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Manappuram Finance Ltd.

BSE: 531213 Sector: Financials
NSE: MANAPPURAM ISIN Code: INE522D01027
BSE 00:00 | 11 May 153.80 -0.70
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OPEN 152.55
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VOLUME 243253
52-Week high 187.30
52-Week low 111.35
P/E 8.24
Mkt Cap.(Rs cr) 13,017
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 152.55
CLOSE 154.50
VOLUME 243253
52-Week high 187.30
52-Week low 111.35
P/E 8.24
Mkt Cap.(Rs cr) 13,017
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Manappuram Finance Ltd. (MANAPPURAM) - Director Report

Company director report

Dear Members

The Board of Directors of Manappuram Finance Limited have pleasure in presenting beforeyou the 28th Annual Report of the Company together with the Audited Consolidated andStandalone Statements of Accounts for the financial year ended 31 March 2020.

1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS

The standalone and consolidated financial highlights of your Company are as follows:

( Rs in million)
Standalone Consolidated
Description
2019-20 2018-19 2019-20 2018-19
Gross Income 43521.91 34271.80 55511.88 42420.25
Total Expenditure 26721.81 22094.38 35438.90 27854.34
Profit Before Tax 16800.10 12177.42 20072.98 14565.91
Provision for Taxes/Deferred tax 4496.98 4272.86 5269.81 5080.41
Other Comprehensive Income (54.32) (27.78) (60.00) (25.30)
Minority interest - - 125.60 80.90
Net Profit 12303.12 7904.56 14677.57 9404.60
Amount available for appropriations 27023.18 19184.42 30532.55 20580.20
Appropriations:
Transfer to statutory Reserve 2449.77 1575.36 2920.43 1884.74
Transfer to/(from) Debenture Redemption Reserve (1115.33) 970.80 (1115.33) 970.80
Interim Dividend on Equity share 2321.75 1811.77 2371.99 1811.77
Tax on Dividend 477.25 372.41 487.58 372.41
Adjustment on account of IND AS 274.55 (265.98) 351.50 (188.90)
Balance carried forward to next year 22615.19 14720.06 25516.38 15729.38

During the Financial Year ("FY") 2019-20 under review the Company'sconsolidated revenue from operations grew 30.9% to Rs 55511.88 million and the Profitafter Tax increased to 56.1% to Rs 14803.17 million. The Company's consolidated AUM grewby 29.8% to Rs 252304.48 million during the year owing to rapid growth in themicrofinance (grew 43.3%) housing finance (grew 21.7%) and vehicle finance (grew 10.2%)AUMs. Gold loan AUMs grew 30.9% during the year.

The Company also implemented multiple campaigns to increase awareness among thecustomers about the benefits of digital transactions. Through its local marketinginitiatives the Company covered individuals belonging to the masses segment andconcentrated on getting close and personally relevant to understand the financial needs ofthe people in these sections. Consistent review and monitoring at field level was alsodone to ensure business propensity.

During the year the Company undertook various employee engagement initiatives tomotivate them and improve their efficiencies. These efforts played a prominent role in theCompany's growth during the year. The Company will continue to engage in such initiativesin the future to serve its customers better and thereby achieve higher growth.

2. DIVERSIFICATION OF BUSINESS

In 2014 your Company decided to pursue a diversification of its business on thestrength of its large net worth access to debt capital on competitive terms and access tocustomer relationships built over decades through its mainstay business of gold loans.

The objective of the diversification strategy is to bring down the dependence of theCompany on gold loans and over time reach a reasonable parity between the new streams ofbusiness and gold loans. In the intervening years we have assiduously built upcompetencies and capabilities to bring the share of new business in our AUM close to 33%.

Our long-term objective is to achieve a 50-50 mix between the new businesses and goldloans in the years to come. This will address three key business objectives; First itaddresses the regulatory discomfort with mono-line NBFCs perceived as vulnerable toconcentration risk. Second it would enable the Company to cater to its existing (and new)customers with new products and services. Finally it enables your Company to play aleading role in accelerating the government's agenda for inclusion by addressing the needsof the underprivileged sections of our population.

Accordingly your Company is focusing on affordable housing finance vehicle andequipment finance which includes commercial vehicle loans two-wheeler loans tractor& car loans microfinance SME finance project and industrial finance corporatefinance and insurance broking. Over the last five years the Company has made progress inall these new businesses having steadily scaled up operations by leveraging its existingcustomer base branch network and the goodwill of the Manappuram Brand.

The key achievement thus far is that having begun from scratch in FY2015 the Company'snon-gold new businesses now contribute 33% of the total assets under management. Themicrofinance business is carried out by a subsidiary Asirvad Microfinance Ltd. (AML). Inthe past year microfinance AUM has grown from Rs 38407.8 million in FY2019 to Rs55026.4 million in FY2020.

Your Company's Vehicle & Equipment Finance division and the Corporate Loan/ onlending division have ended the year with an AUM of Rs 13443.5 million and Rs 5540.3million respectively. Your Company's housing subsidiary Manappuram Home Finance Limitedhas ended the year with an AUM of Rs 6296.1 million while the insurance brokingsubsidiary has contributed revenue of Rs 150.2 million.

The other business verticals of the Company include Payments business SME business andfee-based services including forex and money transfer.

Vehicle & Equipment Finance (VEF)

The vehicle finance portfolio stands at Rs 13444 million spread across 221 locationsin 22 states as at 31 March 2020. The pre-owned vehicles portfolio is of Rs 8.3 billionand new vehicles are of Rs 990 million with 18065 contracts. The two-wheeler financeportfolio is of Rs 3.29 billion with 107582 contracts and other vehicle loans make up aportfolio of around Rs 860 million. The business is supported by robust pre-screeningmethodologies and credit assessment for a healthy portfolio mix.

With plans to target the existing customer base for consumer vehicle loans yourCompany firmly believes that digital technology would be an integral component for thegrowth of the business in the coming years.

SME Business

Our Company commenced SME business in November 2017 to serve the underserved segmentand help them grow their businesses. The SME business vertical covers loans providedagainst the collateral security of property with the loan amount ranging from Rs 0.2million to Rs 2.50 million. The Company deliberately went slow in adding new business dueto constraints faced by the customers hence AUM of the SME business stood at Rs 270.15million as at 31 March 2020 as against Rs 298.52 million in Fiscal 2019.

Fee-Based Services (Including Forex and Money Transfer)

Our Company's fee-based services include money transfer foreign exchange and otherdepository services. We act as sub-agents to Indian representatives for money transferinward remittance. We facilitate fast easy and safe money transfer and no bank account isneeded by the customer for an amount of up to Rs 50000 subject to compliance withapplicable RBI norms.

Your Company is an Authorised Dealer (AD) Category 2 license holder from RBI. We assistin currency exchanges and sale of traveller's cheques for a variety of purposes aspermitted under the FEMA. Fee-based services accounted for 20 basis points of our totalrevenue for Fiscal 2020.

Payments Business

Our Company's payments business includes our remittances and money changing business.Our Company became an RBI licensed principal agent in Fiscal 2018 and tied up with variousthird parties as their principal agent. We have also tied up with many banks and otherinstitutions to provide banking correspondent services. We are also looking to leveragegreater synergies between our online gold lending platform and our digital wallet‘MAKASH'.

Our Subsidiaries

Asirvad Microfinance Limited (AML)

AML an NBFC operating as a microfinance institution (NBFC - MFI) is a majority-ownedsubsidiary of our Company. AML provides mainly three types of loans namely incomegenerating programme loan (IGP) product loan and MSME loan.

During the year the Company consolidated its existing operations in 22 statesincluding union territories. The Company forayed into lending for MSME enterprises againstthe security of the property by starting operations in 15 branches across Andhra PradeshKarnataka and Tamil Nadu. The Company's MSME loan book at the end of the year is Rs 136million.

AML is ranked as the 4th largest NBFC-MFI in India. The Company has a network of 1030branches across 22 States and union territories with presence in 316 districts and 209956centres. During the year the Company passed on the reduction in the interest rate chargedby banks/Financial Institutions on its borrowings by reducing the interest rate charged tocustomers from 21.70% per annum to 21.30%.

The assets under management of this business increased by 43.27% during Fiscal 2020.This growth was an outcome of multiple factors such as healthy addition of new customersaggregation to 1.19 million enhanced reach via a balanced mix of branch-led expansion aswell as more client acquisition via our online/digital platforms. AML had AUM of Rs 55.03billion as at

March 31 2020 as compared to Rs 38.41 billion as of March 31 2019. AML has highcapital adequacy with CAR at 25.37% and excellent ROA at 4.63%. It has a customer base of2.36 million and gross NPA of just 1.83%.

Being the most significant business after gold loans microfinance is strategicallyvital to the Company. Asirvad is adequately capitalised and has consistently shown healthyand profitable growth.

Manappuram Home Finance Limited (MAHOFIN)

MAHOFIN a wholly owned subsidiary of Manappuram Finance started operations in January2015 and focuses on affordable housing loans and caters to the needs of mid-income to thelow-income group. Our housing finance business registered 21.37% growth in its AUM inFiscal 2020 posting CAGR of 37.7% in the past five years reaching an AUM of Rs 6.30billion. Currently there are 47 branches across nine states. The western regioncontributes the largest share of the loan portfolio. Considering the increasingurbanisation and the rise of tier II and tier III cities the Company is also planning tocover nearby states and locations.

Positioned as an affordable home finance company target customers are theself-employed from the unorganised sector and others lacking access to credit facilitiesfrom mainstream financial institutions. The Company offers two products – Home Loansand Loans Against Property. The average ticket size of a Home Loan is about Rs 1 millionand for the LAP segment it stands at about Rs 0.75 million.

As a part of digitalisation the Company has introduced the "Mobile-CustomerAcquisition System" (mCAS) for faster processing of loan applications and"Mobile Collect" (M-Collect) for speeding up the collection process.

The Company is looking to diversify funding sources and in October 2019 it succeeded inraising about Rs 943.1 million by a public issue of NCDs. The portfolio faced minimaldelinquencies with GNPA held at 4.91%. The Company has a capital adequacy ratio is around53.43% (well above the regulatory requirement).

Manappuram Insurance Brokers Limited (MAIBRO)

Our wholly owned subsidiary Manappuram Insurance Brokers Limited (MAIBRO) ended theyear at Rs 2.05 billion of total business. The Company did the new business of Rs 1.89billion in the fiscal. The Company now operates in various products of Life HealthPersonal Accident and Motor insurance to cater to multiple sections of the society. TheCompany has the distinction of covering 2.61 million customers in FY2020. MAIBRO posted anet profit of Rs 73.3 million in FY2020 vs Rs 34.24 million in

FY2019 and is likely to snowball from here on by entering new tie-ups with insurancecompanies. The Company covered 54580 families with a health cover 49748 customers withPersonal Accident cover and 2.48 million customers with death cover.

MAIBRO today has a presence across the length and breadth of the country. The Companyhas used the Manappuram brand and strength to its advantage and provided new productsacross all branches of the parent company and the Group companies. The Company hasimproved its 13 months persistency to 70% and has been able to successfully settle 88% ofclaims reported.

Manappuram Comptech And Consultants Ltd. (MACOM)

Our subsidiary Manappuram Comptech and Consultants Limited (MACOM) ended the year atRs 99.15 million of total business. The Company has enhanced its revenue portfolio by Rs28.10 million. The Company has offers services in audit and taxation along with core ITservices to service varied market requirements including application development forDigital Personal Loan Loan Management Solutions etc. During the year the Company made amark by developing fully android based apps for EMI collection Customer and AgentCollection etc. MACOM posted a net profit of Rs 17.7 million in FY2020 vs Rs 3.3 millionin FY2019 and is poised for take-off from here on.

3. SUBSIDIARIES

Your Company holds 93.33% equity shares of Asirvad Microfinance Limited 100% equityshares of Manappuram Home Finance Limited 100% equity shares of Manappuram InsuranceBrokers Limited and 99.81% of Manappuram Comptech and Consultants Limited as on 31 March2020.

Asirvad Microfinance Limited

Gross Income of the Company as on 31 March 2020 is Rs 11014.44 million as compared toRs 7404.47 million for the year ended 31 March 2019 and profit after Tax is Rs 2353.28million for the year ended 31 March 2020 as compared to Rs 1516.38 million for the yearended 31 March 2019

Manappuram Home Finance Limited

Gross Income of the Company as on 31 March 2020 is Rs 856.73 million as compared to Rs664.45 million for the year ended 31 March 2019 and profit after tax is Rs 105.64 millionfor the year ended 31 March 2020 as compared to Rs 30.21 million for the year ended 31March 2019. AUM of the Company as on 31 March 2020 is Rs 6296.10 million which is 2.51%of consolidated AUM.

Manappuram Insurance Brokers Limited

Gross income of the Company for the year ended 31 March 2020 is Rs 150.24 million ascompared to Rs 113.33 million for the year ended 31 March 2019 and profit after tax forthe year ended 31 March 2020 is Rs 73.3 million as compared to Rs 34.24 million for theyear ended 31 March 2019.

Manappuram Comptech and Consultants Limited

Gross income of the Company for the year ended 31 March 2020 is Rs 101.35 million ascompared to Rs 72.27 million for the year ended 31 March 2019 and Profit after tax forthe year ended 31 March 2020 is Rs 17.69 million as compared to the profit of Rs 3.30million for the year ended 31 March 2019.

Salient features of financial statements of the Company's subsidiaries in form AOC-1are annexed herewith as Annexure – I(a) and the highlights of performance ofsubsidiaries are annexed herewith as Annexure – I(b).

4. RESERVES

During the FY 2019-20 the Company has utilised Rs 274.55 million with regards toadoption of IndAS 116 "Leases" from Retained earnings.

The total reserves and surplus as on 31 March 2020 stands at Rs 51868.97 million.

5. DEBENTURE REDEMPTION RESERVE

Pursuant to notification issued by Ministry of Corporate Affairs on 16th August 2019in exercise of the powers conferred by subsections (1) and (2) of section 469 of theCompanies Act 2013 (18 of 2013) the Central Government amended the Companies (ShareCapital and Debentures) Rules 2014.

In the principal rules in rule 18 for sub-rule (7) the limits with respect toadequacy of Debenture Redemption Reserve and investment or deposits for listed companies(other than All India Financial Institutions and Banking Companies as specified insubclause (i)) Debenture Redemption Reserve is not required to maintain in case of publicissue of debentures as well as privately placed debentures for NBFCs registered withReserve Bank of India under section 45-IA of the RBI Act 1934.

By complying with the above notification the Company has transferred back Rs 1115.33million from DRR to Retained earnings and in respect of the debentures issued throughpublic issue the Company has not created DRR during the year ended 31 March 2020.

6. RESOURCES

The Company as an NBFC mobilisation of resources at optimal cost and its deployment inthe most profitable and secured manner constitutes the two important functions of theCompany. The main source of funding for the Company continues to be credit lines from thebanks and financial institutions. Your Company as at 31 March 2020 availed various creditfacilities from 33 banks 1 NBFC (Bajaj Finance) and NABARD.

Management has been making continuous efforts to broaden the resource base of theCompany so as to maintain its competitive edge. The next important source of funding isthe issue of Secured Redeemable Non-Convertible Debentures (NCDs). In addition theCompany also raised funds through the issue of Commercial Papers (CPs) and foreigncurrency denominated bonds under the euro medium term note programme.

Your Directors are confident that the Company will be able to raise adequate resourcesfor onward lending in line with its business plans.

7. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis Report is attached and forms an integral part of theAnnual Report. The report discusses in detail the overall industry situation economicdevelopments sector wise performance outlook and state of company's affairs.

8. REPORT ON CORPORATE GOVERNANCE

The Company has been practicing principle of good Corporate Governance over the years.The endeavour of the Company is not only to comply with the regulatory requirements butalso adhere to good Corporate Governance standards that lays strong emphasis on integritytransparency and overall accountability. The report on corporate governance forms integralpart of this annual report.

9. BUSINESS RESPONSIBILITY REPORT

Business Responsibility Report in line with the National Voluntary Guidelines (NVG) onSocial Environmental and Economic Responsibilities of Business released by the Ministryof Corporate Affairs Government of India and as stipulated under Regulation 34 of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (‘SEBI LODR') forms integral part of this Annual Report and thesame has been hosted on the website of the Company https://www.manappuram.com/investors/annual-reports.html

Business Responsibility Report provides information on key initiatives undertaken bythe Company driven by the triple bottom line (people planet and Profit) aspects and isaligned with the nine principles of NVG. Your Company together with its subsidiaries viz.Manappuram Home Finance Limited Asirvad Microfinance Limited Manappuram InsuranceBrokers Limited and Manappuram Comptech and Consultants Limited serves millions ofcustomers in the financial services space. Your Company has moved towards enhancing theBusiness Responsibility framework to align them with the Business Responsibility Reportingguidelines/standards as per SEBI.

Your Company's initiatives of Sustainability Corporate Social Responsibility (CSR) andBusiness Responsibility is driven from the top. Board-level CSR Committee is entrustedwith formulating revising and updating our CSR Policy which governs the implementation ofall our CSR initiatives in compliance with Section 135 of Companies Act 2013. Variouspolicies including CSR Policy and Business responsibility policy guide our stringentadherence to compliance and governance. The business responsibility performance of theCompany is assessed annually by the Board of Directors. Your Company believes inconducting its operations in a fair and transparent manner. Within the organisation yourCompany works towards integrating community development responsible governancestakeholder inclusiveness and environmental responsibility into business practices andoperations.

Your Company seeks to differentiate itself by building a new age NBFC to serve thefinancial needs of all sections of society in India especially the less privileged/ underprivileged sections. This will be achieved by providing a basket of diversified productsand services backed by state of the art technology and driven through a culture thatvalues customer service.

10. DIRECTOR'S RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134 OF THE ACT

The Board of Directors to the best of their knowledge and ability confirm that:

i. in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;

ii. they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring FY 2019-20.

11. MEETINGS OF THE BOARD

During the financial year 2019-20 Board of Directors met on eight occasions. Forfurther details of these Board Meetings please refer to the Corporate Governance Sectionof this Report.

12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

Your Company has received necessary declarations from all Independent Directors of theCompany confirming that they meet criteria as mentioned in Section 149 of the Act and SEBILODR. Your Company has also received undertaking and declaration from each Director on fitand proper criteria in terms of the provisions of Non-Banking Financial Company-Systemically Important Non-Deposit taking Company and Deposit taking Company (ReserveBank) Directions 2016 ("RBI NDSI Master Directions 2016").

13. POLICY ON BOARD COMPOSITION COMPENSATION

The Board of Directors has adopted a policy on Director's appointment and remunerationfor Directors Key Managerial

Personnel and other employees including criteria for determining qualificationpositive attributes and independence of Directors as laid down by the NominationCommittee of the Board in compliance with the provisions of Section 178 of the Act. Thepolicy can be viewed at https://www.manappuram.com/policies-codes.html and is also annexedto this report as Annexure II.

14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are provided in Note 101144 & 49 to the StandaloneFinancial Statements.

15. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

Contracts / arrangements / transactions entered by the Company during the FY 2019-20with related parties under Section 188 of the Act were in ordinary course of business andon arm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the provisions of Regulation 23 of SEBI LODR and the Company's policy onrelated party transactions. Therefore particulars of contracts / arrangements withrelated parties under Section 188 in Form AOC-2 is not annexed with this report.

Your Directors draw attention of the members to Note 42 to the Standalone FinancialStatement which sets out related party disclosures.

The Policy on related party transactions as approved by the Board which is annexed tothis report as Annexure III may be accessed on the Company's website at thehttps://www.manappuram.com/policies-codes.html

16. DIVIDEND

Five interim dividends at the rate of 55 paise per equity share were declared duringthe financial year 2019-20 on 15.05.2019 13.08.2019 06.11.2019 28.01.2020 and27.02.2020.

An aggregate of Rs 2.75/- per equity share amounting to 137.5% of the paid-up value ofthe shares was paid by the Company during the financial year 2019-20.

The Dividend Distribution Policy as per the SEBI LODR is available at the followinglink: https://www.manappuram.com/policies-codes.html

17. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:

These details are provided as Annexure IV to this report.

18. RISK MANAGEMENT POLICY

The Company has a Board of Directors approved Risk Management Policy wherein materialrisks faced by the Company including Operational Risk Regulatory Risk Price InterestRate Risk and Credit Risk are identified and assessed. The Risk Management Committeeperiodically reviews the various risks faced by the Company and advises the Board on riskmitigation plans. Risk Management policy may be accessed on the Company's website at thelink: https://www.manappuram.com/policies-codes.html

19. CORPORATE SOCIAL RESPONSIBILITY POLICY

Corporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company have been formulated by the Board based on the recommendation ofthe Corporate Social Responsibility Committee (CSR Committee). The CSR Policy may beaccessed on the Company's website at the link:https://www.manappuram.com/policies-codes.html

The Corporate Social Responsibility initiatives taken by the Company during the FY2019-20 is detailed in the Report on CSR activities which is annexed herewith marked asAnnexure V.

20. FORMAL ANNUAL EVALUATION

The Board of Directors have carried out annual evaluation of its own performance boardcommittees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI LODR. The following were theperformance evaluation parameters of Independent Directors:

Qualification Initiative
Experience Availability and attendance
Knowledge and Competency Commitment
Fulfillment of functions Contribution
Ability to function as a team Integrity

The Board and the Nomination Committee reviewed the performance of the Non-ExecutiveDirectors (including Independent Director) on the basis of the criteria such asattendance level of participation contribution to the meetings and its decision makingcontinuity on the Board and performance appraisal questionnaire etc. In addition thechairman was also evaluated on the key aspects of his role.

The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as the Board composition and structureeffectiveness of Board processes information and functioning etc.

The performance of the committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.

In furtherance to above performance evaluation parameters pertaining to Non-ExecutiveDirectors (including Independent Director) Nomination Committee and Board has evaluatedperformance of Managing Director and Whole-time Director based on the performance ofadditional criteria as detailed in the Corporate Governance Report. In a separate meetingof Independent Directors performance of Non-Independent Directors performance of theBoard as a whole and performance of the chairman was evaluated taking into account theviews of Executive Directors. Performance evaluation of Independent Directors was done bythe entire Board excluding the Independent Director being evaluated.

The Board of Directors has confirmed that all existing Directors are fit and proper tocontinue to hold the appointment as Directors on the Board as reviewed and recommended bythe Nomination Committee on fit and proper criteria under RBI NDSI Master Directions2016.

21. DETAILS OF REMUNERATION / COMMISSION RECEIVED BY MD OR ED FROM SUBSIDIARIES

During the FY 2019-20 Mr. B.N.Raveendra Babu (Executive Director) has receivedremuneration by way of sitting fee Rs 0.40 million for attending Board/Committeemeetings of the subsidiary Manappuram Insurance Brokers Limited and Mr. V. P Nandakumar(Managing Director & CEO) has not received any remuneration or commission from any ofthe subsidiaries of the Company for the FY 2019-20.

22. AUDIT AND AUDITORS REPORT

Deloitte Haskins & Sells LLP Chartered Accountants have been appointed as theStatutory Auditors by shareholders at the 25th AGM to hold office up to the conclusion of30th AGM.

The notes annexed to the Standalone and Consolidated financial statements referred inthe Independent Auditors' Reports are self- explanatory and do not call for any furthercomments.

There were no frauds reported by the statutory auditors to Audit Committee or Boardunder Section 143 of the Act.

Secretarial Audit

The Board appointed KSR & Co. Practicing Company Secretaries LLP to conductSecretarial Audit for the financial year 2019-20.

Secretarial audit report for year ended on 31 March 2020 as provided by KSR & Co.Practicing Company Secretaries LLP Indus chambers Ground floor No.101 Govt ArtsCollege Road Coimbatore-641018 is annexed to this Report as Annexure- VI. AsirvadMicrofinance Limited the material subsidiary of the Company as per Regulation 16(1)(c) ofSEBI(LODR) 2015 has obtained Secretarial Audit Report from S Hari Practising CompanySecretary. The said report will form part of their Annual Report and will be madeavailable on their website..

The reports issued by Statutory Auditor and Secretarial Auditor does not contain anyqualification reservation adverse remark or disclaimer.

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL CHANGE IF ANY

Dr. Amla Samanta (DIN: 00758883) stepped down as Director of the Board of the Companyat the meeting dated 20.03.2019 w.e.f 01.04.2019.

Mr. Abhijit Sen (DIN: 00002593) has been appointed as Additional Director of the Boardconsidering his integrity expertise and experience with effect from 13.08.2019 andShareholders at the 27th AGM approved his appointment as Non-Executive IndependentDirector.

Mr. Harshan Kollara (DIN: 01519810) has been appointed as Additional Director of theBoard with effect from 28.01.2020 considering his integrity expertise and experience.

Mr. Shailesh Mehta (DIN: 01633893) has been appointed as Additional Director of theBoard with effect from 27.02.2020 considering his integrity expertise and experience.

Mr. E.A Kshirsagar (DIN: 00121824) resigned on 06.11.2019. Mr.V.R.Rajiven(DIN: 06503049) passed away on 19.10.2019. Shareholders at the 27th AGM also approved:

• Revision of remuneration by way of increment and variation in the terms ofappointment of Mr. V. P. Nandakumar Managing Director & CEO (DIN: 00044512)

• Re-appointment of Executive Director Mr. B. N. Raveendra Babu (DIN: 00043622)for a further period of five years with effect from January 11 2020.

• There were no other changes in Directors or Key Managerial Personnel during theFY 2019-20.

24. SHARE CAPITAL

During the year 2019-20 the Company has allotted 2183268 equity shares of Rs 2 eachpursuant to exercise of stock options. Consequently the paid-up equity share capital ofthe Company stood as on 31.03.2020 at Rs 1689.99 million consisting of 844993125equity shares of Rs 2 each.

During the year under review the Company has not issued shares with differentialvoting rights bonus shares and sweat equity shares.

25. DEPOSITS

As you are aware your Company had stopped acceptance of deposits from the public sinceFY 2009-10. Your Company had converted itself into a non deposit taking Category ‘B'NBFC. During FY 2019-20 the Company has not accepted deposits as per Chapter V of the Act.

There is NIL unclaimed deposit as on 31 March 2020.

26. COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions of the Reserve Bank ofIndia applicable to Non-Banking Financial Company - Systemically Important Non-Deposittaking Company.

As on 31 March 2020 the Capital Adequacy Ratio of the Company is 21.74% well abovethe statutory requirement of 15%. The Company has not issued any Perpetual DebtInstruments.

27. EMPLOYEE STOCK OPTION SCHEME (ESOS)

In order to retain the best available talent ensure long term commitment to theCompany and encourage individual ownership Company has instituted employee stock optionsplans from time to time.

Presently the Company has Employee Stock Option Scheme 2016 (‘ESOS-2016').

Disclosures in terms of ‘Guidance note on accounting for employee share basedpayments' issued by ICAI and diluted EPS in accordance with Indian Accounting Standard(IndAS) 33 - Earnings Per Share are provided in note 36 of Standalone Financial Statementsin this Annual Report.

Details related to stock option schemes as required under SEBI SBEB Regulations readwith Securities and Exchange Board of India circular no. CIR/CFD/POLICY CELL/2/2015 dated16 June 2015 are provided in Note 37 of the Standalone Financial Statements in thisAnnual Report and Annexure VII of this report and are also available on Company's websiteat https:// manappuram.com/investors/annual-reports.html

A certificate from Deloitte Haskins and Sells LLP Statutory Auditors (Firm'sRegistration No.117366W/W-100018) Statutory Auditors confirming that ESOS 2016 has beenimplemented in accordance with the SEBI SBEB Regulations and that the respectiveresolutions passed by the Company in General Meetings would be placed in the ensuingAnnual General Meeting for inspection by the members

28. DISCLOSURE

The Composition of CSR Committee and Audit Committee are detailed in the CorporateGovernance Report.

Whistle Blower Policy and Vigil Mechanism

The Vigil Mechanism of the Company provides adequate safeguards against thevictimisation of any directors or employees or any other person who avail the mechanismand also provides direct access through an e-mail or a letter to the Chairman and aMember of the Audit Committee.

No person has been denied access to the Chairman of the audit committee. Company hasensured that its employees are well aware of the content and procedure of the policy andfully protected. The Whistle Blower Policy and Vigil Mechanism may be accessed on theCompany's website at the link: https://www.manappuram.com/policies-codes.html

Compliance with the Provisions of Secretarial Standard - 1 and Secretarial Standard - 2

The applicable Secretarial Standards i.e. SS-1 and SS-2 relating to ‘Meetings ofthe Board of Directors' and ‘General Meetings' respectively have been duly compliedby your Company.

29. EXTRACT OF ANNUAL RETURN

Extract of annual return in Form MGT-9 is annexed herewith as Annexure- VIII.

30. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS AND INTERNAL AUDIT

Your Company has put in place well defined and adequate Internal Control System andInternal Financial Control (IFC) mechanism commensurate with size scale and complexity ofits operations to ensure control of entire business and assets. The functioning ofcontrols is regularly monitored to ensure their efficiency in mitigating risks. Acomprehensive internal audit department functions in house to continuously audit andreport gaps if any in the diverse business verticals and statutory compliancesapplicable.

During the year Internal Financial Controls were reviewed periodically by themanagement and Audit Committee. Key areas were subject to various statutory and internalaudits in order to review the adequacy and strength of IFC followed by the Company. As perthe assessment Controls are strong and there are no major concerns. The internalfinancial controls are adequate and operating effectively so as to ensure orderly andefficient conduct of business operations.

Your Company has an independent internal audit function which carries out regularinternal audits to test the design operations adequacy and effectiveness of its internalcontrol processes and also to suggest improvements to the management. KPMG was appointedin terms of Section 138 of Companies Act 2013 to conduct internal audit of functions.Their observations along with management response are periodically reviewed by AuditCommittee and Board and necessary actions are taken.

31. LISTING WITH STOCK EXCHANGES

Your Company confirms that it has paid the Annual Listing Fees for the financial year2019-20 to BSE and National Stock Exchange (NSE) where the Company's shares are listed.

32. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year under review there were 9 cases filed with the Internal ComplaintsCommittee of the Company pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the same were investigated andresolved. No complaints were pending more than 90 days during FY 2019-20.

The Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

33. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Act SEBI LODR and Indian Accounting Standard (IndAS) 27 onConsolidated Financial Statements the audited consolidated financial statement isprovided in the Annual Report.

34. CREDIT RATING

Your Company holds valid credit rating from Brickwork CRISIL ICRA and CARE forNon-Convertible Debentures Short Term and Long-Term Bank Facilities and Commercial Paperas follows:

a. CRISIL rated Bank Loan Facilities amounting to Rs 50000 million as CRISIL AA /Stable.

b. CRISIL rated Non – Convertible Debentures amounting to Rs 40075 million asCRISIL AA / Stable.

c. CRISIL rated Commercial Paper of Rs 40000 million as CRISIL A1+

d. ICRA rated Series A1 PTC of Rs 426.5 million and Rs 459 million as Provisional ICRAAAA(SO)

e. CARE rated Bank Loan Facilities for Long Term amounting to Rs 60873.8 million asCARE AA (Stable) (Double A; Stable)

f. CARE rated Bank Loan Facilities for Short Term amounting to Rs 29126.2 million asCARE A1+ (A One Plus)

g. Care rated Non-Convertible Debentures amounting to Rs 21500 million as CARE asAA(Stable)

h. Care rated Commercial Paper of Rs 40000 million as CARE A1+ (A 1 Plus)

i. Brickwork rated Non – Convertible Debentures amounting to Rs 10030 million asBWR AA+(Stable)

j. Brickwork rated Bank Loan facilities amounting to Rs 70000 million as BWR AA+(Stable)

k. S&P rated US$750 million EMTN Programme and Senior Secured Notes as BB- /Stable

l. Fitch rated US$750 million EMTN Programme and Senior Secured Notes as BB- /Negative

35. DETAILS OF AUCTIONS HELD DURING THE YEAR 2019-20

Additional disclosures as required by RBI NDSI Master Directions 2016:

Year Number of Loan Accounts Principal Amount outstanding at the dates of auctions (A) Interest Amount outstanding at the dates of auctions (B) Total (A+B) Value fetched
( Rs in million) ( Rs in million) D ( in million) ( Rs in million)
31-03-2019 181555 4193.87 584.76 4778.63 4846.16
31-03-2020 48026 1161.54 214.87 1376.41 1505.62

Note: No sister concern participated in the auctions during the year ended 31 March2019 and 31 March 2020

36. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

Particulars of employees and related disclosures are annexed herewith as Annexure IX asper Section 197 of the Act.

37. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE

A certificate from Statutory Auditor in compliance with the conditions of corporategovernance by the Company for the year ended on 31 March 2020 as stipulated in Part E ofSchedule V of SEBI LODR is annexed as Annexure - X.

38. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

There were no such significant / material orders passed by the Regulators during thefinancial year 2019-20.

No penalties and strictures were imposed on the Company by any of the regulatoryauthorities such as the Stock Exchange SEBI Reserve Bank of India Registrar ofCompanies for non- compliance on any matter related to capital markets during the lastthree years 2017-18 2018-19 and 2019-20 except for the below:

BSE Regulation 18(1) Rs 132160 BSE notice dated 31.01.2019
Non-Compliance with the constitution of Audit Committee ( Rs 2000 per day computed till quarter ended December 31 2018) plus GST Paid on 08.02.2019
Rs 84960 BSE notice dated 02.05.2019
( Rs 2000 per day computed till quarter ended March 31 2019) plus GST Paid on 04.05.2019
NSE Rs 132160 NSE notice dated 31.01.2019
(Rs 2000 per day computed till quarter ended December 31 2018) plus GST Paid on 08.02.2019
Rs 84960 NSE notice dated 02.05.2019
(RS 2000 per day computed till quarter ended March 31 2019) plus GST Paid on 09.05.2019
BSE Regulation 44(3) delayed submission of Voting Results Rs 11800 BSE notice dated 06.11.2019
(Fine amount per instance Rs 10000) plus GST Paid on 21.11.2019
NSE RS 11800 NSE notice dated 06.11.2019
(Fine amount per instance Rs 10000) plus GST Paid on 21.11.2019

39. MATERIAL EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT

There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the FY 2019-20 and the date of thisreport.

40. MAINTENANCE OF COST RECORDS

The Company is an NBFC and hence the requirement under sub-section (1) of section 148of the Companies Act 2013 w.r.t Maintenance of cost records is not applicable.

41. ACKNOWLEDGEMENT

Your Directors express sincere appreciation and gratitude to the employees of theCompany at all levels for their dedicated service and commitments to the Reserve Bank ofIndia Rating Agencies Stock Exchanges Debenture Trustees RTA's Depositories Centraland State Governments and its statutory bodies for the support guidance and co-operation.Your Directors wish to thank the Customers Investors Shareholders Debenture holdersBankers Auditors Scrutiniser and other financial institutions and other stakeholders forthe whole hearted support and confidence reposed on the Company.

For and on behalf of the Board of Directors of
Manappuram Finance Limited
Sd/-
Jagdish Capoor
Place: Valapad Chairman
Date: May 29 2020 DIN: 00002516

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