ArmanLeaseandFinanceLtd

BusinessPlan
20082013

August2008

50234,SakarIII,Opp.OldHighCourt
Off.AshramRoad,
Ahmedabad380014
Phones:+917930005000,27541989
Fax:+917927541738
Website:www.armanlease.com
Email:finance@armanlease.com

ExecutiveSummary

ThisBusinessPlanhasbeenpreparedinordertoplanexpansionandlendinginArmanLeaseandFinanceLtd
(Arman). The document will serve as a guide for all the stakeholders in formulation of strategies, setting up
policiesandprocedures,designingtheloanproductsandresourcemobilizationandmanagement.Thiswillhelp
thecompanyinmanagingitsoperationsaswellasfundingrequirementsinaplannedmanner.Thisdocument
willalsohelpprospectiveinvestorsandlendersinmakingdecisions.

The document highlights the operational area of Arman, its products, people involved, growth strategy,
highlightsofoperationspolicy,currentandprojectedfinancialandoperationalstatistics.TheBusinessPlanalso
presentstheoperationalandfinancialprojectionsforthenextfiveyears(20082013).Basedontheprojected
financialstatements,criticalperformanceratioshavealsobeencalculated.

Arman Lease and Finance Limited was incorporated in November 1992 as a Private Limited Company. In
December1993,itconverteditselfintoaPublicLimitedCompanyandinAugust1995itcameoutwithapublic
issue of Rs2.8 crores. The company is listed in Mumbai and Jaipur stock exchange. Arman is a category A
certification(eligibletoavaildepositsfrompublic)fromtheRBI.

Thecompanycurrentlyisengagedintothebusinessofofferingmicrofinancebothunsecured(personalloans),as
wellas,securedlendingforautorickshaws,twowheelers,oldtwoandfourwheelersandpersonalloanscredit.
Thecompanyisplanningtoenterinto themarketofcoregroupbasedmicrofinanceactivityfromthecurrent
financialyearintheAhmedabad,GandhinagarandMehsanadistrictsofGujarat.Armanrealisesthepotentialin
microfinancesectorisalsoguidedby theideology ofDirectorsforworking with thelowerincomegroupand
hence started core microfinance products. The Company is now determined to expand its microfinance
portfolio,whichwillbeitscoreproductandthefocusareaforthefuture.

Armanisledbyanexperiencedandqualifiedteamwithastrongtopaswellasmiddlemanagementandhasthe
advantageofanindependentChairman,MrChinubhaiRShahwhohasover35yearsofexperienceincorporate
sector. He shows keen interest in the area of corporate governance and is guest professor at IIM (A). For its
strong management and governance practices combined with good financial performance, it has been
continuouslygettingagradeofAlpha()toAlphafromtheleadingmicrofinanceratingagencyMCRIL.

Armanhasstrategicallychosenmicrofinanceasitscoreactivity andwouldbeworkingin Gujarat.Thecurrent

operations are based in and around Ahmedabad. The Directors as well as all the staff of the Company have
extensive knowledge and understanding of the region. The region has good infrastructure, a wide and strong
network of dairy cooperatives and the market size is growing rapidly. The region has large population of
economically weak and socially neglected communities such as Scheduled Castes, tribal and other backward
classes in its slum areas. The region offers tremendous potential for the growth of microfinance sector. The
cultural and economic distinctiveness of the place offers an advantage to Arman with its expertise and
knowledgeoftheregion.

This Business Plan document represents the growth that the Company envisions and its funding requirement
willalsobeguidedbytheprojectedoperationalandfinancialfiguresmentionedinthisdocument.

TableofContent
ContentPageNo.

Chapter1:MicrofinanceSector

1.1GlobalContext..

5
1.2IndianContext...

Chapter2:ArmanLeaseandFinanceLtd

2.1Introduction..

7
2.2PresentActivities...

10
2.3OperationalHighlights..

11
2.4GeographicalSpread

11
2.5OrganisationalStructure................

12
2.6HumanResource.

13
2.7Operationalstatusason31March2008:thebaseyear.
14
2.8DistributionofloansProductWise..................................................14
2.9KeyRatiosforlasttwoyears..................
14

Chapter3:MicrofinanceinNorthGujarat

3.1ArmansstrategytolendinNorthGujarat...
15
3.2MicrofinanceMarketNorthGujarat......
16
3.3CompetitionAnalysis

17

Chapter4:ArmansGovernance

4.1LegalForm................

18
4.2Equitystructure...

18
4.3Fundmobilisation

19
4.4Growth,expansionandcompetition

19
4.5GoverningBoard.

21
4.6Armansplantoestablishmicrofinance.
21

Chapter5:MicrofinanceMethodology

5.1CurrentLoanPolicies

22
5.2FeaturesofloanproductscurrentlyofferedbyArman...
22

22
5.3CoreMicrofinanceDeliveryModel.
5.4OperationalUnit.........

22
5.5DescriptionofCoreMicrofinanceloanproducts...
23
5.6MicrofinanceProcedures.

24

Chapter6:ManagementSystems

6.1HumanResource.

27
6.2AccountingSystemandMIS...

27
6.3Internalcontrolprocedures..

27
6.4Infrastructure...

28

Chapter7:BusinessPlanProjections

28
7.1CurrentFinancialPosition....
7.2BusinessPlanprojections..

31
7.3Financingrequirements.............

34

7.4NotestoProjections..............

Annexure1SchedulestotheFinancialStatements.....
Annexure2DemographicdataofAhmedabad,GandhinagarandMehsana..

35

36
43

Chapter1:Microfinancecontext

1.1
Globalcontext

"Microfinanceisthesupplyofloans,savings,andotherbasicfinancialservicestothepoor."(ConsultativeGroup
toAssistthePoorCGAP).Itcanalsobedefinedasanyactivitythatincludestheprovisionoffinancialservices
suchascredit,savings,andinsurancetolowincomeindividualsorhouseholds,withthegoalofcreatingsocial
value.

ProfessorMohammadYunusofBangladesh,noblepricewinnerintheyear2008,iswidelyknownasthefather
ofmicrofinance.25yearsagohefoundedtheGrameenBank,whichisseenasthebeginningofmicrofinance,
thoughalmostatthesametimetherewereseveralotherinitiativebeingtakeninmicrofinance.Thedomainof
microfinancehassincespreadwiththeadaptationandevolutionofProfessorYunusideastovariouscountries
and contexts. Several other innovative models in microfinance have developed. Microfinance is now being
hailedasoneofthemostpowerfulinstrumentsofpovertyalleviation,worldwide.

TheWorldBankestimatesthattherearenowover7,000microfinanceinstitutions,servingsome16millionlow
income families in developing countries. The total cash turnover of MFIs worldwide is estimated at US$2.5
billionandthepotentialfornewgrowthisoutstanding.(DataSnapshotsonMicrofinanceTheVirtualLibrary
onMicrocredit)

"The great challenge before us is to address the constraints that exclude people from full participation in the
financial sector... Together, we can and must build inclusive financial sectors that help people improve their
lives."
KofiAnnan,UNSecretaryGeneral

Thepoorrarelyaccessservicesthroughtheformalfinancialsector.Theyaddresstheirneedforfinancialservices
through a variety of financial relationships, mostly informal (CGAP). Formal financial institutions were not
designed to help those who don't already have financial assets they were designed to help those who do.
Creditisavailablefrominformalcommercialandnoncommericalmoneylendersbutusuallyataveryhighcost
toborrowers.Experienceshowsthatmicrofinancecanhelpthepoortoincreaseincome,buildviablebusinesses,
andreducetheirvulnerabilitytoexternalshocks.Itcanalsobeapowerfulinstrumentforselfempowermentby
enablingthepoor,especiallywomen,tobecomeeconomicagentsofchange

1.2
Indiancontext

The microfinance sector in India has been perceived by policymakers, particularly the Reserve Bank of India
(RBI),asausefulchannelforexpandingaccesstovariousfinancialservicesforlowincomepersonsandthosein
theinformalsector.

Sadhan study contends that Indias microfinance sector has an outreach potential of 36.8 million borrowers
including 3.5 million urban residents, which is less than 50% of the estimated potential. MFIs had close to 10
million customers and a cumulative outstanding portfolio of Rs 3,400 crores (US$769 million) as on 31 March
2007.


TheefficiencyandprofitabilityindicatorsofIndianMFIsarehighlyfavourablecomparedtoAsianbenchmarks.
Severalleading MFIs havebegun tooperateonanationalscale.Since2007, therehavebeenatleastfourPE
investments in Indian MFIs totalling $43 million. Such investments are expected to accelerate. There are two
mainreasonswhyPEfirmsareinterestedinthemicrofinancesector.

First, there is a perception that this sector is capable of providing extraordinary returns. Compartamos, a
Mexican bank specialising in microfinance, made a successful IPO of 30% of its shares with a valuation at 12
timesitsbookvalue.Second,studiesindicatethatreturnsfromthesectorarenotsensitivetoswingsinglobal
economiccycles.Thismakessuchinvestmentsdesirableforriskdiversification.

InIndia,microfinancegainedmomentuminearlyandmid1990swithemergenceofBasix,SHAREandSNFas
majorplayersinmicrofinance.Between2000and2003,anumberofnewplayers(primarilySpandanaandSKS)
with innovative business models emerged on the microfinance radar of India. Their spectacular returns and
scaleable business model attracted the attention of commercial banks like ICICI Bank, HDFC Bank and ABN
AMROBank.Mostofthesebankssetupdedicatedmicrofinancelendingcellsandstartedlookingmicrofinance
asabusinessopportunityratherthanpartoftheirprioritysectorobligation.

Microfinancegainedfurthermomentumafter2003sectorgrowingformorethan100%onyeartoyearbasis.
Some of older MFIs, who were conservative in their growth plans earlier altered their plans drastically and
startedplanningaggressiveexpansion.Thegrowthmomentumisexpectedtocontinue,giventheplansofthe
commercial banks, equity funds and the MFIs. Apart from the main stream Microfinance Institutions, the
traditional finance companies working under NonBanking Finance Company license area also increasingly
adoptingcoremicrofinanceproducts.Theincreasingcompetitioninurbansectorsandalsotherealizationthat
low income group people are also bankable, in fact more bankable in many cases, has led to NBFCs adopting
microfinance.Alsothereisamplebusinessopportunityinlowincomegroupsector.Totaloutstandingportfolio
of all Indian MFIs taken together along with the expected growth has been presented in Table 1. The total
outstandingoftheMFIsisexpectedtobetothetuneofRs10,000croresbyMarch2009.

Table1:GrowthinMicrofinanceOutstanding1
Yearending
Outstanding(RsCrores)
Yearending
Outstanding(RsCrores)
Mar06
2,300
Mar08
7,000
Mar07
3,400
Mar09
10,000

Despitethisspectaculargrowth,thesupplyofmicrofinanceisstillminisculeascomparedtothedemandwhich
is now estimated to be to the tune of over Rs100,000 crores in India. To make the matters worse whatever,
supplyisavailableishighlyskewedinfavourofSouthandtosomeextent EasternpartofIndia.Microfinance
service providers in other parts of country especially centre and western states including Gujarat are very
limited.

From Sa-dhans study. Numbers for March 2007 onwards are estimates.

Chapter2:ArmanLeaseandFinanceLtd

2.1
Introduction

ARMAN LEASE & FINANCE LIMITED was originally incorporated on 26th November, 1992 as Private Limited
Company under the name and style of ARMAN LEASE & FINANCE PRIVATE LIMITED and was converted into
PublicLimitedCompanyvidefreshCertificateofincorporationdated22ndDecember,1993.

ThemainobjectsofthecompanyasenunciatedintheMemorandumOfAssociationoftheCompanyconsistof
providingawidespectrumoffinancialservicesbothFundbasedandNonFundBasedactivitiessuchasLease/
Hire Purchase Finance, Bill Discounting, Investment in Primary and Secondary market, Merchant Banking,
PortfolioManagement,LoanSyndicationetc.

Inlineoftheexpansionplansthatthecompanyperceived,itwasdecidedtocomeoutwithpublicissueandthe
companyhasissued28,00,000EquitysharesofRs.10eachon21stAugust,1995aggregatingtoRs280lacsand
has received overwhelming response from the public and it was oversubscribed by 7 times in the category of
small investor and more than 22 times in case of applicants with application of more than 1000 shares. The
companyretainedanadditionalamountofRs2.66lacsaspertheSEBIGuidelinesandhencemadeanallotment
of shares of Rs 282.66 lacs. During the said period the companys Promoters has also increased their
contributiontocapitalinthecompanyuptoRs125lacs.Hencethetotalpaidupcapitalofthecompanyafter
thepublicissueincreasedtoRs.407.66lacs,whichhasbeencontinuedtilldate.

Name
ArmanLeaseandFinanceLImited

DateofIncorporation
26111992asPvt.Ltd.Company

22121993asPublicLimitedcompanywidefresh
certificateofIncorporation

Legalform
PublicLimitedNonBankingFinanceCompanyCategoryA
(Deposittaking)ReserveBankofIndiaRegistrationNo.01.00066

Chairman
ShChinubhaiR.Shah

ManagingDirector
ShJayendraPatel

50234,SakarIII,Opp.OldHighCourt
RegisteredAddress
(HeadOffice)
Off.AshramRoad,
Ahmedabad380014
Phones:+917930005000,27541989

TheCompanyhas8(Eight)memberBoardofDirectors,amixofexecutiveandindependentDirectors.Thelistof
Boardalongwiththeirqualificationandexperienceisgivenbelow.
BoardofDirectors

S.No.

Name

Designation

Sh.ChinubhaiR.Shah

Chairman

Qualification Experience

M.A.LL.M.(GoldMedalist)
DLP,DTP,LifeFellowAIMA

Experience:

Morethan30yearsofSeniorManagerialandBoardlevelexperienceinthecorporatesectorfinallyendingwith
M.D.positionattheAhmedabadElectricityCo.Ltd.

Served as Professor of Law & Management at Gujarat University and Indian Institute of Management,
Ahmedabad,formorethan25years

GuestLectureratASCI,Hyderabad,MDI,NewDelhi,AIMA,NewDelhiaswellastomanyotherinstitutionsfor
thantwodecades,inthesubjectsofcorporatelaws,jointventures,foreigncollaborationsandcapitalmarket.

Mr.C.R.ShahisontheBoardofmanyreputedCompaniesofIndialikeNirmaLtd.,AdaniExportLtd.,Meghmani
OrganicsLtd.,GujaratNRECokeLtd.,H.K.FinechemLtd.,TinplateCompanyofIndiaLtd.(TataCompany),Cadila
PharmaLtd.etc.

Hisaffiliationsinclude:
Member,BoardofGovernorsofIndianInstituteofManagement,Ahmedabad[199297]
President,GujaratChamberofCommerce&Industry,Ahmedabad[200405]
President,AllIndiaManagementAssociation,NewDelhi[199192]
President,TheInstituteofCompanySecretariesofIndia,NewDelhi[197779]
President,TheGujaratInvestors&ShareholdersAssociation[198897andfromOctober1999onwards]
Member,PrimaryMarketAdvisoryCommittee,SEBI,Bombay[19922003]
Member,WesternRegionalCommittee,IDBI,Bombay[199799]
MemberofDirectTaxesAdvisoryCommittee,MinistryofFinance,NewDelhi[199293]

HisOtherinterestinclude
HaswrittenanumberofArticlesonLaw,GeneralManagementandEconomicSubjectsContributesaregular
columntitledLawandSocietyinGujaratSamachar,No.1languagedailyinGujarat.

Travelledthroughoutworld,leadIndiandelegationstoInternationalConferencesinHongKongandLondon.

Mr. C. R. Shah is affiliated with organizations like Apollo Hospital International Ltd., India Renal Foundation,
Saline Area Vitulization Enterprise Ltd., Gulmahor GreenGolf & Country Club Ltd., Gujarat Investor &
ShareholdersAssociation

Managing
2
Sh.JayendraB.Patel
B.Sc.B.S

Director

Experience:


Morethan20yearsofSeniorManagerialandboardlevelexperienceinthecorporatesector.Mr.Patelwasin
U.S.A.foradecadewherehecompletedhiseducation.Aftercompletinghiseducationhejoinedbusinessfirm
in USA namely KAPPS PHARMACEUTICALS INC. as Company Executive. During his stay in USA he successfully
turnedaroundtwosickunitsintoprofitableposition.LaterhereturnedtoIndiatoconcentrateandexpandin
thefieldoffinance,hedevotedfulltimeattentiontoARMANLEASEANDFINANCELIMITED.Mr.Patelisafounder
memberoftheGujaratFinancecompaniesAssociationandpresentlysecretaryoftheAssociation.

Mr. Jayendra Patel was Member of the Finance and Banking Committee of Gujarat Chamber of Commerce &
Industry(GCCI),Ahmedabad.

Morethan20yearsofSenior
Managerialandboardlevel
WholeTime
B.Com
3
Sh.AmitR.Manakiwala
experienceinthecorporate
Director

sector

4
Sh.KaushikbhaiD.Shah
Director
B.COM.LL.B.,F.C.A.

Experience

Morethan30yearsasPracticingCharteredAccountant.ExpertintheFieldofAccounts,Taxation,
CorporateLawsandAudit
ChairmanofAhmedabadbranchI.C.A.I.for8687&8788andelectedmemberofW.I.R.C.for88to91
VisitingfacultyinH.L.CollegeofCommerce
ViceChairmanoftheWesternIndiaRegionalCounciloftheI.C.A.I.fortheyear198990.
PresidentAllGujaratFederationofTaxConsultantsforyear992000
MemberoftheExecutiveCommitteeofGujaratChamberofCommerce&Industriesfortheyear99
2000.
ChairmanofTaxationCommitteeofGujaratChamberofCommerceandIndustriesfortheyear992000
to200405
TreasurerCumJointSecretaryofGujaratChamberofCommerceandIndustriesforyear200506
AddressedSeminarsandconferenceonTopicsofAccountsandAudit&Taxation
WrittenArticlesinJournalofCharteredAccountantsAssociation,Ahmedabad.

TrusteeoftheSadanandTrust,AhmedabadandIndiaFoundation&IndiaServiceCentre,U.S.A.The
SadanandTrustisactivelyengagedinsocialactivitiesalloverIndiaandundertakesvariousactivitiesof
flood,famine,draughtreliefetc.
WrittenBookControversiesinDirectTaxLawsPublishedbyTaxmanofDelhi

5
Sh.AakashJ.Patel
Director

6
Sh.NileshTrivedi
Director

7
Sh.AalokJ.Patel
Director

8
Smt.RitabenJ.Patel
Director

ArmansStatementofVision,MissionandObjective

VisionstatementofArman

Tobeareliable,transparentandselfsustainedmicrofinanceinstitution

MissionstatementofArman

ToprovidefinancialservicestolowincomefamiliesofthestateofGujarattoassistthemin
improvingtheirincomegeneratingcapacities

Objective

To provide funds for setting up small enterprises to sixty thousand low income families of
AhmedabadandotherdistrictsofGujaratbytheendoffinancialyear201213.

2.2
PresentActivities

Arman is one of the 13 Category `A Non Banking Finance Company (NBFC) in the state of Gujarat which is
registeredwithReserveBankofIndia.AsperthisclassificationtheCompanyiseligibletoacceptpublicdeposit
andisregularlyscrutinizedbyRBI.TheCompanyhasnotacceptedpublicdepositbuthasmaintainedcategory
`Aasitprovidesselfcheckandcreditworthinesstoitsimage.

Armanhasoperatedinthreemajorsegments,Vehicleloansliketwo/three/fourwheelerfinancingwiththe
hypothecationofnewandusedvehicles,PersonalLoansandBusinessloanstovariouscorporatesforshortterm
working capital requirement. However the company has moved away from business segment because of the
inherentriskinvolvedandhascontinuedtooperateinasafermoreobedientandmoreprofitabletwo/three
wheelersegmentandinpersonalloan,microfinancesegment.

ArmanhasgainedrichexperienceintwoandthreewheelersegmentwithallitsclientelebasedinAhmedabad.
The company has a database of 11,000 clients with proven credit worthiness which is advantageous for a
personalloanorarepeatvehicleloan.

TheCompanywasoriginallyratedbyICRA,thenotedratingagencyanditwasassignedcreditratingof`7which
wasindicativeofsafeborrowingfromtheBank.

TheCompanyhasbeenratedthreetimesoverthelast4yearsbyaleadingmicrofinanceratingagencyMCRIL
andithascomeoutwithflyingcolours.Thedraftrationaleisavailableforareviewwhichcanbeavailableona
request.ThelastratingreceivedbythecompanyinApril,2008isAlfa,whichisaninvestmentgrade.

10

2.3

Operationalhighlights

FortheYear
PortfolioOutstanding(Rslakhs)
NumberofBorrowers
TotalStaff
Totalbranches
Externalborrowings(Rslakhs)
Paidupcapital(Rslakhs)
AverageOutstandingloansize(Rs)
RepaymentRate
PAR(>60days)

31March05
March06
March07
March08
618.1
718.5
1355.4
1669.4
3,196
3,328
3,770
4,232
29
35
46
58
1
1
1
1
118.1
616.2
806.8
1,148.9
407.7
407.7
407.7
407.7
19,340
21,589
35,953
37,736
97.2%
98.9%
97.7%
97.1%
5.7%
4.6%
5.0%
5.0%

2.4
Geographicspread

At present, Arman has

Planned Microfinance
concentrated operations in
the
Geography
municipal
limits
of
Ahmedabad and Gandhi
Nagar
twin
cities.
The
organization,
however,
plans to
expand its presence in
smaller
towns towards districts of
North
Gujarat that is, Mehsana
and
Sabarkantha. Arman is in
process
of introducing its new core
microfinance product and
settingup
a core microfinance team
for
its
operations. It has already
recruited
a senior Operations Manager with more than 6 years of managing group based microfinance operations in
southernIndia.

11


2.5
Organisationalstructure

Arman at the Head Office has Managing Director supported by whole time Director; Head (collections), Head
(LegalaffairsandCompanySecretary),Head(MarketingandBusinessDevelopment)andHead(Accounts).

ArmansHeadOfficeStructure

BoardofDirectors

Mr.JayendraPatel
(ViceChairman&ManagingDirector)

Mr.A.R.Manakiwala
(WholetimeDirector)

MrPrashantModi
Mr.B.J.Vaghela(C.S.) Mr.R.B.Agarwal(C.A.)Mr.AtulPatel
Head(Collections)(CompanySecretary&Legalaffairs)(ManagerMarketing&(ChiefAccountant)
BusinessDevelopment)

DeepakRathodShaileshPatel ManojShahHirenShahDilipPatelHimanshuMistri
(SecretarialWork)(Legal&JudicialMatters)

(AccountsAssistants)

DharmendraParmar

(DataEntryOperator)

TeleCallersTeamleaderSeizingAgencies

CollectionExecutives
SalesExecutiveTeleCallersFieldInvestigationEventmanagement

12

2.6
Humanresource

Armanhasawellqualifiedandtrainedteamofstaffatalllevels.Thelistbelowshowsthequalificationofsenior
managementofArman:
S.
No.
1

Name

Designation

Qualification

Experience

Sh.JayendraB.
Patel

Managing
Director

B.Sc.B.S

Sh.AmitR.
Manakiwala
Mr.B.J.Vaghela

Mr.R.B.Agrawal

Mr.AtulM.Patel

WholeTime
Director
Company
Secretary
Head
(Marketing
andBusiness
Development)
Chief
Accountant

Morethan20yearsofSeniorManagerialand
boardlevelexperienceinthecorporate
sector.Mr.PatelwasinU.S.A.foradecade
wherehecompletedhiseducation.After
completinghiseducationhejoinedbusiness
firminUSAnamelyKAPPS
PHARMACEUTICALSINC.asCompany
Executive.DuringhisstayinUSAhe
successfullyturnedaroundtwosickunitsinto
profitableposition.LaterhereturnedtoIndia
toconcentrateandexpandinthefieldof
finance,hedevotedfulltimeattentionto
ARMANLEASEANDFINANCELIMITED.

Mr.JayendraPatelwasMemberofthe
FinanceandBankingCommitteeofGujarat
ChamberofCommerce&Industry(GCCI),
Ahmedabad.

Mr.PatelisfoundermemberofTheGujarat
FinancecompaniesAssociationandpresently
heisasecretaryoftheAssociation.

Morethan20yearsofSeniorManagerialand
boardlevelexperienceinthecorporatesector
Morethan20yearsofexperienceasCompany
Secretary
Morethan10yearsofcorporateexperience

B.Com
B.com,AICWA,
FCS
B.Com, CA

B.Com

Morethan15yearsofexperienceinAccounts
andAuditing.

Foritsplannednewcoremicrofinanceprogramme,Armanhasplannedtohaveaseparateoperationsteam.For
thebackofficejobsincludingaccountingandfundraisingthesameteamwouldfunction.Armanhasrecently
recruitedaseniormicrofinanceprofessionalwithmorethan6yearsofexperienceingroupbasedmicrofinance
lendinginsouthernIndia.Theorganizationhasalsohiredtheservicesoftwomicrofinanceconsultants
experiencedinbothmicrofinanceoperationsandwellasstrategyformulation.

13


2.7
Operationalstatusason31March2008:thebaseyear

Ason31March2008,ArmanhadaportfolioofRs19.6crores,whichwasdistributedacrossPersonalloan,two
wheelerandthreewheelerloans

2.8

DistributionofloansProductWise

GrossReceivables
includingInterest
Receivable(Rslakhs)
563.3
1041.0
157.0
55.5
141.8

Sr.No.
SEGMENT
NoofLoans
1
AssetBaseMicroLoan(Twowheeler)
2,054
2
AssetBaseMicroLoan(ThreeWheeler)
1,485
3
UnsecuredMicroLoans(Personalloan)
586
4
FourWheeler
102
5
Others(WorkingCapitalfinance)
5

TOTAL
4,232
1,958.6*
*Thisfigureincludesinterestreceivablealso.ThefigureisderivedfromportfoliotrackingsystemofArmanandisonlyfor
thepurposeofpresentingthedistributionamongsegments

2.9

KeyratiosforlastFouryears

KeyRatios
31March05
March06
March07
March08
CapitalAdequacy
RiskWeightedCapitalAdequacyratio
75.1%
58.8%
39.6%
35.5%
97.2%
98.9%
97.7%
97.1%
RepaymentRate
5.7%
4.6%
5.0%
5.0%
PAR(>60days)

Profitability
13.3%
13.3%
11.1%
7.9%
OperatingExpenseRatio(OER)
27.6%
28.8%
30.1%
25.9%
LoanPortfolioYield
21.2%
12.4%
10.4%
11.2%
ReturnonEquity
14.3%
6.3%
4.1%
4.1%
ReturnonAssets

14

Chapter3:NeedandmarketpotentialofmicrofinanceinNorthGujarat

3.1
Armansplannedoperationalarea

ArmanLeaseandFinancelimitedis
currentlyoperatinginthemunicipal
limitsofAhmedabadandGandhi
Nagar.Sincethecompanyplansto
launchitscoregroupbased
microfinanceprogrammeinthe
currentfinancialyear200809,ithas
identifiedthreedistrictstowards
northofAhmedabadforexpansion.
TheseareMehsana,Sabarkanthaand
Ahmedabad(includingGandhi
Nagar).

Thetargetbeneficiariesoftheorganizationwouldbepeoplemainlywomeninhabitinginsemiurbanandrural
with a special focus on those belonging to economically poor and socially neglected communities such as
Scheduled Castes, Scheduled Tribes, Other Backward Classes and religious minorities. The organization has
surveyedNorthGujarat
areaswithemphasisonAhmedabadandMehasanadistrictsandfoundadireneedforworkingforthemasses
thesetownsandthesurroundingareas.SABARKANTHA
D
ThedecisionofworkinginNorthGujaratisduetoseveralimportantfactors.ArmansDirectorsandstaffarewell
awareoflocalconditions,culture,needsandconstraints.Armanhasgoodideaofgeography,marketpotential,
socialdynamicsandvariousotherlocalissuesandconstraints.Armanwouldliketocapitalizeonthisknowledge
bycontinuingworkingintheseareas.Secondlyandmoreimportantly,thoughGujaratiswitnessingincreasing
volume of economic activities, low income families still find it difficult to raise finance from banks. Local
moneylenderswreakhavocintheareathroughusuriousinterestrates.MicrofinanceInstitutionsarestilllimited
inthisarea.Armanseesthisasanopportunityandwouldliketousethisopportunitytoprovidetimelyfinancial
servicestotheneedy.Thegeneraleconomicconditionandpotentialmarketsizehasbeenelaboratedfurther.

15


3.2
MicrofinancemarketinNorthGujarat

ThepopulationoftheGujaratStatewas5.1croresasperthe2001censusdatawithmorethan3croresofrural
population. The density of population is 258 persons per km. The four districts of North Gujarat had a
populationof1.1croreswith34talukasand2,775villages.

District

Area(insq.
km.)

Population

Taluka

Village

196,024

48,387,270

222

18,569

8,707

58,16,519

10

551

649

13,34,455

216

Mehsana

9,027

18,37,892

622

Sabarkantha

7,390

20,83,416

13

1,386

25,773 1,10,72,282

34

2,775

GUJARAT

Ahmedabad

Gandhi
Nagar

Total

Literacy(in
%)

Talukas/Towns
Planned/Potentialfor
microfinanceoperations
60.91
73.1 Ahmadabad,Bhadiad,
Bhoyani,Dehgam,Dholera,
Dholka,Jetalpur,Lothal,Nal
Sarovar,Surkhej,Vautha

87.1 Adalaj,Dabhoda,
Gandhinagar

65.1 Becharaji,Delmal,Kadi,Kalol,
Mahesana,Mahudi,Modera,
Patan,Shankheshwar,
Sidhpur,Taranga,Unjha,
Vadnagar

59.0 Himatnagar,Idar,Khed
Brahma,Modasa,Shamlaji,
Talod

As can be observed from the above table, the four selected districts have comparatively dense population
suitableformicrofinance.

Apartfromtheinformationaspresentedabove,Armanhascollecteddetailsofslumsofthesedistricts.These
slumspresentgoodpotentialforextendingthegroupbasedmicrofinanceproductofArman.

DetaileddemographicinformationonAhmedabad,GandhinagarandMehsanaisprovidedinAnnexure2ofthis
document.Armanplanstolaunchitsmicrofinanceprogrammeinitiallyinthesethreedistrictswhileitwillstart
operationsinSabarkanthain200910.

GujaratincludingNorthGujaratisthemainproduceroftobacco,cotton,andgroundnutsinIndia.Othermajor
food crops produced are rice, wheat, jowar, bajra, maize, tur, and gram. North Gujarat has an agricultural
economy; the total crop area amounts to more than onehalf of the total land area. Animal husbandry and
dairyinghaveplayedavitalroleintheruraleconomyofNorthGujarat.Dairyfarming,primarilyconcernedwith
milkproduction,functionsonacooperativebasiswithlacsofmembers.Gujaratisthelargestproducerofmilkin
India. Amul milk cooperative federation products are well known all over India and is Asia's biggest dairy.

16

Among livestock raised are buffalo and other cattle, sheep, and goats. As per the results of livestock census
1997,there were209.70 lakhlivestockin GujaratState.As per theestimatesofthesurveyofmajorlivestock
products,duringtheyear200203theGujaratproduced6.09milliontonnesofmilk,385millioneggsand2.71
million kg of wool. Gujarat also contributes inputs to industries like textiles, oil and soap. All these offer
immenseopportunityfortheruralmassesofGujarat.

OverthelastfivedecadesinGujarat,withthechangesintheagrarianeconomyandtheadoptionofamarket
economy, the proportion of poor, particularly those below poverty line has steadily declined. However, even
thoughnotofficiallyclassifiedaspoorbytheState,thevastmajorityofthepopulationliveonlyjustabovethe
povertyline.Theydonotownthemeansofproductionorpossessmarketableskills.Theyworkmainlyascasual
labourersintheinformalsectorofboththeruralandtheurbaneconomyandhavenosocialpowerorsecurity.

The above mentioned quantitave and qualitative facts suggest a good microfinance market scenario. Even a
conservativeestimatesuggestpotentialborrowerbaseofatleast10lakhswithapotentialloanappetiteof2,000
croresinthefourselecteddistricts.

3.3
CompetitionAnalysis

Armanoperatesinhighlycompetitiveareaasfarasitsexistingsegmentofmarketisconcerned.Currentlyevery
privateaswellaspublicsectorbankshavestartedprovidingtwothreewheelerloanswithdifferentschemes.
AdditionallyitfacescompetitionfromotherMFIs.However,stronglinkageswithautodealersandbrokershelp
thecompanygeneratenewbusiness.

Foritsnewplannedcoremicrofinance,competitionatpresentisverylimitedthoughthereisanindicationof
SKSMicrofinLtdenteringthestate.CurrentlyonlysmallNGOsareengagedinthestatewhicharefollowingthe
SHG model. The scale achieved by these organsiations is limited and still the major proportion of the
microfinancemaketiscateredbyinformalentitiessuchasthetradersandmoneylenders.

TheadvantagewithArmanoveritscompetitorswouldbeitsknowledgeofregion,strongbackofficesystems,
strongcapitaladequacyforgrowthandskilledhumanresource.Anywaysthecompanyfollowsconservative
financingmodelwithemphasisonclientselectionandloanappraisalandisplanningtoachieveamodesttarget
ofaround60,000borrowerbaseby2013.

17

Chapter4:Governance

ThissectiondiscussesstrategyoftheorganisationonvariousissuesrelatedtoGovernance.

4.1
LegalForm

ArmanLeaseandFinanceLimitedisaPublicLimitedNonBankingFinanceCompany.ItisaPublicLimitedNon
BankingFinanceCompany.ItsisaCategoryAcompanyimplyingthatitiseligibletoavailpublicdepositsandis
wellregulatedbytheReservebankofIndia.Armanhasasuitablelegalformtoconductfinancebusinessandit
doesnotforeseeanylegalriskcontinuinginthislegalform.TheCompanyiswellregulatedbyReserveBankof
India and meets all regulatory requirements. Therefore, Company will not be making any change in its legal
form.

4.2
EquityStructure

Inlineoftheexpansionplansthatthecompanyperceived,itwasdecidedtocomeoutwithpublicissueandthe
companyhasissued28,00,000EquitysharesofRs.10eachon21stAugust,1995aggregatingtoRs280lacsand
has received overwhelming response from the public and it was oversubscribed by 7 times in the category of
small investor and more than 22 times in case of applicants with application of more than 1000 shares. The
companyretainedanadditionalamountofRs2.66lacsaspertheSEBIGuidelinesandhencemadeanallotment
of shares of Rs 282.66 lacs. During the said period the companys Promoters has also increased their
contributiontocapitalinthecompanyuptoRs125lacs.Hencethetotalpaidupcapitalofthecompanyafter
thepublicissueincreasedtoRs.407.66lacs,whichhasbeencontinuedtilldate.

Table3:ArmansNetworthason31March2008

Particulars
AuthorisedShareCapital
PaidupCapital
Reservesandsurplus
Retainedprofits
Generalreserve
Totalreservesandsurplus
Totalnetworth

Rs
50,000,000
40,766,000

19,383,381
6,260,566
25,643,937
66,409,937

18

Theownershipstructureofthecompanyisshowninthefollowingtable.

Table4:Ownershipstructure:Shareholding(ason30June2008)

S.no. ShareholderCategory
%ofshareholding
1

PromotersIndian

BodiesCorporate

IndianPublic
(includingrelativesofpromoters)

NRIs/OCBs

Total

30.62

6.37

51.77

10.88

100.00

As the company is comfortably placed as far as the equity is concerned, there is not much significant change
likelyinthestructure.However,Armanisnowpoisedtoexpandrapidly,ifinthefuture,thecompanyrequires
capital it will be open to equity investments from external sources. So far company has maintained a close
strategyand theshareholdersaremainlyDirectors orrelativesofDirectors,butnowif needbe theCompany
mayexploreexternalequitysources.However,withRs6.6croresofNetworththecompanyisverycomfortably
placedatpresentandneedforequityinvestmentfromanyexternalsourcedoesnotseemlikelyatleastforthe
nextoneyear.

4.3
FundMobilisation

ArmanslenderbasewaslimitedtoICICIBankandInduslandBanktilltheyear2006.However,itdiversifiedits
funderbaseintheyear20062007andwasabletomobilisefundsfromHDFCBank,AxisBankandSIDBIwhich
gave a major push to the companys portfolio. The total outstanding borrowings from banks and financial
institutionsason31March2008wereRs1,061.5lakhs

Arman is in discussions with numerous banks to establish lines of credit. These banks include Axis bank, ICICI
bankandSBI.

Funds from external sources will be utilized primarily for the microfinance loans, which will now be the focus
area. The Company will also try keep borrowing sources diversified and will prefer not to have excessive
dependenceonasinglesourceoffund.

4.4
Growth,expansionandcompetition

The growth of the company since start of its finance activities has been reasonable. In March 2008 the gross
portfolio(includinginterestreceivable)ofthecompanyreachedRs19.59crores.Armanhasdecidedtoexpand
itsportfoliomainlyinMicrofinanceloansandtosomeextentsecuredmicroloanswithvehiclecollateralwhile
restrictingPersonalandConsumerloanswhichhavehighdefaultrates.Armanhasalreadyexperimentedwith
Microfinanceloansandhaswitnessedpotentialforhighgrowth.Armanthroughinternalsurveysandresultsof
itsmicrofinanceloanssofarhasrealizedthatthereisahugeneedforcreditinlowerincomegroupsegment.
These clients do not have access to any formal financial institutions. Such clients rely on Moneylenders who
chargeunimaginablyhighinterestrates.Poorandlowincomeclients,nothavinganyalternative,havetoresort
totakingloansfromsuchmoneylenders.Armanhasfoundthatcateringtosuchclientshasdistinctadvantages

19

suchasexposuretooneclientissmall,clientsareinvolvedindailybusinessactivitieshavingshortbusinesscycle
andhencemoneyisquicklyrecoverable.Since,thecollectionsaremorefrequent(weekly)repaymentratesare
significantlybetter.

Geographically, Arman has identified three districts towards north of Ahmedabad for expansion. These are
Mehsana,SabarkanthaandAhmedabad(includingGandhiNagar).
Armanwillfocusonsemiurbanandtownlikecentersintheseareaswheremostoftheeconomicactivitiestake
place. With Microfinance loans it would like to support cattle breeders, small entrepreneurs, daily vendors,
pettyshopkeepersandtraderswhohaverunningbusinessesandgeneratefastcashflows.Armaninnearfuture
will restrict itself from going significantly into remote villages, as it does not have the required experience in
that. The organisation plans to cover the following centres in the state under microfinance in the next three
years.

Table5:PlannedGeographicCoverage

S.no.
1

Districts
Ahmedabad

GandhiNagar

Mehsana

Sabarkantha

Centres
Ahmadabad,Bhadiad,Bhoyani,Dehgam,Dholera,Dholka,Jetalpur,
Lothal,NalSarovar,Surkhej,Vautha

Adalaj,Dabhoda,Gandhinagar

Becharaji,Delmal,Kadi,Kalol,Mahesana,Mahudi,Modera,Patan,
Shankheshwar,Sidhpur,Taranga,Unjha,Vadnagar

Himatnagar,Idar,KhedBrahma,Modasa,Shamlaji,Talod

Details of growth and planned expansion in numeric terms are elaborated in Financial Section (Chapter 7).
ArmanplanstogrowonlyinGujaratasithasexperienceoftheseareas.Itiswellawareoflivelihoodandsocio
economic condition of the state. Further, the microfinance potential in these areas is very good. Much has
alreadybeenelaboratedonthisinChapter3.

As far as competition is concerned, Arman does face competition at present and will be facing it in future as
well. However, until now competition from microfinance institutions is not an area of major concern. The
competitionwillincreaseonceSKSestablishesitsoperations.Whilemoneylendersarecharginganexcessively
highinterestrates,theydonotposemuchthreatonceArmanintroducesitsloanproducts.AsfarasNGOMFIs
are concerned they are generally small in size and does not have infrastructure and equity comparable to
Arman.

4.5
GoverningBoard

Arman has an eightmember Board. All the Board members are well qualified and experienced professionals.
FouroftheBoardmembersincluding theChairman,areindependent directors.TheChairman,ShriChinubhai
Shah,has37yearsofexperienceincorporatesector.HeheldthepositionofPresidentofGujaratChamberof
Commerceandwasaguestfacultyforcoursesinlawandmanagementtovariousuniversitiesandinstitutesof
repute includingGujarat University and IIM, Ahmedabad. He shows keen interest in the area of corporate
governanceandispresentlythepresidentofGujaratInvestorsandShareholdersAssociation.Heplayshisrole
intheInvestorsGrievanceCommitteeandAuditCommitteeofArmantoo.

20


4.6
Armansplantoestablishmicrofinance

As Arman is still new to microfinance, it would be making changes in its microfinance methodology, delivery
model, product and systems such as Accounting, MIS and controls. The objective is to have systems and
mechanisms, which can enable fast growth, are simple and are yet sound from control perspective. To this
effect, the Company has already hired the services of professional microfinance consultants, to review its
present systems, model, product and provide comprehensive guidance on transforming the company into an
effective microfinance service provider. The organization has also recruited an experienced microfinance
practitionerwithmorethan6yearsofmicrofinanceexperienceinsouthernIndiawithareputedorganization.

21

Chapter5:MicrofinanceMethodology

5.1
CurrentLoanPolicies

Currently the loan applications are collected by the sales executives who are placed at the
vehicle dealers showrooms and other sales points. This requires an arrangement with the
vehicledealers.Incaseofpersonalloans,applicationsarecollectedbythecompanyatitsoffice
intheAhmedabadcity.ItalsoreceivesapplicationsfromDirectMarketingAgents(DMAs)along
with the relevant documents (proof of identity and residence, income tax returns and bank
statements). A coapplicant, who serves the purpose of guarantor, is compulsorily asked for.
After collecting the application a field investigation and a telephonic enquiry of the applicant
andthejointapplicant(guarantor)isconducted.LoansaredisbursedthroughchequesandPDCs
arecollectedforrepayments

5.2
FeaturesofloanproductscurrentlyofferedbyArman

Typicalfeatures

Twowheelerloan

Purpose

Newtwowheeler
purchase

Collateral/
Guarantee

Hypothecationof
vehicleandPDCs

1236months

Rs15000Rs40000
AvgRs29,000

Loanterm
Loansize

Three Wheeler
loan

Newthree
wheelerpurchase

Hypothecationof
vehicleandPDCs

1236months

Rs50,000
Rs1,00,000
AvgRs82,000

Usedvehicleloan

Personalloan

Usedtwowheeler
Workingcapital,
andfourwheeler
familyeventsetc
purchase
Hypothecationof
Guarantorand
vehicleandPDCs
PDCs

1236months
1236months

Rs15,000Rs50,000 Rs15,000Rs40,000
AvgRs25,000
AvgRs28,000

5.3
CoreMicrofinanceDeliveryModel

Arman currently follows Individual methodology for its loans. It plans to follow Group
Methodology, for the new core microfinance product. The group size will be between 812
members. The group members will have to share the responsibility of repayment. The
organizationwillputinplaceaseparatetrainedteamforthisprogrammewithanexperienced
teamleader.

5.4
OperationalUnit

Armanwillsetupbranchesfordisbursement,collectionandmonitoringofmicrofinanceloans.
Decision making, accounting and MIS will be decentralized for achieving faster expansion.
BranchManagerwillberesponsibleforachievinggrowthaswellasportfolioqualitytargets.
5.5
DescriptionofCoreMicrofinanceloanproducts

22

DescriptionofLoanProducts

Thecompanywillhaveasinglegrouploanproductwithfollowingfeaturesandpolicies

1stCycleloanforincomegeneratingactivities

Loansize
Rs5,000toRs15,000
Loanduration
12months
LoanPurpose
Income generating activities like livestock especially for milch animals,
pettyshop,hawkerbusinessetc
LoanRepayment
Installmentispaidmonthlyattheoffice
Borrowersprofile
Lendingtobemadetogroupof8to12members,preferablywomen
Guarantee/collateral
No Collateral, Joint liability of group for repayment of each individuals
loan
Rateofinterest
24%perannum,calculatedondecliningloanbalance
DocumentationCharges
Rs100perloanagreement
SecurityDeposit
10% of the loan amount, to be adjusted with the loan outstanding
towardstheendoftheloan

2ndandsubsequentloansforincomegeneratingactivities

Loansize
Rs5,000toRs50,000
Loanduration
12monthsto24months
LoanPurpose
Incomegeneratingactivitieslikelivestockespeciallyformilchanimals,petty
shop,hawkerbusiness,workingcapitalorestablishmentoftradingbusiness,
purchaseofequipmentsetc
LoanRepayment
Instalmentispaidmonthlyattheoffice
Borrowersprofile
Firstloanisrepaidwithoutanydelays.Lendingcanbemadetoindividuals
ortothegroupof8to12members,attheoptionoftheborrower
Guarantee/collateral
NoCollateral,OneGuarantorrequiredincaseofloantoindividual
Rateofinterest
24%perannum,calculatedondecliningloanbalance
DocumentationCharges Rs100perloanagreement
SecurityDeposit
10%oftheloanamount,tobeadjustedwiththeloanoutstandingtowards
theendoftheloan

LoansoformorethanRs20,000willbelenttoborrowerswithexistingenterprises/activities.
Loanappraisalprocessbasedoncashflowanalysisoftheborrowerswillbecarriedoutby
trainedappraisalstaff.Loanwillbeapprovedbythecreditcommittee.

Seasonalloan/Topuploan/SocialPurposeloan

Thisloanisforborrowersinsecondorsubsequentcycles
Theloancanbegivenasatopuploanalso,thatis,evenwhenasecondorsubsequent
cycleloanforincomegeneratingpurposeisoutstanding.
Purposeofthisloanistomeetseasonalbusinessrequirementsorsocialrequirements
suchasamarriageormedicalemergency.

23


Loansize
Loanduration
LoanRepayment
Borrowersprofile

Guarantee/collateral
Rateofinterest
DocumentationCharges
SecurityDeposit

Rs5,000toRs20,000
Upto12months
Instalmentispaidmonthlyattheoffice
Firstloanisrepaidwithoutanydelays.Lendingcanbemade
to individuals or to the group of 8 to 12 members, at the
optionoftheborrower
NoCollateral,OneGuarantorrequired
24%perannum,calculatedondecliningloanbalance
Rs100perloanagreement
10% of the loan amount, to be adjusted with the loan
outstandingtowardstheendoftheloan

Portfolio of seasonal/topup loan product not be more than 20% of total outstanding loan
portfolioatanytime.

PrePaymentPolicy

1. Noprepaymentsareallowedexceptincasetheborrowermakesfullpaymentto
closeanexistingloan.
2. Noprepaymentsareallowedbeforehalftheloantermiscompleted
3. Noprepaymentpenaltyischargedfromtheclients

5.6
MicrofinanceProcedures

Borrowerswillbeselectedfromlowerincomegroup(earninglessthan$2perday)
Intheruralandurbanslumareasborrowersshouldbeonlywomen.Theremaybemaleclients
in the urban areas and particularly among target groups with microentrepreneurs and small
trading activities. However, male clients would not be more than 5% of total number clients.
Detailedprocedureasfollows:

ClientIdentification:FieldOfficers(FO)basedinrespectivebranchofficeswillberesponsiblefor
locating potentialclientsinmarketareas.The clientsshouldalreadybeinvolvedinanincome
generatingactivity.

Group formation: Homogenous clients would be identified in an area with similar loan
requirements.FOswould organizethemintogroupsof812membersandwouldaskthemto
form groups. Each group should have a Group leader elected by the Group members. FOs
would inform the group about Armans loan policies, processes and groups collective
responsibilities.

LoanApplication:Oncethegrouphasbeenformedloanapplicationfromeachclientalongwith
addressproofwouldbemobilized.Ifformationofgroupisnotpossibleorparticularclienthas
higher loan demand then client is considered for Individual loan. The Loan Application in the
Armans format has to be submitted by the clients to the Branch manager at the office. After
receiving the applications manager would conduct Field Investigation (GRT, as called in the
Grameenmodel).

24


Disbursement:DisbursementswouldbemadeattheBranchOffice.HeadOfficewouldsendthe
fundsasperthedisbursementplansofthebranchesandtheBranchManagerwouldmakethe
disbursementsthoughchequeorcashasisdecidedfortheindividualbranch.Theclientshave
tobringtheprocessingfeeanddocumentationchargeswithher.Thesearenotdeductedfrom
theloanamount.

Collection:Repaymentsareweeklyandareeithermadeattheofficeordepositedbythegroups
inthebankaccountofthecompany.Whilemakingthecollectiontheclientisgiventhereceipt
andthecollectedamounthastobedepositedwiththeAccountantinthebranchoffice.

Overduesfollowupsystem:IncaseFOencountersanoverdueFOhastoenquireaboutreason
ofoverduefromthegroupandtheaction/discussiontakenplacewithinthegroupondefault.
FO enquires as to why other members of Group have not paid on her behalf. If the Group is
unable to pay, Branch manager is informed who should visit the clients immediately and take
commitmentonwhentheamountwouldberepaid.

Theproductprovideslimitedflexibilitytotheclienttodecidetheloansizeandloanterm.Based
on loan term and loan size weekly installment is set, however, repayments have to be made
weekly.TheloansdecisionsaretakencompletelybasedonappraisaldonebytheFieldOfficer
and the Branch Manager. Field Investigation of individual borrowers looks into primarily the
cashflowsandassetbaseoftheborrower.

LoanInsurance

1. LifeInsurancewithalimitofloanamountiscompulsoryforeachandeveryborroweras
theloanissanctioned
2. NomineeofinsuredborrowerwouldbeArman
3. Incaseaborrowerdies,amountremainingafterrecoveringtheloanoutstandingwould
bedeliveredtothelegalheirofborrower.

LoanWriteoffandprovisioningpolicy

1. TherightofloanwriteoffrestsonlywiththeBoard.Boardafterbeingsatisfiedthatthe
possibilityofrecoveringtheloansisremoteoriscostlyandtimeconsumingvisvisits
benefits;itmaydecidetowriteofftheloans.
2. Provisionforoverdueloansonportfolioatriskshouldbemadeonthebasisofageingof
theoverdues

Loanclassification
Provisionasa
%ofLoanOutstanding
Portfoliowithnooverdues
1%
Overduesageing030days
20%
Overduesageing3160days
40%
Overduesageing6190days
60%
Overduesageing91180days
80%
Overduesageing>180days
100%

25

Chapter6:ManagementSystems

6.1.

Humanresourcequality&management

Armanhaswellqualifiedandcompetentmanagerialstaff.Thestaffmembers,bothattheoffice
and at sales point have a good understanding of the operational procedures. Roles and
responsibilities of staff are clearly established. Arman has been careful not to outsource its
critical function of appraisal. Appraisal team consists of both Whole time Director and the
Manager(MarketingandBusinessDevelopment),whoisaCharteredAccountant.Realisingthe
fact that recovery of new overdues is critical, it has developed an inhouse team of ten
collectionstaffwhohavetheresponsibilityofrecoveringtheoverdues

6.2.
AccountingSystemandMIS

MIS at Arman is strong. It is computerised and Arman has utilised the services of a local
professional software development agency for MIS maintenance. The whole time director has
playedakeyroleinthedesignofthesoftware,whichhasfeaturestocatertothespecificneeds
ofthecompany.Sourcecodesarealsoownedbythecompanyandarewelldocumentedbythe
developer.SoftwarehasVisualBasicasthefrontendandSQLbasedbackend.Thesoftwarehas
integratedMISandaccounting.Thepresentsoftwarehassufficientsecuritysystems.MISisable
to generate reports for the analysis by top management. Important documents including the
contract documents, RC books, and PDCs are stored in the Head Offices fireproof lockers.
AccountingsystemsarestrongandrequirementsofCompaniesAct,IncomeTaxActandallRBI
guidelines on reporting for NBFCs are followed. It follows the policy to writeoff all the debts
overdueformorethansixmonthsandprovidesadequateprooftotheincometaxauthoritiesto
get acceptance of the writeoff. For loan cases in which partial payments are still coming, it
providesprovisiononportfolioaspertheRBIguidelines.CompanybeingaclassANBFChasto
makeregularreportingtotheRBIandisalsoauditedperiodicallybytheRBIstaff.Italsoneeds
to submit various reports to the stock exchanges as per the listing agreement with them. In
addition to this, it is audited every quarter by the External Auditor, as well as, the Internal
Auditorofthecompany.ExternalAuditor,ontherequirementofArmansBoard,auditsallthe
vouchersofthecompany.

6.3.
Internalcontrolsystemsandfinancialplanning

Tomaintainthecashcreditlimitswiththebanks,portfoliogrowthandcashpositionmonitored
ondailybasisbywholetimedirector.Bankreconciliationisdonetwiceamonth.Growthplans
have been set up till 2013. A private chartered accountancy firm does the work for internal
auditorforArman,whichsubmitsaquarterlyreporttoBoard.Thereportdealswithananalysis
ofthemajorfinancialfiguresandcoverspolicyissuestoalimitedextent.Internalauditoralso
comments on the policy decisions taken by the management. One such issue raised by the
Internal Auditor in a recent report was with regards to the increase in the interest costs and
disproportionateriseinbaddebtswrittenoff.

26

6.4.

Infrastructure

Arman has a wellfurnished Head Office in Ahmedabad. Its office is equipped with computer
hardware and software, fax machines, telephones, furniture and fixture. Anticipating that
increasednumberofmicrofinanceclients,Armanplanstosetupbranchoffices.

27

Chapter7:BusinessPlanProjections

7.1
Currentfinancialperformance

ARMAN has had a decent financial performance and is making profits. The OSS of the
organisation in March 2007 was 140.9% and the operating expenses are also reasonable at
10.3%. The company has followed a conservative expansion model with much emphasis on
maintaining a good portfolio quality. It has maintained a high repayment rate of 97.1% and a
reasonablePortfolioatRisk(>60days)of5.1%.

Thecompanyhasveryhealthycapitaladequacyofover35.5%andArmanhasnowdecidedto
leverageandachievehighgrowthwithintroductionofmicrofinanceproduct.Inthelastfinancial
200708, the Company had experimented with microfinance loans. From this financial year
onwardsitwillintroducegroupbasedmicrofinancelendingmodel.

28

Thefinancialstatementsofthecompanyforthelasttwoyearsarepresentedbelow.

ARMANLEASEANDFINANCELIMITED
BALANCESHEETASON:

PARTICULARS

Schedule
No.

SOURCESOFFUNDS
1. Shareholders'Funds:
(a)ShareCapital
(b)ReservesandSurplus

1
2

40,766,000
25,643,937

2.

3
4

106,150,436
8,737,688

66,409,937

114,888,124
920,974

86,677,736
879,339

182,219,035

147,265,788

APPLICATIONOFFUNDS
1. FixedAssets
GrossBlock
Less:Depreciation

11,442,432
2,894,944

2.
3.

Investments
CurrentAssets,Loans&Advances
(a)CurrentAssets
(b)Loans&Advances

7
8

23,498,951
159,695,653

8,547,488
975

7,512,995
84,975

9,987,878
136,405,890

4.

Less:CurrentLiabilities&Provisions
(a)CurrentLiabilities
(b)Provisions

9
10

183,194,604

1,751,617
7,772,416

9,524,033

173,670,571

6,725,951
139,667,818

182,219,034

147,265,788

NotestoAccounts
Asperourreportofevendateattached.
For,J.T.SHAH&COMPANY
CHARTEREDACCOUNTANTS

15

For&OnbehalfofBoardofDirectors

LoanFunds:
(a)SecuredLoans
(b)UnsecuredLoans

3. DeferredTaxLiability(Net)

Total..

NetCurrentAssets

31/03/2008
Rs.

31/03/2007
Rs.

40,766,000
18,942,713
59,708,713

80,684,872
5,992,864

10,366,680
2,853,685

146,393,769

1,138,871
5,587,080

29


ARMANLEASEANDFINANCELIMITED
PROFITANDLOSSACCOUNTFORTHEYEARENDED

PARTICULARS

INCOME

1. IncomefromOperations

2. OtherIncome

EXPENDITURE

1. Administrative&OtherExpenses

2. Interest

3. Depreciation

4. Writeoffs

PROFITBEFORETAXATION
Less:ProvisionforTaxation
CurrentTax
FringeBenefitTax
DeferredTaxAssets/(Liability)
PROFITAFTERTAXATION
PriorPeriodItems
Excess/(Short)ProvisionofEarlierYears

Add:BalanceB/Ffromlastyear
PROFITAVAILABLEFORAPPROPRIATION
InterimDividend
TaxonInterimDividend
TranfertoGeneralReserve
TranfertoSpecialReserve
BALANCECARRIEDTOBALANCESHEET

NotestoAccounts

Asperourreportofevendateattached.

For,J.T.SHAH&COMPANY
CHARTEREDACCOUNTANTS

Schedule
No.

Rupees

31/03/2008
Rs.

11

38,712,302

12

173,729

31/03/2007
Rs.

31,279,653
241,970
31,521,623

38,886,031

13

11,110,317

14,103,677

14

12,348,498

8,440,750

579,193

497,425

13

3,555,164
27,593,172

Nil
Nil

15

11,292,859

8,479,771

(4,100,000)
(82,500)
(41,635)
7,068,724
Nil
(367,500)
6,701,224
14,182,157
20,883,381

(3,050,000)
(65,000)
49,834
5,414,605
Nil
(375,722)
5,038,883
10,153,273
15,192,157
Nil
Nil
Nil
1,010,000
14,182,157

Nil
Nil
1,500,000
19,383,381

23,041,852

For&OnbehalfofBoardofDirectors

30

7.2
Businessplanprojections

Thissectionprojectsthefinancialstatementsbasedonthegrowthplansofthecompany.Based
ontheprojectedfinancialstatementsvariousratioshavealsobeenprojected.

Assumptions

31Mar08
Fortheyearending:
(Actual)
Mar09
Mar10
Apr11 Mar12
Mar13
AssetBaseMicroLoan(Twowheeler)
2,054
2,773
3,605
3,965
4,362
4,798
AssetBaseMicroLoan(ThreeWheeler)
1,485
1,708
1,964
2,062
2,165
2,273
UnsecuredMicroLoans(Personalloan)
586
615
646
678
712
748
FourWheelerandother
107
112
118
124
130
137
CoreMicrofinance(NewProduct)

4,000
14,000
26,600 39,900
53,865
Total
4,232
9,208 20,333
33,430 47,269
61,821

Averageloansize(disbursed)TwoWheeler
29,000
30,000 31,500
33,075 34,729
36,465
AverageloansizeThreeWheeler
82,000
86,100 90,405
94,925 99,672 104,655
AverageloansizePersonalLoan
28,000
29,400 30,870
32,414 34,034
35,736
AverageloansizeOther
25,000
26,250 27,563
28,941 30,388
31,907
Averageloansize(coremicrofinancenew)

12,000 13,200
14,520 15,246
16,008

YieldTwoWheeler
25.0%
24.5%
24.5%
24.0%
23.5%
23.0%
YieldThreeWheeler
26.0%
25.5%
25.0%
24.5%
24.0%
24.0%
YieldPersonalLoan
36.0%
36.0%
37.0%
36.0%
35.0%
34.0%
YieldOther
20.0%
20.0%
20.0%
20.0%
19.5%
19.0%
Yield(coremicrofinancenew)

30.0%
30.0%
30.0%
29.0%
28.0%
WeightedAverageYield
25.9%
26.2%
26.4%
26.5%
26.1%
25.8%
Costofexternalfunds
12.2%
13.5%
13.0%
12.7%
12.2%
12.0%
Repaymentratefromgroups
97.1%
96.5%
96.0%
96.5%
96.5%
96.5%
LoanlossreserveandwriteoffsRatio
2.23%
2.6%
2.6%
2.8%
3.0%
3.2%

31

ProjectedIncomeStatements(RsLacs)

Fortheyearending:
31Mar08
31Mar09 31Mar10

(Actual)
Income

Interestincome
382
536
793
Otherincome
7
10
15
TotalIncome
389
546
808

Cost

Financial
123
216
329
Loanlossprovisionandwriteoff
36
24
27
Salary
41
62
86
Travel
3
5
8
OtheroperatingExpenses
67
94
141
Depreciation
6
8
11
TotalCost
276
409
602

Surplus/Deficit
113
137
206

Provisionfortax
42
56
81

NetSurplus/Deficit
71
80
124

31Mar11
Projections

1,066
20
1,086

436
35
108
10
177
13
778

308

120

188

31Mar12

31Mar13

1,316
25
1,341

1,580
30
1,610

523
40
132
12
216
16
939

619
47
161
14
263
20
1,124

402

486

155

187

247

299

32


ProjectedBalanceSheets(RsLacs)

Ason:31March
2008
2009
2010

Actual
Assets

CashandBankbalance
163
241
313
OtherCurrentAssets
72
113
160
LoanOutstanding
AssetBaseMicroLoan(Twowheeler)
459
643
932
AssetBaseMicroLoan(ThreeWheeler)
849
1,061
1,326
UnsecuredMicroLoans(Personalloan)
128
160
176
FourWheelerandOther
161
201
221
GroupbasedMicrofinanceloans

422
866
TotalLoansoutstanding
1,597
2,487
3,522
Loanlossreserve
5
29
56
Netloansoutstanding
1,592
2,458
3,466
Netfixedassets
85
117
137
TotalAssets
1,913
2,929
4,076

LiabilitiesandNetWorth

ExternalBorrowings
1,149
2,045
3,020
OtherCurrentLiabilities
100
140
187
Equity
408
408
408
Retainedsurplus/deficit
186
256
337
Currentsurplus/deficit
71
80
124
Networth
664
744
869

TotalLiabilitiesandNetWorth
1,913
2,929
4,076

2011
Projections

335
205

1,072
1,459
185
232
1,567
4,515
91
4,424
166
5,129

3,840
232
408
461
188
1,057

5,129

2012

2013

444
252

459
303

1,233
1,605
203
244
2,272
5,557
131
5,426
202
6,324

1,356
1,685
213
256
3,171
6,682
178
6,504
248
7,514

4,740
279
408
649
247
1,304

5,580
330
408
896
299
1,604

6,324

7,514

33


7.3
FinancingRequirements

TheprojectedcashflowstatementgivestheestimateoffundingrequirementsforArmanLease
andFinanceLimited.

ProjectedCashflowStatements(RsLacs)

Fortheyearending:
Mar09
Mar10
Apr11
Mar12
Mar13

Inflows

Openingcash
163
241
313
335
444
ExternalBorrowings
1,700
2,400
2,800
3,700
4,000
RepaymentsfromBorrowers
2,102
3,956
6,394
8,996
11,938
Equity

Interestincome
536
793
1,066
1,316
1,580
Otherincome
10
15
20
25
30
TotalInflow
4,511
7,405
10,594
14,372
17,992

Outflows

Disbursement
2,993
4,991
7,387
10,038
13,063
RepaymentstoLenders
804
1,424
1,980
2,800
3,160
Operatingexpenses(excl.Depr.)
161
236
295
359
438
Interestpaidonborrowings
216
329
436
523
619
Tax
56
81
120
155
187
Dividends

Fixedassetspurchase
40
30
42
53
66
TotalOutflow
4,270
7,092
10,259
13,928
17,532

Netcashbalance
241
313
335
444
459

34

Projectedratios

Fortheyearending:

Operationalselfsufficiency
Returnonaverageassets
OperatingExpenseRatio
FinancialCostRatio
Averageoutstanding/borrower(Rs)
Portfoliogrowthrate
ReturnonEquity
Riskweightedcapitaladequacyratio

Mar08
Actual

Mar09

Mar10

140.9%
4.1%
7.9%
8.3%
37,735
25.1%
11.2%
35.5%

133.4%
3.3%
8.3%
10.6%
27,010
55.7%
11.4%
32.1%

134.1%
3.5%
8.2%
11.0%
17,322
41.6%
15.4%
23.5%

Apr11
Mar12
Mar13
Projections

139.6%
142.8%
143.2%
4.1%
4.3%
4.3%
7.7%
7.5%
7.5%
10.8%
10.4%
10.1%
13,505
11,756
10,809
28.2%
23.1%
20.2%
19.5%
21.0%
20.6%
22.4%
22.6%
23.1%

Notestoprojections

1. Repaymentrate:hasbeenassumedconsideringthecurrentperformanceofArman.
Repaymentrateonthenewmicrofinanceproductisexpectedtobearound97%takinginto
accounttheperformanceofNGOsoperatingintheregion.
2. Shareofmicrofinanceloans:hasbeengraduallyincreased.
3. Otherincome:ismainlyfeeandpenaltyincomefromborrowers.
4. LoanLossReserve:andwriteoffsarebasedonrepaymentrates.
5. Tax:hasbeenassumedat35%ofthePBTPlusLoanLossProvision
6. Averageloansize:ofalltheproductshasbeengraduallyincreasedkeepinginaccountthe
increasingabsorptioncapacityoftheborrowers.Overallaverageoutstandingofthe
companyisexpectedtogodownsteeplywithanincreaseintheshareofmicrofinance
loans.
7. Repaymentfromborrowersisassumingoneyearloantermfornewmicrofinanceloan
productandforrestoftheproducttheratioofcollectionstototaldisbursementsofpast
yearisapplied.
8. Financialcostratiowhichistotalfinancialcostasaproportiontototalloanportfoliois
poisedtoincreasewithanincreaseinrateofinterestchargedbythelendersaswellasdue
toincreaseindebtequityratio.
9. Operatingexpenseratioisexpectedtogoupdespiteanincreaseinscaleofoperations.This
ismainlyduetodecreaseinaverageticketsizeofloansduetoexpansioninmicrofinance
loansegment.
10. Companydoesnotplantoraiseequityatthispointsincetheprojectionsuggesta
comfortablecapitaladequacyposition.

35

KeyDefinitions

Activeborrowers

Numberofborrowers,whichhaveloansoutstandingasonthedateofreporting.

Loanportfolio

Outstandingloansoftheorganization,whichisappearinginthebooks.

PAR60

Outstandingbalanceofloanswithoverduesmorethan60days

Totalportfoliooutstanding

OperationalSelfSufficiency(OSS)

Totaloperatingincomes

Totaloperatingexpenses(excludingtaxes)

OperatingExpenseRatio(OER)

TotalOperatingexpensesduringtheyear

Averageportfoliooutstandingfortheyear

CapitalAdequacyRatio(CAR)

Totalqualifyingcapital(allowedfortheNBFCs)

RiskweightedAssets

ReturnonPortfolio(RoP)

Profitbeforetaxes

Averageportfoliooutstandingfortheyear

ReturnonEquity(RoE)

Profitaftertaxes

Averagenetworthduringtheyear

Yieldonportfolio(YoP)

Interestandfeesincomeonportfolio

Averageportfoliooutstandingfortheyear

ReturnonAssets(RoA)

Profitaftertaxes

Averageassetsduringtheyear

36

Annexure1

SchedulestotheFinancialStatements

ARMANLEASEANDFINANCELIMITED

SCHEDULES"1TO15"FORMINGTHEPARTOFFINANCIALSTATEMENTS
FORTHEYEARENDED31stMARCH,2008

Asat

PARTICULARS

31/03/2008

Rs.

SCHEDULE1

SHARECAPITAL:

AuthorisedCapital:

5,000,000(Prev.Year5,000,000)EquitySharesof

50,000,000
Rs.10/each

Issued,Subscribed&PaidupCapital:

4,076,600(Prev.Year4,076,600)EquitySharesof

Rs.10/eachfullypaidup

40,766,000

Total..

40,766,000

SCHEDULE2

RESERVESANDSURPLUS:

GeneralReserve:

BalanceasperlastBalanceSheet

625,556

Add:TransferredfromProfit&LossA/c.

Nil

625,556

SpecialReserve

BalanceasperlastBalanceSheet
4,135,000

Add:TransferredfromProfit&LossA/c.
1,500,000

5,635,000

ProfitandLossAccount

19,383,381

Total..

25,643,937

SCHEDULE3

SECUREDLOANS:

TermLoansfromBanks

78,722,220

(securedagainstbookdebtsand

personalguaranteeofoneoftheDirector)

TermLoansfromFinancialInstitutions

7,328,000

37

Asat
31/03/2007
Rs.

50,000,000

40,766,000
40,766,000

625,556
Nil
625,556

3,125,000
1,010,000
4,135,000

14,182,157
18,942,713

62,315,569

10,000,000

(SecuredbyHypothicationofhypothicatedassets
andalsobypersonalguaranteeofDirectors)

WorkingCapitalLoansformBanks
(SecuredbywayofMortgageofOfficePremises,Bookdebt
andalsobypersonalguaranteeofDirectors)

VehicleLoanfromBanks
(SecuredbywayofMortgageofspecifiedassetsunderFinance)

Total..
SCHEDULE4
UNSECUREDLOANS:

FromDirectors&theirRelatives
InterCorporateDeposit

Total..
SCHEDULE6
INVESTMENTS:
LongTermInvestments(NonTrade):
Quoted
Shares
300(Prev.Year300)SharesofHDCLtd.
ofRs.10/eachfullypaidup
Nil(PrevYear2,400)SharesofSayajiIron&
SteelLtdofRs.10/eachfullypaidup

Debentures
150(Prev.Year150)NCDofHDCLtd.
ofRs.50/eachfullypaidup

Less:ProvisionforDiminutioninvalueof
Investments

Total..

SCHEDULE7
CURRENTASSETS:
(ConsideredGoodunlessotherwisestated)

STOCKINTRADE:
(AsCertifiedbyDirectors)
150Shares(Prev.Year150)ofCoreEmblichLtd.
ofRs.10/eachfullypaidup
400Shares(Prev.Year200)ofRoltaIndiaLtd.
ofRs.10/eachfullypaidup
1000Shares(Prev.Year1,000)ofRolatainerLtd.
ofRs.10/eachfullypaidup
80Shares(Prev.Year800)ofSilverlineLtd.
ofRs.10/eachfullypaidup
32Shares(Prev.YearNil)ofSilverlineAnimation

19,253,345

846,871

106,150,436

8,737,688

Nil
8,737,688

8,737,688

17,400

Nil

5,400

22,800

21,825

975

1,200

104,540

16,930

2,232

38

8,369,303

Nil

80,684,872

5,992,864
Nil
5,992,864

17,400

84,000

5,400

106,800

21,825
84,975

530

43,880

14,040

12,440

Ltd.ofRs.10/eachfullypaidup
660Shares(Prev.Year660)ofPentamediaGraphics
Ltd.ofRs.1/eachfullypaidup
1,000Shares(Prev.Year2,500)ofSanaraComputer
Ltd.ofRs.10/eachfullypaidup
800Shares(Prev.Year800)ofShreeramaMultiLtd.
ofRs.5/eachfullypaidup
100Shares(Prev.Year100)ofTrygenTechnology
Ltd.ofRs.10/eachfullypaidup
1Shares(Prev.Year1)ofRelianceCapitalLtd.
ofRs.10/eachfullypaidup
127Shares(Prev.Year27)ofRelianceInd.Ltd.
ofRs.10/eachfullypaidup
70(Prev.YearNil)ofBGREnergyLtd.
ofRs.10/eachfullypaidup
27Shares(Prev.Year27)ofRelianceComm.Ltd.
ofRs.5/eachfullypaidup
2Shares(Prev.YearNil)ofRelianceEnergyLtd.
ofRs.10/eachfullypaidup
9000Shares(Prev.YearNil)ofPowerGridCorporation
ofRs.10/eachfullypaidup
27Shares(Prev.Year27)ofRelianceNaturalResourcesLtd
ofRs.5/eachfullypaidup
NiLShares(Prev.Year500)ofI..P.C.L.
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofCholaMandalamFin.Ltd.
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofAshokLeylandFin.Ltd.
ofRs.1/eachfullypaidup
5Shares(Prev.Year5)ofFirstLeasing
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofHDFCBankLtd.
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofICICIBankLtd.
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofIndusindBankLtd.
ofRs.10/eachfullypaidup
5Shares(Prev.Year5)ofKotakMahindraBankLtd.
ofRs.10/eachfullypaidup

SUNDRYDEBTORS:
Unsecured,Consideredgoodunlessotherwisestated

Outstandingforaperiodexceedingsixmonths:
Good
Secured
Unsecured

320

449

13,080

4,800

1,765

226

120,767

23,933

6,741

1,272

884,700

122

Nil

749

178

211

3,594

2,498

159

1,222

755,855

2,674,012
3,429,867

`






















1,191,687

39

Nil

3,241

32,700

4,840

2,560

537

9,058

Nil

6,741

1,007

Nil

122

111,709

547

178

201

3,594

2,498

159

1,222
251,803

438,304
1,135,201
1,573,505

 Doubtful
Nil Nil

3,429,867
Others:

Good

Secured
1,967,448

Unsecured
652,140

2,619,588

Doubtful
Nil
Nil

2,619,588

6,049,455

CASHANDBANKBALANCES:

CashonHand

362,753

BalancewithScheduledBanks

InCurrentA/c.

14,984

(MaximumDebitBalanceatanytimeduring

theyearRs./2380935)(Prev.YearRs.7515308)

BalancewithNonscheduledBanks

InCurrentA/c.
2,482,234

(MaximumDebitBalanceatanytimeduring

theyearRs./47,181,343)(Prev.YearRs.45,147,966/)

FixedDepositA/c.
13,397,838

(MaximumDebitBalanceatanytimeduring

/theyearRs.13397838/)(Prev.YearRs.49,40,299/)

16,257,809

Total..

23,498,951
SCHEDULE8

LOANSANDADVANCES:

Consideredgoodunlessotherwisestated

a. Secured

LoanSecuredbyHypothicationofAssets

131,576,339
(RefereNoteNo.14ofthe"Schedule15")

b. Unsecured

LoanstoCompanies,Firms&Individuals

19,905,180
(RefereNoteNo.13ofthe"Schedule15")

Advancesrecoverableincashorkindorfor

valuetobereceived

3,054,361

Deposits

27,500

AdvancestoStaff

65,000

AdvanceIncometax&TDS

5,067,273

40

Nil
1,573,505

1,253,627
1,361,262
2,614,889

Nil
2,614,889

4,188,394

55,857

90,179

461,346

4,940,299

5,547,681
9,987,878

114,513,378

16,839,983

969,146

30,500

32,900

4,019,983


Total..
SCHEDULE9
CURRENTLIABILITIES:
SundryCreditors
SecurityDeposites(RepayablewithinOneYear
Rs.Nil(Prev.YearRs.23,743/)
Others
UnclaimedDividend

Total..

SCHEDULE10
PROVISIONS
ProvisionforTaxation
ProvisionforFringeBenefitTax
ProvisionforNPA

Total..
SCHEDULE11
INCOMEFROMOPERATIONS:

InterestIncome(TDSRs.546,289/)(Prev.YearTDSRs.157,646/
)
IncomefromLoan
ShareTradingIncome
IncomefromMutualFund

Total..

SCHEDULE12
OTHERINCOME:

Dividend

Total..

SCHEDULE13
ADMINISTRATIVEANDOTHEREXPENSES:

PaymentmadetoEmployees
(IncludingDirector'sSalaryRs.6,98,843/)(Prev.YearRs.6,91,552/)
SalaryandBonus
StaffWelfareExpenses

Rent,RatesandTaxes
ElectricityExpenses
Security&RecoveryExpenses
Insurance
Repairsto
(a)Building

(b)Plant&Machinery

(c)Others

159,695,653

1,572,588

Nil

103,959

75,070

1,751,617

7,150,000

147,500

474,916

7,772,416

3,889,661
228,974

561,563

Nil

Nil

136,405,890

893,740
23,743

18,398
202,990
1,138,871

5,120,000
137,000
330,080
5,587,080

38,158,250
180,752
373,301
Nil
38,712,302

173,729
173,729

4,118,635
90,140
117,527
325,285
38,275

31,061,232
162,808
55,516
97
31,279,653

241,970
241,970

3,211,921
106,982
3,318,903
125,235
107,958
169,141
47,455

132,376

Nil

73,447

41

Printing,Stationery&Advertisement

Postage&TelephoneExpenses

Travelling,Conveyance&VehicleMaintenance(IncludingDirector'sTravelling
Rs.55,660/)(Prev.YearRs.92,775/)

561,563
689,298
417,840

205,823
532,901
397,385

258,649

262,508

1,674,726
2,397,185
534,864
119,736
141,000
125,015
NIL
2,628,480
146,427
522,821
632,614
13,500
14,103,677

6,332,478

2,108,272
8,440,750

1,296,522
628,223
387,493
105,336
149,000
26,197
7,200
3,555,164
144,836
1,243,211
505,087
NIL
14,665,481

Banks

10,524,487

Others

1,824,011
12,348,498

Legal&ProfessionalExpenses
SalesIncentiveExp.
MarketingExpenses
RemunerationtoAuditors
Director'sSittingFees
LossonSaleofFixedAssets
LossonSaleofInvestment
BadDebts&IrrecoverablesW/off(Net)(ReferNote15ofSchedule15)
ProvisionforN.P.A.(Net)(ReferNote16ofSchedule15)
SundryBalanceWrittenOff
GeneralExpenses
Donation

Total..

SCHEDULE14
INTERESTPAID

Total..

42

Annexure2

DemographicdetailsofAhmedabad,GandhinagarandMehsana

43

44

45

46