Directors Report of GSL Nova Petrochemicals Ltd.

Mar 31, 2014

The Members,

GSL NOVA PETROCHEMICALS LTD.

(Formerly Known as NOVA PETROCHEMICALS LTD.)

The Directors have pleasure in presenting the 21st Annual Report and Audited Statement of Accounts for the year ended 31st March 2014. OPERATIONALS & FINANCIALS The highlights are as under :-

('' In Lacs)

Particulars 2013-14 2012-13

Net Sales & Other Income 717.92 5326.62

Profit / (Loss) before Tax (1130.09) (1305.42)

Less: Provision for Tax Nil Nil

Add : Provision for Deferred Tax Nil Nil

Profit After Taxation/(Loss) (1130.09) (1305.42)

Add: Balance Brought from Previous Year (6846.57) (5541.15)

Profit Available for Appropriations (7976.66) (6846.57)

Less: Appropriations

(a) Dividend Nil Nil

(b) General Reserve Nil Nil

Balance Carried to Balance Sheet (7976.66) (6846.57)

PERFORMANCE:

Your company has achieved Net Sales and Other Income of '' 7.17 crores as compared to previous year''s Net Sales and Other Income of '' 53.26 crores. Due to continuing recession & bad market for Polyester Yarn and operational loss coupled with non availability of adequate power at remunerative prices, the production remained suspended since the end of September, 2012. The net loss during the year under review was placed at '' 11.30 crores as compared to net loss of '' 13.05 crores for the previous year..

PRESENT COURSE OF BUSINESS AND OUTLOOK:

The Management''s discussion and analysis report, as required under corporate governance, forming a part of this report, is a reflection of the current state of business. It also deals with the opportunities and threats faced by your company and the company outlook.

As, honorable Members are aware that your Company has been facing severe financial difficulties/Problems due to continuous losses mainly on account of sluggish market of polyester yarn, creation of large capacity of POY resulting in to mis-matching of Demand Supply position of yarn, shortage of working capital funds etc. and also non operational of polyester Chips Plant since couples of years on account of obsolete technology and uneconomic size of plant. Moreover production of POY/FDY had also suspended since the end of Sepetember,2012 due to aforesaid reasons and also due to non availability of power at remunerative price.

As the members are also aware that the company had submitted a revival plan to banks with payment of debts to the extent of Rs 56.50 Crores through development of affordable housing on surplus land and the members had given their consent to carry on the above activity/ business as covered under the other objects Clause III (C) 21. However, the banks have later-on suggested for One Time Settlement (OTS) considering bleak prospects of servicing the debts through running of plant and your company has accordingly submitted OTS proposal to all member banks of the consortium.

SETTLEMENT OF BANKS DUES :

After due deliberation, the banks have agreed to the Company''s OTS proposal and approved the same.

In order to finance the OTS amount, the company has approached Asset Reconstruction Companies and requested the banks to assign their financial assistance - Loans sanctioned to the company to JM Financial Asset Reconstruction Company Pvt. Ltd (JMFARC). Except State bank of India, all other consortium banks have agreed for the same.

Accordingly Assignment agreements entered into between Bank of Baroda, UCO Bank and Central Bank of India and JMFARC, for taking over the existing loan of consortium finance of aforesaid each Bank by JMFARC. The JMFARC has further agreed to restructure the aforesaid take over loans.

In order to comply with OTS terms and to repay/settle dues of State Bank of India and JMFARC in the given time frame, the management of your company decided to sell Company''s Plant and Machinery and also to develop industrial park, commercial & affordable housing space on the whole land of the company jointly with reputed builder/agency through JV, development rights and/or by sale of part of the land. Accordingly special resolutions are moved through postal ballot notice dated 4th July,2014.

The prospects for the proposed affordable real estate activity in the area is quite promising.

DIVIDEND:

Due to loss incurred by the Company during the year 2013-14, your directors regret their inability to recommend any dividend on the Equity Share Capital.

DIRECTORS:

Shri Shyam Gupta, Director of the Company, retire by rotation at the ensuing 21st Annual General Meeting and being eligible for re-appointment, have offered themselves for the re-appointment. Brief resume of the Directors and names of companies in which he hold the Directorship as stipulated under Clause 49 of the Listing Agreement are given in the notes attached to the Notice calling 21st Annual General Meeting of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 217 (2AA) of the Companies (Amendment Act, 2000), Directors'' Responsibility Statement is given as under,

(i) That in the preparation of the annual accounts for the financial year ended 31st March 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(ii) That such accounting policies have been selected and applied consistently and judgments and estimates have been made 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 or loss of the Company for the year ended 31st March, 2014.

(iii) That proper and sufficient care has been taken 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.

(iv) That the annual accounts have been prepared for the financial year ended 31st March, 2014 on a going concern basis.

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

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

INSURANCE:

The Company has adequately covered all assets against all risks.

AUDITORS:

Auditors of the company M/s. J. T. Shah & Co., Chartered Accountants of Ahmedabad, will retire from the office of the Auditors at the conclusion of ensuing 21st Annual General Meeting and being eligible, offer themselves for re-appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company had pursuant to section 139(1) of the Companies Act,2013 received a certificate that their appointment, if made , will be within the limits as laid down in the section.

Explanation to the qualification in Auditors'' Report.

The Directors submit their explanation to the qualifications made by the Auditors in their report for the year 2013-14. The relevant Para nos. of the report and reply are as under:

9 (b) The delay in the payment of Wealth tax of ''5 lacs was due to demerger since it was based on combined wealth of company prior to demerger. Now after the demerger the company shall file revised wealth tax return and pay wealth tax accordingly. Further there is delay in depositing unpaid/unclaimed dividend into Investor Education and Protection fund of '' 2.85 lacs due to freezing of unpaid dividend bank account by government authorities. There is also delay in payment of Tax deducted at source of '' 14498/-, Gujarat value Added Tax of '' 3353/- and Professional Tax of '' 93930/- . The Company has paid part of the of the dues and is arranging to make the payment of the same.

10. The accumulated losses are more than 50% of net worth of the Company. The company shall take appropriate actions in consulatation with the experts.

11. There has been delay in repayment of banks loan installment and interest beyond 90 days.The banks have already approved OTS for the settlement of banks dues.Besides above , other notes to the Accounts are also self explanatory and give suitable explanation to qualifications in Auditors'' Report.

AUDIT COMMITTEE:

During the year under review, the Audit Committee was constituted in accordance with the provisions of the Companies Act, 2013 and listing agreement entered into by the Company with the Stock Exchanges.

FIXED DEPOSITS:

During the year under review, the Company has not accepted any deposit from the public.

CORPORATE GOVERNANCE:

Your Company has complied with the Corporate Governance guidelines as per Clause 49 of the Listing Agreement with the Stock Exchanges.

A report on Corporate Governance practices followed by your Company, in terms of Clause 49(VI) of the Listing Agreement and a Certificate from the Auditors of the company regarding compliance with Corporate Governance guidelines as stipulated and Management Discussion & Analysis reports have been attached by way of separate section as part of this Annual Report.

PARTICULARS OF EMPLOYEES:

There are no employees employed by the Company through out the financial year or for a part of the financial year who were drawing remuneration as per the limit provided in section 217(2A) of the Companies Act, 2013 and therefore there are no details required to be given in the report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EARNINGS & OUTGO :

The particulars prescribed by the companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 as to conservation of energy, Technology absorption, Foreign Exchange Earnings and outgo are furnished in the annexure to this Report.

ACKNOWLEDGEMENT:

Your Directors wish to express their sincere thanks for the support and co-operation extended by the Bankers of the Company viz. State Bank of India, Bank of Baroda, UCO Bank, Central Bank of India and CDR authorities, JM Financial Asset Reconstruction Company Private Limited, all State and Central Government Departments, Shareholders, valued Customers and Suppliers etc. of the Company. Your Directors also wish to express their sincere thanks for the contribution rendered by the employees of the Company at all levels.

For & on behalf of the Board of Directors,

Sunil kumar Gupta

Date: 14/08/2014 Managing Director

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Mar 31, 2013

To, The Members of GSL NOVA PETROCHEMICALS LTD.

(Formerly Known as NOVA PETROCHEMICALS LTD.)

The Directors have pleasure in presenting the 20th Annual Report and Audited Statement of Accounts for the year ended 31st March 2013. OPERATIONAL & FINANCIALS The highlights are as under: -

(Rs. in Lacs)

Particulars 2012-2013 2011-2012

Net Sales& Other Income 5326.62 15844.15

Profit / (Loss) before Tax (1305.42) (1856.61)

Less: Provision for Tax Nil Nil

Add: Provision for Deferred Tax Nil Nil

Profit After Taxation/(Loss) (1305.42) (1856.61)

Add: Balance Brought from Previous Year. (5541.15) (3684.54 )

Profit Available for Appropriations (6846.57) (5541.15)

Less: Appropriations

(a) Dividend Nil Nil

(b) General Reserve Nil Nil

Balance Carried to Balance Sheet (6846.57) (5541.15)

PERFORMANCE:

Your company has achieved Net Sales and other income of Rs.53.26 crores as compared to previous year''s Net Sales and other income of Rs. 158.44 crores. Due to continuing recession & bad market for Polyester Yarn and operational loss coupled with non availability of power the production remained suspended end of September, 2012. The net loss during the year under review was placed at Rs.13.05 crores as compared to net loss of Rs. 18.57 crores for the previous year.. The operations of the company are influenced from change in prices of raw material, fuel prices, lower demand of yarn as well as lower rate of sales realization due to excess supply over demand resulting in to overall lower sales and capacity utilization etc.

PRESENT COURSE OF BUSINESS AND OUTLOOK:

The Management''s discussion and analysis report, as required under corporate governance, forming a part of this report, is a reflection of the current state of business. It also deals with the opportunities and threats faced by your company outlook.

The Prospect of Synthetic, yarn industries is linked with the movement of crude oil prices in international market ''as the raw material of synthetic yarn are derivatives of crude oil.

As the prospect of chips plant based on old aged batch processing technology are bleak in view of high conversion cost and competition arisen from creation of huge capacity from new plants based on continuous process technology the company had shut down the plant since couple of years. As the honorable members are aware that to overcome the said situation, the management of your company had decided to purchase chips directly from the market. Though management had further explored the possibility of modernization of the chips plant and also of manufacturing other than textile grade of chips but the same was not materalised as the banks had reservations for further financing in view of delay in split of bank facilities between two companies and continuous losses.

The company has submitted a revival plan to banks for recommencing the production of yarn and to reduce debt burden of Rs. 56.50 crores through sale of unusable Plant & Machinery and development of affordable housing on surplus land of the company jointly with reputed builder through JV. We are glad to inform that the banks have agreed in principal for the same.

RESTRUCTURING OF BANK DUES UNDER CDR MECHANISM :

As the members are aware, the Company has taken considerable finance from banking institutions, which are also secured by the assets of the Company and personal guarantee of Promoters and associate companies. In view of losses incurred by the company, the company could not adhered to serve the interest and repayment of the loans. The Banks will have right to recompense in respect of waivers/sacrifice made by them for restructured debts under CDR mechanism.

DIVIDEND:

Due to loss incurred by the Company during the year 2012-13, your directors regret their inability to recommend any dividend on the Eqyity Share Capital.

DIRECTORS:

Shri Sunilkumar Gupta, Managing Director and Shri Anil Kumar Singhal, Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment, have offered themselves for the re-appointment. Brief resume of the Directors and names of companies in which they hold the Directorship as stipulated under Clause 49 of the Listing Agreement are given in the notes attached to the Notice calling 20th Annual General Meeting of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956 Directors'' Responsibility Statement is given as under:

(i) That in the preparation of the annual accounts for the financial year ended 31st March 2013; the applicable accounting standards have been followed along with proper explanation relating to material departures.

(ii) That such accounting policies have been selected and applied consistently and judgments and estimates have been made 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 or loss of the Company for the year ended 31st March, 2013.

(iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) That the annual accounts have been prepared for the financial year ended 31st March, 2013 on a going concern basis.

INSURANCE: .

The Company has adequately covered all assets against all risks.

AUDITORS:

Auditors of the company M/s. J. T. Shah & Co. Chartered Accountants of Ahmedabad, will retire from the office of the Auditors at the conclusion of ensuing 20th Annual General Meeting and being eligible, offer themselves for re-appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company had pursuant to section 224 (IB) of the Companies Act,1956, received a certificate that their appointment, if made , will be within the limits as laid down in the section.

Explanation to the qualification in Auditors'' Report.

The Directors submit their explanation to the qualification made by the Auditors in their report for the year 2012-13. The para nos. and reply are as under:

9(b) There has been delay in the payment of Wealth tax of 75 lacs,Investor Education & Protection fund of Rs. 2.85 lacs, Tax deducted at source of Rs.4.74 lacs, TCS of Rs. 0.22 lacs, Service Tax of Rs.2.18 lacs, PF of Rs. 2.51 lacs and Professional Tax of Rs. 1.22 lacs. The Company paid part of some of the dues and is arranging to make the payment of the same shortly.

10 The accumulated losses are more than fifty percent of its net worth end the company has incurred cash losses during the year under audit and in the immediately preceding financial year. The Company will take appropriate action in consultation with the experts.

There was a delay for more than 90 days in the repayment of principal and interest to banks. The Company has already approached the Banks for approving revival plan as stated in other para of Directors'' Report.

Besides, the notes to the Accounts are also self explanatory and give suitable explanation to qualifications in Auditors'' Report.

AUDIT COMMITTEE:

Due to change in company''s Board of Directors during the year under review, the Audit Committee Was reconstituted in accordance with the provisions of the Companies Act, 1956 and listing agreement entered into by the Company with the Stock Exchanges.

COMPLIANCE REPORT BY COST ACCOUNANT:

Pursuant to Section 209(l)(d) and Rule 2 of The Companies (Cost Accounting Records) Rules, 2011 the company shall file compliance report duly authenticated and signed by Kirna J.Mehta & Co. Cost Accountants having office at Ahmadabad for financial year 2012-13 in prescribed Form-A along with the annexure to the Central Government within prescribed time period from the close of the company''s financial year to which the compliance report relates.

APPOINTMENT OF THE COST AUDITOR:

As required under Cost Audit Breach Order dated 24th January! 2012 issued alder reference no. F.No. 52/26/CAB-2010 by Ministry of Corporate Affairs, Government of India, the industries engaged in the production, processing or manufacturing of Wooten'' defended

Fibers/Textiles as coveredRs. under Chapters 50 to 63 of The Central Excise Tariff Act, 1985 where in the aggregate value of the turn over made by the company from sate Sr supply of all its products/activities during the immediately preceding financial year exceed 100 crores of rupees or wherein the company''s equity or debt securities are listed or are in process of Listing on any stock exchange whether in .Istria; or outside India, shall get its Cost, Accounting Records, in respect of each of its financial year commencing on or after the 1st day of April, 2Q12, audited by a cost auditor who shall be either a cost accountant or a firm of cost accountant, holding valid certificate of practice under the provision of Cost and Works Accountants Act, 1959. Accordingly the company in its board meeting held on lltl'' May,2012 had appointed Shri Kiran J. Mehta, Partner of M/s Kiran J. Mehta & Co., Cost accountant having its office at 257, 2nd Floor, Ellis bridge Shopping Centre, Opp. MJ.Library, Ahmedabad-380 006: to conduct the cost audit for financial year commencing from 1st April, 2012, and, ending, on 3V'' Marcfi, 2013.

FIXED DEPOSITS:

The Company has not accepted any deposit falling within the purview of the provisions of Section 58-Aof the Companies Act 1956 read with the Companies (Acceptance of Deposit) Rules, 1975.

CORPORATE GOVERNANCE: -

Your Company has complied with the Corporate Governance guidelines as per Clause 49 of the Listing Agreement with the Stock Exchanges.

A report on Corporate Governance and a Certificate from the Auditors of the company regarding compliance with Corporate Governance guidelines as stipulated and Management Discussion & Analysis reports have been attached by way of separate section as part of this Annual Report.

PARTICULARS OF EMPLOYEES: -

There are no employees'' employed by the Company throughout the financial year or for a part of the financial1 year vetch Were drawing remuneration as per the limit provided in section 217 (2A) of the Companies Act, 1956 and liegiveh in the report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO: -

Information in accordance with the provisions of Section 217(l)(e) of the Companies Act, 1956, read with

Particulars in the Report of Board of Directors'' Report). Rules, 1988 regarding conservation of energy, technology absbrprbri and foreign exchange earning and outgo is given in the Annexure forming part botflies report.

ACKNOWELDGEMENT: -

Your Directors wish to express their sincere thanks for the support and co-operation extended by the Bankers of the Company viz. State Bank of India, Bank of Baroda, UCO Bank, Central Bank of India and CDR authorities, all State and Central Government Departments, Shareholders, valued Customers and Suppliers etc. of the Company. Your Directors also wish to the employees of the Company at all levels.

Regd. Office: By order of the Board of Directors,

Survey No. 396/403, Moraiya Village,

Sarkhej-Bavla Highway, Tal. Sanand,

Dist. Ahmedabad - 382 210 Sunitfcumar Gupta

Dated : 14/08/2013 Managing Director

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Mar 31, 2010

The Directors have pleasure in presenting the 17th Annual Report and Audited Statement of Accounts for the year ended 31st March 2010.

OPERATIONAL & FINANCIALS

The highlights are as under: -

Particulars 2009-2010 *2008-09 (After Demerger) (Before Demerger)

Net Sales& Other Income 22056.14 34867.64

Profit before Interest, Depreciation & Tax(PBDIT) 930.03 1893.67

Less : Interest & Financial Charges 810.65 1708.95

Less : Depreciation 634.56 1445.21 1686.55 3395.50

Profit/(Loss) before Exceptional Item (515.18) (1501.83)

Profit/(Loss) on Exceptional Item 106.07 -

Profit / (Loss) before Tax (409.11) (1501.83)

Less : Provision for Tax Nil 14.50

Add : Provision for Deferred Tax Nil Nil

Profit After Taxation /(Loss) (409.11) (1516.33)

Add : Balance Brought from Previous Year (2688.70) (4482.85)

(for the year 2009-10 : share of demerged company. pursuant to demerger)

Profit Available for Appropriations (3097.81) (5999.18) Less : Appropriations

(a) Dividend Nil Nil

(b) General Reserve Nil Nil

Balance Carried to Balance Sheet (3097.81) (5999.18)



* The figures of Corresponding previous year are not comparable as the results for the referrred previous year are of combined financial results of erstwhile NPL (prior to demerger) and are regrouped/rearranged, wherever necessary.

The operational and financial results of the company are further elaborated in the annexed Management Discussion and Analysis Report.

PERFORMANCE:

Despite the downturn in the economy and continuing recession, your company has achieved Net Sales and Other Income of Rs.220.56 crores as compared to previous years Net Sales and Other Income of Rs 202.37 crores (companys share out of combined of Rs. 348.67 crores - prior to demerger). The profit before Interest, Depreciation and Tax (PBDIT) was Rs 9.30 crores for the FY 2009-10 as compared to combined PBDIT of Rs 18.94 crores for the FY 2008-09 ( prior to demerger). The net loss during the year under review placed at Rs.4.09 crores as compared to net loss of Rs. 15.16 crores in the previous year of the combined company prior to Demerger. The operations of the company are influenced due to prices of raw materials, fuel prices, sales realization etc.

COURSE OF BUSINESS AND OUTLOOK:

The Managements discussion and analysis report , as required under corporate governance, forming a part of this report, is a reflection of the current state of business. It also deals with the opportunities and threats faced by your company and the company outlook.

The Prospect of synthetic yarn industries is linked with the movement of crude oil prices in international market as the raw material of synthetic yarn are derivatives of crude oil. However the prospect of chips plant based on old aged batch processing technology are bleak in view of high conversion cost and competition arisen from creation of large capacity based on continuous process technology. Your company is exploring the possibility of converting its chips plant on continuous process with capability of manufacturing other grade of chips viz., bottle grade, film grade etc. where margins are better.

REVALUATION OF THE FREE HOLD LAND:

At the instance of banks, the revaluation of Fixed Assets viz. free hold land & Building and Plant & Machinery was carried out by the registered valuers appointed by Lender banks. As per the valuation report the market value and realizable value of free hold land & Building and Plant & Machinery continued with the company after demerger was derived at Rs. 4018 lacs and Rs. 12600 lacs respectively.

For better presentation of your companys worth, it has been prudently decided to revalue free hold land in books of accounts at realizable value of Rs 34.64 crores. As a result of this revaluation reserve of Rs 33.70 crores was created in companys Books.

DE-MERGER:

The Scheme of Arrangement in the nature of demerger, Reorganisation of Capital and transfer of demerged undertaking had been sanctioned by Honble High Court of Gujarat on 27th day of August, 2009 and certified copy of the order received by the Company on 18th day of September, 2009. Pursuant to the Scheme of Demerger being approved by Honble High Court of Gujarat, your Company fixed 1st October, 2009 as effective date to give effect to various clauses of the Scheme.

During the year under review, your company had given effect to various clauses of the demerger scheme. The major changes effected thereof are as follows:

1. On Scheme becoming effective , the directors belonging to Chiripal Group resigned from the Board of Company w.e.f 5th October,2009 . Similarly Directors belonging to Gupta Group resigned from Nova Polyyarn Limited -Resultant Company

2. The new shares of Face Value of Rs.5/- each (Rupees five each) of the demerged company viz. Nova Petrochemicals Limited (Now GSL Nova Petrochemicals Limited) and of resultant company viz. Nova Polyyarn Limited (Now CIL Nova Petrochemicals Limited) issued on 26th October,2009 in lieu of Rs 10/- Shares of demerged company to the members whose names appeared in Register of Members of demerged company on record date dated 22nd October,2009. The new shares of your company got relisted on Stock Exchanges w.e.f. 14th December,2009.

3. Authorised Share Capital of your Company reduced from 5,00,00,000 (five Crores) Equity Shares of Rs.10/- (Rupees Ten) each amounting to Rs. 50,00,00,000 (Rupees Fifty Crores) to 6,50,00,000 ( Six Crores Fifty lacs) Equity Shares of Rs. 5/- (Rupees Five) each amounting Rs. 32,50,00,000/- (Rupees Thirty Two Crores Fifty lacs) and the Issued, Subscribed & paid up Capital reduced from 2,70,00,000 (Two Crores Seventy Lacs) Equity Shares of Rs 10/- (Rupees Ten) each amounting Rs. 27,00,00,000 (Rupees Twenty Seven Crores) to 2,70,00,000 (Two Crores Seventy Lacs) Equity Shares of Rs.5/- (Rupees Five) each amounting Rs. 13,50,00,000( Rupees Thirteen Crores Fifty lacs only)

4. The name of your Company was changed from NOVA PETROCHEMICALS LIMITED to GSL NOVA PETROCHEMICALS LIMITED and the name of NOVA POLYYARN LIMITED - Resulting Company was also changed to CIL NOVA PETROCHEMICALS LIMITED.

RESTRUCTURING OF BANK DUES UNDER CDR MECHANISM :

Your company had requested the Banks and Corporate Debt Restructuring (CDR) Cell for extension of Period of Relief under the CDR Mechanism & Approval for other concessions. The CDR-Empowered Group has approved the reworked proposal for restructuring on 25th March, 2009. The approval was conveyed to all the banks by CDR Cell vide their letter dated 31.03.09. Revised financial restructuring package consist of re- schedulement of term loans installments including extension of moratorium by further one year, further funding of interest, increasing cover period of book debts up to 90 days etc.

As the members are aware, the Company has taken considerable finance from banking institutions, secured by the assets of the Company. In view of losses incurred by the company, the CDR and Banks have stipulated that the unsecured loan from Promoters group/associates be converted in to capital so that TNW remain positive all the time. Consequent upon demerger of NPL, it was further stipulated that both the companies to convert the unsecured loans from associates in to capital by 31.03.2010, so that Net worth remain positive. In turn your company had applied to Stock Exchanges for in-principle approval for preferential issue of Equity shares. However in view of SEBI order dated 12.01.2010 restraining the company to access capital market for two years, the company proposes issuance of Preference Shares as per Item No. 9 of Notice of Annual General Meeting in order to comply with the CDR stipulations. Further in order to enable the company to issue preference shares, the board has also proposed for reclassification of authorized share capital in Memorandum and Articles of Association of the Company in Item No. 7 & 8 of Notice of Annual General Meeting.

REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) UNDER SICA

In view of accumulated losses exceeding entire net worth of the Company as on 31.03.09 (prior to demerger) and pursuant to compliance of Section 15 of SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT,1985 the Company made a reference dated 14th September,2009 to Board for Industrial And Financial Reconstruction (BIFR) for the purpose of enabling the BIFR to take suitable measures for rehabilitation of the Company after adoption of accounts for the year ended 31.03.2009 by the shareholders at the 16th Annual General Meeting.

In view of demerger order passed by Gujarat High Court, the BIFR dismissed the reference filed by the Company pursuant to Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 vide its order issued on December 10, 2009. Consequently, the company had preferred an appeal under the provisions of section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985 before The Appellate Authority For Industrial and Financial Reconstruction against the impugned order passed by Honble BIFR and the appeal is pending with the said authorities.

DIVIDEND:

Due to loss incurred by the Company during the year 2009-10 coupled with accumulated lossess, your directors regret their inability to recommend any dividend on the Equity Share Capital.

DIRECTORS:

The Board of Directors of the Company was reconstituted in compliance with the demerger scheme approved by Honble High Court of Gujarat on 27th Day of August,2009 by way of :

- resignation tendered by the directors belonging to Chiripal Family/ Group w.e.f . 5th October,2009 namely Shri Ved Prakash Chiripal and Shri Jyotiprasad Chiripal

- Shri V.D. Gupta and Shri Murli Goyal had also resigned from the Board w.e.f. 5th October,2009 due to their pre occupancy.

• Shri Shyam Sunder Gupta has been appointed as chairman of Board of Directors in place of Shri Jyotiprasad Chiripal, who has resigned as director.

The Board of Directors appointed Shri Anil Singhal as an additional Director during the year under review.The term of his office expires at the conclusion of this Annual General Meeting.

Pursuant to the provisions of Section 257 of the Companies Act, 1956 read with Articles 155(a)&(b) of Articles of Association of the Company, the Company has received a notice in writing alongwith a deposit of Rupees 500.00 (Rupees Five hundred only) from a member signifying his intention to propose Shri Anil Singhal as a director of the Company liable to retire by rotation.

The Board of directors consider it in the best interest of the Company to continue to have the benefit of the long and varied experience of Shri Anil Singhal. Accordingly, the Board proposes to the members of the Company to appoint him as regular director on the Board liable to retire by rotation.

Shri Sandeep Goyal, and Shri Shyam. Gupta, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment, have offered themselves for the re-appointment. Brief resume of all the two Directors and names of companies in which they hold the Directorship as stipulated under Clause 49 of the Listing Agreement are given in the notes attached to the Notice calling 17th Annual General Meeting of the Company.

The Board of Directors decided to pay remuneration to Managing Director Shri Sunilkumar Gupta w.e.f.1st April,2010 in accordance with Schedule XIII to the Companies Act,1956.The Board recommends to the members to pass the resolution in the interest of the Company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956 Directors Responsibility Statement is given as under,

(i) That in the preparation of the annual accounts for the financial year ended 31st March 2010; the applicable accounting standards have been followed along with proper explanation relating to material departures.

(ii) That such accounting policies have been selected and applied consistently and judgments and estimates have been made 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 or loss of the Company for the year ended 31st March, 2010.

(iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) That the annual accounts have been prepared for the financial year ended 31st March, 2010 on a going concern basis.

INSURANCE:

The Company has adequately covered all assets against all risks.

AUDITORS:

Auditors of the company M/s. J. T. Shah & Co. Chartered Accountants of Ahmedabad, will retire from the office of the Auditors at the conclusion of ensuing 17th Annual General Meeting and being eligible, offer themselves for re-appointment from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. The Company had pursuant to section 224 (1B) of the Companies Act,1956, received a certificate that their appointment, if made, will be within the limits as laid down in the section.

EXPLANATION TO THE QUALIFICATION IN AUDITORS REPORT:

The Directors submit their explanation to the qualifications made by the Auditors in their report for the year 2009-10. The para nos. of Auditors Report and reply are as under:

Para 9 (a) : There is delay in the payment of Wealth tax of Rs.5 lacs, Investor Education and Protection fund of Rs 2.85 lacs and tax deducted at source of Rs.0.14 lacs., The Company is arranging to make the payment of the same shortly.

Para 11 : There had been marginal delay in repayment of loan and installment on some occasions due to slow recovery / collection and also non split of limits by banks consequent to demerger.

Besides, other qualification and the notes to the Accounts are also self explanatory and give suitable explanation to qualifications in Auditors Report.

AUDIT COMMITTEE:

During the year under review, the Audit Committee was reconstituted in accordance with the provisions of the Companies Act,1956 and listing agreement entered into by the Company with the Stock Exchanges and consequent to change in composition of the Board made for implementing the demeger scheme as approved by Honble High Court of Gujarat on 27th August,2009,

SHAREHOLDERS TRANSFER AND GRIEVANCES COMMITTEE:

Due to change in composition of the Board made for implementing the demeger scheme as approved by Honble High Court of Gujarat on 27th August,2009, the Shareholders Transfer and Grievances Committee was reconstituted in accordance with Listing Agreement with Stock Exchanges.

REMUNERATION COMMITTEE:

Due to change in composition of the Board made for implementing the demeger scheme as approved by Honble High Court of Gujarat on 27th August,2009, the Remuneration Committee was reconstituted in accordance with Listing Agreement with Stock Exchanges. The same was further reconstituted w.e.f 30th April,2010 comprising of all three Independent Directors .

FIXED DEPOSITS:

The Company has not accepted any deposit falling within the purview of the provisions of Section 58-A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975.

CORPORATE GOVERNANCE: -

Your Company has complied with the Corporate Governance guidelines as per Clause 49 of the Listing Agreement with the Stock Exchanges.

A report on Corporate Governance and a Certificate from the Auditors of the company regarding compliance with Corporate Governance guidelines as stipulated and Management Discussion & Analysis reports have been attached by way of separate section as part of this Annual Report.

PARTICULARS OF EMPLOYEES: -

There are no employees employed by the Company through out the financial year or for a part of the financial year who were drawing remuneration as per the limit provided in section 217 (2A) of the Companies Act, 1956 and therefore there are no details required to be given in the report.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO: -

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors Report) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earning and outgo is given in the Annexure forming part of this report.

ACKNOWELDGEMENT: -

Your Directors wish to express their sincere thanks for the support and co-operation extended by the Bankers of the Company viz. State Bank of India, Bank of Baroda, UCO Bank, Central Bank of India, State Bank of Indore (since merged with State bank of India) and CDR authorities, all State and Central Government Departments and authorities, Shareholders, valued Customers and Suppliers etc. of the Company. Your Directors also wish to express their sincere thanks for the contribution made by the employees of the Company at all levels.

Registered Office : By Order of the Board of Directors,

Survey No. 396, 403, Moraiya Village,

Sarkhej-Bavla Highway, Tal. Sanand,

Dist. Ahmedabad - 382 210 Shyamsunder Gupta Sunil Kumar Gupta

Date : 13/11/2010 Chairman Managing Director