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Directors Report of Capital First Ltd.

Mar 31, 2018

Dear Members,

The Directors have pleasure in presenting the Thirteenth Annual Report of your Company with the audited financial statements for the financial year ended March 31, 2018.

FINANCIAL HIGHLIGHTS

The highlights of the Consolidated and Standalone Financial Statements of the Company for the financial years 2017-18 and 2016-17 are as under:

(Rs. in Million)

Particulars	Consolidated		Standalone
	2017-18	2016-17	2017-18	2016-17
Total Income	38,120.46	28,008.64	36,282.52	27,268.55
Total Expenditure	33,180.80	24,433.80	31,736.84	23,945.70
Profit Before Tax and exceptional items	4,939.66	3,574.84	4,545.68	3,322.85
Exceptional items	-	-	293.68	-
Profit before tax	4,939.66	3,574.84	4,839.36	3,322.85
Provision For Tax	1,656.13	1,174.30	1,569.25	1,154.23
Profit after tax from continuing operations	3,283.53	2,400.54	3,270.11	2,168.62
Profit/(Loss) after tax from Discontinuing operations	(9.08)	(11.33)	_-
Profit for the year	3,274.45	2,389.21	3,270.11	2,168.62
Profit/(Loss) brought forward from previous Year	4,326.27	2,383.66	4,304.04	2,569.14
Profit available for appropriation	7,600.72	4,772.87	7,574.15	4,737.76
Appropriations: Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934	(654.02)	(433.72)	(654.02)	(433.72)
Transfer to statutory reserve under Section 29C of the National Housing Bank Act, 1987	(22.16)	(12.88)
Dividend paid for F.Y. 2016-17#	(254.09)		(254.09)
Dividend Tax thereon for F.Y. 2016-17#	(51.73)		(51.73)
Transfer to General Reserve	-	-	-	-
Balance carried forward to Balance Sheet	6,618.72	4,326.27	6,614.31	4,304.04

# The proposed equity dividend and dividend distribution tax for FY 2017-18 are not accounted as liabilities in fiscal 2018 in accordance with revised AS-4 âContingencies and events occurring after the Balance Sheet dateâ.

The Company is focused on providing retail loans to MSMEs and consumers, including long term loans secured by property, business loans, personal loans, two-wheeler loans and consumer durable loans, which is expected to drive growth for the Company going forward.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs.198.24 billion to Rs.269.97 billion, a growth of 36%. The Retail Assets under Management has grown from Rs.183.53 billion to Rs.252.43 billion, a growth of 38%.

The Consolidated Net worth of the Company increased from Rs.23.04 billion to Rs.26.18 billion as at March 31, 2018.

Consolidated Net Interest Income increased by 53% from Rs.13,008 million during the financial year ending March 31, 2017 to Rs.19,870 million during the financial year ending March 31, 2018.

The profit after tax was up by 37% from Rs.2,389 million to Rs.3,274 million.

DIVIDEND

Keeping in mind the improved performance of the Company and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs.2.80/- (Rupees Two and Paise Eighty only) per share i.e. 28% on each Equity Share having face value of Rs.10/- (Rupees Ten only) each.

DIVIDEND DISTRIBUTION POLICY

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), the Company has formulated a Dividend Distribution Policy.

The Policy is hosted on the website of the Company and can be viewed at https://www.capitalfirst.com/investor/corporate-governance.

CAPITAL ADEQUACY

The Companyâs capital adequacy ratio was 15.88% as on March 31, 2018, which is above the threshold limit of 15% as prescribed by the Reserve Bank of India (âRBIâ).

SHARE CAPITAL

During the year under review, the Company had issued and allotted 15,43,175 equity shares and subsequent to the year under review, 2,500 equity shares were allotted to the eligible employee(s) of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date stands at Rs.98,96,77,440/- (Rupees Ninety Eight Crore Ninety Six Lakhs Seventy Seven Thousand Four Hundred and Forty only) comprising of 9,89,67,744 equity shares of Rs.10/- each.

SUBSIDIARIES

In accordance with the provisions of Section 136 of the Companies Act, 2013, the annual report of the Company, the annual financial statements and the related documents of the Companyâs subsidiary companies are placed on the website of the Company, https://www.capitalfirst.com.

Shareholders may download the annual financial statements and detailed information on subsidiary companies from the Companyâs website or may write to the Company for the same. Further, the documents shall be available for inspection by the shareholders at the registered office of the Company.

The Company has not made any loans or advances in the nature of loans to any of its subsidiary company or companies in which its directors are deemed to be interested, other than in the ordinary course of business.

The Company has obtained a certificate from its statutory auditors that it is in compliance with the provisions of Foreign Exchange Management Act, 1999 with respect to downstream investments made in/by its subsidiaries and in other companies during the year under review.

During the year under review, the subsidiary Company viz. Capital First Home Finance Limited raised funds through issue and allotment of 7,14,28,564 Equity Shares of Rs.10/- each on a right basis, pursuant to receipt of subscription amount of Rs.99,99,99,896/- (Rupees Ninety Nine Crore Ninety Nine Lakhs Ninety Nine Thousand Eight Hundred and Ninety Six only) issued at a price of Rs.14/- per Equity Share (face value of Rs.10/- each and premium of Rs.4/- per share) to Capital First Limited.

PUBLIC DEPOSITS

The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI.

RBI GUIDELINES

As a Systemically Important Non-Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI guidelines and regulations and employs its best efforts towards achieving the same.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 of the Listing Regulations and Circulars/ Notifications/ Directions issued by RBI from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Listing Regulations forms part of the Annual Report.

A Certificate from M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations, also forms part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

In accordance with Regulation 34(2)(f) of the Listing Regulations, the inclusion of Business Responsibility Report (BRR) as a part of the Annual Report is mandated for top 500 listed entities for the year 2017-18 based on the market capitalization to be calculated as on March 31 of every financial year.

Since Capital First Limited is one of the top 500 listed companies by way of market capitalisation as on March 31, 2017, the Company has presented its BRR for the financial year 2017-18, which is part of this Annual Report. As a green initiative, the Companyâs BRR will be available on its website at the web link http://www.capitalfirst.com/investor/corporate-governance. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary of the Company.

DIRECTORS & KEY MANAGERIAL PERSONNEL

a. Re-appointment

The Board of Directors at their Meeting held on March 29, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. N. C. Singhal (DIN 00004916), Mr. M. S. Sundara Rajan (DIN 00169775) and Mr. Hemang Raja (DIN 00040769), as Non-Executive Independent Directors of the Company for a term of five years effective from April 01, 2017 to hold office up to March 31, 2022 and they shall not be liable to retire by rotation. The aforesaid re-appointment of Independent Directors was approved by the members in the 12^th Annual General Meeting of the Company held on July 05, 2017.

During the financial year 2017-18, the term of Dr. (Mrs.) Brinda Jagirdar (DIN 06979864), Non-Executive Independent Director of the Company, who was appointed for a term of three years with effect from September 24, 2014, expired on September 23, 2017. The Board of Directors at its Meeting held on August 02, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Dr. (Mrs.) Brinda Jagirdar as Non-Executive Independent Director of the Company for a term of five years with effect from September 24, 2017 to hold office up to September 23, 2022 and she shall not be liable to retire by rotation. The aforesaid re-appointment of Dr. (Mrs.) Brinda Jagirdar as Non-Executive Independent Director was approved by members through Postal Ballot results on September 07, 2017.

Further, during the financial year 2017-18, Mr. Dinesh Kanabar (DIN 00003252), Non-Executive Independent Director of the Company, who was appointed for a term of three years with effect from January 06, 2015, expired on January 05, 2018. The Board of Directors at its Meeting held on October 31, 2017 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. Dinesh Kanabar as Non-Executive Independent Director of the Company for a term of five years with effect from January 06, 2018 to hold office up to January 05, 2023 and he shall not be liable to retire by rotation. The aforesaid re-appointment of Mr. Dinesh Kanabar as Non-Executive Independent Director was approved by members through Postal Ballot results on January 21, 2018.

Further, subsequent to the year under review, the Board of Directors at their Meeting held on April 03, 2018 on recommendation of Nomination & Remuneration Committee had re-appointed Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) as Executive Directors who shall act as Whole Time Directors and Key Managerial Personnels of the Company for a term of one year with effect from April 04, 2018 to hold office up to April 03, 2019. The aforesaid re-appointment of Mr. Apul Nayyar and Mr. Nihal Desai shall be subject to the approval of members in the 13^th Annual General Meeting of the Company.

The Board recommends re-appointment of Mr. Apul Nayyar and Mr. Nihal Desai as Executive Directors who shall act as Whole Time Directors and Key Managerial Personnels of the Company.

The details of the aforesaid Directors forms part of this Report as Annexure 1.

b. Retire by Rotation

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Narendra Ostawal (DIN 06530414), being Non-Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his re-appointment.

BOARDâS INDEPENDENCE

Based on the confirmation/ disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations:

1. Mr. N. C. Singhal (DIN 00004916)

2. Mr. M. S. Sundara Rajan (DIN 00169775)

3. Mr. Hemang Raja (DIN 00040769)

4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)

5. Mr. Dinesh Kanabar (DIN 00003252)

NUMBER OF MEETINGS OF THE BOARD

The Board met 7 times during the financial year 2017-18 viz., on May 10, 2017, July 05, 2017, August 02, 2017, October 31, 2017, December 18, 2017, January 13, 2018 and January 24, 2018. The maximum interval between any two meetings did not exceed 120 days.

COMMITTEES OF THE BOARD

In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:

- Audit Committee

- Stakeholders Relationship Committee

- Corporate Social Responsibility Committee

- Nomination and Remuneration Committee

Details of the said Committees along with their charters, compositions and meetings held during the financial year, are provided in the âReport on Corporate Governanceâ, as a part of this Annual Report.

COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION AND EVALUATION

Pursuant to the provisions of the Companies Act, 2013 (âthe Actâ), Listing Regulations and requirements of the Reserve Bank of India, Policy on Nomination and Remuneration of Directors, Key Managerial Personnel, Senior Management and other employees had been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Regulations.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

- Expertise;

- Objectivity and Independence;

- Guidance and support in context of life stage of the Company;

- Understanding of the Companyâs business;

- Understanding and commitment to duties and responsibilities;

- Willingness to devote the time needed for effective contribution to Company;

- Participation in discussions in effective and constructive manner;

- Responsiveness in approach; and

- Ability to encourage and motivate the Management for continued performance and success.

The evaluation involves Self-Evaluation by the Board members and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/ her evaluation.

Accordingly, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.

The Board of Directors at their Meeting held on May 04, 2018 on recommendation of Nomination & Remuneration Committee had approved the payment of remuneration of Rs.2.80 Crore (Rupees Two Crore and Eighty Lakhs Only) per annum payable to Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) respectively pursuant to the proposed re-appointment and also bonus of Rs.1.80 Crore (Rupees One Crore and Eighty Lakhs Only) for the financial year 2017-18 which shall be payable in financial year 2018-19 to them respectively subject to the approval of members in the 13^th Annual General Meeting of the Company.

Further, subsequent to the year under review, the Board of Directors at their Meeting held on May 04, 2018 on recommendation of Nomination & Remuneration Committee had also approved increase in remuneration of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing Director by 10%, consisting of Salary of Rs.5.50 Crore (Rupees Five Crore and Fifty Lakhs Only) per annum effective from April 01, 2018, and approved bonus of Rs.2.80 Crore (Rupees Two Crore and Eighty Lakhs Only) per annum being effective for the financial year 2017-18, and payable in financial year 2018-19 and thereafter for the remaining period of his tenure.

The aforesaid revision in remuneration and bonus payable to Mr. V. Vaidyanathan shall be subject to the approval of members in the 13^th Annual General Meeting of the Company.

The details of the aforesaid Directors forms part of this Report as Annexure 1.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directorsâ Responsibility Statement, it is hereby stated that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments 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 and loss of the company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company had carried out its CSR activities/ programs on the recommendation of the CSR Committee and duly approved by the Board of Directors and in accordance with the policy on CSR as per the identified core areas.

The Company chooses its CSR programs among many options in the CSR Committee and the Board Meeting(s) and does not get persuaded by any external influences other than those short listed in the best of spirit and which can add the social value in the pragmatic and idealistic sense.

The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the financial year have been appended as Annexure 3 to this Report.

RISK MANAGEMENT POLICY AND INTERNAL CONTROL

The Company has adopted a Risk Management Policy duly approved by the Board of Directors and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Companyâs internal control systems are commensurate with the nature of its business and the size and complexity.

The detailed note on Risk Management and Internal Controls forms part of Management Discussion and Analysis Report.

CREDIT RATING

During the year, Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of âBWR AAAâ (Triple A) of your Company. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. During the year, CARE Ratings Limited (CARE) reaffirmed the long term rating of âAA â (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, Brickwork reaffirmed a rating of âBWR AAAâ (Triple A) and the Companyâs rating of âCARE AA â (Double A Plus) by CARE was reaffirmed.

Secured Redeemable Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AAAâ (Triple A) and the rating of âCARE AA â (Double A Plus) was reaffirmed by CARE.

Subordinated Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AAAâ (Triple A) and CARE reaffirmed the rating of âCARE AA â (Double A Plus).

Perpetual Non-Convertible Debentures (NCDs): During the year, Brickwork reaffirmed the rating of âBWR AA â (Double A Plus) and CARE reaffirmed the âCARE AAâ (Double A) rating.

Short-term borrowing program: During the year under review, CARE reaffirmed the âCARE A1 â (A One Plus) rating for the short term borrowing program. The rating is the highest rating issued by CARE for short-term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk. During the year under review, ICRA Limited (ICRA) assigned the rating of âA1 â (A One Plus) for the short term borrowing program. The rating is the highest rating issued by ICRA for shortterm debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI).

STATUTORY AUDITORS AND THEIR REPORT

The term of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E/ E300005 who were appointed as Statutory Auditors of your Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014 expired at conclusion of Twelfth Annual General Meeting held on July 05, 2017.

Accordingly, the members of the company at Twelfth Annual General Meeting of the Company held on July 05, 2017, appointed M/s. B S R & Co. LLP, Chartered Accountants bearing Firm Registration No. 101248W/ W-100022 as the Statutory Auditors of the Company for a term of five years from conclusion of Twelfth Annual General Meeting till conclusion of Seventeenth Annual General Meeting in accordance with the applicable provisions of the Companies Act, 2013 read with the Rules made thereunder and the Listing Regulations and applicable law. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is required to be ratified by members at every Annual General Meeting.

The Company has received the certificate(s) of eligibility in accordance with Section 139, Section 141 and other applicable provisions of the Companies Act, 2013 and rules made thereunder, from M/s. B S R & Co. LLP, Chartered Accountants.

Accordingly, the appointment of M/s. B S R & Co. LLP, as Statutory Auditor of the Company is placed for ratification by the shareholders.

The Statutory Auditorâs Report on financial statements for the financial year 2017-18 does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report for financial year 2017-18, has been appended as Annexure 5 to this Report.

The Secretarial Auditorâs Report does not contain any qualification, reservation or adverse remark.

The Board of the Directors at their Meeting held on May 04, 2018 have re-appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2018-19.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188

During and subsequent to the year under review, the contracts or arrangements with related parties have been on armâs length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 2 to this Directorsâ Report.

VIGIL MECHANISM

Your Company has established a âWhistle Blower Policy and Vigil Mechanismâ for Directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Companyâs code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013 READ WITH RULES

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with rules made thereunder, the Company did not receive any complaint of sexual harassment during the year under review.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

COMPOSITE SCHEME OF AMALGAMATION

During the year under review, the Board of Directors of the Company at its meeting held on January 13, 2018, has approved a composite scheme of amalgamation, in terms of Sections 230232 of Companies Act, 2013, of Capital First Limited, Capital First Home Finance Limited and Capital First Securities Limited (together the âAmalgamating Companiesâ) with IDFC Bank Limited (âAmalgamated Companyâ). The Competition Commission of India has, at its meeting held on March 07, 2018, considered the proposed combination and approved the same under subsection (1) of Section 31 of the Competition Act, 2002. The National Housing Bank, vide its letter dated February 16, 2018, has intimated their no objection to the aforesaid amalgamation subject to compliance with the applicable provisions of relevant Acts, Rules, Regulations, etc. in the matter. BSE Limited (âBSEâ) has, vide its letter dated March 14, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of BSE. National Stock Exchange of India Limited (âNSEâ) has, vide its letter dated March 26, 2018, given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of NSE. The said scheme remains subject to the receipt of approval from the Reserve Bank of India and other statutory and regulatory approvals, including the approvals of the relevant stock exchanges, Securities and Exchange Board of India, the National Company Law Tribunal, and the respective shareholders and creditors of the Amalgamating Companies and the Amalgamated Company.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE

The Competition Commission of India has, at its meeting held on March 07, 2018, considered the proposed amalgamation of Capital First Limited, Capital First Home Finance Limited and Capital First Securities Limited with IDFC Bank Limited (âAmalgamated Companyâ) and passed an order to approve the same under sub-section (1) of Section 31 of the Competition Act, 2002. Additionally, the National Housing Bank (vide its letter dated February 16, 2018) has intimated its no-objection to the aforesaid amalgamation subject to compliance with the applicable provisions of law in the matter. BSE Limited (âBSEâ) has (vide its letter dated March 14, 2018) given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of BSE. National Stock Exchange of India Limited (âNSEâ) has (vide its letter dated March 26, 2018) given its prior approval for the aforesaid amalgamation with respect to the Amalgamated Companyâs trading membership in the Currency Derivative Segment of NSE. Other approvals and formalities in respect of the aforesaid amalgamation are under process.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesnât own any manufacturing facility.

However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Note No. 36 to the Standalone Financial Statements as at March 31, 2018. The Members are requested to refer to the said Note for details in this regard.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME (ESOS) AND EMPLOYEES STOCK PURCHASE SCHEME (ESPS)

The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 4. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.

The Stock Options have been granted to the employees under various CFL - Employees Stock Option Schemes. The said schemes are in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 as amended from time to time (SEBI Regulations). The details and disclosures with respect to ESOS/ ESPS as required under SEBI Regulations are provided on the website of the Company and web link for the same is http://www.capitalfirst.com/investor/corporate-governance.

ACHIEVEMENTS

Your Company and Chairman & Managing Director won several award/ achieved rankings. Select few awards/ rankings are enumerated hereunder:

- Mr. Vaidyanathan received âEntrepreneur of The Year -Financial Services Industryâ in Asia Pacific Entrepreneur Award, 2017. He also received âDigitalist Awardâ in Mint SAP Award.

- Capital First received âOutstanding Contribution To Financial Inclusion Indiaâ in Capital Finance International Award - 2017.

- Capital First received âBest BFSI Brand Award 2018â recognition in The Economic Times Best BFSI Brand Awards 2018.

- Capital First received âFinancial Services Company of the Year 2018â in VC Circle Awards 2018.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, investors, rating agencies, debenture trustees, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organizationâs growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Place: Mumbai Chairman & Managing Director

Date: May 04, 2018 DIN: 00082596

Mar 31, 2017

Dear Members,

The Directors have pleasure in presenting the Twelfth Annual Report of your Company with the audited financial statements for the financial year ended March 31, 2017.

FINANCIAL HIGHLIGHTS

The highlights of the Consolidated and Standalone Financial Statements of the Company for the financial years 2016-17 and 2015-16 are as under:

(Rs, in Millions)

Particulars	Consolidated		Standalone
	2016-17	2015-16	2016-17	2015-16
Total Income	28,008.64	18,887.96	27,268.55	18,478.41
Total Expenditure	24,433.80	16,364.41	23,945.70	16,092.27
Profit Before Tax and exceptional items	3,574.84	2,523.55	3,322.85	2,386.14
Provision For Tax	1,174.30	847.98	1,154.23	817.03
Profit after tax from continuing operations	2,400.54	1,675.57	2,168.62	1,569.11
Profit/(Loss) after tax from Discontinuing operations	-11.33	-13.72	_-	_
Profit for the year	2,389.21	1,661.85	2,168.62	1,569.11
Profit/(Loss) brought forward from previous Year	2,383.66	1,468.60	2,569.14	1,734.34
Profit available for appropriation	4,772.87	3,130.45	4,737.76	3,303.45
Appropriations: Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934	433.72	313.82	433.72	313.82
Transfer to statutory reserve under Section 29C of the National Housing Bank Act, 1987	12.88	12.48
Proposed Dividend #	-	218.99	-	218.99
Dividend Tax thereon #	-	44.58	-	44.58
Transfer to General Reserve	_-	156.91	_-	156.91
Balance carried forward to Balance Sheet	4,326.27	2,383.67	4,304.04	2,569.15

# The proposed equity dividend and dividend distribution tax are not accounted as liabilities in fiscal 2017 in accordance with revised AS-4 âContingencies and events occurring after the Balance Sheet dateâ.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs, 160.41 billion to Rs, 198.24 billion, a growth of 24%. The Retail Assets under Management has grown from Rs, 137.56 billion to Rs, 183.53 billion, a growth of 33%.

The Consolidated Net worth of the Company increased from Rs, 17.04 billion to Rs, 23.04 billion as at March 31, 2017.

Consolidated Net Interest Income increased by 59% from Rs, 8,181 million during the financial year ending March 31, 2016 to Rs, 13,008 million during the financial year ending March 31, 2017.

The profit after tax was up by 44% from Rs, 1,661 million to Rs, 2,389 million.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs, 2.60/- (Rupees Two and sixty paise only) per share i.e. 26% on each Equity Share having face value of Rs, 10/- (Rupees Ten only) each.

DIVIDEND DISTRIBUTION POLICY

In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy. The Policy is hosted on the website of the Company and can be viewed at http://www.capitalfirst.com/ investor/corporate-governance

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 20.34% as on March 31, 2017, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India (âRBI'').

SHARE CAPITAL

During the year under review, the Company raised funds through issue and allotment of 47,80,000 Equity Shares of Rs, 10/- each on a preferential basis, pursuant to receipt of subscription amount of Rs, 3,40,67,06,000/- (Rupees Three Hundred and Forty Crores Sixty Seven Lakhs and Six Thousand only) issued at a price of Rs, 712.70/per Equity Share (face value of Rs, 10/- each and premium of Rs, 702.70/- per share) to Caladium Investment Pte. Ltd., which is indirectly wholly-owned by GIC (Ventures) Pte. Ltd., a Singapore''s Sovereign Wealth Fund.

During the year under review, the Company had also issued and allotted 14,04,325 equity shares to the eligible employees of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date stands at Rs, 97,42,20,690/- comprising of 9,74,22,069 equity shares of Rs, 10/- each.

PUBLIC DEPOSITS

RBI GUIDELINES

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) and Circular/ Notifications/Directions issued by RBI from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Listing Regulations forms part of the Annual Report.

BUSINESS RESPONSIBILITY REPORT

Since Capital First Ltd. is one of the top 500 listed companies by way of market capitalization as on March 31, 2016, the Company has presented its maiden BRR for the financial year 2016-17, which is part of this Annual Report. As a green initiative, the

Company''s BRR will be available on its website at the web link http://www.capitalfirst.com/investor/corporate-governance. Any shareholder interested in obtaining a physical copy of the same may write to the Company Secretary of the Company.

CHANGE OF REGISTERED OFFICE

During the year under review, the Company shifted its registered office from 15^th Floor, Tower-2, India bulls Finance Centre, Seagate Bapat Marg, Elphinstone (West), Mumbai - 400 013 to One Indiabulls Centre, Tower 2A & 2B, 10^th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013 with effect from November 21, 2016.

DIRECTORS & KEY MANAGERIAL PERSONNEL

a. Appointment

During the year under review, the Board of Directors at its Meeting held on April 04, 2016 appointed Mr. Apul Nayyar (DIN 01738973) and Mr. Nihal Desai (DIN 03288923) as Additional Directors who shall act as Whole Time Directors and Key Managerial Personnel of the Company as per provisions of Companies Act, 2013 and applicable law and both were designated as âExecutive Director'' for a period of two years effective from April 04, 2016. The aforesaid appointment of Mr. Apul Nayyar and Mr. Nihal Desai was approved by the members in their 11^th Annual General Meeting of the Company held on July 05, 2016.

b. Re-appointment

During the year under review, the term of Mr. N. C. Singhal (DIN 00004916), Mr. M. S. Sundara Rajan (DIN 00169775) and Mr. Hemang Raja (DIN 00040769), Non-Executive Independent Directors of the Company who were appointed for a term of three years with effect from April 01, 2014 expired on March 31, 2017. The Board of Directors at their Meeting held on March 29, 2017 on recommendation of Nomination & Remuneration Committee had reappointed Mr. N. C. Singhal, Mr. M. S. Sundara Rajan and Mr. Hemang Raja as Non-Executive Independent Directors of the Company for a term of five years with effect from April 01, 2017 to hold office up to March 31, 2022 and they shall not be liable to retire by rotation. The aforesaid re-appointment of Independent Directors is subject to the approval of members in the 12^th Annual General Meeting of the Company.

c. Retire by Rotation

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non-Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. The Board recommends his re-appointment.

BOARDâS INDEPENDENCE

Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Section 149(6) of the Companies Act, 2013 and the requirements of Listing Regulations :-

1. Mr. N. C. Singhal (DIN 00004916)

2. Mr. M. S. Sundara Rajan (DIN 00169775)

3. Mr. Hemang Raja (DIN 00040769)

4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)

5. Mr. Dinesh Kanabar (DIN 00003252)

NUMBER OF MEETINGS OF THE BOARD

The Board met 7 times during the financial year 2016-17 viz., on April 04, 2016, May 13, 2016, August 03, 2016, November 09, 2016, November 11, 2016, January 31, 2017 and March 29, 2017. The maximum interval between any two meetings did not exceed 120 days.

COMMITTEES OF THE BOARD

In accordance with the Companies Act, 2013 and Listing Regulations, the Company has following Committees in place:

- Audit Committee

- Stakeholders Relationship Committee

- Corporate Social Responsibility Committee

- Nomination and Remuneration Committee

Details of the said Committees along with their charters, composition and meetings held during the financial year, are provided in the âReport on Corporate Governanceâ, as a part of this Annual Report.

COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT, REMUNERATION AND EVALUATION

Pursuant to the provisions of the Companies Act, 2013 (âthe Actâ), Listing Regulations and requirements of the Reserve Bank of India, Policy on Nomination and Remuneration of Directors,

Key Managerial Personnel, Senior Management and other employees had been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Regulations.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

- Expertise;

- Objectivity and Independence;

- Guidance and support in context of life stage of the Company;

- Understanding of the Company''s business;

- Understanding and commitment to duties and responsibilities;

- Willingness to devote the time needed for effective contribution to Company;

- Participation in discussions in effective and constructive manner;

- Responsiveness in approach;

- Ability to encourage and motivate the Management for continued performance and success.

The evaluation involves Self-Evaluation by the Board Member and subsequent assessment by the Board of Directors. A member of the Board will not participate in the discussion of his/her evaluation.

DIRECTORSâ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134(5) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby stated that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company had carried out its CSR activities/ programs on the recommendation of the CSR Committee and duly approved by the Board and in accordance with the policy on CSR as per the identified core areas.

RISK MANAGEMENT POLICY AND INTERNAL CONTROL

The Company has adopted a Risk Management Policy duly approved by the Board and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity.

The detailed note on Risk Management and Internal Controls forms part of Management Discussion and Analysis Report.

CREDIT RATING

During the year, Brickwork Ratings India Private Limited (Brickwork) upgraded the long term rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) of your Company. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry very lowest credit risk. During the year, Credit Analysis & Research Limited (CARE) reaffirmed the long term rating of âAA â (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, Brickwork assigned a rating of âBWR AAAâ (Triple A) and the Company''s rating of âCARE AA â (Double A Plus) by CARE was reaffirmed.

Secured Redeemable Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) and the rating of âCARE AA â (Double A Plus) was reaffirmed by CARE.

Subordinated Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AAAâ (Triple A) from âBWR AA â (Double A Plus) and CARE reaffirmed the rating of âCARE AA â (Double A Plus).

Perpetual Non-Convertible Debentures (NCDs): During the year, Brickwork upgraded the rating to âBWR AA â (Double A Plus) from âBWR AAâ (Double A) and CARE reaffirmed the âCARE AAâ (Double A) rating.

Short-term borrowing program: During the year under review, CARE reaffirmed the âA1 â (A One Plus) rating for the short term borrowing program. The rating is the highest rating issued by CARE for short-term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS AND THEIR REPORT

The term of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E/E300005 who was appointed as Statutory Auditors of your Company at the Ninth

Annual General Meeting (AGM) held on June 18, 2014 expires at conclusion of Twelfth Annual General Meeting.

Accordingly, the Board of Directors of the Company at its Meeting held on November 09, 2016, on the recommendation of the Audit Committee have appointed M/s. B S R & Co. LLP, Chartered Accountants bearing Firm Registration No. 101248W/W-100022 as the Statutory Auditors of the Company for a term of five years from conclusion of Twelfth Annual General Meeting till conclusion of Seventeenth Annual General Meeting subject to the approval of shareholders at the Twelfth Annual General Meeting in accordance with the applicable provisions of the Companies Act, 2013 read with the Rules issued there under and the Listing Regulations and applicable law.

The Company has received the certificate(s) of eligibility in accordance with Section 139, Section 141 and other applicable provisions of the Companies Act, 2013 and Rules there under, from M/s. B S R & Co. LLP, Chartered Accountants.

The Statutory Auditor''s Report on financial statements for the financial year 2016-17 does not contain any qualification, reservation or adverse remark.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188

During and subsequent to the year under review, the contracts or arrangements with related parties have been on arm''s length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013 are not required to be disclosed as they are not applicable.

AUCTIONED DETAILS

The disclosures as required by Circular No. DNBS.CC.PD.No. 356/03.10.01/2013-14 dated September 16, 2013 issued by RBI, regarding reporting of the Gold Auctioned during the financial year 2016-17 are provided at Note No. 38 of Notes to the Standalone Financial Statements.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure 2 to this Directors'' Report.

SECRETARIAL AUDITORS AND THEIR REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made there under, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2016-17. The Secretarial Audit Report for financial year 201617, has been appended as Annexure 5 to this Report.

The Secretarial Auditor''s Report does not contain any qualification, reservation or adverse remark.

The Board of the Directors at their Meeting held on May 10, 2017 have reappointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2017-18.

VIGIL MECHANISM

Your Company has established a âWhistle Blower Policy and Vigil Mechanism'' for Directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Company''s code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT

2013 READ WITH RULES

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 read with Rules there under, the Company did not receive any complaint of sexual harassment during the year under review.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE

There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company''s operations in future.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/ OUTFLOW, ETC.

However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Note No. 35 to the Standalone Financial Statements as at March 31, 2017. The Members are requested to refer to the said Note for details in this regard.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME (ESOS) AND EMPLOYEES STOCK PURCHASE SCHEME (ESPS)

The Stock Options have been granted to the employees under various CFL - Employees Stock Option Schemes. The said schemes are in compliance with the SEBI (Share Based Employee Benefits) regulations, 2014 as amended from time to time (SEBI Regulations). The details and disclosures with respect to ESOS /ESPS as required under SEBI Regulations are provided on the website of the Company and web link for the same is http:// www.capitalfirst.com/investor/corporate-governance.

Subsequent to the year under review, Board of Directors of the Company at its Meeting held on May 10, 2017, on the recommendation of Nomination and Remuneration Committee approved the âCFL Stock Option Scheme - 2017'' subject to the approval of Members of the Company.

ACHIEVEMENTS

Your Company and Chairman & Managing Director won several award/achieved rankings. Select few awards/rankings are enumerated hereunder:

- Mr. Vaidyanathan received âOutstanding Entrepreneur Award'' in Asia Pacific Entrepreneurship Award 2016.

- Capital First featured in Dun & Bradstreet: India''s Top 500 companies wherein achieved Rank of 381 in total income & Rank 20 in NBFC space.

- Capital First debuted in Fortune India''s Next 500 companies whereby achieved Rank 70 in overall category & Rank 2 in NBFC space.

- Capital First received âBest Electronic Banking Implementation'' recognition in Asset Triple A Treasury, Trade and Risk Management Awards.

- Capital First debuted in the Most Valuable Companies 2016 by Business Today whereby Company was ranked at 274^th place.

- Capital First debuted in India''s future ready companies by ET 500 whereby Company ranked at 466^th place

- Mr. Vaidyanathan received âMost Promising Leaders in Asia Award'' in Economic Time''s Asian Business Leaders Conclave.

- Capital First featured amongst âIndia''s Most Trusted Financial Brands'' by World Consulting & Research Corporation Media Initiative (WCRC).

- Capital First received âAsia Innovator of the Year'' Award by CNBC in India Business Leader Awards from Hon. Finance Minister Shri. Arun Jaitley.

ACKNOWLEDGEMENT

We wish to thank our bankers, investors, rating agencies, debenture trustees, customers and all other business associates for their support and trust reposed in us.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Place : Mumbai Chairman & Managing Director

Date : May 10, 2017 DIN: 00082596

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Tenth Annual Report of your Company with the audited financial statement for the financial year ended March 31, 2015.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial statement of the Company for the financial years 2014-15 and 2013-14 are as under:

(Rs. in Million) Particulars Consolidated Standalone 2014-15 2013-14 2014-15 2013-14

Total Income 14,418.58 10,625.14 14,259.32 10,797.12

Total Expenditure 12,791.40 9,977.63 12,646.13 10,043.79

Profit Before Tax and exceptional items 1,627.18 647.51 1,613.19 753.33

Exceptional income/ (expense) - - - (344.48)

Provision For Tax 510.59 58.00 492.99 39.02

Profit after tax from continuing operations 1,116.59 589.51 1,120.20 369.83

Profit/(Loss) after tax from Discontinuing operations 26.22 (63.23) - -

Profit for the year 1,142.81 526.28 1,120.20 369.83

Profit/(Loss)brought forward from previous Year 931.95 676.22 1,216.26 1,113.55

Less: Accelerated Depreciation as per the Companies Act, 2013 6.71 - 6.71 -

Less: Loss in recovery of advances granted to Employee Welfare Trusts 18.36 - 18.36 -

Profit available for appropriation 2,049.69 1,202.50 2,311.39 1,483.38

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 224.04 73.96 224.04 73.97

Transfer to statutory reserve under section 29C of the National Housing Bank Act, 1987 4.03 3.44 - -

Proposed Dividend 200.24 165.41 200.24 165.41

Dividend Tax thereon 40.76 - 40.76 -

Transfer to General Reserve 112.02 27.74 112.02 27.74

Balance carried forward to Balance Sheet 1,468.60 931.95 1,734.34 1,216.26

The Company is focused on providing loans to Retail, MSME, Consumer and Wholesale credit, which is expected to drive growth for the Company going forward.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 96.79 billion to Rs. 119.75 billion, a growth of 24%. The Retail Assets under Management has grown from Rs. 78.83 billion to Rs. 101.17 billion, a growth of 28%. Wholesale Book increased only by 4% from Rs. 17.96 billion to Rs. 18.62 billion.

The Net worth of the Company increased from Rs. 11.71 billion to Rs. 15.74 billion as at March 31, 2015.

Consolidated Net Interest Income increased by 58% from Rs. 3393 million during the financial year ending March 31, 2014 to Rs. 5363 million during the financial year ending March 31, 2015.

The profit after tax was up by 117% from 526.28 million to Rs. 1,142.81 million.

The Company proposes to transfer an amount of Rs. 112.02 million to the General Reserves.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 2.20 (Rupees Two and paise Twenty only) per share i.e. 22% on each Equity Share having face value of Rs. 10/- (Rupees Ten only). The total outgo for the current year amounts to Rs. 200.24 million as against Rs. 165.41 million in the previous year.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 23.44% as on March 31, 2015, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges and Circular/Notifications/ Directions issued by Reserve Bank of India from time to time, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. Makarand M Joshi & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

During the year under review, the Company raised funds through issue and allotment of 76,92,300 Equity Shares at a price of Rs. 390/- per Equity Share (including a premium of Rs. 380/- per Equity Share), aggregating to Rs. 2,99,99,97,000/- to Qualified Institutional Buyers through Qualified Institutions Placement mode pursuant to Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended and section 42 of the Companies Act, 2013 and the rules made thereunder.

During the year under review, the Company had issued and allotted 6,58,500 equity shares and subsequent to the year under review, 27,050 equity shares were also allotted to the eligible employees of the Company under various Employee Stock Option Schemes of the Company. The paid up equity share capital of the Company as on date of this report stands at Rs. 91,00,93,190/- comprising of 9,10,09,319 equity shares of Rs. 10/- each.

In order to meet its growth objectives and to strengthen its financial position, it is required to generate long term resources by issuing securities. It is, therefore, deemed appropriate to reclassify the Authorised Share Capital of the Company from Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen Crore) comprising of 10,30,00,000 (Ten Crore Thirty Lac) Equity Shares of Rs. 10/- (Rupees Ten) each and 1,00,00,000 (One Crore) Compulsorily Convertible Preference Shares of Rs. 10/- (Rupees Ten) each to Rs. 113,00,00,000/- (Rupees One Hundred and Thirteen Crore) comprising of 11,30,00,000 (Eleven Crore Thirty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten) subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

SUBSIDIARIES

During the year under review, the Board of Directors of Capital First Investment Advisory Limited (''CFIAL) and Capital First Home Finance Private Limited (''CFHFPL''), both being wholly owned subsidiary Companies of the Company had approved the Scheme of Amalgamation pursuant to which a petition has been filed with Hon''ble Bombay High Court for merger of CFIAL into CFHFPL.

During the year under review, Anchor Investment & Trading Private Limited which had been involved in investment management and advisory activity, has initiated the process of winding up. As this business was discontinued by the Company in 2010-11.

PUBLIC DEPOSITS

The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

As a Systemically Important Non Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI laws and regulations and employs its best efforts towards achieving the same.

NUMBER OF MEETINGS OF THE BOARD

The Board met 8 times in financial year 2014-15 viz., on April 02, 2014, May 08, 2014, August 05, 2014, September 24, 2014, November 07, 2014, December 22, 2014, January 06, 2015 and February 10, 2015. The maximum interval between any two meetings did not exceed 120 days.

COMMITTEES OF THE BOARD

During the year, in accordance with the Companies Act, 2013 and Clause 49 of Listing Agreement, the Board re-constituted some of its Committees and also formed a Corporate Social Responsibility Committee. The Committees are as follows:

- Audit Committee

- Nomination and Remuneration Committee

- Stakeholders'' Relationship Committee

- Corporate Social Responsibility Committee

Details of the said Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report.

GOLD AUCTIONED

The disclosures as required by circular no. DNBS.CC.PD.No.356 /03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of India, regarding reporting of the Gold Auctioned during the financial year 2014-15 are provided at Note No. 43 of Notes to the Standalone Financial Statements.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus") rating for the short term borrowing program. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk. During the year under review, the rating of short term borrowing programme was enhanced by Rs. 3,000 million i.e. from Rs. 9,000 million to Rs. 12,000 million.

During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of "AA " (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, the Company''s rating of "CARE AA " ("Double A Plus") by CARE in respect of the bank loan facilities of the Company, was enhanced from Rs. 81,450 million to Rs. 82,450 million.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE reaffirmed the Company''s rating of "CARE AA " ("Double A Plus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 13,000 million (enhanced from Rs.10,500 million). The rating of "BWR AA " ("BWR Double A Plus") for an aggregate amount of Rs. 12,500 million (enhanced from Rs.10,000 million) was also reaffirmed by Brickwork.

Subordinated Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the rating of "CARE AA " ("Double A Plus") rating for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million. Brickwork also reaffirmed the rating to "BWR AA " ("BWR Double A Plus") for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million.

Perpetual Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the "CARE AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million). Brickwork also reaffirmed the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million).

DIRECTORS & KEY MANAGERIAL PERSONNEL

a. Cessation

During the year under review, Mr. Anil Singhvi (DIN 00239589) resigned from the post of Non Executive Independent Directorship and Committees in which he was serving as Chairman/Committee Member with effect from December 22, 2014. The Board placed on its records its appreciation for the valuable contribution provided by Mr. Anil Singhvi.

b. Retire by Rotation

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia (DIN 01035771), being Non- Executive Director, retires by rotation and being eligible offers himself for re- appointment at the ensuing Annual General Meeting. The Board recommends his appointment.

c. Reappointment of Mr. V. Vaidyanathan (DIN 00082596) as Chairman & Managing Director and revision in remuneration

The term of Mr. V. Vaidyanathan (DIN 00082596), Chairman & Managing Director of the Company who was appointed for a term of five years with effect from August 10, 2010, expires on August 09, 2015. It is therefore proposed to reappoint Mr. V. Vaidyanathan (DIN 00082596) for a period of five years with effect from August 10, 2015 and revise remuneration terms as approved by the Board.

d. Appointment of Independent Directors

With coming into force of the provisions of Companies Act, 2013, the Board had appointed the existing Directors viz. Mr. N.C. Singhal (DIN 00004916), Mr. Hemang Raja (DIN 00040769) and Mr. M. S. Sundara Rajan (DIN 00169775) as Independent Directors of the Company for a consecutive term of three years up to March 31, 2017 as per Section 149 of the Companies Act, 2013 read with its Rules. The shareholders of the Company at their Annual General Meeting held on June 18, 2014 had approved aforesaid appointment.

During the year under review, Dr (Mrs.) Brinda Jagirdar (DIN 06979864) and Mr. Dinesh Kanabar (DIN 00003252) had been appointed as Additional Non Executive Independent Directors and Mr. Narendra Ostawal (DIN 06530414) as Additional Non Executive Director of the Company who shall hold office upto the date of ensuing Annual General Meeting of the Company. The Company has received notices in writing under Section 160 of the Companies Act, 2013 from members proposing appointment as Directors. The Board recommends their appointment.

The details of the aforesaid Directors forms part of this Report as Annexure I.

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 164(2) of Companies Act, 2013.

e. Key Managerial Personnel

During the year under review, Mr. V. Vaidyanathan - Chairman & Managing Director (DIN 00082596); Mr. Pankaj Sanklecha - Chief Financial Officer & Head Corporate Centre; and Mr. Satish Gaikwad - Head - Legal, Compliance & Company Secretary were designated as the Key Managerial Personnel of the Company pursuant to the requirements of the applicable provisions of Companies Act, 2013 read with its Rules, by the Board of Directors and their terms and conditions of the appointment and remuneration was considered by the Board.

BOARD''S INDEPENDENCE

Our definition of ''Independence'' of Directors is derived from Clause 49 of the Listing Agreement with Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non- Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013 :-

1. Mr. N.C. Singhal (DIN 00004916)

2. Mr. Hemang Raja (DIN 00040769)

3. Mr. M.S. Sundara Rajan (DIN 00169775)

4. Dr. (Mrs.) Brinda Jagirdar (DIN 06979864)

5. Mr. Dinesh Kanabar (DIN 00003252)

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134 (5) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby stated that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the Directors have selected such accounting policies and applied them consistently and made judgments 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 and loss of the company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION & EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Policy on Nomination and Remuneration of Directors, Key Managerial Personnel, Senior Management and other employees has been formulated including criteria for determining qualifications, positive attributes, Independence of a Director and other matters as required under the said Act and Listing Agreement.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

- Expertise;

- Objectivity and Independence;

- Guidance and support in context of life stage of the Company;

- Understanding of the Company''s business;

- Understanding and commitment to duties and responsibilities;

- Willingness to devote the time needed for effective contribution to Company;

- Participation in discussions in effective and constructive manner;

- Responsiveness in approach;

- Ability to encourage and motivate the Management for continued performance and success;

The evaluation involves Self-Evaluation by the Board Member and subsequently assessment by the Board of Directors. A member of the Board will not participate in the discussion of his / her evaluation.

Accordingly a process of evaluation was followed by the Board for if own performance and that of its Committees and individual Directors and also the necessary evaluation was carried out by Nomination and Remuneration Committee and Independent Director at their respective meetings held for the purpose.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report which have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188

During and subsequent to the year under review, the contracts or arrangements with related parties have been on arms length and in ordinary course of business and they were not material in nature. Accordingly, the particulars of the transactions as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2014 are not required to be disclosed as they are not applicable.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 2 to this Director''s Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year under review the Board of Directors at its meeting held on May 08, 2014 had constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein. The Company pursuant to the recommendation of the CSR Committee had adopted a detailed policy on Corporate Social Responsibility and also discussed and identified the core areas in which the CSR activities was proposed to be carried out in the CSR Committee Meetings from time to time.

The details of contents of CSR Policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure 3 to this Report.

STATUTORY AUDITORS & THEIR REPORT

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, having ICAI Firm Registration No. 301003E were appointed as Statutory Auditors of your Company at the Ninth Annual General Meeting (AGM) held on June 18, 2014 from the conclusion of the said AGM till conclusion of Twelfth Annual General Meeting. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Statutory Auditors is required to be ratified by members at every Annual General Meeting. Accordingly, the appointment of M/s. S. R. Batliboi & Co. LLP, as Statutory Auditor of the Company is placed for ratification by the shareholders.

The Auditor''s Report does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITORS & THEIR REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made thereunder, the Company had appointed M/s. Makarand M Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for financial year 2014-15, has been appended as Annexure 6 to this Report.

The Auditor''s Report does not contain any qualification, reservation or adverse remark.

The Board of the Directors at their Meeting held on May 13, 2015 have reappointed M/s. Makarand M Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2015-16.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

The details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 5. The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 may be obtained by the members by writing to the Company Secretary of your Company.

During the year under review, Board of Directors of the Company on the recommendation of Nomination & Remuneration Committee at its Meeting held on April 02, 2014 and shareholders at Annual General Meeting held on June 18, 2014 approved the ''CMD Stock Option Scheme - 2014''.

Also, during the year under review, the Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes. During the year under review, the Company had also issued and allotted 6,58,500 equity shares and subsequent to the year under review also, 27,050 equity shares were allotted to the eligible employees of the Company under various Employee Stock Option Schemes of the Company.

The details with respect to the Employee Stock Option Schemes/ Employee Stock Purchase Scheme are annexed and forms part of this Report as Annexure 4.

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are not applicable to the Company since it doesn''t own any manufacturing facility.

However, the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgoing Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2015. The Members are requested to refer to the said Note for details in this regard.

VIGIL MECHANISM

Your Company has established a ''Whistle Blower Policy and Vigil Mechanism'' for directors and employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Company''s code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee. The said policy has been uploaded on the website of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

RISK MANAGEMENT POLICY AND INTERNAL CONTROL

The Company has adopted a Risk Management Policy duly approved by the Board and also has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT 2013 READ WITH RULES

Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013 read with Rules thereunder, the Company has not received any complaint of sexual harassment during the year under review.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, investors, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organization''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan Chairman & Managing Director DIN:00082596

Place : Mumbai Date : May 13, 2015

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Ninth Annual Report of your Company with the audited statement of accounts for the year ended March 31, 2014.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial results of the Company for the financial years 2013-14 and 2012-13 are as under:

(Rs. in Million)

Particulars Consolidated Standalone

2013-14 2012-13 2013-14 2012-13

Total Income 10,625.14 8,086.36 10,797.12 8,000.54

Total Expenditure 9,977.63 7,502.65 10,043.79 7,459.31

Profit Before Tax and exceptional items 647.51 583.71 753.33 541.23

Exceptional income/ (expense) - 213.10 (344.48) 243.21

Provision For Tax 58.00 99.071 39.02 86.70

Profit after tax from continuing operations 589.51 697.74 369.83 697.74

Profit/(Loss) after tax from discontinuing operations (63.23) (66.64) - -

Profit/(Loss) brought forward from previous year 676.22 353.83 1,113.55 757.26

Add: Loss of subsidiary excluded on sale - 32.74 - -

Profit available for appropriation 1,202.50 1,017.67 1,483.38 1,455.00

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 73.96 139.55 73.97 139.55

Transfer to statutory reserve under Section 29Cof the National Housing Bank Act, 1987 3.44 - - -

Proposed Dividend 165.41 127.84 165.41 127.84

Dividend Tax thereon - 21.73 - 21.73

Transfer to General Reserve 27.74 52.33 27.74 52.33

Balance carried forward to Balance Sheet 931.95 676.22 1,216.26 1,113.55

The Company is focused on providing a number of financial services to Retail, MSME, Consumer and Wholesale credit, which is expected to drive growth for the Company goingforward.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 75.10 billion to Rs. 96.79 billion, a growth of 29%. The Retail Assets under Management has grown from Rs. 55.60 billion to Rs. 78.83 billion, a growth of 42%. As part of the plan to change the mix of assets, the Wholesale Book reduced by 8% from Rs. 19.50 billion toRs. 17.96 billion.

The Net worth of the Company increased from Rs. 9,607 million to Rs. 11,710 million as at March 31, 2014.

Consolidated Net Interest Income increased by 34% from Rs. 2,499 million during the financial year ending March 31, 2013 to Rs. 3,361 million during the financial year ending March 31, 2014.

The Profit Before Tax, before exceptional items, increased from Rs. 519 million during the financial year ending March 31, 2013 to Rs. 590 million during the financial year ending March 31, 2014. The profit after tax was down by 17% from Rs. 631 million to Rs. 526 million. This is essentially on account of an exceptional and one time item of Rs. 213 million reported in previous year for sale of subsidiaries.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 2/- (Rupees Two only) per share i.e. 20% on each Equity Share of Rs. 10/- (Rupees Ten only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members/ Beneficial Holders list on the Book Closure/Record date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of this Directors'' Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. Chetan Gandhi & Associates, Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

Duringtheyear under review, the Board of Directors of the Company with the approval of the shareholders, allotted 32,50,000 Equity Shares to HDFCStandard Life Insurance Company Limited ("HDFC Life") & 83,57,145 Equity Shares to Cloverdell Investment Ltd ("Cloverdell") on March 28, 2014, for an aggregate consideration of Rs. 1785.18 million at a price of Rs. 153.80 per Equity Share (face value of Rs. 10/- each and premium of Rs. 143.80 per share), in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 ("ICDR Regulations"). The Subscription Amount (invested in the form of Equity Shares) entitles HDFC Life & Cloverdell to not more than an aggregate of 3.87% & 70.48% of total paid up capital of the Company, respectively, of the enhanced equity share capital of the Company. The total shareholding of Promoter Group i.e Cloverdell and Dayside Investment Ltd. in the Company remains unchanged at 71.99% post Preferential Allotment of Equity shares.

Subsequent to the year under review, 74,500 equity shares were allotted to eligible employees of the Company under various Employee Stock Option Schemes of the Company.

SUBSIDIARIES

During the year under review, Capital First Home Finance Private Limited, a Wholly Owned Subsidiary of the Company has received the Certificate of Registration from National Housing Bank to commence business of housing finance institution without accepting public deposits.

During the year under review, the Board of Directors of Subsidiary Companies namely Capital First Securities Limited (CFSL) and Capital First Commodities Limited (CFCL) had decided to close down the security & commodity broking operations, respectively and also approved the surrender of the licenses availed for conducting the broking businesses of both the subsidiaries except for National Spot Exchange Limited.

In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs (MCA), dated 8th and 21st February 2011, respectively, copies of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under ''Details of Subsidiaries'', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

PUBLIC DEPOSITS

The Company being a Non-Deposit Accepting Non-Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

As a Systemically Important Non Deposit taking Non-Banking Finance Company, your Company always aims to operate in compliance with applicable RBI laws and regulations and employs its best efforts towards achieving the same.

GOLD AUCTIONED

The disclosures as required by circular no. DNBS.CCPD.No.356/ 03.10.01/2013-14 dated September 16, 2013 issued by Reserve Bank of India, regarding reporting of the Gold Auctioned during the financial year 2013-14 are provided at Note No. 44 to Notes to the Standalone Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Subsequent to the year under review the Board of Directors at its meeting held on May 08, 2014 has constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of Companies Act, 2013 read with rules formulated therein.

The Company is in process of formulating a detailed policy on Corporate Social Responsibility.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 22.16% as on March 31, 2014, which is significantly above the threshold limit of 15% as prescribed by the RBI.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") reaffirmed the "A1 " ("A One Plus") rating for the short term borrowing program for an amount of Rs. 9,000 million. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

During the year, Credit Analysis & Research Ltd. (CARE) and Brickwork Ratings India Private Limited (Brickwork) reaffirmed the long term rating of "AA " (Double A Plus) of your Company. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year, the Company''s rating of "CARE AA " ("Double A Plus") by CARE in respect of the long-term bank loan facilities, having tenure of more than one year of the Company, was enhanced fromRs. 45,000 million toRs. 81,450 million.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE reaffirmed the Company''s rating of "CARE AA " ("Double A Plus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 10,500 million. The rating of "BWR AA " ("BWR Double A Plus") for Secured Redeemable NCDs was also reaffirmed by Brickwork.

Subordinated Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the rating of "CARE AA " ("Double A Plus") ratingforthe Unsecured Subordinated Debt program of the Company for an aggregate amount ofRs. 2,000 million. Brickwork also reaffirmed the rating to "BWR AA " ("BWR Double A Plus") for the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million.

Perpetual Non-Convertible Debentures (NCDs): During the year CARE reaffirmed the "CAREAA" ("Double A") ratingtothe Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million. Brickwork also reaffirmed the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million.

DIRECTORS

In accordance with Section 152 and other applicable provisions of Companies Act, 2013, Mr. Vishal Mahadevia, being Non- Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting. Also, as per the provisions of Companies Act, 2013, it is proposed to appoint Mr. Anil Singhvi, Mr. N.C. Singhal, Mr. Hemang Raja and Mr. M.S. Sundara Rajan as Independent Directors of the Company for a consecutive term of three years up to March 31, 2017.

Brief resumes of Directors, nature of their expertise in specific functional areas and names of companies in which they hold Directorship and/or Membership/Chairmanship of Committees of the Board (excluding Private Limited Company, Non Profit making Companies and Foreign Companies) are annexed and forms part of this Report {Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(l)(g) of the Companies Act, 1956 and Section 164(2) of Companies Act, 2013.

DIRECTORS''RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments 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 of the Company for that period.

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 financial year ended March 31, 2014, on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Sections 139 and 141 of the Companies Act, 2013, the Company has obtained a written consent and relevant certification from the Auditors proposed to be re-appointed.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, the name and other particulars of certain employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219(l)(b)(iv) of the said Act, the Directors'' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

Subsequent to the year under review, Board of Directors of the Company on the recommendation of Compensation & Nomination Committee at its Meeting held on April 02, 2014, approved the ''CMD Stock Option Scheme - 2014''.

Also, during the year under review, Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes. Subsequent to the year under review, the Company has allotted 74,500 equity shares to eligible employees under aforesaid Schemes.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report {Annexure 2).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company''s activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2014. The Members are requested to refer to the said Note for details in this regard.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Chairman

Place : Mumbai

Date : May 08, 2014

Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the Eighth Annual Report of your Company with the audited statement of accounts for the year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial results of the Company for the financial years 2012-13 and 2011-12 are as under:

(Rs. in Million)

Particulars Consolidated Standalone 2012-13 2011-12 2012-13 2011-12

Total Income 8,196.19 7,437.45 8,000.54 7,027.62

Total Expenditure 7,677.11 5,921.51 7,459.31 5,676.50

Profit Before Tax and exceptional items 519.08 1,515.94 541.23 1,351.12

Exceptional income/ (expense) 213.10 - 243.21 -

Provision For Tax 101.08 457.63 86.70 429.19

Profit After Tax 631.10 1,058.31 697.74 921.93

Profit/(Loss) brought forward from previous year 353.83 (359.07) 757.26 178.78

Add: Loss of subsidiary excluded on sale 32.75 - - -

Profit available for appropriation 1,017.68 699.24 1,455.00 1,100.71

Appropriations:

Transfer to Reserve Fund under Section 45- IC of the RBI Act, 1934 139.55 186.34 139.55 184.39

Proposed Dividend 127.84 97.20 127.84 97.20

Dividend Tax thereon 21.73 15.77 21.73 15.77

Transfer to General Reserve 52.33 46.10 52.33 46.09

Balance carried forward to Balance Sheet 676.23 353.83 1,113.55 757.26

The Company is focused on providing a number of retail financial services to Retail, MSME, Consumer and wholesale credit, which is expected to drive growth for the Company going forward. Towards this end, the Company has launched a number of retail businesses recently.

During the year under review, the Company has successfully grown its outstanding Loan Assets under Management from Rs. 61.86 billion to Rs. 75.09 billion, a growth of 21%. The Retail Assets under Management has grown from Rs. 34.60 billion to Rs. 55.60 billion, a growth of 61%. As part of the plan to change the mix of assets, the Wholesale Book reduced by 28% from Rs. 27.25 billion to Rs. 19.50 billion.

The Net worth of the Company increased from Rs. 8,316 million to Rs. 9,607 million as at March 31, 2013.

Consolidated Net Interest Income increased by 29% from Rs. 1,970 million during the financial year ending March 31, 2012 to Rs. 2,538 million during the financial year ending March 31, 2013.

The Profit After Tax was down by 40% from Rs. 1,058 million to Rs. 631 million. However this is not representative of any reduced prospects of profitability of the Company. In fact the reduced profits are because of investments to scale up new business like Consumer Durables (grown from Rs. 444 million in FY 12 to Rs. 1,821 million in FY 13), Gold Loans (grown from Rs. 2,343 million in FY12 to Rs. 4,408 million in FY13), Two wheeler Loans (grown from Rs. 138 million in FY12 to Rs. 1,631 million in FY13), Loan against Property (grown from Rs. 30,510 million in FY12 to Rs. 46,234 million in FY13). Scaling up of these businesses also required commensurate investment in IT, collections and credit resources. In fact, the Company is confident of growing profits in a sustainable manner in the years to come based on the above investments. Further, the Company changed its accounting policies on amortising income on certain key income items which will make the income more stable and sustainable in future years.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, your Directors are pleased to recommend a dividend of Rs. 1.80/- (Rupee One and Paise Eighty only) per share i.e. 18% on each Equity Share of Rs. 10/- (Rupees Ten only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members/Beneficial Holders list on the Book Closure/Record date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of this Directors'' Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. SVJS & Associates, Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

SHARE CAPITAL

During the year under review, the Board at its Meeting held on June 4, 2012 had approved the execution of Share Purchase Agreement inter-alia with Pantaloon Retail (India) Limited, Future Value Retail Limited and Cloverdell Investment Ltd ("Cloverdell") and also the execution of Share Subscription Agreement with Cloverdell, pursuant to which an open offer was proposed by Cloverdell. Consequent to the subscription of shares and secondary acquisition through the above arrangement, Cloverdell acquired substantial stake and control of the Company and became Promoter of the Company. Cloverdell is a part of Warburg Pincus group. Warburg Pincus is a leading global private equity firm focused on growth investing. The firm has more than US$40 billion in assets under management. Its active portfolio of more than 125 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 13 private equity funds which have invested more than US$45 billion, in over 675 companies, in more than 35 countries.

During the year under review, pursuant to the approval of the shareholders sought through Postal Ballot, results of which were announced on July 5, 2012, the authorized share capital of the Company has been reclassified into 10,30,00,000 equity shares of Rs. 10/- each and 1,00,00,000 Compulsorily Convertible Preference Shares (CCPS) of Rs. 10/- each, aggregating to Rs. 1,13,00,00,000/-.

During the year under review, 53,000 equity shares were allotted to eligible employees of the Company under various Employee Stock Option Schemes of the Company.

Also, during the year under review, Cloverdell, who had been allotted 30,86,420 CCPS on September 28, 2012, requested for conversion of said shares into equity shares. Accordingly, the Board of Directors of the Company at its meeting held on March 14, 2013 allotted 30,86,420 equity shares against conversion of CCPS in the ratio of one equity share against one CCPS.

CHANGE OF NAME OF THE COMPANY & ITS SUBSIDIARIES

Pursuant to the change in control and acquisition of majority stake by Cloverdell Investment Ltd in the Company through preferential allotment, acquisition of stake from erstwhile Promoters and from public shareholders under an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and as envisaged in the Share Purchase Agreement, the name of the Company changed from ''Future Capital Holdings Limited'' to ''Capital First Limited'' on November 8, 2012 vide the approval received from Registrar of Companies, Maharashtra, Mumbai.

To realign the name of the subsidiaries with the name of the holding Company i.e. Capital First Limited, the name of the following subsidiaries were changed in the manner given below pursuant to the approval received from Registrar of Companies:

1. Capital First Securities Limited (Formerly Future Capital Securities Limited)

2. Capital First Commodities Limited (Formerly Future Capital Commodities Limited)

3. Capital First Home Finance Private Limited (Formerly Future Capital Home Finance Private Limited)

4. Capital First Investment Advisory Limited (Formerly Kshitij Investment Advisory Company Limited)

SUBSIDIARIES

Your Directors are pleased to inform that the Hon''ble High Court of Judicature at Bombay, vide its order dated April 13, 2012, has approved the Scheme of Amalgamation of two wholly owned subsidiaries of the Company viz. Future Capital Investment Advisors Limited and FCH Securities & Advisors Limited with Capital First Investment Advisory Limited (formerly Kshitij Investment Advisory Company Limited) and the same has been effective pursuant to filing a certified copy of the said order with the Registrar of Companies on June 2, 2012.

Pursuant to inflow of Foreign Direct Investment by Cloverdell Investment Ltd, downstream investment was made pursuant to adherence of minimum capitalization norms as per Consolidated Foreign Direct Investment Policy in subsidiary companies of the Company viz. Capital First Securities Limited, Capital First Home Finance Private Limited, Capital First Investment Advisory Limited and Capital First Commodities Limited through Capital First Securities Limited.

During the year under review, the Company sold the entire 10,00,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company namely Myra Mall Management Company Limited (Myra Mall) to Providence Educational Academy Private Limited, in its capacity as a Trustee of AAA Holding Trust, a private trust. Consequently, Myra Mall ceased to be a Subsidiary of the Company with effect from July 9, 2012.

Also, the Company sold the entire 1,07,50,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company namely Future Finance Limited to APAC Consultants Private Limited and its Associates. Consequently, Future Finance Limited also ceased to be a Subsidiary of the Company with effect from March 1, 2013.

Subsequent to the year under review, Capital First Home Finance Private Limited (formerly known as Future Capital Home Finance Private Limited), a Wholly Owned Subsidiary of the Company has received the Certificate of Registration from National Housing Bank to commence business of housing finance institution without accepting public deposits.

In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs (MCA), dated 8th and 21st February, 2011, respectively, copies of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under ''Details of Subsidiaries'', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

PUBLIC DEPOSITS

The Company being a Non Deposit Accepting Non Banking Finance Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India (RBI).

RBI GUIDELINES

The Company has complied with the Regulations of the RBI as on March 31, 2013, as are applicable to it as a Systemically Important Non Deposit taking Non Banking Finance Company.

CAPITAL ADEQUACY

The Company''s capital adequacy ratio was 23.53% as on March 31, 2013, which is significantly above the threshold limit of 15% as prescribed by the RBI.

CREDIT RATING

Short-term borrowing programme: During the year under review, Credit Analysis & Research Ltd. ("CARE") retained the "A1 " ("A One Plus") rating of short term borrowing program for an amount of Rs. 9,000 million. The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk.

During the year, the long term rating of your Company was upgraded by two notches to "AA " (Double A Plus) from "AA-" (Double A Minus) by both the rating agencies; CARE and Brickwork Ratings India Private Limited (Brickwork). Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Long-term Bank Loan Facilities: During the year CARE has upgraded your Company''s rating to "CARE AA " ("Double A Plus") from "CARE AA-" ("Double A Minus") in respect of the long-term bank loan facilities of the Company aggregating to Rs. 45,000 million (enhanced from Rs. 22,500 million), having tenure of more than one year.

Secured Redeemable Non-Convertible Debentures (NCDs):

During the year CARE has upgraded your Company''s rating to "CARE AA " ("Double A Plus") from "CARE AA-" ("Double A Minus") for the Secured Redeemable NCDs for an aggregate amount of Rs. 10,500 million (enhanced from Rs. 6,000 million). The rating of the Secured Redeemable NCDs was also upgraded by Brickwork to "BWR AA " ("BWR Double A Plus") from "BWR AA-" ("BWR Double A Minus") for issue size upto Rs. 10,000 million (enhanced from Rs. 5,500 million).

Subordinated Non-Convertible Debentures (NCDs): During the year CARE has assigned the "CARE AA " ("Double A Plus") rating to the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million. Brickwork upgraded the rating to "BWR AA " ("BWR Double A Plus") from "BWR AA-" ("BWR Double A Minus") to the Unsecured Subordinated Debt program of the Company for an aggregate amount of Rs. 2,000 million (enhanced from Rs. 1,500 million).

Perpetual Non-Convertible Debentures (NCDs): During the year CARE has also assigned the "CARE AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million. Brickwork has also assigned the "BWR AA" ("Double A") rating to the Perpetual Debt program of the Company for an aggregate amount of Rs. 1,500 million.

DIRECTORS

During the year under review, Mr. Kishore Biyani, Mr. G. N. Bajpai, Mr. Shailesh Haribhakti, Mr. Pradeep Mukerjee and Mr. K. K. Rathi resigned as Directors of the Company. The Board of Directors of the Company placed on record its appreciation for the valuable contribution made by these esteemed members in steering the Company on its growth path over the years.

Subsequent to the investment made by Warburg Pincus through its affiliate Cloverdell Investment Ltd, Mr. V. Vaidyanathan was designated as the Chairman of the Board of Directors of the Company.

Mr. Vishal Mahadevia, Mr. M S Sundara Rajan and Mr. Hemang Raja were appointed as additional Directors of the Company, during the year under review.

In accordance with Sections 255 and 256 of the Companies Act, 1956, read with the Articles of Association of the Company, Mr. Anil Singhvi, being Non-Executive and Independent Director, retire by rotation and being eligible offer himself for re-appointment at the ensuing Annual General Meeting.

Brief resumes of Directors, nature of their expertise in specific functional areas and names of companies in which they hold Directorship and/or Membership/Chairmanship of committees of the Board, are annexed and forms part of this Report (Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(1)(g) of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended March 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments 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 of the Company for that period.

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 financial year ended March 31, 2013, on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, the name and other particulars of certain 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 Directors'' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

During the year under review, the Members of the Company vide Special Resolutions passed through Postal Ballot, result of which was announced on July 5, 2012, approved the CFL Employees Stock Option Scheme - 2012 (CFL ESOS - 2012) for the employees of the Company and its Subsidiary Companies.

Also, during the year under review, Company has granted employee stock options to eligible employees under various Employee Stock Option Schemes and also allotted 53,000 equity shares to eligible employees under aforesaid Schemes.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report (Annexure 2).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company''s activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided in Notes to the Financial Statements as at March 31, 2013. The Members are requested to refer to the said Note for details in this regard.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Foreign Investment & Promotion Board, Insurance Regulatory and Development Authority of India, National Housing Bank and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation''s growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

V. Vaidyanathan

Chairman & Managing Director

Place : Mumbai

Date : May 27, 2013

Mar 31, 2012

Dear Members,

The Directors have pleasure in presenting the Seventh Annual Report of your Company with the audited statement of accounts for the year ended 31st March, 2012.

FINANCIAL HIGHLIGHTS

The highlights of the consolidated and standalone financial results of the Company for the financial years 2011-12 and 2010-11 are as under:

(Rs. in million)

Particulars Consolidated Standalone

2011-12 2010-11 2011-12 2010-11

Total Income 7,437.45 4,015.14 7,027.62 2,637.28

Total Expenditure 5,921.51 3,176.57 5,676.50 1,885.39

Profit Before Tax 1,515.94 838.57 1,351.12 751.89

Provision For Tax (including Fringe Benefit Tax) 457.63 347.36 429.19 199.28

Profit After Tax 1,058.31 491.21 921.93 552.61

Profit brought forward from previous year / period (359.07) (590.07) 178.78 (122.74)

Profit available for appropriation 699.24 (98.86) 1,100.71 429.87

Appropriations:

Transfer to Reserve Fund under Section 45-IC of the RBI Act, 1934 186.34 119.64 184.39 110.52

Proposed Dividend 97.20 97.18 97.20 97.18

Dividend Tax thereon 15.77 15.76 15.77 15.76

Transfer to General Reserve 46.10 27.63 46.09 27.63

Balance carried forward to Balance Sheet 353.83 (359.07) 757.26 178.78

The Company is focused on retail and wholesale credit, which is expected to drive growth for the Company going forward. The Company has grown its outstanding Loan Book from Rs. 28,548 million to Rs. 46,704 million. The Retail Loan Book has grown from Rs. 8,144 million to Rs. 19,451 million. The Wholesale Book expanded from Rs. 20,404 million to Rs. 27,253 million. Both, Retail and Wholesale Loan Book grew during the year, but the proportion of Loan Book growth tilted more towards Retail credit this year.

The Net worth of the Company increased from Rs. 7,469 million to Rs. 8,316 million as at 31st March, 2012.

The Company has brought down its gross NPAs from Rs. 71 million to Rs. 36 million and net NPA from Rs. 18 million to NIL pursuant to better asset quality/ policies, which is now largely secured with adequate collateral, significantly more conservative provisioning norms and improved collections.

Consolidated Net Interest Income increased 92% from Rs. 1,199 million during the financial year ending 31st March, 2011, to Rs. 2,303 million during the financial year ending 31st March, 2012. This was largely on account of larger Loan Book in comparison to previous year.

The Profit Before Tax was up by 81%, the Profit After Tax was up by 115% from Rs. 491 million to Rs. 1,058 million.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, the Directors are pleased to recommend a dividend of Rs. 1.50/- (Rupee One and Paise Fifty Only) per share i.e. 15% on each Equity Share of Rs. 10/- (Rupees Ten Only). The dividend would be paid to all the shareholders, whose names appear in the Register of Members / Beneficial Holders list on the Book Closure date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of the Directors' Report.

SHARE CAPITAL

During the year under review, the Company issued and allotted 15,000 (Fifteen Thousand) equity shares of Rs. 10/- each, on exercise of Stock Options granted to employees under FCH Employee Stock Option Scheme - 2008. Consequently, the issued, subscribed and paid-up capital increased by 15,000 equity shares of Rs. 10/- each. Consequently, the issued, subscribed and paid-up capital of the Company increased from Rs. 64,78,34,840/- to Rs. 64,79,84,840/- as at the end of the financial year.

Subsequent to the year under review, pursuant to the approval of the shareholders sought through Postal Ballot, results of which were announced on 5th July, 2012, the authorized share capital of the Company has been re-classified into 10,30,00,000 equity shares of Rs. 10/- each and 1,00,00,000 Compulsorily Convertible Preference Shares of Rs. 10/- each, aggregating to Rs. 1,13,00,00,000/-.

With reference to 1,00,00,000 warrants issued by the Company on 30th September, 2010, the warrant holders had not exercised their right to convert their warrants into equity shares by the latest date of exercise of such right, which was 29th March, 2012 (i.e. within 18 months from the date of allotment) as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and consequently the warrants lapsed.

Subsequent to the year under review, the Board at its Meeting held on 4th June, 2012 had approved the execution of Share Purchase Agreement with Pantaloon Retail (India) Limited, Future Value Retail Limited, Mr. Kishore Biyani and Cloverdell Investment Ltd ("Cloverdell") and also the execution of Share Subscription Agreement with Cloverdell pursuant to which an open offer has also been proposed by Cloverdell. Consequent to the subscription of shares and secondary acquisition through the above arrangement, Cloverdell would acquire substantial stake and control of the Company.

CHANGE OF REGISTERED OFFICE

During the year under review, the Company shifted its registered office from FCH House, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai Ã 400 013 to 15th Floor, Tower-2, Indiabulls Finance Centre, Senapati Bapat Marg, Elphinstone (West), Mumbai - 400 013 with effect from 1st September, 2011.

SUBSIDIARIES

During the year under review, the Hon'ble High Court of Judicature at Bombay, vide its order dated 17th June, 2011, had approved the Scheme of Arrangement (Scheme) between the Company and Future Capital Financial Services Limited (FCFS), a Wholly Owned Subsidiary of the Company and a Systemically Important Non Deposit Taking Non Banking FInance Company registered with the Reserve Bank of India, under the provisions of Section 391 to 394, 78 and 100 to 103 of the Companies Act, 1956, inter alia, providing for Amalgamation of FCFS with the Company and the Scheme became effective on 29th June, 2011.

During the year under review, Future Capital Commodities Limited (FCCL) became a step down subsidiary of the Company and has obtained membership of leading commodity exchanges i.e. Multi Commodity Exchange and National Commodity & Derivatives Exchange Limited and also from National Spot Exchange Limited for commencing its commodity trading business.

During the year under review, the Company divested its shareholding in Future Hospitality Management Limited, a Wholly Owned Subsidiary of the Company effective from 2nd September, 2011 vide Share Purchase Agreement dated 2nd September, 2011 entered into with Future Ideas Realtors India Limited. Also, the Company's shareholding in Kshitij Property Solutions Private Limited, a Wholly Owned Subsidiary of the Company was divested effective from 1st December, 2011 vide Share Purchase Agreement dated 1st December, 2011, entered into with Everstone Capital Advisors Private Limited.

Your Directors are pleased to inform that the Hon'ble High Court of Judicature at Bombay, vide its order dated 13th April, 2012, has approved the Scheme of Amalgamation of two wholly owned subsidiaries of the Company viz. Future Capital Investment Advisors Limited and FCH Securities & Advisors Limited with Kshitij Investment Advisory Company Limited and the same has been effective pursuant to filing the certified true copy of the said order with the Registrar of Companies on 2nd June, 2012.

Subsequent to the year under review, Future Capital Home Finance Private Limited, a Wholly Owned Subsidiary of the Company made an application to the National Housing Bank for obtaining the Certificate of Registration to commence its housing finance business.

Subsequent to the year under review, the Company sold the entire 10,00,000 fully paid-up equity shares of Rs. 10/- each held in its Wholly Owned Subsidiary Company namely Myra Mall Management Company Limited (Myra Mall) to Providence Educational Academy Private Limited, in its capacity as a Trustee of AAA Holding Trust, a private trust. Consequently, Myra Mall ceased to be a Subsidiary of the Company with effect from 9th July, 2012.

In terms of the General Circulars No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs (MCA), dated 8th and 21st February, 2011, respectively, copies of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under 'Details of Subsidiaries', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, the Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

PUBLIC DEPOSITS

The Company being a Non Deposit Accepting NBFC has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of Reserve Bank of india.

RBI GUIDELINES

The Company has complied with the Regulations of the Reserve Bank of India as on 31st March, 2012, as are applicable to it as a Systemically Important Non Deposit Taking Non Banking Finance Company.

CAPITAL ADEQUACY

The Company's capital adequacy ratio was 18.63% as on 31st March, 2012, which is significantly above the threshold limit of 15% as prescribed by Reserve Bank of India.

CREDIT RATING

During the year under review, Credit Analysis & Research Ltd. ("CARE") retained the "A1 " ("A One Plus"). The rating is the highest rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries the lowest credit risk. During the year under review, the rating of short term borrowing programme was enhanced by Rs. 2,000 million i.e. from Rs. 7,000 million to Rs. 9,000 million.

During the year CARE has upgraded your Company's rating to "CARE AA-" ("Double A Minus") from "CARE A " ("Single A Plus") for the Secured Redeemable Non-Convertible Debentures (NCDs) for an aggregate amount of Rs. 6,000 million. The rating of the NCDs was also upgraded by Brickwork Ratings India Private Limited (Brickwork) to "BWR AA-" ("BWR Double A Minus") from "BWR A " ("BWR A Plus") for issue size upto Rs. 5,500 million. Brickwork has also assigned the "BWR AA-" ("BWR Double A Minus") rating to the proposed Unsecured Subordinated Debt Issue of the Company for Rs. 1,500 million. The rating indicates that the NCDs carry low credit risk and offer adequate safety for timely servicing of debt obligations. This rating indicates that the NCDs are considered to offer adequate credit quality in terms of timely servicing of debt obligations and further indicates "Stable" outlook.

CARE has also upgraded your Company's rating to "CARE AA-" ("Double A Minus") from "CARE A " ("Single A Plus") in respect of the long-term bank loan facilities of the Company aggregating to Rs. 22,500 million (enhanced from Rs. 8,500 million), having tenure of more than one year. Facilities with this rating carry low credit risk and offer adequate safety for timely servicing of debt obligations.

Subsequent to the year under review, CARE has also assigned the "CARE AA-" (Double A Minus) rating to the Company's Non- Convertible Debentures (NCDs) programme for an enhanced limit of Rs. 10,500 million (enhanced from Rs. 6,000 million).

DIRECTORS

In accordance with Sections 255 and 256 of the Companies Act, 1956, read with the Articles of Association of the Company,

Mr. G.N. Bajpai, Independent Director and Mr. K.K. Rathi, Non- Executive Director, retire by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

Brief resumes of Mr. G. N. Bajpai and Mr. K. K. Rathi, nature of their expertise in specific functional areas and names of companies in which they hold directorship and / or membership / chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, are annexed and forms part of this Report (Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(1)(g) of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments 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 of the Company for that period.

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 financial year ended 31st March, 2012, on a going concern basis.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co., Chartered Accountants, Statutory Auditors of the Company, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time, the name and other particulars of certain 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 Directors' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

Subsequent to the year under review, the Members of the Company vide Special Resolutions passed through Postal Ballot, result of which was announced on 5th July, 2012, approved the FCH Employees Stock Option Scheme Ã 2012 (FCH ESOS Ã 2012) for the Company and its Subsidiary Companies. However, the Company has not granted any Options under the FCH ESOS Ã 2012.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report (Annexure 2).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company's activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided as Note No. 37 to the Financial Statements as at 31st March, 2012. The Members are requested to refer to the said Note for details in this regard.

CORPORATE GOVERNANCE

A report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from M/s. SVJS & Associates, Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

HUMAN RESOURCE MANAGEMENT

Skilled and motivated employees are one of the cornerstones of our business. We focus on meeting the skill gap and providing skilled manpower wherever required. We ensure a favorable work environment for all our employees. Our recruitment and Human Resources management set up enables us to attract and retain employees.

ACKNOWLEDGEMENT

We are grateful to the Government of India, the Reserve Bank of India, the Securities and Exchange Board of India, Stock Exchanges, Insurance Regulatory and Development Authority of India and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co- operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation's growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors

Sd/-

Kishore Biyani

Chairman

Place: Mumbai

Date : 30th July, 2012

Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the Sixth Annual Report of your Company with the audited statement of accounts for the year ended 31st March, 2011.

FINANCIAL HIGHLIGHTS

STANDALONE PERFORMANCE

The highlights of the standalone financial results of the Company for the financial years 2010-11 and 2009-10 are as under:

(Rs. In million)

Particulars Standalone *

2010-11 2009-10

Total Income 2,637.28 558.00

Total Expenditure 1,885.39 350.00

Profit Before Tax 751.89 208.00

Provision For Tax 199.28 34.82

Profit After Tax 552.61 173.18

Profit brought forward from previous 210.94 146.73 year / period

Profit available for appropriation 763.55 319.91

Appropriations:

Transfer to Reserve Fund under 110.52 34.64 Section 45-IC of the RBI Act, 1934

Proposed Dividend 97.18 63.53

Dividend Tax thereon_ 15.76 10.80

Transfer to general reserve 27.63

Balance carried forwarded to Balance 512.46 210.94 Sheet

CONSOLIDATED PERFORMANCE

The highlights of the consolidated financial results of the Company for the financial years 2010-11 and 2009-10 are as under:

(Rs. In million)

Consolidated *

Particulars

2010-11 2009-10

Total Income 4,015.14 2,516.50

Total Expenditure 3,176.57 1,914.85

Profit Before Tax 838.57 601.65

Provision For Tax 347.36 9.00

Profit After Tax 491.21 592.65

* 1. The financial accounts for 2010-11 have been prepared after giving effect to the Scheme of Arrangement between the Company and Future Capital Financial Services Limited (FCFS) as approved by the Hon'ble High Court of judicature at Bombay, inter alia providing for amalgamation of FCFS into the Company and hence, are not comparable with that of 2009 -10.

* 2. The financial accounts of the current year are also not comparable with the previous year as the investment advisory services business and income and costs thereof have been realigned and the current year's performance is based on the income and costs related to the retail and wholesale lending business of the Company only.

The Company is focused on wholesale and retail credit, which is expected to drive growth for the Company going forward. The Company has grown its outstanding Loan Book to Rs. 28,548 million from Rs. 14,951 million. The Retail Loan Book has grown from Rs. 2,910 million to Rs. 8,144 million. The Wholesale Book expanded from Rs. 12,041 million to Rs. 20,404 million. Both Retail and Wholesale Loan Book grew during the year, but the proportion of the Loan Book tilted more towords Retail this year.

The Net-worth of the Company increased from Rs. 6,909 million to Rs. 7,469 million as at 31st March 2011.

The Company has brought down its gross NPAs from Rs. 558 million to Rs. 71 million and net NPAs from Rs. 244 million to Rs. 18 million pursuant to better asset quality / policies, which is now largely secured with adequate collateral, significantly more conservative provisioning norms and improved collections.

In the current year, the Company has made a standard asset provision of Rs. 74 million pursuant to the guidelines issued by Reserve Bank of India.

Consolidated Net Interest Income increased 63% from Rs. 786 million during financial year ending 31st March, 2010, to Rs. 1,285 million during the financial year ending 31st March, 2011. This was largely on account of a larger Loan Book in comparison to the previous year.

Though the Profit Before Tax was up by 39%, the Profit After Tax was down by 17% to Rs. 491 million from Rs. 593 million in previous year. This was essentially due to a one time impact of non availing of the MAT credit and deferred tax charge pursuant to the scheme of merger of FCFS with your Company. Consequent to this, there is a provision for MAT of Rs. 56 million and net deferred tax charge of Rs. 32 million in the current year. Also, in the last year the Company had a brought forward loss of Rs. 84 million which is not the case in the current year eventually leading to higher tax liability.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, the Directors are pleased to recommend a dividend of Rs. 1.5/- (Rupees One and Paise Fifty Only) per share i.e. 15 % on each Equity Share of Rs. 10/- (Rupees Ten Only). The dividend would be paid to all the shareholders, whose names appear on the Register of Members / Beneficial Holders List on the Book Closure Date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the fi nancial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of the Directors' Report.

SHARE CAPITAL

During the year under review, the issued, subscribed and paid- up capital of the Company increased from Rs. 63,52,79,840/- to Rs. 64,78,34,840/- as at the end of the financial year.

During the year under review, the Company issued and allotted 5,35,000 and 7,20,500 equity shares of Rs. 10/- each, on exercise of Stock Options granted to employees under FCH Employee Stock Option Scheme - 2007 and FCH Employee Stock Option Scheme - 2008, respectively. Consequently, the issued, subscribed and paid- up capital increased by 12,55,500 equity shares of Rs. 10/- each.

Further, pursuant to the approval given by the Members of the Company vide Special Resolution passed at the Extraordinary General Meeting held on 27th August, 2010, the Company allotted 1,00,00,000 convertible warrants, convertible into equal number of equity shares of the Company of Rs. 10/- each, at the premium of Rs. 227/- each, aggregating to an Issue Price of Rs. 237/- each.

Subsequent to the year under review, the Company issued and allotted 15,000 (Fifteen Thousand) Equity Shares of Rs. 10/- each, on exercise of Stock Options granted to an employee under FCH Employee Stock Option Scheme Ã 2008 and consequently, the issued subscribed and paid-up capital stands increased from Rs. 64,78,34,840/- to Rs. 64,79,84,840/-.

SUBSIDIARIES

During the year under review, under the Scheme of Arrangement (Scheme), pursuant to the provisions of Section 391 to 394, 78 and 100 to 103 of the Companies Act, 1956, sanctioned by Hon'ble High Court of Judicature at Bombay, Future Capital Financial Services Limited (FCFS), a Wholly Owned Subsidiary of the Company and a Systemically Important Ã Non Deposit Taking - Non Banking Financial Company (SI-ND-NBFC) registered with the Reserve Bank of India (RBI), amalgamated with the Company and dissolved without being wound-up.

The Company also incorporated a new company as its subsidiary viz. Future Capital Home Finance Private Limited (FCHF) which may be used to make a foray into housing finance business. The company will decide to make necessary applications in the matter based on the strategy.

Upon receipt of the necessary approvals from the RBI and the Financial Services Commission, Mauritius, the Company acquired Anchor Investment & Trading Private Limited, a private limited company incorporated under the laws of Mauritius, to make its foray into investment advisory business for overseas clients through such subsidiary.

The Company sold its entire equity stake (representing 50% of the paid-up capital) in Realterm FCH Logistics Advisors Private Limited (presently known as Realterm Everstone Investment Advisors Private Limited) pursuant to an arrangement with Everstone Investment Advisors Private Limited (presently known as Everstone Capital Advisors Private Limited), to realign the investment advisory activities with a view of having a focused and dedicated approach to the investment advisory business.

The Company had two Joint Ventures (JVs) with Centrum Capital Limited viz. FCH CentrumDirect Limited (FCH CDL) and Future Capital Securities Limited (formerly known as FCH Centrum Wealth Managers Limited) (FCSL). During the year, the Company reviewed its strategy of being in the Forex Business through a JV and exited from FCH CDL by selling all of its holding in the JV. The Company, as a part of its strategy to focus on fee based income from retail broking, acquired the entire equity stake of its JV partner and accordingly, FCSL has become the wholly owned subsidiary of the Company. With the acquisition of FCSL, the Company has made its foray into the Stock Broking and Wealth Management business.

With an objective of making a foray into the Commodities Broking in addition to Stock Broking carried out by FCSL, necessary changes / amendments were carried out by Axon Development Solutions Limited including its name which now stands changed to Future Capital Commodities Limited (FCCL). For a flexible corporate structure, the Company transferred entire equity stake in FCCL to FCSL. FCCL is in the process of making an application to all the leading commodity exchanges for obtaining their membership to commence the business.

In terms of the approval granted by the Ministry of Corporate Affairs (MCA) under Section 212(8) of the Companies Act, 1956 and the General Circular No. 2/2011 & 3/2011 of the Ministry of Corporate Affairs, dated 8th and 21st February, 2011, respectively, copies of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same and these documents are also kept for inspection by any Member at the Corporate Office of the Company and the Subsidiaries. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under 'Details of Subsidiaries', forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

SCHEME OF ARRANGEMENT

On 2nd November, 2010, the Directors of the Company and Future Capital Financial Services Limited (FCFS) approved carrying out of a Scheme of Arrangement (Scheme), under the provisions of Section 391 to 394, 78 and 100 to 103 of the Companies Act, 1956, interalia, providing for Amalgamation of FCFS, a Wholly Owned Subsidiary of the Company and a SI-ND-NBFC, registered with the RBI, with the Company.

Pursuant to the directions of Hon'ble High Court of Judicature at Bombay, the Company convened and held the Meeting of the Shareholders of the Company on 17th February, 2011. At the said Meeting the requisite majority of the Shareholders approved the Scheme in accordance with the provisions of the Companies Act, 1956.

Your Directors are pleased to inform that Hon'ble High Court of Judicature at Bombay, vide its order dated 17th June, 2011, has approved the Scheme and having fulfilled all the prescribed conditions to make the Scheme effective, the Company and FCFS gave effect to the Scheme and the Scheme was made effective on 29th June, 2011.

PUBLIC DEPOSITS

The Company being a Non Deposit Taking - NBFC has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the RBI.

RBI GUIDELINES

The Company has complied with the Regulations of the Reserve Bank of India as on 31st March, 2011, as are applicable to it as a SI-ND-NBFC.

CAPITAL ADEQUACY

The Company's capital adequacy ratio was 23.47% as on 31st March, 2011, which is significantly above the threshold limit of 15% as prescribed by the Reserve Bank of India.

CREDIT RATING

On a consolidated basis, during the year under review, Credit Analysis & Research Ltd. (CARE) retained the "PR 1 " (pronounced "PR One Plus"). The grade of Rating is the highest Rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries lowest credit risk. During the year under review the short term borrowing programme of Rs. 6,000 million and the Rating thereof has been further enhanced to Rs. 7,000 million.

CARE has also assigned the "CARE A " (pronounced "Single A Plus") Rating for the Secured Redeemable Non Convertible Debentures (NCDs) for an aggregate amount of Rs. 6,000 million during the year. The grade of Rating indicates that the NCDs carry low credit risk and offer adequate safety for timely servicing of debt obligations. The NCDs are also rated by Brickwork Ratings India Private Limited (Brickwork) and it has assigned the "BWR A " (pronounced "BWR A Plus") Rating to the same for issue size upto Rs. 5,500 million. This grade of rating indicates that the NCDs are considered to offer adequate credit quality in terms of timely servicing of debt obligations and further indicates "Stable" outlook.

Brickwork has assigned the "BWR A " (pronounced "BWR A Plus") Rating to the proposed Unsecured Subordinated Debt Issue of the Company for Rs. 2,000 million. This grade of rating indicates that the instruments are considered to offer adequate credit quality in terms of timely servicing of debt obligations and further indicates "Stable" outlook.

CARE has also assigned the "CARE A " ("Single A Plus") Rating ("Rating") in respect of the long-term bank loan facilities of the Company aggregating to Rs. 8,500 million, having tenure of more than one year. Facilities with this rating are considered to offer adequate safety for timely servicing of debt obligations and carry low credit risk.

RESOURCES AND LIQUIDITY

On a consolidated basis, during the financial year 2010-11, the Company raised Rs. 5,141 million, by issuance of NCDs through private placement, Rs. 7,000 million by issuance of Commercial Papers and Rs. 8,750 million through Banks in the form of Term Loans, Cash Credit and Overdraft Facilities.

The Company's debt-equity ratio as on 31st March, 2011, stands at 3.46:1.

DIRECTORS

During the year under review, the Board of Directors (Board) on the recommendation of the Compensation and Nomination Committee, at its meeting held on 1st August, 2010, pursuant to the provisions of Section 260 of the Companies Act, 1956 and the Articles of Association of the Company and other applicable provisions, appointed Mr. V. Vaidyanathan as an Additional Director and designated him as the Vice Chairman & Managing Director within the meaning of the Companies Act, 1956. Subsequently, at the Extraordinary General Meeting held on 27th August, 2010, the shareholders of the Company approved appointment of Mr. Vaidyanathan as the Vice Chairman & Managing Director and payment of remuneration to him, subject to necessary regulatory approval(s).

Further, pursuant to the provisions of Section 260 of the Companies Act, 1956, the Articles of Association of the Company and other applicable provisions, in order to strengthen the Board, the Company appointed Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep Mukerjee as the Additional Directors with effect from 23rd September, 2010 and pursuant to the Clause 49 of the Listing Agreement with the Stock Exchanges they are the Non-Executive Independent Directors.

Mr. Sameer Sain and Mr. Alok Oberoi resigned from the Board with effect from 10th August, 2010 and 30th October, 2010, respectively.

Mr. Krishan Kant Rathi resigned from the office of the Manager within the meaning of the Companies Act, 1956. However, he continues to be on the Board as a Non-Executive Director.

In accordance with Sections 255 and 256 of the Companies Act, 1956, read with the Articles of Association of the Company, Mr. Kishore Biyani, Chairman and Mr. Shailesh Haribhakti, Non- Executive Independent Director, retire by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting.

Pursuant to Section 260 of the Companies Act, 1956, Mr. Vaidyanathan, Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep Mukerjee hold offi ce as Directors upto the date of the ensuing Annual General Meeting but are eligible to be appointed as Directors. Approval of members for their re-appointment is being sought at the ensuing Annual General Meeting.

Brief resumes of Mr. Kishore Biyani, Mr. V. Vaidyanathan, Mr. Shailesh Haribhakti, Mr. N. C. Singhal, Mr. Anil Singhvi and Mr. Pradeep Mukerjee, nature of their expertise in specific functional areas and names of companies in which they hold directorship and/or membership/chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, are annexed and form part of this Report (Annexure 1).

Based on the confirmations received, none of the Directors are disqualified from appointment under Section 274(1)(g) of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments 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 of the Company for that period.

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 fi nancial year ending 31st March, 2011, on a going concern basis.

GROUP

Pursuant to an intimation from the Promoter(s) and in accordance with Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)

Regulations, 1997 (SEBI Regulations) identification of persons constituting "Group" (within the meaning and as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of the SEBI Regulations is annexed and forms part of this Report (Annexure 2).

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as a part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of certain 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 Directors' Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company.

The Members of the Company vide Special Resolutions passed through Postal Ballot dated 16th March, 2011, approved the FCH Employees Stock Option Scheme Ã 2011 ( FCH ESOS Ã 2011) for the Company, its Holding and Subsidiary Companies. However, during the financial year 2010 - 11 the Company has not granted any Options under the FCH ESOS Ã 2011.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and form part of this Report (Annexure 3).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The Company's activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided as Note No. C13 of the Schedule 16 (Notes to Accounts) of the Balance Sheet as at 31st March, 2011. The Members are requested to refer to the said Note for details in this regard.

CORPORATE GOVERNANCE

Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from the Auditors of the Company, M/s. S. R. Batliboi & Co., Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

HUMAN RESOURCE MANAGEMENT

Skilled and motivated employees are one of the corner stones of our business. We focus on meeting the skill gap and providing skilled manpower wherever required. We ensure a favorable work environment for all our employees. Our recruitment and human resources management set up enables us to attract and retain employees.

ACKNOWLEDGEMENT

We are grateful to the Government of India, concerned regulatory authorities including the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges, Insurance Regulatory and Development Authority of India and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisation's growth possible.

The Directors thank you for your continued trust and support.

On behalf of the Board of Directors

Sd/- Kishore Biyani Chairman

Mumbai, 30th June, 2011

Mar 31, 2010

The Directors have pleasure in presenting the Fifth Annual Report of your Company with the audited statement of accounts for the year ended March 31, 2010.

FINANCIAL HIGHLIGHTS

The highlights of the standalone financial results of the Company for the financial years 2009-10 and 2008-09 are as under:

(Rs. In million) Particulars Standalone* 2009-10 2008-09 Total Income 558.00 1358.00

Total Expenditure 350.00 1259.52

Profit Before Tax 208.00 98.48

Provision For Tax (including Fringe 34.82 5.39

Benefit Tax)

Profit After Tax 173.18 93.08

Profit brought forward from previous 146.73 72.26

year / period

Less: Adjustment on account of liability Nil Nil

in respect of employee benefits, if any

Proft available for appropriation 319.91 165.34

Appropriations:

Transfer to Reserve Fund under Section 34.64 18.61

45-IC of the RBI Act, 1934

Proposed Dividend 63.53 Nil

Dividend Tax thereon 10.80 Nil

Balance carried forward to Balance 210.94 146.73 Sheet

* The Scheme of Amalgamation and Arrangement inter alia providing for transfer of credit business of the Company to Future Capital Financial Services Limited was given effect. Accordingly, the financial parameters of 2009-10 are not comparable with 2008-09.

STANDALONE PERFORMANCE

The standalone total income of the Company decreased 59% during the year. Total income in 2009-10 stood at Rs. 558 million, as compared to Rs. 1358 million in the previous year. The profit after tax showed an increase of 86% which was Rs. 173 million, as compared to Rs. 93 million in the previous year.

Of the above total income, income from Investment Advisory stood at Rs. 131 million and Treasury and Wholesale Credit stood at Rs. 422 million.

An amount of Rs. 35 million was transferred to Reserve Fund pursuant to Section 45-IC of the Reserve Bank of India Act, 1934.

CONSOLIDATED PERFORMANCE

The highlights of the consolidated financial results of the Company for the financial years 2009-10 and 2008-09 are as under:

(Rs. In million)

Particulars Consolidated

2009-10 2008-09

Total Income 2,516.50 1,869.05

Total Expenditure 1,914.85 2,150.32

Profit Before Tax 601.65 (281.27)

Provision For Tax (including Fringe 9.00 39.84

Benefit Tax)

Profit After Tax 592.65 (321.11)

The consolidated total income of the Company and its Subsidiaries increased by 35% during the year. Total income in 2009-10 stood at Rs. 2,517 million, as compared to Rs. 1,869 million in the previous year. The profit after tax was Rs. 593 million, as compared to loss of Rs. 321 million in the previous year.

DIVIDEND

Keeping in mind the overall performance and the outlook for your Company, the Directors are pleased to recommend a dividend of Re. 1/- (Rupee One Only) per share i.e. 10% on each Equity Share of Rs. 10/- (Rupees Ten Only). The dividend would be paid to all the shareholders, whose names appear on the Register of Members / Beneficial Holders list on the Book Closure date.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, the Management Discussion and Analysis of the financial condition and result of consolidated operations of the Company for the year under review, is annexed and forms an integral part of the DirectorsÃ Report.

SHARE CAPITAL

During the year under review, there is no change in the issued, subscribed and paid up capital of the Company and the same was Rs. 635.28 million as at the end of the financial year.

Subsequent to the year under review, the Company issued and allotted 50,000 (Fifty Thousand) Equity Shares of Rs. 10/- each, on exercise of Stock Options granted to an employee under FCH Employee Stock Option Scheme Ã 2008 and consequently, the issued, subscribed and paid-up capital has increased from Rs.635.28 million to Rs.635.78 million.

SUBSIDIARIES

During the year under review, pursuant to the composite Scheme of Amalgamation and Arrangement (the ÃSchemeÃ), under the provisions of Section 391 to 394 of the Companies Act, 1956, sanctioned by HonÃble High Court of Judicature at Bombay, Future Capital Credit Limited, a Wholly Owned Subsidiary of the Company and a Non Banking Finance Company registered with the Reserve Bank of India, amalgamated with Future Capital Financial Services Limited (FCFSL), another Wholly Owned Subsidiary of the Company and dissolved without being wound-up. Your Directors are pleased to inform that FCFSL is granted Certificate of Registration as a Non Banking Finance Company with effect from January 7, 2010, by the Reserve Bank of India. Considering the size of the assets of FCFSL, FCFSL is qualified as a Systemically Important Ã Non Deposit Accepting Ã Non Banking Finance Company under the Reserve Bank of IndiaÃs Prudential Norms to Non Banking Finance Companies.

During the year under review, the Company and its Subsidiaries viz. Future Capital Investment Advisors Limited and Kshitij Investment Advisory Company Limited entered into appropriate agreements with Everstone Investment Advisors Private Limited, to realign their respective investment advisory activities with a view of having a focused and dedicated approach to the Investment Advisory Business. The realignment of the investment advisory activities of the Company and its certain Subsidiaries has been effective from January 1, 2010.

The Company has received the necessary approval from the Reserve Bank of India and is in the process of obtaining the approval(s) of the foreign regulator(s) for acquiring / setting up a foreign subsidiary, in order to make its foray into investment advisory business for overseas clients through such subsidiary.

In terms of the approval granted by the Ministry of Corporate Affairs (MCA) under Section 212(8) of the Companies Act, 1956, copy of the Balance sheet, Profit and Loss Account, Report of the Board of Directors and Auditors of the Subsidiaries of the Company have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same. However, as directed by the MCA, the financial data of the Subsidiaries has been furnished under ÃDetails of SubsidiariesÃ, forming part of the Audited Accounts. Further, pursuant to Accounting Standard (AS - 21) issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report includes financial information of its Subsidiaries.

FCH CentrumDirect Limited and FCH Centrum Wealth Managers Limited continue to be Joint Venture(s) of the Company.

SCHEME OF AMALGAMATION AND ARRANGEMENT

In March, 2009, your Directors had approved the carrying out of, a composite Scheme of Amalgamation and Arrangement (the ÃSchemeÃ), under the provisions of Section 391 to 394 of the Companies Act, 1956, inter alia, providing for:

(i) Transfer of the credit business of the Company (both on account of Retail Credit and Wholesale Credit) to Future Capital Financial Services Limited, a Wholly Owned Subsidiary of the Company.

(ii) Amalgamation of Future Capital Credit Limited, a Wholly Owned Subsidiary of the Company and a Non Banking Finance Company registered with the Reserve Bank of India, with Future Capital Financial Services Limited.

Pursuant to the directions of HonÃble High Court of Judicature at Bombay, the Scheme was submitted for approval and was approved by the Members of the Company at the Court Convened Meeting held on June 15, 2009.

Your Directors are pleased to inform that having fulfilled all the prescribed conditions to make the Scheme effective, the Company and its Subsidiaries gave effect to the Scheme and the Scheme was made effective on February 1, 2010.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year under review and shall not accept any deposits from the public without obtaining prior approval of the Reserve Bank of India.

RBI GUIDELINES

The Company has complied with the Regulations of the Reserve Bank of India as on March 31, 2010, as are applicable to it as a Systemically Important Ã Non Deposit Accepting Ã Non Banking Finance Company.

CAPITAL ADEQUACY

The CompanyÃs capital adequacy ratio was 28.97% as on March 31, 2010, which is significantly above the threshold limit of 12% as prescribed by the Reserve Bank of India.

CREDIT RATING

During the year under review, Credit Analysis & Research Ltd. (CARE) has assigned the ÃPR 1+Ã (pronounced ÃPR One PlusÃ) Rating (Rating) in respect of the short term borrowing programme of Rs. 4000 million (Rupees Four Thousand Million Only) of the Company. The grade of Rating is the highest Rating issued by CARE for short term debt instruments and indicates strong capacity for timely payment of short term debt obligations and further indicates that the borrowing carries lowest credit risk. The short term borrowing programme of Rs. 4000 million (Rupees Four Thousand Million Only) has been further enhanced to Rs. 6000 million (Rupees Six Thousand Million Only).

RESOURCES AND LIQUIDITY

The Company has raised Rs. 6,000 million during the financial year 2009-10, by issuance of Commercial Paper and Rs. 1,000 million through Banks in the form of Term Loans, Cash Credit and Overdraft

Facilities.

The CompanyÃs debt equity ratio as on March 31, 2010, stands at a level of 1.6:1.

DIRECTORS

On being appointed as the Vice Chairman of the Board of Directors with effect from October 29, 2009, Mr. Sameer Sain became the Vice Chairman & Managing Director. Subsequently, Mr. Sain resigned from the office of the Managing Director of the Company with effect from February 5, 2010. He continues to occupy the office of the Vice Chairman of the Company. In accordance with Sections 255 and 256 of the Companies Act, 1956, read with Article 146 of the Articles of Association of the Company, Mr. Sain, Vice Chairman, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. Dhanpal Jhaveri resigned as the Executive Director and was also relieved from the responsibilities of the acting Chief Executive Officer of the Company with effect from April 6, 2010. The Directors place on record their appreciation for the guidance and inputs provided by Mr. Jhaveri during his association with the Company.

The Board on the recommendation of the Nomination Committee at its meeting held on April 6, 2010, appointed Mr. Krishan Kant Rathi as an Additional Director and designated him as a Manager within the meaning of the Companies Act, 1956. Pursuant to Section 260 of the Companies Act, 1956, Mr. Rathi holds office as a Director upto the date of the ensuing Annual General Meeting but is eligible to be appointed as a Director. Approval of Members is being sought at the ensuing Annual General Meeting.

Brief resumes of Mr. Sain and Mr. Rathi, nature of their expertise in specific functional areas and names of companies in which they hold directorship and/or membership/chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, are annexed and forms part of this Report (Annexure 1).

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 274(1)(g) of the Companies Act, 1956.

DIRECTORSÃ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217(2AA) of the Companies Act, 1956, with respect to DirectorsÃ Responsibility Statement, it is hereby confirmed:

i) that in the preparation of the annual accounts for the financial

year ended March 31, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments 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 of the Company for that period.

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 financial year ending March 31, 2010, on a going concern basis.

GROUP

Pursuant to an intimation from the Promoter(s) and in accordance with Regulation 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (SEBI Regulations) identification of persons constituting ÃGroupÃ (within the meaning and as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of the SEBI Regulations is annexed and forms part of this Report (Annexure 2).

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Accounting Standard (AS-21) on Consolidated Financial Statements read with Accounting Standard (AS-23) on Accounting for Investments in Associates and Accounting Standard (AS-27) on Financial Reporting of Interest in Joint Ventures, the Audited Consolidated Financial Statements are provided in this Annual Report. These statements have been prepared on the basis of the financial statements received from Subsidiaries and Joint- Ventures, as approved by their respective Board of Directors.

AUDITORS

M/s. S. R. Batliboi & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have expressed their willingness to continue, if so appointed. As required under the provisions of Section 224(1B) of the Companies Act, 1956, the Company has obtained a written confirmation from the Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section.

A proposal seeking their re-appointment is provided as part of the Notice of the ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES, EMPLOYEES STOCK OPTION SCHEME AND EMPLOYEES STOCK PURCHASE SCHEME

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of certain employees are required to be set out in the Annexure to the DirectorsÃ Report. However, as per the provisions of Section 219(1)(b)(iv) of the

said Act, the DirectorsÃ Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company at its Registered Office.

The Members of the Company at the Fourth Annual General Meeting held on August 4, 2009, approved the FCH Employees Stock Option Scheme Ã 2009 (FCH ESOS Ã 2009) for the Company, its Holding and Subsidiary Companies. However, the Company has not granted any Options under the FCH ESOS Ã 2009.

The disclosure(s) as required under the Securities and Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999, are annexed and forms part of this Report (Annexure 3).

PARTICULARS OF ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, EXPENDITURE ON RESEARCH AND DEVELOPMENT, FOREIGN EXCHANGE INFLOW/OUTFLOW, ETC.

The requirements of disclosure with regard to Conservation of Energy in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable to the Company.

The CompanyÃs activities do not require any technology to be absorbed as mentioned in the aforesaid Rules. However the Company makes all efforts towards conservation of energy, protection of environment and ensuring safety.

The details of the earnings and outgo in Foreign Exchange during the year under review are provided as Note No. C15 of the Schedule 16 (Notes to Accounts) of the Balance Sheet as at March 31, 2010. The Members are requested to refer to the said Note for the details in this regard.

CORPORATE GOVERNANCE

Report on Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, forms part of the Annual Report.

A Certificate from the Auditors of the Company, M/s. S. R. Batliboi & Co., Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, also forms part of the Annual Report.

HUMAN RESOURCE MANAGEMENT

Skilled and motivated employees are one of the corner stones of our business. We focus on meeting the skill gap and providing skilled manpower wherever required. We ensure a favorable work environment for all our employees. Our recruitment and human resources management set up enables us to attract and retain employees.

ACKNOWLEDGEMENT

We are grateful to the Government of India, concerned regulatory authorities including the Reserve Bank of India, the Securities and Exchange Board of India, the Stock Exchanges and other regulatory authorities for their valuable guidance and support and wish to express our sincere appreciation for their continued co-operation and assistance. We look forward to their continued support in future.

We wish to thank our bankers, rating agencies, customers and all other business associates for their support and trust reposed in us.

Your Directors express their deep sense of appreciation for all the employees whose commitment, co-operation, active participation, dedication and professionalism has made the organisationÃs growth possible.

Finally, the Directors thank you for your continued trust and support.

On behalf of the Board of Directors Kishore Biyani Chairman Mumbai, May 24, 2010

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