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.
 
 FINANCIAL RESULTS
 
 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
                                               31-03-2005     31-03-2004
 
 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)
 
                                                (3995.82)      (3999.81)
 
 Add : Provisions for :
 
 i) Prudential Norms                                    -              -
 
 ii) Dimunition in the Value of Investments             -              -
 
                                                (3995.82)      (3999-81)
 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.
 
 DIVIDEND
 
 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
 declared.
 
 RESERVES
 
 Since there is no surplus, the Company could not transfer any sum to
 Reserve.
 
 CAPITAL
 
 The company having incurred losses in the last five years the net worth
 has become negative,
 
 DEBENTURES
 
 The total Debentures outstanding as on 31st March 2005 is 307.44 Lakhs.
 The Company has defaulted in redeeming debentures due to severe
 liquidity problems.
 
 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.
 
 PUBLIC DEPOSITS
 
 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
 
 DEPRECIATION
 
 Your Company Continues to depreciate 95% of the leased assets during
 the lease period.
 
 PROSPECTS
 
 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.
 
 DIRECTORS
 
 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
 Directors.
 
 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
 and perquisites.
 
 AUDITORS
 
 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.
 
 AUDITORS OBSERVATIONS
 
 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.
 
 WINDING UP
 
 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.
 
 ACKNOWLEDGEMENT
 
 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