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Directors Report of Kwality Ltd.

Mar 31, 2014

Dear shareholders,

Your Directors have pleasure in presenting their Twenty Second Annual Report together with Audited Accounts of the Company for the financial year ended 31st March 2014.

1. Financial Highlights

Details Year ended 31.03.2014 Year ended 31.03.2013 INR in crores INR in crores

Turnover 4578.05 3692.29

Profit before Interest, 276.03 214.04 Depreciation,

Extraordinary Items & Tax

Interest & Finance Charge 112.61 92.28

Depreciation 12.91 10.29

Profit Before Extraordinary Item & Tax 150.51 111.48

Extraordinary Items --- 3.00

Profit before Tax 150.51 108.48

Tax Expense 23.88 11.95

Profit after Tax 126.63 96.53

2. COMPANY PERFORMANCE

Your Company achieved a turnover of Rs. 4578.05 crores for the year ended on March 31, 2014, registering a growth of 23.99% over the last year turnover of Rs. 3692.29 crores. Profit before Tax at Rs. 150.51 crores is 38.75% higher than that of last year of Rs. 108.48 Crores. Profit after Tax for the Financial Year 2013-2014 stood at Rs. 126.63 crores as compared to Rs. 96.53 crores in the previous year a growth of 31.18%.

3. THE COMPANIES ACT, 2013

The Ministry of Corporate Affairs (MCA) vide its Circular dated April 4, 2014 has clarified that the financial statements and documents annexed thereto, auditor''s report and board''s report in respect of financial year that have commenced earlier than April 1, 2014 shall be governed by the provisions of the Companies Act, 1956.With respect to other provisions of the Act, appropriate references have been made in this report to the extent these provisions have become applicable from April 1, 2014.

4. DIVIDEND

Based on the performance of your Company, the Directors are pleased to recommend a final dividend of Rs. 0.10 per equity share of Rs. 1 each, which will be paid after your approval at the ensuing Annual General Meeting. The final dividend, if approved by the members of the Company would involve a cash outflow of Rs. 2.03 Crores (excluding dividend tax of Rs. 0.35 crores).

The dividend will be paid to members whose names appear on the company''s register of members after giving effect to all valid share transfers in physical form lodged with the Registrar and Transfer Agents (RTA) of the company on or before 16th September, 2014, in respect of shares held in electronic form (demat mode), dividend will be paid to those "deemed members" whose names appear in the statement of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) at the close of business hours on 16th September, 2014.

5. TRANSFER TO RESERVE

The Board of Directors of the Company have recommended a final dividend of Rs. 0.10 per equity share of Rs. 1 each for the financial year 2013-14. As the dividend is up to 10% of the paid up capital, there is no requirement to transfer any amount to the reserve under Companies (Transfer of Profit to Reserve) Rules, 1975.

6. SIGNIFICANT DEVELOPMENTS

Your company has during the year enhanced its manufacturing capabilities. The Company has acquired a plant situated at Village Mumrejpur, Tehsil Dibai, District Bulandshahar, Uttar Pradesh. Your company has also taken initiatives to increase the production capacities of the newly acquired plant as well as that of the plant situated at Softa to meet the growing demand of its products in the market. The expanssion programme is under implementation.

The Company is also under process of launching new value added products like variants of flavored milk, UHT milk, Table butter in tubs, Cream in tetra packs, variants of cheeses and yogurts etc. Some of the products are in production test stage and your Company is confident of launching these products in the market in near future.

7. CORPORATE SOCIAL RESPONSIBILITY

Your Company defines Corporate Social Responsibility above the philanthropic activities and encompasses all related concepts such as corporate sustainability, business responsibility and corporate citizenship as the way a company balances its economic, social and environmental objectives while addressing stakeholder expectations and enhancing shareholder value. The Company is in Dairy sector, which is an important primary source of livelihood for Indian rural families. Its main objective is to provide rural employment and income generating opportunity particularly for small, marginal farmers and landless labour (men & women).

The Company shall continue to have among its objectives the promotion and growth of community residing in the vicinity of its plants, MCCs etc where it seeks to actively assist to uplift the social economy, standard of living and making this community self-reliant as community living around, many of our factories comprises the weakest sections of rural and tribal India with no access to basic amenities.

The Company has outsourced facilities to support the milk producers, who are directly linked in our commercial milk procurement activities. In order to help such farmers to increase the productivity of their cattle and buffaloes, Kwality Limited has provided, on a principal of no-profit-no-loss, good quality feed. Our Company is also providing such other technical inputs as vaccinations, artificial insemination, and free advice on prevention and cure of common diseases.

The "Sahayogi Foundation has been set up (''the foundation'')” as a non-profit trust in July 2014. The Foundation will work closely with the Board of Directors the CSR Committee in implementation of various CSR activities. The Foundation will also assist in reporting progress of deployed initiatives and in making appropriate disclosures periodically.

MILK PRODUCER CENTRIC PROCUREMENT SYSTEM

Your Company is committed to the upliftment of the rural community by implementing a milk producer centric approach to procure milk and enhance milk productivity. The approach is being operationalized by forming Village Level Collection Centres (VLCs). We have established a fair and transparent system through Automatic Milk Collection Units (AMCUs) comprising of Electronic Weighing Scale, Eko Milk Analyser, Data Processing Unit, printer & display to determine the rate of milk on the basis of quality to the milk producer. Milk is tested for quality parameters of fat & SNF, quantity is weighed through the Electronic machine, the rate payable is displayed and a payment slip generated by the computer is handed over to the milk producer. Milk payment is made on every tenth day and is transferred to the joint account, operated by the Village Service Provider (VSP) and representative of the milk producers.

We have been able to reach out to around 4000 villages situated across the states of Rajasthan, Haryana, Punjab and Uttar Pradesh through more than 2,70,000 farmers.

a) Productivity Enhancement Programme

Long inter-calving period is one of the greatest impediments in achieving sustainable dairying as the cost of the feed and forages are on the rise. Nutritional deficiency across the project area is a limiting factor which attributes to infertility in dairy animals. In order to provide good and balanced quality feed, Kwality Limited has outsourced animal feed processing under the brand of "DAIRY BEST”. Feed formulation is provided by the company with an optimal mix of grains and mineral mixture as the ingredient. Feed is processed under the supervision of the competent company representative to ensure the use of formulation ingredients during the processing.

b) Clean Milk Production Campaign

To ensure the procurement of good quality of raw milk and to create awareness among the milk producers, the Company had organised a campaign on "Clean Milk Production” across the milk shed area covering more than 30,000 farmers across various villages.

c) Dairy Animal Health Management

Preventive and curative health management training programs related to dairy animals digestive system, reproductive system and mastitis control were carried out in collaboration with Ayurvet Limited. About 50 Village Service Providers (VSPs) have been identified as "KISSAN MITRAS” and were imparted elementary training at Ayurvet Training Centre. These supvisors are working under experienced veterinarians to provide preventive treatment to dairy animals.

d) Financial Inclusion Initiative

Your Company has signed a MoUs with Allahabad Bank to assist milk producers to get access to bank credit for the purchase of dairy animals. Similar arrangement has also been worked out with Central Bank of Indian and Bank of India. SBI and PNB has sanctioned interest free loan of 50 lacs for purchase of 50 dairy animals to two of our VSPs under Kamdhanu Scheme through our assistance.

e) "Go Green” Initiative

In the pursuit of the fulfillment of the environmental commitment of harnessing solar energy and saving fossil fuel, your Company has provided 75 solar panels at the VLC level which provide power to operate the AMCUs and lights.

f) Capacity Building

Your Company recognizes the need to have quality and trained manpower in order to achieve competitive advantage. With a view to unleash the potential and sharpen the skills of the employees, a series of in-house and outbound training programs were organised. In accordance with the skill and competency requirements of the various groups, training programmes on effective communication, team building, milk chilling centre management, quality of milk testing, dairy animal health management were conducted.

Details of the programmes are as under:

S. No. Training Programme No. of programmes No. of participants

1. Effective 4 74 communication

2. Teambuilding 2 20

3. Dairy animal 2 40 health management

8. CREDIT RATING

BWR has assigned Long-Term rating of BWRA with Stable Outlook and BWR A1 as short term rating to Kwality Limited overall fund based Working Capital facilities.

9. FUTURE OUTLOOK

Over the past decade, significant transformation took place in the Indian demographic space which led to heightened consumer interest in value added products. This shift in the dynamics of the industry proved beneficial for the manufacturers since value added products have higher margins as compared to liquid milk segment. Considering the higher rate of profit margin expected from the value added Products, your Company has shifted focus to add new products in its existing product line. To increase procurement of milk through Producer Based Village Centres. |Your Company would be hiring more Milk Chilling Centers (MCC) and also setting up its own large MCCs with capacities of more than 50,000 LPD at different locations in North India.

Future Objectives :

Milk Procurement

* Kwality Limited has developed its own comprehensive milk procurement strategy to increase the procurement of high quality milk directly from the farmers

* Setting up Company owned Milk Chilling Centre with a capacity more than 50,000 LPD.

* A basis for payment for milk has been devised ensuring the supply of standardised milk by the farmers and preventing adulteration

* Farmers are provided with veterinary doctors to look after animal health and artificial insemination need, subsidised animal feed and annual FMD vaccination so as to provide incentive to farmers to be associated to us and thus increase the number of farmers under each VCC

New Products & Consumer Brands

* After the launch of the Low Cholesterol Pure Ghee, ''Livlite'', the Company plans to launch various new products catering to the increasing health needs of the Indian Consumers

* Launch of variants of flavored milk for retail consumers

* Setting up manufacturing facilities for products like variant of cheese, drinking yogurt, butter in tubs, cream in tetra packs etc.

Overseas Expansion

* Kwality FZE (100% subsidiary of your Company in dubai) plans to increase its import of SMP, WMP , other Dairy Products and derivatives , and then reprocess, pack and sell these products under its brands, in Dubai and export to other countries.

10. EXPORT

With the removal of ban on the export of skimmed milk powder in June, 2012 and whole milk powder & dairy whitener in November, 2012. Your Company started export of Dairy products and achieved the export turnover of Rs. 183.45 crores as compared to Rs. 71.74 crores in the FY 2012-13. In the next fiscal year the Company has estimated an increase in export sales based upon the rising demand of dairy products in the international market and the acceptance of our products from our existing and prospective buyers. The strategy to develop new products and target new export regions would continue, so that we have a broad based direction of exports.

However the export may be affected during the current year as the Government has withdrawn the VKYUG scheme on SMP.

11. SUBSIDIARY COMPANY & CONSOLIDATED FINANCIAL STATEMENTS

Your Company has a wholly owned subsidiary under the name and style of "Kwality Dairy Products - FZE" in free trade zone of United Arab Emirates to increase its global foot print and to develop and cater to the new markets.

Your Company has prepared Consolidated Financial Statements in accordance with Accounting Standard 21 and 23 of Companies (Accounting Standards) Rules 2006. The Consolidated Statements reflect the results of the Company and those of its subsidiary. As required by Clause 32 of the Listing Agreement with the Stock Exchanges, the Audited Consolidated Financial Statements together with the Independent Auditor''s Report thereon are annexed and form part of this Annual Report. These consolidated financial statements provide all relevant financial information about the Company.

12. CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 31st March, 2014 is attached as a part of the Annual Accounts of the Company.

13. MANAGEMENT DISCUSSION AND ANALYSIS

The management discussion and analysis of the Company for the year under review, as required under Clause 49 of the listing agreement with the stock exchanges, is given as a separate Section in Annual Report.

14. KEY MANAGERIAL PERSONNELS (KMP):

The Companies Act, 2013 introduced the new concept of Key Managerial Personnel (KMP) which includes the Managing Director, Chief Executive Officer or Manager, Whole Time Director, Company Secretary and Chief Financial Officer. The Key Managerial Personnel would guide the Boards to achieve their defined objectives and purposes by adhering to good Corporate Governance practices. KMP would also be looked upon by the Regulators for the non-compliances.

The new Companies Act, 2013 cast a significant duty on the KMPs in successful management of the company. It clearly specifies that whole time KMP cannot hold office in more than one company except in its subsidiary at same time.

As per Section 203 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 if any, and the rules made thereunder, Board of Directors of the Company has appointed Mr. Sunit Shangle as a Chief Financial Officer of the Company with effect from 12th August, 2014 under the preview of Key Managerial Personnel.

The Key Managerial Persons of the Company are:

Name Designation

Mr. Sanjay Dhingra Managing Director

Mr. Sidhant Gupta Director

Mr. Sunit Shangle Chief Financial Officer (CFO)

Ms. Deepa Kapoor Company Secretary

15. DIRECTORS''

The Board of your Company is constituted of four Directors comprising of Mr. Sanjay Dhingra, Chairman & Managing Director, Mr. Sidhant Gupta, Executive Director, Mr. Arun Srivastava, Non-Executive Independent Director and Dr. Rattan Sagar Khanna, Non-Executive Independent Director.

In terms of Section 203 of the Companies Act, 2013 an individual may be appointed as the Chairperson as well as the Managing Director of the Company at the same if it is provided in the Article of Association of the Company or the Company carries multiple businesses.

Therefore the Company in order to comply with the provisions of Section 203 proposes to alter its Article of Association in the ensuing Annual General Meeting in such way that an individual may be appointed as Chairman and Managing Director at the same time.

As per the Companies Act, 2013 Mr. Sanjay Dhingra, Chairman & Managing Director of Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board recommends his appointment/re-appointment.

A resolution seeking your approval on this item is included in the Notice convening the Annual General Meeting together with a brief profile of the Director being re-appointed.

16. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Director Responsibility statement, and based on the representation received from operating management, the Directors hereby confirm:

a) That in the preparation of the annual accounts for the period ended on March 31, 2014, the applicable accounting standards have been followed and there are no material departure.

b) That the directors had selected appropriate accounting policies and 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 March 31, 2014 and the profit of the company for that period.

c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

d) That the directors had prepared the annual accounts for the period ended on 31st March, 2014 as on going concern basis.

17. FIXED DEPOSITS

Your company has not raised any public deposit during the period under review. There was no public deposit outstanding at the beginning or at the end of the period.

18. HUMAN RESOURCE DEVELOPMENT

Development of Human Resource is essential for any organization for its growth. Organizations can sustain in the dynamic changing environment only through the efforts and competencies of their Human Resources.

Your Company recognizes human resource as its most valuable asset and believes that participation of employees in management can foster a sense of importance amongst them, and motivates them in establishing harmonious relations so as to enhance operational efficiency industrial peace and harmony, leading to higher productivity.

Your Company makes efforts to ensure that best talent is recruited, trained and retained. During the year, your Company has put emphasis on performance driven work culture and appropriate HR tools and processes have been deployed to ensure clear linkage with rewards. Strong recognition platforms have been created to encourage people to deliver stretched goals. There has been emphasis on training and development and career development opportunities.

To retain leadership position, the Company continuously innovates and customizes its human resource (HR) strategy to meet changing employee needs.

19. SUPPLY CHAIN AND DISTRIBUTOR''S NETWORK

Your Company''s supply chain agenda remained focused on to maximize customer value and achieve a sustainable competitive advantage and to manage this efficiently, improving performance on service, quality and cost. This was delivered with speed and agility in a Supply Chain setup, with the highest standards of safety and positive environmental impact. Your Company distributor''s network is as:

To tap emerging demand from small towns and interior markets, your Company had appointed super stockiest and distributors who service in small markets through their network. Your Company has more than 50super stockiest and approx. 900 distributors the country for all the product ranges under Brand Name of "Dairy Best”, "Kream Kountry” & "Livlite”.

20. INTERNAL AUDIT & CONTROL SYSTEM

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, and that the transactions are authorized, recorded and reported correctly. These internal controls are supplemented by an extensive programme of internal audit carried out by reputed firms of Chartered Accountants. Your Company has an Audit Committee consisting of three Directors; The Audit Committee, Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee, Board of Directors reviews the adequacy and effectiveness of internal control system and suggest improvement(s) if any. The Company has a robust Management Information System which is an integral part of the control mechanism.

21. BRANDS

Your Company has kept up the pace of innovation by working and investing aggressively behind new consumer understanding, new technologies and capability programs. Consistent with this objective your Company launched several products i.e. milk, curd, ghee, butter, paneer, lassi, chaach and ice-cream etc. under the brand name of ''Dairy Best'', Kream Kountry & Livlite.

Your Company continues to invest significantly in its structured innovation process, which is reflected in the launch of varied and differentiated offering to strengthen the business. Your Company has also initiated the process for breakthrough innovations through interactions with reputed institutions, which is expected to help build a strong platform for sustained and significant business leadership.

22. QUALITY STANDARDS

''Quality'' being the most powerful factor to capture, retain and enlarge customer base in the modern business scenario, your Company concentrates on the quality standards of its products for food safety and public health, standards of milk quality and quality control of milk and dairy products. To produce high-quality international standard milk and dairy products, quality standards for Food Safety is based on Codex Standards for Hazard Analysis and Critical Control Points (HACCP) to ensure safe and quality products for consumers. These control programs are aimed at avoiding abnormal and unsafe milk and dairy products entering into food channels for human consumption.

Your Company continuously works on raising the delivered quality of its products and processes. The culture of continuous improvement is being created through deploying various initiatives like Total Productive Maintenance (TPM) and Total Quality Management (TQM) and every new Kwality Limited product must pass through a full test to evaluate its life/yield, and overall performance under a wide range of environmental conditions.

Your Company review its quality standards and makes them stringent and updated on regular basis. To compete in International market for export of milk & milk products, it has become necessary to produce the dairy products with internationally acceptable quality and food safety standards. It is an indicator of the Company''s commitment for quality, food safety and maintaining environmental standards.

23. MANUFACTURING OPERATION

Your Company has made continuous improvement in its manufacturing operations in order to facilitates its processing activities and increase its operational efficiency. In that context, capacities were created at relevant locations to meet the growing demand by the consumers. These manufacturing operations are compatible with the health & safety standards and environment friendly.

These improved manufacturing operations increases the production capacities and capabilities both in your Company''s manufacturing units and delivers the products at relevant locations to meet the growing demand of the products by the consumers. All these have helped in creating the right capacity with superior technology to better serve the market.

Many of the key tasks in this industry are performed by dairy process workers. In the dairy industry, dairy process workers will operate a range of specialized equipment, often from sophisticated control room, to produce the variety of dairy products.

24. INFORMATION TECHNOLOGY

Information Technology has become a vital and integral part of every business and every company need to invest to improve its existing technology or acquire updated technology for creating differentiating products and services to stay ahead in a competitive and challenging environment.

Your Company continues to invest in Information Technology (IT) to improve operational efficiencies and enhance productivity. Advances in new manufacturing process technology may allow the use of mostly dairy ingredients and small amount of fresh milk in the manufacture of dairy product.

Your Company continuously focuses to build powerful IT capabilities for marketing. Your Company will also be implementing analytics in procurement to enable its procurement team to gain greater visibility and better forecast commodity price trends.

Your Company is in the process of implementation of ERP Solution which will not only help in standardization of the processes but also ensure timely corrective actions and remedial measure as the basis of MIS and information available on the real time basis.

25. ENVIRONMENT, HEALTH AND SAFETY

Your Company is sensitized to the need for responsible action that helps to sustain the environment and natural resources. At all the factories, efficiency and controlling cost extends beyond the commercial and includes the objectives of minimizing consumption of natural resources. During the past year, they continued to follow the two-fold approach to achieve this. On the one hand they continuously increased efficiencies in areas within their control and have been a forerunner in conserving water, saving energy, recycling waste and reducing pollution. On the other hand, as partners in growth, they enabled people in the community to be more aware and responsible towards the environment and its resources.

Your Company has an environmental policy for implementing an Environmental Management System (EMS) for meeting the content & purpose of organization''s Environmental Policy & Objectives which take into account governmental policies, environmental laws and regulations, and adheres to strict internal ''Kwality Environmental Management System'' norms and information about significant environmental aspects. It aims at use of processes, practices and techniques to avoid, reduce or control the creation, emission or discharge of pollutant or waste, in order to reduce adverse environmental impacts.

To maintain sustainable environmental stride, your Company took initiative for waste minimization of all its resources. With the objective to provide a healthy and safe environment, your Company has undertaken several safety measures at all its manufacturing units that include:

* Communicating the EHS Policy to all stakeholders.

* Assessing and identifying unsafe conditions at work place.

* Conducting Hazard and Risk Study at units.

* Documenting and implementing Safe Operational Control Procedures at units.

* Training people on good safety practices on the shop floor and elsewhere in the factory.

Your company has emphasized and worked towards sustainable use of natural and non-renewable resources. Within the factories there are continuous efforts to improve operational efficiencies, minimizing consumption of natural resources and reducing CO2 emission while maximizing production volumes. Your Company actively makes efforts to increase awareness about the need to sustain the environment and within the factories it constantly evaluates new initiatives that could reduce waste and emissions.

26. RISK MANAGEMENT

The risk management process is continuously improved and adapted to the changing global risk scenario. The agility of the risk management process is monitored and reviewed for appropriateness with the changing risk landscape. This includes risk assessment and mitigation at the company level, business / functional unit level, relationship level and project level.

27. AUDITORS

The Board proposes the re-appointment of M/s P.P. Mukerjee & Associates, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General, Meeting, till the conclusion of the Annual General Meeting of the Company to be held in the year 2019 (subject to ratification of their appointment at every AGM). The Company has received a letter from them that their appointment, if made, would be in accordance with Section 139 of the Companies Act, 2013 and that, they are not disqualified for such appointment within the meaning of Section 141 of the Companies Act, 2013.

28. LISTING

The equity shares of the Company continue to be listed on the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The annual listing fees for the current year have been paid to the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

29. PARTICULARS OF EMPLOYEES

The information required under Section 217 (2A) of the Companies Act, 1956 and the rules made thereunder, in respect of the employees of the Company has been excluded in terms of Section 219 (1)(b)(iv) of the Companies Act, 1956. The annual report excluding the aforesaid information is being sent to all the members of the company and others entitled thereto. Any member interested in obtaining a copy of such particulars may write to the Company at the registered office of the Company.

30. KWALITY EMPLOYEE STOCK OPTION PLAN 2014 (ESOP 2014)

The Company appreciates the critical role played by the people in the organizational growth. It strongly feels that the value created by its people should be shared with them. Keeping in view this objective and to promote the culture of employee ownership in the Company, it introduced Employee Stock Options to the employees of the Company under an Employee Stock Option Plan. Accordingly, a Plan namely the "Kwality Employee Stock Option Plan 2014" ("ESOP 2014") has been drafted. Shareholders'' approval is sought as per Section 62(1)(b) of the Companies Act, 2013 and Clause 6 of the SEBI ESOP Guidelines through Postal Ballot, result of which was declared on July 07, 2014.

However till date no ESOP''s have been granted to any employee.

31. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

Information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure on particulars in the report of the Board of Directors) Rules, 1988 is set out in an Annexure to this report.

32. CORPORATE GOVERNANCE

A separate section on Corporate Governance and a certificate from the statutory auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) form part of this Annual Report.

33. APPRECIATION

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Kwality Limited. To them goes the credit for the Company''s achievements.

We are very grateful to National Dairy Research Institute (NDRI) for providing us with invaluable support. National Dairy Research Institute (NDRI) had played a significant role in our growth and development.

Our Bankers, Insurers, Suppliers and Transport Contractors have been of great help to us in managing our growth and are our partners in success.

We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.

Your Directors take this opportunity to express their deep sense of gratitude to the Central and State Governments, customers, vendors and the society at large for their continues support.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For & on behalf of the Board of Directors Sd/- Place: New Delhi Sanjay Dhingra Date: 12th August, 2014 Chairman & Managing Director DIN: 00025376


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting their Twenty First Annual Report together with Audited Accounts of the Company for the financial year ended 31st March 2013.

1. Financial Highlights

Year ended 31.03.2013 Year ended 31.03.2012 Details INR in crores INR in cr ores

Turnover 3692.29 2394.63

Profit before Interest, Depreciation, 214.04 165.26

Extraordinary Items & Tax

Interest & Finance Charge 92.28 65.09

Depreciation 10.29 7.50

Profit Before Extraordinary Item & Tax 111.48 92.67

Extraordinary Items 3.00 0.00

Profit before Tax 108 48 92 67

Tax Expense 11.95 1.68

Profit after Tax 96.53 90.99

2. Turnover

Your Company''s turnover during the year was Rs. 3692.29 Crores as compared to Rs. 2394.63 Crores in the previous year, registering an increase of 54.19% over last year.

3. Profits

Profit from operations before ''Extraordinary Items & Exceptional Items'' for the year ended March 31, 2013 stood at 1 1 1.48 Crores as against 92.67 Crores in the previous year, reflecting an increase of 20.29%. Profit before Tax at Rs. 108.48 Crores vis-à-vis Rs. 92.67 Crores in the previous year reflects an increase of 17.05%. Profit after Tax for the Financial Year 2012-13 stood at Rs. 96.53 Crores as against Rs. 90.99 Crores in the previous year.

4. Dividend

Your Directors are pleased to recommend a final dividend of Rs. 0.10 per equity share of Rs. 1 each, which will be paid after your approval at the ensuing Annual General Meeting. The final dividend will absorb an amount of Rs. 2.03 crores (excluding dividend tax of Rs. 0.33crores). The dividend will be paid to members whose names appear on the company''s register of members after giving effect to all valid share transfers in physical form lodged with the Registrar and Transfer Agents (RTA) of the company on or before 14th

September, 2013, in respect of shares held in electronic form (demat mode), dividend will be paid to those "deemed members" whose names appear in the statement of beneficial ownership furnished by National Secures Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) at the close of business hours on 1 4th September, 2013.

5. Indian Dairy Scenario

As the world''s largest producer and consumer of milk and milk products, India represents one of the world''s most lucrative dairy markets, accounting for around 17% of world''s total Indian dairy sector has evolved from rags to riches…….

6. Significant Developments

Your Company has made significant developments during the year. During the year, your Company has increased its capital expenditure and taken steps towards to increase the production capacity of the plant situated at Softa.

Your Company has introduced the concept of Shopees in Delhi and NCR through which the product of the company is made available to the end consumers directly. The performancs of these shopees are remarkable and company is planning to increase the nnnnnnnners of these shopees in other regions. The company also strengthening its distribution channels so that the products of the company are made available easily to the

7. Milk Producer Procurement Network

During the year KDIL has increased Milk Procurement network in Haryana, Western Uttar Pradesh and Rajasthan. Milk producers supplied milk directly to the KDIL Village Milk Collection Centres producer-centric approach to buy raw milk based on the quality of milk. So as to build the confidence of the milk producers, KDIL has been practicing transparent system for purchase based on testing the quality of milk through highly efficient, Automatic Milk Collection Units. Similarly, milk is weighted on electronic weigh machines. The quantity, quality and price payable are automatically controlled by the computer. The machine prepares payment slip online that is immediately handed over to the milk producers supplying milk. The farmers are given payment slips based on a predetermined and openly declared price well in advance. The pricing approach followed by the KDIL is to pay a remmmmmmmmmm price to the milk producers. Payment to the milk producers is made every 10 days through the Authorised banks.

8. Corporate Social Responsibility

Supply of Cattle Feed

The purchase of milk is a core commercial activity. In addition KDIL has mounted milk productivity enhancement programme covering the dairy animals of the milk producers. This is one of the most important initiative taken up as Corporate Social Responsibility. KDIL provides balanced cattle feed sold on no-profit-no-loss basis to meet with the requirement of dairy farmer''s needs and preferences. Balanced cattle feed is manufactured according to feed formulations of the Bureau of Indian Standards. Feed is sold under the brand of DAIRY BEST in 40 kg bags & 50 kg bags in villages of western Uttar Pradesh and Rajasthan

Dairy Animal Health Supplements

For improving the health and immunity of the dairy animals, KDIL is supplying quality feed supplements manufactured by the NDDB subsidiary company. During 2012-13, KDIL covered 300 villages in Uttar Pradesh and 250 villages in Rajasthan. Plans are underway to cover more villages during the year 2013-14 to provide quality medicines and vaccines for the animals. Your Company had served free veterinary services through doctors/staff and through audio visual presentation. KDIL Collaborated with the NDDB-IIL to provide animal breeding services to milk producer members of KDIL in 287 villages. The programme is likely to be extended further during the next year.

Credit for purchase of dairy animal-kakky yojana

KDIL has also signed Memorandum of understanding with Allahabad Bank, for financing of dairy animals to the milk producers in Rajasthan and Uttar Pradesh. The dairy animal induction programme through the Allahabad Bank has been titled as the "Kwality Dairy Allahabad Bank Kisan Kalyan Yojana (KAKKY)". Since the programme has been started towards the close of the FY 2012-13, credit support has been provided for purchases of 49 dairy animals in the Bagpat district of the Uttar Pradesh.

Farmer capacity building activities

It is widely recognized that the dairy and animal husbandry education and research is well spread in India. But the major deficiency is taking the results of lab research and developmental education to the milk producers who are the end users. During the FY 2012-13, KDIL took up a major programme for rural level capacity building. Workshops were conducted to prepare KDIL field staff so that they are made capable and efficient in communication to the milk producers. The subjects included livestock nutrition, health and animal productivity. The KDIL rural extension team conducted a few workshops for village level service providers covering 580 Village Service Providers VSPs.

The KDIL extension team and VSPs together conducted 598 milk producers'' awareness programme. A total of 12,555 milk producers participated in these educational and awareness development workshops at village level.

Women participation

Smt. Sona Devi from Sabka vllage and Smt. Kunti Devi from Sirsali village, Uttar Pradesh participated as KDIL delegates in the Second All Indian Women Entrepreneurs Workshop held on 21st February 2013 in Delhi. Smt. Sona Devi shared her experiences of managing a small dairy animal- herd of 10 animals as women dairy entrepreneurs. Her efforts and contribution was applauded by the delegates. On the same day, both of them were invited by the All India Radio, New Delhi. They delivered talks sharing their practical experience and wisdom on dairy animals feeding, breeding and management. Their talk was later broadcast by the AIR under ''Krishi Jagat'' programme.

9. Change of Name & Registered Address of the Company

To expand its operations in line with the vsion of the Company the Board of Directors of the Company in their meeting held on 30.03.2013 proposed to change the name of the Company and recommended few new names and after approval from the Registrar of Companies, adopted the name of the Company to "Kwality Lmited. In this respect, special resolution had already been passed by the members of Cmpany on 12th day o June, 2013 at the Extraordinary General Meeting of the members of the Company.

The change of name of the Company as aforesaid does not change the legal status or constitution of the Company, nor does it affects any rights or obligation of the Company

The Registered office of the Company has been shifted from the State of Haryana to NCT of Delhi and the order for the same has been received by the Company from Regional Director dated on February 01, 2013.

The Registered office of the Company is KDIL House, F-82, Shivaji Place, Rajouri Garden, New Delhi-1 10027. All the communication shall henceforth be made on this address.

10. Credit Rating

India Rating & Research Pvt. Ltd (Fitch Group) has assigned Long-Term rating of Fitch BBB (ind)'' with Stable Outlook and A2 as short term rating to KDIL''s overall Working Capital facilities.

11. Future Prospects

Dairy Industry plays an important role in in the socio-economic development of India generating huge rural employment and providing cheap and nutritional food to a vast population. The Indian Dairy Industry is growing very rapidly, trying to keep a pace with the galloping progress around the world.

Presently, India is the world''s largest milk producer, accounting for more than 17% of the world''s total milk production. In the next 10 years, India''s dairy sector is expected to triple its production in view of expanding potential for export to Europe and West.

The urban market for milk products is expected to grow at an accelerated pace of around 33 % per annum to around Rs. 43,500 crore by 201 5. The emergence of a significant middle-class, urbanisation and the expansion of modern shopping habits by busy, health conscious and well- informed consumers is raising the consumption of packaged milk in India. Economic growth is sustaining the purchasing power of Asia''s middle-class, which is convenience store from Shanghai to Mumbai.

The global opportunities available to the Indian dairy industry arise primarily out of availability of a large quantity of competitively priced milk. Most of the traditional health and wellness products sold through the dairy sector are represented by processed dairy products such as malt beverages and infant nutritional products. The visible trends are that the consumption of milk products is on the rise. While it is growing at about 1-1.2% elsewhere in the developed world, India and China are beating these trends. A number of categories which are highly dependent on organised retail like frozen food products are expected to witness significant growth in the years ahead.

India enjoys dual distinction - it is both the world''s largest milk producer and the world''s largest milk consumer. However with 300 million cattle, it appears that the productivity with regard to milk is low. For sure, it is, but things are improving and the per capita milk consumption is expecd to rise by 4% in 2012, and milk production is forecasted to sustain its normal growth of about 2.3%. Thus India shows no sign of slowing down when it comes to milk. In fact, India ranks first in the world contributing about 17% of the total milk produced globally. Milk and milk products are emerging as important sources for improving nutritional security, providing 9.0% protein intake in rural areas and 12.5% in urban areas. Growing demand for milk products presents a great opportunity for your company and with modernise and scaling up the production of both the indigenous, exotic products and introducing new product range we feel we will be able to maintain our growth.

12. Export

With the removal of ban on the export of Skimmed Milk Powder in June''2012 and Whole Milk Powder & Dairy Whitener in November''2012, Company foresaw huge opportunity in international operations. The Company started export of goods and achieved the export turnover of Rs.71.74 crores ( in which Forgein currency earning Rs. 34.18 Crore ) in the FY 2012-13. In the current fiscal year the Company has estimated upright increase in export sales based upon the huge demand of dairy products in the international market and the acceptance of its products from its existing and prospective buyers.

The Company currently export to various countries including Algeria, Afghanistan, Bangladesh, Iran, Japan, Jordan, Lebanon, Togo, Pakistan, Saudi Arabia, Seychelles, Syria, Turkey, UAE, Yemen and is planning to export to other countries vz Australia,Netherland, Singapore, Holland

1 etc 3. Subsidiary Company & Consolidated Financial Statements

Your Company has a wholly owned subsidiary under the name and style of "Kwality Dairy Products - FZE" in free trade zone of United Arab Emirates to increase its global foot print and to develop and cater to the new markets.

In accordance with the Accounting Standards 21 and 23 of Companies (Accounting Standards) Rules, 2006 and pursuant to Listing Agreement with Stock Exchanges on consolidated financial statements which form part of this Annual Report. These consolidated financial statements provide all relevant financial information about the Company.

14. Cash Flow Statement

In conformity with the provisions of Cause 32 of the Listing Agreement, the Cash Flow Statement for the year ended on 31st March, 2013 is attached as a part of the Annual Account of the Company.

15. Management Discussion And Analysis

Thee ment discussion and analysis of the Cmpany for the year under review, as required under Clause 49 of the listing agreement with the stock exchanges, is given as a separate statement in Annual Report.

16. Director

As per the Articles of Association of the Company and relevant provisions of the Companies Act, 1956, Mr. Arun Srivastava, Director of Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The term of office of Mr. Sanjay Dhingra as Managing Director of the company has expired on 14th july 2013. The Board of Directors in its meeting held on 14th august 2013 have re-oppinted him to hold office as the Managing Director for another tenure of 5 years. The Board recommends their appointment/re-appointment.

A resolution seeking your approval on this item is included in the Notice convening the Annual General Meeting together with a brief profile of the Director being re-appointed.

17. Directors'' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies the representation received from operating management, the Directors hereby confirm:

a) that in the preparation of the annual accounts for the period ended on March 31, 2013, the applicable accounting standards have been followed and there are no material departure.

b) that the directors had selected appropriate accounting policies and 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 March 31, 2013 and the profit of the company for that period.

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and

d) that the directors had prepared the annual accounts for the period ended on 31st March, 2013 as a going concern basis.

18. Fixed Deposit

Your company has not raised any public deposit during the period under review. There was no public deposit outstanding as at the beginning or

19. Human Resource Development

Human resource continues to be the biggest asset of the Company. Your company aims at creating a corporate culture that respecs people, develop and trains them to deliver high quality performance with growth opportunities.

Talent development remained a key focus during the year under review. Well-structured HR systems were used for talent identification, development and retention. The organization continues to develop home -grown leaders to support its growth and maintain its competitiveness and leadership in the industry. The Company maintains cordial relations during the year under review.

Therefore, and in vew of the importance of these KDIL values, special attention is paid in matching between a candidate''s values and the Company culture. Your Company organizes workshop for employees.

20. Supply Chain

As you know, your Company operates in dairy products, which belong to an environment that is full of complex supply chain configuration. Your company has continued working to manage this efficiently, ensuring timely and efficient supply of materials and distributing the finished goods to consumers across the country. The Company is also working to reduce the complexities and increase the efficiencies further.

To tap emerging demand from small towns and interior markets, your Company had adopted a model of distribution, wherein your Company had appointed distributers who service in small markets through their network. Your Company has approx. 1000 distributors and 27000 retailers across the nation for all the product ranges under Brand Name of Dairy Best & Kream Kountry.

21. Internal Audit & Control System

Your Company has a well-defined internal control system, which is adequately monitored. Checks & balances and control systems have been established to ensure that assets are safe guarded, utilized with proper authorization and recorded in the books of account. The Internal control systems are improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements. These are supplemented by internal audit carried out by reputed firm of Chartered Accountants M/s Mohan Gupta & Co. Your Company has an Audit Committee consisting of three Directors. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggest improvement(s) if any. The Company has a robust Management Information System which is an integral part of the control mechanism.

22. Brands

Brand is an intangible asset for any company. It is basically a name, design or symbol which differentiates the company from others available in enhance its brand value.

Brand Value of the brand increases by product availability, preference of the consumer, awareness and association towards the product. Your company is continuously focussing on all the parameters to attract the consumers towards it, thus resulting in capturing the bigger market share for the company.

Your Company continues to invest significantly in its structured innovation process, which is reflected in the launch of varied and differentiated offering to strengthen the business. Your Company has also initiated the process for breakthrough innovations through interactions with reputed institutions, which is expected to help build a strong platform for sustained and significant business leadership..

23. Quality Standards

Each year your Company review its quality standards and makes them stringent and updated. To compete in international market for export of milk & milk products, it has become necessary to produce the dairy products with internationally acceptable quality and food safety standards. KDIL commitment to international quality standards for Food Safety is based on Codex Standards for Hazard Analysis and Critical Control Points (HACCP) to ensure safe and quality products for consumers. Every new KDIL product must pass a full test to evaluate its life/yield, and overall performance under a wide range of environmental conditions. KDIL also ensures that every shipment of products is up to your high quality standards. Extensively trained quality assurance inspectors maintain samples and thorough specification documentation for every product we offer. This enables us to enforce ongoing compliance with all specifications. Sophisticated sampling techniques and statistical methods directly enhance the effectiveness of these stringent QA procedures.

24. Manufacturing Operation

Your Company has revised its manufacturing footprint to support profitable growth. In that context, capacities were created at relevant locations to meet the growing demand by the consumers. Additionally, there was the continual focus on de-bottlenecking existing capacities and improving the productivity levels at current units.

The creation of these capacities and capabilities has helped the Company deliver the volume growth at improved customer service levels and at optimized costs.

The climate and natural resources allow production based on year-round pasture grazing. Many of the key tasks in this industry are performed by dairy process workers. In the dairy industry, dairy process workers will operate a range of specialised equipment, often from a sophisticated control room, to produce the variety of dairy products.

25. Information Technology

Your Company continues to invest in Information Technology to improve operational efficiencies and enhance productivity. During the year a business intelligence system was implemented so as to analyze the secondary sales data and information that would help drive the top line growth through identification of new opportunities and area of growth.

26. Environment And Safety

Your Company is sensitized to the need for responsible action that helps sustain the environment and natural resources. At all the factories, efficiency and controlling cost extends beyond the commercial and includes the objectives of minimizing consumption of natural resources. During the past year, they continued to follow the two-fold approach to achieve this. On the one hand they continuously increased efficiencies in areas within their control and have been a forerunner in conserving water, saving energy, recycling waste and reducing pollution. On the other hand, as partners in growth, they enabled people in the community to be more aware and responsible towards the environment and its resources.

Your Company complies with governmental policies, environmental laws and regulations, and adheres to strict internal ''Kwality Environmental Management System'' norms. The Environmental Perfomance Indicator [EPIs] helps to constantly monitor the use of natural resources in the manufacturing operations. The efforts to make the operations more environment-friendly are continuous and ongoing. Your Company continuously reviews energy usage to track and replace energy inefficient equipments, invests in installing processes that reduces energy losses, modifies processes to reduce energy needs, and innovatively use waste heat of one process as input for another. In consonance with the policy of the company, pollution prevention and waste minimization is done through reduction in pollution, recovery of Biogas, and utilization of treated water for plantation Your Company believes that every such step, no matter how small it may seem, is important.

Several initiatives were continued as part of energy saving measures. The drive for energy conservation is always a key priority and your Company continually strives to achieve this through process improvements and through enhancing equipment capability.

Your Company has adopted all the essential Techniques, Mechanisms and International Standard Measures for the Safety & Protection of workers at all the factories of the Company.

27. Auditors

The Board proposes the re-appointment of M/s P.P. Mukerjee & Associates, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of next Annual General Meeting. The Company has received a letter from them that their appointment, if made, would be within the limits specified under sections of the Companies Act, 1 956. A resolution seeking your approval on this item is included in the Notice convening the Annual General Meeting.

The observation made in the Auditor''s Report are selfexplanatory and therefore, do not call f or any further comments under section 217(3) of the Companies Act, 1956.

28. Lsting

The shares of the Company are listed at Bombay Stock Excha nge Limited (BSE) and National Stock Exchange of India Limited (NSE). The annual listing fees for the current year have been paid to the Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

29. Particulars of Employees

During the year under review no employee of the company is covered under the provision of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1 975.

30. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with the companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are set out in an Annexure to this report.

31. Corporate Governance

The Company complied with the Corporate Governance requirements as stipulated under the Listing Agreement with the stock exchanges. A separate section on corporate governance, along with a certificate of Auditors confirming the compliance, is annexed and forms the part of this Annual Report.

32. Appreciation

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Kwality Dairy (India) Limited. To them goes the credit for the Company''s achievements.

We are very grateful to National Dairy Research Institute (NDRI) for providing us with invaluable support. National Dairy Research Institute (NDRI) had played a role in our growth and development.

Our Bankers, Insurers, Suppliers and Transport Contractors have been of great help to us in managing our growth and are our partners in success.

We acknowledge their contributions and commit ourselves to continue and strengthen this fruitful alliance in all times to come.

Your Directors take this opportunity to express their deep sense of gratitude to the Central and State Governments, customers, vendors and the society at large for their continued support.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For & on behalf of the Board of Directors

Sd/-

Place: New Delhi Sanjay Dhingra

Date: 14th August, 2013 Chairman & Managing Director


Mar 31, 2012

Dear Shareholders,

The Directors have pleasure in presenting their Twentieth Annual Report together with Audited Accounts of the Company for the Financial Year Ended 31st March 2012.

1. FINANCIAL HIGHLIGHTS

Details Year ended Year ended 31.03.2012 31.03.2011 (Rs.In Crores) (Rs.In Crores)

Turnover 2394.63 1608.04

Profit before Interest, 165.26 99.73

Depreciation & Tax

Interest & Finance Charges 65.09 35.62

Depreciation 7.50 3.53

Profit before Tax 92.67 60.58

Provision for Tax including 1.68 14.63

Deferred Tax

Profit/(Loss) after Tax 90.99 45.94

2. OPEARTING HIGHLIGHTS

Your Company achieved turnover of Rs.2395 Crores for the year ended on March 31, 2012 as against Rs.1,608 Crores of previous year, registering a growth of 49%, EBITDA for the year under review stood atRs.165 Crores compared toRs.100 Crores of the previous year, a strong growth of 65%. Net Profit increased substantially by 98% to Rs.91 Crores from Rs.46 Crores of the previous year

Your Company has made significant developments during the year. The most important was the launch of nutrified liquid milk in pouches underthe premium brand 'Dairy Best in Delhi & NCR during December 2011. The USP of this product is that we have enriched it with calcium, vitamins A and D and that has been the nutritional differentiator in our

product. The Company launched branded, pouched, set curd and bulk packs in the market in November 2011 and there has been a good response to the curd. The bulk pack is used by the institutional market comprising of caterers, restaurants and the hotels. The Dairy Best Cottage Cheese and 'Dairy Best' Curd were also launched in November 2011 and it has been well received.

Your Company has been recognized and the brand has been registered by the Indian Railways Catering and Travel Corporation (IRCTC). You can enjoy the 'Dairy Best' dairy whitener in prestigious Shatabadi & Rajdhani Express trains originating in northern India and going to such destinations as Mumbai,Kolkata and Chennai.

Your Company has been recognized and the Brand 'Dairy Best' got registered with the richest Indian temple trust Tirumala Tirupati Devasthanams, Tirupati for supply of Cow Ghee. The 'Dairy Best' Cow Ghee would be used for manufacturing of "Tirumala Laddu" known internationally beca use it bears thetagof geographical indication (Gl)from Indian Patent office.

Your Company has taken on franchise two new plants during the year. These plants are located in Amritsar in the state of Punjab and Ajmer in the State of Rajasthan. These ventures will help the Company to achieve its mission in future times.

4. CREDIT RATING

Fitch Ratings has assigned Long-Term rating of Fitch BBB (ind)' with Stable Outlook and A2 as short term rating to KDIL's overall Working Capital facilities

5. FUTURE PROSPECTS

As your Company is planningto increase thesales of various dairy products, there is need for procuring more wholesome good quality milk directly from the milk producers. Your Company had made entry into direct procurement of milk through Producer Based Milk Procurement System by setting up Milk Chilling Centers (MCC) at different locations in North India. KDIL is providing Automatic Milk Collection Unit (AMCU) at every Village Level Collection Centre (VLCC). Your Company has planned to increase the number of milk chilling centers in future to procure clean, hygienic and wholesome good quality of raw milk.

Your Company is stable and focused on long term, sustainable and profitable growth. This stability is founded on the strength of its brands, increasing the portfolio of products, expanding and strengthening its distribution and sales network and by buildingand bondinga relationship of trust and confidence with the customers. The geographical extension of the markets along with the complete range of dairy products will increase the share sustainability.

6. CORPORATE SOCIAL RESPONSIBILITY

Your Company recognizes the importance of Corporate Social Responsibility towards all stakeholders in particular the rural. No doubt that your Company has commercial relationship with the rural milk producer and has set up a network of procurement activities. Your Company is well aware that the community of milk producers should be helped to increase the productivity of their cows and buffaloes through provision of various input facilities including how to reduce milk production cost. KDIL has provided, on a principle of no-profit-no-loss, good quality balanced cattle feed of ISI Standard. We would also provide such other technical inputs such as veterinary care, medicines, vaccines, artificial insemination, and free advice on prevention and cure of common diseases. The feed supplements and preventive are being sourced through the Indian Immunologicals Limited, a wholly owned subsidiary of the National Dairy Development Board. The Ill- is a pioneer in manufacturingfeed supplements, veterinary medicines, veterinary vaccines and human vaccines. These activities have been of great help in improvingthe milkyield per animal, thus improving the quality of life of milk producers associated with the Company. The field staff of the KDIL regularly organizes farmers' meetings to educate the farmers on common issues concerning health, hygiene, sanitation, farming practices and other social issues. They also help Milk Producers in their requirements of loan through financial institutions. Your company is pursuing with insurance companies to provide health insurance of Milk Producer & his family. KDIL expects to build up relationship with the milk producers through loyalty and trust.

Your Company is pursuing milk producer's centric approach and committed to promote transparent and fair milk procurement system. Company has visualized and recognized that milk producers are the major stake holders in the milk procurementsystem.

Long inter-calving period and short lactation period are major constrains in enhancing per animal productivity, to address these problems; the Company is providing them veterinary Consultation, Artificial Insemination facility at his doorstep. The Company is also providingthem area specific mineral mixture to improve animal fertility & production.

7. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs.0.10 per equity share of Rs.1 each, which will be paid after your approval at the ensuing Annual General Meeting. The final dividend will absorb an amount of Rs.203.19 lacs (excludingdividend tax of Rs.32.96 lacs). The dividend will be paid to members whose names appear on the company's register of members after giving effect to all valid share transfers in physical from lodged with the Registrar and Transfer Agents (RTA) of the company on or before 21st September, 2012, in respect of shares held in electronic form (demat mode), dividend will be paid to those "deemed members" whose names appear in the statement of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) at the close of business hours on 21stSeptember, 2012.

8. SUBSIDIARY COMPANY & CONSOLIDATED FINANCIAL STATEMENTS

Your Company has established a wholly owned subsidiary under the name and style of "Kwality Dairy Products - FZE" in free trade zone of United Arab Emirates to increase its global foot print and to develop and cater to the new markets.

The Company has obtained a license for dealing in various milk based products. The company will import the Skimmed Milk Powder, Whole Milk Powder and various derivatives of Milk, Ghee, Butter & other Dairy products from European nations. The Company will sell the products, both domestically and export to other countries.

The Company also plans to have the Milk Products Processing Unit in Dubai to process various milk powders and dairy ingredients.

The Company is managed by a team of highly experienced and talented individuals backed with several years of experience in the field. The Company has achieved the revenue of AED 1.56 crores and net profit AED 0.10 crores in the first 4 months of its incorporation ended March 31, 2012.

In accordance with the AccountingStandards 21 and 23 of Companies (Accounting Standards) Rules, 2006 and pursuant to Listing Agreement with Stock Exchanges on consolidated financial statements which form part of this Annual Report.

9. CASH FLOW STATEMENT

In conformity with the provisions of Clause 32 of the Listing Agreement and AS 3, the Cash Flow Statement for the year ended on 31st March, 2012 is attached as a part of the Annual Accounts of the Company.

10. MANAGEMENT DISCUSSION AND ANALYSIS

The management discussion and analysis of the Company for the year under review, as required under Clause 49 of the listing agreement with the stock exchanges, is given as a separate statement in Annual Report.

11. DIRECTORATE

As per the Articles of Association of the Company and relevant provisions of the Companies Act, 1956, Dr. Rattan Sagar Khanna, Director of Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board recommends this appointment/re-appointment. A resolution seeking your approval on this item is included in the Notice convening the Annual General Meeting together with a brief profile of the Director being re- appointed.

12. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 with respect to Director Responsibility statement, and based on the representation received from operating management, the Directors hereby confirm:

a) that in the preparation of the annual accounts for the period ended on March 31, 2012, the applicable accountingstandards have been followed and there are no material departure.

b) that the directors had selected appropriate accounting policies and 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 March 31, 2012 and the profit of the company for that period.

c) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities; and

d) that the directors had prepared the annual accounts for the period ended on 31st March, 2012 as a going concern basis.

13. FIXED DEPOSIT

Your company has not raised any public deposit during the period under review. There was no public deposit outstandingas at the beginning or at the end of the period.

14. HUMAN RESOURCE DEVELOPMENT

The long term success of the Company depends on its capacity to attract, retain and develop employees who are able to ensure its growth on a continuing basis. This is a primary responsibility for all managers. KDIL policy is to hire staff with personal attitudes and professional skills enabling them to develop a long term relationship with the Company. Each new member joining KDIL is to become a participant in developing a sustainable quality culture which implies a commitment to the organization and a sense for continuous improvement leaving no room for complacency. Therefore, and in view of the importance of these KDIL values, special attention will be paid to the matching between a candidate's values and the Company culture. Your Company organizes workshop for the officers and staff for human development and capacity building on a regular basis.

15. SUPPLY CHAIN

As you know, your Company operates in dairy products, which belong to an environment that is full of complex supply chain configuration. Your company has continued working to manage this efficiently, ensuring timely and efficient supply of materials and distributing the finished goods to consumers across the country. The Company is also working to reduce the complexities and increase the efficiencies further.

Duringthe year, your Company extended to cover all supply chain and procurement processes. A series of problem solving initiative have been completed with the improvement in productivity, working capital, waste, Cost& service levels.

In the current environment, where Information Technology has become a cost effective tool in the area of networking, the Company is also using Information Technology to generate the optimum network and this was rigorously followed to deliver the least cost in manufacturing and distribution.

During the year 2011-12 various programs has been rolled out to select vendors, where the vendors are supported through a pre-assessment process, consultant visits and continuous engagements and education.

The singular focus of supply chain has been to improve availability ofthe stock and reduce overall cost.

16. SAP IMPLEMENTATION

Your company has decided to implement a common ERP system to automate and standardize business processes and enhance operational efficiencies. KDIL is partnering with IBM to implement IBM SAP Dairy Solution - developed specifically for dairy industry and builtaround industry best practices.

The new centralized system will provide single source of financial and other transactional information (e.g. operational metrics like inventory, sales, costs etc.). This will enhance accuracy of information as well as better operational control. Moving to a single platform will also reduce costs associated with managing and maintaining multipletransaction system.

Key highlights of the partnership with IBM are:

- Process efficiencies through in built industry best practices

- Rapid implementation based on the proven Dairy template

- Best in class ERP software platform in SAP

- Fixed, predictable costforthe contract tenure

- On cloud model avoidsall IT capability hassles.

- Subscription (per user) based pricing. Pay as you grow model

- Low cash outflow. No upfrontcapital investment

- Foundational business intelligence and reporting capabilities

17. BRANDS

Since branding is very important to any business in the current competitive environment, your Company is continuously working to enhance its brand value. During the Financial year 2011-12, your Company has strengthened the brand "Dairy Best" with the launch of new products in market viz., Paneer, Dahi and Milk in three variants.

Your Company is aware that Brands provide the momentum for bus in ess growth. Thereto re, duringtheyear, investment in Research and Development, Advertisement and Sales Promotion were increased and strengthened further through making efforts in renovation and innovation.

Your Company continues to invest significantly in its capacity buildingand structured innovation process, which is reflected in the launch of varied and differentiated offeringto strengthen the business. Your Company has also initiated the process for breakthrough innovations through interactions with reputed institutions, which is expected to help build a strong platform for sustained and significant business leadership and growth.

Through Brand enhancementthere is quicker identification of your company products in the market, the consumers have recognized the products, which can also encourage your company to make innovation in the field of Brand.

18. QUALITY STANDARDS

Each year your Company re-visits its quality standards and makes them stringent and updated, parallel to Indian and International quality standards. With the increase in milk production, quality standards prevalent today in milk production, milk collection and processing needs constant revision and improvement. The microbiological quality of milk is normally poor due to lack of knowledge and awareness about clean milk production at the grass root levels as well as the lack of post milk chilling facilities in the rural areas. To compete in International market for export of milk & milk products, it has become necessary to produce the dairy products with Internationally acceptable quality and food safety standards. KDIL commitment to International quality standards for Food Safety is based on Codex Standards for Hazard Analysis and Critical Control Points (HACCP) to ensure safe and quality products for consumers.

The Company has obtained Certificate of Registration with US food and drugadministration.

19. MANUFACTURING OPERATION

Your Company has revised its manufacturing footprint to support profitable growth. In that context, capacities were created at relevant locations to meet the growing demand by the consumers. Additionally, there was the continual focus on de-bottlenecking existing capacities and improvingthe productivity levels at current units.

The creation of these capacities and capabilities has helped the Company deliver the volume growth at improved customerservicelevelsandatoptimized costs.

20. INFORMATION TECHNOLOGY

Your Company continues to invest in Information Technology to improve operational efficiencies and enhance productivity. During the year a business intelligence system was implemented so as to analyze the secondary sales data and information that would help drive the top line growth through identification of new opportunities and area of growth.

During the year, your Company also consolidated its core ERP infrastructure using new generation servers leadingto significant reductions in energy/ power consumption and enhanced efficiencies.

21. ENVIRONMENT AND SAFETY

Your Company is sensitized to the need for responsible action that helps sustain the environment and natural resources. At all the factories, efficiency and controlling cost extends beyond the commercial and includes the objectives of minimizing consumption of natural resources. During the past year, they continued to follow tr approach to achievet this. On the one hand they continuously increased efficiencies in areas within their control and have been a forerunner in conserving water, saving energy, recycling waste and reducing pollution. On the other hand, as partners in growth, they enabled people in the community to be more aware and responsible towards the environmentand its resources.

Your Company complies with governmental policies, environmental laws and regulations, and adheres to strict internal 'Quality Environmental Management System' norms. The Environmental Performance Indicator [EPIs] helps to constantly monitor the use of natural resources in the manufacturing operations. The efforts to make the operations more environment-friendly are continuous and ongoing. Your Company continuously reviews energy usage to track and replace energy inefficient equipments, invests in installing processes that reduces energy losses, modifies processes to reduce energy needs, and innovatively use waste heat of one process as input for another. In consonance with the policy of the company, pollution prevention and waste minimization is done through reduction in pollution, recovery of Biogas, and utilization of treated water for plantation Your Company believes that every such step, no matter how small it may seem, is important. Several initiatives were continued as part of energy saving measures. The drive for energy conservation is always a key priority and your Company continually strives to achieve this through process improvements and through enhancing equipment capability.

Your Company has adopted all the essential techniques, mechanisms and International Standard Measures for the Safety and Protection of workers at all the factories of the Company.

23. AUDITORS

The Board proposes the re-appointment of M/s P.P. Mukerjee & Associates, Chartered Accountants, as Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuingAnnual General Meeting until the conclusion of next Annual General Meeting. The Company has received a letter from them that their appointment, if made, would be within the limits specified under sections of the Companies Act, 1956.

A resolution seeking your approval on this item is included inthe Noticec on vening the Annual General Meeting.

The observation made in the Auditor's Report are self- explanatory and therefore, do not call for any further comments under section 217(3) of the Companies Act, 1956.

24. LISTING

The shares of the Company are listed at Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

25. PARTICULARS OF EMPLOYEES

Duringtheyear under review no employee of the company is covered under the provision of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

26. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.

The particulars as prescribed under Section 217(l)(e) of the Companies Act, 1956 read with the companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are set out in an Annexure to this report.

27. CORPORATE GOVERNANCE

A report on corporate governance, along with a certificate from Auditors of the Company, regarding the compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreement, are annexed to this report.

28. APPRECIATION

Your Directors acknowledge with gratitude the continuing co- operation and assistance rendered by the Central Government, State Government, Financial Institutions, Banks, Suppliers, and other organizations in the working of the Company.

The Directors also wish to place on record their deep sense of appreciation for dedicated services rendered by officers, staff and workmen of the company.

The Board taken this opportunity to express its gratitude for the continuous support received from shareholders.

For & on behalf of the Board of Directors

Sd/- Place: New Delhi Sanjay Dhingra

Date : August 14,2012 Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting their Eighteenth Annual Report together with Audited Accounts of the Company for the financial year ended 31st March 2010.

FINANCIAL HIGHLIGHTS (Rs. in Lacs)

Particulars Year ended Year ended 31.03.2010 31.03.2009

Turnover 105412.45 58280.28

Profit before Interest, Depreciation & Tax 5022.52 2637.87

Interest & Finance Charges 1865.14 1111.74

Depreciation 182.61 124.03

Profit before Tax 2974.77 1402.09

Provision for Tax including FBT and Deferred Tax 1180.11 463.73

Profit/(Loss) after tax 1794.65 938.36

Results of Operations

The year under review was a transformational year for the Company. This was a landmark year for the Company as it delivered record financial and operating performance amidst challenging and volatile market conditions.

During the year, your Company has scaled new heights and set several new benchmarks in terms of sales, profits, networth and assets. Turnover for the year was Rs. 1054.10 crore against Rs. 582.80 crore in the previous year, reflecting a growth of 81%.

Profit after tax, for the year was Rs. 17.94 crore as against Rs. 9.38 crores for the previous year, registering an increase of 91%.

LAUNCHING OF A SUPER BRAND "DAIRY BEST"

Your Company has launched a Super Brand "Dairy Best" to deliver premium quality dairy products. Initially your Company has introduced a New Premium Quality Product: "Dairy Best - Desi Ghee". The "Dairy Best" Brand products are made of the best quality fresh milk procured directly from the Dairy owners through the village level milk collection centers. The "Dairy Best" Brand is packed in tamper proof packaging. It is rich in antioxidants and act as an aid in absorption of vitamins and minerals from other food, feeding all layers of body tissues and serving to strengthen the immune system. A high concentration of butyric acid, a fatty acid that contains anti-viral properties, is believed to inhibit the growth of cancerous tumors. It is used in Indian beauty creams to help soften skin, and as typical for the treatment of burns and blisters. The tamper proof packaging ensures that the consumer gets the original quality products.

FUTURE PROSPECTS

Kwality Dairy plans to procure milk through village level milk collection network by setting up Milk Chilling Centres (MCC). Each center covers about 100 villages spread over 8-10 procurement routes. Each village level milk collection point has 90-100 farmers pouring milk. Each centre generates avenues for earning livelihood for about 9000 farmers, thus bringing economic upliftment in the area.

The total projected milk collection in the next three years through this network will be 18-20 Lac Litres Per Day (LLPD), from about 3,50,000 farmers from 5000-6000 villages. KDIL further plans to augment the processing facilities accordingly and enhance the plant capacity to match the available milk quantities by installing new and latest machinery in the corresponding period.

KDIL will work towards achieving the objectives of ensuring remunerative prices for milk producers through the efforts in milk procurement by directly associating with the farmers in a mutually beneficial relationship.

KDIL is sourcing the good quality feed to be supplied to the farmers and is working with experts in the field to see the possibilities of increasing productivity.

Your Company has launched a Project which provides technical inputs to dairy farmers to improve the yield per animal, and to make the dairy operations, as an occupation viable and profitable.

KDIL organizes various camps and village meetings regularly to discuss the requirements of the farmers and fulfilling the needs for Vaccination, AI, Cattle feed and facilitating the loan requirements of the farmers through financial institutions. Further these camps also educate the farmers on the general quality of life improvement and hygienic living standards alongwith other social issues.

Your Company is working towards raising the quality and hygiene of raw milk and improve the health and life style of the farmers. KDILs contributions to the creation of prosperity on an ongoing and sustainable basis will transform the milk procurement area in prosperous and vibrant milk shed.

KDIL plans to put up modern Dairy Farms with a vision to produce good quality milk at large Dairy Farms which are professionally managed thereby resulting in economical milk production. The Dairy Farms will be equipped with modern techniques, to efficiently handle and manage up to 10000 cows at one farm, and automatic milking parlours for clean milk production. Such farms will even out the seasonal fluctuations and assure supplies round the year.

Further the Farms will also be used for production of Organic Milk in the near future and KDIL plans to explore the market potential for organic milk products.

KDIL has been engaged in the R&D of various value added products and will be launching these products shortly in the Indian market. The new dairy products will be added to the current product mix and a complete range of these products will be tailored to meet the expectations of Gen-Next. The new products range will include products such as high fruit yogurts, sterilized flavoured milk in HDPE bottles, long life milk in tetrapacks, plain curd , paneer, white and salted butter in tubs, ready tea and coffee premixes, instant health drink premixes, liquid milk in pouches and Low Cholesterol Ghee.

KDIL has immediate plans of foraying in the nutraceuticals market and introduce products to meet the national health requirements.

Your Company is stable and focused on long term, sustainable and profitable growth. This stability lies in the strength of its brands, in its varied portfolio, which have over the years built a relationship of trust and confidence with consumers. The geographical extension of the markets along with the complete range of dairy products expansion will increase the market share substantially. The products meeting international standards of quality will be shortly launched overseas to exploit the international markets and contribute to exports and foreign exchange earnings.

Your Company is poised to take the rightful position, as one of the leading players, in the Indian Dairy Industry.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 0.10 per equity share of Rs. 1 each, i.e. 10% which will be paid after your approval at the ensuing Annual General Meeting. The final dividend will absorb an amount of Rs. 201.38 lacs (excluding dividend tax of Rs. 34.53 lacs). The dividend will be paid to members whose names appear on the Companys Register of Members after giving effect to all valid share transfers in physical form lodged with the Registrar and Transfer Agents (R&T Agents) of the Company on or before September 22, 2010; in respect of shares held in electronic form (demat mode), dividend will be paid to those "deemed members" whose names appear in the statements of beneficial ownership furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as at the close of business hours on September 22, 2010.

SUB-DIVISION OF SHARES

Pursuant to the approval by shareholders by Postal Ballot, the face value of the equity share has been split from Rs. 10/- to Rs. 1/- sub dividing each equity share of Rs. 10/- each into 10 equity shares of Rs. 1/- each. As a result of sub-division the number of paid up equity shares have increased from 1, 82, 00,000 to 18, 20, 00, 000 equity shares of Rs. 1/- each, though the total paid up capital amount remains the same.

INCREASE IN AUTHORISED CAPITAL

During the year Company has initiated process to increase its Authorised Share Capital from Rs. 20,00,00,000/- (Rupees Twenty Crores) divided into 20,00,00,000 (Twenty Crores) Equity shares of rupee one each to Rs. 100,00,00,000/- (Rupees One Hundred Crore only) divided into 100,00,00,000 (One Hundred Crore) Equity Shares of rupee one each ranking pari-passu with the existing Equity Shares. For shareholders approval the Company dispatched the Postal Ballot Notice dated March 29, 2010. The result of the Postal Ballot was declared on May 7, 2010 for approving the same.

BONUS ISSUE

Promoters of your Company are totally committed to uphold and protect the interests of shareholders. To deliver and create best possible value addition for shareholders, Directors had proposed and after shareholders approval, issued bonus shares to shareholders. Moreover in line with strict discipline & in tune with best possible Corporate Governance Practices, Promoters of your Company have voluntarily sacrificed by not entitling themselves bonus shares. As a result bonus shares have been issued only to non promoter shareholders. This is a clear gesture justifying intention of the Promoters and Management that the shareholders are an essential part of the Kwality Dairy Family and shareholders must receive the benefits of progress & success achieved by the Company. Thus Board had approved and recommends issue and allotment of Bonus shares by capitalization of Reserves and Surplus of the Company vide Postal Ballot Notice dated April 19, 2010.

Bonus shares issued and allotted to equity shareholders (except to shareholders belonging to promoter and promoter group) of Company in proportion of five new fully paid up equity shares of Rs. 1 (Rupees One Only) each for every seven fully paid equity shares of * 1 (Rupees One Only) each held. The record date for the same was June 16, 2010.

As a result the Companys issued, subscribed and paid up equity share capital has increased from Rs. 18,20,00, 000/- (18,20,00,000 equity shares of Rs.1/- each) to Rs. 20,31,86,434/- (20,31,86,434 equity shares of Rs.1 /- each).

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis of financial condition of the Company for the year under review, as required under clause 49 of the listing agreement with the stock exchange, is given as a separate statement in Annual Report.

DIRECTORS

As per the Articles of Association of the Company and relevant provisions of the Companies Act, 1956 Mr. Gulshan Kumar, Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Rajiv Sharma resigned from the Board of Directors with effect from 18th May, 2010. The Board expressed its sincere appreciation and thanks for the services rendered by Mr. Rajiv Sharma to the Company.

Pursuant to Section 260 and other applicable provisions of Companies Act, 1956, Dr. Rattan Sagar Khanna was appointed as an Additional Director of the Company with effect from May 18, 2010. Dr. Rattan Sagar Khanna would hold office till the conclusion of the Annual General Meeting of the Company scheduled to be held on September 27, 2010. The requisite notices together with necessary deposits have been received from a member pursuant to Section 257 of the Companies Act, 1956, proposing the election of Dr.Rattan Sagar Khanna as a Director of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956 with respect to Directors Responsibility Statement, and based on the representation received from operating management, the Directors hereby confirm :

a) that in the preparation of the annual accounts for the period ended on March 31, 2010, the applicable accounting standards have been followed and there are no material departure;

b) that the directors had selected appropriate accounting policies and applied them consistently and that the judgements 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 March 31, 2010 and the Profit of the Company for that period;

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

d) that the directors had prepared the annual accounts for the period ended on March 31, 2010 on a going concern basis.

FIXED DEPOSITS

Your Company has not raised any public deposit during the period under review. There was no public deposit outstanding as at the beginning or at the end of the period.

AUDITORS

M/s Mukesh K. Arora & Co., Chartered Accountants, retiring auditors of the Company have expressed their inability to continue as Auditor of the Company and have requested not to consider their reappointment for Financial Year 2010-11. The Board of Directors have accordingly approved nomination of M/s P. P. Mukerjee & Associates, Chartered Accountants, as Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting. The Company has received a letter from them that their appointment, if made, would be within the limits specified under Section 224(1B) and other applicable provisions of the Companies Act, 1956.

LISTING

The shares of your Company are listed at The Bombay Stock Exchange Limited, Mumbai. The Company has made an application for listing of its shares on National Stock Exchange of India Limited.

PARTICULARS OF EMPLOYEES

During the year under review no employee of the Company is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Section 217 (1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are set out in an Annexure to this report.

CORPORATE GOVERNANCE

A report on corporate governance, along with a certificate from Auditors of the Company, regarding the compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreement, are annexed to this report.

APPRECIATION

Your Directors acknowledge with gratitude the continuing co-operation and assistance rendered by the Central Government, State Government, Financial Institutions, Banks, Suppliers, and other organizations in the working of the Company.

The Directors also wish to place on record their deep sense of appreciation for dedicated services rendered by officers, staff and workmen of the Company.

The Board taken this opportunity to express its gratitude for the continuous support received from shareholders.

For & on behalf of the Board of Directors

Place : Faridabad Gulshan Kumar

Date : August 30, 2010 Chairman

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