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Alpic Finance Ltd.

BSE: 511325 Sector: Financials
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Alpic Finance Ltd. (ALPICFIN) - Director Report

Company director report

ALPIC FINANCE LTD ANNUAL REPORT 2000-2001 DIRECTORS' REPORT The members Alpic Finance Ltd Yours Directors present the 16th Annual Report, together with the Audited Accounts, for the Financial Year ended 30th June, 2001. Dividend In view of the loss incurred by the Company, your Directors regret their inability to recommend any Dividend (previous year - nil) for the Year ended 30th June, 2001. Appropriations Considering that there is no profit for the year, the Directors do not propose any transfer to the Reserves. Economic Scene The worldwide recessionary trend in the economy continued during the year which had affected the general growth in the economy of our country adversely. In addition to that the matters like Tehelka, UTI Bonds, shaken the confidence of the investor for investing not only in the corporate sector but even in the public sector. To improve the situation, the Government has taken certain steps like cut in the interest rates, relaxing the norms for direct participation of foreign funds in certain areas and many other measures. Although in the recent future the picture of the economy is gloomy, It may be hoped in improving the situation in the long run. Operations & Financial Performance During the year under review, there was no better scenario in comparison with the last year. With the surplus funds for disbursements drying up, your Company continued its focus on consolidation and furthering the financial re-engineering programme begun in last year, involving settlement of high cost debts with non-yielding assets in the form of real estate and investments and reducing dependence on the public deposits, so as to ensure better asset-liability management. However, with the funds becoming scarce, reaching settlements with financial institutions slowed down on account of their insistence on receiving higher percentage in cash. Having discontinued acceptance and renewal of public deposits, your Directors laid maximum emphasis on meeting the repayment obligations to the depositors on a priority basis, notwithstanding the tight funds flow position. Pursuant to the amendment in the Company Law, the Company had made an application to the Company Law Board for extension of time for repayment of Fixed Deposits. The Hon'ble Company Law Board had passed an order dated 9th July, 2001, directing the Company to re-schedule the payments of Fixed Deposit outstanding within a period of 4+ years. The Company is thereby following the directions under the said order. Your Directors wish to place on record their appreciation for the support that all deposit and bondholders showed during these uncomfortable times. It is a matter of pride to note that that your Company has continued to comply with the Prudential Norms laid down by the Reserve Bank of India and that your Company's Capital Adequacy, as of 30th June, 2001, was 30.14% as against 15% prescribed by the Reserve Bank of India. Group Companies & Other Operations The sluggishness in the economy was continued to prevail. Consequently, there were several setbacks in the securities market, resulting in sizeable reduction in trading. Consequently, the securities arm of the group, Allanzers Securities Limited (Erstwhile Alpic Securities Ltd. (ASL), witnessed Losses for the year under review in comparison with its last year which was best year since inception. Further, with a view to streamline operations and achieve economies of scale, the two securities arms of the group, namely Alpic Securities Ltd. and Alpic BBK Finance Ltd., were merged into one entity viz., Allanzers Securities Limited (Erstwhile Alpic Securities Ltd. (ASL). Now, with the memberships of both. the Bombay Stock Exchange and the National Stock Exchange of India, under one entity, ASL is expected to perform better in the times ahead. Corporate Governance Your Company continues to put a great emphasis on corporate governance and has a well defined and clearly laid down operational structure comprising the Board, its committees like Audit Committee and Share Transfer Committee, followed by the managerial personnel and all the way down to the branch heads authority and responsibilities. The staff is regularly deputed to training programmes, both in-house and by deputation outside, to hone their skills. Statutory Disclosures a. There are no employees who are in receipt of salary exceeding the limits prescribed under section 217(2A) of the Companies act, 1956. b. The Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, require the disclosure of particulars regarding Conservation of Energy in Form A and Technology Absorption in Form B, prescribed by the Rules. Your Company not being a manufacturing company, is advised that Forms A and B are not applicable. c. The Company had no foreign exchange outgo except in respect of travel / training, Rs. 8.63 lacs. There is no foreign exchange inflow. Comments on Auditors' Remarks The Company has been prudential in not recognising the revenues on the Non Performing Assets (NPAs). Even in respect of contractual accruals of additional finance charges for overdues, the Company exercises considerable amount of conservative judgement and does not accrue overdue charges at the full contracted rate. This aspect has been mentioned in the Notes to the Accounts too. These amounts are recovered only upon the maturity of the contracts and their final settlements. Sometimes, these are set off against the security deposits. The amounts considered as overdue charges are thus reasonable in the judgement of the management. As regards the remarks under para 2(f)(ii) of the Report, while the Company has been prudential and conservative in not recognising incomes on the NPAs etc., the Company also has not provided for interest on the bank and institutional loans, since their actual values are indeterminable as per the one time settlement proposals by the Company to them. As regards the residual value of the leased assets, the Company has been following the requirements of the guidance note of the Institute of Chartered Accountants of India. Directors Consequent to resignation of Directors namely Mr. R. N. Barisal, Mr. S. R. Mohandas and Mr. Ghulam Ghouse the strength of the Board had been considerably reduced. It was, therefore, proposed to appoint two additional Directors, namely, Mr. Ajay Bora and Mr. S. Mohan Rao on the Board of the Company with effect 28th February, 2001. In view of the restructuring of the group and also proposed shifting of the focus of the business from financial services to new business areas like bio-technology, information technology and agency, and pre occupation of the existing Executive Directors namely Mr. T. S. Chandrashekar and Mr. R. Ravi for development of these new areas of business, it was also proposed to enhance the strength of the Executive Directors on the Board by appointing, Mr. Ajay Bora and Mr. S. Mohan Rao as Executive Directors on the Board of the Company with effect from 28th February, 2001. Mr. Ajay Bora, is an entrepreneur and has an experience in the different fields in the business. The Company is confident of benefiting by his experience. Mr. S Mohan Rao, has more than 30 years experience in the field of finance and had worked with Banks on different positions His experience in the field of finance would certainly benefit the Company in the present circumstances. In terms of the provisions of Section 260 of the Companies Act, 1956 (the Act), read with Article 129 of the Articles of Association of the Company (the Articles), the said Additional Directors hold the Offices as such upto the ensuing Annual General Meeting of the Company. However, the Company has received Notices from certain Members, proposing the candidature of Mr. Ajay Bora and Mr. S Mohan Rao, to be appointed as Directors of the Company, together with a deposit of Rs. 500/- each, in terms of the provisions of Section 257 of the Act, read with Article 141 of the Articles. Mr. Ramesh Shroff and Mr. Sairam Iyer, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend the respective resolutions for adoption. Auditors The Company's Auditors, M/s. R Kothari & Co., Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. Your Directors recommend their re- appointment. Acknowledgements Your Directors express their gratitude to the Company's Clients, Bankers, Financial Institutions, Bondholders. Depositors and Shareholders, for their continued valuable support. On behalf of the Board Mumbai Ravi Kumar S. 30th November, 2001 Chairman & Managing Director