Equitas Micro Finance Limited Micro Finance Limited 1 DIRECTORS' REPORT EQUITAS MICRO FINANCE...

Equitas Micro Finance Limited

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DIRECTORS' REPORTEQUITAS MICRO FINANCE LIMITED

CIN: U65993TN1994PLC028002

Registered Office: 4 Floor, Phase II, Spencer Plaza, No 769,

Mount Road, Anna Salai, Chennai-600 002

Tel: 4299 5000 E-mail : [email protected] Website: www.equitasmf.in

Your Directors have pleasure in presenting the 22 Annual Report together with the Audited Accounts of the Company

for the financial year ended 31 March 2016 (FY 2015-16).

1. Overview

The Company, a wholly owned subsidiary of Equitas Holdings Limited is a Non-Deposit taking Systemically Important

Non-Banking Financial Company– Micro Finance Institution (ND-SI-NBFC-MFI) and is registered with RBI under Section

45 IA of RBI Act, 1934 (Registration No B.07.00571). There has been no change in the business of the Company during

this period.

The Company has converted into a public company vide revised Certificate of Incorporation dated 15 September 2015

issued by the Registrar of Companies. Consequently, the Company received a fresh Certificate of Registration from

Reserve Bank of India bearing no. B.07.00571 dated 9 October, 2015.

3. Dividend

The Directors do not recommend any dividend for the year.

4. Operational highlights

The details of operations are given in the annexed Management Discussion and Analysis Report.

5. Management Discussion and Analysis

The Management Discussion and Analysis Report, highlighting the important aspects of the business is given in this

report as Annexure I.

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2. Financial Results

Particu arl s

For st the Period ended 31March 2016

For st the Period ended 31March 2015

Gros ins come 60,642.52 43,798.16

Less: Total Expenditure

48,160.66

33,384.87

Profit before taxation

12,481.86

10,413.29

Pro isv ion for taxation

4,446.35

3,558.20

Profit after taxation

8,035.51

6,855.09

Transfer to General Reserve

Nil

Nil

(Rs in lakh)

st6. Material changes after the Balance Sheet Date (31 March 2016)

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stThe Capital Adequacy ratio was 21.70% as on 31 March 2016 as against the minimum requirement of 15% stipulated

by RBI. The Net Owned Funds (NOF) as on that date was Rs.43,104.09 lakh.

Corporate Governance Rating

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

st10.2 During the Financial year ended 31 March 2016, one of our Independent Directors, Mr Desikan R expired on th27 June 2015.

10.3 Mr Raman N ceased to be the Nominee Director of Small Industries Development Bank of India (SIDBI) with theffect from 5 November 2015 and Mr Ramakrishnan S became the Nominee Director of SIDBI with effect

thfrom 5 November 2015.

10.4 Mr Ramakrishnan S, Non-Executive Director, retires by rotation this year, and being eligible, offers himself for

reappointment. 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.

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 Eight

crore only) from the Holding Company, Equitas Holdings Limited (EHL) on 22 April 2016. The Company has

issued and allotted on rights basis, 10,06,99,300 (Ten crore six lakhs ninety nine thousand three hundred only)

equity shares of Rs. 10/- each at an overall premium of Rs.187,30,07,000/- (Rupees One hundred and eighty

seven crore thirty lakhs and seven thousand only) to EHL.

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

Limited has been presented before the Hon'ble High Court of Judicature at Madras vide Company Petition Nos

119/2016, 120/2016 and 121/2016 and the petitions were considered by the High Court of Madras at its

hearing held on 28 April 2016 and the orders of the Court are awaited.

7. Capital Adequacy

8.

CRISIL has reaffirmed 'CRISIL GVC Level 2' rating for Equitas Holdings Limited, the holding company. This Governance

and Value Creation (GVC) rating indicates very high capability of the Company with regard to Corporate Governance

and value creation for all its stakeholders.

9. Corporate Governance Report

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.equitasmf.in

10. Directors and Key Managerial Personnel

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

and knowledge to enable them to discharge their responsibilities effectively. The Company has laid down a

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

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10.5 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 equity stshares of the holding company with Stock Exchanges on 21 April 2016. Consequently, Mr Marco Boa,

stNominee Director ceased to be a Director of the Company with effect from 21 April 2016.

The Board places on record its appreciation for the valuable contribution of Mr Marco Boa to the growth of

the Company during the period of his directorship.

11. Overall Remuneration

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

annexed hereto. The Directors of the Company are not entitled to stock options.

Details of remuneration as required under Section 197 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.

12. Evaluation of Board Performance

The performance of the Chairman, the Board, Audit & Risk Management Committee, Remuneration & Nomination

Committee (RNC), Corporate Social Responsibility Committee and that of the individual Directors for the year 2015-16

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 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.

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

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').

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

subsidiaries - the Company, Equitas Finance Limited (EFL) and Equitas Housing Finance Limited (EHFL) to form the SFB.

It is therefore proposed to merge the Company and EHFL with EFL, for which 'in principle' approval has been accorded thby the Board of the respective Companies at their Meeting held 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 the Company and EHFL with EFL and complying with other terms and conditions

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

during FY 2016-17.

14. 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.

15. Declaration by 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).


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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.

16. Auditors

M/s Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company were appointed as Auditors of the rdCompany for 2 years till the conclusion of the 23 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 under Section 141 of the Companies

Act, 2013 and the continuance of their appointment, if made, 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 from the conclusion of the ensuing rdAGM till the conclusion of the 23 Annual General Meeting to be held in the year 2017.

17. Secretarial Audit Report

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

Annexure V.

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 Since the Company does not own any manufacturing facility, the requirement of disclosure of particulars

relating to conservation of energy and technology absorption in terms of Rule 8 of the Companies (Accounts)

Rules, 2014 is not applicable.

18.2 During the year, the Company has foreign currency earnings of Rs.49.24 lakh. Foreign currency expenditure

of Rs 47.60 lakh was incurred by the Company.

19. The 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 VI.

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 Management

Discussion and Analysis Report.

21. Internal Financial Control

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

the Audit & 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

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

Policy, the Company contributes five percent of its net profits as donation to Equitas Development Initiatives Trust

through which CSR activities are carried out by the Company. A report on Corporate Social Responsibility is given in this

report as Annexure VII.

23. 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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24. 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 the 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 Financial

Year 2015-16, the Company has received three complaints regarding sexual harassment and the same have been

disposed of.

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

26. In accordance with Rule 8 (5) (vii) of 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 operations

of the Company.

Acknowledgement

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

continued guidance and support for the various activities of our 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 towards the growth of the Company.

For and on behalf of the Board of Directors

Chennai th5 May 2016

Sd/- Sd/-P N Vasudevan Arun RamanathanDirector Chairman


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Annexure - I

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

EMFL is a wholly owned subsidiary of Equitas Holdings Limited (EHL). EMFL is registered as NBFC-MFI with RBI.

Customer Segment

The Company provides small loans of around Rs. 2,000 to Rs. 35,000 to people who are in the Economically Weaker

Section (EWS) / Low Income Group (LIG) income category. RBI has put in a regulatory framework, which, among others,

also defines the income level of customers who can be serviced by MFIs. Currently this stands at Rs. 1.6 lakh of annual

income for households in urban areas and Rs. 1 lakh of annual income for households in rural areas.

Regulatory Framewor

Recognising the active role played by MFI in driving financial inclusion, RBI in 2011 had introduced a strong regulatory

framework to strengthen this sector. As of now, the significant regulatory guidelines are:Household annual income of

families who avail micro loans from MFIs should not be more than Rs.1.6 lakh in urban areas and Rs. 1 lakh in rural

areas.

Ÿ Not more than 2 MFIs can give loan to the same borrower

Ÿ The total loan outstanding of both the MFIs to the same borrower should not exceed Rs. 1 lakh at any point in timest

Ÿ Loan amount should not exceed Rs. 60,000 in the 1 cycle & Rs. 1 lakh in subsequent cycles.

Ÿ The margin (i.e. the difference between cost of funds of the MFI and its lending rate) not to exceed 10% in case of

MFIs with asset size exceeding Rs. 100 crore and 12% in other cases

Ÿ Loans above Rs. 30,000 should necessarily have a minimum tenor of 2 years.

Ÿ Borrowers should be given a choice of frequency of repayment viz. weekly, fortnightly or monthly

Ÿ Aggregate amount of loans given for income generating purpose is not less than 50% of total loans given

Ÿ Benefit of priority sector classification extended to lending of banks to MFIs.

Business environment

Given the demand for such loans, the MFI sector is expected to record sustained high growth over the next few years.

The MFIs have established themselves as efficient and effective institutions for the last mile connectivity to low income

clients. They are expected to play a supportive role to the initiatives on financial inclusion of the Regulators and

Government. In September, Reserve Bank of India (RBI) gave in-principle approval to start small finance banks to 10

entities of which 8 are microfinance firms including Equitas. This faith in MFIs also augurs well for the Indian Micro

finance sector that has seen its ups and downs since 2010.

This new opportunity gives MFIs the ability to diversify their products and services, obtain access to electronic

channels, expansion of their fund base as well as derive the opportunity to bring an overall positive impact on the

financial wellbeing of its constituents.

Operational and Financial Results

Right from its inception, the Company has been focused on creating a highly efficient platform to deliver microfinance

loan services to clients. The Company has put in place a state-of-the-art Risk Management System for controlling

operational risk and has built a robust technology backbone to process a large number of transactions in a seamless

manner. The earlier industry-leading OMR (Optical Mark Recognition) technology has now been replaced by front- end

tablets. Client acquisition process is now a paperless process across all branches. Applications are entered directly into

the tablet, photograph of clients and KYC documents are captured on the tablet and it moves to head office for


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processing. The tablet process which was launched at about sixty branches in the previous year has been extended to

all the branches during the year. This is expected to bring in substantial savings in cost and time, besides higher levels

of validations.

The Company disbursed Rs.3,173 crore during the year resulting in the total loan outstanding (including securitized st stloan outstanding) going up from Rs.2,144 crore as on 31 March, 2015 to Rs.3,283 crore as on 31 March, 2016. Thirty

eight branches were added including three each in two new states (Haryana & Punjab), taking the total number of

branches to 399.

Since the Company had built up infrastructure to handle high volume operations, the growth during the year resulted

in better utilization of staff and other resources leading to lower operating costs. The Company posted a net profit stafter tax of Rs. 80.36 crore for the year ending 31 March, 2016 compared to Rs. 68.55 crore for the previous year. The

Return on Equity (RoE) was at 19.12%.

Capital Adequacy

As at the end of year, Capital to Risk Adjusted Assets (CRAR) of the Company was comfortable at 21.70% against the

regulatory requirement of 15%. 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.

Resources and Treasury

The funding for the business is from an optimum mix of equity and debt. The Company continues to follow the policy

of diversification of funding sources. The Company has existing relationships with about 36 lenders across Banks,

Financial Institutions, NBFCs and Overseas FII investors, who have sanctioned limits of Rs.2,448 crore during the year, stout of which Rs.2,348 crore have been availed as on 31 March 2016. It includes Rs.250 crore of NCDs and Rs.150

crore of Subordinated Debt issued during the year. Undrawn lines as at the year-end include Rs.100 crore.

The Company during the year completed around Rs.662 crore of fund raising through securitization transactions with stvarious banks. The overall off-book assets constituted 22% of total assets as on 31 March, 2016.

During the year, credit ratings of the Company were reaffirmed by CARE and CRISIL at CARE A and CRISIL A-/Stable.

CRISIL has upgraded the credit ratings of the Company in April 2016 to CRISIL A/Stable. Further, during the year,

CRISIL has reaffirmed the MFI Grading of the Company at the highest level of mfR1.

Human Resources

The Company has provided a wide range of benefits to its employees including health insurance for all employees

and their dependents. The Company also provides stock option benefits to all employees of the Company by which

the employees get opportunity to acquire shares in Equitas Holdings Limited, the holding company. In recognition of

its employee-friendly HR practices, the Company was ranked among the top 50 Great Places to Work in India by The

Great Place to Work Institute India Inc. The number of employees as at the end of the year was 5,317.

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 the Senior Management team of the Company was also

facilitated during the year.


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Risk Management

The Company has a Board approved Risk Management Policy. 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.

Regulatory uncertainty has been a dominant risk faced by the microfinance sector. This risk has come down

considerably during the last two years following RBI's regulations for NBFC-MFIs.

As an NBFC, the Company is exposed to credit, liquidity, interest rate and operating risks. The Company has invested in

people, processes and technology to effectively mitigate these risks.

Credit Risk

The Company considers the need for funds for productive purposes of clients, all of their other borrowings and the

bonding with the rest of the group members, before extending loan, which is further reinforced through group

guarantees. In addition, with the full rollout of the Credit Bureau initiatives, over-borrowing has been effectively

curtailed.

Operational Risk

The Company has put in multi-layered checks and controls over key client interface processes. Each field level process

conducted by the staff is scrutinized through multiple levels of risk oversight, creating a strong risk management

system, what we call as the 'Equitas Chakravyuh'. Further, the Company also constantly upgrades its control processes

based on analysis of failed processes. The robust controls of the Company are well reflected in the almost negligible

instances of breach of control. The control parameters of the Company are generally held as benchmarks in the MFI

sector globally and the Company continues to fine-tune the same based on experience. 19% of disbursements for

FY16 were done by way of electronic fund transfer directly to the customers' bank account.

The Company has also identified a few critical processes and has put in a rigorous FMEA (Failure Mode Effect Analysis)

process to ring-fence potential process failures and limit damage. Equitas has successfully implemented offsite

disaster recovery facility. This has also been tested and certified by the auditors that it is working fine.

Market Risk

Liquidity Risk: Given the sensitive nature of the sector, the funding by banks is closely linked to the overall image of the

sector as well as the regulatory environment. The Company has internal guidelines on the quantum of excess liquidity

which is a balance between the need for liquidity and reducing the cost of negative carry on excess liquidity.

ALM Risk:

The Company ensures matched funding without any adverse mismatch in structural liquidity. Interest rate sensitivity

arises as the Company has high (about 51%) percentage of its borrowings under floating rate whereas the entire

lending is on a fixed rate. The Company adopts off-book transactions like securitization / bilateral assignments as a

means of locking in interest rates.

Leverage:

The Company adopts a conservative policy related to leveraging capital. Along these lines, it considers the entire

managed assets (including securitization and bilateral assignment of portfolios) for maintaining sufficient capital

adequacy. Further, the Company follows a policy of limiting securitization and bilateral assignments to 35% of total

managed assets.


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Micro & Small Enterprise Loans

A survey amongst micro finance clients about four years ago showed that about 15% of the clients have the ability to

grow their businesses to a higher level. However they lack access to capital from organized financiers and often end

up borrowing from the private lenders. To serve the need of such clients, the Company has entered into an

agreement with Equitas Finance Limited (EFL) to source such clients for EFL. EFL does underwriting for the sourced

clients and provides loans in the range of Rs. 50,000 – Rs. 5 lakhs. For the year under review, EMFL sourced nearly

31800 clients who were able to avail of such Micro Enterprise loans from EFL

Micro Housing Loan

Many of the Micro Finance clients are in need of funds to convert kacha houses to pucca houses, for extension of the

house or to complete the house which was left incomplete for lack of funds. The requirement of funds for this

purpose ranges from Rs. 50,000 to Rs. 5 lakhs. The Company has entered into an agreement with Equitas Housing

Finance Limited (EHFL) to source clients for EHFL. EHFL does its own due diligence and approves the credit. EMFL has

sourced close to 2,700 clients under this arrangement.

Outlook and challenges

The growth of Micro Finance looks robust with underlying demand for micro-credit. However, the Company will have

to balance geographic concentration and work towards limiting over-borrowing by its members.

Cautionary Statement

Statements in this Managament Discussion & Analysis Report describing the Company's objectives, projections,

estimates, market trends and expectations may be 'forward looking' within the meaning of applicable laws and

regulations. Actual results might differ materially from those expressed or implied.


Chennai th5 May 2016

Sd/- Sd/-P N Vasudevan Arun RamanathanDirector Chairman


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REPORT ON CORPORATE GOVERNANCE

Annexure - II

CORPORATE GOVERNANCE PHILOSOPHY

The philosophy of Company 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 reviewed and re-affirmed Equitas Holdings Limited, the holding company at Level 2 on Governance & Value

Creation Rating (GVC-2) with only six other corporates viz., Bharti Airtel Limited, HDFC Bank Limited, Housing

Development Finance Corporation Limited, Infosys Limited, Mahindra & Mahindra Limited and Hero Motocorp

Limited at a higher level in India.

BOARD COMPOSITION

stAs on 31 March 2016, the Board comprised of 11 Directors. The names and categories of Directors and the number of

Directorships are given below:

*

st* Ceased to be a Director with effect from 21 April, 2016 consequent to the listing of equity shares of the Holding

Company and falling away of provisions in the Articles of Association granting rights to investors of the Holding

Company to nominate a Director on the Board of the Company.

Excluding Alternate Directorships and Directorships of Foreign Companies, wherever applicable.

Name Nature of DirectorshipOther Directorships

($)

NON-EXECUTIVE

Arun Ramanathan (Chairman) In p nde e dent Director 4

Arun Kumar Verma In p nde e dent Director -

Chitra Chandramouliswaran In p nde e dent Director -

J akan iraman M IDBI Bank Nominee -

Marco Boa* Investor Nominee -

Nanda Y C In p nde e dent Director 6

Ramakrishnan S SIDBI No inm ee 3

Srinivasan N In p nde e dent Director 5

Sampath P B

In p nde e dent Director

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Shankar V In p nde e dent Director 1

Vasudevan P NNon Independent Non

E cuxe tive Dire rcto6


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BOARD MEETINGS & ATTENDANCE

During 2015-2016, seven (7) Board Meetings were held on 6 May 2015, 06 August 2015, 31 August 2015, 05 th th thOctober 2015, 05 November 2015, 26 November 2015 and 4 February 2016. The interval between any two

meetings has been less than four months.

th#Mr. Desikan R expired on 27 June 2015

*Mr. Ramakrishnan S replaced Mr. Raman N as the Nominee Director of SIDBI with effect

th from 5 November 2015.

SEPARATE MEETING OF INDEPENDENT DIRECTORS

During the calendar year 2015, in line with the Companies Act, 2013, the Independent Directors had a separate thmeeting on 20 March 2015 without the presence of the Management team and the non-Independent Directors of

the Company.

INFORMATION FURNISHED 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 all significant items. The Company takes lot of efforts to

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

Company is of a high order.

th th st th

Name No. of Meetings Attendance at

the last AGM Held Attended

NON EXECUTIVE

Arun Ramanathan (Chairman) 7 6 No

Arun Kumar Verma 7 5 No

Chitra Chandramouliswaran 7 6 No

De Rsikan # 1 1 NA

Nanda Y C 7 6 No

Srinivasan N 7 4 No

Sampath P B 7 6 Yes

Shankar V 7 6 No

Marco Boa 7 3 No

Raman N* 4 2 No

J akan iraman M 7 3 No

Ramakrishnan S* 3 2 No

Vasudevan P N 7 7 Yes


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COMMITTEES OF THE BOARD

The Company at present has an Audit & Risk Management Committee, a Business Committee, a Remuneration &

Nomination Committee and a Corporate Social Responsibility Committee. The Company also has an Asset & Liability

Management Committee, constituted by the Board, comprising of senior executives of the Company. During the year, thResources Committee was dissolved vide resolution passed at the Meeting of Board of Directors held on 6 August

2015 consequent to delegation of its powers to Chief Executive Officer.

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

Meetings of the Committee are circulated to all Directors and placed before the Board for information and

confirmation.

AUDIT & RISK MANAGEMENT COMMITTEE

Composition

The Audit & Risk Management Committee is chaired by an Independent Director and comprises of five independent

Directors and one Nominee Director.

1. Mr Sampath P B, Chairman

2. Mr Arun Kumar Verma

3. Ms Chitra Chandramouliswaran

4. Mr Nanda Y C

5. Mr Marco Boa**

6. Mr Shankar V

Meetings & Attendance

rd th th thThe Committee held seven (7) Meetings during the year on 23 April 2015, 06 May 2015, 06 August 2015, 05 th th thOctober 2015, 14 October 2015, 05 November 2015 and 4 February 2016.

st** Ceased to hold office with effect from 21 April 2016

Terms of Reference

The role of the Audit & Risk Management Committee, among others will 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;

NameNo. of Meetings

Held Attended

P B Sampath, Chairman

7

6

Arun Kumar Verma

7

6

Chitra Chandramouliswaran

7

6

Y an C N da 7 7

Marco Boa** 7 3

V Shankar 7 7


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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:

a. Matters required to be included in the Director's Responsibility Statement and the Board's report in t e r m s

(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 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


13

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

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. Review on quarterly basis complaints under policy on prevention of sexual harassment of women at workplace.

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

required to the Board for adoption.

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 statutoryauditors;

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.

BUSINESS COMMITTEE

Composition

The Business Committee is chaired by an Independent Director and comprises of four independent Directors, one

nominee Director and one non independent non executive Director.

1. Mr Srinivasan N, Chairman

2. Mr Nanda Y C

3. Mr Marco Boa**

4. Mr Shankar V

5. Mr Vasudevan P N


14

st*Ceased to hold office with effect from 21 April 2016

Terms of Reference

The Business Committee has been authorized to review and submit its recommendations to the Board in the following

matters:

1. Annual Business Plans

2. Revision in Annual Business Plans

3. New Business Initiatives proposed to be undertaken by the Company

4. Business strategy and product review from time to time

REMUNERATION & NOMINATION COMMITTEE

Composition

The Remuneration & Nomination Committee is chaired by an Independent Director and comprises of four

independent Directors and one Nominee Director.

1. Mr Nanda Y C, Chairman


3. Mr Marco Boa**

4. Mr Sampath P B

5. Mr Srinivasan N


th th th thThe Committee held four (4) Meetings during the year on 06 May 2015, 06 August 2015, 05 November 2015 and 4

February 2016.

NameMeetings

Held Attended

Srinivasan N, Chairman 2 2

Nanda Y C 2 2

Marco Boa 2 1

Shankar V 2 2

Vasudevan P N 2 2

NameNo. of meetings

Held Attended

Nanda Y C, Chairman 4 4

Arun Kumar Verma 4 4

Marco Boa 4 3

Sampath P B 4 2

Srinivasan N 4 4


th thThe Committee held two (2) Meetings during the year on 06 August 2015 and 04 February 2016.

st**Ceased to hold office with effect from 21 April 2016


15

Terms of reference

1. 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;

2. Formulation of criteria for evaluation of Independent Directors and the Board;

3. Devising a policy of Board diversity;

4. 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 Directors.

5. 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;

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

7. To review the results of the Board performance evaluation process that relate to the composition of the Board;

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 Review of the staff.

PERFORMANCE EVALUATION CRITERIA FOR INDEPENDENT DIRECTORS

In terms of the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors

individually as well as the evaluation of the working of the committees. The performance evaluation of the

Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the non-

Independent Directors was carried out by the Independent Directors.

RESOURCES COMMITTEE

Composition

The Resources Committee was chaired by an independent Director and comprises of three independent Directors and

one non independent non executive Director.

1. Mr Shankar V, Chairman

2. Mr Desikan R*

3. Mr Sampath P B

4. Mr Vasudevan P N

The Committee was dissolved consequent to delegation of the powers of the Resources Committee to Chief Executive thOfficer by a resolution of the Board of Directors passed in the Meeting held on 6 August 2015.


16


17


The Committee held three (3) Meetings during the year.

th* Mr Desikan R expired on 27 June 2015.

Terms of reference

I. 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.

ii. 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.

iii. To approve changes in persons authorized to operate current and other accounts and their signing

limits for operating such accounts

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

v. To allot Non – Convertible Debentures (NCD) from time to time, to one or more subscribers, in one or m o r e

tranches on such terms and conditions as it may think 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.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

Composition

The Corporate Social Responsibility Committee of the Board was re-constituted in the Meeting of Board of Directors thheld on 6 August 2015 consequent to the demise of its erstwhile Chairman – Mr Desikan R. Currently, it is chaired by

an Independent Director and all its members are Independent Directors.

1. Ms Chitra Chandramouliswaran, Chairperson

2. Mr Nanda Y C


NameMeetings

Held Attended

Shankar V, Chairman 3 3

De R sikan 2 2

Sampath P B 3 3

Vasudevan PN 3 3


th thThe Committee held two (2) Meetings during the year on 06 May 2015 and 5 November 2015.

th* Mr Desikan R expired on 27 June 2015.

Terms of reference

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.

3. Bring to bear 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 and the Trustees on its efficacies.

ASSET & LIABILITY MANAGEMENT COMMITTEE (ALCO)

Composition

In accordance with the guidelines issued by the RBI for systematically important NBFCs the Board has constituted the

ALCO. The current composition of the Committee is as below:

1. Managing Director/ Chief Executive Officer, Chairman of the Committee

2. Chief Financial Officer

3. Chief Technology Office

4. Group Head - Treasury

The Managing Director and Chief Financial Officer of the holding company shall be the Permanent Invitees to the

Committee. Currently, Mr Sridharan N, Chief Financial Officer is also the Group Head – Treasury. The Committee

meets once in a month.

Name No. of Meetings

Held Attended

Ch tri a Chandramouliswaran,Ch rai person 2 2

De Rsikan # 1 1

Nanda Y C 2 2

Arun Kumar Ve arm 1 1

18

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 a sitting fee 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.

S. No. Board / Committee Meetings Si itt ng Fees

(in R )s.

1 Board 20,000

2 Audit & Risk Management Committee 15,000

3 Busine s s Committee 15,000 4 Re emun ration & Nomination Committee 10,000

5 Corporate Social Responsibility Committee 10,000

6 Re rc s sou e Committee 7,500


19

The sitting fees paid to Directors along with their shareholdings in the Company are as under:

th# Mr Desikan R expired on 27 June 2015th*Mr Ramakrishnan S replaced Mr Raman N as the Nominee Director of SIDBI with effect from 5 November 2015.

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

stFollowing is the remuneration payable to the Non-Executive Directors 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.

th# Mr Desikan R expired on 27 June 2015th* Mr Ramakrishnan S replaced Mr Raman N as the Nominee Director of SIDBI with effect from 5 November 2015.

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

Mr. De ikas n R # 20,000 25,000 Nil

Mr. Nanda Y C

1,20,000

1,95,000

Nil

Mr. Marco Boa**

60,000

90,000

Nil

Mr. Raman N*

40,000

Nil

Nil

Mr. Sampath P B

1,20,000

1,32,500

Nil

Mr. Shankar V

1,20,000

1,57,500

Nil

Mr. Srinivasan N

80,000

70,000

Nil

Mr. Janakiraman

60,000

Nil

Nil

Mr. Ramakrishnan S

*

40,000

Nil

Nil

Mr. Vasudevan P N

Nil

Nil

Nil

Name

Si i gtt n fees (Rs) No.

of equity shares held on

st31 March 2016

Board

Committee

Mr. Arun Ramanathan, Chairman 1 20 000 Nil Nil

Mr. Arun

Kumar Verma

1,00,000

1,40,000

Nil Ms Chitra . Chandramouliswaran

1,20,000

1,10,000

Nil

Name

Remuneration (Amount in Rs)

Mr Arun Ramanathan

10,

,

00,000

Mr Arun Kumar Verma 5

5

00,000

Ms itra Ch Ch andramouliswaran

5

5

,

,

00,000

Mr Desikan R# 1,20,548

Mr Nanda Y C

00,000

Mr Marco Boa**

,00,000

Mr Raman N / Mr Ra akm rishnan S* 5,00,000

Mr Sampath P B 7,50,000

Mr Shankar V 5 00,000

Mr Srinivasan N 5 00,000

Mr Janakiraman M 5,00,000

Total 58,70,548


20

Year Date Time Location

No ofSpecial

Resoultionspassed

2015 29th June 2015 10.00 A.M

4 Floor, Phase II, Spencer Plaza,

No.769, Mo tun Road, Anna Salai,

Chennai ‐ 600002

Six

2014 20th June 2014 11.00 A.M.

Phase II, 4 th Floor, Spencer Plaza,

No.769, Anna Salai,

Chennai ‐ 600002

Four

2013 1st July 2013 11.30 A.M.

4th Floor, Tem lep Tower, No 672,

Anna Salai, Nandanam,

Chennai -600035

Two

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 their th threspective Notices. The registered office of the Company was shifted on 16 June 2014 to 4 Floor, Phase II, Spencer

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

C

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 2015-16.

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

CEO/CFO CERTIFICATION

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

Obligations and Disclosure Requirements), Regulations, 2015.

FAIR PRACTICES CODE

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

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

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/or 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 action taken on the complaints were reviewed by the Audit & Risk Management

Committee. None of the personnel has been denied access to the Audit & Risk Management Committee.

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

ODE OF CONDUCT


21

TRAINING OF BOARD MEMBERS

All new Non-Executive Directors inducted into the Board are given a day's orientation which includes half-a-day field

visit. The Company also arranges interactive sessions with the industry experts to enable the Directors to update

themselves.

REGULAR UPDATES

The Company sends a monthly newsletter to the Board Members and other stakeholders and keeps them updated on

the happenings in the Company.

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

stAnnual General Meeting: Date : Tuesday, 21 June 2016

Time : 3.00 P.M.

thVenue : 4 Floor, Phase II, Spencer Plaza, No 769, Mount Road,

Anna Salai, Chennai 600002

Financhial Year: 1st April to 31st March

Shareholding pattern as on 31st March 2016

Category # Shares %

Equitas Holdings Limited (Indian Holding Company) 19,87,49,994 100%

MrS Bhaskar (No inm ee of Equitas Holdings Limited) 1 -

Mr Mahalingam H, (Nominee of Equitas Holdings Limited) 1

Mr Murthy V S, (Nominee of Equitas Ho L itldings im ed) 1 -

Mr Muralidharan S, (Nominee of Equitas Holdings Limited) 1 -

Mr John Alex, (Nominee of Equitas Holdings Limited) 1 -

Mr Raghavan H K N, (Nominee of Equitas Holdings Limited) 1 -

Total 19, ,50 0087 , 0 100%


22

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

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

currently outstanding are as follows:

Transfer Agents Karvy Computershare Private Limited

Karvy Selenium Tower B, Plot No 31 & 32

Gachibowli, Financial District,

Nanakramguda, Serilingampally

Hyderabad – 500 032

Phone: +91 40 6716 1604

Address for Correspondence Company Secretary

Equitas Micro Finance Limitedth 4 Floor, Phase II, Spencer Plaza, No.769

Mount Road, Anna Salai, Chennai - 600002

Tel: +91 44 42995000

Fax: +91 44 42995050

Email: [email protected]


Sd/- Sd/-Chennai, P N Vasudevan P N Arun Ramanathan

th5 May 2016 Director Chairman


23

S No Nature of NCDS Issue Size (Rs.) IS NoIN . Scr p Ci ode

1 14.04 % - Unsecured 500,000,000 INE186N08017 947882

2 13.00% - Secured 230,000,000 INE186N07019 947944

3 12.67% - Secured 600,000,000 INE186N07068 950723

4 13.50% - Secured 350,000,000 INE186N07076 951633

5 16.00% - Unsecured 300,000,000 INE186N08025 951924

6 12.50 % - Secured 1000,000 000 INE186N07084 952217

7 12.50 % - Secured 750,000,000 INE186N07092 952266

8 12.13 % - Secured 750,000,000 INE186N07100 952700

9 14.05 % - Uns cu de re 1200,000,000 INE186N08041 952812

10 13.80 % - Un cuse red 300,000,000 INE186N08033 952815

The Board of Directors


This is to certify that:

st1. We have reviewed 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 & Risk Management 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/-

Raghavan H K N Sridharan N

CEO CFOChennai

th5 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

with the Code of Conduct as applicable to them.

Sd/- Sd/-

Raghavan H K N Sridharan N

CEO CFOChennai

th5 May 2016

CEO / CFO Certificate


24

Annexure III

Det ils o em n as e ea f r uneratio r quir d 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 Empl yeo es Remuneration.

i.

Chairman –

1:

0.14

ii. Chairman of Audit & Risk Management Comm – ittee 1: 0.19

iii. Managing Director - Niliv. Desikan R - 1:

0.18

v

Ot Dirher ectors

1:

0.29

(ii ce age) the per nt increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secr y or etar Manager, if any, in the financial year;

There was no increase in remuneration of Directors during the financial year.

Increase in remuneration of KMP is as follows:

CE O : 22% CF O

: 22%

Company Secretary : 5%

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

4%

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

March 2016

5317

(v) t e pla tihe x na on on the relationship between average

incr r ease in emuneration and Company performance;The average increase in remuneration across the Company at all levels was

11% and the increase inoperating parameters are as below:

Increase in Net orth :w

21% Increase in Profit After Tax :

17% P b ortfolio growth (on and off ook):

52%

(vi) c parison of the r munerom e ation of the Key Managerial P ins he pe mersonnel aga t t rfor ance of the Company; (only for listed companies)

NA

(vii) variations in the market capitalisation

of the Company, price ear s at tning ratio as he 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 c e out with the las nam t public offer i case of listed Companies

NA

In c un s , thase of li ted companies e variations in the net worth of the Comp at th close e t finan i a d any as e of the curr n c al ye r anprevious financial year;

Variation in networth: Incr se ea of 21% 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 incr th mana erial r munerease in e g e ation and justification ther poin thereof and t out if e are a y e n xceptionalcir s f in thcum tances or increase e managerial

The average increase in salaries of employees other than the m er nel in the last financialanag ial person year was 11%.

(ix) c p ison of eac muner Kom ar h re ation of the ey Managerial Personnel against the performance of the Company

Comparis of emuneron the r ation of the KMP against the performan e y (ce of th Compan PAT – Rs.8,035.51lakh)

Par sticular CEO CFO CS Total

Rem on unerati 72.86 57.53 12.06 142.45


25

(in lakh)Rem on uneratias % of Profit After Tax

0.91% 0.72% 0.15 1.78%

(x) the key parameters for any variable component

of remuneration availed by the Directors;

(xi) the ratio of the remuneration of the hi ghest paid Direct orto tha he es w o ar not Dirt of t employe h e ectors but receive remuneration in excess of the highest

paid Director during the year; and

(xii)

remuneration policy of the Company.

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

As enclosed

(i) if employed throughout the financial year, was in receipt of remuneration for that year whic gh, in the aggre ate, was not less than sixty lakh rupees;

(ii) if d for employe 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;

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in tha yeat r which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is x tha dr Ma in e cess of t awn by the naging Director or Whole- Time Director or manager and holds by himself or along with

his spouse and dependent children, not less than two per equ ty shar of the Com a ycent of the i es p n .

Further details to be stated in the statement:

(I) designation of the employee;

(ii) remuneration received;

(ii t e oi) na ur f employment, whether c n ;o tractual or otherwise

(iv) qualifications and experience of the employee;

(v) e o dat f commencement of employment;

(vi) the age of such employee;

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

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

(ix) whether any such employee is a relative of any Director or manager of the Company and if so, name e tor of such Dir c or manag :er

affirmation that the remuneration is as per the

Non-executive Directors are ent it led 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.

There are 73 employees who are earning more than highest paid director and the ratio of remuneration of the highest paid Director to the remuneration of the highest paid employee is 1: 8.7.

The remuneration is as per the remuneration policy

of the Company.


26




Annexure IV

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief, and according to the information and explanations obtained by them, 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;

· 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, have 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 were adequate and operating effectively; and

· that proper systems to ensure compliance with the provisions of all applicable laws and that such systems were

adequate and operating effectively.

F d on or an behalf of the Board of Directors

Sd/- Sd/- Vasu andevP N Arun Ramanathan

Direc tor ChairmanChennai, 5th May, 2016


27

Enclosure to the Annexure III to the Directors Report

Information as per Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Employed throughout the financial year remuneration in excess of Rs. 60 lakhs

Employed for part of the year with an average salary above Rs.5 lakhs per month

Employee-1

Name of the employee Ragh Kavan H N

( ) p yee;I designation of the em lo Chi Eef xecutive Officer

( i emi ) gross r uneration paid; R . s 72,85,856/- for the year

( i l yi i) nature of emp o ment, whether contractual or otherwise; Permanent

( vi ) qualifications

( ) exp cv erien e of the employee (in number of years) 28 years

( iv ) date of commencement of employment; 8 D- ec-08

( i pl yee;v i) the age of such em o 52

Subhiksha Trading Services Ltd

N li

No

Employee-2

N eame of th employee Vanamali Ranganathan Sridharan

C hhief Tec nology Officer

Rs. 16,14,229/

Permanent

He is an engineering degree holder with a post graduate in business management.degree

2 ar5 ye s

12-Jan-16

47

R Soyal Bank of cotland

Nil

No

Bachelors degree in Commerce from Osmania University and Executive Program in Business Management from Indian Institute of Management, Calcutta.

(viii) the last employment held by such employee before

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

(x) whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager:

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

(x) whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager:

(i) designation of the employee;

(ii) gross remuneration paid;

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

(iv) qualifications


28

(viii) the last employment held by such employee before joining the company;

(v) experience of the employee (in number of years)

(vi) date of commencement of employment;

(vii) the age of such employee;

ANNEXURE - V

SECRETARIAL AUDIT REPORTFOR 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,

EQUITAS MICRO FINANCE LIMITED

CIN: U65993TN1994PLC028002

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 MICRO 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 MICRO 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 in my opinion, the stCompany 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 EQUITAS stMICRO 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)

st


29

(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


(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


(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, notifications,

circulars and instructions framed thereunder:

a) Reserve Bank of India Act, 1934;

b) The Non-Banking Financial Company - Micro Finance Institutions (Reserve Bank) – Directions, 2011

(“NBFC-MFI Directions”);

c) Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank)

Directions, 2015;

d) Non-Banking Financial Companies – Corporate Governance (Reserve Bank) Directions, 2015

e) 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

f) Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential

Norms (Reserve Bank) Directions, 2015

g) Miscellaneous Instructions to all Non-Banking Financial Companies

h) Returns to be submitted by NBFCs

i) Miscellaneous Instructions to NBFC- ND-SI

j) Revised Regulatory Framework for NBFCs

k) Reserve Bank of India Guidelines on raising money through Private Placement of NCDs by NBFCs.

l) Guidelines to Fair Practices Code

m) Reserve Bank of India Master circulars issued to NBFCs

I further report that an inspection of the books of accounts and other records of the Company with reference to

financial position as on 31.03.2014 and 31.03.2015 was conducted by Reserve Bank of India between 15.05.2015 and

02.06.2015. The Company had placed the Inspection report dated 29.07.2015 issued by RBI in this connection, at the

meeting of the board held on 06.08.2015 and had submitted their response vide letter dated 27.08.2015 within a

period of one month from date of receipt of RBI letter. 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 basis, there are

adequate systems and processes in the Company commensurate with the size and operations of the Company to


30

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

f) The Minimum Wages Act, 1948

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, accorded approval to issue and allot non

convertible debentures upto Rs. 1000 crore for the financial year 2015-16.

st(b) At the 21 Annual General meeting held on 29.06.2015, accorded approval to borrow money upto an

aggregate of Rs. 4000 crore outstanding at any point in time and also accorded approval for sale /

assignment / securitization of assets and / or receivable of the Company upto an aggregate of Rs. 1400

crore for the financial year 2015-16.


31

(c) At the Extraordinary General Meeting of the Company held on 31.08.2015, accorded approval for

conversion of the Company into public Company and the Company became a public company on

15.09.2015 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 the Company and Equitas Housing Finance Limited with Equitas Finance Limited.

Place: Chennai Signature: Sd/-

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

FCS No: 1810

C P No : 3318


32

The Members of

EQUITAS MICRO FINANCE LIMITED

CIN: U65993TN1994PLC028002th4 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

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

FCS No : 1810

C. P. No: 3318

Signature: Sd/-


33

Annexure VI

Details of Related Party Transactions during the year**

**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.


34




(a) Name(s) of the related party

and nature of relationship

Equitas Finance Limited – fellow

subsidiary

Equitas Housing Finance Limited –

fellow subsidiary

(b) Nature of contracts /arrangements/ transactions

Sourcing of customers and

collection service.

Sourcing of customers and collection

service.

(c) Duration of the contracts /

arrangements/ transactions

Contract renewable by mutual

consent

Contract renewable by mutual

consent

(d) Salient terms of the contracts

or arrangements or transactions

including the value, if any:

1% fee for sourcing of customers;

0.5% for collection [excluding

Service Tax]

1% on loan disbursement and 0.5%

for collection [excluding Service Tax]

(e) Date(s) of approval by the

Board, if any:

6th

May 2015 6th

May 2015

(f) Amount paid as advances, if

any:

Nil 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 29th

June 2015

Par sticular Rs in lakh

Con ontributi to EDIT from Apr 2015 to Mar 2016 305.60

Conduct of 4413 free health camps in 362 Branches benefitted

845205 members of S H Groelf elp ups (SHG) 47.14

Overheads/salary cost 38.67

TOTAL 391.41

Annexure VII

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.equitasmf.in/sites/default/files/EMFPL_CSR_8May14.pdf.

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

Initiatives Trust) is attached.

2. The Composition of the CSR Committee.

a) Ms. Chitra Chandramouliswaran, Chairperson and Independent Director

b) Mr. Y C Nanda, Independent Director

c) Mr. Arun Kumar Verma, Independent Director

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

4. Prescribed CSR Expenditure 2% of average profit for last 3 years – Rs.159.26 lakh (Rupees One crore fifty nine

lakhs and twenty six thousand only)

5. Details of CSR contribution made during the financial year.

(a) Total amount spent for the financial year:

Par sticular Rs in lakh

Amo t speun nt by EDIT from Apr 2 o015 t Mar 2016 261.54

Conduct of health camps 47.14

Overheads/salary cost 38.67

TOTAL 347.35

Rupees hr r thouT ee c ore forty seven lakh and thirty five sand

Particu arl s Rs in lakh

Profit/Loss 2014 15 10,702.88

Profit/Loss - 2013-14 8,940.31

Profit/Loss - 2012-13 4,245.36

Average PROFIT for CSR purpose 7,962.85

2% f a o verage Profit/Loss for last three years

159.26


35

( Rs. I n lakh)

(1) (2) (3) (4) (5) (6) (7) (8)

S. No

CSR project or activity identified

Sector

in

which

the

Project

is covered

Projects or programs

(1) Local area or other

(2) Speci y th S te and f e tadistrict where projects or programs was undertaken

Amount outlay (bu e )dg t project or programs wise

Amount spent on the projects or programs

Sub – heads:

(1) Direct e diture on xpenprojects or programs

(2) Overheads

Cumulative e diture xpenupto the r tingepor period

Amount spent : Direct or through

implementing agency*

1

To support

6

Regular Matriculation schoo sl for low income SHG

families run by Equitas Dev opmentel Initiatives Trust

Education

6

school Ts in amil Nadu

located

in

Karur, Trichy,

Salem, Coi atmb ore,

Di ind gul

and Cuddalore

- 261.54

261.54

ThroughTrust (EDIT)

2

Conduct of 4 413 free health camp sacross 362 Branches every month bene ngfiti ,45,205 SHG

members

Health Services

Acr noss India i 7 states- Tamil Nadu, Maharashtra, Gujarat, Rajas than, Madhya Pradesh, Puducherry and Karnataka

-

Direct

47.14 Over eads h

38.67 Total85.81

85.81 Direct

TOTAL 347.35 347.35

(b) Amount unspent, if any;

(c) Manner in which the amount spent during the financial year is detailed below.

NIL

a

(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.


Chennai Vasudevan Chitra Chandramouliswaran

th5 May 2016 Director Chairperson, CSR Committee

Sd/- Sd/-P N


36


37

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 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, in addition to carrying out direct CSR activities, 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 and 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 thbehalf for 6 months during which they are taught livelihood skills and linked to local markets. 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% ndcollection was observed in those loans till date. Encouraged by this positive response, the 2 batch of 8 members

was included in the program, thus mainstreaming them into the community and fulfilling their dream of economic

empowerment.


38

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 5 P.M. to 9 P.M.)

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.

E. Health care services done directly by the Company

1. Primary Health Care: The Company has conducted free primary health care medical camps benefiting

cumulatively 37,45,109 members so far.

2. Secondary Health Care & Health Help line: The Company has also tied up with a large number of hospitals

to help our clients get inpatient treatment for serious illnesses at a discount to normal cost. This initiative

has benefited nearly 20,642 members.

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

Placement Cell:

Natur Actie of vity Q1 Q2 Q3 Q4 Year 2015-16 Cumula ve ti

No. of Eye-camp

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

No. of spectac ee of les (fr

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

No. of t ca aract

oper cosations (free of t)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

Ca ps (A)+(B) m )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

Hea Hlth elp Line 197 539 547 393 1,676 20,642

Pla tscemen

Unem eploy d Youth5,370 6,160 8,207 6,583 26,320 59,629

Swasth Mahila Hea lth

Education

6,897

8,614

8,487

9,943

33,941

67,882

P isaersons with d bility 518 509 914 1,416 3,357 14,175

(2,575 Blind)

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

CUMULATIVE NUMBERS

for


39

Annexure VIII

E TRACT OF ANNX UAL RETURN AS ON THE FINANCIAL YEAR ENDED ON 31.03.2016

[ rs anPu u t to Section 92(3) of the Companies Act, 2013 an ule 12(1) od R f the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS

CIN U65993TN1994PLC028002 Registration Date 07.07.1994

Category/Sub-Category of the Company Public Company

Company name Equitas Micro Finance Limited

Registered OfficeAddress

4th Floor, Phase II, Spencer Plaza, No.769, Mount Road,

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

E aim l [email protected] Web tesi w ww .equitasmf.in

Whether listed Company Yes/No De t b listed Company

Name & Address

of Registrar and Transfer Agent, if any

Karv m utery Co p share Private Limited

Karv enium y Sel Tower B, Plot No 31 & 32,

Gachibowli, Financial District, Nanakramguda, Serilingampally,

Hyderabad

500 032

Phone +91 040 67161604

E aim l

[email protected]

Contact Person Mr Mukharji Yenugu

II.

PRIN IPC AL BUSINESS ACTIVITIES OF THE COMPANY

(All the business activities contributing 10 % or more of the total turnover of

th Compane y shall be stated)

SL

No

Name and Description of main products / services NIC Code of th Proe duct/

s eervic

% to total turnover of the

Company

1 Granting Loans to Individuals 99711352 100%

III.

PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

Sl

No Name and Address

of th Compane y CIN/GLN Holding/

Subsidiary /Associate

% of Shares

held

Applicable Se nctio

1 Equitas Holdings Limited U65100TN2007PLC064069 Holding 100 2(46)


40

Anna Salai, Chennai - 600 002

IV. SHARE HOLDING PATTERN

I) Category-wise Share Holding

(Equity Share Capital Breakup as percentage of Total Equity)


Category of s arh eholders

No h of shares eld at the year beginning No h of shares eld at the year end % of changeDemat Physical Total % Demat Physical Total %

A OM. PR OTERS

(1) Ind ani

a) In iddiv ual/ HUF

b) Central Govt

c)

State Govt (s)

d) Bod sie Corp. Nil 198750000 198750000 100 Nil 198750000 198750000 100 No change

e) Banks / FI

f)

Any Other….

Sub-to ( ) tal A (1):- Nil 198750000 198750000 100 Nil 198750000 198750000 100 No change

(2) Foreign

a) NRIs

b) Oth re

c) Bod sie Corp.

d) Banks / FI

e) Any

Sub-to ( ) tal A (2):- Nil Nil Nil Nil Nil Nil Nil Nil Nil

Total shareholding

of Promoter

(A) = (A)(1)+(A)(2)

Nil 198750000 198750000 100 Nil 198750000 198750000 100 No change

B. PUBLIC SHARE OH LDING

1. Institutions

a) Mutual

b) Banks / FI

c) Central Govt

d) State Govt(s)

e) Venture Capital Funds

f) In ura s nceCompanies

g) FIIs

h) Foreign Venture Capital Funds

i) Oth rs ( p ci ye s e f )

Sub-to (tal B)(1):- Nil Nil Nil Nil Nil Nil Nil Nil Nil

2. Non Institutions

a) Bod sie Corp.

41

(ii) Shareholding of Promoters

i) Indian

ii) Overseas

b) Individuals

i) In iddiv ual s arh eholders holding nominal s arh e capital upto Rs. 1 lakh

ii) Ind iduiv al s arh eholders holding nominal s arh e capital in excess of Rs 1 lakh

c) Oth rs e(s e f )p ci y

Sub-to (tal B)(2):-

Nil

Nil

Nil Nil

Nil

Nil

Nil Nil

Total Pu ic blShareholding

(B)=(B)(1)+ (B)(2)

Nil

Nil

Nil Nil

Nil

Nil

Nil Nil

C. SH REA S HELD BYCUSTODIAN FOR

GDRs & RAD s

Nil

Nil

Nil Nil

Nil

Nil

Nil Nil

Grand Total (A+B+C) 198750000 198750000 100 Nil 198750000 198750000 100 No change

Sl No

Shareholder’s

Name

Shareholding at th be eginning

of th ye ear

Shareholding at the end of the

year

%

change

in

s arh e

holding

during

the

year

No. of

Shares

% of

total

Shares

of the

Company

% of Shares

Pledge /d

encumbered

to total

s arh es

No. of

Shares

% of

total

Shares

of the

Company

% of Shares

Pledge /d

encumbered

to total

s arh es

1

Equitas Holdings Limited

198750000 100

NIL

198750000

100

NIL

No change

Total

198750000

100

NIL

198750000

100

NIL

No change


42

(iii) Change in pl s s no cha Promoters’ Shareholding ( ea e specify, if there i nge) : No change in the Promoters’ Shareholding

Sl

No

Date wise Increase /

Decrease in Promoters

Share holding 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

% of total shares of

the Company

No Chan hareholge in the Promoters’ S ding

(iv) Shareholding Pattern of top ten Shareholders (othe thar n Directors, Promoters and Holders of

GDRs and ADRs):

SlNo

Name of

Top 10 Shareholders

Date wise

Increase /

Decrease inPromoters

Share holdingduring the

year

Shareholding at the begin ning 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

No. of shares

% of total

shares

1.

01.04.201 5 NIL

31.03.201 6

(v)

Shareholding of Directors and Key Managerial Personnel ( APKMP): NOT PLICABLE

Sl

No

Name of Shareholders

Who are also KMP/ Directors of the Company

Date wise

Increase /

Decrease in

Promoters

Share holding

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 totalshares of the

Company

No. of shares

% of total

shares of the

Company

1.

01.04.2015

31.03.2016

V. INDEBTEDNESS(Indebtedness of the Company including interest outstanding/accrued but not due for payment) Rs in lakh

Secured LoansExcluding depo is ts

Unsecured Loans Deposits Total Indebtedness

Indebtednes ths at e beginning of the financial year

I) Principal Amount

1,54,763.79

8,000.00

1,62,763.79 ii) Interest due but not paid -

-

-

iii) Interest accrued but not due

1,225.71 235.35 - 1,461.06

Total (i+ii+iii)

1,55,989.50

8,235.35

-

1,64,224.85 Change in Indebtedness during the financial yearAddition 2,19,358.37 15,037.48 - 2,34,395.85 Reduction

1,13,685.10

-

1,13,685.10 Net nge Cha

1,05,673.27

15,037.48

-

1,20,710.75 Indebtedness at the end of the financial yearI) Principal Amount 2,59,095.69 23,000.00 - 2,82,095.69 ii) Interest due but not paid - - -iii) Interest accrued but not

due2,567.08 272.83 - 2,839.91

Total (i+ii+iii)

2,59,095.69 23,000.00

-

2,82,095.69


43

V CT AND I. REMUNERATION OF DIRE ORS KEY MANAGERIAL PERSONNEL:

Remuneratio onn to N -Executive Directors (In Rs.)

S No Name of Dir oect r

Fee for attending

Board/ Committee Meetings

Commission Others Total

1 Arun Ramanathan 1, 20,000 10,00,000 Nil 11, 20,000

2 Arun Kumar Verma 2, 40,000 5,00,000 Nil 7, 40,000

3 Chitra Chandramouliswaran 2,3 0,000 5,00,000 Nil 7,3 0,000

4 D se ikan R# 45,000 1, 20,548 Nil 1,65,548

5 Nanda Y C 3,15,000 5,00,000 Nil 8,15,000

6 Mar o Bc oa $ 1,50,000 5,00,000 Nil 6,50,000

7 Raman N */ Ramakrishnan S* 80,000 5,00,000 Nil 5, 80,000

8 Sampat h P B 2,52,500 7,50,000 Nil 10,02,500

9 Shankar V 2,77,500 5,00,000 Nil 7,77,500

10 Srinivasan N 1, 50,000 5,00,000 Nil 6, 50,000

11 Janakiraman M 60,000 5,00,000 Nil 5,6 0,000

12 Vasudevan P N Nil Nil Nil Nil

Total (B) 19,20,000 58,70,548 Nil 77,90,548

Overall Ceiling for Remuneration as per Act

1% of Profits for Financial Year 2015 -16 comput d ue nder Section 197 of the Act

1,26,98,000

Commi sis on payable to Directors as above 58,70,548

# Mr. Desikan R Expired on 27 June 2015

* Mr.Ramakrishnan S replaced Mr. Raman N as the Nominee Director of SIDBI with effect from 5th November 2015.

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

th

st


44

PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: N I L

Type Section of e th

Companie cts A

Details of the Penal yt , Fees

etc.

Authority imposing (RD/ NCLT/ Court)

Details of Appeal made if

any

Penalty

Nil

Punishment

Compounding

Other Officers In Default

Penalty

Punishment

Compounding

Remuneratio eyn to K Managerial Personnel

(In Rs.)

S No Particulars o emunf R eration CEO CFO CS Total

1 Gross salary

(a) Salary as per provisions contained

in se .c 17(1) of the Income - tax Act,

1961

(b) Value of perquisites u/s 17(2) of the

Income -tax Act, 1961

(c) Profits in lieu of salary u/s. 17(3) of

the Income -tax Act, 1961

66,81,833

6,04,023

Nil

52,28,916

5,23,773

Nil

12,06,060

Nil

Nil

1,31,16,809

11,27,796

Nil

2 St k Ooc ption

Nil Nil Nil Nil

3 Sweat Equity

Nil Nil Nil Nil

4 Co ssionmmi

- as % of of pr it

- others, specify

Nil

Nil

Nil

Nil

5 Others, please specify Nil Nil Nil Nil

Total (A) 72,85,856 57,52,689 12,06,060 1,42,44,605


Sd/- Sd/-Chennai, P N Vasudevan Arun Ramanathan



45

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF EQUITAS MICRO FINANCE LIMITED

(formerly known as EQUITAS MICRO FINANCE PRIVATE LIMITED)

Report on the Financial Statements

We have audited the accompanying financial statements of Equitas Micro 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 thereunder 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.


46

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial

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

conformity with the accounting principles generally accepted in India, 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 laws or accounting standards, for

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

Conmtracts.

(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

Place: Chennai

Date: 5 May 2016


47

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 Micro Finance Limited (“the

Company”) as of 31 March 2016 in conjunction with our audit of the financial statements of the Company for the year

ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on “the

internal control over financial reporting criteria established by the Company considering the essential components of

internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by

the Institute of Chartered Accountants of India”. These responsibilities include the design, implementation and

maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and

efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the

prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the

timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based

on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls

Over Financial Reporting (the “Guidance Note”) 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

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


48

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 31 March 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”.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm's Registration No. 008072S)

Sd/-

Geetha Suryanarayanan

Partner

Membership No. 29519

Place: Chennai

Date: 5 May 2016


49

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 explanation given to us, no

material discrepancies were noticed on such verification.

(c) The Company has no 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) of the 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, Service 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, Service 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 Income-tax and Service Tax which have not been deposited as on 31 March 2016 on

account of disputes are given below:


50


51

(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 and 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 duringthe 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 Companyby its officers or employees has been

noticed or reported during the year, though there have been a few cases of irregularities amounting

to Rs. 22.47 lakhs (Refer Note 42 of the Financial Statements) which have been 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 Sections 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.

(x) 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.

Nature of Dues

Forum where Di e isput s P ending

Peri o wod t hich the Amount

Rela tes

Amou t nInvolved (Rs.

in lakh)

Unpaid (Rs.)

Na at eme of St ut

Amou t n

The I c n ome Tax

Act, 1961 Income tax

Commissioner of Income Tax (Appeals)

Financial Year

2011-2012 18.99 18.99

The I c n ome Tax

Act, 1961 Income Tax

Assistant Commissioner of Income Tax

Financial Year -2012 13

2.16 2.16

Finance Act,

1994 Se icrv e Tax

Se icrv e Tax authorities

Financial Years 2008-2009 to FY 2012-2013

363.95 363.95

Place: Chennai

Date: 5 May 2016

For Deloitte Haskins & SellsChartered Accountants(Firm's Registration No. 008072S)

Geetha SuryanarayananPartner Membership No. 29519

Equ t i an L i ei as Micro F n ce imited (Formerly known as Equ tas Micro Financ Private Limited)B l c eea an e Sh t as at 31 March 2016

Note As a t As at

No 31 March 2016 31 March 2015

R .s in Lakhs Rs. in Lakhs

EQUITY AND LIABILITIES

Shareholders' FundsS a e Ca tah r pi l 3 19,875.00 19,875.00 R ve a d ureser s n S plus 4 26,160.21 18,124.70

46 03, 5.21 37,999.70

N n Cu ento - rr LiabilitiesL g-Ton erm Borrowings 5 146,618.30 71,341.23 Other onL g-Term Liabilities 6 1,521.97 1,035.50 L g-Ton erm Provisions 7 1,901.77 858.48

150,042.04 73,235.21

Cu err nt Liabilities

Current Maturities of Long-Term Borrowings 8 135,477.39 91,422.54 Trade Payables

(i) Total Outstanding dues of micro enterprises and small enterprises

9.1 - 0.56

(ii) Total Outstanding dues of creditors other than mi o ecr nterprises and small enterprises

9.2 2,251.78 1,361.18

Other Current Liabilities 10 18,933.66 14,717.73 S ort-Th erm Provisions 11 3,813.60 2,631.90

160,476.43

110,133.91

TOTAL356,553.68

221,368.82

ASSETS

N n Cu ento - rr AssetsF xe Ai d ssets - Tangible Assets 12.1 1,459.57 1,011.08 - Intangible Assets 12.2 94.45 134.33 - Capital Work in Progress - 127.01

1,554.02 1,272.42

Non-Current Investments 13 20.00 20.00 Deferred Tax Assets 14 2,374.91 1,372.21 L g-Ton erm Receivables Under Financing Activities 15 96,324.40 56,316.51 L g-Ton erm Loans and Advances 16 2,723.75 976.28 Other Non-Current Assets 17 6,366.71 5,708.59

109,363.79 65,666.01 Cu err nt Assets

Current Investments 18 - 15,000.00 S ort-Th erm Receivables Under Financing Activities 19 161,203.34 106,007.94 Ca a d ash sh n C Equivalents 20 76,032.09 26,824.85 S ort-Th erm Loans and Advances 21 1,911.13 1,855.68 Other Current Assets 22 8,043.33 6,014.34

247,189.89 155,702.81

TOTAL 356,553.68 221,368.82

In r te ms of our report attachedFor Del io tte Haskins & Sells

For a nd on behalf of the B a c rso rd of Dire to

Cha e Arter d ccountants


Aru an R manathan P atB Samp h

P rartne

Cha mair nD :00IN 308848

P a e : nn il c Che aD ate : 5 May 2016

D :00IN 037043

P d vanN Vasu e H K N RaghavanD ri ector Chief Executive OfficerD :01IN 550885

N ara Sridh n K a k mR Samp th u arChief Financial Officer Comp na y Secretary

A27466P a e : nn il c Che aD ate : 5 May 2016

S omp nee acc a ying notes forming part of the Financial Statements

Pa i u arsrt c l

D ri ector and Chairman of Audit & Risk Management Committee


52

Equ s ic o a E ita Mita M ro Finance Limited (Formerly kn wn s qu s icro Finance Private Limited)S t men f Profit a d Lo s fo he y a ded 1 a 0ta e t o n s r t e r en 3 M rch 2 16

Note F r t r Endedo he Yea F r th ar Ended o e Ye

No 3 arc 201 M h 16 3 arc 201 M h 15 Rs. in k La hs Rs. in k La hs

REVENUE

Revenue from Operations 23 60 30, 8.81

43 5, 21.25

Other Income 24 33 73. 1

276.91

60,642.52

43,798.16

EX EN ESP S

Employee Benefits Expense 25 13 05, 6.14

8,70 82. 5

Finance Costs 26 26 20, 6.37

18 6, 99.92

Pr iov sions and Write Offs 27 1,770 7. 7

895.66

D eciepr ation and Amortisation Expense 12 73 88. 5

394.84

O he t r Expenses 28 6,388 5. 3

4,69 61. 0

48,160.66

33,384.87

P fit Bero fore Tax 12,481.86

10,413.29

Tax Expense

Cu r ntr e Tax 5,449 0. 5

3,91 00. 0

Deferred Tax 14 (1 0, 02.70)

(351.80)

N et Tax Expense 4,446 3. 5

3,55 28. 0

P fit After Taro x 8,035.51

6,855.09

E niar ngs Per Equity Share. Face Value - Rs.10 each 34 - Basic- in Rs. 4.04

3.45

- Diluted- in Rs. 4.04

3.45

P rtic laa u rs

See ac mp i co any ng notes forming part of the Financial Statements


53






P rartne



D :00IN 037043





E tqui as Micro Finance Limited (Formerly known as Equitas Micro Finance Private Limited)

C Sash Flow tatement for year ended 31 March 2016

F t Year or he Ended F t Year or he Ended

3 h 1 Marc 2016 3 h 1 Marc 2015

R .s in Lakhs R .s in Lakhs

A. C frash Flow om Operating ActivitiesPr i oof t Bef re Tax 12,481.86

10,413.29

A justmd ents for:Dep cire ation and Amortisation Expense 738.85

394.84

Co ti ovn ngent Pr ision for Standard Receivables under Financing Activities (Net) 1,184.23

546.88

Pr siovi on for Sub-standard and Doubtful Receivables under Financing Activities (Net) 339.36

79.94

Pr siovi on for Credit Enhancements on Assets De-Recognised (Net) 233.15

254.22

L sso Assets Written Off (Net) 14.03

14.62

Pr Paompt yment Rebate (Net) -

-

Pr siovi on for Doubtful Employee Loans / Insurance Claims (net) 52.16

9 7. 2

Finance Costs 26,206.37

18,699.92

I nnterest Income o Deposits with Banks / Others (993.46)

(790.06)

I nnterest Income o Pass Through Certificates -

(31.99)

I n onterest Income o L ans / Deposits to Related parties -

(209.52)

I n ecunterest Spread o S ritisation / Assignment of Receivables (Net) (5,819.05)

(4,084.37)

Gain on Sale of Current Investments (Net) (997.76)

(584.72)

Pr iof t on Sale of Fixed Assets (Net) (1.92)

(6.51)

Pr siovi on no longer required written back (4.95)

-

Operating Profit before Changes in Working Capital 33,432.87

24,706.26

Chan n Woges i rking Capital:

A justmd ents for (increase) / decrease in operating assets:L n tio g-Term Receivables Under Financing Activi es (40,007.89)

(18,931.59)

L no g-Term Loans and Advances (1,313.61)

366.35

Sho T esrt- erm Receivables Under Financing Activiti (55,209.43)

(24,921.23)

Sho Trt- erm Loans and Advances 415.38

4,635.47

Other Cu etsrrent Ass (534.89)

(76.12)

B al ilater Assignment and Securitisation of Assets (Net) 5,330.13

5,354.64

A justm tid ents for increase / (decrease) in operating liabili es:Other Long-Term Liabilities 370.95

206.96

Trade Payables 890.04

427.60

Other Cu ilrrent Liab ities 1,326.83

4,838.44

Sho Trt- erm Provisions 468.25

106.56

C Us d i perash Flow e n O ations (54,831.37)

(3,286.66)

Gain on Sale of Current Investments (Net) 997.76

584.72

Finance Costs Paid (24,870.29)

(18,602.00)

I Deponterest Received on sits 1,095.76

989.64

Direct Taxes Paid (5,576.71)

(4,002.50)

N n Oet Cash Flow Used i perations (83,184.85)

(24,316.80)

B. C fr nvash Flow om I esting Activities

Capital Expenditure including capital advances (1,400.13)

(1,397.23)

Pr rooceeds f m Sale of Fixed Assets 44.10

37.72

B ank Deposits not considered as Cash and Cash Equivalents (Net) (240.49)

(2,627.30)

I Pass nvestment in Through Certificates (Net) -

340.12

Pr rooceeds f m sale/ (purchase) of Current Investments (Net) 15,000.00

(15,000.00)

N nvet Cash Flow From / (Used in) I esting Activities 13,403.48

(18,646.69)

Particulars


54


C Sash Flow tatement for year ended 31 March 2016

F t Year or he Ended F t Year or he Ended 3 h 1 Marc 2016 3 h 1 Marc 2015

R .s in Lakhs R .s in LakhsParticulars

C. C frash Flow om Financing Activities

L no g-Term Borrowings Taken 233,017.00

125,572.70

L no g-Term Borrowings Repaid (113,685.08)

(91,177.11)

Sho Trt- erm Borrowings Taken / (Repaid) -

(3,383.90)

Net Cash Flow From Financing Activities 119,331.92

31,011.69

49,550.55

(11,951.80)

59,920.885

Cash and Cash Equivalents at the Beginning of the Year 21,651.04

33,602.84

Cash and Cash Equivalents at the End of the Year 71,201.59

21,651.04

Note:

(i)

Cash and Cash Equivalents as per Note 20 76,032.09

26,824.85

L i osiess: L en Marked Dep ts 4,830.50

5,173.81

71,201.59

21,651.04

See ac mp i co any ng notes forming part of the Financial Statements

N ncet I rease/ (Decrease) in Cash and Cash Equivalents (A)+(B)+(C)

The reconciliation to the Cash and Cash Equivalents as given in Note 20 is as follows:

Cash and Cash Equivalents (as defined in AS 3 - Cash flow statements) as at the End of the Y ear


55






P rartne



D :00IN 037043





1. CORPORATE INFORMATION

Equitas Micro Finance Limited ("EMFL" / "the Company") (formerly known as "Equitas Micro Finance Private

Limited") was incorporated on 7 July 1994. The Company is a Non-Banking Finance Company - Micro Finance

Institution (NBFC-MFI). The Company had obtained registration under the Non-Banking Financial Company -

Micro Finance Institution (Reserve Bank) Directions, 2011 vide RBI letter dated 4 October 2013.

The Company was converted to a Public Company vide fresh Certificate of Incorporation dated 15 September

2015, subsequent to which the Company's name got changed from Equitas Micro Finance Private Limited to

Equitas Micro Finance Limited.

The Company is engaged in extending micro credit to economically active persons. The Company generally

provides small value collateral free loans upto Rs. 40,000 for a tenor of one to two years with fortnightly /

monthly repayment. The Company broadly follows the Grameen model with suitable adaptations using the Joint

Liability Groups (JLG) framework, where each member of the group guarantees the loan repayment of the other

members of the group. All transactions are conducted in the group meetings organised every fortnight / month

near the habitats of the members.

The Company also provides collateral free individual loans to the existing borrowers ranging between Rs. 2,000

to Rs.10,000 as additional loans like educational loans, kirana loans etc.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Accounting

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 as applicable. 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 is a Non-Banking Finance Company - Micro Finance Institution (NBFC-MFI). The Company follows

the prudential norms for income recognition, asset classification and provisioning as prescribed by the Reserve

Bank of India for NBFC-MFI's or more stringent norms as indicated in Note 2.19.

2.2 Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make

estimates and assumptions 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.


56

Equitas Micro Finance Limited (Formerly known as Equitas Micro Finance Private Limited)Notes forming part of the Financial statements for Year ended 31 March 2016

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 before extraordinary items and tax is adjusted

for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or

payments. The cash flows from operating, investing and financing activities of the Company are segregated

based on the available information.

2.5 Depreciation and Amortisation

Depreciable amount for assets is the cost of an asset, less its estimated residual value.

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 advice, taking into account the

nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of

replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.

Tangible Assets:

Computer Equipments - 3 Years

Furniture and Fixtures - 3 Years

Office Equipments - 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 on a straight line basis over their estimated useful life as follows:

Software - Lower of license period or 3 years.

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.

a) Interest Income on Loans granted is recognised under the internal rate of return method. Income on Non-

performing Assets is recognized only when realized and any interest accrued until the asset became a Non-

performing Asset and remaining overdue is de-recognized by reversing the interest income.

b) Loan Processing Fee is recognized over the life of the loan on a straight line basis.

c) In accordance with the RBI Guidelines on Securitisation Transactions, gains arising from securitisation are

amortised over the life of the underlying portfolio loans. In case of any loss, the same is recognised in the

Statement of Profit and Loss immediately.


57


d) Interest Income on deposits / investments is recognized on a time proportion basis taking into account the

amount outstanding and the rate applicable.

e) Grants are recognised as income on fulfillment of the terms of the Grant Agreement

f) Dividend income is accounted for when the right to receive it is established.

g) All other income is recognized on an accrual basis, when there is no uncertainty in the ultimate realisation

/ collection.

2.7 Fixed Assets - Tangible and Intangible

Fixed assets are carried at cost less accumulated depreciation/amortisation and impairment losses, if any. The

cost of fixed assets 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. Subsequent expenditure on fixed assets

after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits

from such asset beyond its previously assessed standard of performance.

2.8 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 or at rates that closely approximate the rate at the date of the transaction. or at

rates that closely approximate the rate at 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.

2.9 Investments

Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the

value of such investments. Current investments are carried at the lower of cost and fair value. Cost of

investments include acquisition charges such as brokerage, fees and duties.

2.10 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 they fall due based on the amount of contribution required to be made and when the services are

rendered by the employees.


58


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

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 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.

2.11 Borrowing Costs

Borrowing costs include interest 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.

2.12 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 over the lease term.

2.14 Earnings per Share

Basic earnings per share is computed by dividing the profit after tax (including the post tax effect of extraordinary


59


items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per

share is computed by dividing the profit 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.

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 Income 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.

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 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.

2.17 Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable


60



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

each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in

the Notes to the Financial Statements.

2.18 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 no uncertainty in availing / utilising the credits.

2.19 Classification and Provisions of Loan Portfolio

(a) Loans are classified and provided for as per the Company’s Policy and Management’s estimates, subject to

the minimum classification and provisioning norms as per the Non-Banking Financial Company - Micro

Finance Institutions (Reserve Bank) Directions, 2011, as amended.receivable

“Overdue” refers to interest and / or principal and / or installment remaining unpaid from the day it became

receivable.

C al ssification of Loans

Asset Classification

Standard Assets

N Pon erforming Assets (NPA)

Sub Stand A- ard ssets

Doubtful Assets

L sso Assets

P of Oeriod verdue

Ov derdue for 30 ays and more but less than 90 days

Ov derdue for 90 ays and more

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.

Not Overdue or Overdue for less than 30 days

Asset Classification

Standard Assets

No on Perf rming Assets (NPA)

Sub Stand A- ard ssets



Doubtful Assets

Doubtful Assets – Overdue for 90 days and more but

Doubtful Assets – Overdue for 120 days and more

L sso Assets 100%

Provisioning Percentage used by the Company

1.25%

10%

25%

50%

100%

(b) Provisioning Norms for Loans - Followed by the Company

l ess than 120 days


61

(c) [

Institutions (Reserve Bank) Directions, 2011, as amended]The aggregate loan provision to be maintained by

NBFC-MFIs at any point of time shall not be less than the higher of the following:

1% of the outstanding loan portfolio (or)

50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and

100% of the aggregate loan installments which are overdue for 180 days or more.

(d) Under exceptional circumstances, Management may renegotiate loans by rescheduling repayment terms

for customers who have defaulted in repayment but who appear willing and able to repay their loans under

a longer term agreement. Rescheduled Standard Assets are classified / provided for as Sub-Standard Assets

as per (b) above which classification / provisioning is retained for a period of 1 year of satisfactory

performance. Rescheduled Non Performing Assets are not upgraded but are retained at the original

classification / provisioning for a period of 1 year of satisfactory performance.

2.20 Provision for Credit Enhancements on Assets De-Recognised

Provision for Credit Enhancements on Assets De-Recognised is made based on Management estimates at 1.25%

of the outstanding amount of assets de-recognised from the books of the Company as at the Balance Sheet date.

2.21 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.

Provisioning Norms for Loans - As Per RBI Guidelines Non-Banking Financial Companies - Micro Finance


Particulars

No. res of Sha R .s in Lakhs No. res of Sha R .s in Lakhs

3 Share Capital

(a) Aut is dhor e

320,000,000

32,000.00

220,000,000

22,000.00

(b) I s Ss ued, ubscribed and Full y Paid-up

E uiq ty shares of Rs. 10 each 198,750,000

19,875.00

198,750,000

19,875.00

198,750,000

19,875.00

198,750,000

19,875.00

3.1 R ce onciliation of Shares Outstanding at the beginning and at the end of the Year

Particulars

N haro. of S es R .s in Lakhs N haro. of S es R .s in Lakhs

198,750,000

19,875.00

198,750,000

19,875.00

-

-

-

-

198,750,000

19,875.00

198,750,000

19,875.00

E uiq ty shares of Rs. 10 each - (Refer Note 3 5. )

As Mar 15 at 31 ch 20As Mar 16 at 31 ch 20

F t yor he ear ended 3 h 1 Marc 2016

F t yor he ear ended 3 h 1 Marc 2015

Outstanding at the End of the Year

A egt the B inning of the YearI uedss during the Year


62



3.2 Det ngails of Shares held by the Holdi Company

Particulars

As a t 3 h 21 Marc 016 N of haro. S es

As at3 h 21 Marc 015N haro. of S es

198,750,000

198,750,000

E uiq tas Holdings Limited, the Holding Company

(including shares hedl by its nominee)

3.3 Det Sails of Shareholders holding more than 5% hares in the Company

Particulars

N haro. of S es % Holding N haro. of S es % Holding

E t 0 hqui y Shares of Rs. 1 eacE uiq tas Holdings Limited 198,750,000

100% 198,750,000

100%

(including shares held by its nominee)

F t yor he ear ended 3 h 1 Marc 2016 For the year ended 3 1 March 2015

3.4 Terms/Rights attached to Shares.

The Company has only one class of equity shares having a par value of Rs.10. Each holder is entitled to one vote

per equity share. Dividends are paid in Indian Rupees. Dividend proposed by the Board of Directors, if any, is

subject to the approval of the shareholders at the Annual General Meeting, except in the case of interim

dividend.

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.22,000.00 Lakhs (comprising of 22,00,00,000 equity shares of INR.10 each) to

Rs.32,000.00 Lakhs (comprising of 32,00,00,000 equity shares of INR. 10 each)

3.6 Employee Stock Option

Under the Employee Stock Option Scheme (ESOS) - 2015 of the Holding Company, Equitas Holdings Limited,

92,49,886 options (As at 3 March 2015 - 60,95,886 options) of the Holding Company granted to some of the

employees of the Company are 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 31 March 2016.

3.7 Issue of Shares without Payment being received in Cash

Pursuant to the Scheme of Arrangement, on 21 January 2012, as consideration for the transfer of assets and

liabilities of the Micro Finance Undertaking of Equitas Holdings Private Limited ("EHPL") the Company had

allotted 150,000,000 fully paid up equity shares of Rs. 10 each without payment being received in cash from

EHPL.

63

As at As at 3 21 March 016 3 21 March 015

Rs. in a L khs Rs. in a L khs

4 Res es aerv nd Surplus

Securities Premium Account 646.93

646.93

Statutory Reserve

(Refer Note 50)Openin Balang ce 3,418.62

2,047.60

1,607.10

1,371.02

C s g celo in Balan 5,025.72

3,418.62

General Reserve 391.86

391.86

Surplus in the Statement of Profit and Loss

Openin Balang ce 13,667.29

8,183.22

Add Pr: ofit After Tax for the year 8,035.51

6,855.09

Less: Appropriations - Transfer to Statutory Reserve (Refer Note No 49) 1,607.10

1,371.02

Net Surplus in the Statement of Profit and Loss 20,095.70

13,667.29

26,160.21

18,124.70

Particulars

Add Amo: unt Transferred during the Year from Surplus in the Statement of Profit and Loss



5 L ng-o Term Borrowings

Redeem vable Non-Con ertible Debentures - (Refer Note 5.1)

Secured 33,300.00

10,050.00

Unsecured - Subordinated Debt 23,000.00

8,000.00

56,300.00

18,050.00

Term Loans - Secured

Fr kom Ban s (Refer Note 5.2) 59,424.88

45,291.23

From Other Parties (Refer Note 5.3) 30,893.42

8,000.00

146,618.30

71,341.23

Particulars


64


3.8 Subscription of Share Capital

Subsequent to Balance Sheet date, the Company has received Share Capital subscription amount of Rs.28,800

lakh from the Holding Company, Equitas Holdings Limited (EHL) on 22 April 2016. The Company has issued and

allotted on a rights basis, 10,06,99,300 equity shares of Rs. 10/- each at a price of Rs.28.60 per share on 22 April

2016 to EHL, resulting in an increase of Paid up Share capital by Rs.10,069.93 Lakhs


5 1.

(a)

As at 3 21 March 016


Nos Face value Rs. in a L khs Rs. in a L khs

A. S decure

12.67% 28 May 2019 600 1,000,000 6,000.00 6,000.00 Not applicable Not applicable

13.40% 11 April 2019 230 1,000,000 - 2,300.00 P t &u Call 11 April 2015 & 11 April 2017

13.00% 11 April 2019 230 1,000,000 2,300.00 - P t &u Call 11 April 2015 & 11 April 2017

13.70% 25 September 2015 250 1,000,000 - 2,500.00 Not applicable Not applicable

13.50%30 January 2017 - Quarterly Installments Commencing from

350 1,000,000 1,750.00 3,500.00 Not applicable Not applicable

12.50% 26 May 2017 1000 1,000,000 10,000.00 - Not applicable Not applicable

12.50% 16 June 2017 750 1,000,000 7,500.00 - Not applicable Not applicable

12.13% 28 June 2018 750 1,000,000 7,500.00

35,050.00 14,300.00

B. nsecured -U Subordinated Debt

16.00% 30 April 2021 300 1,000,000 3,000.00 3,000.00 Not applicable Not applicable

14.04% 1 J une 2019 500 1,000,000 5,000.00 5,000.00 Not applicable Not applicable

13.80% 16 September 2022 300 1,000,000 3,000.00 Not applicable Not applicable

14.05% 28 September 2022 1200 1,000,000 12,000.00 Not applicable Not applicable

23,000.00 8,000.00

58,050.00 22,300.00

56,300.00 18,050.00

Total

Total

Details of Debentures issued by the Company

Repayment terms

C poou n Rate

Sub total

Dates of Options available

Less : Current Maturities of Long-Term Borrowings (Ref er Note 8)

(4,250.00)

Nature of avaliable

( ,1 750.00)

* Balanc as on 0 epay are 31st March 2 16 is r able in 4 qu terly instalments.

Maturity DateDe eb nture details

Sub total

(b) The Secured, Redeemable, Non-Convertible Debentures are secured by hypothecation of specified

Receivables under Financing Activities.

(c) The above Non-Convertible Debentures are listed on BSE Limited (Bombay Stock Exchange). Further, the

Company has entered into an agreement with IDBI Trusteeship Services Limited to act as Debentures

Trustees for the Debentures.

(d) The Company has not defaulted in the repayment of dues to Debenture holders.

Options

30 April 2015 *


65



(e) As per the terms of Trust deed for the NCD's issued by the Company amounting to Rs.51,987.50 Lakhs (Previous

Year - Rs. 13,300.00 Lakhs) , the Company should not declare / pay dividend to the Shareholders without the

express consent from the Debenture holders/Trustee in case of dues to Debenture holders/Trustee.

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 Fixed Deposits with Banks (Refer Notes 17 & 20).

(b) The Company has not defaulted in the repayment of dues to banks.

(c) As per the terms of agreement entered into by the Company for Borrowings with lenders ,amounting to

Rs.122,380.54 Lakhs (Previous Year - Rs.71,079.31 Lakhs), the Company should not declare / pay

dividend to the Shareholders without the express consent from the Banks in case of overdue to the Banks

in loan installments / interest payments.

( )d T terhe details of in est rate, tenor, repayment terms of the Term Loans from Banks are as follows:

S.No.Tenor

(in Months)Interest Rate

(%)

Repayment Terms

Rate of Interest Fixed /Floating

No. of Installments outstanding as on

3 21 March 016

Loan Amount as at 31 March 2016

Rs. in a L khs


Rs. in a L khs

1 24 13.50% Mo thn ly Fixed 0 - 2,333.33

2 27 13.70% Mo thn ly Floating 0 - 104.17


4 24 13.70% Mo thn ly Fixed 0 - 578.47


6 60 12.75% Q lyuarter Floating 0 - 4,444.44



9 36 13.85% Mo thn ly Floating 0 - 1,117.84



12 24 12.33% Q lyuarter Floating 0 - 857.12

13 24 13.65% Mo thn ly Fixed 0 - 2,062.50


15 24 13.50% Mo thn ly Fixed 0 - 3,467.89

16 24 13.70% Q lyuarter Floating 0 - 714.25



19 24 13.65% Q lyuarter Fixed 0 - 1,250.00

20 24 12.50% Mo thn ly Floating 0 - 4,404.76

21 24 13.50% Mo thn ly Fixed 0 - 1,533.38

22 24 13.90% Q lyuarter Fixed 0 - 1,125.00



25 24 11.90% On Maturity Fixed 1 5,000.00 5,000.00

26 24 11.50% Mo thn ly Floating 6 2,500.00 7,500.00



29 24 13.30% Q lyuarter Floating 2 625.00 1,875.00

30 24 13.50% Mo thn ly Fixed 5 1,785.72

6,071.43

66



S.No.Tenor


(%)Repayment

TermsRate of Interest Fixed /Floating


3 21 March 016


Rs. in a L khs


Rs. in a L khs

41 24 11.90% Q lyuarter Floating 12 1,499.15 2,500.00

42 24 13.45% Mo thn ly Fixed 5 2,083.33 7,083.33



45 24 13.05% Mo thn ly Floating 3 300.00 1,500.00

46 24 11.50% Mo thn ly Floating 24 19,375.00

47 24 11.25% Q lyuarter Floating 7 15,000.00


49 24 12.00% Mo thn ly Fixed 18 8,250.00


51 24 11.50% Mo thn ly Fixed 18 5,541.66


53 24 11.75% Mo thn ly Fixed 17 4,250.00


55 24 11.75% Q lyuarter Fixed 7 3,500.00 56 24 13.45% Mo thn ly Fixed 8 2,000.00


58 24 12.00% Q lyuarter Fixed 6 2,142.86








Total 171,243.36 126,685.35

(111,818.48) (81,394.12)

L ng o Term Borrowings from Banks 59,424.88 45,291.23

Less : Current Maturities of Long-Term Borrowings (Refer Note 8)

37 24 13.00% Q lyuarter Fixed 4 2,562.50 5,312.50


39 27 13.25% Mo thn ly Floating 0 -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2,933.33

40 28 12.80% Mo thn ly Floating 14 875.00 1,500.00

31 24 11.00% Mo thn ly Fixed 12 4,285.71 7,500.00


33 24 13.10% Mo thn ly Fixed 6 1,125.00 3,375.00

34 24 12.60% Mo thn ly Fixed 10 1,250.00 2,750.00


36 24 13.50% Q lyuarter Fixed 2 1,200.00 3,600.00

Notes:

(i) Interest rates are on floating / fixed rate basis and is payable on monthly basis. The interest rates

disclosed above represents the rate of interest as at 31 March 2016. The repayment of principal

portion is on monthly, quarterly and / or bullet basis.

(ii) In addition to the hypothecation of specified Receivables under financing activities, Long-Term loans

from Banks amounting to Rs. Nil (Previous Year - Rs.14,298.21 Lakhs) (including the Current

Maturities of Long-Term Borrowings) are guaranteed by Equitas Holdings Limited (Holding

Company).67


5.3 Details of Term Loans from Other Parties - Secured

61 11.75% Mo thn ly Fixed - - 992.65

24 13.75% Mo thn ly Fixed - -

285.77

36 13.00% Mo thn ly Fixed - -

7,500.00

36 13.00% Mo thn ly Fixed 24 6,000.00

36 12.00% Mo thn ly Fixed 30 20,000.00

36 10.25% Half Yearly Fixed 5 8,333.33


24 13.50% Mo thn ly Floating 5,000.00


36 10.00% Mo thn ly Fixed 28 3,180.00

36 10.00% Mo thn ly Fixed 31 3,522.00

36 11.40% Mo thn ly Floating 33 4,000.00

52,802.33

13,778.42

( 12 ,908.91)

( ,75 78.42)

L ng o Term Borrowings from Other Parties 30,893.42

8,000.00

* Borrowings are subject to Dividend restriction clause.

Less : Current Maturities of Long-Term Borrowings (Refer Note 8)

S.No.Tenor


(%)Repayment

TermsRate of Interest Fixed /Floating


3 21 March 016


Rs. in a L khs


Rs. in a L khs

1

2

3

4

5

6

7

8

9

10

11

12*


A t s a A t s a3 01 March 2 16 3 01 March 2 15

Rs. in Lakhs Rs. in Lakhs

6 Other -Long Term Liabilities

Unamortised Income

- Processing Fee 945.53

574.58

er Ret ed - Int est Strip ain on Securitisation of Receivables 576.44

460.92

1,521.97 1,035.50

Particulars

68

Notes:

(I) Interest rates are on both fixed / floating rate basis and is payable on monthly and half yearly basis.

The interest rates disclosed above represents the rate of interest as at 31 March 2016. The repayment

of principal portion is on monthly and half yearly basis.

(ii) In addition to the hypothecation of specified Receivables under financing activities, the above Long-

Term loans from other parties amounting to Rs.Nil Lakhs (Previous Year - Rs.992.65 Lakhs) (including

the Current Maturities of Long-Term Borrowings) are guaranteed by Equitas Holdings Limited

(Holding Company).

(iii) As per the terms of agreement entered into by the Company for Borrowings from others amounting

to Rs.4,000.00 Lakhs (Previous Year - Rs.5,000.00 Lakhs), the Company should not pay dividend to the

Shareholders without the express consent from the parties in case of overdue to the parties in loan

installments / interest payments.

E tqui as Micro Finance Limited (Formerly known as Equitas Micro Finance Private Limited)Not s f na stae orming part of the Fi ncial tements for Year ended 31 March 2016


69



8

Red mabee le Non-Convertible Debentures (Refer Note 5.1) 1,750.00 4, 00 250.

Term Loans - Secured

Fr m B s - e o ank (Refer Not 5.2) 111,818.48

81,394.12

Fr m Otho er Parties - (Refer Note 5.3) 21,908.91

5,778.42

135,477.39

91,422.54

C r s of L g-Tur ent Maturitie on erm Borrowings

Particulars



9 Trade Payables

Trade Payables (Refer Note 35)

9.1 Dues of micro enterprises and small enterprise -

0 5. 6

9.2 Dues of ed o s o h Cr it r t er than micro enterprises and small enterprise 2,251.78

1,361.18

2,251.78

1,361.74



10

G et (Ref No 30 2ratuity (N ) er te . ) 35.97

90.03

Adv n r owance i stalments from bo r ers 70.35

1,442.21

I t dnterest accrued but no ue on borrowings 2,839.91 1,503.83

Unamortised income ee - Processing f 2,075.89 1,390.60 er s r - Int est strip retained on ecu itisation of receivables 5,704.18 4,147.74

St esatutory du 139.31 98.96

8,068.05 6,044.36

18,933.66

14,717.73

Particulars

Particulars

Amou e nt payabl to Special Purpose Vehicles for assets d eco ne-r g ised

Other n Li biCurre t a lities



7 Long T- erm Provisions (Ref No e 3er t 8)

1,203.85 703.71

12.94

3 3. 5

684.98

151.42

1,901.77

858.48

C nt n f dar abl o i gent Provision or Stan d Receiv es under Financing Activities

Particulars

Pr s on o an dovi i f r Sub-st dar and Doubtful Receivables under Financing Activities

Pr s on oovi i f r Credit Enhancements on Assets De-Recognised

E tqui as Micro Finance Limited (Formerly known as Equitas Micro Finance Private Limited)Not s f na stae orming part of the Fi ncial tements for Year ended 31 March 2016

-A t s a A t s a

3 01 March 2 16 3 01 March 2 15Rs. in Lakhs Rs. in Lakhs

11 S Thort- erm Provisions

P mp oy ne srovision - E l ee Be fit

Pr s on oovi i f r Compensated Absences 1,192.63

724.38

P herrovision - Ot s (Ref No e 3er t 8)

2,007.88

1,323.79

414.03

84.26

199.06

499.47

3,813.60

2,631.90

Pr s on o an dovi i f r Sub-st dar and Doubtful Receivables under Financing Activities

Pr s on oovi i f r Credit Enhancements on Assets De-Recognised

C nt n f dar abl o i gent Provision or Stan d Receiv es under Financing Activities

Particulars


70

Equ

s M

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for Y

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For

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Rs. i

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Elim

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Rs. i

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as

at

31M

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12.1

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Ass

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- Ow

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Les

hd

mp

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men

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1013

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4428

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5.

Com

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1,39

724.

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1,97

568.

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844.

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263.

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8.54

3949

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8.54

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Of

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810.

1677

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9.36

4795

5.

1830

6.

1022

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9.36

2789

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Vehi

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3924

4.

1482

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6260.

4746

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6584.

9318.

2122.

1380

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63

1,16

7.89

149.

66

3,76

8.86

1,73

9.55

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9.29

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21.7

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702.

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546.

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1.75

1,18

9.64

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2,28

6.34

738.

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7.71

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31

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1234

3.

7205

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3880

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3603.

1906

9.

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1,45

9.57

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9445.

1333

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5

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1,55

4.02

1,14

5.41

Net

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72

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. in

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6.

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2132

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3.

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280.

3981

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1,39

724.

8795

9.

1383

3.

5.43

1,00

844.

3880

8.

1285

2.

2318

5.68

53.

6.30

2968

7.

2119

7.

5049.

6.30

2665

1.

3603.

1799.

1780

9.14

177.

6.61

3281

0.

1451

0.

5136.

5.75

1830

6.

1351

4.

3929.

5943.

3910

3.58

29.

3924

4.

2274.

7080.

2770.

6584.

3240

8.

3669.

1,72

4.34

1,16

3.35

137.

06

2,75

0.63

1,48

7.37

358.

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105.

85

1,73

9.55

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236.

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-

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1.

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9.

3681.

-

5479

6.

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4.

2135.

531.

3314

9.79

-

681.

12

509.

98

36.8

1

-

546.

79

134.

33

21.3

5

2,25

5.67

1,31

3.14

137.

06

3,43

1.75

1,99

7.35

394.

84

105.

85

2,28

6.34

1,14

5.41

258.

32

Net

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Ass

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13

14

Non-Current Investments - Trade - Unquoted, at Cost

Investment in Equity Shares

Alph Mic Finan o Priva ro ce C nsultants ate Limited 20.00

20.00

20.00

20.00

Aggregate amount of unquoted investments - Cost 20.00

20.00

Def derre Tax Assets

T efhe D erred Tax Asset of Rs.2,374.91 Lakhs as at 31 March 2016 has arisen on account of the following:

As a t 1 April 0 2 15Rs. in a L khs

C t redi / (Charged)Rs. in a L khs


Rs. in a L khs

54.11 14.52 68.63

701.68 409.83 1,111.51

30.32 117.45 147.77

225.25 80.70 305.95

344.10 363.93 708.03

16.75

16.27

33.02

1,372.21 1,002.70 2,374.91

Particulars

Particulars

Def derre Tax Assets

200,000 (As at 31 March 2015 - 200,000) Equity Shares of Rs. 10 each fully paid, which represents 6.20% of

Shar pane capital of the com y.

Deferred Tax Assets

Difference between depreciation as per Books of Account and Income Tax Act, 1961

Contingent Provision for Standard Assets under Financing Activities

Provision for Sub-Standard and Doubtful Receivables under Financing Activities

Provision for Credit Enhancements on Assets De-Recognized

Employee Benefits

Provision for doubtful advances


73




15 L ng-o Term Receivables Under Financing Activities( rRep esents Installments Due after one year from the reporting date)

Mic anc L Unsecuro Fin e oans - red 96,324.40

56,251.76

-

64.75

96,324.40

56,316.51

Note:

Of v the abo e:

- Considered Good (Standard Assets ) 96,289.78

56,308.61 34.62

7.90



16 L ng-o Term Loans and Advances

C ital advap ance - Unsecured, Considered Good 337.50 -

Secu ity D sr epo its (Also Refer Note 36)

- r Unsecu ed, Considered Good 464.22 409.00

- r Unsecu ed, Considered Doubtful 34.96 3.66

499.18

412.66

Less : Provision for Doubtful Deposits 34.96 3.66

464.22 409.00

Loans to Employees

- ur Sec ed, Considered Good 16.13

15.34

- r Unsecu ed, Considered Good 263.56

37.26

279.69

52.60

1,345.00

345.00

297.34

169.68

2,723.75

976.28

Mic anc L nh rro Fin e oans Subordinated as Credit E ancements fo Assets

De-Recognised - Unsecured

Adv me Tance Inco ax [Net of Provision for Income Tax Rs.12,575.00 Lakhs (Previous Year Rs.9,756.01 Lakhs)] - rUnsecu ed, Considered Good

D sits epo - on lien against borrowings (Refer Note 5.3) - Unsecured, Considered Good

- Others (Sub-Standard and Doubtful Receivables under

anc Activities as an Fin ing per Comp y's Provisioning Norms)

(Refer Note 7 for Provision for Sub-Standard and Doubtful Receivables under Financing Activities)

Particulars

Particulars


74


Not s f na stae orming part of the Fi ncial tements for Year ended 31 March 2016


75

As at As at 3 21 March 016

Rs. in a L khs

17 O her Nt on-Current Assets

Inter fest Strip Retained on Securitisation o Receivables 576.44

Interest Accrued But Not Due D Bank- on eposits with s / Others 125.97

5,664.30

6,366.71

Note:

Ban D sits nder Lienk epo u

- Cash Collateral for Assets De-recognised 5,251.80

- Cash Collateral for Term Loans obtained from Banks 412.50


Rs. in a L khs

18 C rre tu n Investments (At cost )

O her C rre tt u n Investments :

Investment in Mutual Funds- (Refer Note 18.1) -

-

18.1 Details of Investments in Mutual Funds :

Name of the Scheme No. of Units Face Value As at

(Rs.)

Barod Pio L ect Plan - ra neer iquid Fund - Dir G owth 93,501.80

1,000.00

IDFC Cash Fund - Direct Plan - Growth 88,263.20

1,000.00

IC neyICI Prudential Mo Market Fund - Direct - Growth 775,563.74

100.00

SBI Pr nd Gr themier Liquid Fu - ow 68,249.29

1,000.00

Birla Sun L ife Floating Rate Fund - Direct Plan - Growth 805,686.21

100.00

HD nd DFC Liquid Fu - irect Plan-Growth 5,434,821.99

10.00

Tata Liquid Fund - Direct Plan - Growth 58,101.51

1,000.00

D k c L t PSP Blac Ro k iquidity Fund - Direc lan 74,988.04

1,000.00

AXIS Liquid Fund - Direct Plan - Growth 96,762.40

1,000.00

ID Liqu irBI id Fund - D ect Plan - Growth 100,069.05

1,000.00

Total

Aggregate Market Value of Quoted Investments as at 31 March 2016 - Rs.Nil (as at 31 March 2015 -

Rs.15,009.17 Lakhs).

Ban D sits nder Lien having rity onthsk epo u Matu after 12 m(Refer Note Below)

Particulars

Particulars

3 21 March 015Rs. in a L khs

460.92

167.17

5,080.50

5,708.59

4,468.00

612.50


Rs. in a L khs

15,000.00

15,000.00

3 21 March 015

(Rs .in Lakhs)

1,500.00

1,500.00

1,500.00

1,500.001,500.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

15,000.00



76

A t s a

A t s a

A t s a

A t s a

3 01 March 2 16

3 01 March 2 16

3 01 March 2 15

3 01 March 2 15

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

Rs. in Lakhs

S Thort- erm Receivables Under Financing Activities

Mi ocr Finance Loans - Unsecured t l d - Ins al ments ue within one year from the reporting date 160,658.36

105,093.90

-

847.25

235.52

36.71

309.46

30.08

161,203.34

106,007.94

Not :e

Of the above:

- Considered Good (Standard Assets ) 160,648.22

105,890.50

555.12

117.44

20

19

C sh nd C quia a ash E valents

C onash Hand 43.81

152.21

Balances with Banks

- In Current Accounts 16,157.78

10,498.83

- In Deposits Accounts - Free of Lien 55,000.00

11,000.00

- In Deposits Accounts - Under Lien (Refer Note(b)) 4,830.50

5,173.81

Total 76,032.09

26,824.85

Not s:e

(a) 71,201.59

21,651.04

(b) Depo i s t Accounts under Lien: e- eco n - Cash Collateral for Assets D r g ised 4,718.00

4,486.31

Bank - Cash Collateral for Term Loans obtained from s 112.50

687.50

Particulars

Particulars

Of the above, the balances that meet the definition of Cash and cash equival ents as per AS 3 Cash Flow Statements is

Mi ocr Finance Loans Subordinated as Credit Enhancements for Assets De-Recog i ed n s - Unsecured

I s r Fin tallments overdue on Mic o nance Loans - Unsecured - More than six months from the date they were due for payment

- Others (Sub-Standard and Doubtful Receivables under

Financing Activities as per Company's Provisioning Norms(Refer N eot 11 for Pr s onovi i for Sub and d-St ar andDou fbt ul Recei esvabl underFinancing Acti iv ties)

- Others

As at As at 31 March 2016 31 March 2015

R ks. in La hs R ks. in La hs

21 Short Term Loans and Advances

L n a d A v nc s to Employ eoa s n d a e e s

- S cu d, C nsi ee re o d red Good 33.68

25.87

- Unsecured, Considered Good 263 47.

97.45

- Unsecured, Considered Doubtful 30.61

21.09

327 76.

144 41.

30.61

21.09

297 15.

123 32.

Prepaid Expenses - Unsecured, Considered Good 104 22.

130 42.

55.41

42.57

-

666 10.

386 79. 306 06.

1,067.56 587 21.

1,911.13 1,855.68

As at As at 31 March 2016 31 March 2015

R ks. in La hs R ks. in La hs

22 Oth r se Current As ets

Gold Coins 0.07

I re t e ut Not D ente s Accru d B u

- on R s un r F n nc n Acteceivable de i a i g ivities 1,903.49

1,400.43

- on De osip ts with Banks / Others 290 78.

351 88.

I re t t ined on is c i blnte s S rip Reta Securit ation of Re e va es 5,704.18

4,147.74

I s ra en u nc Claims Receivable

- C nsi eo d red Good 63.80

40.03

- C nsi e t lo d red Doub fu 29.84

23.65

93.64

63.68

L sse : Provision for Doubtful Claims 29.84

23.65

63.80

40.03

81.01

74.19

8,043.33

6,014.34

R s from at d P ieceivable Rel e art es - U se ured, Con d re Gon c si e d od (Refer Note 32.2)

L sse : Provision for Doubtful Loans and Advances to Employees

Particulars

Particulars

S r a Oupplie nd ther Advances

- Unsecured, Considered Good

R s from p c aeceivable S e i l Purpose Vehicles for Assets De-recognised


B la ances with Government Authorities

e -S rvice Tax Input Credit - Unsecured, Considered Good

De spo its - on lien against borrowings (Refer Note 5.3)





77

Fo the Yea Er r nded

3 h 21 Marc 016

Rs. in Lakhs

Fo the Year Er nded

3 h 21 Marc 015

Rs. in Lakhs

23 Revenue from Operations

Interes co e from anst In m Lo 49,689.69

36,091.77

Processing and Other Fees 2,115.69

1,536.81

5,819.05

4,084.37

Other Operating Revenues

993.46

790.06

-

31.99

al d- Gain on Sale of Current Investments in Mutu Fun s 997.76

584.72

sin- Bu ess Sourcing and Facilitation 632.40

309.21

48.74

83.98

s As- Los sets Recovered 12.02

8.34

60,308.81

43,521.25

Fo the Yea Er r nded 3 h 21 Marc 016

Rs. in Lakhs

Fo the Year Er nded 3 h 21 Marc 015

Rs. in Lakhs

24 Other ome Inc

Interes co e t In m

- on Loans / Deposits to Related Parties -

209.52

- on Loans to Employees 44.20

26.47

Pro s ( etfit on Sale of Fixed Asset n ) 1.92

6.51

Provision no longer required written back 4.95 -

Miscellaneous Income 282.64 34.41

Total333.71 276.91

Particulars

Particulars

nal Finan Corp- Grant from Internatio ce oration

(Refer Note 23.1)

m ank t- Interest Inco e on Fixed Deposits with B s / O hers

come n Pass T- In o hrough Certificates

Interes pt s read on Securitisation / Assignment of Receivables



23.1(IFC) to expand access to financial services among low income households in India for which, the Company is eligible to receive a revenue grant of USD 300,000 over a period of 3 years, subject to the Company meeting the 'Performance Indicators' set out in the agreement. During the year, on achievement of the 'Performance Indicators' the Company has received and accounted an amount of USD 79,627 (equivalent Rs.48.74 Lakhs) [previous year USD 140,000 (equivalent Rs.83.98 Lakhs)] as income for year ended 31 March 2016.

The Company has entered into a Grant Agreement dated 28 June 2012 with, the International Finance Corporation


78


Rs. in Lakhs


Rs. in Lakhs

26 Finance Costs

Interes n Lot o ans 19,627.92 16,094.77

Interes n Deb tt o en ures 6,182.52 2,332.04

Loan Processing Fees and Other Borrowing Costs 395.93 273.11

26,206.37

18,699.92


Rs. in Lakhs


Rs. in Lakhs

27 Provisions and Write Offs

1,184.23

546.88

339.36

79.94

233.15

254.22

14.03

94.91

Less : -

(80.29)

14.03

14.62

1,770.77

895.66

Release from Provision for Sub tand-s ard and Doubtful ReceivablesUnder FinancingActivities

Contingent Provision for Standard Receivables Under Financing Activities (Net)

Particulars

Particulars

Provision for Sub-standard and Doubtful Receivables Under Financing Activities

Provision for Credit Enhancements on Assets De- Recognised (Net)

Lo en Oss Assets Writt ff




R . s in Lakhs


Rs. in Lakhs

25 E enef E e employee B its xp ns

Salaries 10,810.77

7,077.28

Contribution to Provident Fund and other funds 870.77

640.92

Staff Welfare Expenses 1,374.60

984.65

13,056.14

8,702.85

Particulars


79

o F r the Year Ended 3 c 1 Mar h 2016

Rs in. Lakhs

o F r the Year Ended 3 c 1 Mar h 2015

Rs in. Lakhs

28 Other Expenses

Rent (Refer Note 33) 544.40 433.80

Elect gesricity Char 115.41 106.61

Rates and Taxes 413.12 205.88

Insurance 11.18 24.72

S ftw h Mao are & Ot er intenance Expenses 630.36 414.09

Repairs and Maintenance - Others 195.08 157.60

Cash Ma nagement Charges 478.20 400.38

Travelling and Conveyance 1,575.38 1,129.67

Communication Expenses 696.89 568.21

Pr n i a ti t ng nd S ationery 541.36 448.24

Adve t semen anr i t d Business Promotion 122.33

4.19

Lega al nd Professional Charges 403.93

301.27

N n Eo xecutive Directors Remuneration and Sitting Fees 77.91

85.63

Corporate Social Responsibility (Refer Note 48)

io- Donat ns 305.60

235.00 e- Other Expenditur 47.14

43.93

Auditors' Remuneration (Net of Service Tax)

t tor t - Sta u y Audi 13.50

15.25 ed R - Limit eview 3.75

3.75

t - Tax Audi 3.25

3.00 t n - Certifica io 1.83

2.35

- Reimbursement of Expenses 0.47

0.14

Employee Loans and Advances / Insurance Claims Written off -

0.65 -

(0.65)

-

52.16

9.72

Ba Chnk arges 82.43

33.84

Miscellaneous Expenses 72.85

64.33

6 3, 88.53 4 6, 91.60

Par i lt cu ars

Provision for Doubtful Employee Loans / Insurance Claims

Less : Releasefrom Provisionfor D ub fo t ulEmployeeLoansand Advances/ Insurance

Claims




80

29 As nmsig ent / Securitisation

29.1 Securitization of Assets:

For the Ye r Enda ed

3 01 March 2 16 Number / Rs. in Lakhs

For the Ye r nda E ed

3 01 March 2 15 Number / Rs. in Lakhs

555,392 612,443

66,154.97 57,505.05

- 410.42

66,154.97 57,505.05

7,860.33 6,513.87

5,726.80 5,267.00

6,280.62 4,608.66

5,819.05

4,084.37

T hotal Number of Loan Assets Securitized during t e Year

B e o o dook Valu f L ans Assets Securitized uring the Year

A er t I G is p he RB u delines on Securitization of Standard Assets issued on 6 February 2006, the details of Assets De-recognised by way of securitisation is as under:

Total Gain on account of Securitisation to be amortised over the life of the Receivables

S e Co s d ec ual n i eration R eived d ring the Year

Interest s rp ead Recognised in theStatement of Profit and L sso during theperiod (including amortization of Unamortised Income) (Refer Note 23)

Qu nta um of Credit Enhancement p o dedr vi duringthe Year in the form ofDeposits/Corporate Guarantee

Pa ularrtic s

Un at r en-amortised Income as yea d (Refer Note 6 & 10)

M c a En oi ro Finance Loans Subordin ted as Credit hancements f r Assets De-Recognised




81

29.2

S.No.

As at3 01 March 2 16

Number / Rs. in Lakhs

As at3 01 March 2 15

Number / Rs. In Lakhs

1 14 13

2 70,723.22 52,070.66

3

a) f c o r O f-balan e sheet exp su es

- First loss -

-

225

-

b O) n-balance sheet exposures

- First loss (Cash Collateral) 9,969.80

8,954.31

- First loss (Micro Finance Loans) - 912.00 - -

4

a) f c o r O f-balan e sheet exp su es

Exp sure too own securitisations

- First loss - - - t O hers -

-

b O) n-balance sheet exposures

i) Exp s re to u o own securitisations

- First loss -

- 1,067.56

587.21

ii Exp sure to ird u) o th party sec ritisations

- First loss -

- - t O hers -

-

Note :

Th e d l su e is p o ded tee o he SPV' h ec ri

e abov isc o r r vi based on the certified statement provided by the Trus f t s w ohave purchased the S u tised Assets.

Total amountof exp su eso r retainedby the N FB C to c yompl with M ni imum

Retention Ratio (MRR) as on the date of balance sheet

- t (I O hers nvestment in Pass through Certificates)

A o nt f exp su es isa o t s s er m u o o r to securit ti n ran action oth than MRR

- t (R O hers eceivables from SPV's for Assets

De-recognised)

Pa ularrtic s

- t (C O hers orporate Gurantee)

N .o of S ec alp i Purpose Veh lic e's (SPV's) sponsored by the N FB C forsecuritisation transactions (Nos.)

Total amount of securitised assets as per books of the SPVs sponsored by the NBFC

D sc es suant t R nd e i wi losur pur o eserve Bank of I ia Guidelines on Corporate Governance - R v e , RBI/2014-15/552 DNBR (PD) CC.No. 029/ 03.10.001/ 2014-15 dated 10 April 2015.




82

P ararticul s r e Fo th Year Ended

3 M 61 arch 201Rs. in Lakhs

r e Fo th Year Ended 3 M 51 arch 201

Rs. in Lakhs

Change in defined benefit obligations during the Year

Present value of Defined Benefit Obligation at beginning of the Year 492.33

279.68

C t ce osurren Servi C t 209.23

235.21

Interest cost 4 57. 0

2 66. 6

Benefits Paid ( 2. 04 8 )

( . 929 0 )

Actuar a i l (Gains) ( 4. 13 6 )

( . 320 1 )

P e o Defiresent valu f ned Benefit Obligation at End of the Year

671.65

492.33

Ch i e ange in Fa r Value of Assets during th Year Plan Assets at Beginning of the Year 402.30

277.87

E pectx ed Return on Plan Assets 4 95. 3

2 77. 3

Actual pa C r but Com ny ont i ions 276.18

9 17. 4

Benefits Paid Out of the Assets -

( )0.46 Actuar a ii l Ga n / (Loss) ( 8. 38 7 )

0 02.

P t E d o thlan Assets a n f e Year 635.68

402.30

Liability Recognised in the Balance Sheet

Present Value of Defined Benefit Obligation 671.65

492.33

Fair Value of Plan Assets 635.68

402.30

Net abLi ility Recognised in the Balance Sheet 35.97

90.03

Co o Defist f ned Benefit Plan for the Year

C t ce osurren Servi C t 209.23

235.21

Interest Cost 4 57. 0

2 66. 6

E pectx ed Return on Plan Assets ( 5. 34 9 )

( . 327 7 )

Net Actuarial Gains 5 14. 0

( . 520 1 )

Net t gn oCos Reco ized in the Statement of Pr fit and Loss 264.90

213.99

Re u n ot r n Plan Assets ( 2. 04 8 )

2 77. 5

Assumptions

7 80. % 7 80. %

8 50. % 8 50. %

F e alar ncr sutur S y I ea e (Refer Note (a)) 1 00. 0% 1 00. 0%

M a it ort l y Table Indian Assured Lives (2006 - 08

Indian Assured Lives (2006 - 08

Attrition rate (Refer Note (a)) 2 00. 0% 2 00. 0%

D scounti Rate (Refer Note (b))

Interest Rate (Rate of Return on Assets)



30 Employee Benefits

30.1 Defined Contribution Plan

The Company makes Provident Fund contributions to State administered fund for qualifying employees. The Company is required to contribute a specified percentage of the payroll costs to the Fund. The Company recognised Rs.605.87 Lakhs (Previous Year: Rs.426.92 Lakhs) towards Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to the fund by the Company is at rates specified in the rules of the scheme.

30.2 Defined Benefit Plans

The Company has a funded gratuity scheme for its employees and the Gratuity liability has been made based on the actuarial valuation done as at the year end. The details of actuarial valuation as provided by the Independent Actuary is as follows:


83

P ararticul s

r e Fo th Year Ended

31 March 2016Rs. in Lakhs









Projected Benefit Obligation 671.65

492.33

279.68

192.93

121.21

Fair Value of Plan Assets 635.68

402.30

277.87

-

-

S ( efurplus/ D icit) ( . 735 9 )

( . 390 0 )

( . )1 81

( 92 91 . 3)

( 1 212 . 1)

E per ence x i Adjustments on Plan Liabilities - Gains ( . 134 6 )

( . 320 1 )

1 75. 7

( . )7 05

( . 919 4 )

( . 388 7 ) 0 02. ( 1. 11 8 ) - -



Assumptions:

D scounti Rate 7 80. % 7 80. %

F e alar ncr sutur S y I ea e 1 00. 0% 1 00. 0%

Attrition rate 2 00. 0% 2 00. 0%

P ararticul s

E per ence x i Adjustments on Plan Assets - Gains / (Losses)



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 affecting 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) Experience Adjustments:

30.3 Compensated Absences

The key assumptions used in the computation of provision for long term compensated absences as per the

Actuarial Valuation done by an Independent Actuary are as given below:

31 Segment Reporting

revolve around the main business. As such there are no separate business and geographic reportable

segments as per AS-17 “Segment Reporting”.

The Company is primarily engaged in the business of Micro Finance in India. All the activities of the Company


84

d) 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

.e) Estimated amount of contribution to the funds during the year ending 31 March 2017 as estimated by the

management is Rs.278.00 Lakhs (Previous Year: Rs.215.00 Lakhs)

32 Rel ated Party Transactions32.1 Names f a po Rel ted Parties and Nature of Relationshi

Des r pc i tion of Relationship

Holding Company Equitas Holdings Limited

Fellow Subsidiaries

Equitas Housing Finance Limited

Equitas B2B Trading Limited

Equitas Dhanyakosha India Equitas Dhanyakosha India

Equitas Development Initiatives Trust

Note:Related party relationships are as identified by the Management.

32.2 Transactions with the Related Parties

Transaction


Rs. in Lakhs


3 M 51 arch 201Rs. in Lakhs

Income

Equitas Finance Limited - 112.71

- 9 03. 8

- 3 73.

Equitas Finance Limited 695.15 289.45

25.80 1 79. 6

Equitas Holdings Limited 2.05 5.06

120.74 382.76

15.63 2 98. 3

- 0 10.

0.01 0 94.

95.67 0 35.

0.01 -

E px enses

Staff Welfare Expenses 9 55. 6

0 72.

- 0 90.

Equitas Holdings Limited 4.52 -

Equitas Finance Limited 11.13 2 26. 3

- 4 80. 8

72.86 7 61.

57.53 1 99. 5

12.06 4 77.

D ionat ons 305.60 235.00

* ountAm stated above is inclusive of Service Tax.

As a t 31 March 2015


Business Sourcing and Facilitation Fee *


Interest on Loans / Deposit

Recovery of Expenses

Equitas B2B Trading Private Limited

Equitas Dhanyakosha India


Entities where the Holding Company has Control

K eney Managem t Personnel

Equitas Technologies Private Limited

Equitas Technologies Private Limited

As at 31 March 2016

Equitas Finance Limited

Equitas Holdings Limited



Rel ated Party

N. Sridharan, Chief Financial Officer

KR pa. Sam th Kumar, Company Secretary

P.N.Vasudevan, Director (Managing Director upto 4 February 2015)

HKN Raghavan, Chief Executive Officer


HKN Raghavan, Chief Executive Officer from 4th February 2015.

N. Sridharan, Chief Financial Officer from 1st N ovembe r 2014.

K paR. Sam th Kumar, Company Secretary from 1st N 1ovember 20 4.





Equitas Dhanyakosha India

Reimbursement of Expenses Equitas Housing Finance Limited

P.N.Vasudevan, Managing Director

HKN Raghavan, Chief Executive Officer

N. Sridharan, Chief Financial Officer

Remuneration to Key Managerial Personnel (excludes

E plm oyer’s share of Contribution to Provident Fund) KR pa. Sam th Kumar, Company Secretary




85

Transaction Related Party F eor th Year Ended

31 Ma 2016rchRs. in Lakhs

F eor th Year Ended 31 Ma 2015rch

Rs. in Lakhs

Other Transactions

- 30.00

- 150.93

Eq t nceui as Fina Limited - 2,800.00

- 2,500.00

Sale of Fixed Assets - 11.02

P cur hase of Fixed Assets Eq t nceui as Fina Limited - 7.54

Eq t e Lui as Housing Financ imited - 6.61

0. 58 1.40

Eq t nceui as Fina Limited 5. 58 4.76

Transfer of Staff loans from related parties on account of employee transfers

2. 48 -

45.15 44.46

80.10 139.50

R nd p id on b haecovered a a e lf of the Company

Eq t tui as Holdings Limi ed - 4.01

G a t s s (reluar n ee i sued / eased) during th Ye ear (net)

Eq t tui as Holdings Limi ed (40,600. )00 (31,100.00)

Balance as at Year End

Eq tui as Dhanyakosha India 0. 21 - Eq t nceui as Fina Limited 1. 57 1. 91

R iece vable Eq t tui as Holdings Limi ed - 11.16 3. 89 4.04

Eq t nceui as Fina Limited 77.12 58.99

C at u r norpor e G a a tee issued by the Holding Company

Eq t tui as Holdings Limi ed - 40,600.00

As t a As t a31 Ma 2016rch 31 Ma 2015rch


L than Oneess Year 377.16

376.50

One Year to Five Years 315.91

302.98

L t r tha Fa e n ive Years - -

R nd p id on b haecovered a a e lf of C su tomers

Eq t tui as Holdings Limi ed

Transfer of Staff loans to Related parties on account of employee transfers

Eq t e Lui as Housing Financ imited

Eq t n sui as Developme t Initiative Trust

Eq t nceui as Fina Limited


Eq tui as Dhanyakosha India

Loans Given Eq t n sui as Developme t Initiative Trust

Eq t n sui as Developme t Initiative Trust

I t Corn er porate Deposit Received back

L r doans Recove e


P u sartic lar

Payable



Note:

The Company accounts for costs incurred by / on behalf of the Related Parties based on the actual invoices / debit notes raised and accruals as confirmed by such related parties. 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.

33 Operating Leases

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.544.40 Lakhs (Previous Year Rs.433.80 Lakhs) was paid towards lease rentals and other charges for the office space. The future minimum lease payments under operating leases are as follows:


86




34 Earn r Sh eings Pe ar

P u sartic lar F eor th Year Ended

31 Ma 2016rch F eor th Year Ended

31 Ma 2015rch

P ofi af rr t te Tax - Rs. in Lakhs 8,035.51

6,855.09

Weighted Average Number of Equity Shares (Nos.) 198,750 00, 0

198,750 00, 0

Ea errnings P Share - Ba is c - in Rs. 4.04

3.45

- Dilut in Red - s. 4.04

3.45

F Vaace lue Per Share - in Rs. 10.00

10.00

35 D es re u d , Small aisclosur q ire under Section 22 of the Micro nd Medium Enterprises Development Act, 2006


Rs. in Lakhs


Rs. in Lakhs

- 0.56

- -

- -

- -

- -

- -

36 Co itmentmm s and Contingencies

P u sartic larAs t a As t a

31 Ma 2016rch 31 Ma 2015rchRs. in Lakhs Rs. in Lakhs

C n b li iontinge t Lia i t es:P ovide t un ma nde r e (ar n F d de nd u r appeal (Refe Not ) below) 187.54

187.54

Service Tax (Refer Note (b) below) 363.95

342.91

I omnc e Tax (Refer Note (c) below 21.15

18.99

Commitments:

-Estimated amount of contracts remaining to be executed

337.50 - on c pit a t nd n et of A n ea al ccoun a ot provided for (N dva c s)

P u sartic lar

Based on and to the extent of information received by the Company from the suppliers during the year regarding their status under the Micro Small and Medium Enterprises Development Act, 2006 (MSMED Act), the relevant particulars for the year ended 31 March 2016 and 31 March 2015 are furnished below:

Principal amount remaining unpaid to any supplier as at the end of the accounting year.

Interest due thereon remaining unpaid to any supplier as at the end of the accounting year.

The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed day

The amount of interest due and payable for the year.

The amount of interest accrued and remaining unpaid at the end of the accounting year.

The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid.

Note:Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

87




88

(a) Provident Fund Demand

An Order dated 22 October 2010 has been received from the Regional Provident Fund Commissioner

demanding an amount of Rs.187.54 Lakhs towards provident fund payment on the incentives / allowances

paid to the employees for the period February 2009 to September 2010. The Company believes that the

claim is untenable and, hence, has filed an appeal with the Employees’ Provident Fund Appellate Tribunal

and has obtained a stay against the said Order. As per the stay Order received from the Employees’

Provident Fund Appellate Tribunal, an amount of Rs.56.26 Lakhs has been deposited with the Employees’

Provident Fund Organisation and included as part of Security Deposits in Note 16 - Long-Term Loans and

Advances. As at 31 March 2016, the case is pending.

(b) Service Tax

I. The Company has received three show cause notices on 6 October 2009,11 October 2010 and 30

August 2011 respectively from the Service Tax authorities disallowing the service tax input credit

claimed by the Company during the period 2008-2011 attributable to input services used for providing

exempt services to the extent of Rs.277.35 Lakhs. Based on professional advice, the Company replied

to the above show cause notice contesting the claim of the Service Tax authorities. There has been no

further progress in this matter.

ii. During the year an order dated 18 Feb 2016 has been passed by Principal Commissioner of Service Tax

directing the company (EMFL) to pay Rs.86.60 Lakhs excluding penalty and interest, stating that the

service fee charged by the company as collection agent on the assigned/ securitized assets is not

representative of actual consideration for the services rendered for the period from 2009 to 2015

under banking and other financial services. The company is in the process of preferring an appeal

against said order.

(c) Income Tax

While completing the Income Tax assessment for the Assessment Year 2012-13 the department vide order

dated 30 March 2015, has added interest on Non performing assets on accrual basis and raised a demand

of Rs.18.99 Lakhs. During the year while completing the Income Tax assessment for the Assessment Year

2013-14 the department vide order dated 19 March 2016 has added tax of Rs.2.16 Lakhs on Interest on

Non performing assets on accrual basis and adjusted, the same in the refund due for the Year. The Company

has filed an appeal against the addition with Commissioner of Income Tax - Appeals. Based on professional

advice, the Company strongly believe that the case will be decided in company's favor and hence no

provision has been considered.

(d) The contingent liabilities stated in note (a) and b (i) above are based on demands raised on Equitas Holdings

Limited (EHL) who is contesting the same with the concerned authorities. These have been assumed by the

Company pursuant to Scheme of Demerger during the year ended 31 March 2012. The proceedings of

these disputes are being undertaken by the Company in the name of EHL. However, the Company has

agreed to compensate EHL for any losses arising on account of the above contingencies.

Further, outflows, if any, arising out of these claims would depend on the outcome of the decision of the

appellate authorities and the Company’s rights to future appeals. No reimbursements are expected.

37 L an o fo P rt olio and Provision for Standard and Non Performing Assets

( )a Cu Yrrent ear

As t Cla t nse ssifica ioL ano Outstanding as at 31 Ma 2016

srch (Gross)

Rs. in Lakh

Provision as at 31 Ma 2016rch

Rs. in Lakhs

L ano Outstanding as at 31 Ma 2016rch (Net)

Rs. in Lakhs

R ndeceivables u er Financing Activities

S n rdta da Assets 256,938 00. 3,211.73 253,726 27.

S b- anda d Au St r ssets 165.87

28.32

137.55

Doubtful Assets 423.87

398.65

25.22

S b Tu otal 589.74 426.97 162.77

Total 257,527.74

3,638.70

253,889.04




38 Changes in Provisions (Refer Note 7 & 11)

(a) Current Year (Rs. in Lakhs)

Pa ti lar cu rs A as t 1 A 2 pril 015 Pr isi n for the Yov o ear Utilization/ Reversal

A as t3 ch 21 Mar 016

2,027.50 3,266.18 (2,081.95) 3,211.73

87.61

350.87

(11.51)

426.97

650.89 739.78 (506.63) 884.04

Total 2,766.00 4,356.83 (2,600.09) 4,522.74

Contingent Pro ivis on for Standard Assetsunder Financing Activities

Pro ivis on for Sub-Standard and DoubtfulReceivables Financing Activities

Pro ivis on for Credit Enhancements on Assets De-Recognised

( )b Previous Year

As t Cla t nse ssifica ioL ano Outstanding as at

31 Ma 2015rch Provision as at 31 Ma 2015rch

Rs. in Lakhs

L ano Outstanding as at 31 Ma 2015rch (Net)

Rs. in Lakhs

R ndeceivables u er Financing Activities

S n rdta da Assets 162,199 11.

2,027.50

160,171 61.

S b- anda d Au St r ssets 36.31

5.97

30.34

Doubtful Assets 89.03

81.64

7.39

S b Tu otal 125.34

87.61

37.73

Total 162,324.45 2,115.11 160,209.34

(Gross) Rs. in Lakhs

89




90

(Rs. in Lakhs)

Pa ti lr cu ars A as t 1 A 2 pril 014 Pr isi n for the Yov o ear Utilization/ Reversal

A as t3 ch 21 Mar 015

1,480.62

2,675.27

(2,128.39)

2,027.50

87.96

79.94

(80.29)

87.61

396.67 718.81 (464.59) 650.89

Total 1,965.25 3,474.02 (2,673.27) 2,766.00

Contingent Pro ivis on for Standard Assetsunder Financing Activities

Pro ivis on for Sub-Standard and DoubtfulReceivables under Financing Activities

Pro ivis on for Credit Enhancements on Assets De-Recognised

(b) Pr i us Yev o ear

39

A. Customer Complaints

S No. A a s t31 March 2016

A a s t31 March 2015

( )a 2 4

( )b 239 66

(c) 236 68

( )d 5 2

B. Details of Registration with Financial Regulators

S No. Re lgu ator Registration No. Registration No.

1 Min y o istr f Company Affairs U65993TN1994PLC028002 U65993TN1994PTC028002

2 R r n ese ve Ba k of India B 07- .00571 B 07- .00571

Penalties levied by the above Regulators - Nil

C. R n a i ned by ati gs ss g Credit Rating Agencies



NA NA

NA NA

CA E R A and CRISIL A-/ Stable CA E R A and CRISIL A-/ Stable

CA E R A and CRISIL A-/ Stable CA E R A and CRISIL A-/ Stable

MFI Grading mfR1 mfR1

CA E R A- and CRISIL A-/ Stable CA E aR A- nd CRISIL A-/ Stable

NA NA

* S ubsequently rating has been upgraded to CRISIL A /Stable in April 2016.

Disclosure Pursuant to Reserve Bank of India Notification DNBR (PD) CC No. 002/03.10.001/2014-15 dt 1. 0 November, 2014

N . o of complaints pending as on March 31

Pa t c lr i u ars

Pa t c lr i u ars

Commercial paper

Working Capital Facility (Cash Credit/WCDL)

Lo Ter ng- m bank facilities*

Lo Ter on Conng- m N - vertible Debentures*

Subordinated Debt*

P petuer al Debt

N . o of complaints pending as on April 01

N . o of complaints received during the year

N . o of complaints redressed during the year

D. Con e rc nt ation of Advances, Exposures and NPA's



Refer Note below Refer Note below

Total Exposure to top four NPA accounts Refer Note below Refer Note below

Refer Note below Refer Note belowP nerce tage of Advances and Exposures to twenty largest borrowers to Total Advances of the NBFC

Pa t c lr i u ars

Total Advances and Exposures to twenty largest borrowers




91

E. Sec witor- se NPAs as on March 31, 2016

S .l NoPercentage of NPAs to Total

A s dvance in that sector as on Percentage of NPAs to Total A s dvance in that sector as on

31 March, 2016 31 March, 2015

1 A tu gricul re & allied activities 0.07% 0.01%

2 MSME 0.16% 0.07%

3 Cor orp ate borrowers NA NA

4 S re vices NA NA

5 Uns e p r onecur d e s al loans NA NA

6 A tu o loans (commercial vehicles) NA NA

7 Oth r loae ns NA NA

F. Move em nt of NPAs

S .l No Pa t c lr i u arsA a s t

31 March 2016R s. in Lakhs


R s. in Lakhs

( )i 0.06% 0.02%

( i)i

125.34 116.89 489.43 118.05 25.03 109.60

589.74 125.34

( ii)i

37.73 28.93

138.56 35.52

13.52 26.72

162.77

37.73

( vi )

87.61

87.96

350.87

79.94

11.51

80.29

426.97

87.61

( )d Closing balance (Refer Note 37)

Move em nt of provisions for NPAs (excluding provisionsons artand d assets)

( ) na Ope ing balance

( )b Provisions made during the year

( Wc) rite-off / write-back of excess provisions

( )d Closing balance

( Rc) eductions during the year

Sector

N Net PAs to Net Advances (%)

Move em nt of NPAs (Gross)


( ) Addb itions during the year

( Rc) eductions during the year

( )d Closing balance (Refer Note 37)

Mov m ne e t of Net NPAs


( ) Addb itions during the year

The Company operates in the business of microfinance providing collateral free loans for fixed amounts ranging from Rs.2,000 to Rs.40,000 to women engaged in various income generating activities. As at 31 March 2016, the Company has provided loans to more than 27.44 Lakhs women and hence, the disclosure relating to concentration to advances, exposures and NPA's are not applicable to the Company.

40 Disclosure Pursuant to Reserve Bank of India Notification DNBS.200/CGM (PK) – 2008 dated 1 August 2008

40.1 Cap tal de ua y Ri A q c atio

A as t31 March 2016

A as t31 March 2015

Tier Ca I pital (Rs in Lakhs) 39,371.01

33,328.69

Tier I Ca I pital (Rs in Lakhs) 19,333.80

6,308.00

Total Capital (Rs in Lakhs) 58,704.81

39,636.69

Total Risk Assets (Rs in Lakhs) 270,509.70

187,363.80

Capital Ratios

Tier Ca I pital as a percentage of Total Risk Assets (%) 14.55% 17.79%

Tier I Ca I pital as a percentage of Total Risk Assets (%) 7.15% 3.36%

Total Capital (%) 21.70% 21.15%

40.2 Ex osurp e to Real Estate Sector

Pa t c lr i u ars

Th e Company does not have any direct or indirect exposure to the real estate sector as at 31 March 2016

and as at 31 March 2015.




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41

Particulars Amount Outstanding in

Rs. in a L khs

Amount Overdue in Rs. in a L khs

Amount Outstanding in

Rs.in a L khs

Amount Overdue in Rs. in Lakhs

1

(a)

35,050.00 - 14,934.50 -

23,000.00 - 8,235.35 -

- - -

( )b - - - ( )c Term Loans (Refer Note Below) 225,253.29 - 141,097.75 - ( )d - - - -

(e) - - - - ( )f - - - -

Debentures (Refer Note Below)

- urSec ed

- rUnsecu ed

( ther than f e meanin o puo alling within th g f blic deposits)

Deferred Credits

Inter-Corporate Loans and Borrowings

C mm ial Po erc aperCash Credits

L BFC oans and Advances availed by the N inclusive of interest accrued thereon but not paid:

Disclosure Pursuant to paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding)

Companies Prudential Norms (Reserve Bank) Directions, 2015):

L a iei bilit s:

As a 15t 31 March 20As a 16 t 31 March 20



Note:

Includes Interest Accrued but Not Due on Debentures amounting to Rs.1632.31 Lakhs (Previous Year Rs.869.85

Lakhs) and Term Loans amounting to Rs.1207.59 Lakhs (Previous Year Rs.633.98 Lakhs), totaling to Rs.2,839.91

Lakhs (Previous Year Rs.1,503.83 Lakhs) as at 31 March 2016.(Refer Note 10)


94


Particulars

Amount Outstanding as at

3 21 March 016


3 21 March 015Rs. in a L khs Rs. in a L khs

Ass ts:e

2 Bre k- p oa u f Loans and Ad a e ing lls v nc s includ Bi

Receivables [other than

(a) Secured -

-

( )b 259,431.23 163,724.88 3 Bre k up o ta f Leased Asse s

and Stock on Hire and

Other Assets counting

(i) Lease ingAssets includ Lease Rentals Accrued and( ial Leasa) Financ e - - ( )b Operating Lease - -

(ii) Sto e incck on Hir luding

Hire Charges under Sundry (a) Assets on Hire - - ( ) sb Repo sessed Assets - -

(iii) Other oan cou tin L s n g

towards AFC Activities

( era) Loans wh e Assets - -

( ) s ther thanb Loan o - -

Unsecured (Refer Note Below)

Note:

The above includes interest Accrued but Not Due amounting to Rs.1,903.49 Lakhs (Previous Year: Rs.1,400.43

Lakhs) on Loans to Borrowers and excludes Other Loans and Advances which are not in the nature of

Lending.(Refer Note 22)



95

ParticularsAmount Outstanding

as at 3 21 March 016


3 21 March 015Rs. in a L khs Rs. in a L khs

4 Bre k- p o va u f In estments

Current Investments

I Quoted:

(i) Shares: (a) Equity - -

(b) Preference - -

(ii) Debentures and Bonds - -

(iii) Units of tuMu al Funds - -

(iv) G ent Secu itiovernm r es - -

(v) Others (please specify) - - II U qun oted:(i) Shares: (a) Equity - -

(b) Preference - -

(ii) Debentures and Bonds - - (iii) Units of tu Mu al Funds - 15,000.00

(iv) G ent Secu itiovernm r es - -

(v) Others (please specify) - -

Long Term InvestmentsI Quoted:(i) Shares: (a) Equity - -

(b) Preference - - (ii) Debentures and Bonds - - (iii) Units of tuMu al Funds - - (iv) G ent Secu itiovernm r es - - (v) Others (please specify) - - II U qun oted:

(i) Shares: (a) Equity 20.00 20.00

(b) Preference - - (ii) Debentures and Bonds - - (iii) Units of tu Mu al Funds -

-

(iv) G ent Secu itiovernm r es -

-

(v) Investment in Pass Through Certificates - -

5 Borrowe - vr Group wise Classification of Assets Financed as in (2) and (3) abo e

Category

S curede U sn ecured Secured U sn ecured1 Related Parties

(a) Subsidiaries - -

- -

( ) ies e s e b Compan in th amG prou

- -

- -

( )c Other Related Parties - - - -

2 Other an Related Pth arties - 259,004.26 - 163,637.27

Total

As a 15t 31 March 20

(Refer Note below)

Amount Rs. in Lakhs(Net of Provisions)

As a 16 t 31 March 20Amount Rs. in Lakhs(Net of Provisions)(Refer Note below)



Provisions include Provision for Sub-Standard and Doubtful Receivables from Financing Activities amounting to

Rs.426.97 Lakhs (Previous Year: Rs.87.61 Lakhs ) and excludes Contingent Provision for Standard Receivables

from Financing Activities amounting to Rs.3,211.73 Lakhs (Previous Year: Rs.2,027.50 Lakhs).(Refer Note No 38)

Note :


96

6

1 Related Parties - - (a) Subsid iesiar - -

( )b - - ( )c Other PRelated arties - -

2 29.90 20.00 15,037.83 15,020.00

Total 29.90 20.00 15,037.83 15,020.00

7 Other Information Related Parties O her tt han Related Parties

Related Parties O her tt han Related Parties

(i) - 589.74 - 125.34

(ii) - 162.77 - 37.73

(iii) - - - -

Investor Group-wise Classification of all Investments (Current and Long

Term) in Shares and Securities (both Quoted and Unquoted) :

Rs. in a L khs

Category

Other an Related Pth arties (Refer Note Below)

Assets Acquired in Satisfaction of Debt

Gross Non-Performing Assets

As a 16 t 31 March 20

Rs. in a L khs

C mp oo anies in the Same Gr up

Net Non P- erforming Assets (Refer Note 37)

As a 15t 31 March 20



Market Value / Break up Value or Fair

Value or Net Asset Value (Company’s Share) as on

31 March 2016

Book Value as on 31 March 2016

Book Value as on 31 March 2015

Market Value / Break up Value or Fair Value or Net

Asset Value (Company’s Share)

as on 31 March 2015

Note:

The Company's Share of Net Asset Value of Alpha Micro Finance Consultants Private Limited as at 31 March 2016 and as at 31 March 2015 has been calculated based on the unaudited financial statements as at 31 March 2016 and audited financial statements as at 31 March 2015 respectively.


97

42

( )a Current Year

More than R . s 1 lakh Less t Rs. 1 la han kh

Num r be of InstancesAm nt in ouR . s in Lakhs Num r be of Instances Am nt in ou

R . s in Lakhs

2 19.55 29.9222

2 19.55 29.9222

Note:Ou ot f the above amount Rs.2.92 Lakhs has been recovered by the Company.

Dis ud Pursuant to Rclosures of Fra eserve Bank of India Notification DNBS.PD.CC. No. 256 /03.10.042 /

2011-12 dated 2 March 2012:

Category

E b ent m ezzlem of cash by employees

43 Net Interest Marg in during the year:

Particulars

23.50%

13.66%

9.84%

For the Year ended 31 March 2 015

Average Interest (a)

For the Year ended 31 March 2 016

22.32%

12.76%

9.56%

Average effective cost for borrowing Interest (b)

Net Interest Margin (a-b)



The Average interest represents the effective rate at which loans have been disbursed to the customers for the

year ended 31 March 2016 and 31 March 2015.

The Average interest cost of borrowings of the Company for the year ended 31 March 2016 and 31 March 2015

has been computed based on the monthly interest cost divided by the average monthly balances of outstanding

borrowings. The Average cost of borrowings include the following :

a) Upfront processing fees paid by the Company for availing loans.

b) Interest loss on fixed deposits placed as collateral, being difference between rate of interest on fixed deposit

and the interest rate on the borrowings

.


98

More than R . s 1 lakh Less t Rs. 1 la han kh

Num r be of InstancesAm nt in ouR . s in Lakhs Num r be of Instances Am nt in ou

R . s in Lakhs

- - 3.8629

- - 3.8629

(b) Prev aious Ye r

Note:

Th ab ve o e amount has been fully recovered by the Company.

Category

E b ent m ezzlem of cash by employees

44

Am Outsta

ountnding

Maximum Amount

Maximum Amount

Out tas nding during

Out tas nding during

the year the year

Am nt ouOut tas nding

(a) From Holding Company: - Equitas Holdings Limited - - - -

(b) To Fellow Subsidiaries - Equitas Finance Limited - - - 2,800.00 - Equitas Housing Finance Limited - - - 2,500.00

(c) To Associates - No Associate during the Current Year - - - -

(d) Where there is - - - No Repayment Schedule - - - - - Repayment Schedule beyond seven years - - - - - No Interest - - - -

- - - -

(e)

- - - 150.93

(f) - - - -

- Interest below the rate as specified in section 372A of the Co ies cmpan A t

To Firms / Companies in which directors are interested (Other the (a) d (b) aboan ve)

- Equitas Development Initiative Trust (excluding Interest Accrued b t uut No D e)

Investments by the Loanee in the Shares of Parent Company and Sub d y Com ansi iar p y

As a 1 Ma h 0t 3 rc 2 16R . s in Lakhs

Loa ns and Advances in the nature of Loans

As a 1 Ma h 0t 3 rc 2 15R . s in Lakhs

Dis closures of Transactions Pursuant to clause 28 of the Debt Listing Agreement with BSE Limited

45 Earn eign anings in For Exch ge

F eor th Year Ended 31 Mar 2016ch

Rs. in Lakhs


G an n nancr t from I ternational Fi e Corporation 48.74

F gn Torei ravel Expenses -Reimbursement 0.50

46 Expenditure incurred in Foreign Currency

F eor th Year Ended

31 Mar 2016ch

Rs. in Lakhs

F eor th Year Ended

31 Ma 2015rch

Loan Processing Fees and Other Borrowing Costs 3.23

M eembership F es 0.10

S r Cha geoftwa e r s 37.76

D r ci e tors' Remuneration & Sitting Fees 6.50

F gn Torei ravel Expenses 0.25

P u sartic lar

P u sartic lar

Rs. in Lakhs

83.98

-

Rs. in Lakhs

72.67

-

38.27

7.40

0.94




99

47

and the Company did not have any derivatives.

48 CSR Activities

The Company in accordance with its CSR Policy has implemented CSR activities, through the Equitas

Development Initiatives Trust, a public charitable trust established by Equitas Holdings Limited.

The company has paid a donation of Rs.305.60 Lakhs (Previous Year Rs.235.00 Lakhs) to Equitas Development

Initiatives Trust for the year ended 31 March 2016 (Refer Note 32).

Further, the Company has also incurred an amount of Rs.47.14 Lakhs (Previous Year Rs.43.93 Lakhs) towards

CSR activities during the current year ended 31 March 2016.

49 Statutory Reserve

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

an amount of Rs.1,607.10 Lakhs (Previous Year – Rs.1,371.02 Lakhs), out of the net profit after tax for the year

ended 31 March 2016 to Statutory Reserve.

50 The Reserve Bank of India (RBI) has granted an ‘in-principle’ approval for establishing a ‘Small Finance Bank’

(SFB) to Equitas Holdings Limited (EHL). One of the conditions precedent for the issuance of the banking license

by RBI is the merger of its three subsidiaries viz., Equitas Finance Limited (EFL), Equitas Housing Finance Limited

(EHFL) and the Company to form the SFB.

Pursuant to the above, the Scheme of Amalgamation of the Company and EHFL with EFL has been presented

before the Hon’ble High Court of Madras, in respect of which approval is awaited. Pending Court approval and

completion of other related formalities, the proposed merger does not impact the financial results as at and for

the year ended 31 March 2016.

51 The Board of Directors have reviewed the realisable value of all the assets of the Company (other than Fixed

Assets and Non-Current Investment) and has confirmed that the value of such assets in the ordinary course of

business will not be less than the value at which these are recognised in the financial statements.

52 Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current

year classification / disclosure

.

The Company did not have any unhedged Foreign currency exposure as at 31 March 2016 and 31 March 2015








P rartne



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Equitas Micro Finance Limited Micro Finance Limited 1 DIRECTORS' REPORT EQUITAS MICRO FINANCE...

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Transcript of Equitas Micro Finance Limited Micro Finance Limited 1 DIRECTORS' REPORT EQUITAS MICRO FINANCE...