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Directors Report of LN Industries India Ltd.

Mar 31, 2016

DIRECTORS REPORT

To,

The Members of LN INDUSTRIES INDIA LIMITED.

The Directors hereby present the Twenty Second Annual Report of your Company together with the Audited Accounts for the financial year ended March 31, 2016 and the Report of the Auditor thereon.

FINANCIAL RESULTS:

(Rs. In Lakhs

Particulars

For the year ended 31st March '' 2016

For the year ended 31st March '' 2015

Revenue from operations

0.00

46.34

Other Income

5.68

2.86

Total Income

5.68

49.20

Total Expenditure

2,875.88

443.17

Profit / (Loss) before exceptional items

(2,870.20)

(393.97)

Exceptional Items

2.60

0.97

Profit / (Loss) before extraordinary items

(2,872.80)

(394.94)

Extraordinary items

0.00

0.00

Profit / (Loss) before tax

(2,872.80)

(394.94)

Less : Provision for tax

0.00

0.00

Profit / (Loss) after tax for the year

(2,872.80)

(394.94)

Basic and Diluted EPS

(2.83)

(0.39)

STATE OF COMPANY''S AFFAIRS:

The manufacturing operations of the Company have not taken place during the year owing to non-availability of the working capital from the banks as the credit facilities from State Bank of Hyderabad have become NPA. Company is taking steps to resume the operations by entering into job work arrangement with various vendors. The developer to whom the Company has given the Company Land for development has obtained approvals from the regulatory authorities and the development activity is expected to commence. The Company is yet to settle dues of the JM Financial ARC Private Limited with whom the Company assets are charged.

INDUSTRY STRUCTURE AND DEVELOPMENT:

The Company is engaged in the manufacture of Texturized Twisted Polyester Dyed Yarn and Nylon Dyed Yarn.

The product of the Company Polyester Dyed Yarn is used in the manufacturing of Dress Materials, Sarees. Shirting, Suiting and Furnishing Fabrics. Another Product Nylon Dyed Yarn in used in the manufacture of Socks, Sport Gear etc.,

With the emphasis of the Government in giving inputs to the Textile Industry Company has opportunity to revive its operations. The products of the Company command good brand recall due to their presence over past 2 decades. The market offers opportunities to the Company to for scaling up its operations.

LISTING OF EQUITY SHARES:

The Company''s Equity shares are presently listed on BSE Limited and the Company has paid the Annual Listing Fees to the said Stock Exchanges for the financial year 2015 - 2016.

TRANSFER TO RESERVES:

The Company has incurred a loss of Rs.2,872.80 lacs during the year. The said loss is set off against the reserves held by the Company.

CHANGE IN NAUTURE OF BUSINESS, IF ANY:

During the year under review, there has been no change in the nature of business of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT:

There are no material changes and commitments in the business operations of the Company from the financial year ended 31st March, 2016 to the date of signing of the Directors Report.

PERFORMANCE AND FINANCIAL POSITION OF THE SUBSIDIARY COMPANY:

The Company does not have any subsidiaries or associate companies. Hence the required information under this head is not being attached to the report.

CORPORATE GOVERNANCE:

The Corporate Governance Report and a Certificate by the Statutory Auditors regarding compliance of the conditions of Corporate Governance by your Company as stipulated in Regulation 34 of SEBI (Listing Obligations and Disclosure Requirement) Regulation 2015 with Stock Exchanges are annexed to this Report.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

All the Independent Directors have given declarations of Independence, as required pursuant to Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of Independence as provided in subsection (6) of Section 149 of the Companies Act, 2013.

MEETING OF INDEPENDENT DIRECTORS:

The performance of the Individual Directors on the Board and the Committees thereof is done by the Board and the Independent Directors in their exclusive meeting done as per the policy formulated by the Board in this regard.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the performance evaluation of the Board, the Committees of the Board and Individual Directors is done on annual basis.

The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

CHANGES IN DIRECTORS:

INDUCTIONS:

During the year there were no inductions on to the Board of the Company.

RE - APPOINTMENTS:

As per the provisions of the Companies Act 2013, Mr.G.Laxma Reddy (DIN: 06902285) retires at the ensuing Annual General Meeting and being eligible, seek his re-appointment. The Board recommends his reappointment.

None of the independent directors will retire at the ensuing Annual General Meeting.

RESIGNATIONS:

No Directors have resigned during the year under review.

CHANGES IN KEY MANAGERIAL PERSONNEL:

There have been no changes in the Key Managerial Personnel.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS:

During the year under review Six (6) times Board meetings were held on the following dates:

1. 21st April '' 2015.

2. 15th May''2015.

3. 13th August '' 2015.

4. 29th August '' 2015.

5. 14th November '' 2015.

6. 13th February '' 2016.

The intervening gap between any two Board Meetings was within the period prescribed under the provisions of the Companies Act, 2013. All the recommendations given by the Audit Committee are accepted by the Board.

INTERNAL FINANCIAL CONTROL:

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:

i. in the preparation of the annual accounts for the financial year 2015 - 16, the applicable accounting standards have been followed and there are no material departures;

ii. selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;

iii. and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. prepared the annual accounts on a going concern basis;

v. laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and

vi. devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

CORPORATE SOCIAL RESPONSIBILITY:

Your Company does not fall under any of the criteria specified under the provisions of Companies Act, 2013. Hence the Company has not constituted any committee and is not required to furnish information required under the provisions of the said Act.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

There have been no loans, guarantees and investments under Section 186 of the Act during the financial year 2015 - 16.

TRANSACTIONS WITH RELATED PARTIES:

There were no related party transactions during the year except that entered in the ordinary course of business and on arms length basis. There were no materially significant related party transactions between your Company and the Directors, promoters, Key Managerial Personnel and other designated persons which may have a potential conflict with the interest of Company at large.

Form AOC - 2 for disclosure of particulars of contracts / arrangements, entered into by your Company with related parties is attached herewith as Annexure - I.

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

Information in accordance with clause (m) of sub section (3) of Section 134 of the Companies Act, 2013 is annexed herewith as Annexure - II to this report.

PARTICULARS OF EMPLOYEES:

The information and statement containing particulars of employees required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company are provided in Annexure -III and forms part of this report.

The Nomination and remuneration committee of the Company has affirmed that the remuneration is as per the Remuneration policy of the Company.

Your Directors take this opportunity to record their deep appreciation of the continuous support and contribution from all employees of the Company.

EXTRACT OF ANNUAL RETURN:

As required under Sub-Section (3) of Section 92 of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 an extract of Annual Return in Form MGT - 9 forms part of this report as Annexure - IV.

DEPOSITS:

During the year under review your Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.

AUDITORS:

Statutory Auditors:

At the Annual General Meeting held on September 30, 2015, M/s. Kumar & Giri, Chartered Accountants, were appointed as the Statutory Auditors of the Company to hold office till the conclusion of the 22nd Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Kumar & Giri, Chartered Accountants, as the statutory auditors of the Company is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

There are no specifications, reservations, adverse remarks on disclosures by the Statutory Auditors in their report. They have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

DISCLOSURE AS PER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there under.

During the financial year 2015-16, the Company has not received any complaints on sexual harassment.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

ACKNOWLEDGEMENTS:

Your Directors place on record their appreciation for the assistance and co-operation extended by the Bankers, State and Central Government Agencies. Your Directors also thank all the Customers, Members and Employees for their valuable support and confidence in the Company.

on behalf of the Board of Directors

for LN INDUSTRIES INDIA LIMITED

Place: Hyderabad.

Date: 30-08-2016. G. SURENDER REDDY

Managing Director

DIN:00109441


Mar 31, 2014

Dear Share Holders,

The Directors have pleasure in presenting the 21st Annual Report and the Audited Statement of Accounts of the Company for the Year Ended 31st March ''2014.

FINANCIAL RESULTS: (Rs. In Lakhs)

year ended year ended Particulars 31st March 2014 31st March 2013

Net Income from Operations 310.30 1476.15 Gross Profit/(Loss) (before Finance Charges,

Depreciation, Taxation & Extraordinary Items) (42.14) 250.78

Less : Finance Charges 770.87 191.01

Less : Depreciation 164.90 189.47

Less : Provision for Taxation 0.00 0.00

Less : Extraordinary Items 1859.09 151.35

Profit / (Loss) (2837.00) (281.05)

OPERATIONS:

During the year the Company, operations are adversely effected due to low level of operations. During the year the Company has relocated its Dyeing facilities to Sarigam. The same also effected the production during the year. The volatile foreign exchange rates fluctuations have totally curtailed the Company export market. The fact that the entire south textile market was under the grip of erratic power supply has put the Company turnovers under strain. The Company is also venturing for enhancement of its product mix and the new markets and distributions in improving its turnovers and the Company performance stands to improve in the coming periods. The land development activity on the land belonging to the Company has not yet commenced during the year, owing to the state bifurcation tussle.

MARKETING:

The domestic markets where the Company''s products are sold have not registered significant growth during the year. The Company with its proven quality products has been able to sustain its markets. The Company has identified new product mix, potential market areas for spreading its products range which are encouraging.

FIXED DEPOSITS:

The Company has not accepted any Fixed Deposit within the meaning of Section 58A of the Companies Act, 1956, and Rules made there under.

BOARD OF DIRECTORS:

During the year Sri.L.Madhu Kuamr Reddy, Director of the Company, Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirms:

(i) that in the preparation of the Annual Account for the Financial Year Ended 31st March '' 2014, the applicable accounting standards had been followed along with proper explanation relating to material departure''s;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) 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.

(iv) that the Directors had prepared the accounts for the Financial Year ended 31st March '' 2014, on a "going concern basis".

AUDITORS:

M/s. Kumar & Giri, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/s. Kumar & Giri to the effect that their appointment as Auditors if made would be within the limits under Section 224 (1-B) of the Companies Act, 1956.

PERSONNEL:

There are no employees in the Company whose particulars are required to be given pursuant to section 217 (2A) of the Companies Act, 1956.

REPLIES TO QUALIFICATIONS MADE BY THE AUDITORS:

Ref. No. (vii)

a) The Company is taking effective steps to clear off the payables at the earliest.

Ref. No. (ix)

b) The Company is in the process of mobilizing funds for repaying the loan outstanding to M/s.JM Financial Asset Reconstruction Company Private Limited.

Ref. No. (xi)

c) The Company has initiated steps towards identifying Internal Auditors and also drawing the scope of the Internal Auditors.

CONSERVATION OF ENGERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE:

Information in accordance with the provisions of Section 217 (e) of the Companies (Disclosure of Particulars in the Report of Board Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the annexure forming part of this report.

COMPLIANCE CERTIFICATE:

The Company has complied with the provision of Corporate Governance as required under the provisions of Clause 49 of the Listing Agreement.

A Certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing agreement is attached to this report.

ACKNOWLEDGEMENT:

Your Directors place on record their appreciation for the continuous support, assistance extended by all the Government Authorities, Financial Institutions Viz., JM Financial Asset Reconstruction Company Private Limited, Company Banker''s State Bank of Hyderabad, Consultants, Shareholders and the dedicated and sincere services rendered by the employees of the Company.

on behalf of the Board of Directors for LN INDUSTRIES INDIA LIMITED Place: Hyderabad. Date: 30-08-2014.

G. SURENDER REDDY Managing Director DIN :00109441


Mar 31, 2012

Dear Share Holders,

The Directors have pleasure in presenting the 19th Annual Report and the Audited Statement of Accounts of the Company for the Year Ended 31st March '2012.

FINANCIAL RESULTS: (Rs. In Lakhs)

SI For the year ended For the period Ended No. Particulars 31st March 2012 31st March 2011

1. Net Income from Operations 7,698.74 7,460.10

2. Gross Profit (before Finance Charges,

Depreciation, Taxation & Extraordinary Items) 684.91 662.07

3. Less : Finance Charges 364.75 212.46

4. Less : Depreciation 242.49 115.05

5. Less : Provision for Taxation 15.53 101.20

6. Profit/(Loss) 62.14 233.36

OPERATIONS:

During the year the Company, in spite of the flat market conditions could manage to hold on to the markets in which it regularly operates with its quality product lines. Due to the cyclical fluctuations in the foreign exchange rates more particularly in the US dollar, the focus on the overseas markets has been lowered during the year. The Company is working closely with the new distributors for the enhancement of the product off take and it expects to improve the performance of the Company over the coming periods. Further the Company is also exploring the possibilities for venturing into new business avenues. The land development activity on the land belonging to the Company has not commenced yet during the year.

MARKETING:

The domestic markets where the Company's products are sold have not registered significant growth during the year. However the Company with its long established track record in the domestic market could able to sustain the operating levels as in the previous periods. All though the overseas markets are encouraging, the adverse currency movements have become a deterrent for exploiting its full potential. The Company has identified new and potential market areas for increasing the spread of its products the results of which are encouraging.

FIXED DEPOSITS:

The Company has not accepted any Fixed Deposit within the meaning of Section 58A of the Companies Act, 1956, and Rules made there under.

BOARD OF DIRECTORS:

During the year Sri.Shailesh Shivram Mistry, Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

Sri.L.Madhu Kumar Reddy was appointed as Additional Directors of the Company with effect from 15th November ' 2011 and hold office till the date of ensuing Annual General Meeting.

The Company has received notice from a member proposing Sri.L.Madhu Kumar Reddy for appointment as a Director of the Company.

During the year under review Sri. S. Sridhar resigned as Director of the Company due to his pre occupations. The Board places on record its appreciation for the services rendered by him during his tenure as the Director of the Company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirms:

(i) that in the preparation of the Annual Account for the Financial Year Ended 31st March ' 2012, the applicable accounting standards had been followed along with proper explanation relating to material departure's;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) 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.

(iv) that the Directors had prepared the accounts for the Financial Year ended 31st March ' 2012, on a "going concern basis".

AUDITORS:

M/s. Kumar & Giri, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/s. Kumar & Giri to the effect that their appointment as Auditors if made would be within the limits under Section 224 (1-B) of the Companies Act, 1956.

PERSONNEL:

There are no employees in the Company whose particulars are required to be given pursuant to section 217 (2A) of the Companies Act, 1956.

REPLIES TO QUALIFICATIONS MADE BY THE AUDITORS:

a) The Company is in the process of mobilizing funds for repaying the Loan Outstanding to M/s.JM Financial Asset Reconstruction Company Private Limited.

b) The Company has initiated steps to strenghten the Various internal control systems in the organisation including enhancing the scope of the internal audit function.

c) The Company is taking effective steps to clear off the payables at the earliest.

CONSERVATION OF ENGERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE:

Information in accordance with the provisions of Section 217 (e) of the Companies (Disclosure of Particulars in the Report of Board Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the annexure forming part of this report.

COMPLIANCE CERTIFICATE:

The Company has complied with the provision of Corporate Governance as required under the provisions of Clause 49 of the Listing Agreement.

A Certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing agreement is attached to this report.

ACKNOWLEDGEMENT:

Your Directors place on record their appreciation for the continuous support, assistance extended by all the Government Authorities, Financial Institutions Viz., JM Financial Asset Reconstruction Company Private Limited, Company Banker's State Bank of Hyderabad, Consultants, Shareholders and the dedicated and sincere services rendered by the employees of the Company.

on behalf of the Board of Directors for LN INDUSTRIES INDIA LIMITED

Place: Hyderabad.

Date: 10.08.2012.

G.SURENDERREDDY

Managing Director


Sep 30, 2010

The Directors have pleasure in presenting the 17th Annual Report and the Audited Statement of Accounts of the Company for the 18 (Eighteen). Months Period Ended 30th September 2010.

FINANCIAL RESULTS (Rs. In Lakhs)

SL. 18 Months Ended 9 Months Ended No. Particulars 30th September 2010 31st March 2009

1. Net Income from Operations 4,139.77 1,615.78

2. Gross Profit (before Finance Charges, Depreciation & Taxation) 213.13 13.36

3. Less : Finance Charges 263.55 321.85

4. Less : Depreciation 347.77 182.32

5. Add : Extraordinary items -

Written Back on OTS / Restructuring 2083.89 0.00

6. Profit/(Loss) 167.14 (490.81)

OPERATIONS:

During the year, Company has taken initiatives to strengthen themarket network through which the products are distributed across the country. To leverage the brand image of products of the Company the trading activity of the yarns also in a limited- manner is taken up during the year. The manufacturing capacities of the Company are geared up to cater to the growing demand for the Companys products in the market.

During the year the Company has settled the Term Loan dues of Industrial- Investment Bank of India under One Time Settlement (OTS) scheme. Another Term Lender to the Company IDBI Bank Limited has also granted OTS for the payment of the dues- outstanding to it. TheCompany has discharge part of the OTS dues to IDBI Bank Limited on its own and to an extent balance of Rs. 10 cores payable was discharged through the assignment of the dues of the IDBI Bank Limited dues to JM Financial Asset Reconstruction Company Pvt., Limited. The settlement/assignment of the dues of the term lenders has bearing on the reduction of the interest cost of the Company to a significant extent. The market for the Dyed yarn and Nylon yarn, the products manufactured by the Company have been witnessing a significant growth phase over the past 12 months. The Company has registered a growth of 16% in the volume of proceeding under taken for the third party manufacturers during the year. The . Company has continued the conversion works for Reliance Industries Limited for the 10,th year in succession. The Company is making efforts to increase the levels of working capital facilities presently available from the banks so as to ramp up the production in tune with the increased capacities of production and growing market demands.

The real estate development activity at the land belonging to the Company in Hyderabad has not commenced during the year owing to the combinations of factors such as pending approvals from the lenders and the recessionary trends being witnessed in the real estate sectors during the period under review.

MARKETING:

There has been bouncy in the market for the products manufactured by the Company in all the regions of the country as well as in the overseas markets. The prices of the products are witnessing an uptrend backed by the strong domestic demand. The overseas market also has been very positive with the demand recording an impressive growth. The enhanced dealer network coupled with the enhanced demand for the products is expected to enable the Company to for registering higher sales and improved profitability in ensuring period.

FIXED DEPOSITS:

The Company has not accepted any FixedDeposit within the meaning of Section 58A of the Companies Act, 1956, and Rules made there under.

BOARDOFDIRECTQRS:

During the year Sri Sadashiv Sawrikar and Sri S. Sridhar, Directors of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointments.

DIRECTORS RESPONSIBIIJTY STATEMENT:

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956, the Board of Directors confirms:

(i) that in the preparation of the Annual Account for the Financial Year Ended 30th September 2010, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;

(iii) 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.

(iv) thatthe Directors had prepared the accounts for the Financial Year ended 30,th September 2010, on a "going concern basis". -

AUDITORS:

M/s.Kumar & Giri, auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a letter from M/s. Kumar & Giri to the effect that their appointment asAuditors if made would be within the limits under Section 224 (1-B) of the Companies Act, 1956.

PERSONNEL:

There are no employees in the Company whose particulars are required to be given pursuant to section 217 (2A) of the Companies Act, 1956.

REPLIES TO QUALIFICATIONS MADE BYTHE AUDITORS:

a) The Company has entered into MOU with JM Financial Asset Reconstruction Company Pvt Ltd for the settlement of the dues of the Company with IDBI Bank Limited. In terms of the same JM FARC is to pay Rs.10 Cr for the settlement of the dues to IDBI, though the IDBI has assigned the amount outstanding in the loan account of the Company, the actual amount of the consideration for the assignment is only Rs. 10 crores and the Company would have to pay the full liability only in case it fails to discharge JMFARC liability of Rs.10 crores as per the agreed schedules. Considering the above, the Company has retained the liability of Rs.10 crores only which is to be repaid in the books of account and written back the balance liability in the books of account as at 30th Septemebr2010. Clause (ix)(b)ofAnnexure to the Auditors Report:

b) As on date an amount of Rs. 118.63 Lacs is outstanding towards Sales Tax Deferment. The Company is effecting payment of the amount due periodically and sought time for the payment of the dues.

ENGERGY TECHNOLOGY AND FOREIGN EXCHANGE:

Information in accordance with the provisions of Section 217 (e) of the Companies (Disclosure of Particulars in the Report of Board Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the annexure forming part of this report.

COMPLIANCE CERTIFICATE:

The Company has complied with the provision of Corporate Governance under listing agreement.

A Certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing agreement is attached to this report.

ACKNOWLEDGEMENT:

Your Directors place on record their appreciation for the continuous support, assistance extended by all the Government Authorities, Financial Institutions Viz., IDBI Bank Limited, Industrial Investment Bank Of India, Company Bankers State Bank of Hyderabad, Consultants, Shareholders and the dedicated and sincere services rendered by the employees of the Company.

On behalf of the Board of Directors.

Place: Hyderabad. S. MAN M0HAN RAO

Date: 27th October 2010. Chairman

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