The directors have pleasure in presenting the 31st annual report on
 the audited accounts of the Company for the year ended 31st March,
 2011. The summarised financial results are given below:
 
 Financial results                                 (Rs. in lac)
 
                           Year ended 31 March 2011   Year ended 31
                                                        March 2010
 
 Total income                      84,732.98           70,300.89
 
 Profit before interest and 
 depreciation                      53,648.17           45,207.66
 
 Less: Interest and finance 
 charges                           33,813.00           31,624.96
 
 Less: Depreciation                 2,785.07            3,278.58
 
 Profit before tax                 17,050.10           10,304.12
 
 Tax Expense                        5,606.78            3,658.09
 
 Profit after tax                  11,443.32            6,646.03
 
 Add: Surplus brought forward      10,191.97            6,677.91
 
 Balance available for 
 appropriation                     21,635.29           13,323.94
 
 - Statutory reserves               2,290.00            1,330.00
 
 - General reserve                  1,150.00              500.00 
 
 Provision for dividend
 
 - On Preference Shares               961.53              599.28
 
 - On Equity Shares                   778.64              517.39
 
 - Dividend tax                       282.42              185.30 
 
 Balance carried forward to the 
 next year                         16,172.70           10,191.97 
 
 Net worth                         72,214.16           46,458.69 
 Earning per equity
 share (Rs.)
 
 - Basic                                8.12                5.46
 
 - Diluted                              7.94                5.45 
 
 Book value per equity share (Rs.)     43.36               32.00
 
 Note: EPS and Book Value are shown after adjusting for split of share
 in ratio of 1 share of Rs.10/- into 5 shares of Rs.2/-
 
 Business
 
 The Indian economy achieved good growth in the year and is estimated to
 have grown at 8.6 percent during FY 2010-11, as compared to 7.4 percent
 during FY 2009-10. WPI based inflation remained high in major part of
 the year and was at 8.9 percent at March end. High food inflation,
 which was 9.2 percent for the week ended 26 March 2011, has been one of
 the major contributors to overall high inflation in the economy.
 Responding to this, RBI has been following policies of monetary
 tightening for the entire year, which has pushed up the interest rates
 in the economy. Despite this, retail assets demand continues to be
 strong.
 
 There was robust growth in sales of new vehicles during fiscal 2010-11.
 Domestic sales of new commercial vehicles registered a healthy growth
 of 27.3 percent during 2010-11 as compared to 2009-10, while sales of
 new cars and UVs registered a growth of 29.3 percent during the
 financial year. Tractors sales also grew about 21 percent during the
 year under review.
 
 As supported by strong growth in primary sales, Magma Fincorp Limited
 recorded total funding of Rs.5,262 crore (on a standalone basis) during
 FY 2010-11, resulting in 31.9 percent growth over Rs.3,989 crore
 recorded during FY 2009-10. Aided by growth in business, build up of
 on-book assets and increasing share from high yield products such as
 Suvidha (Used CV), Tractors and SME Loans, total income enhanced to Rs
 847.33 crore, representing a 20.53 percent growth over Rs.703.00 crore
 achieved in last year.
 
 Higher business volumes have been accompanied by better asset quality,
 superior collection performance, dramatically lower write-offs and
 higher cost efficiency. Accordingly, profit before tax increased to
 Rs.170.50 crore during 2010-11, compared to Rs.103.04 crore for
 2009-10, a growth of 65.5 percent. Profit after tax recorded remarkable
 72.2 percent growth, from Rs.66.46 crore in last year to Rs.114.43
 crore in 2010-11.
 
 Profitability parameters of the Company have shown significant
 improvement during the year. RoA (return on average assets) has
 improved from 1.7 percent in 2009-10 to 2.2 percent in 2010-11, while
 RoE (Return on Average Equity) has enhanced from 18.5 percent in
 2009-10 to 22.7 percent in 2010-11.
 
 Insurance Joint Venture :
 
 The Company is in Joint Venture Agreement with HDI Gerling
 International Holding AG for the purpose of entering into General
 Insurance Business in India through the existing Company, Magma HDI
 General Insurance Company Ltd. (the JV Company). The JV Company has
 since received the R1 approval and is in the process of filing the R2
 application with IRDA.
 
 Dividend
 
 Your Directors recommend a tax-free dividend of 30 percent, i.e. Rs.0.6
 per Equity Share on 12,97,73,550 Equity Shares of Rs.2 each; a 9.7
 percent dividend on 21,09,199 Cumulative Non-Convertible Redeemable
 Preference Shares of Rs.100 each for the period from 1.4.2010 to
 17.2.2011 and 9.7 percent on 21,09,199 Cumulative Non-Convertible
 Redeemable Preference Shares of Rs.80/- each (reduced to Rs.80/- upon
 redemption of 1st installment of Rs.20/- each per share on 17th
 Feb,2011) for the period from 18.2.2011 to 31.3.2011; a 5 percent
 dividend on 30,00,000 Cumulative Non-convertible Redeemable Preference
 Shares of Rs.100 each; a 3.7 percent dividend on 65,00,999 Cumulative
 Non-Convertible Redeemable Preference Shares of Rs.100 each; a 12
 percent dividend on 25,00,000 Cumulative Non-Convertible Redeemable
 Preference Shares of Rs.100 each for the period from 30.6.2010 to
 31.3.2011; a 9.6 percent dividend on 10,00,000 Cumulative
 Non-Convertible Redeemable Preference Shares of Rs.100 each for the
 period from 19th June, 2010 to 31st March,2011; a 1 percent dividend on
 21,09,199 Cumulative Non Convertible Redeemable Preference Shares of
 Rs.100 each for the previous year ended 31 March 2010, subject to your
 approval at the ensuing Annual General Meeting .
 
 Employee Stock Option Scheme
 
 Your Company formulated and implemented an ESOP scheme (Magma
 Employees Stock Option Plan 2007) in accordance with the SEBI
 (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999.The details of options granted and outstanding as on
 31 March 2011 along with other particulars as required by Clause 12 of
 the SEBI (Employee Stock Option Scheme and Employee Stock Purchase
 Scheme) Guidelines, 1999 and the Auditors Certificate required to be
 placed at the forthcoming Annual General Meeting pursuant to Clause 14
 of the said guidelines are set out in the Annexure to the Report.
 
 Pursuant to Subdivision of Equity Share of the face value of Rs.10/-
 each into 5 Equity Shares of the face value of Rs.2/- each, the
 existing 7,41,900 Options of Rs.10/- each available for grant out of
 the 10,00,000 Options under the Plan stands converted into and
 increased to 37,09,500 Options of Rs.2/- each and existing 2,58,100
 live options of Rs.10/- each stands converted into 12,90,500 options of
 Rs.2/- each. The exercise price is also revised from Rs.180/- per
 option to Rs.36/- per option.
 
 Pursuant to the Plan, 17,54,000 stock options of Rs.2/- each (increased
 from 3,50,800 stock options of Rs.10/- each to 17,54,000 stock options
 of Rs.2/- each following subdivision of 1 equity share of the nominal
 value of Rs.10/- each into 5 Equity Shares of the nominal value of
 Rs.2/- each ) were granted to the eligible employees in October 2007
 out of which 4,63,500 stock options of the nominal value of Rs.2/- each
 have lapsed and 7,74,300 stock options of the nominal value of Rs.2/-
 each were vested till 31st March,2011. During the year 5,51,750 stock
 options of the nominal value of Rs.2/- each were exercised by the
 eligible employees and equivalent number of Equity Shares of the
 nominal value of Rs.2/- each were issued and allotted under the scheme
 ranking pari passu with the existing Equity Shares of your company.
 
 Capital – issuances and redemptions
 
 Changes in Share Capital
 
 Equity Shares
 
 During the year,the following changes were effected in the share
 capital of the Company :
 
 i) Issue of Warrants:
 
 During the year, 20,00,000 warrants (increased to 1,00,00,000 warrants
 following subdivision of 1 equity share of the nominal value of Rs.10/-
 each into 5 Equity Shares of the nominal value of Rs.2/- each ) were
 allotted to one of the Promoter entities, carrying an option /
 entitlement to subscribe to equivalent number of Equity Shares at a
 price of Rs.250/- per Equity Share (revised to Rs.50/- per Equity share
 following Sub division ), on a future date not exceeding 18 months from
 the date of issue of such warrants in terms of provisions of SEBI
 Guidelines for
 
 Preferential Issue (Chapter VII of the SEBI (Issue and Disclosure
 Requirements) Regulations, 2009).
 
 ii) Issue of Equity Shares through the Qualified Institutional
 Placement ( QIP ) route
 
 The Company has raised a sum of Rs.122.42 crore through the Qualified
 Institutional Placement ( QIP ) route by way of issue of 40,67,220
 Equity Shares of Rs.10/- each for cash at a price of Rs.301/- per
 equity share (including premium of Rs.291/- per equity share) to a host
 of Institutional Investors who are Qualified Institutional Buyers.
 
 iii) Sub-division of Equity Shares
 
 Each Equity share of the face value of Rs.10/- of the Company was
 sub-divided into 5 Equity Shares of the face value of Rs.2/- each with
 effect from 16th August,2010.
 
 iv) Change in Authorised Equity Share Capital : The Authorised Equity
 Share Capital of the Company comprising of 3.5 crore Equity Shares of
 Rs.10/- each stand revised to 17.5 crore Equity Shares of Rs.2/- each .
 
 v) Issue of Equity Shares under the Magma Employees Stock Option Plan
 2007:
 
 During the year, 5,51,750 Equity Shares of the face value of Rs.2/-
 each at a price of Rs.36/- per share ( including a premium of Rs.34/-
 per share ) were allotted to the eligible employees under the Scheme
 against the exercise of stock options by them.
 
 Consequently, the issued, subscribed and paid up equity share capital
 of your company stands increased to Rs.25.95 crore divided into
 12,97,73,550 Equity Shares of Rs.2/- each.
 
 The new Equity Shares issued during the year rank pari passu with the
 existing Equity Shares .
 
 Preference Shares
 
 (i) Issue of Preference Shares
 
 During the year 10,00,000, 9.6% Cumulative Non - Convertible Redeemable
 Preference Shares of the face value of Rs.100/- each aggregating to
 Rs.10 crore were issued and allotted on preferential allotment basis,
 at par redeemable at the end of 5 years at a premium of 25 percent of
 the face value.
 
 The Company also issued 25,00,000, 12%, Cumulative Non Convertible
 Redeemable Preference Shares of the face value Rs.100/- each
 aggregating to Rs.25 crore at par on preferential allotment basis which
 are redeemable at par at the end of 5 years.
 
 (ii) Redemption of Preference Shares
 
 As per the terms of issue of 9.7% Cumulative Non-Convertible Redeemable
 Preference Shares of Rs.100/- each, the first installment of 20 percent
 ( Rs.20/- each) on 21,09,199 Preference Shares aggregating to Rs.4.22
 crore was redeemed on 17th Feb, 2011 out of the profits of the Company
 and an equivalent sum has been transferred to the Capital Redemption
 Reserve.
 
 Consequently, the issued ,subscribed and paid up Preference share
 capital of your Company stands revised to Rs.146.88 crore.
 
 Debt
 
 Subordinated Debt
 
 During the year, the Company issued 1,36,200 Unsecured Redeemable
 Non-Convertible Subordinated Debt in the nature of Debentures of
 Rs.10,00,000 each, aggregating Rs.136.20 crore.
 
 Perpetual Debt
 
 During the year, the Company issued 250 Unsecured Subordinated
 Perpetual Bonds in the nature of Debentures of Rs.10,00,000 each,
 aggregating Rs.25 crore.
 
 Consolidated financial statements
 
 In accordance with the requirements under Clause 32 of the Stock
 Exchange Listing Agreement, your Company prepared consolidated
 financial statements in accordance with Accounting Standard-21 issued
 by The Institute of Chartered Accountants of India. The consolidated
 financial statements form a part of the Annual Report.
 
 Corporate Governance
 
 Your Company has consistently been complying with the Corporate
 Governance Code prescribed by SEBI and a detailed report on Corporate
 Governance together with a certificate of compliance from the statutory
 auditors, as required by Clause 49 of the Stock Exchange Listing
 Agreement, forms a part of this Annual Report.
 
 Directors responsibility statement
 
 In accordance with the provisions of Section 217(2AA) of the Companies
 Act, 1956, your Directors confirm
 
 - That in the preparation of the annual accounts, the applicable
 accounting standards have been followed by your Company along with
 proper explanation relating to materia departures, if any;
 
 - Having 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 financia year 31 March 2011 and of the
 profit of the Company for the period under review;
 
 - That 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, if any, have been taken;
 
 - That the annual accounts have been prepared on a going concern basis.
 
 RBI regulations - compliance
 
 Your Company continues to carry on its business of Non-Banking Finance
 Company as a Non-Deposit Taking Company and follows prudent financial
 management norms as applicable and continues to progressively follow
 the internationally accepted accounting principles on revenue
 recognition, provisioning and asset classification which are more
 stringent than the guidelines prescribed by the RBI. A detailed note is
 appended in Schedule 16 Notes on Accounts. The gross and net NPAs
 stood at Nil and Nil respectively. Your Company appended a statement
 containing particulars as required in terms of paragraph 13 of
 Non-Banking Financial (Non-Deposit Accepting or Holding) Companies
 Prudential Norms (Reserve Bank) Directions, 2007 in Note 2 (xxvi),
 Schedule 16 Notes on Accounts and additiona disclosures required for
 NBFCs-ND-SI in terms of notification dated 1 August 2008 issued by the
 RBI in Note 2 (xxv) Schedule 16 Notes on Accounts.
 
 Subsidiary
 
 Magma ITL Finance Limited, a subsidiary of the Company and the
 Companys joint venture with International Tractors Limited,
 manufacturers of Sonalika Brand of Tractors is registered with the RBI
 as a non-deposit taking NBFC.The Company has earned a PBT of Rs.11.71
 crore for the year ended 31st March, 2011.
 
                                 For and on behalf of the Board
 
 Kolkata                                          Mayank Poddar
 
 18th April, 2011                                      Chairman