BARCLAYS INVESTMENTS AND LOAN (INDIA) LIMITED (FORMERLY RANK INVESTMENTS AND CREDITS (INDIA) LIMITED) ANNUAL REPORT 2007-2008 DIRECTOR'S REPORT To The Members, Your Directors have pleasure in presenting the Annual Report of Barclays Investments & Loans (India) Limited (the Company) along with the audited statement of accounts for the year ended March 31, 2008. FINANCIAL PERFORMANCE: A brief summary of the financial results is as under: March 31, March 31, 2008 2007 Rs. Rs. Profit/Loss before Taxation (402,140,885) (764,540) Provision for Taxation (1,068,498) (3,842,209) Profit/Loss after Taxation (403,209,383) (3,077,669) Profit/Loss B/F from previous year (3,670,548) (574,483) Appropriations: Dividend on Preference Shares - 16,133 Dividend Distribution Tax - 2,263 Balance carried over to Balance Sheet (406,879,931) (3,670,548) DIVIDENDS: The Company has not declared any dividend; equity or preference during the year. AUDITORS' REPORT: The Auditors in their report have mentioned as follows: * Clause 3.1 - Approval of the Central Government of India is awaited for the remuneration paid to the Manoj Viswanathan, former Managing Director aggregating to Rs.840,096. * Clause 9(iii) - Internal control system with respect to the purchase of fixed assets needs to be strengthened. * Clause 9(vii) - There have been delays in case of deposit if tax deducted at source (TDS) on commission, professional fees, contractors and salaries. We would like to state as follows: * Clause 3.1 - An application has been filed with the Central Government of India for payment of remuneration to Mr. Manoj Viswanathan, former Managing Director within the prescribed timelines of 90 days from the date of appointment. Approval of the Central Government is expected shortly. * Clause 9(iii) - Large number of branches going live simultaneously resulted in stress on existing resources. Resulting gaps in internal control are being rectified with robust policies and procedures. The matter was also noted by the Board, at its Meeting held on July 28, 2008, and an action plan for tagging assets pan India is underway. * Clause 9(vii) - The delays in TDS were primarily due to delayed. reconciliations caused by the cutover into the new General Ledger (GL) system. The new GL system has adequate checks and balances to ensure that this does not recur. OPERATIONS AND, FUTURE OUTLOOK: Retail Lending: In March 2008, the Company launched the Retail Lending business, under the brand name of 'Barclays Finance'. As at March 31, 2008, there were 100 branches of Barclays Finance in 48 cities across India. Subsequently, a further 20 branches were added. To support business growth and expansion, Barclays Group infused additional capital of Rs.160.18 Crores, in different tranches, during the period of March - August 2008. The launch project involved a capital outlay of Rs.59.7 Crores on leasehold improvements, hardware, software and equipment. Collateralised Loans: The buoyancy in the equity, markets continued during the financial year, which helped the Company achieve a strong growth in the portfolio of loans collateralized against pledge of shares and securities. The quantum of loans disbursed by the Company under this head during the year is Rs.87.47 Crores (P.Y.: Nil) Investments and Borrowings: The Company has an active Treasury taking care of various risks on its Balance Sheet and optimize funding cost. Treasury generally funds the balance sheet through various products viz. non-convertible secured debentures (including structured debentures), commercial papers coupled with bank credit lines. The Company has adopted AS-30 which requires fair value accounting for financial instruments. Accordingly, the Company has recognized mark-to-market gain of Rs.21.04 Crores on non-convertible structured debentures of Rs.326.60 Crores. Index/Stock Futures and Cash equities: The Company primarily invests in exchange traded equity index/stock futures and cash equities to hedge the risk embedded in structured. debentures. As at March 31, 2008 total exposure of the Company stood at Rs.123.50 Crores and loss on account of this activity for the year ended March 31, 2008 is Rs. 49.98 Crores. DIRECTORS: Mr. Samir Bhatia and Mr. Suresh Guramaiu were appointed under Section 260 of the Companies Act, 1956, as additional directors, at the Board Meeting held on August 1, 2007 and were thereafter appointed by the shareholders at the Annul General Meeting held on August 25, 2007. Mr. Sandeep Menon and Mr. Manoj Viswanathan were appointed under Section 260 of the Companies Act, 1956, as additional. directors, at the Board Meeting held on February 19, 2008. At the said Meeting, the Board appointed Mr. Manoj Viswanathan as also the Managing Director of the Company for a period of three years, effective February 19, 2008, subject to the approval of the Central Government. Subsequently, Mr. Viswanathan decided to resign as the Director and Managing Director of the Company, which was accepted by the Board, at its Meeting held on July 28, 2008. The Board placed on record its sincere appreciation and gratitude for the valuable contribution made by Mr. Viswanathan to the growth and development of the Company. The details of remuneration drawn by Mr. Viswanathan from the date of his appointment till March 31, 2008, are annexed to the Report along with the particulars of other employees, as required to be disclosed in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. The Board, thereafter, decided. to appoint Mr. Kusal Roy as an additional Director and Managing Director of the Company, effective August 1, 2008, for a period of three years, subject to the approval of the Central Government. Mr. Menon and Mr. Roy are proposed to be appointed as Directors at the ensuing Annual General Meeting, pursuant to Section 257 of the Companies Act, 1956. Mr. Jaideep Khanna, Chairman and Director, indicated his desire to step down as the Chairman of the Board. The Board, at its Meeting held on July 28, 2008, decided that Mr. Samir Bhatia be appointed as the Chairman of the Board. Further, in terms of the provisions of the Companies Act, 1956 arid the Articles of Association of the Company, Mr. Anindya Das Gupta and Mr. Suresh Gurumani would retire by rotation at the forthcoming AGM .and, being eligible, offer themselves for re-appointment at the ensuing AGM. COMPANY SECRETARY: Ms. Namita Grover has been appointed as the Company Secretary effective March 13, 2008. CHANGE OF NAME OF THE COMPANY: Effective June 27, 2008, the name of the Company has changed from Rank Investments and Credits (India) Limited to Barclays Investments & Loans (India) Limited, to reflect its identity and association with Barclays Group. INCREASE IN THE AUTHORIZED SHARE CAPITAL: During the year, the Authorized Share Capital of the Company has been increased as follows: * Extraordinary General Meeting (EGM) held on April 1, 2008 - The Authorized Share Capital of the Company has been increased from. Rs.1915,000,000 to Rs.2615,000,000 by creating additional 14,00,000 Equity Shares of Rs.50 each. * EGM held on July 25, 2008 - The Authorized Share Capital of the Company has been increased from Rs.2615,000,000 to Rs.7000,000,000 by creating additional 87,700,000 Equity Shares of Rs.50 each. SUBSIDIARY COMPANY: Presently, your Company has only one subsidiary; Barclays Securities (India) Private Limited (BSIPL), the entire shareholding of which is held by your Company. AUDITORS: The auditors, Price Waterhouse (PWC), Chartered Accountants will retire at the ensuing AGM. As recommended by the Audit Committee, the Board has proposed the appointment of PWC as statutory auditors for the financial year ending March 31, 2009. The Company has received a certificate from the Auditors to the effect that their reappointment, if made, would be in accordance with Section 224 (1B) of the Companies Act 1956. You are requested to consider their appointment. DEPOSITS: During the year under review, the Company has not accepted any fixed deposits/deposits from public under Section 58A and Section 58AA of the Companies Act 1956 read with Companies (Acceptance of Deposit) Rules 1975 and as per the provisions of Non-Banking Financial Companies (Reserve Bank) Directions, 1998. COMMITTEES: Audit Committee Pursuant to the provisions of Section 292A of the Companies Act 1956, the Company has constituted an Audit Committee. The present constitution of the Audit Committee is as follows: Mr. Jaideep Khanna - Chairman Mr. Ashwini Kapila Mr. Anindya Das Gupta The Audit Committee holds its meetings regularly. Besides the Audit Committee, the Company has also constituted various other Committee of Directors and Committee of Executives for ensuring good corporate governance. DIRECTORS' RESPONSIBILITY STATEMENT: Your Directors confirm that: i) In the preparation of annual accounts, applicable accounting standards have been followed; ii) The accounting policies adopted are consistent and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year; iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv) The Annual Accounts have been prepared on a going concern basis. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 are not applicable to the Company and hence not given. PARTICULARS OF EMPLOYEES: Information in accordance with the provision of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is annexed to this Report. ACKNOWLEDEMENTS: Your Company is grateful to Reserve Bank of India, Ministry of Corporate Affairs and other regulatory authorities for their support and advise. The Company would like to express its gratitude for the unstinted support and guidance received from Barclays Bank PLC and its group companies. The Directors would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year. For and on behalf of the Board of Sd/- Samir Bhatia Chairman Place: Mumbai Date : August 14, 2008