MANAGEMENT DISCUSSION AND ANALYSISA. INDUSTRIAL STRUCTURE AND DEVELOPMENT
Economy
India's GDP growth for FY 2010-11 is at 8.5%. The growth, which is fastest in threeyears, has come on the back of a sharp recovery in farm output, but high inflation remainsan area of concern.
B. OPPORTUNITIES AND STRENGTHS
In view of the cut throat competition in the NBFC Sector and due to lack of levelplaying field, your company has excited from the sector and has surrended its NBFCcertificate to Reserve Bank of India. We have consolidated our operations and repayed theentire public deposits and loans from banks. At present NCC Finance Ltd is a debt freecompany. The company is exploring various alternatives available for restructuring thebusiness.
REPORT ON CORPORATE GOVERNANCE
In compliance with Clause 49 of the Listing Agreement entered into with the StockExchanges, the Company hereby submits the report on the matters as mentioned in the saidclause.
1. PHILOSOPHY OF THE COMPANY ON THE CODE OF GOVERNANCE:
The Company aims at achieving transparency, accountability and equity in itsoperations, and in all interactions with the stakeholders, including the shareholders,employees, government and other constituents while fulfilling the role of a responsiblecorporate representative committed to good corporate practices. The Company is committedto achieve the good standards of Corporate Governance.
2. BOARD OF DIRECTORS:
As on 31st March, 2011 the Board of the Company consists of Four Directors. The detailsof the Composition and Category of Directors, number of Board Meetings held during theyear, attendance of the Directors at the Board Meetings and other Directorships held bythe Directors are as follows:
| Name | Category | Designation | No. of Board Meetings held during the last financial Year | No. of Board Meetings Attended | No. of Memberships in Boards of other Public Companies | Attendance of each Director at last AGM |
| | | | | Board | # Committee | |
| Sri A G K Raju | Promoter/ Non Executive Director | Director | 4 | 4 | 3 | 5 | No |
| Sri A S R Raju | Promoter/ Non Executive Director | Director | 4 | 2 | 5 | NIL | No |
| Sri Y D Murthy | Non Executive and Independent Director | Director | 4 | 4 | 5 | 1 | Yes |
| Sri M Peddi Raju | Non Executive and Independent Director | Director | 4 | 3 | NIL | NIL | Yes |
# Membership in Audit and Investor/Shareholder Grievance Committee of Public LimitedCompanies (including NCC Finance Ltd) only.
The Meetings of the Board of Directors of the Company were held on the following dates:12th May,2010, 31st July, 2010, 8th November, 2010 and 9th February, 2011.
Information Supplied to the Board
As a policy measure, all the major decisions, which involve new investments and capitalexpenditure, in addition to the matters which statutorily require Board approval, are putup for consideration of the Board. The relevant information is regularly provided to theBoard as part of the agenda papers well in advance of the Board meetings or is tabled atthe Board Meeting. The information provided to the Board include
• Annual operating plans & budgets and any updates.
• Capital budgets and any updates.
• Quarterly, half yearly and annual results of the Company.
• Minutes of the meetings of the Audit Committee and other Committees of theBoard.
• Show cause, demand, prosecution notices and penalty notices which are materiallyimportant.
• Fatal or serious accidents, dangerous occurrences, any material effluent orpollution problems.
• Any material default in financial obligations to and by the company, orsubstantial non-payment by clients.
• Non-compliance of any regulatory, statutory or listing requirement andshareholders service such as nonpayment of dividend, delay in share transfer etc.,
The Board also periodically reviews compliance reports of all laws applicable to thecompany, prepared by the Company as well as steps taken by the company to rectifyinstances of non-compliances.
Code of Conduct
The Board of Directors of the company has laid a Code of Conduct for Directors andSenior Management Personnel. The Code of Conduct is posted on the Company's web-sitewww.nccsoftech.com. All Directors and designated personnel in the senior management cadreof the Company have affirmed compliance with the code for the year under review. Thedeclaration to this effect which is signed by Sri A G K Raju, Director is annexed to thisreport.
3. AUDIT COMMITTEE OF THE BOARD:
In terms of clause 49 of the Listing Agreement, the Audit Committee comprises of threeDirectors viz., Sri Y.D. Murthy (Chairman of the Committee), Sri M Peddi Raju and SriA.G.K.Raju. The Committee met four times during the financial year on the following dates,
12th May, 2010, 31st July, 2010, 8th November, 2010 and 9th February, 2011.
The terms of reference as stipulated by the Board to the Audit Committee include
a. Oversight of the Company's financial reporting process and the disclosure of itsfinancial information.
b. Recommending the appointment and removal of external auditors, fixation of audit feeand also approval for payment for any other services.
c. Reviewing with management the annual financial statements before submission to theBoard, focusing primarily on
(i) Any changes in accounting policies and practices.
(ii) Major accounting entries based on exercise on judgment by management.
(iii) Qualifications in draft audit report.
(iv) Significant adjustments arising out of audit.
(v) The going concern assumption.
(vi) Compliance with accounting standards.
(vii) Compliance with Stock Exchange and legal requirements concerning financialstatements.
(viii) Disclosure of any related party transactions.
d. Reviewing with the management, external and internal auditors, and the adequacy ofinternal control systems.
e. Reviewing with the management, the quarterly financial statements before submissionto the Board for approval.
f. Discussion with internal auditors any significant findings and follow up there on.
g. Reviewing the findings of any internal investigations by the internal auditors intomatters where there is suspected fraud or irregularity or failure of internal controlsystems of a material nature and reporting the matter to the Board.
h. Discussion with statutory auditors before the audit commences, about the nature andscope of audit as well as post-audit discussion to ascertain any area of concern.
i. Carrying out any other function as is mentioned in the terms of reference of theAudit Committee.
4. REMUNERATION COMMITTEE:
The Board of the Company has constituted a Remuneration Committee of the Board,comprising of Three Directors viz., Sri A G K Raju (Chairman of the Committee), Sri MPeddi Raju and Sri Y D Murthy. The Committee has been constituted to recommend/review theremuneration package of the Managing/Whole Time Directors. The remuneration policy isdirected towards rewarding performance, based on review of achievements on a periodicalbasis. The remuneration policy is to be in consonance with the existing Industry Practice.
No Remuneration was paid during the financial year 2010-2011 to any director.
The Company pays sitting fees to the Non-Executive Directors at the rate of Rs.500/-per Board Meeting. The details of total amount of Sitting Fees paid to each of theNon-Executive Directors for the year ended 31st March, 2011 are as follows:
| Sri Y D Murthy | Rs. 2000/- |
| Sri M Peddi Raju | Rs. 1500/- |
5. SHAREHOLDERS'/INVESTORS' GRIEVANCE COMMITTEE :
The Board of the Company Re-constituted a Shareholders'/Investors' Grievance Committeecomprising of Sri A G K Raju (Chairman of the Committee), and Sri A S R Raju and Sri MPeddi Raju as its members.
The Committee, inter alia, approves the issue of duplicate certificates and overseesand reviews all matters connected with servicing of investors. The Committee oversees theperformance of the Registrar and Transfer Agents, and recommends measures for overallimprovement in the quality of investor services.
The Company has not received complaints during the year. The Company has received 6requests for transfers and 38 requests for dematerialisation during the year. No requestsreceived for dematerialisation and no requests received for transfer were pending forapproval as on 31st March, 2011.
6. GENERAL BODY MEETINGS :
| YEAR | AGM | TIME | PLACE |
| 2007-2008 | 29-09-2008 | 10.30 A.M | Sri Sagi Ramakrishnam Raju Community Hall, Madhura Nagar, Hyderabad-500038 |
| 2008-2009 | 29-09-2009 | 10.30 A.M | Sri Sagi Ramakrishnam Raju Community Hall, Madhura Nagar, Hyderabad-500038 |
| 2009-10 | 28-09-2010 | 10.30 A.M | Sri Sagi Ramakrishnam Raju Community Hall, Madhura Nagar, Hyderabad-500038 |
Postal Ballot : During the financial year the company has not passed anyresolutions through postal ballot. Details of Special Resolutions passed in Annual GeneralMeetings held during past three years
| AGM dt.29-09-2008 | NIL |
| AGM dt.29-09-2009 | NIL |
| AGM dt.28-09-2010 | NIL |
7. DISCLOSURES:
a. During the year no transactions have been entered into with related parties.
b. There have not been any occasions of non-compliance by the Company and no penaltiesor strictures imposed on the Company by the Stock Exchanges or SEBI or any statutoryauthority, on any matter related to capital markets, during the last three years.
8. MEANS OF COMMUNICATION : Quarterly results
The quarterly results of the Company are generally published in newspapers {(BusinessStandard and Andhra Prabha (regional language)} along with the official press releases.
Date of publication of Quarterly Results:
| 1st Quarter ended 30th June,2010 | : 02-08-2010 |
| 2nd Quarter ended 30th September,2010 | : 09-11-2010 |
| 3rd Quarter ended 31st December,2010 | : 10-02-2011 |
| 4th Quarter ended 31st March, 2011 | : 27-05-2011 |
The Management Discussion and Analysis Report is a part of the Annual Report.
9. General Shareholders' Information
| 17th Annual General Meeting | : Date : 28th September, 2011 |
| Time : 10.30 A.M |
| Venue : Sri Sagi Ramakrishnam Raju Community Hall |
| Madhuranagar, Hyderabad-500 038. |
| Financial Calendar | : The Tentative Calendar of events for the financial year 2011-2012 is given below: |
| Results for Quarter ending June 30, 2011 - August,2011 |
| Results for Quarter ending Sept 30, 2011 - November, 2011 Results for Quarter ending Dec 31, 2011 - February, 2012 |
| Results for year ending March, 31, 2012 - May, 2012 |
| Book closure date | : 22nd September, 2011 to 28th September, 2011 (both days inclusive) |
| Listing of Equity Shares | : The Stock Exchange Mumbai |
| Stock Code | : BSE Code : 531452 |
| Demat ISIN Numbers in | : ISIN NO : INE768B01012 |
NSDL & CDSL For Equity shares
Market price Data: The monthly high and low stock quotations during the lastfinancial year and performance in comparison to BSE is given below:
| BSE | SENSEX |
| Month & Year | High | Low | No.of Shares Traded | High | Low |
| Apr-10 | 4.20 | 2.53 | 139419 | 18047.86 | 17276.86 |
| May-10 | 4.45 | 3.29 | 76529 | 17536.86 | 15960.15 |
| Jun-10 | 4.00 | 2.90 | 114443 | 17919.62 | 16318.39 |
| July-10 | 4.54 | 3.50 | 96707 | 18237.56 | 17395.58 |
| Aug-10 | 4.55 | 3.49 | 60521 | 18475.27 | 17819.99 |
| Sep-10 | 4.56 | 3.66 | 114820 | 20267.98 | 18027.12 |
| Oct-10 | 4.15 | 3.43 | 47418 | 20854.55 | 19768.96 |
| Nov-10 | 3.99 | 3.16 | 30234 | 21108.64 | 18954.82 |
| Dec-10 | 3.10 | 2.05 | 27704 | 20552.03 | 19074.57 |
| Jan-11 | 2.67 | 2.23 | 17190 | 20664.80 | 18038.48 |
| Feb-11 | 3.00 | 2.12 | 20941 | 18690.97 | 17295.62 |
| Mar-11 | 3.60 | 3.00 | 6193 | 19575.16 | 17792.17 |
| Share Transfer System | : The share transfers which were received in physical form were processed and the share certificates returned within a period of 15 days from the date of receipt, subject to the documents being found valid and complete in all respects. The company has appointed M/s. Sathguru Management and Consultants (Pvt.) Ltd. w.e.f. 1st April, 2003 as the Registrar and Transfer Agents for dealing with all the activities connected with both physical and demat segments pertaining to the share transactions of the company. |
| Dematerialisation of Shares : | Over 75.26 % of the Company's shares have been dematerialised upto 31st March,2011. Trading in Equity Shares of the Company is permitted only in dematerialised form w.e.f. 25th September, 2000 as per notification issued by the Securities and Exchange Board of India (SEBI). |
| Distribution of Shareholding : as on 31st March, 2011 | |
As on 31.03.2011, the distribution of Company's Shareholding was as follows :
| Category (No of shares) | Shareholders | Shares |
| From To | Number | % of Total | Number | % of Total |
| 1 5,000 | 4182 | 77.25 | 902807 | 14.98 |
| 5,001 10,000 | 540 | 9.97 | 478756 | 7.95 |
| 10,001 20,000 | 270 | 4.99 | 424784 | 7.05 |
| 20,001 30,000 | 167 | 3.09 | 426473 | 7.08 |
| 30,001 40,000 | 55 | 1.02 | 202022 | 3.35 |
| 40,001 50,000 | 60 | 1.11 | 291465 | 4.84 |
| 50001 1,00,000 | 77 | 1.42 | 565419 | 9.38 |
| 1,00,001 And above | 62 | 1.15 | 2733964 | 45.37 |
| Total | 5413 | 100.00 | 6025690 | 100.00 |
Investor's correspondence
| Physical/Electronic mode | M/s. Sathguru Management |
| Consultants Pvt. Ltd., |
| Plot No 15, Hindi Nagar, Punjagutta, Hyderabad - 500 034. |
| Ph. No's 040- 30160333, Fax: 040-40040554 |
| E-Mail: sta@sathguru.com |
| Investor's General Correspondence | Secretarial Department |
| 41 Nagarjuna Hills, Hyderabad - 500 082 |
| Ph.No. 040 - 23351753, Fax No.040 - 23350214 |
| E-Mail: ho.secr@nccltd.in |
Declaration of Compliance with the Code of Conduct
I hereby confirm that the company has obtained from all the members of the Boardaffirmation that they have complied with the Code of Conduct Board members in respect ofthe financial year ended 31st March, 2011
For NCC Finance Limited
A G K Raju
Director
Place: Hyderabad
Date: 26th May, 2011
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
To
The Members of
NCC FINANCE LIMITED
We have examined the compliance of conditions of Corporate Governance by NCC FinanceLimited, for the year ended on March 31, 2011, as stipulated in Clause 49 of the ListingAgreement of the said Company with stock exchanges.
The compliance of conditions of Corporate Governance is the responsibility of themanagement. Our examination has been limited to a review of the procedures andimplementations thereof adopted by the Company for ensuring compliance with the conditionsof Corporate Governance as stipulated in the said clause. It is neither an audit nor anexpression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanationsgiven to us and the representation made by the Directors and the management, we certifythat the Company has complied with the conditions of the Corporate Governance asstipulated in Clause 49 of the above mentioned Listing Agreement.
We further state that such compliance is neither an assurance as to the futureviability of the Company nor of the efficiency or effectiveness with which the managementhas conducted the affairs of the Company.
For M. Bhaskara Rao & Co.
Chartered Accountants
(Regn.No.000459S)
V K Muralidhar
Partner
M.No.201570
Place: Hyderabad
Date: 26-05-2011