To the Members
 
 The Board of Directors of your Company has the pleasure of presenting
 the Eighteenth Annual Report of IFCI Limited together with the Audited
 Statements of Accounts for the year ended March 31, 2011.
 
 FINANCIAL RESULTS
 
                                                            (Rs. crore)
 
 PARTICULARS                                     2010-11       2009-10
 
 1.  Operational Income                            2,422         1,657
 
 2.  Total Income                                  2,486         1,679
 
 3.  Cost of Borrowings                            1,319           891
 
 4.  Staff Cost/Other Expenditure                    141           112
 
 5.  Depreciation                                     10             9
 
 6.  Total Expenditure                             1,470         1,012
 
 7.  Profit before provisions/write-off            1,016           667
 
 8.  Write-off/Provisions for Bad &
 Doubtful Assets(net of reversal)                  (150)         (448)
 
 9.  Profit Before Tax                             1,166         1,115
 
 10.  Tax Expense                                    460           444
 
 11.  Profit After Tax                               706           671
 
 12.  Surplus brought forward
 from previous year                                  608           312
 
 13.  Appropriations:
 Reserve u/s 45 IC of RBI Act                        142           134
 
 Capital Redemption Reserve                           –             82
 
 General Reserve                                      –             65
 
 Special Reserve u/s 36(1)(viii)                     10             10
 
 Corporate Social Responsibility Fund                10              –
 
 Dividend on Equity Shares (incl. Tax)               86             84
 
 Dividend on Preference Shares (incl. Tax)           0*             0*
 
 14.  Balance carried to Balance Sheet            1,066            608 
 * Rs. 0.31 crore
 
 Your Company, during FY 2010-11, has clocked a growth of 48% in total
 income, which has grown to Rs. 2,486 crore from the total income of Rs.
 1,679 crore in the previous year on the strength of creation of fresh
 assets, which increased from Rs. 7,846 crore as on March 31, 2009 to Rs.
 15,942 crore as on March 31, 2011. The Balance Sheet size of Rs. 24,268
 crore as at March 31, 2011 is the highest in the history of IFCI since
 1948.
 
 The cost of borrowings increased to Rs. 1,319 crore for the current year
 from Rs. 891 crore in the previous year, since, in order to create fresh
 assets, fresh borrowings had to be made. The total borrowing increased
 from Rs. 13,562 crore as at March 31, 2010 to Rs. 19,264 crore as at March
 31, 2011.
 
 Profit from operations has significantly improved by 47% to Rs. 951 crore
 for the current year over Rs. 645 crore for the previous year. Profit
 before tax and after tax of Rs. 1,166 crore and Rs. 706 crore respectively
 has increased by 5% over corresponding amount of Rs. 1,115 crore and Rs.
 671 crore respectively for the previous year.
 
 Dividend
 
 Your Directors have recommended a Dividend @ Re.1 per equity share
 (10%) of face value of Rs. 10/- for the year 2010-11. Further, Dividend
 at the applicable rate i.e. Rs. 0.31 crore (including Corporate Dividend
 Tax) on Preference Shares has been paid as Interim Dividend.
 
 Directors
 
 Since the last Annual General Meeting, Shri Tejinder Singh Laschar
 resigned from the Board on August 31, 2010. Shri Rakesh Bharti Mittal
 joined the Board as Additional Director on October 27, 2010.
 
 Directors'' Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors'' Responsibility Statement, it is
 hereby confirmed:
 
 (i) that in the preparation of annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to any departures;
 
 (ii) that the Directors 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 or loss of the Company for the year under review;
 
 (iii) that the Directors 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;
 
 (iv) that the Directors have prepared the annual accounts for the year
 ended March 31, 2011 on a ''going concern basis''.
 
 Auditors
 
 M/s Chokshi & Chokshi, Chartered Accountants (Firm Registration No.
 101872W), Mumbai, Statutory Auditors of the Company hold office until
 the conclusion of the ensuing Annual General Meeting and being
 eligible, offer themselves for re-appointment.
 
 The Company has received a letter from them to the effect that their
 appointment, if made, would be within the prescribed limits under
 Section 224(1B) of the Companies Act, 1956. You are requested to
 consider their appointment.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 (i) Operating Environment and Outlook
 
 Macroeconomic conditions, after contraction in 2009 on a heterogeneous
 scale, witnessed improvement all over the world in FY 2010-11. IMF, in
 their ''Global Financial Stability Report'' published in April, 2011
 observed that improvements in macroeconomic performance in advanced
 economies and strong prospects for emerging markets are supporting
 overall financial stability and that risks to global financial
 stability have declined. However, structural weakness and
 vulnerabilities in euro area pose significant risks to bank balance
 sheets, which have thin capital buffers apart from uncertain assets
 quality and sovereigns facing debt sustainability challenges.
 
 Reserve Bank of India (RBI), in its ''Financial Stability Report'' dated
 June 14, 2011 somewhat differently observes
 
 that ''the growth is slackening in most parts of the world, even as the
 risks from global imbalances and sovereign debt crisis in Europe
 continue to hover'' and subsequently in the monetary policy review on
 June 16, 2011, it observed that the global environment has changed for
 the worse, after its last review made on May 3, 2011. RBI also noted
 that ''Lead indicators suggest that growth moderated in both advanced
 economies and emerging market economies (EMEs) under the impact of high
 oil and other commodity prices, the spill-over from the Japanese
 natural disasters and monetary tightening in EMEs to contain
 inflationary pressures. Uncertainty about the resolution of the
 sovereign debt problem in the euro area has increased. These
 developments increase downside risks to global growth prospects''.
 
 The Indian economy, on the back of improved agricultural output, strong
 private consumption, robust investment and a pick-up in exports, has
 rebounded strongly during 2010-11. GDP growth however, decelerated to
 7.8% in Q4 of 2010-11 from 8.3% in the previous quarter and 9.4% in the
 corresponding quarter a year ago. For the year as a whole, GDP growth
 in 2010-11 was 8.5%. While private consumption was robust, investment
 activity moderated in Q4 of 2010-11. IIP growth, on year-on-year basis,
 moderated to 6.3% in April 2011, but growth in capital goods production
 at 14.5% was buoyant.
 
 Domestic inflation remains high and much above the comfort zone of RBI.
 The headline Wholesale Price Index (WPI) inflation rate was 9.7% in
 March 2011. The main drivers of WPI inflation in April-May 2011 were
 non-food primary articles, fuel group and non-food manufactured
 products. The consumer price inflation for industrial workers (CPI -
 IW) rose from 8.8% in March 2011 to 9.4% in April 2011. Domestic fuel
 prices do not yet reflect the current trends of global prices. Although
 global commodity prices moderated in recent weeks, it is too early to
 downgrade this as a risk factor. Year-on-year non-food credit growth
 moderated from 21.3% in March 2011 to 20.6% in early June 2011, but
 remained above the indicative projection of 19%. The year-on-year
 deposit growth increased to 18.2% in early June 2011 from 17.0% in
 March 2011. However, corporate earnings growth and profit margins in
 the fourth quarter of 2010-11 were already showing stresses in their
 performance and ever since then the investment climate has weakened
 further.
 
 We believe that growth would be adversely affected in the days to come
 on account of tight monetary conditions and worsening investor
 sentiment.
 
 Initiatives of IFCI
 
 Your Company, during the year under review, accelerated its operations
 and re-established its presence in the financial market by enlarging
 and retaining high value customer base.  The business model adopted by
 IFCI has been guided by maximization of return on investment, while
 maintaining
 
 emphasis on due diligence, as well as appropriate risk mitigants.  High
 yielding short term lending, backed by strong and easily enforceable
 security of highly rated companies, formed the key strengths helping
 your Company to expand its asset base without any Non Proforming Assets
 (NPAs). Your Company will continue to explore possibilities for new
 business in the short and medium term with the aim of establishing a
 niche market for itself in financial products like loans against liquid
 securities, working capital gap, pre-operative expenses, acquisition,
 financing and participation in QIPs and IPOs.
 
 The Government of India has developed an ambitious plan for
 infrastructure investment, involving both public and private sector.
 Developing roads, ports, power generation and transmission
 infrastructure forms an integral part of the plan.  Furthermore, there
 is an increased focus on evaluating new sectors in Indian
 infrastructure and developing an infrastructure advisory division for
 providing holistic solutions to existing and potential clients. In
 keeping with the dynamics of the sector, your Company''s Project
 Development Group (PDG) has scouted for the best investment
 opportunities in the Indian infrastructure space. The group proposes to
 make further investments in infrastructure while nurturing projects in
 its portfolio. While adding to its existing portfolio of investments in
 roads, thermal power and hydro power generation, the group has forayed
 into power transmission, solar power generation and wind energy
 generation through its investments during FY 2010-11 and is looking
 forward to investing in the logistic sector.
 
 Your Company has strengthened the Treasury team by creating a dedicated
 Research Desk for making better and more informed investment decisions
 with the aim of maximizing profits in all treasury operations. The
 Treasury Department has been equipped with necessary tools and
 technology to meet the challenges in the rapidly changing environment.
 Your Company has also initiated operations in new segments viz.
 Collateralized Borrowing & Lending Obligation (CBLO) and Overnight
 Interest Swaps (OIS) to manage liquidity risk.
 
 Your Company, after strengthening the activities of its Corporate
 Advisory Group, has diversified in areas of high value segments of
 financial consultancy. As a result, currently, IFCI provides the entire
 gamut of financial advisory services to clients across different
 sectors of the economy. IFCI has been able to create a space for itself
 in the niche bid advisory segment, where only a handful of global
 consultants have the expertise to provide consultancy services for
 competitive tariff based power projects, Ultra Mega Power Projects
 (UMPP), City Gas Distribution (CGD), Gas Pipeline Projects etc. During
 the current FY 2011-12, the thrust would be to get more Transaction
 Advisory assignments in the infrastructure sector, which will provide
 the impetus to further expand the footprints of IFCI in advisory
 business.
 
 IFCI is the nodal agency for channelizing the Sugar Development Fund
 (SDF) Loans of the Government of India.  Your Company, besides
 financial appraisal for SDF loans, disinvestment and monitoring, is
 exploring new avenues to increase fee based income by providing
 consultancy to sugar industry in almost every area, which includes
 restructuring, syndication and getting technical and financial
 partners; both to private and co-operative sector and preparing schemes
 for sugar factories to avail assistance from SDF for cane development
 activities.  During the year 2010-11, fee based income from financial
 appraisals for SDF assistance, was higher by about 49% vis-a-vis
 previous year, as a result of continued efforts made in this direction.
 
 Your Company, consequent on its demonstrated success in NPA resolution,
 took the initiative for the acquisition of NPAs from Banks/other FIs
 after complying with RBI guidelines on the subject. Your Company
 acquired NPAs from Banks/other FIs, and earned attractive returns. Your
 Company proposes to acquire further NPAs from Banks/other FIs by way of
 participating in public auction and/or through bilateral deals, to
 ensure that the momentum of earning profit with a substantial return is
 maintained. Innovative strategies are being adopted for the resolution
 of NPAs including assets under the control of Official Liquidators and
 companies before BIFR.
 
 Your Company has been continuously posting profits. After paying
 dividend @ 8% for the year 2008-09 and @ 10% for the year 2009-10, the
 Board of Directors is now recommending to pay dividend @ 10% subject to
 your approval. The capital adequacy ratio of your Company as on March
 31, 2011 at 16.4% is comfortable. Your Company is poised to raise
 resources in a big way to ensure accelerated growth in the years to
 come.
 
 As per the study carried out by ''The Economic Times and Great Place to
 Work Institute'', on India''s Best Companies to Work for-2011, your
 Company, for the second consecutive year, maintained its position as
 third best place to work for in the Financial Services Sector.
 
 Your Company is keeping a close watch on the various developments in
 connection with the issue of new Banking Licenses and evaluating its
 strategy for foray into the Banking arena.
 
 Your Company, in order to provide the requisite fillip to more
 effective management development in relation to significant and growing
 sectors of the economy, established Management Development Institute
 (MDI) in 1973 and another campus of MDI is now proposed to be set up at
 Murshidabad, West Bengal for which the foundation stone was laid by the
 Hon''ble Finance Minister of India on October 31, 2010. An MoU was
 signed between MDI and your Company in this regard. MDI has now emerged
 as one of the most prominent Business Schools of the country and as per
 CNBC Survey for the year 2011, it ranked 5th among the top 10 business
 institutes of the country. MDI is also in the process of acquiring land
 in Bengaluru for setting up a third campus.
 
 The Technical Consultancy Organisations (TCOs) promoted by your Company
 provide a complete set of consultancy services in the areas of project
 conceptualization and other related services, credit syndication,
 preparation of various project specific agreements including credit
 documents, restructuring of projects, valuation of assets, stock
 audits, assessment studies on working capital, project monitoring
 consultancy, securitization services and secretarial assistance, in
 conducting training, entrepreneurship development programmes. IFCI is
 the lead promoter Institution for MPCON, HIMCON, HARDICON and NITCON.
 
 Corporate Social Responsibility
 
 Your Company has taken the initiative for undertaking Corporate Social
 Responsibility (CSR) from the year 2010-11. The main objective of the
 CSR initiative is to provide a platform to specialized agencies for
 enabling their involvement in CSR related activities with special focus
 on public health, education, environment and micro-finance. Under this
 initiative, in the year 2010-11, your Company released an amount ofRs. 50
 lakh to Institute of Leadership Development (ILD) for upgradation and
 strengthening of infrastructure as well as to pursue its project for
 adoption of 3 villages for the purpose of social and economic
 development of the area, capacity building for enhancing the level of
 education and training as well as implementation of developmental
 programmes on health, energy, environment, sustainable economic
 activities and skill development programmes. Also Rs. 26 lakh was
 released to Rashtriya Gramin Vikas Nidhi (RGVN), Guwahati to pursue a
 project on Solar Lighting and Sanitation in semi urban areas of Kamrup
 District, Assam which will definitely uplift the standard of people
 living in the area.
 
 Subsidiary Organisations
 
 The following subsidiary companies have synergized their operations
 with IFCI:
 
 - IFCI Infrastructure Development Ltd (IIDL)
 
 IFCI Infrastructure Development Ltd (IIDL) had been promoted as a
 wholly owned subsidiary of your Company, as an instrument for unlocking
 value from real estate held by IFCI by way of its office and
 residential properties, acquiring valuable and strategic real estate in
 the process of recovery from NPAs of IFCI and availing new
 opportunities in real estate development through development
 authorities. Over the years, IIDL has expanded its asset base by
 purchasing assets and intensifying development work on such assets at
 various geographical locations in the country and made its presence
 felt on a pan India basis.
 
 IIDL, with its implementation of projects like Service Apartment
 Project at Delhi, Hotel Project at Lucknow, Financial City project at
 Bengaluru and residential projects in NCR and Kochi, is one of the
 growth engines in the development of real estates and infrastructure,
 to which impetus is given by Government of India.
 
 IIDL has also secured an important opportunity to participate in the
 development of a food park approved by the Ministry of Food &
 Processing Industries, Government of India during the year. IIDL has
 formed a Special Purpose Vehicle (SPV) named JANGIPUR BENGAL MEGA FOOD
 PARK for the development of the food park. During the year 2010-11,
 there was a growth of 86% in the company''s
 
 assets base, which went up to Rs. 640.05 crore as against Rs. 344.04 crore
 at the end of previous year. The net profit increased by 7.98%, which
 was at Rs. 4.33 crore during the year under review as against Rs. 4.01
 crore during the previous year. The gross income of the company was Rs.
 29.32 crore despite the generally slow recovery rate in the real estate
 sector during the year under review.
 
 - IFCI Venture Capital Funds Ltd (IVCF)
 
 IFCI Venture Capital Funds Ltd was set up by your Company in the year
 1975 with a view to promoting entrepreneurship by providing risk
 capital mainly to first generation entrepreneurs/technocrats to help
 them setup business projects. Later on, IVCF started providing capital
 support to Small and Medium Enterprises (SMEs) towards initial capital
 and growth. Since inception, it has supported entrepreneurs by
 providing start-up/growth capital for setting up more than 400 projects
 across India. IVCF closed three private equity/venture capital funds,
 launched in 2008, with aggregate corpus ofRs. 512 crore on June 30, 2010.
 During the year 2010-11, the entity sanctioned an amount of Rs. 395.14
 crore and disbursed Rs. 292.14 crore out of the aggregate corpus fund.
 IVCF registered a growth of 166% in Profit after Tax at Rs. 13.14 crore
 (Rs. 4.94 crore) in 2010-11 over previous year.
 
 - IFCI Financial Services Ltd (IFIN)
 
 IFIN is engaged in Stock Broking, Investment Banking, Mutual Fund
 Distribution and Advisory Services, Depository Participant Services and
 Insurance Products.  IFIN continued to grow both organically and
 inorganically.  The retail branches of IFIN at the end of the year
 increased from 25 to 42. The size of operations has also increased
 considerably and reasonable growth was registered in the institutional
 services. A growth of 26.89% was registered in company''s income from
 operations at Rs. 33.13 crore as compared to Rs. 26.11 crore during
 previous year. During the year 2010-11, the authorized share capital of
 the company was raised from Rs. 28.25 crore to Rs. 50 crore.
 
 - IFCI Factors Ltd (IFL)
 
 IFCI Factors is one of the first members of Factors Chain International
 from India. It has pioneered the export factoring business in India and
 is also providing domestic factoring services, through which it is
 steadily replacing the hitherto conventional modes of working capital
 finance in the banking space. IFL achieved a turnover of Rs. 2,683 crore,
 funds in use of Rs. 856 crore and net profit of Rs. 20.1 crore, registering
 a growth of 131% in turnover, 183% in funds in use and 90% in net
 profit over the corresponding numbers of financial year 2009-10,
 whereby the year under review had been yet another significant year.
 IFL hopes to maintain the momentum in growth in future and aims to
 become one of the major players in the factoring industry in India in
 the next 3-5 years. The factoring business globally grew by 28% in the
 year 2010 at ¤ 1648 billion as compared to ¤ 1283 billion in previous
 year, though the Indian factoring volume grew only at 4% at ¤ 2.75
 billon ( ¤ 2.65 billion). With India''s market share of 0.77% in Asia,
 there is vast scope for factoring business in India. However, it is
 going to be a continued challenge for factoring companies to raise
 appropriately priced funds to create quality domestic and export
 factoring assets and appropriately structure deals to de-risk business
 in the absence of supportive factoring legislations in India.  The
 proposed Factoring Bill, if passed, is expected to create a conducive
 environment for further development of the factoring industry in India.
 
 - MPCON Ltd
 
 MPCON is providing consultancy services to small and medium
 enterprises, individual entrepreneurs, Government Departments and
 agencies, various state level institutions, commercial banks and other
 institutions in the States of Madhya Pradesh, Rajasthan and
 Chhattisgarh.  The company is specialised in small business, training
 and skill development. During the year 2010-11, the total income of
 MPCON grew by 19.18% at Rs. 8.61 crore. The project consultancy income
 grew by 121% during the period and stood at Rs. 2.86 crore ( Rs. 1.30
 crore) which constituted 33.28% share in total income. Training
 programmes and others constituted 65.11% share and stood atRs. 5.60 crore
 (Rs. 5.14 crore). The profit after tax of MPCON grew by 80.14% in the
 year 2010-11 and stood at Rs. 0.46 crore.
 
 (ii) Industry Structure & Development
 
 The industrial sectors in which your Company has major exposures and
 which include power generation, service sector and other
 infrastructure/logistics, have performed satisfactorily. Government of
 India, under the ''National Action Plan for Climate Change'' (NAPCC) has
 identified measures that promote our development objectives, while
 yielding co-benefits for addressing climate change effectively. These
 developments translate into potential investment opportunities in
 roads, ports, renewable energy and the power sector at large. The
 prospects of other sectors in which your Company has major exposures,
 viz., iron and steel, petroleum refining, construction and real estate
 have improved with the upswing in economic activities.
 
 IFCI, being categorized as an NBFC-ND-SI (Non-Banking Financial
 Company-Non Deposit taking Systemically Important) by RBI, has to
 compete, in the area of project finance, with Banks and
 Financial/Investment Institutions.  Your Company, having embarked upon
 substantial asset creation in FY 2008-09, after a gap of 10 years, has
 been able to re-establish business relationships with several major
 industrial houses in the country by extending financial assistance.
 Your Company has endeavored to maximize returns, with the in-house
 experience in infrastructure projects, by investing by way of loans
 with a mix of equity, mezzanine and sub debt.
 
 During FY 2010-11, looking to the maturity profile of its existing
 liabilities, IFCI has sanctioned term loans of one to three years
 duration mainly to meet the short term fund requirements of companies
 with excellent track record, for general corporate purposes, investment
 in subsidiary company/(s), acquisition, subscription to rights issue,
 purchase of warrants, refinancing of high cost debt, pre- operative
 expenses for project implementation, etc. against adequate security.
 Apart from fund based activity, your Company also ventured into
 non-fund based activities like advisory services, syndication,
 underwriting etc. In order to retain and enlarge the customer base,
 endeavours were made to develop such products which cater to the needs
 of corporate clients.
 
 Your Company, during the year, also ensured improvement in various
 other operational areas like Treasury and Investments and posted
 substantially higher level of revenue and profits.
 
 The details of various developments are given hereunder:
 
 (a) Approvals and Disbursements:
 
 During the FY 2010-11, total fund based approvals were Rs. 13,208.50
 crore as against Rs. 6,765.56 crore in the previous year registering a
 rise of 95.23%. Out of the above approvals, an amount of Rs. 3,262.25
 crore (24.69%) was by way of rupee term loans, Rs. 3,111 crore (23.55%)
 by way of corporate loans, Rs. 945 crore (7.15%) by way of short term
 loans and Rs. 1,460 crore (11.05%) by way of debenture. The amount
 approved towards equity and other investments was Rs. 4,430.25 crore
 (33.54%).
 
 Total disbursements during FY 2010-11 amounted to Rs. 8,399.39 crore
 compared to Rs. 6,053.82 crore in the previous year registering a rise of
 38.75%. Out of the said disbursement, Rs. 2,028.06 crore (24.14%) was by
 way of rupee term loans, Rs. 3,034.20 crore (36.12%) by way of corporate
 loans, Rs. 1,150.45 crore (13.69%) by way of short term loans, Rs. 110
 crore (1.30%) by way of debenture and Rs. 2,076.68 crore (24.72%) by way
 of equity & other investments.
 
 (b) Treasury and Investment Operations
 
 During the FY 2010-11, your Company earned an income of Rs. 139 crore
 from fixed market operations. While the avenues of investment were
 broadened for earning higher return, safety and liquidity were the
 prime criteria behind all investment decisions. Your Company was able
 to achieve returns at par with/higher than the market returns of top
 rated instruments with similar maturity. During the year, operations in
 Collateralized Borrowing and Lending Obligation and Overnight Interest
 Swaps were also introduced.
 
 In foreign currency operations, your Company managed its exposure in
 foreign exchange reasonably well by taking appropriate forward covers.
 The foreign exchange position was nearly hedged throughout the year.
 Your Company did not have any exotic derivatives exposure in
 equity/debt or foreign exchange market.
 
 In equity operation, your Company continued with the strategy of
 selective disinvestment of slow moving/illiquid stocks and
 strengthening the portfolio through selective investment in frontline
 and mid cap stocks. While improving the quality of the portfolio, in FY
 2010-11 your Company earned a profit of Rs. 325.39 crore from equity
 operations. Net investment portfolio of your Company as on March 31,
 2011 stood at Rs. 8,005.56 crore which is substantially higher than the
 net investment amount of Rs. 5,882.43 crore as on March 31, 2010.
 
 Your Company embarked on an ambitious drive of raising Rs. 5,000 crore
 during FY 2009-10 by way of bond issuance and bank loans. Buoyed by the
 success in FY 2009-10, your Company set a higher target for FY 2010-11
 and mobilised Rs. 7,000 crore. The remarkable feat was achieved through
 successful nurturing of relationship developed by your Company with
 different market participants. The overwhelming response of investors
 to the maiden Infrastructure Bond issuance program of your Company
 demonstrates the goodwill and confidence enjoyed by your Company among
 investors.
 
 (c) Management of Non-Performing Assets
 
 Your Company continued to exploit aggressively all channels available
 to it to reduce its NPAs and were successful in doing so. This is
 evidenced by NPA recovery of more than Rs. 338 crore surpassing the
 recovery budget, of which Rs. 263 crore was by One Time Settlement (OTS)
 and Assignment and Rs. 75 crore through Securitization and Reconstruction
 of Financial Assets & Enforcement of Security Interest Act (SARFAESI)
 and legal route.
 
 In future, your Company has to meet new challenges in resolving NPA
 where it holds minority stake and action under SARFAESI is difficult
 due to non-receipt of consent from other secured creditors pursuant to
 settlement with them by company. IFCI intends to resolve these NPAs by
 adopting DRT and High Court route among other recourses available to
 it.
 
 (iii) Financial Performance
 
 Your Company''s profit before tax of Rs. 1,166 crore in the current year
 is higher by 5% as compared to Rs. 1,115 crore in the previous year
 mainly on the strength of creation of fresh assets since April 2008.
 Profit after tax of Rs. 706 crore for the year has also shown a growth of
 5% over previous year''s profit after tax of Rs. 671 crore.
 
 Standard loans to borrowers which stood at Rs. 6,425 crore as at April 1,
 2008 have shown CAGR of 35% and stand at Rs. 15,942 crore as at March 31,
 2011. The growth over the previous year''s standard loans to borrowers
 of Rs. 11,022 crore is 45%. Total assets have also increased to Rs. 25,915
 crore in the current year from Rs. 19,589 crore in previous year
 registering a growth of 32%.
 
 Satisfactory levels have been maintained for key financial ratios viz.
 interest margin, capital adequacy ratio, debt-equity ratio, debt
 service coverage ratio, net worth, etc. Basic EPS increased to Rs. 9.6
 per share for the current year vis-a-vis Rs. 9.1 per share for the
 previous year. Book Value (excluding Revaluation Reserve) also
 increased to Rs. 51 per share as at March 31, 2011 from Rs. 42.7 per share
 as at March 31, 2010 (FV Rs. 10/-).
 
 Your Company''s quality of assets continued to be excellent.  The ratio
 of net NPAs to net advances was as low as 0.97% as at March 31, 2011.
 
 (iv) Segment-wise/Product-wise Performance
 
 Your Company operates in India and hence it is considered to operate
 only in the domestic segment. More than 90% of revenue for the Company
 comes from a single segment of financing. Accordingly, segment
 reporting as required under Accounting Standard-17, issued by The
 Institute of Chartered Accountants of India, is not applicable.
 
 (v) Opportunities, Threats and Future Outlook
 
 Your Company is well poised to expand and diversify its operations and
 performance in accordance with its business strategy. Your Company will
 continue to explore possibilities for new business for short term and
 medium term with the aim of establishing a niche market for itself in
 products like short and medium term loans against liquid securities,
 take-out finance and debt swapping. In addition to the normal lending
 activities, your Company continues to concentrate on private equity
 participation, project development activities, non-fund based income
 from advisory services, syndication, underwriting of loans, acquisition
 of NPAs from other lenders and thrust on the activities of
 subsidiaries/associate companies.
 
 IFCI, as an NBFC-ND-SI, has developed for itself niche products,
 covering the entire range of capital structure including debt, equity,
 equity related products, mezzanine instruments etc. of short, medium
 and long term duration.
 
 The overall economic scenario in the country is worsening and
 inflationary pressure has pushed up the cost of funds and impacted
 profit margins. However, owing to strong growth in the balance sheet
 without NPAs, your Company would continue to improve its top line and
 bottom line.  On the power front, there exists a huge demand-supply gap
 with an all India average energy shortfall of 7% and peak demand
 shortfall of 12%. There is over 90,000 MW of new generation capacity
 required in the next seven years with over 150,000 MW of hydro power
 yet to be tapped.  Additional 60,000 circuit km of transmission network
 is expected by 2012. Power generation and transmission will continue to
 be a potential sector for investment by your Company.
 
 There is an annual growth of 12-15% projected for passenger traffic and
 a growth of 15-18% for cargo traffic.  Covering 66,590 km,
 highways/expressways constitute only 2% of all roads and carry 40% of
 the road traffic. This clearly indicates the scope for further
 development of highways.  Your Company shall leverage on its experience
 in bidding for attractive road projects across India.
 
 Growth in merchandise exports projected at over 13% p.a.  underlines
 the need for large investments in port infrastructure. It is expected
 that 95% of foreign trade by volume and 70% by value would be through
 the maritime route. The New Foreign Trade Policy envisages doubling of
 India''s share in global exports in next five years to USD 150 billion.
 
 Your Company shall continue to aggressively pursue project development
 activities in the infrastructure projects by way of participating in
 equity as promoter/co-promoter. This endeavour is expected to result in
 ample opportunities in future where your Company can involve itself in
 appraisal, underwriting, syndication of debt/sub-debt, equity, etc.
 besides acting as the lenders'' agent. The said areas would improve the
 overall return by way of non-fund based income such as underwriting,
 syndication fee etc. Your Company would continue its endeavour to
 establish/ re-establish relationship with corporate houses of repute
 and standing so as to exploit emerging business opportunities during
 the days to come.
 
 Your Company, with its present business model, does not envisage any
 major challenge in the short as-well-as medium term perspective. In the
 emerging scenario arising out of Government''s move to modify regulatory
 requirements which is expected to provide the opportunity to different
 players to be more pro-active for economic development of the nation,
 your Company has geared up to find its ''niche'' area.
 
 (vi) Risk Management
 
 Managing various types of risks is an inherent part of IFCI''s business.
 Business and revenue growth have to be viewed in the context of the
 risks implicit in your Company''s business strategy. Recognizing this,
 your Company has continued its endeavor to have in place a robust and
 integrated risk management system. The risk management strategy is
 based on a clear understanding of various risks, a multiplicity of risk
 assessment and measurement procedures and continuous monitoring.
 Forming part of the risk management architecture of your Company, the
 Risk Management Committee of Directors is overseeing all the risks viz.
 credit, market, liquidity and operational risks and any other risks,
 assumed by your Company. The Committee guides the development of
 policies, procedures and systems for managing risk at the
 organizational level.
 
 The Audit Committee of Directors provides direction and monitors the
 quality of the internal audit function and compliance with systems and
 procedures. At the executive level, a Risk Management Committee of
 Executives has been constituted to facilitate overseeing of various
 risks in a focused manner, supported by an independent risk management
 function that looks after all aspects of enterprise-wide risk
 management. The risk management function endeavors to anticipate
 vulnerabilities at the transaction level or the portfolio level, as
 appropriate, through quantitative or qualitative assessment of inherent
 risks. Appropriate structure, approved policies and procedures and
 review processes are in place through which risk is managed. A
 well-established, effective and independent internal control mechanism
 exists for supplementing the risk management systems to build risk
 consciousness and discipline into decision-making throughout the
 Company.
 
 Being primarily a lending institution, credit risk is the most
 important for IFCI and therefore, your Company has put in place
 comprehensive credit risk management architecture. With appreciable
 augmentation of credit portfolio during the year under report, systems
 and controls are in place, to mitigate credit risks including exposure
 limits for borrowers, borrower groups, industrial sectors, multi-tier
 credit appraisal system, risk-based monitoring system, committee system
 for considering proposals and detailed risk assessment of new
 proposals, which have been further strengthened commensurate with the
 volume of business activities. Emphasis is placed on both, evaluation
 and containment of risk for individual exposures and analysis of the
 portfolio behaviour. The loan policy and risk management policy of your
 Company is reviewed periodically keeping in view the changing economic
 and business environment. Periodic reviews of existing products and
 services are carried out with a view to continuously monitoring the
 risks and assisting in control management. Overall portfolio quality
 and high risk exposures are also monitored periodically.
 
 Your Company undertakes analysis of industries/sectors where the
 exposure levels are sizeable as also to evaluate and capitalize on
 business opportunities in the prospective/ sunrise sectors.
 
 As a part of loan review mechanism, credit audit of a majority of the
 standard assets with exposure of Rs. 50 crore and above, was taken up
 during the year under report, with the objective of detecting
 weaknesses, if any, in these exposures and initiating timely corrective
 action. The credit audit exercise also provides the top management with
 information on quality of credit administration including credit
 sanction process, risk evaluation and post-sanction follow-up. Your
 Company continues to undertake reviews of large borrower accounts and
 related industries/sectors on a regular basis with the objective of
 monitoring and managing the risk in the portfolio. In another
 initiative towards effectively monitoring the standard asset portfolio,
 rapid analysis of quarterly results of assisted concerns, with
 particular focus on assessing cash flows and debt servicing capacity as
 also detecting early warning signals, if any, were carried out during
 the year under report. Credit exposures are managed through target
 sectors/corporate/group identification, appropriate credit approval
 processes, post- disbursement monitoring and remedial management
 procedures.
 
 In order to make the risk management system more robust as also a best
 practice, your Company has initiated steps to adopt and make internal
 credit risk rating models an integral part of the credit assessment
 process. The use of these models is being disseminated at an
 organizational level for measuring credit risk in new business
 proposals and existing loan portfolios. The internal rating models,
 based on two-dimensional rating methodology, have the capacity to
 estimate probability of default (PD), loss given default (LGD) and
 expected loss (EL) in a specific loan asset.  During the year under
 report, the internal rating process has been streamlined for achieving
 faster turnaround time and accelerating credit delivery. From a
 portfolio monitoring perspective, the internal rating along with the
 size of the exposure would determine the monitoring frequency
 applicable to the exposure in line with the policies approved by the
 Board. With a view to initiating the process of monitoring the loan
 portfolio using these models, ratings of select standard cases were
 carried out during the year under report.
 
 The market and liquidity risk is managed by the Asset & Liability
 Committee (ALCO) through analysis of structural liquidity gaps and
 interest rate sensitivity positions and deployment of surplus funds by
 Treasury besides approved limits and triggers for various types of
 deployment. The investment policy of your Company is reviewed
 periodically in the light of the prevalent market scenario.  To manage
 the operational risks, there are adequate internal controls and systems
 in place aided and assisted by internal audit, remote back-up of data,
 disaster management policy and appropriate insurance.
 
 Going forward, with the growth of business and augmentation of loan
 portfolio, risk management at IFCI would assume a larger and more
 complex role. Your Company would continue to work on various
 initiatives which would not only help to develop a more robust risk
 management framework but also inculcate a strong culture for risk
 management and awareness in the Company. The steps taken would
 streamline the mechanism for effective overall institutional risk
 management at IFCI.
 
 (vii)Nominee Directors
 
 Appointment of Nominee Directors on the Boards of assisted concerns has
 been a long and well established
 
 practice for Institutions and Banks with a view to monitoring the
 performance of their borrower companies.  The basic objective of such
 appointments is to help build up professional management and facilitate
 effective functioning of the Board of Directors as well as formulation
 of proper corporate policies and strategies to improve productive
 efficiency and promote long term growth of the assisted companies,
 keeping in view the overall interest of the shareholders and financial
 institutions. The feedback reports received from Nominee Directors act
 as a useful tool for credit monitoring. The system of Nominee Directors
 is functioning effectively in your Company.
 
 (viii) Resources
 
 Your Company continued the initiative of increased levels of resource
 mobilization programme undertaken during the previous year 2009-10.
 During the year 2010-11, an amount of Rs. 7,000 crore was mobilized
 mainly by way of rupee bank facilities and private placement of bonds
 at competitive rates. A few new instruments like Tax Saving Bonds and
 Commercial Paper were introduced during the year.
 
 Your Company is privileged to have been authorized by the Government of
 India for issuance of Long Term Infrastructure Bonds to retail
 investors, having tax benefits under Section 80 CCF of Income Tax Act,
 1961. The two issues floated by IFCI received overwhelming response and
 the total valid subscription of Rs. 370.75 crore was fully allotted. We
 are thankful to our investors for their investment and for reposing
 their faith and trust in IFCI.  The entire proceeds out of these
 infrastructure bonds have been fully utilized during the year under
 report in infrastructure facilities as defined by the Reserve Bank of
 India.
 
 The total borrowing of your Company stood at Rs. 19,265 crore as at March
 31, 2011, which comprised of rupee and foreign currency borrowings of Rs.
 18,738 crore and Rs. 527 crore respectively.
 
 The investor-wise and instrument-wise break-up of the borrowings as at
 March 31, 2011 are indicated below:
 
 Investor service continued to be of utmost importance for your Company.
 Investors'' grievances, received in physical or electronic form or
 through web-based query submission system, were taken up promptly and
 redressed.
 
 (ix) Public Deposits
 
 Your Company did not raise any public deposit during the year. There
 was no public deposit outstanding as at the beginning or end of the
 year under report.
 
 (x) Internal Control Systems and their Adequacy
 
 Your Company has in place adequate systems of Internal Control and the
 Internal Audits are being carried out, based on the scope approved by
 the Audit Committee of the Board of Directors (ACD). A ''Risk based
 Internal Audit'' system has already been introduced, which has made the
 Internal Audit more focused and such Reports are constantly reviewed by
 ACD.
 
 SIGNIFICANT DEVELOPMENTS
 
 (i) Project Development Group (PDG)
 
 Availability of quality infrastructure is a prerequisite of the
 sustainable growth of any country. The present growth phase of Indian
 economy is also coupled with impetus on the infrastructure sector.
 Project development is a part of IFCI''s strategy to enter
 infrastructure projects early in their life cycle, ensuring IFCI
 reasonable returns on cost of funds.  It shares strong relationships
 with India''s leading infrastructure companies and is associated with
 them throughout the project development life cycle from inception to
 commissioning and thereafter nurturing the projects to realize returns.
 It is these relationships and the experience of the group in Indian
 infrastructure which positions your Company as one of the country''s
 largest players in infrastructure investment.
 
 PDG, with its dedicated team of highly qualified and experienced
 professionals, has developed invaluable insights into the technical,
 practical and financial aspects of the infrastructure sector in general
 and power generation and roads in particular. During the year 2010-11,
 your Company has made investments in select coal and gas based Thermal
 Power, Hydro Power, Wind and Solar Power, Power Transmission, Road,
 Port and Logistic Projects and simultaneously increased focus on
 providing a gamut of fee-based services in the infrastructure sector.
 Going forward, your Company intends to consolidate its position as a
 provider of end to end financial services in the infrastructure sector.
 
 (ii) Corporate Advisory Services
 
 In the area of providing customized corporate advisory services, your
 Company, despite stiff competition during the year, has not only been
 able to retain its existing clients but has also been able to secure
 some prestigious new assignments relating to disinvestment of public
 sector enterprises on competitive bidding basis, management consultancy
 assignments with respect to bid advisory, due diligence, project
 appraisal, business re-engineering, besides new assignments with
 respect to financial restructuring, business plan, valuation and bid
 process management from various private/public sector entities and
 Central/State Government(s). During the year, your Company has also
 been empanelled by many prestigious clients for various consultancy
 assignments.
 
 (iii) Sugar Development Fund
 
 Your Company has been acting as an agent of the Government of India
 since the inception of the Sugar Development Fund (SDF) for the purpose
 of disbursement, follow up and recovery of SDF loans. Cumulative
 approvals and disbursements under SDF upto March 31, 2011 stood at Rs.
 4,102 crore and Rs. 3,400 crore respectively.  The agency commission
 accrued during the year 2009-10 was of the order of Rs. 11.40 crore,
 which is likely to be Rs. 14 crore for the year 2010-11. During the year
 2010-11, IFCI has received Rs. 19 crore out of the outstanding agency
 commission.
 
 Your Company has also carried out merchant appraisals for SDF loans,
 which fetched a fee of Rs. 1.85 crore during the year 2010-11 as against
 a sum of Rs. 1.24 crore earned during the previous year 2009-10.
 
 (iv) NPA Acquisition and Resolution
 
 Your Company, while managing its NPA portfolio since 2007-08 and
 putting exemplary performances in terms of recovery of NPAs, acquired a
 very strong expertise in this business segment. Making use of the said
 expertise, taking care of the regulatory framework and other
 advantageous factors, your Company has floated a separate business
 vertical for acquisition of NPAs from Banks and Institutions.  The
 acquisitions were aimed at further management of the same and unlocking
 the true worth out of the said NPAs with substantially higher returns,
 compared to normal lending operations. Till date, your Company has
 acquired more than 80 NPAs at a total consideration of about Rs. 220
 crore and has resolved a substantial number of accounts with a highly
 satisfactory annualized return. Your Company will endeavour to attain
 still higher levels of such business and to maintain a pre-eminent
 position in the NPA business segment.
 
 (v) Human Resources
 
 The revitalisation of Human Resource Management practices has immensely
 contributed towards the resurgence that your Company has witnessed over
 the last few years. Your Company strongly believes that, going forward,
 creating a pool of leaders would be vital for accelerated growth of the
 Company. Hence, in the year 2010-11, your Company laid special focus on
 the creation of a leadership pipeline. The identified leadership
 talent, on the foundation of performance driven culture is being
 progressively exposed to challenging assignments.
 
 The manpower strength of your Company as on March 31, 2011 was 264
 including 261 executives and professionals as compared to a total
 strength of 252 as on March 31, 2010.
 
 Your Company has further strengthened its position as a preferred
 employer in the Indian financial sector. During the year, your Company
 has been able to attract talent from leading banks and multinational
 organizations. Besides, it has recruited 16 young professional from
 leading business schools like ISB Hyderabad, IIM Ahmedabad, IIM
 Bengaluru, IIM Kolkata and Faculty of Management Studies, New Delhi.
 
 Your Company continued its endeavour to upgrade knowledge and skill set
 of its employees. Aside from regular in-house behavioural and
 functional interventions, employees were nominated to leading
 institutes in India and abroad for Executive Education programs.
 Employees were also nominated to participate in various conferences and
 discussion forums organised by industry so as to provide them platforms
 for keeping abreast with the latest developments and also to explore
 business opportunities.
 
 (vi) Information Technology and Communications
 
 A software package developed in-house, namely ''Central Integrated
 Information System, (CIIS) is an umbrella providing solutions for
 automating operations of various activities of your Company. During the
 year 2010-11, to meet the current and emerging business needs, the
 existing software applications were upgraded with enhanced/added
 features.
 
 In a constant endeavour to induct latest technology and improve
 operational efficiency, Oracle BI business intelligence software was
 implemented. The application provides interactive dashboards with user
 level security thereby facilitating Management Information System (MIS)
 and facilitating the decision making process of top management. The
 system provides visual presentation of data, which can also be
 customised by the user by slicing and dicing.
 
 In the efforts to provide IT support to its Associates and
 Subsidiaries, the IT team of your Company has implemented the Financial
 Accounting, Balance Sheet and Loan Accounting modules of CIIS at Asset
 Care & Reconstruction Enterprise Ltd and also implemented the Loan
 Accounting modules at IFCI Factors Ltd.
 
 The Video conferencing facility has been established at the Head Office
 as well as in the Mumbai and Hyderabad Regional Offices. Additional
 firewalls were implemented to enhance the security of the Data Center.
 A state-of-art visitor entry and monitoring system was implemented at
 Head Office for enhanced security.
 
 Compliance
 
 Timely submission of various returns and data/information to RBI, SEBI
 and other regulatory bodies and the Government of India has been
 ensured through the Compliance and Secretarial Departments of your
 Company at the Head Office.
 
 Cautionary Statement
 
 Statements in Management Discussion and Analysis describing the
 Company''s objectives, estimates and expectations may be ''forward
 looking'' within the meaning of applicable laws and regulations. Actual
 results might differ materially from those expressed or implied.
 
 Corporate Governance
 
 A detailed report on Corporate Governance as stipulated under Clause 49
 of the Listing Agreement, is attached to this Report.
 
 Certificate from the Statutory Auditors of the Company regarding
 compliance with the conditions of Corporate Governance as stipulated in
 Clause 49 of the Listing Agreement has been obtained and is annexed at
 the end of Corporate Governance Report.
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and Outgo
 
 As the Company''s operations do not involve any manufacturing or
 processing activities, the particulars as per Companies (Disclosures of
 particulars in the Report of the
 
 Board of Directors) Rules, 1998 regarding conservation of energy and
 technology absorption, are not applicable. The particulars regarding
 expenditure and earning in the foreign exchange are given in Item
 Nos.10 and 11 in the Notes on the Accounts.
 
 Particulars of Employees
 
 In terms of provisions of Section 217(2A) of the Companies Act, 1956
 read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Annexure to the Directors'' Report. However, as per
 the provisions of Section 219(1)(b)(iv) of the said Act, the Annual
 Report excluding the aforesaid information is being sent to the Members
 and others entitled thereto. The Annexure is available for inspection
 by members at the Registered Office of the Company during business
 hours on working days upto the date of the ensuing Annual General
 Meeting.
 
 Appreciation
 
 The Board of Directors of your Company wishes to express its gratitude
 for the cooperation, guidance and support received from the Ministry of
 Finance, various other Ministries and Departments of the Government of
 India, State Governments, the Securities and Exchange Board of India,
 the Reserve Bank of India and other regulatory bodies. The Board of
 Directors also acknowledges the continued cooperation received from all
 overseas correspondent banks and other members of the banking
 fraternity.
 
 The Board of Directors would like to thank Banks, Financial
 Institutions and other investors and shareholders for their continued
 support.
 
 The Directors of your Company place on record their appreciation of the
 dedicated and sincere service rendered by the officers and staff at all
 levels.
 
                             For and on behalf of the Board of Directors
 
 Place: New Delhi
 
 Dated: July 28, 2011                                  P G MURALIDHARAN
 
                                                  Chairman of the Board