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Serial No. ____________
Addressed to: _________
INFORMATION MEMORANDUM SURYODAY MICRO FINANCE PRIVATE LIMITED
A private limited company incorporated under the Companies Act, 1956
Date of Incorporation: November 10, 2008
Registered Office: No. 6 CS Towers, 3rd Floor, 34/76 Bazullah Road,
T Nagar, Chennai 600 017
Telephone No: (044) 4202 4457
Website: http://www.suryodaymf.com/
Information Memorandum for issue of Debentures on a private placement basis on
July 22, 2014
Background
This Information Memorandum is related to the Debentures to be issued by Suryoday Micro Finance Private
Limited (the “Issuer” or “Company”) on a private placement basis and contains relevant information and
disclosures required for the purpose of issuing of the Debentures. The issue of the Debentures comprised in the
Issue and described under this Information Memorandum has been authorised by the Issuer through a
resolutions passed by the shareholders of the Issuer on April 10, 2014 and the Board of Directors of the Issuer
on April 10, 2014 and the Memorandum and Articles of Association of the Company. Pursuant to the resolution
passed by the Company’s shareholders dated November 8, 2013 in accordance with provisions of the
Companies Act, 2013, the Company has been authorised to borrow, upon such terms and conditions as the
Board may think fit for amounts up to 500,00,00,000/- (Five Hundred Crore). The present issue of NCDs in
terms of this Information Memorandum is within the overall powers of the Board as per the above shareholder
resolution(s).
Credit Rating
The Debentures proposed to be issued by the Issuer have been rated by ICRA Limited (“Rating Agency
/ICRA”). The Rating Agency has vide its letter dated June 6, 2014 assigned a rating of [ICRA] BBB (Stable) in
respect of the Debentures. The above rating is not a recommendation to buy, sell or hold securities and investors
should take their own decision. The ratings may be subject to revision or withdrawal at any time by the rating
agency and should be evaluated independently of any other ratings. Please refer to Annexure II of this
Information Memorandum for the letter dated June 6, 2014 from the Rating Agency assigning the credit rating
abovementioned and the letter dated June 6, 2014 issued by the Rating Agency disclosing the rating rationale
adopted for the aforesaid rating.
Issue Schedule
Issue Opens on: June 23 , 2014
Issue Closing on: July 22, 2014
Deemed Date of Allotment: July 22, 2014
The Issuer reserves the right to change the Issue Schedule including the Deemed Date of Allotment at its sole
discretion, without giving any reasons or prior notice. The Issue shall be open for subscription during the
banking hours on each day during the period covered by the Issue Schedule.
The Debentures are proposed to be listed on the wholesale debt market of the Bombay Stock Exchange
(“BSE”).
.
Issue of 350 (Three Hundred and Fifty), Rated, Collateralised, Listed, Redeemable,
Transferable, Non-convertible Debentures of face value of Rs.10,00,000 /- (Rupees (Ten
Lakhs only) each, aggregating up to Rs.350,000,000 /- (Rupees Thirty Five Crores only)
on a private placement basis and listing thereof in terms of the SEBI (Issue and Listing of
Debt Securities) Regulations, 2008 (the “Issue”)
TABLE OF CONTENTS
SECTION 1: DEFINITIONS AND ABBREVIATIONS 3
SECTION 2: NOTICE TO INVESTORS AND DISCLAIMERS 6
SECTION 3: RISK FACTORS 9
SECTION 4: FINANCIAL STATEMENTS 14
SECTION 5: REGULATORY DISCLOSURES 15
SECTION 6: TRANSACTION DOCUMENTS AND KEY TERMS 45
SECTION 7: OTHER INFORMATION AND APPLICATION PROCESS 47
SECTION 8: DECLARATION 54
ANNEXURE I: TERM SHEET
ANNEXURE II: RATING LETTER& RATING RATIONALE
ANNEXURE III: CONSENT LETTER FROM THE DEBENTURE TRUSTEE
ANNEXURE IV: LAST AUDITED FINANCIAL STATMENTS
ANNEXURE V: ILLUSTRATION OF BOND CASH FLOWS
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SECTION 1: DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or requires, the following terms shall have the
meanings given below in this Information Memorandum.
Allot/Allotment/Allotted Unless the context otherwise requires or implies, the
allotment of the Debentures pursuant to this Issue.
Application Form The form used by the recipient of this Disclosure
Document, to apply for subscription to the Debentures,
which is annexed to the Offer Letter.
Board/Board of Directors The Board of Directors of the Issuer
Business Day Shall mean a day (other than a Saturday or a Sunday) on
which banks are open for business generally in Mumbai,
India and New York, United States of America.
CDSL Central Depository Services (India) Limited
Debentures / NCDs 350 (Three Hundred and Fifty) Collateralized Rated Listed
Redeemable Non-Convertible Debentures bearing a face
value of Rs.10,00,000/-(Rupees Ten Lakhs) each,
aggregating to Rs.350,000,000/- (Rupees Thirty Five
Crores only).
Debenture Holders / Investors The holders of the Debentures issued by the Issuer whose
name is registered as a holder of a Debenture in the
register of Debentureholders maintained by the Issuer
and shall include the registered transferees of the
Debentures from time to time
Deemed Date of Allotment July 22, 2014
Deed of Hypothecation Deed of Hypothecation executed by the Issuer dated July
18, 2014 for creating an exclusive first ranking charge over
the hypothecated property in favour of the Debenture
Trustee.
Debenture Trustee IDBI Trusteeship Services Limited
Debenture Trustee Agreement Debenture Trustee Agreement dated May 30, 2014
executed by and between the Debenture Trustee and the
Company for the purposes of appointment of the Debenture
Trustee to act as debenture trustee in connection with the
issuance of the Debentures.
Debenture Trustee Deed Debenture Trust Deed executed by and between the
Debenture Trustee and the Company on May 30, 2014 in
connection with the issuance of the Debentures.
Demat Refers to dematerialized securities which are securities that
are in electronic form, and not in physical form, with the
entries noted by the Depository.
Depositories Act The Depositories Act, 1996, as amended from time to time
Depository A Depository registered with SEBI under the SEBI
(Depositories and Participants) Regulations, 1996, as
amended from time to time.
Depository Participant / DP A depository participant as defined under the Depositories
Act
Director(s) Director(s) of the Issuer.
Disclosure Document /
Information Memorandum
This document which sets out the information regarding the
Debentures being issued on a private placement basis.
DP ID Depository Participant Identification Number.
Due Date Any date on which the holders of the Debentures are
entitled to any payments, whether on maturity or upon
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exercise of the option to redeem the Debentures prior to the
scheduled Maturity Date.
EFT Electronic Fund Transfer
Financial Year/ FY Twelve months period commencing from April 1 of a
particular calendar year and ending on March 31 of the
subsequent calendar year
Fee letter shall mean the letter dated May 30, 2014 between the
Issuer and the Original Debentureholder setting out the fees
payable by the Issuer to the Original Debentureholder
GAAP Generally Accepted Accounting Principles
Issue Private Placement of the Debentures.
Issue Opening Date June 23, 2014
Issue Closing Date July 31, 2014
Issuer/ Company Suryoday Micro Finance Private Limited
Maturity Date /Redemption
Date
May 28, 2019
Material Adverse Effect With respect to the Issuer, means a material adverse
effect on: (i) the Issuer, its assets or properties; (ii) the
Issuer’s business prospects or financial condition; (iii)
the implementation of, or the carrying on of, the
Issuer’s business or operations; or (iv) the ability of
the Issuer to comply with its obligations under any
other Transaction Document to which it is a party;
N.A Not Applicable.
NSDL National Securities Depository Limited.
Original Debentureholder Shall mean the initial subscriber to the Debentures
Offer Documents Shall mean the Offer Letter and the Information
Memorandum
Offer Letter Shall mean the private placement offer letter dated
June 23, 2014, in the form specified pursuant to sub-
rule (1) of Rule 14 of the Prospectus and Allotment of
Securities Rules, and circulated by the Issuer to the
Original Debentureholder for offering, by way of
private placement to the Original Debentureholder, the
Debentures
RBI Reserve Bank of India.
Rating Agency ICRA Limited
Record Date In relation to any Due Date on which a payment has to
be made by the Issuer in respect of the Debentures, the
date that is 15 (fifteen) days prior to that Due Date
R&T Agent or Registrar and
Transfer Agent
Sharepro Services (India) Private Limited
ROC Registrar of Companies.
Rs. / INR Indian National Rupee.
RTGS Real Time Gross Settlement.
SEBI Securities and Exchange Board of India constituted under
the Securities and Exchange Board of India Act, 1992 (as
amended from time to time).
SEBI Debt Listing Regulations The Securities and Exchange Board of India (Issue and
Listing of Debt Securities) Regulation, 2008 issued by
SEBI, as amended from time to time.
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Security The security for the Debentures as specified in Annexure I.
TDS Tax Deducted at Source.
Terms & Conditions Shall mean the terms and conditions pertaining to the Issue
as outlined in the Transaction Documents
Transaction Documents Shall mean collectively the Information Memorandum, the
Offer Documents, the Debenture Trustee Agreement,
Debenture Trust Deed, the Deed of Hypothecation, the Fee
Letter, the letters issued by the Trustee and Rating Agency,
the letters appointing the Registrar and Transfer Agent with
respect to the issuance of the Debentures, the agreement
entered into between the Registrar and Transfer Agent and
the Issuer, with respect to the issuance of the Debentures,
the agreement between the Issuer, its Registrar and
Transfer Agent and the Depository, the listing agreement
between the Issuer and the Stock Exchange for listing the
Debentures, all other documents in relation to the issuance
of the Debentures and any other document designated as a
Transaction Document by the Trustee or the
Debentureholders
WDM Wholesale Debt Market.
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SECTION 2: NOTICE TO INVESTORS AND DISCLAIMERS
2.1 ISSUER’S DISCLAIMER
This Information Memorandum is neither a prospectus nor a statement in lieu of a prospectus
and should not be construed to be a prospectus or a statement in lieu of a prospectus under the
Companies Act. The issue of the Debentures to be listed on the WDM segment of the BSE is
being made strictly on a private placement basis. Multiple copies hereof given to the same
entity shall be deemed to be given to the same person and shall be treated as such. This
Information Memorandum does not constitute and shall not be deemed to constitute an offer
or invitation to subscribe to the Debentures to the public in general.
As per the applicable provisions, it is not necessary for a copy of this Information
Memorandum/ Disclosure Document to be filed or submitted to the SEBI for its review
and/or approval. Pursuant to the provisions of Section 42 of the Companies Act 2013 read
with the Companies (Prospectus and Allotment of Securities ) Rules, 2014, the Offer Letter
in Form PAS -4 shall be filed with the ROC within 30 days of the date of circulation of the
offer letter.
This Information Memorandum has been prepared in conformity with the SEBI Debt Listing
Regulations and applicable SEBI and RBI Circulars governing private placements of
debentures by NBFCs. This Information Memorandum has been prepared solely to provide
general information about the Issuer to the Eligible Investors (as defined below) to whom it is
addressed and who are willing and eligible to subscribe to the Debentures. This Information
Memorandum does not purport to contain all the information that any Eligible Investor may
require. Further, this Information Memorandum has been prepared for informational purposes
relating to this transaction only and upon the express understanding that it will be used only
for the purposes set forth herein.
Neither this Information Memorandum nor any other information supplied in connection with
the Debentures is intended to provide the basis of any credit or other evaluation and any
recipient of this Information Memorandum should not consider such receipt as a
recommendation to subscribe to any Debentures. Each Investor contemplating subscription to
any Debentures should make its own independent investigation of the financial condition and
affairs of the Issuer, and its own appraisal of the creditworthiness of the Issuer. Potential
investors should consult their own financial, legal, tax and other professional advisors as to
the risks and investment considerations arising from an investment in the Debentures and
should possess the appropriate resources to analyze such investment and the suitability of
such investment to such Investor’s particular circumstances.
The Issuer confirms that, as of the date hereof, this Information Memorandum (including the
documents incorporated by reference herein, if any) contains all the information that is
material in the context of the Issue and regulatory requirements in relation to the Issue and is
accurate in all such material respects. No person has been authorized to give any information
or to make any representation not contained or incorporated by reference in this Information
Memorandum or in any material made available by the Issuer to any potential Investor
pursuant hereto and, if given or made, such information or representation must not be relied
upon as having being authorized by the Issuer. The Issuer certifies that the disclosures made
in this Information Memorandum are adequate and in conformity with the SEBI Debt Listing
Regulations. Further, the Issuer accepts no responsibility for statements made otherwise than
in the Information Memorandum or any other material issued by or at the instance of the
Issuer and anyone placing reliance on any source of information other than this Information
Memorandum would be doing so at its own risk.
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This Information Memorandum and the contents hereof are restricted only for the intended
recipient(s) who have been addressed directly and specifically through a communication by
the Issuer and only such recipients are eligible to apply for the Debentures. All Investors are
required to comply with the relevant regulations/guidelines applicable to them for investing in
this Issue. The contents of this Information Memorandum are intended to be used only by
those Investors to whom it is distributed. It is not intended for distribution to any other person
and should not be reproduced by the recipient.
No invitation is being made to any persons other than those to whom the Offer Letter along
with the Application Form and this Information Memorandum being issued have been sent.
Any application by a person to whom the Information Memorandum and Offer Letter has not
been sent by the Issuer shall be rejected without assigning any reason.
The person who is in receipt of this Information Memorandum shall not reproduce or
distribute in whole or part or make any announcement in public or to a third party regarding
the contents hereof without the consent of the Issuer. The recipient agrees to keep confidential
all information provided (or made available hereafter), including, without limitation, the
existence and terms of the Issue, any specific pricing information related to the Issue or the
amount or terms of any fees payable to us or other parties in connection with the Issue. This
Information Memorandum may not be photocopied, reproduced, or distributed to others at
any time without the prior written consent of the Issuer. Upon request, the recipients will
promptly return all material received from the Issuer (including this Information
Memorandum) without retaining any copies hereof. If any recipient of this Information
Memorandum decides not to participate in the Issue, that recipient must promptly return this
Information Memorandum and all reproductions whether in whole or in part and any other
information statement, notice, opinion, memorandum, expression or forecast made or
supplied at any time in relation thereto or received in connection with the Issue to the Issuer.
The Issuer does not undertake to update the Information Memorandum to reflect subsequent
events after the date of Information Memorandum and thus it should not be relied upon with
respect to such subsequent events without first confirming its accuracy with the Issuer.
Neither the delivery of this Information Memorandum nor any sale of Debentures made
hereafter shall, under any circumstances, constitute a representation or create any implication
that there has been no change in the affairs of the Issuer since the date hereof.
This Information Memorandum does not constitute, nor may it be used for or in connection
with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
No action is being taken to permit an offering of the Debentures or the distribution of this
Information Memorandum in any jurisdiction where such action is required. Persons into
whose possession this Information Memorandum comes are required to inform themselves
about and to observe any such restrictions. The Information Memorandum is made available
to potential Investors in the Issue on the strict understanding that it is confidential.
2.2 DISCLAIMER CLAUSE OF STOCK EXCHANGES
As required, a copy of this Information Memorandum has been filed with the BSEin terms of
the SEBI Debt Listing Regulations. It is to be distinctly understood that submission of this
Information Memorandum to the BSEshould not in any way be deemed or construed to mean
that this Information Memorandum has been reviewed, cleared, or approved by the BSE; nor
does the BSEin any manner warrant, certify or endorse the correctness or completeness of any
of the contents of this Information Memorandum, nor does the BSE warrant that the Issuer’s
Debentures will be listed or will continue to be listed on the BSE; nor does the BSEtake any
8
responsibility for the soundness of the financial and other conditions of the Issuer, its
promoters, its management or any scheme or project of the Issuer.
2.3 DISCLAIMER CLAUSE OF SEBI
As per the provisions of the SEBI Debt Listing Regulations, it is not stipulated that a copy of
this Information Memorandum has to be filed with or submitted to the SEBI for its review /
approval. It is to be distinctly understood that this Information Memorandum should not in
any way be deemed or construed to have been approved or vetted by SEBI and that this Issue
is not recommended or approved by SEBI. SEBI does not take any responsibility either for
the financial soundness of any proposal for which the Debentures issued thereof is proposed
to be made or for the correctness of the statements made or opinions expressed in this
Information Memorandum. However the Company undertakes to file this Information
Memorandum and the Offer Letter in Form PAS -4 within 30 days of the date of circulation
of the Offer Letter.
2.4 DISCLAIMER IN RESPECT OF JURISDICTION
This Issue is made in India to Investors as specified under the clause titled “Eligible
Investors” of this Information Memorandum, who shall be/have been identified upfront by the
Issuer. This Information Memorandum does not constitute an offer to sell or an invitation to
subscribe to Debentures offered hereby to any person to whom it is not specifically addressed.
Any disputes arising out of this Issue will be subject to the exclusive jurisdiction of the courts
and tribunals at Chennai. This Information Memorandum does not constitute an offer to sell
or an invitation to subscribe to the Debentures herein, in any other jurisdiction to any person
to whom it is unlawful to make an offer or invitation in such jurisdiction.
2.5 DISCLAIMER IN RESPECT OF RATING AGENCIES
Ratings are opinions on credit quality and are not recommendations to sanction, renew,
disburse or recall the concerned bank facilities or to buy, sell or hold any security. The Rating
Agency has based its ratings on information obtained from sources believed by it to be
accurate and reliable. The Rating Agency does not, however, guarantee the accuracy,
adequacy or completeness of any information and is not responsible for any errors or
omissions or for the results obtained from the use of such information. Most entities whose
bank facilities/instruments are rated by the Rating Agency have paid a credit rating fee, based
on the amount and type of bank facilities/instruments.
2.6 ISSUE OF DEBENTURES IN DEMATERIALISED FORM
The Debentures will be issued in dematerialised form. The Issuer has made arrangements
with the Depositories for the issue of the Debentures in dematerialised form. Investors will
have to hold the Debentures in dematerialised form as per the provisions of Depositories Act.
The Issuer shall take necessary steps to credit the Debentures allotted to the beneficiary
account maintained by the Investor with its depositary participant. The Issuer will make the
Allotment to Investors on the Deemed Date of Allotment after verification of the Application
Form, the accompanying documents and on realisation of the application money.
9
SECTION 3: RISK FACTORS
The following are the risks relating to the Company, the Debentures and the market in general
envisaged by the management of the Company. Potential investors should carefully consider
all the risk factors in this Information Memorandum for evaluating the Company and its
business and the Debentures before making any investment decision relating to the
Debentures. The Company believes that the factors described below represent the principal
risks inherent in investing in the Debentures, but does not represent that the statements below
regarding risks of holding the Debentures are exhaustive. The ordering of the risk factors is
intended to facilitate ease of reading and reference and does not in any manner indicate the
importance of one risk factor over another. Investors should also read the detailed information
set out elsewhere in this Information Memorandum and reach their own views prior to
making any investment decision.
3.1 REPAYMENT IS SUBJECT TO THE CREDIT RISK OF THE ISSUER.
Potential investors should be aware that receipt of the principal amount,(i.e. the redemption
amount) and any other amounts that may be due in respect of the Debentures is subject to the
credit risk of the Issuer. Potential investors assume the risk that the Issuer will not be able to
satisfy their obligations under the Debentures. In the event that bankruptcy proceedings or
composition, scheme of arrangement or similar proceedings to avert bankruptcy are instituted
by or against the Issuer, the payment of sums due on the Debentures may not be made or may
be substantially reduced or delayed.
3.2 THE SECONDARY MARKET FOR DEBENTURES MAY BE ILLIQUID.
The Debentures may be very illiquid and no secondary market may develop in respect
thereof. Even if there is a secondary market for the Debentures, it is not likely to provide
significant liquidity. Potential investors may have to hold the Debentures until redemption to
realize any value.
3.3 CREDIT RISK & RATING DOWNGRADE RISK
The Rating Agency has assigned the credit ratings to the Debentures. In the event of
deterioration in the financial health of the Issuer, there is a possibility that the rating agency
may downgrade the rating of the Debentures. In such cases, potential investors may incur
losses on revaluation of their investment or make provisions towards sub-standard/ non-
performing investment as per their usual norms.
3.4 CHANGES IN INTEREST RATES MAY AFFECT THE PRICE OF NCDS.
All securities where a fixed rate of interest is offered, such as this Issue, are subject to price
risk. The price of such securities will vary inversely with changes in prevailing interest rates,
i.e. when interest rates rise, prices of fixed income securities fall and when interest rates drop,
the prices increase. The extent of fall or rise in the prices is a function of the existing coupon,
days to maturity and the increase or decrease in the level of prevailing interest rates. Increased
rates of interest, which frequently accompany inflation and/or a growing economy, are likely
to have a negative effect on the pricing of the Debentures.
3.5 TAX CONSIDERATIONS AND LEGAL CONSIDERATIONS
Special tax considerations and legal considerations may apply to certain types of investors.
Potential investors are urged to consult with their own financial, legal, tax and other advisors
to determine any financial, legal, tax and other implications of this investment.
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3.6 ACCOUNTING CONSIDERATIONS
Special accounting considerations may apply to certain types of taxpayers. Potential investors
are urged to consult with their own accounting advisors to determine implications of this
investment.
3.7 SECURITY MAYBE INSUFFICIENT TO REDEEM THE DEBENTURES
In the event that the Company is unable to meet its payment and other obligations towards
Investors under the terms of the Debentures, the Debenture Trustee may enforce the Security
as per the terms of security documents, and other related documents. The Investors recovery
in relation to the Debentures will be subject to (i) the market value of such secured property,
(ii) finding willing buyers for the Security at a price sufficient to repay the potential investors
amounts outstanding under the Debentures. The value realised from the enforcement of the
Security may be insufficient to redeem the Debentures.
3.8 MATERIAL CHANGES IN REGULATIONS TO WHICH THE ISSUER IS
SUBJECT COULD IMPAIR THE ISSUER’S ABILITY TO MEET PAYMENT
OR OTHER OBLIGATIONS.
The Issuer is subject generally to changes in Indian law, as well as to changes in government
regulations and policies and accounting principles. Any changes in the regulatory framework
could adversely affect the profitability of the Issuer or its future financial performance, by
requiring a restructuring of its activities, increasing costs or otherwise.
3.9 LEGALITY OF PURCHASE
Potential investors of the Debentures will be responsible for the lawfulness of the acquisition
of the Debentures, whether under the laws of the jurisdiction of its incorporation or the
jurisdiction in which it operates or for compliance by that potential investor with any law,
regulation or regulatory policy applicable to it.
3.10 POLITICAL AND ECONOMIC RISK IN INDIA
The Issuer operates only within India and, accordingly, all of its revenues are derived from
the domestic market. As a result, it is highly dependent on prevailing economic conditions in
India and its results of operations are significantly affected by factors influencing the Indian
economy. An uncertain economic situation, in India and globally, could result in a further
slowdown in economic growth, investment and consumption. A slowdown in the rate of
growth in the Indian economy could result in lower demand for credit and other financial
products and services and higher defaults. Any slowdown in the growth or negative growth of
sectors where the Issuer has a relatively higher exposure could adversely impact its
performance. Any such slowdown could adversely affect its business, prospects, results of
operations and financial condition.
3.11 RISKS RELATED TO THE BUSINESS OF THE ISSUER
(a) Majority of the Issuer’s loans are unsecured and the clients of these unsecured
loans are of the high risk category and if the Issuer is unable to control the level of
non-performing loans (“NPAs”) in the future, or if the Issuer’s loan loss reserves
are insufficient to cover future loan losses, the financial condition and results of
operations may be materially and adversely affected.)
A majority of the Issuer’s loans are unsecured and the clients of these unsecured
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loans are of the high risk category. There is uncertainty on the client’s ability to fulfil its loan obligations as MFI clients typically do not have bank accounts or proper income proof verification so it can be difficult to verify all client details and assess the risk. Such non-performing or low credit quality loans can negatively impact our results of operations. The Issuer has various procedures and process controls in place to mitigate the risk. All group lending loans are provided under the Grameen Model and based on the joint liability of the group. As at March 2014, the gross NPA was Rs 0.15 crores on a gross portfolio of Rs. 326.6 crores (including managed / securitized portfolio of Rs. 35.3 crores).
The Issuer cannot assure that it will be able to effectively control and reduce the level
of the NPAs of its Client Loans. The amount of its reported NPAs may increase in the
future as a result of growth of Client Loans, and also due to factors beyond its control,
such as over-extended member credit that it is unaware of. If the Issuer is unable to
manage our NPAs or adequately recover its loans, the results of its operations will be
adversely affected.
The current loan loss reserves of the Issuer may not be adequate to cover an increase
in the amount of NPAs or any future deterioration in the overall credit quality of
Client Loans. As a result, if the quality of its total loan portfolio deteriorates the
Issuer may be required to increase its loan loss reserves, which will adversely affect
its financial condition and results of operations.
The members are poor and, as a result, might be vulnerable if economic conditions
worsen or growth rates decelerate in India, or if there are natural disasters such as
floods and droughts in areas where the Issuer’s members live. Moreover, there is no
precise method for predicting loan and credit losses, and the Issuer cannot assure that
it’s monitoring and risk management procedures will effectively predict such losses
or that loan loss reserves will be sufficient to cover actual losses. If the Issuer are
unable to control or reduce the level of its NPAs or poor credit quality loans, it’s
financial condition and results of its operations could be materially and adversely
affected.
(b) The Issuer’s business operates through a large number of rural and semi urban
branches and is exposed to operational risks including fraud
The Issueris exposed to operational risks, including fraud, petty theft and
embezzlement, as it handle a large amount of cash due to high volume of small
transactions. This could harm its operations and its financial position.
As the Issuer handle a large amount of cash through a high volume of small
transactions taking place in its network, the Issuer is exposed to the risk of fraud or
other misconduct by its employees or outsiders. These risks are further compounded
due to the high level of delegation of power and responsibilities that the Issuer’s
business model requires. Given the high volume of transactions processed by the
Issuer, certain instances of fraud and misconduct may go unnoticed before they are
discovered and successfully rectified. Even when the Issuer discovers such instances
of fraud or theft and pursue them to the full extent of the law or with its insurance
carriers, there can be no assurance that the Issuer will recover any such amounts. In
addition, the Issuer’s dependence upon automated systems to record and process
transactions may further increase the risk that technical system flaws or employee
tampering or manipulation of those systems will result in losses that are difficult to
detect.
The Issuer maintains an internal audit process to ensure the operations team follows
the defined procedures and reports any deviations to the operations staff and
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management team. The Issuer also has a strong MIS system that has a wide range of
data that can be used to monitor financial and operational performance.
To mitigate the above risk, the Issuer maintains an internal audit process to ensure the
operations team follows the defined procedures and reports any deviations to the
operations staff and management team. The Issuer also has a MIS system able to
generate data analysis that can be used to monitor financial and operational
performance.
(c) Loans due within two years account for almost all of the Issuer’s interest income,
and a significant reduction in short term loans may result in a corresponding
decrease in its interest income
All of the loans the Issuer issues are due within approximately two years of
disbursement. The relatively short-term nature of the Issuer’s loans means that the
Issuer’s long-term interest income stream is less certain than if a portion of its loans
were for a longer term. In addition, the Issuer’s customers may not obtain new loans
from the Issuer upon maturity of their existing loans, particularly if competition
increases. The potential instability of the Issuer’s interest income could materially and
adversely affect the Issuer’s results of operations and financial position.
The loans given by the issuer are at fixed interest rate, and the tenor of the underlying
asset has increase from one year to two year which has provided stability to the
portfolio and interest income and has also smoothen operating expense.
(d) The Issuer is exposed to certain political, regulatory and concentration of risks
Due to the nature of its operations, the Issuer is exposed to political, regulatory and
concentration risks. The Issuer believes a mitigant to this is to expand its geographical
reach and is consequently expanding operations in six states, namely, Tamil Nadu,
Maharashtra, Gujarat, Odisha, Karnataka and Rajasthan. If it is not effectively able to
manage such operations and expansion, it may lose money invested in such
expansion, which could adversely affect its business and results of operations.
Large scale attrition, especially at the senior management level, can make it difficult
for the Issuer to manage its business
If the Issuer is not able to attract, motivate, integrate or retain qualified personnel at
levels of experience that are necessary to maintain the Issuer’s quality and reputation,
it will be difficult for the Issuer to manage its business and growth. The Issuer
depends on the services of its executive officers and key employees for its continued
operations and growth. In particular, the Issuer’s senior management has significant
experience in the microfinance, banking and financial services industries. The loss of
any of the Issuer’s executive officers, key employees or senior managers could
negatively affect its ability to execute its business strategy, including its ability to
manage its rapid growth. The Issuer’s business is also dependent on its team of
personnel who directly manage its relationships with its members. The Issuer’s
business and profits would suffer adversely if a substantial number of such personnel
leftthe Issuer or became ineffective in servicing its members over a period of time.
The Issuer’s future success will depend in large part on its ability to identify, attract
and retain highly skilled managerial and other personnel. Competition for individuals
with such specialized knowledge and experience is intense in this industry, and the
Issuer may be unable to attract, motivate, integrate or retain qualified personnel at
levels of experience that are necessary to maintain its quality and reputation or to
sustain or expand its operations. The loss of the services of such personnel or the
inability to identify, attract and retain qualified personnel in the future would make it
difficult for us to manage the Issuer’s business and growth and to meet key
objectives.
13
(e) The Issuer’s business and results of operations would be adversely affected by
strikes, work stoppages or increased wage demands by employees
The employees are not currently unionized. However, there can be no assurance that
they will not unionize in the future. If the employees unionize, it may become
difficult to maintain flexible labour policies, and could result in high labour costs,
which would adversely affect the Issuer’s business and results of operations.
(f) The Issuer’s insurance coverage may not adequately protect it against losses.
Successful claims that exceed its insurance coverage could harm the Issuer’s
results of operations and diminish its financial position
The Issuer maintains insurance coverage of the type and in the amounts that it
believes are commensurate with its operations and other general liability insurances.
The Issuer’s insurance policies, however, may not provide adequate coverage in
certain circumstances and may be subject to certain deductibles, exclusions and limits
on coverage.
In addition, there are various types of risks and losses for which the Issuer does not
maintain insurance, such as losses due to business interruption and natural disasters,
because they are either uninsurable or because insurance is not available to the Issuer
on acceptable terms. A successful assertion of one or more large claims against the
Issuer that exceeds it’s available insurance coverage or results in changes in its
insurance policies, including premium increases or the imposition of a larger
deductible or co-insurance requirement, could adversely affect the Issuer’s business,
financial condition and results of operations.
(g) The Issuer requires certain statutory and regulatory approvals for conducting its
business and the failure to obtain or retain them in a timely manner, or at all, may
adversely affect operations
NBFCs in India are subject to strict regulation and supervision by the RBI. Pursuant
to guidelines issued by the RBI (circular dated August 3), 2012 and (NBFC-MFI
Directions) the Issuer is required to maintain it’s status as a NBFC- MFI in order to
be eligible for categorization as priority sector advance for bank loans. See ‘risk
factor titled ―Current Microfinance Industry Challenges’ for details. The Issuer
requires certain approvals, licenses, registrations and permissions for operating its
business, including registration with the RBI as a NBFC-MFI. Further, such
approvals, licenses, registrations and permissions must be maintained/renewed over
time, applicable requirements may change and the Issuer may not be aware of or
comply with all requirements all of the time. Additionally, the Issuer may need
additional approvals from regulators to introduce new insurance and other fee based
products to its members. In particular, the Issueris required to obtain a certificate of
registration for carrying on business as a NBFC-MFI that is subject to numerous
conditions. In addition, its branches are required to be registered under the relevant
shops and establishments laws of the states in which they are located. The shops and
establishment laws regulate various employment conditions, including working
hours, holidays and leave and overtime compensation. If the Issuer fails to obtain or
retain any of these approvals or licenses, or renewals thereof, in a timely manner, or
at all, its business may be adversely affected. If the Issuer fails to comply, or a
regulator claims that it has not complied, with any of these conditions, the Issuer’s
certificate of registration may be suspended or cancelled and it shall not be able to
carry on such activities. If the Issuer fails to comply with the NBFC-MFI Directions
and fail to maintain the status of NBFC-MFI, it will not be eligible for priority sector
loans from the Indian banking sector and may also attract penal provisions under the
RBI Act, 1934 for non-compliance.
15
SECTION 5: REGULATORY DISCLOSURES
The Information Memorandum is prepared in accordance with the provisions of SEBI Debt
Listing Regulations and in this section, the Issuer has set out the details required as per
Schedule I of the SEBI Debt Listing Regulations
5.1 Documents Submitted to the Exchanges
The following documents have been / shall be submitted to the BSE:
(a) Memorandum and Articles of Association of the Issuer and necessary resolution(s)
for the allotment of the Debentures;
(b) Copy of last 3 (Three) years audited Annual Reports;
(c) Statement containing particulars of, dates of, and parties to all material contracts and
agreements;
(d) Copy of the resolution passed by the shareholders of the Company at the Extra-
Ordinary General Meeting held on April 10,2014, authorizing the issue/offer of non-
convertible debentures by the Company;
(e) Copy of the Board / Committee Resolution authorizing the borrowing and list of
authorized signatories;
(f) Certified true copy of the resolution passed by the Company at the Extra Ordinary
General Meeting held on November 8,2013 authorising the Company to borrow, upon
such terms as the Board may think fit, upto an aggregate limit of INR
5,00,00,00,000/- (Rupees Five Hundred Crores Only);
(g) An undertaking from the Issuer stating that the necessary documents for the creation
of the charge, including the Debenture Trust Deed would be executed within the time
frame prescribed in the relevant regulations/acts/rules etc and the same would be
uploaded on the website of the BSE, where the debt securities have been listed,
within 5 (five) working days of execution of the same;
(h) Where applicable, an undertaking that permission / consent from the prior creditor for
a second or pari passu charge being created, in favor of the trustees to the proposed
issue has been obtained; and
(i) Any other particulars or documents that the recognized stock exchange may call for
as it deems fit.
5.2 Documents Submitted to Debenture Trustee
The following documents have been / shall be submitted to the Debenture Trustee:
(a) Memorandum and Articles of Association of the Issuer and necessary resolution(s)
for the allotment of the Debentures;
(b) Copy of last 3 (Three) years audited Annual Reports;
(c) Statement containing particulars of, dates of, and parties to all material contracts and
agreements;
(d) Latest audited / limited review half yearly consolidated (wherever available) and
standalone financial information (profit & loss statement, balance sheet and cash flow
statement) and auditor qualifications, if any.
(e) An undertaking to the effect that the Issuer would, until the redemption of the debt
securities, submit the details mentioned in point (d) above to the Debenture Trustee
within the timelines as mentioned in Simplified Listing Agreement issued by SEBI
vide circular No.SEBI/IMD/BOND/1/2009/11/05 dated May 11, 2009 as amended
from time to time, for furnishing / publishing its half yearly/ annual result. Further,
the Issuer shall within 180 (One Hundred and Eighty) calendar days from the end of
the financial year, submit a copy of the latest annual report to the Debenture Trustee
and the Trustee shall be obliged to share the details submitted under this clause with
16
all ‘Qualified Institutional Buyers’ and other existing Debenture-Holders within 2
(two)Business Days of their specific request.
5.3 Name and Address of Registered Office of the Issuer
Name: Suryoday Micro Finance Private Limited
Registered Office of Issuer: No. 6 CS Towers, 3rd Floor, 34/76 Bazullah Road,
T Nagar, Chennai 600 017
Corporate Office of Issuer: Suryoday Micro Finance Private Limited
1101, Sharda Terraces, Plot # 65, Sector- 11, CBD
Belapur, Navi Mumbai 400 614
Compliance Officer of Issuer: Ms. Priya Vishwanathan
1101, Sharda Terraces, Plot # 65, Sector- 11, CBD
Belapur, Navi Mumbai 400 614
CFO of Issuer: Mr. Sanjay Tiwari
1101, Sharda Terraces, Plot # 65, Sector- 11, CBD
Belapur, Navi Mumbai 400 614
Registration Number: 069807
Corporate Identification Number: U65923TN2008PTC069807
Phone No.: +91 22 40435800
Contact Person: Sanjay Tiwari
Email: [email protected]
Website of Issuer: www.suryodaymf.com
Arranger to the Issue N.A.
Auditors of the Issuer: S R Batliboi & Associates
Address: 6th & 7th Floor, “A” Block, Tidel Park, No. 4,
Rajiv Gandhi Salai, Taramani, Chennai 600 113
Trustee to the Issue: IDBI Trusteeship Services Limited
Address: Asian Building, Ground Floor,
17R Kamani Marg, Ballard Estate,
Mumbai - 400001.
Registrar to the Issue: Sharepro Services (India) Private Limited
13 AB Samhita Warehousing Complex, 2nd Floor,
Sakinaka, Telephone Exchange Lane,
Off Andheri-Kurla Road, Sakinaka, Andheri (East)
Mumbai – 400 072
Credit Rating Agency of the Issue: ICRA Limited
1105, Kailash Building, 11th Floor, 26,
Kasturba Gandhi Marg,
New Delhi – 110001
A brief summary of business / activities of the Issuer and its line of business
(a) Overview
17
Suryoday Microfinance Private Limited (Suryoday) was set up in October 2008 as an
NBFC with the concept of providing loans to women in urban and semi-urban areas under
the Grameen Bank Joint Lending Model. It has some presence in rural areas as well where
reasonable infrastructure facilities are available. Suryoday commenced full-fledged
operations from May 2009. The company gives only group loans under the Grameen Bank
Joint Liability Group (JLG) model.
Suryoday is promoted by three persons with vast experience in Banking and Financial
Services. It has the distinction of being provided with seed funding by Aavishkaar
Goodwell - a leading Microfinance Fund – even before start of operations. Suryoday
received its second round of equity funding of Rs 17.5 crore from Aavishkaar Goodwell
and Lok Capital in August 2010.
Industry Overview
Indian microfinance now has 70 million borrower accounts, by-far the largest in any country
across the world. Over the last year Indian microfinance institutions that are organised as
NBFC-MFIs and operating in remote rural areas of India have emerged as effective financial
intermediaries offering an alternative to the inaccessible formal financial institutions. Most of
them who received funding and growth capital from banks, have demonstrated commendable
scale, sustainability and impact.
Many NBFC-MFIs have received a good quantum of capital in FY 2013 in the form of both
debt and equity. Almost all NBFC-MFIs (less than INR 1000 crores of assets under
management) have been consistent in their growth, maintaining excellent portfolio quality in
FY 2013.
(b) Corporate Structure
i. Vision and Mission
The company’s vision is ‘To be a world-class financial services organisation that provides
products and value-added services to the economically challenged, helping them generate
higher incomes, build an asset base and achieve a sustainably better standard of living.’
Suryoday’s mission is to cater to one million households by the year 2015.
ii. Current Corporate Status
The Issuer was incorporated as a private limited company on November 10,2008 and is
currently registered as a an NBFC-MFI with the RBI. The Issuer derives the following
benefits of being registered as an NBFC:
• Access to Funds: Commercial lenders have greater comfort lending to a regulated
NBFC with transparent ownership. As an Issuer, Suryoday can raise equity and offer
commercial returns.
• Diverse Funding Sources: An NBFC can access commercial investors and
international capital markets, diversifying away from donors or members as equity
funders.
• Commercialisation: Classifying Suryoday as an NBFC increases its commercial
credibility and integrates it and its clients into the formal financial sector which
ultimately increases its outreach potential.
18
• Mainstream Resources: As a for-profit commercial NBFC, Suryoday will be more
likely to attract mainstream capital resources which Societies or Trusts would find
difficult to attract.
• Regulatory Coverage: As Suryoday grows in size, operating as an NBFC within the
regulatory framework mitigates risks from political and regulatory intervention.
• Stakeholder Involvement: As an NBFC, Suryoday can bring a variety of
stakeholders to the table, including clients, management, employees and investors.
iii. Brief Profile of the Board of Directors
Name Background
Mr. R. Baskar
Babu
Promoter Director; an Engineering and Management Graduate with 19+
years of experience in Financial Services, he has earlier worked with
Cholamandalam, HDFC Bank and GE Commercial Finance in various
leadership positions. His dream has been to create a World Class
Organisation which will positively impact a sizeable percentage of
population.
Mr. John Arun
Kumar Diaz
Nominee Director; He holds a Master’s Degree in Management from
XLRI. He is currently an entrepreneur consultant and also a trustee and
member of the Investment Committee of Aavishkaar Goodwell. He was
earlier the head of Reuters Consulting for South Asia and had a
distinguished career spanning 28 years at Standard Chartered Bank in
various positions and international locations.
Mr. Venkatesh
Natrajan
Nominee Director; has over fourteen years of experience in product
development and venture capital at Intel. He has led several equity deals
in design software, computing and wireless technology sectors and acted
as operational consultant to various MFIs in India. He is an MBA from
Cornell University and has an Engineering Degree from Annamalai
University.
Ms. Sheela
Bhide
Independent Director; holds a Doctorate in International Trade from the
Institute of International Studies, Geneva; a Masters Degree in Economics
from George Mason University and a Masters in Public Policy from John
F. Kennedy School of Government, Harvard University. She joined the
Indian Administrative Service in 1973 and in the course of her 36 year
long career with the GoI, has held various posts such as Chairman and
Managing Director, ITPO; Additional Secretary and Financial Advisor,
Ministry of External Affairs; Additional Secretary and Financial Advisor,
Ministry of Defence and Joint Secretary, Ministry of Corporate Affairs.
Mr.Mathew
Joseph
Nominee Director; a Chartered Accountant with over 25 years of
experience in Banking and Financial Services, he is currently a member of
the Executive Management of HDFC Ltd.
Mr. R.
Ramachandran
Additional Non-Executive Director; has held many senior management
responsibilities both in India and Overseas. He was the Chairman & the
Managing Director of Andhra Bank from September 2010 to December
2011. He was also the Executive Director of Syndicate Bank from
December 2008 to August 2010. He has expertise in handling of Global
Commodity Trade Finance and International Project Finance and has
incisive knowledge of Regulatory Framework and Supervision, through
interaction with Monetary Authority of Singapore while functioning as
CEO of Singapore Branch. He was responsible for getting Regulatory
Rating Upgrade for the Bank in Singapore from MAS. He is a Non
19
Executive Director of SIDBI and also an Independent Director in Gati -
Kintentsu Express Pvt Ltd and a director of Meliora Asset Reconstruction
Company Ltd.
iv. Brief Profile of the Senior Management
Name & Function Background
Mr. R. Baskar Babu An Engineering and Management Graduate with 19+ years of
experience in Financial Services, he has earlier worked with
Cholamandalam, HDFC Bank and GE Commercial Finance in various
leadership positions.
Chief Executive
Officer
Mr. Narayan Rao An MBA from Symbiosis with 22+ years of work experience spanning
Sales, Operations and IT including 6+ years in USA, he has worked in
organizations like Motorola-Pagepoint, Intelligroup and PINC. As
Senior Director at Intelligroup, he was responsible for Account
Management, Delivery, Pre-Sales and Solutioning and played a
pivotal role in growing the company's presence in USA.
Head – Information
Technology, Human
Resources and
General
Administration
Mr. Vikrant
Bhagwat
An Executive MBA with 17+ years of work experience in Banking
and Financial Services, he has worked in organizations like
Cholamandalam, HDFC Bank, DCB Bank and Lok Capital Head – Business
v. Business Segments
Suryoday is operational primarily in the urban and semi urban areas with low presence in
rural areas. Nevertheless, the lending policy and models followed while catering to rural
and urban populations are same. Suryoday‘s microcredit program follows the Joint
Liability Group (JLG) model of lending and focuses only on poor women. The borrowers
are organized in groups of five; 3-4 such groups form a center. The loans are given only
for income generation activities. Before clients are admitted to the microfinance program,
an internal auditor from Suryoday visits the house of each borrower to check the borrower
and her household details. The clients have weekly/ fortnightly/ monthly meetings
(depending on the frequency of repayment of the loan that they have taken) when they
pay back their loans.
Product Details
Suryoday provides only Group Loan products to women in urban/ semi-urban and rural
areas for income generation activities. The company earlier had only a weekly repaying
product, which it has now converted to monthly repayment product in Maharashtra and
Gujarat and to a fortnightly repayment product in Tamil Nadu and Orissa.
Products
Loan
Amount
Annual
Int.
Rate
Upfront
Proc. Fee
Security
deposits Tenure
Repaymen
t
Frequency
Insurance
Premium Description
C-1-A 16500/- 26.00%
1.00% +
ST Nil 24 Monthly 340
Income Generation
Monthly (1st
Cycle)
C-2-A 22000/- 26.00%
1.00% +
ST Nil 24 Monthly 425
Income Generation
Monthly (2nd
Cycle)
20
C-3-A 26000/- 26.00%
1.00% +
ST Nil 24 Monthly 425
Income Generation
Monthly (3rd
Cycle Onwards)
C-1-A – F 16500/- 26.00%
1.00% +
ST Nil 53 Fortnightly 340
Income Generation
Fortnightly (1st
Cycle)
C-2-A – F 22000/- 26.00%
1.00% +
ST Nil 53 Fortnightly 425
Income Generation
Fortnightly (2nd
Cycle)
C-3-A – F 26000/- 26.00%
1.00% +
ST Nil 53 Fortnightly 425
Income Generation
Fortnightly (3rd
Cycle Onwards)
vi. Lending Methodology The company follows the Grameen model of microfinance with some modifications
to suit urban microfinance and has well-established field operations.
- A centre can have anywhere between 15/20/25/30 members of similar socio-
economic status.
- It uses Social Acceptance Index to identify and target its client. The clients are
scored across 6 parameters and allotted a score which categorizes them into
Poor/Marginally Poor/Very Poor/Distressed Poor.
- The relationship officer encourages prospective clients to for a centre of
15/20/25/30 members. The group under goes at least 3 days of Continuous Group
training (CGT) in the objectives, rules & regulation, systems and processes of
Suryoday. The Branch Manager conducts a Group Recognition Test (GRT) of
the group after which the loan is approved (in case the group passes the GRT).
Each branch consists of 1 Branch Manager (BM), 1 Audit Officer (AO) and 5
Relationship officers (RO). The Branch Manager heads the branch while audit being
the separate function from Sales/Business; Audit Officer reports to Area Audit
Manager. The Branch reports to its nearest Area Office. Area Office will have 5
Branches under its command area. All activities like capturing and storing
customer/group/centre information and legal documents will be at central office.
- The Company operates and renders its services to customers who reside within a 10
to 15 km radius of a branch. Branches are headed by Branch Manager (BM) who
supervises 5 Relationship Officers (RO) under him. RO’s are the front line employees
and deal directly with clients; they identify, acquire and retain customers to carry on
the business. They collect all the required customer information like demographic /
social / business and loan related information. The Audit Officer will complete the
field verification process off every single member, verify the KYC documents and
validate the approval. Further the BM scrutinizes the application form understands
the purpose of loan and upon being satisfied will approve the loan in the application
form and courier the center file to centralized operations to proceed with the
disbursement activities. The branch reports to its nearest Area Office/Regional Office
and finally culminates at Head Office.
Sourcing Process:
21
Collections and Recovery
Loan repayments are to be made in monthly or fortnightly installments. The
installment of every member is reflected in the Due Sheets and Passbook. The due
sheet is sent by the operations team at central office at least five days in advance. The
branches should maintain due sheets respective box files. The due sheet consists of
customer’s name, centre name, RO name, loan amount, POS, EMI, overdue if any,
and attendance. The Due Sheet is sent in 1+1 format and the one copy should be
pinned with centre receipt for payment collection and filed in the centre file
maintained at the centre. The Monthly product is modeled in such manner that the RO
will not have more than 7 meetings per day and maximum of 10 for other products.
This will help the ROs to complete all meetings in the desired manner, maintain
quality of the meeting and reach office by 2:00PM to deposit the collection money in
the bank. Financial discipline is the core of this business and deviation in not
depositing cash will reflect as poor performance and may affect the employee ratings
and the incentives.
Risk Management
Suryoday’s audit department is an independent team with Audit Officer at each
branch (70 Audit Officers for 70 branches as of now) and 10 Area Audit Managers.
Audit Officer is responsible for doing the borrower verification and also does the
surprise center visits (Post disbursement i.e. Collection Meetings) of 5 random
selected centres every week. The audit officers report to Audit Area Manager. The
Audit Area Manager visits branches on a monthly basis. The Audit report for each
branch is generated on a monthly basis and presented to the audit committee. The
audit committee comprises of 1 Independent Director, 3 nominee director
Apart from Business Audit Suryoday has a separate team of Process Audit. This team
reports directly to CEO. Main function of this team is to check and ascertain whether
branches are following all the laid down processes as per company policy. Process
audit person gives surprise visit to branch without prior information. All processes are
22
given certain scores and based on the final score, branches’ performance are
categorized into Satisfactory, Adequate and Unsatisfactory.
vii. Organisational Structure and Field Hierarchy
viii. Technology and MIS
Since inception, Suryoday has been using Atyati’s Ganaseva as its Loan Management
System and Tally for Accounting. In preparation for growth and to ensure a scalable
platform, Suryoday has planned migration in April 2014 to Craft Silicon’s BR.Net
with integrated accounting module. Suryoday’s technology roadmap for loan
management includes mobile handheld devices to capture customer data and
transactions as also biometrics and receipt printing to enhance process controls and
transparency.
Suryoday has also implemented web-based HRMS software from Emportant with
employee self-service and payroll processing capabilities and an E-Learning Solution
from Training Central for employee induction and process training.
23
Suryoday also has plans to implement various workflow solutions to further enhance
workforce productivity/efficiency as it moves towards a paperless environment.
ix. Internal Audit
Suryoday‘s audit department is an independent team with Audit Officer at each
branch (70 Audit Officers for 70 branches as of now) and 10 Area Audit Managers.
Audit Officer is responsible for doing the borrower verification and also does the
surprise centre visits (Post disbursement i.e. Collection Meetings) of 5 random
selected centres every week. The audit officers report to Audit Area Manager. The
Audit Area Manager visits branches on a monthly basis. The Audit report for each
branch is generated on a monthly basis and presented to the audit committee. The
audit committee comprises of 1 Independent Director, 3 nominee director.
x. Shareholders
Please refer to ‘Shareholding Pattern as of June 30, 2014’ under Section 6.6.
xi. Board of Directors
The Company has a well-balanced, professional Board with vast experience in retail
lending, corporate finance and administration. For further details, please refer to ‘Names
and Addresses of the Directors of the Issuer’ under Section 6.7.
xii. Company Credit Rating
BBB(Stable) by ICRA on June 6, 2014. The rating is based on high credibility, good
governance, established systems & processes and strong financial performance of the
organisation.
xiii. Investment Thesis
Suryoday presents an attractive investment opportunity driven by multiple reaffirming
factors such as:
• Emerging India MFI: While the microfinance sector expanded rapidly in the
highly competitive southern regions of India, Suryoday is positioning itself to be
a leading MFI in many parts of India where there is significantly lesser access to
formal financial institutions like Odisha and Rajasthan.
• High Credibility: Suryoday, as mentioned earlier, is the only MFI in India to
have raised external funding even before having established operations.
• Highly Professional and Experienced Management Team: Suryoday is led by
a Board of Directors and senior management team with decades of experience in
financial services. The five-member Board is comprised of one independent
Directors, three nominee directors, and one promoter director. The Board
Members are proactive and provide their strategic inputs through various board
committees. The senior management team is actively involved in day-to-day
operations and decision making.
• Growth Supported by Strong Equity Funding: Suryoday is supported by
strong promoters, private equity and institutional investors that include Aavishkar
Goodwell, Lok Capital and HDFC Holdings Limited. Promoters and Promoter
Associates hold 15.47% of equity stake. Individual shareholders have 20.03% of
equity with them.
• Geographical risk diversification: Suryoday’s portfolio is diversified across six
different states, namely Maharashtra, Tamil Nadu, Orissa, Rajasthan, Gujarat and
Karnataka.
• Robust Financial Alliances: Suryoday has established financial alliances with
various public sector banks, private sector banks and financial institutions. At
24
Present there are over 16 different lenders (Banks/FIs) on the books of Suryoday.
There has been no delay/default in repayment to any lender since inception.
• Focus on Portfolio Quality: The NPA level of the Company for the
microfinance Joint Liability Group (JLG) portfolio is low at 0.03% as on March
31, 2014. The collection efficiency on all securitisation transaction pools have
been close to 100% .
(c) Key Operational and Financial Parameters for the last 3 audited years Rs. Lakhs
Audited Audited Audited Audited
31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14
Net worth 2778.18 2868.59 6411.68 8749.15
Total Debt
- Non current maturities of long term
Borrowings
658.09 1073.71 4706.39 10908.99
- short term borrowings 753.27 250.74 0.02 207.93
- Current maturities of long term
Borrowings
1580.99 2187.21 8221.06 18720.51
Net Fixed Assets 79.83 67.98 135.63 225.82
Non-Current Assets/ Liabilities 661.56 1096.93 4757.73 10954.74
Cash and Cash equivalents 784.69 2142.6 5674.57 7538.98
Current investments - - 214.00 88.35
Current Assets 5879.21 6249.33 19431.41 37908.75
Current liabilities 2519.28 3521.69 9158.14 20262.43
Assets Under Management 4866.79 9228.43 15237.29 32662.57
Off balance sheet assets 42.29 5474.83 2432.10 3536.08
Interest Income 1546.29 1647.16 2568.82 6160.42
Interest Expense 452.92 513.17 944.77 2840.35
Provisioning & write Offs 143.77 133.19 100.40 162.25
PAT 104.43 42.83 195.45 882.32
Gross NPA (%) 2.43% 0.13% 0.02% 0.03%
Net NPA (%) 2.37% 0.01% 0.01% 0.01%
Tier I Capital Adequacy Ratio (%) 51.95% 45.65% 40.61% 26.72%
Tier II Capital Adequacy Ratio (%) 0.95% 0.67% 0.82% 0.92%
Gross Debt:Equity Ratio of the Company:
Before the issue of debt securities 2.78
After the issue of debt securities 3.07
Calculations
As on_30th
June 2014 debt-to-equity ratio is calculated as follows:-
Debt – ( In INR Crore) 327.5
Equity – ( In INR Crore) 117.9
Debt/Equity 2.78
Subsequent to the issue, debt-to-equity ratio shall be calculated as follows:-
Debt - ( In INR Crore) 362.5
Equity - ( In INR Crore) 117.9
Debt/Equity 3.07
25
(d) Project cost and means of financing, in case of funding new projects: N.A.
5.4 Brief history of Issuer since its incorporation giving details of its following
activities:
(a) Details of Share Capital as on last quarter end i.e. June 30, 2014:
No. of
Shares
Share Capital
Face Value Face Value
(Rs.) Rs in Actuals
AUTHORISED CAPITAL 3,50,00,000 10 35,00,00,000
ISSUED, SUBSCRIBED
AND PAID-UP CAPITAL 3,28,21,602 10 32,82,16,020
(b) Changes in its capital structure as on last quarter end i.e. June 30, 2014, for the
last five years:
Date of Change Authorised Capital Particulars
(AGM/EGM) (in Rs.)
31-Mar-09 5,00,00,000
30-Jun-09 7,00,00,000 Added 20,00,000 Shares on 27-Apr-09
30-Sep-09 7,00,00,000
31-Dec-09 7,00,00,000
31-Mar-10 7,00,00,000
30-Jun-10 20,00,00,000 Added 1,30,00,000 Shares on 10-June-10
30-Sep-10 20,00,00,000
31-Dec-10 20,00,00,000
31-Mar-11 20,00,00,000
30-Jun-11 20,00,00,000
30-Sep-11 20,00,00,000
31-Dec-11 20,00,00,000
31-Mar-12 20,00,00,000
30-Jun-12 20,00,00,000
30-Sep-12 20,00,00,000
31-Dec-12 35,00,00,000 Added 1,50,00,000 Shares on 17-Dec-12
31-Mar-13 35,00,00,000
30-Jun-13 35,00,00,000
30-Sep-13 35,00,00,000
31-Dec-13 35,00,00,000
31-Mar-14 35,00,00,000
30-Jun-14 35,00,00,000
(c) Equity Share Capital History of the Company as on last quarter end i.e. June
30, 2014, for the last five years:
26
Date of
Allotment
No
of Equity
Shares
Face
Value
(Rs)
Issue
Price
(Rs)
Considerat
ion (Cash,
other than
cash, etc)
Nature
of
Allotm
ent
Cumulative Remark
s
No. of
Equity
Shares
Equity
Share Capital
(Rs)
Equity
Share
Premium
(in Rs)
26-12-2008 10,30,000 10 10 Cash Private
placem
ent
10,30,000 1,03,00,000 0
29-09-2009 5,00,000 10 10 Cash Private
placem
ent
15,30,000 1,53,00,000 0
26-12-2008 10,96,000 10 10 Cash Private
placem
ent
26,26,000 2,62,60,000 0
23-01-2009 2,00,000 10 10 Cash Private
placem
ent
28,26,000 2,82,60,000 0
23-03-2009 60,000 10 10 Cash Private
placem
ent
28,86,000 2,88,60,000 0
30-03-2009 1,20,000 10 10 Cash Private
placem
ent
30,06,000 3,00,60,000 0
08-05-2009 25,00,000 10 15 Cash Private
placem
ent
55,06,000 5,50,60,000 1,25,00,000
21-10-2009 5,00,000 10 15 Cash Private
placem
ent
60,06,000 6,00,60,000 1,50,00,000
19-07-2010 7,40,000 10 10 Cash Private
placem
ent
67,46,000 6,74,60,000 1,50,00,000
19-07-2010 3,00,000 10 10 Cash Private
placem
ent
70,46,000 7,04,60,000 1,50,00,000
27
19-07-2010 10,00,000 10 15 Cash Private
placem
ent
80,46,000 8,04,60,000 2,00,00,000
31-08-2010 50,00,000 10 35 Cash Private
placem
ent
1,30,46,000 13,00,46,000 14,50,00,000
02-02-2012 3,80,000 10 10 Cash Private
placem
ent
1,34,26,000 13,42,60,000 14,50,00,000
07-06-2012 5,17,857 10 67.59 Cash Private
placem
ent
1,39,43,857 13,94,38,570 17,48,23,385
13-08-2012 1,85,000 10 10 Cash Private
placem
ent
1,41,28,857 14,12,88,570 17,48,23,385
28-09-2012 28,95,000 10 10 Cash Private
placem
ent
1,70,23,857 17,02,38,570 17,48,23,385
29-09-2012 16,57,290 10 42.66 Cash Private
placem
ent
1,86,81,147 18,68,11,470 22,89,50,476
19-01-2013 46,88,232 10 42.66 Cash Private
placem
ent
2,33,69,379 23,36,93,790 38,20,68,133
12-09-2013 22,22,223 10 45 Cash Private
placem
ent
2,55,91,602 25,59,16,020 45,98,45,939
25-10-2013 11,11,111 10 45 Cash Private
placem
ent
2,67,02,713 26,70,27,130 49,87,34,824
12-05-2014 27,55,556 10 45 Cash Private
placem
ent
2,94,58,269 29,45,82,690 59,51,79,284
28
16-06-2014 33,33,333 10 45 Cash Private
placem
ent
3,27,91,602 32,79,16,020 71,18,45,939
16-06-2014 30,000 10 10 Cash Private
placem
ent
3,28,21,602 32,82,16,020 71,18,45,939
(d) Details of any Acquisition or Amalgamation in the last 1 (one) year: There has been no acquisition or amalgamation in the last 1 (one) year.
(e) Details of any Reorganization or Reconstruction in the last 1 (one) year:
There has been no reorganization or reconstruction in the last 1 (one) year.
5.5 Details of the shareholding of the Company as on the latest quarter end, i.e. June
30, 2014:
(a) Shareholding pattern of the Company as on last quarter end, i.e. June 30, 2014
S.
No
.
Particulars (Name of the shareholders)
Total no of
equity
shares
No of
shares in
demat form
Total
Shareholding
as a % of
total no of
equity shares
1 R BaskarBabu 14,76,435 NIL 4.50%
2 Promoters's Associates 25,24,325 NIL 7.69%
3 Domestic Investors 56,92,464 NIL 17.34%
4 Aavishkar Venture Management Services Pvt. Ltd. 7,527 NIL 0.02%
5
Aavishkaar Goodwell India Microfinance
Development Company Ltd 61,42,857 NIL 18.72%
6
Aavishkaar Goodwell India Microfinance
Development Company II Ltd. 57,19,072 NIL 17.42%
7 LOK Capital LLC 24,90,850 NIL 7.59%
8 LOK Capital II LLC 37,77,449 NIL 11.51%
9 HDFC Holdings Limited 9,54,055 NIL 2.91%
10 HDFC Standard Life Insurance Company Ltd 7,03,235 NIL 2.14%
11 International Finance Corp (IFC) 33,33,333 NIL 10.16%
Notes: Details of shares pledged or encumbered by the promoters (if any):N.A.
(b) List of top 10 holders of equity shares of the Company as on the latest quarter
end, i.e. June 30, 2014
S. No.
Name of the Shareholders
Total no. of equity shares
No. of shares in demat form
Total shareholding as a % of total no of equity shares
1 Aavishkaar Goodwell India Microfinance Development Company Ltd - AG I 61,42,857 Nil 18.72%
29
2 Aavishkaar Goodwell India Microfinance Development Company Ltd - AG II 57,19,072
Nil
17.42%
3 P. Surendra Pai 46,44,575 Nil 14.15%
4 Lok Capital LLC – Lok II 37,77,449 Nil 11.51%
5 International Finance Corporation (IFC) 33,33,333 Nil 10.16%
6 Promoters Associates 25,24,325 Nil 7.69%
7 LOK Capital LLC 24,90,850 Nil 7.59%
8 R. Baskar Babu 14,76,435 Nil 4.50%
9 HDFC Holdings Limited – HDFC I 9,54,055 Nil 2.91%
10 P. S. Jagdish 8,25,666 Nil 2.52%
5.6 Following details regarding the directors of the Company:
(a) Details of current directors of the Company:
This table sets out the details regarding the Company’s Board of Directors as on date of the
Information Memorandum:
S.
No
.
Name of Director,
Designation, DIN Age
Director of
the
Company
since (Date
of
appointment
) Address Details of Other Directorship
1
Mr. R. Baskar Babu,
Executive Director,
(DIN: 02303132) 44 10-Nov-08
Flat # 101, Avalon
Raheja, Acropolis-1,
Deonar(E), Mumbai-
400 088.
• Trust Housing Finance Company
Pvt. Ltd.
• Indian Association for Saving and
Credit
2
Mr. John Arun Kumar
Diaz, Nominee Director,
(DIN: 00493304) 62 09-Jul-09
Lakshmi Narayan, 84
Saahil 14, Altamount
road, Mumbai-400
026.
• Lynx HealthplusServices Pvt Ltd
• Synergy Relationship Management
Services Pvt Ptd
• Aavishkaar Venture Trustee Pvt Ltd
• Vortex Engineering Pvt Ltd
• INI Farms Pvt Ltd
• Jeevanti Healthcare Pvt Ltd
• Synergy Nexgen Products LLP
3
Mr. Venkatesh Natrajan,
Nominee Director,
(DIN: 02453219) 45 11-Oct-10
Y/4/7B, A.R. Colony,
Vasantha Nagar,
Madurai, Tamil
Nadu, India 625003
• Ujjivan Financial Services Pvt Ltd
• Asirvad Microfinance Pvt Ltd
• Lok Advisory Services Pvt Ltd
• Ruralshores Business Services Pvt
Ltd
• Everest Edusys and Solutions Pvt
Ltd
• MAS Financials
4
Dr. Sheela Bhide,
Independent Director
(DIN: 01843547) 65 30-Aug-10
B-I/8, Vasant
Vihar,New Delhi –
110057 INDIA
• L&T Metro Rail Ltd
• Gati-Kintetsu Express Pvt Ltd
• Rashtriya Ispat Nigam Ltd
30
5
Mr. Mathew Joseph,
Nominee Director,
(DIN: 01033802) 52 26-Feb-13
6-B, 6th floor,
Rosememre
Apartments,18,
Harrington Road,
Chetpet,Chennai-
600031, Tamil Nadu
• HDFC Sales Pvt Ltd
• Ozone Product Pvt Ltd
• Magnum Foundation Pvt Ltd
• Tamil Nadu Urban Infrastructure Co.
Ltd
• Vayana Pvt Ltd
6
Mr. R. Ramachandran,
Additional Non-
Executive Director,
(DIN: 01953653 ) 62 07-Jun-14
Old No. 3A, New No.
5, Jeevarathnam
Nagar, 2nd Street,
Adyar,
Chennai- 600020,
Tamil Nadu
• Meliora Asset Reconstruction
Company Ltd.
• Gati-Kintetsu Express Pvt Ltd
• Small Industries Development Bank
of India
*Company to disclose name of the current directors who are appearing in the RBI defaulter
list and/or ECGC default list, if any: Nil
Details of change in directors since last three years:
Name, Designation and
DIN
Date of
Appointment/
Resignation
Director of the
company since (in
case of resignation)
Remarks
Raghunathan Sankaran,
Independent Director,
(DIN: 00517220) 14-01-2009 20-12-2008
Ceased to be director
on 14-1-2009
Ganesh Rao,
Executive Director,
(DIN: 02302989) 31-12-2013 29-05-2009
Ceased to be director
on 31-12-2013
Ramachandran Baskar
Babu,
Executive Director,
(DIN:02303132) 29-05-2009 N.A
Appointment
Vadakancherry
Lakshminarayanan
Ramakrishnan,
Executive Director,
(DIN: 02326543) 31-12-2013 29-05-2009
Ceased to be director
on 31-12-2013
John Arunkumar Diaz,
Nominee director,
(DIN: 00493304) 09-07-2009 N.A.
Appointment
Raghunathan Sankaran,
Independent Director,
(DIN: 00517220) 28-02-2013 17-08-2009
Ceased to be director
on 28-02-2013
Kala Srinivas Pant,
Independent Director,
(DIN:00003915) 29-09-2011 17-09-2009
Ceased to be director
on 29-09-2011
Venkatesh Natarajan,
Nominee director,
(DIN: 02453219) 31-08-2010 N.A.
Appointment
Sheela Bhide,
Independent Director,
(DIN: 01843547) 29-09-2011 N.A.
Appointment
31
Mathew Joseph,
Nominee Director,
(DIN: 01033802) 26-02-2013 N.A.
Appointment
R. Ramachandran,
Additional Non-Executive
Director,
(DIN: 01953653) 07-06-2014 N.A.
Appointment
5.7 Following details regarding the auditors of the Company:
(a) Details of the auditor of the Company:
Name Address Auditor since
S.R Batliboi & Associates
6th & 7th Floor, “A” Block, Tidel
Park, No. 4, Rajiv Gandhi Salai,
Taramani, Chennai 600 113
29th
September, 2011
(b) Details of change in auditors since last three years:
Name Address Date of
Resignation
Auditor of the Company
since (in case of
resignation)
Remarks
M/s
Manian &
Narayanan
12th Avenue,
Chennai –600083 25-08-2011 12-11-2008 Resigned
5.8 Details of borrowings of the Company, as on latest quarter end (i.e. June 30,
2014):
(a) Details of Secured Loan Facilities: (Rs Crores)
Lender’s Name Type of
Facility
Amount
Sanctione
d
Principal
Amount
Outstandin
g
Repayment
Date/Sched
ule
Security
Perso
nal
Guar
antee
Margi
n
(FLD
G)
Security
IFMR Capital Secured
term loan 3.00 0.15 Monthly No 7.5
Book
debt
IFMR Capital Secured
term loan 2.00 0.12 Monthly No 7.5
Book
debt
IFMR Capital Secured
term loan 2.00 0.49 Monthly No 7.5
Book
debt
IFMR Capital Secured
term loan 2.50 1.18 Monthly No 7.5
Book
debt
IFMR Capital Secured
term loan 3.00 2.07 Monthly No 7.5
Book
debt
SBI Secured
term loan 10.00 5.96 Monthly No 7.5
Book
debt
32
Reliance Capital
TL 3
Secured
term loan 10.00 1.23 Monthly No
Book debt
Reliance Capital
TL 4
Secured
term loan 10.00 2.43 Monthly No
Book debt
Reliance Capital
TL 5
Secured
term loan 15.00 5.39 Monthly No
Book debt
Reliance Capital
TL 6
Secured
term loan 20.00 14.37 Monthly No
Book debt
Reliance Capital
TL 10
Secured
term loan 10.00 9.00 Monthly No
Book debt
Maanveeya TL2 Secured
term loan 10.00 4.19 Quaterly No -
Book debt
Maanveeya TL3A Secured
term loan 15.00 12.50 Quaterly No -
Book debt
MAS-6 Secured
term loan 6.00 1.33 Monthly No 15%
Book debt
MAS-7 Secured
term loan 4.00 1.11 Monthly No 15%
Book debt
MAS – 15 Secured
term loan 10.00 3.89 Monthly No 15%
Book debt
MAS - 16A Secured
term loan 5.00 2.22 Monthly No 15%
Book debt
MAS - 16B Secured
term loan 3.00 1.33 Monthly No 15%
Book debt
MAS – 17 Secured
term loan 2.00 0.89 Monthly No 15%
Book debt
MAS – 18 Secured
term loan 3.00 1.33 Monthly No 15%
Book debt
MAS - 19A Secured
term loan 5.00 4.17 Monthly No 15%
Book debt
MAS - 19B Secured
term loan 5.00 4.17 Monthly No 15%
Book debt
MAS – 20A Secured
Term Loan 10.00 5.00 Monthly No 10%
Book debt
DCB Secured
term loan 4.00 1.50 Monthly No 10%
Book debt
DCB Secured
term loan 3.00 1.88 Monthly No 15%
Book debt
DCB Secured
term loan 10.00 6.25 Monthly No 10%
Book debt
Ratnakar Bank
TL1
Secured
term loan 7.50 2.14 Quaterly No 5%
Book debt
Ratnakar
Bank(ADB)
Secured
term loan 12.50 4.69 Quaterly No 5%
Book debt
Ratnakar Bank
TL2
Secured
term loan 15.00 9.38 Quaterly No 5%
Book debt
Ratnakar Bank
TL3
Secured
term loan 13.00 11.38 Quaterly No 5%
Book debt
Ratnakar Bank
TL4
Secured
term loan 12.00 12.00 Quaterly No 5%
Book debt
33
Indusind bank - 1 Secured
term loan 5.00 1.88 Monthly No 10%
Book debt
Indusind bank - 2 Secured
term loan 5.00 3.26 Monthly No 10%
Book debt
IDBI TL 1 Secured
term loan 3.00 1.29 Monthly No 10%
Book debt
IDBI TL 2 Secured
term loan 15.00 11.43 Monthly No 10%
Book debt
Dena Bank Secured
term loan 5.00 1.67 Monthly No 10%
Book debt
Dena Bank Secured
term loan 10.00 8.75 Monthly No 15%
Book debt
Axis Bank
Secured
term loan 10.00 3.75 Quarterly No 10%
Book debt
Axis Bank
Secured
term loan 10.00 10.00 Quarterly No 12%
Book debt
HDFC Bank
TL2A
Secured
term loan 1.50 0.70 Monthly No 10%
Book debt
HDFC Bank
TL2B
Secured
term loan 1.50 0.90 Monthly No 10%
Book debt
Bellwether-
Caspian
Secured
term loan 5.00 3.33 Half Yearly No -
Book debt
State Bank of
Patiala
Secured
term loan 7.00 5.23 Monthly No 15%
Book debt
South Indian
Bank
Secured
term loan 5.00 3.75 Monthly No 10%
Book debt
Andhra Bank
Secured
term loan 5.00 4.17 Monthly No 10%
Book debt
Ananya Finance
Secured
term loan 3.00 1.83 Monthly No -
Book debt
UCO Bank
Secured
term loan 10.00 9.39 Monthly No 10%
Book debt
Yes Bank
Secured
term loan 12.00 8.33 Monthly No 10%
Book debt
Kotak Bank
Secured
term loan 10.00 8.75 Monthly No 10%
Book debt
Indian Overseas
Bank
Secured
term loan 25.00 15.00 Monthly No 15%
Book debt
BOM
Secured
term loan 3.00 2.62 Quarterly No 10%
Book debt
Dhanlaxmi Bank
Secured
term loan 5.00 2.00 Quarterly No 10% Book debt
(b) Details of Unsecured Loan Facilities:
Mr.V Srinivasan
Unsecured
term loan 0.50 0.50 yearly No - -
(c) Details of Non-Convertible Debentures:
34
Debentur
e Series
Tenor/P
eriod of
Maturit
y
Coupon
(Rate of
Interest
)
Amount
(Rs in
Lacs)
Date of
allotment
Redemption
on Date/
Schedule
Credit
Rating
Secured/
Unsecured
Security
12.90%
Suryoday
Micro
Finance
Private
Limited
2014
2 years /
April
15, 2016
12.90% 1,100 March 28,
2014
The
Debentures
shall be
redeemed
through 24
equal
monthly
instalments,
on the 15th
of every
month,
starting the
15th of May
and ending
on the
Maturity
Date
(scheduled)
but will also
be dependent
on the
cashflows
from the
underlying
receivables
BBB+ Secured Book debt +
FD
14.70%
Suryoday
Micro
Finance
Pvt. Ltd.
2020
6 years/
April
25, 2020
14.70% 3,000 April 25,
2014
April 25,
2020
BBB
(Stable)
Secured Book debt
14.80%
Suryoday
Micro
Finance
Pvt. Ltd.
2017
3 years/
May 15,
2017
14.80% 2,400 May 15,
2014
May 15,
2017
BBB
(Stable) Secured Book debt
14.75%
Suryoday
Micro
Finance
Pvt. Ltd.
2017
3 years/
June 27,
2017
14.75% 2,000 June 27,
2014
June 27,
2017
BBB
(Stable) Secured Book debt
TOTAL 8,600
(d) List of Top 10 Debenture Holders (as on June 30, 2014)
S. No. Name of Debenture Holders Amount (Rs. in lacs)
1. Hinduja Leyland Finance Limited 1200
2. UTI International Wealth Creator 4 3000
35
(e) The amount of corporate guarantee issued by the Issuer along with name of the
counterparty (like name of the subsidiary, JV entity, group company, etc) on
behalf of whom it has been issued. (if any)
The Company has not issued any corporate guarantee for any third party as at June
30, 2014.
(f) Details of Commercial Paper:
The Company has not issued any Commercial Paper as at June 30, 2014
(g) Details of rest of the borrowing (if any including hybrid debt like FCCB,
Optionally Convertible Debentures / Preference Shares ) as on June 30, 2014:
NIL
(h) Details of all default/s and/or delay in payments of interest and principal of any
kind of term loans, debt securities and other financial indebtedness including
corporate guarantee issued by the company, in the past 5 years:
NIL
(i) Details of any outstanding borrowings taken / debt securities issued where taken
/ issued (i) for consideration other than cash, whether in whole or part, (ii) at a
premium or discount, or (iii) in pursuance of an option:
NIL
5.9 Details of Promoters of the Company:
(a) Details of Promoter Holding in Company as on latest quarter end, i.e. June 30,
2014:
Sr
No
Name of the shareholders Total No of
Equity
shares
No .of
shares in
Demat
form
Total
shareholding
as % of total
no of equity
shares
No of
shares
Pledged
% of shares
pledged with
respect to
shares owned
1 R. Baskar Babu 14,76,435 NIL 4.50% NIL N.A.
5.10 Abridged version of the Audited Consolidated and Standalone Financial
Information (like Profit and Loss statement, Balance Sheet and Cash Flow
statement) for at least last three years and auditor qualifications, if any.
3. Microfinance Initiative For Asia (MIFA) Debt
Fund SA, SICAV-SIF
2400
4. Microfinance Enhancement Facility SA, SICAV-
SIF
2000
36
Profit & Loss Statement (in Rs. Mn.) FY 2010 -2011 FY 2011 -2012 FY 2012 -
2013
FY 2013 -
2014
Income
Interest on loans 142.58 125.63 231.26 570.04
Other Financial Income 5.68 36.94 22.92 34.02
Other Income 6.38 2.15 2.69 11.97
Total Income 154.64 164.72 256.87 616.04
Expenditure/ Cost of Sales
Personnel Expenditure 54.26 67.92 85.89 136.09
Provisioning Expenditure 3.52 (0.87) 8.70 16.2
Write-off Expenditure 10.85 14.19 1.34 -
Depreciation and Amortization 1.71 2.67 2.87 3.73
General and Administrative Expenditure 26.63 22.94 34.96 47.11
Total Expenditure 96.97 106.85 133.76 203.13
Operating Profit before Interest 57.67 57.87 123.11 412.91
Interest 45.30 51.32 94.48 284.03
Operating profit after Interest 12.37 6.55 28.63 128.91
Net non-operating income/expenses - - - -
Profit Before Tax 12.37 6.55 28.63 128.9
Income Tax 1.93 2.27 9.09 40.60
Net Profit 10.44 4.28 19.54 88.3
Equity Dividend paid - - - -
Retained Profit 10.44 4.28 19.54 88.3
Balance Sheet (in INR Lakhs)
Liabilities
Current Liabilities
Short Term borrowings from banks 233.43 243.79 822.11 1892.8
Short term borrowings from others - - - -
Other Current Liabilities 18.50 108.39 93.71 133.4
Total Current Liabilities 251.93 352.18 915.82 2026.25
Total Term Liabilities 66.16 109.69 475.77 1095.47
Total Liabilities 318.09 461.87 1391.59 3121.67
Ordinary Share Capital 130.46 134.26 233.69 267.02
Reserves & Surplus 147.36 152.60 407.47 607.89
Legal reserves - - - -
Other Capital - - - -
Net Worth 277.82 286.86 641.16 874.91
Total Equity & Liabilities 595.91 748.73 2032.75 3996.63
Assets
Current Assets 78.47 219.68 567.46 753.90
Net Receivables 482.46 375.36 1280.52 2913.37
Other Current Assets 17.76 35.32 95.16 123.6
Total Current Assets 578.69 630.36 1943.14 3790.87
37
Fixed Assets - Gross Block 7.42 8.69 13.75 20.22
Depreciation 2.08 4.54 6.67 9.78
Fixed Assets - Net Block 5.34 4.15 7.07 10.44
Investments - - 21.40 8.84
Other Non-Current assets 11.88 114.22 61.14 186.48
Total Non-Current assets 11.88 114.22 61.14 186.48
Total Assets 595.91 748.73 2032.75 3996.63
5.11 Abridged version of Latest Audited/ Limited Review Half Yearly Consolidated
and Standalone Financial Information and auditors qualifications, if any.
[Note: Financial information submitted must be in line with the timelines specified in
the Simplified Listing Agreement, issued vide Circular no.
SEBI/IMD/BOND/1/2009/11/05, dated May 11, 2009]
Profit and Loss Statement (in INR Lacs) For the period ended
31st March 2014
Revenue from Operations 5700.45
Other Income 459.97
Total Revenue 6160.42
Expenses:
Employee Benefits Expense 1360.98
Finance Costs 2840.35
Depreciation and amortization expense 37.32
Other expenses 633.42
Total expenses 4872.07
Profit / (Loss) for the period before Tax 1288.35
Tax expense: 406.03
Deferred Tax (Credit)
Profit (Loss) for the period from continuing operations 882.32
Balance Sheet (INR mn)
EQUITY AND LIABILITIES
Shareholders’ funds
(a) Share Capital 2670.27
(b) Share Application Money -
(c) Reserves and Surplus 6078.88
38
Total
8749.15
Non-current liabilities
(a) Long Term Borrowings 10954.74
(c) Long Term Provisions 11.32
Total
10966.06
Current liabilities
(a) Short Term Borrowings 18928.45
(b) Trade payables 36.34
(c) Other Current Liabilities 996.97
(d) Short Term Provisions 289.35
Total
20251.11
TOTAL 39966.32
ASSETS
Non-current assets
(a) Fixed Assets
(i) Tangible assets 99.31
(ii) Intangible assets 5.08
(iii)
Intangible assets under
development 0.00
(b) Non-current Investments 88.36
(c) Deferred Tax Assets (Net) 121.43
(d) Long-Term Loans and Advances 8312.02
(e) Other non-current assets 1437.34
Total
10063.54
Current assets
(a) Cash and Cash equivalents 7538.98
(b) Short-term Loans and Advances 21864.38
(c) Other current assets 499.40
29902.76
TOTAL 39966.32
Off- Balance Sheet
Managed Portfolio (Assets) 3118.02
Cash Collateral on de-recognised
assets 657.37
5.12 Any material event/ development or change having implications on the
financials/credit quality (e.g. any material regulatory proceedings against the
Issuer/promoters, tax litigations resulting in material liabilities, corporate
restructuring event etc) at the time of Issue which may affect the issue or the
investor’s decision to invest / continue to invest in the debt securities.
Other than as disclosed in this Information Memorandum, there are no other material
events or developments or changes at the time of this Issue or subsequent to the Issue
which may affect the Issue or the investors’ decision to invest/ continue to invest in
the Issue.
39
5.13 Names of the Debentures Trustees and Consents thereof
The Debenture Trustee of the proposed Debentures is IDBI Trusteeship Services
Limited. IDBI Trusteeship Services Limited has given its written consent for its
appointment as debenture trustee to the Issue under regulation 4(4) of the SEBI Debt
Listing Regulations and inclusion of its name in the form and context in which it
appears in this Information Memorandum, Transaction Documents and in all the
subsequent periodical communications sent to the Debenture Holders. The consent
letter from Debenture Trustee is provided in Annexure III of this Information
Memorandum.
5.14 Rating and Rating Rationale
The Rating Agency has assigned ratings of “BBB (Stable)” to the Debentures.
Instruments with this rating are considered to have moderate degree of safety
regarding timely servicing of financial obligations. Such instruments carry moderate
credit risk. The rating letter and rating rationale dated June 6, 2014 issued by Rating
Agency are annexed hereto as Annexure II.
5.15 If the security is backed by a guarantee or letter of comfort or any other
document / letter with similar intent, a copy of the same shall be disclosed. In
case such document does not contain detailed payment structure (procedure of
invocation of guarantee and receipt of payment by the investor along with
timelines), the same shall be disclosed in the offer document.
Not Applicable. The Debentures are secured by the Security as described herein
below, in the Debenture Trust Deed and in the Deed of Hypothecation.
5.16 The consent letter from Debenture Trustee is provided in Annexure III of this
Information Memorandum.
5.17 Names of all the recognized stock exchanges where the debt securities are
proposed to be listed:
The Debentures are proposed to be listed on the WDM segment of the BSE. The
Issuer shall comply with the requirements of the listing agreement for debt securities
to the extent applicable to it on a continuous basis. The in-principle approval of the
BSE has been obtained in this regard.
5.18 Other details:
(a) Debenture Redemption Reserve Creation:
As per the Companies (Share Capital and Debentures) Rules, 2014, the Company is
not required to create Debenture Redemption Reserve because the Company is a
NBFC MFI registered with the RBI and the debentures are privately placed.
(b) Issue / instrument specific regulations:
The Issue of Debentures shall be in conformity with the applicable provisions of the
Companies Act including the notified rules thereunder and the SEBI Debt Listing
Regulations and all other applicable circulars, regulations and guidelines issued by
SEBI and by RBI from time to time.
(c) Application process:
40
The application process for the Issue is as provided in Section 8 of this Information
Memorandum.
5.19 A statement containing particulars of the dates of, and parties to all material
contracts, agreements:
The following contracts, not being contracts entered into in the ordinary course of business
carried on by the Company or entered into more than 2 (Two) years before the date of this
Information Memorandum, which are or may be deemed material, have been entered into by
the Company.
The contracts, documents referred to hereunder are material to the Issue, may be inspected at
the Registered Office of the Company between 10.00 am to 4.00 pm on working days.
Sr. No. Nature of Contract
1 Certified true copy of the Memorandum & Articles of Association of the Issuer
2 Board Resolution dated April 10,2014authorizing issue of Debentures offered under
terms of this Disclosure Document.
3 Shareholder Resolution dated April 10, 2014 authorizing the issue of non-convertible
debentures by the Company.
4 Shareholder Resolutions dated November 8, 2013 and April 10, 2014 authorizing the
borrowing by the Company and the creation of security.
5 Copies of Annual Reports of the Company for the last three financial years
6 Credit rating letter from the Rating Agency
7 Letter from IDBI Trusteeship Services Limited giving its consent to act as Debenture
Trustee
8 Letter for Register and Transfer Agent
9 Certified true copy of the certificate of incorporation of the Company
10 Certified true copy of the tripartite agreement between the Company, the Registrar &
Transfer Agent and the National Securities Depository Limited/CDSL
11 Private Placement Offer Letter in Form PAS- 4
12 The Transaction Documents entered into by the Company
5.20 Details of Debt Securities Sought to be Issued
Under the purview of the current document, the Issuer intends to raise an amount of
Rs.35,00,00,000 (Rupees Three Five Crores only) by issue of Collateralized, Rated, Listed,
Redeemable Non-Convertible Debentures, on a private placement basis.
For further details of the Debentures, please refer to the terms and conditions of the
debentures set out in Section 6.23 of this Information Memorandum.
5.21 Issue Size
The aggregate issue size for the Debentures is. Rs. 350,000,000/- (Rupees Thirty Five Croroes
only)
5.22 Utilization of the Issue Proceeds
The proceeds shall be used for loan portfolio growth of the company subject to such
restrictions as the parties may have agreed upon and shall not be utilised for the purposes
mentioned below.
41
The Issuer undertakes that the proceeds of this Issue shall be utilized for the deployment of
funds on its own balance sheet and not to facilitate resource requests of its group
entities/parent company/associates.
The Issuer undertakes that proceeds of this Issue shall not be utilized for the following
purposes as specified in the RBI Master Circular No. DBOD.BP.BC.No.6/21.04.172/2013-14
dated July 1, 2013:
1) Bills discounted / rediscounted by NBFCs, except for rediscounting of bills discounted by
NBFCs arising out of: Commercial vehicles (including light commercial vehicles) and
two wheeler and three wheeler vehicles, subject to the following conditions: The bills
should have been drawn by the manufacturer on dealers only; The bills should represent
genuine sale transactions as may be ascertained from the chassis / engine number and;
Before rediscounting the bills, the bona fides and track record of NBFCs which have
discounted the bills would be verified.
2) Investments of NBFCs both of current and long-term nature, in any company / entity by
way of shares, debentures, etc. However, Stock Broking Companies may be provided
need-based credit against shares and debentures held by them as stock-in-trade.
3) Unsecured loans / inter-corporate deposits by NBFCs to / in any company.
4) All types of loans and advances by NBFCs to their subsidiaries, group companies /
entities.
5) Finance to NBFCs for further lending to individuals for subscribing to Initial Public
Offerings (IPO) and for purchase of shares from secondary market
5.23 Issue Details (a) Delay in execution of the Debenture Trust Deed and Deed of Hypothecation:-
In the case of a delay in the execution of Debenture Trust Deed and the Deed of
Hypothecation, the Issuer shall refund the subscription with the agreed rate of interest
or shall pay penalty interest of 2% (Two Percent) per annum over the and above the
applicable coupon rate until such time the conditions have been complied with at the
option of the investor.
(b) Default in Payment :-
In the event of a default in payment of (i) the interest on the relevant interest payment
date; and/or (ii) the redemption amount on the relevant redemption payment date, the
Issuer shall pay default interest at the rate of 2% (two percent) per annum over and
above the interest rate on the defaulted amounts for the period of default.
(c) Default in listing :-
The Issuer shall, promptly after allotment of the Debentures but in any event within
15 (fifteen) days from the Deemed Date of Allotment, procure that the Debentures are
listed on the wholesale debt market segment of the Stock Exchange, failing which,
the Issuer shall be required to immediately redeem all the Debentures along with the
interest accrued from the date of issuance at the interest rate till the date of
redemption.
(d) Other Issue Details
Security Name 13.63% Suryoday Micro Finance Private Limited 2019
Issuer Suryoday Micro Finance Private Limited
Type of Instrument Non-Convertible Debentures
Nature of Instrument Collateralized, Rated, Listed, Redeemable Non-Convertible
Debentures
42
Seniority Senior
Mode of Issue Private placement
Eligible/Identified Investors As provided in Clause 0 below
Listing Debentures are to be listed on the WDM of Bombay Stock Exchange
within a maximum period of 15 (Fifteen) calendar days from the
Deemed Date of Allotment.
The Issuer shall, promptly after allotment of the Debentures but in any
event within 15 (fifteen) days from the Deemed Date of Allotment,
procure that the Debentures are listed on the wholesale debt market
segment of the Stock Exchange, failing which, the Issuer shall be
required to immediately redeem all the Debentures along with the
interest accrued from their date of issuance at the coupon/interest rate
till the date of redemption.
Rating of Instrument [ICRA]BBB(Stable)
Issue Size Rs. 350,000,000/- (Rupees Thirty Five Crores Only)
Option to retain oversubscription N.A.
Objects of the Issue To raise senior secured debt to the extent upto Rs.350,000,000/-
(Rupees Thirty Five Crores only) and the issue proceeds will be
utilized for financing the growth of the microfinance portfolio in
accordance with applicable Law
Details of the utilization of the
Proceeds
The issue proceeds will be utilized for financing the growth of the
microfinance portfolio in accordance with applicable Law
Coupon Rate 13.63%
Step Up/ Step Down Coupon Rate As per clause 2.8 of the Debenture Trust Deed
Coupon Payment Frequency Semi Annually
Coupon Payment Dates Semi-annually on November 28, and May 28, of every calendar year
until Maturity Date
Coupon Type Fixed Coupon rate
Coupon Reset Process [N.A]
Day Count Basis Actual / 365 (or 366 in the case of a leap year)
Interest on Application Money 13.63% per annum gross of withholding taxes
Default Interest Rate As per clause 2.8 of the Debenture Trust Deed
Delay Penalty In the case of a delay in the execution of Debenture Trust Deed and the
Deed of Hypothecation, the Issuer shall refund the subscription with
the agreed rate of interest or shall pay penalty interest of 2% (Two
Percent) per annum over the and above the applicable Coupon Rate
until such time the conditions have been complied with at the option of
the Investor.
Tenor The period commencing from the Deemed Date of Allotment until the
Redemption Date
Redemption Date May 28, 2019
Redemption Amount Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture on the
Redemption Date plus accrued Coupon if any
Redemption Premium/ Discount As per clause 2.6 of the Debenture Trust Deed
Issue Price Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture
Discount at which security is
issued and the effective yield as a
result of such discount
N.A.
43
Put option date As per clause 2.6 of the Debenture Trust Deed
Put option price As per clause 2.6 of the Debenture Trust Deed
Call Option Date As per clause 2.6 of the Debenture Trust Deed
Call Option Price As per clause 2.6 of the Debenture Trust Deed
Put Notification time As per clause 2.6 of the Debenture Trust Deed
Call Notification Time As per clause 2.6 of the Debenture Trust Deed
Face Value Rs. 10,00,000/- (Rs. Ten Lakh Only) per Debenture
Minimum Application size and in
multiples of __ thereafter
35 Debentures and in multiples of 10 Debentures thereafter
Issue Timing Issue Opening Date: June 23, 2014
Issue Closing Date: July 22, 2014
Pay-in Dates: July 22, 2014
Deemed Date of Allotment: July 22, 2014
Issuance mode of the Instrument Demat only
Trading mode of the Instrument Demat only
Settlement mode of the Instrument RTGS
Depositories NSDL/CDSL
Business Days Shall mean a day (other than a Saturday or a Sunday) on which banks
are open for business generally in Mumbai, India and New York,
United States of America.
Business Day Convention 1. When a day on or by which a payment of interest is due to be
made is not a Business Day, then such date shall be
automatically changed to the next Business Day.
2. When the day on or by which a payment (other than a
payment of interest) is due to be made is not a Business Day,
that payment shall be made on the preceding Business Day.
Record Date In relation to any Due Date on which a payment has to be made by the
Issuer in respect of the Debentures, the date that is 15 (fifteen) days
prior to that Due Date
Security 1. Description of security: Interim security of a first ranking
exclusive charge by hypothecation over identified mutual
fund units to be replaced, within 60 days from the Deemed
Date of Allotment, by a first ranking exclusive charge by
hypothecation over identified loan portfolios as may be
supplemented from time to time, in accordance with the terms
of the Transaction Documents
2. Type of security – First ranking and exclusive
3. Type of charge – floating charge
4. Likely date of creation of security – An interim security over
certain identified mutual fund units (as set out in Schedule 1
of the Deed of Hypothecation) has been created under the
Deed of Hypothecation and will be replaced, within 60 days
from the Deemed Date of Allotment, by security over
identified loan portfolios as may be supplemented from time
to time, in accordance with the terms of the Transaction
Documents
5. Minimum security cover – As per clause 2.11 in Debenture
Trust Deed
6. Revaluation and replacement of security -As per clause 2.11
of the Debenture Trust Deed
44
Transaction Documents Shall be as set out in Clause 6.1 below
Conditions Precedent to
Disbursement
1. As per clause 3.1 and Schedule II of the Debenture Trust
Deed
Conditions Subsequent to
Disbursement
1. As per clause 3.5 and Schedule III of the Debenture Trust
Deed
Events of Default As per clause 6.1 of the Debenture Trust Deed
Cross Default Clause As per clause 6.1 (g) of the Debenture Trust Deed
Role and Responsibilities of
Debenture Trustee
As per clause 8 of the Debenture Trust Deed
Covenants As per clause 5.2 of the Debenture Trust Deed
Representation and warranties As per clause 5.1 of the Debenture Trust Deed
Illustration of Bond Cashflows Kindly refer to [Annexure V] of this Information Memorandum
Governing Law As per clause 12.1 and 12.2 of the Debenture Trust Deed
45
SECTION 6: TRANSACTION DOCUMENTS AND KEY TERMS
6.1 Transaction Documents
The following Transaction Documents shall be executed in relation to the Issue:
(a) Debenture Trustee Agreement
(b) Information Memorandum
(c) Offer Documents
(d) Fee Letter
(e) The letters issued by the Trustee and Rating Agency
(f) The letters appointing the Registrar and Transfer Agent with respect to the issuance
of the Debentures
(g) The agreement entered into between the Registrar and Transfer Agent and the Issuer,
with respect to the issuance of the Debentures
(h) The agreement between the Issuer, its Registrar and Transfer Agent and the
Depository
(i) The listing agreement between the Issuer and the Stock Exchange for listing the
Debentures
(j) Debenture Trust Deed
(k) Deed of Hypothecation
(l) Such other documents as agreed between the Issuer and the Debenture Trustee.
The Transaction Documents shall be executed on or prior to the Deemed Date of Allotment.
6.2 Representations and Warranties of the Issuer
The representations and warranties of the Issuer shall be in accordance with Clause 5.1
and Schedule VI of Debenture Trust Deed.
AFFIRMATIVE COVENANTS:-
The affirmative covenants of the Issuer shall be in accordance with Clause 5.2 and
Schedule VII (Part A) of the Debenture Trust Deed.
NEGATIVE COVENANTS:-
The negative covenants of the Issuer shall be in accordance with Clause 5.2 and
Schedule VII (Part B) of the Debenture Trust Deed.
FINANCIAL COVENANTS AND ADDITIONAL COVENANTS:- The financial covenants of the Issuer shall be in accordance with Clause 5.2 and
Schedule VII (Part C) of the Debenture Trust Deed.
REPORTING COVENANTS
The reporting requirements of the Issuer shall be in accordance with Clause 5.3 and
Schedule XII of the Debenture Trust Deed. Schedule XII of the Debenture Trust
Deed
EVENTS OF DEFAULT
The Events of Default shall be in accordance with clause 6.1of the Debenture Trust
Deed.
CONSEQUENCES OF EVENTS OF DEFAULT
As per Clause 6.2 of the Debenture Trust Deed.
46
6.3 CONFLICT
In case of any inconsistency where there is a conflict between the conditions as stipulated in
this Information Memorandum and the Debenture Trust Deed, the provisions of the
Debenture Trust Deed shall prevail and override the provisions of this Information
Memorandum. The Issuer agrees, upon request in writing from the Debenture Trustee, to
issue any supplement to this Information Memorandum and ensure that this is consistent with
the terms and conditions set out in the Debenture Trust Deed.
47
SECTION 7 : OTHER INFORMATION AND APPLICATION PROCESS
The Debentures being offered as part of the Issue are subject to the provisions of the Act, the
Memorandum and Articles of Association of the Issuer, the terms of this Information
Memorandum, the Offer Letter, the Application Form and other terms and conditions as may
be incorporated in the Transaction Documents.
7.1 Mode of Transfer/Transmission of Debentures
The Debentures shall be transferable freely; however, it is clarified that no Investor shall be
entitled to transfer the Debentures to a person who is not entitled to subscribe to the
Debentures. The Debenture(s) shall be transferred and/or transmitted in accordance with the
applicable provisions of the Act and other applicable laws. The Debentures held in
dematerialized form shall be transferred subject to and in accordance with the
rules/procedures as prescribed by NSDL/CDSL and the relevant DPs of the transferor or
transferee and any other applicable laws and rules notified in respect thereof. The
transferee(s) should ensure that the transfer formalities are completed prior to the Record
Date. In the absence of the same, amounts due will be paid/redemption will be made to the
person, whose name appears in the register of debenture holders maintained by the R&T
Agent as on the Record Date, under all circumstances. In cases where the transfer formalities
have not been completed by the transferor, claims, if any, by the transferees would need to be
settled with the transferor(s) and not with the Issuer. The normal procedure followed for
transfer of securities held in dematerialized form shall be followed for transfer of these
Debentures held in dematerialised form. The seller should give delivery instructions
containing details of the buyer’s DP account to his DP.
7.2 Debentures held in Dematerialised Form
The Debentures shall be held in dematerialised form and no action is required on the part of
the Debenture Holder(s) for redemption purposes and the redemption proceeds will be paid by
fund transfer/RTGS to those Debenture Holder(s) whose names appear on the list of
beneficiaries maintained by the R&T Agent. The names would be as per the R&T Agent’s
records on the Record Date fixed for the purpose of redemption. All such Debentures will be
simultaneously redeemed through appropriate debit corporate action.
The list of beneficiaries as of the Record Date setting out the relevant beneficiaries’ name and
account number, address, bank details and DP’s identification number will be given by the
R&T Agent to the Issuer. If permitted, the Issuer may transfer payments required to be made
in any relation by EFT/RTGS to the bank account of the Debenture Holder(s) for redemption
payments.
7.3 Trustee for the Debenture Holder(s)
The Issuer has appointed IDBI Trusteeship Services Limited to act as trustee for the
Debenture Holder(s). The Issuer and the Debenture Trustee intends to enter into the
Debenture Trustee Agreement and the Debenture Trust Deed inter alia, specifying the
powers, authorities and obligations of the Debenture Trustee and the Issuer. The Debenture
Holder(s) shall, without further act or deed, be deemed to have irrevocably given their
consent to the Debenture Trustee or any of its agents or authorized officials to do all such
acts, deeds, matters and things in respect of or relating to the Debentures as the Debenture
Trustee may accordance with the Debenture Trust Deed deem necessary or require to be done
in the interest of the Debenture Holder(s). Any payment made by the Issuer to the Debenture
Trustee on behalf of the Debenture Holder(s) shall discharge the Issuer pro tanto to the
Debenture Holder(s). The Debenture Trustee will protect the interest of the Debenture
Holder(s) in regard to the repayment of principal and yield thereon and they will take
48
necessary action, subject to and in accordance with the Debenture Trustee Agreement and the
Debenture Trust Deed, at the cost of the Issuer. No Debenture Holder shall be entitled to
proceed directly against the Issuer unless the Debenture Trustee, having become so bound to
proceed, fails to do so. The Debenture Trustee Agreement and the Debenture Trust Deed shall
more specifically set out the rights and remedies of the Debenture Holder(s) and the manner
of enforcement thereof.
7.4 Sharing of Information
The Issuer may, at its option, but subject to applicable laws, use on its own, as well as
exchange, share or part with any financial or other information about the Debenture Holder(s)
available with the Issuer, with its subsidiaries and affiliates and other banks, financial
institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the
Issuer nor its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid
information.
7.5 Debenture Holder not a Shareholder
The Debenture Holder(s) shall not be entitled to any right and privileges of shareholders other
than those available to them under the Act. The Debentures shall not confer upon the
Debenture Holders the right to receive notice(s) or to attend and to vote at any general
meeting(s) of the shareholders of the Issuer.
7.6 Modification of Debentures
(a) As per clause 11.4 of the Debenture Trust Deed
7.7 Right to accept or reject Applications
The Board of Directors/Committee of Directors reserves its full, unqualified and absolute
right to accept or reject any application for subscription to the Debentures, in part or in full,
without assigning any reason thereof.
7.8 Notices
Any notice may be served by the Issuer/ Debenture Trustee upon the Debenture Holders
through registered post, recognized overnight courier service, hand delivery or by facsimile
transmission addressed to such Debenture Holder at its/his registered address or facsimile
number.
All notice(s) to be given by the Debenture Holder(s) to the Issuer/ Debenture Trustee shall be
sent by registered post, recognized overnight courier service, hand delivery or by facsimile
transmission to the Issuer or to such persons at such address/ facsimile number as may be
notified by the Issuer from time to time through suitable communication. All correspondence
regarding the Debentures should be marked “Private Placement of Debentures”.
Notice(s) shall be deemed to be effective (a)in the case of registered mail, 3 (three) calendar
days after posting; (b)1 (One) Business Day after delivery by recognized overnight courier
service, if sent for next Business day delivery(c) in the case of facsimile at the time when
dispatched with a report confirming proper transmission or (d) in the case of personal
delivery, at the time of delivery.
7.9 Issue Procedure
49
Only Eligible Investors as given hereunder and identified upfront by the Issuer may apply for
the Debentures by completing the Application Form in the prescribed format in block letters
in English as per the instructions contained therein. The minimum number of Debentures that
can be applied for and the multiples thereof shall be set out in the Application Form. No
application can be made for a fraction of a Debenture. Application Forms should be duly
completed in all respects and applications not completed in the said manner are liable to be
rejected. The name of the applicant’s bank, type of account and account number must be duly
completed by the applicant. This is required for the applicant’s own safety and these details
will be printed on the refund orders and /or redemptions warrants.
The applicant should transfer payments required to be made in any relation by EFT/RTGS, to
the bank account of the Issuer as per the details mentioned in the Application Form.
7.10 Application Procedure
Eligible investors will be invited to subscribe by way of the Application Form prescribed in
the Offer Letter during the period between the Issue Opening Date and the Issue Closing Date
(both dates inclusive). The Issuer reserves the right to change the issue schedule including the
Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice.
The Issue will be open for subscription during the banking hours on each day during the
period covered by the Issue Schedule.
7.11 Basis of Allotment
Notwithstanding anything stated elsewhere, Issuer reserves the right to accept or reject any
application, in part or in full, without assigning any reason. Subject to the aforesaid, in case of
over subscription, priority will be given to Investors on a first come first serve basis. The
investors will be required to remit the funds as well as submit the duly completed Application
Form along with other necessary documents to Issuer by the Deemed Date of Allotment.
7.12 Payment Instructions
The Application Form should be submitted directly. The entire amount of Rs.10,00,000- (Rs.
Ten Lakhs only) per Debenture is payable on the Deemed Date of Allotment in accordance
with the terms of the Transaction Documents. Applicants can remit the application amount
through RTGS . The RTGS details of the Issuer are as under:
Beneficiary Name: Suryoday Micro Finance Private Limited
Bank Account No.: 08307700000038
IFSC CODE: HDFC0000830
Bank Name: HDFC BANK
Branch Address: CBD BELAPUR MUMBAI-400614
7.13 Eligible Investors
The following categories of Investors, who have been specifically approached through
issuance of the Offer Letter and have been identified upfront, are eligible to apply for this
private placement of Debentures subject to fulfilling their respective investment norms/rules
and compliance with laws applicable to them by submitting all the relevant documents along
with the Application Form:
(b) Multilateral development banks such as International Finance Corporation
(c) Mutual Funds
(d) Non-banking financial companies
(e) Provident Funds and Pension Funds
(f) Corporates
50
(g) Banks
(h) Foreign Institutional Investors (FIIs)
(i) Qualified Foreign Investors (QFIs)
(j) Insurance Companies
(k) Investment holding companies of high net worth individuals
(l) Any other person eligible to invest in the Debentures
All Investors are required to comply with the relevant regulations/guidelines applicable to
them for investing in this issue of Debentures.
Note: Participation by potential investors in the issue may be subject to statutory and/or
regulatory requirements applicable to them in connection with subscription to Indian
securities by such categories of persons or entities. Applicants are advised to ensure that they
comply with all regulatory requirements applicable to them, including exchange controls and
other requirements. Applicants ought to seek independent legal and regulatory advice in
relation to the laws applicable to them.
The Debentures are and have been placed on a private placement basis and shall not be issued
to more than forty nine (49) Eligible Investors
7.14 Procedure for Applying for Dematerialised Facility
(m) The applicant must have at least one beneficiary account with any of the DP’s of
NSDL/CDSL prior to making the application.
(n) The applicant must necessarily fill in the details (including the beneficiary account
number and DP - ID) appearing in the Application Form.
(o) Debentures allotted to an applicant will be credited to the applicant’s respective
beneficiary account(s) with the DP.
(p) For subscribing to the Debentures, names in the Application Form should be identical
to those appearing in the details in the Depository. In case of joint holders, the names
should necessarily be in the same sequence as they appear in the account details
maintained with the DP.
(q) Non-transferable allotment advice/refund orders will be directly sent to the applicant
by the Registrar and Transfer Agent to the Issue.
(r) If incomplete/incorrect details are given under the heading in the Application Form,
it will be deemed to be an incomplete application and the same may be held liable for
rejection at the sole discretion of the Issuer.
(s) For allotment of Debentures, the address, nomination details and other details of the
applicant as registered with his/her DP shall be used for all correspondence with the
applicant. The applicant is therefore responsible for the correctness of his/her
demographic details given in the Application Form vis-a-vis those with his/her DP. In
case the information is incorrect or insufficient, the Issuer would not be liable for the
losses, if any.
(t) The redemption amount or other benefits would be paid to those Debenture Holders
whose names appear on the list of beneficial owners maintained by the R&T Agent as
on the Record Date. In case of those Debentures for which the beneficial owner is not
identified in the records of the R&T Agent as on the Record Date, the Issuer would
keep in abeyance the payment of the redemption amount or other benefits, until such
51
time that the beneficial owner is identified by the R&T Agent and conveyed to the
Issuer, whereupon the redemption amount and benefits will be paid to the
beneficiaries, as identified.
7.15 Depository Arrangements
The Issuer shall make necessary arrangement with CDSL and NSDL for issue and holding of
Debenture in dematerialised form.
7.16 List of Beneficiaries
The Company shall request the Depository to provide a list of Beneficial Owners as at end of
every Record date. This shall be the list, which shall be considered for payment of interest/
redemption premium and repayment of principal, as the case maybe. The list so provided by
the Depository shall be deemed to be the Register of Debenture Holders in terms of Section
88 of the Companies Act, 2013.
7.17 Procedure for application by Mutual Funds and Multiple Applications
In case of applications by mutual funds and venture capital funds, a separate application must
be made in respect of each scheme of an Indian mutual fund/venture capital fund registered
with the SEBI and such applications will not be treated as multiple application, provided that
the application made by the asset management company/trustee/custodian clearly indicated
their intention as to the scheme for which the application has been made.
The application forms duly filled shall clearly indicate the name of the concerned scheme for
which application is being made and must be accompanied by certified true copies of
(u) SEBI registration certificate
(v) Resolution authorizing investment and containing operating instructions
(w) Specimen signature of authorized signatories
7.18 Documents to be provided by Investors
Investors need to submit the following documents, as applicable
(x) Memorandum and Articles of Association or other constitutional documents
(y) Resolution authorising investment
(z) Specimen signatures of the authorised signatories
(aa) SEBI registration certificate (for Mutual Funds)
(bb) Application Form (including RTGS details)
7.19 Applications to be accompanied with Bank Account Details
Every application shall be required to be accompanied by the bank account details of the
applicant and the magnetic ink character reader code of the bank for the purpose of availing
direct credit of redemption amount and all other amounts payable to the Debenture Holder(s)
through EFT/RTGS.
7.20 Succession
In the event of winding-up of the holder of the Debenture(s), the Issuer will recognize the
executor or administrator of the concerned Debenture Holder(s), or the other legal
representative as having title to the Debenture(s). The Issuer shall not be bound to recognize
such executor or administrator or other legal representative as having title to the Debenture(s),
unless such executor or administrator obtains probate or letter of administration or other legal
representation, as the case may be, from a court in India having jurisdiction over the matter.
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The Issuer may, in its absolute discretion, where it thinks fit, dispense with production of
probate or letter of administration or other legal representation, in order to recognize such
holder as being entitled to the Debenture(s) standing in the name of the concerned Debenture
Holder on production of sufficient documentary proof and/or an indemnity.
7.21 Mode of Payment
All payments must be made through EFT/RTGS .
7.22 Effect of Holidays
a) When a day on or by which a payment of interest is due to be made is not a Business Day,
then such date shall be automatically changed to the next Business Day.
b) When the day on or by which a payment (other than a payment of interest) is due to be made
is not a Business Day, that payment shall be made on the preceding Business Day.
7.23 Issue of Debentures
As soon as practicable thereafter but in any event within 2 (two) days from the Deemed Date
of Allotment, the Issuer shall credit the Debentures in dematerialized form to the demat
account of the debentureholders.
7.24 Record Date
The Record Date will be 15 (Fifteen) calendar days prior to any Due Date.
7.25 Refunds
For applicants whose applications have been rejected or allotted in part, refund orders will be
dispatched within seven days from the Deemed Date of Allotment of the Debentures.
In case the Issuer has received money from applicants for Debentures in excess of the
aggregate of the application money relating to the Debentures in respect of which allotments
have been made, the Registrar shall upon receiving instructions in relation to the same from
the Issuer repay the moneys to the extent of such excess, if any.
7.26 Interest on Application Money
Interest shall be payable on all application monies received at the Coupon Rate of 13.63%
(Thirteen Point Sixty Three Percent) per annum from the date of realization of the application
monies by the Issuer until the Deemed Date of Allotment and the same shall be paid to the
relevant Investors within 7 (Seven) Business Days from the Deemed Date of Allotment.
7.27 Payment on Redemption
Payment on redemption will be made through RTGS system/funds transfer in the name of the
Debenture Holder(s) whose names appear on the list of beneficial owners given by the
Depository to the Issuer as on the Record Date.
The Debentures shall be taken as discharged on payment of the redemption amount by the
Issuer on maturity to the registered Debenture Holder(s) whose name appears in the Register
of Debenture Holder(s) on the Record Date. On such payment being made, the Issuer will
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inform NSDL/CDSL and accordingly the account of the Debenture Holder(s) with
NSDL/CDSL will be adjusted.
On the Issuer dispatching the amount as specified above in respect of the Debentures, the
liability of the Issuer shall stand extinguished.
Disclaimer: Please note that only those persons to whom this Information Memorandum
or the Offer Letter has been specifically addressed are eligible to apply. However, an
application, even if complete in all respects, is liable to be rejected without assigning any
reason for the same. The list of documents provided above is only indicative, and an
investor is required to provide all those documents / authorizations / information, which
are likely to be required by the Issuer. The Issuer may, but is not bound to revert to any
investor for any additional documents / information, and can accept or reject an
application as it deems fit. Investment by investors falling in the categories mentioned
above are merely indicative and the Issuer does not warrant that they are permitted to
invest as per extant laws, regulations, etc. Each of the above categories of investors is
required to check and comply with extant rules/regulations/ guidelines, etc. governing or
regulating their investments as applicable to them and the Issuer is not, in any way,
directly or indirectly, responsible for any statutory or regulatory breaches by any
investor, neither is the Issuer required to check or confirm the same.
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ANNEXURE V: ILLUSTRATION OF BOND CASH FLOWS
Illustration of Bond Cash Flows
Company Suryoday Micro Finance Private Limited
Face Value (per security) Rs. 10,00,000/- (Rupees (Ten Lakhs) only)
Issue Date / Date of Allotment July 22, 2014
Redemption May 28, 2019
Coupon Rate 13.63% (Thirteen Point Sixty Three
Percent) per annum (computed on a simple
interest basis)
Frequency of the Coupon Payment with
specified dates
Semi-annually on 28th Nov and 28th May of
every calendar year until Maturity Date
Day Count Convention Actual / Actual
Cash Flows Date No. of days in
Coupon Period
Amount (in
Rupees)
1st Coupon November 28, 2014 160 16.90
2nd Coupon May 28, 2015 181 23.70
3rd Coupon November 28, 2015 184 24.00
4th Coupon May 28, 2016 182 23.80
5th Coupon November 28, 2016 184 24.00
6th Coupon May 28, 2017 181 23.70
7th Coupon November 28, 2017 184 24.00
8th Coupon May 28, 2018 181 23.70
9th Coupon November 28, 2018 184 24.00
10th
Coupon May 28, 2019 181 23.70
Principal 350.00
Total 581.50