Muthoot Microfin Ltd Directors Report

To the Members of Muthoot Microfin Limited,

Your directors are pleased to present the 32^nd Boards Report of Muthoot Microfin Limited (“The Company”) together with the Audited Financial Statements for the financial year ended March 31,2024.

1. Financial Highlights

The financial statements of the Company for the year ended March 31, 2024 have been prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013 (“the Act”) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Schedule III to the Act, as amended from time to time and applicable guidelines issued by SEBI.

	Particulars	31.03.2024
31.03.2023
Revenue from operations	22,701.80	14,287.64
Other Income	153.10	175.8
Profit/loss before Depreciation, Finance Costs, Exceptional items and Tax Expense	15,004.41	7,884.86
Less: Depreciation/ Amortisation/ Impairment	354.37	266.06
Profit /loss before Finance Costs, Exceptional items and Tax Expenses	14,650.04	7,618.80
Less: Finance Costs	8,831.62	5,490.10
Profit /loss before Exceptional items and Tax Expenses	5,818.42	2,128.70
Add/(less): Exceptional items	-	-
Profit /loss before Tax Expenses	5,818.42	2,128.70
Less: Tax Expenses (Current & Deferred)	1,322.59	489.81
Profit /loss for the year (1)	4,495.83	1,638.89
Total Comprehensive Income/loss (2)	136.77	394.17
Total comprehensive income/(loss) for the year (1+2)	4,632.60	2,033.06
Add: Balance of profit /loss for earlier years	4,262.23	2,787.60
Add: Consolidation of ESOP Trust	102.24	-230.65
Less: Transfer to Debenture Redemption Reserve	-	-
Less: Transfer to Reserves	899.17	327.78
Less: Dividend paid on Equity Shares	-	-
Less: Dividend paid on Preference Shares	-	-
Less: Dividend Distribution Tax	-	-
Balance carried forward	8,097.90	4,262.23

2. State of affairs of the Company

As of March 31, 2024, the Company had 3.35 million active customers spread across 1,508 branches, with a gross loan portfolio of H 121,935.00 million as compared to H 92,082.96 million in Financial Year as of March 31, 2023.

The net worth of the Company as on March 31,2024 was H 28,043.53 million and capital adequacy as on March 31, 2024 was 28.97%, well in excess of the mandated 15%.

During the year, the Companys revenue from operations and other income was H 22,854.90 million with a net profit with other comprehensive income of H 4,632.60 million. The funding source for the Company was through private placement of NonConvertible Debentures (“NCDs”) and borrowings from banks/ financial institutions by way of Term Loans, PTCs, ECBs and CPs as summarized below.

Financial Year	2023-24 2022-23
Privately placed Non-Convertible Debenture	9,657.00	13,336.00
Term Loan	55,133.14	41,143.47
Commercial Paper	-	484.84
Pass-Through Certificate	14,246.42	8,256.39
External Commercial Borrowings	4,960.17	2,054.80
Others	0.00	0.00
Total	83,996.73	65,275.50

Your Companys Operational Highlights for the financial year ended March 31, 2024 are as follows:

Financial Year	March 31, 2024 March 31,2023
Number of Branches	1,508	1,172
Amount disbursed	106,615.92	81,044.74
Number of active loans	41,00,011	33,36,821
Total Assets under management including securitized and assigned portfolio (Gross Loan Portfolio)	121,935.00	92,082.96
BC Portfolio (Managed for Yes Bank)	9.8	9.9
BC Portfolio (Managed for SIDBI)	836.97	910.4
MSGB (Managed for MFL)	117.22	117.8

3. Share Capital

Authorised Share Capital:

During the year under review, the authorized share capital of the Company was increased from H 2,00,00,00,000 (Rupees Two Hundred Crores) divided into 15,00,00,000 (Fifteen Crore) equity shares of 10/- each aggregating to 150,00,00,000/- (Rupees One Hundred and Fifty Crores) and 5,00,00,000 (five crore) preference shares of H 10/- each aggregating to 50,00,00,000 (Rupees Fifty Crores) to 250,00,00,000 (Rupees Two Hundred and Fifty crores only) divided into 20,00,00,000 (Twenty Crore) equity shares of 10/- each aggregating to 200,00,00,000 (Rupees Two Hundred Crore only) and 5,00,00,000 (Five Crore) preference shares of 10/- each aggregating to 50,00,00,000/- (Rupees fifty Crore only).

Issued, Subscribed and Paid-up Share Capital:

The shareholders of the Company at their Extra Ordinary General Meeting held on November 25, 2023, approved the conversion of 23,360,260 fully paid-up Compulsorily Convertible Preference Shares (CCPS) of the Company into 27,520,722 fully paid-up Equity Shares.

The conversion was made in accordance with the terms of issue of the CCPS, the Share Subscription Agreement and the Shareholders Resolutions dated December 03, 2021, January 10, 2022 and September 29, 2022 at a conversion ratio of 1:1.1781.

During the financial year, the Company has done the Initial Public Offering (IPO) of its equity shares comprising of fresh issue of 2,61,34,205 shares and an offer for sale, by the promoters, of 6,872,849 shares to the public, at an offer price of 291.00 per equity share, pursuant to the prospectus dated December 21, 2023.

As on March 31, 2024, the issued, subscribed and paid-up Share Capital of the Company is H 1704.92 Million comprising of fully paid-up equity shares of face value of H 10/- each.

Type of share capital	Number of shares	Face value (H)	Aggregate value (H)
Equity shares	17,04,92,176	10	1,70,49,21,760.00

There was no reclassification or sub-division of the authorised share capital, reduction of share capital, buyback of shares, change in the capital structure resulting from restructuring, or change in voting rights in respect of any class of the share capital of the company during the financial year.

As on March 31, 2024, none of the Directors of the Company holds instruments which are convertible into Equity Shares of the Company.

4. Listing of Shares

The equity shares of the Company were listed on National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). The listing fee for the Financial years 2023-24 and 2024-25 are paid to both the Stock Exchanges.

5. Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year under review.

Pursuant to Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy, setting out the parameters for the declaration and distribution of dividend. The Policy is available on the website of the Company at: https://muthootmicrofin. com/disclosures/

6. Transfer to Investor Education and Protection Fund

During the period, the Company does not have any amount due to be credited to the Investor Education and Protection Fund as provided in the provisions of Section 125 of the Companies Act, 2013.

7. Amount transferred to Reserves

The Company proposes to transfer 899.17 million to the reserve out of the amount available for appropriation and H 3,835.68 million is proposed to be retained in the profit and loss account.

8. Employee Stock Option Plan (ESOP)

Stock Options are granted to the eligible employees and KMPs of the Company pursuant to the Muthoot Microfin Employee Stock Option Plan 2016 ("ESOP 2016") and Muthoot Microfin Limited Employee Stock Option Plan 2022 (“ESOP 2022”), as decided by the Nomination & Remuneration Committee.

During the year under review, the Nomination and Remuneration Committee has granted 3,08,147 options under both the plans and these options will vest over a period of four years from the date of grant. Further, 71,625 options were cancelled during the year due to separation of employees. The canceled options were added to the respective plans and form part of the further grants made during the period.

The disclosure pursuant to the provisions of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and Section 62(1)(b) of the Act, read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 is provided in Annexure- I which forms part of this Report.

9. Debentures, bonds or any non-convertible securities

Non-convertible Debentures: During the period under review, your Company has issued debentures (Listed, Secured, Nonconvertible Debentures) aggregating to 9,657.00 million. The debentures outstanding as on March 31, 2024 are as follows:

Series	MML-6	MML-9	MML-15	MML-16	MML-17
a. Date of issue of the securities	09-11-2019	08-10-2020	25-05-2022	01-06-2022	09-06-2022
b. Date of allotment of Securities	27-11-2019	25-11-2020	27-05-2022	03-06-2022	15-06-2022
c. Number of securities	700	225	380	1120	932
d. Whether the issue of the securities was by way of preferential allotment, private placement or public issue	Private Placement	Private Placement	Private Placement	Private Placement	Private Placement
e. Brief details of the debt restructuring pursuant to which the securities are issued	NA	NA	NA	NA	NA
f. Issue price	10,00,000	10,00,000	10,00,000	10,00,000	10,00,000
g. Coupon rate	11.44%	11.40%	11.45%	11.55%	9.90%
h. Maturity date	27-11-2024	25-05-2024	27-05-2027	03-06-2027	15-12-2025
i. Amount raised (In H million)	700	225	380	1120	932
j. Amount Outstanding (In H million)	700	450	380	1120	932

 

MML-19 (MLD-7)	MML-21 (MLD-9)	MML-22	MML-23	MML-24	MML-25	MML-26
29-07-2022	22-12-2022	25-01-2023	02-02-2023	02-06-2023	06-07-2023	31-07-2023
29-07-2022	22-12-2022	27-01-2023	09-02-2023	05-06-2023	07-07-2023	01-08-2023
700	1,000	8,000	8,000	15,000	7500	7500
Private	Private	Private	Private	Private	Private	Private
Placement	Placement	Placement	Placement	Placement	Placement	Placement
NA	NA	NA	NA	NA	NA	NA
10,00,000	10,00,000	1,00,000	1,00,000	1,00,000	1,00,000	1,00,000
10.60%	10.00%	11.00%	11.00%	11%	10.75%	10.75%
29-04-2024	27-01-2024	27-01-2026	27-01-2026	05-06-2026	07-07-2026	01-08-2026
700	1000	1000	1000	1500	750	750
700	1000	800	800	1500	750	750

10. Capital Adequacy

The Capital Adequacy Ratio was 28.97% as on March 31, 2024. The Net Owned Funds (NOF) as on that date was H 24,842.52 million. The minimum capital adequacy requirement stipulated for your Company by Reserve Bank of India is 15%.

11. Annual Return

Pursuant to Section 134 and Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the

Companies (Management and Administration) Rules, 2014, a copy of the Annual Return is placed on the website of the Company.

The web-link is:

https://muthootmicrofin.com/stakeholders-information/?tab=5.

12. Achievements

During the Financial Year, your company has won several awards and accolades. Selected few awards/ recognitions are listed hereunder:

• Muthoot Microfin Limited has been recognized among Indias top 50 Best Workplaces™ in Health and Wellness 2023 by Great Place To Work Institute.

• Muthoot Microfin Limited has been awarded Microfinance Company of the Year at the ET

Business Awards 2024, held at Bangalore on the 18 March 2024.

• Muthoot Microfin Limited retained the Great Place To Work? certification for the 5^th time for its commitment to foster a culture of pride, trust, reliability, teamwork, and credibility amongst its employees.

• Muthoot Microfin Limited has been awarded the Gold Level Certification for Client Protection by M-CRIL.

• Muthoot Microfin Limited has been conferred the Runner-Up Award for Outstanding Financial Performance at the ASSOCHAM 18^th Annual Summit & Awards.

• Muthoot Microfin Limited has been awarded the Best Learning Strategy - Gold award from Indian Business Council and The Human Resource Ideas & Voices Event (THRIVE) 2023.

• Mr. Sadaf Sayeed, CEO - Muthoot Microfin has been recognized among Indias Top 10 CEOs by Tradeflock.

• Muthoot Microfin Limited has been honoured as a winner in the prestigious Modern and Agile Data Architecture and Infrastructure category at The Economic Times DataCon Awards 2023.

• Muthoot Microfin Limited honoured with ELETS 2^nd NBFC100 Leader of Excellence Award in Jurys Choice for Outstanding Technology Implementation.

• Muthoot Microfin Limited has been awarded the Best Workplaces in BFSI title for the 2^nd time.

13. Particulars of Loans, Guarantees or Investments

The Company, being an NBFC registered with RBI and engaged in the business of giving loans in the ordinary course of its business, is exempt from complying with the provisions of section 186 (2) of the Companies Act, 2013 with respect to loans, guarantees and investments. Accordingly, the Company is exempt from complying with the requirements to disclose in the financial statement the full particulars of the loans given, investment made or guarantee given or security provided.

The Company has duly complied with the provisions of Section 186 of the Companies Act, 2013 and Rules made thereunder. The details of Loans, Guarantees or Investments made by the Company is given below:

Name of Companies	Nature of Transactions	Investments
The Thinking Machine Media Private Limited	Equity investment	4,50,000/-

Details on the loans given and investments made under the provisions of this section are disclosed in the financial statements. The Company has not given any guarantees or security on behalf of a third party.

14. Change in Nature of Business If any

There was no change in the nature of business of the Company during the financial year 2023-24.

15. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

There have been no material changes or commitments which affect the financial position of the company which has occurred between the end of the financial year to which the financial statements relate and the date of this Report.

16. Revision of financial statement or the Report

The Company has not revised its Financial Statement or Boards Report during the financial year.

17. Credit Rating

The credit rating awarded to various instruments of the Company as on March 31, 2024 are as follows:

Credit Rating Agency	Instrument	March 31, 2024	March 31,2023
CRISIL	Organization grading	M1C1	M1C1
	Bank Lines	A+/ Stable	A+/ Stable
	Non-convertible debentures	A+ /Stable	A+ /Stable
	Commercial paper	A1 +	A1 +
	Principal Protected Market Linked Debenture	PPMLD A+ / Stable	PPMLD A+ / Stable

The Credit Rating of different instruments of the Company as on March 31, 2024 is mentioned under note 50 (XVI) of the Financial Statements under RBI disclosures.

18. Directors and Key Managerial Personnel

I. Composition of the Board of Directors

As on March 31, 2024, the Board of your Company comprised of Ten Directors with one Executive Director, four Non-Executive Directors and Five Independent Directors. The composition of the Board of Directors meets the requirement of provisions of Regulation 17 of the Listing Regulations and Section 149 of the Act.

Details of the Directors are as follows:

Category	Name of Director
Executive Director	Mr. Thomas Muthoot (Managing Director)
Non-Executive	Mr. Alok Prasad
Independent	Ms. Pushpy B Muricken
Directors	Mr. Thai Salas Vijayan
	Ms. Bhama Krishnamurthy
	Mr. Anand Raghavan
Non-Executive	Mr. Thomas John Muthoot
Directors	Mr. Thomas George Muthoot
	Mr. John Tyler Day
	Mr. Akshaya Prasad

A. Change in Composition of the Board of Directors

During the year under review, there was no changes on the Board of Directors (‘Board) except as mentioned below;

i. Directors retiring by rotation

At the 31^st Annual General Meeting held on June 14, 2023, Mr. Thomas John Muthoot, Director (DIN 00011618) retired by rotation in compliance with the provisions of Section 152 of the Companies Act, 2013 and was reappointed.

Mr. Thomas George Muthoot, Director (DIN: 00011552) is due to retire by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.

ii. Re-appointment of Independent Directors

The Members of the Company at their 31^st Annual General Meeting held on June 14, 2023, re-appointed Mrs. Pushpy B Muricken (DIN: 03431198), Mr. T S Vijayan (DIN: 00043959) and Mrs. Bhama Krishnamurthy (DIN: 02196839) as NonExecutive Independent Directors of the Company who are not liable to retire by rotation for their second term of five years.

iii. Approval of the Members will be sought at the forthcoming Annual General Meeting to the following appointments.

Mr. Akshaya Prasad (DIN: 02028253) and Mr. John Tyler Day (07298703), NonExecutive Non-Independent Directors, were appointed by the members at their Extra Ordinary General meetings held on December 6, 2021 and December 20, 2022 respectively. Pursuant to the provisions of Regulation 17 (1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the resolutions passed by the Board of Directors dated June 26, 2023, their terms of office were changed and their office shall be liable for retirement by rotation.

In compliance with the above-said provisions and as a good governance practice, the Board of Directors proposes the ratification of the appointment of Mr. Akshaya Prasad and Mr. John Tyler Day, Non-Executive Non-Independent Directors, at the ensuing Annual General Meeting.

iv. Cessations

During the year under review, there were no cessation, retirement or resignation of Directors from the Board

B. Change in the composition of the Board of Directors after the end of the financial year and up to the date of this Report

There were no changes in the composition of the Board of Directors after the end of the financial year and up to the date of this Report.

II. Key Managerial Persons

The Key Managerial Persons of the Company in accordance with Regulation 2(1 )(bb) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations and Section 2(51) of the Companies Act, 2013 are as follows:

Name	Designation
Mr. Thomas Muthoot	Managing Director
Mr. Sadaf Sayeed	Chief Executive Officer
Mr. Praveen T	Chief Financial Officer
Ms. Neethu Ajay	Chief Compliance Officer and Company Secretary

III. Woman Director

In terms of the provisions of Section 149 of the Act and Regulation 17(1)(a) of Listing Regulations, the Company is required to have at least one-woman director on the Board.

The Company has Ms. Bhama Krishnamurthy (DIN: 02196839) and Ms. Pushpy B Muricken (DIN: 03431198) as Independent Woman

Directors on the Board.

IV. Declaration by Independent Directors and statement on compliance with the code of conduct

The Company has received necessary declarations with respect to independence from all the independent directors in compliance of Section 149 (7) of the Companies Act, 2013.

The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013 and the Code of Conduct for Directors and senior management personnel formulated by the Company.

V. Nomination & Remuneration Policy

The Nomination and Remuneration Committee has formulated the Nomination and Remuneration Policy which sets out the criteria for determining qualifications, positive attributes and independence of Directors. It also lays down criteria for determining qualifications, positive attributes of KMPs and senior management and other matters provided under Section 178(3) of the Act and Listing Regulations. The Nomination and Remuneration Policy of the Company as approved and adopted by the Board is available on the website of the Company at: https:// muthootmicrofin.com/disclosures/

The policy is in compliance with the provisions of Section 178 of the Companies Act, 2013, SEBI (LODR) regulations and guidelines of the Reserve Bank of India on Corporate Governance Norms for NBFCs. The policy covers the following:

1. Objectives, composition and responsibilities of the Nomination and Remuneration Committee

2. Guidelines for NRC on appointment and removal of directors/KMP and senior management

3. Fit and proper criteria to determine the suitability of the person for appointment / continuing to hold appointment as a Director on the Board of the Company.

4. Criteria for independence - for directors to be appointed as independent directors on board of the company.

5. Criteria to be considered while appointing KMP, senior management personnel

6. Removal of a director, KMP or senior management

7. Remuneration of directors, key managerial personnel and senior management

8. Evaluation of performance of the Directors and the overall Board broadly on the basis of the laid-out criteria.

9. Criteria for review of the policy due to change in regulations or as may be felt appropriate by the Committee subject to the approval of the Board of Directors.

19. Board Meeting

During the Financial Year 2023-24, our Board has met eleven (11) times and the meetings were held on May 6, 2023, June 26, 2023, June 29, 2023, August 10, 2023, October 26, 2023, November 25, 2023 (Two Meetings), December 11, 2023, December 21, 2023, January 29, 2024 and March 25, 2024.

The requisite quorum was present for all the Meetings. The intervening gap between the Meetings was within the period prescribed under the Act and Listing Regulations.

The Company provides all the Board Members with the facility to participate in the meetings of Board and its committee through Video Conferencing or Other AudioVisual Means. The details of the meetings have been enclosed in the Corporate Governance Report, which forms part of this report.

Pursuant to the requirements of Schedule IV to the Act and the Listing Regulations, a separate Meeting of the Independent Directors of the Company was held on March 26, 2024, and the Directors reviewed the matters enumerated under Schedule IV(VII)(3) to the Act and Regulation 25(4) of the Listing Regulations. All the Independent Directors attended the said meeting.

20. Committees of Board

The Company has various Committees which have been constituted as part of good corporate governance practices and the same follow the requirements of the relevant provisions of applicable laws and statutes.

The Committees of the Board are the Audit committee, the Nomination and Remuneration committee, the Borrowing committee, the Corporate Social Responsibility committee, the Stakeholders Relationship committee, the IT strategy committee, the Asset Liability Management committee, Debenture Issue and Allotment Committee and the Risk management committee.

The details with respect to the composition, powers, roles, terms of reference, Meetings held, and attendance of the Directors at such Meetings of the relevant Committees are given in detail in the Report on Corporate Governance of the Company which forms part of this Annual Report.

21. Recommendations of the Audit Committee

There was no instance during the year where the Board has not accepted the recommendations of the Audit Committee requiring disclosure pursuant to Section 177(8) of the Companies Act, 2013.

22. Companys policy on Directors appointment and remuneration

The Company, pursuant to the provisions of Section 178 of the Companies Act, 2013, has formulated and adopted a policy on Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 which is available on the website of the Company at : https:// muthootmicrofin.com/disclosures/

23. Annual Evaluation of Board, Committees, and Individual Directors

The meeting of the Board of Directors held on March 25, 2024, has conducted an evaluation of its own performance and that of its committees and individual directors.

The evaluation process is carried out by collecting feedback from each of the Directors /committee members about the Board/committees performance and feedback about each of the other directors.

The feedback is collected through structured questionnaires. The Board then evaluated all the feedback received and expressed their satisfaction.

Aspects covered in the feedback inter alia are:

a. Composition of Board/committees.

b. Appropriateness of its size, experience and expertise.

c. Effective participation, integrity and credibility.

d. Ability to handle conflict collectively, Interpersonal skills, and willingness to address issues proactively.

e. Performance against set goals.

f. Adequacy of terms of reference to serve the purpose.

The Board of Directors has conducted these evaluations through electronic mode by distributing electronic evaluation forms to the Directors.

24. Compliance

The Company is registered with the Reserve Bank Of India (“the RBI”) as a NBFC-MFI. As per the Framework for Scale Based Regulation for Non-Banking Financial Companies issued by the RBI vide circular dated October 22, 2021 (‘SBR Framework), the Non-Banking Finance Companies are categorised into four layers, NBFC - Base Layer (NBFC-BL), NBFC - Middle Layer (NBFC-ML), NBFC - Upper Layer (NBFC-UL) and NBFC - Top Layer

(NBFC-TL) based on size, activity, and risk perceived. According to the said regulation, the Company has been categorised as NBFC - ML..

The Company has listed its equity shares in the BSE Limited and the National Stock Exchange of India Limited with effect from December 26, 2023, and has various NonConvertible Debt Instruments listed in the BSE Limited.

The Company has complied with and continues to comply with all applicable Laws, Rules, Circulars, Regulations, etc. including Directions of RBI for NBFC-MFIs and various SEBI Listing Regulations, and does not carry on any activities other than those specifically permitted by RBI for NBFC-MFIs.

25. Code of Conduct for Board and Senior Management

In compliance with Regulation 26(3) of the Listing Regulations and the Act, the Company has framed and adopted a Code of Conduct for Directors and Senior Management “the Code” which provides guidance on ethical conduct of business and compliance with laws and Regulations.

All members of the Board and Senior Management personnel have affirmed their compliance with the Code as of March 31, 2024. A declaration to this effect, signed by the Managing Director in terms of the Listing Regulations, is given in the Report of Corporate Governance forming part of this Annual Report. The Code is made available on the Companys website at https://muthootmicrofin.com/disclosures/

26. Code of Practices and procedures for fair disclosure of Unpublished Price Sensitive information

The Board has formulated the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (Fair Disclosure Code), for the fair disclosure of events and occurrences that could impact the price discovery in the market for the Companys securities. The Fair Disclosure Code also provides for maintaining transparency and fairness in dealings with all stakeholders and ensuring adherence to applicable laws and regulations. The same is available on the website of the Company at https://muthootmicrofin.com/disclosures/

27. Prevention of Insider Trading

The Board of Directors of the Company has formulated and adopted a Code of Conduct to regulate, monitor and report the trading of shares by insiders. This code lays down the guidelines and procedures to be followed and disclosures to be made by the insiders while dealing with shares of the Company and cautioning them of the consequences of non-compliance. The same is available on the website of the Company at https://muthootmicrofin. com/disclosures/

28. Subsidiary Company, Joint Ventures and Associate Companies

The Company does not have any subsidiary, Joint venture or Associate Company.

29. Deposit

During the financial year, your Company has not accepted any deposits from the public within the meaning of provisions of

the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016 or any deposits within the meaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

Therefore, the disclosures required under Rule 8(5)(v) of Companies (Accounts) Rules, 2014 and Rule 2(1 )(c) of Companies (Acceptance of Deposits) Rules, 2014 are not applicable.

30. Remuneration Details of Directors, KMPs and Employees

Details of managerial remuneration pursuant to Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are mentioned below:

Particulars	Details
1 The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year	NA. Other than sitting fees to Independent Director, no remuneration was paid to the Directors of the Company.
2 The percentage increase in remuneration of: a) Managing Director	NA
b) Chief Executive Officer	98.25%
c) Chief Financial Officer	42.29%
d) Company Secretary	105.29%
3 Percentage increase in the median remuneration of employees in the financial year	0.00%
4 Number of permanent employees on the rolls of the Company	13,321
5 The Company has a remuneration policy, and the remuneration is as per the remuneration policy of the company	Yes
6 average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration	3.13%

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

Top 10 employees in terms of remuneration drawn during the year

Employee name	Designation	Remuneration in FY 2023-24 (in J Million)	Nature of employment, whether contractual or otherwise;	Educational Qualification & Experience	Date of Joining	Age	Last employment before joining the company;	Whether relative of any Director or Manager
Sadaf Sayeed Udeesh Ullas Paras Kumar Wasnik Subhransu Pattnayak Sabat Ajit Kumar Dileep Kumar Pathak Praveen T Linson C Paul Srinivas Vadla Nitin Sadashiv Awati	Chief Executive Officer Chief Operating Officer Deputy COO Executive Vice President Senior Vice President Chief Internal Auditor Chief Financial Officer Chief Technology Officer Senior Vice President Deputy Vice President	73.97 13.89 9.14 8.96 8.22 7.11 7.04 5.73 5.55 5.08	Permanent Permanent Permanent Permanent Permanent Permanent Permanent Permanent Permanent Permanent	MBA MBA MA MBA PGDRM MBA CA MBA-MSC Bsc MBA	26-08-2015 26-02-2016 24-07-2019 26-08-2015 15-07-2019 26-01-2016 26-01-2016 21-07-2022 26-10-2016 24-09-2018	44 41 44 47 46 41 38 49 45 42	Satin Credit Care Network Ltd Fullerton India Credit Company Ltd. Asirvad Microfinance Ltd ICICI Bank Limited Asirvad Microfinance Ltd Satin Credit Care Network Ltd Ark Power Controls Pvt Ltd. Joy Alukkas India Limited Share Microfin Ltd Bharat Financial Inclusion Ltd	No No No No No No No No No No

Employees who are employed throughout the financial year and was in receipt of remuneration for the FY 23-24, in the aggregate, was not less than H 1,02,00,000/- (One crore and two lakh rupees)

Employee name	Designation		Remuneration in FY 2023-24 (in J Million)		Nature of employment, whether contractual or otherwise;		Educational Qualification & Experience
Sadaf	Chief	73.97	Permanent	MBA	26-08-2015	44	Satin Credit	No
Sayeed	Executive						Care Network
	Officer						Ltd
Udeesh	Chief	13.89	Permanent	MBA	26-02-2016	41	Fullerton	No
Ullas	Operating						India Credit
	Officer						Company Ltd.

Employees who are employed for a part of the FY 23-24 and was in receipt of remuneration for any part of that year at a rate which, in the aggregate, was not less than 8,50,000/- (Eight lakh and fifty thousand rupees) per month

Employee name	Designation	Remuneration in FY 2023-24 (in J Million)	Nature of employment, whether contractual or otherwise;	Educational Qualification & Experience	Date of Joining	Age	Last employment before joining the company;	Whether relative of any Director or Manager
NIL

31. Criteria for making payments to Non-Executive Directors

Apart from the sitting fee paid to the Independent Directors, expenses incurred by the Company on behalf of the Directors for their travel and accomodation and reimbursement of expenses incurred by the Directors during and for the purpose of attending Board and Committee meetings, the Company has made no other payment to its Non-Executive Directors.

32. Directors Responsibility Statement

In terms of Section 134 (5) of the Companies Act 2013, the Directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure;

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit and loss of the Company for that period;

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Directors had prepared the annual accounts on a going concern basis;

v) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) The Directors has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

33. Adequacy of Internal Audit and Financial Controls

The Company has adequate internal controls and processes in place with respect to its operations, which provide reasonable assurance regarding the reliability of the financial statements and financial reporting and also functioning of other operations. These controls and processes are driven through various policies and procedures.

During the year, the review of Internal Financial Controls was done, and the report was placed before the Audit Committee. As per the report the Controls are effective and

there are no major concerns. The internal financial controls are adequate and operating effectively to ensure orderly and efficient conduct of business operations.

34. Fair Practices Code

The RBI had been issuing revised Fair Practices Code guidelines from time to time and your Company has adhered to all of them without any compromise. The Fair Practices Code, Code of Conduct, and Grievance Redressal Mechanism have been displayed prominently in all the branches of the Company.

35. Statutory Auditors

The Members of the Company at the Annual General Meeting held on 24^th August 2022 have appointed M/s. Sharp & Tannan Associates, Chartered Accountants, (ICAI Firm Registration Number 109983W), as Statutory Auditors of the Company in accordance with the provisions of the Companies Act, 2013 read with RBI Circular: Ref. No. DoS.CO.ARG /SEC.01/08.91.001/2021-22 dated April 27, 2021. The term of appointment was for two years till the conclusion of the ensuing (32nd) Annual General Meeting of the Company.

The auditors have submitted their Report on the accounts of the Company for the Financial Year ended March 31,2024 to the Board of Directors. The Board has duly examined the Statutory Auditors Report which is self-explanatory. The Report does not contain any qualifications, reservations or adverse remarks

As per the RBI guidelines on the appointment of statutory auditors as referred above, the term of the present statutory auditor is expiring at the conclusion of the ensuing annual general meeting and the Board of Directorsis proposing the appointment of M/s. Suresh Surana & Associates LLP (RSM), Chartered Accountants, (Firm Registration No. 121750W/W- 100010) having a valid Peer review Certificate issued by the Peer Review Board of ICAI in accordance with Section 139 of the Companies Act, 2013 read with RBI Circular No. DoS. C0.ARG/SEC.01/08.91.001/2021-22, for a term of three years.

36. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. SEP Associates, Company Secretaries, Kochi to conduct the Secretarial Audit of the Company for the Financial Year 2023-24. The Secretarial Audit Report for the financial year ended March 31, 2023, is annexed to this report as Annexure II.

The Secretarial Audit Report for the Financial Year 202324 does not contain any qualification, reservation, adverse remark or disclaimer except in respect of the matter mentioned in Annexure II to this report along with the Management response provided in clause 39 herein.

37. Internal Auditor

The Company has an independent internal audit department headed by Chief Internal Auditor Mr. Dileep Kumar Pathak. The internal audit department broadly assesses and contribute the overall improvement of the organizations governance, risk management, and control processes using a systematic and disciplined approach. The internal audit team follows Risk Based Internal Audit which helps the organization to identify the risks and address them accordingly based on the risk priority and direction provided by the board of directors. The Internal audit reports are presented to the Audit Committee of the Board on a quarterly basis. Based on the reports of the internal audit team, the process owners undertake corrective action in their respective areas.

Pursuant to the provisions of Section 138 of the Act, the Board of Directors, on the recommendation of the Audit Committee appointed M/s. KPMG Assurance and Consulting Services LLP, as the Internal Auditor of the Company for financial year 2023-24 for providing cosourced internal audit services.

38. Explanation or Comments on Qualifications, Reservations or Adverse Remarks or Disclaimers made by the Statutory Auditor / Secretarial Auditor in their Reports

The Statutory Auditors have given their report ‘with an unmodified opinion, on the Financial Statements of the Company for Financial Year 2023-24,

There has been no qualification, reservation, adverse remark or disclaimer made by the Statutory Auditor in their Report for the year under review.

With respect to the remark made by the Secretarial Auditors in their Report, the Company inadvertently had a delay of one-day for the submission of the notice of record date pursuant to Regulation 60(2) of the SEBI (LODR) Regulations, 2015. The delay was occured for one series of the listed Non-Convertible Debentures. The Company duly paid the necessary fine to the stock exchange (BSE Limited) as provided in SEBI circular no. SEBI/HO/ DD H S/D DH S_D i v1 /P/CIR/2022/0000000103. Exce pt for the inadvertent delay in submission of the notice of record date, the payment of interest, in relation to the said disclosure, was duly made on time.

39. Compliance with Secretarial Standards

During the Financial year, the Company has complied with the provisions of applicable Secretarial Standards viz. Secretarial Standard on meetings of The Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2).

40. Corporate Social Responsibility

In compliance with Section 135 of the Companies Act 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established the Corporate Social Responsibility Committee

(CSR Committee) in the year 2015 and the composition and function thereof are mentioned in the Corporate Governance Report.

The Board has adopted the CSR Policy, formulated and recommended by the CSR Committee, and the same is available on the website of the Company at: https:// muthootmicrofin.com/disclosures/

Companys CSR initiatives are mainly implemented through the Muthoot Pappachan Foundation (MPF), a Public Charitable Trust - the CSR arm of Muthoot Pappachan Group (MPG). MPF tackles issues affecting the communities in which our businesses operate.

The CSR initiatives of MPG revolve around the theme ‘HEEL, covering ‘Health, Education, Environment and Livelihood. Detailed information report on the CSR policy and the CSR initiatives undertaken during the Financial Year 2023-24 is given in the Annexure III-‘Annual Report on CSR activities.

41. Business Responsibility and Sustainability Report

In accordance with Regulation 34(2)(f) of the Listing Regulations the Business Responsibility and Sustainability Report (BRSR), covering disclosures on the Companys performance on Environment, Social and Governance parameters for the reporting period, which forms part of this Annual Report as Annexure IV.

The BRSR provides a comprehensive account of the Companys business performance and impacts, and it is aligned with the NGRBC (National Guidelines on Responsible Business Conduct) on Social, Environmental and Economic Responsibilities of Business, issued by the Ministry of Corporate Affairs.

42. Management Discussion and Analysis Report

Pursuant to Regulation 34(2)(e) of the Listing Regulations, a detailed Management Discussion and Analysis Report for the Financial Year under review is presented in a separate section, forming part of the Annual Report.

The state of the affairs of the business along with the financial and operational developments has been discussed in detail in the Management Discussion and Analysis Report.

43. Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI.

The Report on Corporate Governance as required under Regulation 34(3) read with Schedule V of the Listing Regulations forms part of this Report.

Further, as required under Regulation 17(8) of the Listing Regulations, a certificate from the Chief Executive Officer and Chief Financial Officer is annexed with the Annual Report.

A certificate from CS Lakshmi Pradeep and Associates, Practicing Company Secretary, confirming the compliance of the Company with the conditions of Corporate Governance, as stipulated under the Listing Regulations, is attached to the Report of Corporate Governance

44. Details of the auctions of Gold conducted during the financial year.

Details of auctions of Gold conducted during the financial year is as follows:

Particulars	March 31,2024 March 31,2023
Number of loan accounts	1063	879
Outstanding amounts	37.69	21.37
Value fetched	40.62	22.24
Whether any sister concerns participated in the auction*	Yes	Yes

45. Related Party Transaction

All contracts/arrangements/transactions entered by the Company during the Financial Year with related parties were in the ordinary course of business and on an arms length basis.

During the year under review, your Company had not entered into any contract/arrangement/transaction with Related Parties which could be considered material in accordance with the Policy on Related Party Transactions. Further there were no materially significant related party transactions entered by the Company with Promoters, Directors, KMP or other persons which may have potential conflicts with the interests of the Company.

The particular of contracts or arrangements made with related parties pursuant to Section 188 of the Companies Act, 2013 in the prescribed Form AOC-2 is appended

as Annexure V which forms part of this report. Details

of Related Party Transactions as required under Indian Accounting Standard (Ind AS-24) are reported in Note no. 36 forming part of the Financial Statements.

Disclosure on Related Party Transactions, in compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the applicable accounting standards, are made in the financial statements. Also, the Company has adopted the policy on Materiality and Dealing with Related Party Transaction which is available on the website of the Company at: https://muthootmicrofin.com/wp-content/uploads/2023/03/ Policv-on-Materialitv-and-Dealina-with-Related-Partv- Transactions.pdf

Disclosure on Related Party Transactions, in compliance with the requirements of SEBI (Listing Obligations and

Disclosure Requirements) Regulations, 2015 and the applicable accounting standards, are made in the financial statements .

46. Details of Frauds reported by Auditors

Pursuant to sub-section 12 of Section 143 of the Act, the Statutory Auditors and the Secretarial Auditors of the Company have not reported any instances of material frauds committed in the Company by its officers or employees, except few instances of cheating, forgery, misappropriation and criminal breach of trust, which are duly identified by the Company and are disclosed as Note 51 (xxiii) to the Financial Statements.

47. Risk Management

As a NBFC- MFI focusing on unorganized and under serviced sector, risk management is an integral part of our business. Your Company has a Board approved comprehensive Risk Management Policy in place and has laid down a well-defined risk management framework, established system and adequate controls for identification, assessment, measurement, reporting, mitigation and/or management of risks. The processes, policies and procedures are periodically reviewed by the Risk Management Committee and the Board of Directors. Regular review, stress testing and scenario analysis of portfolios, self-assessments of controls and monitoring of key risk indicators enhances the effectiveness of risk management framework in your Company. Risk Management Committee evaluates and monitors Credit, Operational, IT, Financial, Regulatory, Market and Reputational risks and its all-associated risks.

Your Companys internal control systems, organizational structure, processes, policies, and code of conduct together form a robust mechanism of internal controls that govern efficient functioning of the business, and the existing risk management measures are being regularly upgraded to ensure risk avoidance and risk mitigation. There are no risks which in the opinion of the Board threaten the existence of your Company.

48. Technology Absorption, Conservation of Energy, Foreign Exchange Earnings and Outgo

The provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are not applicable to your Company. However, your Company has been taking steps at all times for the conservation of energy.

Foreign Exchange Earnings & Outgo

Foreign Exchange Earnings - H 11.50 million Foreign Exchange Outgo - H 32.07 million

49. Vigil Mechanism

Your Company is committed to the highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013. All Directors, employees and stakeholders can raise their concerns regarding any discrimination, harassment, victimization, any other unfair practice being adopted against them or any instances of fraud by or against your Company. As per the Whistle Blower Policy implemented by the Company, the Employees, Directors, customers, dealers, vendors, suppliers, or any stakeholders associated with the Company are free to report illegal or unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or Corporate Governance Policies or any improper activity, to the Chairman of the Audit Committee or Chief Compliance Officer and Company Secretary or Chief Executive Officer of the Company The policy provides for adequate safeguard against victimization.

Any incidents reported are investigated and suitable actions are taken in line with the whistle blower policy. The Whistle Blower Policy is also available on your Companys website at: https://muthootmicrofin.com/disclosures/

50. Details of significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Companys operations in future

There was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in the future.

51. Corporate Insolvency Resolution Process initiated under The Insolvency and Bankruptcy Code, 2016 (IBC)

There were no applications filed for corporate insolvency resolution process, by any financial or operational creditor of the Company or by the company itself, under the IBC before the NCLT.

52. Disclosure as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company is an equal opportunity employer and is committed to ensuring that the work environment at all its locations is conducive to fair, safe and harmonious relations between employees. It strongly believes in upholding the dignity of all its employees, irrespective of their gender or seniority. Discrimination and harassment of any type are strictly prohibited.

The company has in place a Policy for prevention of Sexual Harassment at the Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has constituted the Prevention of Sexual Harassment Committee to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed of during the period under review:

(a) Number of complaints pending at the beginning of the year: Nil

(b) Number of complaints received during the year: Nil

(c) Number of complaints disposed off during the year: Nil

(d) Number of cases pending at the end of the year: Nil

53. Details of Debenture Trustee

During the financial year, the following debenture trustees are associated with the Company:

Catalyst Trusteeship Limited	Vardhman Trusteeship Pvt Ltd.
Office No.83-87, 8th Floor,	The Capital, A Wing, 412A,
B Wing, Mittal Tower,	Bandra Kurla Complex,
Nariman Point,	Bandra (East)
Mumbai-400021,	Mumbai 400 051.
Tel: +91(022)4922 0555	Tel: 022-42648335

54. Acknowledgment

Your Directors wish to place on record their appreciation for the assistance, co-operation and guidance received by the Company from the Customers, Shareholders, Debenture Holders, the Central Government, the State Government, the Reserve Bank of India, the Registrar of Companies, Mumbai, the Securities and Exchange Board of India, the BSE Limited, the National Stock Exchange of India Limited, Debenture Trustees, Depositories, Registrar and Share Transfer Agent, Credit Rating agencies and other Regulatory Authorities and Bankers during the year under review and look forward to their continued support. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Employees of the Company.

Kochi

06.05.2024

 

Thomas George Muthoot	Thomas Muthoot
Director	Managing Director
(DIN 00011552)	(DIN 00082099)