To, The Members Manappuram Finance Limited
The Directors are pleased to present the 20th Annual Report on the
working of the Company with the Audited Accounts and the Report of the
Auditors for the financial year ended March 31, 2012.
1. Financial Results
(In Rs. million)
Description 2011-12 2010-11
Gross Income 26,558.45 11,815.26
Total Expenditure 17,786.39 7,576.30
Profit Before tax 8,772.06 4,238.96
Provision for Taxes/Deferred tax 2,857.45 1,412.32
net Profit 5,914.61 2,826.64
Profit b/f from previous year 2,319.84 917.13
Amount available for appropriations 8,228.97 3,743.75
Transfer to Statutory Reserve 1,182.92 565.33
Transfer to General Reserve 591.48 282.67
Transfer to Debenture Redemption 2,208.10 -
Transfer to Capital Redemption - -
Dividend on Preference shares - -
Interim Dividend on Equity Shares 420.55 -
Tax on Interim Dividend 68.21 -
Proposed Equity Dividend 841.15 500.25
Tax on dividend 136.45 81.14
Balance carried forward to next 2,780.11 2,314.36
The comparative operational results shown above reveals the performance
of the Company for the year under report and of the previous year. It
is evident that the Company has achieved enviable results during the
fiscal 2011-12 compared to that of the previous year. During the year
under review gross total income of the Company rose to Rs. 26,558.45
million as against Rs. 11,815.26 million of the corresponding previous
year marking an increase of 124.78%. Total expenditure for the year
ended March 31, 2012 is Rs. 17,786.39 million as against Rs. 7,576.30
million of the previous year.
The Company has posted a record profit after tax of Rs. 5,915 million for
the period under consideration as against Rs. 2,827 million of the
previous year, signifying an increase of 109.23% over the net profit
for the corresponding previous year.
Your Board is pleased to recommend a final dividend of Rs. 1 per equity
shares (50%- per equity share of Rs. 2 each) on the paid up equity
capital of the Company. On approval by the Members at the ensuing
Annual General Meeting, the said dividend would be paid to those
Members whose name appears on the Register of Members as on the date of
Book Closure. The above final dividend includes a special dividend of
50paise per equity share as commemorative of 20th
Anniversary of the Company. Members may kindly recall that the Board
has already declared an interim dividend of 50 paise per equity share
during February 2012. Thus the total dividend for the year is Rs. 1.50
per equity share of Rs. 2 per share.
The total cash outflow exclusive of tax on account of equity dividend
for the year 2011-12 would be Rs. 1,261.70 million (inclusive of interim
dividend) as compared to Rs. 500.25 million during the previous year.
3. Raising of additional capital
During the year, Company has issued 1:1 bonus shares which resulted in
the increase of shares by 416,874,188 nos. Further the Company has
issued 7,404,760 shares to its employees under the ESOP 2009 scheme of
the Company resulting in the paid up share capital increasing to Rs.
1,682,306,272 as on March 31, 2012.
4. Capital and Reserves
Capital and Reserves of the Company as on March 31, 2012 stood at Rs.
23,810.08 million. During the year under review the Company transferred
Rs. 1,182.85 million to Statutory Reserve
5. Debenture Redemption Reserve
Members may recall that the Company had made a public issue of
Redeemable Non Convertible Debentures during the year under review. The
issue opened on August 18, 2011 and closed on August 26, 2011. The
Company has issued debentures equivalent to Rs. 4,416 million to the
successful applicants under the issue. The issue proceeds net of issue
expenses have been utilised for the stated purpose being working
capital for lending against the security of gold jewellery. Under
section 117C read with the circulars issued thereunder the Company
should create Debenture Redemption Reserve (DRR) out of its profits for
the purpose of providing resources for redemption of debentures. During
the year, your Company has transferred Rs. 2,208.10 million to DRR in
compliance with the above provision out of the profits of the Company.
6. Business outlook
In the recent past, NBFCs engaged in the gold loan business have been
registering rapid growth. Your Company is also witnessing substantial
growth in terms of business volumes and human capital, and has acquired
a pan India presence. The future for the Company remains robust.
Recently, Reserve Bank of India (RBI) has issued a circular on March
21, 2012 amending the Non-Banking Financial (Non-Deposit Accepting or
Holding) companies Prudential Norms (Reserve Bank) Directions, 2007 to
the effect that all NBFCs shall maintain a Loan- to Value (LTV) ratio
of 60 % for loans granted against the collateral of gold jewellery. In
line with the latest regulatory measures and encouraged by the
Company''s success so far, we have shaped our business plan for the
financial year 2012-13 which will help to realise our long term
strategy to ''energise'' at least 10% of the vast privately held gold
reserves in the country. For this, it is necessary to develop a
country- wide presence to be close to the customers.
Your Company provides credit, the average size of which is Rs. 38,582.
Your Company has decided to make a way in to nnovative products,
improved relationship management, brand building, efficient customer
service, better use of technology and reduced operational costs which
will become the hallmark of successful NBFCs in future.
Your Directors could successfully mobilise Rs. 4,416 million from whole
sale debt market by issue of listed Non convertible Secured Debenture.
The Company was also successful in mobilising funds from the issue of
debentures to both retail and nstitutional investors and from
instruments like Commercia Paper.
Details of resources raised during the year under review are given
a) secured Redeemable non-convertible Debentures
Your Company continues to issue fully secured redeemable convertible
debentures ofRs. 1000/- each on private placement basis, both retail and
institutional. During the year, your Company has raised Rs. 4416 million
from the public issue of NCDs. The outstanding balance of Debentures
including interest accrued and due as on March 31, 2012 amounts to Rs.
14,739.56 million. The debentures issued on private placement basis are
secured by a floating charge created on the receivables and other
current assets of the Company. The Company has appointed Trustees to
see that the interests of debenture holders are well protected.
b) unsecured Bonds.
The Company has issued unsecured Subordinated Bonds in the nature of
Promissory Notes on private placement basis. These Bonds will be
treated as Tier II Capital as per RBI norms. The outstanding figure of
these bonds as on March 31, 2012 amounted to Rs. 4,266.84 million.
c) assignment of Receivables
The Company has procured funds through assignment of receivables to
Banks and Financial Institutions during the year. The aggregate amount
assigned as at March 31, 2012 is Rs. 1916.36 million.
d) commercial Paper (cP)
During the year, the Company made several issues of the CPs and the
outstanding figure of these CPs as on March 31, 2012 amounted to Rs. 232
8. compliance with nbfc Regulations
Your Company has complied with all the regulatory provisions framed by
Reserve Bank of India for Non-Banking Financia Companies. The Capital
Adequacy Ratio of the Company as on March 31, 2012 is 23.38 % as
against the statutory requirement of 15%.
However, on 1st February, 2012, the Company received a letter from
Reserve Bank of India (RBI) directing the Company to disassociate, its
name, officials, and infrastructure from that of any other group
concerns carrying on financial activities. The Company has complied
with all the directions issued by RBI with the professional assistance
of reputed corporate lega firm and management consultants and updated
the progress regularly to RBI.
9. Important Regulatory Developments
In order to further strengthen the existing regulatory framework,
Reserve Bank of India (RBI) has issued revised guidelines amending the
existing the Fair Practices Code (FPC). Accordingly, as required under
the guidelines, the Board of Directors of the Company at its meeting
held on 24th April, 2012, has approved a new Fair Practices Code. The
Company has posted the new Fair Practices Code at its website at
www.manappuram.com. Further, as required under the said guidelines, the
Company has put in place an elaborate Customer Grievance Mechanism, a
revised Loan Policy and a revised Auction Policy.
Retirement of Directors by Rotation
1) Mr. A.R Sankaranarayanan, Director, retires by rotation and he is
eligible for re-appointment.
2) Adv.V.R.Ramachandran, Director, retires by rotation and he is
eligible for re-appointment.
11. conseRvation oF eneRgy, technology aBsoRPtion anD FoReign exchange
eaRnings & outgo - inFoRmation as PeR section 217 (1) (e) oF the
comPanies act, 1956
The Company does not have any activity relating to conservation of
energy or technology absorption.
The Company holds AD Category II licence from the Reserve Bank of India
for its foreign exchange operations. Following are the details of
foreign exchange earnings and outgo during the period covered by this
Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Nil
12. PaRticulaRs oF emPloyees
Particulars of the employees covered by the provisions of section 217
(2A) of the Companies Act, 1956 read with Company''s (Particulars of
Employees) Rules, 1975 is as under:
13. DiRectoRs'' ResPonsiBility statement
As required under Section 217 (2AA) of the Companies Act, 1956, the
Board of Directors hereby declares that:
a) In the preparation of Annual Accounts for the financial year ended
March 31, 2012, applicable Accounting Standards have been followed
along with proper explanation relating to material departures.
b) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year 2011-12 and of the
profit of the Company for that period.
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of Companies Act, 1956, for safeguarding the assets of the
Company and for preventing and detecting fraud and other
d) The Directors have prepared the Annual Accounts for the year 2011-12
on a going concern basis.
The Statutory Auditors M/s S.R. Batliboi & Associates, Chartered
Accountants, (Firm Registration Number- 101049W, (TIDEL Park, 6th and
7th Floor - A Block, Module 601, 701-702, No 4 Rajiv Gandhi Salai,
Taramani, Chennai 600 113, India, Office: 91 44 6654 8100) retires at
the ensuing Annual General Meeting of the Company and are eligible for
15. Report on Corporate Governance
Your Company has been practicing principle of good Corporate Governance
over the years. The endeavor of the Company is not only to comply with
the regulatory requirements but also practice good Corporate Governance
that lays strong emphasis on integrity, transparency and overall
accountability. A separate section on Corporate Governance along with
a certificate from the Statutory Auditors confirming compliance is
annexed and forms part of this report.
16. Management Discussion and analysis Report
Management Discussion and Analysis Report is attached and forms an
integral part of the Report of the Board of Directors.
Your Directors acknowledge and place on record its sincere appreciation
and gratitude to the employees of the Company at all levels for their
dedicated service and commitments, to the Reserve Bank of India, Rating
Agencies, Stock exchanges, Governments and its statutory agencies for
the support, guidance and co-operation, to the Investors, shareholders
Banks and other financial institutions and customers for the whole
hearted support and confidence reposed on the Company and the
management and to the general public at large for their blessings and
good wishes the Company have been receiving in good measure over the
For and on behalf of the Board of Directors
Place: Valapad V.P.Nandakumar
Date : May 18, 2012 Executive Chairman