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Associated Business Credits Ltd.

BSE: 530567 Sector: Financials
NSE: N.A. ISIN Code: N.A.
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Associated Business Credits Ltd. (ASSOCBUSINESS) - Director Report

Company director report

ANNUAL REPORT 1998-99 ASSOCIATED BUSINESS CREDITS LIMITED DIRECTORS' REPORT To The Members Your Directors have pleasure in presenting the 16th Annual Report, together with the Audited Accounts, for the financial period ended 30th september 1999. OPERATIONS: The year 1998-99 has been a very disappointing year for the Company, with the Company declaring a loss for the first time in its history. The new RBI guidelines of January 1998 had clearly cut out the task for the Non Banking Financial Companies (NBFCs) operating in country. The guidelines in essence have tried to bring the NBFCs operations on the same foundation as those of the banking sector. This new viewpoint was a radical variation from the then prevailing guidelines, as a result it called for a major change in the operating plans of the companies. From aggressively raising funds for deployment in the market, the task of an NBFC, reversed to that of repaying funds, from the collections arising out of earlier deployment in the market. This sudden reversal in role coupled with the economic slowdown, has taken its toll on the NBFCs in the country. The Company has discontinued, acceptance / renewals of fixed deposits, leasing; auto financing and other traditional fund based activities. The focus is now in the following three areas of operations: 1. Cost Reduction 2. Asset/Liability - Management 3. Collections 1. Cost Reduction: During the year the Company has put in place a number of cost reduction measures resulting to reduce the operational expenses. The measures adopted include reduction in the number of offices, size, employee strength and rent of offices all over the Tamil Nadu. The full impact of these measures will be seen in the years to come. 2. Asset / Liability - Management: The process of rationalisation involves downsizing the balance sheet of the Company to a manageable level in tune with the new operating environment. The Company is also in the process of restructuring asset / liability, maturity profiles, to minimise mismatches. 3. Collections: The Company has chalked out a plan to strengthen collections and to deal with the legal issues arising thereof. The Company is trying to keep the receivables under control inspite of a sharp deterioration in the financial health of a number of small and mid-size companies. In terms of the RBI prudential guidelines, we have during 18 months period provided for Lease Equalisation and provided for Non Performing Assets to the extent of Rs.98.21 lacs and Rs.416.81 lacs respectively. During the year, we have provided for diminution in investments value to an extent of Rs.3.03 lacs. We are sure that some of these provisions would be reversed in a couple of years with a change in the economic climate of the country. PUBLIC FIXED DEPOSITS The company has applied to the RBI as per the new RBI directives u/s 451A of RBI Act, 1934 for registration as an NBFC. The approval of the RBI is awaited. OUTLOOK In an economic slowdown, the finance markets are amongst the first sectors to be hit, and whenever there is a reversal, they are also the first off the block. We do not visualise any immediate reversal in the financial sector in the country, however, whenever it does happen we would be in a better position to take advantage of the opportunities that it would throw up. Until then we would be engaged in sharpening our skills in our line of business and restructuring our balance sheet. DIVIDEND Your Directors do not recommend any Dividend. DIRECTORS Mr. V. P. Subrahmaniyam, Mr.V.Thangavelu and Mr.B.S.Kantharaja Shetty retires by rotation at the ensuing Annual General Meeting and being eligible, for reappointment. INFORMATION TECHNOLOGY, YEAR 2000 COMPLIANCE (Y2K) Your company is well aware of the year 2000 problem and has taken all steps to ensure Y2K compliance as per the SEBI guidelines. The cost for Y2K compliance being negligible has not been separately reflected in the financial statements. AUDITORS & AUDITOR'S REPORT: M/s. Selvam & Suku, Chartered Accountants, Auditors of the Company, retire at the conclusion of the ensuing Annual General Meeting and being eligible offers themselves for reappointment. STATUTORY DISCLOSURES The Company had no employee covered by the provisions of section 217(2A) of the Companies Act, 1956. The Company has no activity relating to Conservation of Energy, or Technology Absorption. The Company had no foreign exchange outgo or inflow. ACKNOWLEDGEMENT: Your Directors take this opportunity to place on record their warm appreciation for the valuable contribution, untiring efforts and spirit of dedication demonstrated by the employees at all levels. Your Directors also express their deep gratitude to the Bankers, Financial Institutions and Statutory Authorities. We are thankful to the Shareholders and customers for the co-operation and trust they have reposed in the Company. By the order of the Board for ASSOCIATED BUSINESS CREDITS LIMITED Date : 18.02.2000 Sd/- S. R. Velanandan Place : Sales Chairman & Managing Director

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