muthoot capital services ltd Directors report

Dear Members,

Your Directors have pleasure in presenting the 29th Annual Report on your Companys business and operations together with audited financial statements of the Company for the financial year ended March 31, 2023.

1. PERFORMANCE HIGHLIGHTS

A snapshot on key performance highlights of your Company showcasing the rebound in terms of all parameters, whether Business, Operational or Financial front establishing the fact that the Company is on its road to recovery is given below.

a) Financial Results

The summarized financial results of your Company for the FY 2022-2023 are given below:

( I in lakhs, except earnings per share)

Particulars	2022-2023	2021-2022
Total Income	44,461.96	41,131.00
Total Expenses	33,582.01	62,701.00
Pro t Before Tax (PBT)1	10,879.15	-21,570.00
Tax Expense	3,011.84	-5,376.39
Pro t After Tax (PAT)(Including OCI)	7,792.41	-16,183.00
Basic Earnings Per Share (EPS)	47.84	-98.47

b) Business Growth

The Company was able to conclude the year ended March 31,2023 by re-visiting all the business parameters which helped the company in creating an additional disbursement of I 1,318 crores during the year with robust asset quality.

Though the growth can be seen as neutral the additional business during the year has rede ned the policy, SOPs and the way forward. The business growth for the reporting year was 15%.

c) Pro tability

The total income of the Company increased to I 44,462 lakhs during the Financial Year 2022-2023 as against I 41,131 lakhs during the Financial Year 2021-2022. The total expenditure for the Financial Year 2022-2023 was at I 335,82 lakhs. The Company ended up with a profit of I 77,92 lakhs during the Financial Year 2022-2023 while the net loss after tax for the Financial Year 2021-2022 was I 16,183 lakhs. The Net Interest Margin (NIM) is reported at 66.7% for the current financial year as against 63.6% in Financial Year 2021 - 2022.

d) Asset Quality

As on March 31, 2023, the gross NPA and net NPA in the books of your Company stood at I 431,20 lakhs and I 44,08 lakhs respectively. The Provision Coverage on the entire on-book loan stood at 19.5% against 22.6% as on March 31, 2022. The Asset quality was the parameter which was given the topmost significance throughout the last Financial Year. A considerable reduction can be seen in the year on year numbers. The Companys Non performing asset as of March 31st 2023 stood at I 431,20 lakhs while the same were I 531,37 lakhs as of March 31st 2022. The Overall collection efficiencies have significantly improved in all the buckets. In spite of overall improvement, the Company is carrying management overlay of I 210,83 lakhs where in NNPA is 2.58%.

e) Net worth & Capital Adequacy Ratio

The net worth of your Company stood at I 489,25 lakhs as against I 411,33 lakhs in the previous year. It increased on account of profit earned during the year amounting to I 77,93 lakhs (including I 77 lakhs has been added on account of change in accounting policy with respect to ‘Accounting of Interest income on credit impaired assets for the better presentation and to ensure compliance with IND AS). The reserves and surplus of previous year is restated because of change in accounting policy amounting to I 23,59 lakhs. As a result the reserves increased from I 387,74 lakhs to I 411,33 lakhs.The Companys total Capital Adequacy Ratio (CRAR) as on March 31, 2023 stood at 27.92% of the aggregate risk weighted assets on the Balance Sheet and risk adjusted value of the - Balance Sheet items, which is significantly above the statutory minimum of 15%. Out of the above, Tier I CRAR stood at 27.92% and Tier II CRAR stood at 0%. The CRAR as on March 31, 2022 was at 19.73%.

f) Earnings Per Share

Earnings Per Share of your Company during the year under review is reported at I 47.84 against a negative earning of I 98.47 as on March 31, 2022. Return on Equity was at 17.3% for the current financial year.

2. DIVIDEND

To ensure availability of capital for the future growth of the Company, your Board of Directors, are of the view that ploughing back of profit after tax into the business is a necessity of time. Hence the Board does not recommend any dividend for the Financial Year 2022-2023.

3. RESERVES

The Company has transferred an amount of I 15,60.00 lakhs to the Statutory Reserve maintained under Section 45-IC of the Reserve Bank of India Act, 1934. The Company has not transferred any amount to the General Reserve for the financial year ended March 31, 2023. Post transfer of profits to reserves, your Board has decided to retain I 62,71.36 Lakhs as surplus in the profit & loss account.

4. RESOURCE MOBILISATION a) Share Capital

The authorized share capital of the Company is I 25,00 lakhs, and the paid-up share capital of the Company is I 16,45 lakhs. The Company had not issued any equity shares either with or without differential rights during the Financial Year 2022- 2023 and hence, the disclosure requirements under Section 43 and Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable.

b) Debentures

During the year under review, your Company issued I 175,00 lakhs Senior listed redeemable taxable principal protected market linked nonconvertible debentures and I 35,00 lakhs listed senior secured redeemable nonconvertible debentures. Your Company has redeemed Secured Redeemable Non-Convertible Debentures aggregating to an amount of I 100,00 lakhs. The MLDs and NCDs are listed on the debt market segment of the BSE Limited. As specified in the respective offer documents, the funds raised from MLDs and NCDs are being utilized for various financing activities, onward lending, to repay existing indebtedness, working capital and general corporate purposes of the Company. Details of the end-use of funds were furnished to the Audit Committee on a quarterly basis. The Company is in compliance with the applicable guidelines issued by the Reserve Bank of India, as amended from time to time. The Company has been regular in making payments of interest on all the MLDs and NCDs issued by the Company on a private placement basis as and when due.

As on March 31, 2023, the residual portion of Secured Redeemable non-convertible principal protected market linked and Non-Convertible Debentures under private placement including those issued during earlier years along with interest accrued is I 260,64 lakhs. The debentures issued are secured by way of paripassu and exclusive charge on the current assets of the Company. The non-convertible debentures of your Company are rated as “A +/ Stable” by CRISIL.

Trustees for Debenture Holders: Mr. A Gopalakrishnan, Chartered Accountant, M/s. K. Venkatachalam Aiyer & Co., Chartered Accountants, Building No. 41/3647 B, First Floor, Blue Bird Towers, Providence Road, Kochi - 682 018,IDBI Trusteeship Services Limited, Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001 and Vardhman Trusteeship Private Limited ,The Capital, A

Wing, 412A, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 are the Debenture Trustee for ensuring and protecting the interests of debenture holders.

c) Fixed Deposits

Your Company is a Non - Banking Financial Company (NBFC), registered with Reserve Bank of India (RBI) having a Deposit Taking License. The Company started accepting xed deposits during FY 2013 - 2014. The xed deposits of the Company are rated as “A+/Stable” by CRISIL.

The outstanding amount of xed deposits as on March 31, 2023, received by the Company including interest accrued at that date is I 39,22 lakhs.

As on March 31, 2023, there are 61 accounts of xed deposits amounting to I 114 lakhs which have become due for payment but have not been claimed by the depositors.

Being an NBFC registered with RBI, the provisions of Chapter V of the Companies Act, 2013, relating to acceptance of deposits by Companies, is not applicable to the Company.

Communication to Deposit Holders: The Company has the practice of sending communication by registered post to the deposit holders whose accounts are about to mature, two months prior to the date of maturity. If the deposit holders do not respond to the communication, the Company contacts the depositors in person, instructing them to surrender the xed deposit certificate and claim the amount. In case, the depositors are not traceable due to change in address/phone numbers, another regular communication is sent to the deposit holder and other modes to contact the deposit holders are also initiated till the deposits are repaid.

Trustees for Deposit Holders: Based on the RBI Guidelines for trustees of deposit holders of the NBFC, your Company has appointed IDBI Trusteeship Services Limited, as trustees for protecting the interests of deposit holders.

In compliance with the Master Circular - Miscellaneous Instruction to all NBFCs dated July 01, 2014, your Company has created a floating charge on the Statutory Liquid Assets in favour of IDBI

Trusteeship Services Limited, as trustee on behalf of the depositors as required under the extant provisions.

d) Subordinated Debts

The Company had, in the current year, raised money through issue of subordinated debts. As of March 31, 2023, the total amount of outstanding subordinated debts, including accrued interest was I 13,54 lakhs as against I 34,65 lakhs in the previous year.

The subordinated debts and public deposits contribute to 2.8% of our total funding.

e) Bank Finance

The Company raises funds for its working capital requirements mainly from banks. As on March 31, 2023 the total outstanding amount of credit facilities from Banks were I 1054,87 lakhs as against I 1105,76 lakhs as on March 31, 2022 excluding accrued interest.

Apart from the above, the Company has been sourcing funds through Securitization. During the year under review, the Company has sourced I 626,59 lakhs (net of MRR) (previous year I 315,15 lakhs). The same has been invested into by various kinds of entities and the value remaining outstanding as on March 31, 2023, was I 480,36 lakhs (previous year I 265,56 lakhs).

5. DIRECTORS

As on March 31, 2023, the Board of your Company consisted of the following six Directors:

Category	Name of Directors
Executive Director	Mr. Thomas George Muthoot, Managing Director
Non - Executive - Non - Independent Directors	Mr. Thomas John Muthoot, Chairman
	Mr. Thomas Muthoot, Director
Non - Executive Independent Directors	Mr. A. P. Kurian
	Mrs. Shirley Thomas
	Mr. Thomas Mathew

The composition of the Board is in line with the requirements of the Companies Act, 2013 and the SEBI

(Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015. All the Directors have vast knowledge and experience in their relevant elds and the Company has benefited immensely by their presence on the Board. The key Board quali cations, expertise, attributes are given in detail in the Report on Corporate Governance which forms part of this Report.

Mr. Thomas John Muthoot, Director (DIN: 00011618) retires at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment. The Board of Directors recommends the reappointment of Mr. Thomas John Muthoot as Director of the Company. The detailed Profile of Mr. Thomas John Muthoot, recommended for re-appointment, is enclosed with the Notice for the 29th AGM of the Company.

a) Changes in Directors and Key Managerial Personnel (KMP) during the Financial Year 2022-2023

During the year under review, Mr. Abhijith Jayan, Company Secretary & Compliance Of cer resigned with effect from closing hours of September 28,2022. Mr. Vinodkumar M. Panicker, Chief Finance Of cer, resigned with effect from closing hours of December 5,2022.

Mr. Ramandeep Singh was appointed as Chief Finance Of cer with effect from December 6,2022 and Ms.Deepa G was appointed as Company Secretary & Compliance Of cer with effect from March 22,2023.

Mr. Thomas George Muthoot, Managing Director, Mr. Ramandeep Singh, Chief Finance Of cer and Ms.Deepa G, Company Secretary & Compliance Of cer, are the KMPs of the Company, as recorded by the Board as on March 31, 2023.

There were no Independent Director appointed during the Financial year 2022-23.

b) Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Act the independent directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. There has been no change in the circumstances affecting their status as independent directors of the Company.

A declaration by Managing Director confirming the receipt of this declaration from Independent Directors is enclosed to this report as Annexure 1.

c) Policy on Board Diversity

The Policy on Board Diversity approved and adopted by the Company contains the followings: i. Diversity is ensured through consideration of a number of factors, including but not limited to skills, regional and industry experience, background and other qualities. ii. The Company shall also take into account factors based on its own business model and specific needs from time to time.

iii. The Nomination & Remuneration Committee shall lead the process of identifying and nominating candidates for appointment as Directors in the Board. iv. The benefits of diversity continue to influence succession planning and continue to be the key criteria for the search and nomination of Directors to the Board. v. Board appointments are based on merit and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board, including gender.

d) Policy on Nomination & Remuneration

The management of the Company has immensely benefitted from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. The Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. The Company has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee. The Policy on Nomination and Remuneration is framed in terms of section 178(3) of the Companies Act,2013 which contains the criteria for determining quali cations, positive attributes, independence of a director and other related matters. It also includes the details relating to the remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel in line with the requirement of the Section 178 of the Act, Regulation 19 read with Part D of Schedule II of the Listing Regulations and directions issued by the Reserve Bank of India (“RBI”) and as per the Guidelines on Compensation of Key Managerial Personnel and Senior Management in NBFCs issued by RBI. This Policy is available on the Companys website at the weblink: https://www.muthootcap.com/wp-content/uploads/2023/05/Policy-on-Nomination-and-Remuneration.pdf. The Company has formulated policy on Succession Planning for Directors and Key Managerial Personnel for continuity and smooth functioning of the Company.

e) Formal Annual Evaluation of Board and its Committees

Based on the Policy on Nomination and Remuneration, the Board has carried out an annual evaluation of its own performance, its Committees and Independent Directors, excluding the Director being evaluated.

The detailed note on the annual board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 is given in the Report on Corporate Governance, which forms part of this Report.

f) Meetings of the Board

During the Financial Year 2022-2023, your Board of Directors met eight times. Further details about the meetings of the Board are given in the Report on Corporate Governance, which forms a part of this Report.

g) Committees of the Board

The details of the Committees of the Board, their composition, terms of reference and the activities during the year are elaborated in the Report on Corporate Governance forming part of this Report.

6. SUBSIDIARIES/JOINT VENTURE/ASSOCIATE COMPANY

The Company has no subsidiary/joint venture/associate company. Hence consolidation and the provisions relating to the same under the Companies Act, 2013 and Rules made thereunder are not applicable to the Company.

7. CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year under review, there is no change in business of the Company. The Company is mainly into the business of providing vehicle loans (two-wheeler and used cars), for which, during the year under review the Company has disbursed loans to the extent of I 1152,73 lakhs and as on March 31, 2023, the total outstanding amount was I 1936,67 lakhs. The Company had disbursed business / corporate loans to the extent of I 165,54 lakhs and as on March 31, 2023, the outstanding amount is I 165,69 lakhs.

In addition, the Company has entered into Co-lending partnership with two NBFCs, WheelsEMI Private Limited and Up Money Limited wherein the company has become a principal partner by providing 80% and 20% remains in the Originator books. Agreement entered has been backed by the FLDG of 5% as per the guideline stipulated by RBI. The total disbursement done with these partners stands at I 241,36 lakhs with WheelsEMI and I 23,39 lakhs with Up Money.

The sourcing of two-wheeler and used car business of the Company takes place mainly at the dealer points for two wheelers where Company representatives are present and through branches of its group company, Muthoot FinCorp Limited. The Company is sources its customers through its mobile app.

8. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There were no material changes and commitments affecting the financial position of the Company between the end of financial year and the date of this Report.

9. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS AND TRIBUNALS

Your Directors con rm that there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

10. RISK MANAGEMENT

The Board oversees the risk management functions of the Company and a separate Risk Management Committee of the Board supervises the risk management functions. Apart from this, the Company has a separate Risk Management Department that co-ordinates and administers the risk management functions thereby setting up a top to down focus on the risk management. The Company has appointed Mrs. Umadevi Pazhoor unnikrishnan as the Chief Risk Of cer w.e.f. March 22, 2023. The Board has decided to appoint CRO for the purpose of augmenting risk management practices of the Company.

The Company believes that risk resilience is key to achieving higher growth. To this effect, the Company has a well-de ned Risk Management Policy in place to create and protect shareholder value by minimizing threats or losses and identifying and maximizing opportunities and thereby to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The policy lays down broad guidelines for timely identi cation, assessment and prioritization of risks affecting the Company in the short and foreseeable future. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately addressed or mitigated. The said policy is approved by the Board and reviewed from time to time.

The risk management framework in the Company is periodically reviewed by the Risk Management Committee of the Board. The Internal Auditors are also having a complete review of risk assessments and associated management action plans. All material risks of the Company emerging in the course of its business are identified, assessed and monitored and necessary action are taken on a regular basis.

MCSL conducts Internal Capital Adequacy Assessment Process (ICAAP) on annual basis to assess the suf ciency of its capital funds to cover the risks specified under Pillar II of Basel guidelines. The adequacy of MCSLs capital funds to meet the future business growth is also assessed in the ICAAP Document. Capital requirement for current business levels and framework for assessing capital requirement for future business levels has been made. Capital requirement and Capital optimisation are monitored periodically by the Committee of Senior Management (ALCO). The Senior Management deliberates on various options available for capital augmentation in tune with business growth. Based on these reports submitted by Senior Management, the Board of Directors evaluates the available capital sources, forecasts the capital requirements and capital adequacy of MCSL and ensures that the capital available for MCSL at all times is in line with the Risk Appetite of the company.

11. ADEQUACY OF INTERNAL AUDIT AND FINANCIAL CONTROLS

The Company has in place a stabilized and effective Internal Audit and Financial Controls system calibrated to the risk appetite of the Company and aligned to the size, scale and complexity of the business operations of the Company. The said financial controls of the Company are evaluated by the Audit Committee as per Part C of Schedule II of the SEBI (LODR) Regulations, 2015.

Apart from Statutory Audit and Concurrent Audit, your Company, in compliance with Section 138 of the Companies Act, 2013, had appointed M/s. BDO India LLP, Chartered Accountants as the Internal Auditors of the Company for the period under review . The scope and authority of the Internal Audit function is defined in the Audit Policy of the Company, duly approved and recommended by the Audit Committee of the Board and approved and adopted by the Board of Directors. The Internal Audit function essentially validates and ensures that the Company has in place adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. The Internal Audit function provides independent assurance to the Board of Directors and Senior Management on the quality and effectiveness of the Companys internal control, risk management and governance systems and processes, thereby helping the Board and Senior Management protect the Company and its reputation.

The Audit Committee oversees and reviews the functioning of the entire audit team and the effectiveness of internal control system at all levels and monitors the implementation of audit recommendations. During the year, such control systems were assessed and no reportable material weaknesses in the design or operation were observed. Improvements suggested are tracked with identified timelines for its completion. Accordingly, your Board is of the opinion that the Companys internal financial controls were adequate and effective during Financial Year 2022-2023.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility activities at Muthoot Capital Services Limited encompasses much more than social outreach programmes. The Company believes that CSR is a way of creating shared value and contributing to social and environmental good. With this philosophy, the CSR activities of the Company is centered around a theme called HEEL i.e., Health, Education, Environment and Livelihood. Aligning with its vision, your Company has been continuing to increase value in the community in which it operates, through its services and CSR initiatives, so as to stimulate well-being for the community, in ful llment of its role as a responsible corporate citizen. The Board has constituted a Corporate Social Responsibility Committee (CSR Committee) to oversee and monitor the CSR activities of the Company. The CSR Committee of the Company has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The Companys CSR Policy is committed towards CSR activities as envisaged in Schedule VII of the Companies Act, 2013. The CSR Policy is available on the website of the Company at https://www.muthootcap.com/wp-content/uploads/2023/05/CSR-Policy.pdf.

During the year, the Company spent an amount of I 125.37 lakhs identified as CSR activities including for ongoing projects from financial year 2022-23. The details of the CSR Policy and CSR Committee of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure 2 to this Report in the format prescribed as per the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The composition and other details of the CSR Committee and its meetings are detailed in the Report on Corporate Governance, forming part of this Report.

13. AUDIT & AUDITORS a) Statutory Auditors

The Company has re-appointed M/s. PKF Sridhar & Santhanam LLP, Chartered Accountants, 91/92, VII

Floor, Dr. Radhakrishnan Road, Mylapore, Chennai - 600 004, Tamil Nadu, India as the Statutory Auditors of the Company at the 28th Annual General Meeting held on 27th September 2022 to hold office from conclusion of the 28th Annual General Meeting till conclusion of the 30th Annual General Meeting of the Company to conduct audit of accounts of the Company. M/s PKF Sridhar & Santhanam LLP is a registered Limited Liability Partnership with LLPIN AAB-6552 (Registration No. with ICAI is 003990S/S200018). The Statutory Auditor holds a valid peer review certificate as prescribed under the Listing Regulations. The same is in compliance with the RBI Guidelines on appointment of statutory auditor(s) by Non-Banking Financial Company (“NBFC”) vide Circular RBI/2021-22/25 Ref. No. DoS. CD.ARG/SEC.01/08.91.001/2021-22 dated April 27, 2021 (“RBI Guidelines”)

The Board has duly examined the Statutory Auditors Report to the accounts, which is self-explanatory. Clari cations, wherever necessary, have been included in the Notes to the Accounts section of the Annual Report. Further, your Directors con rm that there are no quali cation, reservation or adverse remark or disclaimer in the Independent Auditors Report provided by Statutory Auditors for the Financial Year 2022-2023.

The Auditors had also prepared a separate report, pursuant to Non - Banking Financial Companies Auditors Report (Reserve Bank) Directions, 2008 in addition to the report made under Section 143 of the Companies Act, 2013 which was duly examined by the Board and submitted to Reserve Bank of India.

b) Secretarial Auditors

The Board, at its meeting held on February 9th, 2023, re-appointed M/s. SEP & Associates, Company Secretaries, Building No. CC 56/172, K C Abraham Master Road, Panampilly Nagar, Kochi - 682036 to conduct the Secretarial Audit for the year ended March 31, 2023 in compliance with the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Secretarial Audit Report in form MR-3, submitted by the Secretarial Auditors for the FY 2022- 2023 is enclosed to this report as Annexure 3. The Directors of your Company con rms that there is no quali cation, reservation or adverse remark or disclaimer in Secretarial Audit Report for the period under review.

14. COMPLIANCE WITH THE SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

15. CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS

AND OUTGO

Considering the nature of activities, the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 relating to conservation of energy, technology absorption and foreign exchange earnings & out go does not apply to the Company. The Company is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service.

16. WHISTLE BLOWER POLICY OR VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has in place, a comprehensive Whistle Blower Policy in compliance with Section 177 (9) & 177 (10) of the Companies Act, 2013 and as per Regulation 4 (2) (d) (iv) & 34 (3) read with Para 10 of Part C of Schedule V of the SEBI (LODR) Regulations, 2015.

A brief note on the highlights of the Whistle Blower Policy and compliance with the same is also provided in the Report on Corporate Governance, which forms part of this Report.

17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Pursuant to Section 186(11) (a) of the Act read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by an Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act.

The details of the investments of the Company are given in the notes to the financial statements.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Your Directors con rm that all contracts/arrangements/transactions entered into by the Company during the Financial Year 2022-2023 with related parties were in compliance with the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Company had obtained prior approval of the Audit Committee for all the related party transactions during the Financial Year 2022-2023 as envisaged in Regulation 23 (2) of the SEBI (LODR) Regulations, 2015. Further, the Audit Committee had given prior omnibus approval under Regulation 23 (3) of the SEBI (LODR) Regulations, 2015 for related party transactions that are foreseen and of repetitive in nature during the period under review and the required disclosures are made to the Committee on quarterly basis against the approval of the Committee.

In addition to the above, the Company had obtained the approval of the shareholders for related party transactions with Muthoot Micro n Limited, Muthoot Bankers and Muthoot Fincorp Limited at the AGMs held on June 06, 2017, June 14, 2018 and September 28, 2020 respectively for a period of ve years even though the said transactions were not material in nature.

All related party transactions that were entered into during the financial year ended March 31, 2023 were on an arms length basis and were in the ordinary course of business except the transaction Muthoot Bankers on windmill business, for which the Company had obtained the approval of shareholders. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted for the transactions. Thus, disclosures as per Form AOC-2 under Section 134 (3) (h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is not required. The disclosure of transactions with related party for the year, as per IND-AS 24 Related Party Disclosures is given in Notes to the Accounts section of the Annual Report. Also, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors or other designated persons which may have a potential conflict with the interest of the Company at large.

As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the policy on dealing with related party transactions as approved by the Board is uploaded on the Companys website at the web link: https://www.muthootcap.com/wp-content/uploads/2022/06/Related-party-transaction-policy.pdf

19. PARTICULARS OF EMPLOYEES

Disclosures required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter-alia, the ratio of remuneration of Managing Director to median remuneration of employees, percentage increase in the median remuneration etc., are annexed to this Report as

Annexure 4.

Statement containing the particulars of top ten employees and the details as prescribed under Section 197(12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed to this Report as Annexure 5.

As the Company does not have any Holding Company or Subsidiary Company no disclosure as required under Section 197(14) of the Act has been made.

20. LISTING

Equity shares of your Company was listed on BSE Limited since April 24, 1995 and on National Stock Exchange of India Limited since August 24, 2015 and debt instruments are also listed on the BSE Limited. Your Company has paid the required listing fees to both the Stock Exchanges for the Financial Year 2022 - 2023.

21. BUSINESS RESPONSIBILITY REPORT

Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, requires the top one thousand listed entities based on market capitalization as on 31st March of every financial year, to have, a “Business Responsibility and Sustainability Report” as part of their Annual Report, containing the environmental, social and governance disclosures, in the format as may be specified by the Board from time to time. Although Muthoot Capital Services Limited is not one amongst the top one thousand listed companies based on the market capitalisation as on 31st March 2023, this Report has been prepared as a part of good corporate governance practices and same forms a part of this Annual Report.

22. CORPORATE GOVERNANCE REPORT

Your Company has taken adequate steps to adhere to all the stipulations laid down in Regulation 27 read with Part E of Schedule II and Schedule V of the SEBI (LODR) Regulations, 2015 on Corporate Governance. The detailed Report on Corporate Governance along with certificate on Corporate Governance from the Statutory Auditors forms part of this Report.

23. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review is included as a separate section of this Report. The same covers the state of the Companys affairs and provides insightful information on the performance of the Organization in view of the various macro-economic barriers under which operates.

24. FAIR PRACTICE CODE (FPC)

The Company has in place, a Fair Practice Code approved by the Board on April 02, 2012, in compliance with the guidelines issued by the RBI, to ensure better service and provide necessary information to customers to take informed decisions. The FPC is available on the website of the Company at: https://www.muthootcap.com/wp-content/uploads/2023/05/Fair-Practice-Code-.pdf. The FPC is also reviewed by the Board at frequent intervals to ensure its level of adequacy and appropriateness.

25. CUSTOMER GRIEVANCE

The Company has a dedicated Customer Grievance Cell for receiving and handling customer complaints/grievances and ensuring that the customers are treated fairly and without bias at all times. All issues raised by the customers are dealt with courtesy and redressed expeditiously.

26. ANNUAL RETURN

In accordance with the provisions of Section 92(3) of the Act, Annual Return in Form No. MGT-7 of the Company is hostedon website of the Company at https://www.muthootcap.com/investors/#tab4

27. DIVIDEND DISTRIBUTION POLICY

As stipulated in Regulation 43 A of SEBI (LODR) Regulations, 2015, the Dividend distribution policy forms a part of the Corporate Governance report.

The Dividend Distribution Policy approved by the Board of Directors of the Company is available on the website and can be accessed at https://www.muthootcap.com/wp-content/uploads/2021/12/Policy-on-Distribution-of-Dividends.pdf.

28. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, your Directors state that: a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) We had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; c) We had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) We had prepared the annual accounts on a going concern basis; e) We had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) We had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

29. CREDIT RATING

The Credit Rating enjoyed by the Company as on March 31, 2023, is as given below:

Credit Rating Agency	Instrument	Rating as on March 31, 2023	Date on which the credit rating was obtained	Migration during the FY 2022-23
CRISIL	Rs 2500 crore Bank loan facilities	CRISIL A+ / Stable	March 02, 2023	Upgraded from CRISIL A / Stable
CRISIL	Fixed deposits	CRISIL A+ / Stable	March 02, 2023	Upgraded from CRISIL A / Stable
CRISIL	Rs. 200 crore non-convertible debentures	CRISIL A+/Stable	March 01, 2023	Assigned
CRISIL	Rs 150 crore non-convertible debentures	CRISIL A+/Stable	March 02, 2023	Upgraded from CRISIL A / Stable
CRISIL	Rs 100 crore Long Term Principal Market Linked Debentures	CRISIL PPMLD A+/Stable	March 02, 2023	Upgraded from CRISIL PPMLD A r /Stable
CRISIL	Rs 100 crore Long Term Principal Market Linked Debentures	CRISIL PPMLD A+/Stable	March 02, 2023	Upgraded from CRISIL PPMLD A r /Stable
CRISIL	Rs 250 Crore Commercial Paper	CRISIL A1+	March 02, 2023	Upgraded from CRISIL A1

30. OTHER DISCLOSURES

The Company, in the capacity of Financial Creditor, has not led any applications with National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 during the Financial Year 2022-23 for recovery of outstanding loans against any customer.

The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable.

The provision of Section 148 of the Act relating to maintenance of cost records and cost audit are not applicable to the Company.

The Company has not defaulted in repayment of loans from banks and financial institutions. There were no delays or defaults in payment of interest/principal of any of its debt securities and deposits accepted.

The equity shares of the Company were not suspended from trading during the year.

Disclosures pursuant to RBI Master Directions, unless provided in the Directors Report and Corporate Governance Report, form part of the notes to the standalone financial statements.

Disclosure regarding details relating to deposits covered under Chapter V of the Act is not applicable since our Company is a Non-Banking Financial Company regulated by RBI. The Company accepts deposits as per the Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.

The Company has a policy for prevention of Sexual Harassment of Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH). During the year under review, there were no cases led under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company continues to comply with the Master Direction for Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and all the applicable laws, regulations, guidelines, etc. prescribed by RBI from time to time. The Board of Directors have framed various policies as applicable to the Company and periodically reviews the policies and approves amendments as and when necessary.

There are no companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year.

During the financial year 2022-23, the Company has transferred an amount of Rs 6,65,155/- to Investor Education and Protection Fund (IEPF) Authority, being unclaimed and unpaid dividend for the financial year 2014-15. Since the amount has been transferred to IEPF Authority, no claim for unclaimed and unpaid dividends for the financial year 2014-15 shall lie against the Company. Further, in compliance with the provisions of Companies Act, 2013 and Rules made thereunder, the Company had transferred the shares pertaining to the shareholders whose dividend were remaining unclaimed and overdue for a period of seven consecutive years to the IEPF Authority. As per the provisions of IEPF Authority (Accounting, inspection, Transfer and Refund) Rules, 2016 (as amended), the shareholder may lodge the claim to the IEPF Authority for such dividends and shares by submitting an online application in Form IEPF- 5 available on the website www.iepf.gov.in.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Act (including any statutory modi cation(s) or re-enactment(s) for the time being in force).

31. ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation and sincerely acknowledge the contribution and support from shareholders, customers, depositors, debenture holders, Central and State Governments, Bankers, Reserve Bank of India, Registrar of Companies, Kerala and Lakshadweep, Securities and Exchange Board of India, BSE Limited, National Stock Exchange of India Limited, Registrar & Share Transfer Agents, Credit Rating Agencies and other Statutory and Regulatory Authorities for the kind co- operation and assistance provided to the Company.

Your Directors also extend their special appreciation to each Muthootians for their continuing support and unstinting efforts in ensuring an excellent all-round operational performance along with every well-wisher for their continued commitment, dedication and co-operation.

	For and on behalf of the Board of Directors
	Sd/-
	Thomas John Muthoot
Kochi	Chairman
August 08, 2023	DIN: 00011618