Annual Reports (Overall Outlook)

An annual report provides information

on the company's fiscal year. The
financial information provided in the
annual reports helps determine the
current status of business, how the
company is funding operations and
growth, and how good the company is
placed at making money for its
investors. It is the most comprehensive
means of communication between a
company and its stakeholders, rightly
called the pinnacle of corporate communications. Annual reports typically include financial
statements, statements from the CEO and Board Chair, and key activities and
accomplishments. An annual report contains various things.

So, if we talk about Midlife Microfinance Limited , the present Authorized Share Capital of
Midland Microfinance Ltd is Rs 7500 lakhs.

 Source of funds:
During the Financial Year 2020-21, your Company raised a sum of Rs. 793 million by way of
Secured Redeemable Non-Convertible Debentures and Rs. 275.20 million by way of
Unsecured Redeemable Non-Convertible Debentures through Private Placement. Further, the
Company raised resources aggregating to Rs. 3,890.10 million in total through various
international and domestic banks and financial Institutions in the form of ECBs and Working
Capital Term loans. The Company also sourced funds through securitization and Direct
Assignments.

1. External Sources

Also ,During the Financial Year 2020-21, the Company drew an aggregate amount of
Rs. 60.67 Million by way of External Commercial Borrowings, the details of which
are as under:

Particulars Amount (in Mn)

Aviator Emerging Market Fund 60.67

Further, during the Financial Year ended on March 31, 2021, the Company received
consolidated foreign direct investment of Rs. 155.98 million from Kitara PIIN 1501
and Sh. Ashish Bhandari.

2. Domestic Resources
During the Financial Year under review, the Company mobilized funds amounting to
Rs. 793.00 million by way of Secured Redeemable Non-Convertible Debentures
(SRNCD) and Rs. 275.20 million by way of Unsecured Redeemable Non-Convertible
 Debentures (URNCD) through Private Placement. SRNCD. The details of SRNCD
and URNCD along with their maturity & coupon rate are provided below.

Sr. Type of Debentures Amount Listed/Unlisted Maturity Coupon

No Rate
1. Secured 250 mn Listed 3 Years 12.40%
Redeemable Non-
Convertible
Debentures
2. Secured 250 mn Listed 3 Years 12.30%
Redeemable Non-
Convertible
Debentures
3. Secured 200 mn Listed 18 Months 13.00%
Redeemable Non-
Convertible
Debentures
4. Unsecured 275.20 mn Unlisted 7&10 years 10.00% -
Redeemable 11.10%
Non-Convertible
Debentures
5. Secured 93 mn Unlisted 6 Years 16%
Redeemable Non-
Convertible
Debentures
The Company's Debentures are listed on Debt platform of Bombay Stock Exchange.
Further, the Company took the term loan facility amounting to Rs. 3,829.50 million
from domestic banks/financial institutions.

 Loan portfolio & its quality:

1. Business loan: The company encourage entrepreneurship amongst women as
sustainable source of livelihood by providing business loans for working capital.
Business Loans give the economically active women access to finance in order to
support their micro enterprises. They give Rs. 11,000-30,000 and 31,000-50,000
ticket size loan on interest rate of 25.20% for 1 year and 2 year, respectively.
2. Water Purifier Loan: It was observed that people especially in rural areas spend a
hefty amount of their money on their medical expenses. It not only causes burden on
their finances but is also too much bothersome. The quality of water in Punjab
nowadays is not good and contains a lot of toxic elements that are hazardous for
health, a water purifier has become the basic necessity of every household. They give
loan in the range of Rs. 4200 to 8500, with interest rate of 25.20%, for the duration of
6M, 9M and 11M.
3. Sewing Machine Loan: To provide products and services of outstanding quality to
our members, Midland Microfin Limited has collaborated with Greenlight Planet
India Pvt Ltd., which is one of the leading Dealers & Manufacturers of Solar
Products, to facilitate the services with the mission of Serving Members “Beyond
 Microfinance. Loan Size of Rs. 3520 for interest rate of 25.20%, for 6M, 9M and
11M.
4. Solar Lamp Loan: To provide products and services of outstanding quality to our
members, Midland Microfin Limited has collaborated with Greenlight Planet India
Pvt Ltd., which is one of the leading Dealers & Manufacturers of Solar Products, to
facilitate the services with the mission of Serving Members “Beyond Microfinance.
Loan Size of Rs. 2899 for interest rate of 25.20%, for 6M, 9M and 11M.
5. Udaan-Individual Loan: Udaan loan product is given to MML’s existing customers
for working capital as well as capital investment in their existing business. It is one of
MML’s first few attempts to develop individual credit products for its loyal customer.
Loan Size of Rs. 60,000 to 1,00,000 for interest rate of 25.20%, for 2 years.

 Main source of income 

On a worldwide basis, microfinance institutions (MFIs) provide financial services to the
poorest households. To date, funding of MFI activities has come primarily from outright
donor grants, government subsidies, and often debt capital, including debt with non-
market terms favorable to the MFI.

Malegam Committee also recognizes the contribution of MFIs towards financial inclusion.
“Microfinance is an important plank in the agenda for financial inclusion.” – Malegam
Committee report.

India is an upcoming economic powerhouse, but many of our problems still exist. Healthcare
is a critical issue, which remains out of reach of the majority of the world’s population. The
Reserve Bank of India and Govt.of India want that more and more people should be brought
into the purview of mainstream banking. Commercial Banks have made efforts to open bank
accounts of each and every individual in their area of operation.

On august 28, 2013 Govt of India announced Pradhan Mantri Jan-Dhan Yojnaunder which
more than 125 million new bank accounts were opened. The object is to provide atleast one
basic banking account in each and every household. However, the banks consider giving
loans to the poor to be too costly and risky. Therefore, MFIs play a vital role in financial
inclusion of those who are outside the reach of commercial banks. World over, microfinance
is looked upon as source of credit-based poverty alleviation and financial inclusion. This
financial inclusion drive by the government is making way for the MFIs to lend through
banking channel and offer cashless disbursement which ensures risk free lending.

 Expenditure on Corporate Social Responsibility:

Particulars March 31, 2021
a) Gross amount required to be spent by the 2.69
Company during the year
Amount spent during the year on purposes 2.69
other than construction/acquisition of any
asset
Paid (Includes no payment which were 1.82
 provided as in previous year)
Yet to be paid 0.87
The company has complied with the provisions of the section 135 of the Companies Act 2013
and transferred the unspent amount to the Unspent CSR account within 30 days from the end
of the FY 2020-21.

 Director’s report:  The Directors have the pleasure in presenting the 33rd Annual
Report on the business and operations of your Company for the Financial Year (FY)
ended March 31, 2021 along with the Audited Financial Statements, Auditor's Report
and Secretarial Auditor's Report.
Microfinance Institutions were no exception to the adversities of pandemic during the
year 2020-21. Where the country was chasing to settle the situation arisen due to
Pandemic Covid-19, on the other hand financial sector was chasing to manage
financial distress of market, retention of its customers/clients and look after the
wellbeing of its staff etc.
When the microcredit sector
was gradually recovering from
the first wave, the second
wave struck. Industry analysts
said that while last year's
outbreak le the rural areas less
affected, the situation is totally
different now. Collections
plunged in the last week of
March 2020 and continued to
remain impacted during the
whole year. When the
situation during Q3 of 2020-
21 started to improve, the
second wave with different strains struck, that led to the lockdowns in different states.
The RBI had earlier come up with a slew of measures in FY21 to provide liquidity to the
financial services industry. The move by RBI was a positive step towards specifically
improving access to credit for smaller entities to ease liquidity pressure and increase credit
flow to the lowest strata of the society.

 Additional Considerations:
Pursuant to the Reserve Bank of India circular dated March 27, 2020 and May 23, 2020
(“RBI circular”) allowing lending institutions to offer a moratorium to customers on payment
of instalments falling due between March 1, 2020 and August 31, 2020 read with advisory
issued by the Microfinance Institutions Network dated March 30, 2020 (“MFIN advisory”),
the Company has extended a moratorium to its borrower in accordance with its Board
approved policy. 97% of Midland Microfinance Ltd.'s (MML) borrowers are in rural areas
(which fortunately have relatively lesser Covid19 incidence), and 62% engage in “essential
services” activities such as dairy or agricultural activities – hence their cash flows and
repayment capability are largely intact. Pursuant to the order issued by the Ministry of Home
Affairs on 15th April 2020, 45% of MML's branches became operational by April-May end
fully complying with the regulatory guidelines and prescribed Covid norms. Management
took immediate steps to mitigate this force majeure situation, in various areas including
information technology, operations, credit, risk and Human Resources which are discussed in
Management Discussion and Analysis.
 Financial Highlights: The highlights of the financial performance of the Company for
the Financial Year ended on March 31, 2021 together with comparative position of the
previous financial year, are as under:

1. Gross Income: During the Financial Year 2020-21, Gross Income of your Company
increased to Rs. 1,923.45 million registering a growth of 4.45% over the previous
year's Gross Income of Rs. 1,841.46 million. The contributing factors to this growth
in income were increase in the interest income on JLG loan portfolio.

2. Profit Before Tax (PBT): Profit before Tax (PBT) decreased to Rs. 190.10 million at
the end of the Financial Year 2020-21 recording a decline of 24.20% over the
previous year's PBT of Rs. 250.78 million.

3. Profit After Tax (PAT): Profit after Tax (PAT) decreased to Rs. 146.26 million at
the end of the Financial Year 2020-21 recording a decline of 21.91% over the
previous year's PAT of Rs. 187.29 million due to creation of higher provision (ECL)
during the current year considering the impact of Covid.

4. Net Worth: During the Financial Year 2020-21, the Company issued and allotted
equity shares to its shareholders through Rights Issue resulting into the increase of
 Net Worth of the Company to Rs. 1,768.10 million as compared to Rs. 1,185.93
million in the previous year showing a growth of 49.09%.

5. Non-fund-based Income: During the Financial Year 2020-21, the Non-fund-based

income decreased to Rs. 4.84 million as compared to Rs. 15.89 million in the previous
year showing a decrease of 69.52%.

6. Earnings Per Share: During the Financial Year 2020-21, the Earning per share of the
Company decreased to Rs. 4.06 as compared to Rs. 5.96 in the previous year showing
a decrease of 31.85%.

7. Capital to Risk Weighted Assets Ratio (CRAR): The Company's Capital to Risk
Weighted Assets Rao (CRAR) stood at 33.96% as at the end of the year under report,
which is within permissible limit of 15% prescribed under RBI norms prescribed for
NBFC-MFIs.

 Operational Highlights:
1. Branch Expansion: The Company has expanded its distribution capabilities and has
expanded its presence in the state of Gujarat by adding 20 new branches overall to its
network that has been scaled to the level of 217 branches as against 197 in the
previous year. Concurrently, the Company has emphasized on increasing the
operational efficiency of the existing branches.

2. Reduction in Operational Cost: During these challenging times, Senior Management

is trying to cut operational & financial costs wherever possible, while simultaneously
improving operational efficiency, IT infrastructure and level of existing branches. The
Company understands that a jolt such as COVID-19 will help to examine these costs
in great detail, and prune them wherever possible. As a result, the productivity and
profitability of the Company boosted resulting into the growth in business and
reducing the operational cost.

3. Liquidity: Adequate -The company has a favourable liquidity position given the
longer tenure borrowings repayable over 2-10 years as against shorter tenure of MFI
loans of up to 2 years as also reflected by a well matched ALM as on September 30,
2020. Company’s expected inflows in up to one-year bucket were 1.7 times of
expected outflows. The company maintains sufficient liquidity buffer at all times to
meet its immediate disbursement requirements and any emergent payments. The
company has cash and bank balance of Rs. 6.09 crore with unutilised credit of Rs. 10
crore as on February 28, 2021. Additionally, the company had unencumbered
investments/FD of Rs 187.8 crore as on date

 Adverse:
Declining yet manageable asset quality MML has been able to maintain good asset quality
since 2011 when it started its operations. The asset quality is supported by rigorous
supervision by operations team and regular checks and controls of finance and internal audit
department. The overall collection efficiency (including arrears and prepayments) of MML
remained healthy till August with 99%, however, in October 2020, it declined to 71% but
again improved to 89% end February 2021. The current collection efficiency stood at 100%
in August 2020 though declined to about 83% in October 2020 and now improved to 97%
end February 2021.