Adani

1

Adani Exports LimitedFive Star Export House

ToThe Members,Your Directors have pleasure in presenting the 13th Annual Report together with the audited statement of accounts for the year ended31st March, 2005.FINANCIAL RESULTSThe Financial Results of your Company for the year ended 31st March, 2005, are as follows :

(Rs. In Crores)*

Year Ended March 31, 2005* 2004*

Sales and operating earnings 13515.84 7069.05Other income 3.03 76.98Gross Profit before Depreciation, Interest and Tax 184.88 181.45Finance charges 52.15 53.52Depreciation 2.11 1.79Profit before Tax 130.62 126.14Surplus brought forward from Previous Year 239.38 186.37Balance available for appropriations 347.67 310.46Appropriations:Dividend on Preference Shares: - Interim 0.19 0.99 - Final - 0.01Dividend on Equity Shares: - Final 9.02 8.82Tax on Dividend 1.29 1.26General Reserve 80.00 60.00Balance carried to Balance Sheet 257.16 239.38*1 crore equals 10 million

Total 347.67 310.46

PERFORMANCE OF YOUR COMPANY

Your Directors are pleased to inform you that your Company has posted a Gross Turnover of Rs. 13515.84 Crores as against thePrevious Year of Rs. 7069.05 Crores, showing growth of 91.20%. The Profit for the period before taxation for the year under reviewis Rs. 130.62 Crores as against the Previous Year of Rs. 126.14 Crores. This has been made possible largely due to the top-linegrowth, focus on value-added products and continued accent on cost-optimisation.

During the year, the turnover has increased substantially as a result of your Company pursuing the twin strategy of concentratingon high value added turnover in its core areas and also focusing on its supportive strength to promote turnover of certain itemswith marginal overall profitability.

The value addition exercise has been immensely helped by the emphasis on exports and the consequent higher per unit realization.In fact, the exports have grown from Rs. 4841.46 Crores in 2003-04 to Rs. 10807.97 Crores in 2004-05, the representing growthof 123 %.

Your Company has now been recognized as “Five Star Export House” by the Ministry of Commerce and Industry, Office of the JointDirector General of Foreign Trade, Government of India in accordance with the provisions of EXIM Policy.

DIVIDEND

In the Previous Year, your Company had paid a dividend of Rs. 4 per equity share.This year, your Directors are pleased to recommend a dividend of 40% on 225539684Equity Shares of Re. 1 each absorbing Rs. 10.29 Crores, which if approved at theforthcoming Annual General Meeting, will be paid to all those equity shareholderswhose names will appear on the Register of the Members as on 9th August,2005.Hence, the total dividend payout for the year under review is Rs. 10.29 Croresincluding tax thereon. The dividend will not suffer tax in the hands of the shareholders.50,65,684 equity shares allotted during the year upon conversion of 740 ForeignCurrency Convertible Bonds (FCCBs) will be entitled to full dividend.

SEGMENT REPORTING

Your Company is a “Five Star Export House” with operations covering a wide range of commodity groups such as Agro, Energy,Precious Goods and Textiles. In view of the integrated nature of business in its entirety, there are no separate segments within theCompany as defined by Accounting Standard 17 (Segmental Reporting) issued by the ICAI.

“GROUP” FOR INTER-SE TRANSFER OF SHARES

As required under Clause 3(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997, persons constituting “Group” (within the meaning as defined in the Monopolies and Restrictive Trade Practices

140

120

100

80

60

40

20

01997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-

98 99 00 01 02 03 04 05YEAR

RS.

IN C

RORE

S

P R O F I T B E F O R E T A X

140

120

100

80

60

40

20

01997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-

98 99 00 01 02 03 04 05

RS.

IN C

RORE

S

P R O F I T A F T E R T A X

YEAR

DIRECTOR’S REPORT

YEAR

2

Annual Report 2004Annual Report 2004Annual Report 2004Annual Report 2004Annual Report 2004-----0505050505


Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid SEBIRegulations are given in Annexure III attached herewith and the said Annexure III forms part of this Annual Report.

FIXED DEPOSITS

Your Company has neither invited nor accepted / renewed any deposits from the Public within the meaning of Section 58A of theCompanies Act, 1956 during the year under review.

LISTING OF SHARES

The shares of your Company are listed at The Stock Exchange, Mumbai, National Stock Exchange and Ahmedabad Stock Exchange.The listing fee for the year 2005-06 has been paid before the due date.

SHARE CAPITAL

Sub-division of face value of shares :

After obtaining necessary approval of the members at the 12th annual general meeting of the Company held on 3rd July, 2004, theface value of shares of your Company stands sub-divided from Rs. 10/- each per share to Re. 1/- each per share with effect from7th August, 2004.

Your directors are pleased to inform you that after reduction in the unit price of the shares, the shares of the Company have nowbecome more affordable to the retail investors and this has resulted into improvement in terms of liquidity in the scrip significantly.

Issue of Foreign Currency Convertible Bonds (FCCBs)

In September 2004, in order to meet the long term fund requirements, we raised a sum of Rs. 174.42 Crores (USD 38 million) byissuing 1% Foreign Currency Convertible Bonds (FCCBs) in the international markets.

We are pleased to inform you that this was one of the most successful issues in the overseas market. Allocations were made totop quality investors. The conversion price of the share was fixed at Rs. 67 per share. The fixed exchange rate at which theaggregate principal amount of the Bonds deposited for conversion shall be translated into INR (the “Fixed Exchange Rate”) is INR45.865 for USD 1.

These bonds are convertible into equity shares of the Company at Rs. 67 per share at the option of the bondholders, any time duringthe conversion period from November 8, 2004 to September 23, 2009. Unless the Bonds are previously purchased and cancelledor the Bonds are converted as herein provided, the Company will redeem the Bonds at 124 per cent on October 23, 2009, withoutany previous notice.

It ’s a matter of great pleasure to inform you that Foreign Currency Convertible Bonds (FCCBs) issue has given advantages ofprevailing low financing costs regime existing in the international markets to your Company.

The above FCCB issue is a clear demonstration of the confidence of investors in your Company. FCCB issue has made your Companyfinancially even stronger and has enhanced its ability to encash any growth opportunity that may come its way.

Conversion of Foreign Currency Convertible Bonds into Equity Shares of the Company and increase in Paid up Share Capital

During the year under review, your Company had received seven conversion notices for conversion of 740 Foreign CurrencyConvertible Bonds (FCCBs) of USD 10,000 each into 50,65,684 equity shares of the Company.

35,25,442 equity shares were allotted to FCCB holders upon conversion of 515 FCCBs on 18th February, 2005 and 15,40,242 equityshares were allotted to FCCB holders upon conversion of 225 FCCBs on 21st March, 2005.

In view of this, paid up share capital of your Company stands increased from Rs. 220474000/- to Rs. 225539684/-.

Redemption of Preference Shares and Non Convertible Debentures.

During the year under review, your Company has redeemed 1,00,00,000 9.9% Cumulative Redeemable Preference Shares ofRs. 10/- each – Series VII. The Company has paid dividend @ 9.9% p.a. upto the date of redemption.

As per the terms of issue, last installment of Rs. 5,00,00,000/- of 15,00,000 privately placed 14.50% Secured Redeemable NonConvertible Debentures of Rs. 100/- was redeemed on 29th December, 2004 being its due date for redemption.

CORPORATE GOVERNANCE

Your Directors are pleased to inform you that name of your Company has figured amongst the Top 25 Companies selected for thepurpose of Corporate Governance Award, 2004 by the Institute of Company Secretaries of India (ICSI).

Your Company has already implemented mandatory requirements of Corporate Governance in terms of the provisions of Clause 49of the Listing Agreement in its letters and spirit and continuously tries to improve it.

Adequate steps have been taken to ensure that all the provisions of Clause 49 of the Listing Agreement are duly complied with.

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditionsof Corporate Governance as stipulated under Clause 49 of the Listing Agreement/s with Stock Exchange/s together with theManagement Discussion and Analysis of the financial position of the Company, forms part of the Annual Report.

FORMATION OF VARIOUS COMMITTEES

Details of various committees constituted by the Board of Directors are given in the Corporate Governance Report annexed andforms part of this report.

3


DIRECTORS

Re-appointment of Managing Director

The tenure of Shri Rajesh S. Adani as Managing Director is due to expire on 10th June, 2005. In view of his expertise in the financialand commercial intricacies, he is in charge of the day to day operations of the Company. His proactive and personalised approachto business and competitive spirit has been instrumental in the Company establishing business relationships and a wide networkof contacts with traders across the globe.

The remuneration committee of the Company at its meeting held on 11th May, 2005 and subsequently, the Board at its meeting held on 11th May, 2005 have re-appointed Shri Rajesh S. Adani as Managing Director unanimously for a further period of five yearswith effect from 10th June, 2005 subject to the approval of the shareholders in General Meeting

In view of this, it will be in the best interest of the Company to re-appoint Shri Rajesh S. Adani as Managing Director of the Companyw.e.f. 10th June, 2005. Terms and conditions for his re-appointment are contained in the Explanatory Statement forming part of theNotice of the ensuing Annual General Meeting.

Increase/revision of remuneration of Executive Chairman

On review of the duties and responsibilities assigned to Mr. Gautam S. Adani, Executive Chairman and looking to the time devotedand from taxation point of view, the Board of Directors of your Company on recommendation of remuneration committee havedecided to increase remuneration payable to him as detailed in the Explanatory Statement forming part of the Notice of the ensuingAnnual General Meeting.

Resignation/cessation of Director(s)

Shri Vasant S. Adani has resigned as Whole-time Director of the Company w.e.f. 11th May, 2005. Shri Vasant S. Adani will continueas Non-executive Director of the Company.

Shri Biswajit Choudhuri, who was appointed as Nominee Director of Unit Trust of India on the Board of Directors of the Companyon 26th October, 2002 has resigned with effect from 24th January, 2005.

The Board has placed on record the valuable contribution made to the Company by Shri Vasant S. Adani as Whole-time Directorand Shri Biswajit Choudhuri as Nominee Director of Unit Trust of India.

Retirement by Rotation

In accordance with the requirements of the Companies Act, 1956 and the Articles of Association of the Company, Shri Vasant S.Adani and Shri C.R. Shah retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

DIRECTORS‘ RESPONSIBILITY STATEMENT

The Directors‘ Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956.

Directors hereby confirm :

• That in the preparation of the accounts for the financial year ended 31st March, 2005, the applicable accounting standardshave been followed and that no material departures have been made from the same.

• That the Directors have selected such accounting policies and applied consistently and reasonable and prudent judgementsand estimates were made so as to give a true and fair view of the state of affairs of the Company at the end of the financialyear and of the profit or loss of the Company for that period.

• That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities.

• That the Directors have prepared the annual accounts on a “going concern” basis.

CONSOLIDATED ACCOUNTS

Your Directors have pleasure in attaching the Consolidated Financial Statements in accordance with the Clause 32 of the ListingAgreement with the Stock Exchanges and Accounting Standard 21 on “Consolidated Financial Statements” issued by the Instituteof Chartered Accountants of India, which form part of the Annual Report and Accounts.

SUBSIDIARY COMPANIES

Adani Global Limited is a wholly owned subsidiary of your Company. Adani Global Pte. Ltd., Singapre and Adani Global FZE, Dubaiare subsidiary Companies of Adani Global Ltd. The Directors report, Audited Statement of Accounts and the Auditors‘ Report thereonof these subsidiary companies are annexed pursuant to Section 212 of the Companies Act, 1956.

As the financial year of Adani Global Ltd., Adani Global FZE, and Adani Global Pte Ltd. are not coinciding with that of your Company,the relevant information as required under Section 212(5) of the Companies Act, 1956 of the said Companies are also annexedherewith.

Further, as required under Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India, in compliance withthe Listing Agreement/s with the Stock Exchange/s, Consolidated Statement of Accounts together with the Auditors‘ report areannexed.

4



AUDITORS AND AUDITORS’ REPORT

• The statutory auditors, M/s. Dharmesh Parikh and Co., Chartered Accountants, Ahmedabad, retire at the ensuing AnnualGeneral Meeting and being eligible, offer themselves for re-appointment.

• M/s. Dharmesh Parikh and Co. have confirmed their eligibility for re-appointment under Section 224(IB) of the Companies Act,1956.

• The Audit Committee and the Board of Directors recommend re-appointment of M/s. Dharmesh Parikh and Co., CharteredAccountants, Ahmedabad as statutory auditors of the Company for the year 2005-06.

• The notes to the Accounts referred to in Auditors‘ Report are self explanatory and, therefore, do not call for any furtherexplanation under Section 217(3) of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

Since your Company is a trading unit, the statement containing the information as per Section 217(1)(e) of the Companies Act readwith the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, is not appended.

The details of foreign exchange earnings and outgo are appended in the Annexure-I attached herewith and forms part of this report.

EMPLOYEES

Your Company continues to focus on its core values of Quality, Integrity, Leadership, Collaboration and Respect for people. Asa part of talent acquisition exercise, 47 professional were recruited to meet gaps in skill sets and support growth areas.

Relations between the Company and the employees continue to be cordial at all locations.

Information required to be given pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies(Particulars of Employees) Rules, 1975 is enclosed herewith, marked Annexure – II and forms part of this report.

AWARDS AND RECOGNITIONS

Your Company has received the following awards/recognitions/trophies during the year under review:

1. Name of your Company was figured amongst the Top 25 Companies selected for the purpose of Corporate GovernanceAward, 2004 by the Institute of Company Secretaries of India.

2. Your Company was recognized as “Five Star Export House” by the Ministry of Commerce and Industry, Office of the JointDirector General of Foreign Trade, Government of India in accordance with the provisions of EXIM Policy.

3. GCCI Export Appreciation Award 2003-04 in recognition for your Company ’s outstanding export performance in the field ofAgro, Textile and Marine Products, Cut and Polished Diamonds etc, as Merchant Exporter in the category of Rs. 1000 Croresand above.

4. Secured 63rd rank in Dun and Bradstreet’s India’s Top 500 Companies, 2004.

TSUNAMI RELIEF

Just prior to the year end the country was drawn into the totally unexpected Tsunami disaster. This was amongst the worstdisasters that the world has faced and the entire Adani family responded to the process of relief and rebuilding. Your Companydonated Rs. 50,00,000/- (Rupees Fifty Lacs Only) to Prime Ministers Relief Fund towards rehabilitation to Tsunami victims. Besidesthis, all the employees of your Company donated one day salary to the Prime Minister’s Relief Fund.

ACKNOWLEDGEMENT

Your Directors record their thanks to the Company’s employees at all levels for their dedication and commitment throughout theyear. Your directors would also like to record their thanks to the Company’s shareholders, bankers, financial institutions, Central andState Government officials, vendors, traders and all customers for their continued support and co-operation.

For and on behalf of the Board of Directors

PLACE : AHMEDABAD GAUTAM S. ADANIDATE : 11th May, 2005 Chairman

5


FOREIGN EXCHANGE EARNINGS AND OUTGO: (figures in crores)

Current year Previous Year

(I) Foreign exchange earned(Including export of goods on FOB basis ) 10807.97 4841.46

(II) Foreign exchange used 9228.08 2155.71

A. Information pursuant to Section 217(2A) of the Companies Act,1956, read with Companies (Particulars of Employees) Rules, 1975.

Sr. Name Age Designation Remuneration Qualification Date of Last EmploymentNo. (yrs.) Gross Commencement Held-Designation and

(Rs. In Crores) of Employment Period for which Held.

1 Mr. Gautam S. Adani 43 Chairman 1.03 S.Y. B.Com 1/12/93 Business2 Mr. Rajesh S. Adani 41 Managing Director 1.32 B. Com. 1/12/93 Business3 Mr. Vasant S. Adani 50 Whole-time Director 0.79 B.A. 7/1/95 Business4 Mr. Pradeep Mittal 51 CEO 0.50 Diploma in Mktg. 1/1/98 Chief General

(Energy & Minerals) ManagerKaramchand Thapar

and Brothers (C.S.) Ltd.

B. Employed for a part of the financial year and were in receipt of remuneration for any part of the financial year at a rate whichin aggregate was not less than Rs. 2,00,000/- per month.

Sr. Name Age Designation Remuneration Qualification Date of Last EmploymentNo. (yrs.) Gross Commencement Held-Designation and

of Employment Period for which Held.

———————— N I L ————————

Note : Remuneration as above includes salary, contribution to provident and other funds and other perquisites.

ANNEXURE - II

ANNEXURE TO DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2005

ANNEXURE - I

The following is the list of persons constituting “Group” (within the meaning as defined in the Monopolistic and Restrictive TradePractices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of Securitiesand Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“the said Regulations”), asprovided in Clause 3(e) of the said Regulations :

ANNEXURE - III FORMING PART OF THE DIRECTORS REPORT

1 Accurate Finstock Pvt. Ltd.2 Adani Agri Fresh Ltd.3 Adani Agro Pvt. Ltd.4 Adani Chemicals Ltd5 Adani Global FZE6 Adani Global Ltd.7 Adani Global Pte. Ltd.8 Adani Infrastructure Services Ltd.9 Adani Investments10 Adani Logistics Ltd.11 Adani Petronet (Dahej) Port Pvt. Ltd.12 Adani Port Infrastructure Ltd.13 Adani Power Pvt. Ltd.14 Adani Properties Pvt. Ltd.15 Adani Textile Industries16 Adani Wilmar Ltd.17 Advance Exports18 B2B India Pvt. Ltd.19 B2C India Ltd.20 Crown (International)21 Ezy Global22 Gautam S. Adani Family Trust

23 Gujarat Adani Energy Ltd.24 Gujarat Adani Infrastructure Pvt. Ltd.25 Gujarat Adani Port Ltd.26 I Call India Ltd.27 I Gate India Pvt. Ltd.28 Intercontinental (India)29 Mahasukh S. Adani Family Trust30 Mundra Special Economic Zone Ltd.31 Netvantage International Ltd.32 Rajesh S. Adani Family Trust33 S. B. Adani Family Trust34 Shahi Property Developers Pvt. Ltd.35 Shantikrupa Estates Pvt. Ltd.36 Vasant S. Adani Family Trust37 Vinod S. Adani Family Trust38 Bhavik B. Shah39 Gautam S. Adani40 Jeet G. Adani41 Karan G. Adani42 Kunal D. Shah43 Mahasukh S. Adani44 Mansi K. Shah

45 Namrata P. Adani46 Param P. Adani47 Pranav V. Adani48 Priti G. Adani49 Priti R. Shah50 Pushpa V. Adani51 Rahi R. Adani52 Rajesh S. Adani53 Rakesh R. Shah54 Ranjan V. Adani55 Riddhi V. Adani56 Sagar R. Adani57 Shantaben Adani58 Sharmishta Sanghavi59 Shilinben R. Adani60 Surekha B. Shah61 Suvarna M. Adani62 Vanshi R. Adani63 Vasant S. Adani64 Vinod N. Sanghavi65 Vinod S. Adani

Sr. ParticularsNo.

Sr. ParticularsNo.

Sr. ParticularsNo.

6



The management of Adani Exports Limited presents the analysis of performance of the Company for the year 2004-2005 and theoutlook for the future, which is based on assessment of the current business environment. It may vary due to future economic andother developments, both in India and abroad.

Economy and Business Environment

Review of Economy

During the year 2004-2005, the Indian economy fared well with an estimated GDP growth of around 6.3 per cent, better than in thepast several years. This growth was spread across all sectors and is an indicator of robustness of the India economy. All the majoreconomic indicators were favorable, helping the India’s growth to the second highest position after China.

The foreign exchange reserves of the country swelled to US$ 135089 Million at the end of the fiscal year and are still continuingto rise. The Indian rupee appreciated by about 3.08 per cent to the U.S. Dollar in this one year. While this was a matter of concernfor exporters, exports in 2004-05 were, nevertheless, higher by 24.40 per cent. Imports grew by 35.50 per cent during 2004-05.

Investor confidence in the capital markets revived significantly, with the BSE Sensex remaining over 6,000 at the end of the year.The buoyancy of the primary equity market is expected to continue in fiscal 2005-06 with a number of companies lined up to tapthe capital markets. At the same time there are some concerns. Of late, inflation stood at 6.4 per cent. This level of inflation isalmost one percentage point higher than the 5.4 per cent inflation experienced in the preceding fiscal year. There are signals thatoil prices may rise further. Coal cost has been hiked just recently. The spurt in prices of many agricultural commodities on accountof the poor progress of the monsoons and trucker’s strike in August 2004 also contributed to the increase. Interest rates seem tohave bottomed out and the possibility of it increasing cannot be ruled out. Thus, inflation in 2004-05 could be attributed to supplyconstrains and rise in cost, driven by hardening of prices in international markets. These factors are likely to increase inflationfurther and have some negative impact on the business environment.

This has been a year of overall progress. But India will need several years of such robust performance to mature into a developedeconomy.

Even with these concerns, we believe that all the business indicators are well in place for the economy to achieve an overall GDPgrowth of about 6.0 per cent in 2005-06.

(Source : CMIE Report)

The management ’s views on the Company’s performance and outlook are discussed below:

A. Agro Commodities

Inspite of the poor monsoon, the food grain production for the year 2004-05 is placed at 210.4 million tones, compared tothe 213.4 million tones produced in the previous fiscal. It is a matter of great pleasure to inform you that the Company hascontinued to consolidate its position as one of the leading exporter of agro commodities. For the first time open marketprocurement of wheat to feed the export market was undertaken. The Company has continued to maintain its leading positionas an exporter of wheat from India. Open market procurement was necessitated as government of India stopped releasingwheat from the central pool for export purposes. The Company grew in strength in castor oil exports and the volume duringthe year was doubled. The Company now handles almost 25% of Castor oil exports from India. The Company has successfullyexplored and tapped the market of China while retaining its existing customer in Europe, Japan, Thailand & USA.

Hps (Groundnut Kernels), Maize, Rice, Groundnut oil, Soyameal and other oilcakes like castor meal, rapeseed meal continue todo well. The Company has enlarged its agri commodity basket by adding industrial salt to its trading portfolio.

With a view to effectively manage the risk in agro commodities, the Company has initiated hedging operations in the futuresexchanges of India like NCDEX,NBOT etc. In the ensuing year the Company plans to expand its operations in domestic tradingto have a sustainable business model.

ANNEXTURE - IVMANAGEMENT DISCUSSION AND ANALYSIS REPORT

7


B. Textiles

The textile industry is one of the important sectors of the Indian Economy. Your management is of the opinion that IndianTextile Industry is poised for big growth opportunity because of quota free global trade and its inherent strength in value chain.The textile industry witnessed a healthy recovery in 2004-05. The weighted production index recorded growth of 8.9 per centin 2004-05 as against 1.1 per cent drop in production in Previous Year.

The Company continued to be on the growth path both in terms of volume as well as overall revenue while maintaining healthybottom line and enjoyed a dominant position as a merchant exporter of textile products. The implications of quotas phasingout have been far reaching and the Company is in the process of making adjustments in its business model to meet with newchallenges.

Thus the focus of the Company firmly remains on trading activities. New avenues of expanding business on trading model areconstantly being explored. India as a market is also posing very interesting opportunities and a very serious effort is beingmade to develop import based business for Indian Market.

The Company continues to enjoy good reputation with all its buyers and suppliers. The management is confident of postinggood results in the current year also.

C. Energy & Minerals

The performance of the Energy Sector has shown much improved results in the fiscal year 2004-05 over the working of thePrevious Year. Coal production rose by 4.4 per cent in the fiscal 2004-05, on top of a 7.2 per cent increase in the PreviousYear. Crude oil production was up by 1.8 per cent in 2004-05, after registering an increase of one per cent in the precedingfiscal. During 2004-05, growth in power generation was 5.2 per cent, same as in the preceding financial year. Performanceof the Company in the energy sector is as under :

Coal and Coke : The increase in import of bulk Coal / Coke has been doubled over the previous period. Despite odds, allcommitments of domestic orders were fulfilled.

Iron Ore : Procurement of Ore from the mine owners had been difficult during the financial year 2004-05, due to steepincrease in ore prices leading to much speculation and withholding of supplies by them, despite which the Company hasexported over one million tones of ore and has posted healthy margins. In view of the fluctuation in iron ore prices resultingin constraints in procurement of sufficient iron ore, the Company has made arrangement for dedicated minings.

The performance of Iron Ore handling at the Belekeri Port was considerably improved and all supplies to foreign buyers wereefficiently executed.

Power Trading: The Operations have resulted in a marked improvement and about 800 million units have been traded withimproved margins.

D. Precious Metals

The gems and jewellery industry is undergoing substantial structural change. If one were to look into the history of Gem &Jewellery Exports from India especially, of Cut and Polished diamonds, it will be noticed that the exporters were mainly familyowned and run proprietary/partnership firms. Eventually, the globalization, has its effect on this trade too. Like other industrialand business ventures, diamond exporters have also moved to corporatization, in view of the ambitious business strategy ofthe industry players and significant spurt in the volume of trade on the one hand and the attendant need for huge workingcapital on the other, which proprietary/partnership firms cannot garner from financial institutions. Other reasons for thecorporitisation is the ready availability of highly skilled and trained manpower churned out by several institutions in this field.

Although a recent entrants to this trade, the Company has been able to carve out niche by its consistent and quality suppliesto the ever growing quality conscious buyers from a number of countries. The Company also has to its credit substantialexports of gold jewellery from India.

E. Petroleum, Oils and Lubricants (POL)

POL imports have seen robust growth in fiscal 2004-05. POL imports were up by 41.20 per cent during 2004-05 as againsta 16.5 per cent rise witnessed during 2003-04. A large portion of the increase was on account of the surge in crude oil pricesin international markets and increase in domestic demand for crude oil.

The major users of POL products are industries engaged in generation of power, production of steel, manufacture of fertilizers& solvents etc. Bitumen is used for making roads. Apart from above, we also supply Furnace oil as a fuel to ships. TheCompany imports these commodities from Middle East countries such as UAE, Bahrain, Iran etc.

The Company hopes to build up handsome volumes in the trading of the petroleum products, since we have the necessaryinfrastructure in place in terms of its competitive procurement from the international markets, leveraging facilities at MundraPort and established marketing credentials to various users in India.

F. Petrochemicals and Industrial Products

The Company continues to focus trading in a wide range of petrochemicals viz. methanol and has introduced several innovativevalue added service structures to enhance its profitability.

G. Fertilizers and Raw Materials

During 2004-05, fertiliser production rose by 7.5 percent to 15.3 million tonnes as opposed to a one per cent fall in theprevious fiscal.

The Company deals in sulphur ammonium nitrate and phosphoric acid. During the year under review, the trading volume ofsulphur and ammonium nitrate have witnessed a healthy growth of around 15% over the Previous Year with substantial

8



margins. Having executed large orders of ammonium nitrate successfully, the Company plans to further build up handsometrading volume of this commodity in the coming year(s) by enlarging the customer base. Infact in the past couple of years,the Company has established its name as one of the formidable players in the field of ammonium nitrate trading. In the fieldof sulphur trading, the Company hopes to expand the business by roping in institutional buyers and by catering to other regularbuyers in the markets of Mumbai, especially the chemical units. The Company intends to make a foray in the field of Rockphosphate trading in the coming year in its efforts to expand the basket of products being handled.

Competition/Outlook on opportunities

The Company is looking at the future with a lot of optimism and hope. The Company’s growing reputation for developing anddelivering quality products at competitive prices has enabled it to expand the turnover significantly. Over the last decade, theCompany has established and maintained its pioneer position in the global trading industry. But success of any business apart fromits own efforts lies in many external factors, which are beyond the control of the Company. The Company is also not an exceptionto it. The Company would continue to focus on effective risk management practices. Models to identify and manage risks areconstantly fine-tuned to ensure profitable growth. The Company has chalked out sector-wise strategy to improve its competitivepositioning. The business prospects for the Company in the Agro, Textile, Energy & Minerals, Power, Petroleum, Oil and Lubricants,Precious Metals and Coal & Coke Sectors are expected to be good.

The quota free global trade offers a great opportunity to the textile industry to increase its share in the world textile exports, whichis less than 1% of the world trade. To share the benefits of expected increase in India’s textile share, the Company will have tomeet the international quality standards and that too at very competitive rates. The Company has already taken steps in this regardand new avenues of expanding business on trading model are constantly being explored. The Company will continue to focus onoperational improvements, manpower rationalization and cost reduction efforts for improving the margins in global trading of itstextile products.

Prices of agro commodities are dependent upon a host of uncontrollable factors like good and timely monsoons. Indian economyis also slowly integrating itself with the world market and any changes in the global prices for various reasons have a direct andindirect impact on agro commodities in India. Measures being taken includes forecasting future trends and hedging operations inthe futures exchanges of India like NCDEX,NBOT etc to minimize the impact on the profitability of the Company.

The Company has maintained its position as major importer of petroleum products in the private sector. The Company plans to tradein Indian Market for all type of petroleum products.

In an environment of rapidly escalating competitive challenges, the Company has also plans to implement its global strategy ofoperating exclusively in Indian operations. It also aims at building up domestic agro trade on a large scale.

Risk and Concerns

Risk is inherent in any business activity, particularly in global trading industry. As the Company steps up its international operations,and contribution of exports to the total revenue grows larger, the ensuing risk from operating in foreign countries also grows higher.This includes inter-alias political risk, credit risk, litigation risk and currency risk. The Company’s exports are principally denominatedin US$ and the rupee appreciation versus the US$ is a matter of concern. However this is partially compensated by importsdenominated in US$. While the Company manages these exposures through currency hedging, any significant fluctuation in exchangerates may have an adverse effect on its financial condition.

Further, the Company has processes in place to identify warning signals at an early stage to hedge itself against potentialthreats. On the other hand, these processes enable early recognition of opportunities emerging in the business environment. TheCompany resorts to risk management methodologies to ensure that various business risk are identified well in time, are assessedfor their possible impact and are effectively mitigated through control measures. Open risks, if any are adequately covered byInsurance.

Internal Control Systems and their adequacy

The Company has designed proper and adequate internal control systems to ensure:

• Proper recording and safeguarding of assets• Maintenance of proper accounting records and reliability of financial information• Compliance with prevalent statutes, policies, procedures, listing agreements and circulars.• That transactions are being accurately recorded and cross-verified and promptly reported.• Adherence to applicable accounting standards and policies.

The internal control system provides for well-documented policies, Standard Operating Procedures (SOPs), guidelines, authorizationsand approval procedures.

The Company has deployed a comprehensive Internal Auditing System, which is commensurate to the size of the business. Competentprofessionals who are external to the Company’s business are conducting regular and detailed internal auditing. The internal auditdepartment conducts periodic audits across all locations and of all functions throughout the year and brings out the non-compliancesor deviations of internal control procedures through its audit report. The observations arising out of audit are subject to periodicreview and compliance monitoring. The significant observations made in internal audit reports, are reviewed by the Audit Committeeof the Board on a regular basis.

Moreover, the Company continuously upgrades these systems in line with best international practices.

Financial Performance with respect to operational performance

The Company has posted yet another year of handsome growth, testifying to the robustness of the Corporate Strategy of pursuingmultiple growth drivers.

9


The gross turnover was higher by 91.20% at Rs. 13515.84 Crores (Rs. 7069.05 Crores). Profit before tax and exceptional items washigher by 3.55% at Rs. 130.62 Crores (Rs. 126.14 Crores). Net profit after provision for prior year adjustments, income tax stoodat Rs. 108.29 Crores (Rs. 124.09 Crores).

This could be achieved primarily due to the focus on higher value added commodities, as well as unabated efforts to eliminateoperational inefficiencies. It is a matter of pride that the turnover and profitability levels have been growing sharp.

The Management considers the all round performance of the Company during the year under review satisfactory.

Developments in Human Resources

• Employee relations:

The Industrial Relations climate of the Company has been cordial during the year and is geared towards improving productivity,quality and safety.

The management wishes to place on record its acknowledgement and appreciation for the support extended by all theemployees of the Company.

• Employee Strength:

As on March 31, 2005, the Company has approx. 350 employees, who have different academic background and diverse workexperience to their credit.

• Human Resources:

AEL, being a people-centric performing organization believes that retaining top talent is essential to organizational success and toretain competitive edge.

To maintain a stable workforce, the Company has deliberately integrated all aspects of human resources management – humanresource policies, systems and procedures with the overall corporate objective and framework of the Company with an aim toenhance organizational effectiveness, retaining talent and sustaining the personal motivation levels. These efforts range from re-recruiting interviews to family activities and individualized compensation packages.

At AEL, we believe that Employee training and development initiatives can transform organizations with providing extra skills to ouremployees to not only increase productivity but training leads to higher job satisfaction, which shows up in better corporateperformance.

Valuable training also includes situational training that provides personnel the skill sets that allow them to make timely, knowledgeabledecisions that benefit both the customer and the Company.

For career development of our employees, we organize various training programmes and career development workshops on continuousbasis. During the year 2004-05, the employees benefited from various training programmes, which covered issues relating tomanagement, technology, safety, health and environment.

The Company uses competency mapping and organization need analysis to manage individual potential and organization development.We strongly believe that a highly skilled, motivated and empowered manpower is the key to organization success.

Cautionary Note

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectationsmay be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual result might differmaterially from those either expressed or implied. Important factors that could make a difference to the Company’s operationsinclude, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas marketsin which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors. TheCompany assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis, of anysubsequent developments, information or events.

10



INTRODUCTION

Corporate Governance is a synonym for sound management, transparency and disclosure. Corporate Governance encompasses notonly the way in which a Company is managed and deals with its shareholders but also addresses all aspects of its relationship withthe society. Good corporate governance helps to achieve excellence to further enhance stakeholder’s value by focusing on long-termstakeholder value creation without compromising on integrity, social obligations and regulatory compliances.

The detailed report on implementation by the Company, of the Corporate Governance Code as incorporated in Clause 49 of the ListingAgreement with the Stock Exchanges, is set out below :

A. MANDATORY REQUIREMENTS

1. Company’s Philosophy on Corporate Governance

“OUR CORPORATE GOVERNANCE IS OUR CONSTANT JOURNEY TO ADOPT GLOBALLY RECOGNISED CORPORATEGOVERNANCE PRACTICES TO ACHIEVE ECONOMIC AND SOCIAL GROWTH.”

The Company’s philosophy on the code of Corporate Governance is to ensure:

• That the Company follows globally recognized corporate governance practices.

• Fullest commitment of the Management and the Board for the maximization of shareholder value.

• That the employees of the Company subscribe to the corporate values and apply them in their conduct

• Transparency and professionalism in all the activities of the organization

• Implementation of policies and procedures prescribed by the Company to ensure high ethical standards in all itsbusiness activities and responsible and responsive management.

The aforesaid principles of Corporate Governance are being followed by the Company over the years. We at Adani ExportsLimited believe that the essence of Corporate Governance is to conduct the Company’s business and deal with its stakeholdersin a clean and transparent manner. Corporate Governance to us means not only compliance with the provisions of Companylaw, allied acts and listing agreement but also management’s responsibility to work with morality, ethics and accountabilitytowards stakeholders for their acts and decisions.

The Company aims at fairness, transparency, accountability and responsibility in its functioning with the ultimate objectiveof realizing and enhancing stakeholder’s values.

The Company continues to make its best endeavors to uphold and nurture these core values in all facets of its operations andaims to increase and sustain its corporate value through growth and innovation.

COMPLIANCE WITH CLAUSE 49 OF THE LISTING AGREEMENT

The Company is in full compliance with the requirements under Clause 49 of the Listing Agreement with the Stock Exchanges.The statutory auditors have certified that the Company has complied with the conditions of Corporate Governance as stipulatedin Clause 49 of the Listing Agreement with the Stock Exchanges and the same is enclosed herewith.

SEBI has vide its circular no. SEBI/CFD/DIL/CG/1/2005/29/3 dated March 29, 2005 extended the date for implementation ofprovisions of revised clause 49 of the listing agreement from 31st March, 2005 to 31st December, 2005. In view of this,provisions of the revised clause 49 of the listing agreement will be implemented before 31st December, 2005.

BOARD OF DIRECTORS

Composition and Category

The Board of Directors provides strategic direction and thrust to the operations of the Company.

The Board of Directors of the Company consists of eminent persons with considerable professional expertise and experience ofbusiness and global trading industry, finance, international trade, legal, accounting, real estate management and administration etc.

As per Clause 49 of the Listing Agreement, at least 50% of the Board shall comprise of non-executive directors. As on 31st

March, 2005, in Adani Exports Limited (AEL), 4 out of 7 directors (57.14%) are non-executive directors.

Where the Chairman is executive chairman, at least 50% of the Board shall comprise of independent directors. In AEL, all the4 non-executive directors constituting 57.14% of the total strength of the Board are independent directors.

The composition of the Board is in conformity with Clause 49 of the Listing Agreement.

Independent Directors are Directors, who apart from receiving Directors‘ remuneration do not have any other material pecuniaryrelationship or transactions with the Company, its promoters, its management or its subsidiaries, which in the judgement ofthe Board may affect independence of the judgement of the Directors.

None of the Directors on the Board is a member on more than 10 Committees and Chairman of 5 Committees (as specifiedin clause 49), across all the Companies in which he is a Director.

ANNEXTURE - VCORPORATE GOVERNANCE REPORT

11


The composition of the Board of Directors and also the number of other Board of directors or Board Committees of which heis member/chairman as on 31st March, 2005 are as under:

Name of the Director and Category of No. of other Directorships* No. of other CommitteeBusiness Relationship Directorship (other than AEL) Memberships held #

Chairman Member

Shri Gautam S. Adani Executive Director 6 1 1Executive ChairmanShri Rajesh S. Adani Executive Director 7 - 4Managing DirectorShri Vasant S. Adani Executive Director 5 - 2Whole-time Director(Resigned as Whole-timeDirector w.e.f. 11th May, 2005)Shri C.R. Shah Independent & Non-Executive Director 7 2 5Dr. A.C. Shah Independent & Non-Executive Director 5 1 5Dr. Pravin P. Shah Independent & Non-Executive Director 5 - 1Shri Jay H. Shah Independent & Non-Executive Director 3 - 1

# It relates to Audit Committee, Shareholders Grievances Committee and Remuneration Committee only.* excludes directorships in Indian Private Limited Companies and foreign companies.BOARD PROCEDURESThe meetings of the Board of Directors are scheduled well in advance and generally held at the Company’s registered officein Ahmedabad. The board meets at least once a quarter to review the quarterly performance and the financial results. Thenotice convening Board Meeting, Board papers comprising the agenda are circulated to the Directors in advance. SeniorManagement of the Company is invited to attend the Board meetings and provide clarifications as and when required.Wherever appropriate the Board delegates its authority to Committees of Directors like Management Committee, InvestorsGrievance Committee, Remuneration Committee and Audit Committee.ATTENDANCE OF EACH DIRECTOR AT THE BOARD MEETINGS AND THE LAST ANNUAL GENERAL MEETINGDuring the financial year ended 31st March, 2005, five Board Meetings were held on 5th May, 2004, 27th May, 2004, 31st July,2004, 30th October, 2004 and 21st January, 2005. Details of attendance of each director at the Board Meeting and Last AnnualGeneral Meeting are tabulated hereunder:

Name of the Director and No. of Board Meetings Attendance at the 12th AnnualBusiness Relationship attended during the year General Meeting held on 3rd July, 2004

Shri Gautam S. Adani 5 YESExecutive ChairmanShri Rajesh S. Adani 5 YESManaging DirectorShri Vasant S. Adani 4 YESWhole-time Director (Resigned as Whole-time Director w.e.f. 11th May, 2005)Shri C.R. Shah 5 YESDr. A.C. Shah 2 NODr. Pravin P. Shah 2 NOShri Jay H. Shah 2 NOShri Biswajit Choudhuri @ 3 YES(nominee of Unit Trust of India)

@ resigned with effect from 24th January, 2005Notes on Directors appointment / re-appointment.Shri Rajesh S. Adani was appointed as a Managing Director with effect from 10/6/2000 for a period of 5 years. His presenttenure expired on 10/06/2005. The remuneration committee of the Company at its meeting held on 11th May, 2005 and subsequently,the Board at its meeting held on 11th May, 2005 have re-appointed Shri Rajesh S. Adani as Managing Director unanimously fora further period of five years with effect from 10th June, 2005 subject to the approval of the shareholders in General Meeting.Shri Vasant S. Adani and Shri C.R. Shah, Directors of the Company, are retiring at the ensuing Annual General Meeting andare eligible for re-appointment. Details of Shri Rajesh S. Adani, Shri Vasant S. Adani and Shri C.R. Shah are given in theAnnexure forming part of the notice calling Annual General Meeting of the Company.

3. Committees of BoardA. Audit Committee

Broad Terms of ReferenceThe Company had constituted an Audit Committee in the year 2001. The scope of the activities of the Audit Committeeis as set out in Clause 49 of the Listing Agreement with the Stock Exchanges read with Section 292A of the CompaniesAct, 1956. The Audit Committee of the Company, inter-alia, provides assurance to the Board on the adequacy of theinternal control systems and financial disclosures. The terms of reference of the Audit Committee broadly are as under:• Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure

that the financial statement is correct, sufficient and credible.• Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment

for any other services.

12



• Reviewing with management the annual financial statements before submissions to the Board.• Review of related party transactions• Reviewing with the management, external and internal auditors, the adequacy of internal control systems.• Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing

and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.• Discussion with internal auditors any significant findings and follow up thereon.• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected

fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.• Discussions with external auditors before the audit commences nature and scope of audit as well as to have post-

audit discussion to ascertain any area of concern.• Reviewing the Company’s financial and risk management policies.• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders

and creditors.Composition and attendance during the year ended 31st March, 2005.The Audit Committee comprises of four directors, all of whom are Non-Executive Independent Directors. All theseDirectors possess knowledge of corporate finance, accounts and Company Law. The committee met four times duringthe year under review, the meetings were held on 5th May, 2004, 31st July, 2004, 30th October, 2004 and 21st January,2005 and the attendance of members at the meetings was as follows:

Sr. No. Name of the Member Designation Category No. of meetings attended

1. Shri C.R. Shah Chairman I & NED* 42. Dr. A.C. Shah Member I & NED* 23. Dr. P.P. Shah Member I & NED* 24. Shri Jay H. Shah Member I & NED* 2

* Independent and Non Executive DirectorThe Statutory and Internal Auditors are also invitees to the Audit Committee Meetings.The Company Secretary acts as the Secretary to the Committee.The Minutes of the Audit Committee Meetings are noted by the Board of Directors at the subsequent Board Meeting.The Chairman of the Committee was present at the Annual General Meeting held on 3rd July, 2004.

B. Remuneration CommitteeBrief description of terms of referenceThe Company has constituted remuneration committee in 2001. Broad terms of reference of the remuneration committeeinclude recommendation to the Board, the overall policy on remuneration and other terms of employment of executive and nonexecutive directors of the Company within the overall ceiling fixed by members of the Company. The terms of reference ofthe Committee is as per the provisions of the Companies Act, 1956 and Clause 49 of the Listing Agreement with stockexchanges.Remuneration policyPayment of remuneration to the Executive Chairman/Managing Director/Whole-time Director is governed by the respective agreementsexecuted between them and the Company. These agreements are approved by the Board and the Shareholders. Their remunerationstructure includes salary, HRA, perquisites and allowances, contribution to provident fund and superannuation. The Non-ExecutiveDirectors do not draw any remuneration from the Company other than the sitting fee as may be determined by the Board from time to time.A sitting fee of Rs. 5,000/- for attendance at each meeting of the Board, Audit Committee, Shareholders/Investors GrievanceCommittee and Remuneration Committee is paid to its members (excluding executive directors).Composition and attendance during the year ended 31st March, 2005.No remuneration committee meetings were held during the year under review.

Sr.No. Name of the Member Designation Category No. of meetings attended

1. Dr. P.P. Shah Chairman I & NED* N.A.2. Dr. A.C. Shah Member I & NED* N.A.3. Shri C.R. Shah Member I & NED* N.A.4. Shri Jay H. Shah Member I & NED* N.A.

* Independent and Non Executive DirectorRemuneration to DirectorsIn respect of the financial year 2004-2005, the following remuneration and sitting fees were paid/payable to the directors:• Non-Executive Directors

(Rs. In Lacs)

Name Sitting Fees paid during FY 2004-05 TOTAL

Board Meeting Committee Meeting

Dr. P.P. Shah 0.10 0.10 0.20Dr. A.C. Shah 0.10 0.20 0.30Shri C.R. Shah 0.25 0.40 0.65Shri Jay H. Shah 0.10 0.20 0.30Shri Biswajit Choudhuri 0.15 - 0.15

The non-executive directors do not have any other pecuniary relationship or transactions with the Company.

13


• Executive Directors :(Rs. In Lacs)

Name Salary Perquisites Commission* Incentive Stock& Allowances Remuneration Options

Shri Gautam S. Adani 24.60 11.05 66.85 NIL NILShri Rajesh S. Adani 14.66 17.16 100.29 NIL NILShri Vasant S. Adani 12.15 13.60 53.49 NIL NIL

* Payable in FY 2005-06Presently, the Company does not have a scheme for grant of stock options either to the working directors or employees.The attention of the members is invited to the notice of the Annual General Meeting wherein it is proposed to revise the termsof remuneration of Executive Chairman and Managing Director.The Board of Directors take note of the Minutes of the Remuneration Committee Meetings at Board Meetings.Company Secretary Ms. Birva C. Patel acts as Secretary to the Committee.

C. Shareholders’/Investors’ Grievances CommitteeTerms of Reference :The shareholder’s/Investors‘ Grievance Committee was formed in June 2001. At the first instance, the Shareholder’s complaints/grievances are redressed by the Registrar and Transfer Agent, namely M/s. Pinnacle Shares Registry Pvt. Ltd. The committeeoverseas the performance of M/s. Pinnacle Shares Registry Pvt. Ltd., the Registrar and Share Transfer Agents of the Companyand looks into the investors‘ complaints, if any and tries to redress it expeditiously.The terms of reference of the committee cover the matters specified under Clause 49 of the Listing Agreement with Stock Exchanges.Composition and attendance during the year ended 31st March, 2005.The committee met four times during the year under review, the meetings were held on 5th May, 2004, 31st July, 2004, 30th

October, 2004 and 21st January, 2005 and the attendance of members at the meetings was as follows :

Sr. No. Name of the Member Designation Category No. of meetings attended

1. Shri C.R. Shah Chairman I & NED* 42. Dr. A.C. Shah Member I & NED* 23. Shri Vasant S. Adani Member Executive Director 34. Shri Jay H. Shah Member I & NED* 2

* Independent and Non Executive DirectorThe Company Secretary has been designated Compliance Officer.The Board of Directors notes the Minutes of the Shareholders’/Investors’ Grievances Committee Meetings at Board Meetings.During the year, 2 (two) investor complaints were received from the shareholders and none of the complaints was pendingon 31st March, 2005.Share Transfer CommitteeIn addition to the above, to expedite the process of share transfer, the Board has delegated the powers of share transfers toa committee comprising of Shri Gautam Adani, Executive Chairman, Shri Rajesh S. Adani, Managing Director, Shri Vasant S.Adani, Whole-time Director.The Committee deals with matters relating to transfers/transmission/transposition/ non-receipt of declared dividend/consolidation/split of folios/issue of share certificates in exchange for sub-divided/consolidated/defaced share certificates/issue of duplicate share certificates etc.The Share Transfer Committee meetings are held at least once in a fortnight. The Board of Directors notes the Minutes of theShare Transfer Committee at Board Meetings.All valid share transfers during the year ended 31.03.2005 have been acted upon. No share transfer was pending as on 31.03.2005.Investor ServicesAs you are aware, your Company has already appointed M/s Pinnacle Share Registry Pvt. Ltd. as Registrar & Share TransferAgent, who have adequate infrastructure and VSAT connectivity with both the depositories, which facilitate better and fasterservice to the investors.Other facilities such as remittance of dividend, bank mandate, incorporation of bank details on dividend warrants, revalidationof dividend warrants, issue of duplicate share certificates etc. are also extended to the Shareholders.a) Name and Address of Compliance Officer is as follows

Ms. Birva C. PatelCompany Secretary and Compliance Officer

Adani Exports Ltd.“Adani House”, Near Mithakhali Six Roads, Navarangpura, Ahmedabad - 380 009

Tel No. (079) 25555 555, 26565 555, 25555 365(DID),Fax No. (079) 26565 500, 25555 500

b) Exchange of Shares of Rs. 10 with shares of Re. 1After the sub-division of the Company’s shares of Rs. 10 each into shares of Re. 1 each, during the year 2003-2004,the Company sent circulars to all the shareholders holding Rs. 10 shares in physical form to exchange these for Re. 1share certificates.Although a large number of such shareholders have done the exchange, there are still many who have not. They arerequested to forward their old share certificates of the shares of Rs. 10 each (which are no longer tradable) at theCompany ’s address above or directly to the Company’s Registrar and Share Transfer Agents M/s. Pinnacle SharesRegistry Pvt. Ltd. along with a request letter signed by all holders.

14



4. General Body MeetingsLocation and time, where last three Annual General Meetings were held is given below :

Financial Date Location of Time No. of SpecialYear Meeting resolutions passed

2001-2002 30th September, 2002 Lion’s Hall, Near Mithakhali Six Roads, Ellisbridge,Ahmedabad 380006. 11.00 a.m. 2

2002-2003 27th September, 2003 Hotel President, Off. C.G. Road,Opp. Municipal Market,Navrangpura, Ahmedabad 380 009. 11.00 a.m. 1

2003-2004 3rd July, 2004 Fortune Hotel Landmark, Usmanpura, Ashram Road,Ahmedabad 380 013 11.00 a.m. 2

No Special Resolution was put through postal ballot at the last AGM nor is any proposed for this year.

5. Dividend History (Equity Shares)

Year Rate Per Share (Rs.) Amount (Rs. in lacs)#

1996-97* 30.00% 3 222.441997-98 30.00% 3 330.711998-99 30.00% 3 330.711999-00* 30.00% 3 415.602000-01 30.00% 3 661.422001-02 30.00% 3 661.422002-03 30.00% 3 661.422003-04 40.00% 4 881.892004-05 40.00% 0.40 902.16(proposed)

* Bonus issue in proportion of 1 : 1 # Excluding dividend tax

6. Disclosuresa) Disclosure on materially significant related party transactions :

No transactions of material nature has been entered into by the Company with its promoters, the Directors or theManagement, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large.Transactions with related parties are disclosed in notes to the accounts in this Annual Report.

b) Details of non-compliance by the CompanyThe Company has complied with the requirements of the Stock Exchanges, SEBI and Statutory Authorities on all mattersrelated to the capital markets during the last three years.No penalties or strictures were imposed by SEBI, Stock Exchanges or any statutory authorities on matters relating tocapital markets during the last three years.

7. Means of Communicationa) Quarterly, Half-yearly and Annual Results

The Board of Directors of the Company approves and takes on record quarterly, half yearly and yearly financial resultsin the proforma prescribed by Clause 41 of the Listing Agreement within one month of close of the reporting period.In compliance with Clause 41 of the Listing Agreement, the Company sends the quarterly / half-yearly / audited results to theStock Exchanges within 15 minutes of the end of the Board Meetings at which they are taken on record. First quarterly resultsof the Company were published in the Loksatta Jansatta (G) and Business Standard (E), second quarterly results of theCompany were published in the Business Standard (E) and Loksatta Jansatta (G), third quarterly results of the Company werepublished in Business Standard (E) and Loksatta Jansatta (G) news papers. Audited results for the year ended on 31st March,2005 were published in Business Standard (E) & Loksatta Jansatta (G).

b) Pursuant to Clause 51 of the Listing Agreement, all data related to quarterly financial results, share holding pattern etc.are hosted on the on the SEBI EDIFAR website www.sebi.gov.in within the time prescribed in this regard.

c) No formal presentations were made to the institutional investors and analysts during the year under review.d) The Company’s financial results and official news releases are displayed on the Company’s website www.adanigroup.com.e) As the Company’s quarterly/half-yearly/annual financial results are published in press and also posted on its website,

the same are not mailed to the shareholders.f) Management Discussion and Analysis Report is attached with the Directors Report in this Annual Report.

8. General Shareholder InformationA. 13th Annual General Meeting

Date Time Venue12th August,2005 11.00 a.m. Hotel Le meridian, Khanpur, Ahmedabad - 380 001.

15


B. Financial Calendar (April – March) :(tentative and subject to change)Period Approval of Quarterly resultsFor the first quarter ending 30th June, 2005. : 4th Week of July, 2005.For the second quarter and half year ending 30th September, 2005 : 4th Week of October, 2005For the third quarter ending 31st December, 2005 : 4th Week of January, 2006For the year ending 31st March, 2006 : Audited Results are declared in June, 2006 as

permitted in listing agreement.Limited Review by the Auditors : August end, 2005

November end, 2005February end, 2006

C. Date of Book Closure :9th August, 2005 to 11th August, 2005 (both days inclusive)

D. Dividend Payment Date :On or before 17th August, 2005.

E. Listing on Stock Exchanges :(a) The Equity Shares of the Company are listed on the following Exchanges :

Ahmedabad Stock Exchange (ASE) The Stock Exchange, Mumbai (BSE)Kamdhenu Complex, Opp. Sahajanand College, P. J. Towers, Dalal Street,Fort, Mumbai - 400 001Panjrapole,Ahmedabad 380 015

National Stock Exchange of India Limited (NSE)”Exchange Plaza”, Bandra-Kurla Complex,Bandra (E), Mumbai – 400 051.

Listing fee for the year 2005-2006 has been paid to the above Stock Exchanges.(b) Depositories : 1. National Securities Depository Ltd.

Trade World, 4th Floor, Kamala Mills Compound,Senapati Bapat Marg, Lower Parel,Mumbai – 400 013.

2. Central Depository Services (India) LimitedPhiroze Jeejeebhoy Towers, 28th Floor,Dalal Street, Mumbai – 400 023.

Annual Issuer charges for the year 2005-2006 have been paid to the above depositories.F. Stock Code :

1. The Stock Exchange, Mumbai (BSE) : 5125992. National Stock Exchange (NSE) : ADANIEXPO3. Ahmedabad Stock Exchange (ASE) : 01378

G. Market Price Data : High, Low during each month in financial year 2004-05.Monthly share price movement during the year 2004-05 at BSE & NSE :

Month BSE NSE

High Low Volume High Low Volume

April 453.70 399.70 1188055 455.00 401.00 1207898May 494.00 350.00 1452833 509.00 350.00 1308015June 511.10 473.60 1704400 515.00 460.00 1718074July 756.00 481.10 3374730 755.00 462.00 2345536August 70.75 53.30 11768787 71.50 60.55 10313905September 66.91 58.00 11695785 67.00 59.25 9866461October 62.86 59.50 10858815 62.40 55.15 9464633November 66.00 52.50 10407820 67.95 58.10 9065079December 85.66 60.00 16577194 85.45 60.10 17171213January 79.00 70.00 9992296 79.00 70.00 8550799February 82.00 70.00 10766214 81.95 70.10 9443513March 78.91 58.75 11421566 79.30 58.50 10874309

* The figures have been adjusted from Rs. 10 to Re. 1 for split w.e.f. August 7, 2004.H. Performance in comparison to broad-based indices such as BSE Sensex.

16



Performance in comparison to broad-based indices such as NSE Nifty

I. Registrar and Transfer Agents :M/s. Pinnacle Share Registry Private Limited are the Registrar and Transfer Agents of the Company for both Physical andDemat Shares and their address is given below:Regd. Office : Contact Person :M/s. Pinnacle Share Registry Private Ltd. Mr. Gautam Shah,Unit : Adani Exports Limited General ManagerNear Asoka Mills Ltd., Naroda Road, Ahmedabad - 380 025.Tel: +91-79-22200582, 22200338. Fax : +91-79-22202963.E-mail : [email protected] to Investor Education and Protection Fund (IEPF)In terms of Section 205C of the Companies Act, 1956, an amount of Rs. 31,886.50/- being unclaimed dividend of the Companydeclared in the AGM held on 30th August, 1997 was transferred during the year to the IEPF established by the Central Government.

J. Share Transfer System :To expedite the process of share transfers, the Board has delegated powers of share transfers to a Committee comprising ofMr. Gautam S. Adani, Mr. Rajesh S. Adani and Mr. Vasant S. Adani, Executive Directors of the Company. The share transfercommittee attends to the share transfer formalities at least once in a fortnight. The business transacted at the Share TransferCommittee meetings is placed before the Board regularly. Grievances received from investors and other miscellaneouscorrespondence on change of address, mandates etc. are processed by the Registrars within 30 days. Requests for de-materialisation of shares were processed and confirmation was given to the respective depositories i.e. NSDL and CDSLwithin 15 days of receipt.All valid share transfers during the year ended 31.03.2005 have been acted upon.Pursuant to Clause 47 (c) of the Listing Agreement with the stock exchanges, certificates, on half yearly basis, have beenissued by a Company Secretary-in-Practice for due compliance of share transfer formalities by the Company. Pursuant to SEBI(Depositories and Participants) Regulations, 1996, certificates have also been received from a Company Secretary-in Practicefor timely dematerialization of the shares of the Company and for conducting secretarial audit on a quarterly basis forreconciliation of the share capital of the Company.

K. Dematerialisation of Shares and Liquidity :The Company’s shares are compulsorily traded in dematerialized form and areavailable for trading on both the Depositories in India – National SecuritiesDepository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).As on 31st March, 2005, 10,394 shareholders are holding shares in demat formand 22,25,57,995 Equity Shares of the Company representing 98.68% of theCompany’s share capital have been dematerialized.The Company’s shares are regularly traded on The Stock Exchange (BSE), Mumbaiand The National Stock Exchange (NSE), Mumbai, as is seen from the volume ofshares indicated in the Table containing market information.Under the Depository System, the International Securities Identification Number(ISIN) allotted to the Company’s shares is INE 423A01024

L. Distribution of Shareholding as on March 31, 2005.

Number of shares Number of shareholders Equity Shares held in each categorycategory Holders % % of Total Total Shares % of Total

1 to 5000 10332 96.13 6160768 2.735001 to 10000 169 1.57 1265853 0.5610001 to 20000 95 0.88 1425549 0.6320001 to 30000 27 0.25 667075 0.3030001 to 40000 14 0.13 503228 0.2240001 to 50000 7 0.07 321832 0.1450001 to 100000 22 0.21 1483381 0.66100001 and above 80 0.74 212171756 94.07In transit in NSDL system 2 0.02 1540242 0.68

TOTAL 10748 100 225539684 100.00

MONTHS

17


AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

M. Shareholding Pattern as on 31st March, 2005 :

N. Outstanding GDRs/ADRs/Warrants or any convertible instruments conversion date and likely impact on equity.On 24th September, 2004, in order to meet the long term fund requirements, the Company had issued 3800 - 1% ForeignCurrency Convertible Bonds (FCCBs) of USD 10,000 each.Out of 3800 FCCBs issued, outstanding number of FCCBs as on March 31, 2005 is 3060.These outstanding FCCBs can be converted into 20947301 Equity Shares of the Company during any time during the conversionperiod from November 8, 2004 to September 23, 2009 at the option of FCCB holders.The shares to be issued upon conversion of FCCBs shall rank pari passu with the existing equity shares of the Company in all respects.

O. Plant Locations :The Company is a “Five Star Export House” engaged in export/import of goods and is having no plants.

P. Address for correspondence :The shareholders may address their communications / suggestions / grievances /queries to :Ms. Birva C. PatelCompany Secretary and Compliance OfficerAdani Exports Ltd.“Adani House”, Near Mithakhali Six Roads, Navarangpura, Ahmedabad 380 009Tel No. (079) 25555 555, 26565 555, 25555 365(DID).Fax No. (079) 26565 500, 25555 500.Email address : [email protected]

B. NON-MANDATORY REQUIREMENTSA) CHAIRMAN OF THE BOARD

The Company has an Executive Chairman and hence, the requirement pertaining to reimbursement of expenses to a non-executive Chairman does not arise.

B) REMUNERATION COMMITTEEA remuneration committee comprising all non-executive and independent directors is functioning since 2001.

C) SHAREHOLDER RIGHTSThe financial performance of the Company is well publicised and also displayed on the Company’s website. In view ofthis, individual communication of quarterly/half yearly results is not sent to the shareholders.

D) POSTAL BALLOTThe provisions relating to Postal Ballot will be complied with in respect of matters where applicable.

The Members,The Adani Exports Limited

We have examined the compliance of conditions of Corporate Governance by Adani Exports Limited, for the year ended on March31, 2005, as stipulated in clause 49 of the Listing Agreement of the said Company with the Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to areview of the procedures and implementations thereof, adopted by the Company for ensuring the compliance with the conditions ofCorporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, and the representations made bythe Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance asstipulated in clause 49 of the above mentioned Listing Agreement.

We state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintainedby the Share Registrars and reviewed by the Shareholders/Investors’ Grievance Committee.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency oreffectiveness with which the Management has conducted the affairs of the Company.

For DHARMESH PARIKH & CO.Chartered Accountants

PLACE : Ahmedabad (D. A. PARIKH)DATE : 11th May, 2005 Proprietor

18



AUDITORS’ REPORT

ToThe Members ofADANI EXPORTS LIMITED

We have audited the attached Balance Sheet of ADANI EXPORTS LIMITED as at 31st March, 2005 and also the Profit and LossAccount for the year ended on that date annexed thereto and the Cash Flow statement for the year ended on that date, which wehave signed under reference to this report. These financial statements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for ouropinion.

1. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifiedin paragraphs 4 & 5 of the said Order.

2. Further to our comments in the annexure referred to above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessaryfor the purpose of our audit;

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books;

iii) The Balance Sheet, Profit & Loss Account and Cash-flow statement dealt with by this report are in agreement with thebooks of account.

iv) In our opinion, the Balance Sheet, Profit & Loss account and Cash Flow Statement dealt with this report comply withthe Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors, as on 31st March, 2005, and taken on record by theBoard of Directors, we report that none of the directors is disqualified as on 31st March, 2005 from being appointed asa director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts readtogether with the Significant Accounting Policies and other notes thereon give the information required by the CompaniesAct, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generallyaccepted in India:

a) in the case of the Balance Sheet, of the State of affairs of the Company as at 31st March, 2005;

b) in the case of Profit & Loss account, of the Profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.


Place : Ahmedabad D. A. PARIKHDate : 11th May, 2005 Proprietor

(Membership No. 45501)

19


(Referred to in Paragraph 1 of our Report of even date.)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixedassets. The same are in the process of being updated;

(b) As explained to us, fixed assets, according to the practice of the Company, are physically verified by the managementat reasonable intervals, in a phased verification-programme, which, in our opinion, is reasonable, looking to the size ofthe Company and the nature of its business. No material discrepancies were noticed on such verification.

(c) As the Company has disposed off an insignificant part of the fixed assets during the year, paragraph 4(i)(c) of theCompanies (Auditors’ Report) Order, 2003 (hereinafter referred to as the Order) is not applicable.

(ii) (a) During the year, the inventories have been physically verified by the management, except for stocks lying with outsideparties, which have, however, been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification ofinventories followed by the management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the record of inventories, we are of the opinion that, the Company is maintainingproper records of inventories. The discrepancies noticed on physical verification of inventories as compared to bookrecords were not material and have been properly dealt with in the books of account.

(iii) (a) According to the information and explanation given to us, the Company had granted loan to five companies covered in theregister maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year wasRs. 8.52 Crores and the year end balance of loans granted to such parties was Rs. 1.23 Crores. The Company has notgranted loans to firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have been granted to companies listedin the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interestof the Company.

(c) The parties have repaid the principal amounts as stipulated and have been regular in the payment of interest.

(d) There is no overdue amount of loans granted to Companies listed in the register maintained under section 301 of theCompanies Act, 1956. Consequently, requirement of clause (iii.d) of paragraph 4 of the Order is not applicable.

(e) According to the information and explanation given to us, the Company had taken loan from a Company covered in theregister maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year wasRs. 0.22 Crore and the year end balance of loans taken from such party was Rs. 0.22 Crore. The Company has not takenloans from firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956.

(f) In our opinion, the rate of interest and other terms and conditions on which loans have been taken from companies listedin the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interestof the Company.

(g) The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

(iv) According to the information and explanations given to us, there is an adequate internal control system commensurate withthe size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goodsand services. During the course of our audit, no major weakness has been noticed in the internal control system.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by themanagement, we are of the opinion that the particulars of the contracts or arrangements that need to be entered intothe register maintained under section 301 have been so entered.

(b) In respect of transactions made in pursuance of such contracts or arrangements have been entered into during thefinancial year are reasonable except in some of the transactions, for which no comments is being made owing to theunique and specialized nature of the items involved and absence of any comparable prices. For price justificationreliance is placed on the information and explanation given by the management.

(vi) The Company has not accepted deposits from the public within the meaning of section 58A of the Companies Act, 1956 andthe Rules framed thereunder. We are informed that no order has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) The Company has an internal audit system, which in our opinion is commensurate with its size and the nature of its business.

(viii) The maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 is not applicable to the Company.

(ix) (a) As explained to us, the statutory dues payable by the Company comprise of provident fund, investors education protectionfund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess, octroi,entry tax, purchase tax, Municipal tax and other applicable statutory dues. According to the records of the Company,the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There are no undisputedstatutory dues as referred to above as at March 31, 2005 outstanding for a period of more than six months from duedate they become payable.

(b) According to the records of the Company and representation made by the Management, the following are the disputedamounts in respect of various statutes:

ANNEXURE TO THE AUDITOR’S REPORTRE : ADANI EXPORTS LIMITED

20



Name of Statute Nature of the dues Amount Forum where dispute(Rs. in Crores) is pending

Income Tax Act, 1961 Additions made in 9.33 Commissioner ofregular assessments Income Tax, Appeals

Central Sales Tax Act, 1956 Sales against sales 0.07 Dy. Commissionerdeclaration forms of sales tax, Gujarat

Gujarat Sales Tax Act, 1969 Sales against sales 0.03 Dy. Commissionerdeclaration forms of sales tax, Gujarat

Central Sales Tax Act, 1956 Sales against sales 0.92 Delhi Tribunaldeclaration forms

West Bengal Sales Tax Act. Sales Tax liability 0.18 West Bengal CommercialTax Department

Customs Act, 1962 Valuation of various Amount With variousproducts Unascertainable appellate authorities

Customs Act, 1962 Valuation of Pertroleum, 2.37 Commissioner of customsChemicals, Oil & Lubricants.

Customs Act, 1962 Valuation of coal 0.92 Assistant commissionerof customs

Customs Act, 1962 Valuation of Pertroleum, 0.81 Special Valuation BenchOil & Lubricants.

Customs Act, 1962 Penalty 0.04 Commissioner of Custom

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in thecurrent and immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinionthat the Company has not defaulted in repayment of dues to a financial institution, bank and debenture holders.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures andother securities. Accordingly clause (xii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 is not applicable.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xiv) In respect of dealing in securities and other investments, in our opinion and according to the information and explanationsgiven to us, proper records have been maintained of the transactions and contracts and timely entries have been madetherein. The Company in its own name except has held the securities and other investments to the extent of theexemption granted under section 49 of the Act.

(xv) In respect of guarantees given by the Company for loans taken by others from banks, the terms and conditions are primafacie not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans raised during the year have been applied for the purpose for which they were raised.

(xvii) According to the Cash-flow statement and other records examined by us and the information and explanations given tous, on an overall basis, funds raised on short term basis have not, prima facie, been used during the year for long terminvestment except permanent working capital.

(xviii) The Company has not made any preferential allotment of shares to parties and Companies covered in the Registermaintained under section 301 of the Companies Act. Accordingly paragraph 4(xviii) of the Order is not applicable.

(xix) As the Company does not have any debenture outstanding at the year end, paragraph 4(xix) of the Order is not applicable.

(xx) During the year, since the Company has not raised money by way of public issue, paragraph 4(xx) of the Order is notapplicable.

(xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that,no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended 31st March,2005.


Place : Ahmedabad D. A. PARIKHDate : 11th May, 2005 Proprietor

(Membership No. 45501)

21


(Rs. in Crores)

PARTICULARS SCHEDULE AS AT 31-03-2005 AS AT 31-03-2004

A SOURCES OF FUNDS :I. SHAREHOLDERS’ FUND

(A) Share capital 1 22.55 32.05(B) Reserves & surplus 2 654.72 591.67

677.27 623.72II. LOAN FUNDS :

(A) Secured loans 3 382.73 265.26(B) Unsecured loans 4 456.60 86.24

839.33 351.50III. DEFERRED TAX LIABILITY

Deferred Tax Liability 7.84 4.27Less :Deferred Tax Assets 1.47 1.47

6.36 2.80

TOTAL 1,522.96 978.02

B APPLICATION OF FUNDS :I FIXED ASSETS 5

(A) Gross block 61.37 43.41(B) Less : Depreciation 11.66 9.80

(C) Net block 49.71 33.61(D) Capital work-in-progress 6.45 2.40

56.17 36.01

II INVESTMENTS 6 46.67 69.38

III. CURRENT ASSETS, LOANS & ADVANCES(A) Inventories 7 323.10 219.47(B) Receivables 8 2,140.37 1,142.77(C) Cash & bank balances 9 479.38 199.63(D) Loans & advances 10 330.36 214.78

3,273.21 1,776.65

LESS :-CURRENT LIABILITIES & PROVISIONS(A) Current liabilities 11 1,818.93 887.26(B) Provisions 12 37.00 17.68

1,855.93 904.94

NET CURRENT ASSETS 1,417.28 871.71

IV. MISCELLANEOUS EXPENDITURE 13 2.84 0.92

TOTAL 1,522.96 978.02

BALANCE SHEET AS AT 31ST MARCH, 2005

For and on behalf of the Board

GAUTAM S. ADANIChairman

RAJESH S. ADANIManaging Director

PLACE : AhmedabadDATE : 11th May, 2005

Notes forming part of the accounts 20

As per our attached report of even date

For DHARMESH PARIKH & CO.,Chartered Accountants

D.A. PARIKHProprietor


BIRVA C. PATELCompany Secretary

22



(Rs. in Crores)

PARTICULARS SCHEDULE 2004-05 2003-04

A INCOME :Sales & Operating earnings 14 13,515.84 7,069.05Other income 15 3.03 76.98

13,518.87 7,146.03

B EXPENDITURE :Cost of materials 16 12,894.60 6,661.67Personnel expenses 17 11.97 7.99Operation & other expenses 18 427.82 295.68Finance Charges 19 52.15 53.52Depreciation 2.11 1.79Misc.expenditure written off 0.95 0.23

13,389.60 7,020.89

Profit for the year before Prior Period Adjustments 129.27 125.15Add / (Less) : Prior period adjustment (0.12) (0.06) - Excess / short provision written back 1.47 1.05

Profit for the year before taxation 130.62 126.14Provision for taxation:- Current Tax [(Including Wealth tax of 18.77 2.10 Rs. 0.17 Crores (P.Y. Rs. 0.03 Crores) and excess provision (net) of earlier year Rs. 4.40 Crores (P.Y. 2.32 Crores)]

- Deferred Tax 3.56 (0.05)

Profit after taxation 108.29 124.09Add : Surplus brought forward from Previous Year 239.38 186.37

Profit available for appropriation 347.67 310.46

APPROPRIATIONS :Interim dividend on Preference Shares 0.19 0.99Dividend on Preference Shares - 0.01Proposed Dividend on Equity Shares 9.02 8.82Tax on Dividend (including surcharge) 1.29 1.26Transfer to general reserve 80.00 60.00

Balance carried to balance sheet 257.16 239.38

347.67 310.46

Earning per Share of Rs. 1/- each- Basic 4.89 5.58- Diluted 4.87 5.58

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005











23


(Rs. in Crores)

PARTICULARS AS AT 31-03-2005 AS AT 31-03-2004

SCHEDULE : 1SHARE CAPITALAUTHORISED

50,00,00,000 (Previous Year 5,00,00,000) 50.00 50.00Equity Shares of Re. 1/-(Previous Year Rs 10/-) each

5,00,00,000 (Previous Year 5,00,00,000) 50.00 50.00Preference Shares of Rs. 10/- each

100.00 100.00

ISSUED, SUBSCRIBED & PAID-UP22,55,39,684 (Previous Year 2,20,47,400) 22.55 22.05

Equity Shares of Re. 1/-(Previous Year Rs. 10/-) each

NIL (Previous Year 1,00,00,000) - 10.009.9% Cumulative RedeemablePreference Shares - Series VII of Rs. 10/- each)

22.55 32.05

NOTES :(a) The face value of the equity shares have been reduced from Rs.10/- to Re.1/-(b) Of the above Equity Shares

(i) 50,65,684 (Previous Year NIL) Equity shares of Re. 1/- each were allotted asfully paid up at premium on conversion of foreign currency convertible bonds.

(ii) 50,00,000 (Previous Year 5,00,000) Equity Shares of Re. 1/- (Previous YearRs. 10/-) each were allotted as fully paid up at premium without paymentbeing received in cash.

(iii) 50,00,000 (Previous Year 5,00,000) Equity Shares of Re.1/- (Previous YearRs.10/-) each were issued as Bonus Shares by capitalization of profit.

(iv) 16,53,55,000 (Previous Year 1,65,35,500) Equity Shares of Re. 1/- (Previous YearRs. 10/-) each were issued as Bonus shares by capitalization of share premium.

(c) Preference Shares were redeemed in June 2004.

SCHEDULE : 2RESERVES & SURPLUS1 GENERAL RESERVE

As per last balance sheet 327.66 275.13ADD :- Transferred during the year from Profit & Loss Account80.00 60.00ADD :- Preference Share Redemption Reserve written back 10.00 -ADD :- Debenture Redemption Reserve written back 5.00 25.00ADD :- Reserve under section 33AC under IT Act written back - 7.50LESS :- Transferred to Profit & Loss Account in respect of

:- bad-debts (see note no.B 9) 68.16 39.97

354.50 327.662 PREFERENCE SHARE REDEMPTION RESERVE

As per last balance sheet 10.00 10.00LESS :- Transfer to General Reserve 10.00 -

- 10.003 DEBENTURE REDEMPTION RESERVE

As per last balance sheet 5.00 30.00LESS :- Transfer to General Reserve 5.00 25.00

- 5.00 4 SHARE PREMIUM ACCOUNT

As per last balance sheet 9.63 9.63ADD :- Amount received on conversion of Foreign Currency Convertible Bonds 33.43 -

43.06 9.63 5 RESERVE UNDER SECTION 33AC OF INCOME-TAX ACT, 1961 :

As per last balance sheet - 7.50LESS :- Transferred to General Reserve - 7.50

- - 6 SURPLUS IN PROFIT & LOSS ACCOUNT 257.16 239.38

654.72 591.67

SCHEDULES 1 TO 13 FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2005

24



(Rs. in Crores)


SCHEDULE : 3SECURED LOANS

1 From banks - term loansa) Foreign Currency Loan (ECB) (Note - I) 9.55 22.23b) Rupee loan (Note II & III) 184.09 189.08

2 From banks - Working Capital (Note II & III)a) Foreign Currency 71.60 36.92b) Rupee 114.37 11.41

3 Non convertible debentures (Note - IV) - 5.004 Vehicle Loans (Note - V) 1.18 0.605 Home Loans 1.946 Interest accrued and due - 0.02

382.73 265.26

NOTES :I Above facilities are secured by Second Charge :

a) Hypothecation over whole of the current assets of the Company by wayof second charge.

b) Equitable Mortgage over certain immovable properties belonging to theCompany by way of second charge.

c) Equitable Mortgage over certain immovable properties belonging to AdaniProperties Pvt. Ltd. by way of second charge.

d) Guaranteed by some of the Directors and their relatives in their personalcapacity.

e) Pledge of equity shares of some of the promoters and their relatives.f) Rs. 6.00 Crores secured by above covered under item 1 b) [P.Y.Rs. 12 Crores]

II Above facilities are secured by :a) Hypothecation of the stocks and book debts by way of first charge ranking

pari-passu among the banks.b) Tangible movable properties ranking pari-passu among the banks.c) Guaranteed by some of the Directors in their personal capacity.d) Pledge of 1,00,00,000 equity shares of Gujarat Adani Port Ltd. @ of Rs. 80/-

each for present outstanding of Rs. 153.00 Crores [P.Y. Rs. 156.93 Crores]e) Kindly refer Note I f) above.

III Further secured by creation of Equitable Mortgage :a) Over certain immovable properties belonging to the Company.b) Over certain immovable properties belonging to Adani Properties Pvt. Ltd.

IV a) 15,00,000 privately placed 14.50% secured redeemable non convertibledebentures of Rs. 100/- each allotted w.e.f. 29th December 1999, wereredeemable at par in three equal annual installments on 29th December2002, 29th December 2003 & 29th December 2004 respectively, whichwere redeemed on respective due dates.

b) The above debentures were secured by pledge of shares of some of thePromoters and their relatives and by way of mortgage and exclusivecharges on some immovable properties of the Company.

V Vehicles loans are secured by hypothecation of respective vehicles.

SCHEDULE : 4

UNSECURED LOANSForeign Currency Convertible Bonds (Note - I) 133.86 -Inter Corporate Loans 27.72 26.65Loans from Banks / Financial Institutions (Note - II) 295.02 59.59

456.60 86.24

NOTE :-I) In the case of FCCB, the bondholders have an option of conversion into Equity

Shares at the rate of Rs.67/- per share at any time after November 8, 2004 andupto October 23, 2009. Further, the Company has an option of redemption ofthese bonds at any time on or after October 24, 2007, subject to certain conditions.

II) Above loans from Banks/Financial Institutions are secured by DemandPromissory Note and/or Pledge of shares of some of the Promoters and theirrelatives and/or guaranteed by some of the Directors in their personal capacity.

25


(Rs. in Crores)


SCHEDULE : 6

INVESTMENTS - NON-TRADE :LONG-TERM INVESTMENTS

GOVERNMENT SECURITIES (UNQUOTED)(Lodged with Government departments)- in 6 year National Saving Certificates 0.02 0.02- in Kisan Vikas Patra (Rs. 500/-) - -

INVESTMENT IN SUBSIDIARY COMPANIES (UNQUOTED)1) 64,000 (64,000) fully paid up Equity Shares of 30.90 30.90

Adani Global Ltd. of $ 100/- each2) 25590 (32,790) fully paid up 10% Redeemable Preference 10.38 13.27

shares of Adani Global Ltd. of $ 100/- each.

OTHERS (UNQUOTED)

1) NIL (1,28,83,950) Equity Shares of Adani Wilmar Ltd. - 12.88of Rs. 10/- each

2) 10 (10) Equity Shares of Coffee Futures Exchange 0.01 0.01Board India Ltd. of Rs. 10,000/- each

3) 5 (5) Bond of UCO Bank of Rs. 5,00,000/- each. 0.25 0.25

4) 2,600 (2,600) Equity Shares of Adani Petronet (Dahej) Port Pvt. Ltd. - -of Rs. 10/- each.

5) 20,000 (20,000) Equity Shares of 0.05 0.05Kalupur Commercial Co-op. Bank of Rs. 25/- each

6) 24,750 (NIL) Equity Shares of Adani Logistics Ltd. of Rs. 10/- each. 0.02 -

OTHERS (QUOTED)

943 (NIL) Equity Shares of Punjab National Bank of Rs 10/- each 0.04 -

SHORT TERM INVESTMENTS

1) Kotak K Liquid IP NIL( 2361330.846) units of - 3.00Kotak Mahindra K Liquid IP of Rs.10/- each

2) NIL (2000000) units of Reliance Liquid Fund of Rs.10/- each - 2.00

3) 1853087.243 (6757474.249) units of 2.00 7.00UTI Mutual Liquid Fund of Rs.10/- each

4) 2725290.698 (NIL) J M High Liquidity Fund of Rs. 10/- each 3.00 -

46.67 69.38

Aggregate Book Value - Quoted 0.04 -- Unquoted 46.63 69.38

Aggregate Market Value - Quoted 0.04 -

SHEDULE : 5FIXED ASSETS : (Rs. In Crores)Sr. PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCKNo. As at Additions Deductions As at As at Provided Deductions As at As at As at

1/4/2004 during the during the 31/3/2005 1/4/2004 for the during the 31/3/2005 31/3/2005 31/3/2004year year year year

1 Land 5.82 - - 5.82 - - - - 5.82 5.822 Building 17.60 1.05 - 18.65 1.78 0.32 - 2.10 16.55 15.823 Plant & Machinery 0.91 0.25 - 1.16 0.28 0.05 - 0.33 0.83 0.634 Furniture & Fixtures 5.87 0.50 0.01 6.36 2.34 0.37 - 2.71 3.65 3.535 Electrical Fittings 1.05 0.10 - 1.15 0.32 0.07 - 0.39 0.76 0.736 Office Equipments 3.54 0.61 0.11 4.04 0.94 0.19 0.04 1.08 2.96 2.607 Computer Equipment 2.64 0.40 0.04 3.00 1.94 0.28 0.03 2.19 0.81 0.708 Vehicles 5.98 1.43 0.49 6.92 2.19 0.59 0.17 2.61 4.31 3.789 Air-craft - 14.26 - 14.26 - 0.24 - 0.24 14.02 -

Total 43.41 18.60 0.65 61.36 9.79 2.11 0.24 11.65 49.71 33.61Previous Year 43.39 2.41 2.39 43.41 9.24 1.79 1.23 9.80 33.61 -

26



PURCHASED AND SOLD DURING THE YEAR

PARTICULARS FACE VALUE NOS. COST(Rs.) (in crs.)

1 RLF - TREASURY PLAN - RETAIL OPTION - GROWTH OPTION - GROWTH PLAN 10 1.077 14.5002 TEMPLELTON INDIA - TREASURY MANAGEMENT PLAN ACCOUNT - REGULAR PLAN 1000 0.003 5.0003 SBI - MAGNUM - INSTITUTIONAL INCOME PLAN 10 1.838 19.0004 SBI - MAGNUM INSTA CASH FUND - CASH OPTION 10 1.100 16.0005 DSP MERRILL LYNCH LIQUIDITY FUND - GROWTH 10 0.320 5.0006 PRUDENTIAL ICICI INST LIQUID PLAN 10 0.253 4.0007 KOTAK LIQUID (INSTITUTIONAL) - GROWTH 10 0.856 11.0008 PRINCIPAL CASH MANAGEMENT FUND - LIQUIDITY OPTION - INST PLAN - GROWTH PLAN 10 0.849 9.0009 UTI LIQUID CASH PLAN REGULAR - GROWTH PLAN 10 5.461 57.25010 UTI LIQUID CASH PLAN REGULAR - GROWTH PLAN 1000 0.037 40.00011 UTI LIQUID CASH PLAN INST PLAN - GROWTH PLAN 10 7.007 73.50012 UTI LIQUID CASH PLAN INST PLAN - GROWTH PLAN 1000 0.034 54.00013 GFBD - GRINDLAYS FLOATING RATE - ST - INST PLAN B - DAILY DIV 10 4.280 43.100

(Rs. in Crores)


SCHEDULE : 7INVENTORIES(AS CERTIFIED BY THE MANAGEMENT)Raw-materials 7.89 -Finished Goods 314.99 219.47Packing materials 0.22 -

323.10 219.47

SCHEDULE : 8RECEIVABLES(UNSECURED, CONSIDERED GOOD)Over six monthsConsidered good 81.51 182.73Considered doubtful 3.26 3.06

84.77 185.79Less :- Provision for doubtful debts (3.26) 81.51 3.06 182.73

Others, considered good 2,058.86 960.04

2,140.37 1,142.77

SCHEDULE : 9CASH & BANK BALANCESCash on hand [including cheques on hand Rs. 0.25 crores, Previous Year Rs. 3.39 crores] 1.02 3.96Balances with Scheduled Banks :-In Margin money account :- Margin money account (lodged against Bank Guarantee & Letter of Credit) 161.72 98.97- Margin money account (net of 100% Letter of Credit) 4.94 46.39- Margin money account (PCFC) 13.10 -- Margin money account (net of buyers credit facility) 87.79 14.01- In Deposit Account (in foreign currency) 94.72 -

362.26 159.37- In Fixed Deposit account (pledged with govt. authorities) 1.67 0.05- In Current Account 113.25 30.02- In Over draft / CC Account - 5.78- EEFC Account 0.85 0.36- Unclaimed Dividend Account 0.09 0.09- Balance with Foreign Bank in Current Account 0.24 -

479.38 199.63

27


(Rs. in Crores)


SCHEDULE : 10

LOANS & ADVANCES(UNSECURED, CONSIDERED GOOD)

Loans 5.04 17.23Advances recoverable in cash or in kind or for value to be received 246.34 175.35Balances with Service Tax Authorities 0.42 -Interest accrued but not due 41.85 12.14Interest accrued and due on Investments 0.01 0.01Advance payment of Income tax (including TDS of Rs. 3.52 crores ,Previous Year Rs.7.16 crores) 36.70 10.05

330.36 214.78

SCHEDULE : 11

CURRENT LIABILITIES

Sundry Creditors 1,692.37 871.63Other liabilities 119.17 15.29Unclaimed Dividend 0.09 0.09Interest accrued but not due 7.30 0.25

1,818.93 887.26

SCHEDULE : 12

PROVISIONS

Provision for taxation 25.68 6.91Provision for Leave encashment 1.03 0.69Proposed dividend 9.02 8.82Tax on dividend (Including surcharge) 1.27 1.26

37.00 17.68

SCHEDULE : 13

MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Deferred Revenue Expenditure 3.79 1.15Less: 1/5th written off during the year 0.95 0.23

2.84 0.92

28



(Rs. in Crores)

PARTICULARS 2004-05 2003-04

SCHEDULE : 14

SALES & OPERATING EARNINGS

Sales 13417.80 6782.64Export incentives 8.84 201.25Service charges (Service Tax) 25.34 -Insurance Claim Received 2.31 0.12Miscellaneous Operating income 61.55 85.04(TDS on service charges and misc. operating income Rs. 2.34 crores,P.Y. Rs. 1.23 crores)

13515.84 7069.05

SCHEDULE : 15

OTHER INCOME

Dividend (Gross) - 0.02Dividend from Subsidiary Company 0.44 1.79Interest on investments - 0.03Profit/ Loss on sale of investments(net) 0.16 73.14Profit on surrender of rights - 2.00Other Income 2.43 -

3.03 76.98

SCHEDULE : 16

COST OF MATERIALS

Raw materials consumedOpening stock - 0.20ADD : Purchases during the year 1727.00 10.63

1727.00 10.83LESS : Closing stock 7.90 -

1719.10 10.83ADD : Processing charges 35.04 6.24

1754.14 17.07Purchase of traded goods 11235.97 6786.81Decrease / (Increase) in stockOpening stock of finished / traded goods 219.47 77.26Closing stock of finished / traded goods 314.99 219.47

(95.51) (142.21)

12894.60 6661.67

SCHEDULE : 17

PERSONNEL EXPENSES

Salaries & bonus 10.39 6.64Contribution to provident & other funds 0.97 0.98Staff welfare expenses 0.62 0.37

11.97 7.99

SCHEDULES 14 TO 19 FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005

29


(Rs. in Crores)


SCHEDULE : 18

OPERATION & OTHER EXPENSES

Rent (Net) 1.39 0.63Rates & Taxes 7.77 8.60Postage, telephone & telex expenses 2.57 1.76Stationery & printing expenses 0.63 0.48

REPAIRS TO :Office building 0.40 0.24Office equipments 0.19 0.19Others 1.08 0.32

1.66 0.75Electric power expenses 0.86 0.67Insurance expenses 4.74 1.84Miscellaneous expenses 28.01 9.66Payment to auditors 0.13 0.13Office expenses 0.43 0.17Computer software 3.13 0.05Directors sitting fees 0.02 0.02Loss / Profit on sale of assets (Net) 0.18 0.33Clearing & forwarding expenses (Net) 148.54 57.06Packing Materials Consumed 37.48 1.33Supervision & testing expenses 4.47 2.93Damages on contract settlements 11.49 -Loss of stock due to accident 0.04 -Advertisement and Selling Expenses 35.56 18.35Bad-debts and other receivable written off (net of recoveryRs 0.63 crores, Previous Year Rs 0.50 crores) 68.16 39.97Less :- Transferred from General Reserve (See Note No. 9) 68.16 - 39.97 -

Provision for Bad & Doubtful debts 0.87 3.06Business support services 130.00 182.61Travelling & conveyance expenses 7.85 5.25

427.82 295.68

SCHEDULE : 19

FINANCE CHARGES

INTEREST PAIDInterest on Term Loans 18.82 13.21Interest on Debentures/Bonds 1.36 2.57Interest on Bank Borrowings & Others 114.31 70.12

134.49 85.90Less : Interest Income

Interest on deposit and others (160.23) 41.57(TDS Rs. 0.97 crore, Previous Year Rs. 1.88 crores)

Net Interest (25.74) 44.32

Bank Commission / Charges 37.58 18.50Exchange rate difference 40.31 (9.30)

52.15 53.52

31


Group Gratuity & Super Annuation Scheme of Life Insurance Corporation of India and are charged against revenue every year.iii) Leave Encashment: The Company has provided the liabilities pertaining to accrued leave encashment as at the

year end in its books of accounts on the basis of the actuarial valuer’s certificate.m) BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part ofthe cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready forintended use. All other borrowing costs are charged to revenue.

n) SEGMENT ACCOUNTINGAccounting Standards Interpretation (ASI) 20 dated 14th February, 2004, issued by the Accounting Standards Board of theInstitute of Chartered Accountants of India, on AS 17, “Segment Reporting” clarifies that in case, by applying the definitions of“business segment” and “geographical segment” given in AS 17, it is concluded that there is neither more than one businesssegment nor more than one geographical segment, segment information as per AS 17 is not required to be disclosed.

o) RELATED PARTY TRANSACTIONSDisclosure of transactions with Related Parties, as required by Accounting Standard 18 “Related Party Disclosures” has been setout in a separate statement annexed to this Schedule. Related parties as defined under clause 3 of the Accounting Standard havebeen identified on the basis of representations made by key managerial personnel and information available with the Company.

p) LEASESThe Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office, stores, godowns,etc.) and land. The leasing arrangements which are not cancelable range between 11 months and five years generally, and are usuallyrenewable by mutual consent on agreed terms. The aggregate lease rentals payable are charged as rent including lease rentals.

q) EARNING PER SHAREThe Company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard-20 issued by the Instituteof Chartered Accountants of India. The Basic EPS has been computed by dividing the income available to equity shareholders bythe weighted average number of equity shares outstanding during the accounting year. The Diluted EPS have been computed usingthe weighted average number of equity shares and dilutive potential equity shares outstanding at the end of the year.

r) TAXATIONa) Provision for taxation has been made in accordance with the Income Tax Law prevailing for the relevant assessment years.b) In accordance with Accounting Standard 22 – “Accounting for Taxes on Income”, issued by the Institute of Chartered

Accountants of India, the deferred tax for timing differences between the book and tax profits for the year is accountedby using the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date.

Deferred Tax assets arising from timing differences are recognised to the extent there is virtual certainty that the assetscan be realised in future.Net outstanding balance in Deferred tax account is recognized as deferred tax liability/asset. The deferred tax accountis used solely for reversing timing difference as and when crystallized.

s) COMMODITY HEDGING TRANSACTIONSThe commodity hedging contracts are accounted on the date of their settlement & realised gain / loss in respect ofsettled contracts are recognised in the Profit and Loss account, together with the underlying transactions.

t) ACCOUNTING OF CLAIMSi) Claims received are accounted at the time of lodgment depending on the certainty of receipt and claims payable

are accounted at the time of acceptance.ii) Claims raised by Government authorities regarding taxes and duties, which are disputed by the Company, are accounted

based on legality of each claim. Adjustments, if any are made in the year in which disputes are finally settled.u) EXPORT INCENTIVES

Export benefits under various scheme announced by the Central Government under Exim Policy are accounted on accrualbasis to the extent considered receivable depending on the certainty of receipt.

v) PROPOSED DIVIDENDDividend proposed by the Directors is provided for in the books of account pending approval at the Annual General Meeting.

w) CAPITAL WORK-IN-PROGRESSAdvances paid towards the acquisition of fixed assets, and the cost of assets not put to use before the year ended,are disclosed under capital work-in-progress.

x) INSURANCE CLAIMSInsurance and other claims to the extent considered recoverable are accounted for in the year of claim based on theamount assessed by the surveyor. However, claims and refunds whose recovery can not be ascertained with reasonablecertainty, are accounted for on acceptance/actual receipts basis.

y) DOUBTFUL DEBTS/ADVANCESProvision is made in the accounts for Debts/Advances which in the opinion of the management are considered doubtful of recovery.

z) MISCELLANEOUS EXPENDITURE – DEFERRED REVENUE EXPENSERevenue expenditure incurred, the benefit of which extends over a period of time, are deferred and amortized over aperiod of three to five years commencing from the year the resource / facility gets fully functional in an integral wayand the corresponding benefit starts accruing to the business.

(B) NOTES ON ACCOUNTS:-1. Cumulative redeemable preference shares under series VII of the face value of Rs. 10/- each redeemable at the end of

five years from the date of allotment, were redeemed at par during the year.2 a) During the year Company has issued 3800 1% Foreign Currency Convertible Bonds (FCCB) each having face value

of 10000 US$, total value Rs.174.42 crores. These Bonds are convertible in to equity shares at the option of the Bondholders at a fixed price of Rs.67 per share. Unless the Bonds are Previously purchased and cancelled or the Bondsare converted, the Company will redeem the Bonds at 124 percent on 23-10-2009, without any Previous notice.

32



b) Consequently, 740 bonds aggregating to Rs.33.94 crores (net of exchange gain of Rs.0.03 crore) have beenconverted in to 5065684 Equity Shares at agreed conversion price of Rs.67 per share. Upon said conversion, theEquity Share Capital and Share premium have increased by Rs.0.51 crore and Rs.33.43 crores respectively.

3. During the year the Company has changed the presentation with regards to Bills Discounted with Banks. The outstandingBills Discounted as on the Balance Sheet date have been shown as contingent liability, consequently working capitalloan and debtors are reduced to the extent of Rs.961.27 crores (Previous Year Rs.311.04 crores).

4. For the Current Year review as required by Accounting Standard 28 Impairment of Fixed Assets, the management is ofthe opinion that no impairment or reversal of loss is required.

5. Buildings include cost of ownership accommodations including Rs.3,500/- (Previous Year Rs. 3,250/-), being cost ofshares held in various Co-operative Societies.

6. Office premises of Rs. 3.75 Crores, include Rs. 2.32 Crores represent unquoted Shares (160 equity shares of A type and 1280 equityshares of B type of Rs. 100 each fully paid up) in Ruparelia Theatres P. Ltd. By virture of Investment in shares, the Company is enjoyingrights in leasehold land and Rs. 1.44 Crores towards construction contribution and exclusive use of terrace and allotted parking space.

7. Capital work in progress includes:-Building worth Rs. 0.65 Crore (Previous Year Rs. 0.65 Crore) which is disputed and the matter is sub-judice.

8. Capital Commitments:-(Rs. in Crores)

PARTICULARS AS AT 31-03-2005 AS AT 31-03-2004Estimated amount of contracts remaining to be executed 70.36 0.01and not provided for (net of advances)

9. During the year, balances in Receivables / Advances which are long outstanding amounting to Rs. 68.16 Crores (Previous YearRs. 39.97 Crores), net of recovery, have been identified as not recoverable. The determination of this balance of written offamount is based on evaluation of individual advances, current economic conditions, viability and other factors and reflects anamount which, in management’s judgment, is not recoverable. Accordingly, the above amount in respect of outstanding duesrepresenting transactions effected in past years during normal course of business has been debited to the Profit & Loss Account.An equivalent amount has been withdrawn from the General Reserve to offset this charge, as it pertains to past years.

10. Sundry Creditors, Receivables and Loans and Advances include certain items for which confirmations are yet to be received andinclude certain long outstanding balances which are considered payable / realisable, as the case may be. Provision for doubtful debts,if any, in respect of above and the consequential adjustment, arising out of reconciliation will be made at the appropriate time.

11. Credit & Debit balances under a particular category are netted off while certain mutually discharging related debit &credit balances have also been netted off for effective presentation.

12. In the opinion of the Board, the current assets, loans and advances are approximately of the value stated, if realisedin the ordinary course of business, except unless stated otherwise. The provision for all the known liabilities is adequateand not in excess of amount considered reasonably necessary.

13. Provisions for doubtful debts are made by provision charged to current revenue. The determination of the balance of theprovisions is based on evaluation of individual advances, current economic conditions, viability and other factors andreflects an amount which in management’s judgment is adequate to provide for potential losses.

14. Receivable includes amount due from foreign subsidiary companies of Rs.37.14 Crores (Previous Year Rs.46.35 Crores).15. Loans & Advances includes :-

a) Amount due from Companies Rs. 10.59 Crores (Previous Year Rs. 35.99 Crores) in which some of the Directorsof the Company are interested.

b) Rs. 47.03 Crores (Previous Year Rs. 1.92 Crores) paid as advance against Capital Asset.16. Export Incentive receivable under duty free credit entitlement included under the head Loans & Advances is pending due

to disposal for some procedural aspects with Government. Shortfall / excess if any will be taken into accounts as andwhen it is determined.

17. The Company has a policy of accounting export benefits / incentives on accrual basis to the extent receivable. Hence, lookingto the past history and uncertainty attached to the availability of benefit on account of entitlement to import goods free of dutyunder the new Exim Policy, will be accounted when certainty exist and the expenses payable under contractual obligation /arrangement with regard to availment of export incentives will be recognized only upon recognition of Export Incentives.

18. Buyers credit/suppliers credit have been netted off against margin money for effective presentation.19. a) During the year, the Company disinvested 1,28,83,950 (Previous Year NIL) shares of Adani Wilmar Ltd. a joint

venture, reducing the holding to NIL.b) The Company disinvested, Current Year NIL (Previous Year 1,55,00,000) shares of Gujarat Adani Port Limited,

Current Year NIL (Previous Year 14,23,300) shares of Adani Port Limited and Current Year NIL (Previous Year26,000) shares of Adani Container (Mundra) Terminals Limited, being long term investment (unquoted) and theresultant gain is credited to profit & loss account.

20. In respect of advances given by the Company to some of the parties for fulfillment of commitment, against non-fulfillmentof commitment, the Company has taken legal action and is examining other options for recovery of the Advances.

21. The Company has initiated legal proceedings against various parties for recovery of dues and such legal proceedingsare at different stages as at the date of the Balance Sheet and are expected to materialise in recovering the dues inthe future. Management is hopeful of their recovery. In the opinion of the Management, adequate balance is lying inGeneral Reserve to meet the eventuality of this account being irrecoverable.

22. Unsecured loan includes Rs. 0.22 Crore (Previous Year Rs. 0.22 Crore) from a Company in which one of the Director is interested.23. Sundry Creditors include amount due to the companies in which some of the directors are interested Rs. NIL (Previous

Year Rs. 5.34 crores).

33


24. Other liabilities include:-a) Rs. 0.05 Crore (Previous Year Rs. 0.05 Crore) received against agreement to sell of Land pending other formalities.b) Amount due to Company in which some of the Directors are interested Rs. NIL (Previous Year Rs. 1.78 Crores).c) Rs 1.03 Crores for Liability against earned leave (leave liability actuarially valued at 31-3-2004 is Rs. 0.69 Crore).

25. a) Provision for taxation for the year has been made after considering allowance, claims and relief available to theCompany as advised by the Company’s tax consultants.

b) Various tax related legal proceedings are pending against the Company. Potential liabilities, if any, have beenadequately provided for, and management does not estimate any incremental liability in respect of legal proceedings.

c) No provision for Income Tax was made on profit on sale of investments in financial year 2003-04 on which, reliefis likely to be extended under the Income Tax Act, 1961 on the basis of expert opinion taken by the Company.

26. Contingent liabilities not provided for (Rs. in Crores)


a) Claims against the Company not acknowledged as debts 14.44 36.95

b) In respect of Corporate Guarantee given:-i. To Companies under the same management 108.11 213.86ii. For obligations to other parties 88.26 336.01

c) Bills of Exchange Discounted 961.27 311.04

d) Demand against the Company not admitted as debtsregarding sales tax against which appeals are pending 14.21 1.05

e) In respect of bank guarantees given to government agencies. 4.07 4.10

f) Certain claims / show cause notices disputed have neither been considered as contingent liabilities noracknowledged as claims based on the opinions obtained from prominent legal counsels for which amount isunascertainable.

27. The Company has taken out a group gratuity insurance policy with the Life Insurance Corporation of India for futurepayments of retirement gratuity to employees. In the event of any employees leaving service earlier, the Company will haveto bear a certain portion of the gratuity which is not ascertainable and no provision has been made in respect thereof.

28. In spite of the absence of a data-base identifying creditors as Small Scale Industrial Undertakings, the management isof the opinion that there are no parties which can be classified as Small Scale Industrial Undertakings to whom theCompany owes any sum. The Auditors have accepted the representations of the management in this matter.

29. No amounts are due for deposits as at the Balance Sheet date to the Investors Education and Protection Fund.30. Currency Swap Gains of Rs. 3.36 Crores (Previous Year Rs. 1.05 Crores) has been netted off against interest expenses

on term loans. Exchange rate difference has been debited to Profit & Loss Account.31. Items of Expenditure in the Profit and Loss Account include reimbursements to and by the Company.32. Disclosure as required by Accounting Standard 19, “Leases” issued by the Institute of Chartered Accountants of India

are given below:Being the Company is lessee:(i) The Company’s significant leasing arrangements are in respect of godowns / residential / office premises (Including

furniture and fittings therein, as applicable). The aggregate lease rental payable are charged to Profit and LossAccount as Rent in Schedule 18.

(ii) The Leasing arrangements, which are cancelable at any time on month to month basis and in some cases between11 months to 5 years, are usually renewable by mutual consent on mutually agreeable terms. Under thesearrangements, generally refundable interest free deposits have been given.

33. As per Accounting Standard 21 on “Consolidated Financial Statements” and Accounting Standard 23 on “Accounting forInvestments in Associates in Consolidated Financial Statements” issued by the Institute of Chartered Accountants ofIndia, the Company has presented consolidated financial statements separately, including subsidiaries and associates,in this annual report.

34. Payments to Auditors (including service tax) :- (Rs. in Crores)

2004-2005 2003-2004

i Audit fee 0.10 0.10

ii Tax Audit fee 0.02 0.02

iii Other Matters (C.Y. Rs.50,000/- P.Y. Rs. 20,000/-) — —

iv Reimbursement of Expenses 0.01 0.01

Total 0.13 0.13

35. Prior period adjustments consist of :- (Rs. In Crores)

2004-2005 2003-2004

Debits relating to earlier years 35.80 0.27

Credits relating to earlier years (23.36) (0.21)

Net Total 12.44 0.06

34



36. Computation of Net Profit under Section 349 of the Companies Act,1956 (Rs. In Crores)

PARTICULARS 2004-2005 2003-2004

A. Profit Before Taxation 130.62 126.14 ADD: Depreciation as per accounts 2.10 1.79 Director ’s Remuneration 0.88 0.57 Director ’s Commission 2.21 0.87 Loss on sale of investments/assets 0.18 0.33

135.99 129.70

LESS:Depreciation as per Sec. 350 of the Companies Act, 1956 2.11 1.79 Profit on surrender of rights — 2 .00 Profit on sale of investments/assets 0.16 73.14

Profit for the purpose of Director’s Commission 133.72 52.77

Chairman @ 0.5% of Rs.133.72 crores 0.67 0.26 (Previous Year at 0.5% of Rs. 52.77 crores) Managing Director @ 0.75% of Rs.133.72 crores 1.00 0.40 (Previous Year at 0.75% of Rs. 52.77 crores) Whole-time Director @ 0.4% of Rs.133.72 crores 0.53 0.21 (Previous Year at 0.4% of Rs. 52.77 crores)

2.20 0.87

B. Managerial remuneration to Chairman, Managing & Whole-time Directors under section 198 of the Companies Act, 1956

i) Salaries 0.72 0.53 ii) Contributions to provident and other funds 0.16 0.04 iii) Commission 2.20 0.87

3.08 1.44

37. Miscellaneous Income includes Rs. NIL (Previous Year Rs. 0.24 Crores) being net of Debit & Credit balances no longerrequired & Written Off during the year.

38. Related party disclosure (As identified by the Management)

The Company has entered into transaction in ordinary course of business with related parties at arm’s length. Asrequired by Accounting Standard 18

I Name of related parties & description of relationship

A Controlling Companies -B Subsidiary Companies Adani Global Ltd. Adani Global FZE Adani Global Pte Ltd.C Associate Entities

Adani Agrifresh Ltd.Adani Agro Pvt. Ltd.Adani Chemicals Ltd.Adani Logistics Ltd.

Adani Petronet (Dahej) Port Pvt Ltd. Adani Port Infrastructure Ltd. Adani Port Ltd. Adani Textiles Industries

Adani Wilmar Ltd.B2C India Ltd.Gujarat Adani Energy Ltd.Gujarat Adani Infrastructure Pvt. Ltd.Gujarat Adani Port Ltd.Gujarat State Exports Corporation Ltd.I Call India Ltd.Inter Continetal (India)

35


I-Gate India Pvt. Ltd.Komal Marketing Pvt LtdKomal Infotech Pvt LtdMundra Special Economic Zone LtdShanitkrupa Estates Pvt. Ltd.Shantivan

D Joint Control Adani Wilmar Ltd.E Key Management Personnels Shri Gautam S. Adani Shri Rajesh S. Adani Shri Vasant S. AdaniF Relatives Vasant S. Adani Family Trust Vinod S.Adani

ii) Nature & Volume of Transaction with Related Parties(Rs in Crores)

Particulars Subsidiary Associate Jt Control Key mngt Relatives Company Entities Company Personnels 1 Sales (Net of Return) 202.21 33.20 - - - (236.48) (0.88) (17.70) (-) ( - )

2 Purchase ( Net of Return) 937.52 63.39 2.02 - - (191.56) (0.13) (56.27) ( - ) ( - )

3 Sale of Investment - 12.88 - - - (-) (93.71) ( - ) ( - ) 1.894 Purchase of Fixed Asset - 3.92 - - - (-) ( - ) (0.01) ( - ) ( - )

5 Sale of Fixed Assets - 0.03 - - - (-) (0.26) ( - ) ( - ) ( - )6 Interest - received / (paid) (0.44) 0.28 - - - (-) (1.09) (0.17) ( - ) ( - )7 Dividend received 0.44 - - - - (1.79) ( - ) ( - ) ( - ) ( - )

8 Funds given [ includes investment in - 41.99 - - - preference shares/equity participation/ (0.08) (278.20) (44.97) ( - ) ( - )

business arrangement]9 Funds received [including redemption of 2.89 68.22 - - -

preference share/business arrangement] (1.46) (167.81) (49.97) ( - ) ( - )10 Service rendered - 1.52 0.33 - - (-) (2.00) (4.35) ( - ) ( - )11 Service availed - 124.62 - - - (-) (29.38) (1.36) ( - ) ( - )12 Rent paid 0.33 0.04 - - 0.02 (-) (0.24) ( - ) ( - ) ( - )13 Rent received - 0.04 - - - ( - ) (-) (0.04) ( - ) ( - )14 Remuneration - - - 3.11 - ( - ) ( - ) (-) (1.44) ( - )15 Guarantee & Collateral securities 65.63 130.73 - - - (Outstanding facility as on 31-03-2005) (85.50) (249.51) (185.90) ( - ) ( - )16 Balance Outstanding as on (Due From) 37.14 13.52 - - - 31st March 2005 (Due To) - 14.75 - - - (46.35) (108.01) ( - ) ( - ) (-)

Adani Wilmar Ltd ceased to be joint venture from 28-6-2004 so the transactions with Adani Wilmar Ltd till then areshown in Joint Venture and thereafter shown in Associate Concern.

36



iii) As required by the amendment to the clause 32 of the listing agreement vide SEBI circular no. 2 / 2003 of 10th January, 2003,the following disclosure has been made :(a) Loans and advances in the nature of loans to subsidiaries: NIL(b) Loans and advances in the nature of loans to associates:

Sr. Name of Entity Closing Balance Maximum amountNo. AS AT 31-03-2005 Outstanding during the year

1 Adani Agrifresh ltd. 0.03 0.03 (NA) (NA)

2 Adani Chemicals Ltd. NIL 2.08 (2.08) (2.08)

3 Adani Logistics Ltd. 1.20 1.20 (NA) (NA)

4 Adani Properties Pvt Ltd NA NA (NIL) (0.14)

5 B2C India Ltd. NIL 5.15 (5.15) (17.92)

6 Gujarat Adani Energy Ltd. NIL NIL (NIL) (0.48)

7 Gujarat Adani Infrastructure Pvt. Ltd. NIL 0.06 (0.06) (9.71)

8 Gujarat Adani Port Ltd. NIL NIL (NIL) (2.16)

9 I Call India Ltd. NA NA (9.99) (9.99)

(c) Loans and advances in the nature of loans where there is no repayment schedule, or no interest or interest below therate under Section 372A of the Companies Act, 1956: NIL

(d) Loans and advances in the nature of loans to firms / companies in which directors are interested: (Rs in Crores)

Sr. Name of Entity Closing Balance Maximum amountNo. AS AT 31-03-2005 Outstanding during the year

1 Adani Agrifresh ltd. 0.03 0.03 (NA) (NA)

2 Adani Chemicals Ltd. NIL 2.08 (2.08) (2.08)

3 Adani Logistics Ltd. 1.20 1.20 (NA) (NA)

4 B2C India Ltd. NA NA (5.15) (17.92)

5 Gujarat Adani Energy Ltd. NIL NIL (NIL) (0.48)

6 Gujarat Adani Port Ltd. NIL NIL(NIL) (2.16)

7 I Call India Ltd. NA NA (9.99) (9.99)

8 Adani Properties Pvt. Ltd. NA NA (NIL) (0.14)

(e) Investments by the loanee in the shares of the Company as on 31st March, 2005: NIL

39. Earning Per Share

Particulars Year ended Year ended31-03-2005 31-03-2004

Net Profit after Tax Provision (Rs. in Crores) 108.29 124.08Less: Preference Dividend including tax thereon (Rs. in Crores) 0.22 1.12Net Profit after tax available for Equity Shareholders (Rs. in Crores) 108.07 122.96Number of shares used in computing Earning Per ShareBasic 220926086 220474000Diluted 221757733 220474000Earning Per Share (Equity Shares, face value Rs.1/-)Basic (in Rs.) 4.89 5.58Diluted (in Rs.) 4.87 5.58

37


Dilutive potential equity shares are those which are deemed for the purpose of the computation to have been issuedfor no consideration.

During the year, face value of the equity shares have been reduced from Rs.10/- to Re.1/-, accordingly the calculationof basic and diluted earning per share is adjusted for the year ended March 31, 2004 based on the new number ofshares as per para 44 of Accounting Standard 20.

40. a) Deferred Tax(Rs. in Crores)

As At As At31-03-2005 31-03-2004

Deferred Tax Liability on account of (i) Depreciation 6.32 4.27 (ii) Deferrred Revenue Expenditure 1.26 — Total 7.58 4.27 Deferred Tax Assets on Account of (i) Software expenses — 0.10 (ii) Brought forward capital loss — 0.03 (iii) Diminution in value of investments — — (iv) Leave Encashment 0.12 0.24 (v) Provision for Bad-debts 1.10 1.10 Total 1.22 1.47 Net Deferred Tax Liability 6.36 2.80

b) In accordance with “Accounting Standard 22”, the deferred tax Liability of Rs. 3.56 Crores (Previous Year Assetsof Rs. 0.05 Crore) for the year has been recognised in the Profit & Loss Account.

41 Quantitative information to the extent applicable for the year pursuant to the paragraphs 3 & 4 of part II of Schedule VIto the Companies Act, 1956 (As certified by the management).

(A) SALES AND STOCKS OF GOODS TRADED AND PROCESSED (Rs in Crores)

SR. CLASS UNITS OPENING STOCK CLOSING STOCK SALESNO. QTY RUPEES QTY RUPEES QTY RUPEES

1 CHEMICAL / PLASTICS MT 10,962.302 18.15 31,654.018 65.88 235,794.382 444.91 (12,322.816) (23.55) (10,962.302) (18.15) (105,753.185) (202.59)

2 AGRO PRODUCTS MT 200,958.038 186.72 122,375.358 102.68 1,081,007.072 1,283.57 (41,916.767) (43.57) (200,958.038) (186.72) (1,704,351.632) (1,786.67)

3 PRECIOUS & OTHER METAL KGS - - 134.809 8.23 17,208,816.138 4,165.15 (15.190) (0.79) (-) (-) (138,989,596.190) (880.80)

PRECIOUS & OTHER METAL CTS - - - - 8,338,234.310 6,092.75 (-) (-) (-) (-) (10,671,025.020) (2,500.93)

PRECIOUS & OTHER METAL MT - - - - 256.216 13.54 (-) (-) (-) (-) (-) (-)

4 MINERALS / OILS MT 5,172.744 0.92 397,888.557 123.41 3,070,466.659 856.88 (3,797.916) (1.14) (5,172.744) (0.92) (1,384,145.748) (598.58)

5 POWER TRADING U - - - - 803,069,687.135 200.46 (-) (-) (-) (-) (101,005,100.000) (22.34)

6 TEXTILE PRODUCTS KGS 556,526.520 8.40 220,843.440 2.21 11,118,650.632 149.63 (315,783.560) (1.90) (556,526.520) (8.40) (15,611,366.437) (209.12)

TEXTILE PRODUCTS NOS - - - - - - (-) (-) (-) (-) (94,465.000) (6.99)

TEXTILE PRODUCTS YDS 64,565.000 0.45 - - 479,206.000 3.30 (44,141.000) (0.33) (64,565.000) (0.45) (2,686,001.070) (13.02)

TEXTILE PRODUCTS MTR 125,065.500 0.57 3,486.750 0.02 5,277,261.930 27.61 (112,978.600) (0.59) (125,065.500) (0.57) (22,306,056.960) (80.08)

7 FROOZEN FOODS MT - - - - 5,498.063 119.41 (-) (-) (-) (-) (22,063.569) (417.28)

8 FERTILIZERS MT 7,00-0 4.26 19,527.978 12.55 126,245.402 60.43 (4,850.814) (2.07) (7,000.000) (4.26) (129,562.096) (54.55)

9 OTHER PRODUCTS - - - - - 4,452.000 0.16 (-) (3.32) (-) (-) (-) (9.69)

GRAND TOTAL 219.47 314.99 13,417.80 (77.26) (219.47) (6,782.64)

38



(B) PURCHASE OF TRADED GOODS(Rs. In Crores)

SR. CLASS UNITS 2004-2005 2003-2004NO. QTY AMOUNT QTY. AMOUNT

1 CHEMICAL / PLASTICS MT 256,486.098 479.94 104,931.187 189.97

2 AGRO PRODUCTS MT 965,161.855 1,102.34 1,886,351.863 1,885.61

3 PRECIOUS & OTHER METAL KGS 17,181,627.513 2,329.35 138,989,581.000 884.66 PRECIOUS & OTHER METAL CTS 8,338,234.310 5,909.07 10,671,028.420 2,481.73

PRECIOUS & OTHER METAL MT 256.215 13.38 - -

4 MINERALS / OILS MT 3,465,006.228 886.68 1,382,806.520 570.56

5 POWER TRADING U 803,069,687.135 179.28 104,456,757.000 19.56

6 TEXTILE PRODUCTS KGS 10,782,767.820 123.64 15,851,651.040 189.50 TEXTILE PRODUCTS NOS - - 6,000.000 4.86 TEXTILE PRODUCTS YDS 414,640.000 2.81 1,280,825.180 8.35 TEXTILE PRODUCTS MTR 5,155,683.180 26.31 20,089,279.500 67.94

7 FROOZEN FOODS MT 5,498.063 116.13 22,063.569 425.10

8 FERTILIZERS MT 138,773.380 66.91 131,711.282 54.30

9 OTHER PURCHASES - - 0.12 - 4.67

TOTAL 11,235.97 6,786.81

(C) RAW MATERIAL CONVERTED(Rs. In Crores)

SR. CLASS UNITS 2004-2005 2003-2004NO. QTY AMOUNT QTY. AMOUNT

1 PRECIOUS METAL KGS 27,323.434 1678.17 - -

2 AGRO PRODUCTS MT 52,490.298 75.97 - -

3 TEXTILES KGS 5,307.120 0.06YDS - - 1,428,102.000 4.19

MTR 2,563,985.000 12.82

TOTAL 1754.14 17.07

(D) IMPORTED & INDIGENOUS CONSUMPTION (Rs. In Crores)

2004-2005 2003-2004

AMOUNT % AMOUNT %

RAW MATERIALS :IMPORTED 1580.000 90.07 0.40 2.34INDIGENOUS 174.140 9.93 16.67 97.66

TOTAL 1754.140 100.00 17.07 100.00

E) VALUE OF IMPORTS ON CIF BASIS(Rs. In Crores)

2004-2005 2003-2004

Trade goods 9029.94 1967.12

TOTAL 9029.94 1967.12

F) EXPENDITURE IN FOREIGN CURRENCY(Rs. In Crores)

2004-2005 2003-2004

Travelling expenses 0.93 0.48Other matter 8.45 4.34Interest 75.18 8.53Bank charges 0.92 0.79Clearing & Forwarding - 29.22Brokerage & Commission 112.66 145.23

Total 198.14 188.59

30



SCHEDULE: “ 20 “NOTES FORMING PART OF THE ACCOUNTS

A) SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and presentation of the Accounts :-a) SYSTEM OF ACCOUNTING

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting in accordancewith Companies Act, 1956 and in accordance with the accounting principles generally accepted in India (Indian GAAP) andcomply with the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) to the extent applicable.

b) USE OF ESTIMATESThe preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and thedisclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates.Any revision to accounting estimates is recognized prospectively in current and future periods.

c) INVENTORIESi) Inventories are valued at lower of cost or Net Realisable value.ii) The Custom duty in respect of Closing Inventory of Finished goods is included as cost of inventory.iii) The basis of determining cost for various categories of inventories are as follows:

a) Raw material : First in First out (FIFO).b) Traded / Finished goods : First in First out (FIFO) / Specific identification

of their individual costs – as the case may be.c) Licences on hand : Specific identification of their individual costs.d) Packing Material : Packing material having significant value on

First in First Out (FIFO).d) MATERIAL EVENTS

Material events occurring after the balance sheet date are taken into cognizance.e) CONTINGENT LIABILITIES

These are disclosed by way of notes on accounts. Provision is made in accounts in respect of those contingences,which are likely to materialize in to liabilities after the year end, till the finalisation of accounts and have material effecton the position stated in the Balance Sheet. (Refer Note No.3 on Notes on Accounts).

f) PRIOR PERIOD ITEMSPrior period expenses/income is accounted under the respective heads. Material items, if any, are disclosed separately by way of note.

g) DEPRECIATIONi) Depreciation on Fixed Assets is provided on straight-line method at rates and in the manner specified in Schedule

XIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs.ii) Depreciation on Assets acquired / disposed off during the year is provided on pro-rata basis with reference to the

date of addition/disposal.iii) Any expenditure in respect of assets, the ownership of which would not vest with the Company, are charged off

to revenue in the year of incurrence.h) REVENUE RECOGNITION

i) Sales of goods is recognised on shipment or despatch to customer sales and net of Sales-tax and return.ii) Dividend income from investments is recognised when the Company ’s right to receive payment is established.iii) Income from services rendered is accounted for when the work is performed.iv) Interest revenues are recognised on time proportion basis taking into account the amount outstanding and the rate applicable.

i) FIXED ASSETSFixed assets are stated at cost of acquisition or construction. They are stated at historical cost less accumulated depreciation.

j) FOREIGN CURRENCY TRANSACTIONSi) Initial Recognition

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.ii) Conversion

At the year-end, monetary items denominated in foreign currencies, other than those covered by forward contracts,are converted into rupee equivalents at the year end exchange rates.

iii) Exchange DifferencesAll exchange differences arising on settlement and conversion on foreign currency transaction are included in theProfit and Loss Account.

iv) Forward Exchange ContractsIn respect of transactions covered by forward exchange contracts, the difference between the forward rate andthe exchange rate at the date of the transaction is recognised as income or expense over the life of the contract.

k) INVESTMENTSi) Current investments are carried at the lower of cost and quoted/fair value, computed category wise. Long term

investments are stated at cost. Provision for diminution in the value of long-term investments is made only if sucha decline is other than temporary in the opinion of the management.

ii) Investment in shares of foreign subsidiary Company is expressed in Indian Currency at the rates of exchangeprevailing at the time when the investment was made.

l) RETIREMENT BENEFITSi) Provident Fund and Pension Fund: The Company contributes towards provident and pension fund which is

administered by Central Government and are charged against revenue every year.ii) Gratuity and Superannuation Fund: Liabilities for payment of Gratuity & Super Annuation to employees are covered through

39


G) EARNING IN FOREIGN CURRENCY(Rs. In Crores)

2004-2005 2003-2004

Export of Goods on F.O.B. Basis 10807.97 4841.46

Commission - 0.27

Interest Income 0.16 0.01

Dividend Income 0.44 1.79

Other Income 0.62 0.14

Total 10809.19 4843.67

Note : Licensed and installed capacity : Not applicable(Previous Year : Not applicable)

42. Previous Year’s figures have been regrouped wherever necessary to confirm to this year’s classification.

43. Additional Information as required under Part IV of Schedule VI to the Companies Act, 1956. Balance Sheet Abstract andCompany’s General Business Profile:-

I. Registration Details :Registration No. : 19067State Code : 04Balance Sheet Date : 31-03-2005

II. Capital Raised during the year (Amount in Rs. Thousands)Public Issue - NIL Right Issue - NILBonus Issue - NIL Private Placement - 5065

III. Position of Mobilisation and Deployment of Funds(Amount in Rs. Thousands)Total Liabilities : 33788862Total Assets : 33788862Sources of Funds:Paid –up Capital : 225540Reserves & Surplus : 6650102Secured Loans : 3827280Unsecured Loans : 4565972Deferred Tax Liability : 63627Application of Funds:Net Fixed Assets : 561650Investments : 466679Net Current Assets : 14275753Miscellaneous Expenditure : 28439Accumulated Losses : —-

IV. Performance of Company (Amount in Rs. Thousands)Turnover (Including other Income) : 135188736Total expenditure : 133882513Profit/(Loss) before tax : 1306223Profit/(Loss) after tax : 1082929Earning per share (Rs.) : 4.89Dividend Rate % : 40%

V Generic Names of Three Principal products/services of Company (as per monetary terms)Item Code No. (ITC Code) Not AscertainableProduct Description Merchant ExportersItem Code No. (ITC Code) Not AscertainableProduct Description Merchant ExportersItem Code No. (ITC Code) Not AscertainableProduct Description Merchant Exporters






Signature to Schedules “ 1 “ to “ 20 “

40



(Rs. in Crores)


A CASH FLOW FROM OPERATIONSNet Profit before tax & extraordinary items 130.62 126.14Adjustment for :

Depreciation 2.11 1.79Income from investments (0.44) (1.84)Loss on sale of investment - 63.81Profit on sale of investment (0.16) (136.95)Profit on sale of assets (0.02) (2.03)Loss on sale of fixed assets 0.20 0.36Provision for Bad Debts 1.25 3.06Deferred Revenue Expenditure 0.95 0.23Interest Expense 134.49 85.90Interest income (160.23) (41.58)

(21.86) (27.25)Operating Profit before working capital changes 108.77 98.89Adjustment for:

Trade & other receivables (1067.30) (179.23)Inventories (103.63) (142.01)Loans & Advances (59.22) 1.08Trade Payables 924.96 361.17

(305.18) 41.01Cash generated from operations (196.41) 139.90

Direct tax (paid) / refund (27.95) 2.37Net cash from operating activities (224.36) 142.27

B Cash Flow from Investing ActivitiesAdditions to fixed assets (18.60) (2.41)Additions to work in progress (4.05) 0.37Sale of fixed assets 0.23 2.83Deferred Revenue Expenditure (2.64) (1.15)Proceeds from Redemption of Investments 2.89 1.19Sale of Investments 12.89 162.16Purchase of Investments (0.06) (69.73)Realisation of Short Term Investments (Net) 0.16 0.16Income from Investments 0.44 1.84Interest received 130.52 32.34

Net cash used in Investing Activities 121.79 127.60C Cash Flow from Financing Activities

Conversion of 1% FCCB in to Equity Shares at a Premium 33.94 -Redemption of preference shares (10.00) -Proceeds from working capital borrowings 137.64 (225.42)Proceeds from long term borrowings 246.21 206.24Repayment of long term borrowings (132.49) (94.96)Proceeds from short term borrowings 236.50 48.19Interest Paid (127.46) (89.17)Dividend paid (9.01) (7.61)

375.33 (162.72)Net lncrease/(Decrease) in cash & cash equivalents 272.75 107.15Cash & cash equivalent at the beginning of the year 211.63 104.48Cash & cash equivalent as at 31/03/2005 484.38 211.63

Notes : 1 The above cash flow statement has been prepared under the “Indirect Method” set out in Accounting Standard (AS - 3) on Cash Flow

Statement issued by The Institute of Chartered Accountants of India. 2 Prior Year Comparatives have been reclassified to confirm with current year’s presentation, wherever applicable. 3 Cash and Cash equivalents includes Rs. 269.30 crores (Previous Year Rs. 159.51 Crores). which are not available for use by the company

(refer schedule 9 to accounts) 4 Short Term Investments of Rs. 5 crores (Previous Year Rs. 12 crores) included in Cash and Cash equivalents.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2005










41


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956






Name of The Subsidiary Company Adani Adani AdaniGlobal Ltd. Global FZE Global Pte. Ltd.

In US$ In AED In S$

1. Financial year of the Subsidiary Companies 31/12/2004 31/12/2004 31/12/2004ended on

2. Extent of interest in subsidiary Companies 100% 100%* 100%*

3. Net aggregate amount of the profits of theSubsidiary Company as far as it concerns themembers of the Companya) Dealt with in the Company ’s Accounts

i) for the financial year of the Subsidiary 172992 9452092 634884ii) for the previous year of the subsidiary

since it became the Subsidiary of theCompany 341427 39532774 797519

b) Not dealt with in the Company’s Accountsi) for the financial year of the Subsidiaryii) for the previous year of the Subsidiary

since it became the Subsidiary of theCompany

4. Statement of changes under Section 212(5)of the Companies Act, 1956 from (01/01/2005 to 31/03/2005)1. Fixed Assets, Capitalised Assets & W.I.P. – 24980 –2. Investments 25000 – –3. Monies Lent (354798.59) 94605.90 (4103139.03)4. Monies Borrowed Term Loan for its ongoing

project from the Financial Institutions/Banks – (1276598.49) (18642032.84)

* by Adani Global Ltd.

42



1. We have examined the attached consolidated Balance Sheet of Adani Exports Limited, its subsidiaries and associates as atMarch 31, 2005, the consolidated Profit and Loss Account for the year ended on that date annexed thereto, and the consolidatedcash flow statement for the year ended on that date which we have signed under reference to this report. These consolidatedfinancial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion onthese consolidated financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that weplan and perform and audit to obtain reasonable assurance about whether the financial statements are prepared, in all materialrespects, in accordance with an identified financial reporting framework and are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by the management, as well asevaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of Foreign subsidiaries Adani Global Limited, Adani Global FZE and Adani Global PteLimited, for the year ended 31st December, 2004 whose financial statements reflect total assets of Rs. 442.75 Crores as at31st December, 2004 and total revenue of Rs. 2799.72 Crores for the year then ended. These financial statements have beenaudited by other auditors, whose reports have been furnished to us and our opinion, in so far as it relates to the amountsincluded in respect of these subsidiaries, is based solely on the report of the other auditors.

4. We did not audit the financial statements of associate namely Adani Petronet (Dahej) Port Pvt Ltd., whose financial statementsreflect total assets of Rs. 1.68 Crores as at March 31, 2005 and total revenues of Rs. NIL for the year ended on that date.These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion,in so far as it relates to the amounts included in respect of these associates, is based solely on the report of the otherauditors.

5. We did not audit the separate financial statements of other Associate Adani Logistics Limited for the period ended 31st March,2005 whose unaudited financial statements reflect total assets of Rs. 1.78 Crores as at 31st March, 2005 and total revenueof Rs. NIL for the period then ended. The said financial statements, which were furnished to us by the management, wereunaudited. We are unable to express an opinion on true and fair view in so far as it relates to the amounts included in theconsolidated financial statements in respect of the associate, for the reasons as stated above.

6. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirementsof Accounting Standard 21– Consolidated Financial Statements and Accounting Standard 23–Accounting for Investments inAssociates in Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basisof the separate audited financial statements of Adani Exports Ltd., its subsidiaries and associates included in the consolidatedfinancial statements.

7. On the basis of the information and explanations given to us and on the consideration of the separate audit reports onindividual audited financial statements of the Adani Exports Limited, its subsidiaries and Associates in our opinion theconsolidated financial statements give a true and fair view in conformity with the accounting principles generally acceptedin India:

a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Adani Exports Limited, its subsidiaries andAssociates as at March 31, 2005;

b) in the case of the Consolidated Profit and Loss Account of the consolidated results of operations of theAdani Exports Limited, its subsidiaries and Associates for the year then ended; and

c) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flow of the Adani Exports Limited, itssubsidiaries and Associates for the year then ended.


PLACE : Ahmedabad (D. A. PARIKH)DATE : 11th May, 2005 Proprietor

REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF ADANI EXPORTS LIMITED

43


(Rs. in Crores)



(A) Share capital 1 22.55 32.05(B) Share Application Money pending allotment - 3.95(C) Reserves & surplus 2 720.40 662.03

742.95 698.03II. LOAN FUNDS :

(A) Secured loans 3 387.08 296.53(B) Unsecured loans 4 457.08 87.22

844.16 383.75III. DEFERRED TAX LIABILITY

Deferred Tax Liability 7.84 8.41Less :-Deferred Tax Assets 1.47 1.52

6.37 6.89

TOTAL 1593.48 1088.67

B APPLICATION OF FUNDS :I. FIXED ASSETS

(A) Gross block 5 64.61 74.91(B) Less : Depreciation 14.39 16.48

(C) Net block 50.22 58.43(D) Capital work-in-progress 6.45 17.22

56.67 75.65PRE-OPERATIVE EXPENDITURE - 0.25(PENDING CAPITALISATION)

II. INVESTMENTS 6 9.96 17.46

III. CURRENT ASSETS, LOANS & ADVANCES(A) Inventories 7 329.73 306.48(B) Receivables 8 2402.23 1250.44(C) Cash & bank balances 9 525.26 285.32(D) Loans & advances 10 344.27 240.32

3601.49 2082.56

LESS :-CURRENT LIABILITIES & PROVISIONS(A) Current liabilities 11 2039.03 1069.73(B) Provisions 12 38.45 18.46

2077.48 1088.19

NET CURRENT ASSETS 1524.01 994.37

IV. MISCELLANEOUS EXPENDITURE 13 2.84 0.94TO THE EXTENT NOT WRITTEN-OFFOR ADJUSTED

TOTAL 1593.48 1088.67


CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2005










44



(Rs. in Crores)

PARTICULARS SCHEDULE 2004-05 2003-04

A INCOME :

Sales & Operating earnings 14 15005.34 8911.21Other income 15 2.58 75.20

15007.92 8986.41

B EXPENDITURE :Cost of materials 16 14341.29 8415.48Personnel expenses 17 15.48 12.43Operation & other expenses 18 434.65 344.17Finance Charges 19 70.26 66.23Depreciation 2.33 3.27Misc. expenditure written off 0.95 0.23

14864.96 8841.81

Profit for the year Before Prior Period Adjustments 142.96 144.60Add/(Less) : Prior period adjustment (net) (0.12) (0.11)Add : Excess provision written back 1.47 1.05

Profit for the year before taxation 144.31 145.54

Provision for taxation:- Current Tax [(Including Wealth tax of Rs. 0.17 Crores P.Y. (Rs. 0.03 Crores), and 19.17 4.70 excess provision (net) of earlier year Rs. 4.40 Crores (P.Y. 2.32 Crores)]- Deferred Tax 3.56 0.78

Profit after taxation 121.58 140.06Add : Surplus brought forward from Previous Year 289.83 231.61


APPROPRIATIONS :Interim dividend on Preference Shares 0.19 0.99Dividend on Preference Shares - 0.01Proposed Dividend on Equity Shares 9.02 9.26Tax on Dividend (including surcharge) 1.29 1.26Transfer to General Reserve 80.00 64.23

Balance carried to balance sheet 320.91 295.92

411.41 371.67

Earning per Share - Rs. 1/- each (in Rupees)- Basic 5.49 6.30- Diluted 5.47 6.30






Notes forming part of the accounts 20As per our attached report of even date




CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005

45


(Rs. in Crores)



50,00,00,000 (Previous Year 5,00,00,000) 50.00 50.00Equity Shares of Re. 1/-(Previous Year Rs 10/-) each

5,00,00,000 (Previous Year 5,00,00,000) 50.00 50.00Preference Shares of Rs. 10/- each

100.00 100.00

ISSUED, SUBSCRIBED & PAID-UP22,55,39,684 (Previous Year 2,20,47,400) 22.55 22.05

Equity Shares of Re. 1/-(Previous Year Rs. 10/-) each

NIL (Previous Year 1,00,00,000) - 10.009.9% Cumulative RedeemablePreference Shares - Series VII of Rs. 10/- each)

22.55 32.05

NOTES :(a) The face value of the equity shares have been reduced from Rs. 10/- to Re. 1/-(b) Of the above Equity Shares –

(i) 50,65,684 (Previous Year NIL) Equity shares of Re. 1/- each were allotted asfully paid up at premium on conversion of foreign currency convertible bonds.

(ii) 50,00,000 (Previous Year 5,00,000) Equity Shares of Re. 1/- (PreviousYear Rs. 10/-) each were allotted as fully paid up at premium withoutpayment being received in cash.

(iii) 50,00,000 (Previous Year 5,00,000) Equity Shares of Re. 1/- (Previous YearRs. 10/-) each were issued as Bonus Shares by capitalization of profit.

(iv) 16,53,55,000 (Previous Year 1,65,35,500) Equity Shares of Re. 1/- (Previous YearRs. 10/-) each were issued as Bonus shares by capitalization of share premium.

(c) Preference Shares were redeemed in June 2004.

SCHEDULE : 2RESERVES & SURPLUS1 GENERAL RESERVE

As per last balance sheet 327.66 275.13ADD :- Transferred during the year from Profit & Loss Account 80.00 60.00ADD :- Preference Share Redemption Reserve written back 10.00 -ADD :- Debenture Redemption Reserve written back 5.00 25.00ADD :- Reserve under section 33AC under IT Act written back - 7.50LESS :- Transferred to Profit & Loss Account in respect of bad-debts 68.16 39.97

354.50 327.66Share in General Reserve of Joint Venture - 9.86

2 PREFERENCE SHARE REDEMPTION RESERVEAs per last balance sheet 10.00 10.00LESS :- Transfer to General Reserve 10.00 -

- 10.003 DEBENTURE REDEMPTION RESERVE

As per last balance sheet 5.00 30.00LESS :-Transfer to General Reserve 5.00 (25.00)

- 5.004 SHARE PREMIUM ACCOUNT

As per last balance sheet 9.63 9.63ADD :- Amount received on conversion of Foreign Currency 33.43 -

Convertible Bonds 43.06 9.63

5 RESERVE UNDER SECTION 33AC OF INCOME-TAX ACT, 1961 :As per last balance sheet - 7.50LESS :- Transferred to General Reserve - 7.50

- -6 EXCHANGE RESERVE 1.93 3.967 SURPLUS IN PROFIT & LOSS ACCOUNT 320.91 292.728 SHARE IN PROFIT & LOSS ACCOUNT OF JOINT VENTURE - 3.20

720.40 662.03

SCHEDULES 1 TO 13 FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2005

46



SCHEDULE : 4UNSECURED LOANS

Foreign Currency Convertible Bonds (Note - I) 133.86 -Inter Corporate Loans 28.04 27.46Loans from Banks / Financial institutions 295.02 59.59Loans from Directors 0.16 0.17

457.08 87.22

NOTE :-I) In the case of FCCB, the bondholders have an option of conversion into Equity

Shares at the rate of Rs.67/- per share at any time after November 8, 2004 andupto October 23, 2009. Further, the Company has an option of redemption ofthese bonds at any time on or after October 24, 2007, subject to certain conditions.

II) Above loans from Banks / Financial Institutions are secured by DemandPromissory Note and/or Pledge of shares of some of the Promoters and theirrelatives and/or guaranteed by some of the Directors in their personal capacity.

(Rs. in Crores)



1 From banks - term loansa) Foreign Currency Loan (ECB) (Note - I) 9.55 26.93b) Rupee loan (Note II & III) 184.09 189.08

2 From banks - Working Capital (Note II & III)a) Foreign Currency 75.95 36.92b) Rupee loan 114.37 37.98

3 Non convertible Debentures (Note - IV) - 5.004 Vehicle Loans (Note - V) 1.18 0.605 Home Loans 1.946 Interest accrued and due - 0.02

387.08 296.53

NOTES :I Above facilities are secured by Second Charge :

a) Hypothecation over whole of the current assets of the Company by wayof second charge.

b) Equitable Mortgage over certain immovable properties belonging to theCompany by way of second charge.

c) Equitable Mortgage over certain immovable properties belonging to AdaniProperties Pvt. Ltd. by way of second charge.

d) Guaranteed by some of the Directors and their relatives in their personalcapacity.

e) Pledge of equity shares of some of the pro-moters and their relatives.f) Rs. 6.00 Crores secured by above covered under item 1 b) [P.Y.Rs. 12 Crores]

II Above facilities are secured by :a) Hypothecation of the stocks and book debts by way of first charge ranking

pari-passu among the banks.b) Tangible movable properties ranking pari-passu among the banks.c) Guaranteed by some of the Directors in their personal capacity.d) Pledge of 1,00,00,000 equity shares of Gujarat Adani Port Ltd. @ of Rs. 80/-

each for present outstanding of Rs. 153.00 Crores [P.Y. Rs. 156.93 Crores]e) Kindly refer Note I f) above.

III Further secured by creation of Equitable Mortgage :a) Over certain immovable properties belonging to the Company.b) Over certain immovable properties belonging to Adani Properties Pvt. Ltd.

IV a) 15,00,000 privately placed 14.50% secured redeemable non convertibledebentures of Rs. 100/- each allotted w.e.f. 29th December 1999, wereredeemable at par in three equal annual installments on 29th December2002, 29th December 2003 & 29th December 2004 respectively, whichwere redeemed on respective due dates.

b) The above debentures were secured by pledge of shares of some of thePromoters and their relatives and by way of mortgage and exclusivecharges on some immovable properties of the Company.

V Vehicles loans are secured by hypothecation of respective vehicles.

47



1/4/2004 during the during the 31/3/2005 1/4/2004 for the during the 31/3/2005 31/3/2005 31/3/2004year year year year

1 Land 5.82 - - 5.82 - - - - 5.82 6.392 Building 18.70 1.05 - 19.74 2.84 0.34 - 3.19 16.55 21.903 Plant & Machinery 0.91 0.25 - 1.16 0.28 0.05 - 0.33 0.83 17.134 Furniture & Fixtures 7.39 0.60 0.01 7.98 3.52 0.50 - 4.02 3.96 4.095 Electrical Fittings & Installations 1.05 0.10 - 1.15 0.32 0.07 - 0.39 0.76 1.216 Office Equipments 3.59 0.61 0.11 4.09 0.99 0.19 0.04 1.14 2.95 2.997 Computer Equipment 2.69 0.43 0.04 3.08 1.99 0.28 0.03 2.25 0.83 0.928 Vehicles 6.29 1.65 0.62 7.31 2.48 0.66 0.30 2.83 4.48 3.899 Air-craft - 14.26 - 14.26 - 0.24 - 0.24 14.03 -

Total 46.43 18.96 0.78 64.61 12.44 2.32 0.37 14.39 50.22 58.52Previous Year 71.99 5.46 2.55 74.91 14.55 3.27 1.34 16.48 58.43 -

(Rs. in Crores)


SCHEDULE : 6

INVESTMENTS - NON-TRADING :LONG-TERM INVESTMENTS

GOVERNMENT SECURITIES (UNQUOTED)

(Lodged with Government departments)- in 6 year National Saving Certificates 0.02 0.03- in Kisan Vikas Patra (Rs. 500/-) - -

INVESTMENT IN ASSOCIATES

1) 2,600 (2600) equity shares of Adani Petronet - -(Dahej) Port Pvt. Ltd. of Rs. 10/- each. (Rs. 26000/-)

OTHERS (UNQUOTED) (NON TRADE)

1) 10 (10) equity shares of Coffee Futures Exchange 0.01 0.01Board India Ltd. of Rs. 10,000/- each

2) 5 (5) Bond of UCO Bank of Rs. 5,00,000/- each. 0.25 0.25

3) India Millenium Deposit (USD 1000000) 4.34 4.56

4) 2,00,000 (Previous Year 2,00,000) full paid up Equity shares of - 0.56

Vishakha Polyfab Pvt. Ltd. Rs. 10/- each

5) 20,000 (20,000) Equity Shares of KCCB of Rs. 25/- each 0.05 0.05

6) 24,750 (NIL) Equity Shares of Adani Logistics Ltd. of Rs. 10/- each. 0.02 -

(Goodwill Rs. 15000)

7) I Call LLC USA 0.23 -

OTHERS (QUOTED) (NON TRADE)

1) 943 (NIL) Equity Shares of Punjab National Bank of Rs 10/- each 0.04 -

INVESTMENTS (CURRENT) NON-TRADE

1) NIL (2361330.846) units of - 3.00Kotak Mahindra K Liquid IP of Rs.10/- each

2) NIL (2000000) units of Reliance Liquid Fund of Rs.10/- each - 2.00

3) 1853087.243 (6757474.249) units of UTI Mutual Liquid Fund 2.00 7.00

of Rs. 10/- each

4) 2725290.698 (NIL) J M High Liquidity Fund of Rs. 10/- each 3.00 -

9.96 17.46

Aggregate Book Value - Quoted 0.04 -- Unquoted 46.63 17.46

Aggregate Market Value - Quoted 0.04 -

48



PURCHASED AND SOLD DURING THE YEAR

PARTICULARS FACE VALUE NOS. COST(Rs.) (in crs.)

1 RLF - TREASURY PLAN - RETAIL OPTION - GROWTH OPTION - GROWTH PLAN 10 1.077 14.5002 TEMPLELTON INDIA - TREASURY MANAGEMENT PLAN ACCOUNT - REGULAR PLAN 1000 0.003 5.0003 SBI - MAGNUM - INSTITUTIONAL INCOME PLAN 10 1.838 19.0004 SBI - MAGNUM INSTA CASH FUND - CASH OPTION 10 1.100 16.0005 DSP MERRILL LYNCH LIQUIDITY FUND - GROWTH 10 0.320 5.0006 PRUDENTIAL ICICI INST LIQUID PLAN 10 0.253 4.0007 KOTAK LIQUID (INSTITUTIONAL) - GROWTH 10 0.856 11.0008 PRINCIPAL CASH MANAGEMENT FUND - LIQUIDITY OPTION - INST PLAN - GROWTH PLAN 10 0.849 9.0009 UTI LIQUID CASH PLAN REGULAR - GROWTH PLAN 10 5.461 57.25010 UTI LIQUID CASH PLAN REGULAR - GROWTH PLAN 1000 0.037 40.00011 UTI LIQUID CASH PLAN INST PLAN - GROWTH PLAN 10 7.007 73.50012 UTI LIQUID CASH PLAN INST PLAN - GROWTH PLAN 1000 0.034 54.00013 GFBD - GRINDLAYS FLOATING RATE - ST - INST PLAN B - DAILY DIV 10 4.280 43.100

(Rs. in Crores)


SCHEDULE : 7

INVENTORIES(AS CERTIFIED BY THE MANAGEMENT)

Raw-materials 7.89 5.57Finished Goods 321.62 286.91Stores, Chemicals & Packing Materials 0.22 1.78Stock-in-process - 0.30Goods-in-transit - 11.92

329.73 306.48

SCHEDULE : 8

RECEIVABLES(UNSECURED, CONSIDERED GOOD)

Over six monthsConsidered good 81.51 182.73Considered doubtful 3.26 3.06

84.77 185.79Less :- Provision for doubtful debts (3.26) 81.51 3.06 182.73

Others, considered good 2,320.72 1067.71

2,402.23 1,250.44

SCHEDULE : 9

CASH & BANK BALANCESCash on hand [including cheques on hand] 6.07 7.15

Balances with Scheduled Banks :-- In Margin money account (lodged against Bank Guarantee & Letter of Credit) 161.72 115.69- In Margin money account (net of 100% Letter of Credit) 4.94 46.39- Margin money account (PCFC) 13.10 -- In Margin money account (net of buyers credit facility) 87.79 14.01- In Deposit Account (in foreign currency) 94.72 -- In Fixed Deposit account (pledged with govt. authorities) 40.76 40.88- In Current Account 114.98 54.97- In Over draft / CC Account - 5.78- Bank Balance with Foreign Bank in Current Account 0.24 -- In EEFC Account 0.85 0.36- Unclaimed Dividend account 0.09 0.09

525.26 285.32

49


(Rs. in Crores)


SCHEDULE : 10

LOANS & ADVANCES(UNSECURED, CONSIDERED GOOD)

Loans 5.04 17.23Advances recoverable in cash or in kind or for value to be received 258.89 193.39Interest accrued but not due 43.22 19.66Interest accrued and due on Investments 0.01 0.01Advance payment of Income tax (including TDS of Rs. 3.52 crores,Previous Year Rs.7.16 crores) 36.70 10.03Balances with service tax authorities 0.42 -

344.27 240.32

SCHEDULE : 11

CURRENT LIABILITIES

Sundry Creditors 1867.40 943.86Other liabilities 164.24 125.35Unclaimed Dividend / Dividend payable 0.09 0.09Interest accrued but not due 7.30 0.43

2039.03 1069.73

SCHEDULE : 12

PROVISIONS

Provision for taxation 26.08 7.24Provision for Leave encashment 1.22 0.69Proposed dividend 9.88 9.27Tax on dividend (Including surcharge) 1.27 1.26

38.45 18.46

SCHEDULE : 13

MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)1) Deferred Revenue Expenditure 3.79 1.15

Less: 1/5th written off during the year 0.95 2.84 0.23 0.92

2) Preliminary Expenses - 0.02Less: 1/5th amortised during the year (Rs. 59000/-) - - - 0.02

2.84 0.94

50



(Rs. in Crores)


SCHEDULE : 14

SALES & OPERATING EARNINGS

Sales 14906.89 8613.58Export incentives 8.84 207.23Insurance Claim Received 2.31 0.12Service charges (Service Tax) 25.34 -Miscellaneous Operating income 61.96 90.28(TDS on service charges and misc. operating income Rs. 2.34 crores,Previous Year Rs. 1.23 crores)

15005.34 8911.21

SCHEDULE : 15

OTHER INCOME

Dividend (Gross) - 0.02Interest on investments - 0.03Profit / Loss on sale of investments (net) 0.16 73.15Profit on surrender of rights - 2.00Other Income 2.43 -

2.58 75.20

SCHEDULE : 16

COST OF MATERIALS

Raw materials consumedOpening stock - 2.95ADD : Purchases during the year 1727.00 299.94

1727.00 302.89LESS : Closing stock 7.90 5.57

1719.10 297.32ADD : Processing charges 35.04 6.24

1754.14 303.56Purchase of traded goods 12670.66 8302.67Decrease / (Increase) in stockOpening stock of finished / traded goods 234.42 108.55Closing stock of finished / traded goods 317.93 299.13

(83.51) (190.58)Stock-in-processOpening Stock - 0.13Closing Stock - 0.30

- (0.17)

14341.29 8415.48

SCHEDULE : 17

PERSONNEL EXPENSES

Salaries & bonus 13.84 10.73Contribution to provident & other funds 1.02 1.22Staff welfare expenses 0.62 0.48

15.48 12.43

SCHEDULES 14 TO 19 FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005

51


(Rs. in Crores)


SCHEDULE : 18


Rent 1.39 1.51Rates & Taxes 7.77 9.10Postage, telephone & telex expenses 2.76 2.24Stationery & printing expenses 0.66 0.58

REPAIRS TO :Office building 0.40 0.26Office equipments 0.19 0.30Others 1.08 0.44

1.66 1.00Electric power expenses 0.86 3.18Insurance expenses 4.74 2.50Miscellaneous expenses 28.19 27.64Loss of stock due to Accident 0.04 0.05Chemicals & Consumables - 2.71Payment to auditors 0.16 0.16Office expenses 4.61 1.75Directors sitting fees 0.02 0.02Loss / Profit on sale of assets (Net) 0.09 0.33Computer software 3.13 0.05Clearing & forwarding expenses (Net) 150.25 72.66Packing Materials Consumed 37.48 16.74Damages on contract settlements 11.49 -Supervision & testing expenses 4.47 2.93Advertisement and Selling Expenses 35.56 6.06Bad-debts and other receivable written off (net of recoveryRs 0.63 crores, Previous Year Rs 0.50 crores) 68.16 40.01Less :- Transferred from General Reserve 68.16 - 39.97 0.04

Provision for Bad & Doubtful debts 0.87 3.06Business support services 130.00 183.63Membership & Subscription 0.13 0.11Legal & Professional 0.09 0.02Travelling & conveyance expenses 8.23 6.10

434.65 344.17

SCHEDULE : 19

INTEREST

INTEREST EXPENSESInterest on Term Loans 18.37 18.73Interest on Debentures/Bonds 1.36 2.57Interest on Bank Borrowings & Others 132.60 75.98

152.33 97.28Less : Interest Income

Interest on deposit and others (160.23) (43.64)(TDS Rs. 0.97 crore, Previous Year Rs. 1.88 crores)

Net Interest (7.90) 53.64

Bank Commission / Charges 37.58 21.79Exchange rate difference 40.58 (9.20)

70.26 66.23

52



SCHEDULE: “ 20 “

NOTES FORMING PART OF THE CONSOLIDATED ACCOUNTS

A) SIGNIFICANT ACCOUNTING POLICIES ADOPTED BY THE COMPANY IN PREPARATION AND PRESENTATION OFCONSOLIDATED ACCOUNTS :

1. Basis of accounting :

The financial statements are prepared in accordance with the requirement of the Companies Act, 1956, including themandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211(3C) of the Companies Act, 1956, under historical cost convention on an accrual basis.

2. Principles of consolidation:

a) The consolidated financial statements have been prepared in accordance with Accounting Standard 21(AS 21) on“Consolidated Financial Statements”, Accounting Standard 23(AS 23) on “Accounting for Investments in Associatesin Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India and on the basisof the separate audited financial statements of Adani Exports Limited (AEL) its subsidiaries and associates.Reference in the notes to “Group” shall mean to include AEL, its subsidiaries and associates consolidated in thesefinancial statements unless otherwise stated.

b) The consolidated financial statements have been prepared on the following basis.

i) The financial statements of the Group are combined on a line-by-line basis by adding together the bookvalues of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balancesand intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standard(AS) 21.

ii) In case of associates where the Group directly or indirectly holds more than 20% of equity, investments inassociates are accounted for using equity method in accordance with Accounting Standard (AS) 23 –“Accounting for Investments in Associates in Consolidated Financial Statements” issued by the Institute ofChartered Accountants of India.

iii) The difference between the cost of investment in the subsidiaries / Associates over the net assets at thetime of acquisition of the investment in the subsidiaries / Associates is recognised in the financial statementsas Goodwill or Capital Reserve as the case may be.

iv) The consolidated financial statements are prepared using uniform accounting policies for like transactionsand other events in similar circumstances and necessary adjustments required for deviations if any havebeen made in the consolidated financial statements.

v) Investment in Adani Wilmar Limited, a Joint venture Company, whose financial statements reflected GroupShare of Total Assets of Rs. 168.41 Crores as at 31st March, 2004 and Group Share of Sales Rs.514.53crores, disposed off during the year, has not been included in preparation of the current year consolidatedfinancial statements.

The list of companies included in consolidation, relationship with Adani Exports Limited and Adani Exports Limited‘sshareholding therein is as under:

Name of Company Country of Incorporation Relationship Shareholding Reporting date

Adani Global Ltd. (AGL) Mauritius Subsidiary 100% 31-12-04Adani Global FZE (AGFZE) U.A.E. Subsidiary 100% by AGL 31-12-04Adani Global Pte Ltd. (AGPTE) Singapore Subsidiary 100% by AGL 31-12-04Adani Logistics Ltd. India Associate 49.50% 31-03-05Adani Petronet (Dahej) Port Pvt. Ltd. India Associate 26% 31-03-05

The list of companies included in consolidation in the Previous Year, relationship with Adani Exports Limited and AdaniExports Limited‘s shareholding therein is as under:

Name of Company Country of Incorporation Relationship Shareholding Reporting date

Adani Global Ltd.(AGL) Mauritius Subsidiary 100% 31-12-03Adani Global FZE (AGFZE) U.A.E. Subsidiary 100% by AGL 31-12-03Adani Global Pte Ltd. (AGPTE) Singapore Subsidiary 100% by AGL 31-12-03Adani Petronet (Dahej) Port Pvt Ltd. India Associate 26% 31-03-04Adani Wilmar Ltd. (AWL) India Joint-venture 28.18% 31-03-04

3. SIGNIFICANT ACCOUNTING POLICIES:

a) SYSTEM OF ACCOUNTING

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting inaccordance with Companies Act 1956 and in accordance with the accounting principles generally accepted in India(Indian GAAP) and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India(ICAI) to the extent applicable.

53


b) USE OF ESTIMATES

The preparation of financial statements in confirmity with generally accepted accounting principles (GAAP) requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and thedisclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates.Any revision to accounting estimates is recognized prospectively in current and future periods.

c) INVENTORIESi) Inventories are valued at lower of cost or Net Realisable value.ii) The Custom duty in respect of Closing Inventory of Finished goods is included as cost of inventory.iii) The basis of determining cost for various categories of inventories are as follows:

a) Raw material : First in First out (FIFO).b) Traded / Finished goods : First in First out (FIFO) / Specific identification

of their individual costs – as the case may be.c) Licenses on hand : Specific identification of their individual costs.d) Packing Materials : First in First out (FIFO).

d) MATERIAL EVENTS

Material events occurring after the balance sheet date are taken into cognizance.

e) CONTINGENT LIABILITIES

These are disclosed by way of notes on accounts. Provision is made in accounts in respect of those contingences,which are likely to materialize into liabilities after the year end, till the finalisation of accounts and have material effecton the position stated in the Balance Sheet.

f) PRIOR PERIOD ITEMS

Prior period expenses / income is accounted under the respective heads. Material items, if any, are disclosed separatelyby way of note.

g) DEPRECIATION

i) Depreciation on Fixed Assets is provided on straight-line method at rates and in the manner specified in ScheduleXIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs.

ii) Depreciation on Assets acquired / disposed off during the year is provided on pro-rata basis with reference to thedate of addition/disposal.

iii) Any expenditure in respect of assets, the ownership of which would not vest with the Company, are charged offto revenue in the year of incurrence.

h) REVENUE RECOGNITION

i) Sales of goods is recognised on shipment or despatch to customer sales and net of Sales-tax and return.

ii) Dividend income from investments is recognised when the Company’s right to receive payment is established.

iii) Income from services rendered is accounted for when the work is performed.

iv) Interest revenues are recognised on time proportion basis taking into account the amount outstanding and the rateapplicable.

i) FIXED ASSETS

Fixed assets are stated at cost of acquisition or construction. They are stated at historical cost less accumulateddepreciation.

j) FOREIGN CURRENCY TRANSACTIONS

i) Initial Recognition

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of thetransaction.

ii) Conversion

At the year-end, monetary items denominated in foreign currencies, other than those covered by forward contracts,are converted into rupee equivalents at the year end exchange rates.

iii) Exchange Differences

All exchange differences arising on settlement and conversion on foreign currency transaction are included in theProfit and Loss Account.

iv) Forward Exchange Contracts

In respect of transactions covered by forward exchange contracts, the difference between the forward rate andthe exchange rate at the date of the transaction is recognised as income or expense over the life of the contract.

k) INVESTMENTS

i) Current investment are carried at the lower of cost and quoted / fair value, computed category wise. Long termInvestments are stated at cost. Provision for diminution in the value of long-term Investments is made only if sucha decline is other than temporary in the opinion of the management.

54



ii) Investment in shares of foreign subsidiary Company is expressed in Indian Currency at the rates of exchangeprevailing at the time when the investment was made.

l) RETIREMENT BENEFITS

i) Provident Fund and Pension Fund: The Company contributes towards provident and pension fund which isadministered by Central Government and are charged against revenue every year.

ii) Gratuity and Superannuation Fund: Liabilities for payment of Gratuity & Super Annuation to employees arecovered through Group Gratuity & Super Annuation Scheme of Life Insurance Corporation of India and are chargedagainst revenue every year.

iii) Leave Encashment: The Company has provided the liabilities pertaining to accrued leave encashment as at theyear end in its books of accounts on the basis of the actuarial valuer’s certificate.

m) BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part ofthe cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready forintended use. All other borrowing costs are charged to revenue.

n) SEGMENT ACCOUNTING

Accounting Standards Interpretation (ASI) 20 dated 14th February, 2004, issued by the Accounting Standards Board ofthe Institute of Chartered Accountants of India, on AS 17, Segment Reporting clarifies that in case, by applying thedefinitions of “business segment” and “geographical segment” given in AS 17, it is concluded that there is neither morethan one business segment nor more than one geographical segment, segment information as per AS 17 is not requiredto be disclosed.

o) RELATED PARTY TRANSACTIONS

Disclosure of transactions with Related Parties, as required by Accounting Standard 18 “Related Party Disclosures” hasbeen set out in a separate statement annexed to this Schedule. Related parties as defined under clause 3 of theAccounting Standard have been identified on the basis of representations made by key managerial personnel andinformation available with the Company.

p) LEASES

The Company’s significant leasing arrangements are in respect of operating leases for premises (residential, office,stores, godowns, etc.) and land. The leasing arrangements which are not cancellable range between 11 months and fiveyears generally, and are usually renewable by mutual consent on agreed terms. The aggregate lease rentals payable arecharged as rent including lease rentals.

q) EARNING PER SHARE

The Company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard-20 issued bythe Institute of Chartered Accountants of India. The Basic EPS has been computed by dividing the income available toequity shareholders by the weighted average number of equity shares outstanding during the accounting year. TheDiluted EPS have been computed using the weighted average number of equity shares and dilutive potential equityshares outstanding at the end of the year.

r) DEFERRED TAXATION

In accordance with Accounting Standard 22 – “Accounting for Taxes on Income”, issued by the Institute of CharteredAccountants of India, the deferred tax for timing differences between the book and tax profits for the year is accountedby using the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet Date.

Deferred Tax assets arising from timing differences are recognised to the extent there is virtual certainty that the assetscan be realised in future.

Net outstanding balance in Deferred tax account is recognized as deferred tax liability / asset. The deferred tax accountis used solely for reversing timing difference as and when crystallised.

s) COMMODITY HEDGING TRANSACTIONS

The commodity hedging contracts are accounted on the date of their settlement & realised gain / loss in respect ofsettled contracts are recognised in the Profit and Loss account, together with the underlying transactions.

t) ACCOUNTING OF CLAIMS

i) Claims received are accounted at the time of lodgement depending on the certainty of receipt and claims payableare accounted at the time of acceptance.

ii) Claims raised by Government authorities regarding taxes and duties, which are disputed by the Company, areaccounted based on legality of each claim. Adjustments, if any are made in the year in which disputes are finallysettled.

55


u) EXPORT INCENTIVES

Export benefits under various scheme announced by the Central Government under Exim Policy are accounted on accrualbasis to the extent considered receivable depending on the certainty of receipt.

v) PROPOSED DIVIDEND

Dividend proposed by the Directors is provided for in the books of account pending approval at the Annual GeneralMeeting.

w) CAPITAL WORK-IN-PROGRESS

Advances paid towards the acquisition of fixed assets, and the cost of assets not put to use before the year ended,are disclosed under capital work-in-progress.

x) INSURANCE CLAIMS

Insurance and other claims to the extent considered recoverable are accounted for in the year of claim based on theamount assessed by the surveyor. However, claims and refunds whose recovery cannot be ascertained with reasonablecertainty, are accounted for on acceptance/actual receipts basis.

y) DOUBTFUL DEBTS/ADVANCES

Provision is made in the accounts for Debts / Advances which in the opinion of the management are considered doubtfulof recovery.

z) TAXATION

Provision for taxation has been made in accordance with the Income Tax laws prevailing for the relevant assessmentyears.

aa) MISCELLANEOUS EXPENDITURE

Revenue expenditure incurred, the benefit of which extends over a period of time, are deferred and amortized over aperiod of three to five years commencing from the year the resource / facility gets fully functional in an integral wayand the corresponding benefit starts accruing to the business.

bb) OTHER SIGNIFICANT ACCOUNTING POLICIES

These are set out in the notes to accounts under “Statement of Accounting Policies” of the financial statements of theCompany, AGL, AGFZE & AGPTE.

(B) NOTES ON ACCOUNTS:-

1. In case of AGFZE, AGPTE and AGL, the summarized revenue and expenses transactions at the year end reflected in Profit& Loss Account have been translated into Indian Rupees at an average of monthly exchange rate.

The assets and liabilities in the Balance Sheet have been translated into Indian Rupees at the closing exchange rate atthe year end. The resultant translation exchange, gain / loss has been disclosed as Exchange Reserves in Reserves andSurplus.

2. Contingent liabilities not provided for(Rs. in Crores)


a) Claims against the Company not acknowledged as debts 14.44 36.95

b) In respect of Corporate Guarantee given:-i. To Companies under the same Management 108.11 213.86ii. For obligations to other parties 88.26 337.59

c) Bills of Exchange Discounted 961.27 311.04

d) Demand against the Company not admitted as debtsregarding sales tax against which appeals are pending 14.21 1.05

e) In respect of bank guarantees given to Government agencies. 4.07 5.49

f) Letter of Credit 48.61 52.64

g) Certain claims / show cause notices disputed have neither been considered as contingent liabilities noracknowledged as claims based on the opinions obtained from prominent legal counsels for which amount isunascertainable.

3. Disclosure as required by Accounting Standard 19, “Leases” issued by the Institute of Chartered Accountants of Indiaare given below:Being the Company is lessee:(i) The Company’s significant leasing arrangements are in respect of godowns / residential / office premises (Including

furniture and fittings therein, as applicable). The aggregate lease rental payable is charged to Profit and LossAccount as Rent in Schedule 18.

(ii) The Leasing arrangements, which are cancelable, range between 11 months and 5 years. They are usually renewableby mutual consent on mutually agreeable terms. Under these arrangements, generally refundable interest freedeposits have been given.

56



4. Related Party Disclosure (As identified by the Management)i) Name of related parties & description of relationshipA Associate Entities

Adani Agrifresh Ltd.Adani Agro Pvt. Ltd.Adani Chemicals Ltd.Adani Logistics Ltd.

Adani Petronet (Dahej) Port Pvt Ltd. Adani Port Infrastructure Ltd. Adani Port Ltd. Adani Textiles Industries

Adani Wilmar Ltd. B2C India Ltd. Gujarat Adani Energy Ltd. Gujarat Adani Infrastructure Pvt. Ltd. Gujarat Adani Port Ltd.

Gujarat State Exports Corporation Ltd. I Call India Ltd.

Inter Continetal (India)I-Gate India Pvt. Ltd.

Komal Marketing Pvt Ltd Komal Infotech Pvt Ltd Mundra Special Economic Zone Ltd

Shanitkrupa Estates Pvt. Ltd. Shantivan

B Key Management Personnels Shri Gautam S. Adani Shri Rajesh S. Adani Shri Vasant S. AdaniC Relatives Vasant S. Adani Family Trust Vinod S.Adani

ii) Nature & Volume of Transaction with Related Parties (Rs. in Crores)

Particulars Associate Jt Control Key mngt Relatives Entities Company Personnels 1 Sales (Net of Return) 33.20 - - -

0.88 17.70 - -2 Purchase ( Net of Return) 63.39 - - - 0.13 56.27 - -3 Sale of Investment 12.88 - - - 93.71 - 1.894 Purchase of Fixed Asset 3.92 - - - - 0.01 - -5 Sale of Fixed Assets 0.03 - - - 0.26 - - -6 Interest - received / (paid) 0.27 - - - 1.09 0.17 - -7 Dividend received - - - - 8 Funds given [ includes investment in 40.78 - - - preference shares/equity participation/ business 278.20 44.97 - -

arrangement ]9 Funds received [ including redemption of 68.22 - - - preference share/business arrangement ] 167.81 49.97 - -10 Service rendered 1.52 - - - 2.00 4.35 - -11 Service availed 124.62 - - - 29.38 1.36 - -12 Rent paid 0.04 - - 0.02 0.24 - - -13 Rent received 0.04 - - - - 0.04 - -14 Remuneration - - 3.11 - - 1.44 -15 Guarantee & Collateral securities 130.73 - - - (Outstanding facility as on 31-03-2005) 249.51 185.90 - -16 Balance Outstanding (Due From) 13.52 - - - as 31st March 2005 (Due To) 14.75

108.01 - - -

57







Signature to Schedules “ 1 “ to “ 20 “


Particulars Year ended 31-03-2005 Year ended 31-03-2004Net Profit after Tax Provision (Rs. in Crores) 121.58 140.06Less: Preference Dividend including tax thereon (Rs. in Crores) 0.22 1.12Net Profit after tax available for Equity Shareholders (Rs. in Crores) 121.36 138.94Number of shares used in computing Earning Per ShareBasic 220926086 220474000Diluted 221757733 220474000Earning Per Share (Equity Shares, face value Rs.1/-)Basic (in Rs.) 5.49 6.30Diluted (in Rs.) 5.47 6.30

Dilutive potential equity shares are those which are deemed for the purpose of the computation to have been issued for no consideration.During the year, face value of the equity shares have been reduced from Rs.10/- to Re.1/-, accordingly the calculation of basicand diluted earning per share is adjusted for the year ended March 31, 2004 based on the new number of shares as per para44 of Accounting Standard 20.

6. a) Deferred Tax

As At 31-03-2005 As At 31-03-2004

Deferred Tax Liability on account of(i) Depreciation 6.31 8.41(ii) Deferred Revenue Expenditure 1.26 —Total 7.57 8.41Deferred Tax Assets on Account of(i) Miscellaneous Expenditure — 0.11(ii) Brought forward capital loss — 0.03(iii) Leave Encashment 0.12 0.28(iv) Other 0.10 1.10Total 1.22 1.52Net Deferred Tax Liability 6.36 6.89

b) In accordance with “Accounting Standard 22”, the deferred tax liability of 3.56 Crores (Previous Year liability ofRs. 0.78 Crores) for the year has been recognised in the Profit & Loss Account.

7. Previous Year’s figures have been regrouped wherever necessary to confirm to this year’s classification.

58



(Rs. in Crores)


A CASH FLOW FROM OPERATIONSNet Profit before tax & extraordinary items 144.31 145.54Adjustment for :

Depreciation 2.33 3.27Income from investments - (0.05)Loss on sale of investment - 63.81Profit on sale of investment (0.16) (136.96)Profit on sale of assets (0.11) (2.03)Loss on sale of fixed assets 0.20 0.36Provision for Bad Debts 1.25 3.06Deferred Revenue Expenditure 0.95 0.23Interest Expense 152.33 97.28Interest income (160.23) (43.64)

(3.44) (14.67)Operating Profit before working capital changes 140.87 130.87Adjustment for:

Trade & other receivables (1234.10) (186.88)Inventories (95.21) (174.93)Loans & Advances (64.41) (19.53)Trade Payables 1065.91 434.33

(327.81) 52.99Cash generated from operations (186.94) 183.86

Direct tax (paid) / refund (28.30) 0.14Net cash from operating activities (215.24) 184.00

B Cash Flow from Investing ActivitiesAdditions to fixed assets (18.96) (5.45)Additions to work in progress (4.05) (12.78)Sale of fixed assets 0.32 2.88Deferred Revenue Expenditure (2.64) (1.18)Sale of Investments - 162.62Purchase of Investments (0.29) (69.73)Realisation of Short Term Investments (Net) 0.16 0.16Income from Investments - 0.05Interest received 136.52 34.60

Net cash used in Investing Activities 111.06 111.17C Cash Flow from Financing Activities

Conversion of 1% Foreign Currency Converible Bonds in to EquityShares at a Premium (PY Share Application Money) 33.94 3.95

Redemption of preference shares (10.00) -Proceeds from working capital borrowings 141.99 (218.67)Proceeds from long term borrowings 246.20 219.59Repayment of long term borrowings (132.49) (94.96)Proceeds from short term borrowings 236.00 48.72Interest paid (145.30) (100.43)Dividend paid (9.46) (7.62)

360.88 (149.42)D Others

Exchange reserve 9.21 2.53Adjustments for Subsidiary and Joint Venture - (6.68)

Net lncrease/(Decrease) in cash & cash equivalents 265.91 141.59Cash & cash equivalent at the beginning of the year(Net of Share in Joint Venture Rs. 32.97 crores) 264.35 155.73Cash & cash equivalent as at 31/03/2005 530.26 297.32

Notes : 1 The above cash flow statement has been prepared under the “Indirect Method” set out in Accounting Standard (AS - 3) on Cash Flow Statement issued by

The Institute of Chartered Accountants of India. 2 Prior Year Comparatives have been reclassified to confirm with current year’s presentation, where ever applicable. 3 Cash and Cash equivalents includes Rs. 308.40 crores (Previous Year Rs. 217.06 Crores). which are not available for use by the Company (refer schedule 9

to accounts) 4 As due to disinvestment of all the shares in joint venture, adjustments relating to the difference arising on account of differntial block of assets, differential balance

of Profit & Loss account, differential balance of Investments and differential balance of net current assets relating to joint venture of the Company considered for itsconsolidated financial statements are adjusted in respective items in a consolidated statement of cash flow for the year ended 31st March 2005.

5 Short Term Investments of Rs. 5 crores (Previous Year Rs. 12 crores) included in Cash and Cash equivalents.



D.A. PARIKH BIRVA C. PATELProprietor Company Secretary






CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2005

Adani Global Limited(A Subsidiary Company of Adani Exports Limited)

59

To,The ShareholdersADANI GLOBAL LIMITEDProt Louis, Mauritius

The directors are pleased to present their report together with the audited financial statements of the company for the yearended 31st December 2004.

PRINCIPAL ACTIVITYThe principal activity of the Company is that of international trading and investments holding.

RESULTS AND DIVIDENDThe results for the year are shown after auditor’s report.

The directors recommend the payment of a dividend of USD 98,093 for the year under review (2003: USD 95,368).

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF FINANCIAL STATEMENTS

The directors arc responsible for the preparation of financial statements which comply with the Companies Act 2001. Inpreparing those financial statements, the directors have:

• selected suitable accounting policies and then applied them consistently;

• made judgements and estimates that are reasonable and prudent,

• stated whether applicable accounting standards have been followed, subject to any material departures disclosed andexplained in the financial statements, and

• prepared the financial statements on the going concern basis

They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the preventionand detection of fraud and other irregularities.

By order of the Board

JAYCHUND JINGREEDATE : 10th May, 2005 DIRECTOR

DIRECTOR’S REPORT

60



To the Members ofADANI GLOBAL LIMITED

We have audited the financial statements of Adani Global Limited Ltd for the year ended 31 December 2004.

This report is made solely to the Company’s shareholders, as a body, in accordance with section 205 of the Companies Act2001. Our audit work has been undertaken so that we might state to the Company’s shareholders those matters we arerequired to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our auditwork, for this report, or for the opinions we leave formed.

Directors’ responsibilities

The directors are responsible for the preparation of financial statements which comply will the Companies Act 2001. Theyare also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the preventionand detection of fraud and other irregularities.

Auditors’ responsibilities

It is our responsibility to form an independent opinion, based on our audit, on those Financial statements and to report ouropinion to you.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing. An audit includes examination, on a testbasis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgements made by directors in the preparation of financial statements, and of whether theaccounting policies are appropriate to the Company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from materialmisstatements. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in thefinancial statements. We believe that our audit provides a reasonable basis for our opinion.

We have no relationship with, or interests in the Company other than in our capacity as auditors and tax advisors.

Opinion

We have obtained all the information and explanations that we have required.

In our opinion

• proper accounting records have been kept by the Company as far as it appears from our examination of those records;and

• the financial statements give a true and fair view of the financial position of the Company as at 31 December 2004,and the results of its operation and cash flows for the year then ended, and comply with the Companies Act 2001 andInternational Financial Reporting Standards.

KPMGPublic Accountants

Port Louis

DATE : 10th May, 2005

AUDITORS’ REPORT


61

(Rs. in Crores)



(A) Share capital 1 41.26 44.14(B) Reserves & surplus 2 (0.52) 1.58

40.74 45.72II. LOAN FUNDS : - -

TOTAL 40.74 45.72

B APPLICATION OF FUNDS :I. FIXED ASSETS - -II. INVESTMENTS 3 40.32 42.08III. CURRENT ASSETS, LOANS & ADVANCES

(A) Cash & Bank Balances 4 0.04 0.03(B) Loans & Advances 5 2.24 9.64

2.28 9.67

LESS :-CURRENT LIABILITIES & PROVISIONS(A) Current Liabilities 6 1.41 5.56(B) Provisions 7 0.45 0.47

1.86 6.03


TOTAL 40.74 45.72



JAYECHUND JIGNGREEDirector

SUSHIL KUMAR JOGOODirector




BALANCE SHEET AS AT 31ST DECEMBER, 2004

62



(Rs. in Crores)

PARTICULARS SCHEDULE 31-12-2004 31-12-2003

A INCOME :Sales and Operating Earnings 8 0.84 1.17

0.84 1.17

B EXPENDITURE :Operation and Other Expenses 9 0.04 0.03

0.04 0.03

Profit for the year before taxation 0.80 1.14Provision for taxation:- Current Tax 0.03 0.03

Profit after taxation 0.77 1.11Add : Surplus Brought Forward From Previous Year 1.55 0.92


APPROPRIATIONS :Dividend on Preference Shares 0.43 0.44Balance carried to balance sheet 1.89 1.59

2.32 2.03

Earning per Share-of US $100 each (in Rupees)- Basic & Diluted 54.21 104.85- Annualised 54.21 104.85








PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER, 2004


63

(Rs. in Crores)



64000 Ordinary Shares of USD 100 each 30.89 30.8936000 10 % Redeemable Prefrence Shares of

USD 100 each 28.92 28.92

59.81 59.81

ISSUED, SUBSCRIBED & PAID-UP64000 Ordinary Shares of USD 100 each 30.89 30.89Of the above 64000 (Previous year 64000) Shares are heldby Adani Exports Limited, a holding Company25590 (Previous year 32790) 10% Redeemable Preference 10.37 13.25Shares of USD 100 each.Of the above 25590 (Previous year 32790) Shares are held byAdani Exports Limited, a holding Company16050 Redeemable Preference Shares privatlely placed withholding Company, redeemable at par in 5 equal instalmentscommenced from 28/12/0319950 Redeemable Preference Shares privatlely placed withholding Company, redeemable at par in 5 equal instalmentscommenced from 05/08/04

41.26 44.14

SCHEDULE : 2RESERVES & SURPLUS

Exchange Reserve (0.08) (0.02)Translation Reserve (2.33) 0.01Surplus in profit & loss account 1.89 1.59

(0.52) 1.58

SCHEDULE : 3INVESTMENTS (LONG-TERM) (NON TRADING)INVESTMENT IN SUBSIDIARY COMPANIES

1) 18 Equity Shares of Adani Global FZE ofAED 10,00,000 each 21.32 22.38

2) 88,50,000 equity share of Adani Global Pte.Ltd. (Singapore) of USD 1 each. 18.77 19.70

OTHERS (UNQUOTED)1) I Call US LLC 0.23 -

40.32 42.08

SCHEDULE : 4CASH & BANK BALANCES

Cash & Bank Balances 0.04 0.03

0.04 0.03

SCHEDULE : 5LOANS & ADVANCES (UNSECURED, CONSIDERED GOOD)

Loan to Subsidiary 1.44 7.38Advances Recoverable in Cash or Kind or for Value 0.43 1.55to be receivedInterest 0.37 0.71

2.24 9.64

SCHEDULES 1 TO 5 FORMING PART OF THE BALANCE SHEET AS AT 31ST DECEMBER, 2004

64



(Rs. in Crores)


SCHEDULE : 6

CURRENT LIABILITIES

Sundry Creditors 1.40 5.54

Other Liabilities 0.01 0.02

1.41 5.56

SCHEDULE : 7

PROVISIONS

Provision for Taxation 0.02 0.03

Proposed Dividend 0.43 0.44

0.45 0.47

SCHEDULE : 8SALES & OPERATING EARNINGS

Miscellaneous Income 0.84 1.17

0.84 1.17

SCHEDULE : 9OPERATION & OTHER EXPENSESMiscellaneous Expenses 0.01 0.01Payment to Auditors 0.01 0.01Membership & Subscription 0.01 0.01Legal & Professional 0.01 -

0.04 0.03



65

SCHEDULE: “ 10 “

NOTES FORMING PART OF THE ACCOUNTS

A) GENERAL INFORMATION

The financial statements of Adani Global Ltd for the accounting year 31st December 2004, being a Company registeredin the Republic of Mauritius, are audited by KPMG, Public Accountants, Mauritius, and we have been furnished withtheir audit report dated 10th May, 2005.

The financial statements of Adani Global Ltd. are presented in Indian Rupees duly converted, on the basis of aforesaidaudit report to comply with the requirements of Section 212 of the Companies Act, 1956.

The Company was incorporated as a Private Limited Company in the Republic of Mauritius on 21 January 1997 and wasgranted a Category 1 Global Business Licence on 28th January 1997. The principal activity of the Company is that ofinternational trading and investments holding.

The Company, as a holder of a Category 1 Global Licence under the Companies Act 2001 and the Financial ServicesDevelopment Act 2001, is required to carry on its business in a currency other than the Mauritian Rupee.

The Company is a wholly owned subsidiary of Adani Exports Limited. The accounts have been prepared and auditedfor the purpose of attachment to the accounts of the Holding Company to comply with the provisions of the IndianCompanies Act, 1956.

Adani Global Ltd. is not a ‘Company’ as defined in the Companies Act, 1956. The auditors have not included the mattersspecified in paragraph 4 & 5 of Companies (Auditor’s Report) Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of section 227 of the Companies Act, 1956, as the order is applicable only to the‘Company’ in terms of clause 2 of Paragraph 1.

The accounts have been prepared for the purpose of attachment to the accounts of the ultimate holding Company tocomply with the provisions of the Indian Companies Act, 1956.

B) SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and presentation of the Accounts:-


i) The accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

ii) Accounting policies not specifically referred to otherwise are consistent and in consonance with generallyaccepted accounting principles.

iii) All expenditure and income to the extent considered payable and receivable respectively are accounted foron accrual basis except those with significant uncertainties.

b) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the average rate of exchangeapplicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.The exchange difference arising out of the year-end translation is debited or credited to Translation Reserve.

The Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resultingexchange difference on account of translation at the year end are transferred to Translation Reserve Account andthe said account is being treated as “Reserve and Surplus”.

c) INVESTMENT IN SUBSIDIARIES

The company does not prepare consolidated financial statements and in accordance with IAS 27, has elected toreport investments in subsidiaries at cost.

d) INVESTMENT IN ASSOCIATES

The company does not prepare consolidated financial statements and in accordance with IAS 28, has elected toreport investment in associate at cost.

e) IMPAIRMENT OF ASSETS

Assets are reviewed for impairments whenever events or changes in circumstances indicate that the recoverableamount of assets is below the carrying amount.

In case that the carrying value of an asset exceeds its recoverable amount, the Company recognise the impairmentlosses in the income statement

f) REVENUE RECOGNITION

Revenue represents dividend and interest on loan receivable for the year.

Revenue is recognised as follows:

Dividends – When the shareholder ’s right to receive payment is established.

Interests – As they accrue unless when collectibility is in doubt.

g) CASH AND CASH EQUIVALENTS

Cash comprises cash at bank. Cash equivalents are short term, highly liquid investments that are readily convertibleto known amounts of cash and which are subject to an insignificant risk of change in value.

h) RELATED PARTIES

Related parties are individuals and companies where the individual or Company has the ability, directly or indirectly,to control the other party or exercise significant influence over the other party in making financial and operatingdecisions.

66



i) TAXATIONThe Company is subject to income tax in Mauritius at the rate of 15%. It is however, entitled to a tax creditequivalent to the higher of the foreign tax paid and 80% of the Mauritius tax on its foreign source income.

(B) NOTES ON ACCOUNTS:-1. The transactions are in local currency United States Dollars(USD), which have been converted into Indian Currency

(Indian Rupees) for reporting and the rate applied is as per para (b) of the significant accounting policies.2. Financial instruments and associated risks

Fair valueInvestments are valued as described in note 2. The Company’s assets and liabilities include cash and cashequivalents, other receivables and other payables, which are realised or settled within a short-term period.The carrying amounts of these assets and liabilities approximate their fair values.Associated risksThe Company’s activities expose it to the various types of risk, which are associated with the financial instrumentsand markets in which it invests. The following summary is not intended to be a comprehensive summary of all risks:Market riskMarket risk represents the potential loss that can be caused by a change in the market value of the financialinstrument. The Company’s exposure to market risk is determined by a number of factors, including interestrates, foreign currency exchange rates and market volatility.Credit riskCredit risk represents the potential loss that the Company would incur if counter parties fail to perform pursuantto the terms of their obligations to the Company. The Company limits its credit risk by carrying out transactionsmainly with its related Companies. The maximum exposure to credit risk is represented by the carrying amountof each financial asset in the Balance Sheet.Currency riskThe Company’s investments are mainly denominated in United Arab Emirates Dinar (AED) and Singapore Dollar(SGD). Consequently, the Company is exposed to the risk that the exchange rate of the US dollar relative to theAED and SGD may change in a manner, which has a material effect on the reported values of the Company’sassets and liabilities, which are denominated in AED and SGD respectively.

3. Financial instruments and associated risks (continued)Currency profile (Rs. In crores)

Financial Financial Financial FinancialAssets Liabilities Assets Liabilities

2004 2004 2003 2003INR INR INR INR

USD 0.30 1.43 0.03 0.05

AED 20.58 0.43 28.91 5.98

SGD 21.73 - 22.81 -

42.61 1.86 51.75 6.03

4. Related Party Transactions

During the year under review, the Company entered into the following related party transactions. All the transactionswere on an arm’s length basis.

(Rs. In crores)

Name of Company Nature of relationship Nature of Transactions 2004 2003

Transactions during the year:Adani Global FZE Subsidiary Loan interest receivable 0.37 0.71Adani Global FZE Subsidiary Loan received 2.45 3.35Adani Global FZE Subsidiary Dividends receivable 0.43 0.44Adani Global FZE Subsidiary Dividends received 0.41 -Adani Global FZE Subsidiary Loan and interest recovered 6.52 -Adani Global FZE Subsidiary Dividends recovered 1.54 -Adani Exports Limited Parent Dividend payable 0.43 0.44Adani Exports Limited Parent Dividend paid 0.41 1.81Adani Exports Limited Parent Payable for redemption of shares 1.40 -

Balances outstanding at 31 December:Adani Global FZE Subsidiary Loan, interest and dividend receivable 2.23 9.64Adani Global FZE Subsidiary Loan payable - 5.98Adani Exports Limited Parent Payable for redemption of shares 1.40 -Adani Exports Limited Parent Dividend payable 0.43 0.44


67


Particulars Year ended Year ended31st December, 31st December,

2004 2003

Net Profit after Tax Provision (Rs. in Crores) 0.77 1.11

Less:Preference Dividend including tax thereon (Rs. in Crores) 0.43 0.44

Net Profit after tax available for Equity Shareholders (Rs. in Crores) 0.34 0.67

Weighted Average No. of Equity Shares of USD 100 each outstanding 64000 64000during the year

Basic Earning per Share (in Rs.) 52.97 104.85

6. During the year under review the Company had invested Rs.0.24 crores in I Call USA LLC being 50% interest insuch Company. However the said Company had not yet started its commercial operations.

7. Previous year’s figures have been regrouped wherever necessary to confirm to this year’s classification.

Signature to Schedule “ 1 “ to “ 10 “For and on behalf of the Board



68



(Rs. in Crores)

PARTICULARS 2004 2003

A Cash flows from Operating ActivitiesNet Profit Before Taxation 0.80 1.14

Adjustment for :Interest Receivable (0.37) (0.71)

Profit from Operations Before Working Capital Changes 0.43 0.43Decrease in Other Payables (-) (0.01)Increase in Other Receivables 6.99 (1.14)

Cash generated from operations 7.41 (0.72)Taxation paid (0.03) (0.06)

Net Cash Used in operating activities 7.38 (0.78)

B Cash Flows From Investing ActivitiesAcquisition of Investments (0.24) -Interest Recieved 0.37 0.71

Net Cash used in investing activities 0.13 0.71

C Cash flows from financing activitiesProceeds from Loan From Subsidiary (5.32) 3.35Redemption of Shares (1.75) (1.47)Dividend paid (0.42) (1.81)

Net Cash flows from financing Activities (7.49) 0.07

D OthersExchange Reserve (0.02) (0.02)

(0.02) (0.02)

Net increase in cash and cash equivalents 0.01 (0.02)

Cash & Cash equivalents at beginning of the year 0.03 0.05

Cash & Cash equivalents at end of the year 0.04 0.03

Notes :

1 The above Cash Flow Statement has been prepared under the “Indirect Method” set out in Accounting Standard(AS - 3) on Cash Flow Statement issued by The Institute of Chartered Accountant of India.

2 Prior Year Comparatives have been reclassified to confirm with current year ’s presentation, where ever applicable.

As per our attached report of even date. For and on behalf of the Board






CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2004

Adani Global FZE(A Subsidiary Company of Adani Global Limited)

69

To,The ShareholdersADANI GLOBAL FZEJebel Ali, DubaiU.A.E.

The directors have pleasure in submitting the financial statements of Adani Global FZE, Jebel Ali, Dubai for the year ended31 December 2004.

Review of operations

Your directors are pleased to report that the establishment continued to perform well and all its activities continue to expand.The directors are confident of maintaining the growth rate in the volume of business and the profitability of the establishmentin 2005.

Turnover, profit and dividend

The turnover of the establishment for the year ended 31st December 2004, amounted to AED 930,356,362 as compared toAED 699,620,608 in the previous year, indicating a growth of 33% over the previous year.

The net profit for the year is AED 9,452,092. The Board of Directors declared an enhanced dividend of AED 360,000 duringthe year.

Events after the balance sheet date

There were no major events occurred after the balance sheet date which materially affect the establishment.

The following served as directors of the establishment during the year:

Mr. Vinod Shantilal Shah Indian national

Mr. Bhavik Bharatkumar Shah Indian national

Messrs Pannell Kerr Forster, Chartered Accountants, Dubai were appointed as auditors of the establishment for the yearended 31 December 2004. A resolution to reappoint them for the year ending 31st December 2005 will be proposed at theforthcoming annual general meeting.

By order of the Board of directors ofAdani Global FZE, Dubai, UAE

VINOD SHANTILAL SHAHDATE : 11th April, 2005 Director

DIRECTOR’S REPORT

70



To the Members ofADANI GLOBAL FZE LIMITED

We have audited the accompanying financial statements of ADANI GLOBAL FZE for the year ended 31st December 2004.

Respective responsibilities of the management and the auditors

These financial statements are the responsibility of the establishment’s management. Our responsibility is to express anopinion on these financial statements based on our audit. The previous year’s financial statements were audited by anotherauditor, whose report dated 12th May 2004 expressed an unqualified audit opinion.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of ADANI GLOBAL FZE as of31st December 2004 and of the results of its operations and its cash flows for the year then ended in accordance withInternational Financial Reporting Standards and comply with Implementing Regulations No. 1/92 issued pursuant to Law No.9 of 1992. Also, in our opinion, proper books of account and other records have been maintained by the establishment inaccordance with the said regulations.

For PANNELL KERR FORSTER

DUBAI PANNELL KERR FORSTERUNITED ARAB EMIRATES Proprietor

DATE : 28th February, 2005

AUDITORS’ REPORT


71

(Rs. in Crores)



(A) Share capital 1 23.02 23.02(B) Reserves & surplus 2 55.81 48.45

78.83 71.47II. LOAN FUNDS :

(A) Secured loans 3 4.35 -(B) Unsecured loans 4 1.80 3.66

6.15 3.66

TOTAL 84.98 75.13

B APPLICATION OF FUNDS :I. FIXED ASSETS

(A) Gross block 5 3.00 3.08(B) Less : Depreciation 2.53 2.70

(C) Net block 0.47 0.38(D) Capital work-in-progress - -

0.47 0.38II. INVESTMENTS 6 4.34 4.56III. CURRENT ASSETS, LOANS & ADVANCES

(A) Inventories 7 2.82 15.05(B) Receivables 8 73.77 76.10(C) Cash & bank balances 9 8.32 26.78(D) Loans & advances 10 43.78 5.97

128.69 123.90


48.52 53.70


TOTAL 84.98 75.13



VINOD SHANTILAL SHAHChairman

BHAVIK BHARATKUMAR SHAHDirector





72



(Rs. in Crores)

PARTICULARS SCHEDULE 2004 2003

A INCOME :Sales & Operating earnings 13 1147.31 888.87

1147.31 888.87

B EXPENDITURE :Cost of materials 14 1116.30 867.44Personnel expenses 15 2.21 1.61Operation & other expenses 16 6.11 3.83Interest 17 10.84 5.17Depreciation 0.19 0.21

1135.65 878.26

Profit for the year before taxation 11.66 10.61Provision for taxation:- Current Tax - -

Profit after taxation 11.66 10.61Add : Surplus brought forward from previous year 46.78 39.14


APPROPRIATIONS :Proposed Dividend on Equity Shares 0.43 0.43Balance carried to balance sheet 58.01 49.33

58.44 49.76

Earning per Share-AED 1000000- each(in Rupees)- Basic & Diluted 6477800.56 5895590.86- Annualised 6477800.56 5895590.86










73

(Rs. in Crores)



18 Equity Shares of AED 1,000,000 each 23.02 23.02

ISSUED, SUBSCRIBED & PAID-UP18 Equity Shares of AED 1,000,000 each 23.02 23.02(Above shares are held by Adani Global Ltd.,a holding Company)

23.02 23.02


Exchange Reserve (0.48) (0.21)Translation Reserve (1.72) (0.66)Surplus in Profit & Loss Account 58.01 49.33

55.81 48.45


From banks 4.35 -

(Secured by Guarantees, Securities and Covenants) 4.35 -


Loans from Shareholder 1.80 3.66

1.80 3.66


01/01/04 during during 31/12/04 01/01/04 for the during the 31/12/04 31/12/04 31/12/03the year the year year year

1 Building 1.05 - - 1.05 1.05 - - 1.05 - -

2 Furniture, Fixtures& Office Equipments 1.47 0.10 - 1.56 1.14 0.12 - 1.26 0.30 0.33

3 Vehicles 0.31 0.22 0.14 0.39 0.28 0.07 0.13 0.22 0.18 0.02

Total 2.82 0.32 0.14 3.00 2.47 0.19 0.13 2.53 0.47 0.35

Previous Year 3.19 0.02 0.13 3.08 2.59 0.21 0.10 2.70 0.35 -

Note: Previous year’s figures of fixed assets are converted at previous year’s closing rate. Current year ’s figures of fixedassets are converted at current year’s closing rate. Therefore previous year’s closing balance and current year’sopening balance will differ to the extent of exchange rate difference.

SCHEDULE : 6INVESTMENTSLONG TERM INVESTMENTUNQUOTED

India Millenium Deposit(100 certificates of US$ 10,000 each) 4.34 4.56

4.34 4.56


74



(Rs. in Crores)


SCHEDULE : 7INVENTORIES(AS CERTIFIED BY THE MANAGEMENT)

Finished Goods 2.82 3.13Goods-in-transit - 11.92

2.82 15.05

SCHEDULE : 8RECEIVABLES(UNSECURED, CONSIDERED GOOD)

Others 73.77 76.10

73.77 76.10


Cash in hand 0.01 0.03Deposit with Banks 6.57 3.41Cash at Bank 1.73 23.34

8.32 26.78

SCHEDULE : 10LOANS & ADVANCES(UNSECURED, CONSIDERED GOOD)

Interest 1.36 0.90Advances recoverable in cash or kind or forvalue to be received 42.42 5.08

43.78 5.97

SCHEDULE : 11CURRENT LIABILITIES

Sundry Creditors 32.95 42.00Other liabilities 14.95 11.27

47.90 53.27



75

(Rs. in Crores)


SCHEDULE : 12PROVISIONS

Proposed dividend 0.43 0.43Provision for Staff End of Service Gratuity 0.19 -

0.62 0.43

SCHEDULE : 13SALES & OPERATING EARNINGS

Sales 1,146.90 886.17Profit on sale of fixed asset 0.08 0.03Miscellaneous Income 0.33 2.67

1,147.31 888.87

SCHEDULE : 14COST OF MATERIALS

Purchase of traded goods 1,104.30 882.77Decrease / (Increase) in stockOpening stock of finished / traded goods 14.94 0.02Closing stock of finished / traded goods 2.94 15.35

12.00 (15.33)

1,116.30 867.44

SCHEDULE : 15PERSONNEL EXPENSES

Salaries & bonus 2.21 1.61

2.21 1.61

SCHEDULE : 16OPERATION & OTHER EXPENSES

Rent 0.22 0.23Commission 1.71 1.21Other expenses 4.18 2.39

6.11 3.83

SCHEDULE : 17INTEREST

INTEREST EXPENSESInterest on Others 0.39 0.72Interest on Bank Borrowings 11.04 5.01

11.43 5.73LESS : INTEREST INCOMEInterest on Deposit & others (Gross) 0.59 0.56

10.84 5.17

SCHEDULES 12 TO 17 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR 2004

76



SCHEDULE: “ 18 “NOTES FORMING PART OF THE ACCOUNTSA) BACK GROUND:-

The financial statements of Adani Global FZE for the accounting year 31st December 2004, being a Company registeredin Jebel Ali Free Zone of United Arab Emirates, are audited by PANNELL KERR FORSTER, Chartered Accountants, Dubaiand we have been furnished with their audit report dated 28th February, 2005.The financial statements of Adani Global FZE are presented in Indian Rupees duly converted, on the basis of aforesaidaudit report to comply with the requirements of Section 212 of the Companies Act, 1956.ADANI GLOBAL FZE is registered as a Free Zone Establishment in Jebel Ali Free Zone of United Arab Emirates. Theestablishment was incorporated on 22nd November 1997 with limited liability pursuant to Law No. 9 of 1992 and theImplementing Regulations No. 1/92 issued by Jebel Ali Free Zone Authority.The establishment has a general trading licence and it principally trades in agro-commodities, metal scrap, oil, preciousmetals and stones.The establishment is a wholly owned subsidiary of Adani Global Limited, (the “Holding Company”), a private Companyincorporated in Mauritius. Adani Exports Limited, India, a public joint stock Company is the “ultimate holding Company”.Adani Global FZE is not a ‘Company’ as defined in the Companies Act, 1956. The auditors have not included thematters specified in paragraph 4 & 5 of Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, as the order is applicable only to the‘Company ’ in terms of clause 2 of Paragraph 1.The accounts have been prepared for the purpose of attachment to the accounts of the ultimate holding Company tocomply with the provisions of the Indian Companies Act, 1956.

B) SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and presentation of the Accountsand notes thereon:-a) SYSTEM OF ACCOUNTING

i) The accounts are prepared on the historical cost basis and on the accounting principles of a going concern.ii) Accounting policies, not specifically referred to otherwise are consistent and in consonance with generally

accepted accounting principles.iii) All expenditure and income to the extent considered payable and receivable respectively are accounted for

on accrual basis except those with significant uncertainties.b) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the average rate of exchangeapplicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.The exchange difference arising out of the year-end translation is debited or credited to Exchange Reserve.The Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resultingexchange differences on account of translation at the year end are transferred to Translation Reserve Account andthe said account is being treated as “Reserve and Surplus”.The transactions are in local currency United Arab Emirates Dirhams (“AED”), which have been converted into IndianCurrency (Indian Rupees) for reporting and the rate applied is as per para (b) of the significant accounting policies.

c) FIXED ASSETSProperty, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses,if any, Property, plant and equipment are being depreciated on the straight-line basis so as to write them off overtheir estimated useful life as follows:

Life (Years)

Building 6-7Furniture and Fixtures 5

Office Equipment 5Motor vehicles 3

d) INVESTMENTS

Held-to-maturity investments are debt investments with fixed repayments and maturity that the establishmenthas intent and ability to hold to maturity. The investment is stated at amortised cost less impairment loss.

The investment in India Millennium Deposits is held by Habib Bank AG Zurich in fiduciary capacity, as a colletaralfor facilities extended to the establishment. Following are the key features of the deposit:-

Interest rate Maturity

India Millennium Deposits 8.5% p.a. payable 29th December 2005 (Cumulative Deposits) semi-annually

The investment is held in the name of a director in fiduciary capacity as a trustee for the establishment.

e) INVENTORIESInventories are stated at the lower of cost and net realizable value. Cost is arrived at using the weighted averagemethod and comprises invoice value plus applicable landing charges. Net realizable value is based on estimatedselling price less any estimated cost of completion and disposal.


77

f) STAFF END-OF-SERVICE GRATUITYProvision is made for end-of-service gratuity payable to the staff at the balance sheet date in accordance withthe local labour law.

g) REVENUERevenue represents net amount invoiced for goods sold during the year. The establishment’s sales are on trans-shipment basis i.e. the supplier ships goods directly to the customer. Revenue is recognized when significantrisks and rewards relating to the ownership of goods concerned are transferred to the customer and is based onamount invoiced to customers for trans-shipments made during the year.

h) CASH AND CASH EQUIVALENTSCash and cash equivalents comprise cash and bank balances including bank deposits free of encumbrance witha maturity date of three months or less from the date of deposit.

i) FINANCIAL INSTRUMENTSFinancial instruments comprise investment, trade and other receivables, cash and bank balances including depositswith banks, bank borrowings, trade and other payables and shareholder’s loan.Financial assets that do not have an active market and whose fair value cannot be estimated reliably, aremeasured at amortised cost less any write-down for impairment if they have a fixed maturity date, and at costless any write-down for impairment if there is no fixed maturity date. Investment (held-to-maturity) is stated atamortised cost less impairment loss.Financial liabilities with no fixed maturity date are measured at cost and at amortised cost if they have a fixedmaturity date.Changes in values of other financial assets and financial liabilities are recognized in the income statement.

k) Contingent liabilities and capital commitments (Rs. in Crores)

31ST DEC 2004 31ST DEC 2003

Bankers letters of Guarantees 0.16 0.14

Unutilised balances of Commercial Letters’ of Credit 48.61 52.64

On 5th August 2003, a supplier (the “plaintiff ”) has filed a case against the establishment (the “defendant”)claiming an amount of INR 0.61crores against delivery of goods in pursuance of purchase/sale agreement H 3236dated 29th January 2003. Defendant is of the opinion that the plaintiff failed to deliver the required quantity asagreed. The case is still in the court of law and various hearings have taken place. The management is of theopinion that the possibility of the court’s decision against the establishment is remote.

l. RELATED PARTIESThe establishment enters into transactions with Companies that fall within the definition of a related party ascontained in International Accounting Standard 24. The management considers such transactions to be in normalcourse of business and at terms which correspond to those on normal arm’s length transactions with third parties.Related parties comprises of the holding Company, the ultimate holding Company, Companies under commonownership and common management control, associates, directors and a relative of the director.

At the balance sheet date balances with related parties were as follows:

(Rs. In Crores)

2004 2003Included in advances to suppliers 29.98 —Included in trade and other payables:Due to associates 10.23 31.61Due to relative of a director 0.21 —Disclosed as loan from a shareholder 2.23 4.09

The nature of significant related party transactions and the amount involved during the year are as follows:(Rs. In Crores)

2004 2003Sales 325.97 113.15Purchases 306.57 158.49Commission expense - 0.38Directors’ remuneration and expenses 0.46 0.47Service charges paid 0.40 0.34Interest on shareholder’s loan 0.39 0.72Salary to relative of a director 0.22 -

m. OPERATING LEASESLeases as lesseeNon-cancelable operating lease rentals are payable as follows:

(Rs. in Crores)Year ended Year ended

31st December, 31st December,2004 2003

Upto 1 year 0.06 0.06Greater than 1 year but less than 5 years 0.19 0.25Greater than 5 years NIL NIL

78



The establishment has entered into non-cancellable operating leases for 130 months with a renewable option fora further period of fifteen years. The total of the future lease payment commitment is as follows:

n. Earning Per Share(Rs. in Crores)

Year ended Year ended31st December, 31st December,

2004 2003

Net Profit after tax available for Equity Shareholders (Rs. in Crores) 11.67 10.61Weighted Average No. of Equity Shares of AED 10,00,000 each 18 18Outstanding during the yearBasic Earning per Share (in Rs.) 6483356.12 5895590.86

o. Financial Instruments: Credit, Interest Rate And Exchange Rate Risk ExposuresCredit risk

Financial assets which potentially expose the establishment to concentrations of credit risk comprise principallyinvestment, bank balances and trade and other receivables.

The investment (held-to-maturity) represents unquoted Indian Government securities, the repayment of which isguaranteed by an Indian nationalised bank.

The establishment ’s bank accounts are placed with high credit quality financial institutions.

At the balance sheet date, the establishment’s maximum exposure to credit risk from trade and other receivablesoutside the UAE is as follows:

(Rs. in Crores)

2004 2003

European countries 6.30 13.74Asian countries 64.58 34.67Far East and GCC countries 30.69 24.63

At the balance sheet date, 45% of the trade receivables was due from three customers (previous year 68% duefrom four customers).Significant concentrations of credit risk by industry are as follows:

Scrap traders 45.54 40.45Agro products 19.77 24.63Furnace 18.87 1.23Fabric traders 7.75 8.79

At the balance sheet date, advances to suppliers include an amount of INR 29.98 crores paid to a related party(supplier) in Singapore, against which goods have been received subsequent to the balance sheet date.Interest rate riskThe establishment’s deposits with banks are at a fixed rate of interest whereas bank trust receipts are at floatingrates of interest at levels which are generally obtained in the UAE. Shareholder ’s loan carries an interest rate of12% per annum.Exchange rate riskThere is no significant exchange rate risk as substantially all financial assets and financial liabilities are denominatedin UAE Dirhams or US Dollars to which the Dirham is fixed.

p. FINANCIAL INSTRUMENTS: FAIR VALUESThe fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled,between knowledgeable, willing parties in an arm’s length transaction. The fair values of the establishment’sfinancial assets and financial liabilities which are required to be carried at cost or at amortised cost approximateto their carrying values.

q) Number Of EmployeesThe number of employees at the end of the year was 14 (previous year 9).

r) Previous year’s figures have been regrouped wherever necessary to confirm to this year’s classification.

Signature to Schedule “ 1 “ to “ 18 “For and on behalf of the Board




79

(Rs. in Crores)


A Cash flows from Operating ActivitiesNet profit for the year 11.67 10.61Adjustment for :Finance Cost 10.97 5.62Depreciation 0.19 0.21Interest Income (0.56) (0.55)Gain on sale of fixed asset (0.08) (0.03)

Operating Profit before working capital changes 22.19 15.86Adjustment For:Inventories 11.52 (15.04)Trade & Other Receivables (38.86) 10.17Trade & Other Payables (2.66) 13.75

Cash flows from operating activities (7.81) 24.74

B Cash flows from investing activitiesAddition to Fixed Assets (0.32) (0.02)Sale of Property, plant and equipment 0.08 0.06Interest received 0.06 0.08Maturity of investments - 0.68(Increase)/decrease in deposits with banks (Net) (3.31) 1.94

Cash flows from investing activities (3.49) 2.74

C Cash flows from financing activitiesRepayment of bank borrowings - (0.03)Proceeds from trust receipts (net) 4.35 -Shareholder‘s loan repaid (2.47) (3.35)Interest paid (10.60) (4.91)

Net Cash flows from financing Activities (8.72) (8.29)


(0.62) (0.62)

Net increase/(decrease) in cash and cash equivalents (20.64) 18.57Cash & Cash equivalents at beginning of the year 23.37 4.57


Represented byCall Deposits 0.55 3.77Cash at bank and in hand 1.20 19.60

1.75 23.37

Notes :

1 The above cash flow statement has been prepared under the “Indirect Method” set out in Accounting Standard(AS - 3) on Cash Flow Statement issued by The Institute of Chartered Accountant of India.


As per our attached report of even date. For and on behalf of the Board







Adani Global Pte. Ltd.(A Subsidiary Company of Adani Global Limited)

Annual Report 2004-2005Annual Report 2004-2005Annual Report 2004-2005Annual Report 2004-2005Annual Report 2004-2005

80

To,The ShareholdersADANI GLOBAL PTE LIMITEDSingapore

The directors are pleased to present their report to the members together with the audited financial statements of the Companyfor the financial year ended 31 December 2004.

1 DIRECTORSThe directors of the Company in office at the date of this report are: Vinod Shantilal Shah, Chang Chung Ling,Joseph Selvamalar, Shah Bhavik Bharatkumar.

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURESNeither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objectis to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of theCompany or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURESThe directors of the Company holding office at the end of the financial year had no interests in the share capital anddebentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by theCompany under section 164 of the Companies Act, Chapter 50.

4 CONTRACTUAL BENEFITS OF DIRECTORSSince the beginning of the financial year, no director of the Company has received or become entitled to receive a benefitwhich is required to be disclosed under section 201(8) of the Companies Act, Chapter 50, by reason of a contract madeby the Company or a related corporation with the director or with a firm of which he is a member, or with a Companyin which he has a substantial financial Interest except as disclosed in the financial statements.

5 OPTIONS TO TAKE UP UNISSUED SHARESDuring the financial year, no option to take up unissued shares of the Company was granted.

6 OPTIONS EXERCISEDDuring the financial year, there were no shares of the Company issued by virtue of the exercise of an option to take upunissued shares.

7 UNISSUED SHARES UNDER OPTIONAt the end of the financial year, there were no unissued shares under option.

8 AUDITORSThe auditors, Tony Oei & Company, have expressed their willingness to accept re-appointment.

For and on behalf of the Directors

VINOD SHANTILAL SHAHDirector

JOSEPH SELVAMALARDATE : 11th April, 2005 Director

DIRECTOR’S REPORT


81

In the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view ofthe state of affairs of the Company as at 31 December 2004 and the results of the business, changes in equity and cashflows of the Company for the financial year then ended and at the date of this statement there are reasonable grounds tobelieve that the Company will be able to pay its debts as and when they fall due.

The Board of Directors had authorized the issue of the financial statements on the date of the Statement of Directors

On behalf of the Directors


JOSEPH SELVAMALARDATE : 11th April, 2005 Director

STATEMENT OF DIRECTORS



82

To the Members ofADANI GLOBAL PTE LIMITED

We have audited the financial statements of Adani Global Pte Ltd for the year ended 31st December 2004. The financialstatements comprise the balance sheet, the profit and loss account, the statement of changes in equity and cash flowstatement of the Company, and notes thereto. These financial statements are the responsibility of the Company’s directors.Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the financial statements are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap.50 (“the Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairsof the Company as at 31st December 2004 and the results, changes in equity and cash flows of the Company for thefinancial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company have been properly kept in accordancewith the provisions of the Act.

For TONY OEI & COMPANYCertified Public Accountants

DATE : 11th April, 2005 Proprietor

AUDITORS’ REPORT


83

(Rs. in Crores)

PARTICULARS SCHEDULE 31-12-2004 31-12-2003


(A) Share Capital 1 24.07 24.07(B) Reserves & Surplus 2 3.32 1.83

27.39 25.90II. LOAN FUNDS :

(A) Secured loans - -(B) Unsecured loans 3 0.16 0.17

0.16 0.17

TOTAL 27.55 26.07

B APPLICATION OF FUNDS :I. FIXED ASSETS 4

(A) Gross block 0.23 0.20(B) Less : Depreciation 0.20 0.17

(C) Net block 0.03 0.030.03 0.03

II. CURRENT ASSETS, LOANS & ADVANCES(A) Inventories 5 3.81 -(B) Receivables 6 225.20 70.86(C) Cash & bank balances 7 37.51 25.90(D) Loans & advances 8 0.10 3.55

266.62 100.31


239.10 74.27


TOTAL 27.55 26.07




JOSEPH SELVAMALARDirector







84

(Rs. in Crores)

PARTICULARS SCHEDULE 2004 2003

A INCOME :Sales 12 1651.57 1006.32

1651.57 1006.32

B EXPENDITURE :Cost of materials 13 1639.76 999.82Personnel expenses 14 1.30 0.76Operation & other expenses 15 1.40 0.63Interest 16 7.00 3.62Depreciation 4 0.03 0.02

1649.49 1004.85

Profit for the year before taxation 2.08 1.47Provision for taxation:- Current Tax 0.39 0.29

Profit after taxation 1.69 1.18Add : Surplus brought forward from previous year 2.12 0.95


APPROPRIATIONS :Balance carried to balance sheet 3.81 2.13

3.81 2.13

Earning per Share - S$ 1 each (in Rupees)- Basic & Diluted 1.91 1.33- Annualised 1.91 1.33










85

(Rs. in Crores)



10000000 Ordinary Shares of S$ I each 27.13 27.16ISSUED, SUBSCRIBED & PAID-UP

8850000 Ordinary Shares of S$ I each 24.07 24.07(Above shares are held by Adani Global Ltd.,a holding Company)

24.07 24.07


Exchange Reserve 0.01 0.01Translation Reserve (0.50) (0.31)Surplus in Profit & Loss Account 3.81 2.13

3.32 1.83


Loans from Directors 0.16 0.170.16 0.17

SCHEDULE : 5INVENTORIES (AS CERTIFIED BY THE MANAGEMENT)

Finished Goods 3.81 -3.81 -

SCHEDULE : 6RECEIVABLES (UNSECURED, CONSIDERED GOOD)

Others 225.20 70.86225.20 70.86


Cash and Bank Balance 4.99 3.12Fixed Deposits with Banks 32.52 22.78

37.51 25.90

SCHEDULE : 8LOANS & ADVANCES (UNSECURED, CONSIDERED GOOD)

Advances recoverable in cash or kind or forvalue to be received 0.10 3.55

0.10 3.55

SCHEDULE : 9CURRENT LIABILITIES

Sundry Creditors 207.80 70.30Other liabilities 30.91 3.67

238.71 73.97

SCHEDULE : 10PROVISIONS

Provision for taxation 0.39 0.300.39 0.30


01/01/04 during during 31/12/04 01/01/04 for the during the 31/12/04 31/12/04 31/12/03the year the year year year

1 Building 0.05 - - 0.05 0.02 0.02 - 0.04 0.01 0.032 Furniture & Fixtures 0.05 - - 0.05 0.05 - - 0.05 - -3 Office Equipments 0.05 - - 0.05 0.05 - - 0.05 - -4 Computer Equipment 0.05 0.03 - 0.08 0.05 0.01 - 0.06 0.02 -

Total 0.20 0.03 - 0.23 0.17 0.03 - 0.20 0.03 0.03

Previous Year 0.20 - - 0.20 0.15 0.02 - 0.17 0.03 -




86

(Rs. in Crores)


SCHEDULE : 12

SALES

Sales 1,651.57 1,006.32

1,651.57 1,006.32

SCHEDULE : 13

COST OF MATERIALS

Purchase of traded goods 1,639.76 999.82

1,639.76 999.82

SCHEDULE : 14

PERSONNEL EXPENSES

Salaries & bonus 1.24 0.69

Contribution to provident & other funds 0.06 0.07

1.30 0.76

SCHEDULE : 15


Rent 0.10 0.12Postage, telephone & telex expenses 0.19 0.16Stationery & printing expenses 0.03 0.02Miscellaneous expenses 0.18 0.05Payment to auditors 0.02 0.02Membership & subscription 0.13 0.11Legal & Professional 0.09 0.01Travelling & conveyance expenses 0.39 0.08Exchange rate difference 0.27 0.06

1.40 0.63

SCHEDULE : 16

INTEREST

INTEREST EXPENSES

L/C Charges 2.01 1.38Bank Charges , Commission & Interest 5.24 2.41

7.25 3.79LESS : INTEREST INCOMEInterest on Deposit & others 0.25 0.17

7.00 3.62

SCHEDULES 12 TO 16 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR 2004


87

SCHEDULE: “11”NOTES FORMING PART OF THE ACCOUNTS

A) Back ground:-

The financial statements of Adani Global Pte Ltd for the accounting year 31st December 2004, being a companyregistered in the Republic of Singapore, are audited by Tony Oei & Company, Certified Public Accountants and RegisteredAuditors, Singapore, and we have been furnished with their audit report dated 11th April, 2005.

We are presented with the financial statements of Adani Global Pte Ltd. in Indian Rupees duly converted, on the basisof aforesaid audit report to comply with the requirements of Section 212 of the Companies Act, 1956.

Adani Global Pte Ltd is the wholly owned subsidiary of Adani Gobal Limited incorporated in Singapore.

The principal activities of the Company are to carry on business as general merchants, importers and exporters,commission agents and manufacturer’s representative. There have been no significant changes in the nature of theseactivities during the financial year.

Adani Global Pte Ltd. is not a ‘Company’ as defined in the Companies Act, 1956. We have not included the mattersspecified in paragraph 4 & 5 of Companies (Auditor’s Report) Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of section 227 of the Companies Act, 1956, as the order is applicable only to the‘Company’ in terms of clause 2 of Paragraph 1.

The accounts have been prepared for the purpose of attachment to the accounts of the ultimate holding Company tocomply with the provisions of the Indian Companies Act, 1956.

B) SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and presentation of the Accounts:-


i) The accounts are prepared on the historical cost basis and on the accounting principles of a going concern.

ii) Accounting policies, not specifically referred to otherwise are consistent and in consonance with generallyaccepted accounting principles.

iii) All expenditure and income to the extent considered payable and receivable respectively are accounted foron accrual basis except those with significant uncertainties.

b) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the average rate of exchangeapplicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.The exchange difference arising out of the year-end translation is debited or credited to Translation Reserve.

The Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resultingexchange difference on account of translation at the year end are transferred to Translation Reserve Account andthe said account is being treated as “Reserve and Surplus”.

c) FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation and any impairment in value.

Depreciation is computed on a straight-line basis over the estimated useful life of the asset as follows:

Office furniture and fittings - 33 1/3%

Office equipment - 33 1/3%

Renovation - 33 1/3%

The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciationare consistent with the expected pattern of economic benefits from items of plant and equipment.

Fully depreciation assets still in use are retained in the financial statements.

d) DEFERRED TAXATION

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered or settled based on tax rates enactedor substantively enacted at the balance sheet date.

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be availableagainst which the temporary differences can be utilized.

Deferred tax liabilities are recognized for all taxable temporary differences, except where the timing of thereversal of the temporary differences can be controlled and it is probable that the temporary difference will notreverse in the foreseeable furture.

e) REVENUE RECOGNITION

Revenue from sales are recognized when goods are delivered.

Interest income is recognized on an accrual basis.

f) TRADE DEBTORS AND OTHER DEBTORS

Trade and other debtors are stated at cost.



88

g) TRADE CREDITORS AND OTHER CREDITORS

Trade and other creditors are stated at cost.

h) EMPLOYEE LEAVE ENTITLEMENTS

Employees’ entitlements to annual leave are recognized when they accrue to employees. No provision has beenmade for the estimated liability for annual leave as the amount involved is considered to be not significant.

i) EMPLOYEE BENEFITS

The Company makes contributions to the Central Provident Fund scheme in Singapore, a defined contributionpension scheme. These contributions are recognized as an expense in the period in which the related service isperformed.

j) TAXATION

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

h) IMPAIRMENT OF ASSETS

At each balance sheet date, the Company reviews the carrying amounts of its tangible assets to determinewhether there is any indication that those assets have suffered an impairment loss. If any such indication exists,the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount ofthe asset is reduced to its recoverable amount. Impairment losses are recognised as an expense immediately.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revisedestimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceedthe carrying amount that would have been determined had no impairment loss been recognised for the asset inprior years. A reversal of an impairment loss is recognised as income immediately.

k) INVENTORIES

Inventories are stated at the lower of cost and net realizable value. Cost is determined on a first-in, first-outbasis. Net realizable value is the estimated selling price in the ordinary course of business, less the costs ofselling expenses.

l) CASH AND CASH EQUIVALENTS

Cash and cash equivalents are stated in the balance sheet at cost. Cash and cash equivalent comprise cash onhand, fixed deposits and cash at bank.

C) NOTES ON ACCOUNTS:-

1. The transactions are in local currency (Singapore Dollars), which have been converted into Indian Currency(Indian Rupees) for reporting and the rate applied is as per para (b) of the significant accounting policies.

2. BILLS PAYABLE

The bills payable is secured by the Company’s fixed deposit and guaranteed by the directors.

3. AMOUNT DUE TO A DIRECTOR

The amount due to a director is interest free and has no fixed term of repayment.

4. RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and or directors or management. Partiesare considered to be related if one party has the ability to control the other party or exercise significant influenceover the other party in making financial and operating decisions.

During the financial year, there were the following significant transactions with related parties, based on termsagreed by the parties:-

(Rs. In Crores)

Particulars 2004 2003

Sales to related party 180.84 80.79

Sales to ultimate holding Company 606.37 120.25

Purchases from ultimated holding Company 87.54 79.00

Purchases from related party 0.14 -


Particulars Year ended Year ended31st December, 31st December,

2004 2003

Net Profit after tax available for Equity Shareholders (Rs. in Crores) 1.69 1.18

Weighted Average No. of Equity Shares of S$ 1 eachOutstanding during the year 8850000 8850000

Basic Earning per Share (in Rs.) 1.91 1.33


89

6. FINANCIAL INSTRUMENTS

Financial risk factors

The main risks arising from the Company’s financial instruments are interest risk/credit risk/liquidity risk/foreign currencyrisk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeksto minimise potential adverse effect on the financial performance of the Company.

Interest rate risk

The Company has cash balances placed with reputable banks and financial institutions which generate interest incomefor the Company.

The Company is exposure to changes in interest rates primarily to the Company’s debt obligations.

The Company obtains minimal financing through bank borrowings. The Company ’s policy is to obtain any financing atthe most favourable interest rates available.

Credit risk

Credit risk is limited to the risk arising from the inability of debtors to make payment when due. It is the Company’spolicy to provide credit term to creditworthy customers.

Management has established credit policies in place and the exposure to credit risks is monitored on an ongoing basis.Credit evaluation are performed on all customer’s requiring credit over a certain amount.

The carrying amount of trade and other debtors represent the Company ’s maximum exposure to credit risk. TheCompany has no significant concentrations of credit risk.

Liquidity risk

Liquidity risk arises from the possibility that debtors may not be able to settle its debts within the normal term of trade.Liquidity risk is minimal as the Company is able to fund its operation from its accumulated profits.

Funding is obtained from bank facilities.

Foreign currency risk

The Company is transacting all the business in US$, Company is not affected by the fluctuation in exchange rate. Tomeet office administrative expenses, Company is converting nominal amount from US$ to Singapore Dollar and exchangerate arising out of such conversion has been provided in the books.

Fair value of financial assets and liabilities

The carry amount of financial assets and liabilities recorded in the financial statements represents their respective netfair values.

7. Previous year’s figures have been regrouped wherever necessary to confirm to this year’s classification.

Signature to Schedule “ 1 “ to “ 16 “






90

(Rs. in Crores)


A Cash flows from Operating ActivitiesNet profit for the year 2.07 1.47Adjustment for :Depreciation 0.02 0.02Interest Received (0.24) (0.17)

Operating Profit before working capital changes 1.85 1.32Adjustment For:Trade & Other Receivables (154.89) (5.62)Loans & Advances 3.42 (3.46)Trade & Other Payables 27.28 3.52Trade Creditors 90.99 9.12Bills Payable 47.06 1.16Stock (3.81) -

Cash generated from operations 11.90 6.04Tax paid (0.30) (0.12)

Net Cash Used in operating activities 11.60 5.92

B Cash flows from investing activitiesPurchase of equipment (0.02) -Interest Recieved 0.24 0.17

Net Cash used in investing activities 0.22 0.17

C Cash flows from financing activitiesProceeds from Unsecured Loans (0.01) 0.05

Net Cash flows from financing Activities (0.01) 0.05


(0.20) (0.06)

Net increase in cash and cash equivalents 11.61 6.08Cash & Cash equivalents at beginning of the year 25.90 19.82


Represented byFixed Deposit 32.53 22.78Cash at bank and in hand 4.98 3.12

37.51 25.90

Notes :

1 The above cash flow statement has been prepared under the “Indirect Method” set out in Accounting Standard(AS - 3) on Cash Flow Statement issued by The Institute of Chartered Accountant of India.









THIS

PAGE HAS

BEEN

INTE

NSIONALLY

LEFT

BLANK



I / We of

in the district of being a member / members of

the above named Company, hereby appoint Shri / Smt.

of in the district of

or failing him Shri / Smt. of in the district of

as my / our proxy to vote for me / us and on my / our behalf at the Annual General Meeting of the Company to be held on the

12th August, 2005 and any adjournment thereof.

Signed this day of 2005.

Signature Affix 1 Re. Revenue Stamp

Folio No. DP ID No. * Client ID No. *

* Applicable for members holding shares in electronic form

No. of Share(s) held Notes :1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself.

2. A proxy need not be a member.

3. The proxy form duly completed should be deposited at the Registered Office of the Company before 48 hours of the meeting.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PROXY FORM

Full name of the member attending

Full name of the joint-holder

(To be filled in if first named joint - holder does not attend meeting)

Name of Proxy

(To be filled in if Proxy Form has been duly deposited with the Company)

I hereby record my presence at the Annual General Meeting to be held at Hotel Le meridian, Khanpur, Ahmedabad-1,

on Friday, the 12th August, 2005 at 11.00 a.m.

Folio No. DP ID No. * Client ID No. *

* Applicable for members holding shares in electronic form

No. of Share(s) held

Member’s / Proxy’s Signature

(To be signed at the time of handing over this slip)

ATTENDANCE SLIP

Documents

Adani