Your Directors are presenting the 72nd Annual Report on the business
and operations of your Company and the Audited Financial Accounts tor
the Financial Year ended 31st March 2005.
The financial results of your Company for the period from 1st April,
2004 to 31st March 2005 as compared to the previous Period from
01-04-2003 to 31-03-2004 are as follows :
(Rupees in Lakhs)
Year ended Year ended
Gross Income 49.31 60.78
Profit/Loss before depreciation 10.18 (36.75)
Less : Depreciation 78.76 8021
Profit/Loss (68.58) (118.95)
Add : Balance B/F From last year (3927.24) (3860.86)
Add : Provisions for :
i) Prudential Norms - -
ii) Dimunition in the Value of Investments - -
Less Transfer from
i) Provision for Dimunition in
Value of Investments - -
ii) NPA Provision 59.20 (2.95)
iii) Lease Balancing Provision 74.55 75.52
Balance Carried to Balance Sheet (3862.07) (3927.24)
Your Company has completely stopped lending operations after the
stringent regulations of Reserve Bank of India in January 1998 for want
of financial resources. Every rupee recovered was utilised for payment
of matured deposits and for administrative expenses. Hence the Company
has been incurring losses year after year.
The NBFC Industry in general and your Company in particular is passing
through very difficult times. Heavy defaults, due to slow down in
economy and stringent provisioning and Income recognition norms have
resulted in the Company ending up with loss for the year ending 31st
March, 2005 Hence the Directors regret that the dividend could not be
Since there is no surplus, the Company could not transfer any sum to
The company having incurred losses in the last five years the net worth
has become negative,
The total Debentures outstanding as on 31st March 2005 is 307.44 Lakhs.
The Company has defaulted in redeeming debentures due to severe
INVESTMENTS AND STOCK-IN-TRADE
The investment in Government Securities Bank Deposits and in shares
stood at Rs. 331 83 Lakhs against Rs. 264.71 Lakhs, of previous year.
In view of the RBI Directions, the Company is not accepting fresh
deposits and also not renewing the matured deposits.
As on 31st March 2005, the total deposits with the Company was
Rs.30.57 Crores. We have submitted a scheme to Honble Company Law
Board. Southern Bench. Chennai to repay the Deposits, in instalments
and the CLB has passed orders on 15th May 2000 to repay in instalments
within 39 months.
Due to liquidity problem the Company could not fully comply with the
orders. However, the Company has paid Rs. 8.94 Crores from the date of
submission of the scheme to CLB till 31.03.2005. The company is
restrained from making any payments by the Honble High Court of
Karnataka in its order dated 12.09.2003
Your Company Continues to depreciate 95% of the leased assets during
the lease period.
There were 37,400 registered NBFCs in 1998 which came down drastically
to 679 deposit taking NBFCs in 2001. All the rest died being unable to
cope with stringent regulations.
All our efforts to diversity or to gel new investors to revive the
Company have failed. Now the Company is exerting all its efforts to
recover its receivables and pay back creditors.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and outgo as per Section 217(1) (e) of the Companies Act, 1956
The company has no activities relating to conservation of energy and
technology absorption. The Company had neither foreign exchange
earnings nor outgo.
The Board of Directors regret to state that Sri M. S. Krishnappa.
Director and Chairman of the Company expired on 18.04.2005 and the
Board placed on record the appreciation of invaluable services rendered
by Sri M. S. Krishnappa during his tenure.
Sri Girish Punja retiring by rotation in the ensuing Annual General
Meeting and being eligible offer himself for re appointment.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 2000 the Directors
confirm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departues.
(ii) Appropriate accounting policies have been selected and applied
consistently, and have made judgements and estimates that are
reasonable and prudent so as to give a true and fair iew of the state
of affairs of the Company as on March 31, 2005 and of the loss of the
Company for the said period :
(iii) proper and suficient care has been taken for the maintainance of
adequate accounting records in accordance with provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
(iv) the annual accounts have been prepared on a going concern basis
(v) Corporate Governance :
The Board of Directors consists of more than 50% Non-Executive
An Audit Committee has been formed consisting of the following members
1. George Joseph, Chairman-Non-Executive Director
2. Girish Punja, Member-Non-Executive Director
3. A. K. Shetty, Member-Managing Director.
The unaudited quarterly results are sent to the Stock Exchanges where
the shares of the Company are listed as per the Clause 41 of the
Listing Agreement, after the approval of the Audit Committee.
PARTICULARS OF EMPLOYEES As required by Section 217 (2A) of the
Companies Act, 1956 none of the employees working is in receipt of Rs.
12 Lakhs or more per annum or Rs. 1 Lakh or more per month as salary
In parsuant of the powers delegated to the Board in the last AGM the
Board of Directors appointed M/s.J.Srinivasan. Chartered Accountants,
Bangalore as statutory auditors for a period of 1 year I.e. upto the
conclusion of this AGM on the same terms and conditions as of last
year. The Board of Directors deem fit to seek the consent of the share
holders to appoint suitable chartered accountant as statutory auditors
for the audit of accounts for the financial year ending 31.03.2006 and
fix their remuneration.
Replies to the adverse comments made by the Auditors is given below :
Para (5) of the Auditors Report :
1 since none of the Directors was appointed afresh and these directors
were directors as on the date of the application of section 274 (1) (G)
of the Companies Act. 1956 there is no violation of the section 274 (1)
(G). Para (7) and (8) of the Auditors Report :
2. The reconciliation mentioned in the above paras of the Auditors
Report have not been made due to closure of most of the Branches. The
Management does not expect any losses in this front.
Para (9) of the Auditors Report :
3. Most of the borrowal accounts are under Arbitration / Civil suit and
a number of them have been decreed and hence confirmation of balance
could not be obtained. In a few cases the parties are absconding and
their whereabouts are not traceable.
Para (10) of the Auditors Report :
4. The amount not provided towards interest Is negligible, Para (11) of
the Auditors Report :
5. The reduction in the amount of Public Deposits from 01.04.04 to
31.03.05 is on account of reconciliation entries passed and not due to
any payment made.
Para (12) of the Auditors Report :
6. The Shortfall if any in provisioning for NPA as per norms prescribed
by RBI will be taken careoff in future.
RBI and Lord Krishna Bank Ltd., have filed for winding up of the
Company in the High Court of Karnataka. The Honble High Court has in
its interim order dt. 12-09-2003 restrained the Company from making any
payments until further orders.
The Board of Directors takes this opportunity to express their
appreciation to the employees at all levels int he Company for their
dedicated and sincere services. The Board of Directors also place on
record their thanks to the Reserve Bank of India for their guidance and
Bankers to the Company. The Board also expresses grateful thanks to
valued customers of the Company.
For and on behalf of the
Board of Directors
Place: Bangalore A. K. Shetty
Date : 31-08-2005 Chairman & Managing Director