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All rights reserved. No part of this report may be reproduced or utilized in any form or by any means electronic or mechanical, including photocopying, recording or by any information storage or retrieval system without written permission from Margdarshak.

Be the path to lead the wayFor every footstep to see the morning ray

Be the guide for the weary stepsTo show beyond the night ahead

Be every sign to show where it is leadingTo a place where we can find our meaning

Be at every step to hold a hand and keep on growingStanding still as the time keeps on flowing

One by one in all seasons we’d hear a callingTo give a chance to all for dreaming

In every momentIn every precious second

There’s a place for all of us in this world

Beautiful. Innocent. Small. Significant

-by Saroj Topno Mittra(inspired by lyrics of Nano)

small issignificant

“A leader is one who sees more than others see,

who sees farther than others see & who sees before others see.”

- Leroy Eimes, author and leadership expert

OUR GUIDING LIGHTS

DEVELOPING SUCCESSORS FOR NEXT LEAP

Succession Planning at Margdarshak is based on performance and is transparent. Most of them know exactly where they stand in succession planning. We have combined succession planning with leadership development with the purpose to identify a pool of potential successors. The ultimate goal being to ensure a solid team of candidates for the top job.Last year twenty five senior and middle managers were identified for participating in “Management Development Programme”conducted in coordination with ‘Grameen Foundation India’, for development of their core management and leadership skills. It was a 12 month programme, consisting of 4 classroom sessions and 2 hour virtual Group Dialogue session each month. The pre-session and post session consisted of self assessment to identify the strength and opportunities of the participants before and after the sessions, 2-3 pre-reads to encourage reflection prior to group dialogue session and post session one to one meeting of pairs of trainees with facilitator for discussing the areas they were struggling with. The programme will help them not only develop their capacities but also be able to better lead their teams and departments , cross –collaborate and work with other teams and most importantly share and pass on their knowledge with others. We also completed Training the Trainers (TTT) for around 15 senior and middle managers including managers from operations team. The primary objective of the training was to make the participants equipped with training skills, especially in content delivery and facilitation skill. Today the company has a systematic approach to building the pipeline, and it now uses these trained pool of senior and middle managers to groom the next level managers for more senior roles. It is not just the HR who is the primary owner of both succession planning and leadership development, but there are multiple owners-to enable the organization to develop a healthy and sustainable pipeline of leaders.

Dheeraj Mishra, Manager,

Joined Margdarshak as Cashier in Dec 2008

“MDP was very useful programme. Skills like verbal,non-verbal communication, importance of praising and reprimands, creating new vision for oneself contributed in accomplishing goals easily.”

Amit Pratap Singh, Area M

anager

Joined Margdarshak as BM in Oct 2010

“Really helpful. Learnt many good

skills. I found the training of gestures, eye

contact,handshake to be very useful.”

I joined Margdarshak as a Cashier in Margdarshak’s 3rd branch at Lucknow in February 2008. I was transferred to Head Office in the year 2009. I am a graduate in Arts and did not know how to operate even a calculator. I learnt to punch data in Tally at Margdarshak and soon gained expertise in accounting. Margdarshak is like a family to me as it gave me strength to grow both professionally and personally. I got married and now I have a 5 year old son. I was encouraged to join back after a gap of 8 months. Today I am Dy. Manager -Finance and Accounts and I love to extend my support and train the new joinees and trainees in the department.

-Punita Upadhyay Tiwari

I joined Margdarshak as office boy in Barabanki branch in June 2009. I was just 18 years old and was an undergraduate. I was transferred to Head Office in Lucknow in the year 2011. In Margdarshak, I was encouraged to complete my graduation. I learnt computer typing and other related work during my free time from serving tea and water to staff at HO. Today, I can do all the banks related work for the organisation and also contribute in setting up of computer hardware and networking in branches of Margdarshak. I have travelled across many branches of Margdarshak in UP and Bihar. I am thankful to Margdarshak for giving me this opportunity for learning and development.

-Abhishek Rathore

HARNESSING WOMEN AND YOUTH

CONTENTS

LETTER TO STAKEHOLDERS ..................................10

MFSL BOARD ....................................................... 12

KEY TRENDS ........................................................ 13

BOARD’S REPORT ................................................. 14

CORPORATE GOVERNANCE REPORT ....................27

MANAGEMENT DISCUSSION & ANALYSIS .............32

OUR STORIES OF TRANSFORMATION .................. 39

INDEPENDENT AUDITORS' REPORT ......................42

FINANCIAL STATEMENTS .................................... 48

CORPORATE INFORMATION .................................73

LeTTeR TO STAkeHOLDeRS | 10 Margdarshak Financial Services Ltd Annual Report 2016-17

LETTER TO STAKEHOLDERS

Dear Stakeholders,

Its been almost 10 years since we formed our first group, established our first branch in Barabanki (Uttar Pradesh) and disbursed our first loan. Its been a learning of decade and learning to become significant from small in the ever-evolving landscape of financial inclusion.

In the 10th year of our work on financial inclusion, the company continues to grow despite going through one of the most challenging periods. As the country moved towards digital financial inclusion helmed by our esteemed Prime Minister, Margdarshak continued to focus on serving the marginalised and increasing the financial inclusion footprint of the organisation by expanding to the state of Himachal Pradesh. Our quest for seeking un-served and under-served communities continues by establishing branches in some of the most financial excluded regions of the country and particularly the North India.

Being at the epicentre of financial upheaval and still improving the past years performances, displays the strength of our team and character of the organisation. Your company grew from an AUM of Rs. 170.85 cr in 2016 to AUM of 292.18 cr in March 2017. This is a stupendous growth rate of 71%, despite the 2nd half of the year being one of the most difficult periods for MFI’s in Uttar Pradesh and surrounding regions. Margdarshak now has a network of 120 branches across 50 districts of 5 key North Indian states viz. Uttar Pradesh-33, Bihar-9 and Haryana-4, Uttrakhand-1 and Himachal Pradesh-3.

Margdarshak Board continues to be its source of inspiration, guidance and support with corporate governance benchmarks being established and surpassed each year. During the year the management team was also expanded to build greater diversity and experience in the core management team of the organisation. Margdarshak has been one of the first organisations to undergo a comprehensive grading and code of conduct assessment by SMeRA and was accorded the 2nd highest grading of M2C2. The grading demonstrates high capacity of the organisation to manage its operations in a sustainable manner and good performance on code of conduct dimensions. Brickwork has accorded BBB rating to the organisation in November 2016, after reviewing the impact of demonization on the institutions performance metrices.

“Go Digital and Paperless” has been the cornerstone of the Margdarshak’s IT initiatives and we achieved another hallmark in that direction by issuing real-time collection slips retrieved in the field from our server to our borrowers. The initiative has enabled the organisation in taking another step towards becoming paperless with loan applications already digitised in the previous year. efforts are underway to integrate the operations and processes with the mainstream efforts of the Government by building process architecture around Aaadhar and its enabled payment systems.

In order to serve our customers and field employees better, the organisation has set up a 25-seat data centre in Lucknow with technology support from knowlarity and Aria. Taking the initiative forward we now have the infrastructure of handling client grievances and complaints in a more robust and timely manner. The infrastructure now allows us to do more robust pre-sanction client verification exercise and maintain a close connect with the members of the organisation.

Margdarshak’s partnership with its lenders is its core strength and the diversity of lenders allows us to grow in a sustainable manner. In the current year, the company is supported by 15 public sector banks, 12 NBFCs and 3 DFIs. During the year we added 8 new lenders including 4 banks viz. Microbuild, Mahindra Finance, NABARD, Dhan Laxmi Bank, kanika Investments, Bank of Baroda, Punjab & Sindh Bank and Intelligrow. The diversity of the lender base lays the foundation for the organisation in meeting its funding requirements in the long run. In line with the vision of widening the bouquet of financial services to our members, we scaled our BC relationships with IDBI Bank and Reliance Capital in the states of UP & Haryana.

Following our philosophy of providing a holistic bouquet of financial products and services, and realising the value of shelter in ones life, we successfully piloted and rolled out the Home Improvement Loans for our members. During the year we made small beginning by disbursing 150 home improvement loans and have plans of enabling about 25% of our members in availing home loans over a period next 2 years. We also laid the groundwork for technology enabled MSMe loans in a tie-up with Simplilend which will enable us in delivering and managing MSMe loans in a digital and paperless environment.During the

Margdarshak Financial Services Ltd Annual Report 2016-17 LeTTeR TO STAkeHOLDeRS | 11

year we expanded our partnership with IDBI Bank for providing savings avenues to our members by enabling them opening and operating recurring deposit with the bank. The programme supported by Metlife Foundation and managed by Grameen Foundation has enabled members of Margdarshak in accessing banking services by having a savings and RD account besides building their reserves for future financial requirements.

enhancing the quality of living of our communities frames the thought process of the organisation. In our search of avenues leading to improved quality of living the organisation has been engaged in conducting financial literacy, digital financial literacy, medical and eye care camps, children engagement programmes and skill development interventions. With support form UkAID & SIDBI-PSIG, Margdarshak has conducted financial literacy trainings for 20922 women members in selected districts of east UP. We are following a mission of enabling half of our member families in being able to move out of poverty by having access to credit plus programmes and services.

The faith reposed by the Government, regulators, investors, lenders in the vision, leadership and management of Margdarshak motivates us to set new benchmarks in our mission of poverty alleviation. I take this opportunity to thank our customers for giving us an opportunity to serve them, the board for providing us the guidance and leadership, employees for choosing Margdarshak as their career and fulfilling their ambitions, business partners for keeping up with our constant demands and all our stakeholders for reposing their trust and faith in the organisation. Its an honour to work in such a esteemed and robust environment and look forward to take Margdarshak forward in its ever evolving journey of financial inclusion and poverty alleviation.

Warm Regards

Rahul J. MittraMD & CeO

MFSL BOARD | 12 Margdarshak Financial Services Ltd Annual Report 2016-17

MFSL BOARD

Mr. Prasad KuchibhatlaIndependent Director

Ms. Maitrayee BanerjeeIndependent Director

Ms. Saroj Topno MittraCFO and Whole Time Director

Mr. D.P.S RathoreIndependent Director

Mr. Rahul J MittraFounder, CEO and Managing Director

Mr. Arupjyoti Rai BaruahWhole Time Director

Mr. Saneesh SinghNominee Director - Dia Vikas

Mr. Bhanu Prakash VermaNominee Director- SIDBI

Margdarshak Financial Services Ltd Annual Report 2016-17 keY TReNDS | 13

5.22 7.78 13.99

30.45

50.83

0

10

20

30

40

50

60

Mar-‐13 Mar-‐14 Mar-‐15 Mar-‐16 Mar-‐17

Revenue (in ` crore)

Revenue

4.21% 6.08%

7.72%

14.60%

19.59%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%


Return on Equity

35759 56478

82670

133847

201185

0

50000

100000

150000

200000

250000


Client Outreach

30 40

52

89

120

0

20

40

60

80

100

120

140


Branches

142 196

252

487

799

0

100

200

300

400

500

600

700

800

900


Number of employees

KEY TRENDS

BOARD’S RePORT | 14 Margdarshak Financial Services Ltd Annual Report 2016-17

BOARD’S REPORT

Dear Shareholders,The Board of Directors hereby submits the business and operations of your company together with the audited financial statements for the financial year ended March 31, 2017. The financial summary and performance highlights are given below:

1. FINANCIAL RESULTSParticulars 2017 2016

Revenue from operations 47.76 28.53

Other income 3.07 1.92

Total Income 50.83 30.45

Interest expenses on borrowings

26.84 13.91

Other financial costs 1.34 1.37

Total Financial expense 28.18 15.28

Loan Loss Provision 0.77 0.60

Personnel expenses 9.77 6.33

Depreciation and Amortisation 1.92 0.98

Administration expenses 5.21 3.62

Total Operating expenses 17.67 11.53

Profit before Tax 4.98 3.64

Tax expense 1.54 1.21

Profit after Tax 3.44 2.43

Retained earnings-Opening balance

3.69 2.01

Add: Profit for the year 3.44 2.43

Less: Statutory Reserves 0.82 0.49

Less: Dividend Payable 0.17 0.22

Less: Dividend Distribution Tax 0.04 0.04

Retained earnings-Closing balance

6.10 3.69

earning per share

Basic 2.07 1.51

Diluted 1.97 1.45REVENUEThe revenue from operations increased to `47.76 crore from `28.53 crore in the previous year, at a growth rate of 67%.

PROFITThe profit before tax amounted to `4.98 crore (9.8% of revenue), as against `3.64 crore (11.96% of revenue) in the previous year. The Net Profit amounted to `3.44 core as against `2.43 crore in the previous year

DIVIDENDThe company has made a provision of `0.18 crore for payment of dividend.

TRANSFER TO RESERVESThe company proposes to transfer `0.82 crore to Statutory Reserves. As per Section 45-IC of the RBI Act 1934, the company is required to create a reserve fund at the rate of 20% of the Net Profit after Tax.

SHARE CAPITAL The issued, subscribed and paid-up Share Capital as on March 31, 2017 was ` 17.54 crore comprising of 1,57,14,958 equity shares of face value `10/- each and 18,25,000 9% Optionally Convertible Preference Shares (OCPS) of ` 10 each.On May 31, 2016 5,50,000 9% OCPS were converted into equity and on October 19, 2016, 75,000 9% OCPS were redeemed. The Company has neither issued shares with differential rights as to dividend, voting or otherwise, nor has issued sweat equity.During the year, there was no fresh issue under employee stock option scheme [eSOP].

CAPITAL ADEQUACYAs on March 31, 2017, the Capital to Risk Assets Ratio (CRAR) of the company was 17.21%. The minimum requirement for the capital adequacy ratio is 15% as prescribed by the Reserve Bank of India.

2. OPERATIONS During the financial year 2016-17, the company extended its operations to Himachal Pradesh and opened 31 new branches, 16 in Uttar Pradesh, 9 in Bihar, 2 in Harayana, 3 in Himachal and 1 in Uttarakhand, taking the total count of branches to 120. As on March 31, 2017, the operations spread across 33 districts of Uttar Pradesh, 9 of Bihar, 4 of Haryana, 3 of Himachal and 1 of Uttarakhand.The aggregate gross loan portfolio (glp) of the company stood at ` 292.18 crore as compared to ` 170.86 crore in the previous year, a growth of 71% over previous year. Managed portfolio was `95.09 crore, out of which ` 14.15 crore was direct assignment.About 70% of the portfolio was in Uttar Pradesh, 21% in Bihar, 8% in Haryana and 1% in Uttarakhand and Haryana. On November 8, 2016 Government of India announced to demonetize ` 500 and ` 1000 notes. The government initiated the process of exchanging the notes through scheduled commercial banks and provided a timeline till 30th Dec’ 2106 for the same. Consequent to the announcement-followed by currency crisis, Margdarshak saw its microfinance operations being impacted and it led to a situation wherein disbursement had to be put on hold, clients didn’t

Margdarshak Financial Services Ltd Annual Report 2016-17 BOARD’S RePORT | 15

have appropriate currency to repay the loan leading to repayment stress and vested pockets of the community started making representation to the local administration for loan waiver . The effect of demonetisation stretched till March 2017 and the company did see elevated levels of Portfolio at Risk (PAR) at 2.56% under Own Portfolio and 7.91% under Managed Portfolio as compared to overall PAR of 0.35% in the previous year.The company piloted Affordable Housing Loan product in December 2016 and extended loans ranging from ` 50,000 to ` 75000 to 116 existing borrowers of the company.During the year, MFSL received a total of ` 194.25 crore as debt funding (from banks and financial institutions) and ` 15 crores as sub-Debt, as compared to ` 130 crores in the previous year. This represents a growth of 49.42% over previous year.Net Worth of the company increased to ` 24.86 crores as compared to ` 21.93 crores in the previous year showing a growth of 13.36%.

CHANGE IN THE NATURE OF BUSINESS, IF ANYThere has been no change in the nature of business of the Company. The company provides loans for income generation to rural and urban producers comprising of livelihood financial services, namely micro credit distribution to rural customers mostly unreached by the formal banking system with the main purpose of promoting sustainable livelihoods. The company does not provide any savings services as it does not take any deposits.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY AND THE DATE OF THE REPORTThere were no material changes affecting the financial position of the Company, between the end of the financial year and the date of the Report.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIESThe Company does not have any Subsidiary/ Joint ventures or Associate Companies.

DEPOSITSBeing a non deposit taking NBFC-MFI, the Company does not accept public deposits and has not accepted Public deposits till date.

3. HUMAN RESOURCE MANAGEMENTA well structured and comprehensive human resource management policy is a necessity for effective management of MFIs, given the service orientation and the volume of staff-client interactions on the field. The company, therefore, encourages amongst its staff professionalism –to provide financial services through efficient systems and humility-to understand and respect

our clients in our efforts to provide quality services. As on March 31, 2017, the total number of employees stood at 799 out of which 449 were field officers. Out of total number of employees, 57 were female employees. The atttrition rate for the financial year was 20%

PARTICULARS OF EMPLOYEESThe ratio of the remuneration of each whole time director and key managerial (kMP) to the median of employees’ remuneration as per Section 197(12) of the Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure 2 which forms part of the board’s report.

EMPLOYEE STOCK OPTIONS – The company, under 2015 employee Stock Option Scheme [eSOP], approved by the shareholders’ vide resolution date March 04, 2015, grants stock option to the eligible employees with a view to enhancing the employee engagement, to reward the employees for their association and performance as well as to motivate them to contribute to the growth and profitability of the Company and to create a sense of ownership and participation amongst them. The maximum no. of shares that may be issued pursuant to the exercise of all option granted to the optioneesunder the scheme shall not exceed 10% of the expanded capital.The details of the employees stock option plan forms part of the Notes to Accounts of the financial statements in the Annual Report. During the year the 3,70,189 options have been granted by the company.

4. CORPORATE GOVERNANCEeffective corporate governance practices constitute the strong foundations on which successful commercial enterprises are built to last. The Company’s philosophy on corporate governance oversees strategies and ensures fiscal accountability, ethical corporate behavior and fairness to all stakeholders comprising regulators, employees, customers, vendors and investors and the society at large.Strong leadership and effective corporate governance practices have been the Company’s hallmark. The Company believes in adopting the ‘best practices’ that are followed in the area of corporate governance across various geographies. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees.The detailed information on Corporate Governance, is given in Corporate governance report which forms part of this Annual Report.


NUMBER OF MEETINGS OF THE BOARDThe Board met four times during the financial year. The meeting details are provided in the Corporate Governance report which forms part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATIONThe company has a Board approved Nomination and Remuneration Policy. The policy of the company on directors’ appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under sub-section (3) of Section 178 of the Companies Act, 2013 is available on our website http://www.margdarshak.org.in. There has been no change in the policy since last year. The remuneration paid to the directors is as per terms laid out in the Nomination and Remuneration Policy of the company.As on March 31, 2017, the Board had 8 members, three of whom were whole time directors, three were independent directors and two were nominee directors.

DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND RE- APPOINTMENT, IF ANYThe company has received necessary declaration from each independent director under Section 149(7) of the Companies Act 2013.

DIRECTORS AND KEY MANAGERIAL PERSONNELChiarman of the BoardMr. D.P.S. Rathore is the non-executive chairman of the Board.Mr. Rahul J. Mittra, Managing Director & CeO, Ms. Saroj Topno Mittra, Whole-time Director & Chief Financial Officer and Ms. Anchit Pandey, Company Secretary of the Company have been designated as the key Managerial Personnel of the Company (kMP) pursuant to the provisions of sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.There has been no change in the kMP during the year.

RETIREMENT BY ROTATIONUnder the provisions of subsection 6 of section 152 of the Companies Act, 2013, one-third of the directors being liable to retire by rotation, shall retire every year at the Annual General meeting. Presently there are 8 directors on Board of the Company, including 3 independent directors and 2 Nominee directors. Since Independent directors and Nominee directors are not liable for rotation, 2 directors of the Company Ms. Saroj Topno Mittra

and Mr. Arupjyoti Rai Baruah are liable to retire by rotation. Ms. Saroj Topno Mittra being longest in office, is retiring by rotation at the Annual General Meeting, and being eligible, has offered herself for reappointment.The Board recommends her re-appointment by the members at the Annual General meeting.

COMMITTEES TO THE BOARD As of March 31, 2017, the Board has five committees: Audit Committee, Risk Management Committee, Asset Liability Committee, HR Management Committee and Nomination and Remuneration Committee. A detailed note on the composition of the Board and its committee is provided in the Corporate Governance Report of this Annual Report.

EXTRACT OF THE ANNUAL RETURNIn accordance with section 134 (3)(a) of the Companies Act, 2013, an extract of the annual return in the prescribed format is appended as Annexure 3 to the Board’s report.

DIRECTORS’ RESPONSIBILITY STATEMENTThe Board of Directors states that—(a) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed;(b) the Board of directors have 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) proper and sufficient care has been taken 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) the annual accounts have been prepared on a going concern basis; and(e) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186There were no loans, guarantees or investments given under section 186 of the Companies Act, 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIESAll transactions entered into with Related Parties during the financial year were in the ordinary course of business and on an arm’s length basis. The details of transactions with related parties is


disclosed in Form AOC-2 given in Annexure 1 to this report.

RBI COMPLIANCE ON CORPORATE GOVERNANCEThe company has complied with RBI circular on Corporate Governance Directions, dated July 1, 2015 directions.

5. AUDIT REPORTS AND AUDITORSAUDITORS’ REPORTThe Auditors’ Report for the Financial Year 2016- 2017 does not contain any qualification, reservation or adverse remark . The Auditors’ Report is enclosed with the financial statements in this Annual Report.

STATUTORY AUDITORS- Under Section 139 of the Companies Act 2013, it is mandatory to rotate the statutory auditors on completion of maximum term permitted under the section. The Board of Directors of the company had recommended the appointment of auditors Umesh k. Agrawal & Co., Chartered Accountants, as the statutory auditors of the company. They will hold office for the period of five consecutive years from the conclusion of the 5thAnnual General Meeting of the Company held on August 21, 2014 till the conclusion of the 10th Annual General Meeting to be held in the year 2019, subject to the approval of the shareholders of the Company. Their appointment is subject to ratification by members at every ensuing Annual General Meeting, till 2019. The Board recommends the ratification of the appointment of statutory auditors for the FY 2017-18.

6. RISK MANAGEMENTThe Company has a three-tier Risk Management function with a Board Risk Management Committee, a Management Risk Committee and a Risk Department. The Risk department manages risks within the organization. It monitors Strategic and reputational risk, Credit Risk, Liquidity Risk, Operational Risk, and Market Risk against pre-defined risk tolerance limits and risk management framework set by the Board. The Risk Management process has been established across the company and is designed to identify and assess risk and evaluate existing controls of the company. The operational risk metric has been created to provide an overview of the risks in critical areas. These indicators are expected to help in determining the status of risks in different departments. In addition to the risk metric, the company has evolved a system of assurances for critical functions. These assurances reflect that the important controls are in place and are functioning well.

The development and implementation of Risk Management Policy adopted by the Company is discussed in detail in the Management Discussion and Analysis chapter which forms part of this Annual Report.

7. WHISTLE BLOWER POLICY/VIGIL MECHANISM

A whistle blower policy has been implemented which allows the directors and employees to report to the Management/Chairperson of the Audit Committee instances of unethical behaviour, actual or suspected, fraud or violation of the company’s Code of Conduct or ethics Policy. This policy would also help to create an environment where individuals feel free and secure to raise the alarm where they see a problem. It will also ensure that whistle blowers are protected from retribution, whether within or outside the organisation. The policy can be viewed on the website of the Company.The Company also has a Staff Grievance Redressal and a Client Grievance Redressal System in place through which the employees and clients of the Company can submit their complaints and grievances through dedicated e-mail ids or by phone to the Management. Ms. Saroj Topno Mittra, Whole Time director, was designated as the Grievance Redressal Officer of the Company.The Board has also framed a Policy against Sexual Harassment of Women at Workplace which allows women employees to report concerns about or connected to any act or behavior of sexual harassment. The Company has also constituted a Internal Complaints Committee for redressal of complaints on Sexual Harassment.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A) CONSERVATION OF ENERGYThe Company’s operation involves low energy consumption and there are no major areas where energy conservation measures could be taken. However, efforts to conserve and optimize the use of energy through improved operational methods and other means will continue.

B) TECHNOLOGY ABSORPTIONThe organization has implemented android based mobile application for the CGT, GRT, Collection and Disbursement module, which facilitates data entry by field staff on the real time basis. In this way, the most time consuming aspects of recording client repayments, disbursements and client on-boarding have been migrated to mobile modules The successful integration of mobile modules in the software, have enabled availability of real-time


information related to collections, disbursements and outstanding / overdue with the central monitoring office. This has also reduced the HR requirements and increased information management efficiencies in the organisation. The impact of OPeX is yet to be measured but it is expected that over a period of next 2 years the OPeX will reduce by ½% while increasing the operational efficiencies at the same time.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO- There were no foreign exchange earnings and outgo during the financial year 2016-17

9. ACKNOWLEDGMENTWe thank our clients, investors, lenders and regulators for their consistent support in helping us achieve our business and social goals. The Board of Directors also places on record their appreciation for the contribution made by our employees in the sustainability and growth of the organization.

For and on behalf of the Board of Directors

Rahul J. Mittra Saroj Topno Mittra(MD&CEO) (Whole-time director)

Place: LucknowDate: 11.09.2017


Annexure 1-Particulars of contracts/ arrangements made with related parties

Form AOC -2[Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014-AOC -2]This Form pertains to the disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto.Details of contracts or arrangements or transactions not at arm’s length basisThere were no contracts or arrangements or transactions entered during the year ended March 31, 2017, which were not at arm’s length basis. Details of contracts or arrangements or transactions at arm’s length basis.The details of material contracts or arrangements or transactions at arm’s length basisfor the year ended March 31, 2017 are as follows.

Name of the related party Nature of relationship

Duration of Contract

Amount in ` crore

Nature of contract

Redemption of Optionally Convertible Preference SharesSmall Industries Development Bank of India Shareholder 22.11.2016 0.08

Dividend to SIDBI on OCPSSmall Industries Development Bank of India Shareholder NA 0.18

Conversion of Optionally Convertible Preference SharesSmall Industries Development Bank of India Shareholder 31.05.2016 0.55

Purchase of ServicesRent to Margdarshak Development Projects & Consulting Private Limited

Shareholder 19.05.2016 0.09

For and on behalf of the Board of Directors

Rahul J Mittra Saroj Topno Mittra(MD & CeO) (Whole-time Director)

Date: 11.09.2017Place: Lucknow


Annexure 2-Particulars of Employees

Information as per Rule 5(1) of Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 2(a) Remuneration to Whole-Time Directors

Name of the director

Director Identification Number (DIN)

TitleRemuneration in fiscal 2017 (in ` crore)

% increase of remuneration fiscal 2017 as

compare to fiscal 2016

Ratio of MRE excluding

WTD

Rahul J. Mittra 01873793 Whole Time Director 0.20 28.59% 20.32x

ArupjyotiRai Baruah 01874739 Whole Time

Director NIL NIL NIL

Saroj Topno Mittra 05122419 Whole Time

Director 0.16 90.75% 16.42x

2(b) Remuneration to key Managerial Personnel

Name of the KMP

Director Identification Number (DIN)

TitleRemuneration in fiscal 2017 (in ` crore)

% increase of remuneration fiscal 2017 as

compare to fiscal 2016

Ratio of MRE excluding

WTD

Rahul J. Mittra 01873793 Whole Time Director 0.20 28.59% 20.32x

ArupjyotiRai Baruah 01874739 Whole Time

Director NIL NIL NIL

Saroj Topno Mittra 05122419 Whole Time

Director 0.16 90.75% 16.42x

Anchit Pandey - Company Secretary 0.039 NIL 4.07x

Note: The Median Remuneration of employees excluding Whole Time Directors(WTDs)was ` 97,172.


Annexure 3-Extract of Annual Return

Form No. MGT-9[Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Company (Management & Administration) Rules, 2014]

Registration and other detailsCorporate Identity Number (CIN) of the company U65921UP1996PLCO19924

Registration Date May 09, 1996

Name of the Company MARGDARSHAk FINANCIAL SeRVICeS LIMITeD

Category/Sub-category of the Company Company limited by sharesNon Deposit Taking, Category B, NBFC-MFI

Address of the Registered office & contact details 118 DAYAL FARMS GANeSHPUR-ReHMANPUR, CHINHAT-DeVA ROAD, LUCkNOW-226019Tel: 0522-7125400email:[email protected]:margdarshak.org.in

Whether listed company No

Name, Address & contact details of the Registrar & Transfer Agent, if any

NOT APPLICABLe

Principal business activities of the companyName and Description of main

products / servicesNIC Code of the Product/service % to total turnover of the

company

Other Financial Service Activities DIVISION 64 100

Particulars of holding, subsidiary and associate companiesName and address of the

CompanyCIN/GLN Holding/ Subsidiary/

Associate% of shares

heldApplicable

Section

Not applicable

Shareholding pattern (Equity share capital break-up as a percentage of total equity)(i) Category wise shareholding

Category of Shareholders

No. of Shares held at the beginning of the year No. of Shares held at the end of the year % Change during

the yearDemat Physical Total % of Total

Shares Demat Physical Total % of Total Shares

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X)

(A) Promoter and Promoter Group

- - - - - - - - -

(1) Indian - - - - - - - - -

a) Individual/ HUF - 1,886,267 1,886,267 12.44% - 1,886,267 1,886,267 12% 0.37%

b) Central Govt - - - - - - - - -

c) State Govt(s) - - - - - - - - -

d) Bodies Corp. - 2,502,811 2,502,811 16.50% - 2,502,811 2,502,811 15.93% 0.57%

e) Banks / FI - - - - - - - - -

f) Any other - - - - - - - - -

Sub Total (A) (1) - 4,389,078 4,389,078 28.94% - 4,389,078 4,389,078 27.93% 1.01%

(2) Foreign - - - - - - - - -

a) NRI Individuals - - - - - - - - -

b) Other Individuals - - - - - - - - -







c) Bodies Corp. - - - - - - - - -

d) Any other - - - - - - - - -

Sub Total (A) (2) - - - - - - - - -

(B) Public Sharholding - - - - - - - - -

(1) Institution - - - - - - - - -

a) Mutual Funds - - - - - - - - -

b) Banks / FI - 2,550,000 2,550,000 16.82% - 3,100,000 3,100,000 19.73% 2.91%

c) Central Govt - - - - - - - - -

d) State Govt(s) - - - - - - - - -

e) Venture Capital Funds - - - - - - - - -

f) Insurance Companies - - - - - - - - -

g) FIIs - - - - - - - - -

h) Foreign Venture Capital Funds

- - - - - - - - -

i) Others (downstream foreign investment)

- 6,269,176 6,269,176 41.34% - 6,269,176 6,269,176 39.89% 1.45%

Sub-total (B)(1):- - 8819176 8819176 58.16% - 9369176 9369176 59.62% 4.36%

2. Non-Institutions - - - - - - - - -

a) Bodies Corp. - - - - - - - - -

i) Indian - - - - - - - - -

ii) Overseas - - - - - - - - -

b) Individuals - - - - - - - - -

i) Individual shareholders holding nominal share capital uptoRs. 1 lakh

- - - - - - - - -

ii) Individual shareholders holding nominal share capital in excess of Rs 1 lakh

- 956,704 956,704 6.31% - 956,704 956,704 6.09% 0.22%

c) Any Other (specify) - - - - - - - - -

Non Resident Indians - - - - - - - - -

Overseas Corporate Bodies

- - - - - - - - -

Foreign Nationals - - - - - - - - -

Clearing Members - - - - - - - - -

Trusts* - 1,000,000 1,000,000 6.59% - 1,000,000 1,000,000 6.36% 0.13%

Foreign Bodies - D R - - - - - - - - -

Sub-total (B)(2):- - 1956704 1956704 12.90% - 1956704 1956704 12.45% 0.35%







Total Public (B) - 10,775,880 10,775,880 71.06% - - 11,325,880 72.07% 1.01%

C. Shares held by Custodian for GDRs & ADRs

- - - - - - - - -

Grand Total (A+B+C) - 15,164,958 15,164,958 100.00% - - 15,714,958 100.00% -

*This pertains to shares held by Margdarshak employee Welfare Trust which is a non-promoter, non-public shareholding.

(ii) Shareholding of Promoter

Shareholder’s Name Shareholding at the beginning of the year

No. of Shares

% of total Shares of the

company

% of Shares Pledged/

encumbered to total shares

No. of Shares

% of total Shares of the

company

% of Shares Pledged / encumbered to total

shares

Rahul J Mittra 1,040,093 6.86% - 1,040,093 6.62% 0.24%

Arupjyoti Rai Baruah 595,126 3.92% - 595,126 3.79% 0.13%

Saroj Topno Mittra 251,048 1.66% - 251,048 1.60% 0.06%

Margdarshak Development Projects and Consulting Pvt. Ltd.

2,502,811 16.50% - 2,502,811 15.93% 0.57%

(iii) Change in Promoters’ Shareholding

Name of the shareholders

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of shares % of total shares No. of shares % of total sharesThere was no change in promoters’ shareholding in fiscal 2017. The shareholding of promoters is same as mentioned above in the shareholding pattern

(iv) Shareholding Pattern of top ten Shareholders(Other than Directors, Promoters and Holders of GDRs and ADRs):

Name of shareholder Shareholding at the beginning of the year


No. of shares % of total shares No. of shares % of total

sharesDiaVikas Capital Pvt. Ltd.At the beginning of the year 6,269,176 41.34% - -

Changes during the year - - - -

At the end of the year 6,269,176 39.89% 6,269,176 39.89%

Small Industries Development Bank of IndiaAt the beginning of the year 2,550,000 16.82%

Changes during the year (Conversion for OCPS to equity) 550,000 - 3,100,000 19.73%


Somak GhoshAt the beginning of the year 205,592 1.36% - -





sharesChanges during the year - - - -

At the end of the year 205,592 1.31% 205,592 1.31%

Samir ShahAt the beginning of the year 2,05,592 1.36%



Anoop MittraAt the beginning of the year 155,000 1.14% - -



Gurmeet Singh AnandAt the beginning of the year 147926 0.98% - -


At the end of the year 147926 0.94% 147926 0.94%

Sandeep SrivastavaAt the beginning of the year 102032 0.67% - -



Amit Kumar SinghAt the beginning of the year 70281 0.46% - -



Santosh KulshresthaAt the beginning of the year 70281 0.46% - -



(iv) Shareholding Pattern of Directors and Key Managerial Personnel




sharesRahul J MittraAt the beginning of the year 1,040,093 6.86% - -



Arupjyoti Rai BaruahAt the beginning of the year 595,126 3.92% - -

Changes during the year (Conversion for OCPS to equity) - - - -


Saroj Topno MittraAt the beginning of the year 251,048 1.66% - -





sharesChanges during the year - - - -


V. IndebtednessIndebtedness of the Company including interest outstanding/accrued but not due for payment

Particulars Secured Loans excluding deposits

Unsecured Loans Deposits Total

IndebtednessIndebtedness at the beginning of the financial yeari) Principal Amount 137.93 - - 137.93

ii) Interest due but not paid - - - -

iii) Interest accrued but not due 0.83 - - 0.83

Total (i+ii+iii) 138.76 - - 138.76

Change in Indebtedness during the financial year* Addition 194.25 15.00 - 209.25

* Reduction 112.19 - - 112.19

Net Change 82.06 15.00 - 97.06

Indebtedness at the beginning of the financial yeari) Principal Amount 219.98 15.00 - 234.98

ii) Interest due but not paid - - - -

iii) Interest accrued but not due 1.28 - - 1.28

Total (i+ii+iii) 221.27 - - 236.27

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNELA. Remuneration to Managing Director, Whole-time Directors and/or Manager in `crore

Particulars of RemunerationName of MD/WTD/ Manager

Total AmountRahul J Mittra Saroj Topno

MittraGross salary

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

0.14 0.12 0.26

(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 0.06 0.04 0.10

(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961 - - -

Stock Option - - -

Commission as % profit - - -

Others - - -

Total 0.20 0.16 0.36

Ceiling as per the Act 0.26 0.26 0.52


B. Remuneration to other Directors

Particulars of RemunerationName of MD/WTD/ Manager

Total AmountK.Prasad D.P.S

RathoreSaneesh

SinghMaitrayee Banerjee

Independent Directors

Fee for attending board/ committee meetings

0.009 0.007 0.005 0.021

Commission - - - - -

Others, please specify - - - - -

Total (1) 0.009 0.007 0.005 0.021

Other Non-executive Directors

Fee for attending board committee meetings

- - 0.006 - 0.006

Commission - - - - -

Others, please specify

Total (2) - - 0.006 - -

Total (B)=(1+2) 0.009 0.007 0.006 0.005 0.027

Total Managerial Remuneration 0.009 0.007 0.006 0.005 0.027

Overall Ceiling as per the Act 0.050

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD

Particulars of RemunerationName of Key Managerial

Personnel (CS) Total Amount

AnchitPandeyGross salary 0.04

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

- 0.04

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

(c) Profits in lieu of salary under section 17(3) Income- tax Act, 1961

- -

Stock Option - -

Sweat equity - -

Commission - -

- as % of profit -

- others, specify - -

Others, please specify - -

Total - 0.04

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES

Type Section of the Companies Act

Brief Description

Details of Penalty / Punishment/ Compounding

fees imposed

Authority [RD / NCLT/

COURT]

Appeal made, if any (give

Details)There were no penalties, punishments, compounding offences towards the company, its directors, or other officers

Margdarshak Financial Services Ltd Annual Report 2016-17 CORPORATe GOVeRNANCe RePORT | 27

CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE PHILOSOPHYeffective corporate governance practices constitute the strong foundations on which successful commercial enterprises are built to last. The Company’s philosophy on corporate governance oversees strategies and ensures fiscal accountability, ethical corporate behavior and fairness to all stakeholders comprising regulators, employees, customers, vendors and investors and the society at large. Strong leadership and effective corporate governance practices have been the Company’s hallmark. The Company believes in adopting the ‘best practices’ that are followed in the area of corporate governance across various geographies. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a Code of Conduct for its employees.

BOARD COMPOSITIONThe Company has an active, experienced and a well informed Board. The Board along with its Committees undertakes its fiduciary duties towards all its stakeholders with the Corporate Governance mechanism in place. As on March 31st, 2017 our Board consists of 8 members, three of whom are executive/ Whole-Time Directors, three are Independent Directors and two are Nominee Directors. Independent Directors constitute 37.5% of Board’s strength. Two out of eight board members or 25% of Board are women. Any changes in the composition of the Board is subject to the approval of institutional investors, as a part of the reserved matters of the Investors under the shareholder’s agreement.

The average tenure of members on our Board is 4.9 years as of March 31, 2017. The average tenure of whole-time directors is 5.4 years, of independent

directors is 5 years and of nominee directors is 4.3 years.

The tenure of Board members in years as on March 31, 2017 was as follows

Sr. No. Name Designation Date of

AppointmentTenure (in years) as on March 31, 2017

1. RAHUL JeSSeL MITTRA Managing director 18/01/2010 7.2

2. ARUPJYOTI RAI BARUAH Whole-time director 23/10/2013 3.5

3. SANeeSH SINGH Nominee director 23/02/2010 7.1

4. PRASAD kUCHIBHATLA Independent Director 25/09/2011 5.6

5. DIWAkAR PRATAP SINGH RATHORe Independent Director 25/09/2011 5.6

6. SAROJ TOPNO MITTRA Whole-time director 12/11/2011 5.4

7. MAITRAYee BANeRJee Independent Director 10/08/2013 3.7

8. BHANU PRAkASH VeRMA Nominee Director 03/11/2015 1.4

CORPORATe GOVeRNANCe RePORT | 28 Margdarshak Financial Services Ltd Annual Report 2016-17

RESPONSIBILITIES OF CHAIRMAN, CEO & MANAGING DIRECTORThe company has appointed a non-executive Chairman of the Board –D.P.S. Rathore and the CeO & Managing Director - Rahul J. Mittra. The Chairman is responsible for ensuring that the board provides effective governance to the company and ensure that the board works harmoniously for long term benefits of its company and stakeholders. The CeO is responsible for reviewing and recommending credit policies and ensuring that the implementation/operations of Margdarshak are carried out within the directions and guidelines provided by the Reserve Bank of India (RBI) as well as other relevant regulators including the Insurance Regulatory and Development Authority (IRDA), Registrar of Companies (ROC) and MFIN(SRO).

ROLE OF THE BOARD OF DIRECTORSThe Board of Directors act as a trustee of the

company and its primary role is to provide strategic direction to the company. The board has a fiduciary responsibility to the lenders and investors to protect and increase shareholders’ value and the company’s growth.

BOARD MEMBERSHIP CRITERIAThe nomination and remuneration committee works with the entire Board to determine the appropriate skills and experience required for the Board as a whole. Members are expected to possess the required qualifications and expertise in micro finance sectors / areas and ability to contribute to the Company’s growth. None of the Directors on the Board is member of more than ten committees or Chairman of more than five committees across all the public companies in which s/he is a Director. Necessary disclosures regarding committee positions in other public companies as on March 31, 2017 have been made by the Directors.

The composition of the Board, and directorships held, as on March 31, 2017 are as follows:

Name of the director Designation Age All companies

Committee memberships

Chairperson of committees

Whole-time directorsRahul J Mittra Chief executive Officer

and Managing Director44 4 3 -

Arupjyoti Rai Baruah Whole-time director 48 4 - -

Saroj Topno Mittra Chief Financial Officer and Whole-time

director

44 3 3 -

Independent directorsD.P.S.Rathore Independent director 67 1 4 2

k.Prasad Independent director 72 7 3 3

Maitrayee Banerjee Independent director 65 1 3 -

Nominee director

Saneesh Singh Nominee director 49 9 1 -

Bhanu Prakash Verma Nominee director 49 2 - -

BOARD MEETINGS The dates of Board meetings are decided in advance. The Company Secretary in consultation with the MD & CeO prepare the agenda and distribute it in advance to the directors. The Board meets at least once a quarter to review the quarterly results and other items on the agenda also on the occasion of the AGM. Additional meetings are held when necessary. Committees of

the Board usually meet the day before the formal Board meeting, or whenever the need arises for transacting business. 4 Board meetings were held during the year ended March 31, 2017. These were held on 31st May, 2016, 26th July, 2016, 22nd November, 2016 and 7th March, 2017. The names and their attendance at Board Meetings held on during the year is appended below:


Attendance of directors during the fiscal year 2017

Board Meeting

Name of the directorBoard Meeting Number Held during

the year Attended % of Attendance1 2 3 4

Rahul J Mittra 4 4 100%

Arupjyoti Rai Baruah 4 2 50%

Saroj Topno Mittra 4 4 100%

D.P.S.Rathore 4 4 100%

k.Prasad 4 4 100%

Maitrayee Banerjee 4 3 75%

Saneesh Singh 4 4 100%

Bhanu Prakash Verma 4 3 75%

BOARD COMMITTEESCurrently, the Board has five committees : audit committee, risk management committee, asset liability management committee, HR & compensation management committee, nomination and remuneration committee.

Name of the director Board Audit

committee

Risk Management Committee

Asset Liability Management Committee

HR & Compensation Management Committee

Nomination and

Remuneration Committee

Rahul J Mittra Member Member Member Member

Arupjyoti Rai Baruah

Member

Saroj Topno Mittra Member Member Member Member

D.P.S.Rathore Chairperson Member Chairperson Chairperson Member

k.Prasad Member Chairperson Chairperson Chairperson

Maitrayee Banerjee Member Member Member

Saneesh Singh Member Member

Bhanu Prakash Verma

Member

MEETING OF INDEPENDENT DIRECTORS Schedule IV of Companies Act, 2013 provides that the independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management. At this meeting, the independent directors review the performance of non-independent directors and the Board as a Whole, review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors, and assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. One meeting of Independent directors of the Company was held during the year on 26th July 2016.

AUDIT COMMITTEEDuring FY 2016-17, the Audit Committee had following directors: Mr. k Prasad, Chairman of the Committee Ms. Maitrayee Banerjee, Independent Director Ms. Saroj Topno Mittra, Whole-time Director &

CFOThere has been no change in the composition of the committee during the year. The Company Secretary acts as the secretary to the audit committee. The purpose of the Audit Committee is to oversee the company’s financial reporting process and disclosure of its financial information to ensure that financial statement is correct, sufficient and credible and reviewing with the management the annual financial statements before submission to the Board, focusing primarily on any changes in accounting policies and practices, major

CORPORATe GOVeRNANCe RePORT | 30 Margdarshak Financial Services Ltd Annual Report 2016-17

accounting entries based on exercise of judgment by management, qualifications in draft audit report, significant adjustments arising out of audit The audit committee held four meetings during

the year ended March 31, 2017. These were held on 30th May 2016, 25th July 2016, 21st November 2016 and 7th March 2017. The attendance details of the audit committee meetings are as follows :


Audit Committee Meeting

Name of the directorBoard Meeting Number Held during the

year Attended % of Attendance1 2 3 4

k.Prasad 4 4 100%


Maitrayee Banerjee 4 3 75%


Audit Committee Meeting


year Attended % of Attendance1 2 3 4



k.Prasad 4 4 100%

Saneesh Singh 4 4 100%

BOARD RISK MANAGEMENT COMMITTEEThe Board Risk Management Committee has following members: Mr. k. Prasad- Independent Director & Chairman of the Committee

DPS Rathore –Independent Director Mr. Saneesh Singh- Nominee Director Mr. Rahul J. Mittra- Managing Director

4 meetings of the Board Risk Management Committee were held during the year on 31st May 2016, 25th July 2016, 21st November 2016 and 7th March 2017. The Company Secretary of the Company acts as Secretary of the Committee. The

attendance of this committee is given below:The purpose of Risk Management committee is to review the risk identification and management process developed by management, to confirm it is consistent with the Company’s strategy and business plan in addition to ensuring that there are effective procedures and adequate resources to identify and mitigate credit risk; monitoring and evaluating all issues that may materially impact on the present and future quality of the loan portfolio and credit risk management along with setting the limits on lending exposure and specific actions for the PAR in line with the institution’s risk management programs and market

ASSET LIABILITY MANAGEMENT COMMITTEEAs on March 31, 2017, the Committee has following members: Mr. DPS Rathore–Independent Director Mr. Rahul J. Mittra- Managing Director Ms. Saroj Topno Mittra- Whole-time Director

The purpose of Asset Liability Management Committee is to provide an independent and objective oversight and review of the information raised by management at different levels along with monitoring limits on loans to deposit and loans to capital ratios as well as the percentage on a particular deposit category as set by the board

and maximum percentage imbalance between rates and sensitive assets and liabilities as set by the board.ALCO met 21 times during the year on 16th April 2016, 27th April 2016, 2nd May 2016, 13th May 2016, 30th May 2016, 18th June 2016, 24th June 2016, 7th July 2016, 27th July 2016, 8th August 2016, 31st August 2016, 21st September 2016, 28th September 2016, 28th October 2016, 22nd November 2016, 28th November 2016, 30th December 2016, 2nd January 2017, 14th February 2017, 15th March 2017 and 29thMarch 2017.The Company Secretary of the Company acts as Secretary of the Committee.



HR Management Meeting


year Attended % of Attendance1 2 3





Name of the director Held during the year Attended % of AttendanceRahul J Mittra 21 21 100%



HUMAN RESOURCE AND COMPENSATION MANAGEMENT COMMITTEEAs on March 31, 2017, the Committee has following members: Mr. DPS Rathore–Independent Director Mr. Rahul J. Mittra- Managing Director Ms. Saroj Topno Mittra- Whole-time Director

The purpose of HR & Compensation Management Committee is oversight of the human resources

function of the company. The committee can take appropriate action on other human resources and compensation matters as may be referred to it from time to time by Company management or the Board.HRMC met 3 times during the year on 31st August 2016, 11th November 2016 and 2nd February 2017.The Company Secretary of the Company acts as Secretary of the Committee. The attendance of this committee is given below:

NOMINATION AND REMUNERATION COMMITTEEAs on March 31, 2017, the Committee has following members: Mr. k. Prasad- Chairman, Independent Director Mr. DPS Rathore – Member, Independent

Director Ms. Maitrayee Banerjee - Member, Independent

DirectorThe purpose of Nomination and Remuneration Committee is to identify persons who are qualified to become directors and who may be

appointed in senior management in accordance with the criteria laid down, recommend to the Board, their appointment and removal and shall carry out evaluation of every director’s performance and to formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. Company Secretary of the Company acts as Secretary of the Committee.

NOMINATION AND REMUNERATION COMMITTEE ATTENDANCEThe nomination and remuneration committee held one meeting during the fiscal ended March 31, 2017. The meeting was held on July 25, 2016. The attendance of this committee is given below:

Nomination and Remuneration Committee

Name of the directorBoard Meeting Number

Held during the year Attended % of Attendance1 2 3




GENERAL BODY MEETINGSOne Annual General Meeting was held during the fiscal ended March 31, 2017. The meeting was held

on August 29, 2016. No extraordinary General meeting was held during the year.

MANAGeMeNT DISCUSSION & ANALYSIS | 32 Margdarshak Financial Services Ltd Annual Report 2016-17

MANAGEMENT DISCUSSION & ANALYSIS

OVERVIEWIt is beyond doubt that the microfinance system has proved to be a very successful way of providing immensely valuable financial services to the unserved and underserved on a sustainable basis. Globally, over a billion poor people are still without access to formal financial services. Some 200 million of these people live in India. Access to financial services enables poor to build assets, increase incomes and reduces the vulnerabiity to economic stress. Microfinance market in India is expected to grow rapidly, supported by government of India’s initiatives to achieve greater financial inclusion, and growth in the country’s unorganized but priority sector. During the year 2016-17, five NBFC-MFIs who were granted Small Finance Bank (SFB) license by RBI, converted into SFBs and three more NBFC-MFIs converted to SFBs in current FY. This is expected to fuel competion for deposits and bring innovative banking solutins to the customers. Support systems such as Self Regulatory Organisation (SRO) and Credit Information Bureau (CIB) have established transparency and increased the confidence in the microfinance sector. The fund flow in the sector has seen improvement and is expected to improve further due to reduction in interest rates. As of March 31, 2017, micro finance industry in India had a total loan portfolio of ` 106,916 crore. This represents a growth of 26% over the last year. NBFC-MFIs represent 42% of the micro finance lending , followed by Banks at 38% and SFBs at 14%. For Margdarshak year 2016-17 was a year of growth highlighted by growth in terms of portfolio, branches, clients and disbursement. Margdarshak also expanded its operations to Himachal Pradesh. The asset under management grew by 71% as on March 31, 2017. On November 08, 2016 Government of India announced to demonetize ` 500 and ` 1000 notes. The government initiated the process of exchanging the notes through scheduled commercial banks and provided a timeline till 30th Dec’2016 for the same. Consequent to announcement of demonetization by the Government of India, followed by currency crisis, microfinance business was severely impacted in multiple ways including slowing down of growth due to non availability of cash for few months.

FINANCIAL PRODUCTSMargdarshak Financial Services Ltd. an NBFC-MFI, is a public limited company with its registered office in Lucknow. Working

towards livelihood strengthening and economic mainstreaming of poor,in the states of UP, Bihar, Haryana, Uttarakhand and Himachal Pradesh, Margdarshak’s outreach in rural areas is around 70%. Majority of its clients are from bottom of the pyramid who have no access to formal banking system. Forming the bulk of our clients are women who are involved in a host of agri-allied activites, handicraft, livestock rearing and petty trading related activites. The loan amount ranges from `15000 to ` 35000/-.Moving up the value chain, the second category of our loans are smaller in number and are extended to existing loan clients with good repayment track record. The loan amount is used for growth in their exisitng activity. The loan amount ranges from ` 10000 to ` 20000/-.The third category of clients are micro entrepreneurs who require higher level of investment. To serve this segment for enterprise development we have developed individual loans under MSMe lending with stronger appraisal mechanism and credit score based client selection.

AFFORDABLE HOUSINGMajority of our clients are not able to address their housing needs as they are already burdened with affording necessities such as food and health related expenses. With its new Home Improvement Loan product Margdarshak intends to extend loan at the range of ` 50000 to ` 75000 for home improvement, extension and addition (except for new house construction) under funding support from Habitat Microbuild India Housing Finance Co. Pvt. Ltd.

CLEAN ENERGYMargdarshak also strives to build awareness on environmental protection and climate change among its members. We encourage them to adopt environment friendly lifestyle and provide them access to clean energy and energy efficient products through appropriate financial services and trainings. The solar / clean energy loans as well as loan for purchase of mobile are given to existing clients and is co-terminus with the existing loan.All loans mentioned above are as per RBI guidelines at an interest rate as applicable from time to time.

OUR STRATEGYOverall, our long term goals allow for continued growth in rural wealth. Micro loans provide financial stability for our clients. Whereas

Margdarshak Financial Services Ltd Annual Report 2016-17 MANAGeMeNT DISCUSSION & ANALYSIS | 33

MSMe loans reduces the gap between market and producers strengthening the value chain. The strategy essentially allows a member to be invloved in all programmes of the organisation at all times. Clients who have access to choices and further development are less inclined to leave a programme. Our strategy thereby intends to cultivate long term committed members.

OUR STRENGTHMargdarshak is engaged in various aspects of socio-economic development of the entrepreneurial poor. Led by a diverse set of board of directors, MFSL is managed by a well established senior management team. Comprising primarily of sectoral and technical specialists the stability of the senior management team is one of the key strengths of the organisation. � Gradual and consolidated growth: MFSL has been one of the most consistent MFI’s in North India with its business growing at steady 30% annually for past 3 years. The organisation has managed to show sustained growth even during the period of turmoil in Indian mf landscape following the AP Act.

� Balanced Market spread: The business operations of MFSL are equally spread in low growth – low risk, medium growth – medium risk and high growth and high risk areas. The spread enables the organisation in creating a sustainable business for the long term by working in un-served and underserved areas while creating sufficient financial sustainability by establishing fast business in urban clusters.

� Use of technology for improving efficiencies and margins: MFSL has a well established plan for using technology for improving efficiencies, margins and strengthening its monitoring. Over the past few years the organisation has moved from LAN based software to a web-based software which has reduced the TAT for the clients and also strengthened the monitoring. The organisation has implemented collection and disbursement modules. In 2016-17, organisation has implemented Bluetooth printer generated collection receipts, automated the loan application form and introduced biometric attendance system for employees. This will further strengthen its operations.

� Compliance with RBI guidelines: Due to its strong focus on client servicing and client satisfaction, MFSL has been able to comply with key RBI guidelines in terms of interest rates, repayment options, qualifying assets, and FPC and client protection measures.

� Long term investors: MFSL hasreceivedequity investments fromDiaVikas and SIDBI which are one of the most stable and long term investors in the mf landscape in India. The investments

received and strategic support received by MFSL from the investors enables the organisation in maintaining sustainable growth in a highly regulated mf sector of India.

RISK MANAGEMENTRisk Management has become a key area of focus for the MFIs, particularly in India, subsequent to the global financial crisis (2008-09) and the Andhra Pradesh microfinance crisis (2010). MFIs have realized that risk management can, in fact, create value. In addition, the pressure to have proper Risk Management procedures in place has increased, given the attention that regulatory bodies have placed on such issues, as well as the introduction of stricter capital requirements. Responding to the needs of the MFIs, IFC developed Risk Assessment Framework to improve the overall approach of the MFIs towards risk management. IFC performed a Microfinance Risk Diagnostic to assess the risk management capabilities of Margdarshak Financial Services Ltd. and thereafter provided technical assistance through support of consultants from M2i for implementing the risk management framework. Margdarshak implemented the recommendations with the support of consultants from M2i during the period from July 2014 to June 2015. As part of implementation support, the consultants helped Margdarshak in establishing risk management structures, drafting policies related to risk management, finalizing risk reporting formats, orienting senior and middle management staff in Risk Management issues. During the year 2016-17, Margdarshak organized 6 workshops on Risk Management covering 163 field level managers. The workshop was conducted by M2i to enable the employees understand the implications of risks, instill a sense of accountability and encourage escalation of issues and integrate role of risk into decision-making processes. Risk management is a dynamic function and structures and reporting frameworks need to evolve given increase in scale of operations, changes in operating structures and changes in the external environment.

RISK GOVERNANCEMargdarshak has evolved a general risk management policy, which was adopted by its board in November 2014. It has formed two committees – Board Risk Management Committee (BRMC) and the Management Risk Committee (MRC). The Board Risk Committee is chaired by an Independent Director and consists of three Board Members. The Management Risk Committee is chaired by the executive Director and consists of all department heads. A Risk Management department has been established with a dedicated person heading it.


The head of the Risk Management Department reports to the Board Risk Management Committee. The organisation has increased the strength of the Risk Management department and plans to further strengthen the department as the scale of operation increases. The Risk Management Department is currently involved in: � Advising the Management and the Board on Risk Management policies and limits

� Developing tools for effective management of risks

� Advising the organisation on improvement of management systems

� Preparing risk reports in coordination with various departments

� Conducting orientation workshops for field staff on issues pertaining to Risk Management

The risks of the organization has been categorized into the following major heads:

ICAAPThe organisation has set Board approved limits for Risk-Weighted Capital Adequacy Ratio (CRAR). As the scale of operations increase, the organization will need to further evolve its ICAAP framework and in the medium term shall link its level of capital with assessment of risks.

CREDIT RISKMargdarshak has evolved its credit risk policy to include limits for concentration in various categories, credit risk reports, monthly review by the Management Risk Management Committee of the management and quarterly review by the Board Risk Management Committee. Credit risk policy is widely disseminated across all the organization. Limits have also been documented in the operations manual of the organization. The process of loan administration including loan application, loan disbursement and collection are now being administered using a mobile based application. The MIS software has in-built validations to ensure adherence to limits on individual and cycle wise loan sizes. Margdarshak has developed mechanisms to actively track its exposure to different districts and industry segments and takes action to bring this exposure to approved limits. Margdarshak has also started estimating hidden delinquency on the basis of a sample survey of groups. The organisation is in the process of developing a mobile based software application, which will enable it to track hidden delinquency for all clients.

OPERATIONAL RISKThe organisation has adopted operational risk policy that contains quantitative limits on

key operational parameters. These limits are also communicated to relevant persons in the organization. The organization has developed business continuity plans for different aspects of its operations. (eg fire in the premises, riots/floods in the operational area, loss of critical staff etc). Margdarshak is in the process of including aspects of risk in its induction and refresher trainings. This is expected to build appropriate risk culture in the organization. Margdarshak has also developed mechanism to track its operational risks using a system of key Risk Indicators (kRIs) for its various activities. Information on key Risk Indicators is obtained by the Risk Management Department on monthly basis and is shared with the Management Risk Committee (MRC). Margdarshak has developed a system of grading its groups on the basis of a set of objective criteria, where groups are rated by the internal auditors and supervisors during their regular visits. Margdarshak has also started analysing internal audit scores of its branches to identify aspects requiring immediate attention. Margdarshak is also in the process of evolving a system of capturing operational loss data. All functional departments have been made accountable for the operational risks relevant to them. The Risk Management department advises them to adopt required tools for effective management of operational risks. Heads of departments are required to submit assurance reports to the BRMC to inform them about the status of operational risks within their departments. Operational risk reports are discussed in the MRC and BRMC.

LIQUIDITY RISKAlthough dependence on NBFCs is still very high, contribution from a single source of fund has come down. Margdarshak has developed Board approved Liquidity and Funding Risk policy. The policy covers the following aspects: � Organizational responsibility for managing liquidity

� Cash management system � Liquidity risk monitoring � Limits on concentration of funding sources � Liquidity Contingency Plan

Margdarshak has also developed funding and liquidity risk limits and actively tracks its liquidity position on the basis of short-term forecasts. Limits have been defined for minimum number of days of liquidity on the basis of short-term forecasts.


The organization has also started actively tracking the concentration of its funding sources and cost of funds. A system to track funding covenants has been developed to ensure that all the funding covenants are met. Margdarshak has also started undertaking liquidity stress testing on quarterly basis key liquidity reports are discussed in the meeting of Management Risk Committee (MRC) on monthly basis.

INTEREST RATE RISKMargdarshak has adopted an Interest Rate Risk Policy. The policy requires monthly management review of interest rate risk and quarterly board risk committee review of these risks as well as their limits. Margdarshak has developed limits on interest rate risks to comply with regulatory margins on interest rate risks. It also has developed limits for losses on account of increase in interest rates by the lenders. Margdarshak has also prepared formats for tracking maturity mismatches in interest incomes and interest expenses as well as for tracking the impact of changes in borrowing interest rates on profits.

MARKET RISKMargdarshak still has no exposure to Foreign exchange Risk. As per the organization’s policy, in case it accesses foreign currency borrowings, it will need to completely hedge this exposure. This is also required by the directions issued by RBI on external Commercial Borrowings by NBFC-MFIs. Margdarshak’s level of maturity remains Formative for Forex Risk implementation and practice.

OPERATIONAL PERFORMANCEThe operations of the company spread across 50 districts in 5 states viz.Uttar Pradesh, Bihar, Haryana, Uttarakhand and Himachal Pradesh. During the year 2016-17 the company expanded its operations to Himachal Pradesh and operated through a network of 83 branches in UP, 21 in Bihar, 11 in Haryana, 2 in Uttarakhand andin Himachal taking the total number of branches to 120. The state-wise number of branches is shown in the table below:

State March 16 March 17UP 67 83

Bihar 12 21

Haryana 9 11

Uttarakhand 1 2

Himachal - 3

Total 89 120The Gross Loan Portfolio stood at ` 292.18 crore

as compared to ` 170.86 crore in the previous year, a growth of 71%. Managed portfolio was about 33 % of the total portfolio amounting to ` 95.09 crore as on March 31, 2017, as compared to ` 50.94 crore a growth of 87% over previous year. About 70% of the portfolio was in UP, 21% in Bihar, 8% in Bihar and 1% in Uttarakhand and Himachal. During 2016-17, Margdarshak disbursed loans worth ` 294 crore out of which ` 198 crore was own and ` 96 crore under Managed, (overall growth of 81%).The company registered positive growth across all indicators. The client grew by 50% from 133847 in March 31, 2016 to 201185 in March 31, 2017. The no. of branches grew by 35% from 89 to 120, no. of employees grew by 64% from 487 to 799. The snapshot and year on year growth is given below:

Mar-16 Mar-17 YoY Growth

State 4 5 25%

Districts 42 50 19%

Branches 89 120 35%

Borrowers 133847 201185 50%

Loan Officers 288 449 56%

employees 487 799 64%

GLP (cr) 170.86 292.18 71%

FINANCIAL PERFORMANCEThe authorized share capital is ` 52.50 crore, divided into 2,50,00,000 equity shares of ` 10 each, 25,00,000 Optionally Convertible Preference Shares (OCPS) of ` 10 each and 25,00,000 Compulsorily Convertible Preference shares (CCPS) of ` 100 each. The issued and paid up capital stood at ` 17.54 crore comprising of equity shares of ` 15.71 crore and OCPS of ` 1.83 crore. The equity shares increased from 15.16 crore to 15.71 due to conversion of OCPS of ` 0.55 crore and OCPS reduced from ` 2.45 crore to ` 1.83 crore due to redemption of OCPS of ` 0.08 crore and conversion of ` 0.55 crore.

RESERVES AND SURPLUS

STATUTORY RESERVESStatutory Reserve increased from ` 0.81 crore to ` 1.63 crore . The company is required to create a reserve fund at the rate of 20% of the Net Profit after Tax as per section 45-IC of the Reserve Bank of Indian Act.

SHARE PREMIUMThe balance as on March 31, 2017 amounted to ` 1.04 crore which is the same as the previous year.


PROVISION FOR LOAN LOSSThe balance of Loan Loss Provision amounted to ` 1.97 crore on March 31, 2017 as compared to ` 1.20 crore on March 31, 2016. The movement was due to additional provisioning requirement as per the prudential norms of Reserve Bank of India according to which the aggregate loan provision to be maintained by the company at any point of time shall not be less than the higher of (i)1% of the outstanding portfolio of the standard assets (ii) 50% of sub-standard assets (iii) 100% for Loss assets.

GRANT SUPPORTDuring the year, the company received grant support from SIDBI to the extent of ` 0.24 crore (Capital grant - ` 0.13 crore and Revenue grant – ` 0.11 crore) and Grameen Foundation India of ` 0.34 crore (Capital grant – ` 0.23 crore and Revenue grant – ` 0.11 crore). The balance under Grant Support as on March 31, 2017 was ` 0.37 crore as compared to ` 0.08 crore in March 31, 2016. ` 0.07 crore was transferred to deferred revenue against the depreciable assets. The grant was utilized towards Technology Upgradation and Capacity Building of employees.

RETAINED EARNINGSThe balance retained earnings as on March 31, 2017 was ` 6.10 crore. The balance as on March 31, 2016 was ` 3.69 crore.

DEBT FUNDING :During the year, new debt funds received amounted to ` 209.25 crore out of which ` 194.25 crore was term loan and ` 15 crore was unsecured subordinated debt. Total repayments of loans amounted to ` 112.19 crore. The outstanding amount as on March 31, 2017 stood at ` 234.98 crore as compared to ` 137.93 crore.

PROVISIONSThe balance of provision as on March 31, 2017 amounted to ` 2.5 crore as compared to ` 1.91 crore on March 31, 2016. Property,Plant and equipmentDuring the year, additions to gross block was ` 1.99 crore out of which ` 0.25 crore was on Furnitures, ` 1.27crore on computers and ` 0.47 crore in electrical equipments. The Net Block as on March 31, 2017 amounted to ` 3.23 crore as compared to ` 1.86 crore in March 31, 2016.

CASH AND CASH EQUIVALENT: The balance cash and cash equivalent as on March 31, 2017 was ` 23.6 crore out of which ` 23.44 was in banks and ` 0.16 crore in cash. Unamortised expensesThe cost of arranging the borrowings are amortised

during the tenure of the loan. The unamortised expenditure as on March 31, 2017 stood at ` 3.73 crore as compared to ` 2.41 crore in the previous year.

OTHER CURRENT AND NON-CURRENT ASSETS:

TERM DEPOSITSThe balance of term deposit against borrowings as on March 31, 2017 was ` 26.48 crore and term deposit against managed portfolio was ` 7.58 crore as compared to ` 14.44 crore and ` 3.4 crore respectively as on March 31, 2016.

LOAN TO MARGDARSHAK EMPLOYEE WELFARE TRUST: This was ` 1 crore as on March 31, 2017 and March 31, 2016.

OTHER CURRENT ASSETS: The other current assets as on March 31, 2017 amounted to ` 7.00 crore as compared to ` 5.64 in the previous year.

REVENUEParticulars March 17 March16

Interest Income 39.79 22.15

Processing fee 1.98 1.24

Income from BC operations

5.99 5.14

Interest Income on FDs 2.73 1.77

Other Income 0.34 0.15

Total 50.83 30.45

EXPENDITUREParticulars March 17 March16

employee Benefits 9.77 6.33

Interest on borrowings 26.84 13.91

Upfront fee 1.07 1.11

Bank Charges 0.27 0.26

Rent 0.99 0.73

Travel 0.97 0.61

Telephone&Postage 0.59 0.26

LLP 0.77 0.60

Depreciation 0.61 0.36

Amortisation 1.30 0.62

Other Admn expenditure 2.67 2.02

Total 45.85 26.81The employee cost has decreased as a percentage of revenue from 21% to 19% in the year 2016-17. The financial cost has increased from 50% to 55% whereas the administration cost has reduced from


17% to 16%. This was primarily due to slow down of disbursement during November 2016-March 2017 due to impact of demonetization. Other details including Related Party transactions have been discussed in detail in the Notes to Accounts to the financial statements in this Annual Report.

STRATEGIC ENABLERS FOR GROWTHWith recent changes in economic environment, declining interest rates, and increase in compliances under the new GST regime, we realize that we need to achieve significant scale to be sustainable in long run. As Margdarshak enters its next phase of growth, it would be critical for the institution to invest in infrastructure and systems that hold the institution in good stead for managing the targeted growth. During the last two years SIDBI-PSIG and Grameen Foundation India supported Margdarshak in subsidizing most of the costs incurred by the company in strengthening its internal systems especially in three functional areas i.e. human capital, information technology for monitoring and client relationship management. It has also worked towards strengthening of its internal control systems.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The company has reasonable system of internal control and the internal audit practices. The company has well documented policies related to credit, operations, internal audit, HR. Monitoring is carried out regularly by middle and senior management. During the year 2016-17, 100% of its branches were issued Bluetooth Printers for shifting to giving electronic receipts for collection at group meetings. Assistant Branch Manager position was introduced this year to strengthen the dual custody policy in critical cash handling task. Dual custody encourages cash handler to check each other, reduces the risk of robbery/theft and if loss occurs, protects the cash handler from unwarranted suspicion.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES INCLUDING NUMBER OF PEOPLE EMPLOYED Given the service orientation of microfinance operations and the volume of staff-client interactions on the field, Margdarshak encourages professionalism, humility and efficient and qualified staff to understand and respect out clients in our efforts to provide quality service.

HUMAN CAPITAL AND RECRUITMENTDuring the year 2016-17, we streamlined our

recruitment process by organizing planned recruitment drives and following standard operating procedures to ensure quality standards that management desires in its human resources. We also streamlined organization structure and inducted professionals inAs on March 31, 2017, the total number of employees stood at 799 out of which 449 were field officers. Out of total number of employees, 57 were female employees. The atttrition rate for the financial year was 20%, however, the attrition rate above above 180 days of employee service was 7.65%.

TRAINING AND DEVELOPMENT As a first step to build robust training systems, during the year 2016-17 with the support of SIDBI –PSIG funds and technical support of Grameen Foundation India, Margdarshak has refined the existing training content and updated it on operational and field level processes and design/delivery aspects of training. 25 employees were imparted training on ‘Training the Trainers’ who are expected to downstream the training at regional levels, be part of the interview committees for selction of right candidates . In addition to this 23 candidates completed the one year Management Development Programme. It is conducted for its senior and middle managers for development of their core management and leadership skills.It was a 12 month programme, consisting of 4 classroom sessions (one each quarter) and 2 hour virtual Group Dialogue session each month. The pre-session and post session consisted of self assessment to identify the areas of strength and opportunities of the participants before and after the session, 2-3 pre-reads to encourage reflection prior to group dialogue session and post session one to one meeting of pairs of trainees with facilitator for discussing the areas they were struggling with.The programme will help them to not only develop their capacities but also to be able to better lead their teams and departments, cross collaborate and work with other teams and most importantly share and pass on their knowledge with others

INFORMATION COMMUNICATION TECHNOLOGY As a growing institution, Information and Communication Technology (ICT) would be critical for the institution to bring in efficiencies in monitoring. The management at Margdarshak is focused on using ICT in all the key organizational functions including operations and support functions. embarking on this vision, some of the major developments in last few years on ICT front are listed below. 1. Transitioned from a LAN based eRP to a web


hosted one thereby making network access geography agnostic

2. Transitioned from a discreet database management system to a centralized one leading to significant efficiencies in reporting/monitoring on one hand and enhanced data integrity, portability and administration on the other.

3. Outsourced server management to a specialized vendor leading to significant reduction in CAPeX requirements coupled with enhanced server administration.

4. In order to make loan management processes paperless and efficient, Margdarshak developed a remote loan origination application on android in consultation with its eRP vendor. Currently, all the field based client sourcing, disbursements, collections happen through mobile devices operated by individual field officers (FOs).

These developments have helped Margdarshak to shape up its ICT infrastructure in a way that makes it more efficient, reliable and secure. During the year 2016-17 Margdarshak further ramped up its IT capabilities to bring in efficiencies in service delivery by automating the:1. Automation of credit enquiry from credit bureau

leading to faster turnaround time (TAT) for loan appraisals

2. Augmentation of data/network security.

CLIENT EMPOWERMENTMargdarshak is constantly working towards economic strengthening of the clients by understanding their need for financial services, vocational trainings and business development support.The organization is not only catering the financial needs of the clients but also engaging with them in developing their skill sets to manage their business well. Also, with development of institutional strategy on social performance management, one of the focus areas for Margdarshakduring the year was to develop robust client grievance management systems and implemented systems to monitor its social goals with focus on automating client grievance management systems, providing business development services across identified clusters and expanding the bouquet of financial products/services for greater impact. During the last few years, Margdarshak had conducted around 175 financial literacy training

programs covering around 6,125 participants with the support of SIDBI. This year, Digital Literacy Programme for micro business clusters of Uttar Pradesh, was conducted during the month of April 2017 in 14 districts of UP covering around 1600 clients. Aiming to educate the clients on digital financial options including schemes of government, a cadre of specialised Master Trainer on Digital Financial Literacy were used for on-site training in 14 artisanal locations. Short video clips on Digital Financial Literacy were displayed using fully loaded LeD vans, followed by introducing digital platforms of different version such as Paytm, Oxigen and BHIM to clients and their family members for transaction.

OUR STORIES OF TRANSFORMATION

Hashmi Begum, a self-dependent separated single mother of four daughters and four sons, tells us her struggles through her journey of life and how Margdarshak helped her to resiliently get back on her feet and keep her chin up in the society.

Client Stories contributed by Sandeep B. Sanga

Hashmi Begum (Branch : Jhunsi, FO : Pradeep kumar, BM: Ashish Srivastava)

I am a mother of four daughters and four sons. I live in Nihalpur Allahabad District. I am a master tailor and I have a set up my work station here at my home itself. I faced many life difficulties after my husband left me to marry the second time. Having these many children slowly racked up to become a frighteningly huge responsibility. I used to sew a little before but my business wasn’t much known to the people. Having just one machine to sew alone wasn’t enough to progress and make a living out of it. The pressure was starting to get to me. I got intrigued when I came to know about Margdarshak that it was a financial institution that gives away loans. I took a loan of 15k to invest the money in my business. I bought a new machine. My business grew. I repayed my first loan and then took another loan from Margdarshak of 30k. Then I bought another two machines and kept two women to work for me. I trained both of them, even tutored a few others and I slowly started to grasp this kind of working lifestyle. I was able to provide for my children, pay for their education and successfully got two of them married. I duly acknowledge and thank Margdarshak for their support in the very crucial stage of my life.

Aradhna, Margdarshak’s first client of Home Improvement Loan in Bihar, shares her story of how empowered she feels after her business’ growth & expansion, borrowing from us.

Aradhna Gupta(Branch: Muzaffarpur, FO: Santeshwar kumar, BM: Sujit kumar)

I have a production line set up of Adauri (an edible item popular in Bihar). The lack of proper storage for drying Adauri, especially in the monsoons, sternly affected my business. I had trouble paying rent of my general store as low production equals low transactions. I heard about Margdarshak’snew home improvement loan product andquickly decided to avail the loan. I have already availed two loans from Margdarshak for the business and have already repaid the first loan. Now I have got an additional room made from which I started to earn monthly rentals and I also refurbished my production set up/storage in my home. Moreover, the boosted financial situation helped augment the previous limited items in my general store to get greater returns and thus, my business has expanded significantly. I feel empowered in actual terms.

Geeta Devi, tells us how hectic she found the conditional repayment methods of Saahukaars and how relieved she was after she discovered Margdarshak which helped her save and sustain her business.

Geeta Devi(Branch : Jhunsi, FO : Pradeep kumar, BM: Ashish Srivastava)

I have a livestock(cows)/milk business. The situation at home was worsening with every tick of the clock. I had used up most of my money for my children’s education (till inter-college). All the money spent weakened my financial state to such extent that it shook my business. I had to seek help. I borrowed money from a Saahukaar who gave me a very strict condition to repay. The saahukaar kept breathing down my neck for repayment and it became so hectic that I couldn’t use the borrowed money in my business and that took a toll on me. I first came to know about Margdarshak and borrowed a loan of Rs. 20,000. I borrowed with the intention of recovering my business’ state. I bought a cow. The additional cow helped me recover money faster. It was relieving. The repayment scheme of Margdarshak is also less stressful. The house we live in, even though incomplete, is a result of the recovered business that I sustained from the provided support of Margarshak. I also gave away two of my daughters in marriage. I am grateful to Margdarshak for their kind support when I needed help the most.

INDePeNDeNT AUDITORS' RePORT | 42 Margdarshak Financial Services Ltd Annual Report 2016-17

INDEPENDENT AUDITORS' REPORT

To the Members of Margdarshak Financial Services Limited

REPORT ON THE FINANCIAL STATEMENTSWe have audited the accompanying financial statements of Margdarshak Financial Services Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information (collectively referred to as the “financial statements”).

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR'S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit.We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder, to the extent applicable.We conducted our audit in accordance with the

Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

OPINIONIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, its profit, and its cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS1. As required by the Companies (Auditor’s

Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the “Annexure-A”, a statement on the matters specified in paragraphs 3 and 4 of the order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best

Margdarshak Financial Services Ltd Annual Report 2016-17 INDePeNDeNT AUDITORS' RePORT | 43

of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014and the Companies (Accounting Standards) Amendment Rules, 2016.

(e) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure - B”.

(g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor education and Protection Fund by the Company.

iv. The Company has provided disclosures in Note 25.13 in the financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 9, 2016 to December 30, 2016. We are relying on the management representation regarding the holding and nature of cash transactions, including those in Specified Bank Notes, However, we are unable to obtain sufficient and appropriate audit evidence to report on whether the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management

For Umesh K. Agrawal & Co.Chartered AccountantsFirm's Registration No. : 004883C

(Shruti Gupta)PartnerMembership No.: 425212

Place: LucknowDate: July 04, 2017


“Annexure – A” referred to in paragraph 1 under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date on the financial statements of Margdarshak Financial Services Limited (‘the Company') as at and for the year ended March 31, 2017 (i) (a) The Company has maintained proper

records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) According to the information and explanations given by the management, there are no immovable properties included in fixed assets of the Company and accordingly the requirements under clause 3(i)(c) of the Order are not applicable to the Company.

(ii) The Company's business does not involve inventories and, accordingly, the requirements under paragraph 3 (ii) of the Order are not applicable to the Company and hence not commented upon.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities given in respect of which provisions of section 185 and 186 of the Companies Act, 2013 are applicable and hence not commented upon.

(v) According to the information and explanations given to us, the company has not accepted any deposit from the public. Therefore, the provisions of Clause (v) of paragraph 3 of the Order are not applicable.

(vi) The Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the services rendered by the Company.

(vii) (a) Undisputed statutory dues including income-tax, service tax and other material statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, service tax and other material statutory dues were outstanding, at the year end, for

a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of income tax and service tax which have not been deposited on account of any dispute.

In respect of sub clause (vii) (a) to (vii) (b) above, the Company did not have any dues towards wealth-tax, sales-tax, customs duty, excise duty, value added tax and cess during the year. (viii) In our opinion and according to the

information and explanations given by the management, the company has not defaulted in repayment of loans or borrowings to any financial institution, bank or government or dues to debenture holders.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer or further public offer, hence not commented upon. Further, monies raised by the Company by way of term loans were applied for the purpose for which those were raised, though idle/surplus funds which were not required for immediate utilization were gainfully invested in liquid assets payable on demand.

(x) The company has provided disclosures in Note 25.10 in the financial statements as to the fraud cases noticed / reported during the year. As on March 31, 2017, an amount of ` 11,08,204/- has been written off by the company on account of fraud by employees who violated the policies by either engaging third party for disbursements or by misappropriating the collection amount.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions ofsection 197, read with Schedule V to the Act.

(xii) The company is not a Nidhi company. Therefore, the provisions of clause 3 (xii) of the order are not applicable to the company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the notes


to the financial statements, as required by the applicable accounting standard.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3(xiv) are not applicable to the company and hence not commented upon.

(xv) According to the information and explanations given by the management, the company has not entered into any non-cash transactions with the directors or persons connected with him as referred to in section 192 of the Companies Act, 2013.

(xvi) According to the information and explanations given to us, we report that the Company has registeredas required, under

section 45-IA of the Reserve Bank of India Act, 1934.

For Umesh K. Agrawal & Co.Chartered AccountantsFirm's Registration No. :004883C

Shruti GuptaPartnerMembership No.: 425212



“Annexure – B” referred to in paragraph 2(f) under the heading “Report on Other Legal and Regulatory Requirements” of our report of even date on the financial statements of Margdarshak Financial Services Limited (‘the Company') as at and for the year ended March 31, 2017

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF THE SECTION 143 OF THE COMPANIES ACT, 2013 (“THE ACT”)We have audited the internal financial controls over financial reporting of Margdarshak Financial Services Limited(“the Company”) as of March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

MANAGEMENT’S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLSThe Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business,including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

AUDITORS’ RESPONSIBILITYOur responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial

reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTINGA company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition,use, or disposition of the company’s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTINGBecause of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or


that the degree of compliance with the policies or procedures may deteriorate.

OPINIONIn our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Umesh K. Agrawal & Co.Chartered AccountantsFirm's Registration No. : 004883C

Shruti GuptaPartnerMembership No.: 425212


FINANCIAL STATeMeNTS | 48 Margdarshak Financial Services Ltd Annual Report 2016-17

FINANCIAL STATEMENTS

BALANCE SHEET AS ON MARCH 31, 2017(All amounts in ` unless otherwise stated)

Notes No.

As at March 31, 2017

As at March 31, 2016

I. EQUITY AND LIABILITIESShareholders' funds

Share Capital 3 175,399,580 176,149,580

Reserves & Surplus 4 111,136,512 68,290,330

286,536,092 244,439,910 Non-current liabilities

Term Loan borrowings 5 1,091,512,993 620,842,518

Long Term Provisions 6 5,716,007 1,578,729

1,097,229,000 622,421,247 Current Liabilities

Term Loan borrowings 5 1,258,313,186 758,431,322

Other Current liabilities 7 37,230,875 21,529,957

Short-term provisions 9 19,349,622 17,508,826

1,314,893,683 797,470,105 TOTAL 2,698,658,775 1,664,331,262

II. ASSETSNon-current assets

Property, Plant & equipment 10 32,348,538 18,560,141

Long term loans and advances 11 715,969,456 379,386,316

Other non-current assets 12 251,320,426 139,809,552

Deferred tax asset 8 1,385,228 577,107

1,001,023,648 538,333,116 Current Assets

Cash and Bank Balances 13 235,982,010 176,981,200

Short term loans and advances 11 1,254,868,499 819,890,161

Other current assets 14 206,784,618 129,126,785

1,697,635,127 1,125,998,146 TOTAL 2,698,658,775 1,664,331,262

Summary of significant accounting policies 2

The accompanying notes are an integral part of the financial statementsAs per our report of even dateFor Umesh K. Agrawal & Co. For and on behalf of the Board of Directors ofChartered Accountants Margdarshak Financial Services LimitedFirm Registration No.04883C

(Shruti Gupta) (Rahul J. Mittra) (Saroj Mittra)Partner Managing Director Executive DirectorMembership No.425212

Place: LucknowDate: 04.07.2017 (Anchit Pandey) Company Secretary

Margdarshak Financial Services Ltd Annual Report 2016-17 FINANCIAL STATeMeNTS | 49

PROFIT AND LOSS ACCOUNT AS ON MARCH 31, 2017

(All amounts in ` unless otherwise stated)

Notes No.

Year ended March 31, 2017

Year ended March 31, 2016

I. Income

Revenue from operations 15 477,635,823 285,281,642

Other income 16 30,686,891 19,176,526

Total Income 508,322,714 304,458,168

II. Expenses

employee benefit expenses 17 97,724,253 63,255,322

Finance Costs 18 281,788,086 152,803,896

Depreciation and amortization 19 19,156,628 9,846,482

Other expenses 20 59,878,115 42,172,752

Total Expenses 458,547,082 268,078,452

Profit before Tax 49,775,633 36,379,716

Tax Expense

-Current Tax 16,145,775 13,521,614

-Deferred tax charge/ (credit) (808,121) (1,396,837)

Total Tax Expenses 15,337,655 12,124,777

Profit for the year 34,437,978 24,254,939

Earning per equity share(EPS) 21

Basic 2.07 1.51

Diluted 1.97 1.45

Nominal value of share 10.00 10.00

Summary of significant accounting policies 2

The accompanying notes are an integral part of the financial statements

As per our report of even dateFor Umesh K. Agrawal & Co. For and on behalf of the Board of Directors ofChartered Accountants Margdarshak Financial Services LimitedFirm Registration No.04883C


Place: LucknowDate: 04.07.2017 (Anchit Pandey) Company Secretary


Cash Flow Statement for the year ended March 31, 2017(All amounts in (`)unless otherwise stated) Mar-17 Mar-16(A) Opening BalancesCash in Hand 652,655 1,385,887 Cash at Bank Accounts -In Current Accounts 176,328,545 133,852,724 - In Saving Accounts - Total (A) 176,981,200 135,238,611 SOURCES OF FUNDS(B)Cash Flow From Change in Capital BaseShare Capital Increased (750,000) 15,556,220 Reserve Fund Increased/(Decreased) 42,846,182 30,565,162 Debt Fund -New Debt Fund received during the year 2,092,500,000 1,300,000,000 Less: Repayment of Debt Liabilities during the year 1,121,947,662 970,552,338 580,526,395 719,473,605

970,552,338 719,473,605 (B) Net cash Inflow/(outflow) form change in capital Base 1,012,648,520 765,594,987

(C) Cash inflow/(outflow) from Micro-lending activitiesIncome Generating Loan -New loans Disbursed 1,983,637,745 771,561,478 1,240,954,000 600,818,255 Less -Repayment of loan received 1,212,076,267 640,135,745 (C) Net cash Inflow/(outflow) from Micro Loan Disbursement (771,561,478) (600,818,255)

( D) Cash flow from Operating ActivitiesProfit/(Loss) as per Profit and Loss Account -

- Add/(Less): Non- cash expenses( Non-cash incomes) -Depreciation 6,134,076 3,626,088

6,134,076 3,626,088 Increase/(decrease) in current liabilities 21,678,992 (10,528,206) (Increase)/decrease in current assets (14,432,328) (36,815,662)(D) Cash From Operation 13,380,740 (43,717,780)(E) SOURCES OF FUND (A+B+C+D) 431,448,982 256,297,563 APPLICATION OF FUNDAdjustments for change in current assets/liabilities(F)Cash Flow from Investment ActivitiesLess: Investment in TDR (162,214,785) (50,288,200)-( Increase) /decrease in Unamortised expenses (13,329,714) (19,725,213)-(Increase)/decrease in fixed assets (19,922,473) (9,302,950)(F) Net cash inflow/(outflow) form investment activities (195,466,972) (79,316,363)(G) CLOSING BALANCE (E-F) 235,982,010 176,981,201 CLOSING BALANCECash in Hand 1,628,706 652,655 Cash in Bank accounts -Current Accounts 234,353,304 176,328,545 - In Saving Accounts

235,982,010 176,981,200 As per our separate report of even date.

For Umesh K. Agrawal & Co. For and on behalf of the BoardChartered Accountants For Margdarshak Financial Services Limited


LucknowDate: 04.07.2017 (Anchit Pandey) Company Secretary


SCHEDULES TO THE FINANCIAL STATEMENTSas on March 31st, 2017

1. CORPORATE INFORMATIONMargdarshak Financial Services Limited is a public limited company incorporated in India. The company is engaged in the business of financial inclusion. It provides small value collateral free loans to the economically weaker section of the society especially women who are organized into joint liability groups. The company is registered with RBI as a Non- Banking Financial Company - Non Deposit taking (NBFC-ND) vide certificate no. B-12.00364 dated 22nd March 2011. RBI had approved its conversion into NBFC-MFI w.e.f 19th December 2013.The registered office of the company is at Plot No.118, Dayal Farms, Ganeshpur, Rehmanpur, Chinhat, Deva Road, Lucknow 226019, Uttar Pradesh. It has also tied with Yes Bank, IDBI Ltd. and Reliance Commercial Finance Ltd. for working as a Business Correspondent and support the banks in client origination and client servicing.Financial Inclusion forms the backbone and core of Margdarshak ’s economic empowerment and development paradigm. Following the principles of social and financial sustainability, financial inclusion services of Margdarshak include credit, pension and insurance services. Working in underserved areas and with artisans remains the core of Margdarshak ’s financial inclusion intervention. Margdarshak through its network of 120 branches serves over 2 lakh families in the most populous & backward states of North India including Uttar Pradesh, Bihar, Uttrakhand, Haryana and Himachal Pradesh.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION:The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014 and the provisions of RBIas applicable to NBFC-MFI.The Financial Statements have been prepared on an accrual basis and under the historical cost convention, except for interests on non-performing loans which is accounted on realization basis. The accounting policies applied by the company are consistent with those applied in the previous year.

2.2 USE OF ESTIMATES:The preparation of financial statements is

in conformity with Indian GAAP requires management to make estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Future results could differ due to these estimates and differences between the actual results and estimates are recognized in the period in which the results are known/ materialize.

2.3 TANGIBLE FIXED ASSETS:All fixed assets are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use.Gains and Losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit & loss when the asset is derecognized.

2.4 DEPRECIATION ON TANGIBLE FIXED ASSETS:

Depreciation on fixed assets is calculated on the straight line method basis as per useful life prescribed under Schedule II of the Companies Act, 2013, which is the useful lives of the underlying assets as estimated by the management.

2.5 IMPAIRMENT OF ASSETS:The carrying amount of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognized whether the carrying amount of an asset exceeds its recoverable amount which is the greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessment of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

2.6 INVESTMENTS:Investments that are readily realizable and intended to be held for less than one year from the date of purchase are classified as current investments. All other investments are classified as long term investments. Investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of investments.

2.7 FINANCIAL COST:Financial Costs includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings/ securitization/


assignment transactions. Interest on borrowings are recognized on the time proportion basis taking into account the amount outstanding and the rate applicable on borrowings.

2.8 REVENUE RECOGNITION:Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.2.8.1 All Interest income on loans is recognized on

accrual basis taking into account the amount outstanding and the rate applicable, except in the case of non-performing assets (NPA), where it is recognized, upon realization, as per prudential norms of RBI.

2.8.2 The company enters into arrangements for sale of portfolio loans through securitization or direct assignment. The profit on assignment is computed and recognized over the period of securitization or direct assignment contract as required by the revised guidelines issued by RBI on transfer of assets through securitization or direct assignment of cash flows.

2.8.3 Interest income on deposits with banks is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

2.8.4 Processing Fees are recognized as income at the time of collection from members.

2.8.5 Income from services rendered in connection with loans given on behalf of banks/ financial institutions to JLG groups organized / monitored by the company are recognized on accrual basis as and when such services are rendered.

2.8.6 All other income is recognized on accrual basis.

2.9 GOVERNMENT GRANTS:Accounting for government grant has been done as per AS-12- Accounting for Government Grant issued by ICAI.Grants are recognized when there is reasonable assurance that (i) the company will comply with the conditions attached to them, and (ii) the grant will be received.When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.

2.10 LEASE:Leases, where the lessor effectively retains substantially all risks and the benefits of ownership of the leased item, are classified as operating lease. Operating lease payments are recognized

as expense in the statement of profit and loss on a straight line basis over the lease term.

2.11 RETIREMENT AND OTHER EMPLOYEE BENEFITS

employee benefits includes provident fund, (PF, employee State Insurance Scheme and gratuity).Retirement benefit in the form of provident fund and eSI is a defined contribution scheme. The company has no obligation, other than the contribution payable to the Regional Provident Fund Commissioner. The company recognizes contribution payable to the provident and eSI scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for the service rendered before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then the excess is recognized as an asset to the extent that the pre-payment will lead to, for example a reduction in future payment or a cash refund.Gratuity liability is a defined obligation and is provided for on the basis of an actuarial valuation on projected unit credit method at the end of each financial year.The company provides employees stock option (eSOP) benefits to its employees under its employees Stock Option Scheme 2014. The objective of the scheme is to enhance the employee engagement, to reward the employees for their association and performance as well as to motivate them to contribute to the growth and profitability of the company and to create a sense of ownership and participation amongst them. A trust names Margdarshak employee Welfare Trust was set up for implementing the scheme. The pool of shares is used for granting stock options to the eligible employees of the company.

2.12 FOREIGN CURRENCY TRANSACTIONSForeign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. exchange differences arising on foreign currency transactions settled during the year are recognized in the Profit and Loss account.Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date, not covered by forward exchange contracts, are translated at year-end rates. The resultant exchange differences are recognized in the Profit and Loss account. Non-monetary assets and liabilities denominated in foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.


2.13 DIRECT AND INDIRECT TAXESIncome tax expense comprises current tax and deferred tax charge or credit.Current TaxThe current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company. Deferred TaxDeferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the year. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/virtually certain to be realized.Service Tax Input CreditService tax input credit is accounted for in the books in the period in which the underlying service received in accounted and when there is reasonable certainty in availing/ utilizing the credit.

2.14 EARNING PER SHAREThe basic and diluted earnings per share (“ePS”) is computed by dividing the excess of profit over expenditure after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

2.15 PROVISIONS AND CONTINGENCIESA provision is recognized when the company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resource is remote.

2.16 SEGMENT REPORTING The Company is primarily engaged in the business of Micro Financing. All the activities of the Company revolve around the main business. Further, the Company does not have any separate geographic segments other than India. As such there are no separate reportable segments as per AS-17 “Segmental Reporting”.

2.17 CASH AND CASH EQUIVALENT:Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and deposits with an original maturity of three months or less.

2.18 ASSET CLASSIFICATION AND PROVISIONING NORMS:

Loans to customers are classified as Standard and Non-performing assets on the criteria laid down below: -

Particulars CriteriaStandard Asset The asset in respect of which,

no default in repayment of principal or payment is perceived and which does not disclose any problem nor carry more than normal risk attached to the business.

Sub-Standard Asset

An asset for which interest/ principal payment has remained overdue for a period of 90 days or more.

Loss Asset An asset for which interest/ principal payment has remained overdue for a period of 180 days or more.

2.19 LOAN PROVISION FOR LOAN PORTFOLIO:The company follows the prudential norms for income recognition, asset classification and provisioning as prescribed by the Reserve Bank of India for systemically non-important Non-Deposit taking Non-Banking Financial Company- MFI (NBFC-ND-MFI) on micro finance loans.The aggregate loan provision to be maintained by the company at any point of time shall not be less than the higher of:

Particulars Provisioning Norms as per RBI guidelines

Standard Assets 1% of the outstanding portfolio

Sub-Standard Assets

50% of Sub-standard portfolio

Loss Asset 100% provision/ written off **

**All overdue loans including loans where the tenure of the loan is completed and in the opinion of the management any amount is not recoverable, are fully provided for/ written off.


2.20 UNAMORTIZED EXPENSES:Valued at the cost, preliminary expenses including expenses on acquisition and transformation to NBFC are being amortized over the period of five

years.The debt syndication fees have been amortized during the year over the period of loan.

3. SHARE CAPITAL:

As OnMar-17 Mar-16

Authorised Share Capital250,00,000(PY: 31 March 2016: 250,00,000) equity Shares of `10/- each

25,00,00,000 25,00,00,000

25,00,000(PY:31 March 2016: 25,00,000) 9% Optionally Convertible Preference Shares (OCPS) of `10/- each

2,50,00,000 2,50,00,000

25,00,000(PY:31 March 2016:25,00,000) 9% Compulsorily Convertible Preference Shares (CCPS) of `100/- each

25,00,00,000 25,00,00,000

Total 52,50,00,000 52,50,00,000

Issued, Subscribed and Paid up1,57,14,958 (PY: 31 March 2016: 1,51,64,958) equity shares of `10/- each

15,71,49,580 15,16,49,580

18,25,000(PY: 31 March 2016: 24,50,000) 9% OCPS of `10 each 1,82,50,000 2,45,00,000

Total 17,53,99,580 17,61,49,580

3.1 RECONCILIATION OF THE NUMBER OF SHARES AND AMOUNT OUTSTANDING AT THE BEGINNING AND AT THE END OF THE REPORTING YEAR:

Equity Shares Mar-17 Mar-16

Number (`) Number (`)Opening Balance 1,36,09,336 13,60,93,360 1,36,09,336 13,60,93,360

Fresh Issue during the year - - 15,55,622 1,55,56,220

OCPS conversion during the year 5,50,000 55,00,000 - -

Closing Balance 1,57,14,958 15,71,49,580 1,51,64,958 15,16,49,580

3.2 9% OPTIONALLY CONVERTIBLE PREFERENCE SHARES (OCPS):

Mar-17 Mar-16Number (`) Number (`)

Opening Balance 24,50,000 2,45,00,000 24,50,000 2,45,00,000

OCPS conversion during the year (5,50,000) (55,00,000) - -

Redemption during the year (75,000) (7,50,000) - -

Closing Balance 18,25,000 1,82,50,000 24,50,000 2,45,00,000

3.3 TERMS/ RIGHTS ATTACHED TO EQUITY SHARES:

The company has equity shares having par value of `10/- per share. each holder of equity shares is entitled to one vote per share for matters other than "Investors Reserved Matters".In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.4 TERMS OF CONVERSION/ REDEMPTION OF OCPS:

On August 22, 2012, the company had issued 32,50,000 OCPS of `10/- each fully paid-up to Small Industries Development Bank of India (SIDBI), carrying a coupon rate of 9%, convertible into equity shares of `10/- each. Out of which 12,50,000 shares has been converted into equity shares @`10 each on September 21, 2012 and 13,00,000 shares have been converted into equity on September 23, 2014, On December 15, 2014, the company has issued


17,50,000 OCPS of `10/- each fully paid up to Small Industries Development Bank of India (SIDBI), carrying a coupon rate of 9%, convertible into equity shares of `10/- each.

On May 31, 2016 5,50,000 shares have been converted into equity and on October 19,2016, 75,000 shares have been redeemed.

3.5 DETAILS OF SHAREHOLDERS HOLDING MORE THAN 5% SHARES IN THE COMPANY:

Equity Shares of `10/- each fully paid

Mar-17 Mar-16No. of Shares

held

% of holding in the class

No. of Shares held


Rahul J Mittra 10,40,093 6.62% 10,40,093 6.86%

Dia Vikas Capital Limited 62,69,176 39.89% 62,69,176 41.34%

Margdarshak Development Projects and Consulting Pvt Ltd.

25,02,811 15.93% 25,02,811 16.50%

SIDBI 31,00,000 19.73% 25,50,000 16.82%

Margdarshak employee Welfare Trust 10,00,000 6.36% 10,00,000 6.59%

Optionally Convertible Preference Shares of `10 each fully paid

Mar-17 Mar-16

No. of Shares held


No. of Shares held


SIDBI 1825000 100.00% 2450000 100.00%**As per records of the company, including its register of shareholders / members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

4. RESERVES AND SURPLUSMar-17 Mar-16

a) Statutory Reserves (`) (`)

Opening Balance 81,10,370 32,59,382

Add: amount transferred from current year surplus 68,87,596 48,50,988

Add: Amount transferred for previous years (refer Notes 4.2) 13,35,812 -

Closing Balance 1,63,33,778 81,10,370

** Statutory Reserves created u/s 45-IC of the Reserve Bank of India Act, 1934

b) Share Premium Opening Balance 1,04,18,818 69,75,038

Add:- Premium on equity shares issued during the year. - 34,43,780

Closing Balance 1,04,18,818 1,04,18,818

c) Provision for Loan Loss Opening Balance 1,19,92,765 59,84,582

Add:- additional provision created during the year 77,15,615 60,08,183

Closing Balance 1,97,08,380 1,19,92,765

d) Grant Support from SIDBI under PSIG and Grameen Foundation under

Opening Balance 8,48,000 14,10,000

Add: Grant received from SIDBI during the year 12,66,000 -

Add: Grant received from Grameen Foundation during the year 23,00,000 -


Mar-17 Mar-16Less: Grant adjusted and transferred to deferred revenue against the depreciable asset.

(7,47,445) (5,62,000)

Closing Balance 36,66,555 8,48,000

e) Surplus in the statement of Profit and Loss Opening Balance 3,69,20,377 2,00,96,166

Add: -current year profit available after appropriation

Profit after taxes 3,44,37,978 2,42,54,939

Less: Statutory Reserves 82,23,408 48,50,988

Less: Dividend payable to SIDBI 17,68,685 22,05,000

Less: Dividend distribution tax 3,57,280 3,74,740

2,40,88,605 1,68,24,211

Closing Balance 6,10,08,982 3,69,20,377

Total Reserves and Surplus 11,11,36,512 6,82,90,330

4.1 BREAK UP OF DIVIDEND PROPOSED TO PREFERENCE SHAREHOLDERS

Year Particulars Number of Shares Dividend (`)March 2017 9% OCPS 1825000 17,68,685

March 2016 9% OCPS 2450000 22,05,000

4.2 STATUTORY RESERVESAs per Section 45-IC of the Reserve Bank of India Act, 1934, the company is required to create a reserve fund at the rate of 20% of the Net Profit after Tax. Accordingly, the company has transferred an amount of `68,87,596/-(Previous year ` 48,50,988/-) out of the profit after tax for the year to the statutory reserve. In addition to this, shortfall in transfer to statutory reserves for the year 2008-09 to 2012-13 amounting to `13,35,812/- has been transferred to statutory reserve in the current year. Details given below:

Year Net Profit after Tax Transfer to Statutory Reserve2008-09 20,126 4,025

2009-10 71,482 14,296

2010-11 18,52,322 3,70,464

2011-12 18,87,802 3,77,560

2012-13 28,47,329 5,69,466

66,79,061 13,35,812

5. LONG TERMS BORROWINGS:Particulars Mar-17 (`) Mar-16 (`)

Current Non-Current Current Non-Current(a) Term LoansFrom banks (secured) (Refer Note 5.1) 49,83,80,722 51,14,98,438 27,91,47,575 30,18,68,687

From Non- Banking financial institutions (secured) (Refer Note 5.2)

74,40,81,676 42,36,30,696 47,92,83,748 31,89,73831

From Non- Banking financial institutions (unsecured) (Refer Note 5.3)

1,58,50,788 63,83,859 - -

From financial Institutions (unsecured), (Subordinated debt, Tier II Capital) (Refer Note 5.4)

- 15,00,00,000 - -

Total 125,83,13,186 109,15,12,993 75,84,31,323 62,08,42,518


5.1 DETAILS OF TERM LOANS FROM BANKS AND FINANCIAL INSTITUTIONSAs at March 2017

Name of Bank / Financial Institution

Terms of repaymentRemaining

instalments due

Loan Outstanding as on March 31,

2017 (`)

Current (`) Non-Current (`)

Andhra BankRate of Interest-15%, repayable in 8 Quarterly Instalments

7 Quarterly Instalments 87,50,000 50,00,000 37,50,000

Bank of BarodaRate of Interest-12.2%, repayable in 33 Monthly Instalments

33 Monthly Instalments 5,75,00,000 1,9431,818 3,80,68,182

Bank of Maharashtra

Rate of Interest-12.75%, repayable in 36 Monthly Instalments

13 Monthly Instalments 1,80,16,665 1,65,41,916 14,74,749


24 Monthly Instalments 1,32,46,000 63,44,000 69,02,000

Dena Bank


10 Monthly Instalments 2,08,33,333 2,08,33,333 -


21 Monthly Instalments 8,74,99,999 4,99,99,992 3,75,00,007

DCB Bank Ltd.

Rate of Interest-14%, repayable in 18 monthly Instalments

4 Monthly Instalments 75,00,000 75,00,000 -


10 Monthly Instalments 1,25,00,000 1,25,00,000

Dhanlaxmi Bank Ltd.

Rate of Interest-14%, repayable in 21 Monthly Instalments


IDBI BankRate of Interest-13%, repayable in 18 monthly Instalments


Indian Overseas Bank





Punjab and Sindh Bank



NABARDRate of Interest-11%, repayable in 11 Half Yearly Instalments

11 Half Yearly Instalments 10,00,00,000 1,16,66,667 8,83,33,333

Small Industries Development Bank of India (SIDBI)







State Bank of Bikaner & Jaipur

Rate of Interest-13.50%, repayable in 33 Monthly Instalments, 3 months moratorium





instalments due


2017 (`)


State Bank of India

Rate of Interest-12.30%, repayable in 34 Monthly Installments,3 months moratorium


UCO Bank


19 Monthly Instalments 82,28,390 56,39,624 25,88,766



Union Bank of India





United Bank of India

Rate of Interest-14%, repayable in 11 Quarterly Instalments

7 Quarterly Instalments 1,90,90,912 1,09,09,088 81,81,824

Rate of Interest-14%, repayable in 11 Quarterly Instalments

11 Quarterly Instalments 3,00,00,000 75,00,000 2,25,00,000

Vijaya Bank

Rate of Interest-12.65%, repayable in 10 Quarterly Instalments

6 Quarterly Instalments 2,01,90,561 1,20,00,000 81,90,561

Rate of Interest-12.65%, repayable in 10 Quarterly Instalments

10 Quarterly Instalments 5,00,00,000 1,50,00,000 3,50,00,000

100,98,79,160 49,83,80,722 51,14,98,438

Ananya Finance For Inclusive Growth Pvt Ltd.



Rate of Interest-15.75%, repayable in 18 monthly Instalments


AU Financiers Pvt. Ltd.



Rate of Interest-15.75%, repayable in 24 monthly Instalments


Capital FirstRate of Interest-16%, repayable in 18 Monthly Instalments


Habitat India Housing Finance Co.Pvt. Ltd



Jainsons Finlease Ltd.

Rate of Interest-14.75%, repayable in 33 Monthly Instalments and 3 months moratorium


Kanika Investment


20 Monthly Instalments 40,87,079 23,61,365 17,25,714

Maanaveeya Development and Finance Pvt. Ltd.

Rate of Interest-15%, repayable in 12 quarterly Instalments


Rate of Interest-14.75%, repayable in 12 quarterly Instalments





instalments due


2017 (`)


MAS Financial Services Ltd.

















MUDRA





Mahindra & Finance



Muthoot Fincorp Ltd.



Reliance Commercial Finance Ltd.



Religare Finvest Ltd.





Total Term Loan Outstanding from NBFCs 116,77,12,372 74,40,81,676 42,36,30,696

Jain sons Fin lease Ltd.



Total unsecured loan 2,22,34,647 1,58,50,788 63,83,859

Capital First Ltd.

Rate of Interest-17%, repayable in bullet payment end of 84 months

Bullet Repayment after 84 months

15,00,00,000 - 15,00,00,000

Total sub-debt 15,00,00,000 - 15,00,00,000


As at March 2016


Terms of repayment Loan Amount Outstanding (`) Current (`) Non-Current

(`)

Andhra Bank Rate of Interest-15%, repayable in 8 Quarterly Instalments 37,50,000 37,50,000 -

Bank of Maharashtra

Rate of Interest-12.75%, repayable in 36 monthly Instalments 3,47,16,186 1,66,68,000 1,80,48,186

Rate of Interest-12.20%, repayable in 36 monthly Instalments 2,00,00,000 66,72,000 1,33,28,000

Central Bank Rate of Interest-14%, repayable in 12 quarterly Instalments 1,25,00,000 75,00,000 50,00,000

Dena Bank

Rate of Interest-13.80%, repayable in 21 monthly Instalments 1,66,66,670 1,66,66,670 -


DCB Bank Ltd. Rate of Interest-14%, repayable in 18 monthly Instalments 3,00,00,000 2,25,00,000 75,00,000

Indian Overseas Bank

Rate of Interest-14.50%, repayable in 36 monthly Instalments 87,51,537 66,00,000 21,51,537


State Bank of Bikaner & Jaipur


State Bank of India


UCO Bank

Rate of Interest-13.20%, repayable in 45 monthly Instalments 38,74,114 27,00,000 11,74,114

Rate of Interest-13.20%, repayable in 45 monthly Instalments 1,37,33,508 54,00,000 83,33,508

Union Bank of India

Rate of Interest-12.75%, repayable in 30 monthly Instalments 1,28,33,336 69,99,996 58,33,340

United Bank of India

Rate of Interest-14%, repayable in 12 quarterly Instalments 2,72,72,728 1,09,09,088 1,63,63,640

Vijaya Bank Rate of Interest-12.65%, repayable in 10 quarterly Instalments 3,00,00,000 1,20,00,000 1,80,00,000

Small Industries Development Bank of India (SIDBI)




58,10,16,261 27,91,47,574 30,18,68,687

Ananya Finance For Inclusive Growth Pvt Ltd.

Rate of Interest-16%, repayable in 18 monthly Instalments 66,66,668 66,66,668 -

Rate of Interest-15.75%, repayable in 18 monthly Instalments 1,55,55,556 1,33,33,332 22,22,224

AU Financiers Pvt. Ltd.


Capital First Rate of Interest-16%, repayable in 18 monthly Instalments 10,00,00,000 3,33,33,336 6,66,66,664

Maanaveeya Development and Finance Pvt. Ltd.

Rate of Interest-15%, repayable in 12 quarterly Instalments 2,49,97,955 2,49,97,955 -

Rate of Interest-15%, repayable in 12 quarterly Instalments 6,66,68,000 2,66,40,000 4,00,28,000



Terms of repayment Loan Amount Outstanding (`) Current (`) Non-Current

(`)

MAS Financial Services Ltd.





MUDRA Rate of Interest-11.50%, repayable in 27 monthly Instalments 4,07,40,000 2,22,24,000 1,85,16,000

Muthoot Fincorp Ltd.


Reliance Capital Limited

Rate of Interest-15.5%, repayable in 12 monthly instalments 1,32,30,900 1,32,30,900 -


Reliance Home Finance Ltd

Rate of Interest-15.50%, repayable in 12 monthly Instalments 53,60,426 53,60,426 -

Religare Finvest Ltd.


Total Term Loan outstanding from NBFCs 79,82,57,579 47,92,83,748 31,89,73,831

6. LONG TERM PROVISIONS:

Particulars Mar-17 Mar-16

(`) (`)

Provision for employee benefitsProvision for Gratuity 57,16,007 15,78,729

Total 57,16,007 15,78,729

7. OTHER CURRENT LIABILITIES:Particulars

Mar-17 Mar-16

(`) (`)

expenses Payable 1,87,21,301 1,03,83,099

Payable to employer Provident Fund 4,78,094 1,75,159

Payable to eSI 1,11,275 34,943

TDS Payable 21,93,678 12,91,748

Swachh Bharat Cess Payable 12,097 1,22,932

krishi kalyanCess Payable 51,592 -

Interest Payable to Financial Institutions 1,28,23,710 83,06,597

Payable to PFRDA 10,84,529 12,15,479

Managed Loan (Reliance Capital Limited - BC) 17,54,599 -

Total 3,72,30,875 2,15,29,957

8. DEFERRED TAX LIABILITY:

ParticularsMar-17 Mar-16

(`) (`)Opening Balance (5,77,107) 8,19,730

Impact of difference between tax depreciation and depreciation charged for the financial reporting period

15,76,004 12,79,422

Less: Impact of provision for standard and non-performing assets 23,84,125 18,56,529

Total (13,85,228) (5,77,107)


9. SHORT TERM PROVISIONS:

ParticularsMar-17 Mar-16

(`) (`)Provision-Others

Provision for taxation 1,73,20,442 1,49,29,086

Provision for Preference Dividend 16,85,959 22,05,000

Provision for Dividend Distribution tax 3,43,221 3,74,740

Total 1,93,49,622 1,75,08,826

10. FIXED ASSETS:

Cost or Valuation Furniture Computers Electricals

Equipment Total

(`) (`) (`) (`)1st April 2015 47,37,053 75,01,249 59,92,295 1,82,30,597

Additions 33,43,459 32,32,861 27,26,630 93,02,950

As at 31st March 2016 80,80,512 1,07,34,110 87,18,925 2,75,33,5471st April 2015 7,20,788 40,09,717 6,16,813 53,47,318

Charge for the period 6,96,021 22,07,751 7,22,316 36,26,088

As at 31st March 2016 14,16,809 62,17,468 13,39,129 89,73,406Net Block As at 31st March 2016 66,63,703 45,16,642 73,79,796 1,85,60,1411st April 2016 80,80,512 1,07,34,110 87,18,925 2,75,33,547

Additions 24,87,997 1,27,49,281 46,85,195 1,99,22,473

As at 31st March 2017 1,05,68,509 2,34,83,391 1,34,04,120 4,74,56,0201st April 2016 14,16,809 62,17,468 13,39,129 89,73,406

Charge for the period 9,87,612 40,81,330 10,65,134 61,34,076

As at 31st March 2017 24,04,421 1,02,98,798 24,04,263 1,51,07,482Net Block As at 31st March 2017 81,64,088 1,31,84,593 1,09,99,857 3,23,48,538

11. LOANS AND ADVANCES:

Long Term Short Term

Mar-17 Mar-16 Mar-17 Mar-16(`) (`) (`) (`)

Loan to Micro Finance Clients

Considered Good 70,73,07,374 37,77,08,185 1,23,78,80,353 81,73,72,965

Remained overdue for more than 30 days and up to 90 days 86,62,082 16,78,131 1,69,88,146 25,17,196

71,59,69,456 37,93,86,316 1,25,48,68,499 81,98,90,161

11.1 LOANS WRITTEN OFF DURING THE YEAR:An amount of ̀ 420,183/-which remained overdue for more than 90 days and treated as doubtful asset and is not recoverable has been written off during the current year.

11.2 DISCLOSURE RELATED TO MANAGED PORTFOLIO:

Sr. no. Particulars Mar-17 Mar-16

(`) (`)1 Yes Bank Ltd. 3,82,77,495 32,43,55,607

2 IDBI Bank Ltd. 24,29,67,415 11,82,79,048

3 Reliance Capital Limited 52,82,89,562 -


Sr. no. Particulars Mar-17 Mar-16

(`) (`)TOTAL 80,95,34,472 44,26,34,655

11.3 DISCLOSURE RELATING TO DIRECT ASSIGNMENT:

Sr. no. Particulars

Mar-17 Mar-16(`) (`)

1 Total Nos of assignment of receivables of loan 14362 15315

2 Total Book Value of Loan assignment 13,43,81,706 6,13,98,550

3 Total book value of loan assignment including loan placed as collateral

14,14,54,427 6,46,30,053

4 Sales Consideration received for Loans assignment 19,77,60,929 6,13,98,550

5 Interest spread on assignment of loans 1,02,17,351 23,68,685

12. OTHER NON-CURRENT ASSETS:

Mar-17 Mar-16

(`) (`)Other Non-Current assets: Unamortised expenditure 1,67,47,426 98,55,267

Ancillary Cost of arranging the borrowings - -

Loan to Margdarshak employee Welfare Trust 1,00,00,000 1,00,00,000

Bank Balances held as margin money or cash collateral in the form of term deposits against borrowings

15,93,23,000 8,59,04,285

Balance held as deposit against Managed Portfolio 6,52,50,000 3,40,50,000

Total 25,13,20,426 13,98,09,552

13. CASH AND CASH EQUIVALENT:Particulars Mar-17 Mar-16

A. Cash & Cash Equivalents (as per AS 3 Cash Flow Statements) (`) (`)

Cash in hand 16,28,706 6,52,655

Balances with Banks in current accounts 23,32,68,775 17,51,13,066

PFRDA collection accounts 10,84,529 12,15,479

Total Cash and Cash equivalent (A)

Total 23,59,82,010 17,69,81,200

14. OTHER CURRENT ASSETS:


(`) (`)Interest accrued on Loan 1,21,52,448 59,79,954

Interest receivable on fixed deposit 2,44,06,836 1,37,51,693

Prepaid expenses - 2,21,855

Security Deposit and Advances 38,33,734 53,93,332

Receivable from SIDBI and Grameen towards grant amount 34,75,250

TDS Receivable 65,57,310 67,24,420

Service Tax Credit 1,07,899 92,244



(`) (`)Advance Tax 1,01,40,000 65,00,000

Receivable from IDBI 83,92,560 1,61,30,000

Corpus to Margdarshak employee Welfare Trust 8,71,864 14,86,353

Advance to Insurance Company 1,16,157 1,50,000

Unamortised expenditure 2,06,37,575 1,42,00,020

Balances held as margin money or cash collateral in the form of Term Deposit against borrowing

10,55,42,985 5,84,96,915

Balance held as deposit against managed portfolio 1,05,50,000 -

Total 20,67,84,618 12,91,26,786

15. REVENUE FROM OPERATIONS:

Mar-17 Mar-16(`) (`)

Interest Income on portfolio loans 39,78,61,605 22,14,58,445

Processing fee on portfolio loans 1,98,36,377 1,24,09,540

Income from BC operations 5,99,37,841 5,14,13,657

Total 47,76,35,823 28,52,81,642

16. OTHER INCOME:

Mar-17 Mar-16

(`) (`)Interest Income on Fixed Deposits/ Investment 2,73,41,957 1,77,08,789

Deferred income for grant received under PSIG 7,47,445 5,62,000

Income from PFRDA 59,300 8,14,896

Grant income received from Grameen & SIDBI 22,19,250 -

Misc. Income 3,18,939 90,841

Total 3,06,86,891 1,91,76,526

17. EMPLOYEE BENEFIT EXPENSES:

Mar-17 Mar-16

(`) (`)Directors Salary 26,00,000 16,20,000

Staff Salaries & Allowances 8,63,90,089 5,85,78,425

employer Contribution-PF 19,27,143 6,89,671

employer Contribution-eSI 5,99,798 2,60,164

Gratuity expense 41,37,278 15,78,729

Staff Welfare 17,69,945 5,28,333

Total 9,77,24,253 6,32,55,322

18. FINANCIAL COSTS:

Mar-17 Mar-16

(`) (`)Interest on Borrowings 26,83,74,733 13,91,26,236

Management Fee/ Upfront Fees 1,06,88,345 1,10,89,308

Bank Charges 27,25,008 25,88,352

Total 28,17,88,086 15,28,03,896


19. DEPRECIATION & AMORTIZATION EXPENSE:

Mar-17 Mar-16

(`) (`)Depreciation on Tangible Assets 61,34,076 36,26,088

Amortisation expenses 1,30,22,552 62,20,394

Total 1,91,56,628 98,46,482

20. OTHER EXPENSES:

Mar-17 Mar-16

(`) (`)Telephone & Postage expenses 58,69,826 25,52,166

Rent 99,49,235 72,67,685

Travelling & Conveyance expenses 96,96,285 60,96,607

Printing & Stationery 31,57,070 29,37,041

Legal and Professional Fees 36,13,168 31,44,392

Rating expenses 5,23,407 -

Payment to Auditor 5,00,000 3,10,000

Internal Audit Fees 14,10,225 9,85,000

IT consumables and Repair & Maintenance 5747,843 49,57,713

Portfolio loans written off 4,20,183 2,98,980

Loans & Advances write off 11,08,204 -

Business Promotion & CSR Initiative expenses 12,57,449 5,38,775

electricity & Water charges 19,14,081 14,51,843

Filing Fees 3,48,136 26,18,400

Credit Bureau expenses 12,91,681 4,60,673

Training & Capacity Building 20,07,057 10,23,220

Board Meeting expenses 5,44,901 4,04,148

Membership Fees 8,86,636 4,15,485

Swachh Bharat Cess 3,79,934 -

Miscellaneous expenses 1,43,521 2,39,863

Insurance expenses 13,93,660 4,62,578

Loan Loss Provision 77,15,615 60,08,183

Total 5,98,78,116 4,21,72,752

21. EARNING PER SHARE:

Mar-17 Mar-16

(`) (`)Profit for the year 3,44,37,978 2,42,54,939

Less : Dividend on 9% OCPS 17,68,685 22,05,000

Dividend distribution tax 3,57,280 3,74,740

Net Profit/(Loss) for calculation of basic ePS 3,23,12,013 2,16,75,199

Net Profit as above 3,23,12,013 2,16,75,199

Add: Dividend on convertible preference shares and tax thereon 21,25,965 25,79,740

Net Profit/(Loss) for calculation of diluted ePS 3,44,37,978 2,42,54,939

Weighted average number of equity shares in calculating basic ePS 1,56,23,040 1,43,35,013


Mar-17 Mar-16

(`) (`)effect of dilution :

Convertible Preference shares 18,25,000 24,50,000

Weighted average number of equity shares in calculating diluted ePS 1,74,48,040 1,67,85,013

ePS 2.07 1.51

Diluted ePS 1.97 1.45

22. RELATED PARTY DISCLOSURE:As per Accounting Standard (AS 18), on related party disclosures specified under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rule, 2014, related parties of the company are as follows: -

Description of relationship Names of related parties

entities having significant influence

DIA Vikas Capital Pvt Ltd.

SIDBI

Margdarshak employee Welfare Trust

Margdarshak Development Projects and Consulting Pvt Ltd. (MDPC)

key Management Personnel

Rahul J Mittra, MD & CeO

Saroj Topno, Whole Time Director

Anchit Pandey, Company Secretary

22.1 DETAILS OF RELATED PARTY TRANSACTIONS DURING THE YEAR ENDED MARCH 31, 2017 IS GIVEN BELOW:

S. No. Transaction during the year Name of Related Party Nature of

Relationship Amount

1Redemption of OCPS made during the year amounting to `7.50 Lacs

SIDBI Shareholder 7,50,000

2 9% Dividend to SIDBI on OCPS SIDBI Shareholder 17,68,685

3 Rent to MDPCMargdarshak Development Projects and Consulting Pvt Ltd. (MDPC)

Shareholder 9,00,000

4 Corpus to MeWT Margdarshak employee Welfare Trust (MeWT) Shareholder 6,14,489

5 Remuneration to kMP

Rahul J Mittra MD & CeO 14,00,000

Saroj Topno Whole Time Director 12,00,000

Anchit Pandey Company Secretary 3,96,000

6 Rent and other reimbursements to kMP

Rahul J Mittra MD & CeO 4,01,000

Saroj Topno Whole Time Director 3,10,000

23. EMPLOYEE BENEFITS:23.1 GRATUITYThe company has a defined employee benefit plan in the form of gratuity on retirement/ cessation. The company has entrusted the administration of the gratuity plan to the SBI Life Insurance Company Limited and contributions are made based on the demand raised by the SBI Life.The following table summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amount recognized in the balance sheet for the respective plan: -

Mar-17 Mar-16i) Assumptions

Discount Rate 8% 8%


Mar-17 Mar-16Salary escalation 10% 10%

Withdrawal Rate Varying between 10% to 5% per annum depending upon duration and age of employees

expected average remaining working life of employees 27.21 years 27.18 years

ii) Table Showing changes in present value of Defined Benefit Obligation :

Past Service Liability 1,05,38,046 22,89,374

Current Service Cost 41,37,238 15,78,729

23.2 EMPLOYEE STOCK OPTIONSThe Company had issued 8,50,000 equity shares of INR 10 each to Margdarshak employee Welfare Trust for the purpose of issuing shares under eSOPs to the employee of the company during the Financial Year 2014-15. The Company has issued 1,50,000 equity shares to the Margdarshak employee Welfare Trust in Financial Year 2015-16. Out of the above mentioned shares, the company has provided employee Stock Options to its employee in the FY 2016-17. The Plan wise detail of eSOP schemes are as given below:

Particulars Details Date of Grant 30 June 2016

Date of Board Approval 25 November 2014

Date of Shareholders approval

19 December 2014

Date of Modification of the scheme, if any

Not applicable

Number of Options granted

3,70,189

Number of Options vested

0

exercise Price `10/-

Mode of settlement equity

Vesting Period 1 year from the date of grant

Vesting Schedule a) 10% of the Options at the end of the First year from the Grant Date.

b) 20% of the Options at the end of the Second year from the Grant Date.

c) 30% of the Options at the end of the Third year from the Grant Date.

d) 40% of the Options at the end of the Fourth year from the Grant Date.

exercise Period 1 year from the date of vesting

Vesting conditions Not applicable

Name of the plan eSOP plan 2014

ParticularsAs on March 31st 2017 As on March 31st 2016No. of

optionsExercise Price

(in `)No. of

optionsExercise

PriceOutstanding at the beginning of the year - - - -

Granted during the year 370189 - - -

Forfeited during the year - - - -

exercised during the year - - - -

expired/Lapsed during the year - - - -

Outstanding at the end of the year 370189 10/- - -


24. ACCOUNTING OF GRANT AMOUNT RECEIVED DURING THE YEAR:The company has received grant during the year and below given are the details of the same: -

Particulars 2016-17 2015-16Revenue Grant: - Amount received from Grameen during the year 11,00,000 Nil

Amount received from SIDBI PSIG during the year 11,19,250 Nil

Capital Grant: - a) Amount received from Grameen during the year 23,00,000 Nil

b) Amount received from SIDBI PSIG during the year 12,66,000 Nil

Total 57,85,250 Nil

25. DISCLOSURES IN ACCORDANCE TO RBI GUIDELINES:25.1 CAPITAL TO RISK ASSETS RATIO (CRAR):

Mar-17 Mar-16CRAR (in %) 17.21% 15.55%

25.2 DERIVATIVES:a) The Company has no transactions/exposure in derivatives for the year March 31, 2017 and March 31, 2016.b) The Company has no unhedged foreign currency exposure as on March 31, 2017 and March 31, 2016

25.3 DISCLOSURE RELATING TO SECURITIZATIONS:

S. No. Particulars Mar-17 Mar-16

1. No of SPVs sponsored by the NBFC for securitization transactions19 Nil Nil

2. Total amount of securitized assets as per books of the SPVs sponsored by the NBFC

Nil Nil

3. Total amount of exposures retained by the NBFC to comply with MRR as on the date of balance sheet

Nil Nil

a) Off-balance sheet exposures

* Nil Nil

* Nil Nil

b) On-balance sheet exposures

* Nil Nil

* Nil Nil

4 Amount of exposures to securitization transactions other than MRR

a) Off-balance sheet exposures

i)

Nil First loss Nil

Nil Loss Nil

ii)

Nil First loss Nil

Nil Others Nil

b) On-balance sheet exposures

i)

Nil First loss Nil

Nil Others Nil

ii)

Nil First loss Nil

Nil Others Nil


25.4 DETAILS OF FINANCIAL ASSETS SOLD TO SECURITIZATION/RECONSTRUCTION COMPANY FOR ASSET RECONSTRUCTION:

The company has not sold financial assets to securitization/ reconstruction companies for asset reconstruction in the current/ previous year.

25.5 DETAILS OF NON-PERFORMING FINANCIAL ASSETS PURCHASED/SOLD: The company has not purchased/sold non-performing financial assets in the current and previous year.

25.6 ASSET LIABILITY MANAGEMENT:A. Maturity pattern of certain items of assets and liabilities as on March 2017

` in crore

Particulars up to 1 month

Over 1 month up to 2 month

Over 2 months up to 3 months

Over 3 months up to 6 months

Over 6 months up to 1

year

1-3 years

Over 3 years

up to 5 years

Over 5 years Total

Advances 11.85 10.92 9.48 30.43 62.81 71.59 - - 197.08

Deposits 0.75 1.00 0.75 4.21 4.90 12.94 9.52 - 34.07

Borrowings 10.48 9.85 9.58 28.02 67.90 77.42 16.73 15 234.98B. Maturity pattern of certain items of assets and liabilities as on March 31, 2016

Particulars upto 1 month

Over 1 month upto 2 month

Over 2 months upto 3 months

Over 3 months upto 6 months

Over 6 months upto 1 year

1-3 years

Over 3 years upto 5 years

Total

Advances 9.49 8.33 7.65 22.06 34.46 37.94 - 119.93

Deposits 0.26 0.10 0.41 1.81 3.26 12.00 - 17.85

Borrowings 7.87 7.15 7.35 20.56 36.49 56.94 1.57 137.93

25.7 EXPOSURE25.7.1 EXPOSURE TO REAL ESTATE SECTOR (DIRECT AND INDIRECT)The Company does not have any direct or indirect exposure to real estate sector as on March 31, 2017 and March 31, 2016.

25.7.2 EXPOSURE TO CAPITAL MARKETThe Company does not have any exposure to Capital Market as on March 31, 2017 and March 31, 2016.

25.8 REGISTRATION OBTAINED FROM OTHER FINANCIAL SECTOR REGULATOR: -

Regulator Mar-16 Ministry of Company Affairs U65921UP1996PLC019924

Reserve Bank of India B-12.00364

25.9 DISCLOSURE OF PENALTIES ISSUED BY RBI AND OTHER REGULATORS:No penalties were imposed by RBI and other regulators during the current and previous year.

25.10 RATINGS ASSIGNED BY CREDIT RATING AGENCIES DURING THE YEAR AND PREVIOUS YEAR:

Mar-17 Mar-16Long Term Bank facilities CARe BBB CARe BBB-

MFI Grading (Smera Ratings) SMeRA M2C2 CARe MFI 2

25.11 DISCLOSURE OF FRAUDS REPORTED DURING THE YEAR ENDED MARCH 31, 2017:Fraud cases reported as on March, 31st 2017.

ParticularsLess than 1 Lac 1-5 Lacs 5-25 Lacs Total

No Amount No Amount No Amount No Amount

Person Involved - - - - - - - -

Staff 18 5,35,403 2 4,81,951 1 6,15,000 21 16,32,354

Client - - - - - - - -

Total 18 5,35,403 2 4,81,951 1 6,15,000 21 16,32,354


ParticularsLess than 1 Lac 1-5 Lacs 5-25 Lacs TotalNo Amount No Amount No Amount No Amount

Type of Fraud - - - - - - - -

Misappropriation 18 5,35,403 2 4,81,951 1 6,15,000 21 16,32,354

Unauthorized Credit Facility extended

- - - - - - - -

Cheating and Forgery - - - - - - - -

Total 18 5,35,403 2 4,81,951 1 6,15,000 21 16,32,354**Out of the above ` 5.24 lacs have been recovered during the year and the remaining `11.08 lacs (8 cases) has been written off during the year.

25.12 INFORMATION ON NET INTEREST MARGIN:

Mar-17 Mar-16Average Interest (a) 25.67 25.96

Average effective cost of interest (b) 16.28 16.58

Net Interest Margin (a-b) 9.39 9.38

25.13 CUSTOMER COMPLAINTS:

Numbera) No. of complaints pending at the beginning of the year 53

b) No. of complaints received during the year 299

c) No. of complaints redressed during the year 278

d) No. of complaints pending at the end of the year 74

25.14 DISCLOSURE OF SPECIFIED BANK NOTES:Specified Bank Notes (SBN) held and transaction during the period from November 8,2016 to December 30, 2016 is given in the table below:

SBNs Other denominations TotalClosing cash in hand as on 08.11.2016 6,42,500 7,90,595 14,33,015

Add: Permitted receipts 12,24,05,500 16,56,74,940 28,80,80,440

Less: Permitted payments 1,15,500 1,54,479 2,69,979

Less: Amount deposited in Banks 12,29,32,500 16,40,91,867 28,70,24,367

Closing cash in hand as on 30.12.2016 - 22,19,189 22,19,189

25.15 DETAILS OF OVERSEAS ASSETS: - NIL25.16 SPONSORED SPVS: - NIL

26. PREVIOUS YEAR’S FIGURESPrevious years have been regrouped/ reclassified wherever necessary to correspond with the current year’s classification/disclosures.

ANNEXURE-1 AS PER RBI GUIDELINES Particular

1 Liabilities side

Loans and advances availed by the non- banking financial company inclusive of interest accrued thereon but not paid:

Amount outstanding

Amount overdue

(a) Debentures:Secured: - -

(b) Unsecured (other than falling within the meaning of public deposits*)

Nil Nil

(c) Deferred Credits - -

(d) Term Loans 15.00 Nil


Particular(e) Inter-corporate loans and borrowing - -

(f) Commercial Paper 221.26 Nil

(g) Other Loans (specify nature) - -

* Please see Note 1 below - -

2 Asset side - Amount outstanding

Break-up of Loans and Advances including bills receivables [other than those included in (4) below] :

- -

(a) Secured Nil Nil

(b) Unsecured 197.08 Nil

3 Break up of Leased Assets and stock on hire and other assets counting towards AFC activities

- -

(i) Lease assets including lease rentals under sundry debtors :

- -

(a) Financial lease (b) Operating lease - -

(ii) Stock on hire including hire charges under sundry debtors:

- -

(a) Assets on hire - -

(b) Repossessed Assets - -

(iii) Other loans counting towards AFC - -

activities - -

(a) Loans where assets have been repossessed - -

(b) Loans other than (a) above - -

4 Break-up of Investments : - -

Current Investments : - -

1 - -

Quoted : - -

(i) Shares : (a) equity (b) Preference - -

(ii) Debentures and Bonds (iii) Units of mutual funds (iv) Government Securities (v) Others (please specify)

- -

Unquoted :Shares : (a) equity - -

(b) Preference - -

(ii) Debentures and Bonds - -

(iii) Units of mutual funds - -

(iv) Government Securities - -

(v) Others (please specify) - -

Long Term investments : - -

(b) Preference 10.55


1 - -

Quoted: - -

(i) Shares: (a) equity (b) Preference - -


(iii) Units of mutual funds - -

(iv) Government Securities - -


2. Unquoted :(i) Shares : (a) equity - -


Particular(b) Preference (ii) Debentures and Bonds 23.51

(iii) Units of mutual funds (iv) Government Securities - -


5 Borrower group-wise classification of assets financed as in (2) and (3) above: Please see Note 2 below

Category Amount net of provisions

Secured Unsecured Total

1.Related Parties Nil Nil Nil

a. Subsidiaries Nil Nil Nil

b.Companies in same group Nil Nil Nil

c.Other related parties Nil Nil Nil

2.Other than related parties Nil 195.11 195.11

6 Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted): Please see note 3 below

Category Market Value / Break up or fair value or NAV

Book value (net of provision)

1.Related Parties - - -

a. Subsidiaries - - -

b.Companies in same group - - -

c.Other related parties - - -

2.Other than related parties - - -** As per Accounting Standard of ICAI (Please see Note 3)

(7) OTHER INFORMATION Particulars Amount

(i)

Gross Non-Performing Assets -

(a) Related parties -

(b) Other than related parties -

(ii)

Net Non-Performing Assets -

(a) Related parties -

(b) Other than related parties -

(iii) Assets acquired in satisfaction of debt -Notes: 1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits

(Reserve Bank) Directions, 1998.2. Provisioning norms shall be applicable as prescribed in Non-Systemically Important Non-Banking

Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 or Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015 whichever is applicable.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in (4) above.

Margdarshak Financial Services Ltd Annual Report 2016-17 CORPORATe INFORMATION | 73

CORPORATE INFORMATION

Registered Office 118 Dayal Farms, Ganeshpur- Rehmanpur, Chinhat-Deva Road, Lucknow-226019

Corporate Office 118 Dayal Farms, Ganeshpur- Rehmanpur, Chinhat- Deva Road, Lucknow-226019

CIN U65921UP1996PLC019924

RBI Reg No. B-12-00364

Board of Director

Mr. Rahul J Mittra(Founder, CEO and Managing Director)

Mr. Arupjyoti Rai Baruah(Whole Time Director)

Ms. Saroj Mittra(CFO and Whole Time Director)

Mr. D.P.S Rathore(Independent Director)

Mr. Prasad kuchibhatla(Independent Director)

Ms. Maitrayee Banerjee(Independent Director)

Mr. Saneesh Singh(Nominee Director)

Mr. Bhanu Prakash Verma(Nominee Director)

Company Secretary Ms. Anchit Pandey

Auditors M/S Umesh kumar Agarwal & Co.

OUR INVESTORS

CORPORATe INFORMATION | 74 Margdarshak Financial Services Ltd Annual Report 2016-17

“WE THANK ALL OUR LENDERS FOR THEIR SUPPORT.”

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