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Directors Report of Modern India Ltd.

Mar 31, 2014

Dear Members,

The Directors are pleased to present the Eightieth Annual Report along with Audited statement of Accounts for the Financial Year ended 31st March, 2014.

FINANCIAL RESULTS

(Rs.in lacs)

Financial Years

2013-14 2012-13

Gross profit before Depreciation 463.27 944.02

Less Depreciation / Amortization 155.06 156.21

Profit before tax 308.21 787.81

Add/(Less) Exceptional Items (Net) 129.82 (162.90)

Provision for Taxation 116.00 119.50

Less MAT credit entitlement (24.81) 91.19 69.40 50.10

Prior Period Expenses / Tax 32.55 10.29

Deferred Tax (92.09) 70.93

Profit after Tax 406.38 493.59

Add: Balance brought forward 3576.99 3350.92

Balance available for appropriation 3983.37 3844.51

LESS :APPROPRIATION

Proposed Dividend 187.71 187.71

Tax on distributed profit 31.90 30.45

Transferred to General Reserve 40.64 260.25 49.36 267.52

Balance carried to Balance Sheet 3723.12 3576.99

DIVIDEND

Despite the lack luster performance your Directors are recommending a dividend of 0.50 ps. per share, i.e 25% per Equity Share of Rs.2/- each. The Dividend for the year amounts to 219.61 Lacs including the Dividend Distribution Tax.

REVIEW OF OPERATIONS.

During the year under review (i.e 2013-2014) the stock markets were upbeat with the election results predicting a win for the right wing BJP with Shri Narendra Modi as its PM designate. The overall global business scenario is not favourable and there has been a downturn in all sectors in the Indian economy with the GDP dropping below 5%.

BUSINESS OPERATIONS

The business segments of the Company consist of Real Estate, Trading and Jewellery Training Institute.

Real Estate

Real estate sector is marked by declining volumes, over supply and lack of sustained economic activity. With the economy in a tailspin, the leasing business witnessed a slowdown due to factors such as over supply, lower foreign investments and poor domestic triggers in the retail segment, mixed signals have been witnessed, residential segment has remained muted.

The sector was plagued by high interest cost, however the proposed increase in allocation in the twelfth five-year plan (2012-2017) will translate into a healthy business for real estate companies.

Your Company will continue to focus on building scale through sourcing land in a capital efficient manner and will continue to actively explore suitable re-development opportunities which will add value to the Company and its stakeholders, Company has entered into a joint development of land agreement, which will be beneficial in the long term.

Trading:

Trading activities consist of trading in various commodities including cloth, yarn, sponge iron, steel products, paddy, castor etc. During the year, total sale of trading items stood at Rs. 144.78 Crores as against Rs.440.98 Crore in the corresponding previous year. The fall in volume & revenue is due to the crisis in NSEL which led to a complete closure of trading activity in commodities from August 2013.

INDIAN INSTITUTE OF JEWELLERY (IIJ) – DIVISION OF THE COMPANY FOR VOCATIONAL TRAINING

The Indian Institute of Jewellery (IIJ) is a leading professional institute, recognized and accepted by the jewellery industry for quality training, state-of-the art infrastructure and industry-relevant curriculum;

IIJ has remodeled itself both in terms of curriculum and delivery of programs to meet with the needs of the jewellery industry;

Indian Institute of Jewellery is also the technical partner for the University of Mumbai - Garware Institute of Career Development for the post graduate and undergraduate program in Jewellery Management and is affiliated member of National Skill Development Council.

IIJ has also written the curriculum for the Ministry of Labour and Employment for the Gems and Jewellery

Reply to Auditors Qualification

In view of the steps taken by the Management it is felt that there are good chances of recovery and hence no provision is being made.

SUBSIDIARY COMPANIES

MODERN INTERNATIONAL (ASIA) LIMITED, HONG KONG (MIAL)

Modern International (Asia) Limited [MIAL] is actively involved in the B2B segment. MIAL sources products from China and S. E. Asian countries and exports it to its clientele in other countries. With a wide and varied range of products including textile, furniture, luggage, building / construction material, gift articles etc. Inspite of lull prevailing in major parts of the world, MIAL has registered a turnover of US$ 19.4 million in Financial Year 2013-14 (previous year US$12.8 million). Operations of the Company has stabilized and it has recorded a profit of US $158473 (previous year US $ 506)

The Statutory Auditors in their Report on the Consolidated Financial Statements for the year ended on March 31, 2014 have qualified their opinion as regards investments of about US$ 51,623 made by its wholly owned subsidiary Modern International (Asia) Limited in its Associate concern and its carrying amount as at March 31, 2014.The Management is of the opinion that carrying amount of investment is fully realizable and in view of the steps initiated by the management, there is no permanent diminution in the value of aforesaid investments as at March 31, 2014.

MODERN INDIA PROPERTY DEVELOPERS LIMITED (MIPDL):

Company deploys its surplus funds in real estate activities viz., Bookings of under construction residential and / or commercial space. Funds committed towards booking of under construction spaces and to be paid over a period of time, are placed with corporate entities fetching interest in the intervening period.

The Company has consciously invested into under construction spaces, which falls into affordable category wherein demand is reasonable and offers better exit opportunities.

Above scheme of things have worked well and during the financial year 2013-14, Company has earned profit before tax of Rs.58.51Lacs.

MODERN INDIA FREE TRADE WAREHOUSING PRIVATE LIMITED (MIFTWPL)

Company has taken possession of land at village Sai, District Raigad which was acquired during the preceding years, the said land area has potential and will offer good opportunities over a period of time.

VERIFACTS SERVICES PRIVATE LIMITED

Modern India Limited signed a Share Purchase Agreement with the Promoters of Verifacts Services Private Limited wherein Modern India Limited agreed to acquire 3,80,000 equity shares aggregating to 76 % of the paid up share capital of Verifacts Services Pvt Ltd. for a consideration of Rs.28 Crores. With the acquisition of these shares Verifacts Services Private Limited is the Subsidiary of Modern India Limited with effect from 4th February 2014.

Verifacts Services Private Limited is headquartered in Bangalore, it is a human resources consulting company providing background/ antecedents verification services. Verifacts Services Private Limited has 7 other branches and several associates across the globe providing services to a large number of multinationals and national companies worldwide. With this addition, Modern India Limited has forayed into the business of verifications services.

During the year, Verifacts has achieved a turnover of Rs. 14.72 crores as against Rs. 14.30 crores in the corresponding previous year. It is expected that this business has immense potential to flourish and this will result in the growth of the bottom line of your Company.

SOLAR POWER PLANT

Modern India Ltd is in the process of setting up a 5 MW solar power plant in Satara District, Maharashtra at an estimated total cost of Rs. 36.00 Cr. Your company is taking all necessary regulatory approvals from various authorities before commissioning of the plant.

Company has signed contracts with suppliers for delivering the Solar panels and the other equipments required. Certain equipments have been received and are being installed and the Company anticipates that in the coming few months part of plant could be commissioned.

Till date a sum of Rs. 12.78 Crores has been spent on the project.

NSEL CRISIS

Our Company has suffered losses due to the recent NSEL crisis that has shaken the faith of the investors in the commodity markets. In view of the losses and the monies being locked up, Modern India Ltd. along with three others have instituted a Suit in the Hon''ble High Court of Bombay inter alia against Financial Technologies (India) Ltd. (FTIL), National Spot Exchange Ltd. (NSEL) and 36 others for recovery of its dues, as an investor for the trades executed on the NSEL.

The Company is regularly following up and will keep all stockholders updated about any development in the said matter. All possible steps are being taken to recover the amount receivable. As on date, Rs.1365 Lacs is outstanding.

The said matter is currently being heard in the Hon''ble High Court of Bombay.

ANNUAL ACCOUNTS OF SUBSIDIARY COMPANIES:

The Ministry of Corporate Affairs has granted general exemption to all companies from attaching a copy of Balance Sheet, Statement of Profit & Loss, and Report of the Board of Directors and Report of the Auditors of Subsidiary Companies vide circular dated 08.02.2011. Pursuant to the said general exemption/permission certain details are published regarding the Subsidiaries in an Annexure to this report. Moreover, pursuant to the Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Company includes the financial information of the Subsidiaries in its notes to the Annual Accounts. Any Member of the Company, desirous of inspecting the same, may inspect and/or request for copy of these documents or any details relating to these documents.

DIRECTORS

Shri Rusi Sethna our independent director passed away on 11.05.2014. The Board and the Management express their heartfelt condolences and the Board places on record his valuable contribution towards the growth of the Company.

As per the new Companies Act, 2013 implemented with effect from 1st April 2014, Independent Directors can be appointed for two terms of five years each, and in view of the explanation given to section 149 (10) and (11), any tenure of the independent director on the date of commencement of the Act shall not be counted, therefore the Management is of the opinion to appoint the following directors viz Shri Anand Didawani, Shri Rajas Doshi, Shri Dilip Thakar, and Shri S D Israni as Independent Directors for a term of 5 years with effect from the date of Annual General Meeting , on the Board of the Company.

Shri Kaiwan Kalyaniwalla was appointed as an Additional Director (Independent) on 16.05.2014 and he will hold office upto the ensuing Annual General Meeting and being eligible offers himself for appointment. Management is of the opinion that Shri Kaiwan Kalyaniwalla will be able to contribute towards the growth of the Company & recommend his appointment an Independent Director of the Company from the date of Annual General Meeting.

Brief resume of all Directors are provided in the Report on Corporate Governance forming part of the Annual Report.

Smt. Gauri Jatia, Director of the Company, retires by rotation and, being eligible, offers herself for re-appointment.

The Management recommends her reappointment.

CONSOLIDATION OF ACCOUNTS:

In pursuance of the mandatory compliance of the Accounting Standard 21, as issued by the Institute of Chartered Accountants of India, the Company has presented Consolidated Financial Statements, for the year under review, consolidating its Accounts with the Accounts of its Subsidiary Companies, Modern International (Asia) Limited, Modern India Property Developers Ltd., Modern India Free Trade Warehousing Pvt. Ltd. and Verifacts Services Pvt Ltd. A separate Report of the Statutory Auditors, on consolidated Financial Statements also forms part of the same.

DEFERRED TAX: The total net Deferred Tax liabilities as on 31.03.2014 are Rs. 23.57 lacs [Previous Year Rs. 115.66 lacs]. Rs.92.09 Lacs [Previous Year Rs.70.93 Lacs debited] have been credited to the Statement of Profit & Loss for the year in respect of the Deferred Tax.

AUDITORS'' APPOINTMENT: Members are requested to appoint Auditors and fix their remuneration. The present Auditors, Messers K.S. Aiyar & Company, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. It is must noted that according to the new Companies Act 2013, an auditor who has been the auditor of the Company for a period of 10 continuous years or more will be required to relinquish his position, however the Act provides for an interim period of 3 years to the Company to scout for a new Auditor. In view of the same, it is proposed to reappoint Messrs K.S. Aiyar & Company, Chartered Accountants as Statutory Auditor of the Company for a further period of one year.

FIXED DEPOSITS: During the year under review, the Company has neither accepted nor renewed any Fixed Deposits, under Section 73 & 74 of the Companies Act, 2013.

INSURANCE

Adequate insurance cover has been taken for the properties of the Company including Stocks, Tools and Machineries, Furniture and Fixtures, Electronic and Electric Equipments, Vehicles and to cover Directors'' and Officers'' Liability.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

ii) appropriate accounting policies have been selected and applied them consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of its profit for the year ended as on that date;

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

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

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOINGS.

In compliance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement giving requisite information is given in Annexure ''A'' forming part of this Report.

PARTICULARS OF EMPLOYEES

Other than the Chairman and Managing Director, there was no employees receiving remuneration as prescribed under Section 217 (2A) of the Companies Act, 1956, during the period under review. Having regard to the provisions of Section to 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. Any Member interested in obtaining such particulars may write to the Company Secretary of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

As per the requirement of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, the Management Discussion and Analysis of the events, which have taken place and the conditions prevailing, during the period under review, are elucidated in ANNEXURE - 1 to this Report.

CORPORATE GOVERNANCE

In compliance of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, a Report on Corporate Governance, along with a Certificate of the Auditors on Corporate Governance is annexed to this Report marked ANNEXURE - 2.

GREEN INITIATIVE:

Your Company has taken the initiative of going green and minimising the impact on the environment. The Company has been circulating the copy of the Annual Report in electronic format to all those Members whose email address is available with the Company. Your Company would encourage other Members also to register themselves for receiving Annual Report in electronic form.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere thanks to the Valued Customers, Suppliers, Bankers, Central Government, State Governments and various Consultants and Business Associates for their continued support, co-operation and guidance, during the year under review. Your Directors also wish to thank their employees and executives at all levels for their valuable contributions.

For and on behalf of the Board of Directors

Mumbai, Vijay Kumar Jatia

Dated, 16th May, 2014 Chairman & Managing Director

Registered Office:

Modern Centre, Sane Guruji Marg, Mahalaxmi, Mumbai-400011.


Mar 31, 2013

To the Members,

The Directors have pleasure in presenting the Seventy-nineth Annual Report of the Company along with the Audited Accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

(Rs. in lacs)

Financial Years

2012-13 2011-12

Gross profit before Depreciation 948.74 712.41

Less Depreciation / Amortization 156.21 166.23

Profit before tax 792.53 546.18

Less : Exceptional Expenditure 162.89 586.43

Provision for Taxation 119.50 -

Less MAT credit entitlement 69.40 50.10 - -

Prior Period Expenses 15.02 -

Deferred Tax 70.93 (70.97)

Profit after Tax 493.59 30.72

Add: Balance brought forward 3350.92 3497.14

Balance available for appropriation 3844.51 3527.86

LESS : APPROPRIATION

Proposed Dividend 187.71 150.17

Tax on distributed profit 30.45 24.36

Transferred to General Reserve 49.36 267.52 2.41 176.94

Balance carried to Balance Sheet 3576.99 3350.92



DIVIDEND

Your Directors are pleased to recommend a dividend of Rs.. 00/50 ps. (25%) per Equity Share of Rs.2/- each. The outgo for Dividend for the year amounts to Rs. 218.16 Lacs including the Dividend Distribution Tax.

BUSINESS OPERATIONS

The business segments of the Company consist of Real Estate, Business Centre, Trading and Jewellery Training Institute.

Real Estate

The year 2012 was a challenging year for the Indian real estate sector marked by declining volumes, over supply and lack of sustained economic activity. The leasing business witnessed a slowdown due to factors such as oversupply, lower foreign investments and poor domestic triggers. The retail segment, however, witnessed a mixed year as overcapacities got absorbed. As for the residential segment, the same remained muted. The trends varied in different markets with some witnessing price correction and other seeing higher volume growth.

On an overall basis, companies from the real estate sector faced issues related to higher interest costs on the back of leveraged balance sheets.

India requires quality infrastructure. This simple fact is the long term driver of the real estate sector as infrastructure investments are the most important growth driver for real estate companies. While short term factors will keep the sentiments subdued, over the long term, demand will remain strong. The proposed increase in allocation in the twelfth five-year plan (2012-2017) will translate into a healthy business for real estate companies.

Your Company will continue to focus on building scale through sourcing land in a capital efficient manner and will continue to actively explore suitable re-development opportunities which will be value to the Company and its stakeholders

Business Centre: During the year under review, Joint Venture agreement for running Business Centre has been concluded and activity of the Business Centre has come to an end. The revenue from the Business Centre has been Rs. 48.15 Lacs as compared to Rs. 429.34 Lacs in the previous year.

Trading: Trading activities consist of various commodities including cloth, yarn, sponge iron, steel flat products, paddy, castor etc. During the year, total sale of trading items were at Rs. 439.79 Crores as against Rs.287.97 Crore in the corresponding previous year.

SUBSIDIARY COMPANIES

MODERN INTERNATIONAL (ASIA) LIMITED, HONG KONG (MIAL)

Modern International (Asia) Limited [MIAL] is into B2B segment Business. MIAL sources products, namely from China and S. E. Asian Countries and exports to its clientele in other countries. The range of product is wide and varied including textile, furniture, luggage, building / construction material, gift articles etc. Inspite of lull prevailing in major parts of the world, MIAL has registered turnover of US$ 12.8 million in Financial Year 2012-13 (previous year US$12.05 million). Operations of the Company has stabilized and it recorded profit of US $95,506 (previous year US $45,396), before providing for loss of US $95,000 due to cybercrime fraud.MIAL has chalked calibrated marketing plans and we expect to achieve higher turnover and profitability in the coming year.

The Statutory Auditors in their Report on the Consolidated Financial Statements for the year ended on March 31, 2013 have qualified their opinion as regards investments of about Rs. 27.90 Lacs made by its wholly owned subsidiary Modern International (Asia) Limited in its Associate concern and its carrying amount as at March 31, 2013. The Management is of the opinion that carrying amount of investment of Rs. 27.90 Lacs is fully realizable and in view of the steps initiated by the management, there is no permanent diminution in the value of aforesaid investments as at March 31, 2013.

MODERN INDIA PROPERTY DEVELOPERS LIMITED (MIPDL):

The available funds with the Company are deployed into real estate activities viz., Bookings of under construction residential and / or commercial space. Funds committed towards booking of under construction spaces and to be paid over a period of time, are placed with corporate entities fetching interest in the intervening period;

The Company has consciously invested into under construction spaces, which falls into affordable category wherein demand is reasonable and offers better exit opportunities;

Above scheme of things have worked well and during the financial year 2012-13, Company has earned profit before tax of Rs.63.75Lac;

MODERN INDIA FREE TRADE WAREHOUSING PRIVATE LIMITED (MIFTWPL)

During the year identified land areas at Village SAI, Dist., RAIGAD, have been acquired. Balance advance payment made towards purchases of the land has been received back. The acquired land areas have potential and offers opportunities over a period of time.

INDIAN INSTITUTE OF JEWELLERY (IIJ) – DIVISION OF THE COMPANY FOR VOCATIONAL TRAINING

The Indian Institute of Jewelry (IIJ) is leading professional institute, recognized and accepted by the jewelry Industry for quality training, state-of-the art infrastructure and industry-relevant curriculum;

IIJ went through several changes during the year with deliberate shift in its long term vision and plans and has now remodeled itself both in terms of curriculum and delivery of programs to meet with the needs of the jewelry industry;

Tanishq todays leaders in the jewelry industry were one of the most active patrons of the graduation ceremony amongst seven other reputed companies; Indian Institute of Jewelry has recently signed an MOU with Somaiya College of Commerce for an on line program and Reliance jewels for conditional placement of students

ANNUAL ACCOUNTS OF SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs has granted general exemption from attaching a copy of Balance Sheet, Profit & Loss Account, and Report of the Board of Directors and Report of the Auditors of all the three Subsidiary Companies. Pursuant to the said general exemption/permission certain details are published about the Subsidiaries in Annexure to this report. Moreover, pursuant to the Accounting Standard 21 issued by the Institute of Chartered Accountants of India, the Company includes the financial information of the Subsidiaries in its notes to the Annual Accounts. Any member of the Company, desirous of inspecting the same, may inspect and/or request for copy of these documents or any details relating to these documents.

DIRECTORS

A) Shri. Rajas R Doshi, Director of the Company, retire by rotation and, being eligible, offers himself for re-appointment.

B) Shri. Pradip K Bubna Director of the Company, retire by rotation and, being eligible, offers himself for re-appointment.

Taking into consideration stake of the Promoters and with a view to continue to avail the services of Shri Vijay Kumar Jatia, as Chairman, it is necessary that there is stability in the top management of the Company. It is felt by the Board to make Shri Vijaykumar Jatia as Permanent Chairman. Your Directors recommend the resolution for approval.

CONSOLIDATION OF ACCOUNTS

In pursuance of the mandatory compliance of the Accounting Standard 21, as issued by the Institute of Chartered Accountants of India, the Company has presented Consolidated Financial Statements, for the year under Report, consolidating its Accounts with the Accounts of its Subsidiary Companies, Modern International (Asia) Limited, Modern India Property Developers Ltd. and Modern India Free Trade Warehousing Pvt. Ltd. as also accounts of the Joint Venture – Central Bombay Infotec Park to the extent of the investment made by the Company. A separate Report of the Statutory Auditors, on consolidated Financial Statements also forms part of the same.

DEFERRED TAX : The total net Deferred Tax liabilities as on 31.03.2013 are Rs. 115.66 lacs [Previous Year Rs. 44.72lacs]. Rs. 70.93 Lacs [Previous Year Rs. 70.97 Lacs credited] have been debited to Profit & Loss account of the year in respect of the Deferred Tax.

AUDITORS'' APPOINTMENT

Members are requested to appoint Auditors and fix their remuneration. The present Auditors, Messrs K.S. Aiyar & Company, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

FIXED DEPOSITS

During the year under Report, the Company has neither accepted nor renewed any Fixed Deposits, under Section 58A, read with Companies (Acceptance of Deposits) Rules, 1975.

INSURANCE

Adequate insurance cover has been taken for the properties of the Company including Stocks, Tools and Machineries, Furniture and Fixtures, Electronic and Electric Equipments, Vehicles and to cover Directors'' and Officers'' Liability.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

ii) appropriate accounting policies have been selected and applied them consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of its profit for the year ended as on that date;

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

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

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOINGS.

In compliance with the provisions of Section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement giving requisite information is given in Annexure ''A'' forming part of this Report.

PARTICULARS OF EMPLOYEES

There were no employees receiving remuneration as prescribed under Section 217(2A) of the Companies Act, 1956, during the period under review. Hence, the Companies (Particulars of Employees) Rule, 1975 do not apply to the Company.

MANAGEMENT DISCUSSION AND ANALYSES

As per the requirement of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, the Management Discussion and Analyses of the events, which have taken place and the conditions prevailed, during the period under review, are elucidated in ANNEXURE - 1 to this Report.

CORPORATE GOVERNANCE

In compliance of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, a Report on Corporate Governance, along with a Certificate of the Auditors on Corporate Governance is annexed to this Report marked ANNEXURE - 2.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere thanks to the Valued Customers, Suppliers, Banks, Central Government, State Governments and various Consultants and Business Associates for their continued support, co-operation and guidance, during the year under review. Your Directors also wish to thank the employees and executives at all levels for their valuable contributions.

For and on behalf of the Board of Directors

Mumbai, Vijay Kumar Jatia

dated 04th May, 2013 Chairman & Managing Director

Registered Office:

Modern Centre, Sane Guruji Marg,

Mahalaxmi,

Mumbai-400011.


Mar 31, 2010

The Directors have pleasure in presenting the Seventy-sixth Annual Report of the Company along with the Audited Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

(Rupees in lacs) Financial Years 2009-10 2008-09

Gross Profit before depreciation 1949.90 987.34 Less: Depreciation 154.23 101.27 Profit Before Tax 1795.67 886.07 Less: Extra Ordinary Expenditure

Provision for Taxation (Including Wealth Tax/FBT) 585.80 221.64

Tax provision of earlier year (2.51) 16.05

Deferred tax (0.70) 582.59 14.03 251.72 Profit after Tax 1213.08 634.35

Add: Balance brought forward 2887.49 2520.34

Less: Debit balancejn the P&L A/c.

of IIJL on Amalgamation 530.49

Less: Amount transferred to Capital Reserve 0 2887.49 0 2520.34

Balance available for Appropriation 3570.08 3154.69

LESS: APPROPRIATION

Proposed Dividend 150.17 187.71 Tax on distributed profit 24.94 31.90 Transferred to General Reserve 90.98 47.58

Balance Carried to Balance Sheet 3303.99 2887.49

DIVIDEND

Your Directors are pleased to recommend a dividend of Re.0.40 ps. (20%) per Equity Share of Rs.2/- each. The Dividend for the year amounts to Rs.175.11 Lacs including the Dividend Distribution Tax.

BUSINESS OPERATIONS

The business segments of the Company consist of Real Estate, Business Centre and Trading.

Real Estate

Despite the global economic decline in fiscal 2008, India continues to be one of the fastest growing countries in the world and is showing sign of recovery following the global financial downturn.

Indias ability to recover from the global slowdown and its own domestic liquidity crunch has been driven by the Countrys large domestic savings and corporate retained earnings which have been used to finance the investments. Moreover, the fiscal policy, primarily, in the form of reduced interest rates and Government intervention, has helped maintain private demand, liquidity and short-term rates, thereby reducing the risk of loan losses.

The Real Estate Sector in India has exhibited a trend towards greater organization and transparency by various regulatory reforms such as repeal of Urban Land (Ceiling and Regulation) Act in most of the States, modification in the Rent Control Act to provide greater protection to homeowners wishing to rent out their properties, rationalization of property taxes in a numbers of states and the computerization of land records.

With the spurt in the demand in real estate sector and especially in Mumbai, the Company has decided to embark on real estate development activities on its South Mumbai situated land bank in priority over its other SEZ and FTWZ projects. In this direction, consent of the Members of the Company has been sought by means of postal ballot. As a substantial step, an understanding has been arrived at with K. Raheja Corp Pvt. Ltd. for redevelopment of some of the properties of the Company situated in the South Mumbai.

Business Centre:

Central Bombay Infotec Park - Joint Venture arm of Modern India Limited is running Business Centre named Modern Centre. The revenue from this segment has been Rs. 901.92 Lacs as compared to Rs. 1239.91 lacs in the previous year. Considering flurry of real estate development happening between Mahalaxmi and Elphinstone Road, the Management was considering various options one of which was redevelopment of the Modern Centre. Accordingly, long term lease rentals agreements were not preferred and this is the main reason for current vacancy and resultant lower revenue.

Trading:

Trading activities consist of cloth, yarn, software/ Revo Milling machine, sponge iron, etc. Turnover, in this segment, has grown from Rs. 19,342.46 lacs to Rs. 20,717.89 registering a 7% growth.

SUBSIDIARY COMPANIES

MODERN INTERNATIONAL (ASIA) LIMITED, HONG KONG (MIAL)

MIAL was set up to outsource products from China and other S. E. Asian Countries and is a B2B segment of the company where MIAL services local as well as international companies sourcing raw material/semi finished/finished products and customized products as per requirements. Seven years ago, MIAL started with Textiles, Yarn and Fabric but now expanded range of commodities including Tyres, Steel, Chemicals, Paper, and Luggage sourcing from China, Indonesia, Thailand and Korea. Economic scenario in international trade is improving and sign of textile revival are available. It is expected that FY 2010-11 to be better compared to FY 2009-10 as textile constitute major component of Business in MIAL.

MODERN INDIA PROPERTY DEVELOPERS LIMITED (MIPDL):

MIPDL is developing Electronic Hardware, Software including IT / ITeS Special Economic Zone at Khopoli, Dist. Raigad in Maharashtra. Company has received recommendation from Government of Maharashtra and formal approval from Board of Approval, Ministry of Commerce and Industry, New Delhi and has filed application for notification of the SEZ which is awaited.

In the Finance bill 2010, no further extension to STPI [Software Technology Park of India] has been envisaged. It was further clarified by spokesperson from the finance ministry that tax benefits to STPI will go after sunset period gets over. Hence, SEZ will be the only avenue available to the IT/ITeS exporters to remain tax neutral.

Current recruitment drive of IT industry, robust growth guidance for FY 2010-11 and increasing pie of Indian IT industry in global market are all pointer to increased space requirement in time to come.

We have sought views from IL&FS IDC Limited, advisor to SEZ development of the Company as well as other agencies involved. It has been informed that in next couple of quarters, scenario may get clearer and at appropriate time, after having reasonable LOIs or anchor tenant, this project can be revived, albeit, in phases.

We, at the same time, also looking into alternate land use or outright sale of the land holding. We have been given to understand that simultaneous to revival of real estate market, other opportunities are surfacing and a final decision in this connection will be taken considering all the facets of the matter.

INDIAN INSTITUTE OF JEWELLERY LIMITED (IIJL)

IIJL had set up a premier autonomous jewellery institute, Indian Institute of Jewellery (IIJ), in the Asia Pacific region, which offers international standard education in Jewellery Manufacturing, Designing and Gemology etc. IIJ is a leading professional institute, recognized and accepted by the jewellery industry for quality training, state of the art infrastructure and industry relevant curriculum.

During the year, IIJ commenced post graduation diploma course in collaboration with Mumbai University. Also it has enrolled students under Vocational Training Programme [VTP] as envisaged by the Ministry of Labour and Employment through Directorate General of Employment and Training.

Out of Batches of VTP modules, undergoing particular course, may come for other vocational training program which would result in more students in other stream of courses, offered by IIJ.

IIJ has started an initiative named VINAYA in collaboration with All India Gems & Jewellery Trade Federation whereunder summits are organized in 20 cities of India to create awareness of opportunities in gems and jewellery segment.

As per the Scheme of Amalgamation sanctioned by the Honble Bombay High Court on 7th May, 2010, IIJL got amalgamated with the Company as on 1a July, 2009. As such, whole of the undertaking of IIJL has been taken over by the Company. IIJL has been dissolved without being would up on 3,a June, 2010, being Effective Date. Now, IIJ functions as a Division of Modern India Limited. Accordingly, tinancials of this undertaking has been merged with the tinancials of the Company.

MODERN INDIA FREE TRADE WAREHOUSING PRIVATE LIMITED (MIFTWPL)

The Company acquired 51% equity shareholding in Modern India Free Trade Warehousing Pvt. Ltd. on 4"1 July, 2008. This company has been incorporated to establish Free Trade Warehousing Zone (FTWZ).

Though international trade is returning to normalcy, the scenario is still full of uncertainties, therefore, at present, no further outlay is earmarked for the project. No further acquisition of land has been undertaken. As such, status quo is maintained.

ANNUAL ACCOUNTS OF SUBSIDIARY COMPANIES

The Ministry of Corporate Affairs has granted exemption from attaching a copy of Balance Sheet, Profit & Loss Account, and Report of the Board of Directors and Report of the Auditors of all the four Subsidiary Companies. However, as per the said permission certain details are published about the Subsidiaries. Moreover, pursuant to the Accounting Standard 21 issued by The Institute of Chartered Accountants of India, the Company includes the financial information of the Subsidiaries in its notes to the Annual Accounts. Any member of the Company, desirous of inspecting the same, may inspect and/or request for copy of these documents or any details relating to these documents.

DIRECTORS

Shri. Rajas Doshi, Director of the Company, retire by rotation and, being eligible, offers himself for re-appointment.

Shri. Pradip Kumar Bubna Director of the Company, retire by rotation and, being eligible, offers himself for re-appointment.

CORPORATE EVENTS

One of the Subsidiary Companies, Indian Institute of Jewellery Limited, got amalgamated with the Company vide the Honble Bombay High Courts Order dated 7th May, 2010 sanctioning the Scheme of Amalgamation approved by the Members of the Company on 8,h January, 2010, in the Court Convened Meeting.

Postal ballot procedure is undertaken to obtain consent of the shareholders of the Company for disposal/redevelopment of its land and properties situate in South Mumbai, pursuing new object of publication business and adopting explicit object for real estate development activities and developing real estate on its own. The process is going on and the results will be declared on June 23, 2010 at the Registered Office of the Company.

The Company has entered into Memorandum of Intended Development with K. Raheja Corp. Pvt. Ltd. on 24" May, 2010 for development/redevelopment of some of its properties situate in the South Mumbai.

CONSOLIDATION OF ACCOUNTS

In pursuance of the mandatory compliance of the Accounting Standard 21, as issued by The Institute of Chartered Accountants of India, the Company has presented Consolidated Financial Statements, for the year under Report, consolidating its Accounts with the Accounts of its Subsidiary Companies, Modern International (Asia) Limited, Modern India Property Developers Ltd. and Modern India Free Trade Warehousing Pvt. Ltd. as also accounts of the Joint Venture - Central Bombay Infotec Park to the extent of the investment made by the Company. A separate Report of the Statutory Auditors, on consolidated Financial Statements also forms part of the same.

DEFERRED TAX

The total net Deferred Tax liabilities as on 31.03.2010 is Rs. 112.35 lacs [Previous Year Rs. (113.05) lacs]. Rs.0.70 lac [Previous Year Rs. (14.03) lacs debited] have been credited to Profit & Loss account of the year in respect of the Deferred Tax.

AUDITORS APPOINTMENT

Members are requested to appoint Auditors and fix their remuneration. The present Auditors, Messrs K.S. Aiyar & Company, Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

AUDITORS REPORT

The Auditors Report is attached with the audited statements. There are observations made by the Auditors that have been explained below.

Auditors Observations:

"Attention is drawn to Note No. 2 - (v) & (vi) of Notes to Accounts wherein the demands raised by the Municipal Corporation of Greater Mumbai (MCGM) for property taxes & Penalty for regularization of change of user amounting to Rs. 550.42 lacs and Rs. 598.88 lacs respectively has not been provided in the accounts as these have been disputed by the Company. In view of the uncertainty involved in terms of final settlement of the demands, the impact on the financial statements cannot be quantified."

The Managements reply to the above observation is as under:

The Company has disputed the property tax demands and has not accepted the another demand of Rs. 598.88 lacs. Provision, if any, will be considered on disposal of the complaints and redressal.

FIXED DEPOSITS

During the year under Report, the Company has neither accepted nor renewed any Fixed Deposits, under Section 58A, read with Companies (Acceptance of Deposits) Rules, 1975.

INSURANCE

Adequate insurance cover has been taken for the properties of the Company including Stocks, Tools and Machineries, Furniture and Fixtures, Electronic and Electric Equipments, Vehicles and to cover Directors and Officers Liability.

In view of 26/11 type terror attack in Mumbai, security in and around the Modern Centre has been tightened by installation of surveillance gadgets and beefing up the security in and around Modem Centre.

DIRECTORS RESPONSIBILITY STATEMENT

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

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

ii) appropriate accounting policies have been selected and applied them consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of its profit for the year ended as on that date;

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

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

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOINGS.

In compliance with the provisions of Section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, a statement giving requisite information is given in Annexure A forming part of this Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 is given in Annexure B forming part of this Report.

MANAGEMENT DISCUSSION AND ANALYSES

As per the requirement of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, the Management Discussion and Analyses of the events, which have taken place and the conditions prevailed, during the period under review, are elucidated in ANNEXURE - 1 to this Report.

CORPORATE GOVERNANCE

In compliance of Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, a Report on Corporate Governance, along with a Certificate of the Auditors on Corporate Governance is annexed to this Report marked ANNEXURE -2.

ACKNOWLEDGMENT

Your Directors wish to place on record their sincere thanks to the Valued Customers, Suppliers, Banks, Central Government, State Governments and various Consultants and Business Associates for their continued support, co-operation and guidance, during the year under review. Your Directors also wish to thank the employees and executives at all levels for their valuable contributions.

For and on behalf of the Board of Directors

Vijay Kumar Jatia Mumbai, dated 18th June, 2010 Chairman & Managing Director

Registered Office:

Modern Centre, Sane Guruji Marg, Mahalaxmi, Mumbai-400 011.

 
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