The Directors have pleasure in presenting the Fifteenth Annual Report
 together with the audited accounts of the company for the year ended
 March 31, 2011.
 
 1.  FINANCIAL RESULTS
 
 The financial results for the year ended March 31, 2011 along with
 comparative figures for the previous year are given below:
 
                                                      (Rs. in lacs>
 
                                       For the              For the  
                                          year                 year
                                         ended                ended 
                                     31.3.2011            31.3.2010
 
 
 Total Income                         10321.28             10172.94
 
 Total Expenditure                     5916.88              4569.66
 
 Profit/(loss) Before Tax              4404.40              5603.28
 
 Less : Provision for Income Tax 
 (including deferred tax)               1346.55             1932.83
 
 Profit /(loss) After Tax               3057.85             3670.45
 
 Add: Balance in Profit & Loss 
 Account brought forward                5503.14             4147.21
 
 Amount available for Appropriation     8560.99             7817.66
 
 Proposed Appropriations
 
 Transfer to Statutory Reserve           612.00              735.00
 
 General Reserve                          77.00                   -
 
 Proposed Dividend                      1620.09             1350.08
 
 Dividend Distribution Tax               269.08              229.44
 
 Balance carried forward                5982.82             5503.14
 
 
 
 The year 2010-11 was marked by the process of exit from the
 accommodative monetary policy stance with focus on containing inflation
 and inflationary expectations. As a result, during 2010-11, RBI raised
 the policy rates seven times, whereby the repo rate under LAF has
 cumulatively been increased by 175 basis points to 6.75 per cent and
 the reverse repo rate by 225 basis points to 5.75 per cent. The Cash
 Reserve Ratio (CRR) was, however, retained at 6 per cent. In tune with
 the tight monetary policy stance, the money market rates also hovered
 around the upper bound of the LAF corridor and the borrowing cost of
 the company accordingly went higher.
 
 In the Govt securities market, monetary policy, inflation concerns and
 supply issues were the major factors influencing yields on govt
 securities. Initially, higher than budgeted collections from auctions
 of 3 G and BWA licences receded the concerns on fiscal deficit with
 yield on 10-year G-sec touching a low of 7.35 per cent in mid May from
 7.85 per cent as on March 31, 2010. Improved sentiments were, however,
 offset by high inflation and tight monetary policy stance by RBI and
 the 10 -year yield rose to as high as 8.23 per cent in mid January
 before closing the year at 7.98 per cent as on March 31, 2011.
 Moreover, with consistently tight liquidity conditions prevailing
 almost throughout the year, the short term rates remained high
 resulting in a flat yield curve with spread between 1 year and 30 year
 security declining to 102 basis points from 300 basis points in the
 beginning of the year. Owing to tight liquidity conditions the
 borrowing cost remained high which hurt the net interest margin
 considerably.
 
 Against the above backdrop of tight money market rates and firm G-sec
 yields, the Profit Before Tax of the company stood at Rs. 44.04 crore
 in 2010-11 as against Rs. 56.03 crore during FY 2009-10. While Profit
 After
 
 Tax stands at Rs. 30.58 crore during FY 2010-11 as against Rs. 36.70
 crore during FY 2009-10. The networth of the company stands at Rs.
 568.92 crore as on March 31, 2011.
 
 2.  CAPITAL ADEQUACY
 
 Capital adequacy ratio as on March 31, 2011 stood at 94.42 per cent as
 against the RBI stipulation of 15 per cent.
 
 3.  DIVIDEND
 
 Your Board has recommended a final dividend of Rs. 1.20 per share for
 the financial year 2010-11 amounting to Rs. 1620.09 lakhs. The total
 outflow on account of said dividend shall be Rs. 1889.17 lakhs
 (including Dividend Distribution Tax).
 
 4.  OTHER MATTERS
 
 4.1.  Directors
 
 During the year, the Board of Directors met five times to review
 strategic, operational, technological and financial matters besides
 laying down policies and procedures for operational management of the
 company against the required minimum of 4 meetings in a year. The Audit
 Committee of the Board met four times; the Share Transfer Committee met
 twenty four times and Shareholders’ / Investors’ Grievance Committee
 met twelve times.
 
 Changes since last Annual General Meeting
 
 The following changes took place in the Board of Directors of the
 company since last Annual General Meeting :
 
 Sh. Nagesh Pydah, Executive Director - Punjab National Bank, had
 resigned from Directorship of the company on his elevation as Chairman
 and Managing Director - Oriental Bank of Commerce.
 
 Retirement of Directors by Rotation
 
 As per Article 99 of the Articles of Association of the company, Dr. O.
 P. Chawla & Sh. P. P. Pareek shall retire by rotation in the
 forthcoming Annual General Meeting and are eligible for reappointment.
 
 Corporate Governance
 
 Corporate Governance for the company means achieving high level of
 accountability, efficiency, responsibility and fairness in all areas of
 operations. Our workforce is committed towards the protection of the
 interest of the stakeholders including shareholders, creditors,
 investors, customers, employees, etc.  Our policies consistently
 undergo improvements keeping in mind our goal i.e. maximization of
 value of all the stakeholders. The Corporate Governance practices
 followed by the company are given in the Annual Report. A certificate
 from M/s S. Mohan & Co., Statutory Auditors of the company regarding
 compliance of conditions of corporate governance stipulated by stock
 exchanges is enclosed with the ‘Report on Corporate Governance.
 
 4.2.  Directors’ Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies (Amendment) Act 2000, the
 Directors confirm that in the preparation of the annual accounts:
 
 The applicable accounting standards have been followed.
 
 - Appropriate accounting policies have been selected and applied
 consistently, judgements and estimates made are reasonable and prudent
 so as to give true and fair view of the state of affairs of the company
 at the end of the financial year ended March 31, 2011 and the profit
 and loss account for the year ended March 31, 2011.
 
 - Proper and sufficient care has been taken 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.
 
 - The annual accounts have been prepared on a going concern basis.
 
 4.3.  Audit, Internal Control Systems & their adequacy
 
 M/s S. Mohan & Co., Chartered Accountants, Delhi were appointed as the
 Statutory Auditors of the company by the Comptroller & Auditor General
 of India for the financial year ended March 31, 2011. The report of the
 auditors is self-explanatory.
 
 The company considers Internal Audit to be a very significant part of
 its corporate governance practices. For the year 2010-11, the Board
 appointed M/s Deloitte Haskins & Sells as the Internal Auditors of the
 company.  The scope of Internal Audit included audit of treasury
 transactions on a monthly basis and reporting to the Audit Committee of
 the Board that the company has operated within the limits of various
 risk parameters laid down by the Board, Reserve Bank of India and other
 statutory authorities. Besides, they also audited and reviewed key
 business processes, including IT systems of the company, on quarterly
 basis. All the reports of the Internal Auditors were submitted to the
 Audit Committee and the monthly audit reports were submitted to Reserve
 Bank of India as well.
 
 4.4.  Human Resources
 
 Total number of employees of the company as on March 31, 2011 was 36
 (including 5 employees on deputation from parent bank). The company has
 maintained peaceful and harmonious relations with its employees.
 
 The information required under Section 217 of the Companies Act, 1956
 read with the Companies (Particulars of Employees) (Amendment) Rules,
 2011 be treated as NIL as none of the employees of the company draws
 remuneration in excess of Rs 5,00,000 /- p.m. No employee is related to
 any Director of the company.
 
 4.5.  Particulars required to be furnished by the Companies (Disclosure
 of particulars in the report of the Board of Directors) Rules, 1988.
 
 a) Part A pertaining to the conservation of energy are not applicable
 to the company.
 
 With regard to Part B pertaining to technology absorption, the company
 has installed the integrated treasury management software and RBI’s
 Negotiated Dealing System with the help of IDRBT and reputed IT
 companies. The company recognizes the growing importance of Information
 Technology in the emerging business environment. The company has also
 implemented Business Continuity Plan (BCP) and Disaster Recovery Plan
 (DRP) with the help of IDRBT (consultants for implementation of BCP and
 DRP) to identify and reduce risk exposures and proactively manage any
 contingencies.
 
 b) Foreign Exchange earnings and outgoing:
 
 The company has neither used nor earned any foreign exchange during the
 year under review.
 
 4.6.  Public Deposits
 
 During the year ended March 31, 2011, the company has not accepted any
 deposits from the public within the meaning of the provisions of the
 Non- Banking Financial Companies (Reserve Bank) Directions, 1977 and
 RBI’s notification no. DFC.118DG/(SPT)-98 dated 31st January 1998.
 
 4.7.  Acknowledgement
 
 Your Directors thank Government of India, Reserve Bank of India,
 Securities and Exchange Board of India, National Stock Exchange Ltd.,
 Bombay Stock Exchange Ltd., Punjab National Bank, Commercial,
 Cooperative & Regional Rural Banks, Financial Institutions, PF Trusts,
 Public Sector Undertakings and Private Sector Corporate Bodies and
 other valued clients for their whole-hearted support. We acknowledge
 the sincere and dedicated efforts put in by employees of the company at
 all levels.
 
                                        On behalf of Board of Directors
 
                                                           (K.R.Kamath)
                                                               Chairman
 
 Date : May 11, 2011 
 Place : New Delhi