DCM Financial Services Ltd. ನಿರ್ದೇಶಕರ ವರದಿ

Mar 31, 2015

Dear Members,

The Directors have pleasure in submitting their 24th (Twenty Fourth) Annual Report of the Company together with the Audited Statements of Accounts for the financial year ended March 31,2015.

1. FINANCIAL RESULTS

The Company's financial performance for the year under review alongwith previous year's figures are given hereunder:

Particulars for the Year ended March 31,2015:

(Rupees in Lacs)

PARTICULARS For the Year For the Year ended 31st ended 31st March,2015 March,2014

INCOME

Income from Business Operations - -

Other operating revenues 0.11 0.10

Less Excise Duty - -

Net Revenue from Operations 0.11 0.10

Other Income 408.40 432.18

Total Income 408.51 432.28

EXPENSES

Total Expenses 691.02 1,030.62

Profit before Exceptional and (282.51) (598.34) Extraordinary items and tax

Exceptional Items - -

Profit before Extraordinary items (282.51) (598.34) and tax

Extraordinary items - -

Profit before Tax (282.51) (598.34)

VI. Tax Expenses

Current year tax 28.52

Mat Credit Adjustment (28.52)

Profit After Tax (282.51) (598.34)

Profit/(Loss) for the year (282.51) (598.34)

Earnings per Equity share

Basic (1.28) (2.70)

Diluted (1.28) (2.70)

The Gross Income comprises of amount(s) received on recovery of delinquent assets through settlement/ compromise/ legal action.

2. DIVIDEND

In view of losses suffered by the Company, no dividend has been considered for the year.

3. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply.

4. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements prepared in accordance with the Companies Act, 2013 and Accounting Standards-21 is attached with the Annual Report.

6. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis section describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Company's operations are significant changes in political and economic environment in India, tax laws, RBI regulations, exchange rate fluctuation and related costs.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Surender Kumar was re-appointed as a Whole-Time Director in the Annual General Meeting held on 31st December, 2014 (subject to the approval of Central Government) w.e.f 1st December, 2014.

Further, Mr. Surender Kumar has not been paid any remuneration/monetary benefits from the date of his appointment till the date of this report; as the Company could not obtain the Central Government approval for the payment of the said remuneration. Accordingly, the Board recommends the passing of the Special Resolution as set out in the item no. 4 of the Notice for the re-appointment of Mr. Surender Kumar as a Whole-Time Director.

Following are the directors on the Board:

1. Mr. Om Prakash Gupta Independent Non-Executive Director

2. Mr. Surender Kumar Whole-Time Director

3. Mr. Sehdev Shori Independent Non-Executive Director

The policy for Appointment and Remuneration of Director's, Key Managerial Personnel and Other Employees is attached as Annexure-A and forms an integral part of this report.

The Company has devised the criteria for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors. An evaluation was done by the Board for its own performance and that of its Committees and individual Directors.

8. CORPORATE GOVERNANCE

Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Conduct which has set out the systems, processes and policy conforming to established standards. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, the Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - B and forms an integral part of this Report.

9. DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

10. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.-

Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

11. AUDITORS

i) STATUTORY AUDITORS

M/s. V. Sahai Tripathi & Co., Chartered Accountants, Delhi (Firm Registration No. 000262N), Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

The Company has received letter from M/s. V. Sahai Tripathi & Co., Chartered Accountants to the effect that their appointment, if made, would be within the prescribed limits as specified under Section 139 of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of Section 141 of the Companies Act,2013 read with Companies (Audit and Auditors) Rules, 2014.

Board recommend to appoint M/s. V. Sahai Tripathi & Co., Chartered Accountants, as Statutory Auditors for a period of two years i.e. upto the conclusion of the Annual General Meeting to be held in the year 2017, subject to the ratification by members in every Annual General Meeting.

Auditors' Qualifications/ Observations and Management Comments Thereon

Going Concern Basis -Para i and note 30. In accordance with section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis. In light of the fresh scheme of restructuring pending before the Hon'ble Delhi High Court, the Company has plans for future business and income generation. Accordingly it is not only prudent but also imperative to draw the financial statement based on such Going Concern basis. The Scheme seeks to restructure relying on debt equity swaps and profits earned by engaging in service oriented, fee based business leading to progressive reduction in the debt of the Company. The Scheme of Arrangement would not only enable the Company to wipe out its debts but will also enable it to reduce carry forward losses to be a profitable entity. Further in accordance with amended Section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis.

Provision of interest on certain liabilities covered under Para II and under notes 4.1.g, 4.4(g) &4.6 is in accordance with the Scheme of restructuring filed by the Company before the Hon'ble Delhi High Court, which provides for waiver and cancellation of interest and the same is pending before the Hon'ble Court.

Para iii and Note 2.2 on non-creation of debenture redemption reserve is self-explanatory and cannot be created due to insufficient profits

Depletion in the value of Assets charged to Banks/Institution and Debentures in Para iv and covered under notes 4.1 .e, 4.2.b& 4.3.1 relates to ascertainment of Security against Debentures and Bank Loan, which could not be ascertained since the Company is in litigation with various Lease and Hire Purchase customers and the matters are sub-judice, hence confirmations and acknowledgements are not feasible

Regarding Para v, regarding liability on account of fixed deposit received, the company has prepared a fixed deposit register and verifying the claims of depositors on regular basis and also in process of reconciling difference with books of accounts. Further once the Scheme is sanctioned and all deposits will be verified & reconciled before repayments as per directions of the Court

In view of litigation with creditors mentioned in the para vi, it's not possible to obtain the balance Confirmations.

Maintenance of minimum liquid assets covered under Para viii and note 4.4(h). Due to the liquidity crisis and default in payment to fixed depositors, the liquid assets held by the Company had to be used for payment to depositors in terms of directions from RBI to pay all the matured depositors. Thereafter, the Company has made application to the RBI as well as the Hon'ble Company Law Board for exemption from maintaining minimum liquid assets

Para (viii) In view of restrictions imposed by the Hon'ble High Court of Delhi on the operations of bank accounts, assistance of Rs 20.47 lacs has been taken to meet the essential expenses/obligations from Global IT Options. Company being sick and as the scheme of arrangement pending before the Court does not provide payment of any Interest to creditors, the subsidiary company has given this amount without interest and element of interest and payment of interest will be decided once the scheme is approved and liquidity position improves.

Para viii(i).The Company is contesting claims lodged against it not acknowledged as debts including claims on account of securitization transaction and underwriting obligations. Rest of the contingent liabilities are being addressed through the Scheme

In case of Payment to Punjab & Sind Bank & IndusInd Bank as mentioned in para viii(ii) & para viii(iii) , it is submitted that the scheme of restructuring, pending before the Hon'ble Delhi High Court and repayment issue to these banks is being addressed in the scheme of arrangement with creditors . Further, the Hon'ble Court has stayed the suits filed in DRT by PSB & IndusInd Bank

As mentioned in the para viii (iv), the Company has filed an application with Hon'ble High Court of Delhi for the release of amount to be deposited in the Punjab & Haryana High Court and the same is pending

Para viii(v) There are certain disputes with the tenant and the claim of tenant is contested in the pending arbitration.

As mentioned in the para viii (iv), the Company has filed necessary application for the rectification application for the deletion of said demand, however the same is pending

Para viii (vii) Company has preferred an appeal/objections before Hon'ble High Court of Delhi in the MS Shoes East Limited matter against the arbitration order and the same pending adjudication

Para viii (viii) Company is contesting the claim of NBCC, which is pending arbitration under the Indian Arbitration Act

Emphasis of Matter: Group Companies have infused money in Company from time to time for its revival and as these amount are not to be paid back, group companies had requested to convert their outstanding amount into Share Capital. In view of pending scheme before the Hon'ble High Court of Delhi and these amount remained in share application money only and as shares can only be issued once the scheme is sanctioned by the court. Keeping these facts In view, amounts appearing in share application money have been credited back to the respective group company's account and upon sanction of scheme, shares will be issued.

All the other notes are self-explanatory.

ii) SECRETARIAL AUDITORS

The Board of Directors of the Company has appointed M/s Latika Chawla and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is enclosed as Annexure - C and forms an integral part of this Report.

Management Comments on the observations of Secretarial Auditor

i) The Company is identifying the right person as candidature to be appointed as a Woman Director and will be done soon.

ii) The Company has taken adequate steps to appoint a Full time Company Secretary commensurate to the requirement. However, the Company has duly outsourced all its Secretarial work to the reputed Secretarial Audit Firms.

iii) Due to non-availability of manpower and resources some filing of forms as mentioned in the report remained pending. However efforts are being made to file the relevant forms at the earliest with the Registrar of Companies.

iv) Other observations are on the basis of the facts and hence self explanatory.

iii) INTERNAL AUDITORS

M/s SVTG & Co., Chartered Accountants, performs the duties of Internal Auditors of the Company and their report/s are reviewed by Audit Committee from time to time.

12. DISCLOSURES

i) Meetings of the Board

Six meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - B to this report.

ii) Extracts of Annual Return

In terms of provisions of Section 92 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in Form MGT-9 is enclosed as Annexure - D and forms an integral part of this Report.

iii) Particulars of Loans given, Investments made, Guarantees given and Securities provided

During the year under review, no loan, investment, guarantees and securities has been provided.

iv) Contracts and Arrangements with Related Parties

No contract/ arrangements/ transactions were entered by the Company during the financial year with related parties. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions. The particulars of contracts and arrangement with related parties under section 188(1) in Form AOC-2 is enclosed as Annexure-E.

The Policy on materiality of related party transactions and dealing with related party transactions as provided by the Board may be accesses on the Company's website www. dfslonline.com under Investor Information.

Your Directors draw attention of the members to Note 32 to the financial statement which sets out related party disclosures.

13. PARTICULARS OF EMPLOYEES

None of the employees of your Company is in receipt of remuneration requiring disclosure pursuant to the provisions of Section 197(12) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014; hence no such particulars are annexed.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - F and forms an integral part of this Report.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are as follows:-

i) Conservation of Energy

Your Company being engaged in financing business and does not have any activity relating to conservation of energy.

ii) Research & Development (R&D)

Specific R&D Activities: There is no Research and Development activity in the Company. Benefits derived as a result of above R&D: N.A.

Future Plan of Action: NIL Expenditure on R & D: NIL

iii) Technology Absorption, Adaptation and Innovation: Efforts in brief made towards Technology absorption etc.: NIL Benefits derived as a result of above: N.A.

Technology imported, years of Import, Has technology been fully absorbed? If not fully absorbed, areas where this has not taken place, reasons therefor and future plans of action: N.A.

iv) Foreign exchange earnings and outgo

During the period under review, there was no foreign exchange outflow from your Company and it had no foreign exchange earnings.

15. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

16. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, legal, regulatory and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee.

17. CORPORATE SOCIAL RESPONSIBILITY

The Company has not developed and implemented any Corporate Social Responsibility Initiatives as the said provisions are not applicable

18. PUBLIC DEPOSITS

During the year under review, the Company has not invited any fixed Deposits.

As on 31st March,2015, there were 50928 fixed deposits aggregating to Rs 5631.36Cr remained unpaid as the scheme of repayment to fixed depositors is pending approval before the Hon'ble High Court of Delhi and out of these deposits, Rs 3.51 Cr ( 3639 depositors) have not submitted fixed deposit receipts and can be considered as unclaimed.

19. SUBSIDIARIES

M/s Global IT Solutions Limited is the Subsidiary of your Company. The Financial Statements and other documents of the subsidiary company is being attached with the Financial Statements of the Company.

20. SHARES

a. Buy Back of Securities

The Company has not bought back any of its securities during the year under review.

b. Sweat Equity

The Company has not issued any Sweat Equity Shares during the year under review.

c. Bonus Shares

No Bonus Shares were issued during the year under review.

d. Employees Stock Option Plan

The Company has not provided any Stock Option Scheme to the employees.

21. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Company has Zero tolerance towards any action on the part of any executive which may fall under the ambit of Sexual Harassment at Workplace. Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment.

22. ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

By Order of the Board For DCM Financial Services Limited

Om Prakash Gupta Chairman

Date: November 5, 2015 Place: New Delhi

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Mar 31, 2014

Dear Members,

The Directors present the Twenty Third Annual Report of the Company together with the Audited Accounts for the year ended on March 31,2014.

1 FINANCIAL RESULTS AT A GLANCE

PARTICULARS CURRENT YEAR PREVIOUS YEAR ENDED ON ENDED ON 31.03.2014 31.03.2013 (Rs. In lacs) (Rs. in lacs)

Gross Income 432.28 644.80

Profit/(Loss) before depreciation (563.08) 339.18

Depreciation 35.26 36.10

Profit/(Loss) before tax (598.34) 303.08

Provision for tax - -

Profity(Loss) before Extra ordinary items (598.34) 303.08

Prior period adjustment 0.54 6.00

Net Profit/(Loss) (598.34) 303.08

Profit/(Loss) brought forward from previous year (8496.14) (8799.23)

Surplus/(Loss) carried to Balance Sheet (9094.46) (8496.14)

2 COMPANYS'' AFFAIRS / OPERATIONS / MATERIAL DEVELOPMENTS

The Statement of Company Affairs, operations, opportunities and threats, performance on the recoveries front and developments in the Scheme of Arrangement filed by the Company before the Hon''ble High Court of Delhi, have been elaborately and explicitly explained and dealt with in the Management Discussion and Analysis Report (which forms part of this report) and accordingly have not been repeated herein to avoid repetition.

The Equity Shares of the Company are presently listed on the seven Stock Exchanges including The Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE). The Shares of the Company are compulsorily traded in dematerialized form.

The Directors had recommended the voluntary delisting of shares from other five stock exchanges i.e. Ahmedabad, Madras, Delhi, Calcutta and Jaipur Stock Exchanges and the share holders in the Annual General Meeting held on 30 December 2011 had approved the same. However steps for delisting could not be taken due to circumstances beyond control of the Company.

Due to sustained efforts made by your Company in recovery of dues from its customers and efforts for settlement of liabilities towards secured and unsecured creditors in particular the Fixed Deposit holders, the Reserve Bank of India (RBI) allowed your Company''s application for grant of certificate for registration (COR) as NBFC to remain pending till 5th of March 2004, on which date RBI issued orders rejecting the Company''s application for grant of Certificate of Registration (CoR). Your Company filed an appeal before the Appellate Authority in the Ministry of Finance and vide order dated 21st May 2004, the Appellate Authority directed the Reserve Bank of India to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file the revised scheme for restructuring before appropriate authority or till the disposal of the Company''s review petition by the Hon''ble Delhi High Court. Even though your Company''s business plan as of now do not envisage any fresh aggressive fund based NBFC business exposure as it envisages exploring other business activities and NBFC activities shall be restricted to non fund bases business, apart from continuation of aggressive recovery from its defaulting customers.

RBI, against the orders of the Appellate Authority filed a Constitutional Writ before the Hon''ble High Court of Delhi at New Delhi and the Hon''ble Court granted stay on the operations of the orders of the Appellant Authority. RBI thereafter filed a Petition for winding up of the Company before the Hon''ble High Court of Delhi at New Delhi. Both the Petitions filed by RBI are pending adjudication and have been clubbed with the Scheme.

3. DIVIDEND

In view of the accumulated losses in the past years, the Directors regret their inability to recommend dividend for the period under review.

4. DIRECTORS

The Board of Directors comprises of Mr. Surender Kumar whole time Director, Mr. Om Prakash Gupta Non-Executive Independent Director, Mr. Rajeshwar Singh Non-Executive Independent Director.

Mr. Arif Beg, Independent Director resigned with effect from 30- July, 2014 due to personal reasons. The Board records its appreciation forthe valuable services rendered by Mr. Arif Beg.

Pursuant to Section 152 of the Companies Act, 2013 , Mr. Surender Kumar.director retires by rotation and being eligible offers themself for reappointment.

Pursuant to section 149 and section 152 of the companies Act, 2013 read with companies (Appointment and Qualification of Directors) Rules, 2014 along with schedule IV of the Act it is proposed to appoint Mr. Om Prakash Gupta DIN:06853097 the existing Independent Director as Non-Executive Independent Director for a period of three year wef 01.04.2014 and Mr. Rajeshwar Singh DIN:00024646 the existing Independent Director as Non-Executive director for a period of three years wef 07.02.2014 subject to the approval of members at the forthcoming Annual General Meeting. The Independent director shall not be liable to retire by rotation. All the above mentioned Directors have given the Declaration of Independence as per section 149 (6) of the Companies Act, 2013.

Brief resume of the Directors proposed to be appointed/ reappointed, nature of his expertise in specific functional areas, name of companies in which he hold directorships/ chairmanships of Board committees, shareholding detail as stipulated under clause 49 of the Listing Agreement with the stock exchanges are provided in the Report of corporate Governance

Mr. Surender Kumar is also proposed to be appointed as Whole Time director designated as "Executive Director" of the Company, subject to approval by the Central Government Keeping in view the experience of Mr. Sharma, requirement of Companies Act, 2013 and challenges ahead, your director''s recommend appointment of Mr. Sharma as the Executive director of the Company.

5. FIXED DEPOSITS

During the year under review, the Company had not invited any fixed deposits.

That as on 31st March,2014 .there were 50928 fixed deposits, aggregating Rs.56.34 Cr remained unpaid as the scheme of repayment to fixed depositors is pending approval before the Hon''ble High Court of Delhi and out of these deposits, Rs.3.51 Crores (3639 depositors) remained unclaimed .

6 SUBSIDIARY COMPANY

In accordance with the general circular issued by the Ministry of Corporate Affairs, the Balance Sheets, including annexures and attachments thereto of the Company''s subsidiary, are not being attached with the Annual Report of the Company. The annual accounts of the subsidiary company and the related detailed information will be made available to any member of the Company seeking such information. These documents will also be available for inspection by any member at the Registered Office of the Company and that of the respect subsidiary company. The consolidated financial statements presented in this Annual Report include financial results of the subsidiary companies. A statement containing information on the Company''s subsidiary is included in this Annual Report

7. AUDITORS''REPORT

The Auditors'' Report on the Accounts of the Company is attached. The Directors'' observation on the Auditors'' Report are as under: -

1. Recognition of Rental Income: With reference to Para( i) of the auditor''s report, as there are certain disputes with the tenant and the matter is pending arbitration The Company is hopeful in recovering.

2. No provision of Rs 826.38 lacs: Provision of interest on certain liabilities covered under Para (ii) and under notes 4.1.f, 4.1.g (i), 4.2.C, 4.2.d, 4.3.2, 4.3.3, 4.4(f) & 4.6 is in accordance with the Scheme of restructuring filed by the Company before the Hon''ble Delhi High Court, which provides for waiver and cancellation of interest and the same is pending before the Hon''ble Court.

3. For redemption of debentures of Rs 8.75 Lacs, debenture redemption reserve is required to be created as mentioned in para (iii). Debenture redemption reserve of Rs 8.75lac has not been created due to insufficient profits. The same has been explained in Note 2.2.

4. Depletion in the value of Assets charged to Banks/lnstitution and Debentures in Para (iv) and covered under notes 4.1 .d, 4.2.b & 4.3.1 relates to ascertainment of Security against Debentures and Bank Loan, which could not be ascertained since the Company is in litigation with various Lease and Hire Purchase customers and the matters are sub-judice, hence confirmations and acknowledgements are not feasible

5. Fixed Deposits and Bills Payable as per records maintained by the Company are Rs. 5642.96 lacs and as per financials books amounting to Rs. 5632.27 lacs Their is a difference of Rs. 10.69 lacs which is un-reconciled in the Fixed Deposit Register as mentioned in para (iv). The reason is either lack of identification of depositors or no claim or confirmation having been received by the company. The provision of such differential amount has not been made. This has been explained in Note 4.4.(d) & Note 4.4.(e).

6. Maintenance of minimum liquid assets covered under para (vi) and note 4.4.(g). Due to the liquidity crisis and default in payment to fixed depositors, the liquid assets held by the Company had to be used for repayment to depositors. Thereafter, the Company had made an application to the RBI as well as the Hon''ble Company Law Board for exemption from maintaining minimum liquid assets.

7. Non-Provision of interest on unpaid share application money pertaining to group Companies as covered in Para (vii). Group Companies have infused money in Company from time to time for its revival and as these amount are not be paid back, group companies have requested to convert the outstanding amount into Share Capital. In view of pending scheme before the Hon''ble High Court of Delhi, these amount remained in share application money only and as shares can be issued once the scheme is sanctioned by the court. Keeping these facts In view, interest has not been provided.

8. Going Concern Basis Para (viii) & Note 29: In accordance with section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis. In light of the fresh scheme of restructuring pending before the Hon''ble Delhi High Court, the Company has plans for future business and income generation. Accordingly it is not only prudent but also imperative to draw the financial statement based on such Going Concern basis. The Scheme seeks to restructure relying on debt equity swaps and profits earned by engaging in service oriented, fee based business leading to progressive reduction in the debt of the Company. The Scheme of Arrangement would not only enable the Company to wipe out its debts but will also enable it to reduce carry forward losses to be a profitable entity. Further in accordance with amended Section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis.

9. Para (ix)a,b,c&d on Contingent liabilities: The Company is contesting claims lodged against it not acknowledged as debts including claims on account of securitization transaction and underwriting obligations. Rest of the contingent liabilities are being addressed through the Scheme.

Para (ix) a&b : Punjab & Sind Bank, Indusind Bank are to be paid in terms of restructuring scheme pending before Hon''ble High Court of Delhi and hence the amount payable under the scheme has been provided in books.The matters before DRT has been stayed by the Hon''ble High Court of Delhi since 2005.

Para(ix)c: Company has made an application before Hon''ble High Court of Delhi for permission to deposit Rs. 1.00 Cr with Hon''ble High Court of Punjab & Haryana and the same is pending.

Para (ix) d: Company has preferred an appeal before Hon''ble High Court of Delhi in the MS Shoes East Limited matter

All the other notes are self-explanatory.

8. AUDITOR''S

M/s V. Sahai Tripathi & Co., Chartered Accountants, Auditors of the Company retires at the conclusion of the ensuing Annual General Meeting. They have furnished a Certificate to the effect that their re-appointment, if made, will be within the limits specified under section 224(1 B) of the Companies Act, 1956.

9 LISTING AGREEMENT COMPLIANCES

The Company is presently listed at Stock Exchanges at Ahmedabad, Calcutta, Chennai, Delhi, Jaipur, Mumbai and the National Stock Exchange. Due to Financial constraints, the Company is in arrears of listing fees to the Stock Exchanges at Ahmedabad, Calcutta, Chennai, Delhi and Jaipur and also applied for delisting its shares from these Stock Exchanges because of non- availability of nation wide terminals and there is no suffering to the investors for trading & it will reduce the cost to your company. However, the trading on National Stock Exchange is suspended since October, 2010 due to certain queries raised by the National Stock Exchange and reply to same has been made. The Company is in constant touch with the National Stock Exchange and efforts are being made to revoke the suspension of trading on National Stock Exchange.

INCORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report and report on Corporate Governance form an integral part of this report. The Certificate from the Auditors of the Company certifying compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed to the Report on Corporate Governance. Though the Company is complying with all the requirements of the Listing Agreement, yet your company had been served a Show Cause Notice from National Stock Exchange for non- compliance of Clause 49 III of the Listing Agreement. The Show Cause Notice states that your Company has not appointed an independent Director on the Board of Directors of its material Subsidiary Company. Your company has replied to the show cause notice wherein it has been stated that the company is complying with the requirements of the Clause 49 of the Listing Agreement, however since your company has defaulted in paying its depositors, all its Directors are disqualified under section 274 (1 )(g) of the Companies Apt, 1956, hence the Directors on the Board of Directors of your Company cannot become the Directors on the Board of any Public Limited Company.

11. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the CompaniesAct, 1956 with respect to Directors'' Responsibility Statement, it is confirmed that for the period ended on March 31st 2014:

(i) In the preparation of the Annual Accounts, the Company has followed the applicable Accounting Standards and there are no material departure except for non-payment of interest and discounting charges, which is in line with the new scheme of restructuring u/s 391-394 filed by the Company, which envisages waiver of Interest. It may be worthwhile to note that the said new Scheme has already been approved by the requisite class of Secured and Unsecured Creditors and is pending approval before the Hon''ble High Court of Delhi.

(ii) They have, in the selection of the accounting polices consulted the Statutory and Internal Auditors from time to time and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period aforementioned and of the profit or loss of the Company for that period.

(iii) They have taken, proper and sufficient care, to the best of their knowledge and ability and consulted the Statutory as well Internal Auditors from time to time 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 for the financial year aforementioned.

(iv) The financial statement has been prepared on a going concern basis,

12. CODE OF CONDUCT

Pursuant to the requirements of clause 49 of Listing Agreement, the Board Members and Senior Management Personnel, have affirmed compliance with the Code of Conduct for the financial year ending 31s1 March, 2014.

13. INTERNAL CONTROL SYSTEM

The company has adequate internal control procedure proportionate to the nature of the business and size of its operations for the smooth conduct of its business. Internal audit is conducted at regular intervals and covers the key area of operations. The performance of the company is regularly viewed by the Board of directors to ensure that it is in keeping with the overall corporate policy and in line with pre-set objectives

14. PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

In view of the nature of operations of the Company, no particulars are furnished in respect of conservation of energy and technology up graduation.

15. FOREIGN EXCHANGE EARNING AND OUTGO

There has been no foreign exchange income and outgo for the period of this report.

16. PARTICULARS OF EMPLOYEES

During the year ended March 31st, 2014, there was no employee drawing remuneration in excess of the amount prescribed under section 217(2A) of the Companies Act, 1956.

17. FORWARD LOOKING STAEMENTS

Certain statements describing the future outlook, industry structure, developments, projection, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Since the Company''s operation are influenced by many external and internal factors beyond the control of the company and its management. Important factors that could make the difference to the Company''s operation and future include RBI''s stance towards the company, outcome of the restructuring scheme, industry and economic conditions, changes in Govt, regulations, tax laws and other statues.

ACKNOWLEDGEMENTS

Yours Directors wish to place on records their sincere thanks and deep appreciation for the guidance, support, continued co-operation extended by the Banks specially the Reserve Bank of India, Central Bank of India, Punjab & Sind Bank, Induslnd Bank, Ministry of Company Affairs, Creditors, Shareholders, Debenture holders, fixed depositors and its Solicitors, advocates for their continued support and assistance.

The Directors also take this opportunity to acknowledge the dedicated efforts of the employees at all levels.exchanges.

On behalf ofthe Board of Directors

Sd/- Place: New Delhi OM PRAKASH GUPTA Date: 5th Dec,2014 (Chairman)

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Jun 30, 2011

The Directors present the Twentieth Annual Report of the Company together with the Audited Accounts for the 12 months period ended on June 30, 2011.

FINANCIAL RESULTS

The financial results for the period under review are for a period of twelve months:

PARTICULARS CURRENT YEAR PREVIOUS YEAR Ended on 30.06.11 Ended on 30.06.10 (Rs. in lacs) (Rs.in lacs)

Gross Income 328.34 311.78

Profit/(Loss) before depreciation 206.47 183.46

Depreciation 36.44 36.76

Profit/(Loss) before tax 170.03 146.71

Provision for tax - -

Profit/(Loss) before Extra ordinary items 170.03 146.71

Prior period adjustment 1.91 -0.15

Less: Provision on Investments - -

Net Profit/(Loss) 168.12 146.86

Profit/(Loss) brought forward from previous year (9163.26) (9310.11)

Surplus /(Loss) carried to Balance Sheet (8995.14) (9163.26)

Your Directors have pleasure in informing the members that the Company has posted a profit of Rs. 168.12 lacs, after adjusting prior period adjustments amounting to Rs. 1.91 lacs.

The Board of Directors have made conscious efforts for drawing the financial statements on the basis of sound, accepted and conservative accounting principles to ensure true and fair financial statements of the Company.

COMPANYS' AFFAIRS / OPERATIONS / MATERIAL DEVELOPMENTS

The Statement of Company Affairs, operations, opportunities and threats, performance on the recoveries front and developments in the Scheme of Arrangement filed by the Company before the Hon'ble High Court of Delhi, have been elaborately and explicitly explained and dealt with in the Management Discussion and Analysis Report (which forms part of this report) and accordingly have not been repeated herein to avoid repetition

The Equity Shares of the Company are presently listed on the seven Stock Exchanges including The Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE). The Shares of the Company are compulsorily traded in dematerialized form.

The Directors had recommended the voluntary delisting of shares from other five stock exchanges i.e. ASE, MSE, DSE, CSE and JSE and the share holders in the AGM held on 30th December 2009 had approved the same, however steps for delisting could not be taken due to circumstances beyond control of the Company.

Due to sustained efforts made by your Company in recovery of dues from its customers and efforts for settlement of liabilities towards secured and unsecured creditors in particular the Fixed Deposit holders, the Reserve Bank of India (RBI) allowed your Company's application for grant of certificate for registration (COR) as NBFC to remain pending till 5th of March 2004, on which date RBI issued orders rejecting the Company's application for grant of Certificate of Registration (CoR). Your Company filed an appeal before the Appellate Authority in the Ministry of Finance and vide order dated 21st May 2004, the Appellate Authority directed the Reserve Bank of India to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file the revised scheme for restructuring before appropriate authority or till the disposal of the Company's review petition by the Hon'ble Delhi High Court. Even though your Company's business plan as of now do not envisage any fresh aggressive fund based NBFC business exposure as it envisages exploring other business activities and NBFC activities shall be restricted to non fund bases business, apart from continuation of aggressive recovery from its defaulting customers.

RBI, against the orders of the Appellate Authority filed a Constitutional Writ before the Hon'ble High Court of Delhi at New Delhi and the Hon'ble Court granted stay on the operations of the orders of the Appellant Authority. RBI thereafter filed a Petition for winding up of the Company before the Hon'ble High Court of Delhi at New Delhi. Both the Petitions filed by RBI are pending adjudication and have been clubbed with the Scheme.

AUDITORS' REPORT

The Auditors' Report on the Accounts of the Company is attached. The Directors' observation on the Auditors' Report are as under:

1. Provision of interest on certain liabilities covered under notes 5 (c), 5(e), 6(B), (C), (D), 7 (e), and 8 is in accordance with the Scheme of restructuring filed by the Company before the Hon'ble Delhi High Court, which provides for waiver and cancellation of interest and the same is pending before the Hon'ble Court.

2. Depletion in the value of Assets charged to Banks/Institution and Debentures covered under notes 5(a) and 6(E) relates to ascertainment of Security against Debentures and Bank Loan, which could not be ascertained since the Company is in litigation with various Lease and Hire Purchase customers and the matters are sub-judice, hence confirmations and acknowledgements are not feasible.

3. The default in repayment to depositors as mentioned in note7(a) and Para 6 in CARO report is comprehensively covered by the Scheme of Arrangement filed before the Hon'ble High Court of Delhi and approved by the creditors at their meetings held under the directions of the Hon'ble Delhi High Court.

4. Maintenance of minimum liquid assets covered under note 7(f) Due to the liquidity crisis and default in payment to fixed depositors, the liquid assets held by the Company had to be used for payment to depositors. Thereafter, the Company has made application to the RBI as well as the Hon'ble Company Law Board for exemption from maintaining minimum liquid assets.

5. Provision of Non Performing Assets as per RBI norms under Note 9: Though keeping in line with the philosophy and experiences during the years, that recoveries have been made even from the assets which were classified as Non Performing as per the Prudential Norms of RBI. The total NPA provisions as on date of Balance Sheet aggregates to Rs. 1556.79 lacs. This is to give a more realistic picture of the receivable of the Company and will also put more stress on recovery. Accordingly it is deemed expedient that the provision for non-performing assets may be made at a realistic level. The Director's view is that assessment of recoverable should depend on the estimate of the recovery matters, financial position of the defaulting customers and payment by the Customer in the subsequent years and the present negotiations/ commitment with/ by the customers. Non reconciliation of stock in trade –Note 11, the stocks in trade are primarily from share division customer accounts and bad delivery of shares, which used to be in physical form at that time and hence complete reconciliation has not been done however reconciliation is under process.

6. Going Concern Basis – Note 13: In accordance with section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis. In light of the fresh scheme of restructuring pending before the Hon'ble Delhi High Court, the Company has plans for future business and income generation. Accordingly it is not only prudent but also imperative to draw the financial statement based on such Going Concern basis. The Scheme seeks to restructure relying on debt equity swaps and profits earned by engaging in service oriented, fee based business leading to progressive reduction in the debt of the Company. The Scheme of Arrangement would not only enable the Company to wipe out its debts but will also enable it to reduce carry forward losses to be a profitable entity. Further in accordance with amended Section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis.

7. Balance confirmation & Un-Reconciled Balances – Note 14(a) & 14 (b): As the Company is under litigation for a majority of bills receivable and payables, and the matters are sub- judice, confirmations and acknowledgments are not feasible.

8.Rental receivable: With reference to Clause 5(f) of the auditor's report , there are certain disputes with the tenant and the company and the matter is pending arbitration .

9. Stock in trade : With reference to Clause 5(f) of the auditor's report, efforts are on to get transferred these shares held under bad delivery in the name of the company and the value of these shares are much higher than considered in the books.

10. Director remuneration: Note 15- The Company could not file application for approval of remuneration of director in the absence of NOC from the financial institutions , however the same has been filled and the approval is awaited.

11. Note 18 on Contingent liabilities: The Company is contesting claims lodged against it not acknowledged as debts including claims on account of securitization transaction and underwriting obligations. Rest of the contingent liabilities are being addressed through the Scheme. Claim of Rs 1 Cr filed against the company by the tenant and the matter is pending before arbitrator.

All the other notes are self-explanatory.

AUDITOR'S

M/s V.Sahai Tripathi& Co., Chartered Accountants, Auditors of the Company retires at the conclusion of the ensuing Annual General Meeting. They have furnished a Certificate to the effect that their re-appointment, if made, will be within the limits specified under section 224(1B) of the Companies Act, 1956.

DIVIDEND

In view of the accumulated losses in the past years, the Directors regret their inability to recommend dividend for the period under review.

DIRECTORS

There was no change in the Directors during the year. In accordance with the provision as contained in Section 256 of the Companies Act 1956, & Article of Association, Mr. Om Prakash Gupta, Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Om Prakash Gupta was appointed as Director, liable to retire by rotation, at the AGM held on 16.12.2008 and holds the office as such up to the date of the ensuing Annual General Meeting.

Mr. S.K. Sharma is proposed to be re-appointed as Whole Time Director designated as "Executive Director" of the Company, subject to approval of members and the Central Government.

Keeping in view the experience of Mr. Sharma, requirement of Companies Act, 1956, and challenges ahead, your Director's recommend appointment of Mr. Sharma as the Executive director of the Company for three years.

LISTING AGREEMENT COMPLIANCES

I. The Company is presently listed at Stock Exchanges at Ahmedabad, Calcutta, Chennai,

Delhi, Jaipur, Bombay and the National Stock Exchange. Due to Financial constraints, the Company is in arrears of listing fees to the Stock Exchanges at Ahmedabad, Calcutta, Chennai, Delhi and Jaipur and also applied for delisting its shares from these Stock Exchanges because of non-availability of nation wide terminals and there is no suffering to the investors for trading & it will reduce the cost to your company. However, the trading on National Stock Exchange is suspended since October, 2010 due to certain queries raised by the National Stock Exchange and reply to same has been made. The Company is in constant touch with the National Stock Exchange and progressing towards revocation of suspension of trading on National Stock Exchange.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report and report on Corporate Governance form an integral part of this report. The Certificate from the Auditors of the Company certifying compliance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed to the Report on Corporate Governance. Though the Company is complying with all the requirements of the Listing Agreement, yet your company had been served a Show Cause Notice from Securities & Exchange Board of India (SEBI) for non-compliance of Clause 49 III of the Listing Agreement. The Show Cause Notice states that your Company has not appointed an independent Director on the Board of Directors of its material Subsidiary Company. Further, the audit committee of the listed holding company shall also review the financial statements, in particular the investments made by the unlisted subsidiary Company. The Show Cause Notice further states that your company has not complied with the requirements of Clause 49 ID of the Listing Agreement which states that the Board shall lay down a code of conduct for all Board Members and senior management personnel shall affirm compliance with the code on an annual basis.

Your company has replied to the show cause notice wherein it has been stated that the company is complying with the requirements of the Clause 49 of the Listing Agreement, however since your company has defaulted in paying its depositors, all its Directors are disqualified under section 274 (1)(g) of the Companies Act, 1956, hence the Directors on the Board of Directors of your Company cannot become the Directors on the Board of any Public Limited Company. As regards the Code of Conduct for all Board Members and senior management personnel and affirmation by senior management personnel with the code on annual basis, the company is complying with the same and the website of your company is also operational. As per communication received from SEBI, SEBI seems to be satisfied with the reply submitted by the company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is confirmed that for the twelve months period ended on June 30, 2011:

(i) In the preparation of the Annual Accounts, the Company has followed the applicable Accounting Standards and there are no material departure except for non-payment of interest and discounting charges, which is in line with the new scheme of restructuring u/s 391-394 filed by the Company, which envisages waiver of Interest. It may be worthwhile to note that the said new Scheme has already been approved by the requisite class of Secured and Unsecured Creditors and is pending approval before the Hon'ble High Court of Delhi.

(ii) They have, in the selection of the accounting polices consulted the Statutory and Internal Auditors from time to time and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period aforementioned and of the profit or loss of the Company for that period.

(iii) They have taken, proper and sufficient care, to the best of their knowledge and ability and consulted the Statutory as well Internal Auditors from time to time 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 for the financial year aforementioned.

(iv) The financial statement has been prepared on a going concern basis.

SUBSIDIARY COMPANY

The Accounts of the Subsidiary Company for the year ended on June 30, 2011 is attached herewith. Statement in pursuance of section 212 is also annexed.

Your Company had not made any loans to its subsidiary for the year ended 30th June 2011.

FIXED DEPOSITS

During the year under review, the Company had not invited any fixed deposits.

Unclaimed / Unpaid deposits as on 30th June 2011 are Rs.3.51 Crores (3639 depositors) and Rs.56.38 Crores (50928 depositors) respectively. The fixed deposit liability of the Company is proposed to be settled in the manner and in accordance with the Scheme of restructuring filed by the Company, which is pending before the Hon'ble Delhi High Court.

PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

In view of the nature of operations of the Company, no particulars are furnished in respect of conservation of energy and technology up gradation.

FOREIGN EXCHANGE EARNING AND OUTGO

There has been no foreign exchange income and outgo for the period of this report.

PERSONNEL

During the year ended June 30, 2011, there was no employee drawing remuneration in excess of the amount prescribed under section 217(2A) of the Companies Act, 1956.

FORWARD LOOKING STAEMENTS

Certain statements describing the future outlook, industry structure, developments, projection, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Since the Company's operation are influenced by many external and internal factors beyond the control of the company and its management. Important factors that could make the difference to the Company's operation and future include RBI's stance towards the company, outcome of the restructuring scheme, industry and economic conditions, changes in Government regulations, tax laws and other statues.

ACKNOWLEDGEMENTS

Your Directors wish to place on records their sincere thanks and deep appreciation for the guidance, support, continued co-operation extended by the Banks specially the Reserve Bank of India, Central Bank of India, Punjab & Sind Bank, IndusInd Bank, Ministry of Corporate Affairs, Creditors, Shareholders, Debenture holders, fixed depositors and its Solicitors, advocates for their continued support and assistance.

The Directors also take this opportunity to acknowledge the dedicated efforts of the employees at all levels.

For & on behalf of the Board of Directors

Sd/- Place : New Delhi (Arif Beg) Date: December 5th, 2011 Chairman

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Jun 30, 2010

The Directors present the Nineteenth Annual Report of the Company together with the Audited Accounts for the 12 months period ended on June 30,2010.

FINANCIAL RESULTS

PARTICULARS CURRENT YEAR PREVIOUS YEAR (12 months) (12months) (Rs. In lacs) (Rs. in lacs)

Gross Income 311.78 432.13

Profit/(Loss) before depreciation 183.46 264.42

Depreciation 36.76 36.42

Profit/(Loss) before tax 146.71 228

Provision for tax 0 0.82

Proffl/(Loss) before Extra ordinary items 146.71 227.18

Prior period adjustment (0.15) 1.99

Less: Provision on Investments 0 32.12

Net Profit/(Loss) 146.86 193.07

Profity(Loss) brought forward from previous year (9310.12) (9503.19)

Surplus/(Loss) carried to Balance Sheet (9163.27) (9310.12)

Your Directors have pleasure in informing the members that the Company has posted a profit of Rs. 146.86 lacs, after adjusting prior period adjustments amounting to Rs.(0.15) lacs.

The Board of Directors have made conscious efforts for drawing the financial statements on the basis of sound, accepted and conservative accounting principles to ensure true and fair financial statements of the Company.

COMPANYS AFFAIRS / OPERATIONS / MATERIAL DEVELOPMENTS

The Statement of Company Affairs, operations, opportunities and threats, performance on the recoveries front and developments in the Scheme of Arrangement filed by the Company before the Honble High Court of Delhi, have been elaborately and explicitly explained and dealt with in the Management Discussion and Analysis Report (which forms part of this report) and accordingly have not been repeated herein to avoid repetition.

The Equity Shares of the Company are presently listed on the seven Stock Exchanges including The Bombay Stock Exchange Limited (BSE) and National Stock Exchange (NSE). The Shares of the Company are compulsorily traded in dematerialized form.

The Directors had recommended the voluntary delisting of shares from other five stock exchanges i.e. ASE, MSE, DSE, CSE and JSE and the share holders in the AGM held on 30" December 2004 had approved the same, however steps for delisting could not be taken due to circumstances beyond control of the Company.

Due to sustained efforts made by your Company in recovery of dues from its customers and efforts for settlement of liabilities towards secured and unsecured creditors in particular the Fixed Deposit holders, the Reserve Bank of India (RBI) allowed your Companys application for grant of certificate for registration (COR) as NBFC to remain pending till 5th of March 2004, on which date RBI issued orders rejecting the Companys application for grant of Certificate of Registration (CoR). Your Company filed an appeal before the Appellate Authority in the Ministry of Finance and vide order dated 21st May 2004, the Appellate Authority directed the Reserve Bank of India to keep its order of rejection of CoR in abeyance for a period of six months during which the Company shall file the revised scheme lor restructuring before appropriate authority or till the disposal of the Companys review petition by the Honble Delhi High Court. Even though your Companys business plan as of now do not envisage any fresh aggressive fund based NBFC business exposure as it envisages exploring other business activities and NBFC activities shall be restricted to non fund bases business, apart from continuation of aggressive recovery from its defaulting customers.

RBI, against the orders of the Appellate Authority filed a Constitutional Writ before the Honble High Court of Delhi at New Delhi and the Honble Court granted stay on the operations of the orders of the Appellant Authority. RBI thereafter filed a Petition for winding up of the Company before the Honble High Court of Delhi at New Delhi. Both the Petitions filed by RBI are pending adjudication and have been clubbed with the Scheme.

AUDITORS REPORT

The Auditors Report on the Accounts of the Company is attached. The Directors observation on the Auditors Report are as under: -

1. Provision of interest on certain liabilities covered under notes 5 (c), 5(e), 6(B), (C), (D), 7 (e), and 8 is in accordance with the Scheme of restructuring filed by the Company before the Honble Delhi High Court, which provides for waiver and cancellation of interest and the same is pending before the Honble Court.

2. Depletion in the value of Assets charged to Banks/Institution and Debentures covered under notes 5(a) and 6(E) relates to ascertainment of Security against Debentures and Bank Loan, which could not be ascertained since the Company is in litigation with various Lease and Hire Purchase customers and the matters are sub-judice, hence confirmations and acknowledgements are not feasible.

3. The default in repayment to depositors as mentioned in note7(a) and para 6 in CARO report is comprehensively covered by the Scheme of Arrangement filed before the Honble High Court of Delhi and approved by the creditors at their meetings held under the directions of the Honble Delhi High Court.

4. Maintenance of minimum liquid assets covered under note 7(f): Due to the liquidity crisis and default in payment to fixed depositors, the liquid assets held by the Company had to be used for payment to depositors. Thereafter, the Company has made application to the RBI as well as the Honble Company Law Board for exemption from maintaining minimum liquid assets.

5. Provision of Non Performing Assets as per RBI norms under Note 9: Though keeping in line with the philosophy and experiences during the years, that recoveries have been made even from the assets which were classified as Non Performing as per the Prudential Norms of RBI. The total NPA provisions as on date of Balance Sheet aggregates to Rs. 1556.79 lacs. This is to give a more realistic picture of the receivable of the Company and will also put more stress on recovery. Accordingly it is deemed expedient that the provision for non-performing assets may be made at a realistic level. The Directors view is that assessment of recoverable should depend on the estimate of the recovery matters, financial position of the defaulting customers and payment by the Customer in the subsequent years and the present negotiations/ commitment with/ by the customers. Non reconciliation of stock in trade -Note 11, the stocks in trade are primarily from share division customer accounts and bad delivery of shares, which used to be in physical form at that time and hence complete reconciliation has not been done however reconciliation is under process.

6. Going Concern Basis - Note 13: In accordance with section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis. In light of the fresh scheme of restructuring pending before the Honble Delhi High Court, the Company has plans for future business and income generation. Accordingly it is not only prudent but also imperative to draw the financial statement based on such Going Concern basis. The Scheme seeks to restructure relying on debt equity swaps and profits earned by engaging in service oriented, fee based business leading to progressive reduction in the debt of the Company. The Scheme of Arrangement would not only enable the Company to wipe out its debts but will also enable it to reduce carry forward losses to be a profitable entity. Further in accordance with amended Section 217 (2AA) of the Companies Act, 1956, the financial statements are required to be made on going concern basis.

8. Balance confirmation & Un-Reconciled Balances - Note 14(a) & 14 (b): As the Company is under litigation for a majority of bills receivable and payables, and the matters are sub-judice, confirmations and acknowledgments are not feasible.

9. Rental receivable: With reference to Clause 5(f) of the auditors report , there are certain disputes with the tenant and the company is following up with the tenant to recover/settle thedues.

10. Stock in trade: With reference to Clause 5(f) of the auditors report, efforts are on to get transferred these shares held under bad delivery in the name of the company and the value of these shares are much higherthan considered in the books.

11. Director remuneration: Note 15-The Company could not file application for approval of remuneration of director in the absence of NOC from the financial institutions , which is a pre-requisite for filing the application. The company is following up for the NOC from the institutions for necessary approval.

12. Note 18 on Contingent liabilities: The Company is contesting claims lodged against it not acknowledged as debts including claims on account of securitization transaction and underwriting obligations. Rest of the contingent liabilities are being addressed through the Scheme. Claim of Rs 1 Cr filed against the company by the tenant. To settle the claim, the company is negotiating

All the other notes are self-explanatory.

AUDITORS

M/s V.Sahai Tripathi & Co., Chartered Accountants, Auditors of the Company retires at the conclusion of the ensuing Annual General Meeting. They have furnished a Certificate to the effect that their re- appointment, if made, will be within the limits specified under section 224(1 B) of the Companies Act, 1956.

DIVIDEND

In view of the accumulated losses in the past years, the Directors regret their inability to recommend dividend for the period under review.

DIRECTORS

There was no change in the Directors during the year. In accordance with the provision as contained in Section 256 of the Companies Act 1956, & Article of Association, Mr. Arif Baig, Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment. _

Mr Arif Baig was appointed as Director, liable to retire by rotation, at the AGM held on 14" Dec,2007 and hold the office as such upto the date of the Annual General Meeting.

LISTING AGREEMENT COMPLIANCES

The Company is presently listed at Stock Exchanges atAhmedabad, Calcutta, Chennai, Delhi, Jaipur, Mumbai and the National Stock Exchange. Due to Financial constraints, the Company is in arrears of listing fees to the Stock Exchanges atAhmedabad, Calcutta,

Chennai, Delhi and Jaipur and also applied for delisting its shares from these Stock Exchanges because of availability of nation wide terminals of NSE & BSE and there is no suffering to the investors for trading & it will reduce the cost to your company.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report and report on Corporate Governance form an integral part of this report. The Certificate from the Auditors of the Company certifying covnpiiance of the conditions of corporate governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges is also annexed to the Report on Corporate Governance. Though the Company is complying with all the requirements of the Listing Agreement, yet your company had been served a Show Cause Notice from Securities & Exchange Board of India (SEBI) for non-compliance of Clause 49 III of the Listing Agreement. The Show Cause Notice states that your Company has not appointed an independent Director on the Board of Directors of its material Subsidiary Company. Further, the audit committee of the listed holding company shall also review the financial statements, in particular the investments made by the unlisted subsidiary company. The Show Cause Notice further states that your company has not complied with the requirements of Clause 49 ID of the Listing Agreement which states that the Board shall lay down a code of conduct for all Board Members and senior management personnel shall affirm compliance with the code on an annual basis.

Your company has replied to the show cause notice wherein it has been stated that the company is complying with the requirements of the Clause 49 of the Listing Agreement, however since your company has defaulted in paying its depositors, all its directors are disqualified under section 274 (1)(g) of the Companies Act, 1956, hence the Directors on the Board of Directors of your Company cannot become the Directors on the Board of any Public Limited Company. As regards the Code of Conduct for all Board Members and senior management personnel and affirmation by senior management personnel with the code on annual basis, the company is complying with the same and the website of your company is also operational. As per communication received from SEBI, SEBI seems to be satisfied with the reply submitted by the company.

DIRECTORSRESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is confirmed that for the twelve months period ended on June 30,2010:

(i) In the preparation of the Annual Accounts, the Company has followed the applicable

Accounting Standards and there are no material departure except for non-payment of interest and discounting charges, which is in line with the new scheme of restructuring u/s 391-394 filed by the Company, which envisages waiver of Interest. It may be worthwhile to note that the said new Scheme has already been approved by the requisite class of Secured and Unsecured Creditors and is pending approval before the Honble High Court of Delhi.

(ii) They have, in the selection of the accounting polices consulted the Statutory and Internal Auditors from time to time and have applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period aforementioned and of the profit or loss of the Company for that period.

(iii) They have taken, proper and sufficient care, to the best of their knowledge and ability and consulted the Statutory as well Internal Auditors from time to time 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 for the financial year aforementioned.

(iv) The financial statement has been prepared on a going concern basis.

SUBSIDIARY COMPANY

The Accounts of the Subsidiary Company for the year ended on June 30, 2010 is attached herewith. Statement in pursuance of section 212 is also annexed.

Your Company had not made any loans to its subsidiary for the year ended 30" June 2010.

FIXED DEPOSITS

During the year under review, the Company had not invited any fixed deposits.

Unclaimed / Unpaid deposits as on 30" June 2010 are Rs.3.51 Crores (3641 depositors) and Rs.56.42 Crores (50930 depositors) respectively. The fixed deposit liability of the Company is proposed to be settled in the manner and in accordance with the Scheme of restructuring filed by the Company, which is pending before the Honble Delhi High Court.

PARTICULARS ON CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

In view of the nature of operations of the Company, no particulars are furnished in respect of conservation of energy and technology up gradation.

FOREIGN EXCHANGE EARNING AND OUTGO

There has been no foreign exchange income and outgo for the period of this report.

PERSONNEL

During the year ended June 30, 2010, there was no employee drawing remuneration in excess of the amount prescribed under section 217(2A) of the Companies Act, 1956.

FORWARD LOOKING STAEMENTS

Certain statements describing the future outlook, industry structure, developments, projection, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Since the Companys operation are influenced by many external and internal factors beyond the control of the company and its management. Important factors that could make the difference to the Companys operation and future include RBIs stance towards the company, outcome of the restructuring scheme, industry and economic conditions, changes in Govt, regulations, tax laws and other statues.

ACKNOWLEDGEMENTS

Yours Directors wish to place on records their sincere thanks and deep appreciation for the guidance, support, continued co-operation extended by the Banks specially the Reserve Bank of India, Central Bank of India, Punjab & Sind Bank, Induslnd Bank, Department of Company Affairs, Creditors, Shareholders, Debenture holders, fixed depositors and its Solicitors, advocates for their continued support and assistance.

The Directors also take this opportunity to acknowledge the dedicated efforts of the employees at all levels.

For & on behalf of the Board of Directors

Place: New Delhi Arif Baig

Date: 7th December 2010 (Chairman)