Your Directors are pleased to present the Twenty Nineth Annual Report along with Audited Accounts for the year ended March 31, 2007.

Financial Highlights

Rs. in Lacs

Operational review

During the year under review, the Company achieved a Profit before Tax of Rs. 11014.54 Lacs compared to Rs. 13951.64 in previous year. The Profit after Tax was Rs. 11019.01 Lacs as compared to Rs. 13941.64 Lacs in the previous year. An amount of Rs. 2203.80 Lacs was transferred to Statutory Reserve Fund pursuant to Section 45 (1) C of the Reserve Bank of India Act, 1934. The Company's Net Worth as on March 31, 2007 stood at Rs. 326.64 Crores as against Rs. 216.40 Crores last year.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMY AND INDUSTRY OVERVIEW

India is one of the fastest growing economies in the world with a rapidly expanding financial services sector. The Indian financial services industry has experienced significant growth in the last few years. There has been a considerable broadening and deepening of the Indian financial markets due to various financial market reforms undertaken by the Indian regulators, the introduction of innovative financial instruments in the recent years and the entry of sophisticated domestic and international financial services participants. This is particularly evident in the non banking financial services sector where new products and expanding delivery channels have helped these sectors to achieve high growth rates recently. The financial sector is also a large consumer of information technology related products and solutions. 

The economy has reported a growth of 9.2 percent during the financial year 2006-2007. The Gross Domestic Product (GDP) at Factor Cost (at current prices) was reported to be Rs. 3717.5 Thousands Crores. Services contributed as much as 68.6 % of the overall average growth in GDP in the last five year between 2002-2003 and 2006-2007. The dependency on agriculture and industry sector has declined in drastic way during recent time. As a result of this during 2006-2007, while the share of agriculture in GDP declined to 18.5% and the share of industry and services improved to 26.4% and 55.1% respectively. Financial services accounted approximately 14% of total GDP in fiscal 2007.

Service sector growth has continued to be broad based. Among the three sub-sectors of services, ‘trade, hotel, transport and communication services' has continued to boost the sector by  growing at double digit rates for the forth successive year. Impressive progress in information technology (IT) and IT enabled services, both rail and road transport, and fast addition to telephone connections, played a key role in such growth. The capital market indexes, although not a true indicator of economic growth has also touched the record all time high during the financial year 2006-2007. The share prices of almost all the sectors have reached their all time high.

NBFCs are at present in the competing fields of vehicle financing, hire-purchase, lease, personal loans, working capital loans, consumer loans, housing loans, loans against Shares, investments, distribution of financial products, etc. NBFCs function where the risks are higher than returns, recovery has to be the focus area, loan-ticket size is small, appraisal and disbursement has to be speedy and where flexibility in terms of loan size and tenor is required.

Entry of new NBFCs has resulted in a strong competitive environment. Under this scenario, NBFCs are now under pressure to cut costs and to develop a focused marketing approach on selected customer segments by offering more personalized services.

OPERATIONAL OVERVIEW OF THE COMPANY

The Company has been able to raise funds from Banks/Financial Institutions at competitive costs and investments made by the company are giving good returns in terms of Dividend as well as appreciation.

OPPORTUNITIES & THREATS

The financial Sector is growing at a rapid pace providing lot of opportunities to NBFC's, particularly in arena of Wealth Management, Insurance and Financing Business. The Company has, in association with its other group Companies, identified Life Insurance Business as one of the arena for further investments and growth.

For this purpose, RanbaxyHolding Company (RHC) (an entity under ownership/control of Malvinder Mohan Singh and Mr. Shivinder Mohan Singh, Promoters of the Company) has entered into an Agreement with M/s. Aegon International N.V., The Hauge, Netherlands, for setting up life Insurance business in India through a Joint Venture (JV).

The equity investments in the JV for RHC and its Affiliates (that includes the Company) are to be made through Religare Insurance Holding Company Limited (RIHCL) a special purpose vehicle (SPV) incorporated for the purpose. 

The Key threats to the Company's business are changes in regulatory framework for NBFC's, attraction & retention of human capital and market related risks.

The Company manages all these risks by maintaining a conservative financial profile and by following prudent business and risk management practices.

FUTURE OUTLOOK  

The Company intends to participate in this JV by making equity investments on the SPV for which the Company has applied for requisite permission from Reserve Bank of India.  

The Company intends to increase its areas of business and focus on making strategic investments in few selective sectors. 

RISKS & CONCERNS 

The Company is exposed to risks that are specific to its business and the environment within which it operates, like hardening of interest rates, market and credit risks, competitiveness of the financing industry etc. The Company manages these risks by maintaining a conservative financial profile and by following prudent business and risk management practices. 

HUMAN RESOURCES\ 

The Company is deriving maximum output from the existing employees through motivation and in order to conserve costs, no recruitments have been made.  

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY 

The Company has proper and adequate system of Internal Control commensurate with its size and business. The Company ensures adherence to Internal Control Policies and Procedures as well as all regulatory compliances. The Company has an Audit Committee of the Board of Directors which meets regularly to review, inter-alia, adequacy of Internal Controls and Audit Findings on various aspects of the business. 

CAUTIONARY STATEMENT 

Statement in this “Management Discussion and Analysis” describing the Company's objectives, expectations or predications may be within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied in such forward-looking statement. The Company undertakes no obligation to publicly update or revise any forward looking statements whether as a result of new information, future events or otherwise. 

Dividend 

To conserve the resources for business requirements of the Company your Directors do not recommended any Dividend for the financial year ended March 31, 2007. 

Fixed Deposits 

During the year under review, the Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975.  

Directors 

In terms of Article 100 of the Articles of Association of the Company, Mr. Malvinder Mohan Singh, Mr. V. K. Kaul and Mrs. Aditi Shivinder Singh Directors of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The requisite disclosure regarding the above Directors has been made in the Report on Corporate Governance which forms part of this Report. 

Subsidiary Companies

During the year Shimal Research Laboratories Limited (SRLL), a Wholly Owned Subsidiary of the Company increased its Equity Stake in Fortis Clinical Research Limited (FCRL) a company engaged in business of Bio- Equivalence research, thereby making FCRL its wholly owned subsidiary effective from June 7, 2006.

The Company subscribed to a Rights Issue made by SRLL thereby acquiring 2,79,00,000 additional Equity Shares of Rs. 10 each ( 4650000 Equity Shares of Rs. 10 each fully paid up and 23250000 Equity Shares of Rs. 10 each @ Rs. 2 paid up) on January 12 & 25, 2007 respectively.

SRLL issued and allotted 93,40,000 Equity Shares of Rs. 10 each on preferential allotment basis to Ranbaxy Laboratories Limited on February 5, 2007 thereby diluting the stake of the Company in SRLL to 24.91 %.

The audited statement of accounts of Shimal Research Laboratories Limited and Fortis Clinical Research Limited for the year ended March 31, 2007 as required under Section 212 of the Companies Act are annexed.

Consolidated Financial Statements 

As required under Clause 32 of the listing Agreements with the Stock Exchanges, Audited consolidated Financial statements form part of the Annual Report. 

Listing 

The Equity Shares of the Company continue to remain listed on Bombay Stock Exchange Limited (BSE) and Delhi Stock Exchange (DSE). The Company has paid the requisite Annual Listing Fee to BSE and DSE for the financial year 2007-08. 

42,45,808 Equity Shares of Rs. 10 each issued and allotted by the Company on November 30, 2001, pursuant to a scheme of amalgamation approved by the High Court of Delhi on January 12, 2001, were listed and permitted for trading in BSE with effect from Monday July 30, 2007. 

Directors' Responsibility Statement 

In terms of the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby state and confirm as under:  

(i)                 that in the preparation of the annual accounts for the year ended on March 31, 2007, the applicable accounting standards had been followed along with proper explanation relating to material departures; 

(ii)               that the Directors had selected appropriate accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2006-2007 and of the profit of the Company for that period; 

(iii)             that the Directors had taken proper and sufficient care for 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)             that the Directors had prepared the annual accounts of the Company on a going concern basis. 

Particulars of Employees 

None of the employees is in receipt of remuneration for the year, which in aggregate was more than the limit prescribed under Section 217(2A) of the Companies Act, 1956 and rules made thereunder. 

Corporate Governance 

A separate Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed as a part of this Report along with the Auditors' Certificate thereon. 

Auditors and Auditors' Report 

M/s R.V. Shah & Co., Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. The Company has received a letter from the Auditors to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956. 

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo 

The Company is not engaged in manufacturing activities and, therefore, the particulars as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies' (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding Conservation of Energy, Research and Development and Technology Absorption are not applicable.  

There were no Foreign Exchange Earnings and Outgo during the year. 

Acknowledgement 

The Board wishes to place on record its sincere appreciation for the continued assistance, support and co-operation extended to the Company by the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review.  Your Directors also wish to place on record their deep sense of appreciation for the committed services of the staff of the Company.

Place: New Delhi                                                            (Japna Malvinder Singh)                                             (Vinay Kaul)
Date: August 22, 2007                                                     Managing Director                                                    Director

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