1. CORPORATE INFORMATION
Muthoot Capital Services Limited (‘the Company’) is a public company domiciled in India, governed by the Companies Act 2013 and is a Systemically Important Deposit Accepting Non-Banking Financial Company (“NBFC”) registered with Reserve Bank of India. The shares of the Company are listed on the Bombay Stock Exchange and the National Stock Exchange. During the year, the Company was primarily engaged in the business of financing for purchase of automobiles, mainly two wheelers against hypothecation of the vehicles and granting of personal/business loans etc.
2. NOTES ON ACCOUNTS FOR THE YEAR ENDED 31st MARCH, 2019
Amounts in the financial statements are presented in thousands, except for per share data and as otherwise stated.
The Company has only one class of shares referred to as equity shares having a par value of Rs.10. Each holder of equity share is entitled to one vote per share.
In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.
As per the records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
Terms of Repayment of Bank Loans:
Security and Rate of Interest of Term Loans from Banks
The term loans from banks are secured by charge on the entire current assets including loans receivable of the company. The rate of interest varies from 9.30% to 11.00% as on the Balance Sheet date.
These loans are repayable in equal monthly/ quarterly instalments which are spread over period up to 36 months.
Security and Rate of Interest of Term Loans from Financial Institution
The term loans from Mahindra & Mahindra Financial Services Ltd is secured by creating a paripassu hypothecation charge together with other term loan & working capital lenders of the borrower, over receivables/ loan assets/book debts.
The Company has taken one Term Loans from Mahindra & Mahindra Financial Services Ltd in in two tranches of Rs.50 00 00 thousand each with interest rates being 9.5% and 10.75%. The loan is repayable in six equal quarterly installments over a period of 18 months.
2.1.1 Subordinated Term Loans/Debts (Sub Debts):
A. Northern Arc Capital Limited (Formerly known as IFMR Capital Finance Private Limited) -
The Company has taken two Subordinated Unsecured Term Loans from Northern Arc Capital Ltd. of Rs.15 00 00 thousand each on 29th June, 2016 and 30th March, 2017 respectively, with interest rates being 12.5% and 11.95%. The loans will be repaid only on maturity i.e. after 66 months from the date of availing the loan.
B. The Company has also accepted subordinated debts from public under three schemes, namely Monthly, Annual and Maturity interest payment with interest rates ranging from 9% to 13.4%. The maturity period of the loan ranges from 60 months to 96 months. The subordinated debts issued under each scheme will be repaid only on maturity.
The Unsecured Term loans / Subordinated Debts of the Company qualify as Tier II Capital under Master Directions - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.
2.1.2 Public Deposits:
The Company has accepted Public Deposits under three schemes, namely Monthly, Annual and Maturity interest payment. The deposits issued under each scheme will be repaid only on maturity, unless claimed by the depositor earlier and, if permissible, to be repaid as per the regulations issued in this regard by the Reserve Bank of India. The rate of interest on these deposits ranges from 7.0 % to 11.75% per annum. The repayment period ranges from 12 months to 60 months
2.1.3 Current portion of interest accrued, but not due on the above borrowings amounting to Rs.3 51 47 thousand (Rs.5 14 07 thousand) is shown in Note No. 2.8 under Other Current Liabilities .
2.1.4 The liability towards Unrealized Gain appears in the financial statements in the manner given below:
2.1.5 Loans from Banks - Working Capital Demand Loans and Cash Credits Guaranteed Loans
The Working Capital Demand Loans, Cash Credits and Term Loans obtained from Banks have been personally guaranteed by the Promoter Directors of the Company, namely, Mr. Thomas John Muthoot, Mr. Thomas George Muthoot and Mr. Thomas Muthoot.
Security and Rate of Interest of Working Capital Demand Loans and Cash Credits from Banks
The Cash Credits and Working Capital Demand Loan facilities have been obtained from the banks by creating First Charge by way of hypothecation of the entire current assets, including business loans, hypothecation loans and all other loan receivables, ranking pari-passu with other banks and Debenture Holders.
Interest on these loans varies between 8.4% to 11.2% per annum as on the Balance Sheet date.
These loans are repayable within a period upto 12 months from the date of sanction.
2.1.6. Loans and Advances from Related Parties
The Company has entered into transactions with Promoter Director of the Company. The Company pays interest @ 12% p.a in respect of interest bearing loans(Balance outstanding as at 31st March, 2019 was ? 7 55 00 thousand (? 3 05 00 thousand)). The total balance outstanding (interest and non-interest bearing loan) as at 31st March 2019 is Rs.10 24 34 thousand (Rs.5 78 06 thousand)
2.1.7. Inter Corporate Deposits
The Company has taken an Inter Corporate Deposit from Adtech Systems Ltd. This is repayable after a period of 3 months with an effective rate of interest of 9% per annum. The balance Outstanding as on 31st March, 2019: Rs.1 62 47 thousand (Rs.1 49 95 thousand)
Trade Payables includes amounts payable to related parties amounting to Rs.2 85 17 thousand (Rs.2 47 26 thousand)
2.1.8 Amount Payable to Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the Company owes dues on account of Principal amount together with interest and accordingly no additional disclosures have been made.
The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.
2.1.9 Debentures:
The Company has issued Redeemable Non-Convertible Debentures on Private Placement basis in various series. The debentures issued under each series have a repayment period depending on the scheme it falls under. The debentures are repayable within a period of 1 to 6 years, depending on the schemes. The schemes range from Monthly, Annual and Maturity Interest payment. The rate of interest of matured debentures ranges from 11% to 14.19% per annum.
2.1.10 Investment in PMS is represented by the following-
(a) Nil (7 750) shares of Rs.2/- each in Manappuram Finance Ltd - Rs. Nil (Rs.764 thousand)
(b) 9 260 (10 526) shares of Rs.10/- each in Muthoot Finance Ltd-Rs.41 94 thousand (Rs.48 57thousand)
(c) 5 02 006 (Nil) units in HDFC Ultra Short-term Fund Rs.52 21 thousand (?Nil)
(d) Balance with PMS Rs. Nil (Rs.4 thousand)
2.1.11 Aggregate amount of quoted investment is Rs.6 83 65 thousand (Rs.14 81 15 thousand) and market value is Rs.725 07 thousand (Rs.15 60 91 thousand), aggregate amount of unquoted investment is ?3 45 00 thousand (?3 05 04 thousand). Aggregate provision for diminution in value of investment is Nil.
2.1.12 In accordance with the guidelines given in the Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 issued by Reserve Bank of India, the Company has created floating charge on the statutory liquid assets comprising of Investment in Government Securities of face value of Rs.14 88 00 thousand (Cost- Rs.14 24 94 thousand) and bank deposits of Rs.2 00 00 thousand in favor of trustees representing the deposit holders of the Company.
Deferred Tax Asset and Deferred Tax Liabilities have been set off wherever the Company has legally enforceable right to set off current tax assets against current tax liabilities and the Deferred Tax Assets and Deferred Tax Liabilities relating to the same taxation authority.
2.1.13 Aggregate amount of quoted investment is ?8 35 63 thousand (Rs.19 thousand) and market value is ?8 8961 thousand (Rs.27 thousand).
2.1.14 Deposits disclosed above, have a maturity period of less than 12 months as at the end of reporting period, except for deposits offered as collateral security against securitization transaction amounting to Rs.45 78 34 thousand (Nil)
2.1.15 The Company has repossessed assets worth Rs. 3 84 thousand on 31st March, 2019 (Rs.15 19 thousand). The same has been fully provided for and charged to statement of Profit and Loss as on the date of the Balance Sheet and the realizable value is shown as Nil.
2.1.16 Loans Buyout
The company has entered into arrangements with other NBFCs for the buyout of receivables of Four Wheeler Portfolio, Two Wheeler Portfolios and Micro Finance Portfolio. The rate of interest receivable on the loan buyouts ranges between 13.7% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 21 months and 37 months.
2.1.17 Term Loans
The company has advanced Term Loans to other Companies / NBFCs secured by way of first charge/pari-passu charge on the loan portfolio created out of the lending by the Company. The rate of interest receivable on the term loans ranges between 12.4% to 16% per annum on the diminishing balance. The tenure of the loans ranges between 15 and 48 months.
2.1.18 Other receivables include amounts receivable from related parties amounting to Rs.748 thousand (Rs.3 87 thousand).
2.1.19 It comprises of Company’s share of future interest strip receivables in case of par structure of securitisation.
2.1.20 Prepaid expense includes expense paid to related parties amounting to Rs.14 08 thousand (Nil).
2.1.21 An amount of Rs.7 75 77 thousand (Rs.1 60 35 thousand) has been written off against the nonperforming hypothecation assets. (Refer significant accounting policy No 1.19)
3.Employee Benefit Plans
3.1 Defined Benefit Plans - Gratuity
The Company has entered into an arrangement with the LIC of India to cover the liability payable to the employees towards the gratuity under a Gratuity Trust Scheme based on Group Gratuity Cum Assurance Scheme of the LIC of India which is a defined benefit scheme and the company has to make contributions under such scheme.
4.1.1 As per the terms of appointment approved by the Board of Directors, remuneration of Mr. Ravi Oruganti is being paid to Muthoot Fincorp Limited.
4.2 Provisions for doubtful debts due from related parties at the balance sheet date-Nil (Nil)
4.3 Amounts written off or written back of debts due from or to related parties-Nil (Nil)
The operating lease arrangements are renewable on a periodical basis and relates to rented premises. The lease agreements have lease escalation clauses.
5. GENERAL
5.1 Particulars showing maturity pattern of secured privately placed Redeemable Non Convertible Debentures
Secured by charge on all movable assets, book debts, receivables and advances in the books of the company.
5.2 Cost Insurance Freight (CIF) value of imports - NIL
5.3 Expenditure in foreign currency
5.4 Earnings in Foreign Currency - NIL
6. Reporting of Fraud - No cases of frauds were reported during the financial year 2018-19
7. Disclosures required in Master Directions - Non-Banking Financial Company - Systemically Important Non-Deposit taking company and Deposit taking company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.
Note 1: Only the SPVs relating to outstanding securitization transactions are reported here Note 2: Based on the information duly certified by SPV’s auditors on which reliance is placed by Auditors.
Note 1: The above maturity profile has been compiled from the internal records and system reports maintained by the management on which reliance is placed by the auditors.
Note 2: Above includes Interest accrued.
Note 3: In accordance with the revised ALM policy of the management, Non-Performing Assets as at 31st March 2019 have been categorized under the maturity pattern of “ Over 1 year upto 3 years” for the above disclosure.
iii. Details of financing of parent company products - NIL
iv. Details of Single Borrower Limit (SBL) / Group Borrower Limit (GBL) exceeded by the company - NIL
v. Unsecured Advances
The unsecured Loans against Demand Promissory Notes (DPN) executed by the borrowers and outstanding as at 31.03.2019 is Rs.14 50 13 thousand (as at 31.03.2018 Rs.8 11 43 thousand).
A. Registration obtained from other financial sector regulators - NIL
B. Disclosure of Penalties imposed by Reserve Bank of India and other regulators - NIL
C. Ratings Assigned by Credit Rating Agencies and migration of ratings during the year
D. Provisions and Contingencies
Break up of ‘Provisions and Contingencies’ shown under the head Expenditure in the Statement of Profit and Loss
E. Drawn Down from Reserves-Nil
F. Concentration of Deposits, Advances, Exposures and NPAs
G. Concentration of Deposits (for deposit taking NBFCs)
Note vi.(i): Additions/Reductions to NPA do not include accounts classified as NPA and regularized during the same financial year.
Note vi.(ii): Provisions made during the year includes additional provision amounting to Rs.14 09 10 thousand (Rs.4 00 00 thousand) created over and above the minimum levels specified by RBI in accordance with the accounting policy as stated in 1.19 (i)(b) and does not include loans written off during the year as stated in Note 2.26.1.
H. Overseas Assets (for those with joint ventures and subsidiaries abroad) - NIL
I. Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms) - NIL
The above particulars have been compiled from the internal registers maintained by the management on which reliance is placed by the auditors.
8 Additional disclosures as required in terms of Para 18 of Master Directions - Non-Banking Financial Company - Systemically Important Non-Deposit taking company and Deposit taking company (Reserve Bank) Directions, 2016 issued by Reserve Bank of India.
Liabilities side:
8.1 Loans and advances availed by the NBFC, inclusive of interest accrued thereon but not paid:
Note 1 - Overdues for a sum of Rs.6 21 thousand in respect of Secured Debentures represents debentures for which payments could not be made as claims were not received from debenture holders.
Note 2 - Overdue of Rs.2 89 16 thousand in respect of Public Deposits includes deposits for a sum of Rs.1 00 85 thousand pending renewal and deposits for a sum of Rs.1 88 31 thousand for which payments could not be made as claims were not received from deposit holders.
Note 3- Overdue of Rs.49 thousand in respect of Subordinated Debt represents debts for which payments could not be made as claims were not received from Subordinated Debt holders.
Note 4 - Balance outstanding against amounts borrowed from banks is inclusive of interest accrued, but not due.
8.2 The value of repossessed assets is shown net of provision/diminution amounting to Rs. 3 84 thousand as on 31st March 2019.
9. Previous year figures unless otherwise stated, are given within brackets and have been reworked, re-grouped, re-arranged and re-classified to conform to the current year presentation. The figures are rounded off to the nearest thousands.
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