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17th
ANNUAL REPORT 2011 - 2012
REGISTERED & CORPORATE OFFICE
No. 4, Dr. NATESAN ROAD, ASHOK NAGAR, CHENNAI – 600 083
TAMILNADU, INDIA. Tel: 044 – 2371 8588, 044 – 42318049
Fax: 044 – 2371 8589 Website: www.smileltd.org
S.M.I.L.E. MICROFINANCE LIMITED
2
CORPORATE INFORMATION
BOARD OF DIRECTORS
M. Sathiyamoorthi, M.A., B.G.L
Chairman & Managing Director Erstwhile. IAS Officer
J. Bradley Swanson, B.A. MBA
Director Nominee of DWM Investments (Cyprus) Limited
Aleem Remtula, B.A. MBA Director Nominee of DWM Investments (Cyprus) Limited
Indrani Singh, B.A. Director Nominee of DWM Investments (Cyprus) Limited Erstwhile Senior Executive in Public Sector Bank and Regional Manager in Friends of Women`s World Banking (FWWB)
A. Tamilarason, M.Com. Whole-Time Director Erstwhile Banker
COMPANY SECRETARY
STATUTORY AUDITORS
G. Somasundaram, M.Com, ACS
M/s. Victoria Mathews &
Santhakumar
Chartered Accountants
21, (Old No.6) New Street, Nungambakkam Chennai 600 034.
OFFICES
Registered & Corporate
4, Dr. Natesan Road, Ashok Nagar, Chennai 600 083, Tamilnadu, India.
Regional
1&2, Lake Area, Melur Road, Uthangudi Post, Madurai 625 107
3
FUNDERS
BANKS FINANCIAL INSTITUTIONS
Andhra Bank Agri Development Finance (Tamilnadu) Ltd.
BNP Paribas Ananya Finance for Inclusive Growth Pvt. Ltd.
Canara Bank IFMR Capital Finance Private Ltd.
Central Bank of India M.V. Microfin Pvt. Ltd.
Corporation Bank Maanaveeya Development & Finance Pvt. Ltd.
Development Credit Bank Opportunity Microfinance India Ltd.
HDFC Bank Reliance Commercial Finance Ltd.
HSBC Bank SIDBI
ICICI Bank (Bank of Rajasthan Ltd.)
IDBI Bank
Karnataka Bank
Karur Vysya Bank
Kotak Mahindra Bank
Punjab National Bank
State Bank of Patiala
The Ratnakar Bank Ltd.
The South Indian Bank Ltd.
Vijaya Bank
Yes Bank
4
BOARD COMMITTEES
AUDIT COMMITTEE BORROWING & INVESTMENT COMMITTEE
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
SHARE ALLOTMENT & TRANSFER COMMITTEE
CREDIT & NON-PERFORMING ASSETS REVIEW COMMITTEE
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
REMUNERATION & COMPENSATION COMMITTEE
ASSET LIABILITY MANAGEMENT & RISK MANAGEMENT COMMITTEE
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
NOMINATION COMMITTEE
Mr. M. Sathiyamoorthi
Mr. A. Tamilarason
Mr. J. Bradley Swanson
Primary Nominee - DWM Investments (Cyprus) Ltd.
Mr. Aleem Remtula
Secondary Nominee - DWM Investments (Cyprus) Ltd.
Mrs. Indrani Singh
Tertiary Nominee - DWM Investments (Cyprus) Ltd.
5
DIRECTORS’ REPORT
Your Directors are pleased to present the Seventeenth Annual Report of your Company
together with the Audited Statement of Accounts and the Auditors’ Report of your Company
for the financial year ended, 31st March 2012.
FINANCIAL PERFORMANCE
The financial performance for the year 2011-12 is given below:
(Rupees.in Lakhs)
2011 - 12 2010 - 11
Interest Income 5278.97 4816.24
Other Income 157.31 88.84
Total Income 5436.28 4905.08
Less
Expenses 4543.15 3545.92
Profit before Tax 883.13 1359.16
Less
Provisions for:
Income Tax 288.57 470.53
Fringe Benefit Tax 0.00 0.00
Deferred Tax 10.46 (21.49)
Profit after Tax 570.93 910.12
Add:
Balance b/f from previous years 1056.37 328.28
Amount available for Appropriation 1627.30 1238.39
Appropriations:
Statutory Reserve 114.19 182.02
Balance carried to Balance Sheet 1513.11 1056.37
1627.30 1238.39
Equity Share Capital 1733.96 1733.96
Reserves 5631.63 5060.70
CRAR (Capital to Risk-weighted Asset Ratio) 48.58% 41.47%
6
The Company earned a GROSS INCOME of Rs. 54.36 Crore (Previous Year Rs. 49.05
Crore) and PROFIT BEFORE TAX (PBT) of Rs. 8.83 Crore (Previous Year Rs. 13.59 Crore),
with expenditures of Rs. 45.53 Crore (Previous Year Rs. 35.46 Crore).
The Company earned a PROFIT AFTER TAX (PAT) of Rs. 5.71 Crore (Previous year Rs.
9.10 Crore). The amount transferred to Statutory Reserve is Rs. 1.14 Crore (Previous year
Rs. 1.82 Crore).
Despite the limited support extended by Banks and Funders due to the negative
microfinance environment, the Company was able to grow its Gross Income, with total
income increasing by 11%. However, due to restrictions on Interest Cap Margin and
increased operational expenditures, profit decreased compared to the previous year. PBT
stood at 883.13 Lacs, 35% less than the previous year. Net Profit stood at Rs. 570.93 Lakhs.
Net margin (PAT/Total income) stood at 10.5% against 18.55% in the previous year. Net
Worth increased to Rs. 72.57 Crore from Rs. 67.31 Crore in 2010-11.
MICROFINANCE SECTOR SCENARIO
Like other Indian MFIs, SMILE has faced operational and financial challenges in the months following the Andhra Pradesh crisis in October 2010. In May 2011, the introduction of stringent regulatory limitations on interest rates, margins, loan tenors and loan sizes have curtailed disbursement activity, increased compliance costs and reduced margins. Sector-wide funding constraints through December 2011 led to contraction of the loan portfolio. In the last quarter of fiscal year 2012, bank lending slowly resumed to the sector and securitizations through existing and new lenders have further given the Company capital to lend. In May 2012, the Finance Minister introduced a much-awaited microfinance bill to Parliament. This bill would empower the central bank to regulate the sector and introduce an overarching legislative framework for it. This bill would remove MFIs from the purview of state-level legislation, like the one introduced in October 2010 by Andhra Pradesh Government which precipitated the crisis. This bill would offer additional clarity to the sector and by establishing rules for lending rates, margins, recovery methods, and processing fees, among other things. It also introduced a separate category of NBFC-MFI. Collections for Andhra Pradesh MFIs remain minimal. Some of the MFIs have entered corporate debt restructuring and are slowly winding down their portfolio. Others have already taken large losses to their portfolios. The repayment crisis seems to be limited to AP-based portfolios, and the company has no exposure to Andhra Pradesh. S.M.I.L.E. MICROFINANCE LIMITED is one of the largest players in Tamilnadu with over 150 Branches in Tamilnadu and Puducherry. The Company serves 4 Lakh families and provides them a vehicle for poverty alleviation. Our Mission is to empower poor women to become self-reliant. To date, the Company has disbursed Rs. 1406.30 Crore across Tamilnadu and Puducherry, while ensuring 99% collection from its borrowers without coercive collection methods.
7
LOAN DISBURSEMENTS
During the Year, the Company sanctioned loans to 3.8 lakh (previous year 3.3 lakh)
Borrowers. Loan disbursement for the Year amounted to Rs. 403.02 Crore, an increase of
Rs. 26.32 Crore (7%) from Rs. 376.70 Crore in the previous year. Average loan size
increased to Rs. 11,310 from Rs. 11,272 in the previous year.
FUNDERS
The Company was able to obtain Funds amounting to Rs. 85.28 Crore through Term Loans
and Rs. 123.04 Crore through Securitization of its Pool of Credit Portfolio. The Company
was able to add The Ratnakar Bank and IFMR Capital to its Funders List for the year.
LOAN SERVICING
During the year, the Company repaid Rs. 78.55 Crore to all its funding Banks & Financial
Institutions. It serviced all its Term Loans promptly, earning an excellent and enviable
reputation for Loan-servicing.
ARREARS / PORTFOLIO AT RISK (PAR)
There was some contagion in arrears from the Andhra Pradesh Ordinance in the State
border District of Vellore. Due to effective recovery efforts of the Company, the PAR and
arrears remained at low levels at year-end with PAR at Rs. 0.14 Crore compared to Rs. 1.60
Crore in the Previous Year.
PAR >30 days amounted to Rs. 0.13 Crore representing 0.06% of the Portfolio. Non-
Performing Assets amounted to Rs. 0.08 Cr constituting 0.04% of loan portfolio as at
31/3/2012. The Company made a Loan Loss Provision of Rs. 0.08 Crore. The Company also
made a Contingent Provision against Standard Assets of Rs. 0.36 Crore.
COMPUTERISATION OF OPERATIONS
With a view to handle the increased volume of operations and servicing the ever-increasing number of loan beneficiaries efficiently, in-house application software designed to handle all aspects of the Company’s micro finance operations and accounting functions on-line has been implemented.”
DEPOSITS
The Company has not accepted any public deposits during the Year.
8
PRUDENTIAL NORMS AND GUIDELINES
The Reserve Bank of India (RBI), the Regulator, has issued a set of guidelines and Directives to NBFC-MFIs regulating interest rates, margins, loan tenors, loan sizes, customer incomes limits, and Qualifying Assets and Net Owned Funds, among other things. SMILE shall continue to adhere to the guidelines/Directives of the RBI with regard to
prudential norms, capital adequacy, Fair practices code and all other norms as applicable to
NBFC-MFIs. It will also continue to adhere to the guidelines of the RBI with regard to
prudential norms, acceptance of deposits, capital adequacy and all other norms as
applicable to non-deposit taking NBFCs.
DIRECTORS
Mr. A. Tamilarason, Director of the Company retires by rotation at the ensuing Annual
General Meeting and, being eligible, offer himself for re-appointment.
During the year under review:
i) Mr. C. Ponnuchamy, Director of the Company, tendered his resignation from
the Directorship and his resignation letter has been accepted by the Board.
ii) A. Tamilarason was appointed as a Whole Time Director of the Company for
a period of 2 (Two) years w.e.f., 14/12/2010 and his appointment was
approved by the Shareholders of the Company at their Annual General
Meeting held on 27/06/2011. Mr. A. Tamilarason is liable to retire by rotation
at the ensuing Annual General Meeting. Also, since his appointment as a
Whole-Time Director will expire on 13/12/2012, approval of the members in
their ensuing meeting scheduled to be held on 22nd August, 2012 is sought for
his re-appointment as a whole time Director.
iii) Dr. N. Sethuraman, Promoter of the Company, who held the position of
Chairman, tendered his resignation from the position of Chairman and
Director and the same was accepted by the Board at its Meeting held on 25th
October, 2011. On his resignation, the designation of Mr. M. Sathiyamoorthi
was changed from Managing Director to Chairman & Managing Director.
iv) Mrs. N. Buvaneswari, who was a Director of the Company, tendered her
resignation from the position of Director and the same was accepted by the
Board at its Meeting held on 25th October, 2011.
v) Dr. S. Brathibba, who held the position of Director, tendered her resignation
from the position of Director and the same was accepted by the Board at its
Meeting held on 29th November, 2011.
9
The Board took note of the valuable contributions made by the resigned Directors to the
Company in their tenure and their active participation in the Board and Committee Meetings.
AUDITORS
M/s Victoria Mathews & Santhakumar, Chartered Accountants, Chennai retire at the
conclusion of the Seventeenth Annual General Meeting and are eligible for reappointment.
Directors recommend their reappointment for the current Financial Year.
INFORMATION AS PER SECTION 217 (1) (E) OF THE COMPANIES ACT, 1956
The Company has continued to adopt measures to conserve electrical energy by installing
Capacitors & Power Factor Meter in its Corporate Office and also by replacing incandescent
bulbs and tube lights with CFL lighting.
The Company did not have any foreign exchange earnings or expenditures during this
Financial Year.
PARTICULARS OF EMPLOYEES’ REMUNERATION
Statement of particulars pursuant to the provisions of Section 217 (2A) of the Companies
Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended:
The Company does not have any employee who was in receipt of remuneration of
prescribed sum under the said Rules during this Financial Year.
DIVIDEND
The Company did not consider any dividend payment for the current Financial Year as it is
planning on re-investing profits and accumulating reserves in order to more rapidly grow the
business.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has proposed to utilize up to 5% of the Profit after Tax during this Financial
Year towards CSR activities.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm:
10
i) in the preparation of the annual accounts, the applicable accounting standards
read with requirements set out under Schedule VI to the Companies Act, 1956,
have been followed and there are no material departures from the same;
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 state of affairs of the Company as at
March 31, 2012 and of the profit of the Company for the year ended on that date;
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 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
iv) the Directors have prepared the Annual Accounts of the Company on a ‘going
concern’ basis.
CORPORATE GOVERNANCE
Even though, Clause 49 of the Listing Agreement and the Corporate Governance Report
required under this Clause are not applicable to the Company, as per the requirements of
Guidelines issued by RBI, a separate Report on Corporate Governance is attached which
forms part of Directors’ Report.
ACKNOWLEDGEMENTS
The Board of Directors wishes to place on record their sincere thanks for the wholehearted
support by the Company’s Lenders and Bankers, Statutory Authorities, and the Reserve
Bank of India. The Board also wishes to record its sincere appreciation for the commitment
of its employees at all levels in successfully tackling the challenges faced by the Company
during this Year and for their continued efforts to achieve the Company’s goals.
By Order of The Board
S.M.I.L.E. MICROFINANCE LIMITED
Sd/-
M. SATHIYAMOORTHI
CHAIRMAN & MANAGING DIRECTOR
Chennai - 600083 Dated: 07th June, 2012
11
REPORT ON CORPORATE GOVERNANCE
Corporate Governance is the commitment of an organization to follow Ethics, Fair Practices
and Transparency in all its dealings with its various stakeholders such as Customers,
Employees, Investors, Government and the Society at large. Sound Corporate Governance is
the result of external marketplace commitment and legislation plus a healthy Board Culture
which directs the policies and philosophy of the Organization. Your Company is committed
to good Corporate Governance in all its activities and processes even though it is only an
Unlisted Public Limited Company.
COMPANY PHILOSOPHY
S.M.I.L.E. MICROFINANCE LIMITED’s philosophy on Corporate Governance envisages
adherence to the highest levels of Transparency, Accountability and fairness, in all areas of
its operations and in all interactions with its stakeholders. The Board shall work to ensure the
success and continuity of the Company’s business through the appointment of Qualified
Management and through on-going monitoring to assure that the Company’s activities are
conducted in a Responsible, Ethical and Transparent manner.
BOARD of DIRECTORS
In terms of Corporate Governance philosophy, all statutory and other significant material
information are placed before the Board of Directors to enable it to discharge its
responsibility of strategic supervision of the Company as trustees of the Shareholders. The
Board of Directors currently consists of five Members. Other than the Chairman & Managing
Director, there is only one Member of the Board who is an Executive Director. The Chairman
& Managing Director M Sathiyamoorthi and Whole-time Director, A. Tamilarason are
Directors representing the Promoter Dr. N. Sethuraman. Besides the above said 2 Directors,
there are 3 Non-Executive Directors nominated by DWM Investments (Cyprus) Limited, who
is the largest Shareholder of the Company.
During the Financial Year ended 31st March 2012, seven (7) Board Meetings were conducted
on the following dates viz., 30th May, 2011; 23
rd June, 2011; 22
nd September, 2011; 25
th
October, 2011; 29th November, 2011; 6
th December, 2011, 14
th February, 2012 and not more
than four months elapsed between any two Board Meetings.
Particulars of the Directors’ attendance of Board /Committee Meetings and particulars of
their other company directorships are given below:-
NAME Nature of Directorship Attendance Other
Directorships Board Committee
Dr. N. Sethuraman
Promoter & Non-executive
CHAIRMAN
Chairman up to 25.10.2011.
3 Nil 4
M. Sathiyamoorthi
Executive – Chairman &
Managing Director (Chairman
and Managing Director
w.e.f.,25.10.2011
6 25 Nil
J. Bradley Swanson Non-Executive & Nominee of 5 15 4
12
DWM Investments (Cyprus)
Limited
Dr. S. Brathibba Non-Executive Zero Nil 2
Aleem Remtula
Non-Executive & Nominee of
DWM Investments (Cyprus)
Limited
5 16 1
Mrs. Indrani Singh
Non-Executive & Nominee of
DWM Investments (Cyprus)
Limited
6 20 Nil
Mrs. N. Buvaneswari Non-Executive 2 9 1
A. Tamilarason Executive 7 27 Nil
C. Ponnuchamy Non-Executive 5 13 Nil
CHANGES IN BOARD CONSTITUTION
During the Financial Year ended 31st March 2012, the following changes took place in the
constitution of the Board.
Mr. C. Ponnuchamy who was appointed as an Additional Director by the Board on 25th
March, 2011, was appointed by the Shareholders at their fifteenth Annual General Meeting
held on 27th June, 2011 as a Director liable to retire by rotation.
Due to personal reasons, Mr. C. Ponnuchamy resigned from the position of Director of the
Company with effect from 17.3.2012.
Dr. N. Sethuraman resigned from his position as CHAIRMAN and Director of the Company
with effect from 25th October, 2011. On his resignation, the position of Mr. M.
Sathiyamoorthi, Managing Director of the Company was re-designated as Chairman and
Managing Director.
Mrs. N. Buvaneswari resigned from the position of Director of the Company with effect from
25th October, 2011.
Dr. S. Brathibba resigned as Director of the Company with effect from 29th November, 2011.
COMMITTEES of BOARD
The Board has currently Seven Committees, namely, Asset Liability Management & Risk
Management Committee (ALCO); Audit Committee; Borrowing & Investment Committee;
Credit & Non-Performing Assets Review Committee; Remuneration & Compensation
Committee; Share Allotment & Transfer Committee and Nomination Committee. The Board
is responsible for constituting, assigning and co-opting the members of these Committees.
The Board fixes the Terms of Reference of Committees and also delegates powers to the
Committees from time to time.
The Minutes of the meetings of the Committees are circulated to the Board for its information
and confirmation.
13
AUDIT COMMITTEE
Composition
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, Director
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
Meetings
The Audit Committee met four (4) times during the Financial Year 2011-12 viz., on 30th
May, 2011; 21st September, 2011; 5
th December, 2011 and 13
th February, 2012.
Terms of Reference
The Role of the Committee, among others will include - :
1. Oversee the Company’s financial reporting process and the disclosure of its financial
information to ensure that the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and, if required, the
replacement or removal of the Statutory Auditor and the audit fees and also
appointment of External Auditors for Branch Auditing.
.
3. Reviewing with the management, the quarterly and annual financial statements before
submission to the Board for approval, with particular reference to:
a. Matters required to be included in the Director’s Responsibility Statement, in the
Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956;
b. Changes, if any, in accounting policies and practices and reasons for the same;.
c. Major accounting entries involving estimates based on the exercise of judgment by
management;
d. Significant adjustments made in the financial statements arising out of audit findings;
e. Compliance with accounting and other legal requirements relating to financial
statements;
f. Disclosure of any ‘related party transactions’;
g. Qualifications in the Draft Audit Report
.
14
4. Reviewing with the management, performance of Internal Auditors and adequacy of
the internal control systems.
5. Reviewing the adequacy of internal audit function including the structure of the
internal audit department, staffing and seniority of the official heading the
department, reporting structure, coverage and frequency of internal audit.
6. Discussion with Internal Auditors about significant findings and follow up there on.
7. Reviewing the findings of any internal investigations by the internal auditors into
matters where there is suspected fraud or irregularity or a failure of internal control
systems of a material nature and reporting the matter to the Board.
8. Discussion with Statutory Auditors before the audit commences, about the nature and
scope of audit as well as post-audit discussion to ascertain any area of concern.
The Committee shall mandatorily review the following information:
1. Management discussion and analysis of financial condition and results of operations;
2. Statement of ‘related party transactions’ (as defined by the Audit Committee),
submitted by management;
3. Management letters / letters of internal control weaknesses issued by the Statutory
Auditors;
4. Internal Audit reports relating to internal controls of the Company;
REMUNERATION & COMPENSATION COMMITTEE
Composition
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, Director
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
The Committee met 0 time during the Financial Year 2011-12.
Terms of Reference
The primary role of the Committee is fixing and revising the remuneration payable to the
Managing Director and Whole-time Directors of the Company from time to time and to
recommend to the Board the same for its approval.
15
BORROWING & INVESTMENT COMMITTEE
Composition
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, Director
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
Meetings
The Committee met fifteen (15) times during the Financial Year 2011-12 viz., 17th May,
2011; 22nd June, 2011; 23
rd July, 2011; 21
st September, 2011; 29
th September, 2011; 22
nd
October, 2011; 22nd November, 2011; 5
th December, 2011; 21
st December, 2011; 23
rd
December, 2011; 13th February, 2012; 22
nd February, 2012; 12
th March, 2012; 20
th March,
2012; and 22nd March, 2012.
Terms of Reference
The role of Borrowing & Investment Committee is to approve borrowings from sources like
Banks, Financial Institutions, Corporates, on such terms and conditions as to repayment,
interest rate as it thinks fit and to review proposals for fresh issue of securities, or debt and
approve the same for availment.
CREDIT & NON-PERFORMING ASSETS REVIEW COMMITTEE
Composition
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, Director
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
The Committee met four times during the Financial Year 2011-12 viz., 22nd June, 2011; 21
st
September, 2011; 5th December, 2011 and 13
th February, 2012.
Terms of Reference
The Committee has been authorized to review and submit its recommendations to the Board
in the following matters:
16
1. Business Plans; analysis of Member base; Drop outs; Death Benefits to
Members / their Spouses; representations in MFI Associations like MFIN, Sa-
Dhan.
2. Revision in Business Plans, Risk Categorisation of Accounts, Compliances as
per RBI Guidelines in respect of Interest Rates, Margins etc.,
3. Analysing NPAs, suggestions for controlling NPAs, New Business Initiatives
proposed by the Company, etc.
ASSET LIABILITY MANAGEMENT & RISK MANAGEMENT COMMITTEE
(ALCO)
Composition
Asset Liability Management & Risk Management Committee (ALCO) was constituted by the
Company as per the guidelines issued by RBI which are applicable to systemically important
NBFCs.
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, General Manager – Risk Monitoring & Management
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
The Committee met 4 (Four) times during the Financial Year 2011-12 viz., 22nd June, 2011;
21st September, 2011; 5
th December, 2011 and 13
th February, 2012.
Terms of Reference
1. Liquidity Risk Management
2. Management of Market (Interest Rate) Risk
3. Funding and Capital Planning
4. Pricing, Profit planning and Growth projections
5. redit and Portfolio Risk Management
6. Setting credit norms for lending products of the company
7. Operational and Process Risk Management
8. Laying down guidelines on KYC norms
9. To approve and revise the actual interest rates to be charged from customers
for different products from time to time applying the interest rate model.
SHARE ALLOTMENT & TRANSFER COMMITTEE
Composition
Share Allotment & Transfer Committee was constituted as per the guidelines of the
Companies Act, 1956.
17
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, General Manager – Risk Monitoring & Management
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
Share Allotment & Transfer Committee Charter:
The Committee shall consider all the share transfers, share transmissions and allotment of shares as and when the need arises and the Committee shall prepare a consolidated statement of all share transfers/transmissions effected and allotment(s) of shares made and present the same to the Board for its noting.
The Company did not receive any complaints during the Financial Year 2011-12.
No meeting was held during the Financial Year 2011 – 12 as no allotment / transfer of shares
took place.
NOMINATION COMMITTEE
Composition
Nomination Committee was constituted as per the guidelines issued by RBI for systemically
important NBFCs.
1. Mr. M. Sathiyamoorthi, Chairman & Managing Director
2. Mr. A. Tamilarason, Director
3. Mr. J. Bradley Swanson, Director (Nominee of DWM)
4. Mr. Aleem Remtula, Director (Nominee of DWM)
5. Mrs. Indrani Singh, Director (Nominee of DWM)
The Committee met ONCE during the Financial Year 2011-12 viz., on 14th February, 2012.
Terms of Reference
The terms of reference of the Nomination Committee includes:
Analyze the necessity of appointment of Directors to the Board whether Executive / Non
Executive / Independent, proposed candidates’ ability in contributing to the good of the
Company, their value addition etc., and recommending the right person for appointment to
the position of Director in the Board, to the Board.
18
REMUNERATION OF DIRECTORS
The details of remuneration paid to Dr. N. Sethuraman, ex-CHAIRMAN and Mr. M.
Sathiyamoorthi, the present Chairman & Managing Director and Mr. A. Tamilarason,
Director for the Financial Year ended 31st March 2012 is as follows:
Remuneration in Rs.
Dr. N. Sethuraman 5,95,000
Mr. M. Sathiyamoorthi 11,78,000
Mr. A. Tamilarason 6,00,000
Note:
In computing the ex-Chairman’s, Managing Director’s and Director’s remuneration,
perquisites have been valued in terms of actual expenditure incurred by the Company in
providing the benefits.
The details of sitting fees paid to directors are as follows:
Name Sitting Fees in Rs. No. of Equity Shares
held in the Company
Board Committee
Mr. C. Ponnuchamy 5000 13000 Nil
Mr. J. Bradley Swanson 5000 12000 Nil
Mr. Aleem Remtula 5000 Nil Nil
Mrs. Indrani Singh 6000 11000 Nil
Mrs. N. Buvaneswari 2000 9000 110000
GENERAL BODY MEETINGS
During the financial year ended 31st March 2012, one (1) Annual General Meeting (AGM)
and one (1) Extraordinary General Meeting (EGM) were held as per details given below:
Date Time Venue
27th June, 2011 (AGM) 11:30 A.M. Meenakshi Bhavan, # 44/1, G.N. Chetty
Road,
T. Nagar, Chennai – 600017.
22nd October, 2011 (EGM) 11:00 A.M. Meenakshi Bhavan, # 44/1, G.N. Chetty
Road, T. Nagar, Chennai – 600017.
All the proposed resolutions, including special resolutions, were passed by the shareholders
as set out in the respective Notices.
CODE OF CONDUCT
The Company has formulated and adopted a Code of Conduct for the Board of Directors.
The Code of Conduct is derived from three interlinked fundamental principles, viz. good
Corporate Governance, good corporate citizenship and exemplary personal conduct.
19
FAIR PRACTICES CODE
The Company has formulated a Fair Practices Code pursuant to the RBI guidelines issued in
this regard to lay down procedures and practices in dealing with the business transactions,
namely, applications for loans and their processing, loan appraisal and terms/conditions,
disbursement of loans including changes in terms and conditions and handling of customer
grievances. The Code came into effect on 17th March, 2007. The Code was amended by the
Board of directors at their meeting held on 30th August, 2008.
DISCLOSURES
The particulars of transactions between the Company and its related parties, as defined in
Accounting Standard 18, are set out the financial statements.
GENERAL SHAREHOLDER INFORMATION
Financial year: 1st April to 31
st March
Shareholding pattern as on 31st March 2012
Category # of Shares %
Promoter Group (Dr. N. Sethuraman,
Friends, Relatives and Associates) 3475000 20.04%
Other Members 2310000 13.32%
Foreign Shareholding:
DWM Investments (Cyprus) Limited 11554639 66.64%
Total 17339639 100.00%
Address for Correspondence Company Secretary
S.M.I.L.E. Microfinance Limited # 4, Dr. Natesan Road,
Ashok Nagar,
Chennai – 600083.
Tel : +91 44 23718588 Tel : +91 44 42318049
Fax: +91 44 23718589
E-mail: [email protected]
Web: www.smileltd.org
For and on behalf of the Board of Directors
Sd/-
M. Sathiyamoorthi
Chairman & Managing Director
Date: 7th June, 2012
Place: Chennai
20
CMD / GM-F&A Certificate
The Board of Directors
S.M.I.L.E. MICROFINANCE LIMITED
This is to certify that
— We have reviewed financial statements and the cash flow statement for the Financial Year ended
31st March 2012 and that to the best of our knowledge and belief:
a) these statements do not contain any materially untrue statement or omit any material fact
or contain statements that might be misleading;
b) these statements together present a true and fair view of the Company’s affairs and are in
compliance with existing accounting standards, applicable laws and regulations.
— There are, to the best of our knowledge and belief, no transactions entered into by the Company
during the Financial Year which are fraudulent or illegal.
— We accept responsibility for establishing and maintaining internal controls for financial reporting.
Sd/- Sd/-
M. Sathiyamoorthi V.T. Prabakaran
Chairman & Managing Director General Manager – Finance & Accounts
Place: Chennai
Date: 7th June, 2012.
21
AUDITORS’ REPORT TO THE MEMBERS OF S.M.I.L.E.MICROFINANCE LIMITED
1. We have audited the attached Balance Sheet of S.M.I.L.E. MICROFINANCE LIMITED as at
March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year
ended on that date annexed thereto in which are incorporated the returns of 30 branches audited
by other auditors. The branches audited by us and those audited by others have been selected
by the Board on the authority of the shareholders. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes,
examining on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well evaluating the overall financial statement presentation.
We believe that our audit provides reasonable basis for our opinion.
3. As required by Companies (Auditor’ Report) Order, 2003 as amended by the Companies
(Auditors’ Report) (Amendment) Order, 2004 issued by the Central Government in terms of
section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered
appropriate and according to the information and explanation given to us, we give in the
annexure, a statement of matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred above, we report that:
(a) We have obtained all the information and explanations, which to the best of our
knowledge and belief, were necessary for the purposes of our audit;
(b) In our opinion, proper books of accounts as required by the law have been kept by the
Company, so far as appears from our examination of the books of the Company;
(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt
with by this report are in agreement with the books of account;
(d) In our opinion, the Statement of Profit and Loss and the Balance Sheet comply with the
accounting standards referred to in sub-section (3C) of section 211 of the Companies Act,
1956;
(e) On the basis of the written representations received from the Directors as on March 31,
2012, we report that none of the directors is disqualified as on March 31, 2012 from being
appointed as director in terms of clause (g) of sub-section (1) of section 274 of the
Companies Act, 1956;
22
(f) In our opinion and to the best of our information and according to the explanations given
to us, the said financial accounts, read together with the notes on accounts attached
thereto, give the information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the accounting principles
generally accepted in India :
i) In the case of the Balance Sheet, of the State of Affairs of the Company as at
March 31, 2012.
ii) In the case of the Statement of Profit and Loss , of the profits of the Company for
the year ended on that date and
iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on
that date.
For VICTORIA MATHEWS & SANTHAKUMAR
(FRN No. 5458S)
Chartered Accountants
Sd/-
B. SANTHAKUMAR
Partner
Membership No: 27583/200
Place: Chennai
Dated: 07th June, 2012
23
ANNEXURE TO THE AUDITORS’ REPORT
Referred to in paragraph 3 of our Report of Even Date
Re: S.M.I.L.E. MICROFINANCE LIMITED
1. a. The Company is maintaining proper records showing full particulars, including
quantitative details and situation of fixed assets.
b. We are informed by the Management that all the Assets have been physically verified by
them during the year and no material discrepancies were noticed on such verification.
c. The Company has not disposed off any of fixed assets during the year.
2. a. Company has not granted any loans secured or unsecured to companies, firms or other
parties listed in the register maintained under section 301 of the Companies Act, 1956.
Therefore, reporting under sub clauses (a) to (d) of clauses 4 (iii) does not arise.
b. The Company has not taken any loans secured or unsecured from companies, firms or
other parties listed in the register maintained under section 301 of the Companies Act,
1956. Therefore, reporting under sub clauses (e) to (g) of clauses 4 (iii) does not arise.
3. In our opinion and according to the information and explanation given to us, there are adequate
internal control systems commensurate with the size of the Company and the nature of its
business with regard to purchases of fixed assets and for the services rendered. We are
informed that there are no continuing failures to correct major weaknesses in internal control
system, as corrective actions are taken immediately.
4. a) To the best of our knowledge and belief and according to the information and
explanations given to us, we are of the opinion that the particulars of contracts or
arrangements referred to in Section 301 of the Act that need to be entered in the register
maintained under that Section have been so entered.
b) In our opinion, according to the information and explanations given to us, the transactions
made in pursuance of such contracts or arrangements entered in the register maintained
under Section 301 of the Act and exceeding the value of rupees five lakhs in respect of
any party during the year, prima facie, have been made at prices which are reasonable
having regard to the nature of the service and the prevailing market prices at the relevant
time.
5. In our opinion according to the information and explanations given to us, the Company has not
accepted any deposits from the public within the purview of section 58A of the Companies Act,
1956 and the company has complied with the directives issued by Reserve Bank of India with
regard to acceptance of deposits.
6. In our opinion, the Company has an internal audit system commensurate with the size and
nature of its business.
24
7. a. According to the information and explanations given to us, the Company is regular in
depositing undisputed statutory dues including income tax, wealth tax and other material
statutory dues applicable to it with the appropriate authorities during the year.
b. According to the information and explanations given to us, there are no undisputed
amounts payable in respect of income tax, wealth tax and other material statutory dues
applicable to it, which are outstanding as at 31st March, 2012 for a period of more than six
months from the date they became payable.
8. According to the records of the company and the information and explanation given to us, there
are no dues of wealth tax, customs duty, excise duty and cess which have not been deposited on
account of dispute.
9. The Company does not have any accumulated losses and has not incurred cash losses during
the financial year covered by our audit and the immediately preceding financial year.
10. In our opinion and according to information and explanations given to us, the Company has not
defaulted in repayment of dues to Financial Institutions, Banks or Non-banking Financial
Companies.
11. The Company has not granted any loans and advances on the basis of security by way of pledge
of shares, debentures and other securities.
12. The Company does not carry on the business of Chit funds, Nidhi, mutual benefit fund and
society. Hence, the provisions of clause 4 (xiii) of the Order are not applicable to the Company.
13. Based on the examination of records and the information and explanations given to us, the
Company does not deal / trade in shares, securities, debentures and other investments.
14. In our opinion and according to the information and explanations given to us, the terms and
conditions of the guarantees given by the Company in respect of securitisation are not prima
facie prejudicial to the interest of the Company.
15. To the best of our knowledge and belief and according to the information and explanations given
to us, in our opinion, term loans availed by the Company were, prima facie, applied by the
Company during the year for the purposes for which the loans were obtained.
16. According to the information and explanations given to us and on overall examination of the
financial statements of the Company and after placing reliance on the reasonable assumptions
made by the Company for classification of long term and short term usages of funds, we are of
the opinion that, prima facie, short terms funds have not been utilized for long term purposes.
17. The Company has not made preferential allotment of shares to parties and companies covered in
register maintained under section 301 of the Companies Act, 1956.
25
18. The Company has not issued any debentures during the year and therefore the question of
creating security in respect thereof does not arise.
19. The Company has not made any public issue of any security during the year and therefore the
question of disclosing the end-use of money raised by any public issue does not arise.
20. Based on the audit procedures performed and the representation obtained from the
management, we report that no fraud on or by the Company, having a material misstatement on
the financial statements has been noticed or reported during the year under audit.
21. In our opinion and according to the information and explanation given to us, the nature of the
company’s business/activities during the year have been such that other clauses of the said
Order are, in our opinion, not applicable to the Company for the year.
For VICTORIA MATHEWS & SANTHAKUMAR
(FRN No. 5458S)
Chartered Accountants
Sd/-
B. SANTHAKUMAR
Partner
Membership No: 27583/200
Place: Chennai
Dated: 07th June, 2012
S.M.I.L.E. MICROFINANCE LIMITED
26
BALANCE SHEET as at March 31, 2012
Particulars Note 31.03.2012 31.03.2011
` `
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share Capital 1 173,396,390 173,396,390
(b) Reserves and Surplus 2 563,163,203 506,070,044
(2) Non-Current Liabilities
(a) Long-Term Borrowings 3 1,185,381,401 1,113,268,507
(3) Current Liabilities
(a) Short-Term Borrowings 4 - 4,774,207
(b) Other Current Liabilities 5 139,485,487 80,360,458
(c) Short-Term Provisions 6 4,427,160 16,207,340
Total Equity & Liabilities 2,065,853,641 1,894,076,946
II.ASSETS ` `
(1) Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 7 6,749,494 5,866,676
(b) Deferred tax assets (net) 8 794,659 1,840,931
(c) Other Non-Current Assets 9 10,111,111 6,316,615
(2) Current Assets
(a) Inventories 10 785,686 1,220,815
(b) Receivables under Financing Activities 11 1,444,625,855 1,612,943,112
(c) Cash and cash equivalents 12 545,080,761 251,623,039
(d) Short-term loans and advances 13 57,706,075 14,265,758
Total Assets 2,065,853,641 1,894,076,946
See accompanying notes forming part of the financial statements Per our report of even date for and on behalf of the Board for VICTORIA MATHEWS & SANTHAKUMAR
Chartered Accountants Sd/-
Sd/- M. SATHIYAMOORTHI CHAIRMAN & MANAGING DIRECTOR
B. SANTHAKUMAR
Partner Membership No: 27583/200 Sd/- A.TAMILARASON Director
Sd/- Place : Chennai G. SOMASUNDARAM Dated : 07.06.2012 Company Secretary
S.M.I.L.E. MICROFINANCE LIMITED
27
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED March 31, 2012
Sr.
No Particulars Notes 31.03.2012 31.03.2011
` ` I Revenue from operations 14 527,896,540 481,623,403
II Other Income 15 15,731,430 8,884,376
Total Revenue (I +II) 543,627,970 490,507,779
III Expenses:
Financial Costs 16 163,427,193 179,705,722
Employee Benefit Expense 17 179,491,122 130,063,856
Other Administrative Expenses 18 108,303,602 36,486,156
Depreciation and Amortization Expense 19 4,398,713 3,794,075
Provision for NPA 103,188 539,774
Contingent Provisions against Standard Assets (408,421) 4,002,474
Total Expenses 455,315,397 354,592,057
IV Profit before tax 88,312,573 135,915,722
V Tax expense:
(1) Current tax
Current Year 28,857,122 47,053,233
Prior Year 1,316,020 -
(2) Deferred tax (Excess Provision Written Back) 1,046,272 (2,149,261)
VI Profit/(Loss) for the year 57,093,159 91,011,750
VII Earning per equity share of Rs.10/- each:
(1) Basic 3.29 5.25
(2) Diluted 3.29 5.25
See accompanying notes forming part of the financial statements
Per our report of even date for VICTORIA MATHEWS & SANTHAKUMAR for and on behalf of the Board Chartered Accountants
Sd/- Sd/- M. SATHIYAMOORTHI
CHAIRMAN & MANAGING DIRECTOR B. SANTHAKUMAR Partner Membership No: 27583/200
Sd/- A. TAMILARASON
Director
Sd/- Place : Chennai G. SOMASUNDARAM Dated : 07.06.2012 Company Secretary
S.M.I.L.E. MICROFINANCE LIMITED
28
NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 Note 1: Share Capital
Sr.
No Particulars 31.03.2012 31.03.2011
1 AUTHORIZED CAPITAL ` `
20,000,000 Equity Shares of Rs. 10/- each. 200,000,000 200,000,000
200,000,000 200,000,000
2 ISSUED , SUBSCRIBED & PAID UP CAPITAL
17,339,639 Equity Shares of Rs. 10/- each, Fully Paid up 173,396,390 173,396,390
Total 173,396,390 173,396,390
There is no increase in the capital during the year.
Details of shareholding more than 5%:
Name of the Shareholder
31.03.2012 31.03.2011
No.
% of
holding No.
% of
holding
1 DWM Investments (Cyprus) Limited 11,554,639 66.64% 11,554,639 66.64%
2 Dr. N. Sethuraman 993,000 5.73% 993,000 5.73%
Note 2: Reserves & Surplus ` `
1 Share Premium 374,019,752 374,019,752
2 Statutory Reserve
Balance at the beginning of the Year 26,413,400 8,211,000
Add: Amount transferred from surplus in the statement of Profit & Loss 11,418,632 18,202,400
Closing Balance 37,832,032 26,413,400
3 Surplus (Profit & Loss Account)
Balance brought forward from previous year 105,636,892 32,827,542
Add: Profit for the year 57,093,159 91,011,750
Less: Transfer to Statutory reserve 11,418,632 18,202,400
Closing Balance 151,311,419 105,636,892
Total 563,163,203 506,070,044
There is no change in the Share Premium account during the year.
Note 3: Long Term Borrowings
1 Term Loan ` `
Secured
- From Banks 978,228,246 808,151,819
- From Others.
Bodies Corporate 152,392,155 221,783,688
Statutory Bodies 54,761,000 83,333,000
Total 1,185,381,401 1,113,268,507
S.M.I.L.E. MICROFINANCE LIMITED
29
These loans are secured against hypothecation of the book debts arising out of micro loans.
FROM BANKS `
Andhra Bank - TL 1 33,336,226
Andhra Bank - TL 2 150,000,000
Central Bank of India - TL 2 16,668,000
Corporation Bank -TL.2 91,666,000
Development Credit Bank Ltd. 30,000,000
ICICI Bank Ltd. 25,000,000
IDBI Bank - TL 1 8,333,333
IDBI Bank - TL 1 150,000,000
Karnataka Bank Ltd. 27,433,308
Lakshmi Vilas Bank - TL 2 10,000,000
Punjab National Bank 149,892,573
State Bank of Patiala 58,383,758
The Karur Vysya Bank - TL 5 2,500,000
The Karur Vysya Bank - TL 6 28,137,136
The Ratnakar Bank Ltd. 150,000,000
The South Indian Bank Ltd. 20,831,000
Vijaya Bank 25,000,000
TOTAL 977,181,334
FROM BODIES CORPORATE
Agri Development Finance ( Tamil Nadu) Ltd. -TL 1 4,504,205
Agri Development Finance ( Tamil Nadu) Ltd. -TL 2 7,547,498
Ananya Finance For Inclusive Growth Pvt Ltd 9,444,444
IFMR Capital Finance Private Ltd. 45,062,670
Maanaveeya Development & Finance Pvt Ltd. - TL 3 35,000,000
M V Microfin Pvt Ltd. 50,000,000
Opportunity Microfinance India Ltd. 833,338
TOTAL 152,392,155
FROM STATUTORY BODIES
Small Industries Development Bank of India - TL 2 54,761,000
TOTAL 54,761,000
These loans are secured against hypothecation of vehicles : ICICI Bank - (Loan No 1) 204,184
ICICI Bank - (Loan No 2) 167,732
ICICI Bank - (Loan No 3) 167,732
HDFC Bank - (Loan No 1) 181,622
HDFC Bank - (Loan No 2) 181,622
HDFC Bank - (Loan No 3) 144,020
TOTAL 1,046,912
GRAND TOTAL 1,185,381,401
S.M.I.L.E. MICROFINANCE LIMITED
30
Note 4: Short Term Borrowings
Over Draft Facility ` `
- From Kotak Mahindra Bank - 4,774,207
(Secured against receivables from Micro Credit Loan)
Total - 4,774,207
Note 5: Other Current Liabilities
S.No Particulars 31.03.2012 31.03.2011
` `
1 Interest Accrued but not due on Secured Loans 2,417,602 3,925,875
2 Liability in respect of Securitisation 104,779,346 32,897,451
3 Unmatured surplus on Securitisation 10,969,857 -
4 Insurance premium deposits 4,830,038 -
5 Advance collection – Interest 7,059,254 35,431,495
- Principal 443,040 122,113
6 Others 3,048,149 4,560,018
7 Sundry Creditors for Expenses 5,938,201 3,423,506
Total 139,485,487 80,360,458
Note 6: Short Term Provisions
1 Provision For Employees Benefit
Gratuity payable - 1,645,719
2 Others
Provision for NPA 833,107 729,919
Contingent Provisions against Standard Assets 3,594,053 4,002,474
Provision for Taxation - 9,829,228
Total 4,427,160 16,207,340
S.M.I.L.E. MICROFINANCE LIMITED
31
S.M.I.L.E MICROFINANCE LIMITED Notes Forming Integral Part of the Balance Sheet as at 31st March, 2012
Note : 7 Fixed Asset
I. Fixed Assets (Amount in `)
Sr
No Particulars Rate
Gross Block Depreciation Net Block
01.04.2011
Addition
during the
year
Deduction
during the
year
31.03.2012 01.04.2011
Addition
during the
year
Deduction
during the
year
31.03.2012 WDV as on
31.03.2012
WDV as on
31.03.2011
Tangible Assets
1 Plant and Equipment
Electrical Fixtures 13.91%
1,070,364
13,230
1,083,594
517,103 148,888
665,991
417,603
553,261
2 Furnitures & Fixtures 18.10%
1,095,861
187,200 -
1,283,061
565,795 210,471
-
776,266
506,795
530,066
3 Vehicles (Cars) 25.89%
5,288,528
- -
5,288,528
2,459,564 1,369,200
-
3,828,764
1,459,764
2,828,964
4 Office Equipment 13.91%
1,292,296
396,020 -
1,688,316
442,136 208,289
-
650,425
1,037,891
850,160
5 Computer 40.00%
5,243,184
1,532,135 -
6,775,319
4,138,959 2,372,274
-
6,511,233
264,086
1,104,225
6 Software 40.00%
-
3,152,946 -
3,152,946
- 89,592
-
89,592
3,063,354
-
TOTAL 13,990,233 5,281,531 - 19,271,764 8,123,557 4,398,713 - 12,522,270 6,749,494 5,866,676
S.M.I.L.E. MICROFINANCE LIMITED
32
Note 8: Deferred Tax Asset
S.No Particulars 31.03.2012 31.03.2011
` `
1 As per previous year balance 1,840,931 (308,330)
2 Provision for the year (1,046,272) 2,149,261
Total 794,659 1,840,931
Note 9: Other Non Current Assets
1 Unamortized Expenses 10,111,111 6,316,615
Total 10,111,111 6,316,615
Note 10: Inventories
1 Mobile and Two Wheeler stocks 785,686 1,220,815
-
Total 785,686 1,220,815
Note 11: Receivables under Financing Activities
1 Other Loans & Advances (Secured)
Loans against hypothecation of Two Wheelers-Staff 2,637,462 7,325,239
2 Unsecured considered good:
Micro Credit Loans to Poor Women 1,434,791,631 1,596,998,819
Staff Loans 1,471,122 2,139,479
Interest Accrued on Micro Credit Loans 5,725,640 6,479,575
Total 1,444,625,855 1,612,943,112
Note 12: Cash & Cash Equivalent
1 Cash on Hand 7,056,162 48,455,296
2 Bank Balance
In Current Account 169,176,121 52,184,647
In Fixed Deposits
(a) Earmarked-Security Deposit 1,755,000 -
(b) Earmarked for Lenders Margin Money
upto 12 months Maturity 253,911,798 23,750,000
More than 12 months Maturity 99,000,000 123,500,000
3 Interest accrued on Deposits with banks 14,181,680 3,733,096
Total 545,080,761 251,623,039
Note 13: Short Terms Loans and Advances
S.M.I.L.E. MICROFINANCE LIMITED
33
S.No Particulars 31.03.2012 31.03.2011
` `
1 Loans & Advances –Others
Advance Recoverable in cash or in kind for value to be received 27,087,220 5,248,854
Amount Receivable from Bajaj Allianz Life Insurance Company Ltd towards
….Death Claims & Refunds 25613622 -
Advance Income Tax and TDS (Previous Years) 551,712 715,616
Advance Income Tax and TDS (Current Year) 4,453,522 -
Cash Collateral with a Body Corporate - 7,669,734
Interest accrued on Deposits with body corporate - 631,554
Total 57,706,075 14,265,758
Note: Confirmation of claim submitted and accepted by Bajaj Allianz Life Insurance Co Ltd. not available
Note 14: Revenue from Operations
1 Interest on Loans 465,899,004 444,737,861
2 Profit on securitisation of Micro Credit Loan receivables 24,612,330 19,840,731
3 Processing fee receipts 36,523,463 16,929,556
4 Documentation charges - 34,850
5 Bad debts recovered 861,744 80,405
Total 527,896,540 481,623,403
Note 15: Other Income
1 Dividend earned on Liquid Fund Investments 458,397 472,287
2 Interest on Fixed Deposits 15,273,033 8,412,089
Total 15,731,430 8,884,376
Note 16: Finance Cost
1 Interest to – Banks 118,537,434 116,507,851
- Bodies Corporate 27,140,592 36,104,936
- Statutory Bodies 8,746,937 16,914,310
2 Documentation Charges 1,063,252 451,161
3 Bank Charges 1,903,158 1,151,168
4 Processing Fees – Banks 6,035,819 6,875,226
- Bodies Corporate - 1,701,070
Total 163,427,193 179,705,722
Note 17: Employee Benefit Expenses
S.M.I.L.E. MICROFINANCE LIMITED
34
S.No Particulars 31.03.2012 31.03.2011
` `
1 Salaries & Bonus 148,714,453 102,591,037
2 Staff Welfare Expenses 13,110,894 16,315,120
3 Gratuity Expenses 1,927,259 1,738,687
4 PF and ESI Expenses 13,365,515 7,295,012
5 Directors Remuneration 2,373,000 2,124,000
Total 179,491,122 130,063,856
Note 18: Other Administrative Expenses
1 Telephone Expenses 4,255,068 2,470,142
2 Travelling Expenses 26,848,171 13,741,953
3 Repair & Maintenance ( Building ) 1,552,237 383,800
4 Repair & Maintenance ( Machinery ) 3,033,828 1,283,339
5 Electricity charges 3,157,320 930,440
6 CSR Activity Expenses 718,083 -
7 Customer Welfare Expenses 817,357 -
8 Bad Debts written off 10,127,282 6,796,895
9 General Expenses 496,088 137,110
10 Insurance Expenses 5,125,014 911,833
11 Membership fees 435,294 -
12 Postage & Telegram 330,243 47,436
13 Professional Charges 10,521,144 1,540,806
14 Filing Fees 26,164 55,105
15 Sitting Fees 68,000 108,000
16 Security Expenses 1,017,282 720,714
17 Stationery Expenses 14,559,346 3,416,866
18 Auditors' Remuneration 1,133,000 1,040,000
19 Rents, Rates & Taxes 17,718,064 2,544,382
20 Software Expenses 5,694,788 -
21 Meeting and seminar expenses 669,830 357,335
Total 108,303,602 36,486,156
Note 19: Depreciation & Amortised Cost
Depreciation 4,398,713 3,794,075
Total 4,398,713 3,794,075
20. SIGNIFICANT ACCOUNTING POLICIES:
a) Basis of preparation of financial statements
S.M.I.L.E. MICROFINANCE LIMITED
35
The financial statements have been prepared under historical cost conventions and on
accrual system, assuming the principle of going concern and applying all the applicable
accounting standards as notified by the Government of India/ issued by The Institute of
Chartered Accountants of India as applicable. The Company follows the directions issued by
the Reserve Bank of India for Non- Banking Financial Companies.
b) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary
items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals
or accruals of past or future cash receipts or payments. The cash flows from operating,
investing and financing activities of the Company are segregated based on the available
information.
c) Revenue Recognition:
1) Interest on microfinance loans is recognized on accrual basis, as per the contract with the
borrowers. A portion of interest is charged on loan amount at the time of disbursement up to
30th June, 2011 upfront, which is amortized over the period of loan.
2) Interest on Non-Performing Assets, representing microfinance loans is recognized only when
received.
3) Profit on sale of loan receivables is recognized on transfer of clear title and is apportioned on
time basis.
4) Interest on deposits is recognized on accrual basis.
d) Borrowing Costs:
The interest costs incurred in connection with borrowing of funds are charged to revenue on
accrual basis, and processing fees paid upfront to the funders are charged to revenue on time
basis.
e) Fixed Asset:
1) All fixed assets have been valued at cost inclusive of direct and incidental expenses related to
acquisition.
2) Depreciation on the assets is provided on Written Down Value method at the rates specified
in the Schedule XIV to the Companies Act, 1956.
S.M.I.L.E. MICROFINANCE LIMITED
36
3) In respect of additions to fixed assets, the depreciation is provided on proportionate basis
from the date when the asset is put into use.
f) Inventories:
Inventories comprise of two wheelers, mobiles (both meant for field staff). These are stated
at cost.
g) Provisions:
1. A provision arising out of a present obligation is recognized when it is probable that an
outflow of resources will be required to settle the obligation and the amount that be
reasonably estimated.
2. Whenever there is a possible obligation that may, but probably will not, require an outflow of
resources, the same is disclosed by way of contingent liability.
3. Loans are classified and provided for as per the norms different from but not lower than those
provided under Non Banking Financial (Non- Deposit Accepting and Holding) Companies
Prudential Norms (Reserve Bank) Directions, 2007.
4. In respect of assets sold out, the necessary provisions are included along with the other NPA
provisions.
5. The Company has also made a contingency provision on the standard assets @ 0.25% as
per the Reserve Bank of India directions.
h) Gratuity:
The Company has covered its employees under group gratuity scheme of Life Insurance
Corporation of India. The premium payable to Life Insurance Corporation of India is charged to
revenue.
i) Unamortized Expenses:
This represents the processing fee on loans to the extent not written off.
21) Receivables under Financing Activities:
All loan exposures to borrowers with installments structure are stated at the outstanding balance including overdues.
22) Contingent Liabilities
The Corporate Guarantee given by the Company to Development Credit Bank (to cover the
first loss deficiency up to 5% & 10% on outstanding obligations as at 31.03.2012 of Rs.
1,35,74,729/- & Rs. 5,77,11,771/-) in respect of microcredit borrowers is Rs. 64,49,914/- .
S.M.I.L.E. MICROFINANCE LIMITED
37
23) Claims against company not acknowledged as debts – Rs. NIL (Previous Year – Rs.NIL).
24) Estimated amount of Contracts remaining to be executed on capital account and not provided for
is Rs.NIL (Previous Year – Rs.NIL/-)..
25) Reconciliation of subsidiary records with General Ledger has been completed up to 31st March
2012. Steps for elimination of outstanding entries are in progress. Since the outstanding entries
to be eliminated are insignificant, no material consequential effect is anticipated.
26) The entire operation of the company falls under one business segment only viz. Loans.
27) ASSET QUALITY:
Non Performing Assets (NPAs)
2011–12
`
2010–11
`
I Net NPA to Advances (%) NIL NIL
Ii Movement of NPAs (Gross):
a) Opening Balance
b) Additions during the year
c) Reduction during the year
d) Closing Balance
202,912
580,670
-
783,582
943,038
202,912
943,038
202,912
iii Movement of NPAs (Net):
a) Opening Balance
b) Additions during the year
c) Reduction during the year
d) Closing Balance
-
-
-
-
752,893
-
752,893
-
Iv Movement of Provision for NPAs:
a) Opening Balance
b) Provision made during the year
c) Write-off/ Write back of excess
provisions
d) Closing balance
202,912
580,670
-
783,582
190,145
202,912
190,145
202,912
V a) Provision for Standard Assets
b) Contingent Provisions against
Standard Assets.
103,188
3,594,053
539,774
4,002,474
Note: Since the Company follows provisioning norms of providing 10% on standard assets with overdue period ranging from 61 days to 180 days, it results in an additional provision of Rs. 49,525/-
28) Details of Financial Assets sold under Securitization System: Under securitization of financial assets (Micro Finance Portfolio) arrangement between the Company and the Assignees, the Company acts as a collection agent for managing such Portfolio. The Company entered into a separate collection agency agreement in this respect.
S.M.I.L.E. MICROFINANCE LIMITED
38
a. DEVELOPMENT CREDIT BANK - (Sec-3 Tr#I):
PARTICULARS 2011-12 2010-11
I No. of Accounts 2,405 NIL
II Aggregate value (net of Provisions)
of accounts sold 20,186,120 NIL
III Aggregate Consideration 20,960,456 NIL
IV Additional consideration realized in respect
of accounts transferred in earlier years NIL NIL
V Aggregate gain/loss over net book value 774,336 NIL
b. DEVELOPMENT CREDIT BANK - (Sec-3 Tr#II):
PARTICULARS 2011-12 2010-11
I No. of Accounts 7,918 NIL
II Aggregate value (net of Provisions)
of accounts sold 72,436,680 NIL
III Aggregate Consideration 75,368,073 NIL
IV Additional consideration realized in respect
of accounts transferred in earlier years NIL NIL
V Aggregate gain/loss over net book value 2,931,393 NIL
c. DEVELOPMENT CREDIT BANK - (Sec-4):
PARTICULARS 2011-12 2010-11
I No. of Accounts 5,986 Nil
II Aggregate value (net of Provisions)
of accounts sold 47,719,780 Nil
III Aggregate Consideration 49,590,684 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years NIL NIL
V Aggregate gain/loss over net book value 1,870,904 Nil
The Company maintains a Cash Collateral with Development Credit Bank in respect of the
above transaction and the balance as on 31st March 2012 is Rs.14,647,000/-.
d. RELIANCE COMMERCIAL FINANCE - (Tranche- I):
PARTICULARS 2011-12 2010-11
I No. of Accounts 31,284 Nil
II Aggregate value (net of Provisions) 195,573,535 Nil
S.M.I.L.E. MICROFINANCE LIMITED
39
of accounts sold
III Aggregate Consideration 205,353,483 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 9,779,949 Nil
e. RELIANCE COMMERCIAL FINANCE - (Tranche- II):
PARTICULARS 2011-12 2010-11
I No. of Accounts 29,875 Nil
II Aggregate value (net of Provisions)
of accounts sold 229,787,695 Nil
III Aggregate Consideration 238,822,690 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 9,034,996 Nil
The Company maintains a Cash Collateral with Reliance Commercial Finance in respect of the
above transaction and the balance as on 31st March 2012 is Rs.7,47,35,792/-.
f. IFMR CAPITAL FINANCE PRIVATE LTD- (Tranche-I)
PARTICULARS 2011-12 2010-11
I No. of Accounts 16,305 Nil
II Aggregate value (net of Provisions)
of accounts sold 139,868,680 Nil
III Aggregate Consideration 146,576,380 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 6,707,700 Nil
g. IFMR CAPITAL FINANCE PRIVATE LTD- (Tranche-II)
PARTICULARS 2011-12 2010-11
I No. of Accounts 7,773 Nil
II Aggregate value (net of Provisions)
of accounts sold 59,825,960 Nil
S.M.I.L.E. MICROFINANCE LIMITED
40
III Aggregate Consideration 61,585,628 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 1,759,668 Nil
h. IFMR CAPITAL FINANCE PRIVATE LTD- (Tranche-III)
PARTICULARS 2011-12 2010-11
I No. of Accounts 9,262 Nil
II Aggregate value (net of Provisions)
of accounts sold 66,329,060 Nil
III Aggregate Consideration 68,408,995 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 2,079,935 Nil
The Company maintains a Cash Collateral with IFMR Capital Finance Pvt Ltd in respect of the
above transaction and the balance as on 31st March 2012 is Rs.30,748,006/-.
i. IDBI BANK - (Tranche-I)
PARTICULARS 2011-12 2010-11
I No. of Accounts 23,442 Nil
II Aggregate value (net of Provisions)
of accounts sold 116,173,861 Nil
III Aggregate Consideration 121,208,117 Nil
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 5,034,255 Nil
j. IDBI BANK - (Tranche-II)
PARTICULARS 2011-12 2010-11
I No. of Accounts 48,775 Nil
II Aggregate value (net of Provisions)
of accounts sold 308,743,104 Nil
III Aggregate Consideration 321,412,972 Nil
S.M.I.L.E. MICROFINANCE LIMITED
41
IV Additional consideration realized in respect
of accounts transferred in earlier years Nil Nil
V Aggregate gain/loss over net book value 12,669,868 Nil
The Company maintains a Cash Collateral with IDBI Bank in respect of the above
transaction and the balance as on 31st March 2012 is Rs.50,031,000/-.
29) Comparative Figures:
Previous year’s figures have been regrouped/ rearranged wherever necessary.
30) Related Party Transactions:
As per Accounting Standard 18, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below.
Key Management Personnel:
o Dr. N. SETHURAMAN, Chairman (Till 25th October, 2011) o Mr. M.SATHIYAMOORTHI, Chairman & Managing Director (Managing Director till 24th
Oct’2011 and Chairman & Managing Director from 25th Oct’2011) o Mr. A. TAMILARASON, Whole Time Director.
Relatives of Key Management Personnel with whom transactions have taken place: NIL.
Associates / Related entities with whom transactions have taken place:
o Meenakshi Hotels & Entertainment Private Limited.
o Fathi Software (P) Ltd.
o Meenakshi Media Private Limited
The following are the significant transactions of the Company with its related parties.
(a) Lease of premises:
During the year ended March 31, 2012, the Company paid Rs.60,000/- as rental advance (Previous year Rs.60,000/-) and rent Rs.30,000/- (Previous year Rs.60,000/-) to Dr.N.Sethuraman, ex-Chairman of the Company.
(b) Remuneration to whole-time Directors:
During the year ended March 31, 2012, the Company paid remuneration to the whole-time
Directors: –
S.M.I.L.E. MICROFINANCE LIMITED
42
1) Dr. N. SETHURAMAN - Rs.595,000/- (Previous Year: Rs. 1,020,000/-)
2) Mr. M.SATHIYAMOORTHI - Rs.1,178,000/- (Previous Year –Rs.972,000)
3) A.TAMILARASON, - Rs. 600,000/-
(c) Purchase of Food Items:
During the year ended March 31, 2012, the Company purchased food items from-
a) Meenakshi Hotels & Entertainment Private Limited amounting to Rs.1,727,411/-(Previous
year: Rs.189,128/-)
b) Meenakshi Media Private Limited amounting to Rs.1,760,721/-(Previous year: Nil).
Note: Food Items purchased for Cash at arms length price (Market Price)
(d) Software Expenses:
During the year ended March 31, 2012, the Company paid Software expenses to-
Fathi Software (P) Ltd. Amounting to Rs. 6,155,723/- (Previous year: Nil).
31) Earnings per Share as per Accounting Standard 20.
Particulars 2011-2012 2010-2011
Profit after tax (`) 57,093,159 91,011,750
No. of Equity Shares of Rs.10 each as on 31st March
17,339,639 17,339,639
Basic EPS (`) 3.29 5.25
32) TAXATION :
Income Tax:
Current Tax is the amount of tax payable on the taxable income for the year and this is
determined in accordance with the provisions of Income Tax Act, 1961
Deferred tax:
Income tax expenses comprise of current and deferred tax charge or credit. Deferred tax assets
/ liabilities are measured by applying tax rate and tax laws that are in force on the date of
adoption of the balance sheet. Deferred tax assets on account of timing differences are
recognized only to the extent there is certainty of its realization. At each balance sheet date, the
carrying amount of deferred tax asset is reviewed based on developments to reassess
realization.
S.M.I.L.E. MICROFINANCE LIMITED
43
The Company has arrived at a Deferred Tax Asset of Rs.794,659/- during the year (Previous
year Rs. 1,840,931/-).
33) Accounting Standard 28 – Impairment of Assets:
In the opinion of the management, there is no impairment of any of the Fixed Assets of the Company.
34) Accounting Standard 29 – Provision for Contingent Liabilities and Contingent Assets: The guidelines issued by ICAI in this respect have been incorporated at the appropriate places. 35) Managerial Remuneration:
Particulars Year ended
March 31, 2012 March 31, 2011
Managerial Remuneration 2,373,000 2,124,000
36) Auditors’ Remuneration and other expenses:
Particulars Year ended
March 31, 2012 March 31, 2011
Statutory Auditors’ Fees 792,000 720,000
Branch Auditors’ Fees 340,000 320,000
Service Tax 116,596 107,120
Total Fees 1,248,596 1,147,120
37) Micro, Small & Medium Enterprises
Based on and to the extent of information received by the Company from the suppliers
during the year regarding their status under the Micro. Small and Medium Enterprises
Development Act, 2006 (MSMED Act) and relied upon by the auditors, the relevant
particulars as at the year end is NIL
38) Expenditure in foreign currency:
Foreign Travel – Rs. 1,827,524/- (Previous Year: Rs.NIL)
39) Disclosure of Capital Adequacy & Liquidity:
The Company makes the following disclosure as per the Guidelines for Systemically Important
Non-deposit taking Non-Banking Finance Companies as regards Capital Adequacy, Liquidity and
Disclosure Norms issued by the Reserve Bank of India on Aug 1, 2008:
i. Capital Adequacy Ratio
S.M.I.L.E. MICROFINANCE LIMITED
44
(Rs. In Cr)
Particulars As at 31 March
2012 As at 31 March
2011
Tier I Capital 72.56 67.31
Tier II Capital 0.36 0.40
Total Capital 72.92 67.71
Total Risk Weighted Assets 150.64 163.29
Capital Ratios
Tier I Capital as a Percentage of Total Risk Weighted Assets (%)
48.17 41.22
Tier II Capital as a Percentage of Total Risk Weighted Assets (%)
0.24 0.25
Total Capital (%) 48.41 41.47
ii. Exposure to Real Estate Sector, both Direct and Indirect
The Company does not have any direct or indirect exposure to the real estate sector during
the year ended 31st March 2012 and 31st March 2011.
iii. Asset Liability Management
Maturity Pattern of Certain Items of Assets and Liabilities (Rs in Crore)
Up to 1 month
Over 1 month to 2 months
Over 2 months to 3 months
Over 3 months to 6 months
Over 6 months to 1 yr
Over 1 yr to 3 yrs
Over 3 yrs to 5 yrs
Over 5 yrs
Liabilities
Borrowing from Banks
2.74 4.54 10.09 21.10 34.62 45.45 Nil Nil
Assets
Advances 20.77 19.18 17.85 45.19 40.01 0.89 Nil Nil
Investments Nil Nil ` Nil Nil Nil Nil Nil Nil
Per our report of even date for VICTORIA MATHEWS & SANTHAKUMAR for and on behalf of the Board Chartered Accountants
Sd/- Sd/- M. SATHIYAMOORTHI CHAIRMAN & MANAGING DIRECTOR
B. SANTHAKUMAR Partner
Membership No: 27583/200
S.M.I.L.E. MICROFINANCE LIMITED
45
Sd/- A.TAMILARASON
Director
Sd/- Place : Chennai G. SOMASUNDARAM Dated : 07.06.2012 Company Secretary
CASH FLOW STATEMENT FOR THE YEAR ENDED March 31, 2012
CASH FLOW STATEMENT
Year Ended 31st March 2012
Year Ended 31st March 2011
` `
CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Taxes 88,312,573 135,915,722 Adjustment for Non- Cash Expenditures Provision for NPA (305,233) 4,542,248 Loss on Sale of assets - - Depreciation 4,398,713 3794,075
Operating Profit Before Changes in Operating Assets 92,406,053 144,252,045 Adjustments for: (Increase)/ Decrease in Micro-credit Advances 162,207,188 (232,410,997) (Increase)/ Decrease in Other Current Assets 1,189,064 (3,745,356) (Increase)/ Decrease in Other Loan & Advances (38,084,183) 5,172,070 (Increase)/ Decrease in Miscellaneous Assets (3,794,496) 2,035,933 (Decrease)/Increase in Other Liabilities and Provisions 47,650,082 25,223,022 Net cash generated from operating activities Before Tax 261,573,708 (59,473,284) Income Tax Paid (30,173,142) (47,053,233)
Net cash Generated from Operating Activities After Tax (A) 231,400,567 (106,426,517)
CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (5,281,531) (1,370,668) Net cash flow in Investing Activities (B) (5,281,531) (1,370,668)
CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Equity Share Capital Net of issue expenses - 245,584,870 Net Increase in Loans Received 67,338,687 (141,039,389)
Net Cash Generated from Financing Activities (C) 67,338,687 104,545,481
Net Increase/(Decrease) in Cash and Cash equivalents during the year (A)+(B)+( C) 293,457,722 (3,351,705) Cash and Cash Equivalents at the beginning of the year 251,623,039 254,974,745
Cash and Cash Equivalents at the end of the year 545,080,761 251,623,039
Per our report of even date for VICTORIA MATHEWS & SANTHAKUMAR for and on behalf of the Board Chartered Accountants
Sd/- Sd/-
B.SANTHAKUMAR M. SATHIYAMOORTHI Partner Chairman & Managing Director
Membership No: 27583/200
Sd/-
A. Tamilarason Director
S.M.I.L.E. MICROFINANCE LIMITED
46
Place : Chennai Sd/-
Date : 07th June 2012 G. SOMASUNDARAM Company Secretary
INFORMATION PURSUANT TO PART IV OF SCHEDULE TO THE COMPANIES ACT, 1956 BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Registration Details:
Registration Number: U67190TN1995PLC030604 Balance Sheet Date: 31.03.2012 State Code: 18
Capital Raised during the year (Rs. In thousands) Public Issue: Nil Bonus Issue: Nil Right Issue: Nil Private Placement: Nil
Position of Mobilisation and Deployment of funds (Rs. In thousands) SOURCES OF FUNDS
TOTAL 2,065,853 Paid up capital 173,396 Share Application Money 0 Reserves & Surplus 563,164 Deferred tax Liabilities 0 Non Current Liabilities 1,185,381 Current Liabilities 143,913
APPLICATION OF FUNDS TOTAL 2,065,853
Net fixed assets 6,749 Investments 0 Current assets 2,048,198
Other Non-Current Assets 10,111
Deferred Tax Asset 795 PERFORMANCE OF THE COMPANY
Turnover 543,628 Total expenditure 455,315 Profit before Tax 88,313 Profit after Tax 57,093 Earnings per share 3.29
V. Generic Names of Principal Product / Services of the Company
(As per monetary terms) Item Code No. (ITC Code) Product / Service Description MICROFINANCE
Per our report of even date
for VICTORIA MATHEWS & SANTHAKUMAR for and on behalf of the
Board Chartered Accountants
Sd/- Sd/-
B. SANTHAKUMAR M. SATHIYAMOORTHI Partner Chairman & Managing Director Membership No: 27583/200
Sd/-
A. Tamilarason Director Place : Chennai Sd/-
S.M.I.L.E. MICROFINANCE LIMITED
47
Date : 07.06.2012 G. SOMASUNDARAM Company Secretary
Schedule to the Balance Sheet of a non-deposit taking Non-Banking Financial Company (as required in terms of paragraph 13 of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007 as at 31.03.2012.
Liabilities side :
(Rs. in lakhs)
Particulars Amount
Outstanding
Amount
Overdue
(1) Loans and advances availed by the Non-Banking Financial
Company Inclusive of interest accrued thereon but not paid
(a) Debentures : Secured 0 0
: Unsecured 0 0
(other than falling within the meaning of public deposits*)
(b) Deferred Credits 0 0
(c) Term Loans 11,853 0
(d) Inter-Corporate loans and borrowing 0 0
(e) Commercial Paper 0 0
(f) Other Loans (specify nature) 0 0
* Please see Note 1 below
Assets side :
(2) Break-up of Loans and Advances including bills receivables
(other than those included in (4) below):
(a) Secured 26 0
(b) Unsecured 14,420 12.40
(3) Break up of Leased Assets and stock on hire and other
assets counting towards AFC activities
(i) Lease assets including lease rentals under sundry debtors:
(a) Financial lease 0 0
(b) Operating lease 0 0
(ii) Stock on hire including hire charges under sundry debtors:
(a) Assets on hire 0 0
(b) Repossessed Assets 0 0
(iii) Other loans counting towards AFC activities
(a) Loans where assets have been repossessed 0 0
(b) Loans other than (a) above 0 0
S.M.I.L.E. MICROFINANCE LIMITED
48
(4) Break-up of Investments : Cost Market
Value
Current Investments :
1. Quoted :
(i) Shares : (a) Equity 0
(b) Preference 0
(ii) Debentures and Bonds 0
(iii) Units of mutual funds 0
(iv) Government Securities 0
(v) Others (please specify) 0
2. Unquoted :
(i) Shares : (a) Equity 0
(b) Preference 0
(ii) Debentures and Bonds 0
(iii) Units of mutual funds 0
(iv) Government Securities 0
(v) Others (please specify) 0
Long Term Investments :
1. Quoted :
(i) Shares : (a) Equity 0
(b) Preference 0
(ii) Debentures and Bonds 0
(iii) Units of mutual funds 0
(iv) Government Securities 0
(v) Others (please specify) 0
2. Unquoted :
(i) Shares : (a) Equity 0
(b) Preference 0
(ii) Debentures and Bonds 0
(iii) Units of mutual funds 0
(iv) Government Securities 0
(v) Others (please specify)
0
S.M.I.L.E. MICROFINANCE LIMITED
49
(5) Borrower group-wise classification of assets financed as in (2) and (3) above: Please see Note 2 below
Category Amount net of provisions
Secured Unsecured Total
1. Related Parties **
(a) Subsidiaries 0 0 0
(b) Companies in the same group 0 0 0
(c) Other related parties 0 0 0
2. Other than related parties 26 14,420 14,446
TOTAL 26 14,420 14,446
(6) Investor group-wise classification of all investments (current and long term) in shares and
securities (both quoted and unquoted): Please see note 3 below
Category Market / Break-up value or fair value or NAV
Book Value (Net of
Provisions)
1. Related Parties **
(a) Subsidiaries 0 0
(b) Companies in the same group 0 0
(c) Other related parties 0 0
2. Other than related parties 0 0
TOTAL 0 0
** As per Accounting Standard of ICAI (Please see Note 3)
(7) Other Information
Particulars Amount
(i) Gross Non-Performing Assets
(a) Related parties 0 (b) Other than related parties 8 (ii) Net Non-Performing Assets (a) Related parties 0 (b) Other than related parties 0
(iii) Assets acquired in satisfaction of debt 0
NOTES:
1. As defined in paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits Reserve Bank) Directions, 1998.
2. Provisioning norms shall be applicable as prescribed in Non-Banking Financial (Non-Deposit-Accepting or Holding) Companies Prudential Norms(Reserve Bank) Directions, 2007.
3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long term or current in (4) above.
S.M.I.L.E. MICROFINANCE LIMITED
50