INVESTSMART FINANCIAL SERVICES LIMITED ANNUAL REPORT 2010-2011 DIRECTOR'S REPORT The Shareholders Investsmart Financial Services Limited The Directors of your Company present the Fifteenth Annual Report along with the Audited Accounts for the financial year ended March 31, 2011. FINANCIAL RESULTS: Your Company's performance during the financial year 2010-11 is summarized below: (Rupees in Million) Particulars For the year For the year ended ended 31.03.2011 31.03.2010 Total Income 629.28 511.54 Profit/(Loss) before Interest, Depreciation and Tax 353.12 87.45 Interest and Finance Charges 214.59 161.06 Depreciation / Amortization 57.02 60.04 Profit/(Loss) Before Tax 81.51 (130.31) Provision for Tax (including Current, Deferred and Fringe Benefit Tax) - 43.94 Profit/(Loss) After Tax 81.51 (174.25) DIVIDEND: In the absence of adequate profits, Directors are unable to recommend dividend for the financial year 2010-11. OPERATIONS & OUTLOOK FOR THE CURRENT YEAR: During the year under review, your Company made a net profit of Rs.81.51 Mn. and has been successful in increasing its asset book to Rs. 5,007.69 Mn. as on March 31, 2011 from Rs. 3,301.32 Mn. as on March 31, 2010. Your Company has continued its focus on building a vibrant retail NBFC business and has realigned the NBFC operations with its renewed retail focus. Your Company has defined a revised retail organization structure to enable growth in the Asset Business and as a conscious strategy to build the retail asset portfolio; emphasis was given to build the Loan against Shares/ Mutual Funds book growth. DIRECTORS: Pursuant to provisions of the Companies Act, 1956, Mr. Shantanu Ambedkar and Mr. Prachetas Raykar, Directors of your Company, retire by rotation at the ensuing Annual General Meeting, and being eligible, offered themselves for re-appointment. The required resolutions re-appointing the above Directors at the forthcoming Annual General Meeting are included in the Notice of the said Annual General Meeting. CORPORATE GOVERNANCE: In terms of the directives of the Reserve Bank of India issued in respect of Corporate Governance, your Company has constituted various committees such as Risk Management Committee, Nomination Committee and Asset Liability Management Committee and has been adhering to the guidelines prescribed in respect of the same. AUDIT COMMITTEE: As per Section 292A of the Companies Act, 1956, your Company has constituted Audit Committee to review the financial statements of the Company and perform other functions as empowered by the Board, from time to time. Presently, the members of the Audit Committee are Mr. Hardeep Singh, Mr. Manasije Mishra and Mr. Shantanu Ambedkar. AUDITORS: The retiring auditors, namely, M/s. B S R and Company, Chartered Accountants, Mumbai hold office until the conclusion of the ensuing Annual General Meeting and are seeking their re-appointment. Members are requested to consider their appointment and authorize the Board of Directors to fix their remuneration for the financial year 2011-12. FIXED DEPOSITS: The Company has not accepted any deposits from the public or employees during the year under review. PARTICULARS OF EMPLOYEES: The information required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, are set out in the annexure and forms part of this Report. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217 (2AA) of the Companies Act, 1956 as amended, the Directors, based on the representations received from the Operating Management, and after due enquiry, confirm that: (1) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (2) The Directors have selected such 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 your Company at the end of the financial year and of the profit of your Company for that period; (3) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; (4) The Directors have prepared the annual accounts on a going concern basis. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT & FOREIGN EXCHANGE EARNINGS AND OUTGO: During the year under review, the Company did not have any foreign exchange earnings or expenditure / outgo. Since your Company does not own any manufacturing facility, other particulars as required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are not applicable. ACKNOWLEDGMENTS: Your Company maintained cordial relationships with The Reserve Bank of India and other regulatory authorities during the year under review. Your Directors are grateful for the support extended by them and look forward to receiving their continued support and encouragement. Your Directors would also like to place on record their appreciation for committed services extended by the employees of your Company. For and on behalf of the Board of Directors Sd/- Place: Mumbai Hardeep Singh Date : August 16, 2011 Chairman