Directors Report of Jyoti Overseas Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors are pleased to present the 40th Annual Report and the audited accounts of the company for the year ended 31st March 2014.

FINANCIAL RESULTS : (Rs. in Lacs)

2013-14 2012-13

Income from operations 0 0

Other Income 0.19 1.71

Total Income 0.19 1.71

Profit before Depreciation, Interest & tax (2.11) (6.03)

Less : Interest NIL NIL

Depreciation 21.28 22.49

Loss before Tax (23.39) (28.52)

Loss after Tax (23.39) (28.52)

Balance brought forward (3839.57) (3811.05)

Balance transferred to the Balance Sheet (3862.96) (3839.57)

REVIEW OF OPERATIONS:

As the Secured Creditors terminated the custodianship of the company and took the physical possession of factory in April 2011, there were no operations carried out in the factory. The Secured Creditors have sealed the production facilities and have deployed their own security personal. Consequently there was no production and sales in the company.

The management is continuously trying to have a settlement with the Secured Creditors so that the company can revive its operations.

ACTION UNDER SARFAESI ACT, 2002

The Asset Reconstruction Company ARCIL and the Financial Institution, Exim Bank of India had initiated recovery action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) 2002. The Company had been issued notice under section 13(4) of the SARFAESI Act for possession of Secured Assets, that include a part of land, building and complete machineries (except the machines charged to IDBI earlier) ,charged to the said Institutions. The Company had been appointed as Custodian of said Secured Assets with effect from July 11, 2007. The Company was allowed to continue the routine business operations on payment of Rs 25000 per month towards royalty charges. In April 2011 the Financial Institutions withdrew the custodianship from the company and took the physical possession of the factory.

STATUS OF REGISTRATION WITH THE BIFR:

The Company made reference to the Hon''ble BIFR in August 2003 and had been declared sick under the provisions of SICA , 1985 vide order dated 17th May 2006. As the Secured Lenders ARCIL And Exim Bank have taken action under section 13(4) of SARFAESI Act 2002, the Hon''ble BIFR, pursuant to an application by the referred Secured Creditors, has ordered on 26.11.2007 to abate the reference filed under SICA Act.

Winding-up Petition by ARCIL

ARCIL has filed a company petition under Section 433(1)(e) of the Company ''s Act 1956 for winding up of the company, before the Hon''ble High Court of Madhya Pradesh at Indore Bench. The Company is filing proper reply opposing the winding-up petition filed by ARCIL. The petition is pending before the Hon''ble High Court for admission.

DIVIDEND

In view of huge losses incurred by the Company, the directors regret their inability to recommend any dividend (Previous year Nil).

DISCLOSURE OF PARTICULARS

Information as per Section 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 is annexed and marked Annexure "I" and forms part of this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The statement as required under section 217(2AA) of the Companies Act, 1956 the Board of Directors confirm that;

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

(ii) The Directors have selected appropriate 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 or loss for that Year;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on the going concern basis. The Directors are hopeful of achieving One-time settlement of dues of secured creditors and revival of operations. Therefore the company''s accounts are prepared on going concern basis.

PARTICULARS OF THE EMPLOYEES

The information required under section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended are not given as the Company did not have any employee during the year.

PUBLIC DEPOSIT

Your Company has not accepted any Public deposit within the meaning of provisions of Section 58A & 58AA of the Companies Act, 1956 and there is no out standing deposit as at 31st March, 2014.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management discussion and Analysis Report as required under the Listing Agreement with the stock exchange is annexed as Annexure "II" forming part of this report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the Listing Agreement with the Stock Exchange(s), a separate section titled ''Corporate Governance'' has been included in this annual report along with management discussion and analysis report as Annexure III. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance is annexed to this report.

DIRECTORS

Mr. Pramod Somani, (DIN 00042745) Director of your Company, retires by rotation at the ensuing annual general meeting of the company, and being eligible offers himself for re-appointment.

Further that Shri Vikas Chikne (DIN 02776142) the existing independent director is further proposed to be appointed as Independent Director for a term of 5 years and Mr. Luv Kumar Saboo (DIN 02921767) is proposed to be appointed as Independent Directors for a term of 5 years as per requirement of section 149 of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement to hold the office till 31st March, 2019 and 13th August, 2019 respectively.

The Company has received a notice for members as per section 160 of the Companies Act, 2013 for proposal for appointment of the aforesaid directors at the AGM. They have given a declaration to the Board that they meet the criteria of independence as provided under section 149(6) of the Act and clause 49 of the listing agreement and are not disqualified from being appointed as a director in terms of section 164 of the Act and has given their consent to act as director.

In the opinion of the Board, each of these directors fulfill the conditions specified in the Act and the Rules framed there under and clause 49 of the listing agreement for appointment as Independent Director and they are independent of the management.

AUDITORS

As per the provisions of section 139 of the Act, no listed Company can appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years. Section 139 of the Act has also provided a period of three years from the date of commencement of the Companies Act, 2013 to comply with this requirement. In view of the above, M/s S.P.Moondra & Co., (F.R.No 004879C) Chartered Accountants, being eligible for re-appointment and based on the recommendation of the Audit Committee proposed for the re-appointment as the statutory auditors for a period of three years (subject to the peer reviewed by the ICAI) up to the conclusion of the 43rd annual general meeting to be held in the calendar year 2017.

DIRECTORS'' COMMENTS TO THE QUALIFICATION MADE BY AUDITOR

(I) The Auditors, in the point no.3(f), in their report, have made comments on non-provisioning of interest on term loan outstanding. The company has already achieved Onetime settlement (OTS) with majority of secured creditors and is further trying to reach one-time settlement with the remaining secured creditors. Further to this, the secured creditors have taken the physical possession of factory and have sealed the production facilities. Hence the Company considers it appropriate to make no provisioning of interest on these borrowings. The Auditors have also made comments regarding company''s going concern status. Considering the dispute of ownership on company''s assets between Commercial tax Department and Financial Institutions and also considering the management efforts to have One-time settlement of dues of Secured creditors, the management is hopeful that the company will revive its operations. Therefore the Company''s accounts are prepared on going concern basis. The Auditors have also made comment on not following the accounting standard with respect to the provision of gratuity on actuarial basis. The Company does not have any staff on its payrolls and as the physical possession of factory has been taken over by Secured Lenders, all the workers and staff have left the company. The gratuity provisions made for the left staff is sufficient to take care of their dues. Hence the provision of gratuity is not done on the actuarial basis.

(ii) The Auditors, in the Point No. 9(a), of Annexure to their report have also made some qualifications as regards irregularity in payment of statutory dues. The Company is passing through severe financial hardships and as a result there were instances of irregularity in the payment of certain statutory dues. The Company is mobilizing necessary resources to meet the overdue payments.

(iii) The Auditors, in their report also made qualifications as regards non availability of balance confirmations from debtors, creditors and Loans & Advances; and non ascertainment of impairment of assets. The Directors are of the view that the receivables/ payables balances shown in the balance sheet do not require any provision. And as the assets are in the custody of Secured lenders and their ultimate fate is not ascertainable, any change with respect to impairment, if arises, would be adjusted in the year of settlement.

For and on behalf of the Board

Indore, PRAMOD SOMANI PRATISHTHA SOMANI

14th August 2014 DIRECTOR DIRECTOR DIN 00042745 DIN 02921806

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Mar 31, 2011

The Directors are pleased to present the 37th Annual Report and the audited accounts of the company for the year ended 31 st March 2011.

FINANCIAL RESULTS: (Rs. in Lacs)

2010-11 2009-10

Total Income 133.30 90.84

Profit before Depreciation, Interest & tax 6.45 58.10

Less: Interest NIL NIL

Depreciation 194.87 286.48

Loss before Tax (93.51) (228.39)

Loss after Tax (93.31) (228.39)

Balance brought forward (3650.21) (3421.83)

Balance transferred to the Balance Sheet (3743.52) (3650.21)

REVIEW OF OPERATIONS :

As the Company was not enjoying any working capital facilities, support from the creditors, the company had to shift itself to Job-work. With the efforts of the management, the turnover of the Company improved and increased from Rs. 90.84 Lacs to Rs 133.30 Lacs. Further the company has not been able to utilize its production capacity to full extent due to persistent non-availability of working capital from banks and obsolete shuttle looms which are not viable to operate. This has caused severe burden on financials of the company and has made it difficult for the company to bear fixed expenses in full. Despite low margins, absence of working capital facilities, the Company continued to remain in operations in the last year.

However, in April 2011, the Secured Creditors had terminated the Custodianship and took complete physical possession of the factory. They have sealed the production facilities and have deployed their own security personal.

The management is trying hard to have a settlement with the Secured Creditors and exploring other opportunities so that the company can revive its operations.

ACTION UNDER SARFAESI ACT,2002

The Asset Reconstruction Company ARCIL and the Financial Institution, Exim Bank of India had initiated recovery action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) 2002. The Company had been issued notice under section 13(4) of the SARFAESI Act for possession of Secured Assets, that include a part of land, building and complete machineries (except the machines charged to IDBI earlier) .charged to the said Institutions. The Company had been appointed as Custodian of said Secured Assets with effect from July 11,2007. The Company was allowed to continue the routine business operations on payment of Rs 25000 per month towards royalty charges. However, in April 2011 the Financial Institutions withdrew the custodianship from the company.

STATUS OF REGISTRATION WITHTHE BIFR:

The Company made reference to the Hon'ble BIFR in August 2003 and had been declared sick under the provisions of SICA Act, 1985 vide order dated 17th May 2006. As the Secured Lenders ARCIL And Exim Bank have taken action under section 13(4) of SARFAESI Act 2002, the Hon'ble BIFR, pursuant to an application by the referred Secured Creditors, has ordered on 26.11.2007 to abate the reference filed under SICA Act.

Winding-up Petition by ARCIL

ARCIL has filed a company petition under Section 433(1 )(e) of the Company's Act 1956 for winding up of the company, before the Hon'ble High Court of Madhya Pradesh at Indore Bench. The Company is filing proper reply opposing the winding-up petition filed by ARCIL. The petition is pending before the Hon'ble High Court for admission.

DIVIDEND

In view of losses, the directors regret their inability to recommend any dividend.

DISCLOSURE OF PARTICULARS

Information as per Section 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 is annexed and marked Annexure "I" and forms part of this report.

DIRECTORS' RESPONSIBILITY STATEMENT

The statement as required under section 217(2AA) of the Companies Act, 1956 the Board of Directors confirm that;

(i) In thfe preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

(ii) The Directors have selected appropriate 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 or loss for that Year;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on the going concern basis.

PARTICULARS OFTHE EMPLOYEES

None of the Employees in the Company has drawn remuneration in excess of the limits prescribed under Section 217 (2A) read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSIT

Your Company has not accepted any Public deposit within the meaning of provisions of Section 58A & 58AA of the Companies Act, 1956. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management discussion and Analysis Report as required under the Listing Agreement with the stock exchange is annexed as Annexure "II" forming part of this report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the Listing Agreement with the Stock Exchange(s), a separate section titled 'Corporate Governance' has been included in this annual report along with management discussion and analysis report as Annexure III. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance is annexed to this report.

DIRECTORS

Shri Vikas Chikne, Director of your Company, retires by rotation at the ensuing annual general meeting of the company, and being eligible offers himself for re-appointment.

AUDITORS

M/s S.P. Moondra & Co., the Statutory Auditors of the Company will retire at the conclusion of the forthcoming Annual General Meeting and the Company is in receipt of confirmation from them that if they are reappointed, their appointment will be in accordance with the limits mentioned in section 224(1B) of the Companies Act, 1956.

DIRECTORS' COMMENTS TO THE QUALIFICATION MADE BY AUDITOR

The Auditors, in the point no.3 (f), in their report, have made comments on non-provisioning of interest on term loans outstanding. The Company has already achieved one-time settlement with majority of Secured Lenders and is further trying to reach One-time-settlement (OTS) with the remaining secured lenders. Hence the Company considers it appropriate to make no provisioning of interest on these borrowings. The Auditors have also made comments regarding company's going concern status. Considering the dispute of ownership on company's assets between Commercial tax Department and Financial Institutions and also considering the management efforts to have One-time settlement of dues of Secured creditors the management is hopeful that the company will revive its operations. Therefore the Company's accounts are prepared on going concern basis.

The Auditors, in the Point No. 9a., of Annexure to their report have also made some qualifications as regards irregularity in payment of statutory dues. The Company is passing through severe financial hardships and as a result there were instances of irregularity in the payment of certain statutory dues. The Company is mobilizing necessary resources to meet the overdue payments.

APPRECIATION

The Company places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed in no small measure to the performance of the company. Grateful thanks are also due to the banking circles, financial institutions, Government authorities, Suppliers, customers and the investors for their continued support extgpded to the Company from time to time.

For and on behalf of the Board

Indore PRAMOD SOMANI PRATISHTHA SOMANI

25th August, 2011 MG. DIRECTOR DIRECTOR

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Mar 31, 2009

The Directors are pleased to present the 35th Annual Report and the audited accounts of the company for the year ended 31 st March 2009.

FINANCIAL RESULTS: (Rs. In Lacs) 2008-09 2007-2008 Total Income 149.56 872.75 Profit before Depreciation, Interest & tax (240.66) (191.29) Less: Interest NIL NIL Depreciation 292.82 304.41 Loss before Tax (533.84) (495.71) Loss after Tax (534.82) (497.93) Balance brought forward (2887.00)(2389.08) Balance transferred to the Balance Sheet (3421.83)(2887.00)

REVIEW OF OPERATIONS :

As the Company was not enjoying any working capital facilities, support from the creditors, the company had to shift itself to Job-work. Hence the turnover of the Company reduced drastically from Rs 872.75 Lacs to Rs 149.56 Lacs. However both the management and staff, have been putting in extra-efforts to survive the current financial crisis. Further the company has not been able to utilize its production capacity to full extent due to non-availability of working capital from banks. This has caused severe burden on financials of the company and has made it difficult for the company to bear fixed expenses in full.

Despite low margins, absence of working capital facilities, the Company continued to remain in operations and Directors are working hard and are optimistic for better results during the ensuing year barring unforeseen circumstances.

ACTION UNDER SARFAESI ACT, 2002

The Asset Reconstruction Company ARCIL and the Financial Institutions Exim Bank of India had initiated recovery action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) 2002. The Company had been issued notice under section 13(4) of the SARFAESI Act for possession of Secured Assets, that include a part of land, building and complete machineries (except the machines charged to IDBI earlier) .charged to the said Institutions. The Company has been appointed as Custodian of said Secured Assets with effect from July 11, 2007. The Company is allowed to continue the routine business operations on payment of Rs 25000 per month towards royalty charges.They have also issued auction notice for sale of secured assets by way of public auction.

However, the Company is pursuing discussions with both the Financial Institutions for one-time settlement of their dues.

STAY ORDER BY HONBLE HIGH COURT OF MADHYA PRADESH

The Commercial Tax Department of Madhya Pradesh had issued notice to attach the fixed assets of the Company under MP Land Revenue Code 1959. The High Court of Madhya Pradesh, consequent to a petition filed before it by the Commercial Tax Department, stayed the auction proceedings initiated by ARCIL. The matter is still pending before the Honbie High Court to decide upon the priority of charges between Commercial tax Department and ARCIL.

STATUS OF REGISTRATION WITHTHEBIFR:

The Company made reference to the Honbie BIFR in August 2003 and had been declared sick under the provisions of SICA Act, 1985 vide order dated 17" May 2006. As the Secured Lenders ARCIL And Exim Bank have taken action under section 13(4) of SARFAESI Act 2002, the Honbie BIFR, pursuant to an application by the referred Secured Creditors, has ordered on 26.11.2007 to abate the reference filed under SICA Act.

DIVIDEND

In view of losses, the directors regret their inability to recommend any dividend.

DISCLOSURE OF PARTICULARS

Information as per Section 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 is annexed and marked Annexure "I" and forms part of this report.

DIRECTORS RESPONSIBILITY STATEMENT

The statement as required under section 217(2AA) of the Companies Act, 1956 the Board of Directors confirm that;

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

(ii) The Directors have selected appropriate 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 or loss for that Year;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on the going concern basis.

PARTICULARS OFTHE EMPLOYEES

None of the Employees in the Company has drawn remuneration in excess of the limits prescribed under Section 217 (2A) read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSIT

Your Company has not accepted any Public deposit within the meaning of provisions of Section 58A & 58AA of the Companies Act, 1956.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management discussion and Analysis Report as required under the Listing Agreement with the stock exchange is annexed as Annexure "II" forming part of this report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the Listing Agreement with the Stock Exchange(s), a separate section titled Corporate Governance has been included in this annual report along with management discussion and analysis report as Annexure III. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance is annexed to this report.

DIRECTORS

Shri D.P Somani,Director of your Company, retires by rotation at the ensuing annual general meeting of the company, and being eligible offers himself for re-appointment.

AUDITORS

M/s S.R Moondra & Co., the Statutory Auditors of the Company will retire at the conclusion of the forthcoming Annual General Meeting and the Company is in receipt of confirmation from them that if they are reappointed, their appointment will be in accordance with the limits mentioned in section 224(1 B) of the Companies Act, 1956.

DIRECTORS COMMENTSTOTHE QUALIFICATION MADE BY AUDITOR

The Auditors, in the point no.3 (f), in their report, have made comments on non-provisioning of interest on term loans outstanding. The Company has already achieved one-time settlement with majority of Secured Lenders and is further trying to reach One-time-settlement (OTS) with the remaining secured lenders. Hence the Company considers it appropriate to make no provisioning of interest on these borrowings.

The Auditors, in the Point No. 9a., of Annexure to their report have also made some qualifications as regards irregularity in payment of statutory dues.The Company is passing through severe financial hardships and as a result there were instances of irregularity in the payment of employers contribution to provident fund authority and payment of other statutory dues. However, a substantial amount towards PF dues has already been paid in the current financial year. The Company is mobilizing necessary resources to meet the overdue payments.

APPRECIATION

The Company places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed in no small measure to the performance of the company. Grateful thanks are also due to the banking circles, financial institutions, Government authorities, Suppliers, customers and the investors for their continued support extended to the Company from time to time.

For and on behalf of the Board Indore, PRAMOD SOMANI D.P. SOMANI 31st August, 2009 MG. DIRECTOR DIRECTOR

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Mar 31, 2008

The Directors are pleased to present the 34th Annual Report and the audited accounts of the company for the year ended 31st March 2008.

FINANCIAL RESULTS: (Rs. in Lacs)

2007-08 2006-2007

Total Income 872.75 1719.12

Profit before Depreciation, Interest & 32.76 (83.90) tax

Less : Interest 1.75 7.66

Depreciation & expenses written off 304.41 372.90

Loss before Tax (495.71) (807.68)

Loss after Tax (497.93) (810.38)

Balance brought forward (2389.08) (6842.37)

Balance transferred to the Balance Sheet (2887.00) (2389.08)

REVIEW OF OPERATIONS :

As the Company was not enjoying any working capital facilities, the production and consequently the sales turnover reduced drastically from Rs 1719.12 Lacs to Rs 872.75 Lacs. However due to various efforts put in by both the management and staff, the Losses has been stemmed and the company made a small profit (before Interest, Depreciation, Extraordinary Items and Tax) of Rs 32.76 Lacs compared to losses of Rs 83.90 Lacs last year. The Company has streamlined its operations, focusing only on job-work. This has helped the company in reducing inventory carrying cost, staff requirement and other incidental expenses. This strategy has paid off and is reflected in modest PBDIT the company achieved this year.

For improving the bottom line, the Company is making continuous efforts to develop value-added products in its product line. Despite low margins, absence of working capital facilities, the Company continued to remain in operations and Directors are working hard and are optimistic for better results during the ensuing year barring unforeseen circumstances.

ONE-TIME SETTLEMENT (OTS) WITH BANKS AND FIs

The Company has completely paid off dues of Working Capital Banks Viz. State Bank of Indore, State Bank of Bikaner & Jaipur , IDBI Bank Limited and Oriental Bank of Commerce (earstwhile Global Trust Bank Limited) and the Term Lender Industrial Bank of India, pursuant to the One-time settlement agreement with these Secured Creditors. The Company has also received No Dues Certificates from all the above-referred banks and the Financial Institution. All the charges and securities held by these secured creditors and personal guarantees of Directors have been released by them.

ACTION UNDER SARFAESI ACT , 2002

The Financial Institutions ARCIL and Exim Bank of India had initiated recovery action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) 2002. The Company had been issued notice under section 13(4) of the SARFAESI Act for possession of Secured Assets, that include a part of land, building and complete machineries (except the machines charged to IDBI earlier) ,charged to the said Institutions. The Company has been appointed as Custodian of said Secured Assets with effect from July 11, 2007. The Company is allowed to continue the routine business operations on payment of Rs 25000 per month towards royalty charges. They have also issued auction notice for sale of secured assets by way of public auction.

However, the Company is pursuing discussions with both the Financial Institutions for one-time settlement of their dues.

STAY ORDER BY HON’BLE HIG COURT OF MADHYA PRADESH

The Commercial Tax Department of Madhya Pradesh has issued notice to attach the fixed assets of the Company under MP Land Revenue Code 1959.

The High Court of Madhya Pradesh, consequent to a petition filed before it by the Commercial Tax Department, stayed the auction proceedings initiated by ARCIL. The matter is still pending before the Hon’ble High Court to decide upon the priority of charges between Commercial tax Department and ARCIL.

STATUS OF REGISTRATION WITH THE BIFR:

The Company made reference to the Hon’ble BIFR in August 2003 and had been declared sick under the provisions of SICA Act, 1985 vide order dated 17th May 2006. As the Secured Lenders ARCIL And Exim Bank have taken action under section 13(4) of SARFAESI Act 2002, the Hon’ble BIFR, pursuant to an application by the referred Secured Creditors, has ordered on 26.11.2007 to abate the reference filed under SICA Act.

DIVIDEND

In view of losses, the directors regret their inability to recommend any dividend.

DISCLOSURE OF PARTICULARS

Information as per Section 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 is annexed and marked Annexure “I” and forms part of this report.

DIRECTORS’ RESPONSIBILITY STATEMENT

The statement as required under section 217(2AA) of the Companies Act, 1956 the Board of Directors confirm that;

(i) In the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

(ii) The Directors have selected appropriate 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 or loss for that Year;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on the going concern basis.

PARTICULARS OF THE EMPLOYEES

None of the Employees in the Company has drawn remuneration in excess of the limits prescribed under Section 217 (2A) read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSIT

Your Company has not accepted any Public deposit within the meaning of provisions of Section 58A & 58AA of the Companies Act, 1956.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management discussion and Analysis Report as required under the Listing Agreement with the stock exchange is annexed as Annexure “II” forming part of this report.

CORPORATE GOVERNANCE

Pursuant to clause 49 of the Listing Agreement with the Stock Exchange(s), a separate section titled ‘Corporate Governance’ has been included in this annual report along with management discussion and analysis report as Annexure III. A certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance is annexed to this report.

DIRECTORS

Shri D.P Somani,Director of your Company, retires by rotation at the ensuing annual general meeting of the company, and being eligible offers himself for re- appointment.

AUDITORS

M/s S.P.Moondra & Co., the Statutory Auditors of the Company will retire at the conclusion of the forthcoming Annual General Meeting and the Company is in receipt of confirmation from them that if they are reappointed, their appointment will be in accordance with the limits mentioned in section 224(1B) of the Companies Act,1956.

DIRECTORS’ COMMENTS TO THE QUALIFICATION MADE BY AUDITOR

The Auditors, in the point no.3 (f), in their report, have made comments on non- provisioning of interest on term loans outstanding. The Company has already achieved one-time settlement with majority of Secured Lenders and is further trying to reach One-time-settlement (OTS) with the remaining secured lenders. Hence the Company considers it appropriate to make no provisioning of interest on these borrowings.

The Auditors, in the Point No. 9a., of Annexure to their report have also made some qualifications as regards irregularity in payment of statutory dues. The Company is passing through financial hardships and as a result there were instances of irregularity in the payment of employers contribution to provident fund authority and payment of other statutory dues. However, a substantial amount towards PF dues has already been paid in the current financial year and liability towards ESIC dues is also completely paid off in the current financial year. The Company is mobilizing necessary resources to meet the overdue payments.

APPRECIATION

The Company places on record its deep appreciation of the devoted services of the loyal workers, executives and other staff of the Company, who have contributed in no small measure to the performance of the company. Grateful thanks are also due to the banking circles, financial institutions, Government authorities, Suppliers, customers and the investors for their continued support extended to the Company from time to time.

For and on behalf of the Board Indore, PRAMOD SOMANI D.P. SOMANI

27th August, 2008 MG. DIRECTOR DIRECTOR