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BUSINESS MODEL

Shikhar is engaged in urban & rural micro finance lending activities

through Joint Liability Group (JLG) model with a vision and focus to provide

a range of financial products and services covering credit and insurance to

economically backward families living in slums, unauthorized colonies and

urban & rural villages across its area of operations.

ANNUAL REPORT 2015-16

Table of Contents

History of Establishment 1

Profile- Board of Directors 4

Message from CEO 6

Management Discussion and Analysis Report 7

Directors Report 13

Annexure 19

Operations at glance 27

Independent Auditors Report 29

Financial Statement 33

Note forming part of Financial Statement 37

Stories of Transformation 56

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HISTORY OF

ESTABLISHMENT

Shikhar came into existence to extend financial services to protect livelihood and provide greater

economic stability to the unprivileged sections of our society which is vulnerable to decline in income as

well as the household crises that impacts them on regular basis. In achieving the vision of the

organization, Shikhar intends to offer microfinance services, strengthen the safety net, and contribute to

overall socio-economic development of the society.

Shikhar Development Foundation (SDF) got registered in September 2007 as a Trust, under the Indian

Trust Act 1882. Subsequently, the board of SDF in November 2008, decided to acquire a NBFC to

undertake microfinance operations. Accordingly Anup Leasing Private Limited (ALPL), a non-deposit

taking NBFC, incorporated on February 16, 1993 was acquired by Partners of Shikhar Trust (POST), (a

for-profit trust formed by promoters of Shikhar) and Dia Vikas Capital Pvt. Ltd. in March 2009. ALPL,

after acquisition was later renamed to Shikhar Microfinance Private Limited (Shikhar) after obtaining due

approvals from RBI and RoC in 2010. The microfinance operations been undertaken by SDF were

gradually transferred to SMPL.

Further, Shikhar got re-categorized into NBFC-MFI with effect from November 12, 2013.

PROMOTERS

Partners of Shikhar Trust

The private mutual benefit trust was registered to act as a Special Purpose Vehicle formed to

promote Shikhr Microfinance (P) Ltd.

Mr. Satyavir Chakrapani

A management graduate from the Entrepreneurship Development Institute of India (EDII), Mr. Chakrapani is the Managing Director & CEO of SMPL.

Mr. Vinoy Thomas

A B.tech and MBA in systems and finance, Mr.

Thomas holds more than 14 years of experience

with development financial institutions. He is the whole time Director

and CFO of SMPL.

Page | 2

CORPORATE

INFORMATION

Registered Office A-112, 1st Floor, Behind ICICI, Palam Extension,

Sector- 7, Dwarka, New Delhi- 110077

CIN Number U74899DL1993PTC052165

RBI Reg. No. B- 14.02362

Board of Directors

Mr. N. R. Rayalu, Chairman

Mr. Satyavir Chakrapani, MD & CEO

Mr. Anil Vidyarthi, Independent Director

Dr. Shantanu Dutta, Nominee Director

Mr. Javed Ahmad Siddiqui, Nominee Director

Mr. Saurabh Baroi, Nominee Director

Mr. Thomas Vinoy Thomas, Director & CFO

Auditor M/s Suri & Sudhir

Chartered Accountant,

Chief Finance Officer Mr. Thomas Vinoy Thomas

Company Secretary/ Compliance

Officer Mr. Ravi Shankar Kumar

Registrar and Transfer Agent M/s Big Share Services Ltd.

Page | 3

FUNDING PARTNERS

Page | 4

PROFILE: BOARD OF DIRECTORS

N R RAYALU Chairman Retired Deputy Comptroller and Auditor General of India Mr. Rayalu has been Former Chief Executive Officer of the National Pension System Trust and Former Joint Secretary and Financial Advisor in the Ministry of Finance. He also acts as Government nominee director on board of Syndicate Bank. Currently he is the delegate from Asia to ILO

ANIL VIDYARTHI Independent Director

He is currently Chairman of Investment Committee of Green India Venture

Fund and Director on Board of IFCI Venture Capital Ltd. He is Ex-GM, SIDBI

and CEO of India SME Technology Services Ltd. He has over 41 years of experience in private and public sector organizations.

SATYAVIR CHAKRAPANI Managing Director & CEO

He initiated the idea of founding Shikhar in 2007. Has varied experience

of more than 17 years in development sector and microfinance

initiatives. He has earlier worked with World Vision India and Shramik

Bharti. He holds degree in PG Dip. (NGO Mgmt.), LL.B, Licentiate for

Teaching (PG Prog.)and M.A. (Hist.).

He has been consultant with various e-governance projects and ICT initiatives during his career

with One World South Asia, Emmanuel Hospital Association and other developmental agencies.

Has been part of various task forces on policy & guidelines’ review. Has to his credit various

publications on developmental & community issues

He is on Board of various international and national developmental institutions like Opportunity

International Network, Delhi House Society (destitute home – Sewa Ashram), Aspire Prakashan

(Forward Press Magazine). He has been recipient of the NABARD scholarship during the

postgraduate program.

DR. SHANTANU DUTTA,

Nominee Director, Partners of Shikhar Trust

He is presently working as National Director – Advocacy, International

Justice Mission working in the area of trafficking and bonded labour. He is

Ex-Indian Air Force Medical Officer with rich experience in community

health and development. Has also served many development organizations in different strategic capacities over a period of two decades.

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JAVED AHMAD SIDDIQUI Nominee Director, SIDBI Currently serving in SIDBI as Deputy General Manager, Mr. Javed has

worked in various departments of SIDBI since 1995. He has handled

business development, HR, Administration and headed the Okhla Branch, Ludhiana Branch and is currently designated at New Delhi branch.

SAURABH BAROI Nominee Director, Dia Vikas Capital Pvt. Ltd. He has expertise in various areas of MFI including assessment, ratings, due

diligence, planning and forecasting, capacity building needs assessment,

mentoring of MFIs, baseline and impact studies for microfinance projects. He

is currently serving as DGM, Dia Vikas Capital (Subsidiary of Opportunity

International Australia). He has been manager-Microfinance in ACCESS

Development Services and CARE India, CASHE Project in Bhopal and

Partnership coordinator for the CASHE Project in Kolkata.

VINOY THOMAS,

Director & Chief Finance Officer

He has been part of Shikhar’s founding team and is part of all

strategic initiatives of the institution. At Shikhar he has led the

finance function, primarily been responsible for setting up systems

and fund raising, overseeing IT & MIS and responsible for almost all

functions. Currently he is overseeing the operations in Shikhar. He

has overall working experience of more than 13 years.

His earlier roles and responsibilities include working with development financial institutions in the

areas of infrastructure consulting, advisory, financial modelling and analysis. He has also headed the

Tourism, Urban and Social sector portfolio in his assignment with IDFC’s advisory firm, Uttaranchal

Infrastructure Development Co. Ltd. (U-DeC). He has undertaken liaisoning with various technical

partners, state governments, state departments and agencies, local bodies helpful in efficient project

development. He has also been actively involved in the new projects, capacity enhancement projects in his stint with Hindustan Zinc Ltd. consequent to its takeover by Sterlite Industries Ltd.

Page | 6

MESSAGE FROM MD & CEO

Dear Stakeholders,

On behalf of the board, I take the opportunity in presenting the annual report of Shikhar Microfinance Pvt.

Ltd. At the outset of this new growth trajectory that Shikhar has embarked upon, I offer deep gratitude

and praise towards The Lord for ushering in strength and guiding us throughout the journey. I also

extend deep gratitude towards the learned members on the Board, people who were and are part of the

institution providing contribution through their various skill sets, organizations who have provided

assistance in various forms to make Shikhar grow to where it has reached today.

Holding true to its vision of empowering communities by providing financial services and livelihood

opportunities, Shikhar has been serving economically and financially excluded families with major focus

on urban and peri-urban families. The year 2015-16 has been a year of new endeavours’ for

Shikhar. Since its inception in 2007, the year 2015-16 can truly be regarded as a year of new

breakthroughs with gross loan portfolio crossing Rs. 50 cr. and client base of more than 40,000 mark.

Unlike in the past, when Shikhar was primarily funded by financial institutions, we have now been able to

source funds from top public sector banks which include Bank of Baroda, Corporation Bank, State Bank of

India, State Bank of Bikaner & Jaipur and Union Bank thereby bringing down the overall cost of raising

funds and has opened new avenues of funding from other sources.

With a robust outlook of the Reserve Bank of India, the industry on the whole is sure to witness a new era

of expansion. With emphasis on technology in microfinance operations, Shikhar too has set itself on the

process of procuring a new software that would provide us with increased efficiency of operations and

facilitate the tracking of financial and social performance on real time basis.

Introduction of concurrent audit and risk mitigation team has further strengthened the internal control

system. The major highlight of the year has been the introduction of disbursement to clients directly into

their bank accounts and Shikhar has been the first and the only MFI in India to achieve this long dreamt

milestone. These new systems and processes are sure to provide long term impact in the organization’s

growth in years to come.

Continuing the current pace of the growth, Shikhar plans to further expand its operations in Rajasthan

along with the current locations. With a projected portfolio of Rs. 90 crores by the end of the current

financial year, a broader range of cost efficient products and services would be made available to our

customers that would impact the lives of our clients and their families.

I am confident that under the able guidance and support of the Board and the stakeholders, Shikhar will

stand true to its stated objective and commitment towards transforming the lives of the poor and

disadvantaged in India.

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MANAGEMENT DISCUSSION & ANALYSIS

MACRO-ECONOMIC BACKGROUND:

The Indian economy has weathered many challenges successfully in recent times. In the recent past, the

economy has faced headwinds on growth, inflation and current deficit fronts.

An increasing awareness about microfinance, need for timely financial support and aspiration for better

life present an opportunity for the sectors to attract more number of beneficiaries.

We firmly believe the improving economic profile, growing entrepreneurial drive as well as an increasing

penetration in our target market of economically weaker sections will be the underlying drivers for

realization of the latent demand for financial services from the aspiring and emerging economically active

customers in urban, semi-urban and rural areas.

The government initiatives on payment banks and small banks licences will give the sector a good run for

the money, while at the same time it opens opportunities for big players to aspire for universal banking

licence. Although many new players are coming into the sector only those with some serious social

objectives are making it big at the highest level. The encouragement from the Government and the

regulators to help financial services to reach the unbanked areas also comes as a catalysing factor. As the

players are getting bigger in size, there is widespread recognition of the growing role of technology,

digital media, e-commerce and similar internet-led platforms in the sector. Digital platforms for financial

transactions and marketing initiatives will be a game changer as the MFIs would be able to reach out to

potential customers across the country at low costs and in a hassle-free manner.

MICRO FINANCE INDUSTRY BACKGROUND:

In FY16, the MFI Industry witnessed a remarkable growth of 84% (as against 61% in FY15) resulting in a

Gross Loan Portfolio (GLP) of Rs. 53, 233 Cr. with over 3 Cr. Customers. The industry also had a significant

increase of 55% in funding to MFIs (as against 49% in FY14) pointing to high levels of concentration in

the sector amongst lenders and investors - which is further corroborated by strong policy and legislative

initiatives within the Financial Inclusion Space. Annual loan amount disbursed reached to Rs. 61,864 Cr.

representing increase of 65% compared to FY 2014-15 whereas total number of loan disbursed by MFIs

grew to 3.47 Cr, increase of 36% compared with FY 2014-15.

The coverage of MFIs is now geographically well dispersed with Gross Loan Portfolio in South is 35%,

east is 15%, north is 25% and west is 25%. In total, MFIs now cover 30 states / union territories. The top

five states, viz. West Bengal, Tamil Nadu, Karnataka, Maharashtra and Uttar Pradesh. The productivity

ratios for MFIs continued to move upwards. The GLP per loan officer and GLP per branch increased by

51% and 33% respectively, over FY 2014-15.

OPERATIONAL PERFORMANCE

The operations of the company are spread across 22 districts in 4 states, namely, Delhi, Uttar Pradesh,

Haryana and Uttarakhand. During the current financial year, operations have also been initiated in

Rajasthan. New branch has been opened in Jaipur and with the close of FY 2016-17 total of 30 branches

are expected to be in operation. Our loan portfolio has crossed Rs. 50 cr. in the month of March 2016.

Since inception, we have so far disbursed loans to more than 120,000 borrowers as on date with a

cumulative loan disbursement of Rs. 130 Cr. Shikhar has made a steady and sustained progress growing

to 22 Branches in 4 States and a Gross Loan Portfolio of Rs. 51.80 Cr. and active clients of more than

Page | 8

41000. Shikhar has put in place the necessary processes and systems to support the company’s growth in

a scalable and sustainable manner, which is also been continuously strengthened.

During the year, we have successfully implemented the cashless disbursement, direct disbursement in the

bank account of beneficiaries. This has been implemented across all 23 current branches.

The year 2015-16, proved to be a successful year for the company, as reflected in 72% growth in

disbursement and 72% growth in the portfolio over the previous year. Shikhar ended the financial on a

very positive note with outstanding gross loan portfolio of Rs. 51.80 Cr. against Rs. 29.86 Cr. in the

previous financial year i.e. growth of 72% YoY. Profit after tax has increased from Rs. 11.74 lakh to Rs.

27.31 lakh. The Company believes in prudent management of operating cost as a percentage of GLP. The

Operating Expense Ratio was at 14.47% for FY15 which has been reduced to 12% in FY16. Company

endeavours to reduce the same to below 10% during FY17.

During the fiscal year, the company saw an upgrade in its Grading to MFI 3+ and was assigned a Rating of

BB+ for bank borrowing by CARE Ratings.

OPERATIONAL HIGHLIGHTS

Indicator 14-Mar 15-Mar 16-Mar

Districts 16 22 22

Branches 22 22 22

States 4 4 4

Members 28100 31001 40927

Groups 5226 5844 8266

Borrowers at the end of the period 28100 31001 40927

Women clients to total clients (%) 91.26% 89.47% 94.16%

Loan Officers

68

Total Staff 125 116 156

Loan disbursed during the period (Rs. Crore) 34.94 35.62 60.88

Loan Outstanding - Total portfolio (Rs. Crore) 28.79 30.11 51.80

RESOURCE MOBILIZATION

We have continued to keep the sources of funding diversified during the year and raised more than Rs. 69

cr. from Banks and Financial Institutions by way of term loans. The key highlight of funding during the

year was term loans from 5 PSU Banks amounting to Rs. 21.80 cr.

Indicator 14-Mar 15-Mar 16-Mar

Debt funding partners (Nos.) Banks 2 2 7

NBFCs 4 4 4

Investors 2 2 2

Debt Fund Raised (Rs. Cr.) Banks 3.00 6.50 23.30

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NBFCs 12.00 14.00 36.25

Investors 6.00 6.00 9.50

FUTURE OUTLOOK

Shikhar believes in enhancing the overall financial well-being of its customers and is working on a plan to

significantly graduate its customer base to provide better services by introducing new loan products. In

FY 2015-16, Shikhar planned to reach at gross portfolio of Rs. 45 cr. and the same has been achieved by

March with portfolio outstanding of Rs. 51.80 cr.

By 2017, Shikhar plans to reach Rs. 90 cr. portfolio with 70000 borrowers through 30 branches and by

2021 the aim is to reach at a portfolio of Rs. 600 cr. with 350000 borrowers through 70 branches.

REGULATORY COMPLIANCE:

The company is categorized as a systemically important non-deposit taking NBFC-MFI and has complied

with all applicable regulations of Reserve Bank of India. The Board of Directors hereby confirm that the

company did not accept any public deposits during the year and did not hold public deposits outstanding

at the end of the year. The company does not intend to accept deposits. The company is in compliance

with RBI notifications.

RISK MANAGEMENT AND MITIGATION

Company is following healthy Risk Management practices in its operational processes and procedures. An

inclusive Risk Management strategy is implemented thereby staff at all levels are associated in identifying

and managing risks.

Being a microfinance company, Shikhar is exposed to specific risks that are particular to its business and

the environment within which it operates, including interest rate volatility, economic cycle, credit risk

and market risk. Shikhar has laid down stringent credit norms through the Lending Policy Framework

approved by the Board.

The repayment rate is around 98.9% representing the robust quality of credit assessment and customer

service processes. Shikhar follows the conservative approach to manage the credit risk. Our credit risk is

contained through various credit assessment initiatives; the salient ones being credit policies focusing on

occupation, income levels and history of credit behaviour, mandatory credit bureau checks on all our

loans. To mitigate geographical concentration risk, we have expanded our operations to Rajasthan.

State 16- Mar 15-Mar 14-Mar

No of

Clients

GLP (in Cr.) No of

Client

GLP (in

Cr.)

No of

Client

GLP (in

Cr.)

Delhi 11721 15.41 10,050 9.79 10,133 9.71

Uttar Pradesh 20400 25.43 13,776 5.13 11,357 11.85

Haryana 5765 7.04 5,101 1.54 4,517 4.60

Uttarakhand 3041 3.52 2,074 13.40 2,093 2.63

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GRIEVANCE REDRESSAL MECHANISM

During FY 15-16, Company has further strengthened its Grievance Redressal Mechanism for the

customers and staff members. A separate department has been established along with the separate staff

to coordinate resolution of the customer’s grievances. In line with the Supreme Court Judgement, a

system for prevention and dealing with sexual harassment of women employees is also implemented in

the company. The grievances, compliances and deficiency in services of customers & staff are addressed

at various tiers of management. A grievance redressal forum for staff is functioning under the HR

department. Dedicated telephone and mobile number are made operational for registering complaints/

suggestions. The Grievances Redressal Mechanism is headed by Senior Management functionary at the

Head Office.

HR POLICY

Shikhar has an HR Policy in place that specifically mentions employee benefits as well as rights related to

their wages, working conditions, safety at work, non-discrimination etc. The details are clearly mentioned

in the employee contract so that they can have complete knowledge about his/her rights and privileges

and also about the duties they are expected to perform. As 15% of the staff comprises of women, there is

a committee to specifically look into the cases of abuse against women workers, if any. Due care is taken

to ensure that there is fair and justified treatment to all the women and they are not discriminated on the

basis of gender. A Sexual Harassment Committee has been set up, for women to put further their

complaints and seek justice. Also, two wheeler loans are allocated to staff to support their mobility

especially in difficult terrains. Staff satisfaction survey & exit interviews are conducted to help the

management fix any issues with regard to staff dissatisfaction. Company has appointed Head Internal

Audit as Grievance Redressal Officer (Nodal Officer) of the company.

MEASURING SOCIAL IMPACT

The mission of Shikhar is driven by creating opportunities to the excluded class through financial and

allied services in the urban, semi-urban and rural parts of India. The aim is to help the poor to win over

poverty that keeps them in a perpetual state of backwardness. The organization has set its own social

target for its branch network. Shikhar follows an end-to-end process to keep track of the social goals.

Hence a set of key social indicators have been developed to measure the achievement of these goals over

a period of time.

PROGRESS OUT OF POVERTY INDEX (PPI)

In order to track the poverty status of our clients, Shikhar use Progress out of Poverty Index (PPI). We

validate the data collected through random checks conducted by Internal Audit Team and Branch Staff.

The service quality is verified through telephone interviews and household visits. The social data is

collected through the client profile forms. The client profile forms capture indicators related to socio-

economic transformation and access to financial and non-financial services. Going forward, since the data

analysis is not supported by current software, company is moving to new software to capture real time

data and analysing client information and evaluate against social goal set for the company which will be

reviewed regularly by the management and Board of Directors. The software implementation will

complete in the current financial year.

TRAINING OF STAFF

The branch staffs are trained on client protection policy compliances. The staffs are equipped to adopt a

problem solving approach and to extend support for the growth and development of the clients. During

training through simulation exercises, staff are trained in order to help in arriving at decision in

conflicting situation to manage portfolio without compromising on client protection principles and code

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of conduct. They are regularly sensitised on matters of client protection principles, grievance redressal

mechanism, client relationship management, client data privacy etc.

CLIENT PROTECTION POLICY

Shikhar has client protection policies as a part of its Operational Manual that provides guidelines to the

staff and management to ensure that the products and services are in accordance with the client

protection principles. Entire staff is trained on the CPP and HR policies such as policies on fraud and

termination. It clearly mentions about punishment in case of irresponsible behaviour with clients, which

includes verbal and physical abuse, if any, that the staff may resort to in case of default.

CODE OF CONDUCT

A Code of Conduct is in place, which has been developed in line with the mandate set by the RBI. Each

staff is expected to sign and accept the CoC. Violation of the same can result in termination of the job.

CLIENT EDUCATION

Client education is given due emphasis as all the clients are given adequate information about the product

features prior to selling so that the client can make informed choice with regard to the purchase. They are

provided with educational materials, which are self-explanatory and illiteracy friendly.

AUDIT AND CONTROLS

The Company has well defined audit systems covering operational and financial aspect in place. Company

has well established Internal Audit Department, which support and helps the Management in identifying

risk and exercising adequate control over all the activities at the Branch level.

A Concurrent and Risk Mitigation (CARM) team has been put in place which is part of internal audit team.

CARM team has a whole new set of revised audit processes which includes surprise audits. Concurrent

audit is also undertaken instead of quarterly audit and grading is provided on various identified

benchmarks.

Audit observations are resolved through appropriate action plan or after receiving satisfactory

explanations. The Internal Audit Department submits reports to the Audit Committee of the Board on the

important audit observations at the branches. The audit observations have helped the Management to

streamline the branches and increase the efficiency, wherever required.

NEW INITIATIVES

Cash disbursement at branches has been eliminated. Disbursement is made into client’s individual bank

account. For this tie-ups for bulk disbursement have been done with Bank of Baroda and DCB Bank. This

has reduced cash handling risk and cost at field level.

Also collections obtained from clients are been deposited by our staff on the same day into nearby deposit

collection machines currently with Yes Bank. This has been an important step in reducing cash carrying

cost and risk.

Company is focused on looking at newer and innovative cash collecting solutions to drastically reduce

cash associated risk, costs and productivity leakages. In this regards, pilots interventions are proposed

with payment solutions vendors like, Vodafone M-Pesa Oxigen etc.

During the current financial year, company has got sanction from SIDBI for the technology fund to

implement the Craft Silicon’s BR.Net, a proven industry benchmarked solution. Further the company is in

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process to migrate its loan management system into Craft Silicon’s BR.Net, which will help the company

track the entire loan lifecycle.

Further, the company is planning to integrated this system with the Credit Bureau such that credit

decisions are automated based on prescribed parameters and available within minutes.

By order of the Board

For Shikhar Microfinance Pvt. Ltd

Date: 09.08.2016 Sd/- Sd/-

Place: New Delhi (N. R. Rayalu) (Satyavir Chakrapani)

Chairman MD & CEO

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DIRECTORS’ REPORT

To

The Members

Shikhar Microfinance Pvt. Ltd.

Your Directors have pleasure in submitting their Eighth Annual Report of the Company together with the

Audited Statements of Accounts for the year ended 31st March, 2016.

1. OVERVIEW

The Company was originally incorporated as Anup Leasing Private Limited on February 16, 1993 under the Companies Act, 1956 and renamed as Shikhar Microfinance Pvt. Ltd. as on March 25, 2009 after acquisition of ALPL. The Company was granted NBFC–Microfinance Institution ("NBFC–MFI") status by the RBI on November 12, 2013.

2. FINANCIAL RESULTS

The Company’s financial performance for the year under review along with previous year’s figures is

given hereunder:

Particulars For the year ended

31st March, 2016 (in Lakh)

For the year ended

31st March, 2015 (in Lakh)

Income 924.26 788.22

Other Income 64.19 36.91

Total Income 988.44 825.14

Less: Expenses 940.13 807.11

Profit/ (Loss) before Tax 48.88 18.03

Less: Provision for Tax 21.57 6.09

Profit after Tax 27.31 11.94

Share Capital 969.31 969.31

Debt (in Cr) 63.51 26.87

3. OPERATIONAL REVIEW

Shikhar has experienced different milestones as it continues to grow over the years, and at this stage

Shikhar is poised to move into diverse areas. While Shikhar sets high targets for itself, the strategy would

be to diversify the portfolio from urban to rural, to exploring new geographies, new products and new

partnerships. Operations in Uttar Pradesh have been expanded with two new branches in “Sadabad” and

“Kamlanagar” in districts of Hathras and Agra respectively Also, operations have been initiated in

“Rajasthan” with a new branch “Vidhyadharnagar” in Jaipur. Also five more branches are proposed to be

opened in coming months in Rajasthan and Uttar Pradesh.

Following is the brief highlight of the operations:

• Outstanding loan portfolio has increased from Rs. 29.86 Cr. to Rs. 51.80 Cr.

• Revenue from operations has increased from Rs. 7.88 Cr. to Rs. 9.24 Cr.

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• Income from FDR and Other income have increased from Rs. 37.12 lakh to Rs. 64.17 lakh.

• Profit after tax has increased from Rs. 11.74 lakh to Rs. 27.31 lakh.

Particulars FY 2015-16 FY 2014-15 FY 2013-14 FY 2012-13

Areas of

operation

NCR, Delhi,

Haryana,

Uttar Pradesh &

Uttarakhand

NCR, Delhi,

Haryana,

Uttar Pradesh &

Uttarakhand

NCR, Delhi,

Haryana, Uttar

Pradesh &

Uttarakhand

NCR, Delhi,

Haryana & Uttar

Pradesh

Districts 21 21 19 13

Number of

Branches

22 22 22 14

Loan outstanding

(Rs. Lakhs)

5180.29 2986.11 2879.06 1760.37

Active borrowers 40927 30640 28100 17544

Total staff 156 116 125 79

PAR > 30 days 1.68% 2.49% 1.41% 1.41%

OSS 102.5% 101.5% 102% 114.43%

4. SHIFTING OF REGISTERED OFFICE

The Board, vide board resolution dated April 29th, 2016 passed a board resolution, approving the

shifting of the Registered Office (due to deteriorating maintenance conditions) within the local limits

from A-113, 2nd Floor, Sector-7, Dwarka, New Delhi-110077 to A-112, 1st Floor, Sector-7, Dwarka, New

Delhi-110077. The board had confirmed the shifting of the Registered Office. Further compliances

regarding shifting have been compiled with, timely.

5. SOURCES/ APPLICATION OF FUNDS

During the F.Y. 15-16 company raised Rs. 69.05 Cr. by way of debt out of which Rs. 21.80 Cr. was raised

from public sector banks, Rs. 1.50 Cr. from private sector banks and Rs. 45.75 Cr. from Financial

Institutions/NBFCs.

The details of the fund raised during the year under review are as under;

Sl.

No.

Partner/ Funder (Banks/FIs) Funds received during

FY 15-16 (Rs. Cr)

1. Union Bank of India 4.90

2. State Bank Of India 4.90

3. State Bank Of Bikaner & Jaipur 3.00

4. Corporation Bank 5.00

5. Bank Of Baroda 4.00

6. DCB Bank 1.50

7. SIDBI 4.50

8. MUDRA 2.00

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9. MAS Financial Services Ltd. 14.50

10. Ananya Finance for Inclusive Growth 2.50

11. Maanveeya Development & Finance Pvt. Ltd. 6.00

12. Reliance Capital Limited 7.50

13. Dia Vikas Capital Pvt. Ltd. 8.75

TOTAL 69.05

6. REVISION OF FINANCIAL STATEMENT

There was no revision in the financial statements for the year under review.

7. CHANGE IN ACCOUNTING POLICY

There have been no material changes and commitments during the financial year of the Company but

company has changed its method of recognizing processing fees which is given on borrowed loans. The

same are now amortized over the period of loans, whereas earlier it was treated as expenses at the time

of sanction. This change will result in more appropriate presentation and recognition of the expense

incurred for which the economic benefits will be derived in the future years as well. Accordingly, the

impact of change in Accounting Policy has led to recognition of prior period income and creation of

unamortized processing cost. The same has been duly disclosed in the financial statement.

8. PARTICULARS OF MATERIAL ORDERS

During the year under review, neither any Regulator nor any Court or Tribunal has passed any significant

and material order impacting the going concern status and the Company’s operations in future.

9. NUMBER OF MEETINGS OF THE BOARD

A total of four Meetings of Board of Directors was held during the year under the review. As per Section

173 of the Companies Act, 2013, the Company has held at-least one Board Meeting in every three months.

The details of the Board Meeting held during the year under review are as under;

Sl. No. Date of Board Meeting Board Strength No. of Directors Present

1. June 24, 2015 7 5

2. July 16, 2015 7 7

3. November 6, 2015 7 7

4. March 3, 2016 7 7

10. DIRECTORS’ RESPONSIBILITY STATEMENT;

In pursuance of section 134(5) of the Companies Act, 2013, the Director’s hereby confirm that:

i. In the preparation of the Annual Accounts, the applicable accounting standards have been

followed along with proper explanation relating to material departures;

ii. The 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

Page | 16

state of affairs of the Company at the end of the financial year 2015-16 and of the profit of the

Company for that period;

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting

records in accordance with the provisions of the Companies Act, 1956 and Companies Act, 2013,

for safeguarding the assets of the Corporation and for preventing and detecting fraud and other

irregularities; and

iv. The Directors have prepared the annual accounts on a going concern basis.

v. The Directors had devised proper systems to ensure compliance with the provisions of all

applicable laws and such other system were adequate.

11. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR

ADVERSE REMARK OR DISCLAIMER MADE;

The reports of the Statutory Auditor for the year ended 31st March, 2016 are free from any

qualification, reservation or adverse remark by the auditor. The audit reports along with detailed audited

financials are attached in the report.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186;

During the year, company has not given any loans, guarantees or investments under section 186.

13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN

SUB-SECTION (1) OF SECTION 188 IN THE PRESCRIBED FORM;

During the reporting period, there have been no related party transactions as per the provisions of sub-

section (1) of section 188 of the Companies Act, 2013. However, a term loan of Rs. 25 lakh was given to

Shikhar Dairy Pvt. Ltd. for its agri - pilot project, Dairy Project, which is covered in the ordinary course of

business with the approval of board of directors, as two of the directors were common in both the

companies.

14. THE AMOUNTS, IF ANY, WHICH IT PROPOSES TO CARRY TO ANY RESERVES;

During the year, SMPL had transferred 20% of its Net Profit after Tax (Rs. 2,730,586/-) to the Statutory

Reserve in accordance with the provisions of Section 45-IC of Reserve Bank of India Act, 1934.

15. DIVIDEND;

Keeping in view the future fund requirement of the company, no dividend has been declared to equity

shareholders’ of the Company. However during the current Financial Year 2015 -16, an interim dividend

amounting to Rs. 6,75,000/- against the total dividend of Rs. 27 lakh at a fixed rate of 9% per annum on

30,00,000 (Thirty Lakhs) Optionally Convertible Preference Shares (OCPS) of Rs. 10 each of the company

has been paid to SIDBI.

16. THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS

AND OUTGO, IN SUCH MANNER AS MAY BE PRESCRIBED

There is no significant particular, relating to conversion of energy, technology absorption under the

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. During the period

under review, the company has no earnings and outgo in foreign exchange.

17. CORPORATE SOCIAL RESPONSIBILITY

As per Companies Act, 2013, the provision of CSR is not applicable on Shikhar Microfinance Pvt. Ltd.

Page | 17

18. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

The Board comprises of seven directors. During the year following changes had been made:

1. Mr. Cherian Thomas, Chairman resigned on July 31, 2015, as he undertook a new assignment

with World Vision India in Chennai. Subsequently Mr. N R Rayalu s taken on Board on October 6,

2015. He was appointed as the chairman of the company on March 3, 2016.

2. Further SIDBI and Dia Vikas Capital Pvt. Ltd. replaced their nominees on the Board of Shikhar.

Mr. Javed Ahmed Siddiqui, DGM- SIDBI and Mr. Saurabh Baroi, DGM- Dia Vikas Capital were taken

on Board.

3. All Directors / KMPs, members of Senior Management and all other employees shall abide by the

Code of Conduct. Directors/KMPs shall not acquire any disqualification and shall be persons of

sound integrity and honesty, apart from knowledge, experience etc. in their respective fields.

19. CHANGE IN THE NATURE OF BUSINESS, IF ANY;

Since 2009, Shikhar is engaged in urban & rural micro finance lending activities through Joint Liability

Group (JLG) model with a future focus to provide a range of financial products and services which covers

credit and insurance to economically backward families living in slums, unauthorized colonies and urban

& rural villages in the Delhi NCR region, Haryana, Uttarakhand and Uttar Pradesh. Shikhar provides

limited financial awareness, fiscal discipline and training and is looking forward to providing

comprehensive financial literacy programmers to its clients. It is also looking forward to facilitate direct

livelihood opportunities to its clients in the form of animal husbandry and agriculture interventions in the

geographical area of its operations. On account of the focus of the central government on financial

inclusion representatives and in surviving the unbanked and under privileged, there exists an

opportunity to partner with various players to leverage our client partnerships. There has been no

change in the nature of business during the year, however disbursement procedure has been made

changed from cash disbursement at branch offices to disbursement into the clients’ bank accounts.

20. CHANGES IN SHARE CAPITAL

During the period under review, company had merged the two classes of shares Class A and Class B into

one class. Different classes of shares had been converted into ordinary equity shares of Rs. 100/- each.

21. RATING & RATINGS

CRISIL had assigned grading of ‘mfR 4’ (the above average grading for MFI) which was applicable upto

December 2015. Further CAR assigned grading of 'MFI 3+' grading (second highest grading on the eight

point scale) on February 10, 2016. CARE assigned rating of BB+ (Moderate) as on April 19t, 2016 and

CARE also assigned a NSIC -CARE MSE Rating with rate SE 3B (Moderate performance capability).

22. CAPITAL ADEQUACY & QUALIFYING ASSETS

The Capital Adequacy Ratio and qualifying assets of the Company was 18.75% and 94% respectively as on

March 31, 2016 as against the minimum capital adequacy requirement and Qualifying assets of 15% and

85% respectively as per NBFC-MFI directions issued by RBI.

23. COMPLIANCE WITH RBI GUIDELINES

Your Company being an NBFC-MFI has complied with all applicable regulations of the Reserve Bank of

India for NBFC-MFIs. As per Non-Banking Finance Companies RBI Directions, 1998, the Directors hereby

report that the Company did not accept any public deposits during the year and did not have any public

deposits outstanding at the end of the year.

Page | 18

24. CODE OF CONDUCT, TRANSPARENCY AND CLIENT PROTECTION

The Company has fully implemented the Reserve Bank of India's Fair Practice Code and also

adopted the unified Code of Conduct of Sa-Dhan and Microfinance Institutions Network's (MFIN).

25. VARIOUS COMMITTEES

SMPL has three Board sub-committees viz.

1. Human Resource Committee:

The HRC Committee comprises of four directors, Dr. Shantanu Dutta, Mr. Saurabh Baroi, Mr.

Javed Ahmad Siddiqui and Mr. Thomas Vinoy Thomas.

2. Finance & Audit Committee:

The FAC Committee comprises of three directors, Mr. Anil Vidyarthi, Mr. Suarabh Baroi and Mr.

Thomas Vinoy Thomas.

3. Executive Committee:

The Executive Committee comprises of four directors, Dr. Shantanu Dutta, Mr. Anil Vidyarthi, Mr.

Satyavir Chakrapani and Mr. Thomas Vinoy Thomas.

The committees meet on regular basis and discuss and review various issues as referred in their

respective ToR.

26. AUDITOR:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and

Auditors) Rules, 2014, M/s Suri & Sudhir, Chartered Accountants, (Firm Reg. No. 000601N), the Statutory

Auditors of the Company, will hold office upto the conclusion of the ensuing Annual General Meeting. The

consent of the Auditors along with certificate under Section 139 of the Act have been obtained from the

Auditors to the effect that their appointment, if made, shall be in accordance with the prescribed

conditions and that they are eligible to hold the office of Auditors of the Company. The Board

recommends the appointment of M/s Suri & Sudhir Chartered Accountants as the Statutory Auditors of

the Company.

Necessary resolution for reappointment of the said Auditors is included in the Notice of AGM for seeking

approval of members.

27. EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the

prescribed format (MGT–9) is appended as "Annexure 1" to the Board's Report.

28. ACKNOWLEDGEMENT

The Directors wish to thank the customers, shareholders, bankers, and other service agencies for their

consistent support. The directors especially thank the employees for their substantial contribution to the

Company during the period under review.

By order of the Board

For Shikhar Microfinance Pvt. Ltd.

Sd/- Sd/-

Date: 09.08.2016 (N. R. Rayalu) (Satyavir Chakrapani)

Place: New Delhi Chairman MD & CEO

Page | 19

Annexure

FORM NO. MGT 9

EXTRACT OF ANNUAL RETURN

As on financial year ended on 31.03.2016

Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the

Company (Management & Administration) Rules, 2014.

II REGISTRATION & OTHER DETAILS:

1. CIN U74899DL1993PTC052165

2. Registration Date 16.02.1993, renamed on 21.10.2010

3. Name of the Company Shikhar Microfinance Pvt. Ltd.

4. Category/Sub-category of

the Company

Private Company Limited by Shares

5. Address of the Registered

office & contact details

A-112, 1st Floor, (behind ICICI), Palam Extn., Sector-7, Dwarka, New

Delhi- 110077.

6. Whether listed company No,

7. Name, Address & contact

details of the Registrar &

Transfer Agent, if any.

M/s Bigshare Services Pvt. Ltd.

E-2/3, Ansa Industrial Estate,

Sakivihar Road, Saki Naka, Andheri(E),

Mumbai- 40072,

Contact No.: 022-28470652

III PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10

% or more of the total turnover of the company shall be stated)

S.

No.

Name and Description of main products / services NIC Code of the

Product/service

% to total turnover

of the company

1 Microfinance Loans for income generation activity 99711352 100.00%

IIII PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES S.No. Name And Address

Of The Company

CIN/GLN HOLDING/SUBSIDIARY/ASSOCIATE % of

share

held

Applicable

Section

- - - - - -

IIV SHARE HOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

(1) Category-wise Share Holding

Category of

Shareholders

No. of Shares held at the beginning of

the year[As on 31-March-2015]

No. of Shares held at the end of the

year[As on 31-March-2016] %

Change

during

the

year

De

ma

t

Physical Total

% of

Total

Shares

Dema

t Physical Total

% of

Total

Shares

Page | 20

A. Promoters

(1) Indian

a) Individual/ HUF - 200 200 0.03 - 200 200 0.03 -

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

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

d) Bodies Corp. - - - - - - - - -

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

f) Any other - 54317 54317 5.60 - 54317 54317 5.60 -

Sub-Total A(1) - 54517 54517 5.63 - 54517 54517 5.63 -

(2) Foreign

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

b) Other

Individuals - - - - - - - -

-

c) Bodies

Corporate - - - - - - - -

-

d) Banks/ FIs - - - - - - - - -

e) Any Other - - - - - - - - -

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

Total

shareholding of

Promoter (A)

- 54517 54517 5.63 - 54517 54517 5.63 0

B. Public

Shareholding

1. Institutions

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

b) Banks / FI - - - - - - - - -

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

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

e) Venture Capital

Funds - - - - - - - -

-

f) Insurance

Companies - - - - - - - -

-

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

Page | 21

h) Foreign Venture

Capital Funds - - - - - - - -

-

i) Others (specify) - - - - - - - - -

Sub-total (B)(1):- - - - - - - - - -

2. Non-Institutions

a) Bodies Corp.

i) Indian - 674801 674801 69.62 - 674801 674801 69.62 -

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

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

i) Individual

shareholders

holding nominal

share capital up to

Rs. 1 lakh

- - - - - - - -

-

ii) Individual

shareholders

holding nominal

share capital in

excess of Rs 1 lakh

- - - - - - - -

-

c) Others (specify) - - - - - - - - -

Non Resident

Indians - - - - - - - -

-

Overseas

Corporate Bodies - - - - - - - -

-

Foreign Nationals - - - - - - - - -

Clearing Members - - - - - - - - -

Trusts - 240000 240000 24.76 240000 240000 24.76 -

Foreign Bodies-DR

Sub-total (B)(2):- - 914801 914801 94.37 914801 914801 94.37 -

Total Public

Shareholding

(B)=(B)(1)+ (B)(2)

- 914801 914801 94.37 914801 914801 94.37 -

C. Shares held by

Custodian for

GDRs & ADRs

- - - - - - - - -

Grand Total

(A+B+C) - 969318 969318 100.00 - 969318 969318 100.00 -

Page | 22

B) Shareholding of Promoter-

Sl. No. Shareholder’

s Name

Shareholding at the beginning of

the year

Shareholding at the end of the

year

% change

in

sharehol

ding

during

the year

No. of

Shares

% of

total

Shares

of the

compan

y

%of Shares

Pledged /

encumbered

to total

shares

No. of

Shares

% of

total

Shares

of the

compan

y

%of

Shares

Pledged /

encumber

ed to total

shares

1 Mr. Sayavir

Chakrapani

100 0.015 0 100 0.015 0 0

2 Mr. Vinoy

Thomas

100 0.015 0 100 0.015 0 0

3 Partners of

Shikhar Trust

54317 5.600 0 54317 5.620 0 0

C) Change in Promoters’ Shareholding (please specify, if there is no change)

SN Particulars Shareholding at the

beginning of the year

Cumulative

Shareholding during the

year

No. of

shares

% of total

shares of

the

company

No. of

shares

% of total

shares of the

company

At the beginning of the year - - - -

Date wise Increase / Decrease in Promoters

Shareholding during the year specifying the

reasons for increase / decrease (e.g. allotment

/transfer / bonus/ sweat equity etc.):

- - - -

At the end of the year - - - -

D) Shareholding Pattern of top ten Shareholders:

(Other than Directors, Promoters and Holders of GDRs and ADRs):

SN For Each of the Top 10

Shareholders

Shareholding at the


Cumulative

Shareholding during

the Year

No. of

shares

% of total

shares of the

company

No. of

shares

% of total

shares of

the

company

At the beginning of the year 969318 100 - -



reasons for increase /decrease (e.g. allotment /

- - - -

Page | 23

transfer / bonus/ sweat equity etc):

At the end of the year 969318 100 - -

E) Shareholding of Directors and Key Managerial Personnel:

SN Shareholding of each Directors and each Key

Managerial Personnel

Shareholding at the


Cumulative

Shareholding during

the Year

No. of

shares

% of total

shares of the

company

No. of

shares

% of total

shares of the

company

At the beginning of the year 200 0.015 - -



reasons for increase /decrease (e.g. allotment /

transfer / bonus/ sweat equity etc.):

- - - -

At the end of the year 200 0.015 - -

V) INDEBTEDNESS -Indebtedness of the Company including interest outstanding/accrued but not due

for payment. In `

Secured Loans

excluding

deposits

Unsecured

Loans

Deposits Total

Indebtedness

Indebtedness at the beginning of the

financial year

i) Principal Amount 21,96,64,895 4,90,45,450 - 26,87,10,345

ii) Interest due but not paid 0.00 0.00 - 0.00

iii) Interest accrued but not due 0.00 0.00 - 0.00

Total (i+ii+iii) 21,96,64,895 4,90,45,450 - 26,87,10,345

Change in Indebtedness during the

financial year

* Addition 57,40,00,000 5,75,00,000 - 63,15,00,000

* Reduction 20,70,98,979 3,00,45,455 - 237143584

Net Change 366901021 2,74,54,545 - 394356416

Indebtedness at the end of the

financial year

i) Principal Amount 58,65,65,916 7,64,99,995 0.00 66,30,65,911

ii) Interest due but not paid 0.00 0.00 0.00

iii) Interest accrued but not due 0.00 0.00 0.00

Total (i+ii+iii) 58,65,65,916 7,64,99,995 0.00 66,30,65,911

Page | 24

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL-

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Sl. No. Particulars of Remuneration Name of MD/WTD/ Manager Total Amount

Mr. Satyavir Chakrapani Mr. Vinoy Thomas

1 Gross salary (In `) Rs.14,23,800/ Rs.13,43,040/ Rs.27,66,840/

2. Stock Option 0 0

3. Sweat Equity 0 0

4. Commission

- as % of profit

- others, specify…

0 0

5. Others, please specify

0 0

Total (A) (In `)

Rs.14,23,800/ Rs.13,43,040/ Rs.27,66,840/

Ceiling as per the Act

B. Remuneration to other directors

(In `)

S.

No.

Particulars of

Remuneration

Name of Directors Total

Amount

1. Independent Directors Mr. Anil Vidyarthi Mr. N. R.

Rayalu

Fee for attending board

meetings

6,000 - - 6,000


committee meetings

24,000 - - 24,000

Commission - - - -

Others, please specify - - - -

Total (1) 30,000 - 30,000

2. Other Non-Executive

Directors

Mr. Javed Ahmad

Siddiqui

Dr. Shantanu

Dutta

Mr. Saurabh

Baroi


committee meetings

- - - -

Commission - - - -

Others, please specify - - - -

Total (2) - - - -

Total (B)=(1+2) 30,000 - 30,000

Total Managerial

Remuneration

- - - -

Overall Ceiling as per

the Act

- - - -

C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD

(In `)

SN Particulars of Remuneration Key Managerial Personnel

CEO CS CFO Total

NAME Mr. Satyavir

Chakrapani

Mr. Ravi

Shankar

Mr. Vinoy

Thomas

Page | 25

Kumar

1 Gross salary NIL 3,69,600 NIL 3,69,600

2 Stock Option - - - -

3 Sweat Equity - - - -

4 Commission - - - -

- as % of profit - - - -

others, specify… - - - -

5 Others, please specify - - - -

Total NIL 3,69,600 NIL 3,69,600

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)

A. COMPANY

Penalty - - - - -

Punishment - - - - -

Compounding - - - - -

B. DIRECTORS

Penalty - - - - -



C. OTHER OFFICERS IN DEFAULT

Penalty - - - - -



Page | 26

Annexure

Form No. 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)

Form for 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 arm’s length transactions under third proviso thereto 1. Details of contracts or arrangements or transactions not on an arm‟s length basis: N/A

All the transactions or contract or arrangements on an arm’s length basis (a) Name(s) of the related party and nature of relationship;

(b) Nature of contracts/arrangements/transactions;

(c) Duration of the contracts / arrangements/transactions;

(d) Salient terms of the contracts or arrangements or

transactions including the value, if any;

(e) Justification for entering into such contracts or

arrangements or transactions

(f) Date(s) of approval by the Board;

(g) Amount paid as advances, if any; and

(h) Date on which the special resolution was passed in

general meeting as required under first proviso to

section 188.

2. Details of material contracts or arrangement or transactions on an arm’s length basis:

(a) Name(s) of the related party and nature of

relationship;

Shikhar Dairy Pvt. Ltd.

Two directors of Shikhar Microfinance Pvt. Ltd.

namely, Mr. Satyavir Chakrapani and Mr.

Thomas Vinoy Thomas is holding directorship in

Shikhar Dairy Pvt. Ltd.

(b) Nature of

contracts/arrangements/transactions;

Term Loan for their Agri Pilot Project- Dairy

Project

(c) Duration of the contracts /

arrangements/transactions;

36 month

(d) Salient terms of the contracts or

arrangements or transactions including

the value, if any;

Rs. 15 Lakh

Bullet repayment at the end of 36 months.

(e) Date(s) of approval by the Board; June 24, 2015

(f) Amount paid as advances, if any; and Nil

Page | 27

OPERATIONS AT GLANCE

Mar-12 Mar-13 Mar-14 Mar-15 Mar-16

Gross Loan Portfolio(Rs.lakhs)

1269.1 1760.4 2879.1 2986.1 5140.29

Active Borrowers 14084 17544 28100 31001 40927

0

10000

20000

30000

40000

50000

Gross Loan Portfolio & Active Borrowers

Mar-12Mar-13

Mar-14Mar-15

Mar-16

247 418

540 608

602

1006 1097 1277 1409 1860

BORROWERS per FE and Branch

Borrowers per FE Borrowers per Branch

0.00%

10.00%

20.00%

30.00%

Mar-12Mar-13

Mar-14Mar-15

Mar-16

28.44% 20.84% 27.13%

26.66% 24.29%

Yield on Portfolio

Page | 28

96.00%

98.00%

100.00%

102.00%

104.00%

106.00%

108.00%

110.00%

Mar-12Mar-13

Mar-14Mar-15

Mar-16

105.48% 108.56%

102.02% 101.47% 102.50%

Operational Self Sufficiency (OSS)


FCR 6.54% 9.79% 14.71% 15.33% 14.16%

OCR 16.76% 11.94% 15.67% 13.05% 12.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Axi

s Ti

tle

FCR & OCR

Debt/ Equity0

2

4

6


Debt/ Equity 1.95 1.8 3.18 2.34 5.69

Debt Equity Ratio

Page | 29

INDEPENDENT AUDITOR’S REPORT

To

The Members of Shikhar Microfinance Pvt. Ltd.

Report on the Standalone Financial Statements

We have audited the accompanying financial statements of M/s Shikhar Microfinance Private Limited

(“the Company”), which comprise the Balance Sheet as at March 31, 2016, and the Statement of Profit and

Loss for the year, cash flow statement then ended, and a summary of significant accounting policies and

other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters 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

the accounting principles generally accepted in India including the Accounting Standards specified under

Section 133 of the Act, read with Rule 7 of the Companies (Account) Rules, 2014. This responsibility also

includes the maintenance of adequate accounting records in accordance with the provision of the Act for

safeguarding of the assets of the Company and for preventing and detecting the frauds and other

irregularities; selection and application of appropriate accounting policies; making judgements and

estimates that are reasonable and prudent; and design, implementation and maintenance of 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 Responsibility

Our 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 the matters which

are required to be included in the audit report under the provisions of the Act and the Rules made

thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of

the Act. Those standards require that we comply with the 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 control relevant to the Company’s

preparation and fair presentation of the financial statements that give 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

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.

Page | 30

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the

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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2016;

b) In the case of the Statement of Profit and Loss, of the Profit for the year ended on that date;

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal & Regulatory Requirements

1. 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 the paragraphs 3 and 4 of the Order.

1. 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 of our

knowledge and belief were necessary for the purpose of our audit;

b) In our opinion proper books of account as required by law have been kept by the Company so far

as appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and 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 referred

to in section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) On the basis of written representations received from the directors as on March 31, 2016, and

taken on record by the Board of Directors, none of the directors is disqualified as on March 31,

2016, 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”; and

g) With respect to the other matters included in the Auditor’s Report in accordance with the Rule 11

of the Companies (Audit & Auditors) Rules 2014, in our opinion and to our best of our

information and according to the explanations given to us:

i. The management has represented that the company does not have any pending

litigations and hence no provision/disclosure has been made against the same.

ii. That provision as required under the applicable laws or accounting standard for all the

material foreseeable losses as represented to us & identifiable from the financial

statements have been made in the books of accounts. The management has represented

that all loans/advances & recoverable termed as good are fully recoverable and

regarding loans/advances & recoverable termed as doubtful, due provision/disclosure

has been made against the same.

iii. There were no amount which was required to be transferred to Investor education &

Protection fund.

Place: New Delhi For Suri & Sudhir Date 30.05.2016 Chartered Accountants FRN: 000601N Sd/-

Anuj Arora (Partner) M. No: 504815

Page | 31

Annexure ‘A’ to the Auditors’ Report

The Annexure referred to in Independent Auditors’ Report of even date to the members of Shikhar

Microfinance Private Limited on the standalone financial statements for the year ended March 31, 2016;

i. we report that:

a) As per the information provided to us, The company has maintained proper records

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

b) As explained to us, All the assets have been physically verified by the management

during the year at regular intervals according to a regular program of verification which,

in our opinion, is reasonable having regard to the size of the company and nature of its

assets. No material discrepancies were noticed on such verification.

c) Since the company is not in the possession of any immovable property hence this clause

is not applicable.

ii. As the Company do not possess any Inventory therefore Para (ii) do not apply.

iii. The Company has granted unsecured loans to body corporate M/s Shikhar Dairy Pvt Ltd during

the Financial year amounting to Rs. 15,00,000/- covered in the register maintained under Section

189 of the Companies Act. The Maximum Amount outstanding during the year was Rs.40,00,000

and the year end balance of such loan amounted to Rs. 40,00,000.

iv. The company has not given any loans & advances to directors and parties covered under section

185 or loans and advances under section 186 of the Companies Act, 2013 and hence the

provisions of paragraph (iv) are not applicable to the company.

v. The company has not accepted any deposits and hence para (v) is not applicable.

vi. According to the information and explanations given to us, in our opinion the maintenance of cost

records have not been prescribed for the company by the Central Government under subsection

(1) of section 148 of the Companies Act.

vii. According to the information and explanation given to us and according to the books and records

as produced and examined by us, in our opinion, the company is fairly regular in depositing with

appropriate authorities undisputed statutory dues including Income Tax, Service Tax, Cess and

other statutory dues applicable to it. According to the information and explanations given to us,

no undisputed amounts payable in respect of provident fund, employees state insurance, income

tax, service tax, duty of customs, duty of excise, value added tax (VAT), cess and other statutory

dues were in arrears as at 31st March’2016 for a period of more than six months from the date

they become payable.

According to the information and explanation given to us, there are no dues of service tax,

income tax, cess and other statutory dues, which have not been deposited on account of any

dispute.

viii. In our opinion and according to the information and explanations given to us, the company has

not defaulted in repayment of dues to a financial institution or bank. In the absence of any

debentures, the reporting on the debenture dues is not applicable on the company.

ix. The company has not raised any money by way of Initial Public Offer (IPO) or further public offer

(including debt instruments). The term loans were applied for the purpose for which they were

obtained.

x. During the course of our examination of the books and records of the company, carried out in

accordance with the generally accepted auditing practices in India, and according to the

information and explanations given to us, we have neither come across any instance of material

fraud on or by the company, noticed or reported during the year, nor have we been informed of

such case by the management.

xi. Being a private limited company, the provisions of section 197 and likewise the reporting under

paragraph (xi) of the order are not applicable.

xii. The company is not a nidhi company & hence paragraph (xii) of the order is not applicable.

Page | 32

xiii. According to the information and explanations given to us and based on our examination of the

records of the company, transactions with the related parties are in compliance with sections

177 and 188 of the Act where applicable and details of such transactions have been disclosed in

the financial statements as required by the applicable accounting standard.

xiv. The company has not made any preferential placement of shares during the year under review

and thus the Clause is not applicable to the company.

xv. The company has not entered into non-cash transactions with directors or persons connected

with him. Accordingly, paragraph (xv) of the order is not applicable.

xvi. The company is required to hold Certificate of Registration under section 45-IA of the Reserve

Bank of India Act 1934, and they hold a Certificate of Registration under section 45-IA of the

Reserve Bank of India Act 1934 vide certificate no. RBI Reg No. NBFC MFI B- 14.02362 /

23/12/2010.

Place: New Delhi For Suri & Sudhir Date 30.05.2016 Chartered Accountants FRN: 000601N

Sd/- Anuj Arora

(Partner) M. No: 504815

Page | 33

SHIKHAR MICROFINANCE PVT LTD

CIN : U74899DL1993PTC052165

BALANCE SHEET AS ON MARCH 31, 2016

Notes on Financial

Statements

1 to 36

For Suri & Sudhir For and on behalf of the Board of Directors Of

Firm Reg No. 000601N Shikhar Microfinance Pvt Ltd. Chartered Accountants

(Anuj Arora ) Ravi Shankar Kumar Satyavir Chakrapani Thomas Vinoy

Thomas Partner Company Secretary Managing Director & Director & M.No. 504815 M. No.- A32681 Chief Executive Officer Chief Finance

Officer Place: New Delhi DIN 02422305 DIN 02571265 Date :30.05.2016

Note As on Mar 31, 2016 As on Mar 31, 2015

EQUITY AND LIABILITIES In Rs.

Shareholders’ funds

(a) Share capital 3 12,69,31,800 12,69,31,800

(b) Reserves and surplus 4 -60,98,202 -56,69,923

(c) Share Application Money 0 2,60,000

12,08,33,598 12,15,21,877

Share Application Money Pending Allotment - -

Non-current liabilities

(a) Long Term Borrowings 5 31,95,74,223 8,31,51,673

(b) Deferred tax liability (Net) 6 - 32,174

(c) Other Long Term Liabilities 7 10,00,794 5,09,376

(d) Long Term Provisions 8 13,750.00 -

Total Non Current Liabilities 32,05,88,767 8,36,93,223

Current liabilities

(a) Short Term Borrowings 9 34,34,91,688 18,55,58,672

(b) Other current liabilities 10 1,85,72,716 1,12,43,788

(c) Short-term provisions 11 57,55,035 30,41,456

Total Current Liabilities 36,78,19,439 19,98,43,916

TOTAL 80,92,41,805 40,50,59,016

ASSETS In Rs.

Non-current assets

(a) Fixed assets

(i) Tangible assets 12 19,21,531 14,72,708

(b) Long Term Loans & Advances 13 14,30,515 17,87,978

(c) Deferred tax Assets (Net) 6 1,49,721.04 -

(d) Loan Portfolio 15 9,70,83,007 5,67,38,279

(d) Other Non Current Assets 14 77,20,356 5,64,004

Total Non Current Assets 10,83,05,130 6,05,62,969

Current assets

(a) Cash and bank balances 16 26,28,66,854 8,86,40,040

(b) Loan Portfolio 15 42,09,46,328 24,43,72,924

(c) Short-term loans and advances 17 11,56,956 4,32,160

(d) Other current assets 18 1,59,66,537 1,10,50,923

Total Current Assets 70,09,36,675 34,44,96,047

TOTAL 80,92,41,805 40,50,59,016

Page | 34


CIN : U74899DL1993PTC052165

PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2016

In Rs

PARTICULARS Note Year ended Mar 31, 2016

Year ended Mar 31, 2015

I Income

Revenue from operations 19 9,24,25,584 7,88,22,484

Other Income 20 64,18,731 36,91,423

TOTAL INCOME (I) 9,88,44,315 8,25,13,907

II Expenses

Employee benefit expenses 21 2,98,66,667 2,73,38,240

Finance Cost 22 4,71,20,992 3,94,43,323

Depreciation & Amortization expense 23 5,62,250 4,81,636

Provision for Loans 24 21,42,493 1,62,401

Other expenses 25 1,43,21,060 1,32,85,376

TOTAL EXPENSES (II) 9,40,13,462 8,07,10,976

III Profit before exceptional and extraordinary items and tax (I-II)

48,30,853 18,02,931

IV Exceptional items

Add : Unamortizated Processing Fee of earlier year ( Refer Note C )

3,49,145 -

Less : Prior Period Expense - Provision for Loans

6,250 -

Less : MAT Credit of earlier year written off

2,85,859 -

V Profit before extraordinary items and tax (III-IV)

48,87,889 18,02,931

VI Extraordinary Items

Excess provision of earlier years written back

- -

VII Profit Before Tax (V- VI)

48,87,889 18,02,931

VIII Tax expense:

Current tax

21,48,698 6,25,274

MAT Credit availed

1,90,500 -

Deferred tax

-1,81,895 -16,284

IX Profit After Tax (VII-VIII)

27,30,586 11,93,941

(ii) Interest Accrued but not due includes Rs Nil due to Managing Director & CEO of the Company.

Tax expense of discontinuing operations

Profit/(loss) from Discontinuing operations (after tax) (XII-XIII)

Profit (Loss) for the period (XI + XIV)

Earnings per equity share (face value Rs 100):

Basic and Diluted Earning Per Share 26 -0.44 -2.03

Notes on Financial

Statements

1 to 36

For Suri & Sudhir For and on behalf of the Board of Directors Of Firm Reg No. 000601N Shikhar Microfinance Pvt Ltd. Chartered Accountants

(Anuj Arora ) Ravi Shankar Kumar Satyavir Chakrapani Thomas Vinoy Thomas Partner Company Secretary Managing Director & Director & M.No. 504815 Chief Executive Officer Chief Finance Officer Place: New Delhi M.No. A32681 DIN 02422305 DIN 02571265 Date :30.05.2016

Page | 35


CIN : U74899DL1993PTC052165

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2016

In. Rs.

PARTICULARS



CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before taxation and extra ordinary items 48,87,889 18,02,931

Adjustment for:

Depreciation 4,67,752 4,33,648

Preliminary Expenses Written Off 94,498 47,988

Unamortizated Processing Fee of earlier year -3,49,145 -

Less: Prior Period Expense Provision for Loans 6,250 -

Micro Finance Loan W/off 8,43,369 25,12,951

Prov.for Dividend on Preference Shares including DDT -31,58,865 -

Provision for Loan Loss 21,42,493 1,62,401

Operating Profit before working capital changes 49,34,241 49,59,919

Adjustments for:

Decrease/(Increase) in Loans Portfolio - 21,77,61,501 -1,32,18,608

Decrease/(Increase) in Current Assets and Loans & Advances - 56,40,410 -93,52,934

Increase/(decrease) in Short Term Provisions 5,78,586 -3,88,806

Increase/ (Decrease) in other Current Liabilities 58,02,144 26,91,425

Increase/ (Decrease) in Other Long Term Liabilities & Provisions 4,91,418 37,794

Decrease/(Increase) in Other Non Current Asset - 69,01,704

Decrease/(Increase) in Long Term Loans & Advances -12,12,649 -20,25,366

Cash generated from operations -21,97,09,875 -1,72,96,576

Less: Direct Taxes paid -15,70,112 -10,63,858

Net Cash Flow from operating activities Before extraordinary items -21,81,39,763 -1,62,32,718

Extraordinary items - -

Net Cash Flow from operating activities -21,81,39,763 -1,62,32,718

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets -9,16,575 -4,18,656

Amount placed in bank deposits not considered as cash & cash equivalents(net) -15,19,50,000 -3,61,25,000

Net Cash Flow from Investing activities -15,28,66,575 -3,65,43,656

Page | 36

In. Rs.

PARTICULARS



CASH FLOW FROM FINANCING ACTIVITIES

Issue of Shares :

Equity Share Capital including Share Premium - 4,18,93,200

Equity Share Application Money -2,60,000 2,60,000

ROC Filing Fees - -4,32,000

Dividend Paid -8,12,414 -7,89,716

Secured Borrowings(Net) 36,69,01,021 1,73,26,773

Unsecured Borrowings(Net) 2,74,54,544 13,18,180

Net Cash Flow from Financing Activities 39,32,83,151 5,95,76,437

Net Increase in cash/ cash equivalents 2,22,76,813 68,00,064

Add: Cash and Cash equivalents at the beginning of the year 1,12,53,041 44,52,977

Cash & cash equivalents at end of period 3,35,29,854 1,12,53,041

Notes on Financial

Statements

1 to 36

For Suri & Sudhir For and on behalf of the Board of Directors Of Firm Reg No. 000601N Shikhar Microfinance Pvt Ltd. Chartered Accountants

(Anuj Arora ) Ravi Shankar Kumar Satyavir Chakrapani Thomas Vinoy Thomas Partner Company Secretary Managing Director & Director & M.No. 504815 Chief Executive Officer Chief Finance Officer Place: New Delhi M.No. A32681 DIN 02422305 DIN 02571265 Date :30.05.2016

Page | 37

Shikhar Microfinance Pvt Ltd

Notes to financial statements for the year ended March 31, 2016

1. Company Background

Shikhar Development Foundation (SDF) the not for profit Microfinance Institution registered as a

Trust in september 2007 under the Indian Trust Act, 1882 , came into existence with intent to develop

and implement community focused development interventions. SDF envisaged to leverage the benefits of

micro-lending to the marginalized rural and urban communities through sequential lending providing

both savings and loan facilities at various levels.

SDF in its Board Meeting held on November 22, 2008 decided to acquire a Non-Banking Finance Company

(NBFC) for undertaking its microfinance operations& it was decided that a SPV in the form of a for-profit

trust would be created to invest into the NBFC. Accordingly, Partners of Shikhar Trust (POST), a private

mutual benefit trust was registered to act as a Special Purpose Vehicle for acquiring shares of Anup

Leasing Pvt. Ltd., (ALPL),NBFC registered in Delhi and incorporated on February 16, 1993. The ownership

and control of NBFC was transferred on March 25, 2009 through transfer of shares of the previous

shareholders.

ALPL has also received approval from both RBI in December 2010 and Ministry of Corporate Affairs in

October 2010 for change of its name from Anup Leasing Pvt. Ltd. to Shikhar Microfinance Private Limited

(SMPL). SMPL has also been registered with the RBI as an NBFC-MFI with effect from November 12, 2013.

Shikhar operates in the Delhi NCR region, Haryana, Uttarakhand and western Uttar Pradesh providing

microcredit services (joint-liability-group model) and life insurance to economically backward

communities living in slums, unauthorized colonies, rural and urban villages. Shikhar has currently

extended operations to 4 States and 176 Location covered by 20 branches, and has more than 30,000

active loan clients.

The Authorized Share Capital of the company is Rs. 16.00 Cr divided into;

a) 13,00,000 ordinary equity shares of Rs. 100/- carrying one voting rights per shares at all times.

b) 30,00,000 Redeemable Optionally Convertible Preference Shares (OCPS) of face value of Rs. 10/-

each with option of cumulative and non-cumulative.

Nature of Operations

Shikhar Microfinance Pvt. Ltd. (“the Company”) is engaged in micro finance lending activities for

providing small loans to target clientele for income generation and livelihood purposes using the Joint

Liability Group (JLG) methodology. All financial transactions are conducted in the group meetings

organized near the habitats of these women. The operations in the initial stages of group formation,

involves efforts on development training on financial discipline, and constant monitoring through

fortnightly meetings and providing financial and support services at the doorsteps of the borrowers to

ensure high rates of recovery. The Company follows collection process for recovery of loans and interest

accrued thereon at the choice of the borrower, either, weekly, fortnightly or monthly. The Company has

provided insurance cover to all the borrowers in association with various insurance companies in line

with the loan amount extended to the target clients.

Page | 38

2. Significant Accounting Policies

A. Basis of Preparation of Financial Statements

The financial statements have been prepared to comply in all material respects with the accounting

standards notified by Companies (Accounting Standards) Rules,2006 (as amended), relevant

provisions of the Companies Act, 2013 and companies (Accounts) Rule,2013, amended from time to

time and the provisions of the Reserve Bank of India as applicable to a non banking financial

company. Financial Statements have been prepared under the historical cost convention on an

accrual basis of accounting.

B. Use of Estimates

The preparation of financial statements, in accordance with the generally accepted Accounting

Principles, require the management to make estimates and assumptions that effect the reported

amounts of assets and liabilities, disclosure of contingent liabilities at the date of financial

statements, reported amount of expenses and revenues of the year and the amortized amount of

preliminary expenditure of the year. Estimates and underlining assumptions are reviewed on

ongoing basis.Actual results could differ from these estimates. Any revision to accounting estimate is

recognized prospectively in current and future at the date of the financial statements.

C. Change in Accounting Policies

Effective from 01.04.2015, The Company has changed its method of recognizing Processing Fees on

Borrowing of Loans over the period of loans. Processing Fee on Borrowing of loans are now

amortised over the period of loan, whereas earlier it was expenses off at the time sanction. This

change will result in more appropriate presentation and recognition of the expense incurred for

which the economic benefits will be derived in the future years as well. Accordingly, the impact of

change in Accounting Policy has led to recognition of prior period income and creation of

unamortized processing cost the same has been duly disclosed in the financial statement.

Borrowing Cost

Borrowing cost which are directly attributable to the acquisition /construction of fixed assets, till

the time such assets are ready for intended use, capitalized as a part of cost of assets.

Borrowing cost consist of interest and other borrowing cost that the company incurred in

connection with borrowing of the funds. Interest cost is expensed off on accrual basis. Other

incidental borrowing cost namely processing fees are amortised over the period of loan. In case of

unamortized identified borrowing cost is outstanding at the year end, it is classified under loans and

advances as unamortized cost of borrowings.

D. Current-Non Current Classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

i. It is to be realized in, or is intended for sale or consumption in, the Company’s normal

operating cycle;

ii. It is held primarily for the purpose of being traded;

iii. It is expected to be realized within 12 months after the reporting date;or

iv. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a

liability for at least 12 months after the reporting date.

Page | 39

Current assets include current portion of non- current financial assets. All other assets are classified

as Non- current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

i. It is expected to be settled in the Company’s normal operating cycle;

ii. It is held primarily for the purpose of being traded;

iii. It is due to be settled within 12 months after the reporting date;or

iv. The company does not have an unconditional right to defer the settlement of liability for

at least 12 months after the reporting date. Terms of liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

Current liabilities include current portion of non- current financial liabilities. All other liabilities are

classified as non current.

Operating Cycle

Company has ascertained its operating cycle as 12 months that is the time gap between the

acquisition of assets for processing and their realization in cash or cash equivalents.

E. Cash & Cash Equivalents

Cash & cash equivalents for the purpose of cash flow statement comprises cash on hand, cash in

bank, fixed deposits and other short term highly liquid investments with an original maturity of

three months or less that are readily convertible into known amount of cash and which are subject

to an insignificant risk of change in value.

F. Cash Flow Statement

Cash flow are reported using the indirect method whereby cashflows from operating, investing &

financing activities of the company are segregated and profit before tax is adjusted for the effect of

transactions of non-cash nature or any deferrals or accruals of past or future cash receipts or

payments.

G. Fixed Assets

All fixed assets are stated at cost less accumulated depreciation and impairment loss. Cost is

inclusive of all costs relating to the acquisition, pre-operational expenses and installation of fixed

assets to bring the assets to working condition for intended use.

Subsequent expenditures related to an item of tangible fixed assets are added to its book value only

if they increase the future benefits from the existing assets beyond its previously assessed standard

of performance.

H. Depreciation

With effect from 1st April 2014, the management has re-assessed and revised the estimated useful

life of tangible fixed assets as per Schedule II of Companies Act 2013. Depreciation on all fixed assets

of the Company is provided on Straight Line method at the rates specified in schedule II of the

Companies Act, 2013.

Page | 40

I. Impairment of Assets

The Company identifies impairable assets based on individual assets or cash generating unit concept

at the year-end in terms of Para 5.13 of AS-28 issued by the ICAI for the purpose of arriving at

impairment loss thereon, if any, being the difference between the book value and recoverable value

of relevant assets. Impairment loss when crystallizes is charged against revenue of the year.

J. 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.

i. Interest income on all loans given which are standard is recognized under accrual basis. In

case of any default on loan repayment interest income is recognized only when realized.

ii. Interest income on deposits with banks is recognized on an accrual basis taking into account

the amount outstanding and rate applicable.

iii. Processing fees on loans are recognized on upfront basis.

iv. Interest on term deposits has been accrued on the time proportion basis, using the

underlying interest rates.

v. Dividend income is accounted when the right to receive dividend is established.

All other income is recognized on an accrual basis.

K. Classification of Loan Portfolio and provisioning policy

1. Classification of loan portfolio is currently governed in terms of the provisioning undertaken

as per Master Circular- Introduction of New Category of NBFCs - ‘Non-Banking Financial

Company-Micro Finance Institutions’ (NBFC-MFIs) – Directions, July 1, 2014.

Standard Asset: Asset in respect of which, no default in repayment of principal or payment

of interest is perceived and which does not disclose any problem nor carry more than

normal risk attached to a business.

Non performing Asset: Asset for which, interest/principal payment has remained overdue

for a period of 90 days or more.

2. Provisioning Policy for Portfolio Loans & Advances

Provision for MF Portfolio

Provisions for non-performing assets are made as per the Prudential Master Circular-

Introduction of New Category of NBFCs - ‘Non-Banking Financial Company-Micro Finance

Institutions’ (NBFC-MFIs) – Directions, July 1, 2014.

The aggregate loan provision maintained by the Company at any point is not less than the

higher of

a) 1% of the outstanding loan portfolio or

b) 50%of the aggregate loan installment which are overdue for more than 90days and less

than 180 days and 100% of the aggregate loan installments which are overdue for 180

days or more.

Provision for MF Portfolio

Provisions for Standard assets are made as per the Revised Regulatory Framework for

NBFC, November 10, 2014.

A provision for standard assets at 0.30% of the outstanding Portfolio is required to be made.

Page | 41

However the company does not make provisions for the cases in which death of a borrower has

occurred as the company gets all the borrowers insured and complete amount is recoverable from the

insurance companies.

L. Expenditure

The provision is made for all the known losses and liabilities.

M. Income Taxes

i. Current tax is the amount of tax payable on the taxable income for the year as determined in

accordance with the provisions of Income Tax Act, 1961.

ii. As per Accounting Standard (AS) 22 issued by The Institute of Chartered Accountants of India

(ICAI), Deferred Tax resulting from “Timing Difference” between accounting and taxable

profits/(losses) is accounted for using the tax rates and laws that have been enacted or

substantially enacted as on the Balance Sheet date. Deferred tax assets are recognized only to

the extent that there is a reasonable certainty that sufficient future taxable income will be

available against which such deferred tax assets can be realized In situations where the

company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are

recognized only if there is virtual certainty supported by convincing evidence that they can

be realized against future taxable profits.

iii. At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It

recognizes unrecognized deferred tax assets to the extent that it has become reasonably

certain or virtually certain, as the case may be that sufficient future taxable income will be

available against which such deferred tax assets can be realized.

N. Employee Benefits

• Defined Contribution Plan

Company’s contribution to Provident Fund, ESIC are considered as defined contribution plans and

are charged to the Statement of Profit & Loss as they fall due, based on the amount of contribution

required to be made.

• Defined benefit plan

The company provides for gratuity, a defined retirement benefit plan covering eligible employees.

Provision for gratuity is calculated as per Gratuity Act and is recognized as a liability in Balance

Sheet. Payment of Gratuity made to eligible employees charged to the statement of Profit & Loss

for the year.

• Compensated Absences

Based on the leave rules of the company, employees are permitted to accumulate leaves. Provision

for any unavailed privilege leave to the extent encashable is recognized as a liability in Balance

Sheet. Any unavailed privilege leave to the extent encashable once paid to the eligible employee is

charged to the statement of Profit & Loss for the year.

Page | 42

O. Provisions

Provisions involving substantial degree of estimation in measurement are recognized when there is a

present obligation as a result of past events: it is probable that an outflow of resources will be

required to settle the obligation, in respect of which a reliable estimate can be made. Contingent

liabilities are not recognized, but are disclosed in the notes. Contingent assets are neither recognized

nor disclosed in the financial statements..

P. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit / loss for the year attributable to

equity share holders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period

attributable to equity share holders and the weighted average number of equity shares outstanding

during the period are adjusted for the effects of all dilutive potential equity shares. Dilutive potential

equity shares are deemed to have been converted as of the beginning of the year, unless they have

been issued at a later time.

No interest has been paid/ payable by the Company during the year to the suppliers covered under

the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into

account only those suppliers who have responded to enquiries made by the Company for this

purpose.

3 Share Capital

Particulars As at March 31, 2016 As at March 31, 2015

Nos. In Rs Nos. In Rs

AUTHORISED

Equity Share Capital

Class "A" equity shares of `100 each - - 320,000 32,000,000

Class "B" equity shares of `100 each - - 380,000 38,000,000

Ordinary Class Shares of `100 each 1,300,000 130,000,000 600,000 60,000,000

1,300,000 130,000,000 1,300,000 130,000,000

Preference Share Capital

9% Redeemable Optionally Convertible

Preference Shares of `10 each

3,000,000 30,000,000 3,000,000 30,000,000

3,000,000 30,000,000 3,000,000 30,000,000

ISSUED, SUBSCRIBED AND PAID-UP

Equity Share Capital

Class "A" equity shares of `100 each - 250,001 25,000,100

Class "B" equity shares of `100 each - - 324,517 32,451,700

Ordinary Class Shares of `100 each 969,318 96,931,800 394,800 39,480,000

969,318 96,931,800 969,318 96,931,800

Page | 43

Preference Share Capital

9% Redeemable Optionally Convertible


3,000,000 30,000,000 3,000,000 30,000,000

3,000,000 30,000,000 3,000,000 30,000,000

i) Rights attached with shares :-

Current Year FY 2015-16:

All 1300000 equity shares of 100/- each carrying one vote per share.

Previous Year FY 2014-15:

Rights attached with different class of

shares were :

a) Class “A” equity shares total 320,000 equity shares of ` 100/- each, the total voting rights of all

Class A shares will be equal to 1.07 at all times.

b) Class “B” equity shares total 380,000 equity shares of ` 100/- each, the total voting rights of all

Class B shares will be equal to 0.93 at all times.

c) Ordinary Class equity shares total 600,000 equity shares of ` 100/- each, the total voting rights

of all Ordinary Class Equity shares will be equal to 1 at all times.

ii) Dividend on 9% Optionally Convertible Preference Shares (OCPS) is to be paid within 3 months from

the close of Financial Year. Dividend, if not paid, will be cumulative in nature. Dividend distribution

tax and other statutory charges and levies thereon would be borne by the company. In case, SIDBI

decides to convert outstanding OCPS into equity shares, either in full or in parts, OCPS would be

converted into Equity Shares at break-up value (book value) of MFI based on Last Financial Year’s

audited results. In case, SIDBI decides not to convert OCPS into equity shares or converts only part of

OCPS into equity, then OCPS would be redeemable as follows:

a) 50% of outstanding OCPS at the end of 4 years.

b) Remaining 50% outstanding OCPS at the end of 5 years.

Any dividend payable/ unpaid would also be paid along with redemption of OCPS.

3.1 Reconciliation of the number of shares outstanding at the beginning

and at the end of the year.

Particulars As at March 31, 2016 As at March 31, 2015

Number In Rs Number In Rs

Class "A" Shares

Equity Shares of ` 100 each

Outstanding at the beginning of the year 250,001 25,000,100 250,001 25,000,100

Issued during the year - - - -

Bought back during the year - - - -

Converted to Ordinary Shares (250,001) (25,000,100)

Class "A" Shares Outstanding at the

end of the year

- - 250,001 25,000,100

Page | 44

Class "B" Shares


Outstanding at the beginning of the

year

324,517 32,451,700 324,517 32,451,700

Issued during the year - - - -


Converted to Ordinary Shares (324,517) (32,451,700)

Class "B" Shares Outstanding at the

end of the year

- - 324,517 32,451,700

Ordinary Shares


Outstanding at the beginning of the year

394,800

39,480,000

394,800

39,480,000

Issued during the year

Bought back during the year

Converted from Class "A" Shares

250,001

25,000,100

Converted from Class "B" Shares

324,517

32,451,700

Ordinary Shares Outstanding at the

end of the year

969,318

96,931,800

394,800

39,480,000

9% Redeemable Optionally Convertible Preference Shares


Outstanding at the beginning of the year

3,000,000

30,000,000

3,000,000

30,000,000

Issued during the year - -


9 % Optionally con.Preference Shares

Outstanding at the end of the year

3,000,000

30,000,000

3,000,000

30,000,000

3.2 Details of the Shareholders Holding more than 5% of the Share capital


Name of Shareholder As at March 31, 2016 As at March 31, 2015

Number % of Holding Number % of Holding

Class "A" Shares

Dia Vikas Capital Pvt. Ltd. - 0.00% 250,001 25.79%

- 0.00% 250,001 25.79%

Class "B" Shares

Dia Vikas Capital Pvt. Ltd. - 0.00% 30,000 3.09%

Shikhar Development Foundation - 0.00% 240,000 24.76%

Partners of Shikhar Trust - 0.00% 54,317 5.60%

Page | 45

- 0.00% 324,317 33.46%

Ordinary Class Shares

Dia Vikas Capital Pvt. Ltd. 481,101 49.63% 201,100 20.75%

Shikhar Development Foundation 240,000 24.76% - 0.00%

Partners of Shikhar Trust 54,317 5.60%

Small Industries Development Bank of

India

193,700

19.98%

193,700

19.98%

969,118 99.98% 394,800 40.73%

Total 969,118 99.98% 969,118 99.98%

9% Redeemable Optionally Convertible Preference Shares of ` 10 each

Name of Shareholder As at March 31, 2016 As at March 31, 2015

Number % of Holding Number % of Holding

SIDBI (OCPS) 3,000,000 100.00% 3,000,000 100%

3,000,000 100.00% 3,000,000 100%


Notes to Financial Statements for the year ended March 31, 2016

4 Reserves & Surplus

Particulars As at March 31, 2016 (In Rs)

As at March 31, 2015 (In Rs)

(a) Statutory Reserve (As per Section 45-IC of RBI Act,1934)

Opening Statutory Reserve 238,788 -

20% out of Current year Profit 546,117 -

Reinstatement of Statutory Reserve of Rs 2,34,404 for FYR 2013-14 234,404 238,788

Closing Statutory Reserve 1,019,310 238,788

(b) Security Premium 2,413,200 2,413,200

(c) General Reserve

Opening Balance -8,321,911 -5,984,642

Add : Profit for the year 2,730,586 1,193,941

Less: Transfer to Staturory Reserve -780,521 -238,788

Net Profit 1,950,065 955,153

Less:Prov.for Dividend on Preference Shares including DDT -3,158,865 -3,158,865

Less: Under provision of depreciation now adjusted with retained earnings

- -133,557

Total Current Year Profit -1,208,800 -2,337,269

Net surplus in the statement of Profit & loss -9,530,711 -8,321,911

Total Reserves & Surplus -6,098,202 -5,669,923

Page | 46

5 Long Term Borrowings

Particulars As at March 31, 2016

(In Rs)

As at March 31, 2015

(In Rs)

Secured

(a) Term Loans:-

From Banks 148,745,759 21,660,000

From Other Parties 130,995,131 33,991,673

Unsecured Loans

(a) Loans and advances from related parties 39,833,333 27,500,000

Total 319,574,223 83,151,673

5.1 Secured Loans mentioned above are secured by way of charge on Loan Portfolio of the company

5.2 Secured Loans from Banks have been further guaranteed by Managing Director, Mr. Satyavir

Chakrapani and CFO, Mr.Thomas Vinoy Thomas.

5.3 Secured Loans mentioned above are further secured by way of Lien on Fixed Deposit of the

company.

6 Deferred tax Assets/liability (Net)


(In Rs)


(In Rs)

Deferred tax liability

Related to depreciation on fixed assets 2,091 10,729

Related to Preliminary Expenses 95,017 65,817

97,108 55,088

Deferred Tax Asset

Related to Performance Incentives Payable to Employees, Gratuity & Leave Encashment

246,829 22,914

Total Deferred Tax Assets (Net) -149,721 32,174

7 Other Long Term Liabilities


(In Rs)


(In Rs)

Trade Payables - -

Others * 1,000,794 509,376

Total 1,000,794 509,376

*Includes Staff Security Deposit

8 Long Term Provisions


(In Rs)


(In Rs)

Provision against Standard Assets 13,750 -

Total 13,750 -

Page | 47

9 Short Term Borrowings


(In Rs)


(In Rs)

Secured

(a) Term Loans:-

From Banks 100,715,042 26,319,719

From Other Parties 206,109,984 137,693,503

Unsecured Loans

(a) Loans and advances from related parties 36,666,662 21,545,450

Total 343,491,688 185,558,672

9.1 Secured Loans mentioned above are secured by way of charge on Loan Portfolio of the company

9.2 Secured Loans from banks have been further guaranteed by Managing Director, Mr. Satyavir

Chakrapani and CFO, Mr.Thomas Vinoy Thomas.

9.3 Secured Loans mentioned above are further secured by way of on Fixed Deposit of the company.

10 Other Current Liabilities


(In Rs)

As at March 31,

2015 (In Rs)

Statutory Remittances 859,952 590,329

Dividend Payable 7,874,465 5,528,014

Insurance payable to Clients 3,097,986 1,857,632

Provision for Employee Benefits 3,301,146 1,077,573

Others** 3,439,167 2,190,240

Total 18,572,716 11,243,788

** includes other expenses Payable.

11 Short Term Provisions


(In Rs)

As at March 31,

2015 (In Rs)

Provision against MF Portfolio 5,176,449 3,041,456

Provision on Income Tax 578,586

Total 5,755,035 3,041,456

Page | 48

12. Fixed Assets

Fixed Assets Gross Block

Balance as at April 1, 2015

Additions Balance as at March 31, 2016

Rs. Rs. Rs.

Tangible Assets

Furniture and Fixtures 1,121,694 196,585 1,318,279

Office equipment 1,101,311 134,009 1,235,320

Computers 1,344,092 585,981 1,930,073

Assets under lease

Assets under lease

Others (specify nature)

Total 3,567,097 916,575 4,483,672

Accumulated Depreciation Net Block

Balance as at April 1, 2015

Depreciation charge for the year

On disposals

Balance as at March 31, 2016

Adjusted with Retained Earnings



Rs. Rs. Rs. Rs. Rs. Rs.

445,270 94,358 - 539,628 - 778,651 676,424

541,076 196,305 737,381 - 497,939 560,235

1,108,043 177,089 - 1,285,132 - 644,941 236,049

2,094,389 467,752 - 2,562,141 - 1,921,531 1,472,708

13 Long Term Loans and Advances (Unsecured, Considered good)

Particulars

As at March 31, 2016 (In

Rs)

As at March 31, 2015 (In

Rs)

a) Security Deposits 340,718 190,572

b) Balance with Revenue Authorities (Net of provision)-Till Previous Year 1,089,797 682,463

c) Balance with Revenue Authorities (Net of provision)-for Current Year - 438,584

d) MAT Credit Entitlement - 476,359

Total 1,430,515 1,787,978

14 Other non-current assets

Particulars


(In Rs)


(In Rs)

Preliminary Expenses (to the extent not written off) 469,506 564,004

Unamortized Processing Fee * ( Refere Note C) (to the extent not written off)

7,250,850 -

Total 7,720,356 564,004

Page | 49

15 Loan Portfolio

Particulars


(In Rs)


(In Rs)

A. Portfolio Loans (Unsecured, Considered Good)

Joint Liability Group Loans 509,200,752 295,402,673

Individual Loans

-

B. Portfolio Loans (Unsecured, Considered Doubtful)

Joint Liability Group Loans 4,828,583 3,208,530

Individual Loans - -

C. Other Loans (Unsecured, Considered Doubtful) 4,000,000 2,500,000

Total 518,029,335 301,111,203

15.1 Bifurcation of Loan Assets

Particulars


(In Rs)


(In Rs)

A) Micro Finance Loan Portfolio

(i) Standard Assets(no default in repayment) 502,900,231 288,853,760

(ii) Standard Assets(overdue upto 90 days) 4,129,602 4,509,968

(iii) Non Performing assets

Portfolio Assets overdue more than 90 days & less than 180 days 2,170,919 2,038,945

Portfolio Assets overdue more than 180 days 4,828,583 3,208,530

Total Micro Finance Loan Portfolio 514,029,335 298,611,203

B) Other Loan Portfolio

(i) Standard Assets(no default in repayment) 4,000,000 2,500,000

(ii) Standard Assets(overdue upto 90 days)

-

(iii) Non Performing assets

-

Portfolio Assets overdue more than 90 days & less than 180 days

Portfolio Assets overdue more than 180 days

Total Other Loan Portfolio 4,000,000 2,500,000

Gross Loan Portfolio (A+B) 518,029,335 301,111,203

Less : Non Current Portion of Loan Portfolio 97,083,007 56,738,279

Current Portion of Loan Portfolio 420,946,328 244,372,924

Page | 50

16 Cash & Bank Balances


(In Rs)


(In Rs)

Cash and Cash Equivalents

Cash 547,682 182,486

Bank Balances 32,982,172 11,070,554

Total cash & cash equivalents 33,529,854 11,253,040

Other Bank Balances

Fixed Deposits

Fixed Deposits(with original maturity 6 months to 12 months)

153,500,000 33,000,000

Fixed Deposits(with original maturity more than 12 months)

5,000,000 5,000,000

Fixed Deposits (Under Lien) (with original maturity more than 12 months)

70,837,000 39,387,000

Other Fixed Deposits

Interest Accrued but not due

Total Other Bank Balances 229,337,000 77,387,000

Total Cash & Bank Balances 262,866,854 88,640,040

17 Short-Term Loans and Advances (Unsecured, Considered good)

Particulars As at March 31, 2016 (In Rs)


i) Staff Advances 849,107 213,266

ii) Prepaid Expenses 289,508 209,783

iv) Balance with Revenue Authorities 18,341 9,111

Total Current Loans and Advances 1,156,956 432,160

18 Other current assets

Particulars As at March 31 2016 (In Rs)


i) Interest accrued on Loan Portfolio 4,374,395 2,804,658

ii) Interest accrued on Term Deposits & Fixed Deposit 4,259,061 3,385,781

iii) Interest accrued on SDPL Loan 542,762 31,963

iii) Unamortized Processing Fee(to the extent not written off)

- -

iv) Recoverable from Insurance Company * 734,682 690,602

Less: Allowance for Non Recovery -340,602 -340,602

v) Net Recoverable from Insurance Company 394,080 350,000

vi) Recoverable from Staff against Theft 2,968,825 2,961,248

vii) PSIG Grant Receivable from SIDBI 465,699 -

Less: Share Payable to Shikhar Development Foundation - -

Net Grant Receivable 465,699 -

viii) Others 1,711,926 1,133,982

ix) Floater Deposits with PNB Metlife - 183,291

x) Floater Deposits with Bajaj Allianz 100,000 100,000

Page | 51

xi) Floater Deposits with Kotak Mahindra 300,000 100,000

xii) Recoverable from Bank for wrong NEFT Transactions

849,789

Total 15,966,537 11,050,923

* Recoverable from Insurance company includes Theft of cash from Kicha ( District Rudarpur ) uttarakhand of Rs 44,080/-)

19 Revenue from Operations

Particulars For year ended March 31, 2016

(In Rs)

For year ended March 31, 2015

(In Rs)

Interest Income (Note 19.1) 86,323,739 75,300,566

Other Financial Services (Note 19.2) 6,101,845 3,521,918

Total 92,425,584 78,822,484

19.1 Interest Income comprises the following :


(In Rs)


(In Rs)

Interest income on Loan Portfolio 81,949,344 72,495,908

Interest Accrued on Loan Portfolio 4,374,395 2,804,658

Total 86,323,739 75,300,566

19.2 Revenue from other financial services comprises the following :


(In Rs)


(In Rs)

Income from Processing Fee 6,101,845 3,521,918

Total 6,101,845 3,521,918

20 Other Income


(In Rs)


(In Rs)

Other Non Operating Income 6,418,731 3,691,423

Total 6,418,731 3,691,423

20.1 Other Non Operating Income comprises the following :


(In Rs)


(In Rs)

Interest on Fixed Deposits (Gross) - Lien marked under security*

3,485,887 1,948,533

Interest on Fixed Deposits (Gross) 2,319,619 1,675,632

Sale of Scrap 5,174 -

Interest on Staff Loan 34,496 16,239

Interest from Loan 567,554 35,515

Miscellaneous Receipts 6,001 15,504

Total 6,418,731 3,691,423

Page | 52

*Interest on fixed deposit kept with lenders ( Banks / FI) to raise fund for creation of financial assets against the condition mentioned in the sanction

21 Employee Benefit Expenses


(In Rs)

For year ended March

31, 2015 (In Rs)

Salaries & Allowances 26,624,361 24,100,992

Contribution to provident and other funds 2,073,248 2,330,560

Staff Group Life Insurance 122,252 31,210

Staff welfare expenses 1,046,806 875,478

Total 29,866,667 27,338,240

22 Finance Cost


(In Rs)


(In Rs)

Interest Expenses 46,094,911 38,257,823

Fund Raising Expenses* 394,854 -

Other Borrowing Cost** 631,227 1,185,500

Total 47,120,992 39,443,323

* Fund Raising Expenses Includes debt syndication charges, conveyance, social rating and other similar charges incurred for raising funds.

** Includes loan processing and documentation charges expensed during the year ( Refer Note C)

23 Depreciation & Amortization expense


(In Rs)


(In Rs)

Depreciation 467,752 433,648

Preliminary Expenses Written off 94,498 47,988

Total 562,250 481,636

24 Provision for Microfinance Loans


(In Rs)


(In Rs)

Provisioning against MF Loans 2,134,993 162,401

Standard Assets 7,500 -

Total 2,142,493 162,401

Page | 53

25 Other Expenses


(In Rs)


(In Rs)

Rent 2,701,192 2,303,072

Electricity and Water Charges 518,433 472,542

Repairs and Maintenance

-Buildings 108,499 111,243

-Equipments 244,628 215,766

Insurance Charges 129,439 135,741

Travelling and Conveyance 3,581,329 3,098,618

Printing and Stationery 858,974 712,209

Communication Costs 1,360,124 1,103,168

Microfinance Exp - MFI Reports 270,728 81,600

Legal & Professional Fees 898,670 544,447

Bank Charges 899,988 642,479

Hospitality Expenses 132,860 130,948

Royalty 212,000 250,000

Commission and Brokerage 40,000 5,000

Board Meeting Expenses 9,804 10,142

Interest and penalties on Statutory Dues 8,217 5,509

ROC Filling Fees 37,800 156,590

Office Expenses 304,491 304,787

Directors Sitting Fees 29,000 42,000

Other Operating expenses 985,821 326,414

Microfinances Loan Written Off 843,369 2,512,951

Auditors' Remuneration (refer Note 24.1 below) 120,150 120,150

Swachh Bharat Cess 25,544

Total 14,321,060 13,285,376

25.1 Break up of Auditors’ Remuneration:



(In Rs) (In Rs)

Audit Fees 120,150 120,150

Tax Audit Fees - -

Taxation Matters - -

Out of Pocket Expenses - -

Service Tax - -

Less: Service tax set off claimed - -

1234 - -

Total 120,150 120,150

Page | 54

26 Contingent Liabilities & Commitments

Particulars


(In Rs)


(In Rs)

Contingent Liabilities - -

Commitments - -

Total - -

27 Earning Per Share In Accordance with Accounting Standard-20



(In Rs) (In Rs)

Net Profit After Tax 2,730,586 1,193,941

Less: Adjustment of Dividend and DDT on OCPS 3,158,865 3,158,865

Net Amount Available for Equity Shares - 428,279 - 1,964,924

Weighted Average Number of Equity Shares 969,118 969,118

Basic & Diluted EPS* - 0.44 - 2.03

* As at 31.03.2016, the outstanding potential equity shares had an anti-dilutive effect on EPS. Hence there was no dilution of EPS for the year.

28. The balances receivables and payables are subject to confirmation and reconciliation. Pending

such confirmation and reconciliation, the impact on accounts is not ascertainable at this stage.

29. The company is a Small and Medium sized Company (SMC) as defined in the General Instructions

in respect of Accounting Standards notified under the Companies Act, 2013. Accordingly, the

company has complied with the Accounting Standards as applicable to Small & Medium Sized

Company. Segment Reporting as per AS 17 is not mandatory for the Company being an SMC

company.

30. The Company has been sanctioned grant vide sanction letter no.10068/PSIG-33 dated 04.03.2013

by SIDBI for Capacity Building activities under the Poorest States inclusive Growth Programme of

PSIG Project. The objectives of the grant, inter alia, are to undertake Capacity building of

Institution subject to fulfilment of conditions. An amount of Rs. 4,65,699/- as Grant is receivable in

the Financial year 2015-16.

31. The entity is having the Secured and Unsecured loan balances with respective parties as on 31st

march 2016. Annexure A is attached.

32. Employee Benefits

The Company has recognized the following amounts in the Profit and Loss Account towards

contribution to defined contribution plans which are included under Contribution to Provident

Fund-

Page | 55

(Amount in Rs.)

Particulars 2015-16 2014-15

Provident Fund 14,35,908 17,17,051

The Company makes annual contribution to the Employee’s State Insurance. The Company has

recognized following amounts in the Profit & Loss Account towards contribution to ESI –

(Amount in Rs.)


ESI 6,36,890 6,12,119

The Company has recognized the following amounts in the Profit and Loss Account towards

Gratuity-

(Amount in Rs.)


Gratuity Paid - 1,69,038-

Provision for Gratuity 2,09,343 7,93,577-

The Company has recognized the following amounts in the Profit and Loss Account towards Staff

Group Life Insurance

(Amount in Rs.)


Staff Group Life Insurance 1,22,252 31,210

The company has paid and provided for performance incentive to eligible employees. The

Company has recognized in the Profit and Loss Account Rs.2,59,132/-towards Performance

Incentives and Rs. 5,69,925/- towards Leave Encashment for the FY 2015-16.

Page | 56

CLIENTS’ TESTIMONIALS

Poverty and Unemployment continues to persist in India despite 66 years of

development. There is consensus that over 350 million people live below the Poverty

Line in India and in this race women’s condition is worst.

These are the few stories of the Trials and Triumphs of those Women who had been

struggling to eke out a living for themselves and their families. They were once groping

in dark, searching for some income generating activity that could provide them

sustenance. All that they had was labour to sell and a few unfulfilled dreams. These are

the stories of those women who were groomed as Entrepreneurs through Shikhar

Microfinance.

Page | 57

Page | 58

Page | 59

Page | 60

SHIKHAR MICROFINANCE PRIVATE LIMITED

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