Dhandapani Finance and Investments

Your Directors take pleasure in presenting the Twentieth Annual Report
 together with the Audited accounts for the year ended 31st March 2006.
 
 1. FINANCIAL RESULTS                                     (Rs. In Lakhs)
 
 PARTICULARS                                      2005-2006    2004-2005
 
 GROSS INCOME                                       2887.97      2761.03
 
 PROFIT BEFORE INTEREST & DEPRECIATION              2372.07      2273.70
 
 LESS: INTEREST                                     1464.39      1427.71
 
 PROFIT BEFORE DEPRECIATION                          907.68       845.99
 
 LESS: DEPRECIATION                                   92.79        76.93
 
 PROFIT BEFORE TAX                                   814.89       769.06
 
 PROVISION FOR TAXATION (including Deferred tax)     298.16       234.34
 
 PROFIT AFTER TAX                                    516.73       534.72
 
 ADD: BALANCE FROM LAST YEAR                          19.34        16.20
 
 PROFIT AVAILABLE FOR APPROPRIATION                  536.07       550.92
 
 PROPOSED DIVIDEND (Including Dividend Tax)          135.79       134.64
 
 TRANSFER TO STATUTORY RESERVE                       103.35       106.94
 
 TRANSFER TO GENERAL RESERVE                         270.00       290.00
 
 BALANCE CARRIED FORWARD                              26.93        19.34
 
 2. DIVIDEND
 
 Your Directors are pleased to propose a Dividend of 20% for the year
 2005-06. The proposed dividend absorbs a sum of Rs. 135.79 lakhs
 inclusive of dividend tax.
 
 3. OPERATIONS
 
 Your Company has achieved growth in business by 14% after disbursing
 Rs. 140.60 Crores of hire purchase payments as against Rs. 123.41
 Crores in the previous year. The Gross receivables under Hire purchase
 stood at Rs.213.07 Crores as on 31st March 2006. A sum of Rs. 6.28
 Crores was outstanding on account of over dues as against Rs. 4.13
 Crores at the end of the previous year ending 31.03.2005.
 
 The Gross Assets of your Company as on 31st March 2006 is Rs.229.41
 Cores. Your Company has achieved an impressive collection to demand of
 95.89%.
 
 4. RESOURCES
 
 A. DEPOSITS
 
 The deposits outstanding as on 31.03.2006 amounting to Rs. 1.13 crores
 are from Directors/relatives and are under exempt category of RBI.
 
 As at the end of the year, deposits totaling to Rs. 3.32 Lakhs, which
 matured for payment, were awaiting instructions for renewal or
 repayment. Steps have been taken by the Company to obtain depositors
 instructions to ensure renewal/repayment of these deposits.
 
 B. WORKING CAPITAL LIMITS
 
 Your Company continued its strategy of prudent diversification in
 sourcing of funds. This along with the effective liability management
 helped the company in reducing the cost of funds.
 
 i. During the year under review, your Companys working Capital limits
 with a consortium of bankers stood at Rs. 132 Crores.
 
 ii. FCNR (B) Loans - During the year, your company availed foreign
 currency Non-Resident Demand Loan amounting to Rs. 24.58 Crores within
 the overall working capital limits. All these loans together with
 interest have been fully covered against exchange risks.
 
 iii. Your company availed Rs.10 crores from Tamilnadu Industrial
 Investment Corporation Limited and Rs.15 crores from ING Vysya Bank Ltd
 by way of Term Loans.
 
 5. PROSPECTS
 
 Your company faces stiff competition from various financial
 institutions and new generation banks. To mitigate out of this
 situation, your company strives to push up the business volumes to post
 a better performance in ensuing years.
 
 6. PRUDENTIAL NORMS
 
 Reserve Bank of India has prescribed prudential norms for registered
 Non Banking Financial Companies on various parameters. Your Company is
 in Category A indicating prompt and regular filing of returns. Your
 Company enjoys a capital adequacy ratio of 22.03% as on 31.03.06 as
 against the minimum ratio of 12% prescribed by RBI.
 
 7. ALM COMMITTEE
 
 The company has an efficient Asset Liability Management Committee,
 which continuously monitors the Asset Liability match. The committee
 met at regular intervals.
 
 8. CORPORATE GOVERNANCE
 
 Your Company is complying with the Code of Corporate Governance
 introduced by SEBI.A detailed report on Corporate Governance together
 with a certificate from the Statutory Auditors in compliance of Clause
 49 of the Listing Agreement are attached which forms part of the
 Directors Report.
 
 Management Discussion and Analysis
 
 Management Discussion and Analysis report highlighting the performance
 of the company is attached forming part of the Directors report,
 
 9. OTHER DISCLOSURES
 
 a. Some of the promoters of the Company have informed that they have
 entered into a Share Purchase Agreement with M/s. D B Zwirn Mauritius
 for divesting 35% of their stake in the Company. Consequent to this, as
 per SEBI guidelines an open offer will have to be made by them to the
 Shareholders of the Company.
 
 b SUBSIDIARIES
 
 The Annual Accounts of the Subsidiary Companies M/s. Dhandapani
 Holdings & Securities Ltd and M/s. Smartinvest Agency.Com P Ltd are
 annexed to your Companys Annual Report.
 
 c. CONSOLIDATED FINANCIAL STATEMENTS
 
 A Consolidated financial statement for the year ended 31st March,2006
 prepared in accordance with AS21-Accounting Standards on Consolidated
 Financial Statements-issued by the Institute of Chartered Accountants
 of India, is also provided in this Annual Report in accordance with
 Clause 32 of the Listing Agreement.
 
 10. DIRECTORS
 
 Sarvashri T N Kishore and C S Pani retire by rotation in this meeting.
 Shri T N Kishore being eligible for reappointment offers re-election.
 Shri C S Pani expressed his unwillingness for reappointment.
 
 None of the Directors are disqualified to hold directorships under the
 provisions of Section 274(1)(g) of the Companies Act, 1956.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Your Directors confirm:
 
 1. that in the preparation of the annual accounts, the applicable
 accounting standards have been followed;
 
 2. that they have selected such accounting policies and applied them
 consistently and made judgements 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 of the
 Company for the year ended 31st March 2006;
 
 3. that 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; and
 
 4. that they have prepared the annual accounts on a going-concern
 basis.
 
 11. AUDITORS
 
 M/s P.B.Vijayaraghavan & Co, Chartered Accountants, Statutory Auditors
 of the Company retire at the ensuing Annual General Meeting and being
 eligible offer themselves for re-appointment.
 
 A certificate under Section 224(1 B) of the Companies Act, 1956 has
 been received from them.
 
 12. STATUTORY STATEMENT
 
 A. Statement pursuant to Sec.212(3) of the Companies Act, 1956 in
 respect of Subsidiary Companies are annexed.
 
 Your Company is listed at present in the Mumbai Stock Exchange. Your
 companys delisting application from Madras Stock Exchange has been
 approved by the Exchange and accordingly, the Companys shares stands
 delisted from the Madras Stock Exchange with effect from 01.12.2005.
 
 B. The Company has paid the Listing fees to Mumbai Stock Exchange for
 the year 2006-07.
 
 C. There are no employees drawing remuneration as provided in
 Sec.217(2A) of the Companies Act, 1956.
 
 13. INFORMATION AS PER SECTION 217 (1)(E) OF THE COMPANIES ACT, 1956
 
 * The Company is a Non Banking Finance Company and has no activity
 relating to Conservation of Energy or technology absorption.
 
 * The Company does not have any Foreign Exchange earnings and Outgo.
 
 14. ACKNOWLEDGEMENTS
 
 Your Directors thank the Companys Bankers and the Financial
 Institutions for their valuable and timely support.
 
 Your Directors also thank the customers, vehicle manufacturers, dealers
 and share-holders for their support
 
 Your Directors sincerely appreciate the wholehearted effort and
 co-operation rendered by the employees at all levels.
 
                                          For and on behalf of the Board
 Place : Chennai                                             T N DESIKAN
 Date :11.05.2006                                               Chairman