This year has been one of quiet consolidation and a new strategic
 direction under new leadership given the very difficult conditions we
 had experienced at the close of last financial year. I am happy to
 inform shareholders, that on key parameters, DCB has improved its
 position and is now poised to returr \ to profitability in the next few
 months. We had contracted our Balance Sheet in FY 2009 from Rs. 7,582
 Cr. to Rs. 5,943 Cr. as a result of the running off of all our Personal
 Loans, Construction Equipment and Commercial Vehicle loans which
 continued into FY 2010.1 am happy to report that despite the continued
 run off of this portfolio, DCBs Balance Sheet has grown to Rs. 6,136
 Cr. as we have begun to grow our assets on the basis of fully secured
 retail as well as wholesale lending. DCB is now focusing its attention
 on Micro-SME, SME, Retail Mortgages, mid-Corporate in urban areas as
 well as Agriculture, Microfinance and Rural Banking in rural areas.
 Our Net Advances in FY 2010 grew to Rs, 3,460 Cr. and Net Interest
 Margins remained the same despite a challenging lending environment.
 Most gratifying in FY 2010 has been our success in restructuring our
 Balance Sheet on the liability side to ensure stability and
 sustainability while at the same time dramatically lowering the cost of
 funding. We grew CAS A (Current and Saving Accounts) by 18% in FY 2010
 raising our CASA ratio to 35.3% from 30.9% in FY 2009. This has been a
 significant achievement in a difficult year. If we add Retail Term
 Deposits to this, retail deposits went up to 81.5% of total deposits
 from a mere 67.9% in FY 2009.
 
 While we have recorded a Net Loss in FY 2010 of Rs. 78 Cr.  compared
 with Rs. 88 Cr. in FY 2009, we are seeing a reduction in provisions and
 an increase in recoveries month on month. Our coverage ratio is now 70%
 which already meets with RBi guidelines for the banking system to be
 achieved by September 2010. Our net NPA ratio has also declined to 3.1
 % in FY 2010 from 3.9% in FY 2009. The stock of our problem loans -
 Unsecured Personal Loan portfolio - has now reduced substantially and
 is Rs. 95 Cr. compared with Rs. 330 Cr. in FY 2009. Our capital
 adequacy ratio under Basel I remains strong at 15,4% with Tier 1
 capital at 12.4%. Under Basel li guidelines our capital adequacy was
 14.9%.
 
 Most important for the year has been a dedicated focus of attention on
 costs. Nearly Rs, 40 Cr. have been eliminated from total costs bringing
 it down to about Rs. 200 Cr. in FY 2010. We intend to hold costs at
 this level even though we expect the Balance Sheet to grow in FY 2011.
 In summary, DCB has had a very successful year in meeting the key
 objectives it set out with to re-orient its operations to create a
 restructured Balance Sheet that would provide an opportunity to
 eliminate losses and to put DCB on a trajectory of gradual growth and
 sustainable operations. We are in sight of this goal and we hope that
 in the first half of FY 2011 this will most certainly be achieved.
 
 All of this has been possible entirely owing to new leadership we put
 into the Bank at the beginning of FY 2010. The new MD and CEO, Mr,
 Murali M. Natrajan has led from the front, guiding his management team
 to deliver the results we now witness. It has been an extremely hard
 year with ambitious objectives and the management team has worked
 together incessantly to achieve the outcomes that the Bank has
 experienced. It has been a remarkable effort and I have no doubt that
 this team can deliver outstanding performance in the years to come,
 
 At the beginning of FY 2010, we took a conscious decision to reorient
 our approach to banking in a manner which gave a specific character
 to the Bank. Character determines destiny. This is as true for
 institutions as for individuals. Our annual report reflects this new
 character. Neighbourhood Banking.  The focus of our attention will be
 on those close to us - in the neighbourhood of our branches. DCB will
 reach out to build strong relationships with customers within reach.
 The product suite we have developed is extensive and will serve the
 very different needs of our customers. Neighbourhood banking is about
 relationships, proximity, individualized service, trust and
 responsiveness. We aim to be the best banking solution for those in our
 neighbourhood,
 
 In order to achieve this, we have strengthened the capacity of our
 branches to deliver the products and services that customers need with
 the greatest efficiency and caring that we can possibly manage .Our
 operations office, the so-called back office which does the difficult
 task of making efficient delivery of services possible (and inventing
 new ways of delivering services) is rapidly becoming the very heart of
 our system. We are realigning the capabilities of our operations to
 deliver an output that would exceed customer expectations.
 
 Increasingly, in this complex environment, we want to be close to our
 basic purpose: to deliver banking solutions to our constituency for
 both urban and rural communities where we are present. The crisis faced
 in global banking was about moving sharply away from this precept. DCB
 is now obsessed with the idea that those who have the patience to do
 simple things perfectly acquire the skill to do difficult things
 easily.  Perhaps the global financial community could have learnt that
 lesson, We too have learnt that lesson. We expect the Indian Economy,
 despite the problems that beset the US and Europe, to be extremely
 vibrant and robust in the years to come. With all the measures we have
 taken to restructure DCB - and with success in FY 2010 - combined with
 a benign and positive external environment, I have no doubt that DCB
 will emerge as a new breed of neighbourhood bank serving its
 constituency with efficiency and care.
 
 Nasser Munjee
 
 Chairman April 16, 2010