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Directors Report of Keerthi Industries Ltd.

Mar 31, 2016

Dear Members,

The Directors have pleasure in presenting their 33rd Annual Report for the Financial Year 2015-16 together with the Audited Balance Sheet as at 31st March, 2016 and the Profit & Loss Account for the year ended on that date.

1. FINANCIAL RESULTS:

('' In Lakhs)

Particulars

2015-16

2014-15

Net Operational Income

18256.65

15291.54

Other income

118.65

118.63

Profit before interest and depreciation

4253.72

2682.85

Less: Interest

618.01

947.01

Less: Depreciation

823.47

825.82

Profit/(Loss) before taxation

2974.80

1044.32

Less : Provision for taxation including deferred tax liability

973.57

(1093.88)

Less: short provision of earlier years

10.07

251.65

Net Profit/(Loss) after taxation

1991.16

1886.55

2. PERFORMANCE OF THE YEAR UNDER REVIEW:

In the Financial year 2015-16, the Company continued its strong growth momentum due to its ability to satisfy its customers and the rigor in following strong internal processes.

Revenue growth in the year remained high. The Operating profit get increased and thereby increasing the net profit.

The Overall revenue for the year 2015-2016 at Rs 18375.30 Lakhs is higher by 19.24% (Rs 15410.17 Lakhs in 2014-2015), operating profit at Rs. 2974.80 Lakhs is higher by 184.86% (Rs. 1044.32 Lakhs in 2014-2015) and the net profit for the year at Rs. 1991.16 Lakhs is higher by 5.55% (Rs. 1886.55 Lakhs in 2014-2015)

Cement Division: Production of Cement and Clinker were 4,12,284 MTS and 4,02,841 MTS respectively during the twelve months ended 31st March, 2016 as against were 3,88,946 MTS and 3,72,780 MTS respectively during the previous year ended 31st March, 2015.

During the year under review 69% of the installed capacity of the Company was utilized.

Wind Power: The Company has generated 28,17,466 units as against 29,48,120 units during the previous year.

Electronic Division: The Company has produced 2,111 sq. mts of Printed Circuit Boards as against 1838 sq. mts during the previous year.

CURRENT YEAR OUTLOOK:

CEMENT DIVISION:

India''s Cement Industry is a vital part of its economy, providing employment to more than a million people, directly or indirectly. India is the second largest producer of cement in the world. Some of the recent major government initiatives such as development of 98 smart cities are expected to provide a major boost to the sector.

Cement demand in India is expected to increase due to government''s push for large infrastructure projects, leading to 45 million _tonnes of cement needed in the next three to four years. In addition, cement production in India is expected to touch 550-600 million tonnes (MT) in the next three to four year.

The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability. However, exorbitant increase in input prices and frequent power holidays are the major constraints to sustain in the market. However, with the bifurcation of Andhra Pradesh into state of Telangana and residuary state of Andhra Pradesh, the construction of new capital and other development measures of both the states as specified in the Andhra Pradesh Reorganization Act 2013 shall spurt enormous demand for the cement and other infrastructure related products. As such, the coming year''s performance is estimated to be good. Despite of few adverse conditions, your Directors are hopeful that the performance of the company would achieve another level of milestone in producing the cement.

ELECTRONIC DIVISION:

The improvement shown in the sales turnover of electronics division is satisfactory. Development of prototypes for new customers in the high-end automobile segment was done during the year. The division expects to improve its customer base in the automobile segment in the years to come. Supply of PCBs for Konkurs missile program is completed for the existing requirements and development of flexi cables for Invar missile program is underway. The division is exploring further opportunities in the defense sector to improve business in the near future.

The division was identified as one of the potential vendors for developing Gas Electron Multiplier (GEM) foils by European Organization for Nuclear Research (CERN) for their Compact Muon Solenoid (CMS) division. Senior Executives of your company visited CERN, Switzerland during the year on CERN''s invitation, for discussions. GEM foils are expected to be developed by electronics division in a time frame of two years. Apart from their present use in scientific experiments at CERN, GEMs are likely to find applications in medical imaging and other areas.

SUGAR DIVISION:

In view of the adverse market for sugar industry and since there is no progress in the division in particular, effective steps could not be taken for furtherance of the business.

3. DIRECTORS:

a) The Company''s Board of Directors have been constituted in compliance with the provisions of Companies Act read with the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("SEBI (LODR) Regulation". The Composition of the Board is as under:

1. Smt. J. Triveni

Executive Chairperson & Whole-time Director

2. Sri. J. S. Rao

Managing Director

3. Sri. J. Sivaram Prasad

Non-Executive Director

4. Sri. K. Harishchandra Prasad

Independent Director

5. Sri. E. Siva Sankaram

Independent Director

6. Sri. Boddu Venkata Subbaiah

Independent Director

b) In accordance with the provisions of

Companies Act, 2013, Sri. J. S. Rao, the Managing Director of the Company would retire by rotation and, being eligible, offer himself for re-appointment. The Board of Directors recommends his re-appointment at the ensuing Annual General Meeting.

c) As required under Section 134 (3) (d) of the Companies Act, 2013, All independent directors have given declarations to the Company that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013.

d) Other Disclosure Board Evaluation

Pursuant to Section 178 (2) of the Companies Act, 2013, the Nomination and Remuneration Committee has evaluated the performance of individual Directors in its duly convened meeting. Pursuant to Section 134 (3) (p) of the Companies Act, 2013 and Regulation 4 (2) (f) (ii) (9) of the ("SEBI (LODR) Regulation (erstwhile Clause 49 of the Listing Agreement) the Board has carried out an evaluation of its own performance, as well as the evaluation of the Committees of the Board. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. Remuneration Policy is stated in the Corporate Governance Report.

Meetings

During the year Four (4) Board Meetings and Four (4) Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

4. DETAILS OF WHOLE-TIME KEY MANAGERIAL PERSONAL (KMP)

During the period under review, Sri. J. S. Rao, Managing Director, Smt. J. Triveni, Executive Chairperson & Whole-time Director, Sri. Y. Venkateswara Rao, Chief Financial Officer and Mr. Rajesh Kumar Yadav, Company Secretary & Compliance Officer are the Whole-Time Key Managerial Personal of the Company.

5. DIVIDEND:

In view of inadequate profits Your Directors regret their inability to recommend any dividend on Equity Shares for the year 2015-2016.

6. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY:

During the period under review, there are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company''s future operations.

7. POSTAL BALLOT

The Company has, on 23rd April, 2015, approved the following resolution through Postal Ballots.

The details have been discussed in the Corporate Governance Report.

8. DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL for dematerialization. All the Shareholders whose shares are in physical mode are requested to dematerialize their share holding through their depository participants so that it will improve the liquidity of our stock. The Board pleased to inform that in compliance with Regulation 39 of the Listing Regulation (erstwhile clause 5A of the listing agreement) entered with Bombay Stock Exchange Limited, the unclaimed equity shares were dematerialized and the same are lying in the DEMAT suspense account. Shareholders are requested to claim their shares in DEMAT form by submitting their claims to the Company/ RTA.

9. DIRECTORS'' RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Companies Act, 2013, your directors confirm:

(a) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures.

(b) That 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 profit and loss of the Company for that period.

(c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities.

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

(e) That 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) That 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.

10. PUBLIC DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 or 74 of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014.

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.

12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the

Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairperson & Managing Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

13. INTERNAL FINANCIAL CONTROL:

The Company has in place adequate internal financial control commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. The Company has a robust financial closure, certification mechanism for certifying adherence to various accounting policies, accuracy of provisions and other estimates.

14. RELATED PARTY TRANSACTIONS:

All transactions entered by the Company with related party were in the ordinary course of the business. The Audit Committee granted approval of the same. There were no materially significant transactions with Related Parties during the financial year 2015-16 which were in conflict with the interest of the Company.

During the year, your Company has entered into following Related Party Transactions as per Section 188 (1) of the Companies Act, 2013:

S.

No

Date of transaction

Nature of Transactions

Amount (In Rs.)

Legal

Framework

Legal

Requirements

Date of Approval obtained

1

22-07-2015

Purchase of equipments and erection and commissioning services from M/s. Green Secure Systems Pvt.

Ltd, a Related Party u/s 2 (76) of the Act.

Rs. 5.6 Crores plus

applicable duties and taxes

Listing Agreement and

Sec-188 (1) (a) of Companies Act, 2013

Board

approval and

Audit

Committee

Board Approval -29-05-2015

Audit Committee approval - 08-082015

S.

No

Date of transaction

Nature of Transactions

Amount (In Rs.)

Legal

Framework

Legal

Requirements

Date of Approval obtained

2

19-12-2015

Sell of Cement to Executive Chairperson of the Company

70,000

Regulation 23 (2) of SEBI Listing Regulation and

Sec-188 (1) (a) of Companies Act, 2013

Prior approval of Audit Committee and Board

Audit Committee approval - 13-112015

Board Approval -13-11-2015

3

16-02-2016

Sell of Cement to Executive Chairperson of the Company

30,750

Regulation 23 (2) of SEBI Listing Regulation and

Sec-188 (1) (a) of Companies Act, 2013

Prior approval of Audit Committee and Board

Audit Committee approval -13-11-2015

Board Approval -13-11-2015

4

*14-02-2016

Appointment of Smt.

J. Sarada Govardhini (Related Party) in place of Profit

Monthly Salary of Rs. 2.50 Lakhs per month

Regulation 23 (2) of SEBI Listing Regulation and

Sec-188 (1) (f) of Companies Act, 2013

Prior approval of Audit Committee and Board

Audit Committee approval -12-02-2016

Board Approval -12-02-2016

5

05-03-2016

Sell of Cement to Executive Chairperson of the Company on Arm''s length price

19,500

Regulation 23 (2) of SEBI Listing Regulation and

Sec-188 (1) (a) of Companies Act, 2013

Prior approval of Audit Committee and Board

Audit Committee approval -12-02-2016

Board Approval -12-02-2016

6

22-03-2016

Sell of Cement to Chief Operating Officer of the Company

45,000

Regulation 23 (2) of SEBI Listing Regulation and

Sec-188 (1) (a) of Companies Act, 2013

Prior approval of Audit Committee and Board

Audit Committee approval -12-02-2016

Board Approval -12-02-2016

*Smt. J. Sarada Govardhini, has been appointed as Chief Operating Officer in accordance with the provisions of Sec 188 (1) of the Companies Act, 2013 for a period of 5 years at proposed remuneration of Rs. 2.50 Lakhs per month upto a maximum of Rs. 4.30 Lakhs per month, which requires prior approval by Ordinary Resolution of Members in the ensuing AGM. The Board recommends the approval of the Shareholders.

15. COST AUDITORS:

Cost Audit records have been maintained by the company for the F.Y.2015-16. Pursuant to the directives of the Central Government and provisions of Section 148 of the Companies Act, 2013, qualified Cost Auditors have been appointed to conduct the cost audit for the F.Y.2015-16.

16. AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, has been appointed for three consecutive years i.e. till the conclusion of 34th AGM (Subject to the ratification by the shareholders at each AGM) by the shareholders at the 31st AGM. The Board of Directors recommends the ratification of appointment of M/s. K.S. Rao & Co., Chartered Accountants, at the ensuing Annual General Meeting.

17. REPLY TO AUDITOR''S COMMENT:

Regarding Auditor''s emphasis matter on confirmation of balances from Sundary Debtors, Sundary Creditors and for Loans and advances, the same were subsequently collected, adjusted and paid.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

Your Company has duly constituted CSR Committee on 29-05-2014. Your Company has incurred losses in the last two years out of the three immediately preceding financial years, Hence, the requirement in connection with spending of money on specified projects under corporate social responsibility rules as envisaged under section 135 (5) of the Companies Act, 2013 are not applicable to the Company in the Financial year 2015-16.

However Your Company has been contributing generously for upliftment of poor and needy people within and immediate vicinity of the factory for their development in education, cultural, vocational and philanthropic activities. Moreover, your company has been providing on job training to students of Engineering collages at free of cost. As a listed company, necessary measures have been taken to comply with the Listing Regulations of Stock Exchanges.

The Annual Report on CSR activities is annexed herewith as: (Annexure C)

19. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s VCSR & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit for the financial year 2015-2016. The Secretarial Audit report is annexed herewith as "(Annexure D)" & "(Annexure D1)"

20. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "(Annexure E)".

21. DISCLOSURE AS PER SECTION 197(12) Refer " (Annexure F)".

22. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS:

The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Day was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant.

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

23. ADDITIONAL INFORMATION:

Information pursuant to Section 134 (3) (l) & (m) of the Companies Act, 2013 is annexed herewith as (Annexure B), which is detailed in Form A and Form B.

24. RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of the Listing Regulation, the company has constituted a risk management committee on is Board Meeting held on 29th May, 2015. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report.

At present the company has not identified any element of risk which may threaten the existence of the company.

25. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS

The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are discussed separately, together with the Certificate from the Practicing Company Secretary of the Company regarding compliance with the requirements of Corporate Governance as stipulated SEBI (LODR) Regulations, 2015.

26. ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank, MID Corporate Branch Somajiguda, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Telangana & Andhra Pradesh. Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned.

By Order of the Board of Directors

Sd/-

Place: Hyderabad (J. Triveni)

Date: 28-05-2016 Executive Chairperson

DIN: 00029107


Mar 31, 2014

Dear Members,

The Directors are pleased to present your Company''s 31st Annual Report for the Financial Year 2013-14 together with the Audited Balance Sheet as at 31st March, 2014 and the Profit & Loss Account for the year ended on that date.

FINANCIAL RESULTS: (Rs. In Lakhs)

2013-14 2012-13

Net Operational Income 12506.71 10769.28

Other income 109.77 55.78

Profit before interest and 400.69 (146.56) depreciation

Less: Interest 897.47 897.89

Less: Depreciation 1352.73 1372.68

Profit/(Loss) before taxation (1849.51) (2417.13)

Less : Provision for taxation (45.06) (36.98) including deferred tax liability_

Less: short provision of 0.00 0.96 earlier years

Net Profit/ILoss) after" (1804.45) (2455.07) taxation

Less: Capital Redemption 0.00 150.00 Reserve

Add: Surplus Brought 1194.95 3800.02 Forward from previous years_

Balance carried to Balance (609.50) 1194.95 Sheet



OPERATIONS:

During the year 2013-14, your Company witnessed reduced performance. While, our revenues increased by 16.13% over the previous year, Rs.710.31 Lakhs of cash loss was incurred due to drop in margins and lower demand for the cement in the cement division.

Cement Division: Production of Cement and Clinker were 3,95,268 MTS and 3,54,323 MTS respectively during the twelve months ended 31st March, 2014 as against 3,29,357 MTS and 2,96,770 MTS respectively during the previous year. In view of strained cash flows, the finance facilities (working capital and term loans) of the company availed from the Canara Bank, Andhra Bank and Indian Bank has been restructured to align the future cash flows. The same was discussed elaborately elsewhere in the Annual report.

l During the year under review 67% of the installed capacity of the Company was utilised.

Wind Power: The Company has generated 35, 36,160 units as against 32, 76,684 units during the previous year.

Electronic Division: The Company has produced 2028 sq.mts of Printed Circuit Boards as against 2233 sq.mts during the previous year.

FUTURE PROSPECTS:

CEMENT DIVISION:

India''s potential in infrastructure is vast and cement plays a vital role in the growth and development of the nation. India is the second largest producer of cement in the world. The cement industry has been expanding on the back of increasing infrastructure activities and demand from housing sector over the past many years. An investment allowance for infrastructure projects of Rs 100 crore (US$ 16.05 million) and above has also been announced by the Government.In addition, cement production in India is expected to touch 407 million tonnes (MT) by 2020.

The Sudden burst in capacity expansion in the industry situated in southern region coupled with low demand growth led to fierce competition for market share which resulted in prices dropping to unremunerative levels. The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability. However, exorbitant increase in input prices and frequent power holidays are the major constraints to sustain in the market. However, with the bifurcation of Andhra Pradesh into state of Telangana and residuary state of Andhra Pradesh, the construction of new capital and other development measures of the both the states as specified in the Andhra Pradesh Reorganization Act 2013 shall spurt enormous demand for the cement and other infrastructure related products. As such, the coming year''s performance is estimated to be good. Despite of few adverse conditions, your Directors are hopeful that the performance of the company would achieve satisfactory level.

ELECTRONIC DIVISION:

The improvement shown in the sales turn over of electronics division is satisfactory. Development of prototypes for new customers in the high-end automobile segment was done during the year. The division expects to improve its customer base in the automobile segment in the years to come. Supply of PCBs for Konkurs missile program is completed for the existing requirements and development of flexi cables for Invar missile program is underway. The division is exploring further opportunities in the defense sector to improve business in the near future.

The division was identified as one of the potential vendors for developing Gas Electron Multiplier (GEM) foils by European Organization for Nuclear Research (CERN) for their Compact Muon Solenoid (CMS) division. Senior Executives of your company visited CERN, Switzerland during the year on CERN''s invitation, for discussions. GEM foils are expected to be developed by electronics division in a time frame of two years. Apart from their present use in scientific experiments at CERN, GEMs are likely to find applications in medical imaging and other areas.

SUGAR DIVISION:

The Company has planned to install 3500 TPD integrated sugar mill,50 KLPD ethanol Plant and 20 MW Co-generation power plant with an estimated cost of 319.92 Crores at Mosttor Village, Yadgir Dist in the state of Karnataka. Order for project preplanning has been given to M/s. MITCON Consultancy Services Limited. The Company has secured In-principle approval from the Government of Karnataka for establishing the integrated sugar project. The company has purchased Acres 97 and 19 gunats of land for establishment of the project. The requisite approvals under Environment laws and other project related statutory compliance are under progress. Considering the operational difficulties, the Chief Director (Sugar), Department of Food and public distribution, Ministry of Consumer affairs, New Delhi has extended the validity period of our Industrial Entrepreneurs Memorandum (IEM) up to 27-07-2014 whereby the unit should be commissioned and achieve the commercial production. The financial syndication for sugar division becomes a tedious task for the company in view of weak performance of cement division in general and the lackluster performance of sugar industry. In view of the adverse market for sugar industry and on going cash crunch in the company, could not take "effective steps" as defined in sugar control order to implement the sugar project.

DIRECTORS:

In accordance with the provisions of Companies Act, 1956 Sri. J Sivarama Prasad Non Executive Director of the Company would retire by rotation and, being eligible, offer himself for re-appointment.

In view of new legislative changes, we have received proposals from the shareholders for reappointment of Sri E Siva sankaram, Sri BV Subbaiah and Sri K Harishchandra Prasad non executive directors as Independent directors of the Company in the ensuing Annual General meeting in accordance with Section 149 of the Companies Act, 2013 and clause 49 of the listing agreement for a period of five years. The profiles of the reappointed directors are mentioned elsewhere in the report.

DIVIDEND:

In view of severe cash losses, your Board could not recommend any dividend for the financial year 2013-2014.

REDEEMABLE PREFERENTIAL SHARES:

The second installment of Rs.35/- each on first tranche of 500000, 9% non convertible redeemable preferential shares of Rs.l00/-each could not paid on due date, due to no accumulated profits and adverse market for issue of new preferential shares. Your directors are taking steps for extension of period of redemption of 9 % redeemable preferential shares by 3 more years for which preferential shareholder has kindly agreed. The company will initiate postal ballot process to secure the necessary consent from the equity shareholders for extending the period of redemption of 9 % redeemable preferential shares by 3 more years.

DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL for dematerilisation. All the Shareholders whose shares are in physical mode are requested to dematerialize their share holding through their depository participants so that it will improve the liquidity of our stock. The Board pleased to inform that in compliance with clause 5A of the listing agreement entered with Bombay Stock Exchange Limited, the unclaimed equity shares were dematerialized and the same are lying in the DEMAT suspense account. Shareholders are requested to claim their shares in DEMAT form by submitting their claims to the Company/RTA.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended on 31st March, 2014, the applicable accounting standards have been followed along with proper , explanation relating to material departures;

(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 and of the loss of the company for the year under review.

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

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2014 on a going concern basis.

PUBLIC DEPOSITS:

Your Company has no public deposits in accordance with Section 73 or 74 of the Companies Act, 2013

COST AUDITORS:

Cost Audit records have been maintained by the company for the F.Y.2013-14. Pursuant to the directives of the Central Government and provisions of Section 148 of the Companies Act, 2013, qualified Cost Auditors have been appointed to conduct the cost audit for the F.Y.2013-14.

REPLY TO AUDITOR''S QUALIFICATIONS:

Regarding Auditor''s emphasis matter on confirmation of balances from Sundry Debtors, Sundry Creditors and for Loans and Advances, the same were subsequently collected, adjusted and paid.

AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, the present Auditors, retires at the ensuing Annual General Meeting, and is eligible for reappointment.

PERSONNEL:

Employer-Employee relations remained cordial during the year under review. Your Directors place on record their sincere appreciation of the contribution made by the employees of the Company at all levels. As regards, information pursuant to Section 217(2AA) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (as amended), there are no employees governed by the said provisions.

HEALTH AND SAFETY:

The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Piy was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant.

CORPORATE SOCIAL RESPONSIBILITY:

Your company has been contributing generously for upliftment of poor and needy people within and immediate vicinity of the factory for their development in education, cultural, vocational and philanthropic activities. Moreover, your company has been providing on job training to students of Engineering collages at free of cost. As the company has been incurring losses for the last two years, the rules in connection with spending of money on specified projects under corporate social responsibility rules are not applicable to the Company.

ADDITIONAL INFORMATION:

Information pursuant to Section 217(e)&(2A) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith.

ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank, Somajiguda Branch, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Telangana. Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned.

By Order of the Board of Directors

Place: Hyderabad (J. Triveni) Date: 29-05-2014 Executive Chairperson


Mar 31, 2013

Dear Members,

The Directors are pleased to present your Company''s 30th Annual Report for the Financial Year 2012-13 together with the Audited Balance Sheet as at 31st March, 2013 and the Profit & Loss Account for the year ended on that date.

FINANCIAL RESULTS: (Rs.in Lakhs)

2012-13 2011-12 Net Operational Income 10769.28 17593.25

Other income 55.78 48.71

Profit before interest and (146.56) 4240.97 depreciation

Less: Interest 897.89 953.23

Less: Depreciation 1372.68 1356.95

Profit/(Loss) before taxation (2417.13) 1930.79

Less : Provision for taxation 36.98 714.03 including deferred tax liability

Less: short provision of 0.96 22.79 earlier years

Net Profit/(Loss) after (2455.07) 1193.97 taxation

Less: Capital Redemption 150.00 Reserve

Add: Surplus Brought 3800.02 2606.05

Forward from previous years

Balance carried to Balance 1194.95 3800.02 Sheet

OPERATIONS:

During the year 2012-13, Keerthi industries Ltd witnessed lackluster performance. While, our revenues decreased by 38.78% over the previous year, Rs.1082.38 Lakhs of cash loss accrued on account of emaciated margins and lower demand and couple of other reasons in the cement division.

Cement Division: The production of Cement and Clinker were 3,29,357 MTS and 2,96,770 MTS respectively during the twelve months ended 31st March, 2013 as against 4,85,391 MTS and 4,28,303 MTS respectively during the previous year.

During the year under review the capacity of the Company was augmented at 55% of the installed capacity.

Wind Power: The Company has generated 32,76,684 units as against 34,88,954 units during the previous year .

Electronic Division: The Company produced 2233 sq.mts of Printed Circuit Boards as against 2087sq. mts during the previous year.

FUTURE PROSPECTS:

CEMENT DIVISION:

Country''s cement production is likely to raise by 6.4 per cent this fiscal, due to the continued fillips given for the infrastructure projects. The Company expects to sustain and improve the output levels during the year. Also, the Company will have the benefit of increased production from its capacity enhancement project, which will enable the Company to meet the market demand for cement. The Sudden burst in capacity expansion in the industry situated in southern region coupled with low demand growth led to fierce competition for market share which resulted in prices dropping to unremunerative levels. The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability. However, exorbitant increase of input prices of cement and frequent power holidays are the major constraints to sustain in the market. However, the slew of economic reforms announced by the Government and expectation of RBI lowering interest rates will boost sentiments and kick start the sagging construction industry. Despite of few adverse conditions, your Directors are hopeful that the performance of the company would achieve satisfactory level.

ELECTRONIC DIVISION:

The Division is taking the necessary steps to streamline the operations and expects to improve the performance by increasing the sales volumes. The division has shown considerable progress in terms of sales turn over. The increase in turn over is a result of improved business from health care and defense sectors. There is an appreciable growth in the off take to these segments in the year under review. The division is optimistic in developing new customer base in the automobile segment. Development of new PCBs for the existing and new missile programs is under way for defense sector. The division is working closely with the indigenization team of Bharat Dynamics Limited, Bhanur for the introduction of these PCBs.

SUGAR DIVISION:

The Company has planned to install 3500 TPD integrated sugar mill,50 KLPD ethanol Plant and 20 MW Co-generation power plant with an estimated cost of 319.92 Crores at Mosttor Village, Yadgir Dist in the state of Karnataka. Order for project preplanning has been given to M/s. MITCON J

Consultancy Services Limited. The Company has secured In-principle approval from the Government of Karnataka for establishing the integrated sugar project. The company has purchased Acres 97 and 19 gunats of land for establishment of the project. The requisite approvals under Environment laws and other project related statutory compliance are under progress. Considering the operational difficulties, the Chief Director (Sugar), Department of Food and public distribution, Ministry of Consumer affairs, New Delhi has extended the validity period of our Industrial Entrepreneurs Memorandum (IEM) up to July 2014 whereby the unit should be commissioned and achieve the commercial production. The financial syndication for sugar division becomes a tedious task for the company in view of worst performance of cement division in general and in particular the lackluster performance of sugar industry. The company has been scouting for strategic partners for implementation of the said project.

DIRECTORS:

In accordance with the provisions of Companies Act, 1956 and the Company''s Articles of Association, Sri K Harishchandra Prasad and Sri. BV Subbaiah Directors of the Company would retire by rotation and, being eligible, offer themselves for re-appointment.

DIVIDEND:

In view of severe cash losses, your Board could not recommend any dividend for the financial year 2012-2013.

REDEEMABLE PREFERENTIAL SHARES:

The first installment of Rs.30/- each on the first tranche of 500000, 9% non convertible redeemable preferential shares of Rs.100/- each has paid on due date.

DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL for dematerilisation. All the Shareholders whose shares are in physical mode are requested to dematerialize their share holding through their depository participants so that it will improve the liquidity of our stock. The Board pleased to inform that in compliance with clause 5A of the listing agreement entered with Bombay stock exchange limited, 8832 unclaimed equity shares were dematerialized and the same are lying in the DEMAT suspense account. Shareholders are requested to claim their shares in DEMAT form by submitting their credentials with the Company/ k RTA.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended on 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(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 and of the Profit of the company for the year under review.

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

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2013 on a going concern basis.

PUBLIC DEPOSITS:

Your Company has not invited any deposits from public / shareholders in accordance with the Section 58A of the Companies Act, 1956.

COST AUDITORS:

Cost Audit records have been maintained in respect of Cement and power divisions for the FY.2012- 13. Pursuant to the directives of the Central Government and provisions of Section 233B of the Companies Act, 1956, qualified Cost Auditors have been appointed to conduct the cost audit for the FY.2012-13.

REPLY TO AUDITOR''S QUALIFICATIONS:

Regarding Auditor''s emphasis matter on confirmation of balances from Sundry Debtors, Sundry Creditors and for Loans and Advances, the same were subsequently collected, adjusted and paid.

AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, the present Auditors, retires at the ensuing Annual General Meeting, and is eligible for reappointment. J

PERSONNEL:

Employer-Employee relations remained cordial during the year under review. Your Directors place on record their sincere appreciation of the contribution made by the employees of the Company at all levels. As regards, information pursuant to Section 217(2AA) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (as amended), there are no employees governed by the said provisions.

HEALTH AND SAFETY:

The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Day was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant.

CORPORATE SOCIAL RESPONSIBILITY:

Your company has been contributing generously for upliftment of poor and needy people within and immediate vicinity of the factory for their development in education, cultural, vocational and philanthropic activities. Moreover, your company has been providing on job training to students of VNR VJIET Engineering collage at free of cost.

ADDITIONAL INFORMATION:

Information pursuant to Section 217(e)&(2A) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith.

ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank, Somajiguda Branch, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Andhra Pradesh. Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned.

By Order of the Board of Directors

Sd/-

Place: Hyderabad (J. Triveni)

Date: 29-05-2013 Executive Chairperson


Mar 31, 2012

The Directors are pleased to present your Company's 29th Annual Report for the Financial Year 2011-12 together with the Audited Balance Sheet as at 31st March, 2012 and the Profit & Loss Account for the year ended on that date.

FINANCIAL RESULTS: (Rs. In Lakhs) 2011-12 2010-11

Net Operational Income 17593.25 8353.84

Other income 48.71 40.68

Profit before interest and 4240.97 1338.11 depreciation

Less: Interest 953.23 421.96

Less: Depreciation 1356.95 669.51

Profit/(Loss) before taxation 1930.79 246.65

Less : Provision for taxation 714.03 69.46

Less: short provision of 22.79 -

earlier years

Add: excess provisions of - 31.21

earlier years

Net Profit after taxation 1193.97 208.40

Add: Surplus Brought 2606.05 2397.65

Forward from previous years

Balance carried to Balance 3800.02 2606.05 Sheet

OPERATIONS:

During the year 2011-12, Keerthi industries Ltd witnessed splendid performance. While, our revenues increased 210% over the previous year, our post-tax profit surged manifold on account of increased margins and augmentation of additional capacity in cement division.

Cement Division: The production of Cement and Clinker were 4,85,391 MTS and 4,28,303 MTS respectively during the twelve months ended 31st March, 2011 as against 2,77,716 MTS and 2,21,259 MTS respectively during the previous year.

During the year under review the Company was augmented at 81% of the installed capacity. In view of augmentation of additional capacity, the operational results of the company during the year are not comparable with the previous year.

Wind Power: The Company has generated 34,88,954 KWH as against 27,71,454 KWH during the previous year .

Electronic Division: The Company produced 2087 sq.mts of Printed Circuit Boards as against 1441sq.mts during the previous year.

FUTURE PROSPECTS: CEMENT DIVISION:

Demand for cement is expected to grow at 8% in the coming year due to the continued fillips given for the infrastructure projects. The Company expects to sustain and improve the output levels during the year. Also, the Company will have the benefit of increased production from its capacity enhancement project, which will enable the Company to meet the increased market demand for cement. The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability. However, exorbitant increase of input prices of cement and frequent power holidays are the major constraints to sustain in the market. Despite of few adverse conditions, your Directors are hopeful that the performance of the company would achieve satisfactory level.

ELECTRONIC DIVISION:

The division will continue to strengthen the PCB edge, timely expansion, the PCB business to do fine and stronger. The Company is taking the necessary steps to streamline the operations and expects to improve the performance by increasing the sales volumes. The Company has approached to various defense PSUs to secure the work orders for manufacturing rigid PCB and the responses received from them are quite optimistic. During the year under review there is an appreciable improvement in the performance of electronic division. The division has shown more than 30% growth in sales volume and proportionate increase in operating profit. The division has established a loyal customer base in health care instrumentation segment. The high temperature resistant cables made by the division for a defense PSU have been approved for use in their missile programme. There is an improvement in the projected off take to the above segments in the next financial year.

SUGAR DIVISION

The Company has planned to install 3500 TPD integrated sugar mill,50 KLPD ethanol Plant and 20 MW Co-generation power plant with an estimated cost of 31992 Lakhs at Mosttor Village, Yadgir Dist in the state of Karnataka. Order for project preplanning has been given to M/s. MITCON Consultancy Services Limited. The Company has secured In-principle approval from the Government of Karnataka for establishing the integrated sugar project. The company has purchased Acres 97 and 19 gunats of land for establishment of the project. The requisite approvals under Environment laws and other project related statutory compliance are under progress. Considering the operational difficulties, the Chief Director (Sugar), Department of Food and public distribution, Ministry of Consumer affairs, New Delhi has extended the validity period of our Industrial Entrepreneurs Memorandum (IEM) up to 26th July, 2014 whereby the unit should be commissioned and achieve the commercial production.

DIRECTORS:

In accordance with the provisions of Companies Act, 1956 and the Company's Articles of Association, Sri E Siva Sankaram and Sri. J Sivaram Prasad directors of the Company would retire by rotation and, being eligible, offer themselves for re- appointment.

DIVIDEND:

Having applied the internal accrued funds of Rs. 2400 Lakhs for cost escalation of the project at cement division and on going redemption plan of first trench of 9% Cumulative Redeemable preferential shares in the month of November 2012, your Board could not recommend any dividend for the financial year 2011-2012.

OPTIONALLY CONVERTIBLE DEBENTURES/ PREFERENTIAL SHARES:

The 9% Optionally Fully Convertible unsecured Debentures of face value of Rs.100/- each aggregating value of Rs. 770.98 allotted to various shareholders in pursuant to Scheme of amalgamation sanctioned by Honorable High court of Andhra Pradesh has been redeemed. The First tranche of 9% redeemable preferential shares have fallen due for redemption by November, 2012.

DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL for demat. All the Shareholders whose shares are in physical mode are requested to dematerialize their share holding through their depository participants so that it will improve the liquidity of our stock.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors'

Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the accounts for the financial year ended on 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(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 and of the Profit of the company for the year under review.

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

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2012 on a going concern basis.

PUBLIC DEPOSITS:

Your Company has not invited any deposits from public / shareholders in accordance with the Section 58A of the Companies Act, 1956.

COST AUDITORS:

Cost Audit records have been maintained in respect of Cement and power divisions for the F.Y.2011-

12. Pursuant to the directives of the Central Government and provisions of Section 233B of the Companies Act, 1956, qualified Cost Auditors have been appointed to conduct the cost audit for the F.Y.2012-13.

REPLY TO AUDITOR'S QUALIFICATIONS:

Regarding Auditor's Qualification on confirmation of balance from Sundry Debtors, Sundry Creditors and for Loans and Advances, the management is confident of realizing the receivables at the stated values other than those disclosed as doubtful and in the process of obtaining confirmation from the parties.

AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, the present Auditors, retires at the ensuing Annual General Meeting, and is eligible for reappointment.

PERSONNEL:

Employer-Employee relations remained cordial during the year under review. Your Directors place on record their sincere appreciation of the contribution made by the employees of the Company at all levels. As regards, information pursuant to Section 217(2AA) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (as amended), there are no employees governed by the said provisions.

HEALTH AND SAFETY:

The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Day was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant.

ADDITIONAL INFORMATION:

Information pursuant to Section 217(e)&(2A) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith.

ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank, Somajiguda Branch, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Andhra Pradesh. Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned.

By Order of the Board of Directors

Place: Hyderabad (J. Triveni)

Date: 01-09-2012 Executive Chairperson


Mar 31, 2010

The Directors are pleased to present your Companys 27th Annual Report for the Financial Year 2009-10 together with the Audited Balance Sheet as at 31st March, 2010 and the Profit & Loss Account for the year ended on that date.

FINANCIAL RESULTS:

(Rs. lakhs) 2009-10 2008-09 (9 months)

Operational Income 7789.61 7774.52

Operating Profit/(Loss) 1263.35 1764.97

Depreciation & Interest 354.05 272.89

Profit/(Loss) for the year 909.30 1492.08

OPERATIONS:

The performance of your company for the year under review was satisfactory in spite of steep fall in cement prices for last six months. Another reason was sluggish market demand coupled with excess supply of cement in the market which resulted in steep fall in cement prices. Due to the implementation of capacity expansion, the Company has shutdown its plant from the month of February 2010 for erecting the expanded cement capacity, which lead to the revenue loss for the last quarter of the year.

Cement Division: The production of Cement and Clinker were 2,80,107 MTS and 2,72,078 MTS respectively during the twelve months ended 31st March, 2010 as against 2,34,378 MTS and 2,23,183 MTS respectively during the previous year(nine months).

Wind Power: The Company has generated 31,42,779 KWH as against 24,99,271 KWH during the previous year (nine months).

Electronic Division: The company produced 3,349 sq.mts of PCB as against 3,343 sq.mts during the previous year(nine months).

FUTURE PROSPECTS:

CEMENT DIVISION:

Your Company initiated capacity expansion and de- bottlenecking programs to maintain growth and improve efficiencies. The trial production of the expanded capacity began in the month of August, 2010. With the expanded capacity of 900 TPD, your Companys total capacity will be 1800 TPD.

The last few years have been a golden period for cement manufacturers when the government increased spending on infrastructure development. High commercial activity and rising demand for housing on account of higher per capita income has kept cement offtake growth in double digits. The main factors behind increase in demand of cement were: 60 percent higher Public Sector Development Projects allocation, increasing number of real estate development projects for commercial and residential use, developing export market.

The sharp decline in cement prices were due to domestic competition among producers squcesing the profitability of the industry. Thus, your Directors are confident that the performance of the company would be much better in the current year.

ELECTRONIC DIVISION:

The division will definitely continue to strengthen the PCB edge, timely expansion, the PCB business to do fine and stronger. The Company is taking the necessary steps to streamline the operations and expects to improve the performance by increasing the sales volumes.

WIND POWER DIVISION:

Wind energy, with an average growth rate of 30%, is the fastest growing source of renewable energy in the world. India occupies the fifth place in the world in wind energy generation after USA, Germany, Spain, and China. New technological developments in wind energy design have contributed to the significant advances in wind energy penetration and to get optimum power from available wind. In this study, an attempt has been made to analyze and review the development and dissemination of wind energy in India.

SCHEME OF ARRANGEMENT

During the period under report, the Honble High Court of Andhra Pradesh vide order dated 19th January, 2010, sanctioned the Scheme of Arrangement, whereupon the erstwhile Hyderabad Flextech Limited stands merged with the company. The said order was filed with Registrar of Companies and subsequently got approval for the same.

LISTING APPROVAL FOR NEW SHARES ISSUED PURSUANT TO THE SCHEME OF AMLAGAMATION

The Bombay Stock Exchange has given listing permission for listing of 2,21,588 equity shares issued to shareholder of Hyderabad Flextech Limited pursuant to the Scheme of Amalgamation as approved by the Honble High Court of Andhra Pradesh.

DEMAT OF SHARES:

The Equity Shares of your Company have been admitted by CDSL/NSDL for demat.

DIRECTORS:

In accordance with the provisions of Companies Act, 1956 and the Companys Articles of Association, Sri E.Siva Sankaram and Sri J.Sivaram Prasad, Directors would retire by rotation and, being eligible, offer themselves for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed: (i) That in the preparation of the accounts for the financial year ended on 31st March, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures; (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 and of the Profit of the company for the year under review. (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting iscords 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; and (iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2010 on a going concern basis.

REPLY TO AUDITORS QUALIFICATIONS.

Regarding Auditors Qualification on confirmation of balance from Sundry Debtors, Sundry Creditors and for Loans and Advances, the management is confident of realising the receivables at the stated values other than those disclosed as doubtful and in the process of obtaining confirmation from the parties.

AUDITORS:

M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, the present Auditors, retires at the ensuing Annua! General Meeting, and are eligible for re- appointment.

PERSONNEL:

Employer-Employee relations remained cordial during the year under review. Your Directors place on record their sincere appreciation of the contribution made by the employees of the Company at all levels. As regards, information pursuant to Section 217(2AA) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (as amended), there are no employees governed by the said provisions.

ADDITIONAL INFORMATION:

Information pursuant to Section 217(e)&(2A) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed herewith.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Cement Division:

Industry Structure and Developments:

The Indian economic growth rate has been quite rapid compared to other emerging economies primarily due to higher reliance on domestic demand. The growth trajectory is expected to continue on the back of strong domestic demand and huge outlay on infrastructure planned by the Government. The long-term domestic outlook remains buoyant with the progressive reforms, increasing FDI, robust investments, growing incomes and aspirations. India being one of the major producers of cement and the demand is largely based on Infrastructure Projects, Urban development and housing, Roads and Buildings, Ports etc., However, the cost of the raw material and fuel namely Limestone, Coal, Power and Freight charges are all controlled by the Government and any increase in the price of the above mentioned items affects the cost of the production on which the company does not have any control. Thus, industry has been to in ups and downs. The Government spending on infrastructure is likely to benefit the revenue and earnings of all the cement companies across the country.

Opportunities and Threats:

The demand will be driven by Governments continued thrust on infrastructure development and to boost rural and housing sector. Infrastructure development is need of the nation, this along with rising housing provision will accelerate construction activity. Recovery of the global scenario could also provide impetus to economic growth and Cement demand.

Concerns of the Indian Cement Industry are high cost of Power and Coal, high freight cost, inadequate infrastructure, non availability of Wagons, poor quality of coal and heavy taxes/ royalty levies.

Electronic Division:

Industry Structure and Developments:

Your Company is one of the few companies specialized in manufacturing flexible printed circuit boards in India. The flexible PCBs being sold by the Company in India is an import substitute. The PCB industry purely depends on growth of electronic industry. The Electronic Industry is looking up and doing well, giving a scope for PCB industry to expand.

Opportunities and Threats:

Spreading into domestic market, as an import substitute, is a major opportunity for the Company. However, due to fall in exports, there is a constraint on DTA eligibility. Therefore, the Company would have to make DTA sales by paying full Excise Duty, which is an additional burden on the margins. The company has been following this system through out the year under review.

Wind Power Division:

Industry Structure and Developments:

India began wind development in the 1990s, and development has only begun to take off in the last few years. Although a relative newcomer to the wind industry compared with Denmark or the US, a combination of domestic policy support for wind power and the rise of a leading global wind turbine manufacturer have led India to become the country with one of the largest installed wind power capacity in the world, and the wind energy leader in the developing world.

Opportunities and Threats:

However, fundamental risks in the Indian market remain, making international manufacturers somewhat reluctant to invest. In addition, Indias relatively undeveloped national infrastructure meant that transport and installation of megawatt-scale wind power technology was impossible until recently. In addition, we have been undergoing power sector reforms of varying degrees, and the impact of such reforms on renewable energy is still somewhat uncertain.

Segment or product-wise performance:

Segment-wise or product-wise performance has already been furnished elsewhere in this report.

Outlook:

This has been discussed elsewhere in this Report.

Internal control systems and their adequacy:

The company is following a proper and adequate system of internal controls in respect of all its activities including safeguarding and protecting its assets against loss from unauthorized use of disposition. Further all transactions entered into by the company are duly authorized and recorded correctly. M/s. Pavuluri & Co., Chartered Accountants, Hyderabad have been working as the Internal Auditors of the company. The Internal Auditors are submitting reports to the company on a Quarterly basis.

Financial/operational performance:

This has been already discussed elsewhere in this Report.

Human Resources/Industrial Relations:

The company enjoys very cordial industrial relations, due to which there is very low employee/labour turnover in the company. You will be happy to note that ever since the inception of the Company, there were no strikes, lockouts, lay-offs, retrenchments, etc.

ACKNOWLEDGEMENTS:

Your Directors are thankful to Canara Bank, Somajiguda Branch, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti. for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Andhra Pradesh.

Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned.

By Order of the Board of Directors



Place: Hyderabad (J. Triveni)

Date: 30-08-2010 Executive Chairperson

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