SBI HOME FINANCE LIMITED
ANNUAL REPORT 2007-2008
To the Members
The Directors present the Twentieth Annual Report of the Company along with
Audited Accounts for the year ended March 31, 2008.
(Rs. in Lacs)
Particulars For the year ended
31st March 31st March,
Profit (Loss) before Tax (1824.58) (481.69)
& Prior period Adjustments
Provision for Tax - -
Prior period adjustments (Net) - 14.38
Profit (Loss) after Tax (1824.58) (467.31)
Transfer from - -
Balance brought forward - -
from General Reserve
Balance brought forward (29407.77) (28940.46)
from previous year
Adjustment against Special Reserve 276.25 -
Transfer to General Reserve - -
Proposed Dividend - -
Dividend Tax - -
Balance remaining in the
Profit and Loss Account (30956.10) (29407.77)
In the absence of profit, the Directors ale unable to recommend any
dividend for the financial year ended 31st March 2008.
Having regard to the fact that the company lost its 'going concern' status
since a long time and that a conscious decision was taken to stop business
operations, its major activities revolved round the expeditious realisation
of the assets /receivables created and deconstruction of the liabilities/
provision contracted made in the past and discharging its maintenance
function at low cost. As a result income generated by the company mostly
represented the interest earned on realised funds temporarily parked with
the Bank as fixed deposits and expenses covered the truncated needs of
overheads, wages etc. There is, therefore, no performance indicator to
highlight or to make any normal inter temporal comparison of the company's
working results and other parameters from year to year. However, the net
loss of the company increased during the year from Rs4.67 crores in the
last year to Rs18.25 crores, as the earnings on realisations from
receivables was not as huge as it was in the previous year. The total
income for the year ended 31st March 2008 was Rs101.98 lacs. The Company
paid off a sum of Rs.5.53 crores to State Bank of India as a portion of its
current interest dues on loans taken from them. A look at the individual
items of the profit and loss account of the company from year to year would
also generally reveal a steady downward trend indicating that the company's
control over administrative expenses had been quite strict. It would also
be worth mentioning that with a view to taking the benefit of the
provisions contained in Section 41(5) read with Section 72 of the Income
Tax Act, 1961, at the advice of the Company's tax consultants, the item of
'Special Reserve' for Rs. 276.25 crores was set off against the brought
forward business loss of the Assessment year 2000-01 with the consequences
that the brought forward loss in profit and loss account was
correspondingly reduced in the current year.
Relocation of the Registered office of the Company
The company's Registered Office was shifted with t e approval of the Board
from Jeevan Deep Building, 4th Floor. 1, Middleton Street, Kolkata- 700071
with effect from 2nd July 2007 to 4th Floor, SBI Ballygunge Branch
Premises, 50A, Gariahat Road, Kolkata 700 019, as the space offered by the
State Bank of India was urgently required by them for their own purpose.
The new space, which was warehoused by the Bank has also been allowed to be
used by The Company free of rent. The charge of address which was
appropriately notified through newspaper for public information was also
advised suitably to the Registrar of Companies, West Bengal, the Stock
Exchanges, National Housing Bank (NHB) etc.,
Net Worth of the Company
The Company lost its status, as a going concern in the year 2003-04 and
there has been no change in the position since then. The net worth of the
Company stands fully eroded and it is negative at Rs29456.10 lacs as at
31st March 2008.
The Company during the year under review did not accept any deposit from
the public within the meaning of section 58A of the Companies Act, 1956 or
the rules made thereunder. The Company's liabilities on account of
unclaimed public deposits including unencashed Refund/Interest warrants
stood at Rs. 305.24 lacs during the current year (reduced from Rs.321.08
lakhs in the last year). The amount had been fully funded.
Since the Public Deposits Scheme stood discontinued, credit rating thereof
was not required.
Various legal issues
(i) Though the Company settled all issues relating to the payment of
pension of its employees with the Regional Provident Fund Commissioner
(RPFC) on the basis of an order passed by the Hon'ble Calcutta High Court
,during the last year the former filed a stay application against the same
order and the decision thereon is still pending. The company feels that no
liability is likely to devolve on it on this score.
(ii) Following the inspection of the company's books by the Department of
Companies Affairs under Section 209A of the Complaint Act 1956 the Company
and its Directors received show-cause notices for violation of provisions
under section 625 read with section 211, 217(3), Section 301/299, etc. The
Directors filed petitions/suits under section 633 of the Companies Act
1956, and the Calcutta High Court in term of an order, exonerated the
concerned Directors in almost all the cases.
(iii) The cases filed by the Law Enforcing Agencies viz., Police & CBI in
regard to the frauds to the extent of Rs3.90 crores which took place during
the earlier years are in the various stages of evidence.
(i) The company's Patna property was offered for sale on completion of all
connected formalities in this behalf and the State Bank of India was found
to be the only intending buyer. However, State Bank of India required that
the original 'Agreement for Sale' executed at the time of acquiring the
property to be converted into registered sale deed before transferring the
same to them. When the company approached the Registrar it came to light
that Income Tax authorities had camped a general attachment order on all
properties belonging to the original seller notwithstanding that 'Agreement
for Sale' was subsisting at the material time. However, with the
cooperation of the seller and with the active assistance of SBI Patna local
office, the company has been advised that the attachment order has been
vacated and arrangements are in hand to effect transfer and registration of
the property soon.
(ii) The company received a legal notice from its only secured creditor
viz., State Bank of India demanding full payment of their dues to the
latter aggregating Rs. 316.38 crores including interest upto 31.03.2008.
The company sent a suitable reply stating its inability to make refund of
the entire amount because of its severe financial distress. Howevar, a
payment of Rs. 7.00 crores on account of interest dues has since been made
in response to the aforesaid notice.
The report on Corporate Governance as required under clause 49 of the
Listing Agreement with Stock Exchanges together with a Certificate from the
Company's Auditors confirming compliance is set out as a part of this
Management Discussion & Analysis Report
As per the requirement of the Listing Agreement with Stock Exchanges, a
separate report on Management Discussion & Analysis for the year under
review is attached to this report.
During the year, Shri FK.Bhattacharjee, Chairman & Director who retired on
18th April, 2008 was re-appointed on 19th April, 2008 as nominated by State
Bank of India. Shri Ashok Mukand, nominee Director of SBI consequent upon
his transfer on promotion, resigned from the Board on the 16th January 2008
and in his stead Shri Jayanta Kumar Sinha Chief General Manager, State Bank
of India, Kolkata LHO, was nominated by SBI as Director from 17th January
2008. The Board places on record its appreciation for the valuable services
rendered by Shri Mukand during his tenure as Director of the Company. Shri
M. K. Ray Chaudhuri who retired by rotation on the date of the last AGM
held on 6th June 2007 was reappointed as Director on the Board from the
same date. Shri K. Rama Mohan Rao Managing Director retired from the Board
on 18th December 2007 on his being repatriated to his parent Organisation
i.e., State Bank of India and Shri G.I.Mondal on deputation from State Bank
of India has been appointed in his stead as Managing Director from 19th
December 2007. The Board placed its appreciation for the valuable sei vice
rendered by Shri Rao as Managing Director of the Company. None of the
Directors (both Executive and NonExecutive) are holding any shares (both
own or held by / for other persons on beneficial basis) in the Company.
Exccpt the above, there has been no change in the composition of the Board
of Directors of the Company since the last report of the Directors on 7th
May 2007. The Directors of the Company are persons of eminence having vast
and varied experience in the field of Banking, Finance and other allied
The Board confirms that none of the Directors of the Company is
disqualified from being appointed as Director in terms of section 274(1)(g)
of the Companies Act, 1956 and necessary declaration in this regard has
been obtained from them.
The Company's shares are listed on the Stock Exchanges at Kolkata, Mumbai
and at National Stock Exchange of India Limited, Mumbai. The annual Listing
fees in respect of all the Stock Exchanges have been paid upto date. The
trading of snares continues to stand suspended by the Stock Exchanges.
As continuation of listing of the shares with the above Stock Exchanges
yields no benefits either to the investors or to the Company, the Directors
intend delisting of the shares from these Stock Exchanges, for which a
suitable Resolution has been proposed for the Members' approval.
Directors' Responsibility Statement:
Pursuant to Section 217 (2AA) of the Companies Act, 1956 Directors to the
best of their knowledge and behalf of confirm that:
(i) in the preparation of the Annual Accounts for the financial year ended
31st March, 2008, all the applicable accounting standards prescribed by the
Institute of Chartered Accountants of India have been followed along with
proper explanation relating to material departures, if any.
(ii) the Directors have adopted such accounting policies and have applied
them consistently and have made judgements and estimates that are
reasonable and prudent to 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 loss of
the Company for that period.
(iii) the Directors have taken proper and sufficient care of the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities.
(iv) the Directors have prepared the accounts for the financial year ended
31st March, 2008 on the basis of the fact that the Company is no longer a
going concern, as the operations of the Company were discontinued in the
Company has an Investor Grievance Committee to specially look into the
redress of investor grievances and the queries are dealt with
expeditiously. The Company continues to be a client of National Securities
Depository Limited and Central Depository Services (India) Limited and the
ISIN no. allotted to the Company's shares is INE 627A01012.
It is very unlikely that the Company in its present form, would be able to
rehabilitate itself in the near future. With the snowballing of the losses
from year to year and the total erosion of its net worth, the Company lost
its status as a fining concern and there is every possibility that sooner
or later the Company would be taken forward to its logical end. In the
absence of any concrete plan of financial and organisational restructuring
and without any ray of hope of recommencement of its business operations
the future outlook of the company seems bleak. The action of the creditor-
bank recalling their entire loan granted to the company also further
aggravated the issue.
The Auditors M/s S.N. Mukherji & Co. will retire at the ensuing Annual
General Meeting and being eligible, offer themselves for re-appointment.
M/s S.N. Mukherji & Co., have informed the Company that their appointment
if made, would be in conformity with the provisions of Section 224(1B) of
the Companies Act, 1956. The Directors recommend their appointment.
The observations made by the Auditors in their Report have been fully
explained in the Notes to the Accounts. However, our further comments on
the Auditors' Report are as under:
i) Para 3 of Auditors' Report
Since the Company ceased to be operational and is also not a going concern
from the year 2003-04, the figures for 'accumulated losses' and 'negative
net worth' further deteriorated because of losses sustained by the Company
during the current year too, as explained in Note No. 1 (Schedule No. 13).
It is not possible for the company with its current limitation, to alter
ii) Para (i) (c) of Annexure to Auditors' Report
Please refer to our remarks in item (i) above. In addition, as indicated in
Note 8 of the Notes to the Accounts, the treatment of fixed assets has been
done on the basis of the fact that the Company is not a going concern. The
Auditor statement reflects the factual position.
iii) Para (vii) of Annexure to Auditors' Report
The Company stopped its operations, closed its branches, discontinued its
loans and deposits businesses by virtue of the fact that it is not a going
concern. Hence the need for putting in place a separate internal audit
system has not been felt. However, sufficient control mechanism is in place
commensurate with the present level of operations of the Company.
iv) Para (x) of Annexure to Auditors' Report
The Auditors' statement reflects the factual position.
v) Para (xii) of Annexure to Auditors' Report
As the Company has been incurring losses on a continuing basis and stopped
all business operations and is also not a going concern, sufficient cash
was not available to enable it to repay its dues to the Bank fully. However
the Company made part payment of interest dues of this year from out of the
tax refunds received in the previous year. In 2006-2007 the total amount of
tax-refund (with interest) amounted to Rs.25.53 corers and the interest on
the loan according to our estimate was Rs.66.74 crores. Hence, the company
would not have been able to meet the full payment obligation in any case
because of shortage of cash. Besides, a reference is invited to para (x) of
the Annexure to Auditors' Report. As the Income Tax Appellate Tribunal's
decision in our favour was likely to be contested in the Supreme Court with
the permission of the 'Committee on Dispute' it was necessary for us to
retain some contingency fund with us in the event the former had allowed
the matter and the Supreme Court verdict went against the Company. The
amount had, however, been used to make part-payment of the interest dues to
the bank during the current year as stated earlier after the Committee on
Dispute withheld their permission. A further amount of Rs. 7.00 crores has
also been paid recent to SBI to reduce the interest dues as stated earlier.
Since the Company does not own any manufacturing facility, the provisions
of the Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 are not applicable. There is no foreign exchange
earning and outgo.
Particulars of Employees
At present the Company does not have any employees working with them.
The Directors wish to place on record their appreciation for the valuable
support received from the State Bank of India. They also wish to place on
record their gratitude to the National Housing Bank for their very valuable
support to the Company. The Directors would also like to place on record
their appreciation and gratitude to its shareholders who are with the
Company during its bad days.
On behalf of the Board of Directors
Place : Kolkata P.K. Bhattacharjee
Dated : 16th July, 2008 Chairman
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The financial performance of the Company during this year related basically
to the management of the realisation of funds locked up in the past in
various receivables as a conscious decision was taken as far back as in
2003 to stop booking fresh businesses in its books. Hence the bottomline
was simply an outcome of a run down of the receipt of meagre interest
income on bank deposits and the expenses incurred towards Company's
maintenance. The operating income thus represented interest income on
realised funds parked with bank for temporary periods and the other income
arising from miscellaneous sources like refund of excess stamp duty duly
paid in the past and reversal of certain liabilities which were no longer
considered necessary during this year particularly.
Loss / Profit
As expected the company recorded an increase in loss from Rs. 4.67 crores
to Rs.18.25 crores, which was due to non accrual of sufficient income
because of the fact that sources thereof were gradually getting dried up.
The accumulated losses stood at Rs.309.56 crores.
Since the Company ceased to be an operational entity, its income and
expenses are more or less on the anticipated lines and are not very much
subject to uncertainties and widespread variances. Accordingly, the risk
content of the truncated activities are negligible. The Company had been
taking appropriate steps to guard against the systemic and other identified
Internal Control Systems and their adequacy
Adequate internal control system commensurate with the size and the limited
activities of the company was put in place.
With huge debt burden, continued losses and insignificant income, the
future for the Company, in short, continues to look gloomy.
Declaration by the CEO on affirmation by Directors and Senior Management
Personnel of compliance with the code of conduct
I, G.I. Mondal, Managing Director and CEO of the company declare that all
the Members of the Board of Directors and Senior Management Personnel have
for the year ended 31st March 2008 complied with the code of conduct laid
down by the Board of Directors in terms of the Listing Agreement with the
Place : Kolkata (G.I. Mondal)
Dated : 16th July, 2008 Managing Director & CEO