Statue Junction, Thiruvananthapuram-1 Tel: 0471-2467373, 2477697, Fax: 0471 2463694 e-mail-bo3301@pnb.co.in !

" uthoot Fincorp #t$% Thiruvanathapuram% &ear Sir, Su': (!c uthoot Fincorp #t$: )ene*al-cum enhancement +ropo"al "u'mitte$%

,ith re-erence to the a'ove, our hi.her authoritie" have a"/e$ -or the -ollo*in. in-ormation!clari-ication"% 0in$l1 provi$e u" the in-ormation!clari-ication" "o that *e can -or*ar$ the "ame to out hi.her authoritie" -or con"i$erin. the rene*al-cum enhancement propo"al% ,ith re.ar$" (""t 2eneral ana.er

3lari-ication"!in-ormation re4uire$
1. Preethi John, Neena George and Remy Thomas were reported as promoter director in last sanction, however in the present proposal these are not included. What are the reasons for their resignation removal! " #orm $% attached herewith for resignation of Preethi John, Neena George and Remy Thomas %. &evel of capital ade'uacy for $1.($.1% and $1.($.1$ )e informed alongwith its computation." *ttached +teps ta,en )y the company to arrest the increase in NP* and recovery position )e informed. -ncrease in NP* was on account of delay in auction process due to introduction of #air practices .ode )y R/- in 0arch %(1% where)y the entire auction process had to )e revamped and conse'uently auctions could not )e conducted in the first half of %(1%"1$ resulting in a )ac, log . *uction of almost the entire )ac,log was completed )efore +eptem)er itself although funds were received in 1cto)er only in many cases. NP* position has come down significantly

$. Present status of other contingent lia)ilities reported under item no. 2 345 )e informed.6"Please refer Pg 7$ of *nnual Report 4% &atest position of assessment of income ta8 sales ta8 wealth ta8 of the )orrowing concern promoter directors guarantors )e informed.6" The Ta8 returns of the )orrowing concern

have )een filed for the *9 %(1$"1: up to date and documentary proof is held on records .-n the case of directors guarantors the ta8 returns filing is in process.
;. 0a<or issues pointed out in stoc, audit report dated (=.(%.1$ and status of closure of the same )e informed.6"*ttached the ma<or stoc, audit o)servations and reply to it 7. >nder item no.11 3*5 3ii5 ?etailed -ndustry +cenario and .omments on management, production and mar,eting as well as /orrowers@ diversification, e8pansion, modernisation programme )e su)mitted.6"*s part of the e8pansion there has )een )ranch e8pansion and the e8pected no6 of )ranches to )e opened )y %(1: is $A((. 2. #inancials of group concern for #9 %(1%"1$ )e incorporated. #urther, comments on any adverse financial indicator )e su)mitted." *ttached =. #ollowing confirmation )e su)mitted6 Norms Position of compliance -n terms of paragraph A? of the Non"/an,ing .ompanies Prudential Norms N/+"2 is )eing filed 3Reserve /an,5 ?irections, 1AA=, all N/#.s are re'uired to su)mit +tatutory 'uarterly, N?"+-"1(( .r *uditorsB .ertificate with reference to the position of the company as at end of filed monthly. *lso *&0" the financial year ended 0arch $1 latest )y June $(, every year. +uch 1 and *&0"% are filed on certificate will also indicate asset income pattern of each N/#.s according to monthly and half yearly new re"classification. )asis *dvances to any single )orrower group does not e8ceed 1;C %;C of its .omplied owned fund -nvestment in shares of another company single group of companies does .omplied not e8ceed 1;C %;C of its owned fund &oans and investments ta,en together do not e8ceed %;C :(C of its owned .omplied fund to a single party single group of parties. . #urther clarification information re'uired

1. Reasons for huge increase in Net means of the Guarantors )e informed.6 The increase in the net means of the Guarantors can )e attri)uted to the increase in annual income of the directors. %. Dey financials of the group associate concerns as on $1.$.%(1$ )e reported" *ttached $. The company has made su)stantial investments during %(1%"1$ in the following su)sidiary companies 6" a.0uthoot Eousing #inance &td. 6 Rs.%2=:.1; lacs F >nsecured &oans Rs.:((: lacs. ).0uthoot 0icro #inance &td. 6 Rs. :2(.(( lacs

Please inform the Dey financials for $1.$.1% G $1.$.1$ of these companies. -nform details of credit facilities and )an,ing arrangements of these companies." *ttached

Please o)tain .R on these companies and confirm that conduct of a c is satisfactory and the loan accounts are in standard category. There is an investment of Rs.1232.18 lacs as on 31.3.13 with M/s. Edelweiss Asset Reconstruction Co.Ltd. lease inform whether this is a !rou" concern and inform the credentials and financial soundness of the com"an#. The same is not a !rou" a concern. :. Please confirm compliance on e8change of information under 0ultiple /an,ing arrangement and confirm that the credit facilities with respective )an,s #-s are regular standard category." The e8change of information under 0ultiple /an,ing arrangement have )een complied with and the credit facilities with respective )an,s #-s are regular standard. ;. Position of assessment of -ncome Ta8 +ales Ta8 Wealth Ta86" /0 to inform the period 3#inancial 9ear5 upto which assessment of statutory return 3-T +ales ta8 Wealth Ta85 of the company is completed6 %(1$"1: is the *9 up to which the statutory return 3-T5 of the company has )een completed. Please confirm that Ta8 returns of the company directors guarantors have )een filed up to date and documentary proof thereof is held on records.6 The Ta8 returns of the company have )een filed for the *9 %(1$"1: up to date and documentary proof is held on records .-n the case of directors guarantors the ta8 returns filing is in process.
7.

Please confirm that all statutory dues including P#, 4+-, sales ta8 etc. have )een fully paid )y the company. $These are not commented in the audit re"ort%&' *ll dues have )een fully paid )y the company )efore due dates *s per e8tant guidelines a certificate on annual basis )e o)tained from )orrowerBs auditors certifying that all statutory dues including 4P# dues have )een paid )y the )orrower. 3Ref6 &* .ir.No.$$ %(1% dt.%1.;.%(1%5 Please confirm compliance in this regard." P&4*+4 *?H-.4

2. Please inform the present status of the following contingent lia)ilities disputed ta8 lia)ilities -ncome Ta8 orders *ppeals6" 3as per auditorBs report5 a. +how cause notice from +ervice Ta8 ?eptt. for Rs.1%7$.%1 lacs6"#iling in process ). -ncome Ta8 ?epartment 1rders for Rs.%A=.=2 lacs 3%((7"(25 and Rs.7=A.(7 lacs 3%((2"(=5" -ncome Ta8 ?epartment 1rders for Rs %A=.=2 la,hs 3%((7"(256" (ppeal pen$in. 'e-ore 35T!(ppeal"!Trivan$rum -or (6 2006-07 pertainin. to T&S o- )"%2%97 3r"%

-ncome Ta8 ?epartment 1rders for Rs 7=A.(7 la,hs 3%((2"(=56" *ppeal pending )efore .-T *ppeals Trivandrum for *9 %((2"(= pertaining to T?+ on interest on +? of Rs.7.=A .rs. c. +tatus of appeal against Notices issued under Derala 0oney &enders *ct, 1A;= for registration of )ranches of the company." I The appeal filed )y the company against the Derala 0oney &enders *ct, 1A;= is converted to *ppeal .ivil with case num)er ;%:1 %(1%. The status report of the same is downloaded from the +upreme .ourt we)site is attached herewith. d. +how cause notice from R/- as to why armBs length policy is not maintained with group concerns. -nform the latest status and final decision of R/- on the issue and confirm that no penalty was imposed on the company )y R/-." P&4*+4 *?H-.4

=. #raud for Rs.:$%.12 lacs is reported )y the au ditors during the #9 %(1%"1$. Whether the internal control vigilance mechanism of the company is ade'uate to prevent mitigate such incidents. Please su)mit details of steps safeguards ta,en )y the company to prevent incidents in future. a5 Gold inspectors verify and ascertain the purity and weight of the ornaments at regular intervals. )5 /efore the ornament is placed inside the +trong Room it is re appraised )y the /ranch in charge. c5 Proper security systems 3+ecurity alarm and ..TH5 are placed .

A. *uditors have o)served that +undry ?e)tors, +undry .reditors, &oans G *dvances are su)<ect to confirmation. Please confirm that these figures have )een verified and reconciled to the satisfaction of the auditors. -t is a general o)servation made )y all auditors. 1(. Please confirm that the company has complied with all latest guidelines instructions issued )y R/- to N/#.s with regard to 6" D9. norms, #air Practice .ode G .orporate Governance6 *ll latest guidelines instructions issued )y R/- to N/#.s have )een complied R/- has issued new set of guidelines on 17.A.%(1$ for compliance )y N/#.s, which are predominantly into lending against gold <ewellery 3/ased on the report

11.

of Wor,ing Group headed )y D.>./.Rao5. Please su)mit your comments on the steps ta,en )y the company towards compliance of these guidelines. 34specially
with respect to infrastructure for storage of Gold, restriction on opening of new )ranches, valuation of gold, verification of ownership of Gold, auction process and procedures, standardiJation of documents, revisded D9. norms for Eigh value loans, misleading advertisements etc.5."*ttached

1%. Please report position of NP* advances in the following format6"

)"% in lac"

+tandard +u)"+tandard ?ou)tful &oss Gross Loans & Advances(AUM) Recovery Percentage Position of NPA Gross NP* Gross NP* C Provisions Written 1ff amount Net NP* Net NP* C

31.3.2012 7A%;.$7 %A.2: :.A: :.7A 21;%=%

31.3.2013 2$:7.== 1;=.A= %:.%7 %.72 722398

3937 0%889 1008 2933 0%419

17891 2%269 3281 18340 1%779

Please apprise on the recovery mechanism and ris, control measures of the company and steps ta,en to reduce NP* and improve the recovery percentage in view of the volatility of gold price. !e "ecover# Mec!anis$ i5 When the monthly interest is not paid for three months , a written -ntimation may )e sent to the )orrower )y 1rdinary Post. ii5 When the monthly interest is not paid for more than si8 months , a second written -ntimation may )e sent to the )orrower )y 1rdinary Post. iii5 When the monthly interest continues to )e not paid for eleven months, Notice shall unfailingly )e sent to the )orrower under Registered Post with *c,nowledgement ?ue, advising him her to redeem the pledge )efore the e8piry of one year from the date of pledge , failing which the Gold &oan *ccount will )e treated as K over due L and the pledged ornaments will )e earmar,ed for sale )y pu)lic auction after the e8piry of one year from the date of pledge.

iv5 The charges incurred for sending the -ntimations )y 1rdinary Post and the Notice under Registered Post shall )e de)ited to the &oan *ccount at the rates as may )e prescri)ed )y the .ompany from time to time and the same collected from the )orrower concerned. v5 K G1&? &1*N -NT4R4+T P*904NT -NT-0*T-1N R4G-+T4R4? N1T-.4 +4NT R4G-+T4RL shall )e maintained in the .omputer for noting the names of the )orrowers to whom the -ntimations Registered Notice have has )een sent. !e "is% &ontrol Measures 15 ?ual operation of +trong room +afe %5 Gold and cash is ade'uately insured $5 Periodical inspection )y internal auditors and gold inspectors :5 Proper security systems 3+ecurity alarm and ..TH5 ;5 0onthly 0anagerBs .ertificate certifying stoc, of gold pac,ets )y the /ranch 0anager G Joint custodian. 75 +urprise and random inspection conducted )y visiting officials of different verticals 31peration, Ris, 0anagement etc5 +teps ta,en to improve NP* and recovery percentage has )een mentioned in the reply to M"% of .larifications information re'uired