Directors Report of First Leasing Company of India Ltd.

Mar 31, 2013

A REVIEW OF THE COMPANY''S PERFORMANCE OVER FISCAL 2013:

We are presently positioned in an economy that is annually compelled to revise its GDP growth rates from 9% to 8% and then to 5.6% from 6% with a present low forecast at 5%. If any company that works within these confines gets overtaken by a marketing obsession to climb great heights in asset growth it may at best be described as suicidal.

First Leasing despite the odds grew "Total Revenues" to Rs.245 Crores up from Rs.213 Crores recording a growth of 15% with PBT rising from Rs.48.84 Crores to Rs.51.17 Crores.

The one expense account we were able to compress was our tax bill which fell from Rs.17.23 Crores to Rs.16.45 Crores as we exhausted almost every other Expense-reduction possibility. First Leasing controlled what was controllable through exemplary credit management and for yet another year achieved the extraordinary feat of holding its net NPAs at zero. The company also successfully closed its first large Real Estate related lease for land and factory buildings.

Shareholders are understandably concerned that over the years whilst First Leasing enhanced its Net Worth to a level of Rs.363.94 Crores the company restrained but did not abstain from dividend payment despite the consideration that the Company over its present operating life paid dividends of Rs.118.16 Crores which is the equivalent of returning Shareholder Capital "Five times over". Also its imperative for First Leasing to build its "Retained Earnings" to balance debt funds committed by our bankers, which also explains why we remarkably increased the Company''s Capital Adequacy to an "All time High" of 27.32% against Reserve Bank''s present requirement of 15%, and also successfully completing a subordinated debt issue for Rs.178 Crores enhancing our Tier II Capital.

APPROPRIATIONS 2013 2012 (Rs. in Lacs) (Rs. in Lacs)

Profit for the year 3,472.91 3,161.83

Surplus brought forward from previous year 14,613.00 12,798.95

Statutory Reserve (695.00) (633.00)

Total 17,390.91 15,327.78

From which the following appropriations are made :- General Reserve 261.00 238.00

Dividend 410.23 410.23

Corporate Tax on dividend 69.72 66.55

Surplus in Profit and Loss Account 16,649.96 14,613.00

Total 17,390.91 15,327.78



REGULATION OF NBFCs:

The Company has complied with applicable regulations as per Reserve Bank of India Directions to NBFCs. Capital Adequacy Ratio stood at 27.32% (19.24%) as at 31st March 2013 which is much higher than the statutory minimum requirement of 15% stipulated by RBI. Net Non Performing Assets as at 31st March 2013 stood at 0.00% (0.12% ).

DIVIDEND:

The Board of Directors have recommended a Dividend of Rs.1.80 per share of Rs.10/- each on the Equity Shares (18%) free of tax for the year ended 31st March 2013.

PUBLIC DEPOSITS:

During the year entire deposits were repaid to its Deposit holders and as such the amount due to Public towards Public Deposit is Nil. Deposit / Interest which remained unclaimed to the extent of Rs.50.02 lacs has been transferred to a separate ESCROW Account for meeting future claims as per RBI''s direction.

DIRECTORATE:

Mr. V Selvaraj, Director of the Company, retires by rotation at this Annual General Meeting and being eligible offer himself for re-election.

MANAGING DIRECTOR''S COMMISSION:

The Board noted that the Managing Director of the Company expressed his intention to take a significantly reduced commission of Rs.16,12,433/- for the year ended 31st March 2013 which is equivalent to a normal bonus given to a staff member of the Company instead of his eligible Commission of Rs. 1,00,65,569/- (i.e.) 2% on the net profits computed under section 349/ 199 of the Companies Act, 1956 in view of adverse economic conditions prevailing in the financial industry.

AUDITORS:

The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants, Chennai (FRN-03621S), retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment to hold the office as statutory auditors till the conclusion of the next Annual General Meeting. The Auditors have confirmed that the re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The firm has successfully undergone the Peer Review Process by Peer Review Board (PRB) of the Institute of Chartered Accountants of India, New Delhi. The firm holds a valid certificate issued by the Peer Review Board of the said Institute.

COST AUDIT:

The Board of Directors of the Company have approved the appointment of Mr. S.Sundar of M/s. S.Sundar & Associates, Cost Accountant in practice as Cost Auditor to conduct the Audit of the Cost records of the Company in respect of its Wind Mill Operations for the period from 1st April 2013 to 31st March 2014.

CORPORATE GOVERNANCE:

A report on Corporate Governance forms part of this report and a certificate from the Auditors of your Company regarding compliance of conditions of the Corporate Governance is attached to this report.

A Management Discussion and Analysis Report also forms part of this report.

UNCLAIMED SHARE CERTIFICATES:

In term of clause 5A II of the Listing Agreement, the Company has sent three reminders to the shareholders whose share certificates, remains unclimed with the Company. The Company has transferred the shares comprised in the share certificates into one folio in the name of Unclaimed Suspense Account (Demat Account). The Company opened Unclaimed Suspense Account on 4th January 2013. The details of outstanding shares in First Leasing Company of India Limited Unclaimed Shares Suspense Account is as follows:

Particulars Aggregate Outstanding shares Number of lying in First Leasing shareholders Company of India Limited Unclaimed Shares Suspense Account

Opening Balance as on 4th January 2013* 50 1,660

Shareholders approached for transfer / delivery during 2012-13 and Shares transferred / delivered during 2012-13 Nil Nil

Balance as on 31st March 2013 50 1,660

*Account opening date.

RATING:

CREDIT RATING AWARDED BY CARE AND BRICKWORK:

"CARE A1 " (A ONE PLUS) for Commercial Papers "CARE AA" (DOUBLE A) for Non-Convertible Debentures "CARE AA-" (DOUBLE A Minus) for Subordinated Debt "CARE AA" (DOUBLE A) for Long Term Bank facilities "BWR AA" (BWR DOUBLE A) for Non-Convertible Debentures "BWR AA" (BWR DOUBLE A) for Subordinated Debt

PROVISION ON STANDARD ASSETS:

As per Reserve Bank of India Directive, the Company has provided 0.25% on Standard Assets aggregating Rs. 36.65 Lacs (previous year Rs. 42.44 Lacs) in the accounts for the year ended 31st March 2013.

INFORMATION AS PER COMPANIES (DISCLOUSRE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

During the year under review, there is no information required to be stated relating to Energy Conservation and Technology absorption. Foreign currency expenditure amounting to Rs. 2,160.76 Lacs was incurred during the year under review. The Company does not have any Foreign Exchange Earnings.

PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975:

Particulars of Employees in terms of requirement under Section 217(2A) of the Companies Act, 1956 are set out in the Annexure forming part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the section 217(2AA) of the Companies Act, 1956 the Board of Directors confirms:

1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. That the directors had prepared the annual accounts on a going concern basis.

CORPORATE SOCIAL RESPONSIBILITY

Your Company in association with NGO''s and Charitable Trusts is involved for the last 15 years in various community focused activities for improving the health and hygienic level of the community.

Your Company is also contributing to the development of education and sports facilities through various sponsorship programme in association with Charitable Trusts.

ACKNOWLEDGEMENT:

The Directors wish to thank the Bankers, Financial Institutions, Customers and Employees for their assistance and support extended to the Company during the year under review.



For and on behalf of the Board

Place : Chennai A C MUTHIAH

Date : 14th August 2013 Chairman

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Mar 31, 2012

A REVIEW OF THE COMPANY'S PERFORMANCE OVER FISCAL 2012

First Leasing worked against an adverse tide of 13 interest rate impositions and a decelerating economy (GDP growth is forecast at 5.6 to 6% against the 8 & 9% growth rates of earlier years). Raising money to fund asset growth in a cash strapped money market to meet sudden opportunity growth virtually disappeared. First Leasing's major expense account is "interest paid" which after the interest rate hikes referred to earlier escalated to Rs.149.85 Crores from the previous year's Rs.110.34 Crores,

First Leasing despite these adverse developments managed to increase total revenues to Rs. 213.35 Crores from the preceding year's Rs. 179.93 Crores. This adverse impact of the high interest bill was subdued by careful management of Operating Expenses which were brought down to Rs. 9.32 Crores from Rs.14.45 Crores a drop of 36%, almost equalizing "Profits before exceptional expense and taxes", with last years number.

What proved impossible to replicate was the preceding year's windfall capital gain of Rs. 53.42 Crores from the sale of CARE shares. However this drop was partially offset by the corresponding fall in taxes to Rs. 17.22 Crores from Rs. 31.77 Crores.

First Leasing recognizes that funding will continue to be a serious problem in the coming year as inflation continues high in excess of globally acceptable safe limits. The Company succeeded in negotiating the highest bank limit increase in any fiscal year of Rs. 175 Crores to grow our business.

With the Equity markets lifeless we were constrained to find longer term money in the form of subordinated debt for periods of 5 years and 3 months and 7 years. Fortunately Reserve Bank of India recognizes sub debt as Tier II Capital which will strengthen our funding base.

(Rs. in Lacs) (Rs. in Lacs)

APPROPRIATIONS 2012 2011

Profit for the year 3,161.83 7,086.54 Surplus brought forward from previous year 12,798.95 8,189.93

Statutory Reserve (633.00) (1,415.00)

Total 15,327.78 13,861.47

From which the following appropriations are made :-

General Reserve 238.00 531.00

Dividend 410.23 455.81

Corporate Tax on dividend 66.55 75.71

Surplus in Profit and Loss Account 14,613.00 12,798.95

Total 15,327.78 13,861.47

REGULATION OF NBFCs:

The Company has complied with applicable regulations as per Reserve Bank of India Directions to NBFCs. Capital Adequacy Ratio stood at 19.24% (19.38%) as at 31st March 2012 as against the minimum requirement of 15% stipulated by RBI. Net Non Performing Assets as at 31st March 2012 stood at 0.12% (Nil).

DIVIDEND:

The Board of Directors have recommended a Dividend of Rs.1.80 per share of Rs.10 each on the Equity Shares (18%) free of tax for the year ended 31st March 2012.

PUBLIC DEPOSITS:

The outstanding amount in Public Deposits Account as on 31st March 2012 stood at Rs. 4,824.91 Lacs together with the accrued interest of Rs. 285.75 lacs.

The Company has since repaid its entire Public Deposits outstanding as on 7th August 2012 together with the accrued interest on that date to its Deposit holders and as such the amount due to Public towards Public Deposits is Nil.

DIRECTORATE:

Mr. A C Muthiah, Director of the Company, retires by rotation at this Annual General Meeting and being eligible offer himself for re-election.

Mr. V Selvaraj was appointed as Additional Director with effect from 14th August 2012. He holds his Office upto the date of ensuing Annual General Meeting. In accordance with the provisions of section 257 of the Companies Act, 1956 the Company received a notice in writing from a member proposing his appointment as Director of the Company together with requisite deposit. The resolution seeking the approval of the members for appointment of Mr. V Selvaraj as Director of the Company has been incorporated in the notice of the ensuing Annual General Meeting.

Mr. N Ramakrishnan was appointed as Additional Director with effect from 14th August 2012. He holds his Office upto the date of ensuing Annual General Meeting. In accordance with the provisions of section 257 of the Companies Act, 1956 the Company received a notice in writing from a member proposing his appointment as Director of the Company together with requisite deposit. The resolution seeking the approval of the members for appointment of Mr. N Ramakrishnan as Director of the Company has been incorporated in the notice of the ensuing Annual General Meeting.

Maharaj Jai Singh, Mr. A Satish Kumar and Mr. M B Sridharan resigned from the Directorship of the Company with effect from 25th January 2012, 8th August 2012 and 14th August 2012 respectively. The Board wishes to place on record its appreciation of the valuable services and guidance rendered by Maharaj Jai Singh, Mr. A Satish Kumar and Mr. M B Sridharan during their association with the Company.

MANAGING DIRECTOR'S COMMISSION:

The Board noted that the Managing Director of the Company expressed his intention to take a significantly reduced commission of Rs.15,54,952/- for the year ended 31st March 2012 which is equivalent to a normal bonus given to a staff member of the Company instead of his eligible Commission of Rs. 1,00,83,723/- i.e 2% on the net profits computed under section 349 / 199 of the Companies Act, 1956, in view of adverse economic conditions prevailing in the financial industry.

AUDITORS:

The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants, Chennai (FRN- 03621S), retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment to hold the office as statutory auditors till the conclusion of the next Annual General Meeting. The Auditors have confirmed that the re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The firm has successfully undergone the Peer Review Process by Peer Review Board (PRB) of the Institute of Chartered Accountants of India, New Delhi. The firm holds a valid certificate issued by the Peer Review Board of the said Institute.

COST AUDIT:

The Ministry of Corporate Affairs vide its order No. 52 / 26 / CAB / 2010 dated 2nd May 2011 read with its circular 12/2012 dated 4th June 2012 made it mandatory to appoint Cost Auditor in respect of certain industries. The order covers industries engaged in Power Generation through Wind Mill Operations.

Accordingly, the Board of Directors of the Company have approved the appointment of Mr. S Sundar of M/s. S Sundar & Associates, Cost Accountant in practice as Cost Auditor to conduct the audit of the cost records of the Company in respect of its Wind Mill Operations for the financial year ended 31st March 2012 and 31st March 2013, subject to the approval of Central Government.

CORPORATE GOVERNANCE:

A report on Corporate Governance forms part of this report and a certificate from the Auditors of your Company regarding compliance of conditions of the Corporate Governance is attached to this report. A Management Discussion and Analysis Report also forms part of this report.

UNCLAIMED SHARE CERTIFICATES:

In term of clause 5A II of the Listing Agreement, the Company has sent three reminders to the shareholders whose share certificates remains unclaimed with the Company. The Company will transfer the shares comprised in the share certificates into one folio in the name of Unclaimed Suspense Account (Demat Account). The Company is in the process of opening Unclaimed Suspense Account and further disclosures as stated in the Listing Agreement will be made in due course.

RATING:

- "CARE A1 " (A ONE PLUS) for Commercial Papers

- "CARE AA" (DOUBLE A) for Long Term Debentures

- "CARE AA (FD)" (DOUBLE A PLUS) for Fixed Deposits

- "CARE "AA" (DOUBLE A) Long Term Bank facilities

- "CARE "AA -" (DOUBLE A MINUS) for Un-Secured Subordinated debt

- "BWR AA" (BWR DOUBLE A) for Un-Secured Subordinated debt PROVISION ON STANDARD ASSETS:

As per Reserve Bank of India Directive, the Company has provided 0.25% on Standard Assets aggregating Rs. 42.44 Lacs (previous year Rs. 385.32 Lacs) in the accounts for the year ended 31st March 2012.

INFORMATION AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

During the year under review, there is no information required to be stated relating to Energy Conservation and Technology absorption.

Foreign currency expenditure amounting to Rs.1,080.02 Lacs was incurred during the year under review relating to hedging costs for FCNR borrowings from our bankers because a lower interest rate was available. The Company does not have any Foreign Exchange earnings.

PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975:

Particulars of Employees in terms of requirement under Section 217(2A) of the Companies Act, 1956 are set out in the Annexure forming part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the section 217(2AA) of the Companies Act, 1956 the Board of Directors confirms:

1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. That the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT:

The Directors wish to thank the Bankers, Financial Institutions, Customers and Employees for their assistance and support extended to the Company during the year under review.

For and on behalf of the Board

Place : Chennai A C MUTHIAH

Date : 14th August 2012 Chairman

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Mar 31, 2011

Dear Members,

A REVIEW OF THE COMPANY'S PERFORMANCE OVER FISCAL 2011: First Leasing achieved a cash profit for fiscal 31st March 2011 of Rs.105.47 Crores versus Rs.77.65 Crores the preceding year whilst Profit After Tax reached Rs.70.75 Crores against Rs.34.87 Crores, last fiscal, a 103% increase. This unprecedented profit was sourced by a successful sale of CARE shares for Rs.54 Crores which First Leasing bought some 18 years back for Rs.25 lakhs and offcourse represents Non Recurring Income. FLCI decisively completed this sale although market speculators suggested CARE share prices could climb higher, but by doing so, FLCI saved itself Rs.13 Crores i.e., the fall in this share's value over the succeeding three months. FLCI continues to closely monitor its expense accounts despite the consideration that in the preceding year FLCI reduced 'interest paid' from Rs.103.79 Crores to Rs.93 Crores a reduction of Rs.10.79 Crores. The current fiscal, troubled by high headline inflation was dotted with interest rate hikes. Our best efforts enabled us restrict increase in interest paid to Rs.11.88 Crores for the fiscal despite the fact that we had to substantially increase our bank debt, (which offcourse carried a higher interest cost) to achieve asset growth, in the hundred crore plus category. If we were compelled to apply the normal cash credit rate of 13% for the additional borrowings, then incremental interest cost would have risen to Rs.14.43 Crores but we held it at Rs.11.88 Crores, through diligent management of the Treasury function, which kept the average cost of borrowings down to 9.4% against 9.2% the preceding year, despite the multiplicity of interest rate hikes. By doing so FLCI saved Rs.3 Crores of interest expense.

FLCI expanded General Reserves from Rs.241.61 Crores to a high of Rs.307.16 Crores in fiscal 2011 so that the overall networth of the company climbed to Rs.307.16 Crores providing adequate creditor cushion to safeguard credit facilities.

FLCI additionally was compelled to set aside by an RBI directive a significant Rs.3.85 Crores provision for Standard Assets i.e., a provision of 0.25% on the “performing lease credit portfolio” (on which rentals are regularly received) over and above normal NPA provisions. Since almost a hundred percent of our Credit Receivables are current, we paid an unexpectedly surprising price for taking considered credit decisions, via a massive provision of Rs.3.85 Crores which in its turn led to a significant ballooning of “operating expenses” by Rs.3.85 Crores.

CONTINGENT LIABILITIES

A review of the company's contingent liabilities demonstrates that FLCI's M anagement effectively addressed aggressive revenue centric tax demands of Rs.44.28 Crores. By fiscal year end we successfully reduced contingent liability from Rs.44.28 to Rs.21.31 Crores. The foregoing robust result enables First Leasing to continue its unbroken 36 year dividend payment record to declare a 20% dividend which on a tax adjusted basis converts to a return of 26.49%.

(Rs. in Lacs) (Rs. in Lacs)

APPROPRIATIONS 2011 2010

Profit for the year 7,075.09 3,487.05 Surplus brought forward from

previous year 8,189.93 6,146.32

Statutory Reserve (1,415.00) (699.00)

Income Tax of earlier years 11.45 (2.49)

Total 13,861.47 8,931.88

From which the following appropriations are made :-

General Reserve 531.00 262.00

Dividend 455.81 410.23

Corporate Tax on dividend 75.71 69.72

Surplus in Profit and Loss Account 12,798.95 8,189.93

Total 13,861.47 8,931.88

REGULATION OF NBFCs:

The Company has complied with applicable regulations as per Reserve Bank of India Directions to NBFCs. Capital Adequacy Ratio stood at 19.38% (16.75%) as at 31st March 2011 as against the minimum requirement of 12% stipulated by RBI. Net Non Performing Assets as at 31st March 2011 stood at Nil (0.04%).

DIVIDEND:

The Board of Directors have recommended a Dividend of Rs.2.00 per share of Rs.10 each on the Equity Shares (20%) free of tax for the year ended 31st March 2011.

PUBLIC DEPOSITS:

The Company held, as on 31st March 2011, 886 matured deposits aggregating Rs. 378.55 Lacs. Subsequent movements in these deposits are as follows:

(Rs. in lacs) Particulars No. of Accounts Amount

Deposits repaid to date 92 22.13

Deposits renewed 126 28.81

We are yet to receive disposition instructions on the residual Rs. 327.61 Lacs. Steps are continuously being taken to arrange for repayment/ renewal of these deposits.

DIRECTORATE:

Maharaj Jai Singh, Director of the Company, retires by rotation at this Annual General Meeting and being eligible offer himself for re-election.

AUDITORS:

The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants, Chennai (FRN- 03621S), retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment to hold the office as statutory auditors till the conclusion of the next Annual General Meeting. The Auditors have confirmed that the re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The firm has successfully undergone the Peer Review Process by Peer Review Board (PRB) of the Institute of Chartered Accountants of India, New Delhi. The firm holds a valid certificate issued by the Peer Review Board of the said Institute.

CORPORATE GOVERNANCE:

A report on Corporate Governance forms part of this report and a certificate from the Auditors of your Company regarding compliance of conditions of the Corporate Governance is attached to this report. A Management Discussion and Analysis Report also forms part of this report.

UNCLAIMED SHARE CERTIFICATES:

In compliance with clause 5A II of the Listing Agreement, the Company has initiated the process in respect of the unclaimed shares and the Company is in the process of sending first reminder to the shareholders whose shares remain unclaimed with the Company. All such shareholders who are in the receipt of the letter may write to the Registrar and Transfer Agent with the correct details to enable them to verify and re-send the share certificate.

RATING:

CREDIT RATING AWARDED BY CARE:

- PR1 ( ) (Highest Safety) for Commercial Papers

- PR1 ( ) (Highest Safety) for Short Term Debentures

- Care “AA” Long Term Debentures

- Care AA (FD) for Fixed Deposits

- Care “AA” Long Term Bank facilities

PROVISION ON STANDARD ASSETS:

As per Reserve Bank of India Directive, the Company has provided 0.25% on Standard Assets aggregating Rs. 385.32 Lacs (previous year Rs. Nil) in the accounts for the year ended 31st March 2011.

INFORMATION AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

During the year under review, there is no information required to be stated relating to Energy Conservation and Technology absorption.

Foreign currency expenditure amounting to Rs.15,418.82 Lacs was incurred during the year under review. The Company does not have any Foreign Exchange earnings.

PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975:

Particulars of Employees in terms of requirement under Section 217(2A) of the Companies Act, 1956 are set out in the Annexure forming part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the section 217(2AA) of the Companies Act, 1956 the

Board of Directors confirms:

1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. That the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT:

The Directors wish to thank the Bankers, Financial Institutions, Customers and Employees for their assistance and support extended to the Company during the year under review.

For and on behalf of the Board

Place:Chennai A C MUTHIAH

Date:5th May 2011 Chairman

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Mar 31, 2010

A REVIEW OF THE COMPANYS PERFORMANCE OVER FISCAL 2010

First Leasing achieved a pretax profit of Rs.52.79 crores for fiscal 2010 to overtake pretax profit of Rs.51.28 crores last fiscal. What is more significant is that First Leasing increased its networth by over Rs.30 crores to provide adequate creditor cushion to its bankers and financial institutions.

The foregoing represents a robust performance considering that the globalised financial world was traumatized by an almost unparalled financial crisis, leading to a fall in demand especially exports. The fall in demand led to a dramatic cancellation of capital expenditures and consequently a fall in demand for loans/leasing etc., which impacted around seven months of the fiscal period under consideration. Resultantly, Management was compelled to throw away their earlier business plans and re-strategise urgently to maintain profits.

First Leasing as is apparent from the Profit & Loss numbers, focused on its Treasury operations to generate cost savings to compensate for the absence of capex funding opportunities and after strenuous efforts reduced its interest paid expense from Rs.103.79 crores to Rs.93.36 crores a reduction of Rs.10.43 crores. Lets keep in mind that this significant reduction in interest paid was achieved despite the fact that with the growth of business we accomplished, our interest bill understandably would in the normal course have to increase since borrowings expanded from Rs.965.80 crores to Rs.1055.42 crores an increase of Rs.89.62 crores. So self evidently the real interest reduction First Leasing achieved exceeded Rs.10.43 crores.

First Leasings conservative approach to business growth and rigorous credit evaluation enables it to continue its exemplary performance of "nil" Non Performing Assets.

Given the foregoing strategic remedial actions that were successfully implemented to counter the financial crisis, First Leasing for the 35th year was able to continue its unbroken record of paying a cash dividend of 18% which on a tax adjusted basis amounts to a return of 23.98%.



(Rs. In Lacs) (Rs. In Lacs)

APPROPRIATIONS 2010 2009

Profit for the year 3,487.05 3,354.91

Surplus brought forward from

previous year 6,146.32 4,217.40

Statutory Reserve (699.00) (671.00)

Income Tax of earlier years (2.49) (23.42)

Total 8,931.88 6,877.89

From which the following appropriations are made:- General Reserve 262.00 251.62 Dividend 410.23 410.23 Corporate Tax on dividend 69.72 69.72 Surplus in Profit and Loss Account 8,189.93 6,146.32

Total 8,931.88 6,877.89

REGULATION OF NBFCs:

The Company has complied with applicable regulations as per Reserve Bank of India Directions to NBFCs. Capital Adequacy Ratio stood at 16.75% (16.45%) as at 31st March 2010 as against the minimum requirement of 12% stipulated by RBI. Net Non Performing Assets as at 31st March 2010 stood at 0.04% (NIL %).

DIVIDEND:

The Board of Directors have recommended a Dividend of Rs.1.80 per share of Rs.10 each on the Equity Shares (18%) free of tax for the year ended 31st March 2010.

PUBLIC DEPOSITS:

The Company held, as on 31st March 2010, 968 matured deposits aggregating Rs. 397.10 Lacs. Subsequent movements in these deposits are as follows:

(Rs. In lacs)

Particulars No. of Accounts Amount

Deposits repaid to date 96 23.62

Deposits renewed 166 48.24



We are yet to receive disposition instructions on the residual Rs. 325.24 Lacs. Steps are continuously being taken to arrange for repayment/renewal of these deposits.

DIRECTORATE:

Dr. A C Muthiah, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-election.

Mr. A. Satish Kumar was appointed as Additional Director with effect from 26th October 2009. He holds his office upto the date of ensuing Annual General Meeting. In accordance with the provisions of section 257 of the Companies Act, 1956, the Company received a notice in writing from a member proposing his appointment as Director of the Company together with requisite deposit. The resolution seeking the approval of the members for the appointment of Mr. A. Satish Kumar as Director of the Company has been incorporated in the notice of the ensuing Annual General Meeting.

Mr. Viswanath Tumu and Mr. Babu K Verghese resigned from the Directorship of the Company with effect from 15th October 2009 and 18th November 2009 respectively. The Board wishes to place on record its appreciation of the valuable services and guidance rendered by Mr. Viswanath Tumu and Mr. Babu K Verghese during their association with the Company.

MANAGING DIRECTOR’S COMMISSION:

The Board noted that the Managing Director of the Company expressed his intention to take a significantly reduced commission of Rs.16,19,741/- for the year ended 31st March 2010 which is equivalent to a normal bonus given to a staff member of the Company instead of his eligible Commission of Rs. 1,51,23,746/- (i.e) 2% on the net profits computed under section 349 / 199 of the Companies Act,1956, in view of the unprecedented crisis prevailing in the financial industry.

AUDITORS:

The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants, Chennai (FRN- 03621S), retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment to hold the office as statutory auditors till the conclusion of the next Annual General Meeting. The Auditors have confirmed that the re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

The firm has successfully undergone the Peer Review Process by Peer Review Board (PRB) of the Institute of Chartered Accountants of India, New Delhi. The firm holds a valid certificate issued by the Peer Review Board of the said Institute.

CORPORATE GOVERNANCE:

A report on Corporate Governance forms part of this report and

a certificate from the Auditors of your Company regarding

compliance of conditions of the Corporate Governance is attached to this report. A Management Discussion and Analysis Report also forms part of this report.

RATING:

CREDIT RATING AWARDED BY CARE

- PR1 (+) (Highest Safety) for Commercial Papers

- PR1 (+) (Highest Safety) for Short Term Debentures

- Care "AA" (High Safety) for Long Term Debentures

- Care AA+(FD) for Fixed Deposits

- Care "AA" for Long Term Bank facilities

INFORMATION AS PER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988:

During the year under review, there is no information required to be stated relating to Energy Conservation and Technology absorption.

Foreign currency expenditure amounting to Rs. 31,440.96 Lacs was incurred during the year under review. The Company does not have any Foreign Exchange earnings.

PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975:

Particulars of Employees in terms of requirement under Section 217(2A) of the Companies Act, 1956 are set out in the Annexure forming part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the section 217(2AA) of the Companies Act, 1956 the Board of Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. That the directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENT:

The Directors wish to thank the Bankers, Financial Institutions, Customers and Employees for their assistance and support extended to the Company during the year under review.

For and on behalf of the Board Place : Chennai A C MUTHIAH Date : 29 th July 2010 Chairman