Manappuram Finance Limited - Karvy

PROSPECTUSDated August 9, 2011MANAPPURAM FINANCE LIMITED(Formerly „Manappuram General Finance and Leasing Limited‟)(Incorporated in the Republic of India with limited liability with Company Identification Number L65910KL1992PLC006623, under the Companies Act, 1956, as amended (the ―Companies Act‖))Registered Office: V/104, “Manappuram House”, Valapad, Thrissur 680 567, Kerala, IndiaTel: (+91 487) 305 0000; Fax: (+91 487) 239 9298Compliance Officer and Contact Person: Mr. C. Radhakrishnan, Company SecretaryE-mail: cosecretary@manappuram.com; Website: www.manappuram.comPUBLIC ISSUE BY MANAPPURAM FINANCE LIMITED (“COMPANY” OR “ISSUER”) OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES (THE “BONDS”)OF FACE VALUE OF RS. 1,000 EACH AGGREGATING TO RS. 4,000 MILLION WITH AN OPTION TO RETAIN OVER SUBSCRIPTION UPTO RS. 3,500 MILLION,AGGREGATING TO RS. 7,500 MILLION (THE “ISSUE”).The Issue is being made pursuant to the provisions of Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended (the “SEBI Debt Regulations”).GENERAL RISKSFor taking an investment decision, Investors must rely on their own examination of our Company and the Issue including the risks involved. Investors are advised to refer to section entitled “RiskFactors” beginning on page 11, before making an investment in this Issue.ISSUER‟S ABSOLUTE RESPONSIBILITYThe Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus, contains all information with regard to the Issuer and the Issue, which is material in thecontext of this Issue, that the information contained in this Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressedherein are honestly held and that there are no other material facts, the omission of which makes this Prospectus as a whole or any such information or the expression of any such opinions or intentionsmisleading in any material respect.CREDIT RATINGThe Bonds proposed to be issued by our Company have been rated by Credit Analysis and Research Limited (“CARE”) and Brickwork Ratings India Pvt. Ltd. (“Brickwork”). CARE has vide its letterdated June 21, 2011 assigned a rating of “CARE AA-”. Instruments with this rating are considered to offer high safety for timely servicing of debt obligations. Such instruments carry very low creditrisk. Brickwork has vide its letter no. BWR/BLR/RA/2011-12/0075 dated July 1, 2011 assigned a rating of “BWR AA-” to the Bonds in the Issue. Instruments with this rating are considered to havehigh degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The above ratings are not a recommendation to buy, sell or hold securities andinvestors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agency and should be evaluated independently of any other ratings.Please refer to Annexure to this Prospectus for rationale for the above ratings.PUBLIC COMMENTSThe Draft Prospectus was filed with the Designated Stock Exchange pursuant to the provisions of the SEBI Debt Regulations. The Draft Prospectus was open for public comments.LISTINGThe Bonds offered through this Prospectus are proposed to be listed on the Bombay Stock Exchange Limited (“BSE”). The Company has obtained „in-principle‟ listing approval from BSE vide itsletter dated August 3, 2011. For the purposes of the Issue, the Designated Stock Exchange shall be BSE.LEAD MANAGERS TO THE ISSUEMORGAN STANLEY INDIA COMPANYPRIVATE LIMITED18F/19F,Tower 2One Indiabulls Centre, 841,Senapati BapatMarg, Mumbai 400 013Tel: (91 22) 6118 1000Fax: (91 22) 6618 1040E-mail: manappuram_ms@morganstanley.comInvestor Grievance Email:investors_india@morganstanley.comWebsite:www.morganstanley.com/indiaofferdocumentsContact Person: Saurabh KumarSEBI Registration No.: INM000011203A.K. CAPITAL SERVICES LIMITED AXIS BANK LIMITED ICICI SECURITIES LIMITED30-39, Free Press House,Free Press Journal Marg, 215Nariman Point, Mumbai 400 021Tel: (91 22) 6754 6500/6634Fax: (91 22) 6610 0594Email: manappuramdipo@akgroup.co.inInvestor Grievance Email: investor.grievance@akgroup.co.inWebsite: www.akcapindia.comContact Person: Mr. Hitesh ShahSEBI Registration No.: INM000010411CO-LEAD MANAGERS TO THE ISSUECorporate OfficeLevel 5/ E BlockBombay Dyeing Mills Compound, PandurangBhudkar Marg, Worli, Mumbai 400 025Tel: (91 22) 2425 4556Fax: (91 22) 4825 4700E-mail: manappuramdipo@axisbank.comInvestor Grievance Email:axbmbd@axisbank.comWebsite: www.axisbank.comContact Person: Mr. Dinkar RaiSEBI Registration No.: INM000006104ICICI Centre,H.T. Parekh Marg,Churchgate,Mumbai - 400 020Maharashtra, India.Tel.: (91 22) 2288 2460Fax: (91 22) 2282 6580E-mail:project.manappuram@icicisecurities.comInvestor Grievance Email:customercare@icicisecurities.comWebsite: www.icicisecurities.comContact Person: Sumit AgarwalSEBI Registration Number: INM000011179REGISTRAR TO THE ISSUERR INVESTORS CAPITAL SERVICES (P)LTD.133A, Mittal Tower, A Wing,13th Floor, Nariman Point,Mumbai-400 021Tel: (91 22) 2288 6627/28Fax: (91 22) 2285 1925E-mail: manappuramncd@rrfcl.comInvestor Grievance Email:rrinvestors@rrfcl.comWebsite: www.rrfcl.comContact Person: Mr. BrahmduttaSinghSEBI Registration No.INM000007508KARVY INVESTOR SERVICES LIMITED SMC CAPITALS LIMITED LINK INTIME INDIA PRIVATE LIMITEDRegent Chambers, 2nd floorNariman Point, Mumbai – 400021Tel : (91 22) 2289 5000Fax: (91 22) 3020 4040Email: mgflncd2011@karvy.comInvestor Grievance Email: cmg@karvy.comWebsite: www.karvy.comContact Person: Mr. Omkar BarveSEBI Registration No:INM0000083653 rd Floor, A-Wing, Laxmi Towers,Bandra Kurla Complex,Bandra (East), Mumbai - 400 051Tel: (91 22) 6138 3838Fax: (91 22) 6138 3899Email: mgfl@smccapitals.comInvestor Grievance Email: investor.grievance@smccapitals.comWebsite: www.smccapitals.comContact Person: Sanjeev BarnwalSEBI Registration No: MB/INM000011427ISSUE PROGRAMMEISSUE OPENS ONISSUE CLOSES ONAugust 18, 2011 September 5, 2011C-13, Pannalal Silk Mills CompoundL.B.S. Marg,Bhandup (West)Mumbai 400 078Tel: (91 22) 2596 0320Fax: (91 22) 2596 0329E-mail: man.ncd @linkintime.co.inInvestor Grievance Email: man.ncd@linkintime.co.inWebsite: www.linkintime.co.inContact Person: Mr. Sanjog SudSEBI Registration No.: INR000004058The Issue shall remain open for subscription during banking hours for the period indicated above, except that the Issue may close on such earlier date as may be decided by the Boardsubject to necessary approvals. In the event of an early closure of the Issue, our Company shall ensure that notice of the same is provided to the prospective investors through newspaperadvertisements on the day of such earlier date of Issue closure.A copy of the Prospectus shall be filed with the Registrar of Companies, Kerala and Lakshadweep, in terms of section 56 and section 60 of the Companies Act, along with the requisiteendorsed/certified copies of all requisite documents. For further details please refer to the section titled ―Material Contracts and Documents for Inspection‖ beginning on page 177 ofthis Prospectus.

DEFINITIONS AND ABBREVIATIONSThis Prospectus uses certain definitions and abbreviations which, unless the context indicates or impliesotherwise, have the meaning as provided below. References to any legislation, act or regulation shall be to suchterm as amended from time to time.GeneralTerm“MFL” or “Company” or “theCompany” or “the Issuer” or“our Company”“we” or “us” or “our”Manappuram Finance LimitedDescriptionUnless the context otherwise requires, Manappuram Finance LimitedCompany Related TermsTermDescriptionArticles/ Articles of Association Articles of Association of our CompanyAuditorsAudited UnconsolidatedFinancial StatementsBoard / Board of DirectorsEquity SharesGroup CompaniesMAFITS.R. Batliboi & AssociatesThe audited unconsolidated financial statements as of and for the years endedMarch 31, 2011, 2010, 2009 and 2008.Board of Directors of our Company or any duly constituted committee thereofEquity shares of face value of Rs. 2 each of the CompanyIncludes those companies, firms, ventures, etc. promoted by the promoters ofthe issuer, irrespective of whether such entities are covered under Section 370(1)(B) of the Companies Act or as per Accounting Standard 18 issued underthe Companies Accounting Standard RulesManappuram Finance (Tamil Nadu) LimitedMFL ESOP The Manappuram Finance Limited Employee Stock Option Plan 2009MBFLMergerMemorandum / Memorandumof AssociationPrior Year Audited FinancialStatementsPromotersPromoter GroupReformatted StatementsManappuram Benefit Fund LimitedMerger of MAFIT with Our CompanyMemorandum of Association of our CompanyThe audited unconsolidated financial statements as of and for the year endedMarch 31, 2007 as audited by Mohandas & Associates.The promoters of our Company being V.P. Nandakumar and SushamaNandakumarIncludes such persons and entities constituting our promoter group pursuant toRegulation 2 (1)(zb) of the SEBI ICDR RegulationsThe reformatted statement of assets and liabilities of the Company as at March31, 2011, 2010, 2009, 2008 and 2007, the related reformatted statement ofprofit and losses and the reformatted statement of cash flows for the yearsended March 31, 2011, 2010, 2009, 2008 and 2007, prepared on the basis ofthe Audited Unconsolidated Financial Statements and the Prior Year AuditedFinancial Statements of the Company in connection with the Issue under theSEBI Debt Regulations.1

TermRegistered OfficeRoCDescriptionThe registered office of our Company is situated at V/104, “ManappuramHouse”, Valapad, Thrissur 680 567, Kerala, IndiaRegistrar of Companies, Kerala and Lakshadweep, located at ErnakulamIssue Related TermsTermAllotment/ Allot/ AllottedAllotteeApplicantApplication AmountApplication FormBanker(s) to the Issue/ EscrowCollection BankBasis of AllotmentBondholder(s)BondsCo-Lead ManagersConsolidated Bond CertificateDebenture Trust DeedDebenture Trustee/ TrusteeDeemed Date of AllotmentDesignated DateDesignated Stock Exchange/DSEDraft ProspectusDescriptionUnless the context otherwise requires, the allotment of Bonds to thesuccessful Applicants pursuant to the IssueA successful Applicant to whom the Bonds are allotted pursuant to the IssueAny person who applies for issuance of Bonds pursuant to the terms of theProspectus and Application FormThe aggregate value of the Bonds applied for, as indicated in the ApplicationFormThe form (including revisions thereof) in terms of which the Applicant shallmake an offer to subscribe to the Bonds and which will be considered as theapplication for Allotment of Bonds in terms of the ProspectusThe banks which are clearing members and registered with SEBI as Bankersto the Issue with whom the Escrow Account will be opened The details of theBanker to the Issue are provided in the section entitled ―General Information‖on page 42The basis on which Bonds will be allotted to Applicants under the Issue, moreparticularly as detailed in the section entitled ―Procedure for Application –Basis of Allotment‖ on page 167Any person holding the Bonds and whose name appears on the beneficialowners‟ list provided by the Depositories or whose name appears in theRegister of Bondholders maintained by the IssuerBonds, in the nature of secured, redeemable, non-convertible debentures ofour Company of face value of Rs. 1,000 being the Series I Bonds and theSeries II Bonds issued in terms of the ProspectusRR Investors Capital Services (P) Limited, Karvy Investor Services Limitedand SMC Capitals LimitedIn case of rematerialized Bonds held in physical form, the certificate issued bythe Issuer to the Bondholder for the aggregate amount of the Bonds that arerematerialized and held by such BondholderTrust deed to be entered into between the Debenture Trustee and ourCompanyTrustees for the Bondholders in this case being IL&FS Trust CompanyLimitedThe Deemed Date of Allotment shall be the date as may be determined by theBoard of our Company and notified to the BSE.The date on which funds are transferred from the Escrow Account to thePublic Issue Account or the Refund Account, as appropriate, subsequent to theexecution of documents for the creation of SecurityThe designated stock exchange for the Issue, being BSEThe draft prospectus dated July 26, 2011 filed by our Company with theDesignated Stock Exchange in accordance with the provisions of SEBI Debt2

TermEscrow AccountEscrow AgreementInstitutional PortionIssueRegulationsIssue Closing Date September 5, 2011Issue Opening Date August 18, 2011Issue PeriodLead ManagersLead BrokersMalegam Committee ReportMarket LotMaturity DateNon Institutional PortionDescriptionAccount opened with the Escrow Collection Bank(s) and in whose favour theApplicants will issue cheques or drafts in respect of the Application Amountwhen submitting an ApplicationAgreement to be entered into by our Company, the Registrar to the Issue, theLead Managers, Co-Lead Managers and the Escrow Collection Bank(s) forcollection of the Application Amounts and where applicable, refunds of theamounts collected from the Applicants on the terms and conditions thereofPortion of Applications received from Category I of persons eligible to applyto the Issue which includes public financial institutions, statutorycorporations, commercial banks, cooperative banks and regional rural bankswhich are authorised to invest in the Bonds, insurance companies registeredwith IRDA, provident, superannuation and gratuity funds, pension funds,mutual funds in India which are authorised to invest in the Bonds, venturecapital funds registered with SEBI, and National Investment Fund set up byresolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of theGovernment of India published in the Gazette of India and does not includeforeign institutional investors and overseas corporate bodiesPublic issue of bonds in the nature of secured, redeemable, non-convertibledebentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 millionwith an option to retain over subscription upto Rs. 3,500 million, aggregatingto Rs. 7,500 millionThe period between the Issue Opening Date and the Issue Closing Dateinclusive of both days, during which prospective Applicants can submit theirApplication FormsMorgan Stanley India Company Private Limited, A.K. Capital ServicesLimited, Axis Bank Limited and ICICI Securities Limited.Morgan Stanley Financial Services Private Limited, A.K. Stockmart PrivateLimited, ICICI Securities Limited, RR Equity Brokers Private Limited, KarvyStock Broking Limited, SMC Global Securities Limited, Bajaj CapitalInvestor Services Limited, Edelweiss Broking Limited, Enam SecuritiesPrivate Limited, Geojit BNP Paripas Financial Services Limited, HDFCSecurities Limited, India Infoline Limited, Integrated Securities Limited, JMFinancial Services Limited, Kotak Securities Limited and SPA SecuritiesLimitedReport given by sub-committee of its central board of directors of RBI inOctober 2010 set up under the Chairmanship of Shri Y.H. Malegam, a seniormember on the RBI‟s central board of directors to study the issues andconcerns in microfinance sector.One BondFor Series I Bonds, the payment date falling 400 days after the Deemed Dateof Allotment. For Series II Bonds the payment date falling 24 months after theDeemed Date of Allotment.Category II of persons eligible to apply for the Issue which includescompanies, bodies corporate and societies registered under the applicable lawsin India and authorised to invest in Bonds, public/private charitable/religioustrusts which are authorised to invest in the Bonds, scientific and/or industrialresearch organisations, which are authorised to invest in the Bonds,partnership firms in the name of the partners and Limited liability partnerships3

Pay-in DatePortionProspectusTermPublic Issue AccountRecord DateRefund AccountRefund BankRegister of BondholdersRegistrar AgreementRegistrar to the Issue orRegistrarReserved Individual PortionResident IndividualSecuritySecured ObligationSeries I BondsSeries II BondsDescriptionformed and registered under the provisions of the Limited LiabilityPartnership Act, 2008Three (3) days from the date of receipt of application or the date of realisationof the cheques/demand drafts, whichever is laterPortion of Applicant in each Category, being the Institutional Portion, NonInstitutional Portion, Reserved Individual Portion or Unreserved IndividualPortionThe prospectus dated August 9, 2011 to be filed with the RoC in accordancewith the provisions of SEBI Debt Regulations through which the Bonds arebeing offered to the public.An account opened with the Banker(s) to the Issue to receive monies from theEscrow Accounts for the Issue on the Designated DateDate falling 3 Working Days prior to the date on which interest is due andpayable or the Maturity DateThe account opened with the Refund Bank(s), from which refunds, if any, ofthe whole or part of the Application Amount shall be madeAxis Bank LimitedThe register of Bondholders maintained by the Issuer in accordance with theprovisions of the Companies Act and as more particularly detailed in thesection entitled ―Terms of the Issue – Register of Bondholders‖ on page 146Agreement entered into between the Issuer and the Registrar under the termsof which the Registrar has agreed to act as the Registrar to the IssueLink Intime India Private LimitedPortion of Applications received from Category III of persons eligible toapply to the Issue which includes resident Indian individuals and hinduundivided families through the karta whose aggregate value of Applications isnot more than Rs. 5 LacsAn individual who is a person resident in India as defined in the ForeignExchange Management Act, 1999The Bonds shall be secured by mortgage of the immovable property of ourCompany as identified in the Debenture Trust Deed and a charge in favour ofthe Debenture Trustee, on all current assets, book debts, receivables (bothpresent and future) as fully described in the Debenture Trust Deed, exceptthose receivables specifically and exclusively charged, on a first ranking paripassu basis with all other lenders to our Company holding pari passu chargeover the security such that a security cover of 1.10 times is maintained untilMaturity Date, more particularly as detailed in the section entitled ―Terms ofthe Issue - Security‖ on page 153The Face Value of the Bonds to be issued upon the terms contained hereintogether with all interest, costs, charges, fees, remuneration of DebentureTrustee and expenses payable in respect thereof as more particularly describedin the section entitled ―Terms of the Issue - Security‖ on page 153Rs. 1,000 face value Series of Bonds paying no interest but an yield tomaturity of 12% p.a. for Category I, Category II and Category IIIBondholders, due in 400 days.Rs. 1,000 face value Series of Bonds paying semi-annually interest and havingrate of 12% p.a. for Category I and Category II Bondholders and 12.2% p.a.for Category III Bondholders, due in 24 months4

TermDescriptionSeries of Bonds Series I Bonds and / or Series II Bonds, each of face value of Rs. 1,000,proposed to be issued by the Company pursuant to this Issue.Stock ExchangesTrading LotTripartite AgreementsUnreserved Individual PortionWorking DaysThe BSE, NSE, MSE and CSEOne BondAgreements entered into between the Issuer, Registrar and each of theDepositories under the terms of which the Depositories agree to act asdepositories for the securities issued by the Issuer.Portion of Applications received from Category III of persons eligible toapply to the Issue which includes resident Indian individuals; and hinduundivided families through the karta whose aggregate value of Applications ismore than Rs. 5 Lacs.All days excluding Saturdays, Sundays or a public holiday in Mumbai or atany other payment centre notified in terms of the Negotiable Instruments Act,1881Conventional and General Terms or AbbreviationsActAGMAMCASBrickworkBSECARECCTVCDSLTerm/AbbreviationCompanies ActCSEDebt Listing AgreementDepositoriesDescription/ Full FormIncome Tax Act, 1961, unless the context requires otherwiseAnnual General MeetingAsset Management CompanyAccounting Standards issued by the ICAIBrickwork Ratings India Pvt. Ltd.Bombay Stock Exchange LimitedCredit Analysis and Research LimitedClosed-circuit TelevisionCentral Depository Services (India) LimitedCompanies Act, 1956, unless the context requires otherwiseCochin Stock ExchangeThe agreement for listing of Bonds on the BSECDSL and NSDLDepositories Act Depositories Act, 1996DP/ Depository Participant Depository Participant as defined under the Depositories Act, 1996DINDRREGMEquity Listing Agreement(s)FDIDirector Identification NumberDebenture Redemption ReserveExtraordinary General MeetingThe equity listing agreement(s) with each of the Stock ExchangesForeign Direct InvestmentFEMA Foreign Exchange Management Act, 1999FIIForeign Institutional Investor (as defined under the SEBI (Foreign InstitutionalInvestors) Regulations,1995), registered with the SEBI under applicable lawsin India5

Term/AbbreviationDescription/ Full FormFinancial Year/ Fiscal Year/ FY Period of 12 months ended March 31 of that particular yearGAAPGDPGoI or GovernmentHUFICAIIFRSIMaCSGenerally Accepted Accounting PrinciplesGross Domestic ProductGovernment of IndiaHindu Undivided FamilyInstitute of Chartered Accountants of IndiaInternational Financial Reporting StandardsIncome Tax Act / IT Act Income Tax Act, 1961IndiaIRDAIndian GAAPITKYCMCAMoUMnMSEMutual FundsNAVNBFCNCDNECSNEFTNRINSDLNSEp.a.PANRBIRTGSICRA Management Consulting Services LimitedRepublic of IndiaInsurance Regulatory and Development AuthorityGenerally accepted accounting principles followed in IndiaInformation technologyKnow your customerMinistry of Corporate Affairs, Government of IndiaMemorandum of UnderstandingMillionMadras Stock ExchangeA mutual fund registered with SEBI under the SEBI (Mutual Funds)Regulations, 1996, as amendedNet Asset ValueNon Banking Financial Company, as defined under applicable RBI guidelinesNon Convertible DebentureNational Electronic Clearing SystemNational Electronic Fund TransferNon-resident IndianNational Securities Depository LimitedNational Stock Exchange of India LimitedPer annumPermanent Account NumberReserve Bank of IndiaReal Time Gross SettlementRs. or Rupees or Indian Rupees The lawful currency of IndiaSBISEBIState Bank of IndiaSEBI Act SEBI Act, 1992Securities and Exchange Board of IndiaSEBI Debt Regulations SEBI (Issue and Listing of Debt Securities) Regulations, 2008SEBI ICDR Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 20096

Technical and Industry Related TermsTerm/AbbreviationAD II licenseCAGRGold LoansLTVMFINPAPrudential Norms DirectionsAuthorised Dealer II licenseDescription/ Full FormCompounded Annual Growth Rate, that is, the year-over-year growth rate of abusiness activity or income from the same over a specified period of timeLoans against pledge of household and/or used gold jewelleryLoan to ValueMicrofinance institutionsNon-performing assetsNon-Banking Financial (Non - Deposit Accepting or Holding) CompaniesPrudential Norms (Reserve Bank) Directions, 2007, as amended7

PRESENTATION OF FINANCIAL INFORMATION AND OTHER INFORMATIONAll references herein to “India” are to the Republic of India and its territories and possessions.Currency and Unit of PresentationIn this Prospectus, references to „Rs.‟, „Indian Rupees‟ and „Rupees‟ are to the legal currency of India andreferences to „U.S.$‟ and „U.S. dollars‟ are to the legal currency of the United States of America. All referencesherein to the „Government‟ is to the Government of India, central or state, as applicable.Financial DataIn this Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due torounding off. All financial information has been rounded off to two decimals points and percentages to onedecimal point.Our unconsolidated financial statements as of and for the years ended March 31, 2011, 2010, 2009 and 2008(the “Audited Unconsolidated Financial Statements”) and the unconsolidated financial statements as of and forthe years ended March 31, 2007 as audited by Mohandas & Associates (Prior Year Audited UnconsolidatedFinancial Statements”) form the basis for the reformatted statements as of and for the years ended March 31,2011, 2010, 2009, 2008 and 2007, which were prepared in accordance with the provisions of the SEBI DebtRegulations, as amended from time to time (the “Reformatted Statements”). The Reformatted Statements andexamination report dated July 19, 2011 issued by the auditor thereon are included in this Prospectus.Our financials commence on April 1 of each year and ends on March 31 of the succeeding year, so all referencesto particular “financial year”, “fiscal year”, and “Fiscal” or “FY”, unless stated otherwise, are to the 12 monthsperiod ended on March 31 of that year. We publish our financial statements in Rupees in millions. The degree towhich the Reformatted Statements included in this Prospectus will provide meaningful information is entirelydependent on the reader‟s level of familiarity with Indian accounting practices. Any reliance by persons notfamiliar with Indian accounting practices on the financial disclosures presented in this Prospectus shouldaccordingly be limited.Manappuram Finance Tamil Nadu Limited (“MAFIT”) merged with the Company with retrospective effectfrom April 1, 2008 and the merger was given effect to by the Company pursuant to an Order of the High Courtsin the three month period ended December 31, 2009. The published financial results and financial statements ofthe Company prior to December 31, 2009 do not include the financial results or financial statements of MAFIT.8

INDUSTRY AND MARKET DATAInformation regarding market position, growth rates and other industry data pertaining to our businessescontained in this Prospectus consists of estimates based on data reports compiled by government bodies,professional organizations and analysts, data from other external sources and knowledge of the markets in whichwe compete. Unless stated otherwise, the statistical information included in this Prospectus relating to theindustry in which we operate has been reproduced from various trade, industry and government publications andwebsites.This data is subject to change and cannot be verified with certainty due to limits on the availability andreliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither wenor the Lead Managers or the Co-Lead Managers have independently verified this data and do not make anyrepresentation regarding the accuracy of such data. We take responsibility for accurately reproducing suchinformation but accept no further responsibility in respect of such information and data. In many cases, there isno readily available external information (whether from trade or industry associations, government bodies orother organizations) to validate market-related analysis and estimates, so we have relied on internally developedestimates. Similarly, while we believe our internal estimates to be reasonable, such estimates have not beenverified by any independent sources and neither we nor the Lead Managers or the Co-Lead Managers can assurepotential investors as to their accuracy. Accordingly, investors should not place undue reliance on thisinformation.9

FORWARD LOOKING STATEMENTSCertain statements contained in this Prospectus that are not statements of historical fact constitute „forwardlookingstatements‟. Investors can generally identify forward-looking statements by terminology such as „aim‟,„anticipate‟, „believe‟, „continue‟, „could‟, „estimate‟, „expect‟, „intend‟, „may‟, „objective‟, „plan‟, „potential‟,„project‟, „pursue‟, „shall‟, „should‟, „will‟, „would‟, or other words or phrases of similar import. Similarly,statements that describe our strategies, objectives, plans or goals are also forward-looking statements. Allstatements regarding our expected financial conditions, results of operations, business plans and prospects areforward-looking statements. These forward-looking statements include statements as to our business strategy,revenue and profitability, new business and other matters discussed in this Prospectus that are not historicalfacts. All forward-looking statements are subject to risks, uncertainties and assumptions about us that couldcause actual results to differ materially from those contemplated by the relevant forward-looking statement.Important factors that could cause actual results to differ materially from our expectations include, amongothers:• general political, economic and business conditions in India and other countries;• the Company‟s ability to successfully implement its strategy, growth and expansion plans andtechnological changes;• the level and volatility of interest rates and gold rates;• increases in the level of competition in the gold loans business;• any scarcity of credit or other financing in India;• prevailing income conditions among Indian consumers and Indian corporations;• performance of the Indian and global debt and equity markets;• variation in exchange rates;• fraud by employees and borrowers leading to increase in NPAs;• downward revision in credit ratings;• transfer restrictions set forth in this Prospectus;• occurrence of natural calamities or natural disasters affecting the areas in which we have operations;• occurrence of theft or burglary in the Company‟s premises and consequent loss of collateral;• risk of fluctuation in the price of equity shares;• changes in foreign control regulations and regulations applicable to non banking financial companiesand microfinance companies in India and;• other factors discussed in this Prospectus, including under ―Risk Factors‖ beginning on page 11.Additional factors that could cause actual results, performance or achievements to differ materially include, butare not limited to, those discussed under the section entitled ―Our Business‖ beginning on page 88. Theforward-looking statements contained in this Prospectus are based on the beliefs of management, as well as theassumptions made by, and information currently available to, management. Although we believe that theexpectations reflected in such forward-looking statements are reasonable at this time, we cannot assure investorsthat such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to placeundue reliance on such forward-looking statements. If any of these risks and uncertainties materialize, or if anyof our underlying assumptions prove to be incorrect, our actual results of operations or financial condition coulddiffer materially from that described herein as anticipated, believed, estimated or expected. All subsequentforward-looking statements attributable to us are expressly qualified in their entirety by reference to thesecautionary statements.10

RISK FACTORSYou should carefully consider all the information in this Prospectus, including the risks and uncertaintiesdescribed below, and in the sections entitled ―Our Business‖ beginning on page 88 as well as the ReformattedStatement contained in this Prospectus, before making an investment in the Bonds. The risks and uncertaintiesdescribed in this section are not the only risks that we currently face or may face in the future. Additional risksand uncertainties not known to us or that we currently believe to be immaterial may also have an adverse effecton our business, results of operations and financial condition. If any of the following or any other risks actuallyoccur, our business, prospects, results of operations and financial condition could be adversely affected and theprice of, and the value of your investment in, the Bonds could decline and you may lose all or part of yourinvestment.The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed inthe risk factors mentioned below. However, there are certain risk factors where the effect is not quantifiable andhence has not been disclosed in such risk factors. The numbering of risk factors has been done to facilitate theease of reading and reference, and does not in any manner indicate the importance of one risk factor overanother.You should not invest in this Issue unless you are prepared to accept the risk of losing all or part of yourinvestment, and you should consult your tax, financial and legal advisors about the particular consequences toyou of an investment in the Bonds.Unless otherwise stated, our financial information used in this section is derived from the ReformattedStatement and accounting records of the Company.RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY1. We may not be able to successfully manage and maintain our growth.Our business has rapidly grown since our inception in 1992. We have significantly expanded ouroperations and anticipate further expansion of our operations. We have experienced significant growthin terms of our loans portfolio and the number of our branches and employees. Our income fromservices increased at a compounded annual growth rate (“CAGR”) of 146.34% from the fiscal yearended March 31, 2008 to the fiscal year ended March 31, 2011. In this same period, the value of loansadvanced by us against pledged gold increased at a CAGR of 302.20% and our branch networkincreased at a CAGR of 67.91%.Our future growth depends on a number of factors, including increasing our ability to further penetratethe loans against pledge of household, used, gold jewellery (“Gold Loans”) market, the competitivescenario and future regulatory changes. We cannot assure you that we will continue to grow athistorical rates in the future. In addition, we are bound by certain financial covenants under ourfinancing agreements, including requiring us to maintain leverage at specified levels. Our inability tofulfill such covenants may adversely affect our ability to maintain this source of funding and as a result,adversely affect our ability to grow our business.Our future growth also depends on our timely access to, and the cost associated with, raising capital. Ifwe do not have access to financing on terms acceptable to us, our growth could be adversely affected.As we continue to grow, we are required to continue to improve our managerial, technical andoperational knowledge, resources and systems. In addition, we may be required to manage relationshipswith a greater number of customers, third party agents, lenders and other parties. We cannot assure youthat we will not experience issues such as capital constraints, operational difficulties, difficulties inexpanding our existing business and operations and training an increasing number of personnel tomanage and operate our expanding business.Further, we have expanded and will further expand our business into markets outside southern India.We have less experience regarding markets outside southern India, which may lead to difficulties incultivating new customer relationships and managing such operations. Any of these issues may resultin a failure to implement our expansion plans in a timely manner or at all, and we cannot assure youthat any expansion plans, if implemented, will be successful.11

2. Volatility in the market price of gold may adversely affect our financial condition and results ofoperations.We extend loans secured by household, used, gold jewellery. A sharp downward movement in the priceof gold could result in a decline in pledged gold values. Further, a sustained decrease in the marketprice of gold could also cause a decrease in new Gold Loans in our loan portfolio and, as a result, ourinterest income. In addition, customers may not repay their loans and the gold jewellery securing theloans may have decreased significantly in value, resulting in losses which we may not be able tosupport. Although we use a technology-based risk management system and follow strict internal riskmanagement guidelines on portfolio monitoring, which include periodic assessment of loan to securityvalue on the basis of conservative market price levels, limits on the amount of margin, ageing analysisand pre-determined margin call thresholds, we cannot assure you that if the price of gold decreasessignificantly, our financial condition and results of operations would not be adversely affected.3. We face increasing competition in our business which may result in declining margins if we areunable to compete effectively.Our principal business is the provision of personal loans to retail customers in India secured byhousehold, used, gold jewellery. Historically, the Gold Loan industry in India has been largelyunorganised and dominated by local jewellery pawn shops and money lenders, with little involvementfrom public sector or private sector banks. Gold Loan financing was availed predominantly by lowerincome group customers with limited or no access to other forms of credit, however, such incomegroup has gained increased access to capital through organised and unorganised money lenders, whichhas increased our exposure to competition. The demand for Gold Loans has also increased due torelatively lower and affordable interest rates, increased need for urgent borrowing or bridge financingrequirements, the need for liquidity for assets held in gold and increased awareness and acceptance ofGold Loan financing.All of these factors have resulted in increased competition from other lenders in the Gold Loanindustry, including commercial banks and other NBFCs, who also have access to funding fromcustomers‟ savings and current deposits. We are reliant on higher-cost loans and debentures for ourfunding requirements, which may reduce our margins compared to competitors. Our ability to competeeffectively will depend, to some extent, on our ability to raise low-cost funding in the future. If we areunable to compete effectively with other participants in the Gold Loan industry, our business, financialcondition and results of operations may be adversely affected.Furthermore, as a result of increased competition in the Gold Loan industry, Gold Loans are becomingincreasingly standardised. Variable interest rates, variable payment terms and waiver of processing feesare also becoming increasingly common. We cannot assure you that we will be able to react effectivelyto these or other market developments or compete effectively with new and existing competitors.Increasing competition may have an adverse effect on our business, market share and results ofoperations.4. We may not be able to realise the full value of our pledged gold, which exposes us to potential loss.We may not be able to realise the full value of our pledged gold, due to, among other things, defects inthe quality of gold or wastage that may occur when melting gold jewellery into gold bars. In the case ofa default, we typically sell the pledged gold through publicly announced auctions in accordance withthe terms of our „auction policy‟. Manappuram Jewellers Private Limited, a company promoted by thepromoters of the Company also participates in such auctions. All sales made to Manappuram JewellersPrivate Limited are made for cash at prevailing market price. We cannot assure you that we will be ableto sell such pledged gold at prices sufficient to cover the amounts under default. Moreover, there maybe delays associated with the auction process. Any failure to recover the expected value of pledgedgold could expose us to a potential loss. Any such losses could adversely affect our financial conditionand results of operations.12

5. We are involved in certain legal and other proceedings in India and may face certain liabilities as aresult of the same.We are involved in various civil, consumer and tax related litigation proceedings, which are at differentstages of adjudication. We are involved in litigation for a variety of reasons, which typically arise in thenormal course of business, when we seek to recover our dues from borrowers in default. As of June 30,2011, we were party to two sales tax cases, three service tax proceedings, one income tax case, 64consumer cases, 15 cases filed by owners of branch premises for eviction and one case pending beforethe Supreme Court of India in relation to the requirement to register our branches under the KeralaMoney-lenders Act. As of June 30, 2011, the value of these pending cases other than the 15 cases filedby owners of branch premises for eviction and rent escalation, excluding the provisioning made,aggregates to a sum of Rs. 14.61 million. We are also party to a special leave petition filed in theSupreme Court of India, challenging the applicability of Kerala Money-lenders Act, 1958 to ouractivities and in addition to the above matters, are also involved in certain administrative and legalproceedings pending before the relevant courts and authorities at various levels pursuant to show causenotices and other communications received by us. For further details see ―Outstanding Litigation andDefaults‖ on page 133. If any of the cases pending is decided against us, it may have an adverse effecton our business, reputation, financial condition and results of operations.6. Our business requires substantial capital, and any disruption in funding sources would have anadverse effect on our liquidity and financial condition.Our liquidity and ongoing profitability are, in large part, dependent upon our timely access to, and thecosts associated with, raising capital. Our funding requirements historically have been met from acombination of borrowings such as working capital limits from banks and assigning our loan portfolioto other lenders such as banks, issuance of commercial paper, non-convertible debentures, bonds andequity. Thus, our business depends and will continue to depend on our ability to access diversified lowcost funding sources. The capital and lending markets remained highly volatile post the global creditcrisis and access to liquidity had been significantly reduced. These conditions resulted in increasedborrowing costs and difficulty in accessing debt in a cost-effective manner. In addition, it became moredifficult to renew loans and facilities as many potential lenders and counterparties also faced liquidityand capital concerns as a result of the stress in the financial markets.We are also required under applicable laws and regulations to maintain a capital adequacy ratio as perPrudential Norms Directions of at least 15.0% of our risk-weighted assets, with the minimumrequirement of Tier I capital being 10.0%. Our capital adequacy ratio was 29.13% as of March 31,2011, with Tier I capital comprising 26.36%. If we continue to grow our loan portfolio and asset base,we may be required to raise additional Tier I and Tier II capital in order to continue to meet applicablecapital adequacy ratios with respect to our Gold Loan business. We cannot assure you that we will beable to raise adequate additional capital in the future on terms favourable to us, or at all, which mayadversely affect the growth of our business.We also face maturities of unsecured debt each year. Rs. 10,081 million of our outstanding unsecureddebt matures during the current fiscal year ending March 31, 2012. In order to retire these instruments,we either will need to refinance this debt, which could be difficult in the event of volatility in the creditmarkets, or raise equity capital or generate sufficient cash to retire the debt. If we are not able to do so,our financial condition and results of operations may be adversely affected.7. Our ability to access capital depends on our credit ratings.The cost and availability of capital is, amongst other factors, also dependent on our short term and longterm credit ratings. Our current rating is P1+ from CRISIL (a subsidiary of Standard & Poor‟s) for ourshort-term debt programme, including commercial paper. CRISIL has also given an A+ rating for ourNCD issues. ICRA Limited has given us a LA+ rating for our NCD programme. CARE has given us arating of CARE AA- and Brickwork has given us a rating of BWR AA- for the present Issue. Ratingsreflect a rating agency‟s opinion of our financial strength, operating performance, strategic position,and ability to meet our obligations. The rating agencies reserve the right to suspend, withdraw or reviseratings at any time based on new information or other circumstances. Any downgrade of our creditratings would increase borrowing costs and constrain our access to capital and lending markets and, asa result, would adversely affect our business. In addition, downgrades of our credit ratings could13

increase the possibility of additional terms and conditions being added to any new or replacementfinancing arrangements.8. Our financial performance is particularly vulnerable to interest rate risk.Over the last several years, the Government of India has substantially deregulated the financial sector.As a result, interest rates are now primarily determined by the market, which has increased the interestrate risk exposure of all banks and financial intermediaries in India, including us.Our results of operations are substantially dependent on our net interest margins. Interest rates aresensitive to many factors beyond our control, including the RBI‟s monetary policies, domestic andinternational economic and political conditions and other factors.Our policy is to attempt to balance the proportion of our interest-earning assets, which bear fixedinterest rates, with interest-bearing liabilities. A portion of our liabilities, such as our NCDs,subordinated debt and short term loans carry fixed rates of interest and the remaining are linked to therespective banks' benchmark prime lending rate/base rate. As of March 31, 2011, 57% of ourborrowings were at fixed rates of interest. Moreover, we do not hedge our exposure to interest ratechanges. We cannot assure you that we will be able to adequately manage our interest rate risk in thefuture or be able to effectively balance the proportion of our fixed rate loan assets and liabilities.Further, changes in interest rates could affect the interest rates charged on interest-earning assets andthe interest rates paid on interest-bearing liabilities in different ways. Thus, our results of operationscould be affected by changes in interest rates and the timing of any re-pricing of our liabilitiescompared with the re-pricing of our assets.Furthermore, we are exposed to greater interest rate risk than banks or other NBFCs. In a rising interestrate environment, if the yield on our interest-earning assets does not increase at the same time or to thesame extent as our cost of funds, or, in a declining interest rate environment, if our cost of funds doesnot decline at the same time or to the same extent as the yield on our interest-earning assets, our netinterest income and net interest margin would be adversely affected.Additional risks arising from increasing interest rates include:• reductions in the volume of loans as a result of customers‟ inability to service high interestrate payments; and• reductions in the value of fixed income securities held in our investment portfolio.9. A large number of our branches are located in southern India, and any downturn in the economy ofsouthern India or adverse change in consumer preferences in that region could adversely affect ourresults of operations.As of May 31, 2011, more than 75% of our branches were located in the southern states of Kerala,Tamil Nadu, Karnataka and Andhra Pradesh. As of May 31, 2011, 86% of our Gold Loan advanceswere made through branches located in the southern states of Andhra Pradesh, Karnataka, Kerala andTamil Nadu out of which about 16% were made through branches located in the state of Kerala alone.Our concentration in states located in southern India exposes us more strongly to any adversegeological, ecological, economic or political circumstance that may arise in that region as compared toother NBFCs or commercial banks that have a more diversified national presence. If there is adownturn in the economy of southern India or an adverse change in consumer preferences in thatregion, our business, financial condition and results of operations may be adversely affected.10. Inaccurate appraisal of gold by our personnel may adversely affect our business and financialcondition.The accurate appraisal of pledged gold is a significant factor in the successful operation of our businessand such appraisal requires a skilled and reliable workforce. Inaccurate appraisal of gold by ourworkforce may result in gold being overvalued and pledged for a loan that is higher in value than thegold‟s actual value, which could adversely affect our reputation and business.14

Further, we are subject to the risk that our gold appraisers may engage in fraud regarding theirestimation of the value of pledged gold. Any such inaccuracies or fraud in relation to our appraisal ofgold may adversely affect our reputation, business and financial condition.11. Our branches are vulnerable to theft.Storage of pledged gold jewellery as part of our business entails the risk of theft and resulting loss toour reputation and business. The short tenure of the loans advanced by us and our practice ofprocessing loan repayments within short timelines require us to store pledged gold on our premises atall points in time. There have been eight major burglaries at our branches since inception. With regardto all burglaries, we may not be able to recover the entire amount of the loss suffered and may receiveonly a partial payment of the insurance claim. While we are insured against the risk of burglary arisingfrom our business, such insurance may not be sufficient to fully cover the losses we suffer. Further, theactual recovery of the insured amount from the insurer requires the undertaking of certain procedures,and any delay in recovery could adversely affect our reputation and results of operation. We alsoreceived a letter from the RBI dated October 11, 2010, wherein the RBI expressed its concernregarding the frequency of burglaries at our branches. Pursuant to the same, while we havestrengthened our security policies and procedures, we cannot guarantee you that theft will not becommitted in the future, which could adversely affect our reputation, business and results of operations.12. We are subject to the risk of fraud by our employees and customers.We are exposed to the risk of fraud and other misconduct by employees and customers. While wecarefully recruit all of our employees and screen all our employees who are responsible fordisbursement of Gold Loans and custody of gold, there have in the past been acts of fraud with respectto Gold Loans and cash related misappropriation committed by our employees. Our customers havealso committed such acts of fraud and misappropriation. The aggregate value involved in these casesduring fiscal year 2011, fiscal year 2010 and fiscal year 2009 was Rs. 24.87 million, Rs. 8.47 millionand Rs. 4.07 million. We are required to report cases of internal fraud to the RBI, which may takeappropriate action. Certain routine inspections have noted that there has been an increase in the numberof frauds committed from nine in Fiscal 2010 to 19 in Fiscal 2011 and also that a reassessment isrequired in the classification adopted by the Company while reporting frauds to the RBI. While wehave risk monitoring policies in place, we cannot guarantee you that such acts will not be committed inthe future, and any such act could adversely affect our reputation, business and results of operations.13. If we are unable to successfully manage the level of non performing assets in our loan portfolio, ourbusiness and financial condition may be adversely affected.The Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 createcertain provisioning requirements with respect to our outstanding loan portfolio. These provisioningrequirements may require us to reserve lower amounts than the provisioning requirements applicable tofinancial institutions and banks in other countries. The provisioning requirements may also require theexercise of subjective judgments of management. As of March 31, 2011, our gross non performingassets (“NPAs”) were Rs. 249.30 million, or 0.39% of our total loans and advances, as compared to Rs.336.66 million, or 1.29% of our total loans and advances as of March 31, 2010. Our provisions fordoubtful loans and advances amounted to Rs. 167.46 million as of March 31, 2011, as compared to Rs.192.12 million as of March 31, 2010. The level of our provisions may not be adequate to cover furtherincreases in the amount of our non-performing loans or a decrease in the value of our pledged gold. Ifsuch provisions are not sufficient to provide adequate cover for loan losses that may occur, or if we arerequired to increase our provisions, this could have an adverse effect on our financial condition,liquidity and results of operations and may require us to raise additional capital. In addition, we cannotassure you that we will not have significant additional NPAs in our loan portfolio in the future onaccount of new loans made or that we will be able to maintain the asset quality of our current loanportfolio.15

14. As part of our business strategy, we assign / securitize a significant portion of receivables from GoldLoans advanced by us, which exposes us to the restrictions and conditions that are contained in theassignment agreements.As of March 31, 2011, the gold and hypothecation loans assigned to banks, financial institutions andothers aggregated to Rs. 11,182.83 million constituting 14.93% of our gross gold loan portfolio inprincipal amount. We sanction and provide loans and then assign / securitize a portion of our loanportfolio to banks. The assignment / securitization transactions are conducted on the basis of internalestimates of our funding requirements, and may vary from time to time. Any change in RBI or othergovernment regulations in relation to assignments or securitisations by NBFCs could have an adverseimpact on our assignment / securitization program.In the event the relevant bank does not realise the receivables due under such loans, the relevant bankwould have recourse to the corporate guarantee, cash collateral and the underlying security, in the eventsuch loans are secured. Some of these agreements also require us to obtain the consent of the relevantbank before entering into any new line of business and certain such banks have a right of first refusal topurchase receivables from us and our group companies. We are also liable to indemnify the relevantbanks in the occurrence of an event of default. We make a general provision for all loans and specificprovisions on our non-performing loans. Further any downgrade in the ratings of our securitized debtmay lead to additional collaterals or corporate guarantees required to be provided. In the event thecorporate guarantee and/or cash collateral underlying the security and general provisioning areinadequate, and the loans are put back to us, this could have a material adverse effect on our operatingresults and financial condition.15. We have entered into assignment agreements to sell certain loans from our outstanding loanportfolio. If such assignment of loans is held to be unenforceable under applicable law, ourbusiness, financial condition and results of operations could be adversely affected.From time to time we sell and assign a group of similar loans from our outstanding loan portfolio tofinancial institutions in return for an upfront fixed consideration. As of March 31, 2011, ouroutstanding portfolio of assigned loans was Rs. 11,182.83 million, constituting 14.93% of our grossGold Loan portfolio in principal amount. As a part of such transactions, we provide credit enhancementthrough fixed deposits with banks or issue corporate guarantees to the purchaser for an amount equal toa negotiated percentage of the value of the loans being assigned. In January 2009, the High Court ofGujarat held that the provisions of the Banking Regulation Act, 1949 do not permit banks to assigndebt due to them, including the assignment of debt between two banks. However, on appeal, theSupreme Court of India reversed the decision of the Gujarat High Court and held that a bank to banktransfer of debt is not barred by law. If, in the future, one or more of the assignment agreements enteredinto by us is held to be unenforceable by a court of law, we may be required to terminate theassignment agreement(s) In addition, if such assignments of loans are sought to be regulated includingby way of securitization guidelines issued by the RBI, it could adversely affect our ability to raiseresources through loan assignments. Such events may adversely affect our business, financial conditionand results of our operations and our ability to assign our loans.16. We are subject to certain restrictive covenants in our loan agreements, which may restrict ouroperations and ability to expand our business.We have entered into certain loan agreements in respect of our borrowings, which contain certainrestrictive covenants or require us to obtain approval from the lender in certain circumstances fordisposing of (including creating a charge on) our specified assets, undertaking any merger orreorganisation, entering into a new line of business, declaring dividends in certain circumstances,amending our memorandum and articles of association, making substantial change to the general natureor scope of our business, incurring or assuming any debt, diluting the Promoters‟ equity share holdingsin our Company beyond certain agreed thresholds, reducing our share capital and making a substantialchange in our management. We cannot assure you that consents or waivers in connection with theapplication of any of these restrictive covenants could be granted in the future. Some of our lendershave a right to appoint a nominee director on the Board even before the occurrence of a default. Theoccurrence of any of these events could adversely affect our financial condition and results ofoperations.16

17. A routine inspection by the RBI has indicated certain deficiencies in the process that has beenfollowed by us to conduct in auctions.A routine inspection has noted that there is a considerable time gap between the date of a loanbecoming overdue and the implementation of the auction procedure. This would imply that theconcerned customer would be required to pay the interest for such time period. Certain branches hadalso not maintained details of the auction such as the details of bid amounts, list of successful bidders,successful bid amounts, mode of payment of bid amount etc. It has also been indicated that an auctionsurplus of Rs. 95.86 million was lying with the Company as on March 31, 2011 that were ploughedback into the Company as working capital funds. This amount has been required to return to theconcerned borrowers or transferred to an escrow account to avoid it from being treated as public funds.Although we are in the process of implementing steps to rectify these deficiencies, any delay or failurein such implementation may subject us to penalties from the RBI.18. We have entered into, and will continue to enter into, related party transactions.We have entered into transactions with several related parties, including our Promoters, Directors andGroup Companies. We cannot assure you that we could not have achieved more favourable terms hadsuch transactions been entered into with unrelated parties. Furthermore, it is likely that we will enterinto related party transactions in the future. The transactions we have entered into and any futuretransactions with our related parties have involved or could potentially involve conflicts of interest. Thefollowing are summary transactions with related parties as per Accounting standard 18 issued under theCompanies Accounting Standard Rules entered into by us during the periods indicated:• Debentures issued aggregating to Rs. 47.57 million during the fiscal year 2011 and Rs. 273.31million during the fiscal year 2010;• Debentures redeemed aggregating to Rs. 62.04 million during the fiscal year 2011 and Rs.255.54 million during the fiscal year 2010;• Subscription of Equity Shares by relative of key management personnel aggregating to Rs.1,000 million during the fiscal year 2011 and subscription of share warrants by keymanagement personnel aggregating to Rs. 230.76 million during the fiscal year 2010;• Donation of Rs. 6.20 million made to Manappuram Foundations during the fiscal year 2011;and• Sale of gold to Manappuram Jewellers Private Limited aggregating to Rs. 972.70 millionduring the fiscal year 2011and Rs. 140.24 million during the fiscal year 2010.Further certain transactions for the purchase and sale of services from/to parties covered under Section297 of the Companies Act, 1956 contravened the said provision. These offences have since beencompounded vide order of the Company Law Board, Chennai Bench dated August 31, 2009. Forfurther details regarding our related party transactions, see “Auditor Examination Report andReformatted Statements” on page 182 and ―Our Business - Merger of MAFIT with Our Company‖ onpage 89.19. Our Promoters, Directors and related entities have interests in a number of companies similar toours, which may result in potential conflicts of interest with us.Certain decisions concerning our operations or financial structure may present conflicts of interestamong our Promoters, Directors, executive officers and other shareholders. Commercial transactions inthe future between us and related parties could result in conflicting interests. A conflict of interest mayoccur between our business and the business of our Promoter group companies which could have anadverse affect on our operations. Two of our Group Companies, Manappuram Benefit Fund Limitedand Manappuram Asset Finance Limited, are also engaged in the business of advancing Gold Loans. Inaddition, certain sole proprietorships owned by our Promoter, V.P. Nandakumar, are involved in thebusiness of advancing Gold Loans. Conflicts of interest may also arise out of common businessobjectives shared by us, our Promoters, directors and their related entities. Our Promoters, directors andtheir related entities may compete with us and have no obligation to direct any opportunities to us. We17

cannot assure you that these or other conflicts of interest will be resolved in an impartial manner, andany of these conflicts could adversely affect our business and results of operations.20. Our entire customer base comprises individual borrowers, who generally are more likely to beaffected by declining economic conditions than larger corporate borrowers.Individual borrowers typically are less financially resilient than larger corporate borrowers, and as aresult, they are typically more adversely affected by declining economic conditions. In addition, asignificant majority of our customer base belongs to the low to medium income group. Furthermore,unlike many developed economies, a nationwide credit bureau has only recently become operational inIndia, so there is less financial information available about individuals, particularly our focus customersegment of the low to medium income group. It is therefore difficult to carry out precise credit riskanalyses on our customers. While we follow certain procedures to evaluate the credit profile of ourcustomers before we sanction a loan, we generally rely on the quality of the pledged gold rather than ona stringent analysis of the credit profile of our customers. Although we believe that our riskmanagement controls are sufficient, we cannot be certain that they will continue to be sufficient or thatadditional risk management policies for individual borrowers will not be required. Failure to maintainsufficient credit assessment policies, particularly for individual borrowers, could adversely affect ourloan portfolio, which could in turn have an adverse effect on our financial condition and results ofoperations.21. A rise in the general income level of our customers may adversely affect the demand for our loans.The size of our Gold Loan portfolio is dependent upon the demand for Gold Loans in India, which isinversely related to the general income level of our customers. A rise in the general income level inIndia could make our loans unattractive to some customers due to their having increased disposableincome, making them less reliant on loans, including Gold Loans. Such a shift in income levels couldlower our interest income, which could in turn adversely affect our business, financial condition andresults of operations.22. Major lapses of control, system failures or calamities could adversely affect our business.We are vulnerable to risks arising from the failure of employees to adhere to approved procedures,failures of security systems, computer system disruptions, communication systems failure and datainterception during transmission through external communication channels and networks. Failure toprevent or detect such breaches in security or data and communications errors may adversely affect ouroperations.Despite our internal controls, policies and procedures, certain matters such as fraud and embezzlementcannot be eliminated entirely given the cash nature of our business. If we fail to maintain and continueto enhance our internal controls, policies and systems, we may be unable to prevent fraud, securitybreaches or system failures.Our business is increasingly dependent on our ability to process, on a daily basis, a large number oftransactions. Our financial, accounting or other data processing systems may fail to operate properly orbecome disabled as a result of events that are wholly or partially beyond our control, including adisruption of electrical or communications services.If any of these systems do not operate properly or are disabled, or if there are other shortcomings orfailures in our internal processes or systems, financial loss, disruption of our business, regulatoryintervention or damage to our reputation may result. In addition, our ability to conduct business may beadversely affected by a disruption in the infrastructure that supports our businesses and the localities inwhich we are located. Our operations also rely on the secure processing, storage and transmission ofconfidential and other information in our computer systems and networks. Our computer systems,software and networks may be vulnerable to unauthorized access, computer viruses or other maliciouscode and other events that could compromise data integrity and security.Constant connectivity between our branches across India and our head office is key to the functioningof our business. Each of our branches accesses the Manappuram data centre through the Internet, andall data is stored centrally in the Manappuram data centre. Data is replicated at our Disaster Recovery18

Centre in Chennai. While we are seeking to provide each branch with two internet connections forredundancy to protect our systems in the event of failure of a broadband connection, as of May 31,2011, we have not yet provided approximately 500 of our branches with such redundancy. Our disasterrecovery system is fully operational and we continue to engage in technical exercises to test andimprove our disaster plan. A study completed by IBM identified certain areas for improvement in ourIT support processes. As a result, we are in the process of setting up a service desk, service deliveryand service support in the near future.23. The RBI has altered and may further alter regulations relating to priority sector advances.The RBI currently mandates domestic commercial banks operating in India to maintain an aggregate40.0% (32.0% for foreign banks) of their adjusted net bank credit or credit equivalent amount of offbalance sheet exposure, whichever is greater, as “priority sector advances”. These include advances toagriculture, small enterprises, exports and similar sectors where the Government seeks to encourage theflow of credit to stimulate economic development in India. As these commercial banks are unable tomeet these requirements, they often rely on specialised institutions, including microfinance institutions(“MFIs”) and other financing companies, to provide them with access to qualifying advances throughlending programs and loan assignments. These bank requirements result in significant funding for themicrofinance sector. However, by way of a circular dated February 2, 2011, the RBI has clarified thatloans sanctioned to NBFCs for on-lending to individuals or other entities against the security of goldjewellery, are not eligible for classification as loans made to the agricultural sector. Further,investments made by commercial banks in securitised assets originated by NBFCs, where theunderlying assets are loans against gold jewellery, then the assignment of gold loan portfolio fromNBFCs are also not eligible for classification under agriculture sector. To the extent that similarchanges in RBI regulations eliminate or reduce the need of banks for priority sector advances ormodifies the understanding of the concept of MFIs, less capital would be available to MFIs and otherfinancing companies, such as ours. In such event, our access to funds and the cost of our capital wouldbe adversely affected, which may in turn adversely affect our financial condition and results ofoperations.24. In order to successfully manage and expand our business, we must be able to attract, train, motivateand retain key employees.In order to successfully manage and expand our business, we must be able to attract, train, motivate andretain highly skilled employees, especially branch managers and gold appraisal personnel. If we cannothire additional personnel or retain existing qualified personnel, our ability to expand our business willbe impaired and our revenues could decline. Our ability to hire and retain qualified and skilledmanagers and sales representatives is critical to our future, and competition for experienced employeesin the Gold Loan industry may be significant. In addition, we may not be able to hire and retain enoughskilled and experienced employees to replace those who leave or may not be able to re-deploy. We alsomay not be able to retain the proper mix of employees to follow trends in technology, evolving industrystandards and changing customer preferences. Any failure by us to hire or retain key employees couldhave an adverse impact on our business and results of operations.25. Our insurance may not be adequate to protect us against all potential losses to which we may besubject.We maintain insurance for our free hold real estate and tangible properties, including gold and cash,and infrastructure at all premises, which provides insurance cover against loss or damage by fire aswell as against natural calamities including earthquake and floods. Further we maintain insurance foremployee fidelity, cash and gold in the branch premises and in transit, which provides insurance coveragainst loss or damage by employee theft, house breaking and hold up. However, the amount of ourinsurance coverage may be less than the replacement cost of all covered property and may not besufficient to cover all financial losses that we may suffer should a risk materialise. There are manyevents that could significantly affect our operations, or expose us to third party liabilities, for which wemay not be adequately insured. If we were to incur a significant liability for which we were not fullyinsured, it could adversely affect our business, results of operations and financial condition.19

26. Our business is highly regulated and we may be adversely affected by future regulatory changes.Further, The restrictions imposed on NBFCs by the RBI through a Master Circular dated July 1,2010 may restrict our ability to obtain bank financing for specific activities.We are required under applicable laws and regulations to maintain a capital adequacy ratio as perPrudential Norms Directions of at least 15.0% of our risk-weighted assets, with the minimumrequirement of Tier I capital being 10.0%. Our capital adequacy ratio was 29.13% as of March 31,2011, with Tier I capital comprising 26.36%.In addition to the above, we are also subject to the corporate, taxation and other laws in effect in Indiawhich require continued monitoring and compliance. The introduction of additional governmentcontrol or newly implemented laws and regulations, depending on the nature and extent thereof and ourability to make corresponding adjustments, may adversely affect our business, results of operations andfinancial condition. In particular, decisions taken by regulators concerning economic policies or goalsthat are inconsistent with our interests could adversely affect our results of operations. These laws andregulations and the way in which they are implemented and enforced may change from time to timeand we cannot assure you that future legislative or regulatory changes will not have an adverse effecton our business, financial condition and results of operations. The Micro Finance Institutions(Development and Regulation) Bill, 2011 promulgated by the Ministry of Finance in June 2011, ifnotified as legislation could be relevant in this regard. Further, as per the Monetary Policy Statementthat was released by the RBI on May 03, 2011, the RBI seeks to issue detailed guidelines on NBFCsfunctioning as micro finance institutions.The RBI has also designated certain activities that may be carried on by NBFCs as being ineligible forbank credit. These activities include rediscounting of bills by NBFCs (except in certain specific cases)and investment in shares or debentures of any other company. Banks are also prohibited from grantingbridge loans of any nature, or interim finance against capital/debenture issues to NBFCs. Under theRBI Master Circular No. RBI/2010-11/68 DBOD No.Dir.BC.14/13.03.00/2010-11 issued on July 1,2010, the exposure (both lending and investment, including off balance sheet exposures) of a bank to asingle NBFC cannot exceed 10.0% of the bank's capital funds as per its last audited balance sheet.Banks may, however, assume exposures on a single NBFC up to 15.0% of their capital funds providedthe exposure in excess of 10.0% is on account of funds on-lent by the NBFC to the infrastructuresector. Further, banks may also consider fixing internal limits for their aggregate exposure to allNBFCs. These rules limit the exposure that banks may have on NBFCs such as us, which may restrictour ability to borrow from such banks and may increase our cost of borrowing, which could adverselyimpact our growth and results of operations.Additionally, we are required to make various filings with the RBI, the Registrar of Companies,Securities and Exchange Board of India and other relevant authorities pursuant to the provisions of RBIregulations, the Companies Act and other regulations. If we fail to comply with these requirements, ora regulator claims we have not complied with these requirements, we may be subject to penalties andcompounding proceedings. For instance, in the past, we have needed to approach the Company LawBoard for condoning the delay in filing certain forms and had to pay certain penalties. We havereceived inspection reports from the RBI on a timely basis. Based on the recent RBI inspection reportdated June 4, 2011, the RBI has, inter alia, highlighted matters relating to improper and unfilledapplication forms, deficiencies in our fair practices code, delay in auction of gold and deficiencies inthe Pawn Ticket. We replied to the inspection report on June 6, 2011. However, the issues raised in theRBI inspection report may not be resolved in our favour, resulting in sanctions, which may have anadverse impact on our financial condition and results of operations.Further, pursuant to a Master Circular dated July 1, 2010, the RBI has imposed certain restrictions onNBFCs relating to the availability of bank financing. Under this Master Circular, certain NBFCactivities are ineligible for financing by bank credit, such as certain types of discounting andrediscounting of bills arising from the sale of commercial vehicles and unsecured loans or NCDs madeby NBFCs in other companies. In addition to the above, (i) banks are not permitted to grant bridgeloans of any nature, provide interim finance against capital or debenture issues and/or in the form ofloans of a temporary nature pending the raising of long term funds from the market by way of capital,deposits, or other means to any category of NBFCs; (ii) shares and debentures are not permitted to beaccepted as collateral securities for secured loans granted to NBFCs; and (iii) banks are not permittedto execute guarantees covering inter-company deposits or loans that guarantee refund of deposits or20

loans accepted by NBFCs. The Master Circular also advises that guarantees should not be issued bybanks for the purpose of indirectly enabling the placement of deposits with NBFCs. All theaforementioned restrictions may adversely affect our access to availability of bank finance, which mayin turn adversely affect our financial condition and results of operations.27. If interest rate restrictions are imposed on lending by NBFCs, our operating results and financialcondition may be adversely affected.We are subject to laws and regulations by Indian governmental authorities, including the RBI. Theremay be future changes in the regulatory system or in the enforcement of the laws and regulations thatcould adversely affect us. For instance, a number of states in India have enacted laws to regulatetransactions involving money lenders. These state laws establish maximum rates of interest that can becharged by a person lending money. The RBI, however, has not established a ceiling on the rate ofinterest that can be charged by an NBFC in our sector of operations. Currently, the RBI requires thatthe board of all NBFCs adopt an interest rate model taking into account relevant factors such as the costof funds, margin and risk premium. The rate of interest and the approach for gradation of risk and therationale for charging different rates of interest for different categories of borrowers are required to bedisclosed to the borrowers in the application form and expressly communicated in the sanction letter.If, in the future, the RBI imposes an interest rate ceiling on lending by NBFCs, our operating resultsand financial condition may be adversely affected.We may also fall within the ambit of the Usurious Loans Act, 1918 in the event that any of our loanagreements are litigated. While the legislation contains no stipulation as to what rate of interest wouldamount to an excessively high rate of interest, certain states in which our branches are located haveenacted amendments that have fixed such rates of interest at approximately 12.00% per annum forsecured loans. If any of our branches were to fall within the ambit of the Usurious Loans Act, 1918, wemay be subject to penalties and be forced to reduce interest rates accordingly, which could have anadverse effect on our business and results of operations.The National Bank for Agriculture and Rural Development has, on behalf of the RBI, issued a draftmicrofinance bill which has been released for suggestions by stakeholders. Further, the RBI set up a theMalegam committee to study issues and concerns in the microfinance sector which provided theMalegam Committee Report. The Malegam Committee Report has made various operational andfinancial recommendations on the microfinance sector and on the basis of the same we may getclassified as an MFI. If this bill is passed or the Malegam Committee Report adopted, we may becovered by its provisions and consequently, restricted in our activities, which may adversely affect ourbusiness and results of operations.28. Our inability to obtain, renew or maintain our statutory and regulatory permits and approvalsrequired to operate our business may have an adverse effect on our business.NBFCs in India are subject to strict regulation and close supervision by the RBI. In addition to thenumerous conditions required for the registration as an NBFC with the RBI, we are required tomaintain certain statutory and regulatory permits and approvals for our business. In the future, we willbe required to renew such permits and approvals and obtain new permits and approvals for anyproposed operations. We cannot assure you that the relevant authorities will issue any or all suchpermits or approvals in our anticipated timeframe or at all. Failure by us to renew, maintain or obtainthe required permits or approvals may result in the interruption of our operations and may have amaterial adverse effect on our business, financial condition and results of operations.29. The implementation of our KYC norms as well as our measures to prevent money laundering maynot be completely effective, which could adversely affect our reputation and in turn have an adverseimpact on our business and results of operations.Our implementation of anti-money laundering measures required by the RBI, including KYC policiesand the adoption of anti-money laundering and compliance procedures in all our branches, may not becompletely effective. There can be no assurance that attempts to launder money using us as a vehiclewill not be made. If we were associated with money laundering, our reputation may be adverselyaffected, which in turn could have an adverse impact on our business and results of operations.21

30. We are required to comply with the requirements of certain labour laws which may imposeadditional costs on us.Our branches are required to be registered under the relevant shops and establishments laws andverifications under Standards of Weights and Measures Act, 1976 of the states in which they arelocated. The shops and establishment laws regulate various employment conditions, including workinghours, holidays, leave and overtime compensation. Some of our branches have not applied for suchregistration and other branches have pending applications for registration. We have received noticesfrom labour authorities of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu pursuant to shops andestablishments laws for violating the norms laid down under such statutes, including the number ofpermitted working days for these branches. We have replied to these notices and applied forexemptions to keep these branches open seven days a week. If we fail to obtain or retain any of theseapprovals, exemptions or licenses, or renewals thereof, in a timely manner, or at all, our business maybe adversely affected. If we fail to comply, or a regulator claims we have not complied, with anyconditions, our certificate of registration may be suspended or cancelled and we may not be able tocarry on such activities.In addition, our employees are required to be registered under the provisions of certain labour lawssuch as the Employees‟ State Insurance Act, 1948, the Payment of Gratuity Act, 1972 the Kerala Shopsand Commercial Establishments Act, 1960, the Kerala Labour Welfare Fund Act, 1975, and theEmployees Provident Fund and Miscellaneous Provisions Act, 1952. We are also required to maintaincertain records under the provisions of these laws, which add to our costs. Certain claims have alsobeen raised against us for non compliance with the provisions of the Minimum Wages Act, 1948 andthe Maternity Benefits Act, 1961. If we are subject to penalties under these labour laws or if we do notobtain the requisite approvals, our business, financial condition and results of operations may beadversely affected.31. We do not currently own the trademark to the “Manappuram” logo.The “Manappuram” logo is registered with the Registrar of Trademarks in India under Class 36 in thename of our Promoter, V. P. Nandakumar. The trademark has been licensed to us for use on a nonexclusive,non-assignable basis for a period of ten years by way of a licensing agreement entered intoby us with V. P. Nandakumar on December 18, 2007. We cannot assure you that we will continue tohave the uninterrupted use and enjoyment of the “Manappuram” logo if we are unable to renew thelicense agreement. Further, renewal of the agreement may be on terms and conditions that areunfavorable to us. Termination, non renewal or renewal on unfavourable terms of this licensingagreement may adversely affect our business, reputation, goodwill, financial condition and results ofoperations.All of our Group Companies use the “Manappuram” name and logo. If the actions of our Promoters orour Group Companies damage the “Manappuram” name, our reputation, business and financialcondition may in turn be adversely affected.32. We face difficulties and incur additional expenses in operating from rural and semi urban areas,where infrastructural facilities are limited.A significant portion of our operations are conducted in rural and semi urban areas. We face certaindifficulties in conducting such operations, such as accessing power facilities, transporting people andgoods and maintaining profitability at branches in remote areas. We may also face increased costs inimplementing security measures and expanding our advertising presence. We cannot assure you thatsuch costs will not increase in the future as we expand our network in rural and semi urban areas.33. We depend on customer-supplied information when evaluating customer credit worthiness.In deciding whether to extend credit or enter into other transactions with customers and counter parties,we may rely on information furnished to us by or on behalf of our customers, including the financialinformation from which we create our credit assessments. We may also rely on customerrepresentations as to the accuracy and completeness of customer-supplied information. Any relevantchanges in this information may not be made available to us. The information that we have gatheredmay not be sufficient to create a complete customer risk profile. Because we rely on such customer-22

supplied information, some or all of certain customers‟ risk profiles may be willfully or inadvertentlywrong or misleading, which may lead us to enter into transactions that may adversely affect ourfinancial condition and results of operations.34. Our foreign currency exchange business may be adversely affected by exchange rate fluctuationsand is required to adhere to strict know-your-customer (“KYC”) norms.Our income from our foreign currency exchange business for the financial year ended March 31, 2011was Rs. 0.54 million and forms 2.69% of our total income from fee based services. We are authorisedto conduct this business under the Authorised Dealer II license (“AD II license”) that has been grantedto us by the RBI. Engaging in the foreign currency exchange business requires us to adhere to all theterms that are contained in our AD II license, including periodic statements to the RBI and strictcompliance with KYC norms. Any failure by us to comply with such reporting requirements and KYCnorms may result in the imposition of significant penalties, which could adversely affect our financialcondition and results of operations.35. Our money transfer business is strictly regulated by the RBI money transfer service scheme.Our income from our money transfer business for the financial year ended March 31, 2011 was Rs.1.92 million and constituted 95.65% of our total income from fee based services. Our money transferbusiness is required to adhere to the requirements of the RBI money transfer service scheme withregard to the nature of transactions permitted to be undertaken. The RBI has imposed strict KYCrequirements for agents as well as sub-agents of foreign principals who are engaged in providingmoney transfer services. These KYC requirements would require us to adapt our policies on customeracceptance, customer identification, monitoring of transactions and risk management in relation to ourmoney transfer business. Compliance with these requirements may increase costs and could adverselyaffect our money transfer business.36. All of our branches are located on leased premises and non renewal of lease agreements or theirrenewal on terms unfavourable to us could adversely affect our operations.All of our branches are located on leased premises. Any failure to renew the lease agreements for thesepremises on terms and conditions favourable to us may require us to move certain branches to newpremises. We may incur considerable expenses in relation to such relocations, which may adverselyaffect our results of operations.Further, some branch owners have also filed suits to evict us from certain premises. We are currentlyinvolved in 15 such suits. Some of our lease agreements for our branches may not be adequatelystamped or registered with the registering authority of appropriate jurisdiction, which may adverselyaffect our rights in such litigations. If any of these litigations are not resolved in our favour, ourbusiness and results of operations may be adversely affected.37. We do not hold sole title to the land on which our registered office is located.The land on which our registered office is located is jointly registered in our name and in the name ofone of our Group Companies, Manappuram Benefit Fund Limited (“MBFL”). We have not entered intoany arrangement to lease the land from MBFL. If MBFL requires us to relocate our registered office ordecides to relocate its registered office, we may face additional costs and other logistical difficulties incarrying out such a relocation, which may adversely affect our financial condition and operations.38. Our Promoters have given personal guarantees in relation to certain debt including assignmentfacilities provided to us, which if revoked may require alternative guarantees, repayment of amountsdue or termination of the facilities.Our Promoters have given personal guarantees aggregating to Rs. 6,636.02 million in relation to certaindebt including assignment facilities provided to us, which is the total limit sanctioned to us under suchdebt including assignment facilities. In the event that any of the guarantees are revoked, the lenders forsuch facilities may require alternate guarantees, repayment of amounts outstanding under such facilitiesor may terminate such facilities. We may not be successful in procuring guarantees satisfactory to thelenders, and as a result may need to repay outstanding amounts under such facilities or seek additional23

sources of capital, which could adversely affect our financial condition.39. Our Promoters have pledged Equity Shares under the terms of certain loan agreements that one ofour Promoters have entered into. Such agreements also contain certain restrictive provisions.One of our Promoters, Sushama Nandakumar, has availed of a loan of Rs. 1,000.00 million fromReligare Finvest Limited (“Religare”) pursuant to a loan agreement dated August 12, 2010 (the “LoanAgreement”). She has also availed of a loan of Rs. 350.00 million from Aditya Birla Finance Limited(“ABFL”) by way of sanction letters dated December 28, 2010 and March 29, 2011 (collectively the“Sanction Letters”). The security for the Religare loan is in part a pledge of the purchasedunencumbered Equity Shares of the Company by both our Promoters up to 2.5 times of the loanamount availed of, not lesser than a market value of Rs. 2,500.00 million. Upon the occurrence of anevent of default as described in the Loan Agreement, Religare is entitled to sell the pledged shares byway of an auction or private arrangement without court intervention. Religare is also entitled to recallthe loan and demand payment at any point in time depending on risk perception. The margin of theloan is 40.0% of the value of the securities pledged and if the market value of our shares falls below2.25 times the principal amount of the loan, our Promoters are required to provide additionalunencumbered shares to increase the margin to 2.5 times the principal amount of the loan within oneworking day. As of May 31, 2011, our Promoters have pledged 31,576,110 Equity Shares withReligare, which amounts to 7.57% of our paid up equity share capital.Further, pursuant to the terms contained in the Sanction Letters, our Promoter Mr. V. P. Nandakumarhas pledged a total of 6,500,000 Equity Shares with ABFL as on May 31, 2011. This amounts to 0.78%of our paid up capital as on that date. As per the terms of the loan arrangement with ABFL, the EquityShares are pledged at a margin of 50.00% and in case of a margin shortfall, the same would have to berecouped by the pledge of additional Equity Shares. However, any margin shortfall due to a reductionin share price beyond 30.00% would have to be recouped by way of repayment. We cannot assure youthat the interest and/or principal amount of these loans will be repaid on time or that an adequatemargin will be maintained at all times, which could result in a sale by of the pledged shares. A decreasein Promoter holding below agreed thresholds could amount to an event of default under certain of ourloan agreements. The occurrence of any of these risks may adversely affect our financial condition andresults of operations.40. We have certain contingent liabilities which may adversely affect our financial condition.As of March 31, 2011, we had certain contingent liabilities. The contingent liability of amountsdisclosed in our Financial Statements represents estimates and assumptions of our management basedon advice received.For further information on such contingent liabilities, see Schedule 18 to our Reformatted Statements.In the event that any of these contingent liabilities materialise, our financial condition may be adverselyaffected.41. A routine inspection by the RBI in June 2011 has indicated certain deficiencies in the maintenanceand upkeep of our loan documentation including certain identity related documentation.A routine inspection by the RBI has indicated certain deficiencies in our loan documentation. It hasbeen indicated that certain branches had failed to maintain a record of identity related documentsobtained from borrowers. Certain branches had also failed to maintain a record of the specific schemeunder which particular loans were sanctioned or the rate of interest that was chargeable to the specificborrower. It has also been indicated that in relation to loans that are treated as being advanced to theagricultural sector, certain branches had failed to obtain the relevant documents such as tax receipt forland, details of holding etc. Certain details were also omitted to be filled up in the demand promissorynote issued in relation to the repayment of the loan. While we are in the process of rectifying thesedefects, any delay or failure in doing so may subject us to a penalty being imposed in this regard by theRBI.24

42. We, our Executive Chairman, and certain of our employees are parties to a criminal proceeding.We, our Executive Chairman, V. P. Nandakumar, and certain other of our employees are parties to acriminal case which is pending before the Court of the Judicial Magistrate of First Class, Ottapalam,Kerala. The case was filed as a result of a complaint by one of our customers alleging that we hadforcefully dispossessed the customer of a vehicle for which the customer had availed of a loan from usdespite the customer having no payment due to us in relation to the vehicle. This case is filed underSections 143, 147, 148, 149, 323, 394, 457 and 506 (iii) of the Indian Penal Code, 1860. We cannotassure you that this case will be disposed of in our favour. In the event that any adverse order is passedin this case, it may adversely affect our reputation.Risks Related to Investments in an Indian Company43. A slow-down in economic growth in India and other political and economic factors may adverselyaffect our business.We operate only within India and, accordingly, all of our revenues are derived from the domesticmarket. As a result, we are highly dependent on prevailing economic conditions in India and our resultsof operations are significantly affected by factors influencing the Indian economy. An uncertaineconomic situation, in India and globally, could result in a further slowdown in economic growth,investment and consumption. A slowdown in the rate of growth in the Indian economy could result inlower demand for credit and other financial products and services and higher defaults. Any slowdownin the growth or negative growth of sectors where we have a relatively higher exposure could adverselyimpact our performance. Any such slowdown could adversely affect our business, prospects, results ofoperations and financial condition.Since 1991, successive central governments have pursued policies of economic liberalisation andfinancial sector reforms. Nevertheless, the role of the central and state governments in the Indianeconomy as producers, consumers and regulators has remained significant. However, there can be noassurance that the liberalisation policies announced by the Government in the past will continue in thefuture. A significant change in the Government‟s policies could affect business and economicconditions in India and could also adversely affect our business.44. Difficulties faced by other NBFCs, banks or financial institutions or the Indian financial sectorgenerally could cause our business to be adversely affected.We are exposed to the risks of the Indian financial sector which in turn may be affected by financialdifficulties and other problems faced by Indian financial institutions. Certain Indian financialinstitutions have experienced difficulties during recent years particularly in managing risks associatedwith their portfolios and matching the duration of their assets and liabilities, and some co-operativebanks have also faced serious financial and liquidity crises. Any major difficulty or instabilityexperienced by the Indian financial sector could create adverse market perception, which in turn couldadversely affect our business, prospects, results of operations and financial condition.45. Financial instability in other countries could disrupt our business.The Indian market and the Indian economy are influenced by economic and market conditions in othercountries. Although economic conditions are different in each country, investors‟ reactions todevelopments in one country can have adverse effects on the economy as a whole, in other countries,including India. A loss of investor confidence in the financial systems of other emerging markets maycause volatility in Indian financial markets and indirectly, in the Indian economy in general. Anyworldwide financial instability could also have a negative impact on the Indian economy, including themovement of exchange rates and interest rates in India.In the event that the current difficult conditions in the global credit markets continue or if the recoveryis slower than expected or if there any significant financial disruption, this could have an adverse effecton our cost of funding, loan portfolio, business, prospects, results of operations and financial condition25

46. A decline in India‟s foreign exchange reserves may affect liquidity and interest rates in the Indianeconomy, which could adversely impact our financial condition.According to the RBI Weekly Statistical Supplement, India‟s foreign exchange reserves totaled US$310,562.00 million as of June 17, 2011. A decline in India‟s foreign exchange reserves could impactthe valuation of the Rupee and could result in reduced liquidity and higher interest rates which couldadversely affect our future financial performance.47. A downgrade of India‟s sovereign debt rating by an international rating agency could have anegative impact on our business.India's sovereign debt rating could be downgraded due to various factors, including changes in tax orfiscal policy, which are outside our control. Such downgrading could cause a change in interest rates orother commercial terms and could adversely affect our ability to raise additional financing as well asour capital expenditure plans, business and financial performance. A decline in this reserve couldimpact the valuation of the Indian Rupee and could result in reduced liquidity and higher interest rates,which could adversely affect the availability of financing to us.48. We will be required to prepare our financial statements in accordance with „Indian AccountingStandards converged with IFRS‟ (“IND-AS”) effective from April 1, 2014. There can be noassurance that our adoption of IND-AS will not adversely affect our reported results of operations orfinancial condition and any failure to successfully adopt IND-AS from April 1, 2014 could have anadverse effect on the price of the Equity Shares.Based on the current timeline announced convergence of „Indian Accounting Standards‟ with IFRS forIndian companies, we estimate that the earliest that our Company would need to prepare annual andinterim financial statements under IND-AS would be the financial period commencing from April 1,2014. There is currently a significant lack of clarity on the adoption of, and convergence to IND-ASand we currently do not have a set of established practices on which to draw on in forming judgmentsregarding its implementation and application, and we have not determined with any degree of certaintythe impact that such adoption will have on our financial reporting. There can be no assurance that ourfinancial condition, results of operations, cash flows or changes in shareholders‟ equity will not appearmaterially worse under IND-AS than under Indian GAAP. As we transition to IND-AS reporting, wemay encounter difficulties in the ongoing process of implementing and enhancing our managementinformation systems. Moreover, there is increasing competition for the small number of IFRSexperiencedaccounting personnel as more Indian companies begin to prepare IND-AS financialstatements. There can be no assurance that our adoption of IND-AS will not adversely affect ourreported results of operations or financial condition.49. Companies operating in India are subject to a variety of central and state government taxes andsurcharges.Tax and other levies imposed by the central and state governments in India that affect our tax liabilityinclude: (i) central and state taxes and other levies; (ii) income tax; (iii) value added tax; (iv) turnovertax; (v) service tax; (vi) stamp duty; and (vii) other special taxes and surcharges which are introducedon a temporary or permanent basis from time to time. Moreover, the central and state tax scheme inIndia is extensive and subject to change from time to time. For example, a new tax code is proposed tobe introduced in the Indian Parliament. In addition, a new goods and services tax is proposed to beintroduced effective April 2012, and the scope of the service tax is proposed to enlarged.The statutory corporate income tax in India, which includes a surcharge on the tax and an educationcess on the tax and the surcharge, is currently 32.445% down from 33.99% for the fiscal year endedMarch 31, 2010. The central or state government may in the future increase the corporate income tax itimposes. Any such future increases or amendments may affect the overall tax efficiency of companiesoperating in India and may result in significant additional taxes becoming payable. Additional taxexposure could adversely affect our business and results of operations.50. Our ability to raise foreign capital may be constrained by Indian law.As an Indian company, we are subject to exchange controls that regulate borrowing in foreign26

currencies. Such regulatory restrictions limit our financing sources and hence could constrain ourability to obtain financing on competitive terms and refinance existing indebtedness. In addition, wecannot assure you that the required approvals will be granted to us without onerous conditions, if at all.Limitations on raising foreign debt may have an adverse effect on our business.51. Terrorist attacks, civil disturbances, regional conflicts and other acts of violence in India and abroadmay disrupt or otherwise adversely affect the Indian economy, the health of which our businessdepends on.Certain events that are beyond our control, such as terrorist attacks and other acts of violence or war,including those involving India, the United Kingdom, the United States or other countries, mayadversely affect worldwide financial markets which could adversely affect our business, and any ofthese events could lower confidence in India‟s economy. South Asia has, from time to time,experienced instances of civil unrest and political tensions and hostilities among neighbouringcountries, including India, Pakistan and China. Political tensions could create a perception that there isa risk of disruption of services provided by India-based companies, which could have an adverse effecton our business.52. India is vulnerable to natural disasters that could severely disrupt the normal operation of ourbusiness.Parts of India are susceptible to tsunamis and earthquakes and other natural disasters. Because all ofour facilities and employees are located in India, if any of our branches or offices are damaged by anatural disaster, our business could be interrupted or delayed. As a result, a natural disaster in Indiacould adversely affect our results of operations.53. An outbreak of an infectious disease or any other serious public health concerns in Asia orelsewhere could adversely affect our business.The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern,such as swine influenza, could have a negative impact on the global economy, financial markets andbusiness activities worldwide, which could adversely affect our business. Although, we have not beenadversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak ofan infectious disease among humans or animals or any other serious public health concern will not havea material adverse effect on our business.Risks Related to the Bonds54. Payments to be made on the Bonds will be subordinated to certain tax and other liabilities preferredby law.The Bonds will be subordinated to certain liabilities preferred by law such as the claims of theGovernment on account of taxes, and certain liabilities incurred in the ordinary course of ourCompany‟s trading or banking transactions. In particular, in the event of bankruptcy, liquidation orwinding-up, our Company‟s assets will be available to pay obligations on the Bonds only after all ofthose liabilities that rank senior to these Bonds have been paid as per Section 530 of the CompaniesAct, 1956. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assetsremaining to pay amounts due on the Bonds.55. Certain lenders of the Company have exclusive first charge over gold loan receivables of identifiedbranches of the Company.There are some lenders whose loans are secured by „exclusive first charge‟ over gold loan receivablesof identified branches of the Company by virtue of the terms and conditions contained in thedocuments entered into by the Company with such creditors and in the event of bankruptcy, liquidationor winding-up of the Company, the amounts recoverable by Bondholders will be reduced to that extent.56. There are other lenders who have pari passu charge over the Security provided.There are other lenders of the Company who have pari passu charge over the Security provided for the27

Issue. While the Company is required to maintain an asset cover of 1.10 times the outstanding amountof the Bonds, upon the Company‟s bankruptcy, winding-up or liquidation, the other lenders will rankpari passu with the Bondholders and to that extent, may reduce the amounts recoverable by theBondholders.57. The lenders of the Company who have exclusive charges over gold loan receivables of identifiedbranches of the Company may rank pari passu with the Debenture Holders in the event theirsecurity gets re-characterized.The Company has taken various loans from banks and financial institutions which are secured by„exclusive first charge‟ over gold loan receivables of identified branches of the Company. However theCompany periodically changes the identified branches depending on the amounts outstanding with therespective lender and depending on the financial covenants to be maintained under the documentsentered into by the Company with the respective lender. Due to the ability of the Company to deal withthe receivables over which the charge is created, the purported exclusive charge may be pari passucharge over all assets of the Company. In this event, such creditors will rank pari passu along with allthe charge holders of the Company which would include the Bondholders and this may thereforereduce the amounts recoverable by Bondholders in the event of the Company‟s bankruptcy, winding-upor liquidation58. The Company may raise further borrowings and charge its assets after receipt of necessary consentsfrom its existing lenders.The Company may, subject to receipt of all necessary consents from its existing lenders and theDebenture Trustee to the Issue, raise further borrowings and charge its assets. The Company is free todecide the nature of security that may be provided for future borrowings and the same may rank paripassu with the security created for this Issue. In such a scenario, the Bondholders will rank pari passuwith other creditors and to that extent, may reduce the amounts recoverable by the Bondholders uponthe Company‟s bankruptcy, winding-up or liquidation.59. The liquidity for the Bonds in the secondary market is very low and it may remain so in the future,and the price of the Bonds may be volatile.The Issue will be a new public issue of bonds for the Company and the liquidity in bonds at present isvery low in the secondary market. Although an application has been made to list the Bonds on BSE,there can be no assurance that liquidity for the Bonds will improve, and if liquidity for the Bonds wereto improve, there is no obligation on us to maintain the secondary market. The liquidity and marketprices of the Bonds can be expected to vary with changes in market and economic conditions, ourfinancial condition and prospects and other factors that generally influence market price of Bonds.Such fluctuations may significantly affect the liquidity and market price of the Bonds, which may tradeat a discount to the price at which you purchase the Bonds.Moreover, the price of the Bonds on the BSE may fluctuate after this Issue as a result of several otherfactors.60. You may not be able to recover, on a timely basis or at all, the full value of the outstanding amountsand/or the interest accrued thereon in connection with the Bonds.Our ability to pay interest accrued on the Bonds and/or the principal amount outstanding from time totime in connection therewith would be subject to various factors inter-alia including our financialcondition, profitability and the general economic conditions in India and in the global financialmarkets.We cannot assure you that we would be able to repay the principal amount outstanding from time totime on the Bonds and/or the interest accrued thereon in a timely manner, or at all. Although ourCompany will create appropriate security in favour of the Debenture Trustee for the Bondholders onthe assets adequate to ensure 110% asset cover for the Bonds, the realizable value of the SecuredAssets, when liquidated, may be lower than the outstanding principal and/or interest accrued thereon inconnection with the Bonds. A failure or delay to recover the expected value from a sale or dispositionof the Secured Assets could expose you to a potential loss.28

61. Debenture Redemption Reserve (“DRR”) would be created only up to an extent of 50% for theBonds. Further, if we do not generate adequate profits, we may not be able to maintain an adequateDRR, for the Bonds issued pursuant to this Prospectus.Section 117C of the Companies Act states that any company that intends to issue debentures mustcreate a DRR to which adequate amounts shall be credited out of the profits of the company until thedebentures are redeemed. The Ministry of Corporate Affairs has, through its circular dated April 18,2002, (“Circular”), specified that the quantum of DRR to be created before the redemption liabilityactually arises in normal circumstances should be „adequate‟ to pay the value of the debentures plusaccrued interest, (if not already paid), till the debentures are redeemed and cancelled. The Circularhowever further specifies that, for NBFCs like our Company, (NBFCs which are registered with theRBI under Section 45-IA of the RBI Act), the adequacy of the DRR will be 50% of the value ofdebentures issued through the public issue. Accordingly our Company is required to create a DRR of50% of the value of debentures issued through the public issue. This may affect speed of repayment toBondholders or otherwise affect availability to pay in a timely manner all amounts due and payable onthe Bonds.As further clarified by the Circular, the amount to be credited as DRR will be carved out of the profitsof the company only and there is no obligation on the part of the company to create DRR if there is noprofit for the particular year. Accordingly, if we are unable to generate adequate profits, the DRRcreated by us may not be adequate to meet the 50% of the value of the Bonds. This may have a bearingon the timely redemption of the Bonds by our Company.62. Any downgrading in credit rating of our Bonds may affect our trading price of the Bonds.The Bonds proposed to be issued under this Issue have been rated “CARE AA-” from CARE and„BWR AA-‟ from Brickwork. We cannot guarantee that these ratings will not be downgraded. Theratings provided by CARE or Brickwork may be suspended, withdrawn or revised at any time. Anyrevision or downgrading in the above credit ratings may lower the value of the Bonds and may alsoaffect our Company‟s ability to raise further debt.63. Changes in interest rates may affect the price of our Company‟s Bonds.All securities where a fixed rate of interest is offered, such as our Company‟s Bonds, are subject toprice risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e.when interest rates rise, prices of fixed income securities fall and when interest rates drop, the pricesincrease. The extent of fall or rise in the prices is a function of the existing coupon, days to maturityand the increase or decrease in the level of prevailing interest rates. Increased rates of interest, whichfrequently accompany inflation and/or a growing economy, are likely to have a negative effect on theprice of our Company‟s Bonds.64. You may be subject to Indian taxes arising on the sale of the Bonds.Sales of Bonds by any holder may give rise to tax liability in India, as further discussed in sectionentitled ―Statement of Tax Benefits‖ on page 78 of this Prospectus.65. There may be a delay in making refunds to applicants.We cannot assure you that the monies refundable to you, on account of (a) withdrawal of yourapplications, (b) our failure to receive minimum subscription in connection with the base amount of theIssue, (c) withdrawal of the Issue, or (d) failure to obtain the final approval from the BSE for listing ofthe Bonds, will be refunded to you in a timely manner. We however, shall refund such monies, with theinterest due and payable thereon as prescribed under applicable statutory and/or regulatory provisions.NOTES TO RISK FACTORS:1. This is a public issue of Bonds by the Company aggregating to Rs. 4,000 million with an option toretain over subscription upto Rs. 3,500 million, aggregating to Rs. 7,500 million29

2. For details on interests of the Company‟s Directors, please refer to the sections titled “OurManagement” and ―Capital Structure‖ beginning on pages 106 and 49 of this Prospectus respectively.3. The Company has entered into certain related party transactions as disclosed in the section “AuditorExamination Report and Reformatted Statements” beginning on page 182 of this Prospectus.4. Any clarification or information relating to the Issue shall be made available by the Lead Managers, theCo-Lead Managers and our Company to investors at large and no selective or additional informationwill be available for a section of investors in any manner whatsoever.5. Investors may contact the Registrar to the Issue, the Compliance Officer, the Lead Managers or the Co-Lead Managers for any complaints or queries pertaining to the Issue. In case of any specific queries onallotment / refund, investors may contact the Registrar to the Issue.6. In the event of oversubscription to the Issue or the Tranche Issue, allocation of Bonds will be as per the―Basis of Allotment‖ set out on page 167 of this Prospectus.7. Our Company‟s Equity Shares are listed on the BSE, MSE and CSE. It is a permitted security on NSE.8. Some of our privately placed non-convertible debentures are listed on BSE.9. Investors may note that this being a public issue of Bonds, as per the SEBI Debt Regulations, the DraftProspectus was not submitted to SEBI for comments. However, the Draft Prospectus was filed with theBSE on July 26, 2011 for receipt of public comments till 5 p.m. of the 7th Working Day from the dateof filing.10. For further information relating to certain significant legal proceedings that we are involved in, see―Outstanding Litigation and Defaults‖ beginning on page 133 of this Prospectus.30

THE ISSUEThe following is a summary of the terms of the Bonds to be issued under the terms of this Prospectus. Thissection should be read in conjunction with, and is qualified in its entirety by, more detailed information in thesection entitled ―Issue Structure‖ and ―Terms of the Issue‖ on page 140 and 144 respectively.COMMON TERMS FOR ALL SERIES OF THE BONDSIssuerIssueMinimum ApplicationManappuram Finance LimitedPublic issue of bonds in the nature of secured, redeemable, non-convertibledebentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 millionwith an option to retain over subscription upto Rs. 3,500 million,aggregating to Rs. 7,500 million. The Bonds shall be issued at par on theterms contained in this Prospectus.Five Bonds (Rs. 5,000) and in multiples of one Bond thereafter.The minimum number of Bonds per Application Form will be calculated onthe basis of total number of Bonds applied for under each such ApplicationForm and not on the basis of number of Bonds applied for in each Series ofBonds.Rating“CARE AA-” from CARE“BWR AA-” from BrickworkStock Exchange proposed forlistingIssuance and TradingMarket Lot / Trading LotIssue Schedule*Pay-in DateDeemed Date of AllotmentBSECompulsorily in dematerialized formOne BondThe Issue shall be open from August 18, 2011 to September 5, 2011 withan option to close earlier and/or extend upto a period as may be determinedby the Board.3 (three) days from the date of receipt of application or the date ofrealisation of the cheques/demand drafts, whichever is later.The Deemed Date of Allotment shall be the date as may be determined bythe Board of our Company and notified to the BSE. The actual allotmentmay occur on a date other than the Deemed Date of Allotment.* The Issue shall remain open for subscription during banking hours for the period indicated above, except thatthe Issue may close on such earlier date as may be decided by the Board subject to necessary approvals. In theevent of an early closure, our Company shall ensure that notice of the same is provided to the prospectiveinvestors through newspaper advertisements on the day of such earlier date of Issue closure.SPECIFIC TERMS FOR EACH SERIES OF BONDSSeries I IIFrequency of Interest payment NA Semi-annuallyFace Value per Bond Rs. 1,000 Rs. 1,000Issue Price per Bond Rs. 1,000 Rs. 1,00031

Interest Rate**Series I II1) For Bondholders inCategory I2) For Bondholders inCategory II3) For Bondholders inCategory IIIMaturity DateMaturity Amount per BondYield to Maturity1) For Bondholders inCategory I2) For Bondholders inCategory II3) For Bondholders inCategory IIINANANA400 days from the Deemed Date ofAllotment12% p.a.12% p.a.12.2% p.a.24 months from the Deemed Date ofAllotmentRs. 1,132.25*** for Bondholders in all Face Value of the Bonds plus anycategories (Face Value of the Bonds interest that may have accruedplus redemption premium)12% p.a. 12.34% p.a.12% p.a. 12.34% p.a.12% p.a. 12.56% p.a.* For various modes of interest payment, please refer to the section entitled “Terms of the Issue – Mannerand Mode of Payment” on page 151.** As per the “Procedure for Application - Basis of Allotment” on page 167 of this Prospectus, in the eventBonds are allocated to any Portion beyond the reservation for such category, the interest on such Bonds willbe as per rate specified for such applicants.***Rounded to the nearest decimal place.32

SELECTED FINANCIAL INFORMATIONThe summary financial information set out below is derived from the Reformatted Statements and details can befound in the section “Auditor Examination Report and Reformatted Statements” beginning on page 182 of thisProspectus.Summary Statement of Balance Sheet DataSOURCES OF FUNDSMarch 31,2011March 31,2010(Rs. in millions, unless otherwise stated)As atMarch 31, March 31, March 31,2009 2008 2007Shareholders' fundsShare capital 833.75 340.39 212.56 618.00 150.00Share warrants - - 29.98Reserves and surplus 18,405.82 5,765.21 1,436.19 311.83 131.25Loan fundsSecured loans 43,723.07 16,500.50 3,712.45 1,351.08 511.93Unsecured loans 12,817.03 1,856.12 793.34 388.67 420.95Deferred tax liability (net) - - - 0.39 0.9675,779.67 24,462.22 6,184.52 2,669.97 1,215.09APPLICATION OF FUNDSFixed assetsGross block 1,651.82 669.80 325.70 196.10 129.98Less : Accumulated depreciation /amortisation 332.80 135.63 71.85 42.06 25.28Net block 1,319.02 534.17 253.85 154.04 104.70Capital work in progress includingadvances68.64 1.23 2.60 -Intangible assets (net) 59.84 33.55 23.92 9.17 2.17Deferred tax asset (net) 87.07 33.35 13.59 - -Investments 403.20 1,406.70 10.77 29.28 29.01Current Assets, Loans and AdvancesCash and bank balances 6,663.69 2,682.08 1,133.96 672.23 215.65Other current assets 4,947.51 1,878.88 675.91 202.71 156.22Loans and advances 64,141.68 18,907.13 4,486.04 1,853.06 959.1175,752.88 23,468.09 6,295.91 2,728.00 1,330.98Less : Current liabilities and provisionsCurrent liabilities 1,126.34 810.28 347.97 225.81 217.76Provisions 784.64 204.59 68.15 24.71 34.011,910.98 1,014.87 416.12 250.52 251.77Net current assets 73,841.90 22,453.22 5,879.79 2,477.48 1,079.2175,779.67 24,462.22 6,184.52 2,669.97 1,215.0933

Summary Statement of Profit and Loss account dataMarch 31,2011March 31,2010(Rs. in millions, unless otherwise stated)Year endedMarch 31, March 31, March 31,2009 2008 2007INCOMEIncome from services 11,654.20 4,699.77 1,605.34 779.60 420.32Other income 161.06 82.24 55.77 17.00 16.1811,815.26 4,782.01 1,661.11 796.60 436.50EXPENDITUREPersonnel expenses 1,605.00 536.40 283.95 116.38 60.61Operating and other expenses 2,438.71 1,000.75 494.71 198.84 111.87Depreciation / amortization 212.96 57.38 33.71 18.26 10.66Financial expenses 3,319.63 1,369.23 385.91 143.51 89.857,576.30 2,963.76 1,198.28 476.99 272.99Profit before tax 4,238.96 1,818.25 462.83 319.61 163.51Less: Provision for tax- Current tax 1,466.04 640.11 171.44 109.20 57.50- Deferred tax (53.72) (19.07) (13.98) (0.57) (0.38)- Fringe benefit tax - - 2.40 1.08 0.27Profit after tax 2,826.64 1,197.21 302.97 209.90 106.12Balance brought forward from previous917.11 188.74 39.00 6.14 2.80yearProfit after tax and appropriation for thefinancial year 2008-09 - 88.12 - - -Profit available for appropriation 3,743.75 1,474.07 341.97 216.04 108.92Appropriations:- Transfer to Statutory Reserve 565.33 239.45 60.60 42.00 22.00- Transfer to General Reserve 282.67 119.72 31.00 100.00 50.00- Transfer to Capital Redemption Reserve - 17.14 5.72 5.72 5.71- Interim Dividend on Equity Shares - - 1.64 16.50 -- Dividend on Redeemable Preference- - 3.00 3.00 -Shares- Proposed Dividend on Equity Shares 500.25 165.89 43.14 5.50 19.80- Tax on distributed profit 81.14 27.22 8.13 4.26 3.64- Dividend on Convertible PreferenceShares - - - 0.06 1.63Net profit carried forward to balancesheet 2,314.36 904.65 188.74 39.00 6.1434

Summary Statement of Cash Flow dataMarch 31,2011(Rs. in millions, unless otherwise stated)Year endedMarchMarch 31, March March 31,2010 31, 2009 31, 2008 2007A. Cash flow from operating activitiesNet profit before taxation, and extraordinary items 4,238.96 1,818.25 462.83 319.61 163.51Adjustments for:Depreciation / amortization 212.96 57.38 33.71 18.26 10.66Loss on sale of fixed assets 2.28 4.34 2.32 0.84 -Write back of diminution in value of investments - - - (1.27) -(Profit) / Loss on sale of investments (3.96) 0.43 (0.42) - 1.27Interest income (124.67) (66.26) (41.95) (12.34) (12.43)Dividend income (3.62) (0.48) (6.26) - -Interest expense 3,156.59 1,304.54 355.87 141.92 88.28Provision for standard assets 158.47 - - - -Bad debts written off and provision for bad debts 224.28 141.99 177.86 33.72 21.32Operating profit before working capital changes 7,861.29 3,260.19 983.96 500.74 272.61Movements in working capital :Decrease / (Increase) in other current assets (3,026.12) (999.34) (473.21) (34.76) (117.96)Decrease / (Increase) loans and advances (45,458.84) (14,218.30) (2,810.82) (923.95) (382.89)Increase / (Decrease) in current liabilities and provisions 228.75 254.41 125.59 (11.34) 14.43Cash generated from operations (40,394.92) (11,703.04) (2,174.48) (469.31) (213.81)Direct taxes paid (net of refunds) (1,442.22) (653.38) (177.35) (101.44) (48.96)Net cash from operating activities (41,837.14) (12,356.42) (2,351.83) (570.75) (262.77)B. Cash flows from investing activitiesPurchase of fixed assets (1,096.42) (297.24) (153.19) (75.43) (68.63)Proceeds from sale of fixed assets 2.63 0.74 - - 2.03Purchase of investments (5,770.00) (2,680.13) - - (12.34)Sale / maturity of investments 6,777.46 1,284.24 18.92 1.00 2.40Interest received 82.16 44.21 41.95 12.34 12.43Dividends received 3.62 - 6.26 - 0.00Net cash from investing activities (0.55) (1,648.18) (86.06) (62.09) (64.11)C. Cash flows from financing activitiesProceeds from issuance of share capital 11,124.38 2,677.19 525.23 468.00 20.00Share issue expenses adjusted against securities premium / (235.64) (76.19) (23.39) (11.72) -not written off or adjustedRedemption of preference shares - (40.00) - - -Increase / (decrease) in secured debentures including 2,410.52 1,801.77 166.60 258.62 75.05application money (net)Increase / (decrease) in bank borrowings (net) 24,388.01 9,640.91 2,266.20 583.55 (23.38)Increase / (decrease) in borrowings from others (net) 450.00 200.00 - - (0.00)Increase / (decrease) in subordinate bond (net) 613.62 477.88 370.47 114.69 99.70Increase / (decrease) in deposits including inter-corporate (19.74) (29.95) (42.84) (146.32) 125.12deposits (net)Proceeds from commercial paper 21,810.03 3,316.31 - - -Repayment of commercial paper (12,452.89) (2,665.58) - - -Increase / (decrease) in vehicle loans (net) 8.39 (0.39) 0.96 1.59 -Proceeds from subordinated debt 1,000.00 - - - -Interest paid (3,079.25) (1,227.99) (338.23) (148.12) (84.25)Dividends paid (169.86) (54.85) (23.64) (24.42) (9.75)Tax on dividend paid (28.27) (9.14) (1.74) (6.45) (1.37)Net cash used in financing activities 45,819.30 14,009.97 2,899.62 1,089.42 201.12Net increase in cash and cash equivalents (A + B + C) 3,981.61 5.37 461.73 456.58 (125.76)Cash and cash equivalents at the beginning of the year 2,682.08 1,133.96 672.23 215.65 341.41Add: Adjustment on account of amalgamation - 1,542.75 - - -Cash and cash equivalents at the end of the year 6,663.69 2,682.08 1,133.96 672.23 215.65Components of cash and cash equivalentsCash and cheques on hand 1,188.01 644.98 182.62 166.71 66.07With banks35

Year endedMarch 31,2011March 31,2010March31, 2009March31, 2008March31,2007- on current account# 2,480.92 841.12 126.72 213.86 56.94- on deposit account* 2,992.30 1,193.85 823.38 274.70 92.13- on unpaid dividend accounts** 2.46 2.13 1.24 16.96 0.516,663.69 2,682.08 1,133.96 672.23 215.65* Includes cash collateral deposits held with banks whichare not available for use by the Company.2,119.41 1,182.57 702.86 270.76 55.55# includes amounts in Escrow account towards closedpublic deposits not available for use by the Company asthey represent corresponding deposit liabilities11.44 - - - -**These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities.36

SUMMARY OF BUSINESSWe are one of the leading listed NBFCs lending money against the pledge of household, used, gold jewellery(“Gold Loans”) in India, in terms of gold loan portfolio as of March 31, 2011, 2010 and 2009, and we are alsothe fastest growing gold financing company in India in terms of gold loan portfolio for the fiscal year 2010. (SeeIMaCS Industry Report (2010 Update). We provide these short-term personal and business Gold Loansprimarily to retail customers who require immediate availability of funds, but who do not have access to formalcredit on an immediate basis, or at all. Our Gold Loan portfolio as of March 31, 2011 comprised more than 2million Gold Loan accounts with 1.19 million customers aggregating to Rs. 63,705.41 million of Gold Loans inprincipal amount (net of assignments), which is 99.32% of our total loans and advances. As of March 31, 2011,we disburse Gold Loans to our customers from a network of 2,064 branches in 20 states and union territories ofIndia, including 1,567 branches in the southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.We are headquartered in the southern Indian state of Kerala. Our group commenced operations at Valapad,Thrissur, Kerala and has decades of established history in the money lending business, mainly in small-scalemoney lending against household, used, gold jewellery. Our Company has been in the Gold Loan financingbusiness since 1999. Historically, we have also provided other related services, including asset finance, moneytransfer and foreign exchange, sales of gold coins and business and personal lending. We focus on rapid, on-thespotapproval and disbursement of loans with minimal procedural formalities which our customers need tocomplete in order to avail a loan from us. We have developed various Gold Loan schemes, which offer variableterms in relation to the amount advanced per gram of gold, the interest rate and the amount of the loan, to meetthe different needs of various customers.Our lending functions are supported by an in-house, custom developed information technology platform thatallows us to, record relevant customer details and approve and disburse the loan. Our proprietary technologyplatform also handles internal audit, risk monitoring and management of the relevant loan and pledged goldrelated information. Our employees undergo periodic training sessions related to evaluation of the worth andauthenticity of the gold that is pledged with us.Our Gold Loan customers are individuals primarily from rural and semi-urban areas who require funds typicallyfor social obligations, emergencies, agriculture-related activities, small scale business operations orconsumption purposes. We strive to complete our Gold Loan transactions within short timelines. Whatdistinguishes us from banks is our focus on non-organized sections of society and our turn-around time. Loanamounts advanced by us are generally in the range of Rs. 1,000.00 to Rs. 1.00 million per loan transaction andtypically remain outstanding approximately for an average tenor of 120 days. All of our Gold Loans have amaximum of a 12 month term. In the financial year ended March 31, 2011, our gross Gold Loan portfolio yieldrepresenting gross interest income on gross gold loans as a percentage of gross average outstanding of goldloans, for the same period was, on average, 24.95% per annum.We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating isP1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercialpaper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for ourNCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating ofBWR AA- from Brickwork and a rating of CARE AA- from CARE Limited.In the fiscal years 2011, 2010 and 2009, our total income was Rs. 11,815.26 million, Rs. 4,782.01 million andRs. 1,661.11 million respectively. Our profit after tax for the fiscal years 2011, 2010 and 2009 was Rs. 2,826.64million, Rs. 1,197.21 million and Rs. 302.97 million respectively.In the fiscal years 2011, 2010 and 2009, revenues from our Gold Loan business constituted 97.62%, 95.67% and86.20%, respectively, of our total income. As of March 31, 2011, 2010 and 2009, our portfolio of Gold Loansunder management in principal amount (net of assignments) was Rs. 63,705.41 million, Rs. 18,512.26 millionand Rs. 4,000.63 million respectively, and approximately 52.97 tons, 22.45 tons and 13.34 tons, respectively, ofgold jewellery was held by us as security for our Gold Loans. Gross non-performing gold loan assets were0.28%, 0.55% and 0.95% of our gross Gold Loan portfolio under management as of March 31, 2011, 2010 and2009, respectively.37

Merger of MAFIT with Our CompanyManappuram Finance Tamil Nadu Limited (“MAFIT”) an affiliate of our Company merged with the Companywith retrospective effect from April 1, 2008 and the merger was given effect to by the Company pursuant to anOrder of the High Courts in the three month period ended December 31, 2009. Our financial statements as ofand for the fiscal year ended 2010 and 2011 reflect the financial results of MAFIT for such fiscal year; however,as the merger was approved in December 2009, our financial statements as of and for the fiscal year 2007, 2008and 2009, do not include the financial results of MAFIT for such periods.MAFIT was engaged in the same line of business as our Company, and as a result, we have benefited fromincreased operations, cost savings and operational synergies.As a result of the Merger, shareholders of MAFIT received 2.1 Equity Shares in our Company in exchange forevery issued and outstanding share of MAFIT. On January 11, 2010 we issued 11,677,382 equity shares of Rs.10 each credited as fully paid to the shareholders of MAFIT.Competitive StrengthsWe believe that the following competitive strengths position us well for continued growth:One of the leading gold financing companies in India with a long operating history and loyal customer baseWe have been engaged in the business of Gold Loan financing since 1999. We have, over the years, beensuccessful in expanding our brand name, as well as our customer base to different geographical locations inIndia. Our total number of customers grew from 0.22 million as of March 31, 2008 to 0.34 million as of March31, 2009 and then to 0.55 million as of March 31, 2010 and to 1.19 million as of March 31, 2011. We attributeour growth, in part, to our market penetration, particularly in areas less served by organized lending institutionsand the efficient and streamlined procedural formalities which our customers need to complete in order tocomplete a loan transaction with us, which makes us a preferred mode of finance for our customers. We alsoattribute our growth to customer loyalty. We believe that a large portion of our customer base returns to us whenthey are in need of funds. Our average principal amount of loan per customer has increased from Rs. 35,734 forthe fiscal year 2009 to Rs. 63,106 for the fiscal year 2011.Flexible loan schemes, high quality customer service and short response timeWe believe the growth in our Gold Loan portfolio is partly due to the flexible Gold Loan schemes that we offerto our customers and high quality customer service. Depending on their individual needs, we are able tocustomize loans for our customers in terms of the loan amount, advance rate per gram of gold and interest rate.We also allow customers to prepay their loans with us without penalty, and we do not have a minimum loansize.We provide our customers with a transparent process and a secure environment in which to transact theirbusiness, and we believe that our staff is professional and attentive at all our branch locations. Each of ourbranches is staffed with customer representatives who possess local knowledge and understanding of customers‟needs.In addition, we strive to complete our Gold Loan transactions within a short timeframe, as this forms animportant component in our competitive edge over other lenders. We are able to process Gold Loans within ashort timeframe as a result of our efficient technology support, skilled workforce and clear policies on internalprocesses. Although disbursement time may vary depending on the loan size and the number of items pledged,we can generally disburse an average loan of Rs. 30,000 within a few minutes from the time the gold is tenderedto the appraiser. Furthermore, since our loans are all over-collateralized by gold jewellery, there are minimaldocumentary and credit assessment requirements, which also shortens our turnaround time and increases theease with which our customers can do business with us.Rapid expansion of our branch networkWe have rapidly expanded our branch network in the past, which we believe has provided us with an advantageover our competitors. Our total number of branches grew from 644 branches in 14 states and union territories asof March 31, 2009 to 1,005 branches in 15 states and union territories as of March 31, 2010 and to 2,06438

anches in 20 states and union territories as of March 31, 2011 and then to 2,192 branches in 22 states andunion territories as of May 31, 2011. In order to manage our expanding operations as well as our increasedcustomer base, we have developed a proprietary technology framework that provides an integrated, robustplatform to run our operations and scale our branch network. In addition, on a per branch basis, increase inprincipal amount of loans and revenues is generally more than the increase in proportionate operating costs yearon year, providing us with economies of scale as branches mature. We intend to continue to develop ourtechnology framework in order to equip ourselves for further growth of our business.Strong capital raising ability and high credit ratingWe have a track record of successfully raising capital from a variety of sources. We have received private equityfinancing from affiliates of Sequoia Capital, India Equity Partners, Ashmore Alchemy and Granite Hill. As ofMay 31, 2011, these private equity investors (except for Sequoia Capital and Granite Hill, which sold theirinvestment) hold an aggregate of 14.23% of our outstanding Equity Shares.In addition, as of March 31, 2011, we have borrowing relationships with more than 38 banks. As of March 31,2011, March 31, 2010 and March 31, 2009, our secured loans from banks, financial institutions and NBFCswere Rs. 38,696.60 million, Rs. 13,858.59 million and Rs. 2,978.69 million respectively. Our bank borrowingsand private equity financings have aided us in achieving growth in our business.We also raise funds by assigning receivables from Gold Loan advances to banks and other institutions. As atMarch 31, 2011, March 31, 2010 and March 31, 2009, the assigned amounts outstanding were Rs. 11,182.83million, Rs. 7,077.02 million and Rs. 5,381.42 million.We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating isP1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercialpaper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for ourNCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating ofBWR AA- rating from Brickwork and a rating of CARE AA- from CARE Limited.The rating reflects our well established presence in the Gold Loan business, our track record of maintaininggood risk-adjusted returns while expanding our scale of operations and our moderate capitalization levels inrelation to our proposed expansion plans. Our liquidity position is comfortable with a well matched assetliability management profile on account of the relatively shorter tenure of the advance portfolio and availabilityof funding lines. The shorter tenure of advances aided by our P1+ rating also helps us to raise money by way ofshort term borrowings and by way of issue of commercial paper at attractive rates.Robust support system and IT infrastructure, including appraisal, internal audit and inventory control andsafety systemsOur IT infrastructure has been developed in house and links our network of branches across the country with thehead office. We migrated to a .NET platform in December 2008, and have reaped benefits in the form ofminimizing errors, faster transmission of data and risk monitoring. Our management has also benefited fromavailability of real time information. We upload data at each branch to facilitate online information access forfaster decision making. In addition, our technology platform has helped us develop an effective risk basedinternal control system and internal audit. We also have a disaster recovery system located outside of Keralawhich replicates data on a real time basis. Our centralized technology aids us in offsite surveillance of all ourbranches. Our technology also helps reduce the time it takes to complete Gold Loan transactions.Our ability to accurately appraise the quality of the gold jewellery to be pledged in a short period of time iscritical to our business. We do not engage third parties to assess the gold jewellery, but instead employ in-housestaff for this purpose, which leads to better customer service. Assessing gold jewellery quickly and accurately isa specialized skill that involves an assessment for gold content and quality manually without damaging thejewellery. We use tested methods of appraisal of gold, such as the nitric acid test, the touchstone test, checkingfor hallmarks and the sound test, and an independent appraisal is carried out by different sets of officials beforedisbursement is made depending on the ticket size. In addition, branch heads are required to independentlyverify loans that are above Rs. 20,000. Since we generally lend only against household, used jewellery andavoid lending against bullion or lending to jewellers and goldsmiths, the risk of use of low quality gold orspurious jewellery as security for our Gold Loans is limited.39

In addition, the gold that is pledged for each loan is typically as much as the worth of gold that is owned by anaverage Indian household, which prevents our exposure to larger-sized loans where the chances of default andsubsequent losses are increased. Only a small portion of the loans advanced by us are for relatively largeramounts, and in such cases we follow a more detailed process for evaluation of such loans. For larger loans, thehead office will verify the profile of the customer and approve limits for loan sanctions.Once the Gold Loan is made, we have a system in place for continuous monitoring of the pledged gold byinternal audit and risk management teams. In accordance with our internal audit policy, all of our branches aresubject to inspection every 90 days, a branch audit every 45 days and a spot audit can be conducted at anybranch at any time. At the time of conducting an inspection, a quality check on the inventory is also carried out.Our inventory control procedures involve physical security checks and checks on the quality of pledged gold. Inaddition, the branch head and the assistant branch head are the joint custodians of the gold stored in strongrooms or vaults, which means that the strong rooms or vaults can only be opened if two keys are inserted at thesame time. The safes and strong rooms are reinforced concrete cement structures built per industry standardsand practices.Experienced management team and skilled personnelOur management team has over 35 years of experience in the banking and Gold Loan business. Our senior andoperating level management teams have extensive experience in the Gold Loan business and we believe thattheir considerable knowledge of and experience in the industry enhances our ability to operate effectively. Ourstaff, including professionals, covers a variety of disciplines, including gold appraisal, internal audit,technology, accounting, marketing and sales. Some of our key management personnel have been employed byus since our inception. Our management has experience in identifying market trends and suitable locations forexpanding and setting up branches to suit our target customers. Our workforce also consists of appraisers whoare skilled in the evaluation of the worth and authenticity of the gold that is pledged with us and we conductperiodic training programs to augment their knowledge and efficiency in performing this task.StrategyOur business strategy is designed to capitalize on our competitive strengths and enhance our leadership positionin the Gold Loan industry. Key elements of our strategy include:Further grow our Gold Loan businessHistorically, Indians have been one of the largest consumers of gold due to the strong preference for goldjewellery among Indian households and its widespread use as a savings instrument. A large proportion of goldstock is held by rural India, as gold is viewed as a secure, liquid and easily accessible savings instrument, apartfrom its ornamental status. (Source: IMaCS Industry Report 2009)As a result, the market for Gold Loan financing in India is largely untapped and offers good potential for furthergrowth. The organized Gold Loan market is approximately 1.2% of the value of total gold stock in India(Source: IMaCS Industry Report (2010 Update)).We intend to increase our presence in under-served rural and semi-urban markets, where a large portion of thepopulation has limited access to credit either because they do not meet the eligibility requirements of banks orfinancial institutions, or because credit is not available in a timely manner at reasonable rates of interest, or atall. A typical Gold Loan customer expects high loan-to-value ratios, rapid and accurate appraisals, easy access,low levels of documentation, quick approval and disbursement and safekeeping of their pledged gold. Webelieve we meet these criteria, and thus our focus is to expand our Gold Loan business.Continue to expand branch networkWe intend to continue to grow our Gold Loan portfolio by expanding our network through the addition of newbranches. We have added 1,059 branches in the last fiscal year and 128 branches between March 31, 2011 andMay 31, 2011. We propose to increase our branch strength by at least 500 additional branches in the fiscal year2012, including in states where we do not currently have any operations, subject to certain conditions beingsatisfied. We carefully assess the market, location and proximity to target customers when selecting branch sitesto ensure that our branches are set up close to our target customers. We believe our customers appreciate thisconvenience and it enables us to reach new customers. In addition, on a per branch basis, our increase in40

principal amount of loans and revenues is generally more than the increase in proportionate operating costs yearon year, providing us with economies of scale as branches mature.Continue to build the Manappuram brandOur brand is key to the growth of our business. We believe that we have built a recognizable brand in the ruraland semi-urban markets of India, particularly in the southern states of Kerala, Tamil Nadu, Karnataka andAndhra Pradesh. We intend to continue to build our brand by using celebrities in our advertising campaigns andundertaking other marketing efforts on radio, television and outdoor advertising.Strengthen our technology platform and continue to develop robust risk management procedures and relatedsystemsSince we plan to expand our geographic reach as well as our scale of operations, we intend to further developand strengthen our technology platform to support our growth and improve the quality of our services. We arefocused on improving our comprehensive knowledge base and customer profile and support systems, which inturn will assist us in the expansion of our business. We also propose to strengthen the technology in ourjewellery appraisal process. We believe that improvements in technology will also reduce our operational andprocessing time and thereby improve our operating efficiencies.In addition, we view risk management as crucial to the expansion of our Gold Loan business. We thereforecontinually focus on improving our integrated risk management framework with processes for identifying,measuring, monitoring, reporting and mitigating key risks, including credit risk, appraisal risk, custodial risk,market risk and operational risk. We propose to make significant investments in personnel, technology andinfrastructure in order to improve process efficiencies and mitigate business risks. We have recruited individualswho have significant risk management experience and plan to retain this focus in hiring additional riskmanagement personnel. Going forward, we plan to continue to adapt our risk management procedures to takeaccount of trends we have identified, including our loan loss experience. We believe that prudent riskmanagement policies and development of tailored credit procedures will allow us to expand our Gold Loanfinancing business without experiencing significant increases in non-performing assets.Attract and retain high quality talentThe intellectual capital of our management and finance teams, as well as other professionals in our business, iscritical to our success, and we accordingly intend to continue to focus on attracting and retaining high qualitytalent. In order to achieve this, we will continue to capitalize on our strengths in the area of recruiting. Inparticular, we plan to consolidate our position as an employer of choice within the NBFC sector. We currentlyconduct training programs periodically across our regional training centers. We have also developed and willcontinue to develop targeted compensation schemes designed to retain our key management personnel andprofessionals, such as offering performance-linked salaries.New line of businessPursuant to the approval of our shareholders in the EGM on May 31, 2011, we intend to commence a new lineof business in travel and tourism. Our Company holds an Authorised Dealer Category II license from the RBIfor its FOREX operations. To augment our Company‟s income from such operations, it was thought desirable toventure into this new line of business. Our Company proposes to act as a travel agent, tour operator, transportagent and contractor. Further, our Company proposes to arrange and operate tours and to act as representativesof airlines, railways and arranging road, air, water ticket booking.41

GENERAL INFORMATIONManappuram Finance LimitedWe were incorporated as a public limited company on July 15, 1992 as “Manappuram General Finance andLeasing Limited”. Our name was subsequently changed to “Manappuram Finance Limited” on June 22, 2011.Registered OfficeThe Company has its registered office at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala.RegistrationCorporate Identification Number: L65910KL1992PLC006623 issued by the Registrar of Companies, Kerala.Certificate of incorporation No. 09-06623 of 1992 dated July 15, 1992. Fresh Certificate of Incorporation datedJune 22, 2011 for change of name to “Manappuram Finance Limited”.The Company was issued a certificate for commencement of business on July 31, 1992 by the Registrar ofCompanies, Kerala. We received a certificate of registration no. 16.00029 dated May 25, 1998 issued by theRBI allowing our Company to commence/ carry on the business of a deposit accepting NBFC, under section 45-IA of the RBI Act. Subsequently our registration was changed to that of a non-deposit accepting NBFC videcertificate of registration no. B-16.00029 dated March 22, 2011.Compliance OfficerMr. C. Radhakrishnan,Company SecretaryV/104 “Manappuram House”,Valapad P.O.,Thrissur 680 567, KeralaTel: (91 487) 305 0000Fax: (91 487) 239 9298Email: cosecretary@manappuram.comInvestors may contact the Registrar to the Issue or the Compliance Officer in case of any pre-issue or post Issuerelated issues such as non-receipt of letters of allotment demat credit or refund orders.Lead ManagersMorgan Stanley India Company Private Limited18F/19F, Tower 2One Indiabulls Centre841, Senapati Bapat Marg,Mumbai – 400013Tel: (91 22) 6118 1000Fax: (91 22) 6618 1040E-mail: manappuram_ms@morganstanley.comInvestor Grievance Email: investors_india@morganstanley.comWebsite: www.morganstanley.com/indiaofferdocumentsCompliance officer: Mr. Anil ShenoyContact Person: Mr. Saurabh KumarSEBI Registration No.: INM000011203A.K. Capital services limited30-39, Free Press House,Free Press Journal Marg, 215,Nariman Point, Mumbai 400 021Tel: (91 22) 6754 6500 / 6634Fax: (91 22) 6610 059442

Email: manappuramdipo@akgroup.co.inInvestor Grievance Email: investor.grievance@akgroup.co.inWebsite: www.akcapindia.comCompliance officer: Mr. Vikas AgarwalContact Person: Mr. Hitesh ShahSEBI Registration No.: INM000010411Axis Bank LimitedCorporate Office,Level 5/ E Block,Bombay Dyeing Mills Compound,Pandurang Bhudkar Marg, Worli,Mumbai - 400025Tel: (91 22) 2425 4556Fax: (91 22) 4325 4700E-mail: manappuramdipo@axisbank.comInvestor Grievance Email: axbmbd@axisbank.comWebsite: www.axisbank.comCompliance officer: Mr. Advait MajmudarContact Person: Mr. Dinkar RaiSEBI Registration No.: INM000006104ICICI Securities LimitedICICI Centre, H.T. Parekh Marg, Churchgate,Mumbai - 400 020. Maharashtra, India.Tel.: (91 22) 2288 2460Fax: (91 22) 2282 6580E-mail: project.manappuram@icicisecurities.comInvestor Grievance Email: customercare@icicisecurities.comWebsite: www.icicisecurities.comCompliance officer: Mr. Subir SahaContact Person: Mr. Sumit AgarwalSEBI Registration Number: INM000011179Co-Lead Managers:RR Investors Capital Services (P) Limited133A, Mittal Tower, A Wing,Nariman Point,Mumbai-400 021Tel: (91 22) 2288 6627 / 28Fax: (91 22) 2285 1925Email: manappuramncd@rrfcl.comInvestor Grievance Email:rrinvestors@rrfcl.comWebsite: www.rrfcl.comContact Person: Mr. Brahmdutta SinghCompliance Officer: Mr. Sandeep MahajanSEBI Registration Number: INM000007508Karvy Investor Services LimitedRegent Chambers, 2nd floorNariman Point, Mumbai – 400021Tel : (91 22) 2289 5000Fax: (91 22) 3020 4040Email: mgflncd2011@karvy.comInvestor Grievance Email: cmg@karvy.comWebsite: www.karvy.comContact Person: Mr. Omkar BarveCompliance Officer: Mr. V. Madhusudan RaoSEBI Registration No: INM00000836543

SMC Capitals Limited3rd Floor, A-Wing, Laxmi Towers,Bandra Kurla Complex,Bandra (East), Mumbai 400 051Tel: (91 22) 6138 3838Fax: (91 22) 6138 3899Email: mgfl@smccapitals.comInvestor Grievance Email: investor.grievance@smccapitals.comWebsite: www.smccapitals.comContact Person: Sanjeev BarnwalCompliance Officer: Sanjeev BarnwalSEBI Registration No: MB/INM000011427Debenture TrusteeIL&FS Trust Company LimitedThe IL& FS Financial Centre, Plot C-22,G –blockBandra Kurla Complex,Bandra East Mumbai 400 051Tel: (91 22) 2659 3097Fax: (91 22) 2653 3297E-mail: labanya.mukherjee@ilfsindia.comContact Person: Ms. Labanya MukherjeeSEBI Reg. No. IND000000452All the rights and remedies of the Bondholders under this Issue shall vest in and shall be exercised by theappointed Debenture Trustee for this Issue without having it referred to the Bondholders, subject to the terms ofthe Debenture Trust Deed. All investors under this Issue are deemed to have irrevocably given their authorityand consent to the Debenture Trustee so appointed by our Company for this Issue to act as their trustee and fordoing such acts and signing such documents to carry out their duty in such capacity. Any payment by ourCompany to the Bondholders / Debenture Trustee, as the case may be, shall, from the time of making suchpayment, completely and irrevocably discharge our Company pro tanto from any liability to the Bondholders.For details on the terms of the Debenture Trust Deed, please refer to the section entitled ―Terms of the Issue‖ onpage 144 of this Prospectus.Registrar to the IssueLink Intime India Private LimitedC-13, Pannalal Silk Mills CompoundL.B.S. Marg,Bhandup (West)Mumbai 400 078Tel: (91 22) 2596 0320Fax: (91 22) 2596 0329E-mail: man.ncd@linkintime.co.inInvestor Grievance Email: man.ncd@linkintime.co.inWebsite: www.linkintime.co.inContact Person: Mr. Sanjog SudSEBI Registration No.: INR000004058Statutory AuditorS. R. Batliboi & Associates,Chartered Accountants2nd Floor, TPL HouseCenotaph Road, TeynampetChennai 600 018Tel: (91 44) 2431 1440Fax: (91 44) 2431 145044

Credit Rating AgencyCredit Analysis & Research Limited4th Godrej Coliseum,Somaiya Hospital Road,Off Eastern Express HighwaySion (East),Mumbai – 400 022Tel: (91 22) 6754 3456Fax: (91 22) 6754 3457Brickwork Ratings India Pvt. Ltd.3 rd Floor, Raj Alkaa Park,29/3 & 32/2. Kalena Agrahara,Banerghatta Road,Bangalore – 569 076Tel: (91 80) 4040 9940Fax: (91 80) 4040 9941Legal Advisor to the IssueAmarchand & Mangaldas & Suresh A. Shroff & Co.Peninsula Chambers, Peninsula Corporate ParkGanpatrao Kadam Marg, Lower ParelMumbai 400 013Tel: (91 22) 2496 4455Fax: (91 22) 2496 3666Bankers to the IssueAxis Bank LimitedIInd Floor, City CentreRound West,Thrissur-680 001Tel: (91 487) 2338 5820Fax: (91 487) 2338 8550Email: thrissur.branchhead@axisbank.comContact Person: Pradeep Kumar C.K.SEBI Registration Number: INB100000017ICICI Bank LimitedCapital Market Division,Rajabahadur Mansion,30, Mumbai Samachar Marg,Fort, Mumbai 400 001Tel: (91 22) 6631 0322Fax: (91 22) 6631 0350Email: anil.gadoo@icicibank.comWebsite: www.icicibank.comContact Person: Anil GadooSEBI Registration Number: INB100000004Dhanlaxmi Bank LimitedJanmabhoomi Bhavan,Janmabhoomi Marg,Mumbai – 400 001Tel: (91 22) 2287 2535Fax: (91 22) 2287 1637Email: venkataraghavan.ta@dhanbank.co.inWebsite: www. dhanbank.comContact Person: Venkataraghavan T.A.SEBI Registration Number: INB100000025Yes Bank Limited3rd Floor, Ion House,Dr. E. Moses Road,Mahalaxmi, Mumbai 400 011Tel: (91 22) 6622 9031Fax: (91 22) 2497 4875Email: dlbtiservices@yesbank.inWebsite: www.yesbank.inContact Person: Mahesh ShiraliSEBI Registration Number: INB100000935Bankers to our CompanyAxis Bank2 nd Floor, City CentreRoundwest,Thrissur – 680 001,KeralaTel: (91 487) 233 5820Fax: (91 487) 233 8550Punjab National BankPalace Road,Thrissur – 680 020KeralaFederal Bank LimitedSakthan Thampuran Nagar,Thrissur – 680 001,KeralaTel: (91 487) 242 3115IDBI Bank LimitedPanampilly Nagar,Post Bag No, 4253Kochi – 682 036,ING Vysya Bank LimitedKR Road, 757/11,13 th Cross. JayanagarBR Bangalore – 560 082 KarnatakaTel: (91 80) 26712674Development Credit BankLimited128/1 Prestige Meridian Annexe,MG Road,45

Tel: (91 487) 233 0127Fax: (91 487) 233 8550ICICI Bank2nd Floor, Adonai TowerSA Road, KadavantraKochi – 682 016,KeralaTel: (91 484) 401 1360Indusind Bank Limited652-656, Tristar Towers,Avinashi Road,Plot No. 24, Phase 2Coimbatore - 641037Tel: (91422)221 3551Fax: (91 422) 221 2770Jammu & Kashmir Bank787, Karim Mansion,Mount Road, ChennaiTamil Nadu – 600 002Tel: (91 44) 2852 7631HDFC Bank LimitedSL Plaza, First Floor,Palarivattom, KochiTel: (91 484) 443 3206Fax: (91 484) 443 3205Lakshmi Vilas BankThrissur, KeralaTel: (91 487) 233 1053State Bank of India1 st Floor, Vankarath Towers,By-pass Junction, Padivattom,Kochi – 682024, KeralaTel: (91 484) 234 0100Fax: (91 484) 234 1100Union Bank of IndiaShakthan Arcade,Thrissur – 680 001, KeralaTel: (91 487) 242 0330Fax: (91 484) 242 1590Indian Overseas BankThrissur, KeralaTel: (91 487) 233 1295KeralaTel: (91 484) 2423115Yes Bank LimitedPMO, Nehru Centre,Dr. A.B. Road,Worli, Mumbai - 400018Tel: (91 22) 6620 9068Fax: (91 22) 6669 9177Bank of IndiaSubhashchanddra Bose Road,Jawahar Nagar(E), Ponnurunni,Vyttila P.O., Kochi – 682 019Tel: (91 484) 230 2364UCO Bank1 st Floor, Mafatlal Centre,Nariman Point,Mumbai – 400 021Tel: (91 22) 4054 9191Karnataka Bank351 Avvai Shanmugam (Lloyds)Road,Gopalapuram,Chennai – 600 086Tel: (91 44) 2345 3229Syndicate BankPalace Road,Thrissur, Kerala – 680 020Tel: (91 487) 233 1130Fax: (91 487) 233 1422Corporation Bank LimitedMMKS Trust Building,Star Junction,Mattanchery – 682002, KeralaTel: (91 484) 222 4576Ratnakar BankOne Indiabulls Centre,Tower 2, 6 th Floor,841,Senapati Bapat Marg,Mumbai 400 013,Tel: (91 80) 2550 4323DBS Bank LimitedSalarpuria Windsor, No. 3Ulsoor Road,Bangalore – 560 042,Tel: (91 80) 6632 8828Bangalore – 560 001,KarnatakaTel: (91 80) 6631 0516Fax: (91 80) 2555 0115Kotak Mahindra Bank LimitedZone II, 4 th Floor, Kotak Infiniti,Building No. 21, Infinity ParkGen. A.K. Vaidya Marg,Malad (East), Mumbai - 400097Tel: (91 22) 6605 4139Catholic Syrian BankRound SouthThrissur, KeralaTel: (91 487) 242 5890The South Indian Bank LimitedThrissur, KeralaTel: (91 487) 242 4215The Dhanalaxmi Bank LimitedThrissur, KeralaTel: (91 487) 232 1618Karur Vysya BankFirst Floor, Amritha Towers,KPCC Junction, M.G. Road,Ernakulam - 682011Tel: (91 484) 236 6283Fax: (91 484) 238 2291Central Bank of IndiaMetro Palace1 st Floor,Kochi – 682018, KeralaTel: (91 484) 239 8121Fax: (91 484) 239 8132Central Bank of IndiaMetro Palace1 st Floor,Kochi – 682018, KeralaTel: (91 484) 239 8121Fax: (91 484) 239 8132Barclays Bank20/21 Kamrajar Salai,Kanchipuram – 631 501Tel: (91 44) 6720 200046

Andhra BankNo. 17 Mill Road,Coimbatore – 641 001Tel: (91 422) 230 0504State Bank of TravancoreP.b. No. 3689, Malankara Centre,Shenoy‟s Junction,M.G. Road,Ernakulam – 682 035, KeralaTel: (91 44) 641 5211Dena BankC-10, G Block,Bandra Kurla ComplexBandra (East),Mumbai – 400 051,Tel: (91 22) 2654 5003State Bank of Bikaner & JaipurSir P.M. Road,United India Life Building,Fort, Mumbai – 400 023Tel: (91 22) 2266 3189Lead Brokers to the IssueMorgan Stanley India FinancialServices Private Limited18F/19F, Tower 2,One India Bulls Centre,841, Senapati Bapat Marg,Mumbai 400 013Tel: (91 22) 6118 1000Fax: (91 22) 6118 1034Email: pwmindia.customercare@morganstanley.comContact Person: Mr. Rahul JaggiaSEBI Registration Number:INB011301529RR Equity Brokers PrivateLimited47, MM Road,Rani Jhansi Marg, Jhandewalan,New Delhi - 110055Tel: (91 11) 2363 6363Fax: (91 11) 2363 6743Email: manishagrawal@rrfcl.comContact Person: Manish AgrawalSEBI Registration Number:INB011219632Bajaj Capital Investor ServicesLimited5th Floor, Bajaj House,97 Nehru Place,New Delhi - 110019Tel: (91 11) 6616 1111Fax: (91 11) 6660 8888Email: surajitm@bajajcapital.comContact Person: Surajit MisraSEBI Registration Number:INB231269334Geojit BNP Paribas FinancialServices Limited5th Floor, Finance Towers,Kaloor, Kochi,Pin 682 017A.K. Stockmart Private Limited,30-39 Free Press House. 3rd Floor,Free Press Journal Marg, 215,Nariman Point,Mumbai - 400021Tel: (91 22) 6754 6500Fax: (91 22) 6754 4666Email: ankit@akgroup.co.inContact Person: Ankit GuptaSEBI Registration Number:INB231269532Karvy Stock Broking Limited“Karvy House”,46, Avenue 4, Street No. 1,Banjara Hills,Hyderabad – 500034Tel: (91 40) 2331 2454Fax: (91 40) 6662 1474Email: ksblredressal@karvy.comContact Person: Ramapriyan P.B.SEBI Registration Number:INB010770130Edelweiss Broking LimitedEdelweiss House,Off C.S.T. Road,Kalina, Mumbai-400 098Tel: (91 22) 6747 1340Fax: (91 22) 6747 1347Email:nirmal.rewaria@edelcap.comContact Person: Nirmal RewariaSEBI Registration Number:INB011311637HDFC Securities Ltd.Office Floor 8, “I Think” Building,Jolly Board Campus OppositeCrompton Greaves Factory,Kanjurmarg (East)ICICI Securities Limited,ICICI Centre,H.T. Parekh Marg,Churchgate,Mumbai 400020Tel: (91 22) 2288 2460Fax: (91 22) 2282 6580Email: project.manappuram@icicisecurities.comContact Person: Mites ShahSEBI RegistrationNumber:INB011286854SMC Global Securities Ltd.11/6B, Shanti Chambers,Pusa Road,New Delhi, 110005,Tel: (91 11) 3011 1000Fax: (91 11) 2575 4365Email:rakesh@smcindiaonline.comContact Person: Rakesh GuptaSEBI Registration Number:INB011343937Enam Securities Private LimitedKhatau Building, 2nd Floor,44 Bank Street, Fort,Mumbai – 400001Tel: (91 22) 2267 7901Fax: (91 22) 2266 5613Email: ajays@enam.comContact Person: Ajay ShethSEBI Registration Number:INB011287852India Infoline Limited8th Floor, B-Wing, Kamala HillsCompound,Off Senapati Bapat Marg,Lower Parel,47

Tel: (91 484) 240 5501Fax: (91 484) 240 5618Email: mailus@geojit.comContact Person: K. VenkiteshSEBI Registration Number:INB011337326Integrated Securities Limited15, 1st Floor, Modern House,Dr. V.B. Gandhi Marg, Fort,Mumbai - 400023Tel: (91 22) 4066 1800Fax: (91 22) 2287 4676Email: Krishnan_v@iepindia.comContact Person: V. KrishnanSEBI Registration Number:INB231271835SPA Securities Limited101-A, 10th Floor,Mittal Court, Nariman Point,Mumbai – 400021Tel: (91 22) 2280 1240Fax: (91 22) 2657 3608Email:rajesh.gandhi@spagroupindia.comContact Person: Rajesh GandhiSEBI Registration Number:INB011178234Credit Rating and RationaleMumbai – 400042Tel: (91 22) 3075 3442Fax: (91 22) 3075 3435Email: sunil.raula@hdfcsec.comContact Person: Sunil RaulaSEBI Registration Number:INB011109437JM Financial Services PrivateLimited141 Maker Chamber III, 13thFloor,Nariman Point, Mumbai 400 021Tel: (91 22) 3021 3550Fax: (91 22) 2266 5902Email: rohit.singh@jmfinancial.inContact Person: Rohit SinghSEBI Registration Number:INB011054831Mumbai, 400013Tel: (91 22) 4646 4753Fax: (91 22) 2493 1073Email:abhinay.chikne@iiflcap.comContact Person: Abhinay ChikneSEBI Registration Number:INB011097533Kotak Securities Ltd.3rd Floor, Nirlon House,Dr. Annie Besant Road, Worli,Mumbai - 400025Tel: (91 22) 6652 9191Fax: (91 22) 6661 7041Email: sanjeeb.das@kotak.comContact Person: Sanjeeb KumarDasSEBI RegistrationNumber:010808153The Bonds proposed to be issued by our Company have been rated by CARE and Brickwork. CARE has vide itsletter dated June 21, 2011 assigned a rating of “CARE AA-”. Brickwork has vide its letter no.BWR/BLR/RA/2011-2012/0075 dated July 1, 2011 assigned a rating of “BWR AA-” to the Bonds in the Issue.For details in relation to the rationale for the credit rating, please refer to the Annexure to this Prospectus.Minimum SubscriptionIf our Company does not receive the minimum subscription of 75% of the base issue amount of the Issue, beingRs. 3,000 million, on or before the closure of the Issue, the entire subscription amount shall be refunded to theapplicants within 15 days from the date of closure of the Issue. If there is a delay in the refund of thesubscription amount by more than eight days after our Company becomes liable to pay the same, our Companywill pay interest for the period of delay, at rates prescribed under sub-section (2) and (2A) of Section 73 of theCompanies Act.Issue ProgrammeThe Issue shall remain open for subscription during the banking hours for the period indicated below, exceptthat the Issue may close on such earlier date as may be decided by our Company. In the event of an early closureof the Issue, our Company shall ensure that notice of the same is provided to the prospective investors throughnewspaper advertisements on the day of such earlier date of Issue closure.ISSUE OPENS ON August 18, 2011 ISSUE CLOSES ON September 5, 201148

CAPITAL STRUCTUREDetails of share capitalThe share capital of our Company as at the date of this Prospectus is set forth below:Amount (in Rs. unless otherwise stated)Authorised share capital980,000,000 Equity Shares of Rs. 2 each 1,960,000,000400,000 preference shares of Rs. 100 each 40,000,000Issued, subscribed and paid up share capital833,748,376 Equity Shares of Rs. 2 each, fully paid up 1,667,496,752Securities premium account**13,590.57 (in million)** Post adjustments on account of Merger with MAFIT, utilisation towards Bonus issues and share issueexpenses.Notes to Capital Structure1. Equity Share capital history of our Company as of August 4, 2011:Date ofAllotmentNo. of equitysharesFaceValue(Rs.)Issueprice perequityshare(Rs.)Nature ofconsiderationType ofAllotmentCumulativeno of equitysharesCumulativepaid-upequity sharecapitalEquity shareequitypremium(Rs.)GrossCumulativeshare premium(Rs.)June 30, 1992 1,250,000 10 10.00 Cash Promoter1,250,000 12,500,000 Nil -contributionAugust 21,1,750,000 10 10.00 Cash Public issue 3,000,000 30,000,000 Nil -1995August 1, 2003 1,500,000 10 10.00 Cash Rights issue 4,500,000 45,000,000 Nil -July 30, 2005 1,000,000 10 25.00 Cash Preferential 5,500,000 55,000,000 15 15,000,000issueJanuary 15,5,500,000 10 10.00 Nil Bonus issue 11,000,000 110,000,000 Nil 15,000,0002007June 21, 2008 3,283,582 10 142.53 Cash Conversion of 14,283,582 142,835,820 132.53 450,173,122preferenceshareMarch 16, 2009 2,972,246 10 166.62 Cash Conversion of 17,255,828 172,558,280 156.62 915,686,291preferenceshareJanuary 11,11,677,382 10 10.00 Nil Allotment on 28,933,210 289,332,100 Nil 9156862,912010mergerMarch 4, 2010 3,540,420 10 691.00 Cash Qualified32,473,630 324,736,300 681.00 3,326,712,311institutionalplacementMarch 18, 2010 1,564,892 10 166.62 Cash Warrant34,038,522 340,385,220 156.62 3,571,805,696conversionApril 22, 2010 170,192,610 2 2.00 Nil Split of shares 170,192,610 340,385,220 Nil 3,571,805,696May 11, 2010 170,192,610 2 2.00 Nil Bonus issue 340,385,220 680,770,440 Nil 3,571,805,696September 9, 13,210,039 2 75.69 Cash Preferential 353,595,259 707,190,518 73.70 4,545,385,5702010issueSeptember 28, 3,471,000 2 33.12 Cash Employee357,066,259 714,132,518 31.12 4,653,403,0902010stock optionNovember 18, 59,523,809 2 168.00 Cash Qualified416,590,068 833,180,136 166.00 14,534,355,3842010institutionalplacementMarch 19, 2011 284,120 2 33.12 Cash Employee416,874,188 833,748,376 31.12 14,543,197,199stock optionJune 11, 2011 41,6874188 2 - Nil Bonus 833,748,376 1,667,496,752 Nil 14,543,197,199This, being an issue of Bonds, will not impact the equity share capital of our Company.49

2. Shareholding pattern of our Company as on August 4, 2011:S.No.Category ofshareholderNo. ofShareholdersTotal no. ofEquity SharesNo. ofEquityShares heldindematerialised formTotal shareholding asa percentage of totalnumber of shares% ofEquityShares(A+B)% ofEquityShares(A+B+C)Equity Shares pledged orotherwise encumberedNumber ofEquityShares% No. ofEquityShares(A) Promoter and Promoter Group(1) Indian(a) Individuals/ Hindu7 303992774 303992774 36.46 36.46 63152220 20.77Undivided Family(b) Central Government/0 0 0 0.00 0.00 Nil NilState Government(s)(c) Bodies Corporate 0 0 0 0.00 0.00 Nil Nil(d) Financial Institutions/0 0 0 0.00 0.00 Nil NilBanks(e) Any Others(Specify) 0 0 0 0.00 0.00 Nil NilSub-Total (A)(1) 7 303992774 303992774 36.46 36.46 63152220 20.77(2) Foreign(a) Individuals (Non-0 0 0 0.00 0.00 Nil NilResident Individuals/Foreign Individuals)(b) Bodies Corporate 0 0 0 0.00 0.00 Nil Nil(c) Institutions 0 0 0 0.00 0.00 Nil Nil(d) Any Other (specify) 0 0 0 0.00 0.00 Nil NilSub-Total (A)(2) 0 0 0 0.00 0.00 Nil NilTotal Shareholding7 303992774 303992774 36.46 36.46 63152220 20.77of Promoter andPromoter Group(A)= (A)(1)+(A)(2)(B) Public shareholding(1) Institutions(a) Mutual Funds/UTI 11 12219828 12219828 1.47 1.47 N.A N.A(b) Financial Institutions/0 0 0 0.00 0.00 N.A N.ABanks(c) Central Government/0 0 0 0.00 0.00 N.A N.AState Government(s)(d) Venture Capital0 0 0 0.00 0.00 N.A N.AFunds(e) Insurance Companies 0 0 0 0.00 0.00 N.A N.A(f) Foreign Institutional70 255049977 255049977 30.59 30.59 N.A N.AInvestors(g) Foreign Venture0 0 0 0.00 0.00 N.A N.ACapital Investors(h) Any Other (specify) 0 0 0 0.00 0.00 N.A N.ASub-Total (B)(1) 81 267269805 267269805 32.06 32.06 N.A N.A(2) Non-institutions N.A N.A(a) Bodies Corporate 531 9044399 9040299 1.08 1.08 N.A N.A(b) Individuals -37600 49336879 39579198 5.92 5.92 N.A N.AIndividualshareholders holdingnominal share capitalup to Rs. 1 lakh.Individual223 58594705 55904785 7.03 7.03 N.A N.Ashareholders holdingnominal share capitalin excess of Rs. 1lakh.(c) Any Other (specify) N.A N.ATrusts 3 5858 5858 0.00 0.00 N.A N.ADirectors & their29 18897484 18635484 2.27 2.27 N.A N.ArelativesNon resident Indians 926 5679010 5099010 0.68 0.68 N.A N.AClearing members 245 1333022 1333022 0.16 0.16 N.A N.AHindu Undivided256 730060 730060 0.09 0.09 N.A N.AFamiliesForeign Corporate3 118524380 118524380 14.22 14.22 N.A N.ABodiesNRI Directors 1 340000 340000 0.04 0.04 N.A N.ASub-Total (B)(2) 39817 262485797 249192096 31.48 31.48 N.A N.ATotal Public39898 529755602 516461901 63.54 63.54 N.A N.AShareholding (B)=(B)(1)+(B)(2)TOTAL (A)+(B) 39905 833748376 820454675 100.00 100.00 63152220 7.57(C) Shares held byCustodians andagainst whichDepository Receiptshave been issued0 0 0 0.00 0.00 N.A N.A50

S.No.Category ofshareholderGRAND TOTAL(A)+(B)+(C)No. ofShareholdersTotal no. ofEquity SharesNo. ofEquityShares heldindematerialised formTotal shareholding asa percentage of totalnumber of shares% ofEquityShares(A+B)% ofEquityShares(A+B+C)Equity Shares pledged orotherwise encumberedNumber ofEquityShares% No. ofEquityShares39905 833748376 820454675 100.00 100.00 63152220 7.57Pursuant to a resolution passed at the EGM dated April 22, 2010 the face value of one equity share ofRs. 10 each was split and sub-divided into equity shares of Rs. 2 each. The record date for the abovesplit was May 4, 2010.3. List of top 10 holders of Equity Shares of our Company as on August 4, 2011:Sr.No.Name of theShareholderAddressi. V.P. Nandakumar Padma SarojVazhappully HouseP.O. ValapadThrissur KeralaPin-680567ii.iii.iv.Hudson EquityHoldings LimitedV.P. Nandakumar alongwith SushamaNandakumarSmallcap World FundInc.v. AA DevelopmentCapital India Fund 1,LLCvi.VazhoorSankaranarayananSushamaC/o Kotak Mahindra BankLimitedKotak Infiniti,Bldg. No.21,6th Flr Zone IV,Custody Services,Infinity ParkGen. AK Vaidya Marg,Malad (E), MumbaiPin-400097Padma SarojVazhappully HouseP.O. ValapadThrissur KeralaPin-680567Deutsche Bank AGDB House,Hazarimal Somani Marg,Post Box No. 1142,Fort MumbaiPin-400001HSBC Securities Services2nd floor ''Shiv'',Plot no.139-140bWestern Exp Highway,Sahar Rd Junction,Vile Parle (E),Mumbai - 400057Vazhapully HouseValapad P.OTrichur - 680567vii. Sushama Nandakumar Padma SarojVazhappully HouseP.O. ValapadThrissur KeralaTotal EquityShares heldPercentage of theshareholding (%)193,119,056 23.1671,805,840 8.6156,873,640 6.8254,812,814 6.5743,568,540 5.2226,420,078 3.1721,580,000 2.5951

Sr.No.viii.ix.Name of theShareholderCopthall MauritiusInvestment LimitedSloane Robinson LLPA/c SR Globalx. CLSA (Mauritius)LimitedAddressPin-680567J.P.Morgan Chase Bank N.A.India Sub Custody6th Floor, Paradigm BMindspace, malad (W),Mumbai - 400064HSBC Securities Services2nd floor ''Shiv'',Plot no.139-140bWestern Exp Highway,Sahar Rd Junction,Vile Parle (E),Mumbai – 400057Citibank N.A. CustodyServices, 3 rd Floor, Trenthouse, G Block, Plot No 60,BKC, Bandra (e), Mumbai –400051Total EquityShares heldPercentage of theshareholding (%)21,209,014 2.5417,305,668 2.0815,389,565 1.85TOTAL 522,084,215 62.614. List of top 10 holders of different series of non-convertible debentures issued on private placementbasis of our Company as on August 4, 2011:MFL Secured NCD- 12.25% - Series B-1Maturity Date: March 28, 2014ISIN – INE 522D07073Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressi. Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex, SumanNagar,Sion Trombay Road,Chembur,Mumbai - 400071ii. Bank of Maharashtra Apeejay House, 1 st Floor,130 Dr. V.B. Gandhi Marg,Fort,Mumbai – 400001iii.iv.Bank of MaharashtraEmployees ProvidentFundBank of MaharashtraEmployees PensionFund1501, Shivaji Nagar,Lokmangal,Pune - 4110051501, Shivaji Nagar,Lokmangal,Pune - 411005TotaldebenturesheldPercentage ofthe holding (%)1,500 75.75300 15.1590 4.5590 4.55TOTAL 1,980 10052

MFL Secured NCD- 12.25%- Series B-2Maturity Date: March 28, 2015ISIN – INE 522D07081Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressi. Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex, SumanNagar,Sion Trombay Road,Chembur,Mumbai - 400071ii. Bank of Maharashtra Apeejay House, 1 st Floor,130 Dr. V.B. Gandhi Marg,Fort,Mumbai – 400001Totaldebentures heldPercentage of theholding (%)1,500 75.75300 15.15iii.Bank of MaharashtraEmployees ProvidentFund1501, Shivaji Nagar,Lokmangal,Pune - 41100590 4.55iv.Bank of MaharashtraEmployees PensionFund1501, Shivaji Nagar,Lokmangal,Pune - 41100590 4.55TOTAL 1,980 100MFL Secured NCD- 12.25%- Series B-3Maturity Date: March 28, 2016ISIN – INE 522D07099Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressi. Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex, SumanNagar,Sion Trombay Road,Chembur,Mumbai - 400071ii. Bank of Maharashtra Apeejay House, 1 st Floor,130 Dr. V.B. Gandhi Marg,Fort,Mumbai – 400001Totaldebentures heldPercentage of theholding (%)2,000 75.75400 15.15iii.Bank of MaharashtraEmployees ProvidentFund1501, Shivaji Nagar,Lokmangal,Pune - 411005120 4.55iv.Bank of MaharashtraEmployees Pension Fund1501, Shivaji Nagar,Lokmangal,Pune - 411005120 4.5553

Sr.No.Name of the debentureholderAddressTotaldebentures heldPercentage of theholding (%)TOTAL 2,640 100MFL Secured NCD- 12.25% - Series B-4Maturity Date: March 31, 2014ISIN – INE 522D07115Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressi. UCO Bank, Treasury Branch,UCO Building,Mezzanine Floor,359 Dr. DN Road,Fort,Mumbai - 400001ii.iii.iv.Dena Bank EmployeesGratuity FundBank of MaharashtraEmployees ProvidentFundBank of MaharashtraEmployees Pension FundSharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 4000561501, Shivaji Nagar,Lokmangal,Pune - 4110051501, Shivaji Nagar,Lokmangal,Pune - 411005Totaldebentures heldPercentage of theholding (%)750 76.22114 11.5860 6.1060 6.10TOTAL 984 100MFL Secured NCD- 12.25% - Series B-5Maturity Date: March 31, 2015ISIN – INE 522D07123Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressi. UCO Bank, Treasury Branch,UCO Building,Mezzanine Floor,359 Dr. DN Road,Fort,Mumbai - 400001ii.iii.iv.Dena Bank EmployeesGratuity FundBank of MaharashtraEmployees ProvidentFundBank of MaharashtraEmployees PensionSharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 4000561501, Shivaji Nagar,Lokmangal,Pune - 4110051501, Shivaji Nagar,Lokmangal,Totaldebentures heldPercentage of theholding (%)750 76.22114 11.5860 6.1060 6.1054

Sr.No.Name of the debentureholderFund Pune - 411005AddressTotaldebentures heldPercentage of theholding (%)TOTAL 984 100MFL Secured NCD- 12.25%- Series B-6Maturity Date: March 31, 2016ISIN – INE 522D07131Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressi. UCO Bank, Treasury Branch,UCO Building,Mezzanine Floor,359 Dr. DN Road,Fort,Mumbai - 400001ii.iii.iv.Dena Bank EmployeesGratuity FundBank of MaharashtraEmployees ProvidentFundBank of MaharashtraEmployees Pension FundSharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 4000561501, Shivaji Nagar,Lokmangal,Pune - 4110051501, Shivaji Nagar,Lokmangal,Pune - 411005Totaldebentures heldPercentage of theholding (%)1,000 76.22152 11.5880 6.1080 6.10TOTAL 1,312 100MFL Secured NCD-10.65%Maturity Date: March 3, 2012ISIN – INE 522D07040Face Value: Rs. 1,000,000Sr.No.Name of the debentureholderi. Reliance Capital TrusteeCo. Ltd. A/cReliance Floating RateFund – Short Planii.iii.Hero Honda MotorsLimitedNomura Capital (India)LimitedAddressDeutsche Bank AG,DB House, HazarimalSomani Marg,Post Box No. 1142, Fort,Mumbai - 400001HDFC Bank Limited,Custody Services,Lodha – I Think TechnoCampus,Off Floor 8, Kanjunmarg(E)Mumbai - 400042HSBC Securities Services,2 nd Floor, Shiv, Plot No.139-140B,Total debenturesheldPercentage of theholding (%)500 50.00250 25.00250 25.0055

Sr.No.Name of the debentureholderAddressWestern Express Highway,Saghar Road Junction,Ville Parle (E),Mumbai - 400057Total debenturesheldPercentage of theholding (%)TOTAL 1,000 100MFL Secured NCD-9.25%Maturity Date: February 18, 2012ISIN – INE 522D07024Face Value: Rs. 1,000,000Sr.No.Name of the debentureholderAddressi. Bank of India Treasury Branch,Head Office, Star House,7th Floor,Bandra Kurla Complex,Bandra (East),Mumbai - 400051Total debenturesheldPercentage of theholding (%)250 100.00MFL Secured NCD-9.00%Maturity Date: August 16, 2011ISIN – INE 522D07016Face Value: Rs. 1,000,000Sr.No.Name of thedebenture holderAddressTotaldebenturesheldPercentage of theholding (%)i. Central Bank of India Central Bank of India,Treasury Department,Chandramukhi Building,Nariman Point,Mumbai - 400021250 100.00MFL Secured NCD-12.00%%- Series A-1Maturity Date: March 28, 2013ISIN – INE 522D07057Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressi. Corporation Bank Corporation Bank, GeneralAccount,Investment Division,15 Mittal Chambers, 1 stFloor,Nariman Point,Mumbai - 400021Totaldebentures heldPercentage of theholding (%)1000 100.0056

MFL Secured NCD-12.00%- Series A-2Maturity Date: March 28, 2014ISIN – INE 522D07065Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressi. Corporation Bank Corporation Bank,General Account,Investment Division,15 Mittal Chambers, 1 stFloor,Nariman Point,Mumbai - 400021Totaldebentures heldPercentage of theholding (%)1000 100.00MFL Secured NCD-12.60%Maturity Date: June 29, 2012ISIN – INE 522D07107Face Value: Rs. 1,000,000Sr.No.Name of thedebenture holderi. Reliance CapitalTrustee Co. Ltd. A/cReliance FloatingRate Fund – ShortPlanAddressDeutsche Bank AG,DB House, HazarimalSomani Marg,Post Box No. 1142, Fort,Mumbai - 400001Total debenturesheldPercentage of theholding (%)1000 100.00MFL Secured NCD- 12%Maturity Date: May 15, 2012ISIN – INE 522D07149Face Value: Rs. 1,000,000iSr.No.Name of thedebenture holderMorgan StanleyInvestments(Mauritius) LimitedAddressHSBC Securities Services2nd floor ''Shiv'',Plot no.139-140bWestern Exp Highway,Sahar Rd Junction,Vile Parle (E),Mumbai - 400057Total debenturesheldPercentage of theholding (%)500 100.00TOTAL 1,000 100MFL Secured NCD- 12.25%Maturity Date: May 27, 2014ISIN – INE 522D07156Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressTotal debenturesheldPercentage of theholding (%)iAkshay KumarBhatia and ArunaBhatiaGR2, Ground Floor,Prime Beach I,Gandhigram Road,Juhu, Santacruz (West),60 95.2457

Sr.No.iiName of thedebenture holderAmit AsharatanPachisia andAsharatan ShivchandPachisiaAddressMumbai – 40004911, Dream Queen,V.P. Road,Santacruz (West),Mumbai 400054Total debenturesheldPercentage of theholding (%)3 4.76TOTAL 63 100MFL Secured NCD- 12.25%Maturity Date: May 27, 2015ISIN – INE 522D07164Face Value: Rs. 100,000Sr.No.iiiName of thedebenture holderAkshay KumarBhatia and ArunaBhatiaAmit AsharatanPachisia andAsharatan ShivchandPachisiaAddressGR2, Ground Floor,Prime Beach I,Gandhigram Road,Juhu, Santacruz (West),Mumbai – 40004911, Dream Queen,V.P. Road,Santacruz (West),Mumbai 400054Total debenturesheldPercentage of theholding (%)60 95.243 4.76TOTAL 63 100MFL Secured NCD- 12.25%Maturity Date: May 27, 2016ISIN – INE 522D07172Face Value: Rs. 100,000Sr.No.iiiName of thedebenture holderAkshay Kumar Bhatiaand Aruna BhatiaAmit AsharatanPachisia andAsharatan ShivchandPachisiaAddressGR2, Ground Floor,Prime Beach I,Gandhigram Road,Juhu, Santacruz (West),Mumbai – 40004911, Dream Queen,V.P. Road,Santacruz (West),Mumbai 400054Total debenturesheldPercentage of theholding (%)80 95.244 4.76TOTAL 84 10058

MFL Secured NCD- 12.50%Maturity Date: May 27, 2014ISIN – INE 522D07180Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressi Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex,Suman Nagar,Sion Trombay Road,Chembur,Mumbai - 400071ii Bank of Maharashtra Apeejay House, 1 stiiiivDena BankEmployee‟s ProvidentFundDena BankEmployee‟s PensionFundFloor,130 Dr. V.B. GandhiMarg,Fort,Mumbai – 400001Sharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 400056Sharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 400056Total debenturesheldPercentage of the holding(%)2,400 82.47300 10.31105 3.61105 3.61TOTAL 2,910 100MFL Secured NCD- 12.50%Maturity Date: May 27, 2015ISIN – INE 522D07198Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressTotal debenturesheldPercentage of the holding(%)i Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex,Suman Nagar,Sion Trombay Road,Chembur,Mumbai - 400071ii Bank of Maharashtra Apeejay House, 1 stFloor,130 Dr. V.B. GandhiMarg,Fort,Mumbai – 4000012,400 82.47300 10.31iiiDena BankEmployee‟sProvident FundSharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville Parle105 3.6159

Sr.No.Name of thedebenture holderAddressTotal debenturesheldPercentage of the holding(%)Mumbai - 400056ivDena BankEmployee‟s PensionFundSharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 400056105 3.61TOTAL 2,910 100MFL Secured NCD- 12.50%Maturity Date: May 27, 2016ISIN – INE 522D07206Face Value: Rs. 100,000Sr.No.Name of thedebenture holderAddressi. Axis Bank Limited A Wing, 3 rd Floor,Bezzola Complex,Suman Nagar,Sion Trombay Road,Chembur,Mumbai - 400071ii. Bank of Maharashtra Apeejay House, 1 stiii. Dena BankEmployee‟sProvident Fundiv. Dena BankEmployee‟s PensionFundFloor,130 Dr. V.B. GandhiMarg,Fort,Mumbai – 400001Sharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 400056Sharda Bhavan,1 st Floor,V.M. Marg,Juhu Ville ParleMumbai - 400056Total debenturesheldPercentage of the holding(%)3,200 82.47400 10.31140 3.61140 3.61TOTAL 3,880 100MFL Secured NCD- 12%Maturity Date: May 27, 2013ISIN – INE 522D07214Face Value: Rs. 100,000Sr.No.Name of thedebenture holderi. Moiz Vaswadawalaand Anisa MoizVaswadawalaAddressA – 1303, Floor 13,2 Infinity,CS 103, Shivdas ChapsiMarg,Total debenturesheldPercentage of the holding(%)5 50.0060

Sr.No.Name of thedebenture holderAddressTotal debenturesheldPercentage of the holding(%)Mazgaon,Mumbai – 400 010ii. Heminiben Jariwalaand PareshbhaiJariwalaZenith Sil Mills Pvt. Ltd.Vadtal Devdi Road,Surat – 395 0085 50.00TOTAL 10 100MFL Secured NCD- 12%Maturity Date: May 27, 2014ISIN – INE 522D07222Face Value: Rs. 100,000Sr.No.iiiName of the debentureholderMoiz Vaswadawala andAnisa Moiz VaswadawalaHeminiben Jariwala andPareshbhai JariwalaAddressA – 1303, Floor 13,2 Infinity,CS 103, ShivdasChapsi Marg,Mazgaon,Mumbai – 400 010Zenith Sil Mills Pvt.Ltd.Vadtal Devdi Road,Surat – 395 008Total debenturesheldPercentage of theholding (%)5 50.005 50.00TOTAL 10 100MFL Secured NCD- 12%Maturity Date: June 13, 2012ISIN – INE 522D07230Face Value: Rs. 1,000,000Sr.No.iiiName of the debentureholderKotak Mahindra TrusteeCompany Limited A/cKotak Credit OpportunitiesFundKotak Mahindra TrusteeCompany LimitedAddressDB House,Hazarimal SomaniMarg,Post Box No. 1142,Fort MumbaiPin-400001DB House,Hazarimal SomaniMarg,Post Box No. 1142,Fort MumbaiPin-400001Total debenturesheldPercentage of theholding (%)600 60.00400 40.00TOTAL 1,000 10061

MFL Secured NCD- 12.25%Maturity Date: June 14, 2013ISIN – INE 522D07248Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressTotal debenturesheldPercentage of theholding (%)iOriental Bank ofCommerceTreasury Department,A 30 33 A-Block,1 st Floor, ConnaughtPlace,New Delhi – 110 001500 100MFL Secured NCD- 12.25%Maturity Date: June 14, 2014ISIN – INE 522D07255Face Value: Rs. 100,000Sr.No.Name of the debentureholderAddressTotal debenturesheldPercentage of theholding (%)iOriental Bank ofCommerceTreasury Department,A 30 33 A-Block,1 st Floor, ConnaughtPlace,New Delhi – 110 001500 100MFL Secured NCD- 12.25%Maturity Date: June 17, 2014ISIN – INE 522D07263Face Value: Rs. 100,000Sr. No. Name of the debentureholderi. Bank of MaharashtraEmployees Pensionii. Bank of MaharashtraEmployees GratuityAddress1501, Lokmangal,Shivajinagar,Pune – 411 0051501, Lokmangal,Shivajinagar,Pune – 411 005Total debenturesheldPercentage of theholding (%)150 50.00150 50.00TOTAL 300 100MFL Secured NCD- 12.25%Maturity Date: June 17, 2015ISIN – INE 522D07271Face Value: Rs. 100,000Sr. No. Name of the debentureholderi. Bank of MaharashtraEmployees Pensionii. Bank of MaharashtraAddress1501, Lokmangal,Shivajinagar,Pune – 411 0051501, Lokmangal,Shivajinagar,62Total debenturesheldPercentage of theholding (%)150 50.00150 50.00

Sr. No. Name of the debentureholderAddressEmployees Gratuity Pune – 411 005Total debenturesheldPercentage of theholding (%)TOTAL 300 100MFL Secured NCD- 12.25%Maturity Date: June 17, 2016ISIN – INE 522D07289Face Value: Rs. 100,000Sr. No. Name of the debentureholderi. Bank of MaharashtraEmployees Pensionii. Bank of MaharashtraEmployees GratuityAddress1501, Lokmangal,Shivajinagar,Pune – 411 0051501, Lokmangal,Shivajinagar,Pune – 411 005Total debenturesheldPercentage of theholding (%)200 50.00200 50.00TOTAL 400 1005. List of top 10 holders of different series of non-convertible debentures issued on retail basis of ourCompany as on August 4, 2011:MFL Retail NCDsFace Value: Rs. 1,000Sr.No.Name of the holder Address Total units held Percentage ofthe holding (%)i. A.R. Chadha & Co IndiaPrivate limitedii.M/s Atma Ram PropertiesPvt. Ltd.iii. Amforge IndustriesLimitedOff No:8,1 st Floor,Atma Ram Mansion,Connaught Circus 32,000 1.60Off No:8,1 st Floor,Atma Ram Mansion,Connaught Circus20,000 1.00108-111 Rahja Temple,Sree Press Journal Marg. 20,000 1.00iv. Pushpabai K. Seksaria Seksaria Chambers, 4thfloor139, Nagindas MasterRoad,Fort, Mumbaiv. Ramadas M.R. Pillai Manakkattampally,Muhamma P. O.,Trivandrumvi. Jitha Prasad T.C.24/934, Brindavan,Thycaud, Trivandrumvii. Som Mittal F15 Ground Floor,Hauz Khas Enclave,10,000 0.506,700 0.335,000 0.255,000 0.2563

Sr.No.Name of the holder Address Total units held Percentage ofthe holding (%)Hauz Khas, Bangaloreviii. Krishna Prasad T.C.24/934, Brindavan,Thycaud, Trivandrumix. Bala Mahadevan 301,Shanti NilayaApartments,House No.60,15th Cross Malleshwaram,Bangalorex. Srawan Kumar Bagla No-11,Bride Street,LangFord,C M P Centre & School,Bangalore5,000 0.254,191 0.214,000 0.20TOTAL 111,891 5.596. List of top 10 holders of different series of subordinated debentures of our Company as on August 4,2011:MFL Subordinated DebenturesFace Value: Rs. 1,000Sr.No.Name of the holder Address Total units held Percentage of theholding (%)i. Lathika Vijayaraghava Kokkala,Thrissurii. Bright Credits and Real St. Thomas CollegeEstates (P) Ltd.Road,iii.Bright Kuries and LoansPvt. Ltd.ThrissurSt. Thomas CollegeRoad,Thrissuriv. M. Vinod Chandran 4/450 Gul MoharHouse,Manikkasseryv. Xavier K.P. Kallookaran H. No.I/921/A, Padamugal,Kakkanad,Ernakulam, Keralavi. Mandaralakshmi Swandanam,Kalladikode, Palakkadvii. Juguna. G.Saw Mill road,Panikkaparambil Koorkenchery,Thrissurviii. M.V. Premkumar Marath House, qEdamuttam, Thrissurix. Sarita Rahul Sable B Flat No, 401,Florida County,Keshav Nagar,Mundhwa, Punex. Kunjimoithu PazhampulliparambilHouse,Pazhuvil, Thrissur10,300 0.5110,000 0.492,500 0.122,300 0.112,000 0.102,000 0.102,000 0.101,994 0.101,600 0.081,549 0.0864

Sr.No.Name of the holder Address Total units held Percentage of theholding (%)TOTAL 36,243 1.797. List of top 10 holders of commercial papers of our Company as on August 4, 2011:MFL CPMaturity Date: September 9, 2011ISIN – INE 522D14541iSr.No.Name of the CP holder Address Total CPs held Percentage of theholding (%)FIL Trustee Company Pvt.Ltd. A/cFedility Short TermIncome FundStandard Chartered Bank,CRESCENZO Securitiesservices, 3 rd floor, C-38/39, G Block, BKC,Bandra (E), Mumbai -400051500 100.00MFL CPMaturity Date: December 12, 2011ISIN – INE 522D14558Sr.No.Name of the CPholderi. Cholamandalam MSGeneral InsuranceCompany Ltd.Address Total CPs held Percentage of theholding (%)HDFC Bank Ltd. Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042200 100.00MFL CPMaturity Date: September 29, 2011ISIN – INE 522D14194Sr.No.Name of the CPholderAddress Total CPs held Percentage of theholding (%)i. Principal Trustee Co.Pvt. Ltd. A/c – PRINCitibank N.A. CustodyServices, 3 rd Floor, Trenthouse, G Block, Plot No 60,BKC, Bandra (e), Mumbai –400051200 100.00MFL CPMaturity Date: June 22, 2012ISIN – INE 522D14566Sr.No.Name of the CPholderi. Cholamandalam MSGeneral InsuranceCompany Ltd.Address Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -100 100.0065

Sr.No.Name of the CPholder400042Address Total CPs held Percentage of theholding (%)MFL CPMaturity Date: October 24, 2011ISIN – INE 522D14574Sr.No.Name of the CPholderi. BNP Paribas MoneyPlus FundAddress Total CPs held Percentage of theholding (%)Deutsche Bank AG, DBHouse, Hazarimal SomaniMarg, Post Box No. 1142,FortMumbai – 4000011000 100.00MFL CPMaturity Date: October 03, 2011ISIN – INE 522D14590Sr.No.Name of the CPholderi. JM Trustee Co. Ltd.A/c JMii.SBI Premier LiquidFundiii. Peerless Mutual Fund –Peerless UltraAddress Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -4000421000 50500 25500 25TOTAL 2000 100MFL CPMaturity Date: October 04, 2011ISIN – INE 522D14608Sr.No.Name of the CPholderi. Axis TreasuryAdvantage FundAddress Total CPs held Percentage ofthe holding (%)Deutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,500 3366

Sr.No.Name of the CPholderAddress Total CPs held Percentage ofthe holding (%)Mumbai - 400001ii.iii.iv.Peerless Mutual Fund– Peerless UltraPramerica Ultra ShortTerm Bond FundPramerica Ultra ShortTerm Bond FundHDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai- 400042Citibank N.A. CustodyServices, 3 rd floor, TrentHouse, G Block, Plot No.60, BKC, Bandra (E),Mumbai – 400051Citibank N.A. CustodyServices, 3 rd floor, TrentHouse, G Block, Plot No.60, BKC, Bandra (E),Mumbai – 400051500 33300 20200 14TOTAL 1500 100MFL CPMaturity Date: October 05, 2011ISIN – INE 522D14616Sr.No.Name of the CP holder Address Total CPs held Percentage of theholding (%)i. TITCO Ltd. TaurusMutual Fund TaurusHDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042500 100MFL CPMaturity Date: October 07, 2011ISIN – INE 522D14624Sr.No.Name of the CPholderi. TITCO Ltd. TaurusMutual Fund TaurusAddress Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042500 100MFL CPMaturity Date: August 30, 2011ISIN – INE 522D1433567

Sr.No.Name of the CPholderi. L&T Mutual Fund A/cL&T Liquid Fundii.L&T Mutual Fund A/cL&T Short TermFloating Rate FundAddress Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042998 99.82 0.2TOTAL 1000 100MFL CPMaturity Date: August 30, 2011ISIN – INE 522D14368Sr.No.Name of the CPholderi. Kotak MahindraTrustee Co. Ltd. A/cKotak Mahindra LiquidSchemeii.iii.iv.Kotak MahindraTrustee Co. Ltd. A/cKotak floater shortterm schemeCanara Robeco MutualFund A/c CanaraRobeco MonthlyIncome PlanCanara Robeco MutualFund A/c CanaraRobeco Indigo Fundv. Canara Robeco MutualFund A/c CanaraRobeco Income PlanAddressDeutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001Deutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001HSBC Securities Services2 nd Floor “Shiv”, Plot No.139-140 BWestern Exp Highway, SaharRDJUNCT,Vile Parle – E, Mumbai –400057HSBC Securities Services2 nd Floor “Shiv”, Plot No.139-140 BWestern Exp Highway, SaharRDJUNCT,Vile Parle – E, Mumbai –400057HSBC Securities Services2 nd Floor “Shiv”, Plot No.139-140 BWestern Exp Highway, SaharRDJUNCT,Vile Parle – E, Mumbai –400057Total CPs held Percentage of theholding (%)1200 48800 32320 13100 480 3TOTAL 2500 10068

Maturity Date: March 5, 2012ISIN – INE 522D14384Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding(%)i. BNP Paribas Fixed TermFund – Series 21 Eii.BNP Paribas MonthlyIncome PlanDeutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001Deutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001389 9711 3TOTAL 400 100MFL CPMaturity Date: October 10, 2011ISIN – INE 522D14418Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)i. BNP Paribas Fixed TermFund Series 16ADeutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001600 100MFL CPMaturity Date: March 29, 2012ISIN – INE 522D14434Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)i. BNP Paribas FixedTerm Fund – Series 21Hii.iii.Principle Trustee Co.Pvt. Ltd. A/c – PRIPrinciple Trustee Co.Pvt. Ltd. A/c – PrincipalMutual Fund – PrincipalNEA term fund –Conservative PlanDeutsche Bank AGDB House, HazarimalSomani MargPost Box No. 1142, Fort,Mumbai – 400001Citibank N.A. Custodyservices3 rd floor, Trent House GBlock,Plot No 60, BKC Bandra(e), Mumbai – 400098Citibank N.A. Custodyservices3 rd floor, Trent House GBlock,Plot No 60, BKC Bandra(e), Mumbai – 400098800 61356 27144 1269

Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)TOTAL 1300 100MFL CPMaturity Date: May 9, 2012ISIN – INE 522D14483Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)i. BNP Paribas FixedTerm Fund – Series 20Cii.iii.iv.BNP Paribas FixedTerm Fund – Series 22ACanara HSBC OrientalBank of Commerce LifeInsurance Co. Ltd.BNP Paribas MoneyPlus FundDeutsche Bank AG, DBHouse, HazarimalSomani Marg, Post BoxNo. 1142, FortMumbai – 400001Deutsche Bank AG, DBHouse, HazarimalSomani Marg, Post BoxNo. 1142, FortMumbai – 400001Deutsche Bank AG, DBHouse, HazarimalSomani Marg, Post BoxNo. 1142, FortMumbai – 400001Deutsche Bank AG, DBHouse, HazarimalSomani Marg, Post BoxNo. 1142, FortMumbai – 400001500 36400 29300 21200 14TOTAL 1400 100MFL CPMaturity Date: August 10, 2011ISIN – INE 522D14491Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)i. Oriental Bank ofCommerceTreasury DepartmentA 30 33 A Block 1 stfloor,Connaught PlaceNew Delhi – 110001500 100MFL CPMaturity Date: August 16, 2011ISIN – INE 522D14509Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)i. L And T Mutual FundA/C L And T LiquidFundHDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next to701000 100

Sr.No.Name of the CP holder Address Total CPs held Percentage ofthe holding (%)Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042MFL CPMaturity Date: August 23, 2011ISIN – INE 522D14517Sr.No.Name of the CPholderi. UTI – TreasuryAdvantage Fundii.Religare Trustee Co.Ltd. A/c Religare UltraShort Term FundAddress Total CPs held Percentage ofthe holding (%)UTI Mutual Fund, UTIAssestmanagement Co.Ltd. Dept of Fundaccounts, UTI Tower, GNBlock, BKC, Bandra (e),Mumbai – 400051Deutsche Bank AG, DBHouse, Hazarimal SomaniMarg, Post Box No. 1142,FortMumbai – 4000013000 751000 25TOTAL 4000 100MFL CPMaturity Date: December 27, 2011ISIN – INE522D14657Sr.No.Name of the CPholderi. IFCI Limited IFCI LimitedIFCI Tower61 Nehru PlaceNew DelhiPin-110019Address Total CPs held Percentage ofthe holding (%)500 100MFL CPMaturity Date: October 13, 2011ISIN – 522D14640Sr.No.Name of the CPholderi. Union KBC LiquidFundAddress Total CPs held Percentage ofthe holding (%)Citibank N.A. Custodyservices3 rd floor, Trent House GBlock,Plot No 60, BKC Bandra(e), Mumbai – 400098500 100MFL CPMaturity Date: October 14, 2011ISIN – 522D1463271

Sr.No.Name of the CPholderi. Indusind Bank LimitedTreasury DeptAddress Total CPs held Percentage ofthe holding (%)Indusind HouseFourth Floor425, D.B. Marg, OperaHouseMumbai-4000041000 100MFL CPMaturity Date: October 25, 2011ISIN – 522D14699Sr.No.Name of the CPholderi. Escorts Mutual Fund-A/C Escorts LiquidPlanAddress Total CPs held Percentage ofthe holding (%)HDFC Bank Ltd. Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai -400042200 100MFL CPMaturity Date: April 16, 2012ISIN – 522D14681Sr.No.Name of the CPholderi. BNP Paribas FixedTerm Fund - Series 21FMFL CPMaturity Date: October 21, 2011ISIN – 522D14673Address Total CPs held Percentage ofthe holding (%)Deutsche Bank AG, DBHouse, Hazarimal SomaniMarg, Post Box No. 1142,FortMumbai – 400001360 100Sr.No.Name of the CPholderi. L And T Mutual FundA/C L And T FreedomIncomeAddress Total CPs held Percentage ofthe holding (%)HDFC Bank Ltd. Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai -400042500 100MFL CPMaturity Date: August 22, 2011ISIN – 522D14665Sr.No.Name of the CPholderAddress Total CPs held Percentage ofthe holding (%)72

Sr.No.Name of the CPholderi. Religare TrusteeCompany Limited-A/CReligare CreditOpportunities FundAddress Total CPs held Percentage ofthe holding (%)Deutsche Bank AG, DBHouse, Hazarimal SomaniMarg, Post Box No. 1142,FortMumbai – 400001500 100MFL CPMaturity Date: September 8, 2011ISIN – INE 522D14533Sr.No.Name of the CPholderi. Titco Ltd. TaurusMutual Fund Taurusii.iii.Peerless Mutual Fund– Peerless LiquidFundCanara RobecoMutual Fund A/cCanaraAddress Total CPs held Percentage ofthe holding (%)HDFC Bank Ltd. Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai- 400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai- 400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, OffFloor 8, Next toKanjurmarg Stn,Kanjurmarg (e), Mumbai- 4000422000 61800 24500 15TOTAL 3300 100MFL CPMaturity Date: September 2, 2011ISIN – INE 522D14525Sr.No.Name of the CPholderi. SBI Short HorizonDebt Fund - Ultraii.L&T Mutual Fund A/cL&T SelectAddress Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -4000421500 68300 1473

Sr.No.iii.iv.Name of the CPholderL&T Mutual Fund A/cL&T MonthlyReligare TrusteeCompany Limited-A/CReligare CreditOpportunities FundAddress Total CPs held Percentage of theholding (%)HDFC Bank Ltd.Custodyservices Lodha – I ThinkTechno Campus, Off Floor8, Next to Kanjurmarg Stn,Kanjurmarg (e), Mumbai -400042Deutsche Bank AG, DBHouse, Hazarimal SomaniMarg, Post Box No. 1142,FortMumbai – 400001200 9200 9TOTAL 2200 1008. List of top 10 holders of series of debentures issued at a discount having a face value of Rs. 1,000,000each of our Company as on August 4, 2011Sr.NoName of thedebenture holder1 Alkem LaboratoriesLtdFull AddressDevasish Building Adj Matulya MillCompound 462 Senapati Bapat Marg,Lower Parel, Mumbai-4000132nd Floor, Nirlon House Dr. A. B.Road, Worli, Mumbai-400030TotaldebentureheldPercentageof theholding(%)100 17.672 Pramerica Mutual100 17.67Fund3 Shree Holdings 15 Race Course Road,1st Floor Guindy, 40 7.07Chennai-6000324 Uma Kannan Thiagarajar Mills Premises, Kappalur, 34 6.01Madurai-6250085 Goldiam International Gems & Jewellery Complex, Seepz, 25 4.42LimitedAndheri(East) Mumbai-4000966 Vikram Aditya & 620, Antriksh Bhawan, 22KG Marg, 23 4.06Associate Pvt Ltd New Delhi-1100017 Sudhir Menon / Rita 501, Swapna Lok, Marve Road, Malad 20 3.53Menon(W)8 Sridhar Panuganti 20 3.539 Kareena Shares & B-103, Bhaveshwar Plaza, LBS Marg, 14 2.47Stocks Pvt.Ltd Ghatkopar (West), Mumbai - 40008610 Bhamidipati Ravi / A/1 1st Floor Amber, Perry Cross Rd, 11 1.94Sudha Bhamidipati Bandra W, Mumbai-40005010 Jamshed Desai No.2,Central Avenue, Maharani Bagh, 11 1.94New Delhi-11006510 Naveen Munjal 156/E Sainik Farms, Country Club 11 1.94Road, New Delhi-110062TOTAL 566 1009. Debt - equity ratio:The debt to equity ratio of our Company as on March 31, 2011 (prior to this Issue) is based on a totaloutstanding debt of Rs. 56,540.10 million, and shareholders‟ funds amounting to Rs. 19,239.57 millionwhich was 2.94 times as on March 31, 2011. The debt to equity ratio post the Issue (assumingsubscription of Rs. 7,500 million) is 3.32 times, based on a total outstanding debt of Rs. 64,040.10million and shareholders‟ fund (as on March 31, 2011) of Rs. 19,239.57 million.74

(Rs. in millions)Particulars As on March 31, 2011* Post-IssueDebtSecured Loans from Banks, Financial38,707.54 38,707.54Institution, NBFC and Vehicle loansNon Convertible Debentures 5,015.53 5,015.53Fresh Issue of Debenture 7500.00Unsecured Funds 12,817.03 12,817.03Total Debt 56,540.10 64,040.10Share CapitalEquity Share Capital 833.75 833.75Preference Share Capital - -Share application money pending- -allotmentReserves and surplus 18405.82 18405.82Total Shareholders‟ Funds 19239.57 19239.57Long Term Debt to Equity Ratio 2.94** 3.32***Please note that the above particulars as on March 31, 2011 have been taken as the particulars priorto the Issue.** Based on the unaudited financial statements, for June 30 2011, and assuming a full subscriptionof Rs. 7,500 million for the Issue, pre-issue and post-issue debt - equity ratios are 3.48 and 3.85respectively. The debt - equity ratio represents ratio of debt (being total of secured loans andunsecured loans as per the financial statements as at June 30, 2011) over equity (being total of paidup share capital and reserves and surplus).10. This is a public issue of Bonds in the nature of secured, redeemable, non-convertible debentures of facevalue of Rs. 1,000 each aggregating to Rs. 4,000 million with an option to retain over subscriptionupto Rs. 3,500 million, aggregating to Rs. 7,500 million.11. Except as stated in note 1 above, our Company has not issued any equity shares for consideration otherthan cash, whether in whole or part.12. Our Company has not issued any debt securities for consideration other than cash, whether in whole orpart.13. Our company has issued 566 debentures of face value of Rs. 1,000,000 each on July 29, 2011. Thedebentures were issued at a discount of Rs. 118,300 each and the tenure of the debentures is 390 daysfrom the date of allotment. Other than the above mentioned issue, at the time of the Issue, ourCompany has not issued any debt securities at a premium or at a discount. However, the Company mayissue them in future14. For details of the outstanding borrowings of our Company, please see the section entitled ―Descriptionof Certain Indebtedness‖ on page 125.75

OBJECTS OF THE ISSUEIssue ProceedsOur Company has filed this Prospectus for a public issue of the Bonds aggregating to Rs. 7,500 million. Thefunds raised through this Issue will be utilized for our various financing activities including lending andinvestments and towards our business operations including for our capital expenditure and working capitalrequirements, after meeting the expenditures of, and related to, the Issue.The main objects clause of the Memorandum of Association of our Company permits our Company toundertake its existing activities as well as the activities for which the funds are being raised through this Issue.Further, in accordance with the SEBI Debt Regulations, our Company will not utilize the proceeds of the Issuefor providing loans to or acquisition of shares of any person who is a part of the same group as our Company orwho is under the same management as our Company or any subsidiary of our Company.The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any otheracquisition, inter alia by way of a lease, of any property.Further the Company undertakes that Issue proceeds from Bonds allotted to banks shall not be used for anypurpose, which may be in contravention of the RBI guidelines on bank financing to NBFCs.Issue ExpensesA portion of the Issue proceeds will be used to meet Issue expenses. The following are the estimated Issueexpenses:ParticularsAmount(Rs. inMillion)Percentage of netproceeds of the Issue(in %)Fees to IntermediariesFees paid to the Registrar to the Issue 0.8 0.01 0.51Fees paid to the Lead Managers and the Co-Lead Managers (excluding selling andbrokerage commission)60.6 0.81 38.28Fees paid for advertising and marketing 4 0.05 2.53Miscellaneous (including fees paid toDebenture Trustee and selling and brokeragecommission)92.9 1.24 58.69Total 158.3 2.11 100.00Percentage of totalexpenses of the Issue(in %)The fees detailed in the table above may also be paid by way of commission to various intermediaries, whichmay include subsidiaries of our Company. The above expenses are indicative and subject to change dependingon the actual level of subscription, number of Allottees, market conditions and other relevant factors.Monitoring of Utilization of FundsThere is no requirement for appointment of a monitoring agency in terms of the SEBI Debt Regulations. TheBoard of Directors of our Company shall monitor the utilisation of the proceeds of the Issue. Our Company willdisclose in the Company‟s financial statements for the relevant financial year commencing from Fiscal 2012, theutilization of the proceeds of the Issue under a separate head along with details, if any, in relation to all suchproceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilizedproceeds of the Issue. We shall utilize the proceeds of the Issue only upon the execution of the documents forcreation of security as stated in this Prospectus in the section entitled ―Terms of the Issue - Security‖ on page153 and upon the listing of the Bonds.Interim Use of ProceedsThe management of the Company, in accordance with the policies formulated by it from time to time, will have76

flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of the Issuefor the purposes described above, the Company intends to temporarily invest funds in high quality interestbearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy thefunds in investment grade interest bearing securities as may be approved by the Board / Committee of Directorsof the Company, as the case may be. Such investment would be in accordance with the investment policy of ourCompany.77

STATEMENT OF TAX BENEFITSThe information provided below sets out the possible tax benefits available to the debenture holder in asummary manner only and is not a complete analysis or listing of all potential tax consequences of thesubscription, ownership and disposal of redeemable Non Convertble Debentures (―NCDs‖), under the currenttax laws presently in force in India. Several of these benefits are dependent on the debenture holder fulfilling theconditions prescribed under the relevant tax laws. Hence the ability of the debenture holder to derive the taxbenefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future,it may not choose to fulfil. The following overview is not exhaustive or comprehensive and is not intended to bea substitute for professional advice. Investors are advised to consult their own tax consultant with respect to thetax implications of an investment in the NCDs particularly in view of the fact that certain recently enactedlegislation may not have a direct legal precedent or may have a different interpretation on the benefits, whichan investor can avail.Benefits under the Income Tax Act, 1961 („the Act‟)(A)To the CompanyGeneral Tax Benefits1. Dividends earned are exempt from tax in accordance with and subject to the provisions of section10(34) read with section 115-O of the Act. However, as per section 94(7) of the Act, losses arisingfrom sale/ transfer of shares, where such shares are purchased within three months prior to the recorddate and sold within three months after the record date 1 (for entitlement to receive dividend), to theextent such loss does not exceed the amount of dividend claimed exempt, shall be ignored for thepurpose of computing income chargeable to tax.2. Income earned from investment (other than income from transfer of investment) in units of a specifiedMutual Fund is exempt from tax under section 10(35) of the Act. However, as per section 94(7) of theAct, losses arising from the sale/ redemption of units purchased within three months prior to the recorddate (for entitlement to receive income) and sold within nine months after the record date, will bedisallowed to the extent such loss does not exceed the amount of income claimed exempt.3. Further, as per section 94(8) of the Act, if an investor purchases units within three months prior to therecord date for entitlement of bonus, is allotted bonus units without any payment on the basis ofholding original units on the record date and such person sells/ redeems the original units within ninemonths after the record date, while continuing to hold all or any of the additional units, then the lossarising from purchase and sale of the original units will be ignored for the purpose of computingincome chargeable to tax and the amount of loss so ignored shall be regarded as the cost of acquisitionof such bonus units.4. If the Company invests in the equity shares of another Company or units of an equity-oriented fund, asper the provisions of section 10(38), any income arising from the transfer of a long term capital assetbeing an equity share in a Company/ units of an equity-oriented fund 2 is not includible in the total12Record date is defined as per Explanation (aa) to Section 94 as follows:―record date‖ means such date as may be fixed by—(i)(ii)a company for the purposes of entitlement of the holder of the securities to receive dividend; ora Mutual Fund or the Administrator of the specified undertaking or the specified company as referred to in theExplanation to clause (35) of section 10, for the purposes of entitlement of the holder of the units to receiveincome, or additional unit without any consideration, as the case may be.Equity oriented fund is defined Explanation to section 10(38) as under:Explanation.—For the purposes of this clause, ―equity oriented fund‖ means a fund(i)where the investible funds are invested by way of equity shares in domestic companies to the extent of more than[sixty-five] per cent of the total proceeds of such fund; and(ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D):Provided that the percentage of equity of the fund shall be computed with reference to the annual average of the78

income, if the transaction is chargeable to Securities Transaction Tax. However, such long-term capitalgains shall be taken into account while computing book profits for the purposes of section 115JB of theAct.5. Section 14A of the Act restricts claim for deduction of expenses incurred in relation to incomes whichdo not form part of the total income under the Act. Thus, any expenditure incurred to earn tax exemptincome, to the extent computed under Rule 8D of the Income-tax Rules, 1962 would not be allowed asa deduction in computing the total income.6. Under section 32 of the Act, the Company can claim depreciation allowance at the prescribed rates ontangible assets such as building, machinery, plant or furniture and on intangible assets such as knowhow,patents, copyrights, trademarks, licences, franchises or any other business or commercial rights ofsimilar nature acquired after 1 April 1998.7. As per the provisions of section 32(2) of the Act, where full allowance cannot be given to thedepreciation allowance in any year, the same can be carried forward and set-off in the subsequent yearssubject to provisions of section 72(2)/72(3).8. Under section 36(1)(vii), any bad debt or part thereof written off as irrecoverable in the accounts isallowable as a deduction from the total income subject to conditions specified under section 36(2) ofthe Act. As per section 36(2) of the Act inter alia no deduction shall be allowed unless such debt or partthereof has been taken into account in computing the income of the Company of the Previous year(„PY‟) in which the amount of such debt or part thereof is written off or of an earlier PY, or representsmoney lent in the ordinary course of the business of banking or money-lending which is carried on bythe Company.9. Under section 36(1)(viii) of the Act, subject to the conditions specified therein, a deduction isallowable in respect of an amount not exceeding 20% of the profits derived from eligible business viz.providing long-term finance for industrial or agricultural development or development of infrastructurefacility in India or development of housing in India, before making deduction under that sectionprovided such amount is transferred to a special reserve account created and maintained for thispurpose. However where the aggregate of the amounts carried to such reserve account from time totime exceeds twice the amount of the paid up share capital and general reserves, no allowance underthis clause shall be made in respect of such excess.10. The Company will be entitled to amortise preliminary expenditure (underwriting commission,brokerage, charges for drafting, typing, printing and advertisement of prospectus) being expenditureincurred on public issue of shares or NCD under section 35D(2)(c)(iv) of the Act, subject to the limitspecified in section 35D(3) and subject to satisfaction of conditions specified in section 35D. Thededuction is allowable for an amount equal to one-fifth of such expenditure for each of five successiveAssessment years („AY‟).11. Under the provision of section 71 of the Act, losses under the head “Profit and Gains from Business orProfession” can be set-off against other heads of income, in the year in which loss was incurred.Further, as per the provisions of section 72 of the Act, unabsorbed business losses (other than losssustained in speculation business) which are not set-off in any PY can be carried forward and set offagainst the business profits of the subsequent AY, subject to a maximum of eight AY.12. Under the provisions of the Act, if the investments in shares or other security listed in a recognizedstock exchange in India or a unit of a specified Mutual fund are sold after being held for more thantwelve months, the taxable gains, if any, will be treated as long-term capital gains which will becalculated by deducting from the full value of consideration, the indexed cost of acquisition/improvement and expenditure incurred wholly & exclusively in connection with the transfer. Theindexed cost of acquisition/ improvement means an amount which bears to the cost of acquisition/improvement the same proportion as cost inflation index for the year in which the asset is transferredbears to the cost inflation index for the first year in which the asset was held by the Company/improvement to the asset took place respectively.monthly averages of the opening and closing figures;79

13. Under section 54EC of the Act, capital gain arising from transfer of long-term capital assets is exemptfrom tax, if the capital gains are invested in certain notified bonds within a period of six months fromthe date of transfer, up to a maximum limit of Rs. 50 lakhs during any financial year and held for aperiod of three years in accordance with section 54EC(2). The notified bonds are those (redeemableafter three years) issued by :(i)(ii)„National Highways Authority of India‟ constituted under section 3 of National HighwaysAuthority of India Act, 1988 and notified by the Central Government in the Official Gazettefor the purpose of this section; or„Rural Electrification Corporation Limited‟, a company formed and registered under theCompanies Act, 1956 and notified by the Central Government in the Official Gazette for thepurpose of this section.14. If only part of the capital gain is invested in such bonds, the exemption will be proportionatelydetermined. However, if the new bonds are transferred or otherwise converted into money within threeyears from the date of their acquisition, the capital gains earlier exempted will be chargeable to tax inthe year of transfer or conversion.15. Under section 111A of the Act, short-term capital gains (ie, if the shares/ units are held for a period notexceeding twelve months), arising on sale of listed equity shares/ units of an equity-oriented fund aretaxed at the rate of 15% (plus applicable surcharge and cess) in cases where Securities Transaction Taxhas been levied. Further, if the gross total income of the Company includes any short term capital gainsreferred to above, deduction under Chapter VI-A of the Act is only allowed from the gross total incomeas reduced by such short term capital gains.16. Under section 112 of the Act, long-term capital gains (other than those covered under section 10(38) ofthe Act) are subject to tax at a rate of 20% (plus applicable surcharge and cess) after indexation, asprovided in the second proviso to section 48 of the Act. However, in case of listed securities or units,the amount of such tax could be limited to 10% (plus applicable surcharge and cess), withoutindexation benefit, at the option of the Company. Further, if the gross total income of the Companyincludes any long term capital gains referred to above, deduction under Chapter VI-A of the Act is onlyallowed from the gross total income as reduced by such long term capital gains.17. Under section 115JAA(1A) of the Act, credit is allowed in respect of any Minimum Alternate Tax(“MAT”) paid under section 115JB of the Act for any AY commencing on or after 1 April 2006. Taxcredit eligible to be carried forward will be the excess of MAT paid over the tax computed as per thenormal provisions of the Act for that AY. Such MAT credit is allowed to be carried forward for set-offagainst tax liability computed under normal provisions of the Act for upto 10 AY succeeding the AY inwhich the MAT credit becomes allowable subject to other conditions specified in section 115JAA.18. The Company is entitled to a deduction under section 80G of the Act in respect of amounts contributedas donations to various charitable institutions and funds covered under that section, subject tofulfillment of conditions stipulated therein.Special Tax Benefits19. There are no special tax benefits available to the Company.Tax ratesFor the AY 2012 - 201320. The tax rate is 30%. A surcharge on Income tax of 5% would be levied if the total income exceeds Rs 1Crore. Education cess and Secondary Higher Education cess of 3% is levied on the amount of tax andsurcharge.21. Minimum Alternate Tax is at 18.5 % of the Book profits computed in accordance with provisions ofsection 115JB. A surcharge on Income tax of 5% would be levied if the total income exceeds Rs 180

Crore. Education cess and Secondary Higher Education cess of 3% is levied on the amount of tax andsurcharge.(B)ITo the Debenture Holders of the CompanyTo the Resident Debenture Holder1. Interest on NCD issued at par would be subject to tax at the normal rates of tax in accordance with andsubject to the provisions of the Act.2. In respect of NCD issued at discount, the Central Board of Direct Taxes („CBDT‟) has earlier clarifiedby way of certain letters issued to the Reserve Bank of India and others that the difference between thebid price (subscription price) and the redemption price (face value) of Deep Discount Bonds („DDB‟)(Refer Annexure 1) will be treated as interest income assessable under the Act in case the NCD areredeemed as on the redemption date. In respect of transfer of the NCD before maturity, the incomewill be taxable as capital gains.The point of time at which the discount would be taxable as interest in the hands of Debenture Holderis a debatable issue. The CBDT circular issued in the context of DDB suggests that interest would needto be offered to tax based on accrual system of accounting (i.e. by marking such bonds to marketvalue). The concept articulated in the context of DDBs could also be extended to NCDs in question.However, it should be possible to argue that interest should be offered to tax depending on the methodof accounting followed by the Debenture Holder.3. No income tax is deductible at source on interest on NCD inter alia in respect of the following:(a)(b)(c)(d)On any security issued by a Company in a dematerialized form and is listed on recognizedstock exchange in India.In case the payment of interest on NCD to resident individual Debenture Holder in theaggregate during the financial year does not exceed Rs. 2,500 provided the NCD are listed ona recognized stock exchange in India and the interest is paid by an account payee cheque.When the Assessing Officer issues a certificate on an application by a Debenture Holder onsatisfaction that the total income of the Debenture Holder justifies no/lower deduction of tax atsource as per the provisions of section 197(1) of the Act and that certificate is filed with theCompany.When the resident Debenture Holder with PAN (not being a Company or a firm or a seniorcitizen) furnishes a declaration in writing in duplicate in the prescribed form (Form 15G) andverified in the prescribed manner to the effect that the tax on his estimated total income of thePY in which such income is to be included in computing his total income will be Nil.HOWEVER under section 197A (1B) of the Act, Form 15G cannot be submitted nor considered forexemption from deduction from tax at source if the aggregate of income of the nature referred to in thesaid section, viz. dividend, interest, etc as prescribed therein, credited or paid or likely to be credited orpaid during the PY in which such income is to be included exceeds the maximum amount which is notchargeable to tax. To illustrate, as on 01.04.2011,the maximum amount of income not chargeable to taxin case of individuals (other than women assesses, senior citizens and super senior citizens) and HUFsis Rs. 1,80,000; in the case of every individual being a woman resident in India and below the age of 60years at any time during the PY is Rs. 1,90,000; in the case of every individual being a resident inIndia, who is of the age of 60 years or more but less than 80 years at any time during the PY (SeniorCitizen) is Rs. 2,50,000; and in the case of every individual being a resident in India, who is of the ageof 80 years or more at any time during the PY (Super Senior Citizen) is Rs. 5,00,000 for PY 2011-12.Senior citizens, who are 65 or more years of age at any time during the financial year, enjoy the specialprivilege to submit a self-declaration in the prescribed Form 15H for non deduction of tax at source inaccordance with the provisions of section 197A (1C) of the Act provided that the tax due on totalincome of the person is Nil. In all other situations, tax would be deducted at source as per prevailingprovisions of the Act; Form No.15G with PAN / 15H with PAN / Certificate issued u/s 197(1) has to befiled with the Company.81

4. In case of sale of NCD (originally issued at a discount) prior to redemption date, the gains arising onsuch sale of NCD will be taxable as “Capital Gains”.The capital gains will be computed by deducting cost of acquisition of the NCD and expenditureincurred in connection with such transfer from the full value of sale consideration.In case of NCD issued originally at a discount, the cost of acquisition will be taken to be the aggregateof the cost for which the bond was acquired by the Debenture Holder (including the intermediatepurchaser of NCD) and the income, if any, already offered to tax by such Debenture Holder upto thedate of transfer.5. Under section 2(29A) of the Act, read with section 2(42A) of the Act, a listed NCD is treated as a longterm capital asset if the same is held for more than 12 months immediately preceding the date of itstransfer.Under section 112 of the Act, capital gains arising on the transfer of long term capital assets beinglisted securities are subject to tax at the rate of 10% of capital gains as increased by applicablesurcharge and education cess calculated without indexation of the cost of acquisition.In case of an individual or HUF, being a resident, where the total income as reduced by such long-termcapital gains is below the maximum amount which is not chargeable to income-tax, then, such longtermcapital gains shall be reduced by the amount by which the total income as so reduced falls short ofthe maximum amount which is not chargeable to income-tax and the tax on the balance of such longtermcapital gains shall be computed at the rate mentioned above.6. Short-term capital gains on the transfer of listed NCD, where NCD are held for a period of not morethan 12 months would be taxed at the normal rates of tax in accordance with and subject to theprovisions of the Act.The provisions relating to maximum amount not chargeable to tax, surcharge and education cess asdescribed in the preceding paragraph would also apply to such short term capital gains.7. The Circular issued in the context of DDB (Refer Annexure 1) suggests that the period of holding willbe calculated from the date of purchase/subscription, or last valuation date, whichever is later.Consequently the capital gains would always be short term capital gains, since the period of holdingwould always be less than one year. However, a contrary view that the period of holding of DDBshould be calculated from the date of purchase/ subscription could also be explored.8. In case the NCD are held as stock in trade, the income on transfer of NCD would be taxed as businessincome or loss in accordance with and subject to the provisions of the Act.9. However in case where tax has to be deducted at source while paying interest on NCD, the Company isnot required to deduct surcharge, education cess and secondary and higher education cess.10. Under section 94(1) of the Act, where the owner of any securities („the owner‟) sells or transfers thosesecurities, and buys back or reacquires the securities, including similar securities, then, if the result ofthe transaction is that any interest becoming payable in respect of the securities is receivable otherwisethan by the owner, the interest payable as aforesaid shall, whether it would or would not have beenchargeable to income-tax be deemed, to be the income of the owner and not to be the income of anyother person.Under section 94(2) of the Act, where any person has had at any time during any previous year anybeneficial interest in any securities, and the result of any transaction relating to such securities or theincome thereof is that, in respect of such securities within such year, either no income is received byhim or the income received by him is less than the sum to which the income would have amounted ifthe income from such securities had accrued from day to day and been apportioned accordingly, thenthe income from such securities for such year shall be deemed to be the income of such person.82

However, as per provisions of section 94(3), the provisions of sub-section (1) or sub-section (2) ofsection 94 of the Act shall not apply if the owner, or the person who has had a beneficial interest in thesecurities, as the case may be, proves to the satisfaction of the Assessing Officer(a)(b)that there has been no avoidance of income-tax, orthat the avoidance of income-tax was exceptional and not systematic and that there was not inhis case in any of the three preceding PYs any avoidance of income-tax by a transaction of thenature referred to in sub-section (1) or sub-section (2) of section 94 of the Act.11. As per section 56(2)(vii)(c) of the Act, in case and individual or HUF receives NCD from any personon or after 1st October, 2009:(i)(ii)without consideration, aggregate fair market value of which exceeds fifty thousand rupees,then the whole of the aggregate fair market value of such NCD; orfor a consideration which is less than the aggregate fair market value of the NCD by anamount exceeding fifty thousand rupees, then the aggregate fair market value of such NCD asexceeds such consideration;shall be chargeable to tax as the income of the recipient under the head Income from Other Sources.However, the above provisions would not apply in certain situations like receipts:from any relative; oron the occasion of the marriage of the individual; orunder a will or by way of inheritance; orin contemplation of death of the payer or donor, as the case may be; orfrom any local authority as defined in the Explanation to clause (20) of section 10; orfrom any fund or foundation or university or other educational institution or hospital or othermedical institution or any trust or institution referred to in clause (23C) of section 10; orfrom any trust or institution registered under section 12AAIITo the Mutual fundsAll mutual funds registered under Securities and Exchange Board of India or set up by public sectorbanks or public financial institutions or authorised by the Reserve Bank of India are exempt from taxon all their income under the provisions of section 10(23D) of the Act subject to and in accordancewith the provisions contained therein.Benefits under the Wealth Tax Act, 1957(A)To the CompanyAs per the provisions of section 2(m) of the Wealth tax Act, 1957, the Company is entitled to reducedebts owed in relation to the assets which are chargeable to wealth tax in computing the net taxablewealth.(B)To the Debenture Holder of the CompanyNCD of the Company held by the Debenture Holder will not be treated as an asset within the meaningof section 2(ea) of Wealth Tax Act, 1957. Hence, NCD are not liable to wealth tax.83

Gift TaxGift-tax is not levied on gift of NCD in the hands of the donor as well as the donee because the provisions of theGift-tax Act, 1958 have ceased to apply in respect of gifts made on or after October 1, 1998.Proposals made in Direct Taxes CodeThe Hon‟ble Finance Minister has presented the Direct Tax Code Bill, 2010 („DTC Bill‟) on August 30, 2010,which is proposed to be effective from April 1, 2012. The DTC Bill is likely to be presented before the IndianParliament. Accordingly, it is currently unclear what effect the Direct Tax Code would have on the investors.Requirement to furnish Permanent Account Number under the Act1. Section 139A(5A) of the Act:Subsection (5A) of section 139A of the Act lays down that every person from whose income tax hasbeen deducted at source under chapter XVII B of the Income Tax Act shall furnish his PermanentAccount Number to the person responsible for deduction of tax at source.2. Section 206AA of the Act:(1) Notwithstanding anything contained in any other provisions of the Act, any person entitled toreceive any sum or income or amount, on which tax is deductible under Chapter XVIIB(hereinafter referred to as deductee) shall furnish his Permanent Account Number to theperson responsible for deducting such tax (hereinafter referred to as deductor), failing whichtax shall be deducted at the higher of the following rates, namely:(i)(ii)(iii)at the rate specified in the relevant provision of this Act; orat the rate or rates in force; orat the rate of twenty per cent.(2) No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197Aof the Act shall be valid unless the person furnishes his Permanent Account Number in suchdeclaration.(3) In case any declaration becomes invalid under sub-section (2) of section 206AA of the Act,the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1)of section 206AA of the Act.(4) Where the Permanent Account Number provided to the deductor is invalid or does not belongto the deductee, it shall be deemed that the deductee has not furnished his Permanent AccountNumber to the deductor and the provisions of sub-section (1) of section 206AA of the Actshall apply accordingly.Annexure 1246. Clarifications regarding tax treatment of deep discount bonds and STRIPS (Separate Trading ofRegistered Interest and Principal of Securities)1. A review of the tax treatment of income arising from Deep Discount Bonds has been underconsideration in the Board for some time. The Board had earlier clarified by way of certainletters issued to the Reserve Bank of India and others that the difference between the bid price(subscription price) and the redemption price (face value) of such bonds will be treated asinterest income assessable under the Income-tax Act. On transfer of the bonds before maturity,the difference between the sale consideration and the cost of acquisition would be taxed asincome from capital gains where the bonds were held as investment, and as business incomewhere the bonds were held as trading assets. On final redemption, however, no capital gains84

will arise. It was further clarified that tax would be deducted at source on the differencebetween the bid price and the redemption price at the time of maturity.2. Such tax treatment of Deep Discount Bonds, however, has posed the following problems :(i)(ii)(iii)(iv)Taxing the entire income received from such a bond in the year of redemption asinterest income gives rise to a sudden and huge tax liability in one year whereas thevalue of the bond has been progressively increasing over the period of holding.Where the bond is redeemed by a person other than the original subscriber, suchperson becomes taxable on the entire difference between the bid price and theredemption price as interest income, since he is not able to deduct his cost ofacquisition from such income.A company issuing such bonds and following the mercantile system of accountingmay evolve a system for accounting of annual accrual of the liability in respect ofsuch a bond and claim a deduction in its assessment for each year even though thecorresponding income in the hands of the investor would be taxed only at the time ofmaturity.Taxing the entire income only at the time of maturity amounts to a tax deferral.3. The matter has now been examined in consultation with the Reserve Bank of India and theMinistry of Law. The practice followed in several countries outside India has also beenexamined. With a view to remove the anomalies in the existing system of taxation of incomefrom Deep Discount Bonds, and to formulate a system which is more in line with internationalpractice, the Board have decided that such income may hereafter be treated as follows.General treatment4. Every person holding a Deep Discount Bond will make a market valuation of the bond as onthe 31st March of each Financial Year (hereafter referred to as the valuation date) and marksuch bond to such market value in accordance with the guidelines issued by the Reserve Bankof India for valuation of investments. For this purpose, market values of different instrumentsdeclared by the Reserve Bank of India or by the Primary Dealers Association of India jointlywith the Fixed Income Money Market and Derivatives Association of India may be referredto.4.1 The difference between the market valuations as on two successive valuation dates willrepresent the accretion to the value of the bond during the relevant financial year and will betaxable as interest income (where the bonds are held as investments) or business income(where the bonds are held as trading assets).4.2 In a case where the bond is acquired during the year by an intermediate purchaser (a personwho has acquired the bond by purchase during the term of the bond and not as originalsubscription) the difference between the market value as on the valuation date and the cost forwhich he acquired the bond, will be taxed as interest income or business income, as the casemay be, and no capital gains will arise as there would be no transfer of the bond on thevaluation date.Transfer before maturity5. Where the bond is transferred at any time before the maturity date, the difference between thesale price and the cost of the bond will be taxable as capital gains in the hands of an investoror as business income in the hands of a trader. For computing such gains, the cost of the bondwill be taken to be the aggregate of the cost for which the bond was acquired by the transferorand the income, if any, already offered to tax by such transferor (in accordance with para 4above) upto the date of transfer.85

5.1 Since the income chargeable in this case is only the accretion to the value of the bond over aspecific period, for the purposes of computing capital gains, the period of holding in suchcases will be reckoned from the date of purchase/subscription, or the last valuation date inrespect of which the transferor has offered income to tax, whichever is later. Since such periodwould always be less than one year, the capital gains will be chargeable to tax as short-termcapital gains.Redemption6. Where the bond is redeemed by the original subscriber, the difference between the redemptionprice and the value as on the last valuation date immediately preceding the maturity date willbe taxed as interest income in the case of investors, or business income in the case of traders.6.1 Where the bond is redeemed by an intermediate purchaser, the difference between theredemption price and the cost of the bond to such purchaser will be taxable as interest orbusiness income, as the case may be. For this purpose, again, the cost of the bond will meanthe aggregate of the cost at which the bonds were acquired and the income arising from thebond which has already been offered to tax by the person redeeming the bond.STRIPS7. Apart from original issue of Deep Discount Bonds, such bonds can also be created by„stripping‟, i.e., the process of detaching the interest coupons from a normal coupon bearingbond and treating the different coupons and the stripped bond as separate instruments orsecurities („strips‟) capable of being traded in independently. Such a mechanism, referred to asSTRIPS (Separate Trading of Registered Interest and Principal of Securities) createsinstruments which are in the nature of Deep Discount or Zero Coupon Bonds from out of thenormal interest bearing bonds. Accordingly, the tax treatment of the different components ofprincipal and interest created by such stripping will be on the same lines as clarified in thepreceding paragraphs in respect of Deep Discount Bonds.7.1 The process of stripping of a normal interest-bearing bond into its various components will notamount to a transfer within the meaning of the Income-tax Act as it merely involves theconversion of the unstripped bond into the corresponding series of STRIPS. Similarly, thereconstitution of STRIPS to form a coupon bearing bond will not amount to a transfer.Tax deduction at source8. The difference between the bid price of a deep discount bond and its redemption price, whichis actually paid at the time of maturity, will continue to be subject to tax deduction at sourceunder section 193 of the Income-tax Act. Under the existing provisions of that section, no taxis deductible at source on interest payable on Government securities. Further, the CentralGovernment is empowered to specify any such bonds issued by an institution, authority,public sector company or co-operative society by way of notification, exempting them fromthe requirement of tax deduction at source.Option to investors9. Considering the difficulties which might be faced by small non-corporate investors indetermining market values under the RBI guidelines and computing income taxable in eachyear of holding, it has further been decided that such investors holding Deep Discount Bondsupto an aggregate face value of rupees one lakh may, at their option, continue to offer incomefor tax in accordance with the earlier clarifications issued by the Board referred to in para 1above.Circular : No. 2/2002, dated 15-2-2002. CLARIFICATION ONEThere have been certain reports in the press recently, suggesting that the tax treatment of Deep Discount Bondsas specified in Circular No.2/2002, dated February 15, 2002 [See [2002] 120 Taxman 127 (St.)] issued by theCentral Board of Direct Taxes is anomalous, as it provides for taxation of income from such bonds on an annual86

asis, even though no income is received by the bond-holder before maturity. It has been opined that a heavy taxburden is being placed on persons who have been holding such bonds for a while, and a cumbersome obligationof valuing the bonds every year on the basis of RBI Guidelines is being cast on small investors. The reports aremis-conceived and based on an incorrect understanding and inadequate knowledge of facts and law. Themodified tax treatment now specified in fact corrects the anomalies in the existing system by providing amechanism for taxing income accruing from year to year on deep discount bonds, on the same lines as incomefrom normal coupon bearing bonds is taxed. Transfer of the bonds before maturity will attract capital gains tax,as in the existing system.The earlier system of taxing the entire income received from such bonds in the year of redemption as interestincome was anomalous in that it gave rise to a sudden and huge tax liability in one year whereas the value of thebond had been progressively increasing over the period of holding. Further, where the bond was redeemed by aperson other than the original subscriber, such person was taxed on the entire difference between the bid priceand the redemption price as interest income. Such a system also created tax-induced distortions in the debtmarket, and was an impediment to the development of a market in STRIPS, which are essentially zero couponinstruments derived from normal coupon bearing bonds.Taxation of income on accrual basis is an established principle of law, and always results in taxing income thathas not yet been received. Income from deep discount bonds accrues continuously over the period of holdingand can be realized at any time by selling the bond. Taxing income from such bonds on accrual basis annuallyis, in fact, a practice followed world-wide.It is also an established principle that a circular issued by CBDT cannot have a retrospective tax effect. Thepresent circular on deep discount bonds, therefore, specifies the tax treatment in respect of bonds which areissued after the issue of the circular, and does not seek to impose the modified treatment on existing bondholders.Further, non-corporate persons who invest small amounts in new issues (face value upto Rs.1 lakh) canstill opt for the old system.Valuing the bonds every year on the basis of RBI Guidelines will not pose any problem as such values can beobtained from the issuers themselves, who will invariably be the RBI or a public financial institution.The amount received on redemption would always be liable to tax deduction at source as per normal provisionsof the Income-tax Act. However, no TDS is required on interest payable on Government securities, and bondsissued by an institution, authority, public sector company or co-operative society can also be exempted from therequirement by notification.Please note the above “Statement of Tax Benefits” is the “Details of Tax Benefits available to the Companyand its shareholders” which is referred to as Annexure 4 in the auditor report dated July 19, 2011 in“Auditor Examination Report and Reformatted Statements” on page 182.87

OUR BUSINESSOverviewWe are one of the leading listed NBFCs lending money against the pledge of household, used, gold jewellery(“Gold Loans”) in India, in terms of gold loan portfolio as of March 31, 2011, 2010 and 2009, and we are alsothe fastest growing gold financing company in India in terms of gold loan portfolio for the fiscal year 2010. (SeeIMaCS Industry Report (2010 Update)). We provide these short-term personal and business Gold Loansprimarily to retail customers who require immediate availability of funds, but who do not have access to formalcredit on an immediate basis, or at all. Our Gold Loan portfolio as of March 31, 2011 comprised more than 2million Gold Loan accounts with 1.19 million customers aggregating to Rs. 63,705.41 million of Gold Loans inprincipal amount (net of assignments), which is 99.32% of our total loans and advances. As of March 31, 2011,we disburse Gold Loans to our customers from a network of 2,064 branches in 20 states and union territories ofIndia, including 1,567 branches in the southern states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.We are headquartered in the southern Indian state of Kerala. Our group commenced operations at Valapad,Thrissur, Kerala and has decades of established history in the money lending business, mainly in small-scalemoney lending against household, used, gold jewellery. Our Company has been in the Gold Loan financingbusiness since 1999. Historically, we have also provided other related services, including asset finance, moneytransfer and foreign exchange, sales of gold coins and business and personal lending. We focus on rapid, on-thespotapproval and disbursement of loans with minimal procedural formalities which our customers need tocomplete in order to avail a loan from us. We have developed various Gold Loan schemes, which offer variableterms in relation to the amount advanced per gram of gold, the interest rate and the amount of the loan, to meetthe different needs of various customers.Our lending functions are supported by an in-house, custom developed information technology platform thatallows us to, record relevant customer details and approve and disburse the loan. Our proprietary technologyplatform also handles internal audit, risk monitoring and management of the relevant loan and pledged goldrelated information. Our employees undergo periodic training sessions related to evaluation of the worth andauthenticity of the gold that is pledged with us.Our Gold Loan customers are individuals primarily from rural and semi-urban areas who require funds typicallyfor social obligations, emergencies, agriculture-related activities, small scale business operations orconsumption purposes. We strive to complete our Gold Loan transactions within short timelines. Whatdistinguishes us from banks is our focus on non-organized sections of society and our turn-around time. Loanamounts advanced by us are generally in the range of Rs. 1,000.00 to Rs. 1.00 million per loan transaction andtypically remain outstanding approximately for an average tenor of 120 days. All of our Gold Loans have amaximum of a 12 month term. In the financial year ended March 31, 2011, our gross Gold Loan portfolio yieldrepresenting gross interest income on gross gold loans as a percentage of gross average outstanding of goldloans, for the same period was, on an average, 24.95% per annum.We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating isP1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercialpaper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for ourNCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating ofBWR AA- rating from Brickwork and a rating of CARE AA- from CARE Limited.In the fiscal years 2011, 2010 and 2009, our total income was Rs. 11,815.26 million, Rs. 4,782.01 million andRs. 1,661.11 million respectively. Our profit after tax for the fiscal years 2011, 2010 and 2009 was Rs. 2,826.64million, Rs. 1,197.21 million and Rs. 302.97 million respectively.In the fiscal years 2011, 2010 and 2009, revenues from our Gold Loan business constituted 97.62%, 95.67% and86.20%, respectively, of our total income. As of March 31, 2011, 2010 and 2009, our portfolio of Gold Loansunder management in principal amount (net of assignments) was Rs. 63,705.41million, Rs. 18,512.26 millionand Rs. 4,000.63 million respectively, and approximately 52.97 tons, 22.45 tons and 13.34 tons, respectively, ofgold jewellery was held by us as security for our Gold Loans. Gross non-performing gold loan assets were0.28%, 0.55% and 0.95% of our gross Gold Loan portfolio under management as of March 31, 2011, 2010 and2009, respectively.88

Operational DataThe table below sets forth operational data as at and for the fiscal years 2011, 2010, 2009 and 2008.1. Assets underManagement (Rs. inmillion) (net ofassignments)2. Portfolio of AssignedLoans (in principalamount, Rs. inmillion)3. Number of Customers(in million)As at / yearended March31, 2011As at / year endedMarch 31, 2010Fiscal YearAs at / yearended March 31,2009As at / yearended March 31,200863,835.58 18,884.68 4,503.94 1,754.1811,182.83 7,077.02 5,381.42 3,930.121.19 0.55 0.34 0.224. Cost of Borrowing 8.89% 9.84% 12.02% 11.83%5. Leverage 3.52 4.17 5.89 6.106. Bad Debts andProvisions (Rs. inmillion)382.75 142.00 177.86 33.727. Capital AdequacyRatio8. Operating Expense /Average Assets9. Operating Expenses /Total Income10. Net NPAs (GoldLoans)Merger of MAFIT with Our Company29.13% 29.34% 31.74% 40.79%5.32% 5.58% 6.41% 4.09%20.64% 20.93% 30.20% 25.16%0.11% 0.18% 0.13% 0.18%Manappuram Finance Tamil Nadu Limited (“MAFIT”) an affiliate of our Company merged with the Companywith retrospective effect from April 1, 2008 and the merger was given effect to by the Company pursuant to anOrder of the High Courts in the three month period ended December 31, 2009. Our financial statements as ofand for the fiscal year ended 2011 and 2010 reflect the financial results of MAFIT for such fiscal year; however,as the merger was approved in December 2009, our financial statements as of and for the fiscal year 2007, 2008and 2009 does not include the financial results of MAFIT for such periods.MAFIT was engaged in the same line of business as our Company, and as a result, we have benefited fromincreased operations, cost savings and operational synergies.As a result of the Merger, shareholders of MAFIT received 2.1 Equity Shares in our Company in exchange forevery issued and outstanding share of MAFIT. On January 11, 2010 we issued 11,677,382 equity shares of Rs.10 each credited as fully paid to the shareholders of MAFIT.Acquisition of Manappuram PrintersWith effect from April 1, 2009, we acquired all the assets and liabilities of Manappuram Printers, a soleproprietorship of our Promoter which was engaged in the business of printing and sale of stationery items. Theprinting requirements of our Company were quite substantial and prior to this acquisition, we were dependent onthird parties to meet our printing requirements.Competitive StrengthsWe believe that the following competitive strengths position us well for continued growth:89

One of the leading gold financing companies in India with a long operating history and loyal customerbaseWe have been engaged in the business of Gold Loan financing since 1999. We have, over the years, beensuccessful in expanding our brand name, as well as our customer base to different geographical locations inIndia. Our total number of customers grew from 0.34 million as of March 31, 2009 to 0.55 million as of March31, 2010 and to 1.19 million as of March 31, 2011. We attribute our growth, in part, to our market penetration,particularly in areas less served by organized lending institutions and the efficient and streamlined proceduralformalities which our customers need to complete in order to complete a loan transaction with us, which makesus a preferred mode of finance for our customers. We also attribute our growth to customer loyalty. We believethat a large portion of our customer base returns to us when they are in need of funds. Our average principalamount of loan per customer has increased from Rs. 35,734 for the fiscal year 2009 to Rs. 63,106 for the fiscalyear 2011.Flexible loan schemes, high quality customer service and short response timeWe believe the growth in our Gold Loan portfolio is partly due to the flexible Gold Loan schemes that we offerto our customers and high quality customer service. Depending on their individual needs, we are able tocustomize loans for our customers in terms of the loan amount, advance rate per gram of gold and interest rate.We also allow customers to prepay their loans with us without penalty, and we do not have a minimum loansize.We provide our customers with a transparent process and a secure environment in which to transact theirbusiness, and we believe that our staff is professional and attentive at all our branch locations. Each of ourbranches is staffed with customer representatives who possess local knowledge and understanding of customers‟needs.In addition, we strive to complete our Gold Loan transactions within a short timeframe, as this forms animportant component in our competitive edge over other lenders. We are able to process Gold Loans within ashort timeframe as a result of our efficient technology support, skilled workforce and clear policies on internalprocesses. Although disbursement time may vary depending on the loan size and the number of items pledged,we can generally disburse an average loan of Rs. 30,000 within a few minutes from the time the gold is tenderedto the appraiser. Furthermore, since our loans are all over-collateralized by gold jewellery, there are minimaldocumentary and credit assessment requirements, which also shortens our turnaround time and increases theease with which our customers can do business with us.Rapid expansion of our branch networkWe have rapidly expanded our branch network in the past, which we believe has provided us with an advantageover our competitors. Our total number of branches grew from 644 branches in 14 states and union territories asof March 31, 2009, to 1,005 branches in 15 states and union territories as of March 31, 2010 and to 2,064branches in 20 states and union territories as of March 31, 2011and then to 2,192 branches in 22 states andunion territories as of May 31, 2011. In order to manage our expanding operations as well as our increasedcustomer base, we have developed a proprietary technology framework that provides an integrated, robustplatform to run our operations and scale our branch network. In addition, on a per branch basis, increase inprincipal amount of loans and revenues is generally more than the increase in proportionate operating costs yearon year, providing us with economies of scale as branches mature. We intend to continue to develop ourtechnology framework in order to equip ourselves for further growth of our business.Strong capital raising ability and high credit ratingWe have a track record of successfully raising capital from a variety of sources. We have received private equityfinancing from affiliates of Sequoia Capital, India Equity Partners, Ashmore Alchemy and Granite Hill. As ofMay 31, 2011, these private equity investors (except for Sequoia Capital and Granite Hill, which sold theirinvestment) hold an aggregate of 14.66% of our outstanding Equity Shares.The results of operations also depend substantially on our net interest margin, which is the difference betweenthe interest rates on our interest-earning assets and interest-bearing liabilities. For the fiscal years 2011, 2010,and 2009, our interest income represented 99.52%, 99.15% and 97.94% respectively, of our total income.90

In addition, as of March 31, 2011, we have borrowing relationships with 38 banks. As of March 31, 2011,March 31, 2010 and March 31, 2009, our secured loans from banks, financial institutions and NBFCs were Rs.38,696.60 million, Rs. 13,858.59 million and Rs. 2,978.69 million respectively. Our bank borrowings andprivate equity financings have aided us in achieving growth in our business.We also raise funds by assigning receivables from Gold Loan advances to banks and other institutions. As atMarch 31, 2011, March 31, 2010 and March 31, 2009, the assigned amounts outstanding were Rs. 11,182.83million, Rs. 7,077.02 million and Rs. 5,381.42 million.We have had an investment grade rating from approved credit rating agencies since 1995. Our current rating isP1+ from CRISIL (a subsidiary of Standard & Poors) for our short-term debt instruments, including commercialpaper, which is the highest rating for short-term debt instruments. CRISIL has also given an A+ rating for ourNCD issues. In addition, we have a LA+ rating from ICRA Limited. For the current Issue, we have a rating ofBWR AA- from Brickwork and a rating of CARE AA- from CARE Limited.The rating reflects our well established presence in the Gold Loan business, our track record of maintaininggood risk-adjusted returns while expanding our scale of operations and our moderate capitalization levels inrelation to our proposed expansion plans. Our liquidity position is comfortable with a well matched assetliability management profile on account of the relatively shorter tenure of the advance portfolio and availabilityof funding lines. The shorter tenure of advances aided by our P1+ rating also helps us to raise money by way ofshort term borrowings and by way of issue of commercial paper at attractive rates.Robust support system and IT infrastructure, including appraisal, internal audit and inventory control andsafety systemsOur IT infrastructure has been developed in house and links our network of branches across the country with thehead office. We migrated to a .NET platform in December 2008, and have reaped benefits in the form ofminimizing errors, faster transmission of data and risk monitoring. Our management has also benefited fromavailability of real time information. We upload data at each branch to facilitate online information access forfaster decision making. In addition, our technology platform has helped us develop an effective risk basedinternal control system and internal audit. We also have a disaster recovery system located outside of Keralawhich replicates data on a real time basis. Our centralized technology aids us in offsite surveillance of all ourbranches. Our technology also helps reduce the time it takes to complete Gold Loan transactions.Our ability to accurately appraise the quality of the gold jewellery to be pledged in a short period of time iscritical to our business. We do not engage third parties to assess the gold jewellery, but instead employ in-housestaff for this purpose, which leads to better customer service. Assessing gold jewellery quickly and accurately isa specialized skill that involves an assessment for gold content and quality manually without damaging thejewellery. We use tested methods of appraisal of gold, such as the nitric acid test, the touchstone test, checkingfor hallmarks and the sound test, and an independent appraisal is carried out by different sets of officials beforedisbursement is made depending on the ticket size. In addition, branch heads are required to independentlyverify loans that are above Rs. 20,000. Since we generally lend only against household, used jewellery andavoid lending against bullion or lending to jewellers and goldsmiths, the risk of use of low quality gold orspurious jewellery as security for our Gold Loans is limited.In addition, the gold that is pledged for each loan is typically as much as the worth of gold that is owned by anaverage Indian household, which prevents our exposure to larger-sized loans where the chances of default andsubsequent losses are increased. Only a small portion of the loans advanced by us are for relatively largeramounts, and in such cases we follow a more detailed process for evaluation of such loans. For larger loans, thehead office will verify the profile of the customer and approve limits for loan sanctions.Once the Gold Loan is made, we have a system in place for continuous monitoring of the pledged gold byinternal audit and risk management teams. In accordance with our internal audit policy, all of our branches aresubject to inspection every 90 days, a branch audit every 45 days and a spot audit can be conducted at anybranch at any time. At the time of conducting an inspection, a quality check on the inventory is also carried out.Our inventory control procedures involve physical security checks and checks on the quality of pledged gold. Inaddition, the branch head and the assistant branch head are the joint custodians of the gold stored in strongrooms or vaults, which means that the strong rooms or vaults can only be opened if two keys are inserted at thesame time. The safes and strong rooms, are reinforced concrete cement structures built per industry standardsand practices.91

Experienced management team and skilled personnelOur management team has over 35 years of experience in the banking and Gold Loan business. Our senior andoperating level management teams have extensive experience in the Gold Loan business and we believe thattheir considerable knowledge of and experience in the industry enhances our ability to operate effectively. Ourstaff, including professionals, covers a variety of disciplines, including gold appraisal, internal audit,technology, accounting, marketing and sales. Some of our key management personnel have been employed byus since our inception. Our management has experience in identifying market trends and suitable locations forexpanding and setting up branches to suit our target customers. Our workforce also consists of appraisers whoare skilled in the evaluation of the worth and authenticity of the gold that is pledged with us and we conductperiodic training programs to augment their knowledge and efficiency in performing this task.StrategyOur business strategy is designed to capitalize on our competitive strengths and enhance our leadership positionin the Gold Loan industry. Key elements of our strategy include:Further grow our Gold Loan businessHistorically, Indians have been one of the largest consumers of gold due to the strong preference for goldjewellery among Indian households and its widespread use as a savings instrument. A large proportion of goldstock is held by rural India, as gold is viewed as a secure, liquid and easily accessible savings instrument, apartfrom its ornamental status. (Source: IMaCS Industry Report 2009)As a result, the market for Gold Loan financing in India is largely untapped and offers good potential for furthergrowth. The organized Gold Loan market is approximately 1.2% of the value of total gold stock in India(Source: IMaCS Industry Report (2010 Update)).We intend to increase our presence in under-served rural and semi-urban markets, where a large portion of thepopulation has limited access to credit either because they do not meet the eligibility requirements of banks orfinancial institutions, or because credit is not available in a timely manner at reasonable rates of interest, or atall. A typical Gold Loan customer expects high loan-to-value ratios, rapid and accurate appraisals, easy access,low levels of documentation, quick approval and disbursement and safekeeping of their pledged gold. Webelieve we meet these criteria, and thus our focus is to expand our Gold Loan business.Continue to expand branch networkWe intend to continue to grow our Gold Loan portfolio by expanding our network through the addition of newbranches. We have added 1,059 branches in the last fiscal year and 128 branches between March 31, 2011 andMay 31, 2011. We propose to increase our branch strength by at least 500 additional branches in the fiscal year2012, including in states where we do not currently have any operations, subject to certain conditions beingsatisfied. We carefully assess the market, location and proximity to target customers when selecting branch sitesto ensure that our branches are set up close to our target customers. We believe our customers appreciate thisconvenience and it enables us to reach new customers. In addition, on a per branch basis, our increase inprincipal amount of loans and revenues is generally more than the increase in proportionate operating costs yearon year, providing us with economies of scale as branches mature.Continue to build the Manappuram brandOur brand is key to the growth of our business. We believe that we have built a recognizable brand in the ruraland semi-urban markets of India, particularly in the southern states of Kerala, Tamil Nadu, Karnataka andAndhra Pradesh. We intend to continue to build our brand by using celebrities in our advertising campaigns andundertaking other marketing efforts on radio, television and outdoor advertising.Strengthen our technology platform and continue to develop robust risk management procedures and relatedsystemsSince we plan to expand our geographic reach as well as our scale of operations, we intend to further developand strengthen our technology platform to support our growth and improve the quality of our services. We arefocused on improving our comprehensive knowledge base and customer profile and support systems, which in92

turn will assist us in the expansion of our business. We also propose to strengthen the technology in ourjewellery appraisal process. We believe that improvements in technology will also reduce our operational andprocessing time and thereby improve our operating efficiencies.In addition, we view risk management as crucial to the expansion of our Gold Loan business. We thereforecontinually focus on improving our integrated risk management framework with processes for identifying,measuring, monitoring, reporting and mitigating key risks, including credit risk, appraisal risk, custodial risk,market risk and operational risk. We propose to make significant investments in personnel, technology andinfrastructure in order to improve process efficiencies and mitigate business risks. We have recruited individualswho have significant risk management experience and plan to retain this focus in hiring additional riskmanagement personnel. Going forward, we plan to continue to adapt our risk management procedures to takeaccount of trends we have identified, including our loan loss experience. We believe that prudent riskmanagement policies and development of tailored credit procedures will allow us to expand our Gold Loanfinancing business without experiencing significant increases in non-performing assets.Attract and retain high quality talentThe intellectual capital of our management and finance teams, as well as other professionals in our business, iscritical to our success, and we accordingly intend to continue to focus on attracting and retaining high qualitytalent. In order to achieve this, we will continue to capitalize on our strengths in the area of recruiting. Inparticular, we plan to consolidate our position as an employer of choice within the NBFC sector. We currentlyconduct training programs periodically across our regional training centers. We have also developed and willcontinue to develop targeted compensation schemes designed to retain our key management personnel andprofessionals, such as offering performance-linked salaries.New line of businessPursuant to the approval of our shareholders in the EGM on May 31, 2011, we intend to commence a new lineof business in travel and tourism. Our Company holds an Authorised Dealer Category II license from the RBIfor its FOREX operations. To augment our Company‟s income from such operations, it was thought desirable toventure into this new line of business. Our Company proposes to act as a travel agent, tour operator, transportagent and contractor. Further, our Company proposes to arrange and operate tours and to act as representativesof airlines, railways and arranging road, air, water ticket booking.Our Gold Loan BusinessOur core business is providing Gold Loans, which are typically small loans secured by the pledge of household,used, gold jewellery. Loan amounts advanced by us are typically within the range of Rs. 1,000.00 to Rs. 1.00million per loan transaction and typically remain outstanding approximately for an average tenor of 120 days.As of March 31, 2011, we had approximately 1.57 million Gold Loan accounts, aggregating to Rs. 63,705.41million in principal amount (net of assignments).In the fiscal years 2011, 2010 and 2009, our gross Gold Loan portfolio yield representing gross interest incomeon gross gold loans as a percentage of gross average outstanding of gold loans, for the same period were retailloan portfolio yielded an interest rate of 24.95%, 27.88% and 25.50%, respectively, per annum. In the fiscalyears 2011, 2010 and 2009, income from interest earned on our Gold Loans constituted 97.62%, 95.67% and86.20%, respectively, of our total income.We are able to offer a variety of Gold Loan schemes to our customers to suit their individual needs. As of May31, 2011, we have 21 different schemes in place. The schemes differ in relation to the amount advanced perevaluated gram of gold, the interest rate chargeable and the amount of the loan. Some of our schemes areavailable only in certain geographical areas and newly opened branches.The elements of a scheme do not remain constant and are dependent on external factors such as the market priceof gold, our cost of funds, the advance and the rate of interest that is offered by our competitors. To maintainconsistency and ensure that our standards are not compromised, we have kept the procedures and processesinvolved in each gold finance transaction generally the same across the different schemes. We also allowcustomers to prepay their loans without penalty, and we do not have a minimum loan size.Gold Loan Disbursement Process93

The principal form of security that we accept is wearable, household, used, gold jewellery. We do not acceptbullion, gold biscuits, gold bars, new mass-produced gold jewellery or medallions unless it is pledged alongsideused jewellery, and we restrict acceptance of jewellery from other money-lenders. While these restrictionsnarrow the pool of assets that may be provided to us as security, we believe that it provides us with thefollowing key advantages:It filters out spurious jewellery that may be pledged by jewellers and goldsmiths. We find thathousehold, used jewellery is less likely to be spurious or fake.The emotional value attached by each household to the pledged jewellery acts as a strong incentive fortimely repayment of loans and revoking the pledge.As we only accept the pledge of household jewellery, the value of the pledged gold is typically only asmuch as the worth of gold that is owned by an average Indian household. This prevents our exposure tolarge-sized loans where the chances of default and subsequent losses are high.The amount that we finance against the pledged gold jewellery is typically based on a fixed rate per gram ofgold content in the jewellery. We value the gold jewellery brought by customers based on our centralizedpolicies and guidelines. We generally lend between 70% and 85% of the price of gold assumed by us, which isgenerally lower than the market price of gold at that time. Within this range, the actual loan amount variesaccording to the type of jewellery pledged. While jewellery can be appraised based on a variety of factors, suchas total weight, weight of gold content, production cost, style, brand and value of any gemstones, we appraisethe gold jewellery solely based on its gold content. Our Gold Loans are therefore generally well collateralizedbecause the actual value of the gold jewellery is higher than our appraised value of the gold jewellery when theloan is disbursed.The amount we lend against an item and the total value of the pledged gold we hold fluctuates according to themarket price of gold. However, an increase in the price of gold will not automatically result in an increase in thevalue of our Gold Loan portfolio unless the per gram rate is revised by our corporate office. Similarly, sinceadequate margins are built in at the time of the loan disbursement and owing to the short tenure of these loans onaverage, a decrease in the price of gold generally has little impact on our interest income. However, a sustaineddecrease in the market price of gold could cause a decrease in the growth rate of Gold Loans in our loanportfolio. See “Risk Factors - Volatility in the market price of gold may adversely affect our financial conditionand results of operations.”All our Gold Loans have a maximum term of 12 months; however, customers may redeem the loan at any time.Our Gold Loans typically remain outstanding approximately for an average tenor of 120 days. In most cases,interest is paid only at the time the principal is repaid. In the event that a loan is not repaid on time and afterproviding due notice to the customer, the unredeemed pledged gold is disposed of on behalf of the customer insatisfaction of the principal and interest charges. Any surplus arising out of the disposal of the pledged gold isrefunded to the customer. In the event that the recoverable amount is more than the realizable value of thepledged gold, the customer remains liable for the shortfall. We make provisions for losses that we believe arenot recoverable from the customer when the respective loans remain outstanding after six months from the dateof agreed tenor of the loan.The processes involved in approving and disbursing a Gold Loan are divided into three phases: Predisbursement;Post-disbursement; and Release of the pledge. When a loan is repaid, we give the customer theoption to pledge the security again and obtain another loan.Pre-DisbursementPre-disbursement processes include all the actions that are carried out from the moment a customer enters any ofour branches for procuring a Gold Loan until the customer receives the loan amount and include the following:Appraisal of the GoldThe first step in the process is the appraisal or evaluation of the gold to be used as security for the Gold Loan.Each of our branches has designated personnel for gold appraisal who operate under a clear policy regardingtheir function and responsibilities. The initial appraisal is performed by a trained employee who has experiencein appraising the gold content of jewellery. The initial appraisal is then verified by a second trained employee.94

Additionally, if the loan amount is above Rs. 10,000, the appraisal must be verified by the assistant branch head.However, if the loan amount is above Rs. 20,000, the appraisal must be verified by the branch head.Several steps are involved in the gold appraisal process. We first test the authenticity of the gold in accordancewith standard guidelines that are applied across all our branches. This process involves several principal tests,which include the nitric acid test, the touchstone test, checking for hallmarks and the sound test.We then determine the gross weight of the gold jewellery by weighing the jewellery. From the gross weight, wededuct for purity and stone weight to arrive at net weight. We have determined a constant percentage deductionthat applies depending on the purity of the gold, which is based on the proportion of gold contained in thejewellery in relation to other metals. As purity decreases, the percentage deduction that is applied to the grossweight increases in order to arrive at the net weight. The weight of stones and other material that is embedded inthe jewellery is also deducted from the gross weight to determine the net weight. The net weight is thenconverted into 22 carat purity levels.In order to determine the loan amount that can be advanced against a specific piece of jewellery, or the loan tovalue, the net weight of the jewellery is multiplied against a fixed constant, which is the 90 days trailing averageof the price of gold, or the spot price of gold, whichever is lower.Appraisal of the CustomerSince the disbursement of the Gold Loan is primarily based on the value of the pledged gold, the customer‟screditworthiness is not a major factor in the loan decision. However, each branch complies with standard “knowyour customer” (“KYC”) policies and other customer appraisal procedures, depending on the amount of theGold Loan.Compliance with the KYC policies ensures that the personal data provided by a particular customer is accurate.For loans up to Rs. 50,000, the customer must provide a document that confirms the customer‟s identity, whichcould be a Government issued document, such as a passport, driver‟s license, PAN card, election card or rationcard. For loans above Rs. 50,000, proof of address is also required. Any KYC document that is received isverified for authenticity. A KYC register is maintained in every branch to enter all KYC related details of ourcustomers. We are in the process of implementing additional identification confirmation procedures, includingretaining a photograph of each customer in our system, and confirmation of the customer‟s mobile number bygeneration of a unique identification number through text message at the time of the pledge.If the outstanding loan in the account of a customer is Rs. 100,000 or more, an information statement isgenerated by our internal system, which is tracked by the area head. Further, we monitor individually customerswho have loans outstanding in excess of Rs. 1,000,000. In addition, the system generates daily alert reportsbased on certain pre-set parameters, which are tracked by the area head. All of these processes are supported byour technology platform.DocumentationThe standard set of documents that are executed in a typical Gold Loan transaction include the gold loan slip,the pawn ticket and the demand promissory note cum terms and conditions. Basic details of the pledge, such asthe name of the customer and the net weight of the jewellery pledged is recorded on the gold loan slip, which isretained by us. The pawn ticket, which contains the details of the customer and the pledged jewellery, is filled inby the employee who appraised the gold and a copy is retained by the customer. The demand promissory note isan undertaking by the customer to repay the loan amount with the interest to the Company. The terms andconditions that are contained in the demand promissory note empower us to sell the pledged jewellery if thecustomer defaults on the Gold Loan. In addition to these documents, we keep additional internal records thatspecify the customer and the pledged jewellery. We identify and correct data entry errors in customer datathrough a process of day-book checking.Post-DisbursementCustody of the Pledged GoldThe pledged gold jewellery is packed separately by staff of the branch in a polythene pouch with the relevantdocuments about the loan and the customer, and then stored in the safe or strong room of the branch. Once95

lodged in the safe or strong room of the concerned branch, the branch head and the assistant branch head are thejoint custodians of the gold.The safes and strong rooms in which the gold jewellery is kept are built in accordance with industry practice.The strong rooms are vaults with reinforced concrete cement structures. Separate cupboards are used within thestrong rooms for the safe keeping of the gold collateral. At present, approximately 489 of our branches are usingstrong rooms. In 1,703 branches where the volume of business is comparatively low or where the constructionof a strong room is not possible, we use iron safes, which are also built in accordance with industry practice.Inventory ControlOnce the pledged gold is packed and moved to the safe or strong room, colour coded stickers are affixed on thepacket. Tamper proof stickers are also affixed on the jewellery packets to ensure inventory control. Additionalstickers are used to seal packets by persons examining packages subsequently, including our internal auditors. Inaddition to the color coding, these stickers also contain details of the persons inspecting the gold. We haveprocedures in place for random verification of gold packets by the branch heads.Branch Security and Safety MeasuresEnsuring the safety and security of the branch premises is vital to our business since cash and gold inventory arestored in each branch. Branch security measures implemented by us include:Burglar alarms: Burglar alarms are installed at all branches and phone numbers of the assistant branchhead, branch head, the concerned police station and control room are integrated into the alarm system,which triggers a call to these numbers if the alarm goes off.Joint custodianship by the branch head and the assistant branch head: Both the branch head and theassistant branch head hold the keys to the safe or strong room, which can only be opened if both keysare inserted at the same time.Security guards: Security guards are recruited through approved agencies and are present at night at allof our branches. Day time security is also provided at some of our branches, depending on the securityof the particular area and the Gold Loans outstanding in the respective branch. In the absence of asecurity guard, the branch head or the assistant branch head informs the security control room at thehead office and alternative arrangements are made. In addition, we have recently implementedpatrolling services to reduce risk of burglary.IP cameras/CCTVs: As of May 31, 2011, we have completed the installation of IP or CCTV cameras at1,945 branches. We intend to continue to install cameras at our branches and at least two cameras atbranches that are located in high risk areas.Rules in relation to the cash counter: The cash counter is always locked from the inside and the cashieris required to tally the cash against the cash book at least every three hours. Shifting of cash from onestorage point to another is recorded in the cash movement register that is maintained for this purpose.Cash that is held in the cash cabin at any point in time does not generally exceed the retention limitprescribed for this purpose. If there is a case where such cash exceeds the retention limit, it is generallydue to a banking holiday or other business reasons.Release of the PledgeWe monitor our loan accounts and recovery of interest on an ongoing basis. Once a loan is fully repaid, thepledged gold jewellery is returned to the customer. When a customer does not repay a loan on or before itsmaturity, we initiate the recovery process and dispose of the pledged gold to satisfy the amount owed to us,including both the principal and accrued interest. Before starting the recovery process, we inform the customerthrough registered letters or legal notices. The recovery procedure typically commences after 15 days from thedate of maturity.When a loan is repaid, we give the customer the option to pledge the security again and obtain another loan. Theprocedure of re-pledging entails the same procedure as that of a pledge and is accompanied by the same mode of96

documentation that a pledge entails.We also reserve the right, subject to notification to the customer, to sell the pledged gold even before a loanbecomes past due in the event the market value of the underlying pledged gold falls below amounts outstandingon the loan.Our Other Business InitiativesIn the fiscal years 2011, 2010 and 2009, revenues from our businesses other than Gold Loans constituted 1.02%,2.61% and 10.44% respectively, of our total income.Fee Based ServicesFee based services accounted for 0.17% of our total income for the financial year ended March 31, 2011. Feebased services include money transfer and foreign exchange services. We act as sub-agents to Indianrepresentatives for money transfer inward remittance and enter into representation agreements for the same.Under these agreements, we are entitled to a commission for the services provided depending on the amount ofmoney transferred and the location from which the money is transferred to us. We are compliant with theprovisions contained in the Prevention of Money Laundering Act in relation to the business of money transfer.Foreign exchange service involves the repatriation of money in the form of foreign exchange by an Indiancitizen to his account from an account outside India. We have an Authorized Dealer II License from the RBI inconnection with this business activity. We also have the right to appoint franchisees. In addition, we assist incurrency exchanges and sale of Travelers‟ Cheques for a variety of purposes as permitted under the FEMA. Weare associated with HDFC Bank, IndusInd Bank and Thomas Cook for money transfer outward remittancefacilities.Asset FinanceWe have in the past provided loans for the acquisition of assets, particularly vehicles. This loan portfolio as ofMarch 31, 2011 aggregated to Rs. 47.08 million in principal amount, which is 0.07% of total loans andadvances. We do not intend to continue this business.Gold Coins, Gold Purchase and Gold StorageWe convert some of the forfeited gold into gold coins and we sell the same as gold coins through our branchesin those states where we have registration under the local VAT Acts. The weight of the gold coins ranges fromone gram to ten grams and their purity is either 22 carat or 24 carat.Business, Personal and Security LoansWe are also engaged in the business of providing, personal loans and security loans, and this accounted for anegligible portion of our total income for the financial year ended March 31, 2011. We are dedicated toproviding loans to meet the business needs of our customers. The minimum loan amount advanced by us is Rs.10,000 and the duration of the loan varies from 30 days to 100 days. These business loans are sanctioned tosmall size or medium sized enterprises. We also advance loans against the security of life insurance policies.These loans are repayable in equal monthly installments. In addition, we offer customized gold purchaseprograms, or Swarnanidhi schemes, which allow our customers to purchase gold over time ranging from 12months to 60 months.Our business, personal, security and other loan portfolio along with loans under the Swarnanidhi Scheme as ofMarch 31, 2011 aggregated to Rs. 83.09 million, which is 0.13% of our total gross loans in principal amount.Marketing, Sales and Customer CareOur sales and marketing efforts are led by a team of 19 managers who guide the marketing and sales efforts oftheir respective regions and who are supported by 11 marketing executives and 89 customer relation executives.Our marketing team provides advertisement support to all of our branches located in various parts of India,creates new advertising materials, creates new marketing strategies before launching a branch office, monitorsthe competition from other companies and creates new strategies to develop our businesses. Our marketing team97

also provides additional support to improve business of non-performing branches. We use multiple mediaagencies for creative content and advertising campaigns, and our media department coordinates with variousinternal departments for managing their publicity requirements.For the financial year ended 2011 and 2010, our total advertisement expenditure was Rs. 1,038.51 million andRs. 482.81 million, respectively, to support our aggressive brand building initiatives. For the financial yearended, 2011 and 2010, our advertising expenses were 8.79% and 10.10% of our total income, respectively, ascompared to 4.92% and 7.71% of our total income for the financial year ended 2009 and 2008, respectively.Currently film and television celebrities, such as Akshay Kumar, Mithun Chakraborty, Vikram V. Vinod,Mohanlal, Venkatesh, Puneeth Rajkumar and Sachin Khedekar, promote our brand in our advertisementcampaigns.We have developed a number of policies to retain our customers, the most significant amongst them being theissue of „royalty cards‟ and the sale of insurance policies. We issue royalty cards (categorized into silver, goldand platinum) to our customers who meet certain standards with respect to KYC requirements, timelyrepayment and quick redemption of the loan. Eligibility depends upon how long the customer has been doingbusiness with us, as well as the number of loans taken out. The royalty cards reward the customer with higherLTV and lower interest rates as compared to other customers.Risk ManagementRisk management forms an integral element of our business. We continue to improve our policies andimplement our policies rigorously for the efficient functioning of our business. As a lending institution, we areexposed to various risks that are related to our gold lending business and operating environment. Our objectivein our risk management processes is to appreciate, measure and monitor the various risks that we are subject toand to follow policies and procedures to address these risks. We do so through our risk managementarchitecture. The major types of risk we face in our businesses are credit risk, operational risk and market risk.Credit RiskCredit risk is the possibility of loss due to the failure of any counterparty to abide by the terms and conditions ofany financial contract with us. Credit risk in our Gold Loan business is relatively low because all our loans aregenerally over-collateralized by pledged gold. We aim to reduce credit risk through a rigorous loan approval andgold appraisal process, KYC compliance procedures and a strong non-performing asset (“NPA”) monitoring andrecovery mechanism. This risk is diminished because the gold jewellery used as security for our loans can bereadily liquidated, and the possibility of recovering less than the amount due to us is relatively low.We also mitigate credit risk by not disbursing loans in excess of specified limits to the same customer, and forloan amounts exceeding a certain limit, we undertake a credit check or profiling of the borrower before a loan isapproved. We have developed methods to peg the value of the loan amount to the moving average price of gold.We also decrease credit risk by focusing on the quality of the pledged gold. Our internal control system ensuresindependent verification of the gold by at least two officials at the branch level. The level of verification at thebranch level increases as the loan value increases. In addition, the quality of gold is checked by the area headthrough random check. The risk profile of each account is monitored by the risk management division on anongoing basis through exception reports.Operational RiskOperational risk is broadly defined as the risk of direct or indirect loss due to the failure of systems, people orprocesses, or due to external events. We have instituted a series of checks and balances and audit reviews toaddress the various operational risks.Although we disburse loans in very short periods of time, we have clearly defined appraisal methods to mitigateappraisal risk. Inaccurate appraisal of the pledged gold may lead to funds being advanced against low value orspurious gold. This risk is also mitigated by our policies on internal control, generation of alert reports andadditional requirements for high value loans.We also have detailed guidelines on movement of cash or gold to address custodial risk, which is the riskassociated with the safety and security of our gold inventory. Methods of internal control and vigilance98

mechanisms aid in controlling this risk. For example, the branch head and the assistant branch head are the jointcustodians of the pledged gold, which means that the strong rooms or vaults can only be opened if two keys areinserted at the same time. In addition, we are in the process of installing surveillance cameras across of all ourbranches, and security guards are present at night at all of our branches. We also have policies that requireemployee rotation both within the branch, as well as within different branches located within the same area, andwe undertake significant employee profiling and background verification checks before hiring and continuouslymonitor their lifestyle changes. In addition, our insurance covers employee theft or fraud and burglary.Market RiskMarket risk arises from the decline in the value of the pledged gold due to fluctuation in gold prices. This risk isin part mitigated by the 15% to 30% margin we build in to our rate per gram used to calculate the loan amount,as well as linking the LTV to the 90 day average price of gold, or the spot rate, whichever is lower. This risk isfurther reduced because we appraise the gold jewellery and fund loans based solely on the weight of goldcontent without considering design cost, production cost or value of gemstones. In addition, the sentimentalvalue of the gold jewellery to the customers may induce repayment and redemption of the pledged gold even ifthe value of the pledged gold falls below the value of the repayment amount. A prompt and effective recoverymechanism also helps us deal with this risk.Risk Management ArchitectureIn order to address the risks that are inherent to our business, we have developed a risk management architecturethat includes a risk management committee, internal audit department, vigilance department and a riskmanagement department.Risk Management Committee. Our risk management committee, which is led by one of our Directors,oversees our risk management policies, which help us to identify, measure, monitor and mitigate thevarious risks that we face in our businesses.Internal Audit Department. Our internal audit department assists in the management of operational riskusing our centralized monitoring systems. Separate divisions of our internal audit department have beenput in place to handle the audit of the departments of the head office and those of the branch offices.The audit of the head office is divided into two categories: (i) system and compliance audit; and (ii)accounts audit. A branch inspection is carried out every 90 days with the focus on the verification ofthe Gold Loan pledges. In addition, a branch audit is carried out every 45 days to monitor theincremental pledges since the date of the branch inspection and the documentation in connection withGold Loans, and a spot audit can be conducted at any branch at any time.Vigilance Department. We have also put in place a separate department for vigilance inspections. Thevigilance team conducts surprise inspections of high/medium risk branches and other branches basedon any report or detection of serious deviations or irregularities and undertakes the responsibility ofvisiting branches to oversee the implementation of risk mitigation initiatives and improvement ofcustomer service.Risk Management Department. Our risk management department analyzes in-house data available inthe system to generate alert and exception reports on an ongoing basis with respect to Gold Loans.Non-Performing Assets (NPAs)The Non-Banking Financial (Non - Deposit Accepting or Holding) Companies Prudential Norms (ReserveBank) Directions, 2007, as amended (“Prudential Norms Directions”) require that every non-deposit takingNBFC shall, after taking into account the degree of well defined credit weaknesses and extent of dependence oncollateral security for realisation, classify its lease/hire purchase assets, loans and advances and any other formsof credit into the following classes:• Standard assets;• Sub-standard assets;99

• Doubtful assets; and• Loss assets.Further, the class of assets referred to above shall not be upgraded merely as a result of rescheduling, unless itsatisfies the conditions required for the upgradation. A non-deposit taking NBFC is required to make provisionsagainst sub-standard assets, doubtful assets and loss assets in the manner provided for in the Prudential NormsDirections.Based on the Prudential Norms Directions for asset classification, details of the classification of our gross NPAsfor significant classes of our assets as of March 31, 2011, 2010 and 2009 are set forth below:Asset Type As of March 31,2011As of March 31,2010(Rs. in million)As of March 31,2009GoldSub-standard 76.27 48.25 13.23Doubtful 133.68 53.40 24.53Loss - - -Gross NPA 209.95 101.65 37.76HypothecationSub-standard 26.69 124.52 153.93Doubtful - 70.71 5.40Loss - - -Gross NPA 26.69 195.23 159.33Secured loans are classified or provided for, as per management estimates, subject to the minimum provisionrequired as per Prudential Norms Directions as follows:Classification of Gold and other loansAsset ClassificationStandard Assets* 0.25%Sub-standard assets 10%Doubtful assetsLoss assetsProvisioning policy100% of unsecured portion + 20 to 50% of secured portion.100% provided if not written off in books.* as per notification DNBB 222/CGM (US) – 2011 issued by Reserve Bank of India on January 17, 2011..Classification of hypothecation and stock on hireAsset ClassificationProvisioning policyStandard AssetsNilSub-standard assets 10% to 100%Doubtful assets*100% providedLoss assets100% provided if not written off in books.* All loans overdue for more than 18 months are classified as doubtful.We have written-off Rs. 248.94 million as of March 31, 2011. As per the provisioning norms prescribed by RBI,as of March 31, 2011, we have made a total provision of Rs. 167.46 million, which constituted 67.17% of ourGross NPAs. Details of provisions and amounts written off as of March 31, 2011, March 31, 2010 and March31, 2009 are set out in the table below:100

As of / Year endedMarch 31,2011As of / Year endedMarch 31, 2010(Rs. in million)As of / Yearended March 31,2009Gross NPAs 249.30 336.66 235.97Provisions 167.46 192.12 96.70Net NPAs 81.84 144.54 139.27Net loans 64,141.68 18,907.13 4,486.04Net NPAs/Net loans (%) 0.13% 0.76% 3.11%Amounts written off 248.94 53.42 117.54NPA RecoveryFor non-performing assets, our credit department assigns interest collection targets for each branch, reviewsperformance against targets, makes visits to the branches, and advises on timely corrective measures andrepossession action. Once repossession is advised by our credit department, we conduct public auctions of thepledged jewellery in accordance with the terms of our „auction policy, or otherwise dispose of the pledgedjewellery, after serving requisite legal notices.The following table sets forth information relating to bad debts recovered for the fiscal years 2011, 2010 and2009:Fiscal yearendedMarch 31, 2011Fiscal year endedMarch 31, 2010(Rs. in million)Fiscal year endedMarch 31, 2009Bad debts recovered 8.64 3.55 3.15Capital Adequacy RatioAs per the Prudential Norms Directions, every non deposit taking NBFC is subject to capital adequacyrequirements. Currently, such NBFCs are required to maintain a minimum capital ratio consisting of Tier I andTier II capital which shall not be less than 15% of its aggregate risk weighted assets on balance sheet and of riskadjusted value of off-balance sheet items. Also, the total of Tier II capital, at any point of time, shall not exceedone hundred per cent of Tier I capital. We are also required to transfer up to 20.0% of our annual profit to areserve fund and make provisions for NPAs. We had a capital adequacy ratio of 29.13%, 29.34% and 31.74% asof March 31, 2011, 2010 and 2009, respectively. We have satisfied the minimum capital adequacy ratiosprescribed by the RBI for the financial year ended March 31, 2011 and each of the past three financial years asset out below:ParticularsFinancial yearended March 31,2011Financial yearended March 31,2010Financial yearended March 31,2009Financial yearended March 31,2008Tier I Tier II Tier I Tier II Tier I Tier II Tier I Tier IICapital Adequacy Ratio 26.36% 2.77% 26.04% 3.30% 24.54% 7.20% 32.46% 8.33%Centralized Management and TechnologyOur IT support system aids the performance of all the processes involved in a loan transaction. For example, atthe pre-disbursement stage, KYC details as well as other details of customer appraisal are entered and stored inthe system for future reference. All the details contained in the documents that are relevant to a loan transactionare entered into the system. The system filters the transaction at each level to confirm whether a particular set ofpledged jewellery meets the required specifications.Once the inputs to arrive at the net weight are entered into the system, the system generates the net weight aswell as the loan advance that can be made against it under the several schemes that we offer. Once the customerchooses the scheme, an entry to that effect is made and a pawn ticket is generated.With respect to the post-disbursement phase, the interest due on each loan at any given point in time after101

disbursement is generated by the system. If the loan is settled by the customer prior to maturity, the systemcalculates the amount repayable and also records the repayment and recovery of the pledge. When a loanmatures, the system indicates the same and we subsequently notify the customer.The system generates a list of all loans that are overdue on a particular date. All details of the sale process offorfeited jewellery are also entered into the system.Our business, though carried on across the country, is controlled centrally at the head office. All transactions ofpledging and release that occur in all our branches are recorded and results are generated on a real time basis byour internal IT infrastructure. Access to this data is restricted to certain designated personnel and alerts arepassed on to the concerned regional head upon the occurrence of specified events.Up-to-date information on gold inventory and cash reserves in each branch helps us track our liquidity positionand plan for shortfalls well in advance. We are able to avert liquidity shortfalls in any particular branch bytransferring cash from one branch to another. In this manner, we ensure that each branch is centrally managedby the head office and off-site surveillance of each branch is an ongoing process.Treasury OperationsOur treasury department undertakes liquidity management by seeking to maintain an optimum level of liquidityand monitors cash and bank balances. The objective is to ensure sufficient cash reserves at all our brancheswhile at the same time avoid holding cash in excess of what may be required in the ordinary course. Sincealmost all disbursements are made in cash, we maintain an average of Rs. 1.00 million in cash across ourbranches. Each regional office has the primary responsibility for directing branches within the region to movesurplus funds to deficit branches. If there is a surplus of funds in the region as a whole, such surpluses aredeposited in cash credit/overdraft accounts at the corporate level. Deficits at a regional level are managed bycash transfers from our treasury department. We monitor cash and balances on daily basis using ourmanagement information systems, and have arrangements with various banks for the transfer of bank balancesbetween locations. Cost of movement of cash also is taken into consideration while deciding optimum cashlevels in each location. We use a real time gross settlement (“RTGS”) facility if the remitting and receivingbanks are different, or through internal transfer if both the branches belong to the same bank. We also use cashvan services for delivery and collection of cash to and from certain of our branches.Funding SourcesOur lines of credit include borrowings from financial institutions and amounts raised through the issue of nonconvertibledebentures (“NCDs”). We also undertake the assignment of receivables from Gold Loan advances tospecified financial institutions. Our interest on borrowings and assignments, as a percentage of our total loansand assignments, have decreased from 12.0% as of March 30, 2009 to 9.8% as of March 30, 2010 to 9.16% as ofMarch 31, 2011.Borrowings from financial institutions constitute a significant portion of the total borrowings from secured andunsecured loans availed of by us as at March 31, 2011. We have executed loan agreements with several bankswith the object of availing funds from them on certain stipulated terms and conditions. As at March 31, 2011,we have also issued 1,328,535 secured NCDs ranging between Rs. 1,000.00 and Rs. 1.00 million, eachredeemable at par at the end of the term of each series of these debentures, which ranges from one to five years.We pay an interest ranging from 7.50% to 13.00 % per annum on these NCDs. See ―Description of CertainIndebtedness‖ Beginning on page 125.We also attempt to balance our interest-bearing liabilities, some of which bear floating interest rates, against ourinterest-earning assets, which bear fixed interest rates. As of March 31, 2011, 43% of our borrowings hadfloating rates of interest, comprising primarily working capital loans from banks and other financial institutions.We also assign receivables from Gold Loan advances to banks, financial institutions and others. The assignmenttransactions are conducted on the basis of internal estimates of our funding requirements, and may vary fromtime to time. In the event an assignee bank does not realize the receivables due under such loans, the relevantbank would have recourse to a corporate guarantee issued by us and/or cash collateral and the underlyingsecurity. For the fiscal years 2011, 2010 and 2009, the amounts assigned were Rs. 11,182.83 million, Rs.7,077.02 million and Rs. 5,381.42 million respectively.102

Branch NetworkAs of May 31, 2011, we had 2,192 branches located in 22 states and union territories in India.InsuranceWe maintain a range of insurance policies to cover our assets, risks and liabilities. Since we deal in goldfinancing, money in the form of cash and other assets form an integral part of our business. The most vitalinsurance policies that we purchase include policies on gold in storage and transit, cash in storage and transit,burglary, machinery break-down insurance for all our machinery and electronic equipment, fire and specialperils policy. In addition, we also have fidelity insurance covering all our employees as well as directors‟ andofficers‟ liability insurance covering our Directors. For all our branches, we maintain insurance cover under thename of our Company. We consider our insurance coverage to be adequate and as and when we expand ourbusiness, we endeavor to ensure that we have adequate insurance.EmployeesAs of May 31, 2011, we have 16,137 employees, as set out below:Board of directors 3Management Information System and Financial Analysis Wing 10Finance and accounts 171Audit 731Human Resource Management 108Gold loan 14065Branch Opening 121Deposit 18Money transfer & FOREX 30Information technology 206Legal department 74Insurance 27Hostel 4Administration 59Press & Stores 40Risk Management 14Operation 84Vigilance 34Regional Manager‟s office 240Security control 98TOTAL 16,137We have not experienced any significant labor disputes and believe that relations with our employees aresatisfactory. We have established training programs for our employees on a continuous basis and we intend tocontinue investing in recruiting, training and maintaining a rewarding work environment. In addition to ongoingon-the-job training, we provide employees courses in specific areas or specialized operations on an as-neededbasis. We have skilled laborers and experienced personnel, particularly in the process of gold appraisal anddetermination of purity of the gold. In 2009, we adopted an employee stock option scheme.CompetitionWe face competition from pawnshops, other gold financing companies, banks, co-operative societies and localmoney lenders. Other lenders may lend money on an unsecured basis, at interest rates that may be lower thanour service charges and on other terms that may be more favorable than ours. We believe that the primaryelements of competition are the quality of customer service and relationship management, branch location andthe ability to loan competitive amounts at competitive rates.PropertyOur registered head office is located at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala103

and is partly owned by our Company and partly by our Group Company, Manappuram Benefit Fund Limited.The Company has also entered into an agreement for sale dated August 4, 2010 with Mr. Antony JosephPattathu of M/s Pattathu Brothers for the purchase of approximately 2,254.10 square metres of land at Santacruz(East), Mumbai. None of our branches are located on property that is owned by the Company. We enter intolease agreements with the owners of such property, which are renewed on a timely basis. The Company is in theprocess of undertaking the construction of a new corporate office building at Valapad and has entered intoagreements with third parties for the execution of plumbing works, execution of the work of power supply andelectrification, supply of electrical equipments etc. with regard to the same. The land on which the newcorporate office building is being constructed has been purchased by our Company from our Promoter, V. P.Nandakumar.Intellectual PropertyThe trademark in the Manappuram logo is held by one of our Promoters, V.P Nandakumar. The tradename“Manappuram” is held by our Company and is used by all group companies. We have entered into a licenseagreement dated December 18, 2007 with V. P. Nandakumar for the use of the Manappuram logo for a period of10 years on a non-exclusive and non-assignable basis. No payment is made under the license agreement for theuse of the logo.Corporate Social ResponsibilityWe believe that emphasis should be placed on social and community service, which is essential for buildingsustainable businesses that create market value, as well as social value. The Manappuram Group registered acharitable trust on October 24, 2009 under the name, the Manappuram Foundation (“Foundation”) at Valapad.In furtherance to our commitment to corporate social responsibility, the Foundation has contributed to varioussocial causes during the course of its operations by setting up free health insurance for below poverty linefamilies in Thrissur District, Kerala. The Foundation also intends to operate several vocational training centersto help the economically deprived sections in Southern India.104

HISTORY AND MAIN OBJECTSManappuram Finance Limited was incorporated as a public limited company under the Companies Act as“Manappuram General Finance and Leasing Limited” on July 15, 1992 by a Certificate of Incorporation No.09-06623 of 1992 issued by the Registrar of Companies, Kerala under the Companies Act. The Company hasits registered office at V/104 “Manappuram House”, Valapad P.O., Thrissur 680 567, Kerala. The Companywas issued a certificate for commencement of business on July 31, 1992 by the Registrar of Companies, Kerala.The name was subsequently changed to “Manappuram Finance Limited” on June 22, 2011 vide FreshCertificate of Incorporation issued by the Registrar of Companies, Kerala and Lakshadweep.We are listed on the NSE, BSE, MSE and the CSE. We were earlier registered with RBI as a deposit acceptingNBFC as per certificate of registration no. 16.00029 dated May 25, 1998. However, subsequently, we registeredourselves as non deposit accepting NBFC vide a new certificate of registration no. B-16.00029 dated March 22,2011.Main objects of our Company:Our main objects as contained in our Memorandum of Association are:1. To carry on and undertake the business of all types, of financing activities including hiring ofmovables, granting assistance to trade, commerce, industry and agriculture.2. To carry on and undertake the business of Merchant Bankers, Portfolio Investment Managers, MutualFund Managers, Underwriters, Registrars and Managers to public issues and Stock Brokers, and toundertake depository participant activities, functions and responsibilities and to provide custodial anddepository services of assets and securities, to collect dividends, interests, rights, entitlements, bonusesand other benefits, incomes and entitlements accruing on such assets and securities.3. To carry on and to act as agents in money changing business so as to deal in Foreign Exchange, to actas full-fledged Money Changers, to act as Foreign Exchange Brokers, to provide FOREX advisoryservices, to introduce Money Transfer Schemes, to act as Exchange House.Material AgreementsWe have received private equity financing from affiliates of Sequoia Capital, India Equity Partners, AshmoreAlchemy and Granite Hill India Opportunities Fund. As of May 31, 2011, these private equity investors (exceptfor Sequoia Capital and Granite Hill which sold their investment) held an aggregate of 14.23% of ouroutstanding Equity Shares.Our shareholder agreements with these investors contain customary investor‟s rights, including (i) theappointment of a nominee director on the Board of the Company; (ii) the appointment of a nominee director onthe Board of any subsidiary of the Company (iii) affirmative rights in relation to matters such as alteration in thecapital structure of the Company and commencement of a new line of business; and (iv) certain financial rights,such as tag along rights and a right of first sale in certain specified situations. In addition, some of ourshareholder agreements require that the level of assets under management of Manappuram Benefit Fund Limited(“MABEN”) may not exceed a certain per branch average and percentage of our total assets under management,that MABEN may not open any additional branches and that Manappuram Asset Finance Limited (“MAFL”)may not exceed a certain asset size or open any additional branches.Other than the above-mentioned agreements and agreements in relation to this Issue, our Company has notentered into material agreements which are not in the ordinary course of business.105

OUR MANAGEMENTBoard of DirectorsThe composition of the Board of Directors is governed by the provisions of the Companies Act and the EquityListing Agreements with the Stock Exchanges. The Articles of Association of the Company provide that theCompany shall not have less than three Directors and not more than fifteen 15 Directors, unless otherwisedetermined by a special resolution.Pursuant to the Companies Act, not less than two-thirds of the total number of directors shall be persons whoseperiod of office is subject to retirement by rotation and one third of such directors, or if their number is not threeor a multiple of three, then the number nearest to one-third, shall retire from office at every annual generalmeeting. The Articles provide that the Directors to retire are those who have been the longest in the office sincetheir last appointment but as between persons who become Directors on the same day those to retire shall indefault of and subject to any agreement among themselves, be determined by lot. A retiring director is eligiblefor re-election. The Articles provide that in the event of the Company borrowing any money from any financialinstitution or corporation or Government or Government Body or any collaborator, bank person or persons orany other agency or source while any money remains due to them or any of them, the said corporation,institution or Government Body or as the case may be, shall have and may exercise the rights and powers toappoint from time to time any person or persons to be a director or directors of the Company, that such directorsshall not be liable to retire by rotation subject to the limits prescribed under the Companies Act, nor be requiredto holding qualification shares. Further from and with effect from the Closing Date (defined as November 5,2008), as long as Hudson hold at least 6% of the Share Capital, Hudson shall have the right to appoint onenominee director/non executive director on the Board.The Board of Directors are authorised by the Articles to appoint any person as a Director as an addition to theBoard so that the total number of Directors shall not at any time exceed the maximum number fixed by theArticles. Such Director so appointed shall hold office only up to the date of the next AGM of the Company andshall be eligible for re-election. The Articles of Association, subject to the Companies Act, 1956 allow theBoard of Directors to appoint any person to act as an alternate Director for a Director during the latter‟s absencefor a period of not less than three months from the State in which meetings of the Board are ordinarily held.The following table sets forth details regarding the Board as on the date of this Prospectus:Name, DIN, Address,OccupationDesignationOther DirectorshipsV.P. NandakumarDIN: 00044512Address: Padmasaroj‟Vazhappully House,P.O.Valapad, ThrissurKerala 680 567Occupation: BusinessI. UnnikrishnanDIN: 01773417Address: Mannath HouseMannath Lane, Thrissur, KeralaExecutive Chairman 1. Manappuram Insurance Brokers (P) Limited2. Manappuram Asset Finance Limited3. Manappuram Health Care Limited4. Manappuram Comptech and Consultants (P)Limited5. Manappuram Infrastructure and BuildersPrivate Limited6. Manappuram Jewellers Private Limited7. Manappuram Benefit Fund Limited8. Manappuram Constructions & Properties (P)Limited9. Fivestar Business Credits Limited10. Aptus Value Housing Finance India LimitedManaging Director 1. Manappuram Asset Finance Ltd2. Manappuram Insurance Brokers (P) Limited3. Manappuram Jewellers (P) Limited106

680 001Name, DIN, Address,OccupationOccupation: BusinessDesignationOther DirectorshipsB. N. Raveendra BabuDIN: 00043622Address: Blanghat House,P.O. Kaipamangalam,Thrissur, Kerala 680 681Joint Managing Director 1. Manappuram Chits(India) Limited2. Manappuram Comptech and Consultants (P)Limited3. Manappuram Insurance Brokers PrivateLimited4. Manappuram Jewellers Private LimitedOccupation: ConsultantA. R. SankaranarayananDIN: 00046545Address: 10 C, Skyline BrentWood, Saw Mill Road,Koorkencherry, Thrissur, Kerala680 007Occupation: Retired fromserviceIndependent and Non ExecutiveDirector-P. ManomohananDIN: 00042836Address: Aswathy‟, No: 7/ 71A,High School Road,P.O. Chenthrappinny,Thrissur, Kerala 680 687Occupation: Retired fromserviceIndependent and Non ExecutiveDirector1. Manappuram Benefit Fund LimitedV.R. RamachandranDIN: 00046848Address: Valiparambil House,50/840, Ayyanthole,Thrissur, Kerala 680 003Occupation: ServiceIndependent and Non ExecutiveDirector-V.M. ManoharanDIN: 00044817Address: TC 6/657, VylappullyHouse, Kunduvara Road,ChembukkavuThrissur, Kerala 680 020Occupation: Retired fromserviceIndependent and Non ExecutiveDirector1. Manappuram Benefit Fund Limited2. Poomala Cottages Private Limited107

Name, DIN, Address,OccupationGaurav Mathur (1)DIN: : 00016492Address: C/o IEP Advisorsprivate Limited505, Cee Jay HouseDr. Annie Besant Road, WorliMumbai, Maharashtra 400 018Occupation: ServiceShailesh J. MehtaDIN: : 01633893Address: 401 L Cerrito AveHills BoroughCalifornia – 94010United States of AmericaOccupation: ServiceGautam Saigal (2)DIN: : 00640229Address: C/o AA IndiaDevelopment Capital AdvisorsPrivate Limited63 Maker Maxity, Level 6, 3North AvenueBandra Kurla Complex, Bandra(East)Mumbai, Maharashtra400 051Occupation: ServiceM. AnandanDIN: : 00033633Address: House No AL 1921st Street, 12th Main RoadAnnanagar, Chennai, TamilNadu 600 040Occupation: BusinessJagdish CapoorDIN: : 00002516Address: 1601 Brooke Ville359 Mogul Lane, MahimMumbai, Maharashtra400 016Occupation: ServiceDesignationNominee and Non ExecutiveDirectorIndependent and Non ExecutiveDirectorNominee and Non ExecutiveDirectorIndependent and Non ExecutiveDirectorIndependent and Non ExecutiveDirectorOther Directorships1. Ocean Sparkle Limited2. A2Z Maintenance and Engineering ServicesLimited3. High bridge Investments Private Limited4. Ikya Human Capital Solutions Private Limited5. Innovative Foods Limited1. Aptus Value Housing Finance India Limited2. First Source Solutions Limited3. SAFARI Industries Limited4. Arch Pharmalabs Limited5. Account Now Corpn USA6. All Services Under One Roof (P) Limited1. AA Indian Development Capital AdvisorsPrivate Limited2. Numero Uno Clothing Limited3. Siesta Logistics Corporation Limited4. Barflex Poly Films Private Limited1. Aptus Value Housing Finance India Limited2. Fivestar Business credits Limited1. The Indian Hotels Company Limited2. Assets Care Enterprises Limited3. Quantum Trustee Company Private Limited4. LIC Pension Fund Limited5. Alankit Assignments Limited(1) Nominee on behalf of Hudson Equity Holdings Limited(2) Nominee on behalf of AA Development Capital India Fund I LLC108

V.P. Nandakumar and Sushama Nandakumar are the promoters of our Company and V.P. Nandakumar is thesole Promoter Director on the Board. No Directors of the Company are related to each other.Brief Biographies of the DirectorsV. P. Nandakumar, aged 57 years, is the Executive Chairman of our Company. He holds a masters degree inscience from Calicut University and is also a Certified Associate of Indian Institute of Bankers. He is the chiefPromoter of the Manappuram Group of Companies and has in the past been associated with the banking industryin various capacities. He is the Chairman of the Equipment Leasing Association (India) and the Kerala Non-Banking Finance Companies Welfare Association. He has been the Director of our Company since July 15,1992.I. Unnikrishnan, aged 47 years, is the Managing Director of our Company. He holds a bachelors degree incommerce from Calicut University and is also a fellow member of the Institute of Chartered Accountants ofIndia. He has experience in rendering advisory services relating to NBFCs. He has in the past worked withHAWA-MK Electrical Limited. He has been the Director of our Company since October 11, 2001. He wasappointed as the Managing Director on October 1, 2006.B. N. Raveendra Babu, aged 59 years, is the Joint Managing Director of our Company. He holds a mastersdegree in commerce from the Calicut University and completed his inter from the Institute of CertifiedManagement Accountants. He has worked in a senior position in the Finance and Accounts Department of BlueMarine International in the U.A.E. He has been the Director of our Company since July 15, 1992. He wasappointed as the Joint Managing Director on January 11, 2010.A. R. Sankaranarayanan, aged 85 years, is an Independent and Non Executive Director of our Company. Heholds a masters degree in science from Annamalai University and is a retired officer from the Indian RevenueService. He has over 50 years of work experience and has in the past worked as Director of the Prime Minister‟sSecretariat, Managing Director of SAIL International Limited and Director of the Federal Bank Limited. He hasbeen the Director of our Company since August 18, 2003.P. Manomohanan, aged 70 years, is an Independent and Non Executive Director of our Company. He holds abachelor‟s degree in commerce from Kerala University and also a diploma in Industrial finance from IndianInstitute of Bankers. He is also a Certified Associate of the Indian Institute of Bankers. He has over 38 years ofwork experience in the RBI and in the regulatory aspects of NBFCs. He has in the past held the post of GeneralManager of Reserve bank of India. He has been the Director of our Company since August 18, 2003.V. R. Ramachandran, aged 59 years, is an Independent and Non Executive Director of our Company. He holdsa bachelors degree in science from the Calicut University and a bachelor‟s degree in law from the KeralaUniversty. He has over 32 years of work experience and is a civil lawyer enrolled with the Thrissur BarAssociation. He has been the Director of our Company since April 19, 2002.V. M. Manoharan, aged 65 years, is an Independent and Non Executive Director of our Company. He holds amasters degree in commerce from University of Kerala and holds a Doctor of Philosophy in InternationalBusiness (Commerce) from Cochin University of Science and Technology. He has over 40 years of workexperience and has in the past held the posts of Deputy Director, Collegiate Education, Thrissur Zone and Dean,KMCT school of Business, Kozhikode. He also held the post of the Principal in various Government Colleges inKerala and was also a Syndicate Member of University of Calicut. Presently, he is a member of the steeringcommittee, Vidya International Charitable Trust, Thalakkottukara, Thrissur and of the All India ManagementAssociation and the Association of Indian College Principals. He has been the Director of our Company sinceAugust 18, 2003Gaurav Mathur, aged 37 years, is a Nominee and Non Executive Director of our Company. He has completedhis bachelor of arts in economics (honours) from Delhi University and master of business administration fromIndian Institute of Management, Ahmedabad. He is the Co-founder and Managing Director of India EquityPartners. He had worked with JP Morgan Partners, Singapore, and Deutsche Bank, London. He had also servedon the boards of Domino‟s Pizza India Limited, Gujarat Glass Limited, MTR Foods Private Limited and RSBTransmission of India Limited. Currently, he is serving on the boards of A2Z Maintenance and EngineeringServices Private Limited and IKYA HR Services and Ocean Sparkle Limited. He has been the Director of ourCompany since October 15, 2010.109

Shailesh J. Mehta, aged 62 years, is an Independent and Non Executive Director of our Company. He hascompleted his bachelor of technology in mechanical engineering from Indian Institute of Technology, Mumbai,and holds a masters degree in science in Operations Research from Case Western Reserve University. He holdsa Doctor of Philosophy degree in Operation Research and Human Letters from the California State Universityand in Operation Research and Computer Science from Case Western Reserve University. He has over 38 yearsof work experience and has held the post of President Granite Hill Capital Ventures, Chairman and ChiefExecutive Officer Providian Financial Corporation, operating general partner West Bridge Capital, presidentand Chief Operating Officer Capital Holding and Executive Vice President Key Corp (formerly Ameritrust). Hehas also held the post of Chairman and Chief Executive Officer, Providian Financial Corporation and Presidentand Chief Operating Officer Capital Holding. He has been the Director of our Company since August 17, 2009.Gautam Saigal, aged 46 years, is a Nominee and Non Executive Director of our Company. He holds a mastersdegree in commerce from the Calcutta University and is a qualified Chartered Accountant. He has over 19 yearsof work experience of which over 13 years has been on buy side private equity advisory services. He ispresently the Managing Director of AA Indian Development Capital Advisory Services. Prior to this, he co-ledAIG Global Investment Group‟s private equity advisory team, advising on private equity investments by variousAIG Group sponsored funds in India, Earlier he was Vice President at SSKI Corporate Finance, Mumbai andmanager of Stewart & Mackertich.. He has been the Director of our Company since August 17, 2009.M. Anandan, aged 61 years, is an Independent and Non Executive Director of our Company. He holds abachelors degree in commerce from the Madras University and is a qualified Fellow Chartered Accountant. Hehas more than 30 years of work experience in the field of financial services. He has in the past worked withCholamandalam DBS Finance Limited and with Cholamandalam MS General Insurance Limited as itsManaging Director. He was also the Director in Charge of DBS Cholamandalam AMC Limited and DBSCholamandalam Securities Limited. Currently he is the Chairman of Aptus Value Housing Finance Limited andhe was on the board of Equitas Micro Finance India Private Limited as a non executive director. He has been theDirector of our Company since August 17, 2009.Jagdish Capoor, aged 72 years, is an Independent and Non Executive Director of our Company. He holds amasters degree in Commerce from Agra University and has also done his fellowship from Indian Institute ofBanking and Finance. He has more than 39 years of work experience in banking and finance. He has in the pastworked as the Deputy Governor of the Reserve Bank of India, Chairman of HDFC Bank, BSE, DepositInsurance and Credit Guarantee Corporation of India, Unit Trust of India and also as a Director on the boards ofseveral commercial banks. Currently he is on the board of Indian Hotels Company Limited, Assets CareEnterprise Limited, Indian Institute of Management, LIC Pension Fund Limited and the Chairman of QuantumTrustee Company Private Limited. He has been the Director of our Company since July 20, 2010.Borrowing Powers of the Directors of the CompanyPursuant to a resolution passed by the shareholders of the Company at their EGM held on May 31, 2011 and inaccordance with provisions of the Companies Act, the Board has been authorised to borrow up to Rs. 200,000million, apart from temporary loans obtained or to be obtained from the Company‟s bankers in the ordinarycourse of business, notwithstanding that such borrowings may exceed the aggregate of the paid-up share capitaland free reserves of the Company.Interest of Directors of the CompanyAll the Directors, including independent Directors, may be deemed to be interested to the extent of fees, if any,payable to them for attending meetings of the Board or a committee thereof as well as to the extent of otherremuneration and reimbursement of expenses and commission payable to them. The Executive Chairman andthe Managing Director are interested to the extent of remuneration and commission paid to them for servicesrendered as officers or employees of the Company.The Directors, including independent Directors, may also be regarded as interested in the Equity Shares and alsoto the extent of any dividend payable to them and other distributions in respect of the Equity Shares. TheDirectors, including independent Directors, may also be regarded as interested in the Equity Shares held by orthat may be subscribed by and allotted to the companies, firms and trusts, in which they are interested asdirectors, members, partners or trustees.110

All of the Directors may be deemed to be interested in the contracts, agreements/ arrangements entered into or tobe entered into by the Company with any company in which they hold directorships or any partnership firm inwhich they are partners as declared in their respective capacity. Except as otherwise stated in this Prospectusand statutory registers maintained by the Company in this regard, the Company has not entered into anycontract, agreement or arrangement during the two years immediately preceding the date of this Prospectus inwhich the Directors are interested directly or indirectly and no payments have been made to them in respect ofthese contracts, agreements, arrangements which are proposed to be made with them and none of the Directorshave taken any loans from the Company.Shareholding of DirectorsThe following table sets forth the shareholding of our Directors in our Company as on May 31, 2011:S. No. Name No. of Equity Shares Shareholding (%)of Pre issue EquityShare Capital1 V.P. Nandakumar 127,996,348 30.702 I. Unnikrishnan 1,180,500 0.283 A. R. Sankaranarayanan 1,089,500 0.264 P. Manomohanan 691,791 0.165 V. R. Ramachandran 613,000 0.146 V. M. Manoharan 547,555 0.137 Gaurav Mathur NIL -8 Shailesh J. Mehta 170,000 0.049 Gautam Saigal NIL -10 M. Anandan 410,000 0.0911 B. N. Raveendra Babu 1,678,100 0.4012 Jagdish Capoor 1000 NegligibleRemuneration and Terms of Employment of the Directors1. Non-Executive DirectorsThe non-executive Directors are paid remuneration by way of sitting fees and other expenses(travelling, boarding and lodging incurred for attending the Board/Committee meetings).The Company pays sitting fees of Rs. 20,000 per meeting to the non-executive Directors for attendingmeetings of the Board, Rs. 15,000 per each meeting of the Audit Committee and Rs. 7,500 per eachmeeting of the Nomination, Compensation and Corporate Governance Committee and Shareholders‟Grievance Committee. No sitting fee is paid for meetings of the Risk Management Committee of theBoard.The following table sets forth all compensation paid by the Company to the existing non-executiveDirectors for the year April 1, 2010 to March 31, 2011:(Rs. in million)Name Sitting Fees Commission TotalA. R. Sankaranarayanan 0.26 0.40 0.65P. Manomohanan 0.23 0.40 0.63V.R. Ramachandran 0.19 0.40 0.59V. M. Manoharan 0.19 0.40 0.59Shailesh J. Mehta 0.17 0.40 0.55M. Anandan 0.23 0.40 0.63Jagdish Capoor 0.08 0.25 0.33Our directors Gaurav Mathur and Gautam Saigal are not paid any remuneration.111

2. Executive DirectorsThe present remuneration structure of Executive Directors consists of fixed salary, commission andother perquisites. The following table sets forth all compensation paid to the Executive Directors witheffect from April 1, 2011:V.P. Nandakumar, Executive ChairmanParticularsRemunerationBasic salary Rs. 1,875,000 per month with an annual increment of Rs. 187,500Perquisites*CommissionOthersContribution to Provident Fund at 12% of salary; leave encashment at the end oftenure; medical reimbursement expenses for self and family including premiumpayable for medical insurance in accordance with the rules of the Company; personalaccident insurance as per the rules of the Company; leave travel concession for selfand family once in a year as per the rules of the Company; fee for clubs subject tomaximum of two clubs excluding admission and life membership feesNot exceeding 1% of the net profits of the Company calculated as per the provisionsof Sections 349 and 350 of the Companies Act, the quantum whereof to bedetermined by the Board of Directors subject to norms framed by the BoardProvision of chauffeur driven car for official purposes and telephone at residence andsuch other allowances, perquisites, benefits and amenities as may be provided by theCompany from time to time* However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in thecomputation of remuneration or ceiling on perquisites.I. Unnikrishnan, Managing DirectorParticularsRemunerationBasic salary Rs. 625,000 per month with an annual increment of Rs. 62,500Perquisites*CommissionOthersContribution to Provident Fund at 12% of salary; leave encashment at the end oftenure; medical reimbursement expenses for self and family including premiumpayable for medical insurance in accordance with the rules of the Company; personalaccident insurance as per the rules of the Company; leave travel concession for selfand family once in a year as per the rules of the Company; fee for clubs subject tomaximum of two clubs excluding admission and life membership feesNot exceeding 1% of the net profits of the company calculated as per the provisionsof Sections 349 and 350 of the Companies Act, the quantum whereof to bedetermined by the Board of Directors subject to norms framed by the BoardProvision of chauffeur driven car for official purposes and telephone at residence andsuch other allowances perquisites and benefits and amenities as may be provided bythe Company from time to time*However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in thecomputation of remuneration or ceiling on perquisites.B. N. Raveendra Babu, Joint Managing DirectorParticularsRemunerationBasic salary Rs. 500,000 per month with an annual increment of Rs. 50,000112

ParticularsPerquisites*CommissionOthersRemunerationContribution to Provident Fund at 12% of salary; leave encashment at the end oftenure; medical reimbursement expenses for self and family including premiumpayable for medical insurance in accordance with the rules of the Company; personalaccident insurance as per the rules of the Company; leave travel concession for selfand family once in a year as per the rules of the Company; fee for clubs subject tomaximum of two clubs excluding admission and life membership feesNot exceeding 1% of the net profits of the company calculated as per the provisionsof Sections 349 and 350 of the Companies Act, the quantum whereof to bedetermined by the Board of Directors subject to norms framed by the BoardSuch other allowances perquisites and benefits and amenities as may be provided bythe Company from time to time* However, contribution to Gratuity Fund, encashment of leave at the end of the tenure of the appointment is not included in thecomputation of remuneration or ceiling on perquisites.Changes in Board in during the last three yearsSrNoDirector Description of Change Date Reason1 B.N.Raveendra Babu Resignation October 30, 2008 --2 Mr. K.P. BalarajMr. Gautam SaigalMr. Shailesh J. MehtaAppointment December 27, 2008 As per the terms of PE agreement3 Jyothy Prasannan Resignation October 30, 2008 --4 K.K.Mohandas Resignation December 27, 2008 On personal grounds5 M.Anandan Appointment December 27, 2008 --6 B.N.Raveendra Babu Appointment as jointmanaging directorFebruary 25, 2010 --7 Juguna.GP Resignation March 18, 2010 On personal grounds8 K.P.Balaraj Resignation May 11, 2010 On account of sale of share by Sequoia9 K.P.Balaraj Re-appointment May 11, 2010 To continue till AGM10 T.V.Antony Appointment May 11, 2010 --11 Jagdish Capoor Appointment July 20, 2010 --12 K.P.Balaraj Resignation July 24, 2010 On his own13 T.V.Antony Resignation August 24, 2010 On health grounds14 Ashvin Chadha Resignation October 15, 2010 On account of change in employment15 Gaurav Mathur Appointment October 15, 2010 Nominated in place of Mr.AshvinChadhaCorporate GovernanceThe Company has been complying with the requirements of the applicable regulations, including the EquityListing Agreement with the Stock Exchanges, in respect of corporate governance including constitution of theBoard and Committees thereof. The corporate governance framework is based on an effective independentBoard of Directors, separation of the supervisory role of the Board of Directors from the executive managementteam and constitution of the committees of the Board of Directors, as required under applicable law. The113

Company‟s corporate governance policies recognize the accountability of the Board and the importance oftransparency to all constituents, including employees, customers, investors and the regulatory authorities.The Board of Directors functions either as a full Board or through various committees constituted to overseespecific operational areas. The executive management of the Company provides the Board of Directors withdetailed reports on its performance periodically.Currently, the Board of Directors comprises 12 Directors. Consequently, in compliance with the requirements ofClause 49 of the Equity Listing Agreement, the Board of Directors consists of nine independent Directors.As per the mandatory requirements of Clause 49 of the Equity Listing Agreement, the Company has constitutedthe following committees of the Board (“Committee”) and brief details of each of such Committee, its scopeand composition are given below:1. Audit CommitteeThe Audit Committee was re-constituted by the Board of Directors through its resolution dated July 20,2010.The Audit Committee currently comprises the following Directors:(i)(ii)(iii)(iv)(v)P. Manomohanan;A.R. Sankaranarayanan;M. Anandan;Shailesh J. Mehta; andGautam Saigal.The functions of the Audit Committee include:(i)(ii)(iii)(iv)Oversight of the Company‟s financial reporting process and the disclosure of its financialinformation to ensure that the financial statement is correct, sufficient and credible.Recommending the appointment, reappointment, and if required, the replacement or removalof the statutory auditor and the fixation of audit fee.Approval of payment to statutory auditors for any other services rendered by the statutoryauditors.Review, along with the management, the annual financial statements of the Company beforeits submission to the Board for approval, with particular reference to:a. Matters required to be included in the Directors‟ Responsibility Statement to beincluded in the Board‟s report in terms of clause 2AA of Section 217 of theCompanies Act;b. changes, if any in accounting policies and practices and reasons for the same;c. major accounting entries involving based on exercise of judgment by management;d. significant adjustments made in the financial statements arising out of audit findings;e. compliance with listing and legal requirements concerning financial statements;f. disclosure of any related party transactions; and114

g. Qualifications in the draft audit report.(v)(vi)(vii)(viii)(ix)(x)(xi)Reviewing with the management the quarterly financial statements before submission to theBoard for approval.Review of the adequacy of internal control systems with the management, external andinternal auditors.Review the findings of any internal investigations by the internal auditors into matters whereinfraud is suspected or irregularity or failure of internal control systems of a material nature andreporting the matter to the Board.Discussion with internal auditors regarding any significant findings and follow up thereon.Discussion on the nature and scope of the audit with auditors before the audit commences aswell as post-audit discussion to ascertain any area of concern.To look into the reasons for substantial defaults in payments to depositors, debenture holdersand shareholders and creditors.Any other function mentioned in the terms of reference of the Audit Committee.2. Nomination, Compensation and Corporate Governance CommitteeThe Nomination, Compensation & Corporate Governance Committee was re-constituted by the Boardof Directors at its meeting held on July 20, 2010.The Nomination, Compensation & Corporate Governance Committee currently consists of thefollowing Directors:(i)(ii)(iii)(iv)(v)(vi)A. R. Sankaranarayanan;V. P. Nandakumar;M. Anandan;Shailesh J. MehtaJagdish Capoor; andGautam Saigal.The functions of the Nomination, Compensation and Corporate Governance Committee include:(i)(ii)Determining on behalf of the Board and on behalf of the shareholders the Company's policieson specific remuneration packages to executive directors including pension rights and anycompensation payment.Acting as a “Compensation Committee” as required under the SEBI (Employee Stock OptionScheme and Employee Stock Purchase Scheme) Guidelines, 1999 for the purpose offormulation of policy, procedures and scheme and the overall supervision and administrationof the MFL ESOP.3. Shareholders‟ Grievance CommitteeThe Shareholders‟ Grievance Committee was re-constituted by the Board of Directors through itsresolution dated October 15, 2010.115

The Shareholders‟ Grievance Committee currently consists of the following directors:(i)(ii)(iii)V.R. Ramachandran;P. Manomohanan; andV.M.Manoharan.The Shareholders‟ Grievance Committee, among other functions, focuses on shareholder grievanceswhich comprise monitoring and redressing the shareholders complaints in relation to share transfer, nonreceipt of Annual Report etc.4. Risk Management CommitteeThe Risk Management Committee was re-constituted by the Board of Directors through its resolutiondated August 17, 2009.The Risk Management Committee currently consists of the following directors:(i)(ii)(iii)(iv)P. Manomohanan;V.P. Nandakumar;I. Unnikrishnan; andB.N. Raveendra Babu.The Risk Management Committee, among other functions, focuses on reviewing on an ongoing basisthe measures adopted by the Company for the identification, measurement, monitoring and mitigationof the risks involved in the various business activities carried on by the Company.5. Financial Resources and Management CommitteeThe Financial Resources and Management Committee was re-constituted by the Board of Directorsthrough its resolution dated January 24, 2011.The Financial Resources Committee currently consists of the following directors:(i)(ii)(iii)V.P. Nandakumar;I. Unnikrishnan; andB.N. Raveendra Babu.The committee‟s function is to oversee and deal with the following operational matters from time totime:-(i)InvestmentsTo deliberate and make recommendation to the Board on all transactions and matters relatingto the business of the company or its investments.(ii)Financial Arrangementsa) Approve financial arrangements whether as working capital demand loans or againstassignment of receivables of the company or buy out of port folios or by such othermeans with banks and other financial institutions including the signing of suchdocuments for facilities within the borrowing powers of the Board.116

) Approve the creation of any mortgage/charge or other encumbrance over thecompany‟s properties or assets for the above purposes.c) Approve the issuing or providing or permitting the company to issue or provide anyform of guarantee or indemnity or other financial or non financial support in theordinary course of business.d) To consider the issue of commercial papers and other short term or long terminstruments for raising funds from the market.e) Authorize changes in signatories in respect of accounts maintained by the companywith banks and other financial institutions(iii)Allotment of Debentures and BondsApprove the allotment of debentures and bonds issued by the company within in the overalllimit set for the issue and the creation/modification/satisfaction of mortgage/charge on suchdebentures/bonds as the case may be.(iv)Others(a)(b)(c)Authorizing officers of the company for making necessary application for registrationunder different enactments as employee welfare, fiscal and other municipal or localor subordinate legislations.Authorizing officers of the company by grant of power of attorneys so as to representbefore Government, Judicial or quasi judicial bodies or other authorities for sanction,approval or other permissions on such matters affecting the business of the company.Authorizing officers of the company by grant of power of attorneys or otherwise formatters in connection with day to day business activities, opening of branches,execution of rent/tenancy agreements etc.117

Organisation chart of the CompanyEXECUTIVE CHAIRMANMD118

Key Management Personnel of the CompanyC. Radhakrishnan, aged 46 years, is the General Manager and Company Secretary of our Company. He holds amasters degree in commerce from the Calicut University and in business administration from the MahatmaGandhi University. He is a Fellow Company Secretary having completed his bachelor‟s degree in law from theTumkur University. He has 14 years of work experience with the Life Insurance Corporation of India, MafatlalIndustries Limited, Transformers and Electricals Kerala Limited and Co-operative Colleges. He has beenworking with our Company since December 11, 2001.Bindhu A.L., aged 37 years, is the Chief Financial Officer and Senior General Manager of our Company. Sheholds a bachelors degree in commerce from the Calicut University and is also a certified Chartered Accountantfrom the Institute of Chartered Accountants of India. She has in the past worked with Mohandas and Associates.She has been working with our Company since June 15, 1998.N.R. Bahuleyan, aged 62 years, is the Chief General Manager of our Company. He holds a bachelors degree incommerce from the Calicut University and is a Fellow Company Secretary. He has in the past worked with theKerala State Electronics Development Corporation Limited for 18 years. He has been working with ourCompany since August 1, 1994.P. Krishnaraj, aged 62 years, holds the post of „General Manager-Operations‟ in our Company. He holds amaster‟s degree in agricultural science from the Kerala University and is also a Certified Associate of IndianInstitute of Bankers. He has over 37 years of work experience and has worked as Block Development Officer,Government of Tamil Nadu and with the State Bank of Travancore. He has been working with our Companysince March 9, 2009.S.V.R. Jogarao, aged 61 years, holds the post of „General Manager-Gold Loan Marketing‟ in our Company. Heholds a masters degree in science from the Andhra University, a bachelor‟s degree in law from RavisankerUniversity and is also an Associate of Indian Institute of Bankers (C.A.I.I.B). He has over 34 years ofexperience with the Bank of India. He has been working with our Company since November 9, 2009.Krishnamurthy, aged 53 years, holds the post of „Senior General Manager‟ in our Company. He holds abachelors degree in commerce from the Kerala University and is also a Certified Associate of Indian Institute ofBankers. He has over 30 years of experience with the State Bank of India. He has been working with ourCompany since October 29, 2009.M.V.Babu, aged 62 years, holds the post of General Manager (Taxation) in our Company. He holds a bachelorsdegree in Commerce from the Kerala University. He is a Chartered Accountant by profession and is also anassociate member of the Indian Institute of Bankers. He has 25 years of experience as the head of Accounts andTaxation departments of The Federal Bank.M. Satheesh Kumar aged 47 years, holds the post of General Manager (Information Technology) in ourCompany. He holds a bachelors degree in history from the Calicut University. He has an experience spanningmore than 15 years in various departments of our Company.Shareholding of Key Management PersonnelAs of the date of this Prospectus, except as provided below, our Key Management Personnel do not hold anyEquity Shares in the Company.S. No. Name Number of Equity % of shareholdingShares Held1 C. Radhakrishnan 14,602 0.00172 Bindhu A. L. 1,04,020 0.01193 N.R. Bahuleyan 21,050 0.00254 P. Krishnaraj 10,520 0.00125 S.V.R. Jogarao 1,400 0.00016 Krishnamurthy - -7 M.V. Babu 1,200 0.00018. M. Satheesh kumar 36,520 0.0039119

Interests of Key Management PersonnelExcept as disclosed in this Prospectus and other than to the extent of remuneration or benefits to which they areentitled to as per their terms of appointment and reimbursement of expenses incurred by them during theordinary course of business, the Key Management Personnel of the Company do not have any interest in theCompany.None of our Key Management Personnel have been paid any consideration of any nature from our Company,other than their remuneration and options granted under the MFL ESOP.Payment or Benefit to Officers of the CompanyExcept statutory benefits upon termination of their employment in the Company or on reaching superannuation,no officer of the Company is entitled to any benefit other than the stock option (being vested) upon terminationof his employment in the Company.Employee Stock Option SchemeWe adopted an employee stock option scheme on August 17, 2009 (which was amended pursuant to the EGMheld on April 22, 2010) whereby stock options are proposed to be granted to identified employees of ourCompany. Entitlements under this scheme are determined on the basis of various parameters as laid down by theBoard. The compensation committee of the Board is entrusted with the responsibility of implementing andadministering the MFL ESOP scheme. The total number of options proposed to be issued under the MFL ESOPscheme is one million, being 5.78% of the issued equity capital of the Company as on August 17, 2009, theeffective date of the scheme. The total number of options pursuant to stock split and bonus stands to 9,147,500options. The shares allotted pursuant to the exercise of the options granted under this scheme shall not be lockedfor any period. Each option issued by the Company to the employees, would be eligible for the allotment of oneEquity Share of the Company by payment of the exercise price. As on March 31, 2011, we have granted a totalof 8,290,000 options under this scheme, out of which 37,55,120 options have been exercised.The following table indicates the ESOPs granted and exercised by the Directors and the Key ManagementPersonnel as of the date of this Prospectus:S.No.Name DirectorsNumber of ESOPsgrantedNumber of ESOPsexercised1. I. Unnikrishnan 1,200,000 600,0002. B.N.Raveendra Babu 1,000,000 500,0003. M.Anandan 300,000 150,0004. P.Manomohanan 300,000 150,0005. V.M.Manoharan 300,000 150,0006. V.R. Ramachandran 300,000 150,0007. Shailesh J Mehta 300,000 150,0008. A.R.Sankaranarayanan 300,000 150,0009. Bindu.A.L 300,000 150,00010. C.Radhakrishnan 200,000 100,00011. N.R.Bahuleyan 80,000 40,00012. P.Krishnaraj 40,000 20,00013. M. Satheesh Kumar 80,000 40,000TOTAL 4,700,000 2,350,000120

OUR PROMOTERSThe following individuals are the current promoters of our Company:1. Mr. V. P Nandakumar; and2. Mrs. Sushama Nandakumar.Our Promoters collectively hold 36.46% stake in our Company as on July 22, 2011.Mr. V. P. Nandakumar is also the Executive Chairman of our Company. The remuneration that is paid to him inthat capacity has been disclosed on page 112. Neither of our Promoters have any interest in our Company exceptas disclosed in this Prospectus.121

OUR SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIESThe following is the list of Companies under the same management:1. Manappuram Insurance Brokers (P) Limited2. Manappuram Asset Finance Limited3. Manappuram Health Care Limited4. Manappuram Comptech and Consultants (P) Limited5. Manappuram Infrastructure and Builders Private Limited6. Manappuram Jewellers Private Limited7. Manappuram Chits India Limited8. Manappuram Benefit Fund Limited9. Manappuram Construction and Properties Private LimitedWe do not have any subsidiaries, associates or joint venture companies of our Company.122

STOCK MARKET DATA FOR EQUITY SHARES AND DEBENTURES OF OUR COMPANYI. Equity SharesOur Company‟s Equity Shares are listed on the BSE, MSE and CSE. It is a permitted security on NSE.As our Company‟s shares are actively traded on the NSE and BSE, stock market data has been givenseparately for each of these Stock Exchanges.1. The high and low closing prices recorded on the NSE and BSE during the last three years and thenumber of Equity Shares traded on the days the high and low prices were recorded are stated below.NSE*YearendedMarch 31High(Rs.)Date of HighVolume ondate of high(no. of shares)Low(Rs.)Date ofLowVolume ondate of low(no. of shares)Averageprice forthe year(Rs.)2011 181.65 November 22, 2,634,608 69.9 July 6, 35,441 127.65201020102010 NA NA NA NA NA NA NA2009 NA NA NA NA NA NA NASource: www.nseindia.comThe average price has been computed based on the daily closing price of Equity Shares.*Trading started in NSE from June 30, 2010BSEYearendedMarch 31High(Rs.)Date of HighVolume ondate of high(no. of shares)Low(Rs.)Date ofLow2011 829.3 April 27, 2010 38,372 67.3 June 1,20102010 789.8 March 19, 2010 72,111 126.8 April 1,20092009 165.55 May 20, 2008 3,414 100 January12, 2009Volume ondate oflow(no. of shares)Averageprice forthe year(Rs.)65,496 169.83263 442.89176 134.30Source: www.bseindia.comThe average price has been computed based on the daily closing price of Equity Shares.2. The high and low prices and volume of Equity Shares traded on the respective dates during the last sixmonths are as follows:NSE*Month,YearHigh(Rs.)Date ofHighVolume on dateof high (No. ofEquity Shares)Low(Rs.)July 2011 60.05 July 27,2011 4,414,680 55.05June 2011 124.75 June 6,2011 1,376,402 56.3May 2011 133.15 May 5,2011 1,944,330 109.7Date oflowVolume on date oflow (No. of EquityShares)Average Pricefor the month(Rs.)July 29,2011 2,361,645 56.89June 30,2011 1,396,638 74.04May 26,2011 398,296 118.68123

Month,YearHigh(Rs.)Date ofHighVolume on dateof high (No. ofEquity Shares)Low(Rs.)April 2011 135.95 April 5,2011 1,072,867 125.6March 132.8 March 31,20112011 2,099,743 115February 130.75 February201123, 2011 1,848,047 91.3Date oflowVolume on date oflow (No. of EquityShares)Average Pricefor the month(Rs.)April 19,2011 622,449 130.78March 11,2011 494,511 119.58February10, 2011 1,640,201 113.27Source: www.nseindia.comThe average price has been computed based on the daily closing price of Equity Shares.*Trading started in NSE from June 30, 2010BSEMonth,YearHigh (Rs.)Date ofHighVolume on date ofhigh (No. ofEquity Shares)Low(Rs.)July 2011 60 July 27,2011 1,205,002 55.05June 2011 124.5 June 6,2011 298,472 56.15May 2011 133.15 May 5,2011 588,137 109.4April 135.55 April 5,20112011 311,773 125.85March 132.4 March 31,20112011 561,311 114.8February 130.25 February201123, 2011 1,101,899 91.2Date of lowVolume on date oflow (No. of EquityShares)Average Pricefor the month(Rs.)July 29,2011 360,090 56.76June 30,2011 98,426 74.01May 26,2011 47,452 118.63April 19,2011 110,352 130.87March 21,2011 74,437 119.45February10, 2011 559,895 113.23Source: www.bseindia.comThe average price has been computed based on the daily closing price of Equity Shares.II.DebenturesDebt securities listed by the Company, which are listed on BSE are infrequently traded with limited or novolumes. Consequently, there has been no reported data available for the prices or volumes of such listed debtsecurities.124

DESCRIPTION OF CERTAIN INDEBTEDNESS1. The statement of unconsolidated borrowings of our Company as on March 31, 2011 is provided below:ParticularsAmount (in Rs. in million)Loan Funds(a) Secured Loans (a) 43,723.077.5% - 14.5% Secured Non-convertible Debentures 5,012.85Add: Interest accrued and due thereon 2.68From BanksCash Credit 7,488.19Working Capital Loans 30,558.41From OthersWorking Capital Loans 650.00Vehicle Loans (secured by hypothecation of vehicles) 10.94(b) Unsecured Loans (b) 12,817.03Deposits -Debenture Application Money 20.00Inter corporate deposits 1.64Commercial Paper 10,007.87Subordinate bonds 1,778.76Subordinated debt 1,000.00Interest accrued and due 8.76Total Debt (a+b) 56,540.102. Details of Secured Borrowings:Our Company‟s secured borrowings other than vehicle loans as on March 31, 2011 amount to Rs.38,696.60 millions. The details of the individual borrowings are set out below.S.No.Particulars (Cashcredit/Overdrafts/Working CapitalLoans)Date of SanctionLetterAmountoutstanding as onMarch 31, 2011(Rs. in million)RepaymentSchedule1. IDBI Bank Ltd March 21, 2011 4,773.01 12 months2. ING Vysya Bank Ltd October 11, 2010 50.01 12 months3. Development Credit March 21, 2011182 daysBank267.304. Punjab National Bank September 28,2010CC (Rs. 1000million) – 12monthsSTL (Rs. 1000million) – 200 days2,936.095. South Indian Bank August 9, 2010 1,209.04 120 days6. Yes Bank January 21, 201112 months2,500.007. Lakshmi Vilas Bank September 15,On demand2010 499.908. Catholic Syrian Bank March 31, 2008 36.73 On demand9. Kotak Mahindra Bank July 20, 2010On demandLtd17.8910. Dhanalakshmi Bank January 22, 2011LtdCC (Rs. 480million) – 12monthsSTL (Rs. 500509.58 million) – 6 months11. Tata Capital Ltd April 21, 2010 500.00 12 months (rollover125

S.No.Particulars (Cashcredit/Overdrafts/Working CapitalLoans)Date of SanctionLetterAmountoutstanding as onMarch 31, 2011(Rs. in million)RepaymentSchedulequarterly)12. Indusind Bank September 8,2010CC (Rs. 50 million)– on demandSTL (Rs. 500544.14 million) – 180 days13. Karur Vysya Bank July 22, 2010 500.00 365 days14. State Bank of India July 29, 2009180 days4,000.0015. Corporation Bank July 27, 2010180 days2,000.0016. Bank of Rajhastan March 16, 2011 24.40 12 months17. Central Bank of India September 4,On demand2010 1,849.3718. Indian Overseas Bank, April 13, 2010365 daysThrissur1,250.0019. Indian Overseas Bank, April 13, 2010365 daysMumbai1,499.9620. Union Bank of India December 14,On demand2010 1,762.4221. DBS Bank Ltd June 22, 2010 750.00 12 months22. State Bank ofTravancore6 monthsRs. 1000 million– August 19, 2010Rs. 900 million -December 15,2010 1,900.0023. Barclays Bank September 2,2010 1,000.0024. Andhra Bank August 27, 20102,000.0025. Dena Bank September 21,2010 750.0026. Bank of India September 20,2010 1,000.0027. Jammu & Kashmir October 30, 2010BankMarch 23, 2011120 daysOn demand365 days365 daysRs. 1000 million –12 monthsRs. 500 million –18 months (after 15months – 50% and18 months – 50%On demand1,000.0028. State Bank of Bikaner October 29, 2010& Jaipur500.0029. UCO Bank February 9, 201112 months2,000.0030. Karnataka Bank December 14,12 months2010 416.7731. Ratnakar Bank January 18, 2011 500.0 6 months32. Aditya Birla Finance March 25, 2011Ltd150.012 months(payment quarterly)Our Company has also entered into various assignment agreements for Rs 11,182.83 as at March 31,2011.The details of the same are set out below:126

S.No. Particulars (Assignment) Date of Agreement Amountassigned as atMarch 31, 2011(Rs. in million)1. ICICI Bank Ltd December 30, 2010 1,564.862. IDBI Bank Ltd December 16, 2010 548.363. Axis Bank Ltd December 9, 2010 1,118.194. ING Vysya Bank Ltd October 18, 2010 1,628.675. Federal Bank September 11, 2009 166.556. Yes Bank March 25, 2011 1,684.887. Kotak Mahindra Bank Ltd February 25, 2011 1,971.798. Dhanalakshmi Bank Ltd July 30, 2010,August 31, 2010September 9, 20101,849.41September 29, 20109. Indusind Bank March 24, 2010450.4010. Development Credit Bank January 31, 2011 199.72Our Company has issued rated, listed, secured, redeemable, non convertible debentures of face value ofRs. 1,000,000 and Rs. 100,000 each on a private placement basis for cash at par of the aggregatenominal value of Rs. 3,688.00 million carrying coupon rate ranging from 7.5% to 14.5% per annumwhich is outstanding as on March 31, 2011 as follows:ISINCouponRateNo. ofDebenturesAmountoutstanding as onMarch 31, 2011(Rs. in millions)Maturity DateINE522D07016 9.00% 250 250 August 16, 2011INE522D07024 9.25% 250 250 February 18, 2012INE522D07040 10.65% 1000 1,000 March 3, 2012INE522D07057 12.00% 1000 100 March 28, 2013INE522D07065 12.00% 1000 100 March 28, 2014INE522D07073 12.25% 1980 198 March 28, 2014INE522D07081 12.25% 1980 198 March 28, 2015INE522D07099 12.25% 2640 264 March 28, 2016INE522D07107 12.60% 1000 1,000 June 29, 2012INE522D07115 12.25% 984 98.4 March 31, 2014INE522D07123 12.25% 984 98.4 March 31, 2015INE522D07131 12.25% 1312 131.2 March 31, 2016Our Company has issued secured, redeemable, non convertible debentures of varying coupon rates on aretail private placement basis other than the rated, secured and listed debentures mentioned above, ofthe aggregate nominal value of Rs. 1,324.85 million which is outstanding as on March 31, 2011 asfollows:Date of AllotmentNumber ofDebenturesNominal amountoutstanding as at March31, 2011 (Rs. in millions)September 16, 2006 4,812 4.81 60November 15, 2006 5,781 5.78 60March 24, 2007 12 0.01 48March 24, 2007 410 0.41 60October 13, 2007 50 0.05 48Tenure (inMonths)127

Date of AllotmentNumber ofDebenturesNominal amountoutstanding as at March31, 2011 (Rs. in millions)December 4, 2007 328 0.33 60January 31, 2008 163 0.16 48January 31, 2008 1,439 1.44 60March 27, 2008 704 0.70 36March 27, 2008 53 0.05 48March 27, 2008 732 0.73 60March 31, 2008 35 0.04 36March 31, 2008 432 0.43 60December 29, 2008 3,232 3.23 36December 29, 2008 654 0.65 60December 29, 2008 974 0.97 36December 29, 2008 200 0.20 48December 29, 2008 108 0.11 36March 16, 2009 20 0.02 24March 16, 2009 666 0.67 36March 16, 2009 150 0.15 60March 16, 2009 82 0.08 24March 16, 2009 697 0.70 36April 30, 2009 285 0.29 24April 30, 2009 1,013 1.01 36April 30, 2009 15 0.02 24April 30, 2009 517 0.52 36June 9, 2009 10 0.01 48June 9, 2009 252 0.25 60June 9, 2009 574 0.57 24June 9, 2009 1,664 1.66 36February 22, 2010 6,231 6.23 12March 9, 2010 11,062 11.06 12March30, 2010 62,119 62.12 12April 22, 2010 61,460 61.46 12April 22, 2010 62,359 62.36 12April 22, 2010 57,124 57.12 12July 20, 2010 66,273 66.27 12July 20, 2010 45,428 45.43 12July 24, 2010 39,627 39.63 12October 15, 2010 50,164 50.16 12October 15, 2010 60,986 60.99 12October 15, 2010 92,655 92.66 12October 15, 2010 107,254 107.25 12November 29, 2010 1,312 1.31 36November 29, 2010 79,561 79.56 12November 29, 2010 75,076 75.08 12Tenure (inMonths)128

Date of AllotmentNumber ofDebenturesNominal amountoutstanding as at March31, 2011 (Rs. in millions)November 29, 2010 55,328 55.33 12December 15, 2010 98,858 98.86 12February 25, 2011 3,159 3.16 12February 25, 2011 149,979 149.98 12March 31, 2011 82,599 82.60 12March 31, 2011 30,169 30.17 12Tenure (inMonths)3. Details of Unsecured Borrowings:Our Company has issued listed commercial papers aggregating to Rs. 10,007.87 million which isoutstanding as on March 31, 2011 as follows:ISINTenure(indays)Amountoutstanding as onMarch 31, 2011 (Rs. in millions)Maturity DateINE522D14251 90 243.80 April 6, 2011INE522D14251 90 243.80 April 6, 2011INE522D14269 88 487.87 April 8, 2011INE522D14269 88 243.94 April 8, 2011INE522D14277 87 488.42 April 29, 2011INE522D14285 86 243.70 May 11, 2011INE522D14319 90 242.80 May 30, 2011INE522D14319 90 242.80 May 30, 2011INE522D14319 90 242.80 May 30, 2011INE522D14327 91 242.73 May 31, 2011INE522D14293 91 970.95 May 26, 2011INE522D14194 363 92.29 29-Sept-2011INE522D14301 109 482.66 June 14, 2011INE522D14335 179 471.77 August 30, 2011INE522D14343 92 485.32 June 7, 2011INE522D14350 87 243.05 June 3, 2011INE522D14343 91 485.48 June 7, 2011INE522D14343 91 242.74 June 7, 2011INE522D14384 360 178.68 March 5, 2012INE522D14376 139 95.60 July 28, 2011INE522D14368 188 470.78 September 15, 2011INE522D14368 188 235.39 September 15, 2011INE522D14368 188 235.39 September 15, 2011INE522D14392 91 485,77 June 13, 2011INE522D14392 91 485,77 June 13, 2011INE522D14368 183 236.04 September 15, 2011INE522D14400 124 173.35 July 27, 2011INE522D14418 195 282.85 October 10, 2011INE522D14426 125 192.52 August 1, 2011INE522D14434 365 314.32 March 29, 2012INE522D14434 365 224.52 March 29, 2012Our Company has issued unsecured subordinated bonds of varying interest rates aggregating Rs.1,787.52 million (including interest accrued and due of Rs. 8.76 million) which is outstanding as onMarch 31, 2011 as follows:129

SeriesTenure (inmonths)Amountoutstanding as onMarch 31, 2011(Rs.in millions)Maturity DateBD18 60 0.60 31/08/2011BD19 60 4.56 30/12/2011BD1MAG09 60 0.01 23/12/2011BD20 60 21.54 29/06/2012BDMAF001 60 0.54 06/06/2012BDMAF002 60 1.53 21/08/2012BDMAF003 60 1.73 31/10/2012BDMAF004 60 1.76 24/01/2013BDMAF005 60 0.65 22/02/2013BDMAF006 60 0.84 30/08/2013BDMAF007 84 0.30 12/07/2015BDMAF008 60 11.75 29/11/2013BDMAF009 60 3.38 26/12/2013BDMAF010 120 0.73 16/12/2018BDMAF011 60 10.17 31/01/2014BDMAF012 120 0.07 21/01/2019BDMAF012 60 0.03 27/12/2013BDMAF013 60 10.04 14/03/2014BDMAF014 120 1.20 13/03/2019BDMAF015 60 10.11 13/05/2014BDMAF016 120 0.21 28/04/2019BDMAF017 60 3.32 09/06/2014BDMAF018 60 11.62 19/12/2014BDMAF019 120 0.06 02/09/2019BDMAG019 60 0.03 23/12/2011BDMAG020 60 0.70 12/06/2012BDMAG022 60 25.94 31/08/2012BDMAG023 60 12.80 29/09/2012BDMAG024 60 15.54 31/10/2012BDMAG025 60 16.00 22/11/2012BDMAG026 60 7.51 31/12/2012BDMAG027 60 8.53 31/01/2013BDMAG028 60 7.02 28/02/2013BDMAG029 60 3.55 31/03/2013BDMAG030 60 71.89 30/08/2013BDMAG031 72 0.72 12/07/2014BDMAG032 84 23.16 21/07/2015BDMAG033 60 86.77 11/11/2013BDMAG034 60 38.26 29/11/2013BDMAG035 120 0.11 28/11/2018BDMAG036 60 29.15 24/12/2013130

SeriesTenure (inmonths)Amountoutstanding as onMarch 31, 2011(Rs.in millions)Maturity DateBDMAG037 60 0.07 22/12/2013BDMAG037 120 0.72 24/12/2018BDMAG038 60 54.32 31/01/2014BDMAG039 120 1.24 30/01/2019BDMAG039 60 0.03 22/01/2019BDMAG040 60 60.97 04/03/2019BDMAG041 120 1.85 14/03/2019BDMAG042 60 93.54 15/05/2014BDMAG043 120 1.12 09/05/2019BDMAG044 60 39.22 09/06/2014BDMAG045 120 0.29 08/06/2019BDMAG046 60 52.50 06/07/2014BDMAG047 120 22.17 31/03/2021BDMAG047 60 0.21 01/10/2015BDMAG048 60 53.13 27/07/2014BDMAG049 60 52.28 18/08/2014BDMAG050 60 53.02 19/09/2014BDMAG051 60 52.22 19/10/2014BDMAG052 60 82.11 04/01/2015BDMAG053 60 51.50 22/02/2015BDMAG054 60 51.31 17/04/2015BDMAG055 60 50.08 24/05/2015BDMAG056 60 50.14 28/06/2015BDMAG057 60 50.02 25/07/2015BDMAG058 60 50.44 01/09/2015BDMAG059 60 50.04 29/09/2015BDMAG060 60 50.21 30/10/2015BDMAG061 60 50.07 27/11/2015BDMAG062 60 50.00 03/01/2016BDMAG063 60 50.19 08/02/2016BDMAG064 60 50.21 10/03/2016BDMAG065 60 29.22 31/03/2016Not Allocated 120 0.02 09/06/2019Not Allocated 60 88.63 08/06/2014There is also a subordinated debt of Rs. 1000 million from Syndicate Bank outstanding as on March31, 2011 which was sanctioned vide sanction letter dated October 21, 2010, with a maturity of 5 yearsand 6 months from the date of first drawdown at a floating interest rate of Base rate plus 350bps,payable on a monthly basis.4. Trustee Arrangements entered into by our CompanyOur Company has entered into debenture trustee arrangements with Axis Trustee Services Limited and131

IL&FS Trust Company Limited for their debenture issuances mentioned in point 2 above. Besides theabove, the Company has also entered into debenture trustee arrangements with V.K. Kerala Verma andV. Sajith for the retail debentures listed above. The Company has not entered into any security trusteearrangement and all security is created directly in favour of the working capital/short term loancreditors.5. Security Agreements entered into by our CompanyOur Company has taken various loans from banks and financial institutions which are in most casessecured by „exclusive first charge‟ over gold loan receivables of identified branches of the Company. Insome cases the charge created is a pari passu floating charge on all receivables of the Company infavour of the lender. The charge is created by way of hypothecation agreements entered into with therespective lenders and financial institutions and Form 8 filings with the RoC is made for perfection ofthe charge created.6. Servicing behaviour on existing debt securities, payment of accrued interest on due dates on termloans and debt securitiesAs on the date of this Prospectus, there has been no default in payment of principle or interest on anyterm loan and debt security issued by our Company in the past.132

OUTSTANDING LITIGATION AND DEFAULTSOur Company is subjected to various legal proceedings from time to time, mostly arising in the ordinary courseof its business. The legal proceedings are initiated by us and also by various customers. These legal proceedingsare primarily in the nature of (a) consumer complaints (b) arbitration claims (c) criminal complaints (d) civilcases. We believe that the number of proceedings in which we are involved in is not unusual for a company ofits size in the context of doing business in India.Except as described below, we are not involved in any legal proceedings, and no proceedings are threatened,which may have, or have had, a material adverse effect on our business, properties, financial condition oroperations.As on June 30, 2011, we have been made party to the following cases:1. Our Company has filed writ appeal no. 35045 of 2009 before the Supreme Court of India against theorder of the Kerala High Court in 541 of 2007 dated November 18, 2009 directing all NBFCs toregister under the Kerala Money-Lenders Act. The High Court of Kerala had earlier struck down anotification passed under the Kerala Money-Lender Act that imposed an interest ceiling of 12.00% onadvances made by all entities that are covered under that Act. Further, the Government of Karnatakahas issued an order exempting the Company from the applicability of the provisions of themoneylenders‟ legislation of Karnataka. While our Company has received partial exemptions from twoStates (Kerala and Karnataka) from the applicability of the provisions of similar money lendinglegislations, in the event the Supreme Court decides the matter against us, our Company would berequired to register all branches located in Kerala as well as in other States which have enacted similarlegislations under such legislations in the respective States. A stipulated registration fee is payable onthe registration of each branch and in addition to that, each registered branch would also be required todeposit a certain sum of money with the prescribed authority as security for observing the terms of thelicence issued. Further, the Company would not be able to charge interest beyond a limit specifiedunder such legislations and as a result the revenues of the Company may fall substantially.The Kerala Money-Lenders Act prescribes a maximum penalty of imprisonment for a period up to 3years and a fine of Rs. 50,000 for carrying out business without a license in the event that the Companyis found to be in violation of the same.The matter is currently pending hearing before the Supreme Court of India. Now the Supreme Courtvide its order dated December 16, 2009 directed that status quo be maintained until further orders.2. The Executive Chairman of our Company, V. P. Nandakumar, and certain other of our employees areparties to a criminal case which is pending before the Court of the Judicial Magistrate of First Class,Ottapalam, Kerala. The case was filed as a result of a complaint by one of our customers alleging thatwe had forcefully dispossessed the customer of a vehicle for which the customer had availed of a loanfrom us despite the customer having no payment due to us in relation to the vehicle. This case is filedunder Sections 143, 147, 148, 149, 323, 394, 457 and 506 (iii) of the Indian Penal Code, 1860.3. The Company has been made parties to two Sales Tax cases relating to the financial years 1994 - 95,1995 - 96, 1998 – 99, 2005 - 06, and 2006 – 07 respectively. In the first case, the Department haddemanded the payment of Sales Tax to an extent of 0.69 million on hospital equipments leased by ourCompany to PVS Hospital, Ernakulam. The Company had filed a petition before the Kerala High Courtagainst the order of the Department. Pursuant to an interim order passed by the High Court, theCompany has remitted an amount of Rs. 0.23 million towards the demand made by the Department.The case is still pending. The second one is in relation to the demand made by the Intelligence Officer,Department of Commercial Taxes, Thrissur to pay tax on auction sale of vehicles re possessed by theCompany from borrowers who fail to meet the repayment obligations under hire purchase andhypothecation loans. The Company has filed an appeal against the same before the Commissioner(Appeals) Ernakulam. Pursuant to an interim order passed by this authority, the Company has remitted40% of the total tax amount involved and furnished a bank guarantee for the balance amount. The totalamount of tax demanded by the Department is in the tune of Rs. 0.08 million. The case is still pending.4. The Company is also party to an income tax case pursuant to an assessment order dated December 26,2008 passed by the Assistant Commissioner of Income Tax, Thrissur disallowing Rs. 6.38 million133

written off as bad debts during the assessment year 2005-06 since the same was not actually bad andnot recoverable. On an appeal made to the CIT (Appeals) Cochin, that authority has, by way of anorder dated September 20, 2010 allowed the writing off of the debt to the extent of Rs. 6.03 million.The claim in relation to the balance amount is pending.5. Our Company is party to a service tax appeal for alleged wrong availment of CENVAT credit fromApril 1, 2004 to June 30, 2007 to an extent of Rs. 3.05 million. The appeal is arising out of orderMarch 19, 2010 passed by Commissioner of Central Excise and Service Tax, Calicut. Aggrieved by theorder, Additional Commissioner, Central Excise, Calicut has filed an appeal. The Company has filedcounter objections to the same on September 30, 2010. The proceedings are pending.6. The special leave petition that was filed by the Company in relation to the payment of service tax onhire purchase and leasing was dismissed by the Supreme Court of India. The Company has received ashow cause notice dated October 22, 2010 demanding the payment of service tax of Rs 2.34 millionwith penalty and interest for the period from July 2001 to April 2007. The Company has replied to thisnotice stating that the claim made by the department is „time barred‟ and would hence not bemaintainable. This case is yet to be posted for hearing. Our Company has created a provision for theclaim amount in our balance sheet.7. Our Company has received show cause notices from the Labour Departments of Andhra Pradesh,Kerala, Karnataka and Tamil Nadu requiring us to show cause as to why our branches within theseStates are open for all seven days in the week. Subsequently, our Company has made applications tothe Labour Departments of five States (including West Bengal) seeking an exemption for keeping thebranches of the Company within these states open for all seven days of the week. We are yet to receiveexemption under these applications.8. Our Company has been served two show cause notices in relation to the payment of service tax bothdated April 5, 2010, details of which are as follows: (i) Show cause notice bearing No. 30/2010 statingthat for assessment year 2008-09, the Company has short paid service tax amounting to Rs. 99,670; and(ii) show cause notice bearing no. 29/2010 stating that for the assessment year 2008-09, the Companyhas short paid tax amounting to Rs. 1,88,610. The Company has replied to both these notices by way ofletters dated May 13, 2010. By way of an order dated March 24, 2011, the Deputy Commissioner haswithdrawn the demand of Rs.99,670. In the second case, the demand of Rs.1,88,610 has beenconfirmed. We have filed the second appeal against this order on June 8, 2011.9. Our Company has received orders from the Employees State Insurance Corporation pursuant to aninspection of the records of the company in May 2011 for payment of Rs 175,000. The Company willbe pay the amount forthwith.10. Our Company has been made party to 64 consumer cases which are now pending before various districtand state consumer dispute redressal fora. These cases have been filed based on allegations ofdeficiency in service rendered by us. Such grounds include the adoption of improper processes forconducting the sale of forfeited jewellery, wrongful seizure of hypothecated goods and charging veryhigh interest rates on deposits. The aggregate value of the total compensation amount that has beenclaimed against us in all these cases is Rs. 8.44 million.11. 15 cases have been filed against us by owners of branch premises on grounds of eviction and rentescalation.In addition to the above matters, we are also involved in certain administrative and legal proceedings pendingbefore the relevant courts and authorities at various levels. We cannot predict the outcome of any pending orfuture litigation, examination or investigation, based on the amounts sought in pending actions against us andour history of resolving litigation matters in the past, as well as the advice of legal counsel.Further, there have been eight major burglaries at our branches since inception. With regard to the first burglarywe were able to recover the entire amount of the loss suffered. With regard to the second burglary we were ableto recover approximately 90.0% of the loss suffered and received a partial payment of the insurance claim withregard to the third burglary. The aggregate value of the gold and cash stolen in the second and third burglaries isapproximately Rs. 28.32 million. Survey of loss by the insurer and investigation into the burglaries by the policeis complete, and a final charge sheet has been submitted to the court. The fourth, fifth and sixth burglaries134

occurred in August 2010 and September 2010 and the aggregate value of the gold and cash stolen isapproximately Rs. 35.50 million. We have filed insurance claims in relation to the last three burglaries, but wehave not yet received any payment in relation to the same. The seventh one occurred in May 2011 and we havefiled the first information report in relation to the same and the police investigation in relation to the same isongoing. The loss of cash is estimated at Rs. 766,323. The last burglary occurred in June 2011 and the loss ofgold through the same is estimated at Rs. 37.50 million and cash at Rs.639,139 which has since been recoveredby the police.Material Developments after March 31, 2011Except as stated in this Prospectus, there have not arisen, since March 31, 2011, which is the date of the lastFinancial Statements, any circumstances that have materially and adversely affected the profitability of ourCompany, or the value of our assets or our ability to pay our liabilities within the next 12 months.135

Authority for the IssueOTHER REGULATORY AND STATUTORY DISCLOSURESThe Board of Directors, at its meeting held on April 28, 2011, has given its consent to create, offer, issue andallot listed, rated, secured, redeemable, non-convertible debentures, in one or more tranches, of varying facevalue aggregating to a maximum of Rs. 10,000 million including an option to retain over subscription forissuance of additional non-convertible debentures aggregating to a maximum of Rs. 10,000 million, on a privateplacement basis or to the public.Eligibility to come out with the IssueOur Company, persons in control of our Company and/or our Promoter have not been restrained, prohibited ordebarred by SEBI from accessing the securities market or dealing in securities and no such order or direction isin force. Further, no member of our promoter group has been prohibited or debarred by SEBI from accessing thesecurities market or dealing in securities due to fraud.ConsentsConsents in writing of: (a) the Directors, the Compliance Officer, Bankers to the Company, Bankers to theIssue; and (b) Lead Managers, Co-Lead Managers, Lead Brokers, Registrar to the Issue, Advisors to the Issue,Legal Advisors to the Issue, Credit Rating Agency and the Debenture Trustee to act in their respectivecapacities, have been obtained and shall be filed along with a copy of the Prospectus with the Registrar ofCompanies.IL&FS Trust Company Limited has given its consent for appointment as Debenture Trustee under regulation4(4) of the SEBI Debt Regulations.The consent of the Statutory Auditors of our Company, namely S. R. Batliboi & Associates for (a) inclusion oftheir names as the Statutory Auditors, (b) examination report on Reformatted Statements and (c) the statementsof tax benefits in the form and context in which they appear in this Prospectus, have been obtained and the samewill be filed along with a copy of this Prospectus with the RoC.As provided in ―Terms of the Issue - Security‖ on page 153, the Company is going to provide a first rankingpari passu charge over all of the current assets, book debts, receivables (both present and future) and such otherassets of the Company other than the assets that have been exclusively charged by the Company to the extent of1.1 times of the amounts outstanding in respect of the Bonds at any time. As per Regulation 17(2) read withSchedule I of the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, the Company is required toobtain permissions / consents from the prior creditors in favour of the debenture trustee for creation of such paripassu charge. The Company has obtained such permissions / consents from the prior lenders who have paripassu charge.Expert OpinionExcept the report of CARE and Brickwork in respect of credit rating of this Issue, furnishing rationale for itsrating, the Company has not obtained any expert opinions.Common form of TransferOur Company undertakes that there shall be a common form of transfer for the Bonds held in physical form andthe provisions of the Companies Act and all applicable laws shall be duly complied with in respect of all transferof the Bonds and registration thereof.Minimum SubscriptionIf our Company does not receive the minimum subscription of 75% of the base amount of the Issue, being Rs.3,000 million, on or before the closure of the Issue, the entire subscription amount shall be refunded to theapplicants within 15 days from the date of closure of the Issue. If there is a delay in the refund of thesubscription amount by more than eight days after our Company becomes liable to pay the same, our Companywill pay interest for the period of delay, at rates prescribed under sub-section (2) and (2A) of Section 73 of the136

Companies Act.Previous Public or Rights Issues by our Company during last five yearsOur Company has not undertaken any public or rights Issue during the last five years.Commission or Brokerage on Previous Public IssuesOur Company paid an aggregate amount of Rs. 1.8 million on account of fees for management, underwritingand selling commission, and out of pocket expenses in relation to its public offer of equity shares undertaken in1995.Particulars in regard to the Company, and other listed companies under the same management within themeaning of Section 370 (1B), which made any capital issue during the last three yearsNone of the companies under the same management with our Company, within the meaning of section 370(1B)of the Companies Act, have made any capital issue during the last three years.Change in auditors of our Company during the last three yearsOur Company has not changed its Statutory Auditors during the last three years.Revaluation of assetsOur Company has not revalued its assets in the last five years.Utilisation of ProceedsOur Board of Directors certifies that:(i)(ii)(iii)(iv)(v)All monies received out of the Issue of the Bonds to the public shall be transferred to a separate bankaccount other than the bank account referred to in sub-section (3) of section 73 of the Companies Act;Details of all monies utilised out of the Issue referred to in sub-item (i) shall be disclosed under anappropriate separate head in our balance sheet indicating the purpose for which such monies wereutilised; andDetails of all unutilised monies out of the Issue referred to in sub-item (i), if any, shall be disclosedunder an appropriate separate head in our balance sheet indicating the form in which such unutilisedmonies have been invested.We shall utilize the Issue proceeds only upon execution of documents for creation of security as statedin this Prospectus in the section titled ―Terms of the Issue - Security‖ and on receipt of the minimumsubscription of 75% of the base amount of the Issue, being Rs. 3,000 million.The Issue proceeds shall not be utilized towards full or part consideration for the purchase or any otheracquisition, inter alia by way of a lease, of any property.The funds raised by us from previous bonds issues have been utilised for our business as stated in the respectiveoffer documents.Disclaimer clause of BSEBOMBAY STOCK EXCHANGE (“THE EXCHANGE”) HAS GIVEN VIDE ITS LETTER DATEDAUGUST 3, 2011, PERMISSION TO THIS COMPANY TO USE THE EXCHANGE‟S NAME IN THISOFFER DOCUMENT AS ONE OF THE STOCK EXCHANGES ON WHICH THIS COMPANY‟SSECURITIES ARE PROPOSED TO BE LISTED. THE EXCHANGE HAS SCRUTINUZED THISOFFER DOCUMENT FOR ITS LIMITED INTERNAL PURPOSE OF DECIDING ON THE MATTEROF GRANTINIG THE AFORESAID PERMISSION TO THIS COMPANY. THE EXCHANGE DOES137

NOT IN ANY MANNER:(I)(II)(III)WARRANT, CERTIFY OR ENDORSE THE CORRECTNESS OR COMPLETENESS OF ANYOF THE CONTENTS OF THIS OFFER DOCUMENT; ORWARRANT THAT THIS COMPANY‟S SECURITIES WILL BE LISTED AND WILLCONTINUE TO BE LISTED ON THE EXCHANGE; ORTAKE ANY RESPONSIBILITY FOR THE FINANCIAL OR OTHER SOUNDNESS OF THISCOMPANY, ITS PROMOTERS, ITS MANAGEMENT OR ANY SCHEME OR PROJECT OFTHIS COMPANY,AND IT SHOULD NOT FOR ANY REASON BE DEEMED OR CONSTRUED THAT THIS OFFERDOCUMENT HAS BEEN CLEARED OR APPROVED BY THE EXCHANGE. EVERY PERSON WHODESIRES TO APPLY FOR OF OTHERWISE ACQUIRES ANY SECURITIES OF THIS COMPANYMAY DO SO PURSUANT TO INDEPENDENT INQUIRY, INVESTIGATION AND ANALYSIS ANDSHALL NOT HAVE ANY CLAIM AGAINST THE EXCHANGE WHATSOEVER BY REASON OFANY LOSS WHICH MAY BE SUFFERED BY SUCH PERSON CONSEQUENT TO OR INCONNECTION WITH SUCH SUBSCRIPTION/ACQUISITION WHETHER BY REASON OFANYTHING STATED OR OMITTED TO BE STATED HEREIN OF FOR ANY OTHER REASONWHATSOEVER”A copy of this Prospectus has been submitted with BSE.Disclaimer clause of RBITHE COMPANY IS HAVING A VALID CERTIFICATE OF REGISTRATION DATED MARCH 30,2001 ISSUED BY THE RESERVE BANK OF INDIA UNDER SECTION 45I-A OF THE RESERVEBANK OF INDIA ACT, 1934. HOWEVER, THE RESERVE BANK OF INDIA DOES NOT ACCEPTANY RESPONSIBILITY OR GUARANTEE ABOUT THE PRESENT POSITION AS TO FINANCIALSOUNDNESS OF THE COMPANY OR CORRECTNESS OF ANY OF THE STATEMENTS ORREPRESENTATIONS MADE OR OPINIONS EXPRESSED BY THE COMPANY AND FORREPAYMENT OF DEPOSITS / DISCHARGE OF LIABILITIES BY THE COMPANY.ListingThe Bonds will be listed on BSE.If the permissions to deal in and for an official quotation of the Bonds are not granted by the BSE, we shallforthwith repay, without interest, all such monies received from the Applicants in pursuance of this Prospectus.If such money is not repaid within eight days after we becomes liable to repay it (i.e. from the date of refusal orwithin seven days from the Issue Closing Date, whichever is earlier), then our Company and every Director ofour Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay themoney, with interest at the rate of 15% p.a. on application money, as prescribed under Section 73 of theCompanies Act.Our Company shall ensure that all steps for the completion of the necessary formalities for listing andcommencement of trading at the BSE mentioned above are taken within seven Working Days from the date ofAllotment.DividendThe following table sets forth certain details regarding the dividend paid by our Company on the Equity Sharesfor Fiscal 2011, 2010 and 2009:(In Rs. million, except per share data)Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009Face value of Equity Shares (Rs. per share) 2 10 (Face value ason March 31,2010)10138

Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009Interim dividend on Equity Shares (Rs. per share) - - 2.00Final dividend of Equity Shares (Rs. per share) 0.60 0.50 (each Equity0.50Share was subdividedin May2010 to Rs. 2 eachand dividend wascomputed @25%on sub-dividedEquity Share)Total dividend on Equity Shares500.24 (not paid165.89 43.14yet)Dividend tax (gross) NA 27.21 8.13Mechanism for redressal of investor grievancesLink Intime India Private Limited has been appointed as the Registrar to the Issue to ensure that investorgrievances are handled expeditiously and satisfactorily and to effectively deal with investor complaints. TheMoU between the Registrar to the Issue and the Company will provide for retention of records with theRegistrar to the Issue for a period of at least three years from the last date of despatch of the letters of allotment,demat credit and refund orders to enable the investors to approach the Registrar to the Issue for redressal of theirgrievances. All grievances relating to the Issue should be addressed to the Registrar to the Issue giving fulldetails of the Applicant, number of Bonds applied for, amount paid on application and the bank branch orcollection centre where the application was submitted etc.139

THE ISSUE STRUCTUREThe Board of Directors, at its meeting held on April 28, 2011 approved the issue of the Bonds.The following are the key common terms of the Bonds to be issued under the terms of this Prospectus. Thissection should be read in conjunction with, and is qualified in its entirety by, more detailed information in thesection entitled ―Terms of the Issue‖ on page 144.COMMON TERMS FOR ALL SERIES OF THE BONDSIssuerIssue of BondsStatus and RankingEligible InvestorsManappuram Finance LimitedPublic issue of bonds in the nature of secured, redeemable, non-convertibledebentures of face value of Rs. 1,000 each aggregating to Rs. 4,000 millionwith an option to retain over subscription upto Rs. 3,500 million,aggregating to Rs. 7,500 million. The Bonds shall be issued at par on theterms contained in this Prospectus.The Bonds constitute direct and secured obligations of our Company andshall rank pari passu and without any preference or priority amongthemselves. Subject to any obligations preferred by mandatory provisionsof the law prevailing from time to time, the Bonds shall also, as regardsprincipal, all interest, redemption premium (as applicable) and all othermonies secured in respect of Bonds, rank pari passu with all other presentdirect and secured lenders of our Company holding pari passu charge overthe Security, if any, such that a security cover of 1.10 times is maintaineduntil the Maturity Date.Category I• Public financial institutions, statutory corporations, commercial banks,co-operative banks and regional rural banks, which are authorised toinvest in the Bonds;• Provident funds, pension funds, superannuation funds and gratuityfund, which are authorised to invest in the Bonds;• Venture capital funds registered with SEBI;• Insurance companies registered with the IRDA;• National Investment Fund;• Mutual funds;Category II• Companies; bodies corporate and societies registered under theapplicable laws in India and authorised to invest in the Bonds;• Public/private charitable/religious trusts which are authorised to investin the Bonds;• Scientific and/or industrial research organisations, which are authorisedto invest in the Bonds;• Partnership firms in the name of the partners; and• Limited liability partnerships formed and registered under theprovisions of the Limited Liability Partnership Act, 2008.Category III*The following persons/entities• Resident Indian individuals; and• Hindu undivided families through the Karta.140

Minimum ApplicationRatingSecuritySecurity CoverListingDebenture TrusteeDepositoriesRegistrarTerms of PaymentIssuanceTradingMarket Lot / Trading LotFive Bonds (Rs. 5,000) and in multiples of one Bond thereafter.The minimum number of Bonds per Application Form will be calculated onthe basis of total number of Bonds applied for under each such ApplicationForm and not on the basis of number of Bonds applied for in each Series ofBonds.„CARE AA-‟ from CARE“BWR AA-” from BrickworkThe principal amount of the Bonds, interest and other monies payable byour Company in respect of the Bonds shall be secured by mortgage of theimmovable property of our Company as identified in the Debenture TrustDeed and a charge in favour of the Debenture Trustee, on all current assets,book debts, receivables (both present and future) as fully described in theDebenture Trust Deed, except those receivables specifically exclusivelycharged, on a first ranking pari passu basis with all other lenders to ourCompany holding pari passu charge over the security such that a securitycover of 1.10 times is maintained until Maturity Date, more particularly asdetailed in the section entitled ―Terms of the Issue – Security‖ on page 153.1.10 times the outstanding Bonds at any point of time.BSEIL&FS Trust Company LimitedNSDL and CDSLLink Intime India Private LimitedFull amount on applicationDematerialized formDematerialized formOne BondIssue Opening Date August 18, 2011Issue Closing Date September 5, 2011Pay-in DateDeemed Date of AllotmentLead ManagersCo-Lead ManagersGoverning LawThe Issue shall remain open for subscription during banking hours for theperiod indicated above, except that the Issue may close on such earlier dateas may be decided by the Board subject to necessary approvals. In the eventof an early closure of the Issue, our Company shall ensure that notice of thesame is provided to the prospective investors through newspaperadvertisements on the day of such earlier date of Issue closureThree (3) days from the date of receipt of application or the date ofrealisation of the cheques/demand drafts, whichever is later.The Deemed Date of Allotment shall be the date as may be determined bythe Board of our Company and notified to the BSE. The actual allotmentmay occur on a date other than the Deemed Date of Allotment.Morgan Stanley India Company Private Limited, A.K. Capital ServicesLimited, Axis Bank Limited and ICICI Securities LimitedRR Investors Capital Services (P) Limited, Karvy Investor ServicesLimited and SMC Capitals LimitedIndian LawEvents of Default See Condition Clause 15 of ―Terms of the Issue‖ beginning on page 153Risk FactorsSee ―Risk Factors‖ beginning on page 11 for a discussion of risks youshould consider before investing in the Bonds141

Use of Proceeds See ―Objects of the Issue‖ beginning on page 76* With respect to applications received from Category III Applicants, applications by Applicants who apply forBonds aggregating to a value not more than Rs. 5 Lacs, across all Series of Bonds, shall be grouped together,(“Reserved Individual Portion”) while applications by applicants who apply for NCDs aggregating to a valueexceeding Rs. 5 Lacs, across all Series of Bonds, (Option I and/or Option II), shall be separately groupedtogether, (“Unreserved Individual Portion”).Participation by any of the above-mentioned investor classes in this Issue will be subject to applicablestatutory and/or regulatory requirements. Applicants are advised to ensure that applications made bythem do not exceed the investment limits or maximum number of Bonds that can be held by them underapplicable statutory and/or regulatory provisions.In case of Application Form being submitted in joint names, the applicants should ensure that the de-mataccount is also held in the same joint names, and the names are in the same sequence in which they appear in theApplication Form.Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatorypermissions/consents/approvals in connection with applying for, subscribing to, or seeking allotment ofBonds pursuant to the Issue.For further details, please see ―Procedure for Application‖ on page 159SPECIFIC TERMS FOR EACH SERIES OF BONDSFrequency of InterestpaymentSeries I IINASemi-annuallyFace Value per Bond Rs. 1,000 Rs. 1,000Issue Price per Bond Rs. 1,000 Rs. 1,000Mode of Interest Payment NA Through various modes available*Interest Rate**1) For Bondholders inCategory I2) For Bondholders inCategory II3) For Bondholders inCategory IIIMaturity DateMaturity Amount per BondYield on Maturity1) For Bondholders inCategory I2) For Bondholders inCategory II3) For Bondholders inCategory IIINANANA400 days from the Deemed Date ofAllotmentRs. 1,132.25*** for Bondholders inall categories (Face Value of theBonds plus redemption premium)12% p.a.12% p.a.12.2% p.a.24 months from the Deemed Date ofAllotmentFace Value of the Bonds plus anyinterest that may have accrued12% p.a. 12.34% p.a.12% p.a. 12.34% p.a.12% p.a. 12.56% p.a.142

* For various modes of interest payment, please refer to the section entitled “Terms of the Issue – Mannerand Mode of Payment” on page 151.** As per the “Issue Procedure - Basis of Allotment” on page 167 of this Prospectus, in the event Bonds areallocated to any Portion beyond the reservation for such category, the interest on such Bonds will be as perrate specified for such applicants.***Rounded to the nearest decimal place.143

TERMS OF THE ISSUEThe terms and conditions of Bonds being offered will be incorporated into the Debenture Trust Deed and aresubject to the provisions of the Companies Act, the Application Form and other terms and conditions as may beincorporated in the Debenture Trust Deed, Letter(s) of Allotment and/or Consolidated Bond certificate(s). Inaddition, the Issue of Bonds shall be subject to laws as applicable from time to time, including guidelines, rules,regulations, notifications and any statutory modifications or re-enactments relating to the issue of capital andlisting of securities, or in relation to our Company, issued from time to time by SEBI, RBI, GOI, BSE and/orother authorities (collectively, the ―Applicable Laws‖) and other documents that may be executed in respect ofthe Bonds. The statements in these terms and conditions include summaries of and are subject to the detailedprovisions of the Debenture Trust Deed.The Series I Bonds and the Series II Bonds, (together with the Series I Bonds referred to as the “Bonds”) areconstituted by a debenture trust deed (the “Debenture Trust Deed”) to be entered into between our Companyand IL&FS Trust Company Limited (in its capacity as the “Debenture Trustee”, which expression shall includeits successor(s) as trustee for the holders of the Bonds (the “Bondholders”). Link Intime India Private Limitedhas been appointed as the registrar to the issue (the “Registrar” or “Registrar to the Issue”) pursuant to theMoU entered between the Company and the Registrar to the Issue.Words and expressions defined in the Debenture Trust Deed and the Tripartite Agreements (defined below)shall have the same meanings where used in these terms and conditions unless the context otherwise requires orunless otherwise stated.Any reference to “Bondholders” or “holders” in relation to any Bond held in dematerialized form shall mean thepersons whose name appears on the beneficial owners list as provided by the Depository and in relation to anyBond in physical form, such holder of the Bond (whose interest shall be as set out in a Consolidated BondsCertificate (as defined below) whose name is appearing in the Register of Bondholders (as defined below). TheDebenture Trustee acts for the benefit of the Bondholders in accordance with the provisions of the DebentureTrust Deed.1. Authority for the IssueThe Board of Directors, at its meeting held on April 28, 2011, has given its consent to create, offer,issue and allot listed, rated, secured, redeemable, non-convertible debentures, in one or more tranches,of varying face value aggregating to a maximum of Rs. 10,000 million including an option to retainover subscription for issuance of additional non-convertible debentures aggregating to a maximum ofRs. 10,000 million, on a private placement basis or to the public.2. Issue, Status of Bonds2.1 The Bonds are constituted, issued and secured pursuant to a Debenture Trust Deed. The Bondholdersare entitled to the benefit of the Debenture Trust Deed and are bound by and are deemed to have noticeof all the provisions of the Debenture Trust Deed.2.2 The Bonds are issued in the form of secured, redeemable, non convertible debentures. The Bondsconstitute direct and secured obligations of our Company and shall rank pari passu inter se and withoutany preference or priority among themselves. Subject to any obligations preferred by mandatoryprovisions of the law prevailing from time to time, the Bonds shall also, as regards the principalamount of the Bonds, interest and all other monies secured in respect of the Bonds, rank pari passuwith all other present and future debenture holders of our Company, who hold pari passu charge overthe Security. The security described in the section entitled ―Terms of the Issue - Security‖ on page 153shall be pari passu with all the present and future borrowings of our Company from various lenders(although such lenders do not have the benefit of any security over immovable property) which have apari passu charge over the Security. The claims of the Bondholders shall be superior to the claims ofthe unsecured creditors of our Company (subject to any obligations preferred by mandatory provisionsof the applicable law prevailing from time to time).144

3. Form, Face Value, Title and Listing etc3.1 Form3.1.1 The allotment of the Bonds shall only be in a dematerialized form (i.e., not in the form of physicalcertificates but fungible and represented by the statement issued through the electronic mode). OurCompany has made depository arrangements with National Securities Depository Limited (“NSDL”)and Central Depository Services (India) Limited (“CDSL”, and together with NSDL, the“Depositories”) for issue of the Bonds in a dematerialized form pursuant to the tripartite agreementbetween:(i)our Company, NSDL and the Registrar dated August 4, 2011; and(ii) our Company, CDSL and the Registrar dated August 4, 2011.(together the “Tripartite Agreements”)Our Company shall take necessary steps to credit the Depository Participant account of the Applicantswith the number of Bonds allotted. Subject to section 3.1.2 below, the Bondholders will hold the Bondsin dematerialised form and deal with the Bonds in accordance with the provisions of the DepositoriesAct and/or rules as notified by the Depositories from time to time.3.1.2 The Bondholders may rematerialize the Bonds at any time after allotment, in accordance with theprovisions of the Depositories Act and/or rules as notified by the Depositories from time to time.3.1.3 In case of Bonds that are rematerialized and held in physical form, our Company will issue onecertificate to the Bondholder for the aggregate amount of the Bonds that are rematerialized and held bysuch Bondholder (each such certificate a “Consolidated Bond Certificate”). In respect of theConsolidated Bond Certificate(s), our Company will, upon receipt of a request from the Bondholderwithin 30 days of such request, split such Consolidated Bond Certificate(s) into smaller denominationsin accordance with the Articles of Association, subject to a minimum denomination of one Bond. Nofees will be charged for splitting any Consolidated Bond Certificate(s) but, stamp duty, if payable, willbe paid by the Bondholder. The request to split a Consolidated Bond Certificate shall be accompaniedby the original Consolidated Bond Certificate which will, upon issuance of the split Consolidated BondCertificates(s), be cancelled by our Company.3.2 Face Value3.3 TitleThe face value of each Bond is Rs. 1,0003.3.1 In case of:(i)(ii)Bonds held in the dematerialized form, the person for the time being appearing in the registerof beneficial owners maintained by the Depository; andthe Bond held in physical form, the person for the time being appearing in the Register ofBondholders (as defined below) as Bondholder,shall be treated for all purposes by our Company, the Debenture Trustee, the Depositories and all otherpersons dealing with such person as the holder thereof and its absolute owner for all purposes whetheror not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writingon, theft or loss of the Consolidated Bond Certificate issued in respect of the Bonds and no person willbe liable for so treating the Bondholder.3.3.2 No transfer of title of a Bond will be valid unless and until entered on the Register of Bondholders orthe register of beneficial owners maintained by the Depository prior to the Record Date. In the absenceof transfer being registered, interest and/or Maturity Amount, as the case may be, will be paid to the145

3.4 Listingperson, whose name appears first in the Register of Bondholders maintained by the Depositories and/orour Company and/or the Registrar, as the case may be. In such cases, claims, if any, by the purchasersof the Bonds will need to be settled with the seller of the Bonds and not with our Company or theRegistrar. The provisions relating to transfer and transmission and other related matters in respect of ourCompany‟s shares contained in the Articles of Association of our Company and the Companies Actshall apply, mutatis mutandis (to the extent applicable) to the Bond(s) as well.The Bonds will be listed on the Bombay Stock Exchange Limited (the “BSE”).3.5 Market Lot3.5.1 In accordance with Section 68B of the Companies Act, the Bonds shall be allotted only indematerialised form. As per the SEBI Debt Regulations, the trading of the Bonds on the StockExchange shall be in dematerialised form only in multiples of one Bond (“Market Lot”).3.5.2 For details of allotment refer to chapter entitled ―Procedure for Application‖ beginning on page 159.3.6 Procedure for Rematerialisation of BondsAllotment of Bonds will be in dematerialized form only. However, Bondholders who wish to hold theBonds in physical form may do so by submitting his or her request to his or her Depository Participantin accordance with the applicable procedure stipulated by the Depository Participant.4. Transfer of the Bonds, Issue of Consolidated Bond Certificates etc4.1 Register of BondholdersOur Company shall maintain at its registered office or such other place as permitted by law a register ofBondholders (the “Register of Bondholders”) containing such particulars as required by Section 152of the Companies Act. In terms of Section 152A of the Companies Act, the Register of Bondholdersmaintained by a Depository for any Bond in dematerialized form under Section 11 of the DepositoriesAct shall be deemed to be a Register of Bondholders for this purpose.4.2 Transfers4.2.1 Transfer of Bonds held in dematerialized form:In respect of Bonds held in the dematerialized form, transfers of the Bonds may be effected onlythrough the Depository(ies) where such Bonds are held, in accordance with the provisions of theDepositories Act, and/or rules as notified by the Depositories from time to time. The Bondholder shallgive delivery instructions containing details of the prospective purchaser‟s Depository Participant‟saccount to his Depository Participant. If a prospective purchaser does not have a Depository Participantaccount, the Bondholder may rematerialize his or her Bonds and transfer them in a manner as specifiedin section 4.2.2 below.4.2.2. Transfer of Bonds in physical form:The Bonds may be transferred by way of a duly completed, stamped and executed transfer deed orother suitable instrument of transfer as may be prescribed by our Company for the registration oftransfer of Bonds. Purchasers of Bonds are advised to send the Consolidated Bond Certificate to ourCompany or to such persons as may be notified by our Company from time to time. In accordance withArticle 77 of the Articles of Association, no fee shall be charged by our Company for the transfer of theBonds. If a purchaser of the Bonds in physical form intends to hold the Bonds in dematerialized form,the Bonds may be dematerialized by the purchaser through his or her Depository Participant inaccordance with the provisions of the Depositories Act and/or rules as notified by the Depositoriesfrom time to time.146

4.3 Formalities Free of ChargeRegistration of a transfer of Bonds and issuance of new Consolidated Bond Certificates will be effectedwithout charge by or on behalf of our Company, but upon payment (or the giving of such indemnity asour Company may require) in respect of any tax or other governmental charges which may be imposedin relation to such transfer, and our Company being satisfied that the regulations concerning transfersof Bonds have been complied with.5. Debenture Redemption Reserve (“DRR”)Section 117C of the Companies Act requires any company that intends to issue debentures to create aDRR to which adequate amounts shall be credited out of the profits of our Company till the redemptionof the debentures. However, the Ministry of Company Affairs (the “MCA”) has, through its circulardated April 18, 2002, specified that NBFCs which are registered with the RBI under Section 45-IA ofthe RBI Act, 1934 shall create DRR to the extent of 50 percent of the value of the debentures issuedthrough public issue. Accordingly, our Company shall create DRR of 50 per cent of the value of Bondsissued and allotted in terms of this Prospectus, for the redemption of the Bonds. As further clarified bythe circular, the amount to be credited as DRR will be carved out of profit of the Company only if thereis profit for the particular year and there is no obligation on the part of the Company to create DRR ifthere is no profit for the particular year. Our Company shall credit adequate amounts to DRR from itsprofits every year until the Bonds are redeemed. The amounts credited to the DRR shall not be utilizedby our Company for any purpose other than for the redemption of the Bonds.6. Deemed Date of AllotmentThe Deemed Date of Allotment shall be the date as may be determined by the Board of our Companyand notified to the BSE. All benefits under the Bonds including payment of interest will accrue to theBondholders from the Deemed Date of Allotment. The actual allotment may occur on a date other thanthe Deemed Date of Allotment.7. Subscription7.1 Period of SubscriptionThe Issue shall remain open for:Issue Opens on August 18, 2011Issue Closes on September 5, 2011The Issue shall remain open for subscription during banking hours for the period indicated above,except that the Issue may close on such earlier date as may be decided by the Board subject tonecessary approvals. In the event of an early closure, our Company shall ensure that notice of the sameis provided to the prospective investors through newspaper advertisements on the day of such earlierdate of Issue closure.7.2 UnderwritingThe Issue is not being underwritten.7.3 Minimum SubscriptionUnder the SEBI Debt Regulations, our Company is required to stipulate a minimum subscriptionamount which it seeks to raise. The consequence of minimum subscription amount not being raised isthat the Issue shall not proceed and the application monies received are refunded to the Applicants.147

Accordingly, our Company has decided to set the minimum subscription for the issue at 75% of thebase amount of the Issue, being Rs. 3,000 million. If our Company does not receive the minimumsubscription of 75% of the base amount of the Issue on or before the closure of the Issue, the entiresubscription amount shall be refunded to the applicants within 15 days from the date of closure of theIssue. If there is a delay in the refund of the subscription amount by more than eight days after ourCompany becomes liable to pay the same, the Bank will pay interest for the period of delay at ratesprescribed under sub-section (2) and (2A) of Section 73 of the Companies Act.8. Utilization of the proceeds(a)(b)(c)(d)(e)All monies received pursuant to the Issue of Bonds to public shall be transferred to a separatebank account other than the bank account referred to in sub-section (3) of section 73 of theAct.Details of all monies utilised out of Issue referred to in sub-item (a) shall be disclosed underan appropriate separate head in our Balance Sheet indicating the purpose for which suchmonies had been utilised; andDetails of all unutilised monies out of issue of Bonds, if any, referred to in sub-item (a) shallbe disclosed under an appropriate separate head in our Balance Sheet indicating the form inwhich such unutilised monies have been invested.We shall utilize the Issue proceeds only upon execution of the documents for creation ofsecurity as stated in this Prospectus and on receipt of the minimum subscription of 75% of thebase amount of the Issue, being Rs. 3,000 million.The Issue proceeds shall not be utilized towards full or part consideration for the purchase orany other acquisition, inter alia by way of a lease, of any property.9. Interest9.1 Interest Rate9.1.1 The Series I Bonds shall not bear any interest. The Series II Bonds shall bear interest from (andincluding) the Deemed Date of Allotment at a fixed rate of 12% per annum for Category I andCategory II Bondholders and 12.2% per annum for Category III Bondholders.9.2 Calculation of InterestSeries II Bond9.1.2 Interest on the Series II Bonds at the rate mentioned above will be paid semi-annually from theDeemed Date of Allotment.9.1.3 For the first six month period, the interest shall be calculated from the Deemed Date of Allotment tothe last day of the six month period, both days inclusive.9.1.4 For the subsequent six month periods (except the six month period in which the Maturity Date falls),the interest shall be calculated from the first to the last day of the six month period, both days inclusive.9.1.5 For the six month period in which the Maturity Date falls, the interest shall be calculated from the firstday of the six month period to one day prior to the Maturity Date, both days inclusive.9.1.6 If default is made in any payment of any interest in respect of the Bonds or any of them when due andsuch failure continues for a period of 90 days, our Company shall be liable to pay additional interest at2% per annum over and above the rate payable from the Interest Payment Date.9.3 Day Count Convention148

Interest shall be computed on a 365 days-a-year basis on the principal outstanding on the Bonds.However, where the interest period (start date to end date) includes February 29, interest shall becomputed on 366 days-a-year basis, on the principal outstanding on the Bonds.9.4 Accrual of InterestEach Bond shall cease to bear interest from the Maturity Date along with the accrued interest thereonunless, upon due presentation thereof, payment of principal is improperly withheld or refused, in whichevent interest will continue to accrue as provided in this section 9.9.5 Interest on Application and Refund Money9.5.1 Application InterestInterest on Application money on the amount allotted, subject to deduction of income tax under theprovisions of the Income tax act, 1961, will be paid separately by the Company @ 7% p.a. for allcategories of Applicants for all Series of Bonds, to Allottees and the same should not be deducted fromthe amount on application. The interest shall be payable from the Pay-In Date, and shall be payableuntil one day prior to the Deemed Date of Allotment.9.5.2 Refund InterestInterest on any refund of subscription amount paid by an Applicant, subject to deduction of income taxunder the provisions of the Income tax act, 1961, will be paid separately by the Company @ 3% p.a. onthe amount refunded to Allottees and Non-allottees (“Refund Interest”). The Refund Interest shall bepaid along with the refund of application money whether in case of total refund to Non-allotees or partialrefund to Allotees, as the case maybe. The interest shall be payable from the Pay-In Date, and shall bepayable until one day prior to the Deemed Date of Allotment.10. Redemption10.1 Unless previously redeemed as provided under the Debenture Trust Deed, our Company shall redeemthe Bonds on the Maturity Date.10.2 Procedure for Redemption by BondholdersThe procedure for redemption is set out below:10.2.1 Bonds held in electronic form:No action is required on the part of Bondholders at the time of maturity of the Bonds.10.2.2 Bonds held in physical form:No action will ordinarily be required on the part of the Bondholder at the time of redemption and theMaturity Amount will be paid to those Bondholders whose names appear in the Register of Bondholdersmaintained by our Company on the Record Date fixed for the purpose of redemption. However, ourCompany may require that the Consolidated Bond Certificate(s), duly discharged by the sole holder orall the joint-holders (signed on the reverse of the Consolidated Bond Certificate(s)) to be surrenderedfor redemption on Maturity Date and shall be sent by the Bondholders by registered post withacknowledgment due or by hand delivery to the Registrar or Company or to such persons at suchaddresses as may be notified by our Company from time to time. Bondholders may be requested tosurrender the Consolidated Bond Certificate(s) in the manner as stated above, not more than threemonths and not less than one month prior to the Maturity Date so as to facilitate timely payment.10.3 Loan against BondsOur Company, at its sole discretion, subject to applicable statutory and/or regulatory requirements, mayconsider granting of a loan facility to the holders of Bonds against the security of such Bonds. Such149

loans shall be subject to the terms and conditions as may be decided by our Company from time totime.10.4 Buyback of BondsOur Company may, from time to time, subject to Applicable Laws and necessary approvals, buybackthe bonds on terms and conditions to be decided by our Company.11. Payments11.1 Payment of InterestPayment of interest on the Bonds will be made to those Bondholders of the Bonds, whose nameappears first in the Register of Bondholders maintained by the Depositories and/or our Company and/orthe Registrar, as the case may be as, on the Record Date.11.2 Record DateThe record date for the payment of interest or the Maturity Amount shall be 3 Working Days prior tothe date on which such amount is due and payable (“Record Date”).11.3 Effect of holidays on paymentsIf the date of payment of interest or principal or any date specified does not fall on a Working Day,then the succeeding Working Day will be considered as the effective date. Interest and principal orother amounts, if any, will be paid on the succeeding Working Day. Payment of interest will be subjectto the deduction of tax as per Income Tax Act or any statutory modification or re-enactment thereof forthe time being in force. In case the Maturity Date falls on a holiday, the payment will be made on thenext Working Day, without any interest for the period overdue. Such payment of interest or principalon the next Working Day shall not constitute non-payment on the Interest Payment Date or theMaturity Date.11.4 Payment on MaturityThe manner of payment on Maturity is set out below:-11.4.1 Bonds held in electronic form:On the Maturity Date, the Maturity Amount will be paid in a manner as detailed in the section entitled“Manner and Mode of Payment” below. These payments will be as per the Depositories‟ records on theRecord Date fixed for this purpose. No action is required on the part of Bondholders.11.4.2 Bonds held in physical form:Payments with respect to maturity of Bonds will be made by way of cheques or pay orders orelectronically. However, if our Company so requires, payments on maturity may be made on surrenderof the Consolidated Bond Certificate(s). Dispatch of cheques or pay orders in respect of payments withrespect to redemptions will be made on the Maturity Date (if so requested by our Company in thisregard) within a period of 30 days from the date of receipt of the duly discharged Consolidated BondCertificate.11.5 Our Company‟s liability to the Bondholders including for payment or otherwise shall standextinguished from the Maturity Date or upon dispatch of the Maturity Amounts to the Bondholders.Further, our Company will not be liable to pay any interest, income or compensation of any kind fromthe Maturity Date.11.6 Applicable LawsAll payments are subject in all cases to any applicable laws and regulations, but without prejudice to150

the provisions of Condition 11.3. No commissions or expenses shall be charged to the Bondholders inrespect of such payments.12. Manner and Mode of Payment12.1 Manner of Payment:All payments to be made by our Company to the Bondholders shall be made in any of the followingmanners:12.1.1 For Bonds applied or held in electronic form:The bank details will be obtained from the Depositories for payments. Investors who have applied orwho are holding the Bond in electronic form, are advised to immediately update their bank accountdetails as appearing on the records of Depository Participant. Please note that failure to do so couldresult in delays in credit of the payments to investors at their sole risk and neither the Lead Managersnor the Co-Lead Managers or our Company shall have any responsibility and undertake any liabilityfor such delays on part of the investors.12.1.2 For Bonds held in physical form (upon rematerialisation by the holder):The bank details will be obtained from the Registrar for effecting payments.12.2 Mode of Payment:All payments to be made by our Company to the Bondholders shall be made through any of thefollowing modes:12.2.1 Cheques or Demand draftsBy cheques or demand drafts made in the name of the Bondholders whose names appear in the Registerof Bondholders as maintained by our Company and/or as provided by the Depositories. Cheques ordemand drafts in excess of Rs. 1,500, as the case may be, shall be sent by registered/speed post at theBondholder‟s sole risk.12.2.2 National Electronic Clearing System (―NECS‖)Through NECS for Applicants having an account at any of the centers notified by the RBI. This modeof payment will be subject to availability of complete bank account details including the Magnetic InkCharacter Recognition (“MICR”) code as per demographic details derived from Depository recordsbased on DP ID /Client ID appearing in the Application Form.Please note that our Company shall not be responsible for any delay to the Bondholder receiving creditof interest or refund or Maturity Amount so long as our Company has initiated the process in time.12.2.3 Direct Credit12.2.4 NEFTPayment of refunds, interest or principal redemption to Applicants having their bank accounts with theEscrow Collection Bank shall be directly credited to their bank accounts with the Escrow CollectionBank.Payment of refunds, interest or principal redemption shall be undertaken through NEFT wherever theApplicants„ bank has been assigned the IFSC which can be linked to MICR, if any, available to thatparticular bank branch, and where the Applicants have registered their nine-digit MICR number andtheir bank account number while opening and operating the dematerialized account. The IFSC of thatbank branch will be obtained from the RBI„s website as on a date immediately prior to the date ofpayment of refund, and will be duly mapped with the MICR numbers.151

12.2.5 RTGSApplicants having a bank account at any of the centers notified by RBI and whose payment of refunds,interest or principal redemption amounts exceeds Rs. 1 million have the option to receive the dueamounts through RTGS. Such eligible Applicants who indicate their preference to receive payment ofrefunds, interest or principal redemption through RTGS are required to provide the IFSC in theApplication Form. In the event the same is not provided, payment of refunds, interest or principalredemption shall be made through NECS. Charges, if any, levied by the Escrow Collection Bank forthe same would be borne by such Applicant opting for RTGS as a mode of payment of refunds, interestor principal redemption. Charges, if any, levied by the Applicant‟s bank receiving the credit would beborne by the Applicant.12.3 Printing of Bank ParticularsAs a matter of precaution against possible fraudulent encashment of Consolidated Bond Certificatesdue to loss or misplacement, the particulars of the Applicant‟s bank account are mandatorily required tobe provided for printing on the Consolidated Bond Certificate. Applications without these details areliable to be rejected at the sole discretion of our Company. However, in relation to Applications fordematerialised Bonds, these particulars will be taken directly from the Depositories. In case of Bondsheld in physical form, the Bondholders are advised to submit their bank account details with theRegistrar before the Record Date failing which the amounts will be dispatched to the postal address ofthe Bondholders as held in the records of our Company. Bank account particulars will be printed on theConsolidated Bond Certificates which can then be deposited only in the account specified.13. Taxation13.1 The Applicants are advised to consider the tax implications of their respective investment in the Bonds.13.2 No income tax is deductible at source on interest on the Bonds, inter alia, in respect of the following:For Bonds held in dematerialized form:(a)On any security issued by a Company in a dematerialized form and is listed on recognizedstock exchange in India.For Bonds held in physical form (upon rematerialisation by the holder):(b)(c)(d)In case the payment of interest on NCD to resident individual Debenture Holder in theaggregate during the financial year does not exceed Rs. 2,500 provided the NCD are listed ona recognized stock exchange in India and the interest is paid by an account payee cheque.When the Assessing Officer issues a certificate on an application by a Debenture Holder onsatisfaction that the total income of the Debenture Holder justifies no/lower deduction of tax atsource as per the provisions of section 197(1) of the Act and that certificate is filed with theCompany.When the resident Debenture Holder with PAN (not being a Company or a firm or a seniorcitizen) furnishes a declaration in writing in duplicate in the prescribed form (Form 15G) andverified in the prescribed manner to the effect that the tax on his estimated total income of thePY in which such income is to be included in computing his total income will be Nil.13.3 Senior citizens, who are 65 or more years of age at any time during the financial year, , and are holdingthe bonds in physical form, can submit a self-declaration in the prescribed Form 15H for non-deductionof tax at source in accordance with the provisions of section 197A even if the aggregate incomecredited or paid or likely to be credited or paid exceeds the maximum limit for the financial year. Toensure non-deduction/lower deduction of tax at source from interest on Bonds, a resident Bondholder isrequired to submit Form 15G/15H/certificate under section 197 of the Income Tax Act or otherevidence, as may be applicable, with the Application Form, or send to the Registrar along with a copyof the Application Form on or before the closure of the Issue. Subsequently, Form 15G/15H/ originalcertificate issued under section 197 of the Income Tax Act or other evidence, as may be applicable,152

may be submitted to our Company or to such person at such address as may be notified by us from timeto time, quoting the name of the sole or first Bondholder, folio number and the distinctive number(s) ofthe Bond(s) held, at least one month prior to the interest payment date.13.4 Bondholders holding the bonds in physical form, are required to submit Form 15G or 15H or originalcertificate issued under section 197 of the Income Tax Act or other evidence in each financial year toensure non-deduction or lower deduction of tax at source from interest on Bonds.13.5 If the Bondholder is eligible to submit Form 15G or 15H, he or she is required to tick at the relevantplace on the Application Form, to send a blank copy of the form to the Bondholders. Blank declarationform will be furnished to other Bondholders on request made at least two months prior to the interestpayment date. This facility is being provided for the convenience of Bondholders and we will not beliable in any manner, whatsoever, in case the Bondholder does not receive the form.13.6 As per the prevailing tax provisions, Form 15G cannot be submitted if the aggregate of income of thenature referred to in section 197A of the Income Tax Act viz. dividend, interest etc. as prescribedtherein, credited or paid or likely to be credited or paid during the financial year in which such incomeis to be included exceeds the maximum amount which is not chargeable to tax.13.7 Tax exemption certificate or document, if any, must be lodged at the office of the Registrar prior to theRecord Date or as specifically required. Tax applicable on coupon will be deducted at source onaccrual thereof in our Company‟s books and / or on payment thereof, in accordance with the provisionsof the Income Tax Act and / or any other statutory modification, re-enactment or notification as thecase may be. A tax deduction certificate will be issued for the amount of tax so deducted on annualbasis.14. Security14.1 The principal amount of the Bonds to be issued upon the terms contained herein together with allinterest, costs, charges, fees, remuneration of Debenture Trustee and expenses payable in respectthereof (the “Secured Obligations”) shall be secured in favour of the Debenture Trustee in thefollowing manner:14.1.1 by mortgage of the immovable property of our Company as identified in the Debenture Trust Deed; and14.1.2 a charge in favour of the Debenture Trustee, on all current assets, book debts, receivables (both presentand future) as fully described in the Debenture Trust Deed, except those receivables specificallyexclusively charged, on a first ranking pari passu basis with all other lenders to our Company holdingpari passu charge over the security.14.2 Our Company agrees to maintain an asset cover of at least 1.10 times of the outstanding amount ofBonds, at all times, till the Bonds are completely redeemed. In case of reduction of security coverbelow 1.10 times for any reason whatsoever, our Company agrees to make-up the deficiency withequivalent amount of receivables, free from any charge of whatsoever nature, so as to maintain theminimum asset cover of 1.10 times.14.3 Our Company shall ensure that the creation of security as contemplated in this section and all necessaryformalities including execution of relevant security documents in relation to perfection of the securityincluding but not limited to filings to be made with the RoC shall be completed within a period of 90days from the Deemed Date of Allotment of the Bonds.15. Events of Defaults15.1 The Debenture Trustee at its discretion may, or if so requested in writing by the holders of not less than75 per cent. in principal amount of the Bonds then outstanding or if so directed by a Special Resolutionshall (subject to being indemnified and/or secured by the Bondholders to its satisfaction), give notice toour Company specifying that the Bonds and/or any particular Series of Bonds, in whole but not in partare and have become due and repayable on such date as may be specified in such notice inter alia if anyof the events listed in 15.2 below (each an “Event of Default”) occurs.153

15.2 The list given below is an indicative list of events of default and a complete list of event of default andits consequences shall be specified in the Debenture Trust Deed. Events of default shall include but notbe limited to the following:15.2.1 Default is made in any payment of any interest due in respect of the Bonds or any of them and suchfailure continues for a period of 90 days;15.2.2 Our Company does not perform or comply with one or more of its other obligations and undertakingsin relation to the Bonds or the Debenture Trust Deed which default or breach is incapable of remedy or,if in the opinion of the Debenture Trustee capable of remedy, is not remedied within 15 days afterwritten notice of such default or breach shall have been given to our Company by the DebentureTrustee;15.2.3 Our Company is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay (in theopinion of the Debenture Trustee) a material part of its debts, or stops, suspends or threatens to stop orsuspend payment of all or (in the opinion of the Debenture Trustee) a material part of (or of a particulartype of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustmentof all or (in the opinion of the Debenture Trustee) a material part of (or all of a particular type of) itsdebts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes ageneral assignment or an arrangement or composition with or for the benefit of the relevant creditors inrespect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or anypart of (or of a particular type of) the debts of our Company;15.2.4 A distress, attachment, execution or other legal process is levied, enforced or sued out on or against anymaterial part of the property, assets or revenues of our Company and is not discharged or stayed within45 days;15.2.5 An order is made or an effective resolution passed for the winding-up or dissolution, judicialmanagement or administration of our Company, or our Company ceases or threatens to cease to carryon all or substantially all of its business or operations, except for the purpose of and followed by areconstruction, amalgamation, reorganisation, merger or consolidation on terms approved by an SpecialResolution of the Bondholders;15.2.6 An encumbrancer takes possession or an administrative or other receiver or an administrator isappointed of the whole or (in the opinion of the Debenture Trustee) any substantial part of the property,assets or revenues of our Company (as the case may be) and is not discharged within 45 days;15.2.7 Our Company commences a voluntary proceeding under any applicable bankruptcy, insolvency,winding up or other similar law now or hereafter in effect, or consent to the entry of an order for reliefin an involuntary proceeding under any such law, or consent to the appointment or taking possession bya receiver, liquidator, assignee (or similar official) for any or a substantial part of its property or takeany action towards its re-organisation, liquidation or dissolution;15.2.8 It is or will become unlawful for our Company to perform or comply with any one or more of itsobligations under any of the Bonds or the Debenture Trust Deed;15.2.9 Any step is taken by governmental authority or agency or any other competent authority, with a view tothe seizure, compulsory acquisition, expropriation or nationalisation of all or (in the opinion of theDebenture Trustee) a material part of the assets of our Company which is material to our Company;and15.2.10 Any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any ofthe events referred to in any of the foregoing paragraphs.15.3 If any Event of Default or any event which, after the notice, or lapse of time, or both, would constitutean Event of Default has happened, our Company shall, forthwith give notice thereof to the DebentureTrustee in writing specifying the nature of such event of default or of such event.154

15.4 If an Event of Default occurs which is continuing, the Debenture Trustee may with the consent of theBondholders, obtained in accordance with the provisions of the Debenture Trust Deed, and with a priorwritten notice to our Company, enforce the Security in terms of the Debenture Trust Deed.15.5 In case of default in the redemption of Bonds, in addition to the payment of interest and all othermonies payable hereunder on the respective due dates, our Company shall also pay interest on thedefaulted amounts. Arrears of liquidated damages shall carry interest at 2% per annum on the defaultedamount and shall be payable on the footing of compound interest with quarterly rests.16. Bondholder‟s Rights, Nomination Etc.16.1 Bondholder Not a ShareholderThe Bondholders will not be entitled to any of the rights and privileges available to the equity andpreference shareholders of our Company.16.2 Rights of BondholdersSome of the significant rights available to the Bondholders are as follows:(a)(b)(c)(d)(e)(f)The Bonds shall not, except as provided in the Companies Act, confer upon the holdersthereof any rights or privileges available to members of our Company including the right toreceive notices or annual reports of, or to attend and / or vote, at our Company‟s generalmeeting(s). However, if any resolution affecting the rights of the Bondholders is to be placedbefore the shareholders, the said resolution will first be placed before the concerned registeredBondholders for their consideration. In terms of Section 219(2) of the Companies Act, holdersof Bonds shall be entitled to a copy of the balance sheet on a specific request made to ourCompany.The rights, privileges and conditions attached to the Bonds may be varied, modified and / orabrogated with the consent in writing of the holders of at least three-fourths of the outstandingamount of the Bonds or with the sanction of a Special Resolution passed at a meeting of theconcerned Bondholders, provided that nothing in such consent or resolution shall be operativeagainst our Company, where such consent or resolution modifies or varies the terms andconditions governing the Bonds, if modification, variation or abrogation is not acceptable toour Company.The registered Bondholder or in case of joint-holders, the person whose name stands first in theRegister of Bondholders shall be entitled to vote in respect of such Bonds, either by beingpresent in person or, where proxies are permitted, by proxy, at any meeting of the concernedBondholders summoned for such purpose and every such Bondholder shall be entitled to onevote on a show of hands and on a poll, his or her voting rights shall be in proportion to theoutstanding nominal value of Bonds held by him or her on every resolution placed before suchmeeting of the Bondholders.The Bonds are subject to the provisions of the SEBI Debt Regulations, the Act, theMemorandum and Articles of Association of our Company, the terms of this Prospectus, theApplication Forms, the terms and conditions of the Debenture Trust Deed, requirements of theRBI, other applicable statutory and/or regulatory requirements relating to the issue and listing,of securities and any other documents that may be executed in connection with the NCDs.A register of Bondholders will be maintained in accordance with Section 152 of the CompaniesAct and all interest and principal sums becoming due and payable in respect of the Bonds willbe paid to the registered holder thereof for the time being or in the case of joint-holders, to theperson whose name stands first in the Register of Bondholders as on the Record date.Bonds may be rolled over with the consent in writing of the holders of at least three-fourths ofthe outstanding amount of the Bonds or with the sanction of a Special Resolution passed at ameeting of the concerned Bondholders after providing at least 21 days prior notice for such155

oll-over and in accordance with the SEBI Debt Regulations. Our Company shall redeem theBonds of all the Bondholders, who have not given their positive consent to the roll-over.The above rights of Bondholders are merely indicative. The final rights of the Bondholders will be asper the Debenture Trust Deed to be executed by our Company with the Debenture Trustee.Special Resolution for the purpose of this section is a resolution passed at a meeting of Bondholders ofat least three-fourths of the outstanding amount of the Bonds, present and voting.16.3 SuccessionWhere Bonds are held in joint names and one of the joint holders dies, the survivor(s) will berecognized as the Bondholder(s). It will be sufficient for our Company to delete the name of thedeceased Bondholder after obtaining satisfactory evidence of his death. Provided, a third person maycall on our Company to register his name as successor of the deceased Bondholder after obtainingevidence such as probate of a will for the purpose of proving his title to the Bonds. In the event ofdemise of the sole or first holder of the Bonds, our Company will recognize the executors oradministrator of the deceased Bondholders, or the holder of the succession certificate or other legalrepresentative as having title to the Bonds only if such executor or administrator obtains and producesprobate or letter of administration or is the holder of the succession certificate or other legalrepresentation, as the case may be, from an appropriate court in India. The directors of our Companyin their absolute discretion may, in any case, dispense with production of probate or letter ofadministration or succession certificate or other legal representation.Where a non-resident Indian becomes entitled to the Bonds by way of succession, the following stepshave to be complied with:(a)(b)Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that theBonds were acquired by the non-resident Indian as part of the legacy left by the deceasedBondholder.Proof that the non-resident Indian is an Indian national or is of Indian origin.Such holding by a non-resident India will be on a non-repatriation basis.16.4 Nomination Facility to Bondholder16.4.1 In accordance with Section 109A of the Act, the sole Bondholder or first Bondholder, along with otherjoint Bondholders (being individual(s)) may nominate any one person (being an individual) who, in theevent of death of the sole holder or all the joint-holders, as the case may be, shall become entitled to theBond. A person, being a nominee, becoming entitled to the Bond by reason of the death of theBondholders, shall be entitled to the same rights to which he will be entitled if he were the registeredholder of the Bond. Where the nominee is a minor, the Bondholders may make a nomination to appointany person to become entitled to the Bond(s), in the event of his death, during the minority. Anomination shall stand rescinded upon sale of a Bond by the person nominating. A buyer will beentitled to make a fresh nomination in the manner prescribed. When the Bond is held by two or morepersons, the nominee shall become entitled to receive the amount only on the demise of all theBondholders. Fresh nominations can be made only in the prescribed form available on request at ourCompany‟s registered or administrative office or at such other addresses as may be notified by ourCompany.16.4.2 The Bondholders are advised to provide the specimen signature of the nominee to our Company toexpedite the transmission of the Bond(s) to the nominee in the event of demise of the Bondholders. Thesignature can be provided in the Application Form or subsequently at the time of making freshnominations. This facility of providing the specimen signature of the nominee is purely optional.16.4.3 In accordance with Section 109B of the Act, any person who becomes a nominee by virtue of theprovisions of Section 109A of the Act, shall upon the production of such evidence as may be requiredby our Company‟s Board or Committee of Directors, as the case may be, elect either:156

(a)(b)to register himself or herself as the holder of the Bonds; orto make such transfer of the Bonds, as the deceased holder could have made.16.4.4 Further, our Company‟s Board or Committee of Directors, as the case may be, may at any time givenotice requiring any nominee to choose either to be registered himself or herself or to transfer theBonds, and if the notice is not complied with, within a period of 90 days, our Company‟s Board orCommittee of Directors, as the case may be, may thereafter withhold payment of all interests or othermonies payable in respect of the Bonds, until the requirements of the notice have been complied with.16.4.5 Notwithstanding anything stated above, since the allotment of Bonds in this Issue will be made only indematerialised mode, there is no need to make a separate nomination with our Company. Nominationsregistered with the respective Depository Participant of the Bondholder will prevail. If the Bondholdersrequire changing their nomination, they are requested to inform their respective Depository Participant.17. Debenture Trustees17.1 Our Company has appointed IL&FS Trust Company Limited act as the Debenture Trustee for theBondholders. Our Company intends to enter into a Debenture Trust Deed with the Debenture Trustee,the terms of which will govern the appointment and functioning of the Debenture Trustee and shallspecify the powers, authorities and obligations of the Debenture Trustee. Under the terms of theDebenture Trust Deed, our Company will covenant with the Debenture Trustee that it will pay theBondholders the principal amount on the Bonds on the relevant Maturity Date and also that it will paythe interest due on Bonds on the rate specified under the Debenture Trust Deed.17.2 The Bondholders shall, without further act or deed, be deemed to have irrevocably given their consentto the Debenture Trustee or any of their agents or authorised officials to do all such acts, deeds, mattersand things in respect of or relating to the Bonds as the Debenture Trustee may in their absolutediscretion deem necessary or require to be done in the interest of the Bondholders. Any payment madeby our Company to the Debenture Trustee on behalf of the Bondholders shall discharge our Companypro tanto to the Bondholders. All the rights and remedies of the Bondholders shall vest in and shall beexercised by the Debenture Trustee without reference to the Bondholders. No Bondholder shall beentitled to proceed directly against our Company unless the Debenture Trustee, having become sobound to proceed, failed to do so.17.3 The Debenture Trustee will protect the interest of the Bondholders in the event of default by ourCompany in regard to timely payment of interest and repayment of principal and they will takenecessary action at our Company‟s cost.18. Miscellaneous18.1 LienOur Company shall have the right of set-off and lien, present as well as future on the monies due andpayable to the Bondholder whether in single name or joint name, to the extent of all outstanding dues bythe Bondholder to our Company.18.2 Lien on Pledge of BondsOur Company, at its discretion, may note a lien on pledge of Bonds if such pledge of Bond is acceptedby any bank or institution for any loan provided to the Bondholder against pledge of such Bonds as partof the funding.18.3 Right to Reissue Bond(s)Subject to the provisions of the Act, where our Company has redeemed or repurchased any Bond(s),our Company shall have and shall be deemed always to have had the right to keep such Bonds alivewithout extinguishment for the purpose of resale or reissue and in exercising such right, our Companyshall have and be deemed always to have had the power to resell or reissue such Bonds either byreselling or reissuing the same Bonds or by issuing other Bonds in their place. This includes the right to157

eissue original Bonds.18.4 Joint-holdersWhere two or more persons are holders of any Bond (s), they shall be deemed to hold the same as jointholders with benefits of survivorship subject to Articles and applicable law.18.5 Sharing of Information18.6 NoticesOur Company may, at its option, use its own, as well as exchange, share or part with any financial orother information about the Bondholders available with our Company, its subsidiaries and affiliates andother banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required andneither our Company nor its subsidiaries and affiliates nor their agents shall be liable for use of theaforesaid information.All notices to the Bondholders required to be given by our Company or the Debenture Trustees shall bepublished in one English language newspaper having wide circulation and one regional language dailynewspaper in Kerala, will be sent by post/courier or through email or other electronic media to theregistered Bondholders from time to time. All notices to be given by the Bondholders shall be sent byregistered post or by hand delivery to our Company at its Registered Office.18.7 Issue of Duplicate Consolidated Bond Certificate(s)If any Consolidated Bond Certificate is mutilated, defaced or the cages for recording transfers of Bondsare fully utilized it may be replaced by our Company against the surrender of such Consolidated BondCertificates and upon payment by the claimant of such costs as may be incurred in connectiontherewith, provided that where the Consolidated Bond Certificates are mutilated or defaced, they willbe replaced only if the certificate numbers and the distinctive numbers are legible.If any Consolidated Bond Certificate is destroyed, stolen or lost then upon production of proof thereofto our Company‟s satisfaction and upon furnishing such indemnity/security and/or documents as wemay deem adequate and further upon payment by the claimant of such costs as may be incurred inconnection therewith , duplicate Consolidated Bond Certificate(s) shall be issued.18.8 Future BorrowingsOur Company shall be entitled to borrow or raise loans or create encumbrances or avail financialassistance in whatever form, and also issue promissory notes or debentures or other securities in anymanner having such ranking, pari passu or otherwise and change the capital structure including theissue of shares of any class, on such terms and conditions as our Company may deem appropriatesubject to the (i) prior written consent of the Debenture Trustee and (ii) the security cover of 1.10 timesas stipulated for the Bonds is maintained at all times.18.9 JurisdictionThe Bonds, the Debenture Trust Deed, the Tripartite Agreements with the Depositories and otherrelevant documents shall be governed by and construed in accordance with the laws of India. OurCompany has in the Debenture Trust Deed agreed, for the exclusive benefit of the Debenture Trusteeand the Bondholders, that the courts of Mumbai are to have jurisdiction to settle any disputes whichmay arise out of or in connection with the Debenture Trust Deed or the Bonds and that accordingly anysuit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection withthe Debenture Trust Deed and the Bonds may be brought in the courts of Mumbai.158

PROCEDURE FOR APPLICATIONThis section applies to all Applicants. Please note that all Applicants are required to make payment of the fullApplication Amount along with the Application Form.The Prospectus and the abridged prospectus containing the salient features of the Prospectus together withApplication Forms may be obtained from our Registered Office, from the Lead Managers, the Co-LeadManagers or from the Lead Brokers, as mentioned on the Application Form. In addition, Application Formswould also be made available to BSE where listing of the Bonds is sought, and to brokers, being members ofBSE, upon their request.We may provide Application Forms for being filled and downloaded at such websites as we may deem fit.Application FormApplicants are required to submit their Applications through the Bankers to Issue. All Applicants shall have theoption to apply for any of or all categories of Bonds in the Application Form.WHO CAN APPLY?The following categories of persons are eligible to apply in the Issue:Category I• Public financial institutions, statutory corporations, commercial banks, co-operative banks and regionalrural banks, which are authorised to invest in the Bonds;• Provident funds, pension funds, superannuation funds and gratuity fund, which are authorised to investin the Bonds;• Venture capital funds registered with SEBI;• Insurance companies registered with the IRDA;• National Investment Fund;• Mutual funds;Category II• Companies; bodies corporate and societies registered under the applicable laws in India and authorisedto invest in the Bonds;• Public/private charitable/religious trusts which are authorised to invest in the Bonds;• Scientific and/or industrial research organisations, which are authorised to invest in the Bonds;• Partnership firms in the name of the partners; and• Limited liability partnerships formed and registered under the provisions of the Limited LiabilityPartnership Act, 2008.Category III*The following persons/entities• Resident Indian individuals; and• Hindu undivided families through the Karta.159

* With respect to applications received from Category III Applicants, applications by Applicants who apply forBonds aggregating to a value not more than Rs. 5 Lacs, across all Series of Bonds, shall be grouped together,(“Reserved Individual Portion”) while applications by applicants who apply for NCDs aggregating to a valueexceeding Rs. 5 Lacs, across all Series of Bonds, (Option I and/or Option II), shall be separately groupedtogether, (“Unreserved Individual Portion”).Participation by any of the above-mentioned investor classes in this Issue will be subject to applicablestatutory and/or regulatory requirements. Applicants are advised to ensure that applications made bythem do not exceed the investment limits or maximum number of Bonds that can be held by them underapplicable statutory and/or regulatory provisions.Foreign Institutional Investors, NRIs and Overseas Corporate Bodies are not permitted to apply in thisIssue.The Lead Managers, the Co-Lead Managers, their associates and affiliates are permitted to subscribe inthe Issue. However, the Issue or any part thereof is not being underwritten by the Lead Managers or theCo-Lead Managers to the Issue or by any of its associates and affiliates.Applications by Mutual FundsIn terms of the SEBI (Mutual Funds) Regulations, 1996, as amended, no mutual fund scheme is allowed toinvest more than 15% of its net asset value (the “NAV”) in debt instruments issued by a single company, whichare rated not below investment grade by a credit rating agency authorised to carry out such activity. Suchinvestment limit may be extended to 20% of the NAV of the scheme with the prior approval of the board oftrustees and the board of asset management company (the “AMC”).A separate Application can be made in respect of each scheme of an Indian mutual fund registered with SEBIand such Applications shall not be treated as multiple Applications. Applications made by the AMCs orcustodians of a Mutual Fund shall clearly indicate the name of the concerned scheme for which Application isbeing made. In case of Applications made by Mutual Fund registered with SEBI, a certified copy of their SEBIregistration certificate must be submitted with the Application Form. The Applications must be alsoaccompanied by certified true copies of (i) Trust Deed (ii) resolution authorising investment and containingoperating instructions and (iii) specimen signatures of authorized signatories. Failing this, the Company reservesthe right to accept or reject any Application in whole or in part, in either case, without assigning any reasontherefor.Applications by Provident, Superannuation and Gratuity FundsNon-government provident funds, superannuation funds and gratuity funds may invest up to 55% of their fundsin: (a) Government securities; and (b) Government guaranteed securities. Further, up to: (i) 40% of their fundsmay be invested in: (a) minimum 3 year debt securities issued by corporates, banks and PFIs, at least 75% ofwhich should be made in investment grade instruments; and (b) minimum 3 year Rupee bonds issued byinstitutions like the International Bank for Reconstruction and Development, International Finance Corporationand the Asian Development Bank; and (ii) 5% in money market instruments.Application by Pension FundsPension funds under the PFRDA (Registration of Intermediaries) Regulations, 2005 may invest in (i) minimum3 year debt securities issued by corporates, SCBs and PFIs, at least 75% of which should be invested ininvestment grade instruments; (ii) credit rated PFIs or PSU bonds; (iii) credit rated municipal bonds orinfrastructure bonds; and (iv) State Government and Government securities.Application by Scheduled Banks, Co-operative Banks and Regional Rural BanksScheduled banks, co-operative banks and regional rural banks can apply in the Issue based upon their owninvestment limits and approvals. The Application must be accompanied by certified true copies of (i) a boardresolution authorising the Application; (ii) a letter of authorisation. Failing this, the Company reserves the rightto accept or reject any Application in whole or in part, in either case, without assigning any reason therefor.160

Application by Insurance CompaniesIn case of Applications made by insurance companies registered with the Insurance Regulatory andDevelopment Authority, a certified true copy of certificate of registration issued by Insurance Regulatory andDevelopment Authority must be attached to the Application Form. Each Application must be accompanied bycertified copies of (i) the Applicant‟s memorandum of association and articles of association; (ii) a power ofattorney; (iii) a resolution authorising the Application and containing operating instructions; and (iv) specimensignatures of authorized signatories. Failing this, the Company reserves the right to accept or reject anyApplication in whole or in part, in either case, without assigning any reason therefor.Application by TrustsIn case of Applications made by trusts, settled under the Indian Trusts Act, 1882, as amended, or any otherstatutory and/or regulatory provision governing the settlement of trusts in India, must submit a (i) certified copyof the registered instrument for creation of such trust, (ii) power of attorney, if any, in favour of one or moretrustees thereof, (iii) such other documents evidencing registration thereof under applicable statutory/regulatoryrequirements. Further, any trusts applying for Bonds pursuant to the Issue must ensure that (a) they areauthorised under applicable statutory/regulatory requirements and their constitution instrument to hold andinvest in debentures, (b) they have obtained all necessary approvals, consents or other authorisations, which maybe required under applicable statutory and/or regulatory requirements to invest in debentures, and (c)applications made by them do not exceed the investment limits or maximum number of Bonds that can be heldby them under applicable statutory and or regulatory provisions. Failing this, our Company reserves the right toaccept or reject any Applications in whole or in part, in either case, without assigning any reason therefor.Applications cannot be made by:(a)(b)(c)(d)(e)Minors without a guardian name;Non residents;FIIs;OCBs; andForeign nationals.Applicants are advised to ensure that they have obtained the necessary statutory and/or regulatorypermissions/consents/approvals in connection with applying for, subscribing to, or seeking Allotment ofBonds pursuant to this Issue.Application SizeApplications are required to be for a minimum of five Bonds and multiples of one Bond thereafter.For the purpose fulfilling the requirement of minimum subscription of five Bonds, an Applicant may choose toapply for five Bonds of the same series or five Bonds across different series.INSTRUCTIONS FOR COMPLETING THE APPLICATION FORMApplications must be:(a)(b)(c)Made only in the prescribed Application Form.Completed in block letters in English as per the instructions contained herein and in the ApplicationForm, and are liable to be rejected if not so completed. Applicants should note that the Bankers to theIssue will not be liable for errors in data entry due to incomplete or illegible Application Forms.In single name or in joint names (not more than three, and in the same order as their DepositoryParticipant details).161

(d)(e)(f)Applications are required to be for a minimum of five Bonds and in multiples of one Bond thereafter.For the purpose of fulfilling the requirement of minimum subscription of five Bonds, an Applicant maychoose to apply for two Bonds of the same series or two Bonds across different series.Thumb impressions and signatures other than in English/ Hindi/ Marathi or any of the other languagesspecified in the Eighth Schedule to the Constitution of India must be attested by a Magistrate or NotaryPublic or a Special Executive Magistrate under his official seal.No receipt would be issued by our Company for the Application money. However, the Bankers to theIssue, on receiving the applications will acknowledge receipt by stamping and returning theacknowledgment slip to the Applicant.IN CASE THE DP ID, CLIENT ID AND PAN MENTIONED IN THE APPLICATION FORM DO NOTMATCH WITH THE DP ID, CLIENT ID AND PAN AVAILABLE IN THE RECORDS WITH THEDEPOSITORIES, THE APPLICATION FORM IS LIABLE TO BE REJECTED.The demat accounts for Applicants for which PAN details have not been verified shall be “suspended forcredit” and no credit of Bonds pursuant to the Issue shall be made into accounts of such Applicants.GENERAL INSTRUCTIONSDo‟s:1. Check if you are eligible to apply.2. Read all the instructions carefully and complete the Application Form.3. Applications are required to be in single or joint names (not more than three).4. Ensure that the details about the Depository Participant and beneficiary account are correct and thedemat account is active as Allotment of the Bonds will be in the dematerialised form only.5. In case of an HUF applying through its Karta, the Applicant is required to specify the name of anApplicant in the Application Form as “XYZ Hindu Undivided Family applying through PQR”, wherePQR is the name of the Karta.6. Applicant‟s Bank Account Details: The Bonds shall be allotted in dematerialised form only. TheRegistrars to the Issue will obtain the Applicant‟s bank account details from the Depository. TheApplicant should note that on the basis of the name of the Applicant, Depository Participant‟s (DP)name, Depository Participants identification number and beneficiary account number provided by themin the Application Form, the Registrar to the Issue will obtain from the Depositaries, the Applicant‟sbank account details. The Applicants are advised to ensure that bank account details are updated intheir respective DP A/cs as these bank account details would be printed on the refund order(s), if any.Please note that failure to do so could result in delays in credit of refunds to Applicants at theApplicants sole risk and neither the Lead Managers nor the Co-Lead Managers or our Company nor theRefund Bank nor the Registrar shall have any responsibility and undertake any liability for the same.7. Applications under Power of Attorney: Unless our Company specifically agree in writing, and subjectto such terms and conditions as our Company may deem fit, in the case of Applications made underPower of Attorney, a certified copy of the Power of Attorney is required to be lodged separately, alongwith a copy of the Application Form at the office of the Registrar to the Issue simultaneously with thesubmission of the Application Form, indicating the name of the Applicant along with the address,Application number, date of submission of the Application Form, name of the bank and branch whereit was deposited, Cheque/Demand Draft Number and the bank and branch on which theCheque/Demand Draft was drawn.8. Permanent Account Number: All Applicants except applicants on behalf of the Central or StateGovernment and the officials appointed by the courts should mention their PAN allotted under theIncome Tax Act in the Application Form. In case of joint applicants the PAN of the first Applicantshould be provided and for HUFs, PAN of the HUF should be provided. The PAN would be the sole162

identification number for participants transacting in the securities markets, irrespective of the amountof the transaction. Any Application Form without the PAN is liable to be rejected. It is to bespecifically noted that Applicants should not submit the GIR Number instead of the PAN as theApplication is liable to be rejected on this ground. However, applicants residing in the State of Sikkimare exempted from the mandatory requirement of PAN. The exemption for applicants on behalf of theCentral or State Government and the officials appointed by the courts and applicants residing in theState of Sikkim is subject to the Depository participants‟ verifying the veracity of such claims of theinvestors by collecting sufficient documentary evidence in support of their claims. At the time ofascertaining the validity of these bids, the Registrar will check from Depository records for theappropriate description under the PAN field.9. Joint Applications: Applications may be made in single or joint names (not exceeding three). In thecase of joint Applications, all payments will be made out in favour of the first Applicant. Allcommunications will be addressed to the first named Applicant whose name appears in the ApplicationForm at the address mentioned therein.10. Applicants are requested to write their names and Application serial number on the reverse of theinstruments by which the payments are made.11. Category: All Applicants are requested to tick the relevant column “Category of Investor” in theApplication Form.12. Ensure that you have obtained all necessary approvals from the relevant statutory and/or regulatoryauthorities to apply for, subscribe to and/or seek allotment of Bonds pursuant to the Issue.13. Ensure that the Applications are submitted to the Bankers to the Issue before the closure of bankinghours on the Issue Closing Date;14. Ensure that the Applicant‟s name(s) given in the Application Form is exactly the same as the name(s)in which the beneficiary account is held with the Depository Participant. In case the Application Formis submitted in joint names, ensure that the beneficiary account is also held in same joint names andsuch names are in the same sequence in which they appear in the Application Form.Don‟ts:1. Do not make an application for lower than the minimum Application size.2. Do not pay the Application Amount in cash, by money order or by postal order or by stockinvest.3. Do not send Application Forms by post or to the office of Lead Mangers or Registrar to the Issue;instead submit the same to a Banker to the Issue only.4. Do not submit the GIR number instead of the PAN as the Application Form is liable to be rejected onthis ground.5. Do not submit the Application Forms without the full Application Amount.6. Do not fill up the Application Form such that the Bonds applied for exceeds the issue size and/orinvestment limit or maximum number of Bonds that can be held under the applicable laws orregulations or maximum amount permissible under the applicable regulationsFor further instructions, please read the Application Form carefully.Tax Deduction at SourcePlease refer to ―Terms of the Issue – Taxation‖PAYMENT INSTRUCTIONS163

Escrow MechanismOur Company shall open Escrow Account(s) with one or more Escrow Collection Bank(s) in whose favour theApplicants shall make out the cheque or demand draft in respect of his or her Application. Cheques or demanddrafts received for the Application Amount from Applicants would be deposited in the Escrow Account.The Escrow Collection Banks will act in terms of the Prospectus and the Escrow Agreement. The EscrowCollection Banks, for and on behalf of the Applicants, shall maintain the monies in the Escrow Account until thedocuments for creation of security for the Bonds are executed. The Escrow Collection Banks shall not exerciseany lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for theApplicants. On the Designated Date, the Escrow Collection Banks shall transfer the funds represented byAllotment of the Bonds from the Escrow Account, as per the terms of the Escrow Agreement, into the PublicIssue Account maintained with the Bankers to the Issue. The amount representing the Applications that havebeen rejected shall be transferred to the Refund Account. Payments of refund to the Applicants shall be madefrom the Refund Account are per the terms of the Escrow Agreement and the Prospectus.The Applicants should note that the escrow mechanism is not prescribed by SEBI or the BSE and has beenestablished as an arrangement between our Company, the Lead Managers, the Co-Lead Managers, the EscrowCollection Banks and the Registrar to facilitate collection from the Applicants.Payment into Escrow AccountEach Applicant shall draw a cheque or demand draft for the Application Amount as per the following terms:(a)(b)(c)(d)(e)(f)(g)All Applicants would be required to pay the full Application Amount at the time of the submission ofthe Application Form.The Applicants shall, with the submission of the Application Form, draw a payment instrument for theApplication Amount in favour of the Escrow Account and submit the same to Bankers to the Issue. Ifthe payment is not made favouring the Escrow Account along with the Application Form, theApplication shall be rejected.The payment instruments for payment into the Escrow Account should be drawn in favour of “EscrowAccount – Manappuram Bond Issue”.The monies deposited in the Escrow Account will be held for the benefit of the Applicants until theDesignated Date.On the Designated Date, the Escrow Collection Banks shall transfer the funds from the EscrowAccount as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers tothe Issue after execution of documents for creation of security. The Escrow Collection Bank shall alsotransfer all amounts payable to Applicants whose Applications have been rejected, fully or partially, byour Company to the Refund Account with the Refund Bank. The Refund Bank shall refund all theamounts to the Applicants in terms of the Escrow Agreement.Payments should be made by cheque, or a demand draft drawn on any bank (including a Co-operativebank), which is situated at, and is a member of or sub-member of the bankers‟ clearing house located atthe centre where the Application Form is submitted. Outstation cheques/bank drafts drawn on banksnot participating in the clearing process/non-MICR cheques will not be accepted and applicationsaccompanied by such cheques or bank drafts are liable to be rejected.Cash/ stockinvest/money orders/ postal orders will not be accepted.Submission of Application FormsAll Application Forms duly completed and accompanied by account payee cheques or drafts shall be submittedto the branches of the Bankers to the Issue during the Issue Period.Applications shall be deemed to have been received by us only when submitted to Bankers to the Issue at theirdesignated branches and not otherwise.164

No separate receipts shall be issued for the money payable on the submission of Application Form. However,the collection centre of the Bankers to the Issue will acknowledge the receipt of the Application Forms bystamping and returning to the Applicants the acknowledgement slip. This acknowledgement slip will serve asthe duplicate of the Application Form for the records of the Applicant.All applications by persons or entities belonging to Category I should be made in the form prescribed forCategory I Applicants and can only be procured by the Lead Managers or their respective affiliates andany Category I application without a stamp of Lead Managers or their respective affiliates is liable to berejected.Online ApplicationsOur Company may decide to offer an online Application facility for the Bonds, as and when permitted byApplicable Laws, subject to the terms and conditions prescribed.Joint ApplicationsApplications may be made in single or joint names (not exceeding three). In the case of joint applications, allpayments will be made out in favour of the first applicant. All communications will be addressed to the firstnamed applicant whose name appears in the Application Form and at the address mentioned therein.Additional ApplicationsAn Applicant is allowed to make one or more applications for one or more Series of Bonds, subject to aminimum application size of Rs. 5,000 and in multiples of Rs. 1,000 thereafter, for each application. Anyapplication for an amount below the aforesaid minimum application size will be deemed as an invalidapplication and shall be rejected. However, multiple applications by the same Applicant belonging to CategoryIII aggregating to a value exceeding Rs. 5 Lacs shall be grouped in the Unreserved Individual Portion, for thepurpose of determining the basis of allotment to such Applicant. However, any application made by any personin his individual capacity and an application made by such person in his capacity as a karta of a HinduUndivided family and/or as joint applicant, shall not be deemed to be a multiple application.For the purposes of allotment of Bonds under the Issue, applications shall be grouped based on the PAN, i.e.applications under the same PAN shall be grouped together and treated as one application. Two or moreapplications will be deemed to be multiple applications if the sole or first Applicant is one and the same. For thesake of clarity, two or more applications shall be deemed to be a multiple application for the aforesaid purpose ifthe PAN number of the sole or the first applicant is one and the same.Bonds in dematerialised form with NSDL or CDSLAs per the provisions of Section 68B of the Companies Act, the Allotment of Bonds in this Issue shall be only ina de-materialised form, (i.e., not in the form of physical certificates but be fungible and be represented by thestatement issued through the electronic mode).As per the provisions of the Depositories Act, the Bonds can be held in a dematerialised form, i.e., they shall befungible and be represented by a statement issued through electronic mode. In this context:(i)The following two Tripartite Agreements have been signed amongst our Company, the respectiveDepositories and the Registrar:Tripartite Agreement between us, the Registrar and NSDL for offering depository option tothe Bondholders.Tripartite Agreement between us, the Registrar and CDSL for offering depository option tothe Bondholders.(ii)All Applicants can seek Allotment only in dematerialised mode. Applications without relevant detailsof his or her depository account are liable to be rejected.165

(iii)(iv)(v)(vi)(vii)(viii)(ix)(x)An Applicant applying for the Bonds must have at least one beneficiary account with either of theDepository Participants of either NSDL or CDSL prior to making the Application.The Applicant must necessarily fill in the details (including the Beneficiary Account Number andDepository Participant‟s identification number) appearing in the Application Form.Allotment to an Applicant will be credited in electronic form directly to the beneficiary account (withthe Depository Participant) of the Applicant.Names in the Application Form should be identical to those appearing in the account details in theDepository. In case of joint holders, the names should necessarily be in the same sequence as theyappear in the account details in the Depository.If incomplete or incorrect details are given under the heading „Applicants Depository Account Details‟in the Application Form, it is liable to be rejected.The Applicant is responsible for the correctness of his or her Demographic Details given in theApplication Form vis-à-vis those with his or her Depository Participant.Bonds in electronic form can be traded only on the stock exchanges having electronic connectivity withNSDL and CDSL. BSE where the Bonds are proposed to be listed has electronic connectivity withCDSL and NSDL.The trading of the Bonds shall be in dematerialised form only.Allottees will have the option to re-materialise the Bonds so Allotted as per the provisions of theCompanies Act and the Depositories Act.CommunicationsAll future communications in connection with Applications made in the Issue should be addressed to theRegistrar to the Issue, quoting all relevant details regarding the Applicant/Application. Applicants may addressour Compliance Officer as well as the contact persons of the Lead Managers, the Co-Lead Managers and theRegistrar to the Issue in case of any pre-Issue related problems such as non-receipt of letters of Allotment/creditof Bonds in the Depositary‟s beneficiary account/refund orders, etc.Rejection of ApplicationsOur Company reserves its full, unqualified and absolute right to accept or reject any Application in whole or inpart and in either case without assigning any reason thereof.Application would be liable to be rejected on one or more technical grounds, including but not restricted to:Number of Bonds applied for is less than the minimum Application size;Applications not duly signed by the sole/joint Applicants (in the same sequence as they appear in therecords of the depositary);Application amount paid not tallying with the number of Bonds applied for;Age of First Applicant not given;Applications for a number of Bonds which is not in a multiple of one;Investor category not ticked;Bank account details not given;Applications by persons not competent to contract under the Indian Contract Act, 1872, as amended,166

including a minor without a guardian name;In case of Applications under Power of Attorney where relevant documents not submitted;Application by stockinvest/money order/postal order;Applications accompanied by cash;Category not ticked;Application under power of attorney or by limited companies, corporate, trust etc., where relevantdocuments are not submitted;Applications without PAN;Application Form does not have applicant‟s depository account details;GIR number furnished instead of PAN;Applications for amounts greater than the maximum permissible amounts prescribed by applicableregulations;Applications by persons/entities who have been debarred from accessing the capital markets by SEBI;DP ID, Client ID and PAN mentioned in the Application Form do not match with the DP ID, Client IDand PAN available in the records with the depositories;Signature of sole and/ or joint applicant(s) missing;Application Forms not delivered by the applicant within the time prescribed as per the ApplicationForm and the Prospectus and as per the instructions in the Prospectus and the Application Form; orIn case the subscription amount is paid in cash;Category I Applications not procured by the Lead Managers or their respective affiliates; andApplication Form accompanied with more than one cheque.The collecting bank shall not be responsible for rejection of the Application on any of the technical groundsmentioned above.Application form received after the closure of the Issue shall be rejected.In the event, if any Bond(s) applied for is/are not allotted, the Application monies of such Bonds will berefunded, as may be permitted under the provisions of applicable laws.Basis of AllotmentOur Company shall finalise the Basis of Allotment in consultation with the Lead Managers, Co-Lead Managersand the Designated Stock Exchange and in compliance with the aforementioned provisions of this Prospectus.The Designated Stock Exchange along with the Company, Lead Managers, the Co-Lead Managers and theRegistrar shall be responsible for ensuring that the Basis of Allotment is finalised in a fair and proper manner.For removal of doubt, “Institutional Portion”, Non-Institutional Portion” “Reserved Individual Portion” and“Unreserved Individual Portion” are individually referred to as “Portion” and collectively referred to as“Portions”167

For the purposes of determining the number of Bonds available for allocation to each of the above mentionedPortions, our Company shall have the discretion of determining the number of Bonds to be allotted over andabove the base amount of the Issue, in case our Company opts to retain any oversubscription in the Issue uptoRs 7,500 million. The aggregate value of Bonds decided to be allotted over and above the base amount of theIssue, (in case our Company opts to retain any oversubscription in the Issue), and the aggregate value of Bondsupto the base amount of the Issue shall be collectively termed as the “Overall Issue Size”.Subject to the provisions contained in this Prospectus, the Articles of Association of our Company and theapproval of the Designated Stock Exchange, Allocation for the Bonds shall be made on a first come first servedbasis based on the date of presentation of Application to the Banker to the Issue in accordance with reservationfor each Portion as set out below. For each Portion, all applications received on the same day by the Bankers tothe Issue would be treated at par with each other. In case any Portion is under subscribed, the unsubscribedportion of the reservation for such Portion will be allocated first to Reserved Individual Portion, second toUnreserved Individual Portion, third to the Non Institutional Portion and finally to Institutional Portion. In caseof over subscription, Applications received on the day of such over-subscription in respect of such Portion, willbe allotted on a proportionate basis.Applications received from various Applicants shall be grouped together on the following basis:Particulars Category I Category II Category IIIReservation for each PortionInstitutionalPortion20% of theOverall IssueSizeNonInstitutionalPortion10% of theOverall IssueSizeUnreservedIndividualPortion35% of theOverall IssueSizeReservedIndividualPortion35% of theOverall IssueSizeMinimum allotments of 5 Bonds and in multiples of 1 Bond thereafter would be made in case of each validapplication.Proportionate Allotments: For each Portion, on the date of oversubscription(a)(b)(c)Allotments to the Applicants shall be made in proportion to their respective application size, roundedoff to the nearest integer.If the process of rounding off to the nearest integer results in the actual allocation of Bonds beinghigher than the Issue size, not all Applicants will be allotted the number of Bonds arrived at after suchrounding off. Rather, each Applicant whose allotment size, prior to rounding off, had the highestdecimal point would be given preference.In the event, there are more than one applicant whose entitlement remain equal after the manner ofdistribution referred to above, our Company will ensure that the basis of allotment is finalised by drawof lots in a fair and equitable manner.Applicant applying for more than one Series of Bonds: If an Applicant has applied for more than one Series ofBonds, and in case such Applicant is entitled to allocation of only a part of the aggregate number of Bondsapplied for, the Series-wise allocation of Bonds to such Applicants shall be in proportion to the number ofBonds with respect to each Series, applied for by such Applicant, subject to rounding off to the nearest integer,as appropriate in consultation with Lead Managers and Designated Stock Exchange.The Company would allot Series II Bonds for all valid Applications, where the Applicants have not indicatedtheir choice of the relevant Series of Bonds.Letters of Allotment/ Refund OrdersOur Company reserves, in its absolute and unqualified discretion and without assigning any reason thereof, theright to reject any Application in whole or in part. The unutilised portion of the Application money will berefunded to the Applicant by an account payee cheque/demand draft. In case the cheque payable at par facility is168

not available, we reserve the right to adopt any other suitable mode of payment.The Company shall credit the allotted Bonds to the respective beneficiary accounts/despatch the Letter(s) ofAllotment or Letter(s) of Regret by Ordinary Post and Refund Orders by Registered Post/Speed Post at theapplicant‟s sole risk, within 30 days from the date of closure of the Issue. We may enter into an arrangementwith one or more banks in one or more cities for refund to the account of the applicants through DirectCredit/RTGS/NEFTFurther,(a)(b)(c)Allotment of the Bonds shall be made within 30 days of the Issue Closing Date;credit to dematerialised accounts will be made within two Working Days from the date of Allotment;our Company shall pay interest at 15% per annum if the Allotment has not been made and/ or theRefund Orders have not been dispatched to the Applicants within 30 days from the date of the closureof the Issue, for any delay beyond 30 days.Our Company will provide adequate funds to the Registrar to the Issue, for this purpose.Filing of the Prospectus.A copy of the Draft Prospectus has been filed with the BSE and SEBI. The Prospectus shall be filed with theRegistrar of Companies, Kerala and Lakshadweep in terms of Sections 56 and 60 of the Companies Act.Pre-Issue AdvertisementOur Company shall, on or before the Issue Opening Date, publish a pre-Issue advertisement, in the formprescribed by the SEBI Debt Regulations, in at least one national daily newspaper with wide circulation.Material updates, if any, between the date of filing of this Prospectus with RoC and the date of release of thisstatutory advertisement will be included in the statutory advertisement.IMPERSONATIONAttention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of theCompanies Act, which is reproduced below:“Any person who:(a)(b)makes in a fictitious name, an application to a company for acquiring or subscribing for, any sharestherein, orotherwise induces a company to allot, or register any transfer of shares, therein to him, or any otherperson in a fictitious name, shall be punishable with imprisonment for a term which may extend to fiveyears.”ListingThe Bonds will be listed on BSE. BSE will be the Designated Stock Exchange with which the Basis ofAllotment will be finalised.If the permissions to deal in and for an official quotation of the Bonds are not granted by the BSE, we shallforthwith repay, without interest, all such monies received from the Applicants in pursuance of this Prospectus.If such money is not repaid within eight days after we becomes liable to repay it (i.e. from the date of refusal orwithin seven days from the Issue Closing Date, whichever is earlier), then our Company and every Director ofour Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay themoney, with interest at the rate of 15% p.a. on application money, as prescribed under Section 73 of theCompanies Act.169

Our Company shall ensure that all steps for the completion of the necessary formalities for listing andcommencement of trading at the BSE are taken within seven Working Days from the date of Allotment.Utilisation of Application MoneyThe sums received in respect of the Issue will be kept in the Escrow Account and we will have access to suchfunds after the documents for creation of security for the Bonds as disclosed in this Prospectus are executed.Investor Withdrawals and Pre-closureInvestor Withdrawal: Applicants are allowed to withdraw their applications at any time prior to the closure ofthe Issue.Pre-closure: Our Company, in consultation with the Lead Managers reserves the right to close the Issue at anytime prior to the Closing Date, subject to receipt of minimum subscription for Bonds aggregating to 75% of thebase amount of the Issue, being Rs. 3,000 million. Our Company shall allot Bonds with respect to theapplications received at the time of such pre-closure in accordance with the Basis of Allotment as describedhereinabove and subject to applicable statutory and/or regulatory requirements.Undertaking by our CompanyWe undertake that:(a)(b)(c)(d)(e)(f)(g)the complaints received in respect of the Issue shall be attended to by us expeditiously andsatisfactorily;we shall take necessary steps for the purpose of getting the Bonds listed in the BSE within the specifiedtime;the funds required for dispatch of refund orders/Allotment letters/certificates by registered post shall bemade available to the Registrar to the Issue by us;necessary cooperation to the credit rating agency(ies) shall be extended in providing true and adequateinformation till the debt obligations in respect of the Bonds are outstanding;we shall forward the details of utilisation of the funds raised through the Bonds duly certified by ourstatutory auditors, to the Debenture Trustee at the end of each six month period;we shall disclose the complete name and address of the Debenture Trustee in our annual report;we shall provide a compliance certificate to the Debenture Trustee (on yearly basis) in respect ofcompliance of with the terms and conditions of issue of Bonds as contained in this Prospectus.170

1. Modification of RightsMAIN PROVISIONS OF THE ARTICLES OF ASSOCIATIONAs per Article 10 of the Articles of Association, if at any time the share capital is divided into differentclasses of shares, all or any of the rights and privileges attached to any class (unless otherwiseprohibited by the terms of issue of the shares of that class) may, subject to the provisions of sections106 and 107 of the Act, whether or not the Company is being wound up, be modified, commuted,affected, abrogated, varied or dealt with by the consent in writing of the holders of not less than threefourths of the issued shares of that class or with the sanction of a special resolution passed at a separatemeeting of the holders of three fourths of the issued shares of that class. To every such separatemeeting the provisions of these regulations relating to general meeting shall mutatis mutandis apply butso that necessary quorum shall be two persons at least holdings or representing by proxy one third ofthe issued shares of the class in question. Article 11 of the Articles of Association states that the rightsconferred upon the holder of the shares of any class issued with preferred or other rights shall notunless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to bevaried by the creation or issue of further shares ranking pari passu therewith.2. Share CertificatesAs per Article 12 of the Articles of the Company, every member shall be entitled, without payment, toone or more certificates in marketable lots, for all the shares of each class or denomination registered inhis name, or if the Directors so approve (upon paying such fee as the Directors may from time to timedetermine) to several certificates, each for one or more of such shares and the Company shall completeand have ready for delivery such certificates within three months from the date of allotment, unless theconditions of issue thereof otherwise provide, or within one month of the receipt of application ofregistration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as thecase may be (provided the shares are not held in an electronic and fungible form under the provisionsof the Depositories Act, 1996). Every certificate of shares shall be under the seal of the Company,signed by two directors and the secretary or some other person authorized by the Board and shallspecify the number and distinctive numbers of shares in respect of which it is issued and amount paidupthereon and shall be in such form as the Directors may prescribe or approve, provided that in respectof a share or shares held jointly by several persons, the Company shall not be bound to issue more thanone certificate and delivery of a certificate of shares to one of several joint holders shall be sufficientdelivery to all such holder.3. Forfeiture and LienForfeiture(a)(b)(c)As per Article 20, if a member fails to pay the whole or any part of any call or installment orany money due in respect of any shares either by way of principal or interest on or before theday appointed for the payment of the same, the directors may at any time thereafter duringsuch time as the call or installment or other money remains unpaid serve a notice on suchmember or on the persons (if any) entitled to the share by transmission, requiring him to paythe same together with any interest that may have been accrued by reason of suchnonpayment.As per Article 21, the notice aforesaid shall name a further day not being earlier than theexpiry of fourteen days from the date of service of notice, on or before which the paymentrequired by notice is to be made. The notice shall state that in the event of non-payment, on orbefore the date so named the shares in respect of which such call or installment was payableshall be liable to be forfeited.As per Article 22, if the requirements of any such notice as aforesaid are not complied with,any shares in respect of which such notice has been given may at any time thereafter, beforethe payment of call or installment, interest and expense due in respect thereof, be forfeited bya resolution of the Board to that effect and the forfeiture shall be recorded in the directorsminute book. Such forfeiture shall include all dividends declared in respect of the forfeitedshares and not actually paid before the forfeiture.171

(d)(e)(f)(g)(h)As per Article 23, when any share shall have been so forfeited, notice of the forfeiture shall begiven to the member in whose name it stood immediately prior to the forfeiture with the datethereof shall forthwith be made in the Register of Members.As per Article 24, any shares so forfeited shall be deemed to be property of the Company, andmay be sold or otherwise disposed off on such terms and in such manner as the Directorsthinks fit, the Board may at any time before any share so forfeited shall have been sold orotherwise disposed off, annul the forfeiture upon such terms and conditions, as it thinks fit.As per Article 25, a person whose shares have been forfeited shall cease to be member inrespect of forfeited shares, but shall not withstanding the forfeiture remain liable to pay to theCompany all calls, installments, interests and expenses owning upon or in respect of suchshares at the date of the forfeiture, together with interest thereon from time of forfeiture, untilpayment at the rate of ten percent per annum and the directors may enforce the paymentthereof, if they think fit.As per Article 26, the forfeiture of a share shall involve extinction of all interest in and also ofall claims and demands against the Company in respect of the share, and all other rightsincidental to the share except only such of those rights as by the articles are expressly saved.As per Article 27, a duly verified declaration in writing that the declarant is a Director of theCompany and that certain shares in the Company have been duly forfeited on a date stated inthe declaration shall be conclusive evidence of the facts therein stated as against all personsclaiming to be entitled to the share. The Company may receive the consideration, if any, givenfor the shares on any sale or disposal thereof and may execute a transfer of share in favour ofthe person to whom the share is sold or disposed of. The transferee shall thereupon beregistered as the holder of such shares and the purchaser shall not be bound to see to theapplication of purchase money, nor shall his title to such shares be affected by any irregularityor invalidity in the proceedings in reference to such forfeiture, sale or disposition.Lien(a)(b)(c)(d)As per Article 28, the Company shall have a first and paramount lien upon all theshares/debentures (other than fully paid up shares/debentures) registered in the name of eachmember (whether solely or jointly with others) and upon the proceeds of sale thereof for allmonies (whether presently payable or not) called or payable at a fixed time in respect of suchshares/debentures and no equitable interest in any shares shall be created except upon thefooting and condition that this Article will have full effect. And such lien shall extend to alldividends and bonus from time to time declared in respect of such shares/debentures. Unlessotherwise agreed the registration of a transfer of shares/debentures shall operate as a waiver ofthe Company's lien if any on such shares/debentures. The Directors may, at any time declareany shares/debentures wholly or in part to be exempt from the provisions of this clause.As per Article 29, no member shall exercise any voting right in respect of any sharesregistered in his name on which any calls or other sums presently payable by him, have notbeen paid or in regard to which the Company has exercised any right of lien.As per Article 30, The Company may sell, in such manner as the Board thinks fit, any shareson which the Company has a lien, provided that no sale shall be made a) unless a sum inrespect of which the lien exists is presently payable‟ or b) until the expiration of fourteen daysafter a notice in writing stating and demanding payment of such part of the amount in respectof which the lien exists as is presently payable, has been given to the registered holder for thetime being of the share or the person entitled thereto by reason of his death or insolvency.As per Article 31, the net proceeds of the sale shall be applied in or towards satisfaction of thedebts, liabilities or engagements of such member, his executors, administrators orrepresentatives and the residue, if any, shall subject to a like lien for sums not presentlypayable as existed upon the shares before the sale be paid to the persons entitled to the sharesat the date of the sale.172

(e)As per Article 32, upon any sale after forfeiture or for enforcing a lien purported in exercise ofthe powers herein conferred, the Directors may cause the purchaser's name to be entered in theregister of members in respect of the share sold and the purchaser shall not be bound to see tothe regularity of the proceedings nor to the application of the purchase money after his namehas been entered into the register in respect of such share, the validity of the sale shall not beimpeached by any person on any ground whatsoever and the remedy of any person aggrievedby such sale shall be in damages only.4. Transfer and Transmission of Shares(a)(b)(c)(d)(e)(f)As per Article 33, save as provided in Section 108 of the Act, no transfer of shares ordebentures shall be registered unless a proper instrument of transfer duly stamped andexecuted by or on behalf of the transferor and by or on behalf of transferee has been deliveredto the Company together with certificate or if no such certificate is in existence, the letter ofallotment of the shares. The instrument of transfer of the shares in or debentures of theCompany, shall specify the name, father‟s/husband‟s name, address, occupation, nationalityboth of the transferor and of the transferee. The transferee shall be deemed to remain theholder of such shares until the name of the transferee is entered in the Register of members.Each signature to such transfer shall be duly attested by the signature of one witness who shalladd his address.As per Article 34, application for the registration of the transfer of a share may be made eitherby the transferor or the transferee where such application is made by the transferor and relatesto a partly paid share, no registration shall be effected unless the Company gives notice of theapplication to the transferee, in the manner prescribed by section 110 of the Act. Subject tothe provision of Articles thereof, if the transferee makes no objection within two weeks fromthat date of receipt of the notice, the Company shall enter in the register of members the nameof the transferee in the same manner and subject to the same conditions as if the applicationfor registration as made by the transferee.As per Article 37A, every instrument of transfer of shares shall be in the form prescribedunder the Act.As per Article 38, every instrument of transfer shall be left at the office for registration,accompanied by the certificate of the shares or if no such certificate is in existence, by theletter of allotment of the shares to be transferred and such other evidence as the Board mayrequire to prove the title of the transferor or his right to transfer the shares, and upon paymentof the proper fee to the Company, the transferee shall (subject to the right of the Board todecline to register as hereinafter mentioned) be registered as a member in respect of suchshares. The Board may waive the production of any certificate upon evidence satisfactory to itof its loss or destruction.As per Article 40, subject to the provisions of Section 111A of the Act and Section 22A of theSecurities Contracts (Regulation) Act, 1956, the Directors may, at their own absolute anduncontrolled discretion and by giving reasons, decline to register or acknowledge any transferof shares whether fully paid or not and the right of refusal, shall not be affected by thecircumstances that the proposed transferee is already a member of the Company but in suchcases, the Directors shall within one month from the date on which the instruments of transferwas lodged with the Company, send to the transferee and the transferor notice of the refusal toregister such transfer provided that registration of transfer shall not be refused on the groundof the transferor being either alone or jointly with any other person or persons indebted to theCompany on any account whatsoever except when the Company has a lien on the shares.Transfer of shares/debentures in whatever lot shall not be refused.As per Article 41, the registration of transfer may be suspended after giving due notice at suchtimes and for such periods as the Board may from time to time determine. Provided that suchregistration shall not be suspended for more than forty-five days in any year, and notexceeding thirty days at any one time.173

(g)As per Article 42, the shares in the Company shall be transferred in the form for the time beingprescribed under the rules framed under the Act. Notwithstanding anything contained in the Articles, inthe case of transfer of shares or other marketable securities, where the company has not issued anycertificates and where such shares or securities are being held in an electronic and fungible form, theprovisions of the Depositories Act, 1996, shall apply. The Company shall keep a book to be called theregister of transfers and therein shall be entered the particulars of every transfer or transmissions of anyshares held in dematerialized form.(h)(i)(j)As per Article 43, the executors or administrators or the holder of a succession certificate inrespect of shares of a deceased member (not being one of several joint holders) shall be theonly person whom the Company shall recognize as having any title to the shares registered inthe name of such member and, in case of the death of any one or more of the joint holder ofany registered shares, the survivors shall be the only persons recognised by the Company ashaving any title interest in such shares, but nothing herein contained shall be taken to releasethe estate of a deceased joint-holder from any liability on shares held by him jointly with anyother person. Before recognizing any executor or administrator or legal heir the Board mayrequire him to obtain a grant of probate or letter of administration or succession certificate orother legal representation as the case may be, from a competent court. Provided neverthelessthat in any case where the Board in its absolute discretion thinks fit it may dispense withproduction of probate or letter of administration or a succession certificate or such other legalrepresentation upon such terms as to indemnify the company or otherwise as the Board mayconsider desirable. Provided also that the holder of a succession certificate shall not be entitledto receive any dividends already declared but not paid to the deceased member unless thesuccession certificate declares that the holder thereof is entitled to receive such dividends.As per Article 44, any person becoming entitled to a share in consequence of the death, lunacyor insolvency of a member may, upon producing such evidence of his title as the Board thinkssufficient, be registration as a member in respect of such shares, or may subject to theregulations as to transfer herein before contained, transfer such shares and as per Article 45, aperson becoming entitled to a share by reason of the death or insolvency of the holder shall beentitled to the same dividends and other advantages to which he would be entitled if he werethe registered holder of the share, except that he shall not, before being registered as a memberin respect of the share be entitles in respect of it to exercise any right conferred bymembership in relation to meetings of the Company.As per Article 46, provided the Board may, at any time, give notice requiring any person toelect either to be registered himself or to transfer the share, and if the notice is not compliedwith within ninety days, the Board may there after withhold payment of all dividends, bonusesor other money payable in respect of the share, until the requirements of the notice have beencomplied with. If the person so becoming entitled shall elect to be registered as holder of theshare himself, he shall deliver or send to the Company a notice in writing signed by himstating that he so elects. If the person aforesaid shall elect to transfer the shares to some otherperson he shall execute an instrument of transfer in accordance with the provisions of theseArticle relating to the transfer of shares. All the limitations, restrictions and provisions of theseArticles relating to the right of transfer and the registration of transfer of shares shall beapplicable to any such notice or transfer as aforesaid as if the death, lunacy or insolvency ofthe member had not occurred and the notice of transfer where a transfer signed by thatmember.5. Votes of Members(a)As per Article 66, subject to any rights or restrictions for the time being attached to any classor classes of shares:(i)(ii)on a show of hands, every member present in person shall have one vote; andon a poll, the voting rights of members shall be as laid down in Section 87 of the Act(b)As per Article 67, in the case of joint holders, the vote of the senior who tenders a vote,whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint174

holders. For this purpose seniority shall be determined by the order in which the names standin the register of members.(c)(d)(e)(f)(g)(h)(i)As per Article 68, a member of unsound mind, or in respect of whom an order has been madeby any court having jurisdiction in lunacy, may vote whether on a show of hands or on a poll,by his committee or other legal guardian, and any such committee or guardian may on a pollvote by proxy.As per Article 69, no member shall be entitled to vote at any general meeting unless all callsor other sums presently payable by him in respect of shares in the Company have been paid.As per Article 70, no objection shall be raised to the qualification of any vote except at themeeting or adjourned meeting at which the vote objected to is given or tendered, and everyvote not disallowed at such meeting shall be valid for all purposes. Any such objection madein due time shall be referred to the chairman of the meeting, whose decision shall be final andconclusive.As per Article 71, the instruments appointing a proxy and the power of attorney or otherauthority, if any, under which it is signed or a notarially certified copy of that power orauthority, shall be deposited at registered office of the Company not less than 48 hours beforethe time for holding the meeting or adjourned meeting at which the person named in theinstrument proposes to vote, or in the case of a poll, not less than 24 hours before the timeappointed for the taking of the poll, and in default the instrument of proxy shall not be treatedas a valid.As per Article 72, an instrument appointing a proxy shall be in either form of proxy of theforms in Schedule IX to the Act or a form as near there to as circumstances admit.As per Article 73 , a vote given in accordance with the terms of an instrument of proxy shallbe valid, notwithstanding the previous death or insanity of the principal or the revocation ofthe proxy or of the authority under which the proxy was executed or the transfer of the sharesin respect of which the proxy is given. Provided that no intimation in writing of such death,insanity revocation or transfer shall have been received by the Company at its office beforethe commencement of the meeting or adjourned meeting at which the proxy is used.As per Article 73A, notwithstanding anything contained in the Articles of the company, thecompany do adopt the mode of passing a resolution by the Members of the company by meansof a postal ballot and/or other ways as may be prescribed by the Central Government in thisbehalf in respect of the following, matters instead of transacting such business in a generalmeeting of the company.6. Dividends(a)(b)(c)(d)As per Article 109, the Company in general meeting may declare dividends, but no dividendshall exceed the amount recommended by the Board.As per Article 110, the Board may from time to time pay to the members such interimdividends as appears to it to be justified by the profits of the company.As per Article 111, subject to the provisions of the Act, the Board may before recommendingany dividend set aside out of the profits of the Company such sums as at the discretion of theBoard, be applicable, for any purpose to which the profits of the Company may be properlyapplied, including provisions for meeting contingencies or for equalizing dividends; andpending such application, may at the like discretion either be employed in the business of theCompany or be invested in such investments (other than shares of the company) as the Boardmay, from time to time, think fit. The Board may also carry forward any profits which it maythink prudent not to divide, without setting them aside as a reserve.As per Article 112, subject to the rights of persons, if any, entitled to shares with special rightsas to dividends, all dividends shall be declared and paid according to the amount paid or175

credited as paid on the shares in respect whereof the dividend is paid, but if and so long asnothing is paid upon any of the shares in the Company, dividends may be declared and paidaccording to the nominal amounts of the shares. No amount paid or credited as paid on sharesin advance of calls shall be treated for the purpose of this Articles as paid on the shares.Unless otherwise decided by the Board all dividends shall be apportioned and paidproportionately to the amounts paid or credited as paid on the shares during any portion orportions of the period in respect of which the dividend is paid, but if any share is issued onterms providing that it shall rank for dividend as from a particular date such share shall rankfor dividend accordingly.(e)(f)(g)(h)(i)As per Article 113, the Board may deduct from any dividend payable to any member all sumsof money, if any, presently payable by him to the Company on account of calls or otherwise inrelation to the shares of the Company.As per Article 114, where the Company has declared a dividend but which has not been paidor the dividend warrant in respect thereof has not been posted within 30 days from the date ofdeclaration to any shareholder entitled to the payment of the dividend, the Company shallwithin 5 days from the date of expiry of the said period of 30 days, open a special account inthat behalf in any scheduled bank called “Unpaid Dividend of Manappuram Finance Limited”and transfer to the said account, the total amount of dividend which remains unpaid or inrelation to which no dividend warrant has been posted. Any money transferred to the unpaiddividend account of the Company which remains unpaid or unclaimed for a period of sevenyears from the date of such transfer, shall be transferred by the Company to the InvestorEducation and Protection Fund Account of the Central Government. A claim to any money sotransferred to the Investor Education and Protection Fund Account may be preferred to theCentral Government by the shareholders to whom the money is due. No unclaimed or unpaiddividend shall be forfeited by the Board.As per Article 115, any dividend, interest or other monies payable in cash in respect of sharesmay be paid by cheque or warrant sent through the post directed to the registered address ofthe holder or, in the case of joint holders, to the registered address of that one of the jointholders who is first named on the register of members, or to such person and to such addressas the holders may in writing direct. Every such cheque or warrant shall be made payable tothe order of the person to whom it is sent.As per Article 116, any one of two or more joint holders of a share may give effectual receiptsfor any dividends, bonuses or other monies payable in respect of such share.As per Article 117, notice of any dividend that may have been declared shall be given to thepersons entitled to share therein in the manner mentioned in the Act.176

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONThe following contracts (not being contracts entered into in the ordinary course of business carried on by theCompany or entered into more than two years before the date of this Prospectus) which are or may be deemedmaterial have been entered or are to be entered into by the Company. These contracts and also the documentsfor inspection referred to hereunder, may be inspected at the Registered Office of the Company situated atV/104, “Manappuram House”, Valapad, Thrissur 680 567, Kerala, India, from 10.00 a.m. to 1.00 p.m., from thedate of this Prospectus until the date of closure of the Issue.MATERIAL CONTRACTS1. The Memorandum of Understanding between our Company and the Lead Managers dated July 21, 2011and the Addendum to the Memorandum of Understanding between the Company and Co-LeadManagers dated July 21, 2011.2. The Memorandum of Understanding between our Company and Registrar to the Issue dated July 21,2011.3. Debenture Trust Deed to be executed between the Company and the Debenture Trustee on or about thedate of Allotment of the Bonds.4. Escrow Agreement between our Company, Lead Managers, Co-Lead Managers, Registrar to the Issueand the Escrow Collection Bank(s) dated August 3, 2011.5. Tripartite Agreement between the National Securities Depository Limited, the Company and Registrardated August 4, 2011.6. Tripartite Agreement between the Central Depository Services (India) Limited, the Company and theRegistrar dated August 4, 2011.MATERIAL DOCUMENTS1. The Memorandum and Articles of Association of Manappuram Finance Limited.2. Certificate of incorporation of the Company dated July 15, 1992 and Fresh Certificate of IncorporationConsequent upon Change of Name dated June 22, 2011;3. Copy of the Board resolution dated April 28, 2011 approving the Issue.4. Copy of the resolution dated July 21, 2011 passed by the Debenture Committee of Directors approvingthe terms of the issue and the Draft Prospectus.5. Copy of the resolution dated August 8, 2011 passed by the Debenture Committee of Directors approvingthe terms of the issue and this Prospectus6. Consents of the Directors, Compliance Officer of the Company, Lead Managers, Co-Lead Managers,Lead Brokers, Legal Advisor, Registrars to the Issue, Banker to the Issue and the Debenture Trustee toinclude their names in this Prospectus to act in their respective capacities.7. Consent from the Auditors of the Company, for inclusion of their report dated July 19, 2011 on theReformatted Statements as at and for the years ended March 31, 2011, 2010, 2009, 2008 and 2007 inthe form and context in which they appear in this Prospectus and also in the ―Statement of Tax Benefits‖mentioned therein.8. Annual Report of the Company for last five Financial Years.9. Consent of CARE and Brickwork dated July 19, 2011 and July 20, 2011 respectively for inclusion oftheir ratings in this Prospectus.177

10. Credit rating letter dated June 21, 2011 issued by CARE and credit rating letter no.BWR/BLR/RA/2011-12/0072 dated July 1, 2011 issued by Brickwork.11. Application for the in-principle listing approval made to BSE dated July 26, 2011.12. In-principle listing approval obtained from BSE letter no. DCS/IPO/NP/IPO-IP/222/2011-12 datedAugust 3, 2011.13. Due Diligence Certificate dated August 9, 2011 from Lead Mangers and Co- Lead Managers.14. Due Diligence Certificate dated August 9, 2011 from the Debenture Trustee.Any of the contracts or documents mentioned above may be amended or modified any time withoutreference to the holders in the interest of the Company in compliance with the applicable laws.178

RECENT FINANCIAL DEVELOPMENTSReview Report toThe Board of DirectorsManappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)1. We have reviewed the accompanying statement of unaudited financial results of Manappuram FinanceLimited (formerly Manappuram General Finance and Leasing Limited) („the Company‟) for the quarterended June 30, 2011 (the “Statement”), except for the disclosures regarding „Public Shareholding‟ and„Promoter and Promoter Group Shareholding‟ which have been traced from disclosures made by themanagement and have not been reviewed by us. This Statement is the responsibility of the Company'smanagement and has been approved by the Board of Directors. Our responsibility is to issue a report on theStatement based on our review.2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, Review ofInterim Financial Information Performed by the Independent Auditor of the Entity issued by the Institute ofChartered Accountants of India. This standard requires that we plan and perform the review to obtainmoderate assurance as to whether the Statement is free of material misstatement. A review is limitedprimarily to inquiries of company personnel and analytical procedures applied to financial data and thusprovides less assurance than an audit. We have not performed an audit and accordingly, we do not expressan audit opinion.3. Based on our review conducted as above, nothing has come to our attention that causes us to believe thatthe accompanying Statement of unaudited financial results prepared in accordance with recognition andmeasurement principles laid down in Accounting Standard 25 “Interim Financial Reporting”, notifiedpursuant to the Companies (Accounting Standards) Rules, 2006, (as amended) and other recognisedaccounting practices and policies has not disclosed the information required to be disclosed in terms ofClause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it containsany material misstatement.For S.R. BATLIBOI & ASSOCIATESChartered AccountantsFirm Registration Number 101049Wper S BalasubrahmanyamPartnerMembership No: 53315Place: ChennaiDate: July 27, 2011179

Manappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)Regd. & Corp. Office: V/104, Manappuram House, Valapad, Thrissur - 680567Unaudited Financial Results for the quarter ended June 30,2011ParticularsQuarter endedJune 30,2011Quarter ended.June 30,2010(Rs. in Lakhs)Year ended March31,2011 (Audited)1 Income from Operations 49,290.20 18,606.69 117 875 302 Total Expenditurea)Staff Costb)Advertisementc)Provision for standard assetsd)Depreciatione)Other Expenditure15,545,506,573.802,080.70389.80748.705,752.507377.732,311.122,967.29-240.121,859.2042,566.7016,050.0010,385.101,584.702,129.6012,417.303 Profit from Operations before Other Income and Interest (1-2) 33,744.70 11,228.96 75,308.604 Other Income 58.70 73.90 277.305 Profit before Interest (3+4) 33803.40 11,302.86 75,585.906 Interest and finance charges 17,842.60 4386.78 33,196.307 Profit(+)/Loss(-)before tax (5-6) 15,960.80 6916.08 42,389.608 Tax expense 5,178.00 2,300.98 14,123.203 Net Profit (+)/loss(-) (7-8) 10,782.80 4,615.10 28,266.4010 Paid up Equity Share Capital (Face value: Rs.2/- per share) 16,675.00 6,807.70 8,337.5011 Reserves excluding Revaluation reserves 184,058.2012Earnings Per Share (Rs.)-Basic-Diluted(Nominal value of equity share - Rs 2/-)1.291.290.410.41(Not Annualised) (Not Annualised)3.813.7513Aggregate of Public ShareholdingNumber of SharesPercentage of shareholding529,755,60263.54201,963,33259.33264,877,80163.5414 Promoters and promoter group Share holdinga) Pledged/Encumbered-Number of shares-Percentage of shares (as a % of the total shareholding ofpromoter and promoter group)-Percentage of shares (as a% of the total share capital of thecompanyb) Non-encumbered-Number of shares-Percentage of shares (as a % of the total shareholding ofpromoter and promoter group)-Percentage of shares (as a% of the total share capital of thecompany)63,152,22020.777.57240,840,55479.2328.89---138,421,88810040.6734,576,11022.758.23117,420,27777.2528.17180

Notes:Manappuram Finance Limited (formerly Manappuram General Finance and Leasing Limited)Regd. & Corp. Office: V/104, Manappuram House, Valapad, Thrissur - 680567Unaudited Financial Results for the quarter ended June 30,20111. The above results have been reviewed by the Audit Committee and taken on records by the Board ofDirectors in the meeting Held on July 27,2011 and have been subjected to a „Limited Review‟ by theauditors.2. The shareholders of the Company in their extra-ordinary general meeting held on May 31, 2011approved the issuance of equity shares of Rs 2/-each, fully paid up, as bonus shares in the ratio of 1:1to the shareholders existing as on the record date. Accordingly, the earnings per share data for allperiods have been restated. However, the promoter and public shareholding data for the previousperiods is based on the pre-bonus number of shares.3. The Company did not have any unresolved investor complaints as at the beginning / end of the quarter.During the quarter, the Company did not receive any investor complaints.4. The Company is primarily engaged in the business of lending against security of gold and accordinglysegment reporting is not applicable.5. Figures of previous period / year have been regrouped / reclassified, wherever necessary.Place: ValapadDate: July 27, 2011By order o the BoardV.P. NandakumarExecutive Chairman181

AUDITOR EXAMINATION REPORT AND REFORMATTED STATEMENTSReport of S R Batliboi & Associates on the reformatted unconsolidated financial information of each ofthe years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007.ToThe Board of DirectorsManappuram Finance Limited(formerly Manappuram General Finance and Leasing Limited)V/104, “Manappuram House”ValappadThrissur 680 567Kerala, IndiaDear Sirs,1. We have examined the attached reformatted unconsolidated financial information (“ReformattedStatements”) comprising of Balance Sheet, Profit and Loss Account, Cash Flow and notes therein ofManappuram General Finance and Leasing Limited (“Company”) as at and for the years ended March 31,2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007 annexed to this report andapproved by the Board of Directors of the Company and prepared by the Company in accordance with therequirements of:a. paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 ('the Act'); andb. the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008('the Regulations') issued by the Securities and Exchange Board of India ('SEBI'), as amended fromtime to time in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 (the“SEBI Act”).2. We have examined such Reformatted Statements taking into consideration:a. the terms of reference dated July 1, 2011 received from the Company, requesting us to carry out theassignment, in connection with the Draft Prospectus and Prospectus being issued by the Company forits proposed public offer Non-Convertible Debentures (“offering”); andb. the Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of CharteredAccountants of India.3. The Reformatted Unconsolidated Financial Information of the Company have been extracted bymanagement of the Company from the audited unconsolidated financial statements of the Company for theyears ended March 31, 2011 March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007,which were approved by the Board of Directors of the Company. We have audited the financial statementsfor the years ended March 31, 2011, March 31, 2010, March 31, 2009 and March 31, 2008 in respect ofwhich we have issued audit reports dated April 28, 2011, May 11, 2010, April 30, 2009 and May 8, 2008respectively. We have not audited the unconsolidated financial statements of the Company for the yearended March 31, 2007. Those financial statements were audited by, M/s Mohandas & Associates and wehave relied on their report for the purpose of this examination report.4. The Reformatted Statements have been examined by us and are set out in Annexure 1. The Reformattedstatements annexed to this report are as they were produced in the respective years‟ audited financialstatements and have been rounded off to the nearest million of Indian rupees. The accounting policies andnotes to accounts have been reproduced as they were disclosed in the financial statements for therespective years.182

5. We have not audited any financial statements of the Company as of any date or for any period subsequentto March 31, 2011. Accordingly, we express no opinion on the financial position, results of operations orcash flows of the Company as of any date or for any period subsequent to March 31, 2011.6. In the presentation of the Reformatted Statements based on the audited unconsolidated financial statementsreferred to in paragraph 3 above, no adjustments have been made for any events occurring subsequent tothe dates of the audit reports specified therein.7. In our audit report for the year ended March 31, 2008 on the unconsolidated financial statements of theCompany, without qualifying our opinion, we had drawn attention regarding the requirement of previousapproval of the Central Government in respect of certain transactions for the purchase and sale of servicesfrom/to parties covered under Section 297 of the Companies Act, 1956 which are referred to in thereformatted statements. Further, in our CARO (Companies Auditors Report Order, 2003) report for theyears ended March 31, 2008, March 31, 2009, March 31, 2010 and March 31, 2011, we had reportedinstances of fraud on the Company for amounts aggregating Rs 24 Lakhs, Rs 40.69 Lakhs, Rs 84.70 Lakhsand Rs 249 Lakhs respectively, which are referred to in Notes to the Reformatted Statements.8. As stated in our audit reports referred to in paragraph 3 above, we conducted our audit in accordance withauditing standards generally accepted in India to enable us to issue an opinion on general purpose financialstatements. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includes examining, ontest basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by the management aswell as evaluating the overall financial statement presentation. We believe that our audit provided areasonable basis for our opinions.9. Our audits referred to in paragraph 3 above were carried out for the purposes of examining the generalpurpose financial statements. For none of the years referred to in paragraph 3, did we perform audit testsfor the purpose of expressing an opinion on individual balances of accounts or summaries of selectedtransactions, and accordingly, we express no such opinion.10. At the Company‟s request, we have also examined the following financial information relating to theCompany, proposed to be included in the Draft Prospectus and Prospectus prepared by the managementand approved by the Board of Directors of the Company and annexed to this report relating to the yearsended March 31, 2007, March 31, 2008, March 31, 2009, March 31, 2010 and March 31, 2011:i. Statement of dividend paid/proposed, enclosed as Annexure 2 ;ii. Pre issue capitalization Statement enclosed as Annexure 3; andiii. Details of Tax Benefits available to the Company and its shareholders, enclosed as Annexure 4.11. This report should not be in any way construed as a reissuance or redating of any of the previous auditreports issued by us or by other firm of Chartered Accountants, nor should this report be construed as anew opinion on any of the financial statements referred to herein.12. We have no responsibility to update our report for events and circumstances occurring after the date of thereport.13. This report is intended solely for your information and for inclusion in the Draft Prospectus and Prospectusin connection with the proposed public issue of non-convertible debentures of the Company, and is not tobe used, referred to or distributed for any other purpose without our prior written consent.For S.R. BATLIBOI & ASSOCIATESChartered AccountantsFirm Registration Number 101049W183

per S BalasubrahmanyamPartnerMembership No: 53315Place: ChennaiDate: July 19, 2011184

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31,2007Balance Sheet as at March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)As at As at As atSchedule March 31, 2011 March 31, 2010 March 31, 2009As atMarch 31, 2008As atMarch 31, 2007SOURCES OF FUNDSShareholders' fundsShare capital 1 833.75 340.39 212.56 618.00 150.00Share warrants - - 29.98Reserves and surplus 2 18,405.82 5,765.21 1,436.19 311.83 131.25Loan fundsSecured loans 3 43,723.07 16,500.50 3,712.45 1,351.08 511.93Unsecured loans 4 12,817.03 1,856.12 793.34 388.67 420.95Deferred tax liability (net) 6 - - - 0.39 0.9675,779.67 24,462.22 6,184.52 2,669.97 1,215.09APPLICATION OF FUNDSFixed assets 5Gross block 1,651.82 669.80 325.70 196.10 129.98Less : Accumulated depreciation / amortisation 332.80 135.63 71.85 42.06 25.28Net block 1,319.02 534.17 253.85 154.04 104.70Capital work in progress including advances 68.64 1.23 2.60 - -Intangible assets (net) 5 59.84 33.55 23.92 9.17 2.17Deferred tax asset (net) 6 87.07 33.35 13.59 - -Investments 7 403.20 1,406.70 10.77 29.28 29.01Current Assets, Loans and AdvancesCash and bank balances 8 6,663.69 2,682.08 1,133.96 672.23 215.65Other current assets 9 4,947.51 1,878.88 675.91 202.71 156.22Loans and advances 10 64,141.68 18,907.13 4,486.04 1,853.06 959.1175,752.88 23,468.09 6,295.91 2,728.00 1,330.98Less : Current liabilities and provisionsCurrent liabilities 11 1,126.34 810.28 347.97 225.81 217.76Provisions 12 784.64 204.59 68.15 24.71 34.011,910.98 1,014.87 416.12 250.52 251.77Net current assets 73,841.90 22,453.22 5,879.79 2,477.48 1,079.2175,779.67 24,462.22 6,184.52 2,669.97 1,215.09Notes to accounts 18The schedules referred to above and the notes to accounts form an integral part of the Balance Sheet

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March31, 2007Profit and Loss Account for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)Year ended Year ended Year ended Year ended Year endedSchedule March 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007INCOMEIncome from services 13 11,654.20 4,699.77 1,605.34 779.60 420.32Other income 14 161.06 82.24 55.77 17.00 16.1811,815.26 4,782.01 1,661.11 796.60 436.50EXPENDITUREPersonnel expenses 15 1,605.00 536.40 283.95 116.38 60.61Operating and other expenses 16 2,438.71 1,000.75 494.71 198.84 111.87Depreciation / amortization 6 212.96 57.38 33.71 18.26 10.66Financial expenses 17 3,319.63 1,369.23 385.91 143.51 89.857,576.30 2,963.76 1,198.28 476.99 272.99Profit before tax 4,238.96 1,818.25 462.83 319.61 163.51Less: Provision for tax- Current tax 1,466.04 640.11 171.44 109.20 57.50- Deferred tax (53.72) (19.07) (13.98) (0.57) (0.38)- Fringe benefit tax - - 2.40 1.08 0.27Profit after tax 2,826.64 1,197.21 302.97 209.90 106.12Balance brought forward from previous year (refer Sch. 2) 917.11 188.74 39.00 6.14 2.80Profit after tax and appropriation for the financial year- 88.12 - - -2008-09Profit available for appropriation 3,743.75 1,474.07 341.97 216.04 108.92Appropriations:- Transfer to Statutory Reserve 565.33 239.45 60.60 42.00 22.00- Transfer to General Reserve 282.67 119.72 31.00 100.00 50.00- Transfer to Capital Redemption Reserve - 17.14 5.72 5.72 5.71- Interim Dividend on Equity Shares - - 1.64 16.50 -- Dividend on Redeemable Preference Shares - - 3.00 3.00 -- Proposed Dividend on Equity Shares 500.25 165.89 43.14 5.50 19.80- Tax on distributed profit 81.14 27.22 8.13 4.26 3.64- Dividend on Convertible Preference Shares - - - 0.06 1.63Net profit carried forward to balance sheet 2,314.36 904.65 188.74 39.00 6.14Earnings per share information (Refer note 18.5 and note 18.8)Earnings per share, prior to stock split- Weighted average number of equity shares- Basic 371,380,825 58,529,650 27,370,374 22,000,000 22,000,000- Diluted 376,492,274 58,895,744 27,370,374 23,840,000 22,000,000- Basic earnings per share (in Rs.) 7.61 20.46 10.94 9.38 9.48- Diluted earnings per share (in Rs.) 7.51 20.33 10.94 8.65 9.48Nominal value per equity shares Rs. 2/- Rs. 10/- Rs. 10/- Rs 10/- Rs 10/-Earnings per share, subsequent to stock split- Weighted average number of equity shares- Basic 371,380,825 292,648,250 136,851,870 110,000,000 110,000,000- Diluted 376,492,274 294,478,720 136,851,870 119,200,000 110,000,000- Basic earnings per share (in Rs.) 7.61 4.09 2.19 1.88 1.90- Diluted earnings per share (in Rs.) 7.51 4.07 2.19 1.73 1.90Nominal value of equity shares Rs. 2/- Rs. 2/- Rs. 2/- Rs. 2/- Rs. 2/-

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31,2007Cash Flow Statement for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008 and March 31, 2007(All amounts are in millions of Indian rupees unless otherwise stated)Year ended Year ended Year ended Year ended Year endedMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007A. Cash flow from operating activitiesNet profit before taxation, and extraordinary items 4,238.96 1,818.25 462.83 319.61 163.51Adjustments for:Depreciation / amortization 212.96 57.38 33.71 18.26 10.66Loss on sale of fixed assets 2.28 4.34 2.32 0.84 -Write back of diminution in value of investments - - - (1.27) -(Profit) / Loss on sale of investments (3.96) 0.43 (0.42) - 1.27Interest income (124.67) (66.26) (41.95) (12.34) (12.43)Dividend income (3.62) (0.48) (6.26) - -Interest expense 3,156.59 1,304.54 355.87 141.92 88.28Provision for standard assets 158.47 - - - -Bad debts written off and provision for bad debts 224.28 141.99 177.86 33.72 21.32Operating profit before working capital changes 7,861.29 3,260.19 983.96 500.74 272.61Movements in working capital :Decrease / (Increase) in other current assets (3,026.12) (999.34) (473.21) (34.76) (117.96)Decrease / (Increase) loans and advances (45,458.84) (14,218.30) (2,810.82) (923.95) (382.89)Increase / (Decrease) in current liabilities and provisions 228.75 254.41 125.59 (11.34) 14.43Cash generated from operations (40,394.92) (11,703.04) (2,174.48) (469.31) (213.81)Direct taxes paid (net of refunds) (1,442.22) (653.38) (177.35) (101.44) (48.96)Net cash from operating activities (41,837.14) (12,356.42) (2,351.83) (570.75) (262.77)B. Cash flows from investing activitiesPurchase of fixed assets (1,096.42) (297.24) (153.19) (75.43) (68.63)Proceeds from sale of fixed assets 2.63 0.74 - - 2.03Purchase of investments (5,770.00) (2,680.13) - - (12.34)Sale / maturity of investments 6,777.46 1,284.24 18.92 1.00 2.40Interest received 82.16 44.21 41.95 12.34 12.43Dividends received 3.62 - 6.26 - 0.00Net cash from investing activities (0.55) (1,648.18) (86.06) (62.09) (64.11)C. Cash flows from financing activitiesProceeds from issuance of share capital 11,124.38 2,677.19 525.23 468.00 20.00Share issue expenses adjusted against securities premium / not(235.64) (76.19) (23.39) (11.72)written off or adjustedRedemption of preference shares - (40.00) - -Increase / (decrease) in secured debentures including 2,410.52 1,801.77 166.60 258.62 75.05Increase / (decrease) in bank borrowings (net) 24,388.01 9,640.91 2,266.20 583.55 (23.38)Increase / (decrease) in borrowings from others (net) 450.00 200.00 - - (0.00)Increase / (decrease) in subordinate bond (net) 613.62 477.88 370.47 114.69 99.70Increase / (decrease) in deposits including inter-corporate (19.74) (29.95) (42.84) (146.32) 125.12Proceeds from commercial paper 21,810.03 3,316.31 - - -Repayment of commercial paper (12,452.89) (2,665.58) - - -Increase / (decrease) in vehicle loans (net) 8.39 (0.39) 0.96 1.59 -Proceeds from subordinated debt 1,000.00 - - - -Interest paid (3,079.25) (1,227.99) (338.23) (148.12) (84.25)Dividends paid (169.86) (54.85) (23.64) (24.42) (9.75)Tax on dividend paid (28.27) (9.14) (1.74) (6.45) (1.37)Net cash used in financing activities 45,819.30 14,009.97 2,899.62 1,089.42 201.12Net increase in cash and cash equivalents (A + B + C) 3,981.61 5.37 461.73 456.58 (125.76)Cash and cash equivalents at the beginning of the year 2,682.08 1,133.96 672.23 215.65 341.41Add: Adjustment on account of amalgamation - 1,542.75 - - -Cash and cash equivalents at the end of the year 6,663.69 2,682.08 1,133.96 672.23 215.65Components of cash and cash equivalentsCash and cheques on hand 1,188.01 644.98 182.62 166.71 66.07With banks- on current account# 2,480.92 841.12 126.72 213.86 56.94- on deposit account* 2,992.30 1,193.85 823.38 274.70 92.13- on unpaid dividend accounts** 2.46 2.13 1.24 16.96 0.516,663.69 2,682.08 1,133.96 672.23 215.65*Includes cash collateral deposits held with banks which arenot available for use by the Company.# includes amouts in Escrow account towards closed publicdeposits not available for use by the Company as they representcorresponding deposit liabilities**These balances are not available for use by the Company as they represent corresponding unpaid dividend liabilities.2,119.41 1,182.57 702.86 270.76 55.5511.44 - - - -

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)As at As at As at As at As atMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007Schedule 1: Share capitalAuthorized106,000,000 equity shares of Rs. 10/- each 1,060.00 1,060.00 260.00 280.00 160.00400,000 redeemable preference shares of Rs. 100/- each 40.00 40.00 40.00 40.00 40.00Nil compulsorily convertible preference shares of Rs. 100/- each - - 500.00 480.00Issued, subscribed and paid-upEquity shares, fully paid up* # 833.75 340.39 172.56 110.00 110.007.5% redeemable preference shares of Rs. 100 each fully paid up # - - 40.00 40.00 40.000.05% compulsorily convertible preference shares of Rs. 100 each- - - 468.00 -fully paid up #833.75 340.39 212.56 618.00 150.00# Number of shares, issued, subscribed and paid-up-Equity shares fully paid up 416,874,188 34,038,522 17,255,828 11,000,000 11,000,000-7.5% redeemable preference shares of Rs. 100 each fully paid up Nil Nil 400,000 400,000 400,000-0.05% compulsorily convertible preference shares of Rs. 100 eachNil Nil Nil 4,680,000 Nilfully paid-up-Face value of equity shares Rs. 2/- Rs. 10/- Rs. 10/- Rs. 10/- Rs. 10/-*(i) 27,500,000 equity shares of Rs 2/- each are allotted as fully paid up bonus shares by capitalisation of General Reserve - Rs. 40 and Securities Premium - Rs. 15 inearlier years.(ii) 170,192,610 equity shares of Rs.2/- each are allotted as fully paid up bonus shares by capitalisation of Capital redemption reserve - Rs 40 and Securities PremiumAccount - Rs 300.39 in 2011Schedule 2: Reserves and surplusCapital redemption reserveOpening balance 40.00 22.86 17.14 11.42 5.71Add: Transferred from Profit and loss account - 17.14 5.72 5.72 5.71Less: Capitalised for bonus issue (40.00) - - - -- 40.00 22.86 17.14 11.42Securities premium accountOpening balance 3,988.96 877.30 - - 15.00Add: Securities premium on merger of MAFIT as at April 1, 2008 - 4.22 - - -Add: Securities premiumof MAFIT from April 1, 2008 to March31,- 527.51 - - -2009 (net of share issues expenses)Add: Securities premium on issue of shares 10,971.39 2,656.12 900.69 - -Less: Capitalised for bonus issue (300.39) - - - -Less: Transferred to Share Capital - - - - (15.00)Less: Share issues expenses adjusted against securities premium (235.64) (76.19) (23.39) - -14,424.32 3,988.96 877.30 - -Statutory reserveOpening balance 450.75 152.90 92.30 50.30 28.30Add: Statutory Reserve on merger of MAFIT as at April 1, 2008 - 23.60 - - -Add: Statutory Reserve of MAFIT from April 1, 2008 to March 31,- 34.80 - - -2009Add: Transferred from Profit and loss account 565.33 239.45 60.60 42.00 22.001,016.08 450.75 152.90 92.30 50.30General reserveOpening balance 368.39 194.39 163.39 63.39 53.39Add: General Reserve on merger of MAFIT - as at April 1, 2008 - 80.65 - - -Add: General Reserve of MAFIT from April 1, 2008 to March 31,- 34.80 - - -2009Less: Adjustment to General Reserve on merger with MAFIT - (61.17) - - -Less: Transferred to Share Capital - - - - (40.00)Add: Transferred from Profit and loss account 282.67 119.72 31.00 100.00 50.00651.06 368.39 194.39 163.39 63.39Profit & Loss Account 2,314.36 904.65 188.74 39.00 6.14Add: Profit &Loss account on merger of MAFIT as at March 31,- 12.46 - - -20082,314.36 917.11 188.74 39.00 6.1418,405.82 5,765.21 1,436.19 311.83 131.25

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)Schedule 3: Secured loans7.5% -14.5% Secured Non-convertible Debentures of Rs. 1,000/- -Rs. 1,000,000 each redeemable at par at the end of the term of eachseries of debentures ranging between 1-5 years # *As at As at As at As at As atMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 20075,012.85 2,619.84 723.28 633.37 370.80Add: Interest accrued and due thereon 2.68 19.52 7.54 3.25 11.825,015.53 2,639.36 730.82 636.62 382.62From banks- Cash credit* 7,488.19 257.93 1,079.41 372.45 128.93- Working Capital Loans* 30,558.41 13,400.66 1,899.28 340.04 -From Others- Working Capital Loans* 650.00 200.00 - - -Vehicle loans 10.94 2.55 2.94 1.97 0.38(Secured by hypothecation of vehicles)43,723.07 16,500.50 3,712.45 1,351.08 511.93# Number of secured debentures 1,328,535 2,619,833 723,280 633,375 370,797* Refer note 18.14Schedule 4: Unsecured loansDeposits - 18.54 43.57 75.74 240.94Debenture application money 20.00 2.49 97.27 20.57 15.96Inter-Corporate Deposits 1.64 2.84 7.76 18.29 4.67Commercial Paper 10,007.87 650.73 - - -Subordinate bond 1,778.76 1,165.14 641.58 271.11 152.06Subordinate debt 1,000.00 - - - -Interest Accrued and Due 8.76 16.38 3.16 2.96 7.3212,817.03 1,856.12 793.34 388.67 420.95Schedule 5: on fixed assets is set out in the following pageSchedule 6: Deferred tax (liability) / asset (net)Deferred Tax LiabilityDifferences in depreciation and other differences in block of fixedassets as per tax books and financial books(34.39) (34.76) (21.02) (12.03) (6.62)Deferred tax assetEffect of expenditure debited to profit and lossaccount inthe currentyear but allowed for tax purposes in following years15.71 4.29 1.74 - -Provision for loans and advances 105.75 63.82 32.87 11.64 5.66Net Deferred tax asset / (liability) 87.07 33.35 13.59 (0.39) (0.96)

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)Schedule 5: Fixed AssetsGROSS BLOCK DEPRECIATION/ AMORTIZATION NET BLOCKDESCRIPTIONAs atApril 1, 2010AdditionsDeductionsAs atMarch 31, 2011As atApril 1, 2010AdditionsDeductionsAs atMarch 31, 2011As atMarch 31, 2011As atMarch 31, 2010Tangible AssetsFreehold Land* 31.32 - - 31.32 - - - - 31.32 31.32Building 15.12 66.02 - 81.14 0.42 0.51 - 0.93 80.21 14.70Office equipment 60.20 113.02 0.26 172.96 13.61 26.75 0.19 40.17 132.79 46.59Computer equipment 168.82 203.33 9.50 362.65 62.68 106.05 6.10 162.63 200.02 106.14Furniture and Fittings 383.89 595.34 0.29 978.94 56.38 69.51 0.28 125.61 853.33 327.51Vehicle** 9.55 14.34 1.46 22.43 2.52 1.60 0.70 3.42 19.01 7.03Plant & Machinery 0.90 2.16 0.68 2.38 0.02 0.03 0.01 0.04 2.34 0.88Total 669.80 994.21 12.19 1,651.82 135.63 204.45 7.28 332.80 1,319.02 534.172009-10 # 325.70 353.04 8.94 669.80 71.85 67.63 3.85 135.63 534.172008-09 196.10 132.66 3.06 325.70 42.06 30.53 0.74 71.85 253.852007-08 129.98 67.14 1.02 196.10 25.28 16.96 0.18 42.06 154.042006-07 63.50 68.57 2.09 129.98 15.17 10.17 0.06 25.28 104.70Intangible assetsSoftwares 46.03 34.80 - 80.83 12.48 8.51 - 20.99 59.84 33.55Total 46.03 34.80 - 80.83 12.48 8.51 - 20.99 59.84 33.552009-10 29.95 16.08 - 46.03 6.03 6.45 - 12.48 33.552008-09 12.02 17.93 - 29.95 2.85 3.18 - 6.03 23.922007-08 3.73 8.29 - 12.02 1.55 1.30 - 2.85 9.172006-07 3.67 0.06 - 3.73 1.07 0.49 - 1.56 2.17* The Company is in the process of registering the title of the land acquired in an earlier year for Rs 0.7 in its name.** Includes vehicles taken on finance lease/hire purchaseParticulars 2010-11 2009-10 2008-09 2007-08 2006-07Gross block 18.39 6.62 5.21 3.53 0.99Accumulated depreciation 1.58 0.97 0.46 0.30 0.14Net block 16.81 5.65 4.75 3.23 0.85Depreciation for the year 1.18 0.50 0.39 0.16 0.09# Additions during the year ended March 31, 2010 includes Rs 70.50 been assets transferred on amalgamation of MAFIT and depreciation includes Rs 16.70 being transferred on amalgamation.

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)As at As at As atMarch 31, 2011 March 31, 2010 March 31, 2009As atMarch 31, 2008As atMarch 31, 2007Schedule 7: InvestmentsLong Term Investments(Quoted, at cost)A. Other than trade17,000 (Previous year -17,000) units of Rs. 100 each in 6.13% Govt. of India- - 1.64 1.64 1.34Loan15,000 (Previous year -15,000) units of Rs. 100 each in 6.17% Govt. of India- - 1.40 1.40 1.23Loan32,000 (Previous year -62,000) units of Rs. 100 each in 7.38% Govt. of India3.15 6.15 6.15 6.15 5.95Loan15,000 (Previous year -15,000) units of Rs. 100 each in 7.59% Govt. of India- - 1.50 1.50 1.46Loan800 (Previous year -800) equity share of Rs. 10 each fully paid in Chowgule- - - - -Steamship500 (Previous year -500) equity share of Rs. 10 each fully paid in Sterling- - - - -Holiday Resorts India Limited100 (Previousyear -100) equityshare of Rs. 10 each fully paid in Raipur Alloys- - - - -and Steels Limited100 (Previous year -100) equity share of Rs. 10 each fully paid in Western- - - - -Paques India Limited100 (Previous year -100) equity share of Rs. 10 each fully paid in Rohit Pulp- - - - -and Paper Mills Limited.100 (Previous year - 100) equity share of Rs. 10 each fully paid in The0.01 0.01 0.01 0.01 0.01Dhanalakshmi Bank Limited.400 (Previous year -400) equity share of Rs. 10 each fully paid in Global- - - - -Finance Limited.300 (Previous year -300) equity share of Rs. 10 each fully paid in Vijaya Bank0.01 0.01 0.01 0.01 0.01LimitedNil (Previous year -53,700) units of Rs. 100 each in 6.85% Govt. of India- - - 5.35 5.13LoanNil (Previous year - 23,500) units of Rs. 100 each in 8% TN Loan - - - 2.46 2.34Nil (Previous year -30) units of Rs. 1,00,000 each in 8%Gujarat Electricity- - - 3.00 2.78BoardNil (Previous year - 5,000) units of Rs. 100 each in 7.00% Govt of India Loan - - - 0.51 0.49Nil (Previous year - 2,960) units of Rs. 100 each in 7.50% Govt of India Loan - - - 0.31 0.30Nil (Previous year - 20,000) units of Rs. 100 each in 7.33% HAR Loan - - - 1.88 1.91Nil(Prev year-Nil)(In 2007- 10000units of Rs 100 each in 13.30% APPFCL1.00Bonds)(Unquoted, at cost)A. Other than trade1,000 (Previous year -1,000) equity share of Rs. 10 each fully paid in TheCatholic Syrian Bank Limited.B. In Subsidiary CompaniesNil (Previous year - 500,000) equity shares of Rs. 10 each fully paid inManappuram Insurance Brokers Private Limited0.03 0.03 0.03 0.03 0.03- 5.00 5.00Current Investments - Trade (Quoted, at lower of cost and market value) -1,629 units (previous year -1,629) of Rs. 20.46/- each in Sundaram Mutual- 0.03 0.03 0.03 0.03Fund279,730 units (previous year -Nil) of Rs. 1,001.29/- each in Reliance Money- 280.09 - - -Manager Fund - Institutional Option - Daily Dividend13,978,308 units (previous year -Nil) of Rs. 10.0179/- each in DWS Ultra140.03 - - -Short Term Fund - Institutional Daily Dividend - Reinvest98,035,440 units (previous year -Nil) of Rs. 10/- each in LICMF -Floating980.35 - - -Rate Fund - Short term plan - Daily Dividend Plan40,000,000 (previous year -Nil) of Rs. 10 each in State Bank of India -DebtFund Series - 370 Days - 7- Growth400.00403.20 1,406.70 10.77 29.28 29.01Aggregate amount of quoted investments 3.17 6.17 10.74 24.25 25.42Market value of quoted investments 3.37 6.37 10.57 23.26 24.04Aggregate amount of unquoted investments 400.03 1,400.54 0.03 5.03 5.03Refer Note 11 of Schedule 18 for details of investments purchased and sold during the year.

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009 March 31, 2008, and March 31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)Schedule 8: Cash and bank balancesAs at As at As at As at As atMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007Cash on hand 1,188.01 644.98 182.62 166.71 66.07Balances with scheduled banks- on current accounts* 2,480.92 841.12 126.72 213.86 56.94- on deposit accounts** 2,992.30 1,193.85 823.38 274.70 92.13- on unpaid dividend accounts 2.46 2.13 1.24 16.96 0.516,663.69 2,682.08 1,133.96 672.23 215.65* Includes amounts in Escrow account towards closed public deposits 11.44 - - - -** deposit accounts includes collateral deposit towards gold loans assigned and other facilities (Refer Note 12 to Schedule 18)Schedule 9: Other current assetsInterest accrued 4,658.43 1,827.89 661.44 190.95 153.27Stock of foreign currency - - 0.01 0.04 2.95Stock of gold coins etc. 287.17 48.53 14.46 - -Others 1.91 2.46 - 11.72 -4,947.51 1,878.88 675.91 202.71 156.22Schedule 10: Loans and advancesSecured, considered goodLoans:- Gold 63,574.42 18,456.23 3,974.87 977.17 197.62- Hypothecation 18.79 172.38 355.50 620.17 441.05- Stock on Hire 0.29 8.24 29.60 71.38 101.29- Others 77.11 57.52 52.38 56.47 62.43Unsecured, considered goodAdvances recoverable in cash or kind or for value to be received 123.88 62.15 9.36 36.78 4.67Deposits 347.19 150.61 64.33 91.09 152.0564,141.68 18,907.13 4,486.04 1,853.06 959.11Secured, considered doubtfulLoans:- Gold 130.99 56.03 25.76 6.97 6.08- Hypothecation 26.69 114.40 53.50 15.48 6.36- Stock on Hire 1.31 14.15 8.27 2.49 1.17- Others 5.98 5.73 4.06 4.05 1.61Unsecured, considered doubtfulAdvances recoverable in cash or kind or for value to be received 2.49 1.81 5.11 5.27 -167.46 192.12 96.70 34.26 15.22Less: Provision for doubtful loans and advances 167.46 192.12 96.70 34.26 15.2264,141.68 18,907.13 4,486.04 1,853.06 959.11

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31,2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)Schedule 11: Current liabilitiesAs at As at As at As at As atMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007Sundry creditors for expenses* 275.56 148.81 91.09 29.92 15.55Book overdraft 5.09 6.68 8.45 - -Interest accrued but not due on loans 270.91 169.11 30.71 17.57 23.77197.90 339.17 155.42 121.03 13.29Sundry deposits 10.95 20.08 21.22 22.92 13.83Investor Education and Protection Fund shall be credited byfollowing amounts (as and when due)a) Unpaid dividends 2.46 2.13 1.24 0.46 0.51b) Unpaid matured Deposits 2.14 4.58 5.11 5.26 -c) Unmatured Deposits 9.30 - - - -Dividend payable - - - 16.50 -Other liabilities 352.03 119.72 34.73 12.15 150.811,126.34 810.28 347.97 225.81 217.76*There are no duesoutstandingto anyenterprisescovered under Micro, Small and MediumEnterprisesDevelopment Act, 2006, based on the information available withthe Company during the year and as at March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007.Schedule 12: ProvisionsProvisions for taxation (net of advance tax and tax deducted at29.96 6.13 14.17 17.68 8.86source)Provision for standard assets 158.47 - - - -Provision for gratuity 14.82 - - - -Provision for dividend on preference shares - - 3.00 0.07 1.63Provision for Fringe benefit tax (net of advance tax) - - - - 0.08Proposed final dividend 500.25 170.19 43.14 5.50 19.80Tax on proposed dividend 81.14 28.27 7.84 1.46 3.64784.64 204.59 68.15 24.71 34.01

Manappuram General Finance and Leasing Limited (now changed to Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March31, 2007Schedules to accounts(All amounts are in millions of Indian rupees unless otherwise stated)Year ended Year ended Year ended Year ended Year endedMarch 31, 2011 March 31, 2010 March 31, 2009 March 31, 2008 March 31, 2007Schedule 13: Income from servicesInterest and other income from- Gold and other loans 11,533.49 4,575.15 1,431.84 564.93 318.14- Business loans 0.99 2.24 2.86 9.71 1.78- Personal loans 0.62 4.36 8.18 11.40 0.20- Hypothecation and hire purchase loans 93.70 90.86 139.68 182.36 93.84- Others 5.32 2.49 2.34 1.60 -Income from fee based activities*- Money transfer 19.21 21.26 18.85 9.28 5.71- Others 0.87 3.41 1.59 0.32 0.6511,654.20 4,699.77 1,605.34 779.60 420.32Schedule 14: Other incomeInterest (gross)* 124.67 66.26 41.95 12.34 12.43Foreign exchange gain (net) 0.02 (0.01) (0.20) - 0.22Bad debts recovered 8.64 3.55 3.15 2.10 1.64Others 27.73 12.44 10.87 2.56 1.89161.06 82.24 55.77 17.00 16.18* Tax deducted at source 24.93 9.89 7.24 3.09 1.65Schedule 15: Personnel expensesSalaries, wages and bonus 1,419.26 492.87 266.54 109.89 56.63Contribution to provident and other funds 180.71 41.37 16.90 6.12 3.93Staff welfare expenses 5.03 2.16 0.51 0.37 0.051,605.00 536.40 283.95 116.38 60.61Schedule 16: Operating and other expensesRent 328.40 133.27 54.44 27.53 15.68Electricity 38.16 18.29 11.55 5.62 2.99Insurance 23.75 4.64 0.47 0.89 0.69Travel and conveyance 83.90 53.79 21.60 8.44 7.15Communication expenses 44.23 14.74 28.05 16.34 6.68Advertisement 1,038.51 482.81 81.70 61.44 23.21Directors sitting fees 1.51 0.92 0.82 0.75 0.39Repairs and maintenance- Vehicles 1.78 1.56 0.91 0.56 0.38- Others 62.79 17.64 7.95 3.86 2.07Legal and professional fees 95.19 24.42 23.71 6.83 2.31Security charges 204.16 54.90 29.24 15.23 6.79Rates and taxes 40.47 9.96 18.25 5.66 4.47Printing and stationery 41.51 17.65 13.34 9.68 4.02Loss on sale of assets 2.28 4.34 - 0.08 0.01Bad debts 248.94 53.42 117.54 14.69 21.32Provision for standard assets 158.47 - - - -Provision for loans and advances, net of bad debts written off (24.66) 88.58 60.32 19.03 9.52Miscellaneous expenses 49.32 19.82 24.82 2.21 4.192,438.71 1,000.75 494.71 198.84 111.87Schedule 17: Financial expensesInterest- on Debentures 299.67 288.69 105.69 46.47 33.96- on Bonds 233.15 134.78 53.33 27.71 -- on Deposits 1.37 3.84 6.26 40.93 27.24- on Banks borrowings 2,210.30 795.99 188.52 26.74 13.40- on Other borrowings 34.30 16.94 0.27 - -- on Commercial Papers 369.88 57.47 - - -- Others 7.92 6.83 1.80 0.08 13.69Bank and other charges 163.04 64.69 30.04 1.58 1.563,319.63 1,369.23 385.91 143.51 89.85

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________Schedule 18: Notes to accounts(All amounts are in millions of Indian Rupees unless otherwise stated)18. 1 Statement of significant accounting policiesa) Basis of preparationThe financial statements have been prepared to comply in all material respects with the Notifiedaccounting standard by Companies Accounting Standards Rules, 2006, (as amended) the relevantprovisions of the Companies Act, 1956 and the guidelines issued by the Reserve Bank of India asapplicable to a NBFC. The financial statements have been prepared under the historical cost conventionand on an accrual basis except for interest and discounts on non performing assets which are recognizedon realization basis. The accounting policies have been consistently applied by the Company and areconsistent with those used in the previous year.b) Use of estimatesThe preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent liabilities at the date of the financial statements and the results ofoperations during the reporting period end. Although these estimates are based upon management’s bestknowledge of current events and actions, actual results could differ from these estimates.c) Fixed assetsFixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Costcomprises the purchase price and any cost attributable to bringing the asset to its working condition for itsintended use.d) DepreciationDepreciation is provided using the straight line method at the rates prescribed under schedule XIV of theCompanies Act, 1956, which is management’s estimate of the useful lives of the assets except as follows:Nature of assetRate of depreciation followedComputer equipment 16.21% to 33.33%During the year ended March 31, 2011, the Company has changed its estimated useful life of computerequipments from 6 years to 3 years. This change in estimated useful life has resulted in provision ofadditional depreciation by Rs 57.09 million and the profit before tax of the Company is lower by thecorresponding number.Computer software cost capitalized is amortized over the estimated useful life of 6 years.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________e) Impairmenti) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication ofimpairment based on internal / external factors. An impairment loss is recognized wherever the carryingamount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetsnet selling price and value in use. In assessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate that reflects current market assessments ofthe time value of money and risks specific to the asset.ii) After impairment, depreciation is provided on the revised carrying amount of the assets over itsremaining useful life.f) LeasesFinance leases, which effectively transfer to the Company substantially all the risks and benefitsincidental to ownership of the leased item, are capitalized at the lower of the fair value and present valueof the minimum lease payments at the inception of the lease term and disclosed as leased assets. Leasepayments are apportioned between the finance charges and reduction of the lease liability based on theimplicit rate of return. Finance charges are charged directly against income. Lease management fees, legalcharges and other initial direct costs are capitalised.If there is no reasonable certainty that the Company will obtain the ownership by the end of the leaseitem, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset orthe lease term.Leases where the lessor effectively retains substantially all the risks and benefits of ownership of theleased term, are classified as operating leases. Operating lease payments are recognized as an expense inthe Profit and Loss account on a straight-line basis over the lease term.g) InvestmentsThe Board of directors has spelt out the criteria to classify investments into current and long terminvestments in the investment policy. Investments that are readily realisable and intended to be held fornot more than a year are classified as current investments. All other investments are classified as longterminvestments. Any inter class transfer should be with the approval of the board and as per RBIregulation.Current investments are carried at lower of cost and fair value determined on an individual investmentbasis. Quoted current investments for each category is valued at cost or market value whichever is lower.Unquoted equity shares in the nature of current investments is valued at cost or break-up value, whicheveris lower.Long-term investments are carried at cost. However, provision for diminution in value is made torecognise a decline other than temporary in the value of the investments.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________h) RevenuesRevenue is recognized to the extent that it is probable that the economic benefits will flow to theCompany and the revenue can be reliably measured.Interest income on loans given is recognised under the internal rate of return method. Such interests,where installments are overdue in respect of non performing assets are recognised on realization basis.Any such income recognised and remaining unrealized after the installments become overdue withrespect to non performing assets is reversed.Revenues from fee-based activities are recognised as and when services are rendered. Interest on depositsis recognised on a time proportion basis taking into account the amount outstanding and the rateapplicable. Gains arising on direct assignment of assets are recognized over the tenure of agreements asper guideline on securitization of standard assets issued by the Reserve Bank of India, losses, if any arerecognised upfront.i) Employee benefitsi. Retirement benefits in the form of Provident Fund are defined contribution scheme and thecontributions are charged to the Profit and Loss Account of the year when the contributions tothe fund maintained by the Central Government is due. There are no other obligations otherthan the contribution payable to the respective trusts.ii.iii.iv.Gratuity liability under the Payment of Gratuity Act which is a defined benefit scheme isaccrued and provided for on the basis of an actuarial valuation on projected unit creditmethod made at the end of each financial year.Short term compensated absences are provided for on based on estimates.Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.j) Foreign currency transactions(i) Initial RecognitionForeign currency transactions are recorded in the reporting currency, by applying to the foreign currencyamount the exchange rate between the reporting currency and the foreign currency at the date of thetransaction.(ii) ConversionForeign currency monetary items are reported using the closing rate. Non-monetary items which arecarried in terms of historical cost denominated in a foreign currency are reported using the exchange rateat the date of the transaction and non-monetary items which are carried at fair value or other similarvaluation denominated in a foreign currency are reported using the exchange rates that existed when thevalues were determined.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________(iii) Exchange DifferencesExchange differences arising on the settlement of monetary items or on reporting company's monetaryitems at rates different from those at which they were initially recorded during the year, or reported inprevious financial statements, are recognized as income or as expenses in the year in which they arise.k) Income TaxTax expense comprises current and deferred tax. Current income tax is measured at the amount expectedto be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxesreflects the impact of current year timing differences between taxable income and accounting income forthe year and reversal of timing differences of earlier years.Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at thebalance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certaintythat sufficient future taxable income will be available against which such deferred tax assets can berealised.At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizesunrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, asthe case may be that sufficient future taxable income will be available against which such deferred taxassets can be realised.The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Companywritesdown the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certainor virtually certain, as the case may be, that sufficient future taxable income will be available againstwhich deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomesreasonably certain or virtually certain, as the case may be, that sufficient future taxable income will beavailable.l) Earnings per shareBasic earnings per share are calculated by dividing the net profit or loss for the period attributable toequity shareholders (after deducting preference dividends and attributable taxes) by the weighted averagenumber of equity shares outstanding during the period. The weighted average numbers of equity sharesoutstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue toexisting shareholders; share split; and reverse share split, if any.For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributableto equity shareholders and the weighted average number of shares outstanding during the period areadjusted for the effects of all dilutive potential equity shares.m) Provisionsa) A provision is recognized when an enterprise has a present obligation as a result of past event and it isprobable that an outflow of resources will be required to settle the obligation, in respect of which areliable estimate can be made. Provisions are not discounted to its present value and are determined based

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________on management estimate required to settle the obligation at the balance sheet date. These are reviewed ateach balance sheet date and adjusted to reflect the current management estimates.b) Provision policy for gold loans and other loan portfoliosSecured loans are classified / provided for, as per management estimates, subject to the minimumprovision required as per Non-Banking Financial (Deposit Accepting or Holding) CompaniesPrudential Norms (Reserve Bank) Directions, 2007 as follows:Classification of loans (Gold and other loans)Asset ClassificationProvisioning policyStandard Assets # 0.25%Sub-standard assets 10%Doubtful assets100% of unsecured portion + 20 to 50% ofLoss assets100% written off in books.Classification of loans (Hypothecation and Stock on Hire)Asset ClassificationProvisioning policyStandard Assets # 0.25%Sub-standard assets 10% to 100%Doubtful assets*100% written off in books.Loss assets100% written off in books.* Company considers all loans overdue for more than 18 months as doubtful of recovery.# As per notification DNBB.222 / CGM(US)-2011 issued by Reserve Bank of India (RBI) on January 17,2011.n) Segment reportingIdentification of segments:The Company’s operating businesses are organized and managed separately according to the nature ofproducts and services provided, with each segment representing a strategic business unit that offersdifferent products and serves different markets. As the Company operates only in India it has a singlegeographical segment.Allocation of common costsCommon allocable costs are allocated to each segment according to the relative contribution of eachsegment to the total common costs.Unallocated itemsUnallocable costs include general corporate income and expense items which are not allocated to anybusiness segment.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________From financial year 2010-11, the Company primarily operates in the business of "Gold loan" andaccordingly no segment reporting is applicable.o) Cash and Cash EquivalentsCash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-terminvestments with an original maturity of three months or less.p) Ancilliary borrowing costsAncilliary borrowings costs incurred issue of debentures and other long term borrowings are expensedover the tenure of the loan.q) Share issue expensesExpenses incurred in connection with issue of shares are adjusted (net of tax effects, if any) against thesecurities premium account in accordance with Section 78 of the Companies Act, 1956.r) Insurance claimsInsurance claims are accrued for on the basis of claims admitted and to the extent there is no uncertaintyin receiving the claims.s) Surplus on auction of pledged goldThe Company has a policy of refund of any surplus that arises on auction of pledged gold which has beenre-possessed by the Company in accordance with the terms of the agreement with the customers.t) Employee stock compensation costMeasurement and disclosure of the employee share-based payment plans is done in accordance with SEBI(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and theGuidance Note on Accounting for Employee Share-based Payments, issued by the Institute of CharteredAccountants of India. The Company measures compensation cost relating to employee stock optionsusing the intrinsic value method. Compensation expense, if any is amortized over the vesting period of theoption on a straight line basis.18. 2 Nature of operationsManappuram General Finance and Leasing Limited ('MAGFIL' or 'the Company') was incorporated onJuly 15, 1992 in Thrissur, Kerala. The Company is a non banking financial company (‘NBFC’), whichprovides a wide range of fund based and fee based services including gold loans, money exchangefacilities etc. The Company currently operates through more than 1,900 branches spread across thecountry.The Board of Directors of the Company at its meeting held on February 25, 2011, decided to change theCategory A (Deposit Taking) registration of the Company with Reserve Bank of India (RBI) and made anapplication for the change. RBI approved the same and issued a new Certificate giving Category B (Non

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________Deposit Taking) registration to the Company. As per the new registration, the Company is a SystemicallyImportant Non-Deposit Taking NBFC.18.3 Share CapitalIssue of equity shares to promoters on preferential basisDuring the year ended March 31, 2011, the Company has issued 13,210,039 shares to its promoters onpreferential basis at a price of Rs 75.70/- per share at a premium of Rs 73.70/- per share. The approval ofthe Board of Directors and shareholders has been taken and necessary regulatory requirements have beencomplied with by the Company.Bonus and share splitThe shareholders of the Company have on April 22, 2010 through a resolution, approved the sub-divisionof one fully paid equity share of Rs 10/- each of the Company into five equity shares of Rs 2/- each fullypaid pursuant to Section 94 of the Act. Further, the shareholders of the Company have through aresolution passed on April 22, 2010 approved the issuance of equity shares of Rs 2/-each, fully paid up, asbonus shares (after considering the stock split as above) in the ratio of 1:1 to the shareholders existing ason the record date. These changes have been given effect to in the current period.Further, as per the requirements of paragraph 44 read with paragraph 24 of Accounting Standard 20 –‘Earnings per share’ (AS-20), the number of equity shares outstanding as at March 31, 2010 has beenadjusted for the amount of such bonus shares and sub-divided shares in the computation of the weightedaverage number of shares for the computation of EPS for the current year and previous year.Issue of equity shares through private placement to Qualified Institutional Buyers (“QIBs”)During the current year, the Company has issued 59,523,809 shares to certain QIBs by way of a privateplacement at a price of Rs 168/- per share at a premium of Rs 166/- per share. The issues of these sharesare for the purposes of augmenting the funding needs of the Company and to meet capital adequacynorms. The Company raised a total amount of Rs 1,000 crores from these QIBs and incurred an amount ofRs 23 crores as share issues expenses which has been set off against the share premium account.Employee Stock Option Scheme (ESOS), 2009The details of the Employee Stock Option Scheme 2009 are as under:Date of share holders’ approval August 17, 2009Number of options approved 1,000,000Date of grant August 17, 2009Number of options granted 829,500Method of settlementEquityGraded Vesting50% after one year from the date of grant i.e.August 16, 2010 and balance 50% after two yearsfrom the date of grant i.e August 16, 2011

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________Exercisable periodVesting conditions4 years from vesting dateon achievement of pre-determined performanceparameters in accordance with the CompanyPerformance appraisal plans.Subsequent to the share split and bonus issue, the number of options has been adjusted to 8,295,000options and the exercise price has been adjusted to Rs 33.12/- per share in accordance with the terms ofthe scheme.The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensationexpense using the intrinsic value method as set out in those guidelines. The summary of the movements inoptions is given below:ParticularsAs atMarch 31, 2011As atMarch 31, 2010Options outstanding, beginning of year 7,850,000 -Options granted during the year - 8,295,000Options exercised during the year 3,755,120 -Options lapsed during the year - 445,000Options outstanding, end of year 4,094,880 7,850,000Options outstanding at the year end comprise of :- Options eligible for exercise at year end 169,880 -- Options not eligible for exercise at year end 3,925,000 7,850,000ParticularsAs atMarch 31, 2011As atMarch 31, 2010Weighted average remaining contract life of options 2 years 5 month 3 years 5 monthThe options outstanding at March 31, 2011 had an exercise price of Rs. 33.12/-

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________The fair value of options estimated at the date of grant using the Black-Scholes method and theassumptions used are as under:Particulars Vesting I Vesting IIAugust 16, 2010 August 16, 201150% 50%Option fair value (pre-split and bonus Rs 142.43 Rs 157.92Risk-free interest rate 6.15% 6.53%Expected life 3 years 4 yearsExpected volatility 67.11% 66.62%Expected dividend yield 2.76% 2.76%Share price on the date of grant (face Rs. 331.15 /- Rs. 331.15 /-The expected volatility of the stock has been determined based on historical volatility of the stock.The period over which volatility has been considered is the expected life of the option.Pro-forma Disclosures for ESOS 2009In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999, had the compensation cost for ESOS 2009 been recognized based on the fairvalue at the date of grant in accordance with Black-Scholes method, the amounts of the Company’snet profit and earnings per share would have been as follows:Particulars Profit after tax Basic EPS (Rs.) Diluted EPS(Rs.)Year ended March 31, 2011- Amounts as reported 2,826.64 7.61 7.51- Amounts as per pro-forma 2,774.52 7.47 7.37Particulars Profit after tax Basic EPS (Rs.) Diluted EPS(Rs.)Year ended March 31, 2010- Amounts as reported 1,197.22 4.09 4.07- Amounts as per pro-forma 1,143.19 3.91 3.88

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)18.4 Related Party TransanctionsParticularsSubsidiaryAssociates / Enterprises owned or significantly Key Management Personnel Relatives of key management personnel Totalinfluenced by key management personnel or theirrelativesMar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07Sale of gold loans - - - - - - - 7,915.80 790.40 922.67 - - - - - - - - - - - - 7,915.80 790.40 922.67Manappuram Finance Tamilnadu Limited - - - - - - - 7,915.80 790.40 922.67 - - - - - - - - - - - - 7,915.80 790.40 922.67Purchase of gold loans - - - - - - - 705.20 151.63 800.57 - - - - - - - - - - - - 705.20 151.63 800.57Manappuram Finance Tamilnadu Limited - - - - - - - 705.20 122.11 800.57 - - - - - - - - - - - - 705.20 122.11 800.57Manappuram Finance - - - - - - - - 29.52 - - - - - - - - - - - - - - 29.52 -Debentures issued during the year - - - - - - - - - - 46.03 272.18 - 0.28 - 1.54 1.13 - - - 47.57 273.31 - 0.28 -Mr. V.P.Nandakumar - - - - - - - - - - 46.03 272.18 - 0.28 - - - - - - 46.03 272.18 - 0.28 -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.11 0.28 - - - 0.11 0.28 - - -Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - 0.17 0.03 - - - 0.17 0.03 - - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.29 0.24 - - - 0.29 0.24 - - -Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.97 0.58 - - - 0.97 0.58 - - -Debentures redeemed during the year - - - - - - - - - - 60.10 255.09 - - - 1.94 0.45 - - - 62.04 255.54 - - -Mr. V.P.Nandakumar - - - - - - - - - - 60.10 255.09 - - - - - - - - 60.10 255.09 - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.15 0.18 - - - 0.15 0.18 - - -Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - 0.18 0.03 - - - 0.18 0.03 - - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.40 0.07 - - - 0.40 0.07 - - -Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 1.21 0.17 - - - 1.21 0.17 - - -Subordinate Bond issued during the year - - - - - - - - - - - - - - - 0.83 0.61 0.85 0.95 - 0.83 0.61 0.85 0.95 -Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 0.15 - 0.85 - - 0.15 - 0.85 - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - -Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.68 0.50 - - - 0.68 0.50 - - -Mrs. Sathyalekshmy - - - - - - - - - - - - - - - - 0.08 - - - - 0.08 - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - - - - 0.95 - - - - 0.95 -Subordinate Bond redeemed during the year - - - - - - - - - - - 45.00 - - - 0.63 0.09 0.85 - - 0.63 45.09 0.85 - -Mr. V.P.Nandakumar - - - - - - - - - - - 45.00 - - - - - 0.85 - - - 45.00 0.85 - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - - 0.04 - - - - 0.04 - - -Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.02 - - - - 0.02 - - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - -Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.63 - - - - 0.63 - - - -Issue of Preference Shares - - - - - - - - - - - - - - 20.00 - - - - - - - - - 20.00Mr. V.P.Nandakumar - - - - - - - - - - - - - - 20.00 - - - - - - - - - 20.00Subscription to Equity shares - - - - - - - - - - - - - - - 1,000.00 - - - - 1,000.00 - - - -Mrs. Sushama Nandakumar - - - - 1,000.00 - 1,000.00 - - - -

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)18.4 Related Party TransanctionsParticularsSubsidiaryAssociates / Enterprises owned or significantlyinfluenced by key management personnel or theirrelativesKey Management Personnel Relatives of key management personnel TotalMar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07Interest paid - - - - - - 0.30 64.60 12.01 8.19 3.06 7.01 5.66 34.81 10.49 0.34 0.28 0.09 0.08 0.10 3.40 7.60 70.36 46.90 18.77Mr. V.P.Nandakumar - - - - - - - - - - 3.06 7.01 5.66 34.81 10.49 - - - - - 3.06 7.01 5.66 34.81 10.49Manappuram Comptech & Consultants P Ltd. - - - - - - - - - 0.00 - - - - - - - - - - - - 0.00Manappuram Insurance Brokers Private Limited - - - - - - 0.09 - - - - - - - - - - - - - - 0.09 - - -Manappuram Finance Tamilnadu Limited - - - - - - - 63.21 11.49 8.19 - - - - - - - - - - - - 63.21 11.49 8.19Manappuram Asset Finance Limited - - - - - - - 1.11 0.52 - - - - - - - - - - - - - 1.11 0.52 -Manappuram Chits (India) Limited - - - - - - 0.21 0.28 - - - - - - - - - - - - - 0.21 0.28 - -Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.01 - - - - 0.01 - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.08 0.06 - 0.08 0.10 0.08 0.06 - 0.08 0.10Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.04 0.06 - - - 0.04 0.06 - - -Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 0.14 0.15 0.09 - - 0.14 0.15 0.09 - -Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.05 - - - - 0.05 - - - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.03 - - - - 0.03 - - - -Salary to Sooraj Nandan - - - - - - - - - - - - - - - - 0.42 0.40 - - - 0.42 0.40 - -Interest received - - - - - - - 4.56 0.92 9.16 - - - - - - - - - - - - 4.56 0.92 9.16Manappuram Finance Tamilnadu Limited - - - - - - - 4.56 0.92 9.16 - - - - - - - - - - - - 4.56 0.92 9.16Deputation of staff to other Companies - - - - 1.03 - - - 14.99 3.78 - - - - - - - - - - - - - 14.99 4.81Manappuram Benefit Fund Limited - - - - - - - - 10.00 3.53 - - - - - - - - - - - - - 10.00 3.53Manappuram Finance Tamilnadu Limited - - - - - - - - 4.99 - - - - - - - - - - - - - 4.99 -Manappuram Chits (India) Limited - - - - - - - 0.04 - - - - - - - - - - - - 0.04Manappuram Comptech & Consultants P Ltd. - - - - - - - 0.21 - - - - - - - - - - - - 0.21Manappuram Insurance Brokers (P) Ltd - - - - 1.03 - - - - - - - - - - - - - - - - 1.03Deputation of staff from other Companies - - - - 0.42 - - - - - - - - - - - - - - - - - - - 0.42Manappuram Benefit Fund Limited - - - - 0.25 - - - - - - - - - - - - - - - - - - - 0.25Manappuram Insurance Brokers (P) Ltd - - - - 0.17 - - - - - - - - - - - - - - - - - - - 0.17Inter Corporate Deposits accepted - - - - - - 5.15 5.45 13.69 - - - - - - - - - - - - 5.15 5.45 13.69 -Manappuram Asset Finance Limited - - - - - - - - 13.69 - - - - - - - - - - - - - - 13.69 -Manappuram Chits (India) Limited - - - - - - 5.15 5.45 - - - - - - - - - - - - - 5.15 5.45 - -Inter Corporate Deposits redeemed - - - - - - 10.60 13.69 - - - - - - - - - - - - - 10.60 13.69 - -Manappuram Asset Finance Limited - - - - - - - 13.69 - - - - - - - - - - - - - - 13.69 - -Manappuram Finance Tamilnadu Limited - - - - - - - - - - - - - - - - - - - - - - - - -Manappuram Chits (India) Limited - - - - - - 10.60 - - - - - - - - - - - - - - 10.60 - - -Incentive reimbursement received - - - - - - - - 2.40 - - - - - - - - - - - - - - 2.40 -Manappuram Finance Tamilnadu Limited - - - - - - - - 2.40 - - - - - - - - - - - - - - 2.40 -Incentive reimbursement paid - - - - - - - - 1.52 - - - - - - - - - - - - - - 1.52 -Manappuram Comptech & Consultants P Ltd. - - - - - - - - 1.52 - - - - - - - - - - - - - - 1.52 -Advances made - - - - - - 1.78 - - - - - - - - 1.91 1.20 - - - 1.91 2.97 - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 1.31 1.20 - - - 1.31 1.20 - - -Sooraj Nandan 0.60 0.60 - - - -Manappuram Foundations - - - - - - 1.78 - - - - - - - - - - - - - 1.78 - - -

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)18.4 Related Party TransanctionsParticularsSubsidiaryAssociates / Enterprises owned or significantlyinfluenced by key management personnel or theirrelativesKey Management Personnel Relatives of key management personnel TotalMar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07Loans taken - - - - - - 0.51 - - - - - - - - - - - - - - 0.51 - - -Manappuram Insurance Brokers Private Limited - - - - - - 0.51 - - - - - - - - - - - - - - 0.51 - - -Loans repaid - - - - - - 3.56 - - - - - - - - - - - - - - 3.56 - - -Manappuram Insurance Brokers Private Limited - - - - - - 3.56 - - - - - - - - - - - - - - 3.56 - - -Subscription to share warrant - - - - - - - - - - - 230.76 29.98 - - - - - - - - 230.76 29.98 - -Mr. V.P.Nandakumar - - - - - - - - - - - 230.76 29.98 - - - - - - - - 230.76 29.98 - -Conversion of share warrant - - - - - - - - - - - 260.74 - - - - - - - - - 260.74 - - -Mr. V.P.Nandakumar - - - - - - - - - - - 260.74 - - - - - - - - - 260.74 - - -Rent Paid - - - - - - - - - - 0.51 0.51 0.51 - - - - - - - 0.51 0.51 0.51 - -Mr. V.P.Nandakumar - - - - - - - - - - 0.51 0.51 0.51 - - - - - - - 0.51 0.51 0.51 - -Rent Received - - - - - 0.24 0.20 0.18 - - - - - - - - - - - - 0.24 0.20 0.18 - -Manappuram Jewellers Private Limited - - - - - 0.04 0.02 0.00 - - - - - - - - - - - - 0.04 0.02 0.00 - -Manappuram Insurance Brokers Private Limited - - - - - 0.18 0.18 0.18 - - - - - - - - - - - - 0.18 0.18 0.18 - -Manappuram Asset Finance Limited - - - - - 0.02 - - - - - - - - - - - - - - 0.02 - - - -Donation Made - - - - - 6.20 - - - - - - - - - - - - - - 6.20 - - - -Manappuram Foundations - - - - - 6.20 - - - - - - - - - - - - - - 6.20 - - - -Sale of gold - - - - - 972.70 140.24 13.89 - - - - - - - - - - - - 972.70 140.24 13.89 - -Manappuram Jewellers Private Limited - - - - - 972.70 140.24 13.89 - - - - - - - - - - - - 972.70 140.24 13.89 - -Purchase of stationery - - - - - - - 1.05 - - - - - - - - - - - - - - 1.05 - -Manappuram Printers - - - - - - - 1.05 - - - - - - - - - - - - - - 1.05 - -Sale of stationery - - - - - - 0.06 - - - - - - - - - - - - - - 0.06 - - -Manappuram Benefit Fund Limited - - - - - - 0.06 - - - - - - - - - - - - - - 0.06 - - -Purchase of assets - - - - - - - 0.66 - - - 25.41 - - - - 16.96 - - - - 42.37 0.66 - -Manappuram Healthcare - - - - - - - 0.66 - - - - - - - - - - - - - - 0.66 - -Mr. V.P.Nandakumar - - - - - - - - - - - 25.41 - - - - - - - - - 25.41 - - -Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - - 6.86 - - - - 6.86 - - -Mrs. Sumitha Nandakumar - - - - - - - - - - - - - - - - 10.10 - - - - 10.10 - - -

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)18.4 Related Party TransanctionsParticularsSubsidiaryAssociates / Enterprises owned or significantlyinfluenced by key management personnel or theirrelativesKey Management Personnel Relatives of key management personnel TotalMar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-11 Mar-10 Mar-09 Mar-08 Mar-07Balance outstanding as at the period end: - - - - -Amounts payable (net) to related parties - - - - - - - 5.71 13.77 - 0.26 17.39 75.35 45.71 - 2.82 3.38 0.98 0.96 0.13 3.08 20.77 82.04 60.43 0.13Mr. V.P.Nandakumar - - - - - - - - - - 0.26 17.39 75.35 45.71 - - - - - - 0.26 17.39 75.35 45.71 -Manappuram Asset Finance Limited - - - - - - - - 13.77 - - - - - - - - - - - - - - 13.77 -Manappuram Benefit Fund Limited - - - - - - - - - - - - - - - - - - - - - - - - -Manappuram Chits (India) Limited - - - - - - - 5.71 - - - - - - - - - - - - - - 5.71 - -Mrs. Rajalakshmi Raveendra Babu - - - - - - - - - - - - - - - 0.57 0.56 - - - 0.57 0.56 - - -Mrs. Shelly Ekalavyan - - - - - - - - - - - - - - - - 0.02 - - - - 0.02 - - -Mrs. Geeta Ravi - - - - - - - - - - - - - - - 0.09 0.24 - - - 0.09 0.24 - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 0.76 0.88 - 0.96 0.13 0.76 0.88 - 0.96 0.13Mrs. Sushama Nandakumar - - - - - - - - - - - - - - - 1.04 1.03 0.85 - - 1.04 1.03 0.85 - -Mrs. Sathyalekshmy - - - - - - - - - - - - - - - 0.36 0.65 0.13 - - 0.36 0.65 0.13 - -Amounts receivables (net) from related parties - - - - - 0.04 1.79 - 2.40 122.10 - - - - - 3.11 1.20 - - - 3.15 2.99 - 2.40 122.10Manappuram Jewellers Private Limited - - - - - 0.01 - - - - - - - - - - - - - - 0.01 - - - -Manappuram Insurance Brokers Private Limited - - - - - 0.03 0.02 - - - - - - - - - - - - - 0.03 0.02 - - -Manappuram Comptech & Consultants P Ltd. - - - - - - - - - - - - - - - - - - - - - - - - -Manappuram Finance Tamilnadu Limited - - - - - - - - 2.40 122.10 - - - - - - - - - - - - - 2.40 122.10Sooraj Nandan - - - - - - - - - - - - - - - 0.60 - - - - 0.60 - - - -Mrs. Jyothi Prasannan - - - - - - - - - - - - - - - 2.51 1.20 - - - 2.51 1.20 - - -Manappuram Foundations - - - - - - 1.78 - - - - - - - - - - - - - - 1.78 - - -Names of Related PartiesAssociates / Joint Ventures / Enterprises owned orsignificantly influencfed by key managementpersonnel or their relativesKey Management PersonnelRelatives of key management personnelManappuram Finance Tamilnadu Limited [formerly Manappuram Finance (Tamilnadu) Private Limited]Manappuram Benefit Fund LimitedManappuram Chits (India) LimitedManappuram Comptech & consultants (P) LimitedManappuram Asset Finance LimitedManappuram Finance (Sole Proprietorship)Manappuram Insurance Brokers Private LimitedManappuram Jewellers Private LimitedManappuram HealthcareManappuram Foundations (charitable trust)Manappuram PrintersMr. V P NandakumarMr. I UnnikrishnanMr. B.N Raveendra BabuMrs. Sushama NandakumarMr. Sooraj NandanMrs Sumitha NandakumarMrs. Jyothi PrasannanMrs. Shelly EkalavyanMrs. Geetha RaviMrs. Rajalakshmi Raveendra BabuMrs. SathyalekshmyNote: Remuneration to key management personnel is disclosed else where in the accounts in note 18.16(c)

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years endedMarch 31,2011, March31, 2010,March 31,2009, March31, 2008 andMarch 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of indian rupees unless otherwise stated)18.5 Segment ReportingFor the financial year 2010-11, the Company, based on its risks and rewards has determined that it primarily operates in the business of "Gold loan".Accordingly, no segment reporting is applicable for year ended March 31, 2011. Segment dislcosures have been made for the years ended March 31,2007 to March 31, 2010.Primary Segment: Business SegmentThe three identified reportable segments are:1.Gold and other loans - financing of loans against pledging of gold and gold ornaments2.Asset financing - Financing of loans against hypothecation of vehicles3.Fee based activities - Money transfer, foreign currency exchangeSecondary Segment informationThe Company has no reportable geograhical segment as it renders its services entirely in india.Primary segment informationParticularsMarch 31,2010March 31,2009March 31,2008March 31,2007Segment revenuesGold and other loans 4,650.51 1,487.49 599.97 330.59Asset financing 94.41 142.82 184.46 95.48Unallocable Income 12.44 19.93 2.57 3.85Fee based activities 24.65 10.87 9.60 6.584,782.01 1,661.11 796.60 436.50Segment resultGold and other loans 1,926.43 623.74 262.05 137.29Asset financing (54.08) (88.16) 72.07 27.43Fee based activities 18.94 16.04 8.10 5.76Unallocable Income 12.44 10.87 2.56 3.85Net unallocable expenditure (85.48) (99.66) (25.17) (10.82)Profit before taxation 1,818.25 462.83 319.61 163.51Taxes 621.04 159.86 109.71 57.39Profit after taxation 1,197.21 302.97 209.90 106.12Segment assetsGold and other loans 23,833.11 6,117.02 2,137.59 865.34Asset financing 214.73 457.72 743.06 567.64Fee based activities - 0.01 0.04 2.99Unallocable Assets 1,429.25 12.46 24.34 31.1425,477.09 6,587.21 2,905.03 1,467.11Segment liabilitiesGold and other loans 18,958.45 4,611.04 1,887.58 37.81Asset financing 192.68 234.60 79.48 33.56Fee based activities - - - -Unallocated liabilities 220.36 62.85 19.87 1,114.4919,371.49 4,908.49 1,986.93 1,185.86DepreciationGold and other loans 56.83 32.14 15.86 8.95Asset financing 0.55 1.56 2.40 1.71Fee based activities - - - -57.38 33.70 18.26 10.66Capital expenditureGold and other loans 294.37 146.08 65.51 57.61Asset financing 2.87 7.11 9.91 11.02Fee based activities - - - -297.24 153.19 75.43 68.63

Manappuram General Finance and Leasing Limited (now Manappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31, 2010, March 31, 2009, March 31, 2008 and March 31, 2007Schedule 18: Notes to accounts (continued..)(All amounts are in millions of Indian rupees unless otherwise stated)18.6 (a) Loan portfolio and Provision for Non Performing Assets for major categories of loan portfolioGross loan outstanding Provision for Assets Net loan outstanding2011 2010 2009 2008 2007 2011 2010 2009 2008 2007 2011 2010 2009 2008 2007Gold loan- Standard assets 63,495.46 18,410.61 3,962.87 968.11 196.97 158.47 * - - - - 63,336.99 18,410.61 3,962.87 968.11 196.97- Sub-standard assets 76.27 48.25 13.23 9.06 0.63 7.63 4.82 1.32 0.91 0.06 68.64 43.43 11.91 8.15 0.57- Doubtful assets 133.68 53.40 24.53 6.97 6.10 123.36 51.21 24.44 6.06 6.02 10.32 2.19 0.09 0.91 0.08- Loss assets - - - - - - - - - - - - - - -Hypothecation loan- Standard assets 18.79 91.55 249.67 537.59 430.89 - - - - - 18.79 91.55 249.67 537.59 430.89- Sub-standard assets 26.69 124.52 153.93 96.84 10.79 26.69 43.70 48.10 14.26 1.08 - 80.82 105.83 82.58 9.71- Doubtful assets - 70.71 5.40 1.22 5.73 - 70.70 5.40 1.22 5.28 - 0.01 - - 0.45- Loss assets - - - - - - - - - - - - - - -TOTAL 63,750.89 18,799.04 4,409.63 1,619.79 651.11 316.15 170.43 79.26 22.45 12.44 63,434.74 18,628.61 4,330.37 1,597.34 638.67* Disclosed separately under Provisions in Schedule 12 and not netted off against the loan.18.6 (b) Provision for dimunition in value of investmentsParticulars 2011 2010 2009 2008 2007Provision for dimunition in value of investments - - - - -

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.7 Employment benefits disclosures:The amounts of Provident fund contribution charged to theProfit and loss account during the year aggregates to2011 2010 2009 200896.51 26.25 9.95 3.35The Company has a defined benefit gratuity plan. Every employee who has completed five years or moreof service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year ofservice. The scheme is funded with an insurance company in the form of a qualifying insurance policy.The following tables summarise the components of net benefit expense recognised in the profit and lossaccount and the funded status and amounts recognised in the balance sheet for the gratuity plan.Profit and Loss accountNet employee benefit expense (recognised in Personnel expenses)2011 2010 2009 2008Current service cost 32.48 0.54 0.54 0.54Interest cost on benefit obligation 0.31 0.12 0.07 0.06Expected return on plan assets (1.86) (0.29) (0.19) (0.13)Net actuarial loss recognised in the year 15.16 1.73 0.02 (0.26)Net (benefit) / expense 46.09 2.10 0.44 0.21Actual return on plan assets 2.01 0.29 0.19 0.13Balance sheetReconciliation of present value of the obligation and the fair value of plan assets:2011 2010 2009 2008Defined benefit obligation (51.91) (3.88) (1.53) (0.93)Fair value of plan assets 37.09 4.06 2.41 1.80Asset/(liability) recognised in the balance sheet (14.82) 0.18 0.88 0.87Experience adjustments on plan liabilities (Gain) / Loss 14.90 - - -Experience adjustments on plan assets Gain / (Loss) 0.15 - - -

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________Changes in the present value of the defined benefit obligation are as follows:2011 2010 2009 2008Opening defined benefit obligation 3.88 1.53 0.93 0.74Interest cost 0.31 0.12 0.07 0.06Current service cost 32.48 0.54 0.54 0.54Benefits paid (0.07) (0.04) (0.03) (0.15)Actuarial loss / (gain) on obligation 15.31 1.73 0.02 (0.26)Closing defined benefit obligation 51.91 3.88 1.53 0.93Changes in the fair value of plan assets are as follows:2011 2010 2009 2008Opening fair value of plan assets 4.06 2.41 1.80 1.28Expected return 1.86 0.29 0.19 0.13Contributions by employer 31.09 1.40 0.46 0.54Benefits paid (0.07) (0.04) (0.03) (0.15)Actuarial gains / (losses) 0.15 - - -Closing fair value of plan assets 37.09 4.06 2.41 1.80The Company expects to contribute Rs 35 to gratuity in 2010-11.The principal assumptions used in determining gratuity obligations for theCompany’s plans are shown below:2011 2010 2009 2008% % % %Discount rate 8.3% 8.0% 8.0% 7.5%Expected rate of return on assets 8.5% 5.0% 8.0% 7.5%The fund is administered by Life Insurance Corporation of India (“LIC”). The overall expected rate ofreturn on assets is determined based on the market prices prevailing on that date, applicable to the periodover which the obligation is to be settled.The estimates of future salary increases, considered in actuarial valuation, take account of inflation,seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.8 Earnings per shareParticulars 2011 2010 2009 2008 2007Net profit as per profit andloss accountLess: Dividends onPreference SharesNet profit as per profit andloss account (used forcalculation of EPS)Weighted average numberof equity shares incalculating basic EPS (Nos.)2,826.64 1,197.21 302.97 209.90 106.120.00 0.00 3.51 3.59 -2,826.64 1,197.22 299.46 206.31 106.12371,380,825 292,648,250 136,851,870 110,000,000 110,000,000Weighted average number of equity shares in calculating Dilutive EPS (Nos.)Weighted average number 371,380,825 292,648,250 136,851,870 110,000,000 110,000,000of equity shares incalculating basic EPS (Nos.)Add: Number of dilutive 5,111,449 1,830,470 - - -shares under EmpoyeesStock Options (Nos.)Add: Weighted average- - - 9,200,000 -equity shares to be issued onconversion of preferencesharesWeighted average numberof equity shares incalculating diluted EPS(Nos.)376,492,274 294,478,720 136,851,870 119,200,000 110,000,000

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.9 Lease disclosureOperating leases:Office premises are obtained on operating lease which are cancellable in nature.Finance leases: 2011 2010 2009 2008 2007Total minimum lease payments at the year end 12.57 2.83 3.32 2.23 0.41Less : amount representing finance charges 1.63 0.28 0.38 0.26 0.03Present value of minimum lease payments 10.94 2.55 2.94 1.97 0.38Lease payments for the year 2.01 1.78 0.96 0.55 0.54Minimum Lease Payments :Not later than one year [Present value Rs. 3.78 as onMarch 31, 2011]Later than one year but not later than five years[Present value Rs. 7.16 as on March 31, 2011]Later than five years [Present value Rs. Nil as onMarch 31, 2011]4.55 1.79 1.34 0.90 0.338.02 1.04 1.98 1.33 0.08- - - - -18.10 Commitments and contingent liabilitiesCommitmentsParticulars 2011 2010 2009 2008 2007Estimated amount of contracts remaining to be 89.54 1.53 - - -executed on capital account, net of advances isContingent liabilities2011 2010 2009 2008 2007i) Claims against the company not acknowledged as DebtsPenalty under Kerala General Sales TaxAct and Kerala Money Lender Act0.72 0.72 0.72- -Income Tax demand- - - 0.70 -ii) The Company is contingently liableto banks and other financial institutionswith respect to assignment of gold loans 1,702.76 707.17 1,258.38 534.07 263.23to the extent of the collateral deposits /guarantees.Total 1,702.76 707.17 1,259.10 535.49 263.95

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________(iii) Applicability of Kerala Money Lenders' ActThe Company has challenged in the Hon'ble Supreme Court the order of Hon'ble Kerala High Courtupholding the applicability of Kerala Money Lenders Act to NBFCs. The Hon'ble Supreme Court hasdirected that a status quo on the matter shall be maintained and the matter is currently pening with theSupreme court. The Company has taken legal opinion on the matter and based on such opinion themanagement is confident of a favourable outcome. Pending the resolution of the same, no adjustmentshave been made in the financial statements for the required license fee and Security deposits.18.11 Details of investments purchased and sold during the yearFor the year ended March 31, 2011Particulars Purchased SoldUnitsRateRateTotal Units(Rs)(Rs)TotalICICI prudential Flexible IncomePlan Premium - Growth1.42 140.85 200.00 1.13 177.20 200.24Kotak Floater short term Growthfund19.23 15.60 300.00 19.23 15.61 300.22Canara Robeco liquid SuperInstitutional Growth Fund4.31 11.60 50.00 3.47 14.43 50.06IDFC Cash fund - SuperInstitutional - Daily Dividend5.00 10.00 50.00 5.00 10.01 50.05SBI Magnum Insta cash Fund - cashoption36.80 21.20 780.00 36.80 21.21 780.67SBI Magnum Insta cash Fund - cashoption11.79 21.20 250.00 11.79 21.22 250.19Religare Ultra short term fund -Institutional Growth19.08 13.10 250.00 19.03 13.16 250.40Religare Liquid Fund - SuperInstitutional Growth Fund76.31 13.10 1,000.00 76.31 13.11 1,000.19Tata Liquid Super high investmentfund0.03 1,666.67 50.00 0.03 1,668.67 50.06IDBI Liquid fund - Growth 39.07 10.24 400.00 39.07 10.25 400.56PNB liquid fund - Growth 5.00 10.00 50.00 5.00 10.05 50.23UTI Mutual Fund 199.00 10.00 1,990.00 199.00 10.00 ,990.76417.04 5,370.00 415.86 5,373.63

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________For the year ended March 31, 2010Particulars Purchased SoldReliance Liquidity Fund - DailyDividend Reinvestment OptionLICMF - Liquid Fund DividendPlanUnitsRate(Rs)TotalUnitsRate(Rs)Total32.99 10.00 330.04 32.99 10.00 330.0489.26 10.98 980.09 89.26 10.98 980.09122.25 1,310.13 122.25 1,310.1318.12 Assignment of receivablesThe Company has assigned a portion of its gold loans / hypothecations loans to banks and financialinstitutions. These amounts have been reduced from the gross gold loan and hypothecation loan balances.A bank / institution wise breakup of the same is as under:Bank / Financial institution 2011 2010 2009 2008 2007Dhanalakshmi Bank 1,849.41 - - - -Kotak Mahindra Bank 1,971.79 630.31 300.00 100.00 100.00ING Vysya Bank 1,628.67 882.27 750.00 350.00 -Yes Bank 1,684.88 - - - -ICICI Bank 1,564.86 2,092.66 1,156.01 766.97 400.00UTI Bank 1,118.19 1,499.98 968.26 - -Development Credit Bank 199.72 - 500.00 500.00 -Federal Bank 166.55 - 499.24 - -IndusInd Bank 450.40 - - - -IDBI Bank 548.36 1,971.80 500.00 - -Sundaram Finance - - 11.01 38.90 57.94HDFC Bank - - - 300.00 90.00Fullerton Credit Company Ltd - - 0.13 1,532.16 2,076.81Unit Trust of India - - - 342.09 253.99Punjab National Bank- - 496.77 - -Catholic Syrian Bank- - 200.00 - -11,182.83 7,077.02 5,381.42 3,930.12 2,978.74

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.13 Deposits with banks include cash collateral deposits towards assignments and other approvedfacilities. A bank / institution wise breakup of the same is as under:Bank / Financial institution 2011 2010 2009 2008 2007ICICI Bank 182.73 133.81 338.17 168.51 -Kotak Mahindra Bank 35.54 30.18 30.18 2.50 2.50HDFC Bank 153.57 80.00 25.00 36.00 12.00Development Credit Bank 25.00 - 28.09 25.00 20.05ING Vysya Bank 54.79 34.43 21.93 8.75 -Federal Bank 50.00 54.24 25.00 - -South Indian Bank 127.89 136.85 50.00 - -IDBI Bank 155.00 120.00 25.00 - -YES Bank 209.24 50.00 5.00 - -Karur Vyasya Bank 25.00 12.50 - - -Indian Overseas Bank 275.32 50.00 - - -Bank of Rajastan 10.00 10.00 - - -Development Bank of Singapore 37.50 - - - -Dhanalakshmi Bank 365.33 - - - -United Bank of India 100.00 - - - -DENA Bank 37.50 - - - -Andhra Bank 125.00 - - - -Punjab National Bank - 50.00 50.00 - -UCO Bank 100.00 - - - -Jammu & Kashmir Bank 50.00 - - - -Catholic Syrian Bank - 20.56 20.00 - -State Bank of India - 400.00 - - -Axis Bank Limited 34.49 30.00 21.00Allahabad Bank Limited 50.00 - -2,119.41 1,182.57 702.86 270.76 55.5518.14 Charges created on assets of the Company for Secured LoansA. From banksCash credit, overdrafts and working capital loan accounts have been availed from various banks and aresecured by Gold Loan receivables.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________B. Secured Non Convertible DebenturesDetails of security and series wise outstanding of secured non convertible debentures are asunder:Date ofAllotmentNumber ofDebenturesAmountTenureSecuritydetailsRedemption details16-Sep-06 4,812 4.81 60 Note 1At par at the end of 60months15-Nov-06 5,781 5.78 60 Note 1At par at the end of 60months24-Mar-07 12 0.01 48 Note 1At par at the end of 48months24-Mar-07 410 0.41 60 Note 1At par at the end of 60months13-Oct-07 50 0.05 48 Note 1At par at the end of 48months4-Dec-07 328 0.33 60 Note 1At par at the end of 60months31-Jan-08 163 0.16 48 Note 1At par at the end of 48months31-Jan-08 1,439 1.44 60 Note 1At par at the end of 60months27-Mar-08 704 0.70 36 Note 1At par at the end of 36months27-Mar-08 53 0.05 48 Note 1At par at the end of 48months27-Mar-08 732 0.73 60 Note 1At par at the end of 60months31-Mar-08 35 0.04 36 Note 1At par at the end of 36months31-Mar-08 432 0.43 60 Note 1At par at the end of 60months29-Dec-08 3,232 3.23 36 Note 1At par at the end of 36months29-Dec-08 654 0.65 60 Note 1At par at the end of 60months29-Dec-08 974 0.97 36 Note 1At par at the end of 36months29-Dec-08 200 0.20 48 Note 1At par at the end of 48months29-Dec-08 108 0.11 36 Note 1At par at the end of 36months16-Mar-09 20 0.02 24 Note 1At par at the end of 24months16-Mar-09 666 0.67 36 Note 1At par at the end of 36months16-Mar-09 150 0.15 60 Note 1 At par at the end of 60

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________months16-Mar-09 82 0.08 24 Note 1At par at the end of 24months16-Mar-09 697 0.70 36 Note 1At par at the end of 36months30-Apr-09 285 0.29 24 Note 1At par at the end of 24months30-Apr-09 1,013 1.01 36 Note 1At par at the end of 36months30-Apr-09 15 0.02 24 Note 1At par at the end of 24months30-Apr-09 517 0.52 36 Note 1At par at the end of 36months9-Jun-09 10 0.01 48 Note 1At par at the end of 48months9-Jun-09 252 0.25 60 Note 1At par at the end of 60months9-Jun-09 574 0.57 24 Note 1At par at the end of 24months9-Jun-09 1,664 1.66 36 Note 1At par at the end of 36months22-Feb-10 6,231 6.23 12 Note 1At par at the end of 12months9-Mar-10 11,062 11.06 12 Note 1At par at the end of 12months30-Mar-10 62,119 62.12 12 Note 1At par at the end of 12months22-Apr-10 61,460 61.46 12 Note 1At par at the end of 12months22-Apr-10 62,359 62.36 12 Note 1At par at the end of 12months22-Apr-10 57,124 57.12 12 Note 1At par at the end of 12months20-Jul-10 66,273 66.27 12 Note 1At par at the end of 12months20-Jul-10 45,428 45.43 12 Note 1At par at the end of 12months24-Jul-10 39,627 39.63 12 Note 1At par at the end of 12months15-Oct-10 50,164 50.16 12 Note 1At par at the end of 12months15-Oct-10 60,986 60.99 12 Note 1At par at the end of 12months15-Oct-10 92,655 92.66 12 Note 1At par at the end of 12months15-Oct-10 107,254 107.25 12 Note 1 At par at the end of 12

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________29-Nov-10 1,312 1.31 36 Note 129-Nov-10 79,561 79.56 12 Note 129-Nov-10 75,076 75.08 12 Note 129-Nov-10 55,328 55.33 12 Note 115-Dec-10 98,858 98.86 12 Note 125-Feb-11 3,159 3.16 12 Note 125-Feb-11 149,979 149.98 12 Note 131-Mar-11 82,599 82.60 12 Note 131-Mar-11 30,169 30.17 12 Note 115-Feb-10 250 250.00 18 Note 118-Aug-10 250 250.00 18 Note 13-Sep-10 250 250.00 18 Note 13-Sep-10 250 250.00 18 Note 13-Sep-10 500 500.00 18 Note 131-Mar-11 1,000 1,000.00 15 Note 2monthsAt par at the end of 36monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 12monthsAt par at the end of 18monthsAt par at the end of 18monthsAt par at the end of 18months, with a put / calloption on February 3,2011, May 3, 2011, August3, 2011 and November 3,2011.At par at the end of 18months, with a put / calloption on February 3,2011, May 3, 2011, August3, 2011 and November 3,2011.At par at the end of 18months, with a put / calloption on February 3,2011, May 3, 2011, August3, 2011 and November 3,2011.At par at the end of 15months, with a put / calloption on June 29, 2011,September 28, 2011,December 28, 2011 and

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________March 28, 2012.28-Mar-11 100 100.00 24 Note 328-Mar-11 100 100.00 36 Note 328-Mar-11 150 150.00 36 Note 328-Mar-11 150 150.00 48 Note 328-Mar-11 200 200.00 60 Note 328-Mar-11 9 9.00 36 Note 328-Mar-11 9 9.00 48 Note 328-Mar-11 12 12.00 60 Note 328-Mar-11 9 9.00 36 Note 328-Mar-11 9 9.00 48 Note 328-Mar-11 12 12.00 60 Note 328-Mar-11 30 30.00 36 Note 328-Mar-11 30 30.00 48 Note 328-Mar-11 40 40.00 60 Note 331-Mar-11 6 6.00 36 Note 331-Mar-11 6 6.00 48 Note 331-Mar-11 8 8.00 60 Note 331-Mar-11 6 6.00 36 Note 331-Mar-11 6 6.00 48 Note 331-Mar-11 8 8.00 60 Note 331-Mar-11 75 75.00 36 Note 3At par at the end of 24monthsAt par at the end of 36monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36months

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________31-Mar-11 75 75.00 48 Note 331-Mar-11 100 100.00 60 Note 331-Mar-11 11 11.40 36 Note 331-Mar-11 11 11.40 48 Note 331-Mar-11 15 15.20 60 Note 31,328,535 5,012.85At par at the end of 48monthsAt par at the end of 60monthsAt par at the end of 36monthsAt par at the end of 48monthsAt par at the end of 60monthsNote 1:Secured by a floating charge on the gold loan receivables and other unencumbered assets both present andfuture.Note 2:Secured by first pari passu charge on the receivables of the Company with a mimium asset cover ratio of1.10 times.Note 3:The Company is in the process of creating a charge in respect of these debentures aggregating Rs 1,188.

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.15 Additional disclosures as required by circular no DNBS(PD).CC.No.125/03.05.002/2008-2009dated August 1, 2008 issued by the Reserve Bank of India:a) Capital to Risk Assets RatioParticularsMarch 31,2011March 31,2010CRAR (%) 29.13 29.34CRAR - Tier I Capital (%) 26.36 26.04CRAR - Tier II Capital (%) 2.77 3.30b) Exposure to real estate sectorThe Company does not have any direct or indirect exposure to real estate sector.c) Asset liability managementMaturity pattern of certain items of assets and liabilities as at March 31, 2011Liabilities1 day to30/31 days(onemonth)Over onemonth to2 monthsOver 2monthupto 3monthsOver 3months to 6monthsOver 6months to1 yearOver 1year to3 yearsOver3yearsto 5yearsOver5yearsTotalBorrowingsfrom banksMarketborrowings #6,050.06 2,050.07 1,899.27 10,642.26 17,404.94 - - -1,708.20 2,686.12 3,060.99 2,204.00 1,002.40 4.80 2.30 -38,046.6010,668.81Assets1 day to30/31 days(onemonth)Over onemonth to2 monthsOver 2monthupto 3monthsOver 3months to 6monthsOver 6months to1 yearOver 1year to3 yearsOver3yearsto 5yearsOver5yearsTotalAdvances63,670.611,243.48 11,347.28 9,396.95 14,263.14 17,419.76 - - -(net)1Investments - - - 3.15 400.00 - - 0.05 403.20

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________# Represents secured loans from others and vehicle loans underSchedule 3 and commercial papers under Schedule 4These disclosures are given only for certain items of assets and liabilities from the Balance sheet as required bythe above circular and is not a complete depiction of the asset liability maturity position of the Company as atMarch 31, 2011.As this is the first year of presentation of the above information, no comparatives have been disclosed.18.16 Supplementary profit and loss dataa) Legal and Professional fees (Schedule 16) includes remuneration to auditors as follows:Remuneration as auditors 2011 2010 2009 2008 2007Statutory audit 2.50 2.00 1.2 0.45 0.20Other services 1.50 0.90 0.9 0.30 0.03Certification 0.50 0.20 0.38 0.15 0.14Out of pocket expenses 0.20 0.13 0.13 0.10 -4.70 3.23 2.61 1.00 0.37Note:Excludes applicable service taxesExcludes Rs. 3.5 (previous year Rs. 1) included under Share issue expenses in Schedule 2 in connectionwith Qualified Institutional Placement.b) Expenditure in foreign currency 2011 2010 2009 2008 2007Travel 2.52 1.12 - - -Consultancy charges 7.96 - - - -10.48 1.12 - - -c) Managerial remuneration 2011 2010 2009 2008 2007Salary to whole time directors 28.80 14.70 4.00 3.77 2.76Commission to whole time directors 18.60 9.60 5.79 1.55 0.00Commission to Non - whole time directors 2.80 2.23 1.17 0.00 0.00Contribution to provident fund/superannuation forwhole time directors 3.46 1.76 0.25 0.14 0.0753.66 28.29 11.21 5.46 2.83

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________Note:Provisions for / contribution to employee retirement/post retirement and other employee benefits whichare based on actuarial valuations done on an overall Company basis are excluded above.Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 forcalculation of commission payable to directors2011 2010 2009 2008 2007Profit before tax (as per Profit and Loss Account) 4,238.96 1,818.25 462.83 319.61 163.51Add:Directors’ remuneration 53.66 28.29 11.21 5.46 2.83Depreciation as per Profit and Loss account 212.96 57.38 33.71 18.26 10.66Provision for doubtful debts and advances 133.81 88.58 60.32 19.03 9.52Loss on disposal of investments - 0.43 - - -Loss on sale of fixed assets (net) as per Profit andLoss account2.28 4.34 2.32 0 0.00Less:Depreciation (to the extent specified in section 350of the Companies Act, 1956)(212.96) (57.38) (33.71) (18.26) (10.66)(Loss)/Profit on sale of fixed assets as perSection349 of the Companies Act, 1956(2.28) (4.34) (2.32) - (0.00)Net profit as per Section 349 of the CompaniesAct, 19564,426.43 1,935.55 534.36 344.10 175.86Maximum amount of Commission and Salarypayable to Managing and Wholetime directors at10% of the net profits as calculated above442.64 193.55 53.44 34.41 17.59Maximum amount of Commission payable to otherdirectors at 1% of the net profits as calculated above44.26 19.36 5.34 3.44 1.7618.17 Remittance of dividend in foreign curreny2011 2010Final dividendPeriod to which it relates - 2008-09Number of non-resident shareholders - 4Number of equity shares held on which dividend wasdue - 12,546,630Amount remitted - 14.68

Manappuram General Finance and Leasing Limited (nowManappuram Finance Limited)Reformatted unconsolidated financial information for the years ended March 31, 2011, March 31,2010, March 31, 2009, March 31, 2008 and March 31, 2007______________________________________________________________________________18.18During the years there have been certain instances offraud on the Company by employees where goldloan related misappropriations / cash embezzlementshave occurred for amounts aggregating:2011 2010 2009 2008 200724.87 8.47 4.07 2.4 1.57The Company has fully provided for these amounts in the financial statements and is in the process ofrecovering these amounts from the employees and taking appropriate legal actions.18.19 ComparativesIn view of amalgamation of MAFIT with the Company with effect from April 1, 2008 and acquisition ofManapppuram Printers during the year ended March 31, 2010, the figures for the years ended March 31,2011 and March 31, 2010 are not comparable with those of the earlier years. Also, the financialstatements for the year ended March 31, 2007 have been audited by a firm other than S.R. Batliboi &Associates. Further, previous years figures have been reclassified to conform to the presentation of thecurrent year.

Statement of Dividends paid/payable(In Rs. million, except per share data)Particulars Fiscal 2011 Fiscal 2010 Fiscal 2009Face value of Equity Shares (Rs. per2 10 (Face10share)value as onMarch 31,2010)Interim dividend on Equity Shares- - 2.00(Rs. per share)Final dividend of Equity Shares (Rs.per share)Total dividend on Equity Shares0.60 0.50 (eachEquity Sharewas subdividedinMay 2010 toRs. 2 eachand dividendwascomputed@25% onsub-dividedEquity Share)0.50500.24 (not 165.89 43.14paid yet)Dividend tax (gross) NA 27.21 8.13

Pre-issue Capitalization Statement(Rs. in millions)Particulars As on March 31,2011*Secured Loans from Banks, Financial Institution,38,707.54NBFC and Vehicle loansNon Convertible Debentures 5,015.53Fresh Issue of DebentureUnsecured Funds 12,817.03Total Debt 56,540.10Equity Share Capital 833.75Preference Share Capital -Share application money pending allotment -Reserves and surplus 18405.82Total Shareholders’ Funds 19239.57Long Term Debt to Equity Ratio 2.94

DECLARATIONNo statements made in this Prospectus shall contravene relevant provisions of the Act and the SEBI DebtRegulations. All the legal requirements connected with the said Issue as also the guidelines, instructions etc.issued by SEBI, Government and any other competent authority in this behalf have been duly complied with.We confirm that this Prospectus does not omit disclosure of any material fact which may make the statementsmade therein, in light of circumstances under which they were made, misleading. We further certify that allstatements in this Prospectus are true and correct.Yours faithfully,V.P. Nandakumar ................................................................................................I. Unnikrishnan ................................................................................................B.N. Raveendra Babu ................................................................................................A. R. Sankaranarayanan ................................................................................................P. Manomohanan ................................................................................................V.R. Ramachandran ................................................................................................V.M. Manoharan ................................................................................................Gaurav Mathur ................................................................................................Shailesh J. Mehta ................................................................................................Gautam Saigal ................................................................................................M. Anandan ................................................................................................Jagdish Capoor ................................................................................................Place: ValapadDate: August 9, 2011185

DraftRating RationaleBrickwork Ratings assigns “BWR AA-” for Manappuram General Finance andLeasing Limited’s Non-Convertible Debentures issue of ` 750 crores with a tenorup to 5 years and reaffirms “BWR AA-” for NCD issue of ` 100 crores.NCD Issue Rating: BWR AA-Outlook : StableBrickwork Ratings has assigned and reaffirmed the rating of BWR AA- (pronounced BWRDouble A minus) for the following issues of Manappuram General Finance and LeasingLimited (MAGFIL):Instruments Amount RatingAssigned/ReaffirmedRating HistoryReview As on Rating As onNCD` 750 croresBWR AA-(Stable)Assigned -BWR AA-June 2011NCD` 100 croresBWR AA-(Stable)ReaffirmedBWR AA-June 2011BWR AA-June 2010The rating “BWR AA-” stands for an instrument that is considered to have High degree of safetyregarding timely servicing of financial obligations. Such instruments carry very low credit risk. A“Stable” rating outlook signifies the expectation of the rating being stable in the near term.The rating has, inter alia, factored MAGFIL’s rich experience in gold loan business, recognizedbrand name in the niche gold loan segment, strong asset quality, robust increase in AUM,consistent profit margins and management quality. The rating is, however, constrained bygeographic concentration with maximum exposure to Southern States (75% of the branches arein South), significant dependence on loans from Banks, regulatory risks and volatility in theprice of gold.BackgroundManappuram group was founded in 1949 by late Mr. V.C.Padmanabhan. The companycommenced its operations at Valapad, mainly with money lending activity. In 1986, Mr. V.P.Nandakumar, son of late Mr. V.C.Padmanabhan, took over the reins of the group.www.brickworkratings.com June 20111

DraftMAGFIL, presently the group’s flagship Company, was established in 1992 in Thrissur (Kerala)as a deposit taking Non Banking Finance Company (NBFC). However, since January 15, 2007the Company decided to phase out the public deposits. MAGFIL is mainly engaged in providingretail advances against bullion asset collaterals, in the form of Household Used Jewellery.MAGFIL had 16751 people and 2100 branches across India at the end of FY 11. MAGFIL ishaving a strong presence in South India, ~ 75% of total branches are in southern states ofKerala, Tamil Nadu, Karnataka, Andhra Pradesh. All branches are connected to the Head officeby appropriate IT system which provides real time information to the HO.Objectives of the NCD IssueMAGFIL proposes to utilize the proceeds from the proposed NCD issue essentially for expansionof its core business. The proposed NCD issue will be secured by an appropriate charge on theGold loan receivables of the company. The Company would appoint a SEBI registered DebentureTrustee to complete all requirements concerning obtaining/creation of securities andmonitoring the same for the benefit of and protection of the interests of the investors in theproposed NCD issue.ManagementManappuram group was founded by late Mr. V.C.Padmanabhan and is currently managed by hisson Mr. V.P. Nandakumar, Chairman and managing Director. He is a post graduate in sciencewith additional qualifications in Banking & Foreign Trade and was in the Banking Industry fornearly 10 years. He is also the Chairman of Equipment Leasing Association and Chairman ofKNBFC Association. Mr. I.Unnikrishnan is the Managing Director of the company. He is an FCAand has expertise in financial services Industry especially in NBFC’s. The company’s Board isbroad based and consists of highly qualified and well experienced professionals from theIndustry, Accounting, Legal and Academic fields and very senior retired Government/RBIofficials to guide the Company.Loan ProfileMAGFIL, as a matter of policy, has a concentrated focus on the borrowing segment which isserviced by money lenders. Essentially the Company confines to gold loans of small ticket sizewith an average ticket size of ` 35,000. The Company has developed systems and skills whichwww.brickworkratings.com June 20112

Draftenable a branch to disburse a normal ticket loan in about 15 minutes for a new customer and 7-8minutes for an existing customer as KYC takes about 5 minutes. Occasionally loans are made forhigher amounts of ` 5 lakh to ` 10 lakh. Profiling of beneficiaries is done in depth as the amountof the loan increases. Loans are for maximum duration of 12 months, however, average tenor ofa loan is about 3-4 months.MAGFIL has been the fastest growing organized gold loan company in the country. It has tripledits AUM in the one year and grown it eight times in the last two years. The AUM increased to `7549.10 crores as on March 31, 2011 from ` 2598.40 crores as on March 31, 2010 (` 1260 croresas on March 31, 2009). Total loan disbursement has increased by 153% in FY11. Total loandisbursements amounts to ` 18057 crores in FY11 as against ` 7123 crores in FY10 and ` 4737crores in FY09. The company has a strong presence in South comprising 86% of total loanoutstanding.Financial PerformanceThe company has continued to perform well during FY11. Gold loan income forms the largestpart of its total income. MAGFIL’s interest income has substantially increased by 148% to `1165.42 crores in FY11 from ` 469.98 crores in FY10. Due to increasing interest rate scenarioand loss of priority sector lending status on bank funding against assignments, the interestexpenses also increased substantially from ` 136.92 crores in FY10 to `331.97 crores inFY11. Dueto appropriate training and skill development of its employees and consequent increasedoperating efficiency, profit before tax increased by 133% to ` 423.89 crores in FY11 from ` 181.83crores in FY10. The company’s Net Profit as of March 20110 stood at ` 282.66 crores as against `119.72 crores as of March 2010, a substantial increase of around 136%.MAGFIL has a robust capital adequacy ratio of 29.46% as on March 31, 2011, substantiallyhigher than the regulatory floor of 15%. Capital Adequacy of the company was significantlyaugmented by ` 1000 crores QIP issue in November 2010. Leverage was 3.47 as on March 31,2011 as compared to 4.13 as on March 31, 2010. The Return on Assets stood at 5.04% duringFY11 while ROE was 22.31% in FY 11 as compared to 30.76% in FY10. The net interest marginsfor the company as on FY11 stood at 17.25% in FY11 as compared to 19.39% in FY10. Due torising interest rate scenario and tight liquidity the yield on funds declined resulting in thedecline in net interest margins. The yield on funds was 25.55% in FY11 as compared to 29.18% inFY10.www.brickworkratings.com June 20113

DraftAsset QualityThe Company has an efficient system for monitoring and tracking defaults & remedial action hasresulted in practically no NPA. MAGFIL’s gross NPAs have decreased to `26.37 crores in FY11 ascompared to ` 33.66 crores in FY10. The company’s gross NPAs as a percentage to totaladvances decreased to 0.35% in FY11 as compared to 1.29% in FY10 and net NPA decreased to0.13% in FY11 as compared to 0.56% in FY10. The provision coverage ratio stood at 63.49% inFY11.Funding MixNearly 56% of the funding comes from cash credit and working capital demand loans. 17% of thefunding comes from securitization transactions and the rest from retail borrowings andcommercial paper. Total borrowings for the year ended March 31, 2011 was ` 6737 crores.Rating OutlookMAGFIL has a well established presence in the niche gold loan segment. The company has beenperforming well with good asset quality, strong risk management practices, adequate liquidityand low cost of funds. The gold loan business is always exposed to the risk of steep pricemovements which calls for constant vigil and immediate appropriate action to mitigate any loss.MAGFIL’s ability to manage its business well and respond to market needs is displayed from itsestablished track record. BWR expects MFL to continue to demonstrate such abilities to furtherimprove its performance.As per recent RBI announcement, priority agriculture sector lending benefit, available to banksfor lending to gold loan NBFC’s has been removed. Therefore, the cost of funds for the NBFC’s isexpected to increase which may result in lower profitability due to slight contraction in NIM’s.Similarly, the impact of the State Money Lenders Act for NBFCs, the decision on which isawaited from the Supreme Court, could affect the MFL’s lending rates and would also increasethe operational expenditure as the NBFC’s would be required to register with all stateauthorities and to comply with state regulations.www.brickworkratings.com June 20114

DraftAnalystsSameer Singhvisameer.s@brickworkratings.comShilpi Agarwalshilpi.a@brickworkrating.comMediaAnitha Gmedia@brickworkratings.comRelationship ContactK.N.SuvarnaSr.V.P. – Business Developmentkn.suvarna@brickworkratings.comDisclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and otherreliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, itdoes not examine the precision or completeness of the information obtained. And hence, the information in this report ispresented “as is” without any express or implied warranty of any kind. BWR does not make any representation in respect to thetruth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than arecommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from anyuse of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.www.brickworkratings.com June 20115