b.n.rathi securities limited...b.n.rathi securities limited 2 t2008-2009 bnr_annualrepor notice...

B.N.RATHI SECURITIES LIMITED

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BNR_Annualreport2008-2009

BOARD OF DIRECTORS Sri LAXMINIVAS SHARMA - Chairman

Sri BADRI NARAYAN RATHI

Sri K.HARISHCHANDRA PRASADSri HARI NARAYAN RATHI - Managing Director

Sri CHETAN RATHI - Executive Director

AUDITORS Kalyandas & Co.,Chartered Accountants15,Venkateshwara Colony,Narayanguda, Hyderabad - 500029.

BANKERS HDFC Bank Ltd.Karur Vysya Bank LtdICICI Bank LtdAndhra Bank

REGISTERED OFFICE 6-3-652,Kautilya, Amrutha Estates,Somajiguda, Hyderabad-500082Phones : 040-30527777,30727777e-mail : [email protected] : www.bnrsecurities.com

STOCK EXCHANGES Bombay Stock Exchange Ltd.(LISTED) Phiroze Jeejeebhoy Towers,

Dalal Street, Mumbai - 400 001.

REGISTRARS & SHARE TRANSFER Karvy Computershare Pvt. Ltd.AGENTS Plot No. 17-24, Vittal Rao Nagar,

Madhapur, Hyderabad - 500 081Phone : 040- 23420816-824Fax : 040 -23420814e-mail : [email protected]

DEMAT ISIN NUMBER IN NSDL &CDSL INE710D01010


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NOTICENotice is by given that the 24th Annual General Meeting of the Members of B N Rathi Securities Limited will be held on 24th September2010 at 9.30 A.M. at Rajasthani Graduates Association Hall, 5-4-790/1,1st Floor, Abids, Hyderabad-500001 to transact the followingbusiness:

ORDINARY BUSINESS1. To receive, consider and adopt the Audited Accounts for the year ended 31st March, 2010 together with the Reports of the Directors

and Auditors thereon.2. To declare dividend.3. To appoint a Director in place of Shri Badri Narayan Rathi, who retires by rotation and being eligible, offers himself for re-appointment.4. To appoint a Director in place of Shri K Harish Chandra Prasad, who retires by rotation and being eligible, offers himself for re-

appointment.5. To appoint the Auditors and fix their remuneration.

SPECIAL BUSINESS6. APPOINTMENT OF SHRI CHETAN RATHI AS AN WHOLE TIME DIRECTOR/ EXECUTIVE DIRECTOR

To consider and if thought fit, to pass with or without modification the following resolution as an ordinary resolution."RESOLVEDTHAT pursuant to the provisions of sections 198, 269, 309, 310 and 311 and other applicable provisions, if any, of theCompanies Act, 1956 Shri Chetan Rathi, Director be and is hereby appointed as Whole time Director of the Company for a term of3 years with effect from 1st April, 2010 on the following terms and conditions,i) REMUNERATION: Rs 40000/- (Rupees Forty Thousand Only) per Month.II) PERQUISITES:A) Medical Reimbursement: of expenses incurred for self and family subject to a ceiling of one month's salary in

a year or three month's salary over a period of three years.B) Leave Travel Concession: For self and family, once in a year incurred in accordance with the rules of the Company.C) Club Fees: of Clubs subject to a maximum of two clubs. This will not include admission and life membership feeD) Provident Fund: Company's contribution towards Provident Fund and Family Pension Fund as per the Rules of the Company but

not exceeding 12% of the Salary.E) Gratuity as per the Rules of the Company, but shall not exceed one-half month's salary for each completed year of service.F) Provision of car with driver for use on Company's business and telephone at residence will not be considered as perquisites.

Personal long distance calls on telephone and use of car for private purpose shall be billed by the Company.G) Personal Accident Insurance Premium not to exceed Rs.10,000 per annum.H) Reimbursement of entertainment expenses, traveling and all other expenses actually and properly incurred for the

purpose of Company's business.7. REAPPOINTMENT OF SHRI HARI NARAYAN RATHI AS A MANAGING DIRECTOR

To consider and if thought fit, to pass with or without modification the following resolution as an special resolution.“RESOLVED THAT pursuant to Sections 198, 269,309, 310 and 311, read with Part I of Schedule XIII and other applicable provisions,if any, of the Companies Act 1956, including any statutory modification(s) or enactment(s) thereof, for the time being in force,andwith the approul of the members in the Annual General Meeting consent and in accordance with Articles of Association of theCompany Shri Hari Narayan Rathi, Managing Director be and is here by re-appointed has Managing Director of the Company for afurther period of five years with effict from 1st October, 2010”

“RESOLVED FURTHER THAT the Board of Directors be and are here by authorised to take all necssary stept has may be necssaryto give effect to the above resolution.”

8. APPROVAL OF REMUERATION OF SHRI HARI NARAYAN RATHI, MANAGING DIRECTORTo consider and if thought fit, to pass with or without modification the following resolution as an Special resolution

“RESOLVED THAT pursuant to Sections 198, 269, 302, 309,310, 311, read with Schedule XIII and other applicable provisions, ifany, of the Companies Act 1956, including any statutory modification(s) or enactment(s) thereof, for the time being in force,subject to the approval of the Central Government and such other approvals as may be required, the consent and approval of theCompany be and is hereby accorded to the payment of remuneration to Shri Hari Narayan Rathi as Managing Director of theCompany for a period of 5 years from 1st October 2010 on the existing terms of payment as set out hereunder:

a. Basic Salary: Rs.1,20,000/- per month (Rupees One Lack Twenty Thousand only)

b. PERQUISITES:

A) Medical Reimbursement: Reimbursement of expenses incurred for self and family subject to a ceiling of one month'ssalary in a year or three month's salary over a period of three years.

B) Leave Travel Concession: For self and family, once in a year incurred in accordance with the rules of the Company.

C) Club Fees: Fees of Clubs subject to a maximum of two clubs. This will not include admission and life membership fee


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D) Provident Fund : Company's contribution towards Provident Fund and Family Pension Fund as per the Rules of the Companybut not exceeding 12% of the Salary.

E) Gratuity as per the Rules of the Company, but shall not exceed one-half month's salary for each completed year of service.F) Provision of car with driver for use on Company's business and telephone at residence will not be considered as perquisites.

Personal long distance calls on telephone and use of car for private purpose shall be billed by the Company.G) Personal Accident Insurance Premium not to exceed Rs.10,000 per annum.H) Reimbursement of entertainment expenses, traveling and all other expenses actually and properly incurred for the purpose of

Company's business.RESOLVED FURTHER THAT in the event of any statutory amendment or modification or relaxation in the provisions relating to thepayment of remuneration to managerial persons or to Schedule XIII to the Companies Act, 1956, the Board of Directors be and arehereby authorized to vary or increase the remuneration including Basic Salary, Commission, Perquisites, Allowances etc. withinsuch prescribed limits.

Overall RemunerationThe aggregate of Basic Salary, Commission, Perquisites and Allowances in any Financial Year shall not exceed the limits prescribedfrom time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII tothe said Act, for the time being in force.

Where in any Financial Year comprised by the period of appointment, the Company has no profits or its profits are inadequate, theforegoing amount of remuneration and benefits shall be paid or given to the Managing Director in accordance with the approval ofthe Central Government, wherever required.

Adequate ProfitsWhere in any Financial Year, during the tenure of Shri Hari Narayan Rathi, the Company has adequate profits, the Company shall payto Shri Hari Narayan Rathi, remuneration by way of Basic Salary, Commission, Perquisites and Allowances not exceeding theamount approved by the Central Government and which shall not exceed the limits prescribed from time to time under Sections198, 309 read with Schedule XIII to the Companies Act, 1956 for the time being in force.

RESOLVED FURTHER THAT the Board of Directors be and are hereby authorized to take all necessary steps as may be necessaryto give effect to the above resolution.”

9 To consider and if thought fit, to pass with or without modification the following resolution as a Special resolution.

“RESOLVED THAT prusuant to Sections 17 and all othe applicable provisions if any, of the Companies Act, 1956, sub-clause 7 of the MAIN OBJECTS CLAUSE as mentioned un clause III (A) of the Memorandam of Association of the company be andis here by deleted and substituted with the following :

7. To carry on business as underwriters and brokers of stock shares, debentures stock, Government Bonds, Units of Unit Trust,National Savings Certificates, capitalists and financiers and to undertake depository participant activities and for that purposeto obtain the membership of the Depositories under the Depositories Act, 1996 by registering with the Central DepositoryServices (India) Limited and/or National Securities Depository Limited or such other entity as may be recognized in thisbehalf and provide services such as demat account opening and maintenance, dematerialization and rematerialization ofshares and other applicable securities, provision of transaction statements, transaction execution, creation and cancellationof pledge of securities, facilitating settlement of trades through market transactions, off-market transfers and inter-depositorytransfers, distribution of non-cash corporate actions, nomination/transmission and other demat related services

“RESOLVED FURTHER THAT the Board of Directors of the company be and is hereby authorized to take all such necessarysteps as may be required to give effect to the above resolution.”

HARI NARAYAN RATHIMANAGING DIRECTOR

By Order of the Boardfor B.N. Rathi Securities Limited

Date : 29.07.2010Place : Hyderabad.


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NOTES:

1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself/herself and a proxy neednot be a member.

2. The instrument of Proxy in order to be effective shall be deposited at the Corporate Office of the Company by not less than 48 hoursbefore the commencement of the Meeting.

3. The Register of Members and Share Transfer Books of the Company will remain closed from16.09.2010 to 24.09.2010 (Both daysinclusive) for determining the names of members eligible for dividend, if approved, on equity shares. In respect of shares held inelectronic form, dividend will be payable on the basis of beneficial ownership, as per details furnished by NSDL and CDSL, for thispurpose.

4. Subject to the provisions of Section 206A of the Companies Act, 1956, dividend as recommended by the Board of Directors, ifdeclared at the meeting, will be payable on or before 23.10.2010 to those members whose names appear on the Company’sRegister of Members as on 24.9.2010.

5. The valid transfer deeds should be lodged with the Registrar before the book closure date to determine entitlement of the dividend.

6. As a measure of economy, copies of the Annual Report will not be distributed at the Annual General Meeting. Members are thereforerequested to bring their copy of annual report to the Meeting.

7. Members holding shares in the same name under different ledger folios are requested to apply forConsolidation of such folios and send the relevant share certificates to M/s.Karvy Computershare Pvt Ltd., Share Transfer Agentsof the Company for their doing the needful.

8. Members are requested to notify change in address, if any, immediately to M/s Karvy Computershare Pvt Ltd.,Share TransferAgents of the Company, quoting their folio number.

Explanatory Statement(Pursuant to Section 173(2) of the Companies Act, 1956)

ITEM NO 6 :The Ordinary Resolution at item No.6 of the Notice is to seek the members' approval to the appointment of Shri Chetan Rathi as Whole-time Director of the Company under the designation "Executive Director" made by the Board of Directors of the Company at its meetingheld on 18-03-2010. Shri Chetan Rathi after post graduating from Pune University in the year 1998 Shri Chetan Rathi having thusacquired a good knowledge and experience in Share broking business, the Directors of your Company thought proper to appoint him asthe Whole-time Director of the Company for a period of 3 years with effect from 01.04.2010 to 31.03.2013 subject to the approval of themembers of the Company.Further the same be treated as abstract of the contract to Section 302(1) (b) of the Companies Act, 1956.Accordingly, the Board recommends the resolution for approval of the members as an ordinary resolution.None of the Directors except Shri Badri Narayan Rathi and Hari Naryaan Rathi are concerned or interested in the said resolution.

ITEM NO 7:Sri Hari Narayan Rathi present 3 years term of office as the Managing Director of the Company expires on 28th September 2010. Sri HariNarayan Rathi has been in the office as such Managing Director since 1st October, 1997 thus completing a period of about 13 years.During the tenure Sri Hari Narayan Rathi as Managing Director, the Company has made considerable progress in all the spheres and isoptimistic on the future progress.

The Board of Directors confidently feel that the Company should continue to avail the services of Sri Hari .Narayan Rathi as a very ableand experienced person. Hence the Board of Directors at their meeting held on 29th July 2010 has considered it necessary to reappointSri Hari .Narayan Rathi as the Managing Director of the Company for further period of 5 years with effect from 1st October, 2010 subjectto the approval of Members of the Company.Further the same be treated as abstract of the contract to Section 302(1) (b) of the Companies Act, 1956.Accordingly, the Board recommends the resolution for approval of the members as an ordinary resolution.None of the Directors except Shri Badri Narayan Rathi, Shri Hari Naryaan Rathi and Shri Chetan Rathi are concerned or interested in thesaid resolution.

Item No. 8 :Sri Hari Narayan Rathi has immensely contributed for the growth of the Company through his skills, talent and commitment. TheCompany has made remarkable progress under his guidance and supervision and has embarked upon the expansion and diversification

activities to achieve a much higher growth rate.


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The Remuneration Committee fixed the remuneration package with a view to align the package with the best corporate practicesprevailing in the business. After considering the various factors, his contributions and responsibilities, the Remuneration Committeerecommended the above mentioned terms of remuneration payable to Sri Hari Narayan Rathi.

The remuneration proposed to Sri Hari Narayan Rathi as recommended by the Remuneration Committee requires the approval ofMembers.

STATEMENT OF INFORMATION PURSUANT TO SCHEDULE XIII OF THE COMPANIES ACT, 1956

I. GENERAL INFORMATION :

(1) Nature of Business: Dealing In Securities(2) Date or expected date of commencement of commercial production: N.A.(3) In case of new companies, expected date of commencement of activities as per project approved by financial institutions

appearing in the prospectus: Not Applicable(4) Financial performance based on given indicators: (Amount in Rs.’000)

Financial Performance 2004-05 2005-06 2006-07 2007-08 2008-09

Turnover 27903 44032 38620 61909 44308

Net profit as computed under Section 349 7935 11650 8093 11209 5898

Net profit / loss as per profit and loss account 7935 11650 8093 11209 5898

Amount of dividend paid (including dividend tax) 1710 1710 2105 2705 2948

Rate of dividend declared 10% 10% 15% 10% 10%

(5) Export performanance and net foregin exchange collaborations: Not Applicable

(6) Foregin investments or collaborators, if any : Not Applicable

II. INFORMATION ABOUT THE APPOINTEES(1) Background details:

Shri Hair Narayan Rathi, aged 57 years, is Graduate in Science is associated with the Company since 1992.

(2) Past remuneration:Rs. 80,000/-

(3) Recognition or awards: Not Applicable

(4) Job profile and suitability:Shri Hair Narayan Rathi is responsible to discharge the duties entrusted by the Board of Directors from time to time, which mayinclude intiating speedy and stable growth strategies for the organization in line with the vision and mission of the Company, day-to-day management and administration of the Company.

(5) Remuneration proposed:As set out in the resolutions for the item 8 for Shri Hair Narayan Rathi the remuneration has the approval of the RemunerationCommittee.

(6) Comparative remuneration profile with respect to Business, size of the company, profile of the position and person (in case ofexpatriates the relevant details would be w.r.t. the country of his origin)Taking into consideration of the size of the Company, the profile of Shri Hair Narayan Rathi and the responsibilities shouldered onthem, the aforesaid remuneration package is commensurate with the remuneration package paid to managerial positions in othercompanies.

(7) Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any:Sri Chetan Rathi, is son of Shri Hair Narayan Rathi, Managing Director of the Company and is holding 149167 Equity Shares ofthe Company.


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III. OTHER INFORMATION:

(1) Reasons for inadequate profits:The Company is engaged in shares & stock broking business which is prone to huge competition, lesser brokerage and hugecost of compliances with the various rules & regulations framed by SEBI & Stock Exchanges which in turn may result ininadequate profits.

(2) Steps taken or proposed to be taken for improvement:The following are the steps taken for improvement:The Company has increased the number of sub-brokers/branches & accordingly opened branches in the State of Gujarat,Maharastra, Tamilnadu, Haryana and Rajasthan.Further the Company is in the process to get empanelled with various institutions which will improve the profits in future.

(3) Expected increase in productivity and profits in measurable terms.The Financial markets are looking bright and have a better future. Economy is also growing due to which the company expectsto do better in the coming years.

IV. DISCLOSURES:

(1) The Shareholders of the company are informed of the remuneration package of the Managing Director by way of notice ofAnnual general Meeting.

(2) The disclosures shall be mentioned in the Board of Director’s Report under the heading “Corporate Governance” if any,attached to the Annual Report:- Not Applicable

The Board of Directors, therefore, recommends the passing of the Special Resolutions by Members of the Company asmentioned at item no. 6, 7 & 8 of the Notice.

The information provided herein may be deemed to be abstract as referred to under Section 302 of the Companies Act, 1956.The copies of the relevant resolutions of the Board in respect of reappointment and approval of remuneration are available forinspection by Members at the Registered Office of the Company during working hours of any working days till the date ofannual general meeting.

None of the Directors except Shri Badari Narayan Rathi, Chetan Rathi and Sri Hari Narayan Rathi are deemed to be concernedor interested in the above resolution.

Item No. 9:

CDSL, Depository has advised the Company to incorporate a provision in the Object Clause relating to undertaking of depositoryparticipant activities. Accordingly the Board decided to amend the Object Clause.

This requires alteration of the Objects Clause of the Memorandum of Association of the company in terms of Sec. 17 of theCompanies Act, 1956 as set out in the notice by way of consent of the Members through postal ballot.

Your Directors recommend the Resolution as set out in the item no.9 of the Notice of Annual General Meeting for the approvalof the shareholders as Special Resolution.

None of the Directors of the Company is concerned or interested in the above resolution.

By Order of the Boardfor B.N. Rathi Securities Limited

HARI NARAYAN RATHIMANAGING DIRECTOR



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DIRECTORS’ REPORTDear Members,Your Directors have pleasure in presenting the 24th Annual Report together with Audited Statements of Accounts for theyear ended 31st March, 2010.

FINANCIAL RESULTSThe Financial Results for the year ended 31st March, 2010 are summarised as under:

(Rs. In Lakhs)2009-’10 2008-’09

Total Income 696.41 443.08Total Expenditure 563.49 384.10Profit before Tax 132.92 58.98Provision for taxation 46.46 20.09Profit after Tax 86.46 38.89Transfer to General Reserves 2.16 NilProfit available for Appropriation 84.30 38.89Provision for proposed Equity Dividend 30.24 25.20Provision for Corporate Dividend Tax 5.02 4.28Balance carried to Balance Sheet 49.04 9.41

DIVIDEND:Your Directors are pleased to recommend a Dividend @12% on the Paid up Equity Share Capital of the Company in respectof the financial year 2009-10.The total outgo on account of dividend, inclusive of dividend [email protected]% stands atRs. 35.26 lakhs, for which necessary provision has been made in the accounts.

OPERATIONS:Company has acquired the membership of NSE,BSE & MCX-SX and DP with CDSL.The Company is in the process ofemployment with various institutions ,mutual funds etc.The Company is also making all efforts to expand in the variousparts of the company where the presence is nil as of today.INSURANCE:The assets of the company are adequately insured. The Company has also taken Stock Brokers Indemnity Insurance tocover the exposure arising from NSE ,BSE & MCX-SX operations, and also a Liability insurance Policy for Central DepositoryServices (India) Limited.LISTING:The Equity Shares of the Company are listed on Bombay Stock Exchange Limited (Stock Code 523019). The annual listingfees for the year 2010- 2011 has been paid to the Stock Exchange.DIRECTORS:Smt. Nisha Rathi resigned as Director of the Company on personal grounds. The Board expressed their sincere appreciationfor the services rendered by her as Director.Sri Badri Narayan Rathi & Sri K. Hari Chandra Prasad retire by rotation and being eligible offers themselves for re-appointment.AUDITORS:The Auditors of the Company M/s.Kalyandas & Co. Chartered Accountants, Hyderabad retire at the ensuing Annual GeneralMeeting of the Company and have given their consent for re-appointment. The company has also received a certificatefrom them under Section 224 (1-B) of the Companies Act,1956.AUDITORS’REPORT:The Board has duly reviewed the Statutory Auditors ‘Report on the Accounts for the year ended March 31,2010 and wishto reply to the report that the same does not have any reservation,qualification or adverse remarks.FIXED DEPOSITS :The Company has not accepted any deposits from the public.PARTICULARS OF EMPLOYEES:None of the employees are covered under section 217(2A) of the Companies Act, 1956 read with the Companies (Particularsof employees) Rules,1975 and forming part of the Directors report for the year ended 31st March, 2010.


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For and on behalf of the Board

Laxminiwas SharmaCHAIRMAN


DIRECTORS’ RESPONSIBILITY STATEMENT:The Directors confirm :(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;(ii) that they have selected such accounting policies and applied them consistently and made judgements and estimates that are

reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year31.03.2010 and of the profits of the company for that period;

(iii) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act,1956 for safe guarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) that they have prepared the annual accounts on a going concern basis.

STATUTORY COMPLIANCE:The Company has complied with the required provisions relating to statutory compliance with regard to the affairs of the Company in allrespects.

COMPLIANCE CERTIFICATE:The Compliance Certificate referred as per the provision to Sub - Section (1) of Section 383A of the Companies Act,1956 is obtained.

CREDIT & GUARANTEE FACILITIES:The Company has been availing facilities of Credit and Guarantee as and when required, for the business of the Company, from HDFCBank Ltd. and Karur Vysya Bank Ltd from time to time and the Company has taken the required steps to increase the Bank Guaranteelimits. Personal Guarantees given for obtaining Bank Guarantees by the Managing Director and Director Sri B N Rathi without any consideration.

FORFEITURE OF PREFERENTIAL CONVERTIBLE WARRANTSDuring the year the company has forfeited a sum of Rs 11,92,400/- received towards 54,200 convertible warrants for non-opting ofconversion of warrants into equity.

CONSOLIDATED FINANCIAL STATEMENTSThe Company has prepared Consolidated Financial statements in accordance with Accounting Standard 21 (AS21) issued by the TheInstitute of Chartred Accountants of India.The Consolidated Statements reflect the results of the Company and those of its Subsidiary.Asrequired by Clause 32 of the Listing agreement with Stock Exchange ,the Audited Consolidated Financial statements together with Audi-tors' Report thereon are annexed and form the part of this Annual Report.

SUBSIDIARY COMPANYDuring the financial year, your company acquired 100% of the equity capital of M/s B. N. Rathi Comtrade Pvt. Ltd. andB. N. Rathi Comtarde Pvt. Ltd. has become a wholly owned subsidiary of your Company. B. N. Rathi Comtarde Pvt. Ltd. is a Trading CumClearing Member of MCX and NCDEX.

INTERNAL AUDIT:M/s.T.R.Chadha&Co., Chartered Accountants, Hyderabad are the internal Auditors of the Company, and are the Concurrent and InternalAuditors for CDSL Operations also.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE:The information pursuant to Section 217 (i) (e) of the Companies Act,1956 read with Companies (Disclosure of particulars in the reportof Directors) Rules, 1988 has not been given as the same is not applicable. The particulars regarding income and expenditure in ForeignCurrency is nil.

ACKNOWLEDGEMENT:Your Directors wish to place on record their appreciation for the valuable co-operation, support and assistance received from the GovernmentDepartments and Local Authorities, Securities and Exchange Board of India, Financial Institutions, Banks, National Stock Exchange ofIndia Limited, Bombay Stock Exchange Limited and Central Depository Services (India ) Limited.

Your Directors also acknowledge the continued support given by the valued and esteemed customers and sub-brokers and the sincereand dedicated services of the employees of the Company at all levels.

Your Directors also like to express their thanks to the shareholders for the confidence which they reposed in the management of theCompany.


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AUDITOR’S REPORT

To.The Members of B.N.Rathi Securities Limited,

We have audited the attached Balance Sheet of M/s B.N.RATHI SECURITIES LIMITED as at 31st

March, 2010 and also the Profit & Loss Account and the Cash Flow Statement of the Company for theyear ended on that date annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material mis-statements. An audit includes examining, on a test basis,evidence supporting the amount and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the management, as wellas evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion. We report that:

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

b) In our opinion, proper books of account as required by law, have been kept by the Company sofar as it appears from our examination of the same.

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

d) In our Opinion, the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealtwith by this report comply with the Accounting Standards referred to in sub-section (3C) ofsection 211 of the Companies Act, 1956 subject to Notes on Accounts.

e) As per the representations made by the Company and all its Directors, no Director is disqualifiedfrom being appointed as Director U/s 274(1)(g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us,the said accounts read with notes on the accounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) in the case of the Balance Sheet, of the State of Affairs of the Company, as at 31st March,2010 and

(ii) in case of the Profit and Loss Account, of the Profit of the Company for the year ended onthat date and

(iii) in the case of the Cash Flow Statement, of the Cash Flows of the Company for the yearended on that date.

g) As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies(Auditor’s Report Amendment) Order, 2004 issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checksof the books and records of the Company as we considered appropriate and according to theinformation and explanations given to us we further report the matters to the extent applicableas under:


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1) a) The Company has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets. The fixed assets of the Company have been physicallyverified by the management at the year end and no serious discrepancies were noticed on suchverification. Fixed Assets disposed off during the year are not material and therefore do notaffect the going concern assumption.

b) The Company has purchased land bearing GHMC No 14-9-806 admeasuring 590 Sq Yrdssituated at Goshakat,Jumerat Bazar,Hyderabad for a consideration Rs 43.52 Lkahs. During theyear the company sold the land for a consideration of Rs 46 Lakhs and the same was approvedby the Board.Government has fixed the registration value for payment of stamp duty whichworked out to Rs 77.74 Lakhs.

2) The stock of inventory has been physically verified by the management at reasonable intervals. Inour opinion, and according to the information given to us, the procedure for physical verification ofinventory followed by the management are reasonable and adequate in relation to the size of thecompany and the nature of its business. In our opinion the company is maintaining proper recordsof inventory and no material discrepancies were noticed on physical verification.

3) a) The Company has not granted secured or unsecured loan to companies, firms or other partiescovered in the register maintained under section 301 of the Act.

b) The Company has not obtained unsecured loans from companies, firms or other parties coveredin the register maintained under section 301 of the Act.

4) In our opinion there are internal control procedures commensurate with the size of the Companyand the nature of its business with regard to purchase of inventory and fixed assets and for sale ofstock (shares) and services requires Improvement. Further, on the basis of our examination andaccording to the information and explanations given to us, we have neither come across nor havebeen informed of any instance of major weakness in the aforesaid internal control systems.

5) In our opinion and according to the explanation given to us, the particulars of Contracts orarrangements required to be entered in the register under Section 301 of the Companies Act, 1956have been entered and transactions aggregating during the Financial year to Rupees Five Lakhsor more in respect of each party have been made at prices which are reasonable having regard toprevailing market prices for such securities or the prices at which transactions for similar securitiesor services have been made with other parties.

6) The Company has not accepted any deposits from the public within the meaning of Section 58Aand 58AA or any other relevant Provisions of the Companies Act, 1956 and the Rules framed thereunder.

7) In our opinion the Company has a system of internal audit which commensurate with its size andnature of its business.

8) The Central Government has not prescribed the maintenance of cost records under clause (d) ofthe sub-section (1) of Section 209 of the Act for any of its products.

9) a) The Company is regular in depositing with appropriate authorities undisputed amount ofProvident Fund, Investor Education and Protection Fund, Income Tax, Service Tax and otherstatutory dues as applicable and no undisputed amounts payable are outstanding as at31st March, 2010 for a period of more than six months from the date they become payable.

b) The Company has disputed Income Tax Demand Rs. 1,44,656/- for the Assesment year2006- 07 and Rs. 79,900 for the Asst.year 2007-08 and the first appeal is pending disposal.


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For KALYANDAS & Co.Chartered Accountants.

(Registration No.01677F)

(G.KALYANDAS)Partner

Membership No.:7102

Date : 29.07.2010Place : Hyderabad

10) The Company has no accumulated losses as at 31st March, 2010 and it has not incurred cashlosses in the financial year under report or in the immediately preceeding financial year.

11) The Company has not defaulted in repayment of dues to any financial institutions or banks.

12) The Company has not granted any loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

13) The Company is not a chit fund, nidhi or mutual benefit fund/society.

14) The Company is a Member of NSE and BSE and renders services for investors in purchase andsale of shares and securities and also deals in shares and securities.The Company has maintainedproper records of the transactions and contracts of purchases and sale of shares and other securitiesand timely entries have been made therein. The Company has held the shares in the name of theCompany.

15) According to the information and explanations given to us and the representations made by themanagement, the Company has not given any guarantee for Loans taken by others from Banks orFinancial Institutions.

16) The Company has not obtained any term loans during the year.

17) On the basis of our examinations of the books of account and the information and explanationsgiven to us, in our opinion the funds raised on short-term basis have not been used for long terminvestment.

18) The Company has not made any preferential allotment of shares to parties and companies coveredin the register maintained under Section 301 of the Act during the year.

19) The Company has not issued any debentures during the year.

20) The Company has not raised any money by public issues during the year.

21) According to the explanation and information given to us, based upon the audit procedures performedand representations made by the management, we report that no fraud on or by the Company hasbeen noticed or reported during the course of our Audit.


12


BALANCE SHEET AS AT 31ST MARCH, 2010

As at As at31.03.2010 31.03.2009

Schedule (Rupees) (Rupees) (Rupees)

SOURCES OF FUNDS

1. SHAREHOLDERS' FUNDSa) Share Capital 1 2,52,00,000 2,31,20,000b) Upfront Payment against Warrants (Ref Note 7 to Schedule 10) Nil 16,50,000c) Reserves and Surplus 2 5,16,36,650 4,27,92,836

2. LOAN FUNDS Secured Loan 3 2,22,940 4,65,509

Total 7,70,59,590 6,80,28,345

APPLICATION OF FUNDS1. Fixed Assets 4

Gross Block 1,83,70,673 1,96,41,826Less : Depreciation 98,54,177 77,38,325Net Block 85,16,496 1,19,03,501

2. Investments 5 99,99,800 Nil3. Current Assets, Loans and

AdvancesCurrent Assets 6 15,10,01,651 11,05,64,906Loans and Advances 7 2,40,32,049 2,17,13,728

17,50,33,700 13,22,78,634

Less : Current Liabilities 8 10,84,87,757 7,13,95,049 Provisions 80,26,249 49,28,274

11,65,14,006 7,63,23,323Net Current Assets 5,85,19,694 5,59,55,311

4. Deferred Tax Assets 23,600 1,69,533

SIGNIFICANT ACCOUNTING POLICIES Total 7,70,59,590 6,80,28,345AND NOTES ON ACCOUNTS 11

vide our seperate report of even dateFor KALYANDAS & CO., For and on behalf of the BoardChartered Accountants

LAXMINIVAS SHARMACHAIRMAN

G. KALYANDASPartner

Date : 29.07.2010 HARI NARAYAN RATHIPlace: Hyderabad MANAGING DIRECTOR


13


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

For the For theYear Year

ended ended31.03.2010 31.03.2009

Schedule (Rupees) (Rupees)

INCOME

Income from Operations 6,10,45,070 3,67,62,925Other Income 18,10,616 3,66,620Interest Income (TDS Rs.7,49,663 -P/y 11,86,400) 67,85,164 71,78,164

Total 6,96,40,850 4,43,07,709

EXPENDITUREPersonnel 9 91,48,330 60,50,821Administrative expenses 10 1,07,43,268 82,56,114Brokerage 3,17,84,805 2,01,34,782

Interest 25,56,654 20,14,813Depreciation 21,15,852 19,53,314

Total 5,63,48,909 3,84,09,844

Profit Before Taxation 1,32,91,941 58,97,865Less: Provision for Taxation - Current Tax 45,00,000 19,80,000 - Deferred Tax 1,45,933 29,133

Profit After Taxation 86,46,008 38,88,732Transfer to General Reserves 2,16,150 NilProposed Dividend 30,24,000 25,20,000Tax on Dividend 5,02,249 4,28,274Balance carried to Balance Sheet 49,03,609 9,40,458SIGNIFICANT ACCOUNTING POLICIES 11AND NOTES ON ACCOUNTS



G. KALYANDASPartner



14


CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2010

PARTICULARS A.CASH FLOW FROM OPERATING ACTIVITIES:

Net profit before tax and extraordinary items 13292 5898Adjustments for:Depreciation 2116 1953Interest expenses 2556 2015Interest Income (6785) (7178)Profit on sale of land (98) 0Operating profit before working capital changes 11081 2688Trade and other Receivable (28154) (1614)Inventories 255 24Trade payable 37093 (70614)Cash generated from operations 20275 (69516)Less : Direct Tax paid(Net of Refunds) (4070) (1849)NET CASH FLOW FROM OPERATING ACTIVITIES 16205 (71365)

B.CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (3081) (1512)Sale of Fixed Asset 4450 5Interest Received 6251 5751Investment in equity shares of subsidiary company (10000) 0Advance to Subsidiary Company (38) 0NET CASH FLOW FROM INVESTING ACTIVITIES (2418) 4244

C.CASH FLOW FROM FINANCING ACTIVITIES:Interest paid (2556) (2014)Proceeds from preferential issue of warrants 0 1320Proceeds from preferential issue of equity Shares 1622 0Share Premium 2496 0Proceeds /(Repayment) of secured Loan (243) (218)Payment of Dividend &Taxes (2948) (2705)Net cash used in financing activities (1629) (3617)Net cash flow during the year A+B+C 12158 (70738)

Add : Cash and Cash equivalents as at 01-4-2009 54366 125104Cash and Cash equivalents as at 31-3-2010 66524 54366

Note : Previous Year's figures have been re-arranged and re-grouped where ever necessary.* Includes balances in unpaid dividend bank accounts, which are not available for the Company

(Amount in Rs '000)

2009-2010 2008-2009



G. KALYANDASPartner



15


As at As at31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.1

SHARE CAPITALAuthorised :

5000000 Equity Shares Rs.10/- each 5,00,00,000 5,00,00,000

Issued, Subscribed and paid up :2520000 Equity Shares Rs.10/- each 2,52,00,000 2,31,20,000(P/Y 2312000 Equity Shares Rs.10/- each)

Total 2,52,00,000 2,31,20,000

SCHEDULE NO.2

RESERVES AND SURPLUS

Capital Reserve 14,90,400 2,98,000Share Preimum Account 1,22,40,000 97,44,000General Reserve 2,16,150 NilOpening balance - P & L A/c 3,27,50,836 3,20,64,508Add / (Less): Income Tax of earlier years 35,655 (2,54,130)

3,27,86,491 3,18,10,378

Add : Transfer from Profit & Loss A/c 49,03,609 9,40,4583,76,90,100 3,27,50,836

Total 5,16,36,650 4,27,92,836

SCHEDULE NO.3SECURED LOAN

Vehicle Loan 2,22,940 4,65,509

(Bearing Interest Secured onhypothecation of Vehicle)

Total 2,22,940 4,65,509

SCHEDULES FORMING PART OF THE BALANCE SHEET


16


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17


As at As at 31.03.2010 31.03.2009

(Rupees)

SCHEDULE NO.5

INVESTMENT999980 Fully paid equity shares of Rs.10/- each ofM/s. B N Rathi Comtrade Private Limited 99,99,980 Nil

SCHEDULE NO.6A) CURRENT ASSETS1. Accrued Interest 31,22,877 29,31,7232. Cash on hand 16,771 13,995

3. Balances with Non Scheduled Banks 1,77,02,671 1,00,80,0774. Balances with Scheduled Banks 31,30,792 41,05,8455. Fixed Deposits (FDRs with Banks for

Bank Guarantees) 2,11,42,508 1,58,65,6266. Fixed Deposit (FDRs with HDFC Bank for

OD aganist FD ) 2,27,31,694 2,25,00,0008. Fixed Deposits (FDRs with NSEIL-CD) 8,00,000 8,00,0009. Fixed Deposits (FDRs with BSE) 10,00,000 10,00,00010. Additional Base Capital with NSE 21,29,000 25,29,00011. Initial Margin Deposits with IL&FS for F&O 3,39,63,762 2,69,14,00012. Initial Margin Deposits with IL&FS-CD 4,00,000 10,00,000

TOTAL 10,61,40,075 8,77,40,266

No. of As at No. of As atShares 31.03.2010 Shares 31.03.2009

(Qty) (Rupees) (Qty) (Rupees)

B)STOCK-IN-TRADE (Listed )(Stock In Trade valued at cost)BNR Udyog Ltd. Nil Nil 60000 2,55,000

UN-LISTED

Mahesh Vidya Bhavan Ltd 20000 2,00,000 20000 2,00,000

Hyderabad Stock Exchange Ltd 10000 10,000 10000 10,000

TOTAL 2,10,000 4,65,000Aggregate Market Value of Listed Shares Nil 3,88,800

C) Amount Receivable from Clients

& Stock Exchanges(Considered good, Secured againstShares and outstanding for a period)less than Six months 4,46,51,576 2,23,59,640

TOTAL 4,46,51,576 2,23,59,640

(Rupees)


18


As at As at31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.7LOANS AND ADVANCES(Unsecured, considered good and outstanding for a period ofmore than six months receivable in cash or kind for value to be received)I) Receivable from Subsidiary Company

B.N. Rathi Comtrade Private Limited 37,500 Nil

II) Staff Advances 2,34,500 1,09,000III) Income Tax & TDS 40,69,663 16,86,401

IV) Income Tax Refundable 3,54,089 2,68,558V) Deposits

a) NSEIL & NSCCL (Interest Free ) 41,00,000 41,00,000b) NSEIL Membership Deposit 9,00,000 9,00,000c) NSEIL Future Segment Deposit 8,00,000 8,00,000d) BSE Membership Deposit 1,00,00,000 1,00,00,000e) Lease Line Deposit 2,40,959 4,00,000f) BSE Membership Security Deposit 5,00,000 5,00,000g) BSE Base Capital adequacy Deposit 5,00,000 5,00,000h) BSE Brokers contigency Fund 2,50,000 2,50,000i) Rent Deposit 5,00,000 5,00,000j) BSE VSAT Deposit 2,50,000 3,70,000k) NSE Currency Derivatives Segment Deposit 2,00,000 2,00,000l) Other Deposits 6,14,828 6,33,208

VI) Prepaid Expenses 4,80,510 4,96,561TOTAL 2,40,32,049 2,17,13,728

SCHEDULE NO.8CURRENT LIABILITIES

1) Sundry Creditors-Clients 5,60,47,912 2,41,21,3242) VSATs Deposits 23,25,182 19,95,2823) Creditors - Suppliers & Services 15,43,327 34,29,3664) Outstanding Liabilities 10,51,177 14,29,0775) Initial Margin IL&FS 1,44,36,336 89,17,0006) Clients Margin Deposits 3,20,50,066 3,06,39,5007) Un-Paid Dividend 10,33,757 8,63,500

PROVISIONS:1) Income Tax 45,00,000 19,80,0002) Proposed Dividend 30,24,000 25,20,0003) Tax on Dividend 5,02,249 4,28,274

TOTAL 11,65,14,006 7,63,23,323

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT

For the For theYear ended Year ended31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.9PERSONNEL EXPENDITURE

1. Managerial Remuration 12,60,000 12,77,0002. Salaries & allowances 68,99,859 38,36,1573. Medical reimbursement 83,296 72,2674. Staff Welfare 1,52,760 74,5535. Bonus & Gratuity 3,33,410 4,04,5236. Provident Fund Contribution 4,19,005 3,86,321

TOTAL 91,48,330 60,50,821


19


For the For the Year ended Year ended

31.03.2010 31.03.2009(Rupees) (Rupees)

SCHEDULE NO. 10

ADMINISTRATIVE EXPENSES

Rent, Rates & Taxes 14,49,072 8,04,423Printing & Stationery 7,25,655 5,78,516Postage & Courier Charges 6,04,680 3,67,996Conveyance 23,171 22,195Travelling Expenditure 1,10,702 1,76,947Telephone Charges 3,75,414 3,33,720Advertisement Expenses 54,234 49,887Remuneration to Auditors:Statutory Audit Fee 36,000 33,090Other Services 1,76,085 92,586Internal Audit fee 1,56,626 1,03,055Registrar & Share Transfer agency Charges 37,854 40,698VAST Charges 2,58,943 3,05,956Demat & Other Transaction Charges 3,65,952 1,92,427Subscription & Membership Fee 1,75,448 1,74,771Annual Maintenance Charges 5,00,898 4,41,150Professional Fee & Consultancy Fee 4,26,197 1,34,129Listing, Filing/Reg. & Renewals 2,06,734 1,47,659Directors' Sitting Fee 40,500 18,000Electricity Charges 3,91,960 3,12,886Generator Maintainance Charges 21,484 32,428Vehicle Maintenance 3,08,873 1,83,763Office Maintenance 2,06,670 1,47,771Repairs & Maintenance 86,235 71,949Stock Exchange Charges & SEBI Fee 3,76,263 3,48,208Bank Commission & Charges 12,56,724 9,02,711

Business Promotion 4,61,344 46,842Insurance 1,58,341 2,15,682Legal Expenses 31,390 17,677Leased Line Charges 10,19,756 8,55,640Bad debts written off 3,33,775 10,64,170Donations 71,000 5,000CDSL Charges 38,474 NilCTCL Net work Charges 2,20,404 NilOther expenses 36,410 34,182

TOTAL 1,07,43,268 82,56,114


20


SCHEDULE NO.11

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTSI. SIGNIFICANT ACCOUNTING POLICIES:

1. GENERAL : The financial statements are prepared on historical cost convention, on basis of a goingconcern, on an accrual basis and in accordance with the applicable accounting standards.

2. FIXED ASSETS : Fixed Assets are stated at cost less accumulated depreciation.

3. DEPRECIATION : Depreciation has been provided on written down value of the Assets as per the ratesspecified in Schedule XIV of the Companies Act, 1956. Depreciation on Fixed assets added/disposed offduring the year on pro-rata basis.

4. VALUATION OF STOCK OF SECURITIES : Securities disclosed under Stock in Trade are stated at cost.

5. RETIREMENT BENEFITS : The Company contr ibutes to Group policy with Life InsuranceCorporation of India to cover its liabilities towards Employees Gratuity.

6. RECOGNITION OF INCOME AND EXPENDITURE : Items of Income and Expenditure are on accrualbasis subject to the notes on accounts.

7. INVESTMENTS: During the year,the company has acquired 999980 fully paid equity shares of Rs 10/-each of M/s B N Rathi Comtrade Private Ltd consequent to which M/s B N Rathi Comtrade Privat Limitedhas become 100% subsidiary of the Company.

II. NOTES ON ACCOUNTS

1. Information required to be furnished pursuant to clause 4-A, 4-C and 4-D of par t-IISchedule VI to the Companies Act, 1956 is not provided as the same is not applicable to the Company.

2. The Company has not paid remuneration to any of it’s employees exceeding Rs. 24,00,000/- per annumor Rs. 2,00,000 per month as the case may be.

3. Contingent Liability :

(i)On behalf of the company, HDFC Bank & Karur Vysya Bank have given Bank Guarantees of Rs 400.00Lakhs (Previous Year Rs.300.00 Lakhs) to NSCCL and IL&FS.

(ii) The Company has disputed Income Tax demand Rs.1,44,656/- for the Assessment year 2006-07 andRs 79,900/- for the Asst Year 2007-08 and appeals are pending disposal.

(iii) In the absence of information Income tax contigent Liability in respect other appeal could not bequantified.

4. Taxes on Income: Current tax is determined on taxable income for the period Rs. 45 lakhs. Deferred tax isrecognized, subject to the consideration of prudence, on timing differences, being the difference betweentaxable income and accounting income that originate in one period and are capable of reversal in one ormore subsequent periods.Deferred Tax assets on difference between WDV of assets as per CompaniesAct and Income Tax Act is Rs.23,600/-

5. The Company has incurred a net loss of Rs 84,654/- in share Trading. The aggregate value of sharespurchased worked out Rs. 42.24 Lakhs and the sale thereof worked out to Rs.43.08 Lakhs. The aboveloss has been included in other income.Profit on Sale of Stock In Trade Rs 1,94,394/- included underother imcome.

6. During the year the Promoters have subscribed Share Capital Rs 20,80,000 by conversion of 208000warrants into equity shares of Rs 10/- each at apremium of Rs 12/- per share.

7. During the year, the company has sold the Land for Rs 46,00,000/- and the same has been disclosedunder the other income.

8. Preferential Convertible Warrants of Rs 11,92,400/- have been forfeited due to lapse of period for conversion and the same transferred to Capital Reserve.

9. During the year an amount of Rs. 2,16,150/- has been transferred to General Reserves from out of profits.10. Subsidiary company M/s. B N Rathi Comtrade Private Limited is member of MCX & NCDEX Exchanges.11. During the year, preliminary Expenses Rs. 76,236/- and Expenses Rs. 75,000/- incurred in Connection

with increase of authorised capital of M/s. B N Rathi Comtrade Private Limited were absorbed by thecompany and the same has been debited to profit and Loss account.

12. Bad Debts written off Rs 3, 33,775/- during the year.


21


13. As required by Accounting Standard 20 Earnings Per Share issued by Institute ofChartered Accountants of India (ICAI), basic earning per share has been calculated bydividing net profit after tax by weighted average number of equity shares outstanding duringthe year as per details given below:

Current Year Previous Year

2009-2010 2008-2009

Profit as per Profit and Loss Account 86,46,008 38,88,732Weighted average number of shares used incomputing basic earning per equity share 25,20,000 2312000Basic & Diluted earnings per share (Rs) 3.43 1.68(on nominal value of Rs 10/- per share )

14. Figures of the Previous Year have been re-grouped or re-arranged wherever considerednecessary.

Rent paid --- 0.60 4.80 5.40

Remuneration -- 9.60 3.00 12.60

Services rendered -- 0.68 1.81 2.49

Investment in Subsidiary 99.99 -- -- 99.99

KeyManagement

personnel

Enterprises havingcommon keyManagement

Personnel

Relatives ofKey management

personnelTotal

Related Party Transactions during the the year 2008-2009. (Rs in Lakhs)

13. Related Party Disclosure: Key Managment Personnel : Sri.HARI NARAYANRATHIRelatives of Key Management PersonnelSri. Badri Narayan Rathi father of Sri. HARI NARAYANRATHISmt .Basanthi Devi Rathi Mother of Sri. HARI NARAYANRATHISri. Govind Narayan Rathi brother of Sri. HARI NARAYANRATHISmt . Chanda Devi Rathi wife of Sri. HARI NARAYANRATHISmt Kamala Devi Rathi Sister-in-law of Sri. HARI NARAYANRATHISri. Chetan Rathi Son of Sri.HARI NARAYANRATHISmt Nisha Rathi Daughter-in-law of Sri. HARI NARAYANRATHISmt Neetha Rathi Sister-in-law of Sri.HARI NARAYANRATHISmt Sunita Rathi Sister-in-law of Sri.HARI NARAYANRATHI

Signatures to Schedule 1 to 11vide our seperate report of even dateFor KALYANDAS & CO., For and on behalf of the BoardChartered Accountants


G. KALYANDASPartner



22


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE (Submitted interms of Part IV of Schedule VI of the Companies Act, 1956)

I. REGISTRATION DETAILS Registration No. B/Sheet Date

II. CAPITAL RAISED DURING THE YEAR (Amount in Rs. '000)Public Issue Rights Issue

Bonus Issue Private Placement

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs. '000)Total Liabilities Total Assets

SOURCES OF FUNDSPaid up Capital UPfront Payment against Warrants

Reserves & Surplus Minority Interest Secured Loans

APPLICATION OF FUNDSNet Fixed Assets Investments

Net Current Assets Deferred Tax Asset

Accumulated Losses Misc. Expenditure

IV. PERFORMANCE OF COMPANY (AMOUNT IN RS. '000)Turnover (Income) Total Expenditure

Profit /Loss Before Tax Profit/Loss After Tax

Earnings per Share in Rs. Dividend Rate %

V. GENERIC NAME OF PRINCIPAL SERVICES OF THE COMPANY(as per monetary terms)

Item Code No. (ITC Code) :Product Description : Dealing in Securities


LAXMINIVAS SHARMA HARI NARAYAN RATHICHAIRMAN MANAGING DIRECTOR


3 1 0 3 2 0 1 0Month YearDate

L65993AP1985PLC05838

N I L

1 0 0 0 0

2 45 8 5 2 0

6 9 6 4 1 5 6 3 4 9

1 23. 4 3

++ -

1 3 2 9 2

N I L

++ -

N I LN I L

N I L

8 6 4 6

5 1 6 3 7

2 5 2 0 0

8 5 1 6

N I L

2 0 8 0 0 0

7 7 0 5 9 7 7 0 5 9

2 2 3

N I L

0 0 2


23


STATEMENT REGARDING SUBSIDIARY COMPANYPURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956.

01. Name of the subsidiary : B N RATHI COMTRADE PRIVATE LIMITED

02. The financial year of the subsidiary ended on : 31.03.2010

03. B N Rathi Securities Limited shareholding in subsidiary as onNumber of Equity Shares of Rs 10/- each : 9,99,980

Percentage of holding : 100%

04. The net aggregate profit/ (Loss) of subsidiary company so faras it concerns the holding company

1) Not dealt with in the accounts B N Rathi Securities Limited : Rs. 15172

a) For the subsidiary financial year ended on 31st March 2010 : Rs. 15172

b) For the previous financial year ofB N Rathi Comtrade Private Limited since it became asubsidiary of B N Rathi Securities Limited : NA

2) Dealt with in the holding company accounts by way ofdividends on shares held in the subsidiary

a) For the subsidiary financial year ended on 31st March 2010 : NA

b) For the previous financial year ofB N Rathi Comtrade Private Limited since it became asubsidiary of B N Rathi Securities Limited : NA

Note : Charges in the interest of B N Rathi Comtarde Private Ltd andB N Rathi Securities Limited between the end of the subsidiary’sfinancial year and 31st March, 2010 : NA



G. KALYANDASPartner



24


AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF M/s B.N.RATHI SECURITIES LIMITED ONTHE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2010.

We have audited the attached consolidated Balance Sheet of M/s B.N.RATHI SECURITIES LIMITED and its SubsidiaryCompany as at 31st March, 2010,the Consolidated Profit & Loss Account and the Consolidated Cash Flow Statementfor the year ended on that date annexed thereto. These Consolidated financial statements are the responsibility of theM/s.B.N.RATHI SECURITIES LIMITED’s management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial mis-statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by the management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

We report that the consolidated financial statements have been prepared by the Company in accordance with therequirements of Accounting Standard 21 on consolidated Financial Statements issued by the Institute of CharteredAccountants of India, on the basis of the individual financial statements of M/s. B.N.RATHI SECURITIES LIMITED andits Subsidiary M/s.B.N.RATHI COMTRADE PRIVATE LIMITED included in the consolidated financial statements.

In our opinion and to the best of our information and according to the explanations given to us and on considerationof the separate audit reports on individual audited financial statements of M/s. B.N.RATHI SECURITIES LIMITED andits Subsidiary M/s.B.N.RATHI COMTRADE PRIVATE LIMITED, in our opinion, the consolidated financial statementsread with Significant Accounting Policies and Notes on the consolidated accounts give a true and fair view in conformitywith the accounting principles generally accepted in India.

(i) in the case of the Consolidated Balance Sheet, of the State of Affairs of the Company and its subsidiary, as at31st March, 2010 and

(ii) in case of the Consolidated Profit and Loss Account, of the Profit of the Company and its subsidiary for theyear ended on that date and

(iii) in the case of the Consolidated Cash Flow Statement, of the Cash Flows of the Company and its subsidiaryfor the year ended on that date.




Membership No.:7102



25


CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2010

As at As at31.03.2010 31.03.2009


SOURCES OF FUNDS1. SHAREHOLDERS' FUNDS

a) Share Capital 1 2,52,00,000 2,31,20,000b) preferential Convertible Warrants Nil 16,50,000c) Reserves and Surplus 2 5,16,37,729 4,27,92,836

2. MINORITY INTEREST 201 NIL3. LOAN FUNDS

Secured Loan 3 2,22,940 4,65,509Total 7,70,60,870 6,80,28,345


Gross Block 1,85,22,203 1,96,41,826Less : Depreciation 98,58,491 77,38,325Net Block 86,63,712 1,19,03,501

2. Deferred Tax Assets 19,507 1,69,5333. Current Assets, Loans and

AdvancesCurrent Assets 5 16,09,15,688 11,05,64,906Loans and Advances 6 2,96,45,653 2,17,13,728

19,05,61,341 13,22,78,634

Less : Current Liabilities 7 11,41,47,441 7,13,95,049 Provisions 80,36,249 49,28,274

12,21,83,690 7,63,23,323Net Current Assets 6,83,77,651 5,59,55,311

SIGNIFICANT ACCOUNTING POLICIES Total 7,70,60,870 6,80,28,345AND NOTES ON ACCOUNTS 10



G. KALYANDASPartner



26


CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010


ended ended31.03.2010 31.03.2009


INCOMEIncome from Operations 6,12,81,443 3,67,62,925Other Income 18,89,311 3,66,620Interest Income (TDS Rs.7,53,484 -P/y 11,86,400) 68,31,935 71,78,164

Total 7,00,02,689 4,43,07,709EXPENDITURE

Personnel 8 91,48,330 60,50,821Administrative expenses 9 1,09,40,558 82,56,114Brokerage 3,19,28,785 2,01,34,782Interest 25,57,738 20,14,813Depreciation 21,20,166 19,53,314Total 5,66,95,577 3,84,09,844

Profit Before Taxation 1,33,07,112 58,97,865Less: Provision for Taxation - Current Tax 45,10,000 19,80,000 - Deferred Tax 1,50,026 29,133

Profit for the year before Minority Interest 86,47,086 38,88,732Minority Interest 1 NilProfit for the year 86,47,085 NillTransfer to General Reserves 2,16,150 NilProposed Dividend on Equity Share 30,24,000 25,20,000Corporate Dividend TaxTax on Dividend 5,02,249 4,28,274Balance carried to Balance Sheet 49,04,686 9,40,458SIGNIFICANT ACCOUNTING POLICIES 11AND NOTES ON ACCOUNTS



G. KALYANDASPartner



27


CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2010


Net profit before tax and extraordinary items 13307 5898Adjustments for:Depreciation 2120 1953Interest expenses 2558 2015Interest Income (6832) (7178)Absorbed Preliminary Expenses written off 76 0Loss on Sale of Fixed Assets (98) 0Operating profit before working capital changes 11131 2688Trade and other Receivable (34913) (1614)Inventories 255 24Trade payable 42752 (70614)Cash generated from operations 19225 (69516)Less : Direct Tax paid (4073) (1849)NET CASH FLOW FROM OPERATING ACTIVITIES 15152 (71365)

B.CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (3232) (1512)Sale of Fixed Asset 4450 5Interest Received 6274 5751Investment in equity shares of subsidiary company (BNRCPL) (500) 0NET CASH FLOW FROM INVESTING ACTIVITIES 6992 4244

C.CASH FLOW FROM FINANCING ACTIVITIES:Interest paid (2558) (2014)Proceeds from preferential issue of warrants 0 1320Proceeds from preferential issue of equity Shares 1622 0Share Premium 2496 0Proceeds /(Repayment) of secured Loan (243) (218)Payment of Dividend &Taxes (2948) (2705)Net cash used in financing activities (1631) (3617)Net cash flow during the year A+B+C 20513 (70738)Add : Cash and Cash equivalents as at 01-4-2009 54390 125104Cash and Cash equivalents as at 31-3-2010 74903 54366

Note : Previous Year's figures have been re-arranged and re-grouped where ever necessary.* Includes balances in unpaid dividend bank accounts, which are not available for the Company.

(Amount in Rs '000)

2009-2010 2008-2009



G. KALYANDASPartner



28


As at As at31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.1

SHARE CAPITALAuthorised :

5000000 Equity Shares Rs.10/- each 5,00,00,000 5,00,00,000

Issued, Subscribed and paid up :2520000 Equity Shares Rs.10/- each 2,52,00,000 2,31,20,000(P/Y 2312000 Equity Shares Rs.10/- each)

Total 2,52,00,000 2,31,20,000

SCHEDULE NO.2


Capital Reserve(on consolidation) 14,90,400 2,98,000Share Preimum Account 1,22,40,000 97,44,000General Reserve 2,16,150 NilOpening balance - P & L A/c 3,27,50,836 3,20,64,508Add / (Less): Income Tax of earlier years 35,655 (2,54,130)

3,27,86,491 3,18,10,378

Add : Transfer from Profit & Loss A/c 49,04,686 9,40,4583,76,91,177 3,27,50,836

Total 5,16,37,727 4,27,92,836

SCHEDULE NO.3SECURED LOAN

Vehicle Loan 2,22,940 4,65,509

(Bearing Interest Secured onhypothecation of Vehicle)

Total 2,22,940 4,65,509

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET


29


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30


As at As at31.03.2010 31.03.2009

(Rupees)

A) CURRENT ASSETS1. Accrued Interest 31,46,169 29,31,7232. Cash on hand 16,771 13,995

3. Balances with Non Scheduled Banks 2,00,81,068 1,00,80,0774. Balances with Scheduled Banks 66,30,792 41,05,8455. Fixed Deposits (FDRs with Banks for

Bank Guarantees) 2,36,42,508 1,58,65,6266. Fixed Deposit (FDRs with HDFC Bank for

OD aganist FD ) 2,27,31,694 2,25,00,0008. Fixed Deposits (FDRs with NSEIL-CD) 8,00,000 8,00,0009. Fixed Deposits (FDRs with BSE) 10,00,000 10,00,00010. Additional Base Capital with NSE 21,29,000 25,29,00011. Initial Margin Deposits with IL&FS for F&O 3,39,63,762 2,69,14,00012. Initial Margin Deposits with IL&FS-CD 4,00,000 10,00,000

TOTAL 11,45,41,764 8,77,40,266

No. of As at No. of As atShares 31.03.2010 Shares 31.03.2009

(Qty) (Rupees) (Qty) (Rupees)

B)STOCK-IN-TRADE (Listed )(Stock In Trade valued at cost)BNR Udyog Ltd. Nil Nil 60000 2,55,000

UN-LISTED

Mahesh Vidya Bhavan Ltd 20000 2,00,000 20000 2,00,000

Hyderabad Stock Exchange Ltd 10000 10,000 10000 10,000

TOTAL 2,10,000 4,65,000Aggregate Market Value of Listed Shares Nil 3,88,800

C) Amount Receivable from Clients

& Stock Exchanges(Considered good, Secured against share andoutstanding for a period) less than Six months 4,61,63,924 2,23,59,640

TOTAL 4,61,63,924 2,23,59,640

(Rupees)

SCHEDULE NO.5


31


As at As at31.03.2010 31.03.2009

(Rupees) (Rupees)SCHEDULE NO.6

LOANS AND ADVANCES(Unsecured, considered good and outstanding for a period ofmore than six months receivable in cash or kind for value to be received)I) Staff Advances 2,34,500 1,09,000II) Income Tax & TDS 40,73,484 16,86,401III) Income Tax Refundable 3,54,089 2,68,558IV) Deposits

a) NSEIL & NSCCL (Interest Free ) 41,00,000 41,00,000b) NSEIL Membership Deposit 9,00,000 9,00,000c) NSEIL Future Segment Deposit 8,00,000 8,00,000d) NSE Currency Derivatives Segment Deposit 2,00,000 2,00,000e) BSE Membership Deposit 1,00,00,000 1,00,00,000f) Lease Line Deposit 2,40,959 4,00,000g) BSE Membership Security Deposit 5,00,000 5,00,000h) BSE Base Capital adequacy Deposit 5,00,000 5,00,000i) BSE Brokers contigency Fund 2,50,000 2,50,000j) BSE VSAT Deposit 2,50,000 3,70,000k) MCX (Interest Free) Security Deposit 15,00,000 Nill) MCX Membership 20,00,000 Nilm) NCDEX (Interest Free) Security Deposit 15,00,000 Niln) NCDEX Membership 5,00,000 Nilo) Rent Deposit 5,00,000 5,00,000p) Other Deposits 6,14,828 6,33,208

V) Prepaid Expenses 6,27,793 4,96,561 TOTAL 2,96,45,653 2,17,13,728


1) Sundry Creditors-Clients 6,15,46,307 2,41,21,3242) VSATs Deposits 23,25,182 19,95,2823) Creditors - Suppliers & Services 16,76,393 34,29,3664) Outstanding Liabilities 10,79,400 14,29,0775) Initial Margin IL&FS 1,44,36,336 89,17,0006) Clients Margin Deposits 3,20,50,066 3.06.39.5007) Un-Paid Dividend 10,33,757 8,63,500

PROVISIONS:1) Income Tax 45,10,000 19,80,0002) Proposed Dividend 30,24,000 25,20,0003) Tax on Dividend 5,02,249 4,28,274

TOTAL 12,21,83,690 7,63,23,323

SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT

For the For theYear ended Year ended31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.8PERSONNEL EXPENDITURE

1. Managerial Remuration 12,60,000 12,77,0002. Salaries & allowances 68,99,859 38,36,1573. Medical reimbursement 83,296 72,2674. Staff Welfare 1,52,760 74,5535. Bonus & Gratuity 3,33,410 4,04,5236. Provident Fund Contribution 4,19,005 3,86,321

TOTAL 91,48,330 60,50,821


32



31.03.2010 31.03.2009(Rupees) (Rupees)

SCHEDULE NO. 9


Rent, Rates & Taxes 14,49,072 8,04,423Printing & Stationery 7,42,105 5,78,516Postage & Courier Charges 6,04,683 3,67,996Conveyance 23,171 22,195Travelling Expenditure 1,10,702 1,76,947Telephone Charges 3,75,414 3,33,720Advertisement Expenses 54,234 49,887Remuneration to Auditors:Statutory Audit Fee 50,000 33,090Other Services 1,81,600 92,586Internal Audit fee 1,56,626 1,03,055Registrar & Share Transfer agency Charges 37,854 40,698VAST Charges 2,58,943 3,05,956Demat & Other Transaction Charges 3,69,261 1,92,427Subscription & Membership Fee 2,73,886 1,74,771Annual Maintenance Charges 5,00,898 4,41,150Professional Fee & Consultancy Fee 4,38,697 1,34,129Listing, Filing/Reg. & Renewals 2,40,484 1,47,659Directors' Sitting Fee 40,500 18,000Electricity Charges 3,91,960 3,12,886Generator Maintainance Charges 21,484 32,428Vehicle Maintenance 3,08,873 1,83,763Office Maintenance 2,06,670 1,47,771Repairs & Maintenance 86,235 71,949Stock Exchange Charges & SEBI Fee 3,76,263 3,48,208Bank Commission & Charges 12,62,578 9,02,711

Business Promotion 4,61,344 46,842Insurance 1,60,911 2,15,682Legal Expenses 31,390 17,677Leased Line Charges 10,24,659 8,55,640Bad debts written off 3,33,775 10,64,170Donations 71,000 5,000CDSL Charges 38,474 NilCTCL Net work Charges 2,20,404 NilOther expenses 36,410 34,182

TOTAL 1,09,40,560 82,56,114

SCHEDULE 10SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON CONSOLIDATED ACCOUNTS:

1. Basis of Preparation : The consolidated financial statements of B.N. Rathi Securities Limited and its subsidiary companyB N Rathi Comtrade Private Limited are prepared under the historical cost convention, applicable Accounting Standards and inaccordance with the requirements of the Companies Act, 1956.


33


2. Principles of consolidation :The financial statements of B N Rathi Comtrade Private Limited are drawn up to the same reporting date as of the company.Comparative Previous year figures in the consolidated financial statements do not include the figures of B N Rathi ComtradePrivate Limited which has became subsidiary company during the financial year 2009-10.The consolidated financial statements have been prepared on the following basis:

i) The financial statements of the Company and its subsidiary M/s. B N Rathi Comtrade Private Limited have been preparedon a line-by-line consolidation by adding together like items of assets, liabilities, income and expenses as per the auditedfinancial statements of the respective companies.

ii) Inter-company balances, transactions and unrealized profits / losses ( if any ) have been eliminated.iii) The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions and

other events in similar circumstances and are presented to the extent possible, in the same manner as the Company’sindividual financial statement.

iv) Minority interest consists of the amount of equity attributable to the minority shareholders at the dates on which investmentsare made by the company in the subsidiary company and fur ther movements (if any) in their share in equity subsequentto the dates of investments.

v) There is no short/ excess of cost to the Company of its investment in subsidiary company over its share of the equity ofthe subsidiary company. Hence there is no Goodwill or Capital Reserve on account of consolidation in the consolidatedfinancial statements.

3. Taxes on Income:Current tax is determined on taxable income for the period Rs 45.10 Lakhs. Deferred tax is recognized,subject to the consideration of prudence, on timing differences, being the difference between taxable income and accountingincome that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets ondifference between WDV of assets as per Companies Act and Income tax Act is Rs 19,507/-

4. Contingent Liability:on behalf of the company and its subsidiary, HDFC Bank & Karur Vysya Bank have given Bank Guarantees of Rs 435 Lakhs(Previous Year Rs 300 Lakhs) to NSCCL ,BSE, IL&FS, MCX and NCDEX.

5. As required by Accounting Standard 20 Earning Per Share issued by Institute of Chartered accountants of India (ICAI) ,basicearning per share has been calculated by dividing net profit after tax weighted average number of equity shares outstandingduring the year as per details given below:

Current Year Previous Year2009-2010 2008-2009

Profit as per Profit and Loss Account 86,47,085 38,88,732Weighted average number of shares used in computing basic earningsper equity share 25,20,200 2312000Basic & Diluted earnings per share (Rs) 3.43 1.68(on nominal value of Rs 10/- per share

7. Other Significant Accounting Policies & Notes to Accounts:These are set out in the Significant Accounting policies and Notes to Accounts of the Financial Statements of the Company andits Subsidiary Company.

8. Figures of the previous year have been regrouped or re-arranged wherever considered necessary.

Signatures to Schedule 1 to 10vide our seperate report of even dateFor KALYANDAS & CO., For and on behalf of the BoardChartered Accountants


G. KALYANDASPartner



34


DIRECTORS’ REPORTToThe Members ofM/s. B N RATHI COMTRADE PRIVATE LIMITEDYours Directors are pleased in presenting the 2nd Annual Report together with Audited Statement of Accounts for theyear ended 31st March, 2010

OPERATIONS:

During the year, the company has acquired the membership of Multi Commodity Exchange of India Limited throughtransfer of Membership from Mr. Chetan Kumar Rathi, director of the company for Rs.20 Lakhs. During the year, thecompany also obtained the Membership of National Commodity and Derivatives Exchange Limited. The CommodityBusiness started in the month of March, 2010.

DIVIDEND:

Your directors express their inability to recommend any dividend for the financial year 2009-2010

PUBLIC DEPOSITS:

Your Company has not accepted any deposits falling within the meaning of Sec.58A of the Companies Act, 1956 readwith the Companies (Acceptance of Deposits) Rules, during the financial year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE:

The information pursuant to Section 217 (i) (e) of the Companies Act,1956 read with Companies (Disclosure of particularsin the report of Directors) Rules, 1988 has not been given as the same is not applicable. The particulars regardingincome and expenditure in Foreign Currency is nil.

PARTICULARS OF EMPLOYEES:

As the Company is not having any employee during the year under review, the disclosures required to be made undersection 217 (2A) of the Companies Act, 1956 and the rules made there under are not applicable.

AUDITORS:

M/s. Kalyanda & Co., Statutory Auditors, retire at the conclusion of the 2nd Annual General Meeting and being eligibleoffers themselves for re-appointment for the financial year 2010-2011.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 217 (2AA) of the Companies Act, 1956, Directors of your Company hereby state and confirmthat:

(i) That in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures.

(ii) That the directors had selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent 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 loss of the company for that period.

(iii) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities.

(iv) That the directors had prepared the annual accounts on a going concern basis.

B N RATHI COMTRADE PRIVATE LIMITED


35


INCREASED AUTHORISED CAPITAL

During the year, the company has increased its Authorized Share capital from Rs.25 lakhs to Rs.1 Crore. Expenses ofRs.29,250/- incurred in connection with increase in authorized capital has been debited to Profit and Loss account.

ISSUE OF EQUITY SHARES

During the year, the company has issued 950000 Equity Shares of Rs.10 each to B. N. Rathi Securities Limited whichwere fully paid consequent to which the company has become subsidiary of B.N. Rathi Securities Limited

PERSONNEL:

The relations between the management and the staff were very cordial throughout the year.

ACKNOWLEDGMENT:

The Board desires to place on record its sincere appreciation for the support and co-operation that the companyreceived from the strategic partners, bankers, auditors, and all others associated with the company. The company hasalways looked upon them as partners in its progress. It will be the company’s endeavour to build and nurture stronglinks with trade based on mutuality, respect and co-operation.

Place : Hyderabad

Date : 29.07.2010HARI NARAYAN RATHIDIRECTOR

CHETAN RATHIDIRECTOR

FOR B N RATHI COMTRADE PRIVATE LIMITED



36


AUDITOR’S REPORT

To.The Members of B N Rathi Comtrade Private Limited,

We have audited the attached Balance Sheet of M/s B N RATHI COMTRADE PRIVATE LIMITED as at31st March, 2010 and also the Profit & Loss Account and the Cash Flow Statement of the Company forthe year ended on that date annexed thereto. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material mis-statements. An audit includes examining, on a test basis,evidence supporting the amount and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the management, as wellas evaluating the overall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion. We report that:

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

b) In our opinion, proper books of account as required by law, have been kept by the Company sofar as it appears from our examination of the same.

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

d) In our Opinion, the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealtwith by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 subject to Notes on Accounts.

e) As per the representations made by the Company and all its Directors, no Director is disqualifiedfrom being appointed as Director U/s 274(1)(g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us,the said accounts read with notes on the accounts give the information required by the CompaniesAct, 1956 in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) in the case of the Balance Sheet, of the State of Affairs of the Company, as at 31st March,2010 and

(ii) in case of the Profit and Loss Account, of the Profit of the Company for the year ended onthat date and

(iii) in the case of the Cash Flow Statement, of the Cash Flows of the Company for the yearended on that date.

g) As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies(Auditor’s Report Amendment) Order, 2004 issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checksof the books and records of the Company as we considered appropriate and according to theinformation and explanations given to us we further report the matters to the extent applicableas under:



37


1) The Company has maintained proper records showing full particulars including quantitative detailsand situation of fixed assets. The fixed assets of the Company have been physically verified by themanagement at the year end and no serious discrepancies were noticed on such verification.Fixed Assets disposed off during the year are not material and therefore do not affect the goingconcern assumption.

2) As per the information and explanations given to us, the company did not held any Inventory duringthe year.

3) a) The Company has not granted secured or unsecured loan to companies, firms or other partiescovered in the register maintained under section 301 of the Act.

b) The Company has not obtained unsecured loans from companies, firms or other parties coveredin the register maintained under section 301 of the Act.

4) In our opinion there are internal control procedures commensurate with the size of the Companyand the nature of its business with regard to purchase of inventory and fixed assets and for sale ofstock (shares) and services requires Improvement. Further, on the basis of our examination andaccording to the information and explanations given to us, we have neither come across nor havebeen informed of any instance of major weakness in the aforesaid internal control systems.

5) In our opinion and according to the explanation given to us, the particulars of Contracts orarrangements required to be entered in the register under Section 301 of the Companies Act, 1956have been entered and transactions aggregating during the Financial year to Rupees Five Lakhsor more in respect of each party have been made at prices which are reasonable having regard toprevailing market prices for such securities or the prices at which transactions for similar securitiesor services have been made with other parties.

6) The Company has not accepted any deposits from the public within the meaning of Section 58Aand 58AA or any other relevant Provisions of the Companies Act, 1956 and the Rules framed thereunder.

7) The Company does not have system of internal audit.

8) The Central Government has not prescribed the maintenance of cost records under clause (d) ofthe sub-section (1) of Section 209 of the Act for any of its products.

9) The Company is regular in depositing with appropriateauthorities undisputed amount of ProvidentFund, Investor Education and Protection Fund, Income Tax, Service Tax and other statutory duesas applicable and no undisputed amounts payable are outstanding as at 31st March, 2010 for aperiod of more than six months from the date they become payable.

10) The Company has no accumulated losses as at 31st March, 2010 and it has not incurred cashlosses in the financial year under report or in the immediately preceeding financial year.

11) The Company has not defaulted in repayment of dues to any financial institutions or banks.

12) The Company has not granted any loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

13) The Company is not a chit fund, nidhi or mutual benefit fund/society.



38





Membership No.:7102


14) The Company is a Member of MCX and NCDEX, renders services for investors in purchaseand sale of commodities. The Company has maintained proper records of the transactions andtimely entries have been made therein.

15) According to the information and explanations given to us and the representations made by themanagement, the Company has not given any guarantee for Loans taken by others from Banks orFinancial Institutions.

16) The Company has not obtained any term loans during the year.

17) On the basis of our examinations of the books of account and the information and explanationsgiven to us, in our opinion the funds raised on short-term basis have not been used for long terminvestment.

18) The Company has not made any preferential allotment of shares to parties and companies coveredin the register maintained under Section 301 of the Act during the year.

19) The Company has not issued any debentures during the year.

20) The Company has not raised any money by public issues during the year.

21) According to the explanation and information given to us, based upon the audit procedures performedand representations made by the management, we report that no fraud on or by the Company hasbeen noticed or reported during the course of our Audit.



39


BALANCE SHEET AS AT 31ST MARCH, 2010

As at As at31.03.2010 31.03.2009


SOURCES OF FUNDS1. SHAREHOLDERS' FUNDS

a) Share Capital 1 1,00,00,000 5,00,000b) Reserves and Surplus 2 1,079 Nil

2. LOAN FUNDS Secured Loan Nil Nil

3. DEFERRED TAX LIABILITY 4,093 NilTotal 1,00,05,172 5,00,000


Gross Block 1,51,530 NilLess : Depreciation 4,314 NilNet Block 1,47,216 Nil

2. Current Assets, Loans andAdvancesCurrent Assets 4 99,14,037 4,23,764Loans and Advances 5 56,51,104 Nil

1,55,65,141 4,23,764

Less : Current Liabilities 6 56,97,185 Nil Provisions 10,000 Nil

57,07,185 NilNet Current Assets 98,57,956 Nil

4. Miscellaneous Expenditure Nil 76,236(to the extent not written off or adjusted)

SIGNIFICANT ACCOUNTING POLICIES Total 1,00,05,172 5,00,000AND NOTES ON ACCOUNTS 9


HARI NARAYAN RATHIDIRECTOR

G. KALYANDASPartner

Date : 29.07.2010 CHETAN RATHIPlace: Hyderabad DIRECTOR



40


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010


ended ended31.03.2010 31.03.2009


INCOME

Income from Operations 2,36,373 NilOther Income 78,695 NilInterest Income (TDS Rs.3,821) 46,771 Nil

Total 3,61,839 Nil

EXPENDITURE

Administrative expenses 8 1,98,373 NilBrokerage 1,43,980 NilDepreciation 4,314 Nil

Total 3,46,667 Nil

Profit Before Taxation 15,172 NilLess: Provision for Taxation - Current Tax 10,000 Nil - Deferred Tax 4,093 Nil

Profit After Taxation 1,079 NilBalance carried to Balance Sheet 1,079 NilSIGNIFICANT ACCOUNTING POLICIES 9AND NOTES ON ACCOUNTS



G. KALYANDASPartner




41


CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2010


Net profit before tax and extraordinary items 15172 NilAdjustments for:Depreciation 4314 NilInterest expenses 1084 NilInterest Income (46771) NilOperating profit before working capital changes (26201) NilTrade and other Receivable (6759631) (400000)Inventories Nil NilTrade payable 5659685 NilCash generated from operations (1126147) NilLess : Direct Tax paid (3821) NilNET CASH FLOW FROM OPERATING ACTIVITIES (1129968) (400000)

B.CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (151530) NilInterest Received 23478 NilNET CASH FLOW FROM INVESTING ACTIVITIES (128051) Nil

C.CASH FLOW FROM FINANCING ACTIVITIES:Interest paid (1084) NilProceeds from issue of Equity Shares 9500000 500000Preliminary Epenses Nil (76236)Preliminary Epenses absorbed by B N Rathi Securities Ltd. 76236 NilAdvance received from B N Rathi Securities Ltd. 37500 NilNet cash used in financing activities 9612652 423764Net cash flow during the year A+B+C 8354633 23764Add : Cash and Cash equivalents as at 01-4-2009 23764 NilCash and Cash equivalents as at 31-3-2010 8378397 23764

(Amount in Rs)

2009-2010 2008-2009



G. KALYANDASPartner




42


As at As at31.03.2010 31.03.2009

(Rupees) (Rupees)

SCHEDULE NO.1SHARE CAPITAL

Authorised :

1000000 Equity Shares Rs.10/- each 1,00,00,000 25,00,000(P/Y 250000 Equity Shares Rs.10/- each)

Issued, Subscribed and paid up :1000000 Equity Shares Rs.10/- each 1,00,00,000 5,00,000(P/Y 50000 Equity Shares Rs.10/- each)

Total 1,00,00,000 5,00,000

SCHEDULE NO.2


Opening balance - P & L A/c Nil Nil

Add : Transfer from P & L A/c 1,079 Nil1,079 Nil

Total 1,079 Nil

SCHEDULES FORMING PART OF THE BALANCE SHEET

Gross Block Depreciation Net Block

As at Addition As at Upto For the As At As At As AtDescription 01.04.'09 31.3.'10 01.04.'09 year 31.3.'10 31.3.'10 31.3.'09

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

1.Plant & Machinerya) Computers & Software Nil 27530 27530 Nil 392 392 27138 Nil

b) VSATs Nil 124000 124000 Nill 3922 3922 120078 Nil

Total 151530 151530 Nil 4314 4314 147216 Nil

Previous year Nil Nil Nil Nil Nil Nil Nil Nil

SCHEDULE NO.3

FIXED ASSETS



43


As at As at 31.03.2010 31.03.2009

(Rupees)

SCHEDULE NO.4

A) CURRENT ASSETS1. Accrued Interest 23,292 Nil2. Cash on hand Nil Nil3. Balances with Non Scheduled Banks 23,78,397 23,7644. Fixed Deposits (FDRs with Banks for

Bank Guarantees) 35,00,000 Nil5. Fixed Deposit (FDRs with HDFC Bank for

OD aganist FD ) 25,00,000 Nil

TOTAL 84,01,689 23,764B) Amount Receivable from Clients

& Stock Exchanges(Considered good, unsecured and outstanding

for a period less than Six months) 15,12,347 Nil

TOTAL 15,12,347 Nil

(Rupees)

SCHEDULE NO.5LOANS AND ADVANCES(Unsecured, considered good and outstanding for a period ofmore than six months receivable in cash or kind for value to be received)

I) TDS 3,821 Nil

II) Depositsa) MCX (Interest Free) Security Deposit 15,00,000 Nilb) MCX Membership 20,00,000 Nilc) NCDEX (Interest Free) Security Deposit 15,00,000 Nild) NCDEX Membership 5,00,000 Nile) Prepaid Expenses 1,47,283 Nilf) Amount Received from Directors Nil 4,00,000

TOTAL 56,51,104 4,00,000


1) Sundry Creditors-Clients 54,98,396 Nil2) VSATs Deposits 1,33,066 Nil3) Creditors - Suppliers & Services 37,500 Nil4) Outstanding Liabilities 28,223 Nil

PROVISIONS:1) Income Tax 10,000 Nil

TOTAL 57,07,185 Nil

SCHEDULE NO.7MISCELLANEOUS EXPENDITURE

Preliminary Expenses Nil 76,236



44



31.03.2010 31.03.2009(Rupees) (Rupees)

SCHEDULE NO. 8


Printing & Stationery 16,450 NilSubscription & Membership Fee 98,438 NilTransaction Charges 3,309 NilStatutory Audit Fee 14,000 NilProfessional Fee 5,515 NilListing, Filing/Reg. & Renewals 33,750 NilBand with charges 4,903 NilProfessional Fee 12,500 NilBank Commission & Charges 5,854 Nil

Interest 1,084 NilInsurance 2,570 Nil

TOTAL 1,98,373 Nil

Schedule : 9

Significant Accounting Policies and Notes forming part of Accounts for the Year ending 31-3-2010

A. SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS.

The Financial Statements are prepared on historical cost convention, on going concernbasis, on accrual basis and in accordance with the applicable accounting standards.

2. INCOME/ EXPENSES:

Items of Income and Expenditure are on accrual basis subject to notes on accounts.

3. FIXED ASSETS :

Fixed Assets are valued at cost less accumulated depreciation

4. DEPRECIATION :

Depreciation on fixed assets has been provided on Written Down Value Method as per the ratesand in the manner prescribed under schedule XIV of the Companies Act, 1956. Depreciation onfixed assets additions during the year on pro-rata basis

5. INVESTMENTS:

The company has not made any Investments during the period.

6. SUBSIDIARY:

During the year, the company has issued 950000 equity Shares of Rs.10/- each to M/s. B. N.Rathi Securities Limited which were fully paid consequent to which the company has becomesubsidiary of M/s. B.N. Rathi Securities Limited.



45


B. NOTES FORMING PART OF ACCOUNTS

1. Information required to be furnished pursuant to clauses 4A, 4C and 4D of Para II Schedule VI ofthe Companies Act, 1956 is not provided as the same is not applicable to the Company.

2. The Company has made a provision for Income Tax of Rs.10,000.

3. Contingent Liability:on behalf of the company HDFC Bank have given Bank Guarantees of Rs 35 Lakhs (Previous YearRs Nil) to MCX and NCDEX.

4. During the year, the company has increased its Authorized Share capital from Rs.25 lakhs to Rs.1Crore. Expenses of Rs.29,250/- incurred in connection with increase in authorized capital has beendebited to Profit and Loss account.

5. During the year, the company has acquired the membership of Multi Commodity Exchange of IndiaLimited through transfer of Membership from Mr. Chetan Rathi, director of the company for Rs.20Lakhs. And the same has been shown under Loans & Advances.

6. During the year, the company also obtained the Membership of National Commodity and DerivativesExchange Limited and the amount incurred for Membership Rs.5,00,000/- (excluding service tax )disclosed under Loans & Advances

7. During the year, Preliminary Expenses of Rs.76,236/- and Expenses Rs.75000/- incurred inconnection with increase of authorized capital of the company were taken over by M/s. B. N. RathiSecurities Limited



G. KALYANDASPartner




46


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE (Submitted interms of Part IV of Schedule VI of the Companies Act, 1956)

I. REGISTRATION DETAILS Registration No. B/Sheet Date

II. CAPITAL RAISED DURING THE YEAR (Amount in Rs.)Public Issue Rights Issue

Bonus Issue Private Placement

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount in Rs.)Total Liabilities Total Assets

SOURCES OF FUNDSPaid up Capital Reserves & Surplus

Deferred Tax Liability Secured Loans

APPLICATION OF FUNDSNet Fixed Assets Net Current Assets

IV. PERFORMANCE OF COMPANY (AMOUNT IN RS.)Turnover (Income) Total Expenditure

Profit /Loss Before Tax Profit/Loss After Tax

Earnings per Share in Rs. Dividend Rate %

V. GENERIC NAME OF PRINCIPAL SERVICES OF THE COMPANY(as per monetary terms)

Item Code No. (ITC Code) :Product Description : Dealing in Commodities


HARI NARAYAN RATHI CHETAN RATHIDIRECTOR DIRECTOR


3 1 0 3 2 0 1 0Month YearDate

9 8 5 7 9 5 6

3 6 1 8 3 9

0. 0 1

++ -

1 5 1 7 2

N I L

++ -

N I LN I L

N I L

1 0 7 9

4 0 9 3

1 4 7 2 1 6

9 5 0 0 0 0 0

N I L

1 0 0 0 5 1 7 2 1 0 0 0 5 1 7 2

1 0 0 0 0 0 0 0 1 0 7 9

3 4 6 6 6 7

N I L


U74900AP2008PTC060088


47


B.N.RATHI SECURITIES LIMITEDRegd. Off : 6-3-652,IV Floor “Kautilya” Amrutha Estates, Somajiguda,Hyderabad - 500082

ATTENDANCE SLIP24rd Annual General Meeting : 24.09.2010 DP ID

Regd.Folio No.__________

I Certify that I am a registered shareholder/proxy for the registered shareholder of the Company.I hereby record my presence at the 24th ANNUAL GENERAL MEETING of the Company atRajasthani Graduates Association Hall, 5-4-790/1, 1st floor, Abids,Hyderabad-500001on 24.09.2010

Member's / Proxy's name in Block Letters Member's / Proxy's Signature

Note : Please fill this attendance slip and hand it over at the ENTRANCE OF THE HALL.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ( TEAR HERE)- - - - - - - - - - - - - - - - - - - - - -- - - - - -- - - -

B.N.RATHI SECURITIES LIMITEDRegd. Off : 6-3-652, IV Floor “Kautilya” Amrutha Estates, Somajiguda,Hyderabad - 500082

FORM OF PROXY

I/We......................................................................................of...............................................................

...............................................................................................................................................................

in the district of .............................................................being a member/members of the above named

company hereby appoint .............................................or failing him ....................................................of

.........................................in the district of ...................................as my/our proxy to vote for me/us on

my/our behalf at the 24thANNUAL GENERAL MEETING of the Company to be held on 24.09.2010

Signed this .................................day ............................2010

Signature.............................................................................

Regd. Folio No......................................................................

AffixRevenue Stamp

Name of Attending Member (Block Letters) Client ID :______________


48


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