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Directors Report of DFL Infrastructure Finance Ltd.

Mar 31, 2014

Dear Members,

The Directors present their Twenty Seventh Annual Report together with the Audited accounts for the financial year ended March 31, 2014.

1. FINANCIAL RESULTS (Rs. In Lakhs)

PARTICULARS For the For the Financial Financial Year ended Year ended 31.03.2014 31.03.2013

GROSS INCOME 223.23 340.45

PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION (345.92) (644.32)

LESS: INTEREST 941.17 872.13

PROFIT/(LOSS) BEFORE DEPRECIATION (1287.09) (1516.45)

LESS: EXCEPTIONAL ITEMS - -

LESS : DEPRECIATION 22.56 (45.11)

PROFIT / (LOSS) BEFORE TAX (1309.65) (1561.56)

PROVISION FOR TAXATION (including FBT / Deferred tax) - -

PROFIT / (LOSS) AFTER TAX (1309.65) (1561.56)

ADD: BALANCE FROM LAST YEAR (16916.85) (15355.29)

PROFIT /(LOSS) AVAILABLE FOR APPROPRIATION (18226.50) (16916.85)

PROPOSED DIVIDEND (Including Dividend Tax) Nil Nil

TRANSFER TO STATUTORY RESERVE Nil Nil

TRANSFER TO GENERAL RESERVE Nil Nil

BALANCE CARRIED FORWARD (18226.50) (16916.85)

2. DIVIDEND

In view of the absence of profit, the Board is not recommending any dividend on the Equity Shares of the Company during the period under review.

The Preference Shares issued to the Banks in terms of the CDR Approval carry a Cumulative Dividend of 9% and the Preference Shares issued to the Asia Pragati Capfin Private Limited a Cumulative Dividend of 4%. An amount of Rs. 346.52 Lakhs and Rs. 89.04 Lakhs respectively amounting to total of Rs. 435.56 Lakhs being the amount of Dividend accumulated but not paid are shown under Contingent Liability.

3. OPERATIONS

During the financial year ended 31st March, 2014, due to the inability in implementing the CDR package by the Banks the company was unable to disburse any amount as against a disbursement of Rs. 366.95 Lakhs during the previous period.

Your Company has been focusing on Collections during the year. In spite of the absence of any fresh Funds infused by the Banks, the Company was able to meet all the statutory, Staff obligations because of the Strong Collection mechanism.

4. Holding Company - Auctus Holdings Private Limited

The Company has been informed by M/s. Auctus Holdings Private Limited (Auctus) that they have purchased 8750 equity shares of our company comprising of 0.15% through Open Offer from the public in December, 2012.

It may be noted that as per Share Purchase Agreement dated 13th March, 2012, 30,36,703 Equity Shares comprising of 51% of Equity Capital of DFL Infrastructure Finance Limited was purchased from D B Zwirn Mauritius on June, 2013. Accordingly, DFL Infrastructure Finance Limited becomes subsidiary of Auctus.

Now Auctus holds 30,45,453 equity shares of DFL Infrastructure Finance Limited comprising of 51.15% to total Equity Capital.

5. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non Banking Financial Companies on various parameters. Your Company is in Category "B" with effect from 27th November, 2012.

6. Prohibitory Order from Reserve Bank of India

After completion of inspection of the books of accounts and other records of the Company carried out Under Section 45-N of the RBI Act, 1934, the Reserve Bank of India hereby directs that until further orders the Company shall not

a) Sell, transfer, create charge or mortgage or deal in any manner with its property and assets without prior written permission of the Reserve Bank of India;

b) Declare or distribute any dividend;

c) Transact any business; or

d) Incur any further liabilities.

7. ASSET LIABILITY MANAGEMENT COMMITTEE

The company has an Asset Liability Management Committee, which monitors the Asset Liability mismatch.

8. EXPLANATIONS TO THE REMARKS IN AUDITORS'' REPORT AS PROVISIONS OF SECTION 217(3) OF THE ACT:

In response to the Emphasis of matter made by the Auditor, the Board wishes to place the following explanation:

Reference to the Auditors Report Head of Account Reference to notes below

CDR implementation Refer note a

RBI directions Refer note b

Attention invited Net worth Refer note c to Shareholder

Redeemable Preference Refer note d Shares

Loans & advances Refer note e

Dividend for Preference Refer note f Shares

a. CDR implementation:

The Management of the Company approached the CDR Cell for the restructure of debts extended by consortium banks and was approved by CDR. However some of the Banks did not approve the CDR/CDR Re-work schemes due to which the Company was unable to implement the CDR rework scheme. The management is taking efforts to arrive at an acceptable One Time Settlement (OTS) with Secured Creditors.

b. Prohibitory Directions from Reserve Bank of India:

The Company has represented to Reserve Bank of India to withdraw the Directions.

c. Net Owned Funds:

Reason for fall in Net Owned Funds:

i. The company has gone through years of losses due to impairment of assets since 2007. Due to this substantial write offs in the past 5 years, the company has incurred losses amounting to more than Rs. 150 Crores.

ii. The Company has not been carrying out its main activity of lending since 2010 and hence no revenue generation has taken place. This has also contributed to the fall in the NOF.

Actions taken to improve the Net Owned Funds:

i. The company has converted part of the debt into Preference Shares thus improving the Capital base.

ii. The management is in dialogue with investors to bring in fresh equity funds to strengthen the capital base.

iii. The CDR package has not been approved by all the banks and hence no fresh funds have been extended by the banks. The company is in dialogue with the Consortium Banks for a "one time settlement".

iv. The management is pursuing efforts to raise funds from financial entities to re-commence the lending operations.

d. Preference Shares Allotted to Asia Pragati Capfin Pvt. Ltd. Limited:

The Redeemable Preference Shares issued to Asia Pragati Capfin Limited in the year 2007 should have been redeemed in December 2009. However due to absence of Profits and financial strain, the said shares were not redeemed. The company negotiated with the Preference Shareholders and rescheduled the redemption dates to 2017/2018/2019. Hence as on date of this Annual Report there is no default. However, the Dividend on these share due from 1-4-2013 have not been paid / provided in the absence of Profits.

e. Loans and Advances:

The remuneration paid to Mr. Ravichandran (erstwhile Managing Director) was not approved by the shareholders in the general meeting held in December 2010. Hence the company could not approach the Central Government for approval. As the remuneration was already paid, this amount was classified under Loans and Advances. Efforts are underway to recover the amount.

f. Dividend on Preference Shares issued to the Banks:

The consortium Banks have converted part of their outstanding to optionally Convertible Preference Shares as per the CDR Approval. This bear a cumulative dividend of 9%. However in the absence of Profits, the dividends have not been paid / provided since 2011-12 and also for the year 2013-14. Since the dividends are cumulative in nature, the same will be paid as and when profits are made.

9. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. A detailed report on Corporate Governance together with a certificate from the Statutory Auditors in compliance of Clause 49 of the Listing Agreement is attached which forms part of the Directors'' Report.

10. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussions and Analysis report highlighting the performance of the company is attached forming part of the Directors'' Report.

11. OTHER DISCLOSURES

a. SUBSIDIARIES

The Annual Accounts for the period ended March 31, 2014 of the Subsidiary Companies DFL Holdings and Securities Ltd and Smartinvest Agency.Com Private Limited are annexed to your Company''s Annual Report.

b. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statement for the period ended March 31, 2014 prepared in accordance with Accounting Standards 21 on Consolidated Financial Statements-issued by the Institute of Chartered Accountants of India, is also provided in this Annual Report in accordance with Clause 32 of the Listing Agreement.

12. DIRECTORS:

Change in Directorship during the period:

Particulars > Compliance

1 Mr. V Sambamoorthy, Additional Director of the Company has resigned on 14th September, 2013 :

The Board accepted his resignation vide the Board Meeting dated 16th September, 2013

2 Ms. S Mythili, Additional Director of the Company has resigned on 14th September, 2013 :

The Board accepted her resignation vide the Board Meeting dated 16th September, 2013

3 Ms. Krithika Sambamoorthy, Additional Director of the Company has resigned on 14th September, 2013 :

The Board accepted her resignation vide the Board Meeting dated 16th September, 2013

4 Dr. R Baskaran, Director of the Company has resigned on 5th February, 2014 :

The Board accepted his resignation vide the Board Meeting dated 5th February, 2014

5 Mr. T R Suresh was appointed as additional director with effect from 5th February, 2014 :

Approvals of the Board of Directors obtained vide the meeting dated 5th February, 2014

6 Mr. E Selvaraj was appointed as additional director with effect from 3rd May, 2014 :

Approvals of the Board of Directors obtained vide the meeting dated 3rd May, 2014

Retirement by Rotation

Mr. S Mahadevan, director liable to retire by rotation, being eligible offers himself for reappointment. Disqualification of Directors:

None of the Directors is disqualified to hold directorships under the provisions of Section 274(1) (g) of the Companies Act, 1956.

13. DIRECTORS'' RESPONSIBILITY STATEMENT Your Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 period and of the loss of the Company for the financial year ended 31st March, 2014.

3. That they 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; and

4. That they have prepared the annual accounts on a going-concern basis.

14. AUDITORS

M/s. P. B. Vijayaraghavan & Co, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

A certificate under Section 224(1B) of the Companies Act, 1956 has been received from M/s P. B. Vijayaraghavan & Co.

15. STATUTORY STATEMENT

A. Statement pursuant to Sec.212 (3) of the Companies Act, 1956 in respect of Subsidiary Companies is annexed.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay stock Exchange for the years 2014-15 and Annual Custodial Fees to National Securities Depository Limited and Central Depository Services Limited.

D. Information under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given hereunder:

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of employees are required to be set in the Director''s report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the annual report excluding the said information is being sent to all the shareholders.

Members who are interested in obtaining such particulars may write to the company''s registered office.

16. INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

The Company is a Non Banking Finance Company and has no activity relating to Conservation of Energy or technology absorption.

The Company does not have any Foreign Exchange earnings and Outgo.

17. ACKNOWLEDGEMENTS

Your Directors thank the Company''s Bankers and the Financial Institutions for their support. Your Directors also thank the customers and share-holders and also appreciate the wholehearted effort and co-operation rendered by the employees at all levels.

For and on behalf of the Board

Place: Chennai S BALACHANDER Date : 04.08.2014 Managing Director (DIN : 02644584)


Mar 31, 2013

The Directors present their Twenty Sixth Annual Report together with the Audited accounts for the financial year ended March 31, 2013.

1. FINANCIAL RESULTS

(Rs. In Lakhs) PARTICULARS For the Financial For the Financial year ended year ended 31.03.2013 31.03.2012

GROSS INCOME 340.45 308.42

PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION (644.32) (1454.29)

LESS: INTEREST 872.13 634.25

PROFIT/(LOSS) BEFORE DEPRECIATION (1516.45) (2088.54)

LESS: EXCEPTIONAL ITEMS (44.74)

LESS : DEPRECIATION (45.11) (62.99)

PROFIT / (LOSS) BEFORE TAX (1561.56) (2196.27)

PROVISION FOR TAXATION (including FBT / Deferred tax)

PROFIT / (LOSS) AFTER TAX (1561.56) (2196.27)

ADD: BALANCE FROM LAST YEAR (15355.29) (13159.05)

PROFIT /(LOSS) AVAILABLE FOR APPROPRIATION (16916.85) (15355.29)

PROPOSED DIVIDEND (Including Dividend Tax) Nil Nil

TRANSFER TO STATUTORY RESERVE Nil Nil

TRANSFER TO GENERAL RESERVE Nil Nil

BALANCE CARRIED FORWARD (16916.85) (15355.29)

2. DIVIDEND

In view of the paucity of profits, the Board is not recommending any dividend on the Equity Shares of the Company during the period under review.

The Preference Shares issued to the Banks in terms of the CDR Approval carry a Cumulative Dividend of 9% and The Preference Shares Issued to the Asia Pragati Capfin Private Limited a Cumulative Dividend of 4%. An amount of Rs. 356.63 Lakhs and Rs. 89.04 respectively amounting to total of Rs. 435.56 being the amount of Dividend accumulated are shown under Contingent Liability.

3. OPERATIONS

During the financial year ended 31st March, 2013, due to the non disbursal of funds by the Banks the company was able to disburse only Rs. 366.95 Lakhs as against a disbursement of Rs. 209.00 Lakhs during the previous period.

Your Company has been focusing on Collections during the year. Inspite of the absence of any fresh Funds infused by the Banks, the Company was able to meet all the statutory obligations because of the Strong Collection mechanism.

4. STATUS OF NBFC CLASSIFICATION

The Company had approached Reserve Bank of India (RBI) for changing its classification from "Deposit accepting" to "Non Deposit accepting NBFC". This has been approved by RBI and a new certificate of Registration issued on 27th November, 2012.

5. OPEN OFFER

The Company has been informed by M/s. Auctus Holdings Private Limited (Auctus) that they have signed a Share Purchase Agreement with D B Zwirn Mauritius (who hold 51% of the paid up Equity share capital) to acquire their shareholding. Auctus has also made a public announcement of the same and has filed the open offer document through SPA Merchant Bankers Limited with SEBI

The Open offer opened on November 15, 2012 and closed on November 29, 2012. A total of 8,750 equity shares were offered, which were accepted in full by Auctus Holdings Private Limited.

6. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non Banking Financial Companies on various parameters. Your Company is in Category "B" with effect from 27th November, 2012.

7. ASSET LIABILITY MANAGEMENT COMMITTEE

The company has an Asset Liability Management Committee, which continuously monitors the Asset Liability mismatch. The committee meets at regular intervals.

8. EXPLANATIONS TO THE REMARKS IN AUDITORS'' REPORT AS PROVISIONS OF SECTION 217(3) OF THE ACT:

In response to the remarks made by the Statutory Auditor, the Board wishes to explain as follows.

a. Reasons for diminishing NOF:

i. The company has gone through years of losses due to impairment of assets since 2007. Due to this substantial write offs in the past 5 years, the company has incurred losses amounting to more than Rs. 150 Crores.

ii. The Company has not been carrying out its main activity of lending and hence no revenue generation has taken place. This has also contributed to the fall in the NOF.

Actions taken to improve the NOF:

i. The company has converted part of the debt into Preference Shares thus improving the Capital base.

ii. The management is in dialogue with investors to bring in fresh equity funds to strengthen the capital base.

iii. The CDR package has not been approved by all the banks and hence no fresh funds have been extended by the banks. The company is in dialogue with the Consortium Banks for a "one time settlement".

iv. The management is pursuing efforts to raise funds from financial entities to re-commence the lending operations.

b. Remuneration paid to erstwhile Managing Director :

The remuneration paid to Mr. Ravichandran (erstwhile Managing Director) was not approved by the shareholders in the general meeting held in December 2010. Hence the company could not approach the Central Government. Since the remuneration was already paid, this amount was classified as "advance given". Efforts are underway to obtain the shareholders'' approval for the remuneration already paid.

c. Preference Shares Allotted to Asia Pragati Capfin Limited :

Company had issued Redeemable Preference Shares to Asia Pragati Capfin Limited in the year 2007 should have been redeemed in December 2009. However due to absence of Profits and acute financial strain, the said shares were not redeemed. The company negotiated with the Preference Shareholders and rescheduled the redemption dates to 2017/2018/2019. Hence as on date of this Annual Report there is no default. However, the Dividend on these share due from 1-4-2012 have not been paid / provided in the absence of Profits.

d. Dividend on Preference Shares issued to the Banks :

The consortium Banks have converted part of their outstanding to optionally Convertible Preference Shares as per the CDR Approval. These bear a cumulative dividend of 9%. However in the absence of Profits, the dividends have not been paid / provided since 2011-12 and also for the year 2012-13. Since the dividend is cumulative, the dividends will be paid as and when the profits are made.

e. Change in the Accounting Policy

From 1st April 2012, the Company recognizes the income arising out of Additional Finance Charges (AFC), Due Date Missing Charges and Cheque Bouncing Charges on receipt basis as against on Accrual basis hitherto. Due to this change, the loss has been over stated by Rs. 117.23 Lacs during the year under consideration.

This Change in Accounting Policy has been considered and recommended by the Audit Committee in the meeting held on 30th January, 2013 and approved by the Board of Directors in their meeting held on 31st January, 2013.

9. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. A detailed report on Corporate Governance together with a certificate from the Statutory Auditors in compliance of Clause 49 of the Listing Agreement is attached which forms part of the Directors'' Report.

10. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussions and Analysis report highlighting the performance of the company is attached forming part of the Directors'' Report.

11. OTHER DISCLOSURES

a. SUBSIDIARIES

The Annual Accounts for the period ended March 31, 2013 of the Subsidiary Companies DFL Holdings and Securities Ltd and Smartinvest Agency.Com Private Limited are annexed to your Company''s Annual Report.

b. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statement for the period ended March 31, 2013 prepared in accordance with Accounting Standards 21 on Consolidated Financial Statements-issued by the Institute of Chartered Accountants of India, is also provided in this Annual Report in accordance with Clause 32 of the Listing Agreement.

12. DIRECTORS:

Change in Directorship during the period:

S.No. Particulars Compliance

1 Mr. T R Suresh, Director of the Company The Board accepted his resignation vide the has resigned on 18th July, 2012 Circular Resolution dated 18th July, 2012

2 Mr. B Prakash, Wholetime Director of the The Board accepted his resignation vide the Company has resigned on 18th July, 2012 Circular Resolution dated 18th July, 2012

3 Mr. S Mahadevan, Director of the The Board accepted his resignation vide the Company has resigned on 18th July, 2012 Circular Resolution dated 18th July, 2012

4 Mr. V Sambamoorthy was appointed as Approvals of the Board of Directors obtained additional director with effect from 18th vide the meeting dated 18th October, 2012 October, 2012

5 Mr. R. Nagarajan, Director of the The Board accepted his resignation in the Company has resigned on 18th Oct. 2012 Board Meeting dated 18th October, 2012

6 Mr. B Prakash was appointed as Approvals of the Board of Directors obtained additional director with effect from 30th vide the meeting dated 30th November, 2012 November, 2012

S.No. Particulars Compliance

7 Mr. B Prakash was appointed as Whole Approvals of the Board of Directors obtained time director of the Company vide the meeting dated 30th November, 2012

subject to approval of Shareholders.

8 Mr. S Mahadevan was appointed as Approvals of the Board of Directors obtained additional director with effect from 30th vide the meeting dated 30th November, 2012 November, 2012

9 Dr. R Baskaran was appointed as Approvals of the Board of Directors obtained additional director with effect from 30th vide the meeting dated 30th November, 2012 November, 2012

10 Ms S Mythili was appointed as additional Approvals of the Board of Directors obtained director with effect from 30th November, vide the meeting dated 30th November, 2012 2012

11 Ms Krithika Sambamoorthy was Approvals of the Board of Directors obtained appointed as additional director with vide the meeting dated 30th November, 2012 effect from 30th November, 2012

Disqualification of Directors:

None of the Directors is disqualified to hold directorships under the provisions of Section 274(1) (g) of the Companies Act, 1956.

13. DIRECTORS'' RESPONSIBILITY STATEMENT Your Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 period and of the loss of the Company for the financial year ended March 31, 2013.

3. That they 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; and

4. That they have prepared the annual accounts on a going-concern basis.

14. AUDITORS

M/s P. B. Vijayaraghavan & Co, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

A certificate under Section 224(1B) of the Companies Act, 1956 has been received from M/s P. B. Vijayaraghavan & Co.

15. STATUTORY STATEMENT

A. Statement pursuant to Sec.212 (3) of the Companies Act, 1956 in respect of Subsidiary Companies is annexed.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay stock Exchange for the years 2013 – 14 and Annual Custodial Fees to National Securities Depository Limited and Central Depository Services Limited.

D. Information under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given hereunder:

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of employees are required to be set in the Director''s report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the annual report excluding the said information is being sent to all the shareholders

Members who are interested in obtaining such particulars may write to the company''s registered office.

16. INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

The Company is a Non Banking Finance Company and has no activity relating to Conservation of Energy or technology absorption.

The Company does not have any Foreign Exchange earnings and Outgo.

17. ACKNOWLEDGEMENTS

Your Directors thank the Company''s Bankers and the Financial Institutions for their support. Your Directors also thank the customers and share-holders and also appreciate the wholehearted effort and co-operation rendered by the employees at all levels. for and on behalf of the Board Place: Chennai V SAMBAMOORTHY

Date : 28.05.2013 Chairman


Mar 31, 2012

The Directors present their Twenty Fifth Annual Report together with the Audited accounts for the financial year ended March 31, 2012.

1. FINANCIAL RESULTS (Rs. In Lakhs)

PARTICULARS For the For the 18 Financial Months year ended period ended 31.03.2012 31.03.2011

GROSS INCOME 308.42 1931.69

PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION (1454.29) (1621.76)

LESS: INTEREST 634.25 2011.94

PROFIT/(LOSS) BEFORE DEPRECIATION (2088.54) (3633.71)

LESS: EXCEPTIONAL ITEMS (44.74) -

ADD: EXTRA - ORDINARY ITEMS - 1589.24

LESS: DEPRECIATION (62.99) (98.31)

PROFIT/(LOSS) BEFORE TAX (2196.27) (2142.78)

PROVISION FOR TAXATION (including FBT/Deferred tax) - -

PROFIT/(LOSS) AFTER TAX (2196.27) (2142.79)

ADD: BALANCE FROM LAST YEAR (13159.05) (11016.26)

PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION (15355.32) (13159.05)

PROPOSED DIVIDEND (Including Dividend Tax) - -

TRANSFER TO STATUTORY RESERVE - -

TRANSFER TO GENERAL RESERVE - -

BALANCE CARRIED FORWARD (15355.32) (13159.05)

2. DIVIDEND

In view of the in paucity of profits, the Board is not recommending any dividend on the Equity Shares of the Company during the period under review.

The Preference Shares issued to the Banks in terms of the CDR Approval carry a Cumulative Dividend of 9%. However due to paucity of Profits this has not been disbursed. An amount of Rs. 222.49 Lakhs being the amount of Dividend accumulated is shown under Contingent Liability.

3. OPERATIONS

During the financial year ended 31st March, 2012, the company was able to disburse only Rs. 209.50 Lakhs as against a disbursement of Rs. 231.00 Lakhs during the previous period.

Your Company has been focusing on Collections during the year under Review. Inspite of the absence of any fresh Funds infused the Company was able to meet all the statutory obligations because of a strong collection mechanism.

4. RESOURCES DEPOSITS

As on the date of this report, there is no deposit from public lying with the company.

5. PROMOTERS

The Company has been informed by M/s. Auctus Holdings Private Limited (Auctus) that they have signed a Share Purchase Agreement with D B Zwirn Mauritius (who hold 51% of the paid up Equity share capital) to acquire their entire shareholding. Auctus has also made a public announcement of the same and has filed a draft of the open offer document through SPA Merchant Bankers Limited with SEBI

6. OPTIONALLY CONVERTIBLE CUMULATIVE REDEEMABLE PREFERENCE SHARES

During the Year under Review, the Company had allotted 3,85,02,384 Optionally Convertible Cumulative Redeemable Preference Shares aggregating to Rs. 38,50,23,840/- with a Coupon Rate of 9% to the Consortium Banks as per the terms of the CDR Approval. As per the Re-worked CDR package these Preference Shares are Redeemable in four equal yearly installments commencing from the year 2014-15.

7. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non Banking Financial Companies on various parameters and your Company is in Category "A".

8. ASSET LIABILITY MANAGEMENT COMMITTEE

Your company has an Asset Liability Management Committee, which continuously monitors the Asset Liability matching. The committee meets at regular intervals.

9. EXPLANATIONS TO THE REMARKS IN AUDITORS' REPORT AS PROVISIONS OF SECTION 217(3) OF THE ACT

The Board of Directors have examined the Audit Report and in response to the remarks made Auditor, the responses are given below:

Reference Head of Account Reference to to the notes below Auditors Report

3(a) Negative net worth Refer Note 1

3(b) Reappointment and increase in Refer Note 2 remuneration of the former Managing Director

3(c) Redeemable Preference Shares Refer Note 3

5(f) Balance Confirmation Refer Note 4

5(g) Dividend for Optionally Convertible Refer Note 5 Cumulative Redeemable Preference Shares

Notes:

1. Consequent to the write offs due to impairment of assets during the years 2007 - 2011, the Net Owned Funds have fallen below the limits prescribed by Reserve Bank of India. However, consequent to the implementation of the CDR scheme and the infusion of Promoter's contribution the Net Worth is showing improvement. The Directors are confident that the Reserve Bank of India guidelines on minimum Net Owned Funds will be achieved in the coming years.

2. The Company is taking steps to recover the amount due from the erstwhile Managing Director Mr. R Ravichandran.

3. The Company has entered into an Preference Shareholder's Amendment Agreement with Asia Pragati Capfin Pvt. Ltd. (Preference Share Holder) on 27th March 2012 for redemption of preference shares of face value of Rs. 10 at a price of Rs. 8.54 per share. The gain on redemption amounting to Rs. 325 lakhs has not been accounted for during the year under review and the same shall be accounted at the time of redemption during the years 2017, 2018 & 2019. (Refer Note No. 2 of Note 19)

4. Company sends periodical Balance confirmation letters to Debtors and Creditors. The balances are reconciled as and when these confirmations are received.

5. The Company has made an allotment of 9% Optionally Convertible Cumulative Preference Shares to various banks during the year in accordance with Corporate Debt Restructuring package. The Company has not provided for preference dividend of Rs. 222.49 lakhs during the year due to inadequacy of profits. To that extent, losses and liabilities are understated. This amount is disclosed as contingent liability.

10. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. A detailed report on Corporate Governance together with a certificate from the Statutory Auditors in compliance of Clause 49 of the Listing Agreement is attached which forms part of the Directors' Report.

11. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussions and Analysis report highlighting the operations of the company is attached and forms part of the Directors' Report.

12. OTHER DISCLOSURES

a. SUBSIDIARIES

The Annual Accounts for the financial year ended March 31, 2012 of the Subsidiary Companies DFL Holdings and Securities Ltd and Smartinvest Agency.Com Private Limited are annexed to your Company's Annual Report.

b. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statement for the financial year ended March 31, 2012 prepared in accordance with Accounting Standards 21 on Consolidated Financial Statements-issued by the Institute of Chartered Accountants of India, is also provided in this Annual Report in accordance with Clause 32 of the Listing Agreement.

13. DIRECTORS:

Change in Directorship during the period:

Sl. Particulars Compliance No.

1. Mr. Jaideep Krishna, The Board accepted his Director of the Company resignation in the board has resigned on 23rd Meeting dated 23rd September, September, 2011. 2011

2. Mr. B. Prakash was appointed Approvals of the Board of as additional director with Directors obtained vide the effect from 23.09.2011 meeting dated 23.09.2011 subject to approval of Shareholders.

3. Mr. B. Prakash was appointed Approvals of the Board of as Whole time director of the Directors obtained vide the Company meeting dated 23.09.2011 subject to approval of Shareholders.

4. Mr. B. Prakash, Director of The Board accepted his the Company has resigned on resignation vide Circular 18th July, 2012. Resolution dated 18th July, 2012

5. Mr. S. Mahadevan, Director The Board accepted his of the Company has resigned resignation vide Circular on 18th July, 2012. Resolution dated 18th July, 2012

6. Mr. T. R. Suresh, Director The Board accepted his of the Company has resigned resignation vide Circular on 18th July, 2012. Resolution dated 18th July, 2012

Your Directors thank Mr. Jaideep Krishna, Mr. B. Prakash, Mr. S Mahadevan and Mr. T R Suresh for their valuable support during their tenure as Directors of your company.

Retirement by Rotation

Mr. R Nagarajan, director liable to retire by rotation, being eligible has offers himself for reappointment.

Disqualification of Directors:

None of the Directors is disqualified to hold directorships under the provisions of Section 274(1) (g) of the Companies Act, 1956.

14. CHANGE IN THE NAME OF THE COMPANY

Your Company has obtained the approval from Ministry of Corporate Affairs (Registrar of Companies, Tamil Nadu), Reserve Bank of India and the Shareholders for Change in the name of the Company from Dhandapani Finance Limited to DFL Infrastructure Finance Limited with effect from 20th July, 2011. The fresh certificate of Registration of Incorporation has been received by the Company.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 period and of the loss of the Company for the financial year ended March 31, 2012.

3. That they 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; and

4. That they have prepared the annual accounts on a going-concern basis.

16. AUDITORS

M/s P. B. Vijayaraghavan & Co, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. A certificate under Section 224(1B) of the Companies Act, 1956 has been received from M/s P. B. Vijayaraghavan & Co. M/s. Suresh and Balaji, the Auditors, have expressed their inability to continue and hence are not offering themselves for reappointment.

17. STATUTORY STATEMENT

A. Statement pursuant to Sec. 212 (3) of the Companies Act, 1956 in respect of Subsidiary Companies is annexed.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay stock Exchange for the year 2012 - 13.

D. Information under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given hereunder:

In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of employees are required to be set in the Director's report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the annual report excluding the said information is being sent to all the shareholders.

Members who are interested in obtaining such particulars may write to the company's registered office.

18. INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

The Company is a Non Banking Finance Company and has no activity relating to Conservation of Energy or technology absorption.

The Company does not have any Foreign Exchange earnings or outgo.

19. ACKNOWLEDGEMENTS

Your Directors thank the Consortium of Company's Bankers for their valuable and timely support. Your Directors also thank the CDR Cell for their efforts in reviving the Company. Your Directors also thank the customers and share-holders for their understanding and patience. Your Directors sincerely appreciate the wholehearted effort and co-operation rendered by the staff and employees at all levels.

for and on behalf of the Board

R. NAGARAJAN Chairman

Place: Chennai Date : August 07, 2012


Mar 31, 2011

The Directors present their Twenty Fourth Annual Report together with the Audited accounts for the 18 months period ended March 31, 2011.

1. FINANCIAL RESULTS (Rs. In Lakhs)

PARTICULARS For the 18 Months period ended 31.03.2011 For the year ended 30.09.2009

GROSS INCOME 1931.69 3075.17

PROFIT/(LOSS).BEFORE INTEREST & DEPRECIATION (1621.76) 1293.99

LESS: INTEREST 2011.94 2551.47

PROFIT/(LOSS) BEFORE DEPRECIATION (3633.71) (1257.48)

LESS: EXCEPTIONAL ITEMS (5534.42)

ADD: EXTRA - ORDINARY ITEMS 1589.24 -

LESS: DEPRECIATION (98.31) (66.35)

PROFIT/(LOSS) BEFORE TAX (2142.78) (6858.25)

PROVISION FOR TAXATION (including FBT / Deferred tax) - 2.78

PROFIT / (LOSS) AFTER TAX (2142.79) (6861.03)

ADD: BALANCE FROM LAST YEAR (11016.26) (4155.23)

PROFIT/(LOSS) AVAILABLE FOR APPROPROATION (13159.05) (11016.26)

PROPOSED DIVIDEND (Including Dividend Tax) - - -

TRANSFER TO STATUTORY RESERVE - -

TRANSFER TO GENERAL RESERVE - -

BALANCE CARRIED FORWARD (13159.05) (11016.26)

2. DIVIDEND

In view of the losses posted by your company, the Board decided not to recommend any dividend during the period under review.

3. OPERATIONS

During the period ending March 31, 2011, due to the paucity of funds the company was able to disburse only 2.31 crores as direct business and Rs. 8.33 Crores under arrangement with FICCL as against a disbursement of Rs. 27.02 Crores towards direct business and Rs.29.41 crores under FICCL arrangement respectively for the 12 months period ending 30th September 2009.

The Company has already approached CDR for restructuring of its debts and expects to restart its asset finance business once further funds infusion takes place.

DFL is however continuing its focus on recoveries from customers and the same have been satisfactory during the period under review. The Company is also looking into avenues of raising income through fee based sources viz., distribution of financial products including life & general insurance, mutual funds and fixed deposits.

4. RESOURCES

DEPOSITS

The Company has ceased taking deposits from 31.03.2005. In terms of the letter dated 28.12.2007 communicated by RBI, in response to the Companys application for conversion into Non deposit accepting company, all the outstanding deposits as on 07.03.2008 were transferred to an Escrow Account.

As on March 31, 2011, unclaimed deposits totaling to Rs. 1.54 Lakhs including interest, which matured for payment, were awaiting instructions for repayment. The Company sends periodical reminders to deposit holders before transferring the same to Investor Education and Protection Fund as per the provisions of Section 205C of the Companies Act, 1956.

5. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non Banking Financial Companies on various parameters. Your Company is in Category A indicating prompt and regular filing of returns.

6. ASSET LIABILITY MANAGEMENT COMMITTEE

The company has an efficient Asset Liability Management Committee, which continuously monitors the Asset Liability mismatch. The committee meets at regular intervals.

7. EXPLANATIONS TO THE REMARKS IN AUDITORS REPORT:

In response to the remarks made by the Statutory Auditor, the Board wishes to explain as follows.

Reference to the Auditors Report Head of Account Reference to notes below

3(a) Negative net worth Refer note 1

5(0 Balance confirmation Refer note 2

5(g) Donation Refer note 3

5(h) Re-appointment and increase in remuneration of the Managing Director Refer Notes on Accounts SI No 10(b) of Schedule 18

Notes

1. As a result of the extensive clean up of legacy issues initiated in March 2007. which continued until the year under review, companys net owned funds have fallen below the limit prescribed by RBI. Coupled with this, promoters of the company, DBZM were unable to infuse any further capital in to the company.

2. Company is in the process of obtaining balance confirmation from the parties and is hopeful of completing the exercise within the next 60 days.

3. Company is in the process of moving application with Company Law Board under section 621A of the Companies Act, 1956.

8. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. A detailed repor on Corporate Governance together with a certificate from the Statutory Auditors in compliance of Clause 4< of the Listing Agreement is attached which forms part of this Report.

9. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussions and Analysis report highlighting the performance of the company is attachec forming part of this Report.

10. OTHER DISCLOSURES

a. SUBSIDIARIES

The Annual Accounts for the period ended March 31, 2011 of the Subsidiary Companies Dhandapan Holdings & Securities Ltd and Smartinvest Agency.Com Private Limited are annexed to youi Companys Annual Report.

b. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statement for the period ended March 31, 2011 prepared in accordance witr Accounting Standards 21 on Consolidated Financial Statements-issued by the Institute of Charterec Accountants of India, is also provided in this Annual Report in accordance with Clause 32 of the Listing Agreement.

11. DIRECTORS:

Change in Directorship during the period:

S.No. Particulars Compliance

1 Mr. S Mahadevan was appointed as additional director with effect from 24.02.2011 Approvals of the Board of Directors obtained vide Circular resolution dated 24.02.2011 As per provisions of the Section 260 of the Companies Act, 1956, the directors hold office only up to the forthcoming coming Annual General Meeting. Your directors recommended for his regularization as the director in the ensuing Annual General meeting

2- Mr. Jaideep Krishna was appointed as additional director with effect from 20.05.2010 Approvals of the Board of Directors obtained vide Circular resolution dated 20.05.2010 As per provisions of the Section 260 of the Companies Act, 1956, the directors hold office only up to the forthcoming coming Annual General Meeting. Your directors recommended for his regularization as the director in the ensuing Annual General meeting

3 Mr. S Balachander was appointed as additional director with effect from 14.02.2011 Approvals of the Board of Directors obtained vide the meeting dated 14.02.2011

4 Mr. S Balachander was appointed as Whole time director of the Company Appointed by the Shareholders of the Company vide Postal Ballot dated 08.04.2011

5 Mr,T R Suresh was appointed as additional director with effect from 28.05.2011 Approvals of the Board of Directors obtained vide the meeting dated 28.05.2011. As 260 of the Companies Act, 1956 the directors hold office only up to the forthcoming coming Annual General Meeting. Your directors recommended for his regularization as the director in the ensuing General meeting

6 Mr. G S Gusain, Nominee Director appointed by Punjab National Bank Approval of the Board of Directors obtained vide the meeting dated 08.04.2011 He is appointed as a Nominee Director of the Company.

7 Mr. David Chul Know Lee who was a director of the Company, has resigned from the Board on 16.12.2009 The resignation was accepted vide circular resolution dated 16.12.2009

8 Mr. David Lawrence Culter. who was a director of the Company w.e.f. 15.05.2009, has resigned from the Board on 16.12.2009 The resignation was accepted vide circular resolution dated 16.12.2009

9 Mr. Tony Chung HO-Chang who was director of the Company w.e.f. 26.062 009, has resigned from the Board on 16.12.2009 The resignation was accepted vide circular resolution dated 16.12.2009

10 Mr. S. Shravan who was a director of the Company, has resigned from the Board on 14.02.2011 The Board Accepted the resignation vide the board Meetings dated 03.03.2011

11 Mr, S Narayanan who was a director of the Company, resigned from the Board on 24.02.2011 The Board Accepted the resignation vide the board Meetings dated 03.03.2011

12 Mr. R Ravichandran. Managing Director of the Company has resigned on 03rd March, 2011. The Board Accepted his resignation vide the board Meeting dated 03.03.2011

Retirement by Rotation

Mr. R Nagarajan, director liable to retire by rotation, being eligible has offers himself for reappointment.

Disqualification of Directors:

None of the Directors is disqualified to hold directorships under the provisions of Section 274(1) (g) of the Companies Act, 1956.

12. DIRECTORS RESPONSIBILITY STATEMENT Your Directors confirm:

1. That in the preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 period and of the loss of the Company for the 18 months period ended March 31, 2011

3. That they 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; and

4. That they have prepared the annual accounts on a going-concern basis.

13. AUDITORS

M/s P. B. Vijayaraghavan & Co, Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

Your Directors propose to appoint M/s. Suresh and Balaji, Chartered Accountants as Joint Statutory Auditors along with M/s. P B Vijayaraghavan & Co., retiring Auditors of the Company. Accordingly a resolution is being brought forward for their appointment in the ensuing Annual General Meeting. A Certificate under Section 224(1B) of The Companies Act, 1956 has been received from them

14. STATUTORY STATEMENT

A. Statement pursuant to Sec.212 (3) of the Companies Act, 1956 in respect of Subsidiary Companies is annexed.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay stock Exchange for the years 2009-10, 2010-11 and 2011-12

D. Information under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given hereunder:

In terms of the provisions of section 217(2 A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of employees are required to be set in the Directors report. However, as per the provisions of Section 219(l)(b)(iv) of the Act, the annual report excluding the said information is being sent to all the shareholders and such particulars be available for inspection to the members at Registered Office of the Company during working hours till the date of Annual General Meeting.

15. INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

The Company is a Non Banking Finance Company and has no activity relating to Conservation of Energy or technology absorption.

The Company does not have any Foreign Exchange earnings and Outgo.

16. ACKNOWLEDGEMENTS

Your Directors thank the Companys Bankers and the Financial Institutions for their valuable and timely support.

Your Directors also thank the customers, vehicle manufacturers, dealers and share-holders for their support Your Directors sincerely appreciate the wholehearted effort and co-operation rendered by the employees at all levels.

for and on behalf of the Board

Place: Chennai

Date: May 28, 2011 R NAGARAJAN

Chairman


Sep 30, 2009

The Directors present the Twenty Third Annual Report together with the Audited accounts for the year ended September 30, 2009.

1. FINANCIAL RESULTS (Rs. In Lakhs)

PARTICULARS For the year ended For the 18 Months 30.09.2009 ended 30.09.2008

GROSS INCOME 3075.17 7507.56

PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION 1293.99 3102.03

LESS: INTEREST 2551.47 4046.38

PROFIT/(LOSS) BEFORE DEPRECIATION (1257.48) (944.35)

ADD: EXCEPTIONAL ITEMS (5534.42) Nil

LESS: DEPRECIATION / IMPAIRMENT LOSS (66.35) (501.74)

PROFIT / (LOSS) BEFORE TAX (6858.25) (1446.09)

PROVISION FOR TAXATION (including FBT/ Deferred tax) 2.78 51.97

PROFIT / (LOSS) AFTER TAX <6861.03) (1498.06)

ADD: BALANCE FROM LAST YEAR (4155.23) (2657.12)

PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION (11016.26) (4155.23)

PROPOSED DIVIDEND (Including Dividend Tax) Nil Nil

TRANSFER TO STATUTORY RESERVE Nil Nil

TRANSFER TO GENERAL RESERVE Nil Nil

BALANCE CARRIED FORWARD (11016.26) (4155.23)

2. DIVIDEND

In view of the losses posted by your company, the Board decided not to recommend any dividend during the year under review.

3. OPERATIONS

During the year ended September 30, 2009, the company has disbursed an amount of Rs. 56.43 Crores (Rs. 27.02 Crores as direct business and Rs. 29.41 Crores under arrangement with FICCL) as against a disbursement of Rs. 179.39 Crores during the 18 months ended 30th September 2008. The severe liquidity crunch and fall in general market conditions have affected new loan disbursements for the year under review. Period from October to December 2008 being worst effected and almost all of the NBFCs stopped new. loan disbursements. DFL continued its focus on recoveries from customers which is the companys strong point and recoveries have been satisfactory during the year under review.

4. SLUMP SALE REVERSAL

As detailed in the previous annual report, DFL initiated business transfer to Zwirn Pragati Capfin Private Limited ("ZP) by way of a slump sale on a going concern basis. With the approval of the share holders of DFL and the Board of.Directors, on 30th September, 2008, your Company entered into a Business Transfer Agreement ("BTA") with ZP. The BTA provided for the transfer of business, including all assets and liabilities but excluding tax liabilities, on a slump sale basis. The transfer was to be effective on 31st October 2008 (this deadline was extended later), subject to the achievement of all conditions precedent, including obtaining the approval of all lenders.

However during the quarter ended 30.06.2009, ZP terminated the BTA citing that the conditions precedent in the agreement had not been met by DFL. The board of DFL met on the 3rd of July, 2009, and deliberated the matter and accepted the termination notice from ZP and also decided to reverse all slump sale entries which were passed as of 30th September 2008.

The impact of slump sale was given in the Companys books of accounts for the year ended 30th September 2008. However, due to non-fulfilment of the conditions precedent, the Business Transfer Agreement was terminated and necessary effect has been given for the reversal of slump sale entries as on 01 st October 2008.

5. RESOURCES

DEPOSITS

The Company has ceased taking deposits from 31.03.2003. In terms of the letter dated 28.12.2007 communicated by RBI, in response to the Companys application for conversion into Non deposit accepting company, all the outstanding deposits as on 07.03.2008 were transferred to an Escrow Account.

As on 30.09.2009, unclaimed deposits totaling to Rs. 1.S4 Lakhs including interest, which matured for payment, were awaiting instructions for repayment. The Company sends periodical reminders to deposit holders before transferring the same to Investor Education and Protection Fund as per the provisions of Section 205C of the Companies Act, 1956.

6. PRUDENTIAL NORMS

Reserve Bank of India has prescribed prudential norms for registered Non Banking Financial Companies on various parameters. Your Company is in Category A indicating prompt and regular filing of returns.

7. ASSET LIABILITY MANAGEMENT COMMITTEE

The company has an efficient Asset Liability Management Committee, which continuously monitors the Asset Liability mismatch. The committee met at regular intervals.

8. PROSPECTS

The Indian economy managed to grow at a rate of 6.70% in the year ending March 2009 after growing at an average rate,of around 9 percent or mors in three fiscal years to March 2008. This was on account of a global economic downturn and a contraction in domestic demand. But future looks bright with expectations of Indian economy growing at more than 8% in the coming years.

The first quarter of the year, Oct-Dec08, was the worst effected period with almost all the NBFCs putting a hold on their fresh new loan disbursements due to severe liquidity crunch. Situation improved later, though the negative growth over previous year continued till June 2009. One of the major indicators considered as a bench mark for analyzing the growth pattern in Indian economy, sales of new commercial vehicles, has shown promise with growth in sales, over previous year, from July 2009. From November 2009 onwards the sale of commercial vehicles are registering an impressive growth, of more than 100% over previous year.

Several factors, such as increased movement of freight at the leading ports, pick-up in project investments, increased hiring, and encouraging data from a number of key manufacturing segments could be an indicator that the downtrend has bottomed out and that our economy is regaining its lost vigour It is reported that auto, cement, steel and capital goods sectors have started performing strongly which indicates a possible strong turnaround in the economy. Though the slowdown in the economy has led to lower freight movement, which in turn brought down the sales of new commercial vehicles as they are mainly used for long haulage of manufactured goods, the demand for used vehicles was not impacted much as these vehicles are used in shorter routes for carrying essential commodities. The funding requirements of the used commercial vehicles segment are estimated to be about Rs. 650 bn. The aspirations would continue to grow and so would the demand for used trucks.

9. EXPLANATIONS TO THE REMARKS IN AUDITORS REPORT:

In response to the remarks made by the Statutory Auditor, the Board wishes to explain as follows.

Reference to the Head of Account Reference Auditors Report to notes below

3 (a) Company Secretary Refer note 1

3 (b) Negative net worth Refer note 2

3 (c) Going concern Refer note 3

5 (f) Managing Directors remuneration Refer note 4

5 (g) Balance confirmation Refer note 5

5 (h) Provision for outstanding in secured advances extended to Dhandapani Properties (P) Ltd Refer note 6

Notes

1. Since the management was occupied with the task of completing slump sale process which envisaged transfer of all manpower, assets and liabilities of the company in favour of Zwim Pragati Finance Private Limited (ZP), the recruitment process of company secretary could not be taken up earlier. However this task was taken up post slump sale reversal and company secretary came on board in September 2009.

2. As a result of the extensive clean up of legacy issues initiated in March 2007, which continued until the year under review, companys net owned funds have fallen below the limit prescribed by RBI. Coupled with this, promoters of the company, DBZM were unable to infuse any further capital in to the company.

Board of DFL had taken note of the situation and decided to approach lenders of the company with a request to allow for a deep restructuring of its debts through Corporate Debt Restructure (CDR) mechanism. Process for admission of companys proposal in to CDR mechanism is progressing smoothly with requisite majority of the lenders giving their consent.

As a result of implementation of CDR package which envisages conversion of part of the debt to equity, net worth of the company will turn positive and this will also enable the company to restart its direct line of business actively.

3. As explained earlier the company is in the process of going through a debt restructuring process and simultaneously efforts are being made to bring in a new investor.

DFLs board believes that the business model followed by the company has inherent strengths and company will be able to come back to normal status post the CDR process and infusion of capital by new investor. Surviving through the past 3 years under difficult situations is a testimony of the strength of the business model followed by company.

Post CDR process, company shall have healthy cash flows due to the expected reliefs derived from CDR process and infusion of capital will allow the company to leverage and raise borrowings to restart die direct line of business actively.

4. Company received approval of the Central Government vide their letter dated 17th August 2009. This is being put up for approval in the forth coming AGM to be held on 29th March 2010.

5. Company is in the process of obtaining balance confirmation from the parties and is hopeful of completing the exercise within the next 60 days.

6. The company is actively pursuing the matter with the concerned party and is hopeful a resolution in the current financial year, i.e., 2010-11.

10. CORPORATE GOVERNANCE

Your Company is complying with the Code of Corporate Governance introduced by SEBI. A detailed report on Corporate Governance together with a certificate from the Statutory Auditors in compliance of Clause 49 of the Listing Agreement is attached which forms part of the Directors Report.

Management Discussion and Analysis

Management Discussion and Analysis report highlighting the performance of the company is attached forming part of the Directors Report.

11. OTHER DISCLOSURES

a. SUBSIDIARIES

The Annual Accounts for the Financial Year ended March 31, ,2009 of the Subsidiary Companies Dhandapani Holdings & Securities Ltd and Smartinvest Agency.Com Private Limited are annexed to your Companys Annual Report.

b. CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statement for the period ended September 30, 2009 prepared in accordance with Accounting Standards AS 21 on Consolidated Financial Statements-issued by the Institute of Chartered Accountants of India, is also provided in this Annual Report in accordance with Clause 32 of the Listing Agreement.

12. DIRECTORS

Mr. S Narayanan and Mr. S Shravan were appointed as additional directors. As per provisions of the Section 260 of the Companies Act, 1956, the directors hold office only up to the forthcoming Annual General Meeting. Resolutions seeking approval of Members for the appointment of Mr. S Narayanan and Mr. S Shravan as directors of the Company have been incorporated in the Notice of the ensuing Annual General meeting.

Mr. R Nagarajan, director liable to retire by rotation, being eligible has offered himself for reappointment.

Mr. David Chul Kwon Lee, R Vasudevan, Jaideep Krishna, Mr. Shing Yan Chan who were directors of the Company, have resigned on different dates during the year under scrutiny. Mr. David Lawrence Cutler and Mr. Tony Chung Ho-Chang, who were appointed as the additional directors of the company on May 15,2009 and June 26, 2009 have resigned with effect from December 16, 2009.

None of the Directors is disqualified to hold directorships under the provisions of Section 274(1) (g) of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217 (2AA) of the Companies Act 1956, your Directors confirm:

1. That in the- preparation of the annual accounts, the applicable accounting standards have been followed;

2. That they 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 period and of the loss of the Company for the year ended 30th September 2009.

3. That they 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; and

4. That they have prepared the annual accounts on a going-concern basis.

13. AUDITORS

M/s P. B. Vijayaraghavan & Co, Chartered Accountants, Chennai, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

A certificate under Section 224(1B) of the Companies Act, 1956 has been received from them.

14. STATUTORY STATEMENT

A. Statement pursuant to Sec.212 (3) of the Companies Act, 1956in respect of Subsidiary Companies is annexed.

B. The equity shares of your Company are listed at the Bombay stock Exchange.

C. The Company has paid the Listing fees to Bombay Stock Exchange for the years 2007-08, 2008-09 & 2009-10.

D. Information under section 217(2 A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given hereunder:

In term of the provisions of section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, the name and other particulars of employees are required to be set in the Directors report. However, as per the provisions of Section 219(lXbXiv) of the Act, die annual report excluding die said information is being sent to all the shareholders.

Members who are interested in obtaining such particulars may write to the companys registered office.

15. INFORMATION AS PER SECTION 217 (1) (e) OF THE COMPANIES ACT, 1956

- The Company is a Non Banking Finance Company and has no activity relating to Conservation of Energy or technology absorption.

- The Company does not have any Foreign Exchange earnings and Outgo.

16. ACKNOWLEDGEMENTS

Your Directors thank the Companys Bankers and the Financial Institutions for their valuable and timely support.

Your Directors also thank the customers, vehicle manufacturers, dealers and share-holders for their support Your Directors sincerely appreciate the wholehearted effort and co-operation rendered by the employees at all levels.

for & On behalf of the Board Place: Chennai R. NAGARAJAN

Date: 26.02.2010 Chairman

 
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