Dear Shareholders,
 
 This year has been one of the most challenging for the microfinance
 industry in India. The events were precipitated by the Andhra Pradesh
 Microfinance Act, which had serious repercussions on all Microfinance
 Institutions operating in the state. Subsequently, the RBI appointed
 the Malegam Committee to look into the functioning of the sector and
 its recommendations presently provide the framework governing the
 various stakeholders. Even though steps to be `Malegam compliant'' will
 put some pressures on the company in the short term, the
 recommendations are welcome as they lay out the regulatory clarity and
 the continuation of the priority sector tag, both of which are seen to
 be healthy for the growth of the industry in the long run.
 
 Capital Trust has been able to sail through this turbulent time with
 deftness and agility, both on account of the fact that it has no
 exposure in the state of Andhra Pradesh and because it has a modest
 portfolio size which is easily manageable. The very practices which
 were seen as too conservative in the face of competition before the
 crisis have been the backbone of the company''s resilience in the recent
 months. Our painstaking effort on the ground level to have a
 transparent and humble relationship with our clients has ensured no
 change in the payback pattern of the loans, despite a slowdown in fresh
 disbursements. This has given us the confidence that our investment in
 building social capital has borne fruit and has reaffirmed our intent
 to continue working in this sector.
 
 The shake-up in the industry has given a much needed `breathing time''
 to a game which was otherwise just running after numbers.
 
 During this period, the company has focused upon consolidation of its
 operations. Smaller branches have been merged to have healthier, more
 efficient operations. Stricter adherence to operational rules has
 improved client discipline, the main foundation of a successful
 microfinance company. The company has also launched its new product -
 micro enterprise finance - with loan amounts ranging from 15,000 to
 100,000. This shall further improve the asset quality as well as
 improve efficiency.  The company is also exploring other avenues to
 take advantage of its network in servicing its clients with goods and
 services.
 
 With this background in mind, I am pleased to inform the shareholders
 that the Company reported a profit after tax of Rs.49.06 lacs on a
 total income of Rs.734.50 lacs for the financial year ended 31.03.2011.
 Corresponding figures with respect to the financial year ended
 31.03.2010 were 22.07 lacs and 391.14 lacs respectively.
 
 I would like to convey my thanks to the employees of the company who
 have shown their loyalty to the company during this trying period.
 Special thanks to the field staff who have painstakingly motivated the
 clients to maintain the repayment record. Needless to say, this would
 have not been possible without the support of our Bankers and Financial
 Institutions who have reposed faith in the Company and we look forward
 to their continued association.  On behalf of the Company I would also
 like to thank the shareholders who have supported us in our strive
 towards economic empowerment through enterprise.
 
                                                         Yogen Khosla
                                                    Managing Director
 
 Place : New Delhi
 Date  : 2nd August, 2011