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Directors Report of Deccan Gold Mines Ltd.

Mar 31, 2015

The Directors present the 31st Annual Report of the Company together with the Audited Statement of Accounts for the year ended March 31, 2015.

1. FINANCIAL STATEMENTS & RESULTS:

a. FINANCIAL SUMMARY :

The Company's performance during the year ended March 31, 2015 as compared to the previous financial year, is summarized below:

(Rs in '000)

For the financial year For the financial year Particular ended March 31, 2015 ended March 31, 2014

Income 3803 5895

Less: Expenses 19852 9254

Profit/(Loss) before tax (16049) (3359)

Less: Provision for tax - -

Profit / (Loss) after Tax (16049) (3359)

Balance brought forward (66826) (63467)

Balance carried to Balance Sheet (82899) (66826)

b. OPERATIONS:

Details on the operations of the Company during the period under review are given under the head "Report on Exploration Activities" and the segment titled "Status of mineral concession applications" and in "Management Discussion & Analysis" which forms part of this Report.

Rights Issue

Your Directors are pleased to note that the Company had successfully completed fund raising of Rs 50.33 crores through a rights issue. The rights issue was subscribed over 1.3 times which shows the confidence of our shareholders in the Company's long-term strategy.

The Company had offered 1 rights share for every 2 shares held on the Record Date (September 5, 2015) to the existing shareholders of the Company at an Issue Price of Rs17/- per equity share (including premium). Accordingly, 29,609,125 equity shares were offered on rights basis and the issue was kept open during October 14- 30, 2015. On November 6, 2015, the Company issued and allotted the aforesaid equity shares as per the basis of allotment approved by the BSE Limited. The new shares were admitted for listing and trading on the floor of the BSE with effect from November 11,2015.

The money raised will help the Company to focus on continued growth through development of its projects which include the Ganajur Gold Project in Karnataka.

There was no change in nature of the business of the Company, during the year under review.

c. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

The performance and financial position of Deccan Exploration Services Private Limited, subsidiary company for the year ended March 31, 2015 is attached and marked as Annexure I and forms part of this Report.

d. DIVIDEND:

In view of the fact that the Company is yet to commence its commercial operations, your Directors express their inability to recommend dividend for the financial year under review.

e. TRANSFER TO RESERVES:

In view of the fact that the Company is yet to commence its commercial operations, your Directors express their inability to recommend dividend for the financial year under review.

f. REVISION OF FINANCIAL STATEMENT:

There was no revision of the financial statements for the year under review.

g. DEPOSITS :

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

h. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013:

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position, have occurred between the end of the financial year of the Company and date of this report.

i. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS:

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

j. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:

No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future.

k. PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES :

During the year under review, the Company has not entered into any contracts or arrangements with related parties that fall within the purview of Section 188 of the Companies Act, 2013.

1. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES:

During the year under review, the Company did not provide any loan or furnish any guarantees or made any investments.

m. DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013:

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

n. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013:

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1 )(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

o. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013:

As per provisions of Section 62(1 )(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 and other applicable Regulations, details of equity shares issued under Employees Stock Option Scheme during the financial year under review is furnished in Annexure II attached herewith which forms part of this Report.

p. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013:

During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.

2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Ms. Pratima Ram (DIN: 03518633) was appointed as an Additional Director of the Company, as Independent Director, on March 30, 2015 to hold office up to the date of ensuing Annual General Meeting. The Company has received notice from a shareholder along with requisite deposits proposing the candidature of Ms. Pratima Ram for appointment as an Independent Director at the ensuing Annual General Meeting.

Mr. K. Karunakaran was appointed as Key Managerial Person designated as Chief Financial Officer of the Company with effect from February 16, 2015.

In accordance with the provisions of the Act, none of the Independent Directors is liable to retire by rotation.

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Charles Edward English Devenish retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment.

b. DECLARATIONS BY INDEPENDENT DIRECTORS:

The Company has received declarations form all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company.

3. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES :

a. BOARD MEETINGS:

The Board of Directors met eight (8) times during the financial year ended March 31, 2015 in accordance with the provisions of the Companies Act, 2013 and rules made thereunder.

b. DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2015, the Board of Directors hereby confirms 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. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2015 and of the loss of the Company for that year;

c. proper and sufficient care was taken 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 annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

c. NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of Directors as constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act.

The composition of the committee is as under:

1. Mr. K.R. Krishnamurthy, Chairman,

2. Dr. M. Ramakrishnan, Director and

3. Prof V.K. Gaur, Director.

The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees.

Major criteria defined in the policy framed for appointment of and payment of remuneration to the Directors of the Company, are based upon their experience, qualifications, capability to make independent judgment and value addition.

d. AUDIT COMMITTEE:

The Audit Committee of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit Committee is in conformity with the provisions of the said section. The Audit Committee comprises of:

1. Mr. K.R. Krishnamurthy, Chairman,

2. Dr. M. Ramakrishnan, Independent Director and

3. Prof V.K. Gaur, Independent Director.

The scope and terms of reference of the Audit Committee have been amended in accordance with the Act and the Listing Agreement entered into with the Stock Exchanges.

During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee.

e. STAKEHOLDERS RELATIONSHIP COMMITTEE:

During the year under review, pursuant to Section 178 of the Companies Act, 2013, the Board of Directors of the Company has constituted the Stakeholder's Relationship Committee, comprising of Mr. K.R. Krishnamurthy and Mr. Sandeep Lakhwara as its members.

Mr. K.R. Krishnamurthy has been appointed the Chairman of the Stakeholders' Relationship Committee. The Company Secretary acts as the Secretary of the Stakeholders' Relationship Committee.

f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES: (if applicable)

The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right/option to report their concern / grievance to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

g. RISK MANAGEMENT POLICY:

The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc.

The employees of the Company have the right/option to report their concern / grievance to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

h. CORPORATE SOCIAL RESPONSIBILITY POLICY:

Section 135 of the Companies Act, 2013, mandates the constitution of a Corporate Social Responsibility Committee by companies having net worth of Rs. 500 crore or more OR turnover of Rs. 1000 crore or more OR a net profit of Rs. 5 crore or more during any financial year. However, considering the said applicability criteria, this provision is presently not applicable in the case of the Company.

i. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

A statement indicating the manner for evaluation of performance of the Board and its committee, individual Directors is attached with the Board Report as Annexure III and forms part of this Report.

j. INTERNAL CONTROL SYSTEMS:

Adequate internal control systems commensurate with the nature of the Company's business and size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

k. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014:

The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year under review has been marked as Annexure IV.

l. PAYMENT OF REMUNERATION / COMMISSION TO DIRECTORS FROM HOLDING OR SUBSIDIARY COMPANIES:

The Managing Director of the Company is not in receipt of remuneration/commission from the Holding or Subsidiary Company of the Company. Apart from the Managing Director, the Company does not have any other managerial personnel.

4. AUDITORS AND REPORTS :

The matters related to Auditors and their Reports are as under:

a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2015:

The observations made by the Statutory Auditors in their report for the financial year ended March 31, 2015 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED MARCH 31, 2015:

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. M/s Rathi and Associates, Company Secretaries had been appointed to issue Secretarial Audit Report for the financial year 2014-15.

Secretarial Audit Report issued by M/s Rathi and Associates, Company Secretaries in Form MR-3 for the financial year 2014-15 forms part to this report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

c. RATIFICATION OF APPOINTMENT OF AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. V. K. Beswal & Associates, Chartered Accountants, Mumbai, the Statutory Auditors of the Company, hold office up to the conclusion of the ensuing Annual General Meeting. The consent of the Auditors along with certificate under Section 139 of the Act have been obtained from the Auditors to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company. The Board recommends the appointment of M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai, as the Statutory Auditors of the Company.

Necessary resolution for reappointment of the said Auditors is included in the Notice of AGM for seeking approval of members.

d. COST AUDITORS:

The provisions of Section 148 of the Companies Act, 2013 relating to cost audit are not applicable to the Company..

5. OTHER DISCLOSURES

Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended March 31, 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure V which forms part of this Report.

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

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule

8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy and technology absorption have not been furnished considering the nature of activities undertaken by the Company during the year under review.

During the year under review, the Company has neither earned nor used any foreign exchange.

c. CORPORATE GOVERNANCE:

As per the provisions of Section II of the Scheduel V of the Companies Act, 2013, the details of remuneration paid to Mr. Sandeep Lakhwara, Managing Director are furnished as under:

All elements of remuneration package such as salary, Rs. 7 lakhs per month (w.e.f. January 1, 2015) benefits, bonuses, stock options Details of fixed component and performance linked Nil incentives along with the performance criteria Service contracts, notice period, severance fees Notice period of 3 months. No stipulation of severance fee.

Stock option details, if any, and whether the same has Granted 1,500,000 stock options under the Deccan been issued at a discount as well as the period over which Gold Mines Employee Stock Option Scheme, 2014. accrued and over which exercisable The said Options have been granted at the price of til- per option and the Managing Director shall have right to subscribe for shares within the period of 12 months from the date of vesting.

6. ACKNOWLEDGEMENTS AND APPRECIATION:

Your Directors take this opportunity to express their gratitude to all the business associates and to the investors / shareholders for the confidence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board

Charles E.E. Devenish

Chairman

DIN: 01252091

Date: November 13, 2015

Place: Bengaluru

CIN: L51900MH1984PLC034662

REGISTERED OFFICE:

Parinee Crescenzo, C38-C39, G Block,

Bandra Kurla Complex, Bandra (East),

Mumbai -400 051.

Tel .No.:022-33040797

Fax No.: 022-33040779.

Email.: info@deccangoldmines.com

Website.: www.deccangoldmines.com


Mar 31, 2014

Dear Shareholders,

We have pleasure in presenting the Thirtieth Annual Report on the business operations of the Company along with the Statement of Audited Accounts for the year ended 31 March, 2014.

1. Financial Results

Particulars (`Rs in ''000s) 2013-14 2012-13

Total Income 5,895 1,571

Profit/(Loss) before Taxation (3,359) (10,205)

Profit/(Loss) after Tax (3,359) (10,205)

Balance brought forward (63,467) (53,262)

Balance transferred to Balance Sheet (66,826) (63,467)

During the year, the Company incurred Rs. 204.45 lac on exploration activities and Rs. 92.54 lac on administrative and other expenses. The cumulative amount spent on exploration activities of Rs. 1266.95 lac as on 31 March, 2014 has been transferred to pre-operative expenses.

2. BUSINESS OPERATIONS AND OUTLOOK

Details on the operations of the Company during the period under review are given under the head "Report on Exploration Activities" and the segment titled "Status of important applications for Reconnaissance Permit (RP) / Prospecting Licence (PL) / Mining Lease (ML)" and in "Management Discussion and Analysis Report" which forms part of this report.

A detailed write-up on "Outlook and Opportunities" for the mineral exploration sector in general is also given in the section "Management Discussion and Analysis Report".

3. UPDATE ON TAKEOVER OF GEOMYSORE SERVICES INDIA PRIVATE LTD GMSI

The Company had completed considerable work on the Scheme of Arrangement, for takeover of GMSI, including appointment of various agencies viz. lawyers, valuer and merchant banker and also working on finalization of the mechanism of the proposed takeover as advised by the said Agencies.

While, your Directors acknowledge the multifarious advantages that the proposed takeover would bring in terms of consolidation of gold assets to create a large Indian listed gold company, your Directors opined that further drilling in the Jonnagiri Gold Project, which is the key gold project of GMSI, would be necessary to assist in finalization of the valuation sought for GMSI for takeover purposes.

During September, 2014 GMSI indicated that it has drawn up a drilling programme of 15,800 m in the Jonnagiri Gold Project, of which at least 5000 m drilling is expected to be completed by the end of January, 2015.

Accordingly, at the meeting held on 23 September, 2014, your Directors have decided that the proposed takeover of GMSI would be revisited as and when the drilling data becomes available from GMSI in respect of the 5000 m drilling at the Jonnagiri Gold Project and an appropriate decision be taken at that time. The said data is expected to be made available to the Company by April, 2015.

4. SUBSIDIARY COMPANY

In accordance with Accounting Standard 21, issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements have been provided in the Annual Report. These Consolidated Financial Reports provide financial information about your Company and its subsidiary company as a single economic entity. The Consolidated Financial Statements form part of this Annual Report.

5. SUBSIDIARY COMPANY

As required under Section 212 of the Companies Act, 1956, the audited Profit and Loss Account for the year ended 31 March, 2014 along with the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon of Deccan Exploration Services Private Limited, a subsidiary company is attached.

6. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through the then Clause 49 of the Listing Agreement. As required by the said Clause, a separate Report on Corporate Governance forms part of this Annual Report. A Certifcate from M/s. Rathi & Associates, Practicing Company Secretaries, Mumbai regarding compliance with the conditions of Corporate Governance is attached and forms part of this Annual Report.

Further, in terms of the then Clause 49(IV)(F) of the Listing Agreement, a separate report titled "Management Discussion and Analysis" is attached and forms part of this Annual Report.

7. DECCAN GOLD MINES EMPLOYEE STAOCK OPTION PLAN 2008

The disclosures required to be made under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report.

8. BOARD OF DIRECTORS

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Charles E.E. Devenish shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

As per provisions of Section 149 of the Companies Act, 2013, independent directors shall hold office for a term up to five consecutive years on the board of a company, but shall be eligible for re-appointment for another term up to five years on passing of a special resolution by the company and disclosure of such appointment in Board''s Report. Further, Section 152 of 2013 Act provides that the independent directors shall not be liable to retire by rotation in the Annual General Meeting (''AGM'') of the Company. In view of the said provisions, contained in 2013 Act, it would be necessary to appoint independent directors in the ensuing AGM for a period of five years.

The Board has conducted the performance evaluation of Mr. Krishnamurthy Ramaswamy Kuduvalli (DIN:00556641), Dr. Moni Ramakrishnan (DIN:01193152), and Prof. Vinod Kumar Gaur (DIN:0611175), present Independent Directors and on the basis of the same, recommends to the shareholders the appointment of these three persons as Independent Directors of the Company for a term of five years from the date of ensuing AGM. Further, the said Independent Directors fulfll the conditions specified in the Companies Act, 2013 and the Rules made thereunder and are independent of the management.

The Nomination Committee and the Board of Directors have approved the variation in the terms and conditions of appointment including remuneration of Mr. Sandeep Lakhwara, Managing Director.

Necessary resolutions seeking the approval of the shareholders for all the above proposals form part of the Notice convening the Annual General Meeting. In terms of the then Clause 49(IV)(G)(i) of the Listing Agreement entered into with the BSE Limited, all the requisite details about the Directors seeking re-appointment / appointment at the ensuing Annual General Meeting forms part of the Notice convening the Annual General Meeting.

Further, pursuant to the then Clause 49(IV)(E)(iv) of the Listing Agreement, the shareholders may take note that none of the Non Executive Directors hold any shares/convertible instruments in the Company as on the date of this Report.

9. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- that they have 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 ended 31 March, 2014 and of the loss of the Company for that year.

- that they have taken proper and suffcient 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.

- that they have prepared the attached Statement of Accounts for the year ended 31 March, 2014 on a going concern basis.

10. PERSONNEL

Your Directors place on record, their appreciation for the continuous and untiring support received from the employees of the Company at all levels.

During the year under review, none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

11. AUDITORS

The Statutory Auditors M/s. V. K. Beswal & Associates, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

M/s. V. K. Beswal & Associates, Chartered Accountants, Statutory Auditor is eligible and offer themselves for reappointment. In accordance with third proviso of Section 139(2) of the Companies Act, 2013, read with Rule 6 of the Companies (Audit and Auditors) Rules, 2014, M/s. V. K. Beswal & Associates can be appointed as Statutory Auditors for next three financial years. Your Company has received necessary certifcate pursuant to the provisions of Section 139 (1) of the Companies Act, 2013 from the said Statutory Auditors confirming that their re-appointment, if made, will be in accordance with Section 141 of the Companies Act, 2013.

As per the recommendation of the Audit Committee, the Board of Directors proposes the reappointment of M/s. V. K. Beswal & Associates, Chartered Accountants as Statutory Auditor of the Company for a period from the conclusion of the ensuing Annual General Meeting till the conclusion of next Annual General Meeting.

12. STATUTORY AUDITORS REPORT

Observations made by the Statutory Auditors in their Report for the financial year ended 31st March 2014 are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

13. FIXED DEPOSITS

The Company has not accepted or renewed any deposit from public during the year under review.

14. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FORIEGN EXCHAGE EARNINGS & OUTGO

The Company has not accepted or renewed any deposit from public during the year under review.

a. Conservation of Energy and Technology absorption

Considering the nature of the Company''s existing business activities, your Directors have nothing to state in connection with conservation of energy and technology absorption.

B. foreign exchange earnings and outgo

It may be noted that during the year under review, the Company did not have any foreign exchange earnings or outgo.

14. ACKONOWLEDGEMENT

The Directors wish to express their gratitude to all the business associates and to the Investors / Shareholders for the confdence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board,

Place : Bangalore Charles E.E. Devenish Date : 19 November, 2014 Chairman DIN : 01252091

CIN: L51900mh1984pLC034662

Registered office:

Parinee Crescenzo, C38-C39, G Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051. Tel No. : 022-33040797 Fax No. : 022-33040779 Web site: www.deccangoldmines.com Email. : info@deccangoldmines.com


Mar 31, 2013

Dear Shareholders,

The have pleasure in presenting the Annual Report on the business operations of the Company along with the Statement of Audited Accounts for the year ended 31 March, 2013.

1. FINANCIAL RESULTS

Particulars (Rs in ''000s)

2012-13 2011-12

Total Income 1,571 3,028

Proft/(Loss) before Taxation (10,205) (10,618)

Proft/(Loss) after Tax (10,205) (10,618)

Balance brought forward (53,262) (42,644)

Balance transferred to Balance Sheet (63,466) (53,262)

During the year, the Company incurred Rs. 94.85 lac on exploration activities and Rs. 115.10 lac on administrative and other expenses. The cumulative amount spent on exploration activities of Rs. 1062.51 lac as on 31 March, 2013 has been transferred to pre-operative expenses.

2. BUSINESS OPERATIONS AND OUTLOOK

For full details on the operations of the Company during the period under review, please refer the segment titled "Report on Exploration Activities" and the segment titled "Status of important applications for Reconnaissance Permit (RP) / Prospecting Licence (PL) / Mining Lease (ML)" published elsewhere in this Annual Report.

In line with the jurisdictions across the world, the Indian Government initiated several measures including introduction of Mines and Minerals (Development & Regulation) Act, 2011 (MMDRA) with the objective of reforming the mining sector. The MMDRA continues to await the approval of the Indian Parliament. The Parliamentary Standing Committee before whom the MMDRA was referred for review has submitted its Report to the Parliament.

However, the areas of concern continue to be introduction of a complex system of grant of exploration licences; huge increase in fee and security deposits for exploration and prospecting operations; auctioning for grant of prospecting licences and mining leases in respect of under-explored areas; and introduction of a fnancial contribution equivalent to Royalty payable by the Mining Lease holders into the District Mineral Foundation etc., Further, the mining sector also needs to address the issues arising out of the Land Acquisition Act, 2011 which prescribes the compensation to be paid on land acquisition for industrial purposes.

It may be observed that the National Mineral Policy of 1993 was updated with a new Policy in 2008 which clearly incentivizes private sector investment in exploration and its seeks to ensure increased transparency in allocation of mineral concessions; gives thrust on building infrastructure for mining and seeks to promote R&D in minerals and establish education facilities for human resource development.

The global mining trends and the reactions of the various Governments point to a case for India to fast-track adoption of progressive policy measures for the mineral exploration and mining sector. The Company keenly awaits and expects that the fnal version of the MMDRA would positively address the concerns expressed by the Company and the industry associations like FIMI.

A detailed write-up on "Outlook and Opportunities" for the mineral exploration sector in general forms part of the section "Management Discussion and Analysis Report" published elsewhere in this Annual Report.

3. OFFER FROM GEOMYSORE SERVICES (INDIA) PRIVATE LIMITED

During August, 2013 the Company was approached by Geomysore Services (India) Private Limited (GMSI), a Bangalore-based gold exploration company for being taken over as a wholly-owned subsidiary. The Board of Directors considered the offer of GMSI and advised undertaking of a due diligence on GMSI. The due diligence exercise has been completed and the Company is evaluating various options in this regard in consultation with its legal and taxation advisors to structure the transaction in a manner that best serves the interest of all stakeholders.

It may be noted that GMSI is an unlisted private limited company that has been actively engaged in exploration activities in India since 1994. GMSI''s large portfolio of mineral concession applications and licences, covers most of the important gold bearing Archaean and Proterozoic belts of India. GMSI''s assets include a granted and executed Mining Lease in respect of its Jonnagiri Gold Project in Andhra Pradesh.

4. SUBSIDIARY COMPANY

As required under Section 212 of the Companies Act, 1956, the audited Proft and Loss Account for the year ended 31 March, 2013 along with the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon of Deccan Exploration Services Private Limited, a subsidiary company is attached.

5. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specifed by the Securities and Exchange Board of India through Clause 49 of the Listing Agreement. As required by the said Clause, a separate Report on Corporate Governance forms part of this Annual Report. A Certifcate from M/s. Rathi & Associates, Practising Company Secretaries, Mumbai regarding compliance with the conditions of Corporate Governance also forms part of this Annual Report.

Further, in terms of Clause 49(IV)(F) of the Listing Agreement, a separate report titled "Management Discussion and Analysis" forms part of this Annual Report.

6. DECCAN GOLD MINES EMPLOYEE STOCK OPTION PLAN, 2008

The disclosures required to be made under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report.

7. BOARD OF DIRECTORS

Mr. Charles E.E. Devenish and Dr. M. Ramakrishnan are the Directors who retire by rotation and being eligible, offer themselves for reappointment. Further, Mr. Sandeep Lakhwara has been re-appointed as the Managing Director of the Company for a period of 3 years with effect from 1 May, 2013 subject to the approval of the shareholders.

Necessary resolutions seeking the approval of the shareholders for the reappointment of the aforesaid Directors / Managing Director forms part of the Notice convening the Annual General Meeting. In terms of Clause 49(IV)(G) (i) of the Listing Agreement entered into with the Bombay Stock Exchange Limited, all the requisite details about the Directors seeking re-appointment at the ensuing Annual General Meeting forms part of the Notice convening the Annual General Meeting.

Further, pursuant to Clause 49(IV)(E)(iv) of the Listing Agreement, the shareholders may take note that none of the Non Executive Directors hold any shares/convertible instruments in the Company as on the date of this Report.

8. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confrm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- that they have 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 fnancial year ended 31 March, 2013 and of the loss of the Company for that period.

- that they have taken proper and suffcient 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.

- that they have prepared the attached Statement of Accounts for the year ended 31 March, 2013 on a going concern basis.

9. PERSONNEL

Your Directors place on record, their appreciation for the good work done by all the employees.

During the year under review, none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

10. AUDITORS

The Statutory Auditors M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

11. STATUTORY AUDITORS'' REPORT

Observations made in the Statutory Auditors'' Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

12. FIXED DEPOSITS

The Company has not accepted or renewed any deposit from public during the year under review.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy and Technology Absorption

Considering the nature of the Company''s existing business activities, your Directors have nothing to state in connection with conservation of energy and technology absorption.

B. Foreign exchange earnings and outgo

It may be noted that during the year under review, the Company did not have any foreign exchange earnings or outgo.

14. ACKNOWLEDGEMENT

The Directors wish to express their gratitude to all the business associates and to the Investors / Shareholders for the confdence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board,

Place : Bangalore Charles E.E. Devenish

Date : 13 November, 2013 Chairman


Mar 31, 2012

The have pleasure in presenting the Annual Report on the business operations of the Company along with the Statement of Audited Accounts for the year ended 31 March 2012.

1. Financial Results (Rs in '000)

Particulars 2011-12 2010-11

Total Income 3,028 3,274

Profit/(Loss) before Taxation (10,618) (11,537)

Profit/(Loss) after Tax (10,618) (11,537)

Balance brought forward (42,644) (31,133)

Balance transferred to Balance Sheet (53,262) (42,644)

During the year, the Company incurred Rs. 207.88 lacs on exploration activities and Rs. 127.61 lacs on administrative and other expenses. The cumulative amount spent on exploration activities of Rs. 967.65 lacs as on 31 March, 2012 has been transferred to pre-operative expenses.

2. BUSINESS OPERATIONS AND OUTLOOK

For full details on the operations of the Company during the period under review, please refer the segment titled "Report on Exploration Activities" and the segment titled "Status of important applications for Reconnaissance Permit (RP) / Prospecting Licence (PL) / Mining Lease (ML)" published elsewhere in this Annual Report.

India has initiated several progressive policy measures, putting itself in a good starting position to undertake the transformation of the mining and mineral exploration sector. The National Mineral Policy of 1993 was updated with a new Policy in 2008 which clearly incentivizes private sector investment in exploration and seeks to ensure increased transparency in allocation of mineral concessions; gives thrust on building infrastructure for mining and seeks to promote R&D in minerals and establish educational facilities for human resource development.

The proposed Mines and Minerals (Development & Regulation) Act, 2011 (MMDRA, 2011) is presently awaiting the approval of the Parliament of India. While it contains certain positive measures like reduction of time limit for disposal of applications by 50%; assured transition of licences; dedicated mining tribunal for grievance redressal etc., there are certain areas which cause concern. For example, introduction of a complex system of grant of exploration licences; auctioning of metal anomalies for grant of prospecting licences; and imposition of super tax on mining. During June 2012, the Company was able to put forth its views and comments on the proposed MMDRA, 2011 before the Parliamentary Standing Committee to whom it has been sent for review by the Indian Parliament.

The global mining trends and the reactions of the various Governments point to a case for India to fast-track adoption of progressive policy measures for the mineral exploration and mining sector. The Company keenly awaits and expects that the final MMDRA, 2011 would positively address the concerns expressed by the Company and the industry associations like FIMI.

A write-up on "Outlook and Opportunities" for the mineral exploration sector in general forms part of the section "Management Discussion and Analysis Report" published elsewhere in this Annual Report.

3. SUBSIDIARY COMPANY

As required under Section 212 of the Companies Act, 1956, the audited Profit and Loss Account for the year ended 31 March, 2012 along with the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon of Deccan Exploration Services Private Limited, a subsidiary company is attached.

4. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Clause 49 of the Listing Agreement. As required by the said Clause, a separate

Report on Corporate Governance forms part of this Annual Report. A Certificate from M/s. Rathi & Associates, Practising Company Secretaries, Mumbai regarding compliance with the conditions of Corporate Governance also forms part of this Annual Report.

Further, in terms of Clause 49(IV)(F) of the Listing Agreement, a separate report titled "Management Discussion and Analysis" forms part of this Annual Report.

5. DECCAN GOLD MINES EMPLOYEE STOCK OPTION PLAN, 2008

The disclosures required to be made under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report.

6. BOARD OF DIRECTORS

Mr. K.R. Krishnamurthy and Prof V.K. Gaur are the Directors who retire by rotation and being eligible, offer themselves for reappointment.

Necessary resolutions seeking the approval of the shareholders for the reappointment of the aforesaid Directors forms part of the Notice convening the Annual General Meeting. In terms of Clause 49(IV)(G)(i) of the Listing Agreement entered into with the Bombay Stock Exchange Limited, all the requisite details about the Directors seeking re-appointment at the ensuing Annual General Meeting forms part of the Notice convening the Annual General Meeting.

Further, pursuant to Clause 49(IV)(E)(iv) of the Listing Agreement, the shareholders may take note that none of the Non Executive Directors hold any shares/convertible instruments in the Company as on the date of this Report.

7. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm:

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- that they have 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 ended 31 March, 2012 and of the loss of the Company for that period.

- that they have 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.

- that they have prepared the attached Statement of Accounts for the year ended 31 March, 2012 on a going concern basis.

8. PERSONNEL

Your Directors place on record, their appreciation for the good work done by all the employees.

During the year under review, none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975.

9. AUDITORS

The Statutory Auditors M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

10. STATUTORY AUDITORS' REPORT

Observations made in the Statutory Auditors' Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

11. FIXED DEPOSITS

The Company has not accepted or renewed any deposit from public during the year under review.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy and Technology Absorption

Considering the nature of the Company's existing business activities, your Directors have nothing to state in connection with conservation of energy and technology absorption.

B. Foreign exchange earnings and outgo

It may be noted that during the year under review, the Company did not have any foreign exchange earnings or outgo.

13. ACKNOWLEDGEMENT

The Directors wish to express their gratitude to all the business associates and to the Investors / Shareholders for the confidence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board

Place: Bangalore Charles E.E. Devenish

Date: 13 August, 2012 Chairman


Mar 31, 2011

Dear Shareholders,

We have pleasure in presenting the Annual Report on the business operations of the Company along with the Statement of Audited Accounts for the year ended 31st March 2011.

1. Financial Results (Rs in '000)

Particulars 2010-11 2009-10

Total Income 3,274 4,188

Profit/(Loss) before Taxation (11,537) (6,118)

Profit/(Loss) after Tax (11,537) (6,118)

Balance brought forward (31,133) (24,873)

Balance transferred to Balance Sheet (42,644) (31,133)

During the year, the Company incurred Rs. 183.53 lacs on exploration activities and Rs. 137.78 lacs on administrative and other expenses. The cumulative amount spent on exploration activities of Rs. 759.77 lacs as on 31 March, 2011 has been transferred to pre-operative expenses.

2. BUSINESS OPERATIONS AND OUTLOOK

For full details on the operations of the Company during the year under review, please refer to the segment titled "Report on Exploration Activities" and the segment titled "Status of important applications for Reconnaissance Permit (RP) / Prospecting Licence (PL) / Mining Lease (ML)" published elsewhere in this Annual Report.

The highlights of the operations undertaken by the Company during the year under review are summarized hereunder:

Ganajur Main Gold Prospect:

- During November, 2010 the Mining Lease application of Deccan Exploration Services Private Limited (DESPL), a wholly-owned subsidiary of the company for 0.29 sq km covering the Ganajur Main Gold Prospect was recommended by the Government of Karnataka to the Ministry of Mines, Government of India (MoM) for final approval.

- In February, 2011 the company appointed SRK Mining Services (India) Private Limited, Engineers and Consultants (SRK), to undertake a comprehensive scoping (pre-feasibility) study to assess the mining potential of Ganajur Main Gold Prospect located in the Ganajur-Karjagi Block of Haveri District in the State of Karnataka.

- Other than studying the financial economics of establishing an open pit mining operation, the scoping study will also address technical issues such as mine optimization, process design and future work programs. Further, the scoping study will also provide an updated resource statement.

- Our shareholders would be aware that in May, 2010 SRK completed an initial resource estimate and compilation of a technical report according to the internationally approved JORC (Joint Ore Reserves Committee, Australia) Guidelines for the Ganajur Main Gold Prospect.

- The ML application in respect of the Ganajur Main Gold Prospect is being pursued vigorously by the company.

Update on Hutti Gold Projects :

- The company has been updating the shareholders on this matter from time to time. The announcements made by the company in this regard are available on the company's website as well as on the website of the BSE.

- Upon the direction of the Hon'ble High Court of Karnataka, the Ministry of Mines, Government of India (Central Government) had considered and rejected the recommendation of the State Government of Karnataka to reserve an area of 16,109 hectares in the Hutti Belt, Karnataka in favour of Hutti Gold Mines Limited, a State Government PSU and had instead directed the State Government to consider the pending Prospecting Licence (PL) applications of DESPL. It may be noted that DESPL had lodged PL applications for gold in the Hutti Belt after successfully carrying out exploration under Reconnaissance Permit.

- Hutti Gold Mines Limited has now filed a Writ Petition in the Hon'ble High Court of Karnataka challenging the aforesaid decision of the Central Government. The matter is now pending before the Hon'ble High Court which has fixed 29 August, 2011 as the next date of hearing.

3. SUBSIDIARY COMPANY

As required under Section 212 of the Companies Act, 1956, the audited Profit and Loss Account for the year ended 31 March, 2011 along with the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon of Deccan Exploration Services Private Limited, a subsidiary company is attached.

4. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance Code specified by the Securities and Exchange Board of India through Clause 49 of the Listing Agreement. As required by the said Code, a separate Report on Corporate Governance forms part of this Annual Report. A Certificate from M/s. Rathi & Associates, Practising Company Secretaries, Mumbai regarding compliance with the conditions of Corporate Governance also forms part of this Annual Report.

Further, in terms of Clause 49(IV)(F) of the Listing Agreement, a separate report titled "Management Discussion and Analysis" forms part of this Annual Report.

5. DECCAN GOLD MINES EMPLOYEE STOCK OPTION PLAN, 2008

The disclosures required to be made under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are given in the Annexure to the Report.

6. BOARD OF DIRECTORS

Mr. Charles E.E. Devenish and Dr. M. Ramakrishnan are the Directors who retire by rotation and being eligible, offer themselves for reappointment.

Necessary resolutions seeking the approval of the shareholders for the reappointment of the aforesaid Directors forms part of the Notice convening the Annual General Meeting. In terms of Clause 49(IV)(G)(i) of the Listing Agreement entered into with the Bombay Stock Exchange Limited all the requisite details about the Directors seeking re-appointment at the ensuing Annual General Meeting forms part of the Notice convening the Annual General Meeting.

Further, pursuant to Clause 49(IV)(E)(iv) of the Listing Agreement, the shareholders may take note that none of the Non Executive Directors hold any shares / convertible instruments in the Company as on the date of this Report.

7. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm :

- that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- that they have 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 ended 31 March, 2011 and of the loss of the Company for that period.

- that they have 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.

- that they have prepared the attached Statement of Accounts for the year ended 31 March, 2011 on a going concern basis.

8. PERSONNEL

Your Directors place on record, their appreciation for the good work done by all the employees.

During the year under review, none of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

9. AUDITORS

The Statutory Auditors M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

10. STATUTORY AUDITORS' REPORT

Observations made in the Statutory Auditors' Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

11. FIXED DEPOSITS

The Company has not accepted or renewed any deposit from public during the year under review.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy and Technology Absorption

Considering the nature of the Company's existing business activities, your Directors have nothing to state in connection with conservation of energy and technology absorption.

B. Foreign exchange earnings and outgo

It may be noted that during the year under review, the Company did not have any foreign exchange earnings, but had a foreign exchange outgo of Rs. 0.22 lac.

13. ACKNOWLEDGEMENT

The Directors wish to express their gratitude to all the business associates and to the Investors / Shareholders for the confidence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board

Place: Bangalore Charles E.E. Devenish

Date: 10 August, 2011 Chairman


Mar 31, 2010

We have pleasure in presenting the Annual Report on the business operations of the Company along with the Statement of Audited Accounts for the year ended 31st March 2010.

1. Financial Results (Rs in 000)

Particulars 2009-10 2008-09

Total Income 4,188 13,282

Profit/(Loss) before Taxation (6,118) (2,364) Profit/(Loss) after Tax (6,118) (2,424)

Balance brought forward (24,873) (22,236)

Balance transferred to Balance Sheet (31,133) (24,873)

During the year, the Company incurred Rs. 141.49 lac on exploration activities and Rs. 88.19 lac on administrative and other expenses. The cumulative amount spent on exploration activities of Rs. 576.23 lac as on 31 March, 2010 has been transferred to pre-operative expenses.

2. BUSINESS OPERATIONS AND OUTLOOK

For full details on the operations of the Company during the period under review, please refer the segment titled "Report on Exploration Activities" and the segment titled "Status of Exploration Permits and Applications" published elsewhere in this Annual Report.

Soon after taking office in June, 2009 the Union Government approved a 100 day Agenda for the Ministry of Mines to enable focus on key items affecting the Mining Sector for fast track implementation. The new MMDR Act incorporating the key features of the National Mineral Policy, 2008 was placed on the Ministrys Website and was discussed with State Governments, Central Ministries, Confederation of Indian Industry and other Stakeholders. It is expected that the Legislation would be introduced in the Parliament soon after clearance from the Union Cabinet.

Some of the steps that have already been taken by the Union Government include operationalisation of a mineral concession approval software to make it simple and investor friendly; creation of a Techno Economic Think Tank which has started functioning from January, 2010 to provide policy inputs for decision making on mineral policy etc.,

It is expected that the Government would come out with the much awaited legislative and regulatory initiatives which would enable India to play a leading role in the mining and mineral exploration sector.

The highlights of the operations undertaken by the Company during the year under review are summarized hereunder:

* Appointment of SRK Mining Services (India) Private Limited (SRK), for carrying out Independent Mineral Resource Evaluation and preparation of a Technical Report for the most promising Ganajur Main Gold Prospect of Deccan Exploration Services Private Limited (DESPL), a wholly owned subsidiary of the company. SRK submitted its Report during May, 2010 as per the internationally accepted JORC standards.

* SRK in their conclusions note that "DESPL was successful in delineating an Indicated Mineral Resource estimated at total 1.8 million tonnes grading an average of 4.07 grams per tonne gold and an additional 0.32 million tonnes grading 2.61 grams per tonne gold in the Inferred Category".

* The summary of the resource estimated by SRK is given in the section Report on Exploration Activities.

* Results of some of the drill holes of the Ganajur Prospect received to date indicate extension of the ore body further North West by another 150 metres making the overall length of the Ganajur Main ore body to 600 metres. One of the drill holes, GMC-16 passed through high grade gold mineralization of 8.91 grams/tonne over significant width of 42.84 m. Further, the analytical results of GMC-11, 12, 16 and 20 received to date are also very positive. Phase I and II drilling results have brought to light the existence of a high grade zone in the central portion of the Ganajur Main ore body for nearly 200 metres which is expected to increase the overall economics of the deposit.

* DESPL, a subsidiary of the company signed an MoU with the Government of Karnataka during the Global Investors Meet at Bangalore on 4 June, 2010 for commencement of a gold mine and setting up of a processing plant at Ganajur village. The signing of the MoU captures our commitment for the establishment of a gold mine at Ganajur and the State Government of Karnatakas commitment to assist us in doing so.

* Mining Lease (ML) application for Ganajur is being pursued actively and is in the process of being forwarded to the Ministry of Mines, New Delhi by the Government of Karnataka.

* Mangalur-Janiapur Reconnaissance Permit was granted by the Government of Karnataka over an area of 243.34 sq. kms., and the RP Deed was executed on 30 June, 2010. This RP block covers the western portion of the Mangalur greenstone belt and has several promising exploration targets.

* The companys consultancy wing, comprising a strong technical team and being operated through DESPL, a subsidiary of the company made steady progress during the last year and the future looks promising.

3. SUBSIDIARY COMPANY

As required under Section 212 of the Companies Act, 1956, the audited Profit and Loss Account for the year ended 31 March, 2010 along with the Balance Sheet as at that date and the Reports of the Directors and Auditors thereon of Deccan Exploration Services Private Limited, a subsidiary company is attached.

4. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance specified by the Securities and Exchange Board of India through Clause 49 of the Listing Agreement. As required by the said Clause, a separate Report on Corporate Governance forms part of this Annual Report. A Certificate from M/s. Rathi & Associates, Practising Company Secretaries, Mumbai regarding compliance with the conditions of Corporate Governance also forms part of this Annual Report.

Further, in terms of Clause 49(IV)(F) of the Listing Agreement, a separate report titled "Management Discussion and Analysis" forms part of this Annual Report.

5. GRANT OF STOCK OPTIONS

Pursuant to the approval accorded by the shareholders at their Annual General Meeting held on 28 November, 2008, the Company had introduced the Deccan Gold Mines Employee Stock Option Plan, 2008 (Plan) for the benefit of the Eligible Employees of the Company and its subsidiaries providing for issue of up to a maximum of 30,00,000 Stock Options. The Bombay Stock Exchange Limited (BSE) had granted its in-principle approval for listing of the 30,00,000 equity shares that are likely to arise out of the exercise of the Stock Options under the Plan.

It may be noted that the Compensation Committee of the Board, at its meeting held on 2 June, 2010 had granted 30,00,000 Options at an Exercise Price of Rs. 16.95 per Option / Equity Share to certain Eligible Employees of the Company and its wholly-owned subsidiary viz., Deccan Exploration Services Private Limited. In terms of the Plan, the Options were granted at a 25% discount to the latest available closing price of Rs.22.60 at the BSE on 1 June, 2010 (a day prior to the date of the Compensation Committee meeting).

The disclosures required to be made under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as applicable are given in the Annexure to the Report.

6. BOARD OF DIRECTORS

Prof. V.K. Gaur and Mr. V. Sivakumar are the Directors who retire by rotation and being eligible, offer themselves for reappointment.

Mr. Sandeep Lakhwara was reappointed as the Managing Director of the Company for a period of 3 years with effect from 1 May 2010 subject to the approval of the shareholders.

Necessary resolutions seeking the approval of the shareholders for the reappointment of the aforesaid Directors/Managing Director forms part of the Notice convening the Annual General Meeting. In terms of Clause 49(IV)(G)(i) of the Listing Agreement entered into with the Bombay Stock Exchange Limited, all the requisite details about the Directors/Managing Director seeking re-appointment at the ensuing Annual General Meeting forms part of the Notice convening the Annual General Meeting.

Further, pursuant to Clause 49(IV)(E)(iv) of the Listing Agreement, the shareholders may take note that none of the Non Executive Directors hold any shares/convertible instruments in the Company as on the date of this Report.

7. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm:

* that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.

* that they have 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 ended 31 March, 2010 and of the loss of the Company for that period.

* that they have 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.

* that they have prepared the attached Statement of Accounts for the year ended 31 March, 2010 on a going concern basis.

8. PERSONNEL

During the year under review, none of the employees of the Company was in receipt of remuneration aggregating Rs. 24,00,000/- or more per annum, if employed throughout the year, or Rs. 2,00,000/- or more per month, in case employed for part of the year. Hence, there are no particulars to be annexed to this report as required under Section 217 (2A) of the Companies Act, 1956 and the rules made there under.

9. AUDITORS

The Statutory Auditors M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

10. STATUTORY AUDITORS REPORT

Observations made in the Statutory Auditors Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Companies Act, 1956.

11. FIXED DEPOSITS

The Company has not accepted or renewed any deposit from public during the year under review.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy and Technology Absorption

Considering the nature of the Companys existing business activities, your Directors have nothing to state in connection with conservation of energy and technology absorption.

B. Foreign exchange earnings and outgo

It may be noted that during the year under review, the Company did not have any foreign exchange earnings, but had a foreign exchange outgo of Rs. 0.95 lac.

13. ACKNOWLEDGEMENT

The Directors wish to express their gratitude to all the business associates and to the Investors / Shareholders for the confidence reposed in the Company and its management. The Directors also convey their appreciation to the employees at all levels for their enormous personal efforts as well as collective contribution.

For and on behalf of the Board

Place : Bangalore Sandeep Lakhwara K.R. Krishnamurthy

Date : 12 August, 2010 Managing Director Director

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