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Manappuram Finance Ltd.

BSE: 531213 Sector: Financials
NSE: MANAPPURAM ISIN Code: INE522D01027
BSE 00:00 | 24 Apr Manappuram Finance Ltd
NSE 05:30 | 01 Jan Manappuram Finance Ltd
OPEN 105.10
PREVIOUS CLOSE 110.60
VOLUME 596024
52-Week high 194.60
52-Week low 75.60
P/E 8.20
Mkt Cap.(Rs cr) 9,052
Buy Price 107.10
Buy Qty 450.00
Sell Price 107.35
Sell Qty 3.00
OPEN 105.10
CLOSE 110.60
VOLUME 596024
52-Week high 194.60
52-Week low 75.60
P/E 8.20
Mkt Cap.(Rs cr) 9,052
Buy Price 107.10
Buy Qty 450.00
Sell Price 107.35
Sell Qty 3.00

Manappuram Finance Ltd. (MANAPPURAM) - Director Report


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Company director report

Dear Members

The Board of Directors of Manappuram Finance Limited have pleasure in presenting beforeyou the 27th Annual Report of the Company together with the Audited Consolidated andStandalone Statements of Accounts for the financial year ended 31 March 2019.

1. FINANCIAL SUMMARY/HIGHLIGHTS AND STATE OF AFFAIRS

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

(##Rs.## in million)
Standalone Consolidated
Description
2018-19 2017-18 2018-19 2017-18
Gross Income 34271.80 29532.95 41788.36 34791.89
Total Expenditure 22094.38 18979.27 27515.43 24422.88
Profit Before Tax 12177.42 10553.68 14272.93 10369.01
Provision for Taxes/Deferred tax 4272.86 3662.80 4978.08 3609.29
Other Comprehensive Income -27.78 -9.52 -25.28 -7.72
Minority interest - - 70.86 -6.97
Net Profit 7904.56 6890.88 9294.84 6759.72
Amount available for appropriations 19184.43 14030.27 20360.74 14201.91
Appropriations:
Transfer to statutory Reserve 1575.36 1400.34 1846.63 1400.34
Transfer to/(from) Debenture Redemption Reserve 970.80 -676.68 970.80 -676.68
Interim Dividend on Equity share 1811.77 1683.94 1811.77 1683.94
Tax on Dividend 372.41 342.81 372.41 342.81
Adjustment on account of IND AS -265.98 -188.92 -385.60
Balance carried forward to next year 14720.07 11279.86 15548.05 11065.90

During the Financial Year ("FY") 2018-19 under review the Company'sconsolidated revenue from operations grew 20.3% to 41163.18 million and the Profit afterTax increased to 36% to 9198.71 million. The Company's consolidated AUM grew by 23.30% to194384/ million during the year owing to rapid growth in the microfinance (grew 57.6%)housing finance (grew 38.5%) and vehicle finance (grew 78.2%) AUMs. Gold loan AUMs grew10.5% during the year.

Our branches are located in some of the most unbanked markets in India whichcollectively form a large and growing addressable market for us. While gold loans remainthe mainstay our new businesses have started delivering on their potential not onlygrowing faster but also by contributing meaningfully to the profitability.

As an initiative to serve our customers better and thereby achieve higher growth theCompany continues to undertake various employee engagement initiatives to motivate themand improve their efficiencies. As in the past these efforts played a prominent role inthe Company's growth during the year too.

2. DIVERSIFICATION OF BUSINESS

In 2014 your Company decided to pursue diversification on the strength of large networth access to debt capital on competitive terms and access to customer relationshipsbuilt over decades through its mainstay business of gold loans.

The objective of the diversification strategy is to bring down the dependence ofcompany on gold loan AUM and reach a comfortable parity between the new streams ofbusiness and gold loans. In the intervening years we have assiduously built competenciesand capabilities to bring the share of new business in our AUM close to 33.3%.

Our ambition is to achieve a 50% mix between the diversified business and gold loans inyears to come. This will address three key business paradigms; First it addresses theregulatory discomfort with mono-line NBFCs perceived as vulnerable to concentration risk.Second it would enable the Company to cater to existing and new customers with newproducts and services. Finally it enables your Company to play a leading role inaccelerating the government's agenda for inclusion by addressing the needs of theunderprivileged sections of our population.

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

The key achievement for FY2019 has been that having begun literally from scratch inFY2015 the Company's non-gold new businesses now contribute 33.3% of the total assetsunder management. In the past year Microfinance AUM has grown from B 24372 million inFY2018 to B 38407.8 million in FY2019.

Your Company's divisions vehicle and equipment finance and corporate finance haveended and equipment finance and corporate finance have ended the year with an AUM of B11146 million and B 9300.6 million respectively. Your Company's housing subsidiaryManappuram Home Finance Limited has ended the year with an AUM of B 5187.6 million whileinsurance broking subsidiary has contributed a revenue of B 111.38 million. Importantlyhaving established a sound footing home loans microfinance corporate loans and vehicle& equipment loans are expected to continue to record strong growth in the comingyears.

Microfinance

Asirvad Microfinance Limited built upon the consolidation exercise that it undertooklast year to address issues arising out of demonetisation. The Company expanded to newergeographies such as Sikkim and Goa which are fast becoming the Company's best markets.

Asirvad is ranked as the 5th largest NBFC MFI in India. The Company has a network of942 branches across 22 States with presence in 290 districts and 175354 centers. Itpursues the policy of continuing re-assessment of concentration risk &diversification. During the year the Company passed on the reduction in interest ratecharged by banks/Financial Institutions by reducing interest rate charged to customersfrom 22.25% to 21.90%.

Asirvad's AUM grew by 57.6% from B 24372 million in FY 2017-18 to B 38407.8 million inFY 2018-19. Active loan accounts grew by 20.3% to 18 million from 15 million in March2018. 0.68 million Loan accounts were disbursed during the financial year and these loanshave 99.7% repayment rate.

The Company's operational revenue grew by 41% to B 6181.82 million for period FY18-19compared with 4385.18 million for FY 2017-18. Provision for loan loss/bad debt writtenoff stood at 198 million including standard provision of 28 million made for period FY2018-19 as per Company policy.

Housing Finance

Manappuram Home Finance Limited (MAHOFIN) is your Company's dedicated subsidiary thathas been set up to cater to the affordable housing space. Its overall objective is toprovide options for affordable home finance in the ticket size of about B 0.8-1.1million majorly distributed into the outskirts of metros tier-II and tier-III cities.Your Company's customer acquisition strategy focuses on the team's ability to understandthe needs of the customer his net-worth and financial limits.

Its management team is made up of seasoned people with core domain expertise and whopossess mature appraisal methodologies and product structuring solutions that are friendlyfor a customer to manage. In combination with its dedicated 35 branches the growth of theHome Loans business and Loan Against Property will be based on fresh lead generation andon the cross-selling strategies within the Manappuram group's network of branches andregional points of contacts.

Having established its IT backbone and product configurations in the period betweenFY2015 to FY2018 in FY2019 the management essentially focused on developing manpowercompetencies through training and upskilling workshops in robust business practice forbusiness development.

During the year it established dedicated human resources and branches in urban andsemi-urban locations both in the South and the West. By the end of FY2019 MAHOFINachieved a loan book size of B 5187.6 million. The business grew by 38.5% YoY and theloan portfolio has so far faced minimal delinquencies with NPAs held at 3.85%.

Going forward your Company is now ready with its teams products and branches to growthe loan book size steadily in FY2020. Going forward with strong demand professionalmanagement and strong brand and network support of the parent MAHOFIN remains focused ondelivering results responsibly and achieving steady growth of business.

Manappuram Insurance Brokers

Manappuram Insurance Brokers Limited (MAIBRO) a 100% Subsidiary of Manappuram FinanceLimited has closed the year at B 1.87 billion of Total Business. The Company has done anew Business of B 1.77 billion The Company has in 2018-2019 launched various productsacross protection health and motor to cater to various sections of the society.

The Company has the distinction of covering 2.11 million customers in 2018-2019. TheCompany covered 51848 families with a Health cover 12621 customers with PA which waslaunched in December 2018 and 0.53 million customers through a Death cover. MAIBRO todayhas presence across the length and breadth of the country. The Company has used theparents brand and strength to its advantage and provided new products across all Branchesof the parent company and the Group companies.

In 2018-2019 MAIBRO has exclusively setup a renewal and claims team to cater to itscustomers. The Company has improved its 13 month persistency to 63% and has been able tosettle 86% of claims reported. The renewal and claims team regularly call up the customerto either collect the renewal premiums or help the customers get the benefits of theclaims. In 2018-19 we have completed an ISO 9001-2015 certification.

The team is poised to achieve bigger scale in FY2020 on strength of digitalcapabilities which have been developed over the past year.

Vehicle and Equipment Finance

In order to diversify and de-risk portfolio your Company had entered into commercialvehicle financing activity in FY15 operating from southern and western regions andsubsequently into other regions. The vehicle finance portfolio is about B 11146 millionand spread across 168 locations across 21 States as on 31 Mar 2019.

The Commercial Vehicle and construction equipment portfolio comprises approximately B6.70 billion pre-owned vehicles and balance new vehicles with portfolio of B 1.35 billionwith 14863 live contracts as at the end of 31 Mar19. The two-wheeler finance portfolio isof B 2.57 billion with more than 69000 live contracts and other vehicle loans comprisesof a portfolio of around B 0.52 billion. The team consists of domain specialists and hasestablished marketing channels and networks for lead acquisition processing andreceivable management. The business is supported by strong pre-screening methodologies andcredit assessment for a healthy portfolio mix.

Our strategy envisages financing customers who are largely from unorganised sector theretail clientele that is underserved by the formal banking channels. With an increase ingovernment outlay for infrastructure projects the growth of vehicle loan portfolio isexpected to be robust in FY20.

Your Company is also developing an in-house scorecard model for a quicker customerassessment process and disbursements reducing the end to end turnaround time. With plansto focus on existing customer base for consumer vehicle loans your Company stronglybelieves that digital technology would be an integral component for the growth of thebusiness in coming years.

Manappuram Comptech and Consultants Limited- acquired during March 2019

Your Company has acquired a new subsidiary company Manappuram Comptech and ConsultantsLimited [MACOM]. MACOM is engaged in the business of rendering IT support servicessoftware development support in hardware maintenance network support data centremanagement software application training and sale of licenses.

The team consists of senior software developers testers Business Analysts and otherpersonnel with experience ranging from 10 to 20 years. The Company was promoted by V PNandakumar in the year 2000 and has been rendering IT related support to ManappuramFinance Limited in addition to other vendors.

This strategic intention behind the acquisition is to have MACOM in a position to takeover the services currently outsourced and also reduce the operational and capitalexpenditure related to technology in long run. Since technology is a key growth driver inany competitive market your Company wishes to add to its capabilities in this segment andhopes to eventually enter national and international markets as well. MACOM will also bein a position to take care of all the IT related concerns of the parent company and itsother subsidiaries. Some of the key products developed by MACOM are Online Gold LoanAutomated Gold Loan Solutions Jus Suit [Legal Management Solutions] LMS [Loan ManagementSolution] etc. MACOM also engages in research and development activities related to ITsoftware to maintain the competitive edge over others.

MSME Lending

Micro small and medium enterprise (MSME) sector is a vibrant and dynamic sectorpromising high growth potential for the Indian Economy. MSME's play a critical role in theeconomy by providing large employment opportunities while contributing significantly tothe Gross Domestic product (GDP) and exports of India. There are close to 51 million MSMEunits in the country that employ about 117 million people across various sectorsconstituting 40% of the workforce. The MSME share to the total GDP is about 37% and theyalso contribute to 43% of exports based on the data maintained by Ministry of Commerce.

Apart from being a key contributor to the Indian economy the MSME sector also has thefastest growing exposures in the commercial lending space with low delinquency (NPA)rates.

To participate in the robust growth demonstrated by the MSME sector and to address itsever-increasing credit demand your Company has decided to foray into MSME lending by wayof introducing tailored products for meeting working capital demands of MSME's whichwould be different from the traditional secured financing options available. A focusedapproach customised product offerings and a healthy mix of target geographies willenable your Company to build a good quality book in this segment.

Corporate Lending

Manappuram corporate lending vertical caters to financing small and mid-size NBFC'swhich are mainly into housing micro finance vehicle and SME lending. It targetstransactions ranging from B 20 million to B 400 million. Borrowers benefit from a range ofproducts at competitive rates each of which is customised in terms of repayment scheduleand security. The attractiveness of lending to such companies is better yields. Incorporate loans Manappuram focuses on providing funds to other NBFC's for their portfolioorigination. Corporate loan portfolio primarily consists of fund-based product i.e. TermLoan.

Currently all such loans are sourced through Northern Arc Capital (earlier known asIFMR Capital) who go beyond what the rating agencies do with actual field level studybased on which your Company also has its own internal set of criteria for evaluation. Suchcorporate borrowers are typically those companies which have some external private equityinvestments and hence better corporate governance as compared to others in the market.They have good auditors and a professional management team which makes them attractive asa borrower.

Forex and Payments

Your Company has started taking focused steps in the payments landscape. Broadly thePayments division in MAFIL includes Inward Remittances under Money Transfer ServiceScheme Domestic Remittances under Banking Correspondent and Pre- Paid Instrument OutwardRemittances and Money Changing. The Company has recently raised its profile by becoming anRBI licensed Principal Agent. The Company already offers MTSS services through its networkof branches. It has tied up with Western Union as a principal agent to bring in more focuson this business.

Your Company has a PPI license and a digital wallet offering to its customers"MAKASH". The Company is also a Banking Correspondent through its tie up withYes Bank and offers this service to its gold loan customers. The Company intends to bringin focus by adding innovative features to its wallet proposition.

Your Company is an AD Category 2 license holder from Reserve Bank of India. RBI hadalso increased the limit for outward remittances by an individual to USD 250000 perannum in Jan 2016 under the LRS scheme. The sub segments of "travel abroad" and"Studies abroad" have grown the maximum. Your Company intends to enter thismarket in a focused way by starting this business in a few branches and then growing it inphase-wise manner.

3. SUBSIDIARIES

Your Company holds 93.33% equity shares of Asirvad Microfinance Limited 100% equityshares of Manappuram Home Finance Limited 100% equity shares of Manappuram InsuranceBrokers Limited and 81.07% of Manappuram Comptech and Consultants Limited as on 31 March2019.

Asirvad Microfinance Limited

Gross Income of the Company as on 31 March 2019 is B 6772.5 million ascompared to B 4695.92 million for the year ended 31 March 2018 and profit after Tax B1327.96 million as compared to loss of B 90.6 million for the year ended 31 March 2018

Manappuram Home Finance Limited

Gross Income of the Company as on 31 March 2019 is B 662.81 million as comparedto B 515.12 million for the year ended 31 March 2018 and net profit is B 30.52 millionfor the year ended 31 March 2019 as compared to the net loss of B 44.54 million asat 31 March 2018. AUM of the Company as on 31 March 2019 is B 5187.6 million which is2.67% of consolidated AUM.

Manappuram Insurance Brokers Limited

Gross income of the Company for the year ended 31 March 2019 is B 113.33 million ascompared to B 49.76 million for the previous year and profit for the year ended 31 March2019 is B 34.28 million as compared to the profit of B 5.97 million for the previous year.

Manappuram Comptech and Consultants Limited

Gross income of the Company for the year ended

31 March 2019 is B 72.27 million as compared to B 60.73 million for the previous yearand Profit for the year ended 31 March 2019 is B 3.29 million as compared to theprofit of B 0.69 million for the previous year.

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

4. RESERVES

During the FY 2018-19 the Company has utilised B 258.06 million with regards totransition to IND AS from General Reserves.

The total reserves and surplus as on 31 March 2019 stands at B 42235.99million.

5. DEBENTURE REDEMPTION RESERVE

Pursuant to the provisions of the Companies Act 2013 ("Act") and therelevant circulars issued by the Ministry of Corporate Affairs the Company is required tocreate a Debenture Redemption Reserve (DRR) to which amounts shall be transferred fromthe profits every year till the debenture is redeemed. The amount of DRR shall be 25% ofthe NCDs issued through public issue in compliance with SEBI (Issue and Listing of DebtSecurities) Regulations 2008 and no reserve is required in respect of NCDs issuedthrough private placement.

As a matter of policy your Company creates a reserve on a proportionate basis till theredemption of the debentures. Accordingly the Company transferred a sum of B 970.8million from DRR during the year.

Furthermore the Act stipulates that the Company has to invest on or before 30 Aprilof each year in the prescribed manner a sum equal to 15% of the NCDs maturing during theyear ending on the 31 March of the next year. The Company had duly deposited with aScheduled Bank B 2.62 million

in April 2018 w.r.t debentures matured during FY 2018-19 and has also deposited B160.49 million in April 2019 w.r.t. debentures maturing in FY 2019-20.

6. RESOURCES

The Company as an NBFC mobilisation of resources at optimal cost and its deployment inthe most profitable and secured manner constitutes the two important functions of theCompany. The main source of funding for the Company continues to be credit lines from thebanks and financial institutions. Your Company as at 31 March 2019 availed various creditfacilities from 25 banks1 NBFC (Bajaj Finance) and from NABARD.

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

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

7. MANAGEMENT DISCUSSION AND ANALYSIS

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

8. REPORT ON CORPORATE GOVERNANCE

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

9. BUSINESS RESPONSIBILITY REPORT

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

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

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

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

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

The board of directors to the best of their knowledge and ability confirm that:

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

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

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

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

v. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; vi. they havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring FY 2018-19.

11. MEETINGS OF THE BOARD

During the financial year 2018-19 Board of Directors met on twelve occasions. Forfurther details of these Board Meetings please refer to the Corporate Governance Sectionof this Report.

12. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

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

13. POLICY ON BOARD COMPOSITION COMPENSATION

The Board of Directors has adopted a policy on director's appointment and remunerationfor directors Key Managerial Personnel and other employees including criteria fordetermining qualification positive attributes and independence of directors as laid downby the Nomination Committee of the board in compliance with the provisions of Section 178of the Act. The policy can be viewed at https://www.manappuram.com/public/uploads/editor-images/files/Policy%20on%20Board%20composition%20and%20Compensation.pdf and is also annexed to this report as Annexure II.

14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are provided in Note 101144 & 48 to the StandaloneFinancial Statements

15. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

Contracts / arrangements / transactions entered by the Company during the FY 2018-19with related parties under Section 188 of the Act were in ordinary course of business andon arm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the provisions of Regulation 23 of SEBI LODR and the Company's policy onrelated party transactions. Therefore particulars of contracts / arrangements withrelated parties under Section 188 in Form AOC-2 is not annexed with this report.

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

The Policy on related party transactions as approved by the Board which is annexed tothis report as Annexure III may be accessed on the Company's website at the https://www.manappuram.com/public/uploads/editor-images/files/POLICY%20ON%20RELATEDPARTYTRANSACTIONS.pdf.

16. DIVIDEND

One interim dividend at the rate of 50 paise per equity share and three interimdividends at the rate of 55paise per equity share were declared during the financial year2018-19 on 18 May 2018 9 August 2018 6 November 2019 and 6 February 2019respectively.

An aggregate of B 2.15/- per equity share amounting to 107.5% of the paid-up value ofthe shares was paid by the Company during the financial year 2018-19.

The Dividend Distribution Policy as per the SEBI LODR is available at the followinglink: https://www.manappuram.com/public/uploads/editor-images/files/Dividend%20Distribution%20 Policy-090816.pdf

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

These details are provided as Annexure IV to this report.

18. RISK MANAGEMENT POLICY

The Company has a Board of Directors approved Risk Management Policy wherein materialrisks faced by the Company including Operational Risk Regulatory Risk Price InterestRate Risk and Credit Risk are identified and assessed. The Risk Management Committeeperiodically reviews the various risks faced by the Company and advises the Board on riskmitigation plans. Risk Management policy may be accessed on the Company's website at thelink: https:// www.manappuram.com/public/uploads/editor-images/files/ENTERPRISE%20RISK%20MANAGEMENT%20POLICY%20 %26%20FRAMEWORK.pdf

19. CORPORATE SOCIAL RESPONSIBILITY POLICY

The Corporate Social Responsibility Policy (CSR Policy) indicating the activities to beundertaken by the Company have been formulated by the Board based on the recommendation ofthe

Corporate Social Responsibility Committee (CSR Committee). The CSR Policy may beaccessed on the Company's website at the link:https://www.manappuram.com/public/uploads/editor-images/files/CSR%20Policy.pdf

The Corporate Social Responsibility initiatives taken by the Company during the FY2018-19 is detailed in the Report on CSR activities which is annexed herewith marked asAnnexure V.

20. FORMAL ANNUAL EVALUATION

The board of directors have carried out annual evaluation of its own performance boardcommittees and individual directors pursuant to the provisions of the Act and thecorporate governance requirements as prescribed by SEBI LODR. The following were theperformance evaluation parameters during the year;

Board Committees Non-Executive Directors (including Independent Director)
Board Composition and Quality Function and duties Participation at Board/ Committee Meetings
Board Meetings and Procedure Committee Meetings and Procedures Relationship
Board Strategy and Risk Management Overall rating of Board Committees Independence
Overall Rating of Board Perfomance

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

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

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

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

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

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

During the FY 2018-19 Mr. B.N.Raveendra Babu (Executive Director) has receivedremuneration by way of sitting fee B

0.32 million for attending Board/Committee meetings of the subsidiary ManappuramInsurance Brokers Limited and Mr. V. P Nandakumar (Managing Director & CEO) has notreceived any remuneration or commission from any of the subsidiaries of the Company forthe FY 2018-19.

22. AUDIT AND AUDITORS REPORT

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

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

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

Secretarial Audit

The Board appointed KSR & Co. Practicing Company Secretaries LLP to conductSecretarial Audit for the financial year 2018-19.

Secretarial audit report for year ended on 31 March 2019 as provided by KSR & Co.Practicing Company Secretaries LLP Indus chambers Ground floor No.101 Govt ArtsCollege Road Coimbatore-641018 is annexed to this Report as Annexure- VI.

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

23. DIRECTORS AND KEY MANAGERIAL PERSONNEL CHANGE IF ANY

Mr.Gautam Ravi Narayan (DIN: 02971674) was appointed as Additional Director on08.02.2018 and Shareholders at the 26th AGM held on 21.08.2018 approved his appointmentas Non-Executive Non-Independent Director.

Mr.Shailesh Mehta (DIN: 01633893) stepped down as director of the board of the Companyw.e.f 22.08.2018.

Ms.Sutapa Banerjee (DIN: 02844650) has been appointed as Additional Director of theBoard with effect from 6 February 2019 and Shareholders vide Postal Ballot dated29.03.2019 approved her appointment as Independent Director w.e.f 01.04.2019.

Dr. Amla Samanta stepped down as director of the board of the Company at the meetingdated 20.03.2019 w.e.f 01.04.2019.

Shareholders approved Continuation of Directorship of Mr. Eknath Atmaram KshirsagarNominee Director who has attained the age above 75 years Mr. P. ManomohananNon-Executive Independent Director who has attained the age above 75 years Mr.JagadishCapoor Non-Executive Independent Director Who has attained the age above 75 Years andRe-appointment of Mr. Jagdish Capoor (DIN: 00002516) Mr. P. Manomohanan (DIN: 00042836)Mr. Rajiven V.R (DIN: 06503049) Adv. V. R Ramachandran (DIN: 00046848) as IndependentNon-Executive Directors via postal ballot dated 29.03.2019.

Board accepted resignation of Mr. Kapil Krishan CFO on 18.05.2018 w.e.f 30.06.2018 andMrs. Bindu A. L. was appointed as CFO on 03.01.2019 w.e.f the same day.

Board accepted resignation of Mr. Ramesh Periasamy Company Secretary on 16.10.2018w.e.f 04.01.2019 and Mr. Manoj Kumar VR Company Secretary was appointed on 03.01.2019w.e.f 05.01.2019

There were no other changes in Directors or Key Managerial Personnel during the FY2018-19.

24. SHARE CAPITAL

During the year 2018-19 the Company has allotted 274095 equity shares of B 2 eachpursuant to exercise of stock options.

Consequently the paid-up equity share capital of the Company stood as on 31.03.2019 atB 1685.62 million consisting of 842809857 equity shares of B 2 each.

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

25. DEPOSITS

As you are aware your Company had stopped acceptance of deposits from the public sinceFY 2009-10. Your Company had converted itself into a non deposit taking Category ‘B'NBFC. During FY 2018-19 the Company has not accepted deposits as per Chapter V of the Act.

There is NIL unclaimed deposit as on 31 March 2019.

26. COMPLIANCE WITH NBFC REGULATIONS

Your Company has complied with all the regulatory provisions of the Reserve Bank ofIndia applicable to Non-Banking Financial Company - Systemically Important Non-Deposittaking Company. As on 31 March 2019 the Capital Adequacy Ratio of the Company is 23.81%well above the statutory requirement of 15%. The Company has not issued any Perpetual DebtInstruments.

27. EMPLOYEE STOCK OPTION SCHEME (ESOS)

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

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

Disclosures in terms of ‘Guidance note on accounting for employee share basedpayments' issued by ICAI and diluted EPS in accordance with Accounting Standard 20 -Earnings Per Share are provided in note 36 of Standalone Financial Statements in thisAnnual Report.

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

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

28. DISCLOSURE

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

Whistle Blower Policy and Vigil Mechanism

The Vigil Mechanism of the Company provides adequate safeguards against thevictimisation of any directors or employees or any other person who avail the mechanismand also provides direct access through an e-mail or dedicated telephone line or a letterto the Chairperson and a Member (Woman Director) of the Audit Committee.

No person has been denied access to the Chairman and a Member (Woman Director) of theaudit committee. Company has ensured that its employees are well aware of the content andprocedure of the policy and fully protected. The Whistle Blower Policy and Vigil Mechanismmay be accessed on the Company's website at the link:https://www.manappuram.com/public/uploads/editor-images/files/22-Whistle-blower-Policy-v2.pdf

29. EXTRACT OF ANNUAL RETURN

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

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

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

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

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

31. LISTING WITH STOCK EXCHANGES

Your Company confirms that it has paid the Annual Listing Fees for the financial year2018-19 to BSE and National Stock Exchange (NSE) where the Company's shares are listed.

32. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year under review there were 3 cases filed with the Internal ComplaintsCommittee of the Company pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the same were investigated andresolved. No complaints were pending more than 90 days during FY 2018-19.

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

33. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Act SEBI LODR and Accounting Standard (AS) – 21 onConsolidated Financial Statements the audited consolidated financial statement isprovided in the Annual Report.

34. CREDIT RATING

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

a. CRISIL rated Bank Loan Facilities amounting to B 2500 million as CRISIL AA- /Positive.

b. CRISIL rated Non – Convertible Debentures amounting to B 27575 million asCRISIL AA- / Positive.

c. CRISIL rated Commercial Paper of B 35000 million as CRISIL A1 +

d. ICRA rated Non – Convertible Debentures amounting to B 2701.2 millionas [ICRA] AA- (Stable)

e. CARE rated Bank Loan Facilities for Long Term amounting to B 56800 million as CAREAA(Stable) (Double A; Stable)

f. CARE rated Bank Loan Facilities for Short Term amounting to B 33200 million as CAREA1+ (A One Plus)

g. Care rated Non-Convertible Debentures amounting to B 16800 million as CAREAA(Stable)

h. Care rated Commercial Paper of B 35000 million as

CARE A1+ (A 1 Plus)

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

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

35. DETAILS OF AUCTIONS HELD DURING THE YEAR 2018-19

Additional disclosures as required by RBI NDSI Master Directions 2016:

Year Number of Loan Accounts Principal Amount outstanding at the dates of auctions Interest Amount outstanding at the dates of auctions Total (A+B) (Rs. in million) Value fetched ` ( in million)
(A) (##Rs.## in million) (B) (##Rs.## in million)
31 March 2019 181555 4193.87 565.40 4759.27 5155.49
31 March 2018 332767 9045.30 1126.70 10172.00 10585.50

Note: No sister concern participated in the auctions during the year ended 31 March2018 and 31 March 2019

36. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURE

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

37. AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE

A certificate from Statutory Auditor in compliance with the conditions of corporategovernance by the Company for the year ended on 31 March 2019 as stipulated in Part E ofSchedule V of SEBI LODR is annexed as Annexure - X.

38. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS

There were no such significant / material orders passed by the Regulators during thefinancial year 2018-19.

No penalties and strictures were imposed on the Company by any of the regulatoryauthorities such as the Stock Exchange SEBI Reserve Bank of India Registrar ofCompanies for non- compliance on any matter related to capital markets during the lastthree years 2016-17 2017-18 and 2018-19 except for the below:

NSE Regulation 18(1) B 132160 NSE notice dated 31.01.2019 Paid on
Non-Compliance with the constitution of Audit (Rs. 2000 per day computed till 31 08.02.2019
Committee December 2018) plus GST
BSE Regulation 18(1) Rs. 132160 BSE notice dated 31.01.2019 Paid on
Non-Compliance with the constitution of Audit (Rs. 2000 per day computed till 31 08.02.2019
Committee December 2018) plus GST

39. MATERIAL EVENT SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENT

There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the FY 2018-19 and the date of thisreport.

40. MAINTENANCE OF COST RECORDS

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

41. ACKNOWLEDGEMENT

Your Directors express sincere appreciation and gratitude to the employees of theCompany at all levels for their dedicated service and commitments to the Reserve Bank ofIndia

Rating Agencies Stock Exchanges Debenture Trustees RTA's Depositories Central andState Governments and its statutory bodies for the support guidance and co-operation.Your Directors wish to thank the Customers Investors Shareholders Debenture holdersBankers Auditors Scrutiniser and other financial institutions and other stakeholders forthe whole hearted support and confidence reposed on the Company

For and on behalf of the Board of directors of
Manappuram Finance Limited
Sd/-
Jagdish Capoor
Place: Valapad DIN: 00002516
Date: May 15 2019 Chairman