BOARD'S REPORT

To the Members

Your Directors are pleased to present their 61st Annual Report together with the audited financial statements of the company for the year ended 31st March 2018.

1. FINANCIAL PERFORMANCE (Rs lakh)

* Interim Dividend for the financial year 2017-18 was paid during April 2018

Equity Dividend recommended for the financial year 2017-18, if approved by the members, will be recognised as a liability during the financial year 2018-19

2. BUSINESS

For the year under review, the company disbursed Rs 54,964 lakh in hire purchase operations as against Rs 53,791 lakh during the previous financial year. The collection efficiency continues to be good. Your directors hope to achieve better business disbursements and profitability in the coming years.

3. CHANGE IN NATURE OF BUSINESS, IF ANY

During the year, there was no change in the nature of business of the company.

4. DIVIDEND Preference Shares

Your Directors have, at their meeting held on 28th March 2018, declared an interim dividend of Rs 10 per share on 10% Redeemable Cumulative Preference Shares of Rs 100 each and a pro rata dividend on 9% Redeemable Cumulative Preference Shares of Rs 100 each for the financial year ended 31st March 2018 amounting to Rs 110.61 lakh. The dividend distribution tax on the above is Rs 22.51 lakh.

Equity Shares

Your Directors are pleased to recommend a dividend of Rs 1 per equity share (10% on the face value of equity share of Rs 10 each) for the year ended 31st March 2018 amounting to Rs 500.00 lakh. The dividend distribution tax works out to Rs 102.80 lakh.

5. TRANSFER TO RESERVES

No amount has been proposed to be transferred to general reserve.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations), a report on Management Discussion and Analysis, which forms part of this report, is set out in Annexure 1.

7. REDEMPTION OF SECURED, REDEEMABLE, NON-CONVERTIBLE DEBENTURES

As per the terms and conditions of the Public Issue Prospectus dated 18th February 2015, your company has redeemed Non-Convertible Debentures issued under Option III, IV and V aggregating to Rs 1,535.32 lakh. The repayment was made on 31st March 2018 to the respective Debenture holders.

Further, as per the terms and conditions of the Public Issue Prospectus dated 30th March 2016, your company has redeemed Non-Convertible Debentures issued under Option I and II aggregating to Rs 3,432.09 lakh. The repayment was made on 18th May 2018 to the respective Debenture holders.

8. ALLOTMENT OF REDEEMABLE CUMULATIVE PREFERENCE SHARES ON PRIVATE PLACEMENT BASIS

During the year, your company has issued and allotted 9% Redeemable Cumulative Preference Shares of Rs 100 each for an amount of Rs 835 lakhs.

9. DEPOSITS

The total deposits with the company as at 31st March 2018 stood at Rs 16,296.73 lakh as against Rs 14,959.06 lakh as at the end of the previous year.

As at the end of the financial year 2018, 403 public deposits aggregating to Rs 274.30 lakh were due for repayment, but remained unclaimed. The Company has been regularly reminding the depositors about the maturity and out of the said deposits, 169 deposits amounting to Rs 153.94 lakh have since been claimed and repaid / renewed as per their instructions.

10. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the year 2017-18, your Company has transferred unclaimed matured debentures and deposits amounting to Rs 2.91 lakhs to Investor Education and Protection Fund.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. Cessation

Your Directors regret to inform that Sri A Shanmugasundaram, Independent Director, passed away on 19th September 2017. The Board places on record it's deep appreciation for the valuable guidance provided by him during his long association with the Company.

b. Retiring by rotation

In accordance with the provisions of Section 152(6) of the Companies Act 2013, Dr. M Manickam, Chairman (DIN: 00102233) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

c. Continuation of Directorship

In terms of Regulation 17(1A) of the Listing Regulations as amended on 9th May 2018, Sri P S Gopalakrishnan, Non-Executive Independent Director, who is aged more than 75 years, will be continuing as an Independent Director till the end of his present tenure, i.e., up to 26th September 2019, which has been recommended by Nomination and Remuneration Committee and Board of Directors to members.

d. Key Managerial Personnel

In terms of Section 203 of the Companies Act 2013, Sri M Balasubramaniam, Vice Chairman and Managing Director, Dr S Veluswamy, Chief Executive Officer, Sri M K Vijayaraghavan, Chief

Financial Officer and Sri S Venkatesh, Company Secretary are the Key Managerial Personnel (KMPs) of the Company.

e. Remuneration Policy

Company's policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Act are covered in the Corporate Governance Report which forms part of the Board's Report. The policy on remuneration is set out in Annexure 2. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as required under Section 92(3) of the Act and is enclosed as Annexure 3 in the prescribed form MGT-9 which forms part of this Report.

f. Number of Meetings of the Board

Five (5) meetings of the Board of Directors of the Company were held during the year. For details of the meetings, please refer to the Corporate Governance Report, which forms part of this Report.

g. Independent Directors' Declaration

Sri P S Gopalakrishnan, Dr A Selvakumar, Smt. Priya Bhansali and Sri K P Ramakrishnan who are Independent Directors, have submitted declarations that each of them meet the criteria of independence as provided in sub-section (6) of Section 149 of the Act and Regulation 25 of the Listing Regulations. Further, there has been no change in the circumstances which affect their status as independent directors during the year.

h. Code of Conduct for Directors and Senior Management

The Directors and members of the Senior Management have confirmed compliance with the code of conduct. A declaration to this effect has been signed by Vice Chairman and Managing Director and forms part of the Annual Report.

i. Inter se relationship amongst Directors

Except Dr M Manickam, Chairman, Sri M Balasubramaniam, Vice Chairman and Managing Director and Sri M Srinivaasan, Director who are related to each other, none of the other Directors is related to each other within the meaning of the term "relative" as per Section 2(77) of the Companies Act 2013 read with Listing Regulations.

j. Board Evaluation

In terms of the requirements of Companies Act 2013 and Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, individual Directors as well as the evaluation of its Committees.

The evaluation was carried out based on a structured questionnaire which includes performance criteria such as performance of duties and obligations, independence of judgement, level of engagement and participation, contribution in increasing the Board's over-all effectiveness etc. Your directors have expressed their satisfaction on functioning and performance of Individual Directors, Board and its Committees.

12. AUDIT COMMITTEE

The present Audit Committee has three non-executive directors as members of which two are Independent Directors.

The composition of the Committee is given below:

a. Dr A Selvakumar, Chairman

b. Sri M Srinivaasan, Member

c. Sri K P Ramakrishnan, Member

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the financial year 2017-18, there has been no loans, guarantees or investments which would attract the provisions of Section 186 of the Act.

14. TRANSACTIONS WITH RELATED PARTIES

The Company has entered into contracts or arrangements with the related parties in the ordinary course of business and these are on arm's length basis only. There are no contract or arrangement entered into with Related Party(ies) during the year to be disclosed under Sections 188(1) and 134(h) of the Companies Act 2013.

15. INTERNAL CONTROL

The information about internal controls is set out in the Management Discussion and Analysis Report which forms part of this Report.

16. RISK MANAGEMENT

The Risk Management is overseen by the Risk Management Committee of the Company. The Committee oversees the Company's processes and policies for determining risk tolerance against established levels. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuous basis. For details, please refer to the Management Discussion and Analysis Report which forms part of the Board's Report.

17. VIGIL MECHANISM

The Company has established a vigil mechanism of Directors and employees to report their genuine concerns. During the year, no complaint has been received in this regard. For details, please refer to Corporate Governance Report which forms part of this Report.

18.CORPORATE GOVERNANCE REPORT

As required under Regulation 34(3) and Schedule V to the Listing Regulations, a report on Corporate Governance and a certificate from the auditors of the company regarding compliance of the conditions of Corporate Governance form part of the Annual Report.

19. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013

The Company has put in place a Sexual Harassment Prevention Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013. An Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees are covered under this Policy. During the year 2017-18, there were no complaints received in this regard by the ICC.

20. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has put in place necessary internal financial controls which are adequate and are operating effectively. The controls are adequate for ensuring the orderly and efficient conduct of the business, completeness of accounting records and timely preparation of reliable financial information, besides adherence to the Company's policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy, etc.

21. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act 2013, your directors confirm, to the best of their knowledge and belief that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgements 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 and of the profit of the company for the financial year;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

22. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and the details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules 2014 have been disclosed in Annexure - 4. Further, details regarding composition of Corporate Social Responsibility Committee and other particulars are provided in the Corporate Governance Report which forms part of this report.

Your Company has so far spent Rs 10.21 lakhs as against Rs 44.68 lakhs required to be spent during the previous financial year 2016-17. The unspent balance amount of Rs 34.47 lakh for previous year 2016-17 was also spent during the financial year 2017-18.

23. AUDITORS

a. Statutory Auditors

M/s P K Nagarajan & Co., Chartered Accountants (ICAI Regn. No. : 016676S) were appointed as statutory auditors of the Company at the 60th Annual General Meeting to hold office up to the conclusion of the 65th Annual General Meeting. They have confirmed their eligibility under Section 141 of the Companies Act 2013 and the rules framed under the Act for continuation of their term.

M/s. P K Nagarjan & Co, Chartered Accountants, have audited the accounts of the company for year 2017-18 and submitted their report thereon. There has been no qualification, reservation, adverse remarks or disclaimer given by the Auditors in their report.

b. Secretarial Auditors

The Board appointed M/s. S Krishnamurthy & Co, Practicing Company Secretaries, Chennai as Secretarial Auditors for the year 2017-18 and they have given their Secretarial Audit Report for the financial year 2017-18. The Secretarial Audit Report for the financial year 31st March 2018 is set out in Annexure - 5.

M/s. S Krishnamurthy & Co, Secretarial Auditors, have submitted their report for the financial year 2017-18 and there has been no qualification, reservation, adverse remarks or disclaimer given by the Auditors in their report.

24. PARTICULARS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT 2013

Particulars as required under Section 134(3)(m) of the Companies Act 2013 read with Companies (Accounts) Rules 2014 are given below:

a. The Company has no activity involving conservation of energy or technology absorption;

b. The Company does not have any Foreign Exchange Earnings; and

c. Foreign Exchange Outgo : Rs 95.48 lakh

The disclosures in terms of Section 197(12) of the Companies Act 2013 read with rule 5(1), (2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 relating to remuneration is enclosed as Annexure 6.

25. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT

There are no significant and material orders passed by the regulators or courts or tribunals affecting the going concern status of your company and its operations in future.

26. MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments which occurred between the end of the financial year of the company and the date of this report affecting the Company's financial position.

27. EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under sub-section (3) of Section 92 of the Companies Act 2013 is enclosed as Annexure - 3 in the prescribed Form MGT-9 and forms part of this Report.

28. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF NON-EXECUTIVE DIRECTORS

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company.

29. SECRETARIAL STANDARDS COMPLIANCE

Your Directors confirm that the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India in relation to Board and General Meetings.

30. ACKNOWLEDGEMENT

Your Directors wish to place on record the valuable assistance and excellent co-operation extended by the members, banks, financial institutions, rating agencies, Reserve Bank of India and other regulatory authorities. The Board of Directors wish to convey their sincere thanks to the depositors and debenture holders of the company for their continued patronage. They also wish to appreciate the excellent services rendered by the employees of the company.

We pray the Goddess SAKTHI to continue to shower Her blessings and to guide us in all our endeavors.