Annual Report 2012

Transcription

Annual Report 2012

POWERFUL TEAMS GREAT GOALS
2012 - 2013
Sixth Annual Report 2012-13
PEOPLE
POWER
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As we step into the 6th year since commencement of operations, Asirvad has been part of the highs and
lows experienced by the industry. Amongst all this, one aspect stands out very prominently – the power of its
people. As the saying goes, “Men are more powerful than all the resources of the world”, Asirvad has been
fortunate to attract some of the best talent to manage its Microfinance operations. The fact that about 75%
of the employees have been with the organization for 2 or more years speaks volumes about the employeefriendly nature of the organization.
Challenging yet exciting working environment, attractive effort-reward ratio, and genuine concern towards
employee welfare have been the hallmarks of Asirvad. It would not be an overstatement to say that the
employees have amply reciprocated the warmth showered on them. Despite the rough times faced by the
industry since the infamous AP crisis that broke out in Oct ’10, Asirvad and its staff have been of huge support
to each other. The diligence exhibited by the staff, right from the field staff to the Management team, coupled
with the able guidance, support and encouragement of the Board, has contributed to the organization tiding
over the crisis and be in a position poised for future growth.
Asirvad is proud to have to have ‘People power’ as the central theme of its 6th Annual report. We are confident
that ‘Together, we will achieve more’ and continue to contribute to the welfare and service of the underserved.
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ASIRVAD STORY
Small Loans, Big Dreams...
“
There is no exercise better for the heart than
reaching down and lifting people up
4
-John Holmes
”
YEARS AT
A GLANCE
March 08
March 09
March 10
March 11
March 12
March 13
OPERATIONAL METRICS
No: Members enrolled
6,092
57,276
147,850
334,135
387,535
426,489
No: Active members
6,092
48,425
126,483
219,043
173,109
113,416
235
2,152
6,137
12,380
15,205
17,375
No: Branches
2
19
49
85
78
64
No: Districts covered
2
7
14
22
21
20
No: States covered
1
1
1
1
1
1
19
130
327
531
412
280
Cumilative LTD
disbursal (` in Laks)
305
2,570
11,889
31,487
46,067
59,551
Portfolio Outstanding
(Gross) (` in Laks)
286
1,509
6,243
10,101
7,937
10,246
-
-
2
63
1
-
No: Centres
HEADCOUNT METRICS
Total staff
DELINQUENCY
METRICS (` LAKHS)
PAR (`in Laks)
5
BOARD OF DIRECTORS
S V Raja Vaidyanathan
S V Krishnamurthy
Kalpana Iyer
Rajivan Krishnaswamy
S Rathinasabapathi
Venkatesh Natarajan
MANAGEMENT COMMITTEE
Venkatesh Natarajan
S V Krishnamurthy
G Srikanth
BORROWING COMMITTEE
S V Krishnamurthy
S Rathinasabapathi
ASSET LIABILITY COMMITTEE
G Srikanth
B Muralidharan Iyer
AUDITORS
M/s.Deloitte Haskins & Sells.,
Chartered Accountants,
ASV ‘N’ Ramana Tower,
52, Venkatnarayana Road,
T.Nagar, Chennai17.
AUDIT COMMITTEE
S V Krishnamurthy
Venkatesh Natarajan
Kalpana Iyer
COMPENSATION COMMITTEE
Rajivan Krishnaswamy
Venkatesh Natarajan
S Rathinasabapathi
CHIEF FINANCIAL OFFICER
G Srikanth
HEAD OPERATIONS
S Gopinath
COMPANY SECRETARY
B Muralidharan Iyer
LEGAL ADVISOR
M/s.Essess Associates
No.4, Trustpuram, 4th Cross Street,
Kodambakkam, Chennai 600 024.
BANKERS/FUNDERS
Ananya Finance for Inclusive Growth Private Limited
Axis Bank Limited
Corporation Bank
Development Credit Bank Limited
HDFC Bank Limited
ICICI Bank Limited
IFMR Capital Finance Private Limited
The Karur Vysya Bank Limited
Lakshmi Vilas Bank Limited
Small Industries Development Bank of India (SIDBI)
State Bank of India
Union Bank of India
Punjab National Bank
MAS Financial Services Private Limited
Agri Development Finance (Tamil Nadu) Limited
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Ratnakar Bank Limited
IDBI Bank Limited
Dena Bank
South Indian Bank
INDEX
7
PROFILE OF BOARD OF DIRECTORS
8
MESSAGE FROM CHAIRMAN
9
DIRECTORS’ REPORT
11
MANAGEMENT DISCUSSION ANALYSIS
16
CORPORATE GOVERNANCE REPORT
21
CORPORATE SOCIAL RESPONSIBILITY
28
AUDITORS’ REPORT
32
FINANCIAL STATEMENT 39
SIGNIFICANT ACCOUNTING POLICIES
59
DIRECTORS AND THEIR PROFILE
S V RAJA VAIDYANATHAN
B.Tech (IIT Madras), MBA (IIM Calcutta), AICWAI, ACS and has more than 33 years of
experience in the field of financial services, infrastructure, media, telecom & Retail
sectors in large private sector companies in India.
S V KRISHNAMURTHY
FCA and ACS. Has more than 31 years of work experience being one of the pioneers
of a BPO industry way back in the eighties.
KALPANA IYER
FCA an ex- business head of Citibank - Micro finance division at Chennai, is presently
a management consultant in Mumbai. She has more than 25 years of work experience
KRISHNASWAMY RAJIVAN
a Ph.D in Economics from the University of South Carolina, Los Angeles, USA and an
Ex-IAS Officer, was President of IFMR Trust. He has also served in the PMO. He is
now an Urban Advisor to the World Bank.
S RATHINASABAPATHI
is a B.Com, M.A. FCA and IPS Retd. Official, is an Honorary Treasurer with the
Guild of Services and is also an Honorary Secretary of the Retried Police Officers
Association. His expertise ranges from Internal and External Auditing to Taxation
Consultancy. He is also versed on Information Systems Audit.
VENKATESH NATARAJAN
is an MBA from Cornell University and has an Engineering degree from Annamalai
University, Chennai He has over 15 years of experience in product development
and venture capital at Intel; he has led several equity deals in design software,
computing wireless technology sectors and acted as operational consultant to
various MFIs in India. He is the MD of Lok Advisory Services.
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MESSAGE FROM THE CHAIRMAN
Access to financial services is perhaps one
of the most important requirements of any
household across the world. Access to finance
in turn leads to access to other services and
consequently better standard of living. However,
we find a characteristic peculiarity in the
Indian context with respect to the availability of
financial resources. While the rural households
do have manifold needs, their ability to avail
financial resources is severely constrained. This
is primarily due to supply restrictions like the
outright absence of financial services facilities
in rural areas or inappropriateness of products
and delivery processes to the needs of the
targeted populations.
Given this background, Microfinance, as a
means of providing financial access to hitherto
underserved segments, held huge promises
because of its explicit mission to target
population who stand excluded from access
to financial services, and also because of its
innovative nature. Simplicity of the processes
involved, direct lending to the beneficiary, and
the door-step collections served as the primary
attractions. Women particularly were able to
benefit from microfinance as many Microfinance
Institutions (MFIs) targeted female clients.
Microfinance services resulted in women’s
empowerment by positively influencing women’s
decision-making power and enhancing their
overall socio-economic status.
Amidst all the positive impact created by the MFIs
on the borrowers and their standard of living,
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there were certain undesirable practices, albeit
too few, that had crept into the operations of the
MFIs. The infamous AP crisis of Oct 2010 was the
step taken by the Andhra Pradesh Government
to weed out those practices, which unfortunately
had a crippling effect on the entire industry.
However, much has happened since then and I
am glad to note that the MFI sector is well on its
path to recovery. RBI’s initiative in creating a new
category of NBFC-MFI, Central bill to regulate
the NBFC-MFIs to be tabled in the parliament,
protection of borrower and organization interests
through the usage of credit bureau were all the
steps in the right direction to resurrect the MFI
industry. Lot of progress has been made and the
industry has managed to get back some of its
lost aura.
Asirvad was formed with the intention of providing
financial access to the underserved through the
formation of a commercially viable business. I am
happy to state that we have managed to achieve
our stated objectives without compromising the
interests of any of our stakeholders. We have
created an efficient organization upon the strong
foundation of sound corporate governance, set
up well-oiled processes, managed to attract
talented people who have helped achieve our
objectives within a short time frame. I am sure
that we will scale new highs in the years to come.
The liquidity conditions started to improve
during the 2nd half of 2012-13 and Asirvad was
also a beneficiary of liquidity from banks and
financial institutions given the strength of its
operations. We were able to develop new funding
relationships and also obtain enhancements from
existing funders. This resulted in growth of our
portfolio in FY 2012-13 by about 30% against FY
2011-12. Given the tough liquidity conditions that
persisted in FY 2011-12, we had also rationalized
our branch expenses through consolidation
measures. Once the funds position eased out, we
were able to utilize our infrastructure in a better
manner resulting in portfolio growth
I also take pride in mentioning that continuous
process efficiency is accorded top priority at
Asirvad. We have been one of the earliest to
subscribe to the Credit bureau, share exhaustive
data with them and also use the bureau reports
for credit decisioning. This has enabled us to
build portfolio of very strong quality and also
comply with the Central bank regulations. The
technology used at Asirvad is robust enough to
facilitate such data sharing with the bureaus
and we have also continuously enhanced our
software to ensure that it is in line with the
various guidelines that have been laid out
from time to time. We have also submitted our
application for registration as NBFC-MFI and all
the queries that had been raised by the Central
bank from time to time in this regard have been
addressed to their satisfaction.
All this was made possible due to the untiring
efforts of Asirvad staff, who are the pillars
of strength on which Asirvad rests. It is also
heartening to note that most of our staff are of
high vintage which indicate that they have been
with the organization in both the happy and
turbulent times. The single pointed objective of
our field staff is to make a valuable contribution
to the lives of our clients and thereby uplift
their standard of living. They are ably guided by
the senior management members, who have
longstanding experience in the field of banking
and financial services. Such experience has
been leveraged to make Asirvad an efficient and
effective organisation, which has helped us to
sustain ourselves during times of crisis as well
,the reason why we have dedicated this years
Annual Report Cover to them.
Asirvad Development Foundation (ADF), the
Social Responsibility wing of our company, set
up in March 2010 continued to provide assistance
to our members and to the economically weaker
section of the society at large. During the year
2012-13, our Trust launched student scholarship
schemes for the benefit of poor children so that
they may have access to good education. Our
Trust had also provided funds for the renovation
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of school buildings at remote places in order
to ensure infrastructure development in such
schools. We remain committed to our social
objectives and we have transferred 5% of our
current year profits to Asirvad Development
Foundation.
On behalf of Asirvad, I take this opportunity
to express my sincere gratitude to all the
stakeholders for their continued and active
support. The commitment and co-operation of
our staff has been the single most important
factor in Asirvad achieving its mission and the
company derives maximum strength from their
dedication and hard work to achieve its ambitious
growth plans. Good times await us and I pray
that Asirvad continues to grow from strength to
strength and contribute positively to the agenda
of financial inclusion and social development.
Sd/S.V. Raja Vaidyanathan
Chairman and Managing Director
DIRECTORS’ REPORT
The Directors are pleased to present the Sixth Annual Report on the business and operations of Your
Company together with the Audited Accounts of Your Company for the year ended 31st March 2013.
After a sluggish period of about 18-24 months, there has been portfolio growth during the current
year which can be attributed to strict adherence to rules by the organization and untiring efforts and
dedication of all the employees. The following are highlights:
FINANCIAL RESULTS
S.No.
Particulars
Year ended 31st March
2013 (` in crores)
Year ended 31st March
2012 (` in crores)
1
Net Interest Income
6.82
7.79
2
Other income
5.01
7.29
3
Operating Expenses
8.48
11.58
4
Write off and provisions
0.21
1.39
5
Profit Before Tax
3.14
2.11
5
Profit after Tax
2.13
1.29
RESERVES & DIVIDEND
During the year under review, the Directors do not recommend any dividend for the year as it was
decided to use its internal accruals for furtherance of the business objectives.
OPERATIONS AND BUSINESS PERFORMANCE
The year witnessed frequent modifications to regulations by RBI which had been followed by Your
Company in both letter and spirit.
The operational highlights of the Company are:
Client base of about 1.1 million across 64 branches.
Portfolio has increased by about 30%, after sluggish business conditions that existed over the last 18-24
months.
Your company managed to disburse about Rs. 130 Crores during the year
Your company has also ensured compliance to all the guidelines stipulated by the Central bank for the
Microfinance industry.
FUTURE OUTLOOK
Your Company has submitted its application to RBI for getting registered as NBFC – MFI and has been
following transparent and efficient operational policies and procedures, which were instrumental
in achieving the desired results. Your Company expects that banks will continue to view in the
industry in favourable hight during the current year as well which would mean that funds will not
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be a constraint. With dedicated efforts of all the employees, it is expected that Your Company would
scale new heights amidst tough competition.
CREDIT RATING
ICRA, India’s leading Ratings, Research, Risk and Policy Advisory Company had assigned the grading
M2 to your company in January 2013. The rating was given after taking into account the experienced
management team, good corporate governance, strong loan monitoring and collection mechanisms.
Your company was also part of 10 multi-originator Securitization transactions done during the year
and the rating details are given below:
S.No.
Particulars
Ratings
Remarks
1
IFMR MOSEC XIV
A-(SO)
Rated by CRISIL
2
IFMR MOSEC XV
A-(SO)
Rated by ICRA
3
IFMR MOSEC XVII
A-(SO)
Rated by ICRA
4
IFMR MOSEC XIX
A-(SO)
Rated by ICRA
5
IFMR MOSEC XXII
A+(SO)
Rated by CRISIL – First listed
Securitization transaction
6
IFMR MOSEC XXV
A+(SO)
Rated by CRISIL
7
IFMR MOSEC XXVII
BBB+(SO)
Rated by ICRA
8
IFMR MOSEC XXIX
A-(SO)
Rated by ICRA
9
IFMR MOSEC XXX
A (SO)
Rated by ICRA
10
IFMR MOSEC XXXI
A+(SO)
Rated by ICRA
RBI GUIDELINES
Your company is registered with RBI as a Non-Deposit Non Banking Company by their original letter
in December 2007. RBI’s approval was regularized vide their letter DNBS(Che)/CMD/3843/1327.056/9-16 dated 19th April 2010. RBI had issued revised checklist for registering your company
as NBFC-MFIs vide its circular dated 7th February 2013 and your company had duly applied for reregistration under this category. Your Company has also complied with all applicable regulations of
Reserve Bank of India. As per Non-Banking Finance Companies RBI Directions, 1998, the Directors
hereby report that your Company did not accept any public deposits during the financial year under
review.
Your Company continues to comply with all the guidelines prescribed for a systemically important
NBFC.
The Board of Directors and its various Sub-Committees have met from time to time and ensured
adherence to the guidelines issued by RBI. Liquidity Risk Management, Interest Rate Risk, Funding
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and Capital Planning, Profit Planning and Growth Projections, Pricing, Credit Risk, Portfolio Risk
Management, Operational and Process Risk Management have also been reviewed from time to time
and the Sub-Committees have also been making necessary changes to KYC and other disclosure
norms based on the policies being issued by the Central bank at periodic intervals.
CAPITAL ADEQACY
The Capital Adequacy Ratio was 24.31% as on 31st March 2013. The Net Owned Funds (NOF) as
on that date was Rs.28.26 Crores. The minimum capital adequacy requirement stipulated for Your
Company by Reserve Bank of India is 15%.
ISSUE OF CAPITAL
The authorized share capital of the company is Rs.20 Crores represented by Rs.15 Crores of Equity
and Rs.5 Crores of Preference Share Capital. The paid-up capital of your Company as on reporting
date was Rs.8.04 crores.
EMPLOYEES STOCK OPTION PLAN
During 2011-12, the Company had put together an Employees Stock Option plan as a retention tool
for the employees. A total of 2,04,500 options were granted at Rs.11.17 per option (at a discount of
50% to market value). As at 31st Mar 2013, 2,04,500 options were granted to eligible employees and
44,500 options were added back to the pool owing to eligible employees ceasing to be employees of
Your Company. The balance options available in the pool as at 31st Mar 2013 are 33,000.
RESOURCE MOBILISATION
During the year the liquidity was tight and Your Company was successful in getting funds from banks
and Financial Institutions. Your Company has received term loan disbursals of Rs.147.32 Crores from
various public / private banks / NBFCs and market instruments like Securitization.
CREDIT BUREAU SUBSCRIPTION
Your company continues to submit monthly data to Highmark and Equifax Credit bureaus on a
fortnightly basis and also use their credit reports for every single loan that is sanctioned. This,
coupled with the efficient processes, has resulted in a strong portfolio quality with NIL delinquencies.
FAIR PRACTICES CODE
RBI had been issuing revised Fair Practices code guidelines from time to time and Your company
has adhered to all of them without any compromise. The new Fair Practices Code, Code of Conduct,
Code of Ethics and Grievance Redressal Mechanism have been approved by the Board and displayed
prominently in all the branches of Your Company.
ASIRVAD DEVELOPMENT FOUNDATION
Asirvad Development Foundation (ADF), the Corporate Social Responsibility wing of Your Company
had successfully launched schemes for providing financial assistance to poor students and also
funding primary schools for renovating their dilapidated buildings.
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DIRECTORS
Mr. Krishnaswamy Rajivan and Ms. Kalpana Iyer retire by rotation and being eligible has offered
themselves for re-appointment.
AUDITORS
M/s. Deloitte Haskins and Sells, Chartered Accountants, re-appointed as the Auditors of Your
Company at the AGM held on 9th August 2012, retire at the ensuing Annual General Meeting and
have offered themselves for re-appointment.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000 the Directors confirm that:
1. In the preparation of the Annual Accounts, all the applicable accounting standards have been
followed.
2. Appropriate accounting policies have been selected and applied consistently and judgments and
estimates that are reasonable and prudent have been made so as to give a true and fair view of
the state of affairs at the end of the financial year and profit of Your Company for the financial year
ended 31st March 2013.
3. Proper and sufficient care has been taken for the maintenance of adequate accounting standards
in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for prevention and detecting fraud and other irregularities.
4. The Annual Accounts have been prepared on the ‘going concern’ basis.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management’s Discussion and Analysis Report for the year under review is presented in a separate
section forming part of the Annual Report.
CORPORATE GOVERNANCE REPORT
The Directors have adhered to the Corporate Governance requirements and have implemented the
best corporate governance practices. A report on Corporate Governance of your Company is attached
and forms part of the Directors’ Report.
PARTICULARS OF EMPLOYEES REMUNERATION.
In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules 1975 as amended from time to time, Your Company has not
employed any employee drawing Rs.5,00,000/- or more per month or Rs.60,00,000 or more per year.
ENERGY CONSERVATION, TECHNOLOGY ABORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO
The particulars relating to energy conservation, technology absorption, foreign exchange earnings
and outgo as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, our company
had not engaged in any activity relating to consumption of energy or technology absorption. Your
Company had not spent an any foreign currency expenditure and Your Company has no foreign
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currency earnings.
ACKNOWLEDGEMENT
Your directors express their appreciation for the assistance and co-operation received from Banks,
Financial institutions, Government Authorities, Customers, Vendors and other members during the
year under review. Your Directors also wish to place on record their deep sense of appreciation for
the sincere and committed services by the executives, staff and other employees of Your Company.
For and on behalf of the Board of Directors
Sd/(S.V. Raja Vaidyanathan)
Chennai | 6th June, 2013 15
MANAGEMENT
DISCUSSION
ANALYSIS
16
MANAGEMENT DISCUSSION ANALYSIS
INTRODUCTION
Financial inclusion is defined as the delivery of financial services, at affordable costs, to sections of
disadvantaged and low income segments of society. Given the wide diaspora of people living in our
country, it becomes essential to provide everyone with access to finance in order to bring about an
improvement in standard of life and living. Traditional financial institutions like banks were not able
to achieve this goal of financial inclusion completely due to their business model which makes such
business unviable. Microfinance Institutions (MFI) provided a solution to bridge this gap and made
financial access possible even to the low income segments of the society.
The business model made commercial and social sense which enabled the MFIs to grow at a rapid
pace. Historically, the industry was always prone to certain setbacks and the infamous AP crisis
was the latest to hit the sector in Oct 2010. Much progress has been made since then with the
Reserve bank of India creating a separate category of NBFC-MFI, promulgating various ordinances
to regulate their activities, bringing about a cap on the interest rates and margins, streamlining the
collection mechanism, preparation of a Microfinance bill to bring about a central regulator, MFIs’
usage of credit bureaus to avoid over-indebtedness and multiple lending, etc which has helped the
industry to come out of the crisis.
The much wanted liquidity started finding its way back to the sector thereby exhibiting the renewed
confidence of the lenders. Asirvad was also a beneficiary of such renewed trust, which helped the
organization raise significant amount of funds during the third and fourth quarters of 2012-13. This
in turn enabled the organization to grow its portfolio beyond the Rs. 100 Cr mark despite the tight
market conditions and stiff competition from other MFIs in the State of Tamil Nadu. Our company
was also a participant in a number of multi-originator transactions which ensured reasonably steady
flow of liquidity for on-lending during the lean period. Asirvad was also a party to the only listed
Multi-Originator Securitization transaction structured by IFMR Capital, which was a landmark event
in the annals of MFI industry.
Given the margin cap imposed by RBI, Asirvad had undertaken expense rationalization measures
during 2011-12, which continued during the current year as well. Unprofitable branches were
consolidated resulting in expense saves. Usage of credit bureau coupled with stringent underwriting
norms ensured the build-up of a strong portfolio, resulting in NIL delinquent portfolio as at Mar ’13.
ADHERENCE TO RBI GUIDELINES
In addition to the guidlines issued by RBI to qualify for registration as NBFC - MFI, RBI introduced new
FPC codes and other guidelines for ensuring fair practices in business and protecting the borrowers
from excessive interest rates and over-indebtedness. Our Company proactively ensured compliance
with all the stipulated guidelines.
WAY FORWARD
Over the last few months, Reserve Bank of India has been donning the mantle of being the regulator
of the microfinance sector and through its recent guidelines for registering as “NBFC-MFI” has
signaled its intention to streamline the activities of MFIs towards inclusive growth. Our company has
already applied for registering as “NBFC -MFI and we hope that will pave the way for banks to start
lending to this sector on a continuous basis, which will help in providing financial assistance to the
17
people living at the bottom of the pyramid and go a long way in building a stronger and vibrant India.
FINANCIAL YEAR 2012-13
Liquidity pressure was felt through the first half of 2012-13 and our portfolio had shown a sharp
de-growth during this period. However, the last quarter witnessed fresh inflow of funds which helped
in achieving the current portfolio size. Our company revamped the business model, products and
continuously took steps to strengthen the processes and audit framework to ensure that issues, if
any, are resolved immediately.
Our company continues to rely on the strengths of good governance, technological efficiency,
distribution network, and strong and efficient processes which have been the cornerstones of our
success and the basis on which our portfolio was built.
OPERATIONAL HIGHLIGHTS
The financial year 2012-13 saw some light at the end of the tunnel as portfolio started to exhibit a
growing trend. RBI had issued guidelines from time to time which were adhered to strictly by our
company. Expense reduction, consolidation of branches was undertaken keeping the branch viability
and geographical concerns in mind. Due to the untiring work of field staff our portfolio grew by about
30% compared to the previous year, and we are confident that we will be able to grow this further in
the forthcoming years due to the strong management capabilities and the policies in place.
The following are some of the operational highlights:
Particulars
March 2013
March 2012
March 2011
No. of branches
64
78
85
No. of districts
20
21
22
280
412
531
113,512
173,109
219,043
129
151
196
No. of employees
No. of active members
Disbursements
(` in crores)
FINANCIAL HIGHLIGHTS
The financial year 2012-13 showed improvement on the financials as well and some of the key
(` in Crores)
financial metrics are given below:
Particulars
Paid-up capital
March 2012
March 2011
8.04
8.04
8.04
Borrowings
98.98
50.40
73.65
Total revenue
20.40
24.28
29.31
Profit after tax
2.13
1.29
3.59
131.96
78.74
97.89
Total assets
18
March 2013
CUSTOMER ENGAGEMENT INITIATIVES
The key to the success of any business lies in having a healthy relationship with the primary
customers. This is more so for the Microfinance industry as the customers come from the lower
half of the pyramid and hence customer training assumes paramount importance. Keeping this in
mind, we have not compromised on the 3-day training provided to them before the disbursal of
the loan wherein they are kept informed about the profile of the company, terms and conditions
of our products, pricing and other important issues. We are also committed to ensure complete
transparency in our operations. Also in line with the RBI guidelines, our Company interacts with the
customers by having scheduled group meetings in a common place without causing any hindrance to
the general public. We are one of the very few companies that still insist on a minimum attendance
and give more weightage to the attendance criteria during the grant of a higher cycle loan.
HUMAN RESOURCES
Field Development Officers are primarily socially motivated and they work “to help people”. Being
a highly people oriented business, the primary challenge is to find a large pool of people with the
right skill sets and aptitude, followed by additional challenges of retention, talent management and
development. It is also necessary to enhance their skill and knowledge so that they become capable
of assuming higher responsibilities in the future.
As at the end of March 31, 2013, the number of employees in our Company stood at 280 across 20
districts of Tamil Nadu.
The other challenge is to manage the attrition which is generally high amongst the Field Officers due
to their tendency to shift employment regularly for higher monetary benefits to other companies or
other lucrative industries. The compensation provided by our company is benchmarked to the market
and we also conduct performance appraisal to retain the best talent and take steps to promote and
reward high performing individuals. Out of the total employee strength mentioned above, about 75%
of employees have been with us for more than 2 years, which indicates the high level of employee
stickiness that has been the foundation on which the organization rests.
TRAINING
Our company imparts induction and also continuous training to our staff so that they have a clear
understanding of the processes followed and also get the necessary skiils to shoulder additional
responsibilities which will help in their career progression. Our company has a DVD (in vernacular
language) containing the operational process in detail which is used to impart induction training to
the staff. Also the incumbent field staff is placed under senior field staff and he / she accompanies
the senior staff during field visits which will enable him/her to understand the process on the field
under an able guidance.
INFORMATION TECHNOLOGY
Our company had strongly relied on technology for capturing borrower data and updating the
collections which has resulted in better operational and reporting requirement, reducing the manhours of staff and productively utilizing the time of field staff. We have separate data engines to
meet our transactional and reporting requirements. We have also hired dedicated server space in
an external server for data storage in addition to a server hosted at Chennai, which acts as the
backup. This ensures close to zero outage time and demonstrates our preparedness to meet any
eventualities.
19
TREASURY
Raising liquidity was a challenge during the first half of the financial year 2012-13. Despite strong
portfolio without any presence in AP, banks were still reluctant in opening up any funding to the
industry at large. Due to our good relationships with funders and more importantly our efficient
process framework, our company managed to get sanctions from banks and development institutions
during the second half of the financial year. During the year, we had managed to raise about Rs. 148
Crores from various sources which enables us to cater to the needs of our borrowers.
INTERNAL AUDIT
In order to maintain better control over our processes and also as an expense reduction measure, our
company migrated to an in-house audit team during the current financial year. This has resulted in
better supervision and management and immediate resolution of issues. Through this arrangement,
our Company also managed to retain and provide better opportunities to some of the senior staff (at
Area Manager level) who have been managing the operations for quite some time and this gave them
the opportunity to utilize their skills in a different function.
RISK MANAGEMENT
Every organization is subject to the following risks - Credit risk (risk of delinquency), Operational risk
(risk of inadequate processes), Liquidity risk (risk of paucity in funding availability) and Sector risk
(political considerations and the like). The Risk Management framework of an organization serves to
minimize the impact in the event of any risks threatening to compromise the organizational strength.
Our company had put in adequate checks and balances to minimize these risk incidents and also to
counter-act as and when these risks occur. Our Company has constantly brought in changes to the
time tested processes to away untoward incidents and help manage credit and operational risks. The
stringent borrower selection process ensures minimal credit risk and employee training coupled
with a robust audit mechanism helps manage operational risk.
Our Company has also constituted the ALCO (Asset-Liability Committee) which meets at periodic
intervals to ensure that there is always a positive asset-liability pattern and funding is adequately
available to meet the financial obligations that become due in the forthcoming months. The ALM
of the organization is discussed in detail and necessary action taken to ensure that it is in line with
standard requirements.
Our company mandates strict adherence to regulatory guidelines comprising of KYC requirements,
transparency, usage of credit bureau, etc, and thereby expended all efforts to ensure orderly
functioning, which in a matured scenario, would be sufficient to address the sector risk. We also
expect these to act as confidence building measures for the banks to resume funding to our company
which would serve to address the liquidity risk.
Chennai | 6th June, 2013
20
Sd/S.V.Raja Vaidyanathan
CORPORATE
GOVERNANCE
21
REPORT ON CORPORATE GOVERNANCE
Asirvad believes that Governance is a process by which a Board of Directors, through its Management
guides an institution in fulfilling its corporate mission and protects the institution’s assets over time.
A Board of Directors is established to provide oversight and give direction to the managers of an
institution. Good Governance is about achieving desired results and also achieving them in the
right way.
Asirvad’s Board includes well respected directors who provide visibility and direction to the institution
and also lend credibility to the Board. They, along with the Management, play a key role in developing
the institution’s strategic direction and making critical operational decisions.
Asirvad’s Board brings with them long years of strong expertise and is actively involved in defining
and monitoring the activities of the institution. Directors are kept informed of the ongoing operations
and issues of the institution during the Board meetings and other Committee meetings from time
to time. They take the lead in defining the overall strategy for the organization, work closely with the
Management in overseeing its implementation and identify any shortcomings quickly and effectively
and also seek to address such issues in order to ensure that they don’t act as roadblocks in the
organisation’s progress and growth.
Corporate Governance is about promoting corporate fairness, transparency and accountability by
establishing a set of laws, rules, regulations, systems, principles, processes to govern a company.
Corporate governance is the acceptance by management of the inalienable rights of shareholders as
the true owners of the corporation and of their own role as trustees on behalf of the shareholders.
It is about commitment to values, about ethical business conduct and making a distinction between
personal and corporate interests in the management of a company. Asirvad promotes greater
transparency and better corporate governance to enhance long-term shareholder value and respect
minority rights in all our business decisions. Creating value that is not only profitable to the business
but sustainable in the long run, which is in the interests of all the stakeholders, obtained in an ethical
manner is one of the cornerstones of the Corporate governance at Asirvad. Asirvad encourages
compliance to rules and regulations not only in letter but also in spirit. The success of an organization
is a reflection of the professionalism, conduct and ethical values of its management and employees.
In terms of corporate governance philosophy, all statutory and significant material information is
placed before the Directors to enable them to effectively supervise the Company.
Asirvad’s Corporate Governance philosophy is based on the following principles: Utmost transparency in dealings
Clear communication of relevant information and high degree of disclosure levels
Make a clear distinction between personal conveniences and corporate resources
Communicate externally, in a truthful manner, about how the Company is run internally
Comply with the laws
Have a simple and transparent corporate structure driven solely by business needs
Create value for all stakeholders without compromising on ethical principles.
BOARD OF DIRECTORS AND COMPOSITION OF THE BOARD
The principal role of the board of directors – as representatives of the shareholders, is to oversee
22
the function of the organization and ensure that it continues to operate in the best interests of all
stakeholders. The Board of Directors are also responsible for defining the company’s purpose,
strategizing and drawing up plans to achieve that purpose, appointing the chief executive, monitoring
and assessing the performance of the executive team and also to assess and be accountable for their
own performance.
The following are the responsibilities of the Board of Directors:
Keep the organization’s mission, values, and vision at the forefront of all business decisions.
Measure the performance of the institution under key areas of capital adequacy, asset quality,
profitability, liquidity management, and financial audit, which provides the board with the to
adequately asses the strength of the institution’s internal controls.
Strategic planning for the organization.
Monitor fiscal management and maintain accountability to funders and donors.
Review and approve the annual budget, major program plans, and organizational policies.
Ensure that adequate resources are available to the organization to fulfill the goals.
Determine and Monitor the Organization’s Products, Services and Programs.
Define clear risk management and internal control policies and procedures.
Asirvad believes that an active, well-informed and independent Board is necessary to ensure highest
standards of corporate governance. The Board of Directors currently consists of 6 members, 2
representing the promoters, 3 Independent Directors with the other one being a Nominee Director of
the investor, M/s.Lok Capital LLC, Mauritius. There was no change in Directorship during the year.
During the year ended 31st March 2013, 4 Board Meetings were held on the following dates – 14th
May 2012, 29th August 2012, 10th December 2012 and 20th February 2013.
Particulars of the Attendance at the Board Meetings are given below:
S.No
Name of the Director
Category
1
Mr. S V Raja Vaidyanathan
4/4
2
Mr. S V Krishnamurthy
Promoter Director and Non-executive
Director
4/4
3
Mrs. Kalpana Iyer
Independent and Non Executive Director
3/4
4
Mr. S Rathinasabapathi
4/4
5
Mr. Rajivan Krishnaswamy
1/4
6
Mr. Venkatesh Natarajan
4/4
Attendance
COMMITTEES OF THE BOARD
Board committees are formed to help the Board of Directors conduct its business more efficiently.
Committees offer individuals an opportunity to contribute specific talents and expertise. Committees
also serve as training grounds for board members to take on positions of increasing responsibility.
Board committees improve the quality and efficiency of the Board by defining ways to address and
resolve issues. Asirvad’s Board has assigned considerable responsibilities to committees to work
23
effectively. The Board is assisted by Committees which oversee the various aspects relating to
Operations, Borrowing Strategy, Finance & Accounts, Compensation, etc. The Committees of the
Board of Directors of the Company are as under:
MANAGEMENT COMMITTEE
Management Committee establishes the fundamental values, the ethical principles and strategic
direction in which the organisation operates and ensures that everything the organization does
supports its vision, mission, purpose and aims. It is responsible for translating into action, the
policies and strategies of the Board and implementing the directives framed by the Board to achieve
corporate objectives of the company, and assisting the board in its decision making process with
respect to the company’s strategy, policies, code of conduct and performance targets, by providing
necessary inputs. The following are the objectives of the Management Committee
Implementing the policies and code of conduct instituted by the Board.
Managing the day to day affairs of the company in an efficient manner to achieve the targets and
goals set by the board, resulting in enhanced stakeholder value.
Providing timely, accurate, substantive and material information, including financial matters and
exceptions, to the Board, Board-Committees and the Shareholders.
Ensuring compliance of all regulations and laws and ensuring efficient service to the shareholders
and to protect shareholder’s rights and interests.
Monitoring and evaluation all areas of the Organisation’s performance.
Ensures that all monies and resources are properly used, managed and accounted for.
The Management Committee met 3 times on the following dates: 6th July 2012, 18th October 2012
and 25th January 2013. The details of the composition, number of meetings held and attendance
thereat during the year are as under:
S.No.
Category
Attendance
1.
3/3
2.
Promoter Director
3/3
3.
Independent Director
2/3
4.
Mr. G Srikanth
Chief Financial Officer
3/3
AUDIT COMMITTEE
The Audit Committee, being the sub-group of the full board, has an important role to play in the process
of financial monitoring and reporting. The audit committee is established with the aim of enhancing
confidence in the integrity of an organization’s processes and procedures relating to internal controls
and corporate reporting including financial reporting. Audit Committee provides an ‘independent’
reassurance to the board through its oversight and monitoring role, ensuring transparency and
accuracy of financial reporting and disclosures, effectiveness of external and internal audit functions,
robustness of the systems of internal audit and internal controls, effectiveness of anti-fraud, ethics
and compliance systems, and review of the functioning of the whistleblower mechanism. Audit
Committee may also play a significant role in the oversight of the company’s risk management
policies and programs. Both internal and external auditors report directly to the audit committee.
24
The functions of the audit committee include:
Monitor and review the Company’s financial statements and internal controls.
Supervise financial reporting process.
Review financial results before placing them to the Board along with related disclosures and filing
requirements.
Review adequacy of internal controls and performance of internal audit function.
Discuss with management, the Company’s major policies with respect to risk assessment and risk
management.
Ensure compliance with accounting standards with respect to financial statements.
Each Member of the Committee has relevant experience in the field of finance, banking and accounting
with a majority of the Members being professionals with long years of corporate work experience.
During the year under review, the audit committee met 4 times on the following dates – 14th May
2012, 29th August 2012, 10th December,2012 and 20th February 2013. The details of the composition,
number of meetings held and attendance thereat during the year are as under:
S.No.
Category
Attendance
1
Promoter Director
4/4
2
4/4
3
Mr. Kalpana Iyer
3/4
BORROWING COMMITTEE
The Borrowing Committee is in place to approve fresh borrowings from banks and financial institutions
and also to empower designated individuals in the senior management to finalize the terms and
conditions relating to the proposal under consideration. The Borrowing Committee met 22 times
during the year on the following dates -18th June 2012, 16th July 2012, 24th July 2012, 23rd August
2012, 11th September 2012, 20th September 2012, 27th September 2012, 10th October 2012, 22nd
October 2012, 8th November 2012, 22nd November 2012, 26th November 2012, 4th December 2012,
27th December 2012, 31st December 2012, 10th January 2013, 11th February 2013, 16th February
2013,25th February 2013, 14th March 2013,22nd March 2013, and 30th March 2013. The details of the
composition, number of meetings held and attendance thereat during the year are as under:
S.No.
Category
Attendance
1.
Chairman and
Managing Director
21/22
2
Promoter Director
17/22
3
Mr. S Rathinasabapathi
22/22
COMPENSATION COMMITTEE
Asirvad has a credible and transparent policy in determining and accounting for the remuneration
of the directors. The objective was to determine the correct remuneration package while striking a
balance between the interests of the company and the shareholders. The Committee consisted of three
25
members namely Mr. Krishnaswamy Rajivan, Mr. Venkatesh Natarajan and Mr. S. Rathinasabapathi.
No Compensation Committee Meeting was held during the year under review.
ASSET - LIABILITY COMMITTEE
A risk management programme establishes a process of identifying and assessing the major risks
covering all areas of the institution’s activities. This includes all activities geared toward meeting
its strategic, operational, reporting, and compliance objectives. Management then develops ways
to manage and mitigate these risks by implementing a very strong system of internal controls.
Management is accountable to the board of directors for the state of the institution’s risk management
and is responsible for reporting to the board of directors its assessment of the institution’s risk
and its efforts to manage and reduce this risk. The board of directors is responsible to ensure that
management has implemented a risk management programme, that resources are allocated for
risk management and internal controls, and that there is adequate oversight of the audit function as
one of the board of director’s responsibilities.
Asset Liability Committee is constituted to monitor the asset liability gap, strategize action to mitigate
the risk associated, ensuring adherence to the limits set by the Board as well as for deciding the
business strategy of the company (on the assets and liabilities sides) in line with the company’s
budget and decided risk management objectives.
During the year under review, ALCO met 12 times on 9th April 2012, 9th May 2012, 11th June 2012,
13th July 2012, 16th August 2012, 13th September 2012, 19th October 2012, 9th November 2012,
10th December 2012, 9th January 2013, 11th February 2013 and 11th March 2013. The details of the
composition, number of meetings held and attendance thereat during the year are as under:
S.No.
Category
Attendance
1.
12/12
2.
Mr. G Srikanth
12/12
3.
Mr. T G Padma
Company Secretary
12/12
REMUNERATION TO DIRECTORS
No remuneration was paid to any Non-Executive Director except as Sitting Fees for attending the
Board Meeting.
GENERAL BODY MEETING
During the year ended 31st March 2013, one Annual General Meeting was held and the details are
given below:
S.No.
Date
Time
Venue
1.
29th August
2012
3.00.P.M.
Old No.2,New No.11,Habibullah Road,
T.Nagar,Chennai 600 017.
All the proposed resolutions, including special resolutions were passed by the shareholders as set
out in their respective notices.
26
GENERAL SHAREHOLDER INFORMATION AS ON 31ST MARCH 2013
Category
No of shares
Promoter
*Includes individual foreign national category
53,99,800
67.16
Overseas Corporate Body
26,05,855
32.41
30,000
0.37
5,200
0.06
80,40,855
100
Employees
Individual investor
Total
For and on behalf of the Board
Sd/-
S.V. Raja Vaidyanathan
27
% of
shareholding
CORPORATE
SOCIAL
RESPONSIBLITY
28
CORPORATE SOCIAL RESPONSIBLITY
The simplest acts of kindness are by far more powerful than a
thousand heads bowing in prayer.
-Mahatma Gandhi
One more year of trials and tribulations, endurance and perseverance, culminating in great
achievements and jubilation has passed. With bountiful blessings of the Almighty, generous support
from benefactors, timely assistance from authorities, dedicated service from the staff and, above all,
whole hearted cooperation from the beneficiaries and public at large, at every step of the way, we
were able to turn every thorn into a rose petal despite the tough operating environment.
ADF believes in the practice of benevolent giving and caring. During 2012-13, ADF focused its
attention on providing scholarships to poor students and also providing funds for primary schools
in order to improve the infrastructure facilities as it was observed that the rural schools did not
even have the basic infrastructure facilities. In some cases school students were forced to sit under
thatched roofs or under trees for their classes which resulted in school dropouts. Classrooms with
lack of resources also affected the mental health of the children.
Our Trust provided financial assistance to NMR Subbaraman Memorial Residential Primary School
at Madurai for renovation of the school building and the first instalment was paid last year. It is hoped
that the new facilities will provide the students with a more comfortable environment conducive for
learning. The renovation work was constantly supervised by the staff of AMPL and the inauguration
function was organized on the 30th July 2012. Mr. S V Raja Vaidyanathan, Managing Trustee was
the Chief Guest who laid the foundation stone and inaugurated the renovated school building. The
management and students were delighted to have the renovated building and the management was
very appreciative of the activities of the trust.
NMR Subbaraman Memorial Residential Primary School, Madurai
Our trust also received request for financial assistance from Anbu Primary School, Chinnalapatti for
repairing the thatched roofing and the side walls. The renovation work was completed successfully
and the inauguration function was organized on the 9th November 2012. Mr. S V Raja Vaidyanathan,
Managing Trustee was the Chief Guest who laid the foundation stone and inaugurated the renovated
school building in the presence of school functionaries. The students performed various cultural
programmes which lifted the spirits of all the people attending the function.
29
ANBU Primary School, Chinnalapatti
Improving health care access for those with limited incomes and resources is one of the fundamental
objects of the trust. Our Trust facilitates low-income, uninsured, and underserved to have access to
health care. The free health camps which were started last year provided the much needed impetus
for people to get regular medical checkups done and also get treatment at the appropriate time. With
the objective of providing medical care to such people, this year Asirvad decided to provide donations
for medical assistance. The trust received request from Ms. Vimala, w/o Santhiyagu, suffering from
Diabetes Mellitus with gangrene on his right foot, for financial assistance towards her husband’s
surgery expenses. With the financial assistance from ADF, he was able to procure artificial limb and
benefit from the same.
ADF launched the Scholarship for School Student (SSS) last year to bring inclusive development at
the grass root level and continued with the scheme for the Academic Year 2012-13. 20 applications
were shortlisted and these students received scholarships for the academic year 2012 – 2013 and
this scholarship will be continued till these children complete their higher education.
Any catastrophe affects the life of people, especially poor people whose homes and livelihood get
badly damaged by such untoward events. All over the world, life of people changes the day calamities
hit them and they are caught off guard by natural / man-made disasters. It takes a very long time
for them to come back to normalcy. These instances also leave a scar in the minds of the affected.
One such case was the recent fire accident at Tuticorin. It was very disheartening to note that the
huts were gutted and people lost all the utensils affecting their daily way of life. Suddenly, they were
forced on to the streets with no shelter and no food. Government and many other organizations had
been giving a helping hand in those needy hours by providing meals. Our trust also joined the effort
and it was decided to give utensils and mattress to the affected lot. The items were distributed to the
affected lot by the staff of AMPL.
Aide given to people affected by natural calamities
30
In all these endeavours, we have received the generous and whole-hearted support and assistance
from thousands of individuals, institutions and organizations, both Government and Non-Government,
national and international. Our achievements are still miniscule when compared to the immensity
and imminence of the tasks we have already committed ourselves to and the tasks awaiting and
clamouring for our attention. Our trust looks forward and gears up for the immense work awaiting
us in the field of social service that uplifts the oppressed, awakens the depressed, comforts the
deprived and rehabilitates the displaced. Our trust would continue to work towards the uplift of the
poor and is confident of valuable contributions from all concerned in furthering its objectives of
catering to the health, education and other activities in the future.
Sd/-
31
S.V. Raja Vaidyanathan
AUDITOR’S
REPORT
32
AUDITORS’ REPORT
To the Members of Asirvad Microfinance Private Limited
Report on the Financial Statements
We have audited the accompanying financial statements of ASIRVAD MICROFINANCE PRIVATE
LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March , 2013, the Statement
of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
The Company’s Management is responsible for the preparation of these financial statements that give
a true and fair view of the financial position, financial performance and cash flows of the Company
in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act,
1956 (“the Act”) and in accordance with the accounting principles generally accepted in India. This
responsibility includes the design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give a true and fair view and are
free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the Company’s preparation and fair presentation of the financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the reasonableness of the
accounting estimates made by the Management, as well as evaluating the overall presentation of
the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the
aforesaid financial statements give the information required by the Act in the manner so required
and give a true and fair view in conformity with the accounting principles generally accepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;
(b) In the case of the Statement of Profit and Loss, of the profit of the Company for the year ended
on that date; and
33
(c) In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on
that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central
Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
2.As required by Section 227(3) of the Act, we report that:
(a) We have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so
far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement deals with
by this Report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow statement
Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.
(e) On the basis of the written representations received from the directors as on 31st March,2013
taken on record by the Board of Directors, none of the directors is disqualified as on 31st March
2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No. 008072S)
34
Sd/Bhavani Balasubramanian
Partner
(Membership No. 22156)
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 1 under ‘Report on Other Legal and Regulator Requirements
section of our report of even date)
(i) Having regard to the nature of the Company’s business / activities / results during the year,
clauses (ii),(vi), (viii), (x), (xii), (xiii), (xiv), (xv), (xviii), (xix) and (xx) of paragraph 4 of the Order are not
applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management in accordance
with a regular programme of verification which, in our opinion, provides for physical verification
of all fixed assets at reasonable intervals. According to the information and explanation given to
us, no meterial discrepancies were noticed on such verification.
(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial
part of the fixed assets of the Company and such disposal has, in our opinion, not affected the
going concern status of the Company.
(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from company
firms or other parties listed in the Register maintained under Section 301of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate
internal control system commensurate with the size of the Company and the nature of its business
for the purchase of fixed assets and for rendering of services and during the course of our audit,
we have not observed any continuing failure to correct major weaknesses in such internal control
system. The activities of the Company do not involve purchase of inventory and sale of goods.
(v) To the best of our knowledge and belief and according to the information and explanations given
to us, there are no transactions that need to be entered into the register maintained under Section
301 of the Companies Act, 1956.
(vi) In our opinion, the internal audit functions carried out during the year by a firm of Chartered
Accountants appointed by the Management have been commensurate with the size of the Company
and the nature of its business.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including
Provident Fund, Employees’ State Insurance, Income-tax, Service Tax,Cess and other meterial
statutory dues applicable to it with the appropriate authorities. The company does not have any
dues to Investor Education and Protection Fund, Wealth Tax, Customs Duty, and Excise Duty.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employees’ State
Insurance,Income-tax, Sales Tax, Service Tax,Cess and other material statutory due in arrears
as at 31st March, 2013 for a period of more than six months from the date they became payable.
(c) The Company does not have any disputed dues relating to Income-tax, Sales tax, Service tax
and Cess as at 31st March, 2013.
(viii) In our opinion and according to the information and explanations given to us, the Company has
not defaulted in the repayment of dues to banks and financial institutions.
35
(ix) In our opinion and according to the information and explanations given to us, the term loan have
been applied by the Company during the year for the purposes for which they were obtained, other
than temporary deployment pending application.
(x) According to the information and explanations given to us, and on the basis of maturity profile
of the assets and liabilities with a residual maturity of one year, as given in the Asset Liability
Management in Note 35 (iii) of the Financial Statement, liabilities maturing in the next one year are
not in excess of the assets of similar maturity.
(xi) To the best of our knowledge and according to the information and explanations given to us, no
fraud by the Company and no material fraud on the Company has been noticed or reported during
the year.
For DELOITTE HASKINS & SELLS
Partner
36
(Membership No. 22156)
To the Members Of Asirvad Microfinance Private Limited
The Board of Directors,
Asirvad Microfinance Private Limited,
Chennai.
Dear Sirs,
As required under the Reserve Bank of India’s Notification No. DNBS.201 /DG(VL) – 2008 dated 18th
September, 2008, on the basis of our audit of the books of account and other records of the Company
for the year ended 31st March, 2013, in accordance with the Generally Accepted Auditing Standards
and according to the information, explanations and representations given to us by the Management
we report as follows in terms of paragraphs 3 and 4 of the Notification:
1.The Company is engaged in the business of Non- Banking Financial Institution as defined in
Section 45 I (a) of the Reserve Bank of India Act, 1934 (“the RBI”) and is a non deposit taking
systematically important financial institution. The Company has received Certificate of Registration
(COR) bearing No. 07.00769 dated 14th December 2007 from the Reserve Bank of India (‘the Bank)
and continues to hold the certificate of Registration as at 31st March 2012. The Company is in the
process of obtaining appropriate registration under the Non-Banking Financial Company – Micro
Finance Institution (Reserve Bank) Directions, 2011.
2.The Company is entitled to continue to hold the COR based on its asset / income pattern as on
31st March, 2012, which has been computed in the manner laid down in the RBI Circular No.
DNBS (PD) C.C. NO. 81 / 03.05.002 /2006-07 dated 19th October, 2006 and for which we are yet to
issue a separate certificate as required in terms of para.15 of the Non-Banking Financial ( NonDeposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.
3.The Board of Directors has passed a resolution on 14th May 2012 for non-acceptance of public
deposits.
4.The Company has not accepted any public deposit during the year.
5.The Company has complied with the prudential norms relating to income recognition, accounting
standards, asset classification and provisioning for bad and doubtful debts as applicable to it in
terms of the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential
Norms (Reserve Bank) Directions, 2007, as amended.
6.The Capital Adequacy Ratio (CRAR) of the Company as on 31st March, 2012 as disclosed in the
Return submitted to the Bank in form NBS-7 is 30.74% and the same has been correctly computed
and for which we have issued a separate certificate dated 29th June, 2012. The Company is in the
process of filing the form NBS-7 for the year ended 31st March , 2013 with the Reserve Bank of India.
37
7.The Company has submitted to the RBI the annual statement of capital funds, risk assets / exposures and risk asset ratio (NBS-7) for the year ended 31st March 2012 on 29th June 2012,
which is within the stipulated period.
For Deloitte Haskins & Sells
Bhavani Balasubramanian
38
Partner
Membership No. 22156
FINANCIAL
STATEMENTS
39
BALANCE SHEET AS AT 31ST MARCH 2013
Particulars
Note No.
As at 31st As at 31st
March, 2013 March, 2012
`
`
A. EQUITY AND LIABILITIES
1 Shareholders’ funds
(a) Share capital
(b) Reserves and surplus
3 4
80,408,550 191,984,473
80,408,550
170,636,124
2 Non-current liabilities
(a) Long-term borrowings
5 (b) Other long-term liabilities 6 (c) Long-term provisions 9 272,393,023
251,044,674
355,980,801 105,960 1,707,266 126,771,697
143,454
316,554
3 Current liabilities
(a) Trade Payables 7 (b) Other current liabilities 8 (c) Short-term provisions 9 357,794,027 127,231,705
7,905,769 672,072,105
9,457,095 7,502,143
394,659,255
8,966,903
689,434,969 411,128,301
1,319,622,018 789,404,680
B. ASSETS
1 Non-current assets
(a) Fixed assets 10
(i) Tangible assets (ii) Intangible assets (b) Non-current investments
11 (c) Deferred tax assets (net) 12 (d) Receivables under financing activity 16 (d) Long-term loans and advances 13 (e) Other Non-Current assets
14
4,628,535 523,482 5,152,017 500,000 4,232,002 153,399,083 3,785,076 3,797,632
2 Current assets
(a) Current investments 15 (b) Receivables under financing activity 16 (c) Cash and cash equivalents 17 (d) Short-term loans and advances 18 (e) Other current assets 19 165,713,793 58,767,957
535,678,923
508,599,941
4,187,496
41,521,891
1,148,756,208
1,319,622,018
6,619,520
934,861
7,554,381
500,000
3,266,662
37,121,939
3,101,437
43,990,038
108,781
510,814,427
208,299,715
4,618,731
14,018,607
737,860,261
789,404,680
See accompanying notes forming part of the financial statements
In terms of our report attached.
(Registration No.008072S)
Chairman & Managing Director
Sd/S.V. Krishnamurthy
Director
Partner
(Membership No.22156)
Sd/Venkatesh Natarajan
Director
Sd/S. Rathina Sabapathi
Director
Sd/G.Srikanth
Sd/B Muralidharan Iyer
Company Secretary
Place : Chennai | Date : 06th June 2013
40
Sd/Kalpana Iyer
Director
STATEMENT OF PROFIT AND LOSS FOR
THE YEAR ENDED 31ST MARCH, 2013
Particulars
Note No.
As at 31st
March, 2013
As at 31st
March, 2012
`
`
INCOME
Revenue from operations Other income 20 21 180,389,281 23,623,800 228,772,135
13,997,711
204,013,081 242,769,846
EXPENSES
Finance costs Employee benefit expenses Depreciation and amortisation expense Provision and Other Losses Other Expenses 22 23 10 24 25 91,982,722
72,534,922
3,133,590
13,935,884
40,137,495
172,588,101 221,724,613
PROFIT BEFORE TAX 31,424,980 21,045,233
TAX EXPENSE:
(a) Tax expense for current year (b) Tax expense relating to prior years (c) Deferred tax Net tax expense / (benefit)
PROFIT FOR THE YEAR 11,041,972 5,576,018
- 1,844,633
(965,341) 742,502
10,076,631
8,163,153 21,348,349 12,882,080
Earnings per share (of `10/- each)
- Basic and Diluted 85,699,824
56,343,852
2,790,170
2,112,437
25,641,818
31 2.66 1.60
See accompanying notes forming part of the financial statements
Director
Partner
Director
Sd/S. Rathinasabapathi
Director
Sd/G.Srikanth
Company Secretary
41
Sd/Kalpana Iyer
Director
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31st MARCH 2013
Note 3 Share Capital
Particulars
As at 31st March, 2013
Number of
shares
Amount
Number of
shares
Amount
Equity shares of `10/- each
15,000,000
150,000,000
15,000,000
150,000,000
Redeemable preference shares of `100/- each
500,000
50,000,000
500,000
50,000,000
15,500,000
200,000,000
15,500,000
200,000,000
8,040,855
80,408,550
8,040,855
80,408,550
8,040,855
80,408,550
8,040,855
80,408,550
(`)
(`)
(a) Authorised
(b) Issued , Subscribed and Fully Paid Up
Equity shares of `10/- each
(i) Details of Share Capital Reconciliation
Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period
Particulars
No of Shares
Amount
(`)
No of Shares
Amount
(`)
At the beginning of the year
ESOP (Refer Note 3(iv))
8,040,855
-
80,408,550
-
8,040,855
-
80,408,550
-
Oustanding at the end of the year
8,040,855
80,408,550
8,040,855
80,408,550
(ii) Details of Shares Held By Each Shareholder Holding More Than 5% Shares
Particulars
Class of Shares / Name of Shareholder
No of shares
held
% holding in
the class of
shares
No of shares
held
% holding in
the class of
shares
Equity / S V Raja Vaidyanathan
3,199,800
39.79%
3,199,800
39.79%
Equity / K Sethuraman (jointly with
Mrs. Susheela Sethuraman)
1,000,000
12.44%
1,000,000
12.44%
Equity / M/s Lok Capital LCC
2,605,855
32.41%
2,605,855
32.41%
(iii) Terms / Rights Attached To Equity Shares
The Company has only one class of Equity shares having a par value of Rs.10 per share. All these shares have the same
rights and preferences with respect to payment of dividend, repayment of capital and voting. In the event of liquidation of
the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution
of all preferential amounts. The distribution will be in proportion to the number of Equity shares held by the shareholders
Dividend proposed by the Board of Directors,if any is subject to the approval of the shareholders at the Annual General
Meeting, except in the case of interim dividend. (iv) (Employees Stock Option Scheme (ESOP):
On 8th August 2011, the company established an Employees stock option scheme. Under the scheme, the company is
authorized to issue up to 2,04,500 equity shares of Rs.10 each to eligible employees. Employees covered by the plan are
granted an option to purchase shares of the company subject to the requirements of vesting.
42
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2013
(contd. )
The following are the outstanding options as at 31st Mar 2013 :
Particulars
Grant
Date of grant
08-Aug-11
Exercise price per option (`)
11.17
Total options granted and outstanding as at PY
204,500
Add:Options granted during the year
-
Less: Options forfeited / lapsed during the year
44,500
Options exercised as at CY
-
Options outstanding as at CY
160,000
- Vested
- Yet to vest
26.672
133,328
The fair value of the share has been estimated on the date of grant by an external firm of chartered accountants. The
valuation was done based upon the weighted average of the per share value arrived at through the Net Asset Value (NAV)
approach and Profit Earning Capacity Method (PECV). The exercise price was fixed at about a 50% discount to the fair value.
(v) Allotment of Equity Shares was done in the following manner
(a) 1,00,000 of Rs.10/- each amounting to Rs.1,000,000/- was allotted on 29th August 2007 to the subscribers of Memorandum
of Association.
(b) 26,00,000 equity shares of Rs.10/- each amount to Rs.26,000,000 was allotted at the Board Meeting held on 15th October
2007.
(c) 27,27,500 equity shares of Rs.10/- each amounting to Rs.27,275,000/- was allotted at the Board Meeting held on 27th
November 2008.
(d) 7,500 equity shares of Rs.10/- each amounting to Rs.75,000/- was allotted at the Board Meeting held on 17th January
2009.
(e) Pursuant to the Subscription Agreement and Shareholders Agreement dated 6th August 2009 between the company and
M/s. Lok Capital LLC, Mauritius, 17,16,966 equity shares at a price of Rs.40.48/- each (including a premium of Rs.30.48/each) totalling Rs.69,502,784/-was issued and allotted at the Board Meeting held on the 7th September 2009.
(f) Pursuant to the Second Subscription Agreement and Restated and amended Shareholders Agreement dated 18th June
2010 entered into between our company and M/s. Lok Capital LLC, Mauritius, 8,88,889 Equity shares at the price of Rs.90/(inclusive of premium of Rs.80/-) totaling Rs.80,000,010/- was issued and allotted at the Board Meeting held on 12th July
2010.
43
(contd. )
Note 4 Reserves and surplus
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
123,444,244
(a) Securities premium account (Refer Note 4(i))
(b) Statutory Reserve (Refer Note 4(ii))
Opening balance Add: Additions during the year
Less: Utilised / transferred during the year Closing balance (c) General reserve
Opening balance Add: Transferred from surplus in Statement of Profit and Loss Less: Utilised / transferred during the year for Closing balance (d) Surplus in Statement of Profit and Loss
Opening balance Add: Profit for the year Less: Transfer to Statutory Reserve (Refer Note 4 (ii)) Closing balance 123,444,244
16,939,529 4,269,670 - 14,363,113
2,576,416
-
21,209,199 16,939,529
3,592,758 - - 3,592,758
-
3,592,758 3,592,758
26,659,593 21,348,349 (4,269,670) 43,738,272 16,353,929
12,882,080
(2,576,416)
26,659,593
191,984,474 170,636,124
(i) Securities premium on allotment of shares
Premium per
No of shares
As at 31
As at 31
Name of the
Shareholder
share
March, 2013
March, 2012
`
M/s Lok Capital LLC
1,716,966
30.48
52,333,124
52,333,124
M/s Lok Capital LLC
888,889
80.00
71,111,120
71,111,120
123,444,244
123,444,244
(ii) Represents the Reserve Fund created under Section 45-IC of the Reserve bank of India Act ,1934
44
`
(contd. )
Note 5 Borrowings - secured
Particulars
As at 31st
March, 2013
Term loan
-From banks
-From others
Others (Refer Note 30) - From Banks
As at 31st
March, 2012
`
`
597,877,339
391,688,411
188,906
266,409,425
236,624,655
903,568
989,754,656
503,937,648
(i) Security on Term loans
All loans are secured by hypothecation of the Book Debts receivable under Micro Finance Loans. Further, the Company
has provided a specific lien on deposits with Banks(Refer (a) below) and also have deposits with Financial Institutions for
Term Loans(Refer (b) below).
Particulars
As at 31st
March, 2013
a) Deposits with Banks towards lien
b) Deposits with Financial Institutions for Term Loans
As at 31st
March, 2012
`
`
137,956,848
57,391,937
7,000,000
14,500,000
(ii) Details of Terms of Repayment- Secured Loans
(a) Current Year
Particulars
Maturity
Maturity(`)
(`)
As at 31st
March, 2013
Base Rate
Number of
Instalments
< 1 Year
1-2 Years
11,111,104
2
11,111,104
-
Base Rate+Spread
597,877,339
3 to 32
309,641,285
288,236,054
Fixed
380,577,307
6 to 18
312,832,560
67,744,747
633,584,949
355,980,801
989,565,750
b) Previous Year
Particulars
Maturity (`)
Maturity (`)
As at 31st
March, 2013
Base Rate
Number of
Instalments
< 1 Year
1-2 Years
66,842,714
3 to 14
55,731,610
11,111,104
Base Rate+Spread
266,409,425
2 to 24
168,075,087
98,334,338
Fixed
170,685,509
12 to 18
153,359,254
17,326,255
377,165,951
126,771,697
503,937,648
(iii) Details of Terms of Repayment- Securitzation Loans
a) Current Year
Particulars
Fixed
Maturity (`)
Maturity (`)
As at 31st
March, 2013
340,879,792
340,879,792
45
Number of
Instalments
1 to 15
< 1 Year
1-2 Years
340,879,792
-
340,879,792
-
(contd. )
b) Previous Year
Particulars
Fixed
Maturity (`)
As at 31st
Number of
March, 2012
Instalments
255,861,212
< 1 Year
5 to 41
255,861,212
Others - From banks - Fixed interest
255,861,212
-
255,861,212
-
As at 31st
Number of
As at 31st
March, 2013
instalments
Current portion
1-2 Years
3
March, 2012
`
`
188,906
903,568
188,906
903,568
Non-Current portion
Note 6 Other long-term liabilities
Particulars
As at 31st
As at 31st
March, 2013
Grants (Refer Note 30)
March, 2012
`
`
105,960
143,454
105,960
143,454
Note 7 Trade Payables
Particulars
As at 31st
As at 31st
March, 2013
March, 2012
`
`
Other than Acceptances (Refer Note 34)
6,801,319
6,165,921
Bonus
1,104,450
1,336,222
7,905,769
7,502,143
Note 8 Other Current Liabilities
Particulars
As at 31st
As at 31st
March, 2013
March, 2012
`
`
-From Banks
309,830,191
168,075,087
-From Others
323,943,664
209,090,864
Current Maturities of Long term debt (Refer Note 5(i & ii) )
Interest accrued but not due on borrowings
Income received in advance (Unearned revenue)
6,443,002
2,170,821
28,670,684
13,748,485
450,280
244,218
1,904,506
577,197
829,778
752,583
672,072,105
394,659,255
Other payables
- Statutory remittances (Contributions to PF and ESIC and
Withholding Taxes)
- Advances from customers
- Others
46
(contd. )
Note 9 Provisions
Particulars
As at 31st
As at 31st
March, 2013
Provision for compensated absences
Provision for Standard Assets
March, 2012
`
`
918,553
1,315,860
6,837,010
5,371,970
-
37,016
Provision for Sub Standard Assets
Provision for Credit Enhancement
3,408,798
2,558,612
11,164,361
9,283,458
(i) Short term provisions
Particulars
As at 31st
As at 31st
March, 2013
March, 2012
`
`
918,553
1,315,860
5,303,020
5,055,415
-
37,016
3,235,522
2,558,612
9,457,095
8,966,903
(ii) Long term provisions
Particulars
As at 31st
As at 31st
March, 2013
March, 2012
`
`
-
-
Provision for proposed equity dividend
-
-
1,533,990
316,554
-
-
-
-
Provision for Credit Enhancemen
Total (i+ii)
173,276
-
1,707,266
316,554
11,164,361
9,283,457
(iii) Loan Portfolio And Provision For Standard And Non-Performing Assets
a) Current Year
Asset Classification
Provision for
Loan
Outstanding as
Assets - as at
Outstanding as
at 31st March
31st March 2013
at 31st March
2013 (Gross)
(Net)
2013 (Net)
`
`
`
683,701,029
6,837,010
676,864,019
Sub-Standard Assets
-
-
-
Doubtful Assets
-
-
-
Standard Assets
47
Loan
(contd. )
Loss Assets
-
-
-
683,701,029
6,837,010
676,864,019
b) Previous Year
Loan
Provision for
Loan
Outstanding as
Assets - as at
Outstanding as
at 31st March
31st Mar 2012
at 31st March
2012 (Gross)
(Net)
2012 (Net)
`
`
`
537,774,126
5,371,970
532,402,156
Sub-Standard Assets
27,027
6,559
20,468
Doubtful Assets
60,914
30,457
30,457
-
-
-
537,862,067
5,408,986
532,453,081
Standard Assets
Loss Assets
(iv) Changes in provisions
a) Current Year
Particulars
As at 1st Apr 2012
Additional provision
Utilization / Reversal
As at 31st March 2013
`
`
`
`
Provision for standard
assets under
financing activity
5,371,970
1,465,040
-
6,837,010
Provision for
sub-standard and
doubtful assets under
financing activity
37,016
-
37,016
-
Provision for Credit
enhancements on
assets de-recognized
2,558,612
850,186
-
3,408,798
7,967,598
2,315,226
37,016
10,245,808
As at 31st March
(b) Previous Year
Particulars
48
As at 1st
Additional
Utilization /
April 2011
provision
Reversal
2012
`
`
`
`
Provision for standard assets under
financing activity
7,981,018
-
2,609,048
5,371,970
Provision for sub-standard and doubtful
assets under financing activity
1,130,253
-
1,093,237
37,016
Provision for Credit enhancements on
assets de-recognized
1,776,390
782,222
-
2,558,612
10,887,661
782,222
3,702,285
7,967,598
49
2,753,441
294,894
3 Office
Equipments
4 Air
Conditioners
64,265
840,369
3,822,869
17,984,529
Total (B)
Total (A+B)
64,265
776,104
339,100
3,822,869
14,161,660
152,684
30,635
-
406,369
-
1 Software
Intangible
Assets
Total (A)
6 Electrical
Equipments
3,202,097
3,340,395
2 Furnitures &
Fixtures
5 Vehicles
-
As At
31.03.2013
3,159,810
294,894
3,232,732
491,784
-
3,787,234
18,173,994
650,904
3,787,234
99,900
99,900
14,386,760
3,340,395
-
551,004
3,867,1445
551,004
10,430,148
2,888,008
2,888,008
7,542,140
80,206
1,337,443
111,314
1,135,398
2,111,894
2,765,885
2,790,170
4,16,230
4,16,230
2,373,940
26,106
484,039
25,533
938,106
314,862
585,294
For the
Year
As At
01.04.2012
Deletions
As At
01.04.2012
Additions
Depreciation block
Gross block
4,418,149
Tangible Assets
Description
1 Computers
S.
No.
Fixed Assets
Note 10
(contd. )
198,341
40,486
40,486
157,855
-
-
-
-
-
13,021,977
3,263,752
3,263,752
9,758,225
106,312
1,821,482
136,847
2,073,504
2,426,756
3,193,324
For Up To
31.03.2013
157,855
Withdrawn
The Year
5,152,017
523,482
523,482
4,628,535
385,472
1,411,250
158,047
1,086,306
913,639
673,821
As At
31.03.2013
Net block
7,554,381
934,861
934,861
6,619,520
72,478
1,864,654
1,83,580
1,618,043
1,228,501
1,652,264
As At
31.03.2012
Amount in `
(contd. )
50
13,660,549
Air
Conditioners
Vehicles
Electrical
Equipments
Total (A)
4
5
6
1
152,684
Office
Equipments
3
3,462,013
3,462,013
17,122,562
Software
Total (B)
Total (A+B)
3,833,995
270,144
2,262,678
3,160,003
Furnitures &
Fixtures
3,981,045
Computers
Intangible
Assets
As At
31.03.2012
1,561,638
360,856
360,856
1,200,782
30,923
24,750
527,613
180,392
437,104
699,671
-
-
699,671
-
662,821
-
36,850
-
-
17,984,529
3,822,869
3,822,869
14,161,660
152,684
3,202,097
294,894
2,753,441
3,340,395
4,418,149
7,728,507
2,257,502
2,257,502
5,471,005
68,495
1,080,319
82,871
680,789
1,793,128
1,765,403
3,133,590
630,506
630,506
2,503,083
11,711
684,114
28,443
459,567
318,766
1,000,482
For
the Year
As At
01.04.2011
Deletions
As At
01.04.2011
Additions
Depreciation block
Gross block
2
Tangible Assets
Description
1
S.
No.
Previous Year
Fixed Assets
Note 10 A
431,949
-
-
431,949
-
426,990
-
4,959
-
-
Withdrawn For
The Year
10,430,148
2,888,008
2,888,008
7,542,140
80,206
1,337,443
111,314
1,135,398
2,111,894
2,765,885
Up To
31.03.2012
7,554,381
934,861
934,861
6,619,520
72,478
1,864,654
183,580
1,618,044
1,228,501
1,652,264
As At
31.03.2012
Net block
Amount in `
(contd. )
Note 11 Non-Current Investments
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
500,000
500,000
500,000
500,000
500,000
500,000
Non Trade Investments - Unquoted
50,000 (P.Y - 50,000) Equity Shares of Alpha Micro Finance Consultants Private
Limited of `10/- each
Aggregate amount of unquoted investments
Note 12 Deferred Tax Asset
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
2,218,207
1,742,936
-
12,010
Deferred Tax Asset
Provision for Sub-Standard and Doubtful Assets
Provision for Credit Enhancements on Assets De-recognized
1,105,985
830,142
Employee Benefits
298,025
426,930
Depreciation
609,785
254,644
4,232,002
3,266,662
Net Deferred Tax Asset
Note 13 Long-term loans and advances
Particulars
Advance income tax (net of Provision for Tax `1,66,10,559) (P.Y. Net of Provision for
Tax- ` 76,55,065) - Unsecured, considered good
As at 31st
March, 2013
`
As at 31st
March, 2012
`
3,785,076
3,101,437
3,785,076
3,101,437
Note 14 Other Non-Current Assets
Particulars
Prepaid Finance Charges
51
As at 31st
March, 2013
`
As at 31st
March, 2012
`
3,797,632
-
3,797,632
-
(contd. )
Note 15 Current investments (At lower of cost and fair value, unless otherwise stated)
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
NIL (As at 31 March, 2012- 17) units of Reliance Money Manager Fund - Institutional
Plan, Daily Dividend Plan
-
17,236
NIL (As at 31 March, 2012 - 9,126) - units of HDFC Cash Management Fund
-Treasury Advantage Plan Wholesale Daily Dividend
-
91,545
58,767,957
-
58,767,957
108,781
58,767,957
108,781
Investment in mutual funds - Quoted
38,413 (As at 31 March, 2012 - NIL) units of Reliance Liquidity Fund - Daily Dividend
reinvestment Option
Aggregate market value of unquoted investments
Note 16 Receivables under Financing Activity
Particulars
`
`
683,701,029
537,862,067
Unsecured
Microfinance Loans
Business Loans
5,376,977
10,074,299
689,078,005
547,936,366
689,078,006
547,936,366
-
-
`
`
530,301,946
505,541,511
Of the above
- Considered Good
- Considered Doubtful
(i) Receivables under financing activity - current
Particulars
Microfinance Loans
Business Loans
5,376,977
5,272,916
535,678,923
510,814,427
`
`
153,399,083
32,320,556
-
4,801,383
153,399,083
37,121,939
(ii) Receivables under financing activity - Non-current
Particulars
Microfinance Loans
Business Loans
(iii) Managed Micro finance Loans (Refer Note 5 (iii) (a) & 5 (iii) (b))
52
340,879,792
255,861,212
(contd)
(iv) Securitization of Assets
Particulars
For the Year ended
31st March 2013
For the Year ended
31st March 2012
`
`
72,549
35,173
Book value of Loan Assets Securitized during the year
450,730,817
273,482,448
Sale Consideration received during the year
478,356,408
286,616,896
6,727,468
7,266,604
Total number of Loan Assets Securitized during the year
Gain / (Loss) on the Securitization transaction recognised on P&L
Gain / (Loss) on the Securitization transactions deferred
20,898,123
5,867,844
Quantum of Credit Enhancement provided on the transactions in the form of
deposits
55,172,688
59,753,000
Quantum of Credit Enhancement as at year end
55,172,688
59,753,000
(v) Bilateral Assignment of Receivables
Particulars
For the Year ended
31st March 2013
For the Year ended
31st March 2012
`
`
Assets derecognised during the year
-
22,918
Consideration received during the year
-
193,027,000
Cash Collateral provided as Loss facilities during the year
-
25,730,000
Gain / (Loss) on the Assignment transaction recognised on P&L
-
-
Cash Collateral as at year end
-
25,730,000
Note 17 Cash And Cash Equivalents
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
1,829
500,853
- In current accounts
186,278,576
23,903,210
- In deposit accounts - Free of Lien
115,680,000
30,000,000
- In deposit accounts - Under Lien (Refer Note (ii) below)
206,639,536
153,895,652
508,599,941
208,299,715
Cash on hand
Balances with banks
Notes:
As at 31st
March, 2013
(i) Of the above, the balances that meet the definition of Cash and cash equivalents as per AS
3 Cash Flow Statements is
(ii) Deposit under lien represents
- Deposits amounting to Rs.144,956,848 (As at 31 March, 2012 Rs.71,891,937) with respect to
the Term Loans obtained by the Company from Banks and Financial institutions.
- Deposits amounting to Rs. 61,682,688 (As at 31 March 2012 Rs.82,003,715) placed as cash
collateral with Assignees towards Assets De-recognised.
(iii) Balance with Bank includes Lien Marked deposits amounting to Rs 84,640,601 which have
a maturity of more than 12 months from the Balance sheet date
53
As at 31st
March, 2012
`
`
301,960,405
54,404,063
(contd)
Note 18 Short-term loans and advances (Unsecured, Considered good - unless otherwise stated)
Particulars
As at 31st
March, 2013
Security deposits
As at 31st
March, 2012
`
`
3,429,000
3,831,000
445,600
606,071
312,896
181,660
4,187,496
4,618,731
Loans and advances to employees
Balances with government authorities
(i) Service Tax credit receivable
Note 19 Other current assets
Particulars
As at 31st
March, 2013
As at 31st
March, 2012
`
`
- on Deposits with Banks / Others
10,839,123
9,685,840
- on Receivable from Financing Activities
Interest Accrued But Not Due
12,960,368
3,560,649
Commission Receivable
3,342,663
772,118
Prepaid Finance Charges
14,204,172
-
175,565
-
41,521,891
14,018,607
Other Receivables
Note 20 Revenue from operations
Particulars
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
151,350,743
169,295,872
2,543,439
582,589
153,894,182
169,878,461
13,014,353
49,085,207
Income from Financing Activities
Interest on Loan
Interest on Loan- Microfinance Loans
Interest on Loan- Business Loans
Other operating income
Documentation Fees- Microfinance Loans
Documentation Fees - Business Loans
Profit on Securitisation
Registration Fees
54
30,880
195,195
12,595,192
7,543,134
854,674
2,070,138
26,495,099
58,893,674
180,389,281
228,772,135
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2013
(contd. )
Note 21 Other income
Particulars
(a) Interest income - on Deposits with banks and financial institutions
(b) Dividend income from Mutual Funds
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
13,009,751
10,146,007
915,767
1,895,260
-
26,411
9,373,788
1,621,871
37,494
54,995
287,000
253,167
23,623,800
13,997,711
(c) Other non-operating income
- Profit on Sale of Fixed Assets
- Marketing commission
- Grant
- Miscellaneous Income
Note 22 Finance costs
Particulars
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
Interest expense on:
- Term Loans
34,010,214
48,468,321
- Others
44,718,050
34,643,585
4,911,716
7,074,566
Other borrowing costs
- Loan Processing Fee
- Bank Charges
2,059,844
1,796,250
85,699,824
91,982,722
Note 23 Employee Benefits Expense
Particulars
Salaries and wages
Contributions to provident and other funds
Staff welfare expenses
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
51,698,495
65,560,699
4,056,011
5,610,400
589,346
1,363,823
56,343,852
72,534,922
Note 24 Provisions and Other Losses
Particulars
Provision for Standard Receivables Under Financing Activity
Provision for Sub Standard & Doubtful Receivables Under Financing Activity
Provision for Credit Enhancements on Assets De-Recognised
Loss Assets Written off
55
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
1,464,852
(2,609,049)
(37,016)
(1,093,237)
850,374
782,222
(165,773)
16,855,948
2,112,437
13,935,885
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2013
(contd. )
Note 25 Other Expenses
Particulars
For the year ended
31st March, 2013
For the year ended
31st March, 2012
`
`
Electricity Charges
643,338
587,983
Water
194,935
259,557
Rent including lease rentals
5,751,919
6,533,257
Repairs and maintenance - Buildings
734,120
685,191
Repairs and maintenance - Machinery
136,300
642,607
1,702,682
1,083,455
Repairs and maintenance - Others
Insurance
847,762
7,090,769
Rates and taxes
24,932
1,631,876
Communication
1,197,397
1,275,450
Travelling and conveyance
6,197,433
9,957,534
Printing and stationery
2,549,951
2,357,289
Directors’ Sitting Fees
67,000
62,000
466,678
562,605
Donations and contributions
1,000,000
500,000
Legal and professional
2,576,833
5,397,071
- Statutory Audit
700,000
500,000
- Tax Audit
100,000
100,000
- Certification Charges
300,000
122,260
- Out of Pocket Expenses and statutory levies
176,663
166,060
Miscellaneous expenses
273,875
622,531
25,641,818
40,137,495
Business promotion
Payments to auditors
56
CASH FLOW STATEMENT FOR THE
YEAR ENDED 31st MARCH, 2013
For the year ended March 31st, 2013 `
A. Cash Flow from Operating Activities
Net Profit Before Tax Adjustments for:
Depreciation/Amortisation Interest / Finance Charges (Provision written back)/Provision for Standard Receivables Under
Financing Activity (Provision written back)/Provision for Sub Standard & Doubtful
Receivables Under Financing Activity
Provision for Credit Enhancements
on Assets Under Financing Activity
Provision for Compensated absences Loan Assets written off Profit on sale of fixed asset Interest on Term Loans Dividend Income Interest on Deposits Interest Income from borrowers Income from Processing and membership fees Income from securitisation/assignment of receivables Operating Profit before Working Capital changes 31,424,980 2,790,170 - For the year ended
March 31st, 2012
`
21,045,234
3,133,590
-
1,465,040
(2,609,049)
(37,016)
(1,093,237)
850,187
(397,307)
(165,773)
78,728,264
(915,767)
(13,009,751)
(153,894,182)
(13,899,908)
(12,595,192)
782,222
212,527
16,855,948
(26,411)
83,111,906
(1,895,260)
(10,146,007)
(169,878,461)
(51,350,540)
(7,543,134)
(79,656,255) (119,400,672)
Changes in Working Capital:
Adjustments for (increase) / decrease in operating assets:
Receivables under financing activity Short-term loans and advances Other current assets Bank deposits under lien Bilateral Assignment and Securitisation of Assets(Net) (140,975,867) 431,235 20,572,349 (52,743,884) (85,018,580) 238,647,766
450,111
(467,846)
(19,742,327)
(48,408,720)
Increase in Trade Payables (Decrease) in other current liabilities 403,626 248,427,411 866,991
120,728,653
Cash Flow generated from/(Used in) Operations
(88,559,966)
172,673,956
Interest paid on Term Loans Interest received from borrowers Income from Processing and membership fees Income from securitisation/assignment of receivables Interest Income on Deposits Taxes Paid, net of refund (74,456,083) 144,494,463 (6,890,015) 6,727,468 10,111,605 (11,744,863) (82,409,110)
167,929,585
30,127,633
7,246,296
5,661,328
(14,163,807)
Net Cash Flow generated from/(Used in) Operations (20,317,391) 287,065,880
- (840,367) (57,743,409)
(387,800) 241,311
(1,561,638)
32,636,780
-
(58,971,577) 31,316,453
Adjustments for increase/(decrease) in operating liabilities
B. Cash Flow from Investing Activities
Capital Expenditure
Proceeds from Sale of Fixed Assets Purchase of Fixed Assets Proceeds from Sale of Current Investments, net
Dividend received Net Cash Flow generated from/(Used in) Investing Activities 57
For the year ended
March 31st, 2013
`
For the year ended
March 31st, 2012
`
C. Cash Flow from Financing Activities
Long Term Borrowings Taken Long Term Borrowings Repaid Proceeds from Issue of Share capital Dividend paid(including dividend tax) 1,473,356,408 (1,146,511,099) - - 771,916,000
(1,076,429,805)
(37,505,764)
Net Cash (Used in)/generated from Financing Activities 326,845,309 (342,019,569)
Net (decrease)/Increase in Cash and Cash Equivalents
(A) + (B) + (C) 247,556,342 (23,637,236)
Cash and Cash Equivalents at the beginning of the year Cash and Cash Equivalents at the End of the Year 54,404,063
301,960,405 78,041,299
54,404,063
Reconciliation of Cash and Cash equivalents with Balance Sheet
Closing Cash and cash equivalents as per balance sheet
(Refer note 16) Less: Bank Balances not considered as cash and cash equivalents
as defined in AS3, restricted balances placed in fixed deposits
508,599,941 208,299,715
206,639,536 153,895,652
301,960,405 54,404,063
Director
Partner
Director
Sd/S. Rathina Sabapathi
Director
Sd/G.Srikanth
Company Secretary
58
Sd/Kalpana Iyer
Director
SIGNIFICANT
ACCOUNTING
POLICIES
59
NOTE 1 : SIGNIFICANT ACCOUNTING POLICIES
a. Nature of the operation
Asirvad Micro Finance Private Limited (‘the Company’) was incorporated in August 2007.
The company is engaged in extending micro credit advances to poor women, who are otherwise
unable to access finance from the main stream banking channels. The Company provides small
value collateral free loans up to Rs. 20,000 for a tenor of 50 weeks / 12 months / 18 months with
weekly / monthly repayments. The Company follows the Grameen model with suitable adoptions
using the joint liability framework, where each member of the group guarantees the loan repayment
of the other members of the group.
NOTE 2 – BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of the Company have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards
notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have been prepared on accrual
basis under the historical cost convention. The accounting policies adopted in the preparation of
financial statements are consistent with those followed in the previous year except for change in the
accounting policy for accounting of finance charges as more fully described in Note 2 (g) below.
The Company follows the prudential norms for income recognition, asset classification and
provisioning as prescribed by the Reserve Bank of India for Systemically Important Non-deposit
taking Non-Banking Finance Companies (NBFC-ND-SI) or more stringent norms as indicated in
Note 2(n) below.
a. Use of Estimates
The preparation of the financial statements requires the Management to make estimates and
assumptions considered in the reported amounts of assets and liabilities (including contingent
liabilities) as of the date of the financial statements and the reported income and expenses during the
reporting period like provisioning for employee benefits, provisioning for receivables, provisioning for
credit enhancement for assets de-recognized, useful lives of fixed assets, provisioning for taxation
etc. Management believes that the estimates used in the preparation of the financial statements are
prudent and reasonable. Future results may vary from these estimates.
b. Fixed Assets and Depreciation
Tangible assets:
Fixed assets are stated at cost less accumulated depreciation / amortization and impairment losses,
where applicable. The Company capitalizes all costs relating to the acquisition and installation of
fixed assets. Cost comprises the purchase price and any attributable cost of bringing the asset to its
working condition for its intended use.
Depreciation on fixed assets is provided on the written down value method basis, pro-rata to the
period of use of the assets at the rates prescribed under Schedule XIV of Companies Act, 1956.
60
(contd. )
Tangible Assets
Percent
Office Equipments
13.91
Computers
40.00
Furniture & Fittings
18.10
Vehicles
25.89
Intangible assets:
Software is acquired primarily from third-party vendors and is in ready-to-use condition. Costs for
acquiring such software are capitalized. The capitalized software is amortized based on the rates
prescribed under Schedule XIV of Companies Act, 1956.
Intangible Assets
Intangible assets - Software
Percent
40.00
Individual fixed assets costing `5,000 or less are fully depreciated in the year of purchase.
c. Impairment
The carrying values of assets are reviewed at each balance sheet date if there is any indication of
impairment based on internal / external factors. An impairment loss is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater
of the asset’s net selling price and value in use. Value in use is arrived at by discounting the future
cash flows to their present value based on an appropriate discount factor. When there is indication
that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may
have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss,
except in case of revalued assets.
d. Investments
Investments which are long term in nature are stated at cost less provision where necessary for
diminution, other than temporary, in the value of investments.
Current investments are valued at lower of cost and fair value.
e. Receivables under Financing Activity
All loan exposures to borrowers with installment structure are stated at the full agreement value
after netting off
i. Unearned income
ii. Installments appropriated up to the year-end
f. Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.
i. Interest income on loans given is recognized under the internal rate of return method. Income on
Non-performing Assets is recognized only when realized and any interest accrued on such assets is
de-recognized by reversing the unrealized interest income already recognized.
61
(contd. )
ii. Loan processing fee is recognized over the life of the loan on a straight line basis.
iii. Membership fees, which are due at the time of disbursement, are recognized as income on upfront
basis.
iv. In respect of the receivables securitized / assigned, losses arising are recognized in the profit and
loss account immediately upon receipt of sale consideration. Gains arising from the transaction
are amortized over the tenor of the transaction. Reversal of gains proportionate to the amount
prepaid by the borrowers is also provided for during the year of prepayment.
v. Interest income on deposits is recognized on a time proportion basis taking into account the
amount outstanding and the rate applicable.
vi. All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate
realization / collection.
g. Prepaid Finance Charges
Prepaid Finance Charges represents ancillary costs incurred in connection with the arrangement
of borrowings; including borrowings sanctioned but not availed, and is amortized on a straight
line basis, over the tenure of the underlying receivables built out of such borrowings. Unamortized
borrowing costs remaining, if any, are fully expensed off as and when the related borrowing is prepaid
/ cancelled.
h. Retirement and Other Employee Benefits
(i) Defined Contribution Plan
Provident Fund: Contributions to the employees provident fund scheme maintained by the central
Government are accounted for on an accrual basis.
(ii) Defined Benefit Plan
Gratuity: The liability for Gratuity to employees determined on the basis of actuarial valuation as at Balance Sheet date based on Projected Unit Credit method is funded with the Life Insurance
Corporation of India and the contribution thereof paid / payable is absorbed in the accounts.
(iii) Compensated Absences
The liability for long term compensated absences carried forward on the balance sheet date is
provided for based on an actuarial valuation done by an independent actuary using the projected
unit credit method done at the end of each accounting period. Short term compensated absences
is recognized based on the eligible leave at credit on the balance sheet date, and the estimated
cost is based on the terms of the employment contract.
i. Deferred Employee Stock Compensation Cost
Deferred Employee Stock Compensation Cost for stock options is recognized on the basis of generally
accepted accounting principles and is measured as the difference between the estimated intrinsic
value of the company’s shares on the date of grant of the stock options and the exercise price to be
paid by the option holders. The compensation expense, if any, is amortized uniformly over the vesting
period of the options.
j. Service Tax Input Credit
Service tax input credit is accounted for in the books in the period when the underlying service
received is accounted and when there is no uncertainty in availing / utilizing the same.
62
(contd. )
The Finance Act, 2011 had brought in amendments to CENVAT Credit Rules, 2004, whereby only 50%
of the CENVAT credit availed will be available for utilization towards payment of service tax under
‘Banking and other financial services’ by a banking company and financial institution.
k. Insurance Claims
Insurance claims are accrued for on the basis of claims admitted and to the extent there is no
uncertainty in receiving the claims.
l. Taxation
Current tax is the amount of tax payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted
by the Balance sheet date and is recognized on timing differences that originate in one period and are
capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration
of prudence, are recognized and carried forward only to the extent that they can be realized. Deferred
tax assets are reviewed at each balance sheet date for their realisability.
m. Provisions, Contingencies, Liabilities and Contingent Assets
Provisions are recognised only when the Company has present or legal obligations as a result of
past events for which it is probable that an outflow of economic benefit will be required to settle
the transaction and when a reliable estimate of the amount of obligation can be made. Contingent
liability is disclosed for (i) Possible obligations which will be confirmed only by future events not
wholly within the control of the Company or (ii) Present Obligations arising from past events where it
is not probable that an outflow of resources will be required to settle obligation or a reliable estimate
of the amount of the obligation cannot be made. Contingent assets are not recognised in the
financial statements since this may result in the recognition of income that may never be realized.
n. Classification & Provisions of Loan Portfolio
Loans are classified and provided for as per the Company’s Policy and Management’s estimates,
subject to the minimum classification and provisioning norms required as per the Non-Banking
Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)
Directions, 2007, duly taking into account the requirements of Non-Banking Financial Company –
Micro Finance Institutions (Reserve Bank) Directions, 2011.
i. Classification of Loan
Period of Overdue
Standard Assets
Non Performing Assets (NPA)
Not Overdue and Overdue for less than 30 days
Sub-Standard Assets
Overdue for 30 days and more but less than 90 days
Doubtful Assets
Overdue for 90 days and more
Loss Assets
Assets which are identified as loss asset by the Company or
the internal auditor or the external auditor or by the Reserve
Bank of India
“Overdue” refers to interest and / or principal and / or installment remaining unpaid from the day it
became receivable.
63
(contd. )
ii. Provisioning Norms for Loans
Provisioning Percentage
used by the Company for
FY 2012-13
Provisioning Percentage
used by the Company for
FY 2011-12
1.00%
1.00%
a. Overdue for more than 30 days
and more but less than 60 days
10.00%
10.00%
b. Overdue for more than 60 days
25.00%
25.00%
a. Overdue for more than 90 days
50.00%
50.00%
Loss Assets (Overdue for more than
120 days) [Refer note below]
Fully charged off to P&L
Fully charged off to P&L
Standard Assets
Non Performing Assets (NPA)
Sub-Standard Assets
Doubtful Assets
Note: a) Income on NPAs is recognized only when realized.
b) Accounting Standard 4 as applicable to MFIs allows charge off of assets only when the MFI’s contractual right to
receive cashflows from that loan expires. The Loss assets which are overdue for more than 120 days satisfy this
criterion and hence they are charged off fully to P&L.
o. Accounting for Grants
Grants relating to depreciable fixed assets are treated as deferred income over the useful life of the
asset in proportion to which depreciation on the related assets is charged.
p. Accounting for Retention Bonus
The retention bonus is accounted, on the basis of completion of the specified period of service by the
employees in accordance with the stipulated policies of the Company. The policy is applicable only to
employees who have joined on or before March 31, 2011.
q. Leases
Leases are classified as finance or operating leases depending upon the terms of the lease
agreements:
(i) Finance Leases
Finance leases, which effectively transfer substantially all the risks and benefits incidental to the ownership of the leased item, are capitalized at the lower of the fair value or present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease
payments are apportioned between the finance charges and the reduction of the lease liability
based on the implicit rate of return. Finance charges are charged directly against income.
(ii) Operating Leases
Lease of assets under which all the risks and rewards of ownership are effectively retained by the
lessor are classified as operating leases. Lease payments under operating leases are recognized
as an expense on a straight-line basis over the lease term.
64
(contd. )
r. Provision for credit enhancements on assets derecognized
Provision for credit enhancements on assets derecognized is made based on Management estimates
at 1% of the outstanding amount of assets de-recognized from the books of the company as at the
Balance Sheet Date.
s. Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short –term
balances (with an original maturity of three months or less from the date of acquisition), highly
liquid investments that are readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
t. Cash flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items
and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals
of past or future cash receipts or payments. The cash flows from operating, investing and financing
activities of the Company are segregated based on the available information.
Note 26 – Finance Charges
Hitherto, the company was charging off the finance charges incurred on borrowings to the statement
of profit and loss in the year in which it was incurred. However, from the current year the company
has changed its policy to defer the finance charges over the tenure of the underlying receivables in
line with the Accounting standard 16. Consequently the finance charges debited to the statement of
profit and loss for the year ended 31st March, 2013 is lower by Rs 18,001,804 with a corresponding
impact on the profit for the year.
Note 27 Managerial Remuneration
i. Managing Director
Particulars
For the Year ended
31st March 2013
`
Salaries and Allowances
For the Year ended
31st March 2012
`
3,312,000
3,312,000
288,000
288,000
Others
1,200,000
1,200,000
Total (Refer note below)
4,800,000
4,800,000
Employers' Contribution to Provident Fund
Notes: 1. Appointed as Managing Director with effect from 01st July 2010 vide Board resolution dated 18th June 2010 and
the remuneration approved by compensation committee held on 18th June 2010.
2. Actuarial valuation based contribution/ provision with respect to gratuity and compensated absences have not
been included as these are computed for the Company as a whole.
ii. Non-whole time directors
No remuneration except for sitting fees has been paid to any of the non-whole time directors
65
(contd. )
Accounting Standard disclosures
Note 28 Gratuity
The Company has a funded gratuity scheme with LIC for its employees as at 31st March 2013. The
premium payable to LIC is accounted for in the Profit & Loss Account and the details for the current
financial year are given as under:
Particulars
As at 31st
March 2013
`
As at 31st
March 2012
`
Projected Benefit Obligation at the beginning of the year
991,862
987,535
Service Cost
232,025
4,327
Interest Cost
-
-
Actuarial (Gains) / Losses
-
-
Benefits paid
-
-
1,223,887
991,862
1,012,141
987,535
-
-
91,093
24,606
Benefits paid
-
-
Actuarial Gains / (Losses)
-
-
1,103,234
1,012,141
Amounts recognised in the Balance Sheet
-
-
Present value of Obligation
-
-
Fair value of Plan Assets at the year end
-
-
Liability recognised in the Balance Sheet
-
-
91,093
24,606
Interest on Obligation
-
-
Expected Return on Plan Assets
-
-
Net Acturial (Gains) / Losses recognized in the year
-
-
91,093
24,606
8.00%
8.00%
Projected Benefit Obligation at the end of the year
Change in Plan Assets
Fair Value of Plan Assets at the beginning of the year
Expected Returns on Plan Assets at the beginning of the
year
Employer's Contribution
Fair Value of Plan Assets at the end of the year
Cost of the Defined Benefit Plan for the year
Current Service cost
Net Cost recognized in the Profit & Loss Account
Assumptions
Discount rate
66
(contd. )
Future Salary Increase
Mortality rate
5.00%
5.00%
LIC 1994-96 rates
LIC 1994-96 rates
1-3%
1-3%
NA
NA
Attrition rate
Expected Rate of Return on Plan Assets
Notes: 1.The estimate of future salary increase takes into account inflation, seniority, promotion and other relevant factors.
2. Discount rate is the prevailing market yields used by LIC for similar computations.
Note 29 Segment Information
The Company is primarily engaged in the business of Micro financing. All the activities of the
Company revolve around the main business. Further, the Company does not have any separate
geographic segments other than India. As such there are no separate reportable segments as per
AS-17 “Segmental Reporting”.
Note 30 Grants
The Company had received a capacity building grant of Rs. 5,69,000 during the financial year 2008-09
from Small Industries Development Bank of India(SIDBI). The amount was received towards capital
grant for purchase of fixed assets, and was accordingly spent for the stated purpose. An amount of
Rs. 37,494 (P.Y Rs. 54,995) has been recognized as income during the year being the proportionate
depreciation on assets purchased, out of capital grant received.
Note 31 Earnings per Share
Particulars
Profit after tax (`)
For the Year ended
31st March 2013
For the Year ended
31st March 2012
`
`
21,348,349
12,882,081
8,040,855
8,040,855
2,66
1.60
10
10
Weighted Average Number of Equity Shares
- Basic (Nos)
Earnings per Share – Basic and Diluted
Face value of Shares
Note:
Earnings per Share calculations have been done in accordance with Accounting Standard 20 “Earnings per Share”.
67
(contd. )
Note 32 Disclosure requirements under Accounting Standard 19 on ‘Leases’
Financial lease comprises lease of vehicles under a Hire purchase scheme. The future cash flows
are disclosed below:
Rentals (`)
As at 31st
March
2013
Rentals payable under
purchase agreement
`
Present value (`)
As at 31st
March
2012
`
As at 31st
March
2013
As at 31st
March 2012
`
`
188,906
903,568
hire
- Within one year
191,745
- Later than one year and not later
than five years
Less: Future finance charges
766,980
191,745
191,745
958,725
188,906
903,568
2,839
55,157
-
-
188,906
903,568
-
-
Operating leases taken by the company are cancellable at the option of the Company and hence do
not require disclosure under Accounting Standard 19 on Leases.
Note 33 Related Party Disclosures
Name of Related Parties and the Nature of Relationship (with respect to parties with whom the
Company had transactions during the year)
Nature of Relationship
Name of the Party
For the Year ended
31st March 2013
`
Key Management Personnel
Mr. S V Raja Vaidyanathan,
Entities holding Substantial Lok Capital LLC
Interest
For the Year ended 31st
March 2012
`
Mr. S V Raja Vaidyanathan,
Chairman & Managing
Director
Lok Capital LLC
Entities where Company has Asirvad Development Foundation Asirvad Development
Control
Foundation
68
(contd. )
Transactions with Related parties
Transaction
Remuneration (Refer Note 27
above)
Assistance
Related Party
Mr. S V Raja
Vaidyanathan
For the Year
ended 31st
March 2013
For the Year
ended 31st
March 2012
`
`
4,800,000
4,800,000
Asirvad
Development
Foundation
1,000,000
500,000
Asirvad
Development
Foundation
1,000,000
500,000
Balance as at Year end
Assistance payable
Note: a) Related Party relationships are as identified by the Management and relied upon by the Auditors.
b) Lok Capital’s shareholding as on 31st Mar 2013 was 32.41%
Note 34 Micro, Small and Medium Enterprises
Based on the extent of information available with the management, there are no transactions with
Micro and Small Enterprises. This has been relied upon by the auditors.
Note 35 Assistance
The Company has approved an assistance of Rs. 1,000,000 (Previous Year - Rs. 500,000) to Asirvad
Development Foundation for the year ended 31st March 2013.
RBI Disclosures – Disclosures in accordance with provisions of RBI
Note 36 Disclosure Pursuant to Reserve Bank of India Notification DNBS.200/CGM (PK) –
2008 dated 1st August 2008
i. Capital Adequacy Ratio
Particulars
As at 31st
March 2013
`
As at 31st
March 2012
`
Tier I Capital
267,637,538
246,843,152
Tier II Capital
10,245,620
7,967,598
Total Capital
277,883,346
254,810,750
1,142,915,709
828,961,020
23.42%
29.78%
Total Risk Weighted Assets
Capital Ratios
Tier I Capital as a Percentage of Total Risk Weighted
Assets (%)
69
(contd. )
Tier II Capital as a Percentage of Total Risk Weighted
Assets (%)
Total Capital (%)
0.90%
0.96%
24.31%
30.74%
ii. Exposure to Real Estate Sector, Both Direct and Indirect
The Company does not have any direct or indirect exposure to the real estate sector as at 31st March
2013 and 31st March 2012.
iii. Asset Liability Management
Maturity Pattern of Certain Items of Assets and Liabilities as at 31st March 2013 (`Crores):
Upto 1
month
Over 1
month to
2 months
Over 2
months
to 3
months
Borrowing
from
Banks*
11,913,001
26,807,334
29,307,667
69,589,001
172, 024,282
Market
Borrowing
-
-
-
-
Advances@
41,804,969
45,945,282
43,551,648
Investment
-
-
-
Over 3
months to 6
months
Over 6
months to 1
year
Over 1 year
to 3 years
Over
3 year
to 5
years
Over 5
years
Total
287,749,335
-
-
597,877,339
-
-
-
-
-
140,314,330
264, 062,694
153,621,910
-
-
689,078,006
-
-
-
-
500,000
500,000
Liabilities
Assets
Note: * - Excludes Interest Accrued but Not Due on Loans to Borrowers
@ - Excludes Interest Accrued but Not Due on advances
Note 37 Disclosure Pursuant to Reserve Bank of India Notification DNBS.193G (VL) – 2007
dated 22nd February 2007
S.No.
Particulars
As at March 31st 2013
Amount
Amount
outstanding in
overdue in
`
`
- Secured
-
-
- Unsecured
-
-
(other than falling within the meaning of public
deposits)
-
Liabilities:
(1) Loans and Advances availed by the NBFC inclusive of
interest accrued thereon but not paid
a Debentures
b Deferred Credits
-
-
989,565,750
-
d Inter-Corporate Loans and Borrowings
-
-
e Commercial Paper
-
-
188,906
-
c Term Loans
f Other Loans
70
(contd. )
S.No.
Particulars
Amount
outstanding as
on 31st March
2013 in
`
(2)
Assets:
Break-up of Loans and Advances including Bills Receivables (other
than those included in 3 below)
A
Secured
B
Unsecured
(3)
Break-up of Leased Assets and Stock on Hire and Other Assets
counting towards AFC activities
i
Lease Assets including Lease rentals accrued and due:
ii
iii
(a) Financial Lease
-
(b) Operating Lease
-
Stock on Hire including Hire Charges under Sundry Debtors:
(a) Assets on Hire
-
(b) Repossessed Assets
-
Other Loans counting towards AFC activities:
(a) Loans where Assets have been repossessed
-
(b) Loans other than (a) above
-
(4)
Break-up of Investments
I
Quoted:
i
Shares: (a) Equity
(b) Preference
-
-
ii
Debentures and Bonds
-
iii
Units of Mutual Funds
-
iv
Government Securities
-
v
Others (please specify)
I
Unquoted:
i
Shares: (a) Equity
(b) Preference
-
ii
-
iii
-
iv
-
v
Others
-
Long term Investments
I
71
689,078,006
Quoted:
(contd. )
i
Shares: (a) Equity
-
(b) Preference
-
ii
-
iii
-
iv
-
v
Others (please specify)
-
I
Unquoted:
i
Shares: (a) Equity
-
(b) Preference
-
ii
-
iii
-
iv
-
v
Others
-
(5) Borrower Group-wise Classification of Assets financed as in (2) and (3) above
S.No.
Particulars
As at 31st March 2013
Amount in ` (Net of Provisions) (Refer Note below)
Secured
1
Unsecured
Total
Related Parties
(a) Subsidiaries
-
-
-
(b) Companies in the same
group
-
(c) Other Related Parties
2
Other than Related Parties
-
-
-
689,078,066
689,078,066
-
689,078,066
689,078,066
Note:The amount of Assets financed represents the net owned portfolio outstanding after adjusting the provisions
for standard, substandard and doubtful assets.
6. Investor Group-wise classification of all Investments (Current and Long term) in Shares and
Securities (both quoted and unquoted):
S.No.
1
Category
Related Parties
(a) Subsidiaries
(b) Companies in the same group
72
Market Value /
Breakup Value
or Fair Value or
Net Asset Value
(Company's Share)
Book Value
(contd. )
(c) Other Related Parties
2
Other than Related Parties
(Refer note)
508,500
500,000
508,500
500,000
Note: The Company’s share of the Net Asset Value of Alpha Micro Finance Consultants Private Limited has been
calculated based on the unaudited financial statements of the Company as at 31st March 2013
Other Information
Related Parties
Other than Related
Parties
i
Gross Non-Performing Assets
-
-
ii
Net Non-Performing Assets
-
-
iii
Assets acquired in satisfaction of debt
-
-
Note 38
Disclosure of Fraud to Reserve Bank of India Notification DNBS.PD.CC.No.256/03.10.042/011-2012
dated 2nd March 2012
NIL
Note 39 NBFC - ND
The Company is a Systemically Important Non-deposit taking Non-Banking Finance Company
(NBFC-ND-SI). The Company has received Certification of Registration dated 14th December 2007
from the Reserve Bank of India to carry on the business of Non Banking Financial Institution without
accepting deposits. The Company is in the process of obtaining appropriate registration under the
Non-Banking Financial Company – Micro Finance Institution (Reserve Bank) Directions, 2011.
Note 40 Previous Year Figures
Previous year’s figures have been reclassified to conform with the current year’s classification /
presentation, wherever applicable.
For and behalf of the Board of Directors
Sd/-
Sd/-
Sd/-
S V Krishnamurthy
Director
S Rathinasabapathi
Director
Sd/-
Sd/-
Sd/-
Kalpana Iyer
Director
Venkatesh Natarajan
Director
G Srikanth
Company Secretary
73
DISTRICTS COVERED
Operating through 64 branches in 20 districts
*CHENNAI
SALEM
*COIMBATORE
*THANJAVUR
DINDUGAL
*ERODE
*THIRUNELVELI
KANCHIPURAM
THIRUVALLUR
KANYAKUMARI
THIRUVARUR
*MADURAI
TUTICORIN
NAGAPATTINAM
TRICHY
NAMAKKAL
VIRUDHUNAGAR
NILGIRIS
PUDUKOTTAI
Divisional office
74
THIRUPUR
FIELD POWER
www.asirvadmicrofinance.co.in
REGISTERED OFFICE
1st Floor, Desabandhu Plaza 47, Whites Road,
Royapettah, Chennai - 600 014
+91 44 4351 0081
CORPORATE OFFICE
New no.11, Old no.2, Habibullah Road
T.Nagar, Chennai - 600 017
+91 44 4212 4493

Annual Report 2012

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