ANNUAL REPORT 1998-99
ASSOCIATED BUSINESS CREDITS LIMITED
Your Directors have pleasure in presenting the 16th Annual Report, together
with the Audited Accounts, for the financial period ended 30th september
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
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
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
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.
Your Directors do not recommend any Dividend.
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
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.
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.
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