To the Members
Your Directors have pleasure in presenting the 14th Annual Report of the Companytogether with the audited financial statements for the year ended 31st March, 2011.
1. Financial Results
The financial results for the year ended 31st March. 2011 are summarized below:
|Particulars ||2010-11 ||2009-10 |
|Income from Operations ||231,587 ||108,938 |
|Total Expenditure ||150,435 ||72,684 |
|Profit Before Depreciation ||81,152 ||36,254 |
|Depreciation and Other Non Cash Charges ||5,031 ||1.699 |
|Profit Before Tax ||76,121 ||34,555 |
|Provision for Tax/Deferred Taxes ||26,703 ||11,798 |
|Profit After Tax ||49,418 ||22,757 |
|Share Capital and Reserves ||133,441 ||58,455 |
|Subordinated Debt ||71,059 ||32,467 |
|Secured Non-Convertible Debentures ||419,823 ||271,925 |
|Bank Borrowings ||605,282 ||212,787 |
|Gross Retail Loan Assets under Management ||1586,845 ||743,815 |
Financial Year 2010-11 has been a landmark year for your Company for the Gross RetailLoan Assets Under Management crossing the land mark figure of Rs. 1500000 lacs. GrossRetail Loan Assets Under Management stood at Rs. 1586845 lacs as of 31st March, 2011registering a growth of 113% as against Rs. 743815 lacs reported during the financial yearended 31st March, 2010. Interest Income registered a growth of 113% to reach at Rs 229834lacs for the financial year 2010-11 as compared to Rs. 107745 lacs reported during theprevious financial year Profit Before Tax amounted to Rs. 76121 facs for the financialyear 2010-11 as compared to Rs. 34555 lacs registering a growth of 120% as compared to theprevious financial year.
1128 new branches were opened across the country during the year while efforts were putin ensuring deeper penetration into the rural heartlands of the Country. The average goldloan outstanding per branch has increased from Rs. 457 43 lacs to Rs. 575.49 lacs as onMarch 31,2011.
Your Board of Directors has decided to plough back the entire profit for the year andretain the same in the Profit end Loss Account further strengthening your Company's netowned funds position.
4. Resource Mobilization
(a) Secured Debentures
During the year, Company raised Rs. 126397 Lacs, net of repayments, through privateplacement of Secured Non-Convertible Debentures. Funds raised through this route continueto be a substantial resource base for the Company. Company has also privately placedSecured Non-Convertible Debentures to the tune of Rs. 21500 lacs which are listed in theWholesale Debt Segment of the National Stock Exchange of India Limited.
(b) Bank Finance
Commercial Banks continued their support of the company's aggressive asset growth. Asof 31st March, 2011, borrowings from banks held at Rs. 605282 lacs. The company alsoraised resources through sell down of gold loan portfolio such that the outstanding amountof gold loan sold under bilateral assignment as of 31st March. 2011 was Rs. 418639 lacs.Your company's rated short term debt Instruments were also placed with various mutualfunds at competitive rates enabling the company to reduce the overall cost of liabilities.
(C) Subordinated Debts
Subordinated Debts continue to be another source for funding the operations of CompanySubordinated Debts represents long term source of funds for the Company and the amountoutstanding as on 31st March, 2011 was Rs. 71059 lacs. It will qualify as Tier II capitalunder the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies PrudentialNorms (Reserve Bank Directions). 2007.
The company is rated by CRISIL for Rs.4000 crones of Short Term Debt Programme with arating of "CRlStL A1+". This is the highest credit quality rating assigned byCRISIL to short term debt instruments. "CRISIL A1 +" rating indicates that thedegree of safety with regard to timely payment of interest and principal is very strong.CRISIL has also assigned the company with a long term rating of "CRISIL AA-,'(stable)" for Rs.500 crores Non-Convertible Debenture issue and for Rs.100 croresSubordinated Debt issue. This rating Indicates high degree of safety with regard to timelypayment of interest and principal on the instrument.
The company is also rated by ICRA for Rs.200 crores of Short Term Debt Programme with arating of "[ICRA] A1+* This is the highest credit quality rating assigned by ICRA toshort term debt instruments which indicates Lowest credit Risk and stronger creditquality. ICRA has also assigned the company for Rs.200crs Non-Convertible Debenture issueand for Rs.100crs Subordinated Debt issue with a long term rating of "[ICRA] AA-/Stable". Instruments rated in this category carry lowest credit risk and it indicateshigh quality creditrating. Further, ICRA has also assigned the company with LongTerm/Short Term rating of '[ICRA] AA-'/'[ICRA] A1+' respectively for Rs.6000 crores ofBank loans which indicates high quality credit rating and lowest credit risk/ strongercredit quality and Lowest credit Risk respectively.
6. Initial Public Offer
During the month of April, 2011, your Company has completed an Initial Public Offer of5.15.00,000 Equity Shares of Rs. 10/- each at a price of Rs. 175/- raising Rs. 901.25crores. The issue had seen an overwhelming success with an oversubscription of 24.33times. The shares of the Company were listed on National Stock Exchange of India Limitedand Bombay Stock Exchange Limited on 6th May 2011.
7. Internal Control
The Audit and Inspection Department of the company through a team of 704 personnelensures quality of the assets pledged and adherence to various risk management practicesat the branch and regional office level. The structure of the audit teams has been totallyrecast with decentralization of functions to match with the expansion in footprint withoutcompromising control.
The internal audit team directly reports to the Audit Committee of the Company. Theaudit committee oversees the functioning of the audit team and reviews the effectivenessof internal control at all levels apart from laying down constructive suggestions forimproving the audit function in the Company. The present reporting structure ensuresindependence of the internal audit function and embodies best corporate governancepractices.
8. Human Resources
Being a service oriented Company, your company consider human resource capital as thebiggest asset. As of March 31, 2011, your company has 16668 employees on payroll atvarious management levels. Your Company offer employees the opportunity to harness theirInherent skills and to brave newer frontiers at every phase of their growth. Yourmanagement is committed in providing a wholesome work environment and support withexcellent training programs and workshops. Your Company provides extensive training tobranch employees through training programs that are tailored to appraising the goldcontent in gold jewellery. Anew employee is introduced to the business through anorientation program and through training programs covering job-appropriate topics. Theexperienced branch employee receives additional training and an introduction to thefundamentals of management to acquire the skills necessary to move into managementpositions within the organization. Manager training involves a program that includesadditional management principles and more extensive training in topics such as incomemaximization, business development, staff motivation, customer relations and costefficiency.
As of date, your company has established two staff training colleges, one each inCochin and in New Delhi, and three regional training centers located in Chennai, Hyderabadand in Bangalore, and is in the process of establishing staff training colleges at otherregional locations as well.
9. Public Deposits
The Company has not accepted any public deposits and as such, no amount on account ofprincipal or interest on public; deposits was outstanding as on the date of Balance Sheet.
10. Capital Adequacy
As at 31st March, 2011, the capital adequacy of the company stood at 15.62% as againstthe statutory requirement of 15%,
11. RBI Guidelines
Your Company has complied with all the applicable regulations prescribed by the ReserveBank of India from time to time.
Mr. George Joseph and Mr. John K Paul have joined the Board of Directors as IndependentDirectors during the year. Mrs. Anna Alexander and Mrs. Sara George have resigned from theBoard of Directors effective July 21, 2010. Board place on record their deep sense ofappreciation for the services rendered by them during their tenure in the Board ofDirectors of the Company.
In accordance with Article 110 of the Articles of Association of the Company, Mr. KJohn Mathew and Mr. George Jacob Muthoot retire by rotation at the ensuing Annual GeneralMeeting, Both of them being eligible seek re-appointment at the Annual General Meeting.
M/s Rangamani & Co., Chartered Accountants, the Statutory Auditor of the Company,hold office in accordance with the provisions of the Act upto the conclusion of theforthcoming Annual General Meeting and are eligible for re-appointment.
Particulars of employees drawing remuneration beyond the monetary ceilings prescribedunder Section 217 (2A) of the Companies Act. 1956 are as follows:
|SL No: ||Name of Employee ||Age (yrs) ||Designation ||Date of Commencement of employment ||Gross Remuneration (Rs. in Lacs) ||Qualification ||Total Experience ||List employment |
|1 ||Mr. M G George Muthoot ||51 ||Whole Time Chairman ||28.07.2000 ||Rs.480 ||B.Tech ||37 years ||Muthoot Bankers |
|2 ||Mr. George Alexander Muthoot ||55 ||Managing Director ||28.07.2000 ||Rs.480 ||FCA ||31 years ||Muthoot Bankers |
|2 ||Mr. George Thomas Muthoot || ||Whole Time Director ||16.08.2005 ||Rs 480 ||Under Graduate ||36 years ||Muthoot Bankers |
|4 ||Mr. George Jacob Muthoot ||59 ||Whole Time ||16.08.2005 ||Rs.480 ||B.Tech ||34 years ||Muthoot Bankers |
15. Directors' Responsibility Statement
As required under the provisions contained in Section 217(2AA) of the Companies Act,1956 ("the Act"), your Directors hereby confirm that:
1. In the preparation of Annual Accounts for the financial year 2010-11, the applicableAccounting Standards have been followed and there are no material departures;
2. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitof the Company for financial year;
3. They have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act. They confirm that there are adequate systems and controls forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; and
4. The annual accounts have been prepared on a going concern basis.
16. Corporate Governance Report and Management Discussion and Analysis Statement
Your Company has complied with the Corporate Governance norms as stipulated under theListing Agreement entered into with the Stock Exchanges. Detailed reports on CorporateGovernance and Management Discussion and Analysis are annexed to this Report.
17. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Since the Company does not carry on manufacturing activities, disclosure requirementsunder Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1956 in this connection are not applicable. However, your Company, being a responsiblecorporate citizen, has been taking various measures for reducing the energy consumption.
|Total Foreign Exchange Earned ||: NIL |
|Total Foreign Exchange Expended ||: NIL |
Your Directors thank the Company's share holders, investors, customers, banks,financial institutions, rating agencies, debenture holders, debenture trustees and wellwishers for their continued support during the year. Your Directors place on record theirappreciation of the contribution made by the employees at all levels. Your Company'sconsistent growth was made possible by their hard work, solidarity, cooperation andsupport. The Board sincerely expresses its gratitude to Reserve Bank of India and Ministryof Corporate Affairs for the guidance and support received from them including staffofficials thereat from time to time.
| ||For and On Behalf of the Board of Directors |
| ||sd/- |
| ||M G George Muthoot |
| ||Chairman |
|Kochi, July 27, 2011 || |
|Registered Office: || |
|2nd Floor, Muthoot Chambers, || |
|Opposite Saritha Theatre Complex, || |
|Banerji Road, || |
|Kochi 682 018 || |