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Muthoot Finance Ltd.

BSE: 533398 Sector: Financials
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OPEN 1459.70
VOLUME 36103
52-Week high 1722.55
52-Week low 1090.25
P/E 14.53
Mkt Cap.(Rs cr) 57,434
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1459.70
CLOSE 1473.60
VOLUME 36103
52-Week high 1722.55
52-Week low 1090.25
P/E 14.53
Mkt Cap.(Rs cr) 57,434
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Muthoot Finance Ltd. (MUTHOOTFIN) - Director Report

Company director report

Dear Stakeholders

Your Board of Directors is pleased to share with you the 24th AnnualReport of Muthoot Finance Limited ("Company") enumerating the businessperformance along with the Audited Financial Statements (standalone and consolidated) forthe financial year ended March 31 2021.

1. Financial Summary

The summarized standalone and consolidated results for the Company withprevious year's figure are given in the table below:

Rs in millinn



Particulars Year Ended March 31 2021 Year Ended March 31 2020 Year Ended March 31 2021 Year Ended March 31 2020
Total Income 105743.59 87227.91 115664.19 97072.67
Total Expenses 55678.46 46653.81 64349.39 54468.76
Profit Before Tax 50065.13 40574.10 51314.80 42603.91
Tax expense 12843.35 10391.10 13126.10 10917.10
Profit for the year 37221.78 30183.00 38188.70 31686.81
Equity 152388.93 115718.13 155750.25 118292.10
Total Liabilities 482260.31 388878.41 530664.10 430524.82
Total Assets 634649.24 504596.54 686414.35 548816.92

2. Dividend

Your Board has declared an interim dividend at '20 per equity share(200% of face value) for the financial year 2020-21 on April 12 2021. The dividend payoutamounted to '8023.92 million representing 21.56% of profit after tax for the year. TheBoard has decided to plough back the remaining profit after tax for business activitiesduring the Financial Year.

The Dividend distribution policy in terms of Regulation 43 A of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirement)Regulations 2015 ("SEBI Listing Regulations") of the Company is available onthe website at https://www. The list of unpaid dividend is available on theCompany's website at of-shares. Shareholdersare requested to check the said list and if any dividend due to them is remaining unpaidin the said list. Shareholders can approach the Company or Registrar and Transfer Agent ofthe Company for release of unclaimed dividend.

3. Transfer to Reserves

Your Board of Directors has transferred an amount of '7444.35 millionsto the Statutory Reserve maintained under Section 45 IC of the RBI Act 1934. Posttransfer of profits to reserves your Board proposes to retain '61749.04 millions in theRetained Earnings.

4. Company's Performance

During the Financial Year Company achieved 23% increase in itsprofitability with a net profit of '37221.78 millions for the year ended March 31 2021as compared to '30183.00 millions for the year ended March 31 2020. Profit before taxincreased by 23% to '50065.13 millions. Total Income has increased from '87227.91millions for the year ended March 312020 to '105743.59 millions for the year endedMarch 31 2021 which is mainly due to increase in Interest Income of the Company. Interestincome of the Company increased to '103285.29 millions from previous year'sinterest income of '85644.00 millions. Loan Assets Portfolio of the Company increased by'110117.32 millions during the year reaching '526223.37 millions as on March 31 2021 asagainst '416106.05 millions as on March 31 2020. The Return on Average Loan Asset stoodat 7.99% in FY 2020-21 as against 8.11%in FY 2019-20. Interest yield was 22.17% ascompared to 23.03% in FY 2019-20. Net Interest Margin was 14.24% as compared to 15.52% inFY 201920. The Company remitted to exchequer '13057.03 millions as taxes.

5. Share Capital

During the Financial year no preferential issue of shares withdifferential rights as to dividend voting as otherwise was exercised by the Company. TheCompany has also not carried out any buy back of its equity shares during the year underreview.

Employee Stock Options

During the year your Company has allotted 158530 equity shares offace value of '10/- each under Muthoot ESOP 2013 pursuant to exercise of 158330 optionsof '50/- each for Growth Options and 200 options of '10/- each for Loyalty Options byemployees of the Company.

The disclosures as required under Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 read with SEBI CircularCIR/CFD/POLICY CELL/2/2015 dated 16th June 2015 is attached to this report as Annexure 1and is also available on the website of the Company at Please refer note 46 of Notes forming part ofStandalone Financial Statements for further disclosures on ESOPs. The Company does nothave any scheme to fund its employees to purchase the shares of the Company.

Your Company has received the certificate from the Statutory Auditorsof the Company certifying that the ESOP scheme is implemented in accordance with theapplicable SEBI Regulations and is in accordance with the resolution passed by the membersof the Company. The certificate would be placed at the Annual General Meeting forinspection by members.

The Employee Stock Option Schemes is in compliance with Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 and there havebeen no material changes to these plans during the Financial Year 2020-21.

Investor Education and Protection Fund

During the financial year 2020-21 the Company has transferred theunclaimed dividends of '1287375 to Investor Education and Protection Fund. Further2309 corresponding equity shares on which the dividends were unclaimed for sevenconsecutive years were transferred to Investor Education and Protection Fund("IEPF") during the financial year 2020-21 as per the requirements of IEPFrules.

No claim will lie on Company on account of dividend after the dividendis transferred to IEPF.

6. Resource Mobilization

(a) Non-Convertible Debentures:

Your Company successfully completed 23rd and 24th Issue ofNon-Convertible Debentures through Public Issue during FY 2020-21 raising '22929.86millions. Company has raised '36455.00 millions through Private Placement ofNon-Convertible Debentures during the financial year.

Subordinated Debts represents long term source of funds for the Companyand the amount outstanding as on 31st March 2021 was '2106.48 millions. It qualifies asTier II capital under the Non-Banking Financial Company- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions 2016.

(b) Bank Finance

Bank Finance remains an important source of funding for your Company.Commercial Banks continued their support to your Company during Financial Year. As of 31stMarch 2021 borrowings from banks were '195567.63 million as against '143756.21millions in the previous year.

(c) External Commercial Borrowings

Your Company has outstanding Senior Secured Notes of 6.125% USD 450million issued in October 2019 for a period of 3 years and 4.40% USD 550 million issued inMarch 2020 for a period of 3 % years falling under Regulation 144A / Regulation S of theUS Securities Act 1933. These Notes are listed in the International Securities Market ofLondon Stock Exchange.

7. Credit Rating

The Company has debt credit ratings as below:

Domestic Ratings:

Credit Rating Agency Instruments Ratings
CRISIL Commercial Paper CRISIL A1+
Subordinated Debts CRISIL AA+/Stable
Non-Convertible Debentures CRISIL AA+/Stable
ICRA Commercial Paper [ICRA] A1+
Short Term Bank Borrowings [ICRA] A1+
Long Term Bank Borrowings ICRA AA+(Stable)
Subordinated Debts ICRA AA+(Stable)
Non-Convertible Debentures ICRA AA+(Stable)

International Credit Ratings:

Credit Rating Agency Ratings
Fitch Ratings BB(Stable)
S&P Global Ratings BB(Negative)
Moody's Investor Service Ba2(Stable)

8. Internal Audit and Internal Financial Control

Over the years Company has evolved a robust proper and adequateinternal audit system in keeping with the size of the Company and its business model. YourCompany has developed well documented internal audit and control system for meticulouscompliance from all layers of the Company. The control system ensures that theCompany's assets are safeguarded and protected. The audit system also takes care tosee that revenue leakages and losses to the Company are prevented and our income streamsare protected. The control system enables reliable financial reporting.

Company has a well-structured Audit & Inspection department toperform timely and frequent internal audit to evaluate the adequacy of systems andprocedures and also to evaluate the status of compliance to Company's guidelines and otherstatutory requirements. The department is manned by a team of over 900 dedicated personnelwho constantly engaged in safeguarding your Company's assets ensures the quality ofassets pledged and also evaluates the adequacy of risk management systems at its operatingunits. In keeping with the huge network and geographic outreach of the operating unitsspread across the length and breadth of the country the audit functions have beendecentralized through setting up of Regional Audit offices in important Regional centers.The Regional Audit Offices exercise field level control over the branches through onsitevisits and online audit systems. The field level Auditors report to Regional Audit officeswho in turn shares their findings with the Audit & Inspection Department at theRegistered Office of the Company.

Audit Committee of Board of Directors is apex Audit Authority of theCompany. Under the present Audit Architecture the Internal Audit Department reports tothe Audit Committee regarding significant audit findings and also preventive andcorrective measures to protect the interests of the Company.

The audit Committee undertakes an evaluation of the adequacy andeffectiveness of internal control systems. It also oversees the implementation of auditrecommendations especially involving the risk management measures.

In addition to reviewing the internal control systems put in place bythe Audit & Inspection Department the Audit Committee also imparts guidance andcrucial directions for upgradation of systems and controls on ongoing basis.

At present the Audit system prevalent in the Company is completelyautonomous function and built on best corporate governance framework.

Reference is invited to Note 50 of Notes forming part of the standalonefinancial statements contained in the annual report regarding frauds committed byemployees/customers of the Company which are dealt with according to Reserve Bank of Indiaguidelines and are in nature of operation related frauds due to nature of business of theCompany. Company has taken or is in the process of taking disciplinary/ legal actionagainst such employees/customers.

9. Human Resources

As on March 31 2021 the Company had 25911 employees in its rolls atvarious level of organizational structure. Our employees remain one of the company'sgreatest assets. We at Muthoot believe in recognizing and appreciating employees fortheir valuable contribution and loyalty. We offer equal opportunities to all our employeesirrespective of gender to learn and grow in the organization. For the convenience of ouremployees and bringing new ways of working we are promoting digitalization for ouremployees as well as customers.

Recognizing the employee friendly efforts that we have put in ourCompany is certified as Great Place to work for the year 2021-22. The 2021-22certification is an indication of how well Muthoot Finance has adapted to the challengesbrought about by the COVID-19 pandemic.

Since the onset of the pandemic your Company has carried out variousemployee welfare measures such as providing additional paid COVID leaves to employeessalaries to employees during lockdown period to ensure their well-being. Also during theperiod of pandemic your company has ensured that no job loss occurred. We have automatedvarious HRMS modules to bring in efficiency in practices. Your Company has committed tohiring and retaining the best talent and being among the industry's leading employers haveaccelerated hiring offering them various roles in addition to promotion of existingemployees during the financial year 2020-21.

During the COVID times all the classroom training programs were movedto the virtual environment and the trainings were conducted online using videoconferencing tools.

10. Major Marketing & Promotion Initiatives

As a leader in the business segment it is incumbent upon us to takethe lead in creating new consumer segments and growing the gold loan category byreinforcing and encouraging people to unlock the potential of their household goldornaments by availing Gold Loans. And what better way to achieve this other thandemonstrating inspiring stories of real men and women who had chosen to take a Gold Loanfrom Muthoot Finance and move ahead in life.

Our association with Shri. Amitabh Bachchan continued as we foundstrong relevance correlation and fitment between the brand and Mr Bachchan's valuespedigree poise respect leadership acceptability association success philanthropyand more attributes. The initiatives during the year were focussed on impressing uponpeople the prudence of opting for Gold Loans telling great stories of people who'veovercome challenges with a little help from us in the form of Gold Loans and for the firsttime consciously communicating and reaching out to high value customers.

(a) "Gold Loan Is Good" - Integrated Marketing Campaign

This campaign sought to dispel common fears and apprehensions inpeople's minds about Gold Loans as also a few things that they probably did not knowabout Gold Loan from Muthoot Finance. The campaign captured facilities or features uniqueto Gold Loan from Muthoot Finance and also assured potential and current users about thelong standing pedigree of Muthoot Finance in the category. The campaign garnered atremendous response from all quarters including prospective customers media and otherstakeholders.

(b) "Sunheri Soch" - Radio & Digital Marketing Campaign

This campaign captured testimonials of people who've benefitedfrom Muthoot Finance Gold Loans. It brought to life extraordinary success stories ofreal-life people men & women from different walks of life across locations economicbackground and other diversities. The campaign received an overwhelming response from ourtarget customers and new loan seekers as it inspired millions of other Indians to unlockthe true potential of their emotional currency (household gold) and move ahead in life.

(c) "The Muthoot Group - Greater Kailash Metro Station"Branding

We extended our association with Delhi Metro Rail Corporation byrenewing our semi- naming rights branding at Greater Kailash Metro Station in Delhi.

Over the least 3 years this association helped us leverage a prominentand strategic location located on an arterial road in South Delhi; in the form ofseminaming and complete branding of Greater Kailash Metro Station. The station brandingbeautifully showcases our Group's impeccable corporate credentials and key products andservice offerings such as our 5000+ widespread branch network +2.5 Lac customers servedevery day Muthoot Big Business Loan Muthoot Loan@Home facility.

(d) "Ayush Gold Loan" - Integrated Marketing Campaign

The unique product created as response to the pandemic situation wascreated and launched in quick time in Q2 FY 20-21 and was followed by an integratedmarketing campaign.. The campaign featured Shri Amitabh Bachchan and the IPL franchiseeChennai Super Kings. The scheme provided a double benefit to customers as they could nowavail a Gold Loan and

take care of all their financial needs and at the same time we tied upwith a reputed insurance company and along with our Gold Loan product COVID insurance wasalso offered. An integrated marketing campaign across Print Digital TV Outdoor and BTLmedia was executed. Full Page newspaper ads were released in the most prominent regionalpapers to spread awareness on our unique scheme.

(e) Trust Only Muthoot Finance - CSK TVC Campaign

The Muthoot Group was the Principal Team Partner of Chennai Super Kingsduring FY 20-21 and launched three special TVC's during IPL 2020 (UAE) featuring ChennaiSuper Kings cricketing stars. Former Indian captain MS Dhoni took the lead in the theseTVC's that highlighted how in three very important aspects of the game some chances canbe taken but not when it comes to Gold Loan pitching in the trusted name and No. 1status of Muthoot Finance.

(f) The Muthoot Group - Chennai Nandanam Metro Station Branding

The association with Chennai Metro Rail Limited was extended byrenewing the semi-naming rights branding at Nandanam Metro Station in Chennai. Theassociation has helped the brand by making our brand presence felt in a very prominentlocation of Chennai. The station branding includes our Group's impeccable corporatecredentials and key products and services offering such as our widespread branch networkour Loan at home facility and the unique Gold Unlocker.

(g) "Loan at Home" Integrated Marketing Campaign

The "Loan at Home " service was actively supported by acampaign across media. Our brand ambassador Shri Amitabh Bachchan delivers the brandmessage powerfully after a strong "need" is established in the multiplecommercial films. The campaign showed the convenience and ease offered by our "Loanat Home" service which allows our customers to avail Gold Loan from Muthoot Financenow from the comfort and safety of their homes.

Loan at Home expands the services of India's No 1 Most TrustedFinancial Services Brand - Muthoot Finance to beyond the 4632 branch network to almostevery customer's doorstep.

(h) "Gold Unlocker" Integrated Marketing Campaign

Muthoot Finance Gold Unlocker campaign was launched in Q4 FY 20-21featuring Revathy the well known star from the film and now television industry. Thecampaign was focused on announcing the key nature and feature of this gold loan productit being a

24x7 Credit Line that allows access to funds - Anytime Anywhere. Thiscampaign was targeted at prospects who would want to plan their expenses better and beready for any eventuality. Through imuthoot app Gold Unlocker customers could have easyaccess to this credit line whenever they needed it.

An integrated marketing campaign was executed across Print TVDigital Outdoor and BTL media. The campaign on digital alone created a footprint of 12Cr+views. The product is slowly getting accepted and changing the way people manage theirfinances.

(i) Awards & Recognitions

a. 'Sunehri Soch' Radio Campaign was honoured with the Best RadioCampaign of the Year by Global Marketing Excellence Awards 2020.

b. "Gold Loan is Good" Campaign was adjudged the BestIntegrated Campaign and also for the Best Use of Celebrity / Influencer by GlobalMarketing Excellence Awards 2020.

c. Extremely humbled to share that our hugely successful "SochBadaliye" integrated marketing campaign that aimed at creating an attitudinaltransformation in the way people perceive Gold Loans was awarded at the recently concludedExchange4Media's Indian Content Marketing Awards 2020 in the Best Branded ContentMarketing on TV Category

d. Muthoot Finance Limited was awarded India's No. 1 Most TrustedFinancial Services Brand for the 5th year in a row by Brand Trust Report 2020.

e. Our "Soch Badaliye aur Life Mein Aagey Badhiye"Campaign also won the prestigious Primetime Award 2020 for one of the Best CreativeCampaigns in the BFSI Sector.

11. Capital Adequacy

Your Company's Capital Adequacy Ratio as of March 31 2021 stoodat 27.39% of the aggregate risk weighted assets on balance sheet and risk adjusted valueof the off-balance sheet items which is well above the regulatory minimum of 15%. Out ofthe above Tier

I capital adequacy ratio stood at 26.31% and Tier II capital adequacyratio stood at 1.08%.

12. Public Deposits

The Company is a Systemically Important Non-Deposit Taking NBFC and hasnot accepted any public deposits. Hence disclosure regarding details of deposits coveredunder Chapter V of the Companies Act 2013 ("Act") are not applicable.

13. RBI Guidelines

Your Company has complied with all the applicable regulationsprescribed by the Reserve Bank of India from time to time. Please refer note 52 53 5455 and 56 of Notes forming part of Standalone Financial Statements for additionaldisclosures required under RBI Guidelines applicable to the Company.

14. Subsidiaries/ Associates/ Joint Ventures

As on March 31 2021 your Company had seven subsidiaries namely AsiaAsset Finance PLC Muthoot Homefin (India) Limited Muthoot Insurance Brokers PrivateLimited Belstar Microfinance Limited

Muthoot Money Limited Muthoot Asset Management Private Limited andMuthoot Trustee Private Limited. Your Company's subsidiaries have been contributing to theoverall growth of your Company during the year. As required under Section 136 of the Actthe audited financial statements including the consolidated financial statements of yourCompany are available on the website of the Company. The audited financial statements ofeach of its subsidiaries are also available on the website of the Company at The above documents will also be available forinspection at the Registered Office of the Company during business hours.

During the year under review the Board of Directors reviewed theaffairs of the subsidiaries. In accordance with Section 129 (3) of the Act we haveprepared the consolidated financial statements of the Company which form part of theAnnual Report. The statement containing the salient features of the financial statement ofyour Company's Subsidiaries in Form AOC 1 is annexed to Standalone Financial Statements ofthe Company as required under Rule 5 of The Companies (Accounts) Rules 2014.

There are no other Companies which have become or ceased to beSubsidiaries/ Associates/ Joint Ventures of the Company during the Financial Year 2020-21.

There has been no material change in the nature of business ofsubsidiary companies during the financial year 2020-21.

The Board of Directors of your Company has formulated a policy onmaterial subsidiary which is displayed on the web site of the Company 08/1472561568policy%20on%20material%20subsidiary.pdf.

As on March 31 2021 Company did not have any material subsidiary.

Financial Performance & position of Subsidiaries

a. Asia Asset Finance PLC:

Asia Asset Finance PLC (AAF) a Company listed in Colombo StockExchange is a subsidiary of your Company from December 31 2014. AAF where your Companyholds 72.92% of equity capital is a registered Financial Company with Central Bank of SriLanka and is mainly engaged in Vehicle Finance and Hire Purchase Activities. The Companywhich has also started business relating to lending against collateral of gold jewelleryand micro finance is presently contributing a significant part of loan portfolio andincome. AAF has operations across Sri Lanka with 48 branches as on March 31 2021 AAF hasmade considerable progress in its business. Its major financial parameters for FinancialYear 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) LKR/INR as on 31.03.2021 -0.3677855; Average Exchange Rate of Financial Year 2020-21 - 0.393785 1162.59 34.16 17.80 817.25 5645.67 4828.42
Amounts in LKR (in millions) 2952.34 86.75 45.20 2222.08 15350.43 13128.35

AAF increased its loan portfolio during the year by 1.18% at LKR14002.23 millions. Total Income for FY 21 stood at LKR 2952.34 millions as againstprevious year total income of LKR 3332.62 millions. It generated a profit after tax ofLKR 45.20 millions during FY21 as against previous year profit after tax of LKR 70.15millions.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MHIL) a registered Housing FinanceCompany licensed by National Housing Bank is a wholly owned subsidiary of your Company.Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 2408.65 168.66 125.51 4386.59 16783.92 12397.33

MHIL's loan portfolio stood at '17041.70 millions. Total income forFinancial Year 2020-21 stood at '2408.65 millions as against previous year total incomeof '2876.10 millions. It achieved a profit after tax of '125.51 millions in FinancialYear 2020-21 as against previous year profit of '317.77 millions.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL) is an unlistedPrivate Limited Company holding a license to act as Direct Broker from InsuranceRegulatory and Development Authority of India (IRDA) since 2013. MIBPL is a Wholly- OwnedSubsidiary Company of your Company. Its major financial parameters for Financial Year2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 467.38 424.09 316.37 846.99 863.82 16.83

MIBPL generated a First year premium collection amounting to '2641.70millions during Financial Year 2020-21 as against '2059.02 in the previous year. Itgenerated a Profit after Tax of '316.37 millions during Financial Year 2020-21 as against'103.98 millions in the previous year.

d. Belstar Microfinance Limited:

M/s. Belstar Microfinance Limited (BML) is a micro finance Company. Atend of the Financial Year 2020-21 your Company holds 70.01% of the equity capital of BML.Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 5531.59 570.12 466.51 5417.16 34672.88 29255.72

BML grew its loan portfolio during Financial Year 2020-21 by 25%reaching '32998.59 millions. It achieved a profit after tax of '466.51 millions duringFinancial Year 2020-21 as against previous year profit after tax of '989.99 millions.

e. Muthoot Money Limited

M/s. Muthoot Money Ltd (MML) a registered Non-Banking Finance Companylicensed by Reserve Bank of India is a subsidiary of your Company. Its major financialparameters for Financial Year 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 697.31 41.29 37.47 1099.43 3888.86 2789.43

MML's loan portfolio stood at '3668.13 millions. Total income forFinancial Year 2020-21 stood at '697.31 millions as against previous year total income of'703.62 millions. It achieved a net profit of '37.47 millions in Financial Year 2020-21 asagainst previous year profit of '26.90 millions.

f. Muthoot Asset Management Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. MuthootAsset Management Private Limited ("MAMPL") which is yet to commence commercialoperations. Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 38.91 27.23 19.15 1072.26 1092.32 20.06

g. Muthoot Trustee Private Limited

Your Company has incorporated a wholly owned subsidiary M/s. MuthootTrustee Private Limited ("MTPL") which is yet to commence commercial operations.Its major financial parameters for Financial Year 2020-21 are as follows:

Parameters Total Income Profit Before Tax Profit After Tax Equity Total Assets Total Outside Liabilities
Amount in INR (in millions) 523.22 (95.28) (95.00) 9777.49 9803.24 25.75

15. Particulars Of Loans Guarantees Or Investments Under Section 186of Act

Pursuant to Section 186(11)(a) of the Act read with Rule 11(2) of theCompanies (Meetings of Board and its Powers) Rules 2014 the loan made guarantee givenor security provided in the ordinary course of business by a Non- Banking FinancialCompany (NBFC) registered with Reserve Bank of India are exempt from the applicability ofprovisions of Section 186 of the Act. As such the particulars of loans and guarantee havenot been disclosed in this Report. The details of the Investments of the Company arefurnished under Note 9 of Notes forming part of the Standalone Financial Statements forthe year ended March 31 2021.

16. Annual Return

In accordance with the provisions of Section 92(3) read with Section134(3) (a) of the Act Annual Return of the Company is hosted on website of the Company at Return_FY21.pdf

17. Consolidated Financial Statements

The audited consolidated financial statements of the Company along withits subsidiaries AAF MHIL BML MML MAMPL MTPL and MIBPL prepared in accordance withthe IndAS to comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014 and the relevant provisions ofthe Act is provided in the Annual Report.

18. Risk Management

The Board of Directors of the Company has formed a Risk ManagementCommittee to frame implement and monitor the risk management plan for the Company. TheCommittee is responsible for monitoring and reviewing the risk management plan andensuring its effectiveness. The Audit Committee has additional oversight in the area offinancial risks and controls.

The major risks identified by the businesses and functions aresystematically addressed through mitigating actions on a continuing basis. The developmentand implementation of risk management policy has been covered in the Management Discussionand Analysis which forms part of this report.

19. Corporate Social Responsibility

The Company's CSR policy is committed towards CSR activities asenvisaged in Schedule VII of the Act. The Details of CSR policy of the Company areavailable on the website of the Company at CSR_Policy_May_2021.pdf. The Annual Reporton CSR activities as required under Companies (Corporate Social Responsibility Policy)Rules 2014 is attached to this report as Annexure 2.

The details of Corporate Social Responsibility and BusinessResponsibility Committee is provided in the annual report on Corporate SocialResponsibility annexed to this Report.

During the year under review the Committee met four times on June 162020 August 18 2020 November 2 2020 and February 08 2021 respectively.

20. Business Responsibility Report

Regulation 34 of the SEBI Listing Regulations mandates the inclusion ofthe Business Responsibility Report ("BRR") as part of the Annual Report for top1000 listed entities based on their market capitalization. The BRR is attached to thisreport as Annexure 3.

21. Particulars Of Contracts or Arrangements made with Related Parties

The Board of Directors of your Company has put in place a policy forrelated party transactions (Policy on Related Party Transactions and Materiality ofRelated Party Transactions) which has been approved

by the Board of Directors. The policy provides for identification ofRPTs necessary approvals by the Audit Committee/ Board /Shareholders reporting anddisclosure requirements in compliance with the Act and provisions of the SEBI ListingRegulations. Policy is available on the website of the Company at pdf

All contracts executed by the Company during the financial year withrelated parties were on arm's length basis and in the ordinary course of business.

All such related party transactions were entered into in accordancewith the Policy on Related Party Transactions and Materiality of Related PartyTransactions of the Company.

Prior omnibus approval was obtained for related party transactionsunder Section 188 (1) of the Act which are of repetitive nature and entered in theordinary course of business and at arm's length. All related party transactions wereplaced before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to inSection 188 (1) of the Act entered into during the year were on arm's length basis orwere in ordinary course of business or with approval of the Audit Committee. During theyear your Company had not entered into any contract / arrangement / transaction withrelated parties which could be considered material in accordance with the Policy onRelated Party Transactions and Materiality of Related Party Transactions. Further therewere no material related party transactions which required approval of shareholders asrequired under Chapter IV of SEBI Listing Regulations. The disclosure of related partytransactions as required under Section 134(3) (h) of the Act in Form AOC 2 is attached tothis report as Annexure 4.

The details of related party transactions with the related partiesentered into during the financial year are disclosed in Notes to Standalone FinancialStatements of the Company.

22. Audit Committee

Details on Audit committee terms of reference and meetings appear onthe Report on Corporate Governance annexed to this report. All recommendations of AuditCommittee were accepted by your Board during the financial year 2020-21.

23. Vigil Mechanism

The Company has established a Vigil Mechanism/ Whistle Blower policy toenable Directors Stakeholders including individual employees and their representativebodies to report in good faith

unethical unlawful or improper practices acts or activities. The saidmechanism ensures that the whistle blowers are protected against victimization/ anyadverse action and/ or discrimination as a result of such a reporting and provides adirect access to the Chairman of the Audit Committee in exceptional cases. The Companyhereby affirms that none of its personnel have been denied access to the Audit Committee.The whistle blower policy is available at website of the Company at mechanism.

24. Listing

Equity Shares of your Company are listed on National Stock Exchange ofIndia Ltd and BSE Limited. NonConvertible Debentures issued by the Company through publicissues are listed on BSE Ltd. Your Company has paid applicable listing fees to StockExchanges.

Senior Secured Notes issued by the Company are listed on theInternational Securities Market of London Stock Exchange.

25. Changes in Directors and Key Managerial Personnel


Mr. M G George Muthoot Chairman of the Company ceased to be a Directordue to his demise on March 05 2021. Mr. George Jacob Muthoot has been appointed as theChairman of the Company effective June 02 2021.

Appointments - Independent Directors

Ms. Usha Sunny was appointed as an additional and Independent Directoreffective November 30 2020 for a period of three consecutive years to the Board of theCompany subject to the approval of the shareholders at the ensuing Annual General Meeting.Your Board recommends the appointment of Ms. Usha Sunny as an Independent Director on theBoard of Directors of the Company. The notice convening the 24th AGM sets out the detailedprofile of Ms. Usha Sunny. In the opinion of the Board Ms. Usha Sunny brings experienceintegrity proficiency and expertise in the domain of finance that will provide valuableinsights in improving overall business and governance functions of the Company.

In order to comply with the Corporate Governance requirements of SEBIListing Regulations and the Act your Board proposes to appoint Mr. Abraham Chacko asIndependent Director of the Company subject to approval of the shareholders in theupcoming Annual General Meeting. Mr. Abraham is an experienced banker by profession andhad held senior most positions in various banks in the past including Executive Directorin Federal Bank Limited a BSE &

NSE listed and one of the oldest private sector bank in India. Detailedprofile of Mr. Abraham Chacko is provided in the Notice of the AGM.

Appointments - Whole Time Directors

Your Board on the recommendation of the Nomination and RemunerationCommittee proposes the appointment of Mr. George Muthoot George Mr George Muthoot Jacoband Mr George Alexander as Directors liable to retire by rotation and Whole Time Directorsin the Board of Directors with effect from October 01 2021. The proposed appointment willbring in more youthful energy and experience into the Board of Directors of the Company.

As per the provisions contained in Circular DNBR (PD) CC. No.065/03.10.001/2015-16 dated July 09 2015 approval of the Reserve Bank of India isrequired for the appointment of the three whole time directors on the Board of the Companysince such appointment results in change in more than 30 percent of the directorsexcluding the independent directors. Currently your Board has 4 non-independent directorson the Board and the appointment of 3 new directors on the Board would result in more than30 percent change in the Board of Directors as mentioned in the said circular. YourCompany has made applications to the Reserve Bank of India seeking its approval for theproposed appointment on the Board of Directors. Hence the appointment of Mr. GeorgeMuthoot George Mr. George Alexander and Mr. George Muthoot Jacob as Whole Time Directorson the Board of Directors of the Company would be subject to receipt of approval from theReserve Bank of India and will be effective from October 01 2021 or such other dateReserve Bank of India provide its approval whichever is later.

Necessary resolutions seeking shareholders' approval for the proposedappointments are provided in the notice calling the Annual General Meeting.

Directors Liable to retire by rotation

Mr. George Jacob Muthoot Director of the Company retires by rotationat the ensuing Annual General Meeting and being eligible offer himself for reappointment.

Your Board and the Nomination and Remuneration Committee has evaluatedthe eligibility criteria under RBI guidelines the Act and Listing Regulations of alldirectors seeking appointment/ re-appointment at the ensuing Annual General Meeting andrecommends the respective appointment/ re-appointments. Your Board believes that theproposal for appointment/ re-appointment will have the support of shareholders. Necessarydisclosures as required under the SEBI

Listing Regulations and the Act are provided in the notice calling theAnnual General Meeting.

The brief profiles of Directors are available on the website of theCompany at https://www.

Pursuant to Clause C(2)(i) of Schedule V read with Regulation 34(3) ofSEBI Listing Regulations in the opinion of the Board the independent directors fulfillthe conditions as specified in the Listing Regulations and are independent of themanagement.

26. Meetings of the Board

During the Financial Year 2020-21 your Board of Directors met eighttimes on June 17 2020 July 18 2020 August 19 2020; September 05 2020; November 032020 November 30 2020 February 09 2021 and February 19 2021. Details of variousmeetings of the Board are given in the Corporate Governance Report which is a part of thisreport.

27. Declaration from Independent Directors

The Independent Directors have submitted necessary disclosures thatthey meet the criteria of independence as provided under Section 149(6) of the Act andRegulation 16 (1) (b) of the SEBI Listing Regulations.

A statement by Managing Director confirming receipt of this declarationfrom Independent Directors is annexed to this report as Annexure 5. There has been nochange in the circumstances affecting their status as independent directors of theCompany.

During the year under review the non-executive directors of theCompany had no pecuniary relationship or transactions with the Company other than thesitting fees commission if any and reimbursement of expenses incurred for the purpose ofattending the meetings of the Board or Committees of the Company.

28. Policy on Appointment and Remuneration Of Directors and Performanceevaluation of Board Committees and Directors

a) Policy on Appointment and Remuneration of Directors

Board of Directors of your Company on the recommendation of Nominationand Remuneration Committee has formulated a policy for selection appointment andremuneration of the directors senior management personnel as required under Section178(3) of the Act. The policy is available on the Company's website at the weblinkhttps:// files/2020-08/1452753862Nomination%20and%20Remuneration%20Policy.pdf

Terms of reference of the Nomination and Remuneration Committee andother relevant details of Nomination and Remuneration Committee are provided in theCorporate Governance Report circulated along with this report.

b) Performance evaluation of Board Committees and Directors

The SEBI Listing Regulations and the Act require the evaluation of theperformance of the Board its Committees and the individual directors. The Board carriedout an annual evaluation of its own performance its Committees and individual Directorsbased on criteria and framework adopted by the Board and in accordance with existingregulations.

The details of training appointment resignation and retirement ofDirectors if any are dealt with in the report of Corporate Governance. Brief details ofprofile of each Directors appear in Annual Report of the Company.

c) Independent Directors Meeting

During the year a meeting of Independent Directors was held onFebruary 9 2021 as required under the Act and in Compliance with requirement underSchedule IV of the Act and as per requirements of SEBI Listing Regulations and discussedmatters specified therein.

29. Corporate Governance Report

Your Company has complied with the Corporate Governance norms asstipulated in Chapter IV of SEBI Listing Regulations. As per Regulation 34 of SEBI ListingRegulations the detailed report on Corporate Governance is attached to this Report asAnnexure 6.

30. Management Discussion and Analysis Statement

Management Discussion and Analysis detailing the industry developmentssegment wise/ product wise performance and other matters is attached to this Report asAnnexure 7.

31. Environmental Social and Governance ("ESG")

The Board instituted an Environmental Social and Governance Committee("ESG Committee") with effect from August 06 2021 to discharge its oversightresponsibility on matters related to organization-wide ESG initiatives priorities andleading ESG practices. Details of the constitution of the ESG Committee and its terms ofreference are provided in the Report on Corporate Governance.

32. Conservation of energy technology

absorption foreign exchange earnings and outgo:

The information pursuant to Section 134(3)(m) of the Act read with theCompanies (Accounts) Rules 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company has no activitiesinvolving conservation of energy. However your Company has taken adequate measures forconservation of energy and usage of alternative source of energy wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company has no activitiesinvolving adoption of any specific technology. However your Company has been in theforefront in implementing latest information technology and tools towards enhancing ourcustomer convenience.

Initiatives taken by the Company in information technology for improvedbusiness efficiency ease of operation improved risk management practice and forproviding best stakeholders experience:

The Company successfully implemented many digital transformationinitiatives during the year providing great customer experience improved businessefficiencies ease of operations and effective risk management.

A few of the IT initiatives undertaken are given below.

Seamless Integration with Multiple Partner Systems through APIs

The Company established application programming interface (API)enabling seamless and secure exchange of data between various internal and externalsystems. More than 150 APIs were developed and deployed by the Company for providingcustomers seamless experience on a real-time basis.

Despite the ferocity with which the pandemic are now hitting us theCompany was able to provide uninterrupted services to its stakeholders thereby exhibitingharmonious business continuity. With work from home becoming the new normal utmost carewas taken in ensuring that our employees enjoy a seamless work environment while workingremotely. The implementation of Google Work Space across the organization has contributedtremendously to build a more tech savant environment to communicate and collaborate.

Digital Initiatives

The in-house IT team could integrate the widely used WhatsApp platformwith CBS backend for reaching

out to customers through alert mechanism like SMS e-mailClick-to-Call etc for doing transactions. This has been found widely used by customersacross.

KYC Data Capture & Validation

The Company has been a forerunner in using video KYC solution byintegrating with its core banking and in Loan@home customer-facing application obviatingthe need for them to visit the branch physically for onboarding. Other initiatives such asDigital KYC and customer bank account verification using the Penny Drop integration wascompleted as part of the KYC data enrichment programme.

AI Driven Development Initiative

Considering the vast array of possibilities of Artificial Intelligence(AI) your Company has initiated its usage in various areas and processes. As part offirst step signature verification in the pledge process has been performed successfully.Inception of RPA (Robotics Process Automation) in various money transfer transactionsreconciliation has been a crucial step undertaken by the Company resulting in all dailytransactions reconciled with the vendor systems automatically now.

Security Surveillance System

Taking into consideration the necessity of physical security in ourbranches a powerful video surveillance system was developed and implemented with centralmonitoring capabilities. The Smart Eye software solution has the AI and advanced computervision technologies for effective protection of the valuable assets stored in thebranches.

Mobile Applications Development and Roadmap

Mobile applications developed in-house enabled Muthoot Finance toengage with the customers in a more prudent way and identify appropriate customertouchpoints to create and enhance personalized experience. We have built a suite ofmobility applications ranging from lead creation loan repayment loan top-up customeronboarding customer engagements collections and various add-on apps that can act asextensions of our Core Banking Software (CBS). Widely used payment channels such asPhonePe PayTM and BBPS (Bharath Bill Payment) channels could be added for better customerconvenience.

Enhancements in Intranet Portal MINE A new module was enrooted inthe knowledge management intranet portal MINE for the continual updation of employees onvarious operational areas new products and services. This has a dedicated facility forlearning and online tests done by the HR

Department. Learning materials are regularly posted and updated on theplatform prior to and conduct of tests. Individual scores are arrived at by the systemautomatically which are used by HR department for their various reviews.

c) Foreign exchange earnings and outgo

Particulars ' in Million
Total Foreign Exchange earned Nil
Total Foreign Exchange expended 4776.35

33. Audits

a) Statutory Audit under Section 139

On recommendation of Board of Directors of the Company members of theCompany appointed M/s. Varma & Varma Chartered Accountants Kochi (Firm Reg No.004532 S) as Statutory Auditor of the Company at the 20th Annual General Meeting of theCompany for a term of 5 consecutive years i.e. till the conclusion of 25th Annual GeneralMeeting pursuant to Section 139 of the Act.

The Report given by M/s. Varma & Varma Chartered AccountantsStatutory Auditors on the financial statement of the Company for the FY 2020-21 is partof the Annual Report.

Reserve Bank of India on April 27 2021 vide notification no.DoS.CO.ARG/SEC.01/08.91.001/2021- 22 issued Guidelines for Appointment of StatutoryCentral Auditors /Statutory Auditors of Commercial Banks (excluding RRBs) UCBs and NBFCs(including HFCs). In compliance with the guidelines the Company is required to appointtwo new statutory Auditors as "Joint Auditors" in the second half of thefinancial year 2021-22. In compliance with the FAQs on the above notification published byRBI the existing statutory Auditors M/s Varma & Varma Chartered Accountants willcontinue as the statutory auditor of the Company till the appointment of new statutoryAuditors in the second half of the financial year 2021-22. Your Board will appoint the newStatutory Auditors in the second half of the financial year 2021-22 in due compliance withthe provisions of the said guidelines issued by RBI and the relevant provisions of theCompanies Act 2013.

b) Secretarial Audit under Section 204

M/s KSR & Co. Company Secretaries LLP Coimbatore was appointed asSecretarial Auditors of the Company for the financial year 2020-21 pursuant to Section 204of the Act. The Secretarial Audit report submitted by them is annexed to this report asAnnexure 8.

c) Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2020-21 forall applicable compliances as per SEBI Regulations and Circulars/ Guidelines issuedthereunder.

The Annual Secretarial Compliance Report has been submitted to thestock exchanges within 60 days of the end of the financial year.

d) Cost records and Cost Audit

Maintenance of cost records and requirement of cost audit as prescribedunder the provisions of Section 148(1) of the Act are not applicable for the businessactivities carried out by the Company.

e) Auditors' certificate on Corporate Governance

The Auditors' certificate confirming compliance with the conditions ofcorporate governance as stipulated under the SEBI Listing Regulations for financial year2020-21 is enclosed as an annexure to the Board's report.

f) Auditors' certificate on ESOP

The auditors' certificate on the implementation of share based schemesin accordance with the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 will be made available at the AGM for inspectionelectronically.

g) Explanations or comments by the Board on qualification reservationor adverse remark or disclaimer on audits for financial year 2020-21

There are no qualifications reservation or adverse remark ordisclaimer on audits under Section 139 and Section 204 of the Act for financial year2020-21.

34. Reporting on Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace andhas adopted a Policy on Prevention Prohibition and Redressal of Sexual Harassment atworkplace as per the requirement of the Sexual Harassment of Women at workplace(Prevention Prohibition & Redressal) Act 2013 ('POSH Act') and Rules madethereunder.

With the objective of providing a safe environment the Company hasconstituted Internal Committee to redress complaints received regarding sexual harassment.All employees - permanent contractual temporary and trainees are covered under thisPolicy.

Details of cases reported to Internal Complaints Committee during thefinancial year 2020-21 are as under:

Number of complaints pending at the beginning of the financial year 2020-2021 1
Number of complaints filed during the financial year 2020-2021 2
Number of complaints disposed of during the financial year 2020-2021 3
Number of complaints pending as on end of the financial year 2020-2021 0

35. Personnel

The Disclosure required under the provisions of Section 197 of the Actread with Rule 5 (1) & Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this report as Annexure 9.

36. Significant and material Orders passed by Regulators or Courts orTribunals

There are no significant and material orders passed by the regulatorsor courts or tribunals which would impact the going concern status of your Company andits future operations.

37. Material Changes and Commitments affecting the financial positionof the Company between the end of the financial year to which Financial Statements relateand the date of the report

No material changes and commitments affecting the financial position ofyour Company occurred between the end of the financial year to which Financial Statementsrelate and the date of this report.

38. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Act the Board of Directors to thebest of its knowledge and ability confirm that -

(a) in the preparation of the annual accounts the applicableIndian Accounting Standards had been followed. There are no material departures fromapplicable Indian Accounting Standards;

(b) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

(c) they have taken proper and sufficient care for the maintenanceof adequate accounting records

in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concernbasis;

(e) they have laid down internal financial controls to be followedby the Company and such internal financial controls are adequate and operatingeffectively.

(f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

39. Disclosure pursuant to Part A of Schedule V of SEBI ListingRegulations

Disclosure pursuant to Part A of Schedule V read with Regulation 34(3)and 53(f) of SEBI Listing Regulations is attached as Annexure 10 of this report.

40. Others

• The Company has complied with Secretarial Standards issued bythe Institute of Company Secretaries of India on Board Meetings Annual General Meetingsand Dividend.

• The Company in the capacity of Financial Creditor has notfiled any application with National Company Law Tribunal under the Insolvency andBankruptcy Code 2016 during the financial year 2020-21 for recovery of outstanding loansagainst any customer being Corporate Debtor.

• The details of difference between amount of the valuation doneat the time of one time settlement and the valuation done while taking loan from the Banksor Financial Institutions along with the reasons thereof- Not Applicable.

41. Acknowledgement

Your Directors place on record its respect and homage to Late ChairmanMr. M G George Muthoot. Mr. M G George Muthoot was the Mentor and Visionary leader whoplayed pivotal leadership role through his long career in building one of the most trustedfinancial powerhouses in the Country.

Your Directors thank the Company's stakeholders including investorscustomers banks financial institutions rating agencies debenture holders debenturetrustees and well-wishers for their continued support during the year. Your Directors

place on record their appreciation of the contribution made by theemployees of your Company and its subsidiaries at all levels. Your Board reassures that inthese challenging times your Company will continue to support them and their family atall levels. Your Company's consistent growth was made possible by their hard worksolidarity cooperation and support. The Board sincerely expresses its gratitude toReserve Bank of India Securities and Exchange Board of India Ministry of CorporateAffairs and Stock Exchanges including various officials thereat for the guidance andsupport received from them from time to time.

Your Directors mourn the loss of life due to COVID-19 pandemic and aredeeply grateful and have immense respect for every person who risked their safety and lifeto fight this pandemic.

42. Forward Looking Statements

This Report(s) contains certain forward-looking statements within theprovisions of listing agreements and hence reasonable caution is to be exercised bystakeholders while relying on these statements.

For and on behalf of the Board of Directors

Sd/- Sd/-
George Jacob Muthoot George Alexander Muthoot
Chairman & Whole Time Director Managing Director
Place: Kochi
Date: August 06 2021
Registered Office:
2nd Floor Muthoot Chambers
Opposite Saritha Theatre Complex
Banerji Road
Kochi - 682 018