Directors Report of Lloyds Finance Ltd.

Mar 31, 2013

To the Members,

The all are aware that the Hon''ble High Court of Bombay has appointed a Special Committee to take charge of the management and affairs of the Company vide its Order dated 12th March, 2004. With the permission of the Special Committee, your Directors are presenting the 26th Annual Report of the Company with the Audited Statement of Accounts for the financial year ended 31st March, 2013.

1. Financial Results

The Financial Results of the Company for the year under review are summarized for your consideration:-

(Rs. in Lacs)

31.03.2013 31.03.2012

Gross Income 143.98 117.65

Expenditure 239.27 302.10

Write-offs 6125.58 1753.59

Profit / (Loss) for the year before tax (6220.87) (1938.04)

Profit / (Loss) for the year after tax (6220.87) (1938.04)

Balance of (Loss) brought forward 34527.34 32590.76

Income Tax refund of earlier years 0.00 1.46

Balance of (Loss) carried forward (40748.21) (34527.34)

2. Dividend

In view of the losses the Directors have not recommended any Dividend for the year ended 31st March, 2013.

3. Fixed Deposit

The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from public as on 31-3-2013 stood at Rs.11.00 Crore (Previous Year Rs.111.25 Crore).

Pursuance to the responsibility vested by the Hon''ble High Court of Bombay, the Special Committee alongwith the Learned Amicus Curiae (appointed by the Hon''ble High Court of Bombay vide its order dated 14/03/2007), formulated comprehensive Scheme of Repayment to all class and categories of fixed deposit holders on the basis of availability of fund and future recoveries from the debtors of the company. The Hon''ble High Court of Bombay vide its order dated 09,h February, 2012 has sanctioned the Scheme of Repayment to Fixed Deposit Holders. The repayment in pursuance of the scheme to the deposit holders shall be made category-wise as under:

Principal deposit amount upto Rs.10,000A @55%, from Rs. 10,001/- to Rs.25,000/- - @45%, Rs.25,001/- to Rs.50,000/- - @35%, Rs.50,001/- to Rs.1,00,000/- - @30% and Rs.1,00,001/- and above - @25%.

The scheme does not provide for payment of any interest on any category of fixed deposits. The repayment against fixed deposit shall be made only to the extent of percentage approved by the Hon''ble High Court of Bombay after deducting any amount, if already partly repaid. However, if any fixed deposit has been paid in excess of its eligibility amount under the scheme, depositor shall not be paid any further amount.

The Company invited claims from Fixed Deposit Holders through an advertisement in leading newspapers in 39 cities in 19 states. The Fixed Deposit Holders had been advised to lodge their claims on or before 16th May, 2012. The Special Committee has commenced payment after adjudication of claims on the basis of availability of funds and in terms of the Scheme.

Inspite of concerted efforts under directions of Special Committee to make aware the depositors in large about the Scheme'' approved by Hon''ble High Court of Bombay, the number of claims received from depositors are much less in numbers, but are within range of funds available. The Special Committee has also regularly informed all authorities such as RBI, SEBI,. Registrar of Companies, Ministry of Company Affairs, various courts, etc. about the Scheme of payment to depositors approved by Hon''ble High Court of Bombay. The communication with above authorities has enabled large number of depositors to lodge claims with Special Committee for adjudication. The details of Scheme is also available on website of the company under Annual Report. Eventhough the Special Committee had fixed last date for submission of claims as 16th May, 2012, the company was directed to accept claims for extended period. It is more than 1 (one) year of announcement of Scheme for Fixed Deposit Holders to lodge claim, there are comparatively less number of claims received. All claims received during the period have been paid in terms of the Scheme.

It is pertinent to inform that pursuant to the Scheme of repayment to Fixed Deposit Holders sanctioned by Hon''ble High Court of Bombay vide order dated 9th February, 2012 to repay part of principal amount as enumerated above. Consequent to the order, the principal liability of outstanding toward Fixed Deposits is reduced by Rs.63.91 crores. This amount has been transferred to Capital Reserve. The resultant liability then was reduced to Rs.47.34 crores. After due deligence, it was observed that the claims of large number of Fixed Deposit Holders, due from the year 1999 have not been lodged with the company. Therefore, it is thought fit and proper to reflect the liability of Fixed Deposit Holders within the strength and estimates of claims likely to be received and on the basis of estimated inflow of funds. In view of this, the Fixed Deposit liability to the tune of Rs.36.34 crores has been reduced and remitted to reserves.

4. Banks & Financial Institutions borrowings

The Directors wish to inform that only one institutional creditor i.e. Gujarat State Financial Corporation (GSFC) has outstanding term loan amounting to Rs.670.98 lacs, for which efforts are being made by the Special Committee to arrive at One Time Settlement in tandem with settlement with other Banks and Financial Institutions. In view of this, the liability of GSFC works out to Rs.60 lacs and the balance has been accordingly transferred to remission of liabilities. The Special Committee has submitted its report on repayment to GSFC to Hon''ble High Court of Bombay and directions of Hon''ble High Court of Bombay are awaited.

5. Debentures

As regards the liability of Non-convertible debentures, the Hon''ble High Court of Bombay vide its order dated 27/09/2010 in Company Petition No. 926 of 2009 u/s 391 of the Companies Act, 1956 has approved Scheme of Compromise with Public Issue Debenture Holders. The claims of debenture holders received, so far have been satisfied as per terms and conditions of the Scheme approved by Hon''ble High Court of Bombay.

6. Statutory Information

There were no employees during the year ended 31st March, 2013 in respect of whom the particulars are required to be disclosed with reference to Section 217(2A) of the Companies Act, 1956.

The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, require disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B prescribed by the rules. The Company, not being a manufacturing company is advised that Form A and B are not applicable to it. The Company had no Foreign Exchange earnings and outgoings during the year under review.

7. Directors

The Government of India, Ministry of Corporate Affairs vide letter dated 26/12/2011 approved the re-appointment of Shri Pankaj R. Desai as Managing Director for a period of 5 (five) years w.e.f. 1/11/2011 u/s 269, 198/309, 310, 387 and 637AA of the Companies Act, 1956.

Shri Puran Chandra Soni, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.

8. Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements-and estimated that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Gompany at the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2013 on a going concern basis.

9. Auditors'' Observations

The observations of the Auditors are in the nature of general disclosures, .which read together with the accounting policies and the relevant notes to the accounts, are self-explanatory.

10. Auditors

The members are requested to appoint Auditors and fix their remuneration.

11. Corporate Governance

Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that- all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor''s Certificate on its compliance are annexed hereto and forms part of this Annual Report.

12. Acknowledgement

The Board wishes to express its deep appreciation to the Banks and Financial Institutions and various other agencies for their co-operation and to all staff members for the efficient and loyal sen/ices rendered by them.

For and on behalf of the Board

(Basant Bhoruka)

Chairman

Place: Mumbai

Date : 14th May, 2013.

---

Mar 31, 2012

The all are aware that the Hon'ble High Court of Bombay has appointed a Special Committee to take charge of the management and affairs of the Company vide its Order dated 12th' March, 2004. With the permission of the Special Committee, your Directors are presenting the 25th Annual Report of the Company with the Audited Statement of Accounts for the financial year ended 31st March, 2012.

1. Financial Results

The Financial Results of the Company for the year under review are summarized for your consideration:-

(Rs. in Lacs) 31.03.2012 31.03.2011

Gross Income 117.65 134.58

Expenditure (302.10) (325.57)

Write-offs 1753.59 659.51

Profit I (Loss) for the year before tax (1938.04) (850.50)

Profit I (Loss) for the year after tax (1938.04) (850.50)

Balance of (Loss) brought forward 32590.76 (31740.45)

Income Tax Refund of earlier years 1.46 0.19

Balance of (Loss) carried forward (34527.34) (32590.76)

2. Dividend

In view of the losses the Directors have not recommended any Dividend for the year ended 3151 March, 2012.

3. Management Discussion and Analysis

You are aware that the Company is functioning under the management of the Special Committee appointed by the Hon'ble High Court of Bombay instead of Official Liquidator in Company Petition No. 1017/2002 vide Order dated 12th March 2004. In pursuance to Order dated 12th' April, 2004 passed by the Hon'ble High Court of Bombay, the Board of Directors are working under the superintendence of the Special Committee.

The major thrust of the Special Committee is to recover the dues from defaulters of the Company, reduction of expenses and formulate scheme of the repayment to the fixed deposit holders, other secured and unsecured creditors.

The Special Committee pursuant to the direction of the Hon'ble High Court is concentrating on recoveries and in addition to pursuing the legal recourse, is calling the defaulters for settlement of their dues with a view to expedite the recovery.

The Company is currently not engaged in business of Non-Banking Finance Company (NBFC) w.e.f. 14th May, 1998 as per restrictions imposed by Reserve Bank of India and the thrust is on recovery of its dues and repayment of its liability in a phased manner.

The Company, under the direction of the Special Committee appointed by the Hon'ble High Court of Bombay, is complying with all the requirements of the Listing Agreement, The Companies Act, ,1956 and Reserve Bank of India like submission of various forms and returns to Stock Exchanges, Registrar of Companies and Reserve Bank of India.

The Hon'ble High Court of Bombay reviewed the working of the Company under the management of the Special Committee and vide order dated 14th March, 2007 appraised that the Special Committee has acted in earnest and has made best possible efforts to effectuate the purpose of the constitution of the Special Committee and that a substantial amount of work has been done by the Special Committee towards realization of the outstandings, settlement of dues of the Secured Creditors, Debenture holders and Fixed deposit holders. The Special Committee comprises of Mr. Justice V. R. Datar (Retd. Judge of High Court of Bombay) as Chairman, Mr. S. C. Malhotra I.P.S., D.G.P. (Retd.) Maharashtra, Mr. P. K. Bansal, I.P.S., D.G.P. (Retd.), Gujarat as Members.

The Special Committee has addressed to all class of creditors i.e. Banks and Financial Institutions, Debenture Holders and Fixed deposit holders by formulating scheme for repayment based on the availability of funds from the debtors of the Company.

Adequacy of Internal Control:

Considering the size and nature of activities, the Company has adequate Internal Control System covering both accounting and administrative control. In addition, the internal audit is carried out periodically. The management is ensuring an effective internal control system so that the financial statements and reports give a true and fair view.

Human Resources I Industrial Relation:

Inspite of Company facing financial difficulties, the morale of the employees remained high. The organization culture and the commitment of the Company to its people reflect in the motivation levels and the acknowledgement of its employees.

Future Outlook:

Pursuant to the responsibility vested with Special Committee with regard to formulation of Scheme for all class of creditors i.e. Banks and Financial

Institutions, Debenture Holders and Fixed Deposit Holders, the management is pleased to inform that under superintendence of the Special Committee, all above referred class of creditors have been addressed with regard to its liability as referred herein separately. The efforts are being made to take further initiative to recover dues from debtors of company and redress the grievances of its creditors.

4. , Fixed Deposit

The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from public as on 31-3-2012, excluding security deposits and inter-corporate deposits, stood at Rs.111.25 Crore (Previous Year Rs.112.20 Crore).

Pursuance to the responsibility vested by the Hnn'ble High Court of Bombay, the Special Committee alongwith the Learned Amicus Curiae (appointed by the Hon'ble High Court of Bombay vide its order dated 14/03/2007), formulated comprehensive Scheme of Repayment to all class and categories of fixed deposit holders on the basis of availability of fund and future recoveries from the debtors of the company. The Hon'ble High Court of Bombay vide its order dated 09th February, 2012 has sanctioned the Scheme of Repayment to Fixed* Deposit Holders. The repayment in pursuance of the scheme to the deposit holders shall be made category-wise as under:

Principal deposit amount upto Rs. 10,000/- - @55%, from Rs.10,001/- to Rs.25,000/- - @45%, Rs.25,001/- to Rs.50,000/- - @35%, Rs*0,001/- to Rs. 1,00,000/- - @30% and Rs. 1,00,001/- and above - @25%.

The scheme does not provide for payment of any interest on any category of fixed deposits. The repayment against fixed deposit shall be made only to the extent of percentage approved by the Hon'ble High Court of Bombay after deducting any amount, if already partly repaid. However, if any fixed deposit has been paid in excess of its eligibility amount under the scheme, depositor shall not be paid any further amount.

The Company has invited claims from Fixed Deposit Holders through an advertisement in leading newspapers in 39 cities in 19 states. The Fixed Deposit Holders hays been advised to lodge their claims on or before 16th May, 2012. The Special Committee shall commence payment after receipt and adjudication of all claims on the basis of availability of funds and in terms of the Scheme.

In views of the Scheme of Repayment to Fixed Deposit holders approved as above, the principal

liability of Fixed Deposit Holders is estimated to be reduced substantially. However, after receipt of all claims and upon verification of claims, the principal liability of Fixed Deposit shall be ascertained and shall be accounted appropriately.

5. Banks & Financial institutions borrowings

The Directors wish to inform that only one institutional creditor i.e. Gujarat State Financial Corporation (GSFC) has outstanding term loan amounting to Rs.670.98 lacs, for which efforts are being made by the Special Committee to arrive at One Time Settlement in tandem with settlement with other Banks and Financial Institutions.

6. Debentures

As regards the liability of Non-convertible debentures, the Hon'ble High Court of Bombay vide its order dated 27/09/2010 in Company Petition No. 926 of 2009 u/s 391 of the Companies Act, 1956 has approved Scheme of Compromise with Public Issue Debenture Holders.

The 1 (one) institutional debenture holder, M/s. Repco Bank Ltd. has accepted One Time Settlement (OTS) offer of the company for Public Issue Debentures as well as Privately Placed Non- Convertible Debentures. The company has made payment of amount as per OTS and M/s. Repco Bank Ltd. has issued "No Due Certificate" to the company. The claims of other debenture holders received so far have been satisfied as per terms and conditions of the Scheme approved by Hon'ble High Court of Bombay.

7. Statutory Information

There were no employees during the year ended 31s1 March, 2012 in respect of whom the particulars are required to be disclosed with reference to Section 217(2A) of the Companies Act, 1956.

The Companies (Disclosure of Particulars in the Report of Board of Directors) Ruisc, 1988, require disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B prescribed by the rules. The Company, not being a manufacturing company is advised that Form A and B are net applicable to it. The Company had no Foreign Exchange earnings and outgoings during the year under review.

8. Directors

The Government of India, Ministry of Corporate Affair.s vide letter dated 26/12/2011 approved the re-appointment of Shi Panka; R. Desai as Managing Director for a period of 5 (five) years w.e.f. 1/11/ 2011 u/s 269, 198/309, 310, 387 and 637AAof the Companies Act, 1956.

Shri Basant Bhoruka, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.

9. Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1966 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2012 on a going concern basis.

10. Auditors' Observations

The observations of the Auditors are in the nature of general disclosures, which read together with the accounting policies and the relevant notes to the accounts, are self-explanatory.

11. Auditors

' The members are requested to appoint Auditors and fix their remuneration.

12. Corporate Governance

Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditor's Certificate on its compliance are annexed hereto and forms part of this Annual Report.

13. Acknowledgement

The Board wishes to express its deep appreciation to the Banks and Financial Institutions and various other agencies for their co-operation and to all staff members for the efficient and loyal services rendered by them.

For and on behalf of the Board

(Basant Bhoruka)

Chairman

Place: Mumbai

Date : 16th May, 2012.

---

Mar 31, 2011

The all are aware that the Honble High Court of Bombay has appointed a Special Committee to take charge of the management and affairs of the Company vide its Order dated 12th March, 2004. With the permission of the Special Committee, your Directors are presenting the 24th Annual Report of the Company with the Audited Statement of Accounts for the financial year ended 31st March, 2011.

1. Financial Results

The Financial Results of the Company for the year under review are summarized for your consideration:-

(Rs. in Laos)

31.032011 31.03.2010

Gross Income 134.58 800.67

Expenditure 325.57 343.20

Write-offs 659.51 3244.57

Profit / (Loss) for the year before tax (85050) (2787.10)

Profit / (Loss) for the year after tax (85050) (2787.10)

Balance of (Loss) brought forward (31740.45) (28953.40)

Income Tax refund of earlier years 0.19 0.05

Balance of (Loss) carried forward (32590.76) (31740.45)

2. Dividend

In view of the losses the Directors have not recommended any Dividend for the year ended 31 st March, 2011.

4. Fixed Deposit

The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from public as on 31-03-2011, excluding security deposits and inter-corporate deposits, stood at Rs. 112.20 Crore (Previous Year Rs. 113.93 Crore). As you are aware, the Special Committee appointed by the Honble High Court of Bombay is in charge of the management and affairs of the Company and entitled to frame a scheme for the payment of dues of secured and unsecured creditors including fixed deposit holders.

The Special Committee after the approval of the Honble High Court of Bombay, in addition to the payment of deposits upto Rs.5000/- has commenced payment of the deposits of principal amount between Rs.5001/- to Rs. 10000/- from the month of August, 2006. The scheme of the other category of slab of depositors shall be framed

by the Special Committee on the basis of availability of funds generated out of recovery from the debtors of the Company.

The Special Committee pursuant to direction of the Honble High Court of Bombay is also making payment on compassionate ground for hardship cases to Senior Citizens, Widows, for critical medical exigencies etc. on the basis of availability of funds.

5. Banks & Financial Institutions borrowings

The Directors wish to inform that under guidance of Special Committee, One Time Settlements have been reached with 21 out of 22 Banks and Financial Institutions. One institutional creditor i.e. Gujarat State Financial Corporation (GSFC) has outstanding term loan amounting to Rs.670.98 lacs, for which efforts are being made by the Special Committee to arrive at One Time Settlement in tandem with settlement with other Banks and Financial Institutions.

6. Debentures

As regards the liability of Non-convertible debentures, the Honble High Court of Bombay vide its order dated 27.09.2010 in Company Petition No. 926 of 2009 u/s 391 of the Companies Act, 1956, has approved Scheme of Compromise with Public Issue Debenture Holders. In terms of the scheme, debenture holders holding upto 100 debentures will be repaid 55% of principal face value of debentures, those holding 101 to 1000 will be repaid 35% of principal face value and those holding 1001 to 20000 debentures will be repaid 25% of principal face value. The Company is making payment to the debenture holders who have lodged their claims with the Company in terms of the Scheme approved by Honble High Court of Bombay.

The Public Issue Debenture holders also include M/s. Repco Bank Ltd., the institutional debenture holder, who rejected the Scheme of Compromise. Further, M/s. Repco Bank Ltd. is also holding Privately Placed Non-Convertible Debentures. A Scheme of Compromise u/s 391 of the Companies Act, 1956 was separately proposed for the said liability. However, M/s. Repco Bank Ltd. rejected the same. M/s. Repco Bank Ltd. is classified as institutional debenture holder and accordingly the Special Committee had thought it fit and proper to offer 10% of principal amount in Scheme of Compromise in line with settlement with other Banks & Financial Institutions. The Special Committee is making efforts for settlement with M/s. Repco Bank Ltd..

7. Statutory Information

There were no employees during the year ended 31st March, 2011 in respect of whom the particulars are required to be disclosed with reference to Section 217(2A) of the Companies Act, 1956.

The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, require disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B prescribed by the rules. The Company, not being a manufacturing company is advised that Form A and B are not applicable to it. The Company had no Foreign Exchange earnings and outgoings during the year under review.

8. Directors

The Government of India, Ministry of Corporate Affairs vide letter dated 05/06/2007 approved the re-appointment of Shri Pankaj R. Desai as Managing Director for a period of five years w.e.f. 1/11/2006. The term of Shri Pankaj R. Desai Is due to expire on 31st October, 2011. In view of the overall

efforts of Shri Pankaj R. Desai, the Board of Directors in its meeting held on 12.04.2011 have given their consent for re-appointment of Shri Pankaj R. Desai for a further period of 5 (five) years w.e.f. 1st November, 2011, subject to approval of the Shareholders and the Central Government. The Board has also forwarded their views to the Special Committee for approval.

Shri P. C. Soni, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

9. Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed :

(i) That in the preparation of the accounts for the financial year ended 31 st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a going concern basis.

10. Auditors Observations

The observations of the Auditors are in the nature of general disclosures, which read together with the accounting policies and the relevant notes to the accounts, are self-explanatory.

11. Auditors

The members are requested to appoint Auditors and fix their remuneration.

12. Corporate Governance

Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditors Certificate on its compliance are annexed hereto and forms part of this Annual Report.

13. Acknowledgement

The Board wishes to express its deep appreciation to the Banks and Financial Institutions and various other agencies for their co-operation and to all staff members for the efficient and loyal services rendered by them.

For and on behalf of the Board

Basant Bhoruka Chairman

Place : Mumbai Date : 12th April, 2011

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Mar 31, 2010

The all are aware that the Honble High Court of Bombay has appointed a Special Committee to take charge of the management and affairs of the Company vide its Order dated 12th March, 2004. With the permission of the Special Committee, your Directors are presenting the 23rd Annual Report of the Company with the Audited Statement of Accounts for the financial year ended 31st March, 2010.

1. Financial Results

The Financial Results of the Company for the year under review are summarized for your consideration:-

(Rs. in Lacs)

31/03/2010 31/03/2009

Gross Income 80O.67 51.08

Expenditure (343.30) (380.06)

Write-offs 3244.57 7.42

Profit / (Loss) for the year before tax (2787.10) (336.40)

Provision for Fringe Benefit Tax - (1.69)

Profit / (Loss) for the year after tax (2787.10) (338.09)

Balance of (Loss) brought forward (28953.40) (28638.57)

Income Tax refund of earlier years 0.05 23.26

Balance of (Loss) carried forward (3174045) (28953.40)



2. Dividend

In view of the losses the Directors have not recommended any Dividend for the year ended 31st March, 2010.

3. Management Discussion and Analysis

You are aware that the Company is under the management of the Special Committee appointed by the Honble High Court of Bombay instead of Official Liquidator in-Company Petition No. 1017/2002 vide Order dated 12th March 2004. In pursuance to Order dated 12/4/2004 passed by the Honble , High Court of Bombay, the Board of Directors are working under the superintendence of the Special Committee. The major thrust of the Special Committee is to recover the dues from defaulters of the Company, reduction of expenses and the repayment to the fixed deposit holders, other secured and unsecured creditors. The Special Committee pursuant to the direction of the Honble High Court is concentrating on recoveries and in addition to pursuing the legal recourse, is calling the defaulters for settlement of their dues with a view to expedite the recovery.

The Company is currently not engaged in business of Non- Banking Finance Company (NBFC) w.e.f. 14th May, 1998 as per restrictions imposed by Reserve Bank of India and the thrust is on recovery of its dues and repayment of its liability in a phased manner.

The Company, under the direction of the Special Committee appointed by the Honble High Court of Bombay, is complying with all the requirements of the Listing Agreement, The Companies Act, 1956 and Reserve Bank of India like submission of various forms and returns to Stock Exchanges, Registrar of Companies and Reserve Bank of India.

The Honble High Court of Bombay reviewed the working of the Company under the management of the Special Committee and vide order dated 14th March, 2007 appraised that the Special Committee has acted in earnest and has made best possible efforts to effectuate the purpose of the constitution of the Special Committee and that a substantial amount of work has been done by the Special Committee towards realization of the outstandings, settlement of dues of the Secured Creditors, Debenture holders and Fixed deposit holders. The Special Committee comprises of Mr. Justice V. R. Datar (Retd. Judge of High Court of Bombay) as Chairman, Mr. S. C. Malhotra I.P.S.,

D.G.P. (Retd.) Maharashtra, Mr. P. K. Bansal, I.P.S., D.G.P. (Retd.), Gujarat as Members.

The Special Committee has addressed to all class of creditors i.e. Banks and Financial Institutions, Debenture Holders and Fixed deposit holders by formulating scheme for repayment based on the availability of funds from the debtors of the Company. Adequacy of Internal Control:

Considering the size and nature of business, the Company has adequate Internal Control System covering both accounting and administrative control. In addition, the internal audit is carried out periodically. The management is ensuring an effective internal control system so that the financial statements and reports give a true and fair view. Human Resources / Industrial Relation: Inspite of Company being under the management of Special Committee and facing financial difficulties, the morale of the employees remained high. The organization culture and the commitment of the Company to its people reflect in the motivation levels and the acknowledgement of its employees. Future Outlook:

The Indian economy continues its growth performance despite sluggish growth in other world economies. It is expected that the recovery and growth of the Indian economy and industrial sector will help in expediting the recovery of dues from various defaulters of the Company. The outlook for the year 2010-11 appears to be positive with the settlement of debts with Banks and Financial Institutions, scheme for repayment to small depositors and the debenture holders and better recovery prospects in view of all efforts put forth by the Special Committee for recovery of dues from the defaulters.

4. Fixed Deposit

The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from public as on 31-3-2010, excluding security deposits and inter-corporate deposits, stood at Rs. 113.93 Crore (Previous Year Rs.118.90 Crore). As you are aware, the Special Committee appointed by the Hon ble High Court of Bombay is in charge of the management and affairs of the Company and entitled to frame a scheme for the payment of dues of secured and unsecured creditors including fixed deposit holders.

The Special Committee after the approval of the Honble High Court of Bombay, in addition to the payment of deposits upto Rs.5000/- has commenced payment of the deposits of principal amount between Rs.5001/- to Rs.10000/- from the month of August, 2006. The scheme of the other category of slab of depositors shall be framed by the Special Committee on the basis of availability of funds generated out of recovery from the debtors of the Company.

The Special Committee pursuant to direction of the Honble High Court of Bombay is also making payment on compassionate ground for hardship cases to Senior Citizens, Widows, for critical medical exigencies, etc. on the basis of availability of funds.

5. Banks & Financial Institutions borrowings

The Directors wish to inform that under guidance of Special Committee, One Time Settlements have been reached with 21 out of 22 Banks and Financial Institutions for an amount of Rs.260.72 Crores (outstanding in the books of the Company). One institutional creditor i.e. Gujarat State Financial Corporation (GSFC) has outstanding term loan amounting to Rs.670.98 lacs, for which efforts are being made by the Special Committee to arrive at One Time Settlement in tandem with settlement with other Banks and Financial Institutions.

6. Debentures

As regards the liability of Non-Convertible Debentures outstanding in the books of the Company, the Honble Securities Appellate Tribunal (SAT) vide Order dated 17/3/2006 had taken note of the scheme formulated for repayment to the NCD holders by the Special Committee and directed SEBI to be associated in the Scheme. The scheme was formulated and placed before the Honble High Court of Bombay by the Special Committee for approval and the same was acknowledged by SAT vide its order dated 5.5.2006 wherein SEBI expressed their no objection. The Honble High Court vide Order dated 3rd May, 2007 had directed the Scheme to be forwarded to the debenture holders with a view of obtaining their views/objections to the scheme before granting its approval to the scheme. Accordingly, the scheme was forwarded by the Special Committee to all Non- Convertible Debenture Holders of the Company vide letter dated 25th May, 2007. SEBI filed its objection with Honble High Court of Bombay with regard to their clarification of No Objection and also corrigendum to draft of scheme. The Honble SAT vide its order dated 10th December, 2007 clarified with regard to No Objection. Further as per order dated 17th December, 2007 of Honble High Court of Bombay, a corrigendum dated 24th December, 2007 was issued to all the Non-Convertible Debenture holders. This corrigendum was issued as per application of SEBI and as directed by Honble High Court of Bombay. During the course of hearing on 16/12/2008 before Honble High Court of Bombay, ICICI Bank Ltd, the Debenture Trustee and REPCO Bank Ltd, major Debenture Holder raised certain objections. In view of the objections, the Special Committee thought it proper and advised Board of Directors to propound Scheme of Compromise with Non-Convertible Debenture Holders u/s 391 of the Companies Act, 1956.

The Special Committee in its meeting held on 22/5/2009 approved the Scheme of compromise and the Board of Directors also approved the same in its meeting held on 26/5/2009. Further, the Debenture Liability also includes 17% Redeemable Non-Convertible Debentures issued to Repco Bank Ltd. on private placement basis. After obtaining approval of The Bombay Stock Exchange (BSE) and The National Stock Exchange of India Ltd (NSE), as required under Clause 24(f) of the Listing Agreement, Company Applications were filed in Honble High Court of Bombay. As per directions contained in orders dated 14.08.2009, meetings of Public Issue Non Convertible Debenture Holders were convened and held on 22.09.09, 23.09,09, 24.09.09 and 25.09.09. The Debenture holders Of Class A, B & C, present at the meetings, unanimously approved the Scheme of Compromise. M/s. Repco Bank Ltd., constituting the Class D debenture holder, rejected the same. The Chairman of meeting Justice R. G. Sindhakar (Retd.) filed report with Honble High Court of Bombay in that regard. The meeting of Privately Placed Debenture Holder was held on 25.09.09. M/s. Repco Bank Ltd., the sole debenture holder in respect of 17% Private Placed Debentures, rejected the Scheme of Compromise. The Company Petition No. 927 of 2009 filed with Honble High Court of Bombay was withdrawn by the Company on 4.2.2010. M/s. Repco Bank Ltd., the sole debenture holder in Class V and in 17% Privately Placed Debentures, was classified as institutional debenture holder. The Special Committee thought it fit and proper to offer 10% amount in Scheme of Compromise in line with settlement with other Banks and Financial Institutions.

The Company Petition No.926 of 2009 for Scheme of Compromise with Public Issue Debenture Holders has been filed in Honble High Court of Bombay for further directions in the matter. The Honble High Court of Bombay vide its order dated 04.02.2010 admitted petition with regard to Class A, B & C debenture holders. In view of rejection of Scheme of Compromise by Repco Bank Ltd., it has been decided to pray to Honble High Court of Bombay to approve the Scheme of Compromise for debenture holders falling in Class A, B & C who are more than 7800 in numbers and have accepted the Scheme unanimously. These debenture holders will get payment as per the terms of Scheme of Compromise, if approved by Honble High Court of Bombay. The Regional Director, Western Region, Ministry of Corporate Affairs has also filed its affidavit dated 13.04.2010 stating that Scheme of Compromise is not prejudicial to the interests of debenture holders and public. Further directions of Honble High Court of Bombay are awaited in the matter.

7. Statutory Information

There were no employees during the year ended 31st March, 2010 in respect of whom the particulars are required to be disclosed with reference to Section 217(2A) of the Companies Act, 1956. The Compahies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, require disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B prescribed by the rules. The Company, not being a manufacturing company is advised that Form A and B are not applicable to it. The Company had no Foreign Exchange earnings and outgoings during the year under review.

8. Directors

The Government of India, Ministry of Corporate Affairs vide letter dated 05/06/2007 approved the re-appointment of Mr.Pankaj R. Desai as Managing Director for a period of five years w.e.f. 1/11/2006.

Shri Basant Bhorukha, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

9. Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review; (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2010 on a going concern basis.

10. Auditors Observations

The observations of the Auditors are in the nature of general disclosures, which read together with the accounting policies and the relevant notes to the accounts, are self-explanatory.

11. Auditors

The members are requested to appoint Auditors and fix their remuneration.

12. Corporate Governance

Pursuant to the revised Clause 49 of the Listing Agreement, your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of the Stock Exchanges with which the Company is listed are complied with.

A separate report on Corporate Governance and the Auditors Certificate on its compliance are annexed hereto and forms part of this Annual Report.

13. Acknowledgement

The Board wishes to express its deep appreciation to the Banks and Financial Institutions and various other agencies for their co-operation and to all staff members for the efficient and loyal services rendered by them.

For and on behalf of the Board

Place : Mumbai Basant Bhoruka

Date : 07th May, 2010 Chairman