Mr. Shivashankar. Project Diractor was saan racaiving a ...

Mr. Shivashankar. Project Diractor was saan racaiving a certificata of appraciation from Mr. Aloysius Fernandez. Chairperson. having achiavad axcallanca in highest aver

disbursement under WASH progr..-..

n

~X~Hssc ~~RHICARE

Mr. R.D. Gadiyappanavar. CEO. was ana of the panelists participatad in the discussion on 'strangthening livalihoods through SHG linkages in tha avolving financiallandscapa' at tha

National Confaranca 2018 organized by Sa-Dhan, Naw Delhi

Board of Directors

Pada:a.ulu:ee .Aio)oalua P. Fenwad-. Fcnuule:r CbalJ:penoa isM. A., L.Ph. and B.Ph {University of Louvaln, Belgium). He has also done a special Diploma in Development studies from Universiey of Oxford, U.K., and another Diploma in Sociology and Research Methodology, from University of Louvain, Belgium. He is formerly the Executive Director and now, is a member secretary of MYRADA, a premier NGO of India.

Recipient of Padmasbree Award during 2000, Sri Aloysius Prakash Fernandez has vast experience in the fields of development and Micro finance. Popularly known BB the father of tbe SHG movement, which he pior.leercd duriDg 1985, he waa instrumental iD ac1:l:illg up MYRADA. With NABARD he was the driving fon::e behind the SHG-Bank linkage Programme. He was honoured by Honourable Mr. Arwl.Jaitley, Former Finance Minister, Government af ID.dia on the eve of Silver Jubilee af 'SHG- Bank linkage programme organized by NABARD at New Delhi. He is alao recipient of life time achiev'elllent by Corporation Bank and A.ccee8 Development Servicea & HSBC jointly.

To take forward the micro iinance programme, he founded Sanghami.thra Rural Financial Servioea, a Section 8 Company in 1995.

Hie contribution to the developmental sector and hie oumtandlng work In setting up and managing people institutions automaticelly involved him in several national and state level committeea including the Dr. C Rangarajan Committee on Financial inclusion and steering committee on Agriculture and allied sectors during the 121h Five year plan. He was the Chairperson of NABFlNs for five years. He Ia also a recipient of CaritBB Millennium Award. He is also Chairman Emeritua-As&ooiation of Karnataka Micro Finance Institutions (AKMl).

liZ. WDU•m D' 8oau., VIce Cla.ailpei'IIOII, Ia a commerce graduate from University of Mysuru. He has been working in the area of promoting a.Aga and other related areas for over 40 yeara. Presently, he ia the Executive Director of MYRADA Kaveri Pradeahika Samathe (MYKAPS}, Mysuru.

SANGHMIJHIIA~.tn~~"flrllwlhl• ---------------=a..::;~~to;l 1

lila 1'a-•n lll:utelr, Dllector, haB India~~ Dairy Diploma (AH) from National Dairy ~Bean:h Institute. She wa.s work:ing with MYRADA as Programme Officer coordinating activities of live projecta in wriDu.a looationa. Now, ahe !a aaaoclated with a.Cew NGOa and Governing Member In group ofinal:ltutlona promoted by MYRADA..

lila V~ R.una~ D.bwtw, has MAin Social work and M. Phil in Payc:his.tric social work. She ie a former vice- chair of Friend& of Women'• World Banking and ill In the NGO aector for over three de<:adea. She had worked aa Program Ofllcer in MYRADA. She Ia govemlng member in group of inBtitutious promoted by MYRADA. She ie also working u consultant.

Mr. Doralllwalnl Auok, Dlnotoa', la a B.Tech and MBA la apt"cfa!lzed ln Marketing and Syatema. He haa 27 year& experience In ludlng Management Conaultillg & rr organizaticma. He started up and headed conaulta.ncy otB.cea and practices. Re&pollllible for atrateglzlng on service area.a to be offered a.nd enteriiJg in to strat.egjc alliance~~. BeiDg a prolit center head, has been responsible for all areaa relating to strategy, bualneas development, enpgement tttafllng and exec:ution, office adminilltration, ~tment, tra1D1ng and appraiaal..

Presently, he Ia working aa Executive VIce Prealdent-Siemena Informaiion Ltd., Bangalore. He started a new division c:alled ~ Vertiad Markets, with a view to globally provldWg Conaultlng and rr solutions to compan!ea ln the Manufa.cturing, Utilitiu and Pu.'blic Sector & Financial Services domaine.

Mr. Arwltlll 0 . R:Wntd, Director ia BE MBA, n:tired aenior lAS Officer from the Government of Kamatalm. ln 2009. He haa worked lor over 35 yeara in various capaclt:lea in Goven:unent of Kamataka. and preaently he is an Eaecutive D:iretWr cd'MYRADA, a Bengaluru batiled l~cling NGO.

2 I=:J;a::~~'~:..:....--------------WGHAMITHRAI.elllllltiii'UWiillla!ll

Dl'. Van,.......,. 'hpt, DINc:t:or, I& a poat Graduate In Agronomy from

I'Ddia11 Agricultural Re.search Inetitute, New Delhi and Ph. D in Soil and

Water MllJl.B8ement from the allllle in.atitute. He haa alao done DSI!: from Germany In Land Use P.lannlllg for Rural Development and Monitoring

Evaluation in Dev"elopment Proj~. He netired u Chief GeneQl ~. Bualneaa lllitlatives Department of National Bank for Agriculture and Rural

Development (NABARD}. Hesd Ofliee, Mumbai. He had a etint aa CGM, Benpluru Regional Office. He wa& a1ao D:lrector on the Boerd of National

Commodity & Deri.vativee E:l:c:hange Ltd, Mumbai and ai.Bo a. member on the Inter Ministerial Group on Agncultural. Markding, New Delhi. During hie

tenurewithNABARDheha.eformulateda.pollcyforpeoplec:entredlnstitutiona

for managing value chain ~lll3, collaboration with int.em.ational funding organl:zal:lon. viz. GIZ, xtw under Umbrella Project. for Natural. Reaourcea

Management. He has done sigDificant work in the area of ti:mJmlatiQD of guidellnea on waterahed development. In bia profeaalonal experience, he haa

handled finance portfolio of US $ 2.1 billlon In Joana to Cooperatives and

Public aector corporations. He WBB a member/ advi.ar to varioua Central and State ~t oommftteesln the area. oflnli'a.atructure Development

~tance for central/et!Ue (IWD.ed entitie4

Mr. R..D. O.dlppp.u.a'NI', Chlet ICDc:ati'ftl CHBcer, ia a poatgraduate In .AgrJcuJture Science from Unlveraity of Agricultural. Sciences (UAS), Ba.ngalore and CAJIB.. from l'ndta11 Institute of Bankere. He has 35 yeara of varied experience In the Banking lnduetly having worked at State Bank of India. in va.rioua capacitie4 from a Technical Oflieer to Senior Executive

Grade. Throughout his c:areer; he has woz~ in operatione, ~g and administration. Hewaa head of a preatigiows Banplon: Main Bmnch beaidea

head of branchea In Banplore and Hubli etc,.

He had worked aa Asalatant General Manager Region lV ofBangalore Zonal Office. He hall also worked a.s ABsiataDt General MIUUI8Cr Personal BanJring, Development BanJring, Head of Agri Bwtine.sa Unit, and Lead Bank in Local Head Office of State Bank of India, Bangalore. Hewu aleo aBoard of Director in enrtwbile K:riahna Grameena Bank a Regional Rural Bank aponaon:d by

State Bank of India. He ha.e been worldng a.a Chief Executive O:fficer alnce Apr112007.

SAt4GHAMmtltAI.IIIIIi .. fllrUWIIIII ... ----------------' .. =;~~to;~ 3

Bankers

4

Financial Institutions

+ SIDBI, Race Course Road, Bengaluru

+ Water Credit Investment Fund LLC- Kansas City, State Missouri

Commercial Banks

+ Bank of Maharashtra, Basavanagudi Branch, Bengaluru.

+ Canara Bank, Jayalakshmipuram Branch, Mysuru.

+ Indian Bank, Microsate Branch, R T Nagar, Bengaluru.

+ Lakshmi Vilas Bank, HAL II Stage Branch, Bengaluru.

+ State Bank of India, Agri Specialised Commercial Branch, St. Mark's Road, Bengaluru.

+ Syndicate Bank, Indiranagar Branch, Bengaluru.

+ Union Bank of India, Domlur Branch, Bengaluru.

+ Vijaya Bank, Indiranagar Branch, Bengaluru.

Our Auditors

M/s. B.S. Chandrashekar and Co., Chartered Accountants, Bengaluru.

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Contents Notice of the 24th Annual General Meeting ............................................. 06

Director's Report ..................................................................................... 07

Success Story ......................................................................................... 60

Statutory Audit Report ............................................................................ 71

Financial Statements .............................................................................. 76

Notes on Accounts .................................................................................. 87

SANGHAMITHRA lending for livelihoods :--------------------Ann~~~~~~~81~ ~ 5

Notice of the 24th Annual General Meeting

To

All Members

Notice is hereby given that 24th Annual General Meeting of the Company will be held at the Registered Office of the Company at Bangalore, # 612, lC, Main Road, Domlur Layout, Bangalore-560071, at 10 AM on 06.09.2019 to transact the following business:

As Ordinary Business

1. To read the notice of the 24th Annual General Meeting.

2. To receive, consider and adopt the Balance Sheet as at 31st March 2019, the Income and Expenditure account for the year ended on that date and the reports of the Directors and the Auditors thereon.

3. Extension of limit of borrowing power: To consider and if thought fit to pass with or without modification(s) to borrow from Banks/Financial Institutions not exceeding ~ 250,00,00,000/- (Rupees Two Hundred and Fifty Crore only).

4. To appoint and fix remuneration toM/ s. S S Javali & Associates., Chartered Accountants, Bengaluru, as our Statutory Auditors for the year 2019-20 consequent upon retirement ofMjs. B S Chandrashekar & Co., on expiry of his term.

Notes:

a) MEMBERS ENTITLED TO ATTEND AND VOTE AT THE MEETING MAY APPOINT A PROXY OR PROXIES TO ATTEND AND, ON A POLL, TO VOTE INSTEAD OF HIM/HER.

b) Members are requested to notify immediately any change in their address to the Company.

c) Members desirous of raising any queries on the affairs of the Company shall file their queries at least 48 hours before the time of the commencement of the General Meeting.

6

On Behalf of the Board of Directors

Sd/Aloysius P. Fernandez Founder Chairperson

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DIRECTOR') REPORT

OUTLOOK:

The Central Government, in its interim budget for the year 2019-20, focused on generating employment, relief to the distressed small and marginal farmers as also income tax reliefupto ~ Slac to spur growth. At the same time, Government took measures to maintain fiscal discipline and contain inflation.

Government has announced 2% interest subvention on loans upto ~One Crore for GST registered Micro Small and Medium Enterprises (MSME) units, mega pension scheme for workers in unorganized sector to provide assured monthly pension of ~ 3,000/- with contribution of~ 100/- per month and 2% interest subvention to farmers pursuing animal husbandry and fisheries activities.

Under Pradhan Mantri Kisan Samman Nidhi, Government has decided to transfer directly ~ 6,000/per year to each farmer with less than 2 hectares of land. This will benefit 12 Crore small and marginal farmers. These measures will surely benefit the clients of SRFS.

Most of the state Governments have started loan waiver scheme but it is not a long term solution and affects repayment culture. Instead, the Government needs to ensure backward and forward linkages and remunerative prices for agricultural produce.

Microfinance sector has been serving the poor in providing timely credit. The sector has registered 28% growth as on December 2018 despite a liquidity squeeze. To overcome liquidity problems, most of the larger MFis raised resources by way of securitization (assets under management), while, smaller less diversified entities continue to struggle to raise resources. The incremental funding requirement of MFis is likely to remain a challenge and cost of funds to the sector will remain at higher levels till liquidity improves. You may also be aware that 13 public sector banks were put under Prompt Corrective Action (PCA) by Reserve Bank of India. This has impacted the flow of liquidity among NBFCs. However, a few banks have come out ofPCA, easing the liquidity position. Your Company has not faced a liquidity problem till now. We were able to raise resources to meet our lending projections.

Reserve Bank of India has reduced the Repo rate twice (50 basis points) during the year but the benefit of reduction was not passed on fully to MFis by the lending banks.

It is reported that a few new generation private sector banks are planning to takeover large MFis to increase their presence in rural area in order to meet the priority sector lending target.

Small Finance Banks (SFBs) : Most of them are erstwhile NBFC-MFis; a large part of their loan portfolio comprises micro finance which is also a major source of income.

There is a rapid increase in the number of MFis. In their quest for expansion and market share, a few MFis tum to high risk borrowers and to a borrower who has taken loans from more than two lenders, leading to over indebtedness.

Your company has been faced with the following major challenges during the year:

> We do not promote Self Help Groups (SHGs) for onlending; we depend on SHPis; but their investment for nurturing and capacity building has come down. Gradually, SHGs are becoming weak. Thus, we do not get "good" groups for lending.

> Individual members of SHGs are borrowing from other MFis leading to over indebtedness increasing our risk.

SANGHAMITHRA lending for livelihoods :--------------------A_nn~~~~~~~81~ I 7

~ Loan waiver schemes announced by various State Governments have had a negative impact on our recovery in a few pockets.

~ Interest subvention is extended to SHGs who take loans from Banks. A few State Governments offer loans upto ~ 3- 5 lac at zero interest rate. This facility is not extended to Section 25 I Section 8 Companies.

~ NGOs are demanding higher incentives for linking their group with us.

~ A few NGOs are engaged in unethical practices.

~ Many MFis are working as Business Correspondents (BCs) with banks, thus competing with us.

In view of the above reasons, especially, since groups are weak, we decided to start a pilot project for lending under Joint Liability Group (JLG) model at Harappanahalli since December 2017. The experience is encouraging. We have opened 4 branches in unbanked/ underbanked areas ofKarnataka during the year under review.

Also to strengthen the SHGs, to become eligible for borrowing, we entered into memorandum of understanding with MYRADA-CIDORR, Kalaburagi, to promote 700 SHGs to be linked with Sanghamithra.

Industry code of conduct and Self-Regulatory Organization (SRO) :

The apex level industry associations viz. Sa-Dhan and MFIN brought out a revised code of conduct in consultation with various stake holders in 2015. The code of conduct is strictly followed by your organization. We have a well laid out clients' grievances redressal system in place. Even oral complaints received are recorded and resolved satisfactorily. Our approach has always been customer centric and customer friendly. Infact, our endeavor is to follow best industry practices in all areas under governance, grievances redressal, integrity and ethical behavior. We are also a member of Sa-Dhan since its inception as one of the founder members. We are also member of Association of Karnataka Microfinance Institutions (AKMI).

Sa-Dhan has developed a SRO poster which contains key elements of code of conduct, SRO recommendations and client protection principles together in a handy format which we have circulated widely and follow.

Credit Bureau:

Your company continues to be a member of all the three credit information companies (CICs) approved by RBI. We undertake verification of individual borrowers credit history before loan is sanctioned to prevent multiple borrowings leading to over indebtedness by the applicants as per existing guidelines issued by RBI. This process has enabled us to eliminate members/ groups taking loans from more than two MFis. One of the main reasons for rejection of large number of loan applications is due to multiple borrowings which are thrown up by the CICs.

The Bank linkage is one of the biggest programs in providing credit to SHGs but banks are not uploading the individual member data in M/ s. CIBIL. Thus, we are not able to check whether individual SHG members have borrowed under SHG-Bank linkage program. After this issue was taken up by Sa-Dhan with RBI, RBI issued a Circular No. DBOD.No.CID.BC.127/20.16.056/2013-14 dated 27.06.2014, advising the commercial/co-operative banks to incorporate the SHG members data into the existing micro finance data format. The banks are yet to follow RBI guidelines.

Loan disbursement to individuals through their Bank Account:

This was introduced during the year 2016-17, with a view to mitigate the risk of misuse of loan by representatives and influential members within the group. There is risk of this when the amount is

8 ~ ~~~~;10~~p_ort ___________________ -: SANGHAMITHRA landing for livelihoods

credited as a lump sum to the SHG account. The support received from the SHG members for this direct transfer is overwhelming. We have gone one step further and advised all the SHG members to open a KYC compliant SB account so that the loan sought by each member as per resolution of the group can be credited to SB account of individual members through "SBI Pay". We have made it mandatory for every member of the SHG who intends to borrow to have a SB account from July 2017 onwards. This has been achieved fully in 2018-19, after moving to the new software.

Audit Sub-committee of the Board and Board Risk Management Committee:

Risk Management:

SRFS is providing loans to the low-income clients through SHGs I JLGs models, who traditionally lack access to finance.

These transactions are of smaller amounts and of shorter tenure when compared to other types of loans. The targeted activities include Agriculture, Allied agriculture activities, Petty shop, Small hotels, Tailoring, small business etc,.

The major risks associated with such kind of microfinance are (a) Credit risk, (b) operational risk and (c) External risk such as Political risk.

In order to streamline and upgrade the control mechanism, Risk Management Committee comprising of all the RMs, Head (Risk Management) and Head (Audit) meets every quarter to assess various issues which have risk impact on functioning of SRFS. Based on the discussions, various control mechanisms are added I modified to mitigate the risk.

Some of the risk mitigation measures adopted by SRFS are:

Identification of Aadhar is made a compulsory document; the Credit officers/ the borrower Area Managers visit the households for verification as part of

pre sanction process New loans/ Customer retention is given priority. Focus is given on Renewals increasing the renewal percentage to attain 80% Credit SRFS has one major product that caters to the various needs concentration of the customer (General Purpose). Several new products

are also introduced and we are analysing this to reduce risk. Quantum and Both are aligned with the cash flow of the house hold.

CREDIT RISK Tenure of the Care is exercised to ascertain the details of the activities loan undertaken and income generated. The loan sanction

committee has been asked to pay more attention to the cash flow before sanctioning the loan.

Loan The loan amount will be transferred to the individual SB disbursements account of the borrower which is a pre-condition for loan

processing Loan repayments COs/ AMs/RMs/Inspectors verify the loan pass books of

SHGs and compare with the FA balance.

Loan delinquency AMs and RMs should have proper tracking system of PAR below 90 days and every effort should be made to ensure PAR below 90 days at 'zero' level. This means that current demand including arrears should be recovered in the same month.

MIS RO should develop a mechanism to analyse various reports that are being submitted to HO. Wealth of information on the portfolio of the Region is given by these various report.

SANGHAMITHRA lending for livelihoods :--------------------A_nn~~~~~~~81~ I 9

OPERATIONAL Collection I HHBM generated AORs only should be given. Cash collections f RISK Recovery Cash recovery to be remitted to SRFS designated bank accounts

on the same day itself. Deviations to be approved by HO functionaries only.

Books of SRFS books: to be updated regularly and should be checked Accounts by AMs/RMs on a regular basis.

Loan misuse by Loan amounts are credited to the individual account of the a few members borrower.

Loan waiver In group meetings and at the time of appraisal, Staff will make it clear to the prospective borrowers that waiver has to be repaid by somebody.

Inclusive growth : Role of Microfinance:

Government of India and RBI have given greater thrust to financial inclusion by ensuring that atleast one member of the family has a Savings Bank account. Towards this end "Pradhan Mantri Jan Dhan Yojana (PMJDY)" was launched in 2014. It is reported that 351.6 million people have opened PMJDY accounts across the country.

The main aim of financial inclusion is to make financial services accessible to lower income group; this is where the role of micro finance comes in. The micro-finance sector has witnessed impressive growth over the years with over 60 million clients and a loan book of over one lac crore ; it employs over one lac people across the country. More than 35.39 Crore people have gained access to a basic transaction account. The deposits stood at~ 95352 Crore and account holders have been issued 27.89 Crore Rupay debit cards. 50% of Jandhan account holders are women while 50% accounts are in rural and semi urban areas. Reserve Bank of India is also continuously aligning its regulatory frame work to widen and ease the financial access by the excluded population. The microfinance industry is likely to grow around 22% in 2019-20 despite liquidity problem/ squeeze during the year under review, as per ICRA rating agency.

Financing for Farmers Producers Organisation (FPO):

As reported in the previous year annual report, we have started financing FPOs during the year under review as a business model. MYRADA has promoted many FPOs. These FPOs are at various stages of development and are involved in various activities.

It was decided in one of the SRFS Board Meetings, to set up an initiative to be named as 'Support Service Unit' as a department of SRFS to be based in MYRADA office. One person, an IRMA graduate, was appointed as Manager for this unit. It was agreed that SRFS will provide loans for working capital to the FPO as well as for production through the SHG and/or JLG route.

From the previous financial year, SRFS has created a start-up fund to extend loans for working capital to FPOs at a concessional rate of interest at 6%. Initially, an amount of~ 5 lac was earmarked from the surplus of 2017-18 operations. In the financial year 2018-19, SRFS has financed one FPOKazhani Farmers Producers Company Ltd at Kallipatti, Erode district with a working capital limit of ~ 5 lac at 6% per annum. We have received another proposal from Mfs. Mouneshwar FPO in Shorapur in Yadgir district which is under our active consideration.

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Technology upgradation

As reported in the previous year annual report, your Company has decided to switch over to new software called eFimo developed by Mfs. Jayam Solutions P Ltd. The Company invested around ~ 48 lac and procured the required hardware/ software and it is installed at HO. The Web version of the software was also tested for both SHG and JLG operations and the results are found satisfactory. The Tab version of the software is also tested and a few modifications are suggested for the vendor to incorporate.

The data migration work of both SHG and JLG is now ready up to March 2019. The go live of the entire operations of SRFS to the new eFimo software is likely to be made operational by the end of Aug, 2019. The delay for go live is on account of certain reconciliation issues between MIS, Accounts and the present Apparent software and is being addressed in consultation with Jayam Team.

After going live, one of the components of Tab version of the software - eKYC may not be made use of on account of the restrictions imposed by the Supreme Court in making use of Aadhar data from UIDAI server. The eKYC works on the Aadhar platform and the required data is taken from UIDAI. In its original form, after entering the Aadhar number of the borrower supplemented by biometric authentication, the required KYC related information used to be fetched directly from UIDAI server and there was no need for paper based documents. But, on account of restriction imposed by the Supreme Court, the KYC of the borrower has to be continued as paper based process till such time as an alternate to Aadhar emerges and eKYC is rolled back.

At present, the Tabs and the Bluetooth printers are being put to use at the field level to generate Acknowledgement of Receipt (AOR) on a standalone programme. Once the Jayam software live operation begins, the tabs will be linked directly the database server and the live data is fetched for generation of various reports and AORs.

JLG Performance

As you are aware that SRFS diversified its business by introducing the Joint Liability Group (JLG) vertical in the year 2018 on a pilot basis. JLG is a lending business model that enables a group of individuals (usually five) to take loans from SRFS for income generating activity by forming a group of likeminded women, wherein, group members guarantee each other's loans. SRFS staff facilitate in forming the group and all the members are exposed to 3 days compulsory training program (CGT). During this training program, all the participants are informed about SRFS, basic financial awareness, Loans, Loan Repayments, Interest rates etc. The group is finally recognized when they pass another Group Recognition Test(GRT). The loan sanction and disbursement is centralized at Head Office for the present. The work at the branch level involves Credit Officer surveying villages, identifying individual and conducting formal meetings, building up loan applications etc,.

SANGHAMITHRA lending for livelihoods :--------------------Ann~~~~~~~81~ 111

l'.nl~ we opened two exclusive JLG branches In Harapanahalll (Bellary Dist) and Rattihalll (Haver!. Di.st). The raulte were enc:ouragillg and we decided. to add three more exclueive JLG branchea at Huliyar(Tumkur Dial), Ajjampura{Ch.idcmagalur Diet) and Somba(Shim.oga. Dist). All the five plru:e;$ have been equipped with a. complete branch atruct:ure and are manned by experienced Br8nch Managua supported by two c-ut 01ll.cera to atart w.lth. All the std' ata,y In the branch premlaea only. All the branches have started lending operations.

The pMition of the buaineaa level is preaented belDw aa on 31.03.2019:

8L llo. of ActiH llo. of Lou. Lou

liO Bnuaall. llama .n:.a. Bo11o••• :Ke&abera dhllraned. 011tatuullq (\') (\')

1 Harapanahalli 134 683 885 1,80,55,000.00 89,79,990.00

2 Rattihalll 52 262 261 51,45,000.00 43,46,012.00

3 AjJa.mpura 15 54 54 10,70,000.00 10,70,000.00

4 Huliyar 12 36 36 7,00,000.00 7,00,000.00

5 Sorab 6 23 23 4,60,000.00 4,60,000.00

'total 219 10118 11189 2,14,30,000.00 1,1JIIJ,I6,002.00

.AftD' having gained. experience in lending tD individuals under JLG model, we W'Oul.cl like to expand our buelneaa under JLG vertical In the enaulng year by opening another 10 branchea fn unbanked and underbanked areas In Karnataka and Tamil Na.du. We propose to lend around\' 20 Cr. under this segment.

Incidentally, we would like tD mention thai your Company hu the USP of lending at an intereat rate of 21% p.a. on declining baala and without cllarglng any prooeaalng fee; alao repe:yment Ia fixed at mon~ lntervala. Our competitors are charging an Interest at 23-26% p.a with 1 % proceeslng fee with weekly repa,yment obJi8atione. Our clients are happy with our model and we will apand thia vertical in the future.

12 ~~~""'rt'-----------------1 SAtiGHMmitALinl .. farllalha•

l'adtd4ad Bou.lq l.o"" Rural Houeing ill the flagBhip propam. of both State and the Central Govemmenta. In thia endeavour, SRFS ablo haJJ introduced, on a pilot buis, a new houeing loan product <:alled "High Value Gruba Nirman loan acbeme". Unlike unaecured loana, thia new product is oft'ernd as a aecured !nan product alnce the borrower l.a requlred to deposit the original propet ty documenta with SRFS with an intention to create an equitable mortgage of the p~ w~ the house ia belDg built.

The maximum loan amount aa.netioned under the scheme l.a ~ 2 lac; the loan portfolio doee not come under the purview of 'qua1i{ying useta' clause; hence thia ver1ical camwt be expanded beyond a certain limit.

Since the product ia aec:ured by the Mortgage of the hauae ptOpetty, the ataft' ak!lla required to handle th1a !nan l.a are dlft'erent. Hence, the product was laun~ only In Myauru Rq:lon during the year 2017-18. Since there ia good oppo:rtunity fordoing bua:lneeelll Kolar area, the ec:heme waa extended there in 2018-19.

BO'IMlll& Loan PortfoUo :Pocltio11. u at 31•111a.rch li1019:

8L .Aet1ve r-n dialraned. Lou OD.St•ndlnl RO B'ame

JfO •••o•en (~) (~)

1 Myaore region 10 19,00,000.00 18,89,504.00

2 Bengaluru region (Ko~ 03 4,00,000.00 3,97,464.00

Totd 12 23,00,000.00 22,86,968.00

S:lmllar demand Ia coming from Latur and Kalaburagi R£g!ona aa wdl. The acbeme will be extended to the above Rq:lona ln the enaulllg year.

!few Teohaolo&J Maptfoll. for Pa,meD.t s,.tem- •am ~ As you are aware SRFS Introduced -sm Pa,y", a centrallaed fund transfer ayatem. at HO. All these years the loan dillbursementa and other fund tm.nllferslike Salaiy, rent pa.yment ero were done UlliDg

1. paper baaed fund tranafer mechaniam through cheques

2. IDstruct!Dg the ba:ab to transfer funds through NEPT /RTGS process.

[WIGHAMITHIA t..~ingr.LiiiiiiDIIIs j~--------------=::~~~ 13

To cut costs and to have better control on funds, SRFS moved to "SBI Pay" in June 2018 and all types of fund transfers were centralised at HO. "SBI Pay'' is a real time fund transfer directly from SRFS to designated bank accounts maintained at SBI to various beneficiaries accounts maintained at various banks. SRFS now only gives payment instructions in e-fi.le format to SBI Pay portal online sitting at HO and the rest is managed by SBI. Mter submission of e-file by SRFS, the beneficiary's accounts are credited with the specified amount within 30 minutes. The transaction is secured by two level authentication process namely (1) Transaction Checker and (2) Transaction Releaser before the fund transfer file is processed.

Some of the transactions initiated by SRFS in the above manner are getting returned for lacking correct particulars such as KYC compliant bank Account number, correct IFSC code etc. Such transactions are traced with the help of SBI Pay MIS reports and after getting correct particulars from respective ROs, the transaction is again put through SBI Pay. We have given, from time to time, detailed guidelines to ROs to take care of such mistakes while forwarding fund transfer files and the number of returned transactions is gradually decreasing. The details of transactions put through "SBI Pay" are furnished below for the year 2018-19:

No. of Amt. tr. Within SBI Amt. tr. through NEFT Amt. tr. through RTGS transactions

13559 f 56.92 Cr. -- --

26793 -- f 105.45 Cr. --

439 -- -- f 28.90 Cr.

SRFS has incurred bank charges of f 1.54lac only (including GST) towards above transactions using "SBI Pay" If the same transactions were carried without "SBI Pay", as was done earlier, the direct transaction costs would have increased to f 8 lac. Added to this, SRFS would have incurred additional indirect costs on Cheque books, Opportunity costs on unutilised funds as ROs would have allowed huge funds in Savings bank account and one staff cost for approaching the SRFS bank branches to deliver written fund transfer requests in all the Regional Offices.

For bank charges, on availing this service after 6 months, we negotiated with the SBI team to reduce the cost further and SBI has accepted for further reduction in the transaction cost. A comparative cost structure is given below for reference

Service Transaction cost in the Revised transaction cost beginning offered to SRFS

Fund transfer within SBI f 2 I- per transaction f 2 I- per transaction branches

RTGS f 5 I- per transaction f 2 I- per transaction

NEFT f 4 I- per transaction f 2 I- per transaction

Effectively, all the fund transfer services can now be availed by your Company at a uniform transaction cost off 21- only.

14 ~ ~~~~;~D~~p_ort __________________ -: SANGHAMITHRA landing for livelihoods

New Initiatives during the year:

New Technology initiative- "SBI Collect"

During the Current financial year, SRFS is planning to introduce "SBI Collect" service. At present, SRFS is maintaining more than 200 Savings bank accounts in various banks These accounts are opened to help COs to remit their cash collection and recovery to the account. It is a herculean task to reconcile all these bank accounts every month and many times huge credit balances are held in these accounts without being transferred to our borrowing account resulting in loss of interest.

SBI has come forward to help us in improving our collection system through their Cash Management Product "SBI Collect". Under the system one Current account is opened in the name of SRFS, and all the collections/recoveries made by the COs at various places can be deposited into this SRFS current account in any SBI branch. Thus, the process of crediting to various SRFS SBI accounts and then transferring the total amount to HO is not required.

The proposed collection initiative is undertaken by SRFS in two phases. In the first phase, only the branches of SBI are considered for rolling out "SBI Collect". SBI will supply separate deposit challans to SRFS. Once the cash collections and recoveries are made for the day, the CO can approach any SBI bank branch and deposit the collected cash to the separate designated account using the SBI supplied separate challan without paying any handling charges at the branch. HO in tum would come to know the day's collection amount as reflected in the designated account using Internet Banking and the available funds position on a real-time basis.

Once the system is stabilised, the service will be extended to all non SBI account bank branches also. The concept of virtual account number will be used for dealings with non SBI bank branches.

"SBI Collect" benefits SRFS in many ways.

(a) Complexity of maintaining several bank accounts does not arise as one single account will take care of collection/ recovery deposits.

(b) Fund management will be better as all the collections f Recoveries are pooled at one single account. Real time monitoring also can be done using internet banking.

(c) No need to maintain minimum balance in all our accounts and the idle funds can be now better utilized.

(d) Monitoring 200 plus accounts daily and fund transfer is avoided altogether. Thus, cash management system will improve by using this technology. We have already entered into MOU with SBI. We will start using this technology from June 2019.

Future of Sanghamithra :

Sanghamithra has been working with SHGs since its inception; the SHGs were formed, trained and monitored by NGOs as the last mile. But our experience shows that the SHGs are gradually becoming weaker in the absence of proper training and capacity building ; they have become more of financial intermediaries only. The groups have started disintegrating due to the influence of MFis which are providing loans directly to the individuals. Moreover, Government is no longer extending adequate support to NGOs to nurture them on a sustainable basis.

SANGHAMITHRA lending for livelihoods :--------------------Ann~~~~~~~81~ 115

Banks prefer to lend to NBFC-MFis as they are licensed by Reserve Bank of India. Today the sector is dominated by for profit NBFC-MFis who have adopted direct lending to individuals. Further, SHG-Bank linkage program no longer drives the program. The rating agencies give more weightage for individual lending which according to them, ensures better tracking of repayment etc,. Being a Section 8 Company, we are not able to attract investors nor are we able to go public. Thus, our growth is limited and we are not able to expand.

In this backdrop, we had an exclusive Board Meeting to discuss whether to continue in the existing form or to move onto for-profit NBFC-MFI or only NBFC. Board felt that there are strong reasons for converting into for -profit NBFC. The Board authorized the Chairperson to take forward the formation of new for-profit Company. Towards achieving this, Chairperson was also permitted to search for promoters f investors etc,.

In this connection, I have initiated the discussion with Tax Consultants, Auditors, NABARD for registration of new company. A progress report on action taken has been shared with all the Directors. If everything goes well, I am sure, a new Company will come into existence within a year to which SRFS operations will be transferred.

SAG Promotion: CIDORR Kalaburagi :

We have been providing credit linkage for the groups promoted by MYRADA through 19 CMRCs which are presently working in Kalaburagi district. We have lent over 1243 groups to the tune of~ 27 Crore. The present outstanding is~ 1560.40 lac in respect of 1106 groups, which constitutes 37.50% of the total advances~ 4154.54 lac) of Kalaburagi region. There are very few (10) NGOs operating in entire Kalaburagi region; they have linked 371 groups with loan amount of ~ 489 lac which works out to around 12% of the total portfolio of the region; the rest 50.50% comes from Stree Shakthi Groups of WCDPO. The quality of these groups is not upto the mark in the areas of book keeping; most are not functioning as true SAGs.

In this backdrop, Myrda has come forward to adopt around 700 Stree Shakthi Groups to reactivate and strengthen them through seven new CMRCs proposed to be promoted in non-traditional areas of Kalaburagi and Yadgir districts. In this connection, we have received a proposal from CIDORR Kalaburagi with a request to fund CIDORR, Kalaburagi for nurturing and strengthening 700 SAGs through newly created CMRCs. Ultimately these groups will be credit linked with Sanghamithra.

CIDORR intends to undertake capacity building training, regular meetings, books updation and foster leadership qualities among these SHGs besides encouraging them to undertake livelihood activities through financial support from Sanghamithra.

Myrada will have an exclusive trainer based in Myrada - CIDORR Kalaburagi to strengthen the SAGs and link them with Sanghamithra. At the end of two years all the 700 SHGs will be linked with Sanghamithra. Myrada CIDOR, has sought financial assistance from Sanghamithra of~ 31 lac for two year period for strengthening and linking of 700 groups with Sanghamithra. The expenses per group works out to~ 4430/- which is reasonable. We are facing problems with CDPO groups which account for 51% of credit in our Kalaburagi region , if these groups are adopted, activated and strengthened by Myrada CIDORR it will enable Sanghamithra to lend to these groups for undertaking livelihood activities; our risks will be mitigated.

In view of the above, the board approved to invest ~ 31 lac over the period of two years to strengthen 700 SAGs and link them with Sanghamithra. This financial year we shall make payment to the extent of~ 10 lac in two stages of~ 5 lac each.

16 ~ ~~~~;1u~~p_ort __________________ -: SANGHAMITHRA Landing tor livelihoods

Your Compan;y ia not juat a financial interm.edialy but beli- in 'inv'e8ting to c::reaw value'. Each ~gion focuaea on certain key areaa which are crucial for livelihood promotion. For example :

Ben,ph•m R._tGD: A 8hlft to houalDg and sanitation 108118:

Thia Region operate~~ in the di61rict8 ofBengaluru. (Rural}, Ram.anagaram, Kolar and. Tumkur district~~. Benpluru. (Rural) district is l'aat tranaforming into an urban area, hence we have reduced Jmding activities. In Ramanagaram dlatrict, there are no aoc:red.ited NOOa and the Stree Shakthl. groupa prom.ated by WCDPO are ver,y weak; therefo~. we have stopped fresh lending and retl.eWala are cona:ide:red. o:zey wile~ the groups are active and functioning p:toperl,y. However, during the year under review, we partnered with M/a. Vritti NGO whic:h is engaged in prcrm.oting SHOe in Kanakapur taluk of Raman8p1'111 dlatrlct.. We have lent to 16 SHQa w:lth a loon amount off 49.45 lac. We are lending to CMRC/Soukhya Sl'OUp& in Kolar and Chl!dcaballapur dlatrict.a. The ~glon could dlsbUl'lle only t 1257lac agslnet the talget or t 1860 lac leaving a large gap.

CBO wtUl Bl!e1l dJsaursfna how t.o fncn!Gse 1M PfJrtfoliD of~ with the CMRC /JIMI4get'a tJ/Kolar distrlct hlrld at CIDORR .lCamasamudram.

8oukh.Ja poupe (M& worbn poup):

Loans were a.tendecl to l!lell. worms groupa for undertakjng altemate livelihood activitie&. We had lent to 14 Soukhya Sl'OUpa in Kolar and Chiklcaballap\lr dietrictll to the tune off 32.40 lac; the present outatandlng ia f l.26lac.. Due to increa&ed NPAa, particularly in Chflrkahallapura diatrict, we have reduced lending to Soukhya groupe. Moreaver, the members migrate frequentq posing a ttWwety problem. The region haa NPAII to the level at t 52.47 lac from t 64.04 lac over the prmoua year, after write ofl' art 12.38 lac during the yea:r. Thill abnormal epurt in NPA was on account of a fraud committed by one SHG repreaenmtive in Anekal and another at Channapatna beaidea there is an aroount oft 13 lac NPA8 a1' 'Ul'b&n Sl'OUPS In Kolar town, tlu:ough :Kolar CMRC. We have tlled a c:lvll. ault apinat the fraud.atere in Anek.aJ. court for recovery of our dUe&.

Around Bengaluru luger number ofMFie are operating and multiple bon-owing hu become commcm Therefore, we have atopped lending In Tumk:ur, Bengal.uru. Rum! and Ramanapr diatricta except

SAtGWAITHIA lallllgttr ...... lll r--------------__,hl,rulll~£1:1 17

Kanakapura.. Bengaluru Region ia actively involved. In eztendlng loans for WASH and Houalng to SHG members in Kolar dilltrict through CMRCe. The region haB made a. b'1Jinnj~ in lending for houeing upto f 2 lac in Kolar district to individual memJ,en, during the year.

To reduce the NPAa the reglon haa lUed. 196 ca.aea for an amount oft 126 lac ln Lolr. Adalat Court. The response tram bon ow a& Ia poor. HOWI':\Itl' the region ha& made effort& to recover~ 12.81lac and t 6.79lac tram NPA aOCOUllt and AUCA UCC~Ullt& reapecti.~ during the year under review.

~Regloa:

Thi& ie the oldest area of opera.tiona. '1'hie region ha& reeovered. and is maring forwanl. It has P"=Oted houalng, education and aanital:ion Joana. It a1ao coven. tribal families. The problem of delinquency haa been ccmmlned during the year by ccm&tant follow up, rlgoroue loan a.eaeeemel\t prooea& and avoiding financing in high riBk area.& and to Govemme.nt promoted groups. Further, we &topped loane to urban groups of Myeuru City due to multiple 'borTOWinp by these SHGe. There are around 25 l\&li'Ia operating in Mylnlru City. The competition is high. Notwith•trmding the competition, Increased foeu& wa.e given fl:sr lending to groups promoted by CMRCa of MYK.APII ln Myaore di&trict and in Chamare,jan•gar dletrlct be&idea partnerlng with a new NOO, ODP In M,y8uru. dl&trlct, Sw:ya in ~anaga.r district and Sruthi Sneha Seva Samllthe, during the year under review. 'Ib.ue, this region eould diebune f 2706lac as againet t 2182 lac diebuned in the previoue year by rqp.tering 24% growth over the previoua year.

Busine.ss 81lubsjjy 'RI.t!1mitlg of C11RC Alluuzglmt' of Al'ysun4 and ~r distrid3 WGS hlrid at ~ lil1'. 'WllliCim D SoulsQ, ~ <WI CBDparllclpoted ln ~

B'wline.ss <ltJategfl mst!rl:ing of NGOs of Jlyiii!UI'U. and ~ dilrCricCs wa held. OM of the paltMI'Na08sew~~~ Mr. WllltQm

D Sm.taa, Vice CNzlnnatt. and CBD ptlltl.clpatBd ln ~

MYlfW'U region continue to malntaln 'zero' de:llnquency below 90 daya; no fnlah NPA was added durlllg the year under review. Tbe region made dforta to recover t 2.78 lac and brought down the NPA to ~ 1.87 lac after write off of' 2.29 lac. Slmilarl;y, the region ma.cle efforts to recover~ 12.87 lac from written off UCC~Ullt& which is higl!eet among all the regions by filing of 86 cues under PLA and meticulou• foliDw-up. 'Ib.e regiml ia det.c:rmincd tn enaure thai there are no NPAII and or overduea below 90 daya.

This region filed eight ca&9 for cheque bounciDg under Section 138 of Negotiable Instrument Act which were referred to Lok Adalat; five C8lleB were eettled and reeovtJed in fulL In reapi:!Ct of three

18 ~~~r.::.~'~::..._ _____________ _, s.\NGHAMIIHIALIIII .. tarUnlllll•

groupe, non bailable warrants were iaeued and are beiDg followed by ue, 'lrith a view to give a ~ee,ge to other wilful defa~. The cue i4 yet to bed~.

Myauru region Ia unique In financing for hlgh value hou.alng loena (dlabur&ed t 20 lac) and education loan to SHG member&' children to puraue higher education.

The Wablan proj~ i4 being implemented in collaboralion 'lrith Mfe. Water.org iD. Myaore and Chamarajanapr districts. During the year under review, the regjDn started lending to tribal SHGe of MM Hilla promoted by a. CMRC at conoeaalonal lntereat rate of 9% with llnandal support af

M/e. Micro Credit for Mothers, Netherlanda. We have lent to 9 SHOe compria!Dg of 145 members to the tune af ~ 29.80 lac for undertaking varioua lhrelihood actlvltiu. The OYenill performance af the region i4 c:o:neidered good.

Kal.abw-gi. regjDn continue• to foeua on n:aching out to the unreached vulnemble/ma:rginaliaed aectlona of aoclety In the bacltward, underdeveloped dlatrlcta of Kalaburgl, Yadglr, Bidar. Since the laat three and half years, we have started lelldlng operations In B!Japur dlatrlct, and two years ago we have etarted our operatlona In Devadurga of Raicliw: dlBtrlct which is one of the backward taluk of Raichur diBtrict.

Aninten!.tJtiDnDl Wommt'& Day wtJS ~by our K«lrrburagi Regloltal OjJIDIII 01t

8dt. Mtz«:h 2019

The region waa able to dlaburae an amount oft 4372.26lac to 1978 groupa during the~ under review aplnst the target of~ 5110.25 lac. 'l'he rqpon hae failen ahort af the target by aver f 700 lac. However, the region stood tiret am""' the region& in diaburaemellt; the outetancling portfolio ia t 4241.80 lac, almoet the .ame outlltanding as that of preriou!J yur. Kalaburngi region contributed about 24% of the total portfolio of Sangbamithra.. The rqpon iB making effnrta to n:duce expoaure to WCDPO groupa due to Inherent rlaka ; thla expoaure wa.a reduced ftom 70% to 51% during the year. Thle region hae regjstered 80% renewal of loane, next ~ to Latur region. 'l'hls lndlcatell that the cuatomer eatiefa.ction level is higjl.

The Kal.abumgi regjDn continues to be in the forefront in financing pu:lglamalike Nnitation and water connection.. Further, detrpite wbstantiallnareaae in buafneaa the region baa managed ita portfolio fairly well ; but during the~ NPAa have gone up tot 62.64lac aa epinM t 36.42 lac a. yearago aa moat af the rescheduled loane done during the demonetization period have defilulted. We will give

SANGHMITHIA t..~inalur Linllllllds :--------------".~..wu::.;;;:.;1=l 19

apeclal attention to bring down the NPA position conalderably during the eneuing year. The CMlnlll pertarmance waa Mtlafactory. 'the tqlon wauldbaw dane better butforcbangeln RqJonal Manager.

Dharmapuri Re&f-Thla region. wa.a able to cHsbunte ~ 2426.84lac to 689 groupe with an fl'V'el'll&'lloan sl.re of~ 3.52lac per group; the loan eize is the highest among all the regloiUI.

OUr Dhannl.rpwl reg/an. has been orgo.nbllng number oftM SHG meets and - sw:h prognzm w.u orga.rriz«l in mllobmalion with KtzdathuT

CMRC.

In Dharmapurl n:glon, NPAs have gone up conaiderabq due to poor a&aesement of NGOs whD.e partneriDg with them, inadequate aalle8BIIlent of groupa and KYC nol'IIUI, u well aa poor fullowup. 1'his yur alone we have written oil an amount of~ 32.90 lac which wu pariced in AUCA taking cumulative write oil during the previous fouryeara to f 180.55lac. Even after write off, still we have NPA outstanding off 156.20 lac. We have hlsleted. that It Ia the respcmslblllty of the region to focu.a on recovery of written off loans and not to add an,y freah NPAs. However, the region hae added~ 25.47 lac u fresh NPAs during the yeu even afu:rwrite-Qif of t 32.90 lac during the yur. We realized that the am~~ of operntioiUI waa too large to molli.wr from Dharmapuri and henoe apened an.other Regional Offire at Coimbatore two years bw:k but still the region 1'ailt:d to contain addition of NPAa. Becauae of unaatlafact:Dry performance In Dharmapurl area, It haa been decided to atop lending to NOOa promoted groups In thla area and to lend only to CMRC groups. 'the region lwl taken lD.Itlattve in fillDg all 008, NPAa and written off aceounta with Lok Adalat for recovery and recovered a mm of ~ 15.95lac againllt target of t 50 lac. All the c:aBe4l filed with various PI.As are being followed up for rec:ovexy. We are con~~tantly monitoring and guiding the region to reduce NPAs. 'I'IWJ region haa come under special surveillance by Head Office.

Da'f'UIIIC4Iftl reat-T Davanagere region la opemt!ng in the diatrlcta of Davanagere, Chltradurga, Shlvamogga, Bellary and part of Chlklmnl.a&aluru. During the Y'laJ' under reY!ew, we extended our lending operadana to Ankola and Karwar CMRCs promoted by MYRADA under Weatem Ghat Project In Ut:tara. Kannacla cHstrlct beeides partnering with n.ew NGOs, Sri Sai Keerthana VSSN, S'I1ERUA and Samruddi Grameena Abhivruddi Samllthe. 'these new initiatme have enabled the region to link 1117 groups with a loan.

20 1;~~~'=-'-----------------\SAMQWAITHIA I.-dina fur Linl.,llll

amount of 'f 2275 lac as agalnat dlabW'IIelllent taJ:iet of 'f 2813 lac fa11lrlg abort by 'f 538 lac. The region ended up with aame amount of dlabunlement as that of prev.loua year, tho'ugh the region partnered with fi.ve new NGOa.

f ~~

NGO meet wu h«d at DiwanJigfmJ in which JtOn

ptUtnM NGOsfram. Hrwflri, Gada(/ and Dhatwad

d'islricC8 hcw8 also~ and evinced i7ltmlst to become pa1'bl.e1'wltlt ~

~sati~~WQShddwilll

CMRCltof~ dJstrld.. Mr. CS Gowda, Program OjJiasr of Ng'l'tJ44~ and Shri R. D. CadiyappanaiiG1"WG.S-~the

~and.mWngtlurir~

The region had NPAa oft 8.74 lac at the b~ of the year. However, during the year, the region was able to recover f 3.47lac from NPA acoounta; it brought down NPAa to 'f 5.50 lac and no fresh NPAs were added during the yeu. The NPAs are conc:ent:ral:ed ~ in Chal1akere and Chitmdurga. branclles. Eft'O!U will be made to recover NPAs in then two lmulche41. The region was able to recover t 3.48 lac from written off accounts. 11te rqim1 ia confident of recovering from written off acccnmta duriDg the enauh:lg year by ll1h1g cues under PIA and vlltlbl to groups by the recovery team. IDfact, we dld not write oil any bad debt during the year. The region ill endeavouring to make "NNL" NPAa by end of eDJJUiDg year and 'NIL' overdue below 90 dayB by June 2019.

Latur Region continues tD be our growth centt:r. It hu focused on loans far tnileta. Among all the reglona Latur has atood ftr&t in terma of percentage of growth over the year with total dlaburaement off 2523 lac aver the prevloua year off 2274.33 lac reglaterlng 11.50% growth taking the loan outstanding tot 2207.59 lac.

Ow I.catur nrgiQn halt""-~ number ofSHG I'PUlleU in aallcaboraticm with t1wJ parlwJr NOOs. CBO, .Mr. R.D. ~~ Jlr • .f(ulbmi, Rsgional

~ando~Mr 111(!/f- cW-o .,._em~~.

SMGtWAITHaA"-'Iilaftr._.....dl r--------------..::An""iiiiu~~:JI 21

The Region maintains excellent mpport with partner NOOs which enables them to achieve aignificant growth on a month to month baafa. During the year under review, a&&et quality to the tune af

~ 34.351ae deteriorated aa the rescheduled. loan& dur!Dg demonetization period are not being properl,y aerviced. We have ad'rilled the region to follow-up mch loans and upgxade the asset& at the eartieat. We are OOD.Iltantl.y :ownitoril:lg and guiding the region. Thee NPA.. are concentrailed in Decmi, Ki1lari and Osmanabad branches where &auda involving .tall had oa:uned. and hence NPA...

As mentioned In the previous year report. we have law:l.ched WASH project Phase II In oollaboratlon with Water.org in Latur regiml during 2016-17. The region haa dane an excellent job In llnanclllg 2202 membem fm <:Onstruction of toilets and renovation of e:Killtingtoilet., water oonnectivity etc., to the tune of ~ 347.92lac, which ill the highest dillburac:mc:nt among all the regiona.

Senghamlthra hae made a name in the area. and the Government ofllclals have been appreclatlrlg our good work. Infact, all stake holdms are indeed happy and acknowledged our contribution. Our aperience haa been vay satisfactolyin. Marathwadarqion and hence: we propoee to expand bueille1111 in Nand.ed and Parabhani area in the ensuing year.

This was a major experiment to work in partnerahip with Oovemment programs which had a. similar strategy. Chhamrpur region baa started lending since October 2013 to Tejaswlni groups formed by Ma.cleya Pradesh Women Development Corporation and Dl.atrlct Poverty Initlativea Project (DPIP). Due to lack af tim~ action by the field etaf£ and too much dependency on the Government officiala fm lending and recovering, the probleme of recoveey accentuab:d and NPAe Wl!ll.t up to f 120 lac for a portfolio of f 500 lac. We wrote alf f 47lac NPAa pertaining to DPIP groups in the previDua fln.anclal year(2017-18). 'l'here was no support tarth<:Oming from Tejaawlnl. program DPMe in regard to recovery. Tl:rua, we wanted to han.dove:r the portfolio management to one of the MFia operat!Dg in the area. However, all the etaf£ of Chhatarpur promised to bring down the NPAe and improve the quality of lending and requnted the management to drop the idea. of banding over to other MFie. The region sought time till May 2019 to achieve recovery target off 35 bu:(SO%) raa the harvesting of wheat and mustard wm be completed by then the lM.rrowers wm. haw cash In their banda which we had qreed.

SHG IMirta UJI!II'e organiJtl«l in collabonztiort with~ ~ Our ttta/f tue N6n

aplaining 1'186'1! for updaling ofboo'l<:s and P""'"Pt ~ qft.htt loans f4kBn by them.

22 ~~~~11011:!!.rt~--------------r(SANGHAMITHM Llndq fur Unlhl•l

Accordi~JW, the Board permitted to CO!ltinue le~~ding to the groupe who haTe promptl,y n:paid by way of n:pea.t loans so that the3e SHGe wvuld not be denied credit. There were around 400 groups who had repaid promptly and are walling for renewal loena which baa been given by the region alnce November 2018. (Note that we had stopped lending for four month& alnce July to October 2018).

In Cider to r.:-<emphaaiee /reitlt!:rate the wmmitment given by the Regional Manager and hia mun tD achiew: certain gaala before 31.03.2019, the Rqponal Office a1 Chhatarpur waa viaited by Chief Executi.e omcer. It waa made clear to all the at.aft' that the region baa been given an opportunity which should be taken u a c.halleJ18e.

To a~en our efforts, we~ a eenior ~ baoker in place of outgloing Regi.onal Manager; he ia aupported by another retired officer from Rqponw Rural Bank (RRB) u NPA ManaF to Hive foc::wled attention on NPA recovery. Further, we deputed two olllcera from Bengelnru and Kalaburegl.. The ~ill trickling in bite and plecea; we expect enhanced recoverlu during April and May 2019 u the harveeted mustard and wheat will be sold by the defaulters by then.

Chhatarpur region baa dlaburaed total loon ~~mount oft 720.50 lac , only to groups which have repaid duriDg the year (AprD. 2018 to May 2019), taking the tntal outstanding tot 70S.86lac.

Perf'o:rm.u.ce ot Colmbatore recfoa :

Thia region wa.a carved aut of Dharmapwi region on 10.09.2016 with a view to improve buBineu, I.:duce NPA.os and to be elOISe tD the aru. of operation• for ~ monitoring and eupervision. The Coimbaton:officeamrtedfunctioningindependentlyfromOctober2016. Duringtheyearunderreview, the reglon dlaburaed t 1359.35lae aa agahult a target oft 1862.50 lac. The region waa able tD achieve 73% of the annual target and reached an autetandlng of~ 1742.46 lac. 'lbua, the region ended with negative growth oft 64.541ac over the previous year. The poor performance was attributed to hi8her attrition of etaff and problem of etreeeed aaec:bJ in Palani and Ooty areae. Palani aru. hu highcet NP.Aa. Added tD that, there waa a new Regional Man.e.ger who tnok c:onalderable dm.e In underatandlng our bnelnH!A modeL

Health and sanitr.dion awanrtUI.!IIt program wa.s organi.lr«l in .Pt:l1ani by Sanghamithtu whenrin, DDM.I'fA.BARD Wid Health~ ojficiala partic:ipated in 1M e11mt

The r.:gion hu made moderate reco.ery from NPA accounts during the year by tiling caaes with Permanent Lok Adalat in respea of defaulting SHGe amounting to ~ 10.59lac; f 2.% lac reo::oven!d from the written oft" acc:ounta. The regjon haa ftled 62 caaea under PLA ln the p:reviaua year. The Region baa been aaked to ftle ~ caaea with PLA without further loa a of time.

SANGHMITHIA lallilgtwi.Mhldl l------------------'An=;;;;u111~:JI 23

Thill region hu made a UDique contribution UDder WASH program supported by M/11. Water.or:g by diaburaing a loan of't 357 lac. The pn:.sent outstanding under WASH pi"CCjp'WD ia ~ 473.03lac, ot whlch ~ 38 lac la OD/NPA. We have aet up a recovery team to improve performance. The renewal percentage haa came down to 32% against 45% 1ut year. 'lbla la one ot the reaBOil& for negative growth of portfolio during the year. Moreover, we have lllowed down in lencling under WASH program because of higher NPAII. The region ball failed to reQch the goale eet for the year under review. We have lnitiaied several meaaurea to !mpmve overall performance ot the fe11lon.

SAl'fGBAIItiT.BRA - Load1118 for u,.ubooa:

Your Compe.ny ia committed to promoting llvellhoode far SHG members. The livelihood approach cone:lders the "household" ae an economic unit. It a!Bo takn ill to account that famfllu have a liY'ellhood etratqy which differa from family to f~ and which comprisee eeveml activitie~~.

SWitainablepovertyred.uctioncan beachleved through the promotionoflivelihoodatrateglea. MYRADA, our promotirlg arpnlzet!on hae taken macy lnit:lattvea to upgrade the aldlla of SHG members to enable them to undertake livelihood activitiea.

Breakdown of purpo~~e ot lnana and amounts per pll:I])Me are gi.ven below:

SM!!P., ••port 01! M.,.a<b J11'9M9~ecf SAG• ....... ~o ............ thor• 1•nen~ct .. otnc NAtY\*Tl ..... ..........

fY 2017•18: Totlll No. of lo.M ta~" PlHP<»>e- wist l1.$$lbV J~S1 $AGs.. Tr,lt~t NQ, o f M .-mb411$: l16$1,

lovt Qf Rt-.4 <rorot$ R$.l ~,., lo-.n<td bv $.lf'(l:~tlhq to

Simple rtpOrt of Mr-•d• pro.nottd SAGs linll«d •o ,.npamidw• pMI'It.d t.~d"C NABYUKTI Softw•rt

rt 2011·18: TotoJAmountt.oonf'dpurpostwiU'Rs.26.7uores bv 11S7 SAGs. focal No. of Members: 21681.

(out of Rs. 4 «OJH Rs.l cr«es loaned by Sa,.t.mit

Bllll"'ng tlle qa.allf:J' of8e11Help Atll.nlt7 Grou,. ~ l:uUtlltlonal Capaclf:J' BaDd'ng (ICB»:

The Mpld promotion of SHGa, the decl'elllae in funcla avallable for ICB 1:!:8irling and the lack of understanding of the features of a genuine SHG have together led to a decline In their quality. Sanghaml.thra has given ICB priority. ln. tum thla decrea.eee the risk of ita Investment. ICB ia often limited to muning in book keeping, While thie ie important, ICB comprina much more. It include~~ an analysis ot the c:auaea of :pcm:rty and oppreaaion, bow to run a meeting which includes aetting the eaenda by all members, how to Improve each one'a partlclpadon, how to brirlg about conaerurua and reaolve confilct, the importance of recorda and accounts, how to plan Uvellhood strategl.ee and lobby for change etc. There are 24 modulea in all. San8bamithra p:rovidea ti1lining for ita atafr at allleve!B in ICB. It aleo providea fund!J to NGOe and Federe.tions of SHGa like the Community

24 ~~~~::.rt!...--------------~ SAtiGHMnHtALinl .. furliftlha•

Managed Resource Centrea to aaaesa the O%ganiaatlonal performance of SHOa and to proride ICB training where required. During the reporting year we have supported 25 Book wrlUng and Capacity Building 1miningp~ c:o'9'ei'iDg 797 SHG membere coating aboutf 2.661ac, which we collllider a useful inveatment to develop and diaseminate kncrwledgt:. Theae programmes wue conducted in a&IIOciatlon with our partner orpnlaaHona, SHPla. We propo&e to give greeter thrust to ICB actlvltlea In the enauing year by allocating a larger amount an' 25 lac for the coming year in c:ollahoradon with CIDORR -Kalaburngi to atre.Dgthen 700 SHGs.

AIMrat ,.oa.r Compaa.J" : Perf'ora:&a~ac:e 2018·19:

During the ~ under n:view, yaur Company's outatanding bas gone up :&om f 17819.28 lac to t 19234.90 lac. During the year under review, there waa negative growth for two quartera af the year; onl,y In the 3"' quarter we have come out of Jl.efjlltive growth but vezy ~ however, due to imp•o•ed diebunsement in 4"' quarter, we have achieved growth of 7.94%, which inclucle4 JLG portfolio.

The following are the reasons al:trlbuted for slow growth.

• We have blacldiated everal NGOa and shifted our fuc:ua to lend to fP:OUp.t promoted by CMRCs and c:ertaln partner NOOa.

• Increased NPAs in Tamil Nadu and Kalaburagi (Kamataka) prompted us to be cautious. To oompeneate, we inc:reaeed the loan IUDOunt from f 10 lac: to f 12.50 lac for good fP:OUPI, which waa done In Januaty -February 2019 to meet the genuine loan requirement orthe member&.

• We Invested ln regular meetings with CMRCs/NGOa to build truat and a good working reJatlonsblp.

• We reduced our expoaun: to Government pnnnoted S1ree Shakthi and Pancha.yat Level Federadon(PLP) fP:OUpa in K.amataka and Tamil Nadu reapectlvely which carry higher rlak of default.

• Mo1t of time wu apent {~of office a tail )in data migration work to the new IIOftware.

• Good number of loan appllcatlona were rejected due to multiple borrowing from more than two MFia by SHG membera.

SANGHMIJHIIAI.tnll"flrllwlhl•~-------------=;""~~torJI 25

A SWOT analysis of your Company is given below:

Strength: Your Company has certain strengths like well laid down systems and procedures, good governance and transparent practices. Sanghamithra is making serious efforts to reach out to the poor and into unreachedfunderserved areas where there are no formal financial institutions, like Bundelkhand region of Madhya Pradesh, Marathawada region of Maharashtra, Hyderabad Karnataka area of Karnataka. We provide credit to the SHGs at affordable rate of interest ranging from 19% to 21% on declining basis with flexible repayment periods. Out of the income generated, we invest on SHGs for their capacity building/book writers training and also on incentives to SHPis as also to SHGs. We have waived processing fee, although it is permitted by Reserve Bank of India. Cost of operations is low as we have partnered so far with the group (SAG). However, as we have started lending to individuals under JLG we will deal directly with individuals. This will probably require a largest number of more qualified staff. The salary structure of senior management ranges from ~ 25,000/- to~ 85,000/- which is much less when compared to other NBFC-MFis. We have been able to raise resources from the banking sector without much problem because of transparency, better governance, credibility and confidence reposed by the lenders on us. Being a Section 8 Company ("not for profit") our onlending rates are very moderate as compared to other MFis. There are no hidden charges. Therefore, we have been able to get loans from the financial institutions f banking sector at moderate interest rates. We follow responsible lending practices, and adhere to the industry code of conduct. We do not use coercive methods of recovery. So far we have used peer pressure exerted by SHG/JLG members for recovery of the loan. Moreover, amount ofloan and the schedule of repayment of loan by the group is related to the average cash flow of the group. Repayment is fixed at monthly intervals and therefore there is no pressure for repayment. Moreover, we provide 45 days gestation period from the date of disbursement to enable the client to make use of the loan and generate income from the activity and then repay the loan.

Weakness: Being a not for profit company, we are unable to attract equity investors. Thus, our growth is very moderate. We are not promoting SHGs; we depend on partner NGOs. During last few years there has been dilution in the quality of promotion/nurturing of SHGs both by the Government agencies and NGOs. Of late, sustainability of SHGs has become a major issue. The SHGs are disintegrating and members are approaching MFis who are lending to individual members under JLG model. In our strategy, SHGs have to start with savings and internal lending and after waiting for a minimum of six months, the group can approach banks or MFis like us for loans. But today, members have no patience to wait for such a long time to get credit, instead, they look for easy option of forming JLG and getting the loans from MFis immediately. NRLM also has seriously weakened the SHG movement. The group is normally not taking the responsibility of recovery from the members in the event of unforeseen events in the groups. The group representatives are not being rotated periodically. As such, they develop vested interest; misuse ofloans also takes place, agents who control the members have emerged. The books of SHGs are not updated regularly, there is a sea change in the groups promoted before 2000 and after 2000. There is total dilution in the quality of SHGs formed after 2000. They are formed with the main intention of borrowing and not for empowerment as was envisaged. These weaknesses are seen predominantly in developed regions where large number of alternative financial systems are available. Moreover, the investment in promoting and nurturing the SHG by various stakeholders has come down over the years. The NGOsfbook writers and a few powerful Women members act as Agents and control8-10 SHGs; they collect the money and misuse it, resulting in increased non-performing assets.

In order to overcome the above mentioned deficiencies/shortcomings, we propose to lend directly to individuals which I have mentioned elsewhere in this report; this also jells with of software and the general practice in the sector.


Opportunities: As a policy, we are reaching out to the unreachedfunderserved areas in Marathwada region of Maharashtra and Bundelkhand area in Madhya Pradesh where poor are unable to access formal credit sources. Moreover, Banks/RRBs have slowed lending to SHGs in all states which provides a business opportunity for us. Almost 10 large NBFC-MFis have became small finance banks and their focus is towards financing medium and large clients. Thus, there is going to be enough space to small/medium MFis to grow and increase outreach.

Considering the challenges faced in the SHG model, there is an opportunity to lend through an alternate credit delivery model under JLG. This model was piloted at Harapanahalli during the year under review. Our experience has been good; therefore, we intend to expand it. We have opened four more branches during the year in Karnataka.

Threats: NRLM, a Government of India program supports the promotion of SHGs, capacity building etc. But in reality, SHGs have been taken over by NRLM and they no longer function as genuine peoples institutions. This has affected our credit expansion. The DPIP in Madhya Pradesh was merged with NRLM two years back. We lost substantial new business and are facing the problem of recovery. Moreover, Tejaswini program initiated by Madhya Pradesh Women Development Corporation for promoting SHGs came to an end on 30.09.2018 and the future of the federations promoted by them is not clearly spelt out by Madhya Pradesh Government. All these federations are weak in governance and management.

New generation private sector banks like HDFC, ICICI, YES bank, IDBI besides public sector banks are lending to SHGs under Business Correspondent model; they are allowing BCs to enhance interest rate by 5% to 9% which is much higher than what we provide to the Business Facilitators.

We are also facing political risk/threat especially from promises of loan waiver.

The threat of unhealthy competition and breaking of groups has grown in the recent past as seen from reports of Credit Bureax. All MFis have become members of Credit Bureax to avoid over indebtedness and multiple financing. However, clients continue to borrow from more than 3 - 4 MFis as revealed in Credit Information Bureau reports. Unless all the MFis strictly follow guidelines issued by RBI, the Andhra Pradesh crisis may happen again.

Reduction in interest rates:

In order to bring about uniformity in the interest rate structure, the rationalization of interest rates was taken up considering the borrowing cost, cost of operation, bad debt provisioning etc., the Board approved the same as mentioned below irrespective of the loan products.

'-+ Loans u pto f 3 lac

'-+ Loans above f 3 lac

'-+ Loans under JLG

- 19% of interest p.a. on declining basis.



Considering the felt need of CMRCs/SHGs, we have increased the maximum loan amount upto f 12.50 lac per group and reduced the interest rate to 'good' SHGs of 'good' CMRCs to 19% PA from 20% since 01.10.2017, for above f 1lac upto f 12.50 lac. We have increased the quantum ofloan for good SHGs ofCMRCs from f 10 lac to f 12.50 lac) with effect from 01.01.2019 (this still averages only f 50,000/- per member) . This relaxation has enabled your company to scale up lending and achieve higher growth besides meeting the needs of SHG members.


Thill rationalizaticm has benefitted a large number of SHGs who borrow upto ~ 3 lac; those who bDJTOW over~ 3 lac have the potential to generate higher ca.ah flow due to incn:w~ed level of livelihood act:Mty and are capable of eerviclllg a hJgher lntereat rate. We have removed oonceulonallntereat rate otlered to SHGa In Madhya Pracleah and made it on par with other atatea.

ptnanmna '8o1f&u' ~of Hale Mahad'IIU.wara Bll1a (11.11 BUiaJ:

B'amatab:

.As mentioned In the previous year's annual report, we have started lending to tribal SHG11 of MY Hilla promoted by a CMRC at MM Hilla at 9% inte.reat for undertaking livelihDod activities with grant aMilltance received from M/a. Micro Cn:dit for Mother~~, Netherlancb. Aocordingly, 9 SHG• oomprieing 145 famlllea were e:.tended

Under ~~program in assoclaflon witft M/ s. .!o6ci'O aedit jbr mother:t, Nl!lfhtlrltut4s, were jtnJul.ced far~ liMill7tood adiWiea.

loan of ~ 298.00 lac at 9% ~•t p.a. ~nnt outatanding is~ 206.80 lac. There a no delinquency. The SHG members are pursuing various llvdlhood activities and generating Income on sua1alnable baala. We have submitted a proposal to the donor for additional a.selatanoe. The approval !a delayed aa there is a change in the donor representative.

We, at Sanpamithra have always been willing to have better two-way communication between the employee and the employer. T1me and again we have tried to encourage feedbeck from the employees for pDBslble improvements ill our ayatema and procedures, better management af human capital, p1annillg and implementation wwards ac:hieving our vision, miaeioD. etc.

OUr Cllperlence la that the employeea have certain laauea tD be brought tD the notice of the Senior Management but refrain In view af the reluctance to paaa through the a.dmln!atratlve channel which lll9IY afrect them~. Therefore, a Grievance ReclreaNJ. ayatem. waa inttodu~.

The Grievance Ri:dreaaal ayatem pi"'OIidea all employee a with direct aca:as to the HR Mllll.I!F at Head Of.ftce. They are uaured that ~dendallty will be maintained and action to redreaa the grievance will be initiated. Employees have been aclvieed tD make use of the new grievance redreNal system

28 l;~.::.ll't,__ ____________ ----\SAt4GMAMITHIIALtnlllllfwiMihlo11s

in the normal course of their duties. Grievances like ill-treatment by senior colleagues, undue expectations, harassment including gender issues etc., may also be lodged under this system. However, response from the staffis still poor.

Gender

We are an equal opportunity organization, but the women staff strength is only 10.63%, though almost 99% of beneficiaries from our main activity of SHG financing are women. We have endeavored to ensure a safe, secure and congenial work environment at Sanghamithra where all employees can deliver their best without any fear or inhibition. In pursuance of this objective, we have evolved a "Sexual Harassment at the workplace (Prevention, prohibition and redressal) policy" and complied with the Sexual Harassment at the Workplace Act,2013. We have issued a detail guidelines in 2014 in regard to redressal mechanism and constituted a redressal committee headed by Ms. Vidya Ramachandran, Director, and other members of the committee are :

Ms. Yasmin Master

Ms. Chandra Singh

Ms. Savitha

Head- HR

-Director,

- CFO, Myrada

-Manager, Sanghamithra

-Convener

As there are no sexual harassment cases reported, there was no occasion to meet since its formation.

Customer grievances Redressal Mechanism:

In order to serve the customers more efficiently and improve our services, there is a system in place. We have displayed the telephone numbers of the Chief Executive Officer and the Regional Manager at all the branches to enable the customers to contact them in the event of any deficiency of services. We have also printed telephone numbers in the sanction letter and pass book with a request to contact the persons mentioned therein in the event of any difficulties encountered. We are recording the written as well as oral complaints received in a complaints register and dispose of them within the stipulated time frame to the satisfaction of the complainant. In each region we have a designated officer to manage and respond to complaints in a reasonable time frame.

We furnish below the complaints received and disposed off during the year:

Sl. No. of Date of Date of No. Nature of complaint complaints receipt disposal received

1 Issuance of No due certificate- Sri 1 16.08.2018 16.08.2018 Dhanalakshmi Sangha, Magadi

2 Issuance of No due certificate- 1 24.09.2018 24.09.2018 Byraveshwara Sangha, Patlu, Ramanagara

3 New loan request- Sulthan sangha, 1 16.10.2018 16.10.2018 Mulabagilu

4 To finance groups organized by 1 25.02.2019 25.02.2019 Vanasiri Grameenabhivruddhi Yuva Kalyana Sangha, Davanagere


Tollfree phone (Help line):

We have recently installed tollfree telephone no. 18004250508 at Head Office to facilitate customers to contact us not only for lodging complaints but also to know about our products and any other matter. We have printed this toll free number in pass books, sanction letters, at Regional Offices and branches so that the customer can approach us without any cost to them.

Financing to Nandini Groups (KMF):

Karnataka Milk Federation (KMF) has 14 Milk Unions across the state. KMF has promoted SHGs exclusively for members engaged in dairy activity. Many groups were inactive. In order to activate and strengthen the groups, staff from MYRADA were deputed to Milk Unions ofKMF in the districts of Mysore, Chamarajanagar, Kolar, Bengaluru Rural, Chitradurga, Davanagere, Shivamogga, Kalburagi and Bidar. With the support ofMYRADA staff on deputation to KMF, we started credit linkage to KMF groups since 2014-15.

Regionwise KMF Nandini groups lending performance:

During the Year Previous year Present outstanding

• J • J i J go u go Gl u 81 Name of ... ~.9 c:l ... ~.9 c:l ... ~.9 c:l

2 ... 0 , 0 ... 0 , 0 ... 0 , C!Jl, ~ !il ~

.. ojl, ~ !il ~ .. ojl, ~ !il ~ DO the Region 0

~9~.3 0

ciS~ .3 0

ciS~ .3 ... ... ... 0 ~~ • 0 z u ~~ • 0 z u ~~ •

:a~ ...

:a~ ...

:a~ ...

ci ::I ci ::I ci 8 z 0 z 0 z 1 Bangalore 4 35 10.50 10.48 4 49 14.70 2.35 4 35 10.50 10.48

2 Mysore 21 316 49.60 40.17 13 166 39.00 42.00 30 427 78.60 46.09

3 Davangere 6 71 15.85 10.68 7 95 12.00 16.00 11 138 26.40 14.75

4 Kalaburagi 0 0 0 0 0 0 0 0 10 10 32.50 11.08

Total 31 422 75.95 61.33 24 310 65.70 60.35 55 610 148.00 82.40

As can be seen from the above Mysuru region has maximum loans under the arrangement with Karnataka Milk Federation followed by Davanagere and Bengaluru, while Kalaburagi region has not made efforts to link Nandini groups during the year. This was due to non-availability of fodder on account of drought like situation prevailing in the area. Further, groups promoted by Federation (milk unions) are scattered and not falling within the area of operations of Sanghamithra. That is one of the constraints in reaching all Nandini SHG by us.

WASH PROGRAM (Watsan Project):

You are aware that we are collaborating with Mfs. Water.org, a non-profit US based organization in providing credit for construction of toilets, water connectivity, water filter, rainwater harvesting etc,. The Phase I program ended in February 2016. Our donor Mfs. Water.org was very happy with our performance and approved a Phase II program with a financial support of ~ 239 lac. The three year project commenced from 01.07.2016 and ends on 30.06.2019. Lending target of~ 44.35 Crore for various activities over three years has been accepted by us.


The program did not progresa aatlafactorlly in the flrllt year of Phase n program. especially during demonetization period; the donora are very much concerned about alaw growth alnc:e we ach.ieved only 50% of the target upto a. year ago, due to varioue reuona aa detailed ill my prev.ioUII annual report. In this backdrop, we initiated l!level'al. me!U!JUl'eB to achieve the aooepted goals in the remaining period of thie projed AM a etratA:gy, we extended lending under water cn:dit to the entire area. of operation~~ of Sengharaithra.. We have provided for each reglmla Project Manager and an Engineer to moblliae water credit loans by creating the demand for the products and to monitor Implementation. HoweYer, we dlacontinued lending under WASH program m Chhatarpur region In 9iew of !ncreeaed NP.Aa.

The follow!ng atrateglea were adoptA:d to apeed up Implementation:

• Targets under WASH program were given to each regiaD. which in tum allotted a target to each branch bMed on the potA:ntial aVlillable.

• The reriew meeting& of R£glonal Man.egera and Implementing atatr were held quarterly in the preaenoe of afftclala of Water.otg from Chennai and New Delhi. In such meetings ll.eld level problema were di&cu&aed and reaolved.

• The Project Director 1tarted. vieiting more oftm all the regione and es1abliebing relationllhip with various stake holdere. He also be(!lm motivating staff to achieve the ~t.. Beeidn Chid Executive O:ftloer during hia reriew meetings with field atalJ re-emphaaked the need for lending to WASH program. Added to this, bringing lleld ataft' and project atalf on same page haa really helped ln extmdlng Joana to the tune of~ 2201.85 lac to aa Jll8llY aa 15689 SHG members in the year under review aa against~ 2035 lac achieved during the previous year reglatA:rlng a. marginal growth of 8%. This is not a mesn achievement COilllidering drought prevailing ill lfaharaabtra and part of Xamataka.

In addition to the above, we pur&ued the following time te&ted &t:rateglea to lncreaae our portfolio Wlder WASH program,

=> Tra.inirlg/ awareneaa program for 30099 members of 76 pancbayata involving 1386 SHGa ill five dietrictll.

SANGHAMITHIA._. .. ,.,~~~~J--------------...:Am~~~d 31

=> Awareness programs involving 2042 SHG in all regions were conducted about WASH topics wherein 25617 women and 2493 children participated. Due to this, 2042 SHGs came forward to avail water credit loans.

=> During Kalajatha events hand wash practices demo was given to school children.

=> Involvement ofCMRCsfCBOs in WASH program during the period- 42 CMRCs, 36 Federations and 61 NGOs participated in the awareness program.

::::> 369 health and hygiene related programs in four districts were conducted where 21418 members participated.

::::> Five training programs were conducted in Latur, Coimbatore, Dharmapuri, Kalaburagi and Chhatarpur to all staff involved in the program besides Train The Trainer (TTT) refresher programs were conducted for Area Managers/Credit officers.

::::> Wall writing was done in 22 villages in Latur, Chhatarpur and Tamil Nadu to create more awareness.

In order to encourage/motivate the field staff to increase lending to WASH program, cash award worth~ 1,35,000/- was paid in a grand function to the outstanding performers at all levels. This gesture in recognizing the performers was much appreciated by the staff.

All these initiatives have enabled Sanghamithra to achieve very significant performance during the year under review as detailed below:

During the Year Cumulative progress

Name of the product 2018-19 (01.07.2017 to 31.03.2019)

No. Amount No. Amount

Household Toilet Connection 3468 657.30 7944 1475.30

Household Water Connection 1318 69.45 2481 158.23

Water Infrastructure Extension 620 61.90 1402 140.10

Sanitation Renovation 2424 219.06 4317 409.48

Water and Sanitation 4801 1034.26 10873 2385.02

Water Filter 3058 159.88 4503 232.55

TOTAL 15689 2201.85 31520 4800.68

World water day: World Water Day was organized for SHG members and school children in all areas of operations; essay competitions were organized and drawings on environmental/water issues were promoted. Street play team of MYKAPS demonstrated ill effects of open defecation, health issues etc,. On this occasion, 3205 women, 4 71 men and 149 children participated.


M/e. Water.org, bnide3 giving grant a.sei!Jtan~ off 239lac. have aleo provided f 100 Million by way of revolvlllg loran replly8ble ln one lump sum on completion of three years at 10.40%+ withholding tax, to ensure that water credit project doea not auft'er li:om lack of finance.

Manar;tn& rlllk and C~e&tiaa value:

You are aware that we entered into a Memorandum ofUndenrtanding (MoU) with IFC for mit4&ring various risks aaaaciated with our lending. IFC in turn appointed M/s. M2i CODBU!ting Company to provide advlaory aervlcea to a&&iat In identi(ylng rlaka and to auggut vatioua meana to mitigate them.

Balled on their 8ll,!ZeSiionefrecommendalionB, we have iDiliated several-urea lie conetituting a eub-committee cd' the Board on Risk Management and constitution cd' enior :management committee on rlak management. The Board baa approved a rlak management policy. Aaaet Llab!llty Management (ALM) committee Ia alao ln plaoe throu8h which we monitor our llqulcllty position.

HO'WeiiU, we are not able to generate certain reporte such as liquidity ~~tree• testing, accounting and financial reporting. aenaitivity analyllia with reapect to interest rBiea riak maturity matri:r. etc., aa the saft:ware we - uaiDg Ia not able to provfde a.cleq_uate and relevant Information. But we have requested Mfa. J~ Solutloll8 to Include all theae feat:uRaln the new eoftware which are critical and important for ~t to provide effectiYe monitoring and control and mitigate rillke.

ftau.dal Lltenlc,. and cUat proteetloa :

Tbia haa aaaumed algniftcant importance ln the light of reported exploitation of illiterate clienta by a few unscrupulous Milia. Surveys show that 76% of our popnladon doea not underatBnd even 'basic financial concepts. In this backdrop, it baa become imperative for ua to provide financial literacy to our clienta who are P"!(lominantly tSemi illiterate. ~re, we have been organizing reeuJar literacy

~GHNt\mtlt,\ltnll .. fQrtmlhll ... r---------------"h.::;~~ro;l 33

program in regard to importance of savings, repayment of loans, planning and budgeting, health and hygiene related issues besides their rights and responsiblities. We organize "SHG meet" at least once every month in every branch where we create awareness among SHG members on the various issues mentioned above; apart from getting the feedback on our services. This feedback has enabled us to modify our products and reduce time in sanctioning of loans.

Social Performance Management (SPM) :

Though financial sustainability is essential, it does not automatically ensure that benefits are realized at the client level. Social performance is the effective translation of an institutions social goals into practice in line with accepted social values, these include sustainability, improving the quality of financial services, improving the economic and social conditions of clients and ensuring social responsibility of clients, employees and the community we serve.

Sanghamithra, being a Section 8, not- for- profit Company, has a strategy to achieve its social goals by balancing financial and social performance. We realise that it is not enough to conduct a few non-financial services for our clients under corporate social responsibility. We have tried to integrate social performance into microfinance strategy and management systems.

We open programs in remote areas and with marginalized groups even though we know that it will take comparatively longer to break even in these areas and with these groups. Some examples are : i) Bundelkhand program, ii) credit to sex workers, iii) credit to tribals in MM Hills and iv) our focus in remote rural areas.

Senior management oversees implementation of the institution's strategy for achieving social goals.

Your Company has been focusing on

=> Client centric approach

=> Providing loans at affordable rate of interest

=> Providing service at the doorsteps of the client.

=> Engaging in livelihood promotion of SHGs.

=> Developing products and services that meet client needs.

=> Redressing client grievances quickly.

=> Reducing over indebtedness of the borrowers

=> Avoiding harsh collection practices

=> Reaching out to the unreached as in the case of Madhya Pradesh, Maharashtra and Hyderabad

Kama taka

=> Treating the clients fairly and respectfully, respecting privacy of clients.

=> Following transparent pricing of products.


Your Company follows a written HR policy that protects employees and creates a supportive working environment. Your company monitors employee satisfaction and turnover.

Your Company has focused on choosing a Board of Directors committed to the institution's social mission.

Life insurance for the SHG members:

We were covering the lives of our borrowers with LIC of India under Aam Aadmi Bima Yojana(AABY); however, the same was closed in 2017. LIC came up with a product to cover the lives of SHG members with 45 days lock-in period during which time if any insured person dies he/she will not be entitled for the claim. This made us approach other private insurance companies and we partnered with Mfs. Kotak Life Insurance company. The premium is very low at~ 3.33 per~ 1000/- per annum and we cover to the extent of loan amount for the tenure of the loan. Thus, in the event of unfortunate death of the borrower, the loan risk is fully covered. Moreover, recently our Company has become Micro Insurance Agent of M Is. Kotak Life and we get commission at 10% of the premium paid.

No. of members covered under one year policy 20934

No. of members covered under two years policy 45006

TOTAL 65940

Death claims received 43

Death claims submitted 43

Death claims cleared from KOTAK 43

Claims pending with KOTAK 0

Our experience with Mfs. Kotak has been good especially in terms of claim settlement.

Credit Rating:

As per Basel-11 norms, companies intending to avail loans above~ 5 Crore from banking institutions are required to get credit rating done by rating agencies approved by the Reserve Bank of India. Accordingly, Credit Rating for~ 200 Crore Long Term Bank Loans was been entrusted to Mfs. Acuite Ratings and Research.

We are happy to inform you that Mfs. Acuite Ratings and Research has upgraded our rating by one notch from the previous rating "BBB -"to BBB (stable) which is valid up to 31.10.2019.

Now, that we are lending directly to individuals and loan amounts are being credited to SHG members savings bank account, the risk of misuse by others is avoided and tracking system has since improved. We are sure that the rating will improve by one notch.

MFI Grading :

This is done by M/s. ICRA, a grading agency. The MFI grading is assigned on an eight point scale'M 1' being the highest and 'M8' being the lowest. The MFI grading is a measure of overall performance of an MFI on a broad range of parameters which include creditworthiness analysis using the CAMEL


approach, Institutional arrangement, CAR, asset quality, ALM, Operational effectiveness, scalability and sustainability.

We wish to inform you that Mfs. ICRA has retained the grading as 'M2' for the year 2018-19. It is just one notch below the highest grading.

Code of Conduct Assessment (COCA) :

The COCA report expired on 18.03.2019 and it was entrusted to Mfs. ICRA well in time but they are yet to complete the task.

INSPECTION, AUDIT AND VIGILANCE AT SANGHAMITHRA

Internal Audit System

We have well established Internal and External audit systems in place since the year 2008. Over the period we have streamlined the system of conducting the audit. As of now we are conducting quarterly audit of Branches. Changes have been introduced both in Inspection format and rating of the branches from time to time to mitigate the Credit and Operational risks.

An internal audit is conducted to ensure whether the laid down systems and procedures are being followed at all levels and to minimize the level of Credit risk, operational risk and other risks associated with our lending operations involved in the day to day functioning of the organization thereby improving the quality of assets.

In the current Audit Report Format (ARF) with a view to have objective assessment and scoring we have introduced work sheets, comprising simple value statements and re-aligned scores in tune with current risk perception. Each branch is rated on the following General efficiency rating (GER).

General efficiency rating (GER).

Efficiently Managed

Well Managed

Fairly Well Managed

Satisfactorily Managed

Not Satisfactorily Managed

We have classified the branches as low risk, medium risk and high risk. High and medium risk branches are personally monitored by the Regional Manager. Such branches are audited more frequently than the low risk branches.


STATUS OF AUDIT REPORTS AS ON 31.03.2019

We have 113 Branches as on 31.03.2019. The position of Branches as per rating awarded during the year 2018-19 as compared to 2017-18 is as under.

Type of Rating (GER) Previous year Current year

2017-18 2018-19

(Number of branches)

1. Efficiently Managed 9 04

2. Well Managed 32 38

3. Fairly Well Managed 36 50

4. Satisfactorily Managed 28 19

5. Not Satisfactorily Managed - 02

6. New branches yet to be audited - --

Total No. of branches 105 113

As can be seen from the above, number of efficiently Managed branches has come down whereas well Managed together with Fairly Well Managed branches have gone up and Satisfactorily Managed branches have been upgraded to Fairly well managed Branches. Two branches have fallen in the "Not satisfactorily Managed" category during the current year mainly because of occurrence of fraud. The number of branches under Efficiently Managed category has come down mainly due to poor performance under problem loan Management. We have advised the Area Manager and Regional Manager to monitor more closely, particularly the "satisfactory" and "Not satisfactory" rated branches to ensure that these branches are upgraded in the next audit. Inspection department at this office is also closely monitoring poorly rated branches.

REGION WISE STATUS OF AUDIT REPORTS AS ON 31.03.2019

Region EM WM FWM SM NSM Total

Bengaluru -- -- 6 1 1 8

Coimbatore -- -- 1 9 1 11

Davnagere 1 11 3 -- -- 15

Dharmapuri -- 1 12 -- -- 13

Kalaburagi 1 12 9 1 -- 23

Latur -- 5 10 1 -- 16

Chhattarpur (MP) -- 2 6 7 -- 15

Mysuru 2 7 3 -- -- 12

04 38 50 19 02 113


As can be seen from the above only 4 branches earned Efficiently managed & 38 Branches achieved well Managed ; the majority have been graded on Fairly Well Managed. We will to focus on 19 Branches graded as satisfactorily Managed and 2 branches graded on unsatisfactorily Managed. Maximum number of Satisfactory f Unsatisfactory branches are in Coimbatore region followed by Chhattarpur mainly on account of increased NPAS and few staff perpetrated frauds by misusing collected money from SHG, besides failure to follow systems and procedures as laid down. We have taken steps to improve the ratings.

JLG BRANCH AUDIT:

Joint Liability Groups are one of the new verticals.

SRFS opened its first JLG Branch at Harapanahalli during the year 20 17-18 and opened four more Branches during the current year, taking the total number of branches to five. The Joint Liability Groups are formed by our own staff members. We have devised a new Audit Format for JLG Branch with suitable scoring and Rate matrix based on the Risk perception in line with existing audit system. The periodicity for auditing Branches is being done Quarterly. Now, we would like to have audit of JLG branches monthly as loan sanction/disbursement is happening more frequently covering more number of individual members.

CONCURRENT AUDIT OF REGIONAL OFFICES:

We have created a new position as Concurrent Auditor, commencing from the financial year 2017-18 in order to bring about qualitative changes in the accounting standards as the accounts departments in each Regional Office were not following the uniform accounting standards; besides there were deficiencies in the area of reconciliation, regulatory compliances related to audit, checking of loan documents, checking of income leakage etc,.

The concurrent auditor conducts the audit of all the Regional Offices once in a quarter and the Regional Offices have furnished their compliances to the audit leading to closure of all the reports. This has facilitated in maintaining uniformity in accounting standards among the Regions and minimized the audit observations in the extemal audit.

External Audit

The Company's Accounts are being audited at the end of each financial year; this is a mandatory (Statutory Audit) as per Company's Act and is placed before the Board for approval. Your Company's books are audited quarterly as well and placed before the Board for approval.

BOOK DEBT AUDIT

Book debts/stock Audit by Extemal Agencies: As decided in the Project Implementation Committee meeting of Bankers held on 28.02.2014, the common stock/book debts audit of SRFS has been conducted half yearly on behalf of all the Banks/ Financial Institutions, covering the book debts up to the half year ended 31.03.2018 and 30.09.2018 by Mfs Akasham Associates Pvt Ltd. The report is being submitted to all the lending Banks along with the Action Taken Report. The auditors are being changed once in a year as suggested by the lenders.


Vigilance

There were three cases of Misappropriation/Frauds involving Credit Officers reported during the year under review to an extent of RS 24,49,727 f-. With our constant follow up and persuasion we have been able to recover Rs 16,46,961/- from the fraudsters. The break up is given as under.

1) Osmanabad Branch. Latur Region. Maharastra

Total Amount of Misappropriation/Fraud

Amount recovered till date

Balance to be recovered

We have recovered the entire amount with interest.

2) PALANI Branch. Coimbatore region, TamUnadu

Rs 8,93,961/

Rs 8,93,961/

Rs- NIL-/-

Total Amount of Misappropriation/Fraud Rs 5,07,510/-



Rs 1,65,500/

Rs 3,42,016/-

We have permitted the region to file a police complaint against the

fraudster Employee.

3) Anthiyur Branch. Coimbatore region, Tamllnadu

Total Amount of Misappropriation/Fraud: Rs 10,48,256/-



Rs 5,87,500/

Rs 4,60,756/-

The fraudster has promised to remit the balance amount before May 2019,failing which we have instructed the Regional Manager to file a police complaint.

All the frauds/ Misappropriation cases have been reported to the Board from time to time. We have initiated several measures to prevent re-occurrence of such frauds in future.

FINANCIAL RESULTS (tIn lac)

Particulars 2018-19 2017-18 %age of growth

Gross income including other income 3372.96 3005.47 12.23

Gross Income from operations 3293.38 2923.74 12.64

Gross operating expenditure excluding depreciation 2543.40 2241.96 13.45

Add: Depreciation 20.03 14.02 42.87

Total Expenditure 2563.44 2255.98 13.63

Gross operating margin 809.52 749.49 8.01

Gross operating surplus 809.52 749.49 8.01

Provision for loan losses (prudential) 148.44 274.54 -45.93

Provision for start-up fund- FPO 0 5.00 0.00

Provision for IT -(2013-14) - 25.00 0.00

Provision for IT -(20 16-1 7) 100.00 - 0.00

Net surplus after Appropriation 561.08 444.95 26.10


INCOIIIE EXPENDITURE

Empbtntfil

Oepredatkln

98%

• Revenue f rom operations • Other income 61%

~ ofJ'Ip•nolal :Relv.lta:

The income from loan ope!UtioDJS hu g9ne up by 12.23% ever the corresponding period 1Mt yqr; the loan portfolio lncreaaed by '7.95% tot 19235.90 lac from t 1'7819.28lac during the same period. There Ia a net growth off 1416.621ac.

Depreciation on fixed aJIHta increased by 42.87% OYer the pn'lrioua year u we acquiredfpurchaaed hardware I aoftwa:re, tabs etc., worth over t 20 lac.

Pe,yment of lncentlvea to NG06/CMRC6 (BFs}la t 144.321ac.

Mediclaim premium iD.crea.lled to t 22.&4lac compared to t 14.92 lac in the prev.ioue year.

We have pal.d t 75lac torr Deptart:ment which Ia 20% on Income tax demand of t 3,75,10,13'7/- fo:r the asaeeement year 2016-17.

Our net surplus hu gone up to t 561.08lac. u qainst t +44.95 lac regieterillg 26% growth over the corresponding period last year.

Following~ the chargea levied by ue on the loans provided to our cllen111.

~tlozt. Chup: No~ c1large is being l.elli.ed with a lliew TIOt to burden the~ .

.ll'lfollni.IC: Interest ratea were raUo•uulud baaed on the a1ab syatem with efl'ect &om 01.10.2018 In respect of General. Purpose Loana as detailed below. However,lnrespecto!Madh,ya Pradesh operations, onlending :rate of interest waa b:roudlt on par with other statu on declining baei.s irmlpecti.ve of loan amount 'Iince 01.10.2016 to make the operation~~ viable.

Loan upto t 3 lac

.Ahcwe ~ 3 lac

Lending to JLG membe!'ll

-19%

-20%

-21%

However, In respect of 'iood' rated CMRC groupa for loana above t 1 lac upto t 12.50 lac lntereat :rate Ia reduced to 19% p.a. from 20% with efl'ect from 01.10.2017.

Pta 11 a n'"l fee: We have ....trod. the prote..mg fee of 1% to ~uce the bun:len on our clients, though permitted by RBI.

40 ~~~.:::rt.::...._ _____________ ___, s»>GHAMIIHIA~..~n~"farllnllll•

Peaal ID.tea'Nt: We have waived the penal inte:reet on account af dela,yed. repa;y.ment and bulk ~ent.

BoiiiDCe Chequ.a cJaar&M: We ha'fl'llncreaaed the "bounce cheque" charges ftom f 100/- to f 200/-; it aervea to discourage iall'll8li.Ce of cheques without malntalnfng adequate balance in grcupflndl.vldual account; banka are debiting Sangbamlthra. t 200/- to ~ 300/- lilr e'fl':IY bounced cheque. Of late, cheque bounce cuea have oome down oonaidemb\y.

DBP08l'T8:

Our Company ie regi8~ under Section 25 of the Companies ~ (Se<:tion 8 Company of New Act) and u auch 1a not permitted to accept deposita either ftom the public or ftom our clients. We have respected thia.

Opentfcmal atpHpw; During the year under reriew, your Company dl&buned a sum of t 17897.80 lac to 7967 groupe. Of them, new groups (1lm linka&'e) number 2313; the loan advanced waa ~ 5346.121ac. 'The balance

amount oft 12551.68 lac waa lent to the ai&t:ing groups (5654) a.s repeat Joana. 'lbia waa achieved through the netwoxk af 115 branches spread aC101911 four eta~. ThUll, we have extended cumulative credit Hnlmv to 1193153 bDuaebolda with an ag:repte amount off 124254.04lac.

KltY PA'RAJIBTBR8

.AufJblio Incfkot>ont

Oa.utandln& SIR:

Your Company'& llnandal outatandfng portfolio aa on 31.03.2019 waa t 19234.90 lac against an outstanding portfolio of f 17819.281ac during the oorreapondlng period laat year. The average 1o&n eize per group has gone down to \' 1.45 lac from t 1.50 lac over the prev.loua year.

(RII. In t.c)

"' "! ... ~ ...

SANGHMITHIA t..~ ... w Llnllllllds:--------------".u..,;:,;1=l41

lfarnher of FOU,_ Ulll.mld:

7967 group• have been II.Milrted during the year under review aa apin'lt 7718 gro\IP' during the corresponding period laat year.

5484 $()()() 4986

4100 4097 4432

4070 4411

3000

1845

During the year 89067 f'Amilie11 (from 7967 SHGa) have been aaaiated u compared to 89224 families during the prcvioua year.

Calllalatln UDOaDt leat em. m.pt!oa:

t 124254.04 W: hu been lent upto the year end u 'l&llimrt t 106356.24 W: lent upto Jut year end., n:~ an increalle of 16.83%.

Calllaktln •umber or pou,. ..... d:

Clients in 81520 groupe (JLO and SHG) have been 11nanced alnce incep1io:n.

F.DIAJfCIAL Dm1CATOR8

.n.umetal ~fttB ndfo:

lntereet earned on lending f'or 2018-19 WQ t 3293.38 hu: aa apin•t" 3005.54 lac the Jut year. Thla Ia an lncreue of 9.58% CM:r the year. PDrtfoHo lncn:uecl from f 17819.:18 l4c to " 19234.90 l4c durlrlg the year. Interest payout to the blinks lll&lJinally incz'eued by f 195.28 lac. Thia Ia due to increalle In Interest rate by lending ballka u .U.O lncnued onJendlng to SHGe. Operating BUiplua iiH::reued by 8% over the correaponcfing period Lut year due to proYillilming on uc:ount of bad debt to the tune of " 148.44 hu: u «lao apecial prov;.icmins off 100 hu: apinllt Provieion for income tax f'or the aa•ee-ent year 2016-17.

Our austa!D.a.blli!;r ratio baa improved from 119.43% to 125.30%. Further, yield hall also lmprowd to 18.77% from 18.48% a year ago, msultiDg in net interest margiD (NIM) haa gone up marpnaD,y from 9 .68% to 9.69% over the wneaponding period laat yetU".

42 ~~~;=:.~'~----------------< SAHGHNAITHIA Llndq IDr Llnl .....

Productivity

The number of loan accounts per Credit officer has increased to 115 from 105 due to increased lending. The number of groups handled by each field staff varies from centre to centre depending on geographical spread of groups. The average loan size per group has marginally come down to ~ 1.45 lac. In the previous year it was ~ 1.50 lac. Average loan disbursed per Credit Officer during the year is at~ 155.63 lac compared to the corresponding period last year which was at~ 155.06lac.

Cost of operation

The operating cost has gone up marginally to 5.64% from 5.59% during the year under review. The staff expenses went up due to recruitment of additional field staff with a view to expanding business and additional cost on account of opening of branches; payment of incentives to NGOs/CMRCs also doubled over the year. However, total cost ratio has marginally gone up to 14.61% from 14.26% as compared to a year ago. Our endeavor is to contain avoidable expenses and keep cost of operations under control.

Yield on advances

Yield on loans and advances is 18.77% against 18.48% over the previous year. The net interest margin (NIM) is 9.69% as against 9.68% in the previous year.

Capital Adequacy Ratio (CAR)

CAR has increased to 26.93% from 25.98% over the corresponding period last year, but well above Reserve Bank of India stipulation of 15%.

Return On Net Worth (RONW) has marginally increased over the previous year from 9.61% to 10.83% and Return on Assets (ROA) has also increased to 3.20% from 2.81% over the previous year as there is improved net surplus from ~ 444.96lac to ~ 561.08 lac during the year.

Linkage

1st linkage

2nd linkage

3'd linkage

4th linkage

5'h linkage

6th linkage

7th linkage

8th linkage

TOTAL

Disbursement Pattern Linkage wise disbursement

(Cumulative up to 31-03-2019) (Y 0 Y)

(~In lac)

As on 31-03-2019 As on 31-03-2018

No. of No. of Amount Amount groups groups

2406 5530.15 2277 5150.21

1717 3447.31 1859 3713.96

1265 2578.52 1426 3086.77

911 2198.98 865 2052.96

638 1526.91 498 1264.24

409 968.99 323 896.77

237 640.20 210 624.81

384 1006.74 260 732.52

7967 17897.80 7718 17522.23

Linkage wise %age of increase/

decrease

(In respect of Amt)

7.38

-7.18

-16.47

7.11

20.78

8.05

2.46

37.44

2.14


Unkagcwi&c no. of groups linked VoY

1st linkage 2nd linkage 3rd lintaae 4th linkase Sth linJQge 6th lin\(olge 7th link.lst 8th lin.kage

• 2019 • 2018

D tplfaa

Up to 100000

100001 to 200000

SS30.1S .21

200001 To 300000

300001 To 500000

>500001

"l'''''AI.

linkagewise amount disbursed YoY

371.).96

S 2019 111 2018

AmoiiDt wfM ~t

(Cv-tattve 11p to 31-o3·l:l019) ('f' 0 Y)

f t' 111. lac}

All em 81..o34019 All - 31.o3·2018

ll'o.of A:a&o11Dt ll'o. of Amo1aat &li'OQJII IIIO'GJII

2153 1503.111 2257 1739.64

2136 3406.22 1953 3190.10

1882 ~40.&7 1701 4%5.42

1389 5595.99 1450 5956.25

407 2551.54 357 2170.&2

'2'967 l.'n97..10 7'11. 1'711:ta.aa

Lotul.td.M ... ,..... of !a II/ ........ lin IWJill ~t ot

Alat)

·13.59

6.Tl

&.41

-6.05

17.54

2.14

44 l=~o::.rt,__ _____________ _, SAMGHMIIHtAt..n~•"rtm~hll•

~ C) %

~ ~ % s: rID :::> .... :;· = -~ r-

~ :;.: 0 0 .... ...

-:::1 :::1

~-!i iXi= ' "' .....,., =c ;:;:;~ -_J::::,. 01

State

• .11: • .. • c .. ~

:1 "tJ • .E E • 1-

~ I!! .c.c ... :IE.

oa.c :..• .c • tl'tl •I! :lEa.

Districts

Bellarv Banaalore Rural Bidar Biiaour Chamarajnagar ChikkamaQaluru Chikkaballaoura Chitraduraa Davangere Gulbaraa Hassan Kolar Mandva Mysore Raichur Ramanaaara Shimoga Tumkur Uttar Kannada Yadair Total Dharmaouri Dindugal Erode Krishnaairi Namakkal The NiliairisiOotvl Salem Tiruppur Total Latur Osmanabad Total

Chhatarour Panna Tikamgrah Total Grand Total

Sanghamithra Rural Financial Services Highlights of the Activities at the end of March 2019 (I Operations)

The following are some of the Highlights of our performance during the period under review:

. --· ... ·--Disbursed during Cumlloan disbursed Loan amount Cuml No.of No. of groups CumiNo.of Households (In

%age of %age of %age

'lo age of %age of %age

No.of of of Amount 2018-19 2017-18 growth 2018-19 2017-18 growth 2018-19 2017-18 growth 2018-19 2017-18 growth 2018-19 2017-18 growth 2018-19 2017-18 growth groups

235 454.61 2470.17 2015.56 22.56 508.62 471.51 7.B7 1549 1314 17.88 390 299 30.43 20631 1B121 13.85 7761 3389 129.01 1 5.00 6876.62 6871.62 0.07 154.27 275.96 -44.10 4565 4564 0.02 55 122 -54.92 51363 51352 0.02 2659 1841 44.43

106 249.53 1387.71 113B.1B 21.92 27B.35 235.37 1B.26 960 B54 12.41 198 16B 17.B6 13077 11B56 10.30 4165 191B 117.15 142 313.B5 1370.B2 1056.97 29.69 335.79 347.49 -3.37 794 652 21.7B 225 115 95.65 10867 9204 1B.07 51B5 252B 105.10 362 1090.01 7537.79 6447.7B 16.91 1175.30 843.67 39.31 5216 4854 7.46 597 479 24.63 B7152 B2203 6.02 14753 6608 123.26 79 173.20 634.35 461.15 37.56 224.00 220.14 1.75 367 288 27.43 156 120 30.00 5563 4600 20.93 3529 1565 125.50 0 0.00 131.90 131.90 0.00 0.00 0.00 0.00 125 125 0.00 0 0 0.00 1719 1719 0.00 0 0 0.00

31B 583.2B 6433.61 5850.33 9.97 703.50 7B2.05 -10.04 6035 5717 5.56 609 496 22.7B 90329 86647 4.25 13275 6056 119.20 604 BB2.52 5795.65 4913.13 17.96 7B1.36 5B3.07 34.01 5163 4244 21.65 715 415 72.29 65245 60812 7.29 10294 5013 105.35

1419 3244.33 17047.43 13803.10 23.50 3524.91 3103.26 13.59 1254B 11129 12.75 2397 1955 22.61 192555 175980 9.42 55262 25152 119.71 71 161.35 204.35 43.00 375.23 154.97 42.46 264.96 91 20 355.00 B9 20 345.00 1237 295 319.32 1507 295

521 1186.52 4642.31 3455.79 34.33 1423.17 121B.20 16.83 2582 2061 25.2B 854 534 59.93 39939 33515 19.17 19116 7577 152.29 0 0.00 1217.35 1217.35 0.00 0.00 0.00 0.00 1056 1056 0.00 0 0 0.00 1955B 19558 0.00 0 0

513 1454.71 16B32.71 1537B.OO 9.46 1638.9B 1482.31 10.57 11745 11232 4.57 934 756 23.54 194729 1B7942 3.61 22694 10203 122.42 47 72.15 152.80 80.65 B9.46 57.03 44.29 2B.76 245 198 23.74 54 62 -12.90 2236 1710 30.76 1313 707 B5.71 20 58.95 2845.92 27B6.97 2.12 96.19 159.37 -39.64 1259 1239 1.61 52 69 -24.64 21397 210B9 1.46 1849 1046 76.77 40 107.90 3522.46 3414.56 3.16 141.21 154.14 -8.39 2629 2589 1.54 102 B5 20.00 38030 37498 1.42 235B 1062 122.03 3 9.30 549.37 540.07 1.72 36.72 111.97 -67.21 240 237 1.27 34 91 -62.64 4303 4267 0.84 1525 1124 35.68

156 32B.60 514.15 1B5.55 177.10 355.50 175.76 102.26 205 49 31B.37 196 49 300.00 21B9 467 36B.74 2671 521 264 492.75 3502.70 3009.95 16.37 394.49 629.73 -37.36 2313 2049 12.88 370 451 -17.96 36533 33146 10.22 10860 6130 77.16

4901 10868.56 83670.17 72801.61 14.93 11984.36 10880.76 10.14 59687 54471 9.58 8027 6286 27.70 898652 841981 831.84 180776 82735 118.50 2B5 1251.00 B701.B9 7450.B9 16.79 1315.B9 12BB.7B 2.10 3384 3099 9.20 574 499 15.03 61684 57599 7.09 15096 7047 114.22

52 156.15 582.91 426.76 36.59 245.57 349.94 -29.B2 206 154 33.77 208 210 -0.95 4614 4031 14.46 52BO 2539 107.96 151 441.40 6768.10 6326.70 6.9B 572.9B 675.17 -15.14 3674 3523 4.29 410 390 5.13 53002 51197 3.53 10658 4709 126.33 291 995.64 8495.23 7499.59 13.2B 1065.19 109B.37 -3.02 37B7 3496 B.32 594 67B -12.39 66161 61485 7.61 16625 B275 100.91

21 53.60 88.95 35.35 0.00 59.B5 64.33 0.00 43 22 0.00 35 42 0.00 1067 BOB 0.00 970 529 0.00 21B 570.80 4153.55 3582.75 15.93 691.44 595.07 16.19 1619 1401 15.56 455 387 17.57 24472 22065 10.91 9943 4355 12B.31

94 126.60 726.35 599.75 21.11 153.69 220.94 -30.44 324 230 40.B7 105 133 -21.05 5655 5022 12.60 2984 1676 7B.04 57 1B5.55 1071.15 885.60 20.95 232.47 270.97 -14.21 339 2B2 20.21 162 174 -6.90 5511 4877 13.00 3B77 1923 101.61

1169 3780.74 30588.13 26807.39 14.10 4337.08 4563.57 -4.96 13376 12207 9.58 2543 2513 1.19 222166 207084 7.28 65433 31053 110.71 1238 2233.30 6843.91 4610.61 48.44 1962.11 1554.38 26.23 5071 3833 32.30 1742 1663 4.75 67106 54523 23.08 34703 17353 99.9B 158 294.70 865.10 570.40 51.67 245.4B 327.64 -25.08 649 491 32.1B 215 268 -19.7B BB19 7194 22.59 4941 2791 77.03

1396 2528.00 7709.01 5181.01 48.79 2207.59 1882.02 17.30 5720 4324 32.28 1957 1931 1.35 75925 61717 23.02 39644 20144 96.80

251 366.7B 1083.67 716.B9 51.16 359.19 262.92 36.62 1215 964 26.04 461 566 -1B.55 15979 13995 14.1B 1097B 6057 B1.24 111 161.67 52B.52 366.B5 44.07 168.19 117.52 43.12 736 625 17.76 239 268 -10.B2 10129 9155 10.64 5435 2B94 B7.80 139 192.05 674.54 482.49 39.80 17B.49 112.50 5B.66 786 647 21.48 254 273 -6.96 12147 10939 11.04 5742 3006 91.02 501 720.50 2286.73 1566.23 46.00 705.87 492.94 43.20 2737 2236 22.41 954 1107 -13.82 38255 34089 12.22 22155 11957 85.29

7967 17897.80 124254.04 106356.24 16.83 19234.90 17819.28 7.94 81520 73238 11.31 13481 11837 13.89 1234998 1144871 7.87 308008 145889 111.12

Up to 100000

2136

10000110 lOOOOO

Loan sfztwlse "mount disbursed YoY

loan sizewise no. of groups linked YoY

1882

200001 To 300000

11 2019 • 2018

300001To 500000

407 357

lfj >500001

Up to 100000 tOOOOt to 200000 200001 To 100000 300001 Tc SOOCX)() > 500001

• 2019 • 2018

ltatew!M IW• oC porttoUo

-· ... ...

DONORS DURING PREVIOUS YEARS

Canadian International Development Agency (CIDA):

CIDA provided grants of one million Canadian Dollars in 2000-2001, which was equivalent to ~ 320 lac approximately. Out of this, ~ 300 lac has been capitalized for core activities.

Ms. Rohini Nilekani:

Ms. Rohini Nilekani had gifted 2000 Infosys Equity Shares of~ 5 I- face value each; we realized a sum of~ 94.57 lac in the year 2001 by selling these shares in open market. Another~ One Crore was given by means of cheque in 2004-05 for on-lending to SHGs. Further, she gave a grant of~ 7lac for purchase of Hand Held Billing Machines in 2007. She has given a grant assistance of~ One Crore to start lending operations in Madhya Pradesh which enabled us to lend to SHGs at reduced rate of interest at 16% p.a. In all, she has supported Sanghamithra by way of grant to the tune of~ 301.57

lac till 2013-14.

Sir Dorabji Tata Trust (SDTT):

SDTT had sanctioned a sum of~ 87.50 lac (spread over three financial years) as grant, commencing form August 2004. Out of this a sum ~ 60 lac has been utilized towards on lending to SAGs and ~ 27.50 lac for Capacity Building of SAGs I staff of SRFS. During the period 2006-07, SDTT released an amount of~ 10.50 lac towards Capacity Building, Impact Study, Research and Publications. The amount has been fully used during 2007-08.

Care India Project:

Care India Project funded a project "Learning On Wheels" and Kiosk Banking during the year 2003-04 of~ 25.35 lac.

Hope International Development Agency (HIDA):

HIDA donated Canadian Dollars 1,28,0001- equivalent to~ 49.77 lac upto the financial year 2007-08. A review of the functioning of Gulbarga Programme was conducted by the Donors during their visit to Kalaburgi on 18th November 2008. The team also visited Bangalore Office on 20th November 2008. They were pleased to release an additional grant of Canadian Dollars 400001- equivalent to ~ 16.68lac during the year 2008-09. Thus, our Gulbarga Programme has received a total grant of ~ 66.45lac which has been utilised for onlending to SHGs and for meeting administrative expenses in the ratio of 70:30.

Micro Credit for Mothers, Netherlands:

We did not receive any revolving fund assistance from the donor during the year under review. The entire revolving fund has been lent to tribal groups of MM Hills from 01.04.2016. We have lent to 10 Tribal groups during the year under review with a disbursement of~ 29.80 lac ; the present outstanding is~ 21.97lac to nine groups.

Cordaid:

We could not avail ECB loan of€ 3500001- ( ~ 20 million) approved by Cordaid, a Netherlands based International Development Organization as the ECB Loan was to be hedged as per RBI guidelines. The cost of hedging in a volatile currency market was considered very high; it was working out at

SANGHAMITHRA lending for livelihoods :--------------------Ann~~~~~~~81~ ~ 4 7

8 - 9% over and above the 5.5% rate of interest charged by them. Therefore, we requested them to cancel the loan. However, we had received € 10000/- by way of grant from them towards improving the quality of lending. The grant received off 6.41 lac was fully utilized towards meeting part of the salary of Auditors/Manager (Operations) towards re-assessment of the groups as also meeting expenses relating to development of software.

PROJECT FINANCE:

Summary of borrowings: ~in lac)

March 2019 March 2018

Name of the Bank Nature of Limit facility Outstanding ROI Limit Outstanding ROI

State Bank of India 6200 cc 3123.69 11.45 6200 3549.82 10.75

Canara Bank 2500 cc 2584.04 11.20 2500 2494.06 11.65

Union Bank of India (TL-5) 1000 TL 599.97 11.45 1000 1000.64 10.95

Union Bank of India (TL-6) 1000 TL 999.93 11.45 - - -

SIDBI 500 Sub- 179.34 8.00 500 347.32 8.00 ordinated debt

Indian Bank 2000 cc 1987.28 12.00 2000 1859.71 11.85

Indian Bank 1000 TL-2 538.68 12.00 1000 783.90 11.85

Indian Bank 1000 TL-3 1001.53 12.00 - - -

NABARD (RHS) 500 TL - 10.00 500 339.36 10.00

Rabobank International 400 TL - 11.75 400 200.00 11.75

Bank of Maharashtra TL- 2 600 TL 0.19 11.40 600 205.64 12.20

Bank of Maharashtra TL- 3 600 TL 461.66 11.40 600 656.29 11.40

VijayaBank 500 cc 486.80 11.55 500 431.98 12.10

Syndicate Bank 1000 cc 937.57 11.50 1000 990.48 10.70

WCIF 1000 TL 1000.00 12.20 1000 1000.00 12.20

Rotary Club 8 8 NIL 8 8.00 -

Lakshmi Vilas Bank 500 TL 458.33 11.00 - - -

TOTAL 14367.01 13867.19


auut int.iioaff7l(l ban1a.uise ah4l'8 of~

A&Bir.T CLA.BBIFICATIOll AJID PllOVIBIOli1JIG

P.nrtUioalq ROIIDll:

'""

Rt:aene Bank of India (RBI) haa i1111ued (Yide their Cin:ular No. RBI/2011-12/290 DNBS.CC.PO. No.250/03-10AH/2011-12 dated 01.12.2011) rev.laednorma ofprov!alonfngonloan aaaeta for NBFCMFia which were eliecttYe from Apr112013.

lllf per the revieed guidelines of RBI, the loan provillionsl'lhall not be leM than the hidJ.er of:

a) l% of the outatancling l081t portfolio, or

b) 50% of the aggregate Joan fruttallme"t.a overdue for more than 90 days and lesa than 180 d.aya, and

c) 100% of the aggregate loan inetallmenta which are overdue for 180 days or more.

Although, your Company i.a not an NBFC-MFI, we have bc:cn following the provi.aioning norma from 2011-12 itaelf. Acx:onilngly, we had to make a.provlalon of~ 412.17l.a.c on the loan aaaeta for the year 2018-19. While, ~ 367.00 1.a.c provlalon was already held towards bad debt, we have made addltitmal provieian of ~ 45.171.a.c which would take care of the p:rov.lalon norma for 2018-19.

The total loan toes provieioning held towards bad debt ie f 412.171ac.

Ap-wiH RPA pa.ltioD

We fumillh below age-wille portfolio at riak below 90 days & above 90 da,ya u on 31.03.2019.

Mll!'chll019 Mll!'chll018 %11l•••ue/ llo.of Ddllllt KPA llo. Of Ddalllt liP A ·-.AplllU,. Gnupa Amollllt OatlltadiD& GIOCIJ'I Amollllt (OD Outwu:uiiDC w.r.t

UI.O"IIAt 1-30 da.ya 61 7.63 52 6.72 13.54

31-60 days 75 11.42 119 13.82 -17.37

61-90daya 80 20.47 105 26.25 -22.02

'tO'l'AL 1116 3!J.H 3'76 46.'19 -11.13

Above 90 days 645 450.25 454.37 684 411.87 482.62 9.32

Gnus41 Tatal 861 489.'7'7 4&4.8"7' HO 45~Ui6 482.62 6.78

WGHAMITHIA ~.~-. fartm~hii•}---------------'A=1111;;11~R,a;gl 49

You w11l observe from. the above, that PAR below 90 daya haa come down to t 39.52 lac against t 46.39 lac over the conupondlng period 1a.at year. There Is a decline by 15.53% due to the etfortll of Myaore Region in monitoring of montbJ¥ repa,yment from group.s and follow up to ensure that there ~ 'NIL' ODe below 90 daye ; the region hae not added any fresh NP.Alt during the year. Da~ Region too baa lllll.de aincere effort& in bringing down the ODa below 90 da:y11 a.a alao the NPA& which were brought down from. t 8.751a.c tot 5.551a.c over the year. However, all the other Rqlona, W:.,Coimbatore, Kal.aburagi, Chhat81pur, Dharmapuri and Latur Regions failed not~ in containing addition of &elsh OD groupe, but also in letting their OD groupe deteriorate into freeh NPAII.

The NPA& stood at.f454.371a.c for the year 2018-19 agalnatt482.621ac reported during the prerioua year. T.b.ere Ia a decrea.ae off 28.251a.c In NPA after write-off oft 9llac duriDg the reporting year.

We give below the age-win and Region-wise NPA poeition 1111 at end oflfarcll2019 v/e 2018;

REGilN

6ANGALOO'

;otiATAmJR

'COil-SA TORE

.OAVANAGEIIE

DHAiif'IAPURI

'KALASWG!

LATUR :~IYS()ftE

TOTAL

DAYS 17%

1·30 DA'IS

2019 2018

0.25 0.99 . .

2.58 1.83

0.54 . 0.46 1.89

0.32 1.77

3.48 0.24

I 7.63 6.72

181-365 DAYS

8%

REGION-WISE 00 & l'f>A STATI.5 AS ON MARCH

31-60 OA'IS 61-90DA'IS

2019 2018 2019 2018 . 0.79 1.16 0.74

1.85 2.54 us 1.47

3.69 4.01 2.59 3.19

0.49 0.11 0.37 . 2.13 3.25 6.31 1.26

0.67 2.53 . 14.16

2.59 0.65 1.20 . . . .

11.42 13.88 20.48 26.82

2019

TOTAlOO

2019 2018

1.41 2.52

10.70 4.00

8.85 9.04

1.10 0.11

8.90 12.40

0.99 1M I

7.27 0.90 .

39.52 47.42

> 365 DAYS

91-180 DA'IS 181·365 OA'IS ABOVE 365 OA 'IS

2019 2018 2019 2018 2019 2018 . 18.90 . 7.60 52.47 36.51

4.13 19.28 12.28 15.52 58.65 40.44

24.79 21.36 23.16 H.58 17.76 17.20

0.29 2.83 . 4.19 5.26 1.72

36.11 99.59 64.83 66.85 55.27 41.56

4.26 37.13 26.62 31.76 .

12.83 28.66 16.58 3.74 5.45 . . 2.54 1.87 4.61

82.41 230.29 143.47 112.48 228.49 142.04

2018

43%

9%

TOTAL NPA

2019 2018

52.47 63.01

75.06 75.24

65.72 53.15

5.55 8.75

156.20 207.98

62.64 37.13

34.85 32.39

1.87 7.15

454.36 484.80

181-365

50 ~=~""rt'-----------------1 SAMGHAMRHL\~.~n~'-furliftlhl.-

You ma,y o'bl!lerve that during the yeu 2018-19, the NPAa below 180 dayt!l haV"e n:!ducecl to t 82.41 ian from f 227.081ac reported during the earlier year. The reduction under 180 daya ia more on account of deterioration 1n the quality of as seta which moved to above 180 days with contribution from all the Region• exoept l(yaore and Davanagere. Though, Dharmapurl Rqlon -~ t 30 lac in thie ca~, however it could not upgrade the NPA etatus. 'lb.WI, the NPAa under 181-365 da111 increased from t 114.81 lac to f 143.47lac. There~ CrelJh f 26lac NPAa identified by Kalaburagl Region 1n thia category during the year. In the above 365 days catqpry it Ia obaerved that the NPAs have Increased trom \' 142.04lac In the earlier yeu to\' 228.49lac 1n the yeu under reporting. 'lbi8 ia apin due to deterioration of the a.aaeta from Bangalore (\'15 W:), Dhannapuri (r 14lac), Cbhatarpur ( f 12lac) Regions and fresh addition off 31 lac from~ Regjon.

To1al NPAs de<:resaed from f 482.62 lac over the correapondlng period laat year tot 454.37 lac In the period under review after write-off oft 91 lac In March 2019. The maximum freah NPAs baa come from Coimbatore Region (t 40 lac) followed by Kalaburagi It 30 lac). Latur and Cbhatupur Regions too added fresh NPAs significantly. M)'111ore Region haa done ex:ceptionaD:y well in managing the OD and NPAs throughout the year. D&vanagere RegiDn too haa put in elforta to oon11aln the OD and NPAa. Illfact, we did not write otf any be.d. debts of Davanagere region during the year as they are confident of recovering NP.As in normal cow:n.

We have initiated elforte to emulate the pro='lll adopted by My8ore Region in containing OD and NPAa in all the other Reglona during the current year. Thla Ia apart from the apeclal ta.ak aaafgned for Coimbamre, Dharmapurl and Cbhatarpur Reglone far reductlan of OD and NP.Aa. Kalaburagl and Latur Regiona failed to file aey PIA 8Uite for rec:o'Y'el)' during the yeu under review. Both the Regions have been advilled to focus on ~ of the NPAe u most of them are of :rec:>ent origin and need concrete and concerted elforta. Each of the Regions haa been gM:n a cballcnging NPA and AUCA. recovery ta.ak. With the added benefit of In~ In quantum of lllcentl.ve for recowzy of NPAa and AUCA to the amcerned etaff at alllevela and cloee monito:riJ:lg and guidance from the concerned authoritiN from Head ottice, the NPAII would be reduced sigaificaDtly during the ensuing year.

We will continue to handle the hardcore NPAs through ftllng of caaea In Permanent Lok Adalath In respect of all NPA and AUCA accounts. Suimble lllatructlona to all the Regions have already been larned In this regard. We have been maldng aignlflcant reaJVerles in NPA/AUCA accounts through PLA euita. Acco~, we list below Region-'llriae the rewiltly made t.llro'udJ. filing of PLA IJI.Iita.

Rs in Lakh

AMOUNT CLAIMED AMOUNTSEnlED AMT. RECOVERED CUMULATIVE AMT

REGION SHGS UMIT 0/S AMT.CL

AMT AIM SHGS AMOUNT SHGS AMOUNT SHGS AMOUNT

AS ON 31.03.18 fiJ7 1,299.55 465.15 784.56 255 208.08 291 fiJ.21 334 89.84 BANGALORE 95 157 . .50 51.52 51.52 81 42.87 67 16.80 81 34.18

COIMBATORE n 464.10 56.37 56.37 77 52.92 48 15.30 77 33.77

DAVANAGERE 189 3~.93 520.51 257.38 32 19.53 58 4.78 58 9.80

DHARMAPURI 107 378.20 140.n 137.58 107 123.88 107 15.95 107 41.54

KALABURAGI 7 15 . .50 11.32 11.32 5 5.23 5 3.22 5 3.22

MYSORE 22 5.00 85.91 200.56 37 20.18 86 21.64 86 21.64

497 1,329.23 866.4 714.73 339 264.61 371 77.69 414 144.15

SANGHAMITHaA Lmlilatwlili6illa ~----------------:An::::.;;,rui~~~:JI 51

In order to ensure quality assets, we have advised all the Regions in Karnataka and Tamil Nadu to lend to CMRC groups, erstwhile CMRC managed and promoted groups and groups promoted by credible NGOs. Similarly, we have advised Regions not to lend to groups promoted by black-listed SHPis and to groups promoted by SHPis that have existing groups in default category (OD/NPA/ AUCA). We have formed Recovery Teams especially in Tamil Nadu which has contributed 50% of total NPAs of Sanghamithra. Chhatarpur Region which is under our watch list for business continuity has been issued separate instructions for business and recovery of NPAs.

Bad Debts Write-off:

The Board approved write-off of~ 95 lac in respect of 165 groups in the previous Board Meeting held on 18.03.2019 since chances of recovery from such groups in the normal course was considered bleak. Accordingly, an amount of ~ 91 lac was written-off by debiting loan loss provision account as on 31.03.2019 and the same was parked in Advance Under Collection Account (AUCA) for further follow-up and recovery. During the year under review, we have recovered~ 18.57 lac from written-off accounts as against ~ 35.31 lac in the last year. The Regions slowed down filing of fresh cases with Lok Adalat and lack of follow up of cases already decreed for recovery.

Risks and Concerns :

As an MFI, we are exposed to various kinds of risks. We list below certain risks associated with our lending to SHGs and corrective actions initiated to mitigate the risks.

Three features of risk management and control :

i) Quality of board and senior management oversight, formation of Board Risk Management Committee and management level committee to review the risk areas and evolve suitable action plan to mitigate the same.

ii) Adequacy of policies limiting risk, Quality of risk management and monitoring

iii) Adequacy of internal controls to prevent frauds

Operational risks and credit risks:

a) SHG members are members in more than one SHG.

b) SHGs members also availing loans from Banks under SHG-Bank linkage program and borrowing from MFis in their individual capacity leading to over indebtedness.

c) Non-adherence in following KYC norms.

d) One member of the SHG capturing the major part of the loan amount.

e) Loans to fictitious groups.

f) Emergence of agents who control the group and also reduce the work of the MFI staff.

Risk Mitigation:

As mentioned elsewhere, we had partnered with IFC since July 2016 to identify various risks and suitable strategies to mitigate them. We have already initiated several measures in this regard. We hope to see the results in the coming year.


We have become a member of three Credit Bureaus. We verify whether individual members have borrowed from more than two MFis and their credit history.

KYC norms have been made stringent by obtaining Aadhar as compulsory and identification proof of the borrower as envisaged by RBI as also ration card to verify whether members of the family are members of other SHGs.

We have also introduced a system of assessment of the loan required by individual members within the SHG.

We have started crediting the loan amount directly to the member's Savings Bank account instead of crediting to the SHG group account to ensure that the exact loan amount is received by the members who have applied for the loan. SHG members are very happy with this system. Hence, we discontinued in most of the places the practice of cash disbursement in the presence of Credit Officer and of obtaining Demand Promissory Note to the extent ofloan availed by individual member.

Reassessment of loan proposals are done by Area Manager to ensure all the norms/guidelines are followed and that the proposal meets the eligibility criteria as laid down by the Company; this also ensures that the group is genuine and not fictitious.

Internal control and fraud prevention:

Collection by cash

Since cash recovery is done in almost 65% of the cases, the Company is exposed to high risk. To reduce this risk, we are moving from handheld billing machines to tab with android based technology to generate receipts; the amount so recovered is credited to the SHG loan account. Moreover, the system generated receipt creates confidence among the borrowers. We also ensure that the days collection is remitted to the Bank into our account on the same day without fail.

The Inspection and Audit of a branch is conducted once in three months. All the transactions are verified. We also ensure that balances between the Branch and Regional Office are tallied every month. Added to that, officials from controlling office, make frequent visits to the branches and verify the books of accounts. Thus, an effective control is exercised over the functioning of the branches. This also prevents possible frauds.

We have revised the systems and procedures from time to time to plug the loopholes in the operational systems. We also revised the inspection audit format to strengthen monitoring system.

Other risks such as interest rate risk, market risk, political risk, attrition risk are being discussed by the Board and senior management and appropriate action is being taken to address them.

PROJECT IMPLEMENTATION AND MONITORING COMMITTEE(PIMC):

This committee was initially constituted under the Chairmanship of NABARD DGM/ AGM. The CEO of Sanghamithra is the convener of the committee. Its objective is to review the performance of Sanghamithra in utilizing the revolving fund granted by NABARD. Later, the committee was enlarged by enrolling all the financing Bank Managers as members of this committee. The members of the committee are Branch Managers of all Banks from whom we have borrowed. The committee met 4 times during the year under review and deliberated on various issues. All the members actively participated and made valuable suggestions for improvement in performance. The minutes of the meeting and action taken report are being circulated among the lending bankers.


Ploject Ac1ri1o17 CoiiUDittee CPAC)

Thie committee has been conetitu~ at the inetante of SIDBI to review the pt!/rlormance/ operational lawea of Sangbamlthra. 'l'hla oommlttee haa met twice during the year and aeveral iaauea were dl!lcusaed and declalona lll'l'iwd at particularly In respect ot rele8.se of loan by SIDBI and utllla:ation of grant and loan of~ 5 Crore, &anctioned for Madhya Pradeeh operatio:a.a Ullder PSIG program. We had a meeting with Madhya Pradesh aflicials at Bhopal to die<:W~~S and agree to the utilization of grant amount. lAUer on, we had a meeting with Mr. S:rikanth, AGM, SIDBI, Bengahuu offite to reriew the performance of Sangbamlthra in general in regard to utru.atio:n of gmnt aaalatanc:e.

BUIIAJf RB80VRCB8:

The categoty wl9e etd' details are aa under :

'l'otalnam'bu Total

81 of emploJeu •lllllhrof c:atepl7 31.03~19 S1.03.2018 -pto,e. B'o. JolDecl d'lll'iq left. 41111'1q

th•'J'Ul' Uao,....-. 1 Chief Executive Officer 1 1 0 0

2 Chief Financlal. Officer 0 0 0 0

3 Regional Manager& 8 8 3 3

4 Heads/Chief Managera 7 7 2 2

5 ManaserOffice 14 13 3 2

6 Manager Field 38 38 3 3

7 Credit omcera 119 126 29 36

8 Water & Sanitation 8talf 14 16 3 5

9 Other offu:e •taff 38 37 9 8

'l'O't.AL 1139 !M6 a IS9

During the year 2018-19 the al:tritionlevd.ofthe employeee waa around 24%. The attrition level ia l!llightly hi,gh in respect or field etaff particularly Credit Officer..

54 ~~~~11011:!!,rt:_ ____________ --r(SANGHMITHM Llndq fur Unlh•l

We rec<lgl'ire the 9Blue of t:rainin8 and endeavor to impart training fNery year to all the membenl of the atafl'. It is our endeavor that every member of the a taft' ahould Wldell!P at leaae one training conducted either by Internal ar eztemal agencies.

Duriac tb par:

a. We orpnlp<l four days tra1n1ng programme in collaboration with otllclala !rom M/s Jayam. Solutions (P) ltd, Hyderabad Rg'llldiDg implementation of new eoftware cai!ed • e FlMO" from 02.04.2018 w 05.04.2018 at MYRADA, CIDOR, HolfUI' for at! MIS/ Accounte of!U:en!l, Regional Managers of all the region e:zcept Chhatarpur in connection with emooth lmpleme:ntatlml of new Software.

b. We orpniw! ttaining for all .Area Mangers at :MYRADA, CIDDOR, Ho.sur from 06.08.2018 to 08.08.2018 in n:g:ard W orpnilllation beh.a'rim' through Mr. Ajith ICini ofBuoyancee, Bangalon:.

c. We conducted t:1ln) orientation programme for junior credit otllcers as well as new recrulbl during the year, in which 63 employeea participated.

d. Refrnher coun~e was conducted for 11enior Credit Oftioen from 03.12.2018 w 05.12.2018 at MYRADA, SPOORTHY, Kamaaamudra to update their knowledge and aldlla In which 24 employees participated.

e. Mr. Nagaraj HM , Head, Busine8l'l DeY'd.opme:nt and NPA Man.agement aDd Dr Pup.zhendii, Regional Manager, Dhannapuri were deputed to liMB, Bangalorc from 26.11.2018 to 30.11.2018 for the programme on Cballenges of Managing Inclusive Finance in India.

Apart from organizing the tnUning programme for eta~£, book writenJ training programme for SHG members are held regularly. During the year 25 such programmmea were conclucted in which 797 book writers participated.

AWAllD AND RECOGRITIOK:

Sangbamlthra has been lmpraring ita per(ormance ateadlly over the yean. nUa would not have been possible without the active Involvement and suppart of emplayeea at various levels. Be-ginning from the year 2013, the program of awarding the employees towards their ccmtrlbution to the growth of the organization was introdu.ced to booot the morale of the employeee far the good work they have dcm.e to improve the image of the orpnfflltion The Award~~ are giv'e:n annually to the varioUII <:ategp!y of employee• based on their pedormance in their respective poaitiona.

Mr. A1oylfiwl F~. ~and CBOam seen with the atoffwho hlwe ~in thtriT petfoml411.08

The Award and Recognition function wu O!pllized on 13.10.2018 in President H~, M.Y$C)re to reeognlz.e outatanding performance by our fteld atalfunder 21 categorlea. The award functioll waa chaired by our beloved Chairman: aeveml J)!n!ctora also participated. The award t\mctlon waa a grand 8\LCICieiiS,

WAGB RBV.IBIOK:

TheSalaJyand allowance to the employeee ofSanghamitbm waslutn:viaedefl'ectivc: from 01.10.2013 and waa '98lld up to 31.03.2016. SUbaequently the redalon waa not done due to implementatioll of K.R.A. ayetem from the tlnanclal year 2013-14 which waa tall:iDg care of the hike In the aa1ary and allowances every year.

With a view to att:mct akllled, talented Creah employeea and alae retain the eldatillg emptoyeea It waa found neceasary to revl.ae the Sala1y and allowanoea. While OO!lalderlng the ft:Yielon we have taken into account the aa1ary attuc:ture of other Micro Fmance inatitutions. The reviaed Salary and AtiCIWIUlCe$ are revised with effec:t from 01.01.2019 with an additional expenditure of f 49 l.aal per annum.

Lou. IUI.Ct.toD colrlllllttee meeUap:

The loall committee& In the Seven Reglone met 547 tim.ea during the year and sanctioned Joana to membera of 7967 groupe am.ountlzlg to t 17897.80 lac. We thank the committee members on the Boanlzuune\y, Mr. William D' Souza and Mil. Yaamin Maate:r for their commitment and rupport.

Sanghamlthra ia g'O'I"el'Ded by a eight member Board of Dlrectora, COJIB!etizlg of eminent per&Onalltiea representillg different fielde. 40"A. of the membera are independent direcrora. The board membera have a atrong commitment and an overwhelmjng desire/urge to develop the live• of the muginaliaed;

ss l;~'.!:.ll't~----------------r~GMAMJtHRA .......... Uwlhlods

with their vast experience in the eector they talce active inte:rat in the affaire/work of Sanghamithra and etrive to guide the organi.zation in the rip.t direction. Ala a I!Dgn of their commitment, they do not accept any sitting fee or t:raDaport. c:o111ta.

Mr. Anal K Jain, Director realgned after aerving aa Dlrec1m far over 9 ye&nl. Dwin8 his tenwe he haa c:ontribu~ immenselY to improve the performance of Sanghamithra.. HiiJ c::ontn"'bution will be n:membered in implementing Key Reault Area (KRA) sy111tem.

Mr. S S Bhat. CGM(retlred) from Canara Bank'. baa joined Sanpamlthra aa Independent d.irector. Being an. e:a:- banlrn, Sanghamlthra w11l get h!a rich experience particularly in the area. of rlek ~nt. We are searc:bing for two men dim:tnxs, experts in relevant fields.

The Bo6rd. of~ctora met four times during the paat year, the det.alla of these meetings are aa under:-

Board Met 6)ur tlmea d:ariq tile J'eal' 2018-19

Ill. !fame of the Dlnotor lfo. ottlm.u -till& %ap .o. .tt-cled .,. --Plnotol' 1 Mr. Aloysiua Ferande.z 4 100

2 Mr. William D'eoUI!a 4 100

3 Ms. Vldya Ramachandran 4 100

4 Mr. Doraiswamy Aahok 3 75

5 Ma. Yaamin Master 2 50

6 Mr. Anal![ Jain 2 50

7 Mr. Arvind G Riabud 2 so 8 Dr. Venlmteah Tagat 2 50

SANGHMITHIA t.~ ... lur Llnlhoads :---------------".~..wu::.;;;:.;1=l 57

AUDITORS

Mjs. B.S.Chandrashekar & Co., Chartered Accountants, Bengaluru, will retire at the forthcoming Annual General Meeting on completion of term. Consequently, Mjs. S S Javali & Associates, Chartered Accountants, Bengaluru, being appointed as our Satatutory Auditors for the year 2019-20. I recommend to General Body to consider and approve appointing M/S. S S Javali & Associates ., as the Auditor for the current year 2019-20, at a suitable remuneration to be fixed by the General Body.

DIRECTORS RESPONSIBILITY STATEMENT {SECTION 217 (2A) OF THE COMPANIES ACT 1956}

The Directors confirm:

a) that in preparation of the annual accounts, the applicable accounting standards have been followed and proper explanation have been provided relating to material departures, if any;

b) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31st March 2019 and its profits and loss ofthe period ended on that date.

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and

d) that the Directors have prepared and annual accounts on a going concern basis.

ACKNOWLEDGEMENTS

The guidance I suggestions of my colleagues in the Board has given me the strength to lead Sanghamithra and to make it one of the replicable and respected models of an alternative Financial Institution.

The lenders like NABARD, SIDBI, Bengaluru, Bank ofMaharashtra, Canara Bank, Indian Bank, State Bank oflndia, Syndicate Bank, Vijaya Bank, Mjs. Water Credit Investment Fund (WCIF) Ll, Kansas City, United States, also the donors CIDA, HIDA, CARE INDIA, Sir Dorabji Tata Trust (SDTT) and Ms.Rohini Nilekani, Micro Credit for Mothers, Netherlands, Mjs. Rotary cantonment, Bengaluru, have shown concern about the development of the Company, by not only giving financial assistance but also by their timely suggestions and guidance. This has given us strength and courage to take the right decisions.

My sincere thanks to Water.org institution for supporting Sanghamithra in providing potable drinking water and sanitation program for the underprivileged members of SHGs.

The role of partner NGOs, SHPis, Resources Centres and people institutions in developing the loan portfolio, in identification of SAGs and assessment of credit needs and in follow up and recovery etc., is commendable and appreciated.

I sincerely thank Mr. Anal K Jain, H R Committee Head and members of the committee Ms. Vidya Ramachandran and Ms. Yasmin Master for sparing their valuable time to address HR related issues including successful implementation of KRA systems.

I sincerely thank Mr. D Ashok and Mr. Anal K Jain for having taken keen interest in identifying a consultant for selecting a suitable vendor for implementation of new software and android mobile technology.


I also place on record the services of Mr. William D'Souza, Vice Chairperson, Ms. Vidya Ramachandran and Ms. Yasmin Master for their valuable services rendered as loan sub-committee members.

The transmission of funds was possible through the network of branches of commercial banks particularly the branches of, Carrara Bank, Corporation Bank, State Bank of India, Indian Bank, Vijaya Bank, Syndicate Bank, Union Bank of India, Bank of India our sincere thanks to all of them.

I am placing before you the audited financial statement of the Company thanks to the timely auditing of the books of accounts by our Statutory Auditors Mfs. B.S. Chandrashekar & Co., Bangalore. During the year they have rendered assistance in consolidating the Balance Sheet of the Company. I sincerely thank them.

The Company has proved that our micro-finance model is viable and poor people are bankable. In this respect the support and guidance extended by MYRADA and its several projects are noteworthy.

My sincere thanks to all the above institutions and personalities for their generous support and assistance.

Last but not the least, I record my great appreciation for the splendid performances of the committed and dedicated staff members led by Mr. R.D. Gadiyappanavar, Chief Executive Officer.

Place: Bengaluru Date: 31.05.2019

Aloysius P. Fernandez Founder Chairperson


801m ERCOURAOIII'G CASES OF LIV.BLIHOOD STRAT.BGJB8

Sangbem;thmhaa financed c:m:r 81520 groups with a total financial aamt.ance off 1242541ac aince Inception and a& many a& 1234998 houaeholda for undert&ldng llw:Hhood activities. We had entrusted to outBlde agenclea to underta:lm Impact etudlea of our llD.ance. We keep do:lng euch Impact etu.die& on an QD&'Oillg baeia. It is pxoved. beyond doubt that the people (SHG membereJ after availing 1oane for livelihood acti:vitiee from Sanghamithra have ;mpxoted. a lot. Theze have been .everal euc::ceaeful ventures undertaken by the membere of SHGa with our financial aupport. We Cumiah heR below a few euoceaa etoriea which can be replicated by othera.

'l'RARS:J.I'ORIIATIOK' llf LIYBLJBOOD AC'l'IVlTIBS

A HOUUWD'B'S RBJ.EIITLESS JOUIUIBY TO RB4 1.I8B HER DRI'*MS

Mre. AmrothaamQru Natar11j, aged 50 ~. is reeding in K'lllipatti vil1ap 'llong with her hueband and two children. She ia a member of Om Shakthi Map1ir Udhavilr:ulu group having 17 membere ilrmed.ln 2004. The group baa ava.lled general purpose 1oana from Sanghamlthra 8e9ell tlmee elnce limnatlon with t 20,000/- In the 6rat linkage out of this loan, Mrs. Ammthaamanl took loan af t 1,500/- for purchaee aftwo goat&. In the eecond linkage, the group waa finaw:ed t 6/J,OOO/- where ehe 'lvailed f 20,000/- for pu:rchaee of 'I cow. With thia activjty, ehe not only eupplemented the family Income but alao dreemt of the family having a home ofthdr crwn.

With thia dream in her mind, abe had purchued. a email piece of land (eite) on marriage through l!lavinp from cutting down houeebold expeneea prior to her becommg a member of the group. The tJnrd. finance of t'l,OO,OOO/- to the group from Sanghamithra ofwb;ch she 11Vlliled. t' 25,000/- aiDng with her hard eamed. eav.lnga :&om dairy activity fulfi11ed her cherlehed dream of owning a houee. She constructed a two room-hou&e em the land she bad pun:hased earlier. Meanwhile, her two children weze g~owingup and were admitted to acht>olfcollege. Juet not ccmtent with owning a two-room houee, ehe planned. to facilita~ the edumtion af her children with buic facility of power i.e., electricity. In the fourth 1inll:qe of 't 5.50 lac to the group from Sengbamithra, abe availed 't 40,000/- and made value addltiona to her dream houee with power <:onn.ectlon (t.llree-phaae wiring). Meanwhile, the chlldren were progreealng wen in their academic. and the son bad joined EDglneerlng COUl'le. In the fifth linkage of ~ 2.50 lac to the group under water and aanitation, 8he availed ~ 25,000/- loan

60 ~~~~;o=-rt-----------------:CAHGHMITHIA Llndq far Llnlh•

for construction of a toilet cum bathroom end thWI e1111wing a good, healthy and hygienic life for her family. Not aatielied with her achievement., ue m:nt on to furnillh her home and add additional r:oome by availing t 30,000/- end \' 50,000/- in the llixth and eeventh lin.ks,ges to the gtVUp.

Mrs. Amrutheemenl'a aon Karthllaayan, on completing h1a B.E., In 2011, joined Jamb&l. Kalll,yappa.ah~ and Kanclhappaehetiya.r MWllraJu Institute of Technology aa a lecturer. With the grown up daughter and IIOII, tha:e WUIID cue of:m~t or contentment. The responsibility of getting the children married wu of paramount importance. An.d, her income &om di.axy activity had been on the ria e. With the pooled aa.vinga from daily activity and a loan from the tpnup, ue conducted the marriage of both her children. She !a now N""sed with two grandchildren and Ia Jeadlng a happy and contented filmlly Hfe. Mrs. Amrutha.amanl.'e daughter !a a houee-wlfe who would a~ emulate the footetep& of her succee.sful mother. 'Ib.e famil,y of M.nl. Amruthaama:ni. hae now become a well-educated famil,y with ~er income generated through hard work and proper utilization of Sanghamithra'a timely finance for the laat 15 years. Mra. Amruthaamani'a Camily extends its (p1ltitude to Sanghwnithra for the financial support in re&1lldng thelr llfe'a dream&. This !a a aucx:eaa story of a member tee ding a !lie from raga to riches througjl hard work end sincere elforbt for realizing Life's ambition. SanghamWlra is proud to be 8.118ociated with the succees etory of Mre. Alnrl1thaamanj

J'lomll'a.rm Le~Mrarer to Prop 1urve J'umw

Smt. Khe,jabi. belol'l8ing to minority community wu an Agricultumllabour remding at Azadapur in Kal.ahuragi taluk. Her Camily was having a dry land of 2 acres in the village but was not getting sufficient Income from the land. However, her life evolved for the better on beeomlng a member of SHG In her village.

Smt. Xh.!.\iabi and other 9 women membml of the village came together end formed Bendenawaz SHG on 01.01.2013 and atarted Bavinga with a meagre amount of Re 50/- monthly Wlder the guidance of women and cblld welfare department (Anganawadi teacher).Tbe tpnup availed firat !Dan of\' 80000/fram Sanpamltra. on 26.12.2013 and 2'"'loan f 120000/- on 31.01.2015. The loan amount waa utilized prlmarl1,y for meeting their ~ e:r;penaea and repaid prom~. Gra~ the membera gained c:onlidence end decided to takeup income generatillg activities to supplement their income.

In the third lillkage from Sanpamlthra, Smt. Khajabi availed a IC16n of \' 25000/- on 30.03.2017 for d.rilllrlg a bore well In the tleld. She got good amount of -ter from the bore well. The family decided to takeup ftor!culture owiDg to proximity of Ianda to JCalaburagl city. Inltlally ahe ralaed. Jasmine in a portion of land and etarted earning aubstantial illl::ame from selliDg flowera. She availed

SANGHMITHIAt..!inafurl.inlhlladi:--------------".A.n.e::;;;;:,;l::rJI 61

a loan ot \' 45000/- on 26.11.2018 out ot 4"'1lnke&e from S•npamltra. From thl.a loan she expanded cultivation of Jaamine to entire 2 ac:rea along with Rose for which a good demand ex!at. Her income increased graduall.y yur by year. She ia e:apect:ing an income of more than ~ 1.00 lac this year. She hu alJso availed a Houaingloan ai f 50000/- to build a amall houee for her family. She cxpn:ase~~~ her gratitude to Sanghamit:ra., which has provided financial aaalatance alnce S years and brought total tl'8llsformation in her soclo-economlc condition. She has become a role model amongat the villagers. She has ahown to the people around her vil1a8e that "where there ia 'Will there ia a wg;y".

AGRICULTURAL LABOVRBR BBCOIIBS OwnER. 01' A JI.DII TR.'O'CK

Varalakabmi Mahfla Swaaahaya Sangha, la formed on 10..()8-2007 with 13 members promoted by Ma~ CMRC, H.D.Kote

Ini~, the group atarted with eavil:lp of ~ 10/- each per week in 2007. Now the aavinp per member hu increased to 't 100/-pcrweek. '11te agregate aavingaofthe gmupwhich was !l92000/- in 2012 ha.a mcrea.aed to t 3,25,900/-m 2018. The group had availed llnlt loan oft 20,000/- on 2a-05-200'7 from Sanpamlthra and prompt\}' repaid the amount. 'lbey have availed loan 10 tim.e8 with the loan amount gra~ increuing from t 20,000/- in 2008 to t 6,00,000/- in 2018.

One afthe group membc:nJ Smt.Kantbamma D/0 Late Kanthanaika, aged about 39 Years, residing in H.D.lCot.e Ia an ac:1ive member of thla group afnce inception. She remalna unmarried. She ia ataying with her brother whoee family CODS!atlng of wile and two ch1ldren. lDitlally abe was working aa an .Agric:ulturallabo\uer on da.ib' wagea and after taking loan from SaJJgha.mithra. abe baa utilised the loans for the fnllowlng purposee.

Group ID.dlvfdual IJall ... Date ~(in l.oiUl Pll.rpae .. , (Ill. .. )

1"' 23.05.2008 20000 2000 Preparation & •elling ai chilli powder

2"'1 06.02.2009 100000 10000 --do-

3"'- 31.10.2010 250000 25000 Chilli powder and llelling of Vegetables in the nearby villagea

4"' 29.02.2012 360000 40000 Vegetable aelllcg In a puahing cart

62 1=~""11'-----------------1 SAMGHAMIIHRA~.~n~'-furliftlhl.-

se. 22.10.2013 500000 50000 Vegetable aell!ng in Oooda Auto with the help of her brother

6"' 24.10.2015 500000 50000 --do-7ft' 31.03.2017 600000 50000 --do-

Bib 27.07.2017 200000(HL) 50000 Repairing of exlatlng Houae

9"' 15.12.2018 600000 70000 Purclwllng ofTa1B Ace Mega. XL by MYing down ~e:nt (she is paying EMI of f 12000/-) for aelHng w:getablea on a large acale in the surrounding v.l1.lagea and ae1ling of houae hold utic:ke

At present ahe <:OVerS eurrounding ~ within a radius of 25 to 30 Kms selling w:getabla and boUBehold uticlea. She purcbued commercial 11Bilfrn: vending vegetablea in the wholesale vegetable market in H.D.ICote and earna a proll.t which baa increased D:om t 3000/- per month to t 25000/per month. Her brother Sri Som.eah ill dri~ the vehicle and asslathlg her in 8dllng the vegetables and household uticlea. Smt. Kanthamma has totall,y taken loan amountirlg to {' 3.471ac D:om Sangbamithra and in~ in expanding diverai6.ed bwline.a activities including buying a mini truck which enabled her to inCRUe the aalea by reaching to neighboriDg villagellu well.

Smt.Kanthamma and her family membera expreaaed their alncere thank& to Sanghamithra for dm.ely linanclal help and encouragement. She would llkr: to continue and expand the aame profeaslon on a laqe scale with Improved Wbnology auch u better packaging etc,.

Brl DllrppU'UilMiawad ll•hJJa 8waaaJI.a.Ja Sangha, B'.eeNaallola VWqe, II.M.HW.

The above SHG waa promoted by Jenugoodu CMRC, M.M.Hill& on 30"' Aug 2015 .The group baa got 18 members dolrlg cWferent actl~ea. The FQUP conduct& meeting every week and remittiDg the ea:rings to the S.B.t!.CCOWit main1Bined at State Bank of India. J.f.M.Hills. The group atarted with a aa:ringa of {' 20 per member evecy week. Now the savings per member hu increalled to t 100 per week. The ~pte aavinp of the group which was {' 75200/- in 2016 baa increaeed to {' 293600/in 2019 .The group had availed the firat loon of{' 160000/- and promptly repe.ld the amount a.a per the n:paymcnt schedule. They have avallcd the 108113 tlmc8 and the loan amount waa Increased from \' 160000/- in 2016 to \' 400000/- in 2018.

OneofthegroupmemberaSmt.KempadammaW/OlateChin:nappa. aged. 60 yean Ia a member of the group alnoe inception. She Ia bavillg two BOll&. Eadler ahe haa taken loan three tlmea for clllferent acttvitiea and In 2018 she hu taken aloan of\' 60000/forpurchaae of20 goats. She is nowhaving30 goata. Sheia Belling the goats far meat pu:rpoee to the neadJ.y vil1agr:rs at {' 5000/- per goat and getthlg the income off 120000/- per year including aale of goat manure. She la bavillg 'it acre of dry land. She la 1ead1ng a happy life along with the~ members.

[WIGHAMITHIAt..~~wllniiiDIIIs j~-----------"Ane~zk~l 63

Sri Chamudoahwarl Vehlla ......ua,.. Sangha. Mthar Villqo. K .M.HW..

The above SHO was promoted by Jenugoodu CMRC, M.M.Hllla on 1'* Jan 2009 .The group has got 19 members doing cWferent activit!ea. The group conducts meetiDg every week and remitting the eavingllw the S.B.ru:c:ount maintained at State Bank of India, Pomuu:hi The group staiUd with a sa.vinp of f 10 per member ew:ry week. Now the savinp per member baa inl::reaJted to f 25 per week. The aggregate ll.t.I:Vinga of the group which was f 87980/- in 2011 baa increalled. to f 447200/ln 2018 .The group had availed the tlret loan of t 100000/- and prom~ repaid the amount aa per the repa,yment aclledule. They have availed loan 3 times and the loan amount was inc:RUed from flOOOOO/- in 2011 to f 500000/- in 2018.

One of the group members Smt.Onndamdl W JO Sri RaJ1&a,muttu aged 48 yeara ia a member of the group eiD.oe lncepticm. She Ia Jumngcme scm. and cmec:lau8bter. Earlier she haa taken loan for different activitiea and in 201811he has taken a loan of f 50000/- for purcll.ue of four Dcmkey1s. There ill a gpod demand for donkeylll milk especially ueed for young children for heslth purpose. AI! there ill no tranaport faclllty In thia vlllage, dollkeya are uaed. for tranaportlng goodajManure/conatruction ma1erialeln the hl1ly area. She Ia aelllng the milk at a rate of t 100 to t 150 per 100 m1 and gei.1Jrlg the income of t 300001- every m.cm.th including ttansportation chargee. She is gettirJ8 the net income of f 20000/-per month after deducting an expenditure of f 10000/- towan!s maintenance, fodder etc., Her husband ia helping her for tranaportation of gaoda. She ia Jesding a happy life along with the family members. She remembers for timdy support extended by Sanpamithra.

-ael.fBelp Ia the ae.t Belp•

Om Sai Bachat Gata, a group coneillting of 10 membere of Kh.aroea vil1ase in Latur DiBlrict wws founded In Aprll2013. The group ia promoted by Janata Shlkaban Prlilaarak Mandai, a NOO based. In Nllan3a tBluk ofLa1ur Dlatrlct. Smt. Yoglta Sltaram. Kalrasagar Ia an active member of the group and guldea the members of the group in arrl'riDg at coneeneus declalon while selecting the activlt!ee. The group membere availed a loan of ~ 1.00 lac in the fi:ret 1in1lage and purcb.ued 1SewiDg machines for tailoring bumneu. Then, in the aecond linlmge, the membc:rs opted (or daily activities by pu:rchaaing high yielding croaabred jersey cowa and buft'aloea. The group member& had by now made aufficl.ent

64 l=~""'rt,__ _____________ _, SAMGHAMIIHRAt..a~ .. furiMihl.-

aavlngs from the actlvltfea of tailoring and dalry. 'l'he village was hit by drought and ecarclt;y of water prevafled in Kharoaa v.lllage.

Smt. Yogita took the initi.ati:Ye and convinced the membe:nlw pool the aavinga of the members to inveat in drillin& a community bon! well to overcome the water scarcity p"'blem lor their fami!i.... Being ahort of funds, the group avafled the third loon of ~ 1.40 lac from Sanghamithra conaldered for the actMty. The members spent t 1.25 lac for drllllng of a rommon ~well with submersible pump set and draw.lng pipeline to all the group members' hau&e for providing water. Thus, the members could O'Ytlcome the water a<:arcit;y they faced in the village out of the income they earned through livelihood activitiee financed by Sanghamithra. The group has now become a replicable model for entire village.

PU'l"'''DDO UP OJ' ARECA LBAJ' PLATE IIAJDlfO Ollll't BY WOMEif ERTERPREliUERS

The group stands out tor its collective wiedom, viaion follo'wing up by pemervance and :relentleu effort by the members to realize the goal of &tanding on their own feet and lead a li!'e with clignity. Nirmala Swaaahaya. Sangha, Hoaabullapura. Bhadravathl, came Into exiatence In 2005 with 15 m.embera under SJSRY program, so far availed Joana 8 tlmu, started with a loan amount of t 1.50 lac latest being a loan of ~ 5.25 lac availed during Marcl12019. The group ia di.llciplined in ava.iling, utilizing p~uctively and rep~ the loans p"'mptly. The group hae aavinga of f 1, 70 lac which is lent among its members aa internal loan..

Some seven members of the group led by Smt. Poongathal, who enjoys total trust of her tellow members, have coJlectl:vel,y pooled their loans bwtowed from &mgbamithra. along with their aavlnga etc and inve~~ted in putting up a ARECA LEAF PlATE malring machine. The aame haa been gradually ezpanded with the :PUBaF of time with a financial aasiatance from Sanghamithra talring the total inveetm.ent to t 15lac.. The enterprise as on today baa provided gaJntW. employment to 7 members of the group. 'l'he unit 18 running well with plenty of raw material a.vaflable in and around Bha.dravathi and a. ready maiket for the product.

[SANGHAMITHIAt..~~wl.lnlllalds j~-----------"m.~ztsR;;I 65

Membera of the group are gratdUI!y remembering the timely and adequate credit rea:M:d from Sarlghamithra whlch enabled them to undertake a new enterprise In prov1dlrlg employment. The group led by Smt. Poongatba!, atanda talla.a a model for othera In p:rov.ldiDg employment to 7 membera of th1a group. All of them. are thankful to Smt. Poongathai for ahowlng a new way for their llvellhoocla •

.J01li'ILCIJ' from an ord!D.uy member ofBHO to an euoutlft of FPO

Mr. Nand.lah who haJla from MaDaguthlpurada Doddi (MP Docldi) village In Thalavadi taluk In Erode Di.B1rict iB the third of the tl:ve aiblinga' to hie parente. His father, a mnall agriculturist struggled to meet both the end.IJ for hie family. Mr. Nancliah was foroed to quit education and aseillt hill father in apicultural activity. Hia father gifted him 2.5 acres land on hia marriage and let him haw: an opportulllty to build hla llie. It waa then in 2001 that Mr. Nandlah w:lth an active aupport afMYRADA In the area, became a member of Vivekananda. Swam;y Seve Sangha with thirteen other members. Beginning with a small sa.Yinga af t 10/- per month by the membera, the group membe:rB have now grown up to QOntribute ~ 500/- per month.

On accruing handaome savlnga and learning the aldlls af Internal lending the group ava11ed 1m first loan of t 2.00 lac from San8hamlthra. Mr. Nandish, availed and utilized a loan af t 10,000/- for agriculture purpoeea. In the second loan af a similar amount to the group, he availed t 20,000/and utilized it for the purpoae of education of hie two childn:n. Meanwhile, he waa tin:leaaly working hard to increa.ae the yield from hia Ianda which waa abort of irrigation facllitlea. He developed hi& land through land 1eve11ng. 1ay.il'lg pipe line for drip and sprinkler irrigation w:lth water aupplled from his neidlbor agriculturist on an in~ baeiB. For thia, he avai1ed t 50,000/ -loan from the group in iti'J third ~ of t 5.00 lac from Sanpamithra. He hM been growing vegetables t!lince then and Ia now earning t 3.00-4.00 lac from agrlcultund activity per annum.. With the inareaaillg Income from the activity, he not only gave good educat:lan to hia chlldreD. (Daughter-B.Sc., B. Ed and Son-MeA), but also completed his responsibilities of a father af getting them married and settled in life. His aon. now works for an IT firm in B&nplore, while his d.a\18hter ia wen settled u a h01.1.11e wife in Chamarajanagar of Kamataka StaU:. Mr. Nandiah, h.a.a naw plll"Chaaed all the apicultural lmplementa required for hia agicultural a.ctivlty, a house to reaide, a four-wheeler and two-wheeler& for conveyance, ~from the lnoome earned from hia land with the financial asaiatance reoeived from Sanghami.thra and the guidance and support received from MYRADA.

66 l=~o::.rt,__ _____________ _, SAMGHMRHRA~.tn~ .. fllrliftllll•

'I'hanka to the knowledge and aldlla pined from the guidance and training given by MYRADA In Capacity BuDding. modem farming. calf-rearing for dairy activitlea, vermicu1ture etc. that Mr. Nalldillh has IIDW' riee:n from being an ordiruuy member of a SHG to a Chairman of FPO (Ma1ai. Millet Prodw:ens Company, Thalavadi), President of Janapriya Cluster Federation, Thalavadi and Prellident of Ajpiculture P'anner'a A&ao<:lation, Thalavadi. He waa aJao a Board member of CMRC. He haa now gained good rapport with variaua government agenclea in the area and has been ~ pa.aa!Dg on the Villi.on and Mi.&aion of MYRADA and Sangb.amithra to the I!Ociety th.roudJ. mpport and guidance to the poor and the down-trodden. Sanghamithra 1akes pride in itos contribution for the meteoric rille In living atandard and atatu.a of Mr. Nandlah.

J'rom •'"&I• ll....uJaoocl activity to multiple activities to improve tile lacome lnel aad mltlpte tile rlab llllnWa ...

Smt. Suman Balajl Sarvade Ia a member of ~m Holhar 'Mahf!a Ba.chat GtWl of Dalimba v.il1age in Om.erga taluk: of Oemanabad Di•trict. The group formed in June .20D4 with 13 members Ia promoted by Vldya Jqruthi Shlkshan Praaarak Mandal, a NGO baaed at Ter 'Villap in Osmanabad. The group ia now Into ita 414 linkage with Sanghamithra. with a loan of t 3.30 lac. Smt. Suman, haa availed t 30,000/- during the tlnlt 1inb,ge purcha!M!d ~~eWing machinea and started Tailoring ahop•, added a 'Bangle ahop' with a atmllar loan from the aecond loan of t 50,000/. On earning a good income &om the two bualneaaea, abe expanded her activltiea to aale ofllllfte& from the thlrdllnlmgewith a loan of 'f 50000/-. The income ofher~through the

SANGHAMI1tt11Allnll111flrlmllll• l----------------=;•~~forll 67

activltiea financed by Sanghamltbra has rl&en manifold reaulting In the rlae In the living atandarda. Tl:rue, she has been able to educate her two children who are now stud,ylng In Post-graduation and PUC collegea. This has enhan~ her ec:oDomic atarua and is now wi~ reapec:ted. in the village She is ind.elm=d to Sanghamithra which brout#!t nneformation in the eo<:io ~c statue of her family throut#11imely financing for income generating activities.

TRAVBRSE PROII AR EMPLOY.BB TO AR EIIPLOYBR

Mechery, a town situated around 65 KMa from Dharmapuri near Mettur dam ill famous for manufacturing of silk eareee. The traditional occupation of the reaidenta in the area ia weaving and hence ii le populated by skilled, aemi-aldlled laboura of the weaving lnduatry. However, the wage& earned tram the actM~ Ia not sulllclent enough for a decent and healthy 1lte for the cammUillty.

In the year 2008, Women De'9'elopment Federation, an active NOO in Yechery promotl!!d a cohesive group of 16 members of a ..mrilar livelihood activity in the area by name Periyundachi Amman Mahalir SHO. The group membera who were all warldng aa 1ahourera In allk aaree -vlng unlta, Initially contributed to the oorpue of the group with emaD. cmrtrlbut1ans. Meanwhile, they upgraded their knowledge in capacity building, book writing and internal. lending, The money availed by the members from internal lending wu initially utilized for CODIIUIIIption, medical expenose• and education of children. With the saving oorpua growing bigger, the group appro;aclled Sanghamithra In 2015 for finance to eatabllah a Silk Saree Weaoring Unit. 1.'he unit wa.a planned to be nm and managed by the members of the group who were worldllg as a'k!Ded and semi-ekilled lab01.U'e111ln varioua other unit& In the town. W"Jth a loan of {' 5.00 lac in the lint liDkage, the group purcb.ued and inlltalled the re-quiRd machi.,ery for weaving ailk aareea. The Unit purcbaaed raw material :&om nearby Salem and utilized theaervlcea ofthememberaofthegroupwhowereworldllgaa laboura Indifferent unlta. The aervlcea of aeml-akllled members In the group wa.a uWized for threading, eprea.cllng of threa.da and shuttle eetting WOib while the other membera did weaving work. With an average of 2-3 ei1k aarees being made in a day, the monthly production by the unit touched 100 earee.e.

68 ~~~""'.t,_ _____________ _, s.\MGHMIIHIAt.a~•fartm~hll•

Meanwhile, the group expanded ita unit'a weaving capacity by availiDg lle<:OD.d and third tlnaD.ce of t 6.00 lac in 2017 and t 6.50 lac in 2019. The group, with the active mpport of their Camil:y member., marketed and sold the ailk. aareea to individuals in the new:by towns and cities. Then, the unit began to &ell it to retail. tmdera. Wlth the lncreaae In produc1ion, the unit became a hub for purc.haae by wholualetra.derswhogave bulk orders afaareea. The publlc began tovlaittheunltfor purclluedurlrlg marria&'e ae.uon, feetivala etc. With the lncrealled. production, each member of the unit ha8 now an income of t 15,000- t 17,000 per month fr:om the weaving activity. 'lbie hM llhaped and improved the inc:ome of the membens of the group apart from being employed throughout the yeQr in a family buafneaa (Group's bullineaa). 1'he members now have :Independent source of income that baa helped them In the better education for their children and ezperlenc!ng an lmprowd liv.lng standard. Thua, Sanghamithra. hM been instrumental in the members' journey tram an employee to an employer.

CRBATiliO 8£Lli'·EIIIPLOYI!Bl'fT

Mrs. Ra.dha Ahlrwar and her husband Mr. R.atlram are realdenta of Katahara village In Chhatarpur District. The couple haa a BOll, who now OWIIB and runa a aucceasful photography and Wieogra~ etudio in Katahara. The taete of auc:cee.s hae come to the ~ after yeare of hard-life wherein the tamily atn>ggjed to afford a aqu.are meal a dey. In 2014, Mn. Radha, became a member of Knlnthi Tejaawani Mahila Swu.-sahayuta Samuha a SHG. The group first availed a loan of t 1,00,000/- in March 2016 from Senghamlt.bra and Mr&. Ra.dha received t 20,000/- a& loan from the group. With this amount, abe purcllued faur goat& to supplement her family Income from sale of m.i1k:.. Thla activitv hadJm:rudLtJ~L~Ml~llii.COineJ:o_~leJsim.!Jv

Meanwhile, her BOn who waa educated remained un-employed. But, he had his dream& too. He had a fucina1icm for photogra~ and had learnt the flocl!niques of photograph,y from hia friende. When the eecond loau of t 2 lac waa availed by the group in September 2017, Mr11. Radha in order to meet the aspirations of her a on availed along of t 50000/- from the group beaide• •elling 8 goats and let her &Ott to purcha&e a profeaalonal camera and eatahliah a photo studio with the loan amount and the a ale proceeds of 8 goats. Her BOn'a photography bualneaa p1:08pered In the 8lU. and he ha& now mended hla bualneu to vkleogra~.

SANGHMITHIA lallilgtwl.iilhldl l---------------"""e:;;;tu'11~~~ 69

Mrs. Radha availed ~ 50000/- loan from the third linkage of ~ 2.40 lac from Sanghamithra and equipped her son's studio with a photo copy machine and its accessories. While Mrs. Radha's goat rearing activity risen the income as also income from her son's photo shop has been on the rise. He has been earning substantially through attending photoshoots of marriages, public functions etc,. Mrs. Radha's family is now leading a happy and content life. The financial assistance from Sanghamithra was suitably utilized by Mrs. Radha in generating employment to her son and thus assuring an improved standard of living for her family members.


B. S. Chandrasekhar & Co. CHARTERED ACCOUNTANTS

No. 652/B, Shop No. 9, II Floor Dr. Rajkumar Road, II Stage Rajajlnagar, Bangalore- 560 010

:t Ofl .2955 4ml Fox : 080-2332 4ml Mobole · 98459 50059 E·md : boc_~nytyehoo eo In / Cllendretelthorbo 19590gmall oom

Independent Auditor's Report

To the Members of

SANGHAMITHRA RURAL FINANCIAL SERVICES

Report on the Audit of the Standalone Finandal Statements

Opinion We have audit ed the standalone financial statement s of Sanglmlthra Rural Financial Services ("the

Company"), which comprise the Balance Sheet as at March 31, 2019, the Statement of Profit and

Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on

that date, and a summary of the significant accounting policies and other explanatory information

(herein after referred to as "the standalone financial statements" ).

In our opinion and to the best of our information and according to the explanations given to us, the

aforesaid standalone financial statements give the information required by the Companies Act, 2013

("the Act") in the manner so required and give a true and fair view in conformity with the Indian

Accounting Standards prescribed under section 133 of the Act read with Rule 7 of the Companies (

Accounts) Rules, 2014, as and other accounting principles generally accepted in India, of the state of

affairs of the Company as at M arch 31, 2019, the profrt and total comprehensive income. changes In

equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section

143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further

described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our

report. We are independent of the Company in accordance with the Code of Ethics issued by the

Institute of Chartered Accountants of India together with the ethical requirements that are relevant

to our audit of the financial statements under the provisions of the Companies Act, 2013 and the

Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these

requirements and the Code of Ethics. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Responsibility of Management for Standalone Finandal Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the

Companies Act, 2013 ("the Act" ) with respect to the preparation of these standalone financial

statements that give a true and fair view of the financial position, financial performanc sin

equity and cash flows of the Company in accordance with the accounting prin .. < ::; . ~ !<.· .j\. .. .._

q •IIA!IC•~

--------------------------~~~-·:~1 71


No. 652/B, Shop No. 9, II Floor Dr. Rajkumar Road, II Stage Rajajinagar, Bangalore- 560 010

~011 :2165 4e80 Fox 080-2332 4880 Mobtlt . 98459 50059 Eof111il : [email protected] I chand..-s 19590;mel com

accepted in India, Including the accounting Standards specified under section 133 of the Act. This responsibility also Includes maintenance of adequate accounting records in accordance with the

provisions of the Act for safeguarding of the assets of the Company and for preventing and

detecting frauds and other Irregularities; selection and application of appropriate accounting

policies; making judgments and estimates that are reasonable and prudent; and design,

implementation and maintenance of adequate Internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the account ing records, relevant to the

preparation and presentation of the financial statement that give a true and fair view and are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the company's financial reporting

process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to Issue an auditor's

report that includes our opinion. Reasonable assurance is a high level of assurance, but Is not a

guarantee that an audit conducted in accordance with SAs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to Influence the

economic decisions of users taken on the basis of these financial statements.

Report on Other legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit we report that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b. In our opinion, proper books of account as required by law have been kept by the Company so far as It appears from our examination of those books.

c.

72 l;~;a=art:...._ ________ _ _ _ __ ~ ...... "'Uwlhlods


No. 652/8, Shop No 9, II Floor Dr. RaJkumar Road II Stage RajaJinagar, Bangalore - 560 010

d. In our opinion, the afore~id standalone financial statements comply with the /loS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Direct ors, none of the directors Is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the Internal financial controls over financial reportmg of the Company and the operating effectiveness of such controls, refer to our separate Report in •Annexure A". Our report expresses an unmodified opinion on the adequacy and operat ing effectiveness of the Company's internal financiill controls over financial reporting.

g. With respect to the other matters to be Included in the Auditor's Report In accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our Information and according to the explanations given to us:

I.

II.

Ill.

The Company has disclosed the impact of pending litigations on Its financial position in its standalone financial statements. •

The Company did not have any long term contract Including derivative contract. So the Company not required to made a provision.

There were no amounts which were required to be transferred, t o the Investor Education and Protection Fund by the Company.

For B.S. CHANORASEKHAR & CO.,

CHARTEREOACC:~::n

~,......;;;, f-(CHANORASEKHAR B.S)

Praprletor

Membership No: 204488

Firm Reg No: 007189s

Date: 08.07.2019 Place: Banaalore

UOIN: 19204488AUAAJ8133

&AIGWiUTHM~.,. ...... r--------------!!lmu~~~~l 73

Annexure - A to the Auditors' Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Sanghamithra Rural Financial Services ("the Company"} as of 31 March 2019 in conjunction with our audit of the standalone lnd AS financial statements of the Company for the year ended on that date.

Management's Responsib ility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India {'ICAI'}. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note"} and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10} of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statemen \\ r due to

fraud or error. """~~., .::r: 1" u Ch ~

"' <$> • .0 .. <9.; , • "'~AI.Jfi:.<y

7 4 l;~.::.ll't,__ ____________ ----\s»4GMAMITHRAL•IIIIIfwliwlhlods

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system over f inancial reporting

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1} pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2}

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3} provide reasonable assurance regarding prevention or timely <h!tection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent limitat ions of Internal Financial Controls over Financial Reporting

• Because of the inherent limitations of internal financial.controls over financial reporting, including the possibility of collusion or improper management override of cont rols, material misstatements due to error or fraud may occur and not be detected. Also, project ions of any evaluat ion of the internal financial cont rols over financial reporting to future periods are subject to the risk that the internal f inancial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls

system over financial reporting and such internal financial controls over financial reporting were

operating effectively as at 31 March 2019, based on the internal control over financial reporting

criteria established by the Company considering the essential components of internal control

stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued

by the Institute of Chartered Accountants of India.

Place: Bangalore Date: 08.07.2019

For B.S.Chondrosekhar & Co.,

ChorteredAcc~

~ .. (Chandrasekhar B.S)

Proprietor Membership No: 204488 Firm Reg. No: 0071895

UDIN: 19204488AAAAAJ8133

SANGHMIJHIIAI.tnll"flrllwlhl•~--------------=;""~~torJI 75

SAHG:HAMITHllltA MNW. JtNAHOA&. SOMClS

IHCOVOMTlOUHDOSlcnoH UOf 'n4lCOM,ANIU' AC'r, 19H COM, ANY UMnl.O IY GUAMHnf

SI.No.

I fQUfTY ANO UAAIUTIES

L Shlil"thOidt-rt' fundt • · Shaire c.pit~ol b.~ and •urplus c. Money r~ed aplmt •Nre

Wlnanu(not In lfltS)

1 Sh•,.. 1pplk1tlon MOney pencflnl lltotment (notiniF"SI

J Hon-curl't!nt 11-tbiiiU•• • · lona·tttm bofrowlnt~ b. Offflrttd llU li3blr.Um; {Net. c. Other lont term llablllt\tt

cL lOft&'ottHm 1)(0\llilonS

4 Cworr.nt lldlllltl•• • • ShOf'C<I~fM bortOWI"CS b. Trtdf! PIIYDbles c. Other cuuen1 ll.tbllltll:t d . ShorHI:rm orovlslons

• .usns

1 Non-cumnt ••n•s • · Jl•ed l»tU.

L T•"al.,._ usots M, lntJnllblt IUtU

II, Ceplul work-4n·llfocrus ._,, lnuft!Pblt •u•u und'ff de\l~opmem

b N~curtent lnw\lmenls c. Deft~rtd tt• 1ueu (neO d lOt\t-ttfm loans <~nd adv;MCes e. Otl'\.ef non-cutrtl\t eueu

1 (Un'l:tlt IKelS

a.'""~ lnwst:mH~u b ln...,.ccwles c. lr* rll(afv.lblts d. CMh 1M aiM biMnclt'l 1: ShOINetm lOans and aci\4JnciH f. Otbefcur~ usets .....

aAa...AHCf SHUT

Notes 1 to 21 & notn 29 fonnlng part of 8alanee ShMt fOt anct on bthltf Of m. Bolrd

O.t• : 11.05.2019 P&ace : flaftftaturu

fNidla~) V~hctilaildJI

I

•

, • • • ' •

• •• II

12 .. •• 1$

•• 17

11 ,.

41S,ll2.&81

1..160.9&2 41.,.266,!.10

1.021.559, 982 •

2..S2S,13S U,03l,.S2S

2.012,1SJ,J12

$,486,111

2.221.aa1 I

642,799.5$6

1.28:2,326,754 76,S1S,312

3491705 2.011.SSJ,312

&Ol.~17'9

ls.•n.SJ.S

9$4.811.930

U1.S02 1.897,410

l.an.•u.902

5,807,451

1,294.900

1,187.952.298 94,173,7SS

4 607 645 1 119,42S,toZ

As per our Roport or tvon dato For 8.S.Chandrasekh.ar & Co.,

Chartered Acc<MJ~t~~

<1:~~ (Chand'rasekhat B.S.) •

Proptlctor

D n.\ ~.No -2044:9 . . ''\'

(R.

~E~r ""'"'~tlve Office•

76 1=:~~.,~---------------SNtGHAMI'IHIAI.IIAiltlrU 7 •

IHCOI'JIOMTtO UNDI A SlCT10H lS Of THE COMPANIES' ACT,l9S6

COMPANY UMntO 8Y GUARANTEE

II. Ill.

IV.

v.

VI.

befor. e McepUonal end extr'ldlnorv and tax {III ~IV)

VIII nems

IX to (VII-VIII)

X.

•••

XIII ..

""'·· XV.

: 18.05.2019

lncon'M! & Expense St•tcmcnt

26 27

9 & 10

50.238.886 155,360,649

2,003,572

Fl1ures ror the pre'tlious reporclna

45,494,620 135,832,487

1,401,823

M per our Report of even date FOf B.S.Cnan<lres•kl\lr & Co.,

SAMGHAMitMIIAlllllli .. fGrUllllliha•J----------------:a..::;-;~ro;J~ 77

Note formlna Dirt of balanc. ShHt

Note No. Particulars ea...... I 'I ll.Ol.2011

1 2 • 1 Share ClpltJI

2 Re""""' & SWJ>Ius (a). capital Reserve

Openlna balance 4S9,143,9SO 410,68S.831 Unutilised TecnQiosy Fund 3,952,SII Unutilised Interest Sta.rup Fund-fPO 500000

459,60,950 414,648,412

Total(a) 459 643,950 4141648,412 (b). Su<J>Iu$

Excess of Income OWf' Expendit~ for the year 80,952,04) 74,949,041

tess:~· & A!>t>tOP<totlons ,_for loon tosses 14,844,000 27,453,504 ,_ f01 Staarwp Fund-$PO soo.ooo ,_ for lnccme ·ta><l13- 14 & 14·15) 2,$00,000

- for '""""" ... ,qi!Y '" 17) 10.000,000 24,844,000 l0,4Sl,S04

Totol(b) 56,101.043 441495,5)7 Total 2: TotaKal+Totol!bl S1S,7S1.99l 459.143,950

b).Oiti«R....,.... A. Dono<'sFunds

(1~ c.J>Odty &uldlna Fllnci-SJDBl Openiog bolance

l0$S: UliliseG durir\1 tht ...-• Totallll

(2). ~Mnc Fund·SI081 Opening bolance 718.711 507.0.:3

Add: Received during the year 336.250 406.664 1,114,961 913,707

Less: Utilised &recovered di.P1e the yeilr 159.000 114.996 Totallll 965,961 718.711

TOtal A• (I)+(Z) 965.961 788,711

&.Bulldlna Fund Openine balance .

Add: Apptoptiated from Income & hl>tndlturt Account Toul~e .

C.Gulbarga Development Fund ooenina balance

Totai·C . O.Startup Fund Add: Approptiated from Income & E~pendltur• Account

Tototl·O E. Water Orx Granu 371.313 2..U3,967 F.o.vtoO<nent & Tralnlnafund 100,000 100,000 G. Tr<hnoloay Fund 837.419 8 37,419

Total b)sTOtll A+Tota18+Total C+total D 2,274,693 3.850.097 Gl'and Totll·l 518,026,586 452,994,047

£,KII.-f

78 l:~e~.:.......-----------------',SAt4GtWAITHIIALtn• .. ..,.u..~-.•

' t..oft~-Ttrm eorto-Mncs Term Loins from .. w • · Secured

u .. -~••J

(01.). til'« of Mlt\lt1Wt·8aMnacudl Tl-2 t&.SlO ~.052

(Socurtd IPI"" 11000 O.bts)

{02:). Watef credit Investment food 100.000.000 100.000.000

{on Hypothecation of Boot Dtbts)

(03). $1081 Sub Debt Loan 1,410,000 19~64,000

(04).1tobo &ant lntttnatiONI 10.000,000

(Sewrtd apin$t look ~bts)

(06). KA8ARO (RHS) 11.21S.99G

(06). State &ank of Tttv1ncore U.a.t9~

(Sto.Jrtd against 800k Oebu)

{07) 18 RT N~r Tl-1 21.lS9.6o)7 .. _...,

{Secured aaalnst Boot Debts)

(08) 18 RT Nagar Tl-2 100.1Sl,877

(Secured aaalnst Boot Otbts)

(09). Bantof Mat\arastra-BaSV<lNgudill·l 21,8U,AlU 6S,.6l'9,40t {'Se<uttd against Boot Oebts}

(10). UBI ~ur·Tl·S J6.7J0.317

(Secured against Book Debts) "·"'.o60 (11). t.abhmtvllis8ank-Tl-11'hlppasandr.t 42,10S,l31

UBI Oomlur-n-6 99,99),06)

(S«ured ....... Book Oebts) TotiH 414Ml.Ail 401.106.1"

(01). Rouu•y Cfub 8iNd1 100.000 -Totat-b 100.000 -Total J::=(a+tl) 4ts.212A1 .al.tol.17t

• Other &.one r tm'llilbllitit:f Odnn UntNisecllntetest on OeQ\11 l.Oin 1.160,942

""""""" .

Total 1.100,942 . s ~.of'~• T trm prM.ions

OtiMn Provis.ion rN<k uaiNt loan IOS:St:s 41.266.S70 l5,4n.SlS

Total 4l.266S70 JS.4n.ns

' Shott· Termllom>wlnp Loan t'tP'Y'blton demand from &lnb -(01). Con¥~ bont ........... 0656(00) 253,4QUSO l49.40S.813

,_....,.._Otb!SI

(Ol~ S81 1ndh-<dltmr• 199.283,544 1Y.673,471

(Soand apln"-Otb!SI

101~ lndlon ..,.lrT .._.n l2.S07,952 ll.l3l~ r.s~H-1-? toct ~aM 11ft on Reed Otposi\,

~~<F. "' r :t: • ~,, ·:1 !-) v r

. ~c I U\ • ...;

Q> ~ .. •84NGP..\; -

~l.llellt.lll D 1 --------------------~~~u~~~ 79

(04). $81 St Marks Road (ll ,619,26S) 56,271,818

(on Hypothecadon of Book Dtbts;)

(OS}. SBH J C Road 125.()44,608 73.033,622 (on Hypotheeu lon o f Book Debts)

{06). Vijaya bank CC·Binaaaote 48,680,193 4l,J96,/1S

(on Hypothetation of Book Oebts)

{07). SIOBI.SUB Lo:.n 16,656,000 1S,268,000

(08}. 8ank. of Maharaw•S.~VOII\3$t.ld ;. TL· 1

(Secured against Book Deb ts)

{09). SBI Station eauar Gult>arsa (340,342) 1S,SS3.A86 (Sec:t.~red ~gains.t Book OebU)

(10}. Bank of Maharastra ·TL3 17,333,340

(11~ Indian Ban k RT H.agar..OO 198,728,140 18S,9 70,829

{on Hypothecation o1 Book Debts)

(12). Bank ot Mahatu tra-auavanasudi·TL·2 20.004.000 {Secured against Book Debts)

(13). NABAAO (RHS) 11,720,004

(14). L:atshmlvilas Bank ll·1 Thippasandra 3,125.001 {secured aplns( Book Debts)

(15) Syndicate Bank ind ira naiat 9 3,756,96$ 99,()48,447 (Sec:uted against Book Debts)

(16). Unlon bank of India Domlur·Tl·S 39,999,996 3,333,333 (Stcured u:a!n.s« Book Otbts)

To taH 1,02US9,982 984,812.930 b.Unsecured loan

NABAAO . (Soft t.oan 03.~ Interest}

Total 1,021,S59,982 984,812.930 7 Other Current ll<tb lfides

Other paya.b~ saneami:tta Gt;~tuity Fund Micro tnsura.nce payable 1,413.0S6 186,159

Outstandl~ ExPenses 133.191 Software amount payable 1,109,200

TllSPayablt 2,8 79 U .4Sl Total 2,525,135 337,802

• Short • Term prowlslons (a). PJovlslon tor employee benefit

leave Encashment Payable

Silarv payable 107.356 412.888 Gratultv Pavab~ 34 526 34 526

Total(a) 141,882 50 7.414 (b ). Others

prO'Iislon fOf lncome-tax(13·14&14-1S} 2,500,000 2.500,000 PtOYislon fet Stattvp Fund.fPO soo,ooo Income tax Payable 389,643 389,996

Provision for Income ·tax(Frf 16-17) 10.000,000 Total(b) 12..839.643 3,389,996

Tot:II B=Tobll(a)+Total(b) 13,031.525 1,897,410

80 ~~~.:::rt.::..__ _____________ ____, SANGHAMIIHIALinll"farllnllllll•

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0onon rlomd -Care Ind .. Kloobl -lo · Prolode>< c:o.n.n. I L.oJ> 101> • c_,.,.., Vel'lfC:IIIe ----0onon: IWftd -&IDa

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I~RAIWIM. ,..,..,._ IERVICEI

I-UN-I~NCIFlli•GO•-mr.1•

COMPANY UMIT1!0 BY OUARANTEI!

FIXeD ASSET$ AS ON 31ST MARCH. zcnt

oroaa cerryl"g Velu. o.,,reclaUon (Rtftf Note) - c:.r.,tne Yo"'" I

I

l""q···-AoltE ....

..... Ali et beginning

• through • •• I!Uing

.. lllei'Oj)O<tklt A<l<tltlono -- D!Opoool Aa etE:nd of US)tolell Fo.o tht Y'H' WIV><IttWII T .... .... ...... - c.ombiNitio -.. ,..., -.. -... - ,.:: .. 1 --Ot -04..2011 3 1.o1.20tt OI.OU018 3t.Ol.201t )1.01.20tt

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2,79<,117 241·211 . 3043105 Ull.b2 21.4111 . -.:,.a:us ... uu 411.011 .

4 UTHl "'"* . 4,711.112 2.311 .... n12M . l ,ttUA2 t.na.m uu.-. .

I 6lS.1l2 110713 . 711.06l 1.110,412 lt4.201 lllMJ 71100 liO I U tltt,m J.Ct ... J . 3.222,104 71 122 . . 1.300121 2,213,110 2764t J . 2 •to 10) ltO,W ~-.-.

1.710 . . . • 710 8,7 10 . . 1710 . . .

714.001 . . . 714 00S1 411 •U4 1Sl71S . 635121 71MO 2)2,115 . . . .

1 231710 . 1,211.780 7t.861 16S417 244 271 112502 1 157 ,,.

14,2.41.724 1 ·402113 . 111.013 , .... ,.. ... ,.. 8M2,271 1,12ot,103 711053 1 •so ne 5.461.101 6,107,441

1 7101$3 1212<50 . 2,82l.40l 411·,058 279469 585 527 2U787t 1,280,885

1,710,1$3 1 212,450 . U2l,AOl 416,058 279,4&9 695 527 2 227 '" 1 284,885

-~ . . . 1 1 . 1 1 1 I . . I 1 . 1 1 1 I . 1 1 . 1 1 1 I . . 1 1 . 1 1 1

I . 1 1 . 1 I 1

I . . 5 5 . . • I • l . . 3 3 . , 3 3

.. 1 . . . I 1 I I 1 -

' . -- - .-1. 1 , .• , 1 1

! - ·-. - - ':_"" s 5 • • -; .. 5 5

u~~7 ~'i!~l'~ : ___ .r- "'~- '! ~'~ -~-~~ _2~5_!2j 2.!~-~ ~~ - l 71l .tt2 '~ ,o~~ - ~, ... ,.... . .. ~J·~-'1!. I - - ~4!~!..!!.1 .!.,~•.1~~--• ~!="...!..!.-·--· ~\C~,.. ·~~ ~!.· ~':"~· ·

Note formlnt part of balonu Sheet

Note No. P~rtlculars ........ 31.03.201.8

1 2 4

11 Non..Current Investments

12 Lonc·term kwlns & adllonces . (1) Capitol Advances . (b) Security Ooposlts . (<) Otl>ef kwons & ildvonces

n Other non· current usets (1) Lone Term Trade Recelvobles

Unsecured ,considered good l )Financioluslstonce to Self Help Groups 549,759,441 516,108,341 2)Housl~ kwons to Self Help Groups 13,951,233 15,555,891 3)Water & Sanitation Loans 77.452.704 62.311,917

Totol(a) 641,163,378 593,976,149 (b) Otllm

Advan<:e to suppHm 746,710 680,825 Stoff ildvonces 889.468 932,879

Totol(b) 1,636,178 1,613,704 Totai=Totoh)+Total(b) 642,799,556 595,589,853

14 Curr~tnt lnVtitments .

15 Inventories . 16 Trode Roceiv1bles

Unsecured ,cl>o>Sidered Cood

1)flnandalassl$llnCO to Self Help Groups 1,099,518,882 1,032.216,682 2)Hou$1~ loaos to Self Help Groups 27,902,467 3l.l11.781 3)Water & Sanitation loans 154,905,407 124,623.835

Total 1,282,326, 756 1,187,952,298 17 cash & Bonk Balances I Cash & Cash equivalerlts

{a) Balance with banks ·8.472.865 38,352,627 {b) O>eques, drafts on hand {C) Cash on hand 12,284 18,116 {d) Otllers (specify)

Bank deposits with less !han U months maturity 84.975,893 55.803,012 II Earmar1<ed balances with banks Ill Balances with banks-1\eld as maJ1lin money or sea.rity

deposit against borrowings, gu.arantee/othel" commitments rv Repatriation resttictions v Bank deposits with more thon 12 months maturity .

Total 76,515,312 94,17~ ~

~ • fats ~ ~ " ~ ~-~!>ltv. ··

82 lti:~~n:!...._ _______________ ~ ...... ..,u ..

18 Short-Term Loans and Advance (a) Loans and Advance to related parties

Secured, considered good Unsecured , considered &ood Ooubtf\11

(b) Others I Securod, con•ldered &ood Unsecured • considered &ood Doubtful

19 Other current assets SRFS WATfR-oRG (Latur) 6.196 176!S Stamps on hand 74.407 97.32:l ~IS for Premises & FKIII~es 1.1Da,lH 916,IU4 Tax Oed1.1cted at Source 2.238989 1.938. ~ Prepaid Expenses 67.396 67.3% Prepaid lnS<nna Account 2,584 l.SOS431 SIDBI PSIG·II Receivoble 6-15~!1

ToQI 3,497,705 4,607 MS 20 Contlnaent liabilities & commitments

Contlnaent liabllltles & commitments 1•1 Oaims aaalnst the company not acknowledged .s debt (b) Guarantees . (c) Other money for which the company is conbnaently 011~ . Commitments (a) Estimated amount of contracts to be executed on capital .

account & not proVIded lot (b) Uncoiled llabllltv on shares & o!M< onvestments partly paod . (c) Others

u Proposed Dividends . h"oK \f.· T~ . A :;::~o,..f,..

v:~{~ "1 { "' ~. ~' ' ':'_lj

='; ·riS'Yct') ~,. c

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................ ..-.. ..... ·--•u . . ..,,.,..iJII'II 83 --·"-- -------------~118-.!111

;PART •

1-- ll.pr" 8:1 It \M f•twret ei •t tile - ""' of Wtttnt .,.d of pt"t'~h~Nt

··~od ·" 0\ , ••• Dfllod liOHOII 21 1•-'!-:,rPO , ...

;.....,. ..... -~ ... "\~!! TOTAl-A

u Olltofio-- - 1,0$1,420 2,,.1 880

ol Protit on 5oJie of FiJed AlMt in PreviOuS "*" 270,000

·~ 428.202 83M1

lnl.,... on FUdllopos<ts 3.974 540 U7H,. .,..,.., on S11H VohdolA>on 1 029 $370

a-~ttumehof"' 30.00 28400 1.303 7~ 2.8,. 300

""-"''AUCA m eoe ,w......,Oif• .

TOIOioll 1.172.611

TOTALA•I 300.$41 ~~·. Cool of I .

14 FlnllhtdGoods . u u s.tarln end woe .. 42 124.244 :lt.331 137

for Stiff 104.354 1~m

RtiMbunotrlwlt &.Mtd cl1lm Pre!M.Im 1233.843 1 <82ooe

~,.~ .... 1,430.703 ,.~ "'" I~;.······

743.03~ 503$83 1179oe

&. T t'tl!\11\1 hP*ftMS ~.455 104 3~1 24 740 23C1

>to •1 fund and ,,_ "'" ~" 2 9£1•11&

Toll!

JlnonceC.U

n ............. 1.:~::: & .~.1!6 . ........ ~ ..

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11 ~ .... ,. 401.209 8J6471

-·[QI>$Z .. IU 124.803 127 515

·-~ 1- 3,768.102 3 211 ·~7 .. 495447 3700De

50.628 53078

HGO 14.432.302 18 184 245 152.800 161 344

'-Yonce 8.847.126 9.676 921 1,620,743 :·:~·110 l......n. ••• 1 4&7 ~ ..

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245117 --667580 22!1011

16180 65367 272S7

IOC 178 1COOO 4000

18C.2SO 102412

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311.710 4.111000

7'11183 283.200

14 870

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! 162636 210130

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m-700907 204 714

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~·70 l1 ,.I 11171

uoo

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--------~

. SAHGHAMmlltA RUAAI. FIN.ANQAL SERVICES

INCOIIPORATtD UNDER SlCllOH U Of THE COMPANIES' ACT, ~56

COMPAHr UMITtD IY GUARANTEE

CASH FLOW STATtMENT

Clwfwnt Ropotti"' Period ,_ Ropottinc Pllflod

PAIITICULNIS .. .-. ll.o3.2018

Rs Rs Rs Rs

A) CASH FLOW FROM OPERATING ACTMTIES

PIIOFIT 8EFOIIE INCOME TAX 80952043.12 74!14!1041.00

ADJUSTMENTS:

DEPREOATION 2003571.88 1401823.00

I'IIOfiT 011 LOSS ON SALE OF FIXED A5Sm ·270000.00 o.oo INTU\EST ON FIX£D DEPOSIT ·3974540.00 ·2240961.12 ·2578854.00 -1177031 0C1

OPERATING PROfiT 8EFORE WORKING CAPITAL CHANGES 78711075.00 1nno1o.oo

MOVEMENTS IN WOIIKING CAPITAL

DECRESS/INCRESS IN CURRENT ASSETS -'8068500.06 ·240351070-80

DECRESS/INCRESS IN CURRENT LIABILITIES 932~518.47 45196018.41 212637498.99 ·27713571.81

NET CASH GENERATtD FROM OPERATIONS 123907093.41 46058411.19

B) CASH FLOW FROM INVESTING ACTIVmES

PURCHASE OF FIXED ASSEST ·2615213.00 ·15387U.OO

INTEREST ON FIXED DEPOSIT 3974~ 2578854.00

SALE OF FIXED ASSETS 270000.00 1,629,327 00 0.00 1040142.()()

C) CASH FLOW AtOM FINANONG AQlVITIES

REPAYMENT AND BARROWINGS FROM BANKS · 13376302.38 1U792008.00

AND FINANCIAL INSTmTIONS

INTER BRANCH RECEIPTS/ PAYMENTS ·109361462 91 · 1ZS42 1133.06

LOAN GIVEN .. 7209'103 23 ·1431!14863.76 1234&3569.90 123854444 84

NET INCREASE OR DECREASliN CASH AND CASH EQUIVALENTS ·17658443.36 171000225.36

CASH AND CASH EQUIVALENTS AT TilE 8EGINNING OF TilE YEAR !14173 7 S5.l6 7612'-470.00

CLOSING CASH AND CASH EQUIVALfHTS 76S15312.00 !14173755.36

NCITE :

1. "1M~ Aow Stotement 1\os been P<fi'O<ed under~ ' lndlrtct Method' es 1« out 1ft~ Aaountinl Stondard • 3

on Cash Flow SUttment Issued by~ of O>arured A<co<Jntont of Ind..,

z. Cash end Cash oqulv•lonts Include Cash In hand, Cash ot bonlc end Flud deposits.

EKH ,_.per our Report ofeven date

~ ,. ... , .. ~·-"'""··

Jb~e· ~ !'> Charte-.d Aecou~

5_ ~' &9 -d, ~J\ ~ -.

~ q •B.ijj('J-y (Chandraaekhlr B.S.)

(William Proprietor

Founder C alrperaon VIce-Chairman M.No 20«18

~- J <"'('\ ~ ( ppen.-1

Date : 11.06.l01t Chief Executl9e om .. , Place : Bengaluru

86 I~B.i~~1=!!.rt ---------------___J'WGHAMnHIA~ .. u .....

SANGHAMITHRA RURAL FINANCIAL SERVICES

(A Not-For-profit company incorporated under section 25 of The Indian Companies' Act 1956-A company limited by guarantee)

29. SIGNIFICANT ACCOUNTI NG POLICIES & NOTES FORMING PART OF ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

I. BASIS OF PREPERATION

The financial statements have been prepared in conformity with generally accepted accounting principles to comply In all material aspects with notified Accounting Standards ('AS') under the provision of the COmpanies A<l, 2013 ('the AGt') read with General Cirwlar 8/2014 dated April 01,2014. Issued by the Ministry of Corporate Affairs. The financial statements have been consistently applied by company and are consistent with those used in the previous year. The complete financial statements have been prepared along with all disclosures.

II. FIXED ASSETS:

Fixed assets are stated at cost. Cost Includes all expenses Includes all expenses Incurred to bring the assets to working condit ion for Its Intended use. Depreciation Is provided on the bases of prescribed in Schedule II to the Companies Act 2013.

Ill. DEPRECIATION:

Depreciation is provided on the bases prescribed In Schedule lllo the Companies Act, 2013.

IV. REVENUE RECOGNmON:

A) Registration charges.: It was decided to waive Rs.100/- as registration charge with effect from 01.06.2016. •

B) Interest: The rate of interest for lending to SHGs was different for different products and also different geographical areas, especially in respect of general purpose loans. In order to bring about uniformity in the interest rate structure, the rationalization of Interest rates task was taken up; the Board approved the same as mentioned below In respect of General Purpose Loans which constitutes around 92% of the total portfolio.

• Loans above Rs.11ac upto Rs.3 lac - 19% of interest p.a. on declining basis • Loans above Rs.3 lac - 20% of Interest p.a. on declining basis • Water and Sanitation Loans - 19% of Interest p a on declining basis

V. PROVISION:

Provisioning made against Financial Assistance portfolio: The company have adopted provisioning & Income recognition norms as per RBI guidelines vide notification no. DNBS CC PD.2S0/03.10.01l2011·12 dated 2 .. December 2011.

VI. CAPITAL FUND

To account for capital fund when funds are received from the Donors with specific Instructions to form such a fund.

2. The company is registered under section .25 of the companies Act. 1956 (now Section 8). S>hh~a~~~~ applicable to the company /.

~'/.:..~~~ 3. Claim against the company not acknowledged as debt Rs. Nil (Previous Year Nil) :z: '-'.

4. The company has put Internal Audit System & Internal Control procedures by way of Corp•llti~.Qlfi'<(• & Verification Audit commensurate with the Increased lending activities.

----------------------------~-~~~~1 87

5. Service Tax: As advised in the last year Annual Report after having pr~eposited an amount of Rs.SO,OO,OOO/·(Rupees Fifty lakh only) as directed by Honourable Appellate Tribunal, company had filed miscellaneous application on 13-<18·2013 seeking earty hearing of the case. M/s. Hi regange & Associates have re-submitted the same on 01-<>5·2017, for which the Honourable Tribunal vide their order no. M ise order no. 20689/2017 dated 15.12.2017 allowed the application for early hearing and directed the Registry to list appeal in due course.

6. Income Tax Assessment year 2014·15

Demand made by Income Tax Department to pay Rs.1,17,46,660/·, as company failed to submit Form 10 (declaration that accumulated surplus will be utilized in next five years). The HOnorable DIT (Exemptions), Bengaluru, refused to condone the delay In filling form 10 for accumulations under sec. 11(4) during the scrutiny assessment of 2014·15 even though CBDT had empowered the Commissioner to condone belated filing of Form 10. We have now filed a rectification petition before the Honorable OIT(Exemptlons), Bengaluru, requesting him to condone the delay for filing form 10 pertaining to accumulation of income under sec.11(4), for the Assessment Year 2014·15 in accordance with CBDT Instruction. The case was posted for hearing on 21.05.2019 but the Commissioner adjourned the same.

Income Tax Assessment Year 2016-17

IT returns filed for the year 2015·16 came up for scrutiny. The assessing officer was of the opinion that the activities of the assesse cannot be considered as charitable wi thin the meaning of Section 2(15) of the IT Act. Accordingly, the benefits of the provisions of Section 11 & 12 cannot be availed by the assesse. Thus, he has passed an order to pay Income tax of Rs.3,75,10,137/· against surplus of Rs.8,S3,80,050/· .

On receipt of demand notice, Company flied an appeal to the Commissioner of Income Tax (appeals} Bengaluru, within the time stipulated, praying that appeal may be allowed and appropriate relief be granted in the interest of justice and equity. In response to company's appeal vide their letter dated 31.01.2019, the Assistant Commissioner (exemption) agreed that stay of collection of demand shall be granted subject to payment of 20% (Rs.75,02,027/·) of disputed demand (Rs.3,72,78,190/·). Accordingly, Company remitted Rs.7S,02,027/· on 29.03.2019. Now, the company has filed a stay petition under 220 (b) of the Income Tax Act to the Commissioner of Income Tax (Appeals) through M/s. Shankar & Ass~clates, Bengaluru.

7. The company during the financial year has not adopted the CSR provisions as per sec.13S of the companies' act 2013.

8. Figures for the previous year are restated/ regrouped wherever necessary to be In conformity with current year figures.

9. The company has made a provision for Income tax of Rs 1, 00,00,000 for the financial year 2016·17, during the financial year to meet the eventuality.

For and behalf of the board

,JJ.~.~~··· / Founde~ ~h~~~~rsit1 . ~l/

,~-Chief Executrve Officer

Dote: 08.07.2019 Place: Bangalore

(WIIIIa~) VIce-Chainman

As per our Report of even date

Fore;:;~ CHARTERED ACCOUNTANTS

(OiANDRASEKHAR 8.5)

Proprietor Membership No: 204488 Firm Rec No: 0071895

UOIN:19204488AAAAAJ8133

aa l;~..:ll'l.:....... _____________ ____,~_.. .... u 5

Sa-Dhan had organised a ToT program on RBI depositors' education awareness in Bengaluru. Trainers of various MFis participatad. Mr. R.D. Gadiyappanavar, CEO & Mr. Danatraya, AGM,

RBI alangwith Sa·Dhan representative are seen participating in the program

Mr. R.D.Gadiyappanavar, CEO s11111 interacting with tha Location Co-ordinators of Tejaswini Federations in Chhatarpur.

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