REPORT OF THE DIRECTORS A REVIEW OF THE COMPANY'S PERFORMANCE OVER FISCAL 2013: We are presently positioned in an economy that is annually compelled to revise its GDP growth rates from 9% to 8% and then to 5.6% from 6% with a present low forecast at 5%. If any company that works within these confines gets overtaken by a marketing obsession to climb great heights in asset growth it may at best be described as suicidal. First Leasing despite the odds grew "Total Revenues" to Rs.245 Crores up from Rs.213 Crores recording a growth of 15% with PBT rising from Rs.48.84 Crores to Rs.51.17 Crores. The one expense account we were able to compress was our tax bill which fell from Rs.17.23 Crores to Rs.16.45 Crores as we exhausted almost every other Expense-reduction possibility. First Leasing controlled what was controllable through exemplary credit management and for yet another year achieved the extraordinary feat of holding its net NPAs at zero. The company also successfully closed its first large Real Estate related lease for land and factory buildings. Shareholders are understandably concerned that over the years whilst First Leasing enhanced its Net Worth to a level of Rs.363.94 Crores the company restrained but did not abstain from dividend payment despite the consideration that the Company over its present operating life paid dividends of Rs.118.16 Crores which is the equivalent of returning Shareholder Capital "Five times over". Also its imperative for First Leasing to build its "Retained Earnings" to balance debt funds committed by our bankers,which also explains why we remarkably increased the Company's Capital Adequacy to an "All time High" of 27.32% against Reserve Bank's present requirement of 15%, and also successfully completing a subordinated debt issue for Rs.178 Crores enhancing our Tier II Capital. REGULATION OF NBFCs: The Company has complied with applicable regulations as per Reserve Bank of India Directions to NBFCs. Capital Adequacy Ratio stood at 27.32% (19.24%) as at 31st March 2013 which is much higher than the statutory minimum requirement of 15% stipulated by RBI. Net Non Performing Assets as at 31st March 2013 stood at 0.00% (0.12% ). DIVIDEND: The Board of Directors have recommended a Dividend of Rs.1.80 per share of Rs.10/- each on the Equity Shares (18%) free of tax for the year ended 31st March 2013. PUBLIC DEPOSITS: During the year entire deposits were repaid to its Deposit holders and as such the amount due to Public towards Public Deposit is Nil. Deposit / Interest which remained unclaimed to the extent of Rs.50.02 lacs has been transferred to a separate ESCROW Account for meeting future claims as per RBI's direction. DIRECTORATE: Mr. V Selvaraj, Director of the Company, retires by rotation at this Annual General Meeting and being eligible offer himself for re-election. MANAGING DIRECTOR'S COMMISSION: The Board noted that the Managing Director of the Company expressed his intention to take a significantly reduced commission of Rs.16,12,433/-for the year ended 31st March 2013 which is equivalent to a normal bonus given to a staff member of the Company instead of his eligible Commission of Rs. 1,00,65,569/- (i.e.) 2% on the net profits computed under section 349/ 199 of the Companies Act, 1956 in view of adverse economic conditions prevailing in the financial industry. AUDITORS: The Statutory Auditors M/s. Sarathy & Balu, Chartered Accountants, Chennai (FRN-03621S), retire at the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re-appointment to hold the office as statutory auditors till the conclusion of the next Annual General Meeting. The Auditors have confirmed that the re-appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The firm has successfully undergone the Peer Review Process by Peer Review Board (PRB) of the Institute of Chartered Accountants of India, New Delhi. The firm holds a valid certificate issued by the Peer Review Board of the said Institute. COST AUDIT: The Board of Directors of the Company have approved the appointment of Mr. S.Sundar of M/s. S.Sundar & Associates, Cost Accountant in practice as Cost Auditor to conduct the Audit of the Cost records of the Company in respect of its Wind Mill Operations for the period from 1st April 2013 to 31st March 2014. CORPORATE GOVERNANCE: A report on Corporate Governance forms part of this report and a certificate from the Auditors of your Company regarding compliance of conditions of the Corporate Governance is attached to this report. A Management Discussion and Analysis Report also forms part of this report. UNCLAIMED SHARE CERTIFICATES: In term of clause 5A II of the Listing Agreement, the Company has sent three reminders to the shareholders whose share certificates, remains unclimed with the Company. The Company has transferred the shares comprised in the share certificates into one folio in the name of Unclaimed Suspense Account (Demat Account). The Company opened Unclaimed Suspense Account on 4th January 2013. The details of outstanding shares in First Leasing Company of India Limited Unclaimed Shares Suspense Account is as follows: RATING: CREDIT RATING AWARDED BY CARE AND BRICKWORK: • "CARE A1+" (A ONE PLUS) for Commercial Papers • "CARE AA" (DOUBLE A) for Non-Convertible Debentures • "CARE AA-" (DOUBLE A Minus) for Subordinated Debt • "CARE AA" (DOUBLE A) for Long Term Bank facilities • "BWR AA" (BWR DOUBLE A) for Non-Convertible Debentures • "BWR AA" (BWR DOUBLE A) for Subordinated Debt PROVISION ON STANDARD ASSETS: As per Reserve Bank of India Directive, the Company has provided 0.25% on Standard Assets aggregating Rs. 36.65 Lacs (previous year Rs. 42.44 Lacs) in the accounts for the year ended 31st March 2013. INFORMATION AS PER COMPANIES (DISCLOUSRE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988: During the year under review, there is no information required to be stated relating to Energy Conservation and Technology absorption. Foreign currency expenditure amounting to Rs. 2,160.76 Lacs was incurred during the year under review. The Company does not have any Foreign Exchange Earnings. PARTICULARS AS PER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975: Particulars of Employees in terms of requirement under Section 217(2A) of the Companies Act, 1956 are set out in the Annexure forming part of this Report. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the section 217(2AA) of the Companies Act, 1956 the Board of Directors confirms: 1. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures. 2. That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period. 3. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. 4. That the directors had prepared the annual accounts on a going concern basis. CORPORATE SOCIAL RESPONSIBILITY Your Company in association with NGO's and Charitable Trusts is involved for the last 15 years in various community focused activities for improving the health and hygienic level of the community. Your Company is also contributing to the development of education and sports facilities through various sponsorship programme in association with Charitable Trusts. ACKNOWLEDGEMENT: The Directors wish to thank the Bankers, Financial Institutions, Customers and Employees for their assistance and support extended to the Company during the year under review. For and on behalf of the Board Place : Chennai A C MUTHIAH Date : 14th August 2013 Chairman |