INFORMATION MEMORANDUM SURYODAY MICRO FINANCE PRIVATE … · INFORMATION MEMORANDUM SURYODAY MICRO...

Serial No. ____________

Addressed to: _________

INFORMATION MEMORANDUM SURYODAY MICRO FINANCE PRIVATE LIMITED

A private limited company incorporated under the Companies Act, 1956

Date of Incorporation: November 10, 2008

Registered Office: No. 6 CS Towers, 3rd Floor, 34/76 Bazullah Road,

T Nagar, Chennai 600 017

Telephone No: (044) 4202 4457

Website: http://www.suryodaymf.com/

Information Memorandum for issue of Debentures on a private placement basis on

July 22, 2014

Background

This Information Memorandum is related to the Debentures to be issued by Suryoday Micro Finance Private

Limited (the “Issuer” or “Company”) on a private placement basis and contains relevant information and

disclosures required for the purpose of issuing of the Debentures. The issue of the Debentures comprised in the

Issue and described under this Information Memorandum has been authorised by the Issuer through a

resolutions passed by the shareholders of the Issuer on April 10, 2014 and the Board of Directors of the Issuer

on April 10, 2014 and the Memorandum and Articles of Association of the Company. Pursuant to the resolution

passed by the Company’s shareholders dated November 8, 2013 in accordance with provisions of the

Companies Act, 2013, the Company has been authorised to borrow, upon such terms and conditions as the

Board may think fit for amounts up to 500,00,00,000/- (Five Hundred Crore). The present issue of NCDs in

terms of this Information Memorandum is within the overall powers of the Board as per the above shareholder

resolution(s).

Credit Rating

The Debentures proposed to be issued by the Issuer have been rated by ICRA Limited (“Rating Agency

/ICRA”). The Rating Agency has vide its letter dated June 6, 2014 assigned a rating of [ICRA] BBB (Stable) in

respect of the Debentures. The above rating is not a recommendation to buy, sell or hold securities and investors

should take their own decision. The ratings may be subject to revision or withdrawal at any time by the rating

agency and should be evaluated independently of any other ratings. Please refer to Annexure II of this

Information Memorandum for the letter dated June 6, 2014 from the Rating Agency assigning the credit rating

abovementioned and the letter dated June 6, 2014 issued by the Rating Agency disclosing the rating rationale

adopted for the aforesaid rating.

Issue Schedule

Issue Opens on: June 23 , 2014

Issue Closing on: July 22, 2014

Deemed Date of Allotment: July 22, 2014

The Issuer reserves the right to change the Issue Schedule including the Deemed Date of Allotment at its sole

discretion, without giving any reasons or prior notice. The Issue shall be open for subscription during the

banking hours on each day during the period covered by the Issue Schedule.

The Debentures are proposed to be listed on the wholesale debt market of the Bombay Stock Exchange

(“BSE”).

.

Issue of 350 (Three Hundred and Fifty), Rated, Collateralised, Listed, Redeemable,

Transferable, Non-convertible Debentures of face value of Rs.10,00,000 /- (Rupees (Ten

Lakhs only) each, aggregating up to Rs.350,000,000 /- (Rupees Thirty Five Crores only)

on a private placement basis and listing thereof in terms of the SEBI (Issue and Listing of

Debt Securities) Regulations, 2008 (the “Issue”)

TABLE OF CONTENTS

SECTION 1: DEFINITIONS AND ABBREVIATIONS 3

SECTION 2: NOTICE TO INVESTORS AND DISCLAIMERS 6

SECTION 3: RISK FACTORS 9

SECTION 4: FINANCIAL STATEMENTS 14

SECTION 5: REGULATORY DISCLOSURES 15

SECTION 6: TRANSACTION DOCUMENTS AND KEY TERMS 45

SECTION 7: OTHER INFORMATION AND APPLICATION PROCESS 47

SECTION 8: DECLARATION 54

ANNEXURE I: TERM SHEET

ANNEXURE II: RATING LETTER& RATING RATIONALE

ANNEXURE III: CONSENT LETTER FROM THE DEBENTURE TRUSTEE

ANNEXURE IV: LAST AUDITED FINANCIAL STATMENTS

ANNEXURE V: ILLUSTRATION OF BOND CASH FLOWS

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SECTION 1: DEFINITIONS AND ABBREVIATIONS

Unless the context otherwise indicates or requires, the following terms shall have the

meanings given below in this Information Memorandum.

Allot/Allotment/Allotted Unless the context otherwise requires or implies, the

allotment of the Debentures pursuant to this Issue.

Application Form The form used by the recipient of this Disclosure

Document, to apply for subscription to the Debentures,

which is annexed to the Offer Letter.

Board/Board of Directors The Board of Directors of the Issuer

Business Day Shall mean a day (other than a Saturday or a Sunday) on

which banks are open for business generally in Mumbai,

India and New York, United States of America.

CDSL Central Depository Services (India) Limited

Debentures / NCDs 350 (Three Hundred and Fifty) Collateralized Rated Listed

Redeemable Non-Convertible Debentures bearing a face

value of Rs.10,00,000/-(Rupees Ten Lakhs) each,

aggregating to Rs.350,000,000/- (Rupees Thirty Five

Crores only).

Debenture Holders / Investors The holders of the Debentures issued by the Issuer whose

name is registered as a holder of a Debenture in the

register of Debentureholders maintained by the Issuer

and shall include the registered transferees of the

Debentures from time to time

Deemed Date of Allotment July 22, 2014

Deed of Hypothecation Deed of Hypothecation executed by the Issuer dated July

18, 2014 for creating an exclusive first ranking charge over

the hypothecated property in favour of the Debenture

Trustee.

Debenture Trustee IDBI Trusteeship Services Limited

Debenture Trustee Agreement Debenture Trustee Agreement dated May 30, 2014

executed by and between the Debenture Trustee and the

Company for the purposes of appointment of the Debenture

Trustee to act as debenture trustee in connection with the

issuance of the Debentures.

Debenture Trustee Deed Debenture Trust Deed executed by and between the

Debenture Trustee and the Company on May 30, 2014 in

connection with the issuance of the Debentures.

Demat Refers to dematerialized securities which are securities that

are in electronic form, and not in physical form, with the

entries noted by the Depository.

Depositories Act The Depositories Act, 1996, as amended from time to time

Depository A Depository registered with SEBI under the SEBI

(Depositories and Participants) Regulations, 1996, as

amended from time to time.

Depository Participant / DP A depository participant as defined under the Depositories

Act

Director(s) Director(s) of the Issuer.

Disclosure Document /

Information Memorandum

This document which sets out the information regarding the

Debentures being issued on a private placement basis.

DP ID Depository Participant Identification Number.

Due Date Any date on which the holders of the Debentures are

entitled to any payments, whether on maturity or upon

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exercise of the option to redeem the Debentures prior to the

scheduled Maturity Date.

EFT Electronic Fund Transfer

Financial Year/ FY Twelve months period commencing from April 1 of a

particular calendar year and ending on March 31 of the

subsequent calendar year

Fee letter shall mean the letter dated May 30, 2014 between the

Issuer and the Original Debentureholder setting out the fees

payable by the Issuer to the Original Debentureholder

GAAP Generally Accepted Accounting Principles

Issue Private Placement of the Debentures.

Issue Opening Date June 23, 2014

Issue Closing Date July 31, 2014

Issuer/ Company Suryoday Micro Finance Private Limited

Maturity Date /Redemption

Date

May 28, 2019

Material Adverse Effect With respect to the Issuer, means a material adverse

effect on: (i) the Issuer, its assets or properties; (ii) the

Issuer’s business prospects or financial condition; (iii)

the implementation of, or the carrying on of, the

Issuer’s business or operations; or (iv) the ability of

the Issuer to comply with its obligations under any

other Transaction Document to which it is a party;

N.A Not Applicable.

NSDL National Securities Depository Limited.

Original Debentureholder Shall mean the initial subscriber to the Debentures

Offer Documents Shall mean the Offer Letter and the Information

Memorandum

Offer Letter Shall mean the private placement offer letter dated

June 23, 2014, in the form specified pursuant to sub-

rule (1) of Rule 14 of the Prospectus and Allotment of

Securities Rules, and circulated by the Issuer to the

Original Debentureholder for offering, by way of

private placement to the Original Debentureholder, the

Debentures

RBI Reserve Bank of India.

Rating Agency ICRA Limited

Record Date In relation to any Due Date on which a payment has to

be made by the Issuer in respect of the Debentures, the

date that is 15 (fifteen) days prior to that Due Date

R&T Agent or Registrar and

Transfer Agent

Sharepro Services (India) Private Limited

ROC Registrar of Companies.

Rs. / INR Indian National Rupee.

RTGS Real Time Gross Settlement.

SEBI Securities and Exchange Board of India constituted under

the Securities and Exchange Board of India Act, 1992 (as

amended from time to time).

SEBI Debt Listing Regulations The Securities and Exchange Board of India (Issue and

Listing of Debt Securities) Regulation, 2008 issued by

SEBI, as amended from time to time.

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Security The security for the Debentures as specified in Annexure I.

TDS Tax Deducted at Source.

Terms & Conditions Shall mean the terms and conditions pertaining to the Issue

as outlined in the Transaction Documents

Transaction Documents Shall mean collectively the Information Memorandum, the

Offer Documents, the Debenture Trustee Agreement,

Debenture Trust Deed, the Deed of Hypothecation, the Fee

Letter, the letters issued by the Trustee and Rating Agency,

the letters appointing the Registrar and Transfer Agent with

respect to the issuance of the Debentures, the agreement

entered into between the Registrar and Transfer Agent and

the Issuer, with respect to the issuance of the Debentures,

the agreement between the Issuer, its Registrar and

Transfer Agent and the Depository, the listing agreement

between the Issuer and the Stock Exchange for listing the

Debentures, all other documents in relation to the issuance

of the Debentures and any other document designated as a

Transaction Document by the Trustee or the

Debentureholders

WDM Wholesale Debt Market.

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SECTION 2: NOTICE TO INVESTORS AND DISCLAIMERS

2.1 ISSUER’S DISCLAIMER

This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus

and should not be construed to be a prospectus or a statement in lieu of a prospectus under the

Companies Act. The issue of the Debentures to be listed on the WDM segment of the BSE is

being made strictly on a private placement basis. Multiple copies hereof given to the same

entity shall be deemed to be given to the same person and shall be treated as such. This

Information Memorandum does not constitute and shall not be deemed to constitute an offer

or invitation to subscribe to the Debentures to the public in general.

As per the applicable provisions, it is not necessary for a copy of this Information

Memorandum/ Disclosure Document to be filed or submitted to the SEBI for its review

and/or approval. Pursuant to the provisions of Section 42 of the Companies Act 2013 read

with the Companies (Prospectus and Allotment of Securities ) Rules, 2014, the Offer Letter

in Form PAS -4 shall be filed with the ROC within 30 days of the date of circulation of the

offer letter.

This Information Memorandum has been prepared in conformity with the SEBI Debt Listing

Regulations and applicable SEBI and RBI Circulars governing private placements of

debentures by NBFCs. This Information Memorandum has been prepared solely to provide

general information about the Issuer to the Eligible Investors (as defined below) to whom it is

addressed and who are willing and eligible to subscribe to the Debentures. This Information

Memorandum does not purport to contain all the information that any Eligible Investor may

require. Further, this Information Memorandum has been prepared for informational purposes

relating to this transaction only and upon the express understanding that it will be used only

for the purposes set forth herein.

Neither this Information Memorandum nor any other information supplied in connection with

the Debentures is intended to provide the basis of any credit or other evaluation and any

recipient of this Information Memorandum should not consider such receipt as a

recommendation to subscribe to any Debentures. Each Investor contemplating subscription to

any Debentures should make its own independent investigation of the financial condition and

affairs of the Issuer, and its own appraisal of the creditworthiness of the Issuer. Potential

investors should consult their own financial, legal, tax and other professional advisors as to

the risks and investment considerations arising from an investment in the Debentures and

should possess the appropriate resources to analyze such investment and the suitability of

such investment to such Investor’s particular circumstances.

The Issuer confirms that, as of the date hereof, this Information Memorandum (including the

documents incorporated by reference herein, if any) contains all the information that is

material in the context of the Issue and regulatory requirements in relation to the Issue and is

accurate in all such material respects. No person has been authorized to give any information

or to make any representation not contained or incorporated by reference in this Information

Memorandum or in any material made available by the Issuer to any potential Investor

pursuant hereto and, if given or made, such information or representation must not be relied

upon as having being authorized by the Issuer. The Issuer certifies that the disclosures made

in this Information Memorandum are adequate and in conformity with the SEBI Debt Listing

Regulations. Further, the Issuer accepts no responsibility for statements made otherwise than

in the Information Memorandum or any other material issued by or at the instance of the

Issuer and anyone placing reliance on any source of information other than this Information

Memorandum would be doing so at its own risk.

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This Information Memorandum and the contents hereof are restricted only for the intended

recipient(s) who have been addressed directly and specifically through a communication by

the Issuer and only such recipients are eligible to apply for the Debentures. All Investors are

required to comply with the relevant regulations/guidelines applicable to them for investing in

this Issue. The contents of this Information Memorandum are intended to be used only by

those Investors to whom it is distributed. It is not intended for distribution to any other person

and should not be reproduced by the recipient.

No invitation is being made to any persons other than those to whom the Offer Letter along

with the Application Form and this Information Memorandum being issued have been sent.

Any application by a person to whom the Information Memorandum and Offer Letter has not

been sent by the Issuer shall be rejected without assigning any reason.

The person who is in receipt of this Information Memorandum shall not reproduce or

distribute in whole or part or make any announcement in public or to a third party regarding

the contents hereof without the consent of the Issuer. The recipient agrees to keep confidential

all information provided (or made available hereafter), including, without limitation, the

existence and terms of the Issue, any specific pricing information related to the Issue or the

amount or terms of any fees payable to us or other parties in connection with the Issue. This

Information Memorandum may not be photocopied, reproduced, or distributed to others at

any time without the prior written consent of the Issuer. Upon request, the recipients will

promptly return all material received from the Issuer (including this Information

Memorandum) without retaining any copies hereof. If any recipient of this Information

Memorandum decides not to participate in the Issue, that recipient must promptly return this

Information Memorandum and all reproductions whether in whole or in part and any other

information statement, notice, opinion, memorandum, expression or forecast made or

supplied at any time in relation thereto or received in connection with the Issue to the Issuer.

The Issuer does not undertake to update the Information Memorandum to reflect subsequent

events after the date of Information Memorandum and thus it should not be relied upon with

respect to such subsequent events without first confirming its accuracy with the Issuer.

Neither the delivery of this Information Memorandum nor any sale of Debentures made

hereafter shall, under any circumstances, constitute a representation or create any implication

that there has been no change in the affairs of the Issuer since the date hereof.

This Information Memorandum does not constitute, nor may it be used for or in connection

with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation

is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.

No action is being taken to permit an offering of the Debentures or the distribution of this

Information Memorandum in any jurisdiction where such action is required. Persons into

whose possession this Information Memorandum comes are required to inform themselves

about and to observe any such restrictions. The Information Memorandum is made available

to potential Investors in the Issue on the strict understanding that it is confidential.

2.2 DISCLAIMER CLAUSE OF STOCK EXCHANGES

As required, a copy of this Information Memorandum has been filed with the BSEin terms of

the SEBI Debt Listing Regulations. It is to be distinctly understood that submission of this

Information Memorandum to the BSEshould not in any way be deemed or construed to mean

that this Information Memorandum has been reviewed, cleared, or approved by the BSE; nor

does the BSEin any manner warrant, certify or endorse the correctness or completeness of any

of the contents of this Information Memorandum, nor does the BSE warrant that the Issuer’s

Debentures will be listed or will continue to be listed on the BSE; nor does the BSEtake any

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responsibility for the soundness of the financial and other conditions of the Issuer, its

promoters, its management or any scheme or project of the Issuer.

2.3 DISCLAIMER CLAUSE OF SEBI

As per the provisions of the SEBI Debt Listing Regulations, it is not stipulated that a copy of

this Information Memorandum has to be filed with or submitted to the SEBI for its review /

approval. It is to be distinctly understood that this Information Memorandum should not in

any way be deemed or construed to have been approved or vetted by SEBI and that this Issue

is not recommended or approved by SEBI. SEBI does not take any responsibility either for

the financial soundness of any proposal for which the Debentures issued thereof is proposed

to be made or for the correctness of the statements made or opinions expressed in this

Information Memorandum. However the Company undertakes to file this Information

Memorandum and the Offer Letter in Form PAS -4 within 30 days of the date of circulation

of the Offer Letter.

2.4 DISCLAIMER IN RESPECT OF JURISDICTION

This Issue is made in India to Investors as specified under the clause titled “Eligible

Investors” of this Information Memorandum, who shall be/have been identified upfront by the

Issuer. This Information Memorandum does not constitute an offer to sell or an invitation to

subscribe to Debentures offered hereby to any person to whom it is not specifically addressed.

Any disputes arising out of this Issue will be subject to the exclusive jurisdiction of the courts

and tribunals at Chennai. This Information Memorandum does not constitute an offer to sell

or an invitation to subscribe to the Debentures herein, in any other jurisdiction to any person

to whom it is unlawful to make an offer or invitation in such jurisdiction.

2.5 DISCLAIMER IN RESPECT OF RATING AGENCIES

Ratings are opinions on credit quality and are not recommendations to sanction, renew,

disburse or recall the concerned bank facilities or to buy, sell or hold any security. The Rating

Agency has based its ratings on information obtained from sources believed by it to be

accurate and reliable. The Rating Agency does not, however, guarantee the accuracy,

adequacy or completeness of any information and is not responsible for any errors or

omissions or for the results obtained from the use of such information. Most entities whose

bank facilities/instruments are rated by the Rating Agency have paid a credit rating fee, based

on the amount and type of bank facilities/instruments.

2.6 ISSUE OF DEBENTURES IN DEMATERIALISED FORM

The Debentures will be issued in dematerialised form. The Issuer has made arrangements

with the Depositories for the issue of the Debentures in dematerialised form. Investors will

have to hold the Debentures in dematerialised form as per the provisions of Depositories Act.

The Issuer shall take necessary steps to credit the Debentures allotted to the beneficiary

account maintained by the Investor with its depositary participant. The Issuer will make the

Allotment to Investors on the Deemed Date of Allotment after verification of the Application

Form, the accompanying documents and on realisation of the application money.

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SECTION 3: RISK FACTORS

The following are the risks relating to the Company, the Debentures and the market in general

envisaged by the management of the Company. Potential investors should carefully consider

all the risk factors in this Information Memorandum for evaluating the Company and its

business and the Debentures before making any investment decision relating to the

Debentures. The Company believes that the factors described below represent the principal

risks inherent in investing in the Debentures, but does not represent that the statements below

regarding risks of holding the Debentures are exhaustive. The ordering of the risk factors is

intended to facilitate ease of reading and reference and does not in any manner indicate the

importance of one risk factor over another. Investors should also read the detailed information

set out elsewhere in this Information Memorandum and reach their own views prior to

making any investment decision.

3.1 REPAYMENT IS SUBJECT TO THE CREDIT RISK OF THE ISSUER.

Potential investors should be aware that receipt of the principal amount,(i.e. the redemption

amount) and any other amounts that may be due in respect of the Debentures is subject to the

credit risk of the Issuer. Potential investors assume the risk that the Issuer will not be able to

satisfy their obligations under the Debentures. In the event that bankruptcy proceedings or

composition, scheme of arrangement or similar proceedings to avert bankruptcy are instituted

by or against the Issuer, the payment of sums due on the Debentures may not be made or may

be substantially reduced or delayed.

3.2 THE SECONDARY MARKET FOR DEBENTURES MAY BE ILLIQUID.

The Debentures may be very illiquid and no secondary market may develop in respect

thereof. Even if there is a secondary market for the Debentures, it is not likely to provide

significant liquidity. Potential investors may have to hold the Debentures until redemption to

realize any value.

3.3 CREDIT RISK & RATING DOWNGRADE RISK

The Rating Agency has assigned the credit ratings to the Debentures. In the event of

deterioration in the financial health of the Issuer, there is a possibility that the rating agency

may downgrade the rating of the Debentures. In such cases, potential investors may incur

losses on revaluation of their investment or make provisions towards sub-standard/ non-

performing investment as per their usual norms.

3.4 CHANGES IN INTEREST RATES MAY AFFECT THE PRICE OF NCDS.

All securities where a fixed rate of interest is offered, such as this Issue, are subject to price

risk. The price of such securities will vary inversely with changes in prevailing interest rates,

i.e. when interest rates rise, prices of fixed income securities fall and when interest rates drop,

the prices increase. The extent of fall or rise in the prices is a function of the existing coupon,

days to maturity and the increase or decrease in the level of prevailing interest rates. Increased

rates of interest, which frequently accompany inflation and/or a growing economy, are likely

to have a negative effect on the pricing of the Debentures.

3.5 TAX CONSIDERATIONS AND LEGAL CONSIDERATIONS

Special tax considerations and legal considerations may apply to certain types of investors.

Potential investors are urged to consult with their own financial, legal, tax and other advisors

to determine any financial, legal, tax and other implications of this investment.

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3.6 ACCOUNTING CONSIDERATIONS

Special accounting considerations may apply to certain types of taxpayers. Potential investors

are urged to consult with their own accounting advisors to determine implications of this

investment.

3.7 SECURITY MAYBE INSUFFICIENT TO REDEEM THE DEBENTURES

In the event that the Company is unable to meet its payment and other obligations towards

Investors under the terms of the Debentures, the Debenture Trustee may enforce the Security

as per the terms of security documents, and other related documents. The Investors recovery

in relation to the Debentures will be subject to (i) the market value of such secured property,

(ii) finding willing buyers for the Security at a price sufficient to repay the potential investors

amounts outstanding under the Debentures. The value realised from the enforcement of the

Security may be insufficient to redeem the Debentures.

3.8 MATERIAL CHANGES IN REGULATIONS TO WHICH THE ISSUER IS

SUBJECT COULD IMPAIR THE ISSUER’S ABILITY TO MEET PAYMENT

OR OTHER OBLIGATIONS.

The Issuer is subject generally to changes in Indian law, as well as to changes in government

regulations and policies and accounting principles. Any changes in the regulatory framework

could adversely affect the profitability of the Issuer or its future financial performance, by

requiring a restructuring of its activities, increasing costs or otherwise.

3.9 LEGALITY OF PURCHASE

Potential investors of the Debentures will be responsible for the lawfulness of the acquisition

of the Debentures, whether under the laws of the jurisdiction of its incorporation or the

jurisdiction in which it operates or for compliance by that potential investor with any law,

regulation or regulatory policy applicable to it.

3.10 POLITICAL AND ECONOMIC RISK IN INDIA

The Issuer operates only within India and, accordingly, all of its revenues are derived from

the domestic market. As a result, it is highly dependent on prevailing economic conditions in

India and its results of operations are significantly affected by factors influencing the Indian

economy. An uncertain economic situation, in India and globally, could result in a further

slowdown in economic growth, investment and consumption. A slowdown in the rate of

growth in the Indian economy could result in lower demand for credit and other financial

products and services and higher defaults. Any slowdown in the growth or negative growth of

sectors where the Issuer has a relatively higher exposure could adversely impact its

performance. Any such slowdown could adversely affect its business, prospects, results of

operations and financial condition.

3.11 RISKS RELATED TO THE BUSINESS OF THE ISSUER

(a) Majority of the Issuer’s loans are unsecured and the clients of these unsecured

loans are of the high risk category and if the Issuer is unable to control the level of

non-performing loans (“NPAs”) in the future, or if the Issuer’s loan loss reserves

are insufficient to cover future loan losses, the financial condition and results of

operations may be materially and adversely affected.)

A majority of the Issuer’s loans are unsecured and the clients of these unsecured

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loans are of the high risk category. There is uncertainty on the client’s ability to fulfil its loan obligations as MFI clients typically do not have bank accounts or proper income proof verification so it can be difficult to verify all client details and assess the risk. Such non-performing or low credit quality loans can negatively impact our results of operations. The Issuer has various procedures and process controls in place to mitigate the risk. All group lending loans are provided under the Grameen Model and based on the joint liability of the group. As at March 2014, the gross NPA was Rs 0.15 crores on a gross portfolio of Rs. 326.6 crores (including managed / securitized portfolio of Rs. 35.3 crores).

The Issuer cannot assure that it will be able to effectively control and reduce the level

of the NPAs of its Client Loans. The amount of its reported NPAs may increase in the

future as a result of growth of Client Loans, and also due to factors beyond its control,

such as over-extended member credit that it is unaware of. If the Issuer is unable to

manage our NPAs or adequately recover its loans, the results of its operations will be

adversely affected.

The current loan loss reserves of the Issuer may not be adequate to cover an increase

in the amount of NPAs or any future deterioration in the overall credit quality of

Client Loans. As a result, if the quality of its total loan portfolio deteriorates the

Issuer may be required to increase its loan loss reserves, which will adversely affect

its financial condition and results of operations.

The members are poor and, as a result, might be vulnerable if economic conditions

worsen or growth rates decelerate in India, or if there are natural disasters such as

floods and droughts in areas where the Issuer’s members live. Moreover, there is no

precise method for predicting loan and credit losses, and the Issuer cannot assure that

it’s monitoring and risk management procedures will effectively predict such losses

or that loan loss reserves will be sufficient to cover actual losses. If the Issuer are

unable to control or reduce the level of its NPAs or poor credit quality loans, it’s

financial condition and results of its operations could be materially and adversely

affected.

(b) The Issuer’s business operates through a large number of rural and semi urban

branches and is exposed to operational risks including fraud

The Issueris exposed to operational risks, including fraud, petty theft and

embezzlement, as it handle a large amount of cash due to high volume of small

transactions. This could harm its operations and its financial position.

As the Issuer handle a large amount of cash through a high volume of small

transactions taking place in its network, the Issuer is exposed to the risk of fraud or

other misconduct by its employees or outsiders. These risks are further compounded

due to the high level of delegation of power and responsibilities that the Issuer’s

business model requires. Given the high volume of transactions processed by the

Issuer, certain instances of fraud and misconduct may go unnoticed before they are

discovered and successfully rectified. Even when the Issuer discovers such instances

of fraud or theft and pursue them to the full extent of the law or with its insurance

carriers, there can be no assurance that the Issuer will recover any such amounts. In

addition, the Issuer’s dependence upon automated systems to record and process

transactions may further increase the risk that technical system flaws or employee

tampering or manipulation of those systems will result in losses that are difficult to

detect.

The Issuer maintains an internal audit process to ensure the operations team follows

the defined procedures and reports any deviations to the operations staff and

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management team. The Issuer also has a strong MIS system that has a wide range of

data that can be used to monitor financial and operational performance.

To mitigate the above risk, the Issuer maintains an internal audit process to ensure the

operations team follows the defined procedures and reports any deviations to the

operations staff and management team. The Issuer also has a MIS system able to

generate data analysis that can be used to monitor financial and operational

performance.

(c) Loans due within two years account for almost all of the Issuer’s interest income,

and a significant reduction in short term loans may result in a corresponding

decrease in its interest income

All of the loans the Issuer issues are due within approximately two years of

disbursement. The relatively short-term nature of the Issuer’s loans means that the

Issuer’s long-term interest income stream is less certain than if a portion of its loans

were for a longer term. In addition, the Issuer’s customers may not obtain new loans

from the Issuer upon maturity of their existing loans, particularly if competition

increases. The potential instability of the Issuer’s interest income could materially and

adversely affect the Issuer’s results of operations and financial position.

The loans given by the issuer are at fixed interest rate, and the tenor of the underlying

asset has increase from one year to two year which has provided stability to the

portfolio and interest income and has also smoothen operating expense.

(d) The Issuer is exposed to certain political, regulatory and concentration of risks

Due to the nature of its operations, the Issuer is exposed to political, regulatory and

concentration risks. The Issuer believes a mitigant to this is to expand its geographical

reach and is consequently expanding operations in six states, namely, Tamil Nadu,

Maharashtra, Gujarat, Odisha, Karnataka and Rajasthan. If it is not effectively able to

manage such operations and expansion, it may lose money invested in such

expansion, which could adversely affect its business and results of operations.

Large scale attrition, especially at the senior management level, can make it difficult

for the Issuer to manage its business

If the Issuer is not able to attract, motivate, integrate or retain qualified personnel at

levels of experience that are necessary to maintain the Issuer’s quality and reputation,

it will be difficult for the Issuer to manage its business and growth. The Issuer

depends on the services of its executive officers and key employees for its continued

operations and growth. In particular, the Issuer’s senior management has significant

experience in the microfinance, banking and financial services industries. The loss of

any of the Issuer’s executive officers, key employees or senior managers could

negatively affect its ability to execute its business strategy, including its ability to

manage its rapid growth. The Issuer’s business is also dependent on its team of

personnel who directly manage its relationships with its members. The Issuer’s

business and profits would suffer adversely if a substantial number of such personnel

leftthe Issuer or became ineffective in servicing its members over a period of time.

The Issuer’s future success will depend in large part on its ability to identify, attract

and retain highly skilled managerial and other personnel. Competition for individuals

with such specialized knowledge and experience is intense in this industry, and the

Issuer may be unable to attract, motivate, integrate or retain qualified personnel at

levels of experience that are necessary to maintain its quality and reputation or to

sustain or expand its operations. The loss of the services of such personnel or the

inability to identify, attract and retain qualified personnel in the future would make it

difficult for us to manage the Issuer’s business and growth and to meet key

objectives.

13

(e) The Issuer’s business and results of operations would be adversely affected by

strikes, work stoppages or increased wage demands by employees

The employees are not currently unionized. However, there can be no assurance that

they will not unionize in the future. If the employees unionize, it may become

difficult to maintain flexible labour policies, and could result in high labour costs,

which would adversely affect the Issuer’s business and results of operations.

(f) The Issuer’s insurance coverage may not adequately protect it against losses.

Successful claims that exceed its insurance coverage could harm the Issuer’s

results of operations and diminish its financial position

The Issuer maintains insurance coverage of the type and in the amounts that it

believes are commensurate with its operations and other general liability insurances.

The Issuer’s insurance policies, however, may not provide adequate coverage in

certain circumstances and may be subject to certain deductibles, exclusions and limits

on coverage.

In addition, there are various types of risks and losses for which the Issuer does not

maintain insurance, such as losses due to business interruption and natural disasters,

because they are either uninsurable or because insurance is not available to the Issuer

on acceptable terms. A successful assertion of one or more large claims against the

Issuer that exceeds it’s available insurance coverage or results in changes in its

insurance policies, including premium increases or the imposition of a larger

deductible or co-insurance requirement, could adversely affect the Issuer’s business,

financial condition and results of operations.

(g) The Issuer requires certain statutory and regulatory approvals for conducting its

business and the failure to obtain or retain them in a timely manner, or at all, may

adversely affect operations

NBFCs in India are subject to strict regulation and supervision by the RBI. Pursuant

to guidelines issued by the RBI (circular dated August 3), 2012 and (NBFC-MFI

Directions) the Issuer is required to maintain it’s status as a NBFC- MFI in order to

be eligible for categorization as priority sector advance for bank loans. See ‘risk

factor titled ―Current Microfinance Industry Challenges’ for details. The Issuer

requires certain approvals, licenses, registrations and permissions for operating its

business, including registration with the RBI as a NBFC-MFI. Further, such

approvals, licenses, registrations and permissions must be maintained/renewed over

time, applicable requirements may change and the Issuer may not be aware of or

comply with all requirements all of the time. Additionally, the Issuer may need

additional approvals from regulators to introduce new insurance and other fee based

products to its members. In particular, the Issueris required to obtain a certificate of

registration for carrying on business as a NBFC-MFI that is subject to numerous

conditions. In addition, its branches are required to be registered under the relevant

shops and establishments laws of the states in which they are located. The shops and

establishment laws regulate various employment conditions, including working

hours, holidays and leave and overtime compensation. If the Issuer fails to obtain or

retain any of these approvals or licenses, or renewals thereof, in a timely manner, or

at all, its business may be adversely affected. If the Issuer fails to comply, or a

regulator claims that it has not complied, with any of these conditions, the Issuer’s

certificate of registration may be suspended or cancelled and it shall not be able to

carry on such activities. If the Issuer fails to comply with the NBFC-MFI Directions

and fail to maintain the status of NBFC-MFI, it will not be eligible for priority sector

loans from the Indian banking sector and may also attract penal provisions under the

RBI Act, 1934 for non-compliance.

14

SECTION 4: FINANCIAL STATEMENTS

Set out in Annexure IV hereto

15

SECTION 5: REGULATORY DISCLOSURES

The Information Memorandum is prepared in accordance with the provisions of SEBI Debt

Listing Regulations and in this section, the Issuer has set out the details required as per

Schedule I of the SEBI Debt Listing Regulations

5.1 Documents Submitted to the Exchanges

The following documents have been / shall be submitted to the BSE:

(a) Memorandum and Articles of Association of the Issuer and necessary resolution(s)

for the allotment of the Debentures;

(b) Copy of last 3 (Three) years audited Annual Reports;

(c) Statement containing particulars of, dates of, and parties to all material contracts and

agreements;

(d) Copy of the resolution passed by the shareholders of the Company at the Extra-

Ordinary General Meeting held on April 10,2014, authorizing the issue/offer of non-

convertible debentures by the Company;

(e) Copy of the Board / Committee Resolution authorizing the borrowing and list of

authorized signatories;

(f) Certified true copy of the resolution passed by the Company at the Extra Ordinary

General Meeting held on November 8,2013 authorising the Company to borrow, upon

such terms as the Board may think fit, upto an aggregate limit of INR

5,00,00,00,000/- (Rupees Five Hundred Crores Only);

(g) An undertaking from the Issuer stating that the necessary documents for the creation

of the charge, including the Debenture Trust Deed would be executed within the time

frame prescribed in the relevant regulations/acts/rules etc and the same would be

uploaded on the website of the BSE, where the debt securities have been listed,

within 5 (five) working days of execution of the same;

(h) Where applicable, an undertaking that permission / consent from the prior creditor for

a second or pari passu charge being created, in favor of the trustees to the proposed

issue has been obtained; and

(i) Any other particulars or documents that the recognized stock exchange may call for

as it deems fit.

5.2 Documents Submitted to Debenture Trustee

The following documents have been / shall be submitted to the Debenture Trustee:

(a) Memorandum and Articles of Association of the Issuer and necessary resolution(s)

for the allotment of the Debentures;

(b) Copy of last 3 (Three) years audited Annual Reports;

(c) Statement containing particulars of, dates of, and parties to all material contracts and

agreements;

(d) Latest audited / limited review half yearly consolidated (wherever available) and

standalone financial information (profit & loss statement, balance sheet and cash flow

statement) and auditor qualifications, if any.

(e) An undertaking to the effect that the Issuer would, until the redemption of the debt

securities, submit the details mentioned in point (d) above to the Debenture Trustee

within the timelines as mentioned in Simplified Listing Agreement issued by SEBI

vide circular No.SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009 as amended

from time to time, for furnishing / publishing its half yearly/ annual result. Further,

the Issuer shall within 180 (One Hundred and Eighty) calendar days from the end of

the financial year, submit a copy of the latest annual report to the Debenture Trustee

and the Trustee shall be obliged to share the details submitted under this clause with

16

all ‘Qualified Institutional Buyers’ and other existing Debenture-Holders within 2

(two)Business Days of their specific request.

5.3 Name and Address of Registered Office of the Issuer

Name: Suryoday Micro Finance Private Limited

Registered Office of Issuer: No. 6 CS Towers, 3rd Floor, 34/76 Bazullah Road,

T Nagar, Chennai 600 017

Corporate Office of Issuer: Suryoday Micro Finance Private Limited

1101, Sharda Terraces, Plot # 65, Sector- 11, CBD

Belapur, Navi Mumbai 400 614

Compliance Officer of Issuer: Ms. Priya Vishwanathan



CFO of Issuer: Mr. Sanjay Tiwari



Registration Number: 069807

Corporate Identification Number: U65923TN2008PTC069807

Phone No.: +91 22 40435800

Contact Person: Sanjay Tiwari

Email: [email protected]

Website of Issuer: www.suryodaymf.com

Arranger to the Issue N.A.

Auditors of the Issuer: S R Batliboi & Associates

Address: 6th & 7th Floor, “A” Block, Tidel Park, No. 4,

Rajiv Gandhi Salai, Taramani, Chennai 600 113

Trustee to the Issue: IDBI Trusteeship Services Limited

Address: Asian Building, Ground Floor,

17R Kamani Marg, Ballard Estate,

Mumbai - 400001.

Registrar to the Issue: Sharepro Services (India) Private Limited

13 AB Samhita Warehousing Complex, 2nd Floor,

Sakinaka, Telephone Exchange Lane,

Off Andheri-Kurla Road, Sakinaka, Andheri (East)

Mumbai – 400 072

Credit Rating Agency of the Issue: ICRA Limited

1105, Kailash Building, 11th Floor, 26,

Kasturba Gandhi Marg,

New Delhi – 110001

A brief summary of business / activities of the Issuer and its line of business

(a) Overview

17

Suryoday Microfinance Private Limited (Suryoday) was set up in October 2008 as an

NBFC with the concept of providing loans to women in urban and semi-urban areas under

the Grameen Bank Joint Lending Model. It has some presence in rural areas as well where

reasonable infrastructure facilities are available. Suryoday commenced full-fledged

operations from May 2009. The company gives only group loans under the Grameen Bank

Joint Liability Group (JLG) model.

Suryoday is promoted by three persons with vast experience in Banking and Financial

Services. It has the distinction of being provided with seed funding by Aavishkaar

Goodwell - a leading Microfinance Fund – even before start of operations. Suryoday

received its second round of equity funding of Rs 17.5 crore from Aavishkaar Goodwell

and Lok Capital in August 2010.

Industry Overview

Indian microfinance now has 70 million borrower accounts, by-far the largest in any country

across the world. Over the last year Indian microfinance institutions that are organised as

NBFC-MFIs and operating in remote rural areas of India have emerged as effective financial

intermediaries offering an alternative to the inaccessible formal financial institutions. Most of

them who received funding and growth capital from banks, have demonstrated commendable

scale, sustainability and impact.

Many NBFC-MFIs have received a good quantum of capital in FY 2013 in the form of both

debt and equity. Almost all NBFC-MFIs (less than INR 1000 crores of assets under

management) have been consistent in their growth, maintaining excellent portfolio quality in

FY 2013.

(b) Corporate Structure

i. Vision and Mission

The company’s vision is ‘To be a world-class financial services organisation that provides

products and value-added services to the economically challenged, helping them generate

higher incomes, build an asset base and achieve a sustainably better standard of living.’

Suryoday’s mission is to cater to one million households by the year 2015.

ii. Current Corporate Status

The Issuer was incorporated as a private limited company on November 10,2008 and is

currently registered as a an NBFC-MFI with the RBI. The Issuer derives the following

benefits of being registered as an NBFC:

• Access to Funds: Commercial lenders have greater comfort lending to a regulated

NBFC with transparent ownership. As an Issuer, Suryoday can raise equity and offer

commercial returns.

• Diverse Funding Sources: An NBFC can access commercial investors and

international capital markets, diversifying away from donors or members as equity

funders.

• Commercialisation: Classifying Suryoday as an NBFC increases its commercial

credibility and integrates it and its clients into the formal financial sector which

ultimately increases its outreach potential.

18

• Mainstream Resources: As a for-profit commercial NBFC, Suryoday will be more

likely to attract mainstream capital resources which Societies or Trusts would find

difficult to attract.

• Regulatory Coverage: As Suryoday grows in size, operating as an NBFC within the

regulatory framework mitigates risks from political and regulatory intervention.

• Stakeholder Involvement: As an NBFC, Suryoday can bring a variety of

stakeholders to the table, including clients, management, employees and investors.

iii. Brief Profile of the Board of Directors

Name Background

Mr. R. Baskar

Babu

Promoter Director; an Engineering and Management Graduate with 19+

years of experience in Financial Services, he has earlier worked with

Cholamandalam, HDFC Bank and GE Commercial Finance in various

leadership positions. His dream has been to create a World Class

Organisation which will positively impact a sizeable percentage of

population.

Mr. John Arun

Kumar Diaz

Nominee Director; He holds a Master’s Degree in Management from

XLRI. He is currently an entrepreneur consultant and also a trustee and

member of the Investment Committee of Aavishkaar Goodwell. He was

earlier the head of Reuters Consulting for South Asia and had a

distinguished career spanning 28 years at Standard Chartered Bank in

various positions and international locations.

Mr. Venkatesh

Natrajan

Nominee Director; has over fourteen years of experience in product

development and venture capital at Intel. He has led several equity deals

in design software, computing and wireless technology sectors and acted

as operational consultant to various MFIs in India. He is an MBA from

Cornell University and has an Engineering Degree from Annamalai

University.

Ms. Sheela

Bhide

Independent Director; holds a Doctorate in International Trade from the

Institute of International Studies, Geneva; a Masters Degree in Economics

from George Mason University and a Masters in Public Policy from John

F. Kennedy School of Government, Harvard University. She joined the

Indian Administrative Service in 1973 and in the course of her 36 year

long career with the GoI, has held various posts such as Chairman and

Managing Director, ITPO; Additional Secretary and Financial Advisor,

Ministry of External Affairs; Additional Secretary and Financial Advisor,

Ministry of Defence and Joint Secretary, Ministry of Corporate Affairs.

Mr.Mathew

Joseph

Nominee Director; a Chartered Accountant with over 25 years of

experience in Banking and Financial Services, he is currently a member of

the Executive Management of HDFC Ltd.

Mr. R.

Ramachandran

Additional Non-Executive Director; has held many senior management

responsibilities both in India and Overseas. He was the Chairman & the

Managing Director of Andhra Bank from September 2010 to December

2011. He was also the Executive Director of Syndicate Bank from

December 2008 to August 2010. He has expertise in handling of Global

Commodity Trade Finance and International Project Finance and has

incisive knowledge of Regulatory Framework and Supervision, through

interaction with Monetary Authority of Singapore while functioning as

CEO of Singapore Branch. He was responsible for getting Regulatory

Rating Upgrade for the Bank in Singapore from MAS. He is a Non

19

Executive Director of SIDBI and also an Independent Director in Gati -

Kintentsu Express Pvt Ltd and a director of Meliora Asset Reconstruction

Company Ltd.

iv. Brief Profile of the Senior Management

Name & Function Background

Mr. R. Baskar Babu An Engineering and Management Graduate with 19+ years of

experience in Financial Services, he has earlier worked with

Cholamandalam, HDFC Bank and GE Commercial Finance in various

leadership positions.

Chief Executive

Officer

Mr. Narayan Rao An MBA from Symbiosis with 22+ years of work experience spanning

Sales, Operations and IT including 6+ years in USA, he has worked in

organizations like Motorola-Pagepoint, Intelligroup and PINC. As

Senior Director at Intelligroup, he was responsible for Account

Management, Delivery, Pre-Sales and Solutioning and played a

pivotal role in growing the company's presence in USA.

Head – Information

Technology, Human

Resources and

General

Administration

Mr. Vikrant

Bhagwat

An Executive MBA with 17+ years of work experience in Banking

and Financial Services, he has worked in organizations like

Cholamandalam, HDFC Bank, DCB Bank and Lok Capital Head – Business

v. Business Segments

Suryoday is operational primarily in the urban and semi urban areas with low presence in

rural areas. Nevertheless, the lending policy and models followed while catering to rural

and urban populations are same. Suryoday‘s microcredit program follows the Joint

Liability Group (JLG) model of lending and focuses only on poor women. The borrowers

are organized in groups of five; 3-4 such groups form a center. The loans are given only

for income generation activities. Before clients are admitted to the microfinance program,

an internal auditor from Suryoday visits the house of each borrower to check the borrower

and her household details. The clients have weekly/ fortnightly/ monthly meetings

(depending on the frequency of repayment of the loan that they have taken) when they

pay back their loans.

Product Details

Suryoday provides only Group Loan products to women in urban/ semi-urban and rural

areas for income generation activities. The company earlier had only a weekly repaying

product, which it has now converted to monthly repayment product in Maharashtra and

Gujarat and to a fortnightly repayment product in Tamil Nadu and Orissa.

Products

Loan

Amount

Annual

Int.

Rate

Upfront

Proc. Fee

Security

deposits Tenure

Repaymen

t

Frequency

Insurance

Premium Description

C-1-A 16500/- 26.00%

1.00% +

ST Nil 24 Monthly 340

Income Generation

Monthly (1st

Cycle)

C-2-A 22000/- 26.00%

1.00% +


Income Generation

Monthly (2nd

Cycle)

20

C-3-A 26000/- 26.00%

1.00% +


Income Generation

Monthly (3rd

Cycle Onwards)

C-1-A – F 16500/- 26.00%

1.00% +

ST Nil 53 Fortnightly 340

Income Generation

Fortnightly (1st

Cycle)

C-2-A – F 22000/- 26.00%

1.00% +


Income Generation

Fortnightly (2nd

Cycle)

C-3-A – F 26000/- 26.00%

1.00% +


Income Generation

Fortnightly (3rd

Cycle Onwards)

vi. Lending Methodology The company follows the Grameen model of microfinance with some modifications

to suit urban microfinance and has well-established field operations.

- A centre can have anywhere between 15/20/25/30 members of similar socio-

economic status.

- It uses Social Acceptance Index to identify and target its client. The clients are

scored across 6 parameters and allotted a score which categorizes them into

Poor/Marginally Poor/Very Poor/Distressed Poor.

- The relationship officer encourages prospective clients to for a centre of

15/20/25/30 members. The group under goes at least 3 days of Continuous Group

training (CGT) in the objectives, rules & regulation, systems and processes of

Suryoday. The Branch Manager conducts a Group Recognition Test (GRT) of

the group after which the loan is approved (in case the group passes the GRT).

Each branch consists of 1 Branch Manager (BM), 1 Audit Officer (AO) and 5

Relationship officers (RO). The Branch Manager heads the branch while audit being

the separate function from Sales/Business; Audit Officer reports to Area Audit

Manager. The Branch reports to its nearest Area Office. Area Office will have 5

Branches under its command area. All activities like capturing and storing

customer/group/centre information and legal documents will be at central office.

- The Company operates and renders its services to customers who reside within a 10

to 15 km radius of a branch. Branches are headed by Branch Manager (BM) who

supervises 5 Relationship Officers (RO) under him. RO’s are the front line employees

and deal directly with clients; they identify, acquire and retain customers to carry on

the business. They collect all the required customer information like demographic /

social / business and loan related information. The Audit Officer will complete the

field verification process off every single member, verify the KYC documents and

validate the approval. Further the BM scrutinizes the application form understands

the purpose of loan and upon being satisfied will approve the loan in the application

form and courier the center file to centralized operations to proceed with the

disbursement activities. The branch reports to its nearest Area Office/Regional Office

and finally culminates at Head Office.

Sourcing Process:

21

Collections and Recovery

Loan repayments are to be made in monthly or fortnightly installments. The

installment of every member is reflected in the Due Sheets and Passbook. The due

sheet is sent by the operations team at central office at least five days in advance. The

branches should maintain due sheets respective box files. The due sheet consists of

customer’s name, centre name, RO name, loan amount, POS, EMI, overdue if any,

and attendance. The Due Sheet is sent in 1+1 format and the one copy should be

pinned with centre receipt for payment collection and filed in the centre file

maintained at the centre. The Monthly product is modeled in such manner that the RO

will not have more than 7 meetings per day and maximum of 10 for other products.

This will help the ROs to complete all meetings in the desired manner, maintain

quality of the meeting and reach office by 2:00PM to deposit the collection money in

the bank. Financial discipline is the core of this business and deviation in not

depositing cash will reflect as poor performance and may affect the employee ratings

and the incentives.

Risk Management

Suryoday’s audit department is an independent team with Audit Officer at each

branch (70 Audit Officers for 70 branches as of now) and 10 Area Audit Managers.

Audit Officer is responsible for doing the borrower verification and also does the

surprise center visits (Post disbursement i.e. Collection Meetings) of 5 random

selected centres every week. The audit officers report to Audit Area Manager. The

Audit Area Manager visits branches on a monthly basis. The Audit report for each

branch is generated on a monthly basis and presented to the audit committee. The

audit committee comprises of 1 Independent Director, 3 nominee director

Apart from Business Audit Suryoday has a separate team of Process Audit. This team

reports directly to CEO. Main function of this team is to check and ascertain whether

branches are following all the laid down processes as per company policy. Process

audit person gives surprise visit to branch without prior information. All processes are

22

given certain scores and based on the final score, branches’ performance are

categorized into Satisfactory, Adequate and Unsatisfactory.

vii. Organisational Structure and Field Hierarchy

viii. Technology and MIS

Since inception, Suryoday has been using Atyati’s Ganaseva as its Loan Management

System and Tally for Accounting. In preparation for growth and to ensure a scalable

platform, Suryoday has planned migration in April 2014 to Craft Silicon’s BR.Net

with integrated accounting module. Suryoday’s technology roadmap for loan

management includes mobile handheld devices to capture customer data and

transactions as also biometrics and receipt printing to enhance process controls and

transparency.

Suryoday has also implemented web-based HRMS software from Emportant with

employee self-service and payroll processing capabilities and an E-Learning Solution

from Training Central for employee induction and process training.

23

Suryoday also has plans to implement various workflow solutions to further enhance

workforce productivity/efficiency as it moves towards a paperless environment.

ix. Internal Audit

Suryoday‘s audit department is an independent team with Audit Officer at each

branch (70 Audit Officers for 70 branches as of now) and 10 Area Audit Managers.

Audit Officer is responsible for doing the borrower verification and also does the

surprise centre visits (Post disbursement i.e. Collection Meetings) of 5 random

selected centres every week. The audit officers report to Audit Area Manager. The

Audit Area Manager visits branches on a monthly basis. The Audit report for each

branch is generated on a monthly basis and presented to the audit committee. The

audit committee comprises of 1 Independent Director, 3 nominee director.

x. Shareholders

Please refer to ‘Shareholding Pattern as of June 30, 2014’ under Section 6.6.

xi. Board of Directors

The Company has a well-balanced, professional Board with vast experience in retail

lending, corporate finance and administration. For further details, please refer to ‘Names

and Addresses of the Directors of the Issuer’ under Section 6.7.

xii. Company Credit Rating

BBB(Stable) by ICRA on June 6, 2014. The rating is based on high credibility, good

governance, established systems & processes and strong financial performance of the

organisation.

xiii. Investment Thesis

Suryoday presents an attractive investment opportunity driven by multiple reaffirming

factors such as:

• Emerging India MFI: While the microfinance sector expanded rapidly in the

highly competitive southern regions of India, Suryoday is positioning itself to be

a leading MFI in many parts of India where there is significantly lesser access to

formal financial institutions like Odisha and Rajasthan.

• High Credibility: Suryoday, as mentioned earlier, is the only MFI in India to

have raised external funding even before having established operations.

• Highly Professional and Experienced Management Team: Suryoday is led by

a Board of Directors and senior management team with decades of experience in

financial services. The five-member Board is comprised of one independent

Directors, three nominee directors, and one promoter director. The Board

Members are proactive and provide their strategic inputs through various board

committees. The senior management team is actively involved in day-to-day

operations and decision making.

• Growth Supported by Strong Equity Funding: Suryoday is supported by

strong promoters, private equity and institutional investors that include Aavishkar

Goodwell, Lok Capital and HDFC Holdings Limited. Promoters and Promoter

Associates hold 15.47% of equity stake. Individual shareholders have 20.03% of

equity with them.

• Geographical risk diversification: Suryoday’s portfolio is diversified across six

different states, namely Maharashtra, Tamil Nadu, Orissa, Rajasthan, Gujarat and

Karnataka.

• Robust Financial Alliances: Suryoday has established financial alliances with

various public sector banks, private sector banks and financial institutions. At

24

Present there are over 16 different lenders (Banks/FIs) on the books of Suryoday.

There has been no delay/default in repayment to any lender since inception.

• Focus on Portfolio Quality: The NPA level of the Company for the

microfinance Joint Liability Group (JLG) portfolio is low at 0.03% as on March

31, 2014. The collection efficiency on all securitisation transaction pools have

been close to 100% .

(c) Key Operational and Financial Parameters for the last 3 audited years Rs. Lakhs

Audited Audited Audited Audited

31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14

Net worth 2778.18 2868.59 6411.68 8749.15

Total Debt

- Non current maturities of long term

Borrowings

658.09 1073.71 4706.39 10908.99

- short term borrowings 753.27 250.74 0.02 207.93

- Current maturities of long term

Borrowings

1580.99 2187.21 8221.06 18720.51

Net Fixed Assets 79.83 67.98 135.63 225.82

Non-Current Assets/ Liabilities 661.56 1096.93 4757.73 10954.74

Cash and Cash equivalents 784.69 2142.6 5674.57 7538.98

Current investments - - 214.00 88.35

Current Assets 5879.21 6249.33 19431.41 37908.75

Current liabilities 2519.28 3521.69 9158.14 20262.43

Assets Under Management 4866.79 9228.43 15237.29 32662.57

Off balance sheet assets 42.29 5474.83 2432.10 3536.08

Interest Income 1546.29 1647.16 2568.82 6160.42

Interest Expense 452.92 513.17 944.77 2840.35

Provisioning & write Offs 143.77 133.19 100.40 162.25

PAT 104.43 42.83 195.45 882.32

Gross NPA (%) 2.43% 0.13% 0.02% 0.03%

Net NPA (%) 2.37% 0.01% 0.01% 0.01%

Tier I Capital Adequacy Ratio (%) 51.95% 45.65% 40.61% 26.72%

Tier II Capital Adequacy Ratio (%) 0.95% 0.67% 0.82% 0.92%

Gross Debt:Equity Ratio of the Company:

Before the issue of debt securities 2.78

After the issue of debt securities 3.07

Calculations

As on_30th

June 2014 debt-to-equity ratio is calculated as follows:-

Debt – ( In INR Crore) 327.5

Equity – ( In INR Crore) 117.9

Debt/Equity 2.78

Subsequent to the issue, debt-to-equity ratio shall be calculated as follows:-

Debt - ( In INR Crore) 362.5

Equity - ( In INR Crore) 117.9

Debt/Equity 3.07

25

(d) Project cost and means of financing, in case of funding new projects: N.A.

5.4 Brief history of Issuer since its incorporation giving details of its following

activities:

(a) Details of Share Capital as on last quarter end i.e. June 30, 2014:

No. of

Shares

Share Capital

Face Value Face Value

(Rs.) Rs in Actuals

AUTHORISED CAPITAL 3,50,00,000 10 35,00,00,000

ISSUED, SUBSCRIBED

AND PAID-UP CAPITAL 3,28,21,602 10 32,82,16,020

(b) Changes in its capital structure as on last quarter end i.e. June 30, 2014, for the

last five years:

Date of Change Authorised Capital Particulars

(AGM/EGM) (in Rs.)

31-Mar-09 5,00,00,000

30-Jun-09 7,00,00,000 Added 20,00,000 Shares on 27-Apr-09

30-Sep-09 7,00,00,000

31-Dec-09 7,00,00,000

31-Mar-10 7,00,00,000

30-Jun-10 20,00,00,000 Added 1,30,00,000 Shares on 10-June-10

30-Sep-10 20,00,00,000

31-Dec-10 20,00,00,000

31-Mar-11 20,00,00,000

30-Jun-11 20,00,00,000

30-Sep-11 20,00,00,000

31-Dec-11 20,00,00,000

31-Mar-12 20,00,00,000

30-Jun-12 20,00,00,000

30-Sep-12 20,00,00,000

31-Dec-12 35,00,00,000 Added 1,50,00,000 Shares on 17-Dec-12

31-Mar-13 35,00,00,000

30-Jun-13 35,00,00,000

30-Sep-13 35,00,00,000

31-Dec-13 35,00,00,000

31-Mar-14 35,00,00,000

30-Jun-14 35,00,00,000

(c) Equity Share Capital History of the Company as on last quarter end i.e. June

30, 2014, for the last five years:

26

Date of

Allotment

No

of Equity

Shares

Face

Value

(Rs)

Issue

Price

(Rs)

Considerat

ion (Cash,

other than

cash, etc)

Nature

of

Allotm

ent

Cumulative Remark

s

No. of

Equity

Shares

Equity

Share Capital

(Rs)

Equity

Share

Premium

(in Rs)

26-12-2008 10,30,000 10 10 Cash Private

placem

ent

10,30,000 1,03,00,000 0

29-09-2009 5,00,000 10 10 Cash Private

placem

ent

15,30,000 1,53,00,000 0

26-12-2008 10,96,000 10 10 Cash Private

placem

ent

26,26,000 2,62,60,000 0

23-01-2009 2,00,000 10 10 Cash Private

placem

ent

28,26,000 2,82,60,000 0

23-03-2009 60,000 10 10 Cash Private

placem

ent

28,86,000 2,88,60,000 0

30-03-2009 1,20,000 10 10 Cash Private

placem

ent

30,06,000 3,00,60,000 0

08-05-2009 25,00,000 10 15 Cash Private

placem

ent

55,06,000 5,50,60,000 1,25,00,000

21-10-2009 5,00,000 10 15 Cash Private

placem

ent

60,06,000 6,00,60,000 1,50,00,000

19-07-2010 7,40,000 10 10 Cash Private

placem

ent

67,46,000 6,74,60,000 1,50,00,000

19-07-2010 3,00,000 10 10 Cash Private

placem

ent

70,46,000 7,04,60,000 1,50,00,000

27

19-07-2010 10,00,000 10 15 Cash Private

placem

ent

80,46,000 8,04,60,000 2,00,00,000

31-08-2010 50,00,000 10 35 Cash Private

placem

ent

1,30,46,000 13,00,46,000 14,50,00,000

02-02-2012 3,80,000 10 10 Cash Private

placem

ent

1,34,26,000 13,42,60,000 14,50,00,000

07-06-2012 5,17,857 10 67.59 Cash Private

placem

ent

1,39,43,857 13,94,38,570 17,48,23,385

13-08-2012 1,85,000 10 10 Cash Private

placem

ent

1,41,28,857 14,12,88,570 17,48,23,385

28-09-2012 28,95,000 10 10 Cash Private

placem

ent

1,70,23,857 17,02,38,570 17,48,23,385

29-09-2012 16,57,290 10 42.66 Cash Private

placem

ent

1,86,81,147 18,68,11,470 22,89,50,476

19-01-2013 46,88,232 10 42.66 Cash Private

placem

ent

2,33,69,379 23,36,93,790 38,20,68,133

12-09-2013 22,22,223 10 45 Cash Private

placem

ent

2,55,91,602 25,59,16,020 45,98,45,939

25-10-2013 11,11,111 10 45 Cash Private

placem

ent

2,67,02,713 26,70,27,130 49,87,34,824

12-05-2014 27,55,556 10 45 Cash Private

placem

ent

2,94,58,269 29,45,82,690 59,51,79,284

28

16-06-2014 33,33,333 10 45 Cash Private

placem

ent

3,27,91,602 32,79,16,020 71,18,45,939

16-06-2014 30,000 10 10 Cash Private

placem

ent

3,28,21,602 32,82,16,020 71,18,45,939

(d) Details of any Acquisition or Amalgamation in the last 1 (one) year: There has been no acquisition or amalgamation in the last 1 (one) year.

(e) Details of any Reorganization or Reconstruction in the last 1 (one) year:

There has been no reorganization or reconstruction in the last 1 (one) year.

5.5 Details of the shareholding of the Company as on the latest quarter end, i.e. June

30, 2014:

(a) Shareholding pattern of the Company as on last quarter end, i.e. June 30, 2014

S.

No

.

Particulars (Name of the shareholders)

Total no of

equity

shares

No of

shares in

demat form

Total

Shareholding

as a % of

total no of

equity shares

1 R BaskarBabu 14,76,435 NIL 4.50%

2 Promoters's Associates 25,24,325 NIL 7.69%

3 Domestic Investors 56,92,464 NIL 17.34%

4 Aavishkar Venture Management Services Pvt. Ltd. 7,527 NIL 0.02%

5

Aavishkaar Goodwell India Microfinance

Development Company Ltd 61,42,857 NIL 18.72%

6

Aavishkaar Goodwell India Microfinance

Development Company II Ltd. 57,19,072 NIL 17.42%

7 LOK Capital LLC 24,90,850 NIL 7.59%

8 LOK Capital II LLC 37,77,449 NIL 11.51%

9 HDFC Holdings Limited 9,54,055 NIL 2.91%

10 HDFC Standard Life Insurance Company Ltd 7,03,235 NIL 2.14%

11 International Finance Corp (IFC) 33,33,333 NIL 10.16%

Notes: Details of shares pledged or encumbered by the promoters (if any):N.A.

(b) List of top 10 holders of equity shares of the Company as on the latest quarter

end, i.e. June 30, 2014

S. No.

Name of the Shareholders

Total no. of equity shares

No. of shares in demat form

Total shareholding as a % of total no of equity shares

1 Aavishkaar Goodwell India Microfinance Development Company Ltd - AG I 61,42,857 Nil 18.72%

29

2 Aavishkaar Goodwell India Microfinance Development Company Ltd - AG II 57,19,072

Nil

17.42%

3 P. Surendra Pai 46,44,575 Nil 14.15%

4 Lok Capital LLC – Lok II 37,77,449 Nil 11.51%

5 International Finance Corporation (IFC) 33,33,333 Nil 10.16%

6 Promoters Associates 25,24,325 Nil 7.69%

7 LOK Capital LLC 24,90,850 Nil 7.59%

8 R. Baskar Babu 14,76,435 Nil 4.50%

9 HDFC Holdings Limited – HDFC I 9,54,055 Nil 2.91%

10 P. S. Jagdish 8,25,666 Nil 2.52%

5.6 Following details regarding the directors of the Company:

(a) Details of current directors of the Company:

This table sets out the details regarding the Company’s Board of Directors as on date of the

Information Memorandum:

S.

No

.

Name of Director,

Designation, DIN Age

Director of

the

Company

since (Date

of

appointment

) Address Details of Other Directorship

1

Mr. R. Baskar Babu,

Executive Director,

(DIN: 02303132) 44 10-Nov-08

Flat # 101, Avalon

Raheja, Acropolis-1,

Deonar(E), Mumbai-

400 088.

• Trust Housing Finance Company

Pvt. Ltd.

• Indian Association for Saving and

Credit

2

Mr. John Arun Kumar

Diaz, Nominee Director,

(DIN: 00493304) 62 09-Jul-09

Lakshmi Narayan, 84

Saahil 14, Altamount

road, Mumbai-400

026.

• Lynx HealthplusServices Pvt Ltd

• Synergy Relationship Management

Services Pvt Ptd

• Aavishkaar Venture Trustee Pvt Ltd

• Vortex Engineering Pvt Ltd

• INI Farms Pvt Ltd

• Jeevanti Healthcare Pvt Ltd

• Synergy Nexgen Products LLP

3

Mr. Venkatesh Natrajan,

Nominee Director,

(DIN: 02453219) 45 11-Oct-10

Y/4/7B, A.R. Colony,

Vasantha Nagar,

Madurai, Tamil

Nadu, India 625003

• Ujjivan Financial Services Pvt Ltd

• Asirvad Microfinance Pvt Ltd

• Lok Advisory Services Pvt Ltd

• Ruralshores Business Services Pvt

Ltd

• Everest Edusys and Solutions Pvt

Ltd

• MAS Financials

4

Dr. Sheela Bhide,

Independent Director

(DIN: 01843547) 65 30-Aug-10

B-I/8, Vasant

Vihar,New Delhi –

110057 INDIA

• L&T Metro Rail Ltd

• Gati-Kintetsu Express Pvt Ltd

• Rashtriya Ispat Nigam Ltd

30

5

Mr. Mathew Joseph,

Nominee Director,

(DIN: 01033802) 52 26-Feb-13

6-B, 6th floor,

Rosememre

Apartments,18,

Harrington Road,

Chetpet,Chennai-

600031, Tamil Nadu

• HDFC Sales Pvt Ltd

• Ozone Product Pvt Ltd

• Magnum Foundation Pvt Ltd

• Tamil Nadu Urban Infrastructure Co.

Ltd

• Vayana Pvt Ltd

6

Mr. R. Ramachandran,

Additional Non-

Executive Director,

(DIN: 01953653 ) 62 07-Jun-14

Old No. 3A, New No.

5, Jeevarathnam

Nagar, 2nd Street,

Adyar,

Chennai- 600020,

Tamil Nadu

• Meliora Asset Reconstruction

Company Ltd.

• Gati-Kintetsu Express Pvt Ltd

• Small Industries Development Bank

of India

*Company to disclose name of the current directors who are appearing in the RBI defaulter

list and/or ECGC default list, if any: Nil

Details of change in directors since last three years:

Name, Designation and

DIN

Date of

Appointment/

Resignation

Director of the

company since (in

case of resignation)

Remarks

Raghunathan Sankaran,

Independent Director,

(DIN: 00517220) 14-01-2009 20-12-2008

Ceased to be director

on 14-1-2009

Ganesh Rao,

Executive Director,

(DIN: 02302989) 31-12-2013 29-05-2009


on 31-12-2013

Ramachandran Baskar

Babu,

Executive Director,

(DIN:02303132) 29-05-2009 N.A

Appointment

Vadakancherry

Lakshminarayanan

Ramakrishnan,

Executive Director,

(DIN: 02326543) 31-12-2013 29-05-2009


on 31-12-2013

John Arunkumar Diaz,

Nominee director,

(DIN: 00493304) 09-07-2009 N.A.

Appointment

Raghunathan Sankaran,


(DIN: 00517220) 28-02-2013 17-08-2009


on 28-02-2013

Kala Srinivas Pant,


(DIN:00003915) 29-09-2011 17-09-2009


on 29-09-2011

Venkatesh Natarajan,

Nominee director,

(DIN: 02453219) 31-08-2010 N.A.

Appointment

Sheela Bhide,


(DIN: 01843547) 29-09-2011 N.A.

Appointment

31

Mathew Joseph,

Nominee Director,

(DIN: 01033802) 26-02-2013 N.A.

Appointment

R. Ramachandran,

Additional Non-Executive

Director,

(DIN: 01953653) 07-06-2014 N.A.

Appointment

5.7 Following details regarding the auditors of the Company:

(a) Details of the auditor of the Company:

Name Address Auditor since

S.R Batliboi & Associates

6th & 7th Floor, “A” Block, Tidel

Park, No. 4, Rajiv Gandhi Salai,

Taramani, Chennai 600 113

29th

September, 2011

(b) Details of change in auditors since last three years:

Name Address Date of

Resignation

Auditor of the Company

since (in case of

resignation)

Remarks

M/s

Manian &

Narayanan

12th Avenue,

Chennai –600083 25-08-2011 12-11-2008 Resigned

5.8 Details of borrowings of the Company, as on latest quarter end (i.e. June 30,

2014):

(a) Details of Secured Loan Facilities: (Rs Crores)

Lender’s Name Type of

Facility

Amount

Sanctione

d

Principal

Amount

Outstandin

g

Repayment

Date/Sched

ule

Security

Perso

nal

Guar

antee

Margi

n

(FLD

G)

Security

IFMR Capital Secured

term loan 3.00 0.15 Monthly No 7.5

Book

debt



Book

debt



Book

debt



Book

debt



Book

debt

SBI Secured


Book

debt

32

Reliance Capital

TL 3

Secured

term loan 10.00 1.23 Monthly No

Book debt

Reliance Capital

TL 4

Secured


Book debt

Reliance Capital

TL 5

Secured


Book debt

Reliance Capital

TL 6

Secured


Book debt

Reliance Capital

TL 10

Secured


Book debt

Maanveeya TL2 Secured

term loan 10.00 4.19 Quaterly No -

Book debt

Maanveeya TL3A Secured

term loan 15.00 12.50 Quaterly No -

Book debt

MAS-6 Secured

term loan 6.00 1.33 Monthly No 15%

Book debt

MAS-7 Secured


Book debt

MAS – 15 Secured


Book debt

MAS - 16A Secured


Book debt

MAS - 16B Secured


Book debt

MAS – 17 Secured


Book debt

MAS – 18 Secured


Book debt

MAS - 19A Secured


Book debt

MAS - 19B Secured


Book debt

MAS – 20A Secured

Term Loan 10.00 5.00 Monthly No 10%

Book debt

DCB Secured


Book debt

DCB Secured


Book debt

DCB Secured


Book debt

Ratnakar Bank

TL1

Secured

term loan 7.50 2.14 Quaterly No 5%

Book debt

Ratnakar

Bank(ADB)

Secured


Book debt

Ratnakar Bank

TL2

Secured


Book debt

Ratnakar Bank

TL3

Secured


Book debt

Ratnakar Bank

TL4

Secured


Book debt

33

Indusind bank - 1 Secured


Book debt

Indusind bank - 2 Secured


Book debt

IDBI TL 1 Secured


Book debt

IDBI TL 2 Secured


Book debt

Dena Bank Secured


Book debt

Dena Bank Secured


Book debt

Axis Bank

Secured

term loan 10.00 3.75 Quarterly No 10%

Book debt

Axis Bank

Secured


Book debt

HDFC Bank

TL2A

Secured


Book debt

HDFC Bank

TL2B

Secured


Book debt

Bellwether-

Caspian

Secured

term loan 5.00 3.33 Half Yearly No -

Book debt

State Bank of

Patiala

Secured


Book debt

South Indian

Bank

Secured


Book debt

Andhra Bank

Secured


Book debt

Ananya Finance

Secured

term loan 3.00 1.83 Monthly No -

Book debt

UCO Bank

Secured


Book debt

Yes Bank

Secured


Book debt

Kotak Bank

Secured


Book debt

Indian Overseas

Bank

Secured


Book debt

BOM

Secured


Book debt

Dhanlaxmi Bank

Secured

term loan 5.00 2.00 Quarterly No 10% Book debt

(b) Details of Unsecured Loan Facilities:

Mr.V Srinivasan

Unsecured

term loan 0.50 0.50 yearly No - -

(c) Details of Non-Convertible Debentures:

34

Debentur

e Series

Tenor/P

eriod of

Maturit

y

Coupon

(Rate of

Interest

)

Amount

(Rs in

Lacs)

Date of

allotment

Redemption

on Date/

Schedule

Credit

Rating

Secured/

Unsecured

Security

12.90%

Suryoday

Micro

Finance

Private

Limited

2014

2 years /

April

15, 2016

12.90% 1,100 March 28,

2014

The

Debentures

shall be

redeemed

through 24

equal

monthly

instalments,

on the 15th

of every

month,

starting the

15th of May

and ending

on the

Maturity

Date

(scheduled)

but will also

be dependent

on the

cashflows

from the

underlying

receivables

BBB+ Secured Book debt +

FD

14.70%

Suryoday

Micro

Finance

Pvt. Ltd.

2020

6 years/

April

25, 2020

14.70% 3,000 April 25,

2014

April 25,

2020

BBB

(Stable)

Secured Book debt

14.80%

Suryoday

Micro

Finance

Pvt. Ltd.

2017

3 years/

May 15,

2017

14.80% 2,400 May 15,

2014

May 15,

2017

BBB

(Stable) Secured Book debt

14.75%

Suryoday

Micro

Finance

Pvt. Ltd.

2017

3 years/

June 27,

2017

14.75% 2,000 June 27,

2014

June 27,

2017

BBB

(Stable) Secured Book debt

TOTAL 8,600

(d) List of Top 10 Debenture Holders (as on June 30, 2014)

S. No. Name of Debenture Holders Amount (Rs. in lacs)

1. Hinduja Leyland Finance Limited 1200

2. UTI International Wealth Creator 4 3000

35

(e) The amount of corporate guarantee issued by the Issuer along with name of the

counterparty (like name of the subsidiary, JV entity, group company, etc) on

behalf of whom it has been issued. (if any)

The Company has not issued any corporate guarantee for any third party as at June

30, 2014.

(f) Details of Commercial Paper:

The Company has not issued any Commercial Paper as at June 30, 2014

(g) Details of rest of the borrowing (if any including hybrid debt like FCCB,

Optionally Convertible Debentures / Preference Shares ) as on June 30, 2014:

NIL

(h) Details of all default/s and/or delay in payments of interest and principal of any

kind of term loans, debt securities and other financial indebtedness including

corporate guarantee issued by the company, in the past 5 years:

NIL

(i) Details of any outstanding borrowings taken / debt securities issued where taken

/ issued (i) for consideration other than cash, whether in whole or part, (ii) at a

premium or discount, or (iii) in pursuance of an option:

NIL

5.9 Details of Promoters of the Company:

(a) Details of Promoter Holding in Company as on latest quarter end, i.e. June 30,

2014:

Sr

No

Name of the shareholders Total No of

Equity

shares

No .of

shares in

Demat

form

Total

shareholding

as % of total

no of equity

shares

No of

shares

Pledged

% of shares

pledged with

respect to

shares owned

1 R. Baskar Babu 14,76,435 NIL 4.50% NIL N.A.

5.10 Abridged version of the Audited Consolidated and Standalone Financial

Information (like Profit and Loss statement, Balance Sheet and Cash Flow

statement) for at least last three years and auditor qualifications, if any.

3. Microfinance Initiative For Asia (MIFA) Debt

Fund SA, SICAV-SIF

2400

4. Microfinance Enhancement Facility SA, SICAV-

SIF

2000

36

Profit & Loss Statement (in Rs. Mn.) FY 2010 -2011 FY 2011 -2012 FY 2012 -

2013

FY 2013 -

2014

Income

Interest on loans 142.58 125.63 231.26 570.04

Other Financial Income 5.68 36.94 22.92 34.02

Other Income 6.38 2.15 2.69 11.97

Total Income 154.64 164.72 256.87 616.04

Expenditure/ Cost of Sales

Personnel Expenditure 54.26 67.92 85.89 136.09

Provisioning Expenditure 3.52 (0.87) 8.70 16.2

Write-off Expenditure 10.85 14.19 1.34 -

Depreciation and Amortization 1.71 2.67 2.87 3.73

General and Administrative Expenditure 26.63 22.94 34.96 47.11

Total Expenditure 96.97 106.85 133.76 203.13

Operating Profit before Interest 57.67 57.87 123.11 412.91

Interest 45.30 51.32 94.48 284.03

Operating profit after Interest 12.37 6.55 28.63 128.91

Net non-operating income/expenses - - - -

Profit Before Tax 12.37 6.55 28.63 128.9

Income Tax 1.93 2.27 9.09 40.60

Net Profit 10.44 4.28 19.54 88.3

Equity Dividend paid - - - -

Retained Profit 10.44 4.28 19.54 88.3

Balance Sheet (in INR Lakhs)

Liabilities

Current Liabilities

Short Term borrowings from banks 233.43 243.79 822.11 1892.8

Short term borrowings from others - - - -

Other Current Liabilities 18.50 108.39 93.71 133.4

Total Current Liabilities 251.93 352.18 915.82 2026.25

Total Term Liabilities 66.16 109.69 475.77 1095.47

Total Liabilities 318.09 461.87 1391.59 3121.67

Ordinary Share Capital 130.46 134.26 233.69 267.02

Reserves & Surplus 147.36 152.60 407.47 607.89

Legal reserves - - - -

Other Capital - - - -

Net Worth 277.82 286.86 641.16 874.91

Total Equity & Liabilities 595.91 748.73 2032.75 3996.63

Assets

Current Assets 78.47 219.68 567.46 753.90

Net Receivables 482.46 375.36 1280.52 2913.37

Other Current Assets 17.76 35.32 95.16 123.6

Total Current Assets 578.69 630.36 1943.14 3790.87

37

Fixed Assets - Gross Block 7.42 8.69 13.75 20.22

Depreciation 2.08 4.54 6.67 9.78

Fixed Assets - Net Block 5.34 4.15 7.07 10.44

Investments - - 21.40 8.84

Other Non-Current assets 11.88 114.22 61.14 186.48

Total Non-Current assets 11.88 114.22 61.14 186.48

Total Assets 595.91 748.73 2032.75 3996.63

5.11 Abridged version of Latest Audited/ Limited Review Half Yearly Consolidated

and Standalone Financial Information and auditors qualifications, if any.

[Note: Financial information submitted must be in line with the timelines specified in

the Simplified Listing Agreement, issued vide Circular no.

SEBI/IMD/BOND/1/2009/11/05, dated May 11, 2009]

Profit and Loss Statement (in INR Lacs) For the period ended

31st March 2014

Revenue from Operations 5700.45

Other Income 459.97

Total Revenue 6160.42

Expenses:

Employee Benefits Expense 1360.98

Finance Costs 2840.35

Depreciation and amortization expense 37.32

Other expenses 633.42

Total expenses 4872.07

Profit / (Loss) for the period before Tax 1288.35

Tax expense: 406.03

Deferred Tax (Credit)

Profit (Loss) for the period from continuing operations 882.32

Balance Sheet (INR mn)

EQUITY AND LIABILITIES

Shareholders’ funds

(a) Share Capital 2670.27

(b) Share Application Money -

(c) Reserves and Surplus 6078.88

38

Total

8749.15

Non-current liabilities

(a) Long Term Borrowings 10954.74

(c) Long Term Provisions 11.32

Total

10966.06

Current liabilities

(a) Short Term Borrowings 18928.45

(b) Trade payables 36.34

(c) Other Current Liabilities 996.97

(d) Short Term Provisions 289.35

Total

20251.11

TOTAL 39966.32

ASSETS

Non-current assets

(a) Fixed Assets

(i) Tangible assets 99.31

(ii) Intangible assets 5.08

(iii)

Intangible assets under

development 0.00

(b) Non-current Investments 88.36

(c) Deferred Tax Assets (Net) 121.43

(d) Long-Term Loans and Advances 8312.02

(e) Other non-current assets 1437.34

Total

10063.54

Current assets

(a) Cash and Cash equivalents 7538.98

(b) Short-term Loans and Advances 21864.38

(c) Other current assets 499.40

29902.76

TOTAL 39966.32

Off- Balance Sheet

Managed Portfolio (Assets) 3118.02

Cash Collateral on de-recognised

assets 657.37

5.12 Any material event/ development or change having implications on the

financials/credit quality (e.g. any material regulatory proceedings against the

Issuer/promoters, tax litigations resulting in material liabilities, corporate

restructuring event etc) at the time of Issue which may affect the issue or the

investor’s decision to invest / continue to invest in the debt securities.

Other than as disclosed in this Information Memorandum, there are no other material

events or developments or changes at the time of this Issue or subsequent to the Issue

which may affect the Issue or the investors’ decision to invest/ continue to invest in

the Issue.

39

5.13 Names of the Debentures Trustees and Consents thereof

The Debenture Trustee of the proposed Debentures is IDBI Trusteeship Services

Limited. IDBI Trusteeship Services Limited has given its written consent for its

appointment as debenture trustee to the Issue under regulation 4(4) of the SEBI Debt

Listing Regulations and inclusion of its name in the form and context in which it

appears in this Information Memorandum, Transaction Documents and in all the

subsequent periodical communications sent to the Debenture Holders. The consent

letter from Debenture Trustee is provided in Annexure III of this Information

Memorandum.

5.14 Rating and Rating Rationale

The Rating Agency has assigned ratings of “BBB (Stable)” to the Debentures.

Instruments with this rating are considered to have moderate degree of safety

regarding timely servicing of financial obligations. Such instruments carry moderate

credit risk. The rating letter and rating rationale dated June 6, 2014 issued by Rating

Agency are annexed hereto as Annexure II.

5.15 If the security is backed by a guarantee or letter of comfort or any other

document / letter with similar intent, a copy of the same shall be disclosed. In

case such document does not contain detailed payment structure (procedure of

invocation of guarantee and receipt of payment by the investor along with

timelines), the same shall be disclosed in the offer document.

Not Applicable. The Debentures are secured by the Security as described herein

below, in the Debenture Trust Deed and in the Deed of Hypothecation.

5.16 The consent letter from Debenture Trustee is provided in Annexure III of this

Information Memorandum.

5.17 Names of all the recognized stock exchanges where the debt securities are

proposed to be listed:

The Debentures are proposed to be listed on the WDM segment of the BSE. The

Issuer shall comply with the requirements of the listing agreement for debt securities

to the extent applicable to it on a continuous basis. The in-principle approval of the

BSE has been obtained in this regard.

5.18 Other details:

(a) Debenture Redemption Reserve Creation:

As per the Companies (Share Capital and Debentures) Rules, 2014, the Company is

not required to create Debenture Redemption Reserve because the Company is a

NBFC MFI registered with the RBI and the debentures are privately placed.

(b) Issue / instrument specific regulations:

The Issue of Debentures shall be in conformity with the applicable provisions of the

Companies Act including the notified rules thereunder and the SEBI Debt Listing

Regulations and all other applicable circulars, regulations and guidelines issued by

SEBI and by RBI from time to time.

(c) Application process:

40

The application process for the Issue is as provided in Section 8 of this Information

Memorandum.

5.19 A statement containing particulars of the dates of, and parties to all material

contracts, agreements:

The following contracts, not being contracts entered into in the ordinary course of business

carried on by the Company or entered into more than 2 (Two) years before the date of this

Information Memorandum, which are or may be deemed material, have been entered into by

the Company.

The contracts, documents referred to hereunder are material to the Issue, may be inspected at

the Registered Office of the Company between 10.00 am to 4.00 pm on working days.

Sr. No. Nature of Contract

1 Certified true copy of the Memorandum & Articles of Association of the Issuer

2 Board Resolution dated April 10,2014authorizing issue of Debentures offered under

terms of this Disclosure Document.

3 Shareholder Resolution dated April 10, 2014 authorizing the issue of non-convertible

debentures by the Company.

4 Shareholder Resolutions dated November 8, 2013 and April 10, 2014 authorizing the

borrowing by the Company and the creation of security.

5 Copies of Annual Reports of the Company for the last three financial years

6 Credit rating letter from the Rating Agency

7 Letter from IDBI Trusteeship Services Limited giving its consent to act as Debenture

Trustee

8 Letter for Register and Transfer Agent

9 Certified true copy of the certificate of incorporation of the Company

10 Certified true copy of the tripartite agreement between the Company, the Registrar &

Transfer Agent and the National Securities Depository Limited/CDSL

11 Private Placement Offer Letter in Form PAS- 4

12 The Transaction Documents entered into by the Company

5.20 Details of Debt Securities Sought to be Issued

Under the purview of the current document, the Issuer intends to raise an amount of

Rs.35,00,00,000 (Rupees Three Five Crores only) by issue of Collateralized, Rated, Listed,

Redeemable Non-Convertible Debentures, on a private placement basis.

For further details of the Debentures, please refer to the terms and conditions of the

debentures set out in Section 6.23 of this Information Memorandum.

5.21 Issue Size

The aggregate issue size for the Debentures is. Rs. 350,000,000/- (Rupees Thirty Five Croroes

only)

5.22 Utilization of the Issue Proceeds

The proceeds shall be used for loan portfolio growth of the company subject to such

restrictions as the parties may have agreed upon and shall not be utilised for the purposes

mentioned below.

41

The Issuer undertakes that the proceeds of this Issue shall be utilized for the deployment of

funds on its own balance sheet and not to facilitate resource requests of its group

entities/parent company/associates.

The Issuer undertakes that proceeds of this Issue shall not be utilized for the following

purposes as specified in the RBI Master Circular No. DBOD.BP.BC.No.6/21.04.172/2013-14

dated July 1, 2013:

1) Bills discounted / rediscounted by NBFCs, except for rediscounting of bills discounted by

NBFCs arising out of: Commercial vehicles (including light commercial vehicles) and

two wheeler and three wheeler vehicles, subject to the following conditions: The bills

should have been drawn by the manufacturer on dealers only; The bills should represent

genuine sale transactions as may be ascertained from the chassis / engine number and;

Before rediscounting the bills, the bona fides and track record of NBFCs which have

discounted the bills would be verified.

2) Investments of NBFCs both of current and long-term nature, in any company / entity by

way of shares, debentures, etc. However, Stock Broking Companies may be provided

need-based credit against shares and debentures held by them as stock-in-trade.

3) Unsecured loans / inter-corporate deposits by NBFCs to / in any company.

4) All types of loans and advances by NBFCs to their subsidiaries, group companies /

entities.

5) Finance to NBFCs for further lending to individuals for subscribing to Initial Public

Offerings (IPO) and for purchase of shares from secondary market

5.23 Issue Details (a) Delay in execution of the Debenture Trust Deed and Deed of Hypothecation:-

In the case of a delay in the execution of Debenture Trust Deed and the Deed of

Hypothecation, the Issuer shall refund the subscription with the agreed rate of interest

or shall pay penalty interest of 2% (Two Percent) per annum over the and above the

applicable coupon rate until such time the conditions have been complied with at the

option of the investor.

(b) Default in Payment :-

In the event of a default in payment of (i) the interest on the relevant interest payment

date; and/or (ii) the redemption amount on the relevant redemption payment date, the

Issuer shall pay default interest at the rate of 2% (two percent) per annum over and

above the interest rate on the defaulted amounts for the period of default.

(c) Default in listing :-

The Issuer shall, promptly after allotment of the Debentures but in any event within

15 (fifteen) days from the Deemed Date of Allotment, procure that the Debentures are

listed on the wholesale debt market segment of the Stock Exchange, failing which,

the Issuer shall be required to immediately redeem all the Debentures along with the

interest accrued from the date of issuance at the interest rate till the date of

redemption.

(d) Other Issue Details

Security Name 13.63% Suryoday Micro Finance Private Limited 2019

Issuer Suryoday Micro Finance Private Limited

Type of Instrument Non-Convertible Debentures

Nature of Instrument Collateralized, Rated, Listed, Redeemable Non-Convertible

Debentures

42

Seniority Senior

Mode of Issue Private placement

Eligible/Identified Investors As provided in Clause 0 below

Listing Debentures are to be listed on the WDM of Bombay Stock Exchange

within a maximum period of 15 (Fifteen) calendar days from the

Deemed Date of Allotment.

The Issuer shall, promptly after allotment of the Debentures but in any

event within 15 (fifteen) days from the Deemed Date of Allotment,

procure that the Debentures are listed on the wholesale debt market

segment of the Stock Exchange, failing which, the Issuer shall be

required to immediately redeem all the Debentures along with the

interest accrued from their date of issuance at the coupon/interest rate

till the date of redemption.

Rating of Instrument [ICRA]BBB(Stable)

Issue Size Rs. 350,000,000/- (Rupees Thirty Five Crores Only)

Option to retain oversubscription N.A.

Objects of the Issue To raise senior secured debt to the extent upto Rs.350,000,000/-

(Rupees Thirty Five Crores only) and the issue proceeds will be

utilized for financing the growth of the microfinance portfolio in

accordance with applicable Law

Details of the utilization of the

Proceeds

The issue proceeds will be utilized for financing the growth of the

microfinance portfolio in accordance with applicable Law

Coupon Rate 13.63%

Step Up/ Step Down Coupon Rate As per clause 2.8 of the Debenture Trust Deed

Coupon Payment Frequency Semi Annually

Coupon Payment Dates Semi-annually on November 28, and May 28, of every calendar year

until Maturity Date

Coupon Type Fixed Coupon rate

Coupon Reset Process [N.A]

Day Count Basis Actual / 365 (or 366 in the case of a leap year)

Interest on Application Money 13.63% per annum gross of withholding taxes

Default Interest Rate As per clause 2.8 of the Debenture Trust Deed

Delay Penalty In the case of a delay in the execution of Debenture Trust Deed and the

Deed of Hypothecation, the Issuer shall refund the subscription with

the agreed rate of interest or shall pay penalty interest of 2% (Two

Percent) per annum over the and above the applicable Coupon Rate

until such time the conditions have been complied with at the option of

the Investor.

Tenor The period commencing from the Deemed Date of Allotment until the

Redemption Date

Redemption Date May 28, 2019

Redemption Amount Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture on the

Redemption Date plus accrued Coupon if any

Redemption Premium/ Discount As per clause 2.6 of the Debenture Trust Deed

Issue Price Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture

Discount at which security is

issued and the effective yield as a

result of such discount

N.A.

43

Put option date As per clause 2.6 of the Debenture Trust Deed

Put option price As per clause 2.6 of the Debenture Trust Deed

Call Option Date As per clause 2.6 of the Debenture Trust Deed

Call Option Price As per clause 2.6 of the Debenture Trust Deed

Put Notification time As per clause 2.6 of the Debenture Trust Deed

Call Notification Time As per clause 2.6 of the Debenture Trust Deed

Face Value Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture

Minimum Application size and in

multiples of __ thereafter

35 Debentures and in multiples of 10 Debentures thereafter

Issue Timing Issue Opening Date: June 23, 2014

Issue Closing Date: July 22, 2014

Pay-in Dates: July 22, 2014

Deemed Date of Allotment: July 22, 2014

Issuance mode of the Instrument Demat only

Trading mode of the Instrument Demat only

Settlement mode of the Instrument RTGS

Depositories NSDL/CDSL

Business Days Shall mean a day (other than a Saturday or a Sunday) on which banks

are open for business generally in Mumbai, India and New York,

United States of America.

Business Day Convention 1. When a day on or by which a payment of interest is due to be

made is not a Business Day, then such date shall be

automatically changed to the next Business Day.

2. When the day on or by which a payment (other than a

payment of interest) is due to be made is not a Business Day,

that payment shall be made on the preceding Business Day.

Record Date In relation to any Due Date on which a payment has to be made by the

Issuer in respect of the Debentures, the date that is 15 (fifteen) days

prior to that Due Date

Security 1. Description of security: Interim security of a first ranking

exclusive charge by hypothecation over identified mutual

fund units to be replaced, within 60 days from the Deemed

Date of Allotment, by a first ranking exclusive charge by

hypothecation over identified loan portfolios as may be

supplemented from time to time, in accordance with the terms

of the Transaction Documents

2. Type of security – First ranking and exclusive

3. Type of charge – floating charge

4. Likely date of creation of security – An interim security over

certain identified mutual fund units (as set out in Schedule 1

of the Deed of Hypothecation) has been created under the

Deed of Hypothecation and will be replaced, within 60 days

from the Deemed Date of Allotment, by security over

identified loan portfolios as may be supplemented from time

to time, in accordance with the terms of the Transaction

Documents

5. Minimum security cover – As per clause 2.11 in Debenture

Trust Deed

6. Revaluation and replacement of security -As per clause 2.11

of the Debenture Trust Deed

44

Transaction Documents Shall be as set out in Clause 6.1 below

Conditions Precedent to

Disbursement

1. As per clause 3.1 and Schedule II of the Debenture Trust

Deed

Conditions Subsequent to

Disbursement

1. As per clause 3.5 and Schedule III of the Debenture Trust

Deed

Events of Default As per clause 6.1 of the Debenture Trust Deed

Cross Default Clause As per clause 6.1 (g) of the Debenture Trust Deed

Role and Responsibilities of

Debenture Trustee

As per clause 8 of the Debenture Trust Deed

Covenants As per clause 5.2 of the Debenture Trust Deed

Representation and warranties As per clause 5.1 of the Debenture Trust Deed

Illustration of Bond Cashflows Kindly refer to [Annexure V] of this Information Memorandum

Governing Law As per clause 12.1 and 12.2 of the Debenture Trust Deed

45

SECTION 6: TRANSACTION DOCUMENTS AND KEY TERMS

6.1 Transaction Documents

The following Transaction Documents shall be executed in relation to the Issue:

(a) Debenture Trustee Agreement

(b) Information Memorandum

(c) Offer Documents

(d) Fee Letter

(e) The letters issued by the Trustee and Rating Agency

(f) The letters appointing the Registrar and Transfer Agent with respect to the issuance

of the Debentures

(g) The agreement entered into between the Registrar and Transfer Agent and the Issuer,

with respect to the issuance of the Debentures

(h) The agreement between the Issuer, its Registrar and Transfer Agent and the

Depository

(i) The listing agreement between the Issuer and the Stock Exchange for listing the

Debentures

(j) Debenture Trust Deed

(k) Deed of Hypothecation

(l) Such other documents as agreed between the Issuer and the Debenture Trustee.

The Transaction Documents shall be executed on or prior to the Deemed Date of Allotment.

6.2 Representations and Warranties of the Issuer

The representations and warranties of the Issuer shall be in accordance with Clause 5.1

and Schedule VI of Debenture Trust Deed.

AFFIRMATIVE COVENANTS:-

The affirmative covenants of the Issuer shall be in accordance with Clause 5.2 and

Schedule VII (Part A) of the Debenture Trust Deed.

NEGATIVE COVENANTS:-

The negative covenants of the Issuer shall be in accordance with Clause 5.2 and

Schedule VII (Part B) of the Debenture Trust Deed.

FINANCIAL COVENANTS AND ADDITIONAL COVENANTS:- The financial covenants of the Issuer shall be in accordance with Clause 5.2 and

Schedule VII (Part C) of the Debenture Trust Deed.

REPORTING COVENANTS

The reporting requirements of the Issuer shall be in accordance with Clause 5.3 and

Schedule XII of the Debenture Trust Deed. Schedule XII of the Debenture Trust

Deed

EVENTS OF DEFAULT

The Events of Default shall be in accordance with clause 6.1of the Debenture Trust

Deed.

CONSEQUENCES OF EVENTS OF DEFAULT

As per Clause 6.2 of the Debenture Trust Deed.

46

6.3 CONFLICT

In case of any inconsistency where there is a conflict between the conditions as stipulated in

this Information Memorandum and the Debenture Trust Deed, the provisions of the

Debenture Trust Deed shall prevail and override the provisions of this Information

Memorandum. The Issuer agrees, upon request in writing from the Debenture Trustee, to

issue any supplement to this Information Memorandum and ensure that this is consistent with

the terms and conditions set out in the Debenture Trust Deed.

47

SECTION 7 : OTHER INFORMATION AND APPLICATION PROCESS

The Debentures being offered as part of the Issue are subject to the provisions of the Act, the

Memorandum and Articles of Association of the Issuer, the terms of this Information

Memorandum, the Offer Letter, the Application Form and other terms and conditions as may

be incorporated in the Transaction Documents.

7.1 Mode of Transfer/Transmission of Debentures

The Debentures shall be transferable freely; however, it is clarified that no Investor shall be

entitled to transfer the Debentures to a person who is not entitled to subscribe to the

Debentures. The Debenture(s) shall be transferred and/or transmitted in accordance with the

applicable provisions of the Act and other applicable laws. The Debentures held in

dematerialized form shall be transferred subject to and in accordance with the

rules/procedures as prescribed by NSDL/CDSL and the relevant DPs of the transferor or

transferee and any other applicable laws and rules notified in respect thereof. The

transferee(s) should ensure that the transfer formalities are completed prior to the Record

Date. In the absence of the same, amounts due will be paid/redemption will be made to the

person, whose name appears in the register of debenture holders maintained by the R&T

Agent as on the Record Date, under all circumstances. In cases where the transfer formalities

have not been completed by the transferor, claims, if any, by the transferees would need to be

settled with the transferor(s) and not with the Issuer. The normal procedure followed for

transfer of securities held in dematerialized form shall be followed for transfer of these

Debentures held in dematerialised form. The seller should give delivery instructions

containing details of the buyer’s DP account to his DP.

7.2 Debentures held in Dematerialised Form

The Debentures shall be held in dematerialised form and no action is required on the part of

the Debenture Holder(s) for redemption purposes and the redemption proceeds will be paid by

fund transfer/RTGS to those Debenture Holder(s) whose names appear on the list of

beneficiaries maintained by the R&T Agent. The names would be as per the R&T Agent’s

records on the Record Date fixed for the purpose of redemption. All such Debentures will be

simultaneously redeemed through appropriate debit corporate action.

The list of beneficiaries as of the Record Date setting out the relevant beneficiaries’ name and

account number, address, bank details and DP’s identification number will be given by the

R&T Agent to the Issuer. If permitted, the Issuer may transfer payments required to be made

in any relation by EFT/RTGS to the bank account of the Debenture Holder(s) for redemption

payments.

7.3 Trustee for the Debenture Holder(s)

The Issuer has appointed IDBI Trusteeship Services Limited to act as trustee for the

Debenture Holder(s). The Issuer and the Debenture Trustee intends to enter into the

Debenture Trustee Agreement and the Debenture Trust Deed inter alia, specifying the

powers, authorities and obligations of the Debenture Trustee and the Issuer. The Debenture

Holder(s) shall, without further act or deed, be deemed to have irrevocably given their

consent to the Debenture Trustee or any of its agents or authorized officials to do all such

acts, deeds, matters and things in respect of or relating to the Debentures as the Debenture

Trustee may accordance with the Debenture Trust Deed deem necessary or require to be done

in the interest of the Debenture Holder(s). Any payment made by the Issuer to the Debenture

Trustee on behalf of the Debenture Holder(s) shall discharge the Issuer pro tanto to the

Debenture Holder(s). The Debenture Trustee will protect the interest of the Debenture

Holder(s) in regard to the repayment of principal and yield thereon and they will take

48

necessary action, subject to and in accordance with the Debenture Trustee Agreement and the

Debenture Trust Deed, at the cost of the Issuer. No Debenture Holder shall be entitled to

proceed directly against the Issuer unless the Debenture Trustee, having become so bound to

proceed, fails to do so. The Debenture Trustee Agreement and the Debenture Trust Deed shall

more specifically set out the rights and remedies of the Debenture Holder(s) and the manner

of enforcement thereof.

7.4 Sharing of Information

The Issuer may, at its option, but subject to applicable laws, use on its own, as well as

exchange, share or part with any financial or other information about the Debenture Holder(s)

available with the Issuer, with its subsidiaries and affiliates and other banks, financial

institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the

Issuer nor its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid

information.

7.5 Debenture Holder not a Shareholder

The Debenture Holder(s) shall not be entitled to any right and privileges of shareholders other

than those available to them under the Act. The Debentures shall not confer upon the

Debenture Holders the right to receive notice(s) or to attend and to vote at any general

meeting(s) of the shareholders of the Issuer.

7.6 Modification of Debentures

(a) As per clause 11.4 of the Debenture Trust Deed

7.7 Right to accept or reject Applications

The Board of Directors/Committee of Directors reserves its full, unqualified and absolute

right to accept or reject any application for subscription to the Debentures, in part or in full,

without assigning any reason thereof.

7.8 Notices

Any notice may be served by the Issuer/ Debenture Trustee upon the Debenture Holders

through registered post, recognized overnight courier service, hand delivery or by facsimile

transmission addressed to such Debenture Holder at its/his registered address or facsimile

number.

All notice(s) to be given by the Debenture Holder(s) to the Issuer/ Debenture Trustee shall be

sent by registered post, recognized overnight courier service, hand delivery or by facsimile

transmission to the Issuer or to such persons at such address/ facsimile number as may be

notified by the Issuer from time to time through suitable communication. All correspondence

regarding the Debentures should be marked “Private Placement of Debentures”.

Notice(s) shall be deemed to be effective (a)in the case of registered mail, 3 (three) calendar

days after posting; (b)1 (One) Business Day after delivery by recognized overnight courier

service, if sent for next Business day delivery(c) in the case of facsimile at the time when

dispatched with a report confirming proper transmission or (d) in the case of personal

delivery, at the time of delivery.

7.9 Issue Procedure

49

Only Eligible Investors as given hereunder and identified upfront by the Issuer may apply for

the Debentures by completing the Application Form in the prescribed format in block letters

in English as per the instructions contained therein. The minimum number of Debentures that

can be applied for and the multiples thereof shall be set out in the Application Form. No

application can be made for a fraction of a Debenture. Application Forms should be duly

completed in all respects and applications not completed in the said manner are liable to be

rejected. The name of the applicant’s bank, type of account and account number must be duly

completed by the applicant. This is required for the applicant’s own safety and these details

will be printed on the refund orders and /or redemptions warrants.

The applicant should transfer payments required to be made in any relation by EFT/RTGS, to

the bank account of the Issuer as per the details mentioned in the Application Form.

7.10 Application Procedure

Eligible investors will be invited to subscribe by way of the Application Form prescribed in

the Offer Letter during the period between the Issue Opening Date and the Issue Closing Date

(both dates inclusive). The Issuer reserves the right to change the issue schedule including the

Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice.

The Issue will be open for subscription during the banking hours on each day during the

period covered by the Issue Schedule.

7.11 Basis of Allotment

Notwithstanding anything stated elsewhere, Issuer reserves the right to accept or reject any

application, in part or in full, without assigning any reason. Subject to the aforesaid, in case of

over subscription, priority will be given to Investors on a first come first serve basis. The

investors will be required to remit the funds as well as submit the duly completed Application

Form along with other necessary documents to Issuer by the Deemed Date of Allotment.

7.12 Payment Instructions

The Application Form should be submitted directly. The entire amount of Rs.10,00,000- (Rs.

Ten Lakhs only) per Debenture is payable on the Deemed Date of Allotment in accordance

with the terms of the Transaction Documents. Applicants can remit the application amount

through RTGS . The RTGS details of the Issuer are as under:

Beneficiary Name: Suryoday Micro Finance Private Limited

Bank Account No.: 08307700000038

IFSC CODE: HDFC0000830

Bank Name: HDFC BANK

Branch Address: CBD BELAPUR MUMBAI-400614

7.13 Eligible Investors

The following categories of Investors, who have been specifically approached through

issuance of the Offer Letter and have been identified upfront, are eligible to apply for this

private placement of Debentures subject to fulfilling their respective investment norms/rules

and compliance with laws applicable to them by submitting all the relevant documents along

with the Application Form:

(b) Multilateral development banks such as International Finance Corporation

(c) Mutual Funds

(d) Non-banking financial companies

(e) Provident Funds and Pension Funds

(f) Corporates

50

(g) Banks

(h) Foreign Institutional Investors (FIIs)

(i) Qualified Foreign Investors (QFIs)

(j) Insurance Companies

(k) Investment holding companies of high net worth individuals

(l) Any other person eligible to invest in the Debentures

All Investors are required to comply with the relevant regulations/guidelines applicable to

them for investing in this issue of Debentures.

Note: Participation by potential investors in the issue may be subject to statutory and/or

regulatory requirements applicable to them in connection with subscription to Indian

securities by such categories of persons or entities. Applicants are advised to ensure that they

comply with all regulatory requirements applicable to them, including exchange controls and

other requirements. Applicants ought to seek independent legal and regulatory advice in

relation to the laws applicable to them.

The Debentures are and have been placed on a private placement basis and shall not be issued

to more than forty nine (49) Eligible Investors

7.14 Procedure for Applying for Dematerialised Facility

(m) The applicant must have at least one beneficiary account with any of the DP’s of

NSDL/CDSL prior to making the application.

(n) The applicant must necessarily fill in the details (including the beneficiary account

number and DP - ID) appearing in the Application Form.

(o) Debentures allotted to an applicant will be credited to the applicant’s respective

beneficiary account(s) with the DP.

(p) For subscribing to the Debentures, names in the Application Form should be identical

to those appearing in the details in the Depository. In case of joint holders, the names

should necessarily be in the same sequence as they appear in the account details

maintained with the DP.

(q) Non-transferable allotment advice/refund orders will be directly sent to the applicant

by the Registrar and Transfer Agent to the Issue.

(r) If incomplete/incorrect details are given under the heading in the Application Form,

it will be deemed to be an incomplete application and the same may be held liable for

rejection at the sole discretion of the Issuer.

(s) For allotment of Debentures, the address, nomination details and other details of the

applicant as registered with his/her DP shall be used for all correspondence with the

applicant. The applicant is therefore responsible for the correctness of his/her

demographic details given in the Application Form vis-a-vis those with his/her DP. In

case the information is incorrect or insufficient, the Issuer would not be liable for the

losses, if any.

(t) The redemption amount or other benefits would be paid to those Debenture Holders

whose names appear on the list of beneficial owners maintained by the R&T Agent as

on the Record Date. In case of those Debentures for which the beneficial owner is not

identified in the records of the R&T Agent as on the Record Date, the Issuer would

keep in abeyance the payment of the redemption amount or other benefits, until such

51

time that the beneficial owner is identified by the R&T Agent and conveyed to the

Issuer, whereupon the redemption amount and benefits will be paid to the

beneficiaries, as identified.

7.15 Depository Arrangements

The Issuer shall make necessary arrangement with CDSL and NSDL for issue and holding of

Debenture in dematerialised form.

7.16 List of Beneficiaries

The Company shall request the Depository to provide a list of Beneficial Owners as at end of

every Record date. This shall be the list, which shall be considered for payment of interest/

redemption premium and repayment of principal, as the case maybe. The list so provided by

the Depository shall be deemed to be the Register of Debenture Holders in terms of Section

88 of the Companies Act, 2013.

7.17 Procedure for application by Mutual Funds and Multiple Applications

In case of applications by mutual funds and venture capital funds, a separate application must

be made in respect of each scheme of an Indian mutual fund/venture capital fund registered

with the SEBI and such applications will not be treated as multiple application, provided that

the application made by the asset management company/trustee/custodian clearly indicated

their intention as to the scheme for which the application has been made.

The application forms duly filled shall clearly indicate the name of the concerned scheme for

which application is being made and must be accompanied by certified true copies of

(u) SEBI registration certificate

(v) Resolution authorizing investment and containing operating instructions

(w) Specimen signature of authorized signatories

7.18 Documents to be provided by Investors

Investors need to submit the following documents, as applicable

(x) Memorandum and Articles of Association or other constitutional documents

(y) Resolution authorising investment

(z) Specimen signatures of the authorised signatories

(aa) SEBI registration certificate (for Mutual Funds)

(bb) Application Form (including RTGS details)

7.19 Applications to be accompanied with Bank Account Details

Every application shall be required to be accompanied by the bank account details of the

applicant and the magnetic ink character reader code of the bank for the purpose of availing

direct credit of redemption amount and all other amounts payable to the Debenture Holder(s)

through EFT/RTGS.

7.20 Succession

In the event of winding-up of the holder of the Debenture(s), the Issuer will recognize the

executor or administrator of the concerned Debenture Holder(s), or the other legal

representative as having title to the Debenture(s). The Issuer shall not be bound to recognize

such executor or administrator or other legal representative as having title to the Debenture(s),

unless such executor or administrator obtains probate or letter of administration or other legal

representation, as the case may be, from a court in India having jurisdiction over the matter.

52

The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of

probate or letter of administration or other legal representation, in order to recognize such

holder as being entitled to the Debenture(s) standing in the name of the concerned Debenture

Holder on production of sufficient documentary proof and/or an indemnity.

7.21 Mode of Payment

All payments must be made through EFT/RTGS .

7.22 Effect of Holidays

a) When a day on or by which a payment of interest is due to be made is not a Business Day,

then such date shall be automatically changed to the next Business Day.

b) When the day on or by which a payment (other than a payment of interest) is due to be made

is not a Business Day, that payment shall be made on the preceding Business Day.

7.23 Issue of Debentures

As soon as practicable thereafter but in any event within 2 (two) days from the Deemed Date

of Allotment, the Issuer shall credit the Debentures in dematerialized form to the demat

account of the debentureholders.

7.24 Record Date

The Record Date will be 15 (Fifteen) calendar days prior to any Due Date.

7.25 Refunds

For applicants whose applications have been rejected or allotted in part, refund orders will be

dispatched within seven days from the Deemed Date of Allotment of the Debentures.

In case the Issuer has received money from applicants for Debentures in excess of the

aggregate of the application money relating to the Debentures in respect of which allotments

have been made, the Registrar shall upon receiving instructions in relation to the same from

the Issuer repay the moneys to the extent of such excess, if any.

7.26 Interest on Application Money

Interest shall be payable on all application monies received at the Coupon Rate of 13.63%

(Thirteen Point Sixty Three Percent) per annum from the date of realization of the application

monies by the Issuer until the Deemed Date of Allotment and the same shall be paid to the

relevant Investors within 7 (Seven) Business Days from the Deemed Date of Allotment.

7.27 Payment on Redemption

Payment on redemption will be made through RTGS system/funds transfer in the name of the

Debenture Holder(s) whose names appear on the list of beneficial owners given by the

Depository to the Issuer as on the Record Date.

The Debentures shall be taken as discharged on payment of the redemption amount by the

Issuer on maturity to the registered Debenture Holder(s) whose name appears in the Register

of Debenture Holder(s) on the Record Date. On such payment being made, the Issuer will

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inform NSDL/CDSL and accordingly the account of the Debenture Holder(s) with

NSDL/CDSL will be adjusted.

On the Issuer dispatching the amount as specified above in respect of the Debentures, the

liability of the Issuer shall stand extinguished.

Disclaimer: Please note that only those persons to whom this Information Memorandum

or the Offer Letter has been specifically addressed are eligible to apply. However, an

application, even if complete in all respects, is liable to be rejected without assigning any

reason for the same. The list of documents provided above is only indicative, and an

investor is required to provide all those documents / authorizations / information, which

are likely to be required by the Issuer. The Issuer may, but is not bound to revert to any

investor for any additional documents / information, and can accept or reject an

application as it deems fit. Investment by investors falling in the categories mentioned

above are merely indicative and the Issuer does not warrant that they are permitted to

invest as per extant laws, regulations, etc. Each of the above categories of investors is

required to check and comply with extant rules/regulations/ guidelines, etc. governing or

regulating their investments as applicable to them and the Issuer is not, in any way,

directly or indirectly, responsible for any statutory or regulatory breaches by any

investor, neither is the Issuer required to check or confirm the same.

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ANNEXURE I: TERM SHEET

As per Clause 5.23(d) of this Information Memorandum

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ANNEXURE V: ILLUSTRATION OF BOND CASH FLOWS

Illustration of Bond Cash Flows

Company Suryoday Micro Finance Private Limited

Face Value (per security) Rs. 10,00,000/- (Rupees (Ten Lakhs) only)

Issue Date / Date of Allotment July 22, 2014

Redemption May 28, 2019

Coupon Rate 13.63% (Thirteen Point Sixty Three

Percent) per annum (computed on a simple

interest basis)

Frequency of the Coupon Payment with

specified dates

Semi-annually on 28th Nov and 28th May of

every calendar year until Maturity Date

Day Count Convention Actual / Actual

Cash Flows Date No. of days in

Coupon Period

Amount (in

Rupees)

1st Coupon November 28, 2014 160 16.90

2nd Coupon May 28, 2015 181 23.70

3rd Coupon November 28, 2015 184 24.00

4th Coupon May 28, 2016 182 23.80

5th Coupon November 28, 2016 184 24.00

6th Coupon May 28, 2017 181 23.70


8th Coupon May 28, 2018 181 23.70


10th

Coupon May 28, 2019 181 23.70

Principal 350.00

Total 581.50

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