DRAFT RED HERRING PROSPECTUS Dated: July 27, 2018

(This Draft Red Herring Prospectus will be updated upon registering with the RoC) Please read Section 32 of the Companies Act, 2013

100% Book Built Offer

MUTHOOT MICROFIN LIMITEDOur Company was incorporated as “Panchratna Stock and Investment Consultancy Services Private Limited” on April 06, 1992 at Mumbai, Maharashtra, India as a private limited company under the Companies Act, 1956. Our Company was converted into a public limited company pursuant to a special resolution passed by our Shareholders at the EGM held on April 30, 1994 and the name of our Company was changed to “Panchratna Stock and Investment Consultancy Services Limited”. A certificate of change of name, consequent upon conversion to a public limited company was issued by the Registrar of Companies, Maharashtra at Mumbai (“RoC”) on June 09, 1994. The name of our Company was changed to “Panchratna Securities Limited” pursuant to a resolution passed by the Shareholders of our Company at the EGM held on June 11, 1994. A fresh certificate of incorporation, consequent upon change of name was granted to our Company by the RoC on June 22, 1994. The Reserve Bank of India (“RBI”) granted a certificate of registration dated March 18, 1998 bearing no. 13.00365 to our Company for registration as an NBFC under Section 45 IA of the Reserve Bank of India Act, 1934. Subsequently, the name of our Company was changed to “Muthoot Microfin Limited” pursuant to a resolution passed by the Shareholders of our Company at the EGM held on October 29, 2012. A fresh certificate of incorporation, consequent upon change of name was granted to our Company by the RoC on November 06, 2012. Subsequently, our Company was granted NBFC-Microfinance Institution (“NBFC-MFI”) status by the RBI with effect from March 25, 2015. For further details, see “History and Certain Corporate Matters” on page 141.

Registered Office: 13th Floor, Parinee Crescenzo, Bandra Kurla Complex, Bandra East, Mumbai 400 051, Maharashtra, India.Telephone: (+91) 22 6272 8544; Facsimile: (+91) 48 4430 0127

Administrative Office: 5th Floor, Muthoot Towers, M.G. Road, Kochi 682 035, Kerala, India.Telephone: (+91) 48 4427 7500; Facsimile: (+91) 48 4430 0127

Contact Person: Neethu Ajay, Company Secretary and Compliance Officer; Email: info@muthootmicrofin.com; Website: www.muthootmicrofin.comCorporate Identity Number: U65190MH1992PLC066228

OUR PROMOTERS: THOMAS JOHN MUTHOOT, THOMAS MUTHOOT, THOMAS GEORGE MUTHOOT, PREETHI JOHN, REMMY THOMAS, NINA GEORGE AND MUTHOOT FINCORP LIMITEDINITIAL PUBLIC OFFER OF UP TO [●] EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“EQUITY SHARES”) OF MUTHOOT MICROFIN LIMITED (“COMPANY” OR “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ` [●] PER EQUITY SHARE), AGGREGATING UP TO `[●] MILLION (“OFFER”) COMPRISING A FRESH ISSUE OF UP TO [●] EQUITY SHARES, AGGREGATING UP TO ` 5,000 MILLION BY OUR COMPANY (“FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 16,310,072 EQUITY SHARES, AGGREGATING UP TO [●] MILLION (“OFFER FOR SALE”), COMPRISING (1) UP TO 4,060,429 EQUITY SHARES BY THOMAS JOHN MUTHOOT, AGGREGATING UP TO [●] MILLION, (2) UP TO 4,078,996 EQUITY SHARES BY THOMAS MUTHOOT, AGGREGATING UP TO [●] MILLION, (3) UP TO 4,059,019 EQUITY SHARES BY THOMAS GEORGE MUTHOOT, AGGREGATING UP TO [●] MILLION, (4) UP TO 121,180 EQUITY SHARES BY PREETHI JOHN, AGGREGATING UP TO [●] MILLION, (5) UP TO 101,460 EQUITY SHARES BY REMMY THOMAS, AGGREGATING UP TO [●] MILLION, (6) UP TO 122,870 EQUITY SHARES BY NINA GEORGE, AGGREGATING UP TO [●] MILLION, (7) UP TO 1,908,006 EQUITY SHARES BY MUTHOOT FINCORP LIMITED (“MFL”), AGGREGATING UP TO [●] MILLION AND (8) UP TO 1,858,112 EQUITY SHARES BY CREATION INVESTMENTS INDIA LLC, AGGREGATING UP TO [●] MILLION AND (TOGETHER, THE “SELLING SHAREHOLDERS” AND SUCH OFFERED SHARES, THE “OFFERED SHARES”). THE OFFER SHALL CONSTITUTE [●] % OF OUR POST-OFFER PAID-UP EQUITY SHARE CAPITAL.THE FACE VALUE OF EQUITY SHARES IS ` 10 EACH AND THE OFFER PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND, DISCOUNT, IF ANY, AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY AND THE SELLING SHAREHOLDERS, IN CONSULTATION WITH THE MANAGERS AND WILL BE ADVERTISED IN [●] EDITIONS OF [●], [●] EDITIONS OF [●] AND [●] EDITIONS OF [●] (WHICH ARE WIDELY CIRCULATED ENGLISH, HINDI AND MARATHI DAILY NEWSPAPERS RESPECTIVELY, MARATHI BEING THE REGIONAL LANGUAGE OF MAHARASHTRA, WHERE OUR REGISTERED OFFICE IS LOCATED) AT LEAST FIVE WORKING DAYS PRIOR TO THE BID/ OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO BSE LIMITED (“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH BSE, THE “STOCK EXCHANGES”) FOR THE PURPOSE OF UPLOADING ON THEIR RESPECTIVE WEBSITES.In case of any revision in the Price Band, the Bid/ Offer Period will be extended by at least three additional Working Days after such revision in the Price Band, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/ Offer Period, if applicable, will be widely disseminated by notification to the Stock Exchanges, by issuing a press release, and also by indicating the change on the website of the Managers and at the terminals of the other members of the Syndicate.The Offer is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”). The Offer is being made through the Book Building Process, in compliance with Regulation 26(1) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (“SEBI ICDR Regulations”), wherein not more than 50% of the Offer shall be allocated on a proportionate basis to QIBs (“QIB Portion”), provided that our Company and the Selling Shareholders, in consultation with the Managers, may allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis (“Anchor Investor Portion”), at the Anchor Investor Allocation Price. At least one-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above Anchor Investor Allocation Price. In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion. 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders (other than Anchor Investors), including Mutual Funds, subject to valid Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the remaining Net QIB Portion for proportionate allocation to QIBs. Further, not less than 15% of the Offer shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. All Bidders, other than Anchor Investors, shall mandatorily participate in this Offer through the Application Supported by Blocked Amount (“ASBA”) process by providing details of their respective bank account which will be blocked by the Self Certified Syndicate Banks (“SCSBs”). Anchor Investors are not permitted to participate in the Offer through ASBA Process. For details, see “Offer Procedure” on page 296.

RISKS IN RELATION TO THE FIRST OFFERThis being the first public offer of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is ` 10 and the Floor Price is [●] times the face value and the Cap Price is [●] times the face value. The Offer Price (determined and justified by our Company and the Selling Shareholders, in consultation with the Managers, on the basis of the assessment of market demand for the Equity Shares by way of the Book Building Process, as stated under “Basis for Offer Price” on page 86) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKSInvestments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in the Offer unless they can afford to take the risk of losing their entire investment. Investors are advised to read the risk factors carefully before taking an investment decision in the Offer. For taking an investment decision, investors must rely on their own examination of our Company and the Offer, including the risks involved. The Equity Shares in the Offer have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of the investors is invited to “Risk Factors” on page 15.

ISSUER’S AND SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITYOur Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company and the Offer, which is material in the context of the Offer, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. Further, each of the Selling Shareholders, severally and not jointly, accept responsibility only for, and confirms, only the statements specifically made or confirmed by such Selling Shareholder in this Draft Red Herring Prospectus to the extent of information specifically pertaining to itself and its respective portion of Offered Shares, are true and correct in all material aspects and are not misleading in any material respect.

LISTINGThe Equity Shares offered through the Red Herring Prospectus are proposed to be listed on BSE and NSE. Our Company has received an ‘in-principle’ approval from BSE and NSE for the listing of the Equity Shares pursuant to letters dated [●] and [●], respectively. For the purposes of the Offer, the Designated Stock Exchange shall be [●]. A signed copy of the Red Herring Prospectus and the Prospectus shall be delivered for registration to the RoC in accordance with Section 26(4) of the Companies Act 2013. For details of the material contracts and documents available for inspection from the date of the Red Herring Prospectus up to the Bid/ Offer Closing Date, see “Material Contracts and Documents for Inspection” on page 377.

GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS

Edelweiss Financial Services Limited14th Floor, Edelweiss House, Off. C.S.T. Road, Kalina, Mumbai 400 098, Maharashtra, IndiaTelephone: (+91) 22 4009 4400; Facsimile: (+91) 22 4086 3610Email: mml.ipo@edelweissfin.comInvestor grievance email: customerservice.mb@edelweissfin.comWebsite: www.edelweissfin.comContact person: Nishita John/Pradeep TewaniSEBI Registration No.: INM0000010650

Motilal Oswal Investment Advisors LimitedMotilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai 400 025, Maharashtra, IndiaTelephone: (+91) 22 3846 4380; Facsimile: (+91) 22 3846 4315Email: muthootmfin.ipo@motilaloswal.comInvestor grievance email: moiaplredressal@motilaloswal.comWebsite: www.motilaloswalgroup.comContact person: Kristina Dias/ Subodh MallyaSEBI Registration No.: INM000011005

Credit Suisse Securities (India) Private LimitedCeejay House, 9th Floor; Plot F, Shivsagar Estate Dr. Annie Besant Road, Worli, Mumbai 400 018; Maharashtra, IndiaTelephone: (+91) 22 6777 3885; Facsimile: (+91) 22 6777 3820Email: list.muthootmicrofinanceipo@credit-suisse.comInvestor grievance email: list.igcellmer-bnkg@credit-suisse.comWebsite: www.credit-suisse.comContact person: Abhay AgarwalSEBI Registration No.: INM000011161

BOOK RUNNING LEAD MANAGER REGISTRAR TO THE OFFER

SMC Capitals LimitedA-401/402, Lotus Corporate Park. Jai Coach Junction, Off WE Highway, Goregaon (East), Mumbai 400063, Maharashtra, IndiaTelephone: (+91) 22 6648 1818; Facsimile: (+91) 22 6734 1697; Email: mml_ipo @smccapitals.comInvestor grievance id: investor.grievance@smccapitals.com; Website: www.smccapitals.comContact person: Satish Mangutkar/ Bhavin Shah; SEBI Registration No.: INM000011427

Karvy Computershare Private LimitedKarvy Selenium Tower B, Plot 31-32, Financial District, Nanakramguda Gachibowli, Hyderabad 500 032, Telangana, IndiaTelephone: (+91) 40 6716 2222; Facsimile: (+91) 40 2300 1153; Email: einward.ris@karvy.comInvestor grievance email: muthoot.ipo@karvy.com; Website: www.karisma.karvy.comContact person: M Murali Krishna; SEBI Registration No.: INR000000221

BID/ OFFER PROGRAMMEBID/ OFFER OPENS ON [●](1) BID/ OFFER CLOSES ON [●](2)

(1) Our Company and the Selling Shareholders may, in consultation with the Managers, consider participation by Anchor Investors in accordance with the SEBI ICDR Regulations. The Anchor Investor Bidding Date shall be one Working Day prior to the Bid/ Offer Opening Date.

(2) Our Company and the Selling Shareholders may, in consultation with the Managers, consider closing the Bid/ Offer Period for QIBs one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI ICDR Regulations.

TABLE OF CONTENTS

SECTION I: GENERAL ........................................................................................................................................................... 1

DEFINITIONS AND ABBREVIATIONS .............................................................................................................................. 1 NOTICE TO INVESTORS ...................................................................................................................................................... 9 CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND

CURRENCY OF PRESENTATION ..................................................................................................................................... 10 FORWARD-LOOKING STATEMENTS ............................................................................................................................. 13

SECTION II: RISK FACTORS ............................................................................................................................................. 15

SECTION III: INTRODUCTION.......................................................................................................................................... 41

SUMMARY OF INDUSTRY ................................................................................................................................................ 41 SUMMARY OF OUR BUSINESS ........................................................................................................................................ 45 SUMMARY OF FINANCIAL INFORMATION .................................................................................................................. 51 THE OFFER .......................................................................................................................................................................... 54 GENERAL INFORMATION ................................................................................................................................................ 56 CAPITAL STRUCTURE ...................................................................................................................................................... 66 OBJECTS OF THE OFFER ................................................................................................................................................... 82 BASIS FOR OFFER PRICE .................................................................................................................................................. 86 STATEMENT OF SPECIAL TAX BENEFITS..................................................................................................................... 89

SECTION IV: ABOUT OUR COMPANY ............................................................................................................................ 93

INDUSTRY OVERVIEW ..................................................................................................................................................... 93 OUR BUSINESS ................................................................................................................................................................. 116 REGULATIONS AND POLICIES ...................................................................................................................................... 134 HISTORY AND CERTAIN CORPORATE MATTERS ..................................................................................................... 141 OUR MANAGEMENT ....................................................................................................................................................... 146 OUR PROMOTER AND PROMOTER GROUP ................................................................................................................ 163 OUR GROUP COMPANY .................................................................................................................................................. 169 RELATED PARTY TRANSACTIONS .............................................................................................................................. 172 DIVIDEND POLICY ........................................................................................................................................................... 173 SELECTED STATISTICAL INFORMATION ................................................................................................................... 174

SECTION V: FINANCIAL INFORMATION .................................................................................................................... 181

FINANCIAL STATEMENTS ............................................................................................................................................. 181 SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP AND IND AS ....................... 232 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

............................................................................................................................................................................................. 236 FINANCIAL INDEBTEDNESS ......................................................................................................................................... 258

SECTION VI: LEGAL AND OTHER INFORMATION .................................................................................................. 260

OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS ........................................................................ 260 GOVERNMENT AND OTHER APPROVALS .................................................................................................................. 266 OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................................................... 268

SECTION VII: OFFER INFORMATION .......................................................................................................................... 283

TERMS OF THE OFFER .................................................................................................................................................... 283 OFFER STRUCTURE ......................................................................................................................................................... 292 OFFER PROCEDURE ........................................................................................................................................................ 296

SECTION VIII: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ................................................................. 334

SECTION IX: OTHER INFORMATION ........................................................................................................................... 377

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................................. 377 DECLARATION ................................................................................................................................................................. 380 ANNEXURE A – U.S. RESALE LETTER .......................................................................................................................... 389

SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

This Draft Red Herring Prospectus uses certain definitions and abbreviations which, unless the context otherwise indicates or

implies, shall have the meaning as provided below. References to any legislation, act, regulation, rules, guidelines or policies

shall be to such legislation, act or regulation, rules, guidelines and policies as amended from time to time. In case of any

inconsistency between the definitions given below and the definitions contained in the General Information Document, the

definitions given below shall prevail.

The words and expressions used but not defined herein shall have the meaning as is assigned to such terms under the

Companies Act, the SEBI ICDR Regulations, the SCRA, the Depositories Act or the rules and regulations made thereunder,

unless the context otherwise indicates or implies.

General Terms

Term Description

“our Company”, “the

Company”, or “the Issuer”

Muthoot Microfin Limited, a public limited company incorporated under the Companies Act, 1956 and

having its registered office at 13th Floor, Parinee Crescenzo, Bandra Kurla Complex, Bandra East, Mumbai

400 051, Maharashtra, India.

“we”, “us” or “our” Unless the context otherwise indicates or implies, refers to our Company

Company and Selling Shareholder Related Terms Term Description

ALM Committee The asset liability management committee of our Company

Articles of Association/

AoA

Articles of association of our Company, as amended

Audit Committee The audit committee of our Board as described in “Our Management” on page 154

Board/ Board of Directors Board of directors of our Company, including a duly constituted committee thereof

CCPS Compulsorily convertible preference shares of our Company of face value ` 10 each CEO The chief executive officer of our Company, namely, Sadaf Sayeed

CFO The chief financial officer of our Company, namely, Praveen T

Company Secretary and

Compliance Officer

The company secretary and compliance officer of our Company, namely, Neethu Ajay

Administrative Office 5th Floor, Muthoot Towers, M.G Road, Kochi 682 035, Kerala, India

CSR Committee The corporate social responsibility committee of our Board as described in “Our Management” on page 157

Director(s) Director(s) of our Company

Equity Shares Equity Shares of our Company of face value of ` 10 each ESOP Plan Muthoot Microfin Employee Stock Option Plan 2016

ESOP Trust MML Employee Welfare Trust

Group Companies Such companies as covered under the applicable accounting standards and also other companies as

considered material by our Board pursuant to a policy on materiality of group companies approved by our

Board on June 27, 2018 and as disclosed in “Our Group Company” on page 169

Independent Directors Independent directors on our Board, and eligible to be appointed as independent directors under the

provisions of the Companies Act and the SEBI Listing Regulations. For details of the Independent Directors,

see “Our Management” on page 146

IPO Committee The IPO Committee of our Board as disclosed in “Our Management” on page 157

Key Management Personnel

or KMP

Key management personnel of our Company in terms of Regulation 2(1)(s) of the SEBI ICDR Regulations

and as disclosed in “Our Management” on page 160

MD or Managing Director The managing director of our Company, namely, Thomas Muthoot

MFL Muthoot Fincorp Limited, one of our Promoters

Nomination and

Remuneration Committee

The nomination and remuneration committee of our Board as described in “Our Management” on page 156

Memorandum of

Association/ MoA

Memorandum of association of our Company, as amended

Promoter(s) The promoters of our Company namely, Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot,

Preethi John, Remmy Thomas, Nina George and MFL

Promoter Group The entities constituting the promoter group of our Company in terms of Regulation 2(1)(zb) of the SEBI

ICDR Regulations. For details, see “Our Promoter and Promoter Group” on page 166

Registered Office 13th Floor, Parinee Crescenzo, Bandra Kurla Complex, Bandra East, Mumbai 400 051, Maharashtra, India

Registrar Agreement The agreement dated July 27, 2018, entered into amongst our Company, the Selling Shareholders and the

Registrar to the Offer, in relation to the responsibilities and obligations of the Registrar to the Offer

pertaining to the Offer

1

Term Description

Registrar of Companies/

RoC

Registrar of Companies, Maharashtra situated at Mumbai

Restated Financial

Statements

The restated financial information of our Company which comprises the restated summary statement of

assets and liabilities, the restated summary statement of profits and losses and the restated summary

statement of cash flows as at and for the Financial Years ended March 31, 2018, March 31, 2017, March 31,

2016, March 31, 2015 and March 31, 2014, together with the annexures thereto

Selling Shareholders Thomas John Muthoot, Thomas Muthoot, Thomas George Muthoot, Preethi John, Remmy Thomas, Nina

George, MFL and Creation Investments India LLC

Shareholders Equity shareholders of our Company from time to time

Stakeholders’ Relationship

Committee

The stakeholders’ relationship committee of our Board as described in “Our Management” on page 155

Statutory Auditors Statutory auditors of our Company, namely, Walker Chandiok & Co. LLP., Chartered Accountants

Offer Related Terms Term Description

Acknowledgement Slip The slip or document issued by the Designated Intermediary(ies) to a Bidder as proof of registration of the

Bid/ Bid cum Application Form

Allot/ Allotment/ Allotted Unless the context otherwise requires, allotment of the Equity Shares pursuant to the Fresh Issue and transfer

of the Offered Shares by the Selling Shareholders pursuant to the Offer for Sale to the successful Bidders

Allotment Advice Note or advice or intimation of Allotment sent to the successful Bidders who have been or are to be Allotted

the Equity Shares after the Basis of Allotment has been approved by the Designated Stock Exchange

Allottee A successful Bidder to whom the Equity Shares are Allotted

Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion, who has Bid for an amount of at

least ` 100 million, in accordance with the requirements specified in the SEBI ICDR Regulations and the Red Herring Prospectus

Anchor Investor Allocation

Price

The price at which Equity Shares will be allocated to Anchor Investors in terms of the Red Herring

Prospectus and the Prospectus, which will be decided by our Company and the Selling Shareholders, in

consultation with the Managers on the Anchor Investor Bidding Date

Anchor Investor Bidding

Date

The day, one Working Day prior to the Bid/ Offer Opening Date, on which Bids by Anchor Investors shall be

submitted and allocation to Anchor Investors shall be completed

Anchor Investor Form The form used by an Anchor Investor to Bid in the Anchor Investor Portion in accordance with the

requirements specified under the SEBI ICDR Regulations and the Red Herring Prospectus

Anchor Investor Offer Price Final price at which the Equity Shares will be Allotted to Anchor Investors in terms of the Red Herring

Prospectus and the Prospectus, which price will be equal to or higher than the Offer Price but not higher than

the Cap Price

The Anchor Investor Offer Price will be decided by our Company and the Selling Shareholders, in

consultation with the Managers

Anchor Investor Pay-in

Date

In case of the Anchor Investor Offer Price being higher than the Anchor Investor Allocation Price, the date as

mentioned in the CAN but not later than two Working Days after the Bid/ Offer Closing Date

Anchor Investor Portion Up to 60% of the QIB Portion which may be allocated by our Company and the Selling Shareholders, in

consultation with the Managers, to Anchor Investors on a discretionary basis in accordance with the SEBI

ICDR Regulations

One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids

being received from domestic Mutual Funds at or above the Anchor Investor Allocation Price

Application Supported by

Blocked Amount or ASBA

An application, whether physical or electronic, used by Bidders, other than Anchor Investors, to make a Bid

authorising an SCSB to block the Bid Amount in the ASBA Account

ASBA Account An account maintained with an SCSB and specified in the ASBA Form submitted by ASBA Bidders for

blocking the Bid Amount mentioned in the Bid cum Application Form

ASBA Bid A Bid made by an ASBA Bidder

ASBA Bidder(s) Bidders (other than Anchor Investors) in the Offer who intend to submit their Bid through the ASBA process

ASBA Form An application form, whether physical or electronic, used by ASBA Bidders to make Bids which will be

considered as the application for Allotment in terms of the Red Herring Prospectus and the Prospectus

Banker(s) to the Offer Collectively, the Escrow Collection Bank(s), the Public Offer Account Bank(s) and the Refund Bank(s)

Basis of Allotment Basis on which Equity Shares will be Allotted to successful Bidders under the Offer and which is described

in “Offer Procedure” on page 325

Bid An indication to make an offer during the Bid/ Offer Period by a Bidder (other than Anchor Investor), or on

the Anchor Investor Bidding Date by an Anchor Investor pursuant to submission of the Bid cum Application

Form to subscribe to or purchase the Equity Shares at a price within the Price Band, including all revisions

and modifications thereto as permitted under the SEBI ICDR Regulations in accordance with the Red Herring

Prospectus and Bid cum Application Form

The term “Bidding” shall be construed accordingly

Bid/ Offer Closing Date Except in relation to any Bids received from the Anchor Investors, the date after which the Designated

2

Term Description

Intermediaries will not accept any Bids for the Offer, which shall be notified in [●] editions of the English

national daily newspaper [●], [●] editions of the Hindi national daily newspaper [●], and [●] editions of the

Marathi daily newspaper [●], which are widely circulated English, Hindi and Marathi daily newspapers

respectively, Marathi being the regional language of Maharashtra, where our Registered Office is located.

Our Company and the Selling Shareholders may, in consultation with the Managers, consider closing the Bid/

Offer Period for QIBs one Working Day prior to the Bid/ Offer Closing Date in accordance with the SEBI

Regulations which shall also be notified by advertisement in the same newspapers where the Bid/ Offer

Opening Date was published, in accordance with the SEBI ICDR Regulations

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid

cum Application Form and unless otherwise stated or implied, includes an ASBA Bidder and Anchor

Investor

Bid Amount The highest value of optional Bids indicated in the Bid cum Application Form and payable by the Bidder or

blocked in the ASBA Account of the Bidder as the case may be, upon submission of the Bid

Bid cum Application Form The Anchor Investor Form or the ASBA Form, as the context may require

Bid Lot [●] Equity Shares

Bid/ Offer Opening Date Except in relation to any Bids received from the Anchor Investors, the date on which the Designated

Intermediaries shall start accepting Bids for the Offer, which shall be notified in [●] editions of the English

national daily newspaper [●], [●] editions of the Hindi national daily newspaper [●], and [●] editions of the

Marathi daily newspaper [●], which are widely circulated English, Hindi and Marathi daily newspapers

respectively, Marathi being the regional language of Maharashtra, where our Registered Office is located,

and in case of any revision, the revised Bid/ Offer Opening Date also to be notified on the website and

terminals of the Syndicate and SCSBs, as required under the SEBI ICDR Regulations

Bid/ Offer Period Except in relation to Anchor Investors, the period between the Bid/ Offer Opening Date and the Bid/ Offer

Closing Date, inclusive of both days, during which Bidders can submit their Bids, including any revisions

thereof

Bidding Centres Centres at which the Designated Intermediaries shall accept the ASBA Forms, i.e. Designated Branches for

SCSBs, Specified Locations for the Syndicate, Brokers Centres for Registered Brokers, Designated RTA

Locations for RTAs and Designated CDP Locations for CDPs

Book Building Process Book building process, as provided in Schedule XI of the SEBI ICDR Regulations, in terms of which the

Offer is being made

Book Running Lead

Manager or BRLM

The book running lead manager to the Offer namely, SMC Capitals Limited

Broker Centres Broker centres of the Registered Brokers where Bidders can submit the Bid cum Application Forms to

Registered Brokers

The details of such Broker Centres, along with the names and contact details of the Registered Brokers are

available on the respective websites of the Stock Exchanges (www.bseindia.com and www.nseindia.com)

CAN/ Confirmation of

Allocation Note

Notice or intimation of allocation of the Equity Shares sent to Anchor Investors, who have been allocated the

Equity Shares, after the Anchor Investor Bidding Date

Cap Price The higher end of the Price Band, above which the Offer Price and Anchor Investor Offer Price will not be

finalised and above which no Bids will be accepted (including any revisions thereof)

Client ID Client identification number maintained with one of the Depositories in relation to demat account

Collecting Depository

Participant or CDP

A depository participant as defined under the Depositories Act, 1996 and registered with SEBI, who is

eligible to procure Bids at the Designated CDP Locations in terms of circular no. CIR/ CFD/ POLICYCELL/

11/ 2015 dated November 10, 2015 issued by SEBI

Credit Suisse Credit Suisse Securities (India) Private Limited

Cut-Off Price Offer Price, which shall be any price within the Price Band finalised by our Company and the Selling

Shareholders in consultation with the Managers

Only Retail Individual Bidders are entitled to Bid at the Cut-off Price. QIBs and Non-Institutional Bidders

are not entitled to Bid at the Cut-off Price

Demographic Details The demographic details of the Bidders such as their respective addresses, occupation, PAN, name of the

Bidder’s father/ husband, investor status, MICR Code and bank account details

Designated Branches Such branches of the SCSBs which shall collect the Bid cum Application Forms used by the ASBA Bidders,

a list of which is available on the website of SEBI at

www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35, updated from time to

time, or at such other website as may be prescribed by SEBI from time to time

Designated CDP Locations Such locations of the CDPs where ASBA Bidders can submit the ASBA Forms, a list of which, along with

names and contact details of the Collecting Depository Participants eligible to accept ASBA Forms are

available on the websites of the respective Stock Exchanges (www.bseindia.com and www.nseindia.com/)

Designated Date The date on which the Escrow Collection Banks transfer funds from the Escrow Accounts, and the SCSBs

transfer funds from the ASBA Accounts, to the Public Offer Account or the Refund Account, as appropriate,

in terms of the Red Herring Prospectus

Designated Intermediaries Collectively, the members of the Syndicate, Sub-Syndicate/ agents, SCSBs, Registered Brokers, the CDPs

and RTAs, who are authorised to collect Bid cum Application Forms from the Bidders, in relation to the

Offer

3

http://www.bseindia/http://www.nseindia/

Term Description

Designated RTA Locations Such centres of the RTAs where Bidders can submit the Bid cum Application Forms. The details of such

Designated RTA locations, along with names and contact details of the RTAs are available on the respective

websites of the Stock Exchanges (www.bseindia.com and www.nseindia.com)

Designated Stock Exchange [●]

Draft Red Herring

Prospectus or DRHP

This draft red herring prospectus dated July 27, 2018, issued in accordance with the SEBI ICDR Regulations,

which does not contain complete particulars of the price at which the Equity Shares will be Allotted and the

size of the Offer, including any addenda or corrigenda thereto

Edelweiss Edelweiss Financial Services Limited

Eligible FPIs FPIs from such jurisdictions outside India where it is not unlawful to make an offer / invitation under the

Offer and in relation to whom the Bid cum Application Form and the Red Herring Prospectus constitutes an

invitation to subscribe to the Equity Shares

Eligible NRIs NRIs from such jurisdictions outside India where it is not unlawful to make an offer or invitation under the

Offer and in relation to whom the Bid cum Application Form and the Red Herring Prospectus will constitute

an invitation to purchase the Equity Shares offered there

Escrow Account Account opened with the Escrow Collection Bank(s) and in whose favour Anchor Investors can transfer

money through direct credit or NACH or NEFT or RTGS in respect of the Bid Amount when submitting a

Bid

Escrow Agreement The agreement dated [] amongst our Company, the Selling Shareholders, the Registrar to the Offer, the

Managers, the Syndicate Members, the Escrow Collection Bank(s) and the Refund Bank(s) for collection of

the Bid Amounts and where applicable, remitting refunds (if any) on the terms and conditions thereof

Escrow Collection Bank A bank, which is a clearing member and registered with SEBI as a banker to an offer and with whom the

Escrow Account will be opened, in this case being [●]

First/ sole Bidder The Bidder whose name appears first in the Bid cum Application Form or the Revision Form and in case of

joint Bids, whose name appears as the first holder of the beneficiary account held in joint names

Floor Price The lower end of the Price Band, subject to any revision thereto, at or above which the Offer Price and the

Anchor Investor Offer Price will be finalised and below which no Bids will be accepted and which shall not

be less than the face value of Equity Shares

Fresh Issue The fresh issue of up to [] Equity Shares aggregating up to ` 5,000 million by our Company pursuant to the terms of the Red Herring Prospectus

General Information

Document/ GID

The General Information Document for investing in public issues, prepared and issued in accordance with the

circular (CIR/ CFD/ DIL/ 12/ 2013) dated October 23, 2013 notified by SEBI, and updated pursuant to the

circular (CIR/ CFD/ POLICYCELL/ 11/ 2015) dated November 10, 2015, the circular (CIR/ CFD/ DIL/ 1/

2016) dated January 1, 2016, (SEBI/ HO/ CFD/ DIL/ CIR/ P/ 2016/ 26) dated January 21, 2016 and (SEBI /

HO/ CFD/ DIL 2/ CIR / P / 2018/ 22) dated February 15, 2018, notified by SEBI and included in “Offer

Procedure” on page 305

Global Co-ordinators and

Book Running Lead

Managers or GCBRLMs

The global co-ordinators and book running lead managers to the Offer namely, Edelweiss Financial Services

Limited, Motilal Oswal Investment Advisors Limited and Credit Suisse Securities (India) Private Limited

Managers The GCBRLMs and the BRLMs, collectively

Monitoring Agency [●]

Motilal Motilal Oswal Investment Advisors Limited

Mutual Fund Portion 5% of the Net QIB Portion or [] Equity Shares which shall be available for allocation to Mutual Funds only

on a proportionate basis, subject to valid Bids being received at or above the Offer Price

Mutual Funds Mutual funds registered with SEBI under the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996

Net Proceeds Proceeds of the Fresh Issue less our Company’s share of the Offer expenses

For further information about use of the Offer proceeds and the Offer expenses, see “Objects of the Offer” on

page 82

Net QIB Portion The portion of the QIB Portion less the number of Equity Shares Allotted to the Anchor Investors

Non-Institutional Bidders/

NIB(s)/ NII(s)

All Bidders, that are not QIBs or Retail Individual Investors, who have Bid for Equity Shares for an amount

of more than ` [] Non-Institutional Portion The portion of the Offer being not less than 15% of the Offer consisting of [●] Equity Shares which shall be

available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being

received at or above the Offer Price

Non-Resident A person resident outside India, as defined under FEMA and includes FPIs, NRIs, FVCIs and multilateral

and bilateral development financial institutions

Offer The initial public offer of up to [●] Equity Shares for cash at a price of ₹ [●], aggregating up to ` [●] million comprising the Fresh Issue and the Offer for Sale

Offer Agreement The agreement dated July 27, 2018 amongst our Company, the Selling Shareholders and the Managers,

pursuant to which certain arrangements are agreed to in relation to the Offer

Offer for Sale The offer for sale of up to 16,310,072 Equity Shares aggregating up to ` [●] million by the Selling Shareholders in terms of the Red Herring Prospectus

For further details in relation to Selling Shareholders, see “The Offer” on page 54

Offer Price The final price at which Equity Shares will be Allotted to successful Bidders, other than Anchor Investors.

4

http://www.bseindia/

Term Description

Equity Shares will be Allotted to Anchor Investors at the Anchor Investor Offer Price in terms of the Red

Herring Prospectus.

The Offer Price will be decided by our Company and the Selling Shareholders in consultation with the

Managers on the Pricing Date in accordance with the Book-Building Process and the Red Herring Prospectus

Offered Shares Up to 16,310,072 Equity Shares aggregating up to [●] million, including (1) up to 4,060,429 Equity Shares

by Thomas John Muthoot aggregating up to [●] million, (2) up to 4,078,996 Equity Shares by Thomas

Muthoot aggregating up to [●] million, (3) up to 4,059,019 Equity Shares by Thomas George Muthoot

aggregating up to [●] million, (4) up to 121,180 Equity Shares by Preethi John aggregating up to [●] million,

(5) up to 101,460 Equity Shares by Remmy Thomas aggregating up to [●] million, (6) up to 122,870 Equity

Shares by Nina George aggregating up to [●] million, (7) up to 1,908,006 Equity Shares by MFL aggregating

up to [●] million and (8) up to 1,858,112 Equity Shares by Creation Investments India LLC aggregating up to

[●] million

Price Band Price band of a minimum price of ` [●] per Equity Share (Floor Price) and the maximum price of ` [●] per Equity Share (Cap Price) including revisions thereof

The Price Band and the minimum Bid Lot size for the Offer will be decided by our Company and the Selling

Shareholders in consultation with the Managers and will be advertised at least five Working Days prior to the

Bid/ Offer Opening Date, in [●] editions of the English national daily newspaper [●], [●] editions of the

Hindi national daily newspaper [●] and [●] editions of the Marathi daily newspaper [●], each with wide

circulation at least five Working Days prior to the Bid/ Offer Opening Date with the relevant financial ratios

calculated at the Floor Price and at the Cap Price, and shall be made available to the Stock Exchanges for the

purpose of uploading on their respective websites

Pricing Date The date on which our Company and the Selling Shareholders in consultation with the Managers, will finalise

the Offer Price

Prospectus The prospectus to be registered with the RoC on or after the Pricing Date in accordance with Section 26 of

the Companies Act, 2013, and the SEBI ICDR Regulations containing, inter alia, the Offer Price, the size of

the Offer and certain other information, including any addenda or corrigenda thereto

Public Offer Account(s) Account(s) to be opened with the Public Offer Account Bank(s) under Section 40(3) of the Companies

Act, 2013, to receive monies from the Escrow Account and ASBA Accounts on the Designated Date

Public Offer Account

Bank(s)

The bank(s) with whom the Public Offer Account(s) will be opened for collection of Bid Amounts from the

Escrow Account and ASBA Accounts on the Designated Date, in this case being [●]

QIB Portion The portion of the Offer (including the Anchor Investor Portion) being not more than 50% of the Offer or [●]

Equity Shares to be Allotted to QIBs on a proportionate basis

Qualified Institutional

Buyers or QIBs

Qualified Institutional Buyers as defined under Regulation 2(1)(zd) of the SEBI ICDR Regulations

Red Herring Prospectus or

RHP

The Red Herring Prospectus to be issued in accordance with Section 32 of the Companies Act, 2013 and the

SEBI ICDR Regulations, which will not have complete particulars of the price at which the Equity Shares

shall be allotted (including any addenda or corrigenda thereto) and which shall be registered with the RoC at

least three Working Days before the Bid/ Offer Opening Date and will become the Prospectus upon

registering with the RoC on or after the Pricing Date

Refund Account(s) The account(s) opened with the Refund Bank(s), from which refunds, if any, of the whole or part of the Bid

Amount shall be made

Refund Bank(s) The Banker(s) to the Offer with whom the Refund Account(s) will be opened, in this case being [●]

Refunds through electronic

transfer of funds

Refunds through NACH, direct credit, NEFT, RTGS or unblocking ASBA Accounts, as applicable

Registered Brokers Stock brokers registered with SEBI and the stock exchanges having nationwide terminals, other than the

Members of the Syndicate and eligible to procure Bids at the Broker Centres in terms of Circular No. CIR/

CFD/ 14/ 2012 dated October 4, 2012 issued by SEBI

Registrar to the Offer/

Registrar

Karvy Computershare Private Limited

Registrar and Share

Transfer Agents or RTAs

Registrar and share transfer agents registered with SEBI and eligible to procure Bids at the Designated RTA

Locations in terms of circular no. CIR/ CFD/ POLICYCELL/ 11/ 2015 dated November 10, 2015 issued by

SEBI

Retail Individual Bidder(s)/

Retail Individual

Investor(s)/ RII(s)/ RIB(s)

Bidders (including HUFs applying through their kartas and Eligible NRIs) whose Bid Amount for Equity

Shares in the Offer is not more than ` 200,000 in any of the bidding options in the Offer

Retail Portion The portion of the Offer being not less than 35% of the Offer or [●] Equity Shares, available for allocation to

Retail Individual Bidders in accordance with the SEBI ICDR Regulations

Revision Form Form used by the Bidders, to modify the quantity of the Equity Shares or the Bid Amount in any of their Bid

cum Application Forms or any previous Revision Form(s), as applicable

QIB Bidders and Non-Institutional Bidders are not allowed to modify their Bids (in terms of quantity of

Equity Shares or the Bid Amount) at any stage. Retail Individual Bidders can revise their Bids during the

Bid/ Offer Period and withdraw their Bids until the Bid/ Offer Closing Date

Self-Certified Syndicate

Bank(s) or SCSB(s)

The banks registered with SEBI, which offer the facility of ASBA, a list of which is available on the website

of SEBI at www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=35 and updated

5

Term Description

from time to time and at such other websites as may be prescribed by SEBI from time to time

Share Escrow Agent Share escrow agent appointed pursuant to the Share Escrow Agreement, in this case being, [●]

Share Escrow Agreement The agreement dated [●] amongst the Selling Shareholders, our Company and the Share Escrow Agent in

connection with the deposit of the Offered Shares by the Selling Shareholders in a share escrow account and

credit of such Equity Shares to the demat account of the Allottees in accordance with the Basis of Allotment

SMCC SMC Capitals Limited

Specified Locations Bidding centres where the Syndicate shall accept ASBA Forms a list of which is included in the ASBA Form

Stock Exchanges BSE and the NSE

Sub-Syndicate centres The sub-syndicate members, if any, appointed by the Managers and the Syndicate Members, to collect Bid

cum Application Forms and Revision Forms

Syndicate Agreement The agreement dated [●] amongst the Managers, the Syndicate Members, our Company and the Selling

Shareholders in relation to the collection of Bid cum Application Forms by the Syndicate

Syndicate Members Intermediaries registered with SEBI who are permitted to carry out activities as an underwriter, namely, [●]

Syndicate or Members of

the Syndicate

The Managers and the Syndicate Members

Underwriters [●]

Underwriting Agreement The agreement dated [●] among the Underwriters, our Company and the Selling Shareholders to be entered

into on or after the Pricing Date but prior to registering of the Prospectus

Working Day All days other than second and fourth Saturdays of the month, Sundays or public holidays, on which

commercial banks in Mumbai are open for business; provided however, with reference to (a) the time period

between the announcement of Price Band the Bid/ Offer Closing Date, ‘Working Day’ shall mean all days,

except Saturday, Sunday and public holidays on which commercial banks in Mumbai are open for business;

and (b) the time period between the Bid/ Offer Closing Date and the listing of the Equity Shares on the Stock

Exchanges, shall mean all trading days of Stock Exchanges, excluding Sundays and bank holidays, as per the

SEBI Circular SEBI/ HO/ CFD/ DIL/ CIR/ P/ 2016/ 26 dated January 21, 2016

Technical/ Industry Related Terms/ Abbreviations/ Terms relating to our business Term Description

ALM Asset Liability Management

CIBIL Credit Information Bureau (India) Limited

CIC Credit Information Companies

CRAR Capital-to-risk weighted assets ratio

CRISIL CRISIL Limited

CRISIL Report The report titled “Industry Report - Microfinance" dated July 2018 prepared by CRISIL Research

CRR Cash Reserve Ratio

CSR Corporate Social Responsibility

EMI Equated Monthly Instalment

Gross Non-Performing Asset

or Gross NPA or GNPA

Gross NPA represents the non-performing portfolio loans outstanding (gross) as of the last day of the

relevant period

Gross NPA Ratio Gross NPA Ratio represents Gross NPA as a percentage of the total portfolio loans outstanding as of the last

day of the relevant period

GLP Gross Loan Portfolio

HO Head Office

JLG Joint Liability Group

KYC Know-Your-Customer

MFI Micro Finance Institution

MFIN Micro Finance Institution Network

MSE Micro & Small Enterprises

MSME Micro, Small and Medium Enterprises

MUDRA Micro Units Development and Refinance Agency

Master Directions Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit

taking Company (Reserve Bank) Directions, 2016, as amended from time to time

NBFC Non-Banking Financial Company

NBFC – MFI Non-Banking Financial Company – Micro Finance Institution

NII Net Interest Income

NIM Net Interest Margin

Net Non-Performing Asset

or Net NPA or NNPA

Net NPA represents the non-performing portfolio loans outstanding (net) as of the last day of the relevant

period i.e. non-performing portfolio loans outstanding as reduced by the provision for non-performing assets

Net NPA Ratio Net NPA represents the Net NPA as a percentage of total portfolio loans outstanding as reduced by the

provision for non-performing assets as of the last day of the relevant period

PAR Portfolio at Risk

PSL Priority Sector Lending

RoAA Return on Average Assets

RoAE Return on Average Equity

6

SLR Statutory Liquidity Ratio

South India Tamil Nadu, Pondicherry, Kerala and Karnataka

Conventional and General Terms or Abbreviations Term Description

₹ / Rs./ Rupees/ INR Indian Rupees AGM Annual General Meeting

AIF Alternative Investment Fund as defined in and registered with SEBI under the Securities and Exchange

Board of India (Alternative Investments Funds) Regulations, 2012

AML Anti-money laundering

AS/ Accounting Standards Accounting standards issued by the Institute of Chartered Accountants of India

Banking Regulation Act Banking Regulation Act, 1949

Bn/ bn Billion

BSE BSE Limited

CAGR Compounded Annual Growth Rate

CDSL Central Depository Services (India) Limited

CIN Corporate Identity Number

Companies Act Companies Act, 1956 and Companies Act, 2013, as applicable

Companies Act, 1956 Companies Act, 1956 along with the relevant rules made thereunder, as amended

Companies Act, 2013 Companies Act, 2013, along with the relevant rules made thereunder, as amended

Depositories Collectively, the NSDL and the CDSL

Depositories Act The Depositories Act, 1996

DIN Director Identification Number

DP ID Depository Participant’s Identification

DP/ Depository Participant A depository participant as defined under the Depositories Act

EGM Extraordinary General Meeting

EPF Employees' Provident Fund

EPS Earnings Per Share

FCNR Foreign Currency Non-Resident

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999, as amended, read with rules and regulations thereunder

Financial Year/ Fiscal/

Fiscal Year/ FY

Unless stated otherwise, the period of 12 months ending March 31 of that particular year

FPI(s) Foreign Portfolio Investors as defined under the SEBI FPI Regulations

FVCI Foreign Venture Capital Investors as defined and registered under the SEBI FVCI Regulations

GDP Gross Domestic Product

GIR General Index Register

GoI/ Government Government of India

GST Goods and Services Tax

HUF Hindu Undivided Family

ICAI The Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards

IPC The Indian Penal Code, 1860, as amended

Income Tax Act The Income Tax Act, 1961

India Republic of India

Ind (AS) Indian Accounting Standards (Ind AS)

Indian Accounting Standard

Rules

The Companies (Indian Accounting Standards) Rules, 2015

Indian GAAP Generally Accepted Accounting Principles in India

IPO Initial public offering

IRDA Insurance Regulatory and Development Authority of India

IST Indian Standard Time

IT Information Technology

MCA Ministry of Corporate Affairs, Government of India

MoU Memorandum Of Understanding

Mn/ mn Million

N.A./ NA Not Applicable

NABARD National Bank for Agricultural and Rural Development

NAV Net Asset Value

NBFC-MFI Directions Master Circular – ‘Non-Banking Financial Company – Micro Finance Institutions’ (NBFC-MFI) Directions

dated July 1, 2015, updated as on April 20, 2016

NCD(s) Non convertible debenture(s)

NEFT National Electronic Fund Transfer

NRE Account Non-Resident External accounts

NRI A person resident outside India, who is a citizen of India or a person of Indian origin, and shall have the

7

Term Description

meaning ascribed to such term in the Foreign Exchange Management (Deposit) Regulations, 2000

NRO Account Non-Resident Ordinary accounts

NSDL National Securities Depository Limited

NSE The National Stock Exchange of India Limited

OCB/ Overseas Corporate

Body

A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least

60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held

by NRIs directly or indirectly and which was in existence on October 3, 2003 and immediately before such

date had taken benefits under the general permission granted to OCBs under FEMA. OCBs are not allowed

to invest in the Offer

p.a. Per annum

P/ E Ratio Price/ Earnings Ratio

PAN Permanent Account Number

PAT Profit After Tax

PTC Pass-through certificate

RBI Reserve Bank of India

RBI Act Reserve Bank of India Act, 1934, as amended

RHP Red Herring Prospectus

RTGS Real Time Gross Settlement

SCRA Securities Contracts (Regulation) Act, 1956, as amended

SCRR Securities Contracts (Regulation) Rules, 1957, as amended

SEBI Securities and Exchange Board of India constituted under the SEBI Act, 1992

SEBI Act Securities and Exchange Board of India Act 1992, as amended

SEBI AIF Regulations Securities and Exchange Board of India (Alternative Investments Funds) Regulations, 2012, as amended

SEBI ESOP Regulations Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended

SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014

SEBI FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended

SEBI ICDR Regulations Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

SEBI Listing Regulations Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) Regulations,

2015, as amended

SEBI Mutual Fund

Regulations

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended

SEBI Portfolio Manager

Regulations

Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, as amended

SEBI Stock Broker

Regulations

Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992, as amended

SEBI VCF Regulations Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996, as amended

U.S. Securities Act U.S. Securities Act of 1933, as amended

SIDBI Small Industries Development Bank of India

Stamp Act Indian Stamp Act, 1899

State Government The government of a state in India

Stock Exchanges Collectively, the BSE and the NSE

Systemically Important non-

deposit taking NBFC/

Systemically Important

NBFC – ND/ NBFC-ND-SI

A non-banking financial company registered with the Reserve Bank of India and having total assets of more

than ₹ 5,000 million as per the last audited financial statements

STT Securities Transaction Tax

Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

TAN Tax deduction account number

U.S./ USA/ United States United States of America

USD/ US$ United States Dollars

US GAAP Generally accepted accounting principles in the United States

VCFs Venture Capital Funds as defined in and registered with SEBI under the SEBI VCF Regulations

Notwithstanding the foregoing, terms in “Statement of Special Tax Benefits”, “Objects of the Offer”, “Financial Statements”,

“Basis for Offer Price”, “Industry Overview”, “Regulations and Policies”, “History and Certain Corporate Matters”,

“Financial Indebtedness” “Outstanding Litigation and Material Development”, “Offer Procedure” and “Main Provisions of

Articles of Association” on pages 89, 82, 181, 86, 93, 134, 141, 258, 260, 296 and 334 respectively, shall have the meaning

given to such terms in such sections.

8

NOTICE TO INVESTORS

The Equity Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold within the United

States or to, or for the account or benefit of, U.S. Persons as defined in Regulation S under the U.S. Securities Act, except for these

purposes, U.S. Persons include Persons who would otherwise have been excluded from such term solely by virtue of Rule

902(k)(1)(viii)(B) or Rule 902(k)(2)(i) (“U.S. Persons”) except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. The Company has not registered and does not

intend to register under the U.S. Investment Company Act in reliance upon section 3(c)(7) thereof. Accordingly, the Equity Shares are only

being offered and sold (i) within the United States or to U.S. Persons that are “qualified institutional buyers” (as defined in Rule 144A

under the U.S. Securities Act (“Rule 144A”) and referred to in the Draft Red Herring Prospectus as “U.S. QIBs”, for the avoidance of

doubt, the term U.S. QIBs does not refer to a category of institutional investor defined under applicable Indian regulations and referred to in

the Draft Red Herring Prospectus as “QIBs”) pursuant to the private placement exemption set out in Section 4(a) of the U.S. Securities Act,

that are also “qualified purchasers” (as defined under the U.S. Investment Company Act) in reliance upon section 3(c)(7) of the U.S.

Investment Company Act and (ii) outside the United States to non-U.S. Persons in offshore transactions in reliance on Regulation S under

the U.S. Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The Equity Shares may not be re-

offered, re-sold, pledged or otherwise transferred except in an offshore transaction in accordance with Regulation S to a person outside the

United States and not known by the transferor to be a U.S. Person by pre-arrangement or otherwise (including, for the avoidance of doubt, a

bona fide sale on BSE Limited or the National Stock Exchange of India Limited). See “Offer Information – Terms of the Offer – Eligibility

and Transfer Restrictions” beginning on page 285.

As we are relying on an analysis that our Company does not come within the definition of an “investment company” under the U.S.

Investment Company Act because of the exception provided under section 3(c)(7) thereunder, our Company may be considered a “covered

fund” as defined in the Volcker Rule. See “Risk Factors - U.S. regulation of investment activities may negatively affect the ability of

banking entities to purchase our Equity Shares” beginning on page 34.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not

be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such

jurisdiction.

9

CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA AND

CURRENCY OF PRESENTATION

Certain Conventions

Unless otherwise specified or the context otherwise requires, all references in this Draft Red Herring Prospectus to “India” are

to the Republic of India and all references to “USA”, “US” and “United States” are to the United States of America.

Unless stated otherwise, all references to page numbers in this Draft Red Herring Prospectus are to the page numbers of this

Draft Red Herring Prospectus.

Financial Data

Unless stated otherwise or unless the context requires otherwise, and to the extent applicable, the financial data in this Draft

Red Herring Prospectus is derived from our Restated Financial Statements prepared in accordance with the Companies Act

and Indian GAAP and restated in accordance with the SEBI ICDR Regulations.

In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are

due to rounding off. All figures in decimals and all percentage figures, unless otherwise specified, have been rounded off to

the second decimal place and accordingly there may be consequential changes in this Draft Red Herring Prospectus on

account of rounding adjustments.

Our Company’s Financial Year commences on April 1 and ends on March 31 of the next year; accordingly, all references to a

particular “Financial Year”/ “Fiscal”/ “FY”, unless stated otherwise, are to the 12 month period ended on March 31 of that

year.

We prepare our financial statements in accordance with Indian GAAP, which differs in some material respects from IFRS and

U.S. GAAP. Accordingly, the degree to which our Restated Financial Statements, as included in this Draft Red Herring

Prospectus, will provide meaningful information is entirely dependent on the reader’s level of familiarity with the Companies

Act, 2013, Indian GAAP and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting

practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. We have

not made any attempt to quantify or identify the impact of the differences between Indian GAAP and IND (AS) as applied to

our Restated Financial Statements and it is urged that you consult your own advisors regarding the impact of difference, if

any, on financial data included in this Draft Red Herring Prospectus. We have only included a summary of qualitative

differences of certain items between Indian GAAP and Ind (AS) in this Draft Red Herring Prospectus. For details in

connection with risks, see “Risk Factors – Significant differences exist between Indian GAAP and other accounting

principles, such as Ind AS, U.S. GAAP and IFRS, which may be material to investor’s assessments of our financial condition”

on page 32.

Indian GAAP also differs in certain material respects from Ind (AS) which is applicable to our Company for the financial

periods commencing April 1, 2018. Given that Ind (AS) differs in many respects from Indian GAAP, our financial statements

prepared and presented in accordance with Ind AS relating to any period subsequent to April 1, 2018, may not be comparable

to our historical financial statements prepared under Indian GAAP. In the event that any of our historical financial statements,

including our financial statements for Fiscal 2018 are required to be also prepared in accordance with Ind (AS), such

historical Ind (AS) financial statements may vary from our historical India GAAP financial statements, and there can be no

assurance that such variation will not be material. See “Summary of Certain Significant differences between Indian GAAP and

Ind AS” and “Risk Factors – We are required to prepare our financial statements with effect from April 1, 2018 under the Ind

AS. As Ind AS differs in various respects from Indian GAAP, our financial statements for financial year 2019 may not be

comparable to our historical financial statements” on pages 232 and 32.

Any percentage amounts, as set forth in “Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of

Financial Conditions and Results of Operations” on pages 15, 116 and 236 respectively, and elsewhere in this Draft Red

Herring Prospectus, to the extent applicable, have been calculated on the basis of our Restated Financial Statements prepared

in accordance with the Companies Act and Indian GAAP and restated in accordance with the SEBI ICDR Regulations.

Currency and Units of Presentation

All references to:

“Rupees” or “`” or “INR” or “Rs.” are to the Indian Rupee, the official currency of the Republic of India. “US$” or “USD” are to the United States Dollar, the official currency of the United States.

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Our Company has presented certain numerical information in this Draft Red Herring Prospectus in “million” or “billion”

units, or in absolute number where the number have been too small to present in million unless as stated, otherwise, as

applicable. One million represents 1,000,000, one billion represents 1,000,000,000 and one crore represents 10,000,000.

However, figures sourced from third party industry sources may be expressed in denominations other than millions or may be

rounded off to other than two decimal points in the respective sources, and such figures have been expressed in this Draft Red

Herring Prospectus in such denominations or rounded off to such number of decimal points as prescribed in such respective

sources.

Exchange Rates

This Draft Red Herring Prospectus contains conversions of certain other currency amounts into Indian Rupees that have been

presented solely to comply with the SEBI ICDR Regulations. These conversions should not be construed as a representation

that these currency amounts could have been, or can be converted into Indian Rupees, at any particular rate or at all.

The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and

the USD (in Rupees per USD):

Currency As on March 31,

2014

(`)

As on March 31,

2015(1)

(`)

As on March 31,

2016(1)

(`)

As on March 31,

2017(1)

(`)

As on March 31,

2018(1)

(`) 1 USD 60.10 62.59 66.33 64.84 65.18

(Source: RBI website) (1) In the event that March 31 of any of the respective years is a public holiday, the previous calendar day not being a public holiday has been considered

Industry and Market Data

Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus has been obtained or derived

from publicly available information as well as industry publications and sources.

Industry publications generally state that the information contained in such publications has been obtained from publicly

available documents from various sources believed to be reliable but their accuracy and completeness are not guaranteed and

their reliability cannot be assured. Although we believe the industry and market data used in this Draft Red Herring

Prospectus is reliable, it has not been independently verified by us or the Managers or any of their affiliates or advisors. The

data used in these sources may have been reclassified by us for the purposes of presentation. Data from these sources may

also not be comparable. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on

various factors, including those discussed in “Risk Factors – This Draft Red Herring Prospectus contains information from

third parties and an industry report which we have commissioned from CRISIL Research, and such data has not been

independently verified by us, the BRLMs or the Selling Shareholders.” on page 33. Accordingly, investment decisions should

not be based solely on such information.

The sections “Summary of Industry”, “Summary of our Business”, “Industry Overview”, “Our Business” and “Management’s

Discussion and Analysis of Financial Conditions and Results of Operations” of this Draft Red Herring Prospectus contain

data and statistics from the report titled “Industry Report – Microfinance" dated July 2018 prepared by CRISIL Research,

which is subject to the following disclaimer:

“CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this report (Report)

based on the Information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not

guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or

for the results obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any entity

covered in the Report and no part of this Report should be construed as an expert advice or investment advice or any form of

investment banking within the meaning of any law or regulation. CRISIL especially states that it has no liability whatsoever

to the subscribers / users / transmitters/ distributors of this Report. Without limiting the generality of the foregoing, nothing in

the Report is to be construed as CRISIL providing or intending to provide any services in jurisdictions where CRISIL does

not have the necessary permission and/or registration to carry out its business activities in this regard. Muthoot Micofin

Limited will be responsible for ensuring compliances and consequences of non-complainces for use of the Report or part

thereof outside India. CRISIL Research operates independently of, and does not have access to information obtained by

CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their regular operations,

obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of

CRISIL’s Ratings Division / CRIS. No part of this Report may be published/reproduced in any form without CRISIL’s prior

written approval.”

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In accordance with the SEBI ICDR Regulations, “Basis for Offer Price” on page 86 includes information relating to our peer

group companies. Such information has been derived from publicly available sources, and neither we, nor the Managers have

independently verified such information.

The extent to which the market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the

reader’s familiarity with and understanding of the methodologies used in compiling such data. There are no standard data

gathering methodologies in the industry in which the business of our Company is conducted, and methodologies and

assumptions may vary widely among different industry sources.

Further, in accordance with Regulation 51A of the SEBI ICDR Regulations, and SEBI Listing Regulations, as applicable, our

Company may be required to undertake an annual updation of the disclosures made in this Draft Red Herring Prospectus and

make it publicly available in the manner specified by SEBI.

Time

Unless otherwise stated, all references to time in this Daft Red Herring Prospectus are to Indian Standard Time.

Selling Shareholders’ statements

Only statements and undertakings which are specifically “confirmed” or “undertaken” by each of the Selling Shareholders, as

the case may be, in this Draft Red Herring Prospectus shall, severally and not jointly, deemed to be statements and

undertakings made by the respective Selling Shareholder. All other statements and/ or undertakings in this Draft Red Herring

Prospectus shall be statements and undertakings made by our Company even if the same relates to the Selling Shareholders.

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FORWARD-LOOKING STATEMENTS

This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking statements

generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”,

“objective”, “plan”, “project”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly,

statements that describe our Company’s strategies, objectives, plans or goals are also forward-looking statements.

All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to

differ materially from those contemplated by the relevant forward-looking statement. For the reasons described below, we

cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Therefore,

investors are cautioned not to place under reliance on such forward-looking statements and not to regard such statements as a

guarantee of future performance.

Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties

associated with the expectations with respect to, but not limited to, regulatory changes pertaining to the industry in which our

Company has businesses and its ability to respond to them, its ability to successfully implement its strategy, its growth and

expansion, technological changes, its exposure to market risks, general economic and political conditions in India and

globally which have an impact on its business activities or investments, the monetary and fiscal policies of India, inflation,

deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the

performance of the financial markets in India and globally, changes in laws, regulations and taxes and changes in competition

in its industry. Important factors that could cause actual results to differ materially from our Company’s expectations include,

but are not limited to, the following:

The microfinance industry in India faces certain risks due to the category of borrowers that it services, which are not generally associated with other forms of lending. As a result, we may experience increased levels of non-performing

assets (“NPAs”) and related provisions and write-offs that may adversely affect our business, financial condition and

results of operations.

Our business is particularly vulnerable to interest rate risk, and volatility in interest rates could have an adverse effect on our net interest income and net interest margin, thereby affecting our results of operations.

We are subject to laws and regulations governing the financial services industry in India and changes in laws and regulations governing us could adversely affect our business, results of operations and prospects.

Our Promoter, MFL, is involved in other financial services related businesses and is subject to extensive regulation. Any non-compliance or perceived non-compliance by our Promoters may adversely affect our reputation, business,

results of operations and prospects.

If we are unable to manage our growth effectively, our business and reputation could be adversely affected. Further, we may not be able to sustain the growth rates we have had since our inception.

Our operations are concentrated in South India, and any adverse developments in the southern states of India may have an adverse effect on our business, results of operations, financial condition and cash flows.

Any disruption in our sources of funding or increase in costs of funding could adversely affect our liquidity and financial condition.

An increase in the level of our NPAs or our provisions may adversely affect our financial condition and results of operations.

Any non-compliance with mandatory AML and KYC policies could expose us to additional liability and harm our business and reputation.

To support and grow our business, we must maintain a minimum capital to risk weighted assets ratio, and lack of access to capital may prevent us from maintaining an adequate ratio.

For further discussion of factors that could cause the actual results to differ from the expectations, see “Risk Factors”, “Our

Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 15, 116

and 236, respectively. By their nature, certain market risk disclosures are only estimates and could be materially different

from what actually occurs in the future. As a result, actual gains or losses could materially differ from those that have been

estimated.

We cannot assure investors that the expectations reflected in these forward-looking statements will prove to be correct. Given

these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and not to regard

such statements as a guarantee of future performance.

Forward-looking statements reflect the current views of our Company as of the date of this Draft Red Herring Prospectus and

are not a guarantee of future performance. These statements are based on the management’s beliefs and assumptions, which

in turn are based on currently available information. Although we believe the assumptions upon which these forward-looking

statements are based are reasonable, any of these assumptions could prove to be inaccurate, and the forward-looking

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statements based on these assumptions could be incorrect. Neither our Company, our Directors, the Selling Shareholders, the

Managers nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting

circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying

assumptions do not come to fruition.

In accordance with regulatory requirements, our Company and the Managers will ensure that investors in India are informed

of material developments from the date of registration of the Red Herring Prospectus with the RoC until the receipt of final

listing and trading approvals from the Stock Exchanges. Each of the the Selling Shareholders will ensure that it will keep our

Company, the Managers and investors informed of material developments in relation to statements and undertakings made by

such Selling Shareholder with respect to itself and its respective portion of the Offered Shares in the Red Herring Prospectus

and the Prospectus until the time of the grant of final listing and trading approvals by the Stock Exchanges.

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SECTION II: RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider each of the following risk

factors and all other information set forth in this Draft Red Herring Prospectus, including the risks and uncertainties

described below, before making an investment in the Equity Shares. You should read this section together with “Our

Business”, “Selected Statistical Information” and “Management's Discussion and Analysis of Financial Condition and

Results of Operations” on pages 116, 174 and 236, respectively, as well as the financial statements, including the notes

thereto, and other financial information included elsewhere in this Draft Red Herring Prospectus. You should consult your

tax, financial and legal advisors about the particular consequences to you of an investment in the Equity Shares.

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties

not presently known to us or that we currently believe to be immaterial may also adversely affect our business, prospects,

financial condition and results of operations and cash flows. If any or some combination of the following risks, or other

risks that we do not currently know about or believe to be material, actually occur, our business, financial condition and

results of operations and cash flows could suffer, the trading price of, and the value of your investment in, our Equity

Shares could decline, and you may lose all or part of your investment. In making an investment decision, you must rely on

your own examination of our Company and the terms of this Offer, including the merits and risks involved.

This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and uncertainties. Our

results could differ materially from such forward-looking statements as a result of certain factors, including the

considerations described below and elsewhere in this document.

The terms “total outstanding loan portfolio”, “average outstanding loan portfolio” and “outstanding non-performing loan

portfolio” appearing in this section re