Annual report-2016 - 76 Pages...

5

Annual Report 2015-16

Define success on your own terms,

by your own rules, andachieve ityou’re proud to live.build a life

– Anne Sweeney

– Anne Sweeney

About Midland Microfin

Vision & Mission

Managing Director’s Note

Directors’ Report

Management Discussion & Analysis

Auditors’ Report

Financial Statements

Balance Sheet

Statement of Profit & Loss Account

Notes Accountsto

Our Customers

Recreational Activities

Contents

2

5

7

8

9

10

23

36

39

44

48

72

74

76

Operational & Financial Indicators

Corporate Information

Secretarial Audit Report

Our Partners

Our Products 4

2

Midland Microfin Limited (MML) is the first Punjab Based

Microfinance Institution registered as 'NBFC – MFI' with the

Reserve Bank of India (RBI). MML is a techno savvy Company,

with a vision to support progressive poor and financially

excluded at a low Cost. There is a special emphasises on

Women Empowerment by providing financial assistance to

encourage entrepreneurship at the bottom of pyramid,

simultaneously impacting a positive change in the quality of

life of our clients.

The core business is to provide micro loans and certain other

basic financial services to our members for income

generating activities. The members are predominantly

located in rural areas of Northern India. Since inception, the

Company has invested in latest technology to keep up the

pace enhanced efficiency. was the First to introducefor MML

the concept of Centralised Credit Department in

Microfinance Industry.

Midland Microfin Ltd. | Annual Report 2015-16

ABOUT MIDLAND MICROFIN


Towards ustainableSocio-economic rogressS PHaving completed 5 successful ears inyMicrofinance Sector, Midland Microfin

Limited proudly presents to you itsjourney along with the financial

statements for the financial year 2015-16.Having established a substantial presence

in the states of Punjab, Haryana andRajasthan, the Company is now planningto further expand in other parts of the

country with the objective of helping theprogressive poor and to promote self-employment and financial inclusion.

BUSINESS LOANSWe encourage entrepreneurship amongst women as sustainable source of

livelihood by providing loans for working capital. Loans give economically active

women an access to finance in order to support their micro enterprises. These

small enterprises are; kiryana stores, small vendors, repair shops, clay pot

manufacturing, boutiques, embroidery centres, beauty parlours, micro

ancillary units, livestock, small shops, small teaching centres, toy making, small

eateries, dairy farming, fruit & vegetable selling basket making etc. We offer a,

range of products and services, which have been, developed on the basis of

financial needs of poor working women. In some cases these women are

managing family run home based micro enterprises. Midland Microfin has

created different cycles of Business Loans i.e. B , B 2, B 3, B 4, B 5 and(BL) L L- L- L- L-

Pragati Loan. The ticket size increases as the cycle advances. These loans are

offered to the members to support the enhanced business needs of our

borrowers. The ticket size in initial loan cycle from Rs. 10000 to Rs. 20000ranges

& in graduated cycles it goes upto Rs. 50000.

OURPRODUCTS

WATER PURIFIER LOANIt was observed that people especially in rural areas spend a hefty

amount out of their earnings on medical expenses, which creates lot

of financial burden. The quality of water in our area of operation

(presently Punjab, Haryana & Rajasthan) is not good as, Chandigarh

it contains hazardous toxic elements. Hence water purifiers have

become a basic necessity of every household.

Large number of borrowers of Midland lack access to clean drinking

water and are unable to afford water purifiers. However these

members have shown immense interest in buying water purifiers as

per the Survey conducted by Midland. This loan provides an

opportunity to purchase water purifier on easy instalments, which

may otherwise be beyond their reach. To provide an easy access in

an affordable way to the existing borrowers, Midland Microfin has

tied up with 'Hindustan Unilever Ltd' which is India's largest FMCG

Company engaged in marketing and distribution of various

consumer goods inter alia, in home water purifiers called 'Pureit'.

SEWING MACHINE LOANUsing Quality Product is a fundamental right of any Consumer. After

conducting an extensive survey, a noticeable fact came to our notice

that there is a lack of awareness amongst the consumers in these strata

and hence unorganised retailers as well as manufacturers are

exploiting them. Upon the enthusiastic feedback of the members &

with a vision to provide products and services of outstanding quality,

Midland Microfin Ltd. has collaborated with Rita Machines India Pvt.

Ltd., which is one of the leading manufacturers of sewing machines, to

facilitate the services with the mission of Serving Members 'Beyond

Microfinance'. Midland Microfin is offering one variant of sewing

machines i.e. 'Tailor Supreme' to the members. Sewing machine Loan is

provided only to those members who are supposed to avail business

loan for stitching business, boutique business & allied activities.

Midland Microfin Ltd. | Annual Report 2015-16 4

CORPORATEINFORMATION


Chairman

Vijay Kumar Bhandari

Managing Director

Amardeep Singh Samra

Directors

Shant Gupta Independent Director-

Jagdeep Singh Shergill Non-Executive Director-

Harpal Singh Chhokar Non-Executive Director-

Janak Raj Gupta Independent Director-

Sachin Kamath Nominee Director-

Chief Financial Officer

Amitesh Kumar

Company Secretary &

Compliance Officer

Sonia Dua

Statutory Auditors

M/s Ashwani Gupta & Associates

Chartered Accountants,

Civil Lines, Jalandhar, Punjab, INDIA

Secretarial Auditor

M/s Harsh Goyal & Associates

Company Secretaries,

Ludhiana, Punjab, INDIA.

Registrar & Share Transfer Agents

(RTA)

Skyline Financial Services Pvt. Limited

D-153/A, Phase I, Okhla Industrial Area,

New Delhi - 110020, INDIA

Phone: 011 3085 7575

Email - [email protected]

Board Committees

Audit Committee


Shant Gupta

Janak Raj Gupta

Nomination & Remuneration Committee


Shant Gupta

Janak Raj Gupta

Sachin Kamath

Investors/ Stakeholders

Grievance ommitteeC



Shant Gupta

Core Management Committee



Shant Gupta

Sachin Kamath

Board Management Committee


Jagdeep Singh Shergill

Shant Gupta

Amitesh Kumar

Gopesh Gupta

OHead ffice Executive Committee


Amitesh Kumar

Gagan Deep Sharma

Amarjit Singh

Anjali Jindal

Gopesh Gupta

Sonia Dua

CORPORATEINFORMATION


VISION

MISSION

VISIONMISSION

To be a world class,role model, techno savvy

international Micro Finance Institutionproviding support to at low cost.progressive poor

Encourage micro enterprise assource of sustainable livelihood,

with special emphasis on women by providingfinancial services with the help of technology.Work for financial and social empowerment of women.Provide easy access to financial services for low incomeentrepreneurs so they can improve their standard ofliving and create sustainable assets for themselves.


Dear Patrons,

I to share with you that in a short span of five years, has achieved a milestone ofam glad Midland Microfin Ltd. Rs.

500 Crores in June 2016 with regard to cumulative disbursement. We started our microfinance journey in

January 2011, with a vision to be a world class, role model, techno savvy international microfinance institution,

providing support to progressive poor at a low cost. Midland Microfin Limited in many ways is substantiation of

our passion for helping and providing finance to under-served and financially excluded.

Midland Microfin Limited is the first Microfinance Institution, which has roots in the state of Punjab. The seed of

Midland Microfin was sown to encourage microenterprises as a source of sustainable livelihood with a special

emphasis on social and financial empowerment of women. During these five illustrious years, the company has

grown manifold. tarted with few branches in Punjab and by the end of financial year 2015-16 yourWe s a

company has reached a milestone of 45 branches with enhanced penetration in Haryana andthe states of

Rajasthan.

The nstitutional rading enjoyed by the company is 'MFI 2' by CARE Ratings, which is amongst the highest in theI G

peer group. Your company is fully compliant with laws and regulations. In line with vision of financial inclusion of

the Govt., your company took an initiative of cashless disbursement during the financial year 2014-15 wherein

the members were motivated to open bank accounts. n order to promote better quality of life for ourFurther i

members and their families by providing them clean water, your company has tied up with India's leading FMCG

company Hindustan Unilever Limited for offline water purifiers.

It also gives me pleasure to mention here that interns from various countries through AIESEC (Global network of

students) visit your company every year to Microfinance. They show a inhave an insight into keen interest

various processes of the company and share their valuable . Your company also bec me asystems and inputs a

member of two SROs namely MFIN and Sa-Dhan during the financial year 2015-16. I am pleased to inform you

that during the financial year 2015-16 the company has crossed of 100 crores loan, a milestone Rs. outstanding

portfolio. The outstanding loan portfolio of the company is Rs. 144 rores as on March 31, 2016 and as on JulyC

31, 2016 is Rs. 180 rores.it C Your company became a dividend paying company as the oard paid 5% dividendB

for the financial year 2014-15 he oard has proposed a dividend of 8% for the financial year 2015-16. It is. T B

pertinent to mention that your company has been a ZERO NPA since last 5 years.able to maintain level

Considering the ability and scalability, the company has attracted a Foreign Institutional Investment in Equityst

Share Capital during the financial year 2015-16.

I that your company has more than 100% year on year the astam delighted to mention shown growth during p

five years. Moreover the Financial Year 2015-16 has been an outstanding year from Operational and Financial

point of view. This year the substantial growth in our profit is due to effectiveness and cohesiveness in our

operations, hence we have been able to maintain an excellent asset quality.

I would also like to take this opportunity to express my gratitude to all the stakeholders including our Board of

Directors, Bankers, Investors, Members and Employees for their unstinted co-operation and support.

Amardeep Singh SamraManaging Director


MANAGINGDIRECTOR’S NOTE


I that youram delighted to mention

company has more than 100%shown

growth year on year the astduring p

five years.

TotalAssets

178.64Crores

116.86%CumulativeDisbursement

432.27Crores

117.74%

1.67Lakhs

Customers 43.92%

No.ofBranches

4561%

ReturnonTotal Assets 22.94%

2.84%CapitalAdequacyRatio

28.11%50%

113.46%OutstandingLoan Portfolio

144.05Crores

171%Profitafter Tax

3.71Crores

OPERATIONAL &FINANCIAL INDICATORS

As at March 31, 2016


The summarised financial results for the year ended

March 31, 2016 and previous years are as under:(Figures in Rs. )Crores

Year Year YearParticulars Ended Ended Ended CAGR

31-3-16 31-3-15 31-3-14 %

1 Gross 30.69 15.40 8.11 94.53. Total Income

2. Interest Expended 13.54 7.22 3.06 110.35

3. Operating xp (i)+(ii)E . 10.77 6.04 4.07 62.67

(i) Employees ostc 6.76 3.80 2.59 61.56

(ii) Other operating exp. 4.01 2.24 1.49 64.05

4. Total Expenditure (2)+(3) 24.31 13.26 7.14 84.52

(Excluding provisions

Cand ontingencies)

5. Operating Profit (1-4) 6.38 2.14 0.98 155.15

(Profit before Provisions

and Contingencies)

6. Provisions (other than tax) 0.76 0.37 0.15 125.09

and contingencies (Net)

7. Profit/(Loss) from Ordinary 5.62 1.77 0.82 161.79

Activities before Tax ( )5-6

8. Tax Expense 1.91 0.4 0.29 156.64

9. Net Profit/(Loss) 3.71 1.37 0.54 162.11

for the period

10. Paid-up equity share capital 18.71 8.61 7.09 62.45

(Face value Rs.10/- per share)

11. Reserves & Surplus 14.85 1.04 0.13 968.79

12. Net Owned Funds 33.00 9.31 6.99 117.28

13. Dividend %

Preference 9% - - NA

(Proposed)

Equity 8% 5 - NA

(Proposed)

14. EPS (Basic) (in Rs.) 3.27 1.93 0.86 95.00

15. Capital Adequacy Ratio (%) 28.11 18.82 30.89

Dear Members

Your Directors tak pleasure presenting thee in

Annual Report of our Company with Auditedy along

Financial Statement of Accounts and Auditors'

Report for the year ended March 31, 2016.

Having completed 5 remarkable years of operations

in microfinance sector, the Company has been

successful not only in promoting financial resilience

but also in achieving other social objectives Your.

company has buil a microfinance system to supportt

self-employment and Job Generation for women to

build their capacity to take control of their own lives

and families. The company has been a part of the

lives of its members and helped in not just attaining

financial sustainability but also helped them in

achieving overall growth and improvement in their

lifestyle .s

FINANCIAL HIGHLIGHTS

Your Company has made an outstanding growth in

the financial year 2015-16. As always the company

has beaten its own benchmarks in achieving the

business and profitability.

Your company h shown a constant growthas ever

since its inception.

DIRECTORS’REPORT


are , and your Company extends loans to themas

mainly for use in small businesses or for other

income generating activities and not for personal

consumption. Providing only business loans is a

cautionary move by your company to ensure that

the borrowers use the money in micro enterprises

and are easily able to repay the loan. Your company

with the help of various tools & techniques

developed over the years also ensure that thes

borrowers use the loan money provided to them for

business activities only and not for any other

activity.

In its core business, your Company operates in a

village centred group lending model to provide

unsecured loans to its members. This model relies

on the concept of Joint Liability Group (JLG), a form

of 'social collateral', that ensures credit discipline

through peer support within a group. This model

makes the borrowers prudent and disciplined in

managing their financial affairs and ensures

repayment of loans. This also helps in fostering

financial literacy at bottom of pyramid. Thisthe

prevents the borrower to make any delinquencys

and ensures timely payment of instalments. Our

exclusive and unique risk mitigation initiatives of

customer rating and assessment of repayment

capacity of borrowers coupled with centralised

verification system ha helped us to maintainve

GROSS ZERO ARREAR and ZERO NPA since the

inception of MFI operations. Achieving a Zero NPA

level is a huge achievement in itself and your

company is proud to create such a standard. Our

Centralised Grievance Redressal System has helped

the customers with facility of Toll ree number,F

which helps them to have access to top

management. A mandatory call is also generated by

our Customer Helpdesk Department to each

Borrower on the day of disbursement of each loan.

This initiative is one of a kind started by your

company only help the top, which doesn’t

management understand and have a more hands-

on approach and clarity about the ground level

reality but also proves to be a risk mitigation tool.

This also ensures that no employee of the company

is engaged in any activity which is unethical or out of

the scope of his duty. All the queries of the members

are given utmost importance and are ensured that

they are resolved at the earliest. This governance

technique provides a vigil mechanism and will be of

Midland Microfin Limited (MML) has reported an

excellent financial and operating performance

during the period under review i.e. financial year

2015–16. The Company has expanded by opening

17 new branches in the current financial year and

now the company has total 45 branches as against

28 in the previous year and concurrently the

company also emphasised on increasing the

operational efficiency in the existing branches. The

majority of the new branches have been opened in

the states of Haryana and Rajasthan with an

objective of . The companyregional diversification

has earned Gross Income of Rs. 30.69 Crores for the

year ended March 31, 2016 as compared to Rs.

15.40 Crores as on March 31, 2015 registering a

growth of 99.29%. Commutative disbursements

reached Rs. 432.26 Crores as on March 31, 2016 as

against Rs. 198.52 Crores as on March 31, 2015

showing a growth of 117.24%. Total outstanding

Loans as on March 31, 2016 stood at Rs. 144.06

Crores as against 67.48 Crores on March 31, 2015,

reflecting an increase of 113.49%. With the earnest

efforts of dedicated staff, the company has been

able to achieve Net Profit after Taxes amounting to

Rs 3.71 Crores in current year as compared to Rs 1.37

Crores in previous year registering a growth of

170.80%.

The Authorised Share Capital of the Company has

increased to 22.00 Crores from 12.00 Crores during

the period under review. The Paid p apital hasU C

increased from Rs 8.60 Crores to Rs 20.71 Crores as

on March 31, 2016. Net Owned Funds of the

company increased to Rs. 3 Crores during the3

current financial year as compared to Rs 9. Crores31

in the previous year showing a growth of 2 . %54 46

after provision of dividend of 8% p.a. on Equity hareS

Capital and 9% p.a. on Preference Share Capital on

pro rata basis.

OPERATIONS - PROSPECTS AND FUTURE PLANS

Your Company is primarily engaged in providing

microfinance to low-income individuals in India,

who are classified by your Company as 'Members'.

Further, your Company classifies the persons whose

loans are outstanding as 'Borrowers'. Your

Company's core business is providing small value

loans and certain other basic financial services to its

progressive poor Members. Our members are

predominantly located in rural and semi urban

DIRECTORS’REPORT


even more importance in the future expansion

stages. Higher new customer acquisition, higher

number of repeat loans and customer retention at

higher ticket size for our mature, vintage customers

ably supported by timely funding, helped your

Company to sustain robust business growth and

momentum.

Our operations team has initiated new measures to

bring in efficiency and control through the 3 Ts viz.

Technology, Training and Talent with able support of

the Human Resource Department. In last financial

year, the Company laid emphasis on expansion of

business by opening 17 new branches with an

enhanced penetration in Haryana and Rajasthan.

Your company has also made an effort to open most

of the new branches in the area where either there is

no presence of an MFI or there are very few

Microfinance companies present his is done to. T

align with the vision of the company and provide

maximum opportunity to financially excluded

population. The diversification of portfolio and in

the area of operation also helps in reducing the

overall operational and financial risk. The company

also aims to enhance roductivity, usinessP B

Intelligence and Risk Management with the new IT

application for the said purpose. The IT initiative

that the company plann in thehas ed is

implementation phase or at the Beta testing phase.

Your top management has done proper scrutiny

from top to ground levels. They have had meetings

with some leading IT service providers of the

Country and met with the top management of some

of the leading MFIs and discussed their experience

and feedback. The objective is to provide not just

customer satisfaction, but also customer delight in

an efficient way.

With the implementation of these IT related

strategies we are sure that the company will be able

to increase its efficiency and cohesiveness.further

This should also prove to be an important tool in the

risk mitigation space. Moreover, branches today

have access to all reports and are being envisioned

as individual business units catering to customer

transaction and services. The Management iss

constantly trying to give better and more holistic

view to all the branches with view of educatinga

them. This initiative also helps in overall growth of all

the employees and ensures a sense of ownership by

them towards the organisation.

The operational highlights for the financial year

ended on March 31, 2016 include:

a. 45 branches across 3 States (Punjab,

Haryana and Rajasthan) and 1 Union

Territory (Chandigarh).

b. Customer base of 167921 and cumulative

disbursements of Rs 432.26 Crores, an

i n c r e a s e o f 4 3 . 9 3 % a n d 1 1 7 . 2 4 %

respectively.

c. Loan outstanding from Rs. 67.48 Crores in

the previous year to Rs 144.06 Crores as on

March 31, 2016, an increase of 113.49%

d. Gross Zero Arrear/ NPA

This determines that the company is achieving

sustainability and scalability in its Operations and

achieving the road map set by the Board.

The comparative Operational Performance of the

Company is as under:

Year Year Year

Particulars Ended Ended Ended CAGR

31-3-16 31-3-15 31-3-14 %

States 3 3 3 N.A

UT 1 0 0 N.A

Villages Covered 3683 2590 1325 66.72

Branches 45 28 21 46.39

Joint Liability Groups 39793 23389 11638 84.91

No. of Members 167921 116676 66064 59.43

No. of Borrowers 131439 83499 46525 68.08

No. of Centres 7214 4593 2512 69.46

Average Ticket Size 13884 12158 11272 10.98

Loan Disbursed 432.26 198.52 87.211 22.63(In Crores)

Loan Outstanding 144.06 67.48 33.21 108.28(In Crores)

Repayment Rate 100% 100% 100% N.A

Loan End Use Verification 100% 100% 100% N.A

Share Capital 20.71 8.61 7.09 70.91(In Crores)

Total Assets 178.64 82.37 36.04 122.64(In Crores)

a. The Company has raised Rs. 3.85 Crores during

the financial year 2015-16 through Issue of

S e c u re d Re d e e m a b l e N o n - C o nve r t i b l e

Debentures and Rs. 3.00 Crores during the

financial year 2015-16 through Issue of

Unsecured Redeemable Non-Convertible

Debentures. Your Company has been regular in

discharging its liabilities to all lenders and has

established cordial relationship with them.

b. The Company has raised Rs. 23.40 Crores during

the financial year 2015–16 by the issue of urtherf

DIRECTORS’REPORT


Equity and Preference Shares on preferential

basis to strengthen the capital base and also to

leverage the debt funds. The Paid-up Share

Capital of the Company as on March 31, 2016 is

Rs. 20,71,15,000/- (including Equity Paid Capital

of Rs. 18,71,15,000/- and Preference paid Up

Capital of Rs. 2,00,00,000) as compared to Rs

8,60,55,000/- as on March 31, 2015. The capital

infusion has further strengthened your

Company's Capital Adequacy Ratio. Net Owned

Funds of your Company have increased to Rs. 33

crores as on March 31, 2016 as compared to Rs.

9. crores as on March 31, 2015 which endorses31

the investors' confidence in your Company.

FINANCIAL INCLUSION

Access to finance, especially for the poor, is

empowering, because financial exclusion often

leads to broader social exclusion. At the Reserve

Bank Conference on Financial Inclusion in April

2015, the Govt of India urged the Reserve Bank to

take further steps in encouraging financial

institutions to set concrete targets for financial

inclusion to help transform the quality of life of the

poor. Microfinance has been recognised as an

important channel in achieving financial inclusion.

Against this backdrop, the Reserve Bank of India

(RBI) has revised its policies and has raised the short-

term MFI credit limit to Rs 30,000 for short duration

(less than 24 months) from the existing level of Rs

15,000. In order to further widen the scope, it has

been decided that loan disbursed by an NBFC-MFI to

a borrower with a rural household annual income

not exceeding Rs. 60,000 has been increased to Rs.

1,00,000 or urban and semi-urban household

income not exceeding Rs. 1,20,000 has been

increased to Rs. 1,60,000. Earlier, NBFC-MFIs while

disbursing loans were required to ensure that the

total indebtedness of the borrower does not exceed

Rs. 50,000. In partial modification of the above, the

limit of total indebtedness of the borrower has been

increased to Rs.1,00,000. Education and medical

expenses will be excluded while arriving at the total

indebtedness of a borrower.

This move has enabled the customers to meet their

credit requirements in a better way. Moreover, the

total number of loans disbursed by MFIs in India

grew by 42 per cent in Q2 FY15-16 compared with

Q2 FY14-15.

Your Company plays a prominent role in achieving

the Financial Inclusion goal by encouraging

members to open bank accounts, inculcating savings

habit, promoting financial literacy and by adopting

cashless means of disbursement so that accounts do

not remain inoperative. In the financial year 2014-15

your company took an init iat ive to make

disbursement to its clients using Banking Channel

through NEFT. The Company has made cashless

disbursement to approximately 25000 borrowers

during the financial year 2015-16.

DIVIDEND

The company has shown remarkable growth in its

operations during the financial year 2015-16 and

has earned good profits. Your Directors propose a

dividend of 8% on quity hare apital of i.e. Rs. 0.80E S C

per equity share and 9% on Optionally Convertible

Preference Share Capital i.e. Rs. 0.90 per preference

share for the year 2015-16 on prorat basis. Thea

dividend will be paid to those shareholders whose

names appear on the Register of Members as on the

record date. During the last financial year i.e. 2014-

15 your company paid dividend 5% to theof

members of the company.

REGULATORY UPDATE

Your Company being registered as NBFC-MFI (Non-

Banking Financial Company – Micro Finance

Institution) has been following all the relevant

guidelines and directions issued by the Reserve Bank

of India from time to time and other law applicables

to it.

F D IOREIGN IRECT NVESTMENT

To further strengthen the Equity base of the

company, the company has issued Equity shares to a

foreign entity 'KITARA PIIN 1501' on a premium of Rs.

26.53 during the financial year 2015-16. The said

issue is Foreign Direct Investment under the(FDI)

Automatic Route as per the guidelines issued by the

Reserve Bank of India and FEMA.

FAIR PRACTICES CODE

Midland Microfin has adopted Board approved Fair

Practices Code, which provides operating guidelines

for effective dissemination and implementation of


DIRECTORS’REPORT

responsible business practices and grievance

redressal system. Midland Microfin follows various

guidelines issued by Reserve Bank of India (RBI) and

MFIN on Fair Practices Code for NBFC-MFIs and has

also adopted Industry Code of Conduct developed

by Sa-Dhan, a self-regulatory organisation (SRO)

recognised by the Reserve Bank of India.

At the operational level, all NBFCs are required to

display prominently details of their company's

grievance redressal officer, including details of the

local office of the RBI at their branches and other

places of business, in English as well as vernacular

language, for the benefit of the customers.

Your Company has revised the Code of Conduct

along with relevant policies in line with the RBI's

amended Fair Practices Code for NBFCs as well as

MFIN code of conduct for Microfinance Industry and

the same have been displayed at its branches, in

English as well as vernacular language.

BORROWINGS

During the year under review your company has

issued 3850 Secured Non-Convertible Debentures

on preferential basis to meet the working capital

requirements of the Company. Besides this the

Company has been sanctioned various term loans

worth Rs. 7 . 5 crores from various Banks and5 0

Non–Banking Financial Institutions.

DISCLOSURES PURSUANT TO COMPANIES ACT, 2013

AND SEBI (Listing Obligations & Disclosure

Requirements) Regulations 2015.

a) Extract of Annual Return

The extract of the Annual Return as

provided under Section 92 (3) of the

Companies Act, 2013 read with Rule 12(1) of

t h e C o m p a n i e s ( M a n a ge m e nt a n d

Administration) Rules, 2014 forms part of

this report and is annexed hereto.

b) Number of Board Meetings with dates and

number of meetings attended by each

Director

During the Financial year 2015-16 our Board

met 15 times and the detail of the Board

meeting and the No. of Directors who

attended the Meeting as follows:is

Sr. Date of Strength Present

No. Meeting of Board Members

1. 6 4April 15, 2015

2. 6 5May 09, 2015

3. 6 5June 10, 2015

4. 6 4June 13, 2015

5. 6 5July 21, 2015

6. 6 5Aug. 06, 2015

7. 6 5Aug. 11, 2015

8. 6 5Aug. 22, 2015

9. 6 5Sept. 18, 2015

10. 6 5Oct. 06, 2015

11. 6 6Nov. 13, 2015

12. 6 5Dec. 21, 2015

13. 6 4Feb. 13, 2016

14. 6 3March 19, 2016

15. 7 5March 31, 2016

Sr. Name of the No. of No. of

No. Director Meetings Meetings

Held Attended

1. Vijay Bhandari 15 15

2. Amardeep Samra 15 15

3. Jagdeep S. Shergill 15 07

4. Gagan Samra 12 12

5. Shant Gupta 15 15

6. Janak Raj Gupta 01 01

7. Harpal Singh 15 05

c) Directors' Responsibility Statement

In accordance with the Provision of Section

134 (3) (c) of the Company Act, 2013, Your

Directors state that: -

1. In the preparation of annual accounts,

the applicable accounting standards

have been followed along with proper

explanations relating to material

departures if any;

2. The Directors have 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

DIRECTORS’REPORT


the end of the financial year and of the

statement of ofprofit and loss the

Company for that period;

3. Proper and sufficient care has been

taken for the maintenance of adequate

accounting records in accordance with

the Provisions of the Companies Act,

2013 for safeguarding the assets of the

Company and for preventing and

detecting frauds & other irregularities.

4. The annual accounts of the Company

have been prepared on going concern

basis.

5. The Directors have laid down adequate

internal financial controls, which were

fully operative during the financial year;

6. The Directors have devised proper

systems to ensure compliance with the

provisions of all applicable laws and that

such systems were adequate and

operating effectively.

d) Independent Directors' Declaration

The Company has received declaration of

Independence from Mr. Shant Gupta and

Mr. Janak Raj Gupta that both the

Independent Directors meet the criteria of

independence as laid down under Section

149 (6) of the Companies Act, 2013.

e) Reappointment of Director

The Company has reappointed Mr. Jagdeep

Singh Shergill as Director in the Annual

General Meeting held on September 18,

2015 for a period of 5 years.

f) C o m p a n y ' s p o l i c y o n D i r e c t o r s '

Appointment & Remuneration including

criteria for determining Qualifications,

Attributes, Independence etc.

The Nomination and Remuneration

Committee of the Company has put in place

'Fit & Proper' criteria policy for considering

the appointment and remuneration of

Directors and Key Managerial Personnel as

per the guidelines issued by RBI. The policy

c o n t a i n s d e t a i l e d p ro c e d u r e s fo r

determining qual i f icat ion, posit ive

attributes, due diligence mechanism and

reference checks for appointment of

Directors and Key Managerial Personnel.

g) Explanations or Comments by the Board on

every Qualification, Reservation or

Adverse Remarks or Disclaimer made by

Auditors in Audit Report.

M/s Ashwani Gupta & Associates, Chartered

Accountants, Statutory Auditors of the

company have audited the accounts of the

company for the financial year 2015-16 as

per the accounting standards followed in

India. There are no qual i f icat ions,

reservations or adverse remarks given by

the Auditor. The notes to accounts referred

to in Auditors' Report ha been discussedve

by the Board and are self-explanatory and

therefore, in the opinion of the Directors, do

not call for any further comments.

h) Explanations or Comments by the Board on

every Qualification, Reservation or


P ra c t i s i n g C o m p a ny S e c r e t a r y i n

Secretarial Audit Report

The Secretarial Compliance Certificate from

M/s Harsh Goyal & Associates, Company

Secretaries, Ludhiana is obtained for the

financial year ended March 31, 2016 and

there are no Qualification, Reservation,


M/s Harsh Goyal & Associates in the

Secretarial Audit Report.

i) The state of the Company's affair

Midland Microfin Limited is an RBI

registered NBFC-MFI based in Jalandhar and

is the only MFI which is based in Punjab.

Your Company operates primarily on the

Joint Liability Group lending model. As on

March 31, 2016 the company operates

through 45 branches spread over 3 states

namely Punjab, Haryana and Rajasthan and

one Union Territory of Chandigarh covering

3683 villages. As on March 31, 2016 the

borrower base of the Company is 1,31,439.


DIRECTORS’REPORT

DIRECTORS’REPORT

Midland Microfin Ltd. has impacted the lives

of many individuals and families and has

helped them earn their livelihoods.

j) Loans, Guarantees & Investments

Section 186 is not applicable to the

Company being an NBFC. However, no

Loans, Guarantees have been given and no

investment made other than in the ordinary

course of business.

k) Related Party Transactions

There are no contracts or arrangements or

transactions under Section 188 of the the

Companies Act, 2013, entered into during

the financial year ended March 31, 2016

which are not at arm's length basis. The

details of contracts or arrangements or

transactions at arm's length basis are

furnished in prescribed Form AOC-2

attached as Annexure A to this report.

l) Amounts proposed to be carried to

Reserves, if any

The Company is required to transfer 20% of

its Profit after Taxes (PAT) mandatorily to

statutory reserves as per Section 45 (IC) of

the Reserve Bank of India Act. Accordingly,

an amount of Rs 74.12 Lacs has been

transferred to statutory reserves as on

March 31, 2016.

m) Material Changes & Commitments

affecting financial posit ion of the

Company, occurring between date of

Financial Statements and the Board's

Report

There is no such material change and

commitment affecting the financial position

of the company occurring between the date

of financial statement and date of Board

Report.

n) Conservation of Energy, Technology

Absorption, Foreign Exchange Earnings &

Outgo, in manner prescribe

i) Conservation of energy

The company being an NBFC, the energy

consumed by the Company during this

period is only in the form of electricity

and diesel used in generators. The

company has allocated specific cost

budgets for the same in Head office and

all its branches to reduce electric

wast and the same is monitored onage

periodical basis. Other measures like

u s e o f L E D s , p o w e r s a v e r a i r -

conditioning equipments etc. are being

installed for conserving energy. The

company is also exploring for using

alternative source of energy. There is

no capital investment on energy

conservation equipment other than

specified above.

ii) Technology absorption

Midland Microfin Limited is using Core

Microfinance system Bankers Realm

BR.net from Bangalore based Craft

Silicon Limited. Your Company is also

looking for an upgraded / ERP based

software to meet the future needs of

the company. Your management has

had meetings with some top IT service

providers of the country and is in the

process of finalisation of new software

for the company, which would be able to

cater with the future requirements in

the long run.

iii) Foreign exchange earnings and Outgo

The Foreign inflow for the company

during the year is Rs. 14,99,92,180.00/-

on account of raising fresh FDI.

There was no foreign exchange Outflow

during the year under review.

o) Development & Implementation of Risk

Management Policy

Risk is an integral part of your Company's

business, and sound risk management is

critical to the success of the organisation. As

a financial intermediary, your Company is

exposed to risks that are typical to itscertain

lending and the environment within which it

operates. Your Company has developed and


i m p l e m e nte d co m p re h e n s i ve R i s k

Management Policy and Procedures to

assess, monitor and manage risk . The risks

management process is continuously

updated and adapted to the changing global

risk scenario.

Your Company has an elaborate process for

risk management. Major risks identified by

t h e b u s i n e s s e s a n d f u n c t i o n s a re

syste m at i ca l l y a d d re s s e d t h ro u g h

mitigating actions on a continuous basis.

These are discussed with both the

Management and the Audit Committee and

the corrective measures are advised. The

Audit Committee of the Board reviews the

risk management policies in relation to

various risks and regulatory compliance

issues. The Company is following strict

policies to mitigate risk . Strong ands

efficient policies have been developed by

HR & IT department to control Internal &s

External Risks. The IT department ensures

daily reporting that reduces the quantum of

the risk to a large extent. Further with the

infusion of the upcoming IT products we are

confident to further reduce the level of risk

in the organisation. The HR department

carries out various training & development

exercise throughout the year for the same.s

Moreover a team of external auditors

conduct a quarterly Audit of Credits and

other departments, which is also helpful in

determining the bottlenecks in the

organisation and is a constant source of

improvement of the processes.

p) Detail of CSR Policy and its implementation

The mission and objective of your company

is to provide a range of financial services to

the economically active poor to enable its

customer to lead a better life and to improve

their quality of li . Though theving provisions

of Section 134(3) are not applicable to the

company, still your company is aware of its

social responsibilities and has taken various

steps for the same. With the philosophy of

going beyond microfinance, Midland

Microfin -has made tie ups with various

organisations:-

i) Hindustan Unilever Limited: With the

help of Hindustan Unilever Ltd our

company's endeavour is to provide

access to clean water to its members

and their families, by providing them an

additional loan to purchase HUL offline

water purifiers ('PUREIT').

ii) Rita Machines India Pvt. Ltd With the:

help of Rita Machines India Pvt. Ltd the

Company is able to provide sewing

machines and after sale services of

outstanding quality to its borrowers at a

low cost.

iii) Kotak Sampooran Bima Your Company:

has taken a new initiative to strengthen

our members' current position. The

Company has collaborated with Kotak

Life Insurance and provided 'Kotak

Sampooran Bima Micro-Insurance Plan'

to its borrowers meant for catering to

the needs of low income. At a small

premium of Rs. 200 to be paid once, this

plan will provide a fixed maturity benefit

to the borrowers for a period of 5 years.

q) Board Evaluation

Pursuant to the provisions Companies Act,

2013, the Board has carried out an annual

performance evaluation of its own

performance, the Directors individually

as well as the evaluation of the working

of its Audit Committee, Nomination and

Remuneration Committee and Board

Management Committee.

The performance of the Board is evaluated

by each individual director as well as

collectively by the Board on Annual Basis

towards the end of financial year. The

Board performance is evaluated on the

basis of number of Board and Committee

meetings attended by an individual director,

participation of a director in the affairs of

the company, duties performed by each

director during the year.

r) Change in the composition of the Board of

Directors/ Key Managerial Personnel

during the year


DIRECTORS’REPORT

DIRECTORS’REPORT

Board of Directors of Midland Microfin Ltd. as on

March 31, 2016

DIN. Name of Designation Qualification/

Director Category

00052716 Vijay Kumar Chairman- B.Com (Hons),

-Bhandari Non Executive F.C.A.

00649442 Amardeep Managing B.C .om

Samra Director

0 om1571485 Shant Gupta Independent B.C ., L.LB.

07070314 Harpal Singh Non-Executive B.Sc., ACA

0 om0440955 Jagdeep Singh Non-Executive B.C ., L.LB.

0 Gupta7473685 Janak Raj Independent F.C.A.

0 Kamath .1592593 Sachin Nominee F.C.A

Director

The Board of irectors of the company isD

duly constituted in accordance with the

provisions of the Companies Act, 2013 and

RBI regulations. Mr. Vijay Kumar Bhandari

shall retire by rotation at the Annual

General Meeting, and being eligible offer

himself for reappointment.

Mrs. Gagan Samra resigned from the

directorship of the Company on January 06,

2016. The Board places on record the

appreciation of the guidance given by Mrs.

Gagan Samra during her tenure as director.

Mr. Janak Raj Gupta and Mr. Sachin Kamath

were appointed as Additional Directors of

the company on MarchMarch 19, 2016 and

31, 2016 . Mr. Janak Raj Gupta isrespectively

a Fellow member of Institute of Chartered

Accountants of India. He has a rich

experience of more than 35 years carryingin

out the of Manufacturing and ServiceAudit

Companies including Audit of Non-Banking

Finance Companies bywhich are regulated

Reserve Bank of India. Mr. Janak Raj Gupta

has been appointed as Independent

Director subject to the approval of members

in Annual General Meeting.

Mr. Sachin Kamath is an experienced Global

Asset Manager with a stellar track record in

managing multi-million dollar investment

across geographies and asset classes. He is

one of the founder members of Kitara

Capital International Limited. He started his

career in 1985 with ICICI Limited and

completed his Chartered Accountancy in

1989. He has worked in various positions in

the field of investments for Paradigm

Investments Pvt Ltd; BOI Mutual Fund and

JV Gokal Group in India before he left to join

Ajit Khimji Group of Companies in Oman as

Chief Investment Officer. He has headed and

managed the investment division of the

group for over a decade involving turnover

of assets above US$450 million across

various asset classes and countries viz: US,

UK, France, China, Middle East, Singapore

and India. Mr. Sachin Kamath is a Nominee

Director of K P 1501 .‘ ITARA IIN ’

Both the directors shall hold the officese

upto the date of forthcoming Annual

General Meeting (AGM) and are eligible for

reappointment. The company has received

notices from the members regarding their

reappointment as Directors of the

Company. The Board recommends their

appointment.

Appointment of Key Managerial Personnel

The following are the KMPs as on March 31,

2016. Ms. Sonia Dua was appointed as the

Company Secretary of the company w.e.f

November 1, 2015 after the resignation of

Mr. Preetpal Singh Bedi Company Secretary,

Name Designation

Mr. Amardeep Samra Managing Director

Mr. Amitesh Kumar Chief Financial Officer

Ms. Sonia Dua Company Secretary

s) Name of the Companies which have

become / ceased to be Subsidiaries /

Associates or Joint Ventures during the

year

The Company does not have any Subsidiary,

Joint venture or Associate Company.

t) Prescribed details of Deposits under

Chapter V

The company is a non-deposit accepting

NBFC-MFI. The company has neither

accepted any Public deposit during the year

2015-16 nor any Publ ic depos i t i s

outstanding as on March 31, 2016.


u) Details in respect of adequacy of Internal

Controls with reference to Financial

Statements

A statement of adequacy of Internal

Controls with reference to financial

statements is attached with regard to this

has been enclosed with Auditors report.’

v) Vigil Mechanism

Section 177 of the Companies Act, 2013,

read with Rule 7 of the Companies

(Meetings of Board and its Powers) Rules

2014 provides for establishment of vigil

mechanism for directors and employees.

Midland Microf in has framed Vigi l

Mechanism to report concerns to the

management, about unethical behaviour,

actual or suspected fraud or violation of the

company's code of conduct or ethics policy,

without any fear or threat of being

victimised. The Audit Committee of the

Company reviews the functioning of Vigil

Mechanism half yearly to ensure its

effectiveness. Any employee or director of

the Company can approach Chairman of the

Audit Committee and/ or Ethics Counsellor

for reporting genuine concern of actual or

probable violation of Company's code of

conduct.

w) Disclosure in respect of any MD / WTD

receiving commission from a company and

a l s o r e c e i v i n g c o m m i s s i o n o r

remunerat ion from its Holding or

Subsidiary Company

Details of Remuneration of Mr. Amardeep

Singh Samra, Managing Director of the

Company, during the financial year 2015-16

is being attached in point IX (Remuneration

of Directors and Key Managerial Personnel)

of MGT-9.

x) Ratio of Directors' Remuneration to

Median Employees' Remuneration and

Other Disclosures

Information as per Rule 5(1) of Companies

(Appointment and Remuneration of Managerial

Personnel) Rules, 2014 is as under –

1. Mr. Amardeep Singh Samra, Managing

Director of the Company has received an

annual gross salary of Rs. 28,08,000/-

during the Financial Year 2015-16.

2. Average increase in remuneration of Chief

Financial Officer is 29.75% in the financial

year 2015-16.

3. The percentage increase in the median

remuneration of the employees in the

financial year was 9.14%.

4. The number of permanent employees on

the rolls of the Company was 3 during the09

financial year 2015-16.

5. The business and profitability of the

Company has increased approximately

100% in line with the expansion and

diversification plan and so is the average

i n c r e a s e i n R e m u n e ra t i o n o f t h e

employees.

6. The KMPs are primarily responsible and

instrumental in achieving the goals of the

Company and the increase in remuneration

is suitable as compared to the performance

of the Company.

7. The Equity Shares of your Company are not

listed on any stock exchange in India and

therefore no disclosure is required under

sub clause (vii) of the said rules with respect

to Listed Companies. The Net Owned Funds

of the Company increased to Rs. 3 crores3

during the financial year as compared to Rs.

9. crores last year.31

8. Increase in remuneration of employees

depends upon var ious factors l ike

qualification, experience, performance,

length of service etc. Your Company being a

growing organisation, the increase in KMPs

remuneration who are instrumental in the

growth of the company since the MFI

business is not proportionate to the average

increase in remunerat ion of other

employees who are joining at various

intervals and at different levels.

9. The remuneration given to the KMPs is

inconsistent to the significant performance

of the Company.

10. None of the Directors were in receipt of any

variable remuneration during the year


DIRECTORS’REPORT

DIRECTORS’REPORT

2015-16.

11. Mr. Amardeep Singh Samra, Managing

Director of the Company has received an

annual gross salary of Rs. 28,08,000/- during

the Financial Year 2015-16. No Director

other than the Managing Director of the

Company has received any remuneration

other than the Siting ee for the financialF

Year 2015-16.

12. The Company hereby affirms that the

remuneration paid to employees of the

Company during the financial year 2015-16

is as per the terms of remuneration policy of

the Company.

Information as per Rule 5 (2) of Companies


Personnel) Rules, 2014

There are no employees in the Company

drawing salary of Rs 60,00,000/- per annum or

Rs 5,00,000/- per month or more; and none of

the employees are relatives of Directors.

Moreover, none of the employees of the

Company hold by himself or along with his

spouse or dependent children two percent or

more equity shares of the Company.

Hence, disclosure of information in this report in

respect of Particulars of such Employees as

requi red by Rule 5 (2) of Companies


Personnel) Rules, 2014 does not apply.

y) Issue of Equity Shares with Differential

Rights, Sweat Equity, ESOP etc.

The company has not issued any equity

shares with Differential Rights, Sweat

Equity, ESOP etc.

AUDITORS AND AUDIT REPORT

M/s Ashwani Gupta & Associates, Chartered

Accountants, Jalandhar, Statutory Auditors of the

company have audited the accounts of the company

for the financial year 2015 – 2016 as per the

accounting standards followed in India. There noare

qualification , reservations or adverse remarkss

given by the Auditors, which need comments by the

Board. The notes to accounts referred to in Auditors'

Report have been discussed by the Board and are

self-explanatory and therefore, in the opinion of the

Directors, do not call for any further comments.

CUSTOMER SERVICE

Midland Microfin believes that the strong culture of

service that has nurtured throughout the previous

year will help in building still deeper relationship

with its customers. Midland Microfin focuses on

long-term relationship with customers for

meaningful impact. Our business model combines

the unique methodology of selecting and servicing

customers in the field with the help of latest

technology and robust processes at the back office.

The target segment of the Company is Rural, Semi-

urban and rban women.u

The company has focused on income generation

activities to support the livelihood and inclusive

growth. During the year, Midland Microfin focused

on achieving healthy customer retention rate and

has been successful in this endeavour. The key

drivers of the improved retention rate were

innovative field, credit and backend processes

supplemented with strong comprehensive service

quality programs as listed below –

- Strong and independent credit approval

process

- Innovative field and backend processes

- Reduct ion of turn-around-t ime by

Document Management System through


File Transfer Protocol (FTP) server

- Strong customer service and grievance

redressal mechanism to proactively resolve

service issues. Direct rapport with the

customers through centralised Customer

Helpline Department.

- Greater transparency of our services,

effective dissemination of terms &

conditions to customers through various

channels

CUSTOMER GRIEVANCE REDRESSAL

As per RBI and MFIN guidelines your company has an

appropriate grievance redressal mechanism within

the organisation to resolve disputes between the

company and its customers. The mechanism is to

ensure that all disputes arising out of the decisions

of lending institution's functionaries are heard and

disposed of at least at the next higher level.

Grievance Redressal at Branch Level – your

company has placed suggestion cum

complaint boxes in all the branches as the

customers' first point of contact for any query

resolution. Due to low literacy and vulnerable

backgrounds , our customers f ind i t

convenient talking to someone face-to-facein

rather than calling a remote helpdesk, hence

we have given importance to placement of

suggestion cum complaint boxes in all our

branches.

Toll Free Customer Helpline-Your company

has dedicated toll free customer helpline

number, which has been displayed in all the

branches, and the number has also been

given on all the loan cards and applications.

The Help Desk ensures that all queries are

tracked, resolved and if required, escalated

on a timely basis.

Grievance Redressal Officer – Your Company

has appointed Grievance Redressal Officer

(GRO) at Head Office for 3rd level escalation.

GRO monitors customer grievances at all the

levels and is responsible for ensuring timely

resolution of all complaints through CCRs and

Help Desks. A report on status of customer

grievances is periodically reviewed at various

levels of Management and the Board for

decision making and minimising complaints.

STAFF AND CUSTOMER EDUCATION ON CODE OF

C O N D U C T A N D G R I E VA N C E R E D R E S S A L

MECHANISM

To ensure an effective implementation of Code of

Conduct and Grievance Redressal Procedures(CoC)

in its true spirit, we undertook several initiatives to

educate our customers and field staff during past

couple of years :-

· Our field staff is trained on CoC & Grievance

Redressal Procedure and on their role in

effect ive implementat ion of Cl ient

Protection Principles (CPPs) through sharing

of best practices and role plays.

· Policies on CoC and Grievance Redressal

Mechanism have been prominently

displayed at all branch premises in

vernacular language

· Helpline numbers have been displayed and

other disclosures as per Transparency

standards of RBI and Client Protection

Principles made on our loan card/loan

agreements

· A section on grievance redressal has been

integrated into the customer Mandatory

Group Trainings (MGTs) for new customers

and helpline numbers with escalation

matrix have been prominently displayed in

the MGT brochures

Our efforts at customer education during the years

have paid off with an increasing number of

customers approaching our grievance redressal

channels for their queries

INSTITUTIONAL RATINGS & GRADING

The grading of y beenour Company has upgraded to

MFI 2 (MFI Two) from MFI 3+ (MFI Three Plus) from

CARE Ratings in July 2015 that indicates the ability of

your Company to conduct the microfinance

operations in a more scalable and sustainable

manner. The Company has got its Bank Loan ratings

from CARE Ratings & Brickwork Ratings and Code of

Conduct Assessment from SMERA Ratings Ltd.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has a proper and adequate system of

internal control geared towards achieving efficiency,

safeguarding the assets, optimum utilization of


DIRECTORS’REPORT

DIRECTORS’REPORT

resources and compl iance with statutory

regulations. Your company has a vigilant process to

prevent and control risk involved in process ofs

disbursing loan to the borrowers. The company has

continued its efforts to align its process andes

control with best practices and has put in place as

process wise internal control framework across the

company. The internal Auditors of the Company

conduct internal audit of various departments of the

company and evaluate the adequacy and

effectiveness of internal controls.

CORPORATE GOVERNANCE

Your Company is committed to best practices inthe

corporate governance and recognises that

transparency, ethical behaviour, integrity and

protection of the interest of all the stakeholders

form the keystones of the Governance. As per

guidelines on Corporate Governance for Non-

Banking Financial Companies (Non-Deposit

Accepting or Holding) issued by the Reserve Bank of

India, the Company has an Audit Committee to

ensure strong internal controls and corporate

reporting systems including financial reporting. The

Composition of Audit Committee as on March 31,

2016 is as under –

· Mr. Vijay Kumar Bhandari

Non-Executive Director - Chairman

· Mr. Shant Gupta

Independent Director - Member

· Mr. Janak Raj Gupta

Independent Director - Member

The Company has voluntarily adopted Code of

conduct for Board and Board Committees, which

ensures highest standards of ethical and responsible

conduct of business.

The Company has various committees to oversee

the critical areas of the Company namely;

Nomination & Remuneration Committee, Audit

Committee and Board Management Committee.

The details of each committee are provided

separately in this report.

COMPLIANCE CERTIFICATE

The Secretarial Compliance Certificate from M/s

Harsh Goyal & Associates, Company Secretaries is

obtained for the financial year ended March 31,

2016.

MANAGEMENT DISCUSSION & ANALYSIS

The Management Discussion & Analysis report,

highlighting the important aspects of business,

forms part of this report.

ACKNOWLEDGEMENT

The Directors takes this opportunity to express their

deep and sincere gratitude towards the support,

guidance and co-operation received from the

Government of India, Reserve Bank of India, other

Regulatory Authorities, Investors, Accountants,

Lawyers, Advisors, other statutory bodies. The

Board would also like to acknowledge and

appreciate its commitment and contribution shown

by the employees of the Company in supporting the

company in its endeavour to achieve its targets and

objective. Your Directors would also like to express

their gratitude to the members, Bankers andwards

other stakeholders for their trust and support.

For and on behalf of Board of Directors

Sd/- Sd/-

Amardeep Singh Samra Shant Gupta

Managing Director Director

D May 10, 2016ate :

Place: Jalandhar


Financial Year 2015-16 has been a golden year in the

Company's history with excellent growth in business

and operations.

Industry Structure

Unlike earlier years, when Indian Microfinance

sector was facing difficult times, today, the

microfinance sector in India has emerged from the

time of crisis to a preferred sector for the

Government and the Stakeholders. Due to

Government bringing in regulations and policies on

Microfinance and furthering financial inclusion, the

microfinance industry has matured with stronger

institutions.

With the launch of Micro Units Development and

Refinance Agency (MUDRA), Regulatory Policies by

RBI, Issuance of Small Finance Bank approvals to 8

MFIs and stronger interventions by Credit Bureaus,

Microfinance sector in India has become robust with

brighter prospects in future.

Developments

In financial year 2015-16 Microfinance sector in

India marked a new beginning. As of March 31, 2016,

MFIs provided microcredit to 3.25 Crore clients, an

increase of 44% over financial year 2014-15. The

aggregate gross loan portfolio (GLP) of MFIs stood at

Rs. 53,233 Crores, representing an year on year

growth of 84% in the financial year 2014-15.

Annual loan amount disbursed in financial year

2015-16 reached Rs 61,860 Crores, representing

increase of 65% compared to financial year 2014-15.

Portfolio at Risk (PAR) figures remained under 1 %

for financial year 2015-16. MFIs now cover 30

states/union territories. Productivity ratios for MFIs

continued to move upwards.

Particulars 2016 2015 Increase

Disbursements (Cr.) 61860 37599 65%

Gross Loan Portfolio (Cr.) 53233 28940 84%

No. of Borrowers (Cr.) 3.25 2.26 44%

No. of Employees 85888 62407 38%

No. of Branches 9669 7934 22%Source - MFIN Micrometer, 2016

Opportunities and Threats

Opportunities

The Microfinance industry continues to be one of

the sectors in India having a huge potential for

sustainable growth, based on industry reports

according to MFIN Micrometer, as on March 31,

2016.

The MFI industry GIP grew by 84%, while the

disbursements during the year grew by 65%. The

industry grew by 69% in financial year 2015-16 and

47% in financial year2014-15. As on March 2016, the

MFI industry served 3.25 Crore clients.

World Bank and ED a rural System's reports indicate

that 150 Million (15 Crore) households in India

require microcredit with an average credit

requirement per household at Rs. 20,000. This

translates into an annual aggregate demand of

Rs.2,40,000 Crores for microcredit in India (post 20%

downward adjustment for inaccessible households

in rural and urban areas).

Hence there is a huge demand-supply gap and a

large part of this gap is currently being met by

informal sources, including moneylenders.

Considering the above mentioned facts, Reserve

Bank of India (RBI) has revised its policies and has

raised the short-term MFI credit limit to Rs 30,000

for short duration (less than 24 months repayment)

from the existing level of Rs 15,000. In order to

further widen the scope, it has been decided that

loan disbursed by an NBFC-MFI to a borrower with a

rural household annual income not exceeding Rs.

60,000 has been increased to Rs. 1,00,000 or urban

and semi-urban household income not exceeding

Rs. 1,20,000 has been increased to Rs. 1,60,000.

Earlier, NBFC-MFIs while disbursing loans were

required to ensure that the total indebtedness of the

borrower does not exceed Rs.50,000. In partial

modification of the above, the limit of total

indebtedness of the borrower has been increased to

Rs.1,00,000. Education and medical expenses will be

excluded while arriving at the total indebtedness of

a borrower.

Threats

Microfinance sector in India is now being regulated

by Reserve Bank of India. But still it continues to be

exposed to certain inherent business risks. Few of

the threats are:

Credit Risk: Microfinance borrowers belong to low

income group, hence are more prone to default as

the loan is given without any collateral security.

MANAGEMENTDISCUSSION & ANALYSIS


Lack of awareness: There is a lack of awareness

amongst rural people regarding Microfinance

companies.

Unequal distribution: In India MFI outreach is very

low as compared with its requirements and

potential. Microfinance sector in India is also facing

a problem of unequal geographical growth of

Microfinance institutions. Most of the Microfinance

institutions are located in southern states.

Improper usage of Loan: Loan raised through

microfinance might be used for consumption

purpose and not for productive purpose. This does

not serve the real purpose of Micro-credit.

Lack of access to Funding: Another factor

contributing to the lack of growth in MFIs is that

requisite financial support has not been provided to

MFIs by concerned agencies.

High operational cost: High transaction cost is a big

challenge for microfinance institution. The volume

of transactions is very small, whereas the fixed cost

of those transactions is high.

Outlook

Microfinance is very significant in India to achieve

financial inclusion of the poor in the rural and urban

areas. Lending to the poor population if handled in

an effective manner can be a miracle for the

development of the country and alleviation of

Poverty. MFIs are the institutions offering financial

services to low income financially excluded people.

They have been proactive in the process of

comprehensive growth in India by their novel

approach. They have enthused with the passage of

time. With the provision of financial and social

services and helping the members put into practice

repayment ethics and social unity they can be

solution for rural poverty and backwardness. They

have huge potential not only as a system of peer-to

peer (p2p) lending but also as an opportunity of

social bonding.

As mentioned above, the huge gap in demand and

supply in micro credit in India and that a large part of

this gap is serviced by informal sources, including

moneylenders, represents an attractive business

opportunity for growing MFIs such as Midland

Microfin Limited. The company believes that, with

its operating strength and focus on penetration in

the other states alongwith its enhanced penetration

in Punjab, Haryana and Rajasthan, it will be able to

capture a significant share of the demand for micro

credit in India.

Segment-wise/product wise performance

The Company has really done well in financial year

2015-16, the company overachieved all its set

targets. In the financial year 2015-16 the company

also crossed the benchmark of Rs. 100 Crores loan

portfolio, the current loan portfolio of the company

is Rs. 144 Crores as on March 31, 2016. The company

has designed various products, keeping in view the

requirements of the borrowers and the guidelines

issued by the Reserve Bank of India from time to

time

Product –wise break up as on March 31, 2016:

(Rs. in Crores)

Loan Total Total

Product Loans Outstanding

BL 103109 90.40

BL2 10618 20.61

BL3 2516 4.87

BL4 120 0.19

BSM 7317 1.57

PRG 15490 24.88

PRG1 377 0.67

SWM1 215 0.06

SWM2 2328 0.56

WPL12M 1063 0.24

WPL9M 32 0.01

Total 143185 144.06

Risks and concerns

Risk is an integral part of the company's business,

and sound risk management is critical to the success

of the organisation. As a financial intermediary, the

company is exposed to risks that are peculiar to its

lending and the environment within which it

operates. The company has identified and

implemented comprehensive pol ic ies and

procedures to assess, monitor and manage risk

throughout the company. The risk management

process is continuously improved and adapted to

the changing risk scenario and the agility of the risk

management process is monitored and reviewed for

its appropriateness in the changing risk landscape.



The company has an elaborate process for risk

management. Major risks identified by the

businesses and functions are systematically

addressed through mitigating actions on a

continuing basis and are discussed with both the

Management and the Audit committee. Some of the

risks relate to competitive intensity and the

changing legal and regulatory environment. The

Audit committee of the board reviews the risk

management policies in relation to various risks and

regulatory compliance issues

Internal Control System and their Adequacy

The company has a well-established Internal audit

Department, which ensures adherence to systems,

policies and procedures to maintain financial

discipline. The Internal Audit Department aims at

checking the operational risks through its control

mechanism and by conducting bimonthly inspection

of branches. Based on the audit observations and

scores, the branches are assigned grades of A, B, C or

D. The internal audit team also carries out other key

activities such as area cross-checks for new

branches, survey of branch working areas, negative

area crosschecks, fraud investigations and special

audits. Based on the guidelines received on various

issues of control from the reserve bank of India and

the Government of India, the company's Board of

Directors and the Audit Committee of the Board

have become part of the Internal control system for

better compliance at all levels.

T h e c o m p a ny ' s i n t e r n a l c o n t r o l sy s t e m

commensurates with the nature of its business and

the size and complexity of its operations. These are

regularly tested and cover all branches, cluster

offices and the Head Office. Significant audit

observations and follow-up actions thereon are

reported to the audit committee.

The audit committee of the board oversees the

internal audit function of the company. The audit

committee reviews the adequacy and effectiveness

of the company's Internal Control System, and

m o n i t o r s t h e i m p l e m e n t a t i o n o f a u d i t

recommendations including those related to

strengthening of the company's risk management

policies and systems. The audit committee monitors

compliance with inspection and audit reports of the

Reserve Bank of India, other regulators and

statutory auditors.

Midland Microfin Limited believes that technology

combined with innovation and business process,

brings in the greatest return. Pursuing this line, the

company has focused on advanced technology

solutions. It has always emphasised on having strong

IT infrastructure to efficiently run the backend

business operations and deliver efficient financial

services to customers. With the growing pace of

business operations, the company needs to capture

more data and undertake new processes to meet

regulatory requirements. Considering the pace of

development, the company has decided to switch to

an upgraded software to meet the existing and

future business requirements. The main aim behind

switching the application is to enhance productivity,

business intelligence and to get complete solution

for its processes and Risk Management. The same

would also help in critical analysis for better decision

making. Moreover, the new software application

would be able to provide the services required by

the Company such as e-KYC Integration, Asset

Management, MIS, Workflow Configuration and

Mobility Solutions etc.

Human Resource Management

Company banks upon the significant contribution of

its field employees in embarking on a new growth

journey. During financial year 2015-16, the company

continued to show signs of positivity and growth,

providing the Management an appetite for

enhancing potential and driving growth and

development of its people. Company continued to

conduct various training programme for enhancing

potential and providing growth opportunity to its

people. Company ensured that field trainees, the

first entry level employees of the organisation are

welcomed in the right way and the right spirit by

providing them proper induction training for seven

days in order to make them familiar with all the

aspects, policies and processes of the Company.

The new initiatives of the Human Resource

Department this year include several policy level

changes for the benefit of the employees.

1) Change in Incentive and Appraisal policies of

the Company to give a better incentive

structure to the employees.

2) HR Department conduct Mid-Termed

Appraisal and Annual Promotion Exercise



during the financial year 2015-16 also The

Company provided monetary benefits in

terms of performance incentives to its

employees.

3) To enhance the performance and efficiency

of the employees various in-house and,

outdoor training programs are conducted

which are as follows –

I. – Before joining, theExposure Visit

perspective employee is provided 3 – 5

days of field exposure visit to make

him aware the roles and/her about

responsibilities and commitment

towards the organisation.

ii. Induction Training – Post Field , 7visit

days Induction Training is provided to

the employees which helps them to

acquire requisite skills to perform their

jobs as well as develop thorough

knowledge about their f ie ld of

operation. IT training is also provided

after the completion of the operational

training.

iii. Refresher Training – Various Refresher

Training programmes are conducted

throughout the year at Head Office and

Cluster Offices to keep the employees

abreast with latest skills required for

performing their respective jobs.

iv. Transition Training – Transition Training

is provided to the employees who are

due for promotion for the assignments

and challenges in the next level of

hierarchy. The main objective is to help

them perform their new roles more

effectively and efficiently.

4) The company organises a number of

recreat ional act iv i t ies to keep the

employees motivated and to strain their

work pressure. The Company organised

second Midland Cricket League – 2015 in

October. The employees and the top

management of the Company participated

with a great enthusiasm and zeal and made

event a great success.

5) Annual Establishment Day of the Company

was celebrated on January 2, 2016. It is a

platform for its employees to showcase their

talent. Various activities like Cultural

Dances, Plays, Stand-up Comedy, Songs,

Choreographies etc. were performed by the

employees. On this occasion the Company

also honour the top performers of the

company by awarding them for their

outstanding and exemplary performances.

6) To reward the performance of outstanding

employees on annual basis, the company

organised a Chairman's Club for three day at

Mumbai. Like every year, top management

also took part in this trip giving our

employees an ample opportunity to

intermingle with their peers & seniors.

During financial year 2015-16, there was a net

addition of 26% manpower at various levels. As on

31st March, 2016, the overall employee strength of

the company was 309.


Sd/- Sd/-



D May 10, 2016ate :

Place: Jalandhar



Name of Description Nature of Volume of Outstanding Amount

Related Party of Transaction Transaction amount as at written off or

Relationship (Amt. in Rs.) 31-3-2015 written back

(Amt. in Rs.) (Amt. in Rs.)

Mr. Amardeep Key Managerial Rent Nil Nil216000.00Singh Samra Personnel Remuneration Nil Nil2808000.00

Sitting Fees 22000.00 Nil NilGuarantees 520000000.00 Nil499027966.00

Mr. Amitesh Key Managerial # Remuneration Nil Nil1508168.00Kumar Personnel

Mr. Preetpal Key Managerial # Remuneration Nil Nil216336.00Singh Personnel

Mrs. Sonia Dua Key Managerial # Remuneration Nil Nil103871.00Personnel

Mr. Amarjit Relative of Rent Nil Nil291000.00Singh Samra Key Managerial

Personnel

Mrs. Surinder Relative of Rent Nil Nil291000.00Kaur Samra Key Managerial

Personnel

Mr. Sarvjit Relative of Rent Nil Nil216000.00Singh Samra Key Managerial

Personnel

Mrs. Gagan Relative of Rent Nil Nil108000.00Samra Key Managerial Sitting Fees 10000.00

Personnel

Kitara PIIN 1501 Enterprise that * Finance Nil149992180.00 149992180.00have control (Equity)

over thecompany

Form No. AOC-2(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Ruld 8(2) of the Companies (Accounts) Rules, 2014)

1.Details of contracts or arrangements or transactions not at arm’s length basis - NIL

2. Details of material contaacts or aggrangements or transactions at arm’s length basis-


Sd/- Sd/-



ate :D May 10, 2016

Place: Jalandhar

# Remuneration means the Gross Remuneration without any deductions.* Equity includes Security Premium Reserve.

ANNEXURE-A


MGT-9



Sd/- Sd/-



D May 10, 2016ate :

Place: Jalandhar


MGT-9

Funding Structure Return on Total Assets & Return on Equity

31-3-12 31-3-13 31-3-14 31-3-15 31-3-16

31-3-12 31-3-13 31-3-14 31-3-15 31-3-16

.75

1.5

2.25

3

3.75

4.5

5.25

6

6.75

PBT PAT

Total Assets & Portfolio

Profit Before Tax & Profit After Tax

PortfolioTotal Assets

31-3-12 31-3-13 31-3-14 31-3-15 31-3-16

31-3-12

31-3-13 31-3-14 31-3-15 31-3-16

KEY PERFORMANCEINDICATORS

ROTA ROE


KEY PERFORMANCEINDICATORS

Disbursements and Customer Base

No. of Branches No. of Employees

No. of Branches No. of Employees


The Members,

Midland Microfin Limited ,

Jalandhar.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence

to good corporate practices by Midland Microfin Limited.

1. The maintenance of secretarial records is the responsibility of the management of the company. Our

responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance

about the correctness of the contents of the Secretarial records. The verification was done on test basis to

ensure that correct facts are reflected in secretarial records. We believe that the processes and practices,

we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the

company.

4. Where ever required, we have obtained the Management representation about the compliance of laws,

rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the

responsibility of management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the

efficacy or effectiveness with which the management has conducted the affairs of the company.

For Harsh Goyal and Associates

Company Secretaries

Sd/-

Harsh Kumar Goyal

FCS 3314

C. P. No.: 2802

Place: Ludhiana

Dated: May 10, 2016

SECRETARIALAUDIT REPORT


The Members,

Midland Microfin Limited,

Jalandhar.

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence

to good corporate practices by Midland Microfin Limited (hereinafter called the company).

Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate

conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Midland Microfin Limited's books, papers, minute books, forms and returns filed

and other records maintained by the company and also the information provided by the Company, its officers,

agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our

opinion, the company has, during the audit period covering the financial year ended on 31.03.2016 complied

with the statutory provisions listed hereunder and also that the Company has proper Board-processes and

compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by

the Company for the financial year ended on 31.03.2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of

Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

(v) The following applicable Regulations and Guidelines prescribed under the Securities and Exchange Board

of India Act, 1992 ('SEBI Act'):-

a) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

b) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents)

Regulations, 1993 regarding the Companies Act, 2013 and dealing with client;

c) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The following regulations and Guidelines of SEBI are not applicable to the company as only the debt securities

are listed:

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 2011;

b. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992

c. The Securities and Exchange Board of India (Issue of Capital and Disclosure requirements) Regulations,

2009;

d. The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock

Purchase Scheme) Guidelines, 1999;

e. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

f. The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998;

(vi) Reserve Bank of India Act, 1934 and directions, regulations and circulars issued therein relating to Non

Banking Finance Companies – Micro Finance Institutions.



We have also examined compliance of the applicable Secretarial Standards issued by The Institute of Company

Secretaries of India.

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations,

Guidelines, Standards, etc. mentioned above.

We further report that the Board of Directors of the Company is duly constituted with proper balance of

Executive Directors, Non-Executive Directors, Independent Directors and Women Director. The changes in the

composition of the Board of Directors that took place during the period under review were carried out in

compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda

were sent at least seven days in advance, and a system exists for seeking and obtaining further information and

clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members' views are captured and recorded as part of

the minutes, wherever applicable.

We further report that there are adequate systems and processes in the company commensurate with the size

and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and

guidelines.

For Harsh Goyal and Associates

Company Secretaries

Sd/-

Harsh Kumar Goyal

FCS 3314

C. P. No.: 2802

Place: Ludhiana

Dated: May 10, 2016



statements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and 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

financial control relevant to the Company's preparation

of the financial statements that give a true and fair view in

order to design audit procedures that are appropriate in

the circumstances. An audit also includes evaluating the

appropriateness of accounting policies used and the

reasonableness of the accounting estimates made by the

Company's Directors, 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 on the

financial statements.

Opinion

In our opinion and to the best of our information and

according to the explanations given to us, the 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 of the state of affairs of the Company as

at March 31, 2016, its profit and its cash flows for the year

ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's report)

Order, 2016 (“the Order”) issued by the Central

Government of India in terms of sub-section (11) of

section 143 of the Act, we give in the Annexure 1, a

statement on the matters specified in paragraphs 3

and 4 of the Order.

2. As required by section 143 (3) of the Act, we report

that:

(a) We have sought and obtained all the information and

explanations which to the best of our knowledge and

belief were necessary for the purpose of our audit;

(b) In our opinion proper books of accounts as required

by law have been kept by the Company so far as it

appears from our examination of those books and

proper returns adequate for the purposes of our audit

have been received from branches not visited by us;

(c) The Balance Sheet, Statement of Profit and Loss, and

To the Members of Midland Microfin Limited

Report on the Financial Statements

We have audited the accompanying financial statements

of Midland Microfin Limited (“the Company”), and its

branches which comprise the Balance Sheet as at March

31, 2016, the Statement of Profit and Loss and Cash Flow

Statement for the year then ended, and a summary of

significant accounting policies and other explanatory

information.

Management's Responsibility for the Financial

Statements

The Company's Board of Directors is responsible for the

matters stated in Section 134(5) of the Companies Act,

2013 (“the Act”) with respect to 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 accounting principles

generally accepted in India, including the Accounting

Standards specified under section 133 of the Act, read

with Rule 7 of the Companies (Accounts) Rules, 2014. This

responsibility also includes maintenance of adequate

accounting records in accordance with the provisions of

the Act for safeguarding of the assets of the Company and

for preventing and detecting frauds and other

irregularities; selection and application of appropriate

accounting policies; making judgments and estimates

that are reasonable and prudent; and the design,

implementation and maintenance of adequate internal

financial control that were operating effectively for

ensuring the accuracy and completeness of the

accounting records, 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these

financial statements based on our audit. We have taken

into account the provisions of the Act, the accounting and

auditing standards and matters which are required to be

included in the audit report under the provisions of the

Act and the Rules made thereunder. We conducted our

audit in accordance with the Standards on Auditing,

issued by the Institute of Chartered Accountants of India,

as specified under Section 143(10) of the Act. Those

Standards require that we comply with ethical

requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial

AUDITORS’REPORT


as per nature of the company.

(iii) According to the information and explanation

given to us, the company has not granted any

loans, secured or unsecured to companies,

firms or other parties covered in the register

maintained under section 189 of the

Companies Act. Accordingly, the provisions of

clause (iii) (a), (b) and (c) of the Order are not

applicable to the Company and hence not

commented upon.

(iv) According to the information and explanation

given to us and records of the company

examined by us, the Company has complied

with the section 185 and 186 of the Companies

Act, 2013.

(v) The Company has not accepted any deposits

from the public.

(vi) Maintenance of cost records has not been

prescribed and also not applicable as the

nature of the company is non-banking

financial company carrying out micro finance

business.

(vii) (a) According to the information and

explanation given to us and records of the

company examined by us, in our opinion,

the company is regular in depositing

undisputed statutory dues in respect of

income-tax, cess and service tax and other

material statutory dues as applicable, with

the appropriate authorities.

(b) According to the information and

explanations given to us, there is no

amounts payable in respect of income tax,

wealth tax, service tax, sales tax, customs

duty and excise duty which have not been

deposited on account of any disputes.

(viii) Based on our audit procedures and on the

information and explanations given by the

management, we are of the opinion that, the

Company has not defaulted in repayment of

dues to a financial institution, bank,

government or debenture holders.

(ix). According to the information and explanation


examined by us, the Company has not raised

any funds through initial public offer or further

public offer (including debt instruments) and

the Company has applied the term loans for

the purpose for which the loans were

obtained.

Cash Flow Statement dealt with by this Report are in

agreement with the books of account;

(d) In our opinion, the aforesaid financial statements

comply with the Accounting Standards specified

under section 133 of the Act, read with Rule 7 of the

Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from

the directors as on March 31, 2016 and taken on

record by the Board of Directors, none of the directors

is disqualified as on March 31, 2016, from being

appointed as a director in terms of section 164 (2) of

the Act;

(f) With respect to the adequacy of the internal financial

controls over financial reporting of the Company and

the operative effectiveness of such controls, refer to

our separate Report in “Annexure 2” to this report;

(g) With respect to the other matters to be included in

the Auditor's Report in accordance with Rule 11 of the

Companies (Audit and Auditors) Rules, 2014, in our

opinion and to the best of our information and

according to the explanations given to us:

a. The Company does not have any pending

litigations which would impact its financial

position.

b. The Company did not have any long-term

contracts including derivative contracts for

which there were any material foreseeable

losses.

c. There were no amounts which were

required to be transferred to the Investor

Education and Protection Fund by the

Company.

The Annexure 1 a statement on the matters specified

in paragraphs 3 and 4 of the Order.

(I) (a) The company is maintaining proper

records showing full particulars, including

quantitative details and situation of fixed

assets.

(i) (b) As explained to us, fixed assets have

been physically verified by the management

at reasonable intervals; no material

discrepancies were noticed on such

verification.

(i) (c) As per the verification of the books of

accounts, there are no immovable

properties that are belonged to the

Company, so there is a no question for the

verification of the same.

(ii) Paras regarding the physical verification of

inventory and other related are not applicable

AUDITORS’REPORT


year under review and has complied with the

requirements of Section 42 of the Companies

Act, 2013 and the amount raised have been

utilised for the purpose for which the funds

were raised.

(xv). According to the information and explanation


examined by us, the Company has not entered

into any non-cash transactions with directors

or persons connected with him.

(xvi). The Company is required to be registered

under section 45-IA of the Reserve Bank of

India Act, 1934 and the registration has been

obtained.

For Ashwani Gupta & Associates

Sd/-

Ashwani Gupta

Partner

Membership No.: MN 080719

FRN : 0000564

Date : May 10, 2016

Place : Jalandhar

(x). Based on the audit procedures performed and

the information and explanations given to us,

we report that no fraud on or by the Company

has been noticed or reported during the year,

nor have we been informed of such case by the

management.

(xi). According to the information and explanation


examined by us, the Company has paid the

managerial remuneration by complying with

the section 197 read with schedule V of the

Companies Act, 2013.

(xii). In our opinion, the Company is not a Nidhi

company. Therefore, the provisions of clause

3(xi) of the order are not applicable to the

Company and hence not commented upon.

(xiii). According to the information and explanation


examined by us, all the transactions with the

related parties are in compliance with section

177 and 188 of the Companies Act, 2013 and

the details for the same as required by the

applicable accounting standards are disclosed.

(xiv). According to the information and explanation


examined by us, the Company has made the

preferential allotment of shares during the


AUDITORS’REPORT

Our audit involves performing procedures to obtain audit

evidence about the adequacy of the internal financial

controls system over financial reporting and their

operating effectiveness. Our audit of internal financial

controls over financial reporting included obtaining an

understanding of internal financial controls over financial

reporting, assessing the risk that a material weakness

exists, and testing and evaluating the design and

operating effectiveness of internal control based on the

assessed risk. The procedures selected depend on the

auditor's judgement, including the assessment of the

risks of material misstatement of the financial

statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion on the internal financial controls system over

financial reporting.

Meaning of Internal Financial Controls Over Financial

Reporting

A company's internal financial control over financial

reporting is a process designed to provide reasonable

assurance regarding the reliability of financial reporting

and the preparation of financial statements for external

purposes in accordance with generally accepted

accounting principles. A company's internal financial

control over financial reporting includes those policies

and procedures that (1) pertain to the maintenance of

records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of the assets of

the company; (2) provide reasonable assurance that

transactions are recorded as necessary to permit

preparation of financial statements in accordance with

generally accepted accounting principles, and that

receipts and expenditures of the company are being

made only in accordance with authorisations of

management and directors of the company; and (3)

provide reasonable assurance regarding prevention or

timely detection of unauthorised acquisition, use, or

disposition of the company's assets that could have a

material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over

Financial Reporting

Because of the inherent limitations of internal financial

controls over financial reporting, including the possibility

To the Members of Midland Microfin Limited

We have audited the internal financial controls over

financial reporting of Midland Microfin Limited (“the

Company”) as of March 31, 2016 in conjunction with our

audit of the financial statements of the Company for the

year ended on that date.

Management's Responsibility for Internal Financial

Controls

The Company's Management is responsible for

establishing and maintaining internal financial controls

based on the internal control over financial reporting

criteria established by the Company considering the

essential components of internal control stated in the

Guidance Note on Audit of Internal Financial Controls

Over Financial Reporting issued by the Institute of

Chartered Accountants of India. These responsibilities

include the design, implementation and maintenance of

adequate internal financial controls that were operating

effectively for ensuring the orderly and efficient conduct

of its business, including adherence to the Company's

policies, the safeguarding of its assets, the prevention and

detection of frauds and errors, the accuracy and

completeness of the accounting records, and the timely

preparation of reliable financial information, as required

under the Companies Act, 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the

Company's internal financial controls over financial

reporting based on our audit. We conducted our audit in

accordance with the Guidance Note on Audit of Internal

Financial Controls Over Financial Reporting (the

“Guidance Note”) and the Standards on Auditing as

specified under section 143(10) of the Companies Act,

2013, to the extent applicable to an audit of internal

financial controls, both applicable to an audit of Internal

Financial Controls and, both issued by the Institute of

Chartered Accountants of India. Those Standards and the

Guidance Note require that we comply with ethical

requirements and plan and perform the audit to obtain

reasonable assurance about whether adequate internal

financial controls over financial reporting was established

and maintained and if such controls operated effectively

in all material respects.

Annexure 2 to the independent auditor's report of even date on the financial statements of Midland Microfin Limited.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

(“the Act”)

AUDITORS’REPORT


of collusion or improper management override of

controls, material misstatements due to error or fraud

may occur and not be detected. Also, projections of any

evaluation of the internal financial controls over financial

reporting to future periods are subject to the risk that the

internal financial control over financial reporting may

become inadequate because of changes in conditions, or

that the degree of compliance with the policies or

procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects,

an adequate internal financial controls system over

financial reporting and such internal financial controls

over financial reporting were operating effectively as at

March 31, 2016, based on the internal control over

financial reporting criteria established by the Company

considering the essential components of internal control

stated in the Guidance Note on Audit of Internal Financial

Controls over Financial Reporting issued by the Institute

of Chartered Accountants of India.

Explanatory paragraph

We also have audited, in accordance with the Standards

on Auditing issued by the Institute of Chartered

Accountants of India, as specified under Section 143(10)

of the Act, the financial statements of Midland Microfin

Limited, which comprise the Balance Sheet as at March

31, 2016, and the related Statement of Profit and Loss and

Cash Flow Statement for the year then ended, and a

summary of significant accounting policies and other

explanatory information, and our report dated May 10,

2016 expressed an unqualified opinion thereon.

For Ashwani Gupta & Associates

Chartered Accountants

Sd/-

Ashwani Gupta

Partner

Membership No.: 080719

FRN: 0000564

Date: May 10, 2016

Place: Jalandhar


AUDITORS’REPORT

FINANCIALSTATEMENTSFor the Year 2015-2016


BALANCE SHEET AS AT MARCH 31, 2016

(Amount in Rupees)

ParticularsNoteNo.

As atMarch 31, 2016

As atMarch 31, 2015

In terms of our report attached

For Ashwani Gupta & AssociatesChartered Accountants

Reg No : 000564

Sd/-

Ashwani GuptaFCA, L.LB, DISA

80719

Place : Jalandhar

Date : 10 May, 2016

Sd/- Sd/-Amardeep Singh Samra Shant GuptaManaging Director Director

(A) EQUITY AND LIABILITIES

1. Share Holder’s Funds

(a) Share Capital 3 86,055,000.00207,115,000.00

(b) Reserves and Surplus 4 10,384,479.85148,485,256.85

2. Non-Current Liabilities

(a) Long-term Borrowings 5 534,360,003.00819,296,411.00

-(b) Deferred Tax Liabilities (net) 13 -

( ) Other Long-term Liabilitiesc 6 67,363,678.00112,807,074.00

(d) Long-term provisions 7 880,966.002,702,841.00

3. Current Liabilities

(a) Short-term Borrowings 8 - 23,200,000.00

(b) 9 1,936,952.00Trade Payables 8,180,138.50

( ) Other Current Liabilitiesc 10 85,172,273.00460,265,513.54

( ) Short-term Provisionsd 11 14,439,422.0027,592,569.00

TOTAL EQUITY AND LIABILITIES 823,792,773.851,786,444,803.89

(B) ASSETS

1. Non-Current Assets

(a) Fixed Assets

(i) Tangible Assets 12A 12,855,806.2621,811,708.26

(ii) Intangible Assets 12B 1,719,501.00883,216.00

(iii) Capital Work-in-progress 367,684.004,507,102.00

(b) Non-Current Investments - -

(c) Deferred Tax Assets (net) 13 1,354,026.004,721,920.00

(d) Long-term Loans and Advances 14 21,019,341.00105,023,174.00

(e) Other Non-Current Assets 15 109,780.0041,929,924.00

2. Current Assets

(a) Trade Receivables 16 1,993,579.00352,861.00

( ) Cash and Cash Equivalents 1b 7 85,599,919.01231,957,948.13

( ) Short-term Loans and Advances 1c 8 685,386,789.581,364,261,395.50

( ) Other Current Assets 1d 9 13,386,348.0010,995,555.00

TOTAL ASSETS 823,792,773.851,786,444,803.89

Note No. 1 to 26 form an integral part of the accounts

Sd/- Sd/-Amitesh Kumar Sonia DuaChief Financial Officer Company Secretary &

Compliance Officer

BALANCESHEET


STATEMENT OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2016

(Amount in Rupees)

ParticularsNoteNo.

Year EndedMarch 31, 2016

Year EndedMarch 31, 2015

CONTINUING OPERATIONS

1 Revenue from Operations 20 152,139,701.94301,389,720.89

2 Other Income 21 1,811,543.875,508,572.00

3 Total Revenue (1+2) 153,951,245.81306,898,292.89

4 EXPENSES

(a) Employee Benefits Expense 22 38,026,916.0067,607,919.50

(b) Finance Costs 23 72,179,299.45135,391,903.10

(c) Depreciation and Amortisation Expense 12C 3,687,594.003,613,886.00

(d) Other Expenses 24 22,376,509.4944,172,163.29

Total Expenses 136,270,318.94250,785,871.89

5 Profit / (Loss) before Exceptional and Extraordinary 17,680,926.8756,112,421.00

6 Exceptional Items - -

7 Profit / (Loss) before Extraordinary Items & Tax (5 ± 6) 17,680,926.8756,112,421.00

8 Extraordinary Items -

9 Profit / (Loss) before Tax (7 ± 8) 17,680,926.8756,112,421.00

10 TAX EXPENSE

(a) Current Tax 5,988,215.0022,513,559.00

(b) Excess income tax provision for earlier years (89,815.00) -

Deferred Tax(c) (1,971,506.00)(3,367,894.00)

11 Profit after taxes 13,664,217.8737,056,571.00

Earning Per Share (EPS) (Par Value Rs.10.00/- each) (Before Extraordinary Items)

1. Basic Earning per Share (Rs.) 1.933.27

2. Diluted Earning per Share (Rs.) 1.933.04

Earning Per Share (EPS) (Par Value Rs.10.00/- each) (After Extraordinary Items)

1. Basic Earning per Share (Rs.) 1.933.27

2. Diluted Earning per Share (Rs.) 1.933.04



Reg No : 000564

Sd/-


80719

Place : Jalandhar

Date : 10 May, 2016

STATEMENT OFPROFIT & LOSS ACCOUNT



Compliance Officer


ParticularsYear Ended

March 31, 2016Year Ended

March 31, 2015

(Amount in Rupees)

Cash from Operation ActivitiesNet Profit Before Tax 17,680,926.8756,112,421.00Add/Less Adjustment of Non-Operating itemsAdd:-Depreciation & Amortization of Expenses 3,687,594.003,613,886.00Preliminary Expenses 132,775.00242,555.00Provision for Standard Assets 3,453,906.007,637,360.00Provision for Gratuity Fund 332,352.00592,467.00Provision for Leave Encashment 1,379,001.00 -(Profit)/loss on sale/disposal of asset 1,277,770.00 -Less :-Interest on IT Refund - -Misc Income 36,528.8714,052.00Operating Profit before Working Capital Changes 70,841,408.00 25,251,025.00Add/Less : Increase or Decrease in Current Assets & Current LiabilitiesIncrease/Decrease in Trade Receivables (1,992,060.00)1,640,718.00Increase/Decrease in Short Term Loans & Advances (352,895,100.58)(678,874,605.92)Increase/Decrease in Other Current Assets (2,446,055.00)(6,512,375.00)Increase/Decrease in Trade Payables 1,590,407.616,243,186.50Increase/Decrease in Other Current Liabilities 82,752,860.00375,093,240.54Cash Generated from Operations (272,989,947.97)(302,409,835.88)Less: Income Tax paid (5,295,197.00)(20,353,797.00)Cash Flow Before Extraordinary Items (251,922,224.88) (253,034,119.97)Income Tax Refund -48,770.00Misc. Income 36,528.8714,052.00Add/Less: Extraordinary ItemsNet Cash from Operating Activities (A) (251,859,402.88) (252,997,591.10)Cash Flows from Investing ActivitiesPurchase of Fixed Assets (4,856,502.00)(12,377,410.00)Investment in Intangible Assets (198,110.00)(633,863.00)Investment in Capital work-in-progress (963.00)(4,139,418.00)Long Term Advance Given (19,326,591.00)(87,003,833.00)Change in Other Current Assets 12,775.00(38,800,028.00)Net Cash from Investing Activities (B) 24,369,391.00)((142,954,552.00)Cash Flows from Financing ActivitiesProceeds from Issue of Share Capital 15,200,000.00233,992,180.00Proceeds from Long Term Borrowings 281,860,003.00284,936,408.00Increase in Other Long Term Borrowings 40,482,895.0045,443,396.00Proceeds from Short Term Borrowings 23,200,000.00(23,200,000.00)Interim Dividend (Including DDT) - (4,251,092.00)Net Cash used in Financing Activities ( C ) 541,171,984.00 356,491,806.00Net Increase in Cash & Cash Equivalent (A+B+C) 79,124,823.90146,358,029.12Cash & Cash Equivalents in the Beginning of the Year 6,475,095.1185,599,919.01Cash & Cash Equivalents in the end of the Year 85,599,919.01231,957,948.13

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016

CASH FLOWSTATEMENT



Reg No : 000564

Sd/-


80719

Place : Jalandhar

Date : 10 May, 2016



Compliance Officer


Note No. 1 General Information

1. Corporate Information

Midland Microfinance Limited ('The Company')

is a public limited company domiciled in India

and incorporated under the provision of the

Companies Act, 1956 ('the Act'). The Company

was registered as a non-deposit accepting Non-

Banking Financial Company ('NBFC-ND') with

the Reserve Bank of India ('RBI') and has got

classified as a Non-Banking Financial Company -

Micro Finance Institution ('NBFC-MFI') with

effect from January 2, 2015. The Company came

out with a Public Issue of Secured Redeemable

Non-Convertible Debentures in 2014 and the

said securities are listed with Bombay Stock

Exchange (BSE). As such the Company has

acquired the status of Listed company pursuant

to section 2(52) of Companies Act, 2013. The

Company is engaged primarily in providing

micro finance services to women in the rural

areas of India who are enrolled as members and

organized as Joint Liability Groups ('JLG'). The

Company has its operation spread across 3

states. In addition to the core business of

providing micro-credit, the Company uses its

distribution channel to provide certain other

financial products and services to the members.

Programs in this regard primarily relate to

providing of loans to the members for the

purchase of certain productivity-enhancing

products such as Water Purifier and Sewing

Machines etc.

Note No. 2

Summary of significant accounting policies

1. Basis of Preparation-The financial statements

of the Company have been prepared in

a c co rd a n c e w i t h G e n e ra l l y A c c e p te d

Accounting Principles. The Company has

prepared these financial statements to comply

in all material respects with the Accounting

Standards notified under section 133 of the

Companies Act, 2013 read with Rule 7 of the

Companies (Accounts) Rules, 2014 and the

provisions of the RBI as applicable to a NBFC-

MFI and NBFC-ND. The financial statements

have been prepared on an accrual basis and

under the historical cost convention except

interest on loans which have been classified as

non-performing assets and are accounted for

on realization basis. The accounting policies

adopted in the preparation of financial

statements are consistent with those of

previous year.

2. Use of Estimates

The preparation of financial statements in

conformity with the Generally Accepted

Accounting Principles (GAAP) requires the

management to make judgments, estimates

and assumptions that affect the reported

amounts of revenues, expenses, assets and

liabilities and the disclosure of contingent

liabilities, at the end of the reporting period.

Although these estimates are based on the

management's best knowledge of current

events and actions, uncertainty about these

assumptions and estimates could result in the

outcomes requiring a material adjustment to

the carrying amounts of assets or liabilities in

future periods.

3. Revenue Recognition

(I) The Reserve Bank of India's prudential

norms on income recogni t ion and

provisioning for bad and doubtful debts has

been followed.

(ii) Subject to the above, specific income has

been accounted for as under:

a. Interest income on loans given is

recognized under the internal rate of

return method. Income or any other

charges on non-performing asset is

recognized only when realized and any

such income recognized before the

asset became non performing and

remaining unrealized is reversed.

b. Interest income on deposits with banks

is recognized on a time proportion

accrual basis taking into account the

amount outstanding and the rate

applicable.

c. Loan processing fees are recognized as

income on accrual basis.

d. All other income is recognized on an

accrual basis.

NOTES TOACCOUNTS


4. Tangible Fixed Assets

All fixed assets are stated at cost less

accumulated depreciation and accumulated

impairment losses, if any. The cost comprises

purchase price and directly attributable cost of

bringing the asset to its working condition for

the intended use and include borrowing cost

directly attributable to construction or

acquisition of fixed assets, till the date the asset

is put to use. Capital work in progress comprises

outstanding advances paid to acquire fixed

assets that are not ready to use for their

intended use as at the Balance sheet date.

Subsequent expenditure on fixed assets after its

purchase is capitalised only if such expenditure

results in an increase in the future benefits from

such asset beyond its previously assessed

standard of performance

5. Intangible Assets

Intangible assets are stated at acquisition cost,

net of accumulated deprec iat ion and

accumulated impairment losses, if any.

Intangible assets are amortized on a straight line

basis over their estimated useful lives.

6. Depreciation

Depreciation on tangible fixed assets and

intangible assets is provided on the Straight Line

method as per the rates prescribed under Part

'C' of Schedule II of the Companies Act, 2013

which is also as per the useful life of the assets

estimated as prescribed under Part 'C' of

Schedule II of the Companies Act, 2013.

7. Impairment

The Company assesses at each reporting date

whether there is an indication that an asset may

be impaired. If any indication exists, or when

annual impairment testing for an asset is

required, the Company estimates the asset's

recoverable amount. An asset's recoverable

amount is the higher of an asset's net selling

price and its value in use. The recoverable

amount is determined for an individual asset,

unless the asset does not generate cash inflows

that are largely independent of those from

other assets or groups of assets. Where the

carrying amount of an asset exceeds its

recoverable amount, the asset is considered

impaired and is written down to its recoverable

amount. In assessing value in use, the estimated

future cash flows are discounted to their

present value using a pre-tax discount rate that

reflects current market assessments of the time

value of money and the risks specific to the

asset. In determining net selling price, recent

market transactions are taken into account, if

available. If no such transactions can be

identified, an appropriate valuation model is

used. After impairment, depreciation is

provided on the revised carrying amount of the

asset over its remaining useful life.

8. Leases (where the Company is the lessee)

Finance leases, which effectively transfer to the

Company substantially all the risks and benefits

incidental to ownership of the leased item, are

capitalized at the lower of the fair value of the

leased property and 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 reduction of the lease

liability based on the implicit rate of return.

Finance charges are recognized as finance costs

in the statement of profit and loss. Lease

management fees, legal charges and other

initial direct costs are capitalized. A leased asset

is depreciated on a straight-line basis over the

useful life of the asset or the useful life

envisaged in Schedule II to the Companies Act,

2013, whichever is lower.

Leases where the lessor effectively retains,

substantially all the risks and benefits of

ownership of the leased item, are classified as

operating leases. Operating lease payments are

recognized as an expense in the statement of

profit and loss on a straight line basis over the

lease term.

9. Investments

i. Investments which are readily realizable and are

intended to be held for not more than one year

from the date, on which such investments are

made, are classified as current investments. All

other investments are classified as long-term

investments.

ii. The Company values its investments based on

the accounting standard issued by the Institute

NOTES TOACCOUNTS


of Chartered Accountants of India as under:

a. Investments held as Long-term investments

are valued at cost. Provision for diminution

in value is not made unless there is a

permanent fall in their net realizable value.

b. Current investments are valued at lower of

cost or net realizable value.

c. On disposal of an investment, the difference

between the carrying amount and disposal

proceeds are charged or credited to the

statement of profit and loss.

d. Quoted investments are valued on Market

to Market

10. Borrowing Costs

Borrowing costs, which are directly attributable

to the acquisition/construction of fixed assets,

till the time such assets are ready for intended

use, are capitalized as a part of the cost of

assets.

Borrowing costs consist of interest and other

borrowing costs that the company incurred in

connection with borrowing of the funds.

Interest cost is expensed off on accrual basis.

Other Incidental Borrowing Costs namely

Processing Fees, issue expenses, Due Diligence

charges and Stamp duty charges are amortized

in the year in which they are incurred. All other

borrowing costs other than mentioned above

are expensed in the period they are occurred. In

case of unamortized identified borrowing cost is

outstanding at the year end, it is classified under

loans and advances as unamortized cost of

borrowings.

11. Foreign Currency Transactions

i. All transactions in foreign currency are

recognized at the exchange rate prevailing

on the date of the transaction.

ii. Foreign currency monetary items are

reported using the exchange rate prevailing

at the close of the financial year.

iii. Exchange differences arising on the

settlement of monetary items or on the

restatement of Company's monetary items

at rates different from those at which they

were initially recorded during the year, or

reported in previous financial statements,

are recognized as income or as expenses in

the year in which they arise.

12. Retirement and Other Employee Benefits

Employee benefits includes provident fund,

employee state insurance scheme, gratuity

fund and compensated absences.

i. Short term employee benefits including

Salaries and bonuses that are payable in the

financial year. period in which the

employees render the related service.

ii. Defined Contribution Plan- Retirement

benefit in the form of provident fund and

employee state insurance are defined

contribution schemes. The Company has no

obligation, other than the contribution

payable to the provident fund and

employee state insurance. The Company

recognizes contribution payable to the

provident fund scheme and employee state

insurance as expenditure, when an

employee renders the related service.

iii. Defined Benefit Plan- Gratuity liability is a

defined benefit obligation and is provided

for on the basis of an actuarial valuation on

projected unit credit method made at the

end of each financial year. Actuarial gains

and losses for defined benefit plans are

recognized in full in the period in which they

occur in the statement of profit and loss.

iv. Long Term Employee Benefit- Liability for

compensated absences is provided based

on actuarial valuation carried out at the end

of the financial period using Projected Unit

Credit Method and is not funded. Past

service cost is recognized immediately to

the extent that the benefits are already

used and otherwise is amortised on straight

line base over the average period until the

benefits become vested. The retirement

benefit obligation recognised in the balance

sheet represents the present value of the

defined benefits obligation as adjusted for

unrecognized past service cost , as

redeemed by the fair value of scheme

assets.

Compensated absences which are not

expected to occur within 12 months after

the end of period in which the employee

rendered the re lated ser v ices are

recognised as a liability at the present value

of the defined benefit obligations as at the

balance sheet date.

NOTES TOACCOUNTS


Actuarial gains and losses are recognized

immediately in the statement of Profit and

Loss as income or expense in the period in

which they occur. Past service cost is

recognised immediately to the extent that

the benefits are already vested.

13. Taxation

I. Tax expense comprises current and

deferred tax. Current income tax is

measured at the amount expected to be

paid to the tax authorities in accordance

with the Income Tax Act, 1961, enacted in

India. The tax rates and tax laws used to

compute the amount are those that are

enacted or substantively enacted, at the

reporting date. Current income tax relating

to items recognized directly in equity is

recognized in equity and not in the


II. Deferred income taxes reflect the impact of

timing differences between taxable income

and accounting income originating during

the current year and reversal of timing

differences for the earlier years. Deferred

tax is measured using the tax rates and the

tax laws enacted or substantively enacted at

the reporting date. Deferred income tax

relating to items recognized directly in

equity is recognized in equity and not in the


III. Deferred tax assets are recognized for

deductible timing differences only to the

extent that there is reasonable certainty

that sufficient future taxable income will be

available against which such deferred tax

assets can be realised. In situations where

the Company has unabsorbed depreciation

or carry forward tax losses, all deferred tax

assets are recognized only if there is virtual

certainty supported by convincing evidence

that they can be realised against future

taxable profits.

IV. The carrying amount of deferred tax assets

are reviewed at each reporting date. The

Company writes-down the carrying amount

of deferred tax asset to the extent that it is

no longer reasonably certain or virtually

certain, as the case may be, that sufficient

future taxable income will be available

against which deferred tax asset can be

realised. Any such write down is reversed to

the extent that it becomes reasonably

certain or virtually certain, as the case may

be, that sufficient future taxable income will

be available.

V. Excess/short provision of income tax

relating to earlier years is disclosed

separately in the accounts.

14. Earnings Per Share

In determining earning per share, the Company

considers the net profit after tax and includes

t h e p o s t - t a x e f f e c t o f a n y e x t r a -

ordinary/exceptional item. The number of

shares used in computing basic earning per

share is the weighted average number of shares

outstanding during the period. The number of

shares used in computing diluted earning per

share comprises the weighted average shares

considered for deriving basic earning per share

and also the weighted average number of

equity shares that could have been issued on

the conversion of all dilutive potential equity

shares. The diluted potential equity shares are

adjusted for the proceeds receivable, had the

shares been actually issued at fair value. Dilutive

potential equity shares are deemed converted

at the beginning of the period, unless issued at a

later date. The number of shares and potential

dilutive equity shares are adjusted for any stock

splits and bonus shares issued effected prior to

the approval of the financial statements by the

board of directors.

15. Provisions and Contingent Liabilities

A provision is recognized when the Company

has a present obligation as a result of past event,

it is probable that an outflow of resources

embodying economic benefits will be required

to settle the obligation and a reliable estimate

can be made of the amount of the obligation.

Provisions are not discounted to their present

value and are determined based on the best

estimate required to settle the obligation at the

reporting date. These estimates are reviewed at

each reporting date and adjusted to reflect the

current best estimates. Further the company

being a NBFC-MFI also complies with the

guidelines issued by the Reserve Bank of India


NOTES TOACCOUNTS

regarding the various provisioning norms.

A contingent liability is a possible obligation that

arises from past events whose existence will be

confirmed by the occurrence or non-occurrence

of one or more uncertain future events beyond

the control of the Company or a present

obligation that is not recognized because it is

not probable that an outflow of resources will

be required to settle the obligation. A

contingent liability also arises in extremely rare

cases where there is a liability that cannot be

recognized because it cannot be measured

rel iably. Contingent l iabi l i t ies are not

recognized but are disclosed in the notes.

Contingent Assets are neither recognized nor

disclosed in the financial statements.

16. Cash and Cash Equivalents

Cash and cash equivalents for the purpose of

cash flow statement comprise cash in hand and

cash at bank and short-term investments with

an original maturity of three months or less.

17. Segment Reporting

The Company mainly operates in only one

segment - Microfinance loans, hence the

Accounting Standard-17, as notified in

Companies (Accounting Standard Rules, 2006)

on segment reporting is not applicable to the

Company.

18. Asset Qualification and Provisioning Norms

The company being a NBFC-MFI adopts the

f o l l o w i n g n o r m s b a s e d o n t h e

guidelines/instructions issued by the Reserve

Bank of India: -

Asset qualification Norms:

i. Standard asset means the asset in respect of

which, no default in repayment of principal or

payment of interest is perceived and which does

not disclose any problem nor carry more than

normal risk attached to the business;

ii. Non-Performing Asset means an asset for

which, interest/principal payment has

remained overdue for a period of 90 days or

more.

Provisioning Norms:

The aggregate loan provision is maintained by

the Company at any point of time shall not be

less than the higher of: -

(i) 1% of the outstanding Microfinance loan

portfolio, or

(ii) 50% of the aggregate loan installments

which are overdue for more than 90 days

and less than 180 days and 100% of the

aggregate loan installments which are

overdue for 180 days or more and 0.30% of

the outstanding on other loans.

The company has no Arrears/NPAs as on

March 31, 2016

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 3 - SHARE CAPITAL No. of shares Amount No. of shares Amount

(a) AUTHORISED

Equity shares of Rs. 10/- each with voting rights 10,000,000 100,000,000.0020,000,000 200,000,000.00

2,000,000 20,000,000.00Preference shares of Rs. 10/- each without voting rights 2,000,000 20,000,000.00

(b) ISSUED

Equity shares of Rs. 10.00 each with voting rights 18,711,500 187,115,000.00 8,605,500 86,055,000.00

9% Cumulative, Non-Participative and Optionally 2,000,000 20,000,000.00 - -

Convertible Preference shares of Rs. 10.00 each

(c) SUBSCRIBED AND FULLY PAID UP

Equity shares of Rs. 10.00 each with voting rights 18,711,500 187,115,000.00 8,605,500 86,055,000.00

9% Cumulative, Non-Participative and Optionally 2,000,000 20,000,000.00 - -

Convertible Preference shares of Rs. 10.00 each

TOTAL 20,711,500 207,115,000.00 8,605,500 86,055,000.00

NOTES

A. Reconciliation of the number of shares & amount outstanding at the beginning and at the end of the reporting period:

Particulars Opening Fresh Closing

Balance Issue Balance

Equity Shares with Voting Rights

Year ended 31 March, 2016

- Number of shares 8,605,500 10,106,000 18,711,500

- Amount ( )` 86,055,000.00 101,060,000.00 187,115,000.00


- Number of shares 7,085,500 1,520,000 8,605,500

- Amount ( ) 70,855,000.00 15,200,000.00 86,055,000.00`

B. Reconciliation of the number of shares & amount outstanding at the beginning and at the end of the reporting period:

Particulars Opening Fresh Closing

Balance Issue Balance

Preference Shares with Voting Rights


- Number of shares - 2,000,000 2,000,000

- Amount ( ) -` 20,000,000 20,000,000


- Number of shares - - -

- Amount ( ) - - -`

C. Details of shares held by each shareholder holding more than 5% shares:

Class of shares / Name of shareholder As at 31-3-2016 As at 31-3-2015

No. of % holding in No. of % holding in

shares held that classs shares held that class

Equity shares with voting rights

Amardeep Singh Samra 1069530 5.72% 2360030 27.42

S Singh 2000000 10.69%ohan 2000000 23.24

Gurdip Singh 430000 2.30% 430000 5.00

SIDBI Bank 1000000 5.34% 0 0

Balbir Singh 1187000 6.34% 0 0

Ranjit Kaur 1000000 5.34% 0 0

Kitara PIIN 1501 4106000 21.94% 0 0

Preference Shares

SIDBI Bank 2000000 100.00% 0 0


NOTES TOACCOUNTS

(d) Terms/ rights attached to equity shares

The company has only one class of equity shares with voting rights (one vote per share). Any Dividend proposed by the

Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The

distribution of dividend is in proportion to the number of equity shares held by the shareholders.

(e) The Company has only one class of preference shares i.e. optionally convertible preference shares with no voting rights.

They have the preference of the dividend over the equity shareholders at the fixed rate of 9% p.a. The preference shares

can be redeemed upto 50% of the issued preference share capital at the end of 4 years from the date of allotment i.e.

August 11, 2015 and remaining at the end of 5 years OR The preference shares can also be converted into the equity

shares of the company at the option of the preference shareholder at the price that is arrived according to the book

value of the last audited balance sheet upto the shares that have not been redeemed

(f) In the Annual General Meeting of the Company held on Sep 18, 2015, the members have approved the increase in

authorized share capital by Rs 10.00 Crores from Rs. 12.00 Crores to Rs. 22.00 Crores represented by 20,000,000 Equity

shares of Rs.10 each aggregating to Rs. 20.00 Crores and 2,000,000 Optionally Convertible Preference shares of Rs.10

each aggregating to Rs. 2.00 Crores.

(g) On August 5, 2015, the Company has allotted 1,000,000 (Ten Lakhs) Equity Shares of Rs 10.00/- each to Small Industrial

Development Bank of India (SIDBI) and the approval for the same has been obtained in the Extra Ordinary General

Meeting Held on March 25, 2015.

(h) On August 11, 2015, the Company has allotted 2,000,000 (Twenty Lakh ) Optionally Convertible Preference Shares of Rs

10.00/- each to Small Industrial Development Bank of India (SIDBI) and the approval for the same has been obtained in

the Extra Ordinary General Meeting Held on March 25, 2015.

(I) On November 13, 2015, the Company has allotted 2,331,700 (Twenty Three Lakhs Thirty One Thousand Seven

Hundred) Equity Shares of Rs 10.00/- each to Retail Investors at a Premium of Rs.0.80 (Eighty Paisa) each. Consequently,

an amount of Rs.1,865,360.00 (Rs. Eighteen Lakhs Sixty Five Thousand Three Hundred Sixty Only) has been credited to

Securities Premium Account and the approval for the same has been obtained in the Annual General Meeting Held on

September 18, 2015.

(j) On December 21, 2015, the Company has allotted 2,668,300 (Twenty Six Lakhs Sixty Eight Thousand Three Hundred)

Equity Shares of Rs 10.00/- each to Retail Investors at a Premium of Rs.0.80 (Eighty Paisa) each. Consequently, an

amount of Rs.2,134,640.00 (Rs. Twenty One Lakhs Thirty Four Thousand Six Hundred Forty Only) has been credited to

Securities Premium Account and the approval for the same has been obtained in the Annual General Meeting Held on

September 18, 2015.

(k) On March 31, 2016, the Company has allotted 4,106,000 (Forty One Lakh Six Thousand) Equity Shares of Rs 10.00/- each

to Foreign Institutional Investor at a Premium of Rs.26.53 (Twenty Six Rupees and Fifty Three Paisa) each.

Consequently, an amount of Rs.108,932,180.00 (Rs. Ten Crores Eighty Nine Lakhs Thirty Two Thousand One Hundred

Eighty Only) has been credited to Securities Premium Account and the approval for the same has been obtained in the

Extra Ordinary General Meeting held on March 19, 2016.

NOTES TOACCOUNTS


NOTE 4 - RESERVES AND SURPLUSParticulars As at 31-3-2016 As at 31-3-2015(a) Statutory Reserves (Under Section 45 IC of the RBI Act)

Opening balance 1,449,291.774,182,135.34Add: Additions / Transfers during the year 2,732,843.577,411,314.00Closing balance (A) 4,182,135.3411,593,449.34

(b) Surplus / (Deficit) in Statement of Profit and LossOpening balance (162,398.79)6,202,344.51Add: Profit / (Loss) for the year 13,664,217.8737,056,571.00Less: Interim Dividend - 3,542,750.00Proposed Dividend - Equity Share Capital @ 8.00% 8,726,391.00 -Proposed Dividend - Preference Share Capital @ 9.00% 1,150,820.00 -Dividend Distribution Tax 708,342.002,010,763.00Amount of Depreciation on fixed assets whose useful life as onApril 01, 2015 is Nil as per Company Act, 2013 - 315,539.00Transfer to Statutory Reserve 2,732,843.577,411,314.00Transfer to Debenture Redemption Reserve 15,826,471.00 -Closing Balance (B) 6,202,344.518,133,156.51

(c) Debenture Redemption ReserveOpening balanceAdd: Additions / transfers during the year -15,826,471.00Less: Utilisations / transfers during the year -Closing balance -15,826,471.00

(d) Security Premium ReserveOpening balanceAdd: Additions / transfers during the year -112,932,180.00Less: Utilisations / transfers during the year -Closing balance -112,932,180.00Closing Balance (A+B+C+D) 10,384,479.85148,485,256.85

Transfer of 20% of the Profit after Tax to the Statutory Reserves in accordance with the provisions of section 45 – ICReserve Bank of India Act,1934.NOTE 5 - LONG-TERM BORROWINGSA. DEBENTURESUNSECURED - 2017 Unsecured Non-convertible Non-Cumulative Debentures ofRs.10,000/- each Redeemable at 11% on 31-03-2021 (Tier-II Bonds) 20,170,000.00 20,170,000.001674 Unsecured Non-convertible Cumulative Debentures of Rs.10,000/- eachRedeemable at 11.10% on 31-03-2021 (Tier-II Bonds) 16,740,000.00 16,740,000.003000 (P.Y. Nil) Unsecured, Simple, Non-Convertible Debentures of (Series II)Rs.10000/- each redeemable at 12.00% on 12-06-2021 (Tier-II Bonds).The date of allotment is 13-06-2015. 30,000,000.00 -SECURED 2441- Secured simple Redeemable Non-convertible bonds in nature ofDebentures (Series I) of Rs. 10000/- each # 19,140,000.00 19,140,000.005929 Secured compounded Redeemable Non-convertible bonds in nature ofDebentures (Series I) of Rs. 10000/- each # 54,120,000.00 54,120,000.001517 Secured Simple Redeemable Non Convertible Bonds in nature of Debentures(Series II) of Rs 10000/- each # 12,170,000.00 15,170,000.008302 Secured Compounded Redeemable Non Convertible Bonds in nature ofDebentures (Series II) of Rs 10000/- each # 73,240,000.00 83,020,000.002000 Secured Compounded Redeemable Non Convertible Bonds in nature ofDebentures (Series III) of Rs 10000/- each# - 20,000,000.001255 (P.Y. Nil) Secured, Simple, Redeemable, Non-Convertible Bonds in nature ofDebentures (Series IV) of Rs 10000/-each ## 12,550,000.00 -585 (P.Y. Nil) Secured, Compounded, Redeemable, Non-Convertible Bondsin nature of Debentures (Series IV) of Rs 10000/-each ## 5,850,000.00 -1185 (P.Y. Nil) Secured, Simple, Redeemable, Non-Convertible Bondsin nature of Debentures (Series V) of Rs 10000/-each ## 11,850,000.00 -825 (P.Y. Nil) Secured, Compounded, Redeemable, Non-Convertible Bondsin nature of Debentures (Series V) of Rs 10000/-each ## 8,250,000.00 -4273 Secured Simple Redeemable Non Convertible Bonds in nature of Debentures(Public Issue) of Rs 10000/-each $ 42,730,000.0042,730,000.0020727 Secured Compounded Redeemable Non Convertible Bonds in nature ofDebentures(Public Issue) of Rs 10000/-each $ 207,270,000.00207,270,000.00


NOTES TOACCOUNTS

Particulars As atMarch 31, 2016

As atMarch 31, 2015

(Amount in Rupees)

NOTE 5 - LONG-TERM BORROWINGS

B. TERM LOAN

SECURED

From Banks

For Working Capital

IDBI Bank 17,500,000.0012,480,000.00

Bank of Maharashtra 60,000,000.00 -

UCO Bank 49,544,796.00 -

DCB Bank 4,687,500.00 -

For Fixed Assets

HDFC Bank 3,238,287.00 -

From others

For Working Capital

MAS Financial Services Limited 35,000,003.0025,416,679.00

IFMR Captital Finance Pvt. Ltd. 69,927,321.00 -

Reliance Capital Ltd. 74,221,828.00 -

C. LOANS & ADVANCES

UNSECURED

Inter-Corporate Loans 3,500,000.005,700,000.00

TOTAL LONG TERM BORROWINGS 819,296,411.00 534,360,003.001. Nature of Security for Debentures

# a. As per the terms of issue regarding the Secured Redeemable, Non Convertible Debentures, the security offered by the Company is the

hypothecation of moveable property (assets given as loans, financial or other investments receivables on loans, marketable or other

securities including shares, Rights, present and/or future receivables , relating to loans and advances and other movable assets)

equivalent to the 1.25 times of the outstanding amount against series-I,II, and III of Non-convertible Debentures

$ b. As per the terms of issue regarding the Secured Redeemable, Non Convertible Debentures, the security offered by the Company is the

hypothecation of all specific and identifiable current assets, book debts, receivables (both present and future) equivalent to the 1.10

times of the outstanding amount against Public Issue of Non-convertible Debentures. The mentioned Non convertible Debentures are

freely tradable and listed on the Bombay Stock Exchange Limited.

## c. As per the terms of issue regarding the Secured Redeemable, Non Convertible Debentures, the security offered by the Company is the

hypothecation of moveable property (assets given as loans, financial or other investments receivables on loans, marketable or other

securities including shares, Rights, present and/or future receivables , relating to loans and advances and other movable assets)

equivalent to the 1.00 times of the outstanding amount against series-IV and V of Non-convertible Debentures.

2. Nature of Security for Term Loans As at March 31, 2016

a. Loans secured by hypothecation (exclusive charge) of portfolio loans 100,000,000.00

b. Loans secured by hypothecation (exclusive charge) of portfolio loans and margin money deposits 604,554,022.00

c. Loans secured by fixed assets ( Car Loan) 4,953,035.00

Total Outstanding 709,507,057.00

3. The Terms of the repyment of term loans and other loans have been stated in the note (a) and out of the total secured term loans of Rs.

709,507,057.00 as shown in the note (a), an amount of Rs. 499,027,966.00 has been guaranteed by the Managing Director, Mr.

Amardeep Singh Samra in his personal capacity.

4. As per the terms of issue, Secured Redeenable, Non Convertible Debentures including Series-I,II,III and Public Issue are matured at

many different dates, due to that redemptiom date can not be given for each type so a detail has been given after this note which

mentions the tenure for which the Secured Redeenable, Non Convertible Debentures including Series-I,II,III, IV and V and Public Issue

are issued with allotment date.

5. As per the terms of issue, out of 1517 Secured Simple Redeemable Non Convertible Bonds in nature of Debentures (Series II) of Rs

10000/-each amounting to Rs. 1,51,70,000.00, 300 Secured Simple Redeemable Non Convertible Bonds in nature of Debentures

(Series II) of Rs 10000/-each amounting to Rs.30,00,000.00 will be redeemed in the financial year 2016-17. The balance amount of

Rs.1,21,70,000.00 redeemable after financial year 2016-17 has been shown in Long Term Borrowings.

6. As per the terms of issue, out of 8302 Secured Compounded Redeemable Non Convertible Bonds in nature of Debentures (Series II) of

Rs 10000/-each amounting to Rs. 8,30,20,000.00, 978 Secured Compounded Redeemable Non Convertible Bonds in nature of

Debentures (Series II) of Rs 10000/-each amounting to Rs. 97,80,000 will be redeemed in the financial year 2016-17. The balance

amount of Rs.7,32,40,000.00 redeemable after financial year 2016-17 has been shown in Long Term Borrowings.

7. The above Inter- Corporate loan is repayable on cumulative basis of principal and interest. The Inter-Corporate loan is obtained at the

rate of 15% compounded monthly repayable in Financial Year 2018-19.

8. There have been no delay/default in repayment of dues including principal and interest in respect of any borrowings.

NOTES TOACCOUNTS


LON

G-T

ER

M B

OR

RO

WIN

GS

57

NOTES TOACCOUNTS

NOTES TOACCOUNTS

(A) NOTES FORMING PART OF THE FINANCIAL STATEMENTS

Terms of repayment for borrowings including current maturities:

Secured

Terms of Repayment and Interest Amount Outstanding (Rs.) March 31, 2016

Rate of Interest Maturity Instalments Current Non Current

Repayable in Monthly Instalments

Base Rate + 3.10 % < 1 Year 24 25020000

2 Year 14 12480000

Base Rate + 3.00 % < 1 Year 12 20455204

2 Year 12 23209693

3 Year 12 26335103

Base Rate + 2.65 % < 1 Year 12 56250000

2 Year 12 4687500

Base Rate < 1 Year 12 1714748

2 Year 12 1882304

3 Year 8 1355983

Repayable in Quarterly Instalments

Base Rate + 3.50% < 1 Year 4 40000000

2 Year 4 40000000

3 Year 2 20000000

Total (a) 143439952 129950583

Secured



Borrowings from NBFCs


Interest Rate-14.8% < 1 Year 24 49999992

2 Year 11 22916679

Interest Rate-15% < 1 Year 57 94393392

2 Year 24 58106611


2 Year 3 14320710

Total (B) 196183966 95344000

Secured



Borrowings from others



2 Year 22 74221828

Total (C) 70366728 74221828

Unsecured



Borrowings from others

Repayable in Bullet

Interest Rate-15% > 1 Year 0 0 5700000

Total (D) 5700000

Total Outstanding (Secured) (A+B+C) 409990646 299516411

Total Outstanding (Unsecured) (D) 0 5700000

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 6 - OTHER LONG-TERM LIABILITIES

(a) Interest Accrued but not due on borrowings

Secured 58,755,595.0099,540,532.00

Unsecured 8,608,083.0013,266,542.00

TOTAL 67,363,678.00112,807,074.00

NOTE 7 - LONG-TERM PROVISIONS

(a) Provision for employee benefits :

(i) Provision for Gratuity 880,966.001,406,439.00

(ii) Provision for Leave Encashment 1,296,402.00

TOTAL 880,966.002,702,841.00

NOTE 8 - SHORT-TERM BORROWINGS

A. TERM LOAN

Secured

From Others (MAS Financial Services Limited)

For Working Capital - 15,000,000.00

B. Other Loans and Advances (Inter-Corporate Loans)

Unsecured 8,200,000.00-

TOTAL SHORT TERM BORROWINGS - 23,200,000.00

NOTE 9 - TRADE PAYABLES

ICICI Prudential Life Ins Co 111,808.50 -

Kotak Mahindra Old Mutual life Insurance - 130,100.00

Salary Payable 507,997.00 394,167.00

Incentive Payable 4,126,785.00 599,576.00

Audit Fee Payable 90,000.00 51,180.00

Telephone Exp Payable 250,236.00 31,499.00

Internet Charges Payable 58,021.00 46,099.00

Electricity Payable 91,109.00 58,906.00

Newspaper & Periodicals Payable 1,505.00 450.00

Expenses Payable 684,584.00 212,188.00

Payment due to Parties 384,593.00 45,437.00

Rita Machines India Pvt. Ltd. 1,873,500.00 -

Hindustan Unilever Limited - 367,350.00

Total 8,180,138.50 1,936,952.00


NOTES TOACCOUNTS

ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

The disclosures required under Accounting Standard 15 "Employee Benefits" notified in the Companies (Accounting

Standard ) Rules 2015, are given below: -

Defined Contribution Plan

A. Provident Fund

Contribution to Defined Contribution Plan, recognised are charged off for the year as under:

Employer's Contribution to Provident Fund 2,713,638.00 2,043,376.00

Employer's Contribution to Superannuation Fund Nil Nil

Employer's Contribution to Pension Scheme Nil Nil

Defined Benefit Plan

A. Gratuity

The obligation for Gratuity is recognized based on the present value of obligation based on actuarial valuation using the

Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit

entitlement and measures each unit separately to build up the final obligation. The details of the same is as under:

a. Reconciliation Statement reconciling Opening Balance and Closing Balance of Present Value of Defined Benefit

Obligation

Present value of obligation as at the beginning of the period 892,423.00 560,071.00

Acquisition adjustment - -

Interest Cost 69,163.00 47,606.00

Past Service Cost - -

Current Service Cost 673,683.00 425,883.00

Curtailment Cost/(Credit) - -

Settlement Cost/(Credit) - -

Benefits Paid (23,076.00) -

Actuarial (gain)/loss on obligation (127,303.00) (141,137.00)

Present value of obligation as at the end of period 1,484,890.00 892,423.00

b. Reconciliation Statement reconciling Opening Balance and Closing Balance of Present Value of Plan Assets

Fair value of plan assets at the beginning of the period - -


Expected return on plan assets - -

Employer contributions - -

Benefits paid - -

Actuarial gain/(loss) on plan assets - -

Fair value of plan assets at the end of the period - -

c. Details of Expenses

Current service cost 673,683.00 4,25,883

Past service cost - -

Interest cost 669,163.00 47,606.00


Curtailment cost / (Credit) - -

Settlement cost / (credit) - -

Net actuarial (gain)/ loss recognized in the period (127,303.00) (1,41,137)

Expenses recognized in the statement of profit & losses 615,543.00 3,32,352

d. Actuary Assumptions

i) Discounting Rate (in %) 8.00 7.75

ii) Future salary Increase (in %) 5.50 5.25

iii) Expected Rate of return on plan ( in %) - -

(Amount in Rupees)

As atMarch 31, 2016

As atMarch 31, 2015

Particulars

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

B. Leave Encashment

The obligation for Leave Encashment is recognized based on the present value of obligation based on actuarial valuation

using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of

employee benefit entitlement and measures each unit separately to build up the final obligation. The details of the same is

as under:

a. Reconciliation Statement reconciling Opening Balance and Closing Balance of Present Value of Defined Benefit

Obligation

Present value of obligation as at the beginning of the period - -


Interest Cost - -

Past Service Cost 881,679.00 -

Current Service Cost 497,322.00 -

Curtailment Cost/(Credit) - -

Settlement Cost/(Credit) - -

Benefits Paid - -

Actuarial (gain)/loss on obligation - -

Present value of obligation as at the end of period 1,379,001.00 -

b. Reconciliation Statement reconciling Opening Balance and Closing Balance of Present Value of Plan Assets

Fair value of plan assets at the beginning of the period - -



Employer contributions - -

Benefits paid - -

Actuarial gain/(loss) on plan assets - -

Fair value of plan assets at the end of the period - -

c. Details of Expenses

Current service cost 497,322.00 -

Past service cost 881,679.00 -

Interest cost - -


Curtailment cost / (Credit) - -

Settlement cost / (credit) - -

Net actuarial (gain)/ loss recognized in the period - -

Expenses recognized in the statement of profit & losses 1,379,001.00 -

d. Actuary Assumptions

i) Discounting Rate (in %) 8.00 -

ii) Future salary Increase (in %) 5.50 -

iii) Expected Rate of return on plan ( in %) - -


NOTES TOACCOUNTS

ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 10 - OTHER CURRENT LIABILITIES

(a) Current maturities of long-term debt-

447(Series I) (Previous Year 63.70 Lakhs),11.00% Secured Simple Redeemable - 4,470,000.00

Non-Convertible Bonds in nature of Debentures of Rs 10000/- each redeemable

at par on September 9, 2015

80(Series I) (Previous Year 11.00 Lakhs),11.25% Secured Simple Redeemable - 800,000.00



366(Series I) (Previous Year 36.60 Lakhs),11.10% Secured Compounded Redeemable - 2,100,000.00



327(Series I) (Previous Year 32.70 Lakhs),11.35% Secured Compounded Redeemable - 3,070,000.00



90(Series II) (Previous Year 9.00 Lakhs),11.00% Secured Simple Redeemable 900,000.00 -

Non Convertible Bonds in nature of Debentures of Rs 10000/- each redeemable

at par on May 31, 2016

250(Series II) (Previous Year 25.00 Lakhs),11.25% Secured Simple Redeemable 2,100,000.00 -

Non Convertible Bonds in nature of Debentures of Rs 10000/- each redeemable

at par on May 31, 2016

351(Series II) (Previous Year 35.10 Lakhs),11.00% Secured Compounded 3,510,000.00 -

Redeemable Non Convertible Bonds in nature of Debentures of Rs 10000/- each

redeemable at par on May 31, 2016

627(Series II) (Previous Year 62.70 Lakhs),11.25% Secured Compounded 6,270,000.00 -


redeemable at par on May 31, 2016

2000(Series III) (Previous Year 200.00 Lakhs),12.00% Secured Compounded 20,000,000.00 -


redeemable at par on November 30, 2016

(b) Current Maturity of Long Term Borrowings-

Secured from Banks (For Working Capital)

IDBI Bank 12,500,000.0025,020,000.00

Bank of Maharashtra 40,000,000.00 -

UCO Bank 20,455,204.00 -

DCB Bank 56,250,000.00 -

For Fixed Assets

HDFC Bank 1,714,748.00 -

Secured from Others (For Working Capital)

MAS Financial Services Limited 54,999,997.0099,999,995.00

IFMR Capital Finance Pvt. Ltd. 96,183,971.00 -

Reliance Capital Ltd. 70,366,728.00 -

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

(c) Interest accrued but not due on borrowings 3,512,498.0012,972,662.54

(d) Interest accrued and due on borrowings 1,066,908.00 -

(e) Unpaid dividends 215,550.0016,250.00

(f) Other payables (Security of ICL received from Harindra Investments Ltd.) 2,000,000.00223,500.00

(g) Statutory Dues :-

TDS Payable 729,052.001,873,262.00

ESI Payable 137,747.00188,519.00

PF Payable 424,136.00547,601.00

Service Tax Payable - 6,640.00

(h) Contractually reimbursable expenses

Charan Gupta Consultants (P) Ltd. 10,000.0015,000.00

Harsh Goel & Associates -72,000.00

Claims to be Adjusted 103,068.00 66,251.00

Cheque Issued but not Presented for Payment 130,402.00416,097.00

TOTAL 85,172,273.00460,265,513.54

NOTE 11 - SHORT TERM PROVISIONS

(a) Provision for employee benefits:

(I) Provision for gratuity 11,457.0078,451.00

(ii) Provision for leave encashment 82,599.00 -

(b) Provision - Others:

(I) Provision for tax (Net of advance tax) 7,652,630.001,130,850.00

(ii) Provision for Proposed Equity Dividend 8,726,391.00 -

(iii) Provision for Proposed Preference Dividend 1,150,820.00 -

(iv) Provision for Tax on Proposed Dividends 2,010,763.00 -

(v) Provision on Standard Asset 6,775,335.0014,412,695.00

TOTAL 14,439,422.0027,592,569.00


NOTES TOACCOUNTS

(Amount in Rupees)

NOTE 12 (A) - FIXED ASSETS

Tangible Assets Gross Block

Balance as Additions Disposals Borrowing Other Balance as

at 01-4-2015 cost adjustment at 31-3-2016

Premises Fixture - - -349348.00 2510318.822,160,970.82

Other Furniture - - -1427549.00 6033669.824,606,120.82

Electric Implants - - -8019878.00 11720718.993,700,840.99

Computer - - -2580635.00 10534677.637,954,042.63

TOTAL - - -12,377,410.00 30,799,385.2618,421,975.26

Previous Year - - -6,589,519.00 13,565,473.2613,565,473.26

NOTE 12 (A) - FIXED ASSETS (contd.)

Tangible Assets Accumulated Depreciation and Impairment Net Block

Balance as Depreciation Adj. as per Balance as Balance as Balance as

at 1-4-2015 for the year Comp. Act-13 at 31-3-2016 at 31-3-2016 at 31-3-2015

Premises Fixture 316,627.00 227,032.00 - 543,659.00 1,966,659.82 1,844,343.82

Other Furniture 734,082.00 512,788.00 - 1,246,870.00 4,786,799.82 3,872,038.82

Electric Implants 339,254.00 616,228.00 - 955,482.00 10,765,236.99 3,361,586.99

Computer 4,176,206.00 2,065,460.00 - 6,241,666.00 4,293,011.63 3,777,836.63

TOTAL 5,566,169.00 3,421,508.00 - 8,987,677.00 21,811,708.26 12,855,806.26

Previous Year 2,090,414.00 1,062,439.00 - 2,090,414.00 11,475,059.26 11,475,059.26

NOTE 12 (B) - FIXED ASSETS (contd.)

Intangible Assets Gross Block

Balance as Additions Disposal Other Balance as

at 01-4-2015 Adjustment at 31-3-2016

Software 1,584,314.00 350,063.001,934,377.00 - -

License Fee 633,863.00 968,225.00 1,059,276.001,393,638.00 -

TOTAL 633,863.00 2,552,539.00 1,409,339.003,328,015.00 -

Previous Year 1,168,914.00 3,129,905.003,129,905.00 - -

NOTE 12 (B) - FIXED ASSETS (Contd.)

Intangible Assets Accumulated Depreciation and Impairment Net Block

Balance as Depreciation Eliminated on Balance as Balance as Balance as

at 01-4-2015 for the year disp. of assets at 31-3-2016 at 31-3-2016 at 31-3-2015

Software 1,140,231.00 56,745.00 969,066.00 227,910.00 122,153.00 794,146.00

License Fee 468,283.00 135,633.00 305,703.00 298,213.00 761,063.00 925,355.00

TOTAL 1,608,514.00 192,378.00 1,274,769.00 526,123.00 883,216.00 1,719,501.00

Previous Year 624,357.00 456,779.00 - 1,081,136.00 2,048,769.00 2,048,769.00

NOTE 12 (C) - FIXED ASSETS (Contd.)

Depreciation and amortisation relating to continuing operations : As at As at

31-3-2016 31-3-2015

Depreciation and amortisation for the year on tangible assets 3,160,216.003,421,508.00

Depreciation and amortisation for the year on intangible assets 527,378.00192,378.00

Depreciation and amortisation relating to continuing operations 3,687,594.003,613,886.00

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 13 - DISCLOSURES UNDER ACCOUNTING STANDARDS (Contd.)

Deferred Tax (Liability) / Asset

Tax effect of items constituting deferred tax liability

On difference between book balance and tax balance of fixed assets (1,133,778.00)(990,238.00)

Tax effect of items constituting deferred tax liability (A) (1,133,778.00)(990,238.00)

Tax effect of items constituting deferred tax assets (on provision on 2,487,804.005,712,158.00

Standard Assets & Gratuity and Leave encashment)

Tax effect of items constituting deferred tax assets (B) 2,487,804.005,712,158.00

NET DEFERRED TAX (LIABILITY) / ASSET 1,354,026.004,721,920.00

1. The above is pursuant to Accounting Standard -22 issued by the Institute of Chartered Accountants of India in respect of "Accounting

for Taxes on Income'. Accordingly necessary deferred tax liabilities and assets have been recognized.

NOTE 14 - LONG TERM LOANS AND ADVANCES

(A) Security Deposits

Unsecured, Considered good 10,030,500.00 13,143,250.00

(B) Other (Micro-finance Loans)

Unsecured, considered good 4,876,091.0094,992,674.00

TOTAL 105,023,174.00 18,019,341.00

NOTE 15 - OTHER NON-CURRENT ASSETS

(i) Share issue expenses (when applicable) 109,780.00

(ii) Interest accrued but not due on ICL & FLDG & FD 1,627,095.00 129,896.00

(iii) Term Deposits (more than 12 months maturity)* 40,302,829.00 3,000,000.00

TOTAL 41,929,924.00 3,239,676.00

* under lien against loans availed by the company

NOTE 16 - TRADE RECEIVABLES

Other Trade Receivables

Trade Receivables from parties 1,993,579.00352,861.00

TOTAL 1,993,579.00352,861.00

NOTE 17 - CASH AND CASH EQUIVALENTS

(i) Cash and Cash Equivalents

(a) Cash in Hand 3,040,705.571,293,328.57

(b) Imprest 85,882.00166,905.00

(c) Cheques, drafts in hand 1 6,574.006,250.00

(d) Balances with banks

In Current Accounts 221,483,122.56 82,456,757.44

(ii) Other Bank Balances

(a) In earmarked deposits* 8,998,342.00 -

TOTAL 85,599,919.01231,957,948.13

* under lien against loans availed by the company


NOTES TOACCOUNTS

ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 18 - SHORT-TERM LOANS AND ADVANCES

(a) Security Deposits - Unsecured, Considered good 14,875,000.00 4,500,000.00

(b) Loans and Advances to Employees - Unsecured, considered good 683,467.00 42,112.00

(c) Unsecured, Considered goodBalances with government authorities -

CENVAT Credit receivables 2,312.0016,248.00

(d) Inter-corporate deposits -

(Harindra Investments Ltd.)Unsecured, Considered good - 7,039,871.00

(Secured against receivables)

(e) Others (Micro Finance Loans) - Unsecured, considered good 669,972,156.001,345,562,703.00

(f) Others (Loans) - Unsecured, considered good 900,000.00230,684.00

(g) Others (Loans) - Secured, considered good 2,790,000.002,150,000.00

(h) Advances to parties - Unsecured, considered good 140,338.58743,293.50

TOTAL 685,386,789.581,364,261,395.50

NOTE 19 - OTHER CURRENT ASSETS

(a) Accruals

(i) Interest accrued on Loan against Debenture & other loansbut not due 199,317.00116,472.00

(i ) Interest accrued on Micro-finance loansi but not due 3,941,555.007,476,485.00

(iii) Interest accrued but not due on ICL & FLDG, FDs & other loans 192,983.001,336,780.00

(b) Others

(i) Insurance Claims -

(ii) Receivables on Insurance 241,663.00839,595.00

(iii) Others (TDS, Advance Tax) - 7,908,907.00

( v) Stamps in Handi 20,000.0040,000.00

(v) Stationary In Hand 148,789.00127,780.00

(vi) Advance Rent 20,000.0035,100.00

(vii) Prepaid expenses - Unsecured, considered good 450,463.001,023,343.00

(For e.g. Insurance premium, Annual maintenance contracts, etc.)

(viii) Share Issue Expenses (where applicable) - 132,775.00

TOTAL 13,386,348.0010,995,555.00

NOTE 20 - REVENUE FROM OPERATIONS

(A) Interest 133,963,863.00276,076,072.00

(B) Other financial services 18,175,838.9425,313,648.89

TOTAL 152,139,701.94301,389,720.89

(A) Interest

Interest Income from MFI Loan Portfolio 126,174,544.00268,438,601.00

Interest on FDR's 3,243,904.003,307,746.00

Interest on FLDG’s 329,754.003,527,134.00

Interest on ICL & Other Loans 4,215,661.00802,591.00

TOTAL - Financial Revenue 133,963,863.00276,076,072.00

(B) Other Financial Services

Processing Fee 11,130,833.5023,373,678.00

Short term Income from Money Market Instruments 1,865,005.441,939,970.89

Processing Charges & Stamp Paper Charges - 188,000.00

Financial Sub-Arranger Fee - 4,992,000.00

TOTAL - Financial Revenue 18,175,838.9425,313,648.89

NOTE 21 - OTHER INCOME

(a) Interest income (Refer Note (i) below) - -

(b) Other non-operating income (Refer Note (ii) below) 1,811,543.875,508,572.00

TOTAL 1,811,543.875,508,572.00

Note (i) Interest Income comprises :

Interest Income from Income tax Refund - -

TOTAL - Interest Income - -

Note (ii) Other non-operating income comprises :

Misc Income 36,528.8714,052.00

Marketing and Facilitation Fees 1,775,015.005,494,520.00

TOTAL - Other Non-operating Income 1,811,543.875,508,572.00

NOTES TOACCOUNTS


ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

NOTE 2 - EMPLOYEE BENEFITS EXPENSE2Salaries and Wages 32,820,020.0058,993,548.50Contributions to Provident Fund and Other Funds 2,305,364.003,017,202.00ESI Expenses 964,948.001,366,785.00Medical Insuarnce Preminum 436,378.00571,615.00Provision for Gratuity Fund 332,352.00615,543.00Provision for Leave Encashment -1,379,001.00Staff Welfare Expenses 1,167,854.001,664,225.00TOTAL 38,026,916.0067,607,919.50NOTE 23 - FINANCE COSTSInterest on Secured Debentures Application Money 1,332,573.45139,349.00Interest on Unsecured Debentures (Series I) 4,857,077.005,144,552.00Interest on Unsecured Debentures (Series II) 2,890,000.00 -Interest on Secured Debentures (Series I) 11,458,332.0011,696,783.00Interest on Secured Debentures (Series II) 12,921,283.0014,185,631.00Interest on Secured Debentures (Series III) 2,590,300.002,881,590.00Interest on Secured Debentures (Series IV) 1,526,625.00 -Interest on Secured Debentures (Series V) 1,130,627.00 -Interest on Secured Debentures (Public Issue) 22,248,240.0032,004,621.00Interest on Term loan 3,654,142.0052,995,846.10Interest on ICL & Security Deposit 2,535,431.001,189,866.00Processing Charges on Term Loans & ICL 1,178,540.006,637,317.00Brokerage 4,600,525.002,475,000.00Stamp Duty paid 1,340,500.00279,935.00Debenture Trusteeship Charges 219,252.00147,236.00Inspection & Documentation Charges 66,925.00 -Expenses Related To Secured Debentures (Public Issue) - 3,243,104.00TOTAL 72,179,299.45135,391,903.10NOTE 2 - OTHER EXPENSES4Power and Fuel 781,574.00990,947.00Rent Including Lease Rental 3,899,285.006,255,392.00Repairs and Maintenance - Others 124,252.0091,486.00Insurance 7,968.001,280,036.00Fee & Taxes 20,854.00500,597.00Filing Fee 33,200.00131,000.00Service Tax Paid 608,421.001,142,081.58Stamp Exp 279,140.00409,080.00Telephone and Internet Charges 2,486,082.002,737,889.00Travelling and Conveyance 1,301,286.003,515,023.00Printing and Stationery 1,713,350.002,339,749.00Carriage and Forwarding 388,194.57259,012.00Business Promotion 471,024.00388,839.00Advertisement -45,440.00Annual Function Charges 98,798.00210,983.00Legal and Professional 330,243.002,465,389.00Auditors Remuneration 112,360.00142,000.00Charges for increasing the Share Capital W/off 132,775.001,046,386.00Prov for Standard Assets 3,453,906.007,637,360.00Bank Charges 2,893,433.92337,310.71Computer Expenses 681,825.001,473,717.00Sanitation Charges 361,106.00435,570.00Training Expenses 256,307.00316,966.00Meeting Fee 30,000.00129,000.00Petrol Expenses -4,353,711.00(Proft)/loss on sale/disposal of asset 1,277,770.00 -Miscellaneous Expenses 226,793.00368,391.00Credit Information Service Charges 229,934.00401,644.00Due Diligence Expenses -736,348.00Festival Expenses -274,426.00Accretion Charges (Rating Charges) 489,732.00245,000.00Office Maintenance 427,482.00678,142.00Loss on Burglary 300,041.00 -Listing Fees 95,000.00150,000.00Annual Fee 332,402.00 -Annual Maintenance Charges 442,184.00773,035.00Total 22,376,509.4944,172,163.29


NOTES TOACCOUNTS

ParticularsAs at

March 31, 2016As at

March 31, 2015

(Amount in Rupees)

AUDITOR’S REMUNERATION INCLUDES THE FOLLOWING :

Audit Fees 33,708.00100,000.00

Tax Audit Fees 22,472.0030,000.00

Certification Work 56,180.0012,000.00

TOTAL 112,360.00142,000.00

NOTE 25

1. Earning Per Share

In accordance with the Accounting Standard 20 of 'Earning Per Share' as notified by the Companies (Accounting Standards)

Rules, 2006:

(i) Calculation of Earning per Share

Net profit as per Statement of Profit & Loss 37056571 13,664,217.87

Less: Preference dividend on OCPS 1150820 -

Less: DDT on preference dividend 234279 -

Net profit after tax available for equity shares 13664217.8735671472

Weighted average no. of equity shares 708966410907988

Weighted average no. of equity shares for diluted earnings 708966410907988

Basic Earning per share (Rs.) 1.933.27

Face value per share (Rs.) 10.0010.00

(ii) Calculation of Diluted Earning Per Share:

Net profit after tax available for equity shares 37056571 13,664,217.87

Weighted average no. of equity shares 10907988 7089664

Weighted Average no. of potential equity 1278689 0

Weighted average no. of equity shares for diluted earnings 12186677 7089664

Basic Earning per share (Rs.) 3.04 1.93

Face value per share (Rs.) 10.00 10.00

Note: Assuming the conversion of OCPS on face value.

2. The Company has not discontinued any operations hence there is no profit/loss on this account.

3. Related party disclosures in terms of Accounting Standard 18 issued by The Institute of Chartered Accountants of

India is as follows:

Name of related parties and description of relationship:

Enterprises that have control over the company

KITARA PIIN 1501

Key Managerial Personnels :

(i) Mr. Amardeep Singh Samra - Managing director

(ii) Mr. Amitesh Kumar- Chief Financial Officer

(iii) Mr. Preetpal Singh Bedi- Company Secretary & Compliance Officer (Upto October 15, 2015)

(iii) Mrs. Sonia Dua- Company Secretary & Compliance Officer (With effect from November 1, 2015)

Relatives of Key Managerial Personnel:

Mr. Amardeep Singh Samra : Mr. Amarjit Singh Samra, Mr. Sarvjit Singh Samra, Mrs. Surinder Kaur Samra, Mrs.

Gagan Samra, Anayat Samra, Amer Samra

Mr. Amitesh Kumar : Mr. Rajesh Kumar Singh, Mrs. Nisha Singh, Mr. Abhishek Kumar, Mrs. Anshu Kumari, Mrs.

Lata Kumari Singh, Ishanvi Singh

Mr. Preetpal Singh Bedi : Mr. Amarjeet Singh, Mrs. Guljeet Kaur, Mrs. Gurneet Virk, Mrs. Rajwinder Kaur,

Sukhmani Kaur

Mrs. Sonia Dua : Mr. Pawan Puri, Mrs. Santosh Dua, Mr. Paramjit Dua, Naira

NOTES TOACCOUNTS


Name of Related Party Description Nature of Volume of Outstanding Amount

of Transaction Transaction amount as at written off or

Relationship (Amt. in Rs.) 31-3-2015 written back

(Amt. in Rs.) (Amt. in Rs.)

Mr. Amardeep Singh Samra Key Managerial Rent Nil Nil216000.00Personnel Remuneration Nil Nil2808000.00

Sitting Fees 22000.00 Nil NilGuarantees 520000000.00 Nil499027966.00

Mr. Amitesh Kumar Key Managerial Nil# Remuneration Nil1508168.00Personnel

Mr. Preetpal Singh Key Managerial Nil# Remuneration Nil216336.00Personnel

Mrs. Sonia Dua Key Managerial Nil# Remuneration Nil103871.00Personnel

Mr. Amarjit Singh Samra Relative of Rent NilNil291000.00Key Managerial

Personnel

Mrs. Surinder Kaur Samra Relative of Rent NilNil291000.00Key Managerial

Personnel

Mr. Sarvjit Singh Samra Relative of Rent NilNil216000.00Key Managerial

Personnel

Mrs. Gagan Samra Relative of Rent NilNil108000.00Key Managerial Sitting Fees 10000.00

Personnel

Kitara PIIN 1501 Enterprise that Nil* Finance 149992180.00 149992180.00have control (Equity)

over thecompany

# Remuneration means the Gross Remuneration without any deductions.* Equity includes Security Premium Reserve.

25.4 Operating Lease

The company has taken on operating lease office premises for a period ranging from 11 to 36 months on non -cancelable for

the years as referred in the agreements. These lease agreements provide for increase in the lease payments by 10% to 15%

over the period as mentioned in the agreements. Lease payments for the current financial year in respect of these

recognized in the Statement of Profit and Loss amounts to Rs. 6,255,392/- (31 March 2015: Rs.3,899,285/- )

The future lease payments in respect of the above are as follows (Amount in Rs.)

Particulars As at

March 31, 2016

Not later than one year 5882644

Later than one year but not later than five years 3694396

Later than five years 21780

NOTE 26 - ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS

Additional disclosures as required by the Reserve Bank of India: -

26.1 Earnings in foreign currency - Rs. Nil (PY. Nil)

26.2 Earnings in foreign currency - Rs. Nil (PY. Nil)

26.3 Disclosures required under Section 22 of the Micro Small and Medium Enterprises Development Act 2006

Based on the information available with the company, there is no outstanding dues to suppliers registered under"The Micro, Small and Medium Enterprises Development Act 2006" as at March 31, 2016(Previous year Nil).


NOTES TOACCOUNTS

(iii) Asset Liability Management :

Maturity pattern of certain items of assets and liabilities.(Rs. in Crores)

Particulars 1 day to Over 1 Over 2 Over 3 Over 6 Over 1 Over 3 Over Total

30/31 days month to month upto month upto month upto year upto year upto 5 years

(1 month) 2 month 3 month 4 month 1 years 3 years 5 years

Liabilities

Borrowings 0.85 0.85 1.86 3.58 7.21 12.99 Nil Nil 27.34

from Banks

Market Borrowings 1.96 3.46 2.20 7.32 14.99 24.09 26.46 18.39 98.87

(Other than Banks)

Assets

Advance 17.04 16.90 15.91 41.60 45.47 14.50 Nil Nil 151.42

Investments Nil Nil Nil Nil Nil Nil Nil Nil Nil

26.5 Disclosure as required under DNBS (PD) CC. No. 300/03.10.038/2012-13 dated 3rd August 2012.

The Margin Cap of the Company as on March 31, 2016 is 11.63%.

26.6. The figures of the previous year have been regrouped/ reclassified wherever necessary to make them comparable

with the figures of the current year and also in accordance with Schedule III of Companies Act 2013.

ParticularsAs at

March 31, 2016As at

March 31, 2015

(Rs. in Crores)

(i) Capital to Risk Assets Ratio (CRAR)

Tier I Capital 9.3132.99

Tier II Capital 4.379.39

Total Capital 13.6842.38

Total Risk Weighted Assets 72.70150.79

Capital Ratios

CRAR(%) 18.8228.11

CRAR- Tier I Capital (%) 12.8121.88

CRAR- Tier II Capital (%) 6.016.23

(ii) The Company has no exposure to real estate sector, both direct and indirect.

4. Disclosure Pursuant to Reserve Bank of India Notification DNBS.200/CGM (PD)-2008 dated 1st August, 2008

NOTES TOACCOUNTS


THE MILESTONES

As at July 31, 2016THE MILESTONES

States 3

Union Territory (UT) 1

Villages covered 5122

Branches 45

Joint Liability Groups 45622

Members 203105

Borrowers 144493

No. of Centres 8482

Average Ticket Size Rs. 14880

Cumulative Loans Disbursed Rs. 546 Crores

(US$ 81.73 )Million

Loan Outstanding Rs. 179.73 Crores

(US$ 26.93 )Million

Repayment Rate 100%

Loan End Use Verification 100%

Share Capital Rs. 20.71 Crores

(US$ 3.10 )Million

Total Assets (Estimated) Rs. 221.77 Crores

(US$ 33.22 )Million


Customer Base

Loan Outstanding(Rs. in Crores)

31- -2014331-3-2013 31-3-2015 31-7-201631-3-2016

Rs 14.63Crores

25435Rs 33.21Crores

66064 Rs 67.48Crores

116676

Rs 144.05Crores

167921

Rs 179.73Crores

203105

OURCUSTOMERS


SUCCESSSTORIES

I, Paramjit Kaur W/o Varinder Singh R/o

Village Jarkhar, Distt. Ludhiana ., Punjab

I am associated with Midland Microfin

Limited from last 3 years. My husband is

a factory worker. I have taken loan of Rs.

15000/- twice from Midland Microfin

Limited for my cosmetic &small

garment shop in my village. I used the

loan amount for expansion of my

business.

I am very happy and now I earn Iwell &

am able to provide quality education to

my daughter.

Thanks to Midland Microfin.

PARAMJIT KAURR/o VPO Jarkhar, Distt. Ludhiana

I, resident ofSita Devi w/o Sanjay Pathana

Mohalla Panipat . I used to sell, , Haryana

Bed sheet , Pillow covers and others

covers making designs on them. Iafter

took loan from Midland Microfin Limited

and invested the same in my business by

purchasing raw material. It helped me to

expand my business. I Midlandrequest

Microfin to provide loan to other people

like me so that they can also grow their

small establishments. I am very thankful

to Midland Microfin Limited.

SITA DEVIR/o Pathana Mohalla, Panipat

I am Gita w/o agdish R/o village RahdaRani J Kumar ,

Distt. Assandh I took loan, Haryana. of Rs. 15000/-

from Midland Microfin Limited to expand my

business t not only helped my business to grow. I

but also increased my self-income as well as my

confidence. Now I can fulfil the needs of my family

as growth in business has helped improve the

financial condition of our family.

I feel that with the help of Midland Microfin, my

standard of living is improving and I am able to meet

all my daily expenditure. I wish to stay connected

with Midland Microfin Limited in future as well so

that I can further grow my business. Thanks to

Midland Microfin for this support.

GITA RANIR/o VPO Rahda, Distt. Assandh


RECREATIONALACTIVITIES

5th Establishment Day Celebrations

Haly-Yearly Awards Ceremony


RECREATIONALACTIVITIES

Chairman’s Club 2015 - Mumbai Meri Jaan !

Midland Cricket League-2015



OURPARTNERS

After death of my husband I decided to start my ownthe ,

business of stitching clothes or that purpose I needed. F

money. At that time I took loan from Midland Microfin for

starting my business and I am thankful tofor that

Midland Microfin from bottom of my heart who helped

me at that time. my work is going on very smoothlyNow

and am earning very easilyI good income and can take

care of my family.

-Usha Rani

Resident of Gandhi Basti, Faridkot, Punjab

Midland Microfin Customer

ECONOMIC &SOCIAL IMPACT

MIDLAND MICROFIN LIMITEDHead Office :`The AXIS’, BMC Chowk, G.T. Road,Jalandhar - 144 001 (Pb) INDIA

Tel.: +91 181 508 5555, 508 6666Fax +91 181 508 7777

email - [email protected]

Toll Free No. - 1800 137 0600

Annual report-2016 - 76 Pages...

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