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Directors Report of Ashapura Minechem Ltd.

Mar 31, 2015

The Directors present the Thirty Fourth Annual Report of the Company together with the Annual Statements of Accounts (Standalone & Consolidated) for the year ended 31st March, 2015.

FINANCIAL RESULTS AND PERFORMANCE:

Ashapura Minechem Ltd. (in Lacs)

2014-2015 2013-2014

Net Sales / Income from Operations 74,923.51 66,363.60

Less: Total Expenditure 63,541.31 57,070.13

Profit/(Loss) from Operations before

Dep., Other Income and Exceptional Items 11,382.20 9,293.47

Less: Depreciation 1,588.02 1,116.44

Profit/(Loss) from Operations before

Other Income and Exceptional Items 9,794.18 8,177.03

Add: Other Income 945.18 830.77

Profit/(Loss) before Exceptional and

Extra-ordinary Items and Tax 10,739.36 9,007.80

Exceptional Items (23,133.08) 5,118.88

Extra-ordinary Items

Profit/(Loss) before Tax (12,393.72) 14,126.68 Tax Expenses

Current Tax Earlier Year's Tax Deferred - -

Net Profit / (Loss) (12,393.72) 14,126.68

Minority Interest

Share of Profit/(Loss) in Associate Company - -

Net Profit / (Loss) of the Group (12,393.72) 14,126.68

Consolidated (in Lacs) 2014-2015 2013-2014

Net Sales/Income from operations 1,75,284.66 1,08,322.07

Less:Total Expences 1,50,322.64 93,366.10

Profit/(Lose) from operations before 24,962.02 14,955.97 Dep.,Other Income and Exceptional Items

Less: Depreciation 3,485.46 2,568.09

other Income and Exceptional Item 21,476.56 12,387.88

Add:Other Income 714.50 566.02

Profit/9Loss) before exceptional and 22,191.06 12,953.90 Extra Ordinary item ans Tax

Exceptional Item (23,133.08) 5,453.14

Extra Ordinary Items - -

Profit/(Loss) before tax (942.01) 18,407.04

Tax Expences

Current Tax 2,938.70 924.15

Earlier Yeaars tax (1.07) (85.38)

Deferred (29.48) 150.86

Net Profit/(Loss) (3,909.12) 17,417.41

Monitery Intrest (0.20) (1.00)

Share of Profit/(Loss) in Associate Company 262.30 4.71

Net Profit/ (Loss) of The Group (3,647.01) 17,421.12

In the financial year 2014-2015, your Company was able to continue the sale of Bauxite from Gujarat based on the ad-interim relief granted to certain mine owners by the Hon. Supreme Court. The sale of Bauxite allowed the Company to increase its revenue from operations to 7 74,924 Lacs on a standalone basis by about 13% higher as compared to the previous financial year; similarly, the consolidated revenues from operations increased by around 61%. Your company's Profit After Tax (before extraordinary items) rose to 710,739 Lacs on a Stand-alone basis and to 7 22,191 Lacs (before extraordinary items) on a consolidated basis.

Export revenues from Bentonite segment were relatively encouraging whereas those in the domestic sector were steady despite a challenging environment in the auto-ancillary and foundry industries. Sales in the white clay and other mineral segments were buoyant particularly in the domestic market.

Your Company and its Subsidiaries continue to be preferred global suppliers of mineral solutions. The Company's versatile portfolio comprises of more than 25 minerals and 120 value added mineral solutions such as Bleaching Clay, Ceramic Proppants, Clay Catalysts are used in several applications like manufacturing of aluminium metal, cement, iron ore pellatization, foundries, oil well drilling, paper, paints, edible oil purification, castables and hydraulic fracturing, etc.

Products such as Mullite & Chamotte which were inducted in the Company's value added mineral solutions portfolio last year have received an encouraging response in the markets and the Company is set to launch its pioneering Ceramic Proppants this year which are supported by years of research and resource development.

DIVIDEND:

Considering the state of affairs of the Company, your Directors have not recommended any Dividend for the financial year 2014-2015.

DEPOSITS:

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V – Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

SUBSIDIARIES AND JOINT VENTURES:

The principal Subsidiaries and Joint Ventures of the Company showed promising growth.

Ashapura International Ltd. which principally caters to the export of Bauxite and Bentonite showed substantial increase of 45% in revenues 53% in its after tax profits on account of a spurt in export sales.

Bombay Minerals Ltd. which sells bauxite and its value added derivative calcined bauxite had a 4 times revenue and profit multiple as compared to the previous year on account of the continuing supply of Bauxite and High Grade Bauxite on account of the ad-interim order of the Supreme Court. Bombay Minerals Ltd. had acquired 18% stake in Orient Abrasives Ltd. ('OAL') in November 2013; on July 15, 2015, Bombay Minerals Ltd. ('BML') acquired an additional 20% stake in OAL, thereby increasing its total stake to about 38% in the Company and become its single largest shareholder. Furthermore, since OAL is a Company listed on BSE and on NSE; BML as the new promoter of OAL is in the process of completing an open offer to the shareholders of OAL as per the prevalent SEBI guidelines.

Ashapura Perfoclay Ltd. (formerly known as Ashapura Volclay Ltd.) completed its two phase capacity expansion in the financial year, making the largest single location Bleaching Clay processing complex in the world. The Company, exhibited a marginal decline of 2% in its revenues on account of the volatility in the edible oil markets which consume the Company's premium Bleaching Clay.

The other overseas subsidiaries and joint ventures of the Company in Belgium, UAE and Oman exhibited modest increases in revenues and profits.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiaries', Associates' and Joint Ventures (in Form AOC-1) is attached to the financial statements. (Refer Page No. 118)

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the Accounting Standard (AS)-21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, the Audited Consolidated Financial Statement is provided in the Annual Report.

COMPANY'S REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):

Based on the Audited Financial Accounts for the year ended 31st March, 2011, the Board for Industrial & Financial Reconstruction (BIFR) vide its order dated 20th March, 2012 declared your Company as 'Sick Company' under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Consequently, the BIFR Bench appointed Bank of India as Operating Agency (OA) with directions to submit Draft Rehabilitation Scheme (DRS). Based on the various meetings with the Operating Agency and subsequent revisions, your Company has presented a revised Draft Rehabilitation Scheme (DRS) and the same is under discussion amongst various concerned lenders for finalization.

Pending the finalization of DRS, the Company is keen to arrive at an arrangement with lenders/creditors and accordingly, the Company in consultation/concurrence with BIFR, has initiated discussions/negotiations with all financial institutions/banks and have restructured/settled with majority of the lenders. Similarly, discussions are also held with other major creditors which are yet to be concluded.

STATUS OF THE PENDING LITIGATIONS:

1. SHIPPING MATTERS:

The Contracts of Affreightment entered into by the Company with Shipping Companies - viz. [1] I.H.X. (UK) Ltd. [2] Eitzen Bulk A/s and [3] Armada Singapore Pte Ltd.

In case of the above shipping companies, the Company is facing applications for enforcement of ex-parte Foreign Awards passed in respect of three Contracts of Affreightment in the Bombay High Court filed for approx. US $ 126.07 million.

Since the award of claims of each of the three shipping companies were heavily exaggerated, the Company has much prior in time filed an application for enforcement of award, initiated legal proceedings against the alleged arbitration award in the Civil Court at Jam-Khambhaliya, Gujarat on the ground of opposed to the Public Policy of India. The Application filed by the Company challenging the foreign awards stands upheld in the Court of Law.

Matters are also pending in Bombay High Court, Gujarat High Court and Supreme Court apart from District Court at Khambhaliya.

2. FOREX DERIVATIVES:

In case of Forex Derivatives Contracts, the Company has taken legal opinion that these contracts are void and are not legally enforceable. It has been further advised by the counsels that the Company can take legal actions for challenging the validity of the said contracts.

The Company has approached the Bankers and has successfully settled the claims amicably with most of the bankers.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN 31st MARCH, 2015 AND 5th AUGUST, 2015 (DATE OF THE REPORT):

During the year under review, there were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of the report.

SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATIONS:

During the year under review, no significant material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A report on 'Corporate Governance' along with the Certificate from M/s. Sanghavi & Co., Chartered Accountants regarding its compliance and 'Management Discussion and Analysis' as stipulated by Clause 49 of the Listing Agreement are set out separately which forms part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Re-structuring of the Board of Directors:

i. The term of office of Late Shri Navnitlal Shah as an Executive Chairman of the Company was due for renewal at the close of office hours on 30th September, 2014. Since there was no formal communication from the Chairman's office expressing his intention to continue as an Executive Chairman of the Company; also considering his age and health conditions and in the best interest of the Company, the Board of Directors, after considering the recommendations of the Nomination and Remuneration Committee, thought it advisable to relieve him from his duties as an Executive Chairman of the Company and also thought it fit; not to renew his agreement for the said position. However, he was to continue as a Non-Executive Director on the Board of the Company w.e.f. 1st October, 2014.

Further, due to his inability to attend to his office and/or any of the meetings of the Board of Directors of the Company his office of Director stood automatically vacated in terms of the provisions of Section 167(1)(b) of the Companies Act, 2013.

Your Board of Directors with deep regret inform you that Late Shri Navnitlal Shah, Promoter and Ex-Chairman of Ashapura Minechem Limited expired on 30th June, 2015. The Ashapura family and the Board of Directors place on record their sincere gratitude & appreciation for his visionary role and efforts in building the "Ashapura" Group.

ii. The term of office of Shri Chetan Shah as a Managing Director of the Company was also due for renewal at the close of office hours on 30th September, 2014. The Board of Directors, after taking into considering the recommendations of Nomination & Remuneration Committee consented to the request of Shri Chetan Shah for not opting to renew his agreement for the position of Managing Director. However, it was noted that he too would continue to remain on the Board of the Company as a Non-Executive Director.

The Independent Directors having taken on record the vacation of office of Late Shri Navnitlal Shah from the Directorship of the Company opined that the Company and its Management would need an experienced and visionary guide for mentoring and guiding the Group. Considering the need and the turn of events, it was proposed that Shri Chetan Shah should occupy the position of 'Chairman - Emeritus' for the Group (i.e. Non-Executive Chairman) and accordingly he was appointed as Chairman (Non-Executive) of the Group.

iii. The Board of Directors of the Company at its meeting held on 29th September, 2014 appointed Shri Rajnikant Pajwani as an Additional Director w.e.f. 1st October, 2014 and further, on the recommendation of the Nomination & Remuneration Committee, appointed him as 'Whole Time Director & Chief Executive Officer' of the Company for a period of 3 years w.e.f. 1st October, 2014 and also approved payment of his remuneration. The Members of the Company, by passing Ordinary Resolution by way of a Postal ballot, result of which was declared on 1st December, 2014, approved his appointment as a Director under the provisions of Section 152 of the Companies Act, 2013 and also his appointment as a Whole Time Director of the Company for period of 3 years in terms of the provisions of Section 196 of the Act including the terms & conditions of his appointment including remuneration.

Appointment of a Woman Director:

The Company being declared financially 'SICK' found it very difficult to induct able and willing candidates to hold fiduciary positions including that of a woman director. Despite its sincere efforts, the Company was unable to appoint a woman director within the stipulated time limit and was penalised for the default. The Company duly submitted its case for consideration with the Stock Exchanges and paid the penalty under protest.

After being persistent, the Company manage to persuade Smt. Navita Gaiha, a prominent lawyer to take up Directorship as an Additional director (Independent Director) and was co-opted by the Board of Directors at their meeting held on 5th August, 2015 subject to the approval of shareholders at the ensuing Annual General Meeting, as required under the provisions of the Companies Act, 2013 and the Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

The relevant details of Smt. Navita Gaiha as required pursuant provisions of the Companies Act and the Listing Agreement are furnished in "Annexure - 1" of the Notice of the ensuing Annual General Meeting.

Retire by Rotation:

In accordance with the provisions of the Act and the Articles of Association of the Company, Shri Chetan Shah, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. The relevant details of Shri Chetan Shah as required pursuant to the provisions of the Companies Act and the Listing Agreement are furnished in "Annexure - 1" of the Notice of the ensuing Annual General Meeting.

Declaration by Independent Director:

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges.

Appointment of Key Managerial Personnel:

During the year under review, the Company has appointed the following persons as Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

1. Shri Rajnikant Pajwani - Whole Time Director & Chief Executive Officer

2. Shri Sachin Polke - Company Secretary & Vice President

During the year under review, the following Executives are recognized as a whole-time Key Managerial Personnel (KMP) of the Company to perform such duties/functions as may be assigned to them under their prescribed designation and/or generally and specifically assigned to them by the Board of Directors and/or its Committee from time to time:

1. Shri Vipul Saxena - Vice President – HR

2. Smt. Surekha Sathe - Vice President – IT

3. Shri Ashish Desai - Sr. General Manager – Accounts

4. Shri Ajay Phalod - Sr. General Manager – Corporate Finance

5. Smt. Harsha Joshi - General Manager – Taxation & Internal Control

BOARD EVALUATION:

The Company through its Nomination & Remuneration Committee has devised Performance Evaluation Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors.

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Board's functioning was evaluated on various aspects, including inter-alia degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.

Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings. Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Whole-time Director and the Non-Independent Directors were carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.

NOMINATION & REMUNERATION POLICY:

In accordance with Section 178 of the Companies Act, 2013 read with the Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors at its meeting held on 13th November, 2014, on the recommendations of the Nomination & Remuneration Committee, formulated the Nomination & Remuneration Policy of your Company. The salient aspects covered in the Nomination & Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of your Company is set out in "Annexure A" to this Report.

MEETINGS OF THE BOARD:

During the year under review, 6 (six) meetings of the Board of Directors were held. The details of the meetings are provided in the Report on Corporate Governance (Please refer Page no. 38).

AUDIT COMMITTEE:

The Company has an Audit Committee of the Board of Directors in place. The terms of reference of the Audit Committee are in line with Section 177 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement. Detailed information pertaining to Audit Committee has been provided in the Corporate Governance Report, which forms part of this Annual Report.

AUDITORS AND AUDITORS' REPORT:

Statutory Auditors

M/s. Sanghavi & Co., Chartered Accountants were appointed as the Statutory Auditors of the Company to hold office till the conclusion of the 36th Annual General Meeting to be held in the year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of Auditors shall be placed at every Annual General Meeting for ratification. The Company has received confirmation from them to the effect that if they are reappointed it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Accordingly, the appointment of M/s. Sanghavi & Co., Chartered Accountants, as Statutory Auditors of the Company is placed for ratification by the Shareholders at the ensuing Annual General Meeting.

Auditors' Observations

The observations made by Auditors in the Annexure to Auditors' Report are self explanatory and need not require any further clarification.

Branch Auditors

M/s. B. Purushottam & Co., Chartered Accountants, Chennai, the Branch Auditors appointed pursuant to Section 143(8) of the Companies Act, 2013 hold their office till the conclusion of the ensuing Annual General Meeting.

In view of the provisions of Section 143(8) read with the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. B. Purushottam & Co., Chartered Accountants, Chennai as Branch Auditors to conduct the audit of the Company's branches at Chennai, Kodur and Trivendrum for the financial year 2015-2016.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the Board of Directors has, on recommendation of the Audit Committee, appointed M/s. S. K. Rajani & Co., Cost Accountants as the Cost Auditor of the Company to conduct audit of the Company's Cost Accounting Records in respect of the products of the Company viz. Bentonite & allied Minerals, Kaolin & Bauxite (CETA CH. 25, 26 & 38) for the financial year 2015-2016 at the remuneration of Rs. 2,00,000/- (Rupees Two Lacs only) per annum plus reimbursement of actual travel & out of pocket expenses. As per the provisions of the Companies Act, 2013, a resolution seeking approval of the Members for the remuneration payable to the Cost Auditors forms part of the Notice convening Annual General Meeting.

The Cost Audit Report for the financial year 2013-2014 was filed with the Ministry of Corporate Affairs on 9th February, 2015.

Secretarial Auditors

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company engaged the services of Shri. Virendra G. Bhatt, Company Secretary in Practice, Mumbai to conduct the Secretarial Audit of the Company for the financial year ended 31st March, 2015.

The Secretarial Audit Report (in Form MR-3) is attached as "Annexure B" to this Report.

Secretarial Auditors Observations:

1. Your Directors would like to bring to the notice of the Members that being declared as a 'Sick Company' by the Board for Industrial & Financial Reconstruction (BIFR), it is finding difficult to induct able and willing candidates to hold fiduciary positions including that of the Woman Director and Chief Financial Officer (CFO) i.e. Key Managerial Personnel as required under the provisions of the Companies Act, 2013.

The Board of Directors of the Company at their meeting held on 5th August, 2015 have co-opted Smt. Navita Gaiha as an Additional Director (Independent Director), pursuant to provisions of Section 149 of Companies Act, 2013 and in terms of Cause 49 of the Listing Agreement for a period of 5 years subject to the approval of Shareholders.

Also, pending the appointment of 'CFO', the Board of Directors have recognized Shri Ajay Phalod, Sr. General Manager - Corporate Finance and Shri Ashish Desai, Sr. General Manager - Accounts as a whole time Key Manegerial Personnel to perform such duties/functions as may be generally performed by the Chief Financial Officer (CFO).

2. As regard filing of 'Form D' pursuant to SEBI (Prohibition of Insider Trading) Regulation and MGT-10 pursuant to the companies Act, 2013, it was informed by the Promoter that the said shares were tranfered inter-se Promoter Group and as such no disclosure was made. However, upon professional advice, the Promoter Group Members recently filed the disclosure with the relevant authorities & with the Company.

INTERNAL CONTROL SYSTEM & THIER ADEQUACY:

The Company has an adequate Internal Control System commensurate with the size, scale and nature of its operation. The Audit Committee reviews the adequacy and effectiveness of Internal Control System.

The Company has appointed the Chartered Accountants Firm as its Internal Auditors which carries out the periodic audit as per the Scope of Work approved by the Audit Committee. The Audit Committee of the Board of Directors of the Company periodically reviews the Internal Audit Reports submitted by the Internal Auditors. Internal Audit observations and corrective action taken by the Management are presented to the Audit Committee. The status of implementation of the recommendations are reviewed by the Audit Committee on a regular basis and concerns, if any, are reported to the Board. The Company is taking due action to ensure that the Internal Control is strengthened in all the areas of operations.

CORPORATE SOCIAL RESPONSIBILITY:

The Board of Directors at its meeting held on 13th November, 2014 approved the Corporate Social Responsibility (CSR) Policy for your Company pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, on the recommendations of the Corporate Social Responsibility Committee. The CSR Policy lays down the guideline principles for social welfare programs/projects initiated by the Ashapura Group through its Trusts/Foundation for the benefit of different segments of the society, specifically the deprived, underprivileged and differently abled persons. The policy is available on the website of the Company.

The Company to the best of its ability continues to fund its Corporate Social Responsibility initiatives and projects; however on account of its insufficient Net Worth and its continued reference to the Board for Industrial and Financial Reconstruction, the Company has been unable to specifically make a provision for Corporate Social Responsibility.

VIGIL MECHANISM- WHISTLE BLOWER POLICY:

Your Company is committed to conducting its business in accordance with applicable laws, rules and regulations and believes in conducting its business in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour.

Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Policy has been formulated with an objective to build and strengthen a culture of transparency and trust within the Company and to provide a framework to its directors and employees for responsible and secure reporting of improper activities (whistle blowing); and also to provide for adequate safeguards against victimization of directors/employees, who avail of the mechanism; and for direct access to the Chairman of the Audit Committee. More details on the Vigil Mechanism and the Whistle Blower Policy of your Company have been outlined in the Corporate Governance Report which forms part of this report.

RISK MANAGMENT POLICY:

The Board of Directors of your Company has laid down a Risk Management Policy for the Company that identifies elements of risks inherent to the business and have entrusted on Audit Committee the responsibility of reviewing the said policy.

RELATED PARTY TRANSACTIONS:

All contracts/arrangements/transactions entered by the Company during the financial year under review with the Related Parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/arrangement/transaction with the Related Parties which could be considered material in accordance with the Policy of the Company on Related Party Transactions. In view thereof, the disclosure in Form AOC-2 is not required to be provided.

The Company places all Related Party Transactions before the Audit Committee and also before the Board of Directors for approval on quarterly basis. The omnibus approval was obtained from the Audit Committee in respect of transactions which are of repetitive in nature in accordance with the Policy on Related Party Transactions of the Company. The Audit Committee also reviewed the details of such Related Party Transactions entered into by the Company pursuant to each of the omnibus approval given on a quarterly basis.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company is available on the website of the Company www.ashapura.com.

Your Directors draw attention of the members to Note no. 40 to the financial statement which sets out related party disclosures.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided in accordance with the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to Financial Statements (Please refer to Note no. 39).

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in "Annexure C" to this Report.

EXTRACT OF ANNUAL RETURN:

The Extract of Annual Return of the Company in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 is annexed herewith as "Annexure D" to this Report.

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, employees, investors, customers, Government & Government agencies and all other business associates for the continuous support given by them to the Company and their confidence in its management during the year under review and look forward for their contributed support in future.

For and on Behalf of the Board of Directors

Sd/- Sd/-

CHETAN SHAH RAJNIKANT PAJWANI

CHAIRMAN (NON-EXECUTIVE) WHOLE-TIME DIRECTOR & CEO

Place: Mumbai

Date : 5thAugust, 2015


Mar 31, 2014

Dear Members,

The Directors present the Thirty Third Annual Report of the Company together with the Annual Statements of Accounts (Standalone & Consolidated) for the year ended 31st March, 2014.

FINANCIAL RESULTS AND PERFORMANCE:

Ashapura Minechem Ltd. (Rs. in Lacs) 2013-2014 2012-2013

Net Sales / Income from Operations 66,363.60 47,846.70

Less: Total Expenditure 57,070.13 44,171.48

Profit /(Loss) from Operations before

Dep., Other Income and Exceptional Items 9,293.47 3,675.22

Less: Depreciation 1,116.44 1,145.43 Profit /(Loss) from Operations before

Other Income and Exceptional Items 8,177.03 2,529.79

Add: Other Income 830.77 999.71 Profit/(Loss) before Exceptional and

Extra-ordinary Items and Tax 9,007.80 3,529.51

Exceptional Items 5,118.88 (285.71)

Extra-ordinary Items - -

Profit /(Loss) before Tax 14,126.68 3,243.80 Tax Expenses

Current Tax - -

Earlier Year''s Tax - (4.78)

Deferred - -

Net Profit / (Loss) 14,126.68 3,239.02

Minority Interest - -

Share of Profit/(Loss) in Associate Company - -

Net Profit / (Loss) of the Group 14,126.68 3,239.02

Consolidated (Rs. in Lacs) 2013-2014 2012-2013

Net Sales / Income from Operations 1,08,322.07 77,191.85

Less: Total Expenditure 93,366.10 70,364.42

Profit /(Loss) from Operations before

Dep., Other Income and Exceptional Items 14,955.97 6,827.43

Less: Depreciation 2,568.09 2,579.64 Profit /(Loss) from Operations before

Other Income and Exceptional Items 12,387.88 4,247.79

Add: Other Income 566.02 1,437.57 Profit/(Loss) before Exceptional and

Extra-ordinary Items and Tax 12,953.90 5,685.36

Exceptional Items 5,453.14 (725.31)

Extra-ordinary Items - -

Profit /(Loss) before Tax 18,407.04 4,960.05 Tax Expenses

Current Tax 924.15 641.15

Earlier Year''s Tax (85.38) (81.74)

Deferred 150.86 9.38

Net Profit / (Loss) 17,417.41 4,391.26

Minority Interest (1.00) (0.87)

Share of Profit/(Loss) in Associate Company 4.71 23.94

Net Profit / (Loss) of the Group 17,421.12 4,414.33



During the year under review, the stand-alone sales/income from operations for the year ended 31st March, 2014 stood at Rs. 66,364 Lacs as against Rs. 47,847 Lacs in the previous year. The net profit of the Company stood at Rs. 14,127 Lacs as against Rs. 3,239 Lacs in the previous year.

In respect of consolidated accounts, the sales/income from operations stood at Rs. 1,08,322 Lacs as against Rs. 77,192 Lacs in the previous year and the net profit stood at Rs. 17,421 Lacs for the year ended 31st March, 2014 as against Rs. 4,414 Lacs in the previous year.

DIVIDEND:

Considering the state of affairs of the Company, your Directors have not recommended any Dividend for the financial year 2013- 2014.

REVIEW OF OPERATIONS:

In the financial year 2013-2014, your Company was able to continue with the sale of Bauxite from Gujarat based on the ad-interim relief granted to certain mine owners by the Hon. Supreme Court. The continued sale of Bauxite allowed the Company to increase its revenue from operations to Rs. 66,364 Lacs on a stand-alone basis by about 39% higher as compared to the previous financial year;

similarly, the consolidated revenues from operations increased by around 40%. Your Company''s profit after tax (before extraordinary items) rose to Rs. 9,008 Lacs on a standalone basis and to Rs. 11,964 Lacs (before extraordinary items) on a consolidated basis.

Amongst the segments of your Company''s multi-mineral portfolio, revenues from Bentonite were steady, despite a muted foundry - auto ancillary growth in the financial year. Revenues from minerals such as Kaolin, Barites and Attapulgite grew on account of the versatility of their usage and of their markets.

Your Company along with its subsidiaries continues to be one of the most integrated players in the ''Industrial Minerals'' business of India. Its minerals namely Bauxite, Bentonite, Barites, Kaolin, Attapulgite and value added offerings namely Calcined Bauxite, Bleaching Clay, Mullite, Chamotte are used in several industries like manufacturing of aluminium metal, cement, iron ore pellatization, foundries, oil well drilling, paper, paints, edible oil purification, castables and hydraulic fracturing, etc.

During the year under review, the Company has inducted new value added products in its portfolio such as Mullite and Chamotte; these new offerings are a result of your Company''s persistent efforts at market and industry diversification, supported by years of research and resource development. Your Company with an increased thrust towards the increasing processing capabilities at Bhuj, commissioned a satellite unit at Hamla, Bhuj for processing Bentonite this year; as a part of the initiative, your Company also increased its Kaolin processing capacity in Bhuj with a corresponding temporary stoppage of Kaolin processing at Kerala.

Your company stays committed to settle and payout reasonable and like-minded lenders and claimants; over the last few years the Company has entered into settlements with a substantial part of its secured lenders and other claimants. While on the other hand the Company continues to contest the frivolous claims of shipping companies and certain other claimants at the appropriate legal forums.

During the year under review, AMCOL''s stake in your flagship Company Ashapura Minechem Ltd. was bought over by Foreign Institutional Investors.

SUBSIDIARIES AND JOINT VENTURES:

The principal subsidiaries and joint ventures of the Company showed promising growth.

Ashapura International Ltd. which mainly caters to the Bentonite business showed a minor reduction of 7% despite a slowdown in the foundry industry, however there was a substantial increase of about 41% in its after tax profits due to selective marketing and cost rationalization.

Bombay Minerals Ltd. which sells Bauxite and its value added derivative Calcined Bauxite had a 2 times revenue multiple as compared to the previous year on account of the continuing supply of Bauxite and High Grade Bauxite on account of the ad-interim order of the Supreme Court. In November 2013, Bombay Minerals Ltd., took the opportunity to obtain an 18% stake in Orient Abrasives Ltd., a Company with Bauxite reserves engaged in a similar line of business having operational synergies with Bombay Minerals Ltd.

Ashapura Volclay Ltd. (soon to be renamed) is one of the Company''s tenured joint ventures and a market leader in Bleaching Clay. During the year under review, the stake of Volclay International Corporation (Subsidiary Company of AMCOL) in the Company was bought over by CIF AVL Investment Holdings Ltd. (wholly owned subsidiary of Cistenique Investment Fund B. V.), a reputed strategic investment and private equity fund specializing in emerging markets. The Company, during the year, exhibited a 25% increase in revenues on account of optimal capacity utilization. The Company has grown from strength to strength; within 12 years of its inception, Company''s Bleaching Clay Processing Complex at Ler is today the world''s largest single location Bleaching Clay manufacturing facility and is the third largest Bleaching Clay producer globally. By 2015, the Company will have completed a two phase capacity expansion taking the Company''s capacity to 144,000 tons which would be six times the original capacity installed at its inception in 2002.

The other overseas subsidiaries and joint ventures of the Company in Belgium, UAE and Oman exhibited modest increases in revenues and profits. The Company''s stake in Malaysian Joint Venture Company viz. Hudson MPA SDN BHD was transferred to its wholly owned subsidiary situated at United Arab Emirates (UAE).

SUBSIDIARIES:

Pursuant to the provisions of Section 212(8) of the Companies Act, 1956, Ministry of Corporate Affairs vide its General Circular No. 2 & 3 dated 8th February, 2011 and 21st February, 2011, respectively, has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. However, some key information on the financial details of the subsidiary companies for the financial year ended 31st March, 2014 is contained in the Annual Report.

The Annual Accounts of these subsidiaries along with the related information will be made available for inspection at the Company''s registered office and copies will be provided to the any member of the Company who may be interested in obtaining the same.

COMPANY''S REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):

Based on the Audited Financial Accounts for the year ended 31st March, 2011, the Board for Industrial & Financial Reconstruction (BIFR) vide its order dated 20th March, 2012 declared your Company as ''Sick Company'' under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Consequently, the BIFR Bench appointed Bank of India as Operating Agency with directions to submit Draft Rehabilitation Scheme (DRS). Based on the various meetings with the Operating Agency and subsequent revisions, your Company has presented a revised Draft Rehabilitation Scheme (DRS) and the same is under discussion amongst various concerned lenders for finalization.

CHANGES IN SHARE CAPITAL OF THE COMPANY ON CONVERSION OF WARRANTS INTO EQUITY SHARES:

Pursuant to the resolution passed by the shareholders of the Company through Postal Ballot process on 5th December, 2012, the Committee of Directors had at its meeting held on 26th December, 2012, allotted 40,00,000 equity shares and 40,00,000 convertible warrants of the face value of Rs. 2/- each to warrant holder viz. Ashapura Industrial Finance Limited, a Promoter Group Entity for which the Company received consideration mentioned herein below:

1. 100% for equity shares

2. 25% at the time of allotment of the convertible warrants (balance consideration to be received as and when the warrant holder exercises its conversion rights).

During the year under review, the said warrant holder viz. Ashapura Industrial Finance Limited decided to exercise its conversion rights and submitted Warrant Exercise Application Form along with the balance 75% consideration. Accordingly, the Committee of Directors at its meeting held on 25th March, 2014 approved the conversion of 40,00,000 warrants into equity shares and alloted 40,00,000 equity shares of the face value of Rs. 2/- each to Ashapura Industrial Finance Limited.

As a result of the above allotment, the paid-up equity share capital of the Company was increased from Rs. 16,59,72,196/- (comprising of 8,29,86,098 equity shares of Rs. 2/- each as on 31st March, 2013) to Rs. 17,39,72,196/- (comprising of 8,69,86,098 equity shares of Rs. 2/- each as on 31st March, 2014).

STATUS OF THE PENDING LITIGATIONS:

a) The Contracts of Affreightment entered into by the Company with Shipping Companies - viz. [1] British Marine PLC [2] I.H.X. (UK) Ltd. [3] Eitzen Bulk A/s and [4] Armada Singapore Pte Ltd.

The Company has successfully settled the claims with British Marine Plc. In case of the other shipping companies, the Company is facing applications for enforcement of ex-parte awards passed in respect of three Contracts of Affreightment in the Bombay High Court filed by remaining shipping companies for approx. US $ 126.07 million.

Since the award of claims of each of the three shipping companies were heavily exaggerated, the Company has much prior in time filed an application for enforcement of award, initiated legal proceedings against the alleged arbitration award in the Civil Court at Jam-Khambhaliya, Gujarat on the ground of opposed to the Public Policy of India. The Application filed by the Company challenging the foreign awards stands upheld in the Court of Law.

b) In case of Forex Derivatives Contracts, the Company has taken legal opinion that these contracts are void and are not legally enforceable. It has been further advised by the counsels that the Company can take legal actions for challenging the validity of the said contracts. The Company has been defending the legal claim made by a few of the bankers. In light of the recently concluded court cases, the Company has approached the bankers to settle the claims amicably.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A report on, ''Corporate Governance'' along with the Certificate from M/s. Sanghavi & Co., Chartered Accountant regarding its compliance and ''Management Discussion and Analysis'' as stipulated by Clause 49 of the Listing Agreement are set out separately which forms part of this Annual Report.

DIRECTORS:

Appointment of Independent Directors:

Shri Ashok Kadakia, Shri Harish Motiwalla and Shri Abhilash Munsif, Non-Executive Independent Directors of the Company whose period of office is liable to retirement by rotation, are being appointed as Independent Directors of the Company, not liable to retire by rotation, pursuant to the provisions of Section 149 of the Companies Act, 2013, and shall hold office for a period of 5 (five) consecutive years from conclusion of the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Retire By Rotation:

In order to comply with the provisions of Companies Act, 2013, Shri Chetan Shah, Managing Director of the Company, shall retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Withdrawal of Nomination by Exim Bank:

The nomination of Shri Rajendra Khanna on the Board of the Company was withdrawn by Export Import Bank of India (EXIM Bank) as on 31st December, 2013. The Board places on record its appreciation for the contribution made by him during his tenure as such, with the Company.

Brief details of Directors proposed to be appointed/re-appointed as required under Clause 49 of the Listing Agreement are provided in the Notice of Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT:

As required under the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) that in the preparation of the Annual Accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2014 and of the Profit for the year under review;

iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the Annual Accounts for the year ended 31st March, 2014, have been prepared on a ''going concern'' basis.

STATUTORY INFORMATION:

The information in accordance with the provisions of Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is set out in the statement annexed hereto (Annexure I) and forms part of this Report.

The information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, is not given, as there are no employees employed during the year or part thereof as required under Section 217(2A).

Your Company has not accepted any Fixed Deposits during the year under review.

LISTING ON STOCK EXCHANGES:

Your Company''s equity shares are listed at the Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fees have been paid to each of these Exchanges.

AUDITORS:

M/s. Sanghavi and Co., Chartered Accountants (Registration No. 109099W), who are the Statutory Auditors of the Company, hold their office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

In view of the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. Sanghavi and Co., as the Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the Thirty Sixth Annual General Meeting to be held in the year 2017, subject to ratification of their appointment at every Annual General Meeting.

The Company has obtained a written consent and a certificate from them to the effect that their appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013 and the rules framed thereunder, as may be applicable. The Company has also received copy of the Peer Review Certificate as received by the Auditors from the Institute of Chartered Accountants of India.

AUDITORS'' OBSERVATION:

* In reference to the observation made by Auditors in their Report for the Fraud on the Company, the Management states that the Company has terimnated the said employee from the services and filed a complaint against him with EOW (Economic Offence Wing) and subsequently a FIR has been registered.

* Other observations made by Auditors in their Report are self-explanatory and does not require any further clarifications. BRANCH AUDITORS:

M/s. B. Purushottam & Co., Chartered Accountants, Chennai, the Branch Auditors appointed pursuant to Section 228 of the Companies Act, 1956, hold their office till the conclusion of the ensuing Annual General Meeting.

In view of the provisions of Section 143(8) read with the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, it is proposed to appoint M/s. B. Purushottam & Co., Chartered Accountants, Chennai as Branch Auditors to conduct the audit of the Company''s branches at Chennai, Kodur and Trivendrum for the financial year 2014-2015.

COST AUDITORS:

Pursuant to the provisions of Section 233B of the Companies Act, 1956, and in terms of circular No. 52/10/CAB-2010 issued by the Ministry of Corporate Affairs (MCA) dated 30th June, 2011 and with the prior approval of the Central Government, M/s. S. K. Rajani & Co., Cost Accountants, were appointed to conduct audit of cost records of Bauxite, Calcined Bauxite, Bleaching Clay, Bentonite & Allied Minerals and Kaolin for the year ended 31stMarch, 2014.

In view of the provisions of Section 148 of the Companies Act, 2013 and rules framed thereunder, M/s. S. K. Rajani & Co., Cost Accountants, is appointed to conduct audit of cost records of Bauxite, Bentonite & Allied Minerals and Kaolin for the year ended 31st March, 2015, at such remuneration which is subject to ratification at the ensuing Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Your Company has always been undertaking CSR activities on significant scale, through a Trust instituted by the group, upholding the belief that success comes with responsibility, so we take care to reinvest in protecting and developing the communities within which we operate.

The vision of Ashapura Group''s CSR activities is to make sustainable impact on the human development of underprivileged communities through initiatives in Education, Health and Livelihoods.

Your Company has initiated appropriate steps for complying with the provisions in relation to Corporate Social Responsibility as required under the Companies Act, 2013.

ACKNOWLEDGEMENT:

Your Directors wish to express their appreciation for the assistance and co-operation received from the financial institutions, banks, employees, investors, customers, Government & Government agencies and all other business associates for the continuous support given by them to the Company and their confidence in its management during the year under review and look forward for their contributed support in future.

For and on Behalf of the Board of Directors

Sd/- Sd/- Ashok Kadakia Harish Motiwalla Audit Committee Chairman Director & Director

Place: Mumbai Date: 13th August, 2014


Mar 31, 2013

To The Members,

The Directors present the Thirty Second Annual Report of the Company together with the Annual Statements of Accounts (Standalone & Consolidated) for the year ended 31st March, 2013.

FINANCIAL RESULTS AND PERFORMANCE:

Ashapura Minechem Ltd. Consolidated (Rs.in Lacs) (Rs. in Lacs) 2012-2013 2011-2012 2012-2013 2011-2012

Net Sales/ Income from Operations 42,764.22 65,259 99

Less: Total Expenditure 44,171.48 42,124.20 70,364.42 63,232.93

Profit/Loss) from Operations before Dep. Other Income and Exceptional Items 3,675.22 640.02 6,827.43 2,027.06

Less: Depreciation (1,145.43) (1,091.23) (2,579.64) 2,791.27

Profit /(Loss) from Operations before

Other Income and Exceptional Items 2,529.79 (451.21) 4,247.79 (764.21)

Add: Other Income 999.71 1,333.85 1,437.57 1,116.18

Profit/(Loss) before Exceptional and

Extra-ordinary Items and Tax 3,529.51 882.64 5,685.36 351.97

Exceptional Items (285.71) (226.40) (725.31) (3,170.79)

Extra-ordinary Items

Profit/(Loss) before Tax 3,243.80 656.24 4,960.05 (2,818.82)

Tax Expenses

Current Tax 641.15 549.48

Earlier Year''s Tax (4.78) (4.56) (81.74) (14.40)

Deferred 9.38 16.02

Net Profit / (Loss) 3,239.02 660.81 4,391.26 (3,369.92)

Minority Interest (0.87) (0.63)

Share of Profit/ (Loss) in Associate Company 23.94 6.16

Net Profit/ (Loss) of the Group 660.81 (3,364.39)

During the year under review, the Stand-alone sales/income from operations for the year ended 31" March, 2013 stood at X. 47,847 Lacs as against ^. 42,764 Lacs in the previous year. The net profit of the Company stood at ^. 3,239 Lacs as against 66 I Lacs in the previous year.

In respect of Consolidated Accounts, the sales/income from operations stood at X. 77,192 Lacs as against ^ 65,260 Lacs in the previous year and the net profit stood at ^. 4,414 Lacs for the year ended 3 Ist March, 20 I 3 as against the net loss of ^ 3,364 in the previous year.

DIVIDEND

Considering the state of affairs of the Company and in view of the accumulated losses, your Directors have not recommended any Dividend for the financial year 2012-2013.

REVIEW OF OPERATIONS:

In the financial year 2012-2013, your Company got the much awaited push with the ad-interim relief granted by the Hon. Supreme Court, whereby the Government of Gujarat gave conditional permissions in favour of certain mine owners to resume bauxite sales. Accordingly, despite working capital constraints, your Company along with its subsidiaries resumed the export of bauxite. This much awaited and needed boost helped the Company to achieve a good top line with steady profitability. The stand-alone revenue from operations increased by around 12% and stood at ^. 47,847 Lacs. Similary, the consolidated revenue from operations increased by around 18%.

Your Company is one of the most integrated player in the ''Industrial Minerals'' business of India. Moreover, it is persistently working on diversifying and developing its product portfolio by adding more value added products from its mine resources. Bauxite which is an important constituent of the Company''s mineral portfolio is the primary ore for making aluminium metal. It is also used as an additive in the cement industry. Calcined Bauxite which is a value added product of bauxite obtained by calcining (heating) superior grade bauxite at high temperature; is used mainly in steel industry. Simultaneously, the Company is exploring new application of calcined bauxite which is used for road surfacing.

Bentonite which is an another important constituent of the Company''s mineral portfolio is very versatile in its application; it is used in several industries like foundry, iron and ore pallets, oil well drilling, construction, paint, paper etc. During the year under review, iron ore pellets industry experiencing slow down due to deprived economic conditions and low demand for steel and steel products. However, bentonite being used in several industries has diversified advantages and as such a bright outlook is anticipated in the coming years.

SUBSIDIARIES AND JOINT VENTURES:

The principal subsidiaries and joint ventures of the Company showed promising growth. Ashapura International Limited which mainly caters to the bentonite business showed a 45% increase in revenues attributable to a buoyant export demand. Bombay Minerals Limited which sells bauxite and its value added derivative calcined bauxite had a S.S times revenue multiple as compared to the previous year on account of the ad-interim order of the Supreme Court for the resumption of issue of royalty passes for the sale of bauxite.

Ashapura Volclay Limited, one of the Company''s tenured joint ventures and a market leader in bleaching clay exhibited a modest increase in revenues despite structural volatilities in the composition of edible oil consumption in India.

Sohar Ashapura Chemicals LLC, a joint venture company in the Sultante of Oman setup as a mineral processing hub for bentonite, barites, calcium carbonate and kaolin, garnered a significant market share in the region and has generated a modest yet promising profit within its first year of operations.

M. V Asha Prestige, a shipping vessel owned by Ashapura Maritime FZE and operated by Asha Prestige Company (both wholly owned step down subsidiaries of Ashapura Minechem Limited) was sold on account of its operational and economic unviability caused by the prolonged downturn in the shipping industry. Consequently, Asha Prestige Company was wound up.

The other overseas subsidiaries and joint ventures of the Company in Belgium, UAE and Indonesia exhibited resilience in the scale of operations despite freight & foreign exchange volatilities.

COMPANY''S REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR):

Based on the Audited Financial Accounts for the year ended 31st March, 201 I, the Board for Industrial & Financial Reconstruction (BIFR) vide its order dated 20th March, 2012 declared your Company as ''Sick Company'' under Section 3(l)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Consequently, the BIFR Bench appointed Bank of India as Operating Agency with directions to submit Draft Rehabilitation Scheme (DRS). Based on the various meetings with the Operating Agency and subsequent revisions, your Company has presented a revised Draft Rehabilitation Scheme (DRS) and the same is under discussion amongst various concerned lenders for finalization.

PREFERENTIAL ALLOTMENT:

Pursuant to the Special Resolution passed by the Shareholders through postal ballot as on 5,h December, 2012, the duly constituted Committee of Directors has in its meeting held on 26,h December, 2012, allotted 40,00,000 equity shares and 40,00,000 convertible warrants at a price of ^. 36.83 per share/warrant to M/s. Ashapura Industrial Finance Limited, a Promoter Group Entity.

Further, the Company has received X. 184,150,000 upon such allotment of equity shares and convertible warrants till date and the same were utilized for the purpose for which they have been raised i.e. for re-structuring or settlement of loans/liabilities/debts with banks and/or other creditors.

STATUS OF THE PENDING LITIGATIONS:

a) The Contracts of Affreightment entered into by the Company with Shipping Companies - viz. [II British Marine PLC [21 I.H.X. (UK) Ltd. [31 Eitzen Bulk A/s and [41 Armada Singapore Pte Ltd.

The Company has successfully settled the claims with British Marine Pic. In case of the other shipping companies, the Company is facing applications for enforcement of ex-parte awards passed in respect of three Contracts of Affreightment in the Bombay High Court filed by remaining shipping companies for approx. US $ 126.07 million.

Since the award of claims of each of the three shipping companies were heavily exaggerated, the Company has much prior in time filled an application for enforcement of award, initiated legal proceedings against the alleged arbitration award in the Civil Court at lam-Khambhaliya, Gujarat on the ground of opposed to the Public Policy of India. The Application filled by the Company challenging the foreign awards stands upheld or sustained in the Court of Law.

b) In case of Forex Derivatives Contracts, the Company has taken legal opinion that these contracts are void and are not legally enforceable. It has been further advised by the counsels that the Company can take legal actions for challenging the validity of the said contracts. The Company has been defending the legal claim made by a few of the bankers. In light of the recently concluded court cases, the Company has approached the bankers to settle the claims amicably.

SUBSIDIARIES:

Pursuant to the provisions of Section 212(8) of the Companies Act, 1956, Ministry of Corporate Affairs vide its General Circular No. 2 & 3 dated 8th February, 201 I and 21st February, 201 I, respectively, has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. However, some key information on the financial details of the subsidiary companies for the financial year 31st March, 2013 is contained in the Annual Report.

The Annual Accounts of these subsidiaries along with the related information will be made available for inspection at the Company''s registered office and copies will be provided to the any member of the Company who may be interested in obtaining the same.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report on the operations and the financial position of the Company have been provided in the separate section which forms part of this Annual Report.

CORPORATE GOVERNANCE:

As per Clause 49 VI of the Listing Agreement entered into with the Stock Exchanges, a detailed report on Corporate Governance has been provided in the separate section which forms part of this Annual Report. The Auditors'' Certificate on compliance with the Corporate Governance requirements has also been provided in the same.

DIRECTORS:

Appointment of Special Director:

Pursuant to the powers conferred on the Board for Industrial & Financial Reconstruction under Section 16(4) of the Sick Industrial Companies (Special Provisions) Act, 1985, Shri Arun Chadha has been appointed as a Special Director on the Board of the Company with immediate effect.

Resignation of Director:

Shri Piyush Vora, Director, resigned from the directorship of the Company on account of his pre-occupation and existing commitments w.e.f. Ist October, 2012. The Board of Directors places on record its sincere appreciation for the significant contribution, valuable assistance and guidance provided by him during his tenure as a Director of the Company.

Retire by Rotation:

In accordance with the provisions of Section 256 of the Companies Act, 1956, Shri Ashok Kadakia, Director of your Company is due to retire by rotation and being eligible offers himself for re-appointment. The brief details of him has been provided in the Corporate Governance Report under the heading "Board of Directors".

DIRECTORS'' RESPONSIBILITY STATEMENT:

As required under the provisions of Section 2I7(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) that in the preparation of the Annual Accounts for the year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 3 Ist March, 2013 and of the Profit of the Company for the year under review; that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the Annual Accounts for the year ended 3 Ist March, 2013, have been prepared on a ''going concern'' basis.

STATUTORY INFORMATION:

The information in accordance with the provisions of Section 217 (l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is set out in the statement annexed hereto (Annexure I) and forms part of this Report,

The information in accordance with the provisions of Section 2I7(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, I 975, as amended, is not given, as there are no employees employed during the year or part thereof as required under Section 2I7(2A).

Your Company has not accepted any Fixed Deposits during the year under review. The Company''s equity shares are listed at the Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the annual listing fees have been paid to each of these Exchanges.

AUDITORS:

M/s. Sanghavi and Co., Chartered Accountants (Registration No. I09099W), the Auditors of the Company hold their office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment as the Company''s Auditors for the financial year 201 3-2014. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(IB) of the Companies Act, 1956. The Company has also received a copy of the Peer Review Certificate received by the Auditors from the Institute of Chartered Accountants of India.

AUDITORS'' OBSERVATION:

a) In case of interest free loan to wholly owned subsidiary, the Management stated that the said wholly owned subsidiary was incorporated to set up the alumina Project. However, the said project is still in the initial stage of being set-up, which impelled the Parent Company to provide interest free loan.

b) Other observations made by the Auditors in their Report are self-explanatory and need not require any further clarifications.

BRANCH AUDITORS:

M/s. B. Purushottam & Co., Chartered Accountants, Chennai, the Branch Auditors appointed pursuant to Section 228 of the Companies Act, I 956, hold their office till the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment for Chennai, Kodur and Trivendrum branch offices of the Company for the financial year 2013-2014. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(IB) of the Companies Act, 1956.

COST AUDITORS:

Pursuant to the provisions of Section 23 3B of the Companies Act, 1956, and in terms of circular No. 52/I0/CAB-20 10 issued by the MCA dated 30th |une, 201 I and with the prior approval of the Central Government, M/s. S. K. Rajani & Co., Cost Accountants, were appointed to conduct audit of cost records of bauxite, calcined bauxite, bleaching clay, bentonite and allied minerals and kaolin for the year ended 31st March, 2013.

The Cost Audit Report of the Company for the financial year ended 31st March, 2012 was filled on I 5th March, 2013.

ACKNOWLEDGEMENT:

Your Directors would like to express their appreciation for the assistance and co-operation received from the financial institutions, banks, employees, investors, clients, other business associates during the year under review.

We also thank all government agencies for their support during the year and look forward for their contributed support in future.

For and on Behalf of the Board of Directors

sd/- sd/-

Navnitlal Shah Chetan Shah

Executive Chairman Managing Director

Place : Mumbai

Date : 8th August, 2013


Mar 31, 2010

The Directors submit the Annual Report of the Company together with the Audited Statements of Accounts (Standalone & Consolidated) for the year ended 31st March, 2010.

FINANCIAL RESULTS AND PERFORMANCE :

Ashapura Minechem Ltd. Consolidated

(Rs.in Lacs) (Rs.in Lacs)

2009-10 2008-09 2009-10 2008-09

Profit/(Loss) before Depreciation,

Taxation & Extraordinary items (4800.45) (38032.80) (227.52) (39315.26)

Depreciation (980.23) (659.86) (2568.58) (2439.92)

Profit/(Loss) before Tax & Extraordinary items (5780.68) (38692.66) (2796.10) (41755.18)

Tax Expenses:

Current - - (1074.90) (339.50)

Earlier Years Tax - (61.11) (124.61) (61.11)

Fringe benefit Tax - (48.00) - (55.40)

Deferred (237.30) 13362.67 (256.73) 13453.12

Profit/(Loss) after Tax (6017.98) (25439.10) (4252.34) (28758.07)

Extra ordinary Items - (52.71) - (52.71)

Prior period Adjustments (51.68) (56.15) 553.29 (90.84)

Share of (Loss)/Profit in Associate Company - - (46.60) (21.92)

Excess Provision of Income Tax Written Back 222.18 - - -

Exceptional Items

Foreign Currency Derivatives Written Back

(net of deferred tax) 6821.80 - 6821.80 - Net Profif(Loss) after Extra Ordinary Items 974.32 (25547.96) 3076.15 (28923.54)

Minority interest " - - (4.20) (6.99)

974.32 (25547.96) 3071.95 (28930.53)

Balance brought forward from the previous year (9974.09) 15573.86 (8100.94) 21179.60

Amount available for Appropriation (8999.77) (9974.10) (5028.99) (7750.93)

Appropriations:

1) Proposed Dividend - - - -

2) Corporate Dividend Tax - - (15.23) -

3) General Reserve - - (605.17) (350.00) Balance carried to Balance sheet (8999.77) (9974.10) (5649.39) (8100.93)

During the financial year ended 31st March, 2010, the Loss before depreciation, interest and tax reported by the Company was reined to

Rs.4800.45 lacs in comparison to Loss before depreciation, interest and tax of Rs.38032.80 lacs in the previous year. The Company on the basis of legal advice taken from various Counsels has written back Foreign Currency Derivatives Loss and therefore the bottom line reflected a Net Profit after minority interest of Rs.974.32 lacs & Rs.3071.95 lacs, respectively, in the standalone & consolidated financial results.

DIVIDEND:

In view of losses incurred, your Directors have not recommended any Dividend for the year 2009-2010.

REVIEW OF OPERATIONS:

The standalone turnover for the year ended 31 March, 2010, declined by 28.14% and stood at Rs.50306.49 lacs as against Rs.70009.78 lacs in the previous year. The turnover for the entire Ashapura Group stood at Rs.71366.59 lacs as against Rs.96126.36 lacs in the previous year. Although the scale of business was comparable to the previous year, the decline in turnover was largely attributable to export sales of minerals on a Free on Board basis as against Cost Insurance Freight basis in the previous year.

Although the Government of Gujarat declared its Bauxite Policy permitting the resumption of Bauxite exports from the State in November 2009; continuing administrative delays in implementation of the Policy restrained the Company in achieving optimum volumes of Bauxite sales. The Management believes that the imminent implementation of the States Mineral Policy will help the Company achieve its potential volumes of Bauxite sales from the State of Gujarat.

Bentonite & Allied Minerals witnessed volume growth rates in excess of 60% as compared to the previous year on account of the buoyed demand from the oil well drilling and iron ore pelletization sector.

SUBSIDIARIES:

a) Bombay Minerals Limited

Bombay Minerals Ltd. is a 100 percent subsidiary of your Company. The said Company reported a turnover of Rs. 5814.10 lacs during the year as compared to Rs.5573.52 lacs in the previous year. The net profit for the year under review stood at Rs. 823.66 lacs as compared to Rs. 124.49 lacs in the previous year.

b) Ashapura International Limited

Ashapura International Ltd., a 100 percent subsidiary of your Company, has performed well during the year under review. It bagged contracts for supplying Bentonite to Kolkata Airport Project, Kolkata Garden Reach Project and Paradeep Port Project. It also reported a growth in sales of Specility products like Hydrokol & Attapulgite. In view of the above, the said Company reported a turnover of Rs. 5536.77 lacs as against a turnover of Rs. 4704.77 lacs in the previous year. Correspondingly, the said Companys net profit stood at Rs.295.24 lacs as against Rs. 66.39 lacs in the previous year.

c) Ashapura Aluminium Limited

Ashapura Aluminium Limited is a 100 percent subsidiary of your Company. The said Company is primarily engaged in setting up of an Alumina Refinery in the Kutch District of Gujarat. The basic Engineering for setting up the said Refinery has been completed and a contract for the detailed Engineering has been awarded to a China based Company. The said Company has also obtained a revised Techno Economic Feasibility Report for the setting up the said Alumina Refinery.

d) Ashapura Claytech Limited

Your Company owns 95.25 percent of the share capital of Ashapura Claytech Ltd. The said Company is in process of exploring new business activities like mining and marketing of Feldspar, Quartz, etc. During the year under review, the turnover declined by 21.01 percent and stood at Rs.487.74 lacs as against Rs.617.50 lacs in the previous year. The decline in turnover affected the net profit which stood at Rs. 88.19 lacs as compared to Rs.147.29 lacs in the previous year showing a decrease of 40.12 percent.

e) Ashapura Minechem (UAE) FZE

Ashapura Minechem (UAE) FZE, a 100 percent subsidiary of your Company established in United Arab Emirates (UAE), is engaged in the business of import, export and distribution of industrial minerals and other related activities. The said Company during the year under review reported a decline in the total turnover from approx. Rs. 17752.32 lacs (USD 390.50 lacs) to approx. Rs. 6001.64 lacs (USD 125.19 lacs). Subsequently, the net profits also declined from approx. Rs. 730.77 lacs (USD 16.08 lacs) to approx. Rs. 117.65 lacs (USD 2.45 lacs).

f) Ashapura Holdings (UAE) FZE

The said Company is a wholly-owned subsidiary of Ashapura Minechem (UAE) FZE and a step down subsidiary of your Company. During the year under review, there were no earnings in the said Company and the expenditure incurred is reflected in statement of financial position as accumulated losses which stood at approx Rs. 26.09 lacs (USD 54,419).

g) Ashapura Maritime FZE

This is a 100 percent subsidiary of Ashapura Holdings (UAE) FZE and a step down subsidiary of your Company. The said Company is engaged in ship management & operations and has currently leased a vessel from its 100 percent subsidiary - Asha Prestige Co, a Company incorporated in Marshall Islands. During the year under review, the Company earned an income of Rs. 2318.95 lacs (USD 48.37 lacs). However, it incurred a net loss of approx. Rs. 788.11 lacs (USD 16.44 lacs).

h) PT. Ashapura Resources Indonesia

This is a subsidiary of Ashapura Minechem (UAE) FZE and a step down subsidiary of your Company.

The said Company was incorporated on 21st April, 2010, for tapping mining opportunities in Indonesia especially for minerals like Bauxite, Coal and Manganese Ore.

JOINT VENTURES AND ASSOCIATES:

i) Ashapura Volclay Limited

Your Company owns 50 percent Equity of Ashapura Volclay Ltd. The said Company reported a turnover of Rs. 9684.76 lacs as against a turnover of Rs. 7793.22 lacs in the previous year. The profits after tax stood at Rs. 1233.65 lacs for the year under review as compared to Rs. 161.80 lacs in the previous year.

The said Company is in the process of expanding its production capacity of Acid Activated Bleaching Clay from 48,000 TPA to 72,000 TPA. The new capacity is expected to be operational by December, 2010. On completion of the expansion, Ashapura will be the Worlds third largest Bleaching Clay producer in terms of capacity. The Ashapura Group has achieved this milestone within 8 years of its foray into the industry.

j) Ashapura AMCOL NV

Your Company together with its subsidiary - Ashapura Minechem (UAE) FZE owns 50 percent stake in Ashapura AMCOL NV, a Company incorporated in Belgium with an object of developing, trading, manufacturing and marketing of clay mineral products.

During the year under review, the said Companys income stood at Rs. 3789.76 lacs (Euro 59.25 lacs) and the net loss after tax stood at Rs. 237.95 lacs (Euro 3.72 lacs).

k) Shantilal Multiport Infrastructure Private Limited

Your Company owns 50 percent Equity of Shantilal Multiport Infrastructure Private Limited. The said Companys income stood at Rs. 96.37 lacs and the net profit after tax stood at Rs. 35.38 lacs as against the net profit after tax of Rs. 17.20 lacs in the previous financial year.

I) Ashapura Arcadia Logistics Private Limited

Your Company owns 50 percent Equity of Ashapura Arcadia Logistics Private Limited. The said Companys income declined by approx 39% & stood at Rs. 632.12 lacs as compared to income of Rs. 1038.73 lacs in the previous year. The said Company reported a net loss of Rs. 321.88 lacs as compared to a net loss of Rs. 73.41 lacs in the previous year.

STATUS OF THE PENDING LITIGATIONS:

a) The Contracts of Affreightment entered into by the Company with Shipping Companies - viz. [1] British Marine PLC [2] I.H.X. (UK) Ltd [3] Eitzen Bulk A/s and [4] Armada Singapore Pte Ltd., were terminated due to force majeure on account of stoppage of Bauxite export by the Government of Gujarat.

In view of this, the said Shipping Companies initiated legal proceedings against the Company claiming potential damages for non performance of Contracts of Affreightment. These claims are being contested on the basis of invalidity and frustration of contracts.

The Company has successfully settled the claims with one of the Shipping Companies. In case of the other Shipping Companies, the matters are pending at various stages in Courts where the Company is contesting its liabilities. The Company is also simultaneously negotiating to arrive at an amicable settlement with the claimants.

b) In case of Forex Derivatives Contracts, the Company has taken legel opinion that these Contracts are void and are not legally enforceable. It has been further advised by the Counsels that the Company can take legal actions for challenging the validity of the said Contracts. In light of the recently concluded court cases, the Company has approached the Bankers to settle the claims amicably.

SUBSIDIARIES:

As per Section 212(1) of the Companies Act, 1956, the Company is required to attach to its Accounts, the Directors Report, Balance Sheet and Profit & Loss Account of each of its Subsidiaries. As the Consolidated Accounts present a complete picture of the financial results of the Company and its Subsidiaries, the Company had applied to the Central Government acting through Ministry of Corporate Affairs, under Section 212(8) of the Companies Act, 1956, seeking exemption from attaching the documents referred to in Section 212(1). The approval for the same has been granted by the Central Government vide letter dated 15th June, 2010. Accordingly, the Annual Report of the Company does not contain the individual financial statements of its Subsidiaries. However, a gist of the financial details of the Subsidiary Companies is contained in the Annual Report.

The Annual Accounts of the Subsidiary Companies along with the related information are available for inspection at the Companys Registered Office and copies shall be provided on request.

EMPLOYEE STOCK OPTION SCHEME:

Your Company, as approved by the members at the Extra Ordinary General Meeting held on 31ststst May, 2004, has introduced a Stock Option Scheme - the Employees Stock Option Plan - 2004 ("ESOP 2004") for its employees and the employees of its Subsidiary Companies. An approval to issue upto 15,95,675 Equity Shares of Rs. 21- each was obtained, wherein not more than 31stst7,500 Equity shares of Rs. 2/- each could be issued per employee.

The information required to be disclosed in terms of the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, is set out in the Statement annexed hereto (Annexure II) and forms part of this Report.

As required under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guideline, 1999, the Auditors Certificate on ESOP is set out in the Statement annexed hereto (Annexure III) and forms part of this Report.

CORPORATE GOVERNANCE:

Pursuant to the Clause 49 of the Listing Agreement entered into with Stock Exchanges, Report on Corporate Governance alongwith Management Discussion and Analysis and Auditors Certificate on compliance with the Corporate Governance requirements is set out in the Statement annexed hereto (Annexure IV) and forms part of this Report.

DIRECTORS:

Shri Piyush Vora and Shri Harish Motiwalla retire by rotation at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment.

The brief details of the said Directors have been provided in Corporate Governance Report under the heading "Board of Directors".

DIRECTORS RESPONSIBILITY STATEMENT:

As required under the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm:

i) that in the preparation of the Annual Accounts for the year ended 31ststst March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31ststst March, 2010 and of the Profit of the Company for the year under review;

iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the Annual Accounts for the year ended 31stst March, 2010, have been prepared on a going concern basis.

STATUTORY INFORMATION:

The information in accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is set out in the Statement annexed hereto (Annexure I) and forms part of this Report.

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors Report as an addendum thereto. However, as per the provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the Report and the Accounts are being sent to all shareholders, excluding the aforesaid information about the employees. Any shareholder, interested in obtaining a copy of this statement, may write to the Company Secretary at the Registered Office of the Company.

Your Company has not accepted any Fixed Deposits during the year under review.

The Companys Equity Shares are listed at the Bombay Stock Exchange Limited, the National Stock Exchange of India Ltd., the Ahmedabad Stock Exchange Limited and the Annual Listing Fees have been paid to each of these three Exchanges whose addresses have been mentioned under the heading Shareholders information.

AUDITORS:

M/s. Sanghavi and Co., Chartered Accountants (Registration No. 109099W), the Auditors of the Company hold their office until the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment as the Companys Auditors for the Financial Year 2010-2011. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Company has also received a copy of the Peer Review Certificate as received by the Auditors from the Institute of Chartered Accountants of India.

AUDITORS OBSERVATION:

With reference to the observations made by the Auditors in their Report, the Directors hereby state as follows:

a) In case of foreign currency derivates contracts, the Management has received legal opinion from various counsels to the effect that these contracts are void in nature and cannot be legally enforced. The Company has also been advised that it can contemplate legal actions, challenging the validity of said Contracts.

b) In respect of strengthening of the internal control systems in few functional areas, the respective functional heads along with the Internal Auditors are in process of devising certain plans to strengthen the same.

c) In case of interest free loan to wholly-owned subsidiary, the Management states that the said wholly-owned subsidiary was incorporated to set up the Alumina Project. However, the said project is still in the Initial Stages of being set-up, which impelled the Parent Company to provide interest free loan.

BRANCH AUDITORS:

M/s. B. Purushottam & Co., Chartered Accountants, Chennai, the Branch Auditors appointed pursuant to Section 228 of the Companies Act, 1956, for Chennai, Dharur, Hospet and Trivendrum Branch Offices of the Company, hold their offices till the conclusion of the ensuing Annual General Meeting and are recommended for re-appointment. The Company has received letters from them to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956.

ACKNOWLEDGEMENT:

Your Directors takes this opportunity to express their gratitude for the assistance and co-operation received, especially in such tough times and difficult circumstances faced by the Company, from employees at all levels, who have contributed to the progress of the Company. We also thank all our investors, clients, bankers and other business associates for their continued support and encouragement during the year.

We also thank all government agencies for their support during the year and look forward for their contributed support in future.

For and on Behalf of the Board of Directors

sd/- sd/-

Navnitlal Shah Chetan shah Executive Chairman Managing Director

Place : Mumbai

Date : 5th August, 2010



 
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