Action Financial Services (India) Limited · 2010. 10. 21. · SERVICES (INDIA) LIMITED will be...

Action Financial Services (India) Limited

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17th Annual Report 2009-2010

AUDITOR : Ford, Rhodes, Parks & Co.Chartered Accountants

BANKERS : Bank of India HDFC Bank Ltd ICICI Bank LtdCitibank N.A.

REGISTER & SHARE TRANSFER AGENT : M/s Link Intime India Private LimitedC-13, Pannalal Silk Mills Compound, L. B. S. Marg, B hand up (West), Mumbai - 400 078. Tel.: 25963838 Fax.: 25672693.

REGISTERED OFFICE & BROKING DIVISION : 31, 4th Floor, Rajgir Chambers, 12/14, Shahid Bhagatsingh Road, Fort, Mumbai 400001. Tel.:40624444 Fax:40624446/47 Email ID: [email protected] Website:- www.actionfin.com

SECURITIES BANKING CELL : 31, 4th Floor, Rajgir Chambers,(DEPOSITORY PARTICIPANT OF NSDL) 12/14, Shahid Bhagatsingh Road.

Fort, Mumbai-400001.Tel. 40624444 Fax: 40624446

BRANCH WITH BSE TERMINALS : Mumbai (Fort,Matunga,Borivali), Bharuch, Surat (3). Bokaro(3),

Dhanbad. Dharmavaram, Valsad, Varnasi and Mangalore.

BRANCH WITH NSE TERMINALS : Mumbai (Fort ), Mumbai central, Vaslad, Varnasi, Bharuch, Baroda, Bokaro (2), Dhanbad (2), Dharmavaram valsad and Mangalore.

DEPOSITORY BRANCHES : Mumbai (Fort), Mumbai central, Ahmedabad, Baroda, Bokaro, Kakinada, Bharuch. Valsad, Varanasi, Dhanbad and Mangalore

LISTED AT : Mumbai.

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NOTICEthNOTICE is hereby given that the 17 ANNUAL GENERAL MEETING of ACTION FINANCIAL

thSERVICES (INDIA) LIMITED will be held on 30 September, 2010 at the registered office of the company at 31, Rajgir Chambers, 12/14, Sahid Bhagatsingh Road, Mumbai - 400 023 at 10.00 A.M. to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Profit & Loss Account for the year ended 31st March, 2010 and the Balance Sheet as on that date together with the Report of the Directors' and Auditor's thereon.

2. To appoint a Director in place of Shri Milan R. Parekh, who retires by rotation and being eligible offers himself for re-appointment

3. To consider and if thought fit to pass with or without modification, the following resolution as an Ordinary Resolution:

"RESOLVED THAT M/S Ford, Rhodes, Parks & Company, Chartered Accountants, Fort, Mumbai bearing Membership No. 11549 be and are hereby re-appointed as Auditors of the company from the conclusion of this meeting until the conclusion of the next Annual General Meeting of the company on such remuneration as may be fixed by the Board of directors plus reimbursement of all out of pocket expenses."

SPECIAL BUSINESS:

4. To consider and if thought fit to pass with or without modification(s), the following Resolution as an Ordinary Resolution :

“RESOLVED THAT Atul A Zatakia, who was appointed as an additional director by the Board of th

Directors on 29 January, 2010 to hold the said office until the conclusion of the forthcoming annual general of the company, and in respect of whom the company has received notice from members of the company under section 257 of the Companies Act, 1956, proposing his candidature for the office of director, be and is hereby appointed as director of the company, liable to retire by rotation.”

5. To consider and if thought fit to pass with or without modification(s), the following Resolution as an Ordinary Resolution :

“RESOLVED THAT Ketan H Mehta, who was appointed as an additional director by the Board th

of Directors on 29 January, 2010 to hold the said office until the conclusion of the forthcoming annual general of the company, and in respect of whom the company has received notice from members of the company under section 257 of the Companies Act, 1956, proposing his candidature for the office of director, be and is hereby appointed as director of the company, liable to retire by rotation.”

6. To consider and if thought fit to pass with or without modification(s), the following Resolution as a Special Resolution :

"RESOLVED THAT pursuant to the provisions of section 198, 269,309 read with the provisions of Section II B of Part II of schedule XIII and other applicable provisions of the Companies Act, 1956 and subject to such other approval as may be required, the consent of the company be and is hereby accorded to the upward revision in the remuneration, prequisites and othe benefits as stated here under, being paid to Milan R. Parekh, Managing Director of the

stCompany, with effect, from 1 October, 2010 for the remaining tenure of his office which ends on 30th Sepetember 2012

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SALARY:

Gross Salary Rs. 1,75,000/- (Rupees One Lakh Seventy Five Thousand Only) per month inclusive of all perquisites.

The Board may review the basic salary on completion of each year of tenure.

PERQUISITE:

(i) Housing:

The company shall not provide any accommodation but in lieu of that he will be entitled for the House Rent Allowances which shall not exceed 60% of the salary. In addition gas, electricity, water and furnishings or allowances in lieu thereof will be provided, the expenditure on which will be valued as per Income Tax Rules, 1962.

(ii) Medical Reimbursement:

Medical expenses incurred by the Managing director for self and family including dependent mother and father subject to a ceiling of one month salary per year or three months salary in a block of three years, will be reimbursed.

(iii) Club Fees:

Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees.

(iv) Personal Accident Insurance:

of an amount, the annual premium of which does not exceed Rs. 4000/-.

(v) Free use of the company's car with driver for company's business. Use of car for private purpose shall be billed by company.

(vi) Provision of telephone at residence of the Managing Director at company's cost shall not be considered as perquisite. Personal long distance calls shall be billed by the company.

(vii) OTHER BENEFITS:

(a) Leave as per rules in force in the company from time to time.

(b) Benefits under housing loan and other schemes in accordance with the practices, rules and regulations in force from time to time.

(c) Such other benefits as may be provided by the company to other senior officers from time to time.

The following perquisites shall not be included in the computation of remuneration for deciding the ceiling specified for minimum remuneration under Schedule XIII to the Companies Act, 1956

1. Contribution to provident fund, superannuation fund or annuity fund will not included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable, under the Income- tax Act.

2. Gratuity payable will not exceed half a month's salary for each completed year of services.

3. Encashment of leave at the end of the tenure.

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Minimum Remuneration:

In the event of loss or inadequacy of profits in any year during the term of office of the Managing Director, the same remuneration as stated above shall be payable to him as minimum remuneration subject to the limits prescribed under the provisions of the Companies Act, 1956 read with Schedule XIII thereof.

RESOLVED FURTHER THAT the Board of Director or any committee thereof, be and is hereby authorised to do all such acts, deeds, matters and things including revising the remuneration, perquisites and other terms as may be necessary, within the limit prescribed under the provisions of the Companies Act, 1956 read with Schedule XIII thereof, for giving effect to this resolution.”

7. To consider and, if thought fit, to pass, with or without modifications, the following resolution as Special Resolution:

" RESOLVED THAT pursuant to the provisions of section 198, 269,309 read with the provisions of Section II B of Part II of schedule XIII and other applicable provisions of the Companies Act, 1956 and subject to such other approval as may be required, the consent of the company be and is hereby accorded to the upward revision in the remuneration, perquisites and other benefits as stated hereunder, being paid to Bakul R. Parekh, Jt. Managing Director of the

st Company, with effect from 1 October, 2010 for the remaining tenure of his office which ends on th30 September 2012

SALARY:

Gross Salary Rs. 1, 70,000/- (Rupees One lakh Seventy Thousand only) per month inclusive of all perquisites.

PERQUISITE:

(i) Housing:

The company shall not provide any accommodation but in lieu of that he will be entitled for the House Rent Allowances which shall not exceed 60% of the salary. In addition gas, electricity, water and furnishings or allowances in lieu thereof will be provided, the expenditure on which will be valued as per Income Tax Rules, 1962.

(ii) Medical Reimbursement:

Medical expenses incurred by the Jt. Managing director for self and family including dependent mother and father subject to a ceiling of one month salary per year or three months salary in a block of three years, will be reimbursed.

(iii) Club Fees:

Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees.

(iv) Personal Accident Insurance:

Of an amount, the annual premium of which does not exceed Rs. 4000/-.

(v) Free use of the company's car with driver for company's business. Use of car for private purpose shall be billed by company.

(vi) Provision of telephone at residence of the Jt. Managing Director at company's cost shall not be considered as perquisite. Personal long distance calls shall be billed by the company.

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(vii) OTHER BENEFITS:-

(a) Leave as per rules in force in the company from time to time.

(b) Benefits under housing loan and other schemes in accordance with the practices, rules and regulations in force from time to time.

(c) Such other benefits as may be provided by the company to other senior officers from time to time.

The following perquisites shall not be included in the computation of remuneration for deciding the ceiling specified for minimum remuneration under Schedule XIII to the Companies Act, 1956

1. Contribution to provident fund, superannuation fund or annuity fund will not included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable, under the Income- tax Act.

2. Gratuity payable will not exceed half a month's salary for each completed year of services.

3. Encashment of leave at the end of the tenure.

Minimum Remuneration:

In the event of loss or inadequacy of profits in any year during the term of office of the Joint Managing Director, the same remuneration as stated above shall be payable to him as minimum remuneration subject to the limits prescribed under the provisions of the Companies Act, 1956 read with Schedule XIII thereof.

RESOLVED FURTHER THAT the Board of Director or any committee thereof, be and is hereby authorised to do all such acts, deeds, matters and things including revising the remuneration, perquisites and other terms as may be necessary, within the limit prescribed under the provisions of the Companies Act, 1956 read with Schedule XIII thereof, for giving effect to this resolution.”

8. To consider and, if thought fit, to pass, with or without modifications, the following resolution as Ordinary Resolution :

“RESOLVED THAT pursuant to section 94 and applicable provisions of the Companies Act, 1956, out of unissued portion of the Authorised preference share capital of the company, 1,00,000 (One Lakh) Preference shares of Rs. 100/- (Rupees One Hundred only) each aggregating Rs. 1,00,00,000 (Rupees One Crore only) be reclassified into and as 10,00,000 (Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 1,00,00,000 (Rupees One Crores only).”

9. To consider and, if thought fit, to pass, with or without modifications, the following resolution as Ordinary Resolution :

“RESOLVED THAT to effect the reclassification of unissued Authorised Preference Share Capital into Equity Share Capital Clause V of the Memorandum of Association of the Company be and is hereby altered by substituting existing Clause V with the following new Clause:

v. The Authorised capital of the company is Rs. 12,00,00,000 (Rupees Twelve Crores only) divided into 1,10,00,000 (One Crore Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 11,00,00,000 (Rupees Eleven Crores) and 1,00,000 (One Lakhs) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred only) each aggregating

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Rs. 1,00,00,000 (Rupees One Crore), with power to increase or reduce the capital of the company and to divide the shares in the capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualify or special rights, privileges or conditions, as may be determined and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for time being be provided by the Articles of Association of the company

10. To consider and, if thought fit, to pass, with or without modifications, the following resolution as Special Resolution :

“RESOLVED THAT to effect the reclassification of unissued Authorised Preference Share Capital into Equity Share Capital the Articles of Association of the Company be and is hereby altered by substituting existing Clause 3 with the following new Article:

3. The Authorised capital of the company is Rs. 12,00,00,000 (Rupees Twelve Crores only) divided into 1,10,00,000 (One Crore Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 11,00,00,000 (Rupees Eleven Crores) and 1,00,000 (One Lakhs) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred only) each aggregating Rs. 1,00,00,000 (Rupees One Crore), with power to increase or reduce the capital from time to time in accordance with regulation of the company and legislative provisions for the time being in force in this behalf and with power to divide the shares in the capital for the time being into equity share and preference share capital and to attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions

11. To consider and, if thought fit, to pass, with or without modification, the following resolution as ORDINARY RESOLUTION:

“RESOLVED THAT pursuant to the provisions section 94 and other applicable provisions, if any, of the Companies Act, 1956 and subject to such consent / approval as may be required, of the concerned authorities as may be required from time to time, the Authorised share c a p i t a l of the company be and is hereby increased from Rs. 12,00,00,000 (Rupees Twelve Crores only) divided into 1,10,00,000 (One Crore Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) and 1,00,000 (One Lakh) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred only) each to Rs. 13,00,00,000 (Rupees Thirteen Crores only) divided into 1,20,00,000 (One Crore Twenty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 12,00,00,000 (Rupees Twelve Crores only) and 1,00,000 (One Lakh) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred only) each aggregating Rs. 1,00,00,000 (Rupees One Crore Only) by creation of further 10,00,000 (Ten Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each"

12. To consider and, if thought fit, to pass, with or without modification, the following resolution as ORDINARY RESOLUTION:

“RESOLVED THAT pursuant to the provisions of section 16 and other applicable provisions, if any, of the Companies Act, 1956, the Clause V of the Memorandum of Association of the Company be and is hereby altered by substitution of following new Clause in place and lieu of the existing Clause V of the Memorandum of Association of the Company, consequent upon increase in Authorised share capital of the Company:

v. The Authorised capital of the company is Rs. 13,00,00,000 (Rupees Thirteen Crores only) divided into 1,20,00,000 (One Crore Twenty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 12,00,00,000 (Rupees Twelve Crores) and 1,00,000 (One Lakhs) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred

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only) each aggregating Rs. 1,00,00,000 (Rupees One Crore), with power to increase orreduce the capital of the company and to divide the shares in the capital for the time being into several classes and to attach thereto respectively such preferential, deferred, qualify or special rights, privileges or conditions, as may be determined and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may for time being be provided by the Articles of Association of the company.”

13. To consider and, if thought fit, to pass, with or without modification, the following resolution as SPECIAL RESOLUTION:

“RESOLVED THAT pursuant to the provisions of section 31 and other applicable provisions, if any, of the Companies Act, 1956, Article 3 of the Articles of Association of the Company be and is hereby altered by substitution of following new Article in place and lieu of the existing Article 3 of the Articles of Association of the Company, consequent upon increase in Authorised share capital of the Company:

3. The Authorised capital of the company is Rs. 13,00,00,000 (Rupees Thirteen Crores only) divided into 1,20,00,000 (One Crore Twenty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each aggregating Rs. 12,00,00,000 (Rupees Twelve Crores) and 1,00,000 (One Lakhs) Redeemable Preference Shares of Rs. 100/- (Rupees One Hundred only) each aggregating Rs. 1,00,00,000 (Rupees One Crore) with power to increase or reduce the capital from time to time in accordance with regulation of the company and legislative provisions for the time being in force in this behalf and with power to divide the shares in the capital for the time being into equity share and preference share capital and to attach thereto respectively any preferential, deferred, qualified or special rights, privileges or conditions.”

14. To consider and, if thought fit, to pass, with or without modifications, the following resolution as Special Resolution :

“RESOLVED THAT in accordance with and subject to the provisions of section 81(1A) and all other applicable provisions, if any, of the Companies Act, 1956 and other applicable laws (including any statutory modification or re-enactment thereof, for the time being in force), and enabling provisions in the Memorandum and Articles of Association of t he company and Listing Agreement entered into by the company with the stock exchanges where the shares of the company are listed, the subsisting rules, regulations, guidelines and clarifications issued by the Securities and Exchange Board of India (SEBI) or any other relevant authorities and further subject to approvals of all other concerned institutions and authorities, if any, to the extent necessary, and such other approvals, permissions and sanctions, as may be necessary, and subject to the conditions and modifications as may be imposed by any of them while granting such approvals, permissions and sanctions, which may be agreed to by the Board of Directors of the company (hereinafter referred to as the 'Board') and/or any duly authorised committee thereof for the time being exercising the powers conferred by the Board in that behalf, consent and approval be and same are hereby accorded to the Board to issue/offer and allot up to 77,200 warrants of Rs.29 each, convertible, at the option of the warrant holders within the aggregate period of 18 months from the date of allotment of the warrants into 77,200 Equity shares of Rs. 10/- each at a premium of Rs.19/- per share, as determined in accordance with the relevant Guidelines issued by the SEBI, to Mr. Milan R. Parekh promoters / directors of the Company, (hereinafter referred to as 'promoters'), on preferential basis, subject to the following:

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a. the Warrants and the equity shares to be offered and allotted upon conversion shall be subject to the provisions of the Memorandum and Articles of Association of the Company.

b. the 'relevant date' within the meaning of the Regulation 71 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009,for the purpose of determination of applicable price for the issue of above mentioned warrants and equity shares arising out of their conversion is 30.8.2010.

c. the equity shares to be allotted on conversion of the Warrants shall rank pari passu with the existing equity shares of the Company in all respects.

d. the said 77,200 warrants to be issued to the promoters would qualify for conversion in the following manner, into equivalent number of equity shares of Rs. 10/- each at a premium of Rs. 19 per share in one or more tranches, however, subject to the condition that no conversion of warrants issued under the sanction of this resolution shall be admissible after a period of 18 months from the date of allotment.

I. the conversion of 77,200 warrants into equity shares shall be exercised after the current stfinancial year ending on 31 March, 2011 but before the completion of 18 months form the

date of allotment.

e. an amount equal to minimum 25% of the price fixed Regulation 71 read with Regulation 76 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, in relation to each of the warrant shall be paid upfront by the promoters at the time of allotment of the warrants and the same shall be adjusted against the price payable for the subsequent allotment of equity shares, as and when made, against the warrants. Further in the event the option of conversion of warrants into equity shares is not exercised by the warrant holders in terms of this resolution, the up front payment of minimum 25% shall be forfeited.

f. In no case such conversion of warrants into the equity shares shall be in violation of any of the provisions of the SEBI's (Substantial Acquisition of Shares and Take over) Regulation

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board or Committee thereof be and is hereby authorised to do all such acts, deeds, matters and things and to finalise and execute all documents and writings as may be necessary, desirable or expedient as the Board or Committee thereof may deem fit.”

15. To consider and, if thought fit, to pass, with or without modification, the following resolution as SPECIAL RESOLUTION:

“ RESOLVED THAT in accordance with the provisions of section 81 and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re enactment thereof, for the time being in force), of the prevailing Guidelines governing the preferential issue of shares, in the Memorandum and Articles of Association of the company and Listing Agreement entered into by the company with the stock exchanges where the shares of the company are listed and further subject to approvals of all other concerned institutions and authorities, if any, and to the extent necessary and such other approvals, permissions and sanctions, as may be necessary, and subject to the conditions and modifications as may be imposed by any of them while granting such approvals, permissions and sanctions, which may be agreed to by the Board of Directors of the company (hereinafter referred to as the 'Board') and/or any duly authorised committee there of for the time being exercising the powers conferred by the Board in that behalf, consent and approval be and same are hereby

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accorded to the Board to issue/offer 1,521,000 Equity Shares of Rs. 10/- for cash at a premium of Rs. 19 aggregating Rs. 44,109,000, as the Board in its sole discretion may at any time or time hereafter decide to the Promoters / Directors and other investors, through preferential issue for financing working capital requirement and strengthening the Depository and Broking Divisions of the company or other corporate purpose as the Board may deem fit, or otherwise in one or more trenches on such terms and conditions as the Board or Committee thereof may in it absolute discretion think fit.

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board or Committee thereof be and is hereby authorised to do all such acts, deeds, matters and things and to finalise and execute all documents and writings as may be necessary, desirable or expedient as the Board or Committee thereof may deem fit.”

Registered office: 31, Rajgir Chambers, By order of the Board12/14, Sahid Bhagatsingh Road,Mumbai - 400 001.

MILAN . PAREKHthDate: 30 August, 2010 Chairman & Managing Director


Notes:

1) Members entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on a poll instead of himself and such proxy need not be a member of the company. Proxies in order to be effective must be lodged/received at the Registered office of the company not less than 48 hours before the time fixed for this Annual General meeting.

2) Explanatory Statement pursuant to section 173(2) of the Companies Act,1956 in respect of Special business of the Notice is annexed herewith.

3) The Register of Members and Share Transfer Books of the company will remain closed from th th

25 September, 2010 to 27 September, 2010 (both days inclusive).

4) All matters connected to shares transfers and other related matters be addressed to the company's Share Transfer Agent M/S Intime Spectrum Registry Limited at Agent M/s. Intime Spectrum Registry Limited at C- 13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai – 400 078.

5) Members while corresponding with the company are requested to quote their respective Folio No. in the correspondence and also notify the change of address, if any, to the company.

6) Members are requested to bring their copies of Annual Report at the time of attending the Annual General Meeting.

7) Members seeking any information/clarification with regard to accounts are requested to write to the company at an early date so as to enable the management to keep the information ready.

8) Members/Proxy holders are requested to produce attendance slip, at the entrance of the Hall of the meeting duly completed and signed.

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ANNEXURE TO NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

ITEM NO. 4 & 5:

Atul A Zatakia and Ketan H Mehta having vide experience of last more than 10 years in capital Market th

were appointed as Additional Directors of the Company w.e.f. 29 January, 2010. According to the provision of Section 260 of the Companies Act, 1956, they hold office of Director upto the date of the ensuing Annual General Meeting of the Company. Notices have been received from Members as required by Section 257 of the Act signifying their intention to propose the appointment of Atul A Zatakia and Ketan H Mehta.

The Board of Directors is of the view that the vast experience of Atul A Zatakia and Ketan H Mehta in the Capital Market field would be of immense benefit to the Company and hence recommends their appointment for approval.

None of the Directors except Atul A Zatakia and Ketan H Mehta are interested in the respective resolutions proposing their individual appointment.

Atul A Zatakia presently holds 12,045 equity Shares in the Company while Ketan H Mehta holds 9,232 equity shares in the Company.

ITEM No. 6 & 7:

The terms of appointment of Mr. Milan R. Parekh as Managing Director and Mr. Bakul R. Parekh as th

Joint Managing Director expire on 30 September, 2012.

As you are aware that Mr. Milan R. Parekh is the main promoter of the company and because of his continuous efforts the company has reached to this stage. He has been instrumental in getting recognition and status that the company enjoys today in capital market. While Mr. Bakul R. Parekh is also one of the promoters and first Directors of the company. Mr. Bakul R. Parekh has got the vast experience of more than two decade in the secondary market in Mumbai Stock exchange. Because of his vast experience in the capital market and especially his expertise in the secondary market the Board has decided to entrust him the overall administration of secondary market operation.In view of the increasing activities and future expansion programme of the company, your Board of Directors, on recommendation of Remuneration Committee, have proposed to increase the remuneration payable to Mr. Milan R. Parekh as Managing Director and Mr. Bakul R. Parekh as Joint Managing Director, subject to approval of members and other authorities as may be required, with

steffect from 1 October, 2010 for remaining period of their respective tenure, on the such remuneration, perquisites and benefits as embodied in the resolution of their respective appointment. The above may be treated as an abstract of the modification of terms and remuneration of being payable to Mr. Milan R. Parekh and Mr. Bakul R. Parekh pursuant to Section 302 of the Companies Act, 1956.

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Except Mr. Milan R. Parekh and Mr. Bakul R. Parekh no other Directors of the company are deemed to be concerned or interested in the resolution at item No. 6 and 7 of the accompanying notice.

Copies of letters of appointment are available for inspection at the registered office of the company up to the date of the ensuing Annual General meeting during business hours on all working days.

Statement required to be given along with the notice of General Meeting pursuant to clause (b) of part II of Section II of the schedule XIII to the Companies Act, 1956 is given hereunder.

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Profile of Director Annexure-1

Profile of DirectorAnnexure-2

III OTHER INFORMATION:

Due to shortage of Working Capital & competition Brokerage rates has come down which has resulted in lower profits. Even Institution has reduced the brokerage from 15bp to 10bp

Planning to increase number of branches & institutional clients.

Expect to increase substantially subject to Increase in Institutional Clientele & branches.

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IV DISCLOSURES:

Remuneration package of managerial persons have been mentioned in detail in the resolution proposed to be passed.

Required disclosures have also been made in Directors' Report under the heading Corporate Governance.

ITEM No. 8, 9 & 10:

Presently the authorized capital of the company consist of 10, 00, 00,000 equity shares of Rs. 10/- each and 2, 00,000 Redeemable Preference shares of Rs. 100/- each aggregating Rs.12, 00, 00,000/-. Out of the Preference share capital of Rs. 2,00,00,000/- the company has issued and allotted only 82,800 preference shares of Rs. 100/- each aggregating Rs. 82,80,000/-.

Out of the unissued preference share capital it is proposed to re-classify 1,00,000 Preference shares of Rs. 100/- each aggregating Rs. 100 Lakhs into 10,00,000 Equity Shares of Rs. 10/- each so as to enable the company to issue further Equity shares on preferential basis and the Warrants convertible into equity shares in terms of SEBI's guidelines or such other equity shares or equity linked instruments at appropriate time.

Consequent upon such re classification of unissued preference shares into equity shares the Article 3 of the Articles of Association and Clause V of the Memorandum stand altered so as to give effect to such re classification. Hence it is also proposed to alter the Memorandum and Articles of Association of the company.

Your Directors, therefore, recommend the resolution for your approval.

None of the Directors of the company is in way deemed concerned or interested in way in the proposed resolution.

Item No. 11, 12 & 13:

To part finance the company's expansion programme of its depository Division and Stock Broking Division and to meet with the long term working capital requirement the company needs to raise funds to increase the net owned funds of the company. It is therefore necessary that the present authorised capital of the company of Rs. 12 Crores be increased to Rs. 13 Crores consisting of equity as well as preference shares so as to enable the company to issue and allot further equity shares and for the purpose the Memorandum of Association of the company is proposed to be suitably altered as indicated in resolution at item No. 12 of the notice.

The Special Resolution for alteration in Article 3 dealing with the share capital is consequential to resolution proposed for increase in the authorised capital of the company and alteration of Clause V of the Memorandum of Association of the company to that effect so as to increase the Authorised Capital of the company from Rs. 12 Crores to Rs. 13 Crores consisting of 1,20,00,000 (One Crore Twenty Lakhs) equity shares of Rs. 10/- (Rupees Ten only) each and 1,00,000 (One Lakh) Redeemable Cumulative Preference Shares of Rs. 100/- (Rupees One Hundred only) each.

None of the Directors of the company is concerned or interested in this resolution.

Item No. 14

In view of increase in level of operations, the company needs induction of long term funds to meets its ongoing capital expenditure plans and working capital requirements. It is to mobilize a sum of Rs 2,238,800 in stages through issue of 77,200 fully convertible warrants of Rs 29/- each in the manner and on the terms and conditions mentioned in the resolution and herein below. The disclosures in

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terms of Regulation 73 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 [hereinafter referred to as ‘SEBI Regulations’] are given as under.

1. The objects of the issue through preferential offer

Financing of the working capital requirement and to enhance the networth of the company, so as to achieve large objective of the company. The proposed preferential allotment will strengthen the financial position of the Company.

2. Intention of Promoters/Directors/Key Management Persons to subscribe to the offer

Mr. Milan R. Parekh, the promoters, would be subscribing in full to the proposed issue.

3. Shareholding Pattern of the Company before and after the offer

The shareholding pattern pre and post allotment of warrants (assuming conversion of all warrants into equity shares) based on present capital structure is as under

Capital Structure

8,887,200

*

The existing promoters will continue to be in control of the Company and there will not be any change in the management control of the company as a result of the proposed preferential allotment.

* The Company has issued 1,25,000 Convertible warrant to the investor of the Company on 1st November, 2009 and the same are convertible into equal number of eqity shares on exercise of option of conversion by the investor within 18 months form the date of allotment and accordingly the public holding in the enhanced paid up capital (after considering the conversion of warrants into equity share capital) shall be increased proportionately.

4. Proposed time within which the allotment shall be completed

The proposed issue and allotment of the warrants shall be completed within a period of 15 days from the date of approval of the issue by the shareholders of the company or where any other approval is required from Stock Exchanges, regulatory authorities or the Central Government, 15 days from the date of the receipt of such approval, whichever is later. The exercise of the option of conversion of the

16



warrants into equity shares shall be completed within a period of 18 months from the date of allotment of warrants.

5. The identity of the proposed allotment and the percentage of pre and post preferential issue Capital that may be held by them are as under (Base on the present capital structure)

It is proposed to issue and allot

(I) 77,200 convertible warrants to Mr. Milan R. Parekh ( promoter of the company)

Mr. Milan R. Parekh, promoter and the Chairman and Managing Director of the company presently holds 2,334,256 equity shares in the paid up capital of the company constituting 26.50 % of the total voting capital.

Presently, the promoters, along with the persons acting in concert, hold 48.42% of the total voting capital and after exercising full option of conversion of warrants into equity shares the promoters holding shall stand at 48.87 % of the total voting capital of the company

While Mr. Milan R Parekh is holding 23, 34,256 equity shares in the Company. The holding of Mr. Milan R Parekh after the proposed allotment of convertible warrants and equity shares arising out of conversion thereof would be 2,411,456 equity shares constituting 27.13% of the voting capital of the company, assuming conversion of warrants into equity shares

6. Payment terms:

Minimum of 25% of Rs.29 per warrant is payable on or before allotment by the promoters and the balance is payable on or before exercising the respective option of conversion of the warrants into equity shares.

7. Lock in period:

The warrants and the resultants equity shares shall be subject to a lock in period as per the guidelines issued by the Securities and Exchange Board of India for preferential allotment.

In terms of provisions of Regulation 78 of the SEBI Regulations, the lock in on equity shares proposed to be acquired by the conversion of warrants shall be reduced to the extent the convertible warrants have already been locked in.

The certificate of the Statutory Auditors to the effect that the issue of warrants on preferential basis in accordance with SEBI Regulations shall be placed before the members at the ensuing Extra Ordinary General Meeting and will be available for inspection thereat.

The Board of Directors of the company recommends the passing of the Special Resolutions as set out in Notice of the Meeting at Item Nos. 14.

Mr. Milan R. Parekh and Mr. Bakul R. Parekh, being the promoters and managerial persons may be regarded as concerned or interested in the resolution set out in Item No. 14.

No other director is concerned or interested in the resolutions set out at item Nos. 14 above.

17

Item No. 15:

As stated above to induct long term funds to meets its ongoing capital expenditure plans and working capital requirements. It is to mobilize a sum of Rs 44,109,000 Preferential issue of 1,521,000 Equity shares of Rs 10/- each at a premium of Rs.19 /- in the manner and on the terms and conditions mentioned in the resolution and herein below. The disclosures in terms of Regulation 73 of the Securities And Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 [hereinafter referred to as ‘SEBI Regulations’] are given as under:

1. The objects of the issue through preferential offer

Financing of the working capital requirement and to enhance the networth of the company, so as to achieve large objective of the company. The proposed preferential allotment will strengthen thefinancial position of the Company.

2.Intention of Promoters/Directors/Key Management Persons to subscribe to the offer

Mr. Milan R. Parekh and Mr. Bakul R. Parekh, the promoters, would be subscribing in full to the proposed issue.

Ms. Pragati Shah, Mr. Hiren Shah,Ms. Nirmala Shah, Mr. Nirav Parikh, Ms. Archana Mittal, Ms. Ananya Mittal, Mr. Hitesh Gandhi(HUF) & Ms. Nita Gandhi being investors, have indicated that they would be subscribing in full to the proposed issue.

3. Shareholding Pattern of the Company before and after the offer

The shareholding pattern pre and post allotment of warrants (assuming conversion of all warrants into equity shares) based on present capital structure is as under

The existing promoters will continue to be in control of the Company and there will not be any change in the management control of the company as a result of the proposed preferential allotment.

18



* The Company has issued 1,25,000 Convertible warrant to the investor of the Company on 1st November, 2009 and the same are convertible into equal number of eqity shares on exercise of option of conversion by the investor within 18 months form the date of allotment and accordingly the public holding in the enhanced paid up capital (after considering the conversion of warrants into equity share capital) shall be increased proportionately.

4. Proposed time within which the allotment shall be completed

The proposed issue and allotment of the equity share shall be completed within a period of 15 days from the date of approval of the issue by the shareholders of the company or where any other approval is required from Stock Exchanges, regulatory authorities or the Central Government, 15 days from the date of the receipt of such approval, whichever is later.

5. The identity of the proposed allotment and the percentage of pre and post Preferential issue Capital that may be held by them is as under (Base on the present capital structure )

It is proposed to issue and allot fully paid Equity Shares to:

(i) 267,600 Equity Share to Mr. Milan Parekh ( promoter of the company)(ii) 172,400 Equity Share to Mr. Bakul Parekh, ( promoter of the company ) (iii) 87,000 Equity Share to Ms. Pragati Shah (Investor)(iv) 87,000 Equity Share to Mr. Hiren Shah (Investor)(v) 87,000 Equity Share to Ms . Nirmala Shah (Investor)(vi) 50,000 Equity Share to Mr . Nirav Parikh (Investor)(vii) 400,000 Equity Share to Ms. Archana Mittal (Investor)(viii) 350,000 Equity Share to Ms. Ananya Mittal (Investor)(ix) 10,000 Equity Share to Mr. Hitesh Gandhi (HUF) (Investor)(x) 10,000 Equity Share to Ms. Nita Gandhi (Investor)

Mr. Milan R. Parekh, promoter and the Chairman and Managing Director of the company presently holds 2,334,256 equity shares in the paid up capital of the company constituting 26.50 % of the total voting capital while Mr. Bakul R. Parekh promoter and the Joint Managing Director of the company presently holds 1,866,489 equity shares in the paid up capital of the company constituting 21.18 % of the total voting capital, putting both together they hold 4,200,745 equity shares in the paid up capital of the company constituting 47.68 % of the total voting capital.

Presently, the promoters, along with the persons acting in concert, hold 48.42 % of the total voting capital and after the proposed allotment of equity shares to the promoters holding shall stand at 45.95% of the total voting capital of the company.

While Ms. Pragati Shah is not holding any equity shares in the Company. The holding of Ms. Pragati Shah after the proposed allotment of equity shares arising out of 87,000 equity shares constituting of 0.84 % of the voting capital of the company.

While Mr. Hiren Shah is not holding any equity shares in the Company. The holding of Mr. Hiren Shah after the proposed allotment of equity shares arising out of 87,000 equity shares constituting of 0.84 % of the voting capital of the company.

While Ms. Nirmala Shah is not holding any equity shares in the Company. The holding of Ms. Nirmala Shah after the proposed allotment of equity shares arising out of 87,000 equity shares constituting of 0.84 % of the voting capital of the company.

While Mr. Nirav Parikh is not holding any equity shares in the Company. The holding of Mr Nirav Parikh after the proposed allotment of equity shares arising out of 50,000 equity shares constituting of 0.48 % of the voting capital of the company.

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While Ms. Archana Mittal is not holding any equity shares in the Company. The holding of Mrs Archana Mittal after the proposed allotment of equity shares arising out of 400,000 equity shares constituting of 3.85 % of the voting capital of the company.

While Ms. Ananya Mittal is not holding any equity shares in the Company. The holding of Ms Ananya Mittal after the proposed allotment of equity shares arising out of 350,000 equity shares constituting of 3.37 % of the voting capital of the company.

While Mr. Hitesh Gandhi (HUF) is not holding any equity shares in the Company. The holding of Mr. Hitesh Gandhi (HUF) after the proposed allotment of equity shares arising out of 10,000 equity shares constituting of 0.10 % of the voting capital of the company.

While Ms. Nita Gandhi is not holding any equity shares in the Company. The holding of Ms. Nita Gandhi after the proposed allotment of equity shares arising out of 10,000 equity shares constituting of 0.10 % of the voting capital of the company.

The holding of Mr. Milan R. Parekh and Mr. Bakul R. Parekh, after the proposed allotment of 440,000 equity shares shall be 4.23% of the voting capital of the company.

6. Payment terms:

Rs. 29 per Equity Share is payable immediately as the allotment has to be completed within 15 days from the date of passing of the resolution in the ensuing Annual General Meeting.

7. Lock in period:

The warrants and the resultants equity shares shall be subject to a lock in period as per the guidelines issued by the Securities and Exchange Board of India for preferential allotment.

In terms of provisions of Regulation 78 of the SEBI Regulations, the lock in on equity shares proposed to be issued / allotted shall apply.

The certificate of the Statutory Auditors to the effect that the issue of Equity Shares on preferential basis in accordance with SEBI Regulations shall be placed before the members at the ensuing Annual General Meeting and will be available for inspection thereat.

The Board of Directors of the company recommends the passing of the Special Resolutions as set out in Notice of the Meeting at Item No. 15.

Mr. Milan R. Parekh and Mr. Bakul R. Parekh, being the promoters and managerial persons may be regarded as concerned or interested in the resolution set out in Item No. 15 to the extent of Equity Shares may be issued .allotted to them.

No other director is concerned or interested in the resolutions set out at item Nos. 15 above.

Registered office: 31, Rajgir Chambers, 12/14, Sahid Bhagatsingh Road, By order of the BoardMumbai - 400 001.

MILAN R. PAREKH th

Date: 30 August, 2010 Chairman & Managing Director

20



ACTION FINANCIAL SERVICES (INDIA) LIMITEDDIRECTORS' REPORT

Dear Members,

thYour Directors take pleasure in presenting the 17 Annual Report together with the Audited stStatements of Accounts of the Company for the financial year ended 31 March 2010.

1. FINANCIAL RESULTS:

CONSOLIDATED RESULTS:

The audited Standalone and consolidated Financial Statements of the Company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard 21 (AS-21) on Consolidated Financial Statements and Accounting Standard 23 - (AS-23) on Accounting for Investments in Associates in Consolidated Financial Statements

thbased on Audited Financial Results for the 15 months ended March 31, 2010 in case of Action Securities Ltd.

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(9,209,229)(7,734,305)(8,366,130) (8,885,972)

8,450,000 8,450,0008,810,0008,810,000

SUBSIDIARIES:

As on March 31, 2010 your company has two wholly owned subsidiary companies namely Action Securities Limited and Action Commodities Limited. In terms of section 212 of the Companies Act, 1956, the company has attached the Director's Report, Balance sheet and Profit and Loss account of its subsidiaries to the Annual report.

INCOME:

During the financial year 2009-2010 company earned operating profit of Rs. 9,938,963/- against the operating loss of Rs. 12,165,549/- incurred in the previous year, while the net profit (after tax) stood at Rs. 1,151,666/- against the net loss 15,298,907/- in the previous year.

2. DIVIDEND:

2.1 On Preference Shares:In view of carried forward loss of previous years your Directors regret their inability to recommend

stDividend on Cumulative Redeemable Preference Shares for the year ended 31 March, 2010.

2.2 On Equity Shares:In view of carried forward loss of previous years your Directors regret their inability to recommend

stDividend on Equity Shares for the year ended 31 March, 2010.

3. OPERATIONS:

OVERVIEW: During the year the company carried out capital market operations at moderate level. The growth in the Indian economy together with the boom on the capital markets resulted in a better year for the company. Due to the current uncertain capital market situation where the risk factors appear to be high the company is taking a cautious view and will formulate its investment policies accordingly.

REVIEW of BUSINESS DIVISIONS:

3.1 Broking Division:

Our Services under the Broking Business comprising of Equity & Derivatives Services, we offer Institutional broking services in Equity to a large institutional clientele in India. During the year under review the total turnover was increased to Rs 4952 crores as compared to Rs 3463.02 crores in the previous financial year.

Action offers personalized services and complete transaction support through our website to our client for investment in primary market through Mutual fund and IPO's.

Company has established new branches, appointed authorised dealers and sub-brokers all over the country, for the purpose of access to wide business opportunities available in remote areas. This has resulted into increase in clientele base of the company.

Action offers platform for trading in currency futures. Trading in currency futures with Action enable importers, exporters, investors, high net worth clients and institution to hedge their currency risk at low transaction costs and with greater transparency and safety.

The Company has acquired the membership of the Currency Derivative segment of MCX, and expected to commence operation by September 2010.Further company has made the application for member ship of United Stock Exchange of India for Currency Derivative segment. The United Stock Exchange represents the commitment of all 21

22



Indian public sector banks, respected private banks and corporate houses to build an institution that is on its way to becoming an enduring symbol of India's modern financial markets. United Stock Exchange also boasts of Bombay Stock Exchange, as a strategic partner.

3.2 Depository Division:

Company has completed 13 years as a Depository Participant. Company is holding approximately st

Rs1396.80. Crores worth stock on behalf of clients as on 31 March 2010. Company has registered with NSDL for Internet based IDeAS facility for the convenience of the Investor to view latest holding with valuation as well as transactions. Company has also its own website through which client can view previous day holding, transaction and ledger balances.

Company has introduced various tariff Schemes for clients as per their requirement & convenience. As a result, of flexible working hours, experienced staff, timely information to clients regarding failure of instructions, acceptance of last minute Pay-In instructions, less processing time, etc. Clients of other Brokers also prefer to open their Demat Accounts with us. Key areas of service are retail clientele, clearing members and promoters of various companies. DP Division caters to 30 clearing Members Pool Account and maintains 89 Promoters Accounts.

4. FUTURE OUTLOOK & EXPANSION PLAN:

Company has planned to expand the branches all over the country is expected to generate good revenue over the coming period and enhance the profitability of the company.

The Company is focused on building a long-term stable business with emphasis on retail brokerage that does not rely on highly leveraged trading clients. The Company predicts a huge growth in business due to increase in retail and institutional clients.

It is a fact that the currency market is growing, it won't be surprising if it overtakes the equity market in India by 2012. In the days to come trading in currencies will dominate commodities and equities in India also as the case is in major developed economies abroad. Company offers different currency trading platforms to all the clients. Company has also applied the membership for United Stock Exchange and MCX currency segment. .In the local market, rupee would continue to be driven the global risk trends, which have an influence on the local equities market and the foreign currency.

5. BOARD OF DIRECTORS

During the year under review Mr. Sujir Radha Nayak and Mr. Pranav Doshi, Directors of the th

Company resigned from the said office with effect from 29 January, 2010. Company also wishes to place on record their deep sense of appreciation for the contributions rendered by them. While Mr. Atul Zatakia and Mr. Ketan Mehta were appointed as additional directors with effect from

th29 January, 2010 and hold the said office until the conclusion of the ensuing Annual General Meeting. The Company has received notice from its members proposing the candidature of Mr. Atul Zatakia and Mr. Ketan Mehta for the office Directors of the Company. The additional directors have also expressed their desire to get appointed as Directors liable to retire by rotation.

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Mr., Milan R Parekh Director of the Company, retires by rotation at ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

Your Directors recommend the above appointments in the ensuing Annual General Meeting.

6. STATEMENT OF DIRECTORS' RESPONSIBILITY:

Pursuant to the requirement of section 217(2AA) of the Companies Act, 1956, the Board of Directors hereby state that:

a. In preparation of annual accounts, the applicable accounting standard had been followed along with proper explanation relating to material departure;

b. The directors had selected such accounting policies and applied them consistently and made judgment 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 or loss of the company for that period;

c. The directors had 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 the company and for preventing and detecting frauds and other irregularities;

d. The directors had prepared the annual accounts on a going concern basis.

7. SHARE CAPITAL:

During the financial year 2009-10 the Paid up Equity Share Capital of the Company increased from Rs. 84,500,000/- to Rs. 88,100,000 on account of issue of 360,000 Equity Shares on conversion of 360,000 convertible warrants into equal number of fully paid equity shares of Rs. 10/- each to the promoters.

thThe Board of Directors of the company in its meeting held on 9 November 2009 issued 125,000 warrants on preferential basis to investors at the rate of Rs. 19.25 per warrant with an option to convert the same into equivalent number of Equity shares of nominal at Rs. 10/- each at a premium of Rs. 9.25 per share. The option of conversion shall be valid for a period of 18 months from the date of allotment of the warrants. The company received Rs. 5/- per warrant as upfront payment and is credited to Subscription Money towards warrants.

8. CORPORATE GOVERNANCE:

The Company has been following the principles and practices of good Corporate Governance and has ensured due compliance of the requirements stipulated under clause – 49 of the Listing Agreement with the stock Exchanges. A separate detailed report on Corporate Governance is given

thin 17 Annual Report.

thA Certificate 20 August, 2010 issued by the company's Statutory Auditors in terms of clause – 49 of the Listing Agreement with Stock Exchanges is annexed to the said Corporate Governance Report.


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9. SECRETARIAL AUDIT:

As directed by Securities and Exchange Board of India (SEBI) secretarial audit is being carried out at the specified periodicity by practicing Company Secretary. The findings of the secretarial audit were entirely satisfactory.

10. FIXED DEPOSITS:

During year under review the company has not accepted any deposit with in the meaning of section 58A of the Companies' Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975 as amended.

11. MANAGEMENT DISCUSSIONS AND ANALYSIS:

Report on Management discussion and analysis given in the Annual Report is forming part of this report and it deals with the Operations & Business Performance, Expansion & Diversification, Research & Development etc.

12. AUDITORS & AUDITORS' REPORT:

M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, Mumbai, the Company's Statutory Auditors, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. M/s. Ford, Rhodes, Parks & Co. have sought re-appointment and confirmed that their re-appointment shall be within the limits of Section 224(1B) of the Companies Act, 1956. The necessary eligibility certificate under Section 224(1B) of the Companies Act, 1956, has been received from them. The Audit Committee and Board of Directors recommend the appointment of M/s. Ford, Rhodes, Parks & Co., Chartered Accountants, as the Auditors of the Company.

The notes to the accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.

13. DECLARATION:

The Board has formulated a code of conduct for the Board members and senior management of the Company. All Board members and senior management personnel have affirmed their compliance with the code.

14. PARTICULARS OF EMPLOYEES:

Your Company had a compliment of 25 staff members. Your company continues its efforts to strengthen its human-resource base by arranging requisite training and varied exposure to its existing staff to enable to keep their skills updated. Since None of the employee is in receipt of remuneration for whole/ part of the year exceeding the limit prescribed u/s. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, the particulars have not been given.

25

15. Information Required Under the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988:

15.1 Conservation of Energy: Company's operation involves no manufacturing or processing activities. The Company utilizes energy for lighting, air-conditioning and other office equipments at its offices. The Company's operations involve low energy consumption and wherever possible, energy conservation measures have already been implemented and there are no major areas where further conservation measures appear necessary. However, efforts to conserve and optimize the use of energy through improved operational methods and other mean will continue on an on-going basis.

15.2 Form of Disclosure of particulars with respect to absorption of Technology, research & Development (R & D):

FORM – B1. Specific areas in which R & D carried out by the Company Nil2. Benefits derived as a result of the above R & D Nil3. Future Plan of Action Nil4. Expenditure on R & D Nil

15.3 Technology Absorption, Adaptation & Innovation:There is no imported technology involved in the operations of the Company. The Company continues to focus its attention towards the rapid technological changes in the fields of its activity and trains the manpower continuously to improve the productivity. The technologies being used are VPN / CTCL.

15.4 Foreign exchange earning and out go:Foreign Exchange Earned NilForeign Exchange Used Nil

16. ACKNOWLEDGEMENT:Your Directors wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year. Your Directors also wish to place on record their deep sense of appreciation for the contributions made and committed services rendered by the employees of the Company.

For and on behalf of the Board of Directors

Place: Mumbai Milan R. Parekh th

Date : 20 August, 2010 Chairman & Managing Director


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th* Resigned from the office of Director with effect from 29 January, 2010th** Appointed as Additional Director with effect from 29 January, 2010

'ANNEXURE I' TO DIRECTORS' REPORT

A. CORPORATE GOVERNANCE:

The detailed report on corporate governance in the format prescribed by SEBI and incorporated in Clause 49 of the Listing Agreement is set out below:

Mandatory Requirements:

1. Company's Philosophy:

The Company remains committed to the core aspect of Corporate Governance, viz. fairness, transparency, accountability and responsibility.

2. Board of Directors:

I. Composition and category of Directors:

The Board of Directors comprises of Managing Director, Joint Managing Director and Three non-executive Directors. The composition of the Board, the attendance of Directors at the Board meetings during the last financial year, attendance at the last annual general meeting and directorship in other companies are listed below:

27

A total of 14 Board Meetings, 6 Audit Committee Meetings and 1 Remuneration Committee Meeting, were held during the year 2009-2010. The maximum interval between any two meetings was not more than 3 months. The Board meetings were held on 02.04.2009, 11.04.2009, 27.04.2009, 02.06.2009, 09.06.2009, 30.06.2009, 30.07.2009, 10.08.2009, 04.09.2009, 30.9.2009, 30.10.2009, 9.11.2009, 10.11.2009, 30.11.2009, 29.01.2010, 26.02.2010, 18.03.2010. All the Board meetings were held in Mumbai.

ii. Board's Responsibilities:The Board's mandate is to oversee the company's strategic direction, review and monitor corporate performance, ensure regulatory compliance and safeguard the interest of shareholders.

iii. Role of Independent Directors:The independent Directors play an important role in deliberation at the Board and Committee Meetings and bring to the company their expertise in the field of finance, management, law and public policy.

In terms of the Clause 49 of the Listing Agreement, the Audit Committee and shareholders/Investors Grievance Committee are chaired by an Independent Director and said committee's functions are within the defined terms of reference. The minutes of committee meetings are circulated and discussed in Board meetings.

iv. Details of Director, if any, co-opted on the Board. : Atul Zatakia & Ketan Mehta was co-opted on the board as additional directors with effect from

th29 January 2010.

v. Relationship of Directors with each other, if any:Mr. Milan R. Parekh, Chairman & Mg. Director and Mr. Bakul R. Parekh, Joint Managing Director are Brothers.

vi. Notes on Directors seeking re-appointment:Pursuant to the provisions of the Companies Act, 1956 and the Articles of Association of the company, Mr. Milan R Parekh, Director, retires by rotation at the ensuing annual general meeting

thto be held on 30 September 2010 and being eligible, he is seeking re-appointment at this meeting.

vii. CEO/CFO certificationCEO/CFO certificate pursuance to clause 49(v) of the listing agreement is enclosed at the end of this section.

3. Committees of the Board

I. Audit Committee:The role and terms of reference of the Audit committee covers the areas mentioned in the clause 49 of the Listing Agreement with stock exchanges and section 292A of the Companies Act, 1956, which among other things include:

1. A periodical reviews of efficiency of the internal control systems and procedures and suggests improvement therein.


28


2. Review of operating results on a quarterly basis, prior to their submission to the Board for its consideration and adoption.

3. Advise the Board on appointment / removal of statutory auditors and fix their remuneration.4. Review with the statutory auditors their audit findings and suggest measures to address any

areas of concern cited by them.5. Assure the Board on the adequacy of company's risks management measures and

implementation of financial policies and procedures.

Composition:

The Audit committee comprises of 3 Independent Non-Executive Directors. The committee met 6 times during the year i.e. 27.04.2009, 30.07.2009, 04.09.2009, 30.10.2009, 30.11.2009 and 30.01.2010.

th* Resigned from the office of Director with effect from 29 January, 2010th

** Appointed with effect from 29 January, 2010

ii. Remuneration Committee:

Terms of reference:The Remuneration committee was reconstructed, which comprises of 3 independent non-executive

thdirectors with Mr. Pranav M Doshi being its chairman upto 29 January, 2010 and Mr. Ketan Mehta

thbeing its chairman, from 29 January, 2010, to suggest remuneration that may be paid to the Managing Director / Joint Mg. Director. The committee met 1 time during the year i.e 23.12.2009.

COMPOSITION OF REMUNERATION COMMITTEE:

th* Resigned from the office of Director with effect from 29 January, 2010th** Appointed with effect from 29 January, 2010

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Remuneration policy:

Remuneration of employees largely consists of salary and perquisites. The objectives of remuneration policy are to motivate employees to excel in their performance, recognize their contribution, retain talent and reward merit.

Details of remuneration paid to the Directors during the financial year:

iii. Shareholders / Investors Grievance Committee

Terms of reference:

To address shareholders and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of other dues.

Composition

The Shareholders / Investors Grievance Committee was reconstructed, which comprises of 3 independent non-executive directors, Mr. Nirav Sanghavi being its chairman.

th* Resigned from the office of Director with effect from 29 January, 2010th

** Appointed with effect from 29 January, 2010

There were 7 investor's complaints pending at the beginning of the year, the company received and disposed off all the 7 complaints during the year and no complaints were pending unresolved at the end of year.


30

4. Subsidiary : Though providing Stock Broking and Depository Services to be the prime business activity of the Company, the Company promoted two wholly owned subsidiary companies viz. Action Securities

th thLimited (ASL) and Action Commodities Limited (ACL) incorporated on 13 November, 2007 and 7 August, 2009 respectively ASL and ACL have not yet started its operation. The Company monitors the performance of its subsidiaries, interalia, by the following means:lThe financial statements, investments, are reviewed by the Audit Committee and the Board.lThe minutes of Board Meetings of the subsidiary are noted at the Board Meeting of the

Company.

5. General Body Meeting:

I. Particulars of last three Annual General Meetings:

.


ii. Details of special resolutions passed in the previous three AGMs:

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iii. Postal Ballot:

No special resolutions were passed through postal ballot at any of the general meetings of the members.

6. Disclosures:

The company has not entered into any transactions of material nature with any of its Promoters, Directors, their relatives, management or its subsidiaries that may have potential conflict of interest during the last financial year.

The Company has complied with the requirements of the Listing Agreements with the Stock Exchanges and the Regulations and Guidelines of SEBI. No Penalties and strictures have been imposed by SEBI, Stock Exchanges or any Statutory Authorities on matters relating to Capital Markets listing norms during the Last Three years.

The Company has in place a high effective Whistle Blower Policy. The Company promotes ethical behaviour in all its business activities and has put in place mechanism of reporting illegal or unethical behaviour. Employees may report violations of laws, rules, regulations or unethical conduct to their immediate supervisor / notified person. The Audit Committee reviews the reports received from employees. The Directors and management personnel are obliged to maintain confidentiality of such reporting and ensure that the whistle blowers are not subjected to any discriminatory practices. No employee is denied access to the audit Committee.

The company has complied with all the mandatory requirements of the Clause 49 of the Listing Agreement. The details of these compliances have been given in appropriate places in this Report. The Status on compliance with Non-mandatory requirements are given at the end of the report.


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DETAILS OF DIRECTOR SEEKING APPOINTMENT / RE-APPOINTMENT AT THE FORTHCOMING AGM:

Brief profile of Mr. Milan R Parekh, who retires by rotation and is eligible for re-election

Name of Director Mr. Milan ParekhAddress 314, Veena Vihar,

17-A, Flank Road, Sion (West), Mumbai – 400 022.

thDate of Birth 17 May 1959 stDate of Appointment 01 October 2007

Qualification B.ComExperience 31 years

thBrief profile of Mr. Atul Zatakia, who was appointed as an additional director wef 29 January, 2010 and is proposed to be appointed as Director liable to retire by rotation:

Name of Director Mr. Atul ZatakiaAddress C-301 Sharmin, Shanti Park,

Ghatkopar (E) Mumbai- 400 086

stDate of Birth 21 August 1964

thDate of Appointment 29 January 2010Qualification GraduateExperience Over 25 Years

thBrief profile of Mr. Ketan Mehta, who was appointed as an additional director wef 29 January, 2010 and is proposed to be appointed as Director liable to retire by rotation:

Name of Director Mr. Ketan Mehta Address 7/40, Guru Darshan,

Jagdusha Nagar,Ghatkopar (W), Mumbai 400 086

thDate of Birth 27 August 1970

thDate of Appointment 29 January 2010Qualification GraduateExperience Over 5 Years

7. Means of communication:The company communicates its Quarterly/Half yearly and annual results by publishing them in 2 leading newspapers in Mumbai Free Press Journal (English) and Navshakti (Local Marathi language). The company has no system of mailing such results to its shareholders.

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8. General shareholders information:

I. Annual General Meeting

ii. Delisting of Equity Shares: Not Applicable

iii. Market price data - High / low during each month in the last Financial year(Equity Shares of Face value Re. 10/- each)


34


iv. Policy on Insider Trading:

The Company has adopted the Code of Conduct for prevention of Insider Trading in accordance with the Guidelines specified under the SEBI (Prohibition of Insider Trading) Regulations, 1992 and amended from time to time. The object of the code is to prevent purchase and/or sale of shares of the Company by an Insider on the basis of unpublished price sensitive information. Under this Code, insiders (Directors, Designated Employees and other concerned persons) are prevented to deal in the Company's Shares beyond specified limits and are required to disclose related information periodically as defined in the Code. The Board has appointed Joint Managing Director as the Compliance officer under the Code.

v. Registrar and share transfer agents of the company are:

M/s Link Intime India Private Limited is the Registrar and Share Transfer Agent. M/s Link Intime India Private Limited is registered with SEBI as a Registrar and Share Transfer Agent for processing the transfer of securities issued by the Company and is located at C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai – 400 078. M/s Link Intime India Private Limited acknowledges and executes transfer of securities and also accepts, deals with and resolves complaints of shareholders.

R&TA's performance in servicing shareholders has been satisfactory. All the investor grievances have been promptly attended to.

vi. Share Transfer System:

The Company's shares are traded in the stock exchanges compulsorily in demat mode as per Stock Exchange Regulations. Physical shares, which are lodged for transfer, are processed at the M/s Link Intime India Private Limited and returned to the shareholders within a period of 30 days from the receipt subject to documents being valid and complete in all respects. Dematerialization requests are normally confirmed within an average of 15 days from the date of receipt.

The company's R&TA is empowered to effect the transfer pursuant to power of attorney executed in their favour as per the SEBIs' guidelines/instruction with reference to transfer of shares so as expedite the said work in the interest of the members of the company.

35

Equity Shares:

Preference Shares:

vii. Distribution of Shareholding:

a. Distribution of Shares according to size, of holding as on March 31, 2010


36


b. Share Holding Pattern as on 31st March, 2010

37

viii. Dematerialization:As of March 31, 2010, 96.23% of the Company's shares were in dematerialized form, 3.77% in Physical form. The Company's shares are frequently traded on The Stock Exchange, Mumbai.

6,199,191 shares representing 70.37% of the total shares have been dematerialized under NSDL Depository whereas 2,278,663 shares representing 25.86% of the total shares have been dematerialized under CDSL Depository.

ix. Outstanding GDRs/ADRs/Warrants or any Convertible Instruments

thThe Board of Directors of the company in its meeting held on 9 November 2009 issued 125,000 warrants on preferential basis to investors at the rate of Rs. 19.25 per warrant with an option to convert the same into equivalent number of Equity shares of nominal at Rs. 10/- each at a premium of Rs. 9.25 per share. The option of conversion shall be valid for a period of 18 months from the date of allotment of the warrants. The company received Rs. 5/- per warrant as upfront payment and is credited to Subscription Money towards warrants.

ix. Address for Communication:

Note:Shareholders holding Shares in electronic mode should address all correspondence to their respective depository participants.

Adoption of Mandatory and Non Mandatory Requirement of Clause 49:

The Company has complied with all the mandatory requirements of clause 49. The Company has adopted the following Non- mandatory requirements stipulated under Clause 49 :

a. Non –Executive Chairman: The Company has an Executive Chairman and hence the requirements recommended as to a non-executive chairman under the clause 49, are not required to be adopted by the Company.

b. Remuneration Committee: The Company has setup a remuneration Committee pursuant to the provisions of the Schedule XIII of the Companies Act 1956.

c. Shareholder Rights: The Company is getting its quarterly and Annual Financial results published in leading newspapers with the wide distribution across the country and regularly update the same in its public domain website, the same are not separately forwarded to the Members as a measure of economy.


38

d. Unqualified Financial Statements: The Auditors Report on the audited annual accounts of the Company does not contain any qualification from the Statutory Auditors and it shall be the endeavor of the Company to continue the trend by building up accounting systems and controls which ensure complete adherence to the applicable accounting standards and pract ices obviating the possibility of Auditors qualifying their report as to the audited accounts.

e. Whistle Blower Policy: The Company has a Whistle Blower mechanism wherein the Employees are free to report violations of law, rules regulations or unethical conduct to their immediate supervisor or such other person as may be notified by the management to the workgroups. Such reports received will be reviewed by the Audit Committee of Directors from time to time. The confidentiality of those reporting violations shall be protected and they shall not be subjected to any discriminatory practice.

f. Secretarial Audit: A qualified Practicing Company Secretary has carried out secretarial audit every quarter to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued / paid up capital is in agreement with the aggregate total number of shares in physical form, shares allotted and advised for demat credit but pending execution and the total number of dematerialized shares held with NSDL and CDSL.

g. Capital Inegrity Audit The Audit Report, confirming that the total issued capital of the Company is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with National Securities Depository Limited and Central Depository Services (India) Limited, is placed before the Board on a quarterly basis. A Copy of the Audit Report is submitted to the Stock Exchanges where the shares of the Company are listed.

h. Fees to Statutory Auditors: The fees (exclusive of Service Tax) to the Statutory Auditors for the year was Rs. 1.00 Lac (previous year Rs. 0.90 Lac) including Rs. 0.30 Lac (previous year Rs. 0.15 Lac) as fee for Certification in finance and tax matters.

At present the company has not adopted the non mandatory requirements as to any of the other matters recommended under Annexure 1 D to the Clause 49 of the Listing Agreements with the Stock Exchange.

:


39

CERTIFICATE TO THE BOARD BY CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICES (CFO)

th20 August, 2010

To, The Board of Directors,Action Financial Services (India) Ltd.Mumbai,

We, Milan R. Parekh, Chairman & Managing Director and Bakul R. Parekh, Jt. Managing Director & Head-Finance & Accounts (CFO) of Action financial Services (India) Ltd. both certify to the Board that

stwe have reviewed the financial statements and the cash flow statement for the year ended 31 March 2010 and to the best of our knowledge and belief we certify that –

1. The Statement do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; that the Statements together present a true and fair view of the Company's affairs and are in compliance with existing accounting standards, applicable laws regulations;

2. There are no fraudulent or illegal transactions;

3. For the purposes of financial reporting, we accept the responsibility for establishing and maintaining the internal controls which are monitored by the Company's internal Audit Team, the effectiveness of the internal control systems of the Company and have reported to the Auditors and the Audit Committee, the deficiencies, if any, in the internal controls;

4. We have indicated to the Auditors and the Audit Committee significant changes, if any in the internal controls, accounting policies and the same have also been disclosed in the notes to the financial statements; and

5. There have been no instances of frauds, of which we are aware during the year.

Milan R. Parekh Bakul R. Parekh

Chairman & Managing Director Jt. Managing Director and Headof Finance & Accounts.


40


Auditors' Certificate on Corporate Governance

To the Members of Action Financial Services (India) Ltd

We have examined the compliance of the conditions of Corporate Governance by Action Financial Services (India) Ltd for the year ended on March 31, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance as stipulated in the said clause. It is neither an audit nor and expression of opinion on the financial statement of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the above-mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we state that based on the records maintained by the Company and confirmation received from the Registrars of the Company, no investor grievances are pending for a period exceeding one month against the company as at March 31, 2010.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For FORD, RHODES, PARKS & CO.

Chartered Accountants

A.D.Shenoy(Partner) Place : Mumbai

thMembership No.11549 Date : 20 August, 2010

41

MANAGEMENT DISCUSSION AND ANALYSIS :

Market Scenario:The Indian capital markets staged a remarkable recovery during 2009-10 on the back of an overall global change in sentiment and economic recovery in India. Manufacturing, services and industrial growth indices point to an 8.5% to 8.9% GDP growth this fiscal and with the apparent normal monsoon, even agricultural growth indices will probably perform better this year. Your Company continues to build upon its competitive position in Indian financial services sector.

Share markets across the world are recuperating with traces of recession still visible in few nations. The Indian stock market is fast recovering and the emerging opportunities have led to the steady inflows of foreign investments. Investing in India has thus become a trend, which is likely to gain more impetus in the near future. It is the promotion oriented user-friendly policies of the Indian government that have led to this sudden surge. And owing to the increased quantum of foreign investment inflows, India is emerging as one of the best performing markets.

We are hopeful that the government and the regulators will bring about the necessary reforms in order to make the market a vibrant one.

Opportunities and Threat:

Being a broking company, its opportunities and threat would be more specific to the ones, which apply to the companies operating in the capital market as brokers. But as it is known a healthy competition is always good for the industry we expect various new sources of revenues in coming future from financial and capital markets.

Segment wise Performance:Your company is mainly engaged in Capital Market Related Activities i.e. Broking & Depository Participant, which are under one broad segment of capital market, so segment reporting is not applicable to it.

Outlook:Review of the Operation of the Company has been given in detail in Directors' Report.

RISK AND CONCERNS:Your company ensures adherence to best practice and has necessary internal system and control in place to manage the risk.

Further the strict regulations and guidelines imposed by the regulatory authorities like SEBI, Stock exchange and NSDL with reference to capital market operation and Depository functions are sufficient in controlling the market related financial and technical risks. All these guidelines of the regulatory authorities whether it for margin money in capital market transaction or otherwise are being strictly adhered to by your company.


42


INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:Your company has appropriate and adequate internal control systems. The existing systems and procedures help in identifying the potential issues and problems, if any. Company had appointed skilled employees to monitor the regulatory compliance work, to avoid any shortfall in compliance related issues.

FINANCIAL PERFORMANCE:Financial performance with the financial data and figures, have been given in detail in Directors' Report.

HUMAN RESOURCES:ACTION has a set of experienced and qualified staff to look offers its operations, it offers a challenging work and growth-oriented culture to its employees with a people oriented philosophy to deploy right person at right place. ACTION allows its employees to learn all kind of work to educate them properly about the industry. Action lays tremendous emphasis on building and strengthening its human resources capital and accordingly existing employees undergo specific training and exams conducted by stock exchanges on their own assessment and the feedback received in their appraisal. The objective of learning and training process is to enable the employees to reach higher levels of performance and responsibility. Company encourages employees to clear NCFM exams for Capital market, Derivatives and Depository module.

CAUTIONARY STATEMENT:Certain statements in the Management Discussion and Analysis describing the company's objectives, predictions may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and government policies that may impact the company's business as well as its ability to implement the strategy. The company does not undertake to update these statements.

43

44

AUDITORS' REPORT TO THE MEMBERS OF ACTION FINANCIAL SERVICES ST(INDIA) LIMITED FOR THE YEAR ENDED 31 MARCH, 2010

1. We have audited the attached Balance Sheet of Action Financial Services (India) Limited as at st31 March, 2010, the Profit and Loss Account and also the Cash Flow Statement of the

Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examinations of those books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

ste) On the basis of written representations received from the directors, as on 31 March, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as

ston 31 March, 2010 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

sti) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31 March, 2010

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Place: MumbaiDate : 20th August 2010

A.D.Shenoy

Membership No.11549

(Partner)


For Ford,Rhodes,Parks & Co.Chartered AccountantsFirm Reg. No. : 102860W


Annexure referred to in paragraph (3) of our report of even date

1. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) All fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification.

c) During the year the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

2. The Company does not have any stock of raw materials, store, spare parts and finished goods.

However the Company has stock of shares on hand. The management has conducted physical verification of shares on hand at reasonable intervals. The procedure of physical verification of stock on hand followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of stock on hand and no discrepancies were noticed on physical verification.

3. As informed to us, the Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence clause iii (a) (b) (c) of the order is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of shares and fixed asset and for providing services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 has been so entered.

6. The Company has not accepted any deposits from the public during the year.

7. The Company has no internal auditor. However in our opinion, the Company has an adequate internal control system commensurate with the size and nature of its business.

8. The Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records and information and explanations obtained from the management, the Company is generally regular in depositing undisputed statutory dues including Provident fund, Employee State Insurance, Income Tax and other statutory dues applicable to it with appropriate authorities. However in some cases there has been delay in depositing the government dues. According to the information and explanations given to us undisputed amounts payable in respect of Income Tax outstanding at the end of the year for a period of more than six months from the date they became payable amounted to Rs. 21.23 lakhs. b) In our opinion and according to information and explanations obtained, there are no undisputed dues outstanding in respect of Sales tax, Wealth tax, Income tax, Service tax and Cess that have not been deposited on account of dispute.

10. The Company has accumulated losses at the end of the financial year of Rs.77.34 Lakhs and it has not incurred any cash losses in the current however it has incurred cash loss in the immediately preceding financial year.

45

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks. The Company does not have any borrowing by way of debentures.

12. Based on our examination of documents and records the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statutes applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company has dealing/trading in shares and debentures during the year. In respect of dealing in securities and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The securities and other investments have been held by the Company in its own name.

15. According to the information and explanations given to us the Company has not given any guarantees for loans taken by associates from banks.

16. The Company has taken term loans from ICICI Bank Limited and the outstanding balance as at st31 March, 2010 is Rs. 84.31 lakhs. The term loans have been applied for the purpose for which

they were obtained.

17. We have been informed by the management that the funds raised on short term basis have not been used for long term investment.

18. During the year 3,60,000 warrants have been converted into equity shares. In addition the Company issued 1,25,000 warrants on preferential basis to investors at a rate of Rs.19.25 (Face value Rs. 10/- plus Premium Rs. 9.25/-) and The price at which the warrants and shares have been issued are not prima facie not prejudicial to the interest of the company.

19. The Company did not have any debentures issued during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



As per our report of even dateFor Ford,Rhodes,Parks & Co.Chartered AccountantsFirm Reg. No. : 102860W

A.D.Shenoy(Partner)Membership No.11549

46


BALANCE SHEET AS AT 31st MARCH 2010 Schedule 31.03.2010 31.03.2009

No. Rupees Rupees Rupees Rupees I. Sources of Funds 1 Shareholders Fund a. Share Capital 1 96,380,000 92,780,000 b. Subscription Money Towards Warrants 625,000 6,370,000c. Reserves & Surplus 2 23,262,500 14,282,500

120,267,500 113,432,500

2. Loan Funds

a. Secured Loans 3 19,044,496 11,430,824b. Unsecured Loans 4 16,954,333 18,635,928

35,998,829 30,066,752 TOTAL 156,266,329 143,499,252 II. Application of Funds 1. Fixed Assets 5 a. Gross Block 35,520,458 33,261,390 b. Less : Depreciation 18,885,590 16,569,187 c. Net Block 16,634,868 16,692,203 2. Deferred tax Asset (Net) 3,470,510 3,755,014 3. Investments 6 53,188,353 57,312,7694. Current Assets , Loans and Advances a. Stock in trade 7 78,575,801 57,200,929 b. Sundry Debtors 8 30,104,516 21,921,573 c. Cash and Bank balances 9 15,553,965 11,134,171 d. Loans and Advances 10 15,891,674 17,860,244

(A) 140,125,956 108,116,917 Less : Current Liabilities and Provisions 11 a. Current Liabilities 58,090,713 42,120,583 b. Provisions 6,796,950 9,143,040

(B) 64,887,663 51,263,623

Net Current Assets (A) - (B) 75,238,293 56,853,294

5. Profit and Loss Account (Debit Balance) 7,734,305 8,885,972 Total 156,266,329 143,499,252 Significant Accounting Policies and Notes to the Accounts 15 The Schedules 1 to 15 annexed hereto forms part of the Balance Sheet and Profit and Loss Account


A.D.Shenoy(Partner)Membership No. 11549Place : MumbaiDate : 20th August 2010

For and on behalf of the Board

Milan R. Parekh Chairman & Managing Director

Bakul R. Parekh Jt. Managing Director

ACTION FINANCIAL SERVICES (INDIA) LIMITED

47

ACTION FINANCIAL SERVICES (INDIA) LTD.PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2010

Schedule For the Half Year For the Year No. Ended Ended

31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees

INCOME Income from Broking Activities 15,725,015 15,753,132 Income from Depository Services 4,302,545 3,723,744 Other Income 12 14,800,850 2,057,799

34,828,410 21,534,675EXPENDITURE Employees Remuneration and Benefits 13 7,660,966 7,537,636 Administrative and Other Expenses 14 17,228,482 26,162,588

24,889,448 33,700,224OPERATING PROFIT 9,938,963 (12,165,549)Interest and Financial Charges 6,148,186 4,213,346Depreciation 2,328,951 2,201,923

8,477,137 6,415,269 PROFIT / (LOSS) BEFORE TAX 1,461,826 (18,580,818)Provision for Taxation - Earlier Years Tax and FBT 25,656 1,010,623 - Defferred Tax 284,504 (4,346,188) - Fringe Benefit Tax - 53,654

310,160 (3,281,911)PROFIT / (LOSS) AFTER TAX 1,151,666 (15,298,907)Adds: Profit Brought forward from Previous year (8,885,971) 6,412,935 Profit / (Loss) Available for appropriations (7,734,305) (8,885,972)Appropriations - Profit / (Loss) Balance Carried to Balancesheet (7,734,305) (8,885,972)

(7,734,305) (8,885,972)

Earning Per Share (Per Equity Share of Rs.10/- each)

- Basic 0.13 (1.82) - Diluted 0.13 (1.54)Significant Accounting Policies and Notes to the Accounts 15 The Schedules 1 to 15 annexed hereto forms part of the Balance Sheet and Profit and Loss Account






Milan R. Parekh Chairman & Managing Director


48

Cash Flow Statement For The Year Ended 31st March, 2010 Particulars 2009-10 2008-09

Rs. Rs. Rs. Rs.A. Cash Flow From Operating Activities:1 Profit Before Tax 1,461,826 (18,580,818)

Add/(Less) Non-Cash And Non-Operating Items Adjustments For Depreciation 2,328,951 2,201,923

Loss on sale of Fixed Assets 95,412 18,648 Interest And Dividends Received (1,313,546) (1,042,666)Tax Deducted at Source (144,594) (151,918)(Profit) / Loss on sale of Investments (3,880,706) 8,520,875 Interest Expenditure 6,148,186 4,213,346

3,233,702 13,760,207 B. Operating Profit / ( Loss)Before Working Capital

Changes (1 + 2) 4,695,528 (4,820,610)C. Changes In Working Capital

(Increase) / Decrease In Current Assets(Excluding Cash And Bank Balances)Trade & Other Receivable (6,214,375) 2,283,557 Stock In Trade (21,374,872) 3,093,158 Increase / (Decrease) In Current Liabilities & Provisions 13,624,041 6,367,293 (13,965,206) 11,744,008

D. Cash Generated From Operations(B+C) (9,269,677) 6,923,398 E. Less: Taxes Paid 118,938 356,069 F. Net Cash Flow From Operating Activities (9,150,739) 7,279,467G. Cash Flow From Investing Activities

Miscellaneous Income(Purchase) / Sale Of Investments (Net) 4,124,417 3,284,144 Purchase Of Fixed Assets (2,379,028) (637,967)Sale of Fixed Assets 12,000 8,500 Interest Income On Investments 1,201,291 979,702 Dividend Income On Investments 112,256 62,964 Net Cash Used In Investing Activities 3,070,936 3,697,343

(6,079,803) 10,976,810 H. Net Cash Flow From Financing Activities

Proceeds From Secured Borrowing 7,613,672 (2,409,088)Proceeds From Issue Of Warrants 625,000 (120,000)Proceeds From Issue Of Equity Shares 2,880,000 600,000 Securities Premium On Equity Shares 3,330,000 555,000 Proceeds From Un-Secured Borrowing (1,681,595) 5,608,544 Profit / (Loss) on sale of Investments 3,880,706 (8,520,875)Preference Dividend Paid - (1,809,585)Interest Paid (6,148,186) (4,213,346)Net Cash Generated /(Used) From Financing Activities 10,499,597 (10,309,350)

I. Net Changes In Cash & Cash Equivalents 4,419,794 667,460 J. Cash&Cash Equivalents As At End Of Financial Year

- Bank Balance 201,471 251,470 - Fixed Deposits 15,352,126 10,882,642 - Cash Balance 367 15,553,964 59 11,134,171 Less: Cash & Cash Equivalents As At The Beginning Of Financial Year 11,134,171 10,466,711 Net Changes In Cash & Cash Equivalents 4,419,794 667,460

Note : 1 Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

2 Proceeds from Equity shares is net amount received after adjusting amount received on Equity3 Figures in brackets denotes outflows.4 Previous Year Figures are regrouped, wherever necessary.


A.D.Shenoy(Partner)Membership No.11549Place: MumbaiDate : 20th August 2010

For and on behalf of the Board Milan R. Parekh Chariman & Managing Director



ACTION FINANCIAL SERVICES (INDIA) LIMITED

49

SCHEDULES TO THE ACCOUNTSASAT AS AT

SCHEDULES 31.03.2010 31.03.2009 Rupees Rupees

SHEDULE - 1SHARE CAPITAL :Authorised:1,00,00,000 Equity Shares of Rs.10/-each 100,000,000 100,000,000 2,00,000 Preference Shares of Rs. 100/- each 20,000,000 20,000,000 Total 120,000,000 120,000,000

Issued Subscribed and Paid - up: 88,10,000 ( P.Y. 84,50,000) Equity Shares of Rs. 10/- each fully-paid 88,100,000 84,500,000 (During the year further shares have been issued on conversion of warrants)(Refer : Note(II) (2)(A)(1a) of Schedule 15)82,800 10 % Redeemable Cumulative Preferences Shares of Rs.100/- each fully paid (Refer : Note(II) (2) (A)(a)of Schedule 15) 8,280,000 8,280,000 Total 96,380,000 92,780,000

SHEDULE - 2RESERVES & SURPLUS :Capital Redemption Reserve Account (Utilised) 10,120,000 10,120,000 Capital Reserve A/c (Refer : Note(II) (2)(A)(1a) of Schedule 15) 5,650,000 - Securities Premium Account 7,492,500 4,162,500 Total 23,262,500 14,282,500

SCHEDULE - 3SECURED LOANS :Term Loans (Secured ) (See Note No. : II (3) of Schedule 15) 8,431,436 9,654,955 Bank Overdraft (Secured ) (See Note No. : II (3) of Schedule 15) 10,613,060 1,775,869 Total 19,044,496 11,430,824

SCHEDULE - 4UNSECURED LOANS :From Banks 28,457 288,723 From Others (Refer : Note(II) (4) of Schedule 15) 15,750,620 11,000,000 Book Overdraft (Refer : Note(II) (4) of Schedule 15) 1,175,256 7,347,205 Total 16,954,333 18,635,928

Schedule - 5Fixed Assets

Assets Gross Block Net Block

Opening Addition Sales / Ded Total Cost Opening For the On sale Total As on As on

Balance during the during the Balance Year during Depreciation 31.03.2010 31.03.2009

as on Year Year as on as on year Upto

01.04.2009 31.03.2010 01.04.2009 31.03.2010

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

INTANGIBLE ASSETS

Goodwill 12,918,645 -

12,918,645 7,591,472 645,932 - 8,237,404 4,681,241 5,327,173

TANGIBLE ASSETS

Office Premises 7,255,961 - - 7,255,961 977,654 118,272 - 1,095,926 6,160,035 6,278,307

Furniture & Fixtures 3,512,243 - 95,460 3,416,783 2,257,666 218,716 10,722 2,465,660 951,123 1,254,577

Office Equipments 2,072,572 11,128 24,500 2,059,200 710,486 106,435 1,826 815,095 1,244,105 1,362,086

Computer Assets 5,786,017 2,367,900 - 8,153,917 4,132,071 1,076,581 - 5,208,652 2,945,265 1,653,946

Vehicles 1,715,952 - - 1,715,952 899,838 163,015 - 1,062,853 653,099 816,114

Total 33,261,390 2,379,028 119,960 35,520,458 16,569,187 2,328,951 12,548 18,885,590 16,634,868 16,692,203

Previous Year 32,925,072 637,967 301,649 33,261,390 14,641,765 2,201,923 274,501 16,569,187 16,692,203

Depreciation


50

Schedule - 6

INVESTMENTS

(A) Quoted Shares (Fully Paid) at cost

AS ON 31st March, 2010 AS ON 31st March, 2009

Name of the Company No. of Shares Face Value Cost No. of Shares Face Value Cost

Rs. Rs. Rs. Rs.

Bajaj Hindustan Ltd 37,275 1 9,501,292 37,275 1 9,501,292

Balrampur Chini 16,010 1 1,332,089 16,010 1 1,332,089

BHEL 6,532 10 12,559,791 6,532 10 12,559,791

Celebrity Fashions - - - 5,100 10 639,821

Chambal Fertilisers 13,500 10 685,291 13,500 10 685,291

Dhampur Sugar - - - 17,760 10 2,218,609

Grasim Industries - - - 200 10 534,170

Hindustan Constr. Co 1,190 1 158,865 3,090 1 268,191

Hotel Leela 21,020 2 475,471 21,020 2 475,471

IFCI Ltd 11,931 10 677,204 11,931 10 213,207

Infosys Technologies 15 5 39,658 2,550 5 4,060,873

Ispat Industries 6,871 10 138,794 29,258 10 653,417

Jk Sugar Ltd - - - 9,500 10 483,327

Jyothy Lab - - - 2,400 5 1,923,360

Kanchi Karporam 70,600 10 702,470 70,600 10 702,470

Mcleod Russel 30 5 8,373 6,325 5 711,028

Morarji Realities 9,682 10 898,490 9,682 10 898,490

Reliance Petrolium - - - 31,579 10 4,429,660

RNRL 37,451 5 2,029,126 31,451 5 1,858,658

Sakti Sugalr 17,081 10 1,013,757 17,081 10 2,026,870

Orissa Sponge 28,000 10 9,440,700 -

Suryadeep Salt 19,682 10 923,641 19,682 10 923,641

Tasc Pharmae 13,550 10 1,399,354 13,550 10 1,399,354

Tata Iron & Steel Co. - - - 469 10 101,450

Reliance Industries 5,355 10 5,789,560 - - -

TTML 23,775 10 401,318 89,169 10 1,271,776

Uttam Sugar - - - 13,500 10 2,927,352

Total (A) 48,175,244 52,799,660

(B) Unquoted Shares (Fully Paid)

Banglore Stock Exchange Ltd 7,228 1 1,229,609 7,228 1 1,229,609

BSE Limited 23,257 1 2,683,500 1,789 1 2,683,500

Action Securities Limited 50,000 10 500,000 50,000 10 500,000

Action Commodities Ltd. 50,000 10 500,000 - - -

Suman Resort 10,000 10 100,000 10,000 10 100,000

Total (B) 5,013,109 4,513,109

Grand Total (A+B) 53,188,353 57,312,769

-

Aggregate Of Quoted Investments At Cost 48,175,244 At Cost 52,799,660

Aggregate of Unquoted Investments At Cost 5,013,109 At Cost 4,513,109

Market Value Of Quoted Investments 49,955,217 Market Value 27,252,867

(Refer : Note(II) (9B) of Schedule 15)


51

For the For the SCHEDULES Half Year Ended Year Ended

Rupees 31.03.2010 31.03.2009

SCHEDULE - 7Stock in TradeShares & Debentures as at 31.03.2010 valued at Cost 78,575,801 57,200,929 or Market value, whichever is lower. 78,575,801 57,200,929 SCHEDULE - 8SUNDRY DEBTORS -Unsecured, Considered GoodOver Six Months 2,685,555 2,088,105 Less : Provision for Non- Performing Debtors 268,556 208,811(Refer : Note(II) (9A) of Schedule 15)

2,416,999 1,879,294 Other Debts 27,687,517 20,042,279

30,104,516 21,921,573

SCHEDULE - 9Cash & Bank BalanceBalance with Scheduled Banks 201,472 251,470 Fixed Deposits 15,352,126 10,882,642 Cash on hand 367 59

15,553,965 11,134,171

SCHEDULE-10Loans & AdvancesInterest Accrued on Deposits 343,383 367,119 Advance Tax Paid - 3,000,000 Advance recoverable in cash and / or kind or for value to be received 3,196,266 2,984,753 Tax Deducted at Source 777,546 632,952 Sundry Deposits 11,574,480 10,875,420

15,891,675 17,860,244

SCHEDULE-11Current Liabilities & ProvisionCurrent LiabilitiesSundry Creditors 49,379,788 31,717,008 Deposits from Clients 2,838,271 2,150,480 NSDL’s Clients Deposits2,102,257 2,102,257 2,270,257 Due to Investor Education Fund - - Micro, Small & Medium Enterprises - - Outstanding Expenses 3,770,397 5,982,838

(a) 58,090,713 42,120,583ProvisionsProvision for Gratuity (Refer : Note(II) (6) of Schedule 15) 2,108,156 1,269,045 Provision for Leave Encashment 297,054 428,601 (Refer : Note(II) (6) of Schedule 15)Provision for Taxation 4,391,740 7,445,394

(b) 6,796,950 9,143,040


52


For the For the Schedules Year Ended Year Ended

31.03.2010 31.03.2009 Rupees Rupees

SCHEDULE-12

Other IncomeInterest on Fixed Deposits 1,201,291 979,702 Dividend on Shares 112,256 62,964 Miscellaneous Income 88,299 32,745 Stock Exchange Expenses Recovered From Remisiers 147,433 462,858 Gratuity Written Back - 491,719 Leave Salary Provision Written Back - 27,811 Profit on sale of securities (Net) 13,251,572 -

TOTAL 14,800,850 2,057,799

SCHEDULE-13Employees Remuneration & BenefitsSalaries and Allowances 6,242,274 7,029,064 Staff welfare Expenses 126,248 126,208 Contribution to Provident Fund and ESIC 322,384 382,364 Leave Encashment 81,410 - Gratuity 888,650 -

7,660,966 7,537,636

53

ACTION FINANCIAL SERVICES (INDIA) LTD. For the For the

Schedules Year Ended Year Ended 31.03.2010 31.03.2009

Rupees Rupees Rupees Rupees

SCHEDULE -14

Administrative and Other ExpensesAdvertisements 39,382 43,659 Bank Charges 1,261,073 566,607 Insurance Premium 25,114 41,979 Books and Periodicals 1,713 4,687 Business Promotion Gifts and Articles - 9,975 Travelling and Conveyance 117,345 184,759 Electricity Expenses 469,064 546,750 Listing, SEBI and Corporate Action fees 268,586 182,287 Maintainence Expenses 562,057 435,660 Printing and Stationary 244,934 201,494 Registrar Fees and Professional charges 952,082 577,652 Rent, Rates and Taxes 1,209,387 1,357,751 Subscription and Membership 35,296 63,684 Auditors RemunerationAudit Fees 55,000 50,000 Tax Audit Fees 15,000 10,000 Other Charges, Cerification etc. 30,000 30,000 100,000 90,000 Communication Expenses 923,713 875,598 Software Expenses 25,710 9,498 Miscellaneous Expenses 204,964 64,946 Stock Exchange Expenses 1,418,504 1,953,435 Settlement Charges 7,458,329 - Decrease in Value of Stock in Trade 434,802 5,145,877 Vehicle Expenses 133,007 113,911NSDL Expenses 915,462 862,695 Loss on Securities Trading - 11,511,930 Loss on Currency Derivatives 226,668 763,151 Loss on Sale of Assets 95,412 18,648 Provision for Non-Performing Assets 59,745 68,992 Computer Expenses 46,132 122,772 Brokerage Paid - 344,191

Total 17,228,482 26,162,588


54


Action Financial Services (India) Ltd.

SCHEDULE 15stSignificant Accounting Policies & Notes to the Accounts for the year ended 31 March 2010.

I. Significant Accounting Policies:

a. Accounting Concepts

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

b. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c. Revenue Recognition

(i) Income from broking activities and depository services are recognized only when it is reasonably certain that the ultimate collection will be made.

(ii) Income from trading in securities and Derivatives comprises of profit or loss on sale of securities held as stock in trade and profit or loss on Derivative instruments is accounted for based on the “ Guidance note on accounting for Equity Index and Equity Stock Futures and Options” issued be the Institute of Chartered Accountants of India.

(iii) Interest income is recognized on time proportionate basis.(iv) Dividend income is recognized as and when payment is received.(v) Income from investing activities are recognized only when it is reasonably certain that the

ultimate collection will be made

d. Fixed Assets

All the fixed assets are accounted at cost of acquisition less accumulated depreciation.

e. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f. Depreciation

Depreciation on Fixed Assets is provided on prorata basis in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956 under Straight Line Method.

g. Investments

Securities which are bought with an intention of keeping for long term, are classified under Investments and are valued at cost plus brokerage and stamp charges. Provision for diminution

55

in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

h. Amortisation

Goodwill shall be amortized over a period of Twenty years.

i. Stock In Trade

Shares and Debentures are valued at cost or market price whichever is lower, whereby the cost of each script is compared vis-à-vis its market value and the resultant shortfall if any, is charged to revenue.

j. Taxation

(i) Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax Act, 1961.

(ii) Deferred tax on timing difference between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

k. Employee benefits

(i) Gratuity to employees is provided as per AS 15 and liability as on Balance Sheet date has been determined on the basis of actuarial valuation. The liability is not funded.

(ii) Leave encashment benefits payable to employees of the Company with respect to accumulated leave outstanding at the year-end are accounted for on the basis of an actuarial valuation as at the Balance Sheet date.

(iii) Contributions payable by the Company to the concerned government authorities in respect of provident fund, family pension fund and ESIC are charged to Profit and Loss account.

(iv) Other employee benefits are accounted on accrual basis.

l. Earning per ShareIn determining the earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra ordinary/ exceptional items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per shares comprises the weighted average shares considered for deriving the basic earning per share and also weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock split and bonus shares issued.

m. Leased Assets:Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

n. Provisions for Contingent liabilities and Contingent assetsA provision is recognized for a present obligation as result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Provisions are determined based on net estimate of the amount required to settle the obligation at the Balance sheet date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


56


II. Notes to the Accounts:

Contingent Liabilities in respect of

a. Bank Guarantee amounting to Rs. 29,850,000 /- (previous year Rs. 20,200,000/-).b. Allotment money payable on partly paid shares and debentures Rs. 1,782,000/- (Previous

year Rs. 1,782,000/-)stc. Unpaid Dividend on Preference Shares Rs.1, 656,000/- for the year ending 31 March 2010

not provided. (Previous Year Rs.828,000/-)d. Claims against company not recognized as debts: Rs. 540,000/-

2. Share holders Fund

A. Share capital

1. Equity Share Capital and Warrants:tha) The Company in its meeting of Board of directors held on 11 April 2009 allotted 360,000

Equity shares to its promoters, arising after conversion of 360,000 warrants out of total thwarrants which were issued on 12 October 2007, at a price of Rs 19.25 per warrant.

Accordingly as sum of Rs. 3,330,000/- is credited to Securities Premium Account.

b) During the year balance 1,190,000 warrants, which were issued to promoters and investors thon 12 October 2007 for which request for conversion was not received till the expiry date,

were forfeited and the amount of Rs. 5,650,000/- is transferred to Capital Reserve Account on account of forfeiture of warrants.

2. Preference Share Capital:thThe Preference Share Holders meeting was held on 13 March 2009, wherein the Board of

Directors have been authorized to redeem the said shares, decide, modify/ alter the terms of the issue of said shares including early redemption of said shares, or extension of period of

stredemption and in no case the period of redemption of the said shares be extended beyond 31 thMarch 2015, the said resolution was ratified in the AGM held on 30 September 2009.

stAccordingly the Board of Directors have extended the date of redemption to not beyond 31 March 2015, keeping all other terms and conditions unchanged.

B. Warrants:thThe Board of Directors of the company in its meeting held on 9 November 2009 issued 125,000

warrants on preferential basis to investors at the rate of Rs. 19.25 per warrant with an option to convert the same into equivalent number of Equity shares of nominal at Rs. 10/- each at a premium of Rs. 9.25 per share. The option of conversion shall be valid for a period of 18 months from the date of allotment of the warrants. The company received Rs. 5/- per warrant as upfront payment and is credited to Subscription Money towards warrants.

3. Secured Loans

1. Term Loan: Term Loan of ICICI Bank Ltd. of Rs. 8,431,436/- (Previous Year 9,654,955) is Secured by mortgage of office premises at No. 46, 47 and 54, Rajgir Chambers, Fort, Mumbai and Personal Security and Personal Guarantee by Two Directors.

2. Bank Overdraft: Overdraft of Rs. 10,613,060/- (previous year Rs. 1,775,869/-) as at 31.03.2010 from the Schedule Bank is secured against Personal Guarantee of Two Directors and Pledge of Company as well as third party Shares.

57

4. Unsecured Loans

Unsecured Loan of Rs. 1,176,256 (Previous Year Rs. 7,347,205) represents Book overdraft in current of banks and Inter Corporate Deposit of Rs. 15,750,620 (Previous year Rs. 11,000,000)

stas on 31 March 2010.

5. Income Tax :

The company had contested Income Tax demand of Rs. 13,455,810/- for Assessment Year 2001-02. CIT (A) has heard the company's appeal and decided in favour of the company. The Income Tax Department has appealed in the tribunal against the said order.

6. Defined Benefit Plan:

The company has applied revised Accounting Standard AS – 15 Employees Benefits notified under the Companies (Accounting Standard) Rules, 2006. Consequent to the introduction of AS – 15, we have obtained the Actuarial Certificate for Valuation of Gratuity and Leave Salary as under:

a) Gratuity: Disclosures are as under:

(In Rupees)

Assumptions as at 31-Mar-10 31-Mar-09

Mortality LIC (1994-96)

Ult.

Interest / Discount Rate 8.20% 8.00%

Rate of increase in compensation 12.50% 12.50%

Rate of return (expected) on plan assets 0.00%

Employee Attrition Rate(Past Service (PS) ) PS: 0 to 42 : 5%

Expected average remaining service 12.82 13.54

Changes in present value of obligations 31- -10Mar 31-Mar-09

31- -10Mar 31-Mar-09

PVO at beginning of period

Interest cost 149,321

1,269,045 1,866,515

Current Service Cost

101,524

Past service cost (Non vested benefits) 26,708

318,172 201,898

Past service cost (Vested benefits)

Benefits Paid -

-

-

898,739

Actuarial (gain)/loss on obligation

PVO at end of period

(492,678) (948,689)

Changes in fair value of plan assets

2,121,510 1,269,045

Fair Value of Plan Assets at beginning of period --

Expected Return on Plan Assets --

Contributions --


58

31- -10Mar 31-Mar-09

31- -10Mar 31-Mar-09

31- -10Mar 31-Mar-09

31- -10Mar 31-Mar-09

Benefit Paid Actuarial gain/(loss) on plan assets

Fair Value of Plan Assets at end of period

-

-

-

-

-

-

Fair Value of Plan Assets

Fair Value of Plan Assets at beginning of period

Actual Return on Plan Assets

Contributions

Benefit Paid


-

-

-

-

-

-

-

-

-

-

Funded Status

(2,121,510)

(1,269,045)

Excess of actual over estimated return on Plan Assets -- Experience History (Gain)/Loss on obligation due to change in Assumption (42,249) -

Experience (Gain)/ Loss on obligation (450,429) (948,689) Acturial (Gain)/ Loss on Plan Assets --

Actuarial Gain/(Loss) Recognized

Actuarial Gain/(Loss) for the period (Obligation) 492,678 948,689

Actuarial Gain/(Loss) for the period (Plan Assets) --

Total Gain/(Loss) for the period 492,678

948,689

Actuarial Gain/(Loss) recognized for the period 492,678 948,689

Unrecognized Actuarial Gain/(Loss) at end of period --

-

-

-

-

-

-

Past service cost recognised

Past service cost -Non vested benefits 26,708

Past service cost -Vested benefits 898,739

Average remaining future service till vesting of the benefits

2

Recognised Past service cost -Non vested benefits

13,354

Recognised Past service cost - vested benefits

898,739

Unrecognised Past service cost -Non vested benefits

13,354

Amounts to be recognized in the balance sheet and statement of profit & loss account

PVO at end of period

2,121,510 1,269,045


--

Funded Status

(2,121,510)

(1,269,045)


31- -10Mar 31-Mar-09

59

31-Mar-09

31-Mar-09

31-Mar-09

31- -10Mar

31- -10Mar

31- -10Mar

Unrecognized Actuarial Gain/(Loss)

--

-

Unrecognized Past service cost- Non vested benefits

13,354

Net Asset/(Liability) recognized in the balance sheet

(2,108,156)

(1,269,045)

Expense recognized in the statement of P & L A/C Current Service Cost 318,172 201,898

Interest cost 101,524 149,321

Past service cost (Non vested benefits) 13,354

Past service cost (Vested benefits) 898,739

Expected Return on Plan Assets --

--

-

-

Net Actuarial (Gain)/Loss recognized for the period (492,678) (948,689)

Expense recognized in the statement of P & L A/C 839,111 (597,470)

Movements in the Liability recognized in Balance Sheet

Opening Net Liability 1,269,045 1,866,515

Adjustment to opening balance

Expenses as above

839,111

(597,470)

Contribution paid

--

Closing Net Liability

2,108,156

1,269,045

b) Leave Encashment : Disclosures are as under :

Assumptions as at

Mortality LIC (1994-96) Ult. Interest / Discount Rate 8.20% 8.00%

Rate of increase in compensation 12.50% 12.50%

Rate of return (expected) on plan assets

Employee Attrition Rate(Past Service (PS) ) PS: 0 to 42 : 5%

Expected average remaining service 12.82 13.54

Changes in present value of obligations

PVO at beginning of period

428,601

456,412

Interest cost

34,288

36,513

Current Service Cost

293,513

350,727

Benefits Paid

--

Actuarial (gain)/loss on obligation

(459,348)

(415,051)

31- -10Mar 31-Mar-09


60


PVO at end of period 297,054 428,601

Changes in fair value of plan assetsFair Value of Plan Assets at beginning of period

Expected Return on Plan Assets Contributions Benefit Paid

Actuarial gain/(loss) on plan assets


- - - - -

-

- - - - -

-

Fair Value of Plan AssetsFair Value of Plan Assets at beginning of period

Actual Return on Plan Assets

Contributions Benefit Paid Fair Value of Plan Assets at end of period

- -

- - -

- -

- - -

Funded Status (297,054) (428,601)Excess of actual over estimated return on Plan Assets --Experience History(Gain)/Loss on obligation due to change in Assumption (6,638) -

Experience (Gain)/ Loss on obligation (452,710) (415,051)

Experience (Gain)/ Loss on Plan Assets - -

Actuarial Gain/(Loss) Recognized

Actuarial Gain/(Loss) for the period (Obligation) 459,348 415,051

Actuarial Gain/(Loss) for the period (Plan Assets) --

Total Gain/(Loss) for the period 459,348 415,051

Actuarial Gain/(Loss) recognized for the period

459,348 415,051 Unrecognized Actuarial Gain/(Loss) at end of period

--

Amount to be recognized in the Balance sheet and statement of profit & loss Account

PVO at end of period 297,054 428,601


--

Funded Status (297,054) (428,601)

Unrecognized Actuarial Gain/(Loss)

--

Net Asset/(Liability) recognized in the balance sheet

(297,054) (428,601)

Expense recognized in the statement of P & L A/C

31- -10Mar

31- -10Mar

31- -10Mar

31- -10Mar

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09

31- -10Mar

31- -10Mar

31-Mar-09

31-Mar-09

61

31-Mar-09

31-Mar-09

Current Service Cost 293,513 350,727

Interest cost 34,288 36,513

Expected Return on Plan Assets -- Net Actuarial (Gain)/Loss recognized for the period (459,348) (415,051)

Expense recognized in the statement of P & L A/C (131,547) (27,811)Movements in the Liability recognized in Balance Sheet

Opening Net Liability 428,601 456,412

Expenses as above (131,547) (27,811)

Contribution paid --

Closing Net Liability 297,054 428,601

Short Term Compensated Absence Liability

Valuation date. 31-Mar-10 31-Mar-09

No of Days 805 888

Amount * 2,029,679 1,939,983

Remuneration to Directors 31st March,2010 (Rupees)

31st March,2009 (Rupees)

Salary 2,040,000 2,040,000Perquisites 150,000 150,000PF Contribution 18,720 18,720Leave Encashment 182,500 182,500Total 2,391,220 2,391,220

7. Managerial Remuneration:

Provision for leave salary is made on Actuarial Valuation; hence individual figures are not ascertainable.

The computation of net profit under section 198 / 349 of the Companies Act, 1956 has not been given since no commission is paid / payable to any director in the current year.

8. Provision for Taxation:

Tax provision for the year has been made on the basis of taxable income.

Deferred Tax has been considered for timing differences between book and taxable profits are as below:

Particulars

As at 01.04.2009

For the year

As at 31.03.2010

WDV differential

(1,839,959) 206,869 (1,633,090)

Retirement benefits

1,018,318 (294,590) 723,728

Unabsorbed Depreciation

538,275 (61,761) 476,514

Business Loss

3,072,965 250,142 3,323,107

Long Term Loss

242,572 30,738 273,310

Short Term Loss

722,843 (415,902) 306,941

Net Deferred tax Asset / (Liability)

3,755,014 (284,504) 3,470,510

31- -10Mar

31- -10Mar


62


9. (A) As per RBI guidelines in relation to Non-Banking Financial Companies the company hasprovided Rs. 268,556/-, 10% as provision for Non - Performing Assets on debts for more than six months (previous year Rs 208,811-) and Rs. 59,745/- being additional provision is charged to Profit and Loss account.

(B) Investments:

(a) The aggregate market value of quoted investments as at 31.03.2010 is Rs. 49,955,217/- (Previous year Rs. 27,252,867/-) as against the total cost of quoted investment of Rs.48,175,244 /- (Previous year Rs. 52,799,660/-)

No provision for diminution in the value of quoted investment is considered necessary as in the management's view the short fall is temporary in nature.

(b) In case of Stock in Trade, full provision for diminution in value of stock has been made in the accounts.

(C) During the Year the Company invested Rs. 500,000 in M/s Action Commodities Limited in 50,000 Equity Shares of Rs. 10/- being wholly owned subsidiary.

(d) Details of movements in investments during the year are given below:-

Purchases Sales Particulars

Face Value Qty Value Qty Value

BAJAJHINDLTD 1 20000 3,765,033 20000 3,742,869 BALRAMPUR C* 1 200 25,760 200 25,415 BHEL 10 1350 3,063,258 1350 3,083,144 CELEBRITY 10 --

-

--

-

5100 632,400 CHAMB.FER(DM 10 4250 228,263 4250 228,125 DHAMPUR SUGA 10 - 17760 2,291,040 GRASIM INDUS 10 235 605,462 435 1,166,289 HINDUS CONST 1 1290 172,814 3190 425,414 IFCI LTD 10 104919 5,577,138 104919 5,586,682 INFOSYS TECH 5 12411 20,342,545 14946 26,954,632 ISPAT INDUST 10 13735 276,960 36122 783,251 JK SUGAR LTD 10 - 9500 325,375

JYOTHYLAB 5 - 2400 1,898,400

MCLEOD RUSEL 5 35 9,769 6330 1,577,147

ORISA SPO IR 10 25000 8,509,650 13000 4,377,870

RELIANCE 10 33003 56,410,790 28845 52,100,307

RNRL 5 56700 3,861,370 50700 3,489,010

RPL 10 100 10,550 31679 4,440,196

SAKTH SUGAL 10 17081 1,013,757 17081 1,013,757

TATA TELESRV 10 12775 359,868 78169 1,919,081

UTTAMSUGR 10 - 13500 2,943,000

Particulars 2009-10 2008-09 Audit Fees 55,000 50,000Tax Audit Fees 15,000 10,000Other Charges , Certification etc 30,000 30,000Total 100,000 90,000

10. Auditor's remuneration:-

63

Sr. No. Relation

Related Party

1. Enterprise controlling the company NA

2. Key Management Personnel 1. Managing Director:

Mr.Milan R.Parekh

2.Jt.Managing Director:

Mr.Bakul R.Parekh

3. Enterprise controlled by the company Subsidiaries:

1. Action Securities Limited

2. Action Commodities Limited

4. Relative of key management Personnel

NA

5. Enterprise under control of relative of

Key Management Personnel

R. B. Parekh – HUF

6. Enterprise under common control of


M/s. Milan R Parekh

11. Earning Per Share (EPS):

12. There are no balances outstanding due to 1) Small scale industrial undertaking (SSI) 2) Small and Medium Micro Enterprises 3) Investor education and protection fund u/s 205 C of the Companies Act, 1956.

13. Disclosures as required by Accounting Standards 19, “Leases” are given below:

(I) The Company has taken various office premises under leave and license agreements.

The lease period extends between 11 months and 3 years under leave and license.

(ii) Lease payments are recognized in the Profit and Loss Account under “Rent”

(iii) The future minimum lease payments under Non Cancelable operating lease:

Sr. No.

Particulars

Year Ended 31.03.2010


(A)

Profit attributable to Equity Shareholders (in Rs.) after tax

1,151,666 (15,298,904)

(B)

Nominal Value of Equity Shares (in Rs.)

10 10(C)

Weighted Number of Equity Shares outstanding during the Year

8,810,000 8,391,150

(D)

Weighted Number of Equity Sh ares outstanding during the Year

8,847,781 9,941,150

(E)

Basic Earnings Per Share (in Rs.) (A/C)

0.131 (1.82)(F)

Diluted Earnings Per Share (in Rs.) (A/D)

0.130 (1.54)

Particulars



Particulars

Amount (Rs.)

Amount (Rs.)

Not later than one year

1,168,800 1,104,000

Later than one year and not later than five years

3,112,800 2,424,000

More than five years

NIL NIL

14. As per Accounting Standard 18, the disclosures of transaction with the related parties as defined in the Accounting Standard are given below:

a. Relationship & name of related party :


64

Sr. No. Relation Related Party

1.

Enterprise controlling the Company NA

2.


Mr Milan R Parkeh

Nature of

Transaction

Current

Year

Previous

Year

Remuneration

1,228,110 1,228,110

Mr. Bakul R Parkeh

Nature of

Transaction Current

Year Previous

Year

Remuneration 1,163,110

1,163,110

3. Enterprise controlled by the

company Nature of

Transaction Current

Year Previous

Year

Shares Capital 5,00,000 5,00,000

Expense

reimbursement

received

330,000 425,958

Fixed Asset

reimbursement

received

185,000 73,042

Balance

15,000

0 4.

Relative of key management Personnel

None

5.

Enterprise under control of relative

of Key Management Personnel

Nature of

Transaction

Current

Year

Previous

Year Rent Paid

1,20,000

1,20,000

Balance

NIL

NIL

6.

Enterprise under common control

of Key Management Personnel

None


15. Company's primary business activates are Broking and Depository Services, both are covered under one board segment of Share broking activities hence segment reporting is not applicable.

16. Previous year's figures have been regrouped, reclassified and /or renamed to confirm to this year's classification.

As per our report attachedFor Ford,Rhodes,Parks & Co.Chartered AccountantsFirm Reg. No. : 102860W

A.D.Shenoy(Partner)Membership No.11549Place: MumbaiDate : 20th August 2010

For and on behalf of the Board Milan R. Parekh Chairman & Managing Director


b. Details of transactions with related parties are as follows :

65

ACTION FINANCIAL SERVICES (INDIA) LTD.Information pursuant to part (IV) of the Companies Act, 1956

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

For FORD, RHODES, PARKS & CO. Chartered Accountants Firm Registration No. 102860W

A.D. Shenoy Milan R. Parekh Bakul R. Parekh(Partner) M.No.11549 Director DirectorPlace: Mumbai

thDate: 20 August 2010.

For and on behalf of the board of Directors


66


ACTION SECURITIES LIMITEDDIRECTORS' REPORT

ndThe Directors present herewith the 2 Annual Report together with the Audited statement of Accounts st

of the company for the period ended 31 March 2010

FINANCIAL RESULTS:

During the fifteen month period under report the Company did not carry out any commercial activities, however it incurred net loss of Rs. 59,697/- (after Tax) mainly due to the administrative overheads and depreciation compared to net loss of Rs. 3,23,257/- incurred during the previous financial period. The said loss was carried to Balance Sheet.

DIVIDEND:

Since the Company is yet to commence the commercial activities and has incurred net loss the Directors regret their inability to propose any dividend for the period.

FUTURE OUTLOOK:

Your Company is planning to acquire Broking and Depository business in short span of time. Business will commence after acquisition.

DEPOSIT:

The company, during the year under review, did not accept any deposits from the public.

DIRECTORS:

Mr. Milan R. Parekh retires by rotation at the ensuing annual general meeting and being eligible offers himself for re-appointment

There was no change in the constitution of the Board of Directors of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors further report that:

I. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departure;

II. The accounting policies selected by them have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of thecompany at the end of the financial year and of the profit or loss of the company for the year under review;

III. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, 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.

CORPORATE GOVERNANCE:

The Company has been following the principles and practices of good Corporate Governance and is taking necessary steps to ensure due compliance of various laws applicable to the company.

AUDITORS & AUDITORS' REPORT:

M/S Fords, Rhodes, Parks & Co., Chartered Accountants, the statutory auditors of the company retires at the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment.

.

67


EMPLOYEES:

None of the employee was in receipt of remuneration for whole/ part of the year exceeding the limit prescribed u/s. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended.

DISCLOSURES:

Information required under the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988:

Conservation of Energy:

Company's operation involves no manufacturing or processing activities.

Form of Disclosure of particulars with respect to absorption of Technology, research & Development (R & D):

FORM – B

1. Specific areas in which R & D carried out by the Company Nil

2. Benefits derived as a result of the above R & D Nil

3. Future Plan of Action Nil

4. Expenditure on R & D Nil

Technology Absorption, Adaptation & Innovation:

There is no imported technology involved in the operations of the Company. The Company will focus its attention towards the rapid technological changes in the fields of its activity and train the manpower continuously to improve the quality of services once its commences its commercial activities.

Foreign exchange earning and out go:

Foreign Exchange Earned Rs. NIL

Foreign Exchange Used Rs. NIL

ACKNOWLEDGEMENT:

The Board Express and places on record its sincere gratitude for co-operation, guidance and advice extended to the company by its Bankers, Business Associates and the Government Departments.

The Board also places on record its appreciation for the dedication, commitment and teamwork of employees.


Milan R. Parekh thDate: 9 July, 2010 Chairman


68


AUDITORS' REPORT TO THE MEMBERS OF ACTION SECURITIES LIMITED FOR THE STYEAR ENDED 31 MARCH 2010

st1. We have audited the attached Balance Sheet of Action Securities Limited as at 31 March,

st2010, the Profit and Loss Account for the year ended 31 March 2010 and also the Cash Flow Statement of the Company for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.




a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.




ste) On the basis of written representations received from the directors, as on 31 March, 2010 and taken on record by the Board of Directors, we report that none of the directors is

stdisqualified as on 31 March, 2010 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

stI) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31 March,

2010;ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows for the period ended on that date.

For Ford, Rhodes,Parks & Co.Chartered AccountantsFirm Registration no. 102860W

A.D.ShenoythDate : 9 July 2010 Partner

Place : Mumbai Membership No. 11549

69

Annexure referred to in paragraph (3) of our report of even date for the year ended st

31 March , 2010


b) All fixed assets have been physically verified by the management during the period. No material discrepancies were noticed on such verification.

c) During the period the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

2. The Company does not have any stocks of raw materials, stores, spare parts and finished

goods. Hence the clause (ii) of the Order does not apply to the Company.

3. a) The Company has not granted any unsecured loans / Advances to its companies, firms or other parties covered in the Register maintained under Section 301 of the Act.

b) The Company has not taken unsecured loans from companies, firms or other parties covered in the Register maintained under Section 301 of the Act.

4. This is the first year of operations and there are no business activities carried out by the Company. Hence clause (iv) of the Order does not apply.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

6. The Company has not accepted any deposits from the public during the period.

7. The Company has an adequate internal control system commensurate with the size and nature of its business.


9. This is the first period of operations and there are no business activities carried out by the Company. Hence clause (iv) of the Order does not apply.

10. This is the first period of operations of the Company. The Company has accumulated losses of stRs.382,953 /- as at 31 March 2010 and the Company has incurred cash losses during the

current period. 11. The Company has not borrowed from any banks. The Company does not have any borrowing by

way of debentures.


70


12. Based on our examination of documents and records the Company has not granted loans andadvances on the basis of security by way of pledge of shares, debentures and other securities.


14. The Company has yet to start the business activities. Hence clause (xiv) of the Order does not apply.


16. The Company has not taken term loans during the period under review.

17. The Company has not raised any funds on short term basis during the period.

18. During the period, the Company has allotted equity shares to its holding company.

19. The Company did not have any debentures issued during the period.

20. The Company has not raised any money through a public issue during the period.


For Ford,Rhodes,Parks & Co.Chartered Accountants

Firm Registration no. 102860W

A.D.Shenoyth

Date : 9 July 2010 PartnerPlace : Mumbai Membership No. 11549

71

BALANCE SHEET AS AT 31st MARCH 2010

Schedule 31.03.2010 31.12.2008 No. Rupees Rupees Rupees Rupees

I. Sources of Funds 1. Shareholders Fund Share Capital 1 500,000 500,000

2. Unsecured Loans 2 1,766 6,000

TOTAL 501,766 506,000 II. Application of Funds 1. Fixed Assets 3 a. Gross Block 73,042 73,042 b. Less : Depreciation 44,585 16,129 c. Net Block 28,457 56,913

2. Deferred Tax Asset (Net) 128,980 132,168

3. Current Assets , Loans and Advances Cash and Bank balances 4 876 5,662

(A) 876 5,662 Less : Current Liabilities and Provisions 5

Current Liabilities 39,500 12,000(B) 39,500 12,000

Net Current Assets (A) - (B) (38,624) (6,338)

4. Profit and Loss Account (Debit Balance) 382,953 323,257

Total 501,766 506,000 Significant Accounting Policies and Notes to the Accounts 8 The Schedules 1 to 8 annexed hereto forms part of the Balance Sheet and Profit and Loss Account



Place: MumbaiDate : 9th July 2010


Milan R. Parekh Director

Bakul R. Parekh Director

ACTION SECURITIES LIMITED


72

PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED AS AT 31st MARCH 2010

Schedule For the Period For the PeriodNo. Ended Ended


INCOME - - TOTAL INCOME - -

EXPENDITURE Employees Remuneration and Benefits 6 - 114,240 Administrative and Other Expenses 7 28,053 325,056

28,053 439,296 OPERATING PROFIT / (LOSS) (28,053) (439,296)Depreciation 3 28,456 16,129

28,456 16,129 PROFIT / (LOSS) BEFORE TAX (56,509) (455,425)Provision for Taxation - -Provision for Deferred Tax Asset / (Liability) (3,188) 132,168

PROFIT / (LOSS) AFTER TAX (59,697) (323,257)Add : Profit/ (Loss) B/f (323,257)Net Profit / Loss before Appropriations (382,953)Appropriations - Profit and Loss Balance Carried to Balancesheet (382,953) (323,257)

(382,953) (323,257)

Earning Per Share (Per Equity Share of Rs.10/- each)- Basic (1.19) (6.47)Significant Accounting Policies andNotes to the Accounts 8The Schedules 1 to 8 annexed hereto forms part of the Balance Sheet and Profit and Loss Account








ACTION LIMITEDSECURITIES

73

ACTION SECURITIES LIMITEDCash Flow Statement for the period ended 31st March 2010


For Ford,Rhodes,Parks & Co.Chartered AccountantsFirm Reg. No. : 102860W

A.D.Shenoy(Partner)Membership No.11549Place: MumbaiDate : 9th July 2010

For and on behalf of the Board Milan R. Parekh Director


74



SCHEDULES TO THE ACCOUNTS

75

AC

TIO

N S

EC

UR

ITIE

S L

IMIT

ED

Sc

he

du

le -

3F

ixe

d A

ss

ets


76



77

Action Securities Ltd.SCHEDULE 8

Significant Accounting Policies & Notes to the Accounts


a. Accounting ConceptsThe accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

b. Use of estimatesThe preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

c. Revenue RecognitionIncome from broking activities and depository services are recognized only when it is reasonably certain that the ultimate collection will be made.

d. Fixed AssetsAll the fixed assets are accounted at cost of acquisition less accumulated depreciation.

e. Impairment of Fixed AssetsAn asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f. DepreciationDepreciation on all fixed assets is provided on pro-rata basis in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956 under Written down Value Method.

g. Taxation(i) Provision for current tax is made on the basis of estimated taxable income for the current

accounting year in accordance with the Income-tax Act, 1961. (ii) Deferred tax on timing difference between taxable income and accounting income is

accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.


78


h. Employee benefits(i) There are no employees eligible for gratuity as such no provision for gratuity is considered

in accounts.

(ii) There are no employees eligible for Leave Salary as such no provision for Leave salary is considered in accounts.

(iii) There are no employees eligible for PF and ESIC.

(iv)Other employee benefits are accounted on accrual basis.

I. Earning per ShareIn determining the earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra ordinary/ exceptional items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per shares comprises the weighted average shares considered for deriving the basic earning per share and also weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock split and bonus shares issued.

j. Provisions for Contingent liabilities and Contingent assetsA provision is recognized for a present obligation as result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Provisions are determined based on net estimate of the amount required to settle the obligation at the Balance sheet date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


1. Background.Action Securities Limited was promoted by Action Financial Services (India) Limited as a wholly owned subsidiary. The main objects of the company are Share Broking and Depository services. However the company is yet to start the full-fledged activities.

2. Contingent Liabilities: NIL

3. Share Capital

All 50,000 Equity shares are held by the holding company, Action Financial Services (India) Ltd. and its nominees.

4. Unsecured LoansstThe company has availed unsecured loan from Directors. The amount outstanding as on 31

March 2010 is Rs. 1,766/- (Previous Year – Rs. 6,000/-). The loan is interest free and there are no stipulations as to repayment.

79

Sr. No. Relationship Name of the Related Party

1. Holding Company Action Financial Services (India) Limited

2. Key Management Pers onnel Mr. Milan R.Parekh (Director)Mr.Bakul R.Parekh (Director)

3. Transaction with Holding Company Expenses Reimbursed: Rs 15,000/-

4. Transaction with Key Management Personnel

Unsecured Loans repaid: Rs.4, 234 /-Closing Balance: Rs. 1,766/-

Sr. No.

Particulars Period Ended

31.3.2010

Period Ended

31.12.2008(A) Profit / (Loss) attributable to Equity

Shareholders (in Rs.) after tax

(59,697) (323,257)

(B) Nominal Value of Equity Shares (in Rs.) 10 10(C) Weighted Number of Equity Shares outstanding

during the Year 50,000 50,000

(D) Weighted Number of Equity Shares outstanding during the Year

50,000 50,000

(E) Basic Earnings Per Share (in Rs.) (A/C) (1.19) (6.47)(F) Diluted Earnings Per Share (in Rs.) (A/D) (1.19) (6.47)

Particulars As at 31.12.2008

For the year As at 31.03.2010

WDV differential (8,558) 2,858 (5,700)Unabsorbed Depreciation 4,984 15,871 20,855Business Loss 135,742 (21,917) 113825Deferred tax Asset / (Liability) (Net)

132,168 (3,188) 128,980

5. Income Tax:

In view of the loss for this period no provision for income tax is considered.

6. Employee Benefit

There are no employees eligible for gratuity, leave salary or providend fund etc. as such no provision is considered for this period.

7. Provision for Deferred Tax:

Deferred Tax has been considered on timing differences between book and taxable profits are as under.

Deferred tax Asset / (Liability) as at 31.03.2010

8. Earning Per Share (EPS): Basic & Diluted EPS:


10. As per Accounting Standard 18, the disclosures of transaction with the related parties as defined in the Accounting Standard are given below:

• List of related parties with whom transactions have taken place and relationships:


80

11. As the company has not started its full-fledged activites, hence segment reporting is not applicable.

st12 This is the financial statement of the company and covers the period from 1 January 2009

stto 31 March 2010.

13 Previous year’s figures have been regrouped, re-classified and / or renamed to confirm to this year’s classification.





Milan R. ParekhDirector


81

II. Additional Information Pursuant to Part IV of Schedule VI To The Companies Act, 1956.


I. Registration Details

Registration No. State Code

Balance Sheet Date



For and on behalf of the Board Milan R. Parekh Director


Date

Public Issue Right Issue

Bonus Issue

III. Position of Mobilisation and Deployment of Funds(Amount in Rs. Thousands)

IV. Pertomancer of Company/(Amount in Rs. Thousands)

V. Generic Names of three Principal Products/Service of Company(As per monetary terms)

Item Code No.(ltc Code)Product Description

II. Capital Raised during the year (Amount in Rs. Thousands)

Private Placement / Initial Subscription

Month Year

Total Liabilities Total Assets

Sources of FundsPaid-up Capital Reserves & Surplus

Secured Loans Subscription Amount of Warrants

Deferred tax LiabilityUnsecured Loans

Net Current Assets

Deferred Tax Assets

Application of FundsNet Fixed Assets Investments

Miscellaneous Expenditure

Profit & Loss A/c - Debit Balance

Total Expnditure

Profit/(Loss) After Tax

Dividend Rates %

Profit/(Loss) Before Tax

Tumover

Eaming Per Share in Rs.


82


ACTION COMMODITIES LIMITEDDIRECTORS' REPORT

stThe Directors present herewith the 1 Annual Report together with the Audited statement of Accounts

stof the company for the period ended 31 March 2010

FINANCIAL RESULTS:

thThe Company was incorporated on 7 August, 2009. In the very first year of its operations the Company did not carry out any commercial activities, however it incurred net loss of Rs. 248,870/- (after Tax) mainly due to the administrative overheads and depreciation. The said loss was carried to the Balance Sheet.

DIVIDEND:

Since the Company is yet to commence the commercial activities and has incurred net loss the Directors regret their inability to propose any dividend for the period.

OBJECTIVE:

The prime Objective for which the Company has been incorporated is to acquire membership of various Commodity Exchanges and actively deal in various instruments offered by such exchanges for self as well as for clients and to render all allied services.

FUTURE OUTLOOK:

Considering the growth in capital market your directors are confident of having reasonable activities in the Company in the years to come. Your Company expects to commence business by end of October 2010.

SUBSIDIARY COMPANY:

The Company has been incorporated as a wholly owned subsidiary of Action Financial Services (India) Limited and accordingly its entire paid up share capital is held by parent Company and its nominees.

CAPITAL:

The Company was incorporated with an initial authorised and subscribed equity share capital of Rs. 5, 00,000/-.

The Company increased its authorised share capital to Rs. 10,00,000/- in the first quarter of 2010-11 and additional 50,000 Equity Shares of Rs. 10/- each were issued to its holding Company Action Financial Services (India) Limited for cash at a premium of Rs. 150/- per share in terms of prevailing guidelines.

83

DEPOSIT:

The company, during the year under review, did not accept any deposits from the public.

DIRECTORS:

The appointment of First Directors of the Company Mr. Milan R. Parekh, Mr. Bakul R. Parekh and Mr. Sagar M. Parekh are proposed to be regularised in the ensuing Annual General Meeting . The First Directors have expressed their desire to get appointed as Directors liable to retire by rotation.

There was no change in the constitution of the Board of Directors of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT:

Your Directors further report that:

I. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departure;

II. The accounting policies selected by them have been applied consistently and judgments and estimates that are reasonable and prudent have been made 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 or loss of the company for the year under review;

III. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, 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.

CORPORATE GOVERNANCE:

The Company has been following the principles and practices of good Corporate Governance and is taking necessary steps to ensure due compliance of various laws applicable to the company.

AUDITORS & AUDITORS' REPORT:

M/S Fords, Rhodes, Parks & Co., Chartered Accountants, the First Auditors of the Company, retires at the conclusion of the ensuing Annual General Meeting and is eligible for re-appointment.


EMPLOYEES:

None of the employee was in receipt of remuneration for whole/ part of the year exceeding the limit prescribed u/s. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended.


84


DISCLOSURES:

Information required under the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988:

Conservation of Energy:

Company's operation involves no manufacturing or processing activities.

Form of Disclosure of particulars with respect to absorption of Technology, research & Development (R & D):

FORM – B

1. Specific areas in which R & D carried out by the Company Nil2. Benefits derived as a result of the above R & D Nil3. Future Plan of Action Nil4. Expenditure on R & D Nil

Technology Absorption, Adaptation & Innovation:

There is no imported technology involved in the operations of the Company. The Company will focus its attention towards the rapid technological changes in the fields of its activity and train the manpower continuously to improve the quality of services once its commences its commercial activities.

Foreign exchange earning and out go:

Foreign Exchange Earned Rs. NILForeign Exchange Used Rs. NIL

ACKNOWLEDGEMENT:

The Board Express and places on record its sincere gratitude for co-operation, guidance and advice extended to the company by its Bankers, Business Associates and the Government Departments.

The Board also places on record its appreciation for the dedication, commitment and teamwork of employees.


th Date : 10 July, 2010

Milan R. Parekh Chairman

85

86

AUDITORS' REPORT TO THE MEMBERS OF ACTION COMMODITIES LIMITED FOR STTHE PERIOD ENDED 31 MARCH, 2010

st1. We have audited the attached Balance Sheet of Action Commodities Limited as at 31 March, 2010, th stthe Profit and Loss Account for the period from 7 August 2009 to 31 March 2010 and also the Cash

Flow Statement of the Company for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.




a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.




ste) On the basis of written representations received from the directors, as on 31 March, 2010 and taken ston record by the Board of Directors, we report that none of the directors is disqualified as on 31 March,

2010 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

5. In our opinion, and to the best of our information and according to the explanations given to us, the accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

stI) in the case of the Balance Sheet, of the state of the affairs of the Company as at 31 March, 2010;

ii) in the case of the Profit and Loss Account, of the loss for the period ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the period ended on that date.

For Ford,Rhodes,Parks & Co. Chartered Accountants

Firm Registration no. 102860W

A.D. ShenoythDate : 10 July 2010 Partner




Annexure referred to in paragraph (3) of our report of even date for stthe period 31 March , 2010


b) All fixed assets have been physically verified by the management during the period. No material discrepancies were noticed on such verification.

c) During the period the Company has not disposed off any substantial part of fixed assets so as to affect the going concern.

2. The Company does not have any stocks of raw materials, stores, spare parts and finished goods. Hence the clause (ii) of the Order does not apply to the Company.

3. a) The Company has not granted any unsecured loans / Advances to its companies, firms or other parties covered in the Register maintained under Section 301 of the Act.

b) The Company had taken unsecured loans from companies, firms or other parties covered in the Register maintained under Section 301 of the Act and the number of parties is one and outstanding amount is Nil.

c) There are no stipulation as to repayment and the loan was interest free.

4. This is the first year of operations and there are no business activities carried out by the Company. Hence clause (iv) of the Order does not apply.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

6. The Company has not accepted any deposits from the public during the period.

7. The Company has an adequate internal control system commensurate with the size and nature of its business.


9. This is the first period of operations and there are no business activities carried out by the Company. Hence clause (iv) of the Order does not apply.

10. This is the first period of operations of the Company. The Company has incurred cash losses st

during the current period and accumulated losses are Rs. 2,48,870/- as at 31 March 2010.

11. The Company has not borrowed from any banks. The Company does not have any borrowing by way of debentures.

12. Based on our examination of documents and records the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.


14. The Company has yet to start the business activities. Hence clause (xiv) of the Order does not apply.

87


16. The Company has not taken term loans during the period under review.

17. The Company has not raised any funds on short-term basis during the period.

18. During the period, the Company has allotted equity shares at par to its holding company and the price at which shares are issued is not prima-facie prejudicial to the interest of the Company.

19. The Company did not have any debentures issued during the period.

20. The Company has not raised any money through a public issue during the period.


For Ford,Rhodes,Parks & Co. Chartered Accountants

Firm Registration No. 102860W

A.D.ShenoythDate : 10 July 2010 Partner



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ACTION COMMODITIES LIMITED BALANCE SHEET AS AT 31st MARCH 2010

Schedule 31.03.2010 No. Rupees

Rupees I. Sources of Funds

1. Shareholders Fund Share Capital 1 500,000

TOTAL 500,000 II. Application of Funds

1. Fixed Assets 2a. Gross Block 185,000 b. Less : Depreciation 19,890 c. Net Block 165,110

2. Deferred Tax Asset (Net) 98,520

3. Current Assets , Loans and Advances 3 -

(A) - Less : Current Liabilities and Provisions 3Current Liabilities 12,500

(B) 12,500

Net Current Assets (A) - (B) (12,500)

4. Miscellaneous Expenses (To the Extent not written off) Profit and Loss account Debit Balance 248,870

Total 500,000Significant Accounting Policies and Notes to the Accounts 6 - The Schedules 1 to 6 annexed hereto forms part of the Balance Sheet and Profit and Loss Account







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PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED AS AT 31st MARCH 2010

Schedule For the Period No. Ended

31.03.2010Rupee Rupees

INCOME - TOTAL INCOME -

EXPENDITURE Employees Remuneration and Benefits 4 49,565 Administrative and Other Expenses 5 277,935

327,500 OPERATING PROFIT / (LOSS) (327,500)Depreciation 2 19,890

19,890 (347,390)

PROFIT / (LOSS) BEFORE TAX (347,390)Provision for Taxation - Provision for Deferred Tax Asset 98,520

PROFIT / (LOSS) AFTER TAX (248,870) Appropriations - Profit and Loss Balance Carried to Balancesheet (248,870)

(248,870)

Earning Per Share (Per Equity Share of Rs.10/- each) - Basic (4.98) Significant Accounting Policies and Notes to the Accounts 6

The Schedules 1 to 6 annexed hereto forms part of the Balance Sheet and Profit and Loss Account







ACTION COMMODITIES LIMITED


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Cash Flow Statement for the period ended 31st March 2010

Particulars Rs. Rs.

A. Cash Flow From Operating Activities:Profit / (Loss) Before Tax (347,390)Add/(Less) Non-Cash And Non-Operating Items

Adjustments For Depreciation 19890 19,890

B. Operating Profit / ( Loss)Before Working Capital Changes (1 + 2) (327,500)

C. Changes In Working Capital(Increase) / Decrease In Current AssetsIncrease / (Decrease) In Current Liabilities & Provisions 12,500 12,500

D. Cash Generated From Operations(B+C) (315,000)E. Less: Taxes Paid - F. Net Cash Flow From Operating Activities (315,000)

G. Cash Flow From Investing ActivitiesPurchase Of Fixed Assets (185,000)Net Cash Used In Investing Activities (185,000)

(500,000)H. Net Cash Flow From Financing Activities

Proceeds From Issue Of Equity Shares 500,000 Proceeds from Unsecured Loans -Net Cash Generated /(Used) From Financing Activities 500,000

I. Net Changes In Cash & Cash Equivalents -

J. Cash&Cash Equivalents As At End Of Financial Year- Bank Balance 0- Cash Balance 0 - Less: Cash & Cash Equivalents As At The Beginning of Financial Year - Net Changes In Cash & Cash Equivalents -

Note : 1. Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the

effects of transactions of a non-cash nature and any deferrals or accruals.2. Figures in brackets denotes outflows.3. This being first period of accounts there are no previous year figures.







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ACTION COMMODITIES LIMITEDSCHEDULES TO THE ACCOUNTS

AS AT SCHEDULES 31.03.2010

Rupees SHEDULE - 1

SHARE CAPITAL :Authorised:50,000 Equity Shares of Rs.10/-each 500,000 Total 500,000

Issued Subscribed and Paid - up:50,000 Equity Shares of Rs.10/-each fully paid 500,000 (During the period company issued 50000 Equity shares of Rs. 10/- at eachat par to Action Financial Services (India) Limited, holding company.)Total 500,000

SCHEDULE - 3Current Liabilities & ProvisionCurrent LiabilitiesSundry Creditors 12,500

12,500

SCHEDULE-4

Employees Remuneration & BenefitsSalaries and Allowances 46,982 Staff Welfare 2,583

49,565 SCHEDULE-5Administrative and Other ExpensesPrinting and Stationary 42,487Legal and Professional charges 57,500Auditors Remuneration 12,500ROC Filing Fees 7,325Preliminary Exp. W/off 82,540Rent, Rates and Taxes 70,000Computer Expenses 5,583Total 277,935


SHEDULE - 2 Fixed Assets


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Action Commodities Ltd.SCHEDULE - 6



a. Accounting ConceptsThe accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

b. Use of estimatesThe preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c. Revenue RecognitionIncome from broking activities are recognized only when it is reasonably certain that the ultimate collection will be made.

Income from trading in securities and Derivatives comprises of profit or loss on sale of securities held as stock in trade and profit or loss on Derivative instruments is accounted for based on the “ Guidance note on accounting for Equity Index and Equity Stock Futures and Options” issued be the Institute of Chartered Accountants of India.

Interest income is recognised on time proportionate basis.

Dividend income is recognised as and when payment is received.

Income from investing activities are recognized only when it is reasonably certain that the ultimate collection will be made

d. Fixed AssetsAll the fixed assets are accounted at cost of acquisition less accumulated depreciation.

e. Impairment of Fixed AssetsAn asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f. DepreciationDepreciation on all fixed assets are provided on prorata basis in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956 under Written Down Value Method.

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g. InvestmentsSecurities which are bought with an intention of keeping for long term are classified under Investments and are valued cost plus brokerage and stamp charges. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.

h. Stock In TradeShares and Debentures are valued at cost or market price whichever is lower, whereby the cost of each script is compared vis-a-vis its market value and the resultant shortfall if any, is charged to revenue.

i. TaxationProvision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax Act, 1961.

Deferred tax is recognized, subject to prudence, on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

j. Employee benefitsThere are no employees eligible for gratuity as such no provision for gratuity is considered in accounts.

There are no employees eligible for Leave Salary as such no provision for Leave salary is considered in accounts.

There are no employees eligible for PF and ESIC.

Other employee benefits are accounted on accrual basis.

k. Leased Assets :Assets taken on lease under which the lessor effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

l. Earning per ShareIn determining the earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra ordinary/ exceptional items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per shares comprises the weighted average shares considered for deriving the basic earning per share and also weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock split and bonus shares issued.


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m. Provisions for Contingent liabilities and Contingent assetsA provision is recognized for a present obligation as result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Provisions are determined based on net estimate of the amount required to settle the obligation at the Balance sheet date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


1. Contingent Liabilities : NIL2. Share Capital:

During the year company issued 50,000 Equity shares of Rs. 10/- each at par to Action Financial Services (India) Limited, the holding company. The company is hundred percent subsidiary of Action Financial Services (India) Limited.

3. Managerial Remuneration: NIL4. Auditors Remuneration: Audit Fees Rs.12,500/-

5. Income Tax :In view of the loss for this period no provision for income tax is considered.

6. Employee Benefit

There are no employees eligible for gratuity, leave salary or providend fund etc. as such no provsion is considered for this period.

7. Provision for Deferred Tax:Deferred Tax has been considered on timing differences between book and taxable profits is as under.Deferred tax Asset / (Liability) as at 31.03.010:

8. Earning Per Share (EPS):

As at 31.03.2010

(30,968)

6,798

37,729

84,961

98,520

Particulars

WDV differential

Preliminary Expenses w/off

Unabsorbed Depreciation

Business Loss

Deferred tax Asset / (Liability) (Net)

Sr. No.

Particular Year ended31.3-2010

(2,48,870)

1050,000

50,000

(4.98)(4.98)

Profit / (Loss) attributable to Equity Shareholders after taxNominal Value of Equity Shares Weighted Number of Equity Shares outstanding during the Year Weighted Number of Equity Shares outstanding during the Year (diluted)Basic Earnings Per Share (A/C)Diluted Earnings Per Share (A/D)(F)

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10. Disclosures as required by Accounting Standards 19, “Leases” are given below :(i) The Company has taken various office premises under leave and license agreements.

The lease period extends between 11 months and 3 years under leave and license. (ii) Lease payments are recognized in the Profit and Loss Account under “Rent”(iii) The future minimum lease payments under Non Cancelable operating lease:

11. As per Accounting Standard 18, the disclosures of transaction with the related parties as defined in the Accounting Standard are given below:List of related parties with whom transactions have taken place and relationships:

12. As the company has not started its full fledged activities, hence segment reporting is not applicable.

13. This being first year there are no previous year figures.

Particulars

Not later than one year

Later than one year and not later than fiv

More than five years


1,20,000

NIL

NIL

Sr. No.

Relationship Name of the Related Party

1. Holding Company Action Financial Services (India) Limited 2. Key Management Personnel Mr.Milan R.Parekh (Director)

Mr.Bakul R.Parekh (Director) 3. Transaction with Holding

Company Share Capital : Rs. 500,000/- Rent Expense:Rs.70,000/- Fixed assets & Expense reimbursement: 4,30,000/-

4. Transaction with Key Management Personnel

Unsecured Loan received & repaid: Rs.2,460/-








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ACTION COMMODITIES LIMITEDInformation pursuant to part (IV) of the Companies Act, 1956


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AUDITORS' REPORT TO THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENT OF ACTION FIANANCIAL SERVICES (INDIA) AND ITS

SUBSIDIARIES

1. We have audited the attached Consolidated Balance Sheet of Action Financia l Services st(India) Limited (“the Company”) and its subsidiaries as at 31 March, 2010, and the

Consolidated Profit and Loss Account for the year ended on that date annexed thereto, and the Consolidated Cash Flow Statement of the Group for the year ended on that date, which we have signed under reference to this report. Our responsibility is to express an opinion on this consolidated statement bases on our audit.


3. The financial statements of the subsidiaries audited by us reflect total assets (net) of Rs.369,943/- ,total revenue of Rs. NIL and Total expenditure of Rs. 308,567/- for the period

stended 31 March 2010.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis o f t h e separate audited financial statements of the Company and its subsidiaries included in the consolidated financial statements.

On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual audited financial statements of the Company, and its subsidiaries, we are of the opinion that the said consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India.

a) in the case of the consolidated Balance Sheet, of the consolidated state of affairs of the st

Company and its subsidiaries as at 31 March 2010

b) in the case of the consolidated Profit and Loss Account, of the loss for the year ended on that date and

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company and its subsidiaries for the year ended on that date.

For Ford, Rhodes,Parks & Co.Chartered AccountantsFirm Registration No. 102860W

A.D.Shenoyth

Date : 20 August 2010 PartnerPlace : Mumbai Membership No. 11549


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ACTION FINANCIAL SERVICES (INDIA) LTD. CONSOLIDATED BALANCE SHEET AS AT 31st MARCH 2010

99

ACTION FINANCIAL SERVICES (INDIA) LTD.CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2010


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ACTION FINANCIAL SERVICES (INDIA) LTD.Consolidated Cash Flow Statement For The Year Ended 31St March, 2010

Note : 1 Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals

or accruals of past or future cash receipts or payments.2 Proceeds from Equity shares is net amount received after adjusting amount received on Equity warrants.3 Figures in brackets denotes outflows.4 Previous Year Figures are regrouped, wherever necessary.

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As at As at Schedules 31.03.2010 31-03-2009

Rupees Rupees

SCHEDULE - ISHARE CAPITAL :Authorised:1,00,00,000 Equity Shares of Rs.10/-each 100,000,000 100,000,000 2,00,000 Preference Shares of Rs. 100/- each 20,000,000 20,000,000

Total 120,000,000 120,000,000

Issued Subscribed and Paid - up: 88,10,000 ( P.Y. 84,50,000) Equity Shares of Rs. 10/- each fully-paid 88,100,000 84,500,000 (During the year further shares have been issued on conversion of warrants)(Refer : Note(II) (3) (A) of Schedule 15) 82,800 10 % Redeemable Cumulative Preferences Shares of Rs.100/- each fully paid (Refer : Note(II) (3) (A) of Schedule 15 8,280,000 8,280,000

Total 96,380,000 92,780,000

SHEDULE - 2RESERVES & SURPLUS :Capital Redemption Reserve Account (Utilised) 10,120,000 10,120,000 Capital Reserve A/c (Refer : Note(II) (3)(B) of Schedule 15) 5,650,000 - Securities Premium Account 7,492,500 4,162,500

Total 23,262,500 14,282,500

SCHEDULE - 3SECURED LOANS :Term Loans (Secured ) (See Note No.: II (4) 8,431,436 9,654,955 of Schedule 15) Bank Overdraft (Secured ) (See Note No.: II 10,613,060 1,775,869 (4) of Schedule 15)

Total 19,044,496 11,430,824

SCHEDULE - 4UNSECURED LOANS :From Banks 28,457 288,723 From Others (Refer : Note(II) (5) of Schedule 15) 15,750,620 11,000,000 From Director (Refer : Note(II) (5) of Schedule 15) 1,766 6,000 Book Overdraft (Refer : Note(II) (5) of Schedule 15) 1,175,256 7,347,205

Total 16,956,099 18,641,928

ACTION FINANCIAL SERVICES (INDIA) LTD.SCHEDULES TO THE CONSOLIDATED ACCOUNTS


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Schedule - 6INVESTMENTS


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For the For the Schedules Year Ended 31-3-10 Year Ended 31-3-09

Rupees Rupees

SCHEDULE - 7Stock in TradeShares & Debentures as at 31.03.2010 valued at Cost 78,575,800 57,200,929

or Market value, whichever in lower 78,575,800 57,200,929

SCHEDULE-8SUNDRY DEBTORS -Unsecured, Considered GoodOver Six Months 2,685,555 2,088,105 Less : Provision for Non- Performing Debtors 268,556 208,811

(Refer : Note(II) (10A) of Schedule 15) 2,416,999 1,879,294 Other Debts 27,687,517 20,042,279

30,104,516 21,921,573

SCHEDULE-9Cash & Bank BalancesBalance with Scheduled Banks 202,347 251,898 Fixed Deposits 15,352,126 10,882,642 Cash on hand 367 5,293

15,554,840 11,139,833 SCHEDULE-10Loans & AdvancesInterest Accrued on Deposits 343,383 367,119 Advance Tax Paid - 3,000,000 Advance recoverable in cash and / or kind or for value received 3,196,266 2,984,753 Tax Deducted at Source 777,546 632,952 Sundry Deposits 11,574,480 10,875,420

15,891,675 17,860,244 SCHEDULE-11Current Liabilities & ProvisionCurrent LiabilitiesSundry Creditors 49,419,288 31,729,008 Deposits from Clients 2,838,271 2,150,480 NSDL’s Clients Deposits 2,102,257 2,270,257 Due to Investor Education Fund - - Micro, Small & Medium Enterprises - - Outstanding Expenses 3,782,897 5,982,838

(a) 58,142,713 42,132,583 ProvisionsProvision for Gratuity (Refer:Note(II) (7) of Schedule15) 2,108,156 1,269,045 Provision for Leave Encashment 297,054 428,601 (Refer : Note(II) (7) of Schedule 15) Provision for Taxation 4,391,740 7,445,394

(b) 6,796,950 9,143,040

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For the For the Schedules Year Ended Year Ended

31.03.2010 31.3.2009Rupees Rupees

SCHEDULE - 12Other IncomeInterest on Fixed Deposits 1,201,291 979,702 Dividend on Shares 112,256 62,964 Miscellaneous Income 88,299 32,745 Stock Exchange Expenses Recovered From Remisiers 147,433 462,858 Gratuity Written Back - 491,719 Leave Salary Provision Written Back - 27,811 Profit on sale of securities (Net) 13,251,572 -

TOTAL 14,800,850 2,057,799

SCHEDULE-13

Employees Remuneration & BenefitsSalaries and Allowances 6,289,256 7,143,304 Staff welfare Expenses 128,831 126,208 Contribution to Provident Fund and ESIC 322,384 382,364 Leave Encashment 81,410 - Gratuity 888,650 -

7,710,531 7,651,876


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For the For theSchedule Year Ended Year Ended


SCHEDULE -14

Administrative and Other ExpensesAdvertisements 39,382 43,659 Bank Charges 1,261,626 567,179 Insurance Premium 25,114 41,979 Books and Periodicals 1,713 4,687 Business Promotion Gifts and Articles - 9,975 Travelling and Conveyance 117,345 184,759 Electricity Expenses 469,064 546,750 Listing, SEBI and Corporate Action fees 275,911 182,287 Maintainence Expenses 562,057 435,660 Printing and Stationary 287,421 312,174 Registrar Fees and Professional charges 1,024,582 595,652 Rent, Rates and Taxes 1,279,387 1,357,751 Subscription and Membership 35,296 63,684 Auditors RemunerationAudit Fees 80,000 62,000 Tax Audit Fees 15,000 10,000 Other Charges, Cerification etc. 30,000 30,000

125,000 102,000 Communication Expenses 923,713 875,598 Incorporation Expenses 82,540 165,766 Software Expenses 25,710 9,498 Miscellaneous Expenses 204,964 64,946 Stock Exchange Expenses 1,418,504 1,953,435 Settlement Charges 7,458,329 - Decrease in Value of Stock in Trade 434,802 5,145,877 Vehicle Expenses 133,007 113,911 NSDL Expenses 915,462 862,695 Loss on Securities Trading - 11,511,930 Loss on Currency Derivatives 226,668 763,151 Loss on Sale of Assets 95,412 18,648 Provision for Non-Performing Assets 59,745 68,992 Computer Expenses 51,715 140,810 Brokerage Paid - 344,191

Total 17,534,469 26,487,644

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SCHEDULE 15



a. Basis of Preparation of Financial statements and Accounting Concepts

The consolidated financial statements relate to Action Financial Services (India) Limited and its wholly owned subsidiaries viz Action Securities Limited and Action Commodities Limited. The parent company with its subsidiary constitutes the group.

stThe financial statements of the parent company and its subsidiaries are drawn upto 31 March 2010 and in respect of a subsidiary namely Action Securities Limited the financial

ststatements are drawn for a period of 15 months ending 31 March 2010.

The accounts have been prepared on accrual basis, in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard or a more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.

b. Principles of consolidation:

The financial statements of the parent company and its subsidiaries have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, incomes and expenses after eliminating intra group balances, intra group transactions and are presented to the extent possible, in the same manner as the company's independent financial statements. The financial statements of the parent company and its subsidiary have been consolidated using uniform accounting policies.

c. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

d. Revenue Recognition

(i) Income from broking activities and depository services are recognized only when it is reasonably certain that the ultimate collection will be made.

(ii) Interest income is recognised on time proportionate basis.

(iii) Dividend income is recognised as and when payment is received.

(iv) Income from trading in securities and Derivatives comprises of profit or loss on sale of securities held as stock in trade and profit or loss on Derivative instruments is accounted


108


for based on the “Guidance note on accounting for Equity Index and Equity Stock Futures and Options” Issued be the Institute of Chartered Accountants of India.

(v) Income from investing activities are recognized only when it is reasonably certain that the ultimate collection will be made

e. Fixed Assets

All the fixed assets are accounted at cost of acquisition less accumulated depreciation.

f. Impairment of Fixed Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed

if there has been a change in the estimate of recoverable amount.

g. Depreciation

Depreciation on all fixed assets are provided on prorata basis in accordance with the rates prescribed under Schedule XIV of the Companies Act, 1956 under Straight Line Method except in the case of the subsidiary, where depreciation is provided on written Down Value Method.

h. Investments

Securities, which are bought with an intention of keeping for long term, are classified under Investments and are valued cost plus brokerage and stamp charges. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.

i. Amortisation

Goodwill shall be amortized over a period of Twenty years.

j. Stock In Trade

Shares and Debentures are valued at cost or market price whichever is lower, whereby the cost of each script is compared vis-à-vis its market value and the resultant shortfall if any, is charged to revenue.

k. Taxation

(i) Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income-tax Act, 1961.

(ii) Deferred tax on timing difference between taxable income and accounting income is accounted for, using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date Deferred tax assets are recognized for unabsorbed depreciation and carry forward losses to the extent there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realized.

l. Employee benefits

(i) Gratuity to employees is provided as per AS 15 and liability as on Balance Sheet date has been determined on the basis of actuarial valuation. The liability is not funded.

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(ii) Leave encashment benefits payable to employees of the Company with respect to accumulated leave outstanding at the year-end are accounted for on the basis of an actuarial valuation as at the Balance Sheet date.

(iii) Contributions payable by the Company to the concerned government authorities in respect of provident fund, family pension fund and ESIC are charged to Profit and Loss account.

(iv) Other employee benefits are accounted on accrual basis.

m. Earning per Share

In determining the earning per share, the Company considers the net profit after tax and includes the post tax effect of any extra ordinary/ exceptional items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per shares comprises the weighted average shares considered for deriving the basic earning per share and also weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock split and bonus shares issued.

n. Leased Assets:

Assets taken on lease under which the lesser effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.

o. Provisions for Contingent liabilities and Contingent assets

A provision is recognized for a present obligation as result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made. Provisions are determined based on net estimate of the amount required to settle the obligation at the Balance sheet date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


1. The consolidated financial statements of Action Financial Services (India) Ltd. (the parent company) include its wholly owned subsidiaries as under. The consolidated financial statements have beenpreparedin accordance with the Accounting Standard (AS) 21 and the Accounting Standard (AS) 23, notified under section 211(3C) of the Companies Act, 1956.


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In the case of above subsidiary namely Action Securities Limited the financial statements are for st

a period of 15 months ending 31 March 2010.

In the case of above subsidiary namely Action Commodities Limited, this being the first year of the company there are no previous year figures.

2. Contingent Liabilities in respect of

a. Bank Guarantee amounting to Rs. 29,850,000/- (previous year Rs. 20,200,000/-)b. Allotment money payable on partly paid shares and debentures Rs. 1,782,000/-

(Previous year Rs. 1,782,000/-)st

c. Unpaid Dividend on Preference Shares Rs. 1,656,000/- for the year ending 31 March 2009 not provided. (Previous Year Rs. 828,000/-)

d. Claims against company not recognized as debts: Rs. 540,000/-

3. Share holders Fund

A Share Capital

1 Equity Share Capital and Warrants:th

a) The Company in its meeting of Board of directors held on 11 April 2009 allotted 360,000 Equity shares to its promoters, arising after conversion of 360,000 warrants out

thof total warrants, which were issued on 12 October 2007, at a price of Rs 19.25 per warrant. Accordingly as sum of Rs. 3,330,000/- is credited to Securities Premium Account.

b) During the year balance 1,190,000 warrants, which were issued to promoters and th

investors on 12 October 2007 for which request for conversion was not received till the expiry date, were forfeited and the amount of Rs. 5,650,000/- is transferred to Capital Reserve Account on account of forfeiture of warrants.

2 Preference Share Capital:thThe Preference Share Holders meeting was held on 13 March 2009, wherein the Board

of Directors have been authorized to redeem the said shares, decide, modify/ alter the terms of the issue of said shares including early redemption of said shares, or extension of period of redemption and in no case the period of redemption of the said

stshares be extended beyond 31 March 2015, the said resolution was ratified in the AGM

thheld on 30 September 2009. Accordingly the Board of Directors have extended the date stof redemption to not beyond 31 March 2015, keeping all other terms and conditions

unchanged.

B. Warrants:th

The Board of Directors of the company in its meeting held on 9 November 2009 issued 125,000 warrants on preferential basis to investors at the rate of Rs. 19.25 per warrant with an option to convert the same into equivalent number of Equity shares of nominal at Rs. 10/- each at a premium of Rs. 9.25 per share. The option of conversion shall be valid for a period of 18 months from the date of allotment of the warrants. The company received Rs. 5/- per warrant as upfront payment and is credited to Subscription Money towards warrants.

4. Secured Loans1. Term Loan: Term Loan of ICICI Bank Ltd. of Rs. 8,431,436/- (Previous Year 9,654,955) is

Secured by mortgage of office premises at No. 46, 47 and 54, Rajgir Chambers, Fort, Mumbai and Personal Security and Personal Guarantee by Two Directors.

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2. Bank Overdraft: Overdraft of Rs. 10,613,060/- (previous year Rs. 17,75,869/-) as at 31.03.2010 from the Schedule Bank is secured against Personal Guarantee of Two Directors and Pledge of Company as well as third party Shares.

5. Unsecured LoansUnsecured Loan of Rs. 1,176,256 (Previous Year Rs. 7,347,205) represents Book overdraft in current of banks and Inter Corporate Deposit of Rs. 15,750,620 (Previous year Rs. 11,000,000)

stand Rs 1,766 (Previous Year Rs. 6,000) from Director as on 31 March 2010.

6. Income Tax:The Parent company had contested Income Tax demand of Rs. 13,455,810/- for Assessment Year 2001-02. CIT (A) has heard the company's appeal and decided in favour of the company. The Income Tax Department has appealed in the tribunal against the said order.

7. Defined Benefit Plan:Employee benefits including contributions to Provident Fund, ESIC, Gratuity and Leave salary are accounted for based on company rules and accounting Standard AS 15.

8. Managerial Remuneration:

Provision for leave salary is made on Actuarial Valuation; hence individual figures are not ascertainable.

The computation of net profit under section 198 / 349 of the Companies Act, 1956 has not been given since no commission is paid / payable to any director in the current year.

9. Provisions for Taxation:Tax provision for the year has been made on the basis of taxable income. Deferred Tax has been considered for timing differences between book and taxable profits are as below:


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10. (A) As per RBI guidelines in relation to Non-Banking FinancialCompanies the Company has provided Rs. 268,556/-, 10% as provision for Non - Performing Assets on debts for more than six months (previous year Rs 208,811-) and Rs. 59,745/- being additional provision is charged to Profit and Loss.

(B) Investments:(a) The aggregate market value of quoted investments as at 31.03.2010 is Rs. 49,955,217/-

(Previous year Rs. 27,252,867/-) as against the total cost of quoted investment of Rs.48,175,244 /- (Previous year Rs. 52, 799,660 /-)No provision for diminution in the value of quoted investment is considered necessary as in the management’s view the short fall is temporary in nature.

(b) In case of Stock in Trade, full provision for diminution in value of stock has been made in the accounts.

(c) Details of movements in investments during the year are given below:-

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14. Disclosures as required by Accounting Standards 19, “Leases” issued by the Institute of Chartered Accountants of India are given below:

Where the Company is a lessee:(i) The Company has taken various office premises under leave and license agreements.

The lease period extends between 11 months and 3 years under leave and license. (ii) Lease payments are recognized in the Profit and Loss Account under “Rent”(iii) The future minimum lease payments

11. Auditor's remuneration:-

12. Consolidated Earning Per Share (EPS): Basic & Diluted EPS :


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15. As per Accounting Standard 18, the disclosures of transaction with the related parties as defined in the Accounting Standard are given below:List of related parties with whom transactions have taken place and relationships:

16. Company's primary business activities are Broking and Depository Services, both are covered under one broad segment of Share broking activities hence segment reporting is not applicable.

17. Previous year's figures have been regrouped, reclassified and /or renamed to confirm to this year's classification.

As per our Report attached For and on behalf of the board

For FORD, RHODES, PARKS & CO. Chartered AccountantsFirm Reg. No.: 102860W Milan R. Parekh

Chairman & Managing Director

A.D. Shenoy(Partner) Bakul R. Parekh Membership No.11549 Jt. Managing DirectorPlace: Mumbai

thDate: 20 August 2010

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Folio NoI/We

of inthe district of being a member / members of Action Financial Services (India) Ltd., hereby appoint of in the district of failing him / her

ofas proxy to vote for me / us on my / our behalf at the Seventeenth Annual General

meeting of the company to be held at 10.00 a.m. on Thursday, 30th. September, 2010 and at any adjournment thereof. This form is to be used in favour of the resolution/against the resolution. unless otherwise instructed the proxy will act as he thinks fit.,. signed this day of 2010.

Signature :

Note : Proxy form must reach the registered office not less than 48 hours before the meeting.

ACTION FINANCAL SERVICES (INDIA) LIMITEDRegd. Office : 31, Rajgir Chambers, 12/14, Shahid Bhagat Singh Road, Fort, Mumbai-400 001.

ACTION FINANCAL SERVICES (INDIA) LIMITEDRegd. Office : 31, Rajgir Chambers, 12/14, Shahid Bhagat Singh Road, Fort, Mumbai-400 001.

I hereby record my presence at the Seventeenth Annual General Meeting of the company held at Action Financial services (India) ltd., 31, 4th. Floor, Rajgir Chamber, 12/14, Shaid Bhagat Singh Road, Fort, Mumbai - 400 001. at 10.00 A.M. on30th September, 2010.

To be handed over at the entrance of the venue

Note : Share Holder / Proxy Holders wishing to attend the meeting must bring the attendence slip to the meeting and handover at the entrance duly signed

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Notes

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Notes

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