Notes to Accounts of Lloyds Finance Ltd.

Mar 31, 2013

1. Contingent Liabilities (Not provided for)

(Rs.in Lacs)

31.03.2013 31.03.2012

Sales tax liabilities 325.20 324.24 disputed by the Company, pending appeal

2. (i) The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from the public as on 31st March, 2013 stood at Rs.11.00 crores (Previous year Rs. 111.25 Crores).

(ii) Pursuance to the responsibility vested by the Hon''ble High Court of Bombay, the Special Committee alongwith the Learned Amicus Curiae (appointed by 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 order dated 09/02/2012 has sanctioned the Scheme of Repayment to Fixed Deposit Holders. The repayment in pursuance to 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.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 repayment to Fixed Deposit Holders will be as per terms and conditions of the Scheme. In view of the Scheme, the principal liability of Fixed Deposit has been reduced and recast after ascertaining the receipt of claims and adjudication thereof as per terms and conditions of the.Scheme. The reduction and remission of fixed deposit liability has been stated in Directors'' Report.

(iii) Under the petition filed by Creditors of the Company, the Hon''ble High Cou rt at Bombay vide its order dated 12th March, 2004 has appointed the Special Committee to manage the affairs of the Company under the aegis of the Hon''ble High Court at Bombay instead of the Official Liquidator. Further, vide order dated 12th April, 2004 of the Hon''ble High Court at Bombay the Managing Director and the Company Secretary have been directed to function under the superintendence of the Special Committee.

3. Secured Creditors:

The Secured Creditors liability comprises of dues payable to 1 (one) Financial Institution viz. Gujarat State Financial Corporation (GSFC). The said liability shall be paid in line with settlement arrived at with other Banks and Financial Institutions in the past. 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.

4. The provision of interest liability on fixed deposits and debentures is not required since the Hon''ble High Court of Bombay have approved the Schemes of repayment as stated above.

5. The balances in various accounts included in Receivables, Loans and Advances have been shown as per values appearing in books of accounts and in view of the management, even though recovery proceedings are legally initiated. The receivables have been written off to the tune of Rs.6125.58 lacs as they are not expected to be realized.

6. Earning Per Share :

Basic earning per share has been calculated by dividing loss for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. The Company has not issued any equity shares and accordingly, the basic earning per share and diluted earning per share are the same. ''

7. Related Party disclosure:

a) Party where control exists: Nil

b) Key Managerial Personnel: The Key Managerial Personnel are functioning under the superintendence of Special Committee, appointed by the Hon''ble High Court of Bombay pursuant to orders dated 12/3/2004 & 12/4/2004 in Company Petition No. 1017/2002 Company Application No 231/2004. ''

Mr. Pankaj R. Desai

(Managing Director)

8. Previous year figures have been re-arranged, re-casted, re-grouped and/or re-adjusted wherever necessary in accordance with the current year''s figure.

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Mar 31, 2012

1. Contingent Liabilities (Not provided for)

(Rs.in Lacs)

31.03.2012 31.03.2011

Sales tax liabilities 324.24 55.70 disputed by the Company, pending appeal

2. (i) The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from the public as on 31s1 March, 2012 excluding security deposits stood at Rs.111.25 crores. (previous year Rs. 112.20 Crores).

(ii) Pursuance to the responsibility vested by the Hon'ble High Court of Bombay,-the Special Committee alongwith the Learned Amicus Curiae (appointed by 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 order dated 09/02/2012 has sanctioned the Scheme of Repayment to Fixed Deposit Holders. The repayment in pursuance to 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.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 repayment to Fixed Deposit Holders will be as per terms and conditions of the Scheme. In view of the Scheme, the principal liability of Fixed Deposit will be reduced and recast after ascertaining the receipt of claims and adjudication thereof as per terms and conditions of the Scheme. The reduction in the liability of fixed deposit has not been reported in the current year.

(iii) Under the petition filed by Creditors of the Company, the Hon'ble High Court at Bombay vide its order dated 12th March, 2004 has appointed the Special Committee to manage the affairs of the Company under the aegis of the Hon'ble High Court at Bombay instead of the Official Liquidator. Further, vide order dated 12Ih April, 2004 of the Hon'ble High Court at Bombay the Managing Director and the Company Secretary have been directed to function under the superintendence of the Special Committee.

3. Secured Creditors:-

The Secured Creditors liability comprises of dues payable to 1 (one) Financial Institution viz. Gujarat State Financial Corporation (GSFC). The said liability shall be paid in line with settlement arrived at with other Banks and Financial Institutions in the past. The reduction in the principal liability of debenture holder is in pursuance of the Scheme approved by Hon'ble High Court of Bombay vide order dated 27/09/2010 in Company Petition No. 926 of 2009. In terms of the scheme, debenture holders holding upto 100 debentures will be paid 55% of principal face value of debentures, those holding 101 upto 1000 debentures will be paid 35% of principal face value and those holding 1001 to 20000 debentures will be paid 25% of principal face value. The interest on debenture liability is not payable in terms of the Scheme sanctioned by Hon'ble High Court of Bombay.

The Company invited claims from debenture holders through an advertisement in newspapers in October, 2010 all over India. The claims received thereafter have been paid in terms of scheme. The debenture holders who have not lodged claims have been written off. The debenture liability of Repco Bank Ltd. has also been written off during the year pursuant to One Time Settlement.

In view of the above and in view of the affairs of the Company now seized before the Hon'ble High Court of Bombay, it will be prudent to mention that all the creditors i.e. secured and unsecured will be repaid only under the scheme to be formulated by the Special Committee and to be approved by the Hon'ble High Court of Bombay. No distinction regarding the security/ charges are being made here because all the creditors will be paid on the basis of scheme to be formulated for each class of creditor and on the basis of availability of funds. The funds for such scheme are being made available from the reaiization of the assets of the Company, which are primarily in the form of receivables/debtors.

4. The provision of interest liability on fixed deposits and debentures is not required since the Hon'ble High Court of Bombay have approved the Schemes of repayment as stated above.

5. The unquoted investments have been written off during the year as the same are not realisable.

6. The balances in various accounts included in Receivables, Loans and Advances have been shown as per values appearing in books of accounts and in view of the management, even though recovery proceedings are legally initiated, they are considered good for recovery unless they have been written off. Accordingly, the penal interest debited in earlier years has been reduced.

7. Earning Per Share :

Basic earning per share has been calculated by dividing loss for the year attributable to equity shareholders, by the weighted average number of equity shares outstanding during the year. The Company has not issued any equity shares and accordingly, the basic earning per share and diluted earning per share are the same.

8. Previous year figures have been re-arranged, re-casted, re-grouped and/or re-adjusted wherever necessary in accordance with the current year's figure.

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Mar 31, 2010

1. Contingent Liabilities (Not provided for)

(Rs.in Lacs)

31.03.2010 31.03.2009

Sales tax liabilities disputed by the Company, pending appeal 69.95 88.07

2. (i) The Company has neither accepted fresh deposits nor renewed the existing deposits during the year under review. Outstanding deposits from the public as on 31st March, 2010 excluding security deposits stood at Rs.1T3.93 crores.

(ii) The liability of Public Fixed Deposit is subject to reconciliation, reconfirmation, verification, netting off due to loans against fixed deposit. Previously the records were decentralized at respective regions which were transferred, computerized and maintained at Ahmedabad Office. Some of the records were also damaged during the earthquake at Ahmedabad in the year 2001. Pursuant to the direction of the Special Committee, effective from 01.04.2006, all records are now being maintained at the Registered Office at Mumbai.

(iii) The Company was registered with Reserve Bank of India (RBI) as Non-Banking Finance Company (NBFC). The application for re-registration as required by the Reserve Bank of India Amendment Act, 1997 has been rejected by its Order dated 13/01/2004 under section 45 IA of the RBI Act, 1934 notified on 14th January 2004.On an appeal filed by the Company, the Ministry of Finance being the Appellate Authority for NBFC registration,vide order dated 26.04.2004 directed RBI to maintain status quo for one year. However, on a Writ filed by RBI against the order of Ministry of Finance, the Honble Delhi High Court vide Order dated 8/9/2005 upheld the decision of RBI and as such the Company cannot transact the business of a Non-Banking Finance Company (NBFC) as defined in Clause (a) of section 45-I of the RBI Act, 1934. However, since the Special Committee appointed by the Honble High Court at Bombay is in charge of the management and affairs of the Company, no further steps were considered necessary in the matter. (iv) Under the petition filed by Creditors of the Company, the Honble High Court at Bombay vide its order dated 12th March, 2004 has appointed the Special Committee to manage the affairs of the Company under the aegis of the Honble High Court at Bombay instead of the Official Liquidator. Further, vide order dated 12th April, 2004 of the Honble High Court at Bombay the Managing Director and the Company Secretary have been directed to function under the superintendence of the Special Committee. The Special Committee has been empowered to frame the scheme for repayment to all secured and unsecured creditors along with fixed deposit holders on the basis of recovery of dues from Companys borrowers and the payments are being made accordingly on the basis of availability of funds.

3. Secured Creditors :-

The Honble High Court of Bombay vide its Order dated 3/2/2005 directed the secured creditors to approach the Special Committee for the settlement of their dues. The Honble High Court also directed regarding disbursement of funds to various creditors under the scheme empowered to be finalized by the Special Committee. The Special Committee, accordingly, has been authorized to utilize the funds recovered from the properties / debtors of the Company, whether charged as a security or not, towards the scheme formulated for fixed deposit holders and other secured & unsecured creditors in appropriate proportion. Accordingly, arid on the basis of availability of funds, the Special Committee initiated steps to meet the secured creditors and settle the dues. Till 31/3/2010 the Special Committee has reached settlements with all the secured creditors i.e. Banks and Financial Institutions except 1 (one) Financial Institution i.e. Gujarat State Financial Corporation. The status of pending settlements are being submitted to the Honble High Court of Bombay by the Special Committee and efforts are being made to arrive at One Time Settlement in tandem with settlement with other Banks & Financial Institutions.

The secured creditors include the debenture liability. The Honble Securities Appellate Tribunal (SAT) vide its Order dated 5/5/2006 acknowledged the scheme of repayment to the debenture holders which has been approved by the Special Committee and also noted that the scheme is filed before the Honble High Court for approval. The Securities Exchange Board of India (SEBI) has already given its "No Objection" to the scheme before the Honble SAT. However, SEBI objected to the interpretation of the said No Objection but SAT clarified the same in its order dated 10th December, 2007. The Honble High Court vide Order dated 3rd May,2007 has 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 has been forwarded by the Special Committee to all Non-Convertible Debenture Holders of the Company vide letter dated 25th May, 2007. 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. During the course of hearing on 16th December, 2008 before the Honble High Court of Bombay, ICICI Bank Ltd., 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 22/05/2009 has approved the Scheme of Compromise and the Board of Directors have also approved the same in its meeting held on 26/05/2009. 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 14.8.2009, 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 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 04.02.2010.

M/s. Repco Bank Ltd., the sole debenture holder in Class D 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 Scherhe 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.

In view of the above and in view of the affairs of the Company now seized before the Honble High Court at Bombay, it will be prudent to mention that all the creditors i.e. secured & unsecured will be repaid only under the scheme to be formulated by the Special Committee and to be approved by the Honble High Court at Bombay. No distinction regarding the security / charges are being made here because all the creditors will be paid on the basis of scheme to be formulated for each class of creditor and on the basis of availability of funds, the funds for such scheme are being made available from the realization of the assets of the Company which are primarily in the form of receivables / debtors.

4. The provision of interest liability on fixed deposit is not required under the present circumstances. Hence crystallizing the liability of interest on fixed deposit was discontinued and may be considered in future, depending on the availability of funds and circumstances.

5. The balances in various accounts included in Receivables, Loans and Advances have been shown as per values appearing in books of accounts and in view of the management, even though recovery proceedings are legally initiated, they are considered good for recovery unless they have been written off. Accordingly, the penal interest debited in earlier years has been reduced.

6. Related Party disclosure :

a) Party where control exists : Nil

b) Key Managerial Personnel : The Key Managerial Personnel are functioning under the superintendence of Special Committee, appointed by the Honble High Court of Bombay vide its orders dated 12/3/2004 & 12/4/2004 in Company Petition No. 1017/2002 Company Application No 231/2004.

Mr. Pankaj R. Desai (Managing Director)

7. Previous year figures have been re-arranged, re-casted, re-grouped and/or re-adjusted wherever necessary in accordance with the current years figure.