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PROSPECTUS Dated August 9, 2011
MANAPPURAM FINANCE LIMITED
(Formerly „Manappuram General Finance and Leasing Limited‟) (Incorporated in the Republic of India with limited liability with Company Identification Number L65910KL1992PLC006623, under the Companies Act, 1956, as amended (the ―Companies Act‖))
Registered Office: V/104, “Manappuram House”, Valapad, Thrissur 680 567, Kerala, India
Tel: (+91 487) 305 0000; Fax: (+91 487) 239 9298
Compliance Officer and Contact Person: Mr. C. Radhakrishnan, Company Secretary
E-mail: [email protected]; Website: www.manappuram.com
PUBLIC ISSUE BY MANAPPURAM FINANCE LIMITED (“COMPANY” OR “ISSUER”) OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES (THE “BONDS”)
OF FACE VALUE OF RS. 1,000 EACH AGGREGATING TO RS. 4,000 MILLION WITH AN OPTION TO RETAIN OVER SUBSCRIPTION UPTO RS. 3,500 MILLION,
AGGREGATING TO RS. 7,500 MILLION (THE “ISSUE”).
The Issue is being made pursuant to the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended (the “SEBI Debt Regulations”).
GENERAL RISKS
For taking an investment decision, Investors must rely on their own examination of our Company and the Issue including the risks involved. Investors are advised to refer to section entitled “Risk
Factors” beginning on page 11, before making an investment in this Issue.
ISSUER‟S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus, contains all information with regard to the Issuer and the Issue, which is material in the
context of this Issue, that the information contained in this Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed
herein are honestly held and that there are no other material facts, the omission of which makes this Prospectus as a whole or any such information or the expression of any such opinions or intentions
misleading in any material respect.
CREDIT RATING
The Bonds proposed to be issued by our Company have been rated by Credit Analysis and Research Limited (“CARE”) and Brickwork Ratings India Pvt. Ltd. (“Brickwork”). CARE has vide its letter
dated June 21, 2011 assigned a rating of “CARE AA-”. Instruments with this rating are considered to offer high safety for timely servicing of debt obligations. Such instruments carry very low credit
risk. Brickwork has vide its letter no. BWR/BLR/RA/2011-12/0075 dated July 1, 2011 assigned a rating of “BWR AA-” to the Bonds in the Issue. Instruments with this rating are considered to have
high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The above ratings are not a recommendation to buy, sell or hold securities and
investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated independently of any other ratings.
Please refer to Annexure to this Prospectus for rationale for the above ratings.
PUBLIC COMMENTS
The Draft Prospectus was filed with the Designated Stock Exchange pursuant to the provisions of the SEBI Debt Regulations. The Draft Prospectus was open for public comments.
LISTING
The Bonds offered through this Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (“BSE”). The Company has obtained „in-principle‟ listing approval from BSE vide its
letter dated August 3, 2011. For the purposes of the Issue, the Designated Stock Exchange shall be BSE.
LEAD MANAGERS TO THE ISSUE
MORGAN STANLEY INDIA COMPANY
PRIVATE LIMITED A.K. CAPITAL SERVICES LIMITED AXIS BANK LIMITED ICICI SECURITIES LIMITED
18F/19F,Tower 2
One Indiabulls Centre, 841,Senapati Bapat
Marg, Mumbai 400 013
Tel: (91 22) 6118 1000
Fax: (91 22) 6618 1040
E-mail: [email protected]
Investor Grievance Email:
Website:
www.morganstanley.com/indiaofferdocuments
Contact Person: Saurabh Kumar SEBI Registration No.: INM000011203
30-39, Free Press House,
Free Press Journal Marg, 215
Nariman Point, Mumbai 400 021
Tel: (91 22) 6754 6500/6634
Fax: (91 22) 6610 0594
Email: [email protected]
Investor Grievance Email: investor.
Website: www.akcapindia.com
Contact Person: Mr. Hitesh Shah
SEBI Registration No.: INM000010411
Corporate Office
Level 5/ E Block
Bombay Dyeing Mills Compound, Pandurang
Bhudkar Marg, Worli, Mumbai 400 025
Tel: (91 22) 2425 4556
Fax: (91 22) 4825 4700
E-mail: [email protected]
Investor Grievance Email:
Website: www.axisbank.com
Contact Person: Mr. Dinkar Rai
SEBI Registration No.: INM000006104
ICICI Centre,
H.T. Parekh Marg,
Churchgate,
Mumbai - 400 020
Maharashtra, India.
Tel.: (91 22) 2288 2460
Fax: (91 22) 2282 6580
E-mail:
Investor Grievance Email:
Website: www.icicisecurities.com
Contact Person: Sumit Agarwal
SEBI Registration Number: INM000011179
CO-LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE
RR INVESTORS CAPITAL SERVICES (P)
LTD.
KARVY INVESTOR SERVICES LIMITED SMC CAPITALS LIMITED LINK INTIME INDIA PRIVATE LIMITED
133A, Mittal Tower, A Wing,
13th Floor, Nariman Point,
Mumbai-400 021
Tel: (91 22) 2288 6627/28
Fax: (91 22) 2285 1925
E-mail: [email protected]
Investor Grievance Email:
Website: www.rrfcl.com
Contact Person: Mr. Brahmdutta
Singh
SEBI Registration No.
INM000007508
Regent Chambers, 2nd floor
Nariman Point, Mumbai – 400021
Tel : (91 22) 2289 5000
Fax: (91 22) 3020 4040
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.karvy.com
Contact Person: Mr. Omkar Barve
SEBI Registration No:
INM000008365
3rd Floor, A-Wing, Laxmi Towers,
Bandra Kurla Complex,
Bandra (East), Mumbai - 400 051
Tel: (91 22) 6138 3838
Fax: (91 22) 6138 3899
Email: [email protected]
Investor Grievance Email: investor.grievance
@smccapitals.com
Website: www.smccapitals.com
Contact Person: Sanjeev Barnwal
SEBI Registration No: MB/INM000011427
C-13, Pannalal Silk Mills Compound
L.B.S. Marg,
Bhandup (West)
Mumbai 400 078
Tel: (91 22) 2596 0320
Fax: (91 22) 2596 0329
E-mail: man.ncd @linkintime.co.in
Investor Grievance Email: man.ncd
@linkintime.co.in
Website: www.linkintime.co.in
Contact Person: Mr. Sanjog Sud
SEBI Registration No.: INR000004058
ISSUE PROGRAMME
ISSUE OPENS ON ISSUE CLOSES ON
August 18, 2011 September 5, 2011
The Issue shall remain open for subscription during banking hours for the period indicated above, except that the Issue may close on such earlier date as may be decided by the Board
subject to necessary approvals. In the event of an early closure of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors through newspaper
advertisements on the day of such earlier date of Issue closure.
A copy of the Prospectus shall be filed with the Registrar of Companies, Kerala and Lakshadweep, in terms of section 56 and section 60 of the Companies Act, along with the requisite
endorsed/certified copies of all requisite documents. For further details please refer to the section titled ―Material Contracts and Documents for Inspection‖ beginning on page 177 of
this Prospectus.
(i)
TABLE OF CONTENTS
DEFINITIONS AND ABBREVIATIONS .......................................................................................................... 1
PRESENTATION OF FINANCIAL INFORMATION AND OTHER INFORMATION ............................. 8
INDUSTRY AND MARKET DATA................................................................................................................... 9
FORWARD LOOKING STATEMENTS ........................................................................................................ 10
RISK FACTORS ................................................................................................................................................ 11
THE ISSUE ......................................................................................................................................................... 31
SELECTED FINANCIAL INFORMATION ................................................................................................... 33
SUMMARY OF BUSINESS .............................................................................................................................. 37
GENERAL INFORMATION ............................................................................................................................ 42
CAPITAL STRUCTURE ................................................................................................................................... 49
OBJECTS OF THE ISSUE................................................................................................................................ 76
STATEMENT OF TAX BENEFITS................................................................................................................. 78
OUR BUSINESS ................................................................................................................................................. 88
HISTORY AND MAIN OBJECTS ................................................................................................................. 105
OUR MANAGEMENT .................................................................................................................................... 106
OUR PROMOTERS ......................................................................................................................................... 121
OUR SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES ....................................... 122
STOCK MARKET DATA FOR EQUITY SHARES AND DEBENTURES OF OUR COMPANY ......... 123
DESCRIPTION OF CERTAIN INDEBTEDNESS ....................................................................................... 125
OUTSTANDING LITIGATION AND DEFAULTS ..................................................................................... 133
OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................ 136
THE ISSUE STRUCTURE .............................................................................................................................. 140
TERMS OF THE ISSUE ................................................................................................................................. 144
PROCEDURE FOR APPLICATION ............................................................................................................. 159
MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ............................................................... 171
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ..................................................... 177
RECENT FINANCIAL DEVELOPMENTS .................................................................................................. 179
AUDITOR EXAMINATION REPORT AND REFORMATTED STATEMENTS ................................... 182
DECLARATION .............................................................................................................................................. 185
ANNEXURE - CREDIT RATING LETTERS
1
DEFINITIONS AND ABBREVIATIONS
This Prospectus uses certain definitions and abbreviations which, unless the context indicates or implies
otherwise, have the meaning as provided below. References to any legislation, act or regulation shall be to such
term as amended from time to time.
General
Term Description
“MFL” or “Company” or “the
Company” or “the Issuer” or
“our Company”
Manappuram Finance Limited
“we” or “us” or “our” Unless the context otherwise requires, Manappuram Finance Limited
Company Related Terms
Term Description
Articles/ Articles of Association Articles of Association of our Company
Auditors S.R. Batliboi & Associates
Audited Unconsolidated
Financial Statements
The audited unconsolidated financial statements as of and for the years ended
March 31, 2011, 2010, 2009 and 2008.
Board / Board of Directors Board of Directors of our Company or any duly constituted committee thereof
Equity Shares Equity shares of face value of Rs. 2 each of the Company
Group Companies Includes those companies, firms, ventures, etc. promoted by the promoters of
the issuer, irrespective of whether such entities are covered under Section 370
(1)(B) of the Companies Act or as per Accounting Standard 18 issued under
the Companies Accounting Standard Rules
MAFIT Manappuram Finance (Tamil Nadu) Limited
MFL ESOP The Manappuram Finance Limited Employee Stock Option Plan 2009
MBFL Manappuram Benefit Fund Limited
Merger Merger of MAFIT with Our Company
Memorandum / Memorandum
of Association
Memorandum of Association of our Company
Prior Year Audited Financial
Statements
The audited unconsolidated financial statements as of and for the year ended
March 31, 2007 as audited by Mohandas & Associates.
Promoters The promoters of our Company being V.P. Nandakumar and Sushama
Nandakumar
Promoter Group Includes such persons and entities constituting our promoter group pursuant to
Regulation 2 (1)(zb) of the SEBI ICDR Regulations
Reformatted Statements The reformatted statement of assets and liabilities of the Company as at March
31, 2011, 2010, 2009, 2008 and 2007, the related reformatted statement of
profit and losses and the reformatted statement of cash flows for the years
ended March 31, 2011, 2010, 2009, 2008 and 2007, prepared on the basis of
the Audited Unconsolidated Financial Statements and the Prior Year Audited
Financial Statements of the Company in connection with the Issue under the
SEBI Debt Regulations.
2
Term Description
Registered Office The registered office of our Company is situated at V/104, “Manappuram
House”, Valapad, Thrissur 680 567, Kerala, India
RoC Registrar of Companies, Kerala and Lakshadweep, located at Ernakulam
Issue Related Terms
Term Description
Allotment/ Allot/ Allotted Unless the context otherwise requires, the allotment of Bonds to the
successful Applicants pursuant to the Issue
Allottee A successful Applicant to whom the Bonds are allotted pursuant to the Issue
Applicant Any person who applies for issuance of Bonds pursuant to the terms of the
Prospectus and Application Form
Application Amount The aggregate value of the Bonds applied for, as indicated in the Application
Form
Application Form The form (including revisions thereof) in terms of which the Applicant shall
make an offer to subscribe to the Bonds and which will be considered as the
application for Allotment of Bonds in terms of the Prospectus
Banker(s) to the Issue/ Escrow
Collection Bank
The banks which are clearing members and registered with SEBI as Bankers
to the Issue with whom the Escrow Account will be opened The details of the
Banker to the Issue are provided in the section entitled ―General Information‖
on page 42
Basis of Allotment The basis on which Bonds will be allotted to Applicants under the Issue, more
particularly as detailed in the section entitled ―Procedure for Application –
Basis of Allotment‖ on page 167
Bondholder(s) Any person holding the Bonds and whose name appears on the beneficial
owners‟ list provided by the Depositories or whose name appears in the
Register of Bondholders maintained by the Issuer
Bonds Bonds, in the nature of secured, redeemable, non-convertible debentures of
our Company of face value of Rs. 1,000 being the Series I Bonds and the
Series II Bonds issued in terms of the Prospectus
Co-Lead Managers RR Investors Capital Services (P) Limited, Karvy Investor Services Limited
and SMC Capitals Limited
Consolidated Bond Certificate In case of rematerialized Bonds held in physical form, the certificate issued by
the Issuer to the Bondholder for the aggregate amount of the Bonds that are
rematerialized and held by such Bondholder
Debenture Trust Deed Trust deed to be entered into between the Debenture Trustee and our
Company
Debenture Trustee/ Trustee Trustees for the Bondholders in this case being IL&FS Trust Company
Limited
Deemed Date of Allotment The Deemed Date of Allotment shall be the date as may be determined by the
Board of our Company and notified to the BSE.
Designated Date The date on which funds are transferred from the Escrow Account to the
Public Issue Account or the Refund Account, as appropriate, subsequent to the
execution of documents for the creation of Security
Designated Stock Exchange/
DSE
The designated stock exchange for the Issue, being BSE
Draft Prospectus The draft prospectus dated July 26, 2011 filed by our Company with the
Designated Stock Exchange in accordance with the provisions of SEBI Debt
3
Term Description
Regulations
Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour the
Applicants will issue cheques or drafts in respect of the Application Amount
when submitting an Application
Escrow Agreement Agreement to be entered into by our Company, the Registrar to the Issue, the
Lead Managers, Co-Lead Managers and the Escrow Collection Bank(s) for
collection of the Application Amounts and where applicable, refunds of the
amounts collected from the Applicants on the terms and conditions thereof
Institutional Portion Portion of Applications received from Category I of persons eligible to apply
to the Issue which includes public financial institutions, statutory
corporations, commercial banks, cooperative banks and regional rural banks
which are authorised to invest in the Bonds, insurance companies registered
with IRDA, provident, superannuation and gratuity funds, pension funds,
mutual funds in India which are authorised to invest in the Bonds, venture
capital funds registered with SEBI, and National Investment Fund set up by
resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the
Government of India published in the Gazette of India and does not include
foreign institutional investors and overseas corporate bodies
Issue Public issue of bonds in the nature of secured, redeemable, non-convertible
debentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 million
with an option to retain over subscription upto Rs. 3,500 million, aggregating
to Rs. 7,500 million
Issue Closing Date September 5, 2011
Issue Opening Date August 18, 2011
Issue Period The period between the Issue Opening Date and the Issue Closing Date
inclusive of both days, during which prospective Applicants can submit their
Application Forms
Lead Managers Morgan Stanley India Company Private Limited, A.K. Capital Services
Limited, Axis Bank Limited and ICICI Securities Limited.
Lead Brokers Morgan Stanley Financial Services Private Limited, A.K. Stockmart Private
Limited, ICICI Securities Limited, RR Equity Brokers Private Limited, Karvy
Stock Broking Limited, SMC Global Securities Limited, Bajaj Capital
Investor Services Limited, Edelweiss Broking Limited, Enam Securities
Private Limited, Geojit BNP Paripas Financial Services Limited, HDFC
Securities Limited, India Infoline Limited, Integrated Securities Limited, JM
Financial Services Limited, Kotak Securities Limited and SPA Securities
Limited
Malegam Committee Report Report given by sub-committee of its central board of directors of RBI in
October 2010 set up under the Chairmanship of Shri Y.H. Malegam, a senior
member on the RBI‟s central board of directors to study the issues and
concerns in microfinance sector.
Market Lot One Bond
Maturity Date For Series I Bonds, the payment date falling 400 days after the Deemed Date
of Allotment. For Series II Bonds the payment date falling 24 months after the
Deemed Date of Allotment.
Non Institutional Portion Category II of persons eligible to apply for the Issue which includes
companies, bodies corporate and societies registered under the applicable laws
in India and authorised to invest in Bonds, public/private charitable/religious
trusts which are authorised to invest in the Bonds, scientific and/or industrial
research organisations, which are authorised to invest in the Bonds,
partnership firms in the name of the partners and Limited liability partnerships
4
Term Description
formed and registered under the provisions of the Limited Liability
Partnership Act, 2008
Pay-in Date Three (3) days from the date of receipt of application or the date of realisation
of the cheques/demand drafts, whichever is later
Portion Portion of Applicant in each Category, being the Institutional Portion, Non
Institutional Portion, Reserved Individual Portion or Unreserved Individual
Portion
Prospectus The prospectus dated August 9, 2011 to be filed with the RoC in accordance
with the provisions of SEBI Debt Regulations through which the Bonds are
being offered to the public.
Public Issue Account An account opened with the Banker(s) to the Issue to receive monies from the
Escrow Accounts for the Issue on the Designated Date
Record Date Date falling 3 Working Days prior to the date on which interest is due and
payable or the Maturity Date
Refund Account The account opened with the Refund Bank(s), from which refunds, if any, of
the whole or part of the Application Amount shall be made
Refund Bank Axis Bank Limited
Register of Bondholders The register of Bondholders maintained by the Issuer in accordance with the
provisions of the Companies Act and as more particularly detailed in the
section entitled ―Terms of the Issue – Register of Bondholders‖ on page 146
Registrar Agreement Agreement entered into between the Issuer and the Registrar under the terms
of which the Registrar has agreed to act as the Registrar to the Issue
Registrar to the Issue or
Registrar
Link Intime India Private Limited
Reserved Individual Portion Portion of Applications received from Category III of persons eligible to
apply to the Issue which includes resident Indian individuals and hindu
undivided families through the karta whose aggregate value of Applications is
not more than Rs. 5 Lacs
Resident Individual An individual who is a person resident in India as defined in the Foreign
Exchange Management Act, 1999
Security The Bonds shall be secured by mortgage of the immovable property of our
Company as identified in the Debenture Trust Deed and a charge in favour of
the Debenture Trustee, on all current assets, book debts, receivables (both
present and future) as fully described in the Debenture Trust Deed, except
those receivables specifically and exclusively charged, on a first ranking pari
passu basis with all other lenders to our Company holding pari passu charge
over the security such that a security cover of 1.10 times is maintained until
Maturity Date, more particularly as detailed in the section entitled ―Terms of
the Issue - Security‖ on page 153
Secured Obligation The Face Value of the Bonds to be issued upon the terms contained herein
together with all interest, costs, charges, fees, remuneration of Debenture
Trustee and expenses payable in respect thereof as more particularly described
in the section entitled ―Terms of the Issue - Security‖ on page 153
Series I Bonds Rs. 1,000 face value Series of Bonds paying no interest but an yield to
maturity of 12% p.a. for Category I, Category II and Category III
Bondholders, due in 400 days.
Series II Bonds Rs. 1,000 face value Series of Bonds paying semi-annually interest and having
rate of 12% p.a. for Category I and Category II Bondholders and 12.2% p.a.
for Category III Bondholders, due in 24 months
5
Term Description
Series of Bonds Series I Bonds and / or Series II Bonds, each of face value of Rs. 1,000,
proposed to be issued by the Company pursuant to this Issue.
Stock Exchanges The BSE, NSE, MSE and CSE
Trading Lot One Bond
Tripartite Agreements Agreements entered into between the Issuer, Registrar and each of the
Depositories under the terms of which the Depositories agree to act as
depositories for the securities issued by the Issuer.
Unreserved Individual Portion Portion of Applications received from Category III of persons eligible to
apply to the Issue which includes resident Indian individuals; and hindu
undivided families through the karta whose aggregate value of Applications is
more than Rs. 5 Lacs.
Working Days All days excluding Saturdays, Sundays or a public holiday in Mumbai or at
any other payment centre notified in terms of the Negotiable Instruments Act,
1881
Conventional and General Terms or Abbreviations
Term/Abbreviation Description/ Full Form
Act Income Tax Act, 1961, unless the context requires otherwise
AGM Annual General Meeting
AMC Asset Management Company
AS Accounting Standards issued by the ICAI
Brickwork Brickwork Ratings India Pvt. Ltd.
BSE Bombay Stock Exchange Limited
CARE Credit Analysis and Research Limited
CCTV Closed-circuit Television
CDSL Central Depository Services (India) Limited
Companies Act Companies Act, 1956, unless the context requires otherwise
CSE Cochin Stock Exchange
Debt Listing Agreement The agreement for listing of Bonds on the BSE
Depositories CDSL and NSDL
Depositories Act Depositories Act, 1996
DP/ Depository Participant Depository Participant as defined under the Depositories Act, 1996
DIN Director Identification Number
DRR Debenture Redemption Reserve
EGM Extraordinary General Meeting
Equity Listing Agreement(s) The equity listing agreement(s) with each of the Stock Exchanges
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999
FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional
Investors) Regulations,1995), registered with the SEBI under applicable laws
in India
6
Term/Abbreviation Description/ Full Form
Financial Year/ Fiscal Year/ FY Period of 12 months ended March 31 of that particular year
GAAP Generally Accepted Accounting Principles
GDP Gross Domestic Product
GoI or Government Government of India
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IMaCS ICRA Management Consulting Services Limited
Income Tax Act / IT Act Income Tax Act, 1961
India Republic of India
IRDA Insurance Regulatory and Development Authority
Indian GAAP Generally accepted accounting principles followed in India
IT Information technology
KYC Know your customer
MCA Ministry of Corporate Affairs, Government of India
MoU Memorandum of Understanding
Mn Million
MSE Madras Stock Exchange
Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996, as amended
NAV Net Asset Value
NBFC Non Banking Financial Company, as defined under applicable RBI guidelines
NCD Non Convertible Debenture
NECS National Electronic Clearing System
NEFT National Electronic Fund Transfer
NRI Non-resident Indian
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
p.a. Per annum
PAN Permanent Account Number
RBI Reserve Bank of India
RTGS Real Time Gross Settlement
Rs. or Rupees or Indian Rupees The lawful currency of India
SBI State Bank of India
SEBI Securities and Exchange Board of India
SEBI Act SEBI Act, 1992
SEBI Debt Regulations SEBI (Issue and Listing of Debt Securities) Regulations, 2008
SEBI ICDR Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
7
Technical and Industry Related Terms
Term/Abbreviation Description/ Full Form
AD II license Authorised Dealer II license
CAGR Compounded Annual Growth Rate, that is, the year-over-year growth rate of a
business activity or income from the same over a specified period of time
Gold Loans Loans against pledge of household and/or used gold jewellery
LTV Loan to Value
MFI Microfinance institutions
NPA Non-performing assets
Prudential Norms Directions Non-Banking Financial (Non - Deposit Accepting or Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007, as amended
8
PRESENTATION OF FINANCIAL INFORMATION AND OTHER INFORMATION
All references herein to “India” are to the Republic of India and its territories and possessions.
Currency and Unit of Presentation
In this Prospectus, references to „Rs.‟, „Indian Rupees‟ and „Rupees‟ are to the legal currency of India and
references to „U.S.$‟ and „U.S. dollars‟ are to the legal currency of the United States of America. All references
herein to the „Government‟ is to the Government of India, central or state, as applicable.
Financial Data
In this Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to
rounding off. All financial information has been rounded off to two decimals points and percentages to one
decimal point.
Our unconsolidated financial statements as of and for the years ended March 31, 2011, 2010, 2009 and 2008
(the “Audited Unconsolidated Financial Statements”) and the unconsolidated financial statements as of and for
the years ended March 31, 2007 as audited by Mohandas & Associates (Prior Year Audited Unconsolidated
Financial Statements”) form the basis for the reformatted statements as of and for the years ended March 31,
2011, 2010, 2009, 2008 and 2007, which were prepared in accordance with the provisions of the SEBI Debt
Regulations, as amended from time to time (the “Reformatted Statements”). The Reformatted Statements and
examination report dated July 19, 2011 issued by the auditor thereon are included in this Prospectus.
Our financials commence on April 1 of each year and ends on March 31 of the succeeding year, so all references
to particular “financial year”, “fiscal year”, and “Fiscal” or “FY”, unless stated otherwise, are to the 12 months
period ended on March 31 of that year. We publish our financial statements in Rupees in millions. The degree to
which the Reformatted Statements included in this Prospectus will provide meaningful information is entirely
dependent on the reader‟s level of familiarity with Indian accounting practices. Any reliance by persons not
familiar with Indian accounting practices on the financial disclosures presented in this Prospectus should
accordingly be limited.
Manappuram Finance Tamil Nadu Limited (“MAFIT”) merged with the Company with retrospective effect
from April 1, 2008 and the merger was given effect to by the Company pursuant to an Order of the High Courts
in the three month period ended December 31, 2009. The published financial results and financial statements of
the Company prior to December 31, 2009 do not include the financial results or financial statements of MAFIT.
9
INDUSTRY AND MARKET DATA
Information regarding market position, growth rates and other industry data pertaining to our businesses
contained in this Prospectus consists of estimates based on data reports compiled by government bodies,
professional organizations and analysts, data from other external sources and knowledge of the markets in which
we compete. Unless stated otherwise, the statistical information included in this Prospectus relating to the
industry in which we operate has been reproduced from various trade, industry and government publications and
websites.
This data is subject to change and cannot be verified with certainty due to limits on the availability and
reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither we
nor the Lead Managers or the Co-Lead Managers have independently verified this data and do not make any
representation regarding the accuracy of such data. We take responsibility for accurately reproducing such
information but accept no further responsibility in respect of such information and data. In many cases, there is
no readily available external information (whether from trade or industry associations, government bodies or
other organizations) to validate market-related analysis and estimates, so we have relied on internally developed
estimates. Similarly, while we believe our internal estimates to be reasonable, such estimates have not been
verified by any independent sources and neither we nor the Lead Managers or the Co-Lead Managers can assure
potential investors as to their accuracy. Accordingly, investors should not place undue reliance on this
information.
10
FORWARD LOOKING STATEMENTS
Certain statements contained in this Prospectus that are not statements of historical fact constitute „forward-
looking statements‟. Investors can generally identify forward-looking statements by terminology such as „aim‟,
„anticipate‟, „believe‟, „continue‟, „could‟, „estimate‟, „expect‟, „intend‟, „may‟, „objective‟, „plan‟, „potential‟,
„project‟, „pursue‟, „shall‟, „should‟, „will‟, „would‟, or other words or phrases of similar import. Similarly,
statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All
statements regarding our expected financial conditions, results of operations, business plans and prospects are
forward-looking statements. These forward-looking statements include statements as to our business strategy,
revenue and profitability, new business and other matters discussed in this Prospectus that are not historical
facts. All forward-looking statements are subject to risks, uncertainties and assumptions about us that could
cause actual results to differ materially from those contemplated by the relevant forward-looking statement.
Important factors that could cause actual results to differ materially from our expectations include, among
others:
• general political, economic and business conditions in India and other countries;
• the Company‟s ability to successfully implement its strategy, growth and expansion plans and
technological changes;
• the level and volatility of interest rates and gold rates;
• increases in the level of competition in the gold loans business;
• any scarcity of credit or other financing in India;
• prevailing income conditions among Indian consumers and Indian corporations;
• performance of the Indian and global debt and equity markets;
• variation in exchange rates;
• fraud by employees and borrowers leading to increase in NPAs;
• downward revision in credit ratings;
• transfer restrictions set forth in this Prospectus;
• occurrence of natural calamities or natural disasters affecting the areas in which we have operations;
• occurrence of theft or burglary in the Company‟s premises and consequent loss of collateral;
• risk of fluctuation in the price of equity shares;
• changes in foreign control regulations and regulations applicable to non banking financial companies
and microfinance companies in India and;
• other factors discussed in this Prospectus, including under ―Risk Factors‖ beginning on page 11.
Additional factors that could cause actual results, performance or achievements to differ materially include, but
are not limited to, those discussed under the section entitled ―Our Business‖ beginning on page 88. The
forward-looking statements contained in this Prospectus are based on the beliefs of management, as well as the
assumptions made by, and information currently available to, management. Although we believe that the
expectations reflected in such forward-looking statements are reasonable at this time, we cannot assure investors
that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place
undue reliance on such forward-looking statements. If any of these risks and uncertainties materialize, or if any
of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could
differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent
forward-looking statements attributable to us are expressly qualified in their entirety by reference to these
cautionary statements.
11
RISK FACTORS
You should carefully consider all the information in this Prospectus, including the risks and uncertainties
described below, and in the sections entitled ―Our Business‖ beginning on page 88 as well as the Reformatted
Statement contained in this Prospectus, before making an investment in the Bonds. The risks and uncertainties
described in this section are not the only risks that we currently face or may face in the future. Additional risks
and uncertainties not known to us or that we currently believe to be immaterial may also have an adverse effect
on our business, results of operations and financial condition. If any of the following or any other risks actually
occur, our business, prospects, results of operations and financial condition could be adversely affected and the
price of, and the value of your investment in, the Bonds could decline and you may lose all or part of your
investment.
The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed in
the risk factors mentioned below. However, there are certain risk factors where the effect is not quantifiable and
hence has not been disclosed in such risk factors. The numbering of risk factors has been done to facilitate the
ease of reading and reference, and does not in any manner indicate the importance of one risk factor over
another.
You should not invest in this Issue unless you are prepared to accept the risk of losing all or part of your
investment, and you should consult your tax, financial and legal advisors about the particular consequences to
you of an investment in the Bonds.
Unless otherwise stated, our financial information used in this section is derived from the Reformatted
Statement and accounting records of the Company.
RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY
1. We may not be able to successfully manage and maintain our growth.
Our business has rapidly grown since our inception in 1992. We have significantly expanded our
operations and anticipate further expansion of our operations. We have experienced significant growth
in terms of our loans portfolio and the number of our branches and employees. Our income from
services increased at a compounded annual growth rate (“CAGR”) of 146.34% from the fiscal year
ended March 31, 2008 to the fiscal year ended March 31, 2011. In this same period, the value of loans
advanced by us against pledged gold increased at a CAGR of 302.20% and our branch network
increased at a CAGR of 67.91%.
Our future growth depends on a number of factors, including increasing our ability to further penetrate
the loans against pledge of household, used, gold jewellery (“Gold Loans”) market, the competitive
scenario and future regulatory changes. We cannot assure you that we will continue to grow at
historical rates in the future. In addition, we are bound by certain financial covenants under our
financing agreements, including requiring us to maintain leverage at specified levels. Our inability to
fulfill such covenants may adversely affect our ability to maintain this source of funding and as a result,
adversely affect our ability to grow our business.
Our future growth also depends on our timely access to, and the cost associated with, raising capital. If
we do not have access to financing on terms acceptable to us, our growth could be adversely affected.
As we continue to grow, we are required to continue to improve our managerial, technical and
operational knowledge, resources and systems. In addition, we may be required to manage relationships
with a greater number of customers, third party agents, lenders and other parties. We cannot assure you
that we will not experience issues such as capital constraints, operational difficulties, difficulties in
expanding our existing business and operations and training an increasing number of personnel to
manage and operate our expanding business.
Further, we have expanded and will further expand our business into markets outside southern India.
We have less experience regarding markets outside southern India, which may lead to difficulties in
cultivating new customer relationships and managing such operations. Any of these issues may result
in a failure to implement our expansion plans in a timely manner or at all, and we cannot assure you
that any expansion plans, if implemented, will be successful.
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2. Volatility in the market price of gold may adversely affect our financial condition and results of
operations.
We extend loans secured by household, used, gold jewellery. A sharp downward movement in the price
of gold could result in a decline in pledged gold values. Further, a sustained decrease in the market
price of gold could also cause a decrease in new Gold Loans in our loan portfolio and, as a result, our
interest income. In addition, customers may not repay their loans and the gold jewellery securing the
loans may have decreased significantly in value, resulting in losses which we may not be able to
support. Although we use a technology-based risk management system and follow strict internal risk
management guidelines on portfolio monitoring, which include periodic assessment of loan to security
value on the basis of conservative market price levels, limits on the amount of margin, ageing analysis
and pre-determined margin call thresholds, we cannot assure you that if the price of gold decreases
significantly, our financial condition and results of operations would not be adversely affected.
3. We face increasing competition in our business which may result in declining margins if we are
unable to compete effectively.
Our principal business is the provision of personal loans to retail customers in India secured by
household, used, gold jewellery. Historically, the Gold Loan industry in India has been largely
unorganised and dominated by local jewellery pawn shops and money lenders, with little involvement
from public sector or private sector banks. Gold Loan financing was availed predominantly by lower
income group customers with limited or no access to other forms of credit, however, such income
group has gained increased access to capital through organised and unorganised money lenders, which
has increased our exposure to competition. The demand for Gold Loans has also increased due to
relatively lower and affordable interest rates, increased need for urgent borrowing or bridge financing
requirements, the need for liquidity for assets held in gold and increased awareness and acceptance of
Gold Loan financing.
All of these factors have resulted in increased competition from other lenders in the Gold Loan
industry, including commercial banks and other NBFCs, who also have access to funding from
customers‟ savings and current deposits. We are reliant on higher-cost loans and debentures for our
funding requirements, which may reduce our margins compared to competitors. Our ability to compete
effectively will depend, to some extent, on our ability to raise low-cost funding in the future. If we are
unable to compete effectively with other participants in the Gold Loan industry, our business, financial
condition and results of operations may be adversely affected.
Furthermore, as a result of increased competition in the Gold Loan industry, Gold Loans are becoming
increasingly standardised. Variable interest rates, variable payment terms and waiver of processing fees
are also becoming increasingly common. We cannot assure you that we will be able to react effectively
to these or other market developments or compete effectively with new and existing competitors.
Increasing competition may have an adverse effect on our business, market share and results of
operations.
4. We may not be able to realise the full value of our pledged gold, which exposes us to potential loss.
We may not be able to realise the full value of our pledged gold, due to, among other things, defects in
the quality of gold or wastage that may occur when melting gold jewellery into gold bars. In the case of
a default, we typically sell the pledged gold through publicly announced auctions in accordance with
the terms of our „auction policy‟. Manappuram Jewellers Private Limited, a company promoted by the
promoters of the Company also participates in such auctions. All sales made to Manappuram Jewellers
Private Limited are made for cash at prevailing market price. We cannot assure you that we will be able
to sell such pledged gold at prices sufficient to cover the amounts under default. Moreover, there may
be delays associated with the auction process. Any failure to recover the expected value of pledged
gold could expose us to a potential loss. Any such losses could adversely affect our financial condition
and results of operations.
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5. We are involved in certain legal and other proceedings in India and may face certain liabilities as a
result of the same.
We are involved in various civil, consumer and tax related litigation proceedings, which are at different
stages of adjudication. We are involved in litigation for a variety of reasons, which typically arise in the
normal course of business, when we seek to recover our dues from borrowers in default. As of June 30,
2011, we were party to two sales tax cases, three service tax proceedings, one income tax case, 64
consumer cases, 15 cases filed by owners of branch premises for eviction and one case pending before
the Supreme Court of India in relation to the requirement to register our branches under the Kerala
Money-lenders Act. As of June 30, 2011, the value of these pending cases other than the 15 cases filed
by owners of branch premises for eviction and rent escalation, excluding the provisioning made,
aggregates to a sum of Rs. 14.61 million. We are also party to a special leave petition filed in the
Supreme Court of India, challenging the applicability of Kerala Money-lenders Act, 1958 to our
activities and in addition to the above matters, are also involved in certain administrative and legal
proceedings pending before the relevant courts and authorities at various levels pursuant to show cause
notices and other communications received by us. For further details see ―Outstanding Litigation and
Defaults‖ on page 133. If any of the cases pending is decided against us, it may have an adverse effect
on our business, reputation, financial condition and results of operations.
6. Our business requires substantial capital, and any disruption in funding sources would have an
adverse effect on our liquidity and financial condition.
Our liquidity and ongoing profitability are, in large part, dependent upon our timely access to, and the
costs associated with, raising capital. Our funding requirements historically have been met from a
combination of borrowings such as working capital limits from banks and assigning our loan portfolio
to other lenders such as banks, issuance of commercial paper, non-convertible debentures, bonds and
equity. Thus, our business depends and will continue to depend on our ability to access diversified low
cost funding sources. The capital and lending markets remained highly volatile post the global credit
crisis and access to liquidity had been significantly reduced. These conditions resulted in increased
borrowing costs and difficulty in accessing debt in a cost-effective manner. In addition, it became more
difficult to renew loans and facilities as many potential lenders and counterparties also faced liquidity
and capital concerns as a result of the stress in the financial markets.
We are also required under applicable laws and regulations to maintain a capital adequacy ratio as per
Prudential Norms Directions of at least 15.0% of our risk-weighted assets, with the minimum
requirement of Tier I capital being 10.0%. Our capital adequacy ratio was 29.13% as of March 31,
2011, with Tier I capital comprising 26.36%. If we continue to grow our loan portfolio and asset base,
we may be required to raise additional Tier I and Tier II capital in order to continue to meet applicable
capital adequacy ratios with respect to our Gold Loan business. We cannot assure you that we will be
able to raise adequate additional capital in the future on terms favourable to us, or at all, which may
adversely affect the growth of our business.
We also face maturities of unsecured debt each year. Rs. 10,081 million of our outstanding unsecured
debt matures during the current fiscal year ending March 31, 2012. In order to retire these instruments,
we either will need to refinance this debt, which could be difficult in the event of volatility in the credit
markets, or raise equity capital or generate sufficient cash to retire the debt. If we are not able to do so,
our financial condition and results of operations may be adversely affected.
7. Our ability to access capital depends on our credit ratings.
The cost and availability of capital is, amongst other factors, also dependent on our short term and long
term credit ratings. Our current rating is P1+ from CRISIL (a subsidiary of Standard & Poor‟s) for our
short-term debt programme, including commercial paper. CRISIL has also given an A+ rating for our
NCD issues. ICRA Limited has given us a LA+ rating for our NCD programme. CARE has given us a
rating of CARE AA- and Brickwork has given us a rating of BWR AA- for the present Issue. Ratings
reflect a rating agency‟s opinion of our financial strength, operating performance, strategic position,
and ability to meet our obligations. The rating agencies reserve the right to suspend, withdraw or revise
ratings at any time based on new information or other circumstances. Any downgrade of our credit
ratings would increase borrowing costs and constrain our access to capital and lending markets and, as
a result, would adversely affect our business. In addition, downgrades of our credit ratings could
14
increase the possibility of additional terms and conditions being added to any new or replacement
financing arrangements.
8. Our financial performance is particularly vulnerable to interest rate risk.
Over the last several years, the Government of India has substantially deregulated the financial sector.
As a result, interest rates are now primarily determined by the market, which has increased the interest
rate risk exposure of all banks and financial intermediaries in India, including us.
Our results of operations are substantially dependent on our net interest margins. Interest rates are
sensitive to many factors beyond our control, including the RBI‟s monetary policies, domestic and
international economic and political conditions and other factors.
Our policy is to attempt to balance the proportion of our interest-earning assets, which bear fixed
interest rates, with interest-bearing liabilities. A portion of our liabilities, such as our NCDs,
subordinated debt and short term loans carry fixed rates of interest and the remaining are linked to the
respective banks' benchmark prime lending rate/base rate. As of March 31, 2011, 57% of our
borrowings were at fixed rates of interest. Moreover, we do not hedge our exposure to interest rate
changes. We cannot assure you that we will be able to adequately manage our interest rate risk in the
future or be able to effectively balance the proportion of our fixed rate loan assets and liabilities.
Further, changes in interest rates could affect the interest rates charged on interest-earning assets and
the interest rates paid on interest-bearing liabilities in different ways. Thus, our results of operations
could be affected by changes in interest rates and the timing of any re-pricing of our liabilities
compared with the re-pricing of our assets.
Furthermore, we are exposed to greater interest rate risk than banks or other NBFCs. In a rising interest
rate environment, if the yield on our interest-earning assets does not increase at the same time or to the
same extent as our cost of funds, or, in a declining interest rate environment, if our cost of funds does
not decline at the same time or to the same extent as the yield on our interest-earning assets, our net
interest income and net interest margin would be adversely affected.
Additional risks arising from increasing interest rates include:
• reductions in the volume of loans as a result of customers‟ inability to service high interest
rate payments; and
• reductions in the value of fixed income securities held in our investment portfolio.
9. A large number of our branches are located in southern India, and any downturn in the economy of
southern India or adverse change in consumer preferences in that region could adversely affect our
results of operations.
As of May 31, 2011, more than 75% of our branches were located in the southern states of Kerala,
Tamil Nadu, Karnataka and Andhra Pradesh. As of May 31, 2011, 86% of our Gold Loan advances
were made through branches located in the southern states of Andhra Pradesh, Karnataka, Kerala and
Tamil Nadu out of which about 16% were made through branches located in the state of Kerala alone.
Our concentration in states located in southern India exposes us more strongly to any adverse
geological, ecological, economic or political circumstance that may arise in that region as compared to
other NBFCs or commercial banks that have a more diversified national presence. If there is a
downturn in the economy of southern India or an adverse change in consumer preferences in that
region, our business, financial condition and results of operations may be adversely affected.
10. Inaccurate appraisal of gold by our personnel may adversely affect our business and financial
condition.
The accurate appraisal of pledged gold is a significant factor in the successful operation of our business
and such appraisal requires a skilled and reliable workforce. Inaccurate appraisal of gold by our
workforce may result in gold being overvalued and pledged for a loan that is higher in value than the
gold‟s actual value, which could adversely affect our reputation and business.
15
Further, we are subject to the risk that our gold appraisers may engage in fraud regarding their
estimation of the value of pledged gold. Any such inaccuracies or fraud in relation to our appraisal of
gold may adversely affect our reputation, business and financial condition.
11. Our branches are vulnerable to theft.
Storage of pledged gold jewellery as part of our business entails the risk of theft and resulting loss to
our reputation and business. The short tenure of the loans advanced by us and our practice of
processing loan repayments within short timelines require us to store pledged gold on our premises at
all points in time. There have been eight major burglaries at our branches since inception. With regard
to all burglaries, we may not be able to recover the entire amount of the loss suffered and may receive
only a partial payment of the insurance claim. While we are insured against the risk of burglary arising
from our business, such insurance may not be sufficient to fully cover the losses we suffer. Further, the
actual recovery of the insured amount from the insurer requires the undertaking of certain procedures,
and any delay in recovery could adversely affect our reputation and results of operation. We also
received a letter from the RBI dated October 11, 2010, wherein the RBI expressed its concern
regarding the frequency of burglaries at our branches. Pursuant to the same, while we have
strengthened our security policies and procedures, we cannot guarantee you that theft will not be
committed in the future, which could adversely affect our reputation, business and results of operations.
12. We are subject to the risk of fraud by our employees and customers.
We are exposed to the risk of fraud and other misconduct by employees and customers. While we
carefully recruit all of our employees and screen all our employees who are responsible for
disbursement of Gold Loans and custody of gold, there have in the past been acts of fraud with respect
to Gold Loans and cash related misappropriation committed by our employees. Our customers have
also committed such acts of fraud and misappropriation. The aggregate value involved in these cases
during fiscal year 2011, fiscal year 2010 and fiscal year 2009 was Rs. 24.87 million, Rs. 8.47 million
and Rs. 4.07 million. We are required to report cases of internal fraud to the RBI, which may take
appropriate action. Certain routine inspections have noted that there has been an increase in the number
of frauds committed from nine in Fiscal 2010 to 19 in Fiscal 2011 and also that a reassessment is
required in the classification adopted by the Company while reporting frauds to the RBI. While we
have risk monitoring policies in place, we cannot guarantee you that such acts will not be committed in
the future, and any such act could adversely affect our reputation, business and results of operations.
13. If we are unable to successfully manage the level of non performing assets in our loan portfolio, our
business and financial condition may be adversely affected.
The Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 create
certain provisioning requirements with respect to our outstanding loan portfolio. These provisioning
requirements may require us to reserve lower amounts than the provisioning requirements applicable to
financial institutions and banks in other countries. The provisioning requirements may also require the
exercise of subjective judgments of management. As of March 31, 2011, our gross non performing
assets (“NPAs”) were Rs. 249.30 million, or 0.39% of our total loans and advances, as compared to Rs.
336.66 million, or 1.29% of our total loans and advances as of March 31, 2010. Our provisions for
doubtful loans and advances amounted to Rs. 167.46 million as of March 31, 2011, as compared to Rs.
192.12 million as of March 31, 2010. The level of our provisions may not be adequate to cover further
increases in the amount of our non-performing loans or a decrease in the value of our pledged gold. If
such provisions are not sufficient to provide adequate cover for loan losses that may occur, or if we are
required to increase our provisions, this could have an adverse effect on our financial condition,
liquidity and results of operations and may require us to raise additional capital. In addition, we cannot
assure you that we will not have significant additional NPAs in our loan portfolio in the future on
account of new loans made or that we will be able to maintain the asset quality of our current loan
portfolio.
16
14. As part of our business strategy, we assign / securitize a significant portion of receivables from Gold
Loans advanced by us, which exposes us to the restrictions and conditions that are contained in the
assignment agreements.
As of March 31, 2011, the gold and hypothecation loans assigned to banks, financial institutions and
others aggregated to Rs. 11,182.83 million constituting 14.93% of our gross gold loan portfolio in
principal amount. We sanction and provide loans and then assign / securitize a portion of our loan
portfolio to banks. The assignment / securitization transactions are conducted on the basis of internal
estimates of our funding requirements, and may vary from time to time. Any change in RBI or other
government regulations in relation to assignments or securitisations by NBFCs could have an adverse
impact on our assignment / securitization program.
In the event the relevant bank does not realise the receivables due under such loans, the relevant bank
would have recourse to the corporate guarantee, cash collateral and the underlying security, in the event
such loans are secured. Some of these agreements also require us to obtain the consent of the relevant
bank before entering into any new line of business and certain such banks have a right of first refusal to
purchase receivables from us and our group companies. We are also liable to indemnify the relevant
banks in the occurrence of an event of default. We make a general provision for all loans and specific
provisions on our non-performing loans. Further any downgrade in the ratings of our securitized debt
may lead to additional collaterals or corporate guarantees required to be provided. In the event the
corporate guarantee and/or cash collateral underlying the security and general provisioning are
inadequate, and the loans are put back to us, this could have a material adverse effect on our operating
results and financial condition.
15. We have entered into assignment agreements to sell certain loans from our outstanding loan
portfolio. If such assignment of loans is held to be unenforceable under applicable law, our
business, financial condition and results of operations could be adversely affected.
From time to time we sell and assign a group of similar loans from our outstanding loan portfolio to
financial institutions in return for an upfront fixed consideration. As of March 31, 2011, our
outstanding portfolio of assigned loans was Rs. 11,182.83 million, constituting 14.93% of our gross
Gold Loan portfolio in principal amount. As a part of such transactions, we provide credit enhancement
through fixed deposits with banks or issue corporate guarantees to the purchaser for an amount equal to
a negotiated percentage of the value of the loans being assigned. In January 2009, the High Court of
Gujarat held that the provisions of the Banking Regulation Act, 1949 do not permit banks to assign
debt due to them, including the assignment of debt between two banks. However, on appeal, the
Supreme Court of India reversed the decision of the Gujarat High Court and held that a bank to bank
transfer of debt is not barred by law. If, in the future, one or more of the assignment agreements entered
into by us is held to be unenforceable by a court of law, we may be required to terminate the
assignment agreement(s) In addition, if such assignments of loans are sought to be regulated including
by way of securitization guidelines issued by the RBI, it could adversely affect our ability to raise
resources through loan assignments. Such events may adversely affect our business, financial condition
and results of our operations and our ability to assign our loans.
16. We are subject to certain restrictive covenants in our loan agreements, which may restrict our
operations and ability to expand our business.
We have entered into certain loan agreements in respect of our borrowings, which contain certain
restrictive covenants or require us to obtain approval from the lender in certain circumstances for
disposing of (including creating a charge on) our specified assets, undertaking any merger or
reorganisation, entering into a new line of business, declaring dividends in certain circumstances,
amending our memorandum and articles of association, making substantial change to the general nature
or scope of our business, incurring or assuming any debt, diluting the Promoters‟ equity share holdings
in our Company beyond certain agreed thresholds, reducing our share capital and making a substantial
change in our management. We cannot assure you that consents or waivers in connection with the
application of any of these restrictive covenants could be granted in the future. Some of our lenders
have a right to appoint a nominee director on the Board even before the occurrence of a default. The
occurrence of any of these events could adversely affect our financial condition and results of
operations.
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17. A routine inspection by the RBI has indicated certain deficiencies in the process that has been
followed by us to conduct in auctions.
A routine inspection has noted that there is a considerable time gap between the date of a loan
becoming overdue and the implementation of the auction procedure. This would imply that the
concerned customer would be required to pay the interest for such time period. Certain branches had
also not maintained details of the auction such as the details of bid amounts, list of successful bidders,
successful bid amounts, mode of payment of bid amount etc. It has also been indicated that an auction
surplus of Rs. 95.86 million was lying with the Company as on March 31, 2011 that were ploughed
back into the Company as working capital funds. This amount has been required to return to the
concerned borrowers or transferred to an escrow account to avoid it from being treated as public funds.
Although we are in the process of implementing steps to rectify these deficiencies, any delay or failure
in such implementation may subject us to penalties from the RBI.
18. We have entered into, and will continue to enter into, related party transactions.
We have entered into transactions with several related parties, including our Promoters, Directors and
Group Companies. We cannot assure you that we could not have achieved more favourable terms had
such transactions been entered into with unrelated parties. Furthermore, it is likely that we will enter
into related party transactions in the future. The transactions we have entered into and any future
transactions with our related parties have involved or could potentially involve conflicts of interest. The
following are summary transactions with related parties as per Accounting standard 18 issued under the
Companies Accounting Standard Rules entered into by us during the periods indicated:
• Debentures issued aggregating to Rs. 47.57 million during the fiscal year 2011 and Rs. 273.31
million during the fiscal year 2010;
• Debentures redeemed aggregating to Rs. 62.04 million during the fiscal year 2011 and Rs.
255.54 million during the fiscal year 2010;
• Subscription of Equity Shares by relative of key management personnel aggregating to Rs.
1,000 million during the fiscal year 2011 and subscription of share warrants by key
management personnel aggregating to Rs. 230.76 million during the fiscal year 2010;
• Donation of Rs. 6.20 million made to Manappuram Foundations during the fiscal year 2011;
and
• Sale of gold to Manappuram Jewellers Private Limited aggregating to Rs. 972.70 million
during the fiscal year 2011and Rs. 140.24 million during the fiscal year 2010.
Further certain transactions for the purchase and sale of services from/to parties covered under Section
297 of the Companies Act, 1956 contravened the said provision. These offences have since been
compounded vide order of the Company Law Board, Chennai Bench dated August 31, 2009. For
further details regarding our related party transactions, see “Auditor Examination Report and
Reformatted Statements” on page 182 and ―Our Business - Merger of MAFIT with Our Company‖ on
page 89.
19. Our Promoters, Directors and related entities have interests in a number of companies similar to
ours, which may result in potential conflicts of interest with us.
Certain decisions concerning our operations or financial structure may present conflicts of interest
among our Promoters, Directors, executive officers and other shareholders. Commercial transactions in
the future between us and related parties could result in conflicting interests. A conflict of interest may
occur between our business and the business of our Promoter group companies which could have an
adverse affect on our operations. Two of our Group Companies, Manappuram Benefit Fund Limited
and Manappuram Asset Finance Limited, are also engaged in the business of advancing Gold Loans. In
addition, certain sole proprietorships owned by our Promoter, V.P. Nandakumar, are involved in the
business of advancing Gold Loans. Conflicts of interest may also arise out of common business
objectives shared by us, our Promoters, directors and their related entities. Our Promoters, directors and
their related entities may compete with us and have no obligation to direct any opportunities to us. We
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cannot assure you that these or other conflicts of interest will be resolved in an impartial manner, and
any of these conflicts could adversely affect our business and results of operations.
20. Our entire customer base comprises individual borrowers, who generally are more likely to be
affected by declining economic conditions than larger corporate borrowers.
Individual borrowers typically are less financially resilient than larger corporate borrowers, and as a
result, they are typically more adversely affected by declining economic conditions. In addition, a
significant majority of our customer base belongs to the low to medium income group. Furthermore,
unlike many developed economies, a nationwide credit bureau has only recently become operational in
India, so there is less financial information available about individuals, particularly our focus customer
segment of the low to medium income group. It is therefore difficult to carry out precise credit risk
analyses on our customers. While we follow certain procedures to evaluate the credit profile of our
customers before we sanction a loan, we generally rely on the quality of the pledged gold rather than on
a stringent analysis of the credit profile of our customers. Although we believe that our risk
management controls are sufficient, we cannot be certain that they will continue to be sufficient or that
additional risk management policies for individual borrowers will not be required. Failure to maintain
sufficient credit assessment policies, particularly for individual borrowers, could adversely affect our
loan portfolio, which could in turn have an adverse effect on our financial condition and results of
operations.
21. A rise in the general income level of our customers may adversely affect the demand for our loans.
The size of our Gold Loan portfolio is dependent upon the demand for Gold Loans in India, which is
inversely related to the general income level of our customers. A rise in the general income level in
India could make our loans unattractive to some customers due to their having increased disposable
income, making them less reliant on loans, including Gold Loans. Such a shift in income levels could
lower our interest income, which could in turn adversely affect our business, financial condition and
results of operations.
22. Major lapses of control, system failures or calamities could adversely affect our business.
We are vulnerable to risks arising from the failure of employees to adhere to approved procedures,
failures of security systems, computer system disruptions, communication systems failure and data
interception during transmission through external communication channels and networks. Failure to
prevent or detect such breaches in security or data and communications errors may adversely affect our
operations.
Despite our internal controls, policies and procedures, certain matters such as fraud and embezzlement
cannot be eliminated entirely given the cash nature of our business. If we fail to maintain and continue
to enhance our internal controls, policies and systems, we may be unable to prevent fraud, security
breaches or system failures.
Our business is increasingly dependent on our ability to process, on a daily basis, a large number of
transactions. Our financial, accounting or other data processing systems may fail to operate properly or
become disabled as a result of events that are wholly or partially beyond our control, including a
disruption of electrical or communications services.
If any of these systems do not operate properly or are disabled, or if there are other shortcomings or
failures in our internal processes or systems, financial loss, disruption of our business, regulatory
intervention or damage to our reputation may result. In addition, our ability to conduct business may be
adversely affected by a disruption in the infrastructure that supports our businesses and the localities in
which we are located. Our operations also rely on the secure processing, storage and transmission of
confidential and other information in our computer systems and networks. Our computer systems,
software and networks may be vulnerable to unauthorized access, computer viruses or other malicious
code and other events that could compromise data integrity and security.
Constant connectivity between our branches across India and our head office is key to the functioning
of our business. Each of our branches accesses the Manappuram data centre through the Internet, and
all data is stored centrally in the Manappuram data centre. Data is replicated at our Disaster Recovery
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Centre in Chennai. While we are seeking to provide each branch with two internet connections for
redundancy to protect our systems in the event of failure of a broadband connection, as of May 31,
2011, we have not yet provided approximately 500 of our branches with such redundancy. Our disaster
recovery system is fully operational and we continue to engage in technical exercises to test and
improve our disaster plan. A study completed by IBM identified certain areas for improvement in our
IT support processes. As a result, we are in the process of setting up a service desk, service delivery
and service support in the near future.
23. The RBI has altered and may further alter regulations relating to priority sector advances.
The RBI currently mandates domestic commercial banks operating in India to maintain an aggregate
40.0% (32.0% for foreign banks) of their adjusted net bank credit or credit equivalent amount of off
balance sheet exposure, whichever is greater, as “priority sector advances”. These include advances to
agriculture, small enterprises, exports and similar sectors where the Government seeks to encourage the
flow of credit to stimulate economic development in India. As these commercial banks are unable to
meet these requirements, they often rely on specialised institutions, including microfinance institutions
(“MFIs”) and other financing companies, to provide them with access to qualifying advances through
lending programs and loan assignments. These bank requirements result in significant funding for the
microfinance sector. However, by way of a circular dated February 2, 2011, the RBI has clarified that
loans sanctioned to NBFCs for on-lending to individuals or other entities against the security of gold
jewellery, are not eligible for classification as loans made to the agricultural sector. Further,
investments made by commercial banks in securitised assets originated by NBFCs, where the
underlying assets are loans against gold jewellery, then the assignment of gold loan portfolio from
NBFCs are also not eligible for classification under agriculture sector. To the extent that similar
changes in RBI regulations eliminate or reduce the need of banks for priority sector advances or
modifies the understanding of the concept of MFIs, less capital would be available to MFIs and other
financing companies, such as ours. In such event, our access to funds and the cost of our capital would
be adversely affected, which may in turn adversely affect our financial condition and results of
operations.
24. In order to successfully manage and expand our business, we must be able to attract, train, motivate
and retain key employees.
In order to successfully manage and expand our business, we must be able to attract, train, motivate and
retain highly skilled employees, especially branch managers and gold appraisal personnel. If we cannot
hire additional personnel or retain existing qualified personnel, our ability to expand our business will
be impaired and our revenues could decline. Our ability to hire and retain qualified and skilled
managers and sales representatives is critical to our future, and competition for experienced employees
in the Gold Loan industry may be significant. In addition, we may not be able to hire and retain enough
skilled and experienced employees to replace those who leave or may not be able to re-deploy. We also
may not be able to retain the proper mix of employees to follow trends in technology, evolving industry
standards and changing customer preferences. Any failure by us to hire or retain key employees could
have an adverse impact on our business and results of operations.
25. Our insurance may not be adequate to protect us against all potential losses to which we may be
subject.
We maintain insurance for our free hold real estate and tangible properties, including gold and cash,
and infrastructure at all premises, which provides insurance cover against loss or damage by fire as
well as against natural calamities including earthquake and floods. Further we maintain insurance for
employee fidelity, cash and gold in the branch premises and in transit, which provides insurance cover
against loss or damage by employee theft, house breaking and hold up. However, the amount of our
insurance coverage may be less than the replacement cost of all covered property and may not be
sufficient to cover all financial losses that we may suffer should a risk materialise. There are many
events that could significantly affect our operations, or expose us to third party liabilities, for which we
may not be adequately insured. If we were to incur a significant liability for which we were not fully
insured, it could adversely affect our business, results of operations and financial condition.
20
26. Our business is highly regulated and we may be adversely affected by future regulatory changes.
Further, The restrictions imposed on NBFCs by the RBI through a Master Circular dated July 1,
2010 may restrict our ability to obtain bank financing for specific activities.
We are required under applicable laws and regulations to maintain a capital adequacy ratio as per
Prudential Norms Directions of at least 15.0% of our risk-weighted assets, with the minimum
requirement of Tier I capital being 10.0%. Our capital adequacy ratio was 29.13% as of March 31,
2011, with Tier I capital comprising 26.36%.
In addition to the above, we are also subject to the corporate, taxation and other laws in effect in India
which require continued monitoring and compliance. The introduction of additional government
control or newly implemented laws and regulations, depending on the nature and extent thereof and our
ability to make corresponding adjustments, may adversely affect our business, results of operations and
financial condition. In particular, decisions taken by regulators concerning economic policies or goals
that are inconsistent with our interests could adversely affect our results of operations. These laws and
regulations and the way in which they are implemented and enforced may change from time to time
and we cannot assure you that future legislative or regulatory changes will not have an adverse effect
on our business, financial condition and results of operations. The Micro Finance Institutions
(Development and Regulation) Bill, 2011 promulgated by the Ministry of Finance in June 2011, if
notified as legislation could be relevant in this regard. Further, as per the Monetary Policy Statement
that was released by the RBI on May 03, 2011, the RBI seeks to issue detailed guidelines on NBFCs
functioning as micro finance institutions.
The RBI has also designated certain activities that may be carried on by NBFCs as being ineligible for
bank credit. These activities include rediscounting of bills by NBFCs (except in certain specific cases)
and investment in shares or debentures of any other company. Banks are also prohibited from granting
bridge loans of any nature, or interim finance against capital/debenture issues to NBFCs. Under the
RBI Master Circular No. RBI/2010-11/68 DBOD No.Dir.BC.14/13.03.00/2010-11 issued on July 1,
2010, the exposure (both lending and investment, including off balance sheet exposures) of a bank to a
single NBFC cannot exceed 10.0% of the bank's capital funds as per its last audited balance sheet.
Banks may, however, assume exposures on a single NBFC up to 15.0% of their capital funds provided
the exposure in excess of 10.0% is on account of funds on-lent by the NBFC to the infrastructure
sector. Further, banks may also consider fixing internal limits for their aggregate exposure to all
NBFCs. These rules limit the exposure that banks may have on NBFCs such as us, which may restrict
our ability to borrow from such banks and may increase our cost of borrowing, which could adversely
impact our growth and results of operations.
Additionally, we are required to make various filings with the RBI, the Registrar of Companies,
Securities and Exchange Board of India and other relevant authorities pursuant to the provisions of RBI
regulations, the Companies Act and other regulations. If we fail to comply with these requirements, or
a regulator claims we have not complied with these requirements, we may be subject to penalties and
compounding proceedings. For instance, in the past, we have needed to approach the Company Law
Board for condoning the delay in filing certain forms and had to pay certain penalties. We have
received inspection reports from the RBI on a timely basis. Based on the recent RBI inspection report
dated June 4, 2011, the RBI has, inter alia, highlighted matters relating to improper and unfilled
application forms, deficiencies in our fair practices code, delay in auction of gold and deficiencies in
the Pawn Ticket. We replied to the inspection report on June 6, 2011. However, the issues raised in the
RBI inspection report may not be resolved in our favour, resulting in sanctions, which may have an
adverse impact on our financial condition and results of operations.
Further, pursuant to a Master Circular dated July 1, 2010, the RBI has imposed certain restrictions on
NBFCs relating to the availability of bank financing. Under this Master Circular, certain NBFC
activities are ineligible for financing by bank credit, such as certain types of discounting and
rediscounting of bills arising from the sale of commercial vehicles and unsecured loans or NCDs made
by NBFCs in other companies. In addition to the above, (i) banks are not permitted to grant bridge
loans of any nature, provide interim finance against capital or debenture issues and/or in the form of
loans of a temporary nature pending the raising of long term funds from the market by way of capital,
deposits, or other means to any category of NBFCs; (ii) shares and debentures are not permitted to be
accepted as collateral securities for secured loans granted to NBFCs; and (iii) banks are not permitted
to execute guarantees covering inter-company deposits or loans that guarantee refund of deposits or
21
loans accepted by NBFCs. The Master Circular also advises that guarantees should not be issued by
banks for the purpose of indirectly enabling the placement of deposits with NBFCs. All the
aforementioned restrictions may adversely affect our access to availability of bank finance, which may
in turn adversely affect our financial condition and results of operations.
27. If interest rate restrictions are imposed on lending by NBFCs, our operating results and financial
condition may be adversely affected.
We are subject to laws and regulations by Indian governmental authorities, including the RBI. There
may be future changes in the regulatory system or in the enforcement of the laws and regulations that
could adversely affect us. For instance, a number of states in India have enacted laws to regulate
transactions involving money lenders. These state laws establish maximum rates of interest that can be
charged by a person lending money. The RBI, however, has not established a ceiling on the rate of
interest that can be charged by an NBFC in our sector of operations. Currently, the RBI requires that
the board of all NBFCs adopt an interest rate model taking into account relevant factors such as the cost
of funds, margin and risk premium. The rate of interest and the approach for gradation of risk and the
rationale for charging different rates of interest for different categories of borrowers are required to be
disclosed to the borrowers in the application form and expressly communicated in the sanction letter.
If, in the future, the RBI imposes an interest rate ceiling on lending by NBFCs, our operating results
and financial condition may be adversely affected.
We may also fall within the ambit of the Usurious Loans Act, 1918 in the event that any of our loan
agreements are litigated. While the legislation contains no stipulation as to what rate of interest would
amount to an excessively high rate of interest, certain states in which our branches are located have
enacted amendments that have fixed such rates of interest at approximately 12.00% per annum for
secured loans. If any of our branches were to fall within the ambit of the Usurious Loans Act, 1918, we
may be subject to penalties and be forced to reduce interest rates accordingly, which could have an
adverse effect on our business and results of operations.
The National Bank for Agriculture and Rural Development has, on behalf of the RBI, issued a draft
microfinance bill which has been released for suggestions by stakeholders. Further, the RBI set up a the
Malegam committee to study issues and concerns in the microfinance sector which provided the
Malegam Committee Report. The Malegam Committee Report has made various operational and
financial recommendations on the microfinance sector and on the basis of the same we may get
classified as an MFI. If this bill is passed or the Malegam Committee Report adopted, we may be
covered by its provisions and consequently, restricted in our activities, which may adversely affect our
business and results of operations.
28. Our inability to obtain, renew or maintain our statutory and regulatory permits and approvals
required to operate our business may have an adverse effect on our business.
NBFCs in India are subject to strict regulation and close supervision by the RBI. In addition to the
numerous conditions required for the registration as an NBFC with the RBI, we are required to
maintain certain statutory and regulatory permits and approvals for our business. In the future, we will
be required to renew such permits and approvals and obtain new permits and approvals for any
proposed operations. We cannot assure you that the relevant authorities will issue any or all such
permits or approvals in our anticipated timeframe or at all. Failure by us to renew, maintain or obtain
the required permits or approvals may result in the interruption of our operations and may have a
material adverse effect on our business, financial condition and results of operations.
29. The implementation of our KYC norms as well as our measures to prevent money laundering may
not be completely effective, which could adversely affect our reputation and in turn have an adverse
impact on our business and results of operations.
Our implementation of anti-money laundering measures required by the RBI, including KYC policies
and the adoption of anti-money laundering and compliance procedures in all our branches, may not be
completely effective. There can be no assurance that attempts to launder money using us as a vehicle
will not be made. If we were associated with money laundering, our reputation may be adversely
affected, which in turn could have an adverse impact on our business and results of operations.
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30. We are required to comply with the requirements of certain labour laws which may impose
additional costs on us.
Our branches are required to be registered under the relevant shops and establishments laws and
verifications under Standards of Weights and Measures Act, 1976 of the states in which they are
located. The shops and establishment laws regulate various employment conditions, including working
hours, holidays, leave and overtime compensation. Some of our branches have not applied for such
registration and other branches have pending applications for registration. We have received notices
from labour authorities of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu pursuant to shops and
establishments laws for violating the norms laid down under such statutes, including the number of
permitted working days for these branches. We have replied to these notices and applied for
exemptions to keep these branches open seven days a week. If we fail to obtain or retain any of these
approvals, exemptions or licenses, or renewals thereof, in a timely manner, or at all, our business may
be adversely affected. If we fail to comply, or a regulator claims we have not complied, with any
conditions, our certificate of registration may be suspended or cancelled and we may not be able to
carry on such activities.
In addition, our employees are required to be registered under the provisions of certain labour laws
such as the Employees‟ State Insurance Act, 1948, the Payment of Gratuity Act, 1972 the Kerala Shops
and Commercial Establishments Act, 1960, the Kerala Labour Welfare Fund Act, 1975, and the
Employees Provident Fund and Miscellaneous Provisions Act, 1952. We are also required to maintain
certain records under the provisions of these laws, which add to our costs. Certain claims have also
been raised against us for non compliance with the provisions of the Minimum Wages Act, 1948 and
the Maternity Benefits Act, 1961. If we are subject to penalties under these labour laws or if we do not
obtain the requisite approvals, our business, financial condition and results of operations may be
adversely affected.
31. We do not currently own the trademark to the “Manappuram” logo.
The “Manappuram” logo is registered with the Registrar of Trademarks in India under Class 36 in the
name of our Promoter, V. P. Nandakumar. The trademark has been licensed to us for use on a non-
exclusive, non-assignable basis for a period of ten years by way of a licensing agreement entered into
by us with V. P. Nandakumar on December 18, 2007. We cannot assure you that we will continue to
have the uninterrupted use and enjoyment of the “Manappuram” logo if we are unable to renew the
license agreement. Further, renewal of the agreement may be on terms and conditions that are
unfavorable to us. Termination, non renewal or renewal on unfavourable terms of this licensing
agreement may adversely affect our business, reputation, goodwill, financial condition and results of
operations.
All of our Group Companies use the “Manappuram” name and logo. If the actions of our Promoters or
our Group Companies damage the “Manappuram” name, our reputation, business and financial
condition may in turn be adversely affected.
32. We face difficulties and incur additional expenses in operating from rural and semi urban areas,
where infrastructural facilities are limited.
A significant portion of our operations are conducted in rural and semi urban areas. We face certain
difficulties in conducting such operations, such as accessing power facilities, transporting people and
goods and maintaining profitability at branches in remote areas. We may also face increased costs in
implementing security measures and expanding our advertising presence. We cannot assure you that
such costs will not increase in the future as we expand our network in rural and semi urban areas.
33. We depend on customer-supplied information when evaluating customer credit worthiness.
In deciding whether to extend credit or enter into other transactions with customers and counter parties,
we may rely on information furnished to us by or on behalf of our customers, including the financial
information from which we create our credit assessments. We may also rely on customer
representations as to the accuracy and completeness of customer-supplied information. Any relevant
changes in this information may not be made available to us. The information that we have gathered
may not be sufficient to create a complete customer risk profile. Because we rely on such customer-
23
supplied information, some or all of certain customers‟ risk profiles may be willfully or inadvertently
wrong or misleading, which may lead us to enter into transactions that may adversely affect our
financial condition and results of operations.
34. Our foreign currency exchange business may be adversely affected by exchange rate fluctuations
and is required to adhere to strict know-your-customer (“KYC”) norms.
Our income from our foreign currency exchange business for the financial year ended March 31, 2011
was Rs. 0.54 million and forms 2.69% of our total income from fee based services. We are authorised
to conduct this business under the Authorised Dealer II license (“AD II license”) that has been granted
to us by the RBI. Engaging in the foreign currency exchange business requires us to adhere to all the
terms that are contained in our AD II license, including periodic statements to the RBI and strict
compliance with KYC norms. Any failure by us to comply with such reporting requirements and KYC
norms may result in the imposition of significant penalties, which could adversely affect our financial
condition and results of operations.
35. Our money transfer business is strictly regulated by the RBI money transfer service scheme.
Our income from our money transfer business for the financial year ended March 31, 2011 was Rs.
1.92 million and constituted 95.65% of our total income from fee based services. Our money transfer
business is required to adhere to the requirements of the RBI money transfer service scheme with
regard to the nature of transactions permitted to be undertaken. The RBI has imposed strict KYC
requirements for agents as well as sub-agents of foreign principals who are engaged in providing
money transfer services. These KYC requirements would require us to adapt our policies on customer
acceptance, customer identification, monitoring of transactions and risk management in relation to our
money transfer business. Compliance with these requirements may increase costs and could adversely
affect our money transfer business.
36. All of our branches are located on leased premises and non renewal of lease agreements or their
renewal on terms unfavourable to us could adversely affect our operations.
All of our branches are located on leased premises. Any failure to renew the lease agreements for these
premises on terms and conditions favourable to us may require us to move certain branches to new
premises. We may incur considerable expenses in relation to such relocations, which may adversely
affect our results of operations.
Further, some branch owners have also filed suits to evict us from certain premises. We are currently
involved in 15 such suits. Some of our lease agreements for our branches may not be adequately
stamped or registered with the registering authority of appropriate jurisdiction, which may adversely
affect our rights in such litigations. If any of these litigations are not resolved in our favour, our
business and results of operations may be adversely affected.
37. We do not hold sole title to the land on which our registered office is located.
The land on which our registered office is located is jointly registered in our name and in the name of
one of our Group Companies, Manappuram Benefit Fund Limited (“MBFL”). We have not entered into
any arrangement to lease the land from MBFL. If MBFL requires us to relocate our registered office or
decides to relocate its registered office, we may face additional costs and other logistical difficulties in
carrying out such a relocation, which may adversely affect our financial condition and operations.
38. Our Promoters have given personal guarantees in relation to certain debt including assignment
facilities provided to us, which if revoked may require alternative guarantees, repayment of amounts
due or termination of the facilities.
Our Promoters have given personal guarantees aggregating to Rs. 6,636.02 million in relation to certain
debt including assignment facilities provided to us, which is the total limit sanctioned to us under such
debt including assignment facilities. In the event that any of the guarantees are revoked, the lenders for
such facilities may require alternate guarantees, repayment of amounts outstanding under such facilities
or may terminate such facilities. We may not be successful in procuring guarantees satisfactory to the
lenders, and as a result may need to repay outstanding amounts under such facilities or seek additional
24
sources of capital, which could adversely affect our financial condition.
39. Our Promoters have pledged Equity Shares under the terms of certain loan agreements that one of
our Promoters have entered into. Such agreements also contain certain restrictive provisions.
One of our Promoters, Sushama Nandakumar, has availed of a loan of Rs. 1,000.00 million from
Religare Finvest Limited (“Religare”) pursuant to a loan agreement dated August 12, 2010 (the “Loan
Agreement”). She has also availed of a loan of Rs. 350.00 million from Aditya Birla Finance Limited
(“ABFL”) by way of sanction letters dated December 28, 2010 and March 29, 2011 (collectively the
“Sanction Letters”). The security for the Religare loan is in part a pledge of the purchased
unencumbered Equity Shares of the Company by both our Promoters up to 2.5 times of the loan
amount availed of, not lesser than a market value of Rs. 2,500.00 million. Upon the occurrence of an
event of default as described in the Loan Agreement, Religare is entitled to sell the pledged shares by
way of an auction or private arrangement without court intervention. Religare is also entitled to recall
the loan and demand payment at any point in time depending on risk perception. The margin of the
loan is 40.0% of the value of the securities pledged and if the market value of our shares falls below
2.25 times the principal amount of the loan, our Promoters are required to provide additional
unencumbered shares to increase the margin to 2.5 times the principal amount of the loan within one
working day. As of May 31, 2011, our Promoters have pledged 31,576,110 Equity Shares with
Religare, which amounts to 7.57% of our paid up equity share capital.
Further, pursuant to the terms contained in the Sanction Letters, our Promoter Mr. V. P. Nandakumar
has pledged a total of 6,500,000 Equity Shares with ABFL as on May 31, 2011. This amounts to 0.78%
of our paid up capital as on that date. As per the terms of the loan arrangement with ABFL, the Equity
Shares are pledged at a margin of 50.00% and in case of a margin shortfall, the same would have to be
recouped by the pledge of additional Equity Shares. However, any margin shortfall due to a reduction
in share price beyond 30.00% would have to be recouped by way of repayment. We cannot assure you
that the interest and/or principal amount of these loans will be repaid on time or that an adequate
margin will be maintained at all times, which could result in a sale by of the pledged shares. A decrease
in Promoter holding below agreed thresholds could amount to an event of default under certain of our
loan agreements. The occurrence of any of these risks may adversely affect our financial condition and
results of operations.
40. We have certain contingent liabilities which may adversely affect our financial condition.
As of March 31, 2011, we had certain contingent liabilities. The contingent liability of amounts
disclosed in our Financial Statements represents estimates and assumptions of our management based
on advice received.
For further information on such contingent liabilities, see Schedule 18 to our Reformatted Statements.
In the event that any of these contingent liabilities materialise, our financial condition may be adversely
affected.
41. A routine inspection by the RBI in June 2011 has indicated certain deficiencies in the maintenance
and upkeep of our loan documentation including certain identity related documentation.
A routine inspection by the RBI has indicated certain deficiencies in our loan documentation. It has
been indicated that certain branches had failed to maintain a record of identity related documents
obtained from borrowers. Certain branches had also failed to maintain a record of the specific scheme
under which particular loans were sanctioned or the rate of interest that was chargeable to the specific
borrower. It has also been indicated that in relation to loans that are treated as being advanced to the
agricultural sector, certain branches had failed to obtain the relevant documents such as tax receipt for
land, details of holding etc. Certain details were also omitted to be filled up in the demand promissory
note issued in relation to the repayment of the loan. While we are in the process of rectifying these
defects, any delay or failure in doing so may subject us to a penalty being imposed in this regard by the
RBI.
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42. We, our Executive Chairman, and certain of our employees are parties to a criminal proceeding.
We, our Executive Chairman, V. P. Nandakumar, and certain other of our employees are parties to a
criminal case which is pending before the Court of the Judicial Magistrate of First Class, Ottapalam,
Kerala. The case was filed as a result of a complaint by one of our customers alleging that we had
forcefully dispossessed the customer of a vehicle for which the customer had availed of a loan from us
despite the customer having no payment due to us in relation to the vehicle. This case is filed under
Sections 143, 147, 148, 149, 323, 394, 457 and 506 (iii) of the Indian Penal Code, 1860. We cannot
assure you that this case will be disposed of in our favour. In the event that any adverse order is passed
in this case, it may adversely affect our reputation.
Risks Related to Investments in an Indian Company
43. A slow-down in economic growth in India and other political and economic factors may adversely
affect our business.
We operate only within India and, accordingly, all of our revenues are derived from the domestic
market. As a result, we are highly dependent on prevailing economic conditions in India and our results
of operations are significantly affected by factors influencing the Indian economy. An uncertain
economic situation, in India and globally, could result in a further slowdown in economic growth,
investment and consumption. A slowdown in the rate of growth in the Indian economy could result in
lower demand for credit and other financial products and services and higher defaults. Any slowdown
in the growth or negative growth of sectors where we have a relatively higher exposure could adversely
impact our performance. Any such slowdown could adversely affect our business, prospects, results of
operations and financial condition.
Since 1991, successive central governments have pursued policies of economic liberalisation and
financial sector reforms. Nevertheless, the role of the central and state governments in the Indian
economy as producers, consumers and regulators has remained significant. However, there can be no
assurance that the liberalisation policies announced by the Government in the past will continue in the
future. A significant change in the Government‟s policies could affect business and economic
conditions in India and could also adversely affect our business.
44. Difficulties faced by other NBFCs, banks or financial institutions or the Indian financial sector
generally could cause our business to be adversely affected.
We are exposed to the risks of the Indian financial sector which in turn may be affected by financial
difficulties and other problems faced by Indian financial institutions. Certain Indian financial
institutions have experienced difficulties during recent years particularly in managing risks associated
with their portfolios and matching the duration of their assets and liabilities, and some co-operative
banks have also faced serious financial and liquidity crises. Any major difficulty or instability
experienced by the Indian financial sector could create adverse market perception, which in turn could
adversely affect our business, prospects, results of operations and financial condition.
45. Financial instability in other countries could disrupt our business.
The Indian market and the Indian economy are influenced by economic and market conditions in other
countries. Although economic conditions are different in each country, investors‟ reactions to
developments in one country can have adverse effects on the economy as a whole, in other countries,
including India. A loss of investor confidence in the financial systems of other emerging markets may
cause volatility in Indian financial markets and indirectly, in the Indian economy in general. Any
worldwide financial instability could also have a negative impact on the Indian economy, including the
movement of exchange rates and interest rates in India.
In the event that the current difficult conditions in the global credit markets continue or if the recovery
is slower than expected or if there any significant financial disruption, this could have an adverse effect
on our cost of funding, loan portfolio, business, prospects, results of operations and financial condition
26
46. A decline in India‟s foreign exchange reserves may affect liquidity and interest rates in the Indian
economy, which could adversely impact our financial condition.
According to the RBI Weekly Statistical Supplement, India‟s foreign exchange reserves totaled US$
310,562.00 million as of June 17, 2011. A decline in India‟s foreign exchange reserves could impact
the valuation of the Rupee and could result in reduced liquidity and higher interest rates which could
adversely affect our future financial performance.
47. A downgrade of India‟s sovereign debt rating by an international rating agency could have a
negative impact on our business.
India's sovereign debt rating could be downgraded due to various factors, including changes in tax or
fiscal policy, which are outside our control. Such downgrading could cause a change in interest rates or
other commercial terms and could adversely affect our ability to raise additional financing as well as
our capital expenditure plans, business and financial performance. A decline in this reserve could
impact the valuation of the Indian Rupee and could result in reduced liquidity and higher interest rates,
which could adversely affect the availability of financing to us.
48. We will be required to prepare our financial statements in accordance with „Indian Accounting
Standards converged with IFRS‟ (“IND-AS”) effective from April 1, 2014. There can be no
assurance that our adoption of IND-AS will not adversely affect our reported results of operations or
financial condition and any failure to successfully adopt IND-AS from April 1, 2014 could have an
adverse effect on the price of the Equity Shares.
Based on the current timeline announced convergence of „Indian Accounting Standards‟ with IFRS for
Indian companies, we estimate that the earliest that our Company would need to prepare annual and
interim financial statements under IND-AS would be the financial period commencing from April 1,
2014. There is currently a significant lack of clarity on the adoption of, and convergence to IND-AS
and we currently do not have a set of established practices on which to draw on in forming judgments
regarding its implementation and application, and we have not determined with any degree of certainty
the impact that such adoption will have on our financial reporting. There can be no assurance that our
financial condition, results of operations, cash flows or changes in shareholders‟ equity will not appear
materially worse under IND-AS than under Indian GAAP. As we transition to IND-AS reporting, we
may encounter difficulties in the ongoing process of implementing and enhancing our management
information systems. Moreover, there is increasing competition for the small number of IFRS-
experienced accounting personnel as more Indian companies begin to prepare IND-AS financial
statements. There can be no assurance that our adoption of IND-AS will not adversely affect our
reported results of operations or financial condition.
49. Companies operating in India are subject to a variety of central and state government taxes and
surcharges.
Tax and other levies imposed by the central and state governments in India that affect our tax liability
include: (i) central and state taxes and other levies; (ii) income tax; (iii) value added tax; (iv) turnover
tax; (v) service tax; (vi) stamp duty; and (vii) other special taxes and surcharges which are introduced
on a temporary or permanent basis from time to time. Moreover, the central and state tax scheme in
India is extensive and subject to change from time to time. For example, a new tax code is proposed to
be introduced in the Indian Parliament. In addition, a new goods and services tax is proposed to be
introduced effective April 2012, and the scope of the service tax is proposed to enlarged.
The statutory corporate income tax in India, which includes a surcharge on the tax and an education
cess on the tax and the surcharge, is currently 32.445% down from 33.99% for the fiscal year ended
March 31, 2010. The central or state government may in the future increase the corporate income tax it
imposes. Any such future increases or amendments may affect the overall tax efficiency of companies
operating in India and may result in significant additional taxes becoming payable. Additional tax
exposure could adversely affect our business and results of operations.
50. Our ability to raise foreign capital may be constrained by Indian law.
As an Indian company, we are subject to exchange controls that regulate borrowing in foreign
27
currencies. Such regulatory restrictions limit our financing sources and hence could constrain our
ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, we
cannot assure you that the required approvals will be granted to us without onerous conditions, if at all.
Limitations on raising foreign debt may have an adverse effect on our business.
51. Terrorist attacks, civil disturbances, regional conflicts and other acts of violence in India and abroad
may disrupt or otherwise adversely affect the Indian economy, the health of which our business
depends on.
Certain events that are beyond our control, such as terrorist attacks and other acts of violence or war,
including those involving India, the United Kingdom, the United States or other countries, may
adversely affect worldwide financial markets which could adversely affect our business, and any of
these events could lower confidence in India‟s economy. South Asia has, from time to time,
experienced instances of civil unrest and political tensions and hostilities among neighbouring
countries, including India, Pakistan and China. Political tensions could create a perception that there is
a risk of disruption of services provided by India-based companies, which could have an adverse effect
on our business.
52. India is vulnerable to natural disasters that could severely disrupt the normal operation of our
business.
Parts of India are susceptible to tsunamis and earthquakes and other natural disasters. Because all of
our facilities and employees are located in India, if any of our branches or offices are damaged by a
natural disaster, our business could be interrupted or delayed. As a result, a natural disaster in India
could adversely affect our results of operations.
53. An outbreak of an infectious disease or any other serious public health concerns in Asia or
elsewhere could adversely affect our business.
The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern,
such as swine influenza, could have a negative impact on the global economy, financial markets and
business activities worldwide, which could adversely affect our business. Although, we have not been
adversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak of
an infectious disease among humans or animals or any other serious public health concern will not have
a material adverse effect on our business.
Risks Related to the Bonds
54. Payments to be made on the Bonds will be subordinated to certain tax and other liabilities preferred
by law.
The Bonds will be subordinated to certain liabilities preferred by law such as the claims of the
Government on account of taxes, and certain liabilities incurred in the ordinary course of our
Company‟s trading or banking transactions. In particular, in the event of bankruptcy, liquidation or
winding-up, our Company‟s assets will be available to pay obligations on the Bonds only after all of
those liabilities that rank senior to these Bonds have been paid as per Section 530 of the Companies
Act, 1956. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets
remaining to pay amounts due on the Bonds.
55. Certain lenders of the Company have exclusive first charge over gold loan receivables of identified
branches of the Company.
There are some lenders whose loans are secured by „exclusive first charge‟ over gold loan receivables
of identified branches of the Company by virtue of the terms and conditions contained in the
documents entered into by the Company with such creditors and in the event of bankruptcy, liquidation
or winding-up of the Company, the amounts recoverable by Bondholders will be reduced to that extent.
56. There are other lenders who have pari passu charge over the Security provided.
There are other lenders of the Company who have pari passu charge over the Security provided for the
28
Issue. While the Company is required to maintain an asset cover of 1.10 times the outstanding amount
of the Bonds, upon the Company‟s bankruptcy, winding-up or liquidation, the other lenders will rank
pari passu with the Bondholders and to that extent, may reduce the amounts recoverable by the
Bondholders.
57. The lenders of the Company who have exclusive charges over gold loan receivables of identified
branches of the Company may rank pari passu with the Debenture Holders in the event their
security gets re-characterized.
The Company has taken various loans from banks and financial institutions which are secured by
„exclusive first charge‟ over gold loan receivables of identified branches of the Company. However the
Company periodically changes the identified branches depending on the amounts outstanding with the
respective lender and depending on the financial covenants to be maintained under the documents
entered into by the Company with the respective lender. Due to the ability of the Company to deal with
the receivables over which the charge is created, the purported exclusive charge may be pari passu
charge over all assets of the Company. In this event, such creditors will rank pari passu along with all
the charge holders of the Company which would include the Bondholders and this may therefore
reduce the amounts recoverable by Bondholders in the event of the Company‟s bankruptcy, winding-up
or liquidation
58. The Company may raise further borrowings and charge its assets after receipt of necessary consents
from its existing lenders.
The Company may, subject to receipt of all necessary consents from its existing lenders and the
Debenture Trustee to the Issue, raise further borrowings and charge its assets. The Company is free to
decide the nature of security that may be provided for future borrowings and the same may rank pari
passu with the security created for this Issue. In such a scenario, the Bondholders will rank pari passu
with other creditors and to that extent, may reduce the amounts recoverable by the Bondholders upon
the Company‟s bankruptcy, winding-up or liquidation.
59. The liquidity for the Bonds in the secondary market is very low and it may remain so in the future,
and the price of the Bonds may be volatile.
The Issue will be a new public issue of bonds for the Company and the liquidity in bonds at present is
very low in the secondary market. Although an application has been made to list the Bonds on BSE,
there can be no assurance that liquidity for the Bonds will improve, and if liquidity for the Bonds were
to improve, there is no obligation on us to maintain the secondary market. The liquidity and market
prices of the Bonds can be expected to vary with changes in market and economic conditions, our
financial condition and prospects and other factors that generally influence market price of Bonds.
Such fluctuations may significantly affect the liquidity and market price of the Bonds, which may trade
at a discount to the price at which you purchase the Bonds.
Moreover, the price of the Bonds on the BSE may fluctuate after this Issue as a result of several other
factors.
60. You may not be able to recover, on a timely basis or at all, the full value of the outstanding amounts
and/or the interest accrued thereon in connection with the Bonds.
Our ability to pay interest accrued on the Bonds and/or the principal amount outstanding from time to
time in connection therewith would be subject to various factors inter-alia including our financial
condition, profitability and the general economic conditions in India and in the global financial
markets.
We cannot assure you that we would be able to repay the principal amount outstanding from time to
time on the Bonds and/or the interest accrued thereon in a timely manner, or at all. Although our
Company will create appropriate security in favour of the Debenture Trustee for the Bondholders on
the assets adequate to ensure 110% asset cover for the Bonds, the realizable value of the Secured
Assets, when liquidated, may be lower than the outstanding principal and/or interest accrued thereon in
connection with the Bonds. A failure or delay to recover the expected value from a sale or disposition
of the Secured Assets could expose you to a potential loss.
29
61. Debenture Redemption Reserve (“DRR”) would be created only up to an extent of 50% for the
Bonds. Further, if we do not generate adequate profits, we may not be able to maintain an adequate
DRR, for the Bonds issued pursuant to this Prospectus.
Section 117C of the Companies Act states that any company that intends to issue debentures must
create a DRR to which adequate amounts shall be credited out of the profits of the company until the
debentures are redeemed. The Ministry of Corporate Affairs has, through its circular dated April 18,
2002, (“Circular”), specified that the quantum of DRR to be created before the redemption liability
actually arises in normal circumstances should be „adequate‟ to pay the value of the debentures plus
accrued interest, (if not already paid), till the debentures are redeemed and cancelled. The Circular
however further specifies that, for NBFCs like our Company, (NBFCs which are registered with the
RBI under Section 45-IA of the RBI Act), the adequacy of the DRR will be 50% of the value of
debentures issued through the public issue. Accordingly our Company is required to create a DRR of
50% of the value of debentures issued through the public issue. This may affect speed of repayment to
Bondholders or otherwise affect availability to pay in a timely manner all amounts due and payable on
the Bonds.
As further clarified by the Circular, the amount to be credited as DRR will be carved out of the profits
of the company only and there is no obligation on the part of the company to create DRR if there is no
profit for the particular year. Accordingly, if we are unable to generate adequate profits, the DRR
created by us may not be adequate to meet the 50% of the value of the Bonds. This may have a bearing
on the timely redemption of the Bonds by our Company.
62. Any downgrading in credit rating of our Bonds may affect our trading price of the Bonds.
The Bonds proposed to be issued under this Issue have been rated “CARE AA-” from CARE and
„BWR AA-‟ from Brickwork. We cannot guarantee that these ratings will not be downgraded. The
ratings provided by CARE or Brickwork may be suspended, withdrawn or revised at any time. Any
revision or downgrading in the above credit ratings may lower the value of the Bonds and may also
affect our Company‟s ability to raise further debt.
63. Changes in interest rates may affect the price of our Company‟s Bonds.
All securities where a fixed rate of interest is offered, such as our Company‟s Bonds, are subject to
price risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e.
when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices
increase. The extent of fall or rise in the prices is a function of the existing coupon, days to maturity
and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which
frequently accompany inflation and/or a growing economy, are likely to have a negative effect on the
price of our Company‟s Bonds.
64. You may be subject to Indian taxes arising on the sale of the Bonds.
Sales of Bonds by any holder may give rise to tax liability in India, as further discussed in section
entitled ―Statement of Tax Benefits‖ on page 78 of this Prospectus.
65. There may be a delay in making refunds to applicants.
We cannot assure you that the monies refundable to you, on account of (a) withdrawal of your
applications, (b) our failure to receive minimum subscription in connection with the base amount of the
Issue, (c) withdrawal of the Issue, or (d) failure to obtain the final approval from the BSE for listing of
the Bonds, will be refunded to you in a timely manner. We however, shall refund such monies, with the
interest due and payable thereon as prescribed under applicable statutory and/or regulatory provisions.
NOTES TO RISK FACTORS:
1. This is a public issue of Bonds by the Company aggregating to Rs. 4,000 million with an option to
retain over subscription upto Rs. 3,500 million, aggregating to Rs. 7,500 million
30
2. For details on interests of the Company‟s Directors, please refer to the sections titled “Our
Management” and ―Capital Structure‖ beginning on pages 106 and 49 of this Prospectus respectively.
3. The Company has entered into certain related party transactions as disclosed in the section “Auditor
Examination Report and Reformatted Statements” beginning on page 182 of this Prospectus.
4. Any clarification or information relating to the Issue shall be made available by the Lead Managers, the
Co-Lead Managers and our Company to investors at large and no selective or additional information
will be available for a section of investors in any manner whatsoever.
5. Investors may contact the Registrar to the Issue, the Compliance Officer, the Lead Managers or the Co-
Lead Managers for any complaints or queries pertaining to the Issue. In case of any specific queries on
allotment / refund, investors may contact the Registrar to the Issue.
6. In the event of oversubscription to the Issue or the Tranche Issue, allocation of Bonds will be as per the
―Basis of Allotment‖ set out on page 167 of this Prospectus.
7. Our Company‟s Equity Shares are listed on the BSE, MSE and CSE. It is a permitted security on NSE.
8. Some of our privately placed non-convertible debentures are listed on BSE.
9. Investors may note that this being a public issue of Bonds, as per the SEBI Debt Regulations, the Draft
Prospectus was not submitted to SEBI for comments. However, the Draft Prospectus was filed with the
BSE on July 26, 2011 for receipt of public comments till 5 p.m. of the 7th Working Day from the date
of filing.
10. For further information relating to certain significant legal proceedings that we are involved in, see
―Outstanding Litigation and Defaults‖ beginning on page 133 of this Prospectus.
31
THE ISSUE
The following is a summary of the terms of the Bonds to be issued under the terms of this Prospectus. This
section should be read in conjunction with, and is qualified in its entirety by, more detailed information in the
section entitled ―Issue Structure‖ and ―Terms of the Issue‖ on page 140 and 144 respectively.
COMMON TERMS FOR ALL SERIES OF THE BONDS
Issuer Manappuram Finance Limited
Issue Public issue of bonds in the nature of secured, redeemable, non-convertible
debentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 million
with an option to retain over subscription upto Rs. 3,500 million,
aggregating to Rs. 7,500 million. The Bonds shall be issued at par on the
terms contained in this Prospectus.
Minimum Application Five Bonds (Rs. 5,000) and in multiples of one Bond thereafter.
The minimum number of Bonds per Application Form will be calculated on
the basis of total number of Bonds applied for under each such Application
Form and not on the basis of number of Bonds applied for in each Series of
Bonds.
Rating “CARE AA-” from CARE
“BWR AA-” from Brickwork
Stock Exchange proposed for
listing
BSE
Issuance and Trading Compulsorily in dematerialized form
Market Lot / Trading Lot One Bond
Issue Schedule* The Issue shall be open from August 18, 2011 to September 5, 2011 with
an option to close earlier and/or extend upto a period as may be determined
by the Board.
Pay-in Date 3 (three) days from the date of receipt of application or the date of
realisation of the cheques/demand drafts, whichever is later.
Deemed Date of Allotment The Deemed Date of Allotment shall be the date as may be determined by
the Board of our Company and notified to the BSE. The actual allotment
may occur on a date other than the Deemed Date of Allotment.
* The Issue shall remain open for subscription during banking hours for the period indicated above, except that
the Issue may close on such earlier date as may be decided by the Board subject to necessary approvals. In the
event of an early closure, our Company shall ensure that notice of the same is provided to the prospective
investors through newspaper advertisements on the day of such earlier date of Issue closure.
SPECIFIC TERMS FOR EACH SERIES OF BONDS
Series I II
Frequency of Interest payment NA Semi-annually
Face Value per Bond Rs. 1,000 Rs. 1,000
Issue Price per Bond Rs. 1,000 Rs. 1,000
32
Series I II
Interest Rate**
1) For Bondholders in
Category I
NA 12% p.a.
2) For Bondholders in
Category II
NA 12% p.a.
3) For Bondholders in
Category III
NA 12.2% p.a.
Maturity Date 400 days from the Deemed Date of
Allotment
24 months from the Deemed Date of
Allotment
Maturity Amount per Bond Rs. 1,132.25*** for Bondholders in all
categories (Face Value of the Bonds
plus redemption premium)
Face Value of the Bonds plus any
interest that may have accrued
Yield to Maturity
1) For Bondholders in
Category I
12% p.a. 12.34% p.a.
2) For Bondholders in
Category II
12% p.a. 12.34% p.a.
3) For Bondholders in
Category III
12% p.a. 12.56% p.a.
* For various modes of interest payment, please refer to the section entitled “Terms of the Issue – Manner
and Mode of Payment” on page 151.
** As per the “Procedure for Application - Basis of Allotment” on page 167 of this Prospectus, in the event
Bonds are allocated to any Portion beyond the reservation for such category, the interest on such Bonds will
be as per rate specified for such applicants.
***Rounded to the nearest decimal place.
33
SELECTED FINANCIAL INFORMATION
The summary financial information set out below is derived from the Reformatted Statements and details can be
found in the section “Auditor Examination Report and Reformatted Statements” beginning on page 182 of this
Prospectus.
Summary Statement of Balance Sheet Data
(Rs. in millions, unless otherwise stated) As at
March 31,
2011
March 31,
2010
March 31,
2009
March 31,
2008
March 31,
2007
SOURCES OF FUNDS
Shareholders' funds
Share capital 833.75 340.39 212.56 618.00 150.00
Share warrants - - 29.98
Reserves and surplus 18,405.82 5,765.21 1,436.19 311.83 131.25
Loan funds
Secured loans 43,723.07 16,500.50 3,712.45 1,351.08 511.93
Unsecured loans 12,817.03 1,856.12 793.34 388.67 420.95
Deferred tax liability (net) - - - 0.39 0.96
75,779.67 24,462.22 6,184.52 2,669.97 1,215.09
APPLICATION OF FUNDS
Fixed assets
Gross block 1,651.82 669.80 325.70 196.10 129.98
Less : Accumulated depreciation /
amortisation 332.80 135.63 71.85 42.06 25.28
Net block 1,319.02 534.17 253.85 154.04 104.70
Capital work in progress including
advances
68.64 1.23 2.60 -
Intangible assets (net) 59.84 33.55 23.92 9.17 2.17
Deferred tax asset (net) 87.07 33.35 13.59 - -
Investments 403.20 1,406.70 10.77 29.28 29.01
Current Assets, Loans and Advances
Cash and bank balances 6,663.69 2,682.08 1,133.96 672.23 215.65
Other current assets 4,947.51 1,878.88 675.91 202.71 156.22
Loans and advances 64,141.68 18,907.13 4,486.04 1,853.06 959.11
75,752.88 23,468.09 6,295.91 2,728.00 1,330.98
Less : Current liabilities and provisions
Current liabilities 1,126.34 810.28 347.97 225.81 217.76
Provisions 784.64 204.59 68.15 24.71 34.01
1,910.98 1,014.87 416.12 250.52 251.77
Net current assets 73,841.90 22,453.22 5,879.79 2,477.48 1,079.21
75,779.67 24,462.22 6,184.52 2,669.97 1,215.09
34
Summary Statement of Profit and Loss account data
(Rs. in millions, unless otherwise stated)
Year ended
March 31,
2011
March 31,
2010
March 31,
2009
March 31,
2008
March 31,
2007
INCOME
Income from services 11,654.20 4,699.77 1,605.34 779.60 420.32
Other income 161.06 82.24 55.77 17.00 16.18
11,815.26 4,782.01 1,661.11 796.60 436.50
EXPENDITURE
Personnel expenses 1,605.00 536.40 283.95 116.38 60.61
Operating and other expenses 2,438.71 1,000.75 494.71 198.84 111.87
Depreciation / amortization 212.96 57.38 33.71 18.26 10.66
Financial expenses 3,319.63 1,369.23 385.91 143.51 89.85
7,576.30 2,963.76 1,198.28 476.99 272.99
Profit before tax 4,238.96 1,818.25 462.83 319.61 163.51
Less: Provision for tax
- Current tax 1,466.04 640.11 171.44 109.20 57.50
- Deferred tax (53.72) (19.07) (13.98) (0.57) (0.38)
- Fringe benefit tax - - 2.40 1.08 0.27
Profit after tax 2,826.64 1,197.21 302.97 209.90 106.12
Balance brought forward from previous
year
917.11 188.74 39.00 6.14 2.80
Profit after tax and appropriation for the
financial year 2008-09 - 88.12 - - -
Profit available for appropriation 3,743.75 1,474.07 341.97 216.04 108.92
Appropriations:
- Transfer to Statutory Reserve 565.33 239.45 60.60 42.00 22.00
- Transfer to General Reserve 282.67 119.72 31.00 100.00 50.00
- Transfer to Capital Redemption Reserve - 17.14 5.72 5.72 5.71
- Interim Dividend on Equity Shares - - 1.64 16.50 -
- Dividend on Redeemable Preference
Shares
- - 3.00 3.00 -
- Proposed Dividend on Equity Shares 500.25 165.89 43.14 5.50 19.80
- Tax on distributed profit 81.14 27.22 8.13 4.26 3.64
- Dividend on Convertible Preference
Shares - - - 0.06 1.63
Net profit carried forward to balance
sheet 2,314.36 904.65 188.74 39.00 6.14
35
Summary Statement of Cash Flow data
(Rs. in millions, unless otherwise stated)
Year ended
March 31,
2011
March 31,
2010
March
31, 2009
March
31, 2008
March
31,
2007
A. Cash flow from operating activities
Net profit before taxation, and extraordinary items 4,238.96 1,818.25 462.83 319.61 163.51
Adjustments for:
Depreciation / amortization 212.96 57.38 33.71 18.26 10.66
Loss on sale of fixed assets 2.28 4.34 2.32 0.84 -
Write back of diminution in value of investments - - - (1.27) -
(Profit) / Loss on sale of investments (3.96) 0.43 (0.42) - 1.27
Interest income (124.67) (66.26) (41.95) (12.34) (12.43)
Dividend income (3.62) (0.48) (6.26) - -
Interest expense 3,156.59 1,304.54 355.87 141.92 88.28
Provision for standard assets 158.47 - - - -
Bad debts written off and provision for bad debts 224.28 141.99 177.86 33.72 21.32
Operating profit before working capital changes 7,861.29 3,260.19 983.96 500.74 272.61
Movements in working capital :
Decrease / (Increase) in other current assets (3,026.12) (999.34) (473.21) (34.76) (117.96)
Decrease / (Increase) loans and advances (45,458.84) (14,218.30) (2,810.82) (923.95) (382.89)
Increase / (Decrease) in current liabilities and provisions 228.75 254.41 125.59 (11.34) 14.43
Cash generated from operations (40,394.92) (11,703.04) (2,174.48) (469.31) (213.81)
Direct taxes paid (net of refunds) (1,442.22) (653.38) (177.35) (101.44) (48.96)
Net cash from operating activities (41,837.14) (12,356.42) (2,351.83) (570.75) (262.77)
B. Cash flows from investing activities
Purchase of fixed assets (1,096.42) (297.24) (153.19) (75.43) (68.63)
Proceeds from sale of fixed assets 2.63 0.74 - - 2.03
Purchase of investments (5,770.00) (2,680.13) - - (12.34)
Sale / maturity of investments 6,777.46 1,284.24 18.92 1.00 2.40
Interest received 82.16 44.21 41.95 12.34 12.43
Dividends received 3.62 - 6.26 - 0.00
Net cash from investing activities (0.55) (1,648.18) (86.06) (62.09) (64.11)
C. Cash flows from financing activities
Proceeds from issuance of share capital 11,124.38 2,677.19 525.23 468.00 20.00
Share issue expenses adjusted against securities premium /
not written off or adjusted
(235.64) (76.19) (23.39) (11.72) -
Redemption of preference shares - (40.00) - - -
Increase / (decrease) in secured debentures including
application money (net)
2,410.52 1,801.77 166.60 258.62 75.05
Increase / (decrease) in bank borrowings (net) 24,388.01 9,640.91 2,266.20 583.55 (23.38)
Increase / (decrease) in borrowings from others (net) 450.00 200.00 - - (0.00)
Increase / (decrease) in subordinate bond (net) 613.62 477.88 370.47 114.69 99.70
Increase / (decrease) in deposits including inter-corporate
deposits (net)
(19.74) (29.95) (42.84) (146.32) 125.12
Proceeds from commercial paper 21,810.03 3,316.31 - - -
Repayment of commercial paper (12,452.89) (2,665.58) - - -
Increase / (decrease) in vehicle loans (net) 8.39 (0.39) 0.96 1.59 -
Proceeds from subordinated debt 1,000.00 - - - -
Interest paid (3,079.25) (1,227.99) (338.23) (148.12) (84.25)
Dividends paid (169.86) (54.85) (23.64) (24.42) (9.75)
Tax on dividend paid (28.27) (9.14) (1.74) (6.45) (1.37)
Net cash used in financing activities 45,819.30 14,009.97 2,899.62 1,089.42 201.12
Net increase in cash and cash equivalents (A + B + C) 3,981.61 5.37 461.73 456.58 (125.76)
Cash and cash equivalents at the beginning of the year 2,682.08 1,133.96 672.23 215.65 341.41
Add: Adjustment on account of amalgamation - 1,542.75 - - -
Cash and cash equivalents at the end of the year 6,663.69 2,682.08 1,133.96 672.23 215.65
Components of cash and cash equivalents
Cash and cheques on hand 1,188.01 644.98 182.62 166.71 66.07
With banks
36
Year ended
March 31,
2011
March 31,
2010
March
31, 2009
March
31, 2008
March
31,
2007
- on current account# 2,480.92 841.12 126.72 213.86 56.94
- on deposit account* 2,992.30 1,193.85 823.38 274.70 92.13
- on unpaid dividend accounts** 2.46 2.13 1.24 16.96 0.51
6,663.69 2,682.08 1,133.96 672.23 215.65
* Includes cash collateral deposits held with banks which
are not available for use by the Company. 2,119.41 1,182.57 702.86 270.76 55.55
# includes amounts in Escrow account towards closed
public deposits not available for use by the Company as
they represent corresponding deposit liabilities
11.44 - - - -
**These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities.
37
SUMMARY OF BUSINESS
We are one of the leading listed NBFCs lending money against the pledge of household, used, gold jewellery
(“Gold Loans”) in India, in terms of gold loan portfolio as of March 31, 2011, 2010 and 2009, and we are also
the fastest growing gold financing company in India in terms of gold loan portfolio for the fiscal year 2010. (See
IMaCS Industry Report (2010 Update). We provide these short-term personal and business Gold Loans
primarily to retail customers who require immediate availability of funds, but who do not have access to formal
credit on an immediate basis, or at all. Our Gold Loan portfolio as of March 31, 2011 comprised more than 2
million Gold Loan accounts with 1.19 million customers aggregating to Rs. 63,705.41 million of Gold Loans in
principal amount (net of assignments), which is 99.32% of our total loans and advances. As of March 31, 2011,
we disburse Gold Loans to our customers from a network of 2,064 branches in 20 states and union territories of
India, including 1,567 branches in the southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.
We are headquartered in the southern Indian state of Kerala. Our group commenced operations at Valapad,
Thrissur, Kerala and has decades of established history in the money lending business, mainly in small-scale
money lending against household, used, gold jewellery. Our Company has been in the Gold Loan financing
business since 1999. Historically, we have also provided other related services, including asset finance, money
transfer and foreign exchange, sales of gold coins and business and personal lending. We focus on rapid, on-the-
spot approval and disbursement of loans with minimal procedural formalities which our customers need to
complete in order to avail a loan from us. We have developed various Gold Loan schemes, which offer variable
terms in relation to the amount advanced per gram of gold, the interest rate and the amount of the loan, to meet
the different needs of various customers.
Our lending functions are supported by an in-house, custom developed information technology platform that
allows us to, record relevant customer details and approve and disburse the loan. Our proprietary technology
platform also handles internal audit, risk monitoring and management of the relevant loan and pledged gold
related information. Our employees undergo periodic training sessions related to evaluation of the worth and
authenticity of the gold that is pledged with us.
Our Gold Loan customers are individuals primarily from rural and semi-urban areas who require funds typically
for social obligations, emergencies, agriculture-related activities, small scale business operations or
consumption purposes. We strive to complete our Gold Loan transactions within short timelines. What
distinguishes us from banks is our focus on non-organized sections of society and our turn-around time. Loan
amounts advanced by us are generally in the range of Rs. 1,000.00 to Rs. 1.00 million per loan transaction and
typically remain outstanding approximately for an average tenor of 120 days. All of our Gold Loans have a
maximum of a 12 month term. In the financial year ended March 31, 2011, our gross Gold Loan portfolio yield
representing gross interest income on gross gold loans as a percentage of gross average outstanding of gold
loans, for the same period was, on average, 24.95% per annum.
We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating is
P1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercial
paper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for our
NCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating of
BWR AA- from Brickwork and a rating of CARE AA- from CARE Limited.
In the fiscal years 2011, 2010 and 2009, our total income was Rs. 11,815.26 million, Rs. 4,782.01 million and
Rs. 1,661.11 million respectively. Our profit after tax for the fiscal years 2011, 2010 and 2009 was Rs. 2,826.64
million, Rs. 1,197.21 million and Rs. 302.97 million respectively.
In the fiscal years 2011, 2010 and 2009, revenues from our Gold Loan business constituted 97.62%, 95.67% and
86.20%, respectively, of our total income. As of March 31, 2011, 2010 and 2009, our portfolio of Gold Loans
under management in principal amount (net of assignments) was Rs. 63,705.41 million, Rs. 18,512.26 million
and Rs. 4,000.63 million respectively, and approximately 52.97 tons, 22.45 tons and 13.34 tons, respectively, of
gold jewellery was held by us as security for our Gold Loans. Gross non-performing gold loan assets were
0.28%, 0.55% and 0.95% of our gross Gold Loan portfolio under management as of March 31, 2011, 2010 and
2009, respectively.
38
Merger of MAFIT with Our Company
Manappuram Finance Tamil Nadu Limited (“MAFIT”) an affiliate of our Company merged with the Company
with retrospective effect from April 1, 2008 and the merger was given effect to by the Company pursuant to an
Order of the High Courts in the three month period ended December 31, 2009. Our financial statements as of
and for the fiscal year ended 2010 and 2011 reflect the financial results of MAFIT for such fiscal year; however,
as the merger was approved in December 2009, our financial statements as of and for the fiscal year 2007, 2008
and 2009, do not include the financial results of MAFIT for such periods.
MAFIT was engaged in the same line of business as our Company, and as a result, we have benefited from
increased operations, cost savings and operational synergies.
As a result of the Merger, shareholders of MAFIT received 2.1 Equity Shares in our Company in exchange for
every issued and outstanding share of MAFIT. On January 11, 2010 we issued 11,677,382 equity shares of Rs.
10 each credited as fully paid to the shareholders of MAFIT.
Competitive Strengths
We believe that the following competitive strengths position us well for continued growth:
One of the leading gold financing companies in India with a long operating history and loyal customer base
We have been engaged in the business of Gold Loan financing since 1999. We have, over the years, been
successful in expanding our brand name, as well as our customer base to different geographical locations in
India. Our total number of customers grew from 0.22 million as of March 31, 2008 to 0.34 million as of March
31, 2009 and then to 0.55 million as of March 31, 2010 and to 1.19 million as of March 31, 2011. We attribute
our growth, in part, to our market penetration, particularly in areas less served by organized lending institutions
and the efficient and streamlined procedural formalities which our customers need to complete in order to
complete a loan transaction with us, which makes us a preferred mode of finance for our customers. We also
attribute our growth to customer loyalty. We believe that a large portion of our customer base returns to us when
they are in need of funds. Our average principal amount of loan per customer has increased from Rs. 35,734 for
the fiscal year 2009 to Rs. 63,106 for the fiscal year 2011.
Flexible loan schemes, high quality customer service and short response time
We believe the growth in our Gold Loan portfolio is partly due to the flexible Gold Loan schemes that we offer
to our customers and high quality customer service. Depending on their individual needs, we are able to
customize loans for our customers in terms of the loan amount, advance rate per gram of gold and interest rate.
We also allow customers to prepay their loans with us without penalty, and we do not have a minimum loan
size.
We provide our customers with a transparent process and a secure environment in which to transact their
business, and we believe that our staff is professional and attentive at all our branch locations. Each of our
branches is staffed with customer representatives who possess local knowledge and understanding of customers‟
needs.
In addition, we strive to complete our Gold Loan transactions within a short timeframe, as this forms an
important component in our competitive edge over other lenders. We are able to process Gold Loans within a
short timeframe as a result of our efficient technology support, skilled workforce and clear policies on internal
processes. Although disbursement time may vary depending on the loan size and the number of items pledged,
we can generally disburse an average loan of Rs. 30,000 within a few minutes from the time the gold is tendered
to the appraiser. Furthermore, since our loans are all over-collateralized by gold jewellery, there are minimal
documentary and credit assessment requirements, which also shortens our turnaround time and increases the
ease with which our customers can do business with us.
Rapid expansion of our branch network
We have rapidly expanded our branch network in the past, which we believe has provided us with an advantage
over our competitors. Our total number of branches grew from 644 branches in 14 states and union territories as
of March 31, 2009 to 1,005 branches in 15 states and union territories as of March 31, 2010 and to 2,064
39
branches in 20 states and union territories as of March 31, 2011 and then to 2,192 branches in 22 states and
union territories as of May 31, 2011. In order to manage our expanding operations as well as our increased
customer base, we have developed a proprietary technology framework that provides an integrated, robust
platform to run our operations and scale our branch network. In addition, on a per branch basis, increase in
principal amount of loans and revenues is generally more than the increase in proportionate operating costs year
on year, providing us with economies of scale as branches mature. We intend to continue to develop our
technology framework in order to equip ourselves for further growth of our business.
Strong capital raising ability and high credit rating
We have a track record of successfully raising capital from a variety of sources. We have received private equity
financing from affiliates of Sequoia Capital, India Equity Partners, Ashmore Alchemy and Granite Hill. As of
May 31, 2011, these private equity investors (except for Sequoia Capital and Granite Hill, which sold their
investment) hold an aggregate of 14.23% of our outstanding Equity Shares.
In addition, as of March 31, 2011, we have borrowing relationships with more than 38 banks. As of March 31,
2011, March 31, 2010 and March 31, 2009, our secured loans from banks, financial institutions and NBFCs
were Rs. 38,696.60 million, Rs. 13,858.59 million and Rs. 2,978.69 million respectively. Our bank borrowings
and private equity financings have aided us in achieving growth in our business.
We also raise funds by assigning receivables from Gold Loan advances to banks and other institutions. As at
March 31, 2011, March 31, 2010 and March 31, 2009, the assigned amounts outstanding were Rs. 11,182.83
million, Rs. 7,077.02 million and Rs. 5,381.42 million.
We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating is
P1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercial
paper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for our
NCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating of
BWR AA- rating from Brickwork and a rating of CARE AA- from CARE Limited.
The rating reflects our well established presence in the Gold Loan business, our track record of maintaining
good risk-adjusted returns while expanding our scale of operations and our moderate capitalization levels in
relation to our proposed expansion plans. Our liquidity position is comfortable with a well matched asset
liability management profile on account of the relatively shorter tenure of the advance portfolio and availability
of funding lines. The shorter tenure of advances aided by our P1+ rating also helps us to raise money by way of
short term borrowings and by way of issue of commercial paper at attractive rates.
Robust support system and IT infrastructure, including appraisal, internal audit and inventory control and
safety systems
Our IT infrastructure has been developed in house and links our network of branches across the country with the
head office. We migrated to a .NET platform in December 2008, and have reaped benefits in the form of
minimizing errors, faster transmission of data and risk monitoring. Our management has also benefited from
availability of real time information. We upload data at each branch to facilitate online information access for
faster decision making. In addition, our technology platform has helped us develop an effective risk based
internal control system and internal audit. We also have a disaster recovery system located outside of Kerala
which replicates data on a real time basis. Our centralized technology aids us in offsite surveillance of all our
branches. Our technology also helps reduce the time it takes to complete Gold Loan transactions.
Our ability to accurately appraise the quality of the gold jewellery to be pledged in a short period of time is
critical to our business. We do not engage third parties to assess the gold jewellery, but instead employ in-house
staff for this purpose, which leads to better customer service. Assessing gold jewellery quickly and accurately is
a specialized skill that involves an assessment for gold content and quality manually without damaging the
jewellery. We use tested methods of appraisal of gold, such as the nitric acid test, the touchstone test, checking
for hallmarks and the sound test, and an independent appraisal is carried out by different sets of officials before
disbursement is made depending on the ticket size. In addition, branch heads are required to independently
verify loans that are above Rs. 20,000. Since we generally lend only against household, used jewellery and
avoid lending against bullion or lending to jewellers and goldsmiths, the risk of use of low quality gold or
spurious jewellery as security for our Gold Loans is limited.
40
In addition, the gold that is pledged for each loan is typically as much as the worth of gold that is owned by an
average Indian household, which prevents our exposure to larger-sized loans where the chances of default and
subsequent losses are increased. Only a small portion of the loans advanced by us are for relatively larger
amounts, and in such cases we follow a more detailed process for evaluation of such loans. For larger loans, the
head office will verify the profile of the customer and approve limits for loan sanctions.
Once the Gold Loan is made, we have a system in place for continuous monitoring of the pledged gold by
internal audit and risk management teams. In accordance with our internal audit policy, all of our branches are
subject to inspection every 90 days, a branch audit every 45 days and a spot audit can be conducted at any
branch at any time. At the time of conducting an inspection, a quality check on the inventory is also carried out.
Our inventory control procedures involve physical security checks and checks on the quality of pledged gold. In
addition, the branch head and the assistant branch head are the joint custodians of the gold stored in strong
rooms or vaults, which means that the strong rooms or vaults can only be opened if two keys are inserted at the
same time. The safes and strong rooms are reinforced concrete cement structures built per industry standards
and practices.
Experienced management team and skilled personnel
Our management team has over 35 years of experience in the banking and Gold Loan business. Our senior and
operating level management teams have extensive experience in the Gold Loan business and we believe that
their considerable knowledge of and experience in the industry enhances our ability to operate effectively. Our
staff, including professionals, covers a variety of disciplines, including gold appraisal, internal audit,
technology, accounting, marketing and sales. Some of our key management personnel have been employed by
us since our inception. Our management has experience in identifying market trends and suitable locations for
expanding and setting up branches to suit our target customers. Our workforce also consists of appraisers who
are skilled in the evaluation of the worth and authenticity of the gold that is pledged with us and we conduct
periodic training programs to augment their knowledge and efficiency in performing this task.
Strategy
Our business strategy is designed to capitalize on our competitive strengths and enhance our leadership position
in the Gold Loan industry. Key elements of our strategy include:
Further grow our Gold Loan business
Historically, Indians have been one of the largest consumers of gold due to the strong preference for gold
jewellery among Indian households and its widespread use as a savings instrument. A large proportion of gold
stock is held by rural India, as gold is viewed as a secure, liquid and easily accessible savings instrument, apart
from its ornamental status. (Source: IMaCS Industry Report 2009)
As a result, the market for Gold Loan financing in India is largely untapped and offers good potential for further
growth. The organized Gold Loan market is approximately 1.2% of the value of total gold stock in India
(Source: IMaCS Industry Report (2010 Update)).
We intend to increase our presence in under-served rural and semi-urban markets, where a large portion of the
population has limited access to credit either because they do not meet the eligibility requirements of banks or
financial institutions, or because credit is not available in a timely manner at reasonable rates of interest, or at
all. A typical Gold Loan customer expects high loan-to-value ratios, rapid and accurate appraisals, easy access,
low levels of documentation, quick approval and disbursement and safekeeping of their pledged gold. We
believe we meet these criteria, and thus our focus is to expand our Gold Loan business.
Continue to expand branch network
We intend to continue to grow our Gold Loan portfolio by expanding our network through the addition of new
branches. We have added 1,059 branches in the last fiscal year and 128 branches between March 31, 2011 and
May 31, 2011. We propose to increase our branch strength by at least 500 additional branches in the fiscal year
2012, including in states where we do not currently have any operations, subject to certain conditions being
satisfied. We carefully assess the market, location and proximity to target customers when selecting branch sites
to ensure that our branches are set up close to our target customers. We believe our customers appreciate this
convenience and it enables us to reach new customers. In addition, on a per branch basis, our increase in
41
principal amount of loans and revenues is generally more than the increase in proportionate operating costs year
on year, providing us with economies of scale as branches mature.
Continue to build the Manappuram brand
Our brand is key to the growth of our business. We believe that we have built a recognizable brand in the rural
and semi-urban markets of India, particularly in the southern states of Kerala, Tamil Nadu, Karnataka and
Andhra Pradesh. We intend to continue to build our brand by using celebrities in our advertising campaigns and
undertaking other marketing efforts on radio, television and outdoor advertising.
Strengthen our technology platform and continue to develop robust risk management procedures and related
systems
Since we plan to expand our geographic reach as well as our scale of operations, we intend to further develop
and strengthen our technology platform to support our growth and improve the quality of our services. We are
focused on improving our comprehensive knowledge base and customer profile and support systems, which in
turn will assist us in the expansion of our business. We also propose to strengthen the technology in our
jewellery appraisal process. We believe that improvements in technology will also reduce our operational and
processing time and thereby improve our operating efficiencies.
In addition, we view risk management as crucial to the expansion of our Gold Loan business. We therefore
continually focus on improving our integrated risk management framework with processes for identifying,
measuring, monitoring, reporting and mitigating key risks, including credit risk, appraisal risk, custodial risk,
market risk and operational risk. We propose to make significant investments in personnel, technology and
infrastructure in order to improve process efficiencies and mitigate business risks. We have recruited individuals
who have significant risk management experience and plan to retain this focus in hiring additional risk
management personnel. Going forward, we plan to continue to adapt our risk management procedures to take
account of trends we have identified, including our loan loss experience. We believe that prudent risk
management policies and development of tailored credit procedures will allow us to expand our Gold Loan
financing business without experiencing significant increases in non-performing assets.
Attract and retain high quality talent
The intellectual capital of our management and finance teams, as well as other professionals in our business, is
critical to our success, and we accordingly intend to continue to focus on attracting and retaining high quality
talent. In order to achieve this, we will continue to capitalize on our strengths in the area of recruiting. In
particular, we plan to consolidate our position as an employer of choice within the NBFC sector. We currently
conduct training programs periodically across our regional training centers. We have also developed and will
continue to develop targeted compensation schemes designed to retain our key management personnel and
professionals, such as offering performance-linked salaries.
New line of business
Pursuant to the approval of our shareholders in the EGM on May 31, 2011, we intend to commence a new line
of business in travel and tourism. Our Company holds an Authorised Dealer Category II license from the RBI
for its FOREX operations. To augment our Company‟s income from such operations, it was thought desirable to
venture into this new line of business. Our Company proposes to act as a travel agent, tour operator, transport
agent and contractor. Further, our Company proposes to arrange and operate tours and to act as representatives
of airlines, railways and arranging road, air, water ticket booking.
42
GENERAL INFORMATION
Manappuram Finance Limited
We were incorporated as a public limited company on July 15, 1992 as “Manappuram General Finance and
Leasing Limited”. Our name was subsequently changed to “Manappuram Finance Limited” on June 22, 2011.
Registered Office
The Company has its registered office at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala.
Registration
Corporate Identification Number: L65910KL1992PLC006623 issued by the Registrar of Companies, Kerala.
Certificate of incorporation No. 09-06623 of 1992 dated July 15, 1992. Fresh Certificate of Incorporation dated
June 22, 2011 for change of name to “Manappuram Finance Limited”.
The Company was issued a certificate for commencement of business on July 31, 1992 by the Registrar of
Companies, Kerala. We received a certificate of registration no. 16.00029 dated May 25, 1998 issued by the
RBI allowing our Company to commence/ carry on the business of a deposit accepting NBFC, under section 45-
IA of the RBI Act. Subsequently our registration was changed to that of a non-deposit accepting NBFC vide
certificate of registration no. B-16.00029 dated March 22, 2011.
Compliance Officer
Mr. C. Radhakrishnan,
Company Secretary
V/104 “Manappuram House”,
Valapad P.O.,
Thrissur 680 567, Kerala
Tel: (91 487) 305 0000
Fax: (91 487) 239 9298
Email: [email protected]
Investors may contact the Registrar to the Issue or the Compliance Officer in case of any pre-issue or post Issue
related issues such as non-receipt of letters of allotment demat credit or refund orders.
Lead Managers
Morgan Stanley India Company Private Limited
18F/19F, Tower 2
One Indiabulls Centre
841, Senapati Bapat Marg,
Mumbai – 400013
Tel: (91 22) 6118 1000
Fax: (91 22) 6618 1040
E-mail: [email protected]
Investor Grievance Email: [email protected]
Website: www.morganstanley.com/indiaofferdocuments
Compliance officer: Mr. Anil Shenoy
Contact Person: Mr. Saurabh Kumar
SEBI Registration No.: INM000011203
A.K. Capital services limited
30-39, Free Press House,
Free Press Journal Marg, 215,
Nariman Point, Mumbai 400 021
Tel: (91 22) 6754 6500 / 6634
Fax: (91 22) 6610 0594
43
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.akcapindia.com
Compliance officer: Mr. Vikas Agarwal
Contact Person: Mr. Hitesh Shah
SEBI Registration No.: INM000010411
Axis Bank Limited
Corporate Office,
Level 5/ E Block,
Bombay Dyeing Mills Compound,
Pandurang Bhudkar Marg, Worli,
Mumbai - 400025
Tel: (91 22) 2425 4556
Fax: (91 22) 4325 4700
E-mail: [email protected]
Investor Grievance Email: [email protected]
Website: www.axisbank.com
Compliance officer: Mr. Advait Majmudar
Contact Person: Mr. Dinkar Rai
SEBI Registration No.: INM000006104
ICICI Securities Limited
ICICI Centre, H.T. Parekh Marg, Churchgate,
Mumbai - 400 020. Maharashtra, India.
Tel.: (91 22) 2288 2460
Fax: (91 22) 2282 6580
E-mail: [email protected]
Investor Grievance Email: [email protected]
Website: www.icicisecurities.com
Compliance officer: Mr. Subir Saha
Contact Person: Mr. Sumit Agarwal
SEBI Registration Number: INM000011179
Co-Lead Managers:
RR Investors Capital Services (P) Limited
133A, Mittal Tower, A Wing,
Nariman Point,
Mumbai-400 021
Tel: (91 22) 2288 6627 / 28
Fax: (91 22) 2285 1925
Email: [email protected]
Investor Grievance Email:[email protected]
Website: www.rrfcl.com
Contact Person: Mr. Brahmdutta Singh
Compliance Officer: Mr. Sandeep Mahajan
SEBI Registration Number: INM000007508
Karvy Investor Services Limited
Regent Chambers, 2nd floor
Nariman Point, Mumbai – 400021
Tel : (91 22) 2289 5000
Fax: (91 22) 3020 4040
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.karvy.com
Contact Person: Mr. Omkar Barve
Compliance Officer: Mr. V. Madhusudan Rao
SEBI Registration No: INM000008365
44
SMC Capitals Limited
3rd Floor, A-Wing, Laxmi Towers,
Bandra Kurla Complex,
Bandra (East), Mumbai 400 051
Tel: (91 22) 6138 3838
Fax: (91 22) 6138 3899
Email: [email protected]
Investor Grievance Email: [email protected]
Website: www.smccapitals.com
Contact Person: Sanjeev Barnwal
Compliance Officer: Sanjeev Barnwal
SEBI Registration No: MB/INM000011427
Debenture Trustee
IL&FS Trust Company Limited
The IL& FS Financial Centre, Plot C-22,G –block
Bandra Kurla Complex,
Bandra East Mumbai 400 051
Tel: (91 22) 2659 3097
Fax: (91 22) 2653 3297
E-mail: [email protected]
Contact Person: Ms. Labanya Mukherjee
SEBI Reg. No. IND000000452
All the rights and remedies of the Bondholders under this Issue shall vest in and shall be exercised by the
appointed Debenture Trustee for this Issue without having it referred to the Bondholders, subject to the terms of
the Debenture Trust Deed. All investors under this Issue are deemed to have irrevocably given their authority
and consent to the Debenture Trustee so appointed by our Company for this Issue to act as their trustee and for
doing such acts and signing such documents to carry out their duty in such capacity. Any payment by our
Company to the Bondholders / Debenture Trustee, as the case may be, shall, from the time of making such
payment, completely and irrevocably discharge our Company pro tanto from any liability to the Bondholders.
For details on the terms of the Debenture Trust Deed, please refer to the section entitled ―Terms of the Issue‖ on
page 144 of this Prospectus.
Registrar to the Issue
Link Intime India Private Limited
C-13, Pannalal Silk Mills Compound
L.B.S. Marg,
Bhandup (West)
Mumbai 400 078
Tel: (91 22) 2596 0320
Fax: (91 22) 2596 0329
E-mail: [email protected]
Investor Grievance Email: [email protected]
Website: www.linkintime.co.in
Contact Person: Mr. Sanjog Sud
SEBI Registration No.: INR000004058
Statutory Auditor
S. R. Batliboi & Associates, Chartered Accountants
2nd Floor, TPL House
Cenotaph Road, Teynampet
Chennai 600 018
Tel: (91 44) 2431 1440
Fax: (91 44) 2431 1450
45
Credit Rating Agency
Credit Analysis & Research Limited
4th Godrej Coliseum,
Somaiya Hospital Road,
Off Eastern Express Highway
Sion (East),
Mumbai – 400 022
Tel: (91 22) 6754 3456
Fax: (91 22) 6754 3457
Brickwork Ratings India Pvt. Ltd.
3rd
Floor, Raj Alkaa Park,
29/3 & 32/2. Kalena Agrahara,
Banerghatta Road,
Bangalore – 569 076
Tel: (91 80) 4040 9940
Fax: (91 80) 4040 9941
Legal Advisor to the Issue
Amarchand & Mangaldas & Suresh A. Shroff & Co.
Peninsula Chambers, Peninsula Corporate Park
Ganpatrao Kadam Marg, Lower Parel
Mumbai 400 013
Tel: (91 22) 2496 4455
Fax: (91 22) 2496 3666
Bankers to the Issue
Axis Bank Limited
IInd Floor, City Centre
Round West,
Thrissur-680 001
Tel: (91 487) 2338 5820
Fax: (91 487) 2338 8550
Email: [email protected]
Contact Person: Pradeep Kumar C.K.
SEBI Registration Number: INB100000017
Dhanlaxmi Bank Limited
Janmabhoomi Bhavan,
Janmabhoomi Marg,
Mumbai – 400 001
Tel: (91 22) 2287 2535
Fax: (91 22) 2287 1637
Email: [email protected]
Website: www. dhanbank.com
Contact Person: Venkataraghavan T.A.
SEBI Registration Number: INB100000025
ICICI Bank Limited
Capital Market Division,
Rajabahadur Mansion,
30, Mumbai Samachar Marg,
Fort, Mumbai 400 001
Tel: (91 22) 6631 0322
Fax: (91 22) 6631 0350
Email: [email protected]
Website: www.icicibank.com
Contact Person: Anil Gadoo
SEBI Registration Number: INB100000004
Yes Bank Limited
3rd Floor, Ion House,
Dr. E. Moses Road,
Mahalaxmi, Mumbai 400 011
Tel: (91 22) 6622 9031
Fax: (91 22) 2497 4875
Email: [email protected]
Website: www.yesbank.in
Contact Person: Mahesh Shirali
SEBI Registration Number: INB100000935
Bankers to our Company
Axis Bank
2nd
Floor, City Centre
Roundwest,
Thrissur – 680 001,
Kerala
Tel: (91 487) 233 5820
Fax: (91 487) 233 8550
Federal Bank Limited
Sakthan Thampuran Nagar,
Thrissur – 680 001,
Kerala
Tel: (91 487) 242 3115
ING Vysya Bank Limited
KR Road, 757/11,
13th
Cross. Jayanagar
BR Bangalore – 560 082 Karnataka
Tel: (91 80) 26712674
Punjab National Bank
Palace Road,
Thrissur – 680 020
Kerala
IDBI Bank Limited
Panampilly Nagar,
Post Bag No, 4253
Kochi – 682 036,
Development Credit Bank
Limited 128/1 Prestige Meridian Annexe,
MG Road,
46
Tel: (91 487) 233 0127
Fax: (91 487) 233 8550
Kerala
Tel: (91 484) 2423115
Bangalore – 560 001,
Karnataka
Tel: (91 80) 6631 0516
Fax: (91 80) 2555 0115
ICICI Bank
2nd Floor, Adonai Tower
SA Road, Kadavantra
Kochi – 682 016,
Kerala
Tel: (91 484) 401 1360
Yes Bank Limited
PMO, Nehru Centre,
Dr. A.B. Road,
Worli, Mumbai - 400018
Tel: (91 22) 6620 9068
Fax: (91 22) 6669 9177
Kotak Mahindra Bank Limited
Zone II, 4th
Floor, Kotak Infiniti,
Building No. 21, Infinity Park
Gen. A.K. Vaidya Marg,
Malad (East), Mumbai - 400097
Tel: (91 22) 6605 4139
Indusind Bank Limited
652-656, Tristar Towers,
Avinashi Road,
Plot No. 24, Phase 2
Coimbatore - 641037
Tel: (91422)221 3551
Fax: (91 422) 221 2770
Bank of India
Subhashchanddra Bose Road,
Jawahar Nagar(E), Ponnurunni,
Vyttila P.O., Kochi – 682 019
Tel: (91 484) 230 2364
Catholic Syrian Bank
Round South
Thrissur, Kerala
Tel: (91 487) 242 5890
Jammu & Kashmir Bank
787, Karim Mansion,
Mount Road, Chennai
Tamil Nadu – 600 002
Tel: (91 44) 2852 7631
UCO Bank
1st Floor, Mafatlal Centre,
Nariman Point,
Mumbai – 400 021
Tel: (91 22) 4054 9191
The South Indian Bank Limited
Thrissur, Kerala
Tel: (91 487) 242 4215
HDFC Bank Limited
SL Plaza, First Floor,
Palarivattom, Kochi
Tel: (91 484) 443 3206
Fax: (91 484) 443 3205
Karnataka Bank
351 Avvai Shanmugam (Lloyds)
Road,
Gopalapuram,
Chennai – 600 086
Tel: (91 44) 2345 3229
The Dhanalaxmi Bank Limited
Thrissur, Kerala
Tel: (91 487) 232 1618
Lakshmi Vilas Bank
Thrissur, Kerala
Tel: (91 487) 233 1053
Syndicate Bank
Palace Road,
Thrissur, Kerala – 680 020
Tel: (91 487) 233 1130
Fax: (91 487) 233 1422
Karur Vysya Bank
First Floor, Amritha Towers,
KPCC Junction, M.G. Road,
Ernakulam - 682011
Tel: (91 484) 236 6283
Fax: (91 484) 238 2291
State Bank of India
1st Floor, Vankarath Towers,
By-pass Junction, Padivattom,
Kochi – 682024, Kerala
Tel: (91 484) 234 0100
Fax: (91 484) 234 1100
Corporation Bank Limited
MMKS Trust Building,
Star Junction,
Mattanchery – 682002, Kerala
Tel: (91 484) 222 4576
Central Bank of India
Metro Palace1st Floor,
Kochi – 682018, Kerala
Tel: (91 484) 239 8121
Fax: (91 484) 239 8132
Union Bank of India
Shakthan Arcade,
Thrissur – 680 001, Kerala
Tel: (91 487) 242 0330
Fax: (91 484) 242 1590
Ratnakar Bank
One Indiabulls Centre,
Tower 2, 6th
Floor,
841,Senapati Bapat Marg,
Mumbai 400 013,
Tel: (91 80) 2550 4323
Central Bank of India
Metro Palace1st Floor,
Kochi – 682018, Kerala
Tel: (91 484) 239 8121
Fax: (91 484) 239 8132
Indian Overseas Bank
Thrissur, Kerala
Tel: (91 487) 233 1295
DBS Bank Limited
Salarpuria Windsor, No. 3
Ulsoor Road,
Bangalore – 560 042,
Tel: (91 80) 6632 8828
Barclays Bank
20/21 Kamrajar Salai,
Kanchipuram – 631 501
Tel: (91 44) 6720 2000
47
Andhra Bank
No. 17 Mill Road,
Coimbatore – 641 001
Tel: (91 422) 230 0504
Dena Bank
C-10, G Block,
Bandra Kurla Complex
Bandra (East),
Mumbai – 400 051,
Tel: (91 22) 2654 5003
State Bank of Bikaner & Jaipur
Sir P.M. Road,
United India Life Building,
Fort, Mumbai – 400 023
Tel: (91 22) 2266 3189
State Bank of Travancore
P.b. No. 3689, Malankara Centre,
Shenoy‟s Junction,
M.G. Road,
Ernakulam – 682 035, Kerala
Tel: (91 44) 641 5211
Lead Brokers to the Issue
Morgan Stanley India Financial
Services Private Limited
18F/19F, Tower 2,
One India Bulls Centre,
841, Senapati Bapat Marg,
Mumbai 400 013
Tel: (91 22) 6118 1000
Fax: (91 22) 6118 1034
Email: pwmindia.
Contact Person: Mr. Rahul Jaggia
SEBI Registration Number:
INB011301529
A.K. Stockmart Private Limited,
30-39 Free Press House. 3rd Floor,
Free Press Journal Marg, 215,
Nariman Point,
Mumbai - 400021
Tel: (91 22) 6754 6500
Fax: (91 22) 6754 4666
Email: [email protected]
Contact Person: Ankit Gupta
SEBI Registration Number:
INB231269532
ICICI Securities Limited,
ICICI Centre,
H.T. Parekh Marg,
Churchgate,
Mumbai 400020
Tel: (91 22) 2288 2460
Fax: (91 22) 2282 6580
Email: project.
Contact Person: Mites Shah
SEBI Registration
Number:INB011286854
RR Equity Brokers Private
Limited
47, MM Road,
Rani Jhansi Marg, Jhandewalan,
New Delhi - 110055
Tel: (91 11) 2363 6363
Fax: (91 11) 2363 6743
Email: [email protected]
Contact Person: Manish Agrawal
SEBI Registration Number:
INB011219632
Karvy Stock Broking Limited
“Karvy House”,
46, Avenue 4, Street No. 1,
Banjara Hills,
Hyderabad – 500034
Tel: (91 40) 2331 2454
Fax: (91 40) 6662 1474
Email: [email protected]
Contact Person: Ramapriyan P.B.
SEBI Registration Number:
INB010770130
SMC Global Securities Ltd.
11/6B, Shanti Chambers,
Pusa Road,
New Delhi, 110005,
Tel: (91 11) 3011 1000
Fax: (91 11) 2575 4365
Email:
Contact Person: Rakesh Gupta
SEBI Registration Number:
INB011343937
Bajaj Capital Investor Services
Limited
5th Floor, Bajaj House,
97 Nehru Place,
New Delhi - 110019
Tel: (91 11) 6616 1111
Fax: (91 11) 6660 8888
Email: [email protected]
Contact Person: Surajit Misra
SEBI Registration Number:
INB231269334
Edelweiss Broking Limited
Edelweiss House,
Off C.S.T. Road,
Kalina, Mumbai-400 098
Tel: (91 22) 6747 1340
Fax: (91 22) 6747 1347
Email:
Contact Person: Nirmal Rewaria
SEBI Registration Number:
INB011311637
Enam Securities Private Limited
Khatau Building, 2nd Floor,
44 Bank Street, Fort,
Mumbai – 400001
Tel: (91 22) 2267 7901
Fax: (91 22) 2266 5613
Email: [email protected]
Contact Person: Ajay Sheth
SEBI Registration Number:
INB011287852
Geojit BNP Paribas Financial
Services Limited
5th Floor, Finance Towers,
Kaloor, Kochi,
Pin 682 017
HDFC Securities Ltd.
Office Floor 8, “I Think” Building,
Jolly Board Campus Opposite
Crompton Greaves Factory,
Kanjurmarg (East)
India Infoline Limited
8th Floor, B-Wing, Kamala Hills
Compound,
Off Senapati Bapat Marg,
Lower Parel,
48
Tel: (91 484) 240 5501
Fax: (91 484) 240 5618
Email: [email protected]
Contact Person: K. Venkitesh
SEBI Registration Number:
INB011337326
Mumbai – 400042
Tel: (91 22) 3075 3442
Fax: (91 22) 3075 3435
Email: [email protected]
Contact Person: Sunil Raula
SEBI Registration Number:
INB011109437
Mumbai, 400013
Tel: (91 22) 4646 4753
Fax: (91 22) 2493 1073
Email:
Contact Person: Abhinay Chikne
SEBI Registration Number:
INB011097533
Integrated Securities Limited
15, 1st Floor, Modern House,
Dr. V.B. Gandhi Marg, Fort,
Mumbai - 400023
Tel: (91 22) 4066 1800
Fax: (91 22) 2287 4676
Email: [email protected]
Contact Person: V. Krishnan
SEBI Registration Number:
INB231271835
JM Financial Services Private
Limited
141 Maker Chamber III, 13th
Floor,
Nariman Point, Mumbai 400 021
Tel: (91 22) 3021 3550
Fax: (91 22) 2266 5902
Email: [email protected]
Contact Person: Rohit Singh
SEBI Registration Number:
INB011054831
Kotak Securities Ltd.
3rd Floor, Nirlon House,
Dr. Annie Besant Road, Worli,
Mumbai - 400025
Tel: (91 22) 6652 9191
Fax: (91 22) 6661 7041
Email: [email protected]
Contact Person: Sanjeeb Kumar
Das
SEBI Registration
Number:010808153
SPA Securities Limited
101-A, 10th Floor,
Mittal Court, Nariman Point,
Mumbai – 400021
Tel: (91 22) 2280 1240
Fax: (91 22) 2657 3608
Email:
Contact Person: Rajesh Gandhi
SEBI Registration Number:
INB011178234
Credit Rating and Rationale
The Bonds proposed to be issued by our Company have been rated by CARE and Brickwork. CARE has vide its
letter dated June 21, 2011 assigned a rating of “CARE AA-”. Brickwork has vide its letter no.
BWR/BLR/RA/2011-2012/0075 dated July 1, 2011 assigned a rating of “BWR AA-” to the Bonds in the Issue.
For details in relation to the rationale for the credit rating, please refer to the Annexure to this Prospectus.
Minimum Subscription
If our Company does not receive the minimum subscription of 75% of the base issue amount of the Issue, being
Rs. 3,000 million, on or before the closure of the Issue, the entire subscription amount shall be refunded to the
applicants within 15 days from the date of closure of the Issue. If there is a delay in the refund of the
subscription amount by more than eight days after our Company becomes liable to pay the same, our Company
will pay interest for the period of delay, at rates prescribed under sub-section (2) and (2A) of Section 73 of the
Companies Act.
Issue Programme
The Issue shall remain open for subscription during the banking hours for the period indicated below, except
that the Issue may close on such earlier date as may be decided by our Company. In the event of an early closure
of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors through
newspaper advertisements on the day of such earlier date of Issue closure.
ISSUE OPENS ON August 18, 2011 ISSUE CLOSES ON September 5, 2011
49
CAPITAL STRUCTURE
Details of share capital
The share capital of our Company as at the date of this Prospectus is set forth below:
Amount (in Rs. unless otherwise stated)
Authorised share capital
980,000,000 Equity Shares of Rs. 2 each 1,960,000,000
400,000 preference shares of Rs. 100 each 40,000,000
Issued, subscribed and paid up share capital
833,748,376 Equity Shares of Rs. 2 each, fully paid up 1,667,496,752
Securities premium account** 13,590.57 (in million)
** Post adjustments on account of Merger with MAFIT, utilisation towards Bonus issues and share issue
expenses.
Notes to Capital Structure
1. Equity Share capital history of our Company as of August 4, 2011:
Date of
Allotment
No. of equity
shares
Face
Value
(Rs.)
Issue
price per
equity
share
(Rs.)
Nature of
consideration
Type of
Allotment
Cumulative
no of equity
shares
Cumulative
paid-up
equity share
capital
Equity share
equity
premium
(Rs.)
Gross
Cumulative
share premium
(Rs.)
June 30, 1992 1,250,000 10 10.00 Cash Promoter
contribution
1,250,000 12,500,000 Nil -
August 21,
1995
1,750,000 10 10.00 Cash Public issue 3,000,000 30,000,000 Nil -
August 1, 2003 1,500,000 10 10.00 Cash Rights issue 4,500,000 45,000,000 Nil -
July 30, 2005 1,000,000 10 25.00 Cash Preferential
issue
5,500,000 55,000,000 15 15,000,000
January 15,
2007
5,500,000 10 10.00 Nil Bonus issue 11,000,000 110,000,000 Nil 15,000,000
June 21, 2008 3,283,582 10 142.53 Cash Conversion of
preference
share
14,283,582 142,835,820 132.53 450,173,122
March 16, 2009 2,972,246 10 166.62 Cash Conversion of
preference
share
17,255,828 172,558,280 156.62 915,686,291
January 11,
2010
11,677,382 10 10.00 Nil Allotment on
merger
28,933,210 289,332,100 Nil 9156862,91
March 4, 2010 3,540,420 10 691.00 Cash Qualified
institutional
placement
32,473,630 324,736,300 681.00 3,326,712,311
March 18, 2010 1,564,892 10 166.62 Cash Warrant
conversion
34,038,522 340,385,220 156.62 3,571,805,696
April 22, 2010 170,192,610 2 2.00 Nil Split of shares 170,192,610 340,385,220 Nil 3,571,805,696
May 11, 2010 170,192,610 2 2.00 Nil Bonus issue 340,385,220 680,770,440 Nil 3,571,805,696
September 9,
2010
13,210,039 2 75.69 Cash Preferential
issue
353,595,259 707,190,518 73.70 4,545,385,570
September 28,
2010
3,471,000 2 33.12 Cash Employee
stock option
357,066,259 714,132,518 31.12 4,653,403,090
November 18,
2010
59,523,809 2 168.00 Cash Qualified
institutional
placement
416,590,068 833,180,136 166.00 14,534,355,384
March 19, 2011 284,120 2 33.12 Cash Employee
stock option
416,874,188 833,748,376 31.12 14,543,197,199
June 11, 2011 41,6874188 2 - Nil Bonus 833,748,376 1,667,496,752 Nil 14,543,197,199
This, being an issue of Bonds, will not impact the equity share capital of our Company.
50
2. Shareholding pattern of our Company as on August 4, 2011:
S.
No.
Category of
shareholder
No. of
Shareholders
Total no. of
Equity Shares
No. of
Equity
Shares held
in
demateriali
sed form
Total shareholding as
a percentage of total
number of shares
Equity Shares pledged or
otherwise encumbered
% of
Equity
Shares
(A+B)
% of
Equity
Shares
(A+B+C
)
Number of
Equity
Shares
% No. of
Equity
Shares
(A) Promoter and Promoter Group
(1) Indian
(a) Individuals/ Hindu
Undivided Family
7 303992774 303992774 36.46 36.46 63152220 20.77
(b) Central Government/
State Government(s)
0 0 0 0.00 0.00 Nil Nil
(c) Bodies Corporate 0 0 0 0.00 0.00 Nil Nil
(d) Financial Institutions/
Banks
0 0 0 0.00 0.00 Nil Nil
(e) Any Others(Specify) 0 0 0 0.00 0.00 Nil Nil
Sub-Total (A)(1) 7 303992774 303992774 36.46 36.46 63152220 20.77
(2) Foreign
(a) Individuals (Non-
Resident Individuals/
Foreign Individuals)
0 0 0 0.00 0.00 Nil Nil
(b) Bodies Corporate 0 0 0 0.00 0.00 Nil Nil
(c) Institutions 0 0 0 0.00 0.00 Nil Nil
(d) Any Other (specify) 0 0 0 0.00 0.00 Nil Nil
Sub-Total (A)(2) 0 0 0 0.00 0.00 Nil Nil
Total Shareholding
of Promoter and
Promoter Group
(A)= (A)(1)+(A)(2)
7 303992774 303992774 36.46 36.46 63152220 20.77
(B) Public shareholding
(1) Institutions
(a) Mutual Funds/UTI 11 12219828 12219828 1.47 1.47 N.A N.A
(b) Financial Institutions/
Banks
0 0 0 0.00 0.00 N.A N.A
(c) Central Government/
State Government(s)
0 0 0 0.00 0.00 N.A N.A
(d) Venture Capital
Funds
0 0 0 0.00 0.00 N.A N.A
(e) Insurance Companies 0 0 0 0.00 0.00 N.A N.A
(f) Foreign Institutional
Investors
70 255049977 255049977 30.59 30.59 N.A N.A
(g) Foreign Venture
Capital Investors
0 0 0 0.00 0.00 N.A N.A
(h) Any Other (specify) 0 0 0 0.00 0.00 N.A N.A
Sub-Total (B)(1) 81 267269805 267269805 32.06 32.06 N.A N.A
(2) Non-institutions N.A N.A
(a) Bodies Corporate 531 9044399 9040299 1.08 1.08 N.A N.A
(b) Individuals -
Individual
shareholders holding
nominal share capital
up to Rs. 1 lakh.
37600 49336879 39579198 5.92 5.92 N.A N.A
Individual
shareholders holding
nominal share capital
in excess of Rs. 1
lakh.
223 58594705 55904785 7.03 7.03 N.A N.A
(c) Any Other (specify) N.A N.A
Trusts 3 5858 5858 0.00 0.00 N.A N.A
Directors & their
relatives
29 18897484 18635484 2.27 2.27 N.A N.A
Non resident Indians 926 5679010 5099010 0.68 0.68 N.A N.A
Clearing members 245 1333022 1333022 0.16 0.16 N.A N.A
Hindu Undivided
Families
256 730060 730060 0.09 0.09 N.A N.A
Foreign Corporate
Bodies
3 118524380 118524380 14.22 14.22 N.A N.A
NRI Directors 1 340000 340000 0.04 0.04 N.A N.A
Sub-Total (B)(2) 39817 262485797 249192096 31.48 31.48 N.A N.A
Total Public
Shareholding (B)=
(B)(1)+(B)(2)
39898 529755602 516461901 63.54 63.54 N.A N.A
TOTAL (A)+(B) 39905 833748376 820454675 100.00 100.00 63152220 7.57
(C) Shares held by
Custodians and
against which
Depository Receipts
have been issued
0 0 0 0.00 0.00 N.A N.A
51
S.
No.
Category of
shareholder
No. of
Shareholders
Total no. of
Equity Shares
No. of
Equity
Shares held
in
demateriali
sed form
Total shareholding as
a percentage of total
number of shares
Equity Shares pledged or
otherwise encumbered
% of
Equity
Shares
(A+B)
% of
Equity
Shares
(A+B+C
)
Number of
Equity
Shares
% No. of
Equity
Shares
GRAND TOTAL
(A)+(B)+(C)
39905 833748376 820454675 100.00 100.00 63152220 7.57
Pursuant to a resolution passed at the EGM dated April 22, 2010 the face value of one equity share of
Rs. 10 each was split and sub-divided into equity shares of Rs. 2 each. The record date for the above
split was May 4, 2010.
3. List of top 10 holders of Equity Shares of our Company as on August 4, 2011:
Sr.
No.
Name of the
Shareholder
Address Total Equity
Shares held
Percentage of the
shareholding (%)
i. V.P. Nandakumar Padma Saroj
Vazhappully House
P.O. Valapad
Thrissur Kerala
Pin-680567
193,119,056 23.16
ii. Hudson Equity
Holdings Limited
C/o Kotak Mahindra Bank
Limited
Kotak Infiniti,
Bldg. No.21,
6th Flr Zone IV,
Custody Services,
Infinity Park
Gen. AK Vaidya Marg,
Malad (E), Mumbai
Pin-400097
71,805,840 8.61
iii. V.P. Nandakumar along
with Sushama
Nandakumar
Padma Saroj
Vazhappully House
P.O. Valapad
Thrissur Kerala
Pin-680567
56,873,640 6.82
iv. Smallcap World Fund
Inc.
Deutsche Bank AG
DB House,
Hazarimal Somani Marg,
Post Box No. 1142,
Fort Mumbai
Pin-400001
54,812,814 6.57
v. AA Development
Capital India Fund 1,
LLC
HSBC Securities Services
2nd floor ''Shiv'',
Plot no.139-140b
Western Exp Highway,
Sahar Rd Junction,
Vile Parle (E),
Mumbai - 400057
43,568,540 5.22
vi. Vazhoor
Sankaranarayanan
Sushama
Vazhapully House
Valapad P.O
Trichur - 680567
26,420,078 3.17
vii. Sushama Nandakumar Padma Saroj
Vazhappully House
P.O. Valapad
Thrissur Kerala
21,580,000 2.59
52
Sr.
No.
Name of the
Shareholder
Address Total Equity
Shares held
Percentage of the
shareholding (%)
Pin-680567
viii. Copthall Mauritius
Investment Limited
J.P.Morgan Chase Bank N.A.
India Sub Custody
6th Floor, Paradigm B
Mindspace, malad (W),
Mumbai - 400064
21,209,014 2.54
ix. Sloane Robinson LLP
A/c SR Global
HSBC Securities Services
2nd floor ''Shiv'',
Plot no.139-140b
Western Exp Highway,
Sahar Rd Junction,
Vile Parle (E),
Mumbai – 400057
17,305,668 2.08
x. CLSA (Mauritius)
Limited
Citibank N.A. Custody
Services, 3rd
Floor, Trent
house, G Block, Plot No 60,
BKC, Bandra (e), Mumbai –
400051
15,389,565 1.85
TOTAL 522,084,215 62.61
4. List of top 10 holders of different series of non-convertible debentures issued on private placement
basis of our Company as on August 4, 2011:
MFL Secured NCD- 12.25% - Series B-1
Maturity Date: March 28, 2014
ISIN – INE 522D07073
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total
debentures
held
Percentage of
the holding (%)
i. Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex, Suman
Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
1,500 75.75
ii. Bank of Maharashtra Apeejay House, 1st Floor,
130 Dr. V.B. Gandhi Marg,
Fort,
Mumbai – 400001
300 15.15
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
90 4.55
iv. Bank of Maharashtra
Employees Pension
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
90 4.55
TOTAL 1,980 100
53
MFL Secured NCD- 12.25%- Series B-2
Maturity Date: March 28, 2015
ISIN – INE 522D07081
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
i. Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex, Suman
Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
1,500 75.75
ii. Bank of Maharashtra Apeejay House, 1st Floor,
130 Dr. V.B. Gandhi Marg,
Fort,
Mumbai – 400001
300 15.15
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
90 4.55
iv. Bank of Maharashtra
Employees Pension
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
90 4.55
TOTAL 1,980 100
MFL Secured NCD- 12.25%- Series B-3
Maturity Date: March 28, 2016
ISIN – INE 522D07099
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
i. Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex, Suman
Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
2,000 75.75
ii. Bank of Maharashtra Apeejay House, 1st Floor,
130 Dr. V.B. Gandhi Marg,
Fort,
Mumbai – 400001
400 15.15
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
120 4.55
iv. Bank of Maharashtra
Employees Pension Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
120 4.55
54
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
TOTAL 2,640 100
MFL Secured NCD- 12.25% - Series B-4
Maturity Date: March 31, 2014
ISIN – INE 522D07115
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
i. UCO Bank, Treasury Branch,
UCO Building,
Mezzanine Floor,
359 Dr. DN Road,
Fort,
Mumbai - 400001
750 76.22
ii. Dena Bank Employees
Gratuity Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
114 11.58
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
60 6.10
iv. Bank of Maharashtra
Employees Pension Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
60 6.10
TOTAL 984 100
MFL Secured NCD- 12.25% - Series B-5
Maturity Date: March 31, 2015
ISIN – INE 522D07123
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
i. UCO Bank, Treasury Branch,
UCO Building,
Mezzanine Floor,
359 Dr. DN Road,
Fort,
Mumbai - 400001
750 76.22
ii. Dena Bank Employees
Gratuity Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
114 11.58
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
60 6.10
iv. Bank of Maharashtra
Employees Pension
1501, Shivaji Nagar,
Lokmangal,
60 6.10
55
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
Fund Pune - 411005
TOTAL 984 100
MFL Secured NCD- 12.25%- Series B-6
Maturity Date: March 31, 2016
ISIN – INE 522D07131
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total
debentures held
Percentage of the
holding (%)
i. UCO Bank, Treasury Branch,
UCO Building,
Mezzanine Floor,
359 Dr. DN Road,
Fort,
Mumbai - 400001
1,000 76.22
ii. Dena Bank Employees
Gratuity Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
152 11.58
iii. Bank of Maharashtra
Employees Provident
Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
80 6.10
iv. Bank of Maharashtra
Employees Pension Fund
1501, Shivaji Nagar,
Lokmangal,
Pune - 411005
80 6.10
TOTAL 1,312 100
MFL Secured NCD-10.65%
Maturity Date: March 3, 2012
ISIN – INE 522D07040
Face Value: Rs. 1,000,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i. Reliance Capital Trustee
Co. Ltd. A/c
Reliance Floating Rate
Fund – Short Plan
Deutsche Bank AG,
DB House, Hazarimal
Somani Marg,
Post Box No. 1142, Fort,
Mumbai - 400001
500 50.00
ii. Hero Honda Motors
Limited
HDFC Bank Limited,
Custody Services,
Lodha – I Think Techno
Campus,
Off Floor 8, Kanjunmarg
(E)
Mumbai - 400042
250 25.00
iii. Nomura Capital (India)
Limited
HSBC Securities Services,
2nd
Floor, Shiv, Plot No.
139-140B,
250 25.00
56
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
Western Express Highway,
Saghar Road Junction,
Ville Parle (E),
Mumbai - 400057
TOTAL 1,000 100
MFL Secured NCD-9.25%
Maturity Date: February 18, 2012
ISIN – INE 522D07024
Face Value: Rs. 1,000,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i. Bank of India Treasury Branch,
Head Office, Star House,
7th Floor,
Bandra Kurla Complex,
Bandra (East),
Mumbai - 400051
250 100.00
MFL Secured NCD-9.00%
Maturity Date: August 16, 2011
ISIN – INE 522D07016
Face Value: Rs. 1,000,000
Sr.
No.
Name of the
debenture holder
Address Total
debentures
held
Percentage of the
holding (%)
i. Central Bank of India Central Bank of India,
Treasury Department,
Chandramukhi Building,
Nariman Point,
Mumbai - 400021
250 100.00
MFL Secured NCD-12.00%%- Series A-1
Maturity Date: March 28, 2013
ISIN – INE 522D07057
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total
debentures held
Percentage of the
holding (%)
i. Corporation Bank Corporation Bank, General
Account,
Investment Division,
15 Mittal Chambers, 1st
Floor,
Nariman Point,
Mumbai - 400021
1000 100.00
57
MFL Secured NCD-12.00%- Series A-2
Maturity Date: March 28, 2014
ISIN – INE 522D07065
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total
debentures held
Percentage of the
holding (%)
i. Corporation Bank Corporation Bank,
General Account,
Investment Division,
15 Mittal Chambers, 1st
Floor,
Nariman Point,
Mumbai - 400021
1000 100.00
MFL Secured NCD-12.60%
Maturity Date: June 29, 2012
ISIN – INE 522D07107
Face Value: Rs. 1,000,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
i. Reliance Capital
Trustee Co. Ltd. A/c
Reliance Floating
Rate Fund – Short
Plan
Deutsche Bank AG,
DB House, Hazarimal
Somani Marg,
Post Box No. 1142, Fort,
Mumbai - 400001
1000 100.00
MFL Secured NCD- 12%
Maturity Date: May 15, 2012
ISIN – INE 522D07149
Face Value: Rs. 1,000,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
i Morgan Stanley
Investments
(Mauritius) Limited
HSBC Securities Services
2nd floor ''Shiv'',
Plot no.139-140b
Western Exp Highway,
Sahar Rd Junction,
Vile Parle (E),
Mumbai - 400057
500 100.00
TOTAL 1,000 100
MFL Secured NCD- 12.25%
Maturity Date: May 27, 2014
ISIN – INE 522D07156
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
i Akshay Kumar
Bhatia and Aruna
Bhatia
GR2, Ground Floor,
Prime Beach I,
Gandhigram Road,
Juhu, Santacruz (West),
60 95.24
58
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
Mumbai – 400049
ii Amit Asharatan
Pachisia and
Asharatan Shivchand
Pachisia
11, Dream Queen,
V.P. Road,
Santacruz (West),
Mumbai 400054
3 4.76
TOTAL 63 100
MFL Secured NCD- 12.25%
Maturity Date: May 27, 2015
ISIN – INE 522D07164
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
i Akshay Kumar
Bhatia and Aruna
Bhatia
GR2, Ground Floor,
Prime Beach I,
Gandhigram Road,
Juhu, Santacruz (West),
Mumbai – 400049
60 95.24
ii Amit Asharatan
Pachisia and
Asharatan Shivchand
Pachisia
11, Dream Queen,
V.P. Road,
Santacruz (West),
Mumbai 400054
3 4.76
TOTAL 63 100
MFL Secured NCD- 12.25%
Maturity Date: May 27, 2016
ISIN – INE 522D07172
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the
holding (%)
i Akshay Kumar Bhatia
and Aruna Bhatia
GR2, Ground Floor,
Prime Beach I,
Gandhigram Road,
Juhu, Santacruz (West),
Mumbai – 400049
80 95.24
ii Amit Asharatan
Pachisia and
Asharatan Shivchand
Pachisia
11, Dream Queen,
V.P. Road,
Santacruz (West),
Mumbai 400054
4 4.76
TOTAL 84 100
59
MFL Secured NCD- 12.50%
Maturity Date: May 27, 2014
ISIN – INE 522D07180
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
i Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex,
Suman Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
2,400 82.47
ii Bank of Maharashtra Apeejay House, 1st
Floor,
130 Dr. V.B. Gandhi
Marg,
Fort,
Mumbai – 400001
300 10.31
iii Dena Bank
Employee‟s Provident
Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
105 3.61
iv Dena Bank
Employee‟s Pension
Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
105 3.61
TOTAL 2,910 100
MFL Secured NCD- 12.50%
Maturity Date: May 27, 2015
ISIN – INE 522D07198
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
i Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex,
Suman Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
2,400 82.47
ii Bank of Maharashtra Apeejay House, 1st
Floor,
130 Dr. V.B. Gandhi
Marg,
Fort,
Mumbai – 400001
300 10.31
iii Dena Bank
Employee‟s
Provident Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
105 3.61
60
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
Mumbai - 400056
iv Dena Bank
Employee‟s Pension
Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
105 3.61
TOTAL 2,910 100
MFL Secured NCD- 12.50%
Maturity Date: May 27, 2016
ISIN – INE 522D07206
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
i. Axis Bank Limited A Wing, 3rd
Floor,
Bezzola Complex,
Suman Nagar,
Sion Trombay Road,
Chembur,
Mumbai - 400071
3,200 82.47
ii. Bank of Maharashtra Apeejay House, 1st
Floor,
130 Dr. V.B. Gandhi
Marg,
Fort,
Mumbai – 400001
400 10.31
iii. Dena Bank
Employee‟s
Provident Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
140 3.61
iv. Dena Bank
Employee‟s Pension
Fund
Sharda Bhavan,
1st Floor,
V.M. Marg,
Juhu Ville Parle
Mumbai - 400056
140 3.61
TOTAL 3,880 100
MFL Secured NCD- 12%
Maturity Date: May 27, 2013
ISIN – INE 522D07214
Face Value: Rs. 100,000
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
i. Moiz Vaswadawala
and Anisa Moiz
Vaswadawala
A – 1303, Floor 13,
2 Infinity,
CS 103, Shivdas Chapsi
Marg,
5 50.00
61
Sr.
No.
Name of the
debenture holder
Address Total debentures
held
Percentage of the holding
(%)
Mazgaon,
Mumbai – 400 010
ii. Heminiben Jariwala
and Pareshbhai
Jariwala
Zenith Sil Mills Pvt. Ltd.
Vadtal Devdi Road,
Surat – 395 008
5 50.00
TOTAL 10 100
MFL Secured NCD- 12%
Maturity Date: May 27, 2014
ISIN – INE 522D07222
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i Moiz Vaswadawala and
Anisa Moiz Vaswadawala
A – 1303, Floor 13,
2 Infinity,
CS 103, Shivdas
Chapsi Marg,
Mazgaon,
Mumbai – 400 010
5 50.00
ii Heminiben Jariwala and
Pareshbhai Jariwala
Zenith Sil Mills Pvt.
Ltd.
Vadtal Devdi Road,
Surat – 395 008
5 50.00
TOTAL 10 100
MFL Secured NCD- 12%
Maturity Date: June 13, 2012
ISIN – INE 522D07230
Face Value: Rs. 1,000,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i Kotak Mahindra Trustee
Company Limited A/c
Kotak Credit Opportunities
Fund
DB House,
Hazarimal Somani
Marg,
Post Box No. 1142,
Fort Mumbai
Pin-400001
600 60.00
ii Kotak Mahindra Trustee
Company Limited
DB House,
Hazarimal Somani
Marg,
Post Box No. 1142,
Fort Mumbai
Pin-400001
400 40.00
TOTAL 1,000 100
62
MFL Secured NCD- 12.25%
Maturity Date: June 14, 2013
ISIN – INE 522D07248
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i Oriental Bank of
Commerce
Treasury Department,
A 30 33 A-Block,
1st
Floor, Connaught
Place,
New Delhi – 110 001
500 100
MFL Secured NCD- 12.25%
Maturity Date: June 14, 2014
ISIN – INE 522D07255
Face Value: Rs. 100,000
Sr.
No.
Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i Oriental Bank of
Commerce
Treasury Department,
A 30 33 A-Block,
1st
Floor, Connaught
Place,
New Delhi – 110 001
500 100
MFL Secured NCD- 12.25%
Maturity Date: June 17, 2014
ISIN – INE 522D07263
Face Value: Rs. 100,000
Sr. No. Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i. Bank of Maharashtra
Employees Pension
1501, Lokmangal,
Shivajinagar,
Pune – 411 005
150 50.00
ii. Bank of Maharashtra
Employees Gratuity
1501, Lokmangal,
Shivajinagar,
Pune – 411 005
150 50.00
TOTAL 300 100
MFL Secured NCD- 12.25%
Maturity Date: June 17, 2015
ISIN – INE 522D07271
Face Value: Rs. 100,000
Sr. No. Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i. Bank of Maharashtra
Employees Pension
1501, Lokmangal,
Shivajinagar,
Pune – 411 005
150 50.00
ii. Bank of Maharashtra 1501, Lokmangal,
Shivajinagar,
150 50.00
63
Sr. No. Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
Employees Gratuity Pune – 411 005
TOTAL 300 100
MFL Secured NCD- 12.25%
Maturity Date: June 17, 2016
ISIN – INE 522D07289
Face Value: Rs. 100,000
Sr. No. Name of the debenture
holder
Address Total debentures
held
Percentage of the
holding (%)
i. Bank of Maharashtra
Employees Pension
1501, Lokmangal,
Shivajinagar,
Pune – 411 005
200 50.00
ii. Bank of Maharashtra
Employees Gratuity
1501, Lokmangal,
Shivajinagar,
Pune – 411 005
200 50.00
TOTAL 400 100
5. List of top 10 holders of different series of non-convertible debentures issued on retail basis of our
Company as on August 4, 2011:
MFL Retail NCDs
Face Value: Rs. 1,000
Sr.
No.
Name of the holder Address Total units held Percentage of
the holding (%)
i. A.R. Chadha & Co India
Private limited
Off No:8,
1st Floor,
Atma Ram Mansion,
Connaught Circus 32,000 1.60
ii. M/s Atma Ram Properties
Pvt. Ltd.
Off No:8,
1st Floor,
Atma Ram Mansion,
Connaught Circus 20,000 1.00
iii. Amforge Industries
Limited
108-111 Rahja Temple,
Sree Press Journal Marg. 20,000 1.00
iv. Pushpabai K. Seksaria Seksaria Chambers, 4th
floor
139, Nagindas Master
Road,
Fort, Mumbai 10,000 0.50
v. Ramadas M.R. Pillai Manakkattampally,
Muhamma P. O.,
Trivandrum 6,700 0.33
vi. Jitha Prasad T.C.24/934, Brindavan,
Thycaud, Trivandrum 5,000 0.25
vii. Som Mittal F15 Ground Floor,
Hauz Khas Enclave,
5,000 0.25
64
Sr.
No.
Name of the holder Address Total units held Percentage of
the holding (%)
Hauz Khas, Bangalore
viii. Krishna Prasad T.C.24/934, Brindavan,
Thycaud, Trivandrum 5,000 0.25
ix. Bala Mahadevan 301,Shanti Nilaya
Apartments,
House No.60,
15th Cross Malleshwaram,
Bangalore 4,191 0.21
x. Srawan Kumar Bagla No-11,Bride Street,
LangFord,
C M P Centre & School,
Bangalore 4,000 0.20
TOTAL 111,891 5.59
6. List of top 10 holders of different series of subordinated debentures of our Company as on August 4,
2011:
MFL Subordinated Debentures
Face Value: Rs. 1,000
Sr.
No.
Name of the holder Address Total units held Percentage of the
holding (%)
i. Lathika Vijayaraghava Kokkala,
Thrissur
10,300 0.51
ii. Bright Credits and Real
Estates (P) Ltd.
St. Thomas College
Road,
Thrissur
10,000 0.49
iii. Bright Kuries and Loans
Pvt. Ltd.
St. Thomas College
Road,
Thrissur
2,500 0.12
iv. M. Vinod Chandran 4/450 Gul Mohar
House,
Manikkassery
2,300 0.11
v. Xavier K.P. Kallookaran H. No.
I/921/A, Padamugal,
Kakkanad,
Ernakulam, Kerala
2,000 0.10
vi. Mandaralakshmi Swandanam,
Kalladikode, Palakkad
2,000 0.10
vii. Juguna. G.
Panikkaparambil
Saw Mill road,
Koorkenchery,
Thrissur
2,000 0.10
viii. M.V. Premkumar Marath House, q
Edamuttam, Thrissur 1,994 0.10
ix. Sarita Rahul Sable B Flat No, 401,
Florida County,
Keshav Nagar,
Mundhwa, Pune
1,600 0.08
x. Kunjimoithu Pazhampulliparambil
House,
Pazhuvil, Thrissur 1,549 0.08
65
Sr.
No.
Name of the holder Address Total units held Percentage of the
holding (%)
TOTAL 36,243 1.79
7. List of top 10 holders of commercial papers of our Company as on August 4, 2011:
MFL CP
Maturity Date: September 9, 2011
ISIN – INE 522D14541
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of the
holding (%)
i FIL Trustee Company Pvt.
Ltd. A/c
Fedility Short Term
Income Fund
Standard Chartered Bank,
CRESCENZO Securities
services, 3rd
floor, C-
38/39, G Block, BKC,
Bandra (E), Mumbai -
400051
500 100.00
MFL CP
Maturity Date: December 12, 2011
ISIN – INE 522D14558
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. Cholamandalam MS
General Insurance
Company Ltd.
HDFC Bank Ltd. Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
200 100.00
MFL CP
Maturity Date: September 29, 2011
ISIN – INE 522D14194
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. Principal Trustee Co.
Pvt. Ltd. A/c – PRIN
Citibank N.A. Custody
Services, 3rd
Floor, Trent
house, G Block, Plot No 60,
BKC, Bandra (e), Mumbai –
400051
200 100.00
MFL CP
Maturity Date: June 22, 2012
ISIN – INE 522D14566
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. Cholamandalam MS
General Insurance
Company Ltd.
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
100 100.00
66
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
400042
MFL CP
Maturity Date: October 24, 2011
ISIN – INE 522D14574
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. BNP Paribas Money
Plus Fund
Deutsche Bank AG, DB
House, Hazarimal Somani
Marg, Post Box No. 1142,
Fort
Mumbai – 400001
1000 100.00
MFL CP
Maturity Date: October 03, 2011
ISIN – INE 522D14590
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. JM Trustee Co. Ltd.
A/c JM
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
1000 50
ii. SBI Premier Liquid
Fund
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
500 25
iii. Peerless Mutual Fund –
Peerless Ultra
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
500 25
TOTAL 2000 100
MFL CP
Maturity Date: October 04, 2011
ISIN – INE 522D14608
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Axis Treasury
Advantage Fund
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
500 33
67
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
Mumbai - 400001
ii. Peerless Mutual Fund
– Peerless Ultra
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai
- 400042
500 33
iii. Pramerica Ultra Short
Term Bond Fund
Citibank N.A. Custody
Services, 3rd
floor, Trent
House, G Block, Plot No.
60, BKC, Bandra (E),
Mumbai – 400051
300 20
iv. Pramerica Ultra Short
Term Bond Fund
Citibank N.A. Custody
Services, 3rd
floor, Trent
House, G Block, Plot No.
60, BKC, Bandra (E),
Mumbai – 400051
200 14
TOTAL 1500 100
MFL CP
Maturity Date: October 05, 2011
ISIN – INE 522D14616
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of the
holding (%)
i. TITCO Ltd. Taurus
Mutual Fund Taurus
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
500 100
MFL CP
Maturity Date: October 07, 2011
ISIN – INE 522D14624
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. TITCO Ltd. Taurus
Mutual Fund Taurus
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
500 100
MFL CP
Maturity Date: August 30, 2011
ISIN – INE 522D14335
68
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. L&T Mutual Fund A/c
L&T Liquid Fund
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
998 99.8
ii. L&T Mutual Fund A/c
L&T Short Term
Floating Rate Fund
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
2 0.2
TOTAL 1000 100
MFL CP
Maturity Date: August 30, 2011
ISIN – INE 522D14368
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. Kotak Mahindra
Trustee Co. Ltd. A/c
Kotak Mahindra Liquid
Scheme
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
1200 48
ii. Kotak Mahindra
Trustee Co. Ltd. A/c
Kotak floater short
term scheme
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
800 32
iii. Canara Robeco Mutual
Fund A/c Canara
Robeco Monthly
Income Plan
HSBC Securities Services
2nd
Floor “Shiv”, Plot No.
139-140 B
Western Exp Highway, Sahar
RDJUNCT,
Vile Parle – E, Mumbai –
400057
320 13
iv. Canara Robeco Mutual
Fund A/c Canara
Robeco Indigo Fund
HSBC Securities Services
2nd
Floor “Shiv”, Plot No.
139-140 B
Western Exp Highway, Sahar
RDJUNCT,
Vile Parle – E, Mumbai –
400057
100 4
v. Canara Robeco Mutual
Fund A/c Canara
Robeco Income Plan
HSBC Securities Services
2nd
Floor “Shiv”, Plot No.
139-140 B
Western Exp Highway, Sahar
RDJUNCT,
Vile Parle – E, Mumbai –
400057
80 3
TOTAL 2500 100
69
Maturity Date: March 5, 2012
ISIN – INE 522D14384
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding
(%)
i. BNP Paribas Fixed Term
Fund – Series 21 E
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
389 97
ii. BNP Paribas Monthly
Income Plan
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
11 3
TOTAL 400 100
MFL CP
Maturity Date: October 10, 2011
ISIN – INE 522D14418
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
i. BNP Paribas Fixed Term
Fund Series 16A
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
600 100
MFL CP
Maturity Date: March 29, 2012
ISIN – INE 522D14434
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
i. BNP Paribas Fixed
Term Fund – Series 21
H
Deutsche Bank AG
DB House, Hazarimal
Somani Marg
Post Box No. 1142, Fort,
Mumbai – 400001
800 61
ii. Principle Trustee Co.
Pvt. Ltd. A/c – PRI
Citibank N.A. Custody
services
3rd
floor, Trent House G
Block,
Plot No 60, BKC Bandra
(e), Mumbai – 400098
356 27
iii. Principle Trustee Co.
Pvt. Ltd. A/c – Principal
Mutual Fund – Principal
NEA term fund –
Conservative Plan
Citibank N.A. Custody
services
3rd
floor, Trent House G
Block,
Plot No 60, BKC Bandra
(e), Mumbai – 400098
144 12
70
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
TOTAL 1300 100
MFL CP
Maturity Date: May 9, 2012
ISIN – INE 522D14483
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
i. BNP Paribas Fixed
Term Fund – Series 20
C
Deutsche Bank AG, DB
House, Hazarimal
Somani Marg, Post Box
No. 1142, Fort
Mumbai – 400001
500 36
ii. BNP Paribas Fixed
Term Fund – Series 22
A
Deutsche Bank AG, DB
House, Hazarimal
Somani Marg, Post Box
No. 1142, Fort
Mumbai – 400001
400 29
iii. Canara HSBC Oriental
Bank of Commerce Life
Insurance Co. Ltd.
Deutsche Bank AG, DB
House, Hazarimal
Somani Marg, Post Box
No. 1142, Fort
Mumbai – 400001
300 21
iv. BNP Paribas Money
Plus Fund
Deutsche Bank AG, DB
House, Hazarimal
Somani Marg, Post Box
No. 1142, Fort
Mumbai – 400001
200 14
TOTAL 1400 100
MFL CP
Maturity Date: August 10, 2011
ISIN – INE 522D14491
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
i. Oriental Bank of
Commerce
Treasury Department
A 30 33 A Block 1st
floor,
Connaught Place
New Delhi – 110001
500 100
MFL CP
Maturity Date: August 16, 2011
ISIN – INE 522D14509
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
i. L And T Mutual Fund
A/C L And T Liquid
Fund
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
1000 100
71
Sr.
No.
Name of the CP holder Address Total CPs held Percentage of
the holding (%)
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
MFL CP
Maturity Date: August 23, 2011
ISIN – INE 522D14517
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. UTI – Treasury
Advantage Fund
UTI Mutual Fund, UTI
Assestmanagement Co.
Ltd. Dept of Fund
accounts, UTI Tower, GN
Block, BKC, Bandra (e),
Mumbai – 400051
3000 75
ii. Religare Trustee Co.
Ltd. A/c Religare Ultra
Short Term Fund
Deutsche Bank AG, DB
House, Hazarimal Somani
Marg, Post Box No. 1142,
Fort
Mumbai – 400001
1000 25
TOTAL 4000 100
MFL CP
Maturity Date: December 27, 2011
ISIN – INE522D14657
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. IFCI Limited IFCI Limited
IFCI Tower
61 Nehru Place
New Delhi
Pin-110019
500 100
MFL CP
Maturity Date: October 13, 2011
ISIN – 522D14640
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Union KBC Liquid
Fund
Citibank N.A. Custody
services
3rd
floor, Trent House G
Block,
Plot No 60, BKC Bandra
(e), Mumbai – 400098
500 100
MFL CP
Maturity Date: October 14, 2011
ISIN – 522D14632
72
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Indusind Bank Limited
Treasury Dept
Indusind House
Fourth Floor
425, D.B. Marg, Opera
House
Mumbai-400004
1000 100
MFL CP
Maturity Date: October 25, 2011
ISIN – 522D14699
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Escorts Mutual Fund-
A/C Escorts Liquid
Plan
HDFC Bank Ltd. Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
200 100
MFL CP
Maturity Date: April 16, 2012
ISIN – 522D14681
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. BNP Paribas Fixed
Term Fund - Series 21F
Deutsche Bank AG, DB
House, Hazarimal Somani
Marg, Post Box No. 1142,
Fort
Mumbai – 400001
360 100
MFL CP
Maturity Date: October 21, 2011
ISIN – 522D14673
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. L And T Mutual Fund
A/C L And T Freedom
Income
HDFC Bank Ltd. Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
500 100
MFL CP
Maturity Date: August 22, 2011
ISIN – 522D14665
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
73
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Religare Trustee
Company Limited-A/C
Religare Credit
Opportunities Fund
Deutsche Bank AG, DB
House, Hazarimal Somani
Marg, Post Box No. 1142,
Fort
Mumbai – 400001
500 100
MFL CP
Maturity Date: September 8, 2011
ISIN – INE 522D14533
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of
the holding (%)
i. Titco Ltd. Taurus
Mutual Fund Taurus
HDFC Bank Ltd. Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai
- 400042
2000 61
ii. Peerless Mutual Fund
– Peerless Liquid
Fund
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai
- 400042
800 24
iii. Canara Robeco
Mutual Fund A/c
Canara
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off
Floor 8, Next to
Kanjurmarg Stn,
Kanjurmarg (e), Mumbai
- 400042
500 15
TOTAL 3300 100
MFL CP
Maturity Date: September 2, 2011
ISIN – INE 522D14525
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
i. SBI Short Horizon
Debt Fund - Ultra
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
1500 68
ii. L&T Mutual Fund A/c
L&T Select
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
300 14
74
Sr.
No.
Name of the CP
holder
Address Total CPs held Percentage of the
holding (%)
iii. L&T Mutual Fund A/c
L&T Monthly
HDFC Bank Ltd.Custody
services Lodha – I Think
Techno Campus, Off Floor
8, Next to Kanjurmarg Stn,
Kanjurmarg (e), Mumbai -
400042
200 9
iv. Religare Trustee
Company Limited-A/C
Religare Credit
Opportunities Fund
Deutsche Bank AG, DB
House, Hazarimal Somani
Marg, Post Box No. 1142,
Fort
Mumbai – 400001
200 9
TOTAL 2200 100
8. List of top 10 holders of series of debentures issued at a discount having a face value of Rs. 1,000,000
each of our Company as on August 4, 2011
Sr.
No
Name of the
debenture holder
Full Address Total
debenture
held
Percentage
of the
holding
(%)
1 Alkem Laboratories
Ltd
Devasish Building Adj Matulya Mill
Compound 462 Senapati Bapat Marg,
Lower Parel, Mumbai-400013
100 17.67
2 Pramerica Mutual
Fund
2nd Floor, Nirlon House Dr. A. B.
Road, Worli, Mumbai-400030
100 17.67
3 Shree Holdings 15 Race Course Road,1st Floor Guindy,
Chennai-600032
40 7.07
4 Uma Kannan Thiagarajar Mills Premises, Kappalur,
Madurai-625008
34 6.01
5 Goldiam International
Limited
Gems & Jewellery Complex, Seepz,
Andheri(East) Mumbai-400096
25 4.42
6 Vikram Aditya &
Associate Pvt Ltd
620, Antriksh Bhawan, 22KG Marg,
New Delhi-110001
23 4.06
7 Sudhir Menon / Rita
Menon
501, Swapna Lok, Marve Road, Malad
(W)
20 3.53
8 Sridhar Panuganti 20 3.53
9 Kareena Shares &
Stocks Pvt.Ltd
B-103, Bhaveshwar Plaza, LBS Marg,
Ghatkopar (West), Mumbai - 400086
14 2.47
10 Bhamidipati Ravi /
Sudha Bhamidipati
A/1 1st Floor Amber, Perry Cross Rd,
Bandra W, Mumbai-400050
11 1.94
10 Jamshed Desai No.2,Central Avenue, Maharani Bagh,
New Delhi-110065
11 1.94
10 Naveen Munjal 156/E Sainik Farms, Country Club
Road, New Delhi-110062
11 1.94
TOTAL 566 100
9. Debt - equity ratio:
The debt to equity ratio of our Company as on March 31, 2011 (prior to this Issue) is based on a total
outstanding debt of Rs. 56,540.10 million, and shareholders‟ funds amounting to Rs. 19,239.57 million
which was 2.94 times as on March 31, 2011. The debt to equity ratio post the Issue (assuming
subscription of Rs. 7,500 million) is 3.32 times, based on a total outstanding debt of Rs. 64,040.10
million and shareholders‟ fund (as on March 31, 2011) of Rs. 19,239.57 million.
75
(Rs. in millions)
Particulars As on March 31, 2011* Post-Issue
Debt
Secured Loans from Banks, Financial
Institution, NBFC and Vehicle loans 38,707.54 38,707.54
Non Convertible Debentures 5,015.53 5,015.53
Fresh Issue of Debenture 7500.00
Unsecured Funds 12,817.03 12,817.03
Total Debt 56,540.10 64,040.10
Share Capital
Equity Share Capital 833.75 833.75
Preference Share Capital - -
Share application money pending
allotment
- -
Reserves and surplus 18405.82 18405.82
Total Shareholders‟ Funds 19239.57 19239.57
Long Term Debt to Equity Ratio 2.94** 3.32**
*Please note that the above particulars as on March 31, 2011 have been taken as the particulars prior
to the Issue.
** Based on the unaudited financial statements, for June 30 2011, and assuming a full subscription
of Rs. 7,500 million for the Issue, pre-issue and post-issue debt - equity ratios are 3.48 and 3.85
respectively. The debt - equity ratio represents ratio of debt (being total of secured loans and
unsecured loans as per the financial statements as at June 30, 2011) over equity (being total of paid
up share capital and reserves and surplus).
10. This is a public issue of Bonds in the nature of secured, redeemable, non-convertible debentures of face
value of Rs. 1,000 each aggregating to Rs. 4,000 million with an option to retain over subscription
upto Rs. 3,500 million, aggregating to Rs. 7,500 million.
11. Except as stated in note 1 above, our Company has not issued any equity shares for consideration other
than cash, whether in whole or part.
12. Our Company has not issued any debt securities for consideration other than cash, whether in whole or
part.
13. Our company has issued 566 debentures of face value of Rs. 1,000,000 each on July 29, 2011. The
debentures were issued at a discount of Rs. 118,300 each and the tenure of the debentures is 390 days
from the date of allotment. Other than the above mentioned issue, at the time of the Issue, our
Company has not issued any debt securities at a premium or at a discount. However, the Company may
issue them in future
14. For details of the outstanding borrowings of our Company, please see the section entitled ―Description
of Certain Indebtedness‖ on page 125.
76
OBJECTS OF THE ISSUE
Issue Proceeds
Our Company has filed this Prospectus for a public issue of the Bonds aggregating to Rs. 7,500 million. The
funds raised through this Issue will be utilized for our various financing activities including lending and
investments and towards our business operations including for our capital expenditure and working capital
requirements, after meeting the expenditures of, and related to, the Issue.
The main objects clause of the Memorandum of Association of our Company permits our Company to
undertake its existing activities as well as the activities for which the funds are being raised through this Issue.
Further, in accordance with the SEBI Debt Regulations, our Company will not utilize the proceeds of the Issue
for providing loans to or acquisition of shares of any person who is a part of the same group as our Company or
who is under the same management as our Company or any subsidiary of our Company.
The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any other
acquisition, inter alia by way of a lease, of any property.
Further the Company undertakes that Issue proceeds from Bonds allotted to banks shall not be used for any
purpose, which may be in contravention of the RBI guidelines on bank financing to NBFCs.
Issue Expenses
A portion of the Issue proceeds will be used to meet Issue expenses. The following are the estimated Issue
expenses:
Particulars Amount
(Rs. in
Million)
Percentage of net
proceeds of the Issue
(in %)
Percentage of total
expenses of the Issue
(in %)
Fees to Intermediaries
Fees paid to the Registrar to the Issue 0.8 0.01 0.51
Fees paid to the Lead Managers and the Co-
Lead Managers (excluding selling and
brokerage commission)
60.6 0.81 38.28
Fees paid for advertising and marketing 4 0.05 2.53
Miscellaneous (including fees paid to
Debenture Trustee and selling and brokerage
commission)
92.9 1.24 58.69
Total 158.3 2.11 100.00
The fees detailed in the table above may also be paid by way of commission to various intermediaries, which
may include subsidiaries of our Company. The above expenses are indicative and subject to change depending
on the actual level of subscription, number of Allottees, market conditions and other relevant factors.
Monitoring of Utilization of Funds
There is no requirement for appointment of a monitoring agency in terms of the SEBI Debt Regulations. The
Board of Directors of our Company shall monitor the utilisation of the proceeds of the Issue. Our Company will
disclose in the Company‟s financial statements for the relevant financial year commencing from Fiscal 2012, the
utilization of the proceeds of the Issue under a separate head along with details, if any, in relation to all such
proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized
proceeds of the Issue. We shall utilize the proceeds of the Issue only upon the execution of the documents for
creation of security as stated in this Prospectus in the section entitled ―Terms of the Issue - Security‖ on page
153 and upon the listing of the Bonds.
Interim Use of Proceeds
The management of the Company, in accordance with the policies formulated by it from time to time, will have
77
flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of the Issue
for the purposes described above, the Company intends to temporarily invest funds in high quality interest
bearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy the
funds in investment grade interest bearing securities as may be approved by the Board / Committee of Directors
of the Company, as the case may be. Such investment would be in accordance with the investment policy of our
Company.
78
STATEMENT OF TAX BENEFITS
The information provided below sets out the possible tax benefits available to the debenture holder in a
summary manner only and is not a complete analysis or listing of all potential tax consequences of the
subscription, ownership and disposal of redeemable Non Convertble Debentures (―NCDs‖), under the current
tax laws presently in force in India. Several of these benefits are dependent on the debenture holder fulfilling the
conditions prescribed under the relevant tax laws. Hence the ability of the debenture holder to derive the tax
benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future,
it may not choose to fulfil. The following overview is not exhaustive or comprehensive and is not intended to be
a substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the
tax implications of an investment in the NCDs particularly in view of the fact that certain recently enacted
legislation may not have a direct legal precedent or may have a different interpretation on the benefits, which
an investor can avail.
Benefits under the Income Tax Act, 1961 („the Act‟)
(A) To the Company
General Tax Benefits
1. Dividends earned are exempt from tax in accordance with and subject to the provisions of section
10(34) read with section 115-O of the Act. However, as per section 94(7) of the Act, losses arising
from sale/ transfer of shares, where such shares are purchased within three months prior to the record
date and sold within three months after the record date1 (for entitlement to receive dividend), to the
extent such loss does not exceed the amount of dividend claimed exempt, shall be ignored for the
purpose of computing income chargeable to tax.
2. Income earned from investment (other than income from transfer of investment) in units of a specified
Mutual Fund is exempt from tax under section 10(35) of the Act. However, as per section 94(7) of the
Act, losses arising from the sale/ redemption of units purchased within three months prior to the record
date (for entitlement to receive income) and sold within nine months after the record date, will be
disallowed to the extent such loss does not exceed the amount of income claimed exempt.
3. Further, as per section 94(8) of the Act, if an investor purchases units within three months prior to the
record date for entitlement of bonus, is allotted bonus units without any payment on the basis of
holding original units on the record date and such person sells/ redeems the original units within nine
months after the record date, while continuing to hold all or any of the additional units, then the loss
arising from purchase and sale of the original units will be ignored for the purpose of computing
income chargeable to tax and the amount of loss so ignored shall be regarded as the cost of acquisition
of such bonus units.
4. If the Company invests in the equity shares of another Company or units of an equity-oriented fund, as
per the provisions of section 10(38), any income arising from the transfer of a long term capital asset
being an equity share in a Company/ units of an equity-oriented fund2 is not includible in the total
1 Record date is defined as per Explanation (aa) to Section 94 as follows:
―record date‖ means such date as may be fixed by—
(i) a company for the purposes of entitlement of the holder of the securities to receive dividend; or
(ii) a Mutual Fund or the Administrator of the specified undertaking or the specified company as referred to in the
Explanation to clause (35) of section 10, for the purposes of entitlement of the holder of the units to receive
income, or additional unit without any consideration, as the case may be.
2 Equity oriented fund is defined Explanation to section 10(38) as under:
Explanation.—For the purposes of this clause, ―equity oriented fund‖ means a fund
(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than
[sixty-five] per cent of the total proceeds of such fund; and
(ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D):
Provided that the percentage of equity of the fund shall be computed with reference to the annual average of the
79
income, if the transaction is chargeable to Securities Transaction Tax. However, such long-term capital
gains shall be taken into account while computing book profits for the purposes of section 115JB of the
Act.
5. Section 14A of the Act restricts claim for deduction of expenses incurred in relation to incomes which
do not form part of the total income under the Act. Thus, any expenditure incurred to earn tax exempt
income, to the extent computed under Rule 8D of the Income-tax Rules, 1962 would not be allowed as
a deduction in computing the total income.
6. Under section 32 of the Act, the Company can claim depreciation allowance at the prescribed rates on
tangible assets such as building, machinery, plant or furniture and on intangible assets such as know-
how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of
similar nature acquired after 1 April 1998.
7. As per the provisions of section 32(2) of the Act, where full allowance cannot be given to the
depreciation allowance in any year, the same can be carried forward and set-off in the subsequent years
subject to provisions of section 72(2)/72(3).
8. Under section 36(1)(vii), any bad debt or part thereof written off as irrecoverable in the accounts is
allowable as a deduction from the total income subject to conditions specified under section 36(2) of
the Act. As per section 36(2) of the Act inter alia no deduction shall be allowed unless such debt or part
thereof has been taken into account in computing the income of the Company of the Previous year
(„PY‟) in which the amount of such debt or part thereof is written off or of an earlier PY, or represents
money lent in the ordinary course of the business of banking or money-lending which is carried on by
the Company.
9. Under section 36(1)(viii) of the Act, subject to the conditions specified therein, a deduction is
allowable in respect of an amount not exceeding 20% of the profits derived from eligible business viz.
providing long-term finance for industrial or agricultural development or development of infrastructure
facility in India or development of housing in India, before making deduction under that section
provided such amount is transferred to a special reserve account created and maintained for this
purpose. However where the aggregate of the amounts carried to such reserve account from time to
time exceeds twice the amount of the paid up share capital and general reserves, no allowance under
this clause shall be made in respect of such excess.
10. The Company will be entitled to amortise preliminary expenditure (underwriting commission,
brokerage, charges for drafting, typing, printing and advertisement of prospectus) being expenditure
incurred on public issue of shares or NCD under section 35D(2)(c)(iv) of the Act, subject to the limit
specified in section 35D(3) and subject to satisfaction of conditions specified in section 35D. The
deduction is allowable for an amount equal to one-fifth of such expenditure for each of five successive
Assessment years („AY‟).
11. Under the provision of section 71 of the Act, losses under the head “Profit and Gains from Business or
Profession” can be set-off against other heads of income, in the year in which loss was incurred.
Further, as per the provisions of section 72 of the Act, unabsorbed business losses (other than loss
sustained in speculation business) which are not set-off in any PY can be carried forward and set off
against the business profits of the subsequent AY, subject to a maximum of eight AY.
12. Under the provisions of the Act, if the investments in shares or other security listed in a recognized
stock exchange in India or a unit of a specified Mutual fund are sold after being held for more than
twelve months, the taxable gains, if any, will be treated as long-term capital gains which will be
calculated by deducting from the full value of consideration, the indexed cost of acquisition/
improvement and expenditure incurred wholly & exclusively in connection with the transfer. The
indexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/
improvement the same proportion as cost inflation index for the year in which the asset is transferred
bears to the cost inflation index for the first year in which the asset was held by the Company/
improvement to the asset took place respectively.
monthly averages of the opening and closing figures;
80
13. Under section 54EC of the Act, capital gain arising from transfer of long-term capital assets is exempt
from tax, if the capital gains are invested in certain notified bonds within a period of six months from
the date of transfer, up to a maximum limit of Rs. 50 lakhs during any financial year and held for a
period of three years in accordance with section 54EC(2). The notified bonds are those (redeemable
after three years) issued by :
(i) „National Highways Authority of India‟ constituted under section 3 of National Highways
Authority of India Act, 1988 and notified by the Central Government in the Official Gazette
for the purpose of this section; or
(ii) „Rural Electrification Corporation Limited‟, a company formed and registered under the
Companies Act, 1956 and notified by the Central Government in the Official Gazette for the
purpose of this section.
14. If only part of the capital gain is invested in such bonds, the exemption will be proportionately
determined. However, if the new bonds are transferred or otherwise converted into money within three
years from the date of their acquisition, the capital gains earlier exempted will be chargeable to tax in
the year of transfer or conversion.
15. Under section 111A of the Act, short-term capital gains (ie, if the shares/ units are held for a period not
exceeding twelve months), arising on sale of listed equity shares/ units of an equity-oriented fund are
taxed at the rate of 15% (plus applicable surcharge and cess) in cases where Securities Transaction Tax
has been levied. Further, if the gross total income of the Company includes any short term capital gains
referred to above, deduction under Chapter VI-A of the Act is only allowed from the gross total income
as reduced by such short term capital gains.
16. Under section 112 of the Act, long-term capital gains (other than those covered under section 10(38) of
the Act) are subject to tax at a rate of 20% (plus applicable surcharge and cess) after indexation, as
provided in the second proviso to section 48 of the Act. However, in case of listed securities or units,
the amount of such tax could be limited to 10% (plus applicable surcharge and cess), without
indexation benefit, at the option of the Company. Further, if the gross total income of the Company
includes any long term capital gains referred to above, deduction under Chapter VI-A of the Act is only
allowed from the gross total income as reduced by such long term capital gains.
17. Under section 115JAA(1A) of the Act, credit is allowed in respect of any Minimum Alternate Tax
(“MAT”) paid under section 115JB of the Act for any AY commencing on or after 1 April 2006. Tax
credit eligible to be carried forward will be the excess of MAT paid over the tax computed as per the
normal provisions of the Act for that AY. Such MAT credit is allowed to be carried forward for set-off
against tax liability computed under normal provisions of the Act for upto 10 AY succeeding the AY in
which the MAT credit becomes allowable subject to other conditions specified in section 115JAA.
18. The Company is entitled to a deduction under section 80G of the Act in respect of amounts contributed
as donations to various charitable institutions and funds covered under that section, subject to
fulfillment of conditions stipulated therein.
Special Tax Benefits
19. There are no special tax benefits available to the Company.
Tax rates
For the AY 2012 - 2013
20. The tax rate is 30%. A surcharge on Income tax of 5% would be levied if the total income exceeds Rs 1
Crore. Education cess and Secondary Higher Education cess of 3% is levied on the amount of tax and
surcharge.
21. Minimum Alternate Tax is at 18.5 % of the Book profits computed in accordance with provisions of
section 115JB. A surcharge on Income tax of 5% would be levied if the total income exceeds Rs 1
81
Crore. Education cess and Secondary Higher Education cess of 3% is levied on the amount of tax and
surcharge.
(B) To the Debenture Holders of the Company
I To the Resident Debenture Holder
1. Interest on NCD issued at par would be subject to tax at the normal rates of tax in accordance with and
subject to the provisions of the Act.
2. In respect of NCD issued at discount, the Central Board of Direct Taxes („CBDT‟) has earlier clarified
by way of certain letters issued to the Reserve Bank of India and others that the difference between the
bid price (subscription price) and the redemption price (face value) of Deep Discount Bonds („DDB‟)
(Refer Annexure 1) will be treated as interest income assessable under the Act in case the NCD are
redeemed as on the redemption date. In respect of transfer of the NCD before maturity, the income
will be taxable as capital gains.
The point of time at which the discount would be taxable as interest in the hands of Debenture Holder
is a debatable issue. The CBDT circular issued in the context of DDB suggests that interest would need
to be offered to tax based on accrual system of accounting (i.e. by marking such bonds to market
value). The concept articulated in the context of DDBs could also be extended to NCDs in question.
However, it should be possible to argue that interest should be offered to tax depending on the method
of accounting followed by the Debenture Holder.
3. No income tax is deductible at source on interest on NCD inter alia in respect of the following:
(a) On any security issued by a Company in a dematerialized form and is listed on recognized
stock exchange in India.
(b) In case the payment of interest on NCD to resident individual Debenture Holder in the
aggregate during the financial year does not exceed Rs. 2,500 provided the NCD are listed on
a recognized stock exchange in India and the interest is paid by an account payee cheque.
(c) When the Assessing Officer issues a certificate on an application by a Debenture Holder on
satisfaction that the total income of the Debenture Holder justifies no/lower deduction of tax at
source as per the provisions of section 197(1) of the Act and that certificate is filed with the
Company.
(d) When the resident Debenture Holder with PAN (not being a Company or a firm or a senior
citizen) furnishes a declaration in writing in duplicate in the prescribed form (Form 15G) and
verified in the prescribed manner to the effect that the tax on his estimated total income of the
PY in which such income is to be included in computing his total income will be Nil.
HOWEVER under section 197A (1B) of the Act, Form 15G cannot be submitted nor considered for
exemption from deduction from tax at source if the aggregate of income of the nature referred to in the
said section, viz. dividend, interest, etc as prescribed therein, credited or paid or likely to be credited or
paid during the PY in which such income is to be included exceeds the maximum amount which is not
chargeable to tax. To illustrate, as on 01.04.2011,the maximum amount of income not chargeable to tax
in case of individuals (other than women assesses, senior citizens and super senior citizens) and HUFs
is Rs. 1,80,000; in the case of every individual being a woman resident in India and below the age of 60
years at any time during the PY is Rs. 1,90,000; in the case of every individual being a resident in
India, who is of the age of 60 years or more but less than 80 years at any time during the PY (Senior
Citizen) is Rs. 2,50,000; and in the case of every individual being a resident in India, who is of the age
of 80 years or more at any time during the PY (Super Senior Citizen) is Rs. 5,00,000 for PY 2011-12.
Senior citizens, who are 65 or more years of age at any time during the financial year, enjoy the special
privilege to submit a self-declaration in the prescribed Form 15H for non deduction of tax at source in
accordance with the provisions of section 197A (1C) of the Act provided that the tax due on total
income of the person is Nil. In all other situations, tax would be deducted at source as per prevailing
provisions of the Act; Form No.15G with PAN / 15H with PAN / Certificate issued u/s 197(1) has to be
filed with the Company.
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4. In case of sale of NCD (originally issued at a discount) prior to redemption date, the gains arising on
such sale of NCD will be taxable as “Capital Gains”.
The capital gains will be computed by deducting cost of acquisition of the NCD and expenditure
incurred in connection with such transfer from the full value of sale consideration.
In case of NCD issued originally at a discount, the cost of acquisition will be taken to be the aggregate
of the cost for which the bond was acquired by the Debenture Holder (including the intermediate
purchaser of NCD) and the income, if any, already offered to tax by such Debenture Holder upto the
date of transfer.
5. Under section 2(29A) of the Act, read with section 2(42A) of the Act, a listed NCD is treated as a long
term capital asset if the same is held for more than 12 months immediately preceding the date of its
transfer.
Under section 112 of the Act, capital gains arising on the transfer of long term capital assets being
listed securities are subject to tax at the rate of 10% of capital gains as increased by applicable
surcharge and education cess calculated without indexation of the cost of acquisition.
In case of an individual or HUF, being a resident, where the total income as reduced by such long-term
capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-
term capital gains shall be reduced by the amount by which the total income as so reduced falls short of
the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-
term capital gains shall be computed at the rate mentioned above.
6. Short-term capital gains on the transfer of listed NCD, where NCD are held for a period of not more
than 12 months would be taxed at the normal rates of tax in accordance with and subject to the
provisions of the Act.
The provisions relating to maximum amount not chargeable to tax, surcharge and education cess as
described in the preceding paragraph would also apply to such short term capital gains.
7. The Circular issued in the context of DDB (Refer Annexure 1) suggests that the period of holding will
be calculated from the date of purchase/subscription, or last valuation date, whichever is later.
Consequently the capital gains would always be short term capital gains, since the period of holding
would always be less than one year. However, a contrary view that the period of holding of DDB
should be calculated from the date of purchase/ subscription could also be explored.
8. In case the NCD are held as stock in trade, the income on transfer of NCD would be taxed as business
income or loss in accordance with and subject to the provisions of the Act.
9. However in case where tax has to be deducted at source while paying interest on NCD, the Company is
not required to deduct surcharge, education cess and secondary and higher education cess.
10. Under section 94(1) of the Act, where the owner of any securities („the owner‟) sells or transfers those
securities, and buys back or reacquires the securities, including similar securities, then, if the result of
the transaction is that any interest becoming payable in respect of the securities is receivable otherwise
than by the owner, the interest payable as aforesaid shall, whether it would or would not have been
chargeable to income-tax be deemed, to be the income of the owner and not to be the income of any
other person.
Under section 94(2) of the Act, where any person has had at any time during any previous year any
beneficial interest in any securities, and the result of any transaction relating to such securities or the
income thereof is that, in respect of such securities within such year, either no income is received by
him or the income received by him is less than the sum to which the income would have amounted if
the income from such securities had accrued from day to day and been apportioned accordingly, then
the income from such securities for such year shall be deemed to be the income of such person.
83
However, as per provisions of section 94(3), the provisions of sub-section (1) or sub-section (2) of
section 94 of the Act shall not apply if the owner, or the person who has had a beneficial interest in the
securities, as the case may be, proves to the satisfaction of the Assessing Officer
(a) that there has been no avoidance of income-tax, or
(b) that the avoidance of income-tax was exceptional and not systematic and that there was not in
his case in any of the three preceding PYs any avoidance of income-tax by a transaction of the
nature referred to in sub-section (1) or sub-section (2) of section 94 of the Act.
11. As per section 56(2)(vii)(c) of the Act, in case and individual or HUF receives NCD from any person
on or after 1st October, 2009:
(i) without consideration, aggregate fair market value of which exceeds fifty thousand rupees,
then the whole of the aggregate fair market value of such NCD; or
(ii) for a consideration which is less than the aggregate fair market value of the NCD by an
amount exceeding fifty thousand rupees, then the aggregate fair market value of such NCD as
exceeds such consideration;
shall be chargeable to tax as the income of the recipient under the head Income from Other Sources.
However, the above provisions would not apply in certain situations like receipts:
from any relative; or
on the occasion of the marriage of the individual; or
under a will or by way of inheritance; or
in contemplation of death of the payer or donor, as the case may be; or
from any local authority as defined in the Explanation to clause (20) of section 10; or
from any fund or foundation or university or other educational institution or hospital or other
medical institution or any trust or institution referred to in clause (23C) of section 10; or
from any trust or institution registered under section 12AA
II To the Mutual funds
All mutual funds registered under Securities and Exchange Board of India or set up by public sector
banks or public financial institutions or authorised by the Reserve Bank of India are exempt from tax
on all their income under the provisions of section 10(23D) of the Act subject to and in accordance
with the provisions contained therein.
Benefits under the Wealth Tax Act, 1957
(A) To the Company
As per the provisions of section 2(m) of the Wealth tax Act, 1957, the Company is entitled to reduce
debts owed in relation to the assets which are chargeable to wealth tax in computing the net taxable
wealth.
(B) To the Debenture Holder of the Company
NCD of the Company held by the Debenture Holder will not be treated as an asset within the meaning
of section 2(ea) of Wealth Tax Act, 1957. Hence, NCD are not liable to wealth tax.
84
Gift Tax
Gift-tax is not levied on gift of NCD in the hands of the donor as well as the donee because the provisions of the
Gift-tax Act, 1958 have ceased to apply in respect of gifts made on or after October 1, 1998.
Proposals made in Direct Taxes Code
The Hon‟ble Finance Minister has presented the Direct Tax Code Bill, 2010 („DTC Bill‟) on August 30, 2010,
which is proposed to be effective from April 1, 2012. The DTC Bill is likely to be presented before the Indian
Parliament. Accordingly, it is currently unclear what effect the Direct Tax Code would have on the investors.
Requirement to furnish Permanent Account Number under the Act
1. Section 139A(5A) of the Act:
Subsection (5A) of section 139A of the Act lays down that every person from whose income tax has
been deducted at source under chapter XVII B of the Income Tax Act shall furnish his Permanent
Account Number to the person responsible for deduction of tax at source.
2. Section 206AA of the Act:
(1) Notwithstanding anything contained in any other provisions of the Act, any person entitled to
receive any sum or income or amount, on which tax is deductible under Chapter XVIIB
(hereinafter referred to as deductee) shall furnish his Permanent Account Number to the
person responsible for deducting such tax (hereinafter referred to as deductor), failing which
tax shall be deducted at the higher of the following rates, namely:
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent.
(2) No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A
of the Act shall be valid unless the person furnishes his Permanent Account Number in such
declaration.
(3) In case any declaration becomes invalid under sub-section (2) of section 206AA of the Act,
the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1)
of section 206AA of the Act.
(4) Where the Permanent Account Number provided to the deductor is invalid or does not belong
to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account
Number to the deductor and the provisions of sub-section (1) of section 206AA of the Act
shall apply accordingly.
Annexure 1
246. Clarifications regarding tax treatment of deep discount bonds and STRIPS (Separate Trading of
Registered Interest and Principal of Securities)
1. A review of the tax treatment of income arising from Deep Discount Bonds has been under
consideration in the Board for some time. The Board had earlier clarified by way of certain
letters issued to the Reserve Bank of India and others that the difference between the bid price
(subscription price) and the redemption price (face value) of such bonds will be treated as
interest income assessable under the Income-tax Act. On transfer of the bonds before maturity,
the difference between the sale consideration and the cost of acquisition would be taxed as
income from capital gains where the bonds were held as investment, and as business income
where the bonds were held as trading assets. On final redemption, however, no capital gains
85
will arise. It was further clarified that tax would be deducted at source on the difference
between the bid price and the redemption price at the time of maturity.
2. Such tax treatment of Deep Discount Bonds, however, has posed the following problems :
(i) Taxing the entire income received from such a bond in the year of redemption as
interest income gives rise to a sudden and huge tax liability in one year whereas the
value of the bond has been progressively increasing over the period of holding.
(ii) Where the bond is redeemed by a person other than the original subscriber, such
person becomes taxable on the entire difference between the bid price and the
redemption price as interest income, since he is not able to deduct his cost of
acquisition from such income.
(iii) A company issuing such bonds and following the mercantile system of accounting
may evolve a system for accounting of annual accrual of the liability in respect of
such a bond and claim a deduction in its assessment for each year even though the
corresponding income in the hands of the investor would be taxed only at the time of
maturity.
(iv) Taxing the entire income only at the time of maturity amounts to a tax deferral.
3. The matter has now been examined in consultation with the Reserve Bank of India and the
Ministry of Law. The practice followed in several countries outside India has also been
examined. With a view to remove the anomalies in the existing system of taxation of income
from Deep Discount Bonds, and to formulate a system which is more in line with international
practice, the Board have decided that such income may hereafter be treated as follows.
General treatment
4. Every person holding a Deep Discount Bond will make a market valuation of the bond as on
the 31st March of each Financial Year (hereafter referred to as the valuation date) and mark
such bond to such market value in accordance with the guidelines issued by the Reserve Bank
of India for valuation of investments. For this purpose, market values of different instruments
declared by the Reserve Bank of India or by the Primary Dealers Association of India jointly
with the Fixed Income Money Market and Derivatives Association of India may be referred
to.
4.1 The difference between the market valuations as on two successive valuation dates will
represent the accretion to the value of the bond during the relevant financial year and will be
taxable as interest income (where the bonds are held as investments) or business income
(where the bonds are held as trading assets).
4.2 In a case where the bond is acquired during the year by an intermediate purchaser (a person
who has acquired the bond by purchase during the term of the bond and not as original
subscription) the difference between the market value as on the valuation date and the cost for
which he acquired the bond, will be taxed as interest income or business income, as the case
may be, and no capital gains will arise as there would be no transfer of the bond on the
valuation date.
Transfer before maturity
5. Where the bond is transferred at any time before the maturity date, the difference between the
sale price and the cost of the bond will be taxable as capital gains in the hands of an investor
or as business income in the hands of a trader. For computing such gains, the cost of the bond
will be taken to be the aggregate of the cost for which the bond was acquired by the transferor
and the income, if any, already offered to tax by such transferor (in accordance with para 4
above) upto the date of transfer.
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5.1 Since the income chargeable in this case is only the accretion to the value of the bond over a
specific period, for the purposes of computing capital gains, the period of holding in such
cases will be reckoned from the date of purchase/subscription, or the last valuation date in
respect of which the transferor has offered income to tax, whichever is later. Since such period
would always be less than one year, the capital gains will be chargeable to tax as short-term
capital gains.
Redemption
6. Where the bond is redeemed by the original subscriber, the difference between the redemption
price and the value as on the last valuation date immediately preceding the maturity date will
be taxed as interest income in the case of investors, or business income in the case of traders.
6.1 Where the bond is redeemed by an intermediate purchaser, the difference between the
redemption price and the cost of the bond to such purchaser will be taxable as interest or
business income, as the case may be. For this purpose, again, the cost of the bond will mean
the aggregate of the cost at which the bonds were acquired and the income arising from the
bond which has already been offered to tax by the person redeeming the bond.
STRIPS
7. Apart from original issue of Deep Discount Bonds, such bonds can also be created by
„stripping‟, i.e., the process of detaching the interest coupons from a normal coupon bearing
bond and treating the different coupons and the stripped bond as separate instruments or
securities („strips‟) capable of being traded in independently. Such a mechanism, referred to as
STRIPS (Separate Trading of Registered Interest and Principal of Securities) creates
instruments which are in the nature of Deep Discount or Zero Coupon Bonds from out of the
normal interest bearing bonds. Accordingly, the tax treatment of the different components of
principal and interest created by such stripping will be on the same lines as clarified in the
preceding paragraphs in respect of Deep Discount Bonds.
7.1 The process of stripping of a normal interest-bearing bond into its various components will not
amount to a transfer within the meaning of the Income-tax Act as it merely involves the
conversion of the unstripped bond into the corresponding series of STRIPS. Similarly, the
reconstitution of STRIPS to form a coupon bearing bond will not amount to a transfer.
Tax deduction at source
8. The difference between the bid price of a deep discount bond and its redemption price, which
is actually paid at the time of maturity, will continue to be subject to tax deduction at source
under section 193 of the Income-tax Act. Under the existing provisions of that section, no tax
is deductible at source on interest payable on Government securities. Further, the Central
Government is empowered to specify any such bonds issued by an institution, authority,
public sector company or co-operative society by way of notification, exempting them from
the requirement of tax deduction at source.
Option to investors
9. Considering the difficulties which might be faced by small non-corporate investors in
determining market values under the RBI guidelines and computing income taxable in each
year of holding, it has further been decided that such investors holding Deep Discount Bonds
upto an aggregate face value of rupees one lakh may, at their option, continue to offer income
for tax in accordance with the earlier clarifications issued by the Board referred to in para 1
above.
Circular : No. 2/2002, dated 15-2-2002. CLARIFICATION ONE
There have been certain reports in the press recently, suggesting that the tax treatment of Deep Discount Bonds
as specified in Circular No.2/2002, dated February 15, 2002 [See [2002] 120 Taxman 127 (St.)] issued by the
Central Board of Direct Taxes is anomalous, as it provides for taxation of income from such bonds on an annual
87
basis, even though no income is received by the bond-holder before maturity. It has been opined that a heavy tax
burden is being placed on persons who have been holding such bonds for a while, and a cumbersome obligation
of valuing the bonds every year on the basis of RBI Guidelines is being cast on small investors. The reports are
mis-conceived and based on an incorrect understanding and inadequate knowledge of facts and law. The
modified tax treatment now specified in fact corrects the anomalies in the existing system by providing a
mechanism for taxing income accruing from year to year on deep discount bonds, on the same lines as income
from normal coupon bearing bonds is taxed. Transfer of the bonds before maturity will attract capital gains tax,
as in the existing system.
The earlier system of taxing the entire income received from such bonds in the year of redemption as interest
income was anomalous in that it gave rise to a sudden and huge tax liability in one year whereas the value of the
bond had been progressively increasing over the period of holding. Further, where the bond was redeemed by a
person other than the original subscriber, such person was taxed on the entire difference between the bid price
and the redemption price as interest income. Such a system also created tax-induced distortions in the debt
market, and was an impediment to the development of a market in STRIPS, which are essentially zero coupon
instruments derived from normal coupon bearing bonds.
Taxation of income on accrual basis is an established principle of law, and always results in taxing income that
has not yet been received. Income from deep discount bonds accrues continuously over the period of holding
and can be realized at any time by selling the bond. Taxing income from such bonds on accrual basis annually
is, in fact, a practice followed world-wide.
It is also an established principle that a circular issued by CBDT cannot have a retrospective tax effect. The
present circular on deep discount bonds, therefore, specifies the tax treatment in respect of bonds which are
issued after the issue of the circular, and does not seek to impose the modified treatment on existing bond-
holders. Further, non-corporate persons who invest small amounts in new issues (face value upto Rs.1 lakh) can
still opt for the old system.
Valuing the bonds every year on the basis of RBI Guidelines will not pose any problem as such values can be
obtained from the issuers themselves, who will invariably be the RBI or a public financial institution.
The amount received on redemption would always be liable to tax deduction at source as per normal provisions
of the Income-tax Act. However, no TDS is required on interest payable on Government securities, and bonds
issued by an institution, authority, public sector company or co-operative society can also be exempted from the
requirement by notification.
Please note the above “Statement of Tax Benefits” is the “Details of Tax Benefits available to the Company
and its shareholders” which is referred to as Annexure 4 in the auditor report dated July 19, 2011 in
“Auditor Examination Report and Reformatted Statements” on page 182.
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OUR BUSINESS
Overview
We are one of the leading listed NBFCs lending money against the pledge of household, used, gold jewellery
(“Gold Loans”) in India, in terms of gold loan portfolio as of March 31, 2011, 2010 and 2009, and we are also
the fastest growing gold financing company in India in terms of gold loan portfolio for the fiscal year 2010. (See
IMaCS Industry Report (2010 Update)). We provide these short-term personal and business Gold Loans
primarily to retail customers who require immediate availability of funds, but who do not have access to formal
credit on an immediate basis, or at all. Our Gold Loan portfolio as of March 31, 2011 comprised more than 2
million Gold Loan accounts with 1.19 million customers aggregating to Rs. 63,705.41 million of Gold Loans in
principal amount (net of assignments), which is 99.32% of our total loans and advances. As of March 31, 2011,
we disburse Gold Loans to our customers from a network of 2,064 branches in 20 states and union territories of
India, including 1,567 branches in the southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.
We are headquartered in the southern Indian state of Kerala. Our group commenced operations at Valapad,
Thrissur, Kerala and has decades of established history in the money lending business, mainly in small-scale
money lending against household, used, gold jewellery. Our Company has been in the Gold Loan financing
business since 1999. Historically, we have also provided other related services, including asset finance, money
transfer and foreign exchange, sales of gold coins and business and personal lending. We focus on rapid, on-the-
spot approval and disbursement of loans with minimal procedural formalities which our customers need to
complete in order to avail a loan from us. We have developed various Gold Loan schemes, which offer variable
terms in relation to the amount advanced per gram of gold, the interest rate and the amount of the loan, to meet
the different needs of various customers.
Our lending functions are supported by an in-house, custom developed information technology platform that
allows us to, record relevant customer details and approve and disburse the loan. Our proprietary technology
platform also handles internal audit, risk monitoring and management of the relevant loan and pledged gold
related information. Our employees undergo periodic training sessions related to evaluation of the worth and
authenticity of the gold that is pledged with us.
Our Gold Loan customers are individuals primarily from rural and semi-urban areas who require funds typically
for social obligations, emergencies, agriculture-related activities, small scale business operations or
consumption purposes. We strive to complete our Gold Loan transactions within short timelines. What
distinguishes us from banks is our focus on non-organized sections of society and our turn-around time. Loan
amounts advanced by us are generally in the range of Rs. 1,000.00 to Rs. 1.00 million per loan transaction and
typically remain outstanding approximately for an average tenor of 120 days. All of our Gold Loans have a
maximum of a 12 month term. In the financial year ended March 31, 2011, our gross Gold Loan portfolio yield
representing gross interest income on gross gold loans as a percentage of gross average outstanding of gold
loans, for the same period was, on an average, 24.95% per annum.
We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating is
P1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercial
paper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for our
NCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating of
BWR AA- rating from Brickwork and a rating of CARE AA- from CARE Limited.
In the fiscal years 2011, 2010 and 2009, our total income was Rs. 11,815.26 million, Rs. 4,782.01 million and
Rs. 1,661.11 million respectively. Our profit after tax for the fiscal years 2011, 2010 and 2009 was Rs. 2,826.64
million, Rs. 1,197.21 million and Rs. 302.97 million respectively.
In the fiscal years 2011, 2010 and 2009, revenues from our Gold Loan business constituted 97.62%, 95.67% and
86.20%, respectively, of our total income. As of March 31, 2011, 2010 and 2009, our portfolio of Gold Loans
under management in principal amount (net of assignments) was Rs. 63,705.41million, Rs. 18,512.26 million
and Rs. 4,000.63 million respectively, and approximately 52.97 tons, 22.45 tons and 13.34 tons, respectively, of
gold jewellery was held by us as security for our Gold Loans. Gross non-performing gold loan assets were
0.28%, 0.55% and 0.95% of our gross Gold Loan portfolio under management as of March 31, 2011, 2010 and
2009, respectively.
89
Operational Data
The table below sets forth operational data as at and for the fiscal years 2011, 2010, 2009 and 2008.
Fiscal Year
As at / year
ended March
31, 2011
As at / year ended
March 31, 2010
As at / year
ended March 31,
2009
As at / year
ended March 31,
2008
1. Assets under
Management (Rs. in
million) (net of
assignments)
63,835.58 18,884.68 4,503.94 1,754.18
2. Portfolio of Assigned
Loans (in principal
amount, Rs. in
million)
11,182.83 7,077.02 5,381.42 3,930.12
3. Number of Customers
(in million)
1.19 0.55 0.34 0.22
4. Cost of Borrowing 8.89% 9.84% 12.02% 11.83%
5. Leverage 3.52 4.17 5.89 6.10
6. Bad Debts and
Provisions (Rs. in
million)
382.75 142.00 177.86 33.72
7. Capital Adequacy
Ratio
29.13% 29.34% 31.74% 40.79%
8. Operating Expense /
Average Assets
5.32% 5.58% 6.41% 4.09%
9. Operating Expenses /
Total Income
20.64% 20.93% 30.20% 25.16%
10. Net NPAs (Gold
Loans)
0.11% 0.18% 0.13% 0.18%
Merger of MAFIT with Our Company
Manappuram Finance Tamil Nadu Limited (“MAFIT”) an affiliate of our Company merged with the Company
with retrospective effect from April 1, 2008 and the merger was given effect to by the Company pursuant to an
Order of the High Courts in the three month period ended December 31, 2009. Our financial statements as of
and for the fiscal year ended 2011 and 2010 reflect the financial results of MAFIT for such fiscal year; however,
as the merger was approved in December 2009, our financial statements as of and for the fiscal year 2007, 2008
and 2009 does not include the financial results of MAFIT for such periods.
MAFIT was engaged in the same line of business as our Company, and as a result, we have benefited from
increased operations, cost savings and operational synergies.
As a result of the Merger, shareholders of MAFIT received 2.1 Equity Shares in our Company in exchange for
every issued and outstanding share of MAFIT. On January 11, 2010 we issued 11,677,382 equity shares of Rs.
10 each credited as fully paid to the shareholders of MAFIT.
Acquisition of Manappuram Printers
With effect from April 1, 2009, we acquired all the assets and liabilities of Manappuram Printers, a sole
proprietorship of our Promoter which was engaged in the business of printing and sale of stationery items. The
printing requirements of our Company were quite substantial and prior to this acquisition, we were dependent on
third parties to meet our printing requirements.
Competitive Strengths
We believe that the following competitive strengths position us well for continued growth:
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One of the leading gold financing companies in India with a long operating history and loyal customer
base
We have been engaged in the business of Gold Loan financing since 1999. We have, over the years, been
successful in expanding our brand name, as well as our customer base to different geographical locations in
India. Our total number of customers grew from 0.34 million as of March 31, 2009 to 0.55 million as of March
31, 2010 and to 1.19 million as of March 31, 2011. We attribute our growth, in part, to our market penetration,
particularly in areas less served by organized lending institutions and the efficient and streamlined procedural
formalities which our customers need to complete in order to complete a loan transaction with us, which makes
us a preferred mode of finance for our customers. We also attribute our growth to customer loyalty. We believe
that a large portion of our customer base returns to us when they are in need of funds. Our average principal
amount of loan per customer has increased from Rs. 35,734 for the fiscal year 2009 to Rs. 63,106 for the fiscal
year 2011.
Flexible loan schemes, high quality customer service and short response time
We believe the growth in our Gold Loan portfolio is partly due to the flexible Gold Loan schemes that we offer
to our customers and high quality customer service. Depending on their individual needs, we are able to
customize loans for our customers in terms of the loan amount, advance rate per gram of gold and interest rate.
We also allow customers to prepay their loans with us without penalty, and we do not have a minimum loan
size.
We provide our customers with a transparent process and a secure environment in which to transact their
business, and we believe that our staff is professional and attentive at all our branch locations. Each of our
branches is staffed with customer representatives who possess local knowledge and understanding of customers‟
needs.
In addition, we strive to complete our Gold Loan transactions within a short timeframe, as this forms an
important component in our competitive edge over other lenders. We are able to process Gold Loans within a
short timeframe as a result of our efficient technology support, skilled workforce and clear policies on internal
processes. Although disbursement time may vary depending on the loan size and the number of items pledged,
we can generally disburse an average loan of Rs. 30,000 within a few minutes from the time the gold is tendered
to the appraiser. Furthermore, since our loans are all over-collateralized by gold jewellery, there are minimal
documentary and credit assessment requirements, which also shortens our turnaround time and increases the
ease with which our customers can do business with us.
Rapid expansion of our branch network
We have rapidly expanded our branch network in the past, which we believe has provided us with an advantage
over our competitors. Our total number of branches grew from 644 branches in 14 states and union territories as
of March 31, 2009, to 1,005 branches in 15 states and union territories as of March 31, 2010 and to 2,064
branches in 20 states and union territories as of March 31, 2011and then to 2,192 branches in 22 states and
union territories as of May 31, 2011. In order to manage our expanding operations as well as our increased
customer base, we have developed a proprietary technology framework that provides an integrated, robust
platform to run our operations and scale our branch network. In addition, on a per branch basis, increase in
principal amount of loans and revenues is generally more than the increase in proportionate operating costs year
on year, providing us with economies of scale as branches mature. We intend to continue to develop our
technology framework in order to equip ourselves for further growth of our business.
Strong capital raising ability and high credit rating
We have a track record of successfully raising capital from a variety of sources. We have received private equity
financing from affiliates of Sequoia Capital, India Equity Partners, Ashmore Alchemy and Granite Hill. As of
May 31, 2011, these private equity investors (except for Sequoia Capital and Granite Hill, which sold their
investment) hold an aggregate of 14.66% of our outstanding Equity Shares.
The results of operations also depend substantially on our net interest margin, which is the difference between
the interest rates on our interest-earning assets and interest-bearing liabilities. For the fiscal years 2011, 2010,
and 2009, our interest income represented 99.52%, 99.15% and 97.94% respectively, of our total income.
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In addition, as of March 31, 2011, we have borrowing relationships with 38 banks. As of March 31, 2011,
March 31, 2010 and March 31, 2009, our secured loans from banks, financial institutions and NBFCs were Rs.
38,696.60 million, Rs. 13,858.59 million and Rs. 2,978.69 million respectively. Our bank borrowings and
private equity financings have aided us in achieving growth in our business.
We also raise funds by assigning receivables from Gold Loan advances to banks and other institutions. As at
March 31, 2011, March 31, 2010 and March 31, 2009, the assigned amounts outstanding were Rs. 11,182.83
million, Rs. 7,077.02 million and Rs. 5,381.42 million.
We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating is
P1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercial
paper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for our
NCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating of
BWR AA- from Brickwork and a rating of CARE AA- from CARE Limited.
The rating reflects our well established presence in the Gold Loan business, our track record of maintaining
good risk-adjusted returns while expanding our scale of operations and our moderate capitalization levels in
relation to our proposed expansion plans. Our liquidity position is comfortable with a well matched asset
liability management profile on account of the relatively shorter tenure of the advance portfolio and availability
of funding lines. The shorter tenure of advances aided by our P1+ rating also helps us to raise money by way of
short term borrowings and by way of issue of commercial paper at attractive rates.
Robust support system and IT infrastructure, including appraisal, internal audit and inventory control and
safety systems
Our IT infrastructure has been developed in house and links our network of branches across the country with the
head office. We migrated to a .NET platform in December 2008, and have reaped benefits in the form of
minimizing errors, faster transmission of data and risk monitoring. Our management has also benefited from
availability of real time information. We upload data at each branch to facilitate online information access for
faster decision making. In addition, our technology platform has helped us develop an effective risk based
internal control system and internal audit. We also have a disaster recovery system located outside of Kerala
which replicates data on a real time basis. Our centralized technology aids us in offsite surveillance of all our
branches. Our technology also helps reduce the time it takes to complete Gold Loan transactions.
Our ability to accurately appraise the quality of the gold jewellery to be pledged in a short period of time is
critical to our business. We do not engage third parties to assess the gold jewellery, but instead employ in-house
staff for this purpose, which leads to better customer service. Assessing gold jewellery quickly and accurately is
a specialized skill that involves an assessment for gold content and quality manually without damaging the
jewellery. We use tested methods of appraisal of gold, such as the nitric acid test, the touchstone test, checking
for hallmarks and the sound test, and an independent appraisal is carried out by different sets of officials before
disbursement is made depending on the ticket size. In addition, branch heads are required to independently
verify loans that are above Rs. 20,000. Since we generally lend only against household, used jewellery and
avoid lending against bullion or lending to jewellers and goldsmiths, the risk of use of low quality gold or
spurious jewellery as security for our Gold Loans is limited.
In addition, the gold that is pledged for each loan is typically as much as the worth of gold that is owned by an
average Indian household, which prevents our exposure to larger-sized loans where the chances of default and
subsequent losses are increased. Only a small portion of the loans advanced by us are for relatively larger
amounts, and in such cases we follow a more detailed process for evaluation of such loans. For larger loans, the
head office will verify the profile of the customer and approve limits for loan sanctions.
Once the Gold Loan is made, we have a system in place for continuous monitoring of the pledged gold by
internal audit and risk management teams. In accordance with our internal audit policy, all of our branches are
subject to inspection every 90 days, a branch audit every 45 days and a spot audit can be conducted at any
branch at any time. At the time of conducting an inspection, a quality check on the inventory is also carried out.
Our inventory control procedures involve physical security checks and checks on the quality of pledged gold. In
addition, the branch head and the assistant branch head are the joint custodians of the gold stored in strong
rooms or vaults, which means that the strong rooms or vaults can only be opened if two keys are inserted at the
same time. The safes and strong rooms, are reinforced concrete cement structures built per industry standards
and practices.
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Experienced management team and skilled personnel
Our management team has over 35 years of experience in the banking and Gold Loan business. Our senior and
operating level management teams have extensive experience in the Gold Loan business and we believe that
their considerable knowledge of and experience in the industry enhances our ability to operate effectively. Our
staff, including professionals, covers a variety of disciplines, including gold appraisal, internal audit,
technology, accounting, marketing and sales. Some of our key management personnel have been employed by
us since our inception. Our management has experience in identifying market trends and suitable locations for
expanding and setting up branches to suit our target customers. Our workforce also consists of appraisers who
are skilled in the evaluation of the worth and authenticity of the gold that is pledged with us and we conduct
periodic training programs to augment their knowledge and efficiency in performing this task.
Strategy
Our business strategy is designed to capitalize on our competitive strengths and enhance our leadership position
in the Gold Loan industry. Key elements of our strategy include:
Further grow our Gold Loan business
Historically, Indians have been one of the largest consumers of gold due to the strong preference for gold
jewellery among Indian households and its widespread use as a savings instrument. A large proportion of gold
stock is held by rural India, as gold is viewed as a secure, liquid and easily accessible savings instrument, apart
from its ornamental status. (Source: IMaCS Industry Report 2009)
As a result, the market for Gold Loan financing in India is largely untapped and offers good potential for further
growth. The organized Gold Loan market is approximately 1.2% of the value of total gold stock in India
(Source: IMaCS Industry Report (2010 Update)).
We intend to increase our presence in under-served rural and semi-urban markets, where a large portion of the
population has limited access to credit either because they do not meet the eligibility requirements of banks or
financial institutions, or because credit is not available in a timely manner at reasonable rates of interest, or at
all. A typical Gold Loan customer expects high loan-to-value ratios, rapid and accurate appraisals, easy access,
low levels of documentation, quick approval and disbursement and safekeeping of their pledged gold. We
believe we meet these criteria, and thus our focus is to expand our Gold Loan business.
Continue to expand branch network
We intend to continue to grow our Gold Loan portfolio by expanding our network through the addition of new
branches. We have added 1,059 branches in the last fiscal year and 128 branches between March 31, 2011 and
May 31, 2011. We propose to increase our branch strength by at least 500 additional branches in the fiscal year
2012, including in states where we do not currently have any operations, subject to certain conditions being
satisfied. We carefully assess the market, location and proximity to target customers when selecting branch sites
to ensure that our branches are set up close to our target customers. We believe our customers appreciate this
convenience and it enables us to reach new customers. In addition, on a per branch basis, our increase in
principal amount of loans and revenues is generally more than the increase in proportionate operating costs year
on year, providing us with economies of scale as branches mature.
Continue to build the Manappuram brand
Our brand is key to the growth of our business. We believe that we have built a recognizable brand in the rural
and semi-urban markets of India, particularly in the southern states of Kerala, Tamil Nadu, Karnataka and
Andhra Pradesh. We intend to continue to build our brand by using celebrities in our advertising campaigns and
undertaking other marketing efforts on radio, television and outdoor advertising.
Strengthen our technology platform and continue to develop robust risk management procedures and related
systems
Since we plan to expand our geographic reach as well as our scale of operations, we intend to further develop
and strengthen our technology platform to support our growth and improve the quality of our services. We are
focused on improving our comprehensive knowledge base and customer profile and support systems, which in
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turn will assist us in the expansion of our business. We also propose to strengthen the technology in our
jewellery appraisal process. We believe that improvements in technology will also reduce our operational and
processing time and thereby improve our operating efficiencies.
In addition, we view risk management as crucial to the expansion of our Gold Loan business. We therefore
continually focus on improving our integrated risk management framework with processes for identifying,
measuring, monitoring, reporting and mitigating key risks, including credit risk, appraisal risk, custodial risk,
market risk and operational risk. We propose to make significant investments in personnel, technology and
infrastructure in order to improve process efficiencies and mitigate business risks. We have recruited individuals
who have significant risk management experience and plan to retain this focus in hiring additional risk
management personnel. Going forward, we plan to continue to adapt our risk management procedures to take
account of trends we have identified, including our loan loss experience. We believe that prudent risk
management policies and development of tailored credit procedures will allow us to expand our Gold Loan
financing business without experiencing significant increases in non-performing assets.
Attract and retain high quality talent
The intellectual capital of our management and finance teams, as well as other professionals in our business, is
critical to our success, and we accordingly intend to continue to focus on attracting and retaining high quality
talent. In order to achieve this, we will continue to capitalize on our strengths in the area of recruiting. In
particular, we plan to consolidate our position as an employer of choice within the NBFC sector. We currently
conduct training programs periodically across our regional training centers. We have also developed and will
continue to develop targeted compensation schemes designed to retain our key management personnel and
professionals, such as offering performance-linked salaries.
New line of business
Pursuant to the approval of our shareholders in the EGM on May 31, 2011, we intend to commence a new line
of business in travel and tourism. Our Company holds an Authorised Dealer Category II license from the RBI
for its FOREX operations. To augment our Company‟s income from such operations, it was thought desirable to
venture into this new line of business. Our Company proposes to act as a travel agent, tour operator, transport
agent and contractor. Further, our Company proposes to arrange and operate tours and to act as representatives
of airlines, railways and arranging road, air, water ticket booking.
Our Gold Loan Business
Our core business is providing Gold Loans, which are typically small loans secured by the pledge of household,
used, gold jewellery. Loan amounts advanced by us are typically within the range of Rs. 1,000.00 to Rs. 1.00
million per loan transaction and typically remain outstanding approximately for an average tenor of 120 days.
As of March 31, 2011, we had approximately 1.57 million Gold Loan accounts, aggregating to Rs. 63,705.41
million in principal amount (net of assignments).
In the fiscal years 2011, 2010 and 2009, our gross Gold Loan portfolio yield representing gross interest income
on gross gold loans as a percentage of gross average outstanding of gold loans, for the same period were retail
loan portfolio yielded an interest rate of 24.95%, 27.88% and 25.50%, respectively, per annum. In the fiscal
years 2011, 2010 and 2009, income from interest earned on our Gold Loans constituted 97.62%, 95.67% and
86.20%, respectively, of our total income.
We are able to offer a variety of Gold Loan schemes to our customers to suit their individual needs. As of May
31, 2011, we have 21 different schemes in place. The schemes differ in relation to the amount advanced per
evaluated gram of gold, the interest rate chargeable and the amount of the loan. Some of our schemes are
available only in certain geographical areas and newly opened branches.
The elements of a scheme do not remain constant and are dependent on external factors such as the market price
of gold, our cost of funds, the advance and the rate of interest that is offered by our competitors. To maintain
consistency and ensure that our standards are not compromised, we have kept the procedures and processes
involved in each gold finance transaction generally the same across the different schemes. We also allow
customers to prepay their loans without penalty, and we do not have a minimum loan size.
Gold Loan Disbursement Process
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The principal form of security that we accept is wearable, household, used, gold jewellery. We do not accept
bullion, gold biscuits, gold bars, new mass-produced gold jewellery or medallions unless it is pledged alongside
used jewellery, and we restrict acceptance of jewellery from other money-lenders. While these restrictions
narrow the pool of assets that may be provided to us as security, we believe that it provides us with the
following key advantages:
It filters out spurious jewellery that may be pledged by jewellers and goldsmiths. We find that
household, used jewellery is less likely to be spurious or fake.
The emotional value attached by each household to the pledged jewellery acts as a strong incentive for
timely repayment of loans and revoking the pledge.
As we only accept the pledge of household jewellery, the value of the pledged gold is typically only as
much as the worth of gold that is owned by an average Indian household. This prevents our exposure to
large-sized loans where the chances of default and subsequent losses are high.
The amount that we finance against the pledged gold jewellery is typically based on a fixed rate per gram of
gold content in the jewellery. We value the gold jewellery brought by customers based on our centralized
policies and guidelines. We generally lend between 70% and 85% of the price of gold assumed by us, which is
generally lower than the market price of gold at that time. Within this range, the actual loan amount varies
according to the type of jewellery pledged. While jewellery can be appraised based on a variety of factors, such
as total weight, weight of gold content, production cost, style, brand and value of any gemstones, we appraise
the gold jewellery solely based on its gold content. Our Gold Loans are therefore generally well collateralized
because the actual value of the gold jewellery is higher than our appraised value of the gold jewellery when the
loan is disbursed.
The amount we lend against an item and the total value of the pledged gold we hold fluctuates according to the
market price of gold. However, an increase in the price of gold will not automatically result in an increase in the
value of our Gold Loan portfolio unless the per gram rate is revised by our corporate office. Similarly, since
adequate margins are built in at the time of the loan disbursement and owing to the short tenure of these loans on
average, a decrease in the price of gold generally has little impact on our interest income. However, a sustained
decrease in the market price of gold could cause a decrease in the growth rate of Gold Loans in our loan
portfolio. See “Risk Factors - Volatility in the market price of gold may adversely affect our financial condition
and results of operations.”
All our Gold Loans have a maximum term of 12 months; however, customers may redeem the loan at any time.
Our Gold Loans typically remain outstanding approximately for an average tenor of 120 days. In most cases,
interest is paid only at the time the principal is repaid. In the event that a loan is not repaid on time and after
providing due notice to the customer, the unredeemed pledged gold is disposed of on behalf of the customer in
satisfaction of the principal and interest charges. Any surplus arising out of the disposal of the pledged gold is
refunded to the customer. In the event that the recoverable amount is more than the realizable value of the
pledged gold, the customer remains liable for the shortfall. We make provisions for losses that we believe are
not recoverable from the customer when the respective loans remain outstanding after six months from the date
of agreed tenor of the loan.
The processes involved in approving and disbursing a Gold Loan are divided into three phases: Pre-
disbursement; Post-disbursement; and Release of the pledge. When a loan is repaid, we give the customer the
option to pledge the security again and obtain another loan.
Pre-Disbursement
Pre-disbursement processes include all the actions that are carried out from the moment a customer enters any of
our branches for procuring a Gold Loan until the customer receives the loan amount and include the following:
Appraisal of the Gold
The first step in the process is the appraisal or evaluation of the gold to be used as security for the Gold Loan.
Each of our branches has designated personnel for gold appraisal who operate under a clear policy regarding
their function and responsibilities. The initial appraisal is performed by a trained employee who has experience
in appraising the gold content of jewellery. The initial appraisal is then verified by a second trained employee.
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Additionally, if the loan amount is above Rs. 10,000, the appraisal must be verified by the assistant branch head.
However, if the loan amount is above Rs. 20,000, the appraisal must be verified by the branch head.
Several steps are involved in the gold appraisal process. We first test the authenticity of the gold in accordance
with standard guidelines that are applied across all our branches. This process involves several principal tests,
which include the nitric acid test, the touchstone test, checking for hallmarks and the sound test.
We then determine the gross weight of the gold jewellery by weighing the jewellery. From the gross weight, we
deduct for purity and stone weight to arrive at net weight. We have determined a constant percentage deduction
that applies depending on the purity of the gold, which is based on the proportion of gold contained in the
jewellery in relation to other metals. As purity decreases, the percentage deduction that is applied to the gross
weight increases in order to arrive at the net weight. The weight of stones and other material that is embedded in
the jewellery is also deducted from the gross weight to determine the net weight. The net weight is then
converted into 22 carat purity levels.
In order to determine the loan amount that can be advanced against a specific piece of jewellery, or the loan to
value, the net weight of the jewellery is multiplied against a fixed constant, which is the 90 days trailing average
of the price of gold, or the spot price of gold, whichever is lower.
Appraisal of the Customer
Since the disbursement of the Gold Loan is primarily based on the value of the pledged gold, the customer‟s
creditworthiness is not a major factor in the loan decision. However, each branch complies with standard “know
your customer” (“KYC”) policies and other customer appraisal procedures, depending on the amount of the
Gold Loan.
Compliance with the KYC policies ensures that the personal data provided by a particular customer is accurate.
For loans up to Rs. 50,000, the customer must provide a document that confirms the customer‟s identity, which
could be a Government issued document, such as a passport, driver‟s license, PAN card, election card or ration
card. For loans above Rs. 50,000, proof of address is also required. Any KYC document that is received is
verified for authenticity. A KYC register is maintained in every branch to enter all KYC related details of our
customers. We are in the process of implementing additional identification confirmation procedures, including
retaining a photograph of each customer in our system, and confirmation of the customer‟s mobile number by
generation of a unique identification number through text message at the time of the pledge.
If the outstanding loan in the account of a customer is Rs. 100,000 or more, an information statement is
generated by our internal system, which is tracked by the area head. Further, we monitor individually customers
who have loans outstanding in excess of Rs. 1,000,000. In addition, the system generates daily alert reports
based on certain pre-set parameters, which are tracked by the area head. All of these processes are supported by
our technology platform.
Documentation
The standard set of documents that are executed in a typical Gold Loan transaction include the gold loan slip,
the pawn ticket and the demand promissory note cum terms and conditions. Basic details of the pledge, such as
the name of the customer and the net weight of the jewellery pledged is recorded on the gold loan slip, which is
retained by us. The pawn ticket, which contains the details of the customer and the pledged jewellery, is filled in
by the employee who appraised the gold and a copy is retained by the customer. The demand promissory note is
an undertaking by the customer to repay the loan amount with the interest to the Company. The terms and
conditions that are contained in the demand promissory note empower us to sell the pledged jewellery if the
customer defaults on the Gold Loan. In addition to these documents, we keep additional internal records that
specify the customer and the pledged jewellery. We identify and correct data entry errors in customer data
through a process of day-book checking.
Post-Disbursement
Custody of the Pledged Gold
The pledged gold jewellery is packed separately by staff of the branch in a polythene pouch with the relevant
documents about the loan and the customer, and then stored in the safe or strong room of the branch. Once
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lodged in the safe or strong room of the concerned branch, the branch head and the assistant branch head are the
joint custodians of the gold.
The safes and strong rooms in which the gold jewellery is kept are built in accordance with industry practice.
The strong rooms are vaults with reinforced concrete cement structures. Separate cupboards are used within the
strong rooms for the safe keeping of the gold collateral. At present, approximately 489 of our branches are using
strong rooms. In 1,703 branches where the volume of business is comparatively low or where the construction
of a strong room is not possible, we use iron safes, which are also built in accordance with industry practice.
Inventory Control
Once the pledged gold is packed and moved to the safe or strong room, colour coded stickers are affixed on the
packet. Tamper proof stickers are also affixed on the jewellery packets to ensure inventory control. Additional
stickers are used to seal packets by persons examining packages subsequently, including our internal auditors. In
addition to the color coding, these stickers also contain details of the persons inspecting the gold. We have
procedures in place for random verification of gold packets by the branch heads.
Branch Security and Safety Measures
Ensuring the safety and security of the branch premises is vital to our business since cash and gold inventory are
stored in each branch. Branch security measures implemented by us include:
Burglar alarms: Burglar alarms are installed at all branches and phone numbers of the assistant branch
head, branch head, the concerned police station and control room are integrated into the alarm system,
which triggers a call to these numbers if the alarm goes off.
Joint custodianship by the branch head and the assistant branch head: Both the branch head and the
assistant branch head hold the keys to the safe or strong room, which can only be opened if both keys
are inserted at the same time.
Security guards: Security guards are recruited through approved agencies and are present at night at all
of our branches. Day time security is also provided at some of our branches, depending on the security
of the particular area and the Gold Loans outstanding in the respective branch. In the absence of a
security guard, the branch head or the assistant branch head informs the security control room at the
head office and alternative arrangements are made. In addition, we have recently implemented
patrolling services to reduce risk of burglary.
IP cameras/CCTVs: As of May 31, 2011, we have completed the installation of IP or CCTV cameras at
1,945 branches. We intend to continue to install cameras at our branches and at least two cameras at
branches that are located in high risk areas.
Rules in relation to the cash counter: The cash counter is always locked from the inside and the cashier
is required to tally the cash against the cash book at least every three hours. Shifting of cash from one
storage point to another is recorded in the cash movement register that is maintained for this purpose.
Cash that is held in the cash cabin at any point in time does not generally exceed the retention limit
prescribed for this purpose. If there is a case where such cash exceeds the retention limit, it is generally
due to a banking holiday or other business reasons.
Release of the Pledge
We monitor our loan accounts and recovery of interest on an ongoing basis. Once a loan is fully repaid, the
pledged gold jewellery is returned to the customer. When a customer does not repay a loan on or before its
maturity, we initiate the recovery process and dispose of the pledged gold to satisfy the amount owed to us,
including both the principal and accrued interest. Before starting the recovery process, we inform the customer
through registered letters or legal notices. The recovery procedure typically commences after 15 days from the
date of maturity.
When a loan is repaid, we give the customer the option to pledge the security again and obtain another loan. The
procedure of re-pledging entails the same procedure as that of a pledge and is accompanied by the same mode of
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documentation that a pledge entails.
We also reserve the right, subject to notification to the customer, to sell the pledged gold even before a loan
becomes past due in the event the market value of the underlying pledged gold falls below amounts outstanding
on the loan.
Our Other Business Initiatives
In the fiscal years 2011, 2010 and 2009, revenues from our businesses other than Gold Loans constituted 1.02%,
2.61% and 10.44% respectively, of our total income.
Fee Based Services
Fee based services accounted for 0.17% of our total income for the financial year ended March 31, 2011. Fee
based services include money transfer and foreign exchange services. We act as sub-agents to Indian
representatives for money transfer inward remittance and enter into representation agreements for the same.
Under these agreements, we are entitled to a commission for the services provided depending on the amount of
money transferred and the location from which the money is transferred to us. We are compliant with the
provisions contained in the Prevention of Money Laundering Act in relation to the business of money transfer.
Foreign exchange service involves the repatriation of money in the form of foreign exchange by an Indian
citizen to his account from an account outside India. We have an Authorized Dealer II License from the RBI in
connection with this business activity. We also have the right to appoint franchisees. In addition, we assist in
currency exchanges and sale of Travelers‟ Cheques for a variety of purposes as permitted under the FEMA. We
are associated with HDFC Bank, IndusInd Bank and Thomas Cook for money transfer outward remittance
facilities.
Asset Finance
We have in the past provided loans for the acquisition of assets, particularly vehicles. This loan portfolio as of
March 31, 2011 aggregated to Rs. 47.08 million in principal amount, which is 0.07% of total loans and
advances. We do not intend to continue this business.
Gold Coins, Gold Purchase and Gold Storage
We convert some of the forfeited gold into gold coins and we sell the same as gold coins through our branches
in those states where we have registration under the local VAT Acts. The weight of the gold coins ranges from
one gram to ten grams and their purity is either 22 carat or 24 carat.
Business, Personal and Security Loans
We are also engaged in the business of providing, personal loans and security loans, and this accounted for a
negligible portion of our total income for the financial year ended March 31, 2011. We are dedicated to
providing loans to meet the business needs of our customers. The minimum loan amount advanced by us is Rs.
10,000 and the duration of the loan varies from 30 days to 100 days. These business loans are sanctioned to
small size or medium sized enterprises. We also advance loans against the security of life insurance policies.
These loans are repayable in equal monthly installments. In addition, we offer customized gold purchase
programs, or Swarnanidhi schemes, which allow our customers to purchase gold over time ranging from 12
months to 60 months.
Our business, personal, security and other loan portfolio along with loans under the Swarnanidhi Scheme as of
March 31, 2011 aggregated to Rs. 83.09 million, which is 0.13% of our total gross loans in principal amount.
Marketing, Sales and Customer Care
Our sales and marketing efforts are led by a team of 19 managers who guide the marketing and sales efforts of
their respective regions and who are supported by 11 marketing executives and 89 customer relation executives.
Our marketing team provides advertisement support to all of our branches located in various parts of India,
creates new advertising materials, creates new marketing strategies before launching a branch office, monitors
the competition from other companies and creates new strategies to develop our businesses. Our marketing team
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also provides additional support to improve business of non-performing branches. We use multiple media
agencies for creative content and advertising campaigns, and our media department coordinates with various
internal departments for managing their publicity requirements.
For the financial year ended 2011 and 2010, our total advertisement expenditure was Rs. 1,038.51 million and
Rs. 482.81 million, respectively, to support our aggressive brand building initiatives. For the financial year
ended, 2011 and 2010, our advertising expenses were 8.79% and 10.10% of our total income, respectively, as
compared to 4.92% and 7.71% of our total income for the financial year ended 2009 and 2008, respectively.
Currently film and television celebrities, such as Akshay Kumar, Mithun Chakraborty, Vikram V. Vinod,
Mohanlal, Venkatesh, Puneeth Rajkumar and Sachin Khedekar, promote our brand in our advertisement
campaigns.
We have developed a number of policies to retain our customers, the most significant amongst them being the
issue of „royalty cards‟ and the sale of insurance policies. We issue royalty cards (categorized into silver, gold
and platinum) to our customers who meet certain standards with respect to KYC requirements, timely
repayment and quick redemption of the loan. Eligibility depends upon how long the customer has been doing
business with us, as well as the number of loans taken out. The royalty cards reward the customer with higher
LTV and lower interest rates as compared to other customers.
Risk Management
Risk management forms an integral element of our business. We continue to improve our policies and
implement our policies rigorously for the efficient functioning of our business. As a lending institution, we are
exposed to various risks that are related to our gold lending business and operating environment. Our objective
in our risk management processes is to appreciate, measure and monitor the various risks that we are subject to
and to follow policies and procedures to address these risks. We do so through our risk management
architecture. The major types of risk we face in our businesses are credit risk, operational risk and market risk.
Credit Risk
Credit risk is the possibility of loss due to the failure of any counterparty to abide by the terms and conditions of
any financial contract with us. Credit risk in our Gold Loan business is relatively low because all our loans are
generally over-collateralized by pledged gold. We aim to reduce credit risk through a rigorous loan approval and
gold appraisal process, KYC compliance procedures and a strong non-performing asset (“NPA”) monitoring and
recovery mechanism. This risk is diminished because the gold jewellery used as security for our loans can be
readily liquidated, and the possibility of recovering less than the amount due to us is relatively low.
We also mitigate credit risk by not disbursing loans in excess of specified limits to the same customer, and for
loan amounts exceeding a certain limit, we undertake a credit check or profiling of the borrower before a loan is
approved. We have developed methods to peg the value of the loan amount to the moving average price of gold.
We also decrease credit risk by focusing on the quality of the pledged gold. Our internal control system ensures
independent verification of the gold by at least two officials at the branch level. The level of verification at the
branch level increases as the loan value increases. In addition, the quality of gold is checked by the area head
through random check. The risk profile of each account is monitored by the risk management division on an
ongoing basis through exception reports.
Operational Risk
Operational risk is broadly defined as the risk of direct or indirect loss due to the failure of systems, people or
processes, or due to external events. We have instituted a series of checks and balances and audit reviews to
address the various operational risks.
Although we disburse loans in very short periods of time, we have clearly defined appraisal methods to mitigate
appraisal risk. Inaccurate appraisal of the pledged gold may lead to funds being advanced against low value or
spurious gold. This risk is also mitigated by our policies on internal control, generation of alert reports and
additional requirements for high value loans.
We also have detailed guidelines on movement of cash or gold to address custodial risk, which is the risk
associated with the safety and security of our gold inventory. Methods of internal control and vigilance
99
mechanisms aid in controlling this risk. For example, the branch head and the assistant branch head are the joint
custodians of the pledged gold, which means that the strong rooms or vaults can only be opened if two keys are
inserted at the same time. In addition, we are in the process of installing surveillance cameras across of all our
branches, and security guards are present at night at all of our branches. We also have policies that require
employee rotation both within the branch, as well as within different branches located within the same area, and
we undertake significant employee profiling and background verification checks before hiring and continuously
monitor their lifestyle changes. In addition, our insurance covers employee theft or fraud and burglary.
Market Risk
Market risk arises from the decline in the value of the pledged gold due to fluctuation in gold prices. This risk is
in part mitigated by the 15% to 30% margin we build in to our rate per gram used to calculate the loan amount,
as well as linking the LTV to the 90 day average price of gold, or the spot rate, whichever is lower. This risk is
further reduced because we appraise the gold jewellery and fund loans based solely on the weight of gold
content without considering design cost, production cost or value of gemstones. In addition, the sentimental
value of the gold jewellery to the customers may induce repayment and redemption of the pledged gold even if
the value of the pledged gold falls below the value of the repayment amount. A prompt and effective recovery
mechanism also helps us deal with this risk.
Risk Management Architecture
In order to address the risks that are inherent to our business, we have developed a risk management architecture
that includes a risk management committee, internal audit department, vigilance department and a risk
management department.
Risk Management Committee. Our risk management committee, which is led by one of our Directors,
oversees our risk management policies, which help us to identify, measure, monitor and mitigate the
various risks that we face in our businesses.
Internal Audit Department. Our internal audit department assists in the management of operational risk
using our centralized monitoring systems. Separate divisions of our internal audit department have been
put in place to handle the audit of the departments of the head office and those of the branch offices.
The audit of the head office is divided into two categories: (i) system and compliance audit; and (ii)
accounts audit. A branch inspection is carried out every 90 days with the focus on the verification of
the Gold Loan pledges. In addition, a branch audit is carried out every 45 days to monitor the
incremental pledges since the date of the branch inspection and the documentation in connection with
Gold Loans, and a spot audit can be conducted at any branch at any time.
Vigilance Department. We have also put in place a separate department for vigilance inspections. The
vigilance team conducts surprise inspections of high/medium risk branches and other branches based
on any report or detection of serious deviations or irregularities and undertakes the responsibility of
visiting branches to oversee the implementation of risk mitigation initiatives and improvement of
customer service.
Risk Management Department. Our risk management department analyzes in-house data available in
the system to generate alert and exception reports on an ongoing basis with respect to Gold Loans.
Non-Performing Assets (NPAs)
The Non-Banking Financial (Non - Deposit Accepting or Holding) Companies Prudential Norms (Reserve
Bank) Directions, 2007, as amended (“Prudential Norms Directions”) require that every non-deposit taking
NBFC shall, after taking into account the degree of well defined credit weaknesses and extent of dependence on
collateral security for realisation, classify its lease/hire purchase assets, loans and advances and any other forms
of credit into the following classes:
• Standard assets;
• Sub-standard assets;
100
• Doubtful assets; and
• Loss assets.
Further, the class of assets referred to above shall not be upgraded merely as a result of rescheduling, unless it
satisfies the conditions required for the upgradation. A non-deposit taking NBFC is required to make provisions
against sub-standard assets, doubtful assets and loss assets in the manner provided for in the Prudential Norms
Directions.
Based on the Prudential Norms Directions for asset classification, details of the classification of our gross NPAs
for significant classes of our assets as of March 31, 2011, 2010 and 2009 are set forth below:
(Rs. in million)
Asset Type As of March 31,
2011
As of March 31,
2010
As of March 31,
2009
Gold
Sub-standard 76.27 48.25 13.23
Doubtful 133.68 53.40 24.53
Loss - - -
Gross NPA 209.95 101.65 37.76
Hypothecation
Sub-standard 26.69 124.52 153.93
Doubtful - 70.71 5.40
Loss - - -
Gross NPA 26.69 195.23 159.33
Secured loans are classified or provided for, as per management estimates, subject to the minimum provision
required as per Prudential Norms Directions as follows:
Classification of 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 if not written off in books.
* as per notification DNBB 222/CGM (US) – 2011 issued by Reserve Bank of India on January 17, 2011..
Classification of hypothecation and stock on hire
Asset Classification Provisioning policy
Standard Assets Nil
Sub-standard assets 10% to 100%
Doubtful assets* 100% provided
Loss assets 100% provided if not written off in books.
* All loans overdue for more than 18 months are classified as doubtful.
We have written-off Rs. 248.94 million as of March 31, 2011. As per the provisioning norms prescribed by RBI,
as of March 31, 2011, we have made a total provision of Rs. 167.46 million, which constituted 67.17% of our
Gross NPAs. Details of provisions and amounts written off as of March 31, 2011, March 31, 2010 and March
31, 2009 are set out in the table below:
101
(Rs. in million)
As of / Year ended
March 31,
2011
As of / Year ended
March 31, 2010
As of / Year
ended March 31,
2009
Gross NPAs 249.30 336.66 235.97
Provisions 167.46 192.12 96.70
Net NPAs 81.84 144.54 139.27
Net loans 64,141.68 18,907.13 4,486.04
Net NPAs/Net loans (%) 0.13% 0.76% 3.11%
Amounts written off 248.94 53.42 117.54
NPA Recovery
For non-performing assets, our credit department assigns interest collection targets for each branch, reviews
performance against targets, makes visits to the branches, and advises on timely corrective measures and
repossession action. Once repossession is advised by our credit department, we conduct public auctions of the
pledged jewellery in accordance with the terms of our „auction policy, or otherwise dispose of the pledged
jewellery, after serving requisite legal notices.
The following table sets forth information relating to bad debts recovered for the fiscal years 2011, 2010 and
2009:
(Rs. in million)
Fiscal year
ended
March 31, 2011
Fiscal year ended
March 31, 2010
Fiscal year ended
March 31, 2009
Bad debts recovered 8.64 3.55 3.15
Capital Adequacy Ratio
As per the Prudential Norms Directions, every non deposit taking NBFC is subject to capital adequacy
requirements. Currently, such NBFCs are required to maintain a minimum capital ratio consisting of Tier I and
Tier II capital which shall not be less than 15% of its aggregate risk weighted assets on balance sheet and of risk
adjusted value of off-balance sheet items. Also, the total of Tier II capital, at any point of time, shall not exceed
one hundred per cent of Tier I capital. We are also required to transfer up to 20.0% of our annual profit to a
reserve fund and make provisions for NPAs. We had a capital adequacy ratio of 29.13%, 29.34% and 31.74% as
of March 31, 2011, 2010 and 2009, respectively. We have satisfied the minimum capital adequacy ratios
prescribed by the RBI for the financial year ended March 31, 2011 and each of the past three financial years as
set out below:
Particulars Financial year
ended March 31,
2011
Financial year
ended March 31,
2010
Financial year
ended March 31,
2009
Financial year
ended March 31,
2008
Tier I Tier II Tier I Tier II Tier I Tier II Tier I Tier II
Capital Adequacy Ratio 26.36% 2.77% 26.04% 3.30% 24.54% 7.20% 32.46% 8.33%
Centralized Management and Technology
Our IT support system aids the performance of all the processes involved in a loan transaction. For example, at
the pre-disbursement stage, KYC details as well as other details of customer appraisal are entered and stored in
the system for future reference. All the details contained in the documents that are relevant to a loan transaction
are entered into the system. The system filters the transaction at each level to confirm whether a particular set of
pledged jewellery meets the required specifications.
Once the inputs to arrive at the net weight are entered into the system, the system generates the net weight as
well as the loan advance that can be made against it under the several schemes that we offer. Once the customer
chooses the scheme, an entry to that effect is made and a pawn ticket is generated.
With respect to the post-disbursement phase, the interest due on each loan at any given point in time after
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disbursement is generated by the system. If the loan is settled by the customer prior to maturity, the system
calculates the amount repayable and also records the repayment and recovery of the pledge. When a loan
matures, the system indicates the same and we subsequently notify the customer.
The system generates a list of all loans that are overdue on a particular date. All details of the sale process of
forfeited jewellery are also entered into the system.
Our business, though carried on across the country, is controlled centrally at the head office. All transactions of
pledging and release that occur in all our branches are recorded and results are generated on a real time basis by
our internal IT infrastructure. Access to this data is restricted to certain designated personnel and alerts are
passed on to the concerned regional head upon the occurrence of specified events.
Up-to-date information on gold inventory and cash reserves in each branch helps us track our liquidity position
and plan for shortfalls well in advance. We are able to avert liquidity shortfalls in any particular branch by
transferring cash from one branch to another. In this manner, we ensure that each branch is centrally managed
by the head office and off-site surveillance of each branch is an ongoing process.
Treasury Operations
Our treasury department undertakes liquidity management by seeking to maintain an optimum level of liquidity
and monitors cash and bank balances. The objective is to ensure sufficient cash reserves at all our branches
while at the same time avoid holding cash in excess of what may be required in the ordinary course. Since
almost all disbursements are made in cash, we maintain an average of Rs. 1.00 million in cash across our
branches. Each regional office has the primary responsibility for directing branches within the region to move
surplus funds to deficit branches. If there is a surplus of funds in the region as a whole, such surpluses are
deposited in cash credit/overdraft accounts at the corporate level. Deficits at a regional level are managed by
cash transfers from our treasury department. We monitor cash and balances on daily basis using our
management information systems, and have arrangements with various banks for the transfer of bank balances
between locations. Cost of movement of cash also is taken into consideration while deciding optimum cash
levels in each location. We use a real time gross settlement (“RTGS”) facility if the remitting and receiving
banks are different, or through internal transfer if both the branches belong to the same bank. We also use cash
van services for delivery and collection of cash to and from certain of our branches.
Funding Sources
Our lines of credit include borrowings from financial institutions and amounts raised through the issue of non-
convertible debentures (“NCDs”). We also undertake the assignment of receivables from Gold Loan advances to
specified financial institutions. Our interest on borrowings and assignments, as a percentage of our total loans
and assignments, have decreased from 12.0% as of March 30, 2009 to 9.8% as of March 30, 2010 to 9.16% as of
March 31, 2011.
Borrowings from financial institutions constitute a significant portion of the total borrowings from secured and
unsecured loans availed of by us as at March 31, 2011. We have executed loan agreements with several banks
with the object of availing funds from them on certain stipulated terms and conditions. As at March 31, 2011,
we have also issued 1,328,535 secured NCDs ranging between Rs. 1,000.00 and Rs. 1.00 million, each
redeemable at par at the end of the term of each series of these debentures, which ranges from one to five years.
We pay an interest ranging from 7.50% to 13.00 % per annum on these NCDs. See ―Description of Certain
Indebtedness‖ Beginning on page 125.
We also attempt to balance our interest-bearing liabilities, some of which bear floating interest rates, against our
interest-earning assets, which bear fixed interest rates. As of March 31, 2011, 43% of our borrowings had
floating rates of interest, comprising primarily working capital loans from banks and other financial institutions.
We also assign receivables from Gold Loan advances to banks, financial institutions and others. The assignment
transactions are conducted on the basis of internal estimates of our funding requirements, and may vary from
time to time. In the event an assignee bank does not realize the receivables due under such loans, the relevant
bank would have recourse to a corporate guarantee issued by us and/or cash collateral and the underlying
security. For the fiscal years 2011, 2010 and 2009, the amounts assigned were Rs. 11,182.83 million, Rs.
7,077.02 million and Rs. 5,381.42 million respectively.
103
Branch Network
As of May 31, 2011, we had 2,192 branches located in 22 states and union territories in India.
Insurance
We maintain a range of insurance policies to cover our assets, risks and liabilities. Since we deal in gold
financing, money in the form of cash and other assets form an integral part of our business. The most vital
insurance policies that we purchase include policies on gold in storage and transit, cash in storage and transit,
burglary, machinery break-down insurance for all our machinery and electronic equipment, fire and special
perils policy. In addition, we also have fidelity insurance covering all our employees as well as directors‟ and
officers‟ liability insurance covering our Directors. For all our branches, we maintain insurance cover under the
name of our Company. We consider our insurance coverage to be adequate and as and when we expand our
business, we endeavor to ensure that we have adequate insurance.
Employees
As of May 31, 2011, we have 16,137 employees, as set out below:
Board of directors 3
Management Information System and Financial Analysis Wing 10
Finance and accounts 171
Audit 731
Human Resource Management 108
Gold loan 14065
Branch Opening 121
Deposit 18
Money transfer & FOREX 30
Information technology 206
Legal department 74
Insurance 27
Hostel 4
Administration 59
Press & Stores 40
Risk Management 14
Operation 84
Vigilance 34
Regional Manager‟s office 240
Security control 98
TOTAL 16,137
We have not experienced any significant labor disputes and believe that relations with our employees are
satisfactory. We have established training programs for our employees on a continuous basis and we intend to
continue investing in recruiting, training and maintaining a rewarding work environment. In addition to ongoing
on-the-job training, we provide employees courses in specific areas or specialized operations on an as-needed
basis. We have skilled laborers and experienced personnel, particularly in the process of gold appraisal and
determination of purity of the gold. In 2009, we adopted an employee stock option scheme.
Competition
We face competition from pawnshops, other gold financing companies, banks, co-operative societies and local
money lenders. Other lenders may lend money on an unsecured basis, at interest rates that may be lower than
our service charges and on other terms that may be more favorable than ours. We believe that the primary
elements of competition are the quality of customer service and relationship management, branch location and
the ability to loan competitive amounts at competitive rates.
Property
Our registered head office is located at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala
104
and is partly owned by our Company and partly by our Group Company, Manappuram Benefit Fund Limited.
The Company has also entered into an agreement for sale dated August 4, 2010 with Mr. Antony Joseph
Pattathu of M/s Pattathu Brothers for the purchase of approximately 2,254.10 square metres of land at Santacruz
(East), Mumbai. None of our branches are located on property that is owned by the Company. We enter into
lease agreements with the owners of such property, which are renewed on a timely basis. The Company is in the
process of undertaking the construction of a new corporate office building at Valapad and has entered into
agreements with third parties for the execution of plumbing works, execution of the work of power supply and
electrification, supply of electrical equipments etc. with regard to the same. The land on which the new
corporate office building is being constructed has been purchased by our Company from our Promoter, V. P.
Nandakumar.
Intellectual Property
The trademark in the Manappuram logo is held by one of our Promoters, V.P Nandakumar. The tradename
“Manappuram” is held by our Company and is used by all group companies. We have entered into a license
agreement dated December 18, 2007 with V. P. Nandakumar for the use of the Manappuram logo for a period of
10 years on a non-exclusive and non-assignable basis. No payment is made under the license agreement for the
use of the logo.
Corporate Social Responsibility
We believe that emphasis should be placed on social and community service, which is essential for building
sustainable businesses that create market value, as well as social value. The Manappuram Group registered a
charitable trust on October 24, 2009 under the name, the Manappuram Foundation (“Foundation”) at Valapad.
In furtherance to our commitment to corporate social responsibility, the Foundation has contributed to various
social causes during the course of its operations by setting up free health insurance for below poverty line
families in Thrissur District, Kerala. The Foundation also intends to operate several vocational training centers
to help the economically deprived sections in Southern India.
105
HISTORY AND MAIN OBJECTS
Manappuram Finance Limited was incorporated as a public limited company under the Companies Act as
“Manappuram General Finance and Leasing Limited” on July 15, 1992 by a Certificate of Incorporation No.
09-06623 of 1992 issued by the Registrar of Companies, Kerala under the Companies Act. The Company has
its registered office at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala. The Company
was issued a certificate for commencement of business on July 31, 1992 by the Registrar of Companies, Kerala.
The name was subsequently changed to “Manappuram Finance Limited” on June 22, 2011 vide Fresh
Certificate of Incorporation issued by the Registrar of Companies, Kerala and Lakshadweep.
We are listed on the NSE, BSE, MSE and the CSE. We were earlier registered with RBI as a deposit accepting
NBFC as per certificate of registration no. 16.00029 dated May 25, 1998. However, subsequently, we registered
ourselves as non deposit accepting NBFC vide a new certificate of registration no. B-16.00029 dated March 22,
2011.
Main objects of our Company:
Our main objects as contained in our Memorandum of Association are:
1. To carry on and undertake the business of all types, of financing activities including hiring of
movables, granting assistance to trade, commerce, industry and agriculture.
2. To carry on and undertake the business of Merchant Bankers, Portfolio Investment Managers, Mutual
Fund Managers, Underwriters, Registrars and Managers to public issues and Stock Brokers, and to
undertake depository participant activities, functions and responsibilities and to provide custodial and
depository services of assets and securities, to collect dividends, interests, rights, entitlements, bonuses
and other benefits, incomes and entitlements accruing on such assets and securities.
3. To carry on and to act as agents in money changing business so as to deal in Foreign Exchange, to act
as full-fledged Money Changers, to act as Foreign Exchange Brokers, to provide FOREX advisory
services, to introduce Money Transfer Schemes, to act as Exchange House.
Material Agreements
We have received private equity financing from affiliates of Sequoia Capital, India Equity Partners, Ashmore
Alchemy and Granite Hill India Opportunities Fund. As of May 31, 2011, these private equity investors (except
for Sequoia Capital and Granite Hill which sold their investment) held an aggregate of 14.23% of our
outstanding Equity Shares.
Our shareholder agreements with these investors contain customary investor‟s rights, including (i) the
appointment of a nominee director on the Board of the Company; (ii) the appointment of a nominee director on
the Board of any subsidiary of the Company (iii) affirmative rights in relation to matters such as alteration in the
capital structure of the Company and commencement of a new line of business; and (iv) certain financial rights,
such as tag along rights and a right of first sale in certain specified situations. In addition, some of our
shareholder agreements require that the level of assets under management of Manappuram Benefit Fund Limited
(“MABEN”) may not exceed a certain per branch average and percentage of our total assets under management,
that MABEN may not open any additional branches and that Manappuram Asset Finance Limited (“MAFL”)
may not exceed a certain asset size or open any additional branches.
Other than the above-mentioned agreements and agreements in relation to this Issue, our Company has not
entered into material agreements which are not in the ordinary course of business.
106
OUR MANAGEMENT
Board of Directors
The composition of the Board of Directors is governed by the provisions of the Companies Act and the Equity
Listing Agreements with the Stock Exchanges. The Articles of Association of the Company provide that the
Company shall not have less than three Directors and not more than fifteen 15 Directors, unless otherwise
determined by a special resolution.
Pursuant to the Companies Act, not less than two-thirds of the total number of directors shall be persons whose
period of office is subject to retirement by rotation and one third of such directors, or if their number is not three
or a multiple of three, then the number nearest to one-third, shall retire from office at every annual general
meeting. The Articles provide that the Directors to retire are those who have been the longest in the office since
their last appointment but as between persons who become Directors on the same day those to retire shall in
default of and subject to any agreement among themselves, be determined by lot. A retiring director is eligible
for re-election. The Articles provide that in the event of the Company borrowing any money from any financial
institution or corporation or Government or Government Body or any collaborator, bank person or persons or
any other agency or source while any money remains due to them or any of them, the said corporation,
institution or Government Body or as the case may be, shall have and may exercise the rights and powers to
appoint from time to time any person or persons to be a director or directors of the Company, that such directors
shall not be liable to retire by rotation subject to the limits prescribed under the Companies Act, nor be required
to holding qualification shares. Further from and with effect from the Closing Date (defined as November 5,
2008), as long as Hudson hold at least 6% of the Share Capital, Hudson shall have the right to appoint one
nominee director/non executive director on the Board.
The Board of Directors are authorised by the Articles to appoint any person as a Director as an addition to the
Board so that the total number of Directors shall not at any time exceed the maximum number fixed by the
Articles. Such Director so appointed shall hold office only up to the date of the next AGM of the Company and
shall be eligible for re-election. The Articles of Association, subject to the Companies Act, 1956 allow the
Board of Directors to appoint any person to act as an alternate Director for a Director during the latter‟s absence
for a period of not less than three months from the State in which meetings of the Board are ordinarily held.
The following table sets forth details regarding the Board as on the date of this Prospectus:
Name, DIN, Address,
Occupation
Designation Other Directorships
V.P. Nandakumar
DIN: 00044512
Address: Padmasaroj‟
Vazhappully House,
P.O.Valapad, Thrissur
Kerala 680 567
Occupation: Business
Executive Chairman 1. Manappuram Insurance Brokers (P) Limited
2. Manappuram Asset Finance Limited
3. Manappuram Health Care Limited
4. Manappuram Comptech and Consultants (P)
Limited
5. Manappuram Infrastructure and Builders
Private Limited
6. Manappuram Jewellers Private Limited
7. Manappuram Benefit Fund Limited
8. Manappuram Constructions & Properties (P)
Limited
9. Fivestar Business Credits Limited
10. Aptus Value Housing Finance India Limited
I. Unnikrishnan
DIN: 01773417
Address: Mannath House
Mannath Lane, Thrissur, Kerala
Managing Director 1. Manappuram Asset Finance Ltd
2. Manappuram Insurance Brokers (P) Limited
3. Manappuram Jewellers (P) Limited
107
Name, DIN, Address,
Occupation
Designation Other Directorships
680 001
Occupation: Business
B. N. Raveendra Babu
DIN: 00043622
Address: Blanghat House,
P.O. Kaipamangalam,
Thrissur, Kerala 680 681
Occupation: Consultant
Joint Managing Director 1. Manappuram Chits(India) Limited
2. Manappuram Comptech and Consultants (P)
Limited
3. Manappuram Insurance Brokers Private
Limited
4. Manappuram Jewellers Private Limited
A. R. Sankaranarayanan
DIN: 00046545
Address: 10 C, Skyline Brent
Wood, Saw Mill Road,
Koorkencherry, Thrissur, Kerala
680 007
Occupation: Retired from
service
Independent and Non Executive
Director
-
P. Manomohanan
DIN: 00042836
Address: Aswathy‟, No: 7/ 71A,
High School Road,
P.O. Chenthrappinny,
Thrissur, Kerala 680 687
Occupation: Retired from
service
Independent and Non Executive
Director
1. Manappuram Benefit Fund Limited
V.R. Ramachandran
DIN: 00046848
Address: Valiparambil House,
50/840, Ayyanthole,
Thrissur, Kerala 680 003
Occupation: Service
Independent and Non Executive
Director
-
V.M. Manoharan
DIN: 00044817
Address: TC 6/657, Vylappully
House, Kunduvara Road,
Chembukkavu
Thrissur, Kerala 680 020
Occupation: Retired from
service
Independent and Non Executive
Director
1. Manappuram Benefit Fund Limited
2. Poomala Cottages Private Limited
108
Name, DIN, Address,
Occupation
Designation Other Directorships
Gaurav Mathur(1)
DIN: : 00016492
Address: C/o IEP Advisors
private Limited
505, Cee Jay House
Dr. Annie Besant Road, Worli
Mumbai, Maharashtra 400 018
Occupation: Service
Nominee and Non Executive
Director
1. Ocean Sparkle Limited
2. A2Z Maintenance and Engineering Services
Limited
3. High bridge Investments Private Limited
4. Ikya Human Capital Solutions Private Limited
5. Innovative Foods Limited
Shailesh J. Mehta
DIN: : 01633893
Address: 401 L Cerrito Ave
Hills Borough
California – 94010
United States of America
Occupation: Service
Independent and Non Executive
Director
1. Aptus Value Housing Finance India Limited
2. First Source Solutions Limited
3. SAFARI Industries Limited
4. Arch Pharmalabs Limited
5. Account Now Corpn USA
6. All Services Under One Roof (P) Limited
Gautam Saigal(2)
DIN: : 00640229
Address: C/o AA India
Development Capital Advisors
Private Limited
63 Maker Maxity, Level 6, 3
North Avenue
Bandra Kurla Complex, Bandra
(East)
Mumbai, Maharashtra
400 051
Occupation: Service
Nominee and Non Executive
Director
1. AA Indian Development Capital Advisors
Private Limited
2. Numero Uno Clothing Limited
3. Siesta Logistics Corporation Limited
4. Barflex Poly Films Private Limited
M. Anandan
DIN: : 00033633
Address: House No AL 192
1st Street, 12th Main Road
Annanagar, Chennai, Tamil
Nadu 600 040
Occupation: Business
Independent and Non Executive
Director
1. Aptus Value Housing Finance India Limited
2. Fivestar Business credits Limited
Jagdish Capoor
DIN: : 00002516
Address: 1601 Brooke Ville
359 Mogul Lane, Mahim
Mumbai, Maharashtra
400 016
Occupation: Service
Independent and Non Executive
Director
1. The Indian Hotels Company Limited
2. Assets Care Enterprises Limited
3. Quantum Trustee Company Private Limited
4. LIC Pension Fund Limited
5. Alankit Assignments Limited
(1) Nominee on behalf of Hudson Equity Holdings Limited
(2) Nominee on behalf of AA Development Capital India Fund I LLC
109
V.P. Nandakumar and Sushama Nandakumar are the promoters of our Company and V.P. Nandakumar is the
sole Promoter Director on the Board. No Directors of the Company are related to each other.
Brief Biographies of the Directors
V. P. Nandakumar, aged 57 years, is the Executive Chairman of our Company. 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.
I. Unnikrishnan, aged 47 years, is the Managing Director of our Company. 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 the Director of our Company since October 11, 2001. He was
appointed as the Managing Director on October 1, 2006.
B. N. Raveendra Babu, aged 59 years, is the Joint Managing Director of our Company. 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.
A. R. Sankaranarayanan, aged 85 years, is an Independent and Non Executive Director of our Company. 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 the Director of our Company since August 18, 2003.
P. Manomohanan, aged 70 years, is an Independent and Non Executive Director of our Company. 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 the Director of our Company since August 18, 2003.
V. R. Ramachandran, aged 59 years, is an Independent and Non Executive Director of our Company. He holds
a bachelors degree in science from the Calicut University and a bachelor‟s degree in law from the Kerala
Universty. He has over 32 years of work experience and is a civil lawyer enrolled with the Thrissur Bar
Association. He has been the Director of our Company since April 19, 2002.
V. M. Manoharan, aged 65 years, is an Independent and Non Executive Director of our Company. 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 posts of Deputy Director, Collegiate Education, Thrissur Zone and Dean,
KMCT school of Business, Kozhikode. He also held the post of the Principal in various Government Colleges in
Kerala and was also a Syndicate Member of University of Calicut. Presently, he is a member of the steering
committee, Vidya International Charitable Trust, Thalakkottukara, Thrissur and of the All India Management
Association and the Association of Indian College Principals. He has been the Director of our Company since
August 18, 2003
Gaurav Mathur, aged 37 years, is a Nominee and Non Executive Director of our Company. He has completed
his bachelor of arts in economics (honours) from Delhi University and master of business administration from
Indian Institute of Management, Ahmedabad. He is the Co-founder and Managing Director of India Equity
Partners. He had worked with JP Morgan Partners, Singapore, and Deutsche Bank, London. He had also served
on the boards of Domino‟s Pizza India Limited, Gujarat Glass Limited, MTR Foods Private Limited and RSB
Transmission of India Limited. Currently, he is serving on the boards of A2Z Maintenance and Engineering
Services Private Limited and IKYA HR Services and Ocean Sparkle Limited. He has been the Director of our
Company since October 15, 2010.
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Shailesh J. Mehta, aged 62 years, is an Independent and Non Executive Director of our Company. 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 post 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 post of Chairman and Chief Executive Officer, Providian Financial Corporation and President
and Chief Operating Officer Capital Holding. He has been the Director of our Company since August 17, 2009.
Gautam Saigal, aged 46 years, is a Nominee and Non Executive Director of our Company. 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 buy side private equity advisory services. He is
presently the Managing Director of AA Indian Development Capital Advisory Services. Prior to this, he co-led
AIG Global Investment Group‟s private equity 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 and
manager of Stewart & Mackertich.. He has been the Director of our Company since August 17, 2009.
M. Anandan, aged 61 years, is an Independent and Non Executive Director of our Company. 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
he was on the board of Equitas Micro Finance India Private Limited as a non executive director. He has been the
Director of our Company since August 17, 2009.
Jagdish Capoor, aged 72 years, is an Independent and Non Executive Director of our Company. He holds a
masters degree in Commerce from Agra University and has also done his fellowship from 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 the Chairman of Quantum
Trustee Company Private Limited. He has been the Director of our Company since July 20, 2010.
Borrowing Powers of the Directors of the Company
Pursuant to a resolution passed by the shareholders of the Company at their EGM held on May 31, 2011 and in
accordance with provisions of the Companies Act, the Board has been authorised to borrow up to Rs. 200,000
million, apart from temporary loans obtained or to be obtained from the Company‟s bankers in the ordinary
course of business, notwithstanding that such borrowings may exceed the aggregate of the paid-up share capital
and free reserves of the Company.
Interest of Directors of the Company
All the Directors, including independent Directors, may be deemed to be interested to the extent of fees, if any,
payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other
remuneration and reimbursement of expenses and commission payable to them. The Executive Chairman and
the Managing Director are interested to the extent of remuneration and commission paid to them for services
rendered as officers or employees of the Company.
The Directors, including independent Directors, may also be regarded as interested in the Equity Shares and also
to the extent of any dividend payable to them and other distributions in respect of the Equity Shares. The
Directors, including independent Directors, may also be regarded as interested in the Equity Shares held by or
that may be subscribed by and allotted to the companies, firms and trusts, in which they are interested as
directors, members, partners or trustees.
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All of the Directors may be deemed to be interested in the contracts, agreements/ arrangements entered into or to
be entered into by the Company with any company in which they hold directorships or any partnership firm in
which they are partners as declared in their respective capacity. Except as otherwise stated in this Prospectus
and statutory registers maintained by the Company in this regard, the Company has not entered into any
contract, agreement or arrangement during the two years immediately preceding the date of this Prospectus in
which the Directors are interested directly or indirectly and no payments have been made to them in respect of
these contracts, agreements, arrangements which are proposed to be made with them and none of the Directors
have taken any loans from the Company.
Shareholding of Directors
The following table sets forth the shareholding of our Directors in our Company as on May 31, 2011:
S. No. Name No. of Equity Shares Shareholding (%)
of Pre issue Equity
Share Capital
1 V.P. Nandakumar 127,996,348 30.70
2 I. Unnikrishnan 1,180,500 0.28
3 A. R. Sankaranarayanan 1,089,500 0.26
4 P. Manomohanan 691,791 0.16
5 V. R. Ramachandran 613,000 0.14
6 V. M. Manoharan 547,555 0.13
7 Gaurav Mathur NIL -
8 Shailesh J. Mehta 170,000 0.04
9 Gautam Saigal
NIL -
10 M. Anandan 410,000 0.09
11 B. N. Raveendra Babu 1,678,100 0.40
12 Jagdish Capoor 1000 Negligible
Remuneration and Terms of Employment of the Directors
1. Non-Executive Directors
The non-executive Directors are paid remuneration by way of sitting fees and other expenses
(travelling, boarding and lodging incurred for attending the Board/Committee meetings).
The Company pays sitting fees of Rs. 20,000 per meeting to the non-executive Directors for attending
meetings of the Board, Rs. 15,000 per each meeting of the Audit Committee and Rs. 7,500 per each
meeting of the Nomination, Compensation and Corporate Governance Committee and Shareholders‟
Grievance Committee. No sitting fee is paid for meetings of the Risk Management Committee of the
Board.
The following table sets forth all compensation paid by the Company to the existing non-executive
Directors for the year April 1, 2010 to March 31, 2011:
(Rs. in million)
Name Sitting Fees Commission Total
A. R. Sankaranarayanan 0.26 0.40 0.65
P. Manomohanan 0.23 0.40 0.63
V.R. Ramachandran 0.19 0.40 0.59
V. M. Manoharan 0.19 0.40 0.59
Shailesh J. Mehta 0.17 0.40 0.55
M. Anandan 0.23 0.40 0.63
Jagdish Capoor 0.08 0.25 0.33
Our directors Gaurav Mathur and Gautam Saigal are not paid any remuneration.
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2. Executive Directors
The present remuneration structure of Executive Directors consists of fixed salary, commission and
other perquisites. The following table sets forth all compensation paid to the Executive Directors with
effect from April 1, 2011:
V.P. Nandakumar, Executive Chairman
Particulars Remuneration
Basic salary Rs. 1,875,000 per month with an annual increment of Rs. 187,500
Perquisites* Contribution to Provident Fund at 12% of salary; leave encashment at the end of
tenure; medical reimbursement expenses for self and family including premium
payable for medical insurance in accordance with the rules of the Company; personal
accident insurance as per the rules of the Company; leave travel concession for self
and family once in a year as per the rules of the Company; fee for clubs subject to
maximum of two clubs excluding admission and life membership fees
Commission Not exceeding 1% of the net profits of the Company calculated as per the provisions
of Sections 349 and 350 of the Companies Act, the quantum whereof to be
determined by the Board of Directors subject to norms framed by the Board
Others Provision of chauffeur driven car for official purposes and telephone at residence and
such other allowances, perquisites, benefits and amenities as may be provided by the
Company from time to time
* However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in the
computation of remuneration or ceiling on perquisites.
I. Unnikrishnan, Managing Director
Particulars Remuneration
Basic salary Rs. 625,000 per month with an annual increment of Rs. 62,500
Perquisites* Contribution to Provident Fund at 12% of salary; leave encashment at the end of
tenure; medical reimbursement expenses for self and family including premium
payable for medical insurance in accordance with the rules of the Company; personal
accident insurance as per the rules of the Company; leave travel concession for self
and family once in a year as per the rules of the Company; fee for clubs subject to
maximum of two clubs excluding admission and life membership fees
Commission Not exceeding 1% of the net profits of the company calculated as per the provisions
of Sections 349 and 350 of the Companies Act, the quantum whereof to be
determined by the Board of Directors subject to norms framed by the Board
Others Provision of chauffeur driven car for official purposes and telephone at residence and
such other allowances perquisites and benefits and amenities as may be provided by
the Company from time to time
*However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in the
computation of remuneration or ceiling on perquisites.
B. N. Raveendra Babu, Joint Managing Director
Particulars Remuneration
Basic salary Rs. 500,000 per month with an annual increment of Rs. 50,000
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Particulars Remuneration
Perquisites* Contribution to Provident Fund at 12% of salary; leave encashment at the end of
tenure; medical reimbursement expenses for self and family including premium
payable for medical insurance in accordance with the rules of the Company; personal
accident insurance as per the rules of the Company; leave travel concession for self
and family once in a year as per the rules of the Company; fee for clubs subject to
maximum of two clubs excluding admission and life membership fees
Commission Not exceeding 1% of the net profits of the company calculated as per the provisions
of Sections 349 and 350 of the Companies Act, the quantum whereof to be
determined by the Board of Directors subject to norms framed by the Board
Others Such other allowances perquisites and benefits and amenities as may be provided by
the Company from time to time
* However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in the
computation of remuneration or ceiling on perquisites.
Changes in Board in during the last three years
Sr
No
Director Description of Change Date Reason
1 B.N.Raveendra Babu Resignation October 30, 2008 --
2 Mr. K.P. Balaraj
Mr. Gautam Saigal
Mr. Shailesh J. Mehta
Appointment December 27, 2008 As per the terms of PE agreement
3 Jyothy Prasannan Resignation October 30, 2008 --
4 K.K.Mohandas Resignation December 27, 2008 On personal grounds
5 M.Anandan Appointment December 27, 2008 --
6 B.N.Raveendra Babu Appointment as joint
managing director
February 25, 2010 --
7 Juguna.GP Resignation March 18, 2010 On personal grounds
8 K.P.Balaraj Resignation May 11, 2010 On account of sale of share by Sequoia
9 K.P.Balaraj Re-appointment May 11, 2010 To continue till AGM
10 T.V.Antony Appointment May 11, 2010 --
11 Jagdish Capoor Appointment July 20, 2010 --
12 K.P.Balaraj Resignation July 24, 2010 On his own
13 T.V.Antony Resignation August 24, 2010 On health grounds
14 Ashvin Chadha
Resignation October 15, 2010 On account of change in employment
15 Gaurav Mathur Appointment October 15, 2010 Nominated in place of Mr.Ashvin
Chadha
Corporate Governance
The Company has been complying with the requirements of the applicable regulations, including the Equity
Listing Agreement with the Stock Exchanges, in respect of corporate governance including constitution of the
Board and Committees thereof. The corporate governance framework is based on an effective independent
Board of Directors, separation of the supervisory role of the Board of Directors from the executive management
team and constitution of the committees of the Board of Directors, as required under applicable law. The
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Company‟s corporate governance policies recognize the accountability of the Board and the importance of
transparency to all constituents, including employees, customers, investors and the regulatory authorities.
The Board of Directors functions either as a full Board or through various committees constituted to oversee
specific operational areas. The executive management of the Company provides the Board of Directors with
detailed reports on its performance periodically.
Currently, the Board of Directors comprises 12 Directors. Consequently, in compliance with the requirements of
Clause 49 of the Equity Listing Agreement, the Board of Directors consists of nine independent Directors.
As per the mandatory requirements of Clause 49 of the Equity Listing Agreement, the Company has constituted
the following committees of the Board (“Committee”) and brief details of each of such Committee, its scope
and composition are given below:
1. Audit Committee
The Audit Committee was re-constituted by the Board of Directors through its resolution dated July 20,
2010.
The Audit Committee currently comprises the following Directors:
(i) P. Manomohanan;
(ii) A.R. Sankaranarayanan;
(iii) M. Anandan;
(iv) Shailesh J. Mehta; and
(v) Gautam Saigal.
The functions of the Audit Committee include:
(i) Oversight of the Company‟s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible.
(ii) Recommending the appointment, reappointment, and if required, the replacement or removal
of the statutory auditor and the fixation of audit fee.
(iii) Approval of payment to statutory auditors for any other services rendered by the statutory
auditors.
(iv) Review, along with the management, the annual financial statements of the Company before
its submission to the Board for approval, with particular reference to:
a. Matters required to be included in the Directors‟ Responsibility Statement to be
included in the Board‟s report in terms of clause 2AA of Section 217 of the
Companies Act;
b. changes, if any in accounting policies and practices and reasons for the same;
c. major accounting entries involving based on exercise of judgment by management;
d. significant adjustments made in the financial statements arising out of audit findings;
e. compliance with listing and legal requirements concerning financial statements;
f. disclosure of any related party transactions; and
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g. Qualifications in the draft audit report.
(v) Reviewing with the management the quarterly financial statements before submission to the
Board for approval.
(vi) Review of the adequacy of internal control systems with the management, external and
internal auditors.
(vii) Review the findings of any internal investigations by the internal auditors into matters wherein
fraud is suspected or irregularity or failure of internal control systems of a material nature and
reporting the matter to the Board.
(viii) Discussion with internal auditors regarding any significant findings and follow up thereon.
(ix) Discussion on the nature and scope of the audit with auditors before the audit commences as
well as post-audit discussion to ascertain any area of concern.
(x) To look into the reasons for substantial defaults in payments to depositors, debenture holders
and shareholders and creditors.
(xi) Any other function mentioned in the terms of reference of the Audit Committee.
2. Nomination, Compensation and Corporate Governance Committee
The Nomination, Compensation & Corporate Governance Committee was re-constituted by the Board
of Directors at its meeting held on July 20, 2010.
The Nomination, Compensation & Corporate Governance Committee currently consists of the
following Directors:
(i) A. R. Sankaranarayanan;
(ii) V. P. Nandakumar;
(iii) M. Anandan;
(iv) Shailesh J. Mehta
(v) Jagdish Capoor; and
(vi) Gautam Saigal.
The functions of the Nomination, Compensation and Corporate Governance Committee include:
(i) Determining on behalf of the Board and on behalf of the shareholders the Company's policies
on specific remuneration packages to executive directors including pension rights and any
compensation payment.
(ii) Acting as a “Compensation Committee” as required under the SEBI (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 for the purpose of
formulation of policy, procedures and scheme and the overall supervision and administration
of the MFL ESOP.
3. Shareholders‟ Grievance Committee
The Shareholders‟ Grievance Committee was re-constituted by the Board of Directors through its
resolution dated October 15, 2010.
116
The Shareholders‟ Grievance Committee currently consists of the following directors:
(i) V.R. Ramachandran;
(ii) P. Manomohanan; and
(iii) V.M.Manoharan.
The Shareholders‟ Grievance Committee, among other functions, focuses on shareholder grievances
which comprise monitoring and redressing the shareholders complaints in relation to share transfer, non
receipt of Annual Report etc.
4. Risk Management Committee
The Risk Management Committee was re-constituted by the Board of Directors through its resolution
dated August 17, 2009.
The Risk Management Committee currently consists of the following directors:
(i) P. Manomohanan;
(ii) V.P. Nandakumar;
(iii) I. Unnikrishnan; and
(iv) B.N. Raveendra Babu.
The Risk Management Committee, among other functions, focuses on reviewing on an ongoing basis
the measures adopted by the Company for the identification, measurement, monitoring and mitigation
of the risks involved in the various business activities carried on by the Company.
5. Financial Resources and Management Committee
The Financial Resources and Management Committee was re-constituted by the Board of Directors
through its resolution dated January 24, 2011.
The Financial Resources Committee currently consists of the following directors:
(i) V.P. Nandakumar;
(ii) I. Unnikrishnan; and
(iii) B.N. Raveendra Babu.
The committee‟s function is to oversee and deal with the following operational matters from time to
time:-
(i) Investments
To deliberate and make recommendation to the Board on all transactions and matters relating
to the business of the company or its investments.
(ii) Financial Arrangements
a) Approve financial arrangements whether as working capital demand loans or against
assignment of receivables of the company or buy out of port folios or by such other
means with banks and other financial institutions including the signing of such
documents for facilities within the borrowing powers of the Board.
117
b) Approve the creation of any mortgage/charge or other encumbrance over the
company‟s properties or assets for the above purposes.
c) Approve the issuing or providing or permitting the company to issue or provide any
form of guarantee or indemnity or other financial or non financial support in the
ordinary course of business.
d) To consider the issue of commercial papers and other short term or long term
instruments for raising funds from the market.
e) Authorize changes in signatories in respect of accounts maintained by the company
with banks and other financial institutions
(iii) Allotment of Debentures and Bonds
Approve the allotment of debentures and bonds issued by the company within in the overall
limit set for the issue and the creation/modification/satisfaction of mortgage/charge on such
debentures/bonds as the case may be.
(iv) Others
(a) Authorizing officers of the company for making necessary application for registration
under different enactments as employee welfare, fiscal and other municipal or local
or subordinate legislations.
(b) Authorizing officers of the company by grant of power of attorneys so as to represent
before Government, Judicial or quasi judicial bodies or other authorities for sanction,
approval or other permissions on such matters affecting the business of the company.
(c) Authorizing officers of the company by grant of power of attorneys or otherwise for
matters in connection with day to day business activities, opening of branches,
execution of rent/tenancy agreements etc.
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Organisation chart of the Company
EXECUTIVE CHAIRMAN
MD
119
Key Management Personnel of the Company
C. Radhakrishnan, aged 46 years, is the General Manager and Company Secretary of our Company. He holds a
masters degree in commerce from the Calicut University and in business administration from the Mahatma
Gandhi University. He is a Fellow Company Secretary having completed his bachelor‟s degree in law from the
Tumkur University. He has 14 years of work experience with the Life Insurance Corporation of India, Mafatlal
Industries Limited, Transformers and Electricals Kerala Limited and Co-operative Colleges. He has been
working with our Company since December 11, 2001.
Bindhu A.L., aged 37 years, is the Chief Financial Officer and Senior General Manager of our Company. She
holds a bachelors degree in commerce from the Calicut University and is also a certified Chartered Accountant
from the Institute of Chartered Accountants of India. She has in the past worked with Mohandas and Associates.
She has been working with our Company since June 15, 1998.
N.R. Bahuleyan, aged 62 years, is the Chief General Manager of our Company. He holds a bachelors degree in
commerce from the Calicut University and is a Fellow Company Secretary. He has in the past worked with the
Kerala State Electronics Development Corporation Limited for 18 years. He has been working with our
Company since August 1, 1994.
P. Krishnaraj, aged 62 years, holds the post of „General Manager-Operations‟ in our Company. He holds a
master‟s degree in agricultural science from the Kerala University and is also a Certified Associate of Indian
Institute of Bankers. He has over 37 years of work experience and has worked as Block Development Officer,
Government of Tamil Nadu and with the State Bank of Travancore. He has been working with our Company
since March 9, 2009.
S.V.R. Jogarao, aged 61 years, holds the post of „General Manager-Gold Loan Marketing‟ in our Company. He
holds a masters degree in science from the Andhra University, a bachelor‟s degree in law from Ravisanker
University and is also an Associate of Indian Institute of Bankers (C.A.I.I.B). He has over 34 years of
experience with the Bank of India. He has been working with our Company since November 9, 2009.
Krishnamurthy, aged 53 years, holds the post of „Senior General Manager‟ in our Company. He holds a
bachelors degree in commerce from the Kerala University and is also a Certified Associate of Indian Institute of
Bankers. He has over 30 years of experience with the State Bank of India. He has been working with our
Company since October 29, 2009.
M.V.Babu, aged 62 years, holds the post of General Manager (Taxation) in our Company. He holds a bachelors
degree in Commerce from the Kerala University. He is a Chartered Accountant by profession and is also an
associate member of the Indian Institute of Bankers. He has 25 years of experience as the head of Accounts and
Taxation departments of The Federal Bank.
M. Satheesh Kumar aged 47 years, holds the post of General Manager (Information Technology) in our
Company. He holds a bachelors degree in history from the Calicut University. He has an experience spanning
more than 15 years in various departments of our Company.
Shareholding of Key Management Personnel
As of the date of this Prospectus, except as provided below, our Key Management Personnel do not hold any
Equity Shares in the Company.
S. No. Name Number of Equity
Shares Held
% of shareholding
1 C. Radhakrishnan 14,602 0.0017
2 Bindhu A. L. 1,04,020 0.0119
3 N.R. Bahuleyan 21,050 0.0025
4 P. Krishnaraj 10,520 0.0012
5 S.V.R. Jogarao 1,400 0.0001
6 Krishnamurthy - -
7 M.V. Babu 1,200 0.0001
8. M. Satheesh kumar 36,520 0.0039
120
Interests of Key Management Personnel
Except as disclosed in this Prospectus and other than to the extent of remuneration or benefits to which they are
entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the
ordinary course of business, the Key Management Personnel of the Company do not have any interest in the
Company.
None of our Key Management Personnel have been paid any consideration of any nature from our Company,
other than their remuneration and options granted under the MFL ESOP.
Payment or Benefit to Officers of the Company
Except statutory benefits upon termination of their employment in the Company or on reaching superannuation,
no officer of the Company is entitled to any benefit other than the stock option (being vested) upon termination
of his employment in the Company.
Employee Stock Option Scheme
We adopted an employee stock option scheme on August 17, 2009 (which was amended pursuant to the EGM
held on April 22, 2010) whereby stock options are proposed to be granted to identified employees of our
Company. Entitlements under this scheme are determined on the basis of various parameters as laid down by the
Board. The compensation committee of the Board is entrusted with the responsibility of implementing and
administering the MFL ESOP scheme. The total number of options proposed to be issued under the MFL ESOP
scheme is one million, being 5.78% of the issued equity capital of the Company as on August 17, 2009, the
effective date of the scheme. The total number of options pursuant to stock split and bonus stands to 9,147,500
options. The shares allotted pursuant to the exercise of the options granted under this scheme shall not be locked
for any period. Each option issued by the Company to the employees, would be eligible for the allotment of one
Equity Share of the Company by payment of the exercise price. As on March 31, 2011, we have granted a total
of 8,290,000 options under this scheme, out of which 37,55,120 options have been exercised.
The following table indicates the ESOPs granted and exercised by the Directors and the Key Management
Personnel as of the date of this Prospectus:
S.
No.
Name Directors Number of ESOPs
granted
Number of ESOPs
exercised
1. I. Unnikrishnan 1,200,000 600,000
2. B.N.Raveendra Babu 1,000,000 500,000
3. M.Anandan 300,000 150,000
4. P.Manomohanan 300,000 150,000
5. V.M.Manoharan 300,000 150,000
6. V.R. Ramachandran 300,000 150,000
7. Shailesh J Mehta 300,000 150,000
8. A.R.Sankaranarayanan 300,000 150,000
9. Bindu.A.L 300,000 150,000
10. C.Radhakrishnan 200,000 100,000
11. N.R.Bahuleyan 80,000 40,000
12. P.Krishnaraj 40,000 20,000
13. M. Satheesh Kumar 80,000 40,000
TOTAL 4,700,000 2,350,000
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OUR PROMOTERS
The following individuals are the current promoters of our Company:
1. Mr. V. P Nandakumar; and
2. Mrs. Sushama Nandakumar.
Our Promoters collectively hold 36.46% stake in our Company as on July 22, 2011.
Mr. V. P. Nandakumar is also the Executive Chairman of our Company. The remuneration that is paid to him in
that capacity has been disclosed on page 112. Neither of our Promoters have any interest in our Company except
as disclosed in this Prospectus.
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OUR SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
The following is the list of Companies under the same management:
1. Manappuram Insurance Brokers (P) Limited
2. Manappuram Asset Finance Limited
3. Manappuram Health Care Limited
4. Manappuram Comptech and Consultants (P) Limited
5. Manappuram Infrastructure and Builders Private Limited
6. Manappuram Jewellers Private Limited
7. Manappuram Chits India Limited
8. Manappuram Benefit Fund Limited
9. Manappuram Construction and Properties Private Limited
We do not have any subsidiaries, associates or joint venture companies of our Company.
123
STOCK MARKET DATA FOR EQUITY SHARES AND DEBENTURES OF OUR COMPANY
I. Equity Shares
Our Company‟s Equity Shares are listed on the BSE, MSE and CSE. It is a permitted security on NSE.
As our Company‟s shares are actively traded on the NSE and BSE, stock market data has been given
separately for each of these Stock Exchanges.
1. The high and low closing prices recorded on the NSE and BSE during the last three years and the
number of Equity Shares traded on the days the high and low prices were recorded are stated below.
NSE*
Year
ended
March 3
1
High
(Rs.)
Date of High Volume on
date of high
(no. of shares)
Low
(Rs.)
Date of
Low
Volume on
date of low
(no. of sha
res)
Average
price for
the year
(Rs.)
2011 181.65 November 22,
2010
2,634,608 69.9 July 6,
2010
35,441 127.65
2010 NA NA NA NA NA NA NA
2009 NA NA NA NA NA NA NA
Source: www.nseindia.com
The average price has been computed based on the daily closing price of Equity Shares.
*Trading started in NSE from June 30, 2010
BSE
Year
ended
March 3
1
High
(Rs.)
Date of High Volume on
date of high
(no. of shares)
Low
(Rs.)
Date of
Low
Volume o
n
date of
low
(no. of sh
ares)
Average
price for
the year
(Rs.)
2011 829.3 April 27, 2010 38,372 67.3 June 1,
2010
65,496 169.83
2010 789.8 March 19, 2010 72,111 126.8 April 1,
2009
263 442.89
2009 165.55 May 20, 2008 3,414 100 January
12, 2009
176 134.30
Source: www.bseindia.com
The average price has been computed based on the daily closing price of Equity Shares.
2. The high and low prices and volume of Equity Shares traded on the respective dates during the last six
months are as follows:
NSE*
Month,
Year
High
(Rs.)
Date of
High
Volume on date
of high (No. of
Equity Shares)
Low
(Rs.)
Date of
low
Volume on date of
low (No. of Equity
Shares)
Average Price
for the month
(Rs.)
July 2011 60.05 July 27,
2011 4,414,680 55.05
July 29,
2011 2,361,645 56.89
June 2011 124.75 June 6,
2011 1,376,402 56.3
June 30,
2011 1,396,638 74.04
May 2011 133.15 May 5,
2011 1,944,330 109.7
May 26,
2011 398,296 118.68
124
Month,
Year
High
(Rs.)
Date of
High
Volume on date
of high (No. of
Equity Shares)
Low
(Rs.)
Date of
low
Volume on date of
low (No. of Equity
Shares)
Average Price
for the month
(Rs.)
April 2011 135.95 April 5,
2011 1,072,867 125.6
April 19,
2011 622,449 130.78
March
2011
132.8 March 31,
2011 2,099,743 115
March 11,
2011 494,511 119.58
February
2011
130.75 February
23, 2011 1,848,047 91.3
February
10, 2011 1,640,201 113.27
Source: www.nseindia.com
The average price has been computed based on the daily closing price of Equity Shares.
*Trading started in NSE from June 30, 2010
BSE
Month,
Year
High (Rs.) Date of
High
Volume on date of
high (No. of
Equity Shares)
Low
(Rs.)
Date of low Volume on date of
low (No. of Equity
Shares)
Average Price
for the month
(Rs.)
July 2011 60 July 27,
2011 1,205,002 55.05
July 29,
2011 360,090 56.76
June 2011 124.5 June 6,
2011 298,472 56.15
June 30,
2011 98,426 74.01
May 2011 133.15 May 5,
2011 588,137 109.4
May 26,
2011 47,452 118.63
April
2011
135.55 April 5,
2011 311,773 125.85
April 19,
2011 110,352 130.87
March
2011
132.4 March 31,
2011 561,311 114.8
March 21,
2011 74,437 119.45
February
2011
130.25 February
23, 2011 1,101,899 91.2
February
10, 2011 559,895 113.23
Source: www.bseindia.com
The average price has been computed based on the daily closing price of Equity Shares.
II. Debentures
Debt securities listed by the Company, which are listed on BSE are infrequently traded with limited or no
volumes. Consequently, there has been no reported data available for the prices or volumes of such listed debt
securities.
125
DESCRIPTION OF CERTAIN INDEBTEDNESS
1. The statement of unconsolidated borrowings of our Company as on March 31, 2011 is provided below:
Particulars Amount (in Rs. in million)
Loan Funds
(a) Secured Loans (a) 43,723.07
7.5% - 14.5% Secured Non-convertible Debentures 5,012.85
Add: Interest accrued and due thereon 2.68
From Banks
Cash Credit 7,488.19
Working Capital Loans 30,558.41
From Others
Working Capital Loans 650.00
Vehicle Loans (secured by hypothecation of vehicles) 10.94
(b) Unsecured Loans (b) 12,817.03
Deposits -
Debenture Application Money 20.00
Inter corporate deposits 1.64
Commercial Paper 10,007.87
Subordinate bonds 1,778.76
Subordinated debt 1,000.00
Interest accrued and due 8.76
Total Debt (a+b) 56,540.10
2. Details of Secured Borrowings:
Our Company‟s secured borrowings other than vehicle loans as on March 31, 2011 amount to Rs.
38,696.60 millions. The details of the individual borrowings are set out below.
S.No. Particulars (Cash
credit/Overdrafts/
Working Capital
Loans)
Date of Sanction
Letter
Amount
outstanding as on
March 31, 2011
(Rs. in million)
Repayment
Schedule
1. IDBI Bank Ltd March 21, 2011 4,773.01 12 months
2. ING Vysya Bank Ltd October 11, 2010 50.01 12 months
3. Development Credit
Bank
March 21, 2011
267.30
182 days
4. Punjab National Bank September 28,
2010
2,936.09
CC (Rs. 1000
million) – 12
months
STL (Rs. 1000
million) – 200 days
5. South Indian Bank August 9, 2010 1,209.04 120 days
6. Yes Bank January 21, 2011
2,500.00
12 months
7. Lakshmi Vilas Bank September 15,
2010 499.90
On demand
8. Catholic Syrian Bank March 31, 2008 36.73 On demand
9. Kotak Mahindra Bank
Ltd
July 20, 2010
17.89
On demand
10. Dhanalakshmi Bank
Ltd
January 22, 2011
509.58
CC (Rs. 480
million) – 12
months
STL (Rs. 500
million) – 6 months
11. Tata Capital Ltd April 21, 2010 500.00 12 months (rollover
126
S.No. Particulars (Cash
credit/Overdrafts/
Working Capital
Loans)
Date of Sanction
Letter
Amount
outstanding as on
March 31, 2011
(Rs. in million)
Repayment
Schedule
quarterly)
12. Indusind Bank September 8,
2010
544.14
CC (Rs. 50 million)
– on demand
STL (Rs. 500
million) – 180 days
13. Karur Vysya Bank July 22, 2010 500.00 365 days
14. State Bank of India July 29, 2009
4,000.00
180 days
15. Corporation Bank July 27, 2010
2,000.00
180 days
16. Bank of Rajhastan March 16, 2011 24.40 12 months
17. Central Bank of India September 4,
2010
1,849.37
On demand
18. Indian Overseas Bank,
Thrissur
April 13, 2010
1,250.00
365 days
19. Indian Overseas Bank,
Mumbai
April 13, 2010
1,499.96
365 days
20. Union Bank of India December 14,
2010 1,762.42
On demand
21. DBS Bank Ltd June 22, 2010 750.00 12 months
22. State Bank of
Travancore
Rs. 1000 million
– August 19, 2010
Rs. 900 million -
December 15,
2010
1,900.00
6 months
23. Barclays Bank September 2,
2010
1,000.00
120 days
24. Andhra Bank August 27, 2010
2,000.00
On demand
25. Dena Bank September 21,
2010 750.00
365 days
26. Bank of India September 20,
2010
1,000.00
365 days
27. Jammu & Kashmir
Bank
October 30, 2010
March 23, 2011
1,000.00
Rs. 1000 million –
12 months
Rs. 500 million –
18 months (after 15
months – 50% and
18 months – 50%
28. State Bank of Bikaner
& Jaipur
October 29, 2010
500.00
On demand
29. UCO Bank February 9, 2011
2,000.00
12 months
30. Karnataka Bank December 14,
2010 416.77
12 months
31. Ratnakar Bank January 18, 2011 500.0 6 months
32. Aditya Birla Finance
Ltd
March 25, 2011
150.0
12 months
(payment quarterly)
Our Company has also entered into various assignment agreements for Rs 11,182.83 as at March 31,
2011.The details of the same are set out below:
127
S.No. Particulars (Assignment) Date of Agreement Amount
assigned as at
March 31, 2011
(Rs. in million)
1. ICICI Bank Ltd December 30, 2010 1,564.86
2. IDBI Bank Ltd December 16, 2010 548.36
3. Axis Bank Ltd December 9, 2010 1,118.19
4. ING Vysya Bank Ltd October 18, 2010 1,628.67
5. Federal Bank September 11, 2009 166.55
6. Yes Bank March 25, 2011 1,684.88
7. Kotak Mahindra Bank Ltd February 25, 2011 1,971.79
8. Dhanalakshmi Bank Ltd July 30, 2010,
August 31, 2010
September 9, 2010
September 29, 2010
1,849.41
9. Indusind Bank March 24, 2010
450.40
10. Development Credit Bank January 31, 2011 199.72
Our Company has issued rated, listed, secured, redeemable, non convertible debentures of face value of
Rs. 1,000,000 and Rs. 100,000 each on a private placement basis for cash at par of the aggregate
nominal value of Rs. 3,688.00 million carrying coupon rate ranging from 7.5% to 14.5% per annum
which is outstanding as on March 31, 2011 as follows:
ISIN Coupon
Rate
No. of
Debentures
Amount
outstanding as on
March 31, 2011
(Rs. in millions)
Maturity Date
INE522D07016 9.00% 250 250 August 16, 2011
INE522D07024 9.25% 250 250 February 18, 2012
INE522D07040 10.65% 1000 1,000 March 3, 2012
INE522D07057 12.00% 1000 100 March 28, 2013
INE522D07065 12.00% 1000 100 March 28, 2014
INE522D07073 12.25% 1980 198 March 28, 2014
INE522D07081 12.25% 1980 198 March 28, 2015
INE522D07099 12.25% 2640 264 March 28, 2016
INE522D07107 12.60% 1000 1,000 June 29, 2012
INE522D07115 12.25% 984 98.4 March 31, 2014
INE522D07123 12.25% 984 98.4 March 31, 2015
INE522D07131 12.25% 1312 131.2 March 31, 2016
Our Company has issued secured, redeemable, non convertible debentures of varying coupon rates on a
retail private placement basis other than the rated, secured and listed debentures mentioned above, of
the aggregate nominal value of Rs. 1,324.85 million which is outstanding as on March 31, 2011 as
follows:
Date of Allotment Number of
Debentures
Nominal amount
outstanding as at March
31, 2011 (Rs. in millions)
Tenure (in
Months)
September 16, 2006 4,812 4.81 60
November 15, 2006 5,781 5.78 60
March 24, 2007 12 0.01 48
March 24, 2007 410 0.41 60
October 13, 2007 50 0.05 48
128
Date of Allotment Number of
Debentures
Nominal amount
outstanding as at March
31, 2011 (Rs. in millions)
Tenure (in
Months)
December 4, 2007 328 0.33 60
January 31, 2008 163 0.16 48
January 31, 2008 1,439 1.44 60
March 27, 2008 704 0.70 36
March 27, 2008 53 0.05 48
March 27, 2008 732 0.73 60
March 31, 2008 35 0.04 36
March 31, 2008 432 0.43 60
December 29, 2008 3,232 3.23 36
December 29, 2008 654 0.65 60
December 29, 2008 974 0.97 36
December 29, 2008 200 0.20 48
December 29, 2008 108 0.11 36
March 16, 2009 20 0.02 24
March 16, 2009 666 0.67 36
March 16, 2009 150 0.15 60
March 16, 2009 82 0.08 24
March 16, 2009 697 0.70 36
April 30, 2009 285 0.29 24
April 30, 2009 1,013 1.01 36
April 30, 2009 15 0.02 24
April 30, 2009 517 0.52 36
June 9, 2009 10 0.01 48
June 9, 2009 252 0.25 60
June 9, 2009 574 0.57 24
June 9, 2009 1,664 1.66 36
February 22, 2010 6,231 6.23 12
March 9, 2010 11,062 11.06 12
March30, 2010 62,119 62.12 12
April 22, 2010 61,460 61.46 12
April 22, 2010 62,359 62.36 12
April 22, 2010 57,124 57.12 12
July 20, 2010 66,273 66.27 12
July 20, 2010 45,428 45.43 12
July 24, 2010 39,627 39.63 12
October 15, 2010 50,164 50.16 12
October 15, 2010 60,986 60.99 12
October 15, 2010 92,655 92.66 12
October 15, 2010 107,254 107.25 12
November 29, 2010 1,312 1.31 36
November 29, 2010 79,561 79.56 12
November 29, 2010 75,076 75.08 12
129
Date of Allotment Number of
Debentures
Nominal amount
outstanding as at March
31, 2011 (Rs. in millions)
Tenure (in
Months)
November 29, 2010 55,328 55.33 12
December 15, 2010 98,858 98.86 12
February 25, 2011 3,159 3.16 12
February 25, 2011 149,979 149.98 12
March 31, 2011 82,599 82.60 12
March 31, 2011 30,169 30.17 12
3. Details of Unsecured Borrowings:
Our Company has issued listed commercial papers aggregating to Rs. 10,007.87 million which is
outstanding as on March 31, 2011 as follows:
ISIN Tenure
(in
days)
Amount
outstanding as on
March 31, 2011 (Rs. in millions)
Maturity Date
INE522D14251 90 243.80 April 6, 2011
INE522D14251 90 243.80 April 6, 2011
INE522D14269 88 487.87 April 8, 2011
INE522D14269 88 243.94 April 8, 2011
INE522D14277 87 488.42 April 29, 2011
INE522D14285 86 243.70 May 11, 2011
INE522D14319 90 242.80 May 30, 2011
INE522D14319 90 242.80 May 30, 2011
INE522D14319 90 242.80 May 30, 2011
INE522D14327 91 242.73 May 31, 2011
INE522D14293 91 970.95 May 26, 2011
INE522D14194 363 92.29 29-Sept-2011
INE522D14301 109 482.66 June 14, 2011
INE522D14335 179 471.77 August 30, 2011
INE522D14343 92 485.32 June 7, 2011
INE522D14350 87 243.05 June 3, 2011
INE522D14343 91 485.48 June 7, 2011
INE522D14343 91 242.74 June 7, 2011
INE522D14384 360 178.68 March 5, 2012
INE522D14376 139 95.60 July 28, 2011
INE522D14368 188 470.78 September 15, 2011
INE522D14368 188 235.39 September 15, 2011
INE522D14368 188 235.39 September 15, 2011
INE522D14392 91 485,77 June 13, 2011
INE522D14392 91 485,77 June 13, 2011
INE522D14368 183 236.04 September 15, 2011
INE522D14400 124 173.35 July 27, 2011
INE522D14418 195 282.85 October 10, 2011
INE522D14426 125 192.52 August 1, 2011
INE522D14434 365 314.32 March 29, 2012
INE522D14434 365 224.52 March 29, 2012
Our Company has issued unsecured subordinated bonds of varying interest rates aggregating Rs.
1,787.52 million (including interest accrued and due of Rs. 8.76 million) which is outstanding as on
March 31, 2011 as follows:
130
Series Tenure (in
months)
Amount
outstanding as on
March 31, 2011(Rs.
in millions)
Maturity Date
BD18 60 0.60 31/08/2011
BD19 60 4.56 30/12/2011
BD1MAG09 60 0.01 23/12/2011
BD20 60 21.54 29/06/2012
BDMAF001 60 0.54 06/06/2012
BDMAF002 60 1.53 21/08/2012
BDMAF003 60 1.73 31/10/2012
BDMAF004 60 1.76 24/01/2013
BDMAF005 60 0.65 22/02/2013
BDMAF006 60 0.84 30/08/2013
BDMAF007 84 0.30 12/07/2015
BDMAF008 60 11.75 29/11/2013
BDMAF009 60 3.38 26/12/2013
BDMAF010 120 0.73 16/12/2018
BDMAF011 60 10.17 31/01/2014
BDMAF012 120 0.07 21/01/2019
BDMAF012 60 0.03 27/12/2013
BDMAF013 60 10.04 14/03/2014
BDMAF014 120 1.20 13/03/2019
BDMAF015 60 10.11 13/05/2014
BDMAF016 120 0.21 28/04/2019
BDMAF017 60 3.32 09/06/2014
BDMAF018 60 11.62 19/12/2014
BDMAF019 120 0.06 02/09/2019
BDMAG019 60 0.03 23/12/2011
BDMAG020 60 0.70 12/06/2012
BDMAG022 60 25.94 31/08/2012
BDMAG023 60 12.80 29/09/2012
BDMAG024 60 15.54 31/10/2012
BDMAG025 60 16.00 22/11/2012
BDMAG026 60 7.51 31/12/2012
BDMAG027 60 8.53 31/01/2013
BDMAG028 60 7.02 28/02/2013
BDMAG029 60 3.55 31/03/2013
BDMAG030 60 71.89 30/08/2013
BDMAG031 72 0.72 12/07/2014
BDMAG032 84 23.16 21/07/2015
BDMAG033 60 86.77 11/11/2013
BDMAG034 60 38.26 29/11/2013
BDMAG035 120 0.11 28/11/2018
BDMAG036 60 29.15 24/12/2013
131
Series Tenure (in
months)
Amount
outstanding as on
March 31, 2011(Rs.
in millions)
Maturity Date
BDMAG037 60 0.07 22/12/2013
BDMAG037 120 0.72 24/12/2018
BDMAG038 60 54.32 31/01/2014
BDMAG039 120 1.24 30/01/2019
BDMAG039 60 0.03 22/01/2019
BDMAG040 60 60.97 04/03/2019
BDMAG041 120 1.85 14/03/2019
BDMAG042 60 93.54 15/05/2014
BDMAG043 120 1.12 09/05/2019
BDMAG044 60 39.22 09/06/2014
BDMAG045 120 0.29 08/06/2019
BDMAG046 60 52.50 06/07/2014
BDMAG047 120 22.17 31/03/2021
BDMAG047 60 0.21 01/10/2015
BDMAG048 60 53.13 27/07/2014
BDMAG049 60 52.28 18/08/2014
BDMAG050 60 53.02 19/09/2014
BDMAG051 60 52.22 19/10/2014
BDMAG052 60 82.11 04/01/2015
BDMAG053 60 51.50 22/02/2015
BDMAG054 60 51.31 17/04/2015
BDMAG055 60 50.08 24/05/2015
BDMAG056 60 50.14 28/06/2015
BDMAG057 60 50.02 25/07/2015
BDMAG058 60 50.44 01/09/2015
BDMAG059 60 50.04 29/09/2015
BDMAG060 60 50.21 30/10/2015
BDMAG061 60 50.07 27/11/2015
BDMAG062 60 50.00 03/01/2016
BDMAG063 60 50.19 08/02/2016
BDMAG064 60 50.21 10/03/2016
BDMAG065 60 29.22 31/03/2016
Not Allocated 120 0.02 09/06/2019
Not Allocated 60 88.63 08/06/2014
There is also a subordinated debt of Rs. 1000 million from Syndicate Bank outstanding as on March
31, 2011 which was sanctioned vide sanction letter dated October 21, 2010, with a maturity of 5 years
and 6 months from the date of first drawdown at a floating interest rate of Base rate plus 350bps,
payable on a monthly basis.
4. Trustee Arrangements entered into by our Company
Our Company has entered into debenture trustee arrangements with Axis Trustee Services Limited and
132
IL&FS Trust Company Limited for their debenture issuances mentioned in point 2 above. Besides the
above, the Company has also entered into debenture trustee arrangements with V.K. Kerala Verma and
V. Sajith for the retail debentures listed above. The Company has not entered into any security trustee
arrangement and all security is created directly in favour of the working capital/short term loan
creditors.
5. Security Agreements entered into by our Company
Our Company has taken various loans from banks and financial institutions which are in most cases
secured by „exclusive first charge‟ over gold loan receivables of identified branches of the Company. In
some cases the charge created is a pari passu floating charge on all receivables of the Company in
favour of the lender. The charge is created by way of hypothecation agreements entered into with the
respective lenders and financial institutions and Form 8 filings with the RoC is made for perfection of
the charge created.
6. Servicing behaviour on existing debt securities, payment of accrued interest on due dates on term
loans and debt securities
As on the date of this Prospectus, there has been no default in payment of principle or interest on any
term loan and debt security issued by our Company in the past.
133
OUTSTANDING LITIGATION AND DEFAULTS
Our Company is subjected to various legal proceedings from time to time, mostly arising in the ordinary course
of its business. The legal proceedings are initiated by us and also by various customers. These legal proceedings
are primarily in the nature of (a) consumer complaints (b) arbitration claims (c) criminal complaints (d) civil
cases. We believe that the number of proceedings in which we are involved in is not unusual for a company of
its size in the context of doing business in India.
Except as described below, we are not involved in any legal proceedings, and no proceedings are threatened,
which may have, or have had, a material adverse effect on our business, properties, financial condition or
operations.
As on June 30, 2011, we have been made party to the following cases:
1. Our Company has filed writ appeal no. 35045 of 2009 before the Supreme Court of India against the
order of the Kerala High Court in 541 of 2007 dated November 18, 2009 directing all NBFCs to
register under the Kerala Money-Lenders Act. The High Court of Kerala had earlier struck down a
notification passed under the Kerala Money-Lender Act that imposed an interest ceiling of 12.00% on
advances made by all entities that are covered under that Act. Further, the Government of Karnataka
has issued an order exempting the Company from the applicability of the provisions of the
moneylenders‟ legislation of Karnataka. While our Company has received partial exemptions from two
States (Kerala and Karnataka) from the applicability of the provisions of similar money lending
legislations, in the event the Supreme Court decides the matter against us, our Company would be
required to register all branches located in Kerala as well as in other States which have enacted similar
legislations under such legislations in the respective States. A stipulated registration fee is payable on
the registration of each branch and in addition to that, each registered branch would also be required to
deposit a certain sum of money with the prescribed authority as security for observing the terms of the
licence issued. Further, the Company would not be able to charge interest beyond a limit specified
under such legislations and as a result the revenues of the Company may fall substantially.
The Kerala Money-Lenders Act prescribes a maximum penalty of imprisonment for a period up to 3
years and a fine of Rs. 50,000 for carrying out business without a license in the event that the Company
is found to be in violation of the same.
The matter is currently pending hearing before the Supreme Court of India. Now the Supreme Court
vide its order dated December 16, 2009 directed that status quo be maintained until further orders.
2. The Executive Chairman of our Company, V. P. Nandakumar, and certain other of our employees are
parties to a criminal case which is pending before the Court of the Judicial Magistrate of First Class,
Ottapalam, Kerala. The case was filed as a result of a complaint by one of our customers alleging that
we had forcefully dispossessed the customer of a vehicle for which the customer had availed of a loan
from us despite the customer having no payment due to us in relation to the vehicle. This case is filed
under Sections 143, 147, 148, 149, 323, 394, 457 and 506 (iii) of the Indian Penal Code, 1860.
3. The Company has been made parties to two Sales Tax cases relating to the financial years 1994 - 95,
1995 - 96, 1998 – 99, 2005 - 06, and 2006 – 07 respectively. In the first case, the Department had
demanded the payment of Sales Tax to an extent of 0.69 million on hospital equipments leased by our
Company to PVS Hospital, Ernakulam. The Company had filed a petition before the Kerala High Court
against the order of the Department. Pursuant to an interim order passed by the High Court, the
Company has remitted an amount of Rs. 0.23 million towards the demand made by the Department.
The case is still pending. The second one is in relation to the demand made by the Intelligence Officer,
Department of Commercial Taxes, Thrissur to pay tax on auction sale of vehicles re possessed by the
Company from borrowers who fail to meet the repayment obligations under hire purchase and
hypothecation loans. The Company has filed an appeal against the same before the Commissioner
(Appeals) Ernakulam. Pursuant to an interim order passed by this authority, the Company has remitted
40% of the total tax amount involved and furnished a bank guarantee for the balance amount. The total
amount of tax demanded by the Department is in the tune of Rs. 0.08 million. The case is still pending.
4. The Company is also party to an income tax case pursuant to an assessment order dated December 26,
2008 passed by the Assistant Commissioner of Income Tax, Thrissur disallowing Rs. 6.38 million
134
written off as bad debts during the assessment year 2005-06 since the same was not actually bad and
not recoverable. On an appeal made to the CIT (Appeals) Cochin, that authority has, by way of an
order dated September 20, 2010 allowed the writing off of the debt to the extent of Rs. 6.03 million.
The claim in relation to the balance amount is pending.
5. Our Company is party to a service tax appeal for alleged wrong availment of CENVAT credit from
April 1, 2004 to June 30, 2007 to an extent of Rs. 3.05 million. The appeal is arising out of order
March 19, 2010 passed by Commissioner of Central Excise and Service Tax, Calicut. Aggrieved by the
order, Additional Commissioner, Central Excise, Calicut has filed an appeal. The Company has filed
counter objections to the same on September 30, 2010. The proceedings are pending.
6. The special leave petition that was filed by the Company in relation to the payment of service tax on
hire purchase and leasing was dismissed by the Supreme Court of India. The Company has received a
show cause notice dated October 22, 2010 demanding the payment of service tax of Rs 2.34 million
with penalty and interest for the period from July 2001 to April 2007. The Company has replied to this
notice stating that the claim made by the department is „time barred‟ and would hence not be
maintainable. This case is yet to be posted for hearing. Our Company has created a provision for the
claim amount in our balance sheet.
7. Our Company has received show cause notices from the Labour Departments of Andhra Pradesh,
Kerala, Karnataka and Tamil Nadu requiring us to show cause as to why our branches within these
States are open for all seven days in the week. Subsequently, our Company has made applications to
the Labour Departments of five States (including West Bengal) seeking an exemption for keeping the
branches of the Company within these states open for all seven days of the week. We are yet to receive
exemption under these applications.
8. Our Company has been served two show cause notices in relation to the payment of service tax both
dated April 5, 2010, details of which are as follows: (i) Show cause notice bearing No. 30/2010 stating
that for assessment year 2008-09, the Company has short paid service tax amounting to Rs. 99,670; and
(ii) show cause notice bearing no. 29/2010 stating that for the assessment year 2008-09, the Company
has short paid tax amounting to Rs. 1,88,610. The Company has replied to both these notices by way of
letters dated May 13, 2010. By way of an order dated March 24, 2011, the Deputy Commissioner has
withdrawn the demand of Rs.99,670. In the second case, the demand of Rs.1,88,610 has been
confirmed. We have filed the second appeal against this order on June 8, 2011.
9. Our Company has received orders from the Employees State Insurance Corporation pursuant to an
inspection of the records of the company in May 2011 for payment of Rs 175,000. The Company will
be pay the amount forthwith.
10. Our Company has been made party to 64 consumer cases which are now pending before various district
and state consumer dispute redressal fora. These cases have been filed based on allegations of
deficiency in service rendered by us. Such grounds include the adoption of improper processes for
conducting the sale of forfeited jewellery, wrongful seizure of hypothecated goods and charging very
high interest rates on deposits. The aggregate value of the total compensation amount that has been
claimed against us in all these cases is Rs. 8.44 million.
11. 15 cases have been filed against us by owners of branch premises on grounds of eviction and rent
escalation.
In addition to the above matters, we are also involved in certain administrative and legal proceedings pending
before the relevant courts and authorities at various levels. We cannot predict the outcome of any pending or
future litigation, examination or investigation, based on the amounts sought in pending actions against us and
our history of resolving litigation matters in the past, as well as the advice of legal counsel.
Further, there have been eight major burglaries at our branches since inception. With regard to the first burglary
we were able to recover the entire amount of the loss suffered. With regard to the second burglary we were able
to recover approximately 90.0% of the loss suffered and received a partial payment of the insurance claim with
regard to the third burglary. The aggregate value of the gold and cash stolen in the second and third burglaries is
approximately Rs. 28.32 million. Survey of loss by the insurer and investigation into the burglaries by the police
is complete, and a final charge sheet has been submitted to the court. The fourth, fifth and sixth burglaries
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occurred in August 2010 and September 2010 and the aggregate value of the gold and cash stolen is
approximately Rs. 35.50 million. We have filed insurance claims in relation to the last three burglaries, but we
have not yet received any payment in relation to the same. The seventh one occurred in May 2011 and we have
filed the first information report in relation to the same and the police investigation in relation to the same is
ongoing. The loss of cash is estimated at Rs. 766,323. The last burglary occurred in June 2011 and the loss of
gold through the same is estimated at Rs. 37.50 million and cash at Rs.639,139 which has since been recovered
by the police.
Material Developments after March 31, 2011
Except as stated in this Prospectus, there have not arisen, since March 31, 2011, which is the date of the last
Financial Statements, any circumstances that have materially and adversely affected the profitability of our
Company, or the value of our assets or our ability to pay our liabilities within the next 12 months.
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OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
The Board of Directors, at its meeting held on April 28, 2011, has given its consent to create, offer, issue and
allot listed, rated, secured, redeemable, non-convertible debentures, in one or more tranches, of varying face
value aggregating to a maximum of Rs. 10,000 million including an option to retain over subscription for
issuance of additional non-convertible debentures aggregating to a maximum of Rs. 10,000 million, on a private
placement basis or to the public.
Eligibility to come out with the Issue
Our Company, persons in control of our Company and/or our Promoter have not been restrained, prohibited or
debarred by SEBI from accessing the securities market or dealing in securities and no such order or direction is
in force. Further, no member of our promoter group has been prohibited or debarred by SEBI from accessing the
securities market or dealing in securities due to fraud.
Consents
Consents in writing of: (a) the Directors, the Compliance Officer, Bankers to the Company, Bankers to the
Issue; and (b) Lead Managers, Co-Lead Managers, Lead Brokers, Registrar to the Issue, Advisors to the Issue,
Legal Advisors to the Issue, Credit Rating Agency and the Debenture Trustee to act in their respective
capacities, have been obtained and shall be filed along with a copy of the Prospectus with the Registrar of
Companies.
IL&FS Trust Company Limited has given its consent for appointment as Debenture Trustee under regulation
4(4) of the SEBI Debt Regulations.
The consent of the Statutory Auditors of our Company, namely S. R. Batliboi & Associates for (a) inclusion of
their names as the Statutory Auditors, (b) examination report on Reformatted Statements and (c) the statements
of tax benefits in the form and context in which they appear in this Prospectus, have been obtained and the same
will be filed along with a copy of this Prospectus with the RoC.
As provided in ―Terms of the Issue - Security‖ on page 153, the Company is going to provide a first ranking
pari passu charge over all of the current assets, book debts, receivables (both present and future) and such other
assets of the Company other than the assets that have been exclusively charged by the Company to the extent of
1.1 times of the amounts outstanding in respect of the Bonds at any time. As per Regulation 17(2) read with
Schedule I of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, the Company is required to
obtain permissions / consents from the prior creditors in favour of the debenture trustee for creation of such pari
passu charge. The Company has obtained such permissions / consents from the prior lenders who have pari
passu charge.
Expert Opinion
Except the report of CARE and Brickwork in respect of credit rating of this Issue, furnishing rationale for its
rating, the Company has not obtained any expert opinions.
Common form of Transfer
Our Company undertakes that there shall be a common form of transfer for the Bonds held in physical form and
the provisions of the Companies Act and all applicable laws shall be duly complied with in respect of all transfer
of the Bonds and registration thereof.
Minimum Subscription
If our Company does not receive the minimum subscription of 75% of the base amount of the Issue, being Rs.
3,000 million, on or before the closure of the Issue, the entire subscription amount shall be refunded to the
applicants within 15 days from the date of closure of the Issue. If there is a delay in the refund of the
subscription amount by more than eight days after our Company becomes liable to pay the same, our Company
will pay interest for the period of delay, at rates prescribed under sub-section (2) and (2A) of Section 73 of the
137
Companies Act.
Previous Public or Rights Issues by our Company during last five years
Our Company has not undertaken any public or rights Issue during the last five years.
Commission or Brokerage on Previous Public Issues
Our Company paid an aggregate amount of Rs. 1.8 million on account of fees for management, underwriting
and selling commission, and out of pocket expenses in relation to its public offer of equity shares undertaken in
1995.
Particulars in regard to the Company, and other listed companies under the same management within the
meaning of Section 370 (1B), which made any capital issue during the last three years
None of the companies under the same management with our Company, within the meaning of section 370(1B)
of the Companies Act, have made any capital issue during the last three years.
Change in auditors of our Company during the last three years
Our Company has not changed its Statutory Auditors during the last three years.
Revaluation of assets
Our Company has not revalued its assets in the last five years.
Utilisation of Proceeds
Our Board of Directors certifies that:
(i) All monies received out of the Issue of the Bonds to the public shall be transferred to a separate bank
account other than the bank account referred to in sub-section (3) of section 73 of the Companies Act;
(ii) Details of all monies utilised out of the Issue referred to in sub-item (i) shall be disclosed under an
appropriate separate head in our balance sheet indicating the purpose for which such monies were
utilised; and
(iii) Details of all unutilised monies out of the Issue referred to in sub-item (i), if any, shall be disclosed
under an appropriate separate head in our balance sheet indicating the form in which such unutilised
monies have been invested.
(iv) We shall utilize the Issue proceeds only upon execution of documents for creation of security as stated
in this Prospectus in the section titled ―Terms of the Issue - Security‖ and on receipt of the minimum
subscription of 75% of the base amount of the Issue, being Rs. 3,000 million.
(v) The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any other
acquisition, inter alia by way of a lease, of any property.
The funds raised by us from previous bonds issues have been utilised for our business as stated in the respective
offer documents.
Disclaimer clause of BSE
BOMBAY STOCK EXCHANGE (“THE EXCHANGE”) HAS GIVEN VIDE ITS LETTER DATED
AUGUST 3, 2011, PERMISSION TO THIS COMPANY TO USE THE EXCHANGE‟S NAME IN THIS
OFFER DOCUMENT AS ONE OF THE STOCK EXCHANGES ON WHICH THIS COMPANY‟S
SECURITIES ARE PROPOSED TO BE LISTED. THE EXCHANGE HAS SCRUTINUZED THIS
OFFER DOCUMENT FOR ITS LIMITED INTERNAL PURPOSE OF DECIDING ON THE MATTER
OF GRANTINIG THE AFORESAID PERMISSION TO THIS COMPANY. THE EXCHANGE DOES
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NOT IN ANY MANNER:
(I) WARRANT, CERTIFY OR ENDORSE THE CORRECTNESS OR COMPLETENESS OF ANY
OF THE CONTENTS OF THIS OFFER DOCUMENT; OR
(II) WARRANT THAT THIS COMPANY‟S SECURITIES WILL BE LISTED AND WILL
CONTINUE TO BE LISTED ON THE EXCHANGE; OR
(III) TAKE ANY RESPONSIBILITY FOR THE FINANCIAL OR OTHER SOUNDNESS OF THIS
COMPANY, ITS PROMOTERS, ITS MANAGEMENT OR ANY SCHEME OR PROJECT OF
THIS COMPANY,
AND IT SHOULD NOT FOR ANY REASON BE DEEMED OR CONSTRUED THAT THIS OFFER
DOCUMENT HAS BEEN CLEARED OR APPROVED BY THE EXCHANGE. EVERY PERSON WHO
DESIRES TO APPLY FOR OF OTHERWISE ACQUIRES ANY SECURITIES OF THIS COMPANY
MAY DO SO PURSUANT TO INDEPENDENT INQUIRY, INVESTIGATION AND ANALYSIS AND
SHALL NOT HAVE ANY CLAIM AGAINST THE EXCHANGE WHATSOEVER BY REASON OF
ANY LOSS WHICH MAY BE SUFFERED BY SUCH PERSON CONSEQUENT TO OR IN
CONNECTION WITH SUCH SUBSCRIPTION/ACQUISITION WHETHER BY REASON OF
ANYTHING STATED OR OMITTED TO BE STATED HEREIN OF FOR ANY OTHER REASON
WHATSOEVER”
A copy of this Prospectus has been submitted with BSE.
Disclaimer clause of RBI
THE COMPANY IS HAVING A VALID CERTIFICATE OF REGISTRATION DATED MARCH 30,
2001 ISSUED BY THE RESERVE BANK OF INDIA UNDER SECTION 45I-A OF THE RESERVE
BANK OF INDIA ACT, 1934. HOWEVER, THE RESERVE BANK OF INDIA DOES NOT ACCEPT
ANY RESPONSIBILITY OR GUARANTEE ABOUT THE PRESENT POSITION AS TO FINANCIAL
SOUNDNESS OF THE COMPANY OR CORRECTNESS OF ANY OF THE STATEMENTS OR
REPRESENTATIONS MADE OR OPINIONS EXPRESSED BY THE COMPANY AND FOR
REPAYMENT OF DEPOSITS / DISCHARGE OF LIABILITIES BY THE COMPANY.
Listing
The Bonds will be listed on BSE.
If the permissions to deal in and for an official quotation of the Bonds are not granted by the BSE, we shall
forthwith repay, without interest, all such monies received from the Applicants in pursuance of this Prospectus.
If such money is not repaid within eight days after we becomes liable to repay it (i.e. from the date of refusal or
within seven days from the Issue Closing Date, whichever is earlier), then our Company and every Director of
our Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay the
money, with interest at the rate of 15% p.a. on application money, as prescribed under Section 73 of the
Companies Act.
Our Company shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at the BSE mentioned above are taken within seven Working Days from the date of
Allotment.
Dividend
The following table sets forth certain details regarding the dividend paid by our Company on the Equity Shares
for Fiscal 2011, 2010 and 2009:
(In Rs. million, except per share data)
Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009
Face value of Equity Shares (Rs. per share) 2 10 (Face value as
on March 31,
2010)
10
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Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009
Interim dividend on Equity Shares (Rs. per share) - - 2.00
Final dividend of Equity Shares (Rs. per share) 0.60 0.50 (each Equity
Share was sub-
divided in May
2010 to Rs. 2 each
and dividend was
computed @25%
on sub-divided
Equity Share)
0.50
Total dividend on Equity Shares 500.24 (not paid
yet)
165.89 43.14
Dividend tax (gross) NA 27.21 8.13
Mechanism for redressal of investor grievances
Link Intime India Private Limited has been appointed as the Registrar to the Issue to ensure that investor
grievances are handled expeditiously and satisfactorily and to effectively deal with investor complaints. The
MoU between the Registrar to the Issue and the Company will provide for retention of records with the
Registrar to the Issue for a period of at least three years from the last date of despatch of the letters of allotment,
demat credit and refund orders to enable the investors to approach the Registrar to the Issue for redressal of their
grievances. All grievances relating to the Issue should be addressed to the Registrar to the Issue giving full
details of the Applicant, number of Bonds applied for, amount paid on application and the bank branch or
collection centre where the application was submitted etc.
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THE ISSUE STRUCTURE
The Board of Directors, at its meeting held on April 28, 2011 approved the issue of the Bonds.
The following are the key common terms of the Bonds to be issued under the terms of this Prospectus. This
section should be read in conjunction with, and is qualified in its entirety by, more detailed information in the
section entitled ―Terms of the Issue‖ on page 144.
COMMON TERMS FOR ALL SERIES OF THE BONDS
Issuer Manappuram Finance Limited
Issue of Bonds Public issue of bonds in the nature of secured, redeemable, non-convertible
debentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 million
with an option to retain over subscription upto Rs. 3,500 million,
aggregating to Rs. 7,500 million. The Bonds shall be issued at par on the
terms contained in this Prospectus.
Status and Ranking The Bonds constitute direct and secured obligations of our Company and
shall rank pari passu and without any preference or priority among
themselves. Subject to any obligations preferred by mandatory provisions
of the law prevailing from time to time, the Bonds shall also, as regards
principal, all interest, redemption premium (as applicable) and all other
monies secured in respect of Bonds, rank pari passu with all other present
direct and secured lenders of our Company holding pari passu charge over
the Security, if any, such that a security cover of 1.10 times is maintained
until the Maturity Date.
Eligible Investors Category I
• Public financial institutions, statutory corporations, commercial banks,
co-operative banks and regional rural banks, which are authorised to
invest in the Bonds;
• Provident funds, pension funds, superannuation funds and gratuity
fund, which are authorised to invest in the Bonds;
• Venture capital funds registered with SEBI;
• Insurance companies registered with the IRDA;
• National Investment Fund;
• Mutual funds;
Category II
• Companies; bodies corporate and societies registered under the
applicable laws in India and authorised to invest in the Bonds;
• Public/private charitable/religious trusts which are authorised to invest
in the Bonds;
• Scientific and/or industrial research organisations, which are authorised
to invest in the Bonds;
• Partnership firms in the name of the partners; and
• Limited liability partnerships formed and registered under the
provisions of the Limited Liability Partnership Act, 2008.
Category III*
The following persons/entities
• Resident Indian individuals; and
• Hindu undivided families through the Karta.
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Minimum Application Five Bonds (Rs. 5,000) and in multiples of one Bond thereafter.
The minimum number of Bonds per Application Form will be calculated on
the basis of total number of Bonds applied for under each such Application
Form and not on the basis of number of Bonds applied for in each Series of
Bonds.
Rating „CARE AA-‟ from CARE
“BWR AA-” from Brickwork
Security The principal amount of the Bonds, interest and other monies payable by
our Company in respect of the Bonds shall be secured by mortgage of the
immovable property of our Company as identified in the Debenture Trust
Deed and a charge in favour of the Debenture Trustee, on all current assets,
book debts, receivables (both present and future) 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 our
Company holding pari passu charge over the security such that a security
cover of 1.10 times is maintained until Maturity Date, more particularly as
detailed in the section entitled ―Terms of the Issue – Security‖ on page 153.
Security Cover 1.10 times the outstanding Bonds at any point of time.
Listing BSE
Debenture Trustee IL&FS Trust Company Limited
Depositories NSDL and CDSL
Registrar Link Intime India Private Limited
Terms of Payment Full amount on application
Issuance Dematerialized form
Trading Dematerialized form
Market Lot / Trading Lot One Bond
Issue Opening Date August 18, 2011
Issue Closing Date September 5, 2011
The Issue shall remain open for subscription during banking hours for the
period indicated above, except that the Issue may close on such earlier date
as may be decided by the Board subject to necessary approvals. In the event
of an early closure of the Issue, our Company shall ensure that notice of the
same is provided to the prospective investors through newspaper
advertisements on the day of such earlier date of Issue closure
Pay-in Date Three (3) days from the date of receipt of application or the date of
realisation of the cheques/demand drafts, whichever is later.
Deemed Date of Allotment The Deemed Date of Allotment shall be the date as may be determined by
the Board of our Company and notified to the BSE. The actual allotment
may occur on a date other than the Deemed Date of Allotment.
Lead Managers Morgan Stanley India Company Private Limited, A.K. Capital Services
Limited, Axis Bank Limited and ICICI Securities Limited
Co-Lead Managers RR Investors Capital Services (P) Limited, Karvy Investor Services
Limited and SMC Capitals Limited
Governing Law Indian Law
Events of Default See Condition Clause 15 of ―Terms of the Issue‖ beginning on page 153
Risk Factors See ―Risk Factors‖ beginning on page 11 for a discussion of risks you
should consider before investing in the Bonds
142
Use of Proceeds See ―Objects of the Issue‖ beginning on page 76
* With respect to applications received from Category III Applicants, applications by Applicants who apply for
Bonds aggregating to a value not more than Rs. 5 Lacs, across all Series of Bonds, shall be grouped together,
(“Reserved Individual Portion”) while applications by applicants who apply for NCDs aggregating to a value
exceeding Rs. 5 Lacs, across all Series of Bonds, (Option I and/or Option II), shall be separately grouped
together, (“Unreserved Individual Portion”).
Participation by any of the above-mentioned investor classes in this Issue will be subject to applicable
statutory and/or regulatory requirements. Applicants are advised to ensure that applications made by
them do not exceed the investment limits or maximum number of Bonds that can be held by them under
applicable statutory and/or regulatory provisions.
In case of Application Form being submitted in joint names, the applicants should ensure that the de-mat
account is also held in the same joint names, and the names are in the same sequence in which they appear in the
Application Form.
Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory
permissions/consents/approvals in connection with applying for, subscribing to, or seeking allotment of
Bonds pursuant to the Issue.
For further details, please see ―Procedure for Application‖ on page 159
SPECIFIC TERMS FOR EACH SERIES OF BONDS
Series I II
Frequency of Interest
payment
NA Semi-annually
Face Value per Bond Rs. 1,000 Rs. 1,000
Issue Price per Bond Rs. 1,000 Rs. 1,000
Mode of Interest Payment NA Through various modes available*
Interest Rate**
1) For Bondholders in
Category I
NA 12% p.a.
2) For Bondholders in
Category II
NA 12% p.a.
3) For Bondholders in
Category III
NA 12.2% p.a.
Maturity Date 400 days from the Deemed Date of
Allotment
24 months from the Deemed Date of
Allotment
Maturity Amount per Bond Rs. 1,132.25*** for Bondholders in
all categories (Face Value of the
Bonds plus redemption premium)
Face Value of the Bonds plus any
interest that may have accrued
Yield on Maturity
1) For Bondholders in
Category I
12% p.a. 12.34% p.a.
2) For Bondholders in
Category II 12% p.a. 12.34% p.a.
3) For Bondholders in
Category III
12% p.a. 12.56% p.a.
143
* For various modes of interest payment, please refer to the section entitled “Terms of the Issue – Manner
and Mode of Payment” on page 151.
** As per the “Issue Procedure - Basis of Allotment” on page 167 of this Prospectus, in the event Bonds are
allocated to any Portion beyond the reservation for such category, the interest on such Bonds will be as per
rate specified for such applicants.
***Rounded to the nearest decimal place.
144
TERMS OF THE ISSUE
The terms and conditions of Bonds being offered will be incorporated into the Debenture Trust Deed and are
subject to the provisions of the Companies Act, the Application Form and other terms and conditions as may be
incorporated in the Debenture Trust Deed, Letter(s) of Allotment and/or Consolidated Bond certificate(s). In
addition, the Issue of Bonds shall be subject to laws as applicable from time to time, including guidelines, rules,
regulations, notifications and any statutory modifications or re-enactments relating to the issue of capital and
listing of securities, or in relation to our Company, issued from time to time by SEBI, RBI, GOI, BSE and/or
other authorities (collectively, the ―Applicable Laws‖) and other documents that may be executed in respect of
the Bonds. The statements in these terms and conditions include summaries of and are subject to the detailed
provisions of the Debenture Trust Deed.
The Series I Bonds and the Series II Bonds, (together with the Series I Bonds referred to as the “Bonds”) are
constituted by a debenture trust deed (the “Debenture Trust Deed”) to be entered into between our Company
and IL&FS Trust Company Limited (in its capacity as the “Debenture Trustee”, which expression shall include
its successor(s) as trustee for the holders of the Bonds (the “Bondholders”). Link Intime India Private Limited
has been appointed as the registrar to the issue (the “Registrar” or “Registrar to the Issue”) pursuant to the
MoU entered between the Company and the Registrar to the Issue.
Words and expressions defined in the Debenture Trust Deed and the Tripartite Agreements (defined below)
shall have the same meanings where used in these terms and conditions unless the context otherwise requires or
unless otherwise stated.
Any reference to “Bondholders” or “holders” in relation to any Bond held in dematerialized form shall mean the
persons whose name appears on the beneficial owners list as provided by the Depository and in relation to any
Bond in physical form, such holder of the Bond (whose interest shall be as set out in a Consolidated Bonds
Certificate (as defined below) whose name is appearing in the Register of Bondholders (as defined below). The
Debenture Trustee acts for the benefit of the Bondholders in accordance with the provisions of the Debenture
Trust Deed.
1. Authority for the Issue
The Board of Directors, at its meeting held on April 28, 2011, has given its consent to create, offer,
issue and allot listed, rated, secured, redeemable, non-convertible debentures, in one or more tranches,
of varying face value aggregating to a maximum of Rs. 10,000 million including an option to retain
over subscription for issuance of additional non-convertible debentures aggregating to a maximum of
Rs. 10,000 million, on a private placement basis or to the public.
2. Issue, Status of Bonds
2.1 The Bonds are constituted, issued and secured pursuant to a Debenture Trust Deed. The Bondholders
are entitled to the benefit of the Debenture Trust Deed and are bound by and are deemed to have notice
of all the provisions of the Debenture Trust Deed.
2.2 The Bonds are issued in the form of secured, redeemable, non convertible debentures. The Bonds
constitute direct and secured obligations of our Company and shall rank pari passu inter se and without
any preference or priority among themselves. Subject to any obligations preferred by mandatory
provisions of the law prevailing from time to time, the Bonds shall also, as regards the principal
amount of the Bonds, interest and all other monies secured in respect of the Bonds, rank pari passu
with all other present and future debenture holders of our Company, who hold pari passu charge over
the Security. The security described in the section entitled ―Terms of the Issue - Security‖ on page 153
shall be pari passu with all the present and future borrowings of our Company from various lenders
(although such lenders do not have the benefit of any security over immovable property) which have a
pari passu charge over the Security. The claims of the Bondholders shall be superior to the claims of
the unsecured creditors of our Company (subject to any obligations preferred by mandatory provisions
of the applicable law prevailing from time to time).
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3. Form, Face Value, Title and Listing etc
3.1 Form
3.1.1 The allotment of the Bonds shall only be in a dematerialized form (i.e., not in the form of physical
certificates but fungible and represented by the statement issued through the electronic mode). Our
Company has made depository arrangements with National Securities Depository Limited (“NSDL”)
and Central Depository Services (India) Limited (“CDSL”, and together with NSDL, the
“Depositories”) for issue of the Bonds in a dematerialized form pursuant to the tripartite agreement
between:
(i) our Company, NSDL and the Registrar dated August 4, 2011; and
(ii) our Company, CDSL and the Registrar dated August 4, 2011.
(together the “Tripartite Agreements”)
Our Company shall take necessary steps to credit the Depository Participant account of the Applicants
with the number of Bonds allotted. Subject to section 3.1.2 below, the Bondholders will hold the Bonds
in dematerialised form and deal with the Bonds in accordance with the provisions of the Depositories
Act and/or rules as notified by the Depositories from time to time.
3.1.2 The Bondholders may rematerialize the Bonds at any time after allotment, in accordance with the
provisions of the Depositories Act and/or rules as notified by the Depositories from time to time.
3.1.3 In case of Bonds that are rematerialized and held in physical form, our Company will issue one
certificate to the Bondholder for the aggregate amount of the Bonds that are rematerialized and held by
such Bondholder (each such certificate a “Consolidated Bond Certificate”). In respect of the
Consolidated Bond Certificate(s), our Company will, upon receipt of a request from the Bondholder
within 30 days of such request, split such Consolidated Bond Certificate(s) into smaller denominations
in accordance with the Articles of Association, subject to a minimum denomination of one Bond. No
fees will be charged for splitting any Consolidated Bond Certificate(s) but, stamp duty, if payable, will
be paid by the Bondholder. The request to split a Consolidated Bond Certificate shall be accompanied
by the original Consolidated Bond Certificate which will, upon issuance of the split Consolidated Bond
Certificates(s), be cancelled by our Company.
3.2 Face Value
The face value of each Bond is Rs. 1,000
3.3 Title
3.3.1 In case of:
(i) Bonds held in the dematerialized form, the person for the time being appearing in the register
of beneficial owners maintained by the Depository; and
(ii) the Bond held in physical form, the person for the time being appearing in the Register of
Bondholders (as defined below) as Bondholder,
shall be treated for all purposes by our Company, the Debenture Trustee, the Depositories and all other
persons dealing with such person as the holder thereof and its absolute owner for all purposes whether
or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing
on, theft or loss of the Consolidated Bond Certificate issued in respect of the Bonds and no person will
be liable for so treating the Bondholder.
3.3.2 No transfer of title of a Bond will be valid unless and until entered on the Register of Bondholders or
the register of beneficial owners maintained by the Depository prior to the Record Date. In the absence
of transfer being registered, interest and/or Maturity Amount, as the case may be, will be paid to the
146
person, whose name appears first in the Register of Bondholders maintained by the Depositories and/or
our Company and/or the Registrar, as the case may be. In such cases, claims, if any, by the purchasers
of the Bonds will need to be settled with the seller of the Bonds and not with our Company or the
Registrar. The provisions relating to transfer and transmission and other related matters in respect of our
Company‟s shares contained in the Articles of Association of our Company and the Companies Act
shall apply, mutatis mutandis (to the extent applicable) to the Bond(s) as well.
3.4 Listing
The Bonds will be listed on the Bombay Stock Exchange Limited (the “BSE”).
3.5 Market Lot
3.5.1 In accordance with Section 68B of the Companies Act, the Bonds shall be allotted only in
dematerialised form. As per the SEBI Debt Regulations, the trading of the Bonds on the Stock
Exchange shall be in dematerialised form only in multiples of one Bond (“Market Lot”).
3.5.2 For details of allotment refer to chapter entitled ―Procedure for Application‖ beginning on page 159.
3.6 Procedure for Rematerialisation of Bonds
Allotment of Bonds will be in dematerialized form only. However, Bondholders who wish to hold the
Bonds in physical form may do so by submitting his or her request to his or her Depository Participant
in accordance with the applicable procedure stipulated by the Depository Participant.
4. Transfer of the Bonds, Issue of Consolidated Bond Certificates etc
4.1 Register of Bondholders
Our Company shall maintain at its registered office or such other place as permitted by law a register of
Bondholders (the “Register of Bondholders”) containing such particulars as required by Section 152
of the Companies Act. In terms of Section 152A of the Companies Act, the Register of Bondholders
maintained by a Depository for any Bond in dematerialized form under Section 11 of the Depositories
Act shall be deemed to be a Register of Bondholders for this purpose.
4.2 Transfers
4.2.1 Transfer of Bonds held in dematerialized form:
In respect of Bonds held in the dematerialized form, transfers of the Bonds may be effected only
through the Depository(ies) where such Bonds are held, in accordance with the provisions of the
Depositories Act, and/or rules as notified by the Depositories from time to time. The Bondholder shall
give delivery instructions containing details of the prospective purchaser‟s Depository Participant‟s
account to his Depository Participant. If a prospective purchaser does not have a Depository Participant
account, the Bondholder may rematerialize his or her Bonds and transfer them in a manner as specified
in section 4.2.2 below.
4.2.2. Transfer of Bonds in physical form:
The Bonds may be transferred by way of a duly completed, stamped and executed transfer deed or
other suitable instrument of transfer as may be prescribed by our Company for the registration of
transfer of Bonds. Purchasers of Bonds are advised to send the Consolidated Bond Certificate to our
Company or to such persons as may be notified by our Company from time to time. In accordance with
Article 77 of the Articles of Association, no fee shall be charged by our Company for the transfer of the
Bonds. If a purchaser of the Bonds in physical form intends to hold the Bonds in dematerialized form,
the Bonds may be dematerialized by the purchaser through his or her Depository Participant in
accordance with the provisions of the Depositories Act and/or rules as notified by the Depositories
from time to time.
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4.3 Formalities Free of Charge
Registration of a transfer of Bonds and issuance of new Consolidated Bond Certificates will be effected
without charge by or on behalf of our Company, but upon payment (or the giving of such indemnity as
our Company may require) in respect of any tax or other governmental charges which may be imposed
in relation to such transfer, and our Company being satisfied that the regulations concerning transfers
of Bonds have been complied with.
5. Debenture Redemption Reserve (“DRR”)
Section 117C of the Companies Act requires any company that intends to issue debentures to create a
DRR to which adequate amounts shall be credited out of the profits of our Company till the redemption
of the debentures. However, the Ministry of Company Affairs (the “MCA”) has, through its circular
dated April 18, 2002, specified that NBFCs which are registered with the RBI under Section 45-IA of
the RBI Act, 1934 shall create DRR to the extent of 50 percent of the value of the debentures issued
through public issue. Accordingly, our Company shall create DRR of 50 per cent of the value of Bonds
issued and allotted in terms of this Prospectus, for the redemption of the Bonds. As further clarified by
the circular, the amount to be credited as DRR will be carved out of profit of the Company only if there
is profit for the particular year and there is no obligation on the part of the Company to create DRR if
there is no profit for the particular year. Our Company shall credit adequate amounts to DRR from its
profits every year until the Bonds are redeemed. The amounts credited to the DRR shall not be utilized
by our Company for any purpose other than for the redemption of the Bonds.
6. Deemed Date of Allotment
The Deemed Date of Allotment shall be the date as may be determined by the Board of our Company
and notified to the BSE. All benefits under the Bonds including payment of interest will accrue to the
Bondholders from the Deemed Date of Allotment. The actual allotment may occur on a date other than
the Deemed Date of Allotment.
7. Subscription
7.1 Period of Subscription
The Issue shall remain open for:
Issue Opens on August 18, 2011
Issue Closes on September 5, 2011
The Issue shall remain open for subscription during banking hours for the period indicated above,
except that the Issue may close on such earlier date as may be decided by the Board subject to
necessary approvals. In the event of an early closure, our Company shall ensure that notice of the same
is provided to the prospective investors through newspaper advertisements on the day of such earlier
date of Issue closure.
7.2 Underwriting
The Issue is not being underwritten.
7.3 Minimum Subscription
Under the SEBI Debt Regulations, our Company is required to stipulate a minimum subscription
amount which it seeks to raise. The consequence of minimum subscription amount not being raised is
that the Issue shall not proceed and the application monies received are refunded to the Applicants.
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Accordingly, our Company has decided to set the minimum subscription for the issue at 75% of the
base amount of the Issue, being Rs. 3,000 million. If our Company does not receive the minimum
subscription of 75% of the base amount of the Issue on or before the closure of the Issue, the entire
subscription amount shall be refunded to the applicants within 15 days from the date of closure of the
Issue. If there is a delay in the refund of the subscription amount by more than eight days after our
Company becomes liable to pay the same, the Bank will pay interest for the period of delay at rates
prescribed under sub-section (2) and (2A) of Section 73 of the Companies Act.
8. Utilization of the proceeds
(a) All monies received pursuant to the Issue of Bonds to public shall be transferred to a separate
bank account other than the bank account referred to in sub-section (3) of section 73 of the
Act.
(b) Details of all monies utilised out of Issue referred to in sub-item (a) shall be disclosed under
an appropriate separate head in our Balance Sheet indicating the purpose for which such
monies had been utilised; and
(c) Details of all unutilised monies out of issue of Bonds, if any, referred to in sub-item (a) shall
be disclosed under an appropriate separate head in our Balance Sheet indicating the form in
which such unutilised monies have been invested.
(d) We shall utilize the Issue proceeds only upon execution of the documents for creation of
security as stated in this Prospectus and on receipt of the minimum subscription of 75% of the
base amount of the Issue, being Rs. 3,000 million.
(e) The Issue proceeds shall not be utilized towards full or part consideration for the purchase or
any other acquisition, inter alia by way of a lease, of any property.
9. Interest
9.1 Interest Rate
9.1.1 The Series I Bonds shall not bear any interest. The Series II Bonds shall bear interest from (and
including) the Deemed Date of Allotment at a fixed rate of 12% per annum for Category I and
Category II Bondholders and 12.2% per annum for Category III Bondholders.
9.2 Calculation of Interest
Series II Bond
9.1.2 Interest on the Series II Bonds at the rate mentioned above will be paid semi-annually from the
Deemed Date of Allotment.
9.1.3 For the first six month period, the interest shall be calculated from the Deemed Date of Allotment to
the last day of the six month period, both days inclusive.
9.1.4 For the subsequent six month periods (except the six month period in which the Maturity Date falls),
the interest shall be calculated from the first to the last day of the six month period, both days inclusive.
9.1.5 For the six month period in which the Maturity Date falls, the interest shall be calculated from the first
day of the six month period to one day prior to the Maturity Date, both days inclusive.
9.1.6 If default is made in any payment of any interest in respect of the Bonds or any of them when due and
such failure continues for a period of 90 days, our Company shall be liable to pay additional interest at
2% per annum over and above the rate payable from the Interest Payment Date.
9.3 Day Count Convention
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Interest shall be computed on a 365 days-a-year basis on the principal outstanding on the Bonds.
However, where the interest period (start date to end date) includes February 29, interest shall be
computed on 366 days-a-year basis, on the principal outstanding on the Bonds.
9.4 Accrual of Interest
Each Bond shall cease to bear interest from the Maturity Date along with the accrued interest thereon
unless, upon due presentation thereof, payment of principal is improperly withheld or refused, in which
event interest will continue to accrue as provided in this section 9.
9.5 Interest on Application and Refund Money
9.5.1 Application Interest
Interest on Application money on the amount allotted, subject to deduction of income tax under the
provisions of the Income tax act, 1961, will be paid separately by the Company @ 7% p.a. for all
categories of Applicants for all Series of Bonds, to Allottees and the same should not be deducted from
the amount on application. The interest shall be payable from the Pay-In Date, and shall be payable
until one day prior to the Deemed Date of Allotment.
9.5.2 Refund Interest
Interest on any refund of subscription amount paid by an Applicant, subject to deduction of income tax
under the provisions of the Income tax act, 1961, will be paid separately by the Company @ 3% p.a. on
the amount refunded to Allottees and Non-allottees (“Refund Interest”). The Refund Interest shall be
paid along with the refund of application money whether in case of total refund to Non-allotees or partial
refund to Allotees, as the case maybe. The interest shall be payable from the Pay-In Date, and shall be
payable until one day prior to the Deemed Date of Allotment.
10. Redemption
10.1 Unless previously redeemed as provided under the Debenture Trust Deed, our Company shall redeem
the Bonds on the Maturity Date.
10.2 Procedure for Redemption by Bondholders
The procedure for redemption is set out below:
10.2.1 Bonds held in electronic form:
No action is required on the part of Bondholders at the time of maturity of the Bonds.
10.2.2 Bonds held in physical form:
No action will ordinarily be required on the part of the Bondholder at the time of redemption and the
Maturity Amount will be paid to those Bondholders whose names appear in the Register of Bondholders
maintained by our Company on the Record Date fixed for the purpose of redemption. However, our
Company may require that the Consolidated Bond Certificate(s), duly discharged by the sole holder or
all the joint-holders (signed on the reverse of the Consolidated Bond Certificate(s)) to be surrendered
for redemption on Maturity Date and shall be sent by the Bondholders by registered post with
acknowledgment due or by hand delivery to the Registrar or Company or to such persons at such
addresses as may be notified by our Company from time to time. Bondholders may be requested to
surrender the Consolidated Bond Certificate(s) in the manner as stated above, not more than three
months and not less than one month prior to the Maturity Date so as to facilitate timely payment.
10.3 Loan against Bonds
Our Company, at its sole discretion, subject to applicable statutory and/or regulatory requirements, may
consider granting of a loan facility to the holders of Bonds against the security of such Bonds. Such
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loans shall be subject to the terms and conditions as may be decided by our Company from time to
time.
10.4 Buyback of Bonds
Our Company may, from time to time, subject to Applicable Laws and necessary approvals, buyback
the bonds on terms and conditions to be decided by our Company.
11. Payments
11.1 Payment of Interest
Payment of interest on the Bonds will be made to those Bondholders of the Bonds, whose name
appears first in the Register of Bondholders maintained by the Depositories and/or our Company and/or
the Registrar, as the case may be as, on the Record Date.
11.2 Record Date
The record date for the payment of interest or the Maturity Amount shall be 3 Working Days prior to
the date on which such amount is due and payable (“Record Date”).
11.3 Effect of holidays on payments
If the date of payment of interest or principal or any date specified does not fall on a Working Day,
then the succeeding Working Day will be considered as the effective date. Interest and principal or
other amounts, if any, will be paid on the succeeding Working Day. Payment of interest will be subject
to the deduction of tax as per Income Tax Act or any statutory modification or re-enactment thereof for
the time being in force. In case the Maturity Date falls on a holiday, the payment will be made on the
next Working Day, without any interest for the period overdue. Such payment of interest or principal
on the next Working Day shall not constitute non-payment on the Interest Payment Date or the
Maturity Date.
11.4 Payment on Maturity
The manner of payment on Maturity is set out below:-
11.4.1 Bonds held in electronic form:
On the Maturity Date, the Maturity Amount will be paid in a manner as detailed in the section entitled
“Manner and Mode of Payment” below. These payments will be as per the Depositories‟ records on the
Record Date fixed for this purpose. No action is required on the part of Bondholders.
11.4.2 Bonds held in physical form:
Payments with respect to maturity of Bonds will be made by way of cheques or pay orders or
electronically. However, if our Company so requires, payments on maturity may be made on surrender
of the Consolidated Bond Certificate(s). Dispatch of cheques or pay orders in respect of payments with
respect to redemptions will be made on the Maturity Date (if so requested by our Company in this
regard) within a period of 30 days from the date of receipt of the duly discharged Consolidated Bond
Certificate.
11.5 Our Company‟s liability to the Bondholders including for payment or otherwise shall stand
extinguished from the Maturity Date or upon dispatch of the Maturity Amounts to the Bondholders.
Further, our Company will not be liable to pay any interest, income or compensation of any kind from
the Maturity Date.
11.6 Applicable Laws
All payments are subject in all cases to any applicable laws and regulations, but without prejudice to
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the provisions of Condition 11.3. No commissions or expenses shall be charged to the Bondholders in
respect of such payments.
12. Manner and Mode of Payment
12.1 Manner of Payment:
All payments to be made by our Company to the Bondholders shall be made in any of the following
manners:
12.1.1 For Bonds applied or held in electronic form:
The bank details will be obtained from the Depositories for payments. Investors who have applied or
who are holding the Bond in electronic form, are advised to immediately update their bank account
details as appearing on the records of Depository Participant. Please note that failure to do so could
result in delays in credit of the payments to investors at their sole risk and neither the Lead Managers
nor the Co-Lead Managers or our Company shall have any responsibility and undertake any liability
for such delays on part of the investors.
12.1.2 For Bonds held in physical form (upon rematerialisation by the holder):
The bank details will be obtained from the Registrar for effecting payments.
12.2 Mode of Payment:
All payments to be made by our Company to the Bondholders shall be made through any of the
following modes:
12.2.1 Cheques or Demand drafts
By cheques or demand drafts made in the name of the Bondholders whose names appear in the Register
of Bondholders as maintained by our Company and/or as provided by the Depositories. Cheques or
demand drafts in excess of Rs. 1,500, as the case may be, shall be sent by registered/speed post at the
Bondholder‟s sole risk.
12.2.2 National Electronic Clearing System (―NECS‖)
Through NECS for Applicants having an account at any of the centers notified by the RBI. This mode
of payment will be subject to availability of complete bank account details including the Magnetic Ink
Character Recognition (“MICR”) code as per demographic details derived from Depository records
based on DP ID /Client ID appearing in the Application Form.
Please note that our Company shall not be responsible for any delay to the Bondholder receiving credit
of interest or refund or Maturity Amount so long as our Company has initiated the process in time.
12.2.3 Direct Credit
Payment of refunds, interest or principal redemption to Applicants having their bank accounts with the
Escrow Collection Bank shall be directly credited to their bank accounts with the Escrow Collection
Bank.
12.2.4 NEFT
Payment of refunds, interest or principal redemption shall be undertaken through NEFT wherever the
Applicants„ bank has been assigned the IFSC which can be linked to MICR, if any, available to that
particular bank branch, and where the Applicants have registered their nine-digit MICR number and
their bank account number while opening and operating the dematerialized account. The IFSC of that
bank branch will be obtained from the RBI„s website as on a date immediately prior to the date of
payment of refund, and will be duly mapped with the MICR numbers.
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12.2.5 RTGS
Applicants having a bank account at any of the centers notified by RBI and whose payment of refunds,
interest or principal redemption amounts exceeds Rs. 1 million have the option to receive the due
amounts through RTGS. Such eligible Applicants who indicate their preference to receive payment of
refunds, interest or principal redemption through RTGS are required to provide the IFSC in the
Application Form. In the event the same is not provided, payment of refunds, interest or principal
redemption shall be made through NECS. Charges, if any, levied by the Escrow Collection Bank for
the same would be borne by such Applicant opting for RTGS as a mode of payment of refunds, interest
or principal redemption. Charges, if any, levied by the Applicant‟s bank receiving the credit would be
borne by the Applicant.
12.3 Printing of Bank Particulars
As a matter of precaution against possible fraudulent encashment of Consolidated Bond Certificates
due to loss or misplacement, the particulars of the Applicant‟s bank account are mandatorily required to
be provided for printing on the Consolidated Bond Certificate. Applications without these details are
liable to be rejected at the sole discretion of our Company. However, in relation to Applications for
dematerialised Bonds, these particulars will be taken directly from the Depositories. In case of Bonds
held in physical form, the Bondholders are advised to submit their bank account details with the
Registrar before the Record Date failing which the amounts will be dispatched to the postal address of
the Bondholders as held in the records of our Company. Bank account particulars will be printed on the
Consolidated Bond Certificates which can then be deposited only in the account specified.
13. Taxation
13.1 The Applicants are advised to consider the tax implications of their respective investment in the Bonds.
13.2 No income tax is deductible at source on interest on the Bonds, inter alia, in respect of the following:
For Bonds held in dematerialized form:
(a) On any security issued by a Company in a dematerialized form and is listed on recognized
stock exchange in India.
For Bonds held in physical form (upon rematerialisation by the holder):
(b) In case the payment of interest on NCD to resident individual Debenture Holder in the
aggregate during the financial year does not exceed Rs. 2,500 provided the NCD are listed on
a recognized stock exchange in India and the interest is paid by an account payee cheque.
(c) When the Assessing Officer issues a certificate on an application by a Debenture Holder on
satisfaction that the total income of the Debenture Holder justifies no/lower deduction of tax at
source as per the provisions of section 197(1) of the Act and that certificate is filed with the
Company.
(d) When the resident Debenture Holder with PAN (not being a Company or a firm or a senior
citizen) furnishes a declaration in writing in duplicate in the prescribed form (Form 15G) and
verified in the prescribed manner to the effect that the tax on his estimated total income of the
PY in which such income is to be included in computing his total income will be Nil.
13.3 Senior citizens, who are 65 or more years of age at any time during the financial year, , and are holding
the bonds in physical form, can submit a self-declaration in the prescribed Form 15H for non-deduction
of tax at source in accordance with the provisions of section 197A even if the aggregate income
credited or paid or likely to be credited or paid exceeds the maximum limit for the financial year. To
ensure non-deduction/lower deduction of tax at source from interest on Bonds, a resident Bondholder is
required to submit Form 15G/15H/certificate under section 197 of the Income Tax Act or other
evidence, as may be applicable, with the Application Form, or send to the Registrar along with a copy
of the Application Form on or before the closure of the Issue. Subsequently, Form 15G/15H/ original
certificate issued under section 197 of the Income Tax Act or other evidence, as may be applicable,
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may be submitted to our Company or to such person at such address as may be notified by us from time
to time, quoting the name of the sole or first Bondholder, folio number and the distinctive number(s) of
the Bond(s) held, at least one month prior to the interest payment date.
13.4 Bondholders holding the bonds in physical form, are required to submit Form 15G or 15H or original
certificate issued under section 197 of the Income Tax Act or other evidence in each financial year to
ensure non-deduction or lower deduction of tax at source from interest on Bonds.
13.5 If the Bondholder is eligible to submit Form 15G or 15H, he or she is required to tick at the relevant
place on the Application Form, to send a blank copy of the form to the Bondholders. Blank declaration
form will be furnished to other Bondholders on request made at least two months prior to the interest
payment date. This facility is being provided for the convenience of Bondholders and we will not be
liable in any manner, whatsoever, in case the Bondholder does not receive the form.
13.6 As per the prevailing tax provisions, Form 15G cannot be submitted if the aggregate of income of the
nature referred to in section 197A of the Income Tax Act viz. dividend, interest etc. as prescribed
therein, credited or paid or likely to be credited or paid during the financial year in which such income
is to be included exceeds the maximum amount which is not chargeable to tax.
13.7 Tax exemption certificate or document, if any, must be lodged at the office of the Registrar prior to the
Record Date or as specifically required. Tax applicable on coupon will be deducted at source on
accrual thereof in our Company‟s books and / or on payment thereof, in accordance with the provisions
of the Income Tax Act and / or any other statutory modification, re-enactment or notification as the
case may be. A tax deduction certificate will be issued for the amount of tax so deducted on annual
basis.
14. Security
14.1 The principal amount of the Bonds to be issued upon the terms contained herein together with all
interest, costs, charges, fees, remuneration of Debenture Trustee and expenses payable in respect
thereof (the “Secured Obligations”) shall be secured in favour of the Debenture Trustee in the
following manner:
14.1.1 by mortgage of the immovable property of our Company as identified in the Debenture Trust Deed; and
14.1.2 a charge in favour of the Debenture Trustee, on all current assets, book debts, receivables (both present
and future) 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 our Company holding
pari passu charge over the security.
14.2 Our Company agrees to maintain an asset cover of at least 1.10 times of the outstanding amount of
Bonds, at all times, till the Bonds are completely redeemed. In case of reduction of security cover
below 1.10 times for any reason whatsoever, our Company agrees to make-up the deficiency with
equivalent amount of receivables, free from any charge of whatsoever nature, so as to maintain the
minimum asset cover of 1.10 times.
14.3 Our Company shall ensure that the creation of security as contemplated in this section and all necessary
formalities including execution of relevant security documents in relation to perfection of the security
including but not limited to filings to be made with the RoC shall be completed within a period of 90
days from the Deemed Date of Allotment of the Bonds.
15. Events of Defaults
15.1 The Debenture Trustee at its discretion may, or if so requested in writing by the holders of not less than
75 per cent. in principal amount of the Bonds then outstanding or if so directed by a Special Resolution
shall (subject to being indemnified and/or secured by the Bondholders to its satisfaction), give notice to
our Company specifying that the Bonds and/or any particular Series of Bonds, in whole but not in part
are and have become due and repayable on such date as may be specified in such notice inter alia if any
of the events listed in 15.2 below (each an “Event of Default”) occurs.
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15.2 The list given below is an indicative list of events of default and a complete list of event of default and
its consequences shall be specified in the Debenture Trust Deed. Events of default shall include but not
be limited to the following:
15.2.1 Default is made in any payment of any interest due in respect of the Bonds or any of them and such
failure continues for a period of 90 days;
15.2.2 Our Company does not perform or comply with one or more of its other obligations and undertakings
in relation to the Bonds or the Debenture Trust Deed which default or breach is incapable of remedy or,
if in the opinion of the Debenture Trustee capable of remedy, is not remedied within 15 days after
written notice of such default or breach shall have been given to our Company by the Debenture
Trustee;
15.2.3 Our Company is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay (in the
opinion of the Debenture Trustee) a material part of its debts, or stops, suspends or threatens to stop or
suspend payment of all or (in the opinion of the Debenture Trustee) a material part of (or of a particular
type of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment
of all or (in the opinion of the Debenture Trustee) a material part of (or all of a particular type of) its
debts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a
general assignment or an arrangement or composition with or for the benefit of the relevant creditors in
respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any
part of (or of a particular type of) the debts of our Company;
15.2.4 A distress, attachment, execution or other legal process is levied, enforced or sued out on or against any
material part of the property, assets or revenues of our Company and is not discharged or stayed within
45 days;
15.2.5 An order is made or an effective resolution passed for the winding-up or dissolution, judicial
management or administration of our Company, or our Company ceases or threatens to cease to carry
on all or substantially all of its business or operations, except for the purpose of and followed by a
reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved by an Special
Resolution of the Bondholders;
15.2.6 An encumbrancer takes possession or an administrative or other receiver or an administrator is
appointed of the whole or (in the opinion of the Debenture Trustee) any substantial part of the property,
assets or revenues of our Company (as the case may be) and is not discharged within 45 days;
15.2.7 Our Company commences a voluntary proceeding under any applicable bankruptcy, insolvency,
winding up or other similar law now or hereafter in effect, or consent to the entry of an order for relief
in an involuntary proceeding under any such law, or consent to the appointment or taking possession by
a receiver, liquidator, assignee (or similar official) for any or a substantial part of its property or take
any action towards its re-organisation, liquidation or dissolution;
15.2.8 It is or will become unlawful for our Company to perform or comply with any one or more of its
obligations under any of the Bonds or the Debenture Trust Deed;
15.2.9 Any step is taken by governmental authority or agency or any other competent authority, with a view to
the seizure, compulsory acquisition, expropriation or nationalisation of all or (in the opinion of the
Debenture Trustee) a material part of the assets of our Company which is material to our Company;
and
15.2.10 Any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of
the events referred to in any of the foregoing paragraphs.
15.3 If any Event of Default or any event which, after the notice, or lapse of time, or both, would constitute
an Event of Default has happened, our Company shall, forthwith give notice thereof to the Debenture
Trustee in writing specifying the nature of such event of default or of such event.
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15.4 If an Event of Default occurs which is continuing, the Debenture Trustee may with the consent of the
Bondholders, obtained in accordance with the provisions of the Debenture Trust Deed, and with a prior
written notice to our Company, enforce the Security in terms of the Debenture Trust Deed.
15.5 In case of default in the redemption of Bonds, in addition to the payment of interest and all other
monies payable hereunder on the respective due dates, our Company shall also pay interest on the
defaulted amounts. Arrears of liquidated damages shall carry interest at 2% per annum on the defaulted
amount and shall be payable on the footing of compound interest with quarterly rests.
16. Bondholder‟s Rights, Nomination Etc.
16.1 Bondholder Not a Shareholder
The Bondholders will not be entitled to any of the rights and privileges available to the equity and
preference shareholders of our Company.
16.2 Rights of Bondholders
Some of the significant rights available to the Bondholders are as follows:
(a) The Bonds shall not, except as provided in the Companies Act, confer upon the holders
thereof any rights or privileges available to members of our Company including the right to
receive notices or annual reports of, or to attend and / or vote, at our Company‟s general
meeting(s). However, if any resolution affecting the rights of the Bondholders is to be placed
before the shareholders, the said resolution will first be placed before the concerned registered
Bondholders for their consideration. In terms of Section 219(2) of the Companies Act, holders
of Bonds shall be entitled to a copy of the balance sheet on a specific request made to our
Company.
(b) The rights, privileges and conditions attached to the Bonds may be varied, modified and / or
abrogated with the consent in writing of the holders of at least three-fourths of the outstanding
amount of the Bonds or with the sanction of a Special Resolution passed at a meeting of the
concerned Bondholders, provided that nothing in such consent or resolution shall be operative
against our Company, where such consent or resolution modifies or varies the terms and
conditions governing the Bonds, if modification, variation or abrogation is not acceptable to
our Company.
(c) The registered Bondholder or in case of joint-holders, the person whose name stands first in the
Register of Bondholders shall be entitled to vote in respect of such Bonds, either by being
present in person or, where proxies are permitted, by proxy, at any meeting of the concerned
Bondholders summoned for such purpose and every such Bondholder shall be entitled to one
vote on a show of hands and on a poll, his or her voting rights shall be in proportion to the
outstanding nominal value of Bonds held by him or her on every resolution placed before such
meeting of the Bondholders.
(d) The Bonds are subject to the provisions of the SEBI Debt Regulations, the Act, the
Memorandum and Articles of Association of our Company, the terms of this Prospectus, the
Application Forms, the terms and conditions of the Debenture Trust Deed, requirements of the
RBI, other applicable statutory and/or regulatory requirements relating to the issue and listing,
of securities and any other documents that may be executed in connection with the NCDs.
(e) A register of Bondholders will be maintained in accordance with Section 152 of the Companies
Act and all interest and principal sums becoming due and payable in respect of the Bonds will
be paid to the registered holder thereof for the time being or in the case of joint-holders, to the
person whose name stands first in the Register of Bondholders as on the Record date.
(f) Bonds may be rolled over with the consent in writing of the holders of at least three-fourths of
the outstanding amount of the Bonds or with the sanction of a Special Resolution passed at a
meeting of the concerned Bondholders after providing at least 21 days prior notice for such
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roll-over and in accordance with the SEBI Debt Regulations. Our Company shall redeem the
Bonds of all the Bondholders, who have not given their positive consent to the roll-over.
The above rights of Bondholders are merely indicative. The final rights of the Bondholders will be as
per the Debenture Trust Deed to be executed by our Company with the Debenture Trustee.
Special Resolution for the purpose of this section is a resolution passed at a meeting of Bondholders of
at least three-fourths of the outstanding amount of the Bonds, present and voting.
16.3 Succession
Where Bonds are held in joint names and one of the joint holders dies, the survivor(s) will be
recognized as the Bondholder(s). It will be sufficient for our Company to delete the name of the
deceased Bondholder after obtaining satisfactory evidence of his death. Provided, a third person may
call on our Company to register his name as successor of the deceased Bondholder after obtaining
evidence such as probate of a will for the purpose of proving his title to the Bonds. In the event of
demise of the sole or first holder of the Bonds, our Company will recognize the executors or
administrator of the deceased Bondholders, or the holder of the succession certificate or other legal
representative as having title to the Bonds only if such executor or administrator obtains and produces
probate or letter of administration or is the holder of the succession certificate or other legal
representation, as the case may be, from an appropriate court in India. The directors of our Company
in their absolute discretion may, in any case, dispense with production of probate or letter of
administration or succession certificate or other legal representation.
Where a non-resident Indian becomes entitled to the Bonds by way of succession, the following steps
have to be complied with:
(a) Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the
Bonds were acquired by the non-resident Indian as part of the legacy left by the deceased
Bondholder.
(b) Proof that the non-resident Indian is an Indian national or is of Indian origin.
Such holding by a non-resident India will be on a non-repatriation basis.
16.4 Nomination Facility to Bondholder
16.4.1 In accordance with Section 109A of the Act, the sole Bondholder or first Bondholder, along with other
joint Bondholders (being individual(s)) may nominate any one person (being an individual) who, in the
event of death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the
Bond. A person, being a nominee, becoming entitled to the Bond by reason of the death of the
Bondholders, shall be entitled to the same rights to which he will be entitled if he were the registered
holder of the Bond. Where the nominee is a minor, the Bondholders may make a nomination to appoint
any person to become entitled to the Bond(s), in the event of his death, during the minority. A
nomination shall stand rescinded upon sale of a Bond by the person nominating. A buyer will be
entitled to make a fresh nomination in the manner prescribed. When the Bond is held by two or more
persons, the nominee shall become entitled to receive the amount only on the demise of all the
Bondholders. Fresh nominations can be made only in the prescribed form available on request at our
Company‟s registered or administrative office or at such other addresses as may be notified by our
Company.
16.4.2 The Bondholders are advised to provide the specimen signature of the nominee to our Company to
expedite the transmission of the Bond(s) to the nominee in the event of demise of the Bondholders. The
signature can be provided in the Application Form or subsequently at the time of making fresh
nominations. This facility of providing the specimen signature of the nominee is purely optional.
16.4.3 In accordance with Section 109B of the Act, any person who becomes a nominee by virtue of the
provisions of Section 109A of the Act, shall upon the production of such evidence as may be required
by our Company‟s Board or Committee of Directors, as the case may be, elect either:
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(a) to register himself or herself as the holder of the Bonds; or
(b) to make such transfer of the Bonds, as the deceased holder could have made.
16.4.4 Further, our Company‟s Board or Committee of Directors, as the case may be, may at any time give
notice requiring any nominee to choose either to be registered himself or herself or to transfer the
Bonds, and if the notice is not complied with, within a period of 90 days, our Company‟s Board or
Committee of Directors, as the case may be, may thereafter withhold payment of all interests or other
monies payable in respect of the Bonds, until the requirements of the notice have been complied with.
16.4.5 Notwithstanding anything stated above, since the allotment of Bonds in this Issue will be made only in
dematerialised mode, there is no need to make a separate nomination with our Company. Nominations
registered with the respective Depository Participant of the Bondholder will prevail. If the Bondholders
require changing their nomination, they are requested to inform their respective Depository Participant.
17. Debenture Trustees
17.1 Our Company has appointed IL&FS Trust Company Limited act as the Debenture Trustee for the
Bondholders. Our Company intends to enter into a Debenture Trust Deed with the Debenture Trustee,
the terms of which will govern the appointment and functioning of the Debenture Trustee and shall
specify the powers, authorities and obligations of the Debenture Trustee. Under the terms of the
Debenture Trust Deed, our Company will covenant with the Debenture Trustee that it will pay the
Bondholders the principal amount on the Bonds on the relevant Maturity Date and also that it will pay
the interest due on Bonds on the rate specified under the Debenture Trust Deed.
17.2 The Bondholders shall, without further act or deed, be deemed to have irrevocably given their consent
to the Debenture Trustee or any of their agents or authorised officials to do all such acts, deeds, matters
and things in respect of or relating to the Bonds as the Debenture Trustee may in their absolute
discretion deem necessary or require to be done in the interest of the Bondholders. Any payment made
by our Company to the Debenture Trustee on behalf of the Bondholders shall discharge our Company
pro tanto to the Bondholders. All the rights and remedies of the Bondholders shall vest in and shall be
exercised by the Debenture Trustee without reference to the Bondholders. No Bondholder shall be
entitled to proceed directly against our Company unless the Debenture Trustee, having become so
bound to proceed, failed to do so.
17.3 The Debenture Trustee will protect the interest of the Bondholders in the event of default by our
Company in regard to timely payment of interest and repayment of principal and they will take
necessary action at our Company‟s cost.
18. Miscellaneous
18.1 Lien
Our Company shall have the right of set-off and lien, present as well as future on the monies due and
payable to the Bondholder whether in single name or joint name, to the extent of all outstanding dues by
the Bondholder to our Company.
18.2 Lien on Pledge of Bonds
Our Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is accepted
by any bank or institution for any loan provided to the Bondholder against pledge of such Bonds as part
of the funding.
18.3 Right to Reissue Bond(s)
Subject to the provisions of the Act, where our Company has redeemed or repurchased any Bond(s),
our Company shall have and shall be deemed always to have had the right to keep such Bonds alive
without extinguishment for the purpose of resale or reissue and in exercising such right, our Company
shall have and be deemed always to have had the power to resell or reissue such Bonds either by
reselling or reissuing the same Bonds or by issuing other Bonds in their place. This includes the right to
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reissue original Bonds.
18.4 Joint-holders
Where two or more persons are holders of any Bond (s), they shall be deemed to hold the same as joint
holders with benefits of survivorship subject to Articles and applicable law.
18.5 Sharing of Information
Our Company may, at its option, use its own, as well as exchange, share or part with any financial or
other information about the Bondholders available with our Company, its subsidiaries and affiliates and
other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and
neither our Company nor its subsidiaries and affiliates nor their agents shall be liable for use of the
aforesaid information.
18.6 Notices
All notices to the Bondholders required to be given by our Company or the Debenture Trustees shall be
published in one English language newspaper having wide circulation and one regional language daily
newspaper in Kerala, will be sent by post/courier or through email or other electronic media to the
registered Bondholders from time to time. All notices to be given by the Bondholders shall be sent by
registered post or by hand delivery to our Company at its Registered Office.
18.7 Issue of Duplicate Consolidated Bond Certificate(s)
If any Consolidated Bond Certificate is mutilated, defaced or the cages for recording transfers of Bonds
are fully utilized it may be replaced by our Company against the surrender of such Consolidated Bond
Certificates and upon payment by the claimant of such costs as may be incurred in connection
therewith, provided that where the Consolidated Bond Certificates are mutilated or defaced, they will
be replaced only if the certificate numbers and the distinctive numbers are legible.
If any Consolidated Bond Certificate is destroyed, stolen or lost then upon production of proof thereof
to our Company‟s satisfaction and upon furnishing such indemnity/security and/or documents as we
may deem adequate and further upon payment by the claimant of such costs as may be incurred in
connection therewith , duplicate Consolidated Bond Certificate(s) shall be issued.
18.8 Future Borrowings
Our Company shall be entitled to borrow or raise loans or create encumbrances or avail financial
assistance in whatever form, and also issue promissory notes or debentures or other securities in any
manner having such ranking, pari passu or otherwise and change the capital structure including the
issue of shares of any class, on such terms and conditions as our Company may deem appropriate
subject to the (i) prior written consent of the Debenture Trustee and (ii) the security cover of 1.10 times
as stipulated for the Bonds is maintained at all times.
18.9 Jurisdiction
The Bonds, the Debenture Trust Deed, the Tripartite Agreements with the Depositories and other
relevant documents shall be governed by and construed in accordance with the laws of India. Our
Company has in the Debenture Trust Deed agreed, for the exclusive benefit of the Debenture Trustee
and the Bondholders, that the courts of Mumbai are to have jurisdiction to settle any disputes which
may arise out of or in connection with the Debenture Trust Deed or the Bonds and that accordingly any
suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with
the Debenture Trust Deed and the Bonds may be brought in the courts of Mumbai.
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PROCEDURE FOR APPLICATION
This section applies to all Applicants. Please note that all Applicants are required to make payment of the full
Application Amount along with the Application Form.
The Prospectus and the abridged prospectus containing the salient features of the Prospectus together with
Application Forms may be obtained from our Registered Office, from the Lead Managers, the Co-Lead
Managers or from the Lead Brokers, as mentioned on the Application Form. In addition, Application Forms
would also be made available to BSE where listing of the Bonds is sought, and to brokers, being members of
BSE, upon their request.
We may provide Application Forms for being filled and downloaded at such websites as we may deem fit.
Application Form
Applicants are required to submit their Applications through the Bankers to Issue. All Applicants shall have the
option to apply for any of or all categories of Bonds in the Application Form.
WHO CAN APPLY?
The following categories of persons are eligible to apply in the Issue:
Category I
• Public financial institutions, statutory corporations, commercial banks, co-operative banks and regional
rural banks, which are authorised to invest in the Bonds;
• Provident funds, pension funds, superannuation funds and gratuity fund, which are authorised to invest
in the Bonds;
• Venture capital funds registered with SEBI;
• Insurance companies registered with the IRDA;
• National Investment Fund;
• Mutual funds;
Category II
• Companies; bodies corporate and societies registered under the applicable laws in India and authorised
to invest in the Bonds;
• Public/private charitable/religious trusts which are authorised to invest in the Bonds;
• Scientific and/or industrial research organisations, which are authorised to invest in the Bonds;
• Partnership firms in the name of the partners; and
• Limited liability partnerships formed and registered under the provisions of the Limited Liability
Partnership Act, 2008.
Category III*
The following persons/entities
• Resident Indian individuals; and
• Hindu undivided families through the Karta.
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* With respect to applications received from Category III Applicants, applications by Applicants who apply for
Bonds aggregating to a value not more than Rs. 5 Lacs, across all Series of Bonds, shall be grouped together,
(“Reserved Individual Portion”) while applications by applicants who apply for NCDs aggregating to a value
exceeding Rs. 5 Lacs, across all Series of Bonds, (Option I and/or Option II), shall be separately grouped
together, (“Unreserved Individual Portion”).
Participation by any of the above-mentioned investor classes in this Issue will be subject to applicable
statutory and/or regulatory requirements. Applicants are advised to ensure that applications made by
them do not exceed the investment limits or maximum number of Bonds that can be held by them under
applicable statutory and/or regulatory provisions.
Foreign Institutional Investors, NRIs and Overseas Corporate Bodies are not permitted to apply in this
Issue.
The Lead Managers, the Co-Lead Managers, their associates and affiliates are permitted to subscribe in
the Issue. However, the Issue or any part thereof is not being underwritten by the Lead Managers or the
Co-Lead Managers to the Issue or by any of its associates and affiliates.
Applications by Mutual Funds
In terms of the SEBI (Mutual Funds) Regulations, 1996, as amended, no mutual fund scheme is allowed to
invest more than 15% of its net asset value (the “NAV”) in debt instruments issued by a single company, which
are rated not below investment grade by a credit rating agency authorised to carry out such activity. Such
investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the board of
trustees and the board of asset management company (the “AMC”).
A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBI
and such Applications shall not be treated as multiple Applications. Applications made by the AMCs or
custodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which Application is
being made. In case of Applications made by Mutual Fund registered with SEBI, a certified copy of their SEBI
registration certificate must be submitted with the Application Form. The Applications must be also
accompanied by certified true copies of (i) Trust Deed (ii) resolution authorising investment and containing
operating instructions and (iii) specimen signatures of authorized signatories. Failing this, the Company reserves
the right to accept or reject any Application in whole or in part, in either case, without assigning any reason
therefor.
Applications by Provident, Superannuation and Gratuity Funds
Non-government provident funds, superannuation funds and gratuity funds may invest up to 55% of their funds
in: (a) Government securities; and (b) Government guaranteed securities. Further, up to: (i) 40% of their funds
may be invested in: (a) minimum 3 year debt securities issued by corporates, banks and PFIs, at least 75% of
which should be made in investment grade instruments; and (b) minimum 3 year Rupee bonds issued by
institutions like the International Bank for Reconstruction and Development, International Finance Corporation
and the Asian Development Bank; and (ii) 5% in money market instruments.
Application by Pension Funds
Pension funds under the PFRDA (Registration of Intermediaries) Regulations, 2005 may invest in (i) minimum
3 year debt securities issued by corporates, SCBs and PFIs, at least 75% of which should be invested in
investment grade instruments; (ii) credit rated PFIs or PSU bonds; (iii) credit rated municipal bonds or
infrastructure bonds; and (iv) State Government and Government securities.
Application by Scheduled Banks, Co-operative Banks and Regional Rural Banks
Scheduled banks, co-operative banks and regional rural banks can apply in the Issue based upon their own
investment limits and approvals. The Application must be accompanied by certified true copies of (i) a board
resolution authorising the Application; (ii) a letter of authorisation. Failing this, the Company reserves the right
to accept or reject any Application in whole or in part, in either case, without assigning any reason therefor.
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Application by Insurance Companies
In case of Applications made by insurance companies registered with the Insurance Regulatory and
Development Authority, a certified true copy of certificate of registration issued by Insurance Regulatory and
Development Authority must be attached to the Application Form. Each Application must be accompanied by
certified copies of (i) the Applicant‟s memorandum of association and articles of association; (ii) a power of
attorney; (iii) a resolution authorising the Application and containing operating instructions; and (iv) specimen
signatures of authorized signatories. Failing this, the Company reserves the right to accept or reject any
Application in whole or in part, in either case, without assigning any reason therefor.
Application by Trusts
In case of Applications made by trusts, settled under the Indian Trusts Act, 1882, as amended, or any other
statutory and/or regulatory provision governing the settlement of trusts in India, must submit a (i) certified copy
of the registered instrument for creation of such trust, (ii) power of attorney, if any, in favour of one or more
trustees thereof, (iii) such other documents evidencing registration thereof under applicable statutory/regulatory
requirements. Further, any trusts applying for Bonds pursuant to the Issue must ensure that (a) they are
authorised under applicable statutory/regulatory requirements and their constitution instrument to hold and
invest in debentures, (b) they have obtained all necessary approvals, consents or other authorisations, which may
be required under applicable statutory and/or regulatory requirements to invest in debentures, and (c)
applications made by them do not exceed the investment limits or maximum number of Bonds that can be held
by them under applicable statutory and or regulatory provisions. Failing this, our Company reserves the right to
accept or reject any Applications in whole or in part, in either case, without assigning any reason therefor.
Applications cannot be made by:
(a) Minors without a guardian name;
(b) Non residents;
(c) FIIs;
(d) OCBs; and
(e) Foreign nationals.
Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatory
permissions/consents/approvals in connection with applying for, subscribing to, or seeking Allotment of
Bonds pursuant to this Issue.
Application Size
Applications are required to be for a minimum of five Bonds and multiples of one Bond thereafter.
For the purpose fulfilling the requirement of minimum subscription of five Bonds, an Applicant may choose to
apply for five Bonds of the same series or five Bonds across different series.
INSTRUCTIONS FOR COMPLETING THE APPLICATION FORM
Applications must be:
(a) Made only in the prescribed Application Form.
(b) Completed in block letters in English as per the instructions contained herein and in the Application
Form, and are liable to be rejected if not so completed. Applicants should note that the Bankers to the
Issue will not be liable for errors in data entry due to incomplete or illegible Application Forms.
(c) In single name or in joint names (not more than three, and in the same order as their Depository
Participant details).
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(d) Applications are required to be for a minimum of five Bonds and in multiples of one Bond thereafter.
For the purpose of fulfilling the requirement of minimum subscription of five Bonds, an Applicant may
choose to apply for two Bonds of the same series or two Bonds across different series.
(e) Thumb impressions and signatures other than in English/ Hindi/ Marathi or any of the other languages
specified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or Notary
Public or a Special Executive Magistrate under his official seal.
(f) No receipt would be issued by our Company for the Application money. However, the Bankers to the
Issue, on receiving the applications will acknowledge receipt by stamping and returning the
acknowledgment slip to the Applicant.
IN CASE THE DP ID, CLIENT ID AND PAN MENTIONED IN THE APPLICATION FORM DO NOT
MATCH WITH THE DP ID, CLIENT ID AND PAN AVAILABLE IN THE RECORDS WITH THE
DEPOSITORIES, THE APPLICATION FORM IS LIABLE TO BE REJECTED.
The demat accounts for Applicants for which PAN details have not been verified shall be “suspended for
credit” and no credit of Bonds pursuant to the Issue shall be made into accounts of such Applicants.
GENERAL INSTRUCTIONS
Do‟s:
1. Check if you are eligible to apply.
2. Read all the instructions carefully and complete the Application Form.
3. Applications are required to be in single or joint names (not more than three).
4. Ensure that the details about the Depository Participant and beneficiary account are correct and the
demat account is active as Allotment of the Bonds will be in the dematerialised form only.
5. In case of an HUF applying through its Karta, the Applicant is required to specify the name of an
Applicant in the Application Form as “XYZ Hindu Undivided Family applying through PQR”, where
PQR is the name of the Karta.
6. Applicant‟s Bank Account Details: The Bonds shall be allotted in dematerialised form only. The
Registrars to the Issue will obtain the Applicant‟s bank account details from the Depository. The
Applicant should note that on the basis of the name of the Applicant, Depository Participant‟s (DP)
name, Depository Participants identification number and beneficiary account number provided by them
in the Application Form, the Registrar to the Issue will obtain from the Depositaries, the Applicant‟s
bank account details. The Applicants are advised to ensure that bank account details are updated in
their respective DP A/cs as these bank account details would be printed on the refund order(s), if any.
Please note that failure to do so could result in delays in credit of refunds to Applicants at the
Applicants sole risk and neither the Lead Managers nor the Co-Lead Managers or our Company nor the
Refund Bank nor the Registrar shall have any responsibility and undertake any liability for the same.
7. Applications under Power of Attorney: Unless our Company specifically agree in writing, and subject
to such terms and conditions as our Company may deem fit, in the case of Applications made under
Power of Attorney, a certified copy of the Power of Attorney is required to be lodged separately, along
with a copy of the Application Form at the office of the Registrar to the Issue simultaneously with the
submission of the Application Form, indicating the name of the Applicant along with the address,
Application number, date of submission of the Application Form, name of the bank and branch where
it was deposited, Cheque/Demand Draft Number and the bank and branch on which the
Cheque/Demand Draft was drawn.
8. Permanent Account Number: All Applicants except applicants on behalf of the Central or State
Government and the officials appointed by the courts should mention their PAN allotted under the
Income Tax Act in the Application Form. In case of joint applicants the PAN of the first Applicant
should be provided and for HUFs, PAN of the HUF should be provided. The PAN would be the sole
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identification number for participants transacting in the securities markets, irrespective of the amount
of the transaction. Any Application Form without the PAN is liable to be rejected. It is to be
specifically noted that Applicants should not submit the GIR Number instead of the PAN as the
Application is liable to be rejected on this ground. However, applicants residing in the State of Sikkim
are exempted from the mandatory requirement of PAN. The exemption for applicants on behalf of the
Central or State Government and the officials appointed by the courts and applicants residing in the
State of Sikkim is subject to the Depository participants‟ verifying the veracity of such claims of the
investors by collecting sufficient documentary evidence in support of their claims. At the time of
ascertaining the validity of these bids, the Registrar will check from Depository records for the
appropriate description under the PAN field.
9. Joint Applications: Applications may be made in single or joint names (not exceeding three). In the
case of joint Applications, all payments will be made out in favour of the first Applicant. All
communications will be addressed to the first named Applicant whose name appears in the Application
Form at the address mentioned therein.
10. Applicants are requested to write their names and Application serial number on the reverse of the
instruments by which the payments are made.
11. Category: All Applicants are requested to tick the relevant column “Category of Investor” in the
Application Form.
12. Ensure that you have obtained all necessary approvals from the relevant statutory and/or regulatory
authorities to apply for, subscribe to and/or seek allotment of Bonds pursuant to the Issue.
13. Ensure that the Applications are submitted to the Bankers to the Issue before the closure of banking
hours on the Issue Closing Date;
14. Ensure that the Applicant‟s name(s) given in the Application Form is exactly the same as the name(s)
in which the beneficiary account is held with the Depository Participant. In case the Application Form
is submitted in joint names, ensure that the beneficiary account is also held in same joint names and
such names are in the same sequence in which they appear in the Application Form.
Don‟ts:
1. Do not make an application for lower than the minimum Application size.
2. Do not pay the Application Amount in cash, by money order or by postal order or by stockinvest.
3. Do not send Application Forms by post or to the office of Lead Mangers or Registrar to the Issue;
instead submit the same to a Banker to the Issue only.
4. Do not submit the GIR number instead of the PAN as the Application Form is liable to be rejected on
this ground.
5. Do not submit the Application Forms without the full Application Amount.
6. Do not fill up the Application Form such that the Bonds applied for exceeds the issue size and/or
investment limit or maximum number of Bonds that can be held under the applicable laws or
regulations or maximum amount permissible under the applicable regulations
For further instructions, please read the Application Form carefully.
Tax Deduction at Source
Please refer to ―Terms of the Issue – Taxation‖
PAYMENT INSTRUCTIONS
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Escrow Mechanism
Our Company shall open Escrow Account(s) with one or more Escrow Collection Bank(s) in whose favour the
Applicants shall make out the cheque or demand draft in respect of his or her Application. Cheques or demand
drafts received for the Application Amount from Applicants would be deposited in the Escrow Account.
The Escrow Collection Banks will act in terms of the Prospectus and the Escrow Agreement. The Escrow
Collection Banks, for and on behalf of the Applicants, shall maintain the monies in the Escrow Account until the
documents for creation of security for the Bonds are executed. The Escrow Collection Banks shall not exercise
any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the
Applicants. On the Designated Date, the Escrow Collection Banks shall transfer the funds represented by
Allotment of the Bonds from the Escrow Account, as per the terms of the Escrow Agreement, into the Public
Issue Account maintained with the Bankers to the Issue. The amount representing the Applications that have
been rejected shall be transferred to the Refund Account. Payments of refund to the Applicants shall be made
from the Refund Account are per the terms of the Escrow Agreement and the Prospectus.
The Applicants should note that the escrow mechanism is not prescribed by SEBI or the BSE and has been
established as an arrangement between our Company, the Lead Managers, the Co-Lead Managers, the Escrow
Collection Banks and the Registrar to facilitate collection from the Applicants.
Payment into Escrow Account
Each Applicant shall draw a cheque or demand draft for the Application Amount as per the following terms:
(a) All Applicants would be required to pay the full Application Amount at the time of the submission of
the Application Form.
(b) The Applicants shall, with the submission of the Application Form, draw a payment instrument for the
Application Amount in favour of the Escrow Account and submit the same to Bankers to the Issue. If
the payment is not made favouring the Escrow Account along with the Application Form, the
Application shall be rejected.
(c) The payment instruments for payment into the Escrow Account should be drawn in favour of “Escrow
Account – Manappuram Bond Issue”.
(d) The monies deposited in the Escrow Account will be held for the benefit of the Applicants until the
Designated Date.
(e) On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow
Account as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to
the Issue after execution of documents for creation of security. The Escrow Collection Bank shall also
transfer all amounts payable to Applicants whose Applications have been rejected, fully or partially, by
our Company to the Refund Account with the Refund Bank. The Refund Bank shall refund all the
amounts to the Applicants in terms of the Escrow Agreement.
(f) Payments should be made by cheque, or a demand draft drawn on any bank (including a Co-operative
bank), which is situated at, and is a member of or sub-member of the bankers‟ clearing house located at
the centre where the Application Form is submitted. Outstation cheques/bank drafts drawn on banks
not participating in the clearing process/non-MICR cheques will not be accepted and applications
accompanied by such cheques or bank drafts are liable to be rejected.
(g) Cash/ stockinvest/money orders/ postal orders will not be accepted.
Submission of Application Forms
All Application Forms duly completed and accompanied by account payee cheques or drafts shall be submitted
to the branches of the Bankers to the Issue during the Issue Period.
Applications shall be deemed to have been received by us only when submitted to Bankers to the Issue at their
designated branches and not otherwise.
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No separate receipts shall be issued for the money payable on the submission of Application Form. However,
the collection centre of the Bankers to the Issue will acknowledge the receipt of the Application Forms by
stamping and returning to the Applicants the acknowledgement slip. This acknowledgement slip will serve as
the duplicate of the Application Form for the records of the Applicant.
All applications by persons or entities belonging to Category I should be made in the form prescribed for
Category I Applicants and can only be procured by the Lead Managers or their respective affiliates and
any Category I application without a stamp of Lead Managers or their respective affiliates is liable to be
rejected.
Online Applications
Our Company may decide to offer an online Application facility for the Bonds, as and when permitted by
Applicable Laws, subject to the terms and conditions prescribed.
Joint Applications
Applications may be made in single or joint names (not exceeding three). In the case of joint applications, all
payments will be made out in favour of the first applicant. All communications will be addressed to the first
named applicant whose name appears in the Application Form and at the address mentioned therein.
Additional Applications
An Applicant is allowed to make one or more applications for one or more Series of Bonds, subject to a
minimum application size of Rs. 5,000 and in multiples of Rs. 1,000 thereafter, for each application. Any
application for an amount below the aforesaid minimum application size will be deemed as an invalid
application and shall be rejected. However, multiple applications by the same Applicant belonging to Category
III aggregating to a value exceeding Rs. 5 Lacs shall be grouped in the Unreserved Individual Portion, for the
purpose of determining the basis of allotment to such Applicant. However, any application made by any person
in his individual capacity and an application made by such person in his capacity as a karta of a Hindu
Undivided family and/or as joint applicant, shall not be deemed to be a multiple application.
For the purposes of allotment of Bonds under the Issue, applications shall be grouped based on the PAN, i.e.
applications under the same PAN shall be grouped together and treated as one application. Two or more
applications will be deemed to be multiple applications if the sole or first Applicant is one and the same. For the
sake of clarity, two or more applications shall be deemed to be a multiple application for the aforesaid purpose if
the PAN number of the sole or the first applicant is one and the same.
Bonds in dematerialised form with NSDL or CDSL
As per the provisions of Section 68B of the Companies Act, the Allotment of Bonds in this Issue shall be only in
a de-materialised form, (i.e., not in the form of physical certificates but be fungible and be represented by the
statement issued through the electronic mode).
As per the provisions of the Depositories Act, the Bonds can be held in a dematerialised form, i.e., they shall be
fungible and be represented by a statement issued through electronic mode. In this context:
(i) The following two Tripartite Agreements have been signed amongst our Company, the respective
Depositories and the Registrar:
Tripartite Agreement between us, the Registrar and NSDL for offering depository option to
the Bondholders.
Tripartite Agreement between us, the Registrar and CDSL for offering depository option to
the Bondholders.
(ii) All Applicants can seek Allotment only in dematerialised mode. Applications without relevant details
of his or her depository account are liable to be rejected.
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(iii) An Applicant applying for the Bonds must have at least one beneficiary account with either of the
Depository Participants of either NSDL or CDSL prior to making the Application.
(iv) The Applicant must necessarily fill in the details (including the Beneficiary Account Number and
Depository Participant‟s identification number) appearing in the Application Form.
(v) Allotment to an Applicant will be credited in electronic form directly to the beneficiary account (with
the Depository Participant) of the Applicant.
(vi) Names in the Application Form should be identical to those appearing in the account details in the
Depository. In case of joint holders, the names should necessarily be in the same sequence as they
appear in the account details in the Depository.
(vii) If incomplete or incorrect details are given under the heading „Applicants Depository Account Details‟
in the Application Form, it is liable to be rejected.
(viii) The Applicant is responsible for the correctness of his or her Demographic Details given in the
Application Form vis-à-vis those with his or her Depository Participant.
(ix) Bonds in electronic form can be traded only on the stock exchanges having electronic connectivity with
NSDL and CDSL. BSE where the Bonds are proposed to be listed has electronic connectivity with
CDSL and NSDL.
(x) The trading of the Bonds shall be in dematerialised form only.
Allottees will have the option to re-materialise the Bonds so Allotted as per the provisions of the
Companies Act and the Depositories Act.
Communications
All future communications in connection with Applications made in the Issue should be addressed to the
Registrar to the Issue, quoting all relevant details regarding the Applicant/Application. Applicants may address
our Compliance Officer as well as the contact persons of the Lead Managers, the Co-Lead Managers and the
Registrar to the Issue in case of any pre-Issue related problems such as non-receipt of letters of Allotment/credit
of Bonds in the Depositary‟s beneficiary account/refund orders, etc.
Rejection of Applications
Our Company reserves its full, unqualified and absolute right to accept or reject any Application in whole or in
part and in either case without assigning any reason thereof.
Application would be liable to be rejected on one or more technical grounds, including but not restricted to:
Number of Bonds applied for is less than the minimum Application size;
Applications not duly signed by the sole/joint Applicants (in the same sequence as they appear in the
records of the depositary);
Application amount paid not tallying with the number of Bonds applied for;
Age of First Applicant not given;
Applications for a number of Bonds which is not in a multiple of one;
Investor category not ticked;
Bank account details not given;
Applications by persons not competent to contract under the Indian Contract Act, 1872, as amended,
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including a minor without a guardian name;
In case of Applications under Power of Attorney where relevant documents not submitted;
Application by stockinvest/money order/postal order;
Applications accompanied by cash;
Category not ticked;
Application under power of attorney or by limited companies, corporate, trust etc., where relevant
documents are not submitted;
Applications without PAN;
Application Form does not have applicant‟s depository account details;
GIR number furnished instead of PAN;
Applications for amounts greater than the maximum permissible amounts prescribed by applicable
regulations;
Applications by persons/entities who have been debarred from accessing the capital markets by SEBI;
DP ID, Client ID and PAN mentioned in the Application Form do not match with the DP ID, Client ID
and PAN available in the records with the depositories;
Signature of sole and/ or joint applicant(s) missing;
Application Forms not delivered by the applicant within the time prescribed as per the Application
Form and the Prospectus and as per the instructions in the Prospectus and the Application Form; or
In case the subscription amount is paid in cash;
Category I Applications not procured by the Lead Managers or their respective affiliates; and
Application Form accompanied with more than one cheque.
The collecting bank shall not be responsible for rejection of the Application on any of the technical grounds
mentioned above.
Application form received after the closure of the Issue shall be rejected.
In the event, if any Bond(s) applied for is/are not allotted, the Application monies of such Bonds will be
refunded, as may be permitted under the provisions of applicable laws.
Basis of Allotment
Our Company shall finalise the Basis of Allotment in consultation with the Lead Managers, Co-Lead Managers
and the Designated Stock Exchange and in compliance with the aforementioned provisions of this Prospectus.
The Designated Stock Exchange along with the Company, Lead Managers, the Co-Lead Managers and the
Registrar shall be responsible for ensuring that the Basis of Allotment is finalised in a fair and proper manner.
For removal of doubt, “Institutional Portion”, Non-Institutional Portion” “Reserved Individual Portion” and
“Unreserved Individual Portion” are individually referred to as “Portion” and collectively referred to as
“Portions”
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For the purposes of determining the number of Bonds available for allocation to each of the above mentioned
Portions, our Company shall have the discretion of determining the number of Bonds to be allotted over and
above the base amount of the Issue, in case our Company opts to retain any oversubscription in the Issue upto
Rs 7,500 million. The aggregate value of Bonds decided to be allotted over and above the base amount of the
Issue, (in case our Company opts to retain any oversubscription in the Issue), and the aggregate value of Bonds
upto the base amount of the Issue shall be collectively termed as the “Overall Issue Size”.
Subject to the provisions contained in this Prospectus, the Articles of Association of our Company and the
approval of the Designated Stock Exchange, Allocation for the Bonds shall be made on a first come first served
basis based on the date of presentation of Application to the Banker to the Issue in accordance with reservation
for each Portion as set out below. For each Portion, all applications received on the same day by the Bankers to
the Issue would be treated at par with each other. In case any Portion is under subscribed, the unsubscribed
portion of the reservation for such Portion will be allocated first to Reserved Individual Portion, second to
Unreserved Individual Portion, third to the Non Institutional Portion and finally to Institutional Portion. In case
of over subscription, Applications received on the day of such over-subscription in respect of such Portion, will
be allotted on a proportionate basis.
Applications received from various Applicants shall be grouped together on the following basis:
Particulars Category I
Category II
Category III
Institutional
Portion
Non
Institutional
Portion
Unreserved
Individual
Portion
Reserved
Individual
Portion
Reservation for each Portion 20% of the
Overall Issue
Size
10% of the
Overall Issue
Size
35% of the
Overall Issue
Size
35% of the
Overall Issue
Size
Minimum allotments of 5 Bonds and in multiples of 1 Bond thereafter would be made in case of each valid
application.
Proportionate Allotments: For each Portion, on the date of oversubscription
(a) Allotments to the Applicants shall be made in proportion to their respective application size, rounded
off to the nearest integer.
(b) If the process of rounding off to the nearest integer results in the actual allocation of Bonds being
higher than the Issue size, not all Applicants will be allotted the number of Bonds arrived at after such
rounding off. Rather, each Applicant whose allotment size, prior to rounding off, had the highest
decimal point would be given preference.
(c) In the event, there are more than one applicant whose entitlement remain equal after the manner of
distribution referred to above, our Company will ensure that the basis of allotment is finalised by draw
of lots in a fair and equitable manner.
Applicant applying for more than one Series of Bonds: If an Applicant has applied for more than one Series of
Bonds, and in case such Applicant is entitled to allocation of only a part of the aggregate number of Bonds
applied for, the Series-wise allocation of Bonds to such Applicants shall be in proportion to the number of
Bonds with respect to each Series, applied for by such Applicant, subject to rounding off to the nearest integer,
as appropriate in consultation with Lead Managers and Designated Stock Exchange.
The Company would allot Series II Bonds for all valid Applications, where the Applicants have not indicated
their choice of the relevant Series of Bonds.
Letters of Allotment/ Refund Orders
Our Company reserves, in its absolute and unqualified discretion and without assigning any reason thereof, the
right to reject any Application in whole or in part. The unutilised portion of the Application money will be
refunded to the Applicant by an account payee cheque/demand draft. In case the cheque payable at par facility is
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not available, we reserve the right to adopt any other suitable mode of payment.
The Company shall credit the allotted Bonds to the respective beneficiary accounts/despatch the Letter(s) of
Allotment or Letter(s) of Regret by Ordinary Post and Refund Orders by Registered Post/Speed Post at the
applicant‟s sole risk, within 30 days from the date of closure of the Issue. We may enter into an arrangement
with one or more banks in one or more cities for refund to the account of the applicants through Direct
Credit/RTGS/NEFT
Further,
(a) Allotment of the Bonds shall be made within 30 days of the Issue Closing Date;
(b) credit to dematerialised accounts will be made within two Working Days from the date of Allotment;
(c) our Company shall pay interest at 15% per annum if the Allotment has not been made and/ or the
Refund Orders have not been dispatched to the Applicants within 30 days from the date of the closure
of the Issue, for any delay beyond 30 days.
Our Company will provide adequate funds to the Registrar to the Issue, for this purpose.
Filing of the Prospectus.
A copy of the Draft Prospectus has been filed with the BSE and SEBI. The Prospectus shall be filed with the
Registrar of Companies, Kerala and Lakshadweep in terms of Sections 56 and 60 of the Companies Act.
Pre-Issue Advertisement
Our Company shall, on or before the Issue Opening Date, publish a pre-Issue advertisement, in the form
prescribed by the SEBI Debt Regulations, in at least one national daily newspaper with wide circulation.
Material updates, if any, between the date of filing of this Prospectus with RoC and the date of release of this
statutory advertisement will be included in the statutory advertisement.
IMPERSONATION
Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of the
Companies Act, which is reproduced below:
“Any person who:
(a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares
therein, or
(b) otherwise induces a company to allot, or register any transfer of shares, therein to him, or any other
person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five
years.”
Listing
The Bonds will be listed on BSE. BSE will be the Designated Stock Exchange with which the Basis of
Allotment will be finalised.
If the permissions to deal in and for an official quotation of the Bonds are not granted by the BSE, we shall
forthwith repay, without interest, all such monies received from the Applicants in pursuance of this Prospectus.
If such money is not repaid within eight days after we becomes liable to repay it (i.e. from the date of refusal or
within seven days from the Issue Closing Date, whichever is earlier), then our Company and every Director of
our Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay the
money, with interest at the rate of 15% p.a. on application money, as prescribed under Section 73 of the
Companies Act.
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Our Company shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at the BSE are taken within seven Working Days from the date of Allotment.
Utilisation of Application Money
The sums received in respect of the Issue will be kept in the Escrow Account and we will have access to such
funds after the documents for creation of security for the Bonds as disclosed in this Prospectus are executed.
Investor Withdrawals and Pre-closure
Investor Withdrawal: Applicants are allowed to withdraw their applications at any time prior to the closure of
the Issue.
Pre-closure: Our Company, in consultation with the Lead Managers reserves the right to close the Issue at any
time prior to the Closing Date, subject to receipt of minimum subscription for Bonds aggregating to 75% of the
base amount of the Issue, being Rs. 3,000 million. Our Company shall allot Bonds with respect to the
applications received at the time of such pre-closure in accordance with the Basis of Allotment as described
hereinabove and subject to applicable statutory and/or regulatory requirements.
Undertaking by our Company
We undertake that:
(a) the complaints received in respect of the Issue shall be attended to by us expeditiously and
satisfactorily;
(b) we shall take necessary steps for the purpose of getting the Bonds listed in the BSE within the specified
time;
(c) the funds required for dispatch of refund orders/Allotment letters/certificates by registered post shall be
made available to the Registrar to the Issue by us;
(d) necessary cooperation to the credit rating agency(ies) shall be extended in providing true and adequate
information till the debt obligations in respect of the Bonds are outstanding;
(e) we shall forward the details of utilisation of the funds raised through the Bonds duly certified by our
statutory auditors, to the Debenture Trustee at the end of each six month period;
(f) we shall disclose the complete name and address of the Debenture Trustee in our annual report;
(g) we shall provide a compliance certificate to the Debenture Trustee (on yearly basis) in respect of
compliance of with the terms and conditions of issue of Bonds as contained in this Prospectus.
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MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
1. Modification of Rights
As per Article 10 of the Articles of Association, if at any time the share capital is divided into different
classes of shares, all or any of the rights and privileges attached to any class (unless otherwise
prohibited by the terms of issue of the shares of that class) may, subject to the provisions of sections
106 and 107 of the Act, whether or not the Company is being wound up, be modified, commuted,
affected, abrogated, varied or dealt with by the consent in writing of the holders of not less than three
fourths of the issued shares of that class or with the sanction of a special resolution passed at a separate
meeting of the holders of three fourths of the issued shares of that class. To every such separate
meeting the provisions of these regulations relating to general meeting shall mutatis mutandis apply but
so that necessary quorum shall be two persons at least holdings or representing by proxy one third of
the issued shares of the class in question. Article 11 of the Articles of Association states that the rights
conferred upon the holder of the shares of any class issued with preferred or other rights shall not
unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be
varied by the creation or issue of further shares ranking pari passu therewith.
2. Share Certificates
As per Article 12 of the Articles of the Company, every member shall be entitled, without payment, to
one or more certificates in marketable lots, for all the shares of each class or denomination registered in
his name, or if the Directors so approve (upon paying such fee as the Directors may from time to time
determine) to several certificates, each for one or more of such shares and the Company shall complete
and have ready for delivery such certificates within three months from the date of allotment, unless the
conditions of issue thereof otherwise provide, or within one month of the receipt of application of
registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the
case may be (provided the shares are not held in an electronic and fungible form under the provisions
of the Depositories Act, 1996). Every certificate of shares shall be under the seal of the Company,
signed by two directors and the secretary or some other person authorized by the Board and shall
specify the number and distinctive numbers of shares in respect of which it is issued and amount paid-
up thereon and shall be in such form as the Directors may prescribe or approve, provided that in respect
of a share or shares held jointly by several persons, the Company shall not be bound to issue more than
one certificate and delivery of a certificate of shares to one of several joint holders shall be sufficient
delivery to all such holder.
3. Forfeiture and Lien
Forfeiture
(a) As per Article 20, if a member fails to pay the whole or any part of any call or installment or
any money due in respect of any shares either by way of principal or interest on or before the
day appointed for the payment of the same, the directors may at any time thereafter during
such time as the call or installment or other money remains unpaid serve a notice on such
member or on the persons (if any) entitled to the share by transmission, requiring him to pay
the same together with any interest that may have been accrued by reason of such
nonpayment.
(b) As per Article 21, the notice aforesaid shall name a further day not being earlier than the
expiry of fourteen days from the date of service of notice, on or before which the payment
required by notice is to be made. The notice shall state that in the event of non-payment, on or
before the date so named the shares in respect of which such call or installment was payable
shall be liable to be forfeited.
(c) As per Article 22, if the requirements of any such notice as aforesaid are not complied with,
any shares in respect of which such notice has been given may at any time thereafter, before
the payment of call or installment, interest and expense due in respect thereof, be forfeited by
a resolution of the Board to that effect and the forfeiture shall be recorded in the directors
minute book. Such forfeiture shall include all dividends declared in respect of the forfeited
shares and not actually paid before the forfeiture.
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(d) As per Article 23, when any share shall have been so forfeited, notice of the forfeiture shall be
given to the member in whose name it stood immediately prior to the forfeiture with the date
thereof shall forthwith be made in the Register of Members.
(e) As per Article 24, any shares so forfeited shall be deemed to be property of the Company, and
may be sold or otherwise disposed off on such terms and in such manner as the Directors
thinks fit, the Board may at any time before any share so forfeited shall have been sold or
otherwise disposed off, annul the forfeiture upon such terms and conditions, as it thinks fit.
(f) As per Article 25, a person whose shares have been forfeited shall cease to be member in
respect of forfeited shares, but shall not withstanding the forfeiture remain liable to pay to the
Company all calls, installments, interests and expenses owning upon or in respect of such
shares at the date of the forfeiture, together with interest thereon from time of forfeiture, until
payment at the rate of ten percent per annum and the directors may enforce the payment
thereof, if they think fit.
(g) As per Article 26, the forfeiture of a share shall involve extinction of all interest in and also of
all claims and demands against the Company in respect of the share, and all other rights
incidental to the share except only such of those rights as by the articles are expressly saved.
(h) As per Article 27, a duly verified declaration in writing that the declarant is a Director of the
Company and that certain shares in the Company have been duly forfeited on a date stated in
the declaration shall be conclusive evidence of the facts therein stated as against all persons
claiming to be entitled to the share. The Company may receive the consideration, if any, given
for the shares on any sale or disposal thereof and may execute a transfer of share in favour of
the person to whom the share is sold or disposed of. The transferee shall thereupon be
registered as the holder of such shares and the purchaser shall not be bound to see to the
application of purchase money, nor shall his title to such shares be affected by any irregularity
or invalidity in the proceedings in reference to such forfeiture, sale or disposition.
Lien
(a) As per Article 28, the Company shall have a first and paramount lien upon all the
shares/debentures (other than fully paid up shares/debentures) registered in the name of each
member (whether solely or jointly with others) and upon the proceeds of sale thereof for all
monies (whether presently payable or not) called or payable at a fixed time in respect of such
shares/debentures and no equitable interest in any shares shall be created except upon the
footing and condition that this Article will have full effect. And such lien shall extend to all
dividends and bonus from time to time declared in respect of such shares/debentures. Unless
otherwise agreed the registration of a transfer of shares/debentures shall operate as a waiver of
the Company's lien if any on such shares/debentures. The Directors may, at any time declare
any shares/debentures wholly or in part to be exempt from the provisions of this clause.
(b) As per Article 29, no member shall exercise any voting right in respect of any shares
registered in his name on which any calls or other sums presently payable by him, have not
been paid or in regard to which the Company has exercised any right of lien.
(c) As per Article 30, The Company may sell, in such manner as the Board thinks fit, any shares
on which the Company has a lien, provided that no sale shall be made a) unless a sum in
respect of which the lien exists is presently payable‟ or b) until the expiration of fourteen days
after a notice in writing stating and demanding payment of such part of the amount in respect
of which the lien exists as is presently payable, has been given to the registered holder for the
time being of the share or the person entitled thereto by reason of his death or insolvency.
(d) As per Article 31, the net proceeds of the sale shall be applied in or towards satisfaction of the
debts, liabilities or engagements of such member, his executors, administrators or
representatives and the residue, if any, shall subject to a like lien for sums not presently
payable as existed upon the shares before the sale be paid to the persons entitled to the shares
at the date of the sale.
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(e) As per Article 32, upon any sale after forfeiture or for enforcing a lien purported in exercise of
the powers herein conferred, the Directors may cause the purchaser's name to be entered in the
register of members in respect of the share sold and the purchaser shall not be bound to see to
the regularity of the proceedings nor to the application of the purchase money after his name
has been entered into the register in respect of such share, the validity of the sale shall not be
impeached by any person on any ground whatsoever and the remedy of any person aggrieved
by such sale shall be in damages only.
4. Transfer and Transmission of Shares
(a) As per Article 33, save as provided in Section 108 of the Act, no transfer of shares or
debentures shall be registered unless a proper instrument of transfer duly stamped and
executed by or on behalf of the transferor and by or on behalf of transferee has been delivered
to the Company together with certificate or if no such certificate is in existence, the letter of
allotment of the shares. The instrument of transfer of the shares in or debentures of the
Company, shall specify the name, father‟s/husband‟s name, address, occupation, nationality
both of the transferor and of the transferee. The transferee shall be deemed to remain the
holder of such shares until the name of the transferee is entered in the Register of members.
Each signature to such transfer shall be duly attested by the signature of one witness who shall
add his address.
(b) As per Article 34, application for the registration of the transfer of a share may be made either
by the transferor or the transferee where such application is made by the transferor and relates
to a partly paid share, no registration shall be effected unless the Company gives notice of the
application to the transferee, in the manner prescribed by section 110 of the Act. Subject to
the provision of Articles thereof, if the transferee makes no objection within two weeks from
that date of receipt of the notice, the Company shall enter in the register of members the name
of the transferee in the same manner and subject to the same conditions as if the application
for registration as made by the transferee.
(c) As per Article 37A, every instrument of transfer of shares shall be in the form prescribed
under the Act.
(d) As per Article 38, every instrument of transfer shall be left at the office for registration,
accompanied by the certificate of the shares or if no such certificate is in existence, by the
letter of allotment of the shares to be transferred and such other evidence as the Board may
require to prove the title of the transferor or his right to transfer the shares, and upon payment
of the proper fee to the Company, the transferee shall (subject to the right of the Board to
decline to register as hereinafter mentioned) be registered as a member in respect of such
shares. The Board may waive the production of any certificate upon evidence satisfactory to it
of its loss or destruction.
(e) As per Article 40, subject to the provisions of Section 111A of the Act and Section 22A of the
Securities Contracts (Regulation) Act, 1956, the Directors may, at their own absolute and
uncontrolled discretion and by giving reasons, decline to register or acknowledge any transfer
of shares whether fully paid or not and the right of refusal, shall not be affected by the
circumstances that the proposed transferee is already a member of the Company but in such
cases, the Directors shall within one month from the date on which the instruments of transfer
was lodged with the Company, send to the transferee and the transferor notice of the refusal to
register such transfer provided that registration of transfer shall not be refused on the ground
of the transferor being either alone or jointly with any other person or persons indebted to the
Company on any account whatsoever except when the Company has a lien on the shares.
Transfer of shares/debentures in whatever lot shall not be refused.
(f) As per Article 41, the registration of transfer may be suspended after giving due notice at such
times and for such periods as the Board may from time to time determine. Provided that such
registration shall not be suspended for more than forty-five days in any year, and not
exceeding thirty days at any one time.
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(g) As per Article 42, the shares in the Company shall be transferred in the form for the time being
prescribed under the rules framed under the Act. Notwithstanding anything contained in the Articles, in
the case of transfer of shares or other marketable securities, where the company has not issued any
certificates and where such shares or securities are being held in an electronic and fungible form, the
provisions of the Depositories Act, 1996, shall apply. The Company shall keep a book to be called the
register of transfers and therein shall be entered the particulars of every transfer or transmissions of any
shares held in dematerialized form.
(h) As per Article 43, the executors or administrators or the holder of a succession certificate in
respect of shares of a deceased member (not being one of several joint holders) shall be the
only person whom the Company shall recognize as having any title to the shares registered in
the name of such member and, in case of the death of any one or more of the joint holder of
any registered shares, the survivors shall be the only persons recognised by the Company as
having any title interest in such shares, but nothing herein contained shall be taken to release
the estate of a deceased joint-holder from any liability on shares held by him jointly with any
other person. Before recognizing any executor or administrator or legal heir the Board may
require him to obtain a grant of probate or letter of administration or succession certificate or
other legal representation as the case may be, from a competent court. Provided nevertheless
that in any case where the Board in its absolute discretion thinks fit it may dispense with
production of probate or letter of administration or a succession certificate or such other legal
representation upon such terms as to indemnify the company or otherwise as the Board may
consider desirable. Provided also that the holder of a succession certificate shall not be entitled
to receive any dividends already declared but not paid to the deceased member unless the
succession certificate declares that the holder thereof is entitled to receive such dividends.
(i) As per Article 44, any person becoming entitled to a share in consequence of the death, lunacy
or insolvency of a member may, upon producing such evidence of his title as the Board thinks
sufficient, be registration as a member in respect of such shares, or may subject to the
regulations as to transfer herein before contained, transfer such shares and as per Article 45, a
person becoming entitled to a share by reason of the death or insolvency of the holder shall be
entitled to the same dividends and other advantages to which he would be entitled if he were
the registered holder of the share, except that he shall not, before being registered as a member
in respect of the share be entitles in respect of it to exercise any right conferred by
membership in relation to meetings of the Company.
(j) As per Article 46, provided the Board may, at any time, give notice requiring any person to
elect either to be registered himself or to transfer the share, and if the notice is not complied
with within ninety days, the Board may there after withhold payment of all dividends, bonuses
or other money payable in respect of the share, until the requirements of the notice have been
complied with. If the person so becoming entitled shall elect to be registered as holder of the
share himself, he shall deliver or send to the Company a notice in writing signed by him
stating that he so elects. If the person aforesaid shall elect to transfer the shares to some other
person he shall execute an instrument of transfer in accordance with the provisions of these
Article relating to the transfer of shares. All the limitations, restrictions and provisions of these
Articles relating to the right of transfer and the registration of transfer of shares shall be
applicable to any such notice or transfer as aforesaid as if the death, lunacy or insolvency of
the member had not occurred and the notice of transfer where a transfer signed by that
member.
5. Votes of Members
(a) As per Article 66, subject to any rights or restrictions for the time being attached to any class
or classes of shares:
(i) on a show of hands, every member present in person shall have one vote; and
(ii) on a poll, the voting rights of members shall be as laid down in Section 87 of the Act
(b) As per Article 67, in the case of joint holders, the vote of the senior who tenders a vote,
whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint
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holders. For this purpose seniority shall be determined by the order in which the names stand
in the register of members.
(c) As per Article 68, a member of unsound mind, or in respect of whom an order has been made
by any court having jurisdiction in lunacy, may vote whether on a show of hands or on a poll,
by his committee or other legal guardian, and any such committee or guardian may on a poll
vote by proxy.
(d) As per Article 69, no member shall be entitled to vote at any general meeting unless all calls
or other sums presently payable by him in respect of shares in the Company have been paid.
(e) As per Article 70, no objection shall be raised to the qualification of any vote except at the
meeting or adjourned meeting at which the vote objected to is given or tendered, and every
vote not disallowed at such meeting shall be valid for all purposes. Any such objection made
in due time shall be referred to the chairman of the meeting, whose decision shall be final and
conclusive.
(f) As per Article 71, the instruments appointing a proxy and the power of attorney or other
authority, if any, under which it is signed or a notarially certified copy of that power or
authority, shall be deposited at registered office of the Company not less than 48 hours before
the time for holding the meeting or adjourned meeting at which the person named in the
instrument proposes to vote, or in the case of a poll, not less than 24 hours before the time
appointed for the taking of the poll, and in default the instrument of proxy shall not be treated
as a valid.
(g) As per Article 72, an instrument appointing a proxy shall be in either form of proxy of the
forms in Schedule IX to the Act or a form as near there to as circumstances admit.
(h) As per Article 73 , a vote given in accordance with the terms of an instrument of proxy shall
be valid, notwithstanding the previous death or insanity of the principal or the revocation of
the proxy or of the authority under which the proxy was executed or the transfer of the shares
in respect of which the proxy is given. Provided that no intimation in writing of such death,
insanity revocation or transfer shall have been received by the Company at its office before
the commencement of the meeting or adjourned meeting at which the proxy is used.
(i) As per Article 73A, notwithstanding anything contained in the Articles of the company, the
company do adopt the mode of passing a resolution by the Members of the company by means
of a postal ballot and/or other ways as may be prescribed by the Central Government in this
behalf in respect of the following, matters instead of transacting such business in a general
meeting of the company.
6. Dividends
(a) As per Article 109, the Company in general meeting may declare dividends, but no dividend
shall exceed the amount recommended by the Board.
(b) As per Article 110, the Board may from time to time pay to the members such interim
dividends as appears to it to be justified by the profits of the company.
(c) As per Article 111, subject to the provisions of the Act, the Board may before recommending
any dividend set aside out of the profits of the Company such sums as at the discretion of the
Board, be applicable, for any purpose to which the profits of the Company may be properly
applied, including provisions for meeting contingencies or for equalizing dividends; and
pending such application, may at the like discretion either be employed in the business of the
Company or be invested in such investments (other than shares of the company) as the Board
may, from time to time, think fit. The Board may also carry forward any profits which it may
think prudent not to divide, without setting them aside as a reserve.
(d) As per Article 112, subject to the rights of persons, if any, entitled to shares with special rights
as to dividends, all dividends shall be declared and paid according to the amount paid or
176
credited as paid on the shares in respect whereof the dividend is paid, but if and so long as
nothing is paid upon any of the shares in the Company, dividends may be declared and paid
according to the nominal amounts of the shares. No amount paid or credited as paid on shares
in advance of calls shall be treated for the purpose of this Articles as paid on the shares.
Unless otherwise decided by the Board all dividends shall be apportioned and paid
proportionately to the amounts paid or credited as paid on the shares during any portion or
portions of the period in respect of which the dividend is paid, but if any share is issued on
terms providing that it shall rank for dividend as from a particular date such share shall rank
for dividend accordingly.
(e) As per Article 113, the Board may deduct from any dividend payable to any member all sums
of money, if any, presently payable by him to the Company on account of calls or otherwise in
relation to the shares of the Company.
(f) As per Article 114, where the Company has declared a dividend but which has not been paid
or the dividend warrant in respect thereof has not been posted within 30 days from the date of
declaration to any shareholder entitled to the payment of the dividend, the Company shall
within 5 days from the date of expiry of the said period of 30 days, open a special account in
that behalf in any scheduled bank called “Unpaid Dividend of Manappuram Finance Limited”
and transfer to the said account, the total amount of dividend which remains unpaid or in
relation to which no dividend warrant has been posted. Any money transferred to the unpaid
dividend account of the Company which remains unpaid or unclaimed for a period of seven
years from the date of such transfer, shall be transferred by the Company to the Investor
Education and Protection Fund Account of the Central Government. A claim to any money so
transferred to the Investor Education and Protection Fund Account may be preferred to the
Central Government by the shareholders to whom the money is due. No unclaimed or unpaid
dividend shall be forfeited by the Board.
(g) As per Article 115, any dividend, interest or other monies payable in cash in respect of shares
may be paid by cheque or warrant sent through the post directed to the registered address of
the holder or, in the case of joint holders, to the registered address of that one of the joint
holders who is first named on the register of members, or to such person and to such address
as the holders may in writing direct. Every such cheque or warrant shall be made payable to
the order of the person to whom it is sent.
(h) As per Article 116, any one of two or more joint holders of a share may give effectual receipts
for any dividends, bonuses or other monies payable in respect of such share.
(i) As per Article 117, notice of any dividend that may have been declared shall be given to the
persons entitled to share therein in the manner mentioned in the Act.
177
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by the
Company or entered into more than two years before the date of this Prospectus) which are or may be deemed
material have been entered or are to be entered into by the Company. These contracts and also the documents
for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at
V/104, “Manappuram House”, Valapad, Thrissur 680 567, Kerala, India, from 10.00 a.m. to 1.00 p.m., from the
date of this Prospectus until the date of closure of the Issue.
MATERIAL CONTRACTS
1. The Memorandum of Understanding between our Company and the Lead Managers dated July 21, 2011
and the Addendum to the Memorandum of Understanding between the Company and Co-Lead
Managers dated July 21, 2011.
2. The Memorandum of Understanding between our Company and Registrar to the Issue dated July 21,
2011.
3. Debenture Trust Deed to be executed between the Company and the Debenture Trustee on or about the
date of Allotment of the Bonds.
4. Escrow Agreement between our Company, Lead Managers, Co-Lead Managers, Registrar to the Issue
and the Escrow Collection Bank(s) dated August 3, 2011.
5. Tripartite Agreement between the National Securities Depository Limited, the Company and Registrar
dated August 4, 2011.
6. Tripartite Agreement between the Central Depository Services (India) Limited, the Company and the
Registrar dated August 4, 2011.
MATERIAL DOCUMENTS
1. The Memorandum and Articles of Association of Manappuram Finance Limited.
2. Certificate of incorporation of the Company dated July 15, 1992 and Fresh Certificate of Incorporation
Consequent upon Change of Name dated June 22, 2011;
3. Copy of the Board resolution dated April 28, 2011 approving the Issue.
4. Copy of the resolution dated July 21, 2011 passed by the Debenture Committee of Directors approving
the terms of the issue and the Draft Prospectus.
5. Copy of the resolution dated August 8, 2011 passed by the Debenture Committee of Directors approving
the terms of the issue and this Prospectus
6. Consents of the Directors, Compliance Officer of the Company, Lead Managers, Co-Lead Managers,
Lead Brokers, Legal Advisor, Registrars to the Issue, Banker to the Issue and the Debenture Trustee to
include their names in this Prospectus to act in their respective capacities.
7. Consent from the Auditors of the Company, for inclusion of their report dated July 19, 2011 on the
Reformatted Statements as at and for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 in
the form and context in which they appear in this Prospectus and also in the ―Statement of Tax Benefits‖
mentioned therein.
8. Annual Report of the Company for last five Financial Years.
9. Consent of CARE and Brickwork dated July 19, 2011 and July 20, 2011 respectively for inclusion of
their ratings in this Prospectus.
178
10. Credit rating letter dated June 21, 2011 issued by CARE and credit rating letter no.
BWR/BLR/RA/2011-12/0072 dated July 1, 2011 issued by Brickwork.
11. Application for the in-principle listing approval made to BSE dated July 26, 2011.
12. In-principle listing approval obtained from BSE letter no. DCS/IPO/NP/IPO-IP/222/2011-12 dated
August 3, 2011.
13. Due Diligence Certificate dated August 9, 2011 from Lead Mangers and Co- Lead Managers.
14. Due Diligence Certificate dated August 9, 2011 from the Debenture Trustee.
Any of the contracts or documents mentioned above may be amended or modified any time without
reference to the holders in the interest of the Company in compliance with the applicable laws.
179
RECENT FINANCIAL DEVELOPMENTS
Review Report to
The Board of Directors
Manappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)
1. We have reviewed the accompanying statement of unaudited financial results of Manappuram Finance
Limited (formerly Manappuram General Finance and Leasing Limited) („the Company‟) for the quarter
ended June 30, 2011 (the “Statement”), except for the disclosures regarding „Public Shareholding‟ and
„Promoter and Promoter Group Shareholding‟ which have been traced from disclosures made by the
management and have not been reviewed by us. This Statement is the responsibility of the Company's
management and has been approved by the Board of Directors. Our responsibility is to issue a report on the
Statement based on our review.
2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Institute of
Chartered Accountants of India. This standard requires that we plan and perform the review to obtain
moderate assurance as to whether the Statement is free of material misstatement. A review is limited
primarily to inquiries of company personnel and analytical procedures applied to financial data and thus
provides less assurance than an audit. We have not performed an audit and accordingly, we do not express
an audit opinion.
3. Based on our review conducted as above, nothing has come to our attention that causes us to believe that
the accompanying Statement of unaudited financial results prepared in accordance with recognition and
measurement principles laid down in Accounting Standard 25 “Interim Financial Reporting”, notified
pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended) and other recognised
accounting practices and policies has not disclosed the information required to be disclosed in terms of
Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains
any material misstatement.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm Registration Number 101049W
per S Balasubrahmanyam
Partner
Membership No: 53315
Place: Chennai
Date: July 27, 2011
180
Manappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)
Regd. & Corp. Office: V/104, Manappuram House, Valapad, Thrissur - 680567
Unaudited Financial Results for the quarter ended June 30,2011
(Rs. in Lakhs)
Particulars Quarter ended
June 30,2011
Quarter ended.
June 30,2010
Year ended March
31,2011 (Audited)
1 Income from Operations 49,290.20 18,606.69 117 875 30
2 Total Expenditure
a)Staff Cost
b)Advertisement
c)Provision for standard assets
d)Depreciation
e)Other Expenditure
15,545,50
6,573.80
2,080.70
389.80
748.70
5,752.50
7377.73
2,311.12
2,967.29
-
240.12
1,859.20
42,566.70
16,050.00
10,385.10
1,584.70
2,129.60
12,417.30
3 Profit from Operations before Other Income and Interest (1-2) 33,744.70 11,228.96 75,308.60
4 Other Income 58.70 73.90 277.30
5 Profit before Interest (3+4) 33803.40 11,302.86 75,585.90
6 Interest and finance charges 17,842.60 4386.78 33,196.30
7 Profit(+)/Loss(-)before tax (5-6) 15,960.80 6916.08 42,389.60
8 Tax expense 5,178.00 2,300.98 14,123.20
3 Net Profit (+)/loss(-) (7-8) 10,782.80 4,615.10 28,266.40
10 Paid up Equity Share Capital (Face value: Rs.2/- per share) 16,675.00 6,807.70 8,337.50
11 Reserves excluding Revaluation reserves 184,058.20
12
13
Earnings Per Share (Rs.)
-Basic
-Diluted
(Nominal value of equity share - Rs 2/-)
Aggregate of Public Shareholding
Number of Shares
Percentage of shareholding
1.29
1.29
(Not Annualised)
529,755,602
63.54
0.41
0.41
(Not Annualised)
201,963,332
59.33
3.81
3.75
264,877,801
63.54
14 Promoters and promoter group Share holding
a) Pledged/Encumbered
-Number of shares
-Percentage of shares (as a % of the total shareholding of
promoter and promoter group)
-Percentage of shares (as a% of the total share capital of the
company
b) Non-encumbered
-Number of shares
-Percentage of shares (as a % of the total shareholding of
promoter and promoter group)
-Percentage of shares (as a% of the total share capital of the
company)
63,152,220
20.77
7.57
240,840,554
79.23
28.89
-
-
-
138,421,888
100
40.67
34,576,110
22.75
8.23
117,420,277
77.25
28.17
181
Manappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)
Regd. & Corp. Office: V/104, Manappuram House, Valapad, Thrissur - 680567
Unaudited Financial Results for the quarter ended June 30,2011
Notes:
1. The above results have been reviewed by the Audit Committee and taken on records by the Board of
Directors in the meeting Held on July 27,2011 and have been subjected to a „Limited Review‟ by the
auditors.
2. The shareholders of the Company in their extra-ordinary general meeting held on May 31, 2011
approved the issuance of equity shares of Rs 2/-each, fully paid up, as bonus shares in the ratio of 1:1
to the shareholders existing as on the record date. Accordingly, the earnings per share data for all
periods have been restated. However, the promoter and public shareholding data for the previous
periods is based on the pre-bonus number of shares.
3. The Company did not have any unresolved investor complaints as at the beginning / end of the quarter.
During the quarter, the Company did not receive any investor complaints.
4. The Company is primarily engaged in the business of lending against security of gold and accordingly
segment reporting is not applicable.
5. Figures of previous period / year have been regrouped / reclassified, wherever necessary.
Place: Valapad
Date: July 27, 2011
By order o the Board
V.P. Nandakumar
Executive Chairman
182
AUDITOR EXAMINATION REPORT AND REFORMATTED STATEMENTS
Report of S R Batliboi & Associates on the reformatted unconsolidated financial information of each of
the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007.
To
The Board of Directors
Manappuram Finance Limited
(formerly Manappuram General Finance and Leasing Limited)
V/104, “Manappuram House”
Valappad
Thrissur 680 567
Kerala, India
Dear Sirs,
1. We have examined the attached reformatted unconsolidated financial information (“Reformatted
Statements”) comprising of Balance Sheet, Profit and Loss Account, Cash Flow and notes therein of
Manappuram General Finance and Leasing Limited (“Company”) as at and for the years ended March 31,
2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 annexed to this report and
approved by the Board of Directors of the Company and prepared by the Company in accordance with the
requirements of:
a. paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 ('the Act'); and
b. the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008
('the Regulations') issued by the Securities and Exchange Board of India ('SEBI'), as amended from
time to time in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 (the
“SEBI Act”).
2. We have examined such Reformatted Statements taking into consideration:
a. the terms of reference dated July 1, 2011 received from the Company, requesting us to carry out the
assignment, in connection with the Draft Prospectus and Prospectus being issued by the Company for
its proposed public offer Non-Convertible Debentures (“offering”); and
b. the Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of Chartered
Accountants of India.
3. The Reformatted Unconsolidated Financial Information of the Company have been extracted by
management of the Company from the audited unconsolidated financial statements of the Company for the
years ended March 31, 2011 March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007,
which were approved by the Board of Directors of the Company. We have audited the financial statements
for the years ended March 31, 2011, March 31, 2010, March 31, 2009 and March 31, 2008 in respect of
which we have issued audit reports dated April 28, 2011, May 11, 2010, April 30, 2009 and May 8, 2008
respectively. We have not audited the unconsolidated financial statements of the Company for the year
ended March 31, 2007. Those financial statements were audited by, M/s Mohandas & Associates and we
have relied on their report for the purpose of this examination report.
4. The Reformatted Statements have been examined by us and are set out in Annexure 1. The Reformatted
statements annexed to this report are as they were produced in the respective years‟ audited financial
statements and have been rounded off to the nearest million of Indian rupees. The accounting policies and
notes to accounts have been reproduced as they were disclosed in the financial statements for the
respective years.
183
5. We have not audited any financial statements of the Company as of any date or for any period subsequent
to March 31, 2011. Accordingly, we express no opinion on the financial position, results of operations or
cash flows of the Company as of any date or for any period subsequent to March 31, 2011.
6. In the presentation of the Reformatted Statements based on the audited unconsolidated financial statements
referred to in paragraph 3 above, no adjustments have been made for any events occurring subsequent to
the dates of the audit reports specified therein.
7. In our audit report for the year ended March 31, 2008 on the unconsolidated financial statements of the
Company, without qualifying our opinion, we had drawn attention regarding the requirement of previous
approval of the Central Government in respect of certain transactions for the purchase and sale of services
from/to parties covered under Section 297 of the Companies Act, 1956 which are referred to in the
reformatted statements. Further, in our CARO (Companies Auditors Report Order, 2003) report for the
years ended March 31, 2008, March 31, 2009, March 31, 2010 and March 31, 2011, we had reported
instances of fraud on the Company for amounts aggregating Rs 24 Lakhs, Rs 40.69 Lakhs, Rs 84.70 Lakhs
and Rs 249 Lakhs respectively, which are referred to in Notes to the Reformatted Statements.
8. As stated in our audit reports referred to in paragraph 3 above, we conducted our audit in accordance with
auditing standards generally accepted in India to enable us to issue an opinion on general purpose financial
statements. 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
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 the management as
well as evaluating the overall financial statement presentation. We believe that our audit provided a
reasonable basis for our opinions.
9. Our audits referred to in paragraph 3 above were carried out for the purposes of examining the general
purpose financial statements. For none of the years referred to in paragraph 3, did we perform audit tests
for the purpose of expressing an opinion on individual balances of accounts or summaries of selected
transactions, and accordingly, we express no such opinion.
10. At the Company‟s request, we have also examined the following financial information relating to the
Company, proposed to be included in the Draft Prospectus and Prospectus prepared by the management
and approved by the Board of Directors of the Company and annexed to this report relating to the years
ended March 31, 2007, March 31, 2008, March 31, 2009, March 31, 2010 and March 31, 2011:
i. Statement of dividend paid/proposed, enclosed as Annexure 2 ;
ii. Pre issue capitalization Statement enclosed as Annexure 3; and
iii. Details of Tax Benefits available to the Company and its shareholders, enclosed as Annexure 4.
11. This report should not be in any way construed as a reissuance or redating of any of the previous audit
reports issued by us or by other firm of Chartered Accountants, nor should this report be construed as a
new opinion on any of the financial statements referred to herein.
12. We have no responsibility to update our report for events and circumstances occurring after the date of the
report.
13. This report is intended solely for your information and for inclusion in the Draft Prospectus and Prospectus
in connection with the proposed public issue of non-convertible debentures of the Company, and is not to
be used, referred to or distributed for any other purpose without our prior written consent.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm Registration Number 101049W
184
per S Balasubrahmanyam
Partner
Membership No: 53315
Place: Chennai
Date: July 19, 2011
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Balance Sheet as at March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at Schedule March 31, 2011 March 31, 2010 March 31, 2009
SOURCES OF FUNDS
Shareholders' funds Share capital 1 833.75 340.39 212.56 618.00 150.00 Share warrants - - 29.98 Reserves and surplus 2 18,405.82 5,765.21 1,436.19 311.83 131.25
Loan fundsSecured loans 3 43,723.07 16,500.50 3,712.45 1,351.08 511.93 Unsecured loans 4 12,817.03 1,856.12 793.34 388.67 420.95
Deferred tax liability (net) 6 - - - 0.39 0.96 75,779.67 24,462.22 6,184.52 2,669.97 1,215.09
APPLICATION OF FUNDS
Fixed assets 5Gross block 1,651.82 669.80 325.70 196.10 129.98 Less : Accumulated depreciation / amortisation 332.80 135.63 71.85 42.06 25.28 Net block 1,319.02 534.17 253.85 154.04 104.70 Capital work in progress including advances 68.64 1.23 2.60 - -
Intangible assets (net) 5 59.84 33.55 23.92 9.17 2.17
Deferred tax asset (net) 6 87.07 33.35 13.59 - -
Investments 7 403.20 1,406.70 10.77 29.28 29.01
Current Assets, Loans and AdvancesCash and bank balances 8 6,663.69 2,682.08 1,133.96 672.23 215.65 Other current assets 9 4,947.51 1,878.88 675.91 202.71 156.22 Loans and advances 10 64,141.68 18,907.13 4,486.04 1,853.06 959.11
75,752.88 23,468.09 6,295.91 2,728.00 1,330.98 Less : Current liabilities and provisionsCurrent liabilities 11 1,126.34 810.28 347.97 225.81 217.76 Provisions 12 784.64 204.59 68.15 24.71 34.01
1,910.98 1,014.87 416.12 250.52 251.77 Net current assets 73,841.90 22,453.22 5,879.79 2,477.48 1,079.21
75,779.67 24,462.22 6,184.52 2,669.97 1,215.09 Notes to accounts 18
The schedules referred to above and the notes to accounts form an integral part of the Balance Sheet
As at March 31, 2008
As at March 31, 2007
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31,2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Profit and Loss Account for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)
Year ended Year ended Year ended Year ended Year endedSchedule March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
INCOMEIncome from services 13 11,654.20 4,699.77 1,605.34 779.60 420.32 Other income 14 161.06 82.24 55.77 17.00 16.18
11,815.26 4,782.01 1,661.11 796.60 436.50
EXPENDITUREPersonnel expenses 15 1,605.00 536.40 283.95 116.38 60.61 Operating and other expenses 16 2,438.71 1,000.75 494.71 198.84 111.87 Depreciation / amortization 6 212.96 57.38 33.71 18.26 10.66 Financial expenses 17 3,319.63 1,369.23 385.91 143.51 89.85
7,576.30 2,963.76 1,198.28 476.99 272.99
Profit before tax 4,238.96 1,818.25 462.83 319.61 163.51
Less: Provision for tax- Current tax 1,466.04 640.11 171.44 109.20 57.50 - Deferred tax (53.72) (19.07) (13.98) (0.57) (0.38) - Fringe benefit tax - - 2.40 1.08 0.27
Profit after tax 2,826.64 1,197.21 302.97 209.90 106.12 Balance brought forward from previous year (refer Sch. 2) 917.11 188.74 39.00 6.14 2.80
- 88.12 - - -
Profit available for appropriation 3,743.75 1,474.07 341.97 216.04 108.92
Appropriations:- Transfer to Statutory Reserve 565.33 239.45 60.60 42.00 22.00 - Transfer to General Reserve 282.67 119.72 31.00 100.00 50.00 - Transfer to Capital Redemption Reserve - 17.14 5.72 5.72 5.71 - Interim Dividend on Equity Shares - - 1.64 16.50 - - Dividend on Redeemable Preference Shares - - 3.00 3.00 - - Proposed Dividend on Equity Shares 500.25 165.89 43.14 5.50 19.80 - Tax on distributed profit 81.14 27.22 8.13 4.26 3.64 - Dividend on Convertible Preference Shares - - - 0.06 1.63 Net profit carried forward to balance sheet 2,314.36 904.65 188.74 39.00 6.14
Earnings per share information (Refer note 18.5 and note 18.8)
Earnings per share, prior to stock split- Weighted average number of equity shares- Basic 371,380,825 58,529,650 27,370,374 22,000,000 22,000,000- Diluted 376,492,274 58,895,744 27,370,374 23,840,000 22,000,000- Basic earnings per share (in Rs.) 7.61 20.46 10.94 9.38 9.48 - Diluted earnings per share (in Rs.) 7.51 20.33 10.94 8.65 9.48 Nominal value per equity shares Rs. 2/- Rs. 10/- Rs. 10/- Rs 10/- Rs 10/-
Earnings per share, subsequent to stock split- Weighted average number of equity shares- Basic 371,380,825 292,648,250 136,851,870 110,000,000 110,000,000- Diluted 376,492,274 294,478,720 136,851,870 119,200,000 110,000,000- Basic earnings per share (in Rs.) 7.61 4.09 2.19 1.88 1.90 - Diluted earnings per share (in Rs.) 7.51 4.07 2.19 1.73 1.90 Nominal value of equity shares Rs. 2/- Rs. 2/- Rs. 2/- Rs. 2/- Rs. 2/-
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Profit after tax and appropriation for the financial year 2008-09
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Cash Flow Statement for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)
Year ended Year ended Year endedMarch 31, 2011 March 31, 2010 March 31, 2009
A. Cash flow from operating activitiesNet profit before taxation, and extraordinary items 4,238.96 1,818.25 462.83 319.61 163.51 Adjustments for:Depreciation / amortization 212.96 57.38 33.71 18.26 10.66 Loss on sale of fixed assets 2.28 4.34 2.32 0.84 - Write back of diminution in value of investments - - - (1.27) - (Profit) / Loss on sale of investments (3.96) 0.43 (0.42) - 1.27 Interest income (124.67) (66.26) (41.95) (12.34) (12.43)Dividend income (3.62) (0.48) (6.26) - - Interest expense 3,156.59 1,304.54 355.87 141.92 88.28 Provision for standard assets 158.47 - - - - Bad debts written off and provision for bad debts 224.28 141.99 177.86 33.72 21.32 Operating profit before working capital changes 7,861.29 3,260.19 983.96 500.74 272.61 Movements in working capital :Decrease / (Increase) in other current assets (3,026.12) (999.34) (473.21) (34.76) (117.96)Decrease / (Increase) loans and advances (45,458.84) (14,218.30) (2,810.82) (923.95) (382.89)Increase / (Decrease) in current liabilities and provisions 228.75 254.41 125.59 (11.34) 14.43 Cash generated from operations (40,394.92) (11,703.04) (2,174.48) (469.31) (213.81)Direct taxes paid (net of refunds) (1,442.22) (653.38) (177.35) (101.44) (48.96)Net cash from operating activities (41,837.14) (12,356.42) (2,351.83) (570.75) (262.77)
B. Cash flows from investing activitiesPurchase of fixed assets (1,096.42) (297.24) (153.19) (75.43) (68.63)Proceeds from sale of fixed assets 2.63 0.74 - - 2.03Purchase of investments (5,770.00) (2,680.13) - - (12.34)Sale / maturity of investments 6,777.46 1,284.24 18.92 1.00 2.40Interest received 82.16 44.21 41.95 12.34 12.43 Dividends received 3.62 - 6.26 - 0.00 Net cash from investing activities (0.55) (1,648.18) (86.06) (62.09) (64.11)
C. Cash flows from financing activitiesProceeds from issuance of share capital 11,124.38 2,677.19 525.23 468.00 20.00 Share issue expenses adjusted against securities premium / not written off or adjusted
(235.64) (76.19) (23.39) (11.72)
Redemption of preference shares - (40.00) - - Increase / (decrease) in secured debentures including 2,410.52 1,801.77 166.60 258.62 75.05 Increase / (decrease) in bank borrowings (net) 24,388.01 9,640.91 2,266.20 583.55 (23.38)Increase / (decrease) in borrowings from others (net) 450.00 200.00 - - (0.00)Increase / (decrease) in subordinate bond (net) 613.62 477.88 370.47 114.69 99.70 Increase / (decrease) in deposits including inter-corporate (19.74) (29.95) (42.84) (146.32) 125.12 Proceeds from commercial paper 21,810.03 3,316.31 - - - Repayment of commercial paper (12,452.89) (2,665.58) - - - Increase / (decrease) in vehicle loans (net) 8.39 (0.39) 0.96 1.59 - Proceeds from subordinated debt 1,000.00 - - - - Interest paid (3,079.25) (1,227.99) (338.23) (148.12) (84.25)Dividends paid (169.86) (54.85) (23.64) (24.42) (9.75)Tax on dividend paid (28.27) (9.14) (1.74) (6.45) (1.37)Net cash used in financing activities 45,819.30 14,009.97 2,899.62 1,089.42 201.12 Net increase in cash and cash equivalents (A + B + C) 3,981.61 5.37 461.73 456.58 (125.76)Cash and cash equivalents at the beginning of the year 2,682.08 1,133.96 672.23 215.65 341.41 Add: Adjustment on account of amalgamation - 1,542.75 - - - Cash and cash equivalents at the end of the year 6,663.69 2,682.08 1,133.96 672.23 215.65
Components of cash and cash equivalents
Cash and cheques on hand 1,188.01 644.98 182.62 166.71 66.07 With banks
- on current account# 2,480.92 841.12 126.72 213.86 56.94 - on deposit account* 2,992.30 1,193.85 823.38 274.70 92.13 - on unpaid dividend accounts** 2.46 2.13 1.24 16.96 0.51
6,663.69 2,682.08 1,133.96 672.23 215.65
* Includes cash collateral deposits held with banks which arenot available for use by the Company. 2,119.41 1,182.57 702.86 270.76 55.55
# includes amouts in Escrow account towards closed publicdeposits not available for use by the Company as they representcorresponding deposit liabilities
11.44 - - - -
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
**These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities.
Year ended Year ended March 31, 2008 March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at As at As at March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
Schedule 1: Share capital
Authorized106,000,000 equity shares of Rs. 10/- each 1,060.00 1,060.00 260.00 280.00 160.00 400,000 redeemable preference shares of Rs. 100/- each 40.00 40.00 40.00 40.00 40.00 Nil compulsorily convertible preference shares of Rs. 100/- each - - 500.00 480.00
Issued, subscribed and paid-upEquity shares, fully paid up* # 833.75 340.39 172.56 110.00 110.00
7.5% redeemable preference shares of Rs. 100 each fully paid up # - - 40.00 40.00 40.00 0.05% compulsorily convertible preference shares of Rs. 100 eachfully paid up #
- - - 468.00 -
833.75 340.39 212.56 618.00 150.00
# Number of shares, issued, subscribed and paid-up-Equity shares fully paid up 416,874,188 34,038,522 17,255,828 11,000,000 11,000,000-7.5% redeemable preference shares of Rs. 100 each fully paid up Nil Nil 400,000 400,000 400,000-0.05% compulsorily convertible preference shares of Rs. 100 each fully paid-up
Nil Nil Nil 4,680,000 Nil
-Face value of equity shares Rs. 2/- Rs. 10/- Rs. 10/- Rs. 10/- Rs. 10/-
Schedule 2: Reserves and surplus
Capital redemption reserveOpening balance 40.00 22.86 17.14 11.42 5.71 Add: Transferred from Profit and loss account - 17.14 5.72 5.72 5.71 Less: Capitalised for bonus issue (40.00) - - - -
- 40.00 22.86 17.14 11.42 Securities premium accountOpening balance 3,988.96 877.30 - - 15.00 Add: Securities premium on merger of MAFIT as at April 1, 2008 - 4.22 - - - Add: Securities premium of MAFIT from April 1, 2008 to March 31,2009 (net of share issues expenses)
- 527.51 - - -
Add: Securities premium on issue of shares 10,971.39 2,656.12 900.69 - - Less: Capitalised for bonus issue (300.39) - - - - Less: Transferred to Share Capital - - - - (15.00) Less: Share issues expenses adjusted against securities premium (235.64) (76.19) (23.39) - -
14,424.32 3,988.96 877.30 - - Statutory reserveOpening balance 450.75 152.90 92.30 50.30 28.30 Add: Statutory Reserve on merger of MAFIT as at April 1, 2008 - 23.60 - - - Add: Statutory Reserve of MAFIT from April 1, 2008 to March 31,2009
- 34.80 - - -
Add: Transferred from Profit and loss account 565.33 239.45 60.60 42.00 22.00 1,016.08 450.75 152.90 92.30 50.30
General reserveOpening balance 368.39 194.39 163.39 63.39 53.39 Add: General Reserve on merger of MAFIT - as at April 1, 2008 - 80.65 - - - Add: General Reserve of MAFIT from April 1, 2008 to March 31,2009
- 34.80 - - -
Less: Adjustment to General Reserve on merger with MAFIT - (61.17) - - - Less: Transferred to Share Capital - - - - (40.00) Add: Transferred from Profit and loss account 282.67 119.72 31.00 100.00 50.00
651.06 368.39 194.39 163.39 63.39
Profit & Loss Account 2,314.36 904.65 188.74 39.00 6.14 Add: Profit & Loss account on merger of MAFIT as at March 31,2008
- 12.46 - - -
2,314.36 917.11 188.74 39.00 6.14
18,405.82 5,765.21 1,436.19 311.83 131.25
*(i) 27,500,000 equity shares of Rs 2/- each are allotted as fully paid up bonus shares by capitalisation of General Reserve - Rs. 40 and Securities Premium - Rs. 15 in earlier years. (ii) 170,192,610 equity shares of Rs.2/- each are allotted as fully paid up bonus shares by capitalisation of Capital redemption reserve - Rs 40 and Securities Premium Account - Rs 300.39 in 2011
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at As at As at March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
Schedule 3: Secured loans
7.5% - 14.5% Secured Non-convertible Debentures of Rs. 1,000/- -Rs. 1,000,000 each redeemable at par at the end of the term of eachseries of debentures ranging between 1-5 years # *
5,012.85 2,619.84 723.28 633.37 370.80
Add: Interest accrued and due thereon 2.68 19.52 7.54 3.25 11.82 5,015.53 2,639.36 730.82 636.62 382.62
From banks- Cash credit* 7,488.19 257.93 1,079.41 372.45 128.93 - Working Capital Loans* 30,558.41 13,400.66 1,899.28 340.04 -
From Others- Working Capital Loans* 650.00 200.00 - - -
Vehicle loans 10.94 2.55 2.94 1.97 0.38(Secured by hypothecation of vehicles)
43,723.07 16,500.50 3,712.45 1,351.08 511.93
# Number of secured debentures 1,328,535 2,619,833 723,280 633,375 370,797
* Refer note 18.14
Schedule 4: Unsecured loans
Deposits - 18.54 43.57 75.74 240.94 Debenture application money 20.00 2.49 97.27 20.57 15.96 Inter-Corporate Deposits 1.64 2.84 7.76 18.29 4.67 Commercial Paper 10,007.87 650.73 - - - Subordinate bond 1,778.76 1,165.14 641.58 271.11 152.06 Subordinate debt 1,000.00 - - - - Interest Accrued and Due 8.76 16.38 3.16 2.96 7.32
12,817.03 1,856.12 793.34 388.67 420.95
Schedule 5: on fixed assets is set out in the following page
Schedule 6: Deferred tax (liability) / asset (net)
Deferred Tax LiabilityDifferences in depreciation and other differences in block of fixedassets as per tax books and financial books
(34.39) (34.76) (21.02) (12.03) (6.62)
Deferred tax assetEffect of expenditure debited to profit and loss account in the currentyear but allowed for tax purposes in following years
15.71 4.29 1.74 - -
Provision for loans and advances 105.75 63.82 32.87 11.64 5.66 Net Deferred tax asset / (liability) 87.07 33.35 13.59 (0.39) (0.96)
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
Schedule 5: Fixed Assets
GROSS BLOCK DEPRECIATION/ AMORTIZATION NET BLOCK
DESCRIPTION As at April 1, 2010 Additions Deductions As at
March 31, 2011 As at
April 1, 2010 Additions Deductions As at March 31, 2011
As at March 31, 2011
As at March 31, 2010
Tangible Assets
Freehold Land* 31.32 - - 31.32 - - - - 31.32 31.32 Building 15.12 66.02 - 81.14 0.42 0.51 - 0.93 80.21 14.70 Office equipment 60.20 113.02 0.26 172.96 13.61 26.75 0.19 40.17 132.79 46.59 Computer equipment 168.82 203.33 9.50 362.65 62.68 106.05 6.10 162.63 200.02 106.14 Furniture and Fittings 383.89 595.34 0.29 978.94 56.38 69.51 0.28 125.61 853.33 327.51 Vehicle** 9.55 14.34 1.46 22.43 2.52 1.60 0.70 3.42 19.01 7.03 Plant & Machinery 0.90 2.16 0.68 2.38 0.02 0.03 0.01 0.04 2.34 0.88
Total 669.80 994.21 12.19 1,651.82 135.63 204.45 7.28 332.80 1,319.02 534.17 2009-10 # 325.70 353.04 8.94 669.80 71.85 67.63 3.85 135.63 534.17 2008-09 196.10 132.66 3.06 325.70 42.06 30.53 0.74 71.85 253.85 2007-08 129.98 67.14 1.02 196.10 25.28 16.96 0.18 42.06 154.04 2006-07 63.50 68.57 2.09 129.98 15.17 10.17 0.06 25.28 104.70
Intangible assetsSoftwares 46.03 34.80 - 80.83 12.48 8.51 - 20.99 59.84 33.55
Total 46.03 34.80 - 80.83 12.48 8.51 - 20.99 59.84 33.55 2009-10 29.95 16.08 - 46.03 6.03 6.45 - 12.48 33.55 2008-09 12.02 17.93 - 29.95 2.85 3.18 - 6.03 23.92 2007-08 3.73 8.29 - 12.02 1.55 1.30 - 2.85 9.17 2006-07 3.67 0.06 - 3.73 1.07 0.49 - 1.56 2.17
* The Company is in the process of registering the title of the land acquired in an earlier year for Rs 0.7 in its name.
** Includes vehicles taken on finance lease/hire purchaseParticulars 2010-11 2009-10 2008-09 2007-08 2006-07Gross block 18.39 6.62 5.21 3.53 0.99 Accumulated depreciation 1.58 0.97 0.46 0.30 0.14 Net block 16.81 5.65 4.75 3.23 0.85 Depreciation for the year 1.18 0.50 0.39 0.16 0.09
# Additions during the year ended March 31, 2010 includes Rs 70.50 been assets transferred on amalgamation of MAFIT and depreciation includes Rs 16.70 being transferred on amalgamation.
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at March 31, 2011 March 31, 2010 March 31, 2009
Schedule 7: Investments
Long Term Investments
(Quoted, at cost)A. Other than trade 17,000 (Previous year - 17,000) units of Rs. 100 each in 6.13% Govt. of IndiaLoan
- - 1.64 1.64 1.34
15,000 (Previous year - 15,000) units of Rs. 100 each in 6.17% Govt. of IndiaLoan
- - 1.40 1.40 1.23
32,000 (Previous year - 62,000) units of Rs. 100 each in 7.38% Govt. of IndiaLoan
3.15 6.15 6.15 6.15 5.95
15,000 (Previous year - 15,000) units of Rs. 100 each in 7.59% Govt. of IndiaLoan
- - 1.50 1.50 1.46
800 (Previous year - 800) equity share of Rs. 10 each fully paid in ChowguleSteamship
- - - - -
500 (Previous year - 500) equity share of Rs. 10 each fully paid in SterlingHoliday Resorts India Limited
- - - - -
100 (Previous year - 100) equity share of Rs. 10 each fully paid in Raipur Alloysand Steels Limited
- - - - -
100 (Previous year - 100) equity share of Rs. 10 each fully paid in WesternPaques India Limited
- - - - -
100 (Previous year - 100) equity share of Rs. 10 each fully paid in Rohit Pulpand Paper Mills Limited.
- - - - -
100 (Previous year - 100) equity share of Rs. 10 each fully paid in TheDhanalakshmi Bank Limited.
0.01 0.01 0.01 0.01 0.01
400 (Previous year - 400) equity share of Rs. 10 each fully paid in GlobalFinance Limited.
- - - - -
300 (Previous year - 300) equity share of Rs. 10 each fully paid in Vijaya BankLimited
0.01 0.01 0.01 0.01 0.01
Nil (Previous year - 53,700) units of Rs. 100 each in 6.85% Govt. of IndiaLoan
- - - 5.35 5.13
Nil (Previous year - 23,500) units of Rs. 100 each in 8% TN Loan - - - 2.46 2.34 Nil (Previous year - 30) units of Rs. 1,00,000 each in 8 % Gujarat ElectricityBoard
- - - 3.00 2.78
Nil (Previous year - 5,000) units of Rs. 100 each in 7.00% Govt of India Loan - - - 0.51 0.49
Nil (Previous year - 2,960) units of Rs. 100 each in 7.50% Govt of India Loan - - - 0.31 0.30
Nil (Previous year - 20,000) units of Rs. 100 each in 7.33% HAR Loan - - - 1.88 1.91 Nil(Prev year-Nil)(In 2007- 10000units of Rs 100 each in 13.30% APPFCLBonds)
1.00
(Unquoted, at cost)A. Other than trade1,000 (Previous year - 1,000) equity share of Rs. 10 each fully paid in TheCatholic Syrian Bank Limited.
0.03 0.03 0.03 0.03 0.03
B. In Subsidiary CompaniesNil (Previous year - 500,000) equity shares of Rs. 10 each fully paid inManappuram Insurance Brokers Private Limited
- 5.00 5.00
Current Investments - Trade (Quoted, at lower of cost and market value) - 1,629 units (previous year - 1,629) of Rs. 20.46/- each in Sundaram MutualFund
- 0.03 0.03 0.03 0.03
279,730 units (previous year - Nil) of Rs. 1,001.29/- each in Reliance MoneyManager Fund - Institutional Option - Daily Dividend
- 280.09 - - -
13,978,308 units (previous year - Nil) of Rs. 10.0179/- each in DWS UltraShort Term Fund - Institutional Daily Dividend - Reinvest
140.03 - - -
98,035,440 units (previous year - Nil) of Rs. 10/- each in LICMF - FloatingRate Fund - Short term plan - Daily Dividend Plan
980.35 - - -
40,000,000 (previous year - Nil) of Rs. 10 each in State Bank of India - DebtFund Series - 370 Days - 7- Growth
400.00
403.20 1,406.70 10.77 29.28 29.01
Aggregate amount of quoted investments 3.17 6.17 10.74 24.25 25.42 Market value of quoted investments 3.37 6.37 10.57 23.26 24.04 Aggregate amount of unquoted investments 400.03 1,400.54 0.03 5.03 5.03
Refer Note 11 of Schedule 18 for details of investments purchased and sold during the year.
As at March 31, 2008
As at March 31, 2007
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at As at As at March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
Schedule 8: Cash and bank balances
Cash on hand 1,188.01 644.98 182.62 166.71 66.07
Balances with scheduled banks- on current accounts* 2,480.92 841.12 126.72 213.86 56.94 - on deposit accounts** 2,992.30 1,193.85 823.38 274.70 92.13 - on unpaid dividend accounts 2.46 2.13 1.24 16.96 0.51
6,663.69 2,682.08 1,133.96 672.23 215.65
* Includes amounts in Escrow account towards closed public deposits 11.44 - - - - ** deposit accounts includes collateral deposit towards gold loans assigned and other facilities (Refer Note 12 to Schedule 18)
Schedule 9: Other current assets
Interest accrued 4,658.43 1,827.89 661.44 190.95 153.27Stock of foreign currency - - 0.01 0.04 2.95Stock of gold coins etc. 287.17 48.53 14.46 - - Others 1.91 2.46 - 11.72 -
4,947.51 1,878.88 675.91 202.71 156.22
Schedule 10: Loans and advances
Secured, considered goodLoans:
- Gold 63,574.42 18,456.23 3,974.87 977.17 197.62 - Hypothecation 18.79 172.38 355.50 620.17 441.05 - Stock on Hire 0.29 8.24 29.60 71.38 101.29 - Others 77.11 57.52 52.38 56.47 62.43
Unsecured, considered goodAdvances recoverable in cash or kind or for value to be received 123.88 62.15 9.36 36.78 4.67 Deposits 347.19 150.61 64.33 91.09 152.05
64,141.68 18,907.13 4,486.04 1,853.06 959.11 Secured, considered doubtfulLoans:
- Gold 130.99 56.03 25.76 6.97 6.08 - Hypothecation 26.69 114.40 53.50 15.48 6.36 - Stock on Hire 1.31 14.15 8.27 2.49 1.17 - Others 5.98 5.73 4.06 4.05 1.61
Unsecured, considered doubtfulAdvances recoverable in cash or kind or for value to be received 2.49 1.81 5.11 5.27 -
167.46 192.12 96.70 34.26 15.22 Less: Provision for doubtful loans and advances 167.46 192.12 96.70 34.26 15.22
64,141.68 18,907.13 4,486.04 1,853.06 959.11
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008, and March 31, 2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
As at As at As at As at As at March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
Schedule 11: Current liabilities
Sundry creditors for expenses* 275.56 148.81 91.09 29.92 15.55 Book overdraft 5.09 6.68 8.45 - - Interest accrued but not due on loans 270.91 169.11 30.71 17.57 23.77
197.90 339.17 155.42 121.03 13.29 Sundry deposits 10.95 20.08 21.22 22.92 13.83 Investor Education and Protection Fund shall be credited by following amounts (as and when due)
a) Unpaid dividends 2.46 2.13 1.24 0.46 0.51b) Unpaid matured Deposits 2.14 4.58 5.11 5.26 - c) Unmatured Deposits 9.30 - - - - Dividend payable - - - 16.50 - Other liabilities 352.03 119.72 34.73 12.15 150.81
1,126.34 810.28 347.97 225.81 217.76
Schedule 12: Provisions
Provisions for taxation (net of advance tax and tax deducted at source)
29.96 6.13 14.17 17.68 8.86
Provision for standard assets 158.47 - - - - Provision for gratuity 14.82 - - - - Provision for dividend on preference shares - - 3.00 0.07 1.63 Provision for Fringe benefit tax (net of advance tax) - - - - 0.08 Proposed final dividend 500.25 170.19 43.14 5.50 19.80 Tax on proposed dividend 81.14 28.27 7.84 1.46 3.64
784.64 204.59 68.15 24.71 34.01
* There are no dues outstanding to any enterprises covered under Micro, Small and Medium Enterprises Development Act, 2006, based on the information available withthe Company during the year and as at March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007.
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31,2007
Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)
Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)
Year ended Year ended Year ended Year ended Year endedMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007
Schedule 13: Income from services
Interest and other income from- Gold and other loans 11,533.49 4,575.15 1,431.84 564.93 318.14 - Business loans 0.99 2.24 2.86 9.71 1.78 - Personal loans 0.62 4.36 8.18 11.40 0.20 - Hypothecation and hire purchase loans 93.70 90.86 139.68 182.36 93.84 - Others 5.32 2.49 2.34 1.60 -
Income from fee based activities*- Money transfer 19.21 21.26 18.85 9.28 5.71 - Others 0.87 3.41 1.59 0.32 0.65
11,654.20 4,699.77 1,605.34 779.60 420.32
Schedule 14: Other income
Interest (gross)* 124.67 66.26 41.95 12.34 12.43 Foreign exchange gain (net) 0.02 (0.01) (0.20) - 0.22 Bad debts recovered 8.64 3.55 3.15 2.10 1.64 Others 27.73 12.44 10.87 2.56 1.89
161.06 82.24 55.77 17.00 16.18 * Tax deducted at source 24.93 9.89 7.24 3.09 1.65
Schedule 15: Personnel expenses
Salaries, wages and bonus 1,419.26 492.87 266.54 109.89 56.63 Contribution to provident and other funds 180.71 41.37 16.90 6.12 3.93 Staff welfare expenses 5.03 2.16 0.51 0.37 0.05
1,605.00 536.40 283.95 116.38 60.61
Schedule 16: Operating and other expenses
Rent 328.40 133.27 54.44 27.53 15.68 Electricity 38.16 18.29 11.55 5.62 2.99 Insurance 23.75 4.64 0.47 0.89 0.69 Travel and conveyance 83.90 53.79 21.60 8.44 7.15 Communication expenses 44.23 14.74 28.05 16.34 6.68 Advertisement 1,038.51 482.81 81.70 61.44 23.21 Directors sitting fees 1.51 0.92 0.82 0.75 0.39 Repairs and maintenance
- Vehicles 1.78 1.56 0.91 0.56 0.38 - Others 62.79 17.64 7.95 3.86 2.07
Legal and professional fees 95.19 24.42 23.71 6.83 2.31 Security charges 204.16 54.90 29.24 15.23 6.79 Rates and taxes 40.47 9.96 18.25 5.66 4.47 Printing and stationery 41.51 17.65 13.34 9.68 4.02 Loss on sale of assets 2.28 4.34 - 0.08 0.01 Bad debts 248.94 53.42 117.54 14.69 21.32 Provision for standard assets 158.47 - - - - Provision for loans and advances, net of bad debts written off (24.66) 88.58 60.32 19.03 9.52 Miscellaneous expenses 49.32 19.82 24.82 2.21 4.19
2,438.71 1,000.75 494.71 198.84 111.87
Schedule 17: Financial expenses
Interest- on Debentures 299.67 288.69 105.69 46.47 33.96 - on Bonds 233.15 134.78 53.33 27.71 - - on Deposits 1.37 3.84 6.26 40.93 27.24 - on Banks borrowings 2,210.30 795.99 188.52 26.74 13.40 - on Other borrowings 34.30 16.94 0.27 - - - on Commercial Papers 369.88 57.47 - - - - Others 7.92 6.83 1.80 0.08 13.69
Bank and other charges 163.04 64.69 30.04 1.58 1.56 3,319.63 1,369.23 385.91 143.51 89.85
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ Schedule 18: Notes to accounts (All amounts are in millions of Indian Rupees unless otherwise stated) 18. 1 Statement of significant accounting policies a) Basis of preparation The financial statements have been prepared to comply in all material respects with the Notified accounting standard by Companies Accounting Standards Rules, 2006, (as amended) the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Reserve Bank of India as applicable to a NBFC. The financial statements have been prepared under the historical cost convention and on an accrual basis except for interest and discounts on non performing assets which are recognized on realization basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. b) Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. c) Fixed assets Fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any cost attributable to bringing the asset to its working condition for its intended use. d) Depreciation Depreciation is provided using the straight line method at the rates prescribed under schedule XIV of the Companies Act, 1956, which is management’s estimate of the useful lives of the assets except as follows:
Nature of asset Rate of depreciation followed Computer equipment 16.21% to 33.33%
During the year ended March 31, 2011, the Company has changed its estimated useful life of computer equipments from 6 years to 3 years. This change in estimated useful life has resulted in provision of additional depreciation by Rs 57.09 million and the profit before tax of the Company is lower by the corresponding number.
Computer software cost capitalized is amortized over the estimated useful life of 6 years.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ e) Impairment i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. 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 risks specific to the asset. ii) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. f) Leases Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalised. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease item, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. 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 are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term. g) Investments The Board of directors has 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.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ h) Revenues Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Interest income on loans given is recognised under the internal rate of return method. Such interests, where installments are overdue in respect of non performing assets are recognised on realization basis. Any such income recognised and remaining unrealized after the installments 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 are recognized over the tenure of agreements as per guideline on securitization of standard assets issued by the Reserve Bank of India, losses, if any are recognised upfront. i) Employee benefits
i. Retirement benefits in the form of Provident Fund are defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the fund maintained by the Central Government is due. There are no other obligations other than the contribution payable to the respective trusts.
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 on based on estimates.
iv. Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
j) 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.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ (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 recognized as income or as expenses in the year in which they arise. k) 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 Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of 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 unrecognized deferred tax assets. It recognizes unrecognized 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 writesdown 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. l) Earnings per share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) 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. m) Provisions a) A provision is recognized 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
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 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. b) Provision policy for gold loans and other loan portfolios Secured loans are classified / provided for, as per management 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: 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 Loss assets 100% written off in books.
Classification of loans (Hypothecation and Stock on Hire)
Asset Classification Provisioning policy Standard Assets # 0.25% Sub-standard assets 10% to 100% Doubtful assets* 100% written off in books. Loss assets 100% 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.
n) Segment reporting Identification of segments: The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. As the Company operates only in India it has a single geographical segment. Allocation of common costs Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items Unallocable costs include general corporate income and expense items which are not allocated to any business segment.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ From financial year 2010-11, the Company primarily operates in the business of "Gold loan" and accordingly no segment reporting is applicable.
o) 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. p) Ancilliary borrowing costs Ancilliary borrowings costs incurred issue of debentures and other long term borrowings are expensed over the tenure of the loan. q) Share 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. r) Insurance claims Insurance claims are accrued for on the basis of claims admitted and to the extent there is no uncertainty in receiving the claims. s) Surplus on auction of pledged gold 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. t) 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 amortized over the vesting period of the option on a straight line basis. 18. 2 Nature of operations Manappuram General Finance and Leasing Limited ('MAGFIL' 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 more than 1,900 branches spread across the country. The Board of Directors of the Company at its meeting held on February 25, 2011, decided to change the Category A (Deposit Taking) registration of the Company with Reserve Bank of India (RBI) and made an application for the change. RBI approved the same and issued a new Certificate giving Category B (Non
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ Deposit Taking) registration to the Company. As per the new registration, the Company is a Systemically Important Non-Deposit Taking NBFC. 18.3 Share Capital Issue of equity shares to promoters on preferential basis During the year ended March 31, 2011, the Company has issued 13,210,039 shares to its promoters on preferential basis at a price of Rs 75.70/- per share at a premium of Rs 73.70/- per share. The approval of the Board of Directors and shareholders has been taken and necessary regulatory requirements have been complied with by the Company. Bonus and share split The shareholders of the Company have on April 22, 2010 through a resolution, approved the sub-division of one fully paid equity share of Rs 10/- each of the Company into five equity shares of Rs 2/- each fully paid pursuant to Section 94 of the Act. Further, the shareholders of the Company have through a resolution passed on April 22, 2010 approved the issuance of equity shares of Rs 2/-each, fully paid up, as bonus shares (after considering the stock split as above) in the ratio of 1:1 to the shareholders existing as on the record date. These changes have been given effect to in the current period. Further, as per the requirements of paragraph 44 read with paragraph 24 of Accounting Standard 20 – ‘Earnings per share’ (AS-20), the number of equity shares outstanding as at March 31, 2010 has been adjusted for the amount of such bonus shares and sub-divided shares in the computation of the weighted average number of shares for the computation of EPS for the current year and previous year. Issue of equity shares through private placement to Qualified Institutional Buyers (“QIBs”) During the current year, the Company has issued 59,523,809 shares to certain QIBs by way of a private placement at a price of Rs 168/- per share at a premium of Rs 166/- per share. The issues of these shares are for the purposes of augmenting the funding needs of the Company and to meet capital adequacy norms. The Company raised a total amount of Rs 1,000 crores from these QIBs and incurred an amount of Rs 23 crores as share issues expenses which has been set off against the share premium account. Employee Stock Option Scheme (ESOS), 2009 The details of the Employee Stock Option Scheme 2009 are as under: Date of share holders’ approval August 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
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ Exercisable period 4 years from vesting date Vesting conditions on achievement of pre-determined performance
parameters in accordance with the Company Performance appraisal plans.
Subsequent to the share split and bonus issue, the number of options has been adjusted to 8,295,000 options and the exercise price has been adjusted to Rs 33.12/- per share in accordance with the terms of the scheme. 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, 2011
As at March 31, 2010
Options outstanding, beginning of year 7,850,000 - Options granted during the year - 8,295,000 Options exercised during the year 3,755,120 - Options lapsed during the year - 445,000 Options outstanding, end of year 4,094,880 7,850,000 Options outstanding at the year end comprise of :
- Options eligible for exercise at year end 169,880 - - Options not eligible for exercise at year end 3,925,000 7,850,000
Particulars As at March 31, 2011
As at March 31, 2010
Weighted average remaining contract life of options 2 years 5 month 3 years 5 month
The options outstanding at March 31, 2011 had an exercise price of Rs. 33.12/-
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
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 Rs 142.43 Rs 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 Rs. 331.15 /- Rs. 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 recognized 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 (Rs.) Diluted EPS (Rs.)
Year ended March 31, 2011 - Amounts as reported 2,826.64 7.61 7.51 - Amounts as per pro-forma 2,774.52 7.47 7.37
Particulars
Profit after tax Basic EPS (Rs.) Diluted EPS (Rs.)
Year ended March 31, 2010
- Amounts as reported 1,197.22 4.09 4.07 - Amounts as per pro-forma 1,143.19 3.91 3.88
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)
18.4 Related Party Transanctions
Particulars
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07
Sale of gold loans - - - - - - - 7,915.80 790.40 922.67 - - - - - - - - - - - - 7,915.80 790.40 922.67 Manappuram Finance Tamilnadu Limited - - - - - - - 7,915.80 790.40 922.67 - - - - - - - - - - - - 7,915.80 790.40 922.67
Purchase of gold loans - - - - - - - 705.20 151.63 800.57 - - - - - - - - - - - - 705.20 151.63 800.57 Manappuram Finance Tamilnadu Limited - - - - - - - 705.20 122.11 800.57 - - - - - - - - - - - - 705.20 122.11 800.57 Manappuram Finance - - - - - - - - 29.52 - - - - - - - - - - - - - - 29.52 -
Debentures issued during the year - - - - - - - - - - 46.03 272.18 - 0.28 - 1.54 1.13 - - - 47.57 273.31 - 0.28 - Mr. V.P.Nandakumar - - - - - - - - - - 46.03 272.18 - 0.28 - - - - - - 46.03 272.18 - 0.28 - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.11 0.28 - - - 0.11 0.28 - - - Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - 0.17 0.03 - - - 0.17 0.03 - - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.29 0.24 - - - 0.29 0.24 - - - Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.97 0.58 - - - 0.97 0.58 - - -
Debentures redeemed during the year - - - - - - - - - - 60.10 255.09 - - - 1.94 0.45 - - - 62.04 255.54 - - - Mr. V.P.Nandakumar - - - - - - - - - - 60.10 255.09 - - - - - - - - 60.10 255.09 - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.15 0.18 - - - 0.15 0.18 - - - Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - 0.18 0.03 - - - 0.18 0.03 - - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.40 0.07 - - - 0.40 0.07 - - - Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 1.21 0.17 - - - 1.21 0.17 - - -
Subordinate Bond issued during the year - - - - - - - - - - - - - - - 0.83 0.61 0.85 0.95 - 0.83 0.61 0.85 0.95 - Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 0.15 - 0.85 - - 0.15 - 0.85 - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - - Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.68 0.50 - - - 0.68 0.50 - - - Mrs. Sathyalekshmy - - - - - - - - - - - - - - - - 0.08 - - - - 0.08 - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - - - - 0.95 - - - - 0.95 -
Subordinate Bond redeemed during the year - - - - - - - - - - - 45.00 - - - 0.63 0.09 0.85 - - 0.63 45.09 0.85 - -
Mr. V.P.Nandakumar - - - - - - - - - - - 45.00 - - - - - 0.85 - - - 45.00 0.85 - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - - 0.04 - - - - 0.04 - - - Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.02 - - - - 0.02 - - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - - Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.63 - - - - 0.63 - - - -
Issue of Preference Shares - - - - - - - - - - - - - - 20.00 - - - - - - - - - 20.00 Mr. V.P.Nandakumar - - - - - - - - - - - - - - 20.00 - - - - - - - - - 20.00
Subscription to Equity shares - - - - - - - - - - - - - - - 1,000.00 - - - - 1,000.00 - - - - Mrs. Sushama Nandakumar - - - - 1,000.00 - 1,000.00 - - - -
Associates / Enterprises owned or significantly influenced by key management personnel or their
relatives
Key Management Personnel Relatives of key management personnel Total Subsidiary
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)
18.4 Related Party Transanctions
Particulars
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07
Associates / Enterprises owned or significantly influenced by key management personnel or their
relatives
Key Management Personnel Relatives of key management personnel Total Subsidiary
Interest paid - - - - - - 0.30 64.60 12.01 8.19 3.06 7.01 5.66 34.81 10.49 0.34 0.28 0.09 0.08 0.10 3.40 7.60 70.36 46.90 18.77 Mr. V.P.Nandakumar - - - - - - - - - - 3.06 7.01 5.66 34.81 10.49 - - - - - 3.06 7.01 5.66 34.81 10.49 Manappuram Comptech & Consultants P Ltd. - - - - - - - - - 0.00 - - - - - - - - - - - - 0.00 Manappuram Insurance Brokers Private Limited - - - - - - 0.09 - - - - - - - - - - - - - - 0.09 - - -
Manappuram Finance Tamilnadu Limited - - - - - - - 63.21 11.49 8.19 - - - - - - - - - - - - 63.21 11.49 8.19 Manappuram Asset Finance Limited - - - - - - - 1.11 0.52 - - - - - - - - - - - - - 1.11 0.52 - Manappuram Chits (India) Limited - - - - - - 0.21 0.28 - - - - - - - - - - - - - 0.21 0.28 - - Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.01 - - - - 0.01 - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.08 0.06 - 0.08 0.10 0.08 0.06 - 0.08 0.10 Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.04 0.06 - - - 0.04 0.06 - - - Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 0.14 0.15 0.09 - - 0.14 0.15 0.09 - - Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.05 - - - - 0.05 - - - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - - -
Salary to Sooraj Nandan - - - - - - - - - - - - - - - - 0.42 0.40 - - - 0.42 0.40 - -
Interest received - - - - - - - 4.56 0.92 9.16 - - - - - - - - - - - - 4.56 0.92 9.16 Manappuram Finance Tamilnadu Limited - - - - - - - 4.56 0.92 9.16 - - - - - - - - - - - - 4.56 0.92 9.16
Deputation of staff to other Companies - - - - 1.03 - - - 14.99 3.78 - - - - - - - - - - - - - 14.99 4.81 Manappuram Benefit Fund Limited - - - - - - - - 10.00 3.53 - - - - - - - - - - - - - 10.00 3.53 Manappuram Finance Tamilnadu Limited - - - - - - - - 4.99 - - - - - - - - - - - - - 4.99 - Manappuram Chits (India) Limited - - - - - - - 0.04 - - - - - - - - - - - - 0.04 Manappuram Comptech & Consultants P Ltd. - - - - - - - 0.21 - - - - - - - - - - - - 0.21 Manappuram Insurance Brokers (P) Ltd - - - - 1.03 - - - - - - - - - - - - - - - - 1.03
Deputation of staff from other Companies - - - - 0.42 - - - - - - - - - - - - - - - - - - - 0.42 Manappuram Benefit Fund Limited - - - - 0.25 - - - - - - - - - - - - - - - - - - - 0.25 Manappuram Insurance Brokers (P) Ltd - - - - 0.17 - - - - - - - - - - - - - - - - - - - 0.17
Inter Corporate Deposits accepted - - - - - - 5.15 5.45 13.69 - - - - - - - - - - - - 5.15 5.45 13.69 - Manappuram Asset Finance Limited - - - - - - - - 13.69 - - - - - - - - - - - - - - 13.69 - Manappuram Chits (India) Limited - - - - - - 5.15 5.45 - - - - - - - - - - - - - 5.15 5.45 - -
Inter Corporate Deposits redeemed - - - - - - 10.60 13.69 - - - - - - - - - - - - - 10.60 13.69 - - Manappuram Asset Finance Limited - - - - - - - 13.69 - - - - - - - - - - - - - - 13.69 - - Manappuram Finance Tamilnadu Limited - - - - - - - - - - - - - - - - - - - - - - - - - Manappuram Chits (India) Limited - - - - - - 10.60 - - - - - - - - - - - - - - 10.60 - - -
Incentive reimbursement received - - - - - - - - 2.40 - - - - - - - - - - - - - - 2.40 - Manappuram Finance Tamilnadu Limited - - - - - - - - 2.40 - - - - - - - - - - - - - - 2.40 -
Incentive reimbursement paid - - - - - - - - 1.52 - - - - - - - - - - - - - - 1.52 - Manappuram Comptech & Consultants P Ltd. - - - - - - - - 1.52 - - - - - - - - - - - - - - 1.52 -
Advances made - - - - - - 1.78 - - - - - - - - 1.91 1.20 - - - 1.91 2.97 - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 1.31 1.20 - - - 1.31 1.20 - - - Sooraj Nandan 0.60 0.60 - - - - Manappuram Foundations - - - - - - 1.78 - - - - - - - - - - - - - 1.78 - - -
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)
18.4 Related Party Transanctions
Particulars
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07
Associates / Enterprises owned or significantly influenced by key management personnel or their
relatives
Key Management Personnel Relatives of key management personnel Total Subsidiary
Loans taken - - - - - - 0.51 - - - - - - - - - - - - - - 0.51 - - - Manappuram Insurance Brokers Private Limited - - - - - - 0.51 - - - - - - - - - - - - - - 0.51 - - -
Loans repaid - - - - - - 3.56 - - - - - - - - - - - - - - 3.56 - - - Manappuram Insurance Brokers Private Limited - - - - - - 3.56 - - - - - - - - - - - - - - 3.56 - - -
Subscription to share warrant - - - - - - - - - - - 230.76 29.98 - - - - - - - - 230.76 29.98 - - Mr. V.P.Nandakumar - - - - - - - - - - - 230.76 29.98 - - - - - - - - 230.76 29.98 - -
Conversion of share warrant - - - - - - - - - - - 260.74 - - - - - - - - - 260.74 - - - Mr. V.P.Nandakumar - - - - - - - - - - - 260.74 - - - - - - - - - 260.74 - - -
Rent Paid - - - - - - - - - - 0.51 0.51 0.51 - - - - - - - 0.51 0.51 0.51 - - Mr. V.P.Nandakumar - - - - - - - - - - 0.51 0.51 0.51 - - - - - - - 0.51 0.51 0.51 - -
Rent Received - - - - - 0.24 0.20 0.18 - - - - - - - - - - - - 0.24 0.20 0.18 - - Manappuram Jewellers Private Limited - - - - - 0.04 0.02 0.00 - - - - - - - - - - - - 0.04 0.02 0.00 - - Manappuram Insurance Brokers Private Limited - - - - - 0.18 0.18 0.18 - - - - - - - - - - - - 0.18 0.18 0.18 - -
Manappuram Asset Finance Limited - - - - - 0.02 - - - - - - - - - - - - - - 0.02 - - - -
Donation Made - - - - - 6.20 - - - - - - - - - - - - - - 6.20 - - - - Manappuram Foundations - - - - - 6.20 - - - - - - - - - - - - - - 6.20 - - - -
Sale of gold - - - - - 972.70 140.24 13.89 - - - - - - - - - - - - 972.70 140.24 13.89 - - Manappuram Jewellers Private Limited - - - - - 972.70 140.24 13.89 - - - - - - - - - - - - 972.70 140.24 13.89 - -
Purchase of stationery - - - - - - - 1.05 - - - - - - - - - - - - - - 1.05 - - Manappuram Printers - - - - - - - 1.05 - - - - - - - - - - - - - - 1.05 - -
Sale of stationery - - - - - - 0.06 - - - - - - - - - - - - - - 0.06 - - - Manappuram Benefit Fund Limited - - - - - - 0.06 - - - - - - - - - - - - - - 0.06 - - -
Purchase of assets - - - - - - - 0.66 - - - 25.41 - - - - 16.96 - - - - 42.37 0.66 - - Manappuram Healthcare - - - - - - - 0.66 - - - - - - - - - - - - - - 0.66 - - Mr. V.P.Nandakumar - - - - - - - - - - - 25.41 - - - - - - - - - 25.41 - - - Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - - 6.86 - - - - 6.86 - - - Mrs. Sumitha Nandakumar - - - - - - - - - - - - - - - - 10.10 - - - - 10.10 - - -
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)
18.4 Related Party Transanctions
Particulars
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07
Associates / Enterprises owned or significantly influenced by key management personnel or their
relatives
Key Management Personnel Relatives of key management personnel Total Subsidiary
Balance outstanding as at the period end: - - - - -
Amounts payable (net) to related parties - - - - - - - 5.71 13.77 - 0.26 17.39 75.35 45.71 - 2.82 3.38 0.98 0.96 0.13 3.08 20.77 82.04 60.43 0.13 Mr. V.P.Nandakumar - - - - - - - - - - 0.26 17.39 75.35 45.71 - - - - - - 0.26 17.39 75.35 45.71 - Manappuram Asset Finance Limited - - - - - - - - 13.77 - - - - - - - - - - - - - - 13.77 - Manappuram Benefit Fund Limited - - - - - - - - - - - - - - - - - - - - - - - - - Manappuram Chits (India) Limited - - - - - - - 5.71 - - - - - - - - - - - - - - 5.71 - - Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.57 0.56 - - - 0.57 0.56 - - - Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.02 - - - - 0.02 - - - Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.09 0.24 - - - 0.09 0.24 - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.76 0.88 - 0.96 0.13 0.76 0.88 - 0.96 0.13 Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 1.04 1.03 0.85 - - 1.04 1.03 0.85 - - Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.36 0.65 0.13 - - 0.36 0.65 0.13 - -
Amounts receivables (net) from related parties - - - - - 0.04 1.79 - 2.40 122.10 - - - - - 3.11 1.20 - - - 3.15 2.99 - 2.40 122.10
Manappuram Jewellers Private Limited - - - - - 0.01 - - - - - - - - - - - - - - 0.01 - - - - Manappuram Insurance Brokers Private Limited - - - - - 0.03 0.02 - - - - - - - - - - - - - 0.03 0.02 - - - Manappuram Comptech & Consultants P Ltd. - - - - - - - - - - - - - - - - - - - - - - - - - Manappuram Finance Tamilnadu Limited - - - - - - - - 2.40 122.10 - - - - - - - - - - - - - 2.40 122.10 Sooraj Nandan - - - - - - - - - - - - - - - 0.60 - - - - 0.60 - - - - Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 2.51 1.20 - - - 2.51 1.20 - - - Manappuram Foundations - - - - - - 1.78 - - - - - - - - - - - - - - 1.78 - - -
Names of Related Parties
Manappuram Finance Tamilnadu Limited [formerly Manappuram Finance (Tamilnadu) Private Limited]Manappuram Benefit Fund LimitedManappuram Chits (India) LimitedManappuram Comptech & consultants (P) LimitedManappuram Asset Finance LimitedManappuram Finance (Sole Proprietorship)Manappuram Insurance Brokers Private LimitedManappuram Jewellers Private LimitedManappuram HealthcareManappuram Foundations (charitable trust)Manappuram Printers
Key Management Personnel Mr. V P NandakumarMr. I UnnikrishnanMr. B.N Raveendra Babu
Relatives of key management personnel Mrs. Sushama NandakumarMr. Sooraj NandanMrs Sumitha NandakumarMrs. Jyothi PrasannanMrs. Shelly EkalavyanMrs. Geetha RaviMrs. Rajalakshmi Raveendra BabuMrs. Sathyalekshmy
Note: Remuneration to key management personnel is disclosed else where in the accounts in note 18.16(c)
Associates / Joint Ventures / Enterprises owned or significantly influencfed by key management personnel or their relatives
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)
18.5 Segment Reporting
Primary Segment: Business Segment
The three identified reportable segments are:
1.Gold and other loans - financing of loans against pledging of gold and gold ornaments2.Asset financing - Financing of loans against hypothecation of vehicles3.Fee based activities - Money transfer, foreign currency exchange
Secondary Segment information
The Company has no reportable geograhical segment as it renders its services entirely in india.
Primary segment information
Particulars March 31, 2010
March 31, 2009
March 31, 2008
March 31, 2007
Segment revenuesGold and other loans 4,650.51 1,487.49 599.97 330.59 Asset financing 94.41 142.82 184.46 95.48 Unallocable Income 12.44 19.93 2.57 3.85 Fee based activities 24.65 10.87 9.60 6.58
4,782.01 1,661.11 796.60 436.50 Segment resultGold and other loans 1,926.43 623.74 262.05 137.29 Asset financing (54.08) (88.16) 72.07 27.43 Fee based activities 18.94 16.04 8.10 5.76 Unallocable Income 12.44 10.87 2.56 3.85 Net unallocable expenditure (85.48) (99.66) (25.17) (10.82) Profit before taxation 1,818.25 462.83 319.61 163.51 Taxes 621.04 159.86 109.71 57.39 Profit after taxation 1,197.21 302.97 209.90 106.12
Segment assetsGold and other loans 23,833.11 6,117.02 2,137.59 865.34 Asset financing 214.73 457.72 743.06 567.64 Fee based activities - 0.01 0.04 2.99 Unallocable Assets 1,429.25 12.46 24.34 31.14
25,477.09 6,587.21 2,905.03 1,467.11 Segment liabilitiesGold and other loans 18,958.45 4,611.04 1,887.58 37.81 Asset financing 192.68 234.60 79.48 33.56 Fee based activities - - - - Unallocated liabilities 220.36 62.85 19.87 1,114.49
19,371.49 4,908.49 1,986.93 1,185.86 DepreciationGold and other loans 56.83 32.14 15.86 8.95 Asset financing 0.55 1.56 2.40 1.71 Fee based activities - - - -
57.38 33.70 18.26 10.66 Capital expenditureGold and other loans 294.37 146.08 65.51 57.61 Asset financing 2.87 7.11 9.91 11.02 Fee based activities - - - -
297.24 153.19 75.43 68.63
Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 andMarch 31, 2007
For the financial year 2010-11, the Company, based on its risks and rewards has determined that it primarily operates in the business of "Gold loan".Accordingly, no segment reporting is applicable for year ended March 31, 2011. Segment dislcosures have been made for the years ended March 31,2007 to March 31, 2010.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007
Schedule 18: Notes to accounts (continued..)(All amounts are in millions of Indian rupees unless otherwise stated)
18.6 (a) Loan portfolio and Provision for Non Performing Assets for major categories of loan portfolio
2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007
Gold loan- Standard assets 63,495.46 18,410.61 3,962.87 968.11 196.97 158.47 * - - - - 63,336.99 18,410.61 3,962.87 968.11 196.97 - Sub-standard assets 76.27 48.25 13.23 9.06 0.63 7.63 4.82 1.32 0.91 0.06 68.64 43.43 11.91 8.15 0.57 - Doubtful assets 133.68 53.40 24.53 6.97 6.10 123.36 51.21 24.44 6.06 6.02 10.32 2.19 0.09 0.91 0.08 - Loss assets - - - - - - - - - - - - - - -
Hypothecation loan- Standard assets 18.79 91.55 249.67 537.59 430.89 - - - - - 18.79 91.55 249.67 537.59 430.89 - Sub-standard assets 26.69 124.52 153.93 96.84 10.79 26.69 43.70 48.10 14.26 1.08 - 80.82 105.83 82.58 9.71 - Doubtful assets - 70.71 5.40 1.22 5.73 - 70.70 5.40 1.22 5.28 - 0.01 - - 0.45 - Loss assets - - - - - - - - - - - - - - -
TOTAL 63,750.89 18,799.04 4,409.63 1,619.79 651.11 316.15 170.43 79.26 22.45 12.44 63,434.74 18,628.61 4,330.37 1,597.34 638.67
* Disclosed separately under Provisions in Schedule 12 and not netted off against the loan.
18.6 (b) Provision for dimunition in value of investments
Particulars 2011 2010 2009 2008 2007
Provision for dimunition in value of investments - - - - -
Gross loan outstanding Provision for Assets Net loan outstanding
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.7 Employment benefits disclosures: 2011 2010 2009 2008 The amounts of Provident fund contribution charged to the Profit and loss account during the year aggregates to
96.51 26.25 9.95 3.35
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy. The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for the gratuity plan. Profit and Loss account
Net employee benefit expense (recognised in Personnel expenses)
2011 2010 2009 2008
Current service cost 32.48 0.54 0.54 0.54 Interest cost on benefit obligation 0.31 0.12 0.07 0.06 Expected return on plan assets (1.86) (0.29) (0.19) (0.13) Net actuarial loss recognised in the year 15.16 1.73 0.02 (0.26) Net (benefit) / expense 46.09 2.10 0.44 0.21
Actual return on plan assets 2.01 0.29 0.19 0.13
Balance sheet
Reconciliation of present value of the obligation and the fair value of plan assets: 2011 2010 2009 2008 Defined benefit obligation (51.91) (3.88) (1.53) (0.93) Fair value of plan assets 37.09 4.06 2.41 1.80 Asset/(liability) recognised in the balance sheet (14.82) 0.18 0.88 0.87
Experience adjustments on plan liabilities (Gain) / Loss 14.90 - - - Experience adjustments on plan assets Gain / (Loss) 0.15 - - -
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
Changes in the present value of the defined benefit obligation are as follows: 2011 2010 2009 2008 Opening defined benefit obligation 3.88 1.53 0.93 0.74 Interest cost 0.31 0.12 0.07 0.06 Current service cost 32.48 0.54 0.54 0.54 Benefits paid (0.07) (0.04) (0.03) (0.15) Actuarial loss / (gain) on obligation 15.31 1.73 0.02 (0.26) Closing defined benefit obligation 51.91 3.88 1.53 0.93
Changes in the fair value of plan assets are as follows: 2011 2010 2009 2008 Opening fair value of plan assets 4.06 2.41 1.80 1.28 Expected return 1.86 0.29 0.19 0.13 Contributions by employer 31.09 1.40 0.46 0.54 Benefits paid (0.07) (0.04) (0.03) (0.15) Actuarial gains / (losses) 0.15 - - - Closing fair value of plan assets 37.09 4.06 2.41 1.80
The Company expects to contribute Rs 35 to gratuity in 2010-11.
The principal assumptions used in determining gratuity obligations for the Company’s plans are shown below:
2011 2010 2009 2008 % % % %
Discount rate 8.3% 8.0% 8.0% 7.5% Expected rate of return on assets 8.5% 5.0% 8.0% 7.5%
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.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.8 Earnings per share Particulars 2011 2010 2009 2008 2007 Net profit as per profit and loss account
2,826.64 1,197.21 302.97 209.90 106.12
Less: Dividends on Preference Shares
0.00 0.00 3.51 3.59 -
Net profit as per profit and loss account (used for calculation of EPS)
2,826.64 1,197.22 299.46 206.31 106.12
Weighted average number of equity shares in calculating basic EPS (Nos.)
371,380,825 292,648,250 136,851,870 110,000,000 110,000,000
Weighted average number of equity shares in calculating Dilutive EPS (Nos.) Weighted average number of equity shares in calculating basic EPS (Nos.)
371,380,825 292,648,250 136,851,870 110,000,000 110,000,000
Add: Number of dilutive shares under Empoyees Stock Options (Nos.)
5,111,449 1,830,470 - - -
Add: Weighted average equity shares to be issued on conversion of preference shares
- - - 9,200,000 -
Weighted average number of equity shares in calculating diluted EPS (Nos.)
376,492,274 294,478,720 136,851,870 119,200,000 110,000,000
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.9 Lease disclosure Operating leases: Office premises are obtained on operating lease which are cancellable in nature. Finance leases: 2011 2010 2009 2008 2007 Total minimum lease payments at the year end 12.57 2.83 3.32 2.23 0.41 Less : amount representing finance charges 1.63 0.28 0.38 0.26 0.03 Present value of minimum lease payments 10.94 2.55 2.94 1.97 0.38 Lease payments for the year 2.01 1.78 0.96 0.55 0.54 Minimum Lease Payments : Not later than one year [Present value Rs. 3.78 as on March 31, 2011]
4.55 1.79 1.34 0.90 0.33
Later than one year but not later than five years [Present value Rs. 7.16 as on March 31, 2011]
8.02 1.04 1.98 1.33 0.08
Later than five years [Present value Rs. Nil as on March 31, 2011]
- - - - -
18.10 Commitments and contingent liabilities Commitments Particulars 2011 2010 2009 2008 2007 Estimated amount of contracts remaining to be executed on capital account, net of advances is
89.54 1.53 - - -
Contingent liabilities 2011 2010 2009 2008 2007 i) Claims against the company not acknowledged as Debts Penalty under Kerala General Sales Tax Act and Kerala Money Lender Act
-
-
0.72 0.72 0.72
Income Tax demand -
- - 0.70 -
ii) 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.
1,702.76 707.17 1,258.38 534.07 263.23
Total 1,702.76 707.17 1,259.10 535.49 263.95
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ (iii) Applicability of Kerala Money Lenders' Act The Company has challenged in the Hon'ble Supreme Court the order of Hon'ble Kerala High Court upholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon'ble Supreme Court has directed that a status quo on the matter shall be maintained and the matter is currently pening with the Supreme court. The Company has taken legal opinion on the matter and based on such opinion the management is confident of a favourable outcome. Pending the resolution of the same, no adjustments have been made in the financial statements for the required license fee and Security deposits. 18.11 Details of investments purchased and sold during the year For the year ended March 31, 2011
Particulars Purchased Sold
Units Rate (Rs) Total Units Rate
(Rs) Total
ICICI prudential Flexible Income Plan Premium - Growth 1.42 140.85 200.00 1.13 177.20 200.24
Kotak Floater short term Growth fund 19.23 15.60 300.00 19.23 15.61 300.22
Canara Robeco liquid Super Institutional Growth Fund 4.31 11.60 50.00 3.47 14.43 50.06
IDFC Cash fund - Super Institutional - Daily Dividend 5.00 10.00 50.00 5.00 10.01 50.05
SBI Magnum Insta cash Fund - cash option 36.80 21.20 780.00 36.80 21.21 780.67
SBI Magnum Insta cash Fund - cash option 11.79 21.20 250.00 11.79 21.22 250.19
Religare Ultra short term fund - Institutional Growth 19.08 13.10 250.00 19.03 13.16 250.40
Religare Liquid Fund - Super Institutional Growth Fund 76.31 13.10 1,000.00 76.31 13.11 1,000.19
Tata Liquid Super high investment fund 0.03 1,666.67 50.00 0.03 1,668.67 50.06
IDBI Liquid fund - Growth 39.07 10.24 400.00 39.07 10.25 400.56 PNB liquid fund - Growth 5.00 10.00 50.00 5.00 10.05 50.23 UTI Mutual Fund 199.00 10.00 1,990.00 199.00 10.00 ,990.76
417.04 5,370.00 415.86 5,373.63
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ For the year ended March 31, 2010
Particulars Purchased Sold
Units Rate (Rs) Total Units Rate
(Rs) Total
Reliance Liquidity Fund - Daily Dividend Reinvestment Option 32.99 10.00 330.04 32.99 10.00 330.04
LICMF - Liquid Fund Dividend Plan 89.26 10.98 980.09 89.26 10.98 980.09
122.25 1,310.13 122.25 1,310.13
18.12 Assignment of receivables The Company has assigned a portion of its gold loans / hypothecations loans to banks and financial institutions. These amounts have been reduced from the gross gold loan and hypothecation loan balances. A bank / institution wise breakup of the same is as under: Bank / Financial institution 2011 2010 2009 2008 2007 Dhanalakshmi Bank 1,849.41 - - - - Kotak Mahindra Bank 1,971.79 630.31 300.00 100.00 100.00 ING Vysya Bank 1,628.67 882.27 750.00 350.00 - Yes Bank 1,684.88 - - - - ICICI Bank 1,564.86 2,092.66 1,156.01 766.97 400.00 UTI Bank 1,118.19 1,499.98 968.26 - - Development Credit Bank 199.72 - 500.00 500.00 - Federal Bank 166.55 - 499.24 - - IndusInd Bank 450.40 - - - - IDBI Bank 548.36 1,971.80 500.00 - - Sundaram Finance - - 11.01 38.90 57.94 HDFC Bank - - - 300.00 90.00 Fullerton Credit Company Ltd - - 0.13 1,532.16 2,076.81 Unit Trust of India - - - 342.09 253.99 Punjab National Bank
-
-
496.77
-
- Catholic Syrian Bank
-
- 200.00 - -
11,182.83 7,077.02 5,381.42 3,930.12 2,978.74
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.13 Deposits with banks include cash collateral deposits towards assignments and other approved facilities. A bank / institution wise breakup of the same is as under:
Bank / Financial institution 2011 2010 2009 2008 2007 ICICI Bank 182.73 133.81 338.17 168.51 - Kotak Mahindra Bank 35.54 30.18 30.18 2.50 2.50 HDFC Bank 153.57 80.00 25.00 36.00 12.00 Development Credit Bank 25.00 - 28.09 25.00 20.05 ING Vysya Bank 54.79 34.43 21.93 8.75 - Federal Bank 50.00 54.24 25.00 - - South Indian Bank 127.89 136.85 50.00 - - IDBI Bank 155.00 120.00 25.00 - - YES Bank 209.24 50.00 5.00 - - Karur Vyasya Bank 25.00 12.50 - - - Indian Overseas Bank 275.32 50.00 - - - Bank of Rajastan 10.00 10.00 - - - Development Bank of Singapore 37.50 - - - - Dhanalakshmi Bank 365.33 - - - - United Bank of India 100.00 - - - - DENA Bank 37.50 - - - - Andhra Bank 125.00 - - - - Punjab National Bank - 50.00 50.00 - - UCO Bank 100.00 - - - - Jammu & Kashmir Bank 50.00 - - - - Catholic Syrian Bank - 20.56 20.00 - - State Bank of India - 400.00 - - - Axis Bank Limited 34.49 30.00 21.00 Allahabad Bank Limited 50.00 - -
2,119.41 1,182.57 702.86 270.76 55.55 18.14 Charges created on assets of the Company for Secured Loans A. From banks Cash credit, overdrafts and working capital loan accounts have been availed from various banks and are secured by Gold Loan receivables.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ B. Secured Non Convertible Debentures Details of security and series wise outstanding of secured non convertible debentures are as under:
Date of Allotment
Number of Debentures Amount Tenure Security
details Redemption details
16-Sep-06 4,812 4.81 60 Note 1 At par at the end of 60 months
15-Nov-06 5,781 5.78 60 Note 1 At par at the end of 60 months
24-Mar-07 12 0.01 48 Note 1 At par at the end of 48 months
24-Mar-07 410 0.41 60 Note 1 At par at the end of 60 months
13-Oct-07 50 0.05 48 Note 1 At par at the end of 48 months
4-Dec-07 328 0.33 60 Note 1 At par at the end of 60 months
31-Jan-08 163 0.16 48 Note 1 At par at the end of 48 months
31-Jan-08 1,439 1.44 60 Note 1 At par at the end of 60 months
27-Mar-08 704 0.70 36 Note 1 At par at the end of 36 months
27-Mar-08 53 0.05 48 Note 1 At par at the end of 48 months
27-Mar-08 732 0.73 60 Note 1 At par at the end of 60 months
31-Mar-08 35 0.04 36 Note 1 At par at the end of 36 months
31-Mar-08 432 0.43 60 Note 1 At par at the end of 60 months
29-Dec-08 3,232 3.23 36 Note 1 At par at the end of 36 months
29-Dec-08 654 0.65 60 Note 1 At par at the end of 60 months
29-Dec-08 974 0.97 36 Note 1 At par at the end of 36 months
29-Dec-08 200 0.20 48 Note 1 At par at the end of 48 months
29-Dec-08 108 0.11 36 Note 1 At par at the end of 36 months
16-Mar-09 20 0.02 24 Note 1 At par at the end of 24 months
16-Mar-09 666 0.67 36 Note 1 At par at the end of 36 months
16-Mar-09 150 0.15 60 Note 1 At par at the end of 60
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
months
16-Mar-09 82 0.08 24 Note 1 At par at the end of 24 months
16-Mar-09 697 0.70 36 Note 1 At par at the end of 36 months
30-Apr-09 285 0.29 24 Note 1 At par at the end of 24 months
30-Apr-09 1,013 1.01 36 Note 1 At par at the end of 36 months
30-Apr-09 15 0.02 24 Note 1 At par at the end of 24 months
30-Apr-09 517 0.52 36 Note 1 At par at the end of 36 months
9-Jun-09 10 0.01 48 Note 1 At par at the end of 48 months
9-Jun-09 252 0.25 60 Note 1 At par at the end of 60 months
9-Jun-09 574 0.57 24 Note 1 At par at the end of 24 months
9-Jun-09 1,664 1.66 36 Note 1 At par at the end of 36 months
22-Feb-10 6,231 6.23 12 Note 1 At par at the end of 12 months
9-Mar-10 11,062 11.06 12 Note 1 At par at the end of 12 months
30-Mar-10 62,119 62.12 12 Note 1 At par at the end of 12 months
22-Apr-10 61,460 61.46 12 Note 1 At par at the end of 12 months
22-Apr-10 62,359 62.36 12 Note 1 At par at the end of 12 months
22-Apr-10 57,124 57.12 12 Note 1 At par at the end of 12 months
20-Jul-10 66,273 66.27 12 Note 1 At par at the end of 12 months
20-Jul-10 45,428 45.43 12 Note 1 At par at the end of 12 months
24-Jul-10 39,627 39.63 12 Note 1 At par at the end of 12 months
15-Oct-10 50,164 50.16 12 Note 1 At par at the end of 12 months
15-Oct-10 60,986 60.99 12 Note 1 At par at the end of 12 months
15-Oct-10 92,655 92.66 12 Note 1 At par at the end of 12 months
15-Oct-10 107,254 107.25 12 Note 1 At par at the end of 12
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
months
29-Nov-10 1,312 1.31 36 Note 1 At par at the end of 36 months
29-Nov-10 79,561 79.56 12 Note 1 At par at the end of 12 months
29-Nov-10 75,076 75.08 12 Note 1 At par at the end of 12 months
29-Nov-10 55,328 55.33 12 Note 1 At par at the end of 12 months
15-Dec-10 98,858 98.86 12 Note 1 At par at the end of 12 months
25-Feb-11 3,159 3.16 12 Note 1 At par at the end of 12 months
25-Feb-11 149,979 149.98 12 Note 1 At par at the end of 12 months
31-Mar-11 82,599 82.60 12 Note 1 At par at the end of 12 months
31-Mar-11 30,169 30.17 12 Note 1 At par at the end of 12 months
15-Feb-10 250 250.00 18 Note 1 At par at the end of 18 months
18-Aug-10 250 250.00 18 Note 1 At par at the end of 18 months
3-Sep-10 250 250.00 18 Note 1
At par at the end of 18 months, with a put / call option on February 3,
2011, May 3, 2011, August 3, 2011 and November 3,
2011.
3-Sep-10 250 250.00 18 Note 1
At par at the end of 18 months, with a put / call option on February 3,
2011, May 3, 2011, August 3, 2011 and November 3,
2011.
3-Sep-10 500 500.00 18 Note 1
At par at the end of 18 months, with a put / call option on February 3,
2011, May 3, 2011, August 3, 2011 and November 3,
2011.
31-Mar-11 1,000 1,000.00 15 Note 2
At par at the end of 15 months, with a put / call option on June 29, 2011,
September 28, 2011, December 28, 2011 and
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
March 28, 2012.
28-Mar-11 100 100.00 24 Note 3 At par at the end of 24 months
28-Mar-11 100 100.00 36 Note 3 At par at the end of 36 months
28-Mar-11 150 150.00 36 Note 3 At par at the end of 36 months
28-Mar-11 150 150.00 48 Note 3 At par at the end of 48 months
28-Mar-11 200 200.00 60 Note 3 At par at the end of 60 months
28-Mar-11 9 9.00 36 Note 3 At par at the end of 36 months
28-Mar-11 9 9.00 48 Note 3 At par at the end of 48 months
28-Mar-11 12 12.00 60 Note 3 At par at the end of 60 months
28-Mar-11 9 9.00 36 Note 3 At par at the end of 36 months
28-Mar-11 9 9.00 48 Note 3 At par at the end of 48 months
28-Mar-11 12 12.00 60 Note 3 At par at the end of 60 months
28-Mar-11 30 30.00 36 Note 3 At par at the end of 36 months
28-Mar-11 30 30.00 48 Note 3 At par at the end of 48 months
28-Mar-11 40 40.00 60 Note 3 At par at the end of 60 months
31-Mar-11 6 6.00 36 Note 3 At par at the end of 36 months
31-Mar-11 6 6.00 48 Note 3 At par at the end of 48 months
31-Mar-11 8 8.00 60 Note 3 At par at the end of 60 months
31-Mar-11 6 6.00 36 Note 3 At par at the end of 36 months
31-Mar-11 6 6.00 48 Note 3 At par at the end of 48 months
31-Mar-11 8 8.00 60 Note 3 At par at the end of 60 months
31-Mar-11 75 75.00 36 Note 3 At par at the end of 36 months
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
31-Mar-11 75 75.00 48 Note 3 At par at the end of 48 months
31-Mar-11 100 100.00 60 Note 3 At par at the end of 60 months
31-Mar-11 11 11.40 36 Note 3 At par at the end of 36 months
31-Mar-11 11 11.40 48 Note 3 At par at the end of 48 months
31-Mar-11 15 15.20 60 Note 3 At par at the end of 60 months
1,328,535 5,012.85 Note 1: Secured by a floating charge on the gold loan receivables and other unencumbered assets both present and future. Note 2: Secured by first pari passu charge on the receivables of the Company with a mimium asset cover ratio of 1.10 times. Note 3: The Company is in the process of creating a charge in respect of these debentures aggregating Rs 1,188.
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.15 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,
2011 March 31,
2010
CRAR (%) 29.13 29.34 CRAR - Tier I Capital (%) 26.36 26.04 CRAR - Tier II Capital (%) 2.77 3.30 b) Exposure to real estate sector The Company does not have any direct or indirect exposure to real estate sector.
c) Asset liability management Maturity pattern of certain items of assets and liabilities as at March 31, 2011 Liabilities 1 day to
30/31 days (one
month)
Over one month to 2 months
Over 2 month upto 3 months
Over 3 months to 6
months
Over 6 months to
1 year
Over 1 year to 3 years
Over 3
years to 5
years
Over 5
years
Total
Borrowings from banks 6,050.06 2,050.07 1,899.27 10,642.26 17,404.94 - - - 38,046.6
0 Market
borrowings # 1,708.20 2,686.12 3,060.99 2,204.00 1,002.40 4.80 2.30 - 10,668.81
Assets 1 day to
30/31 days (one
month)
Over one month to 2 months
Over 2 month upto 3 months
Over 3 months to 6
months
Over 6 months to
1 year
Over 1 year to 3 years
Over 3
years to 5
years
Over 5
years
Total
Advances
(net) 11,243.48 11,347.28 9,396.95 14,263.14 17,419.76 - - - 63,670.61
Investments - - - 3.15 400.00 - - 0.05 403.20
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________
# Represents secured loans from others and vehicle loans under Schedule 3 and commercial papers under Schedule 4
These disclosures are given only for certain items of assets and liabilities from the Balance sheet as required by the above circular and is not a complete depiction of the asset liability maturity position of the Company as at March 31, 2011. As this is the first year of presentation of the above information, no comparatives have been disclosed.
18.16 Supplementary profit and loss data a) Legal and Professional fees (Schedule 16) includes remuneration to auditors as follows: Remuneration as auditors 2011 2010 2009 2008 2007 Statutory audit 2.50 2.00 1.2 0.45 0.20 Other services 1.50 0.90 0.9 0.30 0.03 Certification 0.50 0.20 0.38 0.15 0.14 Out of pocket expenses 0.20 0.13 0.13 0.10 -
4.70 3.23 2.61 1.00 0.37
Note: Excludes applicable service taxes Excludes Rs. 3.5 (previous year Rs. 1) included under Share issue expenses in Schedule 2 in connection with Qualified Institutional Placement. b) Expenditure in foreign currency 2011 2010 2009 2008 2007 Travel 2.52 1.12 - - - Consultancy charges 7.96 - - - - 10.48 1.12 - - -
c) Managerial remuneration 2011 2010 2009 2008 2007
Salary to whole time directors 28.80 14.70 4.00 3.77 2.76 Commission to whole time directors 18.60 9.60 5.79 1.55 0.00 Commission to Non - whole time directors 2.80 2.23 1.17 0.00 0.00 Contribution to provident fund/superannuation for whole time directors 3.46 1.76 0.25 0.14 0.07
53.66 28.29 11.21 5.46 2.83
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ Note: Provisions for / contribution to employee retirement/post retirement and other employee benefits which are based on actuarial valuations done on an overall Company basis are excluded above.
Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 for calculation of commission payable to directors
2011 2010 2009 2008 2007 Profit before tax (as per Profit and Loss Account) 4,238.96 1,818.25 462.83 319.61 163.51 Add: Directors’ remuneration 53.66 28.29 11.21 5.46 2.83 Depreciation as per Profit and Loss account 212.96 57.38 33.71 18.26 10.66 Provision for doubtful debts and advances 133.81 88.58 60.32 19.03 9.52 Loss on disposal of investments - 0.43 - - - Loss on sale of fixed assets (net) as per Profit and Loss account 2.28 4.34 2.32 0 0.00
Less: Depreciation (to the extent specified in section 350 of the Companies Act, 1956)
(212.96) (57.38) (33.71) (18.26) (10.66)
(Loss)/Profit on sale of fixed assets as per Section349 of the Companies Act, 1956 (2.28) (4.34) (2.32) - (0.00)
Net profit as per Section 349 of the Companies Act, 1956
4,426.43 1,935.55 534.36 344.10 175.86
Maximum amount of Commission and Salary payable to Managing and Wholetime directors at 10% of the net profits as calculated above
442.64 193.55 53.44 34.41 17.59
Maximum amount of Commission payable to other directors at 1% of the net profits as calculated above 44.26 19.36 5.34 3.44 1.76
18.17 Remittance of dividend in foreign curreny
2011 2010 Final dividend
Period to which it relates -
2008-09 Number of non-resident shareholders -
4
Number of equity shares held on which dividend was due -
12,546,630
Amount remitted -
14.68
Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited) Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 ______________________________________________________________________________ 18.18
During the years there have been certain instances of fraud on the Company by employees where gold loan related misappropriations / cash embezzlements have occurred for amounts aggregating:
2011
2010 2009 2008 2007
24.87 8.47 4.07 2.4 1.57
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. 18.19 Comparatives In view of amalgamation of MAFIT with the Company with effect from April 1, 2008 and acquisition of Manapppuram Printers during the year ended March 31, 2010, the figures for the years ended March 31, 2011 and March 31, 2010 are not comparable with those of the earlier years. Also, the financial statements for the year ended March 31, 2007 have been audited by a firm other than S.R. Batliboi & Associates. Further, previous years figures have been reclassified to conform to the presentation of the current year.
Statement of Dividends paid/payable
(In Rs. million, except per share data) Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009
Face value of Equity Shares (Rs. per share)
2 10 (Face value as on March 31,
2010)
10
Interim dividend on Equity Shares (Rs. per share)
- - 2.00
Final dividend of Equity Shares (Rs. per share)
0.60 0.50 (each Equity Share
was sub-divided in
May 2010 to Rs. 2 each
and dividend was
computed @25% on
sub-divided Equity Share)
0.50
Total dividend on Equity Shares 500.24 (not paid yet)
165.89 43.14
Dividend tax (gross) NA 27.21 8.13
Pre-issue Capitalization Statement
(Rs. in millions) Particulars As on March 31,
2011* Secured Loans from Banks, Financial Institution, NBFC and Vehicle loans
38,707.54
Non Convertible Debentures 5,015.53 Fresh Issue of Debenture Unsecured Funds 12,817.03 Total Debt 56,540.10 Equity Share Capital 833.75 Preference Share Capital - Share application money pending allotment - Reserves and surplus 18405.82 Total Shareholders’ Funds 19239.57 Long Term Debt to Equity Ratio 2.94
185
DECLARATION
No statements made in this Prospectus shall contravene relevant provisions of the Act and the SEBI Debt
Regulations. All the legal requirements connected with the said Issue as also the guidelines, instructions etc.
issued by SEBI, Government and any other competent authority in this behalf have been duly complied with.
We confirm that this Prospectus does not omit disclosure of any material fact which may make the statements
made therein, in light of circumstances under which they were made, misleading. We further certify that all
statements in this Prospectus are true and correct.
Yours faithfully,
V.P. Nandakumar ................................................................................................
I. Unnikrishnan ................................................................................................
B.N. Raveendra Babu ................................................................................................
A. R. Sankaranarayanan ................................................................................................
P. Manomohanan ................................................................................................
V.R. Ramachandran ................................................................................................
V.M. Manoharan ................................................................................................
Gaurav Mathur ................................................................................................
Shailesh J. Mehta ................................................................................................
Gautam Saigal
................................................................................................
M. Anandan ................................................................................................
Jagdish Capoor ................................................................................................
Place: Valapad
Date: August 9, 2011
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Rating Rationale
Brickwork Ratings assigns “BWR AA-” for Manappuram General Finance and Leasing Limited’s Non-Convertible Debentures issue of `̀̀̀ 750 crores with a tenor up to 5 years and reaffirms “BWR AA-” for NCD issue of `̀̀̀ 100 crores.
Brickwork Ratings has assigned and reaffirmed the rating of BWR AA- (pronounced BWR
Double A minus) for the following issues of Manappuram General Finance and Leasing
Limited (MAGFIL):
The rating “BWR AA-” stands for an instrument that is considered to have High degree of safety
regarding timely servicing of financial obligations. Such instruments carry very low credit risk. A
“Stable” rating outlook signifies the expectation of the rating being stable in the near term.
The rating has, inter alia, factored MAGFIL’s rich experience in gold loan business, recognized
brand name in the niche gold loan segment, strong asset quality, robust increase in AUM,
consistent profit margins and management quality. The rating is, however, constrained by
geographic concentration with maximum exposure to Southern States (75% of the branches are
in South), significant dependence on loans from Banks, regulatory risks and volatility in the
price of gold.
Background
Manappuram group was founded in 1949 by late Mr. V.C.Padmanabhan. The company
commenced its operations at Valapad, mainly with money lending activity. In 1986, Mr. V.P.
Nandakumar, son of late Mr. V.C.Padmanabhan, took over the reins of the group.
NCD Issue Rating: BWR AA- Outlook : Stable
Instruments Amount Rating Assigned/ Reaffirmed
Rating History
Review As on Rating As on
NCD ` 750 crores
BWR AA- (Stable)
Assigned - BWR AA- June 2011
NCD ` 100 crores BWR AA- (Stable)
Reaffirmed BWR AA- June 2011
BWR AA- June 2010
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MAGFIL, presently the group’s flagship Company, was established in 1992 in Thrissur (Kerala)
as a deposit taking Non Banking Finance Company (NBFC). However, since January 15, 2007
the Company decided to phase out the public deposits. MAGFIL is mainly engaged in providing
retail advances against bullion asset collaterals, in the form of Household Used Jewellery.
MAGFIL had 16751 people and 2100 branches across India at the end of FY 11. MAGFIL is
having a strong presence in South India, ~ 75% of total branches are in southern states of
Kerala, Tamil Nadu, Karnataka, Andhra Pradesh. All branches are connected to the Head office
by appropriate IT system which provides real time information to the HO.
Objectives of the NCD Issue
MAGFIL proposes to utilize the proceeds from the proposed NCD issue essentially for expansion
of its core business. The proposed NCD issue will be secured by an appropriate charge on the
Gold loan receivables of the company. The Company would appoint a SEBI registered Debenture
Trustee to complete all requirements concerning obtaining/creation of securities and
monitoring the same for the benefit of and protection of the interests of the investors in the
proposed NCD issue.
Management
Manappuram group was founded by late Mr. V.C.Padmanabhan and is currently managed by his
son Mr. V.P. Nandakumar, Chairman and managing Director. He is a post graduate in science
with additional qualifications in Banking & Foreign Trade and was in the Banking Industry for
nearly 10 years. He is also the Chairman of Equipment Leasing Association and Chairman of
KNBFC Association. Mr. I.Unnikrishnan is the Managing Director of the company. He is an FCA
and has expertise in financial services Industry especially in NBFC’s. The company’s Board is
broad based and consists of highly qualified and well experienced professionals from the
Industry, Accounting, Legal and Academic fields and very senior retired Government/RBI
officials to guide the Company.
Loan Profile
MAGFIL, as a matter of policy, has a concentrated focus on the borrowing segment which is
serviced by money lenders. Essentially the Company confines to gold loans of small ticket size
with an average ticket size of ` 35,000. The Company has developed systems and skills which
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3
enable a branch to disburse a normal ticket loan in about 15 minutes for a new customer and 7-8
minutes for an existing customer as KYC takes about 5 minutes. Occasionally loans are made for
higher amounts of ` 5 lakh to ` 10 lakh. Profiling of beneficiaries is done in depth as the amount
of the loan increases. Loans are for maximum duration of 12 months, however, average tenor of
a loan is about 3-4 months.
MAGFIL has been the fastest growing organized gold loan company in the country. It has tripled
its AUM in the one year and grown it eight times in the last two years. The AUM increased to `
7549.10 crores as on March 31, 2011 from ` 2598.40 crores as on March 31, 2010 (` 1260 crores
as on March 31, 2009). Total loan disbursement has increased by 153% in FY11. Total loan
disbursements amounts to ` 18057 crores in FY11 as against ` 7123 crores in FY10 and ` 4737
crores in FY09. The company has a strong presence in South comprising 86% of total loan
outstanding.
Financial Performance
The company has continued to perform well during FY11. Gold loan income forms the largest
part of its total income. MAGFIL’s interest income has substantially increased by 148% to `
1165.42 crores in FY11 from ` 469.98 crores in FY10. Due to increasing interest rate scenario
and loss of priority sector lending status on bank funding against assignments, the interest
expenses also increased substantially from ` 136.92 crores in FY10 to `331.97 crores inFY11. Due
to appropriate training and skill development of its employees and consequent increased
operating efficiency, profit before tax increased by 133% to ` 423.89 crores in FY11 from ` 181.83
crores in FY10. The company’s Net Profit as of March 20110 stood at ` 282.66 crores as against `
119.72 crores as of March 2010, a substantial increase of around 136%.
MAGFIL has a robust capital adequacy ratio of 29.46% as on March 31, 2011, substantially
higher than the regulatory floor of 15%. Capital Adequacy of the company was significantly
augmented by ` 1000 crores QIP issue in November 2010. Leverage was 3.47 as on March 31,
2011 as compared to 4.13 as on March 31, 2010. The Return on Assets stood at 5.04% during
FY11 while ROE was 22.31% in FY 11 as compared to 30.76% in FY10. The net interest margins
for the company as on FY11 stood at 17.25% in FY11 as compared to 19.39% in FY10. Due to
rising interest rate scenario and tight liquidity the yield on funds declined resulting in the
decline in net interest margins. The yield on funds was 25.55% in FY11 as compared to 29.18% in
FY10.
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Asset Quality
The Company has an efficient system for monitoring and tracking defaults & remedial action has
resulted in practically no NPA. MAGFIL’s gross NPAs have decreased to `26.37 crores in FY11 as
compared to ` 33.66 crores in FY10. The company’s gross NPAs as a percentage to total
advances decreased to 0.35% in FY11 as compared to 1.29% in FY10 and net NPA decreased to
0.13% in FY11 as compared to 0.56% in FY10. The provision coverage ratio stood at 63.49% in
FY11.
Funding Mix
Nearly 56% of the funding comes from cash credit and working capital demand loans. 17% of the
funding comes from securitization transactions and the rest from retail borrowings and
commercial paper. Total borrowings for the year ended March 31, 2011 was ` 6737 crores.
Rating Outlook
MAGFIL has a well established presence in the niche gold loan segment. The company has been
performing well with good asset quality, strong risk management practices, adequate liquidity
and low cost of funds. The gold loan business is always exposed to the risk of steep price
movements which calls for constant vigil and immediate appropriate action to mitigate any loss.
MAGFIL’s ability to manage its business well and respond to market needs is displayed from its
established track record. BWR expects MFL to continue to demonstrate such abilities to further
improve its performance.
As per recent RBI announcement, priority agriculture sector lending benefit, available to banks
for lending to gold loan NBFC’s has been removed. Therefore, the cost of funds for the NBFC’s is
expected to increase which may result in lower profitability due to slight contraction in NIM’s.
Similarly, the impact of the State Money Lenders Act for NBFCs, the decision on which is
awaited from the Supreme Court, could affect the MFL’s lending rates and would also increase
the operational expenditure as the NBFC’s would be required to register with all state
authorities and to comply with state regulations.
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Analysts Media
Sameer Singhvi [email protected]
Shilpi Agarwal
Anitha G
Relationship Contact
K.N.Suvarna
Sr.V.P. – Business Development
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other
reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it
does not examine the precision or completeness of the information obtained. And hence, the information in this report is
presented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to the
truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a
recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any
use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.