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Directors Report of Shriram Transport Finance Company Ltd.

Mar 31, 2017

The Directors have pleasure in presenting their Thirty Eighth Annual Report and the Audited Statements of Accounts of the Company for the financial year ended March 31, 2017.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

Particulars

2016-17

2015-16

Profit Before Depreciation And Taxation

195,783.33

181,773.73

Less: Depreciation and amortization

3,390.78

3,630.61

Profit Before Tax

192,392.55

178,143.12

Less: Provision for taxation

66,658.30

60,323.36

Profit After Tax

125,734.25

117,819.76

Add: Balance brought forward from previous year

418,745.82

383,829.91

Add: Additions on account of amalgamation as on April 01, 2015

-

(3,503.89)

Balance available for appropriation

544,480.07

498,145.78

Appropriations

General reserve

12,600.00

12,000.00

Statutory reserve

25,200.00

24,000.00

Debenture redemption reserve

(15,945.04)

16,043.39

Dividend on equity shares of Rs.10/- each

9,075.31

22,688.27

Tax on dividend

1,847.52

4,668.30

Balance carried to Balance Sheet

511,702.28

418,745.82

DIVIDEND

Your Directors have maintained total dividend of Rs. 10/per equity share i.e. 100% for the financial year ended March 31, 2017 consisting of an interim dividend of Rs. 4/- per equity share i.e. 40% declared at the Board meeting held on October 25, 2016 and a final dividend of Rs. 6/- per equity share i.e. 60% recommended at the Board meeting held on April 27, 2017. The interim dividend was paid to the eligible shareholders on November 16, 2016.

TRANSFER TO RESERVES

The amounts proposed to be transferred to General Reserve and Statutory Reserve and from Debenture Redemption Reserve are mentioned in the Financial Highlights under the heading Appropriations’.

CAPITAL ADEQUACY RATIO

Your Company’s total Capital Adequacy Ratio (CAR), as of March 31, 2017, stood at 16.94 % of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2017 is as follows:

Credit Rating Agency

Instruments

Ratings

CARE

Non-Convertible Debentures

CARE AA

CARE

Subordinated Debt

CARE AA

CRISIL

Fixed Deposit

CRISIL FAAA/Stable

CRISIL

Subordinated Debt

CRISIL AA /Stable

CRISIL

Non-Convertible Debentures

CRISIL AA /Stable

CRISIL

Short Term Debt

CRISIL A1

CRISIL

Bank Loan- Short Term

CRISIL A1

CRISIL

Bank Loan- Long Term

CRISIL AA / Stable

ICRA

Fixed Deposit

MAA with Stable outlook

India Ratings & Research Pvt. Ltd. (Formerly known as “FITCH”)

Non-Convertible Debentures

IND AA /Stable Outlook

India Ratings & Research Pvt. Ltd. (Formerly known as FITCH”)

Subordinated Debt

IND AA /Stable Outlook

Fitch Ratings

Long-Term Issuer Default Rating

BB /Stable Outlook

Fitch Ratings

Short-Term Issuer Default Rating

B

Standard & Poor’s Ratings

Long-Term Issuer Credit Rating

BB /Stable

Standard & Poor’s Ratings

Short-Term Issuer Credit Rating

B

Standard & Poor’s Ratings

Offshore Rupee Denominated Bond (Masala Bond)

BB

OPERATIONS & COMPANY’S PERFORMANCE

For the financial year ended March 31, 2017, your Company earned Profit Before Tax of Rs. 192,392.55 lacs as against Rs. 178,143.12 lacs in the previous financial year and the Profit After Tax of Rs. 125,734.25 lacs as against Rs. 117,819.76 lacs in the previous financial year. The total Income for the year under consideration was Rs. 1,083,061.23 lacs and total expenditure was Rs. 890,668.68 lacs. The revised NPAs norms stipulated by Reserve Bank of India which required higher provisioning in respect of Non-Performing loan assets in a phased manner had impacted the profitability of the Company during the current year.

As on March 31, 2017, the outstanding hypothecation loans were Rs. 6,410,197.35 lacs. The total Assets Under Management had increased from Rs. 7,276,060.55 lacs as on March 31, 2016 to Rs. 7,876,093.08 lacs as on March 31, 2017. During the Financial Year 2016-17, the company securitized its assets worth Rs. 1,121,420.00 lacs (accounting for 14.24 % of the total assets under management as on March 31, 2017) as against Rs. 899,175.10 lacs during the Financial Year 2015-16. With securitization, the company ensures better borrowing profile, leading to lower interest liability owing to its lending to priority sector as per RBI. The outstanding securitized assets portfolio stood at Rs. 1,329,474.16 lacs as on March 31, 2017.

Mobilization of funds from following sources/instruments during the financial year ended March 31, 2017 was as under:

(Rs. in lacs)

Sr. No.

Particulars

Funds mobilized by the Company

1

Non-Convertible Debentures - Institutional

831,225.00

2

Subordinated Debts - Institutional

17,500.00

3

Term Loans from Banks - Secured

1,135,365.50

4

Term Loans from Banks - Unsecured

16,000.00

5

Term Loans from Financial Institutions / corporate - Secured

110,000.00

6

Commercial Papers

640,500.00

7

Fixed Deposit

278,542.69

8

Offshore Rupee Denominated Bonds (Masala Bonds)

135,000.00

The Company continued its focus on financing of pre-owned commercial vehicles. Our relationship based business model enabled us to maintain the leadership position in the preowned commercial vehicles financing segment. For further penetration into rural market, the Company opened 51 new Rural Centres and 65 new Branch Offices. With this the total number of Rural Centres has now increased to 854 and the total number of Branch offices across India has now increased to 918.

ISSUE OF SECURITIES Share Capital

There was no change in the paid up Equity Share Capital in the Financial Year 2016-17.

Issue of Masala Bonds

In order to diversify the borrowing portfolio of the Company and to open new market/avenue for borrowing, the Company issued Rs. 135,000 lacs 8.25% Senior Secured Notes Due 2020 which are listed on the Singapore Exchange Securities Trading Limited. The proceeds of Notes have been utilized in accordance with the guidelines issued by the Reserve Bank of India.

FIXED DEPOSITS

As on March 31, 2017, there were 15,150 fixed deposits aggregating to Rs. 13,039.67 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 11,077 deposits amounting to Rs. 8,693.13 lacs. Appropriate steps are being taken continuously to obtain the depositors’ instructions so as to ensure renewal/ repayment of the matured deposits in time.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Director retiring by rotation

Mr. Gerrit Lodewyk Van Heerde, Non-Executive Non Independent Director of the Company will retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Change in Directors

Mr. Ramakrishnan Subramanian resigned from the directorship of the Company on February 03, 2017. He was appointed as an Additional Director in the capacity of NonExecutive Non-Independent Director of the Company by the Board of Directors in its meeting held on July 27, 2016.

Mr. Jasmit Singh Gujral resigned as Managing Director & CEO of the Company and also from the directorship of the Company with effect from close of business hours on October 25, 2016. The Board of Directors have placed on record their appreciation of the services rendered by Mr. Jasmit Singh Gujral and Mr. Ramakrishnan Subramanian.

On recommendation of Nomination and Remuneration Committee, the Board of Directors in its meeting held on October 25, 2016 has appointed Mr. Umesh Revankar as an Additional Director and also as Managing Director & CEO of the Company. The Board of Directors recommend the resolutions contained in Notice of the ensuing AGM for his appointment as Director and also as Managing Director & CEO of the Company. There was no other change in Key Managerial Personnel of the Company during the year under review.

DECLARATION BY INDEPENDENT DIRECTORS

The Board has received the declaration from all the Independent Directors as per the Section 149(7) of the Companies Act, 2013 (the ‘Act’) and the Board is satisfied that all the Independent Directors meet the criteria of independence as mentioned in Section 149(6) of the Companies Act, 2013.

POLICIES ON APPOINTMENT OF DIRECTORS AND REMUNERATION

The Company’s Policy on Board Diversity provides criteria for appointment of directors. The Company’s Remuneration Policy provides for remuneration of Managing Director & CEO, Independent Director, Key Managerial Personnel, Employees, etc. These Policies are annexed to this report as Annexure I and II. The Nomination and Remuneration Committee also takes into account the Fit and Proper criteria for appointment of directors as stipulated by Reserve Bank of India.

NUMBER OF MEETINGS OF THE BOARD

During the year five Board Meetings were held. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

BOARD EVALUATION

Pursuant to the provisions of the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various Committees. The evaluation was conducted on the basis of a structured questionnaire which comprises performance criteria such as performance of duties and obligations, independence of judgment, level of engagement and participation, contribution in enhancing the Board’s overall effectiveness, etc. The Board of Directors has expressed its satisfaction on functioning and performance of Board and Committees and the performance of individual directors.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Act, the Directors confirm that, to the best of their knowledge and belief:

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

b) That such accounting policies as mentioned in note

2.1 to the financial statements 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 March 31, 2017 and of the profit of the Company for the year ended on that date;

c) That proper and sufficient care has 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;

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

e) The Company had followed the internal financial controls laid down by the directors and that such internal financial controls are adequate and were operating effectively.

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

RBI GUIDELINES

The Company continues to comply with all the requirements prescribed by the Reserve Bank of India, from time to time.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, Business Responsibility Report is annexed and forms part of the Annual Report

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Report on CSR activities for the Financial Year 2016-17 is annexed to this report as Annexure-III. The composition of CSR Committee is included in the Report on CSR activities. The CSR Policy is uploaded on the Company’s website at the web link:http://stfc.in/pdf/Corporate-Social-Responsibility-Policy.p df

DISCLOSURES AS PER THE SECTION 134 OF THE ACT, READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Extract of Annual Return

The extract of the annual return in the Form MGT 9 is annexed to this report as Annexure-IV.

Conservation of Energy, Technical Absorption and Foreign Exchange Earnings and Outgo

The information pursuant to Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

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

c. Outgo under Foreign Exchange - Rs. 1,367.99 lacs. Loans, guarantee or investments

Pursuant to Section 186(11)(a) of the Act read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, the loan made, guarantee given or security provided in the ordinary course of business by a Non- Banking Financial Company (NBFC) registered with Reserve Bank of India are exempt from the applicability of provisions of Section 186 of the Act. As such the particulars of loans and guarantee have not been disclosed in this Report.

During the year under review the Company has invested surplus funds in various securities in the ordinary course of business. For details of the Current Investments and Noncurrent Investments of the Company refer to Note 10 & 14 respectively of the financial statements.

Contracts or Arrangements with Related Parties

The Related Party Transactions (RPTs) were entered in ordinary course of business on an arm’s length basis and were in compliance with the provisions of the Act and the Listing Regulations. The statement of RPTs was reviewed by the Audit Committee on a quarterly basis. Omnibus approval of the Audit Committee was obtained for the RPTs of repetitive nature. As required under the Master Direction - Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is annexed to this report as Annexure-V and is also uploaded on the Company’s website at the web link:

http://stfc.in/pdf/Policy-on-Materiality-of-Related-

Party-Transactions-and-dealing-with-Related-Party- Transactions-v1.pdf.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission to Independent Directors. For details of the transactions with Related Party refer to the note 27 to the financial statements.

Risk Management

The Company’s Risk Management Policy deals with identification, mitigation and management of risks across the organization. The same has been dealt with in the Management Discussion and Analysis Report annexed to the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

The Company’s Whistle Blower Policy provides a mechanism under which an employee/director of the Company may report unethical behaviour, suspected or actual fraud, violation of code of conduct and personnel policies of the Company. The Vigil Mechanism ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company’s website: http://www.stfc.in/pdf/Whistle-Blower-Policy-Vigil-Mechanism-2017.pdf Financial summary/highlights

The details are spread over in the Annual Report as well as are provided in the beginning of this report.

Subsidiaries, joint ventures or associate companies

Shriram Automall India Limited (SAIL), Wholly Owned subsidiary of the Company through its 67 Automalls located across the Country provides fee-based facilitation services for the sale of pre-owned commercial and passenger vehicles, agricultural and construction equipments, dealer’s stock of pre-owned two wheelers, etc. repossessed by banks and financing companies. For the year ended March 31, 2017, SAIL’s total income from operations was Rs. 8,030.53 lacs as against Rs. 7,452.95 lacs in the previous year 2015-16 and the Net Profit of Rs. 829.15 lacs as against net profit of Rs. 542.07 lacs in the previous year 2015-16. Eleven new Automalls were opened during the Financial Year 2016-17.

The annual report and the annual accounts of SAIL and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the SAIL shall also be kept for inspection by shareholders at the Registered Office of the Company and of the SAIL. The annual accounts of SAIL shall be available on the website of the Company viz. http://www.stfc.in/annual-reports.aspx The Company shall furnish hard copy of details of accounts of the SAIL to any shareholder on demand.

No Company has become or ceased to be its Subsidiary, joint venture or associate company during the year.

Internal Financial Control System

The Company’s well defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies. The internal financial control is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements and other data. The Audit Committee of the Board reviews internal audit reports given along with management comments. The Audit Committee also monitors the implemented suggestions.

Composition of Audit Committee

The Audit Committee comprises of four directors namely, Mr. S. Sridhar - Chairman, Mrs. Kishori Udeshi, Mr. S. M. Bafna and Mr. Puneet Bhatia.

Others

- There were no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company and the date of the Directors’ report.

- There are no significant and material orders passed by the Regulators or courts or tribunals impacting the going concern status and company’s operations in future.

- There was no change in the nature of business of the Company. The company continues to be an Asset Finance Company.

- During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

- Disclosure regarding details relating to Deposits covered under Chapter V of the Act is not applicable since our company is a Non-Banking Financial Company regulated by Reserve Bank of India. The Company accepts deposits as per Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129 of the Act read with Rule 5 to the Companies (Accounts) Rules, 2014, Statement comparing salient features of the financial statement of Subsidiary (Form AOC-1) and a statement on consolidated financial position of the Company with that of the subsidiary is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Regulations.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The Disclosure required as under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended is annexed to this report as Annexure-VI.

AUDITORS

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, Mumbai (ICAI Firm Registration No. 301003E / E300005) and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, (ICAI Firm Registration No. 100515W), Auditors of the Company will retire at the conclusion of the ensuing AGM. In compliance with mandatory rotation of Auditors as per provision of Section 139 of the Act and the Companies (Audit and Auditors) Rules 2014, the Company is required to appoint new Auditors in place of the retiring joint Auditors at the ensuing AGM.

The Audit Committee and the Board of Directors have recommended appointment of M/s Haribhakti & Co. LLP, Chartered Accountants, Mumbai (Firm Registration No. 103523W/W100048) and M/s Pijush Gupta & Co. Chartered Accountants, Kolkata (Firm Registration No. 309015E) as new joint Auditors Certificates have been received from them to the effect that their appointment as Auditors of the Company, if made would be within the limits prescribed under Section 139 and 141 of the Act. They have also confirmed that they hold a valid peer review certificate as prescribed under Listing Regulations. The Board of Directors recommend passing of the resolution for appointment of new joint Auditors at the ensuing AGM.

The Auditors’ Report to the Shareholders for the year under review does not contain any qualification.

SECRETARIAL AUDIT

The Board had appointed Mr. P. Sriram, Practicing Company Secretary (Certificate of Practice No.3310) (Membership No. FCS 4862) to carry out Secretarial Audit under the provisions of Section 204 of the Act for the financial year 2016-17. The Secretarial Audit Report is annexed to this report as Annexure-VII. The report does not contain any qualification.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the Listing Regulations the following Reports/Certificates form part of the Annual Report:

-the Report on Corporate Governance;

- the Certificate duly signed by the Managing Director & CEO and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2017 as submitted to the Board of Directors at their meeting held on April 27, 2017;

- the declaration by the Managing Director & CEO regarding compliance by the Board members and senior management personnel with the Company’s Code of Conduct ; and

- the Management Discussion & Analysis Report

The Auditors’ Certificate on Corporate Governance is annexed to this report as Annexure-VIII.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are 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

S. Lakshminarayanan

Mumbai Chairman

April 27, 2017 (DIN : 02808698)


Mar 31, 2014

The Directors have pleasure in presenting their Thirty Fifth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2014.

financial highlights

(Rs. in lacs)

Particulars 2013-14 2012-13

Profit Before Depreciation and Taxation 185,718.05 203,452.20

Less: Depreciation and Amortisation 2,913.79 1,833.09

Profit Before Tax 182,804.26 201,619.11

Less: Provision for Taxation 56,383.49 65,557.10

Profit After Tax 126,420.77 136,062.01

Add: Balance brought forward from previous year 288,626.08 191,157.33

Balance available for appropriation 415,046.85 327,219.34

appropriations

Excess provision written back – tax on dividend - 0.41

General Reserve 13,000.00 14,000.00

Statutory Reserve 26,000.00 28,000.00

Debenture Redemption Reserve 11,155.41 (21,956.09)

Dividend on Equity Shares of Rs. 10/- each 15,881.79 15,900.24

Tax on Dividend 2,698.69 2,649.52

Balance carried to Balance Sheet 346,310.96 288,626.08



Dividend

Your Directors at their meeting held on October 29, 2013 declared an interim dividend of Rs. 3.00/- per equity share (i.e. 30%) for the financial year 2013-14, which was paid on November 25, 2013.

Your Directors have recommended a final dividend of Rs.4/- per equity share (i.e. 40%) for the financial year ended March 31, 2014. Thus, the total dividend (including interim dividend paid) for the year ended March 31, 2014 shall be Rs.7/- per equity share (i.e.70%).

Capital adequacy ratio

Your Company''s total Capital Adequacy Ratio (CAR), as of March 31, 2014, stood at 23.39% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.

Credit rating

The credit rating enjoyed by the Company as on March 31, 2014 are as follows:

Credit rating agency Instruments ratings

CARE Non-Convertible Debentures CARE AA

CARE Subordinate Debt CARE AA

CRISIL Fixed Deposit CRISIL FAA /Stable

CRISIL Subordinate Debts CRISIL AA/Stable

CRISIL Non-Convertible Debentures-Public CRISIL AA/Stable

CRISIL Short Term Debt CRISIL A1

CRISIL Bank Loan Long Term & Short Term CRISIL AA/Stable

ICRA Fixed Deposit MAA with Stable outlook

India Ratings & Research Private Limited Non-Convertible Debentures-Public IND AA (Formerly known as "FITCH")

India Ratings & Research Private Limited Subordinate Debt IND AA (Formerly known as "FITCH")

operations’

For the financial year ended March 31, 2014, your Company earned Profit Before Tax of Rs.182,804.26 lacs as against Rs.201,619.11 lacs in the previous financial year and the Profit After Tax of Rs.126,420.77 lacs as against Rs. 136,062.01 lacs in the previous financial year. The total Income for the year under consideration was Rs. 788,825.91 lacs and total expenditure was Rs.606,021.65 lacs. As on March 31, 2014, the outstanding hypothecation loans were Rs. 3,525,312.21 lacs.

During the financial year ended March 31, 2014, the Company mobilized Rs. 483,718.01 lacs through Non-convertible debentures, Rs.129,011.38 lacs through subordinated debts, Rs.1,363,900 lacs through term loans, Rs. 48,700 lacs through working capital loans, Rs.46,000 lacs through commercial paper,Rs.1,067,954.78 lacs through assignment of loan receivables from the customers, Rs.161,630.58 lacs through Fixed deposit and Rs. 1,400 lacs through ICD.

Economic and Business Environment

According to the advance estimates of national income for the year 2013-14 issued by the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation, Government of India vide Press Release dated February 7, 2014, the growth of Gross Domestic Product (GDP) during 2013-14 is estimated at 4.9% as compared to growth rate of 4.5% in the year 2012-13 (previous year). The Agriculture sector comprising ''agriculture, forestry and fishing'' sectors is likely to show a growth of 4.6% during 2013-14 as against the previous year''s growth rate of 1.4%. The production of food grains is expected to grow by 2.3% as compared to decline of 0.8% in the previous agriculture year. In Industry sector de-growth of 0.2% is estimated in the ''manufacturing'' sector as compared to the growth of 1.1% in the previous year. The mining and quarrying de-growth of 1.9% is estimated as compared to the de-growth of 2.2% in the previous year. A growth rate of 1.7% is estimated in the ''construction'' as compared to 1.1% in the previous year.

In the Service sector ''trade, hotels, transport and communication'' is estimated to grow at 3.5% as against growth of 5.1% in the previous year. The sector ''financing, insurance, real estate and business services'' is expected to show a growth rate of 11.2% as compared to growth rate of 10.9% in the previous year.

automobile Industry

The Society of Indian Automobile Manufacturers (SIAM) has reported that the overall domestic sales of vehicles during the year 2013-14 grew marginally by 3.53% as compared to year 2012-13 (last year). The sales of Passenger Vehicles declined by 6.05%. Within the Passenger Vehicles, Passenger Cars, Utility Vehicles and Vans dropped by 4.65%, 5.01% and 19.58% respectively as compared to the last year. The overall Commercial Vehicles sales registered a de-growth of 20.23% as compared to the last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered negative growth of 25.33% and Light Commercial Vehicles also dropped by 17.62%. Three Wheelers sales declined by 10.90%.

Passenger Carriers and Goods Carriers declined by 12.74% and 2.53% respectively. Two Wheelers registered growth of 7.31%. Within the Two Wheelers segment, Scooters and Motorcycles grew at 23.24% and 3.91% respectively, while Mopeds declined by 8.35% during April, 2013- March, 2014.

The overall automobile exports grew by 7.21%. Passenger vehicles, Three Wheelers and Two Wheelers exports registered growth of 6.09%, 16.60% and 6.52% respectively, while Commercial Vehicles exports declined by 3.71% (SIAM Media Release 11/04/2014).

The heavy goods transport vehicles sector faced many challenges in terms of idle time due to de-growth in manufacturing, mining and quarrying sectors, pressure on margins as the freight rate increases were not commensurate with fuel price increases. This resulted into lower demand for credit from urban areas. The rural and semi-urban credit demand was maintained due to impressive growth in foodgrain production.

Company''s performance

Considering the difficult macro-economic conditions and challenging business environment, the Company''s performance during the year under review was satisfactory. The Company continued its focus on financing of pre-owned commercial vehicles and penetration into rural market. The assets under management had increased. However, the finance cost had increased. The Net interest margins were under pressure.

outlook and opportunities

The real GDP growth rate is projected to pick up to a range of 5% to 6% in 2014-15. Easing of domestic supply bottlenecks and progress on the implementation of stalled projects already cleared should contribute to growth. The Current Account Deficit is expected to be about 2% of GDP.

RBI has set ambitious target of bringing down the CPI inflation to 8% by January 2015 and 6% by January, 2016. But the factors such as possible El Nino effects on agricultural production, uncertainty on the setting of minimum support prices for agricultural commodities and setting of other administered prices of fuel, fertilizer and electricity may post threat in achievement of these targets.

Your directors expect that with stable government in center, estimates of better GDP growth rate, the Company''s strong business model, innovative fund management techniques, continued confidence of investors and support of the lending institutions to the Company''s fund mobilization activities on account of good track record of debt servicing, your Company should achieve better performance in the year 2014-15.

fixed Deposits

As on March 31, 2014, there were 3,619 fixed deposits aggregating to Rs. 3,945.82 lacs that have matured but remained unclaimed. There were no deposits, which we reclaimed but not paid by the Company. The unclaimed deposits have since reduced to 3,012 deposits amounting to Rs. 3,040.09 lacs. Appropriate steps are being taken continuously to obtain the depositors'' instructions so as to ensure renewal/ repayment of the matured deposits in time.

Subsidiaries

For the year ended March 31, 2014, the Income from Operations and Profit after Tax of Shriram Equipment Finance Company Limited (SEFCL) was Rs. 54,377.78 lacs and Rs.8,683.00 lacs respectively.

For the year ended March 31, 2014, the income from operations and Profit after Tax of Shriram Automall India Limited (SAIL) was Rs.7,325.13 lacs and Rs. 826.35 lacs respectively. During the year 2013-14, SAIL has established 11 additional Automalls, thereby increasing the total number of Automalls to 32.

As the Company received Corporate Agent license from Insurance Regulatory and Development Authority (IRDA) for procuring business of both Life and General Insurance a decision was taken not to obtain separate license by the Company''s wholly owned subsidiary Shriram Insurance Broking Company Limited (SIBCL). SIBCL withdrew its application pending with IRDA. The application filed by SIBCL under the provisions of Section 560 of the Companies Act, 1956 to strike off its name was accepted and confirmed by the Ministry of Corporate Affairs vide notice dated December 13, 2013.

A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered Office of the Company and of the respective subsidiaries. The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in. The Company shall furnish hard copy of details of accounts of the subsidiaries to any shareholder on demand.

Share Capital

During the year under review, the Company allotted 18,800 fully paid up equity shares of the face value of Rs. 10/- each to its employees on their exercise of stock Options by them. Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

Public Issue of Secured redeemable non-Convertible Debentures

In order to raise funds for various financing activities including lending and investments, to repay existing loans and for business operations including for meeting capital expenditure and working capital requirements, the Company made two Public Issues of Secured Redeemable Non-Convertible Debentures (NCDs) of face value of Rs.1,000/- each during the year under review. The first Public Issue of NCDs opened on July 16, 2013 with the Base Issue aggregating up to Rs. 37,500 lacs with an option to retain over-subscription up to Rs. 37,500 lacs for issuance of additional NCDs aggregating to a total of up to Rs. 75,000 lacs. After considering the technical rejections, the Issue was subscribed 1.96 times of the Base Issue size and 0.98 times of the Total Issue Size. The Second Public Issue of NCDs opened on October 07, 2013 with the Base Issue aggregating up to Rs. 25,000 lacs with an option to retain over-subscription up to Rs. 25,000 lacs for issuance of additional NCDs aggregating to a total of up to Rs. 50,000 lacs. After considering the technical rejections, the Issue was subscribed 2.1356 times of the Base Issue Size and 1.0678 times of the Total Issue Size.

Board of Directors

Mr. Ranvir Dewan, a Non-Executive Non-Independent Director nominated by Newbridge India Investments II Limited (New bridge) on the Board of the Company resigned from directorship of the Company on September 02, 2013 subsequent to disposal of its entire shareholding in the Company by Newbridge. The Board has placed on record its appreciation of the invaluable services rendered by Mr. Ranvir Dewan.

The Board of Directors in its meeting held on April 29, 2014 has appointed Mr. Gerrit Van Heerde as Additional Director of the Company in the category of Non-Executive, Non- Independent director.

Mr. Arun Duggal will retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Mr. Puneet Bhatia, Non Executive Non-Independent Director will subject to approval of member at the ensuing AGM, continue as Non Executive Non Independent Director liable to retirement by rotation.

The Board of Director seek your support for passing of the resolution for appointment/re-appointment of the above directors.

Directors’ responsibility Statement

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

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

b) That such accounting policies as mentioned in Note 2.1 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 March 31, 2014 and of the profit of the Company for the year ended on that date;

c) That 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;

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

Corporate Social responsibility Committee

Pursuant to Section 135 of the Companies Act, 2013 the Board of Directors in its meeting held on April 29, 2014 has constituted Corporate Social Responsibility Committee of three directors.

RBI guidelines

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

annexure

Vide General Circular 08/2014 dated 04/04/2014, the Ministry of Corporate Affairs (MCA) has clarified that the financial statements(and documents required to be attached thereto), auditor’s report and Board''s report in respect of financial years that commenced earlier than April 01,2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act,1956.

Following Reports are attached to this Report pursuant to the provisions of the Listing Agreement with the Stock Exchange:

(i) The Report on Corporate Governance as per clause 49 of the Listing agreement forms part of the Annual Report, and is annexed herewith together with Auditors'' Certificate on Corporate Governance, the 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 as submitted to the Board of Directors at their meeting held on April 29, 2014 and the declaration by the Managing Director regarding compliance by the Board members and senior management personnel with the Company''s Code of Conduct.

(ii) The Management Discussion & Analysis Report as per clause 49 of the Listing agreement is given as a separate Report forming part of the Annual Report.

(iii) Business Responsibility Report as per clause 55 of the Listing agreement is given as a separate Report forming part of the Annual Report.

auditors

M/s. S. R. BATLIBOI & Co. LLP, Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 139 & 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under clause 41(1)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

Conservation of Energy, Technology absorption and foreign Exchange Earnings and outgo

Pursuant to the requirement 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:

a. The Company has no activity involving conservation of energy or technology absorption.

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

c. Outgo under Foreign Exchange - Rs.51.23 lacs.

Particulars of Employees

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Sec 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

acknowledgement

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are 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



Mumbai arun Duggal

April 29, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting their Thirty Fourth Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2013.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

Particulars 2012-13 2011-12

Profit Before Depreciation and Taxation 203,452.20 189,437.37

Less: Depreciation and Amortisation 1,833.09 1,346.35

Profit Before Tax 201,619.11 188,091.02

Less: Provision for Taxation 65,557.10 62,346.06

Profit After Tax 136,062.01 125,744.96

Add: Balance brought forward from previous year 191,157.33 140,584.21

Balance available for appropriation 327,219.34 266,329.17

Appropriations

Excess provision written back - Tax on Dividend 0.41 35.18

General Reserve 14,000.00 12,600.00

Statutory Reserve 28,000.00 25,200.00

Debenture Redemption Reserve (21,956.09) 20,312.44

Dividend on Equity Shares of Rs. 10/- each 15,900.24 14,708.50

Tax on Dividend 2,649.52 2,386.08

Balance carried to Balance Sheet 288,626.08 191,157.33

DIVIDEND

Your Directors at their meeting held on October 30, 2012 declared higher interim dividend of Rs. 3.00 per equity share (i.e.30%) for the financial year 2012-13 as compared to interim dividend of Rs. 2.50 per equity share (i.e 25%) for the previous financial year 2011-12. The interim dividend was paid on November 26, 2012.

Your Directors have recommended a final dividend of Rs. 4.00 per equity share (i.e. 40%) for the financial year ended March 31, 2013. Thus, the total dividend (including interim dividend paid) for the year ended March 31, 2013 shall be Rs.7.00 per equity share (i.e. 70%).

CAPITAL ADEQUACY RATIO

Your Company''s total Capital Adequacy Ratio (CAR), as of March 31, 2013, stood at 20.74% of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 15%.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2013 is as follows.

Credit Rating Agency Instruments Ratings

CARE Non-Convertible Debentures CARE AA

CARE Subordinate Debt CARE AA

CRISIL Fixed Deposit CRISIL FAA / Stable

CRISIL Subordinate Debt CRISIL AA/Stable

CRISIL Non-Convertible Debentures- Public CRISIL AA/Stable

CRISIL Short Term Debt CRISIL A1

CRISIL Bank Loan Long Term & Short Term CRISIL AA/Stable

ICRA Fixed Deposit MAA with Stable outlook

India Ratings & Research Private Limited Non-Convertible Debentures -Public IND AA (Formerly known as FITCH )

India Ratings & Research Private Limited Short Term Debt IND A1 (Formerly known as FITCH )

India Ratings & Research Private Limited Subordinate Debt IND AA (Formerly known as FITCH)

OPERATIONS

For the financial year ended March 31, 2013, your Company earned Profit Before Tax of Rs. 201,619.11 lacs as against Rs.188,091.02 lacs in the previous financial year and the Profit After Tax of Rs.136,062.01 lacs as against Rs. 125,744.96 lacs in the previous f i nancial year. The total Income for the year under consideration was Rs. 656,358.99 lacs and total expenditure was Rs. 454,739.88 lacs. As on March 31, 2013, the outstanding hypothecation loans were Rs. 3,044,719.53 lacs.

During the financial year ended March 31, 2013, the Company mobilised Rs. 794,525.93 lacs through Non-convertible debentures, Rs. 62,913.30 lacs through subordinated debts, Rs. 1,241,800.00 lacs through term loans, Rs. 20,000.00 lacs through working capital loans, Rs.141,000.00 lacs through commercial paper and Rs. 878,430.32 lacs through assignment of loan receivables from the customers.

ECONOMIC AND BUSINESS ENVIRONMENT

Amidst global slowdown and uncertainty, the economic activity in India remained subdued on account of halted investment demand, moderation in consumption spending, declining exports and weakening business and consumer confidence. The loss of growth momentum continued throughout the year 2012-13. The year-on-year growth rate of Gross Domestic Product (GDP) during 2012-13 slowed from 5.5% in the fi rst quarter to 5.3% in the second quarter and 4.5 % in the third quarter. Vide Press Release dated February 7, 2013, the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation, Government of India has estimated 5% growth in GDP for the year 2012-13.

The Headline inflation measured by the Wholesale Price Index (WIP) which remained sticky at above 7.5% on year- on-year basis through first half of 2012-13, fell to 5.96% level in March, 2013.The softening of global commodity prices and lower pricing power of corporates domestically moderated non-food manufactured product infiation. However, the food inflation moved into double digit.

Continuous contracting exports, rising imports on the back of higher oil and gold imports widened trade deficit. On top of the large trade deficit, the slowdown in net exports of services and larger outflows of investment income payments widened the Current Account Deficit to reach at the peak level of 6.7% of GDP in the third quarter of the year 2012-13.

The Society of Indian Automobile Manufacturers (SIAM) has reported growth of 2.61% in the overall domestic sales of vehicles during the f i nancial year 2012-13 over the same period last year. The overall Commercial Vehicles segment registered de-growth of 2.02%. The Medium and Heavy Commercial Vehicles (M&HCVs) sales were worst affected and declined by 23.18%. The Light Commercial Vehicles (LCVs) sales grew at 14.04% and the Passenger Vehicle segment grew by 2.15%. However, Passenger cars declined by 6.69%. Utility vehicles grew by 52.20% and Vans grew by modest 1.18%. Three-Wheelers grew by 4.87%. Passenger Carriers grew by 8.58%. The Goods Carriers registered de- growth of 9.20%.

The overall automobile exports during the financial year 2012-13 registered de-growth of 1.34% as compared to the same period in the previous year. While Passenger Vehicles exports grew by 9.02%, the exports of other segment namely Commercial Vehicles, Three Wheelers and Two Wheelers fell by 13.35%, 16.22% and 0.72% respectively.

Despite tough macro-economic conditions and negative growth rates in sales of new M&HCV, the business of the Company was not impacted due to the Company''s continued focus on financing of pre-owned commercial vehicles, thrust on financing LCVs, rural market penetration , customer relationships etc. Despite tight liquidity conditions, subdued sentiments in the stock market, the Company''s fund mobilization from banks, institutions , issue of non-convertible debentures and securitization of receivables continued to be smooth on account of its innovative resource mobilisation techniques, good track record of debt servicing, investors'' confidence etc.

OUTLOOK AND OPPORTUNITIES

Various measures undertaken by the Government since mid-September, including liberalization of Foreign Direct Investment (FDI) in retail, aviation, broadcasting and insurance, deferment General Anti-Avoidance Rules (GAAR), reduction in withholding tax on overseas borrowings by domestic companies, progressive deregulation of administered fuel prices and setting up of Cabinet Committee on Investment should help in improvement in market sentiments and spur investment. The fall in global commodity prices should help in reducing the Current Account Deficit from lowering of import of crude oil and gold.

Your directors are of the opinion that despite weak macro- economic factors and uncertainty, your Company''s business operations would not be seriously affected and your Company would continue to grow in future as well.

FIXED DEPOSITS

As on March 31, 2013, there were 1,576 fixed deposits aggregating to Rs. 1,109.99 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since reduced to 1,284 deposits amounting to Rs. 819.12 lacs. Appropriate Steps are being taken continuously to obtain the depositors'' instructions so as to ensure renewal/ repayment of the matured deposits in time.

SUBSIDIARIES

Shriram Equipment Finance Company Limited (SEFCL)

SEFCL''s income from operations for the year ended March 31, 2013 was Rs. 40,476.84 lacs as against Rs. 21,010.10 lacs in the previous year.

Shriram Automall India Limited (SAIL)

During the year 2012-13 SAIL has established 13 additional Automalls, thereby increasing the total number of Automalls to 21. SAIL has reported income from operations of Rs. 7,496.66 for the year ended March 31, 2013 as against Rs.10,728.76 lacs in the previous year.

Shriram Insurance Broking Company Limited (SIBCL)

SIBCL was incorporated on January 01, 2013 as a wholly- owned subsidiary of the Company primarily to act as a Direct Broker in General insurance and Life insurance sector. SIBCL is awaiting regulatory approvals for commencement of its operations.

A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to shareholders of the Company seeking such information. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered Office of the Company and of the respective subsidiaries. The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in. The Company shall furnish hard copy of details of accounts of the subsidiaries to any shareholder on demand.

SCHEME OF ARRANGEMENT

The Hon''ble High Court of Madras, has sanctioned the Scheme of Arrangement entailing merger of Shriram Holdings (Madras) Private Limited (''SHMPL''or ''Transferor Company'') with the Company (hereinafter referred to as the ''Scheme''). The Certif i ed True Copy of the High Court Order was filed with Registrar of Companies (ROC), Chennai, Tamil Nadu, on November 5, 2012.

Pursuant to the Scheme, the investment of the Transferor Company in the share capital of the Transferee Company viz. 9,33,71,512 fully paid-up Equity shares of Rs. 10/- each stood cancelled upon coming into effect of the Scheme. Accordingly, on November 5, 2012 the Company issued and allotted 9,38,72,380 New Equity shares on Amalgamation of Rs. 10/- each fully paid-up to the shareholders of the Transferor Company in the ratio of 313:124 i.e 313 equity shares of Rs. 10/- each fully paid up of the Transferee Company issued for every 124 equity shares of Rs. 10/- each fully paid up of the Transferor Company. The Transferor Company was dissolved without winding up.

SHARE CAPITAL

Pursuant to the said Scheme of Arrangement and upon merger of SHMPL with the Company as mentioned above, the Authorized Capital of the Company has increased to Rs. 59,700 lacs. Considering cancellation of investment of erstwhile SHMPL in the Company, the effective increase in the Paid-up capital of the Company was Rs. 50.09 lacs. The erstwhile SHMPL ceased to be Promoter and shareholder of the Company from November 5, 2012. Shriram Capital Limited is Promoter of the Company.

During the year under review, the Company allotted 62,500 fully paid up equity shares of the face value of Rs. 10/- each to its employees on their exercise of stock Options by them. Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the

Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF SECURED NON-CONVERTIBLE DEBENTURES

In July 2012 your Company made Public Issue of Secured Non-Convertible Debentures (NCDs) of face value of Rs. 1,000 each, aggregating to Rs. 30,000 lacs (Base Issue) with an option to retain over-subscription upto Rs. 30,000 lacs for issuance of additional NCDs aggregating to a total of upto Rs. 60,000 lacs, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions. Despite tough market conditions, the Public Issue received good response from investors. The Issue was over-subscribed 2.24 times of the Base Issue size and 1.12 times of the total Issue size. Your Company issued and allotted NCDs aggregating to Rs. 60,000 lacs. The objects of the Public issue was to raise funds for various financing activities including lending and investments, to repay existing loans and for business operations including for meeting capital expenditure and working capital requirement.

The Board in its meeting held on May 7, 2013 has accorded its approval for raising funds by way of Public Issue of NCDs upto Rs. 200,000 lacs in one or more tranches at appropriate time during the current financial year.

BOARD OF DIRECTORS

Mrs. Kishori Udeshi and Mr. Amitabh Chaudhry, who were appointed as Additional Directors by the Board of Directors with effect from October 30, 2012 will hold off ice of an Additional Director upto the date of the ensuing Annual General Meeting pursuant to Section 260 of the Companies Act,1956.

Mr. R. Sridhar, who was appointed as Director on May 8, 2012 in the casual vacancy caused by resignation of Mr. S. Venkatakrishnan will hold office upto the date of the ensuing Annual General Meeting pursuant to Section 262 of the Companies Act,1956.

Company has received notices pursuant to Section 257 of the Companies Act,1956 from shareholders signifying their intention to propose candidatures of Mrs.Kishori Udeshi, Mr. Amitabh Chaudhry and Mr. R. Sridhar for their appointment as directors of the Company in the ensuing Annual General Meeting. Accordingly, the necessary resolutions are included in the Notice of the 34th Annual General Meeting for appointment of said persons as Directors of the Company. The Board has also recommended their appointment as directors of the Company.

Mr. S. Lakshminarayanan will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

b) That such accounting policies as mentioned in Note 2.1 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 March 31, 2013 and of the prof it of the Company for the year ended on that date;

c) That 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;

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

RBI GUIDELINES

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

CORPORATE GOVERNANCE

The Report on Corporate Governance forms part of the Annual Report, and is annexed herewith.

As required by the Listing Agreement, Auditors'' Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

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, 2013, was submitted to the Board of Directors at their meeting held on May 7, 2013. The certificate is attached to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY REPORT

Pursuant to clause 55 of the Listing Agreement, Top 100 Listed companies shall prepare Business Responsibility Report every year and the same shall form part of the company''s Annual Report. The Board has constituted a committee of directors which has framed the Business Responsibility Policy of the Company. The Business Responsibility Report of the Company forms part of the Annual Report and is annexed herewith.

AWARDS AND RECOGNITIONS "Padma Bhushan"

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

"SAFA" Certifi cate of Merit for excellence in Financial Reporting

The Committee of South Asia Federation of Accountants

(SAFA) has awarded ''Certificate of Merit'' to our Company''s Annual Report for the year 2011 in the category of ''Financial Services Sector''.The Awards under different categories are conferred on the basis of evaluation of the published Annual Reports of entries from South Asian countries administered by the committee of SAFA. The Awards were distributed on March 22, 2013 in the premises of the Institute of Chartered Accountants of Sri Lanka, Colombo.

AUDITORS

M/s. S. R. BATLIBOI & Co. LLP, Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. They have also confi rmed that they hold a valid peer review certificate as prescribed under clause 41(1)(h) of the Listing Agreement. Members are requested to consider their re-appointment.

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

Pursuant to the requirement 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:

a. The Company has no activity involving conservation of energy or technology absorption.

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

c. Outgo under Foreign Exchange - Rs. 0.83 lacs.

PARTICULARS OF EMPLOYEES

The Company has not employed any individual whose remuneration falls within the purview of the limits prescribed under the provisions of Sec 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

ACKNOWLEDGEMENT

The Board of Directors would like to place on record their gratitude for the guidance and cooperation extended by Reserve Bank of India and the other regulatory authorities. The Board takes this opportunity to express their sincere appreciation for the excellent patronage received from the Banks and Financial Institutions and for the continued enthusiasm, total commitment, dedicated efforts of the executives and employees of the Company at all levels. We are 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 Mumbai Arun Duggal

May 07, 2013 Chairman


Mar 31, 2011

The Directors have pleasure in presenting their Thirty Second Annual Report and the Audited Statements of Accounts for the financial year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

2010-11 2009-10

Profit Before Depreciation and Taxation 185,974.83 133,954.96

Less: Depreciation and Amortisation 1,082.07 1,495.84

Profit Before Tax 184,892.76 132,459.12

Less: Provision for Taxation 61,904.76 45,147.38

Profit After Tax 122,988.00 87,311.74

Add: Balance brought forward from previous year 93,001.65 58,309.25

Balance available for appropriation 215,989.65 145,620.99

Appropriations

General Reserve 12,300.00 8,800.00

Statutory Reserve 24,600.00 17,500.00

Debenture Redemption Reserve 21,381.60 10,442.08

Dividend on Equity Shares of Rs. 10/- each 14,684.89 13,600.65

Tax on Dividend 2,438.95 2,276.61

Balance carried to Balance Sheet 140,584.21 93,001.65

DIVIDEND

Your Directors at their meeting held on October 27, 2010 declared an interim dividend of Rs. 2.50/- per equity share (i.e. 25 percent) for the financial year 2010-11, which was paid on November 22, 2010. The payment of this Interim Dividend involved an outflow, including tax on dividend, of Rs. 6,574.91 lacs.

Your Directors have recommended a fi nal dividend of Rs. 4/- per equity share (i.e. 40 percent) for the financial year ended March 31, 2011. This dividend distribution would result in a cash outflow of Rs. 10,548.93 lacs including tax on dividend of Rs.1,502.50 lacs.

Thus, the total amount of dividend (including interim dividend paid) for the year ended March 31, 2011 shall be Rs. 17,123.84 lacs including tax on dividend of Rs. 2,438.95 lacs, as against Rs. 15,496.82 lacs, including tax an dividend of Rs. 2,221.35 lacs for the previous fi -nancial year.

CAPITAL ADEQUACY RATIO

Your Companys total Capital Adequacy Ratio (CAR), as of March 31, 2011, stood at 24.85 percent of the aggregate risk weighted assets on balance sheet and risk adjusted value of the off-balance sheet items, which is well above the regulatory minimum of 12.00 percent.

CREDIT RATING

The credit rating enjoyed by the Company as on March 31, 2011 is as follows.

Credit Rating Agency Instruments Ratings Limit in Rs. (lacs)

CARE Non Convertible Debentures AA+ 255,000

CARE Subordinate Debt AA 180,000

CRISIL Fixed Deposit FAA+

CRISIL Subordinate Debt AA 70,000

CRISIL Non Convertible Debentures AA 50,000

CRISIL Short Term P1+ 200,000

ICRA Fixed Deposit MAA+

FITCH Non Convertible Debentures AA(Ind) 550,000

FITCH Short Term FI+(Ind) 150,000

FITCH Subordinate Debt AA(Ind) 120,000

OPERATIONS

For the financial year ended March 31, 2011, your Company earned Profi t Before Tax of Rs. 184,892.76 lacs as against Rs. 132,459.12 lacs of the earlier year, posting an increase of 39.58 percent year-on-year. The Profit After Tax of Rs. 122,988.00 lacs also is 40.86 percent more when compared to the previous year, which was Rs. 87,311.74 lacs. The total income for the year under consideration was Rs. 542,965.40 lacs and total expenditure was Rs. 358,072.64 lacs.

The total disbursements made for financing of commercial vehicles during the year under review were Rs. 1,988,368.64 lacs. As on March 31, 2011, the outstanding hypothecation loans were Rs. 1,946,414.11 lacs.

During the financial year ended March 31, 2011, the Company mobilised Rs.119,920.93 lacs through non-convertible debentures, Rs. 17,981.66 lacs through subordinated debts, Rs. 61,869.26 lacs through term loans, Rs. 10,650.00 lacs through working capital loans, Rs. 1,000.00 lacs through commercial paper and Rs. 1,020,361.35 lacs through assignment of loan receivables from the customers.

ECONOMIC SCENERIO

The economic meltdown originated in the United States of America in the year 2008 seems to have enforced a major shift in the global economic power hierarchy. The timely support through a series of economic measures and by active governmental monitoring of the financial health, the Indian economy registered speedy recovery. Weathering the turbulent global slowdown, the Indian economy managed commendable expansion of 8.00 percent in 2009-10 and 6.80 percent in 2008-09. During the financial year ended March 31, 2011, the growth has been reported as over 8.60 percent. It is now widely believed that India could well be on course to be the third largest economy in the world in a couple of years, overtaking Japan. Besides, it is expected that, after 2020, Indias growth would be faster than that of even China. The Indian economy has benefi ted immensely from robust domestic demand and a revival in investor and consumer sentiment. This has resulted in stronger capital inflows into the country. The agricultural sector, which was lagging behind, has also performed well assisted by favourable monsoon, which in turn, gave a major thrust to the rural demand.

The Indian economy is projected to grow 8.50 percent - 9.00 percent in 2011-12. A good south-west monsoon season is forecasted for the year, which in turn, would give a fi llip to our growth dynamics. A 9.00 percent GDP growth, then could be well within the reach. The Twelfth Five Year Plan could probably set a target growth of 9.00 percent to 9.50 percent. However, managing the infl ationary pressures and the balance of payment situation would be a challenge. Besides, the volatile interest rates could also prove to be a dampener.

The growth of the commercial vehicle segment, which is closely linked to the countrys GDP growth, has also been good during these years. During the year ended March 31, 2011, the passenger vehicles segment grew at 29.16 percent when compared to the previous year. During this period, utility vehicles grew by 18.87 percent and multi-purpose vehicles grew by 42.10 percent. The overall commercial vehicles segment registered growth of 26.97 percent during April- March 2011 as compared to the same period last year. While medium & heavy commercial vehicles registered growth of 31.78 percent, light commercial vehicles grew at 22.88 percent. Three wheelers sales recorded a growth rate of 19.44 percent in April-March 2011. While passenger carriers grew by 22.03 percent during April-March 2011, goods carriers registered growth of 9.45 percent. In the export front, during April-March 2011, the passenger vehicles segment registered marginal growth at 1.64 percent, while the commercial vehicles and three wheelers segments recorded growth of 69.51 percent and 55.86 percent respectively.

The enhanced industrial activity, expected agricultural growth and huge governmental expenditure on infrastructure development are some of the major factors, which are expected to propel the demand for new commercial vehicles. Besides, increased passenger movement through the roads and introduction of new and improved vehicles in the market are also expected to push up the demand. It is projected that during the fi nancial year 2011-12, the light commercial vehicle and the medium & heavy commercial vehicle segments would grow 18-21 percent and 10-12 percent respectively. The passenger bus segment would be recording a growth of 8-10 percent. The three wheelers (cargo) and three wheelers (passenger) would grow 4-6 percent and 10-12 percent respectively.

The sale of commercial vehicle has averaged about 11.00 percent in the fi ve years ended 2010. Considering the typical life cycle of the commercial vehicles, most of the vehicles that have been sold in the last four to fi ve years would be due for resale shortly. The market for large commercial vehicle in India alone is estimated to be about Rs. 70,000 crores and the market for financing the pre-owned vehicles of 5-12 years is expected to be around Rs. 40,000 crores. Your Company, therefore, expects that the demand for commercial vehicles financing would continue to remain strong.

FIXED DEPOSITS

As on March 31, 2011, there were 635 fi xed deposits aggregating to Rs. 278.50 lacs that have matured but remained unclaimed. There were no deposits, which were claimed but not paid by the Company. The unclaimed deposits have since fallen down to 569 deposits amounting to Rs. 221.22 lacs. Appropriate steps are being taken continuously to obtain the depositors instructions so as to ensure renewal/ repayment of the deposits in time.

SUBSIDIARIES

The Company has two wholly owned subsidiaries viz. Shriram Equipment Finance Company Limited (SEFCL) and Shriram Automall India Limited (SAIL). These subsidiary companies are non-material Indian unlisted subsidiaries of the Company.

Shriram Equipment Finance Company Limited (SEFCL):

SEFCL is engaged in the business of hire purchase/loan financing of equipment, especially construction equipment and has been registered under Section 45-IA of the Reserve Bank of India Act, 1934 as Non-Banking Finance Company (Non-Deposit Accepting) vide Certifi cate No. N-07-00786 dated October 8, 2010 issued by Reserve Bank of India.

For the financial year ended March 31, 2011, which is the first full financial year of operation, SEFCL has reported income from operations of Rs. 2,002.83 lacs as against none for the previous year and Profit after tax of Rs. 115.70 lacs as against loss of Rs. 1.19 lacs for the earlier year.

During the year under review, your Company subscribed to 15,000,000, 0.01 percent compulsorily convertible preference shares of Rs. 100/- each issued by SEFCL.

Shriram Automall India Limited (SAIL):

SAIL plans to set up Automalls, which would be a trading platform for the sale of pre-owned commercial vehicles. In these Automalls to be set up by SAIL, it intends to provide showrooms for new commercial vehicles, a platform for sale of refurbished pre-owned commercial vehicles and will also facilitate sale of commercial vehicles repossessed by financing companies and for this purpose would set up touch-screen kiosks across the country, through which customers will be able to access real- time information on pre-owned vehicles available for sale. SAIL proposes that the Automalls would ultimately become a one- stop shop catering to the various needs of commercial vehicle owners. SAIL opened its first Automall in Chennai in the month of March 2011 and has a target of opening 50 to 60 Automallsin the current financial year.

For the financial year ended March 31, 2011, SAIL has reported income from operations of Rs. 6,216.27 lacs as against none for the previous year. Being the initial stages of its operations the company has incurred a loss of Rs. 1,391.51 lacs as compared to the loss of Rs. 0.55 lacs for the period ended on March 31, 2010.

During the year under review, your Company subscribed to 9,950,000 equity shares of Rs. 10/- each issued by SAIL.

In terms of the Circular No: 51/12/2007-CL-III dated February 08, 2011 of the Ministry of Corporate Affairs, Government of India, the Board of Directors of the Company at their meeting held on April 29, 2011 has, by resolution passed thereat, given their consent for not attaching the Annual Reports of the subsidiaries to the Balance Sheet of the Company. A statement on consolidated financial position of the Company with that of the subsidiaries is attached to the Annual Report. The consolidated financial statements attached to this Annual Report are prepared in compliance with the applicable Accounting Standards and Listing Agreement.

The annual reports and the annual accounts of the subsidiaries and the related detailed information shall be made available to Shareholders of the Company and the subsidiaries seeking such information at any point of time. The annual accounts of the subsidiaries shall also be kept for inspection by shareholders at the Registered office of the Company and of the respective subsidiaries. The Company shall furnish hard copy of details of accounts of the subsidiaries to any Shareholder on demand.

The annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in and shall also be provided to the Shareholders on their written request to the Company.

SHARE CAPITAL

During the year under review, the Company allotted 642,850 fully paid up equity shares of the face value of Rs. 10/- each to its employees on exercise of stock options by them.

Details of the shares issued and allotted under the Employees Stock Option Scheme of the Company, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF NCDs

With a view to develop an additional channel for raising monies to fund the business operations, your Company, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions, issued and allotted Secured and Unsecured Non Convertible Debentures (NCDs), through a public issue and raised a sum of Rs. 49,999.99 lacs in May 2010.

Considering the potential in raising funds through public issuance of NCDs and the extra ordinary support received from the investing public for its previous NCDs offerings, your Board, at its meeting held on April 29, 2011, has decided to offer and allot to public, subject to the aforementioned Regulations and such approvals as may be necessary, secured NCDs not exceeding Rs. 200,000 lacs.

CORPORATE SOCIAL RESPONSILITY INITIATIVES

Your Company is fully aware of the fact that as a corporate citizen, it is also entrusted with the responsibility to contribute for the betterment of the community at large and has the necessary resources at its disposal to do so. Hence, your Company endeavours to empower the under privileged and the weaker sections of the community. Your Company has been supporting several NGOs involved in educational, vocational and other charitable programmes and has continued to engage itself in social welfare activities by contributing to charitable institutions.

During the financial year ended March 31, 2011, your Company supported a variety of charitable projects and has contributed a sum of Rs. 272.06 lacs to several charitable organizations.

HUMAN CAPITAL

Your Company fi rmly believes that the human capital built up by it over the years is its most valuable asset and all 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 Companys performance. Imparting of training through internal as well as external training programmes is being done continuously so as to equip them to face the new challenges in the market place.

As of March 31, 2011, the Company has 16,919 employees.

DIRECTORATE

As per Section 256 of the Companies Act, 1956, Mr. Arun Duggal, Mr. Ranvir Dewan and Mr. S. Venkatakrishnan would retire by rotation at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

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

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

b. That such accounting policies as mentioned in Schedule 21.1 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 March 31, 2011 and of the Profit of the Company for the year ended on that date;

c. That 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;

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

RBI GUIDELINES

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

CORPORATE GOVERNANCE

The Report on Corporate Governance forms part of the Directors Report, and is annexed herewith.

As required by the Listing Agreement, Auditors Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

Further, as required under Clause 49 of the Listing Agreement, a certifi cate, 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 to the Board of Directors at their meeting held on April 29, 2011. The certifi cate is attached to the Report on 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.

AUDITORS

M/s. S. R. BATLIBOI & Co., Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certifi cates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. They have also confi rmed that they hold a valid peer review certifi cate as prescribed under

Clause 41(1)(h) of Listing Agreement. Members are requested to consider their re-appointment.

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

Pursuant to the requirement 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:

a. The Company has no activity involving conservation of energy or technology absorption.

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

c. Outgo under Foreign Exchange - Rs. 0.76 lacs.

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 Vice President (Corporate Affairs) & Company Secretary at the Head Offi ce of the Company, and the same will be sent by post.

ACKNOWLEDGEMENT

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

For and on behalf of the Board of Directors

Arun Duggal

Chairman

Mumbai April 29, 2011


Mar 31, 2010

The Directors have pleasure in presenting their thirty First Annual Report and the Audited Statements of Accounts for the year ended March 31, 2010.

FINANCIAL HIGHLIGHTS

(Rs. in lacs)

2009-10 2008-09

Profit Before 133,954.96 96,104.57 Depreciation and taxation

Less: Depreciation, 1,495.84 4,041.46 Amortisation and Impairment Loss Profit Before Tax 132,459.12 92,063.11

Less: Provision for 45,147.38 30,822.90 taxation including Fringe Benefit Tax Profit After Tax 87,311.74 61,240.21

Add: Balance brought 58,309.25 27,486.21 forward from previous year

Balance available for 145,620.99 88,726.42 appropriation

General Reserve 8,800.00 6,200.00

Statutory Reserve 17,500.00 12,300.00

Debenture Redemption 10,442.08 -

Reserve

Dividend on Equity Shares 13,600.65 10,186.01 of Rs. 10/- each

Tax on Dividend 2,276.61 1,731.16

Balance carried to 93,001.65 58,309.25 Balance Sheet

DIVIDEND

Your Directors at their meeting held on october 28, 2009 declared an interim dividend of Rs. 2/- per equity share (i.e. 20%) for the financial year 2009-10, which was paid on November 20, 2009. the payment of this Interim Dividend involved an outflow, including tax on dividend, of Rs. 4,977.86 lacs.

Your Directors have recommended a final dividend of Rs. 4/- per equity share (i.e. 40%) for the financial year ended

March 31, 2010. the dividend distribution would result in a cash outflow of Rs. 10,518.96 lacs including tax on dividend of Rs. 1,498.25 lacs.

For the financial year 2008-09, the total dividend outflow, including on account of interim dividend, was Rs. 12,285.26 lacs which included tax on dividend of Rs. 1,784.59 lacs.

PROSPECTS AND OPPORTUNITIES

After experiencing one of the worst economic crisis ever during the financial year 2008-09 triggered by the subprime crisis, that plunged even the world’s leading economies into financial meltdown, the global economic conditions picked up momentum during the financial year 2009-10, though slowly and with some uncertainty. It was widely feared that the crisis will continue for a long time. Contrary to the general belief, the turnaround has been quicker than what was expected. While it is generally felt that the risk relating to the macro economies have somewhat lessened, there are fears relating to the financial stability of some of the countries. Capital infusion, especially from the private sector, continues to be slow even in the developed economies and coupled with low capacity utilization as well as depressed consumption have forced their governments to continue with the fiscal and monetary stimuli which were extended at the peak of the crisis.

During the crisis period, the fight of capital has been one of the big concerns for the Emerging Market Economies, which saw alarming capital outflows. However, these economies, especially the Asian Emerging Market Economies, led by India and China, exhibited commendable resilience and are now significantly ahead on recovery path as compared to the developed economies. Prompted by the growth of the Emerging Market Economies, the International Monetary Fund has projected that global growth will recover from (-) 0.8 per cent in 2009 to 3.9 per cent in 2010 and further to 4.3 per cent in 2011.

On account of timely support extended through a series of economic measures and close monitoring of the financial health of the economy by the Government of India, the Reserve Bank of India and the other regulatory bodies of the Country, the Indian economy demonstrated a clear momentum of economic recovery. this is achieved despite a deficient monsoon and its consequent adverse impact on the agricultural production. the GDP growth for the fiscal 2009-10 has been estimated at 7.2 per cent as against 6.7 recorded in 2008-09. the recovery has been broad based on account of rebound in industrial production and the resilience of the services sector. In March 2010, the six key sectors i.e. crude oil, petroleum refinery, coal, electricity, cement and finished steel posted an annual growth of 7.2 per cent as against 3.3 per cent in March 2009, boosting prospects of a robust across the board growth.

The growth during the fiscal 2010-11 is widely expected to be higher than that of the year that has gone by. the capacity utilization and consumption are expected to pick up further in the coming months. However, despite commendable stability achieved during the past several months and revival of inflow of capital, there are concerns on account of spiraling inflation and large government borrowings.

The overall Commercial Vehicles segment registered positive growth at 38.31 percent during financial year 2009-10 when compared to 2008-09. Medium & Heavy Commercial Vehicles segment registered growth at 33.55 per cent and Light Commercial Vehicles grew at 42.67 percent.

The growth of the passenger vehicles segment during 2009-10 was at 25.57 percent as compared to last year. Utility Vehicles grew by 20.88 percent and Multi Purpose Vehicles grew by 40.94 percent. During the year, the Passenger vehicles production crossed 2 million mark.

Despite the turmoil witnessed across the globe as well as in our country, Your Company continued to remain in the growth momentum. Your Company was able to consolidate its position further and aggressively pursued to tap markets in the rural areas. Your Company now has a wide array of financial products tailor made for the Commercial Vehicle segment.

The recent venturing into financing of pre-owned passenger vehicles, multi utility vehicles, tractors, construction equipments as well as three wheelers and the foray into extending secondary finances, such as loans for replacement of tyres, engine and extending of finances to its customers to meet their working capital needs, have met with extra ordinary success in the market place. The co-financing arrangements with the local private financiers throughout the country have helped the Company to strategically expand its reach and the customer base. the relationships we have developed with our customers provide us with opportunities for repeat business and to cross sell our other products as well as derive benefit from customer referrals. Despite difficult and volatile conditions, Your Company has been able to borrow from a range of sources at competitive rates to achieve a relatively stable cost of funds primarily due to our improved credit ratings, effective treasury management and innovative fund raising programs. In spite of the volatile financial market conditions Your Company continued to be the leader and retained its position as the largest asset financing Non Banking Financial Company in the country.

OPERATIONS

Your Company has earned a Profit Before Tax of Rs. 132,459.12 lacs for the year ended March 31, 2010, as against Rs. 92,063.11 lacs of the earlier year, posting an increase of 43.88 % year on year. The Profit After Tax of Rs. 87,311.74 lacs also is 42.57 % more when compared to the previous year, which was Rs. 61,240.21 lacs. the total Income for the year under consideration was Rs. 449,963.82 lacs and total expenditure was Rs. 317,504.70 lacs.

The total disbursements made for financing of commercial vehicles during the year under review were Rs. 1,468,359 lacs. As on March 31, 2010, the outstanding hypothecation loans were Rs. 1,773,740.20 lacs.

During the year ended March 31, 2010, the Company mobilised Rs. 232,652.34 lacs through non convertible debentures, Rs. 53,196.13 lacs through subordinated debts, Rs. 699,929.21 lacs through term loans, Rs. 77,700 lacs through working capital loans, Rs. 2,500.00 lacs through commercial paper, Rs. 875,681.04 lacs through securitisation deals.

FIXED DEPOSITS

As on March 31, 2010, there were 414 fixed deposits aggregating to Rs. 60.65 lacs that have matured but remained unclaimed. there were no deposits, which were claimed but not paid by the Company. the unclaimed deposits have since fallen down to 12 deposits amounting to Rs. 3.16 lacs. Steps are being taken continuously to obtain the depositors’ instructions so as to ensure renewal/ repayment of the deposits in time.

SUBSIDIARY

During the Financial Year ended March 31, 2010, the Company incorporated two wholly owned subsidiaries by name, Shriram Equipment Finance Company Limited and Shriram Automall India Limited on December 15, 2009 and February 11, 2010 respectively.

Shriram Equipment Finance Company Limited (SEFCL) received the Certificate of Commencement of Business from the Registrar of Companies, Tamil Nadu on December 23, 2009 and has applied to Reserve Bank of India (RBI) for registration as a Non-Banking Finance Company (Non- Deposit taking). SEFCL will be engaged in the business of hire purchase / loan financing of equipments, especially construction equipments.

Shriram Automall India Limited (SAIL) received the Certificate of Commencement of Business from the Registrar of Companies, Tamil Nadu on April 16, 2010. SAIL intends to develop pre-owned commercial vehicle hubs across India called “Automalls” and set up a one- stop shop catering to the various needs of commercial vehicle owners.

These subsidiary companies are non-material unlisted subsidiaries of the Company.

The Company has made necessary application to the Central Government u/s 212 (8) of the Companies Act, 1956 read with Rule 7D of the Companies (Central Government) General Rules and Forms, 1956 seeking exemption from attaching the annual accounts of its subsidiaries to the Annual Report of the Company. However, the consolidated financial statement attached to this Annual Report is prepared in compliance with Accounting Standard and Listing Agreement. Further, the annual accounts of the subsidiaries shall be available on the website of the Company viz. www.stfc.in and shall also be provided to the Shareholders on their written request to the Company.

SHARE CAPITAL

Qualifed Institutional Placement

During the year under review, the Company issued and allotted to 45 qualified institutional buyers 11,658,552 equity shares of Rs. 10/- each at a premium of Rs. 490.80 per equity share aggregating to Rs. 58,386.03 lacs under Chapter VIII of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Employee stock options

During the year under review, the Company allotted 2,347,650 fully paid up equity shares of the face value of Rs. 10 each to its employees on exercise of stock options by them and also granted additional 50,000 options to eligible senior managerial personnel.

Details of the shares issued and allotted under ESOS, as well as the disclosures in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this Report.

PUBLIC ISSUE OF NCDs

To explore and develop additional source of financing and with a view to meet Your Company’s business operations, Your Company, pursuant to the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and subject to the necessary approvals, consents and permissions, issued and allotted Secured Non Convertible Debentures, through a public issue and raised a sum of Rs. 99,999.96 lacs.

Considering the potential in raising funds by issue of non convertible debentures (NCDs), Your Board, at its meeting held on January 18, 2010, has decided to offer and allot, subject to the aforementioned Regulations and such approvals as may be necessary, secured / unsecured, NCDs not exceeding Rs. 50,000 lacs in one or more tranches through another public issue which is expected to open for public subscriptions in May 2010.

Directorate

Mr. Ravindra Bahl, Non Executive Nominee of Uno Investments on the Board of the Company, resigned as a Director with effect from November 19, 2009. Consequent to the repayment of loan taken by the Company from Indian Renewable Energy Development Authority, they withdrew their nomination of Dr. T.S. Sethurathnam, their nominee on the Board, and he ceased to be a Director of the Company with effect from November 11, 2009. the Board has placed on record its appreciation of the invaluable services rendered by Mr. Bahl and Dr. Sethurathnam during their respective tenures as Directors of the Company.

As per Section 256 of the Companies Act, 1956, Mr. M.S. Verma and Mr. S. M. Bafna would retire by rotation, and being eligible, offer themselves for re-appointment.

Mr. S. Lakshminarayanan was appointed as an Additional Director by the Board with effect from September 22, 2009. In accordance with Section 260 of the Companies Act, 1956, he will hold office only upto the date of the ensuing Annual General Meeting. Being eligible, he offers himself for re-appointment.

The term of office of Mr. R. Sridhar as the Managing Director, will come to an end on September 14, 2010. the Board at its meeting held on April 29, 2010, subject to the approval of the Shareholders, has re-appointed him for a further term of five years. The necessary resolution for his re-appointment and for the remuneration payable to him will be moved at the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

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

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

b) that such accounting policies as mentioned in Schedule 20.1 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 March 31, 2010 and of the profit of the Company for the year ended on that date;

c) That 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;

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

RBI GUIDELINES

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

CORPORATE GOVERANANCE

The Report on Corporate Governance forms part of the Directors’ Report, and is annexed herewith.

As required by the Listing Agreement, Auditors’ Report on Corporate Governance and a declaration by the Managing Director with regard to Code of Conduct are attached to the said Report.

The Management Discussion & Analysis is given as a separate statement forming part of the Annual Report.

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, 2010, was submitted to the Board of Directors at their meeting held on April 29, 2010. The certificate is attached to the Report on Corporate Governance.

AUDITORS

M/s. S. R. BATLIBoI & Co., Chartered Accountants, Mumbai and M/s. G. D. Apte & Co., Chartered Accountants, Mumbai, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Certificates have been received from them to the effect that their re-appointment as Auditors of the Company, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.

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

Pursuant to the requirement 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:

a. The Company has no activity involving conservation of energy or technology absorption.

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

c. Outgo under Foreign Exchange - Rs. 6.85 lacs.

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 Vice President (Corporate Affairs) & Company Secretary at the Head Office of the Company, and the same will be sent by post.

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to express their sincere appreciation for the excellent support and co-operation received from the Banks and Financial Institutions, for the continued enthusiasm, total commitment, dedication and efforts of the executives and employees of the Company at all levels. We are 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

Arun Duggal

Chairman Mumbai April 29, 2010

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