ANNAMALLAI FINANCE LIMITED.
I have great pleasure in welcoming you all to the Seventeenth Annual
General Meeting of the Company. The Directors' Report and the Audited
Accounts for the year ended 31st March 1997 have been with you for quite
some time and with your permission I shall take them as read.
PERFORMANCE IN 1996-97
I am glad to inform you that the performance of your Company has been good
during the year 1996-97.
The Company's share capital is Rs.1125.24 lakhs. Together with the reserves
of Rs.2961.03 lakhs as on 31.3.97. we have a very strong Net Owned Funds
base of Rs 4086.27 lakhs.
The Gross value of leased assets including assets under operational lease
has risen to Rs.6829.80 lakhs from Rs.6278.60 lakhs and stock on hire has
risen to Rs.7447.44 lakhs from Rs.6813.54 lakhs. The turnover achieved in
discounting of Trade bills amounted to Rs.l131.31 lakhs.
The public deposits with the company is Rs.7719.38 lakhs as at 31.3.97 as
against Rs.6464.92 lakhs as at 31.3.96 thereby showing a growth of 19.40%
which is very satisfactory taking into consideration the tight-monetary
conditions and unhealthy competition from unincorporated financial
Gross income for the year under review is Rs.4158.86 lakhs as compared to
Rs 3363.79 lakhs in the previous financial year, there by showing a growth
Profit after tax of the company is of Rs.440.13 lakhs as compared to Rs.
540.13 lakhs in the previous year. The sum set aside for depreciation and
lease equalisation charge totals to Rs.775.25 lakhs.
Your company continues to follow the prudential norms prescribed by the
Reserve Bank of lndia for NBFCs. The Capital Adequacy Ratio of your Company
as on 31.3.97 was at a comfortable level of 27.45%, well above the minimum
prescribed 8%. Taking into consideration the difficult market conditions
experienced during the year, your Directors consider the overall
performance to be good.
Your Directors have recommended payment of tax free dividend of 27% on the
equity capital which will account for Rs.303.81 lakhs. (Previous year
The Company continues to maintain Credit Rating by CRISIL of "FAA-"
indicating High Safety.
Cream Investment & Trading Company Ltd. has earned a net profit of Rs.10.08
lakhs after paying interest of Rs.41.23 Lakhs to the holding Company. The
performance may be considered satisfactory as the stock market remained
subdued during the major part of the year. After the passing of Union
Budget of 1997 the stock markets are looking up and the outlook for the
current year is better.
Annamallai Properties Ltd. has earned a netprofit of Rs.4.52 lakhs. The
performance may be considered satisfactory as the real estate market
remained sluggish throughout the year. The marketing of residential complex
commenced during the year and the subsidiary has started generating income.
Our Country is celebrating the Golden Jubilee of Independence this year. We
can all feel proud of India's achievements thus far. Fifty years after
independence is a good time to set goals for the future. India is now in
the midst of transition -we have moved from an isolated slow growing
economy to one that is growing faster and beginning to integrate with the
global economy. The transition began with liberalisation, but it remains
incomplete. Liberalisation has benefited only a fraction of India the
organised economy and urban Indians.
Growth of GDP is admittedly the only way to measure progress. The Eighth
Plan is likely to end with an average growth of 6.5% per annum higher than
the 6% achieved in the Seventh Plan. Our economic growth during 1996-97 is
estimated to be around 6.8% and may be sustained at around the same level
next year. The current growth rate needs to be consolidated stabilised and
translated into a trend rate of growth for our economy to forge ahead. What
our Country really needs, and must strive for is a growth rate of 8 to 8.5%
per annum for the next 15 to 20 years in order to significantly reduce
The Finance Minister is to be complimented for the bold initiative taken to
restructure the tax regime which will put the Country seriously on the path
of economic regeneration and poverty alleviation. The Central Budget
enthused the people and gave a strong reminder that we are still on the
path of the reforms. The tax rates for both corporates and individuals are
reduced, tax incentives are offered to enhance investments especially in
the infrastructure sector. Besides tax on dividends are abolished at the
hands of the shareholders and dividend tax of 10% is levied in the hands of
the Corporates, which is a welcome measure.
THE ROLE AND REGULATION OF NBFCs
In July 1996 the RBI announced major relaxations to registered NBFCs which
meet the prudential norms and credit rating requirements. For hire
purchase/leasing companies ceiling on both interest rates and quantum of
deposits were removed and liquid asset requirements were lowered. The
Reserve Bank of India Act, 1934 was amended to take effect from January
1997. These amendments are comprehensive and far reaching.
I am happy to inform you that your company has complied with all the
requirements prescribed by the Act and also applied for renewal of
registration before 8.7.97 with RBI as required by them.
The RBI recently announced an increase in the percentage of liquid assets
to be maintained by NBFCs from 10% to 15% in two phases before 31.3.1998.
These measures will enhance the protection available to depositors and
ensure healthy functioning of NBFCs.
The policies of the new Government at the Center are also aimed at
promoting industrial growth and infrastructure development. Hence the
transport sector is also likely to improve their performance with normalcy
restored in operation of commercial vehicles which was recently affected by
nationwide strike. With further growth envisaged in mobilising deposits,
your company is likely to deploy larger volume of funds in its principal
line of business. Your company is also constantly reviewing and
restructuring its interest rates on Deposit Schemes. With downward revision
in interest rates, from 1st July, 1997, the company will be able to deploy
funds at competitive rates and thereby generate further growth in its
principal business of Hire Purchase and Lease. Hence, your company is
optimistic of good performance in the year ahead.
On behalf of the Board of Directors and on my behalf, I take this
opportunity to convey our sincere thanks to all our Customers, Depositors,
Bankers, Financial Institutions and Shareholders for their constructive
support and co-operation. I also wish to place on record my sincere
appreciation for the services rendered by all the employees of the company.
S V BALASUBRAMANIAM