Equitas Finance Limited · Equitas Finance Limited [EFL], is a wholly owned subsidiary of M/s....

Equitas Finance Limited


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DIRECTORS' REPORTEQUITAS FINANCE LIMITED

CIN: U65191TN1993PLC025280thRegistered Office : 4 Floor, Phase II, Spencer Plaza, No. 769,

Mount Road, Anna Salai, Chennai 600 002

Tel.: + 91 44 4299 5000 E-mail: [email protected] Website: www.equitasvf.in

The Directors have pleasure in presenting the Twenty Third Annual Report together with the audited Accounts of the stCompany for the financial year ended 31 March 2016 (FY 2015-16).

1. Overview

Equitas Finance Limited [EFL], is a wholly owned subsidiary of M/s. Equitas Holdings Limited [EHL]. The Company has

been classified as 'Asset Finance Company – Non Deposit Taking' as per Reserve Bank of India [RBI] Certificate of thRegistration No. B-07-00412 dated 10 October 2012. The Company, being a Systemically Important Non-Deposit

taking NBFC, has complied with all the applicable regulations of RBI. As per Non-Banking Finance Companies

Directions, 1998, issued by RBI, the Directors hereby report that the Company had not accepted any public deposits

during the year and did not have any public deposits outstanding as at the end of the year. There has been no change in

the business of the Company during this period. The Company has converted into a public company vide revised thCertificate of Incorporation dated 29 September 2015 issued by the Registrar of Companies. Consequently, the

thCompany received a revised Certificate of Registration from RBI bearing no. B-07-00412 dated 29 October 2015.

2. Financial Results

(Rupees in Lakhs)

3. Dividend

The Directors do not recommend any dividend for the year.

4. Operational highlights

The details of operations are given in the Management Discussion and Analysis [MD&A] Report.

5. Management Discussion and Analysis

The MD&A Report, highlighting the important aspects of the business is given in this Report as Annexure I.

6. Capital Adequacy

stThe Capital Adequacy ratio stood at 29.63% as on 31 March 2016 as against the minimum requirement of

15.00% stipulated by RBI. The Net Owned Funds (NOF) as on the said date was Rs.71,091.89 lakhs.

Gross income

47,607.81

29,649.35

Less: Total Expenditure 34,525.35 24,440.80

Profit before taxation

13,082.46

5,208.55

Provision for taxation 4,570.44 1,785.84

Profit after taxation

8,512.02

3,422.71

Transfer to General Reserve

0.00

0.00

Particulars For the Year ended 31st

March 2016For the Year ended 31st

March 2015

7. Subsidiaries

The Company has no subsidiaries.

st8. Material changes after the Balance Sheet Date as at 31 March 2016

There have been no material changes and commitments between the end of FY 2015-16 and the date of this

report, affecting the financial position of the Company, except the following:

a) the Company has received subscription amount of Rs.288,00,00,000/- (Rupees Two Hundred & Eighty stEight crore only) from the Holding Company, Equitas Holdings Limited (EHL) on 21 April 2016. The

Company has issued and allotted on a rights basis, 11,92,05,300 (Eleven crore ninety two lakhs five

thousand three hundred only) equity shares of Rs. 10/- each at an overall premium of Rs.168,79,47,000/- st(Rupees One Hundred and Sixty Eight crore Seventy nine lakhs forty seven thousand only) to EHL on 21

April 2016.

b) the Scheme of Amalgamation of Equitas Micro Finance Limited and Equitas Housing Finance Limited with

the Company has been presented before the Hon'ble High Court of Judicature at Madras, Chennai vide

Company Petition Nos. 119/2016, 120/2016 and 121/2016 and the Petitions were considered by the High thCourt of Judicature at Madras in its hearing held on 28 April 2016. The orders of the Court are awaited.

9. Corporate Governance Rating

Equitas Holdings Limited, the Holding Company has been re-affirmed 'CRISIL GVC Level 2' rating by the CRISIL.

This Governance and Value Creation (GVC) rating indicates very high capability with regard to corporate

governance and value creation for all its stakeholders.

10. Corporate Governance Report

A report on Corporate Governance is given in this Report as Annexure II.

Details on number of Meetings of Board and Committees and composition of various Committees of the Board

are given in the Corporate Governance Report.

The Company has devised a vigil mechanism for directors and employees, details whereof is available on the

Company's website at www.equitasvf.in.

During the year under review, 4 complaints were received under the Whistle Blower Policy of the Company, all of

which were resolved. These are placed before the Audit & Risk Management Committee and the Board every

quarter for review.

11. Directors and Key Managerial Personnel

While selecting Directors, the Company looks for appropriate balance of skills, experience, independence and

knowledge to enable them to discharge their respective duties and responsibilities effectively. The Company has

laid down a clear Policy on remuneration of Directors, KMP and other employees.

11.1 During the year under review, Ms Lalitha Lakshmanan was appointed as Independent Director of the th thCompany in the Annual General Meeting (AGM) held on 29 June 2015 for a term of 5 years upto 27

March 2020.

11.2 Mr John Arunkumar Diaz, Non-Executive Director retires by rotation this year, and being eligible, offers

himself for re-appointment. The Directors recommend his re-appointment as Director of the Company.

Appropriate resolution for his re-appointment is being placed for approval of the shareholders at the

ensuing Annual General Meeting.

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11.3 The provisions of Articles of Association granting rights to investors of the holding company, Equitas

Holdings Limited, to nominate a Director on the Board of the Company have fallen away on listing of stequity shares of the Holding Company with Stock Exchanges on 21 April 2016. Consequently, Mr

stVenkatesh Natarajan, Nominee Director ceased to be a Director of the Company with effect from 21 April

2016.

The Board places on record its appreciation for the services rendered by Mr Venkatesh Natarajan as

member of the Board and Remuneration & Nomination Committee of the Board that he served on.

12. Overall Remuneration :

Details of all elements of remuneration of all the Directors are given in the Corporate Governance Report. The

Directors of the Company are not entitled to stock options.

Details of remuneration as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 of

Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in this Report as

Annexure III.

13. Evaluation of Board Performance

The performance of the Chairman, the Board, Audit & Risk Management Committee (ARMC), Remuneration &

Nomination Committee (RNC), Corporate Social Responsibility Committee (CSR) and the individual Directors

were evaluated on the basis of criteria as approved by the Board. All the Directors were provided the criteria for

evaluation which was duly filled and sent. The feedback from the Directors was collated and shared in confidence

with the Chairman of the RNC.

The Chairman of the RNC discussed the same at length with other members of the Committee. Areas of

improvement in the functioning of the Board and Committees were identified. Later in the Board Meeting, the

Chairman of the RNC shared the feedback with the Chairman of the Board and other Directors.

14. Small Finance Bank (SFB) and Merger of subsidiaries

The Reserve Bank of India (RBI) has granted an 'in-principle' approval on October 7, 2015 for establishing a 'Small

Finance Bank' (SFB) to Equitas Holdings Limited (EHL) (previously known as, Equitas Holdings Private Limited)

('Holding Company').

One of the conditions precedent to the issuance of the final banking license by RBI is the merger of the wholly

owned subsidiaries – Equitas Finance Limited (the Company), Equitas Micro Finance Limited (EMFL) and Equitas

Housing Finance Limited (EHFL) to form the SFB. It is therefore proposed to merge the Company, EMFL and EHFL,

for which 'in principle' approval has been accorded by the Board of the respective Companies at their Meeting thheld on 26 November, 2015.

In order to comply with this requirement of RBI, the Scheme of Amalgamation was presented before the Hon'ble

High Court of Judicature at Madras and orders of the Court on the merger process are awaited. The effective date

of the merger will be the working day immediately preceding the date of commencement of banking business.

After completion of the merger of EHFL and EMFL with the Company and complying with other terms and

conditions prescribed by the RBI in its 'in-principle' approval, the merged entity is expected to commence

banking operations during FY 2016-17.

15. Directors' Responsibility Statement

The Directors' Responsibility Statement as required under Section 134(3) (c) of the Companies Act, 2013

reporting the compliance with the accounting standards, is given in this report as Annexure IV.

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16. Declaration from Independent Directors

The Independent Directors (IDs) have submitted a Declaration of Independence, as required pursuant to Section

149(7) of the Companies Act, 2013, stating that they meet the criteria of Independence as provided in Section

149(6). In the opinion of the Board, the IDs fulfill the conditions specified in the Act and the rules made

thereunder for appointment as IDs and confirm that they are independent of the Management.

17. Auditors

M/s Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company were appointed as Auditors of the thCompany for 2 years till the conclusion of the 24 Annual General Meeting to be held in the year 2017. The

Company has received a letter from the Auditors, stating that they satisfy the criteria provided in Section 141 of

the Companies Act, 2013 and the continuance of their appointment, if ratified, will be in accordance with the

conditions prescribed under the Companies (Audit and Auditors) Rules, 2014. The Directors recommend the

ratification of appointment of M/s Deloitte Haskins & Sells, Chartered Accountants, as Auditors of the Company th till the conclusion of the 24 Annual General Meeting to be held in the year 2017.

18. Information as per Section 134 (3) (q) of the Companies Act, 2013 read with Rule 8 of the Companies

(Accounts) Rules, 2014

18.1 The Company has no activity relating to conservation of energy or technology absorption.

18.2 During the year, the Company did not have any foreign currency earnings. Foreign currency expenditure

of Rs.158.28 lakhs was incurred during the year.

19. Particulars of contracts or arrangements with Related Parties

The details of related party transactions as required under Section 134 (3) (h) of the Companies Act, 2013 are

given in this report as Annexure V.

20. Risk Management

The Company has a Board approved Risk Management Policy and the Board periodically reviews the risks faced

by the Company and the practices/ processes followed to manage them. Details of the same are covered in the

MD&A report.

21. Internal Financial Control

The Company has clear delegation of authority and standard operating procedures. These are reviewed

periodically by the Audit and Risk Management Committee. These measures help in ensuring adequacy of

internal financial controls commensurate with the nature and scale of operations of the Company.

22. Corporate Social Responsibility (CSR)

The Company has laid down a Corporate Social Responsibility Policy. In accordance with the Policy, the Company

contributes 5% of its net profits to Equitas Development Initiatives Trust (EDIT). CSR activities are carried out

through this Trust. A report on Corporate Social Responsibility is given in this Report as Annexure VI.

23. Secretarial Audit Report

The Secretarial Audit Report as obtained from Dr B Ravi, Practising Company Secretary is given in this Report as

Annexure VII.

24. Loans / Guarantees / Investments

The Company has not given any loans/guarantees and has not made any investment in securities as covered

under Section 186 of the Companies Act, 2013.

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25. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013

The Company has in place, a Policy in line with the requirements of the Sexual Harassment of Women at

Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee has been set up to

redress complaints received regarding sexual harassment. All employees are covered under the policy. During

the year 2015-16, no complaints were received under the same.

26. The extract of the Annual Return in the prescribed form is given in this report as Annexure VIII.

27. In accordance with Rule 8(5)(vii) of the Companies (Accounts) Rules 2014, there have been no significant and

material orders passed by the Regulators or courts or tribunals impacting the going concern status and the

future operations of the Company.

Acknowledgement

The Directors gratefully acknowledge the excellent relationship with the Board of the Holding Company and their

continued guidance and support for the various activities of the Company. The Directors thank the Banks and the

Financial Institutions associated with the Company for their support. The Directors also thank the employees of the

Company for their commitment and contribution to the growth of the Company.

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Chennai, th4 May 2016

For and on behalf of the Board of Directors

Sd/- Sd/-Kuppuswamy P T Vasudevan P NChairman Director

Annexure IEquitas Finance Limited

Management Discussion and Analysis

Introduction

Equitas Finance Limited [EFL] is an NBFC-ND-SI registered with RBI under the 'Asset Finance Company' [AFC] category.

It provides asset-based financing to segments of customers, who do not have adequate access to finance from formal

financing channels. The Company offers used commercial vehicle financing to small truck operators and also financing

to self-employed business people, belonging to Micro and Small Enterprises [MSE].

Trends in the market

Used Commercial Vehicle [UCV] financing

During FY16, the domestic CV industry sales registered growth of 11.5% in volumes compared to a decline of 2.8% in

FY15. The recovery was driven by continuation of healthy replacement-led demand in case of M&HCV (Trucks),

renewal as well as fleet expansion by various State Road Transport Undertakings as well as some pick-up in demand

from mining and construction driven sectors. The M&HCV (truck) segment registered a growth of 31.9% during the

year. The demand for LCV (truck) segment also started picking up from H2FY16 after declining for past two years

(Source: ICRA).

Though the demand for road logistics has not improved meaningfully over the past few quarters, the reduction in

diesel prices has come as a relief for the industry, which was reeling under pressure of steadily rising operating costs

and weak pricing power (amidst surplus capacity in the trucking system). The improvement in cash flows of fleet

operators has also started showing up in improved collection efficiency for CV financiers, who expect that further

deterioration in asset quality indicators is less likely in the near term.

UCV finance market is quite large in size and is estimated at around INR 1.80 Lac Crore. Downtrend in new CV sales for a

short time does not impact the UCV finance market but a sustained weakness in new CV industry does have an impact

on the UCV market, as experienced in FY15. With the increase in sale of new CVs in FY16, UCV market is also showing

signs of moving towards stability. Traditionally, customers in the UCV market prefer models that are more than 6 or 8

years old, but this trend is changing in recent times and customers are tending towards purchase of newer models, i.e.,

3 to 6 years old vehicles, as these vehicles are likely to deliver them 'value for money' due to better fuel economy and

lower maintenance cost.

The Company offers financing services mainly to customers who are desirous of becoming owners of CV, after years of

experience as drivers. Out of the used CV portfolio funded by EFL, about 80% of them are such first time finance buyers,

with no prior exposure to organised financing such as banks or NBFCs. Sufficient freight availability is crucial for our

customers to ensure that they turnaround their vehicle optimally increasing their freight revenues. Given the profile of

our customers, their ability to absorb earning shocks beyond a couple of months is low. This calls for very close hand-

holding and working with each customer to support them suitably in times of stress.

The Company's receivables management has been good and the level of delinquencies & NPA are under control and

compare very favorably with peers. In view of the criticality of the same, the Receivables Management would continue

to remain a key management focus.

Micro & Small Enterprises [MSE] financing

SMEs are critical to the nation's economy as they contribute significantly to India's domestic production. According to

the NSSO Survey of 2013, there are some 57.70 million small business units, mostly individual proprietorship, which


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run manufacturing, trading or services activities. (Source: Economic Characteristics of Unincorporated Non

Agricultural Enterprises (Excluding Construction) in India, National Survey Sample Report, February 2013). These

encompass myriad of small manufacturing units, shopkeepers, fruits / vegetable vendors, truck and taxi operators,

foodservice units, repair shops, machine operators, small industries, artisans, food processors, street vendors and

many others. A vast part of the non-corporate sector operates as unregistered enterprises and formal or institutional

architecture have not been able to reach out to meet its financial requirements. (Source: Ministry of Finance Circular

on Launch of MUDRA Bank).

Equitas' target segment is at lower end within the MSE segment, which are currently not serviced by any formal

financiers.

The business for the ticket size up to Rs.5 lakh is sourced through the micro finance arm of the Group, EMFL and

collection is also managed by them. FY15 was the first full year of this financing operations, which was largely

restricted to South India and in FY16, this product was extended to West and North regions.

From the financier's point of view, this is an attractive product as it is secured on particular primary security and

additionally, secondary collateral is offered in the form of a residential or commercial property.

A large proportion of the loan above Rs.5 lakh is extended to the self-employed category, which mainly utilizes funds

for business purposes such as purchase of assets, expansion and working capital requirements. CRISIL Research

estimates total outstanding in this segment to reach Rs.3,459 billion by 2016-17 with a CAGR of 23-25%. While most of

these are high ticket loans from 1 Crore and above, servicing the formal segment, there are similar opportunities in the

informal sector consisting of cash and carry profiles such as small traders.

EFL is also looking at offering other loan products like loan against gold, two wheeler loans etc., which have been

launched on a 'pilot' basis during Q3FY16 in some branches.

The Company's customers are in the informal segment, who do not possess sufficient documented proof of income.

The biggest challenge in this financing activity is the ability to identify prospective customers and assess their income

with reasonable certainty.

The focus of the Company in terms of customer segment is on those who:

a) deal in goods or services of daily use nature;

b) sell on cash & carry

As on date, the delinquency is very low in MSE financing portfolio due to the close understanding of the customer

segment as well as securing repayment through ECS / ACH mode.

This has been aided by the following:

a) Understanding of the markets and customer profile

Deep understanding of this segment of customers is possible since Equitas Group has been servicing

similar customer profile since its inception. This is aided by the fact that the management team as well as

most of the organisation comes with deep understanding and long experience of servicing customers,

who are not serviced by the formal financial sector.

Assessing the repayment capability of customers is a major challenge in these categories. This is largely

because of the very low asset base and cash-based income of the borrowers. Assessment of the

applicant's knowledge of the business and financial viability is carried out by field staff as well as an

independent team of credit officers. A viability report is prepared for each customer before credit decision

is taken.

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A majority of customers in this segment, mainly in used CV finance business, lack proper banking habits

and hence end up paying back the instalments by way of cash, creating resultant operational risks. The

experience of running micro finance with 100% cash collections and strong risk management practices has

been leveraged to bring about similar high quality operational processes. Mobile based receipting

technology at the field level has enhanced controls significantly and reduced the operational risk.

Endorsement of the Company's name in the Registration Certificate [RC] Book of the vehicle is of

paramount importance to establish the security in favour of the Company. For MSE financing businesses,

registration of Mortgage Deed is mandatory, prior to disbursement. These are tracked closely.

b) Relationship with customers

The cash flow of the customers, in used CV segment, is typically dependent on the one or two vehicles they

own and any minor disturbance, including accident, could affect their cash flow and ability to service the

loan on time. The market practice is for the financier to repossess the vehicles after the overdues cross 60

or 90 days, with little effort made to differentiate between intent and ability of the customer to repay.

Equitas has redefined its approach in this crucial aspect of customer relationship. Branch team is trained to

differentiate between customers with genuine difficulties and customers who are intentionally avoiding

the repayment. The Company provides its data to all the four Credit Information Companies [CICs] i.e.,

Credit Bureaus operating in the country. Customers are kept informed of the information sharing and also

advised on the importance of paying instalment on the 'due date' and how such repayment practice would

help them when they would want to avail loans in the future from organized finance sector.

Customers in MSE financing business repay through ECS / ACH mode and probably this is the first time that

they are effectively using the banking channel to repay loans. These customers need constant reminders

to keep funds in their bank accounts at the time the monthly commitment hits their bank account. The

tele-calling team at Equitas Head Office calls customers in advance to alert and remind them of the

instalment due date.

In summary, the Company has been able to grow well in the last year in all the key businesses it operates,

due to the unique position and relationships with the customers that it has built over time.

Operational and Financial Results

During the year, the Company expanded the used CV business by increasing the network to 135 branches spread over

13 States and 1 Union Territory. Equitas Group had already a presence through its microfinance business in many of

States such as Tamil Nadu, Pondicherry, Maharashtra, Madhya Pradesh, Gujarat, Karnataka and Rajasthan. The

progressive geographic diversification is seen as one of the key elements of the Company's risk diversification plan.

MSE product is targeted mainly at the customers of EMFL, and in the initial phase all branches of Tamil Nadu were

covered and during FY16, this product was launched in other States.

The Company increased the disbursements across the 3 divisions from about Rs.410 Crore in Q1FY16 to about Rs.540

Crore in Q4FY16 and achieved a total disbursement for the year of about Rs.1,916 crore. The disbursement in FY16

represents a CAGR of about 53% over FY14.

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This enabled the Company to close the year with a total AUM outstanding of about Rs.2,596.2 Crore comprising of loan

outstanding of Rs.2,249.0 crore and Securitised portfolio of about Rs.347.2 crore. AUM growth in FY16 over FY14 has

been about 70.9%.

Interest Income stood at Rs.400.8 crore vs. Rs.256.7 crore in the previous year, reflecting a growth of 56.1% while Total

Income stood at Rs.476.1 crore vs. Rs.296.5 crore in the previous year, reflecting a growth of 60.6%.

The Company's collection performance was also quite effective, despite the migration to 5 months recognition norms

for NPA for FY16 as compared to 6 months up to FY15. The GNPA% of the Company compares much favourably with its

peers.

P.S.: GNPA recognition norms was on 6 months basis up to FY15, which has moved to 5 months from Fy16

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1,509.5 Cr

1,086.7 Cr

AUMFY 15-16

VF / UCV MSE

58%

42%

843.8

1,661.8

2,249.0

45.0

24.5

347.3

888.8

1,686.3

2,596.2

-

1,000.0

2,000.0

FY 13-14 FY 14-15 FY 15-16

AUM(Rs. in Crores)

EFL - On Book EFL -Managed

EFL - AUM

-

20.00

40.00

60.00

FY 13-14 FY 14-15 FY 15-16

13.8

33.2

55.3

Gross NPA

(Rs. in Crores)

1.63% 2.00%

2.46%

1.44% 1.50% 1.80%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

FY 13-14 FY 14-15 FY 15-16

GNPA% NNPA%


818.2

1,364.8

1,916.4

-

500.00

1,000.00

1,500.00

2,000.00

FY 13-14 FY 14-15 FY 15-16

Disbursements

(Rs. in Crores)

1,190.5

Cr

725.8 Cr

Disbursements

FY 15-16

VF / UCV MSE

38% 62%

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.The Company posted a Net Profit after Tax of Rs.85.1 crore for the year compared to Rs.34.2 crore, which represents a

growth of about 148.7% over FY15. The profitability increase in FY16 could be attributed to the better operating

performance of the branches as well as reduction in average borrowing costs due to the capital infusion done in end

FY15, which was available for the full year in FY16.

During the year, the Company further strengthened its collection, legal and risk teams. The various efforts taken

during the year are expected to help in scaling up the operations in the coming years, while keeping control over

portfolio quality.

Capital Adequacy

As at the end of the year, the Capital to Risk Adjusted Assets Ratio [CRAR] stood comfortably at 29.63% as against the

RBI requirement of 15.00%. During April 2016, the Holding company has infused fresh capital of Rs.288 crore out of

the funds raised from IPO, which significantly improved the CRAR of the Company.

Resources and Treasury

The funding for the business is raised through a mix of equity and debt. During the year, the Company has diversified

the debt funding sources to include Term Loans from Banks / Financial Institutions, Subordinated Debt and

Commercial Paper to improve the asset liability position. The borrowing profile mix as of March 31, 2016 is as below:

Working Capital limits are under a bank consortium led by State Bank of India with total sanctioned limits of Rs.412

crores as of March 31, 2016. During the year, the Company has also borrowed term loans amounting to Rs.545 crores

from Banks / Financial Institutions, issued Non-Convertible Debentures [NCDs] amounting to Rs.150 crore on private

placement basis and Commercial Papers amounting to Rs.25 crore. Apart from the above, the Company raised funds

through Securitization / Direct Assignment transactions amounting to Rs.382 crore during the year.

During the year, rating agency CARE has reaffirmed the credit ratings for Long Term Bank Borrowings and NCDs of the

Company at “CARE A-”. Further, India Ratings & Research [an associate of FITCH Group] has reaffirmed the credit

ratings for Long Term Bank Loan and NCDs of the Company at “INDA- with Stable Outlook”. Further, rating agency

CRISIL has assigned “CRISIL A1” for the Commercial Papers of the Company and India Ratings has upgraded the

Commercial Papers of the Company to “IND A1” from “IND A2+”.


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Human Resources

The Company has provided a wide range of benefits to its employees including health insurance for all its employees st stand their dependents. The number of employees as at 31 March 2016 was 2,928 as against 2,228 employees as at 31

March 2015.

To enable employees provide quality education to their children, Equitas Group has introduced Children Education

Loan for the employees. All the employees are covered by the ESOP scheme. The Group has also provided

opportunities to employees to move across business verticals through the Career Enhancement Program [CEP]. New

joinees are inducted into the Company through a 2-day training programme, which is conducted once a month in every

region. Leadership Development Programme for senior management team of the Company was also facilitated during

the year.

Risk Management

The Company has a Board approved Risk Management Policy and the Board periodically reviews the risks faced by the

Company and the practices followed to manage them. This is in line with the Risk Management framework formulated

by the Group.

The risks that are part of the policy framework covers both, external and internal risks. The Risk Management policy is

presented to the Audit & Risk Management Committee [ARMC] and Board every year, wherein the risk parameters as

assessed by the Management, is presented to the Committee and Board. A scoring methodology has also been evolved

based on the severity and likelihood of each risk; the risk score arrived at is categorised as High, Low & Medium.

Further, the progress / movement is captured on each of the risk element, especially the high risk areas, on an ongoing

basis and periodically reviewed by the Management for corrective actions, wherever required.

The Company has also in place a FMEA [Failure Mode Effects Analysis] for its operational processes, wherein detailed

study is done on the impact of the failure in terms of severity, occurrence and detection. A composite score i.e., Risk

Priority Number [RPN] is arrived, on the basis of which action is taken for higher risk scores to further reduce the risk of

the failure of process. This is also reviewed by the ARMC and Board on an annual basis.

Apart from credit and operating risks, covered in the preceding paragraphs, the Company faces financial risks namely

liquidity risk, credit default risks and interest rate risks. Timely mobilization of debt funds is critical for achieving

planned growth and profitability. The Company's lending is on a fixed rate basis whereas the borrowing comprises of

both fixed and floating rate basis. It also has to ensure that the financial commitments to institutions and banks are met

on a timely basis.

The Company leverages the relationship of the Group with various lenders to raise debt funds and it has a robust asset

liability management process, which is reviewed by the Asset Liability Committee [ALCO]. This ensures that the

liquidity and interest rate risks are well managed. The Minutes of the ALCO is also placed before the Board at every

quarter meetings.

Outlook and challenges

NBFCs are increasingly playing a critical role in making financial services accessible to wider set of India's population

and, thus, emerging as significant players in the retail finance space. The Company has chosen market segments which


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have a large market size with few organised players.

The gap in regulation with reference to provisioning norms between banks and NBFCs are progressively getting

narrowed and would be synergized by FY18. This would make the sector more attractive from the investor perspective.

With a well-trained & committed resource team, sound systems & processes and customer friendly practices, the

Company is confident of achieving healthy growth over the years.

Some of the products of the Company, especially the used CV finance, remains strongly linked to the overall economic

performance of the country and the performance of some key sectors. The management needs to be continuously

focused to keep the portfolio quality under control.

Cautionary Statement

Statements in this MD&A describing the Company's objectives, projections, estimates and expectation may be

'forward looking' within the meaning of applicable laws and regulations. Actual results might differ materially from

those expressed or implied.





ANNEXURE II

EQUITAS FINANCE LIMITED

REPORT ON CORPORATE GOVERNANCE

CORPORATE GOVERNANCE PHILOSOPHY

The philosophy of Equitas on Corporate Governance envisages adherence to the highest levels of transparency,

accountability and fairness, in all areas of its operations and in all interactions with its stakeholders. Obeying the law,

both in letter and in spirit, is the foundation on which the Company's ethical standards are built. The Company's

Corporate Governance philosophy has been further strengthened by voluntarily adopting Corporate Governance

Guidelines.

CORPORATE GOVERNANCE RATINGS

Equitas Group has been recognized for its voluntary compliance with the highest levels of corporate governance.

CRISIL has re-affirmed the Governance & Value Creation Rating of GVC-2 to Equitas Holdings Ltd., the Holding

Company with only 6 other corporates viz., Bharti Airtel Limited, HDFC Bank Limited, Housing Development Finance

Corporation Limited, Infosys Limited, Mahindra & Mahindra Limited and Hero Motocorp Limited rated at Level 1.

BOARD COMPOSITION

stAs on 31 March, 2016, the Board comprises of 10 (Ten) Directors. The names and categories of Directors and the

number of Directorships are given below:

$ Excluding Alternate Directorships and Directorships of Foreign Companies / Bodies, wherever applicable.

st* Ceased to be Director with effect from 21 April, 2016 since the provisions of Articles of Association granting rights to

investors of the holding company, Equitas Holdings Limited, to nominate a Director on the Board of the Company have st fallen away on listing of equity shares of the holding company with Stock Exchanges on 21 April 2016.

13


Name Nature of Directorship Other Directorships

($)

NON-EXECUTIVE

Kuppuswamy P T(Chairman) Independent Director 2

Jagannath R Independent Director 1

Parthasarathy P Independent Director Nil

Balasubramaniam P S Independent Director 8

George V A Independent Director 1

Sharma V K

Independent Director 4

Lalitha Lakshmanan Independent Director Nil

Venkatesh Natarajan*

Investor Nominee Director 6

John Arunkumar Diaz Non-

-Independent

Non

-

Executive Director

9

Vasudevan P N

Non-Independent

Non Executive Director 6

BOARD MEETINGS & ATTENDANCE

During the Financial Year 2015-16, 7 Board Meetings were held on 30 April 2015, 3 July 2015, 5 August 2015, 5

October 2015, 4 November 2015, 26 November 2015 and 3 February 2016. The gap between any two meetings has

been less than four months.

SEPARATE MEETING OF THE INDEPENDENT DIRECTORS

During the calendar year 2015, in line with the Companies Act, 2013, the Independent Directors had a separate

meeting on 24 March 2015 without the presence of the Management team and the non-independent directors of the

Company.

INFORMATION SUPPLIED TO THE BOARD

In advance of each meeting, the Board is presented with relevant information on various matters related to the

working of the Company, especially those that require deliberation at the highest level. Presentations are also made to

the Board by different functional heads on important matters from time to time. Directors have separate and

independent access to officers of the Company. In addition to items which are required to be placed before the Board

for its noting and/or approval, information is provided on various significant items. The Company takes a lot of effort to

ensure that the quality and comprehensiveness of the information furnished by Management to the Board of the

Company is of high order.

COMMITTEES OF THE BOARD

The Company, at present has Five (5) Committees of the Board viz., Audit & Risk Management Committee,

Remuneration & Nomination Committee, Corporate Social Responsibility Committee, Resources Committee and Asset

Performance Monitoring Committee. The Company also has an executive Committee viz. the Asset Liability

Management Committee with senior management executives as its Members to review the Asset-Liability position of

the Company on an on-going basis.

th rd th th

th th rd

th

Name No. of Meetings Attendance at the

last AGM

Held Attended

NON EXECUTIVE

Kuppuswamy P T (Chairman) 7 7 No

Jagannath R 7 4 No

Parthasarathy P 7 7 No

Balasubramaniam P S 7 4 Yes

George V A 7 7 No

Sharma V K 7 7 No

Lalitha Lakshmanan 7 7 No

Venkatesh Natarajan 7 5 No

John Arunkumar Diaz 7 5 No

Vasudevan P N 7 6 Yes

14


The Board fixes the terms of reference of committees and also delegate powers from time to time. The Minutes of the

Meetings of the Committees are circulated to the Directors and placed before the Board for its information and

confirmation.

AUDIT & RISK MANAGEMENT COMMITTEE

Composition

The Audit & Risk Management Committee, which was reconstituted on 30 April 2015, is chaired by an Independent

Director. All the Members are also Independent Directors.

1. Mr. Parthasarathy P, Chairman

2. Mr. Jagannath R

3. Mr. Balasubramaniam P S

4. Mr. Sharma V K

5. Ms. Lalitha Lakshmanan*

6. Mr. V A George **

Meetings & Attendance

The Committee held Seven (7) Meetings during the year on 20 April 2015, 30 April 2015, 05 August 2015, 05

October 2015, 15 October 2015, 04 November 2015 and 03 February 2016.

*Inducted as a member of the Committee w.e.f. 30 April 2015

** Ceased to be a member of the Committee w.e.f. 30 April 2015

Terms of Reference

The role of the Audit & Risk Management Committee, among others include:

1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure

that the financial statement is correct, sufficient and credible;

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of

the statutory auditor, the remuneration and terms of appointment of auditors of the Company;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements and auditor's report thereon before

submission to the Board for approval, with particular reference to

th

th th th th

th th rd

th

th

15


Name No. of Meetings

Held Attended

Parthasarathy P, Chairman 7 7

Jagannath R 7 4

Balasubramaniam P S 7 4

Sharma V K 7 6

Lalitha Lakshmanan* 7 5

George V A** 7 2

16

a. Matters required to be included in the Director's Responsibility Statement to be included in the Board's

report in terms of (c) of sub-section 3 of section 134 of the Companies Act, 2013

b. Changes, if any, in accounting policies and practices and reasons for the same.

c. Major accounting entries involving estimates based on the exercise of judgment by management.

d. Significant adjustments made in the financial statements arising out of audit findings.

e. Compliance with accounting and other legal requirements relating to financial statements.

f. Disclosure of any related party transactions.

g. Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the Board for

approval;

6. Reviewing, with the management, the statement of uses / application of funds raised through an issue

(preferential issue, rights issue, etc), the statement of funds utilized for purposes other than those stated in the

offer document / notice and making appropriate recommendations to the Board to take up steps in this matter;

7. Review and monitor the auditor's independence and performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of the company with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the company, wherever it is necessary;

11. Evaluation of internal financial controls and risk management systems;

12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal

control systems.

13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit

department, staffing and seniority of the official heading the department, reporting structure coverage and

frequency of internal audit.

14. Discussion with internal auditors any significant findings and follow up there-on.

15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is

suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the

matter to the Board.

16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as

post-audit discussion to ascertain any area of concern.

17. To look into the reasons for substantial defaults in the payment to the debenture holders, shareholders (in case

of non-payment of declared dividends) and creditors;

18. To review the functioning of the Whistle Blower mechanism;

19. Approval of appointment of CFO (i.e. the whole-time Finance Director or any other person heading the finance

function or discharging that function) after assessing the qualifications, experience and background, etc of the

candidate;

20. Laying down and review of procedures relating to risk assessment & risk minimization to ensure that executive

management controls risk through means of a properly defined framework.

21. Credit and Portfolio Risk Management.



Held Attended

Balasubramaniam P S, Chairman 4 3

George V A 4 4

Venkatesh Natarajan* 4 3

John Arunkumar Diaz 4 3

22. Operational and Process Risk Management.

23. Appraising the Board of Directors at regular intervals regarding the process of putting in place a progressive risk

management system, risk management policy and strategy.

24. Laying down guidelines on KYC norms.

25. Review on quarterly basis, the securitization / bilateral assignment transactions and investment activities of the

Company.

26. Annual review of the Company's Policies framed pursuant to RBI Guidelines and suggest changes, if any required

to the Board for adoption.

27. Review on quarterly basis, the complaints under Policy on Prevention of Sexual Harassment of Women at

Workplace.

The Audit & Risk Management Committee shall mandatorily review the following information:

1. Management discussion and analysis of financial condition and results of operations;

2. Statement of significant related party transactions (as defined by the Audit & Risk Management

Committee), submitted by management;

3. Management letters / letters of internal control weaknesses issued by the statutory auditors;

4. Internal audit reports relating to internal control weaknesses;

5. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to

review by the Audit Committee.

REMUNERATION & NOMINATION COMMITTEE

Composition

It comprises of 2 (Two) Independent Directors, 1 (One) Nominee Director and 1 (One) Non-Executive Director.

1. Mr Balasubramaniam P S, Chairman

2. Mr George V A

3. Mr Venkatesh Natarajan*

4. Mr John Arunkumar Diaz


The Committee held Four (4) Meetings during the year on 30 April 2015, 05 August 2015, 04 November 2015 and

03 February 2016:

*Ceased to be a Director with effect from 21 April 2016

th th th

rd

st


17

18

Terms of reference

1. To review the structure, size and composition (including the skills, knowledge and experience) of the Board at

least annually and make recommendations on any proposed changes to the Board to complement the

Company's corporate strategy.

2. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and

recommend to the Board a policy relating to the remuneration of the directors, key managerial personnel and

other employees.

3. Formulation of criteria for evaluation of Independent Directors and the Board.

4. Devising a policy of Board diversity.

5. Identifying persons who are qualified to become directors and who may be appointed in senior management in

accordance with the criteria laid down, and recommend to the Board their appointment and removal and

Succession planning for Director, in particular the Chairman and the Chief Executive.

6. To assess the independence of Independent Non-Executive Directors.

7. To recommend remuneration payable to Non-Executive Directors of the Company from time to time;

8. Annual appraisal of the performance of the Managing Director and fixing his terms of remuneration.

9. Annual appraisal of the senior management team reporting to the Managing Director.

10. Annual performance appraisal of the staff.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Composition

The Corporate Social Responsibility Committee comprises of three (3) Independent Directors.

1.Mr Parthasarathy P, Chairman

2.Mr George V A

3.Mr Sharma V K


The Committee held two (2) Meetings during the year on 30 April 2015 and 4 November 2015.

Terms of reference

The terms of reference of the Corporate Social Responsibility Committee include:

1. Review the Mission of the Organisation from time to time and ensure it stays aligned to changing contexts of

the Organisation.

2. Ensure alignment of the Business goals and objectives of the Company in line with the Mission of the

Organisation.

th th



Held Attended

Parthasarathy P, Chairman 2 2

George V A 2 2

Sharma V K 2 2

Jagannath R , Chairman 2 1


Parthasarathy P 2 2

Vasudevan P N 2 2


Held Attended

19

3. Bring specific focus on certain excluded segments of client community and set benchmarks for the same.

4. Review all the social activities of the Company and suggest to the Board of Trustees suitable measures for

enhancing the efficacy of these activities.

5. Deploy such tools of measurement as may be relevant and available from time to time to study the impact of

the Social Performance activities of the Company and benchmark the same with other MFIs in India and

around the world.

6. Disseminate information related to the Social Performance of the Organisation in such manner as deemed

appropriate.

7. Review the amount spent on social activities and advise the Board on its efficacies.

8. To formulate and recommend to the Board the CSR Policy of the Company.

RESOURCES COMMITTEE

Composition

It comprises of three (3) Independent Directors and one (1) Non - Independent Non - Executive Director.

1. Mr Jagannath R, Chairman

2. Mr Balasubramaniam P S

3. Mr Parthasarathy P

4. Mr Vasudevan P N

The Committee was dissolved consequent to delegation of the powers of the Resources Committee to Managing

Director by a resolution of the Board of Directors passed in the Meeting held on 4 May 2016.


The Committee held two (2) meetings during the year on 16 June 2015 and 5 September 2015

Terms of reference

1. To approve borrowings from various persons including banks, institutions, holding / group companies,

corporates, etc. on such terms and conditions as to repayment, interest rate or otherwise as it thinks fit upto

such limits as approved by the Board / Shareholders from time to time, such limit to be exclusive of any money

borrowed by or on behalf of the Company otherwise than by virtue of this resolution.

2. To approve establishment of current and other accounts with various banks upon such terms and conditions as

may be agreed upon with the said bank.

th

th th


20

-To approve changes in persons authorized to operate current and other accounts and their signing limits for

operating such accounts

- To approve closure of current and other accounts of the Company held with various banks.

3. To allot Non – Convertible Debentures (NCD) from time to time, to one or more subscribers, in one or more

tranches on such terms and conditions as it thinks fit, subject however that the total amount of NCDs so issued

during a financial year shall not exceed the limits approved by the Board /Shareholders from time to time.

ASSET PERFORMANCE MONITORING COMMITTEE

Composition

thThe Asset Performance Monitoring Committee, which was re-constituted on 30 April 2015, comprises of five (5)

Independent Directors.

1. Mr Jagannath R, Chairman

2. Mr Balasubramaniam P S

3. Mr Parthasarathy P

4. Mr George V A*

5. Ms Lalitha Lakshmanan**


th th th thThe Committee held four (4) Meetings during the year on 20 April 2015, 27 July 2015, 26 October 2015 and 27

January 2016.

th * Inducted as a member of the Committee w.e.f. 30 April 2015

th** Inducted as a member of the Committee w.e.f. 30 April 2015

Terms of reference

The terms of reference of the Asset Performance Monitoring Committee include:

I. To review the existing Receivables Management system of the Company;

ii. To review the MIS and other support information system that the Company currently has;

iii. To review the policies on repossessed and unsold vehicles;

iv. Any other matter related to the above.


Jagannath R, Chairman 4 3


Parthasarathy P 4 4

George V A* 4 3

Lalitha Lakshmanan** 4 3


Held Attended

21

ASSET & LIABILITY MANAGEMENT COMMITTEE (ALCO)

Composition & Meetings

The Asset & Liability Management Committee was constituted as per the guidelines issued by RBI in this regard for

Systemically Important NBFCs. The Committee was re-constituted on 30 April 2015 and 5 August 2015 and presently

consists of the following officials of the Company:

1. Managing Director/Chief Executive Officer who shall be the Chairman

2. Chief Financial Officer

3. Head-Information Technology

4. Group Head – Treasury & MIS who shall be the Convenor

The Managing Director and Chief Financial Officer of the holding company are permanent invitees to the Committee.

The Committee meets once a month and reviews the asset liability management reports that are to be submitted

periodically to RBI.

Terms of Reference

The terms of reference of the Asset & Liability Management Committee include:

1. Liquidity Risk Management

2. Management of market (interest rate) risk

3. Funding and capital planning

4. Pricing, profit planning and growth projections

5. Forecasting and analyzing 'what if scenario' and preparation of contingency plans.

6. Approving and revising the actual interest rates to be charged from customers for different products from time to

time applying the interest rate model and also in line with such regulations as may be in force from time to time.

7. Reviewing the Asset Liability Management Reports to be submitted to RBI at periodic intervals.

8. Reviewing the borrowings made from time to time under the authority delegated to the Chief Executive Officer.

The Committee reviews the Asset Liability Management reports to be submitted periodically to RBI.

REMUNERATION OF DIRECTORS

All Directors except Mr Vasudevan P N, Non-Independent Non-Executive Director are paid Sitting Fees for attending

every Meeting of the Board and every Meeting of the Committees, as detailed below :

No Sitting Fee is payable to members of the Asset & Liability Management Committee.

th th


Sl. No.

Nature of Meetings Sitting Fees

(Rs.)

1 Board 20,000/

2 Audit & Risk Management Committee 15,000/

3 to 5

Remuneration & Nomination Committee

Corporate Social Responsibility Committee

Asset Performance Monitoring Committee 10,000/

6 Resources Committee 7,500/

22

The Sitting Fees paid to Directors for the year 2015-16 along with their shareholding in the Company are as under:

Following is the remuneration payable to the Non-Executive Directors of the Company for the Financial Year ended

31 March 2016. There are no performance linked incentives, service contracts, notice period or severance fees.

The Directors of the Company are not eligible for Stock Options.

st

Name

Sitting Fees (Rs.) No. of equity shares

held as on 31st

March 2016Board Committee

Mr Kuppuswamy P T, Chairman 1,40,000 Nil Nil

Mr Jagannath R 80,000 97,500 Nil

Mr Parthasarathy P 1,40,000 1,80,000 Nil

Mr Balasubramaniam P S 80,000 1,27,500 Nil

Mr George V A 1,40,000 1,20,000 Nil

Mr Sharma V K 1,40,000 1,10,000 Nil

Ms Lalitha Lakshmanan 1,40,000 1,05,000 Nil

Mr Venkatesh Natarajan 1,00,000 30,000 Nil

Mr John Arunkumar Diaz 1,00,000 30,000 Nil

Mr Vasudevan P N Nil Nil Nil

Name Remuneration

(Amount in Rs.)

Mr Kuppuswamy P T, Chairman 10,00,000

Mr Jagannath R 5,00,000

Mr Parthasarathy P 7,50,000

Mr Balasubramaniam P S 5,00,000

Mr George V A 5,00,000

Mr Sharma V K 5,00,000

Ms Lalitha Lakshmanan 5,00,000

Mr Venkatesh Natarajan 5,00,000

Mr John Arunkumar Diaz 5,00,000

Total 52,50,000


23

GENERAL BODY MEETINGS

Details relating to last three Annual General Meetings:

All the proposed resolutions, including Special Resolutions, were passed by the shareholders as set out in the

respective Notices.

FAIR PRACTICES CODE

The Company has adopted the Fair Practices Code pursuant to the RBI guidelines issued in this regard, which is placed

on the Company's website and displayed at all Branches of the Company.

CEO/CFO CERTIFICATION

CEO and CFO have given a certificate to the Board as per Regulation 17(8) of SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015.

CODE OF CONDUCT

As per the Company's policy on Code of Conduct for Directors and Senior Management, all Directors and Senior

Management Personnel have affirmed compliance with the code for the FY 2015-16.

The Declaration to this effect signed by Chief Executive Officer has been annexed with this Report.

SECRETARIAL AUDIT

Secretarial audit as required under Section 204 of the Companies Act, 2013 is conducted by an independent Practising

Company Secretary on an annual basis. Dr B Ravi, Practising Company Secretary has conducted the Secretarial audit for

the year ended 31st March 2016, and the certificate was placed before the Board and attached to the Directors'

Report.

WHISTLE BLOWER POLICY

The Company has established the Whistle Blower Policy pursuant to which Directors, employees and vendors of the

Company can report their concerns on unethical and improper behaviour, practices, actual or suspected fraud or

violation of the Company's Code of Conduct or any other wrongful conduct in the Company or of its employees. Details

of complaints received and the actions taken are reviewed by the Audit & Risk Management Committee. None of the

personnel has been denied access to the Audit & Risk Management Committee.


Year Date Time Location

No ofSpecial

Resoultionspassed

2015 29th June 2015 11.00 A.M.

4 Floor, Phase II, Spencer Plaza,

No.769, Mount Road, Anna Salai,

Chennai ‐ 600002

Five

2014 17th June 2014 11.30 A.M.

Phase II, 4 th Floor, Spencer Plaza,

No.769, Anna Salai,

Chennai ‐ 600002

Four

20131st July 2013

10.30 A.M.

4th Floor, Temple Tower, No 672,

Anna Salai, Nandanam,Chennai - 600035

One

24

TRAINING OF BOARD MEMBERS

All Independent Directors inducted into the Board are given an orientation at start which includes a half-day field visit.

The Company also facilitates the continuing education requirements of the Directors by arranging interactive sessions

with industry experts.

REGULAR UPDATES

The Company keeps the Board and stakeholders updated on the happenings of the Company by sending a monthly

letter. All other events and happenings of importance in the sector are reported to the Board on a continuous basis.

DISCLOSURES

The particulars of transactions between the Company and its Related Parties, as defined under Section 2(76) of the

Companies Act, 2013 and in Accounting Standard 18, are set out in the financial statements.

The Company has a record of unqualified financial statements since inception.

GENERAL SHAREHOLDER INFORMATION

Annual General Meeting: Date :

Time :

4 Floor, Phase II, Spencer Plaza,

No.769, Mount Road, Anna Salai, Chennai – 600 002

stTuesday, 21 June 2016

4.00 P.M.

thVenue :

Category No of shares %

Equitas Holdings Limited 100%

Mr S Bhaskar, nominee of Equitas Holdings Limited 0%

Mr Mahalingam H, nominee of Equitas Holdings

Limited 0%

Mr Murthy V S, nominee of Equitas Holdings

Limited 0%

Mr Muralidharan S, nominee of Equitas Holdings

Limited 0%

Mr John Alex, nominee of Equitas Holdings Limited 0%

Mr Raghavan H K N, nominee of Equitas Holdings

Limited0%

Total 100%42,30,00,000

42,29,99,985

10

1

1

1

1

1


The Non-Convertible Debentures (NCDs) of the Company have been issued in dematerialized form and the following

NCDs have been listed in the Bombay Stock Exchange (BSE). The details of ISIN Nos. and Stock Code of such NCDs listed

and currently outstanding are as follows:

The details of unlisted NCDs are as follows:

25

Sl.

No. Nature of NCDs Issue Size [Rs.]

Outstanding as on 31

st March

2016 [Rs.]

ISIN No

1 12.50%-Secured 150,000,000 90,000,000 INE063P07056

2 12.50%-Secured 100,000,000 70,000,000 INE063P07106


Sl.

No. Nature of NCDs Issue Size [Rs.]

Outstanding as

on 31st March

2016 [Rs.]

ISIN No Scrip Code

1 12.70% - Secured 500,000,000 500,000,000 INE063P07015 949255

2 12.00% - Secured 580,000,000 580,000,000 INE063P07023 949649

3 Zero Coupon - Secured

– Redemption at

premium

200,000,000 200,000,000 INE063P07031 950781

4 12.50% - Secured 100,000,000 60,000,000 INE063P07049 950978

5 13.70% - Secured 100,000,000 100,000,000 INE063P07080 950976

6 12.50% - Secured 50,000,000 47,368,421 INE063P07064 950972

7 12.50% - Secured 50,000,000 30,000,000 INE063P07072 950969

8 12.50% - Secured 50,000,000 35,000,000 INE063P07098 951150

9 12.50% Secured 400,000,000 200,000,000 INE063P07114 951637

10 12.13% - Secured 1,000,000,000 1,000,000,000 INE063P07122 951748

11 14.95% - Unsecured,

subordinated 400,000,000 400,000,000 INE063P08013 951930

12 11.66% - Secured 750,000,000 750,000,000 INE063P07130 952464

13 1.66% - Secured 750,000,000 750,000,000 INE063P07148 952614

Transfer Agents : Karvy Computershare Private Limited

Karvy Selenium Tower B, Plot No 31 & 32

Gachibowli, Financial District,

Nanakramguda, Serilingampally

Hyderabad – 500 032

Phone : +91 040 67161604

Address for Correspondence : Company Secretary

Equitas Finance Limitedth4 Floor, Phase-II, Spencer Plaza,

No.769, Mount Road,

Anna Salai, Chennai – 600 002

Phone: +91 44 42995000

Fax: +91 44 42995050

Email: [email protected]

26





CEO / CFO Certificate

The Board of Directors


This is to certify that:

st 1. We have reviewed the Financial Statements and the Cash Flow Statement for the Financial Year ended 31 March,

2016 and that to the best of our knowledge and belief:

a. these statements do not contain any materially untrue statement or omit any material fact or contain

statements that might be misleading;

b. these statements together present a true and fair view of the Company's affairs and are in compliance with

existing Accounting Standards, applicable laws and regulations.

2. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year

which are fraudulent or illegal or violative of Company's Code of Conduct.

3. We accept responsibility for establishing and maintaining internal controls for Financial Reporting and we have

evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting.

4. We have indicated to the Auditors and the Audit Committee:

a. Significant changes in internal control over financial reporting during the year;

b. Significant changes in accounting policies during the year and that the same have been disclosed in the notes

to the financial statements; and

c. Instances of significant fraud of which we have become aware and the involvement therein, if any, of the

management or an employee having a significant role in the company's internal control system over financial

reporting.

Sd/- Sd/- Vasudevan S Murthy V S Chief Financial Officer Chief Executive Officer

Chennaith4 May 2016

Declaration regarding compliance by Board Members and Senior Management personnel with the Company's

Code of Conduct

This is to confirm that the Company has adopted a Code of Conduct for the Members of its Board and its Senior stManagement Personnel. I confirm that the Company has, in respect of the financial year ended 31 March, 2016

received from the Members of the Board and Senior Management team of the Company, a declaration of compliance

to the Code of Conduct as applicable to them. Sd/-

Chennai Murthy V S th4 May 2016 Chief Executive Officer

27


Annexure III

Details of remuneration as required to be provided under Section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Qualification of Managerial Personnel) Rules, 2014

(i) Ratio of Remuneration of Each Director with Median Employees Remuneration.

i. Chairman – 1 : 0.19ii.

Chairman of Audit & Risk Management Committee –

1 : 0.26

iii.

Managing Director -

Nil

iv.

Other Directors

–1

:

0.39

(ii) the percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;

There has been no increase in remuneration of Directors.

Increase in remuneration of KMP is as follows:

CEO

-

26%*

CFO

- 8%

Company Secretary

- 9%

*excluding the perquisite value arising out of exercise of Employee Stock Options granted by the holding company.

(iii) the percentage increase in the median remuneration of employees in the financial year;

3%

(iv) the number of permanent employees on the rolls of the Company as on 31

st March 2016 2928

(v) the explanation on the relationship between average increase in remuneration and Company performance;

The average increase in remuneration across the Company at all levels was 9% and the increase in operating parameters are as below:

Increase in Networth – 13.60%

Increase in Profit After Tax – 148.69%

Increase in Portfolio – 35.33%

(vi) comparison of the remuneration of the Key Managerial Personnel against the performance of the Company; (only for listed companies)

NA

(vii) variations in the market capitalisation of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer in case of listed Companies

NA

In case of unlisted companies, the variations in the net worth of the Company as at the close of the current financial year and previous financial year;

Variation in networth – Increase of 13.60% as

compared to the previous financial year.

(viii) average

percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.

The average increase in salaries of employees other than the managerial personnel in the last financial year was 8%.

(ix) comparison of each remuneration of the Key Managerial Personnel against the performance of the Company

Profit after tax is Rs.8,512.02 lakh and its relation with remuneration of KMP is as below:

28


Particulars CEO CFO CS Total

Remuneration (in lakh)

65.03 32.87 10.48 108.38

Remuneration as % of Profit After Tax

0.76% 0.39% 0.12% 1.27%

(x) the key parameters for any variable component of remuneration availed by the Directors;

Non-executive Directors are entitled to remuneration as a percentage of the net profits of the Company for the financial year calculated as per the provisions of the Companies Act. This is subject to a ceiling as laid down by the Board. The ceiling for remuneration of all non-executive Directors is Rs. 5 lakh for the year while it is 1.5 times the same for the Chairman of the Audit & Risk Management Committee and 2 times the same for the Chairman of the Board.

(xi) the ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year; and

1:6.4

(xii) affirmation that the remuneration is as per the remuneration policy of the Company.

The remuneration is as per the remuneration policy of the Company.

Statement showing the name of every employee of the Company, who-

(I) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees;

Mr Murthy V S, CEO

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month;

Nil

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the Managing Director or Whole-Time Director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.

Nil

Further details to be stated in the statement: (i) designation of the employee;

Chief Executive Officer

(ii) remuneration received; Rs. 65,02,645/-

(iii) nature of employment, whether contractual or otherwise;

Permanent

(iv) qualifications and experience of the employee;

29

Bachelors degree in

Commerce and a

Masters degree in

Business

Administration from

Osmania University.


(v) experience (in number of years)

About 25 years

(v) date of commencement of employment;

10th

November 2010

(vi) the age of such employee;

50

(vii) the last employment held by such employee before joining the Company;

Dhandapani Finance

Limited

(viii) the percentage of equity shares held by the employee in the Company within the meaning of clause (iii) of sub-rule (2) above; and

Nil

(ix) whether any such employee is a relative of any Director or manager of the Company and if so, name of such Director or manager:

No


Sd/- Sd/-

Kuppuswamy P T Vasudevan P N

Chairman Director Chennai,

th4 May 2016

30


Annexure IV

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of our knowledge and belief, and according to the information and explanations obtained by us, the

Directors confirm the following in terms of Section 134(3) (c) of the Companies Act, 2013:

· that in preparation of Annual Accounts, the applicable accounting standards had been followed along with

proper explanation relating to material departures, if any;

· that such accounting policies had been selected and applied consistently and judgments and estimates had

been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the

Company at the end of the financial year and of the profit and loss of the Company for that period;

· that proper and sufficient care for the maintenance of adequate accounting records in accordance with the

provisions of the Companies Act, 2013 has been taken for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

st· that the Annual Accounts have been prepared on a going concern basis for the Financial Year ended 31 March

2016;

· that the necessary internal financial controls to be followed by the Company had been laid down and such

internal financial controls are adequate and were operating effectively and

· that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that

such systems were adequate and operating effectively.

31


Sd/- Sd/-


Chairman Director



Annexure -

V

Details of Related Party Transactions as required under Section 134 (3) (h) of Companies Act, 2013

32


Sd/- Sd/-


Chairman Director


(a) Name(s) of the related party and nature of

relationship

Equitas Micro Finance Limited – fellow

subsidiary

(b) Nature of contracts/ arrangements/ transactions Sourcing of customers and collection service.

(c) Duration of the contracts / arrangements/ transactions

Contract renewable by mutual consent.

(d) Salient terms of the contracts or arrangements or

transactions including the value, if any:

Up to 1.5% of the loan disbursement and collection.

(e) Date(s) of approval by the Board, if any: 30th

April 2015

(f) Amount paid as advances, if any: Nil

(g) Date on which the special resolution was passed in

the General Meeting as required under first proviso to

Section 188

29th

June 2015

** In addition to the above, there were some common costs and expenses that were shared by the Company with

other group companies during the year. The details of the same are provided in the Notes to the accounts.


Actual payment made was 1% on Loan disbursement and 0.5% for collection (excluding Service Tax)

ANNEXURE-VI

Corporate Social Responsibility (CSR) Report

[Pursuant to clause (o) of sub-section (3) of section 134 of the Act and Rule 9 of the Companies (Corporate Social

Responsibility) Rules, 2014]

1. A brief outline of the Company's CSR policy, including overview of projects or programs proposed to be

undertaken and a reference to the web-link to the CSR policy and projects or programs:

http://www.equitasvf.in/sites/default/files/EFPL%20CSR%20Policy_8Aug14.pdf

Detailed write up about CSR Policy, overview of Projects undertaken by the Equitas Development Initiatives

Trust (EDIT), through which the Company carries on CSR activities, is attached.

st2. The Composition of the CSR Committee as at 31 March, 2016 is as follows:

a) Shri Parthasarathy P, Chairman & Independent Director

b) Shri George V A, Independent Director

c) Shri Sharma V K, Independent Director

3. Average net profit of the company for last three financial years

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above)

2% of average profit for last 3 years - Rs. 51.65 Lakhs (Rupees Fifty one Lakhs Sixty Five Thousand only)

5. Details of CSR contribution made by the Company to EDIT during the Financial Year:

(a) Total amount spent by EDIT in CSR activities during the Financial Year:

Rs 206.25 Lakhs (Rupees Two Crore Six Lakhs and Twenty Five Thousand only) which is higher than the

statutory requirement.

33


Particulars Rs in Lakh

Profit/Loss - 2014-15 5,350.02

Profit/Loss - 2013-14 2,466.20

Profit/Loss - 2012-13 (68.52)

Average PROFIT for CSR purpose 2,582.57

2% of average Profit/Loss for last three years 51.65

Particulars

Donation paid between Apr 15 to Mar 16 241.00

TOTAL 241.00

Rs in Lakh

(b) Amount unspent, if any; NIL

(c) Manner in which the amount spent during the Financial Year is detailed below.

34

( Rs. In Lakhs)

(1) (2) (3) (4) (5) (6) (7)

S. No

CSR project or activity identified

Sector in

which

the

Project

is covered

Projects or programs

(1) Local area or other

(2) Specify the State and district where projects or programs was undertaken

Amount outlay (budget) project or programs wise

Amount spent on the projects or programs Sub – heads:

(1) Direct expenditure on projects or programs

(2) Overheads

Cumulative expenditure upto the reporting period

(FY 2015

-

16)

Amount spent : Direct or through implementingagency*

1

To support 6 Regular Matriculation schools for low income SHG families run by Equitas Development Initiatives Trust (EDIT)

Education

6 schools in Tamil Nadu in Karur, Trichy, Salem, Coimbatore, Dindigul and Cuddalore

- 206.25 206.25

Through a public charitable trust - EDIT

TOTAL 206.25 206.25

(Detailed write up with activities of Equitas Development Initiatives Trust is attached)

6. In case the Company has failed to spend the two per cent of the average net profit of the last three financial years

or any part thereof, the company shall provide the reasons for not spending the amount in its Board report.

Not Applicable as contribution is higher than the statutory requirement.

7. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in

compliance with CSR objectives and Policy of the Company

We hereby confirm on behalf of the CSR Committee that the implementation and monitoring of CSR Policy is in

compliance with the CSR objectives and Policy of the Company.


Sd/- Sd/-

Murthy V S Parthasarathy P

CEO Chairman CSR Committee

Chennai,

th4 May 2016


CSR Report – FY 2015-16

The mission of Equitas is Empowering through Financial Inclusion.

In line with this mission, besides providing finance at reasonable cost to those who are not effectively serviced by the mainstream financial institutions, Equitas has also developed a wide range of ecosystem initiatives towards improving the quality of life of its members. These initiatives are carried out through a not-for-profit trust named Equitas Development Initiatives Trust (EDIT) established by the Holding Company, Equitas Holdings Limited as well as through Equitas Dhanyakosha India, a Section 25 (Section 8 under Companies Act 2013), not-for-profit company.

As per the CSR Policy, the Company, donates upto 5% of its net profits every year to EDIT to carry on CSR initiatives on behalf of the Company.

CSR activities carried out by Equitas Development Initiatives Trust (EDIT) are detailed below:

A. Educational Initiatives

Education is a key lever to enable upward social mobility for low income Self Help Group members' children. Equitas has rolled out its Gurukuls initiatives to “empower children of Equitas members and other low income households, through high quality education at affordable cost”.

EDIT is currently running 7 such schools at Trichy, Dindigul, Salem, Sivakasi, Karur, Cuddalore & Coimbatore with 4,142 students. More such schools are planned in the future.

About 98% of Gurukul students are from Backward Class, Most Backward Class and Scheduled Caste categories and about 80% of Gurukul parents are from Economically Weaker Sections. B. Skill development

Equitas has imparted training to about 4,09,489 Self Help Group women members in skills such as tailoring & embroidery, agarbathi / candle making, detergent / phenyl manufacturing and preparing processed foods such as pickles & jams. These training programs are structured as week-long programs.

The skill development program has helped to improve the income of the beneficiaries. Studies reveal that 52% of the trained members earn additional supplemental income in the range of Rs 500 to Rs 2,000 per month using the newly acquired skills.

C. Pavement dwellers rehabilitation program (Equitas Birds Nest)

This programme was commenced in 2010 for “Rehabilitation of Pavement Dwellers” in Chennai. 102 families were identified in the first phase. In 2014-15, 247 families have been moved into houses. The Trust pays the rent on their behalf for 6 months during which they are taught livelihood skills and linked to local

thmarkets. From the 7 month onwards, they are required to make the rent payment by themselves. These families have attained self-sustenance status through this intervention from Equitas. Many people have received Voter ID cards and have applied for ration cards for the first time in their lives. In 2015-16, 362 families have been moved into houses, taking the cumulative beneficiaries under the program to about 720 families.

Out of these rehabilitated families, under a graduation program, 10 members were formed into a group. After inputs on financial literacy and counselling, following all the regular MF process, MFI loan was sanctioned. 100% collection was observed in those loans till date. Encouraged by this positive response, the

nd2 batch of 8 members was included in the program, thus mainstreaming them into the community and

35


fulfilling their dream of economic empowerment.

Placement Cell:

In another proactive step, Equitas facilitates conduct of job fairs for unemployed youth of low income communities, with the help of recruiters and employers. Till date, gainful employment to about 60,000 youth has been arranged in companies and retail outlets like textile showrooms, malls, hospitals, BPOs etc.

D. Health care services

Equitas understands that access to affordable healthcare is of paramount importance.

1. Health Education for Healthy living: A team of 500 women skill trainers have been trained with Technical support from “Freedom from Hunger” to impart Health Education to Members which would help in early detection of non-communicable diseases.

2. Medical Camps: Through a tie up with about 900 hospitals spread across 7 states, Equitas conducts nearly 400 medical camps every month, benefiting about 75,000 people every month. Cumulatively, nearly 4 million people have benefited so far under this program.

3. Equitas Sugam Clinics (evening clinics functioning from 5pm to 9pm)

EDIT runs thirteen evening clinics for the benefit of Economically Weaker Sections and other low income households who seek medical help after they come back home in the evening after the day's work. Doctors offer quality consultation at a reasonable cost and health history of patients is tracked. The health educator follows up with a health education program.

STBOARD OF TRUSTEES OF EQUITAS DEVELOPMENT INITIATIVES TRUST (EDIT) AS ON 31 MARCH, 2016

1. Dr. C K Gariyali, IAS (Retd)

2. Mr. S P Mathur, IPS, DGP (Retd)

3. Mr. M B Nirmal, Founder, Exnora International

4. Ms. T V Jayalakshmi, Educationist

5. Mr. P N Vasudevan, MD, Equitas Holdings Limited

36


SNAP SHOT OF THE PERFORMANCE UNDER VARIOUS CSR ACTIVITIES DURING THE FINANCIAL YEAR 2015-16 AND CUMULATIVE NUMBERS

Nature of Activity

Q1

Q2

Q3

Q4

Year 2015-16 Cumulative

No. of Eye -camp

Participants (A) 75,801 81,911 79,710 78,005 3,15,427 15,25,600

No. of spectacles (free

of cost) 3,771 3,324 2,397 2,198 11,690 82,650

No. of cataract

operations (free of cost) 112 508 507 380 1,507 26,052

Other Medical camps

(B) 1,32,176 1,42,578 1,39,859 1,34,344 5,48,957 22,19,509

Total (Eye camps + Med

Camps) (A)+(B) 2,07,977 2,24,489 2,19,569 2,12,349 8,64,384 37,45,109

Participants in skill

Training Programs 7,725 10,880 12,265 10,398 41,268 4,09,489

Health Help Line 197 539 547 393 1,676 20,642

Placements for

Unemployed Youth

5,370

6,160

8,207

6,583

26,320

59,629

Swasth Mahila Health Education

6,897

8,614

8,487

9,943

33,941

67,882

Persons with disability

518

509

914

1,416

3,357

14,175 (2,575 Blind)

37


ANNEXURE VII

SECRETARIAL AUDIT REPORTst

FOR THE FINANCIAL YEAR ENDED 31 March 2016

[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment

and Remuneration of Managerial Personnel) Rules, 2014]

To:

The Members,


CIN: U65191TN1993PLC025280

4th Floor, Phase II, Spencer Plaza,

No.769,Mount Road,

Anna Salai, Chennai-600002.

Dear members,

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the

adherence to good corporate practices by EQUITAS FINANCE LIMITED (hereinafter called the “Company”).

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

corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of EQUITAS FINANCE 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, I hereby report that st

in my opinion, the Company has, during the audit period covering the financial year ended on 31 March,

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:

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

EQUITAS FINANCE LIMITED (“the Company”) for the financial year ended on 31 March, 2016 according to

the provisions of:

(i) The Companies Act, 1956, the Companies Act 2013 (to the extent Sections and Schedules

notified) and the rules made thereunder including Amendment, Circulars, Notifications and

Removal of Difficulties Order issued by the Ministry of Corporate Affairs from time to time;

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

extent applicable;

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

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

Direct Investment, Overseas Direct Investment and External Commercial Borrowings (was not

applicable to the Company during the period under review)

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

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

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

Regulations, 2011; (was not applicable to the Company during the period under review)

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(was not applicable to the Company during the period under review)

38


c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2009; (was not applicable to the Company during the period under review)

d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;

(was not applicable to the company during the period under review)

e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,

2008;

f) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (was

not applicable to the Company during the period under review)

g) The Securities and Exchange Board of India (Buyback of Securities), Regulations,1998 (was not

applicable to the Company during the period under review)

h) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015;

(vi) The Following Industry Specific Laws and the rules, regulations, directions, guidelines, circulars

and instructions framed thereunder:

a) Reserve Bank of India Act, 1934;

b) Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms

(Reserve Bank) Directions, 2015;

c) Non-Banking Financial Companies – Corporate Governance (Reserve Bank) Directions,

2015;

d) Know Your Customer' (KYC) Guidelines – Anti Money Laundering Standards (AML) -

'Prevention of Money Laundering Act, 2002 - Obligations of NBFCs in terms of Rules notified

thereunder;

e) Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding)

Companies Prudential Norms (Reserve Bank) Directions, 2015;

f) Miscellaneous Instructions to all Non-Banking Financial Companies;

g) Returns to be submitted by NBFCs;

h) Miscellaneous Instructions to NBFC- ND-SI;

i) Revised Regulatory Framework for NBFCs;

j) Reserve Bank of India Guidelines on raising money through Private Placement of NCDs by

NBFCs;

k) Guidelines to Fair Practices Code;

l) Reserve Bank of India Master Circulars issued to NBFC

I further report that arising out of the inspection carried out by Reserve Bank of India pursuant to Section

45N of the Reserve Bank of India Act, 1934 in January 2015, Reserve Bank of India had issued letters during

the audit period advising the company to furnish compliances and the Company had replied reporting

necessary compliances or assurance that will be complied with as directed. There was no adverse remark.

I further report that based on the information received, explanations given, process explained,records

maintained, statutory compliance and statutory internal audit reports submitted to the Board on quarterly

39


basis, 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 labour laws, rules,

regulations and guidelines. The Company has confirmed compliance with the labour laws:

a) The Employees' Provident Funds and Miscellaneous Provisions Act, 1952

b) The Employees' State Insurance Act,1948

c) Labour Welfare Fund – Location wise

d) The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013

e) Shops and Establishments Act – Location wise

I further report that based on the information received, explanations given, process explained, records

maintained and Internal audit reports submitted to the board, the company is regular in making statutory

payments and there have been no cases against the company or its officers nor notices issued to them under

the following Acts:

a) Finance Act, 1994 with respect to Service Tax

b) Income Tax Act, 1961with respect to Tax Deducted at Source and Advance Tax

c) Professional tax- location wise

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreement entered into by the Company with BSE Limited;

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

Regulations, Guidelines, Standards, etc. mentioned above.

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

Executive Directors, Non-Executive Directors and Independent Directors. 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.

All decisions were taken unanimously.

I 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.

I further report that during the audit period the Company:

a) At the Extraordinary General Meeting held on 26.05.2015 had accorded approval to issue and

allot non convertible debentures upto Rs. 1000 crore during the FY 2015-16.nd

b) At the 22 Annual General meeting held on 29.06.2015 had accorded approval to borrow money

upto an aggregate of Rs. 3500 crore outstanding at any point of time and for sale / assignment /

securitization of assets and / or receivable of the Company upto an aggregate of Rs. 1000 crore

40


during the FY 2015-16.

c) At the Extraordinary General Meeting held on 31.08.2015 had accorded approval for conversion

of the Company into Public Company and the company became a Public Company on

29.09.2015 vide fresh Certificate of Incorporation issued by Registrar of Companies, Tamil Nadu,

Chennai.

d) The Board of Directors at their meeting held on 26.11.2015, accorded approval for the proposed

Scheme of amalgamation of Equitas Housing Finance Limited and Equitas Micro Finance Limited

with the company.

Place : Chennai Signature Sd/-

Date: 27.04.2016 Name of Company Secretary in practice: Dr.B.RAVI

FCS No.:1810 C P No.: 3318

41


The Members,


CIN: U65191TN1993PLC025280

4th Floor, Phase II, Spencer Plaza,

No.769,Mount Road, Anna Salai, Chennai-600002.

Dear Members,

Sub: My Report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of the company. My

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

2. I 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 to ensure that correct facts are reflected in secretarial records. I believe that the processes

and practices, I followed provide a reasonable basis for my opinion.

3. I have not verified the correctness and appropriateness of financial records and books of

accounts of the company.

4. Wherever required, I 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. My 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.

Place: Chennai Signature Sd/-

Date: 27.04.2016 Name of Company Secretary in practice: Dr. B. RAVI

FCS: 1810 C. P. No.: 3318

42


43


Annexure VIII

EXTRACT OF ANNUAL RETURN

AS ON THE FINANCIAL YEAR ENDED 31st MARCH 2016

[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies

(Management and Administration) Rules, 2014]

I.

REGISTRATION AND OTHER DETAILS

CIN U65191TN1993PL C025280 Registration Date 21.06.1993

Category/Sub -Category of the Company

Non-Banking Finance Company

Company name


Registered Office

Address

4th

Floor, Phase II, Spencer Plaza,

No.769, Mount Road, Anna Salai, Chennai – 600002

Phone +91 44 4299 5000 Fax +91 44 4299 5050

Email

[email protected]

Website

www.equitasvf.in

Whether listed Company Yes/No

Debenture Listed Company

Name & Address

of Registrar and Transfer Agent,

if any

Karvy Computershare Private Limited

Karvy

Selenium Tower B, Plot No 31 & 32, Gachibowli, Financial District,

Nanakramguda, Serilingampally, Hyderabad –

500 032

Phone

+91 040 67161604

Email

[email protected]

Contact Person Mr Mukharji Yenugu

II.

PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

(All the business activities contributing 10 % or more of the total turnover of the Company shall be stated)

Sl.

No. Name and Description of main products / services

NIC Code of the

Product / service

% to total turnover

of

the Company

1

Credit Granting Services

99711390

65%

2

Granting loans to individuals

99711352

30%

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl.

No.

Name and Address

of the Company

CIN/GLN

Holding/

Subsidiary

/Associate

% of

Shares

Held

Applicable Section

1

Equitas Holdings Limited

U65100TN2007P LC06406

9

Holding

100

2(46)


IV.

SHARE HOLDING PATTERN

(Equity Share Capital Breakup as percentage of Total Equity)

i)

Category-wise Share Holding

Category of shareholders

No. of shares held at the year beginning

No. of shares held at the year end

% of change during

year

Demat

Physical

Total

% of Total

Shares Demat

Physical

Total

% of Total

Shares

A. PROMOTERS

(1) Indian

a) Individual/HUF

b) Central Govt

c) State Govt (s)

d) Bodies Corp. NIL 423000000 423000000 100 NIL 423000000 423000000 100 NIL

e) Banks / FI

f) Any Other….

Sub-total (A) (1):-

NIL 423000000 423000000 100 NIL 423000000 423000000 100 NIL

(2) Foreign NIL NIL NIL NIL NIL NIL NIL NIL NIL

Total shareholding of Promoter (A) = (A)(1)+(A)(2)

NIL 423000000 423000000 100 NIL 423000000 423000000 100 NIL

B. PUBLIC SHAREHOLDING

Total Public Shareholding

NIL NIL NIL NIL NIL NIL NIL NIL NIL

C. SHARES HELD BY CUSTODIAN FOR

GDRs & ADRs

NIL

NIL

NIL

NIL

NIL

NIL NIL NIL NIL

Grand Total (A+B+C)

NIL

423000000

423000000

100

NIL

423000000 423000000 100 NIL

the

44


(ii) Shareholding of Promoters

Sl. No.

Shareholder’s

Name

Shareholding at the beginning

of the year

Shareholding at the end of the

Year

%

change in

share

holding

during

the

year

No. of

Shares

% of

total

Shares

of the

% of Shares

Pledged /

encumbered

to total

shares

No. of

Shares

% of

total

Shares

of the

% of Shares

Pledged /

encumbered

to total

shares

1 Equitas Holdings Limited

423000000 100 NIL 423000000 100 NIL NIL

Total 423000000 100 NIL 423000000 100 NIL NIL

(iii) Change in Promoters’ Shareholding (please specify, if there is no change)

Sl.

No.

Date wise Increase /

Decrease in Promoters

shareholding during the year

Shareholding at the beginning of the year

Cumulative shareholding during the year

Reasons for

increase / decrease (e.g.

allotment /

transfer / bonus/ sweat equity etc):

No. of shares

% of total shares of

the Company

No. of shares


the Company

NO CHANGE IN THE PROMOTERS’ SHAREHOLDING

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs): NOT APPLICABLE

Sl.

No.

Name of Top 10 Share

holders

Date wise

Increase /

Decrease in

Promoters

shareholding

during the year

Shareholding at the beginning of

the year

Cumulative shareholding

during the year

Reasons for increase / decrease (e.g.

allotment /

transfer / bonus/ sweat equity etc)

No. ofshares

% of total

Shares

No. of shares

% of total

shares

1. 01.04.2015

31.03.2016 NIL

2. 01.04.2015

CompanyCompany

31.03.2016

45

(v) Shareholding of Directors and Key Managerial Personnel: NOT APPLICABLE

Sl.

No.

Names of shareholders

Who are also KMP/

Directors of the Company

Date wise

Increase /

Decrease in

Promoters

shareholding

during the year

Shareholding at the beginning of the year

Cumulative shareholding during

the year Reasons for

increase / decrease (e.g. allotment /

transfer / bonus/ sweat equity etc.):

No. of shares


the Company

No. of shares


the

Company

1. 01.04.2015

NIL31.03.2016

2. 01.04.2015

31.03.2016

V. INDEBTEDNESS

(Indebtedness of the Company including interest outstanding /accrued but not due for payment)

Rs in lakh

Particulars Secured Loans

Unsecured Loans (including ICDs)

Deposits Total

Indebtedness Excluding deposits

Indebtedness at the beginning of the financial year

i) Principal Amount 1,23,002.32 6,677.49 - 1,29,679.81

ii) Interest due but not paid - - - -

iii) Interest accrued but not due 1,139.74 3.28 - 1,143.02

Total (i+ii+iii) 1,24,142.07 6,680.77 - 1,30,822.84

Change in Indebtedness during the financial year

Addition 70,828.69 2,503.27 - 73,331.96

Reduction 33,869.02 5,180.77 - 39,049.79

Net Change 36,959.68 (2,677.50) - 34,282.17

Indebtedness at the end of the financial year

i) Principal Amount 1,59,773.05 4,000.00 - 1,63,773.05

ii) Interest due but not paid - - - -

iii) Interest accrued but not due 1,328.69 3.27 - 1,331.96

Total (i+ii+iii) 1,61,101.74 4,003.27 - 1,65,105.01


46

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Remuneration to Non-Executive Directors (In Rs.)

Sl. No. Name of Director Fee for attending

Board/ Committee Meetings

Commission Others Total

1 Kuppuswamy P T 1,40,000 10,00,000 Nil 11,40,000

2 Balasubramaniam P S 2,07,500 5,00,000 Nil 7,07,500

3 George V A 2,60,000 5,00,000 Nil 7,60,000

4 Jagannath R 1,77,500 5,00,000 Nil 6,77,500

5 Parthasarathy P 3,20,000 7,50,000 Nil 10,70,000

6 Sharma V K 2,50,000 5,00,000 Nil 7,50,000

7 Lalitha Lakshmanan 2,45,000 5,00,000 Nil 7,45,000

8 Venkatesh Natarajan 1,30,000 5,00,000 Nil 6,30,000

9 John Arunkumar Diaz 1,30,000 5,00,000 Nil 6,30,000

10 Vasudevan P N Nil Nil Nil Nil

Total (B) 18,60,000 52,50,000 Nil 71,10,000

Overall Ceiling for Remuneration as per the Act

1% of Profits for Financial Year 2015-16 computed u/s 197 of the Act

1,26,13,340

Commission payable to Directors as above 52,50,000

Remuneration to Key Managerial Personnel

(In Rs.)

Sl. No. Particulars of Remuneration CEO CFO CS Total

1 Gross salary

(a) Salary as per provisions contained in sec.17(1) of the Income-tax Act, 1961

(b) Value of perquisites u/s 17(2) of Income-tax Act, 1961

(c) Profits in lieu of salary u/s. 17(3) of Income-tax Act, 1961

54,05,059

21,600

Nil

32,65,680

21,600

Nil

873,610

Nil

Nil

95,44,349

43,200

Nil

2 Stock Option 10,86,786 Nil Nil 10,86,786

3 Sweat Equity Nil Nil Nil Nil

4 Commission

- as % of profit

- others, specify

Nil

Nil

Nil

Nil

5 Others, please specify Nil Nil Nil Nil

Total (A) 65,13,445 32,87,280 8,73,610 1,06,74,335


47

VII.

PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

TypeSection of the Companies Act

Details of Penalty, Fees etc.

Authority imposing (RD/ NCLT/ Court)

Details of Appeal made,

if any

Penalty

Punishment

Compounding

Other Officers In Default

<<Name>>

NIL

Penalty

Punishment

Compounding



Sd/- Sd/-


Chairman Director Chennai,

th4 May 2016

48

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF EQUITAS FINANCE LIMITED

(Formerly known as EQUITAS FINANCE PRIVATE LIMITED)

Report on the Financial Statements

We have audited the accompanying financial statements of Equitas Finance Limited (“the Company”), which comprise

the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then

ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's 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 the accounting principles

generally accepted in India, including the Accounting Standards prescribed under section 133 of the Act, as applicable.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the

Act for safeguarding 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 design, implementation and maintenance of adequate internal financial controls, 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 there under and the

Order under section 143 (11) of the Act.

We conducted our audit of the financial statements in accordance with the Standards on Auditing 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 statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the

financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks

of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal 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 the 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 aforesaid financial

statements give the information required by the Act in the manner so required and give a true and fair view in

49


conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31

March 2016, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. 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 purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it

appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement 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 prescribed

under section 133 of the Act, as applicable.

e) On the basis of the written representations received from the directors as on 31 March 2016 taken on

record by the Board of Directors, none of the directors is disqualified as on 31 March 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 operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report

expresses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal

financial controls over financial reporting.

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:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial

statements.

ii. The Company has made provision, as required under the applicable law or accounting standards for

material foreseeable losses on long-term contracts. The Company does not have any Derivatives.

iii. There were no amounts which were required to be transferred to the Investor Education and

Protection fund by the Company.

2. As required by the Companies (Auditor's Report) Order, 2016 (“the Order”) issued by the Central

Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters

specified in paragraphs 3 and 4 of the Order.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm's Registration No. 008072S)

Sd/-

Geetha Suryanarayanan

Partner

Membership No. 29519

50

Chennai,th4 May 2016


ANNEXURE “A” TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 (f) under 'Report on Other Legal and Regulatory Requirements' of our report of even

date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of

the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Equitas Finance Limited (“the Company”) as

of 31 March 2016 in conjunction with our audit of thefinancial 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 operatin geffectively for ensuring the orderly and

efficient conduct of its business, including adherence to 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 o freliable 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”) issued by the Institute of Chartered Accountants of India and the

Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an

audit of internal financial controls. 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.

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 Company's 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

51


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 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, to the best of our information and according to the explanations given to us, 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”




Sd/-


Partner

Membership No. 29519

Chennai,

th4 May 2016

52


ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements' section of our report of

even date)

(I) (a) The Company has maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) Some of the fixed assets were physically verified during the year by the Management in accordance

with a programme of verification which, in our opinion, provides for physical verification of all the

fixed assets at reasonable intervals. According to the information and explanations given to us, no

material discrepancies were noticed on such verification.

(c) The Company does not have any immovable properties of freehold or leasehold land and building

and hence reporting under clause (i)(c) of the CARO 2016 Order is not applicable.

(ii) The Company does not have any inventory and hence reporting under clause (ii) of the CARO 2016 Order is

not applicable.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability

Partnerships or other parties covered in the register maintained under section 189 of the Companies Act,

2013.

(iv) The Company has not granted any loans, made investments or provided guarantees and hence reporting

under clause (iv) of the CARO 2016 Order is not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during

the year and hence compliance with the provisions of Sections 73 to 76 or any other relevant provisions of the

Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to

the deposits accepted is not applicable to the Company.

(vi) Having regard to the nature of the Company's business / activities, reporting under clause (vi) CARO 2016

Order is not applicable.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including

Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Service Tax, Value Added Tax,

Cess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State

Insurance, Income-tax, Sales Tax, Service Tax, Value Added Tax, Cess and other material statutory

dues in arrears as at 31 March 2016 for a period of more than six months from the date they became

payable.

(c) Details of dues of Value Added Tax which have not been deposited as on March 31, 2016 on account

of disputes are given below:

53

Name of Statute

Nature of

Dues

Forum where Dispute is Pending

Period to which the Amount

Relates

Amount Involved (Rs.)

in lakhs

Amount Unpaid (Rs.)

in lakhs

Sales Tax Payment of VAT on asset seized andsold

Assistant Commissioner (Appeals)

Financial Years2013-14 & 2014-15

0.53 0.53


(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted

in the repayment of loans or borrowings to financial institutions, banks and dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to us, term loans have been applied

by the Company during the year for the purposes for which they were raised, other than temporary

deployment pending application of proceeds. The Company has not raised any money by way of initial public

offer/ further public offer (including debt instruments).

(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the

Company and no material fraud on the Company has been noticed or reported during the year though there

have been few cases of irregularities amounting to Rs 16.17 Lakhs (Refer Note 40 to the financial statement)

detected and appropriately dealt with by the Management.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid /

provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of

section 197 read with Schedule V to the Companies Act, 2013

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not

applicable.

(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance

with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related

parties and the details of related party transactions have been disclosed in the financial statements as

required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully

or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 Order is not applicable

to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company

has not entered into any non-cash transactions with its directors or directors of the Holding Company or

persons connected with them, hence provisions of section 192 of the Companies Act, 2013 are not

applicable.

(xvi) The Company is required to be registered under section 45-I of the Reserve Bank of India Act, 1934 and it has

obtained the registration.




Sd/-Geetha SuryanarayananPartnerMembership No. 29519

Chennai,th4 May 2016s

54


Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)

Particulars Note No. As at

31 March 2016Rs. in lakhs

As at 31 March 2015

Rs. in lakhs

EQUITY AND LIABILITIES

Share Holders' Funds Share Capital 3 42,300.00

42,300.00

Reserves & Surplus 4 28,791.89

20,279.87

71,091.89

62,579.87

Non-Current Liabilities Long-term Borrowings 5 95,253.60

68,113.75

Other Long-term Liabilities 6 5,771.04

247.08

Long-term Provisions 7 664.59

425.59

101,689.23

68,786.42

Current Liabilities Short-term Borrowings 8 23,517.72

40,809.62

Current maturities of Long-term Borrowings 9 45,001.72

22,709.45

Trade Payables 10 (i) Total Outstanding dues of micro enterprises and small enterprises

10.1 -

-

(ii) Total Outstanding dues of creditors other than micro enterprises and small enterprises

10.2 1,360.12

739.09

Other Current Liabilities 11 8,923.29

2,654.69

Short-term Provisions 12 2,192.09

1,166.77

80,994.94

68,079.62

TOTAL 253,776.06 199,445.91

ASSETS

Non-Current Assets Fixed Assets

Tangible Assets 929.10 673.62

Intangible Assets 187.42 84.81

Capital Work-in-Progress - 20.21

1,116.52 778.64

Deferred Tax Asset (Net) 14 1,222.15 807.60 Long-term Receivables under financing activities 15 142,175.40 107,856.20 Other Non-Current Assets 16 5,940.40 477.35 Long-term Loans and Advances 17 2,731.78 450.09

153,186.25 110,369.88

Current Assets Short-term Receivables under financing activities 18 82,720.71

58,328.26

Cash and Cash equivalents 19 9,854.12

27,192.78 Short-term Loans and Advances 20 439.37

267.43

Other Current Assets 21 7,575.61

3,287.56

100,589.81

89,076.03

TOTAL 253,776.06

199,445.91

Refer accompanying Notes forming part of the Financial Statements

In terms of our report attachedFor Deloitte Haskins & SellsChartered Accountants


P N Vasudevan

Partner

Director

Place : Chennai

DIN: 00032309 DIN: 01550885

thDate : 4 May 2016

P Parthasarathy V S MurthyChairman Chief Executive OfficerAudit & Risk Management CommitteeDIN: 05212315

S Vasudevan Sridevi SurenderChief Financial Officer Company Secretary

Place: Chennai thDate : 4 May 2016

Balance Sheet as at 31 March 2016

P T KuppuswamyChairman

13

55




Particulars Note No. For the year ended


For the year ended 31 March 2015

Rs. in lakhs

REVENUERevenue from operations 22 47,548.33

29,635.52

Other income 23 59.48

13.83

47,607.81

29,649.35

EXPENSESEmployee benefits expense 24 9,346.03

6,288.21

Finance cost 25 15,911.31

10,436.73

Provisions and write-offs 26 4,028.04

4,070.76

Depreciation and amortization expense 13 473.55

317.16

Other expenses 27 4,766.42

3,327.94

34,525.35

24,440.80

Profit Before Tax 13,082.46

5,208.55

Tax Expenses Current tax 4,985.00

2,242.00

Deferred tax (414.56)

(456.16)

Net tax expense for the year 4,570.44

1,785.84

Profit for the year 8,512.02 3,422.71

Earnings per Equity share - Basic 32 2.01 1.12 - Diluted 32 2.01

1.12

Refer accompanying Notes forming part of the FinancialStatements

Statement of Profit and Loss for the year ended 31 March 2016

56





P N Vasudevan

Partner

Director

Place : Chennai

DIN: 00032309 DIN: 01550885

thDate : 4 May 2016


S Vasudevan Sridevi Surender

Chief Financial Officer Company Secretary




Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)Cash Flow Statement for the year ended 31 March 2016


Rs. in lakhs


Rs. in lakhs

A.Cash Flow from Operating activitiesProfit Before Tax 13,082.46

5,208.55

Adjustments for:

Depreciation and Amortisation expense 473.55

317.16

Contingent Provision for Standard Receivables under financing activities (Net) 244.80

198.87

Provision for Sub-Standard and Doubtful Receivables under financing activities (Net) 646.73

657.05

Provision against repossessed assets (328.35)

305.90

Provision for Credit Enhancements on assets de-recognised (Net) 78.46

(4.75)

Loss Assets Written-Off (Net) 656.07

391.54

Provision for doubtful advances - Staff loan 9.20

4.04

Finance cost 15,911.31

10,436.73

Interest Income on Deposits with Banks / Others (50.06)

(43.08)

Income from assets securitised (2,439.24)

(592.53)

Profit on sale of current investments (Net) (1.28)

(2.08)

Loss / (Profit) on sale of Fixed Assets (Net) 0.72

(0.17)

Operating Profit before Changes in Working Capital 28,284.37

16,877.23

Changes in Working Capital:

Adjustments for (increase) / decrease in operating assets:Long-term Receivables under financing activities (34,428.68) (55,123.81)

Long-term Loans and advances (129.76) (141.65)

Short-term Receivables under financing activities (24,392.45) (27,638.22) Short-term Loans and advances (378.44) (279.87)

Other current assets (505.15) (921.19) Bilateral Assignment and Securitisation of Assets (Net) 2,124.32 633.72

Adjustments for increase / (decrease) in operating liabilities:

Trade payables 621.03

348.29

Other current liabilities 2,010.16

467.35

Short-term provisions 294.34

88.14 Cash Flow used in Operations (26,500.26) (65,690.01)

Interest Income on Deposits / Other loans 49.09

42.03 Profit on sale of current investments (Net) 1.28

2.08

Finance costs (15,384.10)

(9,809.92)

Direct Taxes paid (5,025.66)

(2,440.80)

Net Cash used in Operations (46,859.65)

(77,896.62)

B.Cash Flow from Investing activities

Capital expenditure on fixed assets (including capital advances) (2,895.66)

(818.43)

Proceeds from sale of fixed assets 30.82

23.28

Bank balances not considered as Cash and cash equivalents (89.56)

(306.15)

Interest income on staff loansPurchase of current investments (2,000.00)

(3,000.00)

Proceeds from sale of current investments 2,001.28

3,002.08

Net Cash Flow used in Investing activities (2,953.12)

(1,099.22)

Particulars

57


Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)Cash Flow Statement for the year ended 31 March 2016


Rs. in lakhs


Rs. in lakhs Particulars

C. Cash Flow from Financing activities

Proceeds from issue of Share Capital -

29,988.35

Long-term borrowings availed 69,500.00

93,800.00

Long-term borrowings repaid (20,067.88)

(24,176.80)

Short-term borrowings (repaid) / availed [Net] (17,291.90)

3,611.73

Net Cash Flow from Financing activities 32,140.22

103,223.28

(17,672.55)

24,227.44

Cash and Cash equivalents at beginning of the year 27,097.93

2,870.49

Cash and Cash equivalents at end of the year 9,425.38

27,097.93

Note:

(i)

Cash and Cash equivalents (Refer Note 19) 9,854.12 27,192.78

1.10 1.10

Less: Cash collateral for term loans 56.25 93.75

Less: Cash collateral for assets de-recognised 371.39 -

9,425.38 27,097.93


Net (decrease) / increase in Cash and Cash equivalents (A) + (B) + (C)

The reconciliation to the Cash and Cash equivalents, as given in Note 19, is as follows:

Cash and Cash equivalents (as defined in AS 3 - Cash Flow Statements) as at end of the year

Less: Deposits with original maturity of more than 3 months earmarked towards Bank

58

Guarantee





P N Vasudevan

Partner

Director

Place : Chennai

DIN: 00032309 DIN: 01550885

thDate : 4 May 2016







1 Corporate Information

Equitas Finance Limited [EFL / Company] operates as a Systemically Important Non Deposit-taking Non Banking

Finance Company [NBFC-ND-SI] registered with the Reserve Bank of India [RBI] under the category of 'Asset Finance

Company'. It is a wholly owned subsidiary of Equitas Holdings Limited [Holding Company]. The Company commenced

used Commercial Vehicle finance business in June 2011. During the Financial Year 2013-14, the Company commenced

Small and Micro Enterprises finance and Loan against property finance [together referred as 'Micro Small Enterprise

Loans (MSE Loans)'] to borrowers not having access to formal financing source.

The Company was converted to a public company vide a fresh Certificate of Incorporation dated 29 September 2015,

subsequent to which the name of the Company changed from Equitas Finance Private Limited to Equitas Finance

Limited.

2 Significant Accounting Policies

2.1 Basis of preparation of Financial Statements

The Financial Statements of the Company have been prepared in accordance with the Generally Accepted

Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section

133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant

provisions of the Companies Act, 2013 ("the 2013 Act") The Financial Statements have been prepared on accrual

basis under the historical cost convention. The accounting policies adopted in the preparation of the Financial

Statements are consistent with those followed in the previous year.

The Company follows the Prudential Norms for income recognition, asset classification and provisioning as

prescribed by the RBI

2.2 Use of Estimates

The preparation of the Financial Statements in conformity with Indian GAAP requires the Management to make

estimates and assumptions which are considered in the reported amounts of assets and liabilities (including

contingent liabilities) and the reported income and expenses during the year. The Management believes that the

estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ

due to these estimates and the differences between the actual results and the estimates are recognised in the

periods in which the results are known / materialise.

2.3 Cash and Cash Equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term balances (with

an original maturity of three months or less from the date of acquisition), highly liquid investments that are

readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.4 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is

adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash

receipts or payments. The cash flows from operating, investing and financing activities of the Company are

segregated based on available information.

2.5 Depreciation and Amortisation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated

residual value.

59


Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)Notes forming part of the Financial Statements for the year ended 31 March 2016

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life

prescribed in Schedule II to the Companies Act, 2013, except in respect of the following categories of assets, in

whose case the life of the assets has been assessed as under, based on technical assessment, taking into account

the nature of the asset, its estimated usage, its operating conditions, past history of replacement and anticipated

technological changes

Tangible Assets

Office Equipment - 3 years

Computers - 3 years

Furniture & Fittings - 3 years

Vehicles - 4 years

Leasehold Improvements are depreciated over the remaining primary lease period or 3 years, whichever is lower.

Assets individually costing less than Rs.5,000 each are fully depreciated in the year of capitalisation.

Intangible assets are amortised over their estimated useful life as follows:

Software - lower of license period or 3 years.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each

financial year and the amortisation method is revised to reflect the changed pattern.

2.6 Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and

the revenue can be reliably measured

I. Interest Income on Loans granted is recognized under the internal rate of return method. Income on Non

Performing Assets is recognized only when realized and any interest accrued until such asset became a

non performing asset and remaining overdue, is de-recognized totally by reversing the interest income.

ii. On assets securitised / assigned, income is recognised over the life of the underlying assets based on the

method prescribed by the Reserve Bank of India vide their guidelines dated 21 August 2012.

iii. Loan Processing fee is recognised as income in the year in which loan is sanctioned

iv. All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realisation

/ collection.

v. Additional Finance Charges, Cheque bounce charges, Field visit charges and other penal / servicing

charges are recognised as income only on realisation due to uncertainty in its collection.

vi. Profit / loss on sale of investments is recognised at the time of sale or redemption.

2.7 Tangible Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost of a tangible

asset comprises its purchase price net of any trade discounts and rebates, including any import duties and other

taxes (other than those subsequently recoverable from the taxing authorities) and any directly attributable

expenditure on making the asset ready for its intended use.

60



Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising

direct cost and related incidental expenses. Advances paid towards acquisition of Fixed assets are included under

long term loans and advances.

2.8 Intangible Fixed Assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an

intangible asset comprises its purchase price, including any import duties and other taxes (other than those

subsequently recoverable from the taxing authorities) and any directly attributable expenditure on making the

asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an

intangible asset after its purchase / completion is recognised as an expense when incurred, unless it is probable

that such expenditure will enable the asset to generate future economic benefits in excess of its originally

assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in

which case such expenditure is added to the cost of the asset.

2.9 Foreign currency transactions and translations

Initial recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing

on the date of the transaction.

Measurement at the Balance Sheet date

Foreign currency monetary items of the Company, outstanding at the Balance Sheet date are restated at the year-

end rates. Non-monetary items of the Company are carried at historical cost.

Treatment of Exchange differences

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of

the Company are recognised as income or expense in the Statement of Profit and Loss.

2.10 Investments

Investments which are long term in nature, are stated at cost, net of provision, if any, for diminution, other than

temporary, in the value of investments.

Current investments are valued at lower of cost and fair value.

2.11 Employee Benefits

Employee benefits include provident fund, gratuity and compensated absences.

Defined contribution plan:

The Company's contribution to provident fund are considered as defined contribution plan and are charged as an

expense as it falls due based on the amount of contribution required to be made and when the services are

rendered by the employees

Defined benefit plans:

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the

Projected Unit Credit method, with Actuarial Valuations being carried out at each Balance Sheet date. Actuarial

gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service

cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a

straight-line basis over the average period until the benefits become vested. The retirement benefit obligation

61



recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for

unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this

calculation is limited to past service cost, plus the present value of available refunds and reductions in future

contributions to the schemes.

Short-term employee benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services

rendered by employees are recognised during the period/year when the employees render the service. These

benefits include performance incentive and compensated absences which are expected to occur within twelve

months after the end of the period in which the employee renders the related service. The cost of such

compensated absences is accounted as under :

(a) in case of accumulated compensated absences, when employees render the services that increase their

entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

Long-term employee benefits:

Compensated absences which are not expected to occur within twelve months after the end of the period in

which the employee renders the related service are recognised as a liability at the present value of the defined

benefit obligation as at the Balance Sheet date.

2.12 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the

internal organisation and management structure.

2.13 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the

lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement

of Profit and Loss on a straight-line basis.

2.14 Earnings per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of

extraordinary items, if any) by the weighted average number of equity shares outstanding during the

period/year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax

effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income

relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for

deriving basic earnings per share and the weighted average number of equity shares which could have been

issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive

only if their conversion to equity shares would decrease the net profit per share from continuing ordinary

operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless

they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds

receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares).

Dilutive potential equity shares are determined independently for each period presented. The number of equity

shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares,

as appropriate.

62



2.15 Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the

applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the

accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting

date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for

timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that

reasonable certainty exists that sufficient future taxable income will be available against which these can be

realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital

losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that

there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are

offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally

enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their

realisability.

2.16 Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment, if

any indication of impairment exists.

If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for

such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless

the asset is carried at revalued amount, in which case, any impairment loss of the revalued asset is treated as a

revaluation decrease to the extent a revaluation reserve is available for that asset.

The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by

discounting the future cash flows to their present value based on an appropriate discount factor.

When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier

accounting periods, no longer exists or may have decreased, such reversal of impairment loss is recognised in the

Statement of Profit and Loss to the extent, the amount was previously charged to the Statement of Profit and

Loss. In case of revalued assets, such reversal is not recognised.

2.18 Borrowing costs

Borrowing costs include interest, Premium on redemption of Debentures and ancillary costs that the Company

incurs in connection with the borrowings. Costs in connection with the borrowing of funds, to the extent not

directly related to the acquisition of qualifying assets, are charged to the Statement of Profit and Loss at the time

of availment of the loan.

2.19 Repossessed Assets

Repossessed Assets are valued at the lower of cost and estimated net realizable value.

2.20 Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable

that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be

made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined

based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at

63



each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in

the Notes to the Financial Statements.

2.21 Classification of Loan Portfolio (Also refer Note 54)

Loans are classified as required by Non-Banking Financial (Non-Deposit Accepting or Holding) Companies

Prudential Norms (Reserve Bank) Directions, 2015

A) Financial year 2015-16

(a) Classification of Loans

'Overdue' refers to interest and / or principal and / or instalment / insurance premium remaining unpaid from the day it became receivable.

64

(b) Provisioning Norms for LoansProvision on loans has been provided as per Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015

Provisioning Percentage

1 Standard Assets

0.30%

2 Non Performing Assets (NPA)

i. Sub-Standard Assets

10.00%

ii. Doubtful Assets

100.00%

Secured portion of loan amount

20.00%

30.00%

50.00%

iii. Loss Assets 100.00%

Not Overdue or Overdue for less than 5 months

Asset Classification

Unsecured portion of loan amount

Up to one year from the date of being doubtful

More than one year and up to three years from the date of being doubtful

More than three years from the date of being doubtful

Overdue for 5 months and above but less than or equal to 21 months


Period of Overdue

Standard Assets Not Overdue or Overdue for less than 5 months

Non Performing Assets (NPA)


ii. Doubtful Assets Overdue for more than 21 months

iii. Loss Assets



Assets which are identified as loss asset by the Company or the internal auditor or the external auditor or by the Reserve Bank of India.


Notes forming part of the Financial Statements for the year ended 31 March 2016

B) Financial year 2014-15

(a) Classification of Loans

‘Overdue' refers to interest and / or principal and / or instalment / insurance premium remaining unpaid from the day it became receivable.

(b) Provisioning Norms for LoansProvision on loans has been provided as per Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015

Note : Income on NPAs are recognised only when realised

Under exceptional circumstances, Management may renegotiate loans by rescheduling repayment terms

for customers who have defaulted in repayment but who appear willing and have the ability to repay their

loans under a longer term agreement. Rescheduled Standard Assets are classified / provided for as Sub-

Standard Assets as per above which classification / provisioning is retained for a period of one year of

satisfactory performance. Rescheduled NPAs are not upgraded but are retained at the original

classification / provisioning for a period of 1 year of satisfactory performance.

65

Period of Overdue

Standard Assets Not Overdue or Overdue for less than 6 months

Non Performing Assets (NPA)

i. Sub-Standard Assets Overdue for 6 months and more but less than or equal to 24 months

ii. Doubtful Assets Overdue for more than 24 months

iii. Loss Assets


Assets which are identified as loss asset by the Company or the internal auditor or the external auditor or by the Reserve Bank of India.

Provisioning Percentage

1 Standard Assets

0.25%

2 Non Performing Assets (NPA)


10.00%

ii. Doubtful Assets

100.00%

Secured portion of loan amount

20.00%

30.00%

50.00%

iii. Loss Assets 100.00%

Not Overdue or Overdue for less than 6 months


Unsecured portion of loan amount

Up to one year from the date of being doubtful

More than one year and up to three years from the date of being doubtful

More than three years from the date of being doubtful




(c) Provision for Credit Enhancements on assets de-recognised

Provision for Credit Enhancements on assets de-recognised is made based on Management estimates at 0.30%

(0.25% for FY 2014-15) of the outstanding amount of assets de-recognised from the books of the Company as at

the Balance Sheet date.

2.22 Service Tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is

accounted and when there is reasonable certainty in availing / utilising the credits.

2.23 Operating Cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets

and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months

for the purpose of classification of its assets and liabilities as current and non-current.

66




Notes forming part of the Financial Statements for the year ended 31 March 2016Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)

No. of Shares Rs. in lakhs No. of Shares Rs. in lakhs

3 Share Capital

Authorised

750,000,000 75,000.00

440,000,000 44,000.00

423,000,000 42,300.00

423,000,000 42,300.00

423,000,000 42,300.00

423,000,000 42,300.00

3.1 Reconciliation of Shares Outstanding at the beginning and at the end of the year

No. of Shares Rs. in lakhs No. of Shares Rs. in lakhs

423,000,000 42,300.00

240,700,000 24,070.00

- - 182,300,000 18,230.00

423,000,000 42,300.00 423,000,000 42,300.00

3.2 Details of Shares held by the Holding Company

Particulars As at

31 March 2016 As at

31 March 2015

No. of Shares No. of Shares

423,000,000 423,000,000

3.3 Details of Shareholders Holding more than 5% Shares in the Company

No. of Shares % Holding No. of Shares % Holding

423,000,000

100.00% 423,000,000

100.00%

Issued during the year

Outstanding at the end of the year

Equitas Holdings Limited (including nominees)

ParticularsFor the year ended 31 March 2016 For the year ended 31 March 2015

Equity Shares of Rs.10 each

Equitas Holdings Limited (including nominees)

Outstanding at the beginning of the year

ParticularsAs at 31 March 2016 As at 31 March 2015

ParticularsFor the year ended 31 March 2016 For the year ended 31 March 2015

Issued, Subscribed and Fully Paid-up



3.4 Disclosure of Rights

The Company has only one class of equity shares, having a face value of Rs.10/- each. Each holder is entitled to one vote per equity share.

Dividends are paid in Indian Rupees. Dividend proposed by the Board of Directors is subject to the approval of the shareholders at the

Annual General Meeting, except in case of interim dividend.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company in the

proportion to the number of equity shares held by the shareholders. Repayment of capital will be in proportion to the number of equity

shares held.

3.5 Increase in Authorised Capital

The Shareholders in their Extra Ordinary General meeting held on 7 December 2015 approved the increase in Authorised Share Capital

from Rs.44,000 lakhs (comprising of 44,00,00,000 shares of Rs.10 each) to Rs.75,000 lakhs (comprising of 75,00,00,000 shares of Rs.10

each).

3.6 Subscription of Share Capital

Subsequent to the Balance Sheet date, the Company has received subscription amount of Rs.28,800.00 lakhs (Rupees Two Hundred &

Eighty Eight crore only) from the Holding Company, Equitas Holdings Limited (EHL) on 21 April 2016. The Company has issued and allotted

on a Rights basis, 11,92,05,300 (Eleven Crore Ninty Two Lakh Five Thousand Three Hundred) equity shares of Rs. 10/- each at a price of

Rs.24.16 per share on 21 April 2016 to EHL, resulting in an increase in Paid-up Share capital by Rs.11,920.53 lakhs.

67


68


As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

4 Reserves & Surplus

4.1 Securities Premium Account

Opening Balance 16,237.05

4,478.70

Add: Premium on Shares issued during the year -

11,758.35

Closing Balance 16,237.05

16,237.05

4.2 Statutory Reserve


394.00

1,703.00 686.00

Closing Balance 2,783.00

1,080.00

4.3 General Reserve

Opening Balance 1.40

1.40

Add: Additions -

-

Closing Balance 1.40

1.40

4.4 Surplus in the Statement of Profit and Loss


224.71

Add: Profit for the year 8,512.02

3,422.71

Less: Appropriations

Transfer to Statutory Reserve (Refer Note 51) 1,703.00

686.00

Net Surplus in the Statement of Profit and Loss 9,770.44

2,961.42

28,791.89

20,279.87

Particulars

Add: Amount transferred from surplus in the Statement of Profit and Loss (Refer Note 51)

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

5 Long-term Borrowings

Non Convertible Debentures - Secured (Refer Note 5.1(a)) 25,024.56

24,123.68

Term Loans from Banks - Secured (Refer Note 5.2(c)) 49,189.26

18,331.73

Term Loans from Other Parties - Secured (Refer Note 5.3(c)) 17,039.78

21,658.34

Non Convertible Debentures - Unsecured (Refer Note 5.1(a)) 4,000.00

4,000.00

95,253.60

68,113.75

Particulars

69


As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs


4.1 Securities Premium AccountOpening Balance 16,237.05 4,478.70 Add: Premium on Shares issued during the year - 11,758.35 Closing Balance 16,237.05 16,237.05

4.2 Statutory ReserveOpening Balance 1,080.00 394.00

1,703.00 686.00

Closing Balance 2,783.00 1,080.00

4.3 General ReserveOpening Balance 1.40 1.40 Add: Additions - - Closing Balance 1.40 1.40

4.4 Surplus in the Statement of Profit and LossOpening Balance 2,961.42 224.71 Add: Profit for the year 8,512.02 3,422.71 Less: Appropriations Transfer to Statutory Reserve (Refer Note 51) 1,703.00 686.00 Net Surplus in the Statement of Profit and Loss 9,770.44 2,961.42

28,791.89 20,279.87

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs


Non Convertible Debentures - Secured (Refer Note 5.1(a)) 25,024.56 24,123.68 Term Loans from Banks - Secured (Refer Note 5.2(c)) 49,189.26 18,331.73 Term Loans from Other Parties - Secured (Refer Note 5.3(c)) 17,039.78 21,658.34 Non Convertible Debentures - Unsecured (Refer Note 5.1(a)) 4,000.00 4,000.00

95,253.60 68,113.75

5.1 Details of Non Convertible Debentures issued by the Company

(a) Repayment terms

Nos. Face value

Secured Non Convertible Debentures12.70% Bullet 1 30-Jun-19 500 1,000,000 5,000.00 5,000.00 Listed 30 June 2017 Par *

12.00% In 3 instalments 3 25-Nov-17 580 1,000,000 5,800.00 5,800.00 Listed Not applicablePar *

Zero Bullet 1 30-Aug-16 200 1,000,000 2,000.00 2,000.00 Listed Not applicable Premium12.50% Monthly 6 29-Sep-16 100 1,000,000 600.00 1,000.00 Listed Not applicable Par *12.50% Monthly 6 29-Sep-16 150 1,000,000 900.00 1,500.00 Unlisted Not applicable Par *13.70% Bullet 1 30-Sep-19 100 1,000,000 1,000.00 1,000.00 Listed 30 Sep 2017 Par *12.50% Monthly 18 30-Sep-17 50 1,000,000 473.68 500.00 Listed Not applicable Par *12.50% Monthly 6 30-Sep-16 50 1,000,000 300.00 500.00 Listed Not applicable Par *12.50% Monthly 7 30-Oct-16 50 1,000,000 350.00 500.00 Listed Not applicable Par *12.50% Monthly 7 30-Oct-16 100 1,000,000 700.00 1,000.00 Unlisted Not applicable Par *12.50% Quarterly 4 31-Jan-17 400 1,000,000 2,000.00 4,000.00 Listed Not applicable Par *

12.13% Bullet 1 26-Feb-20 1000 1,000,000 10,000.00 10,000.00 Listed

26 Feb 2017,

26 Aug 2017,

26 Feb 2018,

26 Aug 2018,

26 Feb 2019,

26 Aug 2019

Par *

11.66% In 3 instalments 3 28-Jul-18 750 1,000,000 7,500.00 - Listed 30 Jul 2018 Par *

11.66% In 3 instalments 3 14-Aug-18 750 1,000,000 7,500.00 - Listed 14 Aug 2018 Par *

Total 44,123.68 32,800.00

(Refer Note 9) Less: Current Maturities of long term borrowings 19,099.12 8,676.32

Long-term portion 25,024.56 24,123.68

Unsecured Subordinated Debentures14.95% Bullet 3 30-Apr-21 400 1,000,000 4,000.00 4,000.00 Listed Not applicable Par

Total 4,000.00 4,000.00

* Guaranteed by Equitas Holdings Limited (Holding Company)

(b)

Particulars

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

Secured Non Convertible Debentures are secured with first ranking exclusive charge on the hypothecated Receivables under financing activities in favour of the Trustee for the benefit of the

debenture holders. Out of the above, debentures amounting to Rs.42,523.68 Lakhs (PY Rs.30,300 Lakhs) are listed in BSE Limited as on 31 March 2016.


Particulars

Final Maturity

Date

Coupon

Rate [%

p.a.]

Issued at

Par /

Premium

Redemption

Frequency

No. of

Installment as

on 31

March 2016

Date of

Redemption, if

Option available to

exercise

Debenture detailsListed /

Unlisted

status


As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs


4.1 Securities Premium AccountOpening Balance 16,237.05 4,478.70 Add: Premium on Shares issued during the year - 11,758.35 Closing Balance 16,237.05 16,237.05

4.2 Statutory ReserveOpening Balance 1,080.00 394.00

1,703.00 686.00

Closing Balance 2,783.00 1,080.00

4.3 General ReserveOpening Balance 1.40 1.40 Add: Additions - - Closing Balance 1.40 1.40

4.4 Surplus in the Statement of Profit and LossOpening Balance 2,961.42 224.71 Add: Profit for the year 8,512.02 3,422.71 Less: Appropriations Transfer to Statutory Reserve (Refer Note 51) 1,703.00 686.00 Net Surplus in the Statement of Profit and Loss 9,770.44 2,961.42

28,791.89 20,279.87

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs


Non Convertible Debentures - Secured (Refer Note 5.1(a)) 25,024.56 24,123.68 Term Loans from Banks - Secured (Refer Note 5.2(c)) 49,189.26 18,331.73 Term Loans from Other Parties - Secured (Refer Note 5.3(c)) 17,039.78 21,658.34 Non Convertible Debentures - Unsecured (Refer Note 5.1(a)) 4,000.00 4,000.00

95,253.60 68,113.75


(a) Repayment terms

Nos. Face value

Secured Non Convertible Debentures12.70% Bullet 1 30-Jun-19 500 1,000,000 5,000.00 5,000.00 Listed 30 June 2017 Par *

12.00% In 3 instalments 3 25-Nov-17 580 1,000,000 5,800.00 5,800.00 Listed Not applicablePar *

Zero Bullet 1 30-Aug-16 200 1,000,000 2,000.00 2,000.00 Listed Not applicable Premium12.50% Monthly 6 29-Sep-16 100 1,000,000 600.00 1,000.00 Listed Not applicable Par *12.50% Monthly 6 29-Sep-16 150 1,000,000 900.00 1,500.00 Unlisted Not applicable Par *13.70% Bullet 1 30-Sep-19 100 1,000,000 1,000.00 1,000.00 Listed 30 Sep 2017 Par *12.50% Monthly 18 30-Sep-17 50 1,000,000 473.68 500.00 Listed Not applicable Par *12.50% Monthly 6 30-Sep-16 50 1,000,000 300.00 500.00 Listed Not applicable Par *12.50% Monthly 7 30-Oct-16 50 1,000,000 350.00 500.00 Listed Not applicable Par *12.50% Monthly 7 30-Oct-16 100 1,000,000 700.00 1,000.00 Unlisted Not applicable Par *12.50% Quarterly 4 31-Jan-17 400 1,000,000 2,000.00 4,000.00 Listed Not applicable Par *


26 Feb 2017,

26 Aug 2017,

26 Feb 2018,

26 Aug 2018,

26 Feb 2019,

26 Aug 2019

Par *



Total 44,123.68 32,800.00

(Refer Note 9) Less: Current Maturities of long term borrowings 19,099.12 8,676.32


Unsecured Subordinated Debentures14.95% Bullet 3 30-Apr-21 400 1,000,000 4,000.00 4,000.00 Listed Not applicable Par

Total 4,000.00 4,000.00


(b)

Particulars

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

Secured Non Convertible Debentures are secured with first ranking exclusive charge on the hypothecated Receivables under financing activities in favour of the Trustee for the benefit of the

debenture holders. Out of the above, debentures amounting to Rs.42,523.68 Lakhs (PY Rs.30,300 Lakhs) are listed in BSE Limited as on 31 March 2016.


Particulars

Final Maturity

Date

Coupon

Rate [%

p.a.]

Issued at

Par /

Premium

Redemption

Frequency

No. of

Installment as

on 31

March 2016

Date of

Redemption, if

Option available to

exercise

Debenture detailsListed /

Unlisted

status



(a) Repayment terms

Nos. Face value

Secured Non Convertible Debentures

12.70% Bullet 1 30-Jun-19 500 1,000,000 5,000.00 5,000.00 Listed 30 June 2017 Par *

12.00% In 3 instalments 3 25-Nov-17 580 1,000,000 5,800.00 5,800.00 Listed Not applicable Par *

Zero Bullet 1 30-Aug-16 200 1,000,000 2,000.00 2,000.00 Listed Not applicable Premium

12.50% Monthly 6 29-Sep-16 100 1,000,000 600.00 1,000.00 Listed Not applicable Par *

12.50% Monthly 6 29-Sep-16 150 1,000,000 900.00 1,500.00 Unlisted Not applicable Par *

13.70%Bullet

1 30-Sep-19 100 1,000,000 1,000.00 1,000.00 Listed 30 Sep 2017 Par *

12.50% Monthly 18 30-Sep-17 50 1,000,000 473.68 500.00 Listed Not applicable Par *

12.50% Monthly 6 30-Sep-16 50 1,000,000 300.00 500.00 Listed Not applicable Par *

12.50% Monthly 7 30-Oct-16 50 1,000,000 350.00 500.00 Listed Not applicable Par *

12.50% Monthly 7 30-Oct-16 100 1,000,000 700.00 1,000.00 Unlisted Not applicable Par *

12.50% Quarterly 4 31-Jan-17 400 1,000,000 2,000.00 4,000.00 Listed Not applicable Par *


26 Feb 2017,

26 Aug 2017,

26 Feb 2018,

26 Aug 2018,

26 Feb 2019,

26 Aug 2019

Par *



Total 44,123.68 32,800.00

Less: Current Maturities of long term borrowings( Refer Note 9) 19,099.12 8,676.32


Unsecured Subordinated Debentures

14.95% Bullet 3 30-Apr-21 400 1,000,000 4,000.00 4,000.00 Listed Not applicable Par

Total 4,000.00 4,000.00


As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

Final

Date

Coupon Rate [%

p.a.]

Issued at Par /

Premium

Redemption Frequency

No. of Installmentas on 31

March 2016

Date of Redemption, if

Option availableto exercise

Debenture details Listed / Unlisted status

Maturity

(b) Secured Non Convertible Debentures are secured with first ranking exclusive charge on the hypothecated

Receivables under financing activities in favour of the Trustee for the benefit of the debenture holders. Out of the

above, debentures amounting to Rs.42,523.68 Lakhs (PY Rs.30,300 Lakhs) are listed in BSE Limited as on 31 March

2016.

© NCD of Rs.4,000 lakhs (PY Rs.4,000 lakhs) is unsecured, subordinated debt and are listed in BSE Limited as on 31

March 2016. This is eligible for inclusion as Tier II Capital as per RBI Guidelines.(d)The Company has not defaulted

in the repayment of dues to the debenture holders.




5.2 Details of Term Loans from Banks - Secured

(a) The loans are secured by hypothecation of specified Receivables under financing activities and lien on

specified FDs with Banks.

(b) The Company has not defaulted in the repayment of dues on Term Loans from Banks.

(C) The details of interest rate, tenor, repayment terms of the Term Loans from Banks are as follows:

TenureRepayment

Frequency

Interest Rate %

p.a.

Fixed or

Floating

Remaining

Instalments

as at

31 March 2016

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

54 Months Quarterly 12.25% Floating 14 2,625.00

3,000.00

36 months Quarterly 11.95% Floating 8 2,181.00

3,000.00


-


2,500.00


-


-


5,000.00

60 months Half Yearly 11.75% Floating 9 4,500.00

-


-


-

24 months Monthly 13.10% Floating 7 437.50

-

36 Months Quarterly 11.05% Floating 10 1,250.00

-


-

48 months Quarterly 12.75% Floating 11 687.50

937.50


-


1,500.00


2,842.11


-


2,187.50


-

48 months Quarterly 12.90% Floating 10 937.50

1,312.50


-


-


-


2,000.00

Total 64,840.37

24,279.61

15,651.11

5,947.88

49,189.26

18,331.73

Less: Current maturities of Long-term Borrowings (Refer Note 9)

Long-term Borrowings from Banks

70


6 Other Long-term Liabilities

5,771.04 63.66

Premium on redemption of Debentures - 183.42

5,771.04

247.08

Particulars

Particulars

As at

As at

31 March 2015

31 March 2015

Rs. in lakhs

Rs. in lakhs

Unamortised Income on Interest Strip retained on Securitisation of Receivables

As at

As at

31 March 2016

31 March 2016

Rs. in lakhs

Rs. in lakhs

7 Long-term Provisions

438.21

265.85

156.10

157.96

Provision for Credit Enhancements on assets de-recognised 70.28

1.78

664.59

425.59

Provision for Sub-Standard and Doubtful Receivables under financing activities

(Refer Note 37)

Contingent Provision for Standard Receivables under financing activities (Refer Note 37)

71

5.3 Details of Term Loans from Other Parties - Secured

(a) The loans are secured by hypothecation of specified Receivables under financing activities and lien on

specified FDs with Banks.

(b) The Company has not defaulted in the repayment of dues on Term loans from Other Parties.

(c) The details of interest rate, tenor, repayment terms of the Term Loans from Other Parties are as follows:

Tenure Repayment Frequency

Interest Rate % p.a.

Remaining Instalments

as at31 March 2016

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

42 months Quarterly 14.00% 7 4,375.00 5,000.00

42 months Quarterly 12.30% 8 4,000.00 4,000.00

24 months Monthly 13.10% 19 - 1,187.50

36 months Monthly 13.25% 13 819.95 1,477.70

36 months Monthly 13.25% 13 201.77 364.15

36 months Monthly 13.25% 17 263.30 420.90

36 months Monthly 14.00% - 3,687.09

36 months Monthly 13.90% 17 850.00 1,450.00

36 months Quarterly 11.85% 18 7,500.00

-

48 months Monthly 13.00% 35 7,750.00

10,000.00

48 months Quarterly 13.25% 9 562.50 812.50

48 months Monthly 13.25% 31 968.75

1,343.75

Total 27,291.27

29,743.59

10,251.49 8,085.25

Long-term Borrowings from Other Parties 17,039.78 21,658.34

Less: Current maturities of Long-term Borrowings (Refer Note 9)



8 Short-term Borrowings

Loans repayable on demand

From BanksCash Credit - Secured (Refer Note 8.1) 23,517.72

30,632.13

Working Capital Demand Loan - Secured (Refer Note 8.1) -

7,500.00

Overdraft - Unsecured (Refer Note 8.2) -

1,277.49

Term Loans - Unsecured (Refer Note 8.3) -

500.00

From Other partiesCommercial Papers - Unsecured -

900.00

23,517.72

40,809.62

8.3 TenureInterest Rate

% p.a.

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

6 months 11.60% -

500.00

Total -

500.00

8.4

9

Non Convertible Debentures - Secured (Refer Note 5.1(a)) 19,099.12

8,676.32

Term Loans from Banks - Secured (Refer Note 5.2(c)) 15,651.11 5,947.88

Term Loans from Other Parties - Secured (Refer Note 5.3(c)) 10,251.49 8,085.25

45,001.72 22,709.45

The Company has not defaulted in the repayment of any short term borrowings.

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

Current Maturities of Long-term Borrowings

Particulars

Repayment Frequency

On Maturity

ParticularsAs at


As at31 March 2015

Rs. in lakhs

72


8.1 Secured loan repayable on demand from banks is primarily secured by loan receivables covered under financing activities (excluding the

assets charged to debenture holders / term lenders on exclusive basis).

Collateral Security - Charge on hypothecation of other free assets / fixed assets owned by the Company; further, the loans are guaranteed by

Equitas Holdings Limited (Holding Company).

8.2 The unsecured overdraft facilities from banks are guaranteed by Equitas Holdings Limited (Holding Company).

Tier II Capital as per RBI



11 Other Current Liabilities

Interest accrued but not due on borrowings 1,331.96

1,143.02

Advance instalments from borrowers 1,415.70

748.78

3,710.36

206.50

Remittances payable - Derecognised assets 1,531.26

413.54

Premium on redemption of Debentures 497.85

-

Payables for purchase of fixed assets 100.15

32.36

336.01

110.49

8,923.29

2,654.69

12 Short-term Provisions

Provision for employee benefits

Provision for Compensated Absences 651.01 356.67

Provision - Others211.91

139.47

1,313.39

664.81

Provision for Credit Enhancements on assets de-recognised 15.78

5.82

2,192.09

1,166.77

Unamortised Income on Interest Strip retained on Securitisation of Receivables

As at31 March 2015

Rs. in lakhs

Provision for Sub-Standard and Doubtful Receivables under financing activities (Refer Note 37)

Particulars

As at31 March 2016

Rs. in lakhs

Statutory remittances (Contributions to PF & ESI, Withholding Taxes etc.)

Contingent Provision for Standard Receivables under financing activities (Refer Note 37)

73

Particulars

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

ParticularsAs at


As at31 March 2015

Rs. in lakhs

10 Trade Payables

10.1 Dues of micro enterprises and small enterprise -

-

10.2 Dues of Creditors other than micro enterprises and small enterprise 1,360.12

739.09

1,360.12

739.09

Note:In the consideredview of the Managementand as relied upon by the Auditors,there are nodues to micro enterprises and small enterprises


Equ

itas

Fin

ance

Lim

ite

d (

form

erly

kn

ow

n a

s, E

qu

ita

s Fi

nan

ce P

riva

te L

imit

ed)

No

tes

form

ing

par

t o

f th

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ina

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tate

me

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fo

r th

e y

ear

en

ded

31

Mar

ch 2

016


Equitas Finance Limit

ed (formerly known a

s, Equitas Finance Priv

ate Limited)

Notes forming part of

the Financial Statem

ents for the year end

ed 31 March 2016

11Other Current

Liabilities

Interest accrued but n

ot due on borrowings

1,331.961,143.02

Advance instalments

from borrowers

1,415.70748.78

3,710.36206.50

Remittances payable -

Derecognised assets

1,531.26

413.54

Premium on redempt

ion of Debentures

497.85-

Payables for purchase

of fixed assets

100.1532.36

336.01110.49

8,923.292,654.69

12Short-term Pro

visions

Provision for employ

ee benefits

Provision for Compen

sated Absences

651.01356.67

Provision - Others

211.91139.47

1,313.39664.81

Provision for Credit E

nhancements on asse

ts de-recognised

15.785.82

2,192.091,166.77

Unamortised Income

on Interest Strip reta

ined on Securitisation

of Receivables

As at 31 March 2015 Rs. in lakhsAs at 31 March 2

015 Rs. in lakhs

Particulars

As at 31 March 2016 Rs. in lakhs

Provision for Sub-Sta

ndard and Doubtful R

eceivables under fina

ncing activities (Refer

Note

37)

Particulars

As at 31 March 2016 Rs. in lakhs

Statutory remittances

(Contributions to PF

& ESI, Withholding Ta

xes etc.)

Contingent Provision

for Standard Receiva

bles under financing a

ctivities (Refer Note 3

7)

13Fi

xed

Ass

ets

As

at 3

1 M

arch

201

6Rs

. in

lakh

s

As

at

1 A

pril

2015

Add

itio

nsD

ispo

sals

As

at

31 M

arch

201

6A

s at

1

Apr

il 20

15D

epre

ciat

ion

char

ge

for

the

year

O

n D

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sals

As

at

31 M

arch

201

6A

s at

31

Mar

ch 2

016

As

at

31 M

arch

201

5

Tang

ible

Ass

ets

(ow

ned)

Impr

ovem

ents

on

Leas

ehol

d pr

emis

es

1

21.9

8

4

0.35

-

162.

33

48.

23

41

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-

90.

21

7

2.12

73

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Off

ice

Equi

pmen

t

2

31.8

6

11

1.39

1

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341.

90

145.

94

78

.66

1

.33

223.

27

118

.63

85.

92

Com

pute

rs

496

.66

378.

75

0.2

0

875.

21

244.

96

1

83.2

5

0

.12

428.

09

447

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251.

70

Furn

iture

& F

ittin

gs

9

2.18

4

1.64

-

133.

82

69.

79

40

.48

-

110.

27

2

3.55

22

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Vehi

cles

274

.85

122.

27

41.5

1

355.

61

34.

99

63

.01

10.

07

87.

93

267

.68

239.

86

Tota

l - A

1

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694.

40

43.0

6

1,8

68.8

7

54

3.91

4

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8

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52

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77

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62

Inta

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Com

pute

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are

375

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168.

78

-

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-

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81

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l - B

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168.

78

-

544.

01

290.

42

66

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-

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187

.42

84.

81

Gra

nd T

otal

(A

+B)

1

,592

.76

863.

18

43.0

6

2,4

12.8

8

83

4.33

4

73.5

5

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52

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96.3

6

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16.5

2

758

.43

Prev

ious

Yea

r:Fi

nanc

ial Y

ear

2014

-15

Rs. i

n la

khs

As

at 1

A

pril

2014

Add

itio

nsD

ispo

sals

As

at 3

1 M

arch

201

5A

s at

1

Apr

il 20

14D

epre

ciat

ion

char

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As

at 3

1

Mar

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015

As

at 3

1 M

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201

5A

s at

31

M

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201

4

Tang

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Ass

ets

(ow

ned)

Impr

ovem

ents

on

Leas

ehol

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es

60.

39

83.

74

22.1

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12

1.98

4

6.81

23.1

5

21.

73

48.

23

7

3.75

1

3.58

O

ffic

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128

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108.

84

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1.86

8

0.08

71.5

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145.

94

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5.92

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8.86

Co

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72.4

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Fu

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59.

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69.

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Ve

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25.9

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239

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Tota

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743.

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61.4

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1

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31

543.

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221.

37

Inta

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Com

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are

295

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79.

88

-

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241.

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-

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84.

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53.

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Tota

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295

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79.

88

-

375.

23

241.

81

48.6

1

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2

90.4

2

84.

81

53.

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Gra

nd T

otal

(A

+B)

830

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823.

79

61.4

2

1,5

92.7

6

55

5.48

3

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6

38.

31

834.

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758

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274.

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Des

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74


As at

1 April 2015

Rs. in lakhs

Credit / (Charged)

Rs. in lakhs

As at

31 March 2016

Rs. in lakhs

14. Deferred Tax Asset (net)

47.23

18.09

65.32

140.27

84.72

224.99

284.75

223.81

508.56

217.30

(113.63)

103.67

2.63 27.15

29.78

115.42

171.23

286.65

Doubtful advances -

3.18

3.18

807.60

414.55

1,222.15

Contingent Provision for Standard Assets under financing activities

Employee benefits

Provision for repossessed assets


Provision for Credit Enhancements on assets de-recognized

Particulars

Difference between depreciation as per Books of Accounts and Income Tax Act, 1961

75

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

15 Long-term Receivables under financing activities

SecuredCommercial Vehicle Financing (Refer Note (b)) 76,745.98

61,909.21

Micro Small Enterprise Loans (Refer Note (b)) 62,723.25

45,225.65

Other Loans 81.60

-

Loans subordinated as Credit Enhancements for assets de-recognised 2,624.57

721.34

142,175.40

107,856.20

Note:

(a) Of the above:Considered Good 141,133.68

107,066.26

1,041.72

789.94

(b) Secured means 'exposures secured, wholly or partly, by hypothecation of vehicles,hypothecation of machinery & stock and / or equitable mortgage of property'

(Refer Note 7 on Provision for Sub-Standard and Doubtful Receivables under financingactivities)

Particulars

Considered Doubtful (Sub-Standardand Doubtful Receivables under financing activities asper Company's Provisioning Norms)



16 Other Non-Current Assets

Interest Strip retained on Securitisation of Receivables 5,771.04

63.66

Bank Deposits under lien having maturity beyond 12 months 169.36

413.69

5,940.40

477.35

Deposit account under lien - Cash collateral for assets de-recognised 150.61

371.39

- Cash Collateral for Term Loans 18.75

37.50

- Others -

4.80

As at31 March 2015

Rs. in lakhs

As at31 March 2016

Rs. in lakhs

Particulars


17

Advance towards purchase of fixed assets 2,129.00

8.52

Loans to employees - Secured * (Refer Note below) 5.06

6.23

- Unsecured 94.43

7.16

- Considered Doubtful 14.01

4.80

113.50

18.19

- Less: Provision for Doubtful advances 14.01

4.80

99.49

13.39

Rental Deposits and other deposits 220.08

155.63

Deposits - on lien against borrowings 45.00

75.00

238.21

197.55

2,731.78

450.09

Note:* Secured against hypothecation of two wheelers

Advance Income Tax and Tax Deducted at Source [Net of provision for Income TaxRs.7,989.21 lakhs (previous year Rs.3,004.21 lakhs)]

Long-term Loans and Advances (considered good, unless otherwise stated)

Particulars

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

76

18 Short-term Receivables under financing activities

SecuredCommercial Vehicle Financing (Refer Note (b)) 68,298.42

47,762.79

Micro Small Enterprise Loans (Refer Note (b)) 8,291.03

5,848.96

Other Loans 108.82

-

Instalments overdue on loans - More than six months from the date these were due for payment 4,120.24

2,150.22

- Others 1,902.20

2,566.29

82,720.71

58,328.26

Note:

(a) Of the above:Considered Good 78,237.16

55,797.66

4,483.55

2,530.60

(b)

19 Cash and Cash equivalents

Cash on hand 488.33

290.72

Balances with Banks - In Current accounts 8,937.05

11,807.21

- In Deposit accounts - free of lien -

15,000.00

- In earmarked accounts under lien -

-

- Balances held as security against borrowings and guarantees 428.74

94.85

9,854.12

27,192.78

Notes:

(a) 9,425.38

27,097.93

(b) Deposit accounts under lien: - Cash collateral for assets de-recognised 371.39 -

- Cash Collateral for Term Loans 56.25 93.75

(c) Deposits earmarked as Bank guarantee 1.10 1.10

Securedmeans 'exposures secured, wholly or partly, by hypothecation of vehicles,hypothecation of machinery & stock and / or equitable mortgage of property'

Of the above,the balancesthat meetthe definitionof Cashand cash equivalentsas per AS 3- Cash Flow Statement is

Particulars

Particulars

(ReferNote 12 for Provision for Sub-Standardand Doubtful Receivables under financingactivities)

ConsideredDoubtful (Sub-Standardand Doubtful Receivables under financing activities asper Company's Provisioning Norms)

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

As at31 March 2016

Rs. in lakhs

77




20 Short-term Loans and Advances

Loans and Advances to employees

- Secured, Considered good * (Refer Note below) 12.38

8.97

- Unsecured, Considered good 99.69

31.07

Trade advance - Unsecured, Considered Good 30.00

-

Balances with Government authorities - Service Tax input credit - Unsecured, Considered good 50.72

29.27

Prepaid expenses - Unsecured, Considered good 51.29

56.81

Contribution to Gratuity - Unsecured, Considered good 80.20

46.14

Other Advances - Unsecured, Considered good 115.09

95.17

439.37

267.43

Note:

* Secured against hypothecation of two wheelers

21 Other Current Assets

459.87

678.11

Interest accrued but not due - on Receivables under financing activities 3,052.17

2,340.19

- on Deposits with Banks 2.11

1.14

- on Other deposits 0.50

0.82

Unamortised Discount on Commercial Papers -

23.84

Interest Strip retained on Securitisation of Receivables 3,710.36

206.50

350.60

36.96

7,575.61

3,287.56

As at

31 March 2015

Rs. in lakhs

As at

31 March 2016

Rs. in lakhs

As at

31 March 2015

Rs. in lakhs

Receivables from Special Purpose Vehicles [SPVs] for assets de-recognised

Repossessed assets [net of provision Rs.299.55 lakhs (previous year Rs.627.90 lakhs)]

Particulars

ParticularsAs at


78


Equitas Finance Limited (formerly known as, Equitas Finance Private Limited)Notes forming part of the Financial Statements for the year ended 31 March 201614 Deferred Tax Asset (net) As at1 April 2015Rs. in lakhs Credit / (Charged)Rs. in lakhs As at31 March 2016Rs. in lakhsDeferred Tax Asset (net) 47.23 18.09 65.32 140.27 84.72 224.99 284.75 223.81 508.56 217.30 (113.63) 103.67 2.63 27.15 29.78 115.42 171.23 286.65 Doubtful advances - 3.18 3.18 807.60 414.55 1,222.15 As at31 March 2016Rs. in lakhs As at31 March 2015Rs. in lakhs 15 Long-term Receivables under financing activitiesSecuredCommercial Vehicle Financing (Refer Note (b)) 76,745.98 61,909.21Micro Small Enterprise Loans (Refer Note (b)) 62,723.25 45,225.65Other Loans 81.60 -Loans subordinated as Credit Enhancements for assets de-recognised 2,624.57 721.34142,175.40 107,856.20Note:(a) Of the above:Considered Good 141,133.68 107,066.261,041.72 789.94(b)

16 Other Non-Current AssetsInterest Strip retained on Securitisation of Receivables 5,771.04 63.66Bank Deposits under lien having maturity beyond 12 months 169.36 413.695,940.40 477.35Deposit account under lien - Cash collateral for assets de-recognised 150.61 371.39 - Cash Collateral for Term Loans 18.75 37.50 - Others - 4.80

Secured means 'exposures secured, wholly or partly, by hypothecation of vehicles,hypothecation of machinery & stock and / or equitable mortgage of property'(Refer Note 7 on Provision for Sub-Standard and Doubtful Receivables under financingactivities)

Contingent Provision for Standard Assets under financing activities

Particulars

Employee benefits

Provision for repossessed assets

As at31 March 2015Rs. in lakhs

Provision for Sub-Standard and Doubtful Receivables under financing activitiesProvision for Credit Enhancements on assets de-recognized

As at31 March 2016Rs. in lakhs

Considered Doubtful (Sub-Standard and Doubtful Receivables under financing activities asper Company's Provisioning Norms)

Particulars

Difference between depreciation as per Books of Accounts and Income Tax Act, 1961

Particulars


For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

22 Revenue from operations

Interest Income from loans 40,074.81

25,667.32

Other Operating Revenue

Processing and other fees 4,982.94

3,330.51

Interest spread on Assignment & Securitisation 2,439.24

592.53

Profit on sale of current investments (Net) 1.28

2.08

Interest on Deposits 50.06

43.08

47,548.33

29,635.52

For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

23 Other income

Interest on loans to employees 12.91

6.30

Profit on sale of fixed assets (net) -

0.17

Miscellaneous income 46.57

7.36

59.48

13.83

For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

24 Employee benefits expense

Salaries 7,802.44 5,335.84

541.41 348.80

Staff welfare expenses 1,002.18 603.57

9,346.03 6,288.21


Particulars

Particulars

Particulars

Contribution to Provident Fund and other funds


79

25 Finance cost

Interest on Term Loans

Interest on NCDs

Loan processing fees and other borrowing costs

Interest on Inter Corporate loans (Refer Note 35)

Interest on Inter Corporate deposits (Refer Note 35)

Discount on Commercial Paper

For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

9,696.09

7,236.00

5,738.43

2,146.74

387.89

447.81

6.63

414.02

-

112.71

82.27 79.45

15,911.31 10,436.73

Particulars



For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

26 Provisions & write-offs

244.80

198.87

646.73

657.05

Provision against repossessed assets (328.35)

305.90

78.46

(4.75)

Loss on sale of repossessed vehicles written-off 2,730.33 2,522.15

Loss on loan assets written-off 656.07 391.54

4,028.04 4,070.76

Particulars


(Net)

Provision for credit enhancements on assets de-recognised (Net)

Contingent provision for Standard Receivables under financing activities (Net)

80


For the year ended

31 March 2016

Rs. in lakhs

For the year ended

31 March 2015

Rs. in lakhs

27 Other expenses

Rent 363.91

213.84

Brokerage & commission 1,129.73

713.34

Rates & taxes 321.34

274.98

Insurance 6.13

4.19

Travelling & conveyance 1,129.22

835.45

Printing & stationery 159.89

123.80

Electricity charges 79.67

39.68

Postage & courier 172.18

113.27

Telephone charges 184.54

121.44

Legal & professional charges 505.36

496.81

Repairs & maintenance 100.30

49.44

Information technology expenses 155.04

100.10

Directors' Sitting Fees 18.60

20.08

Non Whole Time Directors' remuneration 52.50

45.64

Loss on sale of fixed assets (net) 0.72

-

Corporate Social Responsibility - Donations 241.00

96.00

Provision for doubtful advances - Staff loan 9.20

4.04

Auditors' Remuneration (Net of Service Tax) - Statutory Audit 10.00 10.00 - Limited Review 1.00 1.00 - Tax Audit 1.00 1.00 - Certification 1.85 0.45 - Reimbursement of expenses 0.49 - - Others 1.50 -

Miscellaneous expenses 121.25 63.39

4,766.42 3,327.94

Particulars

81



28 Commitments and Contingencies

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

(a) Contingent liabilities

0.53

0.53

5,355.73 6.35

29 Assignment & Securitisation

29.1 Bilateral Assignment of Receivables:

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

6,460 -

11,110.88 -

9,999.79

-

-

-

751.05

-

29.2 Securitisation of Assets

For the year ended31 March 2016

Rs. in lakhs


Rs. in lakhs

20,064

1,311

30,909.38

2,815.20

2,715.20

281.52

28,194.18

2,533.68

10,578.76

439.61

1,673.33 591.64

-

169.00

7,559.61

270.16

3,972.17

450.52

Aggregate gain (loss) over net book value(Income of the assigned portfolio recognised during the year)

Sale consideration received during the yearLoans Subordinated as Credit Enhancements for Assets De-Recognised

Total Gain on account of Securitisation to be amortised over the life of the Receivables

Gainrecognisedin the Statement of Profit and Loss during theyear(includingamortization of Unamortised Income) (Note 22)

Quantum of Credit Enhancement provided during the year in the form of Deposits

Unamortised Income as at year end (Note 6 & Note 11)

Book Value of Loan Assets securitised during the year


Aggregate Consideration (Assignee's share of asset sold)

Additional Consideration realized in respect of accounts transferred in earlier years

Total Number of Loan Assets securitised during the year

Particulars

Disclosures pursuant to Reserve Bank of India Guidelines on Corporate Governance - Review,

RBI/2014-15/552 DNBR (PD) o. 02 10.001/ 2014-15 dated 10 April 2015 CC.N 9/ 03.

No. of Accounts

Particulars

Value Added Tax - Rajasthan State

(b) Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advance)

Particulars

Aggregate value (net of provisions) of accounts sold

Quantum of Credit Enhancement as at year end

82

The Company had entered into certain bilateral assignments with NBFCs and the transaction has been accounted for in accordance with the Accounting Policy of the Company (Refer Note 2.6). The details of the assignment transaction is given below:

As per RBI Guidelines on Securitisation on Standard Assets issued on 6 February 2006, details of assets de-recognised by way of securitisation are as under:



29.3

S.No. As at


As at31 March 2015

Rs. in lakhs

1 4 2

2 28,690.54 3,176.24

3

a) Off-Balance Sheet exposures - First loss 994.60 -

- Others - -

b) On-Balance Sheet exposures - First loss 2,977.57 1,092.73

- - 4

a) Off-Balance Sheet exposures i) Exposure to own securitisations - First loss - - - Others - - b) On-Balance Sheet exposures i) Exposure to own securitisations - First loss - -

- -

ii) Exposure to third party securitisations - First loss - - - Others - -

- Others (Receivables from SPVs for Assets De-recognised)

- OthersAmount of exposures to securitisation transactions other than MRR

Total amount of securitised assets as per books of the SPVs sponsored by the NBFC

Totalamount of exposuresretained by theNBFCto comply with Minimum RetentionRatio (MRR) as on the Balance Sheet date

No. of Special PurposeVehicles(SPVs) sponsoredby the NBFC for securitisationtransactions (Nos.)

Particulars

Disclosures pursuant to Reserve Bank of India Guidelines on Corporate Governance - Review,

CC.No. 029/ 03.10.001/ RBI/2014-15/552 DNBR (PD) 2014-15 dated 10 April 2015

83



Particulars For the year ended



Rs. in lakhs

Change in defined benefit obligations during the yearPresent value of Defined Benefit Obligation at beginning of the year 116.67

50.38

Current Service Cost 96.58

68.20

Interest cost 14.39

7.52

Benefits paid (5.07)

(7.93)

Actuarial Gain / (Loss) (4.08)

(1.50)

Present value of Defined Benefit Obligation at end of the year 218.49 116.67

Change in Fair Value of Assets during the year Plan Assets at beginning of the year 162.81

69.66

Expected return on Plan Assets 19.83

9.12

Actual Company contribution 140.94

84.03

Benefits paid -

-

Actuarial Gain / (Loss) (24.90)

-

Plan Assets at end of the year 298.69 162.81

Liability Recognised in the Balance Sheet Present Value of Defined Benefit Obligation 218.49

116.67

Fair Value of Plan Assets 298.69

162.81

Net Liability/(Asset) Recognised in the Balance Sheet (80.19)

(46.15)

Cost of Defined Benefit Plan for the year

Current Service Cost 96.58 68.20 Interest Cost 14.39 7.52

Expected return on Plan Assets (19.83) (9.12)

Net Actuarial (gain) / loss recognised in the year 20.82 (1.50)

Net Cost Recognized in the Statement of Profit and Loss 111.96 65.10

Return on Plan Assets 19.83 9.12

Assumptions

Discount Rate 7.80% 7.80%

Future salary increase 10.00% 10.00%

Rate of return on Plan Assets 8.50% 8.50%

Attrition rate 20.00% 20.00%

Mortality table Indian Assured Lives(2006 – 08) Ultimate

Indian Assured Lives

(2006 – 08) Ultimate



84

30 Segment information

The Company is primarily engaged in the business of financing. All the activities of the Company revolve around the main business. Further, the Company does not operate in any separate geographic segments other than India. As such there are no separate reportable segments as per Accounting Standard 17 'Segment Reporting'.

31 Employee Benefits

31.1 Defined Contribution Plan

The Company makes Provident Fund contributions which are defined contribution plans for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.429.45 lakhs (Previous Year Rs.283.70 lakhs) towards Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company is at rates specified in the rules of the scheme.

31.2 Defined Benefit Plans

During the year ended 31 March 2016, the Company has funded its gratuity scheme for its employees. Gratuity provision has been made based on the Actuarial Valuation done as at the year end. The details of Actuarial Valuation as provided by an Independent Actuary is as follows:



Notes

a) The estimate of future salary increase takes into account: inflation, seniority, promotion and other relevant factors. Further, the

Management revisits the assumptions such as attrition rate, salary escalation etc., taking into account, the business conditions, various

external / internal factors impacting the Company.

b) Discount rate is based on the prevailing market yields of Indian Government Bonds as at the Balance Sheet date for the estimated term of

the obligation.

c) The entire Plan Assets are managed by LIC. The data on Plan Assets has not been furnished by LIC and hence there are no disclosures in

this regard.

d) Experience adjustments:

e) Estimated amount of contribution to the funds for the year ended 31 March 2017 as estimated by the Management is Rs.148 lakhs

(previous year Rs.141 lakhs).


Rs. in lakhs


Rs. in lakhs


Rs. in lakhs

Projected Benefit Obligation 218.49 116.67 50.38 Fair Value of Plan Assets 298.69 162.81 69.66 Surplus / (Deficit) 80.19 46.14 19.28 Experience adjustments on Plan Liabilities - gains (4.08) (1.50) (4.96)Experience adjustments on Plan Assets - loss (24.90) - 1.76

The details of experience adjustments for the financial years prior to FY 2013-14 have not been disclosed in the absence of necessary information.

Particulars

31.3

Compensated Absences



AssumptionsDiscount Rate 7.80% 7.80%Future salary increase 10.00% 10.00%Attrition rate 20.00% 20.00%

The key assumptions used in the computation of provision for long term compensated absences as per the

Actuarial Valuation done by depen Actuary are as given below: an In dent

Particulars

32

Earnings Per Share (EPS)



EarningsNet profit for the year [Rs. in lakhs] 8,512.02

3,422.71

Equity Shares

423,000,000 305,217,135

423,000,000 305,217,135

EPS - face value Rs.10/- each – Basic 2.01 1.12EPS - face value Rs.10/- each – Diluted 2.01 1.12

Particulars

Weighted average number of shares outstanding during the year - Basic

Weighted average number of shares outstanding during the year – Diluted

85


33

Expenditure in foreign currency



Non Whole Time Directors' remuneration - 2.54

Foreign Travel Expenses 0.20 -

Advance towards Software purchase 158.08

-

Total 158.28 2.54

34

As at As at31 March 2016 31 March 2015

Rs. Rs.

Less than One Year 376.85

257.68

One Year to Five Years 428.24

708.63

Later than Five Years -

Particulars

Operating Leases

Particulars

86

The Company has operating lease agreements primarily for office space, the lease terms of which are for a period of 3 years. For the year ended 31 March 2016, an amount of Rs.363.91 Lakhs (Previous Year Rs.213.84 Lakhs) was paid towards lease rentals and other charges for the office space. The future minimum lease payments under operating leases are as follows:

35 Related Party Transactions

35.1 Names of Related Parties and Nature of Relationship

As at 31 March 2016

a. Holding Company Equitas Holdings Limited

Equitas Micro Finance Limited

Equitas Housing Finance Limited

Equitas Technologies Private Limited

Equitas Development Initiatives Trust

Equitas DhanyaKosha India

V.S. Murthy, Chief Executive Officer

S Vasudevan, Chief Financial Officer

Note:

Related party relationships are as identified by the Management

Sridevi Surender, Company Secretary (from 08 August 2014)

Sridevi Surender, Company Secretary

Equitas Development Initiatives Trust

Equitas DhanyaKosha India

P.N.Vasudevan, Director (Managing Director upto 29 January 2015)

V.S. Murthy, Chief Executive Officer (from 29 January 2015)

S Vasudevan, Chief Financial Officer (from 30 October 2014)

c. Enterprises over which the holding company or its Key management personnel is able to exercise significant

influence

Key Management Personneld.

Description of Relationship As at 31 March 2015

Equitas Holdings Limited

b. Fellow Subsidiaries Equitas Micro Finance Limited

Equitas Housing Finance Limited

Equitas B2B Trading Private Limited



35.2 Transactions with Related Parties Rs. in lakhs

Name of Related PartyFor the year ended



Rs. in lakhs

Income

Equitas Micro Finance Limited 11.13

Equitas Holdings Limited -

Equitas Housing Finance Limited 23.02

Expenses


Equitas Housing Finance Limited -

Equitas Holdings Limited 2.84

Equitas DhanyaKosha India 0.38


Equitas Development Initiatives Trust 241.00

Interest on intercorporate loans Equitas Holdings Limited 6.63

Interest on intercorporate deposits Equitas Micro Finance Limited -

V.S. Murthy, Chief Executive Officer 65.13

S Vasudevan, Chief Financial Officer 32.87

Sridevi Surender, Company Secretary 8.74

Other transactions

Issue of equity shares (including premium) Equitas Holdings Limited - Equitas Micro Finance Limited - Equitas Housing Finance Limited -

Equitas Micro Finance Limited 8.07 Equitas Technologies Private Limited 1.00 Equitas Housing Finance Limited 0.16

Loans availed Equitas Holdings Limited 2,000.00 Loans repaid Equitas Holdings Limited 2,000.00

Inter Corporate Deposits (ICD) repaid Equitas Micro Finance Limited -

Equitas Holdings Limited (12,700.00)

35.3 Balances outstanding at the end of the year

Name of Related PartyAs at


As at31 March 2015

Rs. in lakhs

Payables

Equitas Micro Finance Limited 70.41 53.69

Receivables

Equitas Micro Finance Limited 1.69 2.09

Equitas Housing Finance Limited 2.84 2.42

Corporate Guarantee

Equitas Holdings Limited 126,300.00 139,000.00

Nature of transaction

Recovery of expenses

Reimbursement of expenses

Particulars

Trade payables

Brokerage charges on retail loans

Donations

Corporate Guarantee of Holding Company (released) / issued [net]

Remuneration paid to Key Management Personnel (excludes Employer's share of Contribution to Provident Fund)

Contractually reimbursable expenses

Sale of fixed assets

Staff loan transferred

Corporate Guarantee

87


26.23

0.18

28.39

382.76

0.90

2.36

0.37

289.45

96.00

414.02

112.71

14.32

15.68

7.06

29,988.35

7.54 5.34

4.76

-

0.87

4,500.00 9,900.00

2,800.00

81,600.00

Note:

a. The Company and other entities in the Group incur certain costs on behalf of the Group. The Company has confirmed that these costs

have been allocated / recovered from the entities in the Group on the basis of a policy approved by the Board of Directors of the

Company and other entities in the group.The Company accounts for costs incurred by / on behalf of Related Parties based on the actual

invoices / Debit Notes raised and accruals as confirmed by such Related Parties.

b. The Related Parties have confirmed to the Management that as at 31 March 2016 and 31 March 2015, there are no further amounts

payable to / receivable from them, other than as disclosed above.

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Rs. in lakhs

as on 31 March 2016

Amount Overdue as on 31 March 2016

Amount Outstanding

Amount Outstanding

as on 31 March 2015

Amount Overdue as on 31 March 2015

1

a. Debentures *

i. Secured 45,295.07 - 33,786.05

ii. Unsecured 4,003.27 - 4,003.28

b. Deferred Credits - - -

c. Term Loans * 92,288.96 - 54,676.94

d. Inter-corporate loans and borrowings - - -

e. Commercial Paper - - 900.00

f. Other loans (Cash Credit & Working Capital Demand Loan) 23,517.72 - 39,409.57

Particulars

Loans and Advances availed by the Company, inclusive of interest accrued thereon but not paid

Liabilities side


89

38 Disclosure as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 / Disclosure pursuant to Reserve Bank of India Notification DNBR (PD) CC.No. 024/ 03.10.001/ 2014-15

Note:

* Includes Interest accrued but not due on Debentures amounting to Rs.1,174.65 Lakhs (Previous Year Rs.989.27 Lakhs) and Term Loans amounting to Rs.157.31 Lakhs (Previous Year Rs.153.75 Lakhs), totalling to Rs.1,331.96 Lakhs (Previous Year Rs. 1,143.02 Lakhs) as at 31 March 2016.



Rs. in lakhs

Amount Outstanding

as on

31 March 2016

Amount

Outstanding as on

31 March 2015

a. 71,907.89 51,801.64

b. -

a.

i. -

ii. -

b.

i. -

-

-

-

-

-

-

-

ii. - -

c.

i. 459.87 678.11

ii. 156,040.39 116,723.01

a.

i.

1 Equity - - 2 Preference -

-

-

-

-

-

ii. -

-

-

-

-

-

iii. - - iv. - -

i.

1 Equity -

-

-

-

2 Preference - -

ii. - -

iii. - -

iv. - - b.

i.

1 Equity - - 2 Preference - -

ii. - -

iii. - -

iv. - -

i.

1 Equity - - 2 Preference - -

ii. - -

iii. - -

iv. - -

Unquoted

Shares

Debentures and Bonds

Units of Mutual Funds

Government Securities




Shares

Shares




Unquoted

Shares




Long-term Investments

Quoted

Particulars

Stock on hire including hire charges under Receivables

Assets side

Secured

Unsecured

Operating lease

Assets on hire

Repossessed assets

Other loans counting towards AFC activities

Loans other than (i) above

Leased assets including lease rentals under Receivables

Loans where assets have been repossessed (net)

Quoted

Financial lease

Current Investments

Note: The above includes Interest Accrued but not due amounting to Rs.3,052.17 lakhs (Previous Year Rs.2,340.19 lakhs) on loans to borrowers and excludes other loans and advances, which are not in the nature of lending.

90

4. Break-up of Investments

3 Break up of Leased Assets and Stock on Hire and Other Assets counting towards AFC activities

2 Break-up of Loans and Advances, including Bills Receivables


Rs. in lakhs

Secured as on

31 March 2016

Unsecured as on

31 March 2016

Total as on

31 March 2016

Secured as on

31 March 2015

Unsecured as on

31 March 2015

Total as on

31 March 2015

5 Borrower group-wise classification of assets financed in 2 and 3 above

a. Related Parties

i. Subsidiaries - - - - - -

ii. Companies in the same Group - - - - - -

iii. Other Related Parties - - - - - -

b. 226,478.79 - 226,478.79 167,701.88 - 167,701.88

226,478.79 - 226,478.79 167,701.88 - 167,701.88

Rs. in lakhs

Market value / breakup or Fair value

or NAV as on 31 March 2016

Book Value (Net of Provisions) as on 31

March 2016

Market value / breakup or Fair value or NAV as

on 31 March 2015

Book Value (Net of Provisions) as on 31

March 2015

a. Related Parties

i. Subsidiaries - - - -

ii. Companies in the same group - - - -

iii.Other Related Parties - - - -

b. Other than Related Parties - - - -

Total - - - -

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

7. Other Information

a. Gross Non-Performing Assets

i. Related Parties - -

ii. Other than Related Parties 5,525.27 3,320.54

b. Net Non-Performing Assets

i. Related Parties - -

ii. Other than Related Parties 4,055.78 2,497.77

c. Assets acquired in satisfaction of debt - -

Category

Amount [Net of Provisions]

Other than Related Parties

Total

Category

Particulars

6. Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted)

91



39.2 Exposure to Real Estate sector, both direct and indirect

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

24,862.57

13,850.30

-

-

-

-

-

-

-

-

-

-

- -

Total exposure to Real Estate sector 24,862.57

13,850.30

Particulars

92

39 Disclosure pursuant to Reserve Bank of India Notification DNBS.200/CGM (PK) - 2008 dated

39.1 Capital Adequacy Ratio

As at 31 March 2016

As at31 March 2015

Tier I Capital [Rs. in lakhs] 67,683.23

61,381.70

Tier II Capital [Rs. in lakhs] 2,789.32

4,174.70

Total Capital [Rs. in lakhs] 70,472.55

65,556.40

Total Risk Weighted Assets [Rs. in lakhs] 237,823.55

169,699.83

Capital Adequacy Ratio

Tier I Capital [as a Percentage of Total Risk Weighted Assets (%)] 28.46% 36.17%

Tier II Capital [as a Percentage of Total Risk Weighted Assets (%)] 1.17% 2.46%

Total Capital [as a Percentage of Total Risk Weighted Assets (%)] 29.63% 38.63%

Particulars


1 Direct exposure

I. Residential Mortgages

Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented:

- individual housing loans upto ₹ 15 lakhs

- individual housing loans more than ₹ 15 lakhs

ii. Commercial Real Estate

Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction etc.).

- Fund based

- Non Fund based

iii. Investments in Mortgage Backed Securities (MBS) and other securitised exposures

a. Residential

b. Commercial Real Estate

2 Indirect exposure

Fund based and non fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs)


1 August 2008

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(a)

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41 Customer complaints

(a) No. of complaints pending as on 01 April 2015

(b) No. of complaints received during the year

(c) No. of complaints redressed during the year

(d) No. of complaints pending as on 31 March 2016

42 Other Regulator - registration details

Sl. No. Regulator

1 Ministry of Corporate Affairs

2 Reserve Bank of India

43 Penalties levied by the above Regulator[s] - Nil

44 Ratings assigned by Credit Rating Agencies

As at 31 March 2016 As at 31 March 2015

Commercial Paper IND A1 /CRISIL A1 IND A2+

Working Capital Facility (Cash Credit / WCDL) CARE A- CARE A-

Term Loans from Banks IND A-/Stable IND A-/Stable

Non Convertible Debentures CARE A- and IND A-/Stable CARE A- and IND A-/Stable

Subordinated Debt IND A-/Stable IND A-/Stable

Perpetual Debt Nil Nil

45 Concentration of Advances (Rs. in lakhs)


Total Advances during the year to twenty largest borrowers 1,015.06 1,633.50

0.53% 1.13%

46 Concentration of exposures(Rs. in lakhs)


Total exposure to twenty largest borrowers 1,537.99

1,681.36

0.68% 1.01%

47 Concentration of NPAs(Rs. in lakhs)

As at31 March 2016

Rs. in lakhs

As at31 March 2015

Rs. in lakhs

Total exposure to top four NPA accounts 220.09 44.62

-

Registration No.

U65191TN1993PLC025280

B-07.00412

33

30

3

Particulars

Percentage of Advances to twenty largest borrowers to Total Advances of the NBFC

Percentage of exposures to twenty largest borrowers to Total exposure of the NBFC on borrowers

Particulars

Particulars

Particulars

95



49 Movement of NPAs (Note 36)(Rs. in lakhs)

Sl.No. Particulars As at 31 March 2016As at March 31, 2015

(i) Gross NPAs to Net Advances (%) 2.46% 2.00%

Net NPAs to Net Advances (%) 1.80% 1.50%

(ii) Movement of NPAs (Gross)

(a) Opening balance 3,320.54

1,379.87

(b) Additions during the year 7,587.44

4,802.40

(c) Reductions during the year 5,382.71

2,861.73

(d) Closing balance5,525.27

3,320.54

(iii) Movement of Net NPAs

(a) Opening balance 2,497.77

1,214.15

(b) Additions during the year 6,166.57

3,846.43

(c) Reductions during the year 4,608.56

2,562.81

(d) Closing balance 4,055.78

2,497.77

(iv) Movement of provisions for NPAs (excluding provisions on standard assets)

(a) Opening balance 822.77

165.72

(b) Provisions made during the year 1,420.87

955.97

(c) Write-off / write-back of excess provisions 774.15

298.92

(d) Closing balance 1,469.49

822.77

96

48 Sector-wise Gross NPAs as on 31 March 2016 (Rs. in lakhs)

Sl. No. Sector

Percentage of NPAs to Total Advances in that

sector as on 31 March 2016

Percentage of NPAs to Total Advances in that sector

as on March 31, 2015

1 Agriculture & allied activities -

-

2 MSME 0.64% 0.17%

3 Corporate borrowers -

-

4 Services -

-

5 Unsecured personal loans - -

6 Auto loans (commercial vehicles) 3.36% 2.81%

7 Other loans - -



97

50 Employees Stock Option

Under the Employee Stock Option Scheme (ESOS) – 2015 of the Holding Company, Equitas Holdings Limited,

55,86,878 (Previous Year 43,87,790) Options of the Holding Company, which have been granted to some of the

employee were outstanding as at 31 March 2016. As the administrator of the Employee Stock Option Scheme,

the Holding Company has informed the Company that there are no costs to be transferred to the Company with

respect to the Options granted and outstanding as at the said date.

51 As per Section 45-IC of the Reserve Bank of India Act, 1934, the Company is required to create a reserve fund at

the rate of 20% of the net profit after tax of the Company every year. Accordingly, the Company has transferred

to Statutory Reserves, an amount of Rs.1,703.00 lakhs (Previous Year – Rs.686.00 lakhs), out of the net profit

after tax for the year ended 31 March 2016.

52 The Company did not have any unhedged foreign currency exposure and did not enter into any derivative

contracts at any time during the years ended 31 March 2016 and 31 March 2015.

53 Corporate Social Responsibility [CSR] activities

The Company in accordance with its CSR Policy has implemented CSR activities, through the Equitas

Development Initiatives Trust [EDIT], a public charitable trust established by Equitas Holdings Limited.

The Company has paid a donation of Rs.241.00 Lakhs (Previous Year Rs.96.00 Lakhs) to EDIT for the year ended

31 March 2016 (Refer Note 27).

54 During the year, the Company adopted the revised norms for classification of assets and provisioning for sub-

standard and doubtful assets as per RBI norms (as detailed in Note 2.20). Consequently, the profit before tax for

the year is understated by Rs.81.19 lakhs, resulting out of additional provision aggregating to Rs.42.35 lakhs

and additional reversal of interest aggregating to Rs.38.84 lakhs.

55 The Reserve Bank of India (RBI) has granted an ‘in-principle’ approval for establishing a ‘Small Finance Bank’

(SFB) to Equitas Holdings Limited (EHL) (previously known as, Equitas Holdings Private Limited) (‘Holding

Company’).

The Company, Equitas Micro Finance Limited (EMFL) and Equitas Housing Finance Limited (EHFL) are the wholly

owned subsidiaries of EHL.

One of the conditions precedent for the issuance of the banking license by RBI is the merger of its above three

wholly owned subsidiaries to form the proposed SFB. It is therefore proposed to merge EMFL and EHFL with the

Company, for which ‘in principle’ approval has been accorded by the Board of the respective Companies at their

meeting held on November 26, 2015.

In order to comply with this requirement of RBI, the Scheme of Amalgamation was presented before the

Hon’ble High Court of Judicature at Madras. The approval of the Court to the Merger process is awaited. After

completion of the merger of EMFL and EHFL with the Company and after complying with other terms and



conditions prescribed by the RBI in its ‘in-principle’ approval, EHL would apply to the RBI for commencing

business as a SFB. Upon confirmation of the same by RBI, the effective date of the merger of the entities will be

the date immediately preceding the date of commencement of banking business.

Pending Court approval and completion of other related formalities, the proposed merger does not impact the

financial statements as at and for the year ended 31 March 2016.

56 Previous Year’s figures have been regrouped / reclassified wherever necessary to correspond with the current

year classification / presentation.


98




P N Vasudevan

Partner

Director

Place : Chennai

DIN: 00032309 DIN: 01550885

thDate : 4 May 2016







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