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Muthoot Finance Ltd.

BSE: 533398 Sector: Financials
BSE 00:00 | 20 Aug 399.55 -5.65






NSE 00:00 | 20 Aug 398.60 -6.90






OPEN 400.05
VOLUME 99388
52-Week high 525.80
52-Week low 360.00
P/E 9.29
Mkt Cap.(Rs cr) 15,986
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 400.05
CLOSE 405.20
VOLUME 99388
52-Week high 525.80
52-Week low 360.00
P/E 9.29
Mkt Cap.(Rs cr) 15,986
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

Directors of your Company have pleasure in presenting the 20th Annual Report ofthe Company together with the audited financial statements (standalone and consolidated)for the year ended 31st March 2017.


The financial performance of your Company for the year ended 31st March 2017 aresummarized below:

(Rs. in Crores)

Standalone Consolidated
Particulars Year ended 31st March 2017 Year ended 31st March 2016 Year ended 31st March 2017 Year ended 31st March 2016
Total Revenue 5747 4875 5938 4941
Total Expenses 3826 3558 3980 3614
Profit Before Tax 1921 1317 1958 1327
Tax expense 741 507 751 509
Profit for the year 1180 810 1207 818
Shareholders' Funds 6516 5619 6538 5622
Total Liabilities 24197 21430 25646 21773
Total Assets 30713 27049 32184 27395


The Company has during the year 2016-17 paid an interim dividend of Rs. 6/- per equityshare (60% of face value).

The dividend payout amount including the dividend distribution tax will be Rs. 288 crsrepresenting 24.45% of profit after tax for the year.

Directors of your Company decided to plough back the remaining profit after tax forbusiness activities and hence have not recommended any final dividend.

Directors of your Company has approved a Dividend Distribution Policy as per Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015. The Details of the policy is available on the website of the Company and is attached to this report as Annexure1.

The list of unpaid dividend is available on the Company's Shareholders are requested to check the said list and if anydividend due to them is remaining unpaid in the said list then shareholders can approachthe Company or Registrar and Transfer Agent of the Company for release of unpaid dividend.

As per Section 124(5) of the Companies Act 2013 the Company shall transfer thedividend that remained unclaimed for a period of seven years from the date of transfer tounpaid dividend account to the Investor Education and Protection fund (IEPF). Further asper Section 124(6) of the Companies Act 2013 the Company shall transfer all shares inrespect of which the unclaimed dividend has been transferred to IEPF. No claim will lie onCompany on account of dividend after the dividend is transferred to IEPF.


Your Board of Directors has transferred an amount of

Rs. 236 Crores to the Statutory Reserve maintained under Section 45IC of the RBI Act1934. An amount of Rs. 482 Crores has been transferred to Debenture Redemption Reserve.Post transfer of profits to reserves and distribution of dividend your Board proposes toretain

Rs. 1056 Crores in the Profit and Loss Account.


The Indian economy has weathered many challenges successfully in recent times. Twoimportant domestic policy developments in India: a constitutional amendment making way forthe Goods and Service Tax (GST) and withdrawal of the highest denomination notes (Rs. 500and Rs. 1000) which intends to curb black money and running of a parallel economy.

Demonetisation is also very unusual in its monetary consequences. It has reducedsharply the supply of one type of money—cash—while increasing almost to thesame extent another type of money—demand deposits. This also helped in increasingtransactions through digital money.

With a slow start in 2016 the economic momentum recovered towards the middle of theyear. While this growth momentum was temporarily impacted with demonetization the Indianeconomy appears to be recovering fast and will continue as one of the fastest growingnations. Fixed investment rate in the economy has consistently declined in the past fewyears more so the private investment. Raising the growth rate of the economy will to agreat extent depend on quickly reversing this downward trend in the investment. Theeconomy is expected to grow by 7.7 per cent in the current year.

The Goods and Services Tax (GST) - constitution amendment bill passed by thegovernment e3ective from July 1st 2017 showed a significant impact on the taxationstructure in the country. The GST will create a common Indian market improve taxcompliance and governance and boost investment and growth; it is also a bold newexperiment in the governance of India's cooperative federalism. What will be critical isthe e3ciency in relation to its implementation. Your

Company believes that in the medium run it will lead to more digitalization and willhelp in e3ective governance.


During the Financial Year Company saw 46% increase in its profitability with a netprofit of Rs. 1180 Crores for the year ended March 31 2017 as compared to Rs. 810 Croresfor the year ended March 31 2016. Profit before tax increased by 46% to Rs.1921 Crores.Total Income has increased from Rs. 4875 Crores for the year ended March 31 2016 to Rs.5747 Crores for the year ended March 31 2017 which is mainly due to increase in InterestIncome of the Company. Interest income of the Company increased to Rs. 5655 Crores fromprevious year's interest income of Rs. 4813 Crores. Loan Portfolio of the Companyincreased by Rs. 2899 Crores during the year reaching Rs. 27278 crores as on March 312017 as against Rs. 24379 Crores as on March 31 2016. The Return on Average Loan Assetsincreased to 4.47% in FY 2016-17 as compared to 3.32% in FY 2015-16. The cost of fundsdeclined to 8.69% compared to 9.25% in fiscal 2015-16. Interest yield increased to 21.43%as compared to 19.72% in FY 2015-16. On account of the above the Net Interest Marginimproved to 12.74% as against 10.47% in FY 2015-16. The Company remitted to exchequer Rs.804 crores as taxes.


(a) Non-Convertible Debentures:

Your Company successfully completed 15th and 16th Issue of Non-Convertible Debenturesthrough Public Issue during FY 2016-17 raising Rs. 1832 Crores.

Directors of your Company are thankful to all investors who have subscribed thedebentures through Public Issue and shown their trust towards your Company.

Subordinated Debts represents long term source of funds for the Company and the amountoutstanding as on 31st March 2017 was Rs. 1912 Crores. It qualifies as Tier II capitalunder the Non-Banking Financial Company- Systemically Important Non- Deposit takingCompany and Deposit taking Company (Reserve Bank) Directions 2016.

(b) Bank Finance:

Bank Finance remains an important source of funding for your Company. Commercial Bankscontinued their support to your Company during Financial Year. As of 31st March 2017borrowings from banks were Rs. 9202 Crores as against Rs. 7687 Crores in the previousyear.


Employee Stock Options Schemes

During the year your Company has allotted 473217 equity shares of face value of Rs.10/- each under Muthoot ESOP 2013 pursuant to exercise of 36307 options of Rs. 10/- eachfor Loyalty Options and 436910 options of Rs. 50/- each for Growth Options by Employeesof the Company.

The disclosures as required under SEBI (Share Based Employee Benefits) Regulations2014 read with SEBI Circular CIR/CFD/POLICY CELL/2/2015 dated 16th June 2015 is attachedto this report as Annexure 2. The same disclosure is available at Company's website Please refer note 24(c) of Notes on Accountsin Standalone Financial Statements for further disclosures on ESOP. 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 Auditors of the Companycertifying that the ESOP scheme is implemented in accordance with the applicable SEBIGuidelines/Regulations and is in accordance with the resolution passed by the members ofthe Company. The certificate would be placed at the Annual General Meeting for inspectionby members.

The stock option schemes are in compliance with Securities and Exchange Board of India(Share Based Employee Benefits) Regulations 2014 and there have been no material changesto these plans during the Financial Year 2016-17.


Your Company's debt instruments are rated by ICRA and CRISIL two of the leading CreditRating Agencies in the country. In July 2016 CRISIL and in August 2016 ICRA upgraded yourCompany's Long Term Debt rating from AA-/Stable to AA/Stable.

The rating upgrade is a reflection of consistent performance inspite of going throughturbulent times in the last four years as well as improvement in financial performance.This upgrade is a recognition of the e3orts of ‘Team Muthoot'. We believe that underAA category we enter a different league of credit rated companies. We hope this upgradewill enable us to get finer rates from financial institutions and banks enabling us toreduce our cost of borrowings.

The Credit Ratings assigned to various instruments of the Company as of now are asfollows:

Credit Rating Agency Instruments Ratings Limit in Rs. in Crores
CRISIL Commercial Paper CRISIL A1+ 4000
Subordinated Debts CRISIL AA/Stable 100
Non Convertible Debentures CRISIL AA/Stable 500
ICRA Commercial Paper ICRA A1+ 200
Short Term Bank Borrowings* ICRA A1+ 10818
Long Term Bank Borrowings* ICRA AA/Stable 9337
Subordinated Debts ICRA AA/Stable 100
Non Convertible Debentures ICRA AA/Stable 200

*subject to overall rating of Rs. 12760 Crores for line of credit.


In keeping with the size of the Company and its business model your Company hasdeveloped over the years a proper adequate and well documented internal audit andcontrol system. The control system ensures that the Company's assets are safeguarded andprotected. The audit system also takes care to see that revenue leakages and losses to theCompany are prevented and our income streams are protected. The control system enablesreliable financial reporting .

A full fledged Audit and Inspection Department has been set up to conduct timely andfrequent internal audit to evaluate the adequacy of systems and procedures and also toevaluate the status of compliance to Company's guidelines and other statutoryrequirements. The department has on its rolls around 945 dedicated personnel whorelentlessly safeguard the safety of your Company's assets ensures the quality of assetspledged and also evaluates the adequacy of risk management systems at its operating units.In keeping with the huge network and geographic outreach of the operating units spreadacross the length and breadth of the country the audit functions have been decentralizedthrough setting up of Regional Audit offices in important Regional centers. The RegionalAudit Offices exercise field level control over the branches through onsite visits andonline audit systems. The field level Auditors report to Regional Audit offices who inturn shares their findings with the Audit & Inspection Department at the RegisteredO3ce of the Company.

Under the present Audit Architecture the Internal Auditor(s) at the Registered O3cereports to the Audit Committee regarding significant audit findings and also preventiveand corrective measures to protect the interests of the Company. The audit Committeeundertakes an evaluation of the adequacy and e3ectiveness of internal control systems. Italso oversees the implementation of audit recommendations especially involving the riskmanagement measures.

Apart from monitoring the internal control measures adopted by the Audit departmentthe Committee also imparts guidance and constructive suggestions for improvement of theaudit function in the Company. The Audit architecture now prevalent in the Company enjoysindependence in its functioning and embodies best Corporate Governance standards.

Reference is invited to Note no. 34 to the standalone financial statements contained inthe annual report regarding frauds committed by employees of the Company. Company hastaken or is in the process of taking disciplinary / legal action against such employees.


Your Company has always considered its employees as an important resource of theCompany and is aimed at providing employee satisfaction enabling them to deliver betterresults year over year.

As on March 31 2017 the Company had 24205 employees in its rolls at various level oforganizational structure. Your Company is always committed in providing employees withample opportunities to learn and advance in career. In quest for having a satisfied workforce your Company focused on four major areas for employee engagement during the lastfinancial year.

Rewards & Recognition

Based on performance of the employees management has introduced new means of payoutsand increased the percentage of payout for existing incentives. An ex-gratia payment alongwith Festival bonus which is almost equal to One month pay of employees at each gradewere paid to employees. Management also took steps to increase the payout of Incentive forGold Loan Portfolio Growth and for Interest Collection. The management is also rewardingemployees with foreign trips to exquisite locations based on their achievement.

Training and Development

Your Company has offered multiple training programs to employees to help in theirdevelopment. The programs includes product/process related trainings so3 skill trainingsleadership trainings and certification trainings for different group of employees.Training imparted through two premium training establishments of the Company and 68Regional Learning Centers in the last financial year was to the tune of 63088 mandays.


Your Company has robust mechanism for identifying performers and has taken all steps topromote eligible employees to the next level.

Performance Management

Your Company had formulated a Performance Score card method of performance assessmentfor all employees in the branch model. A pre-defined score card was used to captureperformance of employees on a quarterly basis and all related corrective measure and finetuning of performance was done using this method. The company also encouraged lowperforming employees through well-defined performance growth programs. Use of PerformanceScore cards has helped in improving role clarity and objectiveness to performanceassessment. Performance score is used as an important parameter for deciding the AnnualIncrements of the employees.

Your Company offers various other benefits to employees including Employee StockOptions and various Statutory and Non Statutory Sta3 Welfare Measures. All eligibleemployees are covered under statutory provisions namely EPF ESI Maternity BenefitsGratuity etc. Employees were enrolled under the National Pension System (NPS) with Companyalso making contribution along with their contribution .


Inbound Call Management System

Your Company introduced the Inbound Call Management System designed to bring down theturnaround time while reaching out to customers. This platform has enabled your Company toreach out to potential customers almost instantly. Once a customer observes ouradvertisement he/she attempts to contact Muthoot Finance by calling our Toll Free Number.He will be asked to feed the pincode of his location and thereafter he is directlyconnected to the nearest Muthoot Finance branch . This prompt response mechanism hashelped your Company to upgrade its customer service levels.

Introduction of state-of-the-art CRM

Your Company launched the State of the art CRM Software in pan India. This has enabledto understand and profile our customers better and deliver increased value to them. Thisnew system will help us evolve better schemes and products tailor-made for differentcustomer groups.

Association with Indian Super League

Your Company continue its association with Indian Super League (ISL) as the OfficialReferee Partner and Fair Play Award Sponsor. Your Company have always been in theforefront to promote sports and celebrate sportsmanship. Association with Indian SuperLeague has given the Muthoot brand an exposure to the young Indian diaspora. As soccer isgaining popularity in India an association like this has further helped your Companypresent its fair and trustworthy credentials as a financial supermarket with a businesslegacy of over 130 years.

Mission Lead Demonetization

During the time of demonetization when customers were struggling with problemsprecipitated by the shortage of currency your Company stepped up and launched aninitiative across North East and West India that entailed meeting and interacting withpeople while they were waiting in long serpentine queues. Objective was to educate them onthe various modes of financial assistance that could be provided by Muthoot Finance acrosscash and cashless channels. These include various digital offerings like Muthoot WebPayiMuthoot mobile app utilization of Muthoot Finance DCB VISA Card for availing gold loansdirectly on card direct bank credits use of POS machines for repayments Aadhar enablede-KYC. etc.


Your Company's Capital Adequacy Ratio as of March 31 2017 stood at 24.88% of theaggregate risk weighted assets on balance sheet and risk adjusted value of the o3-balancesheet items which is well above the regulatory minimum of 15%. Out of the above Tier Icapital adequacy ratio stood at 21.78% and Tier II capital adequacy ratio stood at 3.10%.


The Company is a Systemically Important Non-Deposit Taking NBFC and hence has notaccepted any public deposits.


Your Company has complied with all the applicable regulations prescribed by the ReserveBank of India from time to time. Please refer note 41 and 42 of Notes on Accounts inStandalone Financial Statements for additional disclosures required under RBI Guidelinesapplicable to the Company.


As on March 31 2017 your Company has four subsidiaries namely M/s. Asia Asset FinancePLC M/s. Muthoot Homefin (India) Limited M/s. Muthoot Insurance Brokers Private Limitedand M/s. Belstar Investment and Finance Private Limited. Your Company's subsidiaries haveconsiderably contributed to the overall growth of your Company during the year. As perSection 136 of the Companies Act 2013 the audited financial statements including theconsolidated financial statements of your Company and the audited accounts of each of itssubsidiaries are available on the website of the Company at The above documents will also be available for inspection at theRegistered O3ce of the Company during business hours.

The Board of Directors of your Company has formulated a policy on material subsidiarywhich is displayed on the web site of the Company at

Financial Performance & position of Subsidiaries

a. Asia Asset Finance PLC:

Asia Asset Finance PLC (AAF) a Company listed in Colombo Stock Exchange is asubsidiary of your Company from December 31 2014. Company increased its shareholding inAsia Asset Finance PLC from 59.70% to 60% during the year. AAF is a registered FinancialCompany with Central Bank of Sri Lanka and is mainly engaged in Vehicle Finance and HirePurchase Activities. The Company also started business relating to lending againstcollateral of gold jewellery and micro finance and is presently contributing a significantpart of loan portfolio and income. AAF has operations across Sri Lanka with 15 branches ason March 31 2017. AAF has made considerable progress in its business. Its major financialparameters for Financial Year 2016-17 are as follows:

Parameters Total Income Profit Before Taxation Profit After Taxation Shareholder's Funds Total Assets Total Outside Liabilities
Amount in Rs. (in Crores)LKR/Rs. as on 31.03.2017–0.42621 / Average Exchange Rate -0.45423* 97* 14* 13* 74 444 370
Amounts in LKR (in crores) 213 31 28 174 1003 829

The total income of AAF has increased by 48% at Rs. 97crs which has contributed to theoverall improvement of its profitability by 51% reaching Rs.13crs. Its asset base grew by25% reaching Rs.444crs. Directors of your Company are hopeful that AAF will be showingcontinuous growth in the coming years and will contribute significantly to consolidatedprofit of your Company.

b. Muthoot Homefin (India) Ltd:

M/s. Muthoot Homefin (India) Ltd (MHIL) a registered Housing Finance Company licensedby National Housing Bank is a subsidiary of your Company. During the Financial Year2016-17 your Company increased its shareholding in MHIL by acquiring 26700000 sharesfor a consideration of Rs. 30Crores. Post-acquisition your Company holds 88.27% of theequity capital of MHIL. Its major financial parameters for Financial Year 2016-17 are asfollows:

Parameters Total Income Profit Before Taxation Profit After Taxation Shareholder's Funds Total Assets Total Outside Liabilities
Amount in Rs. (in Crores) 24 5 3 88 450 362

During the year its loan portfolio increased by Rs. 409crs at Rs. 441crs. Totalrevenue for FY17 stood at Rs. 24crs as against previous year total revenue of Rs.2crs. Itachieved a profit after tax of Rs. 3crs during FY17 as against previous year profit aftertax of Rs.0.01crs. We believe that housing finance sector is the next best secured lendingopportunity after gold loan and with the central government making a major push fora3ordable housing we expect your Subsidiary Company to tap this opportunity in thecoming years and to contribute significantly to the consolidated profit of your Company.

c. Muthoot Insurance Brokers Private Limited:

Muthoot Insurance Brokers Private Limited (MIBPL) is an unlisted Private LimitedCompany holding a license to act as Direct Broker from Insurance Regulatory andDevelopment Authority of India (IRDA) since 2013. During the Financial Year 2016-17 yourCompany acquired 100% equity shares of MIBPL from the existing shareholders for aconsideration of Rs. 20 Crores. Post-acquisition MIBPL is a Wholly- Owned SubsidiaryCompany. Its major financial parameters for Financial Year 2016-17 are as follows:

Parameters Total Income Profit Before Taxation Profit After Taxation Shareholder's Funds Total Assets Total Outside Liabilities
Amount in Rs. (in Crores) 12 9 6 17 18 1

MIBPL generated a First year premium collection amounting to Rs. 70crs during FY17 asagainst Rs. 49 Crores during previous year. Its total revenue increased by 16% at Rs.12crsas against previous year. Its profit after tax increased by 18% at Rs.6crs as againstprevious year.

d. Belstar Investment and Finance Private Limited:

M/s. Belstar Investment and Finance Private Limited (BIFPL) is a micro finance Company.

During the Financial Year 2016-17 your Company acquired 15017459 equity shares ofBIFPL by investing Rs. 63 Crores. Post-acquisition your Company holds 64.60% of theequity capital of BIFPL thus making it a Subsidiary Company. Its major financialparameters for Financial Year 2016-17 are as follows:

Parameters Total Income Profit Before Taxation Profit After Taxation Shareholder's Funds Total Assets Total Outside Liabilities
Amount in Rs. (in Crores) 103 16 10 90 763 673

During the year its loan portfolio grew by 115% at Rs. 567crs. It achieved a profitafter tax of Rs.10crs during the year as against previous year profit after tax ofRs.6crs. Its Gross and Net NPA stood at 0.09% and 0.02% respectively as on March 31 2017.

The statement containing the salient features of the financial statement of yourCompany's Subsidiaries is attached as Annexure – A to Standalone Financial Statementsof the Company as required under Rule 5 of The Companies (Accounts) Rules 2014.

There are no other Companies which have become or ceased to be Subsidiaries/Associates/ Joint Ventures of the Company during the Financial Year 2016-17.


Pursuant to Section 186(11)(a) of the Companies Act 2013 (the ‘Act') read withRule 11(2) of the Companies (Meetings of Board and its Powers) Rules 2014 the loan madeguarantee given or security provided in the ordinary course of business by a Non- BankingFinancial Company (NBFC) registered with Reserve Bank of India are exempt from theapplicability of provisions of Section 186 of the Act. As such the particulars of loansand guarantee have not been disclosed in this Report. The details of the CurrentInvestments and Non- Current Investments of the Company are furnished under Note no. 10forming part of the Standalone Financial Statements for the year ended March 31 2017.


Extract of Annual Return as required under Companies Act 2013 is annexed as Annexure3.


The audited consolidated financial statements of the Company along with itssubsidiaries AAF MHIL BIFPL and MIBPL prepared in accordance with the Generally AcceptedAccounting Principles in India (Indian GAAP) to comply with the Accounting Standardsspecified under Section 133 of the Companies Act 2013 read with Rule 7 of the Companies(Accounts) Rules 2014 and the relevant provisions of the Companies Act 2013 is providedin the Annual Report.


Your Company has a Board approved Integrated Risk Management Policy which has laid downa framework for identifying assessing measuring various elements of risk involved in thebusiness and formulation of procedures and systems for mitigating such risks. During theFinancial Year your Directors have approved the updated Risk Management Framework of theCompany which has incorporated various new practices and risk control measures.

Risk Management Committee of the Board of Directors of your Company constituted inaccordance with the Reserve Bank of India guidelines has overall responsibility foroverseeing the Risk Management activities of the Company approving measurementmethodologies and appropriate risk management procedures across the organization.

The Risk Management Committee Comprises of:

Name of the Director Designation in the Committee Nature of Directorship
K. George John Chairman Independent Director
Justice K John Mathew Member Independent Director
George Jacob Muthoot Member Whole- time Director

Risk Management Department periodically places its report on risk management to theRisk Management and Audit Committee of the Board of Directors. During the year yourCompany has incorporated various practices and suggestion as directed by the RiskManagement and Audit Committee which helped the Company in attaining an improved vigilanceand security system improved security of gold jewellery and cash improved system ofgrading of branches Regional Offices etc. IT based risk management initiatives arediscussed in section related to ‘Technology Absorption' in this report of Board ofDirectors.


As per Section 135 of Companies Act 2013 your Board has constituted a CorporateSocial Responsibility (CSR) committee to support the Company in achieving the CSRobjectives of the Company. The CSR committee of the Board of Directors comprises of thefollowing:

Name of the Director Designation in the Committee Nature of Directorship
K. George John Chairman Independent Director
John K. Paul Member Independent Director
George Alexander Muthoot Member Managing Director

The Company's CSR policy is committed towards CSR activities as envisaged in ScheduleVII of the Companies Act 2013. The Details of CSR policy of the Company are available onthe website of the Company at www. The AnnualReport on CSR activities as required under Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is attached to this report as Annexure 4.

In terms of Section 135 of the Companies Act 2013 read with Companies (CorporateSocial Responsibility) Rules 2014 as amended ("CSR Rules") and in accordancewith CSR Policy during the year the Company has spent Rs. 15 crores towards CSRprojects/ programs.


The Securities and Exchange Board of India (Listing Obligations and DisclosuresRequirements) Regulations 2015 mandates the inclusion of the Business ResponsibilityReport (BRR) as part of the Annual Report for top 500 listed entities based on theirmarket capitalization. The BRR is attached to this report as Annexure 5.


The Board of Directors of your Company has formulated a policy on related partytransactions which is displayed on the web site of the Company at This policy deals with review of the relatedparty transactions and regulates all transactions between the Company and its RelatedParties.

Prior omnibus approval is obtained for related party transactions which are ofrepetitive nature and entered in the ordinary course of business and at arm's length. Allrelated party transactions are placed before the Audit Committee for review and approval.

All transactions or arrangements with related parties referred to in Section 188 (1) ofthe Act entered into during the year were on arm's length basis or were in ordinarycourse of business or with approval of the Audit Committee.

During the year your Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. Further there were nomaterial related party transactions which required approval of shareholders as requiredunder Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. Accordingly the disclosure of related party transactions as required under Section134(3) (h) of the Companies Act 2013 in Form AOC 2 is not applicable to your Company.

The details of related party and transactions with the related parties as requiredunder chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 appears on the Note no. 32 of the Notes to Accounts of the Standalone FinancialStatements of the Company.


The Audit Committee of our Board was reconstituted vide board resolution dated May 262014 pursuant to Section 177 of the Companies Act 2013. The Audit Committee comprises of:

Name of the Director Designation in the Committee Nature of Directorship
George Joseph Chairman Independent Director
John K. Paul Member Independent Director
George Alexander Muthoot Member Managing Director

All recommendations of Audit Committee are accepted by your Board and details on Auditcommittee appear on the report on Corporate Governance.


To conduct affairs of your Company and its various constituents in a fair andtransparent manner and as part of Vigil Mechanism and providing whistle blowers a safeand reliable way of sharing information your Company has formulated a Whistle BlowerPolicy in compliance with Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. There is graded reporting structure under the Policy andalso provides provision for direct access to Chairman of Audit Committee. The whistleblower policy is available at website of the Company at


Equity Shares of your Company are listed on NSE India Ltd and BSE Ltd. Your Company haspaid required listing fees to Stock Exchanges.


The term of Mr. John K Mathew as Independent Director is expiring at the ensuing 20thAnnual General Meeting and hence he is retiring at the Annual General Meeting this year.

Mr. George Joseph Mr. K George John and Mr. John K Paul were appointed as IndependentDirectors and hence shall not be liable to retire by rotation.

Term of Ms. Pamela Anna Mathew as Independent Director is expiring at the ensuing 20thAnnual General Meeting and Board recommends her re-appointment as Independent Director fora further period of three years.

Mr. George Jacob Muthoot Whole- time Director and Mr. Alexander M George Whole TimeDirector of the Company retire by rotation at the ensuing Annual General Meeting and beingeligible offer themselves for reappointment.

On recommendation of Nomination and Remuneration committee your Board has consideredinduction of three new directors - Mr. Jacob Benjamin Koshy Mr. Pratip Chaudhuri and Mr.Jose Mathew in the Board as Independent Directors to be appointed by members in theensuing 20th Annual General Meeting.

Mr. Jacob Benjamin Koshy is the retired Chief Justice of Patna High Court. He alsoserved as the Acting Chief Justice Of High Court Of Kerala. He was also the Chairman ofthe Kerala State Human Rights Commission. Your Board believes that his appointment willbenefit your Company through his role as Independent Director.

Mr. Pratip Chaudhuri is the former Chairman of State Bank of India. He held severalimportant positions during his 38 years career in SBI. Your Board believes his appointmentwill benefit the Company through his role as Independent Director.

Mr. Jose Mathew is a Chartered Accountant by profession and is also a distinguishedentrepreneur in the field of Tourism. He has served in various capacities like GeneralManager of Kerala State Industrial Enterprises and Managing Director of Kerala State

Drugs and Pharmaceuticals Ltd. Your Board believes his appointment will benefit theCompany through his role as Independent Director.

After evaluating the eligibility criteria under Reserve Bank of India guidelinesCompanies Act 2013 and SEBI LODR Regulations 2015 your Board recommends appointment ofMr. Jacob Benjamin Koshy Mr. Pratip Chaudhuri and Mr. Jose Mathew as IndependentDirectors of the Company. Detailed profile of proposed Directors as required under SEBILODR is annexed to the notice calling Annual General Meeting of members of the Company.


During the Financial Year 2016-17 your Board of Directors met seven times on12.04.2016 27.05.2016 28.07.2016 23.08.2016 11.11.2016 13.02.2017 and 23.03.2017.


The Independent Directors have submitted disclosure that they meet the criteria ofindependence as provided under Section 149(6) of Companies Act 2013 and SEBI Regulations.A statement by Managing Director confirming receipt of this declaration from IndependentDirectors is annexed to this report as Annexure 6.


a) Policy on Appointment and Remuneration Of Directors

Board of Directors of your Company on recommendation of Nomination and

Remuneration Committee has formulated a policy for selection appointment andremuneration of the directors senior management personnel as required under Section178(3) of Companies Act 2013. Details of the said Policy is annexed to this report asAnnexure 7.

The Nomination and Remuneration Committee which was reconstituted on January 28 2016comprises of the following directors:

Name of the Director Designation in the Committee Nature of Directorship
John K Paul Chairman Independent Director
Kariath George John Member Independent Director
K John Mathew Member Independent Director

Terms of reference of the Nomination and Remuneration Committee include the following:

3 Identifying persons who are qualified to become Directors and who may be appointed inSenior Management in accordance with Criteria as laid down and recommend to Board theirappointment and removal.

3 Review and carry out every Director's performance the structure size andcomposition including skills knowledge and experience required of the Board compared toits current position and make recommendations to the Board with regard to any changes;

3 Determine and agree with the Board the framework for broad policy for criteria fordetermining qualifications positive attitudes and independence of a director andrecommend to the Board a policy relating to remuneration for the Directors KeyManagerial Personnel and other employees.

3 Review the on-going appropriateness and relevance of the remuneration policy.

3 Ensure that all provisions regarding disclosure of remuneration and RemunerationPolicy as required under the Companies Act 2013 or such other acts rules regulations orguidelines are complied with.

3 To administrate Employee Stock Options of the Company.

b) Performance evaluation of Board Committees and Directors

The SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and theCompanies Act 2013 require the evaluation of the performance of the Board its Committeesand the individual directors. The Board carried out annual evaluation of its ownperformance its Committees and individual Directors based on criteria and frameworkadopted by the Board and in accordance with existing regulations. The details of trainingappointment resignation and retirement of Directors if any are dealt with in the reportof Corporate Governance. Brief details of profile of each Director appear in Annual Reportof the Company.

c) Independent Directors Meeting

During the year a meeting of Independent Directors was held as required underCompanies Act 2013 and in Compliance with requirement under Schedule IV of the Act and asper requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and discussed matters specified therein.


Your Company has complied with the Corporate Governance norms as stipulated in ChapterIV of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. As perRegulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Detailed report on Corporate Governance is attached to this Report as Annexure 8.


Management Discussion and Analysis on the business of the Company is attached to thisReport as Annexure 9.


The information pursuant to Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 is as follows:

a) Conservation of energy

Your Company being a Non-Banking Finance Company its activities are not energyintensive. However your Company has taken adequate measures for conservation of energyand usage of alternative source of energy wherever required.

b) Technology Absorption

Your Company being a Non-Banking Finance Company its activities do not requireadoption of any specific technology. However your Company has been in the forefront inimplementing latest information technologies & tools towards enhancing our customerconvenience.

Few of the initiatives taken by the company are as follows:

Core Banking Solution(CBS)

The in-house developed and maintained core banking solution(CBS) has been providingvery high(99.99%) uptime which handles the transactions processing back o3ce and MIS forthe Company's entire branches and offices. The CBS has been continually updated so as tomeet the varied business changes as also to comply with the operational and controlrequirements.

The critical CBS system is collocated at the high availability ITI-Trimax data centerin Bangalore. The disaster recovery(DR) systems are set up in Infopark Kochi so as toensure business continuity in case of a major disaster in Data Centre.

Online Payment Channel for Customers

As one of our digital initiative the online facility for payment of Interest andprincipal has been widely accepted by the customers. This has immensely helped the companyand the customers during the post-demonitisation period. The online channel has becomevery popular among the customers due to its availability anywhere on a 24 by 7 basis.

Customers can use any of the multiple options for payment such as Debit card Directdebit through online banking Prepaid cards Mobile wallets UPI etc. Also POS machinesare enabled in our Branches to enable our customers do cashless transactions. For loanamount payout to customer bank accounts we have enabled IMT RTGS NEFT IMPS.

Online Gold Loan (OGL)

Online Gold Loan is a convenient product launched to meet the urgent loan requirementof a customer who can avail of the same anytime anywhere. The loan amount will bedirectly credited to the customer's bank account and has facility to repay through online.The loan is disbursed on the basis of the value of gold already pledged at the branch.

Aadhaar-based Electronic KYC

The Company being an approved KYC User Agency (KUA) by UIDAI it can accept customerAadhaar number and complete KYC verification with Customer fingerprint image with highsecurity . This e-KYC facility available across the Branches is found convenient tocustomers and helps us in ensuring the authenticity of the KYC data and e3ective riskmanagement. Presently around 86% of New KYCs are through e-KYC.

Mobile App iMuthoot

We have developed and implemented a new Mobile Application in Android & iOS andenabled transactions through the convenient channel for customers. Multiple local languageoption also has been made available. Presently the Interest payment availing Gold loansonline Live Chat with Support Desk & Helpline Google Maps to locate nearest branch& Book Appointment with branch are made available in iMuthoot.

CRM System

The Company has implemented a functionally rich highly scalable CRM solution acrossits Branches and offices. The CRM is tightly integrated with the core bankingsolution(CBS). APIs are used for integrating CRM with the different business applicationsrunning in the Group.

With the 360-degree view of the customers provided by the CRM we can manage theirrelationship more e3ectively. Also it is expected to help us in cross selling andupselling the various products & services offered by the business divisions in theGroup.

Auto Debit for EMI Products

Enabled NPCI's automated debiting system of Gold Loan installment scheme. This channelselectronic transactions which are repetitive and periodic in nature with a robust secureand scalable are provided to customers on transaction updates. It is highly flexible andconvenient to customers platform with end-to-end transaction processing capabilities.

API Integrations

We have developed a strong API integration platform and integrated more than 100 + APIsfor banking segments money transfer insurance providers and other external partners.This has taken care of multiple transaction concurrency and meets the needs of systemsintegration for other Divisions of the company.

CCTV Surveillance System

The solution enables live streaming of visuals from cameras installed at branches andoffices from ROs/ HO. It provides a 360 degree dashboard on the data and KPIs of health ofsurveillance devices. Facilitates close monitoring of working status of surveillancedevices and has instant data recording facility and playback options.

c) Total Foreign Exchange Earned : NIL

Total Foreign Exchange Used : Rs. 0.10 Crores


a) Statutory Audit under section 139

As per Section 139 of the Companies Act 2013 read with Companies (Audit and Auditors)Rules 2014 the term of the Company's auditors M/s Rangamani & Co. (Firm Reg No.003050 S) Chartered Accountants Alleppey as Statutory Auditors of the Company expires atthe conclusion of the ensuing 20th Annual General Meeting of the Company and hence will beretiring at the Annual General Meeting.

The Board of Directors of the Company at its meeting held on 08th August 2017 basedon the recommendation of the Audit Committee have recommended for appointment of M/s.Varma & Varma Chartered Accountants Kochi (Firm Reg No. 004532 S) as the Auditors ofthe Company by the Members at the 20th Annual General Meeting of the Company for a term of5 consecutive years. Accordingly a resolution proposing appointment of M/s Varma &Varma as the Auditors of the Company for a term of five year from the conclusion of 20thAnnual General Meeting till the conclusion of 25th Annual General Meeting pursuant toSection 139 of the Companies Act 2013 forms part of the Notice of the 20th AnnualGeneral Meeting of the Company.

The Company has received a certificate from the above Auditors to the e3ect that ifthey are appointed it shall be in accordance with the provisions of Section 141 of theCompanies Act 2013.

The Report given by M/s Rangamani & Co. Statutory Auditors on the financialstatement of the Company for the year 2016-17 is part of the Annual Report. The Boardplace on record its appreciation for the services rendered by M/s Rangamani & Co. asthe Auditors of the Company.

b) Secretarial Audit under Section 204

The Board had appointed M/s KSR & Co. Company Secretaries LLP Coimbatore toconduct Secretarial Audit for the Financial Year 2016-17. The Secretarial Audit report isannexed to this report as Annexure 10.

c) Explanations or comments by the Board on qualification reservation or adverseremark or disclaimer on audits for financial year 2016-17

There are no qualifications reservation or adverse remark or disclaimer on auditsunder Section 139 and Section 204 of Companies Act 2013 for financial year 2016-17.


The Internal Complaints Committee constituted by your Company under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 looksinto the complaints of aggrieved women employees if any and is instrumental in:

• promoting gender equality and justice and the universally recognized human rightto work with dignity

• prevention of sexual harassment of women at the workplace

There were 8 reported cases of sexual harassment wherein lady officials had complainedagainst harassment by their senior official in their Branch/

Region. Action taken was prompt following investigation by the Internal ComplaintsCommittee. Evidence was examined and the erring officials were heard. On finding truth inthe complaints a Report was sent to HRD Department. Disciplinary action was initiatedbased on the Report against the officials concerned and disciplinary procedures werecompleted speedily.


The Disclosure required under the provisions of Section 197 of the Companies Act 2013read with Rule 5 (1) and Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this report as Annexure 11.


There are no significant and material orders passed by the regulators or courts ortribunals which would impact the going concern status of your Company and its futureoperations.


No material changes and commitments a3ecting the financial position of your Companyoccurred between the end of the financial year to which this financial statements relateand the date of this report.


In accordance with the provisions of Section 134(5) of the Companies Act 2013 withregard to Director's Responsibility Statement Directors state that:—

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting 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) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatinge3ectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating e3ectively.


Disclosure pursuant to Part A of Schedule V read with Regulation 34(3) and 53(f) ofSEBI is attached as Annexure 12 of this report.


Your Directors thank the Company's stakeholders in large including investorscustomers banks financial institutions rating agencies debenture holders debenturetrustees and well-wishers for their continued support during the year. Your Directorsplace on record their appreciation of the contribution made by the employees of yourCompany and its subsidiaries at all levels. Your Company's consistent growth was madepossible by their hard work solidarity cooperation and support. The Board sincerelyexpresses its gratitude to Reserve Bank of India Securities and Exchange Board of Indiaand Ministry of Corporate Affairs for the guidance and support received from themincluding officials there at from time to time.


This Report(s) contains certain forward looking statements within the provisions ofListing agreements and hence reasonable caution is to be exercised by stakeholders whilerelying on these statements.

For and On Behalf of the Board of Directors

M G George Muthoot George Alexander Muthoot
Chairman Managing Director
08th August 2017
Registered O3ce:
2nd Floor Muthoot Chambers
Opposite Saritha Theatre Complex
Banerji Road
Kochi – 682 018