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Directors Report of Mercantile Ventures Ltd.

Mar 31, 2016

The Directors are pleased to present the Annual Report and the Audited Financial Statements of the Company for the year ended 31 March 2016.

REVIEW OF OPERATIONS

During the year the company has reported a profit after tax of Rs. 404.05 lakhs as against Rs. 2121.35 lakhs in the previous year

FINANCIAL RESULTS (Rs.Lakhs)

Description

2015-16

2014-15

Profit Before Interest & Depreciation

829.31

638.21

Interest

224.40

11.72

Depreciation

40.33

32.55

Profit Before Tax & Exceptional items

564.58

593.94

Exceptional items

-

2045.21

Profit Before Tax

564.58

2639.15

Provision for Taxation

Current Tax

103.79

695.22

Tax relating to previous year

13.47

-

Provision for tax reversed

-

(165.53)

Deferred tax

43.27

(11.89)

Profit After Tax

404.05

2121.35

DIVIDEND

The Board of Directors has not recommended any dividend for the year as the profits are conserved to fund the future plans of the Company.

FIXED DEPOSIT

The Company has neither accepted nor renewed any deposits during the year under review.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statement relates and the date of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

There are no significant and material orders passed by the regulators or courts or tribunals which would impact the going concern status of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The provisions of Corporate Social Responsibility are not applicable to the Company for the current financial year.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of Loans, guarantees and investments covered under section 186 of the Companies Act 2013 are provided in the notes to the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered by the Company with related parties were in the ordinary course of business and at arm''s length pricing basis. There were no materially significant transactions with related parties during the financial year 2015-16 which were in conflict with the interests of the Company.

The Board has approved the policy on related party transactions. The policy has been uploaded on the Company''s website, under the web link:

http://mercantileventures.co.in/files/Related%20Party.pdf

QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualification, reservations or adverse remarks in the reports of M/s DPV & Associates, Statutory Auditors and Mr. R. Kannan, Practicing Company Secretary.

COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Company''s Policies relating to appointment of directors, payment of managerial remuneration, directors'' qualifications, positive attributes, independence of directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 are uploaded in the website of the Company in the links

http://mercantileventures.co.in/files/CRITERIA%20FOR%20APPOINTMENT%20OF%20INDEPENDENT%20DIRECTORS.pdf

http://mercantileventures.co.in/files/Remuneration%20Policy.pdf

The Remuneration Policy also forms part of the Corporate Governance Report.

MEETINGS

The Company had six board meetings during the financial year under review. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. Details of the same are given in the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Scenario

The real estate market continues to be sluggish and this trend is likely to be witnessed in the next few years.

Future Outlook

The main business of the Company is investment in properties for leasing. The revenue stream from the operations is expected to remain flat in the immediate future.

Opportunities and Threats

After a lull of five quarters, the overall market sentiment has experienced a sharp uptick on the back of the union budget focus on real estate and infrastructure. Apart from the Real Estate Regulation Bill becoming an Act, progressively reducing interest rates and the ample liquidity in the system are expected to help the real estate sector.

However, the challenges of demand supply mismatch, high unsold inventories across the country remain. But the signs are, nevertheless, encouraging with the improving demand and reduced supply of new projects. The stretched deadlines for completion of projects have nudged buyers away from the market and dampened the mood of buyers. The trend of tepid consumer demand is likely to persist in the current financial year.

Risks & Concerns

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Risk Management Committee has to be set up by top 100 listed entities, determined on the basis of market capitalization, as at the end of the immediate previous financial year. As per this regulation company need not constitute a risk management committee. However, company has constituted a risk management committee to constantly review the technical and commercial risks the company has to face so that the interests of the shareholders are protected. The Risk Management Committee has been formed comprising Ms. Sashikala Srikanth, Director as Chairperson of the committee and the other members are Mr. E N Rangaswami, Whole-time Director and Mr. Padmanabha Sarma, Chief Financial officer.

Risk Management Committee ensures that the Company has an appropriate and effective risk management system which carries out risk assessment and ensures that risk mitigation plans are in place by validating the same at regular intervals.

Internal Control Systems & their adequacy

Company''s Internal Control System has been designed to provide for:

- Accurate recording of transactions with internal checks and prompt reporting.

- Adherence to applicable accounting standards and policies.

- Compliance with applicable statutes, management policies and procedures.

- Effective use of resources and safeguarding of assets.

The Internal audit was carried out periodically through a practicing chartered accountant. The observations arising out of the audit are periodically reviewed and compliance ensured. The summary of the internal audit observations and management responses are submitted to the Board after review by the Audit Committee.

DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of section 134(5) of the Companies Act, 2013 the Board hereby submits its Responsibility Statement:-

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

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for the year ended 31 March 2016;

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

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively. Internal financial control means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information and

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

SUBSIDIARIES

The Company monitors the performance of subsidiary companies inter-alia, by the following means:

a) The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary.

b) The Audit Committee reviews the financial statements, in particular, the investments made by the unlisted subsidiary companies.

c) Your Company formulated a Policy on material subsidiary as required, uploaded in the website of the Company in the link http://www.mercantileventures.co.in/files/Material%20Subsidaries-%20Policy.pdf

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were prepared in accordance with accounting standard AS 21 in respect of wholly owned subsidiary Oasis Ventures Private Limited and its subsidiaries i3 Security Services Private Limited and Rayce Electronic Intelligence India Pvt Ltd. Particulars of associates as required in AS 23 were considered in respect of Navia Markets Limited and National Trust Housing Finance Ltd (NATRUST).

PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARIES AND ASSOCIATES

The financial highlights of the subsidiary and associate companies as on 31 March 2016 are given below:

(Rs. lakhs)

Particulars

Oasis Ventures Pvt Ltd

i3 Security Pvt Ltd

Rayce Electronic Intelligence India Pvt Ltd

Navia Markets Ltd

National Trust Housing Finance Ltd

Subsidiaries

Associates

% of shareholding

100.00%

85.77%

100.00%

47.30%

40.00%

held by

Mercantile

Oasis Ventures

Oasis Ventures

Mercantile

Mercantile

Ventures Ltd

Pvt Ltd

Pvt Ltd

Ventures Ltd

Ventures Ltd

Total Income

103.22

1,357.01

11.56

1007.35

5236.09

Profit before tax

22.59

57.24

(24.74)

30.43

1037.36

Provision for Taxation

7.07

17.69

-

15.15

387.07

Deferred tax

-

-

-

(4.76)

71.71

Profit after tax

15.52

39.55

(24.74)

20.04

578.58

The financial highlights of National Trust Housing Finance Ltd (NATRUST) are based on the unaudited financial statements submitted by the company.

DIRECTORS

The Company’s Board comprises of the following directors at present:

Mr. AL Chandramouli

Mr. M Rajamani

Ms. Sashikala Srikanth

Mr. E N Rangaswami

KEY MANAGERIAL PERSONNEL

The Key Managerial personnel of the Company are:

Mr. E N Rangaswami - Whole-time Director

Mr. V Padmanabha Sarma - Chief Financial Officer

Mr. N Prasanna Varadan - Company Secretary

In the Meeting of the Board held on 30 July 2015 Mr. N Prasanna Varadan, was appointed as Company Secretary of the company with effect from 01 October 2015 in the place of Ms. S Aarthi who resigned as Company Secretary with effect from 30 September 2015.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves for the continuance / appointment as independent directors under the provisions of the Companies Act, 2013 and the relevant rules.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Boards'' performance and performance of the Non-Independent Director were considered/evaluated by the independent directors at their meeting without the participation of the Non-Independent Director and key managerial personnel.

They also assessed the quality, quantity and timeliness of flow of information between the Company''s Management and the Board that are necessary for the Board to effectively and reasonably perform its duties.

Pursuant to the provisions of the Companies act, 2013 and regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various committees.

AUDITORS

M/s. DPV & Associates, Chartered Accountants appointed as the auditors of the company at the 13th Annual General Meeting held on 22nd September 2014 to hold office till the conclusion of the 16th AGM to be held in the year 2017 as per Section 139 of the Companies Act, 2013. Their re-appointment will have to be ratified by the Members at every AGM. In compliance with the requirements of the Companies Act, 2013, it is proposed to seek the ratification of the members for the appointment of the auditors.

SECRETARIAL AUDIT REPORT

The Company has appointed Mr. R Kannan, Company Secretary in practice to undertake the Secretarial Audit of the Company. The Report of the secretarial auditor is annexed to this report

CORPORATE GOVERNANCE

A report on Corporate Governance as stipulated under Schedule V and Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. The requisite certificate from a practicing company secretary confirming compliance with the conditions of corporate governance as stipulated is annexed to this Report.

AUDIT COMMITTEE AND WHISTLE BLOWER POLICY

The Audit Committee consists of three independent directors.

Mr. AL Chandramouli

Mr. M Rajamani

Ms. Sashikala Srikanth

As required under Section 177 of the Companies Act 2013, the Company has established Whistle Blower Policy and the same has been uploaded in the following web link

http://mercantileventures.co.in/files/Whistle%20blower%20policy.pdf

SHARES

The Company has not bought back any of its shares during the year under review. The Company also has not issued any sweat equity shares, bonus shares or stock option scheme during the year under review.

ANNUAL RETURN

The extracts of annual return in Form MGT 9 pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed to this report.

TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy and Technical Absorption:

The business of the Company is leasing of immovable properties. The particulars prescribed under Section 134 of the Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to conservation of energy and technology absorption are not applicable to the business operations of the Company.

Foreign Exchange Earnings and Outgo:

(a) Foreign Exchange Inflow: Nil

(b) Foreign Exchange Outflow: Nil

PARTICULARS OF EMPLOYEES

The Company has no employees whose salary exceeds the limits as prescribed under Rule(5)(2) of Companies (Appointment and Remuneration of Key Managerial Personnel) Rules, 2014

INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2015-16.

Mr. E N Rangaswami, Whole-time Director

5.86

The percentage increase in remuneration of each director, Chief Financial Officer, Company Secretary in the financial year 2015-16.

Mr. E N Rangaswami, Whole-time Director

44.00%

Mr. V Padmanabha Sarma, Chief Financial Officer

24.39%

Mr. N Prasanna Varadan, Company Secretary (appointed effective from 01 October 2015)

NA

The percentage increase in the median remuneration of employees in the financial Year 2015-16.

34.15%

The number of permanent employees on the rolls of Company - as on 31.03.2016

2

The explanation on the relationship between average increase in remuneration and Company performance.

Profit after tax

404.05 lakhs

Average increase in remuneration

36.54%

Comparison of the remuneration of the Key managerial personnel against the performance of the Company

Profit after tax

404.05 lakhs

Remuneration of key managerial personnel

51.14 lakhs

Variations in the market capitalisation of the company, price earnings ratio as at the closing date of the current financial year and percentage increase/ decrease in the market quotations of the shares of the company

Description

2015-16

2014-15

Market Capitalisatio (Rs. in Lakhs)

9636.16

27576.64

Price Earnings Ratio

31.28

12.97

Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof

Average percentage increase already made in the

salaries of employees other than the key managerial

personnel in the FY 2015-16

Average percentage increase already made in the

salaries of the key managerial personnel in the FY

2015-16

18.17%

38.65%

AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY

Company is adopting remuneration guidelines for fixing the remuneration as per the Remuneration policy.

ACKNOWLEDGEMENT

Your directors express their grateful thanks for the assistance, co-operation and support extended to the Company by promoters, shareholders and the bankers for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.

By order of the Board

FOR MERCANTILE VENTURES LIMITED

E N RANGASWAMI

Place : Chennai (DIN: 06463753)

Date : 04 August 2016 Whole-time Director


Mar 31, 2014

Dear Members,

The Directors are pleased to present the Annual Report and the Audited Accounts of the Company for the year ended 31 March 2014.

Review of operations

During the year the company has reported a profit after tax of Rs. 259.12 lakhs as against a loss of Rs. 281.74 lakhs in the previous year Financial Results

(Rs.in lakhs) Description 2013-14 2012-13

Profit Before Interest & Depreciation 889.72 (419.84)

Depreciation 8.84 5.48

Profit Before Tax & Exceptional items 880.88 (425.32)

Exceptional items (508.03) 303.95

Profit Before Tax 372.85 (121.37)

Provision for Taxation: Current Tax 228.40 -

Deferred tax (114.67) 160.37

Profit After Tax 259.12 (281.74)

Joint Development Agreement

During the year the Company entered into a joint development agreement for development of freehold land belonging to the Company at Chennai. Pursuant to the agreement, the Company has transferred 75% of the Undivided Share to the developer and recognized the appropriate income thereon.

Formation of subsidiary

During the year the Company formed Oasis Ventures Private Limited, a wholly owned subsidiary on 4 November 2013 to do the business of facility management and other services. i3 Security Private Limited engaged in the business of security services became the subsidiary of Oasis Ventures Private Limited on 12 December 2013

Future Outlook

The main business of the Company would be that of investing in properties for leasing. Due to current slowdown of market conditions in the real estate sector, revenue from these operations is expected to improve over a period of time.

Dividend

The Company has not declared any dividend for the year.

Consolidated financial statements

Consolidated financial statements of Mercantile Ventures Limited, Oasis Ventures Private Limited and i3 Security Private Limited prepared in accordance with Accounting Standard AS 21, issued by the Institute of Chartered Accountants of India, and as required by the Listing Agreement are attached and forms part of the Annual Report and Accounts.

Directors

The Company''s Board comprises of the following directors at present:

Mr. AL Chandramouli Mr. K Gopalakrishanan Mr. M Rajamani Mr. E N Rangaswami

Mr. K Gopalakrishanan was appointed as an Additional Director with effect from 7 November 2013 and is proposed to be re-appointed in the ensuing Annual General Meeting.

Mr. S Kumar who was appointed as a Director in the Board on 15 November 2012 resigned from the Board with effect from 7 November 2013. The company places on record the invaluable contributions made by the outgoing Director.

Mr. M. Rajamani, Director of the company retires by rotation at the ensuing Annual General Meeting of the company and being eligible offers himself for re-election.

M/s. DPV & Associates, Chartered Accountants appointed as the Auditors of the Company at the 12th Annual General Meeting held on 30th September 2013 hold office till the conclusion of 13th Annual General Meeting and are eligible for re-appointment. As per Section 139 of the new Act, they can hold office from the conclusion of the 13th AGM till the conclusion of the 16th AGM. Their re-appointment will have to

be ratified by the Members at every AGM. In compliance with the requirements of the new Act, it is proposed to appoint the retiring Auditors to hold office till the conclusion of the 16th AGM to be held in the year 2017, subject to ratification at the next AGM.

Fixed Deposits

The Company has not invited or accepted any deposits during the year.

Corporate Governance

A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The requisite certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is attached to this Report.

Directors responsibility statement

Pursuant to Sub-Section 2AA of section 217 of the Companies Act 1956, the Directors confirm that:

1. In the preparation of annual accounts, the applicable accounting standards have been followed.

2. Appropriate Accounting Policies have been selected and applied consistently by the company and that the judgments and the estimates made thereat are prudent and reasonable so as to give a true and fair view of the state of affairs of the company as at 31 March 2014 and of the profit of the company for the year ended 31 March 2014

3. Proper and sufficient care has been taken in maintaining adequate accounting records of the company 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. The Annual Accounts of the company as aforesaid have been prepared on a going concern basis.

CEO /CFO Certification

The Whole time Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under Clause 49 (V) of the Listing Agreement.

Particulars of Employees:

Details prescribed under Section 217(2A) of the Companies Act 1956, read with Companies (Particulars of Employees) Rules, 1975 are not applicable as no employee of the company was in receipt of remuneration exceeding the limits prescribed therein.

Financial Statements of Subsidiary companies:-

The statement pursuant to sub-section 3 of Section 212 of the Companies Act 1956 is given as annexure. Pursuant to the exemption granted by the department of Company Affairs, Government of India, the parent company is publishing the consolidated and standalone financial statements of Mercantile Ventures and its subsidiaries viz. Oasis Ventures Private Limited and i3 Security Private Limited. The financial statements and auditors'' report of the individual subsidiaries are available for inspection by the shareholders at the registered office. The information in aggregate on capital, reserves, total assets, total liabilities, details of investments, turnover, profit before taxation, provision for taxation, profit after taxation and proposed dividend for each subsidiary are given as annexure .

Internal control systems

The company has adequate internal control procedures commensurate with the size and nature of its operations. The internal control systems were further strengthened by internal audit conducted by an internal auditor, appointed by the Company. The Audit Committee of the board addresses issues raised by the internal auditor and the statutory auditors.

Reply to Auditor''s observation

The notes to the financial statements have adequately addressed the Auditor''s observation. The Company has initiated the process of review of the quantum of likely realizations and appropriate decisions will be taken in the current year

Acknowledgement

Your Directors express their grateful thanks for the assistance, co-operation and support extended to the Company by Promoters and the shareholders for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.

For and on behalf of the Board

Place : Chennai M. Rajamani E.N. Rangaswami Date : 13 August 2014 Director Whole-time Director


Mar 31, 2013

Dear Members,

The Directors are pleased to present the Annual Report and the Audited Accounts of the Company for the period ended 31st March 2013.

Revival of the Company

The shareholders are aware that the company was carrying on the business of leasing, Merchant Banking and Non Banking Financial Companies (NBFCs) activities such as accepting deposits from public, hire purchase against vehicles, machinery financial lease of assets, lease of properties, etc. In January 1998, in view of the revised guidelines from RBI requiring mandatory credit rating of NBFCs and new conditions imposed for accepting new deposits, many NBFCs could not attain the required credit rating. The borrowers of NBFCs taking advantage of the situation either failed or delayed repayments resulting in NBFCs defaulting repayment of the deposits. These events led to the event of filing of petition against the company and the company was ordered to be wound up by Order dated 3rd August 2001 of the Hon''ble High Court of Madras.

Even after the winding up order was passed, the promoters of the company had taken efforts to settle the deposit holders, bond holders, hundi holders and other secured creditors/unsecured creditors.

Mr AL Vadivelu, ex-Chairman of the company, submitted a Scheme of Arrangement between the company and the creditors u/s 391 - 394 of the Companies Act, 1956 to the Hon''ble High Court of Madras with a view to revive the company. The Hon''ble High Court of Madras passed an Order dated 18th October 2012 approving the Scheme of Arrangement and permitting reconstitution of the Board of the company to take charge of administration, management of affairs and assets of the company. The Board was constituted on 15th November 2012 as per the Scheme and the company started functioning from 15th November 2012.

As per the Scheme of Arrangement as approved by the Hon''ble High Court of Madras, the company would confine its activities to do only fund based activities without seeking any deposits from public. The main business of the company would be lease of properties and merchant banking services.

Issue of further shares:

As per the Scheme, Mr. AL Vadivelu or his nominees and the creditors of the Company or their nominees should be given the option to convert their outstanding to 3 year zero interest bonds for 40% of the amount outstanding or equity shares of Rs.10/- per share at a premium of Rs.15/- per share for the amount outstanding. Accordingly on 27th March 2013 at the Board Meeting, 8.16.68.000 Equity Shares of Rs.10/- at a premium of Rs.15/- per share aggregating to Rs.25/- per share were allotted and 22.48.000 Bonds of Rs.10/- each were issued. The company has obtained the approval from Madras Stock Exchange for listing the shares allotted on 27th March 2013.

The authorized share capital was increased by Rs.80 Crores for allotment of shares to the promoters and the creditors.

Postal Ballot

The company had approached members through postal ballot process during the year for following matters;

1. For change of name from MCC Finance Limited to Mercantile Ventures Limited

2. To change the main objects of the company

3. For recommencement of business

4. For increase in Authorised Capital

5. For alteration of Memorandum of Association pursuant to increase in Authorised Capital.

6. For alteration of Articles of Association pursuant to Increase in Authorised Capital.

7. For alteration of Articles of Association pursuant to dematerialization of shares.

8. For allotment of shares.

9. To give Powers to Board u/s 293(1 )(a) of the Companies Act, 1956.

10. To appoint whole time director u/s 198.269&309 of the Companies Act, 1956.

11. To maintain statutory Registers u/s 163 of the Companies Act 1956.

12. For the Appointment of Auditors.

The above Postal Ballot was conducted in accordance with the provisions of Section 192A of the Companies Act, 1956 read with Companies (Passing of Resolutions by Postal Ballot) Rules, 2011. All the resolutions were declared as passed with requisite majority on 15th March 2013.

PERFORMANCE OF THE COMPANY FINANCIAL RESULTS

Financial performance of the Company for the period ended 31st March 2013 is summarized below: Financial Results (Rs. in lakhs)

Description 2012-13

Profit Before Interest & Depreciation (115.89)

Depreciation 5.48

Profit Before Tax (121.37)

Provision for Taxation (Deferred Tax) 160.37

Profit After Tax (281.74)

REVIEW OF OPERATIONS

The company has taken possession of its properties from the Official Liquidator. The company is in the process of making payments towards arrears of maintenance charges, municipal taxes, electricity charges, etc.

The company has also complied with all the statutory and other formalities which were essential for commencing the operations. These activities were completed only by end March 2013.

Future Outlook

The company has plans to construct residential units and industrial warehouses which will be leased out. The revenue from these operations is expected by the end of the next financial year.

DIVIDEND

The Company has not declared any dividend for the year.

DIRECTORS

The Board of Directors was reconstituted as per the Scheme of Arrangement and the following Directors were appointed in the Board Meeting held on 15th November 2012 and they hold office till the ensuing Annual General Meeting:-

1) MrMRajamani

2) Mr S Kumar

3) Mr AL Chandramouli

Requisite notice under Section 257 of the Companies Act, 1956 has been received from members proposing Mr.M.Rajamani, Mr.S.Kumar and Mr.AL.Chandramouli''s appointment as directors.

Mr. E N Rangaswami was co-opted to the Board on 5th December 2012 and was designated as Whole-time Director of the company for a period of 3 years. Subsequently, his appointment was approved by the Shareholders through Postal Ballot

Mr. E N Rangaswami, Whole-time Director of the company retires by rotation at the ensuing Annual General Meeting of the company and being eligible offer himself for re-election.

AUDITORS

DPV Associates, Chartered Accountants, statutory auditors of your Company who was appointed through postal ballot retire at the conclusion of this Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not invited or accepted any deposits during the year.

CORPORATE GOVERNANCE

A Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. The requisite certificate from a Practising Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 is attached to this Report.

DIRECTORS RESPONSIBILITY STATEMENT

1) Pursuant to Section 217(2AA) of the Companies Act 1956, the Board of Directors report that:

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that no material departures have been made from the same.

b) they have selected such accounting policies and applied them consistently and made judgments and estimates which are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2013 and of the profit & loss account of the Company for the period ended on that date.

c) 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 preventing and detecting fraud and other irregularities.

d) they have prepared the annual accounts on a going concern basis.

Particulars of Employees:

Details prescribed under Section 217(2A) of the Companies Act read with Companies (Particulars of Employees) Rules, 1975 is not applicable as no employee of the company was in receipt of remuneration exceeding the limits prescribed therein.

Reply to Auditor''s observations:

The notes to the Financial statements have adequately addressed the Auditor''s observations. The company has already initiated the process for review of the non current assets and provision for bad debts/write offs, if any, would be considered on completion of the review.

ACKNOWLEDGEMENT

Your Directors express their grateful thanks for the assistance, co-operation and support extended to the Company by the Promoters and the shareholders for their continued support. The Directors also place on record their appreciation of the good work put in by the employees of the company.

For and on behalf of the Board

Place: Chennai M. Rajamani E.N. Rangaswami Date : 8th August 2013 Director Whole-time Director

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