Change & InnovatIon · Tribute to Founder Member Haseena Vahanvaty Our People Glimpses of Change & Innovation Voices From the Field- Clients & Employees Speak Operational performance

swadhaar finserve | 8th annual report 2015

Change & InnovatIon

ColleCtions using digital deviCe

ContentS

Introduction

Vision, Mission & Values

Chairperson’s Message

Tribute to Founder Member Haseena Vahanvaty

Our People

Glimpses of Change & Innovation

Voices From the Field- Clients & Employees Speak

Operational performance

Director’s Report

Independent Auditors Report- SFPL

Financials- Standalone

Independent Auditor’s Report-Consolidated

Financials- Consolidated

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Swadhaar FinServe Pvt. Ltd.

Swadhaar FinServe Pvt. Ltd. ( SFPL) is among the early initiatives in India aimed at providing financial services to the economically active but unbanked, underserved urban population, as an NBFC-MFI, headquartered in Mumbai.

SFPL had four loan products designed and developed to meet a wide range of customer needs: an Individual Loan with a Joint Liability (JL), a Top-up Loan to existing JL clients, a Centre-Based Group Loan and an Individual Business Loan (IBL). The client base was primarily women from low income households.

During 2014-15, SFPL reviewed the strategic options available to the company to achieve scalable impact in serving its target business segment–the under-banked or underserved urban population and micro-enterprises. The company then decided to pursue the Business Correspondent model for the JLG and MSME business through its 100% subsidiary, Swadhaar Information and Management Services Pvt. Ltd. (SIMS). The group loan portfolio of the Company was assigned to RBL Bank Limited in August 2014, and is now serviced by SIMS.

Swadhaar Information & Management Services Pvt. Ltd.

Swadhaar Information & Management Services Private Limited (SIMS) was registered on April 30th, 2013. It was acquired as a wholly owned subsidiary by SFPL, in August 2014. It has entered into a Business Correspondent (BC) partnership with RBL Bank Ltd. (formerly Ratnakar Bank) to provide loans and other financial services to underserved and low-income households. This partnership leverages the strengths of each institution - Swadhaar’s consumer insight and distribution capability to this segment and RBL’s suite of banking products and funding capacity. SIMS is also a BC to its parent, Swadhaar FinServe Pvt. Ltd.

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SFPL had four loan products designed and developed to meet a wide range of customer needs:

An Individual Loan with a Joint Liability (JL)

A Top-up Loan to existing JL clients

A Centre-Based Group Loan

An Individual Business Loan (IBL)

IntroduCtIon

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vISIonTo be the preferred provider of micro financial services.

MISSIonTo make available responsible and efficient financials services to economically vulnerable and underserved urban households, enabling them to attain financial security and meet their aspirations.

valueSOur core values imbibed at all staff levels in order to achieve our vision and mission are:

� Customer First

� Responsibility

� Excellence

� Integrity

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ChaIrperSon’S MeSSage

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I dedicate this reportand message to myfriend and co-founder,Haseena Vahanvaty,who left us on January1st this year. From thefirst day of our journeyas a non-profit,Haseena steadfastlymaintained thatSwadhaar’sraison d’etre is theclient we serve. In hermemory, we reiteratethat Swadhaar’ schoices are driven byour social objective ofserving the client best,whilst continuing tobe sustainable.

Changing Landscape for Financial Inclusion

In 2013-14, the big news in the banking space was the licenses given to two new banks, both large existing financial service players, at opposite ends of the spectrum – infrastructure and microfinance. Not surprisingly, the Financial Inclusion strategy was a key pre-requisite of their plan. In 2014, the Financial Inclusion landscape in India has seen remarkable changes, driven by enabling regulation that will permit a host of different players to evolve, along with the requisite financial infrastructure. The regulation was followed by players rapidly responding to the opportunities to serve clients in a more holistic way. A large number of MFIs as well as payment and technology companies applied to become small finance banks and payment banks. Whilst the outcome of the applications is awaited, what is certain is that the form and substance of the market for financial services for the poor and low income segment is being redrawn, as the rules get rewritten. With this welcome change comes the aspiration that it will sooner, rather than later, become a mature market offering appropriate choices for the client, with the hope that the supply side constraints are also addressed meaningfully.

Apart from the availability of appropriate products and services, what is also “happening” is the digital space. The digital channel as a delivery channel is a reality, with Mobile connectivity always on and affordability of data usage (data may even become free - depending on how the debate on net neutrality progresses, service providers may pay for usage of data, like toll free service calls or incoming free calls). Our clients may progress straight from cash to digital payments - with the various e-wallets introduced, both by banks and payment companies - bypassing cheques, as they did land lines.

New and agile players can now think of piggy backing on the infrastructure that is becoming operative and interconnected. Innovative products, efficient delivery and the customer experience will be the new benchmarks, replacing number of clients as the barometer of success. A question anyone working in the space of Financial Inclusion should be asking is:

What will be the next disruptive business model in financial inclusion ? And more importantly, looking beyond the traditional financial services players to see who is behind it.

Swadhaar’s story

Client focus has always been at the centre of Swadhaar’s business strategy. Here I would like to take a walk down memory lane and share how, at times, events often outside our control directed our path. The precursor to this Company was Swadhaar FinAccess, a non – profit entity, which had the good fortune to partner with social investors, to experiment and pilot urban branches. Designing and offering an individual loan to micro entrepreneurs in urban areas was the vision with which Swadhaar was created. The individual loan and group loan were designed as distinct products, after a near death experience with individual loans in small joint liability groups in Mumbai.

Expansion and growth started in 2008, as an NBFC, taking over a small portfolio from the non- profit entity. The group loans that Swadhaar offered had flexible features and processes designed to be client friendly, such as small groups, no group meetings, door step collection and prepayment options. The individual loans were unsecured, provided primarily to meet working capital for business. Both products were different from the traditional MFI loans prevalent in villages, suited to urban characteristics such as diversity, lack of time and space, lower natural group cohesion and existence of micro entrepreneurs, looking to grow. Growth came slower; costs were higher, but the client found it convenient and was willing to pay more for the flexibility. The 2010 microfinance crisis came bang in the face of Swadhaar’s branch expansion. Fresh capital had been injected, branches set up and ready to scale up, when we faced a crunch on borrowing and had to slow down. The MFI regulations forced us to make a choice between the individual loan and group loan portfolio, which were respectively 30:70 in the portfolio. The former was a fairly new offering at the time, but faced funding constraints and was primarily supported by our capital. The group loan, whilst not exactly fitting the MFI regulatory box, was eligible for PSL and could be tweaked to become compliant, though the pricing cap would require us to drop several client centric features to cut costs. With a modest portfolio size

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and the 15% cap on non-qualifying assets, meant growing the individual loan only in fits and starts, in tandem with the group loan portfolio. This made it difficult to have a viable individual loan portfolio and we reluctantly decided to run it down in 2011, to be able to become an NBFCMFI. Additional capital was raised to tide over the funding constraints from the crisis, and expansion started – modestly at first, and then picking up as funding became available. 2013 and 2014 saw good growth of the group portfolio, geographic expansion and diversification of funding sources.

In 2013 management also worked on a market study led by Grant Thornton, funded by IFC Washington and Accion, along with a business plan for a new entity to offer individual loans to micro entrepreneurs. The study quantified the vast opportunity, segmented the market and identified potential areas.

In 2013, Swadhaar promoters also experimented with a BC pilot for MFI loans, searching for opportunities to serve the clients with a full suite of products and reducing reliance on balance –sheet funding. This proved successful in partnership with RBL Bank.

2014-15 A Successful Transition

Looking at the rapidly evolving financial inclusion landscape, we at Swadhaar re-evaluated our strategy with a focus on the client. It is our belief that as an MFI, our strength is understanding and reaching the client. Our constraint has been capital resources, not so much for on-lending or growth, but for innovation and infrastructure. The MFI regulations curtail our ability to serve the client with a wide suite of products, whilst also restricting us from broadening our client segment. It was to explore these alternatives that the Promoters undertook a BC pilot. In 2014-15,

when RBI permitted NBFCs to be BCs, this became a viable option for the Company and it acquired the BC company, Swadhaar Information & Management Services Pvt. Limited (SIMS) from the Promoters as a 100% subsidiary. This was followed by a sale of the portfolio to RBL in August 2014. SFPL ceased to write new business as an NBFC from August 2014 and SIMS became a BC for RBL Bank. The year 2014-15 was thus one of transition of MFI loans from our own balance sheet, to managing the assets as a BC for a bank by SIMS. This was a major strategic shift, and has been successfully accomplished.

During the year, the operations of SIMS were stabilized and processes aligned with RBL Bank. Whilst initially there client acquisition was slow, this picked up in the last quarter, January-March 2015.

Meanwhile, the individual loan dream of the promoters was not given up. The business plan prepared in 2013 has been revived and refreshed, and the Company is planning to restart this business, either as a BC or direct lending, subject to appropriate regulatory registrations. The Company has also engaged in obtaining an appropriate change in regulatory status, as it no longer has its own MFI portfolio.

As of March 31, 2015 the parent Company, Swadhaar FinServe Private Limited, had a very small portfolio, in the process of being run off. The Auditors have accordingly drawn attention in their Report to the audited accounts for Swadhaar FinServe Private Limited to matters of significance, which are also dealt with in the Directors’ report. The Auditors’ Reports for both entities are without qualification.

The transition in the past year has made Swadhaar a nimble entity, able to react pro-actively to both environmental and regulatory developments. There

Our clients may progress straight from cash to digital payments - with the various e-wallets introduced, both by banks and payment companies - by passing cheques, as they did land lines.

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are greater resources to devote to innovation and various options for increasing digitization and efficiency of operations are under review. To drive these initiatives forward, the Company has re-organised its management structure, inducting people with relevant experience and skills at senior levels, whilst rationalizing its large back office and outsourced operations, primarily through natural attrition.

Financial Literacy

Swadhaar FinAccess, the non-profit associate, continues to operate 10 Financial Literacy and Inclusion Centres, 9 being within the branches of SIMS. This widens the impact in the communities that we work in. It, too, has embraced digitization as the way forward, seeded through a grant received under the Citi Foundation Innovation Grant Programme. Non-profits do not have access to risk capital, and most external funding is directed towards tried and tested programmes that have shown some success. The Citi Innovation Grant served as risk capital to take this leap of faith of delivering Financial Education digitally. Our experience in working with mobile money (http://www.gsma.com/mobilefordevelopment/swadhaar-accion-and-airtel-money-mobile-money-for-female-customers-in-india) has been that our clients can successfully adopt digital channels, if training and handholding is available for a while. We hope to now embark in this direction to move from education to product uptake and usage, working through community women as trainers and product agents. Read more about Swadhaar FinAccess’ work at www.swadhaar.org.

In conclusion, I would like to thank our Investors and my colleagues on the Board for their confidence, as I took on the role of Chairperson. I also express our

appreciation to the RBL Bank team for the smooth operating relationship and for our team led by Raja Ram Kamath, our CEO, for the change executed successfully last year, whilst preparing for the next phase of our growth and development. We look forward to our future with optimism.

Veena MankarFounder & Chairperson

During the year, the operations of SIMS were stabilized and processes aligned with RBL Bank. Whilst initially client acquisition was slow, this picked up in the last quarter,January-March 2015.

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trIBute to haSeena vahanvatY

The year 2015 started on a sad note for the Swadhaar family, as we lost our co-founder, Haseena, on the first day of this year. Haseena and I shared a dream and worked together for the last 10 years – to bring financial services to the urban poor. It was through this shared dream that Swadhaar was born.

Haseena was not new to social development but claimed she was a novice in finance. This, we laughed, would make for a great partnership, as we would accept each other’s perspective on our respective forte! She soon took off for Bangladesh – to understand microfinance, and spent time on field and institutional visits there. After that visit, she decided this was going to be her work from now on – even before we had fleshed out our plan.

Haseena, from the beginning, made me look beyond numbers, accounts and raising funds, to the hopes and aspirations of our clients, and inspire them to achieve their dreams.

When we seeded the idea, she reached out through her vast network of contacts- especially through Rotary and the Mohalla Committees operating in the slum communities – and opened the doors to meeting the clients

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we now serve. Those were wonderful days of discovery, understanding the beauty, vibrancy and yet despondency in our city of Mumbai. It was while walking and talking to the women alongside her, that we came to understand our client, her milieu, her challenges and her motivations; and embrace her needs as our primary purpose. In these early visits, we conceptualized Swadhaar as a customer and employee centric organization. She was impatient for action; whilst we made plans for giving out loans, her first initiatives were to match job opportunities in Swadhaar with the youth from these same families.

She could mix easily with the vegetable vendor, the tailor and the housemaid and get them to share their lives with us; as she did with the Board, investors and funders. She was my window to social impact – beyond just loans to changing mindsets and lives.

She not only had a purpose in life, i.e. to make the lives of those less privileged, better, but she also cared deeply for her colleagues and co-workers.

Staff have often come up to me to express how she touched their lives too, with her smile, her laughter, her concern, her reaching out to help wherever she

could – a job, a doctor, a school admission; making people feel respected, appreciated and finding their self-worth. She gave confidence to the women around her, to find their inner strength, which she believed every woman had – and only had to look inside to draw upon.

I recall that in the early days, she would encourage the women to share their experience of getting a loan, financial training or opening a saving account with others – just spread the word. When they asked “what’s in it for us?” hoping for a monetary inducement, she would pat them on the back and say “man ki shanti- peace of mind”! That was her philosophy, do good to earn your peace of mind.

We both shared a precious friendship, not just building Swadhaar brick by brick, but also our personal joys, successes and failures, comfortable in each other’s company, even when arguing about the things we felt differently.

Just before we lost her, I was away, and in the few communications with her from the US, she was more interested in my new grandson, than answering questions about her health and treatment. She never gave me any indication of how ill she was. That was typical of her, more concerned about others than herself.

I have lost not only my friend and partner in my work, but also my social conscience keeper. Her family’s loss is infinitely more. We are immensely grateful to her husband Gulam, for having taking the onus of continuing what she started and stepping into her place on the Board of Swadhaar FinAccess.

At Swadhaar, as Haseena always kept reminding us, we again dedicate ourselves to our clients – to being a facilitator enabling them to achieve their aspirations. She will always be a part of Swadhaar – and in our work she lives on.

Veena Mankar

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our people

BOARD OF DIRECTORS

Ms. Veena MankarFounder & Chairperson of the Board

Ms. Anita RamachandranIndependent Director

Mr. Anal JainIndependent Director

Ms. Valerie KindtNominee Director, Accion International

Mr. Abhishek Agrawal Nominee Director, Accion International

Mr. Srinivas Bhaskar RaoNominee Director, Indian Family Trust

Mr. RajaRam KamathExecutive Director & Chief Executive Officer

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SENIOR MANAGEMENT TEAM

Ms. Veena MankarFounder & Chairperson of the Board

Mr. RajaRam KamathExecutive Director & Chief Executive Officer

Mr. Pranav DesaiChief Finance Officer

Ms. Preeti TelangVice President- Customer Service, Client Protection & Training

Mr. Mukesh ManjkholaVice President- Commerical, Maharashtra, Madhya Pradhesh & Rajasthan

Mr. Nehal ShahVice President- Commercial, Gujarat

Mr. Pradip GuravGeneral Manager- Human Resources

Mr. S. PasupathyConsultant- Risk Management, QualityControl & Internal Audit

Ms. Anshu MundhraCompany Secretary

BANKERS/ FINANCIAL INSTITuTIONS:

Axis Bank Bank of BarodaCentral Bank of IndiaStandard Chartered BankDCB BankHDFC Bank IDBI Bank Indusind Bank Kotak Mahindra BankRBL BankuCO BankYes Bank

AuDITORS

Haribhakti & Co. LLP Chartered Accountants

REGISTERED ADDRESS

Tenement 1/3 and 1/4,Old MHB Colony, Anand Nagar,Nehru Road, Santacruz (E),Mumbai 400055

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glIMpSeS of Change & InnovatIon

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First Loan Disbursed the first loan in March 2006.

Individual Business Loans launched for entrepreneurs, both male and female, to run micro-businesses, usually enabling them to expand their business.

Axis Bank – Airtel Money programme piloted in 2012, crossing enrolment of over 13,000 during the year. Clients could save and also make via a mobile wallet.

Adopted Centre-based lending models in 2013, moving away from the small Joint Liability Groups (JLG), most suited to the urban context. However, with expansion to smaller cities centre-based group lending was introduced.

Finnoviti Award Swadhaar was one of the recipients of the Finnoviti 2013 Awards for innovation, for The Mobile Wallet product.

Smart Campaign Certification on Client Protection awarded in December 2013, making us amongst the first five institutions in India to receive this certification.

Swadhaar Information & Management Services (SIMS) became a BC company for RBL Bank, following the successful pilot in August 2014.

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Our employees are important stakeholders in the growth of our company. Today the Swadhaar Family comprises 496 employees working in different capacities in four states in India.

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voICeS froM the fIeld- eMploYeeS Speak

Minal KadaM

“I joined Swadhaar on 16th Jan 2006, and at the time there was only one branch in Kherwadi. The team was small and Veena Ma’am used to train us herself. We later expanded to Malad and then to 40 other branches in a span of 9 years. What has remained constant, however, is the customer-centricity of the organization.

Swadhaar is just like a family for me now and my work makes me happy. We give loans to women who do not get loans from banks and the loan helps them to grow their businesses. Seeing the growth in our clients makes me happy and satisfied with my job.”

Shefali Talreja

“Swadhaar – I have worked here for 7 years but when I look back it seems like only 7 days. I joined Swadhaar as an Analyst and over a period of years grew to become an Assistant General Manager straddling multiple responsibilities.

Though I handled a spectrum ofresponsibilities the pressure ofwork never bogged me down as weworked in an atmosphere whichwas fertile for learning and helpingone another. Each of us was awareof our responsibilities, but wecoupled it with a desire to help andguide anybody else who neededit. In the process we found thatour knowledge also grew tenfold.I have been inspired by highlydynamic visionaries who were alsoextremely down to earth, and I havealways wanted to be like them.

harShada Gawde

“I have been with Swadhaar since 2006. I am proud to be a part of a company that has a reputation for its quality and culture. Staff and clients both are always treated with respect. Swadhaar has always encouraged its employees to explore their potential.”

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voICeS froM the fIeld- ClIentS Speak

“6 months ago I availed of a loan of Rs. 25,000 from Swadhaar. This is my third loan, and it has helped me grow my tailoring business. I now have a savings bank account with RBL Bank and I am eagerly awaiting my Rupay Debit Card from RBL Bank. I have an insurance policy as well. I am happy to be part of RBL Bank and Swadhaar and to get different products.”

Manjuben dhanraj ShahNavayard, Lalpura, Gujarat

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“I conduct tailoring classes and I have 15 students in my class. I have 4 machines and 1 machine exclusively for fall beading. This would not have been possible without Swadhaar’s loan. I am currently in my second loan cycle with Swadhaar, and have borrowed Rs. 18,000. I have used this money to repair my machines, purchase material and for the purchase of a new machine.

I want to expand my classes, but in order to do this I will need additional machines. Soon, I will complete repaying my loan and I can apply for a new loan to purchase new machines. I want to grow my business and I am confident Swadhaar will be there with me for the change….”

aniSha MohaMMed rafiq ShaiKhShakir Baug, Gujarat

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“I started a tiffin business with a loan of Rs. 13,000 from Swadhaar. Today, I am in my 4th loan cycle and have borrowed Rs. 30,000. My tiffin business has expanded, and I now also cater for events such as birthdays, festivals, ceremonies etc. I even supply tiffins to call centres.

During my 1st loan cycle I had 10-12 customers, and now in my 4th cycle, I have 40-50 customers. My monthly income has increased ten-fold to Rs. 40,000-45,000. I am extremely happy to see this transition. I am all the more motivated to work hard and achieve my goals!”

VarSha hindulKarBorivali, Mumbai

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operatIonal perforManCe

nuMber of brancheS

acTiVe clienTS

field STaff and ToTal STaff

496

Mar -11

254

252

205

369

425

425

425

295

301

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

Mar -11

Mar -11

38 56

,727

80,20

1

96,60

0 156,5

29

213,7

16

39

24

42 40

Mar -12

Mar -12

Mar -13

Mar -13

Mar -14

Mar -14

Mar -15

Mar -1522

ToTal incoMe & neT ProfiT (rS. in Mn.)

oSS & Par >30+ (%)

oS PorTfolio (rS. in Mn.)

Mar -11

115.7

6 191.8

2 251.5

9

383.7

7

373.6

4

-29.4 6.5

6 11.63 13

.42

11.40

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

Mar -11

Mar -11

504.0

4

79.14

101.78 105.9104.53 105.92

1.731.141.192.031.09

786.0

4 1151

.94 2035

.91 2631

.98

Mar -12

Mar -12

Mar -13

Mar -13

Mar -14

Mar -14

Mar -15

Mar -15

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Directors’ report

To,The Members,

Your Directors are pleased to present the Company’s Annual Report for the financial year 2014-15, it’s eighth year of operations, along with the audited Balance Sheet as at March 31st, 2015 and the Profit and Loss Account for the year ended March 31st, 2015.

Significant Events during the yearThe Company has made a significant strategic transition this year, deciding not to pursue the NBFC-MFI model, instead following a business correspondent model to serve this segment. This decision was taken after a strategic review of the environment and keeping in mind the Company’s commitment to its social mission to serve clients in the best possible manner. It was considered that the objective of financial inclusion, i.e. to offer a full range of banking products to its MFI clients would be best accomplished as a business correspondent partnering with one or more banks. Further, this would also give the Company the flexibility to introduce loan products for the “missing middle” – the segment between the MFI and banking sectors, that is acutely starved of credit, especially non- collateralized credit for working capital. The Company’s previous forays into this segment have been successful, albeit limited, due to the regulatory limitations on lending to non MFI clients for an NBFC-MFI.

Accordingly, during the year under review Company assigned its group loan Micro finance (MFI) portfolio amounting to Rs 1667.7 million to RBL Bank Limited (RBL). The Company ceased writing new MFI loans with effect from August 2014. Arising out of the sale, the Company repaid all its borrowings and prepaid the Non-Convertible Debentures (NCD). As a result Company has its capital primarily invested in cash and cash equivalent. The Company has already drawn up plans to commence providing loans and/or services as a Business Correspondent (BC) for micro and small entrepreneurs. These plans will be implemented during 2015-16, including obtaining the required regulatory approvals. The Company has kept the RBI informed of its portfolio status after sale of its MFI portfolio and sought time to transition into other business segments.

To fulfil its objective of serving micro finance clients as a business correspondent, during the year the Company acquired Swadhaar Information and Management Services

Private Limited (SIMS) as a 100% subsidiary. SIMS acts as a BC for RBL to offer loans and other banking products to the low-income sector. SIMS also took on the servicing of the residual portfolio of the Company. The top management of SFPL i.e. Chairperson, Chief Executive Officer (CEO), Chief Financial Officer (CFO) oversee the responsibilities at SIMS as well. Whereas SFPL scaled down its own staff, a large part of the staff chose to take up offers with SIMS, some relocating to different geographic areas and functions. SIMS also made fresh recruitments to meet requirements for the substantial expansion.

This report provides a comprehensive view of1. SFPL- results, bifurcated into operations that were

discontinued (i.e. microfinance group lending business and continuing operations i.e primarily managing its capital until commencement of the micro and small/ medium enterprise ( MSME) business), and

2. Operations of the subsidiary- SIMS

Operations (Consolidated of Company’s residual portfolio & Asset under management of SIMS)The report presents a review of the operations of the Company along with its subsidiary SIMS, which was acquired during the year. The operations of SIMS, whilst engaged with the similar segment of clients, reflects assets under management as it operates as a Business Correspondent, originating and managing the portfolio for RBL Bank and managing the SFPL portfolio as well.

SIMS had conducted a BC pilot in the previous year and based on the success of the same, undertook a substantial expansion, post August 2014, including in rural areas and districts where Swadhaar did not have prior experience. During the year, SIMS launched operations in 12 locations taking the total operating locations for the group to 40. SIMS starting with the pilot in Gujarat, now also operates in Maharashtra, Rajasthan and Madhya Pradesh.

The business momentum was gained in the last quarter of the year and SIMS closed the year with fresh disbursements of Rs 2197 Million and a portfolio under management of Rs 2632 Million, which included a residual portfolio of SFPL of Rs 66 Million. Across all the regions emphasis was placed on training of all staff and aligning processes with RBL Bank.

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As at March 31, 2015

Number of active clients 213,790Portfolio (assets Under Management by SIMS, that include SFPL’s portfolio) (Rs in Millions ) 2632

Number of Loan Officers 288Number of Outlets 40

Financial Performance of the Company (Standalone SFPL)The Company closed the year with a profit before tax of Rs 18.4 million and net profit of Rs 10.3 million, registering a decrease of nearly Rs 3.10 million in net profit over the previous year. (Rupees’000)

Results Year Ended 31st March, 2015

Year Ended 31st March, 2014

(A) Total Income 262,209 383,768 (B) Total Expenses 243,770 367,141 (C) Profit for the year (A-B) 18,439 16,627 (D) Deferred Tax Adjustment 6,396 -3,422 (E) Current Tax Adjustment 1,712 5,831 (F) Short provision for earlier years - 796 Excess of Total Income over Expenditure (C-D-E-F) 10,332 13,423

Financial Summary of the Subsidiary -Swadhaar Information and Management Services Private Limited (SIMS)

(Rupees’000)


Year Ended 31st March, 2014

(A) Total Income 129,572 3,314 (B) Total Expenses 126,830 3,194 (C) Profit for the year (A-B) 2,742 120 (D) Deferred Tax Adjustment (720) - (E) Current Tax Adjustment 2,109 37 (F) Short provision for earlier years - - Excess of Total Income over Expenditure (C-D-E-F) 1,354 83

Consolidated Financial Statement (includes SIMS for 8 months of operations from the month it became subsidiary)

(Rupees’000)


(A) Total Income 373,643 (B) Total Expenses 352,373 (C) Profit for the year (A-B) 21,270 (D) Deferred Tax Adjustment 5,676 (E) Current Tax Adjustment 3,820 (F) Short provision for earlier years - Excess of Total Income over Expenditure (C-D-E-F) 11,773

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Customer Grievance Redressal Mechanism (CGR)

All clients serviced by Swadhaar have access to its own

and RBL Bank’s customer grievance redressal mechanism

(CGRM) as appropriate, which have a clearly defined process

and resolution mechanism. The Swadhaar teams have been

trained on CGRM. Given the vulnerability of clients in the MFI

and low income segment, it is important to also disseminate

to clients their rights to register complaints and access various

channels available for resolution. At various stages in the

loan process, communication about different channels for

registering the complaints/suggestions/enquiries is given to

clients both in written and oral form. The help line number

of RBL Bank is also publicized by Swadhaar teams and at

Swadhaar branches. The branch teams work with clients to

get resolution to their queries and complaints.

Financial Education and Counseling

Providing financial education to low income households,

especially women and working youth, and increasing the

adoption of appropriate financial products remains a priority

for Swadhaar, and this is carried out through our not for

profit associate, Swadhaar FinAccess. Swadhaar FinAccess

operates 10 Financial Inclusion and Literacy Centre (FILCs),

in Mumbai and Gujarat. FILCs are physical resource centres

for information and advice on money management, financial

products and services. Each FILC has a counsellor and

trainers that build the financial capability of community

women through financial education sessions, product

linkages and counselling.

During the year 16,789 persons benefited from the FILC

initiatives. The work done by SFA is not restricted to clients

of SFPL/SIMS but is available to all those in the vicinity and

desirous of availing these services.

Nine out of the Ten FILCs operated by SFA are located in

SIMS braches. SFA also shares the HO premises of SFPL

and senior management of SIMS and SFPL also manage/

supervise the activities of SFA. The VP for Training and

Client Services at SFPL, devotes 50% of her time to SFA.

This helps to keep the infrastructure costs at SFA low and

funds received for the various programmes go directly into

client facing activities.

Dividend

In order to conserve resources for the new business the

Board does not recommend any dividend for the financial year

ended 31st March, 2015.

Amounts Transferred to Statutory Reserves

The Company has transferred an amount of Rs 2.06 Million

to statutory reserves from the profits of the Company in

accordance with the provisions of section 45 IC of Reserve

Bank of India.

Risk Management

The Company has in place a risk framework led by the Board

Risk Committee and an appropriate Risk Management Policy.

Significant Material Orders

There are no significant material orders passed by the

Regulators / Courts / Tribunal which would impact the going

concern status of the Company and its future operations.

Hence, disclosure pursuant to Rule 8 (5) (vii) of Companies

(Accounts) Rules, 2014 is not required.

Internal Financial Controls

The Company has an adequate internal financial control

system, commensurate with the size of its business operations.

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013, the

shareholder’s of the Company appointed M/S Haribhakti &

Co. LLP, Chartered Accountants as the statutory auditors of

the company for the period of 3 years( From FY2014-15to

FY 2016-17) subject to the ratification by the members at

every annual general meeting. Your directors recommend

the ratification of their appointment for FY 2015-16. They

have given their eligibility & consent for the proposed

ratification.

In the auditor’s report, the auditor’s have drawn attention to

exceptional items following a change in the business of the

Company. They have highlighted that the going concern

assumption of the Company is not affected as Company has

already drawn up plans to commence providing loans and/or

services as a BC for providing financial services to micro and

small entrepreneurs.

27

Share Capital

During the year, no fresh capital was infused. The authorised share capital of the Company remained at Rs 750 million. The

table below reflects the shareholding pattern as on 31st March 2015:

Name of Shareholder Total Number of shares %

Promoters & Promoters Family & Friends

Domestic 2,685,841 4.91%

Foreign 374,583 0.69%

Total 3,060,424 5.60%

ACCION Africa Asia Investment Company* 19,650,000 35.94%

Michael and Susan Dell Foundation 6,452,250 11.80%

Mauritius Unitus Corporation 2,312,500 4.23%

M V Mauritius Limited 8,325,114 15.23%

Indian Family Trust 6,960,000 12.73%

Swadhaar FinServe Employee Welfare Trust 4,919,625 9.00%

SIDBI 3,000,000 5.49%

Total Shares 54,679,913 100.00%

*This is the investment vehicle through which ACCION International has invested in Swadhaar.

Employee Stock Option Scheme 2010 and Asso-ciate Stock Option Scheme 2010The Company has an Employee Welfare Trust set up to manage and implement the Employee Stock Option (ESOP) Scheme. During the year under review, the Company has not granted any option under the Employee Stock Option Scheme 2010 and Associate Stock Option Scheme 2010. The information pertaining to these is contained in the Notes to Accounts.

Registrar and Transfer AgentTSR Darashaw Limited is the Registrar & Transfer Agent (RTA) for the Company. Its address and contact details are as mentioned below:

TSR DARASHAW LIMITED6-10 Haji Moosa Patrawala Industrial Estate20, Dr. E. Moses Road, MahalaxmiMumbai – 400 011

Extract of the Annual ReturnThe extract of the annual return in Form No. MGT – 9 is attached as Annexure A.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and OutgoYour Company, not being a Manufacturing Company, advises that clauses for Conservation of energy and technology absorption are not applicable.

During the year under review, your Company earned no Foreign Exchange. Though, there was outward foreign currency transaction of Rs.6.01 million.

DirectorsA) Changes in Directors and Key Managerial Personnel During the year under review the Board was

reconstituted following to resignations of Ms. Lalita D Gupte, Chairperson and Mr. Siddhartha Chowdri nominee Director of Accion. Ms. Gupte resigned after having lead the Board for 6 years, whereas Mr. Chowdri resigned following relocation to the USA, after also having been on the Board for 6 years. Your Directors acknowledge that the Company benefited from their expertise and experience and would like to record their appreciation for the support and direction provided by them during their tenure.

Ms. Veena Mankar resigned as the Managing Director of the Company and was appointed as the Executive Chairperson of the Board. Mr. Abhishek Agrawal joined the Board, having been nominated by Accion as their nominee Director.

As per the Companies Act 2013, Mr. RajaRam Kamath- CEO &Executive Director, Ms. Reena Sen- CFO and Ms. Anshu Mundhra- Company Secretary, were appointed as the Key Managerial person (KMP) of the Company. After resignation of Ms. Reena Sen, Mr. Pranav Desai –CFO was appointed as the KMP of the Company.

28

B. Number of meetings of the Board of Directors The Board of Directors of the company met 6 times during the year.

Name of Director/Designation No. of meetings eligible to attend

Meetings attended

Ms. Lalita D. Gupte Chairperson till May 29, 2014

2 2

Ms. Veena Mankar Managing Director- Till May 29, 2014 & chairperson from May 29, 2014

6 6

Ms. Anita Ramchandran Independent Director

6 5

Mr. Siddhartha Chowdri Nominee Director till May 29, 2014

2 2

Mr. Srinivas Rao Nominee Director

6 6

Mr. Abhishek Agrawal Nominee Director from May 29, 2014

4 3

Ms.Valérie Kindt Nominee Director

6 3

Mr. RajaRam Kamath Executive Director

6 6

Mr. Anal Jain Independent Director

6 6

Details of Board CommitteesDuring the year under review, the following Board committees were reconstituted due to the reconstitution of the Board:

1. The Audit Committee met Five (5) times during the year and constituted the following Directors: Mr. Srinivas Rao, Mr. Abhishek Agrawal, Ms. Anita Ramchandran and Mr. Anal Jain.

2. The Nominations, Compensation and Governance Committee constituted the following Directors: Ms. Anita Ramchandran, Mr. Srinivas Rao and Mr. Anal Jain.

3. The Risk Committee constituted the following Directors: Mr. Srinivas Rao, Mr. Abhishek Agrawal, Ms. Anita Ramchandran and Ms. Valerie Kindt.

Particulars of Loans, Guarantees or Investments made under section 186 of the Companies Act, 2013The particulars of loans given or guarantees given or investments made or securities provided pursuant to Section 186 are furnished as under:Date Particulars Recipient Amount Purpose 07.04.2014 Demand loan Swadhaar Information and

Management Services Private Limited (SIMS)

Upto an amount Rs. 5 Crore

To meet the working capital requirement for servicing the BC portfolio.

04.08.2014 Acquired 10,000 Equity shares for Rs. 10 each

SIMS Rs. 1 Lac Investment to acquire SIMS as 100% subsidiary.

Particulars of Contracts or arrangements with Related PartiesThe Form No: AOC -2 is attached as annexure B.

29

Directors’ Responsibility StatementThe Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that—(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper

explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AcknowledgementsThe Directors wish to thank all the staff for their dedication and hard work in the past year. The Directors would also like to record their deep appreciation for the un-stinted support and assistance during the past financial year of the shareholders, institutions and bankers that have helped the Company become what it is today.

For and on behalf of the Board

Veena Mankar RajaRam KamathChairperson Executive DirectorDIN:00004168 DIN: 06542196

Dated: August 24, 2015Place: Mumbai

Registered Office:Tenement 1/3 and 1/4, Old MHB Colony, Anand Nagar, Nehru Road, Santacruz (E),Mumbai 400055

30

Annexure- A

Form No. MGT-9- EXTRACT OF ANNUAL RETURN as on the financial year ended on March 31, 2015 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I. REGISTRATION AND OTHER DETAILS

i. CIN : U65990MH2007PTC175181ii. Registration Date : 19/10/2007iii. Name of the company : Swadhaar FinServe Private Limitediv. Category : Private Companyv. Address of the Registered office and contact details : Tenement 1/3 & 1/4, Old MHB Colony, Anand Nagar,

Nehru Road, Santacruz (E), Mumbai – 55vi. Whether listed company : Novii. Name, Address and Contact details of Registrar and

Transfer Agent, if any: TSR Dara Shaw,6-10,Haji Moosa Patrawala Ind. Estate

20 Dr. E Moses Road,Mahalakshmi,Mumbai-400 011

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

The principal business of the Company is to carry on the business of providing all and every kind of microfinance and financial services to the poor, the economically weaker sections of society .

III. PARTICULARS OF SUBSIDIARY:

S. No

Name and address of the Company

CIN Holding/ Subsidiary/ Associate

%of shares held Applicable Section

1. Swadhaar Information and Management Services Private Limited.

U74999MH2013 PTC242681

Subsidiary 99.99 % 2(87)

IV. SHAREHOLDING PATTERN (Equity Share Capital Breakup as percentage of Total Equity)

i. Category - wise Share Holding-there is no change during the year

Category of shareholders

No. of shares held at the beginning of the year No. of shares held at the end of the year

Demat Physical Total % of Total shares

Demat Physical Total % of Total shares

A. Indian Promoter 4,05,000 4,05,000 0.74 -- 4,05,000 4,05,000 0.74

B. Public Shareholding- Non- Institutions

i) Bodies Corp-Indian 3,030,000 27,273 3,057,273 5.59 30,000 27,273 27,273 5.59

ii) BodiesCorp-Overseas -- 30,287,614 30,287,614 55.39 30,287,614 -- 30,287,614 55.39

iii) Individual shareholders holding nominalshare capital upto Rs.1 lakh

1,20,000 5,42,860 6,62,860 4.24 1,20,000 5,42,860 6,62,860 4.24

iv) Individual shareholders holding nominalshare capital in excess of Rs 1 lakh

2,55,708 16,79,583 19,35,291 1.25 2,55,708 16,79,583 19,35,291 1.25

v) Others-Foundation 6,452,250 -- 6,452,250 11.80 6,452,250 -- 6,452,250 11.80

vi) Others- Trust 11,879,625 -- 11,879,625 21.72 11,879,625 -- 11,879,625 21.72

Total Public Shareholding

2,17,37,583 3,25,37,330 5,42,74,913 99.26 2,17,37,583 3,25,37,330 5,42,74,913 99.26

Grand Total (A+B) 2,17,37,583 3,29,42,330 5,46,79,913 100 2,17,37,583 3,29,42,330 5,46,79,913 100

31

ii. Share Holding of Promoters

Sr. No.

Shareholder’s Name Shareholding at the beginning of the year Shareholding at the end of the year

No. of Shares

% of total Shares

% of Shares Pledged

No. of Shares

% of total % of Shares Pledge

1. Veena Mankar 385,000 0.7 - 385,000 0.7 -2. Haseena Vahanvaty 20,000 0.02 - 20,000 0.02 -

iii. Change in Promoters’ Shareholding ( please specify, if there is no change): NO CHANGE

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

For Each of the Top 10 Shareholders No. of shares % of total shares of the companyAt the beginning of year 52,604,072 96.21Change during the year Nil NilAt the End of the year 52,604 ,072 96.21

v. Shareholding of Directors and Key Managerial Personnel:

SI no.

Shareholding at the beginning of

For Each of the Directors and KMP

No. of shares % of total shares of the company

1 Ms. Veena MankarAt the beginning of year 3,85,000 0.70Change during the year 0 0At the End of year 3,85,000 0.70

2 Ms. Anita RamchandranAt the beginning of year 81,500 0.15Change during the year 0 0At the End of year 81,500 0.15

V. INDEBTEDNESS: NIL

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

A. Remuneration to Mr. RajaRam Kamath, Whole-time as detailed in C

B. Remuneration to other directors:

Sl. no.

Particulars of Remuneration Name of Director Designation Total Amount (Rs.)

1 Chairperson’s Remuneration Ms. Veena Mankar Executive Chairperson 4.01 Million2. Sitting Fee for attending board

meetings – RS.10,000/ meeting Mr. Anal Jain Independent Director 60,000

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

Sl. no.

Particulars of Remuneration Key Managerial Personnel

Mr. RajaRam KamathCEO

Ms. Anshu MohtaCompany Secretary

Mr. Pranav DesaiCFO

Total

1. Gross annual salary in Rs in million 3.29 1.3 1.5 6.092. Yearly Bonus paid in FY 2014-15

Rs in million0.75 0.2 -- 0.95

3. Stock Option Vested (In units) 75,000 16,560 -- 91,560

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES: NIL

32

Annexure B- FORM NO AOC-2

(Pursuant to clause (h) of sub section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules 2014)(1). Details of contracts or arrangements or transactions not at arm’s length basis- Not applicable (2). Details of material contracts or arrangement or transactions at arm’s length basis

Sr No

Particulars (1) (2) (3) (4)

Name(s) of the related party Swadhaar Information and Management Services Private Limited

Swadhaar Information and Management Services Private Limited

Swadhaar Information and Management Services Private Limited

Accion Technical Advisors India

a) Nature of relationship: 100% Subsidiary 100% Subsidiary 100% Subsidiary Common Directorsb) Nature of contracts: Recording

Agreement Servicing Agreement

Letter Agreement for sharing of cost.

Technical Assistance Agreement

c) Duration of the contracts : One time Contract It may be terminated by mutual agreement

It may be terminated by mutual agreement

3 year i.e. March 31, 2018

d) Salient terms of the contracts : Transfer of Assets SIMS to service the portfolio @8.94%.

Sharing of personal cost and sharing of rent and other expenses.

Technical Assistance for MSME and JLG Products

e) Date(s) of approval by the Board, if any:

04/08/2014 04/08/2014 10/10/2014 27/03/15

f) Amount paid as advances, if any:

None None None None

g) Date on which the special resolution was passed in general meeting as required under first proviso to section 188:

06/08/2014 Not required Not required Not required

33

34

iNDepeNDeNt AUDitor’s report

To the Members of Swadhaar Finserve Private Limited

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Swadhaar Finserve Private Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Standalone Financial Statements

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

3. Auditor’s Responsibility Our responsibility is to express an opinion on these

standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

4. Opinion In our opinion and to the best of our information and

according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, its profit and its cash flows for the year ended on that date.

AUDitor’s report (stANDAloNe)

35

Emphasis of Matter We draw attention to the following matter in the notes to

the financial statements:

1. Note no 37 (i) and (ii) of the standalone financial statements regarding sale of substantial amount of loan portfolio wherein profit arising on such sale is forming part of exceptional item.

2. Note no 38 of the standalone financial statements regarding non compliance of certain criteria as specified in NBFC-MFI regulations and other NBFC regulations issued by Reserve Bank of India, so as to continue to qualify under the category of a NBFC-MFI and NBFC respectively.

Our opinion is not modified in respect of these matters.

5. Report on Other Legal and Regulatory Re-quirements

(1) As required by the Companies (Auditors’ Report) Order, 2015 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting

Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014;

e. On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements- refer note 31 on Contingent Liabilities to the standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts hence, the question of any material foreseeable losses does not arise;

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

For Haribhakti & Co. LLP Chartered Accountants ICAI Firm Registration No.103523W

____________________

Amit Hundia Partner Membership No.120761

Place : Mumbai Date : June 10th, 2015

ANNEXURE TO INDEPENDENT AUDITOR’S REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ in the Independent Auditor’s Report of even date to the members of Swadhaar Finserve Private Limited on the standalone financial statements for the year ended March 31, 2015]

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) During the year, the fixed assets of the Company have been physically verified by the management and as informed, no material discrepancies were noticed on such verification. In our opinion, the

36

37

frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

(ii) The Company did not have any inventory during current financial year so, clause (ii) of paragraph 3 of the Order are not applicable to the Company.

(iii) (a) The Company has granted unsecured loan to a Company covered in the register maintained under Section 189 of the Act.

(b) As, due date for repayment of loan has still not arrived, there is no question about the regularity of payment of principal and interest. Hence, there is also no overdue amount of loans granted to this Company.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) The Central Government of India has not prescribed the maintenance of cost records for any of the products of the Company under sub-section (1) of Section 148 of the Act and the rules framed there under.

(vii) (a) The Company is regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees’ state insurance, income tax, wealth tax, service tax, cess and any other material statutory dues applicable to it. As explained to us, the provisions regarding sales tax, duty of customs, duty of excise and value added tax are presently not applicable to the Company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other material statutory dues applicable to it, were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues outstanding with respect to income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute which have not been deposited with the appropriate authorities except as stated hereunder:

Name of the statute Nature of dues Amount (Rs.)

Period to which the amount relates

Forum where dispute is pending

Income Tax Act 1961 Income Tax 1,48,250 AY 2011-12 CIT (A)

(d) According to the information and explanations given to us, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(viii) The accumulated losses of the Company are not more than fifty percent of its net worth. Further, the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution(s), bank(s) or debenture holder(s).

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xi) According to the information and explanations given to us, the term loans have been applied for the purpose for which the loans were obtained.

(xii) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such instance by the management.

For Haribhakti & Co. LLPChartered AccountantsICAI Firm Registration No.103523W

____________________

Amit HundiaPartnerMembership No.120761

Place : MumbaiDate : June 10th, 2015

38

39

FiNANciAl stAtemeNts (stANDAloNe)

40

BAlANce sheet

Particulars Note As at 31st March, 2015

As at 31st March, 2014

I. EQUITY AND LIABILITIES1 Shareholders’ funds

(a) Share capital 3 497,602,880 497,602,880 (b) Reserves and surplus 4 (3,379,817) (13,711,471)

(A) 494,223,063 483,891,409 2 Non-current liabilities

(a) Long-term borrowing 5 - 754,665,144 (b) Long-term provisions 6 3,788,477 6,304,716

(B) 3,788,477 760,969,860 3 Current liabilities

(a) Short-term borrowing 7 - 47,582,030 (b) Other current liabilities 8 27,291,363 895,731,996 (c) Short-term provisions 9 7,465,901 24,834,775

(C) 34,757,264 968,148,801 TOTAL (A+B+C) 532,768,805 2,213,010,070

II. ASSETS1 Non-current assets

(a) Fixed assets 10Tangible assets 1,396,617 7,762,180 Intangible assets 8,317,263 9,713,880 7,991,040 15,753,220

(b) Non-current investments 11 646,559 546,559 (c) Deferred tax assets (net) 12 1,778,821 8,174,746 (d) Long Term Loans and Advances

Loans under financing activity 13 114,481 650,706,469 Others 14 56,081,033 56,195,514 6,007,066 656,713,535

(e) Other non current Assets 15 - 135,572,045 (D) 68,334,774 816,760,105

2 Current assets(a) Current Investments 11 11,911 1,100,142 (a) Cash and bank balances 16 383,578,085 259,541,695 (b) Short-term loans and advances

Loans under financing activity 13 6,210,042 1,081,322,999 Others 17 77,113 6,287,155 2,402,487 1,083,725,486

(c) Other current assets 18 74,556,879 51,882,643 (E) 464,434,030 1,396,249,966

TOTAL (D+E) 532,768,805 2,213,010,070 Significant Accounting Policies 1 & 2Additional Notes to Accounts 25 to 47

as at 31st March 2015

(Amt. in Rs.)

As per Our Attached Report of Even Date For and on behalf of the Board of For Haribhakti & Co LLP Swadhaar Finserve Pvt Ltd Chartered AccountantsICAI Firm Registration No: 103523WAmit Hundia Veena Mankar Rajaram Kamath Partner Executive Chairperson Executive Director & CEO Membership No.:- 120761 DIN : 00004168 DIN : 06542196

Pranav Desai Anshu Mundhra Chief Financial Officer Company Secretary

Place : Mumbai Place : MumbaiDate : 10th June, 2015 Date : 10th June, 2015


41

proFit AND loss

Particulars Note For the Year Ended 31st March, 2015

For the Year Ended 31st March, 2014

A Revenue from operations 19 202,282,744 377,864,182 B Other income 20 3,618,394 5,904,123 I Total Revenue (A +B ) 205,901,138 383,768,305

Expenses:Employee benefits expense 21 48,959,045 98,720,217 Finance costs 22 101,583,835 188,050,646 Depreciation and amortization expense 10 8,504,989 6,070,603 NPA Provisions and Waive-offs 23 19,195,192 7,887,392 Other expenses 24 45,499,137 66,412,272

II Total Expenses 223,742,197 367,141,130 III Profit before Exceptional Items and Tax (I-II) (17,841,060) 16,627,175 IV Exceptional Item 41 36,280,548 -V Profit before Tax (III-IV) 18,439,488 16,627,175

VI Profit from ordinary activities attributable to continu-ing operation before tax 10,090,444 16,627,175

Tax Expense Current tax 3,681,848 5,830,660 Deferred tax Expenses 2,055,538 (3,422,151)

Short (Excess) provision for earlier years - 795,809 Profit from continuing operation after tax 4,353,058 13,422,857

VII Loss from ordinary activities attributable to discontinuing operation before tax

(28,661,844) -

Gain on sale of assets and loss on settlement of liability relating to discontinuing operation 37,010,888 8,349,044 -

Tax expense:Current tax (1,969,938) - Deferred tax Expenses 4,340,386 -

Profit from discontinuing operation after tax 5,978,596 - VIII Profit for the year (VI + VII) 10,331,654 13,422,857 IX Earnings per equity share: 25

Basic and Diluted Earning Per Share (Face Value of Rs. 10 each) 0.21 0.28

Significant Accounting Policies 1 & 2 Additional Notes to Accounts 25 to 47

for the year ended 31st March 2015

(Amt. in Rs.)




42

cAsh FloW stAtemeNt

Particulars As at 31st March, 2015


Profit Before Tax 18,439,488 16,627,175

Add:

Depreciation 8,504,989 6,070,603

Loan Loss Provisions (8,057,532) 5,365,379

Bad debt w/off 27,252,724 2,522,013

Less:

Profit on sale of Mutual Fund units (511,769) (1,100,142)

Operating Profit before working capital changes 45,627,900 29,485,029

(Increase)/ Decrease Other current assets (22,674,236) (34,052,872)

(Increase)/ Decrease Short term loans and advances 2,325,374 42,720

(Increase)/ Decrease in Loan portfolio 1,698,452,221 (926,527,019)

(Increase)/ Decrease Non current assets 135,572,045 (3,310,219)

(Increase)/ Decrease long term loans and advances (48,111,348) 783,457

(Increase)/ Decrease Other bank balance -Business FD 4,995,742 (106,160,299)

Increase/ (Decrease) in Short term provision (17,368,874) 8,432,337

Increase/ (Decrease) in Long term provision 5,541,293 (2,884,713)

Increase/ (Decrease) in Long term Borrowing (754,665,144) 353,350,263

Increase/ (Decrease) in Short term Borrowing (47,582,030) 47,582,030

Increase/ (Decrease) in Other current liability (868,440,633) 350,635,556

Cash flow from operating activities 133,672,310 (282,623,729)

Less : Taxes Paid (3,674,529) (6,157,332)

Net Cash Generated from Operations 129,997,781 (288,781,062)

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Investment (257,726,630) (10,000,000)

Sale of Investment 259,326,630 10,000,000

Acquisition of subsidiary (100,000) -

Purchase of Fixed Assets (5,802,715) (9,528,387)

Sale of Fixed assets 3,337,066 -

(Increase)/ Decrease Other bank balance -Non-Business FD (182,759,843) 7,430,395

Net Cash from Investing Activities (183,725,492) (2,097,992)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Issue of Share Capital 30,000,000

Share Issue Expenses - (283,410)

Cash Flows from Financing Activities - 29,716,590

Net decrease in cash and cash equivalents (53,727,711) (261,162,463)

for the year ended March 2015

(Amt. in Rs.)


43

Cash and cash equivalents at beginning of year

Balance with Bank- Current a/c 64,173,862 198,178,370

Balance with Bank- Fixed Deposit 32,500,000 159,300,000

Cash on hand 1,210,699 1,568,654

Total Cash and cash equivalents as at beginning of year 97,884,561 359,047,024

Cash and cash equivalents as at end of year 44,156,850 97,884,561

Balance with Bank- Current a/c 25,990,655 64,173,862

Balance with Bank- Fixed Deposit 18,143,550 32,500,000

Cash on hand 22,645 1,210,699




44

sigNiFicANt AccoUNtiNg policies AND Notes to AccoUNts For the yeAr eNDeD mArch 31, 20151. Nature of Business The Company is Non-banking Financial Company – MFI

registered with the Reserve Bank of India (“RBI”) under section 45-IA of the Reserve Bank of India Act, 1934 and primarily engaged in lending and related activities. The Company received the Certificate of Registration from the RBI on 9th May 2008, enabling the Company to carry on business as a Non-banking Financial Company. It had applied to RBI for reclassification as a NBFC - MFI. The revised certificate of classification as NBFC – MFI was received on 4th October 2013.

2. Significant Accounting Policies a) Basis of Preparation of Financial Statements:

The accompanying financial statements are consistently prepared under the historical cost convention, and accrual basis of accounting, in accordance with the generally accepted accounting principles in India (“Indian GAAP”) and conform to the statutory requirements, circulars and guidelines issued by the RBI from time to time to the extent they have an impact on the financial statements and current practices prevailing in India. The financial statements comply in all material respects with the Accounting Standards (“AS”) notified under section 133 of the Companies Act, 2013 (to the extent applicable) and in accordance with the generally accepted accounting principles, the provisions of the Companies Act, 2013 and regulations of Reserve Bank of India as applicable to a NBFC-MFI .

All assets and liabilities have been classified as current or non current as per the company’s normal operating cycle and other criteria set out in the schedule III to the Companies Act 2013.

b) Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles require the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The

estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any differences of actual results to such estimates are recognized in the period in which the results are known / materialized.

c) Revenue Recognition:

a) Interest income is recognized and accounted on accrual basis as per the agreed terms except in case of Non Performing Assets outstanding for more than 90 days, which is recognized on receipt basis.

b) All other incomes are recognised on accrual basis, except in case of bad debts recovered, cheque bouncing charges, late payment charges, foreclosure charges and application money, which are accounted as and when received.

c) On securitization transactions of portfolio under the PTC route (pass through certificates), the Company has followed the provisions specified by Reserve Bank of India (RBI) in its guidelines on Securitisation Transactions. The amortisation of cash profit arising out of securitisation transaction is done as per method suggested in securitized guidelines as mentioned above.

d) Interest income on deposits with banks and Loan to Subsidiary is recognised on a time proportion accrual basis taking into account the amount outstanding and the rate applicable.

e) In respect of other heads of the income the company accounts the same on accrual basis.

d) Fixed assets & Depreciation:

Fixed Assets are stated at cost less accumulated depreciation and impairment, if any. The cost of fixed assets comprises purchase price and any other


45

incidental cost of bringing the asset to its working condition for its intended use. Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefit / functioning capability from / of such assets.

For assets purchased and sold during the year, depreciation is being provided on pro rata basis by the Company. On all assets, except as mentioned below, depreciation has been provided using the Straight line method at the rates specified in Schedule II to the Companies Act, 2013.

Improvements to Leased Assets are amortized over the lease period from the date of cost incurred.

e) Intangible Assets & Amortization:

Expenses incurred on Computer Software having enduring benefits are capitalized and will be amortized over a period of 3 years on a pro rata basis from the date of purchase.

f) Investments:

Investments are classified into current and –long term investments. Investments that are intended to be held for one year or more are classified as long term investments and investments that are intended to be held for less than one year are classified as current investments.

Long term investments are valued at cost. Provision for diminution in value of long term investments is made if in the opinion of management such a decline is other than temporary.

Current investments are valued at cost or market value, whichever is lower.

Profit/loss on sale of securities is determined based on the Weighted Average cost of the securities sold.

g) Employee Benefits:

Short term employee benefits

Short term employees’ benefits are recognized as an expense at the undiscounted amounts in the profit & loss account for the year in which the related services are rendered.

Long term employee benefits

(i) Provident Fund:

In accordance with law, all employees of the Company are entitled to receive benefits under the provident fund. The Company contributes an amount, on a monthly basis, at a determined rate

(currently 12% of employee’s basic salary) to the Scheme administered by the Regional Provident Fund Commissioner (RPFC) and the Company has no liability for future provident fund benefits other than its annual contribution.

Contribution payable to the recognised provident fund, which is a defined contribution scheme, is accounted for on accrual basis.

(ii) Gratuity:

Gratuity is post employment benefit and is in the nature of Defined Benefit Plan. The Liability recognised in the balance sheet in respect of gratuity is the present value of defined benefit obligation at the balance sheet date, together with the adjustments for unrecognized actuarial gain or losses and the past service costs. The defined benefit obligation is calculated at or near the balance sheet date by an independent actuary. Based on actuarial calculations, which include assumptions about demographics, early retirement, salary increases and interest rates, actuarial gain or loss is recognized in the statement of Profit and Loss.

(ii) Leave Encashment:

Leave encashment is in the nature of long term benefit. It is calculated based on unutilized leave available to the employees as at the Balance Sheet date by an independent actuary.

h) Operating Leases:

Lease payments in respect of operating lease are recognized as an expense in the statement of profit and loss account on accrual basis over the lease term, in accordance with the AS 19, “Leases” issued by the Institute of Chartered Accountants of India.

i) Taxation:

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law), deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year).

i) Current Tax:

Provision for current tax is made on the basis of estimated taxable income for the accounting year in accordance with the Income Tax Act, 1961.

ii) Minimum Alternate Tax (MAT):

Provision for tax expense (MAT) is accounted when tax payable as per provision for Sec.115JB

46

of Income Tax Act, 1961 is higher than the tax payable under normal provision of the Act. MAT credit entitlement is recognized in accordance with the “Guidance Note on Accounting for credit available in respect of Minimum Alternate Tax under the Income-tax Act, 1961” issued by The Institute of Chartered Accountants of India only if there is convincing evidence for realization of such asset during the specified period. MAT credit entitlement is reviewed at each Balance Sheet date

iii) Deferred Tax:

Deferred tax expense or benefits is recognised on timing differences being the difference between taxable and accounting income and are capable of reversal in one or more future periods. The deferred tax charge or credit and the corresponding deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised.

j) Provision and Contingencies:

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If

it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognised in the period in which the change occurs.

k) Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit which the asset belongs to, is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

l) Finance Expenses:

Expenditure incurred for raising borrowed funds including ancillary costs incurred in connection with the arrangement of borrowings, which is not eligible for capitalisation, is fully charged to the statement of profit and loss on incurrence. Likewise, expenditure incurred on funds raised through securitisation transactions (pass through certificates route) are also fully charged to the profit and loss account on incurrence.

m) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange differences, if any arising out of transactions settled during the year are recognised in the statement of profit and loss account. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date.

n) Provision for doubtful debts:

The provisioning norms followed by the Company are more stringent than those prescribed by the Reserve Bank of India and are as follows:


47

3. Share Capital (Amt. in Rs.)



Authorised75,000,000 (PY 75,000,000) Equity Shares of Rs.10 each 750,000,000 750,000,000 Issued, Subscribed & Paid upEquity Shares of Rs.10 each54,679,913 equity shares with face value of Rs 10 each fully paid-up, (PY 54,679,913)

546,799,130 546,799,130

(Less) Amount recoverable from Swadhaar Finserve Employee Welfare Trust [Face value of Rs 10 on 4,919,625 shares (PY 4,919,625) allotted to the Trust]

49,196,250 497,602,880 49,196,250 497,602,880

Total 497,602,880 497,602,880

Issue of Equity Shares

During the FY 2013-14 , the company had raised additonal capital of Rs 30,000,000/- by the way of issue of 3,000,000 equity shares of Rs. 10/- each to Small Industries Development Bank of India (SIDBI).

Loan to Swadhaar FinServe Employee Welfare Trust:

In accordance with the Guidance Note on Accounting for Share based Payments issued by Institute of Chartered Accountants of India (‘ICAI’), the face value of equity shares issued to EWT till 31st March 2015 have been duly shown as deduction from the issued, subscribed and paid up capital. Accordingly, these shares are also not considered for calculating basic EPS.

3.1 Reconciliation of Equity Shares outstanding at the beginning and at the end of the financial year

Particulars As at 31st March 2015 As at 31st March 2014Number (Amt in Rs.) Number (Amt in Rs.)

Shares outstanding at the beginning of the year 54,679,913 546,799,130 51,679,913 516,799,130 Shares Issued during the year - - 3,000,000 30,000,000 Shares outstanding at the end of the year 54,679,913 546,799,130 54,679,913 546,799,130

3.2 Terms/ Rights Attached to equity Shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. In case of further issue of shares, the same shall be offered to all the shareholders on identical terms on a proportionate basis. All shares rank pari passu with regard to dividend and repayment of capital.

In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all the preferential amounts. However no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

No. of days portfolio outstanding overdue

(days)

Provision (% on outstanding principal)

0-30 0.25%31-60 10%61-90 30%91-120 30%

121-150 60%151-180 60%

>181 100%

Provisioning in respect of managed portfolio will be done subject to the maximum guarantee given to respective assignee bank or financial institution. Provisioning in respect of assigned portfolio in sell out transactions and portfolio sold out in securitisation transactions (pass through certificates route) are not done.

48

3.3 Details of Shareholders Holding more than 5% shares in the company

Name of Shareholder As at 31st March 2015 As at 31st March 2014Total No. of

Shares % Total No. of

Shares %

Accion Africa Asia Investment Company 19,650,000 35.94% 19,650,000 35.94%M V Mauritius Limited 8,325,114 15.23% 8,325,114 15.23%Padmini Trust 6,960,000 12.73% 6,960,000 12.73%Michael & Susan Dell Foundation 6,452,250 11.80% 6,452,250 11.80%Swadhaar FinServe Employee Welfare Trust 4,919,625 9.00% 4,919,625 9.00%Small Industries Development Bank of India (SIDBI) 3,000,000 5.49% 3,000,000 5.49%

Employee Stock Option Scheme and Associate Stock Option Scheme:

a) During the year, the Company has not granted options to the employees or the associates.

b) The Company has adopted intrinsic value method to account for ESOP cost. Option is offered with the intrinsic value of the shares based on stock value of Rs 13 per share & the exercise price was fixed by the compensation committee of the Company was Rs 13 per share. The difference between the stock value & the exercise price is being amortized as employee compensation cost over the vesting period. The total amount to be amortized over the vesting period is Nil. Accordingly, the company has not taken any impact in statement of profit & loss towards Compensation cost.

c) Description of each type of employee share-based payment plan that existed at any time during the period:

Type of arrangement ESOP scheme 2010 ASOP scheme 2010

Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2Date of grant 21-Dec-10 21-Dec-11 22-Feb-12 21-Dec-10 21-Dec-11Number of options granted 571,000 775,000 170,000 1,530,000 30,000Exercise Price per Option Rs.11 Rs.13 Rs.13 Rs.11 Rs.13

Date of vesting

Various dates Dec 21, 11, Dec 21, 12, Dec 21, 13, Dec 12, 14


Various dates Feb 22, 13, Feb 22, 14, Feb 22, 15, Feb 22,16



Exercise Period

Prior to listing -All vested Options can be exercised within three years of vesting or six months from the date the Company gets listed on a recognized stock exchange, whichever is later.

Can be exercised within a period of three years from the date on which the Options are vested except for promoters who can exercise within period of Four years from the date on which the Options are vested

Contractual life 4 years

1. Employees - 4 years 2. CEO - 3 Years 3. Managing Di-rector - Immedi-ate Vesting

4 years

1. For full time consultant - 4 years 2. For promoters immediate vesting

4 years

Vesting Condition

40% Perfor-mance as per the Performance Matrix and 60% on each com-pleted year

1. employees- 40% Perfor-mance as per the Performance Matrix and 60% on each com-pleted year 2. CE0- 30% First two years and 40% last year

40% Performance as per the Performance Matrix and 60% on each completed year

40% Performance as per the Per-formance Matrix and 60% on each completed year

40% Performance as per the Perfor-mance Matrix and 60% on each com-pleted year

Method of Settlement Equity Shares Equity Shares Equity Shares Equity Shares Equity Shares


49

d) The activities in the schemes during the year ended March 2015 and March 2014 is set below

Particulars As at 31st March 2015 As at 31st March 2014ESOP ASOP ESOP ASOP

ESOP & ASOP Scheme 2010 (Stock option granted @ Rs 11) Options outstanding, beginning of the year 517,726 1,530,000 534,708 1,530,000 Add: Granted - - - - Less: Exercised - - - - Less: Lapsed - - - - Less: Forfeited 24,776 12,000 16,982 Option outstanding, end of the year 492,950 1,518,000 517,726 1,530,000 Exercisable at the end of the period 492,950 1,518,000 407,726 1,518,000 ESOP & ASOP Scheme 2010 (Stock option granted @ Rs 13) Options outstanding, beginning of the year 875,120 50,000 886,800 50,000 Add: Granted - - - - Less: Exercised - - - - Less: Lapsed - - - - Less: Forfeited 59,840 35,000 11,680 - Option outstanding, end of the year 815,280 15,000 875,120 50,000 Exercisable at the end of the period 384,280 15,000 215,500 15,000

e) As the options are granted using intrinsic value method at an exercise price Rs. 13 equivalent to stock value therefore no employee compensation cost or charge will arise in the books.

f) Stock options outstanding at the end of the period:

Particulars 2014-15 2013-14ESOP SchemeRange of Exercise Prices Rs.11 - Rs. 13 Rs.11 - Rs. 13Weighted Average Contractual lifevesting period 0.80 yrs 1.64 yrsexercise period* - - ASOP SchemeRange of Exercise Prices Rs.11 - Rs. 13 Rs.11 - Rs. 13Weighted Average Contractual lifevesting period - 1.47 yrsexercise period* - -

* Not determinable

g) The company has accounted for ESOP on the intrinsic value method. The company has not determined the impact of profit & loss for the disclosure purpose as per the fair value method and hence, the required disclosures have not been given.

h) Other information regarding Employee Share Based Payment Plan is as below

Particulars 2014-15 2013-14Expense arising from employee share based payment plan NIL NILExpense arising from share and stock option plan NIL NILTotal carrying amount at the end of the period NIL NIL

4. Reserves & Surplus (Amt. in Rs.)



A. Securities Premium ReservesOpening Balance 52,031,804 52,315,214 Less Share issue expenses - 283,410 Closing Balance 52,031,804 52,031,804

B. Statutory ReserveOpening Balance 6,321,535 3,636,964

50

(+) Transferred during the year 2,066,331 2,684,571 Closing Balance 8,387,866 6,321,535

C. SurplusOpening balance (72,064,810) (82,803,095)(+) Net Profit for the year 10,331,654 13,422,856 (-) Transfer to Statutory Reserves 2,066,331 2,684,571 Closing Balance (63,799,487) (72,064,810)

Total (A+B+C) (3,379,817) (13,711,471)

Statutory ReserveAn amount of Rs. 2,066,331 (20% of profits after tax) (PY 2,684,571/- )has been transferred to the Statutory Reserve in accordance with the provisions of Section 45-IC of the RBI Act, 1934

5. Long Term Borrowings (Amt. in Rs.)



Secured BorrowingsBonds / DebenturesSecured Non - Convertible Debentures - 295,000,000 Term loans A. Loan From banks 393,509,588 B. Loan From Financial Institutions - 66,155,556 Total - 754,665,144

Terms and Conditions of Borrowings as on 31st March, 2015There are no outstanding Borrowings as of 31st March, 2015Terms and Conditions of Borrowings as on 31st March 2014

Name of Lending institution Amt outstanding Terms and Conditions(Amt. in Rs) Repayment terms including

moratoriumOther Terms and conditions

Bank of Baroda 183,400,000 33 months from the date of disbursement

Secured against hypothecation of Book Debts with Margin and Cash Collateral

Central Bank Of India -1 12,092,552 5 yrs including 1 yr moratorium (monthly installments)


Central Bank Of India - 2 41,542,060 5 yrs including 3months moratorium (Quarterly installments)


Development Credit Bank Ltd -1 17,500,012 15 months including 2 months moritorium on principal

Secured against hypothecation of Book Debts and Cash Collateral

Development Credit Bank Ltd - 2 25,000,000 26 months including 2 months moritorium


Development Credit Bank Ltd -3 50,000,000 24 months including 2 months moritorium


Gruh Finance - 1 14,261,997 66 months including 6 months moratorium (Monthly Repayment)


Gruh Finance - 2 22,821,097 60 months from the date of disbursement


Gruh Finance - 3 41,500,584 60 months from the date of disbursement


IDBI Bank - 1 40,000,006 36 months including 6 months moratorium (Monthly Repayment)


IDBI Bank - 2 100,000,000 36 months including 6 months moratorium (Monthly Repayment)



51

Indusind Bank 48,913,043 24 months including 2 months moritorium


Maanaveeya Holdings & Investments Pvt. Ltd -1

40,002,000 3 yrs including 1 year moratorium (Half yearly Installment - Interest served on quarterly rest)

Secured against hypothecation of Book Debts with Margin

Maanaveeya Development & Finance Pvt Ltd-2

40,000,000 36 months, repayement in 12 quarterly installments - interest to be paid on monthly basis

Secured against hypothecation of Book Debts with Margin

MAS Financial Services Ltd.- 1 13,888,886 18 months Secured against hypothecation of Book Debts and Cash Collateral





Ratnakar Bank Ltd-1 2,641,558 2 yrs including 6 months moratorium (Monthly Repayment)

Secured against hypothecation of Book Debts with Margin and Cash Collateral + Leverage of Accion Guarantee covering 45% of total loan amount.

Ratnakar Bank Ltd-2 38,250,000 2 yrs including 6 months moratorium (Monthly Repayment)


Reliance Capital 117,460,291 18 months from the date of disbursement


Standard Chartered Bank 12,500,000 8 equal quarterly installments, starting after 3 months from the first drawdown


11,250,000 7,500,000

90,000,000

State Bank of India 42,956,010 26 months from the date of disbursement


UCO Bank 75,000,000 45 months from the date of disbursement


Yes Bank 50,000,000 22 months from the date of disbursement


Total 1,241,257,865

Applicable Interest Rate ranges from Base Rate + 275 to 450 basis points

Secured Non-Convertible Debentures

Date of allotment Amount Redemption period

Interest RateAs at 31 March 2015 As at 31 March 2014

13 November 2013 0 295,000,000 13 May 2015 14.70%Total - 295,000,000

The above NCD is secured by way of exclusive hypothecation of Book Debts created out of the funds provided by debenture holder.

52

The applicable coupon rate for Non - Convertible Debenture is 14.70% per annum payable semi-annually.

Redemption Option dates for NCD are as follows:

1. 13th May, 2015

2. 13th May, 2016

3. 13th May, 2017

6. Long Term Provisions (Amt. in Rs.)Particulars As at

31st March, 2015As at

31st March, 2014(a) Provision for employee benefits

Gratuity 334,257 3,067,323 Leave Encashment 172,005 1,429,804

(b) Others Provision for Standard Assets 9,544 1,738,928 Provision for NPA 7,278 68,661 Provision for Last EMI 3,265,393 -

Total 3,788,477 6,304,716

7. Short Term Borrowings (Amt. in Rs.)



SecuredOverdraft with Bank - 47,582,030 Total - 47,582,030

Overdraft is secured against fixed deposit placed with the bank.

8. Other current Liabilities (Amt. in Rs.)



Current Maturities of Long Term Borrowings - 781,592,721 Interest Accrued but not due on borrowings - 18,965,647 Advance Collection from clients

Advance Collection 1,747,429 1,765,130 Margin Money received from Clients 4,258,137 10,224,362

Outstanding Liability for Expenses 807,500 3,043,682 Payable on Securitized Portfolio 10,223,122 24,801,902 Unearned Revenue-Managed/Sold out Portfolio 5,815,134 31,739,652 Employee Benefits- Payable 1,018,200 1,306,129 Statutory Dues Payable 801,304 3,416,533 Other Payables

- MSME - - - Others 2,620,538 18,876,238

Total 27,291,363 895,731,996


53

9. Short Term Provisions (Amt. in Rs.)



(a) Provision for employee benefitsGratuity 974,991 651,561 Leave Encashment Provision 36,087 324,536 Provision for Bonus 4,569,120 7,650,000

(b) Others Provision for Standard Assets 417,926 3,796,464 Provision for NPA 1,467,777 12,412,214

Total 7,465,901 24,834,775

Details of NPA Provisions (included in note no. 6 & 9 under “NPA Provision” (Amt. in Rs.)

Details of NPA provision on: Percentage As at 31st March, 2015


Loan Loss Provisions:Non- current 16,822 1,807,589Current 1,885,703 16,208,678

Total 1,902,525 18,016,267 Loan Loss Provisions:a) Standard Assets 427,471 5,250,838

0-30 Days 0.25% 2,892 4,281,470 31-60 Days 10% 212,301 354,351 61-90 Days 30% 212,278 615,017

b) Non Performing Assets 1,475,054 12,481,297 91-120 days 30% 210,389 276,485 121 - 180 days 60% 548,945 803,699 >180 days 100% 715,719 11,400,691

Rescheduled Portfolio 100% - 422 c) Additional Provision - 284,132 Total 1,902,525 18,016,267

Loan Loss Provisions as per norms prescribed by RBI w.e.f. 01st April 2013:



Higher ofa) Provisioning as per 1% of the outstanding loan

portfolio63,245 17,320,295

b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days

808,104 1,130,558

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

715,720 1,523,824 11,400,691 12,531,249

Provisioning to be considered 1,523,824 17,320,295

However, the Company is making provision as mentioned below which is more stringent than those prescribed by RBI.

No. of days portfolio outstanding overdue Provision (% on outstanding principal) 0-30 0.25%31-60 10%61-120 30%121-180 60%

>180 100%

54

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55

11. Investments (Amt. in Rs.)

(A) Non Current Investments As at 31st March, 2015


Non Trade and Unquoteda) Investment in Equity instruments:

i) Investment in subsidiary Swadhaar Information & Management Service P. Ltd. 10,000 (PY NIL) equity shares with face value of Rs. 10 Each

100,000 -

ii) Others Investment in Alpha Microfinance Consultants Pvt. Ltd. 50,000 (PY 50,000) equity shares with face value of Rs. 10 Each

500,000 500,000

b) Other-Swadhaar Employee Welfare Trust (Corpus fund) # 46,559 46,559 Aggregate amount of unquoted investment 646,559 546,559

# In the financial year 2009-10, the company had created Swadhaar FinServe Employee Welfare Trust for the purpose of promoting employee welfare activities and for administration, management, implementation and all other matters incidental to any stock option plans.

(B) Current Investments As at 31st March, 2015


Investment in Mutual Fund (IDFC Mutual Fund): Unquoted

11,911 1,100,142



Cost Market Value Cost Market Value

Aggregate value of quoted investments and market value NA NA NA NAAggregate value of unquoted investments and market value

Mutual Fund* 11,911 11,911 1,100,142 1,102,251 Others# 646,559 2,798,611 546,559 472,506

Aggregate provision for dimunation in value of investments - - - -

* On the basis of NAV declared by Mutual Fund# Break-up value of shares is taken as market value

12. Deferred Tax Asset (Amt. in Rs.)

Particularsset As at 31st March, 2015


Difference in WDV of assets 562,629 198,728 Bonus - 717,766 Gratuity Provision 533,617 1,149,135 Compensated absence provision 65,301 542,091 Provision for doubtful assets 617,274 5,567,027 Deferred Tax Asset 1,778,821 8,174,746

13. Loans under financing activity (Amt. in Rs.)



Loans under financing activityNon- current 114,481 650,706,469 Current 6,210,042 1,081,322,999

Total 6,324,523 1,732,029,468 Loans under financing activityStandard Assets: 3,992,596 1,718,367,239

0-30 Days 1,161,994 1,712,773,672 31-60 Days 2,123,010 3,543,509 61-90 Days 707,592 2,050,058

Non Performing Assets 2,331,927 13,662,229

56

91-120 Days 701,298 921,618 121-180 Days 914,909 1,339,498 >180 Days 715,720 11,400,691 Rescheduled Portfolio - 422

Total 6,324,523 1,732,029,468

14. Long Term loans & Advances (Amt. in Rs.)



Unsecured - considered good(a) Security Deposit

Rent Deposit 5,135,500 5,614,500 Other Deposit 124,427 129,911

(b) Loans & Advances to related PartyLoan to Swadhaar Information & Management Services Pvt. Ltd. 48,561,000 -

Loan to Employee Welfare Trust (EWT) 58,790 23,958 (c) Other Loans and AdvancesTax Deducted At Source (Net of provision for tax of CY : Rs 10,657,259, PY : Rs 89,45,349)

2,201,317 238,697

Total 56,081,033 6,007,066

15. Other Non Current Assets (Amt. in Rs.)



Fixed Deposit (maturity more than 12 months)Lien Fixed Deposit - 135,572,045 Total - 135,572,045

Lien against borrowings from Banks/ Financial Institutions & for securitisation.

16. Cash & Bank balances (Amt. in Rs.)Particulars As at


31st March, 2014(A) Cash and Cash Equivalents

Balance with Banks In Current Account 25,990,655 64,173,862 In Deposit Account (maturity less than 3 months) Non - Lien Fixed Deposit 18,143,550 32,500,000 Cash on hand 22,645 1,210,699

Total (A) 44,156,850 97,884,561 (B) Others bank balances

Maturity more than 3 months but less than 12 months Non - Lien Fixed Deposit 142,228,843 - Lien Fixed Deposit 156,661,392 161,657,134 Maturity more than 12 months Non - Lien Fixed Deposit 40,531,000 -

Total (B) 339,421,235 161,657,134 Total (A +B ) 383,578,085 259,541,695



57

17. Short - Term Loans & Advances (Amt. in Rs.)



a. Other Loans & Advances (Unsecured & Considered good)Advance Against Salary 76,073 296,985 Advance Against Expenses 1,040 75,091 Loan to Employees - 2,030,411

Total 77,113 2,402,487

18. Other Current Assets (Amt. in Rs.)Particulars As at


31st March, 2014Interest Accrued on Fixed Deposit 15,660,576 15,416,229 Interest Accrued and Due on Loan Portfolio 2,565,114 518,020 Interest Accrued but not Due on Loan Portfolio 1,550,575 26,494,213 Prepaid Expenses 433,056 638,339 Receivable from Swadhaar Information & Management Services Pvt. Ltd 52,097,258 - Other Receivables 2,220,813 8,625,874 Cenvat Credit Availed 29,487 189,968 Total 74,556,879 51,882,643

19. Revenue from operations (Amt. in Rs.)Particulars For the year Ended

31st March, 2015For the year Ended

31st March, 2014A. Interest Income

Interest from loan portfolio 148,557,040 311,272,434 Interest on Fixed Deposit 35,333,235 27,187,113 Interest from loan to SIMS 3,442,044 - Other Interest 162,607 287,587 Total (A) 187,494,926 338,747,135

B. Other Financial Services: Processing fee 3,722,830 19,930,509 Income from securitized transaction 11,030,055 18,841,532 Other operating income 34,933 345,006 Total (B) 14,787,818 39,117,047

Total (A + B) 202,282,744 377,864,182

20. Other Income (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Profit on sale of Mutual Fund units 511,769 1,100,142 Reimbursement for resources used for training 2,899,993 2,299,999 Other Misc. Income 167,244 294,057 Fees for Business consultancy project 39,388 2,209,926 Total 3,618,394 5,904,123

21. Employee Benefit Expenses (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Salaries, incentives and commission 32,238,190 74,646,607 Contributions to -

Provident fund 2,108,972 5,014,901 ESIC 670,144 1,815,343 Labour Welfare 7,686 16,911

58

Leave Encashment 201,266 1,323,519 Insurance-Staff 841,514 716,437 Gratuity 1,644,683 805,038 Training Expenses 23,468 258,310 Director's Remuneration 5,561,766 4,337,616 Bonus 4,522,573 6,972,866 Staff welfare expenses 1,138,783 2,812,669 Total 48,959,045 98,720,217

22. Finance Cost (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Interest expense 96,307,407 160,026,491 Other borrowing costs 5,276,428 28,024,155 Total 101,583,835 188,050,646

23. NPA Provision and Waive-offs (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Loan Loss Expenses (16,113,742) 5,365,379 Bad Debts W/off 27,252,724 2,522,013 Portfolio Loss 8,056,210 - Total 19,195,192 7,887,392

24. Other Expenses (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Administrative Expenses :- Auditors Remuneration 1,181,400 1,208,200 Banking Charges 159,279 273,761 Cash Handling Charges 1,032,365 2,707,790 Electricity Expenses 749,891 1,269,685 Insurance Charges 155,423 1,922,732 Legal Charges 1,035,395 1,299,712 Memberships & Subscription 657,655 670,784 Office Expenses 815,662 665,565 Rates and Taxes 42,675 337,573 Business Loss 540,281 249,706 Portfolio Management Expense 10,236,482 - Printing & Stationery 1,730,789 6,342,475 Professional Charges 15,715,114 23,973,716 Rent 5,331,638 12,173,475 Repairs and maintenance 1,009,566 1,827,342 Telephone and Internet 1,356,389 2,395,332 Traveling 2,909,676 7,105,575 Other Miscellaneous Expense 839,458 1,988,851 Total 45,499,137 66,412,272


59

25. Basic & Diluted Earnings/(Loss) per share (Amt. in Rs.)

Particulars For the year Ended 31st March, 2015

For the year Ended 31st March, 2014

Net Profit attributable to equity shareholders [A] (Rs) 10,331,654 13,422,856 Weighted Average number of equity shares issued [B] 49,760,288 48,379,466 Basic & Diluted Earnings per share [A/B] (Rs.) 0.21 0.28 Number of equity shares at the beginning of the year for the purpose of calculation of basic EPS

49,760,288 46,760,288

Add: Weighted Average number of additional equity shares issued during the year - 1,619,178

Number of equity shares at the end of the year for the purpose of calcualtion of basic EPS

49,760,288 48,379,466

26. Employee Benefit DisclosureA. Defined Contribution Plan (Amt. in Rs.)Particulars For the year Ended


31st March, 2014Employee contirbution to Provident Fund 2,318,041 3,764,648 Employee state Insurance Corporation 311,737 671,949 Labour welfare 2,685 5,868 Total 2,632,463 4,442,465

B. Defined Benefit Plan

i. Leave encashment

Detailed disclosures of compensated absence is not given in terms of Para 132 of AS15 "Employee Benefits"Current Liability 36,087 242,489 Non-Current Liability 172,005 412,216

ii. GratuityGratuity provision has been made based on the actuarial valuation done as at the year end. The details of actuarial valuation as provided by the independent actuary are as follows:Gratuity Valuation report as at 31st March 2015

Assumptions As at 31st March 2015

As at 31st March 2014

Mortality Rate the Indian Assured Lives Mortality

(2006-08) Ult table

the Indian Assured Lives Mortality

(2006-08) Ult tableDiscount Rate 8.00% 8.80%Salary escalation rate 7.00% 7.00%Attrition RateAge Group

upto 30 10.00% 10.00%31-40 5.00% 5.00%41 & above 3.00% 3.00%

Rate of return (expected) on plan assets 0.00% 0.00%Benefit: as per Gratuity ACT with Limit = 1,000,000 1,000,000Retirement age (Years) 60 60Expected average remaining service 10.88 10.88I. Data informationNumber of members 6 431Total monthly salaries 596,143 2,983,202Average age (years) 44 29.74Average Service (years) 3.6 2.33

60

II Changes in present value of obligationsPVO at beginning of year 3,718,884 3,420,893 Interest cost 139,529 319,056 Current Service Cost 454,114 1,023,609 Benefits Paid (58,895) (507,047)Actuarial (gain)/loss on obligation 1,051,040 (537,627)Liabilities Assumed on Acquisition/ (settled on Divestiture)* (3,995,424) - PVO at end of year 1,309,248 3,718,884 III Actuarial Gain/(Loss) RecognizedActuarial Gain/(Loss) for the year (Obligation) (1,051,040) 537,627 Actuarial Gain/(Loss) for the year (Plan Assets)Total Gain/(Loss) for the year (1,051,040) 537,627 Actuarial Gain/(Loss) recognized for the year (1,051,040) 537,627 Unrecognized Actuarial Gain/(Loss) at end of year -IV Amounts to be recognized in the balance sheet and statement of profit & lossPVO at end of year 1,309,248 3,718,884 Fair Value of Plan Assets at end of yearFunded Status (1,309,248) (3,718,884)Unrecognized Actuarial Gain/(Loss) Net Asset/(Liability) recognized in the balance sheet (1,309,248) (3,718,884)V Expense recognized in the statement of P & LCurrent Service Cost 454,114 1,023,609 Interest cost 139,529 319,056 Expected Return on Plan Assets - - Net Actuarial Gain/(Loss) recognized for the year 1,051,040 (537,627)Expense recognized in the statement of P & L 1,644,683 805,038 VI Movements in the Liability recognized in Balance SheetOpening Net Liability 3,718,884 3,420,893 Expenses as above 1,644,683 805,038 Contribution paid (58,895) (507,047)Liabilities Assumed on Acquisition/ (settled on Divestiture)* (3,995,424) - Closing Net Liability 1,309,248 3,718,884 Current Liability 974,991 651,561 Non- Current Liability 334,257 3,067,323

27. Related Party TransationsA) Related Party Relationships

a) Subsidiary company Swadhaar Information and Management Services Pvt. Ltd.B) Enterprise that can exercise significant influence:

Accion InternationalAccion Technical Advisors India

C) Key Management Personnel (KMP):Ms Veena Mankar - Chairperson Mr Rajaram Kamath - Executive Director & CEO Mr Pranav Desai - CFO

D) List of Enterprise in which KMP exercise significant influenceSwadhaar FinAccess Swadhaar Employee Welfare Trust

E) Relatives of KMP: Mr. Vikas Bhagwan Mankar (Husband of Ms. Veena Mankar)


61

(Amt. in Rs.)Transaction For the year ended 31st March, 2015 For the year ended 31st March, 2014

Subsidiary company

Enterprise that can exercise

significant influence

Key Management

Personnel

List of enterprises in which KMP

exercises significant influence

Sub-sidiary

company



Key Management

Personnel

List of enterprises in which KMP exercises significant influence

Guarantee Fee

Accion International - 467,547 - - - 3,062,384 - -

Technical Assistance

Accion Technical Advisors India: - 4,738,637 - - - 6,147,708 - - Training expense reimburse-ment received Accion Training Expenses reimbursement:

- (505,496) - - - (296,289) - -

Salary and Remuneration

Veena Mankar - - 4,011,618 - - - 1,998,435 -

Rajaram Kamath - - 6,182,940 - - - 2,339,181 -

Pranav Desai - - 1,461,000 - - - -

Total 11,655,558 4,337,616

Professional Charges

Swadhaar FinAccess: - - - - - - - 110,848

Swadhaar Information and Management Services Pvt. Ltd.

Investment in Shares 100,000 - - - - - - -

Loan Given 48,561,000 - - - - - - -

Portfolio Collection received (31,030,846) - - - - - - -

Interest On Loan received (3,442,044) - - - - - - -

Sale of Fixed Assets (3,337,066) - - - - - - -

Reimbursment of expenses received

(26,029,800) - - - - - - -

Portfolio Management Expenses paid

10,236,482 - - - - - - -

Staff Loan transfer (2,021,507) - - - - - - - Gratuity & Leave Encashment liability transfer

6,404,695 - - - - - - -

Cash Balance transfer (2,877,172) - - - - - - -

Outstanding receivable / payable with related parties: (Amt. in Rs.)Transaction For the year ended 31st March, 2015 For the year ended 31st March, 2014

Subsidiary company



Key Management

Personnel



Sub-sidiary

company



Key Management

Personnel

List of enterprises in which KMP exercises significant influence

Swadhaar FinServe Employee Welfare Trust:Expenses receivable - - - (58,790) - - - (23,958)

Investment - - - (46,559) - - - (46,559)

Loans & Advances Given - - - (57,395,625) - - - (57,395,625)

Total - (57,500,974) - (57,466,142)

Payable to accion International - - - - - 608,532 - - Receivable from Accion Tech-nical Advisors India

- - - - - (1,015,792) - -

Accion Training Expenses reimbursement

17,418

Training expense reimbursement receivable

- (505,496) - - - - -

Swadhaar FinAccess: - - - - - - - -

Professional Charges payable - - - 31,752 - - - 138,558

62

Swadhaar Information and Management Services Pvt. Ltd. Investment in Shares 100,000 - - - - - - -

Loan Given 48,561,000 - - - - - - -

Other Receivable (52,097,258) - - - - - - -

Employee Stock Option

Veena Mankar - - 1,200,000 - - - - -

Rajaram Kamath - - 250,000 - - - - - Employees of subsidiary company

560,000 - - - - - - -

28. Foreign Currency Transactions (Amt. in Rs.)



Guarantee Fee payment 1,090,650 3,036,066Travel - 170,418Professional Fees (AVV Sarl and Software Group) 4,916,666 3,288,740 Training Expenses (WWB) - 72,215 Total 6,007,316 6,567,439

29. Segment ReportingThe company is primarily engaged in a single segment of Micro financing, hence there are no separate reportable segments as per AS-17 “Segment Reporting”.

30. MSMED Act, 2006The company has sent letters to suppliers to confirm whether they are covered under Micro, Small and Medium Enterprises Act, 2006 as well as they have filed required memorandum with the prescribed authorities. Out of the letters send to the parties, some confirmations have been received till the date of finalization of Balance Sheet. Based on the confirmations received, the outstanding amounts payable to the vendors under Micro, Small and Medium Enterprises Development Act 2006 are given below.



The principle amount remaining unpaid at the end of the year - - The interest amount remaining unpaid at the end of the year - - The balance of MSMED parties as at the end of the year - -

31. Contingent Liabilities(a) Claims against the company not acknowledged as debts Claims against the company not acknowledged as debts is Rs. 148,500.(b) Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs Nil (Previous year

Rs NIL).

32. Impairment of AssetIn the opinion of the board of directors, all current assets, loans & advances would be realizable at least of an amount equal to the amount at which they are stated in the balance sheet. Hence no impairment loss has been recognized.

33. Auditors Remuneration (Amt. in Rs.)



As Auditors:Statutory Audit Fees 690,000 830,000Tax Audit Fees 130,000 130,000In other capacity:


63

Tax related Services 301,400 150,000Other Services (Certification) 60,000 98,200

1,181,400 1,208,200 Out of pocket expenses 4,400 26,230Service Tax 146,565 152,576Total 1,332,365 1,387,006

34. Disclosures in pursuant to RBI requirementA. CRAR Current Year Previous Year

CRAR (%) 245.55% 23.20%CRAR - Tier I Capital (%) 245.31% 22.99%CRAR - Tier II Capital (%) 0.24% 0.21%

B. EXPOSURESExposure to Real Estate SectorCategory Current Year Previous Year

a) Direct exposure(i) Residential Mortgages - - -

Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented; (Individual housing loans up to Rs.15 lakh may be shown separately)

- -

(ii) Commercial Real EstateLending secured by mortgages on commercial real estates (office buildings, retail space, multipurpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based (NFB) limits;

- -

(iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures -a. Residential, - - b. Commercial Real Estate. - -

b) Indirect ExposureFund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs).

- -

C) Asset Liability Management 2014-15Maturity pattern of certain items of assets and liabilities

1 day to 30/31 days (1 Month)

Over 1 month to 2 months

Over 2 months upto 3 months

Over 3 months to 6 months

Over 6 months to 1

year

Over 1 year to 3

years

Over 3 years to 5

years

Over 5 years

Total

Liabilities(L)Borrowings from Banks

- - - - - - - - -

Market Borrowings

- - - - - - - - -

Assets (A)Advances 837,430 541,519 444,296 1,152,503 52,365,938 7,082,194 - 58,790 62,482,669 Investments - - 11,911 - - - - 646,559 658,470

2013-14

Maturity pattern of certain items of assets and liabilities


Over 1 month to 2

months

Over 2 months upto

3 months

Over 3 months to 6

months

Over 6 months to 1

year

Over 1 year to 3 years

Over 3 years to 5

years

Over 5 years

Total

Liabilities(L)

Borrowings from Banks

109,733,439 68,031,986 85,817,188 221,954,230 343,637,908 431,767,455 27,897,689 - 1,288,839,895

Market Borrowings

- - - - - 295,000,000 - - 295,000,000

64

Assets (A)Advances 97,715,124 91,318,377 92,103,988 278,240,305 524,157,540 654,938,418 1,041,400 923,869 1,740,439,021

Investments - - 1,100,142 - - - - 546,559 1,646,701

Details produced here are as represented by the management and relied upon by the auditors.

D) FY: 2014-15Particulars Amount Outstanding Amount OverdueLiabilities side :

1 Loans and advances availed by the non-banking financial company inclusive of interest accrued thereon but not paid:(a) Debentures : Secured - Nil : Unsecured (Other than falling within the meaning of public

deposits)(b) Deferred Credits Nil Nil(c) Term Loans - Nil(d) Inter-corporate loans and borrowing Nil Nil(e) Commercial Paper Nil Nil(f) Other Loans (specify nature) Nil NilAssets side Amount outstanding

2 Break-up of Loans and Advances including bills receivables (Other than those included in (4) below) :(a) Secured Nil(b) Unsecured 62,482,669

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

(i) Leased assets including lease rentals under Sundry debtors :(a) Financial lease Nil(b) Operating lease Nil

(ii) Stock on hire including hire charges under sundry debtors: (a) Assets on hire Nil(b) Repossessed Assets Nil

(iii) Other loans counting towards AFC activities(a) Loans where assets have been repossessed Nil(b) Loans other than (a) above Nil

4 Break-up of Investments :Current Investments:1. Quoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Please specify) Nil2. Unquoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil(iii) Units of mutual funds 11,911 (iv) Government Securities Nil(v) Others (Please specify) NilLong Term Investments :1. Quoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil


65

(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Please specify) Nil2. Unquoted Nil(i) Shares : (a) Equity 600,000 (b) Preference Nil(ii) Debentures and Bonds Nil(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Corpus Fund in Employee welfare Trust) 46,559

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

CategoryAmount net of provisions

Secured Unsecured Total1. Related parties ** (a) Subsidiaries Nil 48,561,000 48,561,000 (b) Companies in the same group Nil Nil Nil (c) Other related parties Nil 58,790.00 58,790.00

2. Other than related parties Nil 13,862,879 13,862,879 Total - 62,482,669 62,482,669

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

Category Market Value/Break up or fair value or NAV

Book Value (Net of Provisions)

1. Related parties ** (a) Subsidiaries 2,146,835 100,000 (b) Companies in the same group (c) Other related parties (64,637) 46,559 2. Other than related parties 728,324 511,911 Total 2,810,521 658,470

7 Other information Particulars Amount(i) Gross Non-performing Assets

(a) Related Parties Nil(b) Other than related parties 2,331,927

(ii) Net Non-Performing Assets(a) Related Parties Nil(b) Other than related parties 856,873

(iii) Assets acquired in satisfaction of debt Nil

FY: 2013-14Particulars Amount

OutstandingAmount Overdue

Liabilities side :1 Loans and advances availed by the non-banking financial company

inclusive of interest accrued thereon but not paid:(a) Debentures : Secured - 295,000,000 Nil : Unsecured (Other than falling within the meaning of public

deposits *) -

(b) Deferred Credits Nil Nil

(c) Term Loans - 1,241,257,865 Nil

(d) Inter-corporate loans and borrowing Nil Nil

(e) Commercial Paper Nil Nil

(f) Other Loans (specify nature) Nil Nil

* Please see Note 1 below

66

Assets side Amount outstanding

2 Break-up of Loans and Advances including bills receivables (Other than those included in (4) below):(a) Secured Nil(b) Unsecured 1,732,029,468


(i) Leased assets including lease rentals under Sundry debtors :

(a) Financial lease Nil

(b) Operating lease Nil

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

(a) Assets on hire Nil

(b) Repossessed Assets Nil

(iii) Other loans counting towards AFC activities

(a) Loans where assets have been repossessed Nil

(b) Loans other than (a) above Nil

4 Break-up of Investments :

Current Investments:1. Quoted Nil

(i) Shares : (a) Equity

(b) Preference

(ii) Debentures and Bonds Nil

(iii) Units of mutual funds Nil

(iv) Government Securities Nil

(v) Others (Please specify) Nil2. Unquoted Nil(i) Shares : (a) Equity

(b) Preference




(v) Others (Please specify) Nil

Long Term Investments :1. Quoted Nil

(i) Shares : (a) Equity

(b) Preference




(v) Others (Please specify) Nil

2. Unquoted Nil

(i) Shares : (a) Equity 500,000

(b) Preference Nil


(iii) Units of mutual funds 1,100,142(iv) Government Securities Nil(v) Others (Corpus Fund in Employee welfare Trust) 46,559


67

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

Secured Unsecured Total1. Related parties ** (a) Subsidiaries Nil Nil Nil (b) Companies in the same group Nil Nil Nil (c) Other related parties Nil Nil Nil

2. Other than related parties Nil 1,732,029,468 1,732,029,468 Total - 1,732,029,468 1,732,029,468




1. Related parties ** (a) Subsidiaries Nil Nil (b) Companies in the same group (c) Other related parties Nil Nil2. Other than related parties 1,620,429 1,620,429 Total 1,620,429 1,620,429

7 Other information (Please see Note 4)Particulars Amount(i) Gross Non-performing Assets

(a) Related Parties Nil(b) Other than related parties Nil

(ii) Net Non-Performing Assets(a) Related Parties Nil(b) Other than related parties Nil


C) Asset Liability ManagementMaturity pattern of certain items of assets and liabilities



Over 2 months upto 3

months

Over 3 months

to 6 months

Over 6 months to

1 year

Over 1 year to 3

years

Over 3 years to 5

years

Over 5 years

Total (As on Sep'14)

Liabilities(L)Borrowings from Banks

- - - - - - - - -

Over Draft from banks

- -

Market Borrowings

- - - - - - - - -

Assets (A)AdvancesOwned On-balance sheet portfolio

836,390 541,519 444,296 1,076,430 1,603,621 1,822,267 - - 6,324,523

Staff Loan Repayment

- - - - - - - -

Deposits Asset 5,259,927 5,259,927

Tax Deducted At Source

- - - 2,201,317 - - - 2,201,317

Loan to Employee Welfare Trust (EWT)

- - - - - - 58,790.00 58,790

Loan from Swadhaar Information & Man-agement Services

- - - 48,561,000 - - - 48,561,000

68

Advance Against Salary

- - 76,073 - - - - 76,073

Advance Against Expenses

1,040 - - - - - - - 1,040

Investments - - - 11,911 - - - 646,559 658,470

35. Securitised portfolioDuring the financial year 2014-15, no portfolio securitization transaction are conducted. The company will continue to collect the EMIs on 4 securitization transactions already concluded in earlier financial years.

During the financial year 2013-14, there were four transactions of portfolio securitization through PTC route (pass through certificates).The company will continue to collect the EMIs on behalf of the buyers and remitting the same to the buyers as per decided schedule. The brief details of the transaction are indicated below:

The brief details of the transaction are indicated below: (Amt. in Rs.)

Sr. No.



1 Group Loan asset sold to Mosec Apollonis on 23th March, 2014:Sale consideration received for the Individual group loan asset sold 53,097,522Total outstanding book value of the loan asset sold out 20,404,657 47,971,652Collection of client EMIs on behalf of Mosec Apollonis will be till Jan - 16

2 Group Loan asset sold to Mosec Horkos on 26th March, 2014:Sale consideration received for the Individual group loan asset sold 113,731,856Total outstanding book value of the loan asset sold out 29,933,541 103,939,878Collection of client EMIs on behalf of Mosec Horkos will be till Dec - 15

3 Group Loan asset sold to Mosec Callies on 10th July, 2013:Sale consideration received for the Individual group loan asset sold 66,724,083Total outstanding book value of the loan asset sold out 2,021,537 36,763,215Collection of client EMIs on behalf of Mosec Callies will be till May – 15

4 Group Loan asset sold to Mosec Perses on 11th August, 2013:Sale consideration received for the Individual group loan asset sold 56,884,104Total outstanding book value of the loan asset sold out 2,835,954 33,655,889Collection of client EMIs on behalf of Mosec Perses will be till May - 15

5 Group Loan asset sold to Mosec XXX on 24th March, 2013:Sale consideration received for the Individual group loan asset sold - Total outstanding book value of the loan asset sold out 0 9,006,426Collection of client EMIs on behalf of Mosec XXX will be till Nov -14 -

6 Group Loan asset sold to Mosec XXXI on 24th March, 2013:Sale consideration received for the Individual group loan asset sold - Total outstanding book value of the loan asset sold out 0 59,399,952Collection of client EMIs on behalf of Mosec XXXI will be till Jan -15 -

7 Group Loan asset sold to Mosec XXXII on 27th March, 2013:Sale consideration received for the Individual group loan asset sold - Total outstanding book value of the loan asset sold out 0 13,140,420Collection of client EMIs on behalf of Mosec XXXII will be till Nov -14 -


69

36. (Amt. in Rs.)

Disclosures on securtization - 2014-15S r . No.

Particulars Mosec XXX

Mosec XXXI

Mosec XXXII

Mosec Calleis

Mosec Perses

Mosac Horkos

Mosac Apollonis

1 No of SPVs sponsored by the NBFC for securitisation transactions

- - - 1 1 1 1

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

- - - 2,021,537 2,835,954 29,933,541 20,404,657

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

a) Off-balance sheet exposures* First loss - - - - - - - * Others - - - - - - - b) On-balance sheet exposures* First loss (In the form of

Fixed Deposits) - - - 5,700,000 6,391,854 6,863,664 3,838,654

* Others - - - - - - 4 Amount of exposures to

securitisation transactions other than MRR

-

a) Off-balance sheet exposures

i) Exposure to own securitisations

* First loss - - - - - - - * loss - - - - - - -

ii) Exposure to third party securitisations

* First loss - - - - - - - * Others - - - - - - - b) On-balance sheet

exposuresi) Exposure to own

securitisations* First loss - - - - - - - * Others - - - - - - - ii) Exposure to third party

securitisations* First loss - - - - - - - * Others - - - - - - -

70

(Amt. in Rs.)

Disclosures on securtization - 2013-14

S r . No.


Mosec XXXI

Mosec XXXII

Mosec Calleis

Mosec Perses

Mosac Horkos

Mosac Apollonis

1 No of SPVs sponsored by the NBFC for securitisation transactions

1 1 1 1 1 1 1

2 Total amount of securitised as-sets as per books of the SPVs sponsored by the NBFC

11,142,000 69,537,000 14,468,000 39,809,000 36,122,000 103,995,000 47,983,000

3 Total amount of exposures retained by the NBFC to comply with MRR as on the date of balance sheeta) Off-balance sheet exposures* First loss - - - - - - - * Others - - - - - - -

b) On-balance sheet exposures

* First loss (In the form of Fixed Deposits)

10,455,393 19,743,439 5,200,000 5,700,000 6,391,854 6,863,664 3,838,654

* Others - - - - - - - 4 Amount of exposures to

securitisation transactions other than MRR

a) Off-balance sheet exposures


* First loss - - - - - - -

* loss - - - - - - - ii) Exposure to third party


b) On-balance sheet exposures


* First loss - - - - - - - * Others - - - - - - - ii) Exposure to third party


37. (i) As a part of a strategic decision, during the year, the Company has sold a substantial portion of its loan portfolio to a bank

on a true sale basis and post sale it is managing the residual and securitised portfolio. Further, the Company has repaid its entire borrowings including NCD and incurred prepayment penalty of Rs. 1,92,97,433.

(ii) Pursuant to the above, there has been a substantial reduction in the company’s staff strength. Further, the lease agree-ment with respect to the branches were discontinued / novated and the incidental fixed assets were sold.

(iii) During the year, Company has acquired a wholly owned subsidiary, Swadhaar Information and Management services Pvt Ltd (SIMS) and entered into an agreement with it for servicing the residual and securitised portfolio.


71

38. As a result of sale of portfolio as mentioned in note 37 above:

(i) The Company does not meet the qualifying assets criteria as mentioned in the RBI direction DNBS.CC.PD.No.250/03.10.01/2011 -12 dated December 02, 2011 to qualify as a Micro Finance Institution (NBFC-MFI).

(ii) The Company also does not meet one of the principal business criteria (50% of the total assets to be financials assets) for an NBFC.

39. Disclosures pursuant to AS-24 “Discontinuing operation”:Initial disclosures(i) The Company has discontinued its micro finance business. (ii) The Board of directors in its meeting held on June 23, 2014 has decided to sell a substantial part of the portfolio and ac-

cordingly has entered in to a portfolio assignment agreement dated August 22, 2014 with a bank.(iii) The process of discontinuance is completed in the current financial year itself.(iv) The amount of revenue and expense for the year attributable to the discontinued operation is Rs.22,25,92,559 and Rs.

21,42,43,515 respectively. (v) The amount of net cash flows attributable to the operating activities is Rs. 10,95,68,490 and that from investing activity is

Rs. 33,37,117 of the discontinued operation during the current year.

40. Going concern assumption:The management of the Company believes that the Going Concern assumption is not affected as a result of the sale of the portfolio as mentioned in note 37 above and discontinued operation as mentioned in note 41 below, for the following reasons.

a. The management of the Company has decided at a board meeting held on February 12, 2015 to enter in to new line of business as a Business Correspondent for a bank. By the date of finalisation of the balance sheet, both the parties are in the final stage of entering in to an agreement for a new business.

b. The Company is still continuing to manage the residual and securitised portfolio.

41. Exceptional item comprises of:Premium on Portfolio Assignment 56,308,321Loan Prepayment Penalty (19,297,433)Legal Expense (730,340)Total 36,280,548

42. During the last FY, the company has migrated its entire loan portfolio to a new system. The new system has feature of giving credit to the customer against their outstanding loan amount for any advance amount paid by them and thus it calculates inter-est on balance principal outstanding. The impact of the change in this accounting policy on profit for the year is not seperately identifiable.

43.The management of the Company has reviewed and determined remaining useful lives of the tangible fixed asset in accor-dance with the provisions of schedule II, to the Companies act 2013 and depreciation has been charged accordingly as against earlier practice of charging deprecation as per schedule XIV of the Companies act 1956. Due to this change depreciation for the current year is higher by Rs.66,929.

In respect of assets where the remaining useful life is “Nil”,as per Schedule II to the companies act 2013, carrying amount of Rs. 14,51,364 (after retaining the residual value as on 1st April 2014), has been charged to profit and loss.

72

44. Cost of Borrowing1. As stipulated by NBFC-MFI Guidelines issued by RBI, Company has maintained an aggregate margin cap of not more

than 10% during the year. The interest cost is calculated on average fortnightly balances of outstanding borrowings. The average cost of borrowing for Swadhaar for FY 2014-15 is 16.29% and for FY 2013-14 is 16.65%.

The average interest rate on lending during a financial year does not exceed the average borrowing cost during that finan-cial year plus the margin, within the prescribed cap.

The average interest charged on lending by the Company for FY 2014-15 and FY 2013-14 is 26% for group loan.

2. Company charges processing fee of not more than 1 % of gross loan amount. Processing charges is not included in the margin cap or the interest cap.

3. Company recovers the actual cost of insurance premium from the borrower, for self and spouse.

45. LeaseTotal lease rental cost recognised in the financial statement is Rs 5,331,638 (Previous year Rs 12,173,475). This rental cost is exclusive of Service tax.

General terms of lease rentals:a. Lease rental are charged on the basis of agreed terms

b. Some Lease agreements have escalation clause from 5% to 10%

46. Debenture Redemption ReserveThe Company has not created debenture redemption reserve as the same is not required under the provisions of Companies (Share Capital and Debenture) Rules 2014.

47. Previous year figuresPrevious year figures have been regrouped/reclassified wherever necessary to make them comparable.





73

74

iNDepeNDeNt AUDitor’s report

To the Members of Swadhaar Finserve Private Limited

1. Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Swadhaar Finserve Private Limited (“the Company”) and its subsidiary (the Company and its subsidiary together constitute “the Group”) which comprise the Consolidated Balance Sheet as at March 31, 2015, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management’s Responsibility for the Consolidated Financial Statements

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

3. Auditors’ Responsibility Our responsibility is to express an opinion on these

consolidated financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

4. Opinion In our opinion and to the best of our information and

according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March 31, 2015, its consolidated profit and its consolidated cash flows for

AUDitor’s report (coNsoliDAteD)

75

the year ended on that date.

Emphasis of Matter

We draw attention to the following matter in the notes to the consolidated financial statements:

1. Note no 38 (i) and (ii) of the consolidated financial statements regarding sale of substantial amount of loan portfolio wherein profit arising on such sale is forming part of exceptional item.

2. Note no 39 of the consolidated financial statements regarding non compliance of certain criteria as specified in NBFC-MFI regulations and other NBFC regulations issued by Reserve Bank of India, so as to continue to qualify under the category of a NBFC-MFI and NBFC respectively.

Our opinion is not modified in respect of these matters.

5. Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor’s Report) Order, 2015 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements;

b. In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept by the Company so far as it appears from our examination of those books and the reports of the other auditors;

c. The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement dealt

with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements;

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

e. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us;

i. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Company and its subsidiary- refer Note 32 to the consolidated financial statements;

ii. The Company and its subsidiary did not have any material foreseeable losses on long term contracts including derivative contracts;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company and its subsidiary incorporated in India.

For Haribhakti & Co. LLP Chartered Accountants

ICAI Firm Registration No.103523W

____________________

Amit Hundia

Partner

Membership No. 120761

Place: Mumbai Date: 24th August, 2015

76

ANNEXURE TO INDEPENDENT AUDITOR’S REPORT

[Referred to in paragraph 1 under „Report on Other Legal and Regulatory Requirements in the Independent Auditor’s Report of even date to the members of Swadhaar Finserve Private Limited on the consolidated financial statements for the year ended March 31,2015]

(i) (a) The Group has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) During the year, the fixed assets of the Group have been physically verified by the management of the respective entities and as informed, no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable having regard to their size and the nature of their assets.

(ii) The Group did not have any inventory during current financial year so, clause (ii) of paragraph 3 of the Order is not applicable to it.

(iii) As informed, the Group has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions stated in paragraph 3 (iii) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given by the management of the Group there exists an adequate internal control system commensurate with the size of the respective entities and the nature of its business for the purchase of fixed assets and for the sale of services. During the course of audit, we have not observed any continuing failure to

correct major weaknesses in internal control system of the respective entities.

(v) In our opinion and according to the information and explanations given by the management of the Group, the respective entities have not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) The Central Government of India has not prescribed the maintenance of cost records for any of the products of the Group under sub-section (1) of Section 148 of the Act and the rules framed there under.

(vii) (a) The Group is generally regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees state insurance, income tax, wealth tax, service tax, cess and any other material statutory dues applicable to it. However, there have been slight delays in few cases in case of the subsidiary Company. As explained to us, the provisions regarding sales tax, duty of customs, duty of excise and value added tax are presently not applicable to the respective entities.

(b) According to the information and explanations given to us, except Professional tax there were no undisputed dues in respect of provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, which were outstanding, at the yearend for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of the dues

Amount (Rs.)


Due Date Date of Payment

Gujarat Professional Tax Act,1976

Professional Tax 1,900 August 15th September Not yet paid

(c) According to the information and explanations given to us, there are no dues outstanding with respect to income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess which have not been deposited with appropriate authorities on account of any dispute, except for the dues as stated hereunder in case of parent company:

Name of the statute Nature of dues Amount (Rs.)


Forum where dispute is pending

Income Tax Act 1961

Income Tax 1,48,250 AY 2011-12 CIT (A)

(d) According to the information and explanations given by the management of the Group, there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the respective entities.

AUDitor’s report (coNsoliDAteD)

77

(viii) In case of parent Company, the accumulated losses are not more than fifty percent of its net worth. Further, it has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year. In case of subsidiary Company, clause (viii) of paragraph 3 of the Order is not applicable since it is registered for a period of less than five years.

(ix) According to the information and explanations given by the management of the Group, the parent Company has not defaulted in repayment of dues to financial institutions, banks or debenture holder and since subsidiary company did not take any borrowing facility from financial institution or banks neither issued any debentures, clause (ix) of paragraph 3 of the Order is not applicable it.

(x) According to the information and explanations given by the management of the Group, the respective entities have not given any guarantee for loans taken by others from banks or financial institutions.

(xi) According to the information and explanations given by the management of the Group, the parent Company have applied the term loans for the purpose for which the loans were obtained and subsidiary company have not obtained any term loans; therefore clause (xi) of paragraph 3 of the order is not applicable to subsidiary Company.

(xii) During the course of our examination of the books and records of the Group, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across nor informed of any instance of fraud on or by the respective entities, noticed or reported during the year except in case of subsidiary Company, where embezzlement of cash of Rs 89,000 was done by one of its employees. The subsidiary Company has filed a police complaint against that employee to recover the specified amount.

For Haribhakti & Co. LLP Chartered Accountants

ICAI Firm Registration No.103523W

____________________

Amit Hundia

Partner

Membership No. 120761

Place: Mumbai

Date: 24th August, 2015

78

79

FiNANciAl stAtemeNts (coNsoliDAteD)

80

BAlANce sheet

Particulars Note As at 31st March, 2015

I. EQUITY AND LIABILITIES1 Shareholders’ funds

(a) Share capital 3 497,602,880 (b) Reserves and surplus 4 (1,943,543)

(A) 495,659,337 2 Non-current liabilities

(a) Long-term provisions 5 9,301,681 (B) 9,301,681

3 Current liabilities(a) Other current liabilities 6 34,930,773 (b) Short-term provisions 7 13,018,637

(C) 47,949,410 TOTAL (A+B+C) 552,910,429

II. ASSETS1 Non-current assets

(a) Fixed assets 8Tangible assets 5,431,620 Intangible assets 8,402,980 13,834,600

(b) Non-current investments 9 546,559 (c) Deferred tax assets (net) 10 2,498,441 (d) Long Term Loans and Advances

Loans under financing activity 11 114,481 Others 12 17,785,404 17,899,885

(e) Other non current Assets 13 44,476,191 (D) 79,255,676

2 Current assets(a) Trade receivable 14 15,882,219 (b) Current Investments 9 11,911 (c) Cash and Bank balances 15 421,999,136 (d) Short-term loans and advances

Loans under financing activity 11 6,210,042 Others 16 5,379,033 11,589,075

(e) Other current assets 17 24,172,411 (E) 473,654,753

TOTAL (D+E) 552,910,429 Significant Accounting Policies 1 & 2Additional Notes to Accounts 3 to 48

as at 31st March 2015

(Amt. in Rs.)



Place : Mumbai Place : MumbaiDate : 24th August 2015 Date : 24th August 2015


81

stAtemeNt oF proFit AND loss

Particulars Note Year Ended 31st March, 2015

A Revenue from operations 18 313,501,819 B Other income 19 3,832,475 I Total Revenue (A +B ) 317,334,295

Expenses:Employee benefits expense 20 112,413,450 Finance costs 21 101,583,835 Depreciation and amortization expense 8 10,187,568 NPA Provisions and Waive-offs 22 19,195,192 Other expenses 23 89,339,697

II Total Expenses 332,719,741 III Profit before Exceptional Items and Tax (I-II) (15,385,447)IV Exceptional Item 40 36,280,548 V Profit before Tax (III-IV) 20,895,101 VI Profit from ordinary activities attributable to continuing operation before tax 12,546,056

Tax Expense Current tax 5,790,357 Deferred tax 1,335,918

Short (Excess) provision for earlier years Profit from continuing operation after tax 5,419,781

VII Loss from ordinary activities attributable to discontinuing operation before tax (28,661,844)Gain on sale of assets and loss on settlement of liability relating to discontinuing operation 37,010,888 Tax expense:

Current tax (1,969,938)Deferred tax (Income)/ Expenses 4,340,386

Profit from discontinuing operation after tax 5,978,596 VIII Profit for the year (VI + VII) 11,398,377 IX Earnings per equity share: 24 0.23

Basic and Diluted Earning Per Share (Face Value of Rs. 10 each)Significant Accounting Policies & 1 & 2Additional Notes to Accounts 3 to 48

for the year ended 31st March 2015

(Amt. in Rs.)




82

cAsh FloW stAtemeNt


Profit Before Tax 20,895,100

Add:

Depreciation 10,187,568

Loan Loss Provisions (8,057,532)

Bad debt w/off 27,252,724

Loss on sale of Fixed Assets 20,057

Less:

Profit on sale of Mutual Fund units (511,769)

Operating Profit before working capital changes 49,786,148

(Increase)/ Decrease Other current assets 14,896,658

(Increase)/ Decrease Short term loans and advances (5,350,747)

(Increase)/ Decrease in Loan portfolio 1,698,452,221

(Increase)/ Decrease Non current assets 135,572,045

(Increase)/ Decrease long term loans and advances (549,164)

(Increase)/ Decrease in Fixed Deposits with bank (39,480,449)

Increase/ (Decrease) in Short term provision (11,816,138)

Increase/ (Decrease) in Long term provision 11,028,050

Increase/ (Decrease) in Long term Borrowing (754,665,144)

Increase/ (Decrease) in Short term Borrowing (47,582,030)

Increase/ (Decrease) in Other current liability (866,216,993)

Cash flow from operating activities 184,074,455

Less : Taxes Paid (14,285,549)

Net Cash Generated from Operations 169,788,906

Purchase of Investment (257,726,630)

Sale of Investment 259,326,630

Acquisition of subsidiary (100,000)

Purchase of Fixed Assets (8,270,167)

Sale of Fixed assets 23,051

(Increase)/ Decrease Other bank balance -Non-Business FD (182,759,843)

Net Cash from Investing Activities (189,507,010)

Net increase in cash and cash equivalents (19,718,104)

Cash and cash equivalents at beginning of year

Balance with Bank- Current a/c 64,173,862

Balance with Bank- Fixed Deposit 32,500,000

Cash on hand 1,210,699

for the year ended March 2015

(Amt. in Rs.)


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Total Cash and cash equivalents at beginning of year 97,884,561

Cash and cash equivalents at end of period 78,166,457

Balance with Bank- Current a/c 60,369,635

Balance with Bank- Fixed Deposit 18,143,550

Cash on hand (346,728)

Significant Accounting Policies & 1 & 2

Additional Notes to Accounts 3 to 48




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sigNiFicANt AccoUNtiNg policies AND Notes to AccoUNts For the yeAr eNDeD mArch 31, 20151. Nature of Business The Company is Non-banking Financial Company – MFI

registered with the Reserve Bank of India (“RBI”) under section 45-IA of the Reserve Bank of India Act, 1934 and primarily engaged in lending and related activities. The Company received the Certificate of Registration from the RBI on 9th May 2008, enabling the Company to carry on business as a Non-banking Financial Company. It had applied to RBI for reclassification as a NBFC - MFI. The revised certificate of classification as NBFC – MFI was received on 4th October 2013.

On 5 Aug 14, Company acquired the 100% shareholding of Swadhaar Information and Management Services Ltd. (SIMS). SIMS is acting as a business correspondent of banks and financial institution in the financial inclusion space.

2. Significant Accounting Policies a) Basis of Preparation of Consolidated Financial

Statements:

• The accompanying financial statements are consistently prepared under the historical cost convention, and accrual basis of accounting, in accordance with the generally accepted accounting principles in India (“Indian GAAP”) and conform to the statutory requirements, circulars and guidelines issued by the RBI from time to time to the extent they have an impact on the financial statements and current practices prevailing in India.

• The financial statements of the Company comply in all material respects with the Accounting Standards (“AS”) notified under section 133 of the Companies Act, 2013 (to the extent applicable) and in accordance with the generally accepted accounting principles, the provisions of the Companies Act, 2013 and regulations of Reserve Bank of India as applicable to a NBFC-MFI.

• All assets and liabilities have been classified as current or non current as per the company’s

normal operating cycle and other criteria set out in the schedule III to the Companies Act 2013.

b) Use of Estimates:

The preparation of the financial statements in conformity with the generally accepted accounting principles require the management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any differences of actual results to such estimates are recognized in the period in which the results are known / materialized.

c) Revenue Recognition:

i. Interest income is recognized and accounted on accrual basis as per the agreed terms except in case of Non Performing Assets outstanding for more than 90 days, which is recognized on receipt basis.

ii. Service Fees and Collection Fee Income is recognized and accounted on accrual basis as per the agreed terms with BANK for subsidiary.

iii. All other incomes are recognised on accrual basis, except in case of bad debts recovered, cheque bouncing charges, late payment charges, foreclosure charges and application money, which are accounted as and when received.

iv. On securitization transactions of portfolio under the PTC route (pass through certificates), the Company has followed the provisions specified by Reserve Bank of India (RBI) in its guidelines on Securitisation Transactions. The amortisation of cash profit arising out


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of securitisation transaction is done as per method suggested in securitized guidelines as mentioned above.

v. Interest income on deposits with banks is recognised on a time proportion accrual basis taking into account the amount outstanding and the rate applicable.

vi. Interest income on Loan to Subsidiary is accounted on accrual basis.

vii. In respect of other heads of the income the company accounts the same on accrual basis.

d) Fixed assets & Depreciation:

Fixed Assets are stated at cost less accumulated depreciation and impairment, if any. The cost of fixed assets comprises purchase price and any other incidental cost of bringing the asset to its working condition for its intended use. Subsequent expenditure incurred on assets put to use is capitalized only when it increases the future benefit / functioning capability from / of such assets.

For assets purchased and sold during the year, depreciation is being provided on pro rata basis by the Company. On all assets, except as mentioned below, depreciation has been provided using the Straight line method at the rates specified in Schedule II to the Companies Act, 2013.

Improvements to Leased Assets are amortized over the lease period from the date of cost incurred.

e) Intangible Assets & Amortization:

Expenses incurred on Computer Software having enduring benefits are capitalized and will be amortized over a period of 3 years on a pro rata basis from the date of purchase.

f) Investments:

Investments are classified into current and –long term investments. Investments that are intended to be held for one year or more are classified as long term investments and investments that are intended to be held for less than one year are classified as current investments.

Long term investments are valued at cost. Provision for diminution in value of long term investments is made if in the opinion of management such a decline is other than temporary.

Current investments are valued at cost or market value, whichever is lower.

Profit/loss on sale of securities is determined based on the Weighted Average cost of the securities sold.

g) Employee Benefits:

Short term employee benefits

Short term employees’ benefits are recognized as an expense at the undiscounted amounts in the profit & loss account for the year in which the related services are rendered.

Long term employee benefits:

(i) Provident Fund

In accordance with law, all employees of the Company are entitled to receive benefits under the provident fund. The Company contributes an amount, on a monthly basis, at a determined rate (currently 12% of employee’s basic salary) to the Scheme administered by the Regional Provident Fund Commissioner (RPFC) and the Company has no liability for future provident fund benefits other than its annual contribution.

Contribution payable to the recognised provident fund, which is a defined contribution scheme, is accounted for on accrual basis.

(ii) Gratuity

Gratuity is post employment benefit and is in the nature of Defined Benefit Plan. The Liability recognised in the balance sheet in respect of gratuity is the present value of defined benefit obligation at the balance sheet date, together with the adjustments for unrecognized actuarial gain or losses and the past service costs. The defined benefit obligation is calculated at or near the balance sheet date by an independent actuary. Based on actuarial calculations, which include assumptions about demographics, early retirement, salary increases and interest rates, actuarial gain or loss is recognized in the statement of Profit and Loss.

(ii) Leave Encashment

Leave encashment is in the nature of long term benefit. It is calculated based on unutilized leave available to the employees as at the Balance Sheet date by an independent actuary.

h) Operating Leases:

Lease payments in respect of operating lease are recognized as an expense in the statement of profit and loss account on accrual basis over the lease term, in accordance with the AS 19, “Leases” issued by the Institute of Chartered Accountants of India.

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i) Taxation:

Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with the income-tax law), deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year).

i) Current Tax

Provision for current tax is made on the basis of estimated taxable income for the accounting year in accordance with the Income Tax Act, 1961.

ii) Minimum Alternate Tax (MAT)

Provision for tax expense (MAT) is accounted when tax payable as per provision for Sec.115JB of Income Tax Act, 1961 is higher than the tax payable under normal provision of the Act. MAT credit entitlement is recognized in accordance with the “Guidance Note on Accounting for credit available in respect of Minimum Alternate Tax under the Income-tax Act, 1961” issued by The Institute of Chartered Accountants of India only if there is convincing evidence for realization of such asset during the specified period. MAT credit entitlement is reviewed at each Balance Sheet date

iii) Deferred Tax

Deferred tax expense or benefits is recognised on timing differences being the difference between taxable and accounting income and are capable of reversal in one or more future periods. The deferred tax charge or credit and the corresponding deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the asset can be realised in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of the assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonable/virtually certain (as the case may be) to be realised.

j) Provision and Contingencies:

The Company creates a provision when there is present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and related income are recognised in the period in which the change occurs.

k) Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit which the asset belongs to, is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

l) Finance Expenses:

Expenditure incurred for raising borrowed funds including ancillary costs, incurred in connection with the arrangement of borrowings, which is not eligible for capitalisation, is fully charged to the statement of


87

profit and loss on incurrence. Likewise, expenditure incurred on funds raised through securitisation transactions (pass through certificates route) are also fully charged to the profit and loss account on incurrence.

m) Foreign Currency Transactions:

Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange differences, if any arising out of transactions settled during the year are recognised in the statement of profit and loss account. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date.

n) Loss sharing with BC partner:

Subsidiary Company has provided for the share of loss as per the agreement entered with the bank/FI.

o) Provision for doubtful debts:

The provisioning norms followed by the Company

are more stringent than those prescribed by the Reserve Bank of India and are as follows:

No. of days portfolio outstanding overdue

(days)

Provision (% on outstanding

principal)0-30 0.25%31-60 10%61-90 30%

91-120 30%121-150 60%151-180 60%

>181 100%

Provisioning in respect of soldout/securitised portfolio will be done subject to the maximum guarantee given to respective assignee bank or financial institution. Provisioning in respect of assigned portfolio in sell out transactions and portfolio sold out in securitisation transactions (pass through certificates route) are not done.

Subsidiary accounts for the loss as per the terms of the agreement.

3. Share Capital (Amt. in Rs.)


Authorised75,000,000 (PY 75,000,000) Equity Shares of Rs. 10 each 750,000,000 Issued, Subscribed & Paid upEquity Shares of Rs. 10 each54,679,913 equity shares with face value of Rs 10 each fully paid-up, (PY 54,679,913)

546,799,130

(Less) Amount recoverable from Swadhaar Employee Welfare Trust [Face value of Rs 10 on 4,919,625 shares (PY 4,919,625) allotted to the Trust]

49,196,250 497,602,880

Total 497,602,880

Issue of Equity Shares:

During the FY 2013-14 , the company had raised additional capital of Rs 30,000,000/- by way of issue of 3,000,000 equity shares of Rs. 10/- each to Small Industries Development Bank of India (SIDBI).

Loan to Swadhaar Employee Welfare Trust:

In accordance with the Guidance Note on Accounting for Share based Payments issued by Institute of Chartered Accountants of India (‘ICAI’), the face value of equity shares issued to EWT till 31st March 2015 have been duly shown as deduction from the issued, subscribed and paid up capital. Accordingly, these shares are also not considered for calculating basic EPS.

3.1 Reconciliation of Equity Shares outstanding at the beginning and at the end of the financial year:

Particulars As at 31st March 2015 Number (Amt in Rs.)

Shares outstanding at the beginning of the year 54,679,913 546,799,130 Shares Issued during the year - - Shares outstanding at the end of the year 54,679,913 546,799,130

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3.2 Terms/ Rights Attached to equity Shares:

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. In case of further issue of shares, the same shall be offered to all the shareholders on identical terms on a proportionate basis. All shares rank pari passu with regard to dividend and repayment of capital.

In the event of liquidation of the Company, the holder of the equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all the preferential amounts. However no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

3.3 Details of Shareholders Holding more than 5% shares in the company:

Name of Shareholder As at 31st March 2015 Total No. of Shares %

Accion Africa Asia Investment Company 19,650,000 35.94%M V Mauritius Limited 8,325,114 15.23%Padmini Trust 6,960,000 12.73%Michael & Susan Dell Foundation 6,452,250 11.80%Swadhaar FinServe Employee Welfare Trust 4,919,625 9.00%Small Industries Development Bank of India (SIDBI) 3,000,000 5.49%

Employee Stock Option Scheme and Associate Stock Option Scheme:

a) During the year, the Company has not granted options to the employees or the associates.

b) The Company has adopted intrinsic value method to account for ESOP cost. Option is offered with the intrinsic value of the shares based on stock value of Rs 13 per share & the exercise price was fixed by the compensation committee of the Company was Rs 13 per share. The difference between the stock value & the exercise price is being amortized as employee compensation cost over the vesting period. The total amount to be amortized over the vesting period is Nil. Accordingly, the company has not taken any impact in statement of profit & loss towards Compensation cost.

c) Description of each type of employee share-based payment plan that existed at any time during the period:

Type of arrangement ESOP scheme 2010 ASOP scheme 2010

Tranche 1 Tranche 2 Tranche 3 Tranche 1 Tranche 2

Date of grant 21-Dec-10 21-Dec-11 22-Feb-12 21-Dec-10 21-Dec-11

Number of options granted 571,000 775,000 170,000 1,530,000 30,000

Exercise Price per Option Rs.11 Rs.13 Rs.13 Rs.11 Rs.13

Date of vesting Various dates Dec 21, 11, Dec 21, 12, Dec 21, 13, Dec 12, 14


Various dates Feb 22, 13, Feb 22, 14, Feb 22, 15, Feb 22,16



Exercise Period Prior to listing -All vested Options can be exercised within three years of vesting or six months from the date the Company gets listed on a recognized stock exchange, whichever is later.

Can be exercised within a period of three years from the date on which the Options are vested except for promoters who can exercise within period of Four years from the date on which the Options are vested

Contractual life 4 years 1. Employees - 4 years2. CEO - 3 Years 3. Managing Director - Immediate Vesting

4 years 1. For full time consultant - 4 years 2. For promoters immediate vesting

4 years


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Vesting Condition 40% Perfor-mance as per the Performance Matrix and 60% on each com-pleted year

1. employees- 40% Performance as per the Performance Matrix and 60% on each completed year2. CE0- 30% First two years and 40% last year

40% Perfor-mance as per the Perfor-mance Matrix and 60% on each com-pleted year

40% Performance as per the Per-formance Matrix and 60% on each completed year

40% Performance as per the Perfor-mance Matrix and 60% on each com-pleted year

Method of Settlement Equity Shares Equity Shares Equity Shares Equity Shares Equity Shares

d) The activities in the schemes during the year ended March 2015 is set below:

Particulars As at 31st March 2015 ESOP ASOP

ESOP & ASOP Scheme 2010 (Stock option granted @ Rs 11) Options outstanding, beginning of the year 517,726 1,530,000 Add: Granted - - Less: Exercised - - Less: Lapsed - - Less: Forfeited 24,776 12,000 Option outstanding, end of the year 492,950 1,518,000 Exercisable at the end of the period 492,950 1,518,000 ESOP & ASOP Scheme 2010 (Stock option granted @ Rs 13) Options outstanding, beginning of the year 875,120 50,000 Add: Granted - - Less: Exercised - - Less: Lapsed - - Less: Forfeited 59,840 35,000 Option outstanding, end of the year 815,280 15,000 Exercisable at the end of the period 384,280 15,000

e) As the options are granted using intrinsic value method at an exercise price Rs. 13 equivalent to stock value therefore no employee compensation cost or charge will arise in the books.

f) Stock options outstanding at the end of the period:

Particulars 2014-15ESOP SchemeRange of Exercise Prices Rs.11 - Rs. 13Weighted Average Contractual lifevesting period 0.80 yrs exercise period* - ASOP SchemeRange of Exercise Prices Rs.11 - Rs. 13Weighted Average Contractual lifevesting period - exercise period* -

* Not determinable

g) The company has accounted for ESOP on the intrinsic value method. The company has not determined the impact of profit & loss for the disclosure purpose as per the fair value method and hence, the required disclosures have not been given.

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h) Other information regarding Employee Share Based Payment Plan is as below:

Particulars 2014-15Expense arising from employee share based payment plan NILExpense arising from share and stock option plan NILTotal carrying amount at the end of the period NIL

4. Reserves & Surplus (Amt. in Rs.)Particulars As at

31st March, 2015A. Capital ReserveOpening Balance - (+) Transferred on consolidation 369,552 Closing Balance 369,552 B. Securities Premium ReservesOpening Balance 52,031,804 Less Share issue expenses - Closing Balance 52,031,804 C. SurplusOpening balance (72,064,810)(+) Net Profit for the year 11,398,376 (-) Transfer to Statutory Reserves 2,066,331 Closing Balance (62,732,764)D. Statutory ReserveOpening Balance 6,321,535 (+) Transferred during the year 2,066,331 Closing Balance 8,387,866 Total (A+B+C) (1,943,543)

Statutory Reserve:An amount of Rs. 2,066,331 (20% of profits after tax) has been transferred to the Statutory Reserve in accordance with the provisions of Section 45-IC of the RBI Act, 1934

5. Long Term Provisions (Amt. in Rs.)Particulars As at


Gratuity (unfunded) 4,494,260 Leave Encashment (unfunded) 1,525,206

(b) Others Provision for Standard Assets 9,544 Provision for NPA 7,278 Provision for Last EMI 3,265,393

Total 9,301,681

6. Other current Liabilities (Amt. in Rs.)Particulars As at

31st March, 2015Advance Collection from clients

Advance Collection 2,321,705 Margin Money received from Clients 4,258,137 6,579,841

Outstanding Liability for Expenses 2,209,053 Payable on Securitized Portfolio 10,223,122 Unearned Revenue-Managed/Sold out Portfolio 5,815,134 Employee Benefits- Payable 1,018,200 Statutory Dues Payable 2,692,065


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Other PayablesMSME - Others 6,393,358

Total 34,930,773

7. Short Term Provisions (Amt. in Rs.)Particulars As at


Gratuity 1,795,290 Leave Encashment Provision 382,362 Provision for Bonus 8,259,728 Provision for resigned staff 695,554

(b) Others Provision for Standard Assets 417,926 Provision for NPA 1,467,777

Total 13,018,637

Details of NPA Provisions (included in note no. 6 & 9 under “NPA Provision” (Amt. in Rs.)Details of loan loss provision on Percentage As at

31st March, 2015

NPA Provisions:Non- current 16,822 Current 1,885,703

Total 1,902,525 NPA Provisions:a) Standard Assets 427,471

0-30 Days 0.25% 2,892 31-60 Days 10% 212,301 61-90 Days 30% 212,278

b) Non Performing Assets 1,475,054 91-120 days 30% 210,389 121 - 180 days 60% 548,945 >180 days 100% 715,719 Rescheduled Portfolio 100% -

c) Additional Provision - Total 1,902,525

Loan Loss Provisions as per norms prescribed by RBI w.e.f. 01st April 2013 As at 31st March, 2015

Higher ofa) Provisioning as per 1% of the outstanding loan portfolio 63,245b) 50% of the aggregate loan installments which are overdue for more than 90

days and less than 180 days 808,104

and 100% of the aggregate loan installments which are overdue for 180 days or more 715,720 1,523,824

Provisioning to be considered 1,523,824

However, the Company is making provision as mentioned below which is more stringent than those prescribed by RBI.

No. of days portfolio outstanding overdue Provision (% on outstanding principal) 0-30 0.25%31-60 10%61-120 30%121-180 60%

>180 100%

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8. Fixed Assets - FY 2014-15 (Amt. in Rs.)Fixed Assets Gross Block Accumulated Depreciation Net Block

Balance as at 01st April

2014

Additions Disposal Balance as at 31st March

2015

Balance as at 01st April

2014

Addition Deduction Balance as at 31st March

2015

Balance as at 31st March

2014

Balance as at 31st March

2015

Tabgible Assets

Furniture and Fixtures

4,509,396 1,141,176 46,377 5,604,195 2,402,762 831,303 3,320 3,230,745 2,106,634 2,373,500

Office equipment

2,148,870 441,261 - 2,590,131 489,247 769,562 - 1,258,810 1,659,622 1,331,321

Computer 8,801,830 641,059 - 9,442,889 6,316,023 2,111,878 - 8,427,902 2,485,807 1,014,987

Lesae Hold Improvement

2,336,045 524,485 - 2,860,530 825,927 1,322,791 - 2,148,718 1,510,118 711,812

Total (a) 17,796,141 2,747,981 46,377 20,497,745 10,033,960 5,035,534 3,320 15,066,175 7,762,180 5,431,620

Intangible Assest

Computer Logo 294,777 - - 294,777 195,117 (4,912) - 190,206 99,660 104,571

Computer Softwere

16,377,042 5,563,973 - 21,941,015 8,485,662 5,156,945 - 13,642,607 7,891,380 8,298,409

Total (b) 16,671,819 5,563,973 - 22,235,792 8,680,779 5,152,033 - 13,832,813 7,991,040 8,402,980

Total (a+b) 34,467,960 8,311,954 46,377 42,733,537 18,714,739 10,187,568 3,320 28,898,987 15,753,220 13,834,600

9. Investments (Amt. in Rs.)

(A) Non Current Investments As at 31st March, 2015

Non Trade and Unquoteda) Investment in Equity instruments:

Investment in Alpha Microfinance Consultants Pvt. Ltd. 50,000 (PY 50,000) equity shares with face value of Rs. 10 Each# 500,000

b) Others Swadhaar Employee Welfare Trust (Corpus Fund) 46,559

546,559 # In the financial year 2009-10, the company had created Swadhaar FinServe Employee Welfare Trust for the purpose of promoting employee welfare activities and for administration, management, implementation and all other matters incidental to any stock option plans.

(B) Current Investments As at 31st March, 2015

Investment in Mutual Fund (IDFC Mutual Fund): (Unquoted)

11,911


Cost Market ValueAggregate value of quoted investments and market value NA NA

Aggregate value of unquoted investments and market valueMutual Fund* 11,911 11,911 Others# 546,559 651,776

Aggregate provision for dimunation in value of investments - -

*On the basis of NAV declared by Mutual Fund#Break-up value of shares is taken as market value


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10. Deferred Tax Asset (Amt. in Rs.)

Particularsset As at 31st March, 2015

Deferred Tax Asset Difference in WDV of assets 885,421 Gratuity Provision 930,446 Compensated absence provision 65,301 Provision for doubtful assets 617,274 Net Deferred Tax Asset 2,498,441

11. Loans under financing activity (Amt. in Rs.)


Loans under financing activityNon- current 114,481Current 6,210,042

Total 6,324,523 Loans under financing activityStandard Assets: 3,992,596

0-30 Days 1,161,994 31-60 Days 2,123,010 61-90 Days 707,592

Non Performing Assets 2,331,927 91-120 Days 701,298 121-180 Days 914,909 >180 Days 715,720 Rescheduled Portfolio -

Total 6,324,523

12. Long Term loans & Advances (Amt. in Rs.)


Unsecured - considered good(a) Security Deposit

Rent Deposit 6,345,000 Other Deposit 147,243

(b) Loans & Advances to related Party Loan to Employee Welfare Trust (EWT) 58,790

(c) Other Loans and Advances Tax Deducted At Source (Net of provision for tax of CY : Rs 3,820,419) 11,234,371

Total 17,785,404

13. Other Non Current Assets (Amt. in Rs.)


Fixed Deposit (maturity more than 12 months)Lien Fixed Deposit 44,476,191 Total 44,476,191

Lien with Bank as part of BC business.

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14. Trade receivables (Amt. in Rs.)


Unsecured Considered GoodOutstandings for more than 6 months from the date due for Payment - Outstandings for less than 6 months from the date due for Payment 15,882,219 Total 15,882,219

15. Cash & Bank balances (Amt. in Rs.)Particulars As at

31st March, 2015(A) Cash and Cash Equivalents

Balance with Banks In Current Account 64,375,294 In Deposit Account (maturity less than 3 months) Non - Lien Fixed Deposit 18,143,550 Cash on hand 59,057

Total (A) 82,577,901 (B) Others bank balances

Maturity more than 3 months but less than 12 months Non - Lien Fixed Deposit 142,228,843 Lien Fixed Deposit 156,661,392 Maturity more 12 months Non - Lien Fixed Deposit 40,531,000

Total (B) 339,421,235 Total (A +B ) 421,999,136


16. Short - Term Loans & Advances (Amt. in Rs.)


a. Other Loans & Advances (Unsecured & Considered good)Advance Against Salary 80,361 Advance Against Expenses 79,816 Advance receivable from BC Principal 2,915,180 Loan to Employees 2,303,676

Total 5,379,033

17. Other Current Assets (Amt. in Rs.)Particulars As at

31st March, 2015Interest Accrued on Fixed Deposit 15,881,467 Interest Accrued and Due on Loan Portfolio 2,565,114 Interest Accrued but not Due on Loan Portfolio 1,550,575 Prepaid Expenses 1,434,102 Other Receivables 2,239,839 Cenvat Credit Availed 501,315 Total 24,172,411


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18. Revenue from operations (Amt. in Rs.)Particulars For the year Ended

31 March, 2015A. Sale of Services:

Service Fees 103,252,638 Upfront Processing Fees 9,268,127

Total (A) 112,520,766 B. Interest Income

Interest from loan portfolio 148,557,040 Interest on Fixed Deposit 35,333,235 Other Interest 162,607

Total (B) 184,052,882 C. Other Financial Services:

Processing fee 3,722,830 Income from securitized transaction 11,030,055

Total (C) 14,752,885 D. Other Operating Income:

Miscellaneous Income 34,933 Interest on Fixed Deposit 2,140,354 Other Interest -

Total (D) 2,175,287 Total (A + B +C +D) 313,501,819

19. Other Income (Amt. in Rs.)Particulars For the year Ended

31 March, 2015Profit on sale of Mutual Fund units 511,769 Reimbursement for resources used for training 2,899,993 Other Misc. Income 185,027 Other Interest 196,298 Fees for Business consultancy project 39,388 Total 3,832,475

20. Employee Benefit Expenses (Amt. in Rs.)

Particulars For the year Ended 31 March, 2015

Salaries, incentives and commission 84,850,522 Contributions to -

Provident fund 5,157,434 ESIC 1,746,086 Labour Welfare 15,348

Leave Encashment 201,266 Insurance-Staff 841,514 Gratuity 2,922,090 Training Expenses 172,523 Executive Director's Remuneration 5,561,766 Bonus 8,193,561 Staff welfare expenses 2,751,340 Total 112,413,450

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21. Finance Cost (Amt. in Rs.)Particulars For the year Ended

31 March, 2015Interest expense 96,307,407 Other borrowing costs 5,276,428 Total 101,583,835

22. NPA Provision and Waive-offs (Amt. in Rs.)Particulars For the year Ended

31 March, 2015Loan Loss Expenses (16,113,742)Bad Debts W/off 27,252,724 Portfolio Loss 8,056,210 Total 19,195,192

23. Other Expenses (Amt. in Rs.)Particulars For the year Ended

31 March, 2015

Administrative Expenses :- Auditors Remuneration 1,374,733 Banking Charges 198,223 Brokerage 52,500 Cash Handling Charges 3,764,277 Cost Sharing Expenses 24,592,326 Electricity Expenses 1,067,464 Insurance Charges 505,559 Legal Charges 1,690,443 Loss Sharing with BC Principal 4,704,600 Memberships & Subscription 670,059 Other Miscellaneous Expense 1,252,693 Office Expenses 1,649,583 Rates and Taxes 252,707 Business Loss 719,491 Portfolio Management Expense 595,794 Printing & Stationery 4,163,962 Professional Charges 17,084,840 Rent 11,471,332 Repairs and maintenance 1,695,676 Telephone and Internet 2,097,483 Traveling 9,735,954 Total 89,339,697.00

24. Basic & Diluted Earnings/(Loss) per share (Amt. in Rs.)


Net Profit attributable to equity shareholders [A] (Rs) 11,398,377 Weighted Average number of equity shares issued [B] 49,760,288 Basic & Diluted Earnings per share [A/B] (Rs.) 0.23 Number of equity shares at the beginning of the year for the purpose of calculation of basic EPS 49,760,288 Add: Weighted Average number of additional equity shares issued during the year - Number of equity shares at the end of the year for the purpose of calculation of basic EPS 49,760,288


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25. Employee Benefit DisclosureA. Defined Contribution Plan: (Amt. in Rs.)Particulars For the year Ended

31 March, 2015Employee contribution to Provident Fund 5,038,762 Employee state Insurance Corporation 709,680 Labour welfare 5,448 Total 5,753,890

B. Defined Benefit Plan:

i. Leave encashment Detailed disclosures of compensated absence is not given in terms of Para 132 of AS15 "Employee Benefits"Current Liability 382,362 Non-Current Liability 1,525,206

ii. GratuityGratuity provision has been made based on the actuarial valuation done as at the year end. The details of actuarial valuation as provided by the independent actuary are as follows:Current Liability 382,362 Non-Current Liability 1,525,206

Gratuity Valuation report as at 31st March 2015 (Amt. in Rs.)

Assumptions As at 31st March 2015

Mortality Ratethe Indian Assured

Lives Mortality (2006-08) Ult table

Discount Rate 8.00%Salary escalation rate 7.00%Attrition RateAge Group

upto 30 10.00%31-40 5.00%41 & above 3.00%

Rate of return (expected) on plan assets 0.00%Benefit: as per Gratuity ACT with Limit = 1,000,000Retirement age (Years) 60Expected average remaining service 10.88I. Data informationNumber of members 476 Total monthly salaries 3,791,067 Average age (years) 73.54Average Service (years) 5.99II. Changes in present value of obligationsPVO at beginning of year 3,718,884 Interest cost 395,877 Current Service Cost 1,105,498 Benefits Paid (358,251)Actuarial (gain)/loss on obligation 1,427,542 Liabilities Assumed on Acquisition/ (settled on Divestiture)* - PVO at end of year 6,289,550 III. Actuarial Gain/(Loss) RecognizedActuarial Gain/(Loss) for the year (Obligation) (1,427,542)Actuarial Gain/(Loss) for the year (Plan Assets) -

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Total Gain/(Loss) for the year (1,427,542)Actuarial Gain/(Loss) recognized for the year (1,427,542)Unrecognized Actuarial Gain/(Loss) at end of year - IV. Amounts to be recognized in the balance sheet and statement of profit & loss PVO at end of year 6,289,550 Fair Value of Plan Assets at end of year - Funded Status (6,289,550)Unrecognized Actuarial Gain/(Loss) - Net Asset/(Liability) recognized in the balance sheet (6,289,550)V. Expense recognized in the statement of P & L Current Service Cost 1,105,498 Interest cost 395,877 Expected Return on Plan Assets - Net Actuarial Gain/(Loss) recognized for the year 1,427,542 Expense recognized in the statement of P & L 2,928,917 VI. Movements in the Liability recognized in Balance SheetOpening Net Liability 3,718,884 Expenses as above 2,928,917 Contribution paid (358,251)Liabilities Assumed on Acquisition/ (settled on Divestiture)* - Closing Net Liability 6,289,550 Current Liability 1,795,290 Non- Current Liability 4,494,260

26. Related Party Transations (Amt. in Rs.)

A) Enterprise that can exercise significant influence:Accion InternationalAccion Technical Advisors India

B) Key Management Personnel (KMP):Ms. Veena Mankar - Chairperson Mr. Rajaram Kamath - Executive Director & CEO Mr. Pranav Desai - CFO (w.e.f. 23rd April 2015)

C) List of Enterprise in which KMP exercise significant influenceSwadhaar FinAccess Swadhaar Employee Welfare Trust

D) Relatives of KMP:Mr. Vikas Bhagwan Mankar (Husband of Ms. Veena Mankar)

Transaction For the year ended 31st March, 2015Subsidiary company



Key Management

Personnel



Guarantee Fee Accion International - 467,547 - - Technical Assistance Accion Technical Advisors India: - 4,738,637 - - Training expense reimbursement received Accion Training Expenses reimbursement: - (505,496) - - Salary and Remuneration Veena Mankar - - 4,011,618 - Rajaram Kamath - - 6,182,940 - Pranav Desai - - 1,467,000 Total 11,661,558


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Outstanding receivable / payable with related parties:

Transaction For the year ended 31st March, 2015Subsidiary company

Enterprise that can exercise significant influence

Key Manage-ment Personnel



Swadhaar FinServe Employee Welfare Trust:Expenses receivable - - - (58,790)Investment - - - (46,559)Loans & Advances Given - - - (57,395,625)Total - - - (57,500,974) Accion Training Expenses reimbursement Training expense reimbursement receivable - (505,496) - - Swadhaar FinAccess: Professional Charges payable - - - 31,752 Employee Stock Option Veena Mankar - - 1,200,000 - Rajaram Kamath - - 250,000 -

27. Segment Reporting (Amt. in Rs.)Particulars Funding

Bussiness Fees Business Elimination Total

RevenueExternal Revenue 258,600,170 114,661,120 - 373,261,290 Inter-Segment Revenue 3,442,044 9,640,688 13,082,732 - Unallocated 167,244 17,783 185,027 Total Revenue 262,209,459 124,319,591 13,082,732 373,446,318 ResultSegment Result 19,620,888 2,452,647 - 22,073,536 Unallocated Corporate Expenses 1,374,733 Operating Profit - - - 20,698,803 Interest Expense - - - - Interest Income - - - 196,298 Income Taxes-Current Tax - - - 3,820,419 Deferred Tax - - - 5,676,305 Profit from Ordinary Activties - - - 11,398,377 Extra ordinary Loss: - - - - Net Profit - - - 11,398,377 Other InformationSegment Asset 528,130,197 111,147,208 100,658,258 538,619,146 Unallocated Corporate Assets 4,638,608 9,752,675 100,000 14,291,282 Total Assets 528,130,197 111,147,208 100,758,258 552,910,429 Segment Liabilities 38,545,742 119,363,608 100,658,258 57,251,092 Unallocated Corporate Liabilities - - - - Total Liabilities 38,545,742 119,363,608 100,658,258 57,251,092 Capital Expenditure 5,798,666 2,513,288 - 8,311,954 Depreciation 8,504,989 1,682,579 - 10,187,568 Non Cash Expenses other than depreciation - - -

27.1 Segment Reporting

a) The business segment has been considered as the primary segment for disclosure. The groups primary business comprises of “Funding business” & “Fee business”

b) The business segments have been identified considering the nature of activity, the differing risks and returns, the organization structure and the internal financial reporting system.

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c) Fund based activities comprises of financing activity which includes lending loans to the urban poor, While fee based activity comprises of sourcing and servicing the micro loans to the underprivillage in urban and semi urban area”

d) Since the business operations of the Group are primarily concentrated only in India, No separate geogrophic segments are reported.

28. Foreign Currency Transactions (Amt. in Rs.)


Guarantee Fee payment 1,090,650 Travel - Professional Fees (AVV Sarl and Software Group) 4,916,666 Training Expenses (WWB) - Total 6,007,316

29. MSMED Act, 2006The company has sent letters to suppliers to confirm whether they are covered under Micro, Small and Medium Enterprises Act, 2006 as well as they have filed required memorandum with the prescribed authorities. Out of the letters send to the parties, some confirmations have been received till the date of finalization of Balance Sheet. Based on the confirmations received, the outstanding amounts payable to the vendors under Micro, Small and Medium Enterprises Development Act 2006 are given below.


The principle amount remaining unpaid at the end of the year - The interest amount remaining unpaid at the end of the year - The balance of MSMED parties as at the end of the year -

30. Contingent Liabilities(a) Claims against the company not acknowledged as debts Claims against the company not acknowledged as debts is Rs. 148,500.(b) Estimated amount of contracts remaining to be executed on capital accounts and not provided for Rs Nil .

31. Impairment of AssetIn the opinion of the board of directors, all current assets, loans & advances would be realizable at least of an amount equal to the amount at which they are stated in the balance sheet. Hence no impairment loss has been recognized.

32. Payment to Auditors (Amt. in Rs.)


As Auditors:Statutory Audit Fees 816,667 Tax Audit Fees 196,665 In other capacity:Tax related Services 301,400 Other Services (Certification) 60,000

1,374,732 Out of pocket expenses 4,400 Service Tax 182,409 Total 1,561,541


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33. Disclosures in pursuant to RBI requirementA. CRAR Current Year

CRAR (%) 245.55%CRAR - Tier I Capital (%) 245.31%CRAR - Tier II Capital (%) 0.24%

B. EXPOSURESCategory

a) Direct exposure(i) Residential Mortgages - - (ii) Commercial Real Estate -

Lending secured by mortgages on commercial real estates (office buildings, retail space, multipurpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based (NFB) limits;

-

(iii) Investments in Mortgage Backed Securities (MBS) and other securitised exposures -

a. Residential, - b. Commercial Real Estate. -

b) Indirect ExposureFund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs). -

C) Asset Liability Management 2014-15Maturity pattern of certain items of assets and liabilities

1 day to 30/31 days

(1 Month)


Over 2 months upto 3 months

Over 3 months to 6 months

Over 6 months to

1 year

Over 1 year to 3

years

Over 3 years to 5 years

Over 5 years Total

Liabilities(L)Borrowings from Banks - - - - - - - - -

Market Borrowings - - - - - - - - -

Assets (A)Advances 837,430 541,519 444,296 1,152,503 52,365,938 7,082,194 - 58,790 62,482,669

Investments - - 11,911 - - - - 646,559 658,470

D) FY: 2014-15

Particulars Amount Outstanding Amount Overdue

Liabilities side:

1 Loans and advances availed by the non-banking financial company inclusive of interest accrued thereon but not paid:(a) Debentures : Secured - Nil : Unsecured (Other than falling within the meaning of public deposits)(b) Deferred Credits Nil Nil(c) Term Loans - Nil(d) Inter-corporate loans and borrowing Nil Nil(e) Commercial Paper Nil Nil(f) Other Loans (specify nature) Nil NilAssets side Amount outstanding

2 Break-up of Loans and Advances including bills receivables (Other than those included in (4) below) :(a) Secured Nil(b) Unsecured 62,482,669

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(i) Leased assets including lease rentals under Sundry debtors :(a) Financial lease Nil(b) Operating lease Nil

(ii) Stock on hire including hire charges under sundry debtors: (a) Assets on hire Nil(b) Repossessed Assets Nil

(iii) Other loans counting towards AFC activities(a) Loans where assets have been repossessed Nil(b) Loans other than (a) above Nil

4 Break-up of Investments :Current Investments:1. Quoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Please specify) Nil2. Unquoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil(iii) Units of mutual funds 11,911 (iv) Government Securities Nil(v) Others (Please specify) NilLong Term Investments :1. Quoted Nil(i) Shares : (a) Equity (b) Preference(ii) Debentures and Bonds Nil(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Please specify) Nil2. Unquoted Nil(i) Shares : (a) Equity 500,000 (b) Preference Nil(ii) Debentures and Bonds Nil(iii) Units of mutual funds Nil(iv) Government Securities Nil(v) Others (Corpus Fund in Employee welfare Trust) 46,559

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

CategoryAmount net of provisions

Secured Unsecured Total1. Related parties ** (a) Subsidiaries Nil 48,561,000 48,561,000 (b) Companies in the same group Nil Nil Nil (c) Other related parties Nil 58,790.00 58,790.00

2. Other than related parties Nil 13,862,879 13,862,879 Total - 62,482,669 62,482,669


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1. Related parties ** (a) Subsidiaries 2,146,835 100,000 (b) Companies in the same group (c) Other related parties (64,637) 46,559 2. Other than related parties 728,324 511,911 Total 2,810,521 658,470

7 Other information Particulars Amount(i) Gross Non-performing Assets

(a) Related Parties Nil(b) Other than related parties 2,331,927

(ii) Net Non-Performing Assets(a) Related Parties Nil(b) Other than related parties 856,873


34. Securitised portfolioDuring the financial year 2014-15, no portfolio securitization transaction are conducted. The company will continue to collect the EMIs on 4 securitization transactions already concluded in earlier financial years.

The brief details of the transaction are indicated below: (Amt. in Rs.)

Sr. No.


1 Group Loan asset sold to Mosec Apollonis on 23th March, 2014:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 20,404,657Collection of client EMIs on behalf of Mosec Apollonis will be till Jan - 16 -

2 Group Loan asset sold to Mosec Horkos on 26th March, 2014:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 29,933,541Collection of client EMIs on behalf of Mosec Horkos will be till Dec - 15 -

3 Group Loan asset sold to Mosec Callies on 10th July, 2013:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 2,021,537Collection of client EMIs on behalf of Mosec Callies will be till May – 15 -

4 Group Loan asset sold to Mosec Perses on 11th August, 2013:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 2,835,954Collection of client EMIs on behalf of Mosec Perses will be till May - 15 -

5 Group Loan asset sold to Mosec XXX on 24th March, 2013:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 0Collection of client EMIs on behalf of Mosec XXX will be till Nov -14 -

6 Group Loan asset sold to Mosec XXXI on 24th March, 2013:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 0Collection of client EMIs on behalf of Mosec XXXI will be till Jan -15 -

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7 Group Loan asset sold to Mosec XXXII on 27th March, 2013:Sale consideration received for the Individual group loan asset sold -Total outstanding book value of the loan asset sold out 0Collection of client EMIs on behalf of Mosec XXXII will be till Nov -14 -

35. (Amt. in Rs.)Disclosures on securtization - 2014-15

S r . No.


Mosec XXXI

Mosec XXXII

Mosec Calleis

Mosec Perses

Mosac Horkos

Mosac Apollonis

1No of SPVs sponsored by the NBFC for securitisation transactions

- - - 1 1 1 1

2

Total amount of securitised assets as per books of the SPVs sponsored by the NBFC

- - - 2,021,537 2,835,954 29,933,541 20,404,657

3

Total amount of exposures retained by the NBFC to comply with MRR as on the date of balance sheeta) Off-balance sheet

exposures* First loss - - - - - - - * Others - - - - - - - b) On-balance sheet

exposures* First loss (In the form of

Fixed Deposits) - - - 5,700,000 6,391,854 6,863,664 3,838,654

* Others - - - - - -

4Amount of exposures to securitisation transactions other than MRRa) Off-balance sheet

exposures - - - - - - -

i) Exposure to own securitisations - - - - - - -

* First loss - - - - - - - * loss - - - - - - - ii) Exposure to third party

securitisations - - - -

* First loss - - - - - - - * Others - - - - - - - b) On-balance sheet

exposures - - - - - - -

i) Exposure to own securitisations - - - - - - -

* First loss - - - - - - - * Others - - - - - - - ii) Exposure to third party

securitisations - - - -

* First loss - - - - - - - * Others - - - - - - -


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36. (i) As a part of a strategic decision, during the year, the Company has sold a substantial portion of its loan portfolio to a bank

on a true sale basis and post sale it is managing the residual and securitised portfolio. Further, the Company has repaid its entire borrowings including NCD and incurred prepayment penalty of Rs. 1,92,97,433.

(ii) Pursuant to the above, there has been a substantial reduction in the company’s staff strength. Further, the lease agree-ment with respect to the branches were discontinued / novated and the incidental fixed assets were sold.

(iii) During the year, Company has acquired a wholly owned subsidiary, Swadhaar Information and Management services Pvt Ltd (SIMS) and entered into an agreement with it for servicing the residual and securitised portfolio.

37. As a result of sale of portfolio as mentioned in note 36 above:

(i) The Company does not meet the qualifying assets criteria as mentioned in the RBI direction DNBS.CC.PD.No.250/03.10.01/2011 -12 dated December 02, 2011 to qualify as a Micro Finance Institution (NBFC-MFI).

(ii) The Company also does not meet one of the principal business criteria (50% of the total assets to be financials assets) for an NBFC.

38. Disclosures pursuant to AS-24 “Discontinuing operation”:Initial disclosures(i) The Company has discontinued its micro finance business.

(ii) The Board of directors in its meeting held on June 23, 2014 has decided to sell a substantial part of the portfolio and ac-cordingly has entered in to a portfolio assignment agreement dated August 22, 2014 with a bank.

(iii) The process of discontinuance is completed in the current financial year itself.

(iv) The amount of revenue and expense for the year attributable to the discontinued operation is Rs.22,25,92,559 and Rs. 21,42,43,515 respectively.

(v) The amount of net cash flows attributable to the operating activities is Rs. 10,95,68,490 and that from investing activity is Rs. 33,37,117 of the discontinued operation during the current year.

39. Going concern assumption:The management of the Company believes that the Going Concern assumption is not affected as a result of the sale of the portfolio as mentioned in note 37 above and discontinued operation as mentioned in note 41 below, for the following reasons.

a. The management of the Company has decided at a board meeting held on February 12, 2015 to enter in to new line of business as a Business Correspondent for a bank. By the date of finalisation of the balance sheet, both the parties are in the final stage of entering in to an agreement for a new business.

b. The Company is still continuing to manage the residual and securitised portfolio.

40. Exceptional item comprises of :Premium on Portfolio Assignment 56,308,321Loan Prepayment Penalty (19,297,433)Legal Expense (730,340)Total 36,280,548

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41. During the last FY, the company has migrated its entire loan portfolio to a new system. The new system has feature of giving credit to the customer against their outstanding loan amount for any advance amount paid by them and thus it calculates inter-est on balance principal outstanding. The impact of the change in this accounting policy on profit for the year is not seperately identifiable.

42.The management of the Company has reviewed and determined remaining useful lives of the tangible fixed asset in accor-dance with the provisions of schedule II, to the Companies act 2013 and depreciation has been charged accordingly as against earlier practice of charging deprecation as per schedule XIV of the Companies act 1956. Due to this change depreciation for the current year is higher by Rs.66,929.

In respect of assets where the remaining useful life is “Nil”,as per Schedule II to the companies act 2013, carrying amount of Rs. 14,51,364 (after retaining the residual value as on 1st April 2014), has been charged to profit and loss.

43. Cost of Borrowing1. As stipulated by NBFC-MFI Guidelines issued by RBI, Company has maintained an aggregate margin cap of not more

than 10% during the year. The interest cost is calculated on average fortnightly balances of outstanding borrowings. The average cost of borrowing for Swadhaar for FY 2014-15 is 16.29%.

The average interest rate on lending during a financial year does not exceed the average borrowing cost during that finan-cial year plus the margin, within the prescribed cap.

The average interest charged on lending by the Company for FY 2014-15 is 26% for group loan.

2. Company charges processing fee of not more than 1 % of gross loan amount. Processing charges is not included in the margin cap or the interest cap.

3. Company recovers the actual cost of insurance premium from the borrower, for self and spouse.

44. LeaseTotal lease rental cost recognised in the financial statement is Rs 5,331,638 . This rental cost is exclusive of Service tax.

General terms of lease rentals:a. Lease rental are charged on the basis of agreed terms

b. Some Lease agreements have escalation clause from 5% to 10%

45. Principles used in preparing Consolidated Financial Statements and proforma adjustmentsa) The consolidated financial statements have been prepared by applying the principles laid in the Accounting Standard

(AS) - 21 “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India for the purposes of these Consolidated Balance Sheet and Statement of Profit and Loss, together referred to in as ‘Consolidated Financial Statements.’

b) Following are the companies whose accounts have been considered for the consolidated financial statements:

Swadhaar FinServe Private Limited’s shareholding in the following companies as on March 31, 2015 is as under:

Name of the Entity As at 31st March 2015No. of Shares % of effective holding

Swadhaar Information and Management Services Pvt. Ltd. 10,000 100%

c) The cost to the parent of its investment in each subsidiary and the parent’s portion of equity of each subsidiary, at the date on which investment in each subsidiary is made, is eliminated.

d) In preparing consolidated financial statements, the financial statements of the parent and its subsidiaries are combined on a line by line basis by adding together like items of assets, liabilities, income and expenses.

e) Intra-group transactions are eliminated in preparation of consolidated financial statements.


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f) As the cost to the parent of its investment in a subsidiary is less than the parent’s portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, the difference is treated as a capital reserve in the consolidated financial statements.

g) Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

46. Additional disclosure on consolidation

Additional disclosure for consolidationParticulars Net Assets Share in profit or loss

As % of consolidated net

assets

Amount As % of consolidated profit

& loss

Amount

1 2 3 4 5Parent 99.7% 494,223,063 90.64% 10,331,654Swadhaar Finserve Pvt LtdSubsidiaries IndianSwadhaar Information and Management Servies Pvt Ltd 03% 1,536,274 9.36% 1,066,723

Foreign N.A.Total 100% 495,759,337 100% 11,398,377Eliminations Adjusted 0.0% 100,000 -Net Total 100% 495,659,337 100% 11,398,377

47. Debenture Redemption ReserveThe Company has not created debenture redemption reserve as the same is not required under the provisions of Companies (Share Capital and Debenture) Rules 2014.

48. Previous year figuresPrevious year figures are not provided as Company has acquired subsidiary in current financial year.




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Form AOC-I

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part “A”: Subsidiaries

1. Sl. No. 12. Name of the subsidiary Swadhaar Information and

Management Services Private Limited

3. Reporting period for the subsidiary concerned, if different from the holding company’s reporting period

The reporting period of subisdaries is similar as of holding company

4. Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries

NA

5. Share capital 100,000 6. Reserves & surplus 1,436,274 7. Total assets 120,899,883 8. Total Liabilities 119,363,608 9. Investments - 10. Turnover 129,572,147 11. Profit before taxation 2,742,400 12. Provision for taxation 1,388,889 13. Profit after taxation 1,353,510 14. Proposed Dividend - 15. % of shareholding 100%

For and on behalf of the Board of Swadhaar Finserve Pvt Ltd

Veena Mankar Rajaram Kamath Executive Chairperson Executive Director & CEO DIN : 00004168 DIN : 06542196

Pranav Desai Anshu MundhraChief Financial Officer Company Secretary

Place : MumbaiDate : 24th August 2015


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Design

image courtesy

Aparna Olwe

printing

A to Z Digital Prints


Tenement 1/3 & 1/4, Old MHB Colony

Anand Nagar, Santacruz (E)

Mumbai - 400055

T : +91 22 2626 1200 / 1234

F : +91 22 2626 1212 / 13

www.swadhaar.com

credits


Tenement 1/3 & 1/4, old MHB colony

Anand Nagar, LIG, Nehru Road

Santacruz (E), Mumbai 400055

T: +91 22 2626 1234

www.swadhaar.com

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