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મુકુંદ ઇન્ડસ્ટ્રીઝ ફાયનાન્સ ડિરેક્ટર્સ રિપોર્ટ, મુકુંદ ઇન્ડસ્ટ્રીઝ ફાયનાન્સ ડિરેક્ટર્સ દ્વારા રિપોર્ટ

મુકુંદ ઇન્ડસ્ટ્રીઝ ફાયનાન્સ

બીએસઈ: 530329  |  ઍનઍસઈ : N.A  |  ISIN: INE618B01019  |  Finance - Leasing & Hire Purchase

શોધો મુકુંદ ઇન્ડસ્ટ્રીઝ ફાયનાન્સ કનેક્શન � Mar 10
ડિરેક્ટર્સ રિપોર્ટ વર્ષાન્ત : Mar '11
The Directors have pleasure in presenting the Company s 26th Annual
 Report together with the Audited Statement of Accounts for the year
 ended 31st March, 2011.
 
 1. FINANCIAL PERFORMANCE :                               (Rs. in lacs)
 
 Particulars                              31-03-2011         31-03-2010
 
 1.Gross Income                              16.14                29.10
 
 2.Staff Cost and Operative Expenses         46.97                73.54
 
 3.Interest                                   2.04                61.09
 
 4Profit (Loss) before Depreciation
 and Provisions                             (32.87)             (105.53)
 
 5.a) Depreciation                           33.08                47.80
 
 b)Deferred Revenue Expenditure              10.40                10.40
 
 c) Deferred Tax                               -                  19.40
 
 d)Provisions as per RBI Norms                 -                 (97.22)
 
 6.Profit (Loss) after tax for the year     (76.35)             (280.35)
 
 7.Carried forward Loss                    (601.64)              525.29
 
 The company has incurred a loss after tax of Rs. 76.35 lacs for the
 year as against a loss of Rs. 280.35 lacs in the previous year. No
 provision has been made for NPAs as against a provision of Rs. 99.22
 lacs made in the previous year. There is a deferred revenue expenditure
 of Rs.  10.40 lacs in this year. Interest expenses for the year
 substantially declined to Rs.  2.04 lacs from Rs.61.09 lacs in the
 previous year due to non-provisioning of interest on deposits. There
 was a decrease in Depreciation, which was Rs.  33.08 lacs as against
 Rs. 47.80 lacs in the previous year. The carried forward loss now
 stands at Rs. 601.64 lacs.
 
 Your Directors regret their inability to recommend any dividend in view
 of the accumulated losses.
 
 2) OPERATIONAL REVIEW
 
 This year the Company has incurred a Loss before depreciation,
 provisions and taxes to the extent of Rs. 32.87 lacs as against a Loss
 of Rs. 105.53 lacs in the previous year. NBFCs are facing basic
 questions about the viability of their business model. Several firms
 are finding it difficult to operate in an environment where money is
 scarce, defaults are becoming common, and asset-liability mismatches
 have become more the norm than the exception. At the heart of the
 problems being faced by NBFCs is the growing reluctance of banks to
 lend to such companies because the risks involved in doing so have
 increased. NBFCs have seen considerable business model shift over last
 decade because of regulatory environment and market dynamics.  Majority 
 of NBFCs were not able to face the pressure created on and were wiped out. However, over a period NBFCs have
been able to expand their resource 
 profile by diversifying the funding avenues. Further a strict control 
 on asset quality and overheads, coupled with use of innovative borrowing 
 tools such as securitization has resulted in improved profitability of 
 NBFCs. As your company faces a serious liquidity crisis and of late has 
 not been able to carry out any business activity the positive developments 
 in the sector also will make sense only if the Company undergoes 
 restructuring and resumes its normal business activities.
 
 3.  DEPOSITS
 
 The total public deposits as on 31st March, 2011, were Rs. 373.95 lacs
 as compared to Rs. 379.09 lacs as on 31st March, 2010. The interest
 rates as revised with effect from 21st December, 2007 were in force
 throughout the financial year. The rate of interest paid on public
 deposits is within the ceiling rate prescribed by RBI.
 
 As on 31st March, 2011, out of the public deposits, 627 accounts
 amounting to Rs.  335.16 lacs had matured for repayment and the claimed
 deposits could not be repaid due to the financial constraints.
 However, efforts are being made to repay these deposits at the
 earliest.
 
 In view of the directions of RBI, the Company, as a matter of policy,
 has stopped accepting fresh deposits with effect from 5th March 2009.
 
 After the Balance Sheet date (31.03.2011) the Reserve Bank of India
 vide its letter No. DNBS (BG) No. 1897/CMD / 01.02.166/2010-11 dated
 May 23, 2011, communicated to the Company that the Certificate of
 Registration has been cancelled under Section 45-IA(6) of the RBI Act,
 1934.
 
 4.  RBI REGULATIONS
 
 The Company has generally complied with the applicable regulations of
 the Reserve Bank of India. Important Circulars/Directions issued by RBI
 from time to time are:
 
 a) Services to Persons with Disability:
 
 In terms of DNBS .CC. PD. No. 191/ 03.10.01/2010-11 dated July 27,2010,
 NBFCs were advised that there shall be no discrimination in extending
 products and facilities including loan facilities to the
 physically/visually challenged applicants on grounds of disability and
 that they may also advise their branches to render all possible
 assistance to such persons for availing of the various business
 facilities. NBFCs were also directed to ensure redressed of grievances
 of persons with disabilities under the Grievance Redressed Mechanism
 already set up by them.
 
 b) Provision of 0.25% for standard assets of NBFCs: In terms of Non-
 Banking Financial (Deposit Accepting or Holding) Companies Prudential
 Norms (Reserve Bank) Directions, 2007, and Non-Banking Financial (Non-
 Deposit Accepting or Holding) Companies Prudential
 
 Norms (Reserve Bank) Directions, 2007, all NBFCs are required to make
 necessary provisions for non- performing assets. In the interests of
 counter cyclicality and so as to ensure that NBFCs create a financial
 buffer to protect them from the effect of economic downturns, RBI has
 decided to introduce provisioning for standard assets also.
 
 c) Regulation of excessive interest charged by NBFCs: The directions to
 NBFCs were issued by Reserve Bank of India on January 2, 2009 vide
 Notification No. DNBS. 204/ CGM (ASR)-2009. According to the said
 Notification the Board of each NBFC shall adopt an interest rate model
 taking into account relevant factors such as cost of funds, margin and
 risk premium etc., and determine the rate of interest to be charged for
 loan and advances. The rate of interest and the approach for gradations
 of risk and rationale for charging different rates of interest to
 different categories of borrowers shall be disclosed to the borrower or
 customer in the application form and communicated explicitly in the
 sanction letter. The rate of interest should be annualized rates so
 that the borrower is aware of the exact rates that would be charged to
 the account. The Company has a Manual of the Lending Policy as approved
 by the Board of Directors.
 
 d) Reclassification of NBFCs: Earlier, the classification of NBFCs was
 Equipment Leasing, Hire Purchase, Investment Companies and Loan Companies. Consequent upon reclassification
by RBI, companies financing real/physical assets for productive/economic activity are to be classified as
Asset 
 Finance Company and the remaining companies will continue to be classified 
 as loan/investment companies. In the new structure the categories emerge
 as Asset Finance Company, Investment Company and Loan Company.
 According to Circular No. DNBS.PD.CC No. 128/ 03.02.059/2008-09 dated
 September 15, 2008 it has been decided that erstwhile EL/HP NBFCs
 should duly supported by Statutory Auditors Certificate as on March 31,
 2008 approach the Regional Office for appropriate classification latest
 by December 31, 2008 after which NBFCs which have not opted for the
 classification would be deemed to be loan companies.  Since our company
 has been in the business of Leasing and Hire Purchase Financing and
 more than 60% of the operational income comprised of income from
 leasing and hire purchase activities and the company s fixed assets
 comprised more than 60% of leased assets, the Company was classified as
 AFC-D and a fresh Certificate of Registration bearing No. 02.00071
 dated August 28, 2007 was issued by the RBI. However, subsequently the
 Company has been classified as a Loan Company by the Reserve Bank of
 India vide its letter DNBS
 
 (BG) No. 2774/01.02.166/2009-10 dated 8th March, 2010.
 
 e) Monitoring of frauds in NBFCs: RBI had issued Company Circular No.  121 dated July 1, 2008, which was
revised on August 14, 2008 vide Circular No. DNBS.PD.CC. No. 127/ 03.10.42/2008-09. As a result, NBFCs may
also report frauds perpetrated in their subsidiaries and affiliates/joint ventures.  
 Updated guidelines for reporting frauds to RBI, Board and the police were
 issued along with the Circular.
 
 Obligations of NBFCs under Prevention of Money Laundering Act (PMLA),
 2002: NBFCs were advised by RBI vide Circular DNBS(PD).CC 68/03.10.042/
 2005- 06 dated April 5, 2006 to go through the provisions of PMLA, 2002 
 and the Rules notified there under and take all necessary steps to ensure
 compliance with Section 12 of PMLA, 2002 and report information in
 respect of all transactions referred to in Rule 3 to the Director,
 Financial Intelligence Unit-India (FIU-IND).  NBFCs were also advised
 to ensure electronic filing of Cash Transactions Report (CTR) and
 Suspicious Transactions Report (STR) to FIU-IND. CTR should contain
 only the transactions carried out by the NBFCs on behalf of their
 clients/customers excluding transactions between the internal accounts
 of the NBFC. All cash transactions, where forged or counterfeit Indian
 currency notes have been used as genuine should be reported to FIU-IND immediately in the prescribed format.
These cash transactions should also include transactions where forgery of valuable security or documents has 
 taken place and may be reported in plain text form.  No transaction of suspicious nature or otherwise
reportable has come to the notice of the 
 Company.
 
 The Prevention of Money Laundering (Amendment) Act, 2009 has come into
 force with effect from June 01, 2009 as notified by the RBI vide
 DNBS(PD). CC 164/03.10.042/ 2009- 10 dated November 13, 2009.  In terms
 of Sub-Section 2(a) of Section 12 of The Prevention of Money Laundering
 (Amendment) Act, 2009, the records referred to in clause (a) of
 Sub-Section (1) of Section 12 shall be maintained for a period of ten
 years from the date of transaction between the clients and the banking
 company and in terms of Sub-Section 2(b) of Section 12 of the Act ibid,
 the records referred to in clause (c) of Sub-Section (1) of Section 12
 shall be maintained for a period of ten years from the date of
 cessation of transaction between the clients and the banking company.
 
 Accordingly, in modification of paragraph 4 of the Master Circular
 No.152/03.10. 42/2009-10 dated July 1, 2009, NBFCs were advised to
 maintain for at least ten years from the date of transaction between
 the NBFC and the client, all necessary records of transactions.
 However, records pertaining to the identification of the customer and 
 his address (e.g. copies of documents like passports, identity cards, 
 driving licenses, PAN card, utility bills etc.) obtained while opening the account and during the course of
business relationship, would continue 
 to be preserved for at least ten years after the business relationship 
 is ended.
 
 f) Investments in FDs of SIDBI and NABARD: RBI amended the earlier
 directions issued vide Notification No. DFC.121/ED(G)-98 dated January
 31, 1998 by new Notification No. DNBS (PD).205/CGM(PK)-2009 dated
 February 13, 2009 issued to all NBFCs accepting public deposits so as
 to allow investments in fixed deposits of SIDBI and NABARD for meeting
 the requirements of Section 45IB of Reserve Bank of India Act, 1934.
 However, the aggregate of the amount invested in unencumbered approved
 securities, term deposits and the bonds shall not be less than 15% of
 public deposits, as earlier.
 
 g) NBFCs Auditor s Report : 
 
 The directions to the auditors of Non- Banking Financial Companies were
 issued by Reserve Bank of India on January 2, 1998 vide Notification
 No. DFC.117/DG (SPT)-98. The Directions have been consolidated and in
 supersession of the said Directions viz. the Non-Banking Financial
 Companies Auditor s Report (Reserve Bank) Directions, 1998 the new
 Directions were issued vide Notification No.
 
 DNBS(PD)201 / DG(VL)/2008 dated
 
 September 18, 2008. According to the new Directions, in addition to
 every report made by the auditor under Section 227 of the Companies
 Act, 1956 on the accounts, the auditor shall also make a separate
 report to the Board of Directors of the Company on the specified
 matters.  Where, in the Auditor s Report, there is any unfavourable or
 qualified statement or in the opinion of the auditor the company has
 not complied with specified provisions and/ or about the non-
 compliance, it shall be the obligation of the auditor to make a report
 containing the details of such statement to the concerned Regional
 Office of the Department of Non- Banking Supervision of the Reserve
 Bank of India under whose jurisdiction the registered office of the
 company is located. The Auditor s Report dated 5th December, 2011 made
 as per the said directions does contain a few unfavourable or qualified
 statements, some of which are similar to the ones mentioned in the
 Auditor s Report to the members of the Company and replies thereto have
 been given in this Report elsewhere.
 
 5.  DIRECTORS
 
 Sri Niranjan Gupta and Dr. Diliprao More resigned from the Board with
 effect from 14th June, 2011. The Board places on record its
 appreciation for their contribution and support during their tenure of
 office.
 
 Pursuant to Section 260 of the Companies Act, 1956 and Article 96 of
 the Articles of Association of the Company the Board of Directors
 appointed Sri M.S. Bhanuprakash and Sri
 
 H.M. Prashanth as Additional Directors with effect from 14th June,
 2011. They are proposed to be appointed as Directors in the ensuing
 Annual General Meeting.
 
 A brief profile of the Directors is given in the Explanatory Statement
 to the Notice convening the Annual General Meeting.
 
 Necessary resolutions are submitted for your approval.
 
 6.  AUDITORS
 
 The statutory auditors M/s. Venkat & Vasan, Chartered Accountants, hold
 office until conclusion of the ensuing Annual General Meeting and are
 recommended for re-appointment. A certificate from the auditors has
 been received to the effect that the re- appointment, if made, would be
 in accordance with Section 224(1B) of the Companies Act, 1956.
 
 REPLY TO AUDITORS QUALIFICATIONS/ RESERVATIONS
 
 The auditors have commented in point no. 1.d. of the Annexure to
 Auditors Report that the management has capitalized under fixed assets
 Accumulated Lease Equalization Net of Lease Adjustment Account to the
 extent of Rs. 47.01 lacs, which in their opinion should have been
 written off. Your Directors have to state that the capitalization was
 not done during the current year but has been brought over
 
 a period of several financial years consistently in accordance with the
 Company s accounting policy.  However, the management has decided to
 consider the recommendation of the auditors in the future years
 depending on the profitability of the Company keeping in view
 recognition of income as per AS-19 effective from 1.4.2001 and prior to
 1.4.2001 and live and extended leases and realization on transfer.
 
 In point no. 3.d. of the Annexure to Auditors Report the auditors have
 commented that there are overdue amounts in respect of loans/deposits
 given by the Company as specified in Notes on accounts under point
 2(d).  Your Directors have to state that the interest on ICDs has not
 been recognized in view of the fact that the amount is no longer
 realizable.
 
 With regard to item 6 of the Annexure to Auditors Report your Directors
 have to state that all efforts are being made for repayment of deposits
 and interest on deposits received from small depositors under section
 58AA of the Companies Act, 1956. Necessary steps will be taken to
 comply with the provisions of applicable laws. Similarly, the Company
 will comply with the directives issued by the Reserve Bank of India
 vide their letter No. 2774/ 01.02.166/2009-10 dated 8.3.2010.
 
 With regard to item 7 of Annexure to Auditors Report that no internal
 audit or EDP audit was carried out during the financial year, your
 Directors have to state that in view of the fact that the Company was
 incurring losses it was not considered expedient to continue with
 the internal audit system as it was expensive. However, necessary steps
 will be taken to resume the internal audit in future.
 
 The auditors have listed out and commented in point no 9(a) of annexure
 of their CARO report that statutory dues of PF, ESI, Profession Tax,
 TDS and KVAT amounting to Rs. 24.41 lacs have not been paid. Your
 directors have to state that the Company has since paid the KVAT dues
 of Rs. 5.12 lacs, however the other statutory dues could not be paid
 due to acute financial stringency faced by the Company and lack of
 working capital. The Company continues to face serious problems in
 respect of working capital. However, the management has issued
 instructions to the concerned department of the company to remit the
 dues on priority.  The internal accruals of the Company have
 considerably reduced. All these factors made financial situation of the
 company very critical and the Company had to approach its bankers for
 one time settlement as a part of corporate debt restructuring to
 resolve the liquidity crisis. However, it will be the Endeavour of the
 company to make payment of above dues once the Company recovers from
 the current liquidity crisis.
 
 In point no. 10 the Auditors have commented about non-provisioning of
 Rs. 440.63 lacs in respect of unsecured and doubtful advances and
 deposits, Net Investment on lease of Rs. 280.37 lacs and Rs. 16.36 lacs
 in respect of interest on deposits. Your Directors are of the opinion
 that some of these advances are still good in nature and
 
 would be recovered in due course.  However, suitable provisions will be
 made in the future years depending on profitability of the Company to
 comply with the recommendation of the Auditors.
 
 The Auditors have commented in point no. 11 of Annexure of their report
 that the Bank (ING Vysya Bank Ltd) has filed a suit before the Debt
 Recovery Tribunal and obtained a decree against the Company. Your
 Directors have to state that the Company has already settled the dues
 to ING Vysya Bank Ltd under One Time Settlement scheme and the Bank has
 withdrawn the suit. The Company has also approached Karur Vysya Bank
 Ltd for One Time Settlement of their dues and the Bank has accepted our
 request.
 
 7.  PARTICULARS OF EMPLOYEES
 
 None of the employees of the Company employed throughout the year or
 part of the year is in receipt of remuneration exceeding the limit
 prescribed under section 217(2A) of the Companies Act, 1956.
 
 8.  ADDITIONAL INFORMATION
 
 Particulars pursuant to section 217(1) (e) of the Companies Act, 1956
 and Companies (Disclosure of Particulars in the report of Board of
 Directors) Rules, 1988.
 
 A.  CONSERVATION OF ENERGY AND TECHNOLOGY
 
 The Company has no activity relating to consumption of energy or
 technology absorption.
 
 B. FOREIGN EXCHANGE EARNING AND OUTGO
 
 There was no foreign exchange earnings or outgo during the year.
 
 9.  STATUTORY DISCLOSURE
 
 None of the Directors of the company is disqualified under the
 provisions of Section 274(1)(g) of the Companies Act, 1956. Your
 Directors have made necessary disclosures as required under various
 provisions of the Companies Act, 1956 and Clause 49 of the Listing
 Agreement.
 
 10.  DIRECTORS RESPONSIBILITY STATEMENT
 
 The directors accept the responsibility for the integrity and
 objectivity of the Profit & Loss Account for the year ended March 31,
 2011 and the Balance Sheet as at that date. As required under Section
 217(2AA) of the Companies Act, 1956, the Directors of the Company
 hereby state that
 
 1.  In preparation of Annual Accounts for the year 2010-11, applicable
 Accounting Standards have been followed along with the proper
 explanation relating to material departures.
 
 2.  They have selected such Accounting Policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year and of the loss of the
 Company for that year.
 
 3.  They have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities.
 
 4.  They have prepared the annual accounts on a going concern basis.
 
 11.  CORPORATE GOVERNANCE
 
 A Report on Corporate Governance is given as Annexure-B to this report.
 
 12.  MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Report on Management s Discussion and Analysis forming part of this
 Annual Report is given as Annexure - A to this report.
 
 13.  ACKNOWLEDGEMENT
 
 Your directors take this opportunity to place on record their
 appreciation for the support and co-operation extended by all the
 shareholders, depositors, hirers, lessees, other customers, bankers and
 look forward to their continued cooperation.  Your directors also wish
 to place on record their appreciation for the support and co- operation
 extended by every member of Mukunda family at all levels and look
 forward to their continued support.
 
                                     On behalf of the Board of Directors
 
                                                    B.R. Viswanath Setty
 
                                           Chairman, & Managing Director
 
 Bangalore
 5th December, 2011
સ્તોત્ર: રેલીગેર ટેકનોવા


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