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South Asia Financial Exchange Ltd.

BSE: 511158 Sector: Financials
NSE: N.A. ISIN Code: N.A.
BSE 05:30 | 01 Jan South Asia Financial Exchange Ltd
NSE 05:30 | 01 Jan South Asia Financial Exchange Ltd

South Asia Financial Exchange Ltd. (SOUTHASIANFIN) - Director Report

Company director report

South Asian Financial Exchange Limited DIRECTORS' REPORT Your Directors have pleasure in presenting the Twelfth Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 1998. AMALGAMATION OF ONLINE FINANCIAL SERVICES LIMITED The scheme of Amalgamation of Online Financial Services Ltd. (ONLINE) with your Company, which was approved at the Extra Ordinary General Meeting of the Company held on 9th March,1998 was approved by the High Court of Judicature at Madras vide its Order dated 24th April, 1998 and the Amalgamation is effective from 1st April, 1997. Accordingly, the Annual accounts being presented to the Members are the merged accounts in which the accounts of ONLINE for the year ended 31st March, 1998 have been incorporated. As provided in the scheme of Amalgamation, the allotment of the Company shares to erstwhile shareholders of ONLINE was made on 21st August, 1998. REVIEW OF OPERATIONS Your Company, as a matter of its corporate policy, has been extendiny Lease/Hire Purchase finance mainly to the corporate segment. On account of the liquidity constraints faced by this sector, there were defaults in repayment of lease and hire purchase instalments resulting in significant increase in the level of Non Performing Assets (NPAs) of your Company for the year ended 31 st March,1998. The low collections from the corporate segment together with the reduction in Fixed Deposit base adversely affected the liquidity position of the Company. Accordingly, your Company was forced to reduce the size of its business, resulting in increase in the NPAs as a percentage of total business done during the year under reference. In January, 1998, Reserve Bank of India (RBI) had prescribed stricter prudential norms with regard to provisioning for NPAs, income recognition, capital adequacy ratio, etc. The cumulative problems faced by Non Banking Finance Companies (NBFCs) during the last two years resulted in your Company suffering a loss of Rs.9 crores for the year ended 31st March, 1998. Your Company is seized of the problems and is exploring various alternatives of its revival including the identification of a new Partner who could help your Company to survive in a more competitive environment. Your Directors are confident that with an improvement in the economy a major portion of the overdues will be recovered and the provisions made during the year under reference in accordance with the RBI guidelines reversed Your Company has recently reorganised its existing manpower with a view to improving the collection performance. Your Company has also drawn up strategies to downsize the business levels, reduction of overheads, etc., to improve the profitability and liquidity in the light of the changing economic scenario. Your Directors are pleased to inform that the Foreign Investment Promotion Board (FIPB), vide its letter No.3/ 69/SIA/NFC/97-NRI dated August 4, 1998, has approved the investment of 12,50,000 - 7% Cumulative Convertible Preference Shares of Rs.100/ - each aggregating Rs 12,50,00,000/- by Maika Holdings Berhad, Malaysia, (MAIKA) in your Company. Despite the South East Asian crisis, your Directors re confident of pursuing MAIKA to go through the investment. DIVIDEND In view of the losses incurred for the year ended 31st March, 1998, your Board of Directors considered it prudent not to recommend dividend for the year. FIXED DEPOSITS The new regulatory framework issued by RBI also contained severe restrictions on the mobilisation of deposits by the NBFCs. Your Company is well positioned to meet the revised guidelines on deposits within the time stipulated by RBI. The fixed deposits held on 31st March, 1998 stood at Rs.3.81 crores (previous year Rs.7.77 crores). At the close of the year there were deposits aggregating Rs.1.22 crores remaining unclaimed or due to be renewed and efforts are being made to obtain the depositors instructions. With continued apathy of depositors towards NBFCs, the refund requests were in far excess of the renewals. As a result of this trend, there had been a delay to meet the depositors' obligation on due dates. Your Company, in fact, prematurely encashed investment in Government Securities to pay off refund requests from depositors resulting in a shortfall in the maintenance of liquid assets. DIRECTORS During the year, Messrs V. Srinivasan, Ram V. Tyagarajan, Manikam Ramaswamy, S. Nandagopal and P.C.D. Nambiar resigned from the Board. The Board places on record its appreciation of the valuable services rendered by them during their tenure on the Board of the Company. Mr. V.S. Narasimhan was appointed as an additional director, pursuant to Section 260 of the Companies Act,1956. He vacates the office at the ensuing Annual General Meeting and a Notice has been received from a Member proposing his appointment on the Board of your Company. Mr. M Narayanamurthi was appointed as a Managing Director for a period of five years with effect from 1st July, 1998 at the Board Meeting held on 29th June, 1998. Mr M Narayanamurthi is also the Managing Director of Premier Housing and Industrial Enterprises Limited . Mr M Narayanamurthi, retires by rotation and is eligible for re- appointment. AUDITORS M/s. Price Waterhouse, Chartered Accountants, Chennai, retire from the office of Auditors and are eligible for re-appointment as Auditors of the Company till the conclusion of the next Annual General Meeting. The Auditors observations in paragraphs 2.1,2.2 and 2.3 of the Auditors' Report refer to note nos.3,4 and 5 on Schedule 16 of the Accounts and are self explanatory. With regard to the observation in paragraph 2.4, the Company has obtained a legal opinion and is confident of winning the case on appeal and there may not be any tax liability on this account. With regard to paragraphs 2.5 and 2.6, your Directors are confident of recovering the monies due and the requisite steps have already been initiated in this direction. PARTICULARS OF EMPLOYEES Information as per Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, forms part of this report. However, as per the provisions of Section 219(1)(b) (iv) of the Companies Act,1956, the Report and Accounts are being sent to all shareholders of the Company excluding the statements of particulars of employees under Section 217(2A) of the Act. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company. INFORMATION AS PER SECTION 217(1)(e) OF THE COMPANIES ACT,1956 The Company has no activity relating to conservation of energy or technology absorption. During the year under reference, the Company did not have any foreign exchange earnings or outgo. APPRECIATION Your Directors greatly appreciate the excellent assistance and support of the Banks and Financial Institutions. Your Directors also wish to place on record their appreciation of the devoted service rendered by the employees of the Company at all levels. On behalf of the Board K. Raman Director Chennai 600 008 M. Narayanamurthi 30th November 1998 Managing Director