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Muthoot Capital Services Ltd. Directors Report
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You can view full text of the latest Director's Report for the company.
Market Cap. (Rs.) 441.62 Cr. P/BV 0.90 Book Value (Rs.) 297.46
52 Week High/Low (Rs.) 460/239 FV/ML 10/1 P/E(X) 5.61
Bookclosure 13/06/2017 EPS (Rs.) 47.84 Div Yield (%) 0.00
Year End :2019-03 

Dear Members,

The Directors are pleased to present the 25th Board’s Report on your Company’s business and operations, together with audited financial statements of the Company for the financial year ended March 31, 2019.

1. PERFORMANCE HIGHLIGHTS

a) Financial Results

The summarized financial results of your Company for the FY 2018 - 2019 are given below:

(Rs. in lakhs, except earnings per share)

Particulars

2018 - 2019

2017 - 2018

Total Income

535 27.42

398 08.56

Total Expenses

408 02.88

315 62.54

Profit Before Tax (PBT)

127 24.54

82 46.02

Tax Expense

44 82.07

28 78.30

Profit After Tax (PAT)

82 42.47

53 67.72

Basic Earnings Per Share (EPS)

50.11

36.39

b) Business Growth

During the Financial Year (FY) ended March 31, 2019, your Company was able to achieve an impressive growth. The total Asset Under Management (AUM) (including sold portfolio) of your Company increased by 22.48%. The AUM (including sold portfolio) of the Company as on March 31, 2019 stood at Rs.2741 04.67 lakhs, whereas the same as on March 31, 2018 was Rs.2238 02.63 lakhs.

c) Profitability

The total income of the Company increased to Rs.535 27.42 lakhs during the FY 2018 - 2019 as against t 398 08.56 lakhs during the FY 2017 - 2018. The total expenditure for the FY 2018 - 2019 was at Rs.408 02.88 lakhs. The Company achieved an all-time high profit of Rs.82 42.47 lakhs while the same was Rs.53 67.72 lakhs in FY 2017 - 2018. The Net Interest Margin (NIM) improved to 69.83% as against 69.15% in FY 2017 - 2018.

d) Asset Quality

As on March 31, 2019, the gross NPA and net NPA in the books of your Company stood at Rs.113 13.80 lakhs and Rs. 61 90.43 lakhs respectively. The Provision Coverage Ratio stood at 45.28%. Your Company has adopted new and aggressive methods to control delinquencies and the NPA figures and hence have been able to achieve this in spite of the aftermath of the Kerala floods, which temporarily increased the delinquency substantially.

e) Net worth & Capital Adequacy Ratio

Based on the higher profitability of Rs. 82 42.47 lakhs, the net worth of your Company increased by 20.92% to Rs.476 35.45 lakhs as against t 393 92.98 lakhs in the previous year. The Company’s total Capital Adequacy Ratio (CAR) as on March 31, 2019 stood at 21.88% of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the off - Balance Sheet items, which is above the statutory minimum of 15%. Out of the above, Tier I CAR stood at 21.17% and Tier II CAR stood at 0.71%. The CAR as on March 31, 2018, stood at 22.04%.

f) Earnings Per Share

Earnings Per Share of your Company has improved from t 36.39 to t 50.11 during the year under review. Return on Equity reached 19.37% during the year.

2. DIVIDEND

In view of the business growth plans of the Company, the launch of new products and proposed investment in IT/infrastructure in the forthcoming years, the Board of Directors of your Company decided to plough back the profit after tax into the business and hence have not recommended any dividend for the FY 2018- 2019.

3. RESERVES

Your Board of Directors has transferred an amount of Rs. 16 50.00 lakhs to the Statutory Reserve maintained under Section 45-IC of the Reserve Bank of India Act, 1934. The Company has not transferred any amount to the General Reserve for the FY ended March 31, 2019. Post transfer of profits to reserves, your Board decided to retain Rs.185 04.84 lakhs as surplus in the Profit and Loss Account.

4. RESOURCE MOBILISATION

a) Share Capital

The authorized share capital of the Company is Rs.25 00.00 lakhs and the paid-up share capital of the Company is Rs.16 44.75 lakhs. The Company had not issued any equity shares either with or without differential rights during the FY 2018 - 2019 and hence, the disclosure requirements under Section 43 of the Companies Act, 2013 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.

b) Debentures

The Company has not issued any debentures during the FY 2018 - 2019. As on March 31, 2019, the residual portion of secured redeemable non-convertible debentures under private placement during earlier years along with interest accrued is Rs.6.21 lakhs. The debentures issued are secured by way of floating charge on the current assets of the Company. The non-convertible debentures of your Company is rated as “A/Stable” by CRISIL.

Trustees for Debenture Holders: Mr. A Gopalakrishnan, Chartered Accountant, M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018, is the Debenture Trustee for ensuring and protecting the interests of debenture holders.

c) Commercial Papers

During the year under review, your Company has raised funds for its working capital requirements by way of issue of Commercial Papers and duly repaid the same on the maturity date(s). The Commercial Papers of your Company are rated “A1” by CRISIL.

d) Fixed Deposits

Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India (RBI) having a Deposit Taking License. The Company started accepting fixed deposits during FY 2013 -2014. The fixed deposits of the Company are rated “FA /Stable” by CRISIL.

The outstanding amount of fixed deposits as on March 31, 2019, received by the Company including interest accrued at that date is Rs.66 07.17 lakhs. As on March 31, 2019, there are 92 accounts of fixed deposits amounting to Rs.1 77.34 lakhs which have become due for payment but have not been claimed by the depositors.

Being an NBFC registered with RBI, the provisions of Chapter V of the Companies Act, 2013, relating to acceptance of deposits by Companies, is not applicable to the Company.

Communication to Deposit Holders: The Company has the practice of sending communication by registered post to the deposit holders whose accounts are about to mature, two months prior to the date of maturity. If the deposit holders are not responding to the communication, Company contacts the depositors in person instructing them to surrender the fixed deposit certificate and claim the amount. In case, where the depositors are not traceable due to change in address/phone numbers, another regular communication is sent to the deposit holder and other modes to contact the deposit holders are also initiated till the deposits are repaid.

Trustees for Deposit Holders: Subject to the RBI Guidelines for trustees of deposit holders of the NBFC, your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of deposit holders.

In compliance with the Master Circular - Miscellaneous Instruction to all NBFCs dated July 01, 2014, your Company has created a floating charge on the Statutory Liquid Assets in favour of IDBI Trusteeship Services Limited, as trustee on behalf of the depositors as required under the extant provisions.

e) Subordinated Debts

The Company has, in the current year, raised money through issue of subordinated debts. As of March 31, 2019, the total amount of outstanding subordinated debts, including accrued interest was Rs.63 72.38 lakhs as against Rs.65 05.99 lakhs in the previous year.

The subordinated debts and public deposits consists of 8.26% of our total funding.

f) Bank Finance

The Company raised funds for its working capital resources mainly from banks. As on March 31, 2019, the total outstanding amount of credit facilities from Banks were Rs.1349 04.18 lakhs as against t 1149 10.26 lakhs as on March 31, 2018 excluding interest accrued.

Apart from the above, the Company has been sourcing funds through Securitization and Direct Assignment transactions. During the year under review the Company has sourced Rs.837 34.51 lakhs (net of MRR) (previous year Rs.439 76.23 lakhs). The same has been invested into by Banks / NBFCs / Mutual Funds and the value remaining outstanding as on March 31, 2019 was Rs.656 84.87 lakhs (previous year Rs.322 02.37 lakhs).

5. DIRECTORS

The Board of your Company consists of the following seven Directors:

Category

Name of Directors

Executive Director

Mr. Thomas George Muthoot, Managing Director

Non - Executive - Non - Independent Directors

Mr. Thomas John Muthoot, Chairman

Mr. Thomas Muthoot

Non - Executive Independent Directors

Mr. A.P. Kurian

Mr. R.K. Nair1

Mrs. Radha Unni

Mr. K M Abraham2

Mr. Thomas Mathew3

1 Resigned with effect from March 28, 2019

2 Appointed as Additional Independent Director with effect from January 18, 2019

3 Appointed as Additional Independent Director with effect from April 01, 2019

The composition of the Board is in line with the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors are having vast knowledge and experience in their relevant fields and the Company had benefitted immensely by their presence in the Board. The key Board qualifications, expertise, attributes are given in details in the Report on Corporate Governance forming part of this Report.

Mr. Thomas John Muthoot, Director (DIN: 00011618) retires at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. The Board of Directors recommends the re-appointment of Mr. Thomas John Muthoot as Director of the Company. The detailed profile of Mr. Thomas John Muthoot recommended for re-appointment is enclosed with the Notice for the 25th AGM of the Company.

Mr. A.P. Kurian (DIN: 00008022) and Mrs. Radha Unni (DIN: 03242769) were appointed as the Independent Directors of the Company by the shareholders at the 20th Annual General Meeting held on September 03, 2014 for a period of five consecutive years, i.e., for a term upto September 02, 2019. Hence, Mr. A P Kurian and Mrs. Radha Unni will complete their initial term as per Companies Act, 2013 as an Independent Director of the Company on September 02, 2019. Since they are eligible, your Board recommends the re-appointment of Mr. A.P. Kurian and Mrs. Radha Unni for one more term subject to the approval of shareholders by way of special resolution. The detailed profile of Mr. A.P. Kurian and Mrs. Radha Unni, recommended for re-appointment in the ensuing AGM is enclosed with the Notice for the 25th AGM of the Company.

a) Changes in Directors and Key Managerial Personnel (KMP) during the FY 2018 - 2019

During the FY 2018 - 2019, Mr. K.M. Abraham (DIN: 05178826) has been appointed as the Additional Independent Director on the Board with effect from January 18, 2019. The Board of your Company recommends the regularization of appointment of Mr. K.M. Abraham in the ensuing AGM for a period of five years.

The Board also appointed Mr. Thomas Mathew (DIN: 01277149) as the Additional Independent Director of the Company at the Board meeting held on March 28, 2019. The appointment of Mr. Thomas Mathew is effective from April 01, 2019. The Board of your Company recommends the regularization of appointment of Mr. Thomas Mathew in the ensuing AGM for a period of five years.

The detailed profile of Mr. K.M. Abraham and Mr. Thomas Mathew recommended for re-appointment in the ensuing AGM is enclosed with the Notice for the 25th AGM of the Company.

During the FY 2018 - 2019, Mr. R.K. Nair, Independent Director (DIN: 00631889), has resigned from the Board with effect from March 28, 2019 due to compelling personal reasons and pre-occupation with other professional commitments. The Board places on record their appreciation for the commendable contribution made by Mr. R.K. Nair as Independent Director during his tenure in the Company. The Board took on record the confirmation from Mr. R.K. Nair that there are no material reasons for resignation other than those provided.

Mr. Ravi Oruganti, who was appointed as the Company Secretary & Compliance Officer at the Board meeting held on April 17, 2018, has resigned with effect from the closing hours of March 28, 2019, due to personal reasons.

Mr. Thomas George Muthoot, Managing Director and Mr. Vinodkumar M. Panicker, Chief Finance Officer are the KMPs of the Company, as recorded by the Board, as on March 31, 2019.

b) Declaration by Independent Directors

On April 01, 2019, the Company has received declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that, they meet the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013 and subsequently the same was placed at the Board Meeting held on April 24, 2019.

A declaration by Managing Director confirming the receipt of this declaration from Independent Directors is enclosed to this Report as Annexure 1.

c) Policy on Board Diversity

The Policy on Board Diversity approved and adopted by the Company are as follows:

(i) Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities.

(ii) The Company shall also take into account factors based on its own business model and specific needs from time to time.

(iii) The Nomination & Remuneration Committee shall lead the process for Board appointment and for identifying and nominating, for approval of the Board, candidates for appointment to the Board.

(iv) The benefits of experience/knowledge in the areas relevant to the Company and diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of Directors to the Board.

(v) Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender.

d) Policy on Nomination & Remuneration

The Company’s policy on Director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) of the Companies Act, 2013 is provided on the website of the Company and can be accessed on: https:// muthootcap.com/admin/uploads/Policy_on_Nomination_and_Remuneration.pdf

The Policy on Nomination and Remuneration sets out the criteria for determining qualifications, positive attributes and independence of Director and the norms for evaluation of the Board, its Committees and individual Directors.

e) Formal Annual Evaluation of Board and its Committees

Based on the Policy on Nomination and Remuneration, the Board has carried out an annual evaluation of its own performance, its Committees and Independent Directors, excluding the Director being evaluated.

The detailed note on the annual Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, is given in the Report on Corporate Governance, which forms part of this Report.

f) Meetings of the Board

During the FY 2018 - 2019, your Board of Directors met seven times. More details about the meetings of the Board is given the Report on Corporate Governance, forming part of this Report.

g) Committees of the Board

The details of the Committees of the Board, their composition, terms of reference and the activities during the year are elaborated in the Report on Corporate Governance forming part of this Report.

6. SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY

The Company has no subsidiary/joint venture/associate company and hence consolidation and the provisions relating to the same under the Companies Act, 2013 and Rules made thereunder are not applicable to the Company.

7. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year under review, there was no change in the nature of business of the Company. The Company is mainly into the business of providing two-wheeler loans, for which, during the year under review the Company has disbursed loans to the extent of t 1851 00.78 lakhs and as on March 31, 2019, the total outstanding amount (including sold portfolio) was Rs.2339 39.44 lakhs. The Company had disbursed business/corporate loans to the extent of Rs.225 43.50 lakhs and as on March 31, 2019, the outstanding amount is Rs.315 88.81 lakhs. Apart from the above, the Company has ventured into the disbursement of used car loans and disbursed an amount of Rs.4 12.22 lakhs during the year under review. As on March 31, 2019, the total outstanding amount was Rs.3 45.85 lakhs.

The Company had entered into pool buyout arrangement of loan receivables amounting to Rs.54 45.73 lakhs (after deducting 5% / 10% for MRR requirement) during the year under review. The aggregate amount outstanding under loan buyout, as on March 31, 2019, was Rs.52 06.46 lakhs.

The sourcing of two-wheeler and used car business of the Company takes place mainly at the dealer points for two wheelers and through branches of its group company, Muthoot Fincorp Limited. During the FY 2018 - 2019, the Company has also started sourcing through its mobile app which is in the nascent stage.

8. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There were no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.

9. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS AND TRIBUNALS

Your Directors confirm that there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

10. RISK MANAGEMENT

The Board oversees the enterprise wide risk management functions of the Company and a separate Risk Management Committee of the Board supervises the risk management functions. Apart from these, the Company has a separate Risk Management Department that co-ordinates and administers the risk management functions to have a ‘top to down’ focus on the risk management.

The Company believes that risk resilience is key to achieving higher growth. To this effect, the Company have a well-defined Risk Management Policy in place, to create and protect shareholder value, by minimizing threats or losses and identifying and maximizing opportunities to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The policy lays down broad guidelines for timely identification, assessment, and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response for the key risks identified, so as to make sure that risks are adequately addressed or mitigated. The said policy is approved by the Board and reviewed from time to time.

The risk management framework in the Company is periodically reviewed by the Risk Management Committee of the Board. The Internal Auditors are also having a complete review of risk assessments and associated management action plans. All material risks of the Company emerging in the course of its business are identified, assessed and monitored on a regular basis.

Detailed discussion on Risk Management forms part of Management Discussion & Analysis under the section ‘Risks and Concerns’, which forms part of this Annual Report. At present, in the opinion of your Board of Directors, there are no material risks which may threaten the existence of the Company.

11. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS

The Company has in place a stabilized and effective Internal Audit and Financial Controls system, calibrated to the risk appetite of the Company and aligned to the size, scale and complexity of the business operations of the Company. The said financial controls of the Company are evaluated by the Audit Committee as per Schedule II Part C of the SEBI (LODR) Regulations, 2015.

Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of the Companies Act, 2013, had engaged PKF Sridhar & Santhanam LLP as the Internal Auditors of the Company for the FY 2018 - 2019. The scope and authority of the Internal Audit function is defined in the Audit Policy of the Company, duly recommended by the Audit Committee of the Board and approved and adopted by the Board of Directors. The Internal Audit function essentially validates and ensures that the Company, has in place, adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The Internal Audit function provides independent assurance to the Board of Directors and Senior Management on the quality and effectiveness of the Company’s internal control, risk management and governance systems and processes, thereby helping the Board and Senior Management to protect the Company and its reputation.

The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of internal control system at all levels and monitors the implementation of audit recommendations. During the year, such control systems were assessed and no reportable material weaknesses in the design or operations were observed. Accordingly, your Board, is of the opinion that the Company’s internal financial controls were adequate and effective during FY 2018 - 2019.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility activities at Muthoot Capital Services Limited encompasses much more than social outreach programmes. Aligning with its vision, your Company has been continuing to increase value in the community in which it operates, through its services and CSR initiatives, so as to stimulate well-being for the community, in fulfillment of its role as a responsible corporate citizen. The Company has undertaken a number of enriching and enlivening activities in the areas of Health, Education, Environment and Livelihood.

The Board has constituted a Corporate Social Responsibility Committee (CSR Committee) to oversee and monitor the CSR activities of the Company. The CSR Committee of the Company has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The Company’s CSR Policy is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The CSR Policy is available on the website of the Company at https://muthootcap.com/admin/uploads/CSR_Policy-MCSL.pdf

During the year, the Company spent an amount of t 131.21 lakhs towards its CSR activities. The details of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure 2 to this Report in the format prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The composition and other details of the CSR Committee and its meetings are detailed in the Report on Corporate Governance, forming part of this Report.

13. AUDIT & AUDITORS

a) Statutory Auditors

M/s. Varma & Varma, Chartered Accountants (FRN: 004532S), Sreeraghavam, Kerala Varma Tower, Bldg. No. 53/2600 B, C, D & E, Off. Kunjanbava Road, Vyttila, P.O., Kochi - 682 019 were appointed as the Statutory Auditors of the Company during the 23rd AGM held on June 06, 2017, for a period of five years.

The Board has duly examined the Statutory Auditors’ Report to the accounts, which is self-explanatory. Clarifications, wherever necessary, have been included in the Notes to the Accounts section of the Annual Report. Further, your Directors confirm that there are no qualifications, reservations or adverse remarks or disclaimers in the Independent Auditor’s Report provided by Statutory Auditors for the FY 2018 - 2019.

b) Secretarial Auditors

The Board, at its meeting held on April 17, 2018, appointed M/s. SVJS & Associates, Company Secretaries, 65/2364A, Ponoth Road, Kaloor, Kochi, Ernakulam - 682 017 to conduct the Secretarial Audit for the year ended March 31, 2019 in compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2018 -2019 is enclosed to this report as Annexure 3. The Directors of your Company confirms that there are no qualifications, reservations or adverse remarks or disclaimers in Secretarial Audit Report for the period under review.

14. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy and technology absorption does not apply to your Company. The Company is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service.

15. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Your Company, has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9) & 177 (10) of the Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of Part C of Schedule V of the SEBI (LODR) Regulations, 2015.

A brief note on the highlights of the Whistle Blower Policy and compliance with the same is also provided in the Report on Corporate Governance, which forms part of this Report.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loans or provided any guarantee or made any investments pursuant to Section 186 of the Companies Act, 2013, during the period under review.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Your Directors confirm that all contracts/arrangements/transactions entered into by the Company during the FY 2018 - 2019 with related parties were in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee for all the related party transactions during the FY 2018 - 2019 as envisaged in Regulation 23 (2) of the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015, for related party transactions that are foreseen and of repetitive nature during the period under review and the required disclosures are made to the Committee on quarterly basis against the approval of the Committee.

In addition to the above, the Company had obtained the approval of the shareholders for related party transactions with Muthoot Microfin Limited, Muthoot Fincorp Limited and Muthoot Bankers at the AGMs held on August 21, 2015, June 06, 2017 and June 14, 2018 respectively for a period of five years even though the said transactions were not material in nature.

All related party transactions that were entered into during the financial year ended March 31, 2019 were on an arm’s length basis and were in the ordinary course of business. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted.

Also, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, or other designated persons which may have a potential conflict with the interest of the Company at large. Thus, disclosures as per Form AOC-2 under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is not required. However, the disclosure of transactions with related party for the year, as per Accounting Standard-18 Related Party Disclosures is given in Notes to the Accounts section of the Annual Report.

The Company has in place, a Board approved Related Party Transaction Policy, which is available on the website of the Company at https://muthootcap.com/admin/uploads/RPT-Policy-MCSL.pdf

18. PARTICULARS OF EMPLOYEES

Disclosures relating to remuneration of Directors under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 4.

The information, as required to be provided in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 5.

19. LISTING

Equity shares of your Company is listed on BSE Limited since April 24, 1995 and on National Stock Exchange of India Limited since August 24, 2015. Your Company has paid the required listing fees to both the Stock Exchanges for the FY 2019 - 2020.

20. CORPORATE GOVERNANCE REPORT

Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 read with Part E of Schedule II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate Governance. The detailed Report on Corporate Governance along with certificate on Corporate Governance from the Statutory Auditors forms part of this Report.

21. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review is included as a separate section and forms part of this Report.

22. FAIR PRACTICE CODE (FPC)

The Company, has in place, a Fair Practice Code approved by the Board on April 02, 2012, in compliance with the guidelines issued by the RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is available on the website of the Company at: https:// muthootcap.com/admin/uploads/Fair_Practice_Code-MCSL.pdf

The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and appropriateness.

23. CUSTOMER GRIEVANCE

The Company has a dedicated Customer Grievance Redressal Cell for receiving and handling customer complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.

24. EXTRACT OF ANNUAL RETURN

The extract of the annual return in form MGT-9 is placed on the website of the Company and can be accessed at: https://muthootcap.com/admin/uploads/MGT-9_31.03.2019.pdf

25. DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, your Directors state that:

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

b) we had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c) we had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) we had prepared the annual accounts on a going concern basis;

e) we had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) we had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

26. ACKNOWLEDGEMENTS

Your Directors wishes to place on record their appreciation and sincerely acknowledge the contribution and support from shareholders, customers, depositors, debenture holders, Central and State Governments, Bankers, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Registrar & Share Transfer Agents, Credit Rating Agencies and other Statutory and Regulatory Authorities for the kind cooperation and assistance provided to us.

Your Directors also extend their special appreciation to each Muthootians for their continuing support and unstinting efforts in ensuring an excellent all-round operational performance and every well-wisher for their continued commitment, dedication and co-operation.

For and on behalf of the Board of Directors

Sd/-

THOMAS JOHN MUTHOOT

Kochi Chairman

April 24, 2019 DIN: 00011618


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