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Directors Report of McDowell Holdings Ltd.

Mar 31, 2014

Dear Members,

The Directors present the Tenth Annual Report of your Company and the audited accounts for the year ended March 31, 2014.

Since this Report pertains to financial year that commenced prior to April 01, 2014, the contents therein are governed by the relevant provisions/schedules/rules of the Companies Act, 1956, in compliance with General Circular No. 08/2014 dated April 04, 2014, issued by the Ministry of Corporate Affairs.

FINANCIAL RESULTS

For the Financial Year Ended Particulars 31.03.2014 31.03.2013

(Rs.) (Rs.)

Income 128,588,029 112,532,252

Less : Expenditure 131,860,727 70,839,934

Less : Provision for doubtful loans and advance 205,070,767 Nil

Profit / (Loss) before taxation (208,343,465) 41,692,319

Less: Provision for tax Nil 5,420,000

Profit / (Loss) after tax (208,343,465) 36,272,319

Less: Transfer to Statutory Reserve Fund Nil 7,254,464

Balance brought forward from previous year 58,346,328 29,328,473

Balance carried forward (149,997,136) 58,346,328



DIVIDEND

In view of loss for the year, your Directors are unable to recommend any dividend on equity shares for the year ended March 31, 2014.

REVIEW OF OPERATIONS

The total income of the Company during the financial year under review has marginally increased to Rs. 128,588,029 against Rs. 112,532,252 in the previous financial year. The total expenditure during the year was Rs. 131,860,727 against Rs. 70,839,934 in the previous financial year. After providing for Rs. 205,070,767 in respect of amounts due from an entity, which is considered by the Board as doubtful of recovery, the Company has recorded a net loss of Rs. 208,343,465 for the year under review against net profit of Rs. 36,272,319 in the previous financial year.

The Company has provided corporate guarantee and created pledge on 6.3 million shares of United Breweries Limited, held by it as investments, in favour of a lender to secure their lendings to certain group companies and the total amount outstanding as on March 31, 2014 is Rs. 496 crores. Three of such borrowers have defaulted and the lender has demanded repayment of a sum of Rs. 337.52 crores due from them. Simultaneously, the lender has invoked the corporate guarantee and exercised its right of pledge provided by the Company to realize the above dues. The Company is in negotiation with the lender to restore the facility made available to the defaulting borrowers. No adverse action has been taken against the Company. Pending final outcome of the negotiations, the Company continues to recognize its obligations as contingent liabilities.

FUTURE PROSPECTS

Your Company continues to hold strategic investments in the UB Group Companies. As the performance of the major investee companies is on the growth path, it is expected that the dividend distribution by such investee companies would increase progressively.

In order to strengthen the prospects of the Company, your Directors are in the process of evaluating entering into some additional activities such as trading etc. Should such opportunities prove to be attractive, your Company would consider these during the current year.

CAPITAL

During the year under review the Authorised Capital of your Company remained unchanged at Rs. 150,000,000 divided into 15,000,000 equity shares of Rs. 10 each.

The issued, subscribed and paid-up equity share capital of your Company stood at Rs. 139,922,580 divided into 13,992,258 equity shares of Rs. 10 each fully paid-up.

DIRECTORS

Mr. N Srinivasan, Independent Director, is liable to retire by rotation under the erstwhile applicable provisions of the Companies Act, 1956. However, in terms of Section 149 and other applicable provisions of the Companies Act, 2013, Independent Directors can hold office for two terms of five consecutive years. Accordingly, Mr. N Srinivasan has offered himself for appointment as an Independent Director for three consecutive years for a term upto the conclusion of the thirteenth Annual General Meeting of the Company in the calendar year 2017.

Mr. M. Srinivasulu Reddy and Mr. Anil Pisharody were appointed as Additional Directors of the Company, in the meeting of the Board held on July 16, 2014, to hold office upto the date of the ensuing Annual General Meeting (AGM) of the Company.

Pursuant to the provisions of the Companies Act, 2013 which have been enacted with effect from 1 April 2014, Mr. M Srinivasulu Reddy, if appointed at the forthcoming AGM shall be an ''independent director'' under the said Act for a period of five years with effect from the date of the AGM.

The proposal regarding their appointment/re-appointment as Directors is placed for your approval.

Mr. M R Doraiswamy Iyengar and Mr. S N Prasad resigned from the Board with effect from August 14, 2013. Mr. A Harish Bhat and Mr. R N Pillai resigned from the Board with effect from May 12, 2014 and May 31, 2014 respectively.

AUDITORS

Messrs. Vishnu Ram & Co., Chartered Accountants, retire as Auditors of the Company at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. In terms of the provisions contained in the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 the appointment of Statutory Auditors is proposed for a period of three financial years commencing from 2014-2015 to hold office from the conclusion of the Tenth Annual General Meeting till the conclusion of the Thirteenth Annual General Meeting. Their appointment during the aforesaid term of three financial years shall be subject to ratification by the Members at subsequent Annual General Meetings.

With reference to observations in the Auditors Report regarding invocation of guarantee and pledge by a lender, diminution in the carrying value of certain long term investments, appropriateness of treating certain loans as good and appropriateness of preparation of financial statements on going concern basis, the relevant notes to the accounts comprehensively explain the management''s views on such matters.

REGISTRATION WITH RESERVE BANK OF INDIA AS NON BANKING FINANCIAL COMPANY

Your Company continues to be a Non-Banking (non-deposit taking) Financial Company, duly registered with Reserve Bank of India under the provisions of Section 45-IA of the Reserve Bank of India Act, 1934. In terms of the provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a ''Systemically Important Non-Deposit taking Non-Banking Financial Company.

Certain regulatory requirements prescribed by the Reserve Bank of India under the NBFC regulations could not be met by the Company. The matter is being addressed by the Board of Directors to find a suitable solution.

OPEN OFFER

The Company along with other constituents of the UB Group is a party to an agreement entered into between the UB Group and Adventz Group in respect of their respective shareholding in Mangalore Chemicals and Fertilizers Limited. Further, the Company has also joined Zuari Fertilizers and Chemicals Limited, a part of Adventz Group, in making a competing offer under Regulation 20 of the SEBI (SAST) Regulations, 2011, as amended, for acquisition of up to 3,08,13,939 equity shares of Rs. 10 each from the public shareholders of Mangalore Chemicals and Fertilizers Limited by Zuari Fertilisers and Chemicals Limited at a price of Rs. 68.55 per equity share. In terms of the agreement, Zuari Fertilisers and Chemicals Limited has agreed to acquire all the shares that will be tendered in the competing offer and all financial obligations, costs, charges and expenses including payment of consideration to Public Shareholders in terms of the SEBI Regulations will be borne by Zuari Fertilisers and Chemicals Limited alone. SEBI has issued its ''No objection'' for the open offer subject to receipt of approval from the Competition Commission of India.

LISTING OF EQUITY SHARES OF THE COMPANY

The equity shares of your Company continue to be listed on Bangalore Stock Exchange Limited (Regional Exchange), BSE Limited and National Stock Exchange of India Limited. The Annual Listing fees for the year 2014-15 have been paid.

SHIFTING OF REGISTERED OFFICE

Pursuant to the decision taken by the Board of Directors, the Registered Office of your Company will be shifted from Canberra, Level 9, UB City, #24, Vittal Mallya Road, Bangalore - 560 001 to UB Tower, Level 12, UB City, 24, Vittal Mallya Road, Bangalore - 560 001 with effect from August 01, 2014.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on July 25, 2014 (i.e. date of last benpos), equity shares representing 96.67% of the equity share capital are held in dematerialised form.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the Annual Report along with a certificate of compliance from the Auditors.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the listing agreement with the stock exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION ETC.

Your Company has not undertaken any activity relating to conservation of energy and technology absorption and hence there is nothing to be disclosed pursuant to Section 217 (1) (e) of the Companies Act, 1956.

During the year under review, the Company had no transactions in foreign exchange and no expenditure was incurred on Research & Development.

PARTICULARS OF EMPLOYEES

The Company has no employee in respect of whom Statement under Section 217 (2A) of the Companies Act, 1956, is required to be annexed.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required in terms of Section 217 (2AA) of the Companies Act, 1956, your Directors state and confirm that -

a. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. the Accounting Policies have been selected and applied consistently and the judgments and estimates made 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 loss of the Company for that year;

c. proper and sufficient care has been taken 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; and

d. the Annual Accounts have been prepared on a going concern basis.

E-VOTING

In terms of Section 108 of the Companies Act, 2013, Rules framed thereunder and Clause 35B of the Listing Agreement, the Company is providing e-voting facility to its shareholders in respect of all shareholders'' resolutions proposed to be passed at this Annual General Meeting.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation, understanding and support extended by the Group Companies, Employees, Regulatory bodies, Shareholders and Bankers.

By Authority of the Board

July 30, 2014 N Srinivasan Bangalore Chairman


Mar 31, 2013

The Directors present the Ninth Annual Report of your Company and the audited accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

For the Financial Year Ended Particulars 31.03.2013 31.03.2012 (Rs.) (Rs.)

Profit from operations 41,692,319 16,411,234

Less : Provision for tax 5,420,000 1,235,866

Profit after tax 36,272,319 15,175,368

Less : Transfer to Statutory Reserve Fund 7,254,464 3,035,074

Balance brought forward from previous year 29,328,473 17,188,179

Surplus carried to Balance Sheet 58,346,328 29,328,473

DIVIDEND

Your Directors have deemed it prudent not to recomend any dividend on equity shares for the year ended March 31, 2013, in order to conserve the resources for the business.

REVIEW OF OPERATIONS

Your Company has recorded good performance during the year under review. Inclusive of profit on sale of investments, the total income of your Company during the financial year was Rs. 112,532,252 compared to Rs. 33,077,102 in the previous financial year. The total expenditure during the year was Rs. 70,839,934 against Rs. 16,665,868 in the previous financial year. Your Company has recorded a net profit of Rs. 36,272,319 for the year under review compared to Rs. 15,175,368 in the previous financial year.

A sum of Rs. 7,254,464 (previous year: Rs. 3,035,074), has been transferred to Statutory Reserve Fund, pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934. The provision of Rs. 1,714,722 for Standard Assets has been made during the financial year in terms of the Notification issued by Reserve Bank of India.

FUTURE PROSPECTS

Your Company continues to hold strategic investments in the UB Group Companies. As the performance of the major investee companies is on the growth path, it is expected that the dividend distribution by such investee companies would increase progressively.

The Company will continue to focus on making long-term strategic investments in various existing/new ventures, besides consolidating the existing investments, as and when opportunities and resources are available.

CAPITAL

The Authorised Capital of your Company remained unchanged at Rs. 150,000,000 divided into 15,000,000 equity shares of Rs. 10 each.

During the year under review, Kingfisher Finvest India Limited, one of the promoters of your Company had exercised the option to convert 297,909 10% Optionally Convertible Debentures of the face value of Rs. 100 ("OCDs") each and was allotted 607,977 equity shares of Rs. 10 each, fully paid-up, on a preferential basis, as per SEBI Regulations.

The issued, subscribed and paid-up equity share capital of your Company has increased from Rs. 133,842,810 divided into 13,384,281 equity shares of Rs. 10 each fully paid-up to Rs. 139,922,580 divided into 13,992,258 equity shares of Rs. 10 each fully paid-up, consequent to the allotment of 607,977 equity shares of Rs. 10 each fully paid-up to Kingfisher Finvest India Limited, on a preferential basis, on April 17, 2012.

DIRECTORS

Mr. N Srinivasan, Director, retires by rotation and being eligible, offers himself for re-appointment.

Mr. A. Harish Bhat was re-appointed as the Managing Director of the Company without remuneration for a further period of three years from November 06, 2012, with the approval of the shareholders of the Company at the last Annual General Meeting held on September 25, 2012.

Mr. S G Ruparel ceased to be a Director of the Company, consequent upon his demise on February 11, 2013. Dr. Vijay Mallya resigned from the Board with effect from February 28, 2013. The Board places on record its appreciation of the valuable services rendered by Mr. S G Ruparel and Dr. Vijay Mallya during their tenure of office as Directors of your Company.

Mr. R N Pillai (Mr. Pillai) was appointed as an Additional Director of the Company with effect from March 26, 2013, pursuant to the provisions of Section 260 of the Companies Act, 1956, and holds office as a Director upto the date of this Annual General Meeting. A notice under Section 257 of the Companies Act, 1956, has been received from a member specifying his intention to propose the appointment of Mr. Pillai at this Annual General Meeting.

AUDITORS

M/s. Vishnu Ram & Co., Chartered Accountants, the retiring Auditors, are eligible for re-appointment at the ensuing Annual General Meeting and it is necessary to fix their remuneration.

REGISTRATION WITH RESERVE BANK OF INDIA AS NON BANKING FINANCIAL COMPANY

Your Company continues to be a Non-Banking (non-deposit taking) Financial Company, duly registered with Reserve Bank of India under the provisions of Section 45-IA of the Reserve Bank of India Act, 1934. In terms of the provisions of Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007, the Company is categorised as a ''Systemically Important Non-Deposit taking Non-Banking Financial Company''.

LISTING OF EQUITY SHARES OF THE COMPANY

The equity shares of your Company continue to be listed on Bangalore Stock Exchange Limited (Regional Exchange), Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Annual Listing fees for the year 2013-14 have been paid to these Stock Exchanges.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on May 24, 2013 (i.e. date of last benpos), equity shares representing 96.50% of the equity share capital are held in dematerialised form.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the Annual Report along with a certificate of compliance from the Auditors. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the listing agreement with the stock exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION ETC.

Your Company has not undertaken any manufacturing activity during the year under review. Hence the disclosure relating to conservation of energy and technology absorption pursuant to Section 217 (1) (e) of the Companies Act, 1956 is not applicable.

During the year under review, the Company had no transactions in foreign exchange and no expenditure was incurred on Research & Development.

EMPLOYEES

The Company has no employee in respect of whom Statement under Section 217 (2A) of the Companies Act, 1956, is required to be annexed.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required in terms of Section 217 (2AA) of the Companies Act, 1956, your Directors state and confirm that -

a. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. 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 financial year and of the profit of the Company for that year;

c. they 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; and

d. they have prepared the Annual Accounts on a going concern basis.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation, understanding and support extended by the Group Companies, Shareholders and Bankers.

By Authority of the Board

May 30, 2013 N Srinivasan

Mumbai Chairman


Mar 31, 2012

The Directors present the Eighth Annual Report of your Company and the audited accounts for the year ended March 31, 2012.

FINANCIAL RESULTS

For the Financial Year Ended

Particulars 31.03.2012 31.03.2011

(Rs.) (Rs.)

Income 33,077,102 23,016,474

Less : Expenditure 16,665,868 33,056,294

Profit / (Loss) before taxation 16,411,234 (10,039,820)

Less : Provision for tax 1,235,866 1,484,240

Profit / (Loss) after tax 15,175,368 (11,524,060)

Less : Transfer to Statutory Reserve Fund 3,035,074 Nil Balance brought forward from previous year 17,188,180 28,712,239

Balance carried forward 29,328,473 17,188,180

DIVIDEND

In order to conserve the resources for operations, your Directors do not recommend any dividend on equity shares for the year ended March 31, 2012.

REVIEW OF OPERATIONS

Your Company has recorded good performance during the year under review. Inclusive of income by way of dividend, interest and security commission, the total income of your Company during the financial year was Rs. 33,077,102 compared to Rs. 23,016,474 in the previous financial year. The total expenditure during the year was Rs. 16,665,868 against Rs. 33,056,294 in the previous financial year. Your Company has recorded a net profit of Rs. 15,175,368 for the year versus net loss of Rs. 11,524,060 in the previous financial year.

A sum of Rs. 3,035,074 (previous year: Nil), has been transferred to Statutory Reserve Fund, pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934.

FUTURE PROSPECTS

Your Company continues to hold strategic investments in the UB Group Companies. As the performance of the investee companies is on the growth path, it is expected that the dividend distribution by the investee companies would increase in the years to come.

The Company will continue to focus on making long-term strategic investments in various existing/new ventures, besides consolidating the existing investments, as and when opportunities and resources are available.

CONVERSION OF OPTIONALLY CONVERTIBLE DEBENTURES INTO EQUITY SHARES OF THE COMPANY

During the year under review, Kingfisher Finvest India Limited, one of the promoters of your Company had exercised the option to convert 641,350 10% Optionally Convertible Debentures of the face value of Rs. 100 ("OCDs") each and was allotted 635,000 equity shares of Rs. 10 each fully paid-up, on a preferential basis, at a price of Rs. 101.00 per equity share as per SEBI guidelines.

Subsequent to the balance sheet date, Kingfisher Finvest India Limited, further exercised the option to convert the balance 297,909 OCDs and was allotted 607,977 equity shares of Rs. 10 each fully paid-up, on a preferential basis, at a price of Rs. 49.00 per equity share as per SEBI guidelines.

CAPITAL

During the year under review the Authorized Capital of your Company remained unchanged at Rs. 150,000,000 divided into 15,000,000 equity shares of Rs. 10 each.

The issued, subscribed and paid-up equity share capital of your Company has increased from Rs. 127,492,810 divided into 12,749,281 equity shares of Rs. 10 each fully paid-up to Rs. 139,922,580 divided into 13,992,258 equity shares of Rs. 10 each fully paid-up, consequent to the allotment of 1,242,977 equity shares of Rs. 10 each fully paid- up to Kingfisher Finevest India Limited, on a preferential basis, on August 08, 2011 and April 17, 2012.

DIRECTORS

Mr. S Narasimha Prasad and Mr. M R Doraiswamy Iyengar, Directors, retire by rotation and being eligible, offer themselves for re-appointment.

The Board of Directors of the Company, at its Meeting held on August 08, 2012, has re-appointed Mr. A Harish Bhat as Managing Director of the Company in terms of Section 269 of the Companies Act, 1956, for a further period of three years, with effect from November 6, 2012, without remuneration, subject to the approval of the Shareholders at the Annual General Meeting.

As per the declarations received, none of the Directors of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 274 (1) (g) of the Companies Act, 1956.

AUDITORS

M/s. Vishnu Ram & Co., Chartered Accountants, the retiring Auditors, are eligible for re-appointment at the ensuing Annual General Meeting and it is necessary to fix their remuneration.

REGISTRATION WITH RESERVE BANK OF INDIA AS NON BANKING FINANCIAL COMPANY

Your Company continues to be a Non-Banking (non deposit taking) Financial Company, duly registered, with Reserve Bank of India under the provisions of Section 45-IA of the Reserve Bank of India Act, 1934.

LISTING OF EQUITY SHARES OF THE COMPANY

The equity shares of your Company continue to be listed on Bangalore Stock Exchange Limited (Regional Exchange), Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Annual Listing fees for the year 2012-13 have been paid to these Stock Exchanges.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialization mode. As on August 03, 2012 (i.e. date of last benpos), equity shares representing 96.38% of the equity share capital are held in dematerialized form.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the Annual Report along with a certificate of compliance from the Auditors. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the listing agreement with the stock exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION ETC.

Your Company has not undertaken any activity relating to conservation of energy and technology absorption and hence there is nothing to be disclosed pursuant to Section 217 (1) (e) of the Companies Act, 1956.

During the year under review, the Company had no transactions in foreign exchange and no expenditure was incurred on Research & Development.

EMPLOYEES

The Company has no employee in respect of whom Statement under Section 217 (2A) of the Companies Act, 1956, is required to be annexed.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

DIRECTORS' RESPONSIBILITY STATEMENT

As required in terms of Section 217 (2AA) of the Companies Act, 1956, your Directors state and confirm that -

a. in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. 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 financial year and of the profit of the Company for that year;

c. they 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; and

d. they have prepared the Annual Accounts on a going concern basis

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation, understanding and support extended by the Group Companies, Regulatory bodies, Shareholders and Bankers.

By Authority of the Board

August 08, 2012 Dr. Vijay Mallya

New Delhi Chairman


Mar 31, 2010

The Directors present the Sixth Annual Report of your Company and the audited accounts for the year ended March 31, 2010.



FINANCIAL RESULTS

For the Financial Year Ended

Particulars 31.03.2010 31.03.2009

(Rs.) (Rs.)

Income 66,177,272 18,898,901

Less : Expenditure 4,236,877 4,133,362

Profit for the year

before interest & tax 61,940,395 14,765,539

Less : Interest 31,350,001 24,931,645

Profit / (Loss) for the

year before tax 30,590,394 (10,166,106)

Less: Provision for tax 4,335,000 800,000

Profit / (Loss) after tax 26,255,394 (10,966,106)

Less: Transfer to Statutory

Reserve Fund 5,251,079 -

Balance brought forward from previous year 7,707,924 18,674,030

Balance carried forward to the Balance Sheet 28,712,239 7,707,924



DIVIDEND

In order to conserve the resources for operations, your Directors do not recommend any dividend on equity shares for the year ended March 31, 2010.

REVIEW OF OPERATIONS

The total income of the Company during the financial year under review has increased to Rs. 66,177,272 against Rs. 18,898,901 in the previous financial year. The income from operations includes profit on sale of non-core investments amounting to Rs. 51,849,790. The total expenditure during the year was Rs. 4,236,877 against Rs. 4,133,362 in the previous financial year. After providing for a sum of Rs. 31,350,001 towards interest on inter corporate deposit (previous year : Rs. 24,931,645) and Rs. 4,335,000 towards Provision for tax (previous year : Rs. 800,000), the Company has recorded net profit of Rs. 26,255,394 for the year under review against net loss of Rs. 10,966,106 in the previous financial year.

A sum of Rs. 5,251,079 (previous year : Nil), has been transferred to Statutory Reserve Fund, pursuant to the provisions of Section 45-IC of the Reserve Bank of India Act, 1934.

FUTURE PROSPECTS

Your Company continues to hold significant investments in the UB Group companies. The financial year under review saw the economy recovering from the recession witnessed in the earlier years. The Performance of the Investee Companies is expected to improve in the current financial year, which would result in higher dividend yield in the coming year.

During the year under review, the Company sold its entire non-core investments and utilised the sale proceeds towards part payment of the inter-corporate deposit alongwith accrued interest.

The Company will continue to focus on making long-term strategic investments in various new ventures promoted by the UB group, besides consolidating the existing investments through further investments in the existing Companies as and when opportunities and resources are available.

INVESTMENT PORTFOLIO

Your Directors are pleased to report that due to appreciation in the market value of the quoted investments, the Net Asset Value (NAV) of the Company`s equity share as on March 31, 2010, works out to Rs. 307.70 per equity share compared to Rs. 197.90 as at the end of the previous year.

DIRECTORS

Mr. M R Doraiswamy Iyengar and Mr. S G Ruparel, Directors, retire by rotation and being eligible, offer themselves for re-appointment.

As per the declarations received, none of the Directors of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 274 (1) (g) of the Companies Act, 1956.

AUDITORS

M/s. Vishnu Ram & Co., Chartered Accountants, the retiring Auditors, are eligible for re-appointment at the ensuing Annual General Meeting and it is necessary to fix their remuneration.

LISTING OF EQUITY SHARES OF THE COMPANY

The equity shares of your Company continue to be listed on Bangalore Stock Exchange Limited (Regional Exchange), Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Annual Listing fees for the year 2010-11 have been paid to these Stock Exchanges.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialisation mode. As on August 13, 2010 (i.e. date of last benpos), equity shares representing 95.02 % of the equity share capital are in dematerialised form.

REGISTRATION WITH RESERVE BANK OF INDIA AS NON BANKING FINANCIAL COMPANY

The approval of Reserve Bank of India, registering your Company as Non-Banking (non deposit taking) Financial Company, has been granted on August 12, 2010.

SHIFTING OF REGISTERED OFFICE

Pursuant to the decision taken by the Board of Directors of the Company, the Registered Office of your Company will be shifted from 20/2, Vittal Mallya Road, Bangalore - 560 001 to Canberra, Level 9, UB City, #24, Vittal Mallya Road, Bangalore - 560 001, with effect from September 01, 2010.

CORPORATE GOVERNANCE

A report on Corporate Governance is annexed separately as part of the Annual Report along with a certificate of compliance from the Auditors. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Clause 49 of the listing agreement with the stock exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION ETC.

Your Company has not undertaken any activity relating to conservation of energy and technology absorption and hence there is nothing to be disclosed pursuant to Section 217 (1) (e) of the Companies Act, 1956, during the year under review.

During the year under review, the Company had no transactions in foreign exchange and no expenditure was incurred on Research & Development.

EMPLOYEES

The Company has no employee in respect of whom Statement under Section 217 (2A) of the Companies Act, 1956, is required to be annexed.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

DIRECTORS` RESPONSIBILITY STATEMENT

As required in terms of Section 217 (2AA) of the Companies Act, 1956, your Directors wish to state as under -

a. That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. That the Directors have selected such Accounting Policies and applied them consistently and made judgements 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 year;

c. That 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; and

d. That the Directors have prepared the Annual Accounts on a going concern basis.

ACKNOWLEDGEMENT

Your Directors wish to acknowledge the co-operation, understanding and support extended by the Group Companies, Regulatory bodies, Shareholders and Bankers.



By Authority of the Board

August 20, 2010 Dr. Vijay Mallya

Bangalore Chairman





 
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