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Directors Report of Phoenix Lamps Ltd.

Mar 31, 2015

Dear Members,

The Directors are pleased to present the Twenty-Fourth Annual Report on the business and operations of the Company together with the audited accounts for the financial year ended 31st March, 2015.

1. FINANCIAL SUMMARY

Financial Summary and performance Highlights of your Company, for the financial year ended March 31, 2015 are as follows:

(Rs. in lacs) PARTICULARS Year ended Year ended 31.03.2015 31.03.2014

Gross Sales and other Income 26,137.21 38,615.16

Profit before Interest, Depreciation & Tax 4,683.33 8,153.34

Depreciation and amortization 628.79 930.90

Interest 420.18 1,128.79

Profit/(Loss) from Operations 3,634.36 6,093.65

Exceptional Items-Surplus on sale of General Lighting Business - (3,990.92)

Provision for Tax 886.59 1,068.10

Profit/ (Loss) After Tax 2,747.77 9,016.47

Balance of Profit/(Loss) brought 5,754.35 2,884.52 forward

Amount available for appropriation 8,502.12 11,900.99

Interim Dividend on Equity Shares - 1,400.97

Special Dividend on Equity Shares - 2,801.93

Proposed Final Dividend on Equity Shares - 280.19

Tax on Dividends on Equity Shares - 761.90

Transfer of Profits to General Reserve - 901.65

Transfer of Profits to Capital

Redemption Reserve 1,316.00 -

Balance of Profit carried forward 7,186.12 5,754.35 to next year

Previous year's figures have been regrouped/ rearranged wherever considered necessary.

The figures above as at March 31, 2015 represent the full year results of automotive business division only and the figures as at March 31, 2014 includes gross sales of automotive business for the full year and general lighting business till 30.08.2013.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review, gross sales for the Automotive Business have increased from Rs. 25,770.76 lacs in 2013-14 to Rs. 26,137.21 lacs in 2014-15 i.e. an increase of 1.4% and the earnings before interest, depreciation and taxes has decreased from Rs. 7,434.27 lacs to Rs. 4,683.33 lacs over 2013-14. The reason for decrease is due to depreciation of Euro against Rupee & also as a result of this, exchange

variation loss of Rs. 497.23 lacs in 2014-15 as against exchange gain of Rs. 1,714.53 lacs in 2013-14. The figures as at March 31, 2015 represent the full year results of automotive business only i.e. manufacturing and sale of halogen lamps. The figures as at March 31, 2014 includes gross sales amounting to Rs. 12,844.39 lacs, earnings before interest, depreciation and tax amounting to Rs. 719.08 lacs pertaining to general lighting division which had been sold off on slump sale basis.

RESERVES AND SURPLUS (Rs. in lacs) PARTICULARS Year ended Year ended 31.03.2015 31.03.2014

Securities premium account 3,733.86 3,733.86

Capital subsidy 40.00 40.00

Capital redemption reserve 2,937.00 1,621.00

General reserve 925.22 925.22

Surplus in the Statement of profit and loss Credit balance as per the last financial statements 5,754.35 2,884.52

Add: Net profit/(loss) after tax trans- ferred from Statement of profit and loss 2,747.77 9,016.47

Less: Profit & Loss appropriation (1,316.00) (6,146.64)

Net surplus in the Statement of profit and loss 7,186.12 5,754.35

Total 14,822.20 12,074.43

The Company has transferred an amount of Rs 1316 lacs to Capital Redemption Reserve during the Financial year ended March 31, 2015, for the purpose of redemption of 13,16,000 Redeemable Preference Shares of Rs. 100/- each.

2. DIVIDEND

Your Board has deferred for the time being, the decision to recommend any Dividend for the Financial Year 2014-15.

3. STATE OF THE COMPANY'S AFFAIRS

Your Company is the market leader in automotive halogen bulbs in India with approximately 50% market share in passenger vehicle, 70% in commercial vehicles and 70%- 80% in two wheeler Original Equipment Manufacturers (OEMs). The Company is the largest manufacturer in India controlling 50-60% of total manufacturing capacity in the Country and among the top 5 globally with 20 years of manufacturing excellence and institutionalized knowledge. The Company has well entrenched relationships with the leading Japanese, Korean, European and Indian OEMs. More than half of sales are under Company's own brands including India's oldest domestic aftermarket brand and 90 year old European brand for international markets.

There has been no change in the nature of business during the reporting period.

4. MATERIAL CHANGES AND COMMITMENTS

Your Company has received a Public Announcement dated May 6, 2015 from Karvy Investor Services Limited ("Manager to the Offer") on behalf of Suprajit Engineering Limited ("Acquirer") to the shareholders of the Company to acquire 72,85,018 equity shares of face value Rs.10/- each constituting 26% of Issued and Subscribed Capital and Voting Capital of the Target Company, which is your Company, in accordance with Regulation 3(1) and Regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations ("SAST Regulations"). This Public Announcement was made pursuant to and in compliance with Regulations 13 (1) and 15(1) of the SAST Regulations. The Copy of Public Announcement is available on the website of Stock exchanges (BSE Ltd and National Stock Exchange of India Limited).

Further, on May 13, 2015, the Company has received a copy of the Detailed Public Statement (DPS) dated May 12, 2015 and on May 18, 2015, the Company has received the Draft Letter of Offer dated May 16, 2015 from M/s. Suprajit Engineering Limited. However, the said Open Offer does not affect the financial position of your Company during the financial year under review.

5. PARTICULARS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED DURING THE FINANCIAL YEAR ENDED MARCH 31, 2015

Mr. Gurdeep Singh and Mr. Padmanabh P. Vora were appointed as Independent Directors and Mr. Pranay D. Gandhi was regularized and re-appointed as the Managing Director of the Company at the 23rd Annual General Meeting of the Company, held on July 21,2014.

Mr. Pranay D. Gandhi, Managing Director; Mr. Gagandeep Singh, Chief Financial Officer and Mr. Aditya Rungta, Company Secretary are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. None of the Key Managerial Personnel has resigned or appointed during the financial year ended March 31,2015. Ms. Sunita Mathur (DIN- 00008923) was appointed as Additional Director (Non-executive Independent) of the Company with effect from March 23, 2015 in accordance with the provisions under Sections 149 and 161 of the Companies Act, 2013.

SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

As on March 31,2015, the Company has one wholly owned subsidiary company viz. "International Lamps Holding Company SA, Luxembourg" and two step down subsidiaries viz. Luxlite Lamps S.A.R.L, Luxembourg and Trifa Lamps GmbH, Germany.

Further, there has been no change in the number of subsidiaries or in the nature of business of the subsidiaries, during the financial year under review. The consolidated financial statement of the Company and its subsidiaries are prepared in manner as provided under Section 129 of the Companies Act, 2013 read with rules made there under.

Performance and Financial Position of Subsidiary Companies

International Lamps Holding Company S.A., Luxembourg: During the year under review, the losses before interest, depreciation and tax has increased from Euro 0.29 lacs equivalent to Rs. 23.66 lacs to Euro 0.90 lacs equivalent Rs. 69.69 lacs.

Trifa Lamps Germany, GmbH: During the year under review, sales have decreased from Euro 191.02 lacs equivalent to Rs. 15,499.56 lacs in the financial year 2013-14 to Euro 187.47 lacs equivalent to Rs.14,523.87 lacs in the financial year 2014-15 and the earnings before interest, depreciation and taxes has increased from Euro 5.80 lacs equivalent to Rs. 471.15 lacs to Euro 6.03 lacs equivalent to Rs. 467.39 lacs over 2013-14.

Luxlite Lamps SARL, Luxembourg: During the year under review, sales have increased from Euro 108.37 lacs equivalent to Rs. 8,793.47 lacs in the financial year 2013- 14 to Euro 116.96 lacs equivalent to Rs. 9,061.25 lacs in the financial year 2014-15 and the Loss before interest, depreciation and taxes has increased from Euro 8.62 lacs equivalent to Rs. 699.74 lacs to Euro 9.72 lacs equivalent to Rs. 753.36 lacs over 2013-14.

A separate statement in form AOC-1, containing the salient features of the financial statement of its subsidiaries has also been attached along with the financials of the Company. The Annual Accounts and related documents of the Subsidiary Companies shall be kept open for inspection at the Registered Office of the Company. The aforesaid documents will also be made available to the Members of the Company upon receipt of written request from them.

6. EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form MGT-9 is enclosed as a part of this report in compliance with Section 134(3) of the Companies Act, 2013. (Annexure-1)

7. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has entered into in following transactions pursuant to Section 186 of the Companies Act, 2013:

Name of Particulars of Loans, Amount the entity Guarantees or Investments (INR in Lacs)

Trifa Lamps Stand by letter of credit (Euro 1,215.19 Germany, 18 Lacs converted at March GmbH 31, 2015 exchange rate of 1 Euro= Rs. 67.5104)

8. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013

All related party transactions that were entered during the financial year were in the ordinary course of business and were on arm's length basis. There were no material related party transactions entered by the Company with Directors, KMPs or other persons which may have a potential conflict with the interest of the Company.

All related party transactions, wherever applicable, are placed before the Audit Committee. The quarterly disclosures of transactions with related parties are made to the Audit Committee and also disclosed to the Stock exchanges under Clause 49 of the Listing Agreement.

The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company- www.phoenixlamps.co.in.

In compliance with Section 134(3) of the Companies Act, 2013, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 are enclosed, in the Form AOC-2, as a part of this report (Annexure-2)

9. NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the financial year 2014-2015, Seven meetings of the Board of Directors were held on 27th May, 2014, 21st July, 2014, 9th August, 2014, 29th September, 2014, 31st October, 2014, 14th February, 2015 and 23rd March, 2015.

10. DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(5) of the Companies Act, 2013, your directors hereby state and confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. they have 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 and loss of the Company for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and such internal financial control are adequate and were operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

11 .COMMENTS BY THE BOARD ON AUDIT QUALIFICATION

There are no qualifications, reservations or adverse remarks or disclaimers made by Statutory Auditors, in their report and by Secretarial Auditor, in his secretarial audit report.

12. RISK MANAGEMENT POLICY

Your Directors have adopted a Risk Management Policy for the Company. The Audit Committee and the Board of Directors of the Company review the risks, if any involved in the Company from time to time, and take appropriate measures to minimize the same. The Audit Committee ensures that the Policy for Risk Management is adopted across the Company in an inclusive manner.

13. ORDERS PASSED BY THE REGULATORS OR COURTS, IF ANY

No significant and material orders were passed by the Regulators, Courts or Tribunals impacting the going concern status and Company's operations in future

14. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company's internal control systems are supplemented by an extensive programme of internal audit by an independent professional agency and periodically reviewed by the Audit Committee and Board of Directors. The internal control system is designed to ensure that all financial and other records are reliable for preparing financial statements, other data and for maintaining accountability of assets.

15. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS

In terms of the definition of 'Independent Director' as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act, 2013 and based on the confirmation/ disclosures received, following Non-executive Directors are Independent Directors:-

- Mr. Padmanabh P. Vora (DIN-00003192)

- Mr. Gurdeep Singh (DIN-00036922)

- Ms Sunita Mathur (DIN-00008923)

16. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR AND OTHER MATTERS AS PROVIDED UNDER SECTION 178(3) OF THE COMPANIES ACT, 2013

Your Company has adopted a Nomination and Remuneration Policy on Directors' Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013. The Policy is enclosed as a part of this report in compliance with Section 134(3) of the Companies Act, 2013. (Annexure-3)

17. PERFORMANCE EVALUATION OF THE BOARD

The Nomination and Remuneration Committee at its meeting held at September 8, 2014 and the Board of Directors at its meeting held on September 29, 2014 respectively, had laid down criteria for performance evaluation of Directors, Key Managerial Personnels (KMPs) and Board & its Committees as a whole. Further, self evaluation with respect to performance of the Committees was done by the Committees and then recommended to the Board for further evaluation. The Board of Directors in its meeting held on May 22, 2015 has reviewed the performance of the Committees, the Members and the Board as a whole. The criteria and manner for performance evaluation is as per the Nomination and Remuneration Policy, as annexed to this Report.

18. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

In compliance with Section 135 of the Companies Act, 2013 read with the rules made there under, the Company has formed Corporate Social Responsibility (CSR) Committee. The Annual Report on CSR Activities forms part of this Report as (Annexure-4). The Policy on Corporate Social Responsibility as approved by the Board of Directors is uploaded on the website of the Company- www.phoenixlamps.co.in.

The composition of the Corporate Social Responsibility Committee is as under:

Name of Members DIN Composition of the CSR Committee

Mr. Padmanabh 00003192 Chairman, Non-executive P. Vora Independent Director

Mr. Gurdeep Singh 00036922 Non-executive Independent Director

Mr. Shomik P. 02185373 Non-Executive Director Mukherjee

19. AUDIT COMMITTEE

The Company complies with the provisions related to Audit Committee, as provided under Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013. The composition of the Audit Committee is as under:

Name of DIN Composition of the Audit Members Committee

Mr. Padmanabh 00003192 Chairman, Non-executive P. Vora Independent Director

Mr. Gurdeep 00036922 Non-executive Independent Singh Director

Mr. Shomik 02185373 Non-Executive Director P. Mukherjee

All Members of the Committee are financially literate. Mr. Padmanabh P. Vora, is a qualified Chartered Accountant having the requisite financial management expertise.

20. VIGIL MECHANISM

Your Company has formulated the Whistle Blower Policy with a view to provide a mechanism for Employees and Directors of the Company to approach the Whistle blower Compliance Officers/ the Audit Committee of the Company

in compliance with Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Details of the Whistle Blower Policy are explained in the Report on Corporate Governance and Whistle Blower policy of the Company is available on the website of the Company i.e. www.phoenixlamps.co.in.

21. DISCLOSURES UNDER SECTION 197 OF THE COMPANIES ACT, 2013 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in the annexure to the Directors' Report and forms part of this report. In terms of the provisions of Section 136(1) of the Companies Act, 2013, the Directors' Report is being sent to the shareholders without this annexure. Shareholders interested in obtaining a copy of the annexure may write to the Company Secretary at the Company's registered office.

The ratio of the remuneration of each director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as (Annexure-5).

22. EMPLOYEES STOCK OPTIONS DETAILS

The Company does not have any employees stock option schemes

23. AUDITORS STATUTORY AUDITOR

M/s. S. R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No. 301003E) have been appointed as the Statutory Auditors of the Company in the 23rd Annual General Meeting of the Company held on July 21, 2014, to hold the office till the conclusion of 28th Annual General Meeting of the Company, subject to the ratification of shareholders at every Annual General Meeting.

Further, the ratification in respect with the appointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants as the Statutory Auditors of the Company is proposed for the ratification of shareholders in the Notice of 24th Annual General Meeting of the Company.

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act, 2013, the Company had appointed M/s Sanjay Grover & Associates, Practicing Company Secretaries, New Delhi as its Secretarial Auditor to conduct the Secretarial Audit of the Company for FY 2014-2015. The Report of Secretarial Auditor (Form MR-3) for the FY 2014-2015 is annexed to the report as (Annexure-6).

COST AUDITOR

On the recommendation of Audit Committee, the Board of Directors in its meeting held on May 22, 2015 has appointed M/s. J. K. Kabra & Company, Cost Accountants as the Cost Auditor of the Company for the financial year 2015-16 on the aggregate remuneration of Rs. 1,25,000/ - (Rupees One Lac twenty five Thousand only) plus taxes, as applicable and out of pocket expenses, in accordance with the provisions under Section 148 of the Companies Act, 2013 read with rules made there under.

The remuneration payable to the Cost Auditor of the Company has been proposed for the ratification by the members of the Company and shall form part of the notice of 24th Annual General Meeting.

24. PUBLIC DEPOSITS

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORP- TION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 134(3)(m) of the Companies Act, 2013, read with rule 8(3) of the Companies (Accounts) Rules, 2014 is given below:

A. CONSERVATION OF ENERGY

i. Steps taken or impact on conservation of energy:- The Company continues its policy of giving priority to energy conservation measures including regular review of energy conservation, consumption and effective control of utilization of energy.

The following energy conservation measures were implemented during the year under review.

- High wattage Sodium vapor and Mercury lamps replaced by low wattage LED lamps, which can saved approx 29K power units per annum.

- Capacity of APFC (Auto Power Factor Correction) panel has been increased to maintain the value of power factor nearby .99 to reduce the reactive power loses.

- Up-gradation of machine by using VFDs (Variable Frequency Drives) and TPRs (Thyristor Power Regulators) to increase the m/c efficiency and reduction of power consumption.

- 29.34 lac units less consumed in comparison to the last year.

During the year under report, Company has consumed units of energy as detailed below:

Electric Energy : (i) 64.38 (previous year 88.69) lac units supplied by Power Corporation,

(ii) 4.81 (previous year 9.84) lac units generated by DG sets.

Diesel : 1.49 (previous year 3.12) lac liters for

running of DG sets.

ii. The steps taken by the Company for utilizing

alternate sources of energy - NIL

iii. Capital investment on energy conservation equipment

(a) Additional Investments - No major additional

and proposals, if any, investment was made

being implemented for

reduction of consumption of energy.

(b) Impact of the measures - Not applicable referred to above for

reduction of energy consumption and consequent impact on the cost of production of goods

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

i) Efforts in brief made towards technology absorption, adaptation and innovation-NIL

ii) Benefits derived as a result of the above efforts: N.A.

iii) Details of technology imported during last five years

(a) Technology Imported: N.A.

(b) Year of Import: N.A.

(c) Has technology been fully absorbed: N.A.

(d) If not fully absorbed, area where this has not taken place: N.A.

Expenditure incurred on Research and Development

During the year under review, the Company has not incurred any expenses on Research & Development. The Company's products viz. Halogen Lamps are produced with well-established technologies and therefore do not require any focused Research & Development efforts.

27. CORPORATE GOVERNANCE

Your Company is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators/ applicable laws. Our focus on corporate governance, where investor and public confidence in companies is no longer based strictly on financial performance or products and services but on a company's structure, its Board of Directors, its policies and guidelines, its culture and the behavior of not only its officers and directors, but also all of its employees.

Our approach is proactive, starting with our Leadership Team. It is also deeply ingrained in our corporate culture, guiding how we work and how we do business. We apply and adhere to the rules-not just those required by government, but also those we impose on ourselves (OSHAs, ISO etc.) to meet the highest possible standards.

We continually discuss bylaws and governance practices, changing our policies when necessary and pointing out areas where we need to improve our performance. We also compare our practices to the criteria used by outside organizations to evaluate corporate performance.

A separate section on Corporate Governance standards followed by the Company, as stipulated under Clause 49 of the Listing Agreement with the stock exchange is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.

A Certificate from M/s Sanjay Grover & Associates, Practicing Company Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to this Report.

28. LISTING OF SHARES

The Equity Shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited. The Listing Fees for the financial year 2015-16 has been paid.

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to NSEZ Authorities, Banks, Business Associates and Shareholders for their unstinted support, assistance and co- operation. Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain at the forefront of the Industry.

For and on behalf of the Board

Sd/- 3lace : Noida Padmanabh P. Vora Date : May 22, 2015 Chairman DIN: 00003192


Mar 31, 2013

The Directors have pleasure in presenting the Twenty-Second Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS

(Rs. in lacs) PARTICULARS Year ended year ended 31.03.2013 31.03.2012

Gross Sales and other Income 45,517.30 46,883.58

Profit before Interest, Depreciation & Tax 2,560.47 4,340.47

Depreciation 1,419.88 1,409.30

Gross Profit 1,140.59 2,931.18

Interest 1,996.04 2,176.71

Profit/ (Loss) Before Tax (855.45) 754.46

Less Capital advances written off 389.43

Provision for Tax (205.64)

Profit/ (Loss) After Tax (855.45) 570.67

Balance of Profit / (Loss) brought forward 3,739.97 3,169.30

Balance of Profit carried forward to next year 2,884.53 3,739.97

Previous year''s figures have been regrouped/ rearranged wherever considered necessary.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review, Gross Sales was recorded at Rs. 45,078.90 lacs as against Rs. 46,512.10 lacs in 2011-2012, a decrease of 3.08% over 2011-12. Sales for the Automotive Business in 2012-2013 have decreased from Rs. 24,086.87 lacs in 2011-2012 to Rs. 21,466.88 lacs i.e. a fall of 10.88% and the Earnings before interest, depreciation and taxes has decreased from Rs. 5,048.77 lacs to Rs. 4,379.15 lacs i.e. a decrease of 13.26% over 2011-2012. In case of General Lighting Business, the sales in 2012-2013 have increased from Rs. 22,425.23 lacs in 2011-2012 to Rs. 23,612.02 lacs i.e. by 5.29% and the Loss before interest, depreciation and taxes has increased from Rs. (708.29) lacs in 2011-2012 to Rs. (1,818.69) lacs in 2012-2013. Profit/ (Loss) before tax was Rs. (855.45) lacs against Rs. 754.46 lacs and Net Loss after tax at Rs. 855.45 lacs as against profit of Rs. 570.67 lacs in 2011-2012.

DIVIDEND

Your Board has not recommended any Dividend for the financial year 2012-2013.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors Confirm that:-

- in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

- they have 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 year under review;

- they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

- they have prepared the annual accounts on a going concern basis.

BUSINESS/OPERATIONS

Auto Business:

Domestic OEM sales of the Company continued to grow in spite of flat industry level sales volumes for Passenger Vehicle and Two Wheeler. The Company''s growth was achieved by gaining market share from competitors in both Passenger Vehicle and Two Wheeler segments. New customers / markets were also tapped to increase current and future business volumes. Branded sales in the aftermarket have been adversely hit, in line with the auto industry trend. However, export sales have come back strongly in the last quarter, driven by the business from the overseas subsidiaries, acquisition of which was completed in the IIIQ.

General Lighting Business:

2012-2013 was a challenging year for General Lighting Business with the overall economic slowdown reflected in low growth in retail and overall sales. The 20% depreciation in the rupee against the US Dollar over the last two financial years has resulted in huge cost escalation on account of increase in prices of imported materials. To compensate for the cost increases, the Company was forced to take price increases which impacted sales volumes and growth. The product improvement initiatives taken by the Company have resulted in some improvement in Warranty Claims. The Government business improved due to the orders executed for the CDM projects. Private labeling business continued to see declining numbers as per the strategy of the Company to move away from this business. The Company has introduced some LED lighting products during the year to capitalize on the market shift towards LEDs.

CORPORATE GOVERNANCE

Our focus on corporate governance are, where investor and public confidence in companies is no longer based strictly on financial performance or products and services but on a company''s structure, its Board of Directors, its policies and guidelines, its culture and the behavior of not only its officers and directors, but also all of its employees.

Our approach is proactive, starting with our Leadership Team. It is also deeply ingrained in our corporate culture, guiding how we work and how we do business. We apply and adhere to the rules-not just those required by government, but also those we impose on ourselves (OSHAs, ISO etc.) to meet the highest possible standards.

We continually discuss bylaws and governance practices, changing our policies when necessary and pointing out areas where we need to improve our performance. We also compare our practices to the criteria used by outside organizations to evaluate corporate performance.

As an organization we are proud of our strong commitment for maintaining the highest standards of corporate governance. As a listed Company, necessary measures are taken and systems put in place to comply with the Listing Agreement with Stock Exchanges.

A separate Report on Corporate Governance along with a Certificate of Compliances of conditions of Corporate Governance from the Practicing Company Secretary forms part of this Report.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public, during the year under review.

DIRECTORS

Mr. Padmanabh P. Vora and Mr. Shomik Mukherjee, are liable to retire by rotation at the forthcoming Annual General Meeting, and being eligible offer themselves for re- appointment.

Mr. Jaideep Wadhwa was appointed as an Additional Director of the Company with effect from 18th day of January, 2013. The Company has received notice(s) under Section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval.

In terms of Clause 49 of the Listing Agreement with Stock Exchanges, the details of the Directors to be appointed/ re-appointed are contained in the accompanying Notice for convening the ensuing Annual General Meeting.

AUDITORS

M/s. Arun K. Gupta & Associates, one of the Joint Auditors of the Company has expressed their unwillingness to be appointed as Auditors of the Company.

M/s. S. R. Batliboi & Co. LLP, one of the Joint Auditors of the Company retire at the forthcoming Annual General Meeting of the Company, and being eligible offer themselves for re-appointment. The Company has received an eligibility letter under Section 224(1B) of the Companies Act, 1956 from the Auditors and recommends their appointment for your approval.

AUDITORS'' COMMENT IN THE AUDITORS REPORT:

The Auditors Report of the Company does not carry any comment/ qualification to the Audited Financial Results for the financial year ended 31st March, 2013.

LISTING OF SHARES

The Equity Shares of the Company are listed on BSE Ltd. and National Stock Exchange of India Ltd. The Listing Fees for the financial year 2013-2014 has been paid.

COST AUDIT

The Board of Directors, in pursuance of an order made under Section 233B of the Companies Act, 1956, has appointed M/s. J. K. Kabra & Co., Cost Accountants, New Delhi as Cost Auditors for conducting audit of the cost accounts maintained by the Company for the financial year ended 31st March, 2013.

SUBSIDIARY COMPANIES

The Company has following subsidiary companies.

One Indian unlisted subsidiary Company is "Halonix Technologies Limited". There are no operations during the year in the Company. The Balance Sheet, Profit and Loss Account and schedules thereto along with the Statement in terms of Section 212 of the Companies Act, 1956 forms part of this Annual Report.

During the year, Company completed the acquisition of 100% shareholding of International Lamps Holding Company SA, Luxembourg and with this International Lamps Holding Company SA, Luxembourg, has become a 100% wholly owned subsidiary of Halonix Limited. With this acquisition Halonix has acquired assets and business of its distributors (Luxlite Lamps Sarl and Trifa Lamps Germany GmbH) in Europe, including of brands ''Luxlamps'' and ''Trifa''.

In terms of General Exemption, under Section 212(8) of the Companies Act, 1956, granted by Ministry of Corporate Affairs vide its circular no. 02/2011 dated 8th February, 2011 and in compliance with the conditions enlisted therein, the Audited Statement of Accounts, Auditors'' Reports thereon and the Reports of the Board of Directors of the Company''s subsidiaries for the financial year ended 31st March, 2013 have not been annexed. The Annual Accounts and related documents of the Subsidiary Companies shall be kept open for inspection at the Registered Office of the Company. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same. However, as directed by the said circular, the financial data of the Subsidiaries have been furnished under ''Subsidiary Companies Particulars'' forming part of the Annual Report (refer page no. 43). Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company in this Annual Report includes the financial information of its subsidiaries.

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

Information under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given below:

A. Conservation of Energy

(a) The Company continues its policy of priority to energy conservation measures including regular review of energy conservation, consumption and effective control of utilization of energy.

The following energy conservation measures were implemented during the year under review.

- Heavy duty 200 KVA UPS has been extended in Noida unit to take care of critical plant load during tripping of state electricity power. This will help to increase the machine efficiency and power quality.

- AC drives (VFD) has been installed for induction motors to improve power efficiency of AC motors.

- Periodical inspection and testing of DG sets and transformers has been done as per Indian electricity rule 1956 by Assistant Director Electrical Safety.

- 17.65 lac Units less consumed in comparison to the last year.

During the year under report, Company has consumed units of energy as detailed below:- Electric Energy – 119.73 (previous year 138.55) lac units supplied by Power Corporation

16.87 (previous year 15.7) lac units generated by DG sets.

Diesel – 5.18 (previous year 4.64) lac liters for running of DG sets.

(b) Additional Investments – No major additional and proposals, if any, investment is required. being implemented for reduction of consumption of energy

(c ) Impact of the measures – Not applicable at(a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

B. Technology Absorption

Particulars regarding Research & Development, Technology Absorption, Adaptation and Innovation are given under in prescribed Form ''B''.

FORM ''B''

1. Research & Development (R & D) :

During the year under review the Company did not pursue any projects on Research & Development. The Company''s products viz. Halogen Lamps and Compact Flurocent Lamps are produced with well-established technologies and therefore does not require any focused Research & Development efforts.

2. Technology Absorption, Adaptation and Innovation

(i) Efforts in brief made A number of product towards technology adaptations and absorption, adaptation innovations have been and innovation undertaken to improve product life and lumen output as well as to develop special products for specific applications. (ii) Benefits derived : Stabilized Operations as a result of the and improved life of above efforts. lamp

(iii) Details of technology imported during last five years

(a) Technology Imported : N.A.

(b) Year of Import : N.A.

(c) Has technology been fully absorbed : N.A.

(d) If not fully absorbed, area where this : N.A. has not taken place.

C. Foreign Exchange Earnings and Outgo

Current Year Previous Year

PARTICULARS (Rs. in Lacs) (Rs. in Lacs)

1. Foreign Exchange Earnings 8,810.14 9,741.31

2. Foreign Exchange Outgo

(a) Raw Materials 10,828.09 13,354.37

(b) Traded Goods 521.52 285.05

(c) Capital Goods Nil

(d) Spare Parts 138.77 223.83

(e) Foreign Traveling/ 536.33 487.77 Selling Expenses

(f) Dividend Nil

Activities relating to export, initiative taken to increase the export, development of new export markets for products and export plan.

The Company taking necessary steps to increase export activities. The Company is having a unit in NSEZ.

PERSONNEL

Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees)

Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1) (b) (iv) of the Act, the Report and Accounts are being sent excluding the statement containing the particulars to be provided under Section 217 (2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the Registered Office of the company or write to the Compliance Officer for a copy thereof.

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to NSEZ Authorities, Banks, Business Associates and Shareholders for their unstinted support, assistance and co-operation.

Your Company and its Directors also acknowledge with thanks the full fledged co-operation received from the employees at all levels.

For and on behalf of the Board

Place: Noida PADMANABH P. VORA

Date : May 28, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Twenty-First Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2012.

FINANCIAL RESULTS (Rs. in lacs)

PARTICULARS Year ended Year ended

31.03.2012 31.03.2011

Gross Sales and other Income 46,733.51 43,430.71

Profit before Interest, Depreciation & Tax 4,448.69 1,996.21

Depreciation 1,409.30 1,344.73

Gross Profit 3,039.39 651.48

Interest 2,284.93 1,659.56

Profit Before Tax 754.46 (1008.08)

Less : Capital advances written off 389.43 -

Provision for Tax (205.64) 123.85

Profit After Tax 570.67 (884.23)

Balance of Profit / (Loss) brought forward 3,169.30 4,053.52

Balance of Profit carried forward to next year 3,739.97 3,169.30

Previous year's figures have been regrouped/ rearranged wherever considered necessary.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review, Gross Sales was recorded at Rs. 46,667.02 lacs as against Rs. 43,269.12 lacs in 2010-2011, an increase of 7.85% over 2010-11. The sales for the Automotive Business in 2011-2012 has decreased from Rs. 24,870.16 lacs in 2010-2011 to Rs. 24,387.34 lacs i.e. a fall of 1.95% and the Earning before interest, depreciation and taxes has increased from Rs. 5,029.68 lacs to Rs. 5,108.18 lacs i.e. an increase of 1.56 % over 2010-2011. In case of General Lighting Business, the sales in 2011-2012 have increased from Rs. 18,398.96 lacs in 2010-2011 to Rs. 22,279.68 i.e. by 21.09% and the Earning before interest, depreciation and taxes has improved from Rs. (3,033.47) lacs in 2010-2011 to Rs. (659.49 lacs) in 2011-2012. Profit before tax (PBT) was Rs.754.46 lacs against Rs. (1,008.08) lacs and Net Profit after tax at Rs. 570.67 lacs as against Rs. (884.23) lacs in 2010-2011.

BUSINESS/OPERATIONS

Auto Business:

The Auto ancillary business saw average growth globally. The domestic market which rides on the back of auto industry saw a low double digit growth. Halonix sales grew 17% YOY on domestic front driven by a strong performance by the OEM segment. The OEM sales grew by 20% and Halonix Branded sales grew by 13%. Exports sales were subdued mainly on account of low sentiment caused by the Eurozone crisis. Halonix gained market share in OEM segment from competitors in both 2 wheelers as well as 4 wheelers. New customers / markets were developed in Latin America, Middle-East, and CIS region as well.

General Lighting Business:

The General Lighting Business grew by 30% year on year aided by rapid growth in retail sales.

The Company has taken a strategic decision to get out of the Private labeling business. Company is only selling Non-Integrals which are not prone to high warranty levels in the private label and saw a 27% dip in the sales for this segment. The Company had to provide for the warranty for private labels this year also, on the lamps sold earlier.

The CDM based CFL projects had a set-back this year on account of the un-certainty with the Climate change treaty post 2012 and the economic turmoil in Eurozone. There were hardly any new projects executed and the financing for these projects was also difficult. The CDM based CFL distribution is expected to restart in 2012 based on the clarification that CER's will be valid post 2012 also for projects registered prior to 2012.

DIVIDEND

Your Board has not recommended any Dividend for the financial year 2011-2012.

CORPORATE GOVERNANCE

Our focus on corporate governance are, where investor and public confidence in companies is no longer based strictly on financial performance or products and services but on a company's structure, its Board of Directors, its policies and guidelines, its culture and the behavior of not only its officers and directors, but also all of its employees.

Our approach is proactive, starting with our Leadership Team. It is also deeply ingrained in our corporate culture, guiding how we work and how we do business. We apply and adhere to the rules-not just those required by government, but also those we impose on ourselves (OSHAs, ISO etc.) to meet the highest possible standards.

We continually discuss bylaws and governance practices, changing our policies when necessary and pointing out areas where we need to improve our performance. We also compare our practices to the criteria used by outside organizations to evaluate corporate performance.

As an organization we are proud of our strong commitment for maintaining the highest standards of corporate governance. As a listed Company, necessary measures are taken and systems put in place to comply with the Listing Agreement with Stock Exchanges.

A separate Report on Corporate Governance along with a Certificate of Compliances of conditions of Corporate Governance from the Practicing Company Secretary forms part of this Report.

QUALITY POLICY / CERTIFICATION

The Company is committed to provide consistent good quality products to its customers worldwide and for achievement of world class quality in the products manufactured, Management on its part is fully committed to further improve quality and provide all resources to accomplish this task. The Company is also committed to continuously improve safety and health of employees and working environment through institutionalizing proactive safety, health and environmental management strategies.

CERTIFICATION(S)

The organization was first certified ISO 9002 in year 1994 and QS 9000:1998/ISO9001:1994 in Jan 2002 and ISOTS 16949:2002 in May 2003 by RWTUV. The organization was also certified for ISO 14001:2004 and OHSAS 18001:1999 in April 2005 by RWTUV.

The organization is certified for ISO9001:2008 and ISO/ TS16949:2009 for all units located in Noida valid until July 2012 and ISO14001:2004 and OHSAS 18001:2007 is valid until April 2014 BY TUV-NORD.

The Dehradun Plant certification of ISO 9001:2008 and ISO/ TS 16949:2009 are valid until Feb 2014. For Haridwar plant certification of ISO 9001:2008 is valid until August 2014.

The testing lab of 59A Noida is NABL accredited until Oct. 2012. DIRECTORS' RESPONSIBILITY STATEMENT Board of Directors of your Company state:

i. that in the preparation of the annual accounts, applicable accounting standards had been followed along with proper examination relating to material departures, if any;

ii. that the directors have 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 year under review;

iii. that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with 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 have prepared the annual accounts on a going concern basis.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public, during the year under review.

DIRECTORS

Mr. Gurdeep Singh, is liable to retire by rotation at the forthcoming Annual General Meeting, and being eligible offer himself for re-appointment.

Mr. Gurvikram Singh was appointed as an Additional Director and Managing Director of the Company with effect from 29th day of September, 2011. The Company has received notice(s) under Section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval.

In terms of Clause 49 of the Listing Agreement with Stock Exchanges, the details of the Directors to be appointed/ re-appointed are contained in the accompanying Notice for convening the ensuing Annual General Meeting.

During the period, Mr. Raj Krishan Sahgal, Chairman as well as Director, resigned and was relieved from the Board of the Company with effect from 11th October, 2011. Mr. Rajesh Kochhar, Managing Director, resigned and was relieved from the Board as well as from the office of the Company with effect from 30th June, 2011 and Mr. Susanta Kumar Neogi, Director resigned and was relieved from the Board as well as from the office of the Company with effect from 7th September, 2011. Mr. Steven Mark Enderby has resigned as director with effect rom May 26, 2012. Your Board of Directors wish to place on record their sincere appreciation for the guidance and valuable contribution made by Mr. Raj Krishan Sahgal, Mr. Rajesh Kochhar, Mr. Susanta Kumar Neogi and Mr. Steven Mark Enderby in the deliberations of the Board during their tenure as Directors of the Company.

AUDITORS

M/s. Arun K. Gupta & Associates, Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible offer themselves for re-appointment. The Company has received an eligibility letter under Section 224(1B) of the Companies Act, 1956 from the Auditors and recommend their appointment for your approval.

AUDITORS' COMMENT IN THE AUDITORS REPORT

The Auditors Report of the Company do not carry any comment/ qualification to the Audited Financial Results for the financial year ended 31st March, 2012.

LISTING OF SHARES

The Equity Shares of the Company are listed on Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Listing Fees for the financial year 2012-2013 has been paid.

COST AUDIT

The Board of Directors, in pursuance of an order made under Section 233B of the Companies Act, 1956, has appointed M/s. J.K. Kabra & Co., Cost Accountants, New Delhi as Cost Auditors for conducting audit of the cost accounts maintained by the Company for the financial year ended 31st March, 2012.

SUBSIDIARY COMPANY

The Company has one unlisted 100% wholly owned subsidiary company "Halonix Technologies Limited". There are no operations during the year in the Company. The Balance Sheet, Profit and Loss Account and schedules thereto along with the Statement in terms of Section 212 of the Companies Act, 1956 forms part of this Annual Report.

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

Information under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given below:

A. Conservation of Energy

The Company continues its policy of priority to energy conservation measures including regular review of energy conservation, consumption and effective control of utilization of energy.

The following energy conservation measures were implemented during the year under review.

- APFC (Auto Power Factor correction Panel) 360 KVAR has been installed to control the reactive power losses now the power factor reading is completely controlled.

- Low wattage lamps replaced in place of high wattage lamps like 250W MHL lamps have been replaced by T5 (28W) and spiral lamps (55W) to reduce the power consumption of lights.

- Motion sensors and time based sensors installed for auto switching of plant and boundary lights to control the unusual working of lights.

During the year under report, Company has consumed units of energy as detailed below:-

Electric Energy - 138.55 (previous year 137.43) lac units supplied by Power Corporation,

15.7 (previous year 21.47) lac units generated by DG sets.

Diesel - 4.64 (previous year 7.09) lac liters for running of DG sets.

(b) Additional - No major

Investments additional investment is required. and proposals, if any, being implemented forreduction of consumption of energy

(c ) Impact of the measures at(a) - Not applicable and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

B. Technology Absorption

Particulars regarding Research & Development, Technology Absorption, Adaptation and Innovation are given under in prescribed Form 'B'.

FORM B' 1. Research & Development (R & D) :

During the year under review the Company did not pursue any projects on Research & Development. The Company's products viz. Halogen Lamps and Compact Flurocent Lamps are produced with well established technologies and therefore does not require any focused Research & Development efforts.

2. Technology Absorption, Adaptation and Innovation

(i) Efforts in brief : Technology to manufacture made towards Halogen Lamps and technology CFL Lamps has been fully absorption, absorbed.

adaptation and innovation

(ii) Benefits derived : Stabilized Operations as a result of the above efforts.

(iii) Details of technology imported during last five years

(a) Technology Imported : N.A.

(b) Year of Import : N.A.

(c) Has technology been fully absorbed : N.A.

(d) If not fully absorbed, area where this : N.A. has not taken place.

Activities relating to export, initiative taken to increase the export, development of new export markets for products and export plan.

The Company taking necessary steps to increase export activities. The Company is having a unit in NSEZ.

PERSONNEL

Report on particulars of the employees required in terms of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, is as under:

Employed throughout the year

Sr. Name Age Designation Remuneration Qualification No. Received (Rs)

1. Mr. Rakesh Zutshi 44 Director Sales & 1,17,51,608 BSc., MBA Marketing

2. Mr. Amar Singh Saini 61 Director 1,12,46,196 D M E Operations

3. Mr. Lalit Ramsharan Bhatia 45 General 62,36,776 BSc, (Power

Manager-SCM Electronics)



Name Experience Date of Last (Years) Comm. of Employment Employment

Mr.Rakesh Zutshi 22 09.07.2007 Gujarat Glass Ltd

Mr.Amruth Singh saini 40 03.05.1991 ECE Industries Ltd.

Mr.Lalit Ramsharan 15 05.02.2009 Supreme Industries

Employed for part of the year

Sr. Name Age Designation Remuneration Qualification No. Received (Rs.)

1. Mr. Rajesh Kochhar* 55 Managing 29,38,933 B.E.

Director (Electronics)

2. Mr. S K Neogi** 67 Executive 31,82,632 M.Tech

Director

Name Experience Date of Last (Years) Comm. of Employment Employment

Mr.Rajesh Kochhar 34 16.11.2009 Landis Gyyr Ltd..

Mr.S.K.Neogi** 41 03.06.1993 HMT Ltd.

*Ceased to be employed with effect from June 30, 2012 **Ceased to be employed with effect from September 30, 2012

Nature of Employment

- The employment is contractual.

Other Terms and Conditions

- The terms and conditions of employment are based on the board resolution, shareholders resolution and appointment letter. Nature of Duties

- All the above personnel look after day-to-day activities of the Company under the supervision of Board of Directors of the Company.

- No employee as mentioned above are related to each other.

The above employees are not holding any shares in the Company.

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to NSEZ Authorities, Banks, Business Associates and Shareholders for their unstinted support, assistance and co-operation.

Your Company and its Directors also acknowledge with thanks the full fledged co-operation received from the employees at all levels.

For and on behalf of the Board

Place: Noida PADMANABH P. VORA

Date : May 26, 2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting the Twentieth Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2011.

FINANCIAL RESULTS (Rs. in lacs)

PARTICULARS Year ended Year ended

31.03.2011 31.03.2010

Gross Sales and other Income 43,430.71 45,113.37

Profit before Interest, Depreciation & Tax 3,105.56 2,372.92

Depreciation 1,334.73 1,300.36

Gross Profit 1,760.82 1,072.56

Interest 1,494.22 1,445.83

Profit Before Tax 266.62 (327.26)

Less : Provision for Obsolete

Inventories, Doubtful Debts and

Warranty Claims 1,193.01 1,135.88

Less: Adjustments relating to

earlier years (Net) 81.68 421.11

Provision for Tax 123.85 (3.12)

Profit After Tax (884.22) (1,927.13)

Balance of Profit / (Loss) brought forward 4,053.52 5,980.66

Balance of Profit carried forward to next 3,169.30 4,053.52 year

Previous years figures have been regrouped/ rearranged wherever considered necessary.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review, Gross Sales was recorded at Rs. 43,269.12 lacs as against Rs. 45,077.74 lacs in 2009-2010, a decrease of 4.01% over 2009-10. The Gross Sales for the Automotive Business in 2010-2011 has increased from Rs. 21,980.26 lacs in 2009-2010 to Rs. 24,897.88 lacs i.e. by 13.3% and the Earning before interest, depreciation and taxes has increased from Rs. 4,939 lacs to Rs. 5,304 lacs i.e. 7.4% over 2009-2010. In case of General lighting business, the gross sales before discount & warranties in 2010-2011 have decreased from Rs. 25,615 lacs in 2009- 2010 to Rs. 22,336 lacs i.e. by 12.8%. The Earning before interest, depreciation and taxes for general lighting business has improved from Rs. (2,164) lacs in 2009-2010 to Rs. (2,033) lacs i.e. 6% in 2010-2011. Profit before tax (PBT) after providing for Obsolete Inventories, Doubtful Debts, Warranty Claims and prior period adjustments was Rs. (1,008.07) lacs against Rs. (1,930.26) lacs and Net Profit after tax at Rs. (884.22) lacs as against Rs. (1927.13) lacs in 2009-2010 respectively. The Company produced 910.44 lacs electric lamps as against 923.79 lacs electric lamps last year, a decrease of 1.44%. The operating results of the Company have been lower on account of: -

1) High Warranty Returns in CFL business.

2) Withdrawal of exposure from the OLM business and focusing on own brand for CFL business.

3) Reduction of exposure from high warranty prone areas/ markets in the CFL business.

BUSINESS/OPERATIONS

AUTO BUSINESS

The Auto ancillary business saw robust growth but there was a shortage of halogen capacity globally. Halonix sales grew 15% YOY driven by a strong performance by the OEM segment. The OEM sales grew by 37% and Halonix Branded sales grew by 27%. Exports grew by 3% and were hampered mainly on account of capacity constraints. Halonix gained market share in OEM segment from competitors in both 2 wheelers (5%) as well as 4 wheelers (4%). New customers / markets have been developed in Latin America, Middle–East as well as new International OEM customers. During the year, three new production lines were commercialized and the full benefit of these will be accruing this year.

GENERAL LIGHTING BUSINESS

The General Lighting branded business had a flat year with the retail sales growing by 2% year on year. The industry was plagued by the infusion of low price LPF lamps despite their production being illegal, which put price pressure on HPF lamps. However by the end of the year the situation had improved substantially and going forward we see stabilization in prices and sales volumes.

There is a rapid shift taking place from Ordinary Incandescent Lamps to energy efficient Compact Fluorescent Lamps (CFLs) also in turn because of the efforts of the Government to replace Ordinary Incandescent Lamps with energy saving Lamps under the CER / Bachat lamp Yojana scheme. Halonix executed one such project in Chattisgarh and in the coming years, the CFL market is set to show tremendous growth driven by the carbon credits. With our installed capacity, we are poised to benefit from the increasing usage of CFLs.

The company has taken a strategic decision to get out of the Private labeling business as such saw a 68% dip in the sales for this segment. The company had to provide in this year, the warranty of the CFL lamps sold earlier which impacted the bottomline adversely. However this is a one time cost and the company expects to rebound strongly here-after based on the growth in the branded retail sales. The company has also focused on increasing the product basket in the general lighting business which will help the company to achieve better top and bottom line.

LUMINAIRES BUSINESS

Luminaries business has grown by nearly 30% over the previous year. There has been significant progress in the network expansion and most of the major metro cities have exclusive showrooms put up by the channel partners. Thus providing our customers an opportunity to experience the product before purchasing them.

The basic foundation has been laid for an aggressive growth ahead in Infrastructure and Domestic segments of the market. The company has been making rapid strides in LED business segment. The strong technical team in the division has been able to develop and offer high quality and high performance products in the LED space. This has led to the positioning of our brand in the institutional segment as a premium one.

With strong growth being witnessed in Domestic and institutional segments, our luminaries division is poised for greater heights in the months ahead.

DIVIDEND

Due to loss and inadequacy of profits in the Company, your Board has decided not to recommend any Dividend for the year 2010-2011.

RESTRUCTURING OF OPERATIONS OF THE COMPANY

The Board of Directors of the Company in its meeting held on 06.05.2010 approved the sale and transfer of its General Lighting Business, on a Slump Sale and Going concern basis, to its wholly owned subsidiary, Halonix Technologies Limited (HTL), with effect from 01.04.2010. The company bifurcated its operations into Automotive and General Lighting businesses and obtained two independent valuation reports for the General Lighting business as on 31.03.2010. The shareholders of the Company also accorded their approval for the sale of General Lighting business to HTL and its subsequent sale. In terms of the Accounting Standard-24 on "Discontinuing Operations", the company made requisite disclosures and reported its financial results for the quarters ended September 30, 2010 and December 31, 2010 since the proposed sale of business constituted "discontinuing operation" within the meaning of this Accounting Standard. The Slump Sale Agreement for sale of General Lighting business has not been executed as on 31.03.2011. The Board of Directors of the Company, in its meeting held on 20.05.2011 i.e. before signing of the Accounts, has decided not to Sell and transfer its General Lighting business and continue both Automotive and General Lighting businesses as two separate and distinct lines of business ie. Strategic Business units to continue to avail economies of scale and synergies between the two businesses.

ACQUISITION OF ASSETS AND TRADEMARKS OF COMPANIES IN EUROPE

During the year 2010-11, the company acquired 100% shareholding of International Lamps Holding Company S.A

(ILHC) and through ILHC two downstream subsidiaries namely Luxlite Lamps Sarl in Luxembourg and Trifa Lamps GmbH in Germany. The Company, including through its wholly owned subsidiary ILHC and downstream subidiaries Luxlite Lamp Sarl and Trifa Lamps GmbH, entered into an Agreement to acquire their business, with Luxlite Sarl and Trifa Gluhlampenwerk am Trifels GmbH. Halonix Limited has extended Corporate guarantee and SBLC aggregating to Euro 2.7 million to Trifa Lamps Gmbh for its working capital requirements.

Since the terms & conditions of the various agreements entered into by the parties could not be fulfilled either in terms of spirit or by action, the Board of Directors decided that the acquisition of overseas entities be called off. Further, as per the terms of the Agreements, the transaction shall get RESTITUTED and the Seller shall be required to refund the purchase price towards sale and purchase of the Sale Shares / equity investment and / or unsecured loans made by the Purchaser to the Company. Accordingly, the accounts of the subsidiaries have not been consolidated with the Companys accounts as on 31.03.11. The Directors of the Company are also of the opinion that all the dues from overseas companies are fully recoverable, including the Corporate guarantee and SBLC aggregating to Euro 2.7 million.

CORPORATE GOVERNANCE

Our focus on corporate governance are, where investor and public confidence in companies is no longer based strictly on financial performance or products and services but on a companys structure, its board of directors, its policies and guidelines, its culture and the behavior of not only its officers and directors, but also all of its employees.

Our approach is proactive, starting with our Leadership Team. It is also deeply ingrained in our corporate culture, guiding how we work and how we do business. We apply and adhere to the rules—not just those required by government, but also those we impose on ourselves (OSHAs, ISO etc) to meet the highest possible standards.

We continually discuss bylaws and governance practices, changing our policies when necessary and pointing out areas where we need to improve our performance. We also compare our practices to the criteria used by outside organizations to evaluate corporate performance.

As an organization we are proud of our strong commitment for maintaining the highest standards of corporate governance. As a listed Company, necessary measures are taken and systems put in place to comply with the Listing Agreement with Stock Exchanges.

A separate Report on Corporate Governance along with a Certificate of Compliances of conditions of Corporate Governance from the Practicing Company Secretary forms part of this Report.

QUALITY POLICY / CERTIFICATION

The Company is committed to provide consistent good quality products to its customers worldwide and for achievement of world class quality in the products manufactured, every employee is involved in ensuring quality of products at all times. Management on its part is fully committed to further improve quality and provide all resources to accomplish this task. The Company is also committed to continuously improve safety and health of employees and working environment through institutionalizing proactive safety, health and environmental management strategies.

CERTIFICATION(S)

The Company is certified for ISO 9002 since Nov. 1994 & QS 9000:1998/ISO 9001:1994 since Jan. -2002, ISO/TS 16949:2002 since May, 2003 by RWTUV, Germany. The Company has also certified for ISO 14001:2004 and OHSAS 18001: 1999 since Apr. -2005 by RWTUV, Germany.

The Company is certified for ISO:9001:2008 and ISO/TS 16949:2009 for all units located in Noida, valid until 2012 and ISO: 14001:2004, OHSAS: 18001:2007 is valid until 2014 for all units by TUV NORD INDIA PVT. LTD., Germany.

The Certification of ISO 9001:2008 and ISO/TS 16949:2009 are valid until Feb., 2014. For Dehradun plant and Haridwar plant certification of ISO 9001:2008 is valid until Aug., 2011.

The Companys (59-A) testing lab is NABL accredited in July 2010 and SA 8000 Certified.

The Companys units at A1, Phase-II, Noida and Haridwar are certified for RoHS compliance and the audit was performed by Intertek. Your Company was the first Company in India to be certified with RoHS compliance through certification audit and this certification is valid till 2013 and also approved by BIS for the CFL products.

DIRECTORS RESPONSIBILITY STATEMENT

Board of Directors of your Company state:

i. that in the preparation of the annual accounts, applicable accounting standards had been followed alongwith proper examination relating to material departures, if any;

ii. that the directors have 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 loss of the Company for the year under review;

iii. that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with 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 have prepared the annual accounts on a going concern basis.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public, during the year under review.

DIRECTORS

Mr. Raj Krishan Sahgal, and Mr. Ganapati Rathinam, Director(s), are liable to retire by rotation at the forthcoming Annual General Meeting, and being eligible offer themselves for re-appointment.

Mr. Susanta Kumar Neogi has been appointed as an Executive Director for a period of one year with effect from 8th day of September, 2010.

Mr. Padmanabh Pundrikray Vora, Independent and Non- Executive has been appointed as an Additional Director with effect from 20th May, 2011. The Company has received notice along with requisite deposit under section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval.

Mr. Shomik Mukherjee, Non-Executive and representative of Argon India Limited and Argon South Asia Limited has been appointed as an Additional Director with effect from 20th May, 2011. The Company has received notice along with requisite deposit under section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval. In terms of Clause 49 of the Listing Agreement with Stock Exchanges, the details of the Directors to be appointed / re-appointed are contained in the accompanying notice for convening the ensuing Annual General Meeting.

During the period, Mr. Jayant Davar, Director, resigned and was relieved from the Board of the Company with effect from 11th August, 2010. Mr. Girija Shankar Tripathy, Director, resigned and was relieved from the Board of the Company with effect from 28th January, 2011. Your Board of Directors wish to place on record their sincere appreciation for the guidance and valuable contribution made by Mr. Jayant Davar and Mr. Girija Shankar Tripathy in the deliberations of the Board during their tenure as Directors of the Company.

AUDITORS

M/s. Arun K. Gupta & Associates, Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible offer themselves for re-appointment. The Company has received an eligibility letter under section 224(1B) of the Companies Act, 1956 from the Auditors and recommend their appointment for your approval.

AUDITORS COMMENT IN THE AUDITORS REPORT

The Auditors Report of the Company do not carry any comment/ qualification to the Audited Financial Results for the financial year ended 31st March, 2011.

LISTING OF SHARES

The Equity Shares of the Company are listed on Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Listing Fees for the financial year 2011-2012 has been paid.

COST AUDIT

The Board of Directors, in pursuance of an order made under section 233B of the Companies Act, 1956, has appointed M/s. J.K. Kabra & Co., Cost Accountants, New Delhi as Cost Auditors for conducting audit of the cost accounts maintained by the Company for the financial year ended 31st March, 2011.

SUBSIDIARY COMPANY

The Company has one non-listed 100% wholly owned subsidiary company "Halonix Technologies Limited". There are no operations during the year in the Company. The Balance Sheet, Profit and Loss Account and schedules thereto along with the Statement in terms of Section 212 of the Companies Act, 1956 forms part of this Annual Report.

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

Information under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given below:

A. Conservation of Energy

The company continues its policy of priority to energy conservation measures including regular review of energy conservation, consumption and effective control of utilization of energy.

The following energy conservation measures were implemented during the year under review.

- APFC (Auto Power Factor correction Panel) 360 KVAR has been installed to control the reactive power losses now the power factor reading is completely controlled.

- Low wattage lamps replaced in place of high wattage

lamps like 250W MHL lamps have been replaced by T5 (28W) and spiral lamps (55W) to reduce the power consumption of lights.

- Motion sensors and time based sensors installed for auto switching of plant and boundary lights to control the unusual working of lights.

During the year under report, Company has consumed units of energy as detailed below:-

Electric Energy - 137.43 (previous. year 135.22) lac units supplied by Power Corporation, 21.47 (previous year 18.87) lac units generated by DG sets.

Diesel - 7.09 (previous. year 5.78) lac litres for running of DG sets.

(b) Additional Investments and proposals, if any, being implemented for reduction of consumption of energy

No major additional investment is required.

(c ) Impact of the measures at(a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

Not applicable

B. Technology Absorption

Particulars regarding Research & Development, Technology Absorption, Adaptation and Innovation are given under in prescribed Form ‘B.

1. Research & Development (R & D) :

(i) Specific Areas in which R&D carries by the Company

1. Commercialized LED based tail lights E-Homologation.

2. For LED lighting investment close to about Rs. 30 lacs was done for tooling/ testing/ new design testing and validating and generating IES files related to LED.

(ii) Benefits derived as a result of the above R&D

1. Company has been able to develop products which on validation has proven to be more effective products than the products available in the market.

(iii) Future Plan of Action The Company will continue product development and other regular activities related to for tooling/ testing/ new design testing and validating and generating new products to improve quality and reduce cost by increasing the raw material efficiency and reducing wastage. To commercialize the products developed. Penetrate market.

(iv) Expenditure on R & D During the year Company has invested close to INR 20 lacs for tooling / testing / New Design testing and validation.

2. Technology Absorption, Adaptation and Innovation

(i) Efforts in brief made towards technology absorption, adaptation and innovation : Technology to manufacture Halogen Lamps and CFL Lamps has been fully absorbed.

(ii) Benefits derived as a result of the above efforts.

: Stabilized Operations

(iii) Details of technology imported during last five years

(a) Technology Imported : N.A.

(b) Year of Import : N.A.

(c) Has technology been fully absorbed : N.A.

(d) If not fully absorbed, area where this has not taken place.

: N.A.

Activities relating to export, initiative taken to increase the export, development of new export markets for products and export plan.

The Company taking necessary steps to increase export activities. The Company is having a unit in NSEZ. The Company is trying to acquire marketing Company in Europe.

Nature of Employment

– The employment is contractual.

Other Terms and Conditions

– The terms and conditions of employment are based on the board resolution, shareholders resolution and appointment letter.

Nature of Duties

– All the above personnel look after day–to-day activities of the Company under the supervision of Board of Directors of the Company.

– No employee as mentioned above are related to each other.

The above employees are not holding any shares in the Company.

ACKNOWLEDGMENT

Your Directors wish to place on record their gratitude to NSEZ Authorities, Banks, Business Associates and Shareholders for their unstinted support, assistance and co-operation.

Your Company and its Directors also acknowledge with thanks the full fledged co-operation received from the employees at all levels.

For and on behalf of the Board

Place : Noida RAJ KRISHAN SAHGAL

Date : 20.05.2011 Chairman


Mar 31, 2010

The Directors have pleasure in presenting the Nineteenth Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the financial year ended 31st March, 2010.

FINANCIAL RESULTS (Rs. in lacs)

PARTICULARS Year ended Year ended

31.03.2010 31.03.2009

Gross Sales and other Income 45,651.23 40,268.88

Profit before Interest, Depreciation & Tax 2,910.78 4,020.75

Depreciation 1,300.36 1,143.83

Gross Profit 1,610.42 2,876.92

Interest 1,445.83 1,469.46

Profit Before Tax 164.59 1,407.46

Less : Provision for Obsolete

Inventories, Doubtful Debts and

Warranty Claims 1,673.74 825.55

Less: Adjustments relating to earlier

years (Net) 421.11 260.16

Net Provision for Tax (3.12) 158.98

Profit After Tax (1927.14) 162.77

Balance of Profit / (Loss) brought forward 5,980.66 5,949.02

Proposed Dividend on Equity Shares - 112.08

Tax on Dividend - 19.05

Balance of Profit carried forward to next year 4,053.52 5,980.66



FINANCIAL AND OPERATIONAL PERFORMANCE

During the year under review, Gross Sales were Rs. 45,651.23 lacs, an increase of 13% over 2008-09. Profit before tax (PBT) after providing for Obsolete Inventories, Doubtful Debts, Warranty Claims and prior period adjustments was Rs. (1,930.26) lacs and Net Profit at Rs. (1,974.14) lacs. The Company produced 923.79 lacs electric lamps as against 838.28 lacs last year, an increase of 10.2%. The operating results of the Company have been sharply lower on account of :

- Warranty Returns

- Losses on account of Rupee depreciation and high commodity prices during the year.

- Higher expenditure on Fixed Costs, coming from the development of a retail marketing network and Brand launch expenses, including advertising.

BUSINESS / OPERATIONS

AUTO BUSINESS

Your companys business in the Automobile Segment has seen a very strong growth in the year 2009-2010 and we see that trend carrying forward for the year 2010-2011. During the year gone by, all major customer segments viz. Exports, and Original Equipment Manufacturers (OEM) showed healthy demand. We expanded our markets with new customers being added in Latin America, Japan and USA. The expectation is that these new markets will start contributing to our sales from the year 2011. The major reason that held back growth in last quarter of FY10 was capacity constraint. This critical issue has been addressed with the planned addition of two H4 lines in the 2nd Quarter of 2010-2011. This will help your company to maintain its growth pattern and allow it to plan its penetration into new markets and geographies. The Company is, therefore, confident of retaining its dominance in the domestic market and simultaneously looking at aggressive growth in Exports, both for replacement as well as OEM segments.

The volatile Euro was a risk factor which would have adversely affected the company operations and profits despite a natural hedge on account of our Euro purchases. But with the Euro stabilising, this risk seems manageable.

GENERAL LIGHTING BUSINESS

The General lighting business grew 8.25% in the year 2009- 2010 over last year. The year 2009-2010 was turbulent for the Compact Fluorescent Lamp (CFL) market on account of change in the Government regulations to transition lamps from Low Power Factor (LPF) to High Power Factor (HPF). The HPF lamps required additional electronic components which pushed up the cost of manufacturing by about Rs. 10 per lamp. The transition was effective October 1, 2009. However flow of LPF lamps from the organised sector continued unabated for quite some time after the implementation date. This led to very severe pressure on pricing as cost increases could not be passed on to the trade and consumers. This has caused established players to lose market share till recently. We have seen improvement in the last few months of 2010 and we expect the situation to stabilise in the very near future.

During the year, we started our distribution network in South- India. Despite the turbulence, we are confident of achieving significant growth in 2010-2011.

Energy saving has emerged as one of the focus areas of the Government of India and there is a lot of activity in this field. We expect CFL distribution under "Clean Development Mechanism” (CDM) to take off in a big way in the next two years. This will be the biggest driver of growth with the Government estimating close to 400 million lamps to be distributed across India under "Bachat Lamp Yojana" (BLY) program. During the year, we started supplies under CDM to Chattisgarh and are in the process of rolling out the distribution in Lucknow, Varanasi and a pilot project in New Delhi in 2nd Quarter of 2010-2011. The expectation is that several

Government organisations including Public sector Enterprises will switch to the energy saving CFLs, this will fuel the growth in this segment.

Your company took a conscious decision of reducing exposure in the Private labelling business and this segment registered a decline of more than 30% for the year 2009-10 over last year. We expect to bring it down by another 40% in the year 2010-2011. This decision has been taken on account of the high warranty returns in this segment which have eroded the profitability of the company. We will be focussing on developing our own brand and bring down the reliance on the private labelling. The focus will also be on improved quality and better cost efficiencies in manufacturing and distribution.

LUMINAIRES BUSINESS

To enhance the footprint in lighting business, we decided to enter the Luminaires business about 2 years ago. As this business was started when the economy was in a downturn, the initial efforts were not successful. We have reworked the business model and recruited a competent team to focus on high growth areas viz infrastructure projects, home lighting and light emitting diodes (LEDs). We expect this initiative to give significant results in the coming years.

AUDITORS COMMENTS IN THE AUDITORS REPORT

The Auditors, in their Auditors Report, have commented that "According to the information and explanations given to us, and an overall examination of the Balance sheet and Cash flow statement of the Company, we report that funds raised on short term basis amounting to Rs. 800.92 lacs have been used for long term investment". The Directors have examined this comment and state that the Company had a Net Worth of Rs. 10,653 lacs as on 31st March, 2010, while Net Fixed Assets were Rs. 10,588 lacs. The Fixed Assets have, therefore, been entirely funded out of Equity; no short-term bank borrowings have been used to finance long-term assets. During the year under review, an escrow loan was taken to pay off a long- term loan, in order to retrieve the first charge on Fixed Assets given to the banks. This loan has since been paid off.

DIVIDEND

Your directors have not proposed any dividend for the financial year 2009-10.

RE-STRUCTURING OF OPERATIONS OF THE COMPANY

The Company proposes to restructure its business into Automotive lighting business (Auto Business) and the General lighting business (General Business). The Auto Business was performing as per profit expectations but the General Business was acting as a drag on the Company’s profitability. The Board of Directors considered various options and felt that it was best to sell and/or transfer the General Business to the Company’s 100% owned subsidiary, Halonix Technologies Limited, including by way of slump sale, along with all its rights, obligations and liabilities, to Halonix Technologies Limited, effective from 1st April, 2010 and subsequently sell and transfer its entire holding in the shares of or interest in Halonix

Technologies Limited to the promoters of the Company, Argon India Limited and Argon South Asia Limited, for which it has already received an Expression of Interest. In addition to delinking the automotive business from sub-optimal performance of the General Lighting business, this exercise would also result in an infusion of cash in the Company by way of consideration received for the General Lighting business.

The Company has entered into a Memorandum of Understanding with Halonix Technologies Limited in connection with the sale and/or transfer of the General Lighting Business of the Company to Halonix Technologies Limited, subject to valuation by independent valuer(s) and all other approvals as may be applicable. KPMG India Private Limited has been appointed as the Tax advisors for re-structuring advise. PricewaterhouseCoopers Private Limited and SSPA & Co., Chartered Accountants, Mumbai, were appointed as independent valuer(s) for valuing the General Lighting Business, who have submitted their valuation reports. Enam Securities Private Limited have been appointed as the Investment Bankers.

The Board has, vide a circular resolution of 1st July, 2010, sought consent of the shareholders of the Company under section 293 (1) (a) of the Companies Act, 1956 for (i) sale of the non-automotive lighting business to its subsidiary Halonix Technologies Limited and (ii) sale and transfer of the Company’s entire holding/interest in Halonix Technologies Limited to Argon India Limited and Argon South Asia Limited and/ or their affiliates or representatives through Postal Ballot process.

As a part of the demerger and subsidiarisation process, the Company is consolidating its manufacturing/assembly lines for the Automotive business at plants at Noida and for the General Lighting business, at Haridwar plant.

ACQUISITION OF ASSETS AND TRADEMARK OF COMPANIES IN EUROPE

The Board is pleased to inform you that the Company has signed a binding agreement with its distributor in Europe, who distributes the Company’s products in Europe, for the acquisition of its assets, business and intellectual property. Legal and Financial Due diligence has been done by the Consultants and Halonix shall acquire, through one or more of European entities, certain assets (including stock-in-trade, contracts, brand names and employees connected with certain goods) of the Distributor for which the commercial terms and conditions have been finalized. Once this acquisition is completed, the distribution in Europe would get integrated with the quality manufacturing facility of Halonix in India. This is expected to result in expansion of existing brand portfolio, higher customer confidence, cost rationalisation and help in increasing the customer base. With the consolidation of accounts, Revenue and EBITDA for Halonix is expected to increase by the same amount, thereby, enhancing EBITDA margin for the consolidated operations.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

a) Industry Structure and Development

Your Company is a market leader in Automotive Halogen Lamps in India with supplies to all major OEMs in 4-Wheeler and 2-Wheeler Industry. It is also a major exporter to developed countries.

Your Company is also a leading player in Compact Fluo- rescent Lamps and other General Lighting Lamps. In case of General Lighting Lamps, a rapid shift is taking place from Ordinary Incandescent Lamps to energy efficient Compact Fluorescent Lamps (CFLs). With increasing demand of Energy Saving Lamps and the efforts of the Government taking the initiative to replace Ordinary In- candescent Lamps with energy saving Lamps, the CFL market is set to show tremendous growth over the next few years.

The business model for Luminaires business has been revamped. The Company has recruited a competent team to focus on high growth areas viz infrastructure projects, home lighting and light emitting diodes (LEDs). The LED luminaires is gaining greater acceptance by the day and being expensive than the regular luminaires, is pushing up the market size considerably.

b) Opportunities and Threats Opportunities

- Government thrust on use of energy efficient equipments and Energy shortage in India as well as rest of the World will increase the demand for Compact Fluorescent Lamps and thus tremendous growth opportunities for your Company.

- Increase/Consolidate market share in fast growing domestic Auto market – setting up of new lines.

- Greater Auto growth will result in more after market sales.

- Expand export of automotive lamps to new markets with the expansion of brand portfolio – North America, Latin America and Europe.

- Focus on building the Brand.

- Enhanced Product portfolio – LED tail lamp assembly and Stop and Tail lamps.

- Introduction of new low cost PCBs.

- Introduction of new Fixtures and Fitting for the new generation lamps.

- Expansion of domestic distribution network by the Company will increase pricing power with the final customer.

Threats

- Increasing prices of inputs and volatility in currency market may impact the profitability of the Company.

- High Energy prices, high inflation and high Interest cost may adversely affect the Company.

- Increase/ Volatility in cost of Raw Material, especially major commodities like Molybdenum.

- New projects of Luminaries could be put on hold by various State Governments.

- Frequent changes in government regulations especially BIS norms.

e) Outlook

The Government thrust on development of Infrastructure and Housing sector as a whole and use of Energy efficient Lamps will further boost demand for the products of the Company. Compact Fluorescent Lamps are expected to witness exponential growth in the near future.

With the economy reviewing, the auto OE business may see some inventory build-up, which should be positive for the auto business.

The Company has taken various steps to rationalize its operating cost as well as to manage its current assets better. This should improve both profitability and capital efficiency.

d) Risks and Concern

The Company’s risk management strategy encompasses the proper and in-depth identification, assessment and prioritization of risk followed by the speedy mobilization of resources to minimize, monitor, and control the profitability of unfortunate events.

Excessive volatility in the Company’s key raw materials can have severe impact on its profitability. As the Company derives a portion of its revenues from exports and pays for purchases with foreign exchange, excessive volatility in currency rates can significantly impact profitability.

e) Financial Performance vis-a-vis Operational Performance

During the year under review, Gross Sales were Rs. 45,651.23 lacs, an increase of 13% over 2008- 09. Profit before tax (PBT) after providing for Obsolete Inventories, Doubtful Debts, Warranty Claims and prior period adjustments was Rs. (1,930.26) lacs and Net Profit at Rs. (1,974.14) lacs. The Company produced 923.79 lacs electric lamps as against 838.28 lacs last year, an increase of 10.2%.

f) Segment wise or Product wise Performance As per the relevant reporting requirements, though the Company operates in a single segment i.e. Electrical Lamps, it has decided to segregate its business into two product lines, Automotive and General Lighting. Automotive Lamps sales constituted 48% of total sales and 52% sales came from General Lighting side.

g) Internal Control System and their adequacy

The Company has a proper and adequate system of internal controls commensurate with its size to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

The Companys internal control systems are further supplemented by an extensive programme of internal audit by an independent firm of Chartered Accountants and periodic review by management.

The internal control system is designed to ensure that all financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

h) Developments on Human Resources & Industrial Relations Front

The Company believes that employees are the real strength and their contribution is always the main engine for growth. Sound human resource development policies of the Company ensure that each employee grows as an individual and contributes to the performance of the Company. Regular in-house training programs for employees at all levels help in this objective.

Industrial relations continued to remain harmonious during the year and morale of the employees working in the Company is very high. The number of persons employed in the Company is 3094 as on 31st March, 2010.

i) Cautionary Note

Certain statements in the ‘Management Discussion and Analysis’ section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which would be different from what the Directors envisage in terms of the future performance and outlook.

Investors are cautioned that this discussion contains forward looking statement that involve risks and uncertainties including, but not limited to, risks inherent in the Company’s growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors discussed. The following discussion and analysis should be read in conjunction with the Company’s financial statements and notes on accounts.

CORPORATE GOVERNANCE

Your Company always strives to incorporate the appropriate standards for good corporate governance. As a listed Company, necessary measures are taken and systems put

in place to comply with the Listing Agreement with Stock Exchanges.

A separate Report on Corporate Governance along with a Certificate of Compliances of conditions of Corporate Governance from the Practicing Company Secretary forms part of this Report.

QUALITY POLICY

The Company is committed to provide consistent quality products to its customers worldwide. For the achievement of world class quality in the products manufactured, It is necessary that every employee is involved in ensuring and improving of products at all time. The Management on its part is fully committed to quality and provides all resources to accomplish this task.

SAFETY, HEALTH AND ENVIRONMENT POLICY

The Company is committed to prevent injury and ill health and continually improve its safety, health and environment, legal and other requirements through institutionalizing proactive safety, health and environment management strategies.

CERTIFICATION(S)

The Company is certified for ISO 9002 since Nov.-1994 & QS 9000:1998/ISO 9001:1994 since Jan.–2002, ISO/TS 16949:2002 since May -2003 by RWTUV, Germany. The Company has also certified for ISO 14001:2004 and OHSAS 18001:1999 since Apr.-2005 by RWTUV, Germany.

The Company has been certified for ISO 9001:2008 and ISO/ TS 16949:2002 for all units located in Noida, valid until 2012 and ISO 14001:2004, OHSAS 18001:2007 is valid until Apr.- 2011 for all units by TUV NORD INDIA PVT. LTD., Germany. The Company has been recently conducted surveillance audit for ISO/TS 16949:2009 in the month of Mar.-2010.

The Certification of ISO 9001:2008 & ISO/TS 16949:2009 valid are until Aug.-2010 for Dehradun plant and Haridwar plant certification of ISO 9001:2008 valid is until Aug. -2011.

The Companys (59-A) testing lab is NABL accredited in July 2010 and SA 8000 certification during this financial year.

The Companys units at A1, Phase-II, Noida and Haridwar are certified for ROHS compliance and the audit was performed by Intertek. Your Company was the first Company in India to be certified with ROHS compliance through certification audit last year and this certification is valid till 2013 and also approved by BIS for the CFL products.

DIRECTORS RESPONSIBILITY STATEMENT

Board of Directors of your Company state:

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

ii. that the directors have 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 year under review;

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

iv. that the directors have prepared annual accounts on a going concern basis.

PUBLIC DEPOSITS

The Company has not accepted any deposits from Public, during the year under review.

DIRECTORS

Mr. Gurdeep Singh, Director and Mr. Steven Mark Enderby, Director, retire by rotation at the forthcoming Annual General Meeting, and being eligible offer themselves for re-appointment.

During the year Mr. S.K. Neogi was appointed as an Additional Director on 24th August, 2009, subsequent to the dispatch of the Notice for AGM. Hence, he was re-appointed as an Additional Director on 8th September, 2009 for a period of one year. He was subsequently also appointed as Executive Director of the Company. Mr. S. K. Neogi has now been re-appointed as an Executive Director as approved by the Board in their meeting held on 26th August, 2010 for another period of one year, effective September 08, 2010. The Company has received notice under section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval.

Mr. Rajesh Kochhar was appointed as an Additional Director and Managing Director of the Company with effect from 16th day of November, 2009. The Company has received notice(s) under section 257 of the Companies Act, 1956 for his appointment at the ensuing Annual General Meeting. The Board recommends the same for your approval. In terms of Clause 49 of the Listing Agreement with Stock Exchanges, the details of the Directors to be appointed / re- appointed are contained in the accompanying notice for convening the ensuing Annual General Meeting. During the period, Mr. Rajiv Prasad, Managing Director, resigned and was relieved from the Board as well as from the office of the Company with effect from 17th day of August, 2009. Your Board of Directors wish to place on record their sincere appreciation for the guidance and valuable contribution made by Mr. Rajiv Prasad in the deliberations of the Board during his tenure as Managing Director of the Company.

AUDITORS

M/s. Arun K. Gupta & Associates, Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible offer themselves for re-appointment.

LISTING OF SHARES

The Equity Shares of the Company are listed on Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Listing fees for the financial year 2010-2011 has been paid.

COST AUDIT

The Board of Directors, in pursuance of an order made under section 233B of the Companies Act, 1956, has appointed M/s. J.K. Kabra & Co., Cost Accountants, New Delhi as Cost Auditors for conducting audit of the cost accounts maintained by the Company for the financial year ended 31st March, 2010.

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

Information under section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is given below:

A. Conservation of Energy

The Company continues its policy of priority to energy conservation measures including regular review of energy conservation, consumption and effective control of utilization of energy.

The following energy conservation measures were implemented during the year under review.

- Roof extractor and transparent fiber sheet has been installed to dilute the heat in production area, increase natural cooling, improve the natural illumination and replace electricity driven fans and lights to take care of the power consumption.

- Up-gradation of machine electrical panels by using advance PLCs. Absolute encoders, Drives, HMI’s, vision systems and more than 25 new advance electrical panels have been made inhouse at various plant locations to increase the machine efficiency and reduction of power consumption.

- Kwh meters installed on different locations of plants to monitor the actual power consumption.

- Inspite of increased production & existing machine load, 16.9 thousand units saved in comparison to the last year.

During the year under report, company has consumed units of energy as detailed below.

Electric Energy - 135.22 (previous. year 123.64) lac units supplied by Power Corporation, 18.87 (previous. year 16.34) lac units generated by DG sets.

Diesel - 5.78 (previous. year 4.97) lac litres for running of DG sets.

(b) Additional Investments - No major additional and proposals, if any, investment is required. being implemented for reduction of consumption of energy

(c ) Impact of the measures - Not applicable at(a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods.

B. Technology Absorption

Particulars regarding Research & Development, Technology Absorption, Adaptation and Innovation are given under in prescribed Form B.

FORM B

1. Research & Development (R & D) :

(i) Specific Areas 1. LED based TATA NOVA tail in which R&D lights testing and E carried out by Homologation. ARAI the Company Certification launched and sets sold.

2. LED based 600 * 600 mm recessed fitting for use in Commercial Complexes commercialized and sold in bulk.

3. Bulk head fixtures for general lighting on AC mains commercialized and sold several pieces..

4. Ministry of New and Renewal Energy (MNRE) type test approved Home Lighting System for use in remote locations. Home lighting system commercialized and sold.

5. MNRE type test approved street lighting system for use in Urban and remote areas. Production commercialized and sold in bulk quantities.

6. MNRE approved lantern under type testing and approval completed.

7. TERI lanterns under the Bill Clinton Fund approved for supply and production commercialized.

8. Introduction of Sparkle for mass consumer Understanding of LED. We have sold more than 25000 such units for generating awareness of LED.

(ii) Benefits derived 1. Power saving. as a result of the 2. Power provided to areas above R&D where grid has not reached. Installed 15 KW power generating capacity till last financial year.

(iii) Future Plan of : The Company will undertake Action : R&D activities in the organization to improve quality and reduce cost by increasing the raw material efficiency and reducing wastage. To commercialize the products developed.

Penetrate market. Reduce cost and enhance quality To introduce Organic LED. To introduce sensors. To introduce LED 8Watt general lighting lamps.

(iv) Expenditure : During the year Company has on R & D developed and completed tooling for LED based tail lights and expenditure incurred for design and tooling fees was 200 lacs INR.

2. Technology Absorption, Adaptation and Innovation

(i) Efforts in brief : Technology to manufacture technology Halogen Lamps and CFL absorption, Lamps has been fully adaptation absorbed. innovation

(ii) Benefits derived : Stabilized Operations as a result of the above efforts.

(iii) Details of technology imported during last five years:

(a) Technology Imported : tail lamp manufacturing.

(b) Year of Import : 2010.

(c) Has technology been fully absorbed : yes

(d) If not fully absorbed, area where this : N.A. has not taken place.



C. Foreign Exchange Earnings and Outgo

Current Year Previous Year PARTICULARS (Rs. in Lacs) (Rs. in Lacs)

1. Foreign Exchange Earnings 12542.38 9925.24

2. Foreign Exchange Outgo - - -

(a) Raw Materials 11017.68 14377.29

(b) Capital Goods 183.38 767.94

(c) Spare Parts 220.10 778.13

(d) Foreign Traveling/ 83.51 103.27 Selling Expenses

(e) Dividend 85.82 775.38

D. Export Activities

Activities relating to exports, initiatives taken to increase The Company is taking necessary steps to increase exports; development of new export markets for products export activities.The Company is having a unit in and services; and export plans: NSEZ. The company is trying to acquire marketing company in Europe.

PERSONNEL

Report on particulars of the employees required in terms of Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, is as under:

Sr. E-Name Age Designation No.

1. S K Neogi 65 Executive Director

2. Amar Singh Saini 60 Director Operations

3. Pawan Kumar Sharma 59 General Manager-Sales

4. Arvind Raman 43 General Manager Operations

5. Rakesh Zutshi 42 Director Sales & Mktg.

6. Sanjeev Pandiya 49 Director Finance

7. Lalit Ramsharan Bhatia 44 General Manager-SCM



1. C.B.Satija 63 Vice President

2. Muralidhar Manvi 45 VP-luminaires

3. Devarshi Deb 43 Vice President-HR

4. Sanjiv Kashyap 46 CFO & CS

5. Seema Arora 38 Marketing Head

6. Rajesh Kochhar 53 Managing Director

7. Rajiv Prasad 49 Managing Director



Remuneration Sr. No. E- Name Received Qualification

(Rs.)

Employed throughout the year

1. S K Neogi 3491358 M.Tech, BSC(H)

2. Amar Singh Saini 3055008 D.M.E

3. Pawan Kumar Sharma 1956022 B.com., Diploma in Business Management

4. Arvind Raman 2003835 B.E. (Industrial& Prod. Engg.)

5. Rakesh Zutshi 3776280 BSC., MBA

6. Sanjeev Pandiya 4738210 C.A. (Inter), ICWA (Inter), MBA

7. Lalit Ramsharan Bhatia 2294257 B.SC (Power Electronics)

Employed for part of the year

1. S K Neogi 977162 C.A.

2. Amar Singh Saini 487135 MBA (Marketing)

3. Pawan Kumar Sharma 188777 PGDPM

4. Arvind Raman 158166 ACA, ACS, PGDFM

5. Rakesh Zutshi 72313 MBA

6. Sanjeev Pandiya 5472268 B.E. Electronics

7. Lalit Ramsharan Bhatia 9606944 B.E. Electronics, PGDM, IIM Bangalore



Date of Sr. E- Name Experience Comm. of Last No. (Years) Employment Employment

1. S K Neogi 40 03.06.1993 HMTLtd.

2. Amar Singh Saini 39 03.05.1991 Ece Industries Ltd.

3. Pawan Kumar Sharma 40 01.04.1989 Halonix Electric Ltd.

4. Arvind Raman 18 02.01.2008 ITC Ltd.

5. Rakesh Zutshi 20 09.07.2007 Gujrat Glass Ltd.

6. Sanjeev Pandiya 23 14.10.2008 Renuka Sugar Ltd.

7. Lalit Ramsharan Bhatia 14 05.02.2009 Supreme Industries



1. S K Neogi 36 02.06.2008 Surya Roshini Ltd.

2. Amar Singh Saini 21 11.02.2010 Ingersoll Rand

3. Pawan Kumar Sharma 18 02.03.2010 Quatrro

4. Arvind Raman 21 15.03.2010 Hero Motors Limited

5. Rakesh Zutshi 14 15.03.2010 Beetel Teletech Ltd.

6. Sanjeev Pandiya 32 16.11.2009 Landis + Gyr Limited

7. Lalit Ramsharan Bhatia 26 10.05.2007 Gujrat Glass Ltd.

- The employment is contractual

- The terms and conditions of employment are based on the board resolution, shareholders’ resolution and appointment letter.

- Nature of duties of all the above personnel is to look after day-to-day activities of the Company under the supervision of Board of Directors of the Company.

- No employee as mentioned above are related to each other.

ACKNOWLEDGEMENT

Your Directors wish to place on record their gratitude to NSEZ Authorities, Banks, Business Associates and Shareholders for their unstinted support, assistance and co-operation.

Your Company and its Directors also acknowledge with thanks the full fledged co-operation received from the employees at all levels.

For and on behalf of the Board

Place : Noida RAJ KRISHAN SAHGAL

Date : 10.08.2010 Chairman

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