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Directors Report of Kuantum Papers Ltd.

Mar 31, 2014

Dear Members,

The Directors take pleasure in presenting the 17th Annual Report on the business and operations, together with audited statements of Accounts of your Company, for the financial year ended 31 March 2014.

FINANCIAL HIGHLIGHTS

The summarized financial results of the Company for the year 2013-14 are given hereunder.

(Rs. in lacs)

2013-14 2012-13

Sales & other income 50,872.03 44,797.55

Operating Profit 7,745.24 5,987.53

Interest 2,159.86 2,291.12

Gross Profit 5,585.38 3,696.41

Depreciation 1,853.68 1,569.93

Profit before tax 3,731.70 2,126.48

Provision for

* Current Tax (790.28) (425.46)

* Deferred Tax charge for the year (813.30) (845.13)

* Deferred Tax charge for prior years 436.27 -

* MAT credit entitlement 790.28 425.46

Net Profit after tax 3,354.67 1,281.35

Balance b/f from previous year 4,037.01 2,807.65

Profit available for appropriations 7,391.67 4,089.00

Appropriations:- Proposed Dividend on

(a) Equity shares - -

(b) Preference Shares @ Rs. 1.00 Per share (Pro-rata) 164.38 1.71

(c) Tax on dividend 27.94 0.29

(d) Capital Redemption Reserve - 50.00

(e) General Reserve - - Balance carried to Balance Sheet 7,199.35 4,037.00

DIVIDEND

Your Directors have recommended a dividend of Rs. 1.00 per share (previous year Rs. 0.70 per share) on the Redeemable Preference Shares of Rs.10/- each, on the preference share capital, on pro-rata basis, for the year ended 31 March 2014 amounting to Rs. 164.38 lacs and to pay a dividend tax of Rs. 27.94 lacs thereon. No dividend has been recommended on the equity shares to conserve and plough back the resources for the ongoing and upcoming capex projects.

OPERATIONS

The production of paper during the year under review was 97,572 metric tonnes as against 1,00,218 metric tonnes in the previous year. The quantitative figure for the sale of paper was 97,535 metric tonnes this year, leaving closing stock of 35 metric tonnes, as against the sale of 1,00,218 metric tonnes in the previous year. The production during the year was slightly lower during the current year due to better product mix but leading to higher sales realizations as also higher production of copier and other premium quality paper compared to the previous year.

The figures given in the Financial Highlights for the current year under review show the following trends over the previous year;

Gross sales turnover and other income is up by 13.56% at Rs. 50,872.03 lacs, operating profit is up by 29.35% at Rs. 7,745.24 Lacs, Profit before Tax is up by 75.48% at Rs. 3,731.70 lacs. Net profit after tax is up by 161.80% and stands at Rs. 3,354.67 lacs.

There has been a significant improvement in the profitability during the year under review compared to the previous year which is mainly due to higher sales realizations, better product mix and brand equity, improved quality and higher volumes of premium quality paper products like copier and surface sized paper. This is despite the increase in the input costs in terms of raw materials, fuel and chemical costs, imported pulp due to the high volatility in US $ and consequent high depreciation in the Indian currency and high interest costs.

The initiatives taken by your company in increasing productivity and efficiency have led to improvement of the operational performance, which is visible from the operational performance for the year under review. The results of cost reduction initiatives and operational efficiencies will be further visible in the current financial year 2014-15 as your company has continued the initiatives to optimize capacity utilization, cost reduction initiatives, innovation of new products and is further undertaking modification and up- gradation of pulp mill and paper machines for improving the product quality vis-a-vis cost reduction initiatives. The projects are in progress and will be commissioned during the current year 2014-15.

The Mill Expansion Plan implemented in the previous years, has made your company one of the most cost competitive paper mills, as also one of the large paper player in the writing and printing segment. Further continuous innovative initiatives have enabled the mill to manufacture papers of distinctive prime quality, which is competing with the premium quality of other large paper mills.

Writing & printing paper segment have witnessed optimum capacity utilizations levels over the past few years due to significant demand growth. This led to large capacity additions in recent years and demand is taking its time to absorb these capacity accretions. Despite this trend, your company has been able to operate at almost optimum levels of production and sale, and has been able to offset the associated negatives to a large extent.

As per CRISIL estimates, the demand for Paper and Paperboard will continue to grow at a steady pace over next 5 years. Demand for Writing & Printing paper is expected to grow to 5.2 million tonnes in 2017-18, a CAGR of 6.5-7 per cent. The key drivers for this growth are the Government''s emphasis on education and literacy and its spending on the education, corporate spending on stationery and advertisement, coupled with growth in organised retail and demand for better-quality paper. However, growth in demand in 2014-15 is expected to be moderate at 5.5% on the back of a weak macroeconomic environment unless substantive policy measures are undertaken by the Govt. to boost investment sentiment. Between 2015-16 to 2017-18 growth in demand is expected to be at 6.5-7%. Within the writing & printing paper segment, the demand for copier paper is expected to grow at the fastest pace at CAGR of 12.6% on account of rise in the corporate spending in stationery. This is because a rise in corporate spending on stationery has translated into considerable demand for high-quality copier paper from the office printing segment.

Demand for Creamwove Paper (the most widely-used variety in Indian school textbooks), which accounted for 44 per cent of W&P paper demand in 2012-13 compared to 50% in 2007-08, is expected to grow at a steady pace as more new educational institutions are likely to come up in the country between 2014-15 and 2016-17, as an outcome of the Indian Government''s Right to Education (RTE) initiative. Creamwove continues to the largest contributor to the W&P demand. Additionally, initiatives like Rashtriya Madhyamik Shiksha Abhiyan and Sarva Shiksha Abhiyan will continue to boost the paper demand.

The detailed performance of Company''s operations for the year ended 31 March 2014 has been stated in the Management Discussion & Analysis Report which appears as a separate statement in the Annual Report.

FINANCE

(a) Project finance

Punjab National Bank has sanctioned a term loan of Rs. 2,000 lacs. The disbursement of the loan has commenced during the year under review.

(b) Working capital

The enhanced working capital limits amounting to Rs. 10,325 lacs (fund based Rs. 5,000 lacs & non-fund based Rs. 5,325 lacs) have been appraised and sanctioned by the Banks.

(c) Fixed Deposits

As on 31 March, 2014, your Company had Fixed Deposits of Rs. 1,984.12 lacs. There were no overdue deposits as on 31 March 2014. There was no failure in making repayment of the fixed deposits on maturity, including interest due thereon, in terms of the conditions of your Company''s Fixed Deposits Scheme.

The above deposits have been accepted for a period of 1 year to 3 years as per the Fixed deposit Scheme duly approved by the Board in its meeting held on 13 September 2013 pursuant to the provisions of Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules 1975. However, as per the provisions of Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules 2014, all the deposits accepted pursuant to the provisions of Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules 1975 are required to be mandatorily repaid within one year from the date of commencement of Act i.e. 1 April 2014 or from the date on which such payments are due, whichever is earlier.

Henceforth, the fixed deposits will be invited, accepted and renewed as per the relevant provisions of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules 2014 upon compliance of the procedure laid down therein. Necessary steps towards the same are underway and the deposits will be invited, accepted and renewed in accordance with the new provisions.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure, which forms part of this Report.

PERSONNEL

Relationship with the employees remained cordial throughout the year in the Company. The Directors express their appreciation for the contribution made by the employees at all levels to the operations and operational efficiencies of the Company during the year.

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 are to be set out in the Annexure, which forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the report and accounts are being sent to all the members of the Company excluding the aforesaid information. This statement shall be made available for inspection to any member during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the President (Finance) & CFO/ Company Secretary at the Registered Office of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Sh. D.S. Sandhawalia and Sh. Ashutosh Khaitan shall retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

In compliance with the section 149 (1) of the Companies Act, 2013 with regard to the appointment of a woman director, Mrs. Neena Singh has, accordingly been appointed as director.

AUDITORS & AUDITOR''S REPORT

M/s B S R & Co., Chartered Accountants, Statutory Auditors of the company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

The company has received a certificate from the Statutory Auditors to the effect that their reappointment, if made, would be within the prescribed limit under section 139 (1) of the Companies Act, 2013 and they are not disqualified for appointment within the meaning of Section 141 (3) (g) of the said Act.

The Notes on Accounts referred to in the Annexure to the Auditor''s Report are self-explanatory and do not call for any comments.

COST AUDITORS

M/s R.J. Goel & Co., Delhi were appointed as Cost Auditors for conducting the cost audit of the Company for the year ended 31 March 2014. The Company''s Cost Audit Report for the year ended 31 March 2013 was filed on 10.09.2013 (Due date 30.09.2013). The said firm has been appointed as cost auditors of the Company for the financial year 2014-15 as well.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) the accounting policies selected and applied are consistent and the judgments and estimates made 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 of the company for that period;

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

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

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed and forms part of the Annual Report.

ACKNOWLEDGMENT

Your Directors convey their sincere thanks to the various agencies of the Central and State Governments, Banks and other concerned agencies for all the assistance and cooperation extended to the Company. The Directors also deeply appreciate and acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors reposed in the Company. Your Directors also place on record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.

For and on behalf of the Board

Place: Chandigarh Jagesh K Khaitan Dated: 15 May 2014 Chairman & Managing Director


Mar 31, 2013

To the Members,

The Directors take pleasure in presenting the 16th Annual Report on the business and operations, together with audited statements of Accounts of your Company, for the financial year ended 31st March, 2013.

FINANCIAL HIGHLIGHTS

The summarized financial results of the Company for the year 2012-13 are given hereunder.

(Rs. in lacs)

2012-13 2011-12

Sales & other income 44,797.55 39,814.71

Operating Profit 6,045.83 4,515.38

Interest 2,349.42 2,425.03

Gross Profit 3,696.41 2,090.35

Depreciation 1,569.93 1,542.33

Profit before tax 2,126.48 548.02

Provision for

- Current Tax (425.46) (109.65)

- Deferred Tax charge for the year (845.13) (176.26)

- MAT credit entitlement 425.46 109.65

Net Profit after tax 1,281.35 371.76

Balance b/f from previous year 2,807.65 2,491.96

Profit available for appropriations 4,089.00 2,863.72

Appropriations:-

Proposed Dividend on

(a) Equity shares -- --

(b) Preference Shares @ Rs. 0.70 Per share 1.71 5.20

(c) Tax on dividend 0.29 0.87

(d) Capital Redemption Reserve 50.00 50.00

(e) General Reserve -- --

Balance carried to Balance Sheet 4,037.00 2,807.65



DIVIDEND

Your Directors have recommended a dividend of Rs. 0.70 per share (previous year Rs. 0.70 per share) on the Redeemable Preference Shares of Rs.10/- each, on the preference share capital, on pro-rata basis, for the year ended 31st March, 2013 amounting to Rs. 1.71 lacs and to pay a dividend tax of Rs. 0.29 lacs. No dividend has been recommended on the equity shares to conserve and plough back the resources for the ongoing and upcoming capex projects.

OPERATIONS

The production of paper during the year under review was 1,00,218 metric tonnes as against 95,383 metric tonnes in the previous year. The quantitative figure for the sale of paper was the same at 1,00,218 metric tonnes this year, leaving no closing stock, as against 95,493 metric tonnes in the previous year.

The figures given in the Financial Highlights for the current year under review show the following trends over the previous year;

Gross sales turnover and other income is up by 12.51% at Rs. 44,797.55 lacs, operating profit is up by 33.89% at Rs. 6,045.83 Lacs, Profit before Tax is up by 294.17% at Rs. 2,126.48 lacs. Net profit after tax is up by 244.67% and stands at Rs. 1,281.35 lacs.

There has been a significant improvement in the profitability during the year under review compared to the previous year mainly due to improved sales realizations, better product mix, improved quality and launching of new paper products like copier and surface sized paper. This is despite the increase in the input costs in terms of fuel and chemical costs, imported pulp due to the depreciation in the Indian currency and high interest costs.

The initiatives taken by your company in increasing productivity and efficiency have led to improvement of the operational performance in terms of production and sales, which is visible from the operational performance for the year under review. The results of cost reduction initiatives and operational efficiencies will be further visible in the current financial year 2013-14 as your company has continued the initiatives to optimize capacity utilization; innovation of new products and is undertaking modification and up-gradation of pulp mill and paper machines with a view to improve the product quality, as also installation of equipments for compliance with Corporate Responsibility for Environment Protection (CREP) guidelines prescribed by Ministry of Environment and Forests (MoEF), New Delhi for large scale pulp and paper industry. The above projects are in progress and will be commissioned during the current year 2013-14.

With the implementation of the Mill Expansion Plan, the company has become one of the most cost competitive paper mills, as also one of the large paper player in the writing and printing segment. Further innovative initiatives have enabled the mill to manufacture papers of distinctive quality, which is competing with the premium quality of other large paper mills.

Writing & printing paper segment have witnessed optimum capacity utilizations levels over the past few years due to significant demand growth. This led to large capacity additions in recent years and demand is taking its time to absorb these capacity accretions. Despite this trend, your company has been able to operate at higher levels of production and sale, and have been able to offset the negatives to a large extent.

As per CRISIL estimates, Paper and Paperboard demand will grow at a steady pace over next 5 years. Demand for Writing & Printing paper is expected to grow to 5.2 million tonnes in 2017-18 from 3.9 million tonnes in 2012-13, a CAGR of 6.0-6.5 per cent. The key drivers for this growth are the Government''s emphasis on education and literacy, coupled with growth in organised retail and demand for better-quality paper. However, growth in demand in 2013-14 is expected to be moderate on the back of a weak macroeconomic environment unless substantive policy measures are undertaken by the Govt. to boost investment sentiment. Between 2012-13 and 2017-18, demand for copier paper is likely to be the strongest at around 13 per cent CAGR. This is because a rise in corporate spending on stationery has translated into considerable demand for high-quality copier paper from the office printing segment. Hence, the share of copier paper in total Writing & Printing paper demand is expected to increase around 24 per cent in 2017-18 from 18 per cent in 2012-13.

Demand for Creamwove Paper (the most widely-used variety in Indian school textbooks), which accounted for 52 per cent of W&P paper demand in 2012-13, is expected to grow at a steady 3.0-3.5 per cent CAGR over the same period. About 2.5 lac new educational institutions are likely to come up in the country between 2012-13 and 2016-17, as an outcome of the Indian Government''s Right to Education (RTE) initiative. Additionally, initiatives like Rashtriya Madhyamik Shiksha Abhiyan and Sarva Shiksha Abhiyan will continue to boost the paper demand.

The detailed performance of Company''s operations for the year ended 31st March, 2013 has been stated in the Management Discussion & Analysis Report which appears as a separate statement in the Annual Report.

FINANCE

(a) Project finance

State Bank of India has sanctioned a corporate loan of Rs. 1,200 lacs. The loan has been disbursed during the year under review.

(b) Working capital

The enhanced working capital limits amounting to Rs. 8,575 lacs (fund based Rs. 4,750 lacs & non-fund based Rs. 3,825 lacs) have been appraised and sanctioned by the Banks.

(c) Fixed Deposits

As on 31st March, 2013, your Company had Fixed Deposits of Rs. 2,096.00 lacs. There were no overdue deposits as on 31st March, 2013. There was no failure in making repayment of the fixed deposits on maturity, including interest due thereon, in terms of the conditions of your Company''s Fixed Deposits Scheme.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure, which forms part of this Report.

PERSONNEL

Relationship with the employees remained cordial throughout the year in the Company. The Directors express their appreciation for the contribution made by the employees at all levels to the operations and operational efficiencies of the Company during the year.

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 are to be set out in the Annexure, which forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the report and accounts are being sent to all the members of the Company excluding the aforesaid information. This statement shall be made available for inspection to any member during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the President (Finance) & CFO/Company Secretary at the Registered Office of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Sh. Umesh Kumar Khaitan and Sh. Ashutosh Khaitan retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

AUDITORS & AUDITORS'' REPORT

M/s B S R & Co., Chartered Accountants, Statutory Auditors of the company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

The management''s reply to the auditors'' observation contained in the Auditors'' Report at serial no. 4 regarding approval of the members in the general meeting for managerial remuneration to the extent of Rs. 48.00 lacs for the year ended 31 March 2012 and to a director to the extent of Rs. 10.09 lacs for the year ended 31 March 2013 has been explained and disclosed in the note no. 4.11 of Schedule 4 - "Other notes to accounts" .

Necessary resolutions at item nos. 6 and 7 for approval of the members are contained in the notice for annual general meeting for approval of the above remuneration.

The company has received a certificate from the Statutory Auditors to the effect that their reappointment, if made, would be within the prescribed limit under section 224 (1B) of the Companies Act, 1956 and they are not disqualified for appointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Annexure to the Auditors'' Report are self-explanatory and do not call for any comments.

COST AUDITORS

M/s R.J. Goel & Co., Delhi were appointed as Cost Auditors for conducting the cost audit of the Company for the year ended March 31, 2013. The Company''s Cost Audit Report for the year ended March 31, 2012 was filed on 07.01.2013 within the extended date viz. 28.02.2013. The said firm has been appointed as cost auditors of the Company for the financial year 2013-14 as well.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) the accounting policies selected and applied are consistent and the judgments and estimates made 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 of the company for that period;

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

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

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed and forms part of the Annual Report.

ACKNOWLEDGMENT

Your Directors convey their sincere thanks to the various agencies of the Central and State Governments, Banks and other concerned agencies for all the assistance and cooperation extended to the Company. The Directors also deeply appreciate and acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors reposed in the Company. Your Directors also place on record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.



For and on behalf of the Board

Place: Chandigarh Jagesh K Khaitan

Dated: 13 August 2013 Chairman & Managing Director


Mar 31, 2012

The Directors take pleasure in presenting the 15th Annual Report on the business and operations, together with audited statements of Accounts of your Company, for the financial year ended 31st March, 2012.

FINANCIAL HIGHLIGHTS

The summarized financial results of the Company for the year 2011-12 are given hereunder.

(Rs. in lacs) (Rs. in lacs) 2011-12 2010-11

Sales & other income 39854.42 32184.73

Operating Profit 4515.38 4755.71

Interest 2425.03 2265.00

Gross Profit 2090.35 2490.71

Depreciation 1542.33 1464.11

Profit before tax 548.02 1026.60

Provision for

- Current Tax (109.65) (178.79)

- Tax Provision for earlier years -- (15.09)

- Prior period Deferred Tax Adjustment -- 1083.35

- Deferred Tax charge for the year (176.26) (285.40)

- MAT credit entitlement 109.65 200.84

Net Profit after tax 371.76 1831.51

Balance b/f from previous year 2491.96 922.36

Profit available for appropriations 2863.72 2753.87

Appropriations

- Proposed Dividend on

(a) Equity shares -- 87.26

(b) Preference Shares @ Rs. 0.70 Per share 5.20 8.71

(c) Tax on dividend 0.87 15.94

(d) Capital Redemption Reserve 50.00 50.00

(e) General Reserve -- 100.00

Balance carried to Balance Sheet 2807.65 2491.96

DIVIDEND

Your Directors have recommended a dividend of Rs. 0.70 per share (previous year Rs. 0.70 per share) on the Redeemable Preference Shares of Rs.10/- each, on the preference share capital for the year ended 31st March, 2012 amounting to Rs. 5.20 lacs and to pay a dividend tax of Rs. 0.87 lacs. No dividend has been recommended on the equity shares to conserve and plough back the resources for the ongoing capex projects.

OPERATIONS

The production of paper during the year under review was 95,383 metric tonnes as against 79,980 metric tonnes in the previous year. Similarly the quantitative figure for the sale of paper was 95,493 metric tonnes as against 80,119 metric tonnes in the previous year.

The figures given in the Financial Highlights for the current year under review show the following trends over the previous year;

Gross sales turnover and other income is up by 23.8% at Rs. 39854.45 lacs, operating profit is down by 5.1% at Rs. 4515.38 Lacs, Profit before Tax is down by 46.6% at Rs. 548.02 Lacs. Net profit after tax stood at Rs. 371.74 Lacs.

The profitability during the year under review has been lower compared to the previous year mainly due to lower sales realizations, higher input costs in terms of fuel and chemical costs, and of imported pulp due to the depreciation in the Indian currency and high interest costs.

In the Finance budget for the year 2012-13, the Govt. has increased the central excise duty applicable to the writing and printing paper from 5% to 6%, and on supplies to the State Textbooks Corporations, from 1% to 2%.

The Mill Expansion Plan has improved the operational performance in terms of production and sales levels, which is visible from the operational performance. The results of enhanced capacity operations will be further visible in the current financial year 2012-13 as your company has further taken initiatives to optimize capacity utilization; is innovating on new specialty products, packaging paper; is undertaking cost reduction initiatives, and modification and up-gradation of pulp mill and paper machines for improving the product quality, as well as making specialty and copier paper; as also installation of equipments for compliance with Corporate Responsibility for Environment Protection (CREP) guidelines prescribed by Ministry of Environment and Forests (MoEF), New Delhi for large scale pulp and paper industry. This entire outlay is at an estimated cost of Rs. 55 crores.

With the complete implementation of the Mill Expansion Plan, the company has become one of the most cost competitive paper mills, as also one of the large paper player in the writing and printing segment. Further innovative initiatives have enabled the mill to manufacture papers of distinctive quality, which will compete with the premium quality of other large paper mills.

Writing & printing paper segment have witnessed high capacity utilizations levels over the past few years due to significant demand growth. This led to large capacity additions in recent years and will drive more additions over the next 18-24 months. Though the growth in the paper demand is likely to absorb these capacity increments, it may not be adequate to absorb all the new capacities in the immediate future, and would create a short term supply surplus. Despite this trend, your company has been able to operate at higher levels of production and sale, and have been able to offset the negatives to a large extent.

Paper and paperboard demand is expected to increase at 7.5-8 per cent CAGR over the next 5 years. However, growth is expected to remain moderate in 2012-13, on the back of a weak macroeconomic environment, unless substantive policy measures are undertaken by the Govt. to boost investment sentiment. The monetary tightening policy that has continued during the year under review by RBI, but unfortunately it has not been able to curb the inflationary pressures, and has not borne desired results. High inflation has been the major dampener in the economy growth. Going forward, the inflation scenario remains challenging and is expected to remain range bound.

The detailed performance of Company's operations for the year ended 31st March, 2012 has been stated in the Management Discussion & Analysis Report which appears as a separate statement in the Annual Report.

FINANCE

(a) Project finance

State Bank of Patiala has sanctioned a Term Loan of Rs. 4000 lacs, for putting up the aforementioned capex projects. Of this, an amount of Rs. 2004.65 lacs has been disbursed during the year under review and the balance will be disbursed in the financial year 2012-13.

(b) Working capital

The enhanced working capital limits amounting to Rs. 5760 lacs (fund based Rs. 2835 lacs & non-fund based Rs. 2925 lacs) have been appraised and sanctioned by the Banks.

(c) Fixed Deposits

As on 31st March, 2012, your Company had Fixed Deposits of Rs. 1963.50 lacs. There were no overdue deposits as on 31st March, 2012 except an unclaimed deposit of Rs. 0.15 lacs due to the demise of the deposit holder, and will be paid on receipt of requisite documents. There was no failure in making repayment of the fixed deposits on maturity, including interest due thereon, in terms of the conditions of your Company's Fixed Deposits Scheme.

CHANGE IN NAME OF THE COMPANY

Consequent to the approval of the shareholders in the Extraordinary General Meeting of the Company held on 23rd February, 2012, the name of the company has been changed to Kuantum Papers Limited. The Registrar of Companies, Punjab and Chandigarh has issued a fresh Certificate of Incorporation under the new name i.e. Kuantum Papers Limited on March 30, 2012.

Henceforth, the operations under the name of Kuantum Papers Limited will take forward the values, ethics, culture and the legacy of more than three decades.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure, which forms part of this Report.

PERSONNEL

Cordial employee relations were maintained throughout the year in the Company. The Directors express their appreciation for the contribution made by the employees, at all levels, to the operations of the Company during the year.

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 are to be set out in the Annexure, which forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the report and accounts are being sent to all the members of the Company excluding the aforesaid information. This statement shall be made available for inspection to any member during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the Sr. Vice President (Finance) & CFO/ Company Secretary at the Registered Office of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Justice S.S. Sodhi(Rtd) and Sh. D.S. Sandhawalia retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

AUDITORS & AUDITOR'S REPORT

M/s B S R & Co., Chartered Accountants, Statutory Auditors of the company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

The management reply to the auditor's observation contained in the auditor's report at serial no. 4 regarding approval of Central Govt. for excess managerial remuneration of Rs. 29.06 lacs paid to directors is as under:

The managerial remuneration to the whole time directors has been paid as approved by the shareholders pursuant to Part-1I, Section-I of Schedule XIII of the Companies Act, 1956. During the year under review, the remuneration paid exceeds the amount payable due to inadequate profits. The company has filed applications with the Ministry of Corporate Affairs u/s 310 of the Act, for approval and the same is awaited. Necessary disclosure has been made in the note 4.11 in the notes to accounts.

The company has received a certificate from the auditors to the effect that their reappointment, if made, would be within the prescribed limit under section 224 (1B) of the Companies Act, 1956 and they are not disqualified for appointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Annexure to the Auditor's Report are self-explanatory and do not call for any comments. COST AUDITORS

M/s R.J. Goel & Co. were appointed as Cost Auditors for conducting the cost audit of the Company for the year ended March 31, 2012 and the actual date of filing the Cost Audit Report for the year ended March 31, 2011 was 22.09.2011 whereas the last date of filing was 29.09.2011.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) the accounting policies selected and applied are consistent and the judgments and estimates made 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 of the company for that period;

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

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

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed and forms part of the Annual Report.

ACKNOWLEDGMENT

Your Directors convey their sincere thanks to the various agencies of the Central Government, State Governments, Banks and other concerned agencies for all the assistance and cooperation extended to the Company. The Directors also deeply acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors have placed in the Company. Your Directors also record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.

For and on behalf of the Board

Place: Chandigarh Jagesh K Khaitan

Dated: May 26, 2012 Chairman & Managing Director


Mar 31, 2011

To the Members,

The Directors take pleasure in presenting the 14th Annual Report on the business and operations, together with audited statements of Accounts of your Company, for the financial year ended 31st March, 2011.

FINANCIAL HIGHLIGHTS

The summarized financial results of the Company for the year 2010-11 are given hereunder.

(Rs. in lacs)

2010-11 2009-10

Sales & other income 32184.73 22179.10

Operating Profit 4755.71 3914.22

Interest 2265.00 1771.66

Gross Profit 2490.71 2142.56

Depreciation 1464.11 1205.96

Profit before tax 1026.60 936.60

Provision for

-Current Tax (178.79) (159.17)

-Tax Provision for earlier years (15.09) -

-Prior period Deferred Tax Adjustment 1083.35 -

-Deferred Tax charge for the year (285.40) (2188.92)

-MAT credit entitlement 200.84 159.17

Net Profit after tax 1831.51 (1252.32)

Balance b/f from previous year 922.36 2441.08

Profit available for appropriations 2753.87 1188.76

Appropriations:-

- Proposed Dividend on

(a) Equity shares 87.26 87.26

(b) Preference Shares @ Rs. 0.70 Per share 8.71 12.23

(c) Tax on dividend 15.94 16.91

(d) Capital Redemption Reserve 50.00 50.00

(e) General Reserve 100.00 100.00

Balance carried to Balance Sheet 2491.96 922.36

DIVIDEND

Your Directors are pleased to recommend Rs. 0.70 per share (7%) on the Redeemable Preference Shares of Rs.10/- each, on the preference share capital of Rs. 1,00,00,000/- and Rs. 1.00 per share (10%) on the Equity Shares of Rs.10/- each, on the equity share capital of Rs. 8,72,63,630/- for the year ended 31st March, 2011 aggregating to Rs. 95,98,007/- and to pay a dividend tax of Rs. 15,94,133/-.

OPERATIONS

The production of paper during the year under review was 79,980 metric tonnes as against 60,553 metric tonnes in the previous year. The sale of paper was 80,119 metric tonnes as against 60,304 metric tonnes in the previous year. The figures given in the Financial Highlights for the current year under review show the following trends over the previous year;

Gross sales turnover and other income is up by 45.1% at Rs. 32184.73 Lacs, operating profit is up by 21.5% at Rs. 4755.71 Lacs, Profit before Tax is up by 9.6% at Rs.1026.60 Lacs. Net profit after tax stood at Rs. 1831.51 Lacs after deferred tax adjustment of Rs. 1083.35 Lacs accrued on the unabsorbed deprecation for the previous year.

The previous two years has been a period of ever increasing capacities in the paper industry. It has been a situation of oversupply in the market, wherein demand is gradually catching up. The indelible mark on reduced price lines of paper products is very visible. Despite this trend, we have been able to operate at higher levels of production and sale, and have been able to offset the negatives to a large extent.

Robust growth and steady fiscal consolidation have been the hallmark of the Indian economy in 2010-11. The growth has been broad based and has been 8.6% in 2010-11 and is expected to be around 9% in 2011-12. However higher inflation rate, higher input prices and volatility in global markets have been a cause of concern which may impact the projected growth.

In line with the economy growth recovery in 2010-11, the Govt. has implemented gradual exit from stimulus package extended to the industry in the previous years. In the budget for the year 2011-12, the Govt has enhanced the excise duty applicable to the paper industry from 4% to 5% and has also withdrawn the excise duty exemption provided to the state textbooks corporations as also the exemption on the first clearance of 3500 MT which has been hitherto available to Agro paper mills.

As part of the Mill Expansion Plan, the Chemical Recovery Plant, the Co-generation plant and Paper Machine had already been commissioned in the previous year(s). The operations of Paper Machine-4, which were under stabilization in the previous year, have since been stabilized during the year under review which is visible from the improved operational performance. The results of enhanced capacity operations will be further visible in the current financial year 2011-12 as your company further endeavors to optimize capacity utilization in view of the stabilization of PM-4 and to achieve optimum capacity utilization during 2011-12.

The members were informed in the last annual report that pulp mill is at advanced stage of implementation. The Directors are pleased to inform that pulp street which was the remaining project of the Mill Expansion Plan, has also been commissioned during the year under review.

Furthermore, during the year under review the company has also taken up projects for debottlenecking the constraints and putting up balancing equipment/ equipments towards the cost reduction initiatives and to improve the quality of its product. To this end, the Banks have sanctioned a term loan of Rs. 1250 lacs for the purpose. Your company has further conceived few projects in its pursuit to continue with cost reduction initiatives in 2011-12.

The detailed performance of Company's operations for the year ended 31st March, 2011 has been stated in the Management Discussion & Analysis Report which appears as a separate statement in the Annual Report.

FINANCE

(a) Project finance

Punjab National Bank has sanctioned a Term Loan of Rs. 1250 lacs, for putting up the balancing equipments. Of this, an amount of Rs. 846.89 lacs has been disbursed during the year under review and the balance will be disbursed in the current year 2011-12.

(b) Working capital

The enhanced working capital limits amounting to Rs. 5,450 lacs (fund based Rs. 2,850 lacs & non-fund based Rs. 2,600 lacs) have been appraised by Punjab National Bank. Punjab National Bank has sanctioned their share and sanction by State Bank of Patiala, the consortium of banker, is in process.

(c) Fixed Deposits

As on 31st March, 2011, your Company had Fixed Deposits of Rs. 1413.90 lacs. There were no overdue deposits as on 31st March, 2011; nor was there any failure in making repayment of the fixed deposits on maturity, including interest due thereon, in terms of the conditions of your Company's Fixed Deposits Scheme.

SHIFTING THE REGISTERED OFFICE FROM THE NATIONAL CAPITAL TERRITORY OF DELHI TO THE STATE OF PUNJAB

Consequent to the Special Resolution dated January 25, 2011 passed by the shareholders through Postal Ballot, the company filed a petition with the Company Law Board (CLB). CLB vide its order dated May 11, 2011 has confirmed and approved the shifting of Registered Office from the National Capital Territory of Delhi to the State of Punjab. The necessary forms pursuant to the Companies Act, 1956 are being filed.

DELISTING OF EQUITY SHARES FROM U.P. STOCK EXCHANGE

The Company was listed on Bombay Stock Exchange and U.P. Stock exchange, Kanpur. Since the trading at Kanpur Exchange was almost inactive, the Company voluntarily delisted itself from the Kanpur Stock Exchange with effect from 14th March 2011. However, the company continues to be listed on Bombay Stock Exchange, which has nationwide trading terminals.

JOINT VENTURE WITH GRANIT RECHERCHE DEVELOPPEMENT S.A.

The Company had a joint venture with Granit Recherche Developpement S.A. of Switzerland for treatment of black liquor through the "Lignin Precipitation System (LPS)" plant in joint venture Company (JV) under the name of "Greencone Environs Private Limited". The Company had invested a sum of Rs. 1,29,83,000 in equity shares (49.62%) which has been sold at par value during the year under review. The operations of Greencone will continue as it is.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure which forms part of this Report.

PERSONNEL

Cordial employee relations were maintained throughout the year in the Company. The Directors express their appreciation for the contribution made by the employees, at all levels, to the operations of the Company during the year.

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 are to be set out in the Annexure which forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the report and accounts are being sent to all the members of the Company excluding the aforesaid information. This statement shall be made available for inspection by any member during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the Sr. Vice-President (Finance) & CFO/ Company Secretary at the Registered Office of the Company.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri Yashovardhan Saboo and Sh. D.C. Mehandru retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

AUDITORS & AUDITOR'S REPORT

M/s B S R & Co., Chartered Accountants, Statutory Auditors of the company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for reappointment.

The company has received a certificate from the auditors to the effect that their reappointment, if made, would be within the prescribed limit under section 224 (1B) of the Companies Act, 1956 and they are not disqualified for appointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Annexure to the Auditor's Report are self-explanatory and do not call for any comments.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the accounting policies selected and applied are consistent and the judgments and estimates made 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 of the company for that period;

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

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

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed and forms part of the Annual Report.

ACKNOWLEDGMENT

Your Directors convey their sincere thanks to the various agencies of the Central Government, State Governments, Banks and other concerned agencies for all the assistance and cooperation extended to the Company. The Directors also deeply acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors have placed in the Company. Your Directors also record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.

For and on behalf of the Board

J.K. Khaitan Chairman & Managing Director

Place: Chandigarh Dated: May 24, 2011


Mar 31, 2010

The Directors take pleasure in presenting the 13th Annual Report on the business and operations, together with audited statements of Accounts of your Company, for the financial year ended 31st March, 2010.

FINANCIAL HIGHLIGHTS

The summarized financial results of the Company for the year 2009-10 are given hereunder.

(Rs. in lacs)

2009-101 2008-09

Sales & other income 22,134.04 21,000.63

Operating Profit 3,851.93 3,935.10

Interest 1,709.09 1,040.72

Gross Profit 2,142.84 2,894.38

Depreciation 1,205.96 793.91

Profit before tax 936.88 2,100.47

Provision for

- Current Tax (incl FBT) 159.45 249.57

- Deferred Tax 2,188.92 575.72

- MAT credit entitlement 159.17 100.43

Profit after tax (1,252.32) 1,375.61

Balance b/f from previous year 2,441.08 1,537.09

Profit available for appropriations 1,188.76 2,912.70

Appropriations

- Proposed Dividend on

(a) Equity shares @ 87.26 218.16

Rs. 1.00 Per share

(b) Preference Shares @ 12.23 14.00 Rs. 0.70 Per share

(c) Tax on dividend 16.91 39.46

(d) Capital Redemption 50.00 - Reserve

(e) General Reserve 100.00 200.00

Balance carried to Balance Sheet 922.36 2,441.08

DIVIDEND

Your Directors are pleased to recommend Rs. 0.70 per share (7%) on the Preference Shares of Rs.10/- each, on the preference share capital of Rs. 1,50,00,000/- and Rs. 1.00 per share (10%) on the Equity Shares of Rs.10/- each, on the equity share capital of Rs. 8,72,63,630/- for the year ended 31st March, 2010 aggregating to Rs. 99,48,966/- and to pay a dividend tax of Rs. 16,90,827/-.

OPERATIONS

The production of paper during the year under review was 60,553 tonnes as against 54,277 tonnes in the previous year. The figures given in the Financial Highlights for the current year under review show the following trends over the previous year;

Gross sales turnover is up by 5.40%, operating profit is lower by 1.34%, Profit before Tax is down by 5.79%, and Net loss after providing for Deferred Tax Liability provision showing a variance of 191.05% compared to operations in the previous year.

The impact of slowdown and recessionary trends in the industrial activity had its effect during the first half of the current year and it was only in the 2nd half that the demand and the prices picked up. Your company has recorded higher turnover under the difficult times during the year under review. The operating profit stood at the similar level. During the year, the Govt, continued with the concessional excise duty of 4% to the paper industry to stimulate demand.

The members are aware that the company had been implementing Mill Expansion Plan comprising mainly of putting up an additional Paper Machine (PM-4) alongwith pulp street to enhance the manufacturing capacity of paper from the existing capacity of 50,000 MTPA to over 1,00,000 MTPA; and the Chemical Recovery Plant and the Co-generation plant have already been commissioned in the previous year towards cost reduction initiatives in the manufacturing of paper, as part of the Mill Expansion Plan. The directors are pleased to report that PM-4 has been commissioned during the year under review. It took longer time than envisaged to stabilize operations thereby affecting the operational performance. The incidence of depreciation and interest is higher during the year consequent to the commissioning and capitalization of PM-4 which has had its effect on the profitability. With the implementation and commissioning of these projects, the company is heading towards achieving the benchmark of one of the most cost competitive paper units and will make your company one of the large paper manufacturers in the industry. Further it will enable the manufacturing of premium quality paper, which is placed in maplitho paper category, competing with quality specifications of other large paper mills. The results of enhanced capacity operations will be visible in the current financial year 2010-11.

The implementation of pulp street; the remaining project, of the Mill Expansion Plan is at advanced stage and will be commissioned during current year. The members were informed last year that the cost of the projects has undergone a revision from Rs. 157 crores to Rs. 197 crores.

The increased cost was funded by way of term loans of Rs. 28 crores by the Banks and the balance amount was contributed by way of internal accruals and unsecured loans by promoters.

The detailed performance of Companys operations for the year ended 31st March, 2010 has been stated in the Management Discussion & Analysis which appears as a separate statement in the Annual Report.

FINANCE

(a) Project finance

State Bank of India in consortium with State Bank of Patiala and State Bank of Bikaner and Jaipur had sanctioned further Term Loan of Rs. 2800 lacs, for the revised cost of the Mill Expansion Plan of the Company and the same has been disbursed during the year under review.

(b) Working capital

The enhanced working capital limits amounting to Rs. 5,000 lacs (fund based Rs. 3,000 lacs & non-fund based Rs. 2,000 lacs) were sanctioned by the consortium of bankers, comprising of Punjab National Bank and State Bank of Patiala.

(c) Fixed Deposits

As on 31st March, 2010, your Company had Fixed Deposits of Rs. 717.23 lacs. There were no overdue deposits as on 31 st March, 2010; nor there was any failure in making repayment of the fixed deposits on maturity, including interest due thereon, in terms of the conditions of your Companys Fixed Deposits Scheme.

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

The information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure which forms part of this Report.

PERSONNEL

Cordial employee relations were maintained throughout the year in the Company. The Directors express their appreciation for the contribution made by the employees to the operations of the Company during the year.

The particulars of employees as per Section 217(2A) of the Companies Act, 1956 are to be set out in the Annexure which forms part of this Report. However, as per the provisions of Section 219(1 )(b)(iv) of the said Act, the report and accounts are being sent to all the members of the Company excluding the aforesaid information. This statement shall be made available for inspection by any member during working hours for a period of 21 days before the date of the Annual General Meeting. Any member interested in obtaining such particulars may write to the Vice-President (Finance)/ Company Secretary at the Registered Office of the Company.

DIRECTORS

Sh. N.K. Bajaj, Chairman & Managing Director, Sh. G.N. Mehra, Sh. K.R. Ramamoorthy, Sh. Mohit Satyanand, Sh. Ravindra Gupta, Sh. A.K. Bajaj, Sh. V.K. Bajaj, and Sh. J.C. Rana, Directors resigned from the Board of Directors of the Company on 16th July 2010. The Board places on record its appreciation of the valuable contribution made by the directors during their tenure. Justice S.S. Sodhi (Retd.), Sh. D.C. Mehandru, Sh. U.K. Khaitan and Sh. D.S. Sandhawalia were appointed as Additional Directors in the meeting of Board of Directors held on 3rd August, 2010. These directors retire at the ensuing annual general meeting of the Company and being eligible offers themselves for re-appointment.

In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Shri Ashutosh Khaitan retires by rotation at the forthcoming Annual General Meeting and is eligible for re- appointment.

The vacancy created upon the resignation of Sh. Lalit Chainwala, an independent director, on 26.02.2009 was filled with the induction of Sh. Ravindra Gupta on 29.09.2009 due to non-availability of a suitable director in the interim period.

AUDITORS

The Statutory Auditors M/s V Sahai Tripathi & Co., Chartered Accountants, New Delhi have expressed their unwillingness to be reappointed as Statutory Auditors at the forthcoming Annual General Meeting. No representation from the retiring auditors referred to under section 225(3) has been received. It is proposed to appoint M/s B S R & Co., Chartered Accountants, Chandigarh, as the Statutory Auditors for the financial year 2010-11. The company has received a certificate under section 224 (1 -B) of the Companies Act, 1956 from M/s B S R & Co., confirming that, if appointed, their appointment will be within the limits prescribed in sub-section (1-B) of section 224 of the Companies Act, 1956.

DIRECTORS RESPONSIBILITY STATEMENT

As required under section 217 (2AA) of the Companies Act, 1956, your Directors confirrn:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the accounting policies selected and applied are consistent and the judgments and estimates made 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 of the company for that period;

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

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

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a Certificate from the Statutory Auditors of the Company

regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the listing agreement with stock exchanges is annexed and forms part of the Annual Report.

ACKNOWLEDGEMENT

Your Directors convey their sincere thanks to the various agencies of the Central Government, State Governments, Banks and other concerned agencies for all the help and cooperation extended to the Company. The Directors also deeply acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors have placed in the Company. Your Directors also record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.

For and on behalf of the Board

Chandigarh J.K. Khaitan

August 13,2010 Chairman & Managing Director

 
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