Spandana Sphoorty Financial limited Report 2010-11.pdf · crisis due to AP ordinance and more ......

Annual Report 2011 1

Committed to low-income households since 1998Spandana Sphoorty Financial limited

Annual ReportFiscal Year 2011

Spandana Sphoorty Financial Ltd. 2

1. Message from the Managing Director

2. Spandana Milestones

3. About Spandana:

4. Microfinance with Social Focus

5. Operational Highlights

6. Financial Highlights

7. Key Industry Developments during the year 2010-2011

8. Operational Highlights

9. Financial Highlights

10. Management Discussion and Analysis

10a Corporate Information

10b Directors’ Report

10c Auditors’ Report

10d Balance Sheet

10e Profit and Loss Account

10f Cash Flow Statement

10g Schedules

10h Significant accounting policies

10i Notes to the Accounts

10j Abstract Balance Sheet

TABLE OF CONTENTS


LETTER TO STAKEHOLDERS

dear Stakeholders,

The microfinance industry and your company has been through a lot in recent times. From the Andhra crisis due to AP ordinance and more recently through the CDR(Corporate debt restructuring) process. From the ambiguity over the future direction of the industry to increased regulation, Microfinance as an idea, a practice is at a turning point, suggesting an end of one era and the beginning of something new The microfinance sector in India has developed a successful and sustainable business model which has been able to overcome challenges traditionally faced by the financial services sector in servicing the low income population by catering to its specific credit needs, by designing and distributing products which are marked by improved access, availability, adequacy and convenience. As of March 2011, as per MCRIL estimates, The largest 24 MFI institutions in India, together serviced a portfolio of Rs19,700 crore ($4.4 billion) through about 18 million clients. Despite achieving rapid growth over the last five years, the microfinance sector still faces a large unmet demand which means that it still has great potential for continued growth. The microfinance sector is maturing and beginning to diversify its product and service base to address other unmet financial and non-financial needs of the low income population either directly or by acting as a conduit for third party providers – savings, insurance, remittance and low cost education and healthcare services being some of the key examples. However in OCT 2010,The operations of MFIs in Andhra Pradesh got severely impacted with the promulgation of a ordinance – Andhra Pradesh Micro Finance Institution (regulation of money lending)bill, resulting in repayments falling to as low as 20% in Andhra. This ordinance, that later got enacted,

is presumably aimed at protecting the interests of SHGs in AP by regulating the money lending transactions by MFIs accused of usurious interest rates and recovery practices.

As collections slumped, microfinance companies failed to settle their own borrowings, leading to a lending freeze from commercial banks. The chain of events has now all but derailed microfinance in the country. After several years of growth, as per M-CRIL estimates, the industry has likely shrunk by 30% in the financial year ended March 2011.

We are keen to work along with the AP government towards a solution aimed at sustained service provisioning to this customer segment where financial sustainability of MFIs in AP can also be addressed.In January 2011, the Malegam Committee, entrusted with investigation into the crisis, released its recommendations, and in May 2011, the Reserve Bank of India (RBI) released its priority sector guidelines—largely accepting recommendations made by Malegam

Committee but with some ease of operations for MFIs. On the brighter side, the proposed Microfinance Institutions (Development and Regulation) Bill, 2011 is a very positive development for the microfinance sector because it brings the sector within the ambit of organized financial services.Also, the key highlights of the bill are –

• Creation of a separate MFI-NBFC category with possibly separate guidelines on prudential norms and non-credit facilities.

• Giving primary oversight to RBI which can further delegate it to NABARD on need basis.

• Inclusive system having participation of State Governments in oversight through State Councils.

Of course there are certain restrictions as well, such as- product specifications around loan size, tenor, margin & interest rate caps. Although MFI industry outstanding portfolio constitutes a nominal percent of the financial sector assets in

India, , it is more important to look at the number of people affected rather than just the size of the financial contribution. Regulation will bring in more value to the overall business of micro-finance. A good business model will not only benefit MFI but also give credit access to bottom of the pyramid which gives inclusive growth to the nation as a whole. The Indian microfinance sector is making attempt to recover from the crisis. While the fallout will be felt for a long time, there are valuable lessons to be learned from this experience.

padmaja G reddy, Managing Director



SPANDANA MILESTONES:

2010-2011: AP MFI (regulation of money lending) Ordinance / Act puts onerous curbs on AP operations.

Spandana opts for Corporate Debt restructing with its lenders.

2008-2009: Second round of PE investments Rollout into Jharkhand Reached 2.5 mn households

2007-2008: Investment of USD 10 mn by two private equity funds Name changed to Spandana Sphoorty Financial Limited (SSFL) [January 3, 2008].

Rollout into Rajasthan, Madhya Pradesh, Chhattisgarh

2006-2007: Spandana maintains its market leadership (largest AUM & borrowers’ base) Rollout into Orissa and Maharastra Pilot launch of Farm-equipment loan product

2005-2006: Cumulative disbursements cross Rs.1,000 crore CRISIL grading upgraded to mfR2. Rollout into Tamil Nadu.

Pilot launch of Agri-family loan product

2004-2005: Fresh loan disbursements and client servicing out of the NBFC structure. Society operations scaled down.

Rollout into Karnataka State

2003-2004: Asset Under Management crosses Rs.50 crore. SSIFL receives business commencement certificate [November 11, 2003].

Receives CRISIL grading of mfR3

2002-2003: Number of staff members cross 100, servicing over 40,000 customers. Spandana becomes the largest MFI in India (Asset Under Management, borrower base) with critical mass achieved, need felt to transform into a more regulated legal structure Spandana Sphoorty Innovative Financial Services limited (SSIFL) incorporated [March 10, 2003]

2001-2002: M-CRIL* rating benchmarks Spandana as one of the most cost-efficient MFIs in the world

2000-2001: Microfinance programme grows to over 5,000 customers Commercial loans from Small Industries Development Bank of India (SIDBI) and ICICI Bank supports growth

1999-2000: First commercial loan from Rashtriya Mahila Kosh (RMK) Microfinance programme scales up to cumulative disbursement of Rs.1 crore

1998-1999: Spandana achieves financial break-even in the first full financial year of its operation

1997-1998: Spandana started its operations as a Non-Government Organisation (NGO) at Guntur Andhra Pradesh. Spandana works on a range of community welfare programs while keeping microfinance at the core. Some of these interventions include - clean drinking water, sanitation and health.



Spandana is a financial service provider to low income households. Started in 1997, it has grown to become one of the largest institutions of its kind in India. Spandana envisions itself as a financial service provider to households not optimally served and focuses on low-income and under-banked households in rural, semi-urban and urban areas.

The primary focus of Spandana has been economically active low-income women. It provides loan support for a variety of economic activities and emergencies. The former could range from vegetable vending to running a tailoring shop. The latter may include expenses for trouble free childbirth, education expenses, medical expenses.

Mainstream finance in India has attempted, with varying degrees of success, to reach the Low income segment; the state involvement has focused priority on financial inclusion. However, considering the scale as well as the scope of the informal markets in India, much needs to be done beyond the government and the existing banking space.

Private initiatives so far have served the purpose of creating strong models for demonstration, with the implicit expectation that the mainstream would emulate them at scale. Spandana is a unique combination – a strong model, coupled in recent years with meaningful scale. Spandana arose as a personal response to a clearly exploitative lending relationship. Through further work, the budding organization realized that it was not alone in its pursuits. A whole sector was burgeoning with individuals and entities striving to make finance work for the Low income segment.

Spandana, in keeping with its ‘First Principles‘ approach, did not adopt any model in its entirety. Rather, it listened to its clients to better understand their needs, studied and tested existing methodologies, and then developed its own unique approach to reach the target segment in rural and urban areas.

Spandana’s operating methodology became a benchmark in the sector for efficiency, productivity and financial viability with many upcoming organizations emulating its processes. Spandana continued to break new ground, set new standards, overcome hurdles and break myths in the sector.

Presently, Spandana operates as a Non Banking Finance Company incorporated under the Companies Act, 1956 and licensed by the Reserve Bank of India under the Reserve Bank of India Act, 1934 to carry on the business of a Non Banking Financial Institution. It operates in 180 districts of 10 states, with a total member base of 4 million borrowers as of March 31, 2011.

Spandana believes that low-income women play a critical role both in the economics of their households and their communities. Hence, it is committed to maintaining a special focus on women. Spandana also believes that low-income households have risk taking abilities and are rational and judgmental while assessing and improving their livelihoods. They are creative, innovative and enterprising. Access to credit brings out these latent capacities. Spandana respects the opinions of its clients and believes in carrying out its business without compromising our commitment to ethical values, transparency and efficiency.

Spandana has constantly responded to the felt needs of its clients and staff. Many of our clients have been using the access to finance to significantly improve their livelihoods.

VALUES• Transparency: Maintaining simplicity and clarity in all activities and operations, so that high standards of fairness can be established

in all dealings.

• Responsiveness: Constantly working to identify the changing needs of clients and potential clients, and developing suitable products and services to address these needs, thus keeping Spandana ahead of its competitors

• Integrity: Maintaining high standards of conduct, truthfulness and honesty in all dealings, in order to honor the commitment made to our clients and organization.

• Commitment: Performing all activities and tasks with professionalism and enthusiasm in order to give the highest level of client satisfaction and optimal efficiency.

• Team Spirit: Working together in order to create synergy that results in exponential growth.

ABOUT


Spandana is committed to strengthening the socio-economic status of low-income households – Particularly women – in rural and urban areas by providing financial services on a continual basis in order to improve livelihoods, establish identity and enhance self-image.

Spandana places a premium on transparency. To that end, the organization has adopted a policy of providing printed information on the client loan cards about interest rates with a clearly delineated payment schedule, explained in terms of both the flat rate and the equivalent diminishing balance rate along with any upfront charges. Our interest rates are our competitive advantage that we have gained through cost-efficient operations. We have made it a point to keep the clients informed about the interest rates that we charge and the exact installments that are due. A well-informed client not only fits with our core ethos of serving the marginalized, she also makes for a less risky client. Full disclosure also prevents any potential fraud on the part of the staff by misreporting interest rates. Clients are informed of any changes in the interest rates before they are implemented in the field and these changes are reflected in the loan cards provided to the clients. Independent organizations have acknowledged Spandana’s commitment to transparency.

Additionally the Branch Managers, during their daily visits to the centers, advise clients against paying bribes to the staff. Whether such announcements are made or not is verified randomly with the clients by the Regional Managers and the Divisional Managers. The Branch Managers also make a check after disbursement in order to determine whether the amount reported and disbursed are in fact the same. This prevents phony loans and misreporting of disbursed amounts by the staff. The culture of the organization and the nature of the relationship with the clients are best symbolized by the pledge taken by the Credit Assistants during the daily Center meetings. It characterizes the selfless ethos that all Spandana staff members adopt.

We use only on-roll staff, trained in-house, and sourced from our borrower communities to ensure understanding of the cash-flows and empathy towards social situations of our client households. One of Spandana’s key strengths is the training that is provided to the staff members. The classroom training is followed by a rigorous one-month training session in the field wherein the staff members gain valuable hands-on experience. During this phase, strong emphasis is given to appropriate lending and collection processes which include both technical and behavioral aspects. The staff members understand that their livelihoods and the company’s very existence are completely dependent on the clients and therefore, they should be treated with utmost respect. A thorough appraisal process is in place for the selection of clients and also for deciding on the appropriate amounts to be sanctioned for a loan. This is done by taking into consideration the current status, both economic and social, of the household. For the Individual Lending product, the appraisal process even considers financial assessment of profit and loss and cash flow in order to determine the appropriate loan amount. This ensures prevention against problems arising from over-lending.

CLIENT FOCUSED PRODUCTS:As Spandana is a client-focused organization, our products are designed to bring value and service to our client’s lives. The product range and the features associated with each product clearly indicate our client focus and they are also suited to those clients whose requirements would not otherwise be optimally served. For instance, the Individual Loan is meant for clients who are lower level public and private sector employees, unorganised sector wage earners, small business owners and factory workers. These individuals are not readily served by other mainstream financial institutions. Similarly, the Agri-Family Loan is provided primarily to farmers for their non-farm requirements since the mainstream financial institutions provide only crop loans. Even the repayment of these loans is tailored to the cash flows of a farm household – interest is collected every month, but principal repayment happens as and when the crop is sold, be it once or twice in a year.

Any new product that we have added has come from the client feedback reported by the operational staff and this epitomizes our market-driven approach to financial services. We constantly endeavor to respond to felt needs of our clients. Our configuration of rural, semi-urban and urban operations and our product mix (group, individual and agri-family loans) are a testimony to the focus we put on equitable solutions. For example, we have initiated a tie-up with Hindustan Unilever Limited to offer PUREIT water purifiers to provide clean drinking water to our clients. We do this by leveraging our large scale and personal reach in order to offer convenient door-step service through our network of dedicated credit officers. Additionally, Spandana has partnered with Max NewYork Life Insurance in order to offer insurance coverage to all of our clients and their spouses. To date, this program has already insured over ten million lives.

SOCIAL RESPONSIBILITY and TRANSPARENCY:


1. SKS IPO: SKS Microfinance, another large MFI based out of Hyderabad launched its maiden Initial Public Offering in July 2010. After a successful subscription, it was listed on the stock exchange in August 2010. This marked a critical development with the entry of retail investors into the microfinance sector – hitherto capitalized largely by Private Equity from promoters and institutional investors, financial institutions. The event also increased public and media interest in the industry. Analysts and observers have mixed views of its impact on the industry in terms of the visibility it brought and positioning it created for the Microfinance Industry.

2. Industry Initiatives: Over the past few years, Microfinance as a viable business model has gained prominence. It was accompanied by triple digit growth for MFIs and increased interest of investors and lenders alike. Many public sector banks also gravitated towards the private sector MFIs since the system offered better portfolio quality than compared to the alternative models. In the midst of it, the public sector microfinance lead by the SHG Bank linkage program also grew. Andhra Pradesh in particular experienced high level of customer penetration in both these models. Some of the incumbent issues like possibility of client overleveraging herself grew. The MFI industry then came together and started working on many initiatives such as:

• Promotion of Credit Bureau for Microfinance Customers: Spandana also invested in Alpha Microfinance – set up to promote a Credit Bureau

• Increased focus on Self Regulation and implementation of common industry level norms

• Co-opting Banks as critical stakeholders in alignment with self regulation activities through Bankers Forum for Microfinance Funding

Some of these initiatives require incubation and gradual development since it requires strategic and tactical shift for the industry players. Good amount of traction was gained over these activities however, this has proved to be too little too late.

3. Immediate term knee jerk action: AP Microfinance Ordinance: The Rural Development department of Government of State of Andhra Pradesh also runs a large Microfinance program through Society for Elimination of Rural Poverty (SERP) and Municipal Mission for Elimination of Urban Poverty in Municipal areas (MEPMA) in urban areas. The program is larger in scale and outreach than the private sector Microfinance program. In the months through August to October saw a spate of events garnering negative local media coverage and emotive appeal. In a knee jerk reaction, on 15 October 2010, the state of Andhra Pradesh promulgated an Ordinance ostensibly to protect the women Self Help Groups from exploitation by the MFIs in the State of Andhra Pradesh and for the matters connected therewith or incidental thereto. This was called as AP MFI (regulation of money lending) Ordinance. The Ordinance put such curbs on the MFi activities that the business came to a standstill and the company could not honor its existing contracts with the borrowers. After carefully examining the Ordinance, in consultation with our Counsel, the company challenged the Ordinance in the honorable High Court. The petition was accepted along with the other petitions on the same matter by MFIN and SKS Microfinance. The Courts gave interim orders helping the company in resuming collections in the field though with high degree of restrictions.

The Ordinance was later enacted without any changes. This makes the District Rural Development Agency (DRDA) as a regulator

for MFIs in the state of Andhra Pradesh. We have been complying with the provisions of the Ordinance/ Act since its promulgation. However, it has been onerous on many accounts –

• Fresh disbursements have come to a complete standstill – Micro credit was widely construed as a social contract with the borrowers where they become eligible to apply for a fresh loan once they are able to successfully pay off their existing loans. Now under the new statute, we were not able to take new applications from the borrowers since the borrowers needed to get acknowledgement from their SHGs. Moreover, even after the applications were taken, getting approvals for each such application through the system set under the Act was too onerous.

• Field level interactions with the borrowers have been curbed in terms of frequency of collections and also in terms of public places where we are allowed to interact with the borrowers. Even visiting the borrower at her place of stay or work or where the borrower happens to be could be construed as coercion with strict legal implications.

Both these restrictions lead to dramatic drop in repayment rates in AP. Extensive consultations with the representatives of Rural Development department since the promulgation of the ordinance, and later the Act, has not lead to a clear resolution. We are still working with them to arrive at a middle path where the public sector initiatives and private sector initiatives could co-exist for greater choice to the customers.

KEY INDUSTRY DEVELOPMENTS DURING THE YEAR


4. Moderation in face of extremes: Malegam Committee Recommendations: The Reserve Bank of India, concerned about the developments post the AP MFI (regulation of money-lending) Ordinance, set up a committee headed by Mr YH Malegam. The committee included eminent people from the board of RBI and two of its Deputy Governors. The committee did wide level consultations and released a report in January 19, 2011 with its recommendations. The report acknowledged the role played by MFIs in financial Inclusion but also set the tone of greater regulation for the Industry. It also observed that with the adoption of their recommendations, the need for AP MFI (regulation of money-lending) Ordinance would not arise. Malegam Committee Recommendations covered a wide spectrum – including – prudential norms for MFIs, a cap on pricing, limits on loan sizes and loan terms and also defined the target customer set in terms of their household income level. Industry players welcomed the Malegam Committee recommendations since it gave regulatory clarity and direction however, they also expressed concern that it would limit the financial viability of MFIs due to the pricing curbs and limiting it to only a smaller target group.

5. Long term regulatory clarity: Draft Microfinance Bill plus Priority sector qualifying norms: After the Malegam Committee Recommendations were released, the central government set up a panel for drafting of a central MFI Bill. The draft Bill was released for feedback in June 2011. More regulatory clarity emerged in May 2011 with the release of the revised priority sector status of Bank loans to MFIs. Both these flow from the recommendations from the Malegam Committee. The draft bill also gives an advisory role to the state governments in terms of their participation under the “Councils” at state level. It reinstates that MFIs would be considered as an extended arm of the Banking system and would not be governed by the Money-lending Act at State level.

6. Corporate Debt Restructuring: Since the promulgation of Ordinance in AP in October, Bank funding to MFIs came to a standstill. We did not take any fresh disbursements from the Banks after October 15, 2011 however; we continued to service our dues in time till March 31, 2011. In the meantime, we had been closely managing our cash-flows and keeping our Banks informed of the liquidity position. The liquidity challenge was compounded since the recovery rates in AP dropped dramatically. Therefore, we had less liquid funds to continue to service the Banker’s liability beyond March 31, 2011 on time. Foreseeing this, we had been engaged in extensive consultation with our Bankers. After their advise, we opted for Corporate Debt Restructuring (CDR) on March 7, 2011. Since then, the CDR package has been signed up and implementation is underway. With this package, we get relief in terms of Capital – since Rs.1,000 crore of debt is being converted to Optionally Convertible Cumulatively Redeemable Preference Shares (OCCRPS). This would give tier-II Capital benefit to the company and also offer the Banks risk sharing in case they opt for conversion of OCCRPS into common stock. The package also provides for a one year moratorium on repayments and restructuring of remaining debt for a period of 7 years (including moratorium). CDR reflects the confidence that our lenders have reposed in Spandana with their committed support for the next 7 years.

7. Way forward: The Microfinance Industry is at cross roads. On one hand there is a responsibility of credit for fostering financial inclusion in an economically viable manner, while on the other hand there is criticism of unbridled growth. This year is the year to pause and to ponder and to figure out the correct path ahead for all stakeholders – MFIs with limits on lending, Banks with experience of the past year, Regulator with a need to act in time to save the knowledge capital and outreach built by the MFIs over the last decade, and the Government to balance the private sector aspirations and efficiencies with public sector objectives. We are hopeful that over the next year, the industry will get a clear way forward and get back to serving its clients with re-assured focus.


FY11FY09 FY10FY08FY07

no. of employees

11,696

6,373

10,428

3,0241,911


no. of Borrowers (In Lakhs)41.77

24.3

36.7

11.99.16


no. of Branches1,731

944

1,533

435290


no. of districts

182166

176

74

37


Gross portfolio (Rs in Crore)

3,435.92

1,868.30

3,540.50

731.30427.73


disbursements (Rs In Crore)

2256.82

1717.67

3209.56

888.88596.7

operational highlights Fy-07 Fy-08 Fy-09 Fy-10 Fy-11

No. of Branches 290 735 944 1,533 1,731

District 37 74 166 176 182

No. of Employees 1,911 3,024 6,373 10,428 11,696

No. of Borrowers (in Lakhs) 9.16 11.9 24.3 36.7 41.77

Disbursements (Rs. in Crore) 596.70 888.88 1,717.67 3,209.56 2,256.82

Gross Portfolio (Rs. in Crore) 427.73 731.30 1,868.30 3,540.50 3,435.92

OPERATIONAL HIGHLIGHTS


FINANCIAL HIGHLIGHTS


incremental Borrowings

2005.08

1649.21727.6

514.98242.5


total revenue (Rs. In Crores)

782.04

356.68

724.09

127.4549.6


average assets (Rs in Crores)

2763.08

1177.00

2226.11

445.59218.74


profit after tax (Rs. In Crores)

(9.24

90.31

203.51

27.062.62

Financial year Fy 06-07 Fy 07-08 Fy 08-09 Fy 09-10 Fy 10-11

Incremental Borroings 242.50 514.98 1,649.27 1,727.62 2,005.08

Total Revenue (Rs. in Crores) 49.60 127.45 356.68 724.09 782.04

Profit After Tax (Rs. in Crores) 2.62 27.06 90.31 203.51 (9.24)

Total Assets (Rs. in Crores) 309.91 581.27 1,772.73 2,679.48 2,846.68

Average Assets 218.74 445.59 1,177.00 2,226.11 2,763.08

Return on Average Asset 1.20% 6.07% 7.67% 9.14% -0.33%

Equity 15.15 88.32 278.11 485.11 474.38

Average Equity 13.44 51.73 183.22 381.61 479.74

return on average equity 19.46% 52.32% 49.29% 53.33% -1.93%


CORPORATE INFORMATION

Bankers:

No. Name of Bank

1 Andhra Bank

2 AXIS Bank

3 Bank of Baroda

4 Bank of India

5 Bank of Rajasthan

6 BNP Paribas

7 Central Bank of India

8 Citi Bank

9 Corporation Bank

10 Dhanalakshmi Bank

11 HDFC Bank

12 HSBC

13 ICICI Bank

14 IDBI Bank

15 Indian Overseas Bank

16 IndusInd Bank

17 ING Vysya Bank

18 Karnataka Bank

19 Karur Vysya Bank

20 Lakshmi Vilas Bank

21. Manaveeya Holding and Investments (P) Ltd.

22 Oriental Bank of Commerce

23 Punjab & Sind Bank

24 Punjab National Bank

25 Rabo India Finance Ltd.

26 SIDBI

27 South Indian Bank

28 Standard Chartered Bank

29 State Bank of Hyderabad

30 State Bank of Mysore

31 State Bank of Patiala

32 State Bank of Travancore

33 Syndicate bank

34 Tata Capital Ltd.

35 The Jammu & Kashmir Bank

36 Union Bank of India

37 UCO Bank

38 Vijaya Bank

39 YES Bank

registered office:

Plot No. 79, Care Crystal, Vinayak Nagar,Gachibowli, Hyderabad – 500032.

Board of directors:

Mrs. Padmaja Gangireddy - Managing Director Mrs. Metla Asha Latha - Whole Time Director Mr. Vikram Singh Rathore - Nominee Director of SIDBIMr. Avinash Umapathy - Nominee Director of ICICI BankMr. Deepak Alok - Independent Director Mr. Lakshmi Narasaiah Gunturu - Independent Director

Board committees:

Audit Committee Asset Liability Management Committee Remuneration/Compensation Committee Nomination Committee Risk Management Committee Executive Committee

company Secretary:

CS Narne Murali Krishna - Vice President – Corporate Affairs

auditors:

BSR & Company Reliance Humsufer, IVth Floor,Road No. 11, Banjara Hills, Hyderabad – 500034.

registrars & transfer agent:

Karvy Computershare Private Limited Karvy House, 46, Avenue 4, Street No. 1Road No. 10, Banjara Hills, Hyderabad.

Website:

www.spandanaindia.com


Dear Members,

Your Directors have pleasure in presenting the 8th Annual Report, together with the audited financial statements of the Company for the year ended 31st March 2011

Financial performanceThe financial performance for the financial year ended 31st March 2011 is summarized below: (Rupees in Crore)

particularS Financial year ended

31st march 2011 31st march 2010

Income from Operations 746.71 700.41

Other Income 35.33 23.68

Profit before depreciation, interest and tax (PBDIT) 314.12 537.42

Depreciation 5.84 5.34

Financial Charges 307.90 220.99

Profit before tax 0.38 311.09

Provision for Tax – Current Year 9.62 107.58

Profit after Tax -9.24 203.51

Transfer to Statutory Reserves – 40.70

Balance carried to Balance sheet 247.48 256.71

The Income from operations during the year has gone up by Rs.46.30 Crore registering an increase of 6.61%. Profit before tax for the year decreased by 99.88% to Rs.0.38 Crore from Rs.311.09 Crore in the previous year. During the year a net loss of Rs.9.24 was registered against Rs.203.51 Crore profit in the previous year.

review of operationsUp to the first fortnight of October 2010, the entire India operations were normal with collections at over 98% levels and the Assets under Management recording a growth in line with preceding years. Assets under Management grew from Rs.3540 Cr in April 2010 to Rs.4,420 Cr in Sep 2011 and the number of Branches also increased from to 1533 to 1856 in the same period.

The Andhra Pradesh (AP) operations were affected adversely with promulgation of Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Ordinance 2010 (9 of 2010) on 15th October, 2010, which restricted staff movement in the field along with the associated field level pressures. With the interim order issued by the Honourable High court of AP in response to the writ petition (WPMP NO. 33215 of 2010 in WP NO. 25999 of 2010) filed by the Company against the said ordinance, the Company was allowed to resume field work. With that relief, we were able to resume collections in AP in a restricted manner. The Non-AP operations continue to be normal except limited influence on AP bordering areas.

The Central Government has initiated the process of enacting a central legislation for the development and regulation of Micro Finance Activity in India. We are hopeful that once the central legislation is enacted, we shall be able to resume normal business in AP also.

The AP crisis has come as an opportunity and this has catalyzed the Central Government, Ministry of Finance and the Reserve Bank of India to strengthen oversight over the microfinance sector. The contours of the forthcoming regulatory oversight are very positive. This will help in the long term stable growth of the sector. The Banks have also recognized this and have come forward in consortium format to support the company in terms of cash-flow support and the capital adequacy relief under the Corporate Debt Restructuring (CDR) Package. Overall the future outlook is positive.

highlights of cdr package:In present business environment to overcome the cash flow mismatch, the Company made CDR application, which got approved by the CDR cell vide its letter dated 29th June 2011 and the following are brief highlights of CDR Package:

1. The Cut-off date for CDR package is 1 April 2011.2. All on-balance sheet debt including the Term loans and Commercial Paper (CP) will be restructured. CP payments will be done based

on release of matching cash-flow-gap-filling Term debt which in turn will be restructured.3. Rs.1,000 crore debt will be converted in form of Optionally Convertible Cumulatively Redeemable Preference Shares (OCCRPS) to

give tier-II Capital relief immediately.

DIRECTOR’S REPORT


DIRECTOR’S REPORT4. There is one year moratorium on repayments (except servicing interest) followed by six years time schedule is given for repayment/

redemption of debt and OCCRPS.5. Both restructured Term Loans and OCCRPS carry interest/ coupon rate at 12%.6. Off-balance sheet exposures (assigned portfolios) have been kept out of the CDR mechanism. 7. The company has been advised to align itself by the sectoral guidelines of RBI.8. There is no restriction on the company in terms of –

i) fresh debt raise – but in terms of repayment of such facilities, it will be based on approval by the CDR monitoring committee (sequencing)

ii) fresh equity raiseiii) product diversificationiv) geographical diversification

9. The progress of the company on the CDR assumptions will be monitored by a monitoring committee comprising of 6 lender Bank and the CDR cell (set up under the RBI guidelines)

10. Company has also been advised to broad base its board and management team 11. Following the restructuring, our loan portfolio shall be the standard priority sector asset on the books of banks in line with the special

dispensation given to Banks by the Reserve Bank of India vide circular DBOD.BP.BC.No. 74 /21.04.132/2010-11 dated 19th January 2011

dividends During the year your directors have not recommended any dividend.

changes in share capital: There is no change in the capital structure of the Company during the financial year.

Borrowings Your company has been regular in discharging all its liabilities to the banks, financial institutions and other creditors. During the year,

the Company redeemed the 800 Secured Redeemable Non Convertible Debentures (NCDs) of Rs. 10 Lacs each aggregating to Rs. 80 Crores issued on private placement basis to Standard Chartered Bank at premium of 10%. During the year the Company’s incremental borrowings were Rs. 2016.57 Crore of which Rs. 200 Crore was Commercial Paper.

Securitisition: During the year, your Company recognized an amount of Rs. 50.75 Crore as Income for the portfolio buy outs/ securitization deals

having book value of Rs.721.98 Crore.

public deposits: Your Company has not accepted any public deposits during the year and as such no amount of principal and interest was outstanding

during the year.

rBi guidelines Your Company is registered with Reserve Bank of India (RBI), as a non-deposit accepting NBFC under Section 45-1A of the RBI

Act, 1934. Your Directors hereby report that the Company did not accept any public deposits during the year and did not have any outstanding at the end of the year. Further, your Company being systematically important NBFC maintains prescribed Capital Adequacy Ratio (CAR). Your Company’s CAR is as follows.

auditors The Company’s Statutory Auditors, M/s. B.S.R & Company, Chartered Accountants, retires at the conclusion of this Annual General

Meeting and is eligible for re-appointment.

A certificate from the auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956.

capital adequacy ratio 2009-2010 2010-2011

Capital Adequacy Ratio (CAR) 22.1% 16.3%

i) CAR –Tier I Capital (%) 20.8% 16.1%

ii) CAR – Tier II Capital (%) 1.3% 0.2%


(a) employed throughout the year:

Padmaja Gangireddy 44 Yrs Managing Contractual BCJ, MBA, 8 Years 25,920,000 19-Apr-03 Officer bearer of Spandana Director Rural and Urban Development Organisation

last employmentname of the

employee age designation &

nature of dutiesnature of

employmentQualification& experience

date of commencement of

employment

Board comments on auditors report

personnel Employee relations continued to be cordial throughout the year at all locations. Your Directors wish to place on record their deep

sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the year. Particular of Employee pursuant to Section 217 (2A) of the Companies Act, 1956 is given hereunde

auditors remarks

paragraph 5 of audit report

As stated in Note (d) of Schedule 1 to the financial statements, the Company has, considering the significantly adverse business impact following the enactment of the Andhra Pradesh Micro Finance Institution (Regulation of Money Lending) Act, 2011 (Act 1 of 2011) during the current year, revised its provisioning methodology for its outstanding loan portfolio to the minimum required norms as prescribed by the Reserve Bank of India. The Company had, in earlier years, voluntarily adopted a provisioning policy which was more stringent than the minimum prescribed by the Reserve Bank of India. In our opinion, the dilution of the provisioning methodology does not appropriately reflect the credit and operational risk in the revised business environment and therefore results in a less than required provision in relation to the loan portfolio outstanding from borrowers. Had the Company followed its previous provisioning methodology, the losst after tax for the year ended 31 March 2011 would have been higher by Rs.11,092,844,174 and the reserves and surplus would have been lower by Rs. 11,092,844,174 with a consequential impact on capital adequacy, which has not been quantified by the management.

paragraph x of annexure i to auditors report

After considering the effect of the qualifications in paragraph 5 of the auditors’ report, the loss for the current financial year is more than 50% of its net worth at the end of the financial year. The Company did not have accumulated losses at the beginning of the financial year, and it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

comments of the Board

This year has seen many initiatives by the regulators and Government towards increasing regulatory oversight over the microfinance industry – this pans out to various areas including prudential norms governing the MFI-NBFCs, pricing caps, classification of assets for qualification of priority sector for Banks etc. Besides that, a central MFI Bill which was in works has now been released for feedback by the Ministry of Finance. Given the increased regulatory oversight, the company decided to adopt RBI guidelines across all spears including prudential guidelines. Therefore the provisioning policy has also been aligned with the RBI prescribed policy

(b) employed for part of the year and in receipt of remuneration of rs. 5,00,000/- per month and above:

last employmentname of the employee

age designation &

nature of dutiesnature of

employmentQualification& experience

date of commencement of

employment

Radhika Haribakti 53 Yrs Whole Time Contractual B.Com, PGDM 625,000 26-Aug-10 Financial Consultant Director IIMA 25 Years

Chattanathan 47 Yrs Chief Executive Contractual B.Sc. (Ag), 2,923,387 06-Jan-11 Head of DSMG & CCMG –Devarajan Officer (DBM) PGDPR&J, DFS, ICICI Bank Limited CAIIB 20 Years

Lohani 35 Yrs Chief Operating Contractual B.Sc. (Hnrs), 3,564,516 28-Aug-10 Vice President, PortfolioSandeep Kumar Officer MBA, SLP Management at Lok 15 Years Capital LLC

Sanjeevi 47 Yrs Chief Financial Contractual CA, PGDM-IIMA 2,392,473 23-Aug-10 Group CFO, Aditya BirlaGiri Giridhar Officer 24 Years Retail Limited

DIRECTOR’S REPORT

remuneration(per annum /during the Fy)

remuneration(per annum /during the Fy)


DIRECTOR’S REPORTdirectors During the year under review, Mrs. Radhika Vijay Haribhakti and Mrs. Smita Aggarwal were appointed as Additional Directors under

Section 260 of the Companies Act, 1956 with effect from 26th August, 2010 on the Board of the Company. In the same Board Meeting Mrs. Radhika Vijay Haribhakti was appointed as Whole Time Director of the Company.

Mrs. Shamika Ravi was appointed as Additional Director and under Section 260 of the Companies Act, 1956 with effect from 4th October, 2010 on the Board of the Company.

Mr. Avinash Umapathy appointed as Nominee Director of ICICI Bank in place of Mrs. Supritha Shirish Shetty (earlier Nominee Director) with effect from 9th June, 2011.

Mr. Deepak Alok and Mr. Lakshmi Narasaiah were appointed as Additional Directors and under Section 260 of the Companies Act, 1956 with effect from 28th June, 2011 on the Board of the Company, whose period of office is upto the forthcoming Annual General Meeting (AGM). Notices under the Companies Act, 1956 have been received from a member for their appointment at the AGM. The directors recommend their re-appointment.

Mrs. M. Asha Latha, Director retires by rotation at the ensuing AGM and being eligible, offer herself for re-appointment. The directors recommend her re-appointment.

Further, the following changes were effected during the year:

Mrs. Radhika Vijay Haribhakti, vide her letter dated 18th October, 2010 tendered her resignation as Additional and Whole time Director of the Company with immediate effect.

Mr. Rajiv Behari Lall, Mrs. Bala Deepti Gangireddy, Vaddarse Prabhakar Shetty, Mr. Harinder Singh Sawhney and Mr. Venkateswara Reddy Gangireddy were tendered their resignation as Directors of the Company with effect from 25th October, 2010, 9th November, 2010, 21st December, 2010, 31st March, 2011 and 16th April, 2011 respectively.

Mrs. Smita Aggarwal, vide her letter dated 14th April, 2011 tendered her resignation as Additional Director of the Company with immediate effect. Mrs. Shamika Ravi, vide their letter dated and 14th June, 2011 respectively tendered their resignation as Director and Additional Director of the Company respectively with immediate effect.

corporate governance Corporate Governance, in essence, is a set of systems and procedures, which aims to ensure that the Company is managed to suit

the best interest of all its stakeholders with an objective to maximize their wealth. Your Company has been putting earnest efforts to adopt best Corporate Governance practices. In line with RBI Guidelines and the provisions of the Companies Act, 1956 on Corporate Governance, the Company constituted Audit Committee, Nomination Committee, Risk Management Committee, and Asset Liability Management Committee (ALCO).

composition of the audit committee The Audit Committee of the Board consists of three directors of which two are non-executive Independent Directors and one is

Managing Director of the Company. The members of the Audit Committee are as follows:

1. Padmaja Gangireddy, Chairperson

2. Lakshmi Narasaiah Gunturu, Member

3. Deepak Alok, Member

demat of shares Your Company’s shares have been made available for dematerialisation through the National Securities Depository Limited (NSDL)

and its ISIN Number is INE572J01011

conservation of energy, technology absorption and Foreign exchange earnings and outgo The particulars required to be furnished under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,

1988 are as under

a) conservation of energy: Our operations are not energy-intensive. However, significant measures are taken to reduce energy consumption by using energy

efficient computers


b) research and development (r&d) Research and development of new products and methodologies continue to be of importance to us and also a going process. This

allows us to enhance quality of service and customer satisfaction through continuous innovation.

c) technology absorption, adaptation and innovation We at Spandana believe that technology should aid in improving efficiencies and at the same time should not disrupt the existing

operational model with the efficiencies and the cost advantages that have given Spandana its market leadership status. The current weekly branches have a computerized MIS which has made data storage and data retrieval very speedy at the branch level. Keeping in view the unique operational model that we have for our Individual Lending product, we have developed in-house software for data management associated with this product. We are also exploring various options available for the microfinance sector to handle our current scale of operations and future plans for expansion.

d) Foreign exchange earnings and outgo During the year, there was no foreign exchange earning and outgo.

directors’ responsibility statement

In accordance with Section 217(2AA) of the Companies Act, 1956 the Directors of your Company hereby state that:

• In the preparation of the Annual Accounts, the applicable accounting standards have been followed;• Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are

reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year and of the profit or loss of your Company for that period;

• Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; and

• Your Directors have prepared the annual accounts on a going concern basis.

Gratitude and acknowledgement Your Directors would like to express their sincere appreciation of the co-operation and assistance received from shareholders,

bankers, regulatory bodies like Reserve Bank of India, Ministry of Corporate Affairs etc. and other business constituents during the year under review.

For and on behalf of the Board

Sd/- Padmaja GangireddyManaging Director

Sd/-M Asha LathaWhole-Time Director Place: HyderabadDate:

DIRECTOR’S REPORT


auditors’ report to the members of Spandana sphoorty financial limited

1 We have audited the attached Balance Sheet of Spandana Sphoorty Financial Limited (“the Company”) as at 31 March 2011, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These finan-cial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3 As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure I, a Statement on the matters specified in paragraphs 4 and 5 of the said Order.

4 Without qualifying our opinion, we draw attention to note (a) of schedule 19 to the financial statements which explains the nature of the facts and circumstances which have led to significant challenges in the business operations in the state of Andhra Pradesh. Management believes that though these challenges created an uncertainty in the business environment in Andhra Pradesh. As more fully explained in note (b) of schedule 19 to the financial statements, the Corporate Debt Restructuring package (CDR) that the Com-pany has entered into with its lenders approved on 29 June 2011 and other measures it has initiated to ensure business efficiencies will collectively enable the Company to manage its cashflows in a manner that it can sustain its operations and hence the financial statements have been prepared on a Going Concern basis.

5 As stated in Note (d) of Schedule 1 to the financial statements, the Company has, considering the significantly adverse business impact following the enactment of the Andhra Pradesh Micro Finance Institution (Regulation of Money Lending) Act, 2011 (Act 1 of 2011) during the current year, revised its provisioning methodology for its outstanding loan portfolio to the minimum required norms as prescribed by the Reserve Bank of India. The Company had, in earlier years, voluntarily adopted a provisioning policy which was more stringent than the minimum prescribed by the Reserve Bank of India. In our opinion, the dilution of the provisioning meth-odology does not appropriately reflect the credit and operational risk in the revised business environment and therefore results in a less than required provision in relation to the loan portfolio outstanding from borrowers. Had the Company followed its previous provisioning methodology, the loss after tax for the year ended 31 March 2011 would have been higher by Rs.11,092,844,174 and the reserves and surplus would have been lower by Rs. 11,092,844,174 with a consequential impact on capital adequacy, which has not been quantified by the management.

6 Further to our comments in the Annexure I referred to in paragraph 3 above, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our exami-nation of those books;

(c) the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable;

(e) on the basis of written representations received from the directors, as on 31 March 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(f) in our opinion and to the best of our information and according to the explanations given to us, subject to the effect on the financial statements of the matter referred to in paragraph 5 above, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

(iii) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

for B S r & company Sd/-Chartered Accountants Zubin ShekaryFirm Registration No: 128032W Partner Membership No: 48814 Place : HyderabadDate : 15 July 2011

AUDITOR’S REPORT


Annexure referred to in paragraph 3 of our report of even date to the members of Spandana Sphoorty Financial Limited (“the Company”) for the year ended 31 March 2011. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of one year. In our opinion, the periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noted on such verification.

(c) Fixed assets disposed during the year were not substantial, and therefore, do not affect the going concern assumption, in this regards.

ii. The Company is a Non Banking Finance Company (‘NBFC’), engaged in the business of providing loans. Accordingly, it does not hold any physical inventories. Hence, paragraph 4(ii) of the Order is not applicable.

iii. (a) The Company has granted unsecured loans to a company and a party, covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 19,800,000 and the year end balance of such loans was Rs. Nil.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have been granted to the entities listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

(c) In the case of loans granted to the entities listed in the register maintained under section 301, the borrowers have been regular in repaying the principal amounts as stipulated and in the payment of interest.

(d) There is no overdue amount in respect of loans granted to the entities listed in the register maintained under section 301.

(e) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of fixed assets and with regard to services rendered by the Company. The activities of the Company do not involve purchase of inventory and the sale of goods. We have not observed any major weakness in the internal control system during the course of our audit.

v. (a) In our opinion, and according to the information and explanations given to us, the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. The Company has not accepted any deposits from the public.

vii. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

viii. The Central Government has not prescribed the maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for any of the services rendered by the Company.

ix. (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has been generally regular in depositing amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Wealth tax and other material statutory dues with the appropriate authorities during the year though there have been significant delays in deposit of Service tax. As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, Sales-tax, Customs duty, Excise duty and Cess.

(b) Further, there were no dues on account of Cess under Section 441A of the Act, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(c) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Wealth tax, Service tax and other material statutory dues were in arrears as at 31 March 2011 for a period of more than six months from the date they became payable.

(d) As explained to us, the Company did not have any dues on account of Investor Education and Protection Fund, Sales tax, Customs duty, Excise duty and Cess which have not been deposited with the appropriate authorities on account of any dispute. However in respect of Employees’ State Insurance on 19 August 2010 the Company has received a revised notice of demand for payment of Rs 24,745,131 towards dues of Employees’ State Insurance for the period May 2005 to June 2008. In respect of which the Company has deposited an amount of Rs 6,186,283. The matter is pending with Deputy Director of Employees’ State Insurance Corporation

x. After considering the effect of the qualifications in paragraph 5 of the auditors’ report, the loss for the current financial year is more than 50% of its net worth at the end of the financial year. The Company did not have accumulated losses at the beginning of the

ANNEXURE I TO THE AUDITOR’S REPORT


financial year, and it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers or to any financial institutions or debenture holders.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society.

xiv. According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

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

xvi. In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

xviii. The Company has not made any preferential allotment of shares to companies/firms/parties covered in the register maintained under Section 301 of the Companies Act, 1956.

xix. The Company did not have outstanding debentures during the year.

xx. The Company has not raised any money by way of public issue.

xxi. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year, except for misappropriation of cash by certain employees amounting to Rs. 38,440,818 of which an amount of Rs 9,447,968 has been subsequently recovered. The employees have been dismissed and criminal proceedings have been initiated.

for B S r & company Sd/-Chartered Accountants Zubin ShekaryFirm Registration No: 128032W Partner Membership No: 48814 Place : Hyderabad HyderabadDate : 15 July, 2011


BALANCE SHEETBalance Sheet as on 31 march 2011(All amounts in Indian rupees, except share data)

as at as atSourceS oF FundS Schedule 31 march 2011 31 march 2010

Shareholders’ funds Share Share capital 2 135,474,330 135,474,330 Reserves and surplus 3 4,608,335,545 4,715,593,365

4,743,809,875 4,851,067,695 loan funds Secured loans 4 22,253,091,581 21,943,771,696 Unsecured loans 4A 1,469,872,271 -

23,722,963,852 21,943,771,696

total 28,466,773,727 26,794,839,391 application oF FundS

Fixed assets 5Gross block 291,042,225 203,137,129 Less: Accumulated depreciation (155,451,759) (97,400,963)

Net block 135,590,466 105,736,166

Capital work in progress 3,673,990 9,554,711

139,264,456 115,290,877

investments 6 1,000,000 1,000,000 deferred tax asset, net - 95,339,515 [Refer note (g) of schedule 19] current assets, loans and advancesCash and bank balances 7 1,950,664,399 7,765,733,187 Loan portfolio 8 28,505,511,661 21,300,827,762 Other loans and advances 9 427,542,243 43,833,798 Other current assets 10 115,601,444 146,875,082

30,999,319,747 29,257,269,829 current liabilities and provisions Current liabilities 11 2,552,622,941 1,962,111,723 Provisions 12 120,187,535 711,949,107

2,672,810,476 2,674,060,830

net current assets 28,326,509,271 26,583,208,999

28,466,773,727 26,794,839,391

Significant accounting policies 1 notes to accounts 19

The Schedules referred to above form an integral part of the Balance Sheet

As per our report attached

for B S r & company for Spandana Sphoorty Financial limited Chartered AccountantsFirm Registration No: 128032W

Sd/- Sd/- Sd/- Sd/-Zubin Shekary padmaja Gangireddy metla asha latha narne murali KrishnaPartner Managing Director Whole-time Director Company Secretary & VP Corporate AffairsMembership No. 48814Place: Hyderabad Date: 15 July, 2011


profit and loss account for the year ended 31 march 2011(All amounts in Indian rupees, except share data)

Schedule year ended year ended 31 march 2011 31 march 2010

incomeIncome from operations 13 7,467,144,195 7,004,082,859 Other income 14 353,266,091 236,816,984

7,820,410,286 7,240,899,843

expenditure Financial expenses 15 3,079,023,078 2,209,936,156 Personnel expenses 16 1,740,923,788 1,143,709,472 Operating and other expenses 17 396,375,344 362,447,216 Depreciation 58,377,286 53,393,906 Provisions and write offs 18 2,541,910,185 360,507,901

7,816,609,681 4,129,994,651

profit before tax 3,800,605 3,110,905,192

provision for tax 96,160,515 1,075,769,637 Current tax 821,000 1,134,464,415 Deferred tax expense/(benefit) 95,339,515 (58,694,778)

(loss)/profit after tax (92,359,910) 2,035,135,555

amount available for appropriation (92,359,910) 2,035,135,555

appropriations Transfer to Statutory Reserve - 407,027,111

amount available after appropriation (92,359,910) 1,628,108,444

Balance in Profit and Loss Account brought forward 2,567,138,448 939,030,004

Balance carried to Balance Sheet 2,474,778,538 2,567,138,448

earnings per share Basic & diluted - par value Rs.10 per share (6.82) 151.89 Significant accounting policies 1 notes to accounts 19

The Schedules referred to above form an integral part of the Profit and Loss Account

PROFIT AND LOSS ACCOUNT





cash Flow Statement for the year ended 31 march 2011(All amounts in Indian rupees, except share data)

a cash flows from operating activities 31 march 2011 31 march 2010

Profit Before Taxation 3,800,605 3,110,905,192 adjustments for: Depreciation 58,377,286 53,393,906 Provisions and write offs on loan portfolio 2,541,910,185 360,507,901 Loss from sale of fixed assets 32,500 - Interest income (134,146,131) (115,485,153) Income from mutual fund investments (112,216,138) (35,219,236)

Operating cash flows before working capital changes and other assets 2,357,758,307 3,374,102,610 (Increase) / decrease in other current assets 6,755,402 (16,783,427) (Increase) / decrease in loan portfolio (9,996,092,003) (8,829,495,466) (Increase) / decrease in other loans and advances (19,082,746) (9,421,689) Increase / (decrease) in current liabilities and provisions 592,868,737 1,414,187,807

Cash generated from operations (7,057,792,303) (4,067,410,165) Income taxes paid, net (710,067,870) (906,794,582)

net cash provided by operating activities (7,767,860,173) (4,974,204,747)

B cash flows from investing activities Purchase of fixed assets (including Capital Work in Progress) (83,258,788) (82,993,685) Proceeds from sale of fixed assets 875,422 7,868 Purchase of investments, net - 2,949,566,474 Interest received 158,664,367 82,052,131 Income from mutual funds 112,216,138 35,219,235

net cash provided by / (used in) investing activities 188,497,139 2,983,852,023 cash flows from financing activities Proceeds from issuance of share capital - 100,000,272 Proceeds / (repayment) of unsecured loans, net 1,469,872,271 (185,000,000) Proceeds from borrowings, net 294,421,975 7,117,374,205

net cash provided by / (used in) financing activities 1,764,294,246 7,032,374,477 Net increase in cash and cash equivalents (A+B+C) (5,815,068,788) 5,042,021,753 Cash and cash equivalents at the beginning of the year 7,765,733,187 2,723,711,434 Cash and cash equivalents at the end of the year (Note 1) 1,950,664,399 7,765,733,187 Note 1: 1. Cash and cash equivalents comprise: 31 march 2011 31 march 2010

Cash on hand 2,817,747 258,500,122 Balances in Current accounts 481,526,993 2,131,660,864 Deposit accounts* 1,466,319,659 5,375,572,201

1,950,664,399 7,765,733,187 * Out of the above Rs. 1,356,619,659 is lien marked against term loans and assigned loans in the form of cash collateral.

CASH FLOW STATEMENT





Schedule to the Balance Sheet of a non-Banking Financial company as on 31 march 2011.(As required in terms of Paragraph 13 of Non-Banking Financial)(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directons,2007

Rs. in Lakhs

31 march 2011 31 march 2010

Particulars Liabilities Side: 1 loans and advances availed by the nBFcs inclusive of interest accrued thereon but not paid: outstanding overduea Debentures : Secured - - : Unsecured - - (Other than Falling within the meaning of Public deposits) b Deferred Credits (Interest accrued but not due on Term loans) 1,067.67 - c Term Loans 222,087.93 - d Inter-corporate loans and borrowing - - e Commercial Paper 14,698.72 - f Other Loans (Cash credit from banks (secured by book debts)) 442.98 - Assets Side:

2 Break-up of loans and advances including bills receivables (other than those included in (4) below): outstandinga Secured 5,716 b Unsecured 279,339

3 Break-up of leased assets and stock on hire and other assets counting towards aFc activities (i) Lease assets including lease rentals under sundry debtors -a Finance lease - b Operating lease - (ii) Stock on hire including hire charges under sundry debtors -a Assets on hire - b Repossessed Assets - (iii) Other Loan counting towards AFC activities - a Loans where assets have been repossessed - b Loans other than ( a ) above -

4 Break-up of investments: cost market Value Current Investments: A Quoted i Shares: a Equity - - b Preference - - ii Debentures and Bonds - - iii Units of Mutual Fund - - iv Government Securities - - v Others ( Please Specify) - -

B unquoted i Shares: a Equity - -b Preference - - ii Debentures and Bonds - - iii Units of Mutual Fund - - iv Government Securities - - v Others ( Please Specify) - -

SCHEDULES TO THE ACCOUNTS


Schedule to the Balance Sheet of a non-Banking Financial company as on 31 march 2011.( As required in terms of Paragraph 13 of Non-Banking Financial )( Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directons,2007

Rs. in Lakhs

31 march 2011 31 march 2010

long term investments a Quoted i Shares: a Equity - -b Preference - - ii Debentures and Bonds - - iii Units of Mutual Fund - - iv Government Securities - - v Others ( Please Specify) - -

B unquotedi Shares:a Equity 10 10 b Preference - - ii Debentures and Bonds - - iii Units of Mutual Fund - - iv Government Securities - - v Others ( Please Specify) - - total 10 10

5 Borrower group-wise classification of assets financed as in (2) and (3) above: amount net of provisions category Secured unsecured totalA. Related Parties:** a. Subsidiaries - - - b. Companies in same group - - - c. Other related parties - - - B Other than related parties 5,691 278,239 283,930 total 5,691 278,239 283,930

6 investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted):

category market/Value Break up Book Value or Fair value or naV (net of provisions)A. Related Parties:** - - a. Subsidiaries - - b. Companies in same group - - c. Other related parties - - B Other than related parties 10 10 total 10 10 ** As per Accounting Standard of ICAI

7 other information particulars amount(i) Gross Non-Performing Assets a Related Parties - b Other than related Parties 4,233(ii) Net Non-Performing Assetsa Related Parties - b Other than related Parties 3,810 (iii) Assets acquired in satisfaction of debt - As per our report attached






SCHEDULES TO THE ACCOUNTSSchedules to the accounts(All amounts in Indian rupees, except share data)

31 march 2011 31 march 2010

Schedule 2 Share capitalAuthorised 50,000,000 Equity shares of Rs.10/- each (previous year 50,000,000 Equity shares of Rs. 10/- each) 500,000,000 500,000,000

Issued, subscribed and paid-up13,547,433 (previous year 13,547,433) Equity shares of Rs. 10- each fully paid up * 135,474,330 135,474,330 * Out of the above, 6,165,000 equity shares of Rs. 10/- each were issued as fully paid up bonus shares in the year 2005-06

Schedule 3 reserves and surplus 31 march 2011 31 march 2010 General reserve 23,280,656 23,280,656Securities Premium At the commencement of the year 1,443,292,550 1,410,025,358 Add: Allotment of shares at premium - 98,478,082

1,443,292,550 1,508,503,440 Less: Share/Debenture issue expenses (14,897,910) (65,210,890)

1,428,394,640 1,443,292,550 Capital reserve Grant received from SIDBI 7,000,000 7,000,000 Statutory reserve At the commencement of the year 674,881,711 267,854,600 Add: Transfer from Profit and Loss Account - 407,027,111 674,881,711 674,881,711

Balance in Profit and Loss Account 2,474,778,538 2,567,138,448

4,608,335,545 4,715,593,365 Schedule 4 Secured loans 31 march 2011 31 march 2010 Non convertible debentures (secured by book debts and cash collateral )* - 800,000,000 Term Loans From banks (secured by book debts and cash collateral) 17,870,543,185 15,077,993,929 From financial institutions (secured by book debts) 4,338,250,000 5,565,777,767

Others Cash credit from banks (secured by book debts) 44,298,396 500,000,000

22,253,091,581 21,943,771,696 * During the previous year, the Company has issued 800 Non convertible debentures (NCDs) with a face value of of Rs.1,000,000 to a bank. These NCDs are redeemed in full at a premium of of 10% on 8 June 2010.

Schedule 4a Secured loans 31 march 2011 31 march 2010 Commercial paper (short term) (Refer note (d) of schedule 19) 1,500,000,000 -

Less Unamortized interest (30,127,729) -

Maximum amount outstanding during the year is Rs.1,469,872,271 (Previous year : Rs. Nil) 1,469,872,271 -


Schedule 5: Fixed assets

31 march 2011 31 march 2010

Schedule 6 investments (refer note (o) of schedule 19) non-trade unquoted Alpha Micro Finance Consultants Private Limited. 1,000,000 1,000,000

1,000,000 1,000,000

Schedule 7 cash and bank balances 31 march 2011 31 march 2010 Cash on hand 2,817,747 258,500,122 Balances with Scheduled banks Current accounts 481,526,993 2,131,660,864 Deposit accounts * 1,466,319,659 5,375,572,201 *Out of the above Rs. 1,356,619,659 is lien marked against term loans and assigned loans in the form of cash collateral. 1,950,664,399 7,765,733,187 Schedule 8 loan portfolio (refer note (q) of schedule 19) 31 march 2011 31 march 2010 Secured loan portfolio (considered good) Standard 560,579,509 328,082,278 Sub standard 10,992,231 277,048 Loan Portfolio (considered doubtful) - - Unsecured Loan Portfolio (considered good) Standard 27,521,608,068 20,905,167,762 Sub standard 412,331,853 67,300,674 Loan Portfolio (considered doubtful) - - 28,505,511,661 21,300,827,762 Schedule 9 other loans and advances Advances recoverable in cash or kind or for value to be received 17,605,438 7,566,034 Staff loan outstanding 5,082,456 8,577,477 Rent deposits 40,228,650 27,690,287 Advance tax (net of provision for tax of Rs. 797,396,329) 364,625,699 -

427,542,243 43,833,798

Schedule 10other current assets Interest accrued on Term Deposits 51,735,136 76,253,372 Interest accrued on portfolio purchased 2,652,974 - Income tax refund receivable 5,289,517 5,950,622 Unamortised processing fee 50,489,030 62,422,485 Amount pending with court 5,434,787 2,248,603

total 115,601,444 146,875,082

DescriptionAs at

01 April 2010Additions

duringthe year

Deletionsduring

the year

As at31 March 2011

As at01 April 2010

Chargefor the year

Ondeletions

As at31 March 2011

As at31 March 2011

As at31 March 2010

GroSS BlocK depreciation net BlocK

tangible assetsFurniture and fixtures 58,019,835 30,101,019 93,138 88,027,416 31,326,117 18,723,291 7,891 50,041,517 37,985,899 26,693,418Office equipment 28,680,180 9,324,944 - 38,005,124 12,022,057 6,612,203 - 18,634,260 19,370,864 16,658,123 Vehicles 4,918,216 1,282,554 798,000 5,402,770 2,324,656 892,792 285,500 2,931,948 2,470,822 2,593,561 Computers 92,343,687 36,192,259 343,275 128,192,671 43,169,547 26,545,277 33,100 69,681,724 58,510,947 49,174,140

intangible assetsSoftware 19,175,511 12,238,733 - 31,414,244 8,558,587 5,603,723 - 14,162,310 17,251,934 10,616,924

total 203,137,129 89,139,509 1,234,413 291,042,225 97,400,964 58,377,286 326,491 155,451,759 135,590,466 105,736,166

Previous year 129,706,021 73,438,976 7,868 203,137,129 44,008,679 53,393,906 1,622 97,400,963 105,736,166 85,697,342



31 march 2011 31 march 2010

Schedule 11 current liabilitiesSundry creditors (Refer note (s) of schedule 19) 240,160,842 365,285,531 (due to micro and small enterprises: nil (previous year: nil) - - Interest accrued but not due on borrowings 106,767,099 105,004,531 Unamortised upfront interest on the Loan portfolio 270,985,724 238,690,140 Payable on assigned portfolio 1,920,089,372 1,248,794,136 Other liabilities 14,619,904 4,337,385

2,552,622,941 1,962,111,723 Schedule 12 provisionsProvision for taxation [Net of advance tax previous year Rs. 780,209,578] - 344,621,172 Provision on Standard Assets (Refer note (f) of schedule 19) 70,205,469 340,236,160 Provision on Non Performing Assets (Refer note (f) of schedule 19) 42,332,408 21,799,636 Provision for gratuity (Refer note (t) of schedule 19) 7,649,658 5,292,139

120,187,535 711,949,107

Schedule 13 income from operationsInterest income from portfolio loans 6,854,608,747 5,537,338,311 Income from asset assignment (Refer note (e) of schedule 19) 507,478,998 1,336,052,018 Group registration fees 105,056,450 130,692,530

7,467,144,195 7,004,082,859

Schedule 14other incomeInterest on fixed deposits 134,146,131 115,485,153 [Tax deducted at source Rs.13,634,653 (Previous year Rs. 13,321,977]

Insurance facilitation charges 79,099,071 71,244,817 Income from mutual fund investments (Debt) 112,216,138 35,219,236 Recovery from loans written off 3,077,019 9,893,625 Commission on services 19,356,634 404,145 Miscellaneous income 5,371,098 4,570,008

353,266,091 236,816,984

Schedule 15 Financial expensesInterest on term loans from banks 2,309,660,203 1,485,873,720 on term loans from financial institutions 601,289,849 639,440,278 on other loans 84,515,701 14,672,237 Loss on portfolio purchase 13,331,341 8,593,483 Processing fee and other charges 70,225,984 61,356,438

3,079,023,078 2,209,936,156

Schedule 16 personnel expensesSalaries, wages and bonus 1,604,021,010 1,033,837,255 Contribution to provident and other funds 53,045,357 30,987,285 Leave encashment 17,925,128 17,089,238 Staff welfare 58,282,634 56,503,555 Gratuity (Refer note (t) of schedule 19) 7,649,659 5,292,139

1,740,923,788 1,143,709,472



31 march 2011 31 march 2010

Schedule 17 operating and other expensesDeath relief and rehabilitation assistance 2,899,190 92,823,489 Rent (Refer note (i) of schedule 19) 110,179,224 71,084,798 Printing & stationery 43,574,169 40,242,847 Bank charges 32,619,374 26,502,294 Office maintenance 39,787,869 28,487,855 Rates & taxes 23,764,981 17,083,423 Legal and professional charges 18,949,043 37,238,445 Postage & telephone 27,257,126 13,790,131 Travelling expenses 14,244,996 11,354,727 Audit fees & expenses (Refer note (j) of schedule 19) 1,878,035 3,542,807 Computers and network maintenance 9,321,665 2,139,963 Staff recruitment and training 7,710,394 2,038,603 Subscriptions 21,919,831 622,774 Loss on sale of asset 32,500 - Fraud and shortages, net 28,992,850 7,099,657 Miscellaneous expenses 13,244,097 8,395,403

396,375,344 362,447,216

Schedule 18 provisions and write offsStandard assets provision (270,030,692) 161,457,656 Provision for non performing assets 20,532,773 18,657,265 Loss on assigned portfolio 2,273,954,719 - Bad debts written off 517,453,385 180,392,980

total 2,541,910,185 360,507,901



overview Spandana Sphoorty Financial Limited (formerly Spandana Sphoorty Innovative Financial Services Limited) (“SSFL” or “the Company”)

was incorporated on 10 March 2003 as a limited company. The Company is engaged in the business of micro finance, following group lending methodology and providing small value unsecured group loans up to value of Indian Rupees 25,000 to poor people and lower income group in urban and rural areas. The tenure of these loans is generally spread over fifty weeks; other services offered to the members of the Company include facilitating remittances and insurance. The Company also provides individual loans, small business loans, diary loans and tractor loans. The Company also acts as agent to manage loans assigned to Banks/Financial Institutions.

Schedule 1: Significant accounting policies

a. Basis of preparation of financial statements The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting

in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards (“AS”) prescribed by the Companies (Accounting Standards) Rules, 2006, the relevant provisions of the Companies Act, 1956 (‘the Act’) and the relevant guidelines of Reserve Bank of India (‘RBI’) to the extent applicable to a Non Banking Finance Company. The financial statements are presented in Indian Rupees rounded off to the nearest rupee.

b. use of estimates The preparation of financial statements is in conformity with GAAP and requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c. revenue recognition Interest income on loan portfolio is recognized in the profit and loss account on accrual basis using effective interest method except

in the case of non-performing assets (“NPA’s”) where it is recognized, upon realization, as per the prudential norms of RBI. Income from loan portfolio assigned is recognized in the profit and loss account in the year in which all the rights to benefits specified in the underlying contracts are unconditionally and irrevocably transferred to the Assignee.

Group membership fee that is non-refundable in nature is recognized on upfront basis.

Interest on term deposits has been accrued on the time proportion basis, using the underlying interest rate.

Dividend income is accounted when the right to receive the dividend is established.

d. provisioning policy for portfolio loans In earlier years, the Company had voluntarily adopted a provisioning methodology which was higher than the minimum prescribed

norms by the Reserve Bank of India in earlier years. Refer note (f) of schedule 19 for provisioning methodology followed in the earlier years.

The Government of Andhra Pradesh enacted “The Andhra Pradesh Micro Finance Institution (Regulation of Money Lending) Act, 2011 (Act 1 of 2011)” on December 31, 2010 by way of notification in the official gazette on January 1, 2011 in lieu of “The Andhra Pradesh Micro Finance Institution (Regulation of Money Lending) Ordinance 2010” promulgated on October 15, 2010. Post enactment of the above Act, the environment in which the Company is operating has changed significantly. Further, the state regulatory bodies and the Reserve Bank of India (RBI) have increased their regulatory oversight on MFIs. Given the increased regulatory focus on MFIs, the Company changed its earlier provisioning methodology and adopted across all geographies the RBI guidelines as prescribed in the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007.

asset classification: The Company’s Portfolio loans are classified as follows:

(i) Standard assets; (ii) Sub-standard assets; (iii) Doubtful assets; and (iv) Loss assets.

provisioning:

i. Standard Assets: 0.25 percent of the outstanding standard assets, which shall not be reckoned for arriving at net NPAs. ii. Sub-standard Assets: a general provision of 10% of total outstanding Sub-standard Assets. iii. Doubtful Assets:

a. 100% provision to the extent to which the advance is not covered by the realisable value of the security.b. In addition to item (a) above, depending upon the period for which the asset has remained doubtful, provision to the extent

of 20% to 50% of the secured portion (i.e. estimated realisable value of the outstanding) shall be made on the following basis : -

SIGNIFICANT ACCOUNTING POLICIES


iv. Loss Assets: The entire asset shall be written off. If the assets are permitted to remain in the books for any reason, 100% of the outstanding should be provided for;

e. Fixed assets and depreciation Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets comprises the purchase price,

taxes, duties, freight (net of rebates and discounts) and any other directly attributable costs of bringing the assets to their working condition for their intended use. Borrowing costs directly attributable to acquisition of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized.

Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the cost of fixed assets acquired but not ready for their intended use before such date are disclosed as capital work-in-progress.

Depreciation on fixed assets is provided using the written down method as per the rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956. Depreciation is calculated on a pro-rata basis from / upto the month the assets are purchased / sold.

f. investments Investments that are readily realizable and intended to be held to the period of not more than a year are classified as current investments.

Current investments are valued at lower of cost and fair value determined on individual investment basis. All other investments are classified as long term investments. Long term investments are carried at cost. Provision is recognized for any diminution in the value of investments, other than temporary.

g. employee benefits Contributions to gratuity fund (a defined benefit plan), determined by independent actuary at the balance sheet date are charged to

profit and loss account.

Contributions payable to the recognized provident fund which is defined contribution schemes, is charged to the profit and loss account. All actuarial gains and losses arising during the year are recognized in the profit and loss account.

The service rules of the Company do not provide for the carry forward of the accumulated leave balance.

h. income tax Income tax expense comprises current tax and deferred tax.

Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company.

Deferred tax Deferred tax charge or benefit reflects the tax effects of timing differences between accounting income and taxable income for the

year. The deferred tax charge or benefit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/virtually certain to be realised.

i. earnings per share The basic and diluted earnings per share (‘EPS’) is computed by dividing the net profit after tax for the year attributable to equity

shareholders by the weighted average number of equity shares outstanding during the year.

j. provisions and contingent liabilities The Company creates a provision when there is a present obligation as a result of an obligating event that probably requires an outflow

of resources and a reliable estimate can be made of the amount for the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resource is remote, no provision or disclosure is made.

k. impairment of assets The Company assesses at each balance sheet date whether there is any indication that any assets forming part of its cash generating

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

period for which the asset has been considered as doubtful % of provision

Up to one year 20

One to three years 30

More than three years 50

SIGNIFICANT ACCOUNTING POLICIES


a. Going concern assumption During the year, the Andhra Pradesh state government enacted “The Andhra Pradesh Micro Finance Institution (Regulation of Money

Lending) Act, 2011 (Act 1 of 2011) to regulate micro finance institutions (MFI) operating in the state.

Post implementation of the Act, the regulatory mechanism is more stringent for loan disbursement and collections and there were certain additional requirements instituted by the Act like registration of the MFI with the designated district registering authority, specify the area of operations, specify the system of due diligence in disbursing the loans and methods of loan recovery. The Act further requires the loan recovery to happen at a public place and not at the door steps of the borrower. Also the collection frequency is changed from weekly to monthly for all the joint liability group loans. All these changes required the Company to introduce certain additional procedures in the manner of their day to day functioning.

These regulatory changes severely impacted the field operations of the Company in the state of Andhra Pradesh which constitutes significant portion of the total loan portfolio, impacting the collection efficiency substantially and thereby impacting cash flows adversely. This led to an uncertainty in the business environment, the impact of which is currently not fully ascertainable.

The Company has filed a writ petition in the Andhra Pradesh High Court on 19 October 2010 seeking suspension of operation of the AP MFI Ordinance (later on enacted as Act) and obtained an interim relief to carry on its business pending registration under the Ordinance. There were no further directions from the High Court and the matter is subjudice and the management believes that the current challenges faced by the Company are not on account of any credit weakness per-se but are on account of environmental factors. Business in states other than Andhra Pradesh is being carried out as usual and the operations are intact. Further, with effect from 01 April 2011, the Company has entered into a Corporate Debt Restructuring (CDR) package with its lenders which has been approved on June 29, 2011 to overcome the current liquidity crunch. Accordingly, the financial statements of the Company have been prepared on a going concern basis. The Company has incurred a net loss of Rs. 92,359,910 for the year ended 31 March 2011. The key features of the CDR are mentioned in note (b) of schedule 19.

b. corporate debt restructuring With effect from 01 April 2011, the Company has received approval for Corporate Debt Restructuring package with lenders on June

29, 2011. The key features of the CDR are as follows:

i. Of the total term debt an amount of Rs.1,000 crore is to be converted into optionally convertible cumulative redeemable preference shares (‘OCCRPS’) carrying dividend of 0.001% p.a. and redeemable in such a manner so as to give the holder a premium of 12% p.a. In case the individual lenders do not exercise the conversion option on OCCRPS, the same is proposed to be redeemed in unequal quarterly installment starting from 30 June 2013 and getting fully redeemed by 31 March 2018;

ii. The balance term debt is repayable in 72 monthly installments commencing from April 15, 2012 with an interest rate of 12% p.a., with effect from 01 April 2011, payable on monthly basis on 15th day of every month. Deposits made against term loans and existing as on 31 March 2011 may be adjusted against term loan exposures existing as on 31 March 2011;

iii. For the redemption of Commercial Papers (‘CP’) the respective holders of the CP shall disburse working capital term loan to honor the repayment obligation of respective CP holders (refer note (d) of schedule 19 for details of commercial papers). The working capital loan sanctioned and disbursed for this purpose shall be repaid in 72 unequal monthly installment commencing from 15 April 2012 and shall carry an interest rate of 12% p.a. payable on monthly basis on 15th date of every month.

iv. As part of the CDR package, securities available to the lenders, excluding the exclusive tangible securities are proposed to be pooled on a pari passu basis among the lenders of term loans. As the commercial paper and the corporate guarantee are unsecured the corresponding working capital loans are to be sanctioned as unsecured facilities.

v. Additional security shall be made available, as part of the CDR package, to the CDR Lenders by pledging of the entire unencumbered shares held by the promoters. The promoters shall also pledge any additional shares allotted to the promoters as rights/bonus shares/preferential allotment, in future during the currency of the package.

Management believes that, on implementation of the CDR, the Company will be able to discharge its liabilities as and when they fall due as restructured under the CDR package and also enables the Company to meet capital risk to assets ratio as prescribed under RBI prudential norms for NBFCs. Further, the management believes that the steps taken to intensify the level of supervision across all functions and geographies would enhance its business efficiencies and is increasing the concentration in states other than Andhra Pradesh.

c. contingent liability not provided for

* Represents i. ESI payments: Rs. 18,558,848 in respect of which the matter is pending with Deputy Director of Employees’ State Insurance Corporation.ii. ICICI Partnership assignment: Contingent liability not acknowledged as debt by company of Rs.40,153,024.

particulars as at as at 31 march 2011 31 march 2010

Guarantees given and outstanding for the assigned loans 21,308,081 2,537,731,340(including cash collaterals and receivables placed with the banks)

Claim against Company not acknowledge as debts* 58,711,872 33,289,969

Schedule 19 - NOTES TO THE ACCOUNTS


particulars Standard asset provision Sub standard provision total

Opening 340,236,160 21,799,636 362,035,796

Additions/(reversals) (270,030,692) 20,532,773 (249,497,919)

closing 70,205,469 42,332,408 112,537,877

b. commercial paper During the year, the Company has issued the following commercial papers at a face value of Rs. 100 each to be repaid on maturity.

* During the year these commercial papers were repaid on the date of maturity.

e. assignment of certain loan portfolio During the year, Company has entered into assignment agreement with scheduled Banks/Financial Institutions in respect of certain

loan contracts, whereby underlying pool of Assets are transferred to these Banks/Financial Institutions for a lump sum consideration. During the year, the company has assigned loan portfolio having book value of Rs.7,219,792,971 to Scheduled Banks and NBFC’s. The Company has received a total consideration of Rs.7,727,271,968 arising out of such sale of loans through direct assignment. The difference between the consideration received and the book value of the loan portfolio assigned amounting to Rs.507,478,998 has been accounted as a gain in the profit and loss account in the current year, as all the right to benefits specified in the contract have been unconditionally and irrevocably transferred to these Banks/Financial Institutions without any recourse obligation. The loan assignment processing fees are also expensed in the period in which the transaction takes place.

f. provision for outstanding loan portfolio During the year, the Company has changed its provisioning methodology as explained in note (d) of schedule 1 to the financial

statements.

Loans and advances amounting to Rs. 517,453,385 (Previous Year- Rs 180,392,980) has been written off during the year 2010-11. In addition, an amount of Rs.2,273,954,719 has been recognised as loss on assigned portfolio.

The movement in provision during the year is explained below:

Provisioning methodology followed for the year ended 31 March 2010 is as follows:

In addition to the specific provision on NPAs, the Company maintains an additional general provision of 1% on outstanding balance of standard assets.

Sl. no. issue date maturity date tenor (in days) amount discount rate unamortised outstanding (p.a.) interest cost balance

1* 9-Sep-10 7-Mar-11 179 250,000,000 8.90% - -

2* 16-Sep-10 14-Dec-10 89 250,000,000 8.35% - -

3 23-Sep-10 5-Apr-11 194 400,000,000 8.40% 440,598 399,559,402

4 14-Oct-10 5-Apr-11 173 100,000,000 8.75% 115,090 99,884,910

5 9-Sep-10 9-Apr-11 212 250,000,000 9.25% 541,136 249,458,864

6 18-Aug-10 13-Aug-11 360 250,000,000 9.60% 8,108,906 241,891,094

7 24-Sep-10 23-Sep-11 364 500,000,000 9.50% 20,922,000 479,078,000

total 2,000,000,000 30,127,729 1,469,872,271

For the year ended 31 march 2011 For the year ended 31 march 2010

asset classification loan portfolio provision loan portfolio provision

Standard Portfolio 33,306,635,122 70,205,469 34,190,141,448 340,236,160

Sub Standard Portfolio 490,956,966 42,332,408 67,577,722 21,799,636

Less: Assigned portfolio 5,292,080,427 - 12,956,891,408 -

total 28,505,511,661 112,537,877 21,300,827,762 362,035,796

past due days classification General loan individual loan tractor loan agri-Family loan dairy loan

31 to 60 Sub standard 50% 1% 1% 25% 50%

61 to 90 Sub standard 50% 25% 20% 50% 50%

91 to 120 Sub standard 100% 50% 40% 100% 100%

> 120 Doubtful 100% 100% 100% 100% 100%

NOTES TO THE ACCOUNTS


g. deferred tax, net included in the balance sheet (Amount in Rupees)

* In the absence of certainty on realisation of deferred tax assets, the deferred tax asset has been recorded to the extent there exists reversing temporary differences by way of deferred tax liability on fixed assets.

h. Segmental reporting The Company operates in a single reportable segment i.e. micro credit lending to members, which have similar risk and returns for

the purpose of AS-17 on ‘segmental reporting’ issued by ICAI. The Company does not have any reportable geographical segment.

i. leases Lease payments made under cancellable operating lease amounting to Rs.110,179,224 (previous year Rs. 71,084,798) disclosed as

rent and the same have been recognized as an expense in the profit and loss account. The company has not entered into any non cancellable operating or finance leases.

j. auditors’ remuneration

(Amount in Rupees)

k. During the year ended 31 March 2011, the Company has established Employees and Directors Stock Option Plan 2010 (‘SOP Plan 2010) pursuant to the approval by the Board of Directors in their meeting held on 26 August 2010 and shareholders in the extra-ordinary general meeting held on 31 August 2010. The total number of eligible shares set aside under the plan is 669,760 equity shares. In the Remuneration Committee meeting held on 31 August 2010, 429,930 options were approved for allotment at an exercise price of Rs. 757 per share for certain eligible employees and Rs.1,513 per share for other eligible employees. Further, the Board of Directors in their meeting held on 19 May 2011 cancelled the remaining 239,830 un-granted options under SOP Plan 2010 thereby restricting the options to 350,960 (net of employees who have left the services of the Company till 31 March 2011).

details of Sop plan 2010 are as follows:

The Company has adopted the intrinsic value method of accounting for the SOP plan and the value of its shares on the date of grant is determined by the Board of Directors. As the exercise price of the option is significantly higher than the underlying value per share on the grant date, the options are underwater and do not have any intrinsic value. Accordingly, there is no compensation cost to be recognized in the profit and loss account for the year ended 31 March 2011.

particulars as at as at 31 march 2011 31 march 2010

Deferred Tax Liability

On Depreciation 4,932,028 -

Deferred Tax Asset

On Depreciation - (2,478,826)

On provision for Standard Assets* (4,932,028) (92,860,689)

Net deferred tax (Asset) / Liability - (95,339,515)

particulars For the year ended For the year ended 31 march 2011 31 march 2010

Audit fees 1,572,835 2,592,807

Certification 305,200 600,000

Tax audit fees - 350,000

Total 1,878,035 3,542,807

particulars 2010-11

Outstanding at the beginning of the year Nil

Granted during the year 429,930

Lapsed during the year 78,970

Outstanding at the end of the year. 350,960



l. earnings per Share (epS)

* Outstanding options at the end of the year are anti-dilutive in nature as the exercise price of the option is higher than the fair value of the share as at 31 March 2011.

**Joined on 26 Aug 2010 as Wholetime Director and resigned with effect from 18 Oct 2010.

m. related party disclosures

name of the related party nature of relationship

Spandana Rural and Urban Development Organization

Spandana Mutual Benefit Trust

Spandana Sphoorty Marketing Services Limited Enterprise in which Key Managerial Personnel have significant influence

Spandana Sphoorty Chit Funds Private Limited

Spandana Employee Welfare Trust

Criss Financial Holdings Limited (Formerly Keertana Financials Limited)

Ms Padmaja Gangireddy

Ms Asha Latha Metla Key Managerial Personnel

Ms Radhika Haribhakti**


earnings: (rs.)

Profit/(loss) after taxation, attributable to equity shareholders (92,359,910) 2,035,135,555

Shares:

Number of shares at the beginning of the year 13,547,433 13,395,214

Add: Equity shares exercised on exercise of vested options - -

Add: Shares allotted during the year - 152,219

Total number of equity shares outstanding at the end of the year 13,547,433 13,547,433

Weighted average number of equity shares outstanding during the year - Basic EPS 13,547,433 13,398,967

Add: Weighted average number of equity shares outstanding during the year – Diluted EPS* - -

earnings per share of par value rs. 10 each:

Basic and Diluted EPS (6.82) 151.89



related party disclosures A) Parties where control exists

B) Transactions with key managerial personnel:

Managerial remuneration

S.No. Name of the Related Party Nature of Transactions 31 March 2011 31 March 2010

Volume of Payable/ Volume of Amount Transactions (receivable) transactions payable/ During the year during the year (receivable)

1 Spandana Rural and Urban Short term loan given 17,300,000 - - - Development Organization Subordinated loan repaid - - 150,000,000 -

Interest paid on loan - - 8,383,561 - Interest Income (216,452) - - - Rent Expense 243,000 411,000 - Advances given 19,193,448 - 85,639,095 -

2. Spandana Mutual Benefit Trust Subordinated loan repaid - - 35,000,000 - Rent expenses 200,271 - - - Interest on loans - - 1,956,163 - Advances given 4,956,066 - 376,647,935 - (376,647,935) -

3. Spandana Sphoorty Marketing Purchase of Fixed assets 641,852 436,766 - Services Limited Amount received (641,852) - (436766) - Advances given 344,303 313,677 - Advances recovered (344,303) - (313,677) -

4. Spandana Sphoorty Chit Funds Advances given 287,084 - Private Limited Advances recovered - - (287084) -

5. Spandana Employee Welfare Advances given 20,275,175 56,000 10,263,737 Trust Advances recovered (18,757,874) (11,510,547 ) (1,461,301) Staff welfare - - (12,839,000) (12,839,000)

6. Criss Financial Holdings Limited Short term loan given 2,500,000 - - - (formerly Keertana Financial Short term loan recovered (2,500,000) - - - Limited) Interest on loans (4,932) - - - Advances paid 9,206,943 Advances received (9,206,943) - 496,775 - (496,775)

n. asset liability management - maturity pattern of certain items of assets and liabilities

Liabilities (as per Corporate Debt Restructuring package)

Borrowings from banks and FIs 241,325,939 1,101,097,944 - 662,025,330 - 7,812,343,093 3,906,171,546 10,000,000,000 23,722,963,852

Liabilities (as per loan covenants entered with banks and FIs)

Borrowings from banks and FIs 2,132,321,300 1,020,192,479 1,424,059,241 4,328,852,926 7,010,278,616 7,740,592,690 66,666,600 - 23,722,963,852

Assets

Loans & Advances 3,395,864,389 3,334,137,878 3,405,817,331 6,442,793,471 3,783,789,746 5,525,383,760 2,617,725,086 - 28,505,511,661

Investments - - - - - - - 1,000,000 1,000,000

Fixed Deposits 428,055,598 7,500,000 148,666,775 882,097,286 - - - - 1,466,319,659

over onemonth to 2

months

over 2 monthsto 3 months

over 3 months upto 6 months

over 6 months upto 1year

over 1 yearupto 3 years

over 3 yearsupto 5 yearsparticularS

1 day to 30/31 day

(one month)over 5 years total

Sl.No. Name of the related party Transactions during 2010-11 Transactions during 2009-10

1 Padmaja Gangireddy 25,929,360 20,076,966

2 Asha Latha Metla 1,944,339 861,774

3 Radhika Haribhakti 625,000 -

4 Narendra Prasad M.V - 677,751



o. investments (other than in equity shares)

q. movement in loan portfolio: (Amount in Rupees)

loan portfolio 31 march 2011 31 march 2010

Opening loan outstanding 35,268,596,659 18,683,143,683

Loans disbursed during the year 52,934,379,373 58,719,260,351

A 88,202,976,032 77,402,404,034

Loans recovered during the year (53,326,350,911) (41,953,414,395)

Portfolio written off (517,453,385) (180,392,980)

B (53,843,804,296) (42,133,807,375)

Loans outstanding at the end of the year (A-B) 34,359,171,736 35,268,596,659

Assigned portfolio (5,292,080,428) (12,956,891,408)

Portfolio Purchased 172,751,872 136,476,000

Prepayments (734,331,519) (1,147,353,489)

loan portfolio outstanding 28,505,511,661 21,300,827,762

Axis Mutual Fund - - 1,164,959 1,165,000,000 1,168,557 1,168,613,762 - -

Baroda Pioneer Mutual Fund - - 548,990,462 5,493,954,412 549,244,438 5,496,496,316 - -

Birla Sun Life Mutual Fund - - 224,293,414 2,245,536,866 224,547,289 2,248,076,865 - -

Canara Robeco Mutual Fund - - 120,291,140 1,462,919,675 121,235,502 1,474,631,868 - -

Deutsche Mutual Fund - - 69,762,226 700,044,452 69,791,133 700,334,184 - -

Franklin Templeton Investments - - 335,056,766 7,862,050,660 335,903,540 7,871,416,823 - -

HDFC Mutual Fund - - 122,284,754 2,081,323,151 122,555,253 2,084,141,980 - -

ICICI Prudential Asset Management - - 38,266,084 3,911,204,764 288,064,267 3,919,196,395 - -

IDBI Mutual Fund - - 194,254,500 1,942,545,000 195,335,975 1,953,359,751 - -

IDFC Mutual Fund - - 138,801,510 1,388,278,754 139,150,825 1,391,772,440 - -

JM Financial Mutual Fund - - 8,945,259 89,500,000 8,955,307 89,600,530 - -

J P Morgan Asset Management - - 251,397,509 5,028,177,688 502,651,973 5,030,742,302 - -

Kotak Mahindra Mutual Fund - - 346,263,677 3,744,882,252 346,810,223 3,750,432,953 - -

LIC Nomura Mutual Fund - - 629,084,817 7,560,223,047 686,793,605 7,561,264,403 - -

L & T Mutual Fund - - 43,908,539 445,900,000 44,018,175 447,013,376 - -

Pramerica Mutual Fund - - 461,990 462,000,000 467,397 467,466,937 - -

Reliance Mutual Fund - - 24,709,547 2,690,122,971 24,711,596 2,692,536,800 - -

Religare Mutual Fund - - 399,808,772 4,003,008,985 400,796,482 4,012,902,734 - -

SBI Mutual Fund - - 226,267,087 2,266,713,134 226,866,745 2,272,716,534 - -

Sundaram Mutual Fund - - 99,348,200 1,000,045,368 99,416,696 1,000,733,121 - -

Taurus Mutual Fund - - 1,464,879 1,466,771,430 1,471,991 1,473,895,587 - -

UTI Mutual Fund - - 3,092,355 2,625,188,146 3,107,408 2,640,261,234 - -

total: - - 3,827,918,445 59,635,390,755 4,393,064,375 59,747,606,896 - -

name of mutual fund schemeunits unitsunitsunitsamount amountamountamount

purchased during the year Sales during the yearBalance as at1 april 2010

Balance as at31 march 2011

p. managerial remuneration:

particulars For the year ended 31 march 2011 For the year ended 31 march 2010

Salary and allowances 28,489,339 21,604,011

Contribution to provident and other funds 9,360 12,480

total 28,498,699 21,616,491



change in the fair value of plan assets

For the year ended For the year ended 31st march 2011 31st march 2010

The principal amount and the interest due thereon remaining unpaid to any supplier as at the endof each accounting year Nil Nil

The amount of interest paid by the Company along with the amounts of the payment made to thesupplier beyond the appointed day during the year Nil Nil

The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specifiedunder this Act Nil Nil

The amount of interest accrued and remaining unpaid at the end of the year Nil Nil

The amount of further interest remaining due and payable even in the succeeding years, until suchdate when the interest dues as above are actually paid to the small enterprise Nil Nil

s. amounts payable to micro, Small and medium enterprises The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends

that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2011 has been made in the financial statements based on information received and available with the Company. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

r. prepayments: The Company has accepted prepayments over and above the installment due from borrowers and initially accounted as advance

recovery of loans. These are adjusted against the loan outstanding

t. employee benefit plans The following table set out the status of the gratuity plan as required under AS 15 (Revised)

Reconciliation of opening and closing balances of the present value of the defined benefit obligation

change in defined benefit obligation

particulars For the year ended For the year ended 31st march 2011 31st march 2010

Balance at 1 April 11,763,853 5,270,908

Expected return on plan assets 1,283,000 726,800

Actuarial gains (161,672) 157,861

Employer contributions 5,292,139 5,630,322

Benefits paid (309,208) (22,038)

Balance at 31 March 17,868,112 11,763,853

For the year ended For the year endedparticulars 31st march 2011 31st march 2010

Balance at 1 April 17,055,992 10,901,230

Service cost 10,024,019 7,576,938

Interest cost 13,52,111 871,217

Actuarial loss/(Gain) (2,605,144) (2,271,355)

Benefits paid (3,09,208) (22,038)

Balance at 31 march 25,517,770 17,055,992

For the year ended 31 march 2011 31 march 2010

Opening balance 1,147,353,489 703,509,745

Add: Collected during the year 4,275,607,724 3,534,093,287

Less: Adjusted during the year (4,688,629,694) (3,090,249,543)

closing balance 734,331,519 1,147,353,489



Discount rate: The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets: This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

u. capital to risk assets ratio

expense recognized in statement of profit and loss account


Current service cost 10,024,019 7,576,938

Interest on defined benefit obligation 13,52,111 871,217

Expected return on plan assets (12,83,000) (726,800)

Net actuarial loss/(gain) recognized in the year (2,443,472) (2,429,216)

amount included in personnel expenses 7,649,658 5,292,139

amounts in the balance sheet For the year ended For the year ended 31st march 2011 31st march 2010

Provisions 76,49,658 5,292,139

net liability/(asset) 76,49,658 5,292,139

as at as atcategory of assets 31 march 2011 31 march 2010

Insurer managed funds 17,868,112 11,763,853

total 17,868,112 11,763,853

asset information

s. employee Benefit plans (continued)

amount recognized in Balance Sheet


Present value of funded obligations 25,517,770 17,055,992

Fair value on plan assets 17,868,112 (11,763,853)

net liability/(asset) (7,649,658) 5,292,139

Summary of actuarial assumptionsparticulars For the year ended For the year ended 31 march 2011 31 march 2010

Discount rate 8.30% 8.00%

Expected return on plan assets 9.00% 9.00%

Salary escalation rate (p.a.) 5.00% 5.00%

Attrition rate 10.00% 10.00%


i) Capital Adequacy Ratio (CRAR) 16.3% 22.1%

ii) CRAR – Tier I Capital (%) 16.1% 20.8%

iii) CRAR – Tier II Capital (%) 0.2% 1.3%



v. Exposure to real estate sector

The company does not have direct exposure to residential mortgages, commercial real estate and investment in mortgage – securities. Further the company does not have fund based and non fund based exposures on National Housing Bank and Housing Finance Company. (Previous year -Nil)

w. Subsequent events

In the month of March 2011, the Company has opted for Corporate Debt Restructuring for which the approval was received on June 29, 2011. Refer note (b) of schedule 19.

x. Previous year’s figures have been regrouped / reclassified, where necessary, to conform to current year’s classification.


As per our report attached for B S r & company for Spandana Sphoorty Financial limited Chartered Accountants

Sd/- Sd/- Sd/- Sd/-Zubin Shekary padmaja Gangireddy metla asha latha narne murali KrishnaPartner Managing Director Whole-time Director Company Secretary & VP Corporate AffairsMembership No. 48814Place: Hyderabad Date:


Balance Sheet aBStract and company’S General BuSineSS proFile

I Registration Details State Code 01

Registration No. 40648 of 2002 – 2003

Balance Sheet Date 31.03.2011

ii. capital raised during the year (amount in rs. thousands)

Public Issue NIL Right Issue NIL

Bonus Issue NIL Private Placement NIL

Govt. Contribution NIL

iii. position of mobilization and deployment of Funds (amount in rs. thousands)

Total Liabilities: Total Assets:

2,84,66,774 2,84,66,774

Source of Funds

Paid up capital: 1,35,474 Reserve & Surplus: 46,08,336

Secured Loans: 2,22,53,092 Unsecured Loans: 14,69,872

application of Funds

Net Fixed Assets: 1,35,591 Investment: 1,000

Capital Work in Progress: 3,674 Net Current Assets 2,83,26,509

Miscellaneous Exp. Nil Accumulated Losses: Nil

iV. performance of the company (amount in rs. thousands)

Turnover: 78,20,410 Total Expenditure : 78,16,610

Profit/(Loss) before tax (+) 3,800 Profit/(Loss) after tax (-) 92,360

Earnings per share in Rs. Dividend @ % : Nil

Basic: (-) 6.82

Diluted: (-) 6.82

V. Generic names of principal products/Services of the company (as per monetary terms)

(a) ITC CODE Micro Finance

Product Description: FINANCIAL SERVICES

Rs. 74,671,44,195

(b) ITC CODE Other Income

Product Description: INTEREST ON FIXED DEPOSITS, COMMISSION & OTHERS

Rs. 353,266,091

ABSTRACT BALANCE SHEET



Spandana Sphoorty Financial limitedMICRO CREDIT – CREDIT PLUS SERVICES

Plot No.79. Vinayak Nagar, Spandana, Gachibowli,Hyderabad–500032

Date post:	05-Jul-2018
Category:	Documents
Upload:	vonguyet
View:	217 times
Download:	0 times

Spandana Sphoorty Financial limited Report 2010-11.pdf · crisis due to AP ordinance and more ......

Documents