Rajath Finance Ltd

Your Directors are pleased to present their Twenty Fifth Annual Report for the yearended on 31st March, 2010.

Financial Results

Your Company's performance for the year ended on 31 st March 2010 is summarized asunder:

Performance Highlights

During the year under Report, your Company has restarted its operations gradually, andhas earned total income of Rs. 37,23,519/- as compared to Rs. 38,67,485/- in the preciousyear. Further, profit after taxation is arrived at Rs. 19,22,865/- as compared to netprofit of Rs. 25,48,686/- in the precious year. The main reason behind the decrease in thenet profit is due to taxation provision. Further, the accumulated losses are substantiallydecreased from Rs. 47,01,914/- of previous year to Rs. 32,88,066/- in the current fiscal.

The Company is striving to bring the business in the profits and in the coming years itis envisaged that the performance of the Company will be very good.

INCREASE IN AUTHORISED SHARE CAPITAL

Members are aware that the Company requires funds to meet its financial requirements.Thereafter, the Board has decided to increase paid up capital. However, as the paid upcapital cannot be more than the authorised share capital, the Company has first toincrease its authorised share capital.

Hence, it is proposed to increase Authorised Share capital of the Company From Rs 5crores to Rs 7.5 crores and new shares, as and when issued, shall rank pari-passu with theexisting shares.

BUSINESS DEVELOPMENT STRATGEY

The Company is seeing opportunities lying into the business of the micro finance, andit believes that the micro finance area is the most thrust area of the economy. TheCompany has decided to expand the business activities to the Company into micro financeactivities also, in a phased and planned manner. Initially, the Company will establish itsown outlets or will appoint franchisees in 40 to 50 places in the State of Gujarat, Wherethe Company has solid base. The Company will adopt the same strategy in rest of parts ofthe Country also. The Company will appoint experienced core team and supporting menpowerfor establishing its presence if the micro finance business.

Board's Responsibility Satement

In pursuance of Section 217(2AA) of the Companies Act, 1956, the Directors confirm:

a) That in the preparation of annual accounts, the applicable accounting standards havebeen followed and that on material departures have been made from the same,

b) That They have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the accounting year and of theprofit and loss account for that year;

c) That they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956safeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities,

d) That they have prepared the annual accounts on a going basis.

Personnel

Your Company has now recommenced its activities, and is looking to build personnelstrength in the organization. Your Company considers human resources as the primarydrivers for the growth and development of the Company. During the period under review,your Company has continued its efforts for strengthening the relationship with personnel,your Company has made the workplace-environment free from any physical, psychological,verbal harassment. All employees of the Company are treated with highest dignity andrespect.

Your board sincerely thanks all the employees who have put in their hard work andhelped the Company in this tough periods.

Particulars of Employees

The Company has no employee drawing remuneration exceeding limits as specified in theCompanies (Particulars of Employees) Rules, 1975, as amended till date, and hence,particulars as mentioned in Section 217(2A) of the Companies Act, 1956, are not requiredto be given.

Directors

Dr. K K Khakhar, Director of the Company, is liable to retire by rotation at theensuring Annual General Meeting and being eligible offer himself for reappointment. Abrief Resume of Dr K K Khakhar is attached with Notice of the AGM.

Ms. Poonam Bagdai, Director of the Company resigned w.e.f 26th April, 2010. The BoardPut its sincere appreciation for services provided by Ms. Bagdai during her tenure asDirector

Corporate Governance

Your Company has adopted Corporate Governance Practices. The Company believes that theCorporate Governance is all about effective management of relationship among constituentsof the system, i.e. shareholders, management, employees, customers, vendors, regulatoryand the society at large. The Company has strong belief that this relationship can only bebuilt and strengthen through corporate fairness, transparency, and accountability. Adetailed report on Corporate Governance is attached to this Report. The Securities andExchange Board of India (SEBI) has made efforts to strengthen the Clause 49 of the ListingAgreement. Accordingly, a separate Report on Corporate Governance as well as theCertificate from M/s SADP & Co, Chartered Accountants, and the statutory Auditors ofthe Company are annexed to this Report of Board.

Auditors

M/s SADP & Co. Chartered Accountants, and retiring statutory auditors of theCompany, being eligible offer themselves for reappointment. Members are requested toappoint them as auditors of the Company to hold office from the conclusion of ensuinggeneral meeting until the conclusion of the next Annual General Meeting of the Company,and to authorize the Board to fix the remuneration of auditors.

Secretarial Audit

As directed by the Securities and Exchange Board of India (SEBI), Secretarial Audit isbeing carried out at the specified periodicity by M/s. MJP Associates, Practising CompanySecretaries,Rajkot

ECONOMIC SCENARIO

During the year under Report, the world has witnessed one of the worst recessionaryconditions in the history. Industrial output figures were shockingly decreasing and as aresult, problems such as unemployment, capital adequacy, postponement or cancellation ofnew projects & establishment etc. arised. However, since last few months, the economyis showing sing of recovery and is expected to be back on track of growth in next one year

INDUSTRY

The year 2009-10 started off amidst an uncertain economic environment driven by fearsof a global double-dip recession, low domestic industrial growth, the failure of monsoonsaffecting the kharif crop and weak consumer demand. Things changed for the better in thesecond half. Stabilisation of the global financial system, three substantive governmentstimulus packages, an accommodative monetary stance by the Reserve bank of India (RBI) andthe emphasis on public sector expenditure in the first (mid-term) budget of the newgovernment saw a resurgence of growth in H2 2009-10, especially in January-March 2010.

These measures resulted in improved business confidence and revival of consumer demand.A relatively benign interest rate environment throughout the second half of 2009-10 alsohelped. Even so, it needs stating that retail lending in 2009-10 was weak compared to acouple of years ago. Having faced rising delinquencies and higher credit risks in 2008-09and most of 2009-10, lending institutions remained cautious across all retail lendingbusinesses.

SEGMENTS

The Company does no have any segments, and hence, comments are not required.

PERFORMANCE

The performance of the Company was satisfactory as compared to the earlier years. TheCompany has earned total income of Rs. 37,23,519/- as compared to Rs. 38,67,485/- in theprevious year. further, profit after taxation is arrived at Rs. 19,22,865/- as compared tonet profit of Rs. 25,48,686/- in the previous year, The main reason behind the decrease inthe net profit is due to taxation to taxation provision. Further, the accumulated lossesare substantially decreased from Rs. 47,01,914/- of previous year to Rs. 32,88,066/- inthe current fiscal.

INTERNAL AUDIT SYSTEM

The Company has implemented proper and adequate systems of internal control to ensurethat all assets are safeguarded protected against loss from any unauthorised use ofdisposition and all transactions are authorised, recorded and reported correctly. theSystem also ensures formation and implementation of corporate policies for financialreporting, accounting, and information security

OUTLOOK FOR 2010-2011

The economy is predicted to continue the strong performance seen in 2009-10 and thebusiness outlook for Rajath is robust. In 2010-11, the company's approach would be tocontinue to grow by focusing of returns while balancing risk. It will launch new productlines, such as construction equipment finance and retail loans against securities; furtherstrengthen risk management practices; maintain investments in technology and humanresources to consolidate its position in the Industry

CAUTIONARY STATEMENTS

All statements made in Management and discussion Analysis have been made in good faith.Many unforseen factors may come into play and affect the actual results, which could bedifferent from what the Management envisages in terms of performance and outlook. Marketdate, industry information etc. contained in this Report have been based on informationgathered from various published and unpublished reports and their accuracy, reliability,and completeness cannot be assured.

Factors such as economic conditions affecting demand/supply and priced conditions indomestic & international markets in which the Company operates, and changes inGovernment regulations, tax laws, other statues and other incidental factors, may affectthe final results and performance of the Company

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

As the Company is engaged in service sector, and since few years activities have beenclosed down, details of consumption of energy are not required to be given. However theCompany has made enough efforts for minimizing the electricity expenses at its office, andthereby putting efforts for conservation of energy. The Company has not taken anysignificant steps for adoption of new technology during the year under Report.

Acknowledgment

Your directors put on record their whole hearted gratitude to bankers, employees of theCompany for their sincere efforts for the Company.

ANNEXURE'A TO THE DIRECTORS' REPORT

CORPORATE GOVERNANCE

Your directors present the Company's Report on Corporate Governance.

1. Company's philosophy on corporate Governance:

The Company believes in setting the highest standard of good and ethical corporategovernance practices to enhance the long-term shareholder value and protect the interestof shareholders, customers and others.

The main objective of Corporate Governance are:

1. Maximizing long-term shareholder value in a legal and ethical manner.

2. Ensuring fairness, courtesy and dignity in all transactions within and outside theBank with customers, investors, employees, competitors, government and the general public.

3. Open, transparent and merit-based management.

The Company is committed to following high standards of transparency, accountabilityand propriety. The Company has formed various committees of the Board of Directors tomonitor the various aspects of the business.

2 Board of Directors:

Composition of the Board:-

The Company's Board of Directors comprises of Five Directors Out of them, threedirectors. Mr. Manish Mehta and Dr. Kantilal Khakhar, & Mr. Ketan Dhulesia areNon-executive & independent directors of the Company.

Meetings:

Your Company is regularly convening and holding the Board Meetings and all businesstransacted therein have duly recorded in the Minutes book maintained for the purpose.

3. Remuneration to Directors:

Looking into the performance of the Company, the company has not paid any remuneration,including sitting fees to any of its Directors. The Company does not have any EmployeeStock Option Scheme at present.

4. Details of Directorship/Committee Membership or Chairmanship

# includes Directorship/Membership or Chairmanship of Committee In Rajath Finance Ltdbut excludes Directorship in or Membership or Chairmanship of may Committee In any PrivateLimited Companies/Foreign Companies,

Information placed before the Board of Directors:

The Company circulates alongwith Notice of the Board Meeting, a detailed Agenda which,interalia, contain following Items, as and when applicable:

a) Review of annual business plans of the business, capital budgets,, and updates.

b) Quarterly (Including periodic) results of the Company,

c) Materially important show cause, demand, prosecution and penalty notices, if any.

d) Fatal or serious accidents or dangerous occurrences,

e) Any material significant effluent or dangerous occurrences Pollution Problems,

f) Any issue which Involves possible public or product liability claims of asubstantial nature.

g) Significant development in the human resources and Industrial relations fronts,

h) Status of compliance with all regulatory, statutory and materia contractualrequirements.

The Board of Rajath Finance Limited is routinely presented with all information underthe above heads whenever applicable and materially significant. These are submitted eitheras part of the agenda papers well in advance of the Board meetings or are tabled in thecourse of the Board Meetings.

2. Materially significant related party transactions:

There have been no materially significant related party transaction, pecuniarytransaction or relationships between Rajath Finance Limited and its directors for the yearended on 31st March. 2010, that may have a potential conflict with the interests of theCompany at large.

Please refer Schedule 11-Notes to the Accounts

a) Composition

The Company has set up Audit committee of three directors Directors - Shri HiteshBagdai, CA Manish Mehta and Dr. K K Khaakhar. CA Manish Mehta being professionallyqualified as a Chartered Accountant, acted as the Chairman of the Audit.

b) Terms of Reference

The Terms of reference as stipulated by the Board to the Audit Committee are, ascontained in the Clause 49 of the Listing Agreement are as follows:

1) Oversight of the Company's financial reporting process and the disclosure of itsfinancial information,

2) Review of Company's financial and risk management policies,

3) Review of accounting and financial policies and practices,

4) Review of internal control and internal audit systems,

5) Discussion with Internal Auditor and Statutory Auditors on any significant findingsand follow-up thereon,

6) Review the company's financial statements and risk management policies,

Shareholders' Grievance Committee a) Terms of Reference:-

The Committee has been given responsibility to look after complaints, if any, ofinvestors to redress the same expeditiously. The Committee also approves requests forissue of duplicate share certificates, splitting/consolidation of share certificates,transfer and transmission of shares etc.

b) Composition:-

The Committee comprises of CA Manish Mehta, Dr. K K Khakhar, and Shri Ketan Dhulesia.CA Manish Mehta is the Chairman of the Committee.

c) The Committee has resolved almost all complaints received during the year.

Remuneration Committee

The Company is not making any payment to any of Directors, and hence, has not formedthe Remuneration Committee.

Communication to Shareholders

The quarterly results of the Company are published in any two of leading new newspapersof Gujarati and English Language.

General Body Meetings

Details of the last three annual general meetings are given below:

Registered Office

Rajth Finance Limited, 208-215, Star Plaza, Phulchhab Chowk, Rajkot-360 001

Annual General Meeting

The 25th Annual General Meeting (AGM) of the Company will be held on Wednesday, 25thAugust, 2010 at 11:00 A.M. at registered office of the Company, 208-215 Star Plaza,Phulchhab Chowk, Rajkot-360 001

Dates of book Closure

The Company's transfer books will be closed from 16th August, 2010, to 24th August,2010 ( Both days inclusive) for purpose of annual General.

Stock Exchange Listing

The Company's shares are presently listed on the Bombay Stock Exchange Ltd, Mumbai. TheCompany has already passed Resolution for delisting of its Securities from the AhmedabadStock Exchange Ltd. Ahmedabad, and Saurashtra Kutch Stock Exchange Ltd. Rajkot, and theapproval is awaited from the Stock Exchanges.

Stock code

Registrar and Transfer Agents

Company has appointed Registrar and Transfer Agent, the name and address is as follow:Link Intime India Pvt. Ltd.

211, Sudarshan Complex, Nr. Mithakhali Under Bridge, Ellisbridge, Amedabad-380 009

Phone/fax-079-26465179

Share Transfer System

The processing activities with respect to requests received share transfer are normallycompleted within 15 working days from the date of request.

Distribution Schedule as on 31st march, 2010:

Dematerialization of Shares

As per the notification issued by SEBI, the shares of the Company are tradedcompulsorily in dematerialized form by all investors with effect from 26th March, 2001, Ason 31st March, 2010, 96.5814% of the Company's paid up equity capital representing 3863255shares were held in demat form

Shareholders seeking any information/solution of any problem of query related toshares, share transfer; dematerialisation of shares etc. may kindly contact the Registrarand Transfer Agent of the Company.

ADDRESS FOR CORRESPONDENCE

[Clause 49(l)(d)]

The Company has laid down and adopted "Code of Conduct" for all Board Membersand core Management team of the Company. The Company believes that such Code of Conduct isnecessary for best Corporate Governance practices, and expects that all Board Members andCore Management team and here to this Code of Conduct.

It is hereby affirmed that all the Directors and Senior Management personnel havecomplied with the Code of Conduct and have given a confirmation in this regard.

(CLAUSE 49V OF LISTING AGREEMENT)

We have reviewed financial statements and cash flow statements for the financial year2009-ended on 31st March 2010. and to the best of our knowledge and belief:

(a) These statements fo not contain any materially untrue statement or omit anymaterial fact or contain statements that might ve misleading.

(b) These statements together present true and fair view of the Company's affairs andin compliance with existing accounting standards, applicable laws and regulations;

(c) No transactions entered into by the Company during the aforesaid year, which arefraudulent, illegal or in violation of the Company's code of conduct.

Further, we accept that it is our responsibility to establish and maintain internalcontrols. We have evaluated the effectiveness of internal control system of the Companyand have disclosed to the auditors and the Audit Committee, wherever applicable:

(a) Deficiencies in the design or operation of internal controls, if any, which came toour notice and steps have been taken/proposed to be taken to rectify these deficiencies

(b) Significant changes in the internal control during the year

(c) Significant changes in accounting policies during the year and that the same havebeen disclosed in the notes to the financial statements

(d) Instances of significant fraud of which we became aware and the involvementtherein, if any of the management or an employee having a significant role in thecompany's internal control system.

Auditors' Certificate on Corporate Governance

To the members of Rajath Finance Limited, Rajkot

We have examine the compliance of corporate governance by RAJATH FINANCE LIMITED,for the year ended on 31st March, 2010, as stipulated in clause 49 of the ListingAgreement of the said Company with stock exchange.

The compliance of conditions of corporate governance is the responsibility of themanagement. Our examination was limited to procedures and implementation thereof, adoptedby the Company for ensuring the compliance of the conditions of the Corporate Governance.It is neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanationsgiven to us, we certify that the Company has complied with the other condition ofCorporate Governance as stipulated in the above mentioned listing Agreement. As per therecords maintained by the Company on investor grievance is pending for a period exceedingone month.

We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency of effectiveness with which the Management hasconducted the affairs of the Company

For and on behalf of

SADP & Co,

Chartered Accountants

Sd/-

(S.G. Bhuptani)

Partner

M.No.: 107361

Place: Rajkot

Date: 25/07/2010