Information Memorandum Date: July 21, 2020 For Private Circulation Only (This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus) No.1/2020 Addressed to: Union Bank of India INFORMATION MEMORANDUM Private & Confidential – For Private Circulation Only (This Disclosure Document is neither a Prospectus nor a Statement in Lieu of a Prospectus and has been prepared in accordance with the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008) MAS Financial Services Limited CIN: L65910GJ1995PLC026064 A public limited company incorporated under the Companies Act, 1956 Date of Incorporation: 25/05/1995 Registered Office: 6 Narayan Chambers, Gr. Flr., B/h Patang Hotel, Ashram Road, Ahmedabad – 380009, Gujarat, India. Corporate Office: 6 Narayan Chambers, Gr. Flr., B/h Patang Hotel, Ashram Road, Ahmedabad – 380009, Gujarat, India. Tel No.: 079-41106501/638 Contact Person: Mr. Ankit Jain, Chief Financial Officer Ms. Riddhi Bhayani, Company Secretary & Compliance Officer Website: www.mas.co.in Email ID: [email protected] ; [email protected]Information Memorandum for issue of Debentures on a Private Placement Basis Dated: July 21, 2020 ISSUE OF 1000 (ONE THOUSAND) RATED, SENIOR, REDEEMABLE, TAXABLE, TRANSFERABLE, LISTED, NON-CONVERTIBLE DEBENTURES EACH WITH A FACE VALUE OF RS. 10,00,000 (RUPEES TEN LAKHS) AND AGGREGATING UP TO RS. 100 CRORES (RUPEES ONE HUNDRED CRORES), AT PAR ON A PRIVATE PLACEMENT BASIS (“ISSUE”). Background This Information Memorandum prepared under the Companies Act, 2013, the Companies (Prospectus and Allotment of Securities) Rules, 2014 (as amended from time to time), the Securities and Exchange Board of India (Issue and Listing of Debt) Regulations, 2008 (as amended from time to time), for private placement of the Debentures (as defined below) is neither a prospectus nor a statement in lieu of prospectus and does not constitute an offer to the public generally to subscribe for or otherwise acquire the Debentures to be issued by MAS Financial Services Limited (the “Issuer” or “Company”). This is only an information brochure intended for private use. This Information Memorandum contains relevant information and disclosures required for the purpose of issuing and allotting the Debentures. The issue of the Debentures comprised in the Issue and described under this Information Memorandum has been authorised by the Issuer through a resolution passed by the shareholders of the Issuer pursuant to Section 180(1)(c) of the Companies Act, 2013, on 27 th June, 2018, the resolution of the board of directors of the Issuer dated 16 th June, 2020 read with the resolution of the finance committee of the board of directors dated 20 th July, 2020 and the Memorandum and Articles of Association of the Company. Pursuant to the resolution passed by the Company’s shareholders dated 27 th June, 2018, in accordance with provisions of the Companies Act, 2013, the Company has been authorised to borrow, upon such terms and conditions as the Board may think fit for amounts up to Rs. 5000 crores (Rupees Five Thousand Crores only). The present issue of
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MAS Financial Services Limitedprivate placement basis to certain identified investors. Issue Closing Date rd23 July 2020 Issue Opening Date rd23 July 2020 Listing Period has the meaning
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Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
No.1/2020
Addressed to: Union Bank of India
INFORMATION MEMORANDUM
Private & Confidential – For Private Circulation Only
(This Disclosure Document is neither a Prospectus nor a Statement in Lieu of a Prospectus and has
been prepared in accordance with the Securities and Exchange Board of India (Issue and Listing of
Debt Securities) Regulations, 2008)
MAS Financial Services Limited
CIN: L65910GJ1995PLC026064
A public limited company incorporated under the Companies Act, 1956
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
Debentures in terms of this Information Memorandum is within the overall powers of the Board as per
the above shareholder resolution(s).
General Risks
Investment in debt and debt related securities involve a degree of risk and investors should not invest
any funds in the debt instruments, unless they can afford to take the risks attached to such investments
and only after reading the information carefully. For taking an investment decision, the investors must
rely on their own examination of the Company and the Issue including the risks involved. The
Debentures have not been recommended or approved by Securities and Exchange Board of India
(“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of
Investors is invited to the statement of Risk Factors under Section 3 of this memorandum of private
placement for issue of Debentures on a private placement basis (“Information Memorandum” or
“Disclosure Document”). This Information Memorandum has not been submitted, cleared or
approved by SEBI.
Issuer’s Absolute Responsibility
The Issuer, having made all reasonable inquiries, confirms and represents that the information
contained in this Information Memorandum/ Disclosure Document is true and correct in all material
respects and is not misleading in any material respect, that the opinions and intentions expressed
herein are honestly held and that there are no other facts, the omission of which makes this document
as a whole or any of such information or the expression of any such opinions or intentions misleading
in any material respect. The Issuer is solely responsible for the correctness, adequacy and disclosure
of all relevant information herein.
Listing
The Debentures are proposed to be listed on the wholesale debt market of the BSE.
Credit Rating
The Debentures proposed to be issued by the Issuer have been rated by CARE Ratings Ltd. (“Credit
Rating Agency”). The Credit Rating Agency has vide its letter dated 22nd
May, 2020, assigned a
rating of CARE A+; Stable, in respect of the Debentures. The above rating is not a recommendation to
buy, sell or hold securities and investors should take their own decision. The ratings may be subject to
revision or withdrawal at any time by the Credit Rating Agency and should be evaluated
independently of any other ratings. Please refer to Annexure II (Rating Letter and Rating Rationale)
of this Information Memorandum for the letter dated 22nd
May, 2020 from the Credit Rating Agency
assigning the credit rating abovementioned and disclosing the rating rationale adopted for the
aforesaid rating.
Issue Schedule
Heads Debentures
Issue Opening Date 23rd
July 2020
Issue Closing Date 23rd
July 2020
Pay-In Date 24th July 2020
Deemed Date of Allotment 24th July 2020
The Issuer reserves the right to change the issue schedule including the Deemed Date of Allotment at
its sole discretion, without giving any reasons. The Issue shall be open for subscription during the
banking hours on each day during the period covered by the issue schedule.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
Debenture Trustee to the Issue Registrar and Transfer Agent to the Issue
Catalyst Trusteeship Limited
(Erstwhile GDA Trusteeship Limited)
Windsor, 6th floor, Office No.604,
C.S.T Road, Kalina, Santacruz (East)
Mumbai 400098
Link Intime India Pvt. Ltd.
C-101, 1 st Floor, 247 Park, L.B.S. Marg,
Vikhroli (West),
Mumbai - 400083
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
1
TABLE OF CONTENTS
SECTION 1: DEFINITIONS AND ABBREVIATIONS 2 SECTION 2: DISCLAIMERS 11 SECTION 3: RISK FACTORS 14 SECTION 4: FINANCIALSTATEMENTS 24 SECTION 5: REGULATORY DISCLOSURES 25 SECTION 6: DISCLOSURES PERTAINING TO WILFUL DEFAULT 66 SECTION 7: TRANSACTION DOCUMENTS AND KEY TERMS 67 SECTION 8: OTHER INFORMATION AND ISSUE PROCEDURE 85 DECLARATION 95 ANNEXURE I - TERM SHEET 96 ANNEXURE II - RATING LETTER AND RATING RATIONALE 105 ANNEXURE III - CONSENT LETTER FROM THE DEBENTURE TRUSTEE 106 ANNEXURE IV - APPLICATION FORM 107 ANNEXURE V - ILLUSTRATION OF DEBENTURE CASH FLOWS 111 ANNEXURE VI - RELATED PARTY TRANSACTIONS 112 ANNEXURE VII - AUDITED FINANCIAL STATEMENTS 113 ANNEXURE VIII - CORPORATE STRUCTURE/ ORGANISATION STRUCTURE 129 ANNEXURE IX - MATERIAL CONTRACTS 131 ANNEXURE X – BOARD RESOLUTION AND SHAREHOLDERS RESOLUTION 132
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
2
SECTION 1: DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or requires, the following terms shall have the meanings
given below in this Information Memorandum. All capitalised terms used but not defined herein
shall have the meaning ascribed to such term under the Debenture Trust Deed.
Act / Companies Act means the Companies Act, 2013, and shall include any re-enactment,
amendment or modification of the Companies Act, 2013, as in effect
from time to time.
Allot/Allotment/Allotted The allotment of the Debentures pursuant to this Issue.
Applicable Law(s) includes all applicable statutes, enactments or acts of any legislative
body in India, laws, ordinances, rules, bye-laws, regulations,
notifications, guidelines, policies, directions, directives and orders of
any Governmental Authority and any modifications or re-enactments
thereof..
Applicant means a person who has submitted a completed Application Form to
the Issuer.
Application Form The form used by the recipients of this Information Memorandum, to
apply for subscription to the Debentures, which is in the form
annexed to this Information Memorandum and marked as Annexure
IV (Application Form).
Application Money means the subscription amounts paid by the Debenture Holders at the
time of submitting the Application Form.
Assets means, for any date of determination, the assets of the Issuer on such
date as the same would be determined in accordance with Indian
GAAP.
Beneficial Owner(s)
means the holder(s) of the Debentures in dematerialised form whose
name is recorded as such with the Depository in the Register of
Beneficial Owners.
Board/Board of Directors The Board of Directors of the Issuer.
BSE means BSE Limited.
Business Day means any day (other than a Saturday or Sunday or a public holiday
under Section 25 of the Negotiable Instruments Act, 1881) on which
banks are open for general business in Mumbai, India
Capital Adequacy Ratio means the capital adequacy ratio determined in accordance with the
NBFC Directions
CDSL Central Depository Services Limited
CERSAI means the Central Registry of Securitisation Asset Reconstruction
and Security Interest of India.
Change of Control means the Promoters of the Issuer (as on the Effective Date) ceasing
to:
(a) have the power (whether by way of ownership of shares,
proxy, contract, agency or otherwise) to:
(i) cast, or control the casting of, more than 20%
(twenty percent) of the shareholding (on a fully
diluted basis) of the Issuer; or
(ii) appoint or remove all or majority of the directors or
the "key managerial personnel" (as defined in the
Act) of the Issuer,
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
3
OR
(b) hold at least 51% (fifty one percent) of the shareholding (on a
fully diluted basis) of the Issuer.
Change of Control Event means any event, including without limitation, the issuance of any
shares (whether equity or convertible into equity), or any transfer,
sale, creation of security interest (including pledge) or encumbrance
over any shares (whether equity or convertible into equity), which by
itself, or together with other actions (including the conversion of any
convertible instruments into equity shares) may result in a Change of
Control.
CITES means the Convention on International Trade in Endangered Species
or Wild Fauna and Flora, including the protected flora and faunae as
demonstrated on the website: www.cites.org.
Client Loan means each loan made by the Issuer as a lender.
Company/Issuer MAS Financial Services Limited
Conditions Precedent means the conditions precedent set out in Section 5.23 of this
Information Memorandum.
Conditions Subsequent means the conditions subsequent set out in Section 5.23 of this
Information Memorandum.
Constitutional Documents means the certificate of incorporation of the Issuer, the memorandum
of association and articles of association of the Issuer and the
certificate of registration issued by the RBI to the Issuer.
Control has the meaning given to it in the Act.
Debenture Holder(s) /
Investors
each person who is:
(a) registered as a Beneficial Owner; and
(b) registered as a debenture holder in the Register of Debenture
Holders.
(a) and (b) above shall be deemed to include transferees of the
Debentures registered with the Issuer and the Depository from time to
time, and in the event of any inconsistency between (a) and (b)
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
27
Name and Address of the
Auditors of the Issuer : BSR & Co. LLP
5th Floor, Lodha Excelus, Apollo Mills
Compound N. M. Joshi Marg,Mahalaxmi
Mumbai - 400 011
Name and Address of the Debenture
Trustee : Catalyst Trusteeship Limited
Windsor, 6th Floor, Office No. 604,
C.S.T Road, Kalina, Santacruz (East)
Mumbai 400098
Name and Address of the Registrar
to the Issue : Link Intime India Pvt. Ltd.
C 101, 247 Park, L.B.S.Marg, Vikhroli
(West), Mumbai - 400083
Name and Address of the Credit
Rating Agency : CARE Ratings Ltd.
Address: 4th Floor, Godrej Coliseum, Somaiya
Hospital Road, Off Eastern Express Highway,
Sion (E), Mumbai - 400 022
Name and Address of the Arrangers,
if any, to the Issue : Not Applicable
5.4 A brief summary of business / activities of the Issuer and its line of business:
(a) Overview
MAS Financial Services Limited (“the Company” or “MAS”) has been engaged in specialized retail financing services for over two decades. The Company’s inception dates back to 1995, when it was registered with the Reserve Bank of India as an NBFC. Catering to the financial needs of lower income and middle-income groups of society, MAS offers a range of retail financing products for Micro Enterprises and Small and Medium Enterprises, Two-Wheeler Loans, Used Car Loans and Commercial Vehicle Loans. With a presence across urban, semi-urban and rural areas, the Company provides credit solutions for both the formal and informal sectors. With its network of 105 branches, as at end March 2020, MAS catering in more than 3,450 centers, in an endeavour to fulfill its quest to take top-class services to the doorstep of the people of India. These touch points are spread across the states of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Tamil Nadu, Karnataka and NCT of Delhi. Targeting a significant market share of the financial services space, MAS has been putting in place systems and processes that enable the Company to expand its distribution and assess various perspectives of credibility, in the absence of proper and systematic credit documents, including creditworthiness through other channels. It also leverages the distribution network of its partner NBFC-MFIs/NBFCs/HFCs/franchisees, thus tapping the emerging opportunity by extending financial services to underpenetrated regions and the BOP segment.
(b) Corporate Structure/Organization Structure
Refer to Annexure VIII (Corporate Structure/ Organisation Structure)
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
28
(c) Key Operational and Financial Parameters for the last 3 audited years on a
consolidated basis (wherever available) else on a standalone basis.
Parameters
Fiscal March
2020*
Fiscal March
2019 Fiscal March 2018
(Amount in Rs. lakhs)
Networth – Equity 1,06,586.99 93,432.11 79,154.52
Networth – FCD 0.00 0.00 0.00
Total Equity 1,06,586.99 93,432.11 79,154.52
Total Debt** 2,79,589.00 2,27,308.88 1,45,467.12
Non-Current Maturities of Long
Term Borrowing 97144.55 68603.16 32146.29
Short Term Borrowing 124294.46 120978.36 93204.75
Current Maturities of Long Term
Borrowing 58149.99 37727.36 20116.08
Net Fixed Assets 6116.05 5816.11 5778.04
Non-Current Assets 196750.64 164641.28 137359.33
Cash and Cash Equivalents 1,04,554.26 39,699.95 4,938.23
Current Investments 500.00 0.00 0.00
Current Assets 277560.04 228594.5 146815.95
Current Liabilities 245255.5 196349.79 139819.17
Assets Under Management 625282.72 560861.07 436036.87
Off Balance Sheet Assets 266747.69 208912.46 158888.47
Interest Income 59690.94 49668.65 38448.22
Total Income 72241.8 60469.66 47680.59
Interest Expense 28469.55 21558.46 17895.68
Total Finance Cost 29611.2 22366.05 18625.73
Provisioning & Write-offs 8894.53 5543.65 4351.88
Other Expenses 9875.88 8759.15 7925.98
EBITDA 53756.44 46327.22 35566.76
EBIT 53471.39 46166.86 35402.73
Profit Before Tax 23860.19 23800.81 16777.00
Profit After Tax (PAT) 18126.14 15460.65 10519.03
Dividend amounts 6340.79 2019.72 838.51
Current ratio 1.13 1.16 1.05
Interest coverage ratio 1.81 2.06 1.9
Gross debt/ equity ratio 2.62 2.43 1.84
Capital Adequacy Ratio# 31.97% 29.13% 31.89%
Tier I Capital Adequacy Ratio
(%) 29.88% 27.40% 29.46%
Tier II Capital Adequacy Ratio
(%) 2.09% 1.73% 2.43%
Gross NPA/Gross Stage 3 Assets
(% to Own Book) 1.78% 1.91% 1.78%
Net NPA/Net Stage 3 Assets (%
to Own Book) 1.24% 1.52% 1.60%
*Financials as on March, 2020 approved by the Board of Directors of the Company
at its meeting held on 03.06.2020 and to be adopted by members of the Company at
its ensuing Annual General Meeting.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
29
**Security deposits received from borrowers to the tune of Rs. 499.16 Crore, Rs.
510.45 Crore and Rs, 451.34 Crore respectively for FY 2020, FY 2019 and FY 2018
has not been considered in total Debt.
# Capital Adequacy Ratio, Tier I Capital Adequacy Ratio, Tier II Capital Adequacy
Ratio has been calculated on standalone basis.
5.5 Gross Debt: Equity Ratio of the Issuer
Before the issue of Debentures(as at Mar’ 20) 2.62
After the issue of Debentures 2.72
5.6 Brief history of Issuer since its incorporation giving details of its following activities:
(a) Details of Share Capital as on the latest quarter end, i.e. June 30, 2020
Share Capital INR
Authorised
6,40,00,000 Equity Shares of Rs. 10 each 64,00,00,000
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
37
Name
Date of appointment/
resignation Address
Auditor of the
Company since (in
case of resignation)
Remar
ks
Mahalaxmi, Mumbai –
400011.
5.11 Details of borrowings of the Company, as on latest quarter end i.e. 31st March,
2020*:(on a standalone basis)
* As the Issuer is a listed company, the latest published information is available only up to March 31, 2020. The Issuer will disclose all the relevant information up to June 30, 2020 to the stock exchanges within the timelines prescribed under the LODR Regulations.
(a) Details of secured loan facilities
Lender’s
Name
Type
of
facility
Amount
Sanctioned
(Rs. crore)
Principal
Amount
Outstanding
(Rs. Crore)
Repayment
Date/Schedule Security
AU Small
Finance
Bank
Term
Loan 75.00 30.00
Repayable in 10
Quarterly
installments from
5 December 2018.
Secured by a first charge on
hypothecation of present
and future loan receivables.
Bank of India Term
Loan
40.00
2.50
Repayable in 20
Quarterly
installments from
30 September
2015.
Secured by a first ranking
and exclusive charge on
standard receivables of the
company created out of the
loan availed. Personal
Guarantee of Mr. Kamlesh
Gandhi, Mr. Mukesh
Gandhi and Mrs. Shweta
Gandhi.
Bank of India Term
Loan 1.50
Repayable in 20
Quarterly
installments from
30 September
2015.
Secured by a first ranking
and exclusive charge on
standard receivables of the
company created out of the
loan availed. Personal
Guarantee of Mr. Kamlesh
Gandhi, Mr. Mukesh
Gandhi and Mrs. Shweta
Gandhi.
Bank of India Term
Loan 40.00 12.00
Repayable in 20
Quarterly
installments from
30 September
2016.
Secured by a first ranking
and exclusive charge on
standard receivables of the
company created out of the
loan availed. Personal
Guarantee of Mr. Kamlesh
Gandhi, Mr. Mukesh
Gandhi and Mrs. Shweta
Gandhi.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
38
HDFC Bank Term
Loan 50.00 0.12
Repayable in 36
monthly
installments from
7 April 2017.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 50.00 23.97
Repayable in 36
monthly
installments from
7 August 2018.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 54.00 25.37
Repayable in 36
monthly
installments from
7 September 2018.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 50.00 22.11
Repayable in 96
monthly
installments from
7 April 2018.
First and exclusive charge
on land, property and
commercial property under
construction.
HDFC Bank Term
Loan 35.00 30.72
Repayable in 36
monthly
installments from
7 November 2019.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 7.50 7.50
Repayable in 36
monthly
installments from
7 April 2020.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 30.00 30.00
Repayable in 36
monthly
installments from
7 April 2020.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
HDFC Bank Term
Loan 12.50 12.50
Repayable in 36
monthly
installments from
7 April 2020.
Secured by a first and
exclusive charge on specific
receivables of the company
created out of the loan
availed.
Kotak
Mahindra
Bank
Limited
Term
Loan 25.00 10.42
Repayable in 36
monthly
installments from
31 July 2018.
First and exclusive charge
by way of hypothecation on
the company's book debts
and loan installments
receivables.
Federal bank Term
Loan 25.00 10.72
Repayable in 30
monthly
installments from
27 October 2018.
Secured by a first and
exclusive charge on specific
book debt and future
receivables of the company
created/to be created out of
the loan availed.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
39
IDFC First
Bank
Term
Loan 150.00 104.17
Repayable in 36
monthly
installments from
30 April 2019.
First exclusive charge of
present and future book
debts and receivables of the
company.
Indian Bank Term
Loan 100.00 72.73
Repayable in 11
Quarterly
installments from
1 July 2019.
Exclusive charge by way of
hypothecation of such of the
book debts, which are
financed / to be financed by
the company out of the bank
finance.
State Bank of
India
Term
Loan 100.00 25.00
Repayable in 16
Quarterly
installments from
30 June 2017.
Secured by Hypothecation
of portfolio of the company
created out of the term loan.
Personal Guarantee of Mr.
Kamlesh Gandhi, Mr.
Mukesh Gandhi and Mrs.
Shweta Gandhi.
Shinhan
Bank
Term
Loan 25.00 3.47
Repayable in 36
monthly
installments from
1 September 2017.
Exclusive charge by way of
hypothecation of the
specific receivables/book
debts.
Shinhan
Bank
Term
Loan 20.00 8.89
Repayable in 36
monthly
installments from
1 August 2018.
Exclusive charge by way of
hypothecation of the
specific receivables/book
debts.
Axis Bank Term
Loan 25.00 20.83
Repayable in 12
Quarterly
installments from
30 November
2019.
Exclusive charge on
specific standard book debts
and receivables which are
financed / to be financed by
the company out of the bank
finance.
ICICI Bank Term
Loan 60.00 60.00
Repayable in 8
Quarterly
installments from
30 September
2020.
Exclusive charge by way of
hypothecation of on
standard receivables of the
Borrower
Oriental
Bank of
Commerce
Term
Loan 100.00 100.00
Repayable in 12
Quarterly
installments from
31 March 2020.
Exclusive charge by way of
hypothecation of such of the
book debts, which are
financed/ to be financed by
the company out of the bank
financed to the company.
State Bank of
India
Term
Loan 100.00 84.50
Repayable in 16
Quarterly
installments from
30 September
2019.
Hypothecation of standard
portfolio of the company
created out of the term loan.
State Bank of
India
Term
Loan 200.00 191.25
Repayable in 16
Quarterly
installments from
29 February 2020.
Hypothecation of standard
portfolio of the company
created out of the term loan.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
40
Union Bank
of India
Term
Loan 200.00 200.00
Repayable in 18
Quarterly
installments from
31 December
2020.
Exclusive charge by the
way of hypothecation on
specific receivables of the
company
ICICI Bank Term
Loan 0.42 0.19
Repayable in 36
monthly
installments from
5 July 2018.
Secured by hypothecation
of the vehicle financed.
Tata Capital
Financial
Services
Limited
Term
Loan 40.00 22.03
Repayable in 36
monthly
installments from
15 March 2019.
Exclusive charge by way of
hypothecation of specific
standard receivable of the
company.
Sundaram
Finance
Limited
Term
Loan 50.00 33.79
Repayable in 36
monthly
installments from
10 March 2019.
Secured by hypothecation
of specific book debts
created out of the loan
availed.
Mahindra
and
Mahindra
Finance
Limited
Term
Loan 50.00 21.46
Repayable in 10
Quarterly
installments from
18 December
2018.
Exclusive hypothecation
charge over receivables/loan
assets/ book debts of the
company.
Bajaj
Finance
Limited
Term
Loan 20.00 2.00
Repayable in 10
quarterly
installments from
31 March 2018.
Secured by exclusive first
charge by way of
hypothecation of specific
book debts of the company
created out of the loan
availed.
Bajaj
Finance
Limited
Term
Loan 50.00 25.00
Repayable in 10
quarterly
installments from
31 March 2019.
Secured by exclusive first
charge by way of
hypothecation of specific
book debts of the company
created out of the loan
availed.
Bajaj
Finance
Limited
Term
Loan 50.00 33.33
Repayable in 36
monthly
installments from
30 April 2019.
Secured by exclusive first
charge by way of
hypothecation of specific
book debts of the company
created out of the loan
availed.
Bajaj
Finance
Limited
Term
Loan 25.00 24.31
Repayable in 36
monthly
installments from
31 March 2020.
Secured by exclusive first
charge by way of
hypothecation of specific
book debts of the company
created out of the loan
availed.
MUDRA Term
Loan 50.00 8.33
Repayable in 10
quarterly
installments from
10 March 2020.
Exclusive first charge by
way of hypothecation of
book debts and receivables
of secured loans provided
by the Borrower.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
41
Bank Of
Baroda
Cash
Credit 400.00 394.21
N.A.
Hypothecation of
underlying assets such as
consumer durables, office
equipment, vehicles etc.
covered under H.P.
agreements / Loan cum
Hypothecation Agreement
and relative book-
debts/receivables, loans &
Advances and entire
portfolio outstanding
ranking pari passu with
other WC consortium
banks. (Except specific
portfolio generated from
various term loans
sanctioned by various
banks/FIs on exclusive
basis). Personal Guarantee
of Mr. Kamlesh Gandhi,
Mr. Mukesh Gandhi and
Mrs. Shweta Gandhi.
State Bank
Of India
Cash
Credit 290.00 290.00
Bank Of
India
Cash
Credit 100.00 100.00
IDBI Bank
Ltd.
Cash
Credit
150.00 0.00
Central Bank
Of India
Cash
Credit 105.00 75.00
United Bank
Of India
Cash
Credit 50.00 50.01
Canara Bank Cash
Credit 50.00 0.01
Baroda
Gujarat
Gramin Bank
Cash
Credit 30.00 30.00
South Indian
Bank
Cash
Credit 20.00 0.00
Indian Bank Cash
Credit 100.00 100.00
Syndicate
Bank
Cash
Credit 50.00 0.00
Oriental
Bank Of
Commerce
Cash
Credit 100.00 70.05
Indian
Overseas
Bank
Cash
Credit 50.00 0.20
Bank Of
Maharashtra
Cash
Credit 60.00 0.00
Union Bank
Of India
Cash
Credit 70.00 70.00
Punjab
National
Bank
Cash
Credit 100.00 0.47
Andhra Bank Cash
Credit 50.00 48.00
Tamilnad
Mercantile
Bank
Cash
Credit 20.00 15.00
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
42
(b) Details of unsecured loan facilities
Lender's Name Type of Facility Amount
Sanctioned
(Rs. Crore)
Principal
Amount
Outstanding
(Rs. Crore)
Repayment Date/
Schedule
Bajaj Finance Limited Term Loan 25.00 25.00 Bullet Repayment on 17
August, 2026.
Details of NCDs:
Debenture Series Tenor/
Period
of
Maturit
y
Coupo
n
Amount Date of
Allotme
nt
Redem
ption
Date/
Schedul
e
Credit
Rating
Secured/
Unsecured
Securit
y
200, 13.50%
Unsecured,
Redeemable,
Non-Convertible
Debentures of
Rs. 10 lakhs each
18-09-
2021
13.50% 20,00,00,000 18-03-
2015
18-09-
2021
ICRA A Unsecured -
400, 14.00%
Unsecured,
Redeemable,
Non-Convertible
Debentures of
Rs. 10 lakhs each
22-06-
2022
13.00% 40,00,00,000 22-06-
2015
22-06-
2022
ICRA A Unsecured -
The above issued debentures are subordinate debentures.
List of Top 10 Debenture Holder(s)–as on 31st March, 2020*:
* As the Issuer is a listed company, the latest published information is available only up to March 31, 2020. The Issuer will disclose all the relevant information up to June 30, 2020 to the stock exchanges within the timelines prescribed under the LODR Regulations.
Sr.
No. Name of Debenture Holders Amount
1. IDFC First Bank Limited 40,00,00,000
2. RBL Bank Limited 18,40,00,000
3. Indian Register of Shipping Staff Provident Fund 130,00,000
4. Neela Dinesh Vyas 10,00,000
5. Vaishali Vasant Soman 10,00,000
6. Mita Debasis Mitraroy 10,00,000
Note: Top 10 holders’ (in value, on cumulative basis for all outstanding debentures issues)
details should be provided
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
43
(c) The amount of corporate guarantee issued by the Issuer along with the name of the
counterparty (like name of the subsidiary, JV entity, Group Company, etc.) on
behalf of whom it has been issued: As disclosed in the annexed financial Statement
(d) Details of Commercial Paper: The total Face Value of Commercial Papers
outstanding as on the latest quarter end, i.e. June 30, 2020 and its breakup in the
following table: NIL
(e) Details of rest of the borrowing (if any including hybrid debt like FCCB, Optionally
Convertible Debentures / Preference Shares) as on 31.03.2020: NIL
(f) Details of all default/s and/or delay in payments of interest and principal of any kind
of term loans, debt securities and other financial indebtedness including corporate
guarantee issued by the company, in the past 5 years: NIL
(g) Details of any outstanding borrowings taken / debt securities issued where taken /
issued (i) for consideration other than cash, whether in whole or part, (ii) at a
premium or discount, or (iii) in pursuance of an option: NIL
5.12 Details of Promoters of the Company (including promoter group): As set out below
(a) Details of Promoter Holding in Company as on latest quarter end: June 30, 2020
Sr.
No.
Name of the
shareholders
Total No of
Equity
Shares
No of shares in
demat form
Total
shareholding as %
of total no of
equity shares
No of
Shares
Pledged
% of Shares
pledged with
respect to
shares owned.
1. Shweta Kamlesh Gandhi
16338450
16338450
29.89 - -
2. Mukesh Chimanlal Gandhi
16155814
16155814
29.56 - -
3. Kamlesh Chimanlal Gandhi
6285833
6281583
11.50 - -
4. Dhvanil K. Gandhi 34619 34619 0.06 - -
5. Dhriti Kamlesh Gandhi
12054
12054
0.02 - -
6. Prarthana Marketing Private Limited
1310057
1310057
2.40 - -
7. Anamaya Capital LLP
94994
94994
0.17 - -
5.13 Abridged version of the Audited Consolidated and Standalone Financial
Information (like Profit and Loss statement, Balance Sheet and Cash Flow
statement) for at least last three years and auditor qualifications, if any.
Audited Consolidated financials (Amount in Rs. Lakhs):
Balance Sheet March 2020 March 2019 March 2018
EQUITY & LIABILITIES
Shareholders Fund 104597.84 91554.79 77918.88
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
accountant or other expert whether obtained by the Issuer
or by the Debenture Trustee or otherwise;
(b) the Debenture Trustee shall be the attorney of the Issuer
and shall have the right to execute, sign and do any deeds,
documents, assurances, acts and things in the name and on
behalf of the Issuer, which shall in the opinion of the
Debenture Trustee be necessary or expedient that the
Issuer should execute, sign and do for the purpose of
carrying out any of the trusts or obligations declared or
imposed upon the Debenture Trustee;
(c) subject to the approval of the Debenture Holders by way of
Special Resolution passed at a meeting of Debenture
Holders held for determining the liability of the Debenture
Trustee, the Debenture Trustee shall, as regards all trusts,
powers, authorities and discretions, have the discretion as
to the exercise thereof and to the mode and time of
exercise thereof. In the absence of any fraud, gross
negligence, willful misconduct or breach of trust the
Debenture Trustee shall not be responsible for any loss,
costs, charges, expenses or inconvenience that may result
from the aforementioned exercise or non-exercise thereof.
The Debenture Trustee shall not be bound to act at the
request or direction of the Debenture Holders under any
provisions of the Transaction Documents unless sufficient
amounts shall have been provided or provision to the
satisfaction of the Debenture Trustee has been made for
providing such amounts and the Debenture Trustee is
indemnified to its satisfaction against all further costs,
charges, expenses and liability which may be incurred in
complying with such request or direction;
(d) with a view to facilitating any dealing under any
provisions of the DTD or the other Transaction
Documents, subject to the Debenture Trustee obtaining the
consent of the Special Majority Debenture Holders, the
Debenture Trustee shall have (i) the power to consent
(where such consent is required) to a specified transaction
or class of transactions (with or without specifying
additional conditions); and (ii) to determine all questions
and doubts arising in relation to the interpretation or
construction any of the provisions of the DTD;
(e) the Debenture Trustee shall not be responsible for the
amounts paid by the Applicants for the Debentures;
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
63
(f) the Debenture Trustee shall not be responsible for acting
upon any resolution purporting to have been passed at any
meeting of the Debenture Holders in respect whereof
minutes have been made and signed even though it may
subsequently be found that there was some defect in the
constitution of the meeting or the passing of the resolution
or that for any reason the resolution was not valid or
binding upon the Debenture Holders;
(g) the Debenture Trustee and every receiver, attorney,
manager, agent or other person appointed by them shall,
subject to the provisions of the Act, be entitled to be
indemnified by the Issuer in respect of all liabilities and
expenses incurred by them or him in the execution or
purported execution of the powers and trusts thereof;
(h) subject to the approval of the Debenture Holder(s) by way
of Special Resolution passed at a meeting of Debenture
Holder(s) held for determining the liability of the
Debenture Trustee and in the absence of fraud, gross
negligence, willful misconduct or breach of trust, the
Debenture Trustee shall not be liable for any of its actions
or deed in relation to the Transaction Documents;
(i) subject to the approval of the Debenture Holder(s) by way
of Special Resolution passed at a meeting of Debenture
Holders held for determining the liability of the Debenture
Trustee and in the absence of fraud, gross negligence,
willful misconduct or breach of trust, the Debenture
Trustee, shall not be liable for any default, omission or
delay in performing or exercising any of the powers or
trusts herein expressed or contained herein or in enforcing
the covenants contained herein or in giving notice to any
person of the execution hereof or in taking any other steps
which may be necessary, expedient or desirable or for any
loss or injury which may be occasioned by reason thereof
unless the Debenture Trustee shall have been previously
requested by notice in writing to perform, exercise or do
any of such steps as aforesaid given in writing by the
Majority Debenture Holder(s) or by a Majority Resolution
duly passed at a meeting of the Debenture Holders. The
Debenture Trustee shall not be bound to act at the request
or direction of the Debenture Holders under any provisions
of the Transaction Documents unless sufficient amounts
shall have been provided or provision to the satisfaction of
the Debenture Trustee has been made for providing such
amounts and the Debenture Trustee is indemnified to its
satisfaction against all further costs, charges, expenses and
liability which may be incurred in complying with such
request or direction;
(j) notwithstanding anything contained to the contrary in the
DTD, the Debenture Trustee shall before taking any action
on behalf of the Debenture Holders or providing any
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
64
consent on behalf of the Debenture Holders, obtain the
written consent of the Majority Debenture Holders; and
(k) the Debenture Trustee shall forward to the Debenture
Holders copies of any information or documents from the
Issuer pursuant to the DTD within 2 (two) Business Days
of receiving such information or document from the Issuer.
PROVIDED THAT nothing contained herein shall exempt
the Debenture Trustee or any receiver, attorney, manager,
agent or other person appointed by the Debenture Trustee
from or indemnify them against any liability for breach of
trust nor any liability which by virtue of any rule or
Applicable Law would otherwise attach to them in respect
of any negligence, default or breach of trust which they
may be guilty of in relation to their duties hereunder.
Covenants Financial Covenants
Please refer Section 7.3 of this Information Memorandum.
Reporting Covenants
Please refer Section 7.4 of this Information Memorandum.
Affirmative Covenants
Please refer Section 7.5 of this Information Memorandum.
Negative Covenants
Please refer Section 7.6 of this Information Memorandum.
Representation and
warranties
Please refer Section 7.2 of this Information Memorandum.
Illustration of Bond Cash
flows
Please refer to Annexure V of this Information Memorandum
Governing Law and
Jurisdiction
The Debentures and documentation will be governed by and
construed in accordance with the laws of India and the parties
submit to the exclusive jurisdiction of the courts and tribunals at
Mumbai, India.
Additional Disclosures
(Security Creation)
In the event of any delay in the execution of the Deed of
Hypothecation or the creation of security in terms thereof, the
Issuer will, at the option of the Debenture Holders, either refund
the Application Money together with interest at the Interest
Rate/discharge the Secured Obligations, or pay to the Debenture
Holders additional interest at the rate of 2% (two percent) per
annum charged on the Outstanding Principal Amounts in addition
to the Interest Rate until the Deed of Hypothecation is duly
executed or the security is duly created in terms thereof.
Additional Disclosures
(Default in Payment)
The Issuer agrees to pay an additional interest rate of 2% (two
percent) per annum above the applicable Interest Rate on the
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
65
Outstanding Principal Amounts from the date of the occurrence of
a Payment Default until such Payment Default, on each Interest
Payment Date occurring during the aforementioned period.
Additional Disclosures
(Delay in Listing)
In the event there is any delay in listing of the Debentures within
the Listing Period, the Issuer will pay to the Debenture Holders,
penal interest of 2% (two percent) per annum over the Interest
Rate, from the expiry of 30 (thirty) calendar days from the Deemed
Date of Allotment till the listing of the Debentures is completed.
Notes:
1. The list of documents which has been executed or will be executed in connection with the
Issue and subscription of the Debentures shall be annexed.
2. The additional interest rates mentioned above as payable by the Issuer are independent of
each other.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
66
SECTION 6: DISCLOSURES PERTAINING TO WILFUL DEFAULT
In case of listing of debt securities made on private placement, the following disclosures are
required to be made in accordance with the SEBI Debt Listing Regulations.
6.1 Name of the Bank declaring the entity as a Wilful Defaulter: NIL
6.2 The year in which the entity is declared as a Wilful Defaulter: NIL
6.3 Outstanding amount when the entity is declared as a Wilful Defaulter: NIL
6.4 Name of the entity declared as a Wilful Defaulter: NIL
6.5 Steps taken, if any, for the removal from the list of wilful defaulters: NIL
6.6 Other disclosures, as deemed fit by the Issuer in order to enable investors to take
informed decisions: NIL
6.7 Any other disclosure as specified by SEBI: NIL
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
67
SECTION 7: TRANSACTION DOCUMENTS AND KEY TERMS
7.1 Transaction Documents
The following documents shall be executed in relation to the Issue (“Transaction
Documents”):
(a) Debenture Trustee Agreement, which will confirm the appointment of Catalyst
Trusteeship Limited as the Debenture Trustee;
(b) Debenture Trust Deed, which will set out the terms upon which the Debentures
are being issued and shall include the representations and warranties and the
covenants to be provided by the Issuer;
(c) Deed of Hypothecation pursuant to which the Issuer will create a first ranking
exclusive and continuing charge by way of hypothecation over the Hypothecated
Assets in favour of the Debenture Trustee to secure its obligations in respect of
the Debentures; and
(d) Such other documents as agreed between the Issuer and the Debenture Trustee.
7.2 Representations and Warranties of the Issuer
The Issuer makes the representations and warranties set out in Section 7.2 to the
Debenture Trustee for the benefit of the Debenture Holders as on the Effective Date,
which representations shall be true and valid until the Final Settlement Date.
(a) Status
(i) It is a company, duly incorporated, registered and validly existing under
Applicable Law.
(ii) It is a non-deposit accepting or holding non-banking financial company
registered with the RBI.
(iii) It has the power to own its Assets and carry on its business as it is being
conducted.
(b) Binding obligations
The obligations expressed to be assumed by it under the Transaction Documents
are legal, valid, binding and enforceable obligations.
(c) Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by the
Transaction Documents do not and will not conflict with:
(i) any Applicable Law, including but not limited to laws and regulations
regarding anti-money laundering or terrorism financing and similar
financial sanctions;
(ii) its Constitutional Documents; or
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
68
(iii) any agreement or instrument binding upon it or any of its Assets,
including but not limited to any terms and conditions of the existing
Financial Indebtedness of the Issuer.
(d) Power and authority
It has the power to enter into, perform and deliver, and has taken all necessary
action to authorize its entry into, performance and delivery of, the Transaction
Documents to which it is a party and the transactions contemplated by such
Transaction Documents.
(e) Validity and admissibility in evidence
All approvals, authorizations, consents, permits (third party, statutory or
otherwise) required or desirable:
(i) to enable it lawfully to enter into, exercise its rights and comply with its
obligations under the Transaction Documents to which it is a party;
(ii) to make the Transaction Documents to which it is a party admissible in
evidence in its jurisdiction of incorporation; and
(iii) for it to carry on its business, and which are material,
have been obtained or effected and are in full force and effect.
(f) No default
(i) No Event of Default or potential event of default has occurred and is
continuing or would reasonably be expected to result from the execution
or performance of any Transaction Documents or the issuance of the
Debentures.
(ii) To the best of the Issuer's knowledge, no other event or circumstance is
outstanding which constitutes (or which would, with the lapse of time,
the giving of notice, the making of any determination under the relevant
document or any combination of the foregoing, constitute) a default or
termination event (however described) under any other agreement or
instrument which is binding on the Issuer or any of its Assets or which
might have a Material Adverse Effect.
(g) Pari passu ranking
Commencing from the Initial Security Creation Date, its payment obligations
under the Transaction Documents shall rank at least pari passu with the claims of
all of its other senior secured creditors, except for obligations mandatorily
preferred by Applicable Law applying to companies generally. Commencing
from the Deemed Date of Allotment until the Initial Security Creation Date, its
payment obligations under the Transaction Documents rank at least pari passu
with the claims of all of its other unsecured creditors, except for obligations
mandatorily preferred by Applicable Law applying to companies generally.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
69
(h) No proceedings pending
No litigation, arbitration or administrative proceedings of or before any court,
arbitral body or agency have been commenced against the Issuer, which if
determined adversely, may have a Material Adverse Effect.
(i) No misleading information
All information provided by the Issuer to the Debenture Trustee/Debenture
Holders is true and accurate in all material respects as at the date it was provided
or as at the date (if any) at which it is stated and is not misleading due to omission
of material fact or otherwise.
(j) Compliance
(i) The Issuer has complied with Applicable Law (including but not limited
to environmental, social and taxation related laws for the Issuer to carry
on its business, all directions issued by the RBI to non-banking financial
companies and the GOI Guidelines).
(ii) There has not been and there is no investigation or enquiry by, or order,
decree, decision or judgment of any Governmental Authority issued or
outstanding or to the best of the Issuer's knowledge (after making due and
careful enquiry), anticipated against the Issuer which would have a
Material Adverse Effect.
(iii) No notice or other communication (official or otherwise) from any
Governmental Authority has been issued or is outstanding or to the best
of the Issuer's knowledge (after making due and careful enquiry),
anticipated with respect to an alleged, actual or potential violation and/or
failure to comply with any such Applicable Law or requiring them to take
or omit any action.
(iv) The Issuer shall complete all necessary formalities including all filings
with the relevant regulatory authorities, including but not limited to the
SEBI, the BSE, CERSAI and the ROC and obtain all consents and
approvals required for the completion of the Issue.
(k) Assets
Except for the security interests and encumbrances created and recorded with the
ROC (available using CIN: L65910GJ1995PLC026064 on the website
http://www.mca.gov.in/mcafoportal/showIndexOfCharges.do under the heading
"Index of Charges"), the Issuer has, free from any security interest or
encumbrance, the absolute legal and beneficial title to, or valid leases or licenses
of, or is otherwise entitled to use (in each case, where relevant, on arm's length
terms), all material Assets necessary for the conduct of its business as it is being,
and is proposed to be, conducted.
(l) Financial statements
(i) Its financial statements most recently supplied to the Debenture Trustee
as of March 31, 2020 were prepared in accordance with Indian GAAP
consistently applied save to the extent expressly disclosed in such
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
70
financial statements.
(ii) Its financial statements as of March 31, 2020 provided to the Debenture
Trustee, give a true and fair view and represent its financial condition and
operations during the Financial Year save to the extent expressly
disclosed in such financial statements.
(m) Solvency
(i) The Issuer is able to, and has not admitted its inability to, pay its debts as
they mature and has not suspended making payment on any of its debts
and it has not been deemed by a court to be unable to pay its debts for the
purposes of Applicable Law, nor will it become unable to pay its debts
for the purposes of Applicable Law as a consequence of entering into the
DTD or any other Transaction Document. PROVIDED THAT the
foregoing shall not apply to any moratorium provided to the Issuer or re-
scheduling pursuant to the Moratorium Directions (COVID-19).
(ii) The Issuer, by reason of actual or anticipated financial difficulties, has
not commenced, and does not intend to commence, negotiations with one
or more of its creditors with a view to rescheduling its Financial
Indebtedness. PROVIDED THAT the foregoing shall not apply to any
moratorium provided to the Issuer or re-scheduling pursuant to the
Moratorium Directions (COVID-19).
(iii) The value of the Assets of the Issuer is more than its liabilities (taking
into account contingent and prospective liabilities) and it has sufficient
capital to carry on its business.
(iv) The Issuer has not taken any corporate action nor has it taken any legal
proceedings or other procedure or steps in relation to any bankruptcy
proceedings.
(v) No insolvency or bankruptcy process has commenced under Applicable
Law in respect of the Issuer (including pursuant to the (Indian)
Insolvency and Bankruptcy Code, 2016, the Insolvency and Bankruptcy
(Insolvency and Liquidation Proceedings of Financial Service Providers
and Application to Adjudicating Authority) Rules, 2019, and any other
rules and regulations made thereunder from time to time).
(vi) No reference has been made, or enquiry or proceedings commenced, in
respect of the Issuer, before the National Companies Law Tribunal or
under any mechanism or prescription of the RBI in respect of
resolution/restructuring of stressed assets (including without limitation,
under the RBI's circular no. DBR.No.BP.BC.45/21.04.048/2018-19 dated
June 7, 2019 on "Prudential Framework for Resolution of Stressed
Assets").
(n) Hypothecated Assets
(i) The Hypothecated Assets are the sole and absolute property of the Issuer
and are free from any other mortgage, charge or encumbrance and are not
subject to any lis pendens, attachment, or other order or process issued by
any Governmental Authority.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
71
(ii) None of the Client Loans comprising the Hypothecated Assets have been
previously hypothecated, sold, transferred or assigned to any other bank
or financial institution.
(iii) The Transaction Documents executed or to be executed constitute legal,
valid and enforceable security interest in favour of the Debenture Trustee
and for the benefit of the Debenture Holders on all the assets thereby
secured and all necessary and appropriate consents for the creation,
effectiveness, priority and enforcement of such security have been
obtained.
(o) GOI Guarantee and GOI Guidelines
(i) The credit rating (being the Rating) assigned to the Debentures by the
Rating Agency complies with the requirements prescribed under the GOI
Guidelines.
(ii) The tenor in respect of the Debentures is more than 9 (nine) months, but
does not exceed 18 (eighteen) months.
(iii) The aggregate amount of debt securities (in form of bonds, non-
convertible debentures and/or commercial papers) issued by the Issuer
pursuant to the GOI Guidelines does not exceed 1.25 (one decimal two
five) times of the Issuer's aggregate debt liability maturing over a period
of 6 (six) months from the Deemed Date of Allotment.
(iv) The Issuer has made a profit in at least one of the Financial Years ending
on March 31, 2018 (FY 2017-18), March 31, 2019 (FY 2018-19), and/or
March 31, 2020 (FY 2019-20).
(v) The Issuer has been classified as "regular" or "SMA-0" by its lenders for
the period that is 1 (one) year prior to August 1, 2018.
(vi) Without prejudice to (a) above, the Issuer is in compliance with the
eligibility criteria applicable to it as set out in the GOI Guidelines.
(p) Nature of representations and warranties
The Issuer hereby expressly represents and warrants that each of the
representations and warranties set out in this Section 7.2 is true and accurate as
on the Effective Date and shall continue to be true and accurate on each day until
the Final Settlement Date, and nothing contained in this Section 7.2 is/will be
misleading or designed to create an inaccurate, incomplete or false picture.
7.3 Financial Covenants
(a) maintain such Capital Adequacy Ratio as may be prescribed by the RBI from
time to time; and
(b) comply with such financial covenants as may be agreed between the Issuer and
the Debenture Holders from time to time.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
72
7.4 Reporting Covenants
The Issuer shall provide or cause to be provided to the Debenture Trustee and to the
Debenture Holders (including on any online reporting platform notified by the Debenture
Trustee or any Debenture Holder), in form and substance reasonably satisfactory to the
Debenture Trustee, each of the following items:
(a) prior to the Deemed Date of Allotment, all documents and information and
confirmations comprising the Conditions Precedent;
(b) as soon as available, and in any event within 180 (one hundred and eighty)
calendar days after the end of each Financial Year of the Issuer:
(i) certified copies of its audited consolidated and non-consolidated (if any)
financial statements for its most recently completed fiscal year, prepared
in accordance with Indian GAAP including its balance sheet, income
statement and statement of cash flow.
All such information shall be complete and correct in all material respects
and shall fairly represent the financial condition, results of operation and
changes in cash flow and a list comprising all material financial liabilities
of the Issuer whether absolute or contingent as of the date thereof; and
(ii) a certificate from an authorized officer of the Issuer confirming that there
is no existing potential Event of Default or Event of Default;
(c) within 60 (sixty) calendar days after each Quarterly Date:
(i) certified copies of its un-audited consolidated and non-consolidated (if
any) quarterly financial statements for the preceding fiscal quarter,
prepared in accordance with Indian GAAP including its balance sheet,
income statement and statement of cash flow;
(ii) details of operations, portfolio growth and asset quality (including static
portfolio cuts, collection efficiency and portfolio at risk data), funding
data, and asset liability management (ALM) data, in such form and
manner as may be acceptable to the Debenture Holders;
(iii) copies of the quarterly returns filed with the RBI and SEBI; and
(iv) a certificate signed by a director or the chief financial officer of the Issuer
stating that the Issuer is in compliance with all the covenants prescribed
in Section 7.3;
(d) as soon as practicable, and in any event within 30 (thirty) Business Days after the
Issuer obtains or reasonably should have obtained actual knowledge thereof,
notice of the occurrence of any event or circumstance that could reasonably be
expected to result in a Material Adverse Effect;
(e) as soon as practicable, and in any event within 30 (thirty) Business Days after the
Issuer obtains or reasonably should have obtained actual knowledge thereof,
notice of any dispute, litigation, investigation or other proceeding affecting the
Issuer or its property or operations, which, if adversely determined, could result
in a Material Adverse Effect;
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(f) as soon as practicable, and in any event within 30 (thirty) Business Days after the
Issuer obtains or reasonably should have obtained actual knowledge thereof
obtains or reasonably, notice of the occurrence of any Event of Default or
potential Event of Default including any steps taken to cure such event;
(g) as soon as practicable, and in any event within 30 (thirty) Business Days, any
prepayment, or the receipt of notice of any Financial Indebtedness of the Issuer
declared to be due and payable or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof;
(h) as soon as practicable, and in any event within 30 (thirty) Business Days after
such default, notice of any default in the observance or performance of any
agreement or condition relating to any Financial Indebtedness by the Issuer or
contained in any instrument or agreement evidencing, securing or relating thereto
or any other event shall occur or condition exist, the effect of which default or
other event or condition is to cause or to permit the holder or holders of such
Financial Indebtedness to cause (determined without regard to whether any notice
is required) any such Financial Indebtedness to become due prior to its stated
maturity in respect of the Issuer;
(i) as soon as practicable, and in any event within 30 (thirty) Business Days of
receiving any notice of any application for winding up/insolvency having been
made or any notice of winding up or insolvency under the provisions of the Act
or the (Indian) Insolvency and Bankruptcy Code, 2016 or any other statute
relating to winding up/insolvency or otherwise of any suit or other legal process
intended to be filed or initiated against the Issuer;
(j) as soon as practicable and in any event within 30 (thirty) Business Days of the
occurrence of:
(i) any change in the board of directors of the Issuer;
(ii) any change in the accounting policy of the Issuer;
(iii) any change in senior management officials of the Issuer being the chief
executive officer or any other official discharging similar functions and
responsibilities;
(iv) approval by the board of directors of the annual business plan of the
Issuer, a snapshot (in a form acceptable to the Debenture Trustee and the
Debenture Holders) of the approved annual business plan;
(v) details of the occurrence of any fraud amounting to more than 1% (one
percent) of the Gross Loan Portfolio;
(vi) any change in the Constitutional Documents of the Issuer other than in
respect of an increase in its authorized capital for any equity raise by the
Issuer in the ordinary course of business which does not result in a
Change of Control;
(vii) new products introduced or change in existing product features by the
Issuer;
(viii) new business correspondent relationships or discontinuance of existing
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relationships by the Issuer;
(ix) geographical expansion to any new state/city/district/location by the
Issuer;
(x) material changes to any information technology system or monthly
reporting/information systems used by the Issuer;
(xi) any change in credit bureaus used by the Issuer; and
(xii) any revisions in business plans of the Issuer;
(k) without prejudice to Section 7.4(c), within 60 (sixty) calendar days from each
Quarterly Date, a certification from an authorized signatory or director or the
Chief Financial Officer confirming compliance with the financial covenants set
out in Section 7.3;
(l) within such timelines as may be prescribed by the Debenture Trustee, provide all
relevant information required by the Debenture Trustee for the effective
discharge of its duties and obligations under the Transaction Document, including
but not limited to the copies of all reports, balance sheets and the profit and loss
account of the Issuer;
(m) on a quarterly basis (and within such days from each Quarterly Date as may be
prescribed by the Debenture Trustee), provide to the Debenture Trustee:
(i) a certificate from the Issuer's director or the managing director certifying
the value of the book debts/receivables; and
(ii) a certificate from an independent chartered accountant
providing/confirming the value of the book debts/receivables;
(n) (if so required by the Debenture Trustee and within the timelines agreed with the
Debenture Trustee) provide to the Debenture Trustee a certificate from the
statutory auditor of the Issuer providing/confirming the value of the book
debts/receivables and/or the utilisation of the proceeds of the Debentures
(together with such details and information as may be required by the Debenture
Trustee);
(o) without prejudice of (l) above and (o) below, as soon as practicable and in any
event within 30 (thirty) calendar days of receipt of a request, such additional
documents or information as the Debenture Trustee or the Debenture Holders,
may reasonably request from time to time; and
(p) as soon as practicable and in any event within the timelines prescribed by the
Debenture Trustee (and Applicable Law), such other information, notifications,
details, documents, reports, statements and certificates (including from chartered
accountants, auditors and/or directors of the Issuer) as may be required by the
Debenture Trustee from time to time, to ensure compliance with the provisions of
the Applicable Law, including but not limited to the Debenture Trustees
Regulations and the Companies (Share Capital and Debentures) Rules, 2014.
(q) as soon as practicable and in any event within 7 (seven) calendar days of receipt
of a request such documents, statements or information that may be required:
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(i) by the Debenture Holders for obtaining and procuring the GOI Guarantee
from the Guarantor;
(ii) for evidencing eligibility of the Issuer under the GOI Guidelines;
(iii) for ensuring compliance of the Debentures (and the Debenture Holders,
to the extent required) with Applicable Law (including but not limited to
the GOI Guidelines and the GFR); and
(iv) for complying with any other reporting requirement in respect of the GOI
Guarantee.
The Issuer hereby agrees, confirms and authorizes the Debenture
Holders/Debenture Trustee to submit and disclose the required
information in respect of the Issuer and the Debentures to the Guarantor
(or any other authorized entity/department) to ensure that the GOI
Guarantee is obtained to the satisfaction of the Debenture Holders.
7.5 Affirmative Covenants
The Issuer shall:
(a) Use of Proceeds
use the proceeds of the Issue only for the Purpose and in accordance with
Transaction Documents;
(b) Notice of Winding up or other Legal Process
promptly, and in any case not later than 10 (ten) Business Days of occurrence,
inform the Debenture Trustee if it has received:
(i) any notice of any application for winding up or insolvency process or any
statutory notice of winding up or insolvency process under the provisions
of the Act or any other Applicable Law (including the (Indian)
Insolvency and Bankruptcy Code, 2016, the Insolvency and Bankruptcy
(Insolvency and Liquidation Proceedings of Financial Service Providers
and Application to Adjudicating Authority) Rules, 2019, and any other
rules and regulations made thereunder from time to time); or
(ii) any other notice under any other statute relating to the
commencement/initiation of winding up or insolvency process or
otherwise of any suit or other legal process against the Issuer;
(c) Loss or Damage by Uncovered Risks
promptly inform the Debenture Trustee and the Debenture Holders of any
material loss or significant damage which the Issuer may suffer due to any force
majeure circumstances or act of God, such as earthquake, flood, tempest or
typhoon, etc. against which the Issuer may not have insured its properties;
(d) Costs and Expenses
pay all reasonable costs, charges and expenses in any way incurred by the
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Debenture Trustee towards protection of the Debenture Holders' interests,
including traveling and other allowances and such taxes, duties, costs, charges
and expenses in connection with or relating to the Debentures subject to such
expenses, costs or charges being approved in writing by the Issuer before they are
incurred and shall not include any foreign travel costs;
(e) Payment of Rents, etc.
punctually pay all rents, royalties, taxes, rates, levies, cesses, assessments,
impositions and outgoings, governmental, municipal or otherwise imposed upon
or payable by the Issuer as and when such amounts are payable;
(f) Preserve Corporate Status
(i) diligently preserve and maintain its corporate existence and status and all
rights, privileges, and concessions now held or hereafter acquired by it in
the conduct of its business;
(ii) comply with all acts, authorizations, consents, permissions, rules,
regulations, orders and directions of any Governmental Authority; and
(iii) not do or voluntarily suffer or permit to be done any act or thing whereby
its right to transact its business might or could be terminated or whereby
payment of the Outstanding Amounts might or would be hindered or
delayed;
(g) Pay Stamp Duty
pay all such stamp duty (including any additional stamp duty), other duties, taxes,
charges and penalties, if and when the Issuer may be required to pay according to
the applicable state laws. In the event the Issuer fails to pay such stamp duty,
other duties, taxes and penalties as aforesaid, the Debenture Trustee shall be at
liberty (but shall not be bound) to pay such amounts and the Issuer shall
reimburse the aforementioned amounts to the Debenture Trustee on demand;
(h) Furnish Information to Debenture Trustee
(i) provide to the Debenture Trustee or its nominee(s)/ agent(s) such
information/copies of relevant extracts as they may require on any
matters relating to the business of the Issuer or to investigate the affairs
of the Issuer;
(ii) allow the Debenture Trustee to make such examination and investigation
as and when deemed necessary and shall furnish the Debenture Trustee
with all such information as they may require and shall pay all reasonable
costs, charges and expenses incidental to such examination and
investigation;
(iii) provide to the Debenture Trustee or its nominee(s)/agent(s) such
information/copies of relevant extracts as they may require for the
purpose of filing any relevant forms with any Governmental Authority
(including but not limited to the CERSAI) in relation to the Debentures
and the Hypothecated Assets;
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(iv) furnish quarterly reports to the Debenture Trustee (as may be required in
accordance with Applicable Law) containing the following particulars:
(A) updated list of the names and addresses of the Debenture
Holders;
(B) details of the interest due, but unpaid and reasons thereof;
(C) the number and nature of grievances received from the Debenture
Holders and resolved and unresolved by the Issuer along with the
reasons for the same; and
(D) a statement that the Hypothecated Assets are sufficient to
discharge the claims of the Debenture Holders as and when they
become due; and
(v) inform and provide the Debenture Trustee with applicable documents in
respect of the following:
(A) notice of any Event of Default or potential Event of Default; and
(B) any and all information required to be provided to the Debenture
Holders under Applicable Law and the listing agreement to be
entered into between the Issuer and the BSE;
(i) Redressal of Grievances
promptly and expeditiously attend to and redress the grievances, if any, of the
Debenture Holders. The Issuer further undertakes that it shall promptly comply
with the suggestions and directions that may be given in this regard, from time to
time, by the Debenture Trustee and shall advise the Debenture Trustee
periodically of the compliance;
(j) Comply with Investor Education and Protection Fund Requirements
comply with the provisions of the Act relating to transfer of unclaimed/ unpaid
amounts of interest on Debentures and redemption of Debentures to Investor
Education and Protection Fund ("IEPF"), if applicable to it. The Issuer hereby
further agrees and undertakes that until the Final Settlement Date it shall abide by
the regulations, rules or guidelines/listing requirements if any, issued from time
to time by the Ministry of Corporate Affairs, RBI, SEBI or any other competent
Governmental Authority;
(k) Corporate Governance; Fair Practices Code
comply with any corporate governance requirements applicable to the Issuer (as
may be prescribed by the RBI, SEBI, any stock exchange, or any Governmental
Authority) and the fair practices code prescribed by the RBI;
(l) Further Assurances
(i) provide details of any litigation, arbitration or administrative proceedings
that if determined adversely could have a Material Adverse Effect on the
Issuer;
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(ii) comply with any monitoring and/or servicing requests from Debenture
Holders;
(iii) execute and/or do, at its own expense, all such deeds, assurances,
documents, instruments, acts, matters and things, in such form and
otherwise as the Debenture Trustee may reasonably or by Applicable
Law require or consider necessary in relation to enforcing or exercising
any of the rights and authorities of the Debenture Trustee;
(iv) obtain, comply with the terms of and do all that is necessary to maintain
in full force and effect all authorisations necessary to enable it to lawfully
enter into and perform its obligations under the DTD or to ensure the
legality, validity, enforceability or admissibility in evidence in India of
the DTD;
(v) comply with:
(A) all Applicable Law (including but not limited to environmental,
social and taxation related laws, all directions issued by the RBI
to non-banking financial companies and the GOI Guidelines), as
applicable in respect of the Debentures and obtain such
regulatory approvals as may be required from time to time;
(B) the Debenture Trustees Regulations as in force from time to time,
in so far as they are applicable to the Debentures and furnish to
the Debenture Trustee such data, information, statements and
reports as may be deemed necessary by the Debenture Trustee in
order to enable them to comply with the provisions of Regulation
15 of the Debenture Trustees Regulations thereof in performance
of their duties in accordance therewith to the extent applicable to
the Debentures;
(C) the provisions of the Act in relation to the Issue;
(D) procure that the Debentures are rated and continue to be rated
until the Final Settlement Date; and
(E) ensure that, at time of making any payment of interest or
repayment of the principal amount of the Debentures in full or in
part, the Issuer shall do so in the manner that is most tax efficient
for the Debenture Holders but without, in any way requiring the
Issuer to incur any additional costs, expenses or taxes and the
Issuer shall avail of all the benefits available under any treaty
applicable to the Issuer and/or the Debenture Holders;
(m) Collateral and GOI Guarantee
the Issuer hereby further agrees, declares and covenants with the Debenture
Trustee that:
(i) the Debentures shall be collateralised by a first ranking exclusive
continuing security by way of a first ranking exclusive charge on the
Hypothecated Assets in favour of the Debenture Trustee for the benefit of
the Debenture Holders;
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(ii) the Debentures shall be supported by the GOI Guarantee to be provided
by the Guarantor in accordance with the GOI Guidelines;
(iii) all the Hypothecated Assets that will be charged to the Debenture Trustee
under the Deed of Hypothecation shall always be kept distinguishable
and held as the exclusive property of the Issuer specifically appropriated
to this Security and be dealt with only under the directions of the
Debenture Trustee;
(iv) the Issuer shall not create any charge, lien or other encumbrance upon or
over the Hypothecated Assets or any part thereof except in favour of the
Debenture Trustee nor will it do or allow anything that may prejudice this
Security;
(v) the Debenture Trustee shall be at liberty to incur all costs and expenses as
may be necessary to preserve this Security and to maintain the Security
undiminished and claim reimbursement thereof;
(vi) to create the security over the Hypothecated Assets as contemplated in
the Transaction Documents on or prior to the Initial Security Creation
Date by executing the duly stamped Deed of Hypothecation;
(vii) to register and perfect the security interest created thereunder by filing
Form CHG-9 with the concerned ROC and ensuring and procuring that
the Debenture Trustee files the prescribed Form I with CERSAI reporting
the charge created to the CERSAI in relation thereto, as soon as
practicable and in any case no later than 30 (thirty) calendar days from
the date on which such security over the Hypothecated Assets is created
in accordance with the Deed of Hypothecation;
(viii) commencing from the Initial Security Creation Date until the Final
Settlement Date, the Issuer shall, at the time periods set out in the Deed
of Hypothecation, provide a list of specific loan receivables/identified
book debts to the Debenture Trustee over which charge is created and
subsisting by way of hypothecation in favour of the Debenture Trustee
(for the benefit of the Debenture Holders) and sufficient to maintain the
Security Cover ("Hypothecated Assets Report");
(ix) to keep the Application Money in a separate bank account in the event
the DTD and the other Transaction Documents are not executed on or
before the Deemed Date of Allotment;
(x) the Issuer shall, on each Top-up Date (as defined in the Deed of
Hypothecation), add fresh receivables to the Hypothecated Assets so as to
ensure that the Security Cover is maintained or to replace such
Hypothecated Assets that do not satisfy the eligibility criteria prescribed
in the Transaction Documents;
(xi) the Issuer shall, on a half yearly basis, as and when required by the
Debenture Trustee, give full particulars to the Debenture Trustee of all
the Hypothecated Assets from time to time;
(xii) furnish and verify all statements, reports, returns, certificates and
information from time to time and as required by the Debenture Trustee
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in respect of the Hypothecated Assets;
(xiii) furnish and execute all necessary documents to give effect to the
Hypothecated Assets;
(xiv) the security interest created on the Hypothecated Assets shall be a
continuing security;
(xv) the Hypothecated Assets shall fulfil the eligibility criteria set out in the
Deed of Hypothecation;
(xvi) nothing contained herein shall prejudice the rights or remedies of the
Debenture Trustee and/ or the Debenture Holders in respect of any
present or future security, guarantee obligation or decree for any
indebtedness or liability of the Issuer to the Debenture Trustee and/ or the
Debenture Holders;
(xvii) the Debenture Holders shall have a beneficial interest in the
Hypothecated Assets of the Issuer which have been charged to the
Debenture Trustee to the extent of the Outstanding Amounts of the
Debentures under the DTD; and
(xviii) to forthwith upon demand by the Debenture Trustee, reimburse to the
Debenture Trustee all amounts paid by the Debenture Trustee to
reasonably protect the Hypothecated Assets and such amounts shall be
deemed to be secured by the Hypothecated Assets;
(n) Filings; Compliance with BSE Requirements
the Issuer hereby further agrees, declares and covenants with the Debenture
Trustee that:
(i) while submitting half yearly/annual financial results in accordance with
Regulation 52 of the LODR Regulations, the Issuer shall file with the
BSE for dissemination, along with a noting certificate of the Debenture
Trustee, containing, inter alia, the following information:
(A) credit rating (and any change thereto);
(B) asset cover, if required, accompanied with a half yearly
certificate regarding maintenance of 100% asset cover in respect
of the Debentures, by either a practicing Issuer secretary or a
practicing chartered accountant, within one month from the end
of the half year;
(C) debt to equity ratio accompanied with a certificate of a practicing
chartered accountant confirming such debt to equity ratio;
(D) previous Due Date for the payment of interest/principal and
whether the same has been paid or not;
(E) next Due Date for the payment of interest/principal;
(F) debt service coverage ratio (if required);
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(G) interest service coverage ratio (if required);
(H) outstanding redeemable preference shares (quantity and value);
(I) debenture redemption reserve;
(J) net worth;
(K) net profit after tax; and
(L) earnings per share;
(ii) in accordance with Regulation 52 of the LODR Regulations, the Issuer
shall file with the BSE the prescribed statements, financial statements and
noting certificate of the Debenture Trustee within the timelines
prescribed therein;
(iii) in accordance with Regulation 56 of the LODR Regulations, the Issuer
shall submit the following to the Debenture Trustee:
(A) a copy of the annual report at the same time as it is issued and a
copy of the certificate from the Issuer's auditors in respect of
utilisation of funds raised by the issue of the Debentures, at the
same time or at the end of each Financial Year until such funds
have been fully utilized or the purpose for which such funds were
intended has been achieved;
(B) a copy of all notices, resolutions and circulars relating to any new
issue of non-convertible debt securities (at the same time as they
are sent to shareholders/holders of non-convertible debt
securities), the meetings of holders of non-convertible debt
securities (at the same time as they are sent to the holders of non-
convertible debt securities or advertised in the media including
those relating to proceedings of the meetings);
(C) intimations regarding any revision in the rating or any default in
timely payment of interest or redemption or both in respect of the
non-convertible debt securities issued by the Issuer or any failure
to create charge on the assets; and
(D) a copy of the statement, if any filed with the BSE in compliance
of Regulation 52(7) of the LODR Regulations indicating material
deviations, if any, in the use of funds raised by the issue of the
Debentures from the object stated in the Information
Memorandum; and
(iv) in accordance with Regulation 58 of the LODR Regulations, the Issuer
shall furnish the following to the Debenture Holders in the manner
prescribed therein:
(A) physical copies of full annual reports to those Debenture Holders
who request the same;
(B) notice of all meetings of the Debenture Holders specifically
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stating that the provisions for appointment of proxy in
accordance with Section 105 of the Companies Act, 2013 shall
be applicable for such meeting; and
(C) proxy forms for the Debenture Holders clearly providing the
Debenture Holders to vote for each resolution in such a manner
that they may vote either for or against each resolution;
(o) Execution of Security Documents
in the event of any delay in the execution of the Deed of Hypothecation or the
creation of security in terms thereof, the Issuer will, at the option of the
Debenture Holders, either:
(i) refund the Application Money together with interest at the Interest
Rate/discharge the Secured Obligations; or
(ii) pay to the Debenture Holders penal interest at the rate of 2% p.a. (two
percent per annum) charged on the Outstanding Principal Amounts in
addition to the Interest Rate until the Deed of Hypothecation is duly
executed or the security is duly created in terms thereof;
(p) Internal Control
maintain internal control for the purpose of:
(i) preventing fraud on amounts lent by the Issuer; and
(ii) preventing money being used for money laundering or illegal purposes;
(q) Audit and Inspection
permit visits and inspection of books of records, documents and accounts to the
Debenture Trustee and representatives of Debenture Holders as and when
required by them;
(r) Books and Records
maintain its accounts and records in accordance with Applicable Law; and
(s) Access; Periodic Portfolio Monitoring
provide the Debenture Trustee and the Debenture Holders and any of their
representatives, professional advisers and contractors with access to and/or permit
them to, at the cost of the Issuer:
(i) examine and inspect the books and records, office premises, and the
premises of the Issuer;
(ii) portfolio data in the format prescribed by the Debenture Holders from
time to time; and
(iii) discuss the affairs, finances and accounts of the Issuer, and be advised as
to the same, by the relevant officers.
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7.6 Negative Covenants
The Issuer shall not take any action in relation to the items set out in this Section 7.6
without the prior written consent of the Debenture Trustee. The Debenture Trustee shall
endeavour (but is not bound to) to provide its prior written consent/dissent within 15
(fifteen) Business Days after receiving a request to provide its consent. PROVIDED
THAT such request must be accompanied by all relevant information substantiating the
request to enable the Debenture Holders to make a reasoned decision. The Debenture
Trustee reserves the right to take the consent of the Majority Debenture Holders prior to
any such approval/dissent, if it deems necessary.
(a) Change of Business/Constitutional Documents
(i) change the general nature of its business from that which is permitted as a
non-deposit accepting or holding non-banking financial company
registered with the RBI; or
(ii) any diversification of its business outside from that which is permitted as
a non-deposit accepting or holding non-banking financial company
registered with the RBI;
(b) Dividend
(i) declare or pay any dividend to its shareholders (including holders of
preference shares) during any Financial Year unless it has paid or made
arrangements to pay (to the satisfaction of the Debenture Trustee) all the
dues to the Debenture Holders/ Debenture Trustee upto the date on which
the dividend is proposed to be declared or paid or has made satisfactory
provisions thereof; or
(ii) if an Event of Default has occurred and is continuing, declare or pay any
dividend to its shareholders;
(c) Merger, Consolidation, etc.
in any Financial Year:
(i) undertake or permit any merger, acquisition, investment, re-structuring or
amalgamation in excess of 15% (fifteen percent) of the Net Worth of the
Issuer; or
(ii) enter into any merger, de-merger, consolidation, re-organization, scheme
of arrangement or compromise with its creditors or shareholders or effect
any scheme of amalgamation or reconstruction.
PROVIDED THAT the foregoing shall not apply in case where the Issuer
not entering into any such any merger, de-merger, consolidation, re-
organization, scheme of arrangement or compromise with its creditors or
shareholders or effect any scheme of amalgamation or reconstruction,
may result in an Event of Default or potential Event of Default;
(d) Change of Control
permit the occurrence of any Change of Control, or any Change of Control Event;
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(e) Promoter Shareholding
issue any additional shares or equity interests or permit any of its existing shares
or equity interests to be transferred, sold, pledged or otherwise encumbered
which would lead to the Promoters, directly or indirectly:
(i) ceasing to maintain their current shareholding (as of the Effective Date)
in the Issuer; or
(ii) ceasing to Control the Issuer;
(f) Disposal of Assets
sell, transfer, or otherwise dispose of in any manner whatsoever any material
Assets of the Issuer (whether in a single transaction or in a series of transactions
(whether related or not) or any other transactions which cumulatively have the
same effect) other than any securitization/portfolio sale of assets undertaken by
the Issuer in its ordinary course of business that has the effect of exiting the
current business of the Issuer or re-structuring of the existing business;
(g) Anti-money Laundering
permit any of the Debenture proceeds to be used to fund any form of violent
political activity, terrorists or terrorist organizations, nor any money laundering
process or scheme to disguise illegally obtained funds, nor any other criminal
activity including arms sales, drug trafficking, robbery, fraud or racketeering;
(h) Change in Capital Structure
(i) permit or undertake any change in capital structure that would lead to a
reduction in the paid-up capital or authorized capital of the Issuer;
(ii) purchase, buyback, or retire any of its issued shares or reduce its share
capital or resolve to do any of the foregoing;
(i) Change in Financial Year
change its Financial Year end from March 31 of each year to any other date; or
(j) Business
undertake any new major new businesses except in relation to financial services
or diversify its business outside the financial services sector.
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SECTION 8: OTHER INFORMATION AND ISSUE PROCEDURE
The Debentures being offered as part of the Issue are subject to the provisions of the Act, the
Memorandum and Articles of Association of the Issuer, the terms of this Information
Memorandum, the PPOA, the Application Form and other terms and conditions as may be
incorporated in the Transaction Documents.
8.1 Mode of Transfer/Transmission of Debentures
The Debentures shall be transferable freely. The Debentures(s) shall be transferred and/or
transmitted in accordance with the applicable provisions of the 2013 Act and other
applicable laws. The Debentures held in dematerialized form shall be transferred subject
to and in accordance with the rules/procedures as prescribed by NSDL/CDSL and the
relevant DPs of the transferor or transferee and any other applicable Laws and rules
notified in respect thereof. The transferee(s) should ensure that the transfer formalities are
completed prior to the Record Date. In the absence of the same, amounts due will be
paid/redemption will be made to the person, whose name appears in the Register of
Beneficial Owners maintained by the R&T Agent as on the Record Date, under all
circumstances. In cases where the transfer formalities have not been completed by the
transferor, claims, if any, by the transferees would need to be settled with the transferor(s)
and not with the Issuer. The normal procedure followed for transfer of securities held in
dematerialized form shall be followed for transfer of these Debentures held in
dematerialised form. The seller should give delivery instructions containing details of the
buyer’s DP account to his DP.
8.2 Debentures held in Dematerialised Form
The Debentures shall be held in dematerialised form and no action is required on the part
of the Debenture Holder(s) for redemption purposes and the redemption proceeds will be
paid by cheque/EFT/RTGS to those Debenture Holder(s) whose names appear on the list
of beneficiaries maintained by the R&T Agent. The names would be as per the R&T
Agent’s records on the Record Date fixed for the purpose of redemption. All such
Debentures will be simultaneously redeemed through appropriate debit corporate action.
The list of beneficiaries as of the relevant Record Date setting out the relevant
beneficiaries’ name and account number, address, bank details and DP’s identification
number will be given by the R&T Agent to the Issuer. If permitted, the Issuer may
transfer payments required to be made in any relation by EFT/RTGS to the bank account
of the Debenture Holder(s) for redemption payments.
8.3 Market Lot
The market lot will be One Debenture (“Market Lot”). Since the Debentures are being
issued only in dematerialised form, the odd lots will not arise either at the time of
issuance or at the time of transfer of Debentures.
8.4 Debenture Trustee for the Debenture Holder(s)
The Issuer has appointed Catalyst Trusteeship Limited to act as trustee for the Debenture
Holder(s). The Issuer and the Debenture Trustee have entered/intend to enter into the
Debenture Trustee Agreement and the Debenture Trust Deed, inter alia, specifying the
powers, authorities and obligations of the Debenture Trustee and the Issuer. The
Debenture Holder(s) shall, without further act or deed, be deemed to have irrevocably
given their consent to the Debenture Trustee or any of its agents or authorized officials to
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86
do all such acts, deeds, matters and things in respect of or relating to the Debentures as
the Debenture Trustee may in its absolute discretion deem necessary or require to be done
in the interest of the Debenture Holder(s). Any payment made by the Issuer to the
Debenture Trustee on behalf of the Debenture Holder(s) shall discharge the Issuer pro
tanto to the Debenture Holder(s). The Debenture Trustee will protect the interest of the
Debenture Holder(s) in regard to the repayment of principal and interest thereon and they
will take necessary action, subject to and in accordance with the Debenture Trustee
Agreement and the Debenture Trust Deed, at the cost of the Issuer. No Debenture Holder
shall be entitled to proceed directly against the Issuer unless the Debenture Trustee,
having become so bound to proceed, fails to do so. The Debenture Trustee Agreement
and the Debenture Trust Deed shall more specifically set out the rights and remedies of
the Debenture Holder(s) and the manner of enforcement thereof.
8.5 Sharing of Information
The Issuer may, at its option, but subject to applicable laws, use on its own, as well as
exchange, share or part with any financial or other information about the Debenture
Holder(s) available with the Issuer, with its subsidiaries and affiliates and other banks,
financial institutions, credit bureaus, agencies, statutory bodies, as may be required and
neither the Issuer nor its subsidiaries and affiliates nor their agents shall be liable for use
of the aforesaid information.
8.6 Debenture Holder not a Shareholder
The Debenture Holder(s) shall not be entitled to any right and privileges of shareholders
other than those available to them under the Act. The Debentures shall not confer upon
the Debenture Holders the right to receive notice(s) or to attend and to vote at any general
meeting(s) of the shareholders of the Issuer.
8.7 Modification of Debentures
Any Transaction Document may be modified or amended with the written consent of the
Debenture Trustee (acting on the instructions of the Majority Debenture Holders) by way
of an instrument in writing executed by the Issuer and the Debenture Trustee.
8.8 Right to accept or reject Applications
The Board of Directors/Committee of Directors reserves its full, unqualified and absolute
right to accept or reject any application for subscription to the Debentures, in part or in
full, without assigning any reason thereof.
8.9 Notices
Any notice in respect of the Debentures may be served by the Issuer upon the Debenture
Trustee/Debenture Holders in accordance with the terms of the Transaction Documents.
8.10 Issue Procedure
Only ‘Eligible Investors’ as given hereunder to whom this Information Memorandum is
addressed, may apply for the Debentures by completing the Application Form in the
prescribed format in block letters in English as per the instructions contained therein. The
minimum number of Debentures that can be applied for and the multiples thereof shall be
set out in the Application Form. No application can be made for a fraction of a Debenture.
Application forms should be duly completed in all respects and applications not
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87
completed in the said manner are liable to be rejected. The name of the applicant’s bank,
type of account and account number must be duly completed by the applicant. This is
required for the applicant’s own safety and these details will be printed on the refund
orders and /or redemptions warrants.
The subscription to the Debentures shall be made by the Eligible Investors through the
electronic book mechanism as prescribed by SEBI under the EBP Guidelines by placing
bids on the EBP Platform during the Issue period. In case the Eligible Investors are not
registered on the EBP Platform, they will have to register themselves as an "investor" on
the EBP Platform (as a one time exercise) and also complete the mandatory "know your
customer" verification process. The Eligible Investors should also refer to the operational
guidelines of the relevant EBP in this respect. The disclosures required pursuant to the
EBP Guidelines are set out herein below:
Details of size of issue including green shoe
option, if any and a range within which
green shoe may be retained (if applicable)
1,000 (one thousand) rated, senior, redeemable,
taxable, transferable, listed, non-convertible
debentures of face value of INR 10,00,000
(Indian Rupees Ten Lakh) each, aggregating
up to INR 100,00,00,000 (Indian Rupees One
Hundred Crore)
Green Shoe Option: N.A.
Bid opening and closing date Bid opening date: 23rd
July, 2020
Bid closing date: 23rd
July, 2020
Minimum Bid Lot 1,000 (one thousand) Debentures (being INR
100,00,00,000 (Indian Rupees One Hundred
Crore)), and in the multiples of 10 (ten)
Debenture thereafter (being INR 1,00,00,000
(Rupees One Crore))
Manner of bidding in the Issue Closed bidding
Manner of allotment in the Issue Uniform Yield Allotment
Manner of settlement in the Issue Pay-in of funds through ICCL.
The pay-in of the Application Money for the
Debentures shall be made by way of transfer of
funds from the bank account(s) of the Eligible
Investors (whose bids have been accepted) as
registered with the Electronic Book Provider
into the account of the ICCL, as specified in
this regard below.
Settlement Cycle T+1
Settlement of the Issue will be on 24th July,
2020.
Process flow of settlement:
Eligible Investors whose bids have been accepted by the Issuer and to whom a signed
copy of this Information Memorandum along with the PPOA have been issued by the
Issuer and who have submitted/shall submit the Application Form ("Successful
Bidders"), shall make the payments in respect of the Application Money in respect of the
Debentures towards the allocation made to them, into the bank account of the ICCL, the
details of which are as set out below:
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Date: July 21, 2020 For Private Circulation Only
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Name of the Bank HDFC Bank
IFSC Code HDFC0000060
Account Number ICCLEB
Name of the beneficiary INDIAN CLEARING CORPORATION
LIMITED
The pay-in of the Application Money by the Successful Bidders will be made only from
the bank account(s), which have been provided / updated by them in the EBP system.
Any amount received from third party accounts or from accounts not specified in the EBP
system will be refunded and no allotment will be made against such payments. Upon the
transfer of funds into the aforesaid account of ICCL and the Issuer confirming its decision
to proceed with the allotment of the Debentures in favour of the Successful Bidders to the
ICCL, the R&T Agent and the EBP and initiating the requisite corporate action for
allotment of Debentures and credit of the demat letter of allotment into the relevant demat
account of the Successful Bidders through the R&T Agent, the R&T Agent shall provide
corporate action file along with all requisite documents to the relevant Depositories by
12:00 hours and also intimate the EBP of the aforesaid actions. Upon the Depositories
confirming the allotment of the Debentures and the credit of the Debentures into the
demat account of the Successful Bidders to EBP, the subscription monies in respect of the
Debentures from the aforesaid account of ICCL shall be released into the Issuer’s bank
account, the details of which are as set out below:
Name of the Bank IDBI BANK
IFSC Code IBKL0000009
Account Number 0009102000079709
Name of the beneficiary MAS FINANCIAL SERVICES LIMITED -
DEBENTURE APPLICATION MONEY
ACCOUNT
It must be noted that all funds pay-in obligations need to be fulfilled in totality. Partial
fund receipt against any given obligation will be treated as a default and debarment
penalties will be applicable as specified by the EBP Guidelines and other Applicable
Law.
8.11 Application Procedure
Potential Debenture Holders will be invited to subscribe by way of the Application Form
prescribed in this Information Memorandum during the period between the Issue Opening
Date and the Issue Closing Date (both dates inclusive). The Issuer reserves the right to
change the issue schedule including the Deemed Date of Allotment at its sole discretion,
without giving any reasons. The Issue will be open for subscription during the banking
hours on each day during the period covered by the issue schedule, and the procedure will
be subject to the EBP Guidelines.
8.12 Fictitious Application
All fictitious applications will be rejected.
8.13 Basis of Allotment
Notwithstanding anything stated elsewhere, the Issuer reserves the right to accept or
reject any application, in part or in full, without assigning any reason. In case of over
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89
subscription, allotment shall be made on a "yield time priority basis" in accordance with
the EBP Guidelines. The investors will be required to remit the funds in the account of
the ICCL as well as submit the duly completed Application Form along with other
necessary documents to the Issuer by the Deemed Date of Allotment.
8.14 Payment Instructions
The entire amount of INR 10,00,000/- per Debenture is payable on the Pay-In Date.
Applicants can remit the application amount on the Pay-in Date in the account of ICCL
mentioned under Section 8.10 above.
8.15 Eligible Investors
Only the following categories of investors are eligible to invest in these NCDs:
a) Scheduled Commercial Banks
b) Financial Institutions including PFIs, Provident/Gratuity funds, pension funds,
NBFCs, Trusts etc.
c) Mutual Funds
d) Insurance Companies
e) FPIs registered as trust or body corporate
when specifically approached, are eligible to apply for this private placement of
Debentures subject to fulfilling their respective investment norms/rules and compliance
with laws applicable to them by submitting all the relevant documents along with the
Application Form (“Eligible Investors”).
Without prejudice to the aforesaid, where the selection of the eligible investors is required
to be done pursuant to bidding mechanism on the EBP Platform under the EBP
Guidelines or any other successive arrangement/platform mandated by SEBI, only those
persons out of the aforesaid categories of Eligible Investors, who are registered on the
EBP Platform and are eligible to make bids for the Debentures of the Issuer and to whom
allocation is to be made by Issuer pursuant to selection under the electronic book
mechanism for issuance of securities on private placement basis in terms of the EBP
Guidelines and the Electronic Book Providers shall be considered as "identified persons"
for the purposes of Section 42(2) of the Companies Act, 2013, to whom the Company
shall make private placement of the Debentures and only such "identified persons" shall
receive a direct communication from the Company with offer to subscribe to the
Debentures and only such "identified persons" shall be entitled to subscribe to the
Debentures.
Additionally, those arrangers/brokers/intermediaries etc. (as per the defined limits under
the EBP Guidelines) specifically mapped by the Company on the EBP Platform are also
eligible to bid/apply/invest for this Issue.
All Eligible Investors are required to check and comply with Applicable Law(s) including
the relevant rules / regulations / guidelines applicable to them for investing in this Issue of
Debentures and the Company, is not in any way, directly or indirectly, responsible for any
statutory or regulatory breaches by any investor, neither is the Company required to check
or confirm the same.
Hosting of the Information Memorandum on the website of the BSE should not be
construed as an offer or an invitation to offer to subscribe to the Debentures and the same
has been hosted only as it is stipulated under the SEBI Debt Listing Regulations read with
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Date: July 21, 2020 For Private Circulation Only
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90
the EBP Guidelines. Eligible Investors should check their eligibility before making any
investment.
All potential Debenture Holders are required to comply with the relevant
regulations/guidelines applicable to them for investing in this issue of Debentures.
Note: Participation by potential Debenture Holders in the issue may be subject to
statutory and/or regulatory requirements applicable to them in connection with
subscription to Indian securities by such categories of persons or entities. Applicants are
advised to ensure that they comply with all regulatory requirements applicable to them,
including exchange controls and other requirements. Applicants ought to seek
independent legal and regulatory advice in relation to the laws applicable to them.
8.16 Procedure for Applying for Dematerialised Debentures
(a) The applicant must have at least one beneficiary account with any of the DP’s of
NSDL/CDSL prior to making the application.
(b) The applicant must necessarily fill in the details (including the beneficiary
account number and DP –ID) appearing in the Application Form under the
heading “Details for Issue of Debentures in Electronic/Dematerialised Form”.
(c) Debentures allotted to an applicant will be credited to the applicant’s respective
beneficiary account(s) with the DP.
(d) For subscribing to the Debentures, names in the Application Form should be
identical to those appearing in the details in the Depository. In case of joint
holders, the names should necessarily be in the same sequence as they appear in
the account details maintained with the DP.
(e) Non-transferable allotment advice/refund orders will be directly sent to the
applicant by the Registrar and Transfer Agent to the Issue.
(f) If incomplete/incorrect details are given under the heading “Details for Issue of
Debentures in Electronic/Dematerialised Form” in the Application Form, it will
be deemed to be an incomplete application and the same may be held liable for
rejection at the sole discretion of the Issuer.
(g) For allotment of Debentures, the address, nomination details and other details of
the applicant as registered with his/her DP shall be used for all correspondence
with the applicant. The applicant is therefore responsible for the correctness of
his/her demographic details given in the Application Form vis-à-vis those with
his/her DP. In case the information is incorrect or insufficient, the Issuer would
not be liable for the losses, if any.
(h) The redemption amount or other benefits would be paid to those Debenture
Holders whose names appear on the list of beneficial owners maintained by the
R&T Agent as on the Record Date. In case of those Debentures for which the
beneficial owner is not identified in the records of the R&T Agent as on the
Record Date, the Issuer would keep in abeyance the payment of the redemption
amount or other benefits, until such time that the beneficial owner is identified by
the R&T Agent and conveyed to the Issuer, whereupon the redemption amount
and benefits will be paid to the beneficiaries, as identified.
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8.17 Depository Arrangements
The Issuer shall make necessary arrangement with NSDL/ CDSL for issue and holding of
Debentures in dematerialised form.
8.18 List of Beneficiaries
The Issuer shall request the R&T Agent to provide a list of beneficiaries as at the end of
each Record Date. This shall be the list, which will be used for payment or repayment of
redemption monies.
8.19 Application under Power of Attorney
A certified true copy of the power of attorney or the relevant authority as the case may be
along with the names and specimen signature(s) of all the authorized signatories of the
potential Investor and the tax exemption certificate/document of the potential Debenture
Holder, if any, must be lodged along with the submission of the completed Application
Form. Further modifications/additions in the power of attorney or authority should be
notified to the Issuer or to its agents or to such other person(s) at such other address(es) as
may be specified by the Issuer from time to time through a suitable communication.
In case of an application made by companies under a power of attorney or resolution or
authority, a certified true copy thereof along with memorandum and articles of
association and/or bye-laws along with other constitutional documents must be attached
to the Application Form at the time of making the application, failing which, the Issuer
reserves the full, unqualified and absolute right to accept or reject any application in
whole or in part and in either case without assigning any reason thereto. Names and
specimen signatures of all the authorized signatories must also be lodged along with the
submission of the completed Application Form.
8.20 Procedure for application by Mutual Funds and Multiple Applications
In case of applications by mutual funds and venture capital funds, a separate application
must be made in respect of each scheme of an Indian mutual fund/venture capital fund
registered with the SEBI and such applications will not be treated as multiple application,
provided that the application made by the asset management company/trustee/custodian
clearly indicated their intention as to the scheme for which the application has been made.
The application forms duly filled shall clearly indicate the name of the concerned scheme
for which application is being made and must be accompanied by certified true copies of:
(a) SEBI registration certificate
(e) Resolution authorizing investment and containing operating instructions
(f) Specimen signature of authorized signatories
8.21 Documents to be provided by Eligible Investors
Eligible Investors need to submit the following documents, as applicable:
(a) Memorandum and Articles of Association or other constitutional documents
(g) Resolution authorising investment
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
92
(h) Certified true copy of the Power of Attorney to custodian
(i) Specimen signatures of the authorised signatories
(j) SEBI registration certificate (for Mutual Funds)
(k) Copy of PAN card
(l) Application Form (including EFT/RTGS details)
8.22 Applications to be accompanied with Bank Account Details
Every application shall be required to be accompanied by the bank account details of the
applicant and the magnetic ink character reader code of the bank for the purpose of
availing direct credit of redemption amount and all other amounts payable to the
Debenture Holder(s) through cheque/EFT/RTGS.
8.23 Succession
In the event of winding up of a Debenture Holder (being a company), the Issuer will
recognise the legal representative (being the liquidator) of the Debenture Holder
appointed by a competent court.
The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of
such legal representation, in order to recognise any person as being entitled to the
Debenture(s) standing in the name of the concerned Debenture Holder on the production
of sufficient documentary proof and an indemnity.
In the event of, however, a deceased Debenture Holder having nominated any person
entitled to be registered as the Debenture Holder in the event of his death, such nominee
shall be registered as the Debenture Holder in place of the deceased Debenture Holder,
notwithstanding anything contained in any other law for the time being in force.
8.24 Effect of Holidays
(a) If any Due Date on which any interest or additional interest is payable falls on a day which is not a Business Day, the payment to be made on such Due Date shall be made on the succeeding Business Day and to the extent not contrary to Applicable Law, the Issuer shall be liable to the pay the interest or additional interest till such succeeding Business Day.
(b) If any Due Date on which any Outstanding Principal Amounts are payable falls on a day which is not a Business Day, the payment to be made on such Due Date shall be made on the preceding Business Day.
(c) If the Redemption Date falls on a day which is not a Business Day, the payment of any amounts in respect of any interest and the Outstanding Principal Amounts to be made shall be made on the preceding Business Day.
8.25 Tax Deduction at Source
(a) All payments to be made by the Company to the Debenture Holders under the
Transaction Documents shall be made free and clear of and without any Tax
Deduction unless the Company is required to make a Tax Deduction pursuant to
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93
Applicable Law.
(b) The Company shall promptly upon becoming aware that it must make a Tax
Deduction (or that there is any change in the rate or the basis of a Tax Deduction)
notify the Debenture Trustee accordingly.
(c) If the Company is required to make a Tax Deduction, it shall make that Tax
Deduction and any payment required in connection with that Tax Deduction
within the time allowed and in the minimum amount required by Applicable Law.
(d) Within the earlier of (i) 60 (sixty) calendar days of making either a Tax
Deduction or any payment required in connection with that Tax Deduction or (ii)
60 (sixty) calendar days of each Due Date, the Company shall deliver to the
Debenture Trustee evidence reasonably satisfactory to the Debenture Trustee that
the Tax Deduction has been made or (as applicable) any appropriate payment
paid to the relevant Tax authority.
8.26 Letters of Allotment
The letter of allotment, indicating allotment of the Debentures, will be issues and
delivered on the Deemed Date of Allotment. The aforesaid letter of allotment shall be
replaced with the actual credit of Debentures, in dematerialised form, within 2 (two)
Business Days from the Deemed Date of Allotment or such period as is permissible under
applicable Law.
8.27 Deemed Date of Allotment
All the benefits under the Debentures, will accrue to the Debenture Holders from the
specified Deemed Date of Allotment. The Deemed Date of Allotment for the Issue is July
24, 2020 by which date the Debenture Holders would be intimated of allotment.
8.28 Record Date
The Record Date is the date falling 15 (fifteen) calendar days prior to the date on which
interest is due and payable on the Debentures, or the date of redemption of the Debentures
(as applicable).
8.29 Refunds
For applicants whose applications have been rejected or allotted in part, refund orders will
be dispatched within 7 (Seven) days from the Deemed Date of Allotment of the
Debentures.
In case the Issuer has received money from applicants for Debentures in excess of the
aggregate of the application money relating to the Debentures in respect of which
allotments have been made, the R&T Agent shall upon receiving instructions in relation
to the same from the Issuer repay the moneys to the extent of such excess, if any.
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(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
94
8.30 PAN Number
Every applicant should mention its PAN allotted under Income Tax Act, 1961, on the
Application Form and attach a self-attested copy as evidence. Application forms without
PAN will be considered incomplete and are liable to be rejected.
8.31 Payment on Redemption
Payment on redemption will be made by way of cheque(s)/redemption warrant(s)/demand
draft(s)/credit through RTGS system/funds transfer in the name of the Debenture
Holder(s) whose names appear on the list of beneficial owners given by the Depository to
the Issuer as on the Record Date.
The Debentures shall be taken as discharged on payment of the redemption amount by the
Issuer on maturity to the registered Debenture Holder(s) whose name appears in the
Register of Beneficial Owners on the Record Date. On such payment being made, the
Issuer will inform NSDL and CDSL and accordingly the account of the Debenture
Holder(s) with NSDL and CDSL will be adjusted.
On the Issuer dispatching the amount as specified above in respect of the Debentures, the
liability of the Issuer shall stand extinguished.
8.32 Governing law and jurisdiction of courts
The Debentures are governed by and shall be construed in accordance with the laws of
India. Any dispute arising out of or connected with this Issue shall be resolved by the
courts of Mumbai, India having exclusive jurisdiction.
.,
,
Information Memorandum Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
DECLARATION
A. The Issuer has complied with the provisions of the Companies Act, 2013 and the rules made hereunder; -
B. The compliance with the Companies Act, 2013 and the rules made thereunder do not imply that payment of dividend or interest or repayment of the Debentures, if applicable, is guaranteed by the Central Government; and
C. The monies received under the offer shall be used only for the purposes and objects indicated in this Information Memorandum.
I am authorized by the Board of Directors of the Issuer vide resolution dated June 16, 2020 read with the resolution dated July 20, 2020 of the finance committee of the Issuer, to sign this Information Memorandum and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been comp! ied with.
Whatever is stated in this Information Memorandum and in the attachments thereto is true, correct and complete and no information material to the subject matter of this Information Memorandum has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association.
It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this Information Memorandum.
The Issuer declares that all the relevant provisions in the regulations/guideline issued by SEBI and other Applicable Laws have been complied with and no statement made in this Information Memorandum is contrary to the provisions of the regulations/guidelines issued by SEBI and other Applicable Laws, as., the case may be. The information contained in this Information Memorandum is as applicable to privately placed debt securities and subject to the information available with the Issuer. The extent of disclosures made in this Information Memorandum is consistent with disclosures permitted by regulatory authorities to the issue of securities made by the companies in the past.
For, !Jl.,!.J& Financial Services Limited
Name: Riddhi Bhayani Company Secretary & Compliance Officer Memb. No.: A41206 Date: July 21, 2020
,, .
95
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
Cheque/Draft/UTR # ____________________Drawn on__________________________ for Rs.
_____________________ on account of application of Debenture
_____________________
___________________
Initial of the Officer of MAS Financial Services Limited designated to keep the record
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
110
INSTRUCTIONS
1. Application form must be completed in full, IN ENGLISH.
2. Signatures must be made in English or in any of the Indian languages. Thumb
Impressions must be attested by an authorized official of the Bank or by a
Magistrate/Notary Public under his/her official seal.
3. Application form, duly completed in all respects, must be submitted with the respective
Collecting Bankers. The payment is required to be made only to the following account of
ICCL, in accordance with the terms of the EBP Guidelines:
Beneficiary A/C Name: INDIAN CLEARING CORPORATION LTD
Bank Account No. ICCLEB
IFSC CODE: HDFC0000060
Bank Name HDFC Bank
Branch Address: Fort-400001
The Company undertakes that the application money deposited in the above-mentioned
bank account shall not be utilized for any purpose other than
a) for adjustment against allotment of securities; or
b) for the repayment of monies where the company is unable to allot securities.
4. Receipt of applicants will be acknowledged by the Company in the “Acknowledgement
Slip” appearing below the application form. No separate receipt will be issued.
5. All applicants should mention their Permanent Account No. or their GIR No. allotted
under Income Tax Act, 1961 and the Income Tax Circle/Ward/District. In case where
neither the PAN nor the GIR No. has been allotted, the fact of non-allotment should be
mentioned in the application form in the space provided. Income Tax as applicable will
be deducted at source at the time of payment of interest including interest payable on
application money.
6. The application would be accepted as per the terms of the manner outlined in the
transaction documents for the private placement.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
111
ANNEXURE V - ILLUSTRATION OF DEBENTURE CASH FLOWS
Illustration of Bond Cash Flows
Company MAS Financial Services Limited
Face Value (per security) Rs. 10,00,000/- (Rupees Ten Lakhs only)
Issue Date / Date of Allotment Issue Opening Date: July 23, 2020 Deemed Date of Allotment: July 24, 2020
Redemption Date / Maturity Date Redemption Date / Maturity Date: January 24,2022
Coupon Rate 9.00% payable annually
Frequency of the Coupon Payment with specified dates
Coupon payable Annually. (Subject to Business Day Convention).
Day Count Convention Actual/Actual
Cash Flow
Coupon Payment Date
Principal O/s
Principal
Payment Date
Interest Payment
Date
Cash flow
July 24, 2020 - (100,00,00,000) July 24, 2021 100,00,00,000 - 9,00,00,000 9,00,00,000
Jan 24,2022 50,00,00,000 100,00,00,000 4,53,69,863 104,53,69,863
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
112
ANNEXURE VI - RELATED PARTY TRANSACTIONS
(Amount in Rs. Lakhs)
Entity Particulars
Transactions during the
Year
Balances outstanding at the
end Year
31-
Mar-20
31-
Mar-19
31-
Mar-18
31-
Mar-20
31-
Mar-19
31-
Mar-18
M Power Micro
Finance Private
Limited
Loans and
Advances 2250 2600 3250 1300 500 4791.67
Paras Capfin
Company Private
Limited (till 11 May
2018)
Loans and
Advances - - 1400 - - 1105.56
Prarthna Marketing
Private Limited
Dividend
paid 151.97 - - -
Anamaya Capital
LLP
Dividend
paid 7.21 - - -
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
113
ANNEXURE VII - AUDITED FINANCIAL STATEMENTS
The audited financial statements (including balance sheets, profit and loss statements and cash flow statements) of the Issuer for financial years 2017-18,
2018-19 and 2019-20 are:
Standalone Financial Statement and Cash Flow:
(Rs. in Lakhs)
STANDALONE BALANCE SHEET
As at
31 March
2020
As at
31 March
2019
As at
31 March
2018
ASSETS
Financial assets
Cash and cash equivalents 1,02,446.81 35,577.06 3,795.95
Bank balance other than cash and cash equivalents 190.55 1,278.75 1,021.66
Loans 3,33,776.56 3,21,853.69 2,54,628.00
Investments 3,750.03 2,227.05 1,336.54
Other financial assets 8,900.09 3,411.10 2,924.49
Total financial assets 4,49,064.04 3,64,347.65 2,63,706.64
Non-financial assets
Income tax assets (net) 221.38 95.16 172.04
Deferred tax assets (net) - - -
Property, plant and equipment 1,198.56 1,140.92 5,636.66
Capital work-in-progress 4,821.34 4,564.43 -
Right-of-use asset 128.44 - -
Other intangible assets 11.07 10.95 17.40
Other non-financial assets 234.54 196.05 235.57
Total non-financial assets 6,615.33 6,007.51 6,061.67
Total assets 4,55,679.37 3,70,355.16 2,69,768.31
LIABILITIES AND EQUITY
LIABILITIES
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
114
Financial liabilities
Payables
(I)Trade payables
(i) total outstanding dues of micro enterprises and
small enterprises
- -
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises 753.08 553.36 321.95
(II) Other payables
(i) total outstanding dues of micro enterprises and
small enterprises
- -
(ii) total outstanding dues of creditors other than micro
enterprises and small enterprises - -
Debt securities 5,989.18 5,981.78 5,974.41
Borrowings (other than debt securities) 2,52,021.34 1,95,982.99 1,22,517.72
Other financial liabilities 90,693.87 72,419.32 60,216.46
Total financial liabilities 3,49,457.47 2,74,937.45 1,89,030.54
Cash and cash equivalents at the beginning of the year 39,699.95 4,938.23 4,653.24
Cash and cash equivalents at the end of the year (refer
note 1 below) 1,04,554.26 39,699.95 4,938.23
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
129
ANNEXURE VIII - CORPORATE STRUCTURE/ ORGANISATION STRUCTURE
Board of Directors
Mr. Kamlesh C. Gandhi - Founder, Chairman & Managing Director
He manages the Company with the guidance and support of the Board. He is a proficient and
experienced industry practitioner with a brilliant track record. He has over two decades managed
and propelled the Company’s growth. His understanding and vision is among the key enablers for
the consistent performance of the Company.
Mr. Mukesh C. Gandhi - Co-Founder, Whole-Time Director & CFO
He is actively involved in the strategic decisions of the Company. He is a well known industry
expert and a popular public speaker on various issues in Finance. He is an academician and
Chairman of Gujarat Finance Company Association and also the Committee Member of Finance
Industry Development Council (FIDC).
Mrs. Darshana S. Pandya - Director & CEO
She is responsible for leading the operations at MAS and also the relationship of the Company
with its more than 100 NBFC-MFI & NBFC Partners. She is a commerce graduate who joined the
Company in 1996 as a junior executive and through her hard work, immaculate working and
determination to excel, accompanied by enabling support from the management; rose to the level
of Director & CEO.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
130
Mr. Balabhaskaran N. Nair - Independent Director
He is a management graduate with two decades of experience in the consultancy and financial
sector. He has a number of management consultancy inputs from his rich experience. He has done
his engineering from IIT-Madras, MBA from IIM-Bangalore and CFA from ICFAI.
Mr. Chetan R. Shah - Independent Director
He holds bachelor’s degrees in commerce and law (general) from Gujarat University. He is also a
qualified chartered accountant registered with the Institute of Chartered Accountants of India. He
has over 34 years of experience in the financial services sector and has in the past worked with the
Natpur Co-operative Bank as the Manager – Finance.
Mr. Umesh R. Shah - Independent Director
He is a Chartered Accountant. He has more than three decades of experience in the diverse fields
connected with Finance, Accounting, Auditing and Taxation. He also has 5 years hands-on
experience of working in an NBFC.
Mrs. Daksha Niranjan Shah- Independent Director
She is a business graduate from Indian Institute of Management (IIM), Ahmedabad, specialising
in Finance and Marketing and also a student of Economics and Statistics. She has rich experience
of more than three decades in diversified fields of Textile, Chemical and Financial services. She
has undergone various courses such as the course in Microfinance at the Economic Institute,
Boulder, Colorado, USA.
MAS Financial Services Limited is holding Company of MAS Rural Housing & Mortgage
Finance Limited.
Brief details of subsidiary company:
MAS Rural Housing & Mortgage Finance Limited (MRHMFL) is the housing finance company
registered with National Housing Bank. MRHMFL (MAS Rural Housing & Mortgage Finance
Ltd. – subsidiary of MFSL) aims at serving the middle income and the lower income sector of the
economy, especially in the semi urban and rural areas, which are reckoned to be the key drivers of
the sector in the coming decades. Full-fledged efforts are on to execute efficiently, as per the
detail planning. Being aware of the challenges involved in serving this class of the society, a very
cautious approach is adopted in building up volumes. Nevertheless, Company is quite confident
of building substantial volumes in the near future. The Company’s rural initiative will also start
yielding results shortly.
The Company has 69 branches Pan India as on March 31, 2020. It is worth mentioning that
despite of credit worthy customer class, ascertaining the title of the property remains a
challenging job. The Company is actively involved with all the stake holders to smoothen the
process and is assertive in getting the right set of documents.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
131
ANNEXURE IX - MATERIAL CONTRACTS
The contracts and documents referred to hereunder are material to the Issue, and may be
inspected at the registered office of the Company between 10.00 am to 4.00 pm on
working days.
Sr. No. Nature of Contract
1 Certified true copy of the Memorandum & Articles of Association of the Issuer.
2
Resolution dated June 16, 2020 passed by the Board of Directors read together
with the resolution dated July 20, 2020 passed by the finance committee of the
Board of Directors, authorizing issue of Debentures offered under terms of this
Information Memorandum.
3
Resolutions each dated June 27, 2018 passed by the shareholders of the
Company authorizing the borrowing by the Company and the creation of
security, respectively.
4 Copies of Annual Reports of the Company for the last three financial years.
5 Letter from the Rating Agency assigning the credit rating for the Issue.
6 Letter from the Debenture Trustee giving its consent to act as Debenture Trustee.
7 Letter from Registrar and Transfer Agent.
8 Certified true copy of the certificate of incorporation of the Company.
9 Certified true copy of the tripartite agreement between the Company, the
Registrar and NSDL/CDSL.
11 (If so required by the Applicants/to the extent applicable) Evidence of receipt of
an "in-principle" approval from BSE in respect of the listing of the Debentures.
12 Debenture Trustee Agreement to be executed by the Issuer and the Debenture
Trustee.
13 Debenture Trust Deed to be executed by the Issuer and the Debenture Trustee.
14 Deed of Hypothecation to be executed by the Issuer and the Debenture Trustee.
Information Memorandum
Date: July 21, 2020 For Private Circulation Only
(This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus)
132
ANNEXURE X – BOARD RESOLUTION AND SHAREHOLDERS RESOLUTION
As Per Enclosure 5
BSR&Co. LLPChartered Accountants
Independent Auditor's Report
To the Members ofMAS Financial Services LimitedReport on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial staternents of MAS Financial Services Limited(hereinafter referred to as the 'Holding Cornpany') and its subsidiary - MAS Rural Housing &Mortgage Finance Limited (the Holding Company and its subsidiary together referred to as the'Group'), which cornprise the consolidated balance sheet as at 3l March 2020, and the consolidatedstatement of profit and Ioss (including other comprelrensive inconre), the consolidated statentent ofchanges in equity and the consolidated statement of cash flows for the year then ended, and notes tothe consolidated financial statements, including a surnmary of significant accounting policies andother explanatory infornration (hereinafter ref-erred to as the 'consolidated financial statements').
In our opinion and to the best of our infonnatiorr and according to the explanations given to us, andbased on the consideration of repofi of other ar"rditor on separate financial statements of a subsidiary, as
were audited by the other auditor, the afbresaid consolidated financial staternents give the informationrequired by the Companies Act,2013 (the 'Act') in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India, of the consolidated state ofaffairs of the Group as at 3l Marclr 2020, ol its consolidated profit and other comprehensive income,consolidated changes in equity and consolidated cash florvs for the year then ended.
Basis for Opinion
We conducted our audit in accordance rvith the Standards on Auditing ('SAs') specified under section
143 (10) of the Act. Our responsibilities under those SAs are further described in the Auditor'sResponsibilities for the Auclit of the Consolieluted Financial Statements section of our report. We are
independent of the Group in accordance lvith the ethical requirements that are relevant to our audit ofthe consolidated financial statements in terms of the Code of Ethics issued by the Institute of CharteredAccountants of India and the relevant provisions of the Act, and we have fulfilled our other ethicalresponsibilities in accordance rvith these requirements. We believe that the audit evidence obtained byus along with the consideration of audit repo( of the other auditor referred to in the 'Other Matter'paragraph belor.v. is sLrfficient and appropriate to provide a basis for our opinion on the consolidatedfinancial statenrents.
Emphasis of matter
As described in Note 7.1 to the consolidated financial statements, in respect of accour.rts overdue butstandard as at 29 Februan' 2020 u'here rloratoriun.r beneflt has been granted. the staging of thoseaccounts as at 3l March 2020 is based on the days past due status as on 29 FebrLrary 2020. inaccordance with Reserve Bank of lndia ('RBI') COVID-19 Regulatory Package.Ilcq
B S R & Co (a pannership firm withRegistration No. 8461 223) converted intoB S R & Co. LLP (a Limited Liability, Partnershipwith LLP Registration No. AAB-8181)with eflect fronr October 14, 201 3
Telephone +91 Q2\ 4345 5300Fax +91 l22l 4345 5399
Begistered Office:5lh Floor, Lodha Excelus
Apollo Mills CompoundN. M. JoshiMarg, l/al]alaxmiMumbai 400 011 . lndia
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services LimitedEmphasis of matter (Conlinued)
As described in Note 40.1 (iv) to the consolidated financial statements, the extent to which the COVID-l9 pandemic will impact the Group's financial performance is dependent on future developments,which are highly unceftain.
Our opinion is not rnodified in respect of the above matters
Key Audit Nlatters
Key audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in fonring our opinionthereon, and we do not provide a separate opinion on these matters.
Key audit matterlmpairment of loans
How the matter was addressed in our audit
Charge: INR 2,448.57 for the year ended 3l March 2020Provision: INR 6,173.43 as at 3l March 2020Re/'er to lhe accountingpolicies in the consolidatedfinancial statements: Note 3.6 to lhe consolidatedfinancialstatemenls: 'Significant accounting policies' and Note 7 to the consolidatedfinancial slolements: 'Loans'Subjective estimate Our key audit procedures included:
Recognition and rneasurement of impairment ofloans and advances involve significant management
-judgement.
Design / controls
Evaluated the appropriateness of the irnpairmentprinciples based on the requirements of Ind AS 109,our business understanding and industry practice.Under Ind AS 109, Financial Instruments,
allowance for loan losses are determined usingexpected credit loss ('ECL') model. The Group'sirnpairment allowance is derived from estimatesincluding the historical default and loss ratios.Management exercises judgement in determiningthe quantum ofloss based on a range offactors.
The most significant areas are
Understood management's revised processes, systemsand controls implemented in relation to impainnentallowance process, parlicularly in view of COVID-19regulatory package.
Evaluated management's controls over collation ofrelevant information used for determining estimatesfor management overlays on account of COVID- 19.
Tested the controls over 'Governance Framework' inline with RBI guidance.
Assessed the design and irnplementation of keyinternal financial controls over loan irnpairrnentprocess used to calculate the irnpairment charge.
Tested review controls over measllrement ofimpairment allowances and disclosures in standalonefinancial statements.
Segmentation of loan bookDetermination of exposure at defaultLoan staging criteriaAssigning internal rating to Retail AssetChannelCalculation of probability of default / Lossgiven defaultConsideration of probability weightedscenarios and fonvard looking macro-economic factors
The application ol ECL rrodel requires several datainputs. This increases the risk of conrpleteness andaccuracv of the data that has been used to createassumptions in the model. In sonre cases. data isunavailable and leasonable alternatives have beenapplied to allou calculations to be perfonned.
^,.
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services LimitedKey Audit Matters (Continued)
,l$
Key audit matterlmpact of COVID-19
On I I March 2020, the World Health Organisationdeclared the Novel Coronavirus (COVID- l9)outbreak to be a pandemic.
We have identified the irnpact of, and uncertaintyrelated to the COVID l9 pandemic as a key elementand consideration for recognition and measurementof impairment of loans and advances on account of:
Short-term and long-term macroeconomiceffect on businesses in the country and globallyand its consequential first order and cascadingnegative impact on revenue and employmentgeneration opportunities;
impact of the pandemic on the Group'scustomers and their ability to repay dues; and
application of regulatory package announcedby RBI on asset classification and provisioning.
Management has conducted a qualitativeassessment of significant increase in credit risk('SICR') of the loan portfolio with respect to themoratorium benefit to borrowers prescribed by RBIand considered updated macroeconomic scenariosand the use of management overlays to reflectpotential impact of COVID-19 on expected creditlosses on its loan portfolio.
How the matter was addressed in our auditSubstantive tests
Assessed the appropriateness of management'srationale for determination of criteria for SICRconsidering both: adverse effects of COVID 19 andmitigants in the form of RBI / Government financialrelief package.
Assessed the appropriateness of changes made inmacroeconomic factors and management overlays tocalibrate the risks that are not yet fully captured by theexisting model.
Corroborated through independent check and enquiriesthe reasonableness of management's assessment ofgrading of severity of impact of COVID-I9 onsegments of its loan portfolio and the resultantimpairment provision computed.
We used our modelling specialist to test the modelmethodology and reasonableness of assumptions used.
Focused on appropriate application of accountingprinciples and reasonableness of assumptions used inthe model.
Performed test of details over of calculation ofimpairment allowance for assessing the completeness,accuracy and relevance ofdata.
Model calculations testing through re-performancewhere possible.
Appropriateness of management's judgments was alsoindependently reconsidered in respect of calculationmethodologies. segmentation, economic factors, theperiod ofhistorical loss rates used and the valuation ofrecover] assets and collateral.
Assessed the appropriateness of the additionalflnancial statements disclosures rrrade by the Groupresarding inrpact of COVID- 19.
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services LimitedKey Audit Matters (Continued)
Key audit matterInformation technologyInformation Technology ('lT') systenrs and controls
The Group's key financial accounting and reportingprocesses are highly dependent on the automatedcontrols in information systems, such that there existsa risk that gaps in the IT control environrnent couldresult in the financial accounting and reportingrecords being materially m isstated.
We have focused on user access management,change management, interface controls and systemapplication controls over key financial accountingand repofting systems.
Horv the matter was addressed in our audit
Our audit procedures to assess the lT system accessmanagement included the following:
General IT controls / application controls anduser access management. We tested a sample of key controls operating over
the information technology in relation to financialaccounting and reporting systems, includingsystem access to program and data, programchange, and system change management,program development and computer operations.
We tested the design and operating effectivenessof key controls over user access managementwhich includes granting access rights, new usercreation, removal of user rights, user accessreview and preventative controls designed toenforce segregation of duties.
For a selected group of key controls overfinancial and reporting system, we independentlyperformed procedures to determine that thesecontrols remained unchanged during the year orwere changed following the standard changemanagement process.
We evaluated the design, implementation andoperating effectiveness of the significant accountsrelated IT automated controls which are relevantto the accuracy of system calculation, and theconsistency of data transmission.
Other areas that were independently assessed
included password policies, program changemanagement procedures, system configurations,system interface controls, controls over changesto applications and that business users anddevelopers did not have access to rnigratechanges in the production environrnent and theprivileged access to applications, operatingsystem or databases is restricted to authorized
rsonnel
Other Information
The Holding Cornpany's tnanagernent and the Board of Directors are responsible for the otherinformation. The other irtfornration cornprises tlre infbrmation included in the Holding Cornpany'sannltal repoft, but does not include Ihe consolidated financial statemetrts and our auditor's reportthereon. The other infonnatiott is expected to be nrade available to us after the date of this auditor'sreport.
Our opinion ott the consolidated t-inartcial statelrents does not cover the other inforrnation and rve do notexpress any fbrrn of assurance conclusion thereon.
h,\
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services LimitedOther Information (Contin ue d)
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information identified above when it becomes available and, in doing so, consider whether theother information is materially inconsistent with the consolidated financial statements or our knowledgeobtained irr the audit, or otherwise appears to be materially misstated. When we read the annual repoft,if we conclude that there is a material misstatement therein, we are required to communicate the matterto those charged with governance.
Management's and Board of Directors' Responsibilities for the Consolidated FinancialStatements
The Holding Company's Managernent and the Board of Directors are responsible for the preparation andpresentation of these consolidated financial statements in term of the requirements of the Act that give a
true and fair view of the consolidated state of affairs, consolidated profit and other comprehensiveincome, consolidated statement of changes in equity and consolidated cash flows of the Group includingits accordance with the accounting principles generally accepted in India, including the IndianAccounting Standards ('Ind AS') specified under section 133 of the Act. The respective Managementand the Board of Directors of the companies included in the Group are responsible for maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguarding the assets ofeach company and for preventing and detecting frauds and other irregularities: the selection and
application of appropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design, implementation and maintenance of adequate internal financial controls, thatwere operating effectively forensuring accuracy and completeness of the accounting records, relevant tothe preparation and presentation of the consolidated financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error, which have been used fbr thepurpose of preparation of the consolidated financial statements by Managernent and Directors of the
Holding Conrpany, as aforesaid.
In preparing the consolidated financial statements, the respective Managernent and tlre Board ofDirectors of the companies included in the Group are responsible for assessirrg the ability of each
company to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Board of Directors either intends toliquidate the company or to cease operations, or has no realistic alternative but to do so.
The respective Board of Directors of the cornpanies included in the Group is responsible for overseeingthe financial reporting process of each company.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statenrents as
a lvhole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Reasonable assurarrce is a high level of assurance. but is not a
guarantee that an audit conducted in accordance rvith SAs rvill ahvays detect a material misstaternentwhen it exists. Misstatements can arise from fraud or error arrd are corrsider-ed nraterial i1. individuallyor in the a-q-sre-qate. they could reasonably be expected to influence the econorric decisions of users
taken on the basis of these consoliclated financial stater.nelrts.
{,\
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services Limited
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements (Corrtinued)
As part of an audit in accordance with SAs, rve exercise professional judgrnent and maintainprofessional skepticism throughor:t the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk ofnot detecting a material misstatement resultirrg from fraud is higher than for one resulting from error,as fraud may involve collusion, forgery, intentional omissiorrs, nrisrepresentations, or the override ofinternal control.
Obtain an understarrding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143 (3) (i) of the Act, we arealso responsible for expressing our opinion on the internal financial controls with reference to theconsolidated financial statements and the operating effectiveness of such controls based on ouraudit.
a
a
a
Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by Management and the Board of Directors.
Conclude on the appropriateness of Management and the Board of Directors use of the goingconcern basis of accounting in preparation of the consolidated financial statemeuts and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the appropriateness of this assumption. If we conclude that a
material uncertainty exists, we are required to drarv attention in our auditor's report to the relateddisclosures in the consolidated financial statements or, if such disclosr-rres are inadequate, tomodifu our opinion. Our conclusions are based on the audit evidence obtained up to the date ofour auditor's report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
Evaluate the overall presentation, stnrcture and content of the consolidated financial statements,including the disclosures, and whether the consolidated finarrcial statements represent theunderlying transactions and events in a rnanner that achieves fair presentation.
o Obtain sufficient appropriate audit evidence regarding the financial information of such entities orbusiness activities within the Group to express an opinion on the consolidated financialstaternents. We are responsible for the direction, supervision and perfonnance of the audit offinancial information of sr,rch entities included in the consolidated financial statements of whichwe are the independent auditors. For the other entities included in the consolidated financialstatements, which have been audited by other auditor, such other auditor rernain responsible forthe direction, supervision and perfonnance of the audits carried out by them. We remain solelyresponsible for our audit opiniorr. Our responsibilities in this regard are further described in thesection titled 'Other Matter' in this audit reporl.
We believe that the audit evidertce obtained by Lrs along rvith the consideration of audit reports of theother auditor referred to in the Other Matter paragraph belou,. is sufllcient and appropriate to provide a
basis for our audit opinion on the consolidated firrancial statenteltts.
We comnrunicate with those clrarged with governance of the Holding Cornpany and such other entitiesincluded in the consolidated financial statenrerits of u,hich we are the independent auditors regarding,among otlrer rnaftet's. the planned scope and tirring of the audit and si-snificant audit findings. includingany significant deficiencies in internal controlthat lve identifr. durin-u our audit.
I,fOn
a
BSR&Co.LLP
Independent Auditor's Repo rt (Co nti n ued)
MAS Financial Services Limited
Auditor's Responsibilities for the Autlit of the Consolidated Financial Statements (Continued)
We also provide those charged with governance with a statement that we have cornplied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thoLrght to bear on our independence, and where applicable, relatedsafeguards.
From the matters cornmunicated rvith those charged with governance, we deternrirre those matters thatwere of rnost significance irr the audit of the consolidated financial statements of the current period andare therefore the key audit nratter"s. We describe these matters in our auditor's repoft unless law orregulation precludes public disclosLrre about the matter or when, in extremely rare circumstances, wedetermine that a matter shoLrld not be coml.nunicated in our report because the adverse consequerrces ofdoing so would reasonably be expected to outweigh tlie public interest benefits of such cornmurrication.
Other Matter
We did not audit the finarrcial statenrents of a subsidiary whose financial statements reflect total assets
of Rs. 21,937.27 lac as at 3l March 2020, total revenues of Rs. 3,970.81 lac and net cash outflowsamounting to Rs.2,015.44 lac for tlte year ended on that date, as considered in the consolidatedfinancial statements. These financial statements have been audited by other auditor whose report havebeen furnished to us by Managelnent and our opinion on the consolidated financial statements, in so faras it relates to the amounts and disclosures inclLrded in respect of this subsidiary and our report in termsof sub-section (3)of Section 143 of tlre Act, in so far as it relates to the aforesaid subsidiary is based
solely on the ar:dit reports of the other ar-rditor.
Our opinion on the consolidated financial statements, and our Reporl on Other Legal and RegulatoryRequirements belolv, is not nrodified in respect of the above matter with respect to our reliance on thework done and the report of the other auditor.
Report on Other Legal antl Regulatory'Requirements
As required by Section 143 (3 ) of the Act, based on our audit and on the consideration of report ofthe other auditor on separate financial slatements of a subsidiary as were audited by other auditor,as noted in the 'Other Matter' paragraph. we report, to the extent applicable, that:
a) We have sought and obtained all the information and explanations which to the best of ourkrrowledge and belief were necessary for the purposes of our audit of the aforesaidconsolidated fi nancial statenrents.
b) In our opinion, proper books of accolnrt as required by law relating to preparation of thealoresaid consolidated flnancial statelrents have been kept so far as it appears frorn ourexarnination of those books and the reporl of the other auditor.
c) The consolidatecl balarrce sheet. the corrsolidated statement of profit and loss (inclLrding otherconrprelrensive incorne). the consolidated staternent of changes in equity and the consolidatedstatenrent olcash florvs dealt with by this Repo( are in agreement with the relevant books ofaccor.nrt rnaintained fbr the purpose of preparation of the consolidated financial staternents.
d) Irr our opirrion. the afbresaid consolidated financial statements cornply with the Ind ASspecified uncler section 133 of the Act.
A
4..
BSR&Co.LLP
Independent Auditor's Repo rt (Contin ued)
MAS Financial Services Limited
Report on Other Legal and Regulatory Requirements (Continued)
e) On the basis of the written representations received from the directors of the HoldingCompany as on 31 March 2020 taken on record by the Board of Directors of the HoldingCompany and the reports of the statutory auditor of its subsidiary company incorporated inIndia, none of the directors of the Group companies incorporated in India is disqualified as on3 I March 2020 from being appointed as a director in terms of Section 1 64 (2) of the Act.
0 With respect to the adequacy of the internal financial controls with reference to consolidatedfinancial statements of the Holding Company and its subsidiary company incorporated inIndia and the operating effectiveness of such controls, refer to our separate Report in'Annexure A'.
B. With respect to the other matters to be included in the Auditor's Report in accordance with RuleI I of the Companies (Audit and Auditor's) Rules, 2014, in our opinion and to the best of ourinforn-ration and according to the explanations given to us and based on the consideration of therepofts of the other auditor on the separate financial statements of the subsidiary as noted in the'Other Matter' paragraph:
i. Tlrere were no pending litigations as at 31 March 2020 which would impact theconsolidated financial position of the Group:-
ii. The Group did not have any material foreseeable losses on long-term contracts includingderivative contracts during the year ended 31 March 2020;
iii. There are no amounts which are required to be transferred to the Investor Education andProtection Fund by the Holding Company or its subsidiary company incorporated in Indiadrrring the year ended 31 March 2020; and
iv. The disclosures in the consolidated financial statements regarding holdings as well as
dealings in specified bank notes during the period from 8 November 2016to 30 December2016 have not been made in the consolidated financial statements since they do not pertainto the financial year ended 31 March 2020.
C. With respect to the matter to be included in the Auditor's report under section 197 (16)
In our opinion and according to the information and explanations given to us and based on thereport of the statutory auditor of a subsidiary company incorporated in India which was r.rot
audited by us, the remuneration paid during the current year by the Holding Company and itssubsid iary company to its directors is in accordance with the provisions of Section 197 of the Act.The remuneration paid to any director by the Holding Company and its subsidiary company is rrot
in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairshas not prescribed other details under Section 197 (16) which are required to be commented uponby us.
FoTBSR&Co.LLP
Fin.n'sRegistration"t,'i';:;:i;;1i';";;;Z;';
ffi^((.r{'tL"'
MLrr-nbai
3 .lLrne 2020
Sameer MotaPorlner
Membership No.109928UDIN : 20 I 09928AAAADN85 B7
BSR&Co.LLP
Annexure A to the Independent Auditor's report on the consolidated financialstatements of MAS Financial Services Limited for the year ended 3l March2020
Report on the internal financial controls rvith reference to the aforesaid consolidated financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013
(Referred to in paragraph A (f) under 'Report on Other Legal and Regulatory Requirements'section ofour report ofeven date)
Opinion
In conjunction with our audit of the consolidated financial statements of the Company and its subsidiary(collectively referred as 'Group') as of and for the year ended 3 I March 2020,we have audited the internalfinancial controls with reference to the consolidated financial staternents of MAS Financial ServicesLimited (hereinafter referred to as the 'Holding Conrpany') and a company incorporated in India underthe Companies Act,20l3 (the'Act') which is its subsidiary company, as of that date.
In our opinion, the Holding Company and a company incorporated in India which is its subsidiarycompany, have, in all material respects, adequate internal financial controls with reference to theconsolidated financial statements and such internal financial controls were operating effectively as at 31
March 2020, based on the internal financial controls with refereuce to the consolidated financialstatements criteria established by such companies considering the essential components of such internalcontrols stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Repoftingissued by the Institute of Charlered Accountants of India (the 'Guidance Note').
Management's Responsibility for Internal Financial Controls
The respective company's mattagement and the Board of Directors are respolrsible for establishing andmaintaining internal financial controls with reference to the consolidated financial statements based onthe criteria established by the respective company considering the essential components of internal controlstated in the Guidance Note. These responsibilities include the design, irnplementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring the orderly and efficientconduct of its business, including adherence to the respective conrpany's policies, the safeguarding of itsassets, the prevention and detection offrauds and errors, the accuracy and cornpleteness ofthe accountingrecords, and thetirnely preparation of reliable frnancial infonnation, as reqr.rired underthe Act.
Emphasis of Matter
As described in Ernphasis of Matter paragraph of our reporl to the consolidated financial statements, theextent to wlrich the COVID l9 pandemic will have impact on the Cornpany's internal financial controlswith reference to the consolidated financial staterrents is dependent on luture developrnents, which arehighly unceftain.
Our opinion is not modified in respect of this nratter.
Auditor's Responsibility
Our responsibility is to express an opirrion on the internal financial controls with refererrce to theconsolidated financial staterxents based on our audit. We conducted our audit in accordance witlr theGuidance Note and the Standards on Auditing. prescribed under section 143 ( l0) of the Act, to the extentapplicable to an aLrdit of internal financial corrtrols rvith reference to the consolidated finarrcial staterrents.Those Standards and the Guidance Note require that u,e cornply rvith ethical requirerrents and plan andperform the audit to obtain reasonable assurance about rvhether adequate internal financial controls withreference to the consolidated financial statenrer.lts rvere established and ntaintained arrd if such controlsoperated effectively in all material respects.
Our audit involves perfornrin-u procedures to obtaiu audit eviderrce about the adequaci, of the ilrternalflnancial controls r'vith ref-erence to the consoliclated financial staternents and their operatirrg ef'lectiveness.
h
BSR&Co.LLP
Annexure A to the Independent Auditor's report on the consolidatedfinancial statements of MAS Financial Services Limited for the year ended31 March 2020 (Continued)
Auditor's Responsibility (Co rrti n ued)
Our audit of internal financial controls with reference to the consolidated financial statemeltts includedobtaining an understanding of internal finarrcial controls with reference to the consolidated financialstatements, assessirtg the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness ofthe internal controls based on the assessed risk. The procedures selected dependon the auditor's judgement, including the assessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditorof the relevant subsidiary cornpany in tenns of their reports referred to in the Other Matters paragraphbelow, is sufficient and appropriate to provide a basis for our audit opinion on the internal financialcontrols with reference to the consolidated financial statements.
Meaning of Internal Financial controls with Reference to the Consolidated Financial Statements
A company's internal financial controls with reference to the consolidated financial statements is a processdesigned to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of the consolidated financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial controls with reference to the consolidatedfinancial statemetrts includes those policies and procedures that (1) perlain to the maintenance of recordsthat, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of thecompany, (2) provide reasonable assurance that transactions are recorded as necessary to pernritpreparation of the consolidated financial statements in accordance with generally accepted accountingprinciples, and that receipts arrd expenditures of the company are being made only in accordance withauthorisations of managernent and directors of the company; and (3) provide reasonable assuranceregarding prevention or tinrely detection of unauthorised acquisition, use, or disposition of the cornparry'sassets that could have a nraterial ef'fect on the consolidated financial statements.
Inherent Limitations of Internal Financial controls with Reference to the Consolidated FinancialStatements
Because of the inherent limitations of intenral financial controls with reference to the consolidatedfinancial statements, inclr,rding the possibility of collusion or improper management override of controls,material misstaternents due to error or fraud may occur and not be detected. Also, projections of anyevaluation of the internal financial controls with reference to the consolidated financial statements tofuture periods are subject to the risk that the internal financial controls with reference to the consolidatedfinancial staternents may become inadequate because of changes in conditions, or that the degree olcompliance with the policies or procedures may deteriorate.
Other Matter
Our aforesaid report under Section 143 (3) (i) of the Act on the adeqr.racy and operating effectiveness ofthe internal financial controls with reference to the consolidated financial statements insofar as it relatesto a subsidiary cornpany. ivhich is a cornpany incorporated in India, is based on tlre corresponding reportof the aLrditor of sLrch conrpany irrcorporated in India.
FoTBSR&Co.LLPC herrl ere el Ac c oun I utl / s
Firnr's Registration No: I 01248W lW -100022
Crrvtcr'z 'W -'
Sameer MotaPurtrtcr
Membership No.109928UDIN : 20 I 0992BAAAADN8587
,@Murrbai3 June 2020
JruTF FINANCIAL SERVICES LIMITED
CONSOLIDATED BALANCE SHEETAS AT 31 MARCH 2O2O
({ in I-akhs)
ASSETS
Financial assets
Cash md cash equivalents
Bank balmce other than cash and cash equivalents
Loans
Investments
Other financial assets
Non-Iinancial assets
Income ta,\ assets (net)
Defered tax assets (net)
hoperty, plant and equipment
Capital work-in-progress
Right-of-use asset
Other intangble assets
Other non-finmcial assets
EQUITYEquity shae capital
Other equity
Non-controlling interest
See accompmfng notes to the flnancial statements
ln tems of our report of even date attached
FoTBSR&Co.LLPChartered Accountants
Fim's Regishation No: l01248WIV-100022
Total {inancial assets
Total non-Iinancial assets
Total assets
Total financial liabilities
Total non-financial liabilities
Total liabilities
Equity attributable to the ownem ofthe Holding Company
Total equity
Total liabilities and equity
Darshana S. Pandya(Director & Chief Executive fficer)(DrN - 07610402)
4ryRiddhi B. Bhayani(Company Secretary & Compliance fficer1(Membership No: A41206)
Ahmedabad
3 June 2020
Note no.
26
26
10(a)
10(d)
I 0(c)
I o(b)
11
As at3l March 2020
As at3l March 2019
5
67
8
9
26
15
26
16
1,04,554.26192.60
3,59,222.60
500.00
9,072.40
tq 6qq 95
1,280.68
3,48,267.74
3,577 .58
4,73,541.86 3,92,825.95
1)? ))60.13
1,282.91
4,821.34
167.65
11.80
317.82
95.16
69.41
r,239.67
4,564.43
12.01
245.26
6,884.87 6,225.94
LIABILITIES AND EQUITY
LIABILITIES
Financial liatrilitiesPayables
(I)Trade payables
(i) total outstmding dues ofmicro enterpnses and small enterprises
(ii) total outstmding dues ofcreditors other than micro enterprises ald small enterprises
(II) Other payables
(i) total outstanding dues ofmicro enterprises md small enterprises
(ii) total outstanding dues ofcreditors other thm micro enterprises and small enterprises
Debt securities
Bonowings (other thm debt secunties)
Other financial liabilities
Non-fi nancial liabilitiesCunent ta liabilities (net)
Provisions
Defened tax liabilities (net)
Other non-financial liabilities
4,80,426.73 _____l,ex91q2_
812.78 600.1 0
12
13
11
s,989.r82,73,599.82
91,066.88
5,981.78
2,21,327.10
73,27 5.78
3,71,468.66 3,01,184.7 6
47.22
444.41
1,879.4s
1,621 .96
t7 .19
860.55
1,935.32
2,371.08 4,435.02
3,7J,839.74 3,05,6 I 9.78
17
18
s,466.20
99,t31.64s,466.20
86,088.59
1,04,597.84 91,554.79
1,989.1s 1,877.32
1,06,586.99 93,432.11
1,80,426.73 3,99,051.89
MMembership No: 109928
Samcr MotaParlner
For and on behalf ofthe
8AFof
Kamlesh C. GandhiDireclor)
(DrN - 00044852)
I
Mukesh C. GandhiChief Finmcial OJficel
(DrN - 00187086)
Cttyt(cll-\ '-'
Mumbai3 June 2020
qlthole I'ime
lfrCAF FINANCIAL SERVICES LIMITED
CONSOLIDATED STATEMENT OF PROFIT AND LOSSFOR THE YEAR ENDED 3I MAR(:H 2O2O
(t in Lakhs)
I. Rwenue from operationsInterest income
Gain on msigmmt of filmcial msets
Fees md commission income
Total reenue from operationgOthq income
Total income
IL ExpenseFimce costs
Fes md commission expmse
Impaimflt on fimcial 6setsEmployee beneflits expemes
Depreciation md mortiationOthos expmes
Total expen36
Profit before exceptional items and tat (I - [)Exceptional itms
m. Profit before tax
fV. Tax expen*:Cuent tax
Short / (excess) provision for ta\ relating to prior yesNet curretrt tax expensDefened tax (credit) / chage
Net tax erperre
V. Prolit for the yer (Itr - IY)
VI. Other compreheasive income
(A) Itms that will not be recldsfied to profit or loss:
Rmecumat of the defmed bmefit tiabilities
lnmme tax impact on above
Net gain on equity immmflts mesued through otha comprehmive income
lncome tax impact on above
Total (A)(B) Items that will be reclosified to profit or loss:
Loas md advmces through other comprehmsive llcome
lncome tax relatlng to items that will be recl$sified to profit or loss
Total (B)
Other comprehensive itrcome (A+B)
VII. Total comprehersive income (V + Vf)
VItr. Profit for the y€r attributable to
Ownss of the Holdmg CompmyNon-controlling intsest
DL Other comprehensive income attributgble to
Ownas of the Holdng CompmyNon-contolling interest
)(. Total comprehensive income attributable to
Ownere of the Holding CompmyNon-contolling inttrest
XI. Earnings per equity share (of { 10 €ch):Buic (t)Diluted Ct)
hovisionsCASH GENERATED FROM / (USED IN) OPERATIONS
Interest income received
Finmce cost paid
Income tu paid (net)
CASH FLOW FROM / (USED IN) OPERATING ACTIVITIES (A)
B. CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditue on property, plmt md equipment md inungible assets, including capital advaces
koceeds from sale of property, plmt md equipment md intangible msets
Chmge in Emaked balmces with burks
Interest income from bmk deposits
lnterest income on investnents measued at morlised cost
Purchase ofinvestments memued at amortised cost
Proceeds from redemption of investrnents
CASH FLOW (USED IN) INVESTING ACTIVITIES (B)
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of shres of subsidiary
Proceeds from debt secuities md borowingsRepalments of bonowings
Net increase / (decrease) in working caprtal bonowings
Repalment of principal component of lease liabilityDividends paid including dividend distribution tuCASH FLOW FROM / (USED IN) FINANCING ACTIVITIES (C)
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C)
Cash md cash equivalents at the begiming of &e yea
Cash and cash equivalents at the end of the yur (refer note I below)
(16,921.09)
(14.01)
1,001. I 6
(43s.6s)
212.68
(1,142.4s)
17,627.08
30.03 357.75
5,557.21
Yer ended
3l Mdch 2019
23,860.1 9 23.800.8 I
160.36
22.366.05
1,465.00
4,078.65
(r.77)200.44
(47,416.64)(729.36)
(1e.61)
( l. r0)(18,660.73) (19,897.98)
5,199.46 3,902.83
(78,789.28)
291.08
(987.92)
(186.61)
Year ended
31 March 2020
2E5.05
29,611.20
2,148.576,445.96
0.E2
327.03
(s6,47t.r7)(r,272.86)
(19.12)(8.26)(0.es)
239.35
6,339.82
5,410.21
(67.3'7) (67,744.12)
s0,985.09(28,863.68)
(8,04s.2 l) 14,076.20
46,490.98
(22,25t.s8)(7,t97 .87)
(63,84 1.89)
t7,041.53
19,633.,11 (46,800.36)
(200 45)
3.79
732.t3
839.74
9.96
1.385.r
(461.41)
0.s3
86.92
1,290.14
5.49
(s00.00)
421.67
99,82s.00(20,230.21)
(26,983.9r)(r rE.78)
(7,692.87)
200.00
84,790.01
(2',7,131 .42)24,773.61
(2.449.2e)
44,799.23
64,854.31
39,699.95
80.176.91
tmS-1,^S
_____.!,q85!2!_ 39,699.9s
34,',|61.72
4.938.23
dECAF FINANCIAL SER\{CES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWSFoR l'HE YEAR ENDED 3 1 MARCH 2O2O
({ in Lakhs)
Nots;
Cash md bank baluces at the end ofthe yeil comprises:
(a) Cash on hmd(b) Balmces with bmksTotal
Bank deposits with original mnuity of 3 months or less
Cash and cash equivalents as per the balance sheet
As at3l March 2020
As at
3l Mach 2019
21.19
78,532.77
25.01
-1 1.024.91
78,554.26
26,000.00
31,049.95
8,650.00
1.04.ss4.26 39.699.9s
2 The above cash flow statement has been prepued wdo the "lndirect method" as set out in the Ind AS - 7 on statement ofcash flows specified mder section 133 ofthe Compmies
Act,2013.
3 TheGroupappliedlndASl16atlApril 20lg,uingthemodifiedretrospectiveapproach.Underthisapproach,compmtiveinfomtionisnotrestatedmdthecmulativeeffectofinitially applying Ind AS I 16 is recognised in retained emings at the date of initial application.
4 The Group ro at 3l Mach 2020 hm mdmm bonowing ficilities momting to t 77,880.55 lakhs that my be available for futue opemting activities ud to s€ule caPital
comitnents.
5 Change in liabilities arising from financing activities
I April 2019 Cash flows Non cash changes*
'7.40
(838 07)
3l March 2020
securities 5,981.78
2,21,327 10
5,989.1 8
2,"13,599.82other thm debt securities 53.1 I 0 79
liabilities from fi nancing activities
* Non-cash chmges reprcsents the effect of mortiztion of trmsaction cost.
Riddhi B. Bhayani(Company Secretary & Compliance Oficer)(Membenhip No: ,A41206)
Ahmedabad
3 Jue 2020
M
BSR&Co. LLPChartered Accountants
Independent Auditor's Report
To the Members ofMAS Financial Services LimitedReport on the Audit of the Standalone Financial Statements
Opinion
We have audited the standalone financial statements of MAS Financial Services Limited (the'Company'), which comprise the standalone balance sheet as at 3l Marcll 2020, and the standalonestatement of profit and loss (including otlrer comprehensive income), the standalone statement ofchanges in equity and the standalone statement of cash flows for the year then ended, and notes tothe standalone financial statements, including a summary of the significant accounting policies andother explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, theaforesaid standalone financial statements give tlre infonnation required by the Companies Act, 2013(the 'Act') in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India, of the state of affairs of the Company as at 3l March 2020,andprofit and other comprehensive income, changes in equity and its cash florvs for the year ended on thatdate.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing ('SAs') specified under section143 (10) of the Act. Our responsibilities under those SAs are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Slatements sectiorr of our repoft. We are
independent of the Company in accordance with the Code of Ethics issued by the Institute of Cha(eredAccountants of India together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunder, and we havefulfilled our other ethicalresponsibilities in accordance rvith these requirernents and the Code of Ethics.We believe that the audit eviderlce we have obtained is sLrfficient and appropriate to provide a basis forour opirrion on the standalone financial statemerlts.
Bmphasis of matter
As described in Note 7.1 to the standalone financial statelnents, in respect of accourrts overdue butstarrdard as at 29 February 2020 where rnoratoriurn benefit has been granted, the staging of thoseaccounts as at 3 I March 2020 is based on the days past due status as on 29 February 2020, inaccordance r.vith Reserve Bank of India ('RBI') COVID-19 RegLrlatory Package.
As described in Note 42.1 (iv) to the standalone financial statements, the exterrt to which the COVID-19pandenric will irnpact the Conrpany's financial performance is dependent on future developments,which are highly unce(ain.
Our opinion is not rnodified in respect of the above nratters.
B S R & Co (a partnership firm withReqistration No. 8461223) @nverled intoB S R & Co. LLP (a Limited Liability, Partnershipwith LLP Begistration No. AAB-8181)with elfect f rom October 'l4, 20'l 3
Apollo Mills CompoundN. M. Joshi Marg, MahalaxmiMumbai ' 400 011 . lndia
4\
BSR&Co.LLP
Independent Auditor's Report (Contin ued)
MAS Financial Services Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in ouraudit of the standalone financial statements of the current period. These matters were addressed in thecontext of our audit of the standalone financial statements as a whole, and in forming our opinionthereon, and we do not provide a separate opinion on these matters.
Description of Key Audit Matter
Charge: INR 2,256.51 for the year ended 31 March 2020Provision: INR 5,856.44 as at 3l March 2020Refer to the accountingpolicies in the standalonefinancial statentents: Note 3.6 to the standalonefinancialstatements: 'Significant accounting policies' and Note 7 to the standalonefinancial statements: 'Loans'Subjective estimate Our key audit procedures included:
Recognition and measurement of impairrnent ofloans and advances involve significant managementjudgement.
Design / controls
Evaluated the appropriateness of the impairmentprinciples based on the requirements of Ind AS109, our business understanding and industrypractice.
Key audit matterImpairment of loans
Under Ind AS 109, Financial Instruments, allowancefor loan losses are determined using expected creditloss ('ECL') model. The Cornpany's impairmentallowance is derived frorn estimates including thehistorical default and loss ratios. Managementexercises judgernent in detemining the quantum ofloss based on a range of factors.
The rnost significant areas are:
Segmentation of loan bookDetermination of exposure at defaultLoan staging criteriaAssigning internal rating to Retail AssetChannelCalculation of probability of defhult / Lossgiven defaultConsideration of probability weiehtedscenarios and forrvard lookinc macro-economic factors
The application of ECL model requires several datainputs. This increases the risk of completeness and
accuracy of the data that has been used to create
assumptions in the model. In sorne cases, data isunavailable and reasonable alternatives have beenapplied to allow calculations to be performed.
How the matter was addressed in our audit
Understood management's revised processes,
systerns and controls implernented in relation toimpairment allowance process, particularly in viewof COVID-19 regulatory package.
Evaluated management's controls over collation ofrelevant information used for determining estimatesfor management overlays on account of COVID-t9.
Tested the controls over 'Governance Framework'in line with RBI guidance.
Assessed the design and irnplementation of keyinternal financial controls over loan irnpairrnentprocess used to calculate the impainnent charge.
Tested review controls overimpairment allowances andstandalone fi nancial statements.
measurement ofdisclosures in
/,,\
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services Limited
Key Audit Matters (Continued)
Key audit matterImpact of COVID-19
On I I March 2020, lhe World Health Organisationdeclared the Novel Coronavirus (COVID-19)outbreak to be a pandernic.
We have identified the impact of, and uncerlaintyrelated to the COVID l9 pandemic as a key elementand consideration for recognition and measurementof impairment of loans and advances on account of:
Shoft-term and long-term macroeconomiceffect on businesses in the country and globallyand its consequential first order and cascadingnegative irnpact on revenue and employmentgeneration opportun ities;
impact of the pandernic on the Company'scustomers and their ability to repay dues; and
application ofregulatory package announced byRBI on asset classification and provisioning.
Management has conducted a qualitative assessment
of significant increase in credit risk ('SICR') of theloan portfolio with respect to the moratorium benefitto borrowers prescribed by RBI and consideredupdated macroeconomic scenarios and the use ofmanagement overlays to reflect potential impact ofCOVID-I9 on expected credit losses on its loanportfolio.
How the matter was addressed in our auditSubstantive tests
Assessed the appropriateness of management'srationale for determination of criteria for SICRconsidering both: adverse effects of COVID l9and mitigants in the form of RBI / Governmentfi nancial rel ief package.
Assessed the appropriateness of changes made inmacroeconomic factors and management overlaysto calibrate the risks that are not yet fully capturedby the existing model.
Corroborated through independent check and
enquiries the reasonableness of management'sassessment of grading of severity of impact ofCOVID-19 on segments of its loan portfolio and
the resultant impairment provision cornputed.
We used our modelling specialist to test the rrodelmethodology and reasonableness of assumptionsused.
Focused on appropriate application of accountingprinciples and reasonableness of asstrrrptions usedin the model.
Performed test of details over of calculation ofimpairment allowance for assessing thecompleteness, accuracy and relevance ofdata.
Model calculations testing through re-performancewhere possible.
Appropriateness of management's judgments was
also independently reconsidered in respect ofcalculation methodologies, segmentation,economic factors, the period of historical lossrates used and the valuation ofrecovery assets andcollateral.
Assessed the appropriateness of the additionalfinancial statements disclosures made by theCompany reqarding impact ol COVID- I 9.
IV
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services Limited
Key Audit Matters (Continued)
Other Information
The Company's matragement and the Board of Directors are responsible for the other inforrnation. Theother infonnation comprises the information included in the Comparry's annual report. but does notinclude the standalone financial staterrents and our anditor's report thereon. The other infonnation isexpected to be rnade available to us after the date of this auditor's repoft.
Our opinion on the standalone financial staternents does not cover the other infbrrlation and we do notexpress any fonl ofassurance conclusion thereon.
4\
Key audit matterInform ation technology
Information Technology ('lT') systems and controls
The Company's key financial accounting andreporting processes are highly dependent on theautomated controls in information systems, such thatthere exists a risk that gaps in the IT controlenvironment could result in the financial accountingand reporting records being materially misstated.
We have focused on user access management,change management, interface controls and systemapplication controls over key financial accountingand reporting systems.
How the matter rvas addressed in our audit
Our audit procedures to assess the IT system accessmanagement included the following:
General lT controls / application controls and useraccess management
We tested a sample of key controls operating over theinformation technology in relation to financialaccounting and reporting systems, including systemaccess to program and data, program change, andsystem change management, program developmentand computer operations.
We tested the design and operating effectiveness ofkey controls over user access management whichincludes granting access rights, new user creation,removal of user rights, user access review andpreventative controls designed to enforce segregationof duties.
For a selected group of key controls over financialand reporting system, we independently performedprocedures to deterrnine that these controls remainedunchanged during the year or were changed followingthe standard change management process.
We evaluated the design, implementation andoperating effectiveness of the significant accountsrelated lT automated controls which are relevant tothe accuracy of system calculation, and thecorrsistencr of data transrnission.
Other areas that were independently assessed
included password policies, program changemanagernent procedures, system configurations,system interface controls, controls over changes toapplications and that business users and developersdid not have access to migrate changes in theproduction environment and the privileged access toapplications, operating system or databases isrestricted to authorized personnel.
BSR&Co.LLP
Independent Auditor's Report (Continued)
MAS Financial Services Limited
Other Information (Contin ued)
In connection with our audit of tlre standalone financial statements, our responsibility is to read theother information identified above when it becomes available and, in doing so, consider whether theother information is materially inconsistent with the statement standalone financial staternents or ourknowledge obtained in the audit, or otherwise appears to be materially misstated. When we read theannual report, if we conclLrde that there is a rnaterial misstatement therein, we are required tocommunicate the matter to those charged with governance.
Management's and the Board of Directors' Responsibility for the Standalone FinancialStatements
The Company's Management and the Board of Directors are responsible for the matters stated insection 134 (5) of the Act with respect to the preparation of these standalone financial statements thatgive a true and fair view of the state of affairs, profit/loss and other comprehensive income, changes inequity and cash flows of the Corr-rpany in accordance with the accounting principles generallyaccepted in India, including the Indian Accounting Standards ('Ind AS') specified under section 133 ofthe Act. This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for saf-eguarding of the assets of the Company and for preventingand detecting frauds and other irregularities, selection and application of appropriate accountingpolicies; rnaking judgrnents and estimates that are reasonable and prudent; and design,implementation and mairttenarrce of adequate internal financial controls that were operatingeffectively for ensuring accuracy and completeness ofthe accounting records, relevant to the preparationand presentation of the standalone financial statements that give a true and fair view and are free fromrnaterial misstatement. whether due to fraud or error.
In preparing the standalone financial statenrelrts, Management and the Board of Directors are responsiblefor assessing the Company's ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and Lrsing the going concern basis of accounting unless the Board of Directorseither intends to liquidate the Compatty or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtairr reasonable assurance about whether the standalone financial statements as awhole are free from material nrisstatenrent, rvhether due to fraud or error, and to issue an auditor,sreport that includes our opittion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit condr.rcted in accordance with SAs will always detect a material misstatementwhen it exists. Misstatetnetlts can arise frotn fi'aud or error and are considered rrraterial if, individuallyor in the aggregate. they cottld reasonably be expected to influence the econornic decisions of userstaken on the basis of these standalone financial statements.
As parl of an audit irt accordarrce rvitlr SAs, we exercise professional jLrdgrnent and maintainprofessional skepticisrn throu_uhout the audit. We also:
o ldentify and assess the risks of nraterial rnisstatement of the standalone financial statements,whether due to fi'aud or error. design and perform audit procedures responsive to those risks, andobtain audit evidence that is sulficient and appropriate to provide a basis for our opinion. The riskof not detecting a Illaterial t.t'tisstatetrertt resulting from fraud is higher than for one resulting frorlerror. as fraud tnar'' ittvolve collLtsion. forgery. intentional ornissions, misrepresentations, or theoverride of internal control.
4^
a
BSR&Co.LLP
Independent Auditor's Repo rt (Conti n ued)
MAS Financial Services LimitedAuditor's Responsibilities for the Audit of the Standalone Financial Statements (Continued)
Obtain an urrderstanding of internal control relevant to tlre audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143 (3) (i) of the Act, we are
also respolrsible for expressing our opinion on whether the company has adequate intenralfirrancial controls with reference to standalone financial statements in place and the operatirrgeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures in the standalone financial statements made by Management andthe Board of Directors.
Conclude on the appropriateness of Management and the Board of Directors use of the goingconcern basis of accounting and, based on the audit evidence obtained, whetlrer a materialtncertainty exists related to events or conditions that may cast significant doubt on theCornpany's ability to continue as a going concern. If we conclude that a material unceftaintyexists, we are required to draw attention in our auditor's report to the related disclosures in thestandalone financial statements or, if such disclosures are inadequate, to modif, our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor's report.However, future events or conditions may cause the Company to cease to corrtinue as a goingconcern.
. Evaluate the overall presentation, structure and content of the standalone financial statements,including the disclosures, and whether the standalone financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We comrnunicate with those charged with governance regarding, arnong other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with govemance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and otherrnatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.
From the matters communicated with those charged with governance, we determine those matters thatwere of rnost significance in the audit of the standalone financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditor's report unless law orregtrlation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetemine that a matter should not be communicated in our repoft because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
l. As reqLrired by the Companies (Auditor's Reporl) Order,20l6 (the'Order') issued by the CentralGovernntettt in tenns of section 143 (1 l) of the Act, r.ve give in the'Annexure A' a staternent onthe matters specified in paragraphs 3 and 4 of the Order. tothe extent applicable.
(A) As required by Section 143 (3) of the Act, we report that:
a) We have sor-rght and obtained all the infornration and explanations which to the best ofour knowledge and belief rvere necessary for the purposes of or-rr ar-rdit.
b) ltr ottr opinion. proper books of account as required by larv have been kept by the
. Colnpany so far as it appears frorn our exart.rinatiotr of those books.I
4r\
a
a
BSR&Co.LLP
Independent Auditor's Repo rt (Co nti n ued)
MAS Financial Services Limited
Report on Other Legal and Regulatory Requirements (Cotttinued)
c) The standalone balance sheet, the standalone statement of profit and loss (incltrding othercomprehensive income), the standalone statement of changes in equity and the standalonestatement of cash flows dealt with by this Report are in agreement with the books ofaccount.
d) In our opinion, the aforesaid standalone financial statements comply with the Ind ASspecified under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 3l March2020taken on record by the Board of Directors, none of the directors is disqualified as on3l March2020from beingappointedasadirectorintermsof Section 164(2) oftheAct.
0 With respect to the adequacy of the internal financial controls with reference to thestandalone financial statements of the Company and the operating effectiveness of suchcontrols, refer to our separate Report in 'Annexure B'.
(B) With respect to the other matters to be included in the Auditor's Report in accordance withRule 11 of the Companies (Audit and Auditors) Rules, 2014,in our opinion and to the best ofour information and according to the explanations given to us:
i. The Company does not have any pendirrg litigations which would impact its financialposition;
ii. The Company did not have any long-terrn contracts including derivative contracts forwhich there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Educationand Protection Fund by the Cornpany; and
iv. The disclosures in the standalone financial statements regarding holdings as well as
dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these standalone financial statements since theydo not pertain to the financial year ended 31 March 2020.
(C) With respect to the matter to be included in the Auditor's Report under section 197 (16):
Itr our opinion and according to the information and explanations given to us, theremuneration paid by the Company to its directors during the current year is in accordancewitli the provisions of Section 191 of the Act. Rernuneration paid to any director is not inexcess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairshas not prescribed other details under Sectiot-t 197 (16) which are requirecl to be commentedr"rpon by us.
FoTBSR&Co.LLp
Firrr'sRegistrarionti!r';:i;';{ti;;:i:i'{;;;
aNlcw ' lt--Sameer Mota
ParlnerMenrbership No. 10992g
UDIN : 20 1 09928 AAAADe343 0
MMurnbai3 June 2020
BSR&Co.LLP
MAS Financial Services LimitedAnnexure 'A' to the Independent Auditor's report on the standalone financialstatements of MAS Financial Services Limited for the year ended 31 March2020
(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' sectionofour report ofeven date)
iv
ill
VI
vii. (a)
(a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of property, plant and equipment.
(b) The Company has a regular programme of physical verification of its property, plant andequipment by which all property, plant and equipment are verified every year. Inaccordance with this programme, all property, plant and equipment were physicallyverified by managernent during the year. In our opinion, the frequency of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed upon such verification.
(c) According to the information and explanations given to us and the records examined byus, the title deeds of imrnovable propefties included in property, plant and equipment areheld in the name of the Company.
The Company is a non-banking finance company ('NBFC') and does not hold any inventories.Accordingly, reporting under clause (ii) of the Order is not applicable.
According to the inforrnation and explanation given to us, the Company has granted secured andtunsecured loans to a company covered in the register maintained under Section 189 of theCompanies Act, 2013 (the 'Act').
(a) In respect of the aforesaid loan, the terms and conditions under which such loans weregranted are not prejudicial to the Company's interest.
(b) The Company has stipulated schedule of repayment of principal and payment of interestand repayment of principal amount and receipt of interest is regular.
(c) There is no overdue amount in respect of the aforesaid loans.
According to the information and explanations given to us, the Company has not granted anyloans, made investments or provided guarantees under Section 185 of the Act and has compliedwith the provisions of Section I 86 ( I ) of the Act. The Company being a NBFC, nothing containedin Section 186 is applicable, except subsection (l) of that Section.
According to the inforrnation and explanations given to us, the Company has not accepted anydeposits from the public to which the directives issued by Reserve Bank of India and theprovisions of Section 13 to76 or any otherrelevant provisions of the Act and the rules framedthereunder apply. Accordingly, the provision of clause 3 (v) of the Order is not applicable to theCompany.
According the infornlation and explanation given to us, maintenance of cost records has not beenspecified for the Cornpany by the Central Covernmenr urrder section 148 (l) of the Act.
According to the inforrnation and explanations given to us and on the basis of ourexamination of the records of the company, the ctrnpany has generally been regular indepositing undisputed statlrtory dues, incluaing pioviaent
"fund, ernployees-' state
insurance, it.tcot.tle tax, goods and services tax, cess and other material statutory duesapplicable to it to the appropriate authorities except instances of delay in payment ofprofessional tax of Rs. 7.754 due to delay in registrztion of two branches. As explaineclto tts' the Compan.v did not have any d,,es on account of sales tax. rvealth tax, duty ofcttstotlts. duty of excise and value added tax.
l,n
BSR&Co.LLP
MAS Financial Services LimitedAnnexure 'A' to the Independent Auditor's report on the standalone financialstatements of MAS Financial Services Limited for the year ended 3l March2020 (Continued)
There were no undisputed arnounts payable in respect of provident fund, employees' stateinsurance, incorne tax, goods and services tax, cess and other nraterial statutory duesexcept for professional tax which were in arrears as at 31 March 2020 for a period ofmore than six months from the date they became payable. The extent of arrears ofoutstanding statutory dues has been given below:
Name of the Statute
Department of Commercial Taxes
Department of Commercial Taxes
Department ol Commercial Ta,res
Nature of thedues
Professional tax
Professional tax
Professional tax
Amount(Rs.)
Period towhich theamountrelates
June 20 I 9
July 2019
Au_sust 2019
Due Dlte
l5 July 2019
I 5 August 201 9
l5 September 2019
80.00
400.00
680.00
(b) According to the information and explanations given to us, there are no dues of incometax, service tax and goods and service tax which have not been deposited with theappropriate authorities on account of any dispute except as below:
Name of Statute Nature ofdues
Income-tax Act,l96l
Income-tax
Period to whichthe amountrelates
AssessmentY ear: 2017 -
20t8
Amountd isputed(Rs. in Lac)
59.53
Amountu n paid(Rs. in Lac)
59 53
Forum wherethe dispute is
pending
Deputl'commissionerof Income tax
VIII In our opinion and according to the information and explanations given to us, the Company hasnot defaulted in the repayment of loans or borrowings to financial institutions, banks or dues todebenture holders. There are no loans or borrowings from governrnent.
The Cornpany did not raise any money by way of initial public offer or fufther public offer(including debt instruments) in current year. In our opinion and according to the infornratiorr andexplanations given to us, term loans have been applied for the purposes fbr which they wereraised.
During the course of our examination of the books and records of the Company. carried out inaccordance with the generally accepted auditing practices in India, and according to theinformatiott and explanations given to us, there are no material fraud by the Company or anyfraud on the Company by its officers or employees has been noticed or reported durirrg the year.
Irr ottr opinion and accorditrg to the information and explanations given to us, the Cornpany haspaid / provided for managerial remuneration in accordance with the requisite approvals mandatedby the provisions of Section l9r read with Schedule v to the Act.
Itr ottr opinion and accordirtg to the infonration and explanations given to us, the Conrpany is pota nidhi company as prescribed under Section 406 of the Act. Accordingly. paragraph 3(xii) of theOrder is not applicable to the Company.
According to the informatiorr and explanations given to us and based orr our exarriration of therecords of the compally, transactions with the related parlies are in cornpliarrce r.vitlr Section 177a.d Sectiotl 188 of the Act, where applicable. The details of such related partv trarsactiors have
nilj.::]"ted in the standalone financial staternents as required by,the ap[ticabte accounring
According to tlte inforrnation attd explanations give to us and based on our exarninatiorr of.therecords of the cornpany- dle Conrpany has not nrade any pref-erential allotrnent or privateplacetnent of shares or-ful11' or parlly-conveftible debentures during the vear. Accorclin-ulv,paragraph 3 (xiv) of the order is not applicable to th" cnnrprnlr.
lx
xt
x.
xtv
4"
xil.
xiii.
BSR&Co.LLP
MAS Financial Services LimitedAnnexure 'A' to the Independent Auditor's report on the standalone financialstatements of MAS Financial Services Limited for the year ended 31 March2020 (Continued)
xv. According to the information and explanations given to us and based on our examination of therecords of the Company, the Company has not entered into any non-cash transactions withdirectors or persons connected with him. Accordingly, paragraph 3 (xv) of the Order is notapplicable to the Company.
xvi. The Company is required to be registered under Section 45-IA of the Reserve Bank of India Act,1934 and it has obtained the registration.
FoTBSR&Co.LLPChartered Accountants
Firrn's Registration No: 101248W/W-100022
AffvLtw . ,L- -'
Sameer MotaPartner
Membership No: 109928UDIN : 20 I 09928 AAAADQ3430
"ffiMumbai3 June 2020
BSR&Co.LLP
Annexure B to the Independent Auditor's report on the standalone financialstatements of MAS Financial Services Limited for the year ended 31 March2020
Report on the internal financial controls with reference to the aforesaid standalone financialstatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013
(Referred to in paragraph I (A) (f) under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
Opinion
We have audited the internal financial controls with reference to the standalone financial statements ofMAS Financial Services Lirnited (the 'Company') as of 3 I March 2020 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.
In our opinion, the Company has, in all rnaterial respects, adequate internal financial controls withreference to the standalone financial statements and such internal financial controls were operatingeffectively as at 3l March 2020 based on the internal financial controls with reference to the standalonefinancial statements criteria established by the Cornpany considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (the 'Guidance Note').
Management's Responsibility for Internal Financial Controls
The Company's managernent arrd the Board of Directors are responsible for establishing and nraintaininginternal financial controls based on the internal financial controls with reference to the standalonefinancial statements criteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note. These responsibilities include the design, implementation andmaintenance of adequate internal financial controls that were operating effectively for ensuring theorderly and efficient cortduct of its busirress, including adherence to company's policies, the safeguardingof its assets, the prevention and detection of frauds and errors, the accuracy and completeness of theaccounting records, and the tirnely preparation of reliable financial inforrnation, as required under theCompanies Act. 20l3 (hereinafter referred to as the 'Act').
Emphasis of Matter
As described in Emphasis of Matter paragraph of our repofi to the standalone financial statements, theextent to which the COVID l9 pandemic rvill have irnpact on the Company's internal financial controlswith reference to the standalone financial statements is dependent on future developments, which arehighly unceftain.
Our opinion is not rnodifled in respect ol.this rnatter.
Auditor's Responsibility
Our responsibility is to express an opinion on the Company's internal financial controls with reference tothe standalone financial staterrents based on our audit. We conducted our audit in accordance with theGuidance Note and the Standards on Auditing. prescribed under section 143 ( l0) of the Act, to the extentapplicable to an audit of irtternal financial controls r'vith reference to the standalone financial statements.Those Standards and the Guidattce Note require that we comply with ethical requirenrents and plan andperfornl the audit to obtain reasoltable assurance about rvhether:adequate internal financial controls withreference to the starlclalolte fillarrcial staternents u'ere established and rnaintained and whether suchcontrols operated ef fectively in all nraterial respects.
our audit ittvolves perfbrnling procedures to obtain audit evidence about the adequacy of the internalfiltancial controls \vith ref-erence to tlte standalone financial statements and their operating effectiveness.
l,n
BSR&Co.LLP
Annexure B to the Independent Auditor's report on the standalone financialstatements of MAS Financial Services Limited for the year ended 3l March2020 (Continued)
Auditor's Responsibility (Cont in ued)
Our audit of internal financial controls with reference to the standalone financial statements includedobtaining an understanding of such internal financial controls, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgernent, including the assessment ofthe risks of material misstatement of the standalone financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls with reference to the standalone financialstatements.
Meaning of Internal Financial controls with Reference to the Standalone Financial Statements
A cornpany's internal financial controls with reference to the standalone financial statements is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of the standalone financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's ir-rternal financial controls with reference to the standalonefinancial staternents include those policies and procedures that (l) pertain to the maintenance of recordsthat, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecor.npany; (2) provide reasonable assurance that transactions are recorded as necessary to perrnitpreparation of the standalone financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the cornpany are being made only in accordarrce withauthorisations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company'sassets that could have a material effect on the standalone financial statements.
Inherent Limitations of Internal Financial controls with Reference to the Standalone FinancialStatements
Because of the inherent limitations of internalfinancialcontrols with reference to the standalone financialstatentertts, including the possibility of collusion or improper management override of controls, materialmisstatetlertts due to error or fraud may occur and not be detected. Also, projections of any evaluation ofthe internal financial controls with reference to the standalone financial statements to future periods aresubject to the risk that the internal financial controls with reference to the standalone financial statementsnlay become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.
FoTBSR&Co.LLP
F i rnr's Reg i strat i o n -:! t'; i;;{i;;:itr;;;;
(ttw\ c uv' w- .-
Sameer MotaPurlner
Membership No. 109928UDIN : 20 I 09928 AAAADe343 0
ffiMurlbai3 June 2020
.dlAs F|NANCIAL SERVTCES LIM|TED
STANDALONE BALANCE SHEETASAT37 MARCH 2O2O
C{ in Lakhs)
ASSETS
Financial assetaCash and cash equivalents
Bank balance other than cash and cash equivalents
Loans
lnvestments
Other financial assets
lncome tax assets (net)
Property, plant and equipment
Capital work-in-progress
Right-of-use asset
Other intangible assets
Other non-financial assets
LIABILITIES ANO EQUITY
LIABILITIES
Financial liabilitiesPayables
(l)Trade payables
(i) total outstanding dues of micro enterprises and small enterprises
(ii) total outstanding dues of credilors other than micro enterprises and small enterprises
(ll) Other payables
(i) total outstanding dues of micro enterprises and small enterprises
(ii) total outstanding dues ofcreditors otherthan micro enterprises and small enterprises
Riddhi B. Bhayani(Company Secretary & Compliance Officer)
(Membership No: 441206)
For and on behalf of the Board of of
4AF
C. Gandhi
Diector)N - 00044852)
C. Gandhi
Whole Time Director Financial Officer)(DrN - 00187086)
1i
WSameer Mota
Paftner
Membership No: '109928
Mumbai
3 June 2020
Darshana S. Pandya(Dircctor & Chief Executive Officer)
(DrN - 07610402)
*vAhmedabad
3 June 2020
cfiLtw. h- ..
a t
lfrAF FTNANCtAL SERVTCES LTMITED
STANDALONE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2O2O
({ in Lakhs)
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before taxAdjustments for :
Depreciation and amortisation
Finance costProvision for impairment on financial assets
Loss assets Mitten off (net)
(Profit) / loss on sale of property, plant and equipment
Loss on sale of repossessed assels
lnterest income
lnterest in6me from bank deposits
lncome received in advance
lncome from debt component of OCPS investment in subsidiary
lnterest income from NCD measured at amortised cost
Financial guarante commission income
Dividend income
Gain on derecognition of leased asset
Net gain on equity iretruments measured through other comprehensive income
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES
Changes in working capital:
Adjustments for (increase)/decrease in operating assets:
Loans
Deposits given as collateral
Bank balance other than cash and cash equivalents
Other non-flnancial assetAdjustments for increase/(decrease) in operating liabilities:
Trade payables
Security deposits from borrourers
Other financial and non-financial Iiabilities
Provisions
CASH GENERATEO FROM / (USED IN) OPERANONS
lnterest income received
Finance cost paid
lncome tax paid (net)
CASH FLOW GENERATED FROM / (USED IN) OPERANNG ACNMNES (A)
B. CASH FLOW FROM INVESTINGACTIVITIES
Capital expenditure on property, plant and equipments and intangible assets,
including capital advances
Proceeds from sale of property, plant and equipments and intangible assets
Change in Earmarked balances with banks
lnterest income from bank deposits
Purchase of investments at amortised mstPurchase of optionally convertible preference shares ("OCPS") in subsidiary
Dividend received
lnterest income on lnvestmenl measured at amortised cost
Proceeds from redemption of equity instruments
CASH FLOW GENERATED FROM / (USED IN} INVESTING ACNUIES (B)
C. CASH FLOW FROM FINANCING ACTIVITIES
Proeeds from debt securities and bonowings
Repayments of borrowings
Net increase in working capital borowings
Repayment of lease liabilities
Dividends paid including dividend distribution tax
CASH FLOW GENERATED FROM / (USED IN) FINANCING ACNUTES (C)
NET INCREASE / (DECREASE) lN CASH ANO CASH EQUIVALENTS (A+B+C)Cash and Gsh equivalents at the beginning of the year
Cash and cash equivalents at the end of the year (refer note I below)
Year ended31 March 2020
Year ended31 Nrlarch 2019
231.50
27,201.70
2,256.51
6,419.14
o.82
327.03
(52,821.751
l't,155.47].(1e.12)
(32.78)
(E.26)
(4.6e)
(6.33)
(0.E3)
23,447.76
(17,612.s31
't28.70
20,413.33
1,448.85
4,003.88(1.76)
200.44
(44,425.83)(654.1 1 )
( 19.61)
(1 3.50)
(2.5e)
(1.1 0)
23,392.95
(1 8,923.30)
(1 7,683.92)(13.s1)
1,OO1.28
(395.21 )
199.75(1,1 61.95)18, t85.38
29.81
5,835.23
161.63
(72.223.33)296.92
(989.22)
('t75.54)
231.41
7,458.79
5,'168.69
(60.20)
4,469.65
(60,292.48\
47,331.77(26,489.73)
17,s42.841
5,996.86
12,899.20
43,531.92(20,584.23)
(7,1 03.37)
(55,822.83)
15,844.32
18,896.06 (39,978.s1)
(4s3.77l,
0.53
86.92
1,172.74
(s00.00)
(1,000.00)
6.335.49
(1 92.93)
3.75
732.13
764.49
(900 00)
2.59
9.96
(681.76) 419.99
95,425.00
142,349.2213,3'16.4r
(88.69)
(7,648.0s)
67,490.00(21,522.21)
27,779.82
48,65s.45 7 1,339.63
66369?535,577.06
_-92,446.9L
31,781.113,795.95
+A
.{flAFq
(2,407.98)
.06
JfA' FINANCIAL SERVICES LIMITEO
STANDALONE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2O2O
(a in Lakhs)
Notes:
1 Cash and bank balances at the end of the year comprises:(a) Cash on hand
(b) Balances with banks
TotalBank deposits with original maturity of 3 months or less
Cash and cash equivalents as per the balance sheet
As at31 lvlarch 2020
As at31 March 2019
7.43
76,439.38
14.46
26,9'12.60
76,/t46.81
26,000.0026.927.06
8,650.00
1,02,446.81 35.577.06
2 The above cash flow statement has been prepared under the "indirect method" as set out in the lnd AS - 7 on stalement of cash flows specitied under seclion 1 33 of theCompanies Act, 2013.
3 The Company applied lnd AS 116 at 1 April 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and thecumulative efiect of initially applyng lnd AS 1 16 is recognised in retained earnings at the date of initial application.
4 The Company as at 3'l March 2020 has undrawl bonowing facilities amounting to < 74,280.55 lakhs that may be available for tuture operating activities and to settlecapital commitments.
5 Change in liabilities arising from financing activities
* Non-cash changes represents the efiect of amortization of transaction cost.
See accompanying notes to the financial statements