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Directors Report of Smiths & Founders (India) Ltd.

Mar 31, 2015

Dear Members,

The Directors present the Twenty Fourth Annual Report together with the Audited Statements of Account for the financial year ended March 31, 2015.

1. FINANCIAL RESULTS:

During the year under review the Company has achieved the following financial results: ( Rs. in Lakhs )

Particulars 31.03.2015 31.03.2014

Revenue from operations 653.85 669.38

Other Income 9.28 17.94

Profit /(Loss) before Financial Charges, Depreciation, Taxation and Prior Period items (53.02) (16.06)

Less: Finance Costs 88.11 63.95

Profit /(Loss) before Depreciation, Taxation and Prior Period items (141.13) (80.01)

Less: Depreciation 39.41 35.88

Profit /(Loss) before Taxation and Prior Period items (180.54) (115.89)

Less: Taxation (Including Deferred Tax) 0.00 22.98

Profit /(Loss) for the year (180.54) (92.90)

Less: Prior period items 0.00 0.00

Net Profit/(Loss) for the year (180.54) (92.90)

Balance of Profit/(Loss) brought forward from last year (325.84) (621.74)

Less: Capital Reduction Account transferred 0.00 388.80

Profit/(Loss) Carried forward to Balance sheet (506.38) (325.84)

2. OVERVIEW OF COMPANY PERFORMANCE:

During the year under review the sales of your Company has remained muted. However, loss has gone up from Rs. 92.90 Lakhs to Rs. 180.54 Lakhs due to increase in finance costs and employee benefits expense.

Though the Company was hopeful of wiping off its accumulated losses upon reduction of its Capital by 90% and amalgamation of erstwhile Smiths & Founders (India) Limited with the Company as envisaged in the Scheme of Rehabilitation submitted by the Company and approved by the Hon. Board for Industrial and Financial Reconstruction, the Scheme did not yield the desired result in view of drastic fall in sales and losses suffered by the amalgamating Company in the financial years 2012-13 and 2013-14.

The Company also had to bear the burden of additional depreciation amounting to Rs. 1.15 Crores being the carrying amount of assets whose written down value has been written off since the useful life is nil as at 01.04.2014 pursuant to the provisions of Companies Act, 2013, which has been charged to the accumulated losses of the Company.

As a result of this, the Company's accumulated losses has exceeded fifty percent of its net-worth at the end of the financial year. However, the board is of the view that as the accumulated losses for the financial year is Rs. 5.06 Crores, there is no erosion of 50% or more of its peak net worth and hence no reporting under the Sick Industrial Companies (Special Provisions) Act, 1985 is required. The Company is confident of earning a modest net profit in the current financial year.

3. DIVIDEND & RESERVES:

In view of loss incurred by the Company, your Directors do not recommend any dividend for the financial year ended March 31, 2015. During the year under review no amount was transferred to General Reserve.

4. INCREASE IN PAID UP CAPITAL:

Consequent to amalgamation of erstwhile Smiths & Founders (India) Limited with the Company, the Company has issued 97676525 equity shares of Rs. 1/- fully paid up in 2 tranches, ie. 48838265 shares on July 1, 2014 and 48838260 shares on December 27, 2014 to the shareholders of erstwhile Smiths & Founders (India) Limited in the ratio of 5 equity shares of Rs. 1/- fully paid up of the Company for every 2 equity shares of Rs. 1/- held by them. The Paid Up Capital of the Company, as a result of this, has increased to Rs. 10,19,96,525/-.

5. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9, as required under Section 92 (3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management & Administration) Rules, 2014, is included in this Report as Annexure-A and forms an integral part of this Report.

6. NUMBER OF MEETINGS OF THE BOARD:

During the Financial Year 2014-15, 6 (Six) meetings of the Board were held, details of which are given in the Corporate Governance Report.

7. BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has evaluated its performance taking into consideration of the various aspects of its functioning, composition of the Board and its Committees and performance of specific duties, obligations and governance. The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors through a meeting of Independent Directors.

8. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS:

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company, www.smithsandfoundersindia. com

9. DIRECTORS:

During the year under review Mr. G. Ananda, who was a Independent Director on the board since 02.08.2008 resigned on November 14, 2014. The Board places on record its appreciation of his immense contribution to the Company during his long tenure. The Board appointed Mr. Sudhindra N. Kalghatgi on November 14, 2014 to fill the vacancy caused by the resignation of Mr. G. Ananda.

Mr. V. Parthasarathy and Mr. Sudhindra N. Kalghatgi, Independent Directors have been appointed as such in the Annual General Meeting of the Company held on December 27, 2014. to give effect to the applicable provisions of Sections 149 and 152 of the Companies Act, 2013.

The Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Mr. Umesh Shastry and Mr. Satish Shastry retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. The Board recommends their re-appointment.

10. FIXED DEPOSITS:

The Company has not accepted fixed deposits from the public and shareholders within the meaning of Section 73(1) of the Companies Act, 2013 and Rules made there under, during the year under review.

The Company has re-paid all outstanding deposits accepted before the commencement of the Companies Act, 2013, during the year under review.

11. DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that:

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

b) 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 March 31, 2015 and its loss for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) the Directors have prepared the annual accounts on a 'going concern' basis.

e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively

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

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY:

During the year under review the Company has not given any loan, guarantee or made any investment covered under the provisions of Section 186 of the Companies Act, 2013.

13. REMUNERATION AND NOMINATION POLICY:

The Board of Directors have framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy also lays down criteria for selection and appointment of Board Members. The Policy is given in Annexure-B and forms an integral part of this report.

14. RELATED PARTY TRANSACTIONS:

During the year under review the Company has not entered into any contract or arrangement with related parties attracting the provisions of Section 188 of the Companies Act, 2013.

However, during the current year the Company has entered into a transaction with a related party on arm's length basis and in the ordinary course of business thereby not attracting the provisions of Section 188 of the Companies Act, 2013. The details are given in Annexure-C and forms an integral part of this report.

All Related Party Transactions are placed before the Audit Committee and also to the Board for approval.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company, www.smithsandfoundersindia. com

15. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

As per Companies Act, 2013 read with Clause 49 of the Listing Agreement, the Board of Directors of the Company have constituted Vigil Mechanism / Whistle Blower Policy and adopted a policy which aims to provide a channel to the Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or policy. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express those concerns in writing through an e-mail or a letter to the Chairman of the Company or to the Compliance Officer or to the Chairman of the Audit Committee. The Whistle Blower Policy of the Company can be accessed on the Company's website at www.smithsandfoundersindia.com

16. RISK MANAGEMENT:

The Company has in place Risk Management Policy according to which the Board of Directors of the Company and the Audit Committee periodically review and evaluate the risk management system of the Company so that the management controls the risks through properly defined network.

17. CORPORATE SOCIAL RESPONSIBILITY:

No disclosures on Corporate Social Responsibility are required as provision under Section 135 of the Companies Act, 2013 and Rules made thereunder are not applicable to the Company.

18. CORPORATE GOVERNANCE:

A Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with report on Corporate Governance.

19. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report forms part of this Report.

20. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made thereunder, the Company has appointed VB & Associates, Company Secretaries as the Secretarial Auditor of the Company. The Secretarial Audit Report is annexed as Annexure-D and forms an integral part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

21. AUDITORS:

The Company's Auditors, M/s. B.N.Subramanya & Co., Chartered Accountants, were re-appointed as the Statutory Auditors of the Company to hold office from the conclusion of Twenty Third Annual General Meeting held on December 27, 2014 until the conclusion of the Twenty Seventh Annual General Meeting to be held in the year 2018 subject to ratification of their appointment by the Members at every Annual General Meeting held after the Annual General Meeting held on December 27, 2014.

As required under provisions of Section 139 of the Companies Act, 2013, the Company has received written consent from M/s. B.N.Subramanaya & Co. to their appointment and a Certificate to the effect that that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed thereunder and that they satisfy the criteria provided in Section 141 of the Companies Act, 2013.

The Members are requested to ratify the appointment of the Statutory Auditors as foresaid.

The Auditors' Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2015. The statements made by the Auditors in their Report are self- explanatory and do not call for any further comments.

22. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There are no significant and material orders passed by the Regulators/Courts/Tribunals that would impact the going concern status of the Company and its future operations.

23. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an adequate internal control system commensurate with its size and nature of its business.

24. HEALTH, SAFETY AND ENVIRONMENT:

The health and safety of the workforce is of paramount importance. The Company aims to provide a workplace that is free from any occupational hazards or illness.

25. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

During the year under review the Company has not received any complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

26. STATUTORY INFORMATION:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134 (3)(m) of the Companies Act,

2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure-E, which forms part of this Report.

There were no employees employed throughout the year who were in receipt of remuneration of Rs. 60 Lakhs per annum or more. There were no employees employed for part of the year who were in receipt of remuneration of Rs. 5 Lakhs per month or more. During the year under review the Company had 91 employees.

The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended March 31, 2015 is given in Annexure-F to this Report.

27. ACKNOWLEDGEMENTS:

Your Directors thank the Members, Government Authorities, Banks, Customers and Vendors for their continued unstinted support to the Company.

By the Order of the Board

Place: Bangalore SURESH SHASTRY Date: 12.08.2015 Chairman & Managing Director




Mar 31, 2014

Dear Members,

The Directors present the Twenty Third Annual Report together with the Audited Statements of Account for the financial year ended March 31, 2014.

1. FINANCIAL RESULTS.

During the year under review Company has achieved the following financial results :

( Rs. in Lakhs )

Particulars 31.03.2014 31.03.2013

Revenue from operations 676.01 0.00

Other Income 11.84 4.10

Profit /(Loss) before Financial Charges, Depreciation, Taxation and Prior Period items (15.13) (9.49)

Less: Financial Charges 64.88 0.06

Profit /(Loss) before Depreciation, Taxation and Prior Period items (80.01) (9.55)

Less: Depreciation 35.88 19.89

Profit /(Loss) before Taxation and Prior Period items (115.89) (29.44)

Less: Taxation (Including Deferred Tax) 22.98 0.00

Profit /(Loss) for the year (92.90) (29.44)

Less: Prior period items 0.00 0.00

Net Profit/(Loss) for the year (92.90) (29.44)

Balance of Profit/(Loss) brought forward from last year (621.74) (592.30)

Less: Capital Reduction Account transferred 388.80 0.00

Profit/(Loss) Carried forward to Balance sheet (325.84) (621.74)

2. OVERVIEW OF COMPANY PERFORMANCE:

During the year under review, the Rehabilitation Scheme of the Company was approved by the Hon. Board for Industrial and Financial Reconstruction (BIFR) on 20th February, 2014. The members might be aware, the Scheme, inter alia, envisaged merger of erstwhile Smiths & Founders (India) Limited (transferor Company) with the Company. As the appointed date of amalgamation is 01.04.2012, the financials during the year under review is consolidated by merging the figures of both the transferor and transferee Company. Therefore, the numbers of FY 2013-14 are not comparable with FY 2012-13.

Results of Operations

The members might be aware that the Company had stopped manufacturing operations with effect from April 1, 2009 and had leased its plant & machinery to the transferor Company. Hence the Company has been having only lease rentals as main source of income since April 1, 2009. The revenue of the transferor Company could not surge during the year under review due to sluggish market in the automobile industry in which it operates, weak economic environment and low global growth rate. Hence the Company could not achieve its objective of wiping off its accumulated losses in FY 2013-14.

3. DIVIDEND:

In view of loss incurred by the Company, your Directors do not recommend any dividend for the financial year ended 31st March 2014.

4. APPROVAL OF REHABILITATION SCHEME:

Pursuant to the Order dated 20th February, 2014 of the Hon. Board for Industrial and Financial Reconstruction approving the Scheme of Rehabilitation of the Company, the Company has taken the following actions for implementing the Order:

a. Reduction of Capital:

The Company reduced its Existing Share Capital by 90%. Consequently its Paid Up Capital has been reduced from Rs. 4,32,00,000/- to Rs. 43,20,000/- by canceling 3,88,80,000 equity shares of Rs. 1/- each. The shareholders of the Company, determined on Record Date of 28.03.2014, have been allotted 1 share of Rs.1/- each at par in lieu of existing 10 shares of Rs. 1/- each held by them.

b. Change of name of the Company:

Changed the name of the Company from Shimoga Technologies Limited to Smiths & Founders (India) Limited with effect from 27.03.2014 upon receipt of Fresh Certificate of Incorporation Consequent upon Change of Name from the Registrar of Companies, Karnataka.

c. Merger of erstwhile Smiths & Founders (India) Limited with the Company.

The Company filed Certified Copy of the Order sanctioning the Scheme of Rehabilitation with the Registrar of Companies, Karnataka on 27.02.2014. Upon filing the same, the merger of erstwhile Smiths & Founders (India) Limited with the Company became effective. As the appointed date of the merger was 01.04.2012, the Company has prepared merged financials for the FY 2013-14.

As per the terms of the Scheme, the Company had to allot 97676525 shares to the shareholders of erstwhile Smiths & Founders (India) Limited, in the ratio of 5 equity shares of Rs.1/- fully paid up of the Company for every 2 equity shares of Rs.1/- full paid up held on the record date of 28.03.2014. Though the Company allotted the shares on 29.03.2014, the allotment could not be completed as the Company could not get its Authorised Capital enhanced from its existing Capital of Rs.6,00,00,000/- to Rs. 10,25,00,000/- by adding the Authorised Capital of Rs. 4,25,00,000 of erstwhile Smiths & Founders (India) Limited as it was found that there was no clause in the approved Scheme of Merger for clubbing of Authorised Capital of both the Companies. The Company was left with no other option but to keep in abeyance the allotment of shares made on 29.03.2014 to the shareholders of erstwhile Smiths & Founders (India) Limited.

The Company has subsequently filed a Miscellaneous Petition before the Hon. BIFR on June 16, 2014 for amendment of its Order dated 20.2.2014 by modifying the relevant Clause under the head "Part IV- Re-organisation of Share Capital'' in the Scheme of Merger, relating to increase in Paid Up Capital. As the Hon.BIFR is yet to complete its hearing and pass order on the petition, the Company has decided to seek members'' approval for the increase in its Authorised Capital in the ensuing Annual General Meeting.

In the meanwhile, for having merged the Transferor Company with itself, the Company was obliged to issue shares to the shareholders of the Transferor Company and hence decided to make, within the unissued Share Capital, partial allotment on pro rata basis to the shareholders of erstwhile Smiths & Founders (India) Limited totaling to 4,88,38,265 shares against the total number of 9,76,76,525 shares due to them, in lieu of the full allotment made to them on 29th March, 2014. Accordingly, the Committee of Board of Directors allotted the shares on July 1, 2014.

5. DIRECTORS:

Post implementation of the Scheme of Rehabilitation, the Board of the Company was restructured. The Board in its meeting held on March 17, 2014 inducted Mr. Satish Shastry, Mr. Umesh Shastry and Mrs. Supriya Shastry as Whole-time Directors of the Company. The Board also re-designated Mr. Suresh Shastry as Chairman & Managing Director of the Company. Necessary resolution for their appointment is included in the Notice calling the Annual General Meeting.

Consequent to restructuring of the Board, the Company has 4 Whole time Directors including an Executive Chairman & Managing Director and 2 Independent Directors. Though as per Clause 49 (II)(A) of the listing agreement requires the Company to have at least 4 Independent Directors, the Company has been exempted from applicability of this Clause for a period of 5 years by the Hon.BIFR''s Order dated 20.02.2014 sanctioning the Rehabilitation Scheme of the Company.

During the year, Mr. S. Lakshmi Narayana Murthy, who was an Independent Director on the board since 31.07.2009, expired. The Board appointed Mr. V.Parthasarathy on January 27, 2014 to fill the casual vacancy caused by the death of Sri. S.Lakshmi Narayana Murthy. Your Directors place on record their sincere appreciation of the valuable contribution made by Late Mr. S. Lakshmi Narayana Murthy during his tenure on the Board.

Mr. G. Ananda, who was an Independent Director on the board since 02.08.2008 resigned from the Board on 14th November,2014. The Board places on record its appreciation of his immense contribution to the Company during his long tenure.

The Board appointed Mr. Sudhindra Narayan Kalghatgi on 14th November,2014 to fill the casual vacancy caused by the resignation of Mr. G.Ananda.

As of the date of this Report, Mr. V.Parthasarathy and Mr. Sudhindra Narayan Kalghatgi are Independent Directors as per Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In order to give effect to the applicable provisions of sections 149 and 152 of the Act, it is proposed that these Directors be appointed as Independent Directors, to hold office for five consecutive years, for a term up to March 31,2019. As Mr. G.Ananda, the resigned director had completed 5 years as Independent Director as on the date of his resignation, Mr. Sudhindra Narayan Kalghatgi, who has been appointed in his place, is being considered for appointment of one term of 5 years only pursuant to provisions of Section 149(10) by means of a special resolution.

The Company has received declarations from the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the applicable provisions of section 149 of the Act and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Mr. Suresh Shastry retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. The Board recommends his re- appointment.

The notice convening the AGM includes the proposal for appointment / re- appointment of Directors.

6. FIXED DEPOSITS:

The Company (erstwhile Smiths & Founders (India) Limited) has accepted fixed deposits from the public and shareholders within the meaning of Section 58A of the Companies Act, 1956 and Rules made there under, during the year.

7. DIRECTORS RESPONSIBILITY STATEMENT:

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

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

b) 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 31st March,2014 and its loss for the year ended on that date;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) that the Directors have prepared the annual accounts on a ''going concern'' basis.

8. CORPORATE GOVERNANCE:

A Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with report on Corporate Governance.

9. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report forms part of this Report.

10. COMPLIANCE CERTIFICATE:

Secretarial Compliance Certificate from VB & Associates, Company Secretaries, under the provisions of Section 383A of the Companies Act, 1956 is annexed herewith to this Report.

11. AUDITORS

The Company''s Auditors, M/s. B.N.Subramanya & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

As required under provisions of Section 139(1) of the Companies Act, 2013, the Company has received written consent from M/s. B.N.Subramanaya & Co., Chartered Accountants to their re-appointment and a certificate, to the effect that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the rules framed there under and that they satisfy the criteria provided in Section 141 of the Companies Act, 2013. The board recommends their appointment.

The Notes on Financial statements referred to in the Auditors Report are self-explanatory and do not call for any comments and explanation.

12. HEALTH, SAFETY AND ENVIRONMENT:

The health and safety of the workforce is of paramount importance. The Company aims to provide a workplace that is free from any occupational hazards or illness.

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

Particulars prescribed 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 are given in Annexure, which forms part of this Report.

14. PARTICULARS OF EMPLOYEES:

There were no employees, whose particulars require to be furnished under Section 217(2) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended from time to time.

15. ACKNOWLEDGEMENTS:

Your Directors thank the Members, Government Authorities, Banks, Customers and Vendors for their continued unstinted support to the Company.

By the Order of the Board

Place: Bangalore SURESH SHASTRY

Date : 20.11.2014 Chairman & Managing Director


Mar 31, 2012

The Directors present the Twenty first Annual Report together with the Audited Accounts for the year ended 31st March 2012.

1. FINANCIAL RESULTS.

During the year under review Company has achieved the following financial results:

(Rs. in Lakhs )

Particulars 31.03.2012 31.03.2011

Revenue from operations 0.00 0.00

Other income 34.20 45.69

Profit / (Loss) before Financial Charges, Depreciation, Taxation and Prior Period items 19.05 32.03

Less: Financial Charges 0.01 6.73

Profit / (Loss) before Depreciation, Taxation and Prior Period items 19.04 25.30

Less: depreciation 19.76 20.53

Profit / (Loss) before Taxation and Prior Period items (0.72) 4.77

Less: Taxation (including deferred Tax) 0.00 0.00

Profit / (Loss) for the year (0.72) 4.77

Less: Prior period items 0.00 0.80

Less: Write off 0.86 0.00

Net Profit / (Loss) for the year (1.59) 3.96

Balance of Profit / (Loss) brought forward from last year (590.71) (594.67)

Profit / (Loss) Carried forward to Balance sheet (592.30) (590.71)

2. OVERVIEW OF COMPANY PERFORMANCE:

during the year under review, the Company has incurred a net loss of Rs.1.59 Lakhs as against a net profit of Rs.3.96 lakhs for the previous year ended 31st march 2011. the Company does not have any income from operations. the main source of income is lease rentals.

3. DIVIDEND:

in view of loss incurred by the Company, your directors do not recommend any dividend for the financial year ended 31st march 2012.

4. DIRECTORS:

None of the Directors are disqualified as on 31st march 2012 from being appointed as director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Mt Suresh Shastry retires by rotation at the ensuing Annual General meeting and is eligible for re-appointment. the Board recommends his re- appointment.

5. REHABLITITION SCHEME STATUS:

members may recall that in the annual General meeting held on 30th September 2010 the Shareholders approved reduction of Paid up Equity Share capital of the Company from Rs.4,32,00,000/- divided into 4,32,00,000 shares of re.1/- each into Rs.43,20,000/- divided into 43,20,000 shares of re.1/- each by cancelling Rs.3,88,80,000/- divided into 3,88,80,000 equity shares of re.1/- each of the Paid up equity capital, which is unrepresented by available assets. in the same meeting, the Shareholders also approved amalgamation of Smiths & Founders (india) Limited (erstwhile Bhagavathi enterprises Limited) with the Company. in pursuance of the above, during the year 2010-11, the Board arranged to get the business valuation of the Company as at 31.12.2010 and also obtained business valuation of the amalgamating Company, Smiths & Founders (india) Limited (erstwhile Bhagavathi enterprises Limited) as on that date. Based on the valuations of the two Companies, the Statutory auditors of the Company recommended a share exchange ratio of 5:2, ie. 5 fully paid equity Shares of re.1/- each of the Company against every 2 fully paid equity Shares of re.1/- each of the amalgamating Company.

Based on the above guidelines, a draft Rehabilitation Scheme (dRS), involving 90% Capital reduction and

5:2 share exchange ratio was formulated and forwarded to the Amalgamating Company for their approval. After obtaining their 'in-principle' approval, the DRS was presented to IDBI Bank (the Operating Agency (OA) appointed by the Hon. Board for industrial and Financial Reconstruction (BiFR). during the year 2011-12, based upon the audited and adopted financials as at 31.03.2011, the business of both the amalgamating Companies were once again valued and on the basis of these valuations, the Statutory Auditors of the Company once again reworked and recommended the same exchange ratio of 5:2, ie. 5 fully paid Equity Shares of Re.1/- each of the Company against every 2 fully paid Equity Shares of Re.1/- each of the Amalgamating Company. The recommendations have been submitted to IDBI Bank.

The Hon. BIFR in their last hearing held on 16th May, 2012 have directed the Company to submit clarifications / details sought by the OA on the DRS, and have directed the OA to examine the DRS and submit the same to the Hon. BIFR.

6. DIRECTORS RESPONSIBILITY STATEMENT:

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

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

b) 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 31st March,2012 and its loss for the year ended on that date;

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

d) that the Directors have prepared the annual accounts on a going concern basis.

7. CORPORATE GOVERNANCE:

A Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this Report along with report on Corporate Governance.

8. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to Clause 49 of the Listing Agreement, Management Discussion and Analysis Report forms part of this Report.

9. COMPLIANCE CERTIFICATE:

Secretarial Compliance Certificate from Mr. Vighneshwar Bhat, Practicing Company Secretary, under the provisions of Section 383A of the Companies Act, 1956 is annexed herewith to this Report.

10. RELATED PARTY DISCLOSURES:

As regards to related party disclosures, one of the Directors of the Company is related to Directors of Smiths & Founders (india) Limited (Erstwhile Bhagavathi Enterprises Limited), a closely held public limited company. However, there are no common Directors and no shareholders holdings in excess of 2% of the paid up capital of either of the Companies. There are no other materially significant related party transactions made by the Company with Promoters, Directors or Management, etc. that may have potential conflict with the interest of the Company at large. However this disclosure is made as a matter of prudence. For details of transactions with Smiths & Founders (india) Limited (Erstwhile Bhagavathi Enterprises Limited) during the year 2011-12, please refer point 6 of Notes on accounts.

11. AUDITORS

The Company's Auditors, M/s. Naik & Shah, Chartered Accountants, Bangalore, retire at the ensuing Annual General Meeting and are eligible for re-appointment.

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

Particulars prescribed under Section 217(1)(e) of the Companies Act,1956, are given in Annexure A, which forms part of this Report.

13. PARTICULARS OF EMPLOYEES:

The Company has no employees, therefore the statement relating to Particulars of Employees forming part of this report pursuant to Section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended from time to time, is not applicable to the Company.

14. ACKNOWLEDGEMENTS:

Your Directors thank the Members, Government Authorities, Customers and Vendors for their continued unstinted support to the Company.

By the Order of the Board

Place: Bangalore SURESH SHASTRY

Date: 30.07.2012 Chairman


Mar 31, 2010

The Directors present the Nineteenth Annual Report together with the Audited Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS.

During the year under review Company has achieved the following financial results: (Rs. in Lakhs)

Particulars 31.03.2010 31.03.2009

Gross Sales and other income 59.87 866.35

Profit /(Loss) before Financial Charges, Depreciation Taxation and Prior Period items 47.66 24.28

Less: Financial Charges 23.82 42.30

Profit, /(Loss) before Depreciation, Taxation and Prior Period items 23.84 (18.02)

Less: Depreciation 21.69 (25.32)

Profit /(Loss) before Taxation and Prior Period items 2.15 (43.33)

Less: Taxation (Including Deferred Tax) 0.10 (30.21)

Profit /(Loss) for the year 2.05 (73.55)

Less: Prior Period items 0.15 (0.94)

Net Profit/(Loss) for the year 1.90 (74.49)

Balance of Profif(Loss) brought forward from last year (596.57) (522.08)

Profit/(Loss) Carried forward to Balance sheet (594.67) (596.57)

2. OVERVIEW OF COMPANY PERFORMANCE:

The decision of leasing out the manufacturing facilities of the Company has proved beneficial. During the year under review, the Company has been able to reduce the operating expenses and record a Net profit of Rs.1.90 lakhs as against a net loss of Rs.74.48 lakhs for the previous year ended 31st March 2009. The sale of old fixed assets and writing off the excess provision in sundry creditors has enabled to achieve positive results.

3. DIVIDEND:

Since the company doesnt have sufficient amount of profits to pay dividend during the year under review, your Directors regret their inability to recommend dividend for the year ending 31st March 2010.

4. AUDITORS

You are requested to appoint Mr. T. Raghavendra Naik, Proprietor, M/s. Raghavendra Naik & Associates, Chartered Accountants, Bangalore, as statutory Auditors of the Company for the Current Year.

5. DIRECTORS:

None of the Directors are disqualified as on 31st March 2010 from being appointed as Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act 1956.

6. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your company confirm:

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

b) 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 and loss of the company for that period;

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

d) that the Directors have prepared the annual accounts on a going concern basis.

7. FIXED DEPOSITS:

The Company has not accepted any fixed deposits during the period under scrutiny.

8. CORPORATE GOVERNANCE REPORT:

In accordance with clause 49 of the listing Agreement with the stock exchange, a separate Report on Corporate Governance along with the Auditors certificate on its compliance is attached to this report.

9. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to clause 49 of the listing Agreement entered in to with the stock exchange, Management Discussion And Analysis report forms the part of this report.

10. COMPLIANCE CERTIFICATE:

A Compliance certificate from Mr. Sudhindra K.S, Practicing Company Secretary, has been obtained regarding Compliance of provisions of Companies Act, 1956 as stipulated in Section 383A of the Companies Act, 1956 .It is annexed herewith to the Directors Report.

11. SETTLEMNT OF UNPAID SALES TAX.

The Government of Karnataka has introduced Karasamadhana Scheme 2010, which allows one time settlement of unpaid Sales tax by waiving off 90% of the interest and penalty due thereon. As the funds are not available with the Company to pay off the sales tax dues, Company has raised additional lease deposit of Rs. 75 lakhs from Bhagavathi Enterprises Limited and paid the sales tax dues to the department. By this payment the Company has cleared one of the long standing debt and saved Rs.34.75 lakhs In the form of waiver.

12. REHABILITATION SCHEME:

Ever since the Company was considered as a Sick, The Board of Directors of the Company are trying to mobilise additional funds, but due to weak financials of the Company, the investments are not coming forth. The company is a sick Company and the hearing before the Hon. Board for Industrial and Financial Reconstruction is still pending. The Company has to form a Rehabilitation scheme to make the networth of the Company positive and submit the same to the Board. The Board of Directors of the Company formed an opinion that, Reduction of the Existing share Capital of the Company and amalgamation with Bhagavathi Enterprises Limited will translate the net worth of the Company into positive. On this basis, the Board of Directors shall draft a Rehabilitation scheme and place it before the Honable Board for Industrial and Financial Reconstruction for their approval. Board is of the Opinion that once the said Rehabilitation Scheme is implemented the net worth of the Company will become positive.

13. RELATED PARTY DISCLOSURES:

As regards related party disclosures, one of the Directors of the Company is related to Directors of Bhagavathi Enterprises Limited, a closely held public limited company under the Companies Act, 1956. However, there are no common directors and no shareholders holdings in excess of 2% of the paid up capital of either of the companies. There are no other materially significant related party transactions made by the Company with promoters, directors or management etc. that may have potential conflict with the interest of the company at large. However this disclosure is made only as a matter of prudence. For details of transactions with Bhagavathi Enterprises Ltd during the year 2009-10, please refer point 11 of Schedule-VII.

14. AUDITORS QUALIFICATIONS:

Regarding Auditors qualifications, the Directors state as follows:

For Item no. 4.VI a of the Audit Report read with note no.2 schedule vii

Though the net worth of the Company has substantially eroded and the Company has leased out its manufacturing facilities, the facts that the plant is continuously working and the manufacturing facilities have, been leased out only for a short period and the Company has reserved its right to take back the facilities and re start the operations, soon after the financial re-structuring is complete, the accounts have been drawn on going concern basis.

For Item no. 4 Vlb of the Audit Report read with note no.5(l) schedule vll

As on date the Company has settled the Sales Tax dues to the Department. Under Karasamadhana Scheme 2010 announced by Govt, of Karnataka.

For item no. 4 VI c of the Audit Report read with note no.7 schedule vll

a. Advances given by the Company usually relates to deposits / advances with statutory institutions. Company has obtained receipts from such statutory institutions at the time, of making the payments.

b. The Company has requested all the creditors and debtors to confirm the balances and it has obtained confirmations from most of Debtors and Creditors. Confirmation from the banks has been obtained during the year under review.

For item no. 4 VI d of the Audit Report read with note no.5(iv) schedule vll

The company is in process of filing the necessary applications / appeals for reduction / deletion of demands to Provident Fund authorities.

For Item No. Vii of Annexure to Audit Report: relates to improving the Internal audit system

The Company noted this suggestion and is in process of strengthening the internal audit systems by proper supervisions by qualified personnel.

For Item No. ix(a), ix(b) & ix(c) to Audit Report:

a. The company has paid the statutory dues, however due to financial crunch, at times, the company has delayed payments.

b. During the year 2010-11 the company has settled all the KST and CST dues upto 31st March 2005 under Karasamadhana Scheme 2010 and also deposited tax deducted at source for the year 2009-10 under the Income Tax Act 1961.

c. As on the date the Company has settled the Sales Tax dues to the Department, under Karasamadhana Scheme 2010.

For Item No. X to Audit Report

The company is proposing reduction of capital and amalgamation to turn the networth positive.

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGOING:

Annexure A to this report gives the information in respect of conservation of Energy, Technology absorption and Foreign Exchange earning and outgo, required under, Sec 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and form part of the Directors Report.

16. PARTICULARS OF EMPLOYEES:

The Company has no employees, therefore the statement

relating to Particulars of Employees forming part of this report pursuant to section 217 (2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended from time to time is not applicable to the company.

17. APPRECIATION AND ACKNOWLEDGEMENTS:

Your Directors thank the Members, Government Authorities, Customers and Vendors for their unstinted support to the Company.

For and on behalf of the Board of Directors

Place: Bangalore S.Suresh G.Ananda

Date: 27.08.2010 Chairman & Director Director



 
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