Directors Report of Pal Credit & Capital Ltd.

Mar 31, 2014

To the Members,

The Directors present the 52nd Annual Report with Audited Statements of Accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS

(Rs. In Lakhs) Current Year Previous Year particuiars 2013-14 2012-13

Profit/(Loss) for the year before providing for depreciation and (39.22) (26.42) Tax

Less: Depreciation 0.79 0.92

Profit /(Loss) before Tax (40.01) (27.34)

Less: Income Tax of Past years - -

Profit/(Loss) for the year (40.01) (27.34)

During the year the Company has suffered a loss of Rs. 39.22 lakhs, before provision of depreciation as against the loss of Rs. 26.42 lakhs for the previous year. The loss after provision of depreciation of Rs. 0.79 lakhs (previous year Rs. 0.92 lakhs) but before tax works out to Rs. 40.01 lakhs as against the loss of Rs. 2734 lakhs for the previous year. There is no Tax Liability this year and also in the previous year.

In view of the loss incurred during the year, no dividend is recommended.

MANAGEMENT DISCUSSION AND ANALYSIS

Affairs of the Company were continued to be carried out on most economical scale by containing the expenses to minimal level. Company has implemented the Scheme of Reduction of Capital as well decided to go for Rights Issue. In addition, there were certain statutory complainces carried out. Overall expenses, therefore, are higher this year.

Efforts on recovery of the old dues were continued. However, due to lengthy process of the legal system required to be followed results could not be achieved.

As the company is having no funds, pending Rights Issue Premier Ltd., the Promoters have continued to provide the funds to the company to keep the Company going. As at 31st March, 2014 outstanding to Premier Ltd., on this account amounted to Rs. 186.16 lakhs.

REVIVAL OF NBFC BUSINESS & FUTURE PROSPECTS

Your Directors reiterate their determination to remain in NBFC business and to do whatever is necessary for revival of the operations of the company. For that networth has to be regained

to the minimum required level to qualify to carry out NBFC Business. Your Directors are in process of implementing the plans to restructure the Equity Share Capital.

NBFC Business has its own place in the economy of any country. Your Directors are of the view that country''s economy will prosper in the coming years. Keeping in view that, your Directors are of the view that your company (a listed NBFC), have promising future business prospects.

RESTRUCTURING OF EQUITY SHARE CAPITAL Reduction of paid-up capital

As reported last year as a first step towards restructuring of equity share capital the ''Scheme of Reduction of the Share Capital'' was envisaged. The Members approved the scheme of reduction of the subscribed and paid-up equity share capital of the Company by passing a Special Resolution, at the 50th Annual General Meeting of the Company. After obtaining No Objection from BSE Ltd., at which company''s equity shares are listed, a Company Scheme Petition was filed with the Hon''ble High Court, Bombay for approval of the ''Scheme of Reduction of Capital''. During the year under review the Hon''ble High Court, Bombay approved the ''Scheme of Reduction of Capital''. The order of the Hon''ble High Court, Bombay was registered with Registrar of Companies, Mumbai. Necessary adjustments are carried out in the books of accounts of the company as per the provisions of the said Special Resolution. Value of equity share of the Company is reduced from Rs.10 per share to Re. 1 per share, and the accumulated loss as per the Balance sheet is adjusted and reduced by Rs. 2711.44 lakhs during the year as under.

(Rs. In Lakhs)

1. Capital Reserve 499.83

2. Share Premium 267.58

3. Cancelled paid up equity share capital (reduced from Rs. 2160.03 lakhs to Rs. 216.00 lakhs) 1944.03

2711.44

INFUSION OF FUNDS

To achieve positive Net Worth as well as to raise the funds required for revival of the business operations at the Extra Ordinary General Meeting of the Members of the company held on 16th December, 2013, a Special Resolution has been passed to issue 4,32,00,512 equity shares of Re. 1 (Rupee one) each in the share capital of the company to all the existing equity shareholders of the company, in the proportion of 2 (two) equity shares of Re. 1 each for every 1 (one) equity of Re. 1 each i.e. in the ratio 2:1 to the equity shareholders, whose name appears in the Register of Members as on the record date to be decided in consultation with BSE Ltd. Actions are initiated for completing requisite regulatory procedure and obtaining required statutory approvals. Company proposes to raise additional funds amounting to Rs. 432 lakhs this way. This will make possible in achieving the required level of net worth to meet regulatory norms fixed by RBI in this regard and moderate level of own funds to start the business.

TAXATION

Return of income has been filed up to the Financial Year 2012-13, Assessment Year 2013-14. Assessment has been completed up to the Financial Year 2010-11, Assessment Year 2011-12.

FIXED DEPOSITS

Company is not accepting and has not accepted any fixed deposit within the meaning of Section 58A of the Companies Act, 1956 and Non-Banking Financial Companies (Reserve Bank) Directions, 1998. There were no fixed deposits outstanding at the beginning or at the end of the year.

PARTICULARS OF EMPLOYEES

During the year, no employee of the Company was in receipt of remuneration in excess of the prescribed ceiling and as such the information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has not been given.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors state,

a. That in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any;

b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year;

c. That the Directors have taken proper and sufficient care for the maintenance of accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

As disclosed in note no 15.14 to the accounts during the year company had only one reportable business segment i.e. NBFC business as per Accounting Standard 17 of the Institute of Chartered Accountants of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOING

a. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 require disclosure of particulars regarding conservation of energy in Form A and technology absorption in Form B prescribed by the Rules. Your Company not being a manufacturing company is advised that Forms A and B are not applicable.

b. There has been no foreign exchange outflow or earnings in the current year.

COMPLIANCE REPORT ON CORPORATE GOVERNANCE

As a part of this Annual Report, the report on compliance with Clause 49 of the Listing Agreement relating to Corporate Governance is enclosed as Annexure, along with Corporate Governance Compliance Certificate thereon from statutory Auditors of the company.

DIRECTORS

The Board regret to report that Shri P. S. More, an Independent Director of the company expired on 1st August, 2013. The Board places on record its appreciations of the valuable services rendered by Shri P. S. More, as an Independent Director and also a member of the "Audit" & "Investors'' & Shareholders'' Grievance Redressal" Committees and Chairman of Remuneration Committee of the Board.

Shri Jatin D. Jhaveri has been appointed on 28th March, 2014 as an Independent Director in place of the causal vacancy caused by demise of Shri P. S. More.

Shri Jayesh Dadia was appointed as an additional director on Board on 16th December, 2013. He holds office of Director of Board upto the date of ensuing Annual General Meeting. A notice in writing proposing his candidature for the office of Director, under the Provision of section 160(1) of the Companies Act, 2013 has been received.

Shri Ramesh M. Tavhare, Director resigned from the Board of the Company on 28th March, 2014. The Board places on record its appreciations of the valuable services rendered by Shri Ramesh M. Tavhare as Director.

The Directors are advised that as per provisions of section 149 (4), of the Companies Act, 2013 every listed public company shall have at least one third of total number of directors as Independent Director as per section 149 (10) of the Companies Act, 2013, Independent Directors shall hold office for a term up to 5 consecutive years on the Board of the Company and the Independent Directors are not liable to retire by rotation as per explanation of sub section 6 of Section 152 of the Companies Act, 2013.

Shri Jatin D. Jhaveri and Shri K. D. Mankikar are appointed by the Board as Independent Directors as per requriment of Clause 49 of Listing Agreement. It is proposed to appoint them as Independent Directors under Companies Act, 2013. If appointed, their appoinment will be for the period of 5 years and they will not be liable to retire by rotation.

Shri M. D. Adhikari, Director retires by rotation and being eligible offer himself for reappointment.

AUDIT COMMITTEE

At present the Audit committee is headed by Shri Jatin D. Jhaveri, an Independent Director as a Chairman. Other members of the Audit Committee are Shri K. D. Mankikar, an Independent Director and Shri Jayesh Dadia, a Director.

AUDITORS

M/s. M. B. Agrawal & Co., Chartered Accountants, holds office until the conclusion of the ensuing Annual General Meeting of the Company and shall accordingly retire at the conclusion of

the Meeting. The Company has received a consent letter from them to the effect that their appointment for the financial year 2014 - 2015, if approved, at the ensuing Annual General Meeting would be within the limits prescribed in Section 141(3)(g) ol the Companies Act, 2013 and were not disqualified for such appointment. Accordingly, M/s. M. B. Agrawal & Co., Charterec Accountants, is proposed to be appointed as Auditors of the Company at the ensuing Annual General Meeting.

APPRECIATION

The Directors wish to place on record their sincere appreciation to the Company''s valued shareholders and associates for their continued support to the Company. The Directors place on record their sincere gratitude and appreciation to the employees of the Company for the hard work and commitment exhibited throughout the year.

For and on behalf of the Board of Directors

J. H. SHAH CHAIRMAN

Place: Mumbai Date: 13th August, 2014

REGISTERED OFFICE:

PAL Credit & Capital Limited

Amarsons Bhavan, 3rd Floor, Shri Vile Parle K.V.O. Seva Samaj, 68, Misquitta Street, Vile Parle (East), Mumbai- 400 057 Tel/Fax no: 022-2612 6875 Website: www.palcc.co.in Email: [email protected] CIN No. L51010MH1962PLC012287

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Mar 31, 2012

The Directors present the 50th Annual Report with Audited Statements of Accounts for the year ended 31 st March, 2012.

FINANCIAL RESULTS

Particulars Current Year Previous Year 2011-2012 2010-2011

Profit/(Loss) for the year before providing for depreciation and Tax (38.91) (17.72)

Less: Depreciation 1.22 4.03

Profit/(Loss) before Tax (40.13) (21.75)

Less: Income Tax of Past years 159.22 -

Loss for the year (199.35) (21.75)

During the year the Company has suffered loss of Rs.38.91 lakhs, before provision of depreciation and the tax as against loss of Rs. 17.72 lakhs for the previous year. Loss after provision of depreciation of Rs.1.22 lakhs (previous year Rs.4.03 lakhs), but before tax works out to Rs.40.13 lakhs as against loss of Rs.21.75 lakhs for the previous year. After provision for Income Tax of past years amounting to Rs.159.22 lakhs, loss for the year after depreciation and Tax works out to Rs.199.35 lakhs. There was no Income Tax liability in the previous year.

During the year under report the long pending company's applications to The Income Tax Settlement Commission for the accounting years ending 31st March, 1993,31st March, 1994 and 31st March 1996 were heard and disposed off. As per final order received, Income Tax payable ascertained worked out to Rs.159.22 Lakhs. Company has made provision for the same in the current year. Due to this provision of tax for earlier years, the loss for the year is very high.

In view of the loss incurred during the year, no dividend is recommended.

MANAGEMENT DISCUSSION AND ANALYSIS

Affairs of the Company were carried out on most economical scale and the expenses were contained to remain minimal.

As informed in the earlier years, Company had pending disputed Income Tax demands. Most significant event during the year was disposal of our long pending applications to settlement commission mentioned above. At the request of the company, The Income Tax Settlement Commission granted six monthly installments starting from mid November, 2011 to mid April, 2012 for making payment of Tax amount of Rs. 159.22 lakhs. As the income of the company has not been sufficient for past some years, shortfall in funds for Income Tax as well as day to day expenses were met out of, inter-corporate deposit (I.C.D.) placed by the company. To meet further shortfall in funds, at company's request, Premier Ltd., the promoters have advanced required amounts from time to time to the company to pay remaining installments of income tax as well to meet the day to day expenses of the company. As at 31st March, 2012 outstanding to Premier Ltd. on this account amounted to Rs. 101.57 lakhs.

Despite the Company's persistent efforts on recovery of the old dues, the Company has not been able to achieve the desired results due to slow process of the legal system required to be followed. Efforts on recovery front are continued.

Due to provision of Tax for earlier years and there being accumulated loss of past years the net worth at the end of the year is negative. However, with the settlement of Income Tax case, now it is possible to carve out a road map for future prosperity of the company.

RESTRUCTURING OF EQUITY SHARE CAPITAL -

As at 31st March, 2012 the equity capital of the company is fully eroded and net worth of the company is negative. It is necessary to restructure the capital of the company so as to make possible infusion of fresh capital in the company required for reviving the operations of the company and put the company back into normal business operations. As a first step towards this, your directors propose to reduce the face value of equity share from Rs. 10 per equity share to Re. 1 per equity share. This will result into reduction in share capital from Rs. 2160 lakhs to Rs. 216 lakhs. Reduction of capital by Rs. 1944 lakhs, will be adjusted against the accumulated loss. To augment cash flows for normal business operations as well as to achieve positive net worth, company plans for rising further capital, by way of a right issue or otherwise. A special resolution proposed for reduction of capital is included in the Notice of 50th Annual General Meeting of the members of the company.

FUTURE BUSINESS PROSPECTS

Your directors are determined and have decided to remain in NBFC business and to do whatever is necessary for that. The above steps will help the company in resuming NBFC Business. In the continuously growing economy NBFC Business has its own prime place. Your directors feel that the present set back in economy of the country is temporary and country's economy will continue to prosper in the long run. Your directors therefore are positive and confidant that your company's (a listed NBFC), future business prospects are promising.

TAXATION

Income Tax Assessment of the Company are completed upto the Financial Year ended 31st March, 2009. Assessment for the Financial year ending 31 st March, 2010 is in progress.

For the financial year ending 31st March, 2007 company has received an order under section 263 of Income Tax Act to set aside assessment done earlier and carry-out the re-assessment. Company has disputed this order in appeal before Income Tax Appellate Tribunal.

For the Financial year ending 31st March, 2008, the Income Tax Department has raised a demand of Rs. 144 lakhs as explained in Note No.14.03 (b) to the Accounts.. An appeal has been made to the Income Tax Commissioner (Appeals). Company has been advised that there is fair chance of getting decision in its favour.

For the Financial years 1992-93, 1993-94 and 1995-96 as stated above, on disposal of applications by Income Tax Settlement commission, demand of Rs.159.22 Lakhs were received. This Tax liability has been fully accounted for in the accounts for the year ended 31 st March, 2012.

FIXED DEPOSITS

Company is not accepting and has not accepted any fixed deposits- within the meaning of Section 58A of the Companies Act, 1956 and Non-Banking Financial Companies (Reserve Bank) Directions, 1998. There were no fixed deposits outstanding at the beginning or at the end of the year.

PARTICULARS OF EMPLOYEES

During the year, no employee of the Company was in receipt of remuneration in excess of the prescribed ceiling and as such the information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has not been given.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors state,

a. That in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any;

b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year;

c. That the Directors have taken proper and sufficient care for the maintenance of accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

As disclosed in note no 14.11 to the accounts during the year company had only one reportable business segment i.e. NBFC business as per Accounting Standard 17 of the Institute of Chartered Accountants of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOING

a. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 require disclosure of particulars regarding conservation of energy in Form A and technology absorption in Form B prescribed by the Rules. Your Company not being a manufacturing company is advised that Forms A and B are not applicable.

b. There has been no foreign exchange outflow or earnings in the current year.

DELISTING OF SHARES

The Company continues to be listed on the Bombay Stock Exchange which has nationwide trading terminals and investors' interest are not adversely affected.

The Company's shares have been delisted from Ahmedabad & Pune Stock Exchange as already reported earlier.

Company had also made similar application for delisting of equity shares to Delhi Stock Exchange in the year 2003. Delhi Stock Exchange has till date not confirmed delisting of the Company's shares as well there has not been any communication from them otherwise. Further, Company's equity shares are also not quoted on Delhi Stock exchange. Therefore it is considered that our equity shares are delisted by Delhi Stock Exchange.

COMPLIANCE REPORT ON CORPORATE GOVERNANCE

As a part of this Annual Report, the report on compliance with Clause 49 of the Listing Agreement relating to Corporate Governance is enclosed as Annexure, along with Corporate Governance Compliance Certificate thereon from statutory Auditors of the company.

DIRECTORS

Shri Ramesh M. Tavhare was appointed as Director on Board in place of Shri. V.T. Pawar, who resigned as a Director from 1st September, 2010. Had Shri V.T. Pawar, continued to hold the office of Director he would have retired by rotation on the conclusion of 50th Annual General Meeting. Shri Ramesh M. Tavhare therefore retires by rotation and being eligible offer himself for re-appointment.

Shri K.D. Mankikar retires by rotation and being eligible offer himself for re-appointment.

AUDIT COMMITTEE

The Audit committee is headed by Shri K.D. Mankikar, an Independent Director as a Chairman. Other members of the audit committee are Shri P.S. More, an independent Director and Shri Ramesh M. Tavhare.

AUDITORS

Auditors M/s. M. B. Agrawal & Co., Chartered Accountants hold office until conclusion of ensuing Annual General Meeting. The certificate as required under section 224(1 B) of the Companies Act, 1956, regarding their eligibility of appointment has been received from them. The Directors recommend their appointment.

APPRECIATION

The Directors wish to place on record their sincere appreciation to the Company's valued clients, shareholders and bankers for their continued support to the Company. The Directors place on record their sincere gratitude and appreciation to the Company's employees for the hard work and commitment exhibited throughout the year.

BY THE ORDER OF THE BOARD

PAL CREDIT & CAPITAL LTD

Place : Mumbai

Dated: 14th August, 2012 J. H. Shah

Chairman

REGISTERED OFFICE:

Amarsons Bhavan, 3rd Floor,

Shri Vile Parle K.V.O. Seva Samaj,

68, Misquitta Street,

Vile Parle (East), Mumbai 400 057.

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Mar 31, 2011

The Directors present their 49th Report with Audited Statements of Accounts for the year ended 31st March, 2011.

FINANCIAL RESULTS (Rs. In Lakhs)

Particulars Current Year Previous Year 2010-2011 2009-2010

Profit/(Loss) for the year before (17.72) (28.38) providing for depreciation

Less: Depreciation 4.03 1.00

Profit / (Loss) before Tax (21.75) (29.38)

Less: Income Tax of Past years 0.01

Fringe Benefit Tax (0.02)

Loss for the year (21.75) (29.37)

During the year the Company has suffered loss, before provision of depreciation of Rs.17.72 lakhs as against loss of Rs.28.38 lakhs for the previous year. After provision of depreciation of Rs.4.03 lakhs on account of change of depreciation method, loss before tax works out to Rs.21.75 lakhs as against loss of Rs. 29.38 lakhs for the previous year.

In view of the loss incurred during the year, no dividend is recommended.

MANAGEMENT DISCUSSION AND ANALYSIS

The Company continued to carry out its activity on most economical scale and expenses are contained to the bare minimum required. Depending upon the progress of recoveries and availability of funds, Company shall undertake more business activities in future.

Pending disputed income tax demands, which are being contested, the Company is unable to raise any funds. Limited funds available with the Company are placed as Inter- corporate deposit. Companys routine expenses, legal expenses related to recovery disputes and income tax matters are to be met from this interest income and recoveries of old dues. As this income is not sufficient to meet the expenses of the Company, short fall in funds is required to be met by withdrawing the amount from the Inter-corporate deposit placed. This in turn results in reduction in interest income further. This is adversely affecting the bottom-line of the Company.

Despite the Companys persistent efforts on recovery front during the year, the Company has not been able to achieve the desired results, due to slow process of the legal system required to be followed. Efforts on recovery front are still continued.

The Company continues to have positive net worth at the end of the year.

TAXATION

Income Tax Assessment of the Company are completed upto the Financial Year 2007-08.

However, the Department has raised a demand of Rs. 144 lakhs as explained in Note No. 8( c) to the Accounts. An appeal has been made to the Income Tax Commissioner (Appeals) and we have fair chance of getting decision in our favour.

Hearing on the petitions in respect of assessment for Accounting Years 1992-93, 1993-94 and 1995-96 before the Settlement Commission is in progress. Reference of this is made in Note No. 8 (a) to the Accounts.

FIXED DEPOSITS

There were no fixed deposits outstanding at the beginning of the year. During the year under review, the Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and Non-Banking Financial Companies (Reserve Bank) Directions, 1998.

PARTICULARS OF EMPLOYEES

During the year, no employee of the Company was in receipt of remuneration in excess of the prescribed ceiling and as such the information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has not been given.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors state

a. that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any;

b. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year;

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

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

In terms of the requirement of accounting standard, segment-wise results are shown in the notes to accounts.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOING

a. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 require disclosure of particulars regarding conservation of energy in Form A and technology absorption in Form B prescribed by the Rules. Your Company not being a manufacturing company, is advised that Forms A and B are not applicable.

b. There has been no foreign exchange outflow or earnings in the current year.

DELISTING OF SHARES

The Company continues to be listed on the Bombay Stock Exchange which has nationwide trading terminals and investors interest are not adversely affected.

The Companys shares have been delisted from Ahmedabad & Pune Stock Exchange as already reported earlier.

Company had also made similar application for delisting of equity shares to Delhi Stock Exchange in the year 2003. Delhi Stock Exchange has till date not confirmed delisting of the Companys shares as well there has not been any communication from them otherwise. However, Companys equity shares are not quoted on Delhi Stock exchange. Therefore it is considered that our equity shares are delisted by Delhi Stock Exchange.

COMPLIANCE REPORT ON CORPORATE GOVERNANCE

As a part of this Annual Report, the report on compliance with Clause 49 of the Listing Agreement relating to Corporate Governance is enclosed as Annexure, along with Corporate Governance Compliance Certificate thereon from statutory Auditor.

DIRECTORS

Shri V. T. Pawar has resigned as a Director of the Company with effect from 1st September 2010. In his place Shri Ramesh M. Tavhare was appointed as Director on Board from 1st September 2010. He shall hold office up to the date up to which Shri V T Pawar, Director would have held office if he had not vacated the office.

The Board places on record their deep appreciation of the valuable services rendered by Shri V. T. Pawar during his association with the Company.

Shri J. H. Shah and Shri P S More retire by rotation and being eligible offer themselves for reappointment.

AUDIT COMMITTEE

The Audit committee is headed by Shri K. D. Mankikar, an Independent Director as a Chairman. Shri P. S. More continued to be the Member of the Audit Committee and Shri R. M. Tavhare has been inducted as member of Audit Committee w.e.f 1st September, 2010 in place of Shri V. T. Pawar who has resigned from 1st September, 2010.

AUDITORS

Auditors M/s. M. B. Agrawal & Co., Chartered Accountants hold office until conclusion of ensuing Annual General Meeting. The certificate as required under section 224(1B) of the Companies Act, 1956, regarding their eligibility of appointment has been received from them. The Directors recommend their appointment.

APPRECIATION

The Directors wish to place on record their sincere appreciation to the Companys valued clients, shareholders and bankers for their continued support to the Company. The Directors place on record their sincere gratitude and appreciation to the Companys employees for the hard work and commitment exhibited throughout the year.

For and on behalf of The Board of Directors PAL CREDIT & CAPITAL LIMITED

J. H. SHAH CHAIRMAN

Place : Mumbai Dated : 30th May, 2011

REGISTERED OFFICE:

Amarsons Bhavan, 3rd Floor, Shri Vile Parle K.V.O. Seva Samaj, 68, Misquitta Street, Opp. Railway Crossing, Vile Parle (East), Mumbai 400 057.

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Mar 31, 2010

The Directors present their 48th Report with Audited Statements of Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS (Rs. In Lakhs)

Particulars Current Year Previous Year 2009-2010 2008-2009

Profit/(Loss) for the year before (28.38) 1.67

providing for depreciation

Less: Depreciation 1.00 0.50

Profit / (Loss) before Taxation (29.38) 1.17

and prior period Expenses

Less: Income Tax of Past years 0.01 40.30

Fringe Benefit Tax (0.02) 0.25

Loss for the year (29.37) (39.38)

During the year the Company has made loss, before provision of depreciation, of Rs. 28.38 lakhs as against profit of Rs. 1.67 lakhs for the previous year. After provision of depreciation of Rs. 1.00 lakhs (previous year Rs. 0.50 lakhs) loss before taxation and prior period expenses works out to Rs. 29.38 lakhs as against profit of Rs. 1.17 lakhs for the previous year.

Income Tax paid for a past year amounted to Rs. 0.01 lakh (previous year Rs. 40.30 lakhs). There was no Fringe Benefit Tax payable for the year. As against this, Rs. 0.25 lakhs were paid as fringe benefit tax during the previous year. A refund of Rs. 0.02 lakh was received from fringe benefit tax paid in a past year. The loss for the year after the above adjustments amounts to Rs. 29.37 lakhs as against loss of Rs. 39.38 lakhs for the previous year.

In view of the loss incurred during the year, no dividend is recommended.

MANAGEMENT DISCUSSION AND ANALYSIS

Pending disputed income tax demands, which are being contested, the Company is unable to raise any funds. Limited funds available with the Company are placed as inter-corporate deposit. Companys routine expenses, legal expenses related to recovery disputes and income tax matters are to be met from this interest income and recoveries of old dues. As this income is not sufficient to meet the expenses of the Company, short fall is required to be drawn from the amount placed as Inter- corporate deposit and it will result in further reduction in interest income. This is adversely affecting the interest income and in turn bottomline of the Company.

Despite the Companys persistent efforts on recovery front, during the year, the Company has not been able to achieve the desired results due to slow process of the legal system required to be followed. Efforts on recovery front are still continued.

The Company continued to carry out its activity on most economical scale and expenses are contained to the bare minimum required. Depending upon the progress of recoveries and availability of funds, company shall undertake more business activities in future.

Company also tried to explore possibility of entering in field of financial business services without involving any substantial capital investment. However, this could not be progressed.

The Company continues to have positive net worth at the end of the year.

TAXATION

Income Tax Assessment of the Company are completed upto the Financial Year 2006-07.

Assessment for the Accounting Year 2007-08 is under progress.

The petitions in respect of assessment for Accounting Years 1992-93, 1993-94 and 1995-96 were abated and with the decision of Bombay High Court, the abatement was rejected. We have again approached the Settlement Commission to recall our petitions. The Settlement Commission has written to Income-tax Department withdrawing the abatement in our cases. The hearing of our application before Settlement Commission is awaited.

FIXED DEPOSITS

The Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and Non- Banking Financial Companies (Reserve Bank) Directions, 1998. The Company was having due but remaining unclaimed deposits only. In the year 2002-03, the Company had transferred Rs.8.80 lakhs being the amount of such unclaimed fixed deposits together with interest outstanding in an Escrow Account with Central bank of India opened specifically for the purpose of making payment out of Escrow deposit to the deposit holders as and when claims are received. Claims received are paid. The deposits remaining unclaimed and unpaid for 7 years after their maturity are transferred, to Investors Education & Protection Fund as required under Sec. 205C of the Companies Act, 1956. During the year accordingly Rs. 40,358/- are transferred to Investors Education & Protection Fund. With that the entire amount kept in Escrow Account has been withdrawn either to pay to fixed deposit holder, if claims are received upto 7 years from the maturity date or transferred to Investors Education & Protection Fund from time to time on completion of 7 years from the respective date of maturity. With that now, there is no unclaimed fixed deposit with the Company.

PARTICULARS OF EMPLOYEES

During the year, no employee of the Company was in receipt of remuneration in excess of the prescribed ceiling and as such the information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 has not been given.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956, the Directors state

a. that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any;

b. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the loss for the year;

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

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

In terms of the requirement of accounting standard, segment- wise result are shown in the notes to accounts.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGOING

a. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 require disclosure of particulars regarding conservation of energy in Form A and technology absorption in Form B prescribed by the Rules. Your Company not being a manufacturing company, is advised that Forms A and B are not applicable.

b. There has been no foreign exchange outflow or earnings in the current year.

DELISTING OF SHARES

The Company continues to be listed on the Bombay Stock Exchange which has nationwide trading terminals and investors interest are not adversely affected.

The Companys shares have been delisted from Ahmedabad & Pune Stock Exchange as already reported earlier.

Company had also made similar application for delisting of equity shares to Delhi Stock Exchange in the year 2003. Delhi Stock Exchange has till date not confirmed delisting of the Companys shares as well there has not been any communication from them otherwise. However, companys equity shares are not quoted on Delhi Stock exchange. Therefore it is considerd that our equity shares are delisted by Delhi Stock Exchange.

COMPLIANCE REPORT ON CORPORATE GOVERNANCE

The report on compliance with Clause 49 of the Listing Agreement relating to Corporate Governance is enclosed as Annexure, along with Corporate Governance Compliance Certificate thereon from a Practicing Company Secretary.

DIRECTORS

Shri M. D. Adhikari retires by rotation and being eligible offers himself for reappointment.

Shri. K. D. Mankikar was appointed as an additional director on Board on 31st October 2009. He holds office of Director of Board upto the date of ensuing Annual General Meeting. A notice in writing proposing his candidature for the office of Director, under the Provision of section 257 of the Companies Act, 1956, has been received.

AUDIT COMMITTEE

The Audit committee is headed by Shri K. D. Mankikar, an Independent Director as a Chairman and is reconstituted with effect from 31st October 2009. Shri P. S. More an Independent Director and Shri V. T. Pawar continue to be member of Audit Committee.

AUDITORS

Auditors M/s. M. B. Agrawal & Co. Chartered Accountants hold office until conclusion of ensuing Annual General Meeting. The certificate as required under section 224(1B) of the Companies Act 1956 regarding their eligibility of appointment has been received from them. The Directors recommend their appointment.

APPRECIATION

The Directors wish to place on record their sincere appreciation to the Companys valued clients, shareholders and Bankers for their continued support to the Company. The Directors place on record their sincere gratitude and appreciation to the Companys employees for the hard work and commitment exhibited throughout the year.

FOR AND ON BEHALF OF

THE BOARD OF DIRECTORS

PAL CREDIT & CAPITAL LIMITED

J. H. SHAH

CHAIRMAN

Place : Pune

Dated: 16th July, 2010

REGISTERED OFFICE:

Amarsons Bhavan, 3rd Floor,

Shri Vile Parle K.V.O. Seva Samaj,

68, Misquitta Street, Off Tejpal Road,

Opp. Railway Crossing,

Vile Parle (East), Mumbai 400 057.