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Manappuram Finance Ltd.

BSE: 531213 Sector: Financials
NSE: MANAPPURAM ISIN Code: INE522D01027
BSE 00:00 | 16 May 101.05 2.05
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101.10

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101.60

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NSE 00:00 | 16 May 101.05
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OPEN

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101.60

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OPEN 101.10
PREVIOUS CLOSE 99.00
VOLUME 201915
52-Week high 224.40
52-Week low 98.25
P/E 5.71
Mkt Cap.(Rs cr) 8,553
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 101.10
CLOSE 99.00
VOLUME 201915
52-Week high 224.40
52-Week low 98.25
P/E 5.71
Mkt Cap.(Rs cr) 8,553
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

Board of Directors of your company wish to start by expressing its empathy with thebereaved families of all our employees shareholders and all others who have lost theirnear and dear ones due to COVID-19 Pandemic.

The Board of Directors of Manappuram Finance Limited have pleasure in presenting beforeyou the 29th Annual Report of the Company together with the AuditedConsolidated and Standalone Statements of Accounts for the financial year ended 31st March2021.

1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS

Description Standalone

Consolidated

2020-21 2019-20 2020-21 2019-20
Gross Income 51935.14 43521.91 63746.23 55511.88
Total Expenditure 29239.74 26721.81 40585.85 35438.90
Profit Before Tax 22695.40 16800.10 23160.38 20072.98
Provision for Taxes/Deferred tax 5716.33 4496.98 5910.83 5269.81
Other Comprehensive Income (146.03) (54.32) (156.79) (60.00)
Minority interest - - 6.96 125.60
Net Profit 16979.07 12303.12 17249.55 14803.17
Amount available for appropriations 39816.87 27023.18 42895.21 30532.55
Appropriations:
Transfer to statutory Reserve 3406.67 2449.77 3468.14 2920.43
Transfer to/(from) Debenture Redemption Reserve - (1115.33) - (1115.33)
Interim Dividend on Equity share 1057.71 2321.75 1057.71 2371.99
Tax on Dividend - 477.25 - 487.58
Adjustment on account of IND AS 217.60 274.55 233.82 351.50
Balance carried forward to next year 35134.89 22615.19 38135.54 25516.38

During the Financial Year ("FY") 2020-21 under review the Company'sconsolidated revenue from operations grew by 1.1 % and the Profit after Tax increased by17.6 % to `4683.5 million. The Company's consolidated AUM grew by 7.9% to

`272242 million during the year owing to rapid growth in the microfinance (8.8%)housing finance (5.8%) and vehicle finance (-21.7%) AUMs. Gold loan AUMs grew 12.4% duringthe 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 diversification on the strength of large networth access to debt capital on competitive terms and access to customer relationshipsbuilt over decades through business mainstay of gold loans.

The objective of the diversification strategy is to bring down the dependence of thecompany on gold loan AUM and reach a comfortable parity between the new streams ofbusiness and gold loans. In the intervening years we have assiduously built competenciesand capabilities to bring the share of new business in our AUM close to 29.9%.

Our ambition is to achieve a 50-50 mix between the diversified business and gold loansin years to come. This will address three key business paradigms; First it addresses theregulatory discomfort with mono-line NBFCs perceived as vulnerable to concentration risk.Second it would enable the Company to cater to existing and new customers with newproducts and services. Finally it enables your Company to play a leading role inaccelerating the government's agenda for inclusion by addressing the needs of theunderprivileged 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 four to five years the Company has made muchprogress in all these new businesses having steadily scaled up operations by leveragingits existing customer base branch network and the goodwill of the Manappuram Brand.

The key achievement thus far is that having begun literally from scratch in FY2015 theCompany's non-gold new businesses now contribute 29.9 % of the total assets undermanagement. In the past year Microfinance AUM has grown from ` 45284 million in FY2020to `53930 million in FY2021. Your Company's divisions vehicle and equipment finance andcorporate finance have ended the year with an AUM of `10292 million and `15.52 millionrespectively. Your Company's housing subsidiary Manappuram Home Finance Limited has endedthe year with an AUM of `6735 million while the insurance broking subsidiary hascontributed revenue of `99 million.

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

VEHICLE & EQUIPMENT FINANCE

The vehicle finance portfolio is about `10571 Million spread across 222 locations in23 states as of 31st March 2021. The pre-owned commercial vehicles portfoliois `6.99 billion and new commercial vehicles are of `550 million with 16638 contracts.The two-wheeler finance portfolio is of`1.78 billion with 80217 contracts and othervehicle loans make up a portfolio of around

`1240 million. The business is supported by robust pre-screening methodologies andcredit assessment for a healthy portfolio mix. With plans to target the existing customerbase for consumer vehicle loans your Company firmly believes that digital technologywould be an integral component for the growth of the business in the coming years.

SME BUSINESS

Your 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 `0.2 millionto `2.50 million. The Company deliberately went slow in adding new business due toconstraints faced by the customers hence AUM of the SME business stood at `326.27 millionas of 31st March 2021 as against `270.15 million in Fiscal 2020.

FEE-BASED SERVICES (INCLUDING FOREX AND MONEY TRANSFER)

Our Company's fee-based services include money transfer foreign exchange anddepository services. We facilitate fast easy and safe money transfer and the customerdoes not require a bank account for an amount of up to `50000 subject to compliance withapplicable RBI norms. We assist in exchange of currency and sell traveller's cheques forpurposes as permitted under the foreign exchange management act (FEMA). Fee-based servicesaccounted for about 20 basis points of our total revenue for Fiscal 2021. Our Company isan Authorised Dealer (AD) Category 2 license holder from RBI. In December 2017 ManappuramFinance Ltd. received RBI's license to act as the Indian Agent for Western Union MoneyTransfer. We also act as sub-agents to the Indian representatives of other companiesproviding money transfer inward remittance.

Following are the highlights of our fee-based services: Tie up with nine money transferagencies for inward remittance. About 60% of the inward remittance is contributed byWestern Union. As an Indian agent of Western Union we can appoint sub agents to work onour behalf all over India. Turnover of MTSS business is around ` 15 crore per month. Wehave more than 150 active sub-agents for Western Union business who contribute about ` 75lakhs of business per month.

PAYMENTS BUSINESS

It was in March 2017 that Manappuram Finance Ltd. received RBI's authorisation to issueprepaid payment instruments (payment wallet) and went on to launch the MAkash wallet. Amobile wallet is a way to carry cash in digital format that promotes the country'scashless payments initiative. Customers can load money into the wallet using a creditcard debit card net banking and UPI. Alternatively they can walk into any of the MAFILbranches across India and load cash into the wallet without any extra cost.

With over one lakh customers MAkash has registered steady growth. The wallet registersan average of 30000 transactions per month valued at about `15 crore. Customers can availthe assistance of MAFIL Branches to create the wallet and conduct transactions. Thefollowing services are available with Makash Online and Offline modes: Phone Recharge& DTH: With money loaded in your MAkash wallet it takes just seconds to make phoneand DTH recharges.

Bill Payments: Pay all your bills across categories via MAkash in no time and avoidlate payment charges Gold Loan repayment: Load Your wallet using Debit/Credit Card and Payyour MAFIL Gold Loan repayment or make interest payment instantly via MAkash Transfermoney to Bank: You can Load money from your Credit card/ Debit Card/ Net Banking and sendit to any bank account in India any time.

STATE OF AFFAIRS OF OUR SUBSIDIARIES

ASIRVAD MICRO FINANCE LIMITED (AML)

Asirvad Micro Finance Limited an NBFC operating as a microfinance institution(NBFC-MFI) is a majority-owned subsidiary of our company. Asirvad Micro Finance Limitedprovides mainly three types of loans namely Income Generating Programme Loans (IGP)Product loans and MSME loans. During the year company consolidated its operations in theexisting 24 states including union territories. In March 2021 the company forayed intolending of Gold Loan against the security of the Gold jewellery by starting operations in23 branches across 4 states.

Asirvad Micro Finance Limited is ranked as the 4th largest NBFC MFI inIndia. The company has a network of 1025 branches across 22 states and union territorieswith a presence in 315 districts and 225444 centers with respect to Micro FinanceBusiness and 22 branches across 4 states with a presence in 14 districts with respect toMSME. During the year company has passed on the reduction in interest rate in respect ofMicrofinance loans charged by Banks/Financial institutions by reducing the interest ratecharged to customers from 21.30% pa to 20.67% pa.

The assets under management of this business increased by 8.78 per cent during fiscal2021. This growth was an outcome of multiple factors such as healthy addition of newcustomer aggregation to 0.05 million enhanced reach via a balanced mix of branch-ledexpansion as well as more client acquisition via our online/digital platforms. AML had anAUM of `59.85 billion as of 31st March 2021 as compared to `55.02 billion asof 31st March 2020. AML has high capital adequacy with CAR at 23.33 percentand excellent ROA at 0.29 per cent.

Being the most significant business after MSME and Gold loans microfinance isstrategically essential to the company. Asirvad is adequately capitalized and hasconsistently shown healthy and profitable growth.

MANAPPURAM HOME FINANCE LIMITED (MAHOFIN)

MAHOFIN a wholly own subsidiary of Manappuram Finance started operations in January2015 and focuses on affordable housing loans and aims to cater to the needs of themid-income to the low-income group. The housing finance business registered 5.83 per centgrowth in its AUM in Fiscal 2021 posting a CAGR of 16.51% in the past five years. Itreached an AUM of

`6735 million as of 31st March 2021. Currently there are 47 branchesacross nine states. The western region contributes the largest share of the loanportfolio. Considering the increasing urbanisation and the rise of tier II and tier IIIcities the Company is also planning to cover nearby states and locations. Positioned asan affordable home finance company target customers are the self-employed from theunorganised sector and others lacking access to credit facilities from mainstreamfinancial institutions. The Company offers two products – Home Loans and Loan AgainstProperty. The average ticket size of a Home Loan is about `1.05 million and for the LAPsegment it stands at about `0.63 million. As a part of digitisation the Company hasintroduced the "Mobile-Customer Acquisition System" (mCAS) for faster processingof loan applications and "Mobile Collect" (M-Collect) for speeding up thecollection process.

The Company is looking to diversify funding sources and in October 2019 it succeeded inraising about `943.1 million by a public issue of NCDs. The portfolio faced minimaldelinquencies with GNPA held at 6.38%. The Company has a capital adequacy ratio is around52.86% (well above the regulatory requirement).

MANAPPURAM INSURANCE BROKERS LIMITED (MAIBRO)

Manappuram Insurance Brokers Limited (MAIBRO) ended the year at `1273.0 million oftotal business. The Company did the new business of `1073.5 million in the fiscal. TheCompany now operates in various products of Life Health Personal Accident and Motorinsurance to cater to multiple sections of the society. The Company has the distinction ofcovering 0.10Cr customers in FY 2021. MAIBRO posted a net profit of `29.03 million in FY2021 vs `73.29 million in FY 2020 and is likely to snowball from here on by entering newtie-ups with insurance companies. The Company covered 25668 families with a health cover18900 customers with Personal Accident cover and 0.09 Cr customers with death cover.

MAIBRO today has a presence across the length and breadth of the country. MAIBRO hasalso launched portal www.masuraksha.com to issue two-wheeler policy directly tocustomers 24*7 without any manual dependency. Company is also planning to extend theservice for all insurance products and digitalise its sales process from proposal toissuance. The Company has been able to successfully settle 93.50 % of claims reported.

MANAPPURAM COMPTECH AND CONSULTANTS LTD. (MACOM)

Your Company's another subsidiary Manappuram Comptech and Consultants Limited (MACOM)ended the year at `224.82 million of total business. The Company has enhanced its revenueportfolio by `125.67 million. The Company offers services in audit and taxation along withcore IT services to service varied market requirements including application developmentfor Digital Personal Loan Loan Management Solutions etc. During the year the Companymade a mark by developing fully android based apps for EMI collection Customer and AgentCollection etc. MACOM posted a net profit of `31.46 million in FY2021 vs

` 17.7 million in FY2020 and is poised for take-off from here on.

3. SUBSIDIARIES PERFORMANCE

Your Company holds 94.79% equity shares of Asirvad Micro Finance 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 31stMarch 2021.

Asirvad Micro Finance Limited

Gross Income of the Company as of 31st March 2021 is

`10771.84 million as compared to `11014.44 million for the year ended 31stMarch 2020 and profit after Tax is `168.81 million for the year ended 31stMarch 2021 as compared to

` 2353.28 million for the year ended 31st March 2020.

Manappuram Home Finance Limited

Gross Income of the Company as of 31st March 2021 is

`971.32 million as compared to `856.73 million for the year ended 31stMarch and profit after tax is `102.9 million for the year ended 31st March2021 as compared to `105.64 million for the year ended 31st March 2020. AUM ofthe Company as of 31st March 2021 is `6662.7 million which is 2.51% ofconsolidated AUM.

Manappuram Insurance Brokers Limited

Gross Income of the Company for the year ended 31st March 2021 is `99.00million as compared to `150.24 million for the year ended 31st March 2020 andprofit after tax for the year ended 31st March 2021 is `29.03 million ascompared to `73.3 million for the year ended 31st March 2020.

Manappuram Comptech and Consultants Limited

Gross Income of the Company for the year ended 31st March 2021 is `227.28million as compared to `101.35 million for the year ended 31st March 2020 andProfit after tax for the year ended 31st March 2021 is `31.46 million ascompared to the profit of ` 17.69 million for the year ended 31st March 2020

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 of subsidiaries are annexed herewith asAnnexure – I(b).

4. RESERVES

During the FY 2020-21 the Company has utilised `1308.53 million with regards toadoption of IndAS 116 "Leases" from Retained earnings.

The total reserves and surplus as on 31st March 2021 stands at `67324.39million.

5. DEBENTURE REDEMPTION RESERVE

Pursuant to notification issued by Ministry of Corporate Affairs on 16thAugust 2019 in exercise of the powers conferred by sub-sections (1) and (2) of section469 of the Companies Act 2013 (18 of 2013) the Central Government amend the Companies(Share Capital 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 insub-clause (i)) Debenture Redemption Reserve is not required to be maintained in the caseof public issue of debentures as well as privately placed debentures for NBFCs registeredwith Reserve Bank of India under section 45-IA of the RBI Act 1934.

By complying with the above notification the Company has not created DRR during theyear ended 31st March 2021.

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 31st March 2021 availedvarious credit facilities from 25 banks 1 NBFC (Bajaj Finance) NABARD and InternationalFinance Corporation (IFC).

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).

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/public/uploads/editor-images/files/ Business%20Responsibility%20Policy.pdf

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 Micro Finance 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. inthe preparation of the annual accounts the applicable accounting standards have beenfollowed and there are no material departures; ii. they have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit of the Company for that period;iii. they have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities iv. they haveprepared 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 2020-21.

11. MEETINGS OF THE BOARD

During the financial year 2020-21 Board of Directors met on Nine occasions. Forfurther details of these Board Meetings please refer to the Corporate Governance Sectionof this Report.

12. DECLARATION ON INDEPENDENCE 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. PROFICIENCY OF INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

Board of Directors of Manappuram Finance Limited is of the opinion that Mr Shailesh JMehta (DIN: 01633893) and Mr Harshan Kollara (DIN: 01519810) who were appointed asIndependent Directors in the Annual General Meeting held on 28th August 2020possess requisite skills expertise experience and proficiency to be appointed asIndependent Director. Both the directors are registered with Indian Institute of CorporateAffairs.

All other Independent Directors of the company also possess requisite skills expertiseexperience integrity and proficiency to be appointed as Independent Director

14. 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 fordetermining qualification positive attributes and independence of directors as laid downby the Nomination Committee of the board in compliance with the provisions of Section 178of the Act. The policy can be viewed at https://www.manappuram.com/public/uploads/editor-images/files/Policy%2022-Board%20composition. pdf and is also annexed to thisreport as Annexure II.

15. 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.

16. PARTICULARSOFCONTRACTSORARRANGEMENT

WITH RELATED PARTIES

Contracts / arrangements / transactions entered by the Company during the FY 2020-21with 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 of 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 the https://www.manappuram.com/public/uploads/editor-images/ files/RPT%20Policy.pdf

17. DIVIDEND

Two interim dividends at the rate of 0.60 paise and 0.65 paise per equity share weredeclared during the financial year 2020-21 on 06.11.2020 and 29.01.2021.

An aggregate of `1.25/- per equity share amounting to 62.5% of the paid-up value ofthe shares was paid by the Company during the financial year 2020-21.

The Dividend Distribution Policy as per the SEBI LODR is available at the followinglink https://www.manappuram. com/public/uploads/editor-images/files/Dividend%20distribution%20policy.pdf

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

These details are provided as Annexure IV to this report.

19. 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.

The Board has appointed a chief risk officer as the asset size of the Company is above` 50 billion with a tenure of One year subject to re-appointment by the board everyFinancial year.

Risk Management policy may be accessed on the Company's website at the linkhttps://www.manappuram. com/public/uploads/editor-images/files/ERM%20%20 Policy%281%29.pdf

20. 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/public/uploads/editor-images/ files/Policy-7-CSR%20Policy.pdf

The Corporate Social Responsibility initiatives taken by the Company during the FY2020-21 is detailed in the Report on CSR activities which is annexed herewith marked asAnnexure V.

21. FORMAL ANNUAL EVALUATION

The board of directors decided to appoint a third party to assist the Board in carryingout the formal evaluation of board pursuant to which NASDAQ Corporate solutions wasappointed on 29.01.2021 to assist in the evaluation process of its own performance boardcommittees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI LODR. As part of evaluationprocess questionnaire on various aspects governing the company was circulated to directorsfor their individual opinion through electronic mode thereafter individual telephonicinterviews with all directors were carried out as part of the evaluation process and itwas ascertained that the company has maintained the highest standards of the Corporategovernance and integrity in all its practices. The NRC and Board further considered theobservations and has taken necessary measures to implement the suggestions.

.22. DETAILS OF REMUNERATION / COMMISSION

RECEIVED BY MD OR ED FROM SUBSIDIARIES

During the FY 2020-21 Mr. B.N. Raveendra Babu (Non-executive director)(DIN:00043622) has received remuneration by way of sitting fee `0.40 million forattending Board/Committee meetings of the subsidiary Manappuram Insurance Brokers Limitedand Mr. V. P Nandakumar (Managing Director & CEO) (DIN: 00044512) has not received anyremuneration or commission from any of the subsidiaries of the Company for the FY 2020-21.

23. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINTVENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

No company became or ceased to be subsidiary or joint venture or associate company ofManappuram Finance Limited during the Financial Year 2020-21

24. 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 theconclusion of 30th 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(12) of the Act.

Secretarial Audit

The Board appointed KSR & Co. Practicing Company Secretaries LLP to conductSecretarial Audit for the financial year 2020-21.

Secretarial audit report for year ended on 31st March 2021 as provided byKSR & Co. Practicing Company Secretaries LLP Indus chambers Ground floor No. 101Govt Arts College Road Coimbatore-641018 is annexed to this Report as Annexure- VI.

No Fraud has been reported by the Secretarial auditors under Section 143(14) ofCompanies Act 2013 As per Regulation 24A(1) of SEBI (Listing Obligation and DisclosureRequirements) 2015 company does not have any unlisted material subsidiaries.

Company has a debt listed Material Subsidiary Asirvad Micro Finance Limited and wehereby attach its secretarial Audit report for the FY 2020-21 for your reference Thereports issued by Statutory Auditor and Secretarial Auditor does not contain anyqualification reservation adverse remark or disclaimer

Information systems Audit

In terms of the Master Direction on Information Technology Framework for the NBFCSector NBFCs are required to have an information system audit at least once in two years.During FY2021 a system audit was conducted by a CERT-in empanelled audit firm. The areasaudited were inter alia user access management patch management business continuityand disaster recovery data protection and the information security management systemframework. The audit revealed no major observations. In compliance with the RBI MasterDirection on the IT framework for the NBFC sector We are doing the Information SystemsAudit at least once in every year. MAFIL has engaged PricewaterhouseCoopers(PwC) forconducting this audit for the FY 2020-21. The scope of the audit covers the effectivenessof the policies IT systems adequacy of internal controls effectiveness of BCP and DRcompliance to legal and statutory requirements and the security testing of criticalapplications.

25. DIRECTORS AND KEY MANAGERIAL PERSONNEL CHANGE IF ANY

Mr B.N Raveendra Babu (DIN: 00043622) ceased to be Executive Director with effect from01.06.2020 and was redesignated as Non-executive director in the Board meeting held on 29thMay 2020 with effect from 01.06.2020.

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 andhe was appointed as Independent Director in the Annual General Meeting held on 28.08.2020with effect from 28.08.2020.

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 andhe was appointed as Independent Director in the Annual General Meeting held on 28.08.2020with effect from 28.08.2020.

There was no change in Key managerial Person's during the FY 2020-21

26. INCREASE IN SHARE CAPITAL

During the year 2020-21 the Company has allotted 1371604 equity shares of ` 2 eachpursuant to exercise of stock options. Consequently the paid-up equity share capital ofthe Company stood as on 31.03.2021 at

` 1692.73 million consisting of 846364729 equity shares of ` 2 each.

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

Change in Nature of Business if any

There has been no change in the nature if business during the Financial year 2020-21

27. 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 2020-21 the Company has not accepted deposits as per Chapter V of the Act.

28. 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.

Constitution of Statutory committees are in compliance with the corporate governanceprovisions as specified in the master direction issued by the Reserve Bank of India.

As on 31st March 2021 the Capital Adequacy Ratio of the Company is 29.02%which is well above the statutory requirement of 15%. The Company has not issued anyPerpetual Debt Instruments.

29. COMPLIANCE WITH SECRETARIAL STANDARDS OF ICSI

Company has complied with Secretarial Standards-1 (SS-1) on Board meetings andSecretarial Standards-2 (SS-2) on General meetings issued by the Institute of Companysecretaries of India.

30. QUALIFICATION ADVERSE REMARKS RESERVATIONS BY AUDITORS IF ANY

There are no Qualification Adverse Remarks Reservations by statutory Auditors in theIndependent Auditors Report and secretarial auditors in the Independent Auditors Report.

31. 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://www.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

32. DISCLOSURE

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

33. 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 dedicated telephone line or a letterto the Chairperson and a Member of the Audit Committee.

No person has been denied access to the Chairman and a Member (Woman Director) of theaudit committee. Company has ensured that its employees are well aware of the content andprocedure of the policy and fully protected. The Whistle Blower Policy and Vigil Mechanismmay be accessed on the Company's website at the link https://www.manappuram.com/public/uploads/editor-images/files/Policy-18-whistle%20 blower%20policy.pdf

No complaints were reported during the FY 2020-21

34. EXTRACT OF ANNUAL RETURN

Annual return in Form-MGT-07 has been posted in the website the link of the same ismentioned below for reference https://www.manappuram.com/investors/ annual-reports.html

35. 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. Board also appointedKPMG to provide co-sourced internal audit services to assist management of the company inthe appraisal of its internal control functions recommend improvements in processes andprocedures and surface significant observations and recommendations for processimprovements. Their observations along with management response are periodically reviewedby Audit Committee and Board and neccessary actions are taken.

36. LISTING WITH STOCK EXCHANGES

Your Company confirms that it has paid the Annual Listing Fees for the financial year2020-21 to BSE and National Stock Exchange (NSE) where the Company's shares are listed.

37. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year under review there were 12 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 2020-21.

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.

38. CONSOLIDATED FINANCIAL STATEMENTS

In Accordance with the Act SEBI LODR and Indian Accounting Standard (IndAS) 27 onConsolidated Financial statements the audited consolidated financial statement is providedin the Annual Report.

39. CREDIT RATING

Your Company holds valid credit rating from Brickwork CRISIL and CARE forNon-Convertible Debentures Short Term and Long-Term Bank Facilities and Commercial Paperas follows: a. CRISIL rated Bank Loan Facilities amounting to `50000 million as CRISILAA/Stable. b. CRISIL rated Non – Convertible Debentures amounting to `47151 millionas CRISIL AA/Stable. c. CRISIL rated Commercial Paper of `40000 million as CRISIL A1+ d.CRISIL rated PCG DA Nov 2019 of `1000 million as CRISIL AA (SO) e. CRISIL rated MarketLinked Debenture of `5000 million as CRISIL PP - MLD AA r/Stable f. CARE rated Bank LoanFacilities for Long Term amounting to `60444 million as CARE AA (Stable) (Double A;Stable) g. CARE rated Bank Loan Facilities for Short Term amounting to `29556 million asCARE A1+ (A One Plus) h. Care rated Non-Convertible Debentures amounting to `30972million as CARE as AA (Stable) i. Care rated Commercial Paper of `40000 million as CAREA1+ (A 1 Plus) j. Brickwork rated Non – Convertible Debentures amounting to `10030million as BWR AA+(Stable) k. Brickwork rated Bank Loan facilities amounting to `70000million as BWR AA+ (Stable) l. S&P rated US$ 750 million EMTN Programme and SeniorSecured Notes as B+ /Stable and Short Term as B m. Fitch rated US$ 750 million EMTNProgramme and Senior Secured Notes as BB- /Stable

40. DETAILS OF AUCTIONS HELD DURING THE YEAR 2020 -21

Additional disclosures as required by RBI NDSI Master Directions 2016 except for thebelow;

Year Number of Loan Accounts Principal Amount outstanding at the dates of auctions (A) (`in million) Interest Amount outstanding at the dates of auctions (B) ( ` in million) Total (A+B) ` ( in million) Value fetched (`in million)
31-03-2020 48026 1161.54 214.87 1376.41 1505.62
31-03-2021 74553 4122.48 696.92 4819.40 4464.11

Note: No sister concern participated in the auctions during the year ended 31stMarch 2020 and 31st March 2021.

The excess amount realized in the auction is credited in a separate bank account.

41. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

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

42. 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 31st March 2021 as stipulatedin Part E of Schedule V of SEBI LODR is annexed as Annexure - X.

43. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

There were no such significant / material orders passed by the Regulators during thefinancial year 2020-21 except for the below.

Regulator Regulation Amount of penalty Paid details
RBI Para 26 (2) of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company ` 500000/- Penalty paid on 23-11-2020 UTRNo: NEFT/AXISP00162251894/ MANAPPURAM231120203/Enforce
(Reserve Bank) Directions 2016 (updated from time to time)
Charge - Failure to keep a record of verification of ownership of jewellery pledged by the borrowers and absence of Board approved policy in this regard. RBI Letter Ref No – EFD.
CO.S0/106/02.14.006/2020-21 November 19 2020

44 MATERIAL EVENTS 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 2020-21 and the date of thisreport.

45. 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.

46. 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
Place: Valapad Sd/-
Date: 26th May 2021 Jagdish Capoor

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