Directors Report of Kutch Salt & Allied Industries Ltd.

Mar 31, 2011

To The Members of THE KUTCH SALT & ALLIED INDUSTRIES LIMITED

The Directors are pleased to present their SIXTY FIRST ANNUAL REPORT together with the Audited Results for the year ended March 31,2011 AND Audito's Report thereon.

(Rs. In lacs)

1 FINANCIAL RESULTS Year Ended Year Ended

31/03/2011 31/03/2010

Gross Income 23571.67 8922.82

Less: Total Expenditure 21785.40 7141.91

Profit/(Loss) before Depreciation 1786,27 1780.91

Less: Depreciation . 1005.17 807.15

Profit / (Loss) before Tax 781.10 973.76 Less : Provision for Tax

Current Tax 162.00 184.00

Deferred Tax 252.63 330.98

Profit/ (Loss) After Tax 366.47 58.78

Add: Profit/(Loss) B/F from Previous year 396.69 -62.09

Add: MAT Credit (Current year as well as Previous year) 371.68 -

Less: Income Tax of earlier year 6.44 -

Balance carried to Balance Sheet 1128.40 396.69

2 OPERATIONS

The Company operates in three main business segments viz, Manufacturing, Trading & Power. Manufacturing division consists of production of salt only whereas in the trading division main commodity in the year under review is of Raw Cotton.

Manufacturing division account for 16.90 %, Trading division account for 80.96 % and Power division account for 2.14 %of the total turnover of the Company for the year ended 31st March 2011 as compared to 48.75 % of Manufacturing division, 48.15 % of Trading division and 3.10% of power division of the Company for the year ended 31st March, 2010. The financial year 2010-11 has witnessed some improvement in the economies around the globe but the Iron Ore Industiy still passing through bad phases due to restriction in mining activity imposed by Supreme Court in and around surrounding area of Karnataka from where your company mainly purchasing the Iron Ore. However, due to application made in the current year your company had allotted quota for export of cotton bales which was successfully completed by your company and in turn has earned handsome profit on such transaction which has the effect of setting off the loss incurred in Iron Ore business.

Inspire of such adverse factors turnover of your Company has increased to Rs.23571.67 lacs as against Rs. 8922.82 Lacs in the previous year; cash profit of Rs. 1786.28 Lacs as against Rs. 1780.91 Lacs in the previous year but Profit after tax has reduced to Rs.366.12 Lacs as against profit of Rs.458.78 lacs in the previous year.

The Business wise performance of each segment- is as under:

Manufacturing : The Company has produced (Net of wastages etc.) 739254 MTS of salt as against 749903 Mts in the previous year. The total turnover of this segment has decreased to Rs. 3976.63 Lacs .as against Rs. 4309.22 Lacs in the previous year.

Trading : Due to ban imposed by Hon'ble Supreme Court in and around the State of Karnataka for mining activity mainly relating to Iron Ore, no trading activity was carried out during the year under review. However, on the basis of application made by the company has been allowed to export71557 bales of Raw Cotton during the year and because of that total turnover of this segment has increased to Rs. 19074.90 Lacs as against Rs. 4430.18 in the previous year.

Your management is trying hard to meet the prevailing challenges by focusing its efforts, on further reduction of cost and by improving operational efficiencies. Your management is hopeful that company will improve its performance in the Coming periods.

3 DEPOSITS

During the year, the Company has not accepted any deposits from the public.

4 DIRECTORS

Shri Jitendra S. Singhvi and Shri Mukesh B. Singhvi retires by rotation and being eligible, offers themselves for reapointment.

5 DIRECTORS' RESPONSIBILITY STATEMENT

As required by the provisions of Section 217(2 AA) of the Companies Act, 1956, The Directors have to state:

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

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

¦ (iii) That the directors took proper and sufficient care to maintain adequate accounting record 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 directors had prepared the annual accounts on a going concern basis.

6 AUDIT COMMITTEE

The company has already constituted an Audit Committee pursuant to the provisions of section 292A of the Companies Act, 1956 and clause 49 of the listing Agreement. The Audit Committee consists of Dr. Seema Shrimal, Mr. Jitendra S. Singhvi, Mr. Sandeep T. Singhvi as members and Mr. Lekhraj Kanungo is the Chairman of the committee.

7 CORPORATE GOVERNANCE

As per clause 49 of the listing agreement with the stock exchange, a separate report on corporate governance together with a certificate from the Company's Auditors confirming the compliance of the conditions of corporate governance is attached as Annexure-II to this report.

A. DISCLOSURE OF PARTICULARS WITH : Not applicable to salt industry. RESPECT TO CONSERVATION OF ENERGY

B. TECHNOLOGY ABSORPTION :

(A) Research & Development

1) Specific areas in which R & D was : As the Company manufactures salt through natural earned out by the Company process of Solar evapo ration the question of technology absorption, adoption and innova tion does not arise. However, a testing laboratory is maintained for controlling the quality of salt.

2) Benefits derived as a result of the : Does not arise above R & D

3) Future plan of action : Does not arise

4) Expenditure on R & D

a) Capital : NIL

b) Recurring : NIL

c) Total : NIL

d) Total R & D expenditure as per : NIL percentage of total turnover.

(B) Technology absorption, adaptation and : Not Applicable innovation

C. FOREIGN EXCHANGE EARNINGS AND : (Rs.Inkcs)

OUTGO Current Year Previous Year

1.Earning 20815.18 4832.34

2.Outgo 257.04 980.96

For and on behalf of the Board of Directors

(BABULAL A.SINGHVI)

CHAIRMAN Gandhidham, 20th August, 2011

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Mar 31, 2010

To, The Members of THE KUTCH SALT & ALLIED INDUSTRIES LIMITED

The directors are pleased to present their SIXTY ANNUAL REPORT together with audited accounts for the financial year ended 31st March, 2010 and Auditor's Report thereon.

(Rs. in Lacs)

1. FINANCIAL RESULTS Current Year Previous Year

Gross Income 8922.82 7351.03

Less: Total Expenditure 7141.91 7327.64

Profit/ Loss before Depreciation 1780.91 23.39

Less: Depreciation 807.15 409.14

Profit/(Loss) before Tax 973.76 (385.75)

Less : Provision for Tax

Current Tax 184.00 -

Deferred Tax 330.98 (131.11)

Fringe Benefit Tax - 0.11

Profit/(Loss) After Tax 458.78 (254.75)

Add: Profit/(Loss) B/F from Previous year (62.09) 191.61

Add: Excess Provision of Income Tax. - 0.51

written back

Add: Excess Provision of FBT written back - 0.54

Balance carried to Balance Sheet 396.69 (62.09)

2. OPERATIONAL / PERFORMANCE REVIEW

The Company operates in three main business segments viz, Manufacturing, Trading & Power. Manufacturing division consists of production of salt only whereas in the trading division main commodity is of Iron ore.

Manufacturing division account for 48.75 %, Trading division account for 48,15 % and Power division ad count for 3.10 %of the .total turnover of the Company for the year ended 31 _ March. 2010 as compared to 37.58 % of Manufacturing division, 60.33 % of Trading division and 2.09% of power division of the Company for the year ended 31 March, 2009. The financial year 2009-10 has witnessed some improvement in the economies around the globe but the Iron Ore Industry still passing through bad phases. The Iron ore Industry across the globe is suffering severely from weaker demand. Presently the entire Iron ore industry is going through turbulent times. Indian Iron ore industry witnessed substantially decrease in the turnover due to over all slow down in demand particularly from major export destinations viz. China.

Inspire of such adverse factors turnover of your Company has increased to Rs.8922.82 lacs as against Rs. 7351.03 Lacs in the previous year; cash profit of Rs. 1780.91 Lacs as against Rs. 23.-39 Lacs in the previous year and Profit after tax Rs.458.78 Lacs as against loss of Rs.254.7 lacs in the previous year,. .

The Business wise performance of each segment is as under;

Manufacturing : The Company has produced (Net of wastages etc.) 749903 MTS of salt as against 525415 Mts in the previous year. The total turnover of this segment has increased to Rs. 4309.22 Lacs as against Rs. 2760.64 Lacs in the previous year.

Trading : The Company has traded 64870 Mts. of Iron ore as against 112530 Mts. in the previous year. The total turnover of this segment has reduced to Rs. 3210.13 Lacs as against Rs. 4430.18 in the previous year.

Your management is trying hard to meet the prevailing challenges by focusing its efforts on further reduction of cost and by improving operational efficiencies. Your management is hopeful that company will improve its performance in the Coming periods.

3. DEPOSITS

During the year the Company has not accepted any deposits from the public.

4. DIRECTORS

Shri Babulal A. Singhvi and Shri Ashok A. Singhvi retires by rotation and being eligible, offers themselves for reapointment.

5. DIRECTOR'S RESPONSIBILITY STATEMENT

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

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

(iii) That the directors took proper and sufficient care to maintain adequate accounting record 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 directors had prepared the annual accounts on a going concern basis.

6. AUDIT COMMITTEE.

The company has already constituted an Audit Committee pursuant to the provisions of section 292A ot the Companies Act, 1956 and clause 49 of the-listing Agreement . The Audit Committee consists of Dr. Seema Shrimal, Mr. Jitendra S. Singhvi, Mr. Sandeep T. Singhvi as members and Mr. Lekhraj Kanungo is the Chairman of the committee.

7. CORPORATE GOVERNANCE

As per clause 49 of the listing agreement with the stock exchange, a separate report on corporate governance together with a certificate from the Company's Auditors confirming the compliance of the conditions of corporate governance is attached as Annexure-11 to this report.

8. AUDITORS

The observations made in the Auditors Report and Notes forming part of the Accounts are self-explanatory and requires no comments. M/s. M. B. Sorathia & Co., Chartered Accountants, Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re- appointment. The Company has received a certificate from the Auditors as required under section 224(1 B) of the Companies Act, 1956 to the effect that their appointment, if made, would be within the limits specified in the said section.

9. PARTICULARS OF EMPLOYEES

None of the employees of the company is covered under section 217(2A) of the Companies Act, 1956 read with Companies ( Particulars of Employees ) Rule, 1975.

10. ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The particulars prescribed by the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 are furnished in the Annexure -1 to this report.

11. LISTING

The equity share of the company are listed on Bombay Stock Exchange Ltd. (BSE). The Company has already paid listing fee for the financial year 2009-10 to BSE.

12. ACKNOWLEDGEMENT

Your directors would like to express their appreciation for the assistance and co-operation received from the financial institution, banks and shareholders. They also place on record their appreciation for the co-operation of employees at all levels.

For and on behalf of the Board of Directors

(BABULAL A. SINGHVI)

Gandhidham, 16th August, 2010 CHAIRMAN