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Directors Report of Shriram City Union Finance Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present this 29th Annual Report together with the audited financial statements of the Company for the year ended March 31,2015 ("Year"). The Consolidated financial statement of the Company is presented as one part of this Annual Report. The report on corporate governance, management discussion and analysis and other annexures mentioned in the report form a part of this Report.

1. FINANCIAL RESULTS

The summary of financial performance of the Company for the Year is as under.

Rs.in Crores Standalone Consolidated Particulars Year ended March 31, Year ended March 31, 2015 2014 2015 2014

Profit before depreciation and taxation 883.74 809.41 910.44 825.80

Less: Depreciation 42.66 29.55 43.65 30.22

Profit before tax 841.08 779.86 866.79 795.58

Less: Provision for taxation 283.02 258.72 291.44 260.16

Profit after tax 558.06 521.14 575.35 535.42

Less: Minority Interest 0.00 0.00 3.93 3.25

Profit after tax and minority interest 558.06 521.14 571.42 532.17

Add: Profit brought forward from previous year 955.44 739.46 960.65 734.84

Less: Additional Depreciation (as per Companies Act, 2013) 3.66 0.00 3.67 0.00

Profit available for appropriation 1,509.84 1,260.60 1,528.40 1,267.01

Appropriations:

Add:- Adjustment in minority interest 0.00 0.00 0.00 1.01

Transfer to general reserve 55.81 52.20 55.81 52.20

Transfer to statutory reserve 111.61 104.40 114.84 106.60

Transfer to debenture redemption reserve 83.98 77.05 83.99 77.05

Dividend paid on equity shares of rs 10/- each fully paid-up Year 2013-14 : Interim rs 4.00, Final rs 6.00 - 61.12 0.00 61.12

Year 2014 -15 : Interim rs 4.50 33.62 - 33.62 0.00

Dividend proposed on equity shares of rs 10/- each fully paid-up Year 2014-15 : Final rs 10.50 69.20 69.20 -

Corporate dividend tax 20.69 10.39 20.69 10.39

Balance carried to balance sheet 1,134.93 955.44 1,150.25 960.66

Earnings per share before exceptional items

Basic (rs not annualised) 86.18 89.76 88.24 91.66

Diluted (rs not annualised) 86.03 89.53 88.09 91.43

2. APPROPRIATIONS AND TRANSFER TO RESERVE

The Board of Directors ("Board") propose to transfer amounts as mentioned in the above table stating financial results to different reserve in compliance with the requirements of Reserve Bank of India ("RBI") regulations and the Companies Act, 2013 (Act).

3. RECOMMENDATION OF DIVIDEND

Based on the financials of the Company, aspirations of the shareholders and to maintain a sustainable dividend linked to long term growth of the Company, the Board is pleased to recommend final dividend as mentioned below for the Year to be paid to those members, whose name appear on the register of members as on the record date for payment of dividend for the Year. The dividend paid for the year ended March 31,2014 and interim dividend paid for the Year are stated below for reference.

Dividend on equity No of Per share Amount Tax shares of Rs 10 each Shares (Rs) (Rs in Crores) (Rs in Crores)

Interim (FY 14-15) 6,59,05,172 4.50 29.66 5.93

Proposed Final (FY 14-15) 6,59,05,612 10.50 69.20 14.09

Total 15 98.86 20.02

Interim (FY 13-14) 5,92,77,082 4.00 25.55 4.34

Final (FY 13-14) 6,58,89,372 6.00 39.53 6.72

Total 10.00 65.08 11.06

Dividend on equity Total outflow Date of payment shares of rs 10 each (Rs. in Crores)

Interim (FY 14-15) 35.59 November 21,2014

Proposed Final (FY 14-15) 83.29

Total 118.88

Interim (FY 13-14) 29.89 November 18, 2013

Final (FY 13-14) 46.25 August 18, 2014

Total 76.14

The Register of Members and Share Transfer Books will remain closed from July 22, 2015 to July 28, 2015 (both days inclusive) for the purpose of final dividend for the Year and for the Annual General Meeting ("AGM") scheduled to be held on July28,2015.

Section 125 of the Act, requires the companies to transfer dividend that has remained unclaimed for a period of seven years from the date of it''s transfer to unpaid dividend account to Investor Education and Protection Fund ("IEPF"). Accordingly, during the Year an amount of Rs. 0.007 Crores (2013-14 : Rs. 0.006 Crores) were transferred to IEPF. An amount of Rs. 0.61 Crores (2013-14: Rs. 0.49 Crores) is lying in unpaid equity dividend account of the Company. Shareholders are informed that there will be no claim lie on the Company on account of dividend after the dividend is transferred to IEPF.

4. ANNUAL RETURN, PARTICULARS OF LOANS AND CONTRACTS WITH RELATED PARTY

The extract of the Annual Return in the form MGT - 9 as required under Section 92 (3) and 134 (3) of the Act is attached to this Report as Annexure - 6. The particulars of loans, guarantees and investments covered under Section 186 of the Act are given under note no. 28 of the notes to accounts of the Financial Statements. All transactions or arrangements with related parties referred to in Section 188 (1) of the Act, entered into during the Year were on arm''s length basis or were in ordinary course of business or with omnibus approval of the Audit and Risk Management Committee. The Company has formulated a policy on related party transactions approved by the Audit and Risk Management Committee and the Board, which is displayed on the web site of the Company at http://www.shriramcity.in/files/RPT/index.html. The particulars of contracts or arrangements with related parties as referred in section 188(1) of the Act is attached to this Report in prescribed form AOC - 2 as Annexure - 5. The details of related party and transactions with the related parties as required under clause 32(b) of the listing agreement appear on the note no.26.1 and 26.2 of the Notes to Accounts.

5. STATE OF AFFAIRS OF THE COMPANY

Non Banking Finance Companies ("NBFC") are an integral part of the Indian financial system, enhancing competition and diversification in the financial sector and complementing the banking system. NBFCs play a vital role in furthering the objective of financial inclusion by serving the credit demand of the small and medium scale and retail sectors. The Company specializes in financing small businesses and in financing retail asset predominantly in under-served areas. During the Year, the total disbursements of loans under different products were R 17,202.45 Crores (2013-14: Rs. 15,448 Crores). Income from operations for the Year grew by 9.12% to Rs. 3,482.24 Crores and the same resulted in a profit before tax of R 841.08 Crores for the Year (2013-14: Rs. 779.86 Crores). As at March 31,2015 the total assets under management stood at Rs. 16,717 Crores (March 31,2014: Rs. 14,667.95 Crores).

During the Year, the total consolidated disbursements of loans under different products were Rs. 17,705.45 Crores (2013-14 : Rs. 15,684.70 Crores). Consolidated Income from operations for the Year grew by 10.42% to Rs. 3,561.69 Crores (2013-14: Rs. 3,225.55 Crores) and the same resulted in a profit before tax of Rs. 866.79 Crores for the Year (2013-14: Rs. 795.58 Crores). As at March 31,2015 the consolidated assets under management stood at Rs. 17,454.20 Crores (March 31,2014: Rs. 14,988.25 Crores).

The funding source for the Company was through debentures, fixed deposits, subordinated debts and borrowings from banks/ financial institutions byway of term loans and working capital loans as summarized below.

Rs in Crores During Deposits Privately Subordi- Listed non the Year placed non nated convertible ended convertible debt debentures March 31, debentures

2015 1,746.99 100.00 - 200.00

2014 626.74 382.29 374.26 153.61

During the year Term Working Inter Total ended March 31 loans Capital Company and Other Deposit loans

2012 1,020.00 165.00 228.00 3,459.99

2014 2,016.06 90.00 - 3,642.96

*Resources mobilised (gross) excludes limits availed as Cash Credit from banks Balance outstanding on cash credit as on March 31,2015 was Rs. 1,067.45 Crores (March 31,2014: Rs. 367.55 Crores)

As at March 31,2015, the Company had accepted deposits amounting to Rs. 1746.99 Crores. There were 2,030 number of deposits amounting to Rs. 17.21 Crores which had matured for payment and were due to be claimed or renewed. Subsequent follow-up for repayments/renewals resulted in the number reducing to 1,147 number of deposits amounting to Rs. 9.00 Crores as on April 28,2015. There were no deposits which had matured and claimed, but were not paid by the Company. Steps are continuously taken to arrange for repayment/renewal of these unclaimed deposits. In compliance with RBI''s notification number DNBD(PD) CC No. 330/03.10.001/2012-13 dated June 27, 2013 and DNBS(PD) CC No. 349/03.10.001/2013-14 dated July 2,2013, the Company stopped private placement of debentures and subordinated debts.

The Company made a public issue of Secured Redeemable Non Convertible Debentures (NCDs) of face value of Rs. 1,000 each aggregating upto Rs. 100 Crores with an option to retain over subscription up to Rs. 100 Crores for issuance of additional NCDs aggregating to a total up to Rs. 200 Crores in terms of the Prospectus dated March 24,2014. Despite tough market conditions, the issue was over subscribed. The Company retained additional subscription and allotted NCDs for Rs. 200 Crores. The proceeds of the NCD issue were utilised for the purpose for which the issue was made as mentioned in the Prospectus dated March 24,2014. The utilization of the proceeds of the issue is mentioned in note no. 28 of the Notes to Accounts.

The Company has obtained credit ratings from India Ratings and Research Private Limited ("IRRL'') (formerly known as FITCH), CARE, ICRAand CRISILfor it''s long term borrowings, shortterm borrowings and fixed deposits. The present ratings are as under:

Rating Agency Rating Instrument Rating Symbol 2015

IRRL Long-Term IND AA'' / Stable

Short-Term ''IND A1

Bank Loan Ratings IND AA''

Fixed deposit ''IND tAA''

CARE Long-Term CARE AA

Short-Term CARE A1

Subordinate Debt CARE AA

Fixed deposit CARE AA

ICRA Fixed Deposit MAA /Stable

Long-Term ICRA AA/Stable

Short-Term ICRA A1

CRISIL Long-Term CRISIL AA-/Stable

Short-Term CRISIL A1

Subordinate Debt CRISIL AA-/Stable

Fixed deposit FAA/Stable

Rating Agency Date of last Review 2014

IRRL IND AA

''IND A1 April 11,2014

IND AA

''IND tAA''

CARE CARE AA

CARE A1

- July 25, 2014

CARE AA (FD)

ICRA - January 29, 2015

- March 13, 2015

-

CRISIL CRISIL AA-/Stable

CRISIL A1 A August 17, 2012

CRISIL AA-/Stable

FAA/Stable

During the year, there are few frauds detected, which are reported in Note no. 30 of the Notes to Accounts. The fraud detected were in normal course of business of the Company.

6. CAPITAL AND LISTING

During the Year the Company issued and allotted 65,79,840 equity share capital of Rs. 10 each on preferential basis at a premium of Rs. 1,190 (including premium Rs. 1,200) to M/s Piramal Enterprises Ltd, CIN - L24110MH1947PLC005719 the details of which appear on report on corporate governance (Annexure -1). During the Year 41,340 number (2013 -14 : 37,050) of equity shares were allotted to the eligible employees of the Company on exercise of their option under Employees Stock Options Scheme 2006 ("Scheme") approved by the members at the Extra-Ordinary General Meeting held on October 30,2006 in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines, 1999 ("SEBI Guidelines"). The ESOP Scheme titled SCUF ESOP Scheme 2013 as approved by the members in the Extraordinary General Meeting held on May 31,2013 has not been implemented. The required disclosures under Clause 12 under SEBI Guidelines as on March 31,2015 are set out in Annexure - 7 to this report.

The Company has received the certificate as attached in Annexure - 8 from the auditors of the Company certifying that the Employee Stock option Scheme 2006 is implemented in accordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and in accordance with the resolution of the members passed at the general meeting.

Madras Stock Exchange Ltd ("MSE"), in accordance with SEBI (Delisting) Regulations 2009, confirmed the withdrawal of admission granted to dealing in equity shares of the Company and removal of the Company from the list of listed securities with effect from February 23,2015 in response to the application filed by the Company with MSE for voluntary delisting of it''s shares from MSE. The equity shares of the Company continues to be listed on NSE and BSE. The share holders of the Company shall continue to avail the benefits of listing on NSE and BSE. The shares of the Company were delisted from MSE as MSE issued a notice on June 12, 2014 stating it''s decision to seek voluntary surrender of it''s recognition and exit as stock exchange. The listing fees to BSE, NSE and MSE for the Year were paid on time.

7. HUMANRESOURCE

Employees are the most vital asset in the possession of the Company. The nurturing and development of this asset plays an important role in the Human Resources policies of the Company. It is well said that the Company learns as employees learn. Towards this, the Company offers its employees sustained opportunities to learn and develop their skills, with the process beginning at induction. Exciting growth opportunities combined with the ESOP Schemes help retention of employees. The total employee strength of the Company as on March 31,2015 stood at 25,085 with 17,775 number of employees added during the year. The information required pursuant to Section 197(12) of the Act read with Rule - 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 and the details required under Rule - 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 on remuneration are attached as Annexure -9 to this Report.

8. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENTS

The Company''s only subsidiary is M/s Shriram Housing Finance Ltd ("SHFL''). SHFL is registered with National Housing Bank for providing home loans. SHFL does home loan, loan against property and housing project finance. In the past four years, SHFL has seen a marked growth in its disbursement and Asset under management from Rs. 4.9 Crores in 2012 to Rs. 502.8 Crores and Rs. 737.2 Crores. The total liability of SHFL as on March 31,2015 stood at Rs. 362 Crores, out of which Rs. 256 Crores was from allotment of NCDs (71%) and the balance amount was from Bank borrowings. The majority of the future demand for housing loan is expected to be driven by the LIG and the MIG income group categories. SHFL caters to the demand for housing loan of larger mass consisting of self employed in the lower and middle income class in mostly Tier 2 and Tier 3 locations of the country.

The annual financial statements of SHFL together with auditors report thereon are attached to this Report as Annexure-16.

Consolidated financial statements of the Company prepared as per Section 129(3) of the Act and in compliance with applicable accounting standards and equity listing agreements are audited by the statutory auditors of the Company. The Consolidated financial statements along with the report of the auditors of the Company thereon are attached to this Report (Annexure -17).

The annual accounts, annual reports and the related detailed information of SHFL shall be made available to the share holders of the Company and the share holders of SHFL seeking such information at any point of time. In accordance with Section 136 of the Act, the audited annual financial statements including Consolidated financial statements and related information of the Company and audited accounts of SHFL shall be available on the web site of the Company at www.shriramcity.in and shall be kept at the Registered Office of the Company and at the Registered Office of SHFL for inspection by any shareholder during business hours. Shriram Capital Limited, SHFL and TPG India Investments I Inc continued as promoter, subsidiary and associate of the Company respectively. Shriram Seva Sankalp Foundation was added as an associate during the Year.

9. RESERVE BANK OF INDIA ("RBI") GUIDELINES

NBFCs are regulated by RBI. The Company continues to comply with applicable regulations of RBI from time to time. Capital to Risk (Weighted) Assets Ratio ("CRAR") of the Company as at March 31,2015 stood at 29.03% of the aggregate risk weighted assets on the balance sheet and risk adjusted value of the off balance sheet items totalling to r 16,048.45 Crores.

During the Year, there were changes in RBI regulations with respect to deposit acceptance limits (reduction), increase in Tier I capital, Asset classification and NPA provisioning norms, standard assets provision, corporate governance and disclosure in financial statements (Notes to Accounts). Few of these changes had significant impact on the Company and the impact shall continue to be felt in future. The Company positively responded to the changes in regulations of RBI.

10. CORPORATE GOVERNANCE

The Company adheres to high standard of corporate governance. Report on corporate governance forming part of this Report as required under clause 49 of the listing agreement together with the certificate from the auditors of the Company, confirming the compliance with the corporate governance are attached to this Report (Annexure -1). As required under Clause 49 VIII (D) (1) of the equity listing Agreement with stock exchanges, the Management and Discussion Analysis on the business of the Company forming part of this report is attached as Annexure - 3.

Further, as required under Clause 49 of the equity listing agreement, a certificate, duly signed by the Managing Director & Chief Executive Officer and Chief Financial Officer on the financial statements of the Company for the year ended March 31,2015, was submitted to the Board of Directors at their meeting held on April 28,2015. The same certificate is attached as Annexure - 4. The relevant provisions of the voluntary guidelines are adopted in the areas deemed appropriate.

11. CORPORATE SOCIAL RESPONSIBILITY ("CSR")

Section 135 of the Act on CSR applies to the Company. Accordingly, the Company has constituted a CSR Committee consisting of three Directors including two Independent Directors. The details of the CSR Committee appear on the report on corporate governance and annual report on CSR is attached to this Report.

The CSR policy of the Company, as recommended by CSR Committee, was approved by the Board and is displayed on the website of the Company.

The Company along with certain companies has incorporated a Section 8 Company i.e. M/s Shriram Seva Sankalp Foundation, after obtaining licence from the Ministry of Corporate Affairs, Government of India, to conduct CSR activities. The Company has subscribed to the equity share capital of M/s Shriram Seva Sankalp Foundation to the extent of r 1.8 lakhs. M/s Shriram Seva Sankalp Foundation is in the process of obtaining approvals for relevant exemptions available underthe IncomeTaxAct.

The Company''s CSR philosophy is committed to contribute towards the CSR activities included in Schedule VII of the Act. CSR activities will be undertaken through M/s Shriram Seva Sankalp Foundation or through any other eligible entity or directly, in line with the CSR Policy of the Company. During the Year, the Company focussed on laying down the basic framework required for identifying CSR Projects in line with its CSR Policy and could not spend the requisite amount.

During the Year, the Company was not able to spend the stipulated amount as per the Act. During the Year, the Company incurred an expenditure of r 9.33 lacs on CSR activities on education of under privileged children and health care. The Company is in the process of evaluating certain CSR projects.

Annual Report on CSR activities as required under Rule 9 of the Companies CSR Policy Rules, 2014 of the Act is attached to this report as Annexure - 10. The details of CSR policy are available on the web site of the Company http://www.shriramcity.in/fMes/CSR-policy/index.html. The Board affirms that the CSR activities are implemented in accordance with CSR Policy.

12. DIRECTORSAND MEETING OFTHE BOARD

The number of meetings of the Board held during the Year along with details of such meetings is mentioned in the report of Corporate Governance attached as Annexure -1 to this Report. In compliance with Section 178 of the Act, the Company has a Nomination and Remuneration Committee ("NRC") of the Board. As required under Section 149 (7) of the Act and Clause 49 of the equity listing agreement, the Company received necessary declaration from each independent director about his/her meeting the criteria of independence as laid down under Section 149( 6) of the Act. A statement by the Managing Director confirming receipt of this declaration from each independent directors of the Company is attached as Annexure -11. The Board on the recommendation of the NRC has formulated a policy for selection, appointment and remuneration of directors, senior management personnel as required under Section 178 (3) of the Act, the details of which appear in the Annexure -13. The Board carried out annual evaluation of it''s own performance, it''s Committees and individual directors based on the criteria and frame work adopted by the Board. The results of such evaluation were placed before the Board. The induction, training, appointment, resignation and retirement of directors are dealt with in the report on corporate governance attached as Annexure -1. The brief profile of each director appear on page No. 44-45 of the Annual Report. Each Director has given his/her declaration to the Company for not holding any shares in the Company and having no relation inter se with any Director. Sri Debendranath Sarangi (DIN - 01408349) and Sri Gerrit Lodewyk Van Heerde (DIN - 06870337) and Smt. Maya S. Sinha (DIN - 03056226) who were appointed as additional directors during the Year, retire at the ensuing AGM. Sri Debendranath Sarangi, Sri Gerrit Lodewyk Van Heerde and Smt. Maya S. Sinha have expressed their intention and eligibility to be appointed as Directors of the Company. The details on their appointment as directors form a part of the agenda of the ensuing AGM. As per provisions of the Act and Articles of Association of the Company, Sri Gopalasamduram Srinivasaraghavan Sundararajan (DIN - 00361030) and Sri Puneet Bhatia (DIN - 00143973) retire by rotation at the ensuing AGM. Both of them being eligible offer themselves for reappointment.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Sections 134 (3) (c) and 134 (5) of the Act with respect to Directors'' responsibility statement, the Directors of the Company hereby confirm, in the preparation of annual accounts for the Year that :

(i) the applicable accounting standards have been followed and proper explanations have been made in notes to accounts for material departures;

(ii) the accounting policies have been selected and applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and statement of the profit and loss of the Company for the year ended on that date;

(iii) proper and sufficient care have been taken 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;

(iv) the annual accounts have been prepared on agoing concern basis.

(v) internal financial controls to be followed were laid down, which were adequate and were operating effectively during the year.

(vi) proper systems had been devised to ensure compliance with provisions of applicable laws, which were adequate and were operating effectively during the year.

Risk Management Policy was implemented during the Year as approved by the Board on the recommendation of the Audit and Risk Management Committee.

14. SIGNIFICANTAND MATERIAL ORDERS PASSED BY REGULATORS OR COURT

There are no material order passed by Regulators/Courts, which would impact the going concern status of the Company and it''s future operations.

15. AUDIT AND AUDITORS

The auditors of the Company have submitted report to the members of the Company for the Year, which is unqualified, without any reservation or adverse remark or disclaimer. Therefore, Board does not have any explanation or comment. Pursuant to Section 204 of the Act, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s P Sriram & Associates, Company Secretaries in practice were appointed by the Company as the Secretarial Auditor of the Company for the Year. The same Secretarial Auditor conducted audit and submitted their report as attached in Annexure -14 to the Members, which is unqualified, without any reservation or adverse remark or disclaimer. Therefore, Board does not have any explanation or comment on such Secretarial Audit Report. The Board has appointed M/s P Sriram & Associates, Company Secretaries in practice as secretarial auditor of the Company for the financial year 2015-16.

The Auditors M/s Pijush Gupta & Co., Firm Registration No - 309015E, Chartered Accountants, retire at the conclusion of the ensuing AGM and have confirmed their eligibility under Section 141 of the Act and willingness to accept the office, if re- appointed. Necessary resolution for their re-appointment till conclusion of the 30th AGM is proposed at the ensuing AGM.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUT GO DURING THEYEAR:

The information on conservation of energy, technology absorption, foreign exchange earnings and out go as stipulated under Section 134 (3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 are furnished below.

The operations of the Company are not energy intensive. However, adequate measures for conservation of energy, usage of alternate sources of energy and investments for energy conservation, wherever required have been taken.

The Company has not absorbed any technology. There were no foreign exchange earnings. There was an outgo of foreign exchange equivalent to Rs. NIL (2013 —14:Rs. 13.81 lacs)

17. ACKNOWLEDGEMENT

The Board expresses gratitude for the guidance and cooperation extended by RBI, statutory authorities and regulators. The Board appreciates the excellent co-operation and assistance received from the banks and financial Institutions. The Board is thankful to the auditors of the Company. The Board is pleased to record its appreciation for the enthusiasm, commitment, dedicated efforts of the employees of the Company at all levels. The Board is also deeply grateful for the continued confidence and faith reposed on the Company by the shareholders, depositors, debenture holders and debt holders.

18. STATEMENT OF CAUTION

Any of the numbers or statements expressed in this Report may mean forward looking within the provisions of the listing agreements. Actual results, which are dependent on many factors, may be different.

For and on behalf of the Board of Directors

Place: Chennai Chairman Date: May 28,2015


Mar 31, 2014

Dear Members,

The Directors are pleased to present this 28th Annual Report of the Company together with the audited financial statements of the Company for the year ended March 31, 2014.

I. RESULTS OF OPERATION

The summary of financial performance of the Company for the year ended on March 31, 2014 is as under .

Rs. in Crores

YEAR ENDED MARCH 31, PARTICULARS 2014 2013

Profit before depreciation and taxation 809.41 690.06

Less: Depreciation 29.55 24.41

Profit before tax 779.86 665.65

Less: Provision for taxation 258.72 216.04

Profit after tax 521.14 449.61

Add: Profit brought forward from previous year 739.46 512.73

Profit available for appropriation 1,260.60 962.34

APPROPRIATIONS:

Transfer to general reserve 52.20 44.98

Transfer to statutory reserve 104.40 89.95

Transfer to debenture redemption reserve 77.05 33.76

Dividend on equity shares of Rs. 10/- each fully paid-up 61.12 46.41

Year 2013-14 : Interim Rs. 4.00, Final Rs. 6.00

Year 2012-13 : Interim Rs.2.50, Final Rs. 6.00

Corporate dividend tax 10.39 7.79

Balance carried to balance sheet 955.44 739.46

EARNING PER SHARE BEFORE EXCEPTIONAL ITEMS

Basic (Rs. not annualised) 89.76 85.61

Diluted (Rs. not annualised) 89.53 83.00

II. APPROPRIATIONS AND TRANSFER TO RESERVE

(a) Transfer to Reserve : The Board of Directors propose to transfer amounts as mentioned in the above table to different reserve in Compliance with the requirements of RBI regulations and Companies Act.

(b) Declaration of Dividend :The Board of Directors pay/recommend interim and final dividend based on the financials of the Company. The dividend pay out for the year under review has been formulated as per aspirations of the shareholders and to maintain a sustainable dividend linked to long term growth of the Company. The final dividend recommended by the Board is subject to declaration by the members of the Company. Your directors are pleased to recommend final dividend as mentioned below for the year ended March 31, 2014 to those members, whose name appear on the register of members as on the record date. The dividend paid during the year ended March 31, 2014 is also stated below for reference.

Dividend on equity No of Per share Amount (Rs. Tax (Rs. in Total outflow (Rs. Date of payment shares of Rs. 10 each Shares (Rs.) in crores) crores) in crores)

Interim (FY 13 – 14) 5,92,77,082 4.00 25.55 4.34 29.89 Novem- ber 18, 2013

Proposed final 5,92,84,432 6.00 35.57 6.05 41.62 -

Total 10.00 61.12 10.39 71.51

Interim (FY 12 – 13) 5,25,31,701 2.50 13.16 2.13 15.29 Novem- ber , 2012

Final (FY 12 -13) 5,54,16,300 6.00 35.09 5.96 41.05 August 14, 2013

Total 8.50 48.25 8.09 56.34

Section 205C of the Companies Act, 1956 read with Investor Education and Protection Fund (Awareness and Protection of Investors) Rules 2001 requires the companies to transfer dividend that has remained unclaimed for a period of seven years from the date of it''s declaration from unpaid dividend account to Investor Education and Protection Fund (IEPF). Accordingly, during the financial year an amount of Rs. 0.006 crores (Previous year Rs. 0.01 crores) were transferred to IEPF. An amount of Rs. 0.49 crores (previous year Rs. 0.38 crores) is lying in unpaid equity dividend account of the Company. Shareholders are informed that there will be no claim lie on the Company on account of dividend after the dividend is transferred to IEPF.

III. BUSINESS SCENARIO AND BUSINESS OPPORTUNITIES

NBFCs are an integral part of the Indian financial system, enhancing competition and diversification in the financial sector and complementing the banking system in India. With the growing emphasis on financial inclusion, NBFCs would play a vital role in serving the credit demand of the small and medium scale and retail sectors. Your company specializes in small scale and retail asset backed lending and has been extending credit to retail customers in this space and catering to under-served areas. Your company is best placed for the same. The credit demand is likely to be high and stable in coming years.

I V. OPERATIONS

The total disbursements of loans under different products during the year was Rs. 15,448 Crores compared to Rs. 17,412 crores during the previous year. Income from operations for the year under consideration grew by 3.32% percent to Rs. 3,173.50 crores as against Rs. 3,071.47 crores for the previous year and the same resulted in a Profit before tax of Rs. 779.86 crores for the year under review, compared to Rs. 665.65 crores during the previous year. As at March 31, 2014 the total assets under management stood at Rs. 14,667.95 crores

V. FINANCE

The funding source for the Company comprised of debentures, fixed deposits, subordinated debts, borrowings from banks and financial institution by way of term loans and working capital loans.

Borrowings from banks/institution and by way of Debentures/sub-ordinated debts/deposits/commercial paper constituted 58% and 42% (March 31, 2013 comparative values 61% and 39%) respectively of the total borrowings of the Company.

RESOURCES MOBILISED (GROSS)* Rs. in crores

During the year ended March 31, 2014 2013

Deposits 626.74 0.26

Privately placed non convertible debentures 382.29 1,092.92

Subordinated debt 374.26 260.75

Commercial papers - 1,335.00

Listed non convertible debentures 153.61 550.10

Term loans 2,016.06 3,195.00

Working Capital and Other loans 90.00 1,801.00

Total 3,642.96 8,235.03

*Resources mobilised (gross) excludes limits availed as Cash Credit from banks

Limits availed under Cash Credit during the year amounted to Rs. 415 crores; out of which balance outstanding as on March 31, 2014 is Rs. 367.55 crores (March 31, 2013: Rs. 1,347.29 crores)

As at March 31, 2014 51 deposits amounting to Rs. 0.13 crores had matured for payment and were due to be claimed or re- newed. Subsequent follow-up for repayments/renewals resulted in the number reducing to 47 deposits amounting to Rs. 0.03 crores as on April 30, 2014. There are no deposits which had matured and claimed, but not paid by the company. Steps are continuously taken to arrange for repayment/renewal of these unclaimed deposits. During the year RBI by it''s notification number DNBD(PD) CC No. 330/03.10.001/2012-13 dated June 27, 2013 and DNBS(PD) CC No. 349/03.10.001/2013-14 dated July 2, 2013 stopped private placement of debentures and subordinated debts. In compliance with RBI''s notification ,the Company stopped both private placement of debentures and issue of subordinated debts during the year. Stoppage of allotment of debentures and subordinated debts in retail had a big impact on the Company''s resource mobilisation.

VI. PUBLIC ISSUE OF DEBENTURES

The Company made a public issue of Secured Redeemable Non Convertible Debentures (NCDs) of face value of Rs. 1,000 each aggregating upto Rs. 100.00 crores with an option to retain over subscription up to Rs. 100.00 crores for issuance of additional NCDs aggregating to a total up to Rs. 200.00 crores in terms of the Prospectus dated November 18, 2013. Despite tough market conditions, the issue was over subscribed. The Company retained additional subscription and allotted NCDs for Rs. 153.61 crores. The proceeds of the issue were utilised for the purpose for which the issue was made as mentioned in the prospectus dated November 18, 2013. The utilization of the proceeds of the issue is mentioned in note no 28 of the notes to accounts.

VII. CREDIT RATING

The Company has obtained credit ratings from CRISIL, CARE and India Rating and Research Private Limited (IRRL) formerly known as FITCH, for it''s long term borrowings, short term borrowings and fixed deposits. It gives us pleasure to report that the Rating Outlook for the credit ratings granted by IRRL was upgraded to "Positive" from "Negative (with "stable" outlook)" in the month of April 2014. The present ratings are as under:

Instrument CARE IRRL CRISIL

Non convertible debentures - secured CARE AA IND AA CRISIL AA-/Stable

Subordinated debt - - CRISIL AA-/Stable

Fixed deposits CARE AA (FD) IND tAA FAA/Stable

Short term Debt CARE A1 IND A1 CRISIL A1

Bank loan rating - IND AA -

VIII. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company implemented Employees Stock Options Scheme 2006 ("Scheme") approved by the members at the Extra-Or- dinary General Meeting held on October 30, 2006 in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines, 1999. The Nomination and Remuneration Commit- tee (formerly known as Remuneration and Compensation Committee) constituted in accordance with the SEBI Guidelines administers and monitors the Scheme. The applicable tax is borne by the option holder. The ESOP Scheme titled SCUF ESOP Scheme 2013 as approved by the members in the Extraordinary Meeting held on May 31, 2013 has not been implemented. The ESOP schemes amply benefit the employees of the Company and benefits the Company in retaining employees.

During the year under review, the Company allotted 37,050 fully paid up equity shares of the face value of Rs. 10.00 each to its employees on exercise of stock options by them under the Scheme.

The required disclosures under Clause 12 under SEBI Guidelines as on March 31, 2014 are set out in Annexure No. 1 to this report.

The Company has received the attached certificate (Refer Annexure No. 2 to this report) from the auditors of the Company certifying that the Scheme is implemented in accordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and in accordance with the resolution of the members passed at their general meeting.

IX. HUMAN RESOURCE

We owe our continuing success to our employees. Our workforce defines our company, and is the most vital asset in our pos- session. The nurturing and development of this asset therefore plays an important role in our Human Resources policies. We believe that our company learns as our people learn, and towards this, Shriram City offers its employees sustained opportunities to learn and develop their skills, with the process beginning at induction. Employees, for us, are a capital investment. Exciting growth opportunities combined with initiatives such as our ESOP programs assist retention of employees. The result: a workforce that designs, refines and delivers the company''s products and services, often going beyond the call of duty in do- ing so. The company added 3152 employees during the year, and our aggregate workforce numbered 15,760 employees as at March 31, 2014.

X. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has got one subsidiary i.e. Shriram Housing Finance Ltd ("SHFL") registered with National Housing Bank for doing home loans.

The Board of Directors by way of a resolution passed at the meeting held on April 30, 2014 has given it''s consent for not attaching the Balance Sheet, Statement of Profit and loss and other documents of the subsidiary to the Balance Sheet of the Company as per Section 212 of the Companies Act, 1956 read with General Circular No.2/2011 (51/12/2007-CL-III dated February 8, 2011) of the Ministry of Corporate Affairs (MCA), Govt of India. A statement of consolidated financials of the Company with that of the subsidiary prepared in compliance with accounting standards and listing agreements with stock exchanges is attached to this annual report (Please refer Annexure No. 11 to this report).

The annual accounts, annual reports and the related detailed information of the subsidiary shall be made available to the share holders of the Company and the subsidiary company seeking such information at any point of time. The annual accounts of the subsidiary shall be kept at the Registered Office of the Company and at the Registered Office of the subsidiary company for inspection by any shareholder. The Company shall furnish hard copy of the detail of the accounts of the subsidiary to any shareholder on demand. The annual accounts of the subsidiary shall be available on the web site of the Company (www.shriramcity.in) and shall be provided to shareholders on their written request to the Company.

XI. RESERVE BANK OF INDIA (RBI) GUIDELINES

NBFCs are regulated by RBI. The Company continues to comply with all applicable regulations of RBI from time to time. Capital to Risk (Weighted) Assets Ratio (CRAR) of the Company as at March 31, 2014 stood at 25.77% of the aggregate risk weighted assets on the balance sheet and risk adjusted value of the off balance sheet items totalling to Rs. 13,661.83 crores. The Company was quick to positively respond to the changes formulated by RBI.

XII. CORPORATE GOVERNANCE

The Company continues to adhere to high standard of corporate governance. Report on corporate governance forming part of this report as required under clause 49 of the listing agreement together with the certificate from the auditors of the Company, conforming the compliance with the corporate governance are attached to this report (Refer Annexure No 7). As required by Clause 49 (IV) (F) of the listing Agreement with stock exchanges, the Management Discussion Analysis on the business of the Company forming part of this report is attached (Refer Annexure No. 3).

Further, as required under Clause 49 of the listing agreement, a certificate, duly signed by the Managing Director and Chief Financial Officer on the financial statements of the Company for the year ended March 31, 2014, was submitted to the Board of Directors at their meeting held on April 30, 2014. The same certificate is attached to the report on corporate governance (Refer Annexure No. 6). The relevant provisions of the voluntary guidelines are adopted in the areas deemed appropriate.

XIII. CORPORATE SOCIAL RESPONSIBILITY

As an integral part of the society ,the Company is engaged in community and social development The Company en- devours to empower under privileged and weaker section of the community through various initiatives.

XIV. RECOGNITIONS

"SKOCH AWARD"

The Directors are pleased to report that the company won the "SKOCH Corporate Leadership Award 2013" and "SKOCH Order of Merit and a citation".

X V. DIRECTORATE

As per provisions of the Companies Act, 1956 and articles of association of the Company, Sri Puneet Bhatia and Sri Ran- vir Dewan retire by rotation at the ensuing Annual General Meeting. Both of them being eligible seek reappointment.

The Company has received notice in writing along with requisite deposit from members under section 160 (1) of the Companies Act, 2013 signifying the candidature of following directors Sri Subramaniam Krishnamurthy, Sri Pranab Prakash Pattanayak, Sri Venkataraman Murali, Smt. Lakshmi Pranesh, Sri Sunil Varma and Sri Vipen Kapur to continue/be appointed as a Non-Executive and Independent Directors till March 31, 2019 not liable to retire by rotation. As per section 149 (13) of the Companies Act, 2013 an independent director is not liable to retire by rotation. They being eligible for appointment have consented to and declared as qualified for such appointment, if made. The Board has recommended the appointment of all the above mentioned directors.

XVI. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' responsibility statement, the Directors of the Company hereby confirm that :

(i) in the preparation of annual accounts for the year ended on March 31, 2014 the applicable accounting standards have been followed and proper explanations have been made in notes to accounts for material departures;

(ii) the accounting policies have been selected and applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and statement of the Profit and loss of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

XVII. AUDIT AND AUDITORS

The Auditors M/s Pijush Gupta & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting (AGM) and have confirmed their eligibility and willingness to accept the office, if re-appointed. Necessary resolution for their re-appointment till conclusion of the 29th AGM is proposed at the ensuing AGM. The report of the auditor on financial statements referred to in auditor''s report are self explanatory and do not require further comments.

XVIII. DISCLOSURE UNDER SECTION 217 OF THE COMPANIES ACT 1956

The particulars as required under Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 for the year ended on March 31, 2014 are as under:

A. Conservation of Energy : The operations of the Company are not energy intensive. However, adequate measures for conservation of energy, including additional investments, wherever required have been taken to reduce energy consumption.

B. The Company has not absorbed any technology

C. There were no foreign exchange earnings .

D. There was an outgo of foreign exchange equivalent of Rs. 13.81 lacs

Particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, form a part of this report. As per the provisions of Section 219 (1).

(b) (iv) of the Companies Act, 1956 this report and accounts are being sent to all the members of the Company and others entitled there to, without the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the secretarial office of the Company and the same will be sent by post.

XIX. ACKNOWLEDGEMENT

The Board of directors place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and other statutory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent co-operation and assistance received from the banks and financial Institutions .The Board is thankful to the auditors of the Company. The Board is pleased to record its appreciation for the enthusiasm, commitment, dedicated efforts of the employees of the Company at all levels. The Board is also deeply grateful for the continued confidence and faith reposed in the Company by the shareholders, depositors, debenture holders and debt holders.

For and on behalf of the Board of Directors

Place : Chennai ARUN DUGGAL

Date : April 30, 2014 CHAIRMAN


Mar 31, 2013

Dear Members,

The Directors are pleased to present the 27th Annual Report of the Company together with the audited statements of the Company for the year ended March 31,2013.

I.RESULTS OF OPERATION

The summary of financial performance of the Company for the year ended on March 31,2013 is mentioned below.

Rs. in Crores

PARTICULARS YEAR ENDED MARCH 31,

2013 2012

Profit before depreciation and taxation 690.06 537.88

Less: Depreciation 24.41 13.71

Profit before tax 665.65 524.16

Less: Provision for taxation 216.04 181.63

Profit after tax 449.62 342.53

Add: Profit brought forward from previous year 512.73 361.12

Profit available for appropriation 962.34 703.65

APPROPRIATIONS:

Transfer to general reserve 44.98 34.30

Transfer to statutory reserve 89.95 68.60

Transfer to debenture redemption reserve 33.76 49.14

Dividend on equity shares of Rs. 10/- each fully paid-up 46.41 33.46

Year 2012-13: Interim Rs. 2.50,

Final Rs. 6.00 Year 2011-12:

Interim Rs. 2.50, Final Rs. 4.00

Corporate dividend tax 7.79 5.43

Balance carried to balance sheet 739.46 512.73

EARNING PER SHARE BEFORE EXCEPTIONAL ITEMS

Basic (Rs. not annualized) 85.61 68.75

Diluted (Rs. not annualized) 83.00 68.22

II. APPROPRIATIONS AND TRANSFER TO RESERVE

(a) Transfer to Reserve: Transfer of profits to different reserves is mandated by different regulations. Accordingly .transfer to dif- ferent reserve has been made as stated above.

(b) Declaration of Dividend: The Board of Directors pay/declare interim and final dividend based on the financials of the Com- pany. The dividend pay out for the year under review has been formulated as per aspirations of the shareholders and to pay a sustainable dividend linked to long term growth of the Company. The final dividend recommended by the Board is subject to declaration by the members of the Company. Your directors are pleased to recommend final dividend as mentioned below for the year ended March 31,2013 to those members, whose name appear on the register of members as on the record date. The dividend paid for the year ended March 31,2012 are also stated below.

Dividend on Number Per Amount equity shares of Shares share (Rs.) (Rs. in crores) of Rs.10 each

Interim (FY-13) 5,25,31,701 2.50 13.16*

Proposed final 5,54,16,300 6.00 33.25

Total 8.50 46.41

lnterim (FY-12) 4,97,60,859 2.50 12.51*

Final (FY-12) 5,23,67,209 4.00 20.95

Total 6.50 33.46

Dividend on equity shares of Rs. 10 each Tax Total outflow Date of (Rs. In crores) (Rs. in crores) payment

Interim (FY-13) 2.13 15.29 Nov. 26,2012

Proposed Final 5.65 38.90 -

Total 7.79 54.19 -

Interim (FY-12) 2.03 14.54 Nov. 23,2011

Final (FY-12) 3.40 24.35 Aug. 17,2012

Total 5.43 38.89 -

* includes a part of final dividend

Section 205C of the Companies Act ,1956 read with Investor Education and Protection Fund (Awareness and Protection of Investors) Rules 2001 requires the companies to transfer dividend that has remained unclaimed for a period of seven years from the date of it''s declaration from unpaid dividend account to Investor Education and Protection Fund (IEPF). Accordingly, during the financial year an amount of Rs. 0.01 crores (Previous year Rs. 0.01 crores) were transferred to IEPF. An amount of Rs. 0.38 crores (previous year Rs. 0.31 crores) is lying in unpaid equity dividend account of the Company. Shareholders are informed that there will be no claim lie on the Company on account of dividend after the dividend is transferred to IEPF.

III. BUSINESS SCENARIO AND BUSINESS OPPORTUNITIES

NBFCs have been playing an important role in macroeconomic perspective as well as strengthening Indian financial systems. NBFCs have turned out to be engines of growth and are integral part of the Indian financial system, enhancing competition and diversification in the financial sector and are recognized as complementary to banking system. According to the Eco- nomic Survey 2010-11, it has been reported that NBFCs as a whole account for 11.2 per cent of assets of the total financial system. With the growing emphasis on financial inclusion, NBFCs would be regarded as important financial intermediaries particularly for the small-scale and retail sectors. Your Company specialises in retail asset backed lending and has been extending credit to retail customers in under-served areas and to unbanked customers .Your Company is best placed for the same .The importance of NBFCs is much discussed by various committees appointed by RBI in the past and RBI has been modifying its regulatory and supervising policies from time to time to keep pace with the changes in the system. The year ahead is expected to be good for NBFCs due to emphasis on financial inclusion resulting in revival of credit demand, lowering of funding cost and easing of regulations.

VI. PUBLIC ISSUE OF DEBENTURES

The Company made a public issue of Secured Non Convertible Debentures (NCDs) of face value of Rs. 1,000 each aggregating upto Rs. 250.00 crores with an option to retain over subscription up to Rs. 250.00 crores for issuance of additional NCDs ag- gregating to a total up to Rs. 500.00 crores. Despite tough market conditions, the issue was over subscribed. The Company re- tained additional subscription and allotted NCDs for Rs. 433.60 crores. The proceeds of the issue were utilised for the purpose for which the issue was made as mentioned in the prospectus dated August 31,2012.The utilization of the proceeds of public issue was placed before audit committee and was reported in quarterly declaration of financial results and was reported to stock exchanges duly certified by the statutory auditors of the Company.

VII. CREDIT RATING

The Company has obtained credit ratings from CRISIL, CARE and India Rating and Research Private Limited (IRRL) formerly known as FITCH, for it''s long term borrowings, short term borrowings and fixed deposits. There has been no change in rating during this year than previous year. As on March 31,2013, the ratings stood as under:

INSTRUMENT/CREDIT RATING AGENCY CARE IRRL CRISIL

Non convertible debentures - secured CARE AA IND AA-/ POSITIVE CRISIL AA-/STABLE

Subordinated debt bonds CARE AA - CRISIL AA-/STABLE

Term deposits CARE AA (FD) IND tAA- FAA/STABLE

Short term loans CAREA1 IND A1 CRISIL A1

Bank loan rating IND AA-

VIII. SHARE CAPITAL

Shriram Capital Limited ("SCL") was allotted 59,00,000 warrants on preferential basis on March 27,2012 with the approval of members.SCL had the option to convert each warrant into one equity share within 18 months of the allotment of warrants. SCL exercised it''s option of converting 28,50,000 warrants into equal number of equity shares by paying requisite amount of money and were allotted 28,50,000 equity shares of Rs. 10 each on March 28,2013.The utilization of the proceeds is reported in note no 27 of the notes to accounts forming part of this report.

IX. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company has implemented Employees Stock Options Scheme 2006 ("Scheme") approved by the members at the Extra Ordinary General Meeting held on October 30,2006 in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines, 1999. The remuneration & compensation committee constituted in accordance with the SEBI Guidelines administers and monitors the Scheme. The issuance of equity shares in exercise of the options does not affect the statement of profit and loss of the Company for the year under consideration as the exercise is made at market price prevailing on the date of the grant. The applicable tax is borne by the option holder. The ESOP Scheme 2013 as approved by the Board shall be implemented immediately on approval of members of the Company. The ESOP schemes amply benefit the employees of the Company and benefit the Company in bettering it''s performance.

During the year under review, the Company allotted 1,99,131 fully paid up equity shares of the face value of Rs. 10.00 each to its employees on exercise of stock options by them under the Scheme.

The required disclosures under Clause 12 of SEBI Guidelines as on March 31,2013 are set out in Annexure to this report.

The Company has received a certificate from the auditors of the Company certifying that the Scheme is implemented in ac- cordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and is in accordance with the resolution of the members passed at their general meeting. The same report of the auditors of the Company is attached to this report.

X. HUMAN RESOURCE

We strongly believe that our employees are vital assets and their development are vital. The Company provides tremendous learning and development opportunities to employees starting from induction. Human resource management process is set to attract and retain high calibre employees. The ESOP Scheme of the Company has been instrumental in retaining employees and the same has impacted positively on the Company''s performance. The Company added 15,336 (Net) employees during the year taking total number of Employees to 18,642 as at the end of this year.

XI. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has got one subsidiary i.e. Shriram Housing Finance Ltd ("SHFL") registered with National Housing Bank for doing home loans business.

The Board of Directors by way of a resolution passed at it''s meeting held on May 20 ,2013 has given consent for not at- taching the Balance Sheet, Statement of profit and loss and other documents of the subsidiary to the Balance Sheet of the Company as per Section 212 of the Companies Act,1956 read with General Circular No.2/2011 (51/12/2007-CL-lll dated February 8, 2011) of the Ministry of Corporate Affairs (MCA), Govt of India .A statement of consolidated financials of the Company with that of the subsidiary prepared in compliance with accounting standards and listing agreements with stock exchanges is attached to this annual report.

The annual accounts, annual reports and the related detailed information of the subsidiary shall be made available to the share holders of the Company and the subsidiary company seeking such information at any point of time. The annual ac- counts of the subsidiary shall be kept at the Registered Office of the Company and at the Registered Office of the subsidiary company for inspection by any shareholder. The Company shall furnish hard copy of the detail of the accounts of the subsidi- ary to any shareholder on demand. The annual accounts of the subsidiary shall be available on the web site of the Company (www.shriramcity.in)

XII. RESERVE BANK OF INDIA (RBI) GUIDELINES

NBFCs are regulated by RBI. Regulatory frame work has been increasing over few years and is likely to be tightened further. Increasing regulatory coverage for the sector will result in greater transparency and would further strengthen the sector, thereby enhancing the confidence of stake holders. These regulatory changes will pose challenges to the sector. However, the Company would be quick to positively respond to the changes.

The Company continues to comply with all applicable regulations of RBI from time to time. Capital to Risk (Weighted) Assets Ratio (CRAR) of the Company as at March 31,2013 stood at 18.61% of the aggregate risk weighted assets on the balance sheet and risk adjusted value of the off balance sheet items, totalling to Rs. 14118.36 crores.

XIII. CORPORATE GOVERNANCE

The Company continues to adhere to high standard of corporate governance.

As required under clause 49 of the listing agreement entered into with stock exchanges, a report on corporate governance forming part of this report together with the certificate from the auditors of the Company, confirming the compliance with the corporate governance are attached to this report.

As required by Clause 49 (IV) (F) of the listing Agreement with stock exchanges, the Management Discussion Analysis on the business of the Company forming part of this report is attached.

As per Clause 49 of the listing agreement, a certificate, duly signed by the Managing Director and Chief Financial Officer on the financial statements of the Company for the year ended March 31,2013, was submitted to the Board of Directors at their meeting held on May 20,2013. The same certificate is attached to the report on corporate governance. The relevant provi- sions of the voluntary guidelines are adopted in the areas deemed appropriate.

XIV. CORPORATE SOCIAL RESPONSIBILITY

Social welfare and community development are at the top of the Company''s philosophy. The Company endeavours to em- power underprivileged and weaker section of the community through various initiatives.

XV. RECOGNITIONS

"Padma Bhushan"

The Directors are pleased to report that Sri R Thyagarajan, Founder Chairman of Shriram Group has been conferred with the prestigious ''Padma Bhusan'' award for the year 2012 in the field of "Trade and Industry" by the Hon''ble President of India in a grand function held at Rashtrapati Bhawan on April 5,2013

XVI. DIRECTORATE

Sri R. Kannan resigned as Managing Director and Director of the Company with effect from June 5,2012. The Board places on record it''s appreciation for the leadership and immense contribution by Sri R Kannan in building strong foundation for the business of the Company that helped the Company to post impressive results.

Sri R Duruvasan was appointed as a Managing Director and Chief Executive Officer of the Company with effect from June 6, 2012. The Board welcomes him to the Board of the Company.

Sri G S Sundararajan, Director was appointed by the Board of Directors of the Company as the Managing Director of the Company with effect from November 1,2012. The Board welcomes him to the Board of the Company.

Sri S Venkatakrishnan, resigned as the Director of the Company with effect from August 21,2012. The Board records it''s deep sense of appreciation for the contribution, guidance and support extended by Sri S Venkatakrishnan to the Company.

As per provisions of the Companies Act, 1956 and articles of association of the Company, Smt. Lakshmi Pranesh and Sri S Krishnamurthy retire by rotation at the ensuing Annual General Meeting. Both of them being eligible, offer themselves for reappointment.

Sri Vipen Kapur and Sri Pranab Prakash Pattanayak were appointed as additional directors of the Company. As per the provi- sions of Section 260 of the Companies Act, 1956, Sri Vipen Kapur and Sri Pranab Prakash Pattanayak hold office upto the date of the ensuing AGM of the Company. The Company has received notice from two members separately proposing Sri Vipen Kapur and Sri Pranab Prakash Pattanayak respectively as candidates for the office of director. Brief profile and directorship details of both the directors are furnished to the members along with this report. Necessary resolutions with regard to the above are included in the Notice of the ensuing AGM.

XVII. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' responsibility statement, the Directors of the Company hereby confirm that:

i. in the preparation of annual accounts for the year ended on March 31,2013 the applicable accounting standards have been followed and proper explanations have been made in notes to accounts for material departures;

ii. the accounting policies have been selected and applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31,2013 and statement of the profit and loss of the Company for the year ended on that date;

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

XVIII. AUDIT AND AUDITORS

The Auditors of the company M/s Pijush Gupta & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting (AGM) and have confirmed their eligibility and willingness to accept the office, if re-appointed. Necessary resolution for their re-appointment is proposed at the ensuing AGM. The report of the auditor on financial statements referred to in auditor''s report are self explanatory and do not require further comments.

XIX. PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particu- lars of Employees) Rules, 1975 , as amended , form a part of this report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 this report and accounts are being sent to all the members of the Company and others entitled there to, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the secretarial office of the Company and the same will be sent by post.

XX. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARN- INGS & OUTGO

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Par- ticulars in the Report of the Board of Directors) Rules, 1988 for the year ended on March 31,2013 are as under:

A. Conservation of Energy :The operations of the Company are not energy intensive. However, adequate measures, including additional investments, wherever required have been taken to reduce energy consumption.

B. The Company has not absorbed any technology

C. There were no foreign exchange earnings.

D. There was an outgo of foreign exchange equivalent to Rs. 27.60 lacs.

XXI. ACKNOWLEDGEMENT

The Board of directors place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and other statutory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent co- operation and assistance received from the banks and financial Institutions .The Board is thankful to the auditors of the Com- pany. The Board is pleased to record its appreciation for the enthusiasm, commitment, dedicated efforts of the employees of the Company at all levels. The Board is also deeply grateful for the continued confidence and faith reposed on the Company by the shareholders, depositors, debenture holders and debt holders.

For and on behalf of the Board of Directors

Place: Chennai Arun Duggal

Date: May 20,2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 26th Annual Report of the Company together with the audited accounts of the Company for the year ended March 31,2012.

I.RESULTS OF OPERATION

The financial performance of the Company for the year ended on March 31,2012 is summarized below.

Rs.in Crores

Year ended March 31,

2012 2011

Profit before depreciation and taxation 537.87 368.07

Less: Depreciation 13.71 7.47

Profit before tax 524.16 360.60

Less: Provision for taxation 181.63 120.01

Profit after tax 342.53 240.59

Add: Profit brought forward from previous year 361.12 227.30

Profit available for appropriation 703.65 467.89 Appropriations:

Transfer to general reserve 34.30 24.10

Transfer to statutory reserve 68.60 48.10

Transfer to debenture redemption reserve 49.14 -

Dividend on equity shares of Rs. 10/- each fully paid-up 33.46 29.70

Year 2011-12: Interim Rs.2.50, Final Rs.4.00 Year 2010-11 : Interim Rs.2.50, Final Rs.3.50

Corporate dividend tax 5.43 4.87

Balance carried to balance sheet 512.72 361.12

Earnings per share before exceptional items

(Basic not annualized) 68.75 48.78

(Diluted not annualized) 68.22 47.97

II. BUSINESS SCENARIO AND BUSINESS OPPORTUNITIES

The financial year 2011-12, was tough for the Indian economy. The Central Statistical Office (CSO) put out an advance estimate of Gross Domestic Product (GDP) growth of 6.9 percent for 2011-12 as against 8.4 percent in 2010-11.

The growth slowed down in emerging and developing economies reflecting the combined impact of monetary tightening and slowdown in global growth.

The Reserve Bank of India (RBI) in its annual Monetary Policy Statement for 2012-13 dated April 17,2012 has announced reduction in the repo rate by 50 basis points from 8.5 percent to 8 percent with immediate effect. The RBI has also announced increase in the borrowing limit of scheduled commercial banks under the marginal standing facility from one percent to two percent of the bank's net demand and time liabilities. With these measures, RBI expects to address three important issues, namely stabilizing the growth of Indian economy around its current post-crisis trend, containing the risk of inflation and enhancing the liquidity cushion to the system.

The industry is expected to perform better than the last year as leading indicators suggest turn around in index of industrial production growth. The overall domestic growth outlook for the current year looks a little better than last year. According to RBI's baseline projections, the GDP growth for the current year 2012-13 should be 7.3 percent. The global outlook also looks slightly better than expected earlier.

RBI has issued final guidelines on securitization. RBI is expected to announce the draft guidelines on the regulatory framework for Non- Banking Financial Companies (IMBFCs), interlaid dealing with tightening capital adequacy norms and higher provisioning. It is expected that RBI will allow sufficient time to IMBFCs for migrating and re-aligning its operations with the new regulations.

Your directors are of the opinion that despite challenges ahead, your company's operations would not be seriously affected and your Company would continue to grow in future as well.

III. OPERATIONS

Loan disbursement registered a growth of 77 percent at Rs 13,898.00 crores as compared to Rs 7,864.00 crores in the previous year. During the year under review, the Company continued to add new products, while extending its foot prints to new geographical areas and maintained it's market leadership. Income from operations for the year under consideration grew by 55.38 percent to Rs 2,056.41 crores as against Rs 1,323.44 crores for the previous year and the same resulted in a profit before tax of Rs 524.16 crores for the year under review, compared to Rs 360.60 crores during the previous year. As at March 31,2012 the assets under management stood at Rs 13,431.03 crores.

IV. FINANCE

During the financial year 2011-12, the RBI adopted a calibrated approach by hiking repo rate five times with a total hike of 175 basis points in order to contain inflation. It also introduced base rate system in place of prime lending rate from July 1,2010. These two factors resulted in medium/long term interest rate moving up. Tight liquidity conditions persisted during major part of the year. However, your Company was able to reduce the impact of increase in interest rate by continuously monitoring asset liability match and by following innovative method of borrowing and prudent method of lending. The Company's fund mobilization from banks, institutions, public issue and private placement of debentures and subordinated debts continues to be smooth. The summary of borrowings is as under:

RESOURCES INCLUDING FIXED DEPOSITS

Rs.in Crores

AsatMarch31, Deposits Privately placed Subordinated Commercial non convertible debt bonds Papers

2012 0.22 2059.55 835.74 -

2011 0.55 1552.94 532.72 225.00

As at6 March 31, Listed Non convertible Term loans debentures

2012 1484.60 4004.15

2011 645.89 3021.77

As at March 31,2012,67 deposits amounting to Rs 0.15 crores had matured for payment and were due to be claimed or renewed. Subsequent follow-up for repayments/renewals resulted in the number reducing to 61 deposits amounting to Rs 0.13 crores.

There are no deposits which had matured and claimed but not paid by the Company. Steps are continuously taken to arrange for repayment/renewal of these unclaimed deposits.

V. PUBLIC ISSUE OF DEBENTURES

The Company made a public issue of Secured Non Convertible Debentures (IMCDs) of face value of Rs 1,000 each aggregating up to Rs 375.00 crores with an option to retain over subscription up to Rs 375.00 crores for issuance of additional IMCDs aggregating to a total up to Rs 750.00 crores. The issue was oversubscribed. The Company retained additional subscription of Rs 375.00 crores along with base issue of Rs 375.00 crores aggregating to a total of Rs 750.00 crores. The proceeds of the issue were utilized for the purpose for which the issue was made as mentioned in the prospectus dated August 1,2011. The utilization of the proceeds of the issue is mentioned in note no.27(i) of the notes to accounts.

VI. CREDIT RATING

The Company has obtained credit ratings from CRISIL, CARE and FITCH for it's long term borrowings, short term borrowings and fixed deposits. There has been no change in rating during this year than previous year. As on March 31,2012,the ratings stand as under:

Instrument CARE FITCH CRISIL

Non convertible debentures-secured CareAA Fitch AA-(ind) CrisilAA

Subordinated debt bonds CareAA - CrisilAA

Term deposits Care AA(FD) Fitch tAA-(ind) -

Short term rating CareA1 Fitch A1 (ind) Crisil A1

Bank loan rating -- Fitch AA-(ind) -

VII. DIVIDEND

The Board of Directors pay/declare interim and final dividend based on the financials of the Company. The dividend payout for the year under review has been formulated as per aspirations of the shareholders and to pay a sustainable dividend linked to long term growth of the Company. The final dividend recommended by the Board is subject to declaration by the members of the Company. Your directors are pleased to recommend final dividend as mentioned below for the year ended on March 31,2012 to those members, whose name appear on the register of members as on the record date.

For the year ended on March 31,2012

Dividend on No of Shares per share(Rs.) Amount Tax equity shares of (Rs.in crores) (Rs.in crores) Rs.10 each

Interim 4,97,60,859 2.50 12.51 2.03

Proposed final 5,23,67,209 4.00 20.95 3.40

Total 6.50 33.46 5.43 38.89

Dividend on equity Total outflow Date of payment shares of Rs.10 each (Rs.in crores)

Interim 14.54 November 23,2011

Proposed final 24.35 -

Total 38.89 -

For the year ended on March 31,2011

Dividend on No of Shares per share(Rs.) Amount Tax Date of payment

equity shares of (Rs.in crores) (Rs.in crores) Rs.10 each

Interim 4,93,92,739 2.50 12.36 2.05

Final 4,95,36,877 3.50 17.34 2.81

Total 6.00 29.70 4.86 34.56

Dividend on equity Total out flow Date of payment shares of Rs. 10 each

Interim 14.41 November 25,2010

Final 20.15 August 23,2011

Total 34.56 -

Section 205C of the Companies Act,1956 read with Investor Education and Protection Fund (Awareness and Protection of Investors) Rules 2001 requires the companies to transfer dividend that has remained unclaimed for a period of seven years from the unpaid dividend account to Investor Education and Protection Fund (IEPF). Accordingly, during the financial year an amount of Rs 0.11crores (Previous year Rs 0.001 crores) was transferred to IEPF. An amount of Rs 0.31crores (previous year Rs 0.22 crores) is lying in unpaid equity dividend account of the Company. Shareholders are informed that there will be no claim lie on the Company on account of dividend after the dividend is transferred to IEPF.

VIII. SHARE CAPITAL

The members, by way of resolution passed at the Extraordinary General Meeting (EGM) held on March 24,2012 approved the increase in authorized capital of the Company to Rs 140.00 crores (Rupees One hundred forty crores only) divided into 10,00,00,000 equity shares of Rs 10.00 (Rupees ten only) each and 40,00,000 cumulative redeemable preference shares of Rs 100.00 (Rupees One hundred only) each.

The Company successfully completed allotment of 23,00,000 equity shares of face value of Rs 10.00 each and 59,00,000 warrants on preferential basis to Shriram Capital Limited (Promoter Group) for cash. The equity shares were allotted at a price of Rs 570.00 per equity share (including a premium of Rs 560.00 per equity share) and the warrants were allotted at a subscription price of Rs 143.00 per warrant conferring an option to the holder to subscribe to one equity share per warrant at an exercise price of Rs 570 per warrant. The price is higher than the price determined as per regulation 76(1) of chapter VII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009.

The utilization of the proceeds of the issue is mentioned in note no.27(ii) of the notes to accounts.

IX. EMPLOYEE STOCK OPTION SCHEME (ESOS)

The Company has implemented Employees Stock Options Scheme (ESOS) approved by the members at the Extra-Ordinary General Meeting held on October 30, 2006 in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines,1999. The remuneration & compensation committee constituted in accordance with the SEBI Guidelines administers and monitors the ESOS scheme. The issuance of equity shares in exercise of the options does not affect the statement of profit and loss of the Company for the year under consideration as the exercise is made at market price prevailing on the date of the grant. The applicable tax is borne by the option holder.

During the year under review, the Company allotted 5,30,332 fully paid up equity shares of the face value of Rs 10.00 each to its employees on exercise of stock options by them.

The required disclosures under Clause 12 under SEBI Guidelines as on March 31,2012 are set out in Annexure to this report.

The Company has received a certificate from the auditors of the Company certifying that the Company's ESOS scheme is implemented in accordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and in accordance with the resolution of the members passed at their general meeting which is attached to this report.

X. HUMAN RESOURCE

We strongly believe that the employees are vital assets. We have set up a human resource management process to attract and retain high caliber employees. In order to empower our employees, internal and external training are imparted to them continuously. The ESOS of the Company has contributed to a large extent in retaining employees and has also impacted positively on the Company's performance. The Company added 1,948 employees during the year taking total number of Employees to 3,306 as at the end of this year.

XI. SUBSIDIARY AND CONSOLIDATED FINANCIAL STATEMENTS

During the financial year, the subsidiary company of the Company, Shriram Housing Finance Ltd (SHFL) got registration from National Housing Bank and started its business.

The Board of Directors by way of a resolution passed at the meeting held on May 18,2012 has given consent for not attaching the Balance Sheet, Statement of profit and loss and other documents of the subsidiary to the Balance Sheet of the Company as per Section 212 of the Companies Act,1956 read with General Circular No.2/2011 (51/12/2007-CL-lll dated February 8,2011) of the Ministry of Corporate Affairs (MCA), Govt of India. A statement of consolidated financials of the Company with that of the subsidiary prepared in compliance with accounting standards and listing agreements with stock exchanges is attached to this annual report.

The annual accounts, annual reports and the related detailed information of the subsidiary shall be made available to the share holders of the Company and the subsidiary company seeking such information at any point of time. The annual accounts of the subsidiary shall be kept at the Registered Office of the Company and at the Registered Office of the subsidiary company for inspection by any shareholder. The Company shall furnish hard copy of the detail of the accounts of the subsidiary to any shareholder on demand. The annual accounts of the subsidiary shall be available on the web site of the Company ( ww.shriramcity.i ) and shall be provided to shareholders on their written request to the Company.

XII. RESERVE BANK OF INDIA (RBI) GUIDELINES

The Company continues to comply with all applicable regulations of RBI from time to time. The Company is categorized as a loan company as per provisions of the RBI regulations. Capital to Risk (Weighted) Assets Ratio (CRAR) of the Company as at March 31,2012 stood at 17.40 percent of the aggregate risk weighted assets on the balance sheet and risk adjusted value of the off balance sheet items, totaling to Rs 11377.26 crores, which is above 15 percent as prescribed by RBI in it's notification no DNBS193 (VL)-2007, dated February 22,2007. The Company has Fair Practices Code in compliance with the circular of RBI dated March 26,2012.

XIII. CORPORATE GOVERNANCE

The Company continues to adhere to high standard of corporate governance .The efforts of the Company in this direction are widely recognized by the investors and other stake holders.

As required under clause 49 of the listing agreement entered into with stock exchanges, a report on corporate governance forming part of this report together with the certificate from the auditors of the Company, confirming the compliance with the corporate governance are attached to this report.

As required by Clause 49 (IV) (F) of the listing Agreement with stock exchanges the Management Discussion Analysis on the business of the Company forming part of this report is attached.

Further, as required under Clause 49 of the listing agreement, a certificate, duly signed by the Managing Director and Chief Financial Officer on the financial statements of the Company for the year ended March 31,2012, was submitted to the Board of Directors at their meeting held on May 18,2012. The certificate is attached to the report on corporate governance.

The relevant provisions of the voluntary guidelines are adopted in the areas deemed appropriate.

XIV. CORPORATE SOCIAL RESPONSIBILITY

Social welfare and community development is at the top of the Company's philosophy. The Company embraces responsibility for impact of it's operations and actions on all stake holders and society at large. Hence, the Company endeavors to empower under privileged and Weaker section of the community through various initiatives

XV. DIRECTORATE

Sri R.Kannan resigned as Managing Director and Director of the Company with effect from June 5, 2012. The Board places on record it's appreciation for the leadership and immense contribution by Sri R Kannan in building strong foundation for the business of the Company that helped the Company to reach greater heights and post impressive results.

Sri K R Ramamurthy and Sri Mukund Govind Diwan resigned as directors of the Company with effect from November 2,2011 and November 15, 2011 respectively. The Board places on record its appreciation for valuable services and guidance received from Sri Ramamurthy and Sri Diwan during their tenures members of the Board.

As per provisions of the Companies Act 1956 and articles of association of the Company, Sri S Venkatakrishnan, Sri G S Sundararajan and Sri Sunil Varma retire by rotation at the ensuing Annual General Meeting. All of them being eligible offer themselves for reappointment.

Sri V Murali was appointed as an additional director of the Company. As Per the provisions of Section 260 of the Companies Act, 1956, Sri V Murali holds office up to the date of the ensuing AGM of the Company. The Company has received notice from a member proposing Sri V Murali as a candidate for the office of director. Sri R Duruvasan was appointed as an additional director and Managing Director of the Company with effect from June 6,2012. The Company has received notice from a member proposing Sri R.Duruvasan as candidate for the office of director. Brief profile and directorship details of both the directors are furnished to the members along with this report. Necessary resolutions with regard to the above are being placed at the ensuing AGM.

XVI. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956 with respect to Directors' responsibility statement ,the Directors of the Company hereby confirm that :

(i) in the preparation of annual accounts for the year ended on March 31, 2012 the applicable accounting standards have been followed and proper explanations have been made in notes to accounts for material departures;

(ii) the accounting policies have been selected and applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31,2012 and statement of the profit and loss of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

XVII. AUDIT AND AUDITORS

The Auditors M/s Pijush Gupta & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting (AGM) and have confirmed their eligibility and willingness to accept the office, if re-appointed. Necessary resolution for their re-appointment is proposed at the ensuing AGM. The notes on financial statements referred to in auditor's report are self explanatory and do not require further comments

XVIII. PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, form a part of this report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956 this report and accounts are being sent to all the members of the Company and others entitled there to, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the Secretarial Office of the Company and the same will be sent by post.

XIX. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 for the year ended on March 31,2012 are as under:

A. Conservation of Energy :The operations of the Company are not energy intensive. However .adequate measures, including additional investments, wherever required have been taken to reduce energy consumption.

B. The Company has not absorbed any technology.

C. There were no foreign exchange earnings.

D. There were no outgo of foreign exchange

XX. ACKNOWLEDGMENT

The Board of directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and other statutory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent co-operation and assistance received from the banks and financial Institutions. The Board is pleased to record its appreciation for the enthusiasm, commitment, dedicated efforts of the employees of the Company at all levels. The Board is also deeply grateful for the continued confidence and faith reposed on the Company by the shareholders, depositors, debenture holders and debt holders.

For and on behalf of the Board of Directors

Place: Chennai ARUN DUGGAL

Date: June 5, 2012 CHAIRMAN


Mar 31, 2011

Dear Members,

The Directors have pleasure in placing before you their Twenty Fifth Annual Report on the business and Operations of the Company together with the Accounts for the year ended 31st March, 2011.

FINANCIAL PERFORMANCE (Rs. in lacs)

Year ended Year ended

March 31, 2011 March 31, 2010

Profit before Depreciation and Taxation 36807.50 29090.63

Less: Depreciation 747.41 464.77

PROFIT BEFORE TAX 36060.09 28625.86

Less: Provision for taxation 12001.24 9200.00

PROFIT AFTER TAX 24058.85 19425.86

Add: Profit brought forward from Previous Year 22730.09 12003.01

Profit available for appropriation 46788.94 31428.87

APPROPRIATIONS (Rs. in lacs)

Year ended Year ended

March 31, 2011 March 31, 2010

General Reserve 2410.00 1940.00

Statutory Reserve 4810.00 3890.00

Capital Redemption Reserve - - Dividend (interim Rs.2.5 and final Rs 3.5) on Equity Shares of Rs. 10/- each fully paid-up 2970.04 2456.92

Tax on Dividend 486.59 411.86

Balance Carried to Balance Sheet 36112.31 22730.09

BUSINESS SCENARIO AND BUSINESS OPPORTUNITIES

The timely support through a series of economic measures and by active governmental monitoring of the Indian economy, it registered speedy recovery. India managed to grow at 8.00 percent in 2009-10 and 6.80 percent in 2008-09 in the face of global melt down. The growth during the financial year 2010-11 is reported to be about 8.60 percent. Indian economy derived major benefits from robust domestic demand and a revival in investor and consumer sentiment. This contributed for stronger capital inflows into the country.The Indian economy is projected to grow 8.50 percent - 9.00 percent in 2011-12. The volatile interest rates could pose a challenge. The growth in Retail Finance disbursement would largely be driven by increasing propensity to consume.increasing affordability.The penetration in retail finance still remains low.

World over, the Micro Small and Medium Enterprises or MSMEs have been recognised as engines of economic growth. In India, MSMEs are thesecond largest source of employment after agriculture. They account foralmost 40 per cent of industrial production, 95 per cent of the industrial units, 34 percent of the exports and manufacture over 6000 products. It is estimated that to create one job in the MSME sector, only Rs 72,000 is required as against Rs 5.5 lacs required in the large organised sector.

It is estimated that to achieve the target of 10 per cent growth by 2011, the MSME sector needs to grow at 12%.There are some major hurdles which do notallowthissectorto flourish well.

The first major hurdle is that the credit availability is low for this sector. It is estimated that the unorganised sector comprises 95% of the total industrial units, employing more than 65 million people. Yet only 8% of the total bank credit finds its way into this sector. Arranging collateral security, documentation etc makes clearance of the loan all the more difficult. Inevitably, many of these small units fall into the vicious cycle of debt and poverty and eventually many of them perish.

Formal sector has the option to raise huge sum from the money market, while the unorganised sector doesn't have any such opportunity. In the 11 th Five Year Plan, Planning Commission estimates that in the next five years the total working capital and loan requirement by the MSMEs/unorganised sector would be 2,96,000 crore. This huge credit requirement cannot be met by the banking system alone. The Company finds here huge scope in financing this sector of the economy through it's product "SMALL BUSINESS LOANS".

The exceptional growth in gold loan disbursements (loans against gold jewellery) in recent years, the under- penetrated nature of this market, being secured and negligible NPA levels make the lending against gold business attractive within the banking/NBFC space.

The gold loan market is pre-dominantly un-organised lending against this collateral, Indian households are estimated to have a gold holding of anywhere between 18,000 and 20,000 tonnes. Given that gold is not an income- generating asset, the only means to monetise gold holdings is through loans. Theoretically, this translates into a Rs 30 lac crore lending business opportunity (assuming a 75 per cent loan-to-value). The organised market size could be about Rs 38,000 crore (March 2011). This leaves a huge space for Financing against gold and Jewellery. The Company with its wide-spread business outlets sees huge opportunities of growth, particularly in the small business loans and loan against gold.

OPERATIONS

Income from Operations for the period under consideration was Rs.132091.19 lacs as against Rs.110284.71 lacs forthe previous year posting an increase of 19.77% year-on-year basis.

The Company earned a Profit before Tax of Rs.36060.09 lacs for the year ended 31s,March, 2011, registering an increase of Rs.7434.23 lacs (25.97%) over the previous year.which was at Rs 28625.86 lacs. The profit after tax at Rs.24058.85 lacs grew 23.85 % than the previous year (Rs 19425.86 lacs).

RESOURCES INCLUDING FIXED DEPOSITS

The Resource of the Company stood as under:

(Rs in Lacs)

Amount Amount of Amount of Amount of Amount of Amount of Year ending on of Privately Subordina -ted Commercial Listed Non Term Loan Depos -its placed Non Debt Papers Convertible Convert -ible Debentures Debentures

31st March, 2011 55.10 155294.31 53272.33 22500.00 64583.33 302177.28

31st March, 2010 100.74 154073.77 53002.95 NIL 20000.00 114164.17

As on 31st March 2011,113nos deposits amounting to Rs. 20.83 lacs had matured for payment and were due to be claimed or renewed. Subsequent follow-up for repayments/renewals resulted in the number reducing to 77 deposits amounting to Rs.13.47 lacs. However there are no deposits which had matured and which were claimed but not paid by the Company. Steps are continuously being taken to arrange for repayment/renewal of deposits.

DIVIDEND: The Board of Directors declared Interim and Final Dividend based on the financials of the Company. The Final Dividend recommended by the Board are subject to approval by the Members of the Company. The Details of Dividend are given below.

For the Year 2010-11

No of Dividend Dividend Dividend Total Date of Shares per Share Amount Tax Outflow payment (Rs) (Rs in lacs) (Rs in Lacs) (Rs in Lacs)

Interim Dividend 49392739 2.50 1236.25 205.33 1441.58 25.11 2010

Final Dividend 49536877 3.50 1733.79 281.26 2015.05

Total 6.00 2970.04 486.59 3456.63

For the year 2009-2010

No of Dividend Dividend Dividend Total Date of Shares per Share Amount Tax Outflow payment (Rs) (Rs in lacs) (Rs in Lacs) (Rs in Lacs)

Interim Dividend 49113850 2.00 982.28 166.94 1149.22 23.11. 2009

Final Dividend 49154700 3.00 1474.64 244.92 1719.56 18.08. 2010

Total 5.00 2456.92 411.86 2868.78

An amount of Rs.22.11 lacs (previous year Rs. 16.87 lacs) is lying in unpaid Equity dividend account of the Company. During the financial year an amount of Rs 0.10 lacs (Previous year Rs 0.36 lacs) was transferred to Investor Education & Protection Fund.

SHARE CAPITAL AND EMPLOYEE STOCK OPTION SCHEME

The Company has got Employees Stock Options Scheme (ESOS).ESOS was approved by the Members at the Extra-Ordinary General Meeting held on dt 30th October, 2006.ESOS was implemented and options were granted to the employees in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines,1999. The Remuneration & Compensation Committee constituted in accordance with the SEBI Guidelines administers and monitors the Scheme.

During the year under review, the company allotted 3,82,177 Nos of fully paid up equity shares of the face value of Rs.10/- each to its employees on exercise of stock options by them.

The details of Shares issued and allotted under ESOS and the disclosures required under Clause 12 under SEBI Guide lines as on 31st, March, 2011 are set out in Annexure to this report.

Certificate from the Auditors of the Company certifying that the Company's 'Employees Stock Options Scheme 2006' is implemented in accordance with the SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and in accordance with the resolution of the members passed attheirgeneral meeting, is attached tothis report.

HUMAN RESOURCE

The Company strongly believes that the human resource built up by it over the years is its most valuable asset. In orderto strengthen them.internal and external trainings are imparted to them continuously.AII efforts are made to empower them continuously. The broader employee ownership of its share capital has contributed to a large extent on retaining its employees and has also impacted positively on the Company's performance.

SUBSIDIARY

During the Financial Year ended 31st March, 2011, the Company incorporated a wholly owned subsidiary Company, "Shriram Housing Finance Limited" (SHFL) . SHFL was incorporated on 09th November, 2010 and received its Certificate of Commencement of Business from the Registrar of Companies, Tamilnadu on 21st January, 2011. SHFL is a non-material unlisted subsidiary of the Company and is yet to commence business.SHFL has made applications to National Housing Bank(NHB)forobtainingCertificateof Registration.

The Board of Directors by way of a resolution passed at it's meeting held on May 26,2011 has given consent for not attaching the Balance Sheet of the Subsidiary to it's Balance Sheet as per Section 212 of the Companies Act,1956 read with General Circular No.2/2011 (51/12/2007-CL-lll dt 8th February 2011) of the Ministry of Corporate Affairs (MCA).Govt of India. A statement on Consolidated Financial Statement of the Company with that of the Subsidiary prepared in compliance with accounting standards and listing Agreements with Stock Exchanges is attached to this Annual Report.

The Annual Accounts.Annual Reports and the related detailed information ofthesubsidiaryshallbemadeavailable to the Share holders of the Company and the Subsidiary Company seeking such information at any point of time.The Annual Accounts of the Subsidiary shall be kept at the Registered Office of the Company and at the Registered Office of the Subsidiary Company for inspection by any shareholder. The Company shall furnish hard copy of the detail of the Accounts of the Subsidiary to any Shareholder on demand.The annual accounts of the Subsidiary shall be available on the web site of the Company (www.shriramcitv.in) and shall be provided to Shareholders on their written requestto the Company.

RESERVE BANK OF INDIA (RBI) GUIDELINES

The Company continues to comply with all the requirements prescribed by Reserve Bank of India, as applicable to it.

CORPORATEGOVERNANCE

The Company had always endeavored to adhere to high standard of Corporate Governance and ensured its compliance.

As required by the Listing Agreement entered into with Stock Exchanges, a report on Corporate Governance forming a part of this report together with the Certificate from the Auditors of the Company, confirming the compliance of the Corporate Governance are attached to this report.

As required by Clause 49 (IV) (F) of the Listing Agreement with Stock Exchanges the Management Discussion Analysis on the business of the Company given as a separate statement forming a part of this report is attached.

Further, as required under Clause 49 of the Listing Agreements certificate, duly signed by the Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2011, was submitted tothe Board of Directors attheir meeting held on May 26,2011. The certificate is attached totheReporton Corporate Governance.

CORPORATE GOVERNANCE VOLUNTARY GUIDELINES

The Board of Directors have taken note of the 'Corporate Governance Voluntary Guidelines 2009' issued by the Ministry of Corporate Affairs (MCA) in December 2009. Though these guidelines are recommendatory in nature, the Board is aware of its importance and would consider adopting the relevant provisions of these Guidelines as and when deemed appropriate.

DIRECTORATE

As per Section 256 of Companies Act,1956,Sri Arun Duggal, Chairman and Sri Mukund Govind Diwan, Director who retire by rotation at the ensuing Annual General Meeting , being eligible offer themselves for reappointment. Brief profile, nature of expertise and directorship details are furnished to the members in the note accompanying the notice convening the Annual General Meeting.

During the financial year, Smt Lakshmi Pranesh, Sri Puneet Bhatia, Sri K R Ramamoorthy and Sri Ranvir Dewan were appointed as Additional Directors of the Company. As per the provisions of Section 260 of the Companies Act, 1956, Smt Lakshmi Pranesh, Sri Puneet Bhatia, Sri K R Ramamoorthy and Sri Ranvir Dewan hold office upto the date of the ensuing Annual General Meeting of the Company. The Company has received notice from members proposing Smt Lakshmi Pranesh, Sri Puneet Bhatia, Sri K R Ramamoorthy and Sri Ranvir Dewan as candidate for the office of Director.

Necessary resolutions with regard totheaboveare being placed atthe ensuing Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions Section 217(2AA) of the Companies Act, 1956 the Directors to the best of their knowledge and belief confirm that :

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

- such accounting policies as mentioned in Schedule 17 of the Accounts have been selected and applied consistently and judgments and estimates have been made that 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, 2011 and of the profit of the Company for the year ended on that date;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

AUDITORS

The Auditors M/s Pijush Gupta & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from them to the effect that their re-appointment as Auditors of the Companyif made.would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956 they hold valid peer review certificate as prescribed under Caluse 41 (1)(h)ofthe Listing Agreement with Stock Exchanges. Necessary resolution fortheirreppointment is proposed atthe ensuing Annual General Meeting.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 , as amended , forms part of the Directors' Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 this Report and Accounts are being sent to all the Shareholders of the Company, excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary atthe Secretarial Office of the Company and the same will be sent by post.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

PursuanttotherequirementunderSection217(1)(e)oftheCompaniesAct,1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988:

a. The Company does not have any activity involving conservation of energy ortechnology absorption.

b. The Company does not have any Foreign Exchange Earnings.

c. Outgo under Foreign Exchange - Rs. 0.09 lacs (Previous Year: 0.08 Lacs)

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India, other statutory authorities and the Auditors of the Company. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions. The Board is pleased to record its appreciation for the enthusiasm, commitment, dedicated efforts of the employees of the Company at all levels. The Board is also deeply grateful for the continued confidence and faith reposed on us by the Shareholders, Depositors, Debenture holders and Debt holders.

For and on behalf of the Board of Directors

Place: Chennai ARUN DUGGAL

Date: 26th May, 2011 CHAIRMAN


Mar 31, 2010

The Directors have pleasure in placing before you their Twenty Fourth Annual Report and Accounts for the year ended 31st March, 2010.

FINANCIAL PERFORMANCE (Rs. in lacs) Year ended Year ended 31st March 31st March 2010 2009 Profit before Depreciation and Taxation 29090.63 20178.57 Less: Depreciation 464.77 2205.04 PROFIT BEFORE TAX 28625.86 17973.53 Less: Provision for taxation (including Provision for Deferred Tax & Fringe Benefit Tax) 9200.00 6272.76 PROFIT AFTER TAX 19425.86 11700.77 Add: Profit brought forward from Previous Year 12003.01 8412.03 Profit available for appropriation 31428.87 20112.80

APPROPRIATIONS (Rs. in lacs) Year ended Year ended 31st March 31st March 2010 2009 General Reserve 1940.00 1170.00 Statutory Reserve 3890.00 2340.00 Capital Redemption Reserve - 2328.98 Dividend on Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid-up at the stipulated rates - 63.17 Dividend (interim Rs. 21- and final Rs. 3/-) on Equity Shares of Rs. 10/-each fully paid-up 2456.92 1877.77 Tax on Dividend 411.86 329.86 Balance Carried to Balance Sheet 22730.09 12003.01

INDUSTRY OVERVIEW

BUSINESS LOANS-THE INDUSTRY

Small and medium enterprises in India are responsible for generating the highest rate of employment amongst all sectors and are also a very big part of the industrial production and exports of the country According to the Ministry of Micro, Small and Medium Enterprises (MSMEs), MSMEs account for about 45 percent of the manufacturing output and 40 percent of the total exports of the country employing about 59 million persons in over26 million units throughout the country.

BUSINESS LOANS FINANCING

MSMEs often face teething problems in funding, and are in many cases forced to commence operations with the entrepreneurs own money Most often these resources are not sufficient for growth. Many financial institutions are wary of extending credit to MSMEs due to a lack of faith in the business model or for want of collateral.

Shriram City sees a huge opportunity for growth in this segment, given the companys unique business model, widespread reach, credit and collection skills honed over almost three decades in the industry. Thus the company expects to cater most effectively the MSME segment and help this class of borrowers to overcome the difficulties they generally encounter in obtaining timely finance.

YEAR IN RETROSPECT

Income from Operations for the period under consideration was Rs.110284.71 lacs and Total Expenditure was Rs. 81658.85 lacs.

The Company earned a Profit before Tax of Rs. 28625.86 lacs for the year ended 31st March, 2010, registering an increase of Rs. 10652.33 lacs (59.27%) over the previous year. The profit after Tax, at Rs.19425.86 lacs was also 66.02% higher than the previous year (Rs. 11700.77 lacs).

RESOURCES

The deposit portfolio as on 31st March 2010 stood at Rs.100.74 lacs as against Rs.112.80 lacs as on 31st March 2009. The privately-placed Secured Non-Convertible Debenture Portfolio stood at Rs.154073.77lacs as on 31st March 2010 (Rs. 127741.10 lacs as on 31st March 2009). Sub-ordinated Debts as on 31st March 2010 stood at Rs.53002.95 lacs (Rs.41718.53 lacs as on 31st March 2009).

As on 31st March 2010, 133 deposits amounting to Rs. 21.01 lacs had matured for payment and were due to

be claimed or renewed. Subsequent follow-up for repayments/renewals resulted in the number reducing to 119 deposits amounting to Rs.19.46 lacs. However there are no deposits which had matured and claimed but not paid by the Company. Steps are continuously being taken to arrange for repayment/renewal of deposits.

The Company was also successful in the year under consideration to raise resources from products such as Commercial Papers and rated Non-Convertible Debentures.

DIVIDEND

Your Directors declared an interim dividend of Rs. 2 per equity share (20%) for the financial year 2009-2010 amounting to Rs.982.28 lacs exclusive of dividend distribution tax of Rs.166.94 lacs and the same was paid on 23rd November,2009. (Previous year Re. 1 per equity share amounting to Rs. 458.50 lacs exclusive of dividend distribution tax of Rs. 77.92 lacs)

Your Directors have pleasure in recommending a final Dividend of Rs. 3 per equity share (30%) for the financial year ended March 31,2010 subject to your approval . This final dividend shall result in an cash outflow of Rs.1474.64 lacs excluding dividend distribution tax of Rs. 244.92 lacs (previous year Rs.1375.92 lacs excluding dividend distribution Tax of Rs. 233.84 Lacs)

An amount of Rs.16.87 lacs (previous year Rs.13.42 lacs) is lying in unpaid Equity dividend account of the Company. During the financial year an amount of Rs 0.36 lacs (Previous year Rs 0.47 lacs) was transferred to Investor Education & Protection Fund.

EMPLOYEE STOCK OPTION SCHEME

Employees Stock Options scheme was approved and implemented by the Company and options were granted to the employees in accordance with the Securities & Exchange Board of India (Employees Stock Option Scheme & Employees Stock Purchase Scheme) Guidelines,1999. The Remuneration & Compensation Committee constituted in accordance with the SEBI Guidelines administers and monitors the Scheme.

As on 31st March, 2010 the Company allotted 54700 Fully paid up equity shares of the face value of Rs 10 each to its employees on exercise of stock options by them.

The applicable disclosures required under SEBI Guidelines as on 31st March,2010 are set out in Annexure to this report.

Certificate from the Auditors of the Company certifying that the Companys Employees Stock Options Scheme 2006 is implemented in accordance with the SEBI

(Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and in accordance with the resolution of the members passed at their general meeting, is attached to this report.

WARRANTS CONVERSION

As approved by the Extraordinary General Meeting, optionally convertible warrants were issued to various subscribers in the year 2008. In November 2009 all the subscribers except Shriram Retail Holdings Pvt Ltd (SRHPL) exercised their option and converted the warrants into equity shares at a price of Rs. 400/- per share (Rs. 40/-on allotment and balance on conversion of warrants into equity shares). The non conversion of warrants into shares by SRHPL resulted in forfeiture of money paid by them.

RBI DIRECTIONS

The Company continues to comply with all the requirements prescribed by Reserve Bank of India, as applicable to it.

CORPORATE GOVERNANCE

The Company had always endeavoured to adhere to high standard of Corporate Governance and ensured its compliance.

As required by the Listing Agreement entered into with Stock Exchanges, a report on Corporate Governance forming a part of this report together with the Certificate from the Auditors of the Company, confirming the compliance of the Corporate Governance are attached to this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required by Clasue 49 (IV) (F) of the Listing Agreement with Stock Exchanges the Management Discussion Analysis on the business of the Company is attached to this report.

DIRECTORS :

Sri V Parthasarathi resigned as a Director of the Company on 2nd November, 2009. Dr. T S Sethurathnam (Nominee of Indian Renewable Energy Development Agency Ltd (IREDA)) also resigned as a Director in view of the Company repaying the loan of IREDA fully. The Directors place on record their appreciation for the wise counsel, valuable support and esteemed contribution by both the Directors.

Sri Sunil Varma, Director and Sri S Krishnamurthy, Director who retire by rotation at the ensuing Annual General Meeting , being eligible offer themselves for reappointment . Brief profile, nature of expertise and directorship details are furnished to the members in the note accompanying the notice convening the Annual General Meeting.

During the financial year, Sri G S Sundararajan was appointed as an Additional Director of the Company. As per the provisions of Section 260 of the Companies Act, 1956, Sri G S Sundararajan holds office upto the date of the ensuing Annual General Meeting of the Company. The Company has received notice from a member proposing Sri G S Sundararajan as candidate forthe office of Director.

As the term of office of the Managing Director will be expiring on September 14, 2010, Remuneration and Compensation Committee as well as the Board of Directors have recommended Sri R Kannans re-appointment for a further term of three years commencing from September 15,2010 subject to the approval of the shareholders.

Necessary resolutions with regard to the above are being placed at the ensuing Annual General Meeting.

AUDITORS

The Auditors M/s Pijush Gupta & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from the Auditors pursuant to the provisions of Section 224(1 B) of the Companies Act, 1956 regarding their eligibility for re-appointment. Necessary resolution in this regard is proposed at the forthcoming Annual General Meeting.

Resolution is also being proposed authorising the Board to appoint Branch Auditors.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Empoyees) Rules, 1975 , as amended , forms part of the Directors Report. However, as per the provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956 this Report and Accounts are being sent to all the Shareholders of the Company, excluding the statement of particulars of employees under Section 217 (2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Secretarial Office of the Company and the same will be sent by post.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO INFORMATION AS REQUIRED UNDER SECTION 217 (1) (e) OF THE COMPANIES ACT 1956

The Company does not have any activity relating to Conservation of Energy Technology Absorption and does not have any Foreign Exchange earnings. The Foreign Exchange outgo is equivalent to Rs.0.08 lacs (Previous year: Rs.0.08 lacs)

DIRECTORSRESPONSIBILITY STATEMENT

Pursuant to the provisions of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that :

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

-such accounting policies as mentioned in Schedule 17 of the Accounts have been selected and applied consistently and judgements and estimates have been made that 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, 2010 and of the profit of the Company for the year ended on that date;

- proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

ACKNOWLEDGEMENT

The Board of Directors wish to acknowledge the valuable support and guidance extended by Banks and Financial Institutions.

The Board of Directors are pleased to record its appreciation for the hard work put in by the employees at all levels which enabled your Company to achieve good performance in the competitive environment. The Board of Directors take this opportunity to express their sincere gratitude to the Shareholders, Debenture- holders and Depositors for their continued support, encouragement and the confidence reposed in the Management. For gnd on beha|f Qf the Board Place: Chennai ARUN DUGGAL Date: 21.05.2010 CHAIRMAN


Mar 31, 2000

The Directors have pleasure in submitting the Fourteenth Annual Report with audited accounts for the nine months ended 31st March, 2000.

FINANCIAL RESULTS Rs. in lakhs

For the nine months ended 31.03.00

Profit before depreciation and taxation 1393.45 Less : Depreciation 1174.19

Profit before tax 219.26 Less : Provision for taxation 23.03

Profit after tax 196.23 Add : Balance brought forward from previous year 308.89

Profit available for appropriation 505.12

Appropriations:

Statutory Reserve 40.00

General Reserve 14.64

Proposed Dividend on Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up at the stipulated rates 73.92

Proposed Dividend on Equity Shares of Rs. 10/- 90.00 each fully paid up

Tax on Dividend 36.06

Balance carried to Balance Sheet 250.50

505.12

GENERAL SCENARIO

The Government has recognised the importance of drastic and immediate upgradation of infrastructure. An estimated, Rs.56 Crores has been identified for qualitative improvement of roads. The industrial sector and commercial vehicles industry in particular seem to be undergoing a correction. However, the competition and climate in the NBFC business have decelerated the growth in this sector.

OPERATIONS

Despite the difficult market conditions, the performance of your Company has been satisfactory.

As on 31.03.2000, Gross Stock on Hire stood at Rs 22948.89 lakhs and Gross Leased Assets at Rs. 5286.41 lakhs.

DIVIDEND

The Board recommends a tax free equity dividend of 12 % for nine months ended 31.03.2000 subject to your approval. On an annualised basis, the same works out to 16 %. The equity dividend together with dividend tax of Rs. 19.80 lakhs absorbs a sum of Rs. 109.80 lakhs.

The dividend on Preference Shares together with dividend tax of Rs. 16.26 lakhs absorb a sum of Rs. 90.18 lakhs.

RESOURCES

The Deposit portfolio as on 31.03.2000 stood at Rs. 1475.80 lakhs as compared to Rs. 4485.78 lakhs as on 30.06.99. The Deposit Portfolio of the Company as on 31.08.2000 was Rs.956 lakhs.

The net accretion on Secured Non Convertible Debentures issued under private placement basis stood at Rs. 17559 lakhs as of August 00.

The Company has till August 00 allotted a sum of Rs. 1367.13 lakhs under the Cumulative Redeemable Preference Shares on private placement basis.

As on 31.03.2000, there were 287 deposits aggregating Rs.27.23 lakhs which had matured but remained unclaimed. There were no deposits which were claimed but not paid by the Company. After close follow up with the depositors, the figure as on 31.08.2000 has come down to 73 deposits amounting to Rs. 6.96 lakhs. Steps are being taken for the repayment of the unclaimed deposits by contacting the depositors.

RBI DIRECTIONS

Your Company has complied with all the requirements prescribed by the regulatory agencies.

PROSPECTS

The Company has functioned successfully all these years. The dedicated management and the efficient workforce coupled with the vast clientele and extensive network of branches are factors in favour to improve your Companys profitability under the existing tough conditions .

CHANGE OF ACCOUNTING YEAR

Reserve Bank of India vide notification dated 13th January, 2000 has stipulated that all NBFCs should have their Balance Sheet and Profit & Loss Account prepared as on March, 31st with effect from the accounting year ending with 31st March, 2001. However, your Company has decided to fall in line with the stipulation from the current year itself.

AUDIT COMMITTEE

In pursuance of the Reserve Bank of India NBFC Amended Regulations, your Company has constituted an audit committee comprising of Sri G V Raman, Sri S M Bafna and Sri Y D Patil.

DIRECTORATE

Sri T Jayaraman resigned from the position of Managing Director with effect from the close of office hours on 14.09.00, but however, continues to be a Director of the Company. The Board wishes to place on record its sincere appreciation of the valuable contribution made by him to the growth and development of the Company during his tenure as Managing Director.

Consequent to the resignation of Sri T Jayaraman, the position of Managing Director becomes vacant. Sri Akhilesh Kumar Singh has been inducted to the Board and appointed as Managing Director with effect from 15.09.00. The Board is confident that Sri Akhilesh Kumar Singhs rich experience and expertise in the field of finance will benefit the Company greatly.

Sri T Jayaraman and Sri Y D Patil, Directors retire by rotation and being eligible offer themselves for re-election.

Sri S Venkatakrishnan IA & AS (Retd.,) was co-opted as an Additional Director of the Company on 28.07.2000. As per the provisions of Section 260 of the Companies Act, 1956, he holds office upto the date of the ensuing Annual General Meeting. The Company has received notice from a member proposing his name as a Director of the Company.

Necessary resolutions in regard to the above are placed before the members for approval.

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

Your Company has no activity relating to conservation of energy or technology absorption. The Company does not have any foreign exchange earnings or outgo.

PERSONNEL

No employee is in receipt of remuneration in excess of limits prescribed under Section 217 (2A) of the Companies Act, 1956.

AUDITORS

M/s Pijush Gupta & Co., Chartered Accountants, Calcutta retire and are eligible for re-appointment. A certificate under Section 224 (1-B) of the Companies Act, 1956 has been received from them.

Resolution for authorising the Board to appoint Branch Auditors is also being submitted to the General Body for approval.

ACKNOWLEDGEMENT

The Board takes this opportunity to express its sincere thanks to the Financial Institutions and Bankers for their support and assistance. The Directors thank the Shareholders, Debenture holders and Depositors for the confidence placed in the Company. The Directors also wish to thank the employees of the Company for their dedicated service which has made it possible to achieve the current level of operations.

For and on Behalf of the Board

G.V.RAMAN Chairman

Chennai 14th September, 2000

 
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