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Directors Report of Keerthi Industries Ltd.

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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