Directors Report of Callista Industries Ltd.

Mar 31, 1996

Your Directors have pleasure in presenting the Seventh Annual Report of the company along with the Audited Statement of Accounts. At the outset, I would like to, along with my Directors, thank you for the confidence reposed in the company.

FINANCIAL PERFORMANCE

Financial Results for the year ended 31st March, 1996 are as follows:

Year Ended Year Ended 31-03-1996 31-03-1995 (Rs.in Lakhs) (Rs. in Lakhs)

Profit before Depreciation 28.42 24.70

Less : Depreciation 13.12 14.56

Preliminary Expenses written off 2.09 0.11

Profit Before Tax 13.21 10.03

Less : Provision for Tax 4.15 2.87

Profit After Tax 9.06 7.16

DIVIDEND

Your directors have recommended a dividend of 5% (subject to deduction of tax at source) for the year 1995-96 to be paid on a pro-rata basis.

OPERATIONS

The Year 1995-96 has been significant to your Company as it has entered the Capital Market for the first time in October 1995 with an issue of Rs.180 lakhs which was well received by the Investors.

During the year under review, the company had disbursed an amount of Rs. 305 lakhs by way of Hire-purchase, Lease and other Loans. Efficient recovery management and the lending norms adopted by your company ensure adequate safety to its fund.

The Company has obtained Registration of RBI and complied with all the norms prescribed by the Reserve Bank of India for NBFCs governing important parameters such as Capital Adequacy, Asset Classification, Income Recognition, Provisioning, Credit Concentration etc. for the year. Your Company has also fallen in line fully with the accounting standards issued by the Institute of Chartered Accountants of India.

The Company is confident of achieving better results in the coming years.

PUBLIC DEPOSITS:

The Public Deposits outstanding as at the year end stood at Rs.78.06 lakhs as against Rs. 52.27 lacs as on 31st March, 1995. Your Directors wish to express their gratitude to the Depositors for their continued support and reiterate the commitment to the highest safety and security of their funds. As at the year ending, Deposits totalling to Rs. 3.43 lakhs matured but remain unclaimed or renewed. Steps have been taken to obtain instructions from the deposit holders to ensure repayment/renewal of these deposits.

FUTURE PLANS

Despite the continuing uncertainties in securing adequate funds by NBFCs especially from banks and other institutions, difficult money market conditions, your Directors certainly view the business to be more prospective during the coming years with cautious optimism.

As a part of expansion, we have opened a new branch during the year at Visakhapatnam, with this new branch, we have now two branches, the other being at Vijayawada and we have expanded our operations throughout Andhra Pradesh.

Your company is making arrangements to evolve with better strategetic plans for entry into new vistas of business like Investment Banking, Real Estate and Property Development activities during the year 1996-97 and we are confident that the company will continue to perform well in future.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGES

Your company, being basically Hire Purchase Finance company, has not consumed energy of any significant level and accordingly no measures were taken for energy conservation and no additional investment was made for reduction of energy consumption. No comment is made on technology absorption considering the nature of activities undertaken by your Company during the year under review. There has been no foreign exchange income or outflow during the year under review.

DIRECTORS

Mr S R K MURTHY, Director, retires by rotation and being eligible offers himself for re-appointment. Your directors recommend the re-appointment of Mr S R K Murthy as a Director of your company.

Dr Suri Srimathi, Director, retires by rotation and being eligible offers herself for re-appointment. Your directors recommend the re-appointment of Dr Suri Srimathi as a Director of your company.

AUDITORS

M/s. Krishnababu & Associates, Chartered Accountants, Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. The Company has since received a letter from them expressing their unwillingness for their re-appointment, the Board of Directors have recommended the appointment of M/s. B K Hegde & Co., Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Meeting till the conclusion of next Annual General Meeting.

PERSONNEL

Your directors wish to place on record their appreciation for the hard work, commitment and involvement put in by the employees of your company. Their efforts go a long way in maintaining the continuous growth and good results shown by your company.

The Company has not paid any remuneration attracting the provisions of Companies (particulars of employees) Rules, 1975 read with Section 217 (2A) of the Companies Act, 1956. Hence, no information is required to be appended to this report in this regard.

PROJECTIONS VS. ACTUALS

We furnish hereunder comparison of projected profitability figures with actual figures as required by clause 43 of the Listing Agreement.

(Rupees in Lakhs)

Particulars Projections Actuals

Total Income 84.90 66.20

Profit after tax 29.03 9.06

Reasons for Variations:

The year 1995-96 was a difficult year for all Non-Banking Finance Companies (NBFCs) as banks and financial institutions have not extended their full support to NBFCs by not considering enhancement/fresh credit limits. Non release of even the sanctioned limits and the tight money market situations coupled with abnormal delay in receipt of public issue funds and allotment money have all affected the deployment of funds in the right time.

ACKNOWLEDGEMENTS

Your directors wish to place on record their sincere appreciation for the support and cooperation extended by the Bankers, Customers and Depositors who have contributed to the growth of the company during the year under review.

Your directors once again express their gratitude to the Members for their support to the company.