BOARD OF DIRECTORS - GarwarePoly Report.pdf · Walchandnagar Industries Ltd. 10. Essar Shipping Ports & Logistics Ltd. 11. Modern India Ltd. 12. Aegis Ltd. 13. Premier Ltd. ... Your

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BOARD OF DIRECTORS : S.B.GARWARE Chairman & Managing Director

: S.S.GARWARE(Mrs.)

: DILIPJ.THAKKAR

: N. P.CHAPALGAONKAR

: M.GARWAREMODI(Mrs.) Vice Chairperson & Jt. Managing Director

: SARITAGARWARE(Ms.) Jt. Managing Director

: SONIAGARWARE(Ms.)

: B.MORADIAN

: M.S.ADSUL Director – Technical

: M.C.AGARWAL(Dr.)

: RAMESHP.MAKHIJA

COMPANY SECRETARY & : ManojKoulGENERAL MANAGER

BANKERS : IndianOverseasBank

DenaBank

TheFederalBankLimited

StateBankofMysore

BankofIndia

PunjabNationalBank

Export–ImportBankofIndia

AUDITORS : Shah&Co. CharteredAccountants

BhandariDasturGupta&Associates CharteredAccountants

SOLICITORS & ADVOCATES : CrawfordBayley&Co.

REGISTERED OFFICE : Naigaon,PostWaluj, Aurangabad-431133.

CORPORATE OFFICE : GarwareHouse, 50-A,SwamiNityanandMarg, VileParle(East),Mumbai400057.

WORKS : L-5&L-6,ChikalthanaIndustrialArea, Dr.AbasahebGarwareMarg,Aurangabad431210.

Naigaon,PostWaluj,Aurangabad431133.

A-1&A-2,MIDC,Ambad,Nasik422010.

50-A,SwamiNityanandMarg,VileParle(East), Mumbai400057.

OFFICES : 403,MadamBhikajiCamaBhawan, 11,BhikajiCamaPlace,NewDelhi110066.

37/1B,HazraRoad,Kolkata700029.

OldNo.40,NewNo.91, ShiyaliMudaliStreet,Pudupet, Chennai600002.

REGISTRARS & SHARE TRANSFER AGENTS : LinkIntimeIndiaPrivateLimited.

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AnnuAl RepoRt 2009-10

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NOTICEISHEREBYGIVENTHATtheFiftyThirdAnnualGeneralMeetingofthemembersofGARWARE POLYESTER LIMITEDwillbeheldattheRegisteredOfficeoftheCompanyonWednesday,29thSeptember,2010at11.30a.m.atNaigaon,PostWaluj,Aurangabad-431133, to transactthefollowingbusinesses:

Ordinary Business:

1. To receive, consider and adopt the audited Balance Sheet asat 31st March, 2010 and the Profit and Loss Account for the sixmonthsperiodendedon thatdateand the reportsof theBoardofDirectorsandtheAuditorsthereon.

2. Todeclareadividendonpreferenceandequityshares.

3. ToappointaDirectorinplaceofMr.DilipJ.Thakkar,whoretiresbyrotationandbeingeligible,offershimselfforre-appointment.

4. ToappointaDirector inplaceofDr.M.C.Agarwal,who retiresbyrotationandbeingeligible,offershimselfforre-appointment.

5. To appoint a Director in place of Mr. M. S.Adsul, who retires byrotationandbeingeligible,offershimselfforre-appointment.

6. Toappoint theretiringauditorsasauditorsof theCompany toholdthe office from the conclusion of this annual general meeting tillthe conclusion of the next annual general meeting and fix theirremuneration.

ByOrderoftheBoardofDirectors

Manoj KoulMumbai Company Secretary &05thAugust,2010 General Manager

Registered Office: Naigaon,PostWaluj,

AURANGABAD-431133.

NOTES:

1. AMEMBERENTITLEDTOATTENDANDVOTEATTHEANNUALGENERAL MEETING (the ‘Meeting’) IS ENTITLED TO APPOINTONEORMOREPROXIESTOATTENDANDTOVOTEONLYONAPOLL INSTEADOFHIMSELFANDSUCHPROXYNEEDNOTBEAMEMBEROFTHECompany.

2. The instrument appointing proxy should be deposited at theRegistered Office of the Company not less than forty-eight hoursbeforethetimefixedfortheMeeting.

3. Members desiring any information on the business to betransacted at theMeeting are requested to write to the Companyatleast10daysinadvancetoenabletheManagementtokeeptheinformation,asfaraspossible,readyattheMeeting.

4. The Register of Members and the Share Transfer Books of theCompanywillremainclosedfromSaturday,18thSeptember2010toWednesday,29thSeptember2010(bothdaysinclusive).

5. TheDividendas recommendedby theDirectors, if declaredat theMeeting, will be paid to those members whose names appear intheRegisterofMembersoftheCompanyon29thSeptember,2010,in respectofsharesheld inphysical formand in respectofshares

NOTICE

held in the electronic form, to those ‘Deemed Members’ whosenames appear in the statement of Beneficial Ownership furnishedby the National Securities Depository Services Ltd. (NSDL) andthe Central Depository Services (India) Ltd. (CDSL) at the end ofbusinesshourson17thSeptember,2010.

6. Members are requested to notify immediately any change in theiraddressesdirectly to theirDepositoryParticipant incase theyholdshares in dematerialised form or to the Company’s Registrars &ShareTransferAgents,incasetheyholdsharesinphysicalform.

7. Pursuant to the provisions of Sections 205A and 205C of theCompanies Act, 1956, the dividend which remains unclaimed /unpaid foraperiodofsevenyears from thedateof transfer to therespective unpaid dividend accounts, is required to be transferredtotheInvestorEducationandProtectionFund(IEPF)oftheCentralGovernment.

8. Unclaimed dividend for the Financial Years 2003-04 and 2004-05 is still lying in the respective unpaid dividend accounts ofthe Company. Members who have not encashed the dividendwarrants for thesaidFinancialYears,are requested tocontact theCompany’sRegistrarsandShareTransferAgents,LinkIntimeIndiaPrivateLimited.

9. Unclaimed dividend for the Financial Year 2003-04 is due fortransfer to the IEPF in the year 2011. Kindly note that no claimsshalllieagainsttheCompanyortheIEPFaftersuchtransfer.

10. Members holding shares in physical form are requested toforward all applications for transfer and all other shares relatedcorrespondence, including intimation for changeofaddress, if any,totheRegistrarsandShare TransferAgentsoftheCompanyatthefollowingaddress:

LINK INTIME INDIA PRIVATE LIMITED (Unit:GarwarePolyesterLimited)

C-13,PannalalSilkMillCompound,L.B.S.Marg,Bhandup(West),Mumbai-400078.

Tel.No.022-25946970,Fax:022-25946969.

11. In terms of the Regulations of NSDL & CDSL, the BankAccountdetails of Beneficial Owners of Shares in demat form will beprinted on the dividend warrants as furnished by the DepositoryParticipants (DP). The Company will not entertain any requestfor change of bank details printed on their dividend warrants. Incase of any changes in your bank details, please inform your DPimmediately.

12. To prevent fraudulent encashment of dividend warrants, membersare requested to provide their Bank Account Detail(s) (if notprovided earlier) to the Company (if shares held in physical form)or to DP (if shares held in demat form), as the casemay be, forprintingofthesameontheirdividendwarrants.

ByOrderoftheBoardofDirectors

Manoj KoulMumbai Company Secretary &05thAugust,2010 General Manager

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Information on Directors seeking re-election/appointment at this Annual General Meeting. [Pursuant to Clause 49(IV)(G) of the Listing Agreement]

Name of the Director Mr. Dilip Thakkar Dr. M. C. Agarwal Mr. M. S. Adsul

Date of Birth & Age 01.10.1936(74years) 23.10.1946(64years) 01.06.1955(55years)

Appointed on 30.04.2007 29.04.2009 31.07.2007

Qualifications CharteredAccountant MastersinPsychology.Ph.D B.Sc.(Tech.)inplastics&DBM

Expertise in specific functional areas Taxation&ForeignExchangeRegulation HRD ProductDevelopment& Production

Directorship(s) held in other public 1. PoddarDevelopersLtd., – 1. GarwareChemicalsLtd.companies 2. PanasonicEnergyIndiaCo.Ltd. 2. GarwareIndustriesLtd.

3. EssarOilLtd.4. ThirumalaiChemicalsLtd.5. TheRubyMillsLtd.6. PAELtd.7. HimatsingkaSeideLtd.8. IndoCountIndustriesLtd.9. WalchandnagarIndustriesLtd.10. EssarShippingPorts&LogisticsLtd.11. ModernIndiaLtd.12. AegisLtd.13. PremierLtd.

Memberships / Chairmanships of 1. PanasonicEnergyIndiaCo.Ltd. 1. GarwarePolyesterLtd. 1. GarwarePolyesterLtd.Committees across public 2. EssarOilLtd. 2. GarwareChemicalsLtd.companies 3. ThirumalaiChemicalsLtd. 3. GarwareIndustriesLtd.

4. PAELtd.5. HimatsingkaSeideLtd.6. WalchandnagarIndustriesLtd.

Shareholding in the Company. NIL NIL –75-

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Dividend

Your Directors recommend for consideration at the Annual GeneralMeeting,declarationofdividendfor theyear(sixmonthsperiod)ended31stMarch,2010asunder:

a) On 54,46,000 0.01%CumulativeRedeemable Preference SharesofRs.100/-eachand

b) On2,30,60,386equitysharesofRs.10/-each@15%(i.e.Rs.1.50/-perequityshare).

TheabovewillabsorbRs.403.68lakhs(includingTax).

OperationsLocal sales increased by 5.43%, and exports have increased by24.45% (on annualized basis) due to improved demand of PlainPolyester Film in domestic market with specific improved demand inautomobile sector and improved global economic conditions. TheCompanyhadtakenseveralcostcontrolmeasurestoreduceoperatingcosts, which are giving sustained results. The Company has alsoreduced the financial cost and as a combine results of all efforts,your Company has performed better and the net profit has increasedsubstantiallyinthecurrentyear.

Future outlookGrowth in retail sector, liberalization, growing middle class, risingpurchasesofpackagedfoodsandgoods,growingdemandforpolyesterfilms in applications such as electrical cables, motor insulators,lamination for automobiles and building glass windows is expected tofuel growth of polyester films. In International market, it is expectedat 4-6% per annum. Local market growth is estimated at the rate of10-14%per annum.The growth in domesticmarket is expected to be

DIRECTORS’ REPORT FOR THE PERIOD ENDED MARCH 31, 2010

TO THE MEMBERS,Your Directors present the Fifty-ThirdAnnual Report together with theAudited Statement ofAccounts of the Company for the year (six monthsperiod)ended31stMarch,2010.

Financial Results (Rs.inCrores)

October 2009- March 2010 October2008-September2009 (6 months) (12months)

OperatingProfitbeforeinterest&Depreciation 57.85 108.04Less:Interest&FinancialCharges 16.34 52.59 Depreciation 16.09 32.43 32.47 85.06

ProfitfortheperiodbeforeTax 25.42 22.98Less:IncomeTax 0.00 12.30 WealthTax 0.05 0.05 0.05 12.35

ProfitafterTax 25.37 10.63

Add: Balancebroughtforwardfrompreviousyear 75.79 67.87

Balance available for Appropriation 101.16 78.50Appropriation:TransfertoGeneralReserve 1.30 0.00DividendonRedeemablePreferenceShares(*Rs.27,230/-) 0.00 * 0.01ProposedDividend-EquityShares 3.46 2.31TaxonDividend 0.58 0.39Balance carried to Balance Sheet 95.82 75.79

101.16 78.50

higher due to boom in retail outlets. The market scenario is positiveandofferspossibilitiesforincreasingthesalesinvalueaddedproducts.Your Company has successfully created new markets and additionalbusiness in specialty film in Europe, China, USA, Australia, New-Zealand, Brazil, Mexico, Africa and Middle East. With an aggressivemarketingapproachandofferingofvalueaddedproductstheCompanycouldcomeoutwithexcellentresults.

VariousnewproductssuchasNano,CeramicandIRfilms launched inthemarkethaverevealedwideacceptanceworldwide.Thelocalmarketcontinuestoshowrobustgrowthduetocarkits.

Research & DevelopmentCompany’s R&D Center is accredited by the Department of Scientificand Industrial Research, Ministry of Science and Technology,Government of India, and is engaged in research on newapplications as well as development of new products, improvementof manufacturing processes and debottlenecking activities. YourCompany’sthrustonR&Dactivitieshaspaidrichdividends.

Information TechnologyCompanybelieves that IT isastrategic tool forexcellence incustomerservice and sustainable business growth. With this end in view, theCompany has implemented SAP for better business integrationby replacing legacy standalone systems. To start with some of themodules are being implementedwhichwill be extended further in duecourseoftime.

The Company has implemented centralized email system with clustersolutionforefficientworking.

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Awards and RecognitionsDuring the period, your Company has been awarded highestrecognition for Top Exporter of Polyester Film for the year 2007-08and2008-09byPlasticExportPromotionCouncil (Plexcouncil),sponsoredby theMinistryofCommerceand Industry,GovernmentofIndia.

Duringtheperiod,yourCompanyhasreceivedthehighestrecognitionofNationalEnergyConservationawardfirstprize from theMinistryofPower,GovernmentofIndiainappreciationofachievementsinenergyconservationinPlasticsectorfortheyear2009.

Human Resource DevelopmentThe Company’s HR policies and processes are aligned to effectivelydrive its business and other emerging opportunities. This has beenachieved by continuously investing in learning and developmentprograms, creating appropriate work environment and maintaining astructuredrecognitionsystem.TheCompanyhelpsemployeestobuildnew skills and competencies and promote knowledge sharing andteambuilding.

Manufacturing and Quality InitiativesWith innovative approaches in manufacturing techniques andproductoptimization, theproductivity in themanufacturingsegmenthas significantly gone up. The quality culture of your Companyensures that the products are benchmarked as best in class bythecustomers.Ourquest forexcellenceboth inManufacturingandQuality continuesasbefore.YourCompany is regardedasbest inclassforqualityandreliability.

Corporate Social ResponsibilityCorporate social responsibility in your Company is aligned with‘Garware’ tradition of creating wealth in the community with focusonhealth,educationandsafety.

SubsidiariesPursuanttoSection212oftheCompaniesAct,1956,theaccountsof Garware Polyester International Limited and Global Pet FilmsInc.,subsidiariesoftheCompany,areannexed.

Safety, Health & Environmental ProtectionBeingaResponsibleCorporateCitizen,yourCompanyhascontinuedto sustain various initiatives for the continual improvement in Safety,Environment and Health (SEH) at the works and surroundings.Some of the prominent activities include - Internal Safety Audit ofplants (as per Indian Standard on Occupational Safety and HealthAudit: IS-14489), periodical SEH inspections and trainings, schemeson the efficient usage of energy and the conservation of naturalresources, activities for the enhancement of employee participationin SEH and the support in emergency management operations atpublic places.YourCompany has brought various safety laurels fromthe Government authorities on the state and national level in thisperiod. Security system has been upgraded, like awareness training,evacuationdrillstomeetthenewchallenges.

Directors’ Responsibility StatementPursuant to Section 217(2AA) of the Companies Act, 1956 theBoardofDirectorsofyourCompanyconfirm:i) that in the preparation of the annual accounts, the applicable

accountingstandardshavebeenfollowed;ii) that theDirectors have selected suchaccountingpoliciesand

applied themconsistentlyandmade judgmentsandestimates

that are reasonableandprudent soas to givea trueand fairview of the state of affairs of theCompany at the end of thefinancialyearandoftheprofitoftheCompanyforthatyear;

iii) thattheDirectorshavetakenproperandsufficientcareforthemaintenance of adequate accounting records in accordancewith the provisions of the CompaniesAct, 1956 safeguardingthe assets of the Company and for preventing and detectingfraudandotherirregularities;

iv) that the Directors have prepared the annual accounts on agoingconcernbasis.

DirectorsMr.DilipThakkar,Dr.M.C.AgarwalandMr.M.S.Adsul, retirebyrotationandbeingeligible,offerthemselvesforre-appointment.

Audit CommitteeBesides Mr. M. S. Adsul, the Audit Committee comprises of twoindependentDirectorsviz.Mr.B.MoradianandDr.M.C.Agarwal.Mr.B.Moradian,whoisanindependentnon-executivedirector,actsaschairmanofAuditCommitteemeetings.

Corporate GovernanceA Report on Management Discussion and Analysis, CorporateGovernance as well as Auditor’s Certificate regarding complianceofClause49ofthelistingagreementformpartofthisReport.

Change in Financial YearCompanyhasbeenfollowingthefinancialyearfrom1stOctoberto30th September. In order to be in line with accounting year underthe IncomeTaxAct,1961, theCompanyhaschangedthefinancialyear from (1stOctober - 30thSeptember) to (1stApril - 31stMarch).Due to this change, the reporting financial year of the Companycomprises of six months period from 1st October 2009 till 31stMarch2010.

AuditorsThe retiring joint auditors, M/s. Shah & Co., and M/s. BhandariDastur Gupta & Associates are eligible for re-appointment andhaveindicatedtheirwillingnesstoactasauditors,ifappointed.TheCompany has received letters from both the auditors to the effectthat their re-appointment, if made, would be within the prescribedlimits under Section 224(1B) of the Companies Act, 1956 andthey are not disqualified for re-appointment within themeaning ofSection226ofthesaidAct.TheobservationsmadeintheAuditor’sReport are self-explanatory and therefore, do not call for anyfurthercomments.

Other Statutory InformationTheinformationrequiredunderSection217(2A)oftheCompaniesAct,1956 read with Companies (Particulars of Employees) Rules, 1975forms part of this report. However, as per the provisions of Section219(1)(b)(iv) of the Companies Act, 1956, the Report and Accountsare being sent to all theShareholders of theCompany excluding theaforesaid information. Any Shareholder interested in obtaining suchparticulars may inspect the same at the Registered Office of theCompanyorwritetotheCompanySecretaryattheCorporateOfficeoftheCompany. InformationasperSection217(1)(e)of theCompaniesAct, 1956, read with the Companies (Disclosure of Particulars in theReport of Board of Directors) Rules, 1988 and forming part of thisReportisannexed.

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GroupThe names of the Promoters and entities comprising “Group” asdefinedundertheMonopoliesandRestrictiveTradePractices(“MRTP”)Act, 1969 are disclosed as under for the purpose of Regulation 3(1)(e)(i) of the SEBI (Substantial Acquisition of Shares and Takeovers)Regulations,1997.

NameShriS.B.GarwareMrs.S.S.GarwareMrs.MonikaGarwareModiMs.SaritaGarwareMs.SoniaGarwareMonikaHoldingsPvt.Limited.SaritaGarwareInvestmentsConsultantsPvt.Limited.SoniyaHoldingsPvt.Limited.GarwareIndustriesLimitedGarwareChemicalsLimitedShashvatInvestmentsConsultancy&PropertiesPrivateLimitedLuckyTrading&ExportsLimitedGreatDesignPropertiesPrivateLimitedEnvisionPropertiesPrivateLimitedBestDesignPropertiesPrivateLimitedViaInvestmentConsultantsPrivateLimitedNaigaonChemicalsPrivateLimitedGarwarePolyesterInternationalLimited

Information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

(A) CONSERVATION OF ENERGY :Followingsuccessfulenergyconservationeffortsweremadeduring theyearunderreview; 1. Thermic heater efficiency optimization carried out in Central

Utility and started using coolingwater in the place of chilledwaterinsomeareas.

2. CommissioningofBiomassfiredBoiler. 3. Useofemulsifiedfurnaceoilforthermicfluidheater. 4. ProvisionofVFDtoTDOovenblower. 5. SecondaryhotoilpumpimpellertrimminginFilmPlant.

(B) TECHNOLOGY ABSORPTIONI. Research and Development (R&D) –1. Specific areas in which R&D carried out by the Company.

a) Developmentofcoatedproducts forenhancedadhesiontovarious inks- (e.g.UV,PVB, thermal, tonerbasedandlaminatingadhesives)

b) Developmentof catalystand thermal stabilizers forPETfilmtomakeitFDAapproved

c) Developmentofspecialitypolymerasimportsubstitute.

2. Benefit derived as a result of the above R&D Valueaddedproductsdeveloped

3. Expenditure on R&D / Product Development (Rs.inLakhs) a. Capital(Excl.CWIP) Nil b. Recurring 104.70 Total 104.70 TotalR&Dexpenditureasapercentageto

totalturnover: 0.33%

GlobalPetFilmsInc.B.D.GarwareResearchCenterGarwareCharitableTrustS.B.GarwareFamilyTrustSheelaGarwareFamilyTrustMonikaGarwareModiBenefitTrustSaritaGarwareBenefitTrustSoniaGarwareBenefitTrust

Industrial RelationsThe relations between the Employees and theManagement remainedcordialduring theperiodunder review.YourDirectorswish toplaceonrecord theirappreciationof thecontributionmadeby theEmployeesatall levels.

AcknowledgementsYour Directors wish to place on record their appreciation of thewholehearted co-operation received by the Company from the variousdepartmentsof theCentral&StateGovernments,Company’sBankersandFinancial&InvestmentInstitutionsduringtheperiodunderreview.

ForandonbehalfoftheBoardofDirectors

Mumbai S. B. GARWARE05thAugust,2010 Chairman & Managing Director

ANNEXURE TO DIRECTORS’ REPORT

II. Technology absorption, adaptation and innovation1. Efforts made towards technology absorption, adaptation and

innovation: a. Developedtechniquetodispersenanoparticles b. Developednon-fadingnanoparticlebasedSolarControl

film

2. Benefitsderivedasaresultofaboveefforts: Above efforts have resulted in improvement of product

output,qualityandreductioninwastage.

3. Technologyimportedduringthelastfiveyears: NoTechnologyhasbeenimportedduringthelast5years

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:I. Activities relating to exports, initiatives taken to increase

export markets for products and services and export plans.

1. The export marketing activities are being consolidated tomaintain the share of exports in total production. Newermarketsarebeingexplored.

2. Constant endeavour is beingmade to establish theproductsin specific overseas regionalmarkets and to accomplish thesame, individuals with knowledge and experience of thesemarketsareappointedtoservicethecustomers.

3. The Company has established warehousing and marketingoutfitsinUSAandUK.

II. Total Foreign Exchange used and earned (Rs.inCrores) Used : 13.05 Earned(FOB) : 118.80


Mumbai S. B. GARWARE05thAugust,2010 Chairman & Managing Director

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CORPORATE GOVERNANCE REPORT

IncompliancewithClause49oftheListingAgreementwiththeBombayStockExchangeLimited.

Company’s philosophy on Code of GovernanceThephilosophyoftheCompanyistoenhancethelong-termeconomicvalueoftheCompany,itsshareholdersatlargebyadoptingbettercorporatepractices in fair and transparent manner. The Company recognises effective corporate governance as critical to achieving corporate goals andincreasingtheCompany’svalue.

TheReportonCorporateGovernanceisdividedintosix parts:

(1) BoardofDirectors–Composition (2) CommitteesoftheBoard

(3) RemunerationofDirectors (4) Disclosures

(5) MeansofCommunication (6) GeneralShareholderinformation

1. COMPOSITION OF THE BOARD OF DIRECTORS

Category Name of the Director No. of Shares No. of No. of Chairmanship (s), Committee held as on Directorship (s) in of Committees membership s) # 31st March 2010 Public Limited (Both Listed/Unlisted Companies** Public Companies)#

Non– 1. ShriS.B.Garware 14,48,890 4 – –Independent 2. Mrs.M.GarwareModi 5,04,430 7 – –Executive 3. Ms.SaritaGarware 4,59,345 2 – 1

4. Mr.M.S.Adsul 75 3 – 1

Independent 1. Mr.DilipJ.Thakkar – 14 5 5Non-Executive 2. Mr.B.Moradian* – 2 2 –

3. Mr.N.P.Chapalgaonkar – 1 – –4. Dr.M.C.Agarwal – 1 – 25. Mr.RameshP.Makhija – 2 – –

Non-Independent 1. Mrs.S.S.Garware 1,06,528 3 – –Non-Executive 2. Ms.SoniaGarware 4,12,514 2 – –

* ChairmanofAuditCommitteeandShare&DebentureTransactionscumInvestors’GrievancesCommittee.** This excludes directorship held in Private Companies, Foreign Companies, andCompanies formed under section 25 of the CompaniesAct,

1956anddirectorshipheldasanalternatedirectorbutincludesdirectorshipinGarwarePolyesterLimited.# CommitteeofDirectors includeAuditCommitteeandShareholders/ InvestorGrievanceCommitteeofDirectorsonly.This includemembership/

chairmanshipinCommitteeofDirectorsofGarwarePolyesterLimited.

TheCompany places before theBoard all the relevant and necessarydata/ information at it's meetings such as production, sales, exports,review of business, any legal proceedings by/against the Company,share transfers, quarterly financial results, minutes of: (a) previousBoardMeetings, (b)AuditCommitteeMeetings, (c)Share&DebentureTransactions cum Investors’ Grievances Committee Meetings, (d)RemunerationCommitteeMeetingandsuchotherrelevantinformation.

Duringtheperiodunderreviewcommencingw.e.f1stOctober,2009twoBoardMeetingswereheldasperdetailsgivenbelow:

Board Meetings

Sr. Date Board Strength No. of No. Directors Present

1. 12.11.2009 11 8

2. 28.01.2010 11 7

The previous Annual General Meeting (AGM) was held on 28thDecember2009.

The attendance of Directors at the Board Meetings, and at theaforesaidAnnualGeneralMeetingwasasunder:

Name of Directors Number of WhetherBoard Meetings present at the

attended previous AGM

ShriS.B.Garware 2 NO

Mrs.S.S.Garware 2 NO

Mrs.M.GarwareModi – NO

Ms.SaritaGarware 2 NO

Ms.SoniaGarware 2 NO

Mr.M.S.Adsul 1 YES

Mr.DilipJ.Thakkar – NO

Mr.B.Moradian 2 YES

Mr.N.P.Chapalgaonkar 1 YES

Dr.M.C.Agarwal 2 NO

Mr.RameshP.Makhija 1 NO

BOARD MEETINGS

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2. COMMITTEES OF THE BOARD The Board has constituted Committees of Directors to take

informed decisions and to oversee the activities falling within thepurview of their terms of reference.The following are the variousCommitteesoftheBoard:

(a) Audit Committee The Board of the Company has constituted an Audit

CommitteecomprisingofthefollowingDirectors: Mr.B.Moradian – Chairman Mr.M.S.Adsul – Member Dr.M.C.Agarwal – Member TheCompanySecretary,Mr.ManojKoulactsas theSecretary to

theCommittee.

Brief description of terms of reference are: • Overseeing and ensuring the adequacy and compliance of

internalcontrolsystems. • Reviewing the quarterly, half-yearly and annual financial

statementswithspecialemphasisonaccountingpoliciesandpractices, compliance with accounting standards and otherlegal requirements concerning financial statements beforesubmissiontotheBoard.

• Reviewing the adequacy of the Audit and Compliance,including their policies, procedures, techniques and otherregulatoryrequirements.

• Undertaking periodical review of Internal Audit Reports andappraisingandreviewingthescopeofInternalAuditfunctionsfromtimetotime.

• Interacting effectively with the Statutory Auditors from timeto time to discuss about finalisation of annual financialstatements.

• Consideringanyothermatter,whichmaybe referred to itbytheBoard.

• TheMinutes of theAudit CommitteeMeetings are placed attheMeetingoftheBoardofDirectors.

Meetings and attendance during the period. During the period under review, two Audit Committee meetings

wereheldasperdetailsgivenbelow.Sr. Date Strength No. of Members No. Present

1. 12.11.2009 3 3 2. 28.01.2010 3 2 The attendance of Members at the Committee Meetings was as

under:Name of Members Audit Committee Meetings

Attended Mr.B.Moradian 2 Mr.M.S.Adsul 1 Dr.M.C.Agarwal 2

(b) Share & Debenture Transactions cum Investors’ Grievances Committee The Board of the Company has constituted a Share

& Debenture Transactions cum Investor’s GrievancesCommitteecomprisingofthefollowingDirectors:

Mr.B.Moradian – Chairman Ms.SaritaGarware – Member Dr.M.C.Agarwal – Member

TheCompanySecretary,Mr.ManojKoul,actsas theComplianceOfficer.

Briefdescriptionsoftermsofreferenceare; • To consider and approve transfer of shares, issuance of

duplicatesharecertificatesetc. • Redressal of shareholder’s/investor’s complaints relating to

transfer of shares, non-receipt of annual report, dividends,transmission, transposition, splitting, consolidation anddematerialisationofshares,etc.

Details of complaints received and redressed during the period from 1st October, 2009 to 31st March, 2010.

As per information received fromRegistrarM/s. Link Intime IndiaPrivate Limited, during the period, the Company received 50complaints from shareholders, which were resolved. The detailsareasunder:

Nature of No. of No. of No. of Complaint Complaints Complaints Pending Resolved Complaints 31.03.2010 TransferofShares 15 15 Nil Dividend 23 23 Nil Others 12 12 Nil

Total 50 50 Nil

Share Transfer Details:During the period, the Committee met 13 times. As on 31st March,2010, there were no requests pending for transfer of shares. Thedetails of share transfers are reported to theBoard ofDirectors alongwith theMinutesof theaforesaidCommitteeMeetings.TheattendanceofMembersattheaforesaidCommitteeMeetingswasasunder:

Name of Members Meetings AttendedMs.SaritaGarware 13Mr.B.Moradian 6Dr.M.C.Agarwal 7

Investor’s Grievances:The Registrars and Share Transfer Agents, viz. Link Intime IndiaPrivate Limited under supervision of theSecretarialDepartment of theCompanyredressestheInvestor’sgrievances.

(c) Remuneration Committee: The Board of the Company has constituted a Remuneration

CommitteecomprisingofthefollowingDirectors: Mr.B.Moradian – Member Mr.M.S.Adsul – Member Dr.M.C.Agarwal – Member The termsof referenceof theabove committeeare to review the

remunerationpayabletoManaging/WholetimeDirectors.

3. REMUNERATION TO DIRECTORS: The remuneration toManagingDirector, JointManagingDirectors

andDirector-TechnicalispaidaspertheAgreementsenteredintobetween them and theCompany.Wherever necessary, Companyseeks approval of Central Government for their remuneration.Non-Executive Directors are paid sitting fees of Rs.5,000/- foreveryboardmeetingandRs.1000/- foreveryCommitteeMeetingattendedbythem.

Thedetailsof remunerationpaid to theDirectorsof theCompanyduringtheperiod(1stOctober,2009to31stMarch,2010)aregivenbelow:

(Rs.inLakhs) a) SalaryandPerquisites _ 237.74 b) Commission _ 31.00 c) SittingFeestoNon-ExecutiveDirectors _ 00.68 Total 269.42

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Service contract in respect ofManaging Director, JointManagingDirectorsandDirector-Technicalisforfiveyears.

Performance-linkedBonus : Nil Stockoptiondetails,ifany : Nil

4. DISCLOSURES: a. Disclosuresonmateriallysignificantrelatedpartytransactions

i.e. transactions of the Company of material nature, with itspromoters, directors or the management, their subsidiariesor relatives etc. that may have potential conflicts with theinterest of theCompany at large are separately disclosed inthisAnnualReport(ReferNoteNo.12inSchedule12B).

b. Your Company recognizes the “Risk Management” as anintegrated, forward-looking process oriented approach formanaging“EnterpriseWideRisks”.

TheCompanymanagesitsriskunderfollowingbroadcategory: 1. StrategicandBusinessRisk 2. OperationandimplementationRisks 3. FinancialRisks 4. RiskrelatedtoHumanResources Management recognises that risk management encompasses

three processes : risk assessment, riskmitigation and evaluationandassessment.

For the risk assessment, the management of the Companyheaded by Executive Committee under over all supervision ofBoardofDirectorsregularlyreviewsandassessestheplansoftheCompany, taking into account the changes in the global industryscenario and advises the operational management on variousstrategicissues.

Forriskmitigation, theCompanyhasadoptedStandardOperatingProcedures devised byM/s. PricewaterhouseCoopers Pvt. Ltd. tostrengthenit’sinternalcontrolsandstandardisetheprocedures.

The Company has this year successfully implemented SAPin place of existing ERP system to accelerate businessinnovation, unleash growth and create significant new valuesfor all stakeholders. This new system will also help Company inprotecting valuable data, eliminating need for multiple systemsand automate key compliance activities such as data collection,retentionandanalysis.

c. No penalties/strictures have been imposed on the CompanybyStockExchangeorSEBIorotherauthorityonanymatterrelatedtocapitalmarkets,duringlastthreeyears.

5. MEANS OF COMMUNICATION The Board of Directors of the Company approves and takes

on record the unaudited quarterly financial results in the formatprescribed by the Stock Exchange, and discloses the saidfinancial results to the Bombay Stock Exchange Limited, wherethe shares of theCompany are listed. Further, the said results intheprescribedformatarepublishedintheleadingnewspapers.

TheCompany’swebsiteis:www.garwarepoly.com ReportonManagementDiscussionandAnalysisformspartofthis

AnnualReport.

6. GENERAL SHAREHOLDER INFORMATION (a) Registered Office: Naigaon,PostWaluj, Aurangabad-431133 (b) Registrars and Share Transfer Agents : LinkIntimeIndiaPrivateLimited, C-13,PannalalSilkMillCompound, L.B.S.Marg,Bhandup(West),Mumbai-400078. Tel.No.:022-25946970FaxNo.:022-25946969 e-mail:[email protected] ContactPerson:Mr.MaheshMasurkar

(c) Address for Correspondence: GarwarePolyesterLimited, GarwareHouse, 50-A,SwamiNityanandMarg, VileParle(East),Mumbai-400057. TelNo:022-66988000–15 FaxNo:022-28248155/66 e-mail:[email protected]

(d) Plants Locations : Waluj,Chikalthana,

andNasik.

(e) Listing on Stock Exchange Shares of the Company are listed on the Stock Exchange,

Mumbai,underStockCodeNo.500655, ISINNo.fordematerialisedsharesisINE291A01017. The Company has paid Annual Listing Fees for the year

2010- 11 to the above Stock Exchange. The Company hasalsopaidcustodial charges toNationalSecuritiesDepositoryLimited and Central Depository Services (India) Limited for2010-2011.

(f) Share price Data on The Stock Exchange, Mumbai

Month

Share Price Data BSE Sensex High (Rs.) Low (Rs.) High LowOctober2009 39.50 35.10 17,326.01 15,896.28November2009 41.55 29.90 17,198.95 15,404.94December2009 49.95 42.85 17,401.56 16,601.20January2010 53.55 44.65 17,701.13 16,289.82February2010 55.05 46.65 16,496.05 15,790.93March2010 62.15 50.35 17,711.35 16,772.56

(g) Share Transfer System The Share Transfer requests received in physical form are

registered and transferred within 30 days from the date oflodgement by the Registrars and Share Transfer Agentsif the same are valid and complete in all respects andthereafterthesamearedulyapprovedbyShare&DebentureTransactions cum Investors’ Grievances Committee. Sincethe Company’s shares are compulsorily traded in dematsegment on the Stock Exchange, Mumbai, bulk of thetransferstakesplaceinelectronicform.

(h) Dematerialisation of Shares and Liquidity The Company’s shares are available for dematerialisation on

both theDepositoriesviz.NationalSecuritiesDepositoryLimited(NSDL)andCentralDepositoryServices(India)Limited(CDSL),for which purpose the Company has entered into Agreementswith the respective Institutions. The Shares of the Companyarecompulsorily tobedelivered in thedemat form to theStockExchangesbyall investors.Nearly88.44%of theequitysharesoftheCompanyhavebeendematerialisedbyinvestorsandbulkoftransferstakeplaceinthedematform.

(i) Distribution of Shareholdings as on 31st March, 2010

No. of Shares No. of % of No. of % held Shareholders Shareholders Shares Shareholding1to500 31679 96.10 2798565 12.14501to1000 635 1.93 509819 2.211001to2000 293 0.89 449340 1.952001to3000 91 0.27 236643 1.023001to4000 46 0.14 170218 0.744001to5000 47 0.14 226163 0.985001to10000 72 0.22 520154 2.2610001andabove 103 0.31 18149484 78.70Total 32966 100.00 23060386 100.00

11

(j) Categories of shareholding as on 31st March, 2010

Sr. Category No. of % No. shares share- held holding1. Promoters(ShriS.B.Garware,family andAssociates) 1,32,54,596 57.482. MutualFundsandUTI 1,59,118 0.693. Banks,FinancialInstitutions,Insurance Companies(Central/StateGovt. Institutions/Non-Govt.Institutions) 9,95,450 4.324. PrivateCorporateBodies 8,90,576 3.865. ForeignInstitutionalInvestors 2,355 0.016. NRIs 8,15,749 3.547. IndianPublic 69,42,542 30.10

Grand Total 2,30,60,386 100.00

(k) Outstanding GDRs/ADRs/ Warrants or any convertible : Not Applicable

instruments and conversion date and likely impact on equity

(l) Reappointment / Appointment of Directors Mr. Dilip Thakkar, Dr. M. C. Agarwal and Mr. M. S. Adsul

Directors are retiring by rotation and being eligible, offerthemselvesforre-appointment.

(m) Code of Conduct TheCompanyhasalwaysencouragedandsupportedethical

business practice in personal and corporate behaviourby its directors and employees. The Company has frameda specific Code of Conduct for the members of the Boardof Directors and Senior Management personnel of theCompany. In addition to that a special Code of Conduct fordealing in equity shares and other listed securities of theCompanyisalsoinplace.

(n) CEO/CFO Certification The Chairman & Managing Director and the Chief Financial

Officer of the Company give annual certification on financialreporting and internal controls to the Board in terms ofClause 49. The Chief Financial Officer also give quarterlycertification on financial results while placing the financialresultsbeforetheBoardintermsofClause41.

(o) Information on General Body Meetings Detailsof the last3AnnualGeneralMeetings(AGM)heldby

theCompanyareasunder: Date Venue Time50thAGM 18.12.2007 RegisteredOffice: Naigaon,postWaluj, Aurangabad-431133 11.30a.m.51stAGM 23.12.2008 Asabove 11.30a.m.52ndAGM 28.12.2009 Asabove 11.30a.m.

None of the Special Resolutions passed during the last three AGMswererequired tobepassedthroughpostalballot.Nospecial resolutionforthisperiodisrequiredtobepassedthroughpostalballot.

(p) Financial Calendar

CurrentFinancialYear 1stOctober,2009to31stMarch,2010

UnauditedFinancialResultsfor Within45daysformtheendoftheQuarterending: reportingquarter.30thJune2010,30thSeptember2010,31stDecember2010and31stMarch2011.AnnualGeneralMeetingforyear BeforetheendofSeptember2011.ending31stMarch2011.DateofBookClosureforthe 18thSeptember,2010tocurrentfinancialyear 29thSeptember,2010

(bothdaysinclusive)Dividendpaymentdate Onorafter29thSeptember,

2010.Email addressforInvestor [email protected]

TOTHE MEMBERSOFGARWARE POLYESTER LIMITED

We have examined the compliance of conditions of CorporateGovernancebyGARWAREPOLYESTERLIMITEDfortheperiodofsixmonths from 01-10-2009 to 31-03-2010, as stipulated in Clause 49 oftheListingAgreemententeredintowiththeStockExchange.

The compliance of conditions of Corporate Governance is theresponsibility of the management. Our examination was limited toprocedures and implementation thereof, adopted by the Companyfor ensuring the compliance of the conditions of the CorporateGovernance. It is neitheranaudit noranexpressionof opinionon thefinancialstatementoftheCompany.

In our opinion and to the best of our information and according to theexplanationsgiventousandtherepresentationsmadebytheDirectorsand theManagement, we certify that theCompany has compliedwiththe conditions of Corporate Governance as stipulated in the abovementionedListingAgreement.

AUDITORS’ REPORT ON CORPORATE GOVERNANCE

We state that no investor grievances are pending for a periodexceeding one month against the Company as per the recordsmaintainedbytheShareholders/InvestorsGrievanceCommittee.

Wefurtherstatethatsuchcomplianceisneitheranassuranceastothefuture viability of theCompany nor the efficiency or effectivenesswithwhichthemanagementhasconductedtheaffairsoftheCompany.

ForShah & Co. ForBhandari Dastur Gupta & AssociatesChartered Accountants Chartered Accountants(RegistrationNo.109430W) (RegistrationNo.119739W)

(Indulal H. Shah) (Sunil Bhandari)Partner PartnerMembershipNo.:798 MembershipNo.:F-047981

Mumbai,05thAugust,2010

12


OverviewGarware Polyester Limited (GPL) is a pioneer in manufacture ofpolyester films in India and the largest exporter of polyester films.It is the only Company, which manufactures quality Sun ControlFilm in India and one out of the only two companies in the world tomanufactureDyedPolyesterFilms.

1. Industry Structure and Developments Polyester films have wide applications in flexible packaging,

electrical magnetic media, imaging etc. The Company has well-developed marketing network throughout the world, some of themajor countries being EU, USA, Far East, Middle East, Africa,SouthAmericaetc.

The Company has developed a wide network of dedicatedcustomers in Europe, USA, Far East, Middle East, Brazil,Australia, China, New Zealand, Eastern Europe, Mexico, andAfrica.Thequality ofourproductsisratedamongstthebestintheworldandwithaveryhighlevelofcustomerservice,thecustomerbaseisconsistentandstable.

2. Opportunities and threats The supply demand situation for Polyester films is favorable with

the demand exceeding supplies and is likely to continue in asimilar fashion at least for next two quarters. The Company hasevolved several new strategies in product branding as well aswith increased focus on R & D several new products like Nanotechnology based films, Ceramic films and IR (Infra-red) filmshave been introduced in the solar film market. The CompanythereforehopestorapidlygrowitsmarketshareinSolarfilms.

3. OutlookExports:Plain Film:With the variety and high quality of our product offerings, theCompany is fully confident of maintaining its strong position inexports. PresentlyCompany products are being successfully soldinEU,USA,SouthAmerica,Africa,MiddleEast,FarEastetc.

The Company has successfully launched its brand of HighShrink films globally, with its high value addition this product willsubstantiallyaddtotheprofitability.

The Company’s wholly owned subsidiary in UK, viz. GarwarePolyester International Limited (GPIL) is handling EuropeanmarketsandGlobalPetFilms(GPF),awhollyownedsubsidiaryofGPIL,ishandlingAmericanmarkets.Weexpectthesesubsidiariesto grow their business further, given the response to theCompany’spopularbrands,suchas ‘Garfilm’and ‘GlobalWindowFilm’.

Sun Control Film: SunControlfilmshaveshownamajorgrowth in thecurrentyear.

The Company has successfully launched multiple brands, newproducts andwith aggressive and innovativemarketing strategiesthemajorgrowth inSunControlfilmswillbesustainedduring theyear. Sun Control films are presently being marketed throughoutthe world. Both our quality as well as customer orientation ishighlyvaluedintheindustry.

Local: The“Global brand”hasbeenlaunchedinIndiaandtheresponse

of themarket has been overwhelming.Our focus on car kits andOEMtie-upsishelpingustomaintainourdominantpositioninthedomesticmarket.

Increased usage ofWindow films in offices, commercial buildingsandmalls continues to add to the growth ofCompany’s businessinthepremiumsegmentofWindowfilms.

4. Review of Operations The financial statements have been prepared in compliance with

the requirements of the CompaniesAct, 1956 and the applicableaccountingstandards.

REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS

(Rs. in lakhs)2009-10 2008-09 % change

06 months 12 months on annualized

basisGrossSales 52,736.55 91,466.16 15%NetSales 31,269.12 55,467.95 13%OtherIncome 136.93 200.01 37%ProfitbeforeInterest, 5,785.21 10,804.07 7%Depreciation&TaxInterest&FinancialCharges 1,633.74 5,259.16 (38)%Depreciation 1,609.39 3,247.09 (1)%ProfitbeforeTax 2,542.08 2,297.82 121%ProvisionforTax 4.75 1,234.46 (99)%ProfitafterTax 2,537.33 1,063.36 377%Earningspershare(Rs.) 11.00 4.61 377%MarketCapitalization 14,332.03 8,878.25 223%

5. Internal Control Systems and their Adequacy TheCompany has sound systemsof internal control and checks,

whicharesupplementedbyaregular internalauditcommensuratewiththesizeofitsbusinessandnatureofitsoperations.TheAuditCommittee of the Board meets at regular intervals and activelyreviews the internal control systems, which are reflected in theinternal audit reports. Suitable corrective actions are initiatedwherevernecessary.

6. Material Developments in HR / Industrial Relations Your Company has a well-qualified and experienced team of

professionals who have contributed to the performance of theCompany. Labour relations at all the manufacturing units of theCompany continued to remain cordial throughout the six-monthperiod.Therewasnoindustrialunrestduringtheperiodunderreview.

7. Risks and Concerns Due tovolatilityofcrudeoilprices, therawmaterialpricesduring the

periodunder reviewhavebeenexhibiting volatile trend.The volatilityof Rupee has added further uncertainty. Though the Company hasbeen inaposition topasson the increase, therehasalwaysbeenatimelagforpassingtheincreaseinexportmarkets.

TheCompanywillcontinuetofocusoncostcontrolandcosteffectivemeasuresandgivededicatedandspecifiedthrusttoexports.

Demand for the Company’s products is sensitive to changes inindustry capacity and output levels, cyclical changes in regionaland global economic conditions and changes in consumerdemand. Significant addition in capacities by competitors hasheatedthecompetition.

ThecentralandstatetaxschemeinIndiaisextensiveandsubjectto change from time to time.Any adverse changes in any of thetaxes levied by the central or state governments may adverselyaffecttheCompany’scompetitivepositionandprofitability.

The Government of Maharashtra has amended the MVATAct inretrospection and the Company has filed a Writ Petition for thesamebeforetheHon’bleBombayHighCourt.

The Company is subject to risks arising from volatile foreignexchangemarketaswellas interest ratefluctuations,whichcouldadversely affect its business operational results. The Companyhasendeavouredtomonitorandmitigatetheserisks.

8. Cautionary Statement The statements in report of the Board of Directors and the

Management Discussion & Analysis Report describing theCompany’s outlook, estimates or predictions may be forwardlooking statements within the meaning of applicable securitieslaws and regulations. Actual results could differ materially fromthose expressed or implied since the Company’s operations areinfluenced by many external and internal factors beyond thecontrol of theCompany.TheCompany takes no responsibility forkeepingthemembersupdatedonchangesinthesefactorsexceptasmaybestatutorilyrequiredfromtimetotime.

13

TOTHE MEMBERSOFGARWARE POLYESTER LIMITED

We have audited the attached Balance Sheet of GARWARE POLYESTER LIMITED as at 31stMarch 2010, and also theProfit andLoss Account and the Cash Flow Statement of the Company for theperiodendedonthatdate,annexedthereto.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityis to express an opinion on these financial statements based on ouraudit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation.We believe that our audit provides areasonablebasisforouropinion.

As required by the Companies (Auditors’ Report) Order, 2003, issuedby the Central Government of India in terms of sub-section (4A) ofSection 227 of theCompaniesAct, 1956,we enclose in theAnnexureastatementonthemattersspecified inparagraphs4and5of thesaidorder.

Further to our comments in theAnnexure referred to in Paragraph (3)above,westatethat:

a) We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary for thepurposeofouraudit.

b) In our Opinion proper books of account as required by lawhave been kept by the Company so far as appears from ourexaminationofthosebooks.

c) The Balance Sheet, the Profit and Loss Account and the CashFlowStatementreferredtointhisreportareinagreementwiththebooksofaccount.

AUDITORS’ REPORT

d) In our opinion, the Balance Sheet, the Profit and Loss AccountandtheCashFlowStatementdealtwithbythisreportcomplywiththe Accounting Standards referred to in Section 211(3C) of theCompaniesAct,1956.

e) Onthebasisofwrittenrepresentationsreceivedfromthedirectorsand taken on record by the Board of Directors, we report thatnone of theDirectors is disqualified as on 31stMarch, 2010 frombeing appointed as a Director in terms of Clause (g) of sub-section (1) ofSection 274of theCompaniesAct, 1956as on thesaiddate.

f) In our opinion and to the best of our information and accordingto theexplanationsgiven tous, thesaidAccounts readwithNoteNo. 14 regardingDeferredTax liability and read togetherwith theother notes in Schedule 12 give the information required by theCompaniesAct, 1956 in themanner so required and give a trueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia.

i. InthecaseoftheBalanceSheet,ofthestateofaffairsoftheCompanyasat31stMarch,2010.

ii. In the case of theProfit and LossAccount, of the “PROFIT”oftheCompanyfortheperiodendedonthatdate.

AND

iii. In the case of the Cash Flow Statement of the Cash Flowsfortheperiodendedonthatdate.




14


(i) (a) The Company has maintained proper records showing fullparticulars includingquantitativedetailsandsituationoffixedassets.

(b) A major portion of the assets has been physically verifiedby the management during the period. We are informedthat no material discrepancies have been noticed by themanagementonsuchverification.

(c) The Company has not disposed off substantial part of itsfixed assets during the period. According to the informationandexplanationsgiven to us,weareof theopinion that thedisposal of fixed assets has not affected the going concernstatusoftheCompany.

(ii) (a) The Inventories have been physically verified during theperiod by the Management. In our opinion the frequency ofverificationisreasonable.

(b) Theproceduresofphysicalverificationofinventoriesfollowedby themanagementare reasonableandadequate in relationtothesizeoftheCompanyandthenatureofitsbusiness.

(c) TheCompanyismaintainingproperrecordsofinventory.Thediscrepancies noticed on verification between the physicalstocks and the book recordswere notmaterial in relation totheoperationsoftheCompanyandhavebeenproperlydealtwithinthebooksofaccount.

(iii) (a) The Company has not granted any loans, secured orunsecured, to companies, firms or other parties covered inthe registermaintained under section 301of theCompaniesAct,1956.HencetheprovisionsofClause4(iii)b,(c)and(d)oftheorderarenotapplicablefortheperiodunderreport.

(b) The Company has not taken any loans, secured orunsecured fromcompanies,firmsorotherpartiescovered inthe registermaintainedu/s301of theCompaniesAct,1956.Hencetheprovisionsofclauses4(iii)(f)and(g)oftheorderarenotapplicablefortheyearunderreport.

(iv) In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensuratewith thesizeof theCompanyandthenatureof itsbusiness with regard to purchases of inventory, fixed assets andwith regard to the sale of goods and services.During the courseof audit, we have not observed any continuing failure to correctmajorweaknessesininternalcontrols.

(v) (a) In our opinion and according to the information andexplanations given to us the transactions that need to beentered in the register maintained under section 301 of thecompaniesAct,1956havebeensoentered.

(b) According to the information and explanations given tous, the transactions made in pursuance of contracts orarrangements entered in the register maintained undersection 301 of the CompaniesAct, 1956 and exceeding thevalue of rupees five lakhs in respect of any party duringthe period have beenmade at prices which are reasonablehavingregardtoprevailingmarketpricesat therelevanttimeintheopinionofthemanagement.

(vi) According to the information and explanations given to us,the Company has not accepted during the period any depositsfrom the public as per the provisions of Sections 58A and 58AAof the Companies Act, 1956 and the Companies (Acceptanceof Deposits) Rules, 1975. To the best of our knowledge and

according to the information and explanations given to us, noorder has been passed by the Company Law Board or NationalCompanyLawTribunal orReserveBankof India or anyCourt oranyotherTribunal.

(vii) In our opinion, the Company has an internal audit systemcommensuratewiththesizeandnatureofitsbusiness.

(viii) TheCentralGovt.hasnotprescribedmaintenanceofcostrecordsundersection209(1)(d)of theCompaniesAct,1956 in theperiodunderreviewforanyoftheproductsoftheCompany.

(ix) (a) According to the informationandexplanationgiventous, theCompany is generally regular in depositing with appropriateauthorities undisputed statutory dues including providentfund,investoreducationandprotectionfund,employeesstateinsurance, income tax, sales tax, wealth tax, service tax,custom duty, excise duty, cess and other material statutorydues applicable to it. As explained to us, no undisputedamounts payable in respect of above were in arrears as at31stMarch,2010 foraperiodofmore thansixmonths fromthedatetheybecamepayable.

(b) The following dues have not been deposited on account ofdispute:

NatureofDues Financial Amount ForumwheredisputeisYearto (Rs.inLakhs) pendingwhichtheDisputepertains

IncomeTax 2003-04 18.30 CommissionerofIncomeTax,IncomeTax 2005-06 02.28 Mumbai

ExciseDuty 1994-95 07.21 Customs,exciseandService2001-02 31.40 TaxAppellateTribunalMumbai 04.92 HightCourt,Aurangabad

ExciseDuty 1989-90 0.41 HighCourt,Mumbai

SalesTax 1982-83 4.88 DeputyCommissioner,Delhi

SalesTax 1984-85 6.00 SalesTaxAssessingOfficer,1993-94 6.25 Delhi&Noida

(x) The Company does not have accumulated losses at the end ofthe accounting year and has not incurred cash losses duringthe financial period covered by our audit and in the immediatelyprecedingfinancialyear.

(xi) According to the information and explanations given to us, theCompany has not defaulted in repayment of dues to financialinstitutions,banksordebentureholders.

(xii) According to the information and explanations given to us, theCompany has not granted any loans or advances on the basisof security by way of pledge of shares, debentures and othersecurities.

(xiii)As the Company is not a chit fund or a nidhi, mutual benefitfund or society, the provisions of clause 4(xiii) of the Companies(Auditors’report)Order,2003arenotapplicabletotheCompany.

(xiv)As theCompany is not dealing inor trading in shares, securities,debentures andother investments, the provisions of clause 4(xiv)oftheCompanies(Auditors’report)Order,2003arenotapplicabletotheCompany.

ANNEXURE TO THE AUDITORS’ REPORT(REFERREDTOINPARAGRAPH3OFOURREPORTOFEVENDATE)

15

(xv) TheCompanyhasgivenguarantees for loans takenbyAssociateCompany.According to the information and explanations given tous,weareoftheopinionthatthetermsandconditionsthereofarenotprimafacieprejudicialtotheinterestoftheCompany.

(xvi)According to the information and explanations given to us, theCompany has applied the term loans for the purpose for whichtheywereobtained.

(xvii)According to the information and explanations given to us, theCompanyhasnotappliedshorttermborrowingsforlongtermuse.

(xviii)According to the information and explanations given to us, theCompany has not made any preferential allotment of shares toparties and companies covered in the register maintained undersection301oftheCompaniesAct,1956.

(xix)TheCompanyhasnotissuedanydebenturesduringtheperiod.

(xx) The Company has not raised anymoney by way of public issueduringtheperiod.

(xxi)According to the information and explanations given to us, nomaterialfraudonorbytheCompanyhasbeennoticedorreportedduringtheperiod.




16


BALANCE SHEET AS AT 31ST MARCH, 2010

As at Asat 31.03.2010 30.09.2009 Schedule (Rs. in Lakhs) (Rs.inLakhs)FUNDS EMPLOYED :SHAREHOLDERS'FUNDS ShareCapital 1 7,745.83 7,745.83 Reserves&Surplus 2 19,609.24 17,475.59 27,355.07 25,221.42LOANFUNDS SecuredLoans 3A 29,922.67 32,095.25 UnsecuredLoans 3B 30.56 93.25

29,953.23 32,188.50DeferredTaxLiability 1,444.24 1,444.24

TOTAL 58,752.54 58,854.16

APPLICATION OF FUNDS :FIXEDASSETS 4 GrossBlock 86,435.22 86,101.72

Less:Depreciation 48,737.51 47,167.27

NetBlock 37,697.71 38,934.45 CapitalWorkinProgress 331.96 222.22

38,029.67 39,156.67INVESTMENTS 5 3,810.02 3,810.02CURRENTASSETS,LOANSANDADVANCES 6 Inventories 5,448.98 5,677.87 SundryDebtors 10,653.93 9,864.50 CashandBankBalances 996.60 952.29 OtherCurrentAssets 2,148.24 2,162.47 LoansandAdvances 1,921.65 1,359.55

21,169.40 20,016.68Less:CURRENTLIABILITIESANDPROVISIONS 7 CurrentLiabilities 2,744.07 2,838.74 Provisions 1,518.31 1,305.22

4,262.38 4,143.96

Net Current Assets 16,907.02 15,872.72MiscellaneousExpenditure(TotheextentnotWrittenoff)ShareIssueExpenses. 5.83 14.75

TOTAL 58,752.54 58,854.16

ThenotesinSchedule12and ForandonbehalfoftheBoardofDirectorsSchedulesreferredtohereinformanintegralpartoftheBalanceSheet S. B. GARWARE – Chairman & Managing Director

Asperourreportofevendate B. MORADIAN – DirectorM. S. ADSUL – Director – Technical

ForSHAH & CO. ForBHANDARI DASTUR GUPTA & ASSOCIATESChartered Accountants Chartered Accountants

L. M. AGRAWAL – Chief Financial Officer INDULAL H. SHAH SUNIL BHANDARI MANOJ KOUL – Company Secretary &Partner Partner General Manager


17

PROFIT AND LOSS ACCOUNT FOR THE PERIOD OCTOBER 1, 2009 TO MARCH 31, 2010

2009-2010 2008-2009 (6 Months) (12Months) Schedule (Rs. in Lakhs) (Rs.inLakhs)INCOME: SalesincludingExciseduty 32,922.34 58,821.98 Inter-DivisionalTransfers(aspercontra) 19,814.21 32,644.18

GrossSales 52,736.55 91,466.16 Less:Exciseduty 1,653.22 3,354.03 NetSales 51,083.33 88,112.13 OtherIncome 8 136.93 200.01 Increase/(Decrease)inFinishedand Semi-finishedGoods 9 (208.07) (1,604.21)

51,012.19 86,707.93

EXPENDITURE : RawMaterialsconsumed 10 14,823.41 25,033.20 Inter-DivisionalTransfers(aspercontra) 19,814.21 32,644.18 Manufacturing&otherexpenses 11 10,589.36 18,226.48 Interest&financialcharges (ReferNoteNo.8inSchedule12B) 1,633.74 5,259.16 46,860.72 81,163.02

Profit before Depreciation and Tax 4,151.47 5,544.91Depreciation 1,609.39 3,247.09

Profit before Tax 2,542.08 2,297.82Less:ProvisionforTaxation: DeferredTax 0.00 1,193.75 CurrentTax 430.00 467.77 Less:MATCreditEntitlement (430.00) (467.77) FringeBenefitTax 0.00 35.80 WealthTax 4.75 4.91

Profit after Tax 2,537.33 1,063.36 Add:Balancebroughtforwardfrompreviousyear 7,578.91 6,786.53

Profit available for appropriation 10,116.24 7,849.89

APPROPRIATIONS :DividendPayableonPreferenceShares 0.27 1.02ProposedDividendonEquityShares 345.91 230.60TaxonDividend 57.50 39.36TransfertoGeneralReserve 130.00 0.00 533.68 270.98

Balance carried to Balance sheet 9,582.56 7,578.91

EarningperShare{(Basic/Diluted)(Rupees)(FacevalueofRs.10/-each)} 11.00 4.61(NotAnnualisedforcurrentperiod)(ReferNoteNo.13inSchedule12B)

ThenotesinSchedule12and ForandonbehalfoftheBoardofDirectorsSchedulesreferredtohereinformanintegralpartoftheProfit&LossAccount S. B. GARWARE – Chairman & Managing Director





18


Out of the above :(i) 16,50,600 EquitySharesofRs.10/-eachwereallottedasfullypaid-upBonus SharesbyCapitalisationofReserves(Previousyear16,50,600)(ii) 6,60,000 Equity Shares of Rs.10/- each were allotted as fully paid-up pursuant to a scheme of amalgamation without payment being

receivedincash(Previousyear6,60,000)(iii) 64,860 EquitySharesofRs.10/-eachwereallottedas fullypaid-up to IndustrialDevelopmentBankof IndiaLimited(IDBI)atapremium

ofRs.40/-pershareinconsiderationofconversionofapartoftheloanamountofRs.32.43Lakhs(Previousyear64,860)(iv) 47,80,799 Equity Shares of Rs.10/- eachwere allotted as fully paid up at a premium of Rs. 40/- per share against 23,90,400 detachable

warrants(Previousyear47,80,799)(v) 10,19,022EquitysharesofRs.10/-eachwereallottedasfullypaiduptoIDBIatapremiumofRs.48.88pershareon7thNovember 2007as

perarrangement.(vi) 2,00,000Equity shares of Rs.10/- each were allotted as fully paid up to various schemes operating under UTI Assets Management

CompanyLimitedatapremiumofRs.22.67pershareon23rdDecember2008asperarrangement.(vii) 54,46,000 0.01%CumulativeRedeemablePreferenceSharesofRs.100/-eachwereallottedas fullypaidup to IDBIatpar (49,54,000on

7th November 2007and 4,92,000 on 19th June 2008) as per arrangement. The preference shares amounting to Rs. 4954.00Lakhsshallberedeemed in3equal installments from1stApril2014 to1stApril2016and Rs.492.00Lakhsshallberedeemedinsingleinstallmenton1stApril2016.

SCHEDULE – 2RESERVESANDSURPLUSShare Premium : BalanceasperlastBalanceSheet 592.14 546.80

Add:OnEquitySharesissuedtoUnitTrustofIndia (UTI)underitsvariousschemes. (ReferNoteSr.no.(vi)inSchedule1) 0.00 45.34 592.14 592.14Debenture Redemption Reserve : BalanceasperlastBalanceSheet 1,356.05 1,356.05Revaluation Reserve : BalanceAsperlastBalanceSheet 4,584.49 4,584.49General Reserve : BalanceAsperlastBalanceSheet 3,364.00 3,313.24

Add: Lossonexchangeratefluctuationon ForeignCurrencyLoansforthefinancialyear2007-08 transferedtoFixedAsset(RefNoteNo.5Inschedule12A) 0.00 50.76 TransferredfromProfit&LossAccount 130.00 0.00 3,494.00 3,364.00Profit & Loss Account 9,582.56 7,578.91

TOTAL 19,609.24 17,475.59

SCHEDULES FORMING PART OF THE BALANCE SHEET

SCHEDULE – 1 As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)

SHARECAPITALAuthorised:4,00,00,000 EquitySharesofRs.10/-each 4,000.00 4,000.00 60,00,000 PreferenceSharesofRs.100/-each 6,000.00 6,000.00 10,000.00 10,000.00Issued, Subscribed and Paid-up:2,30,60,386 EquitySharesofRs.10/-eachfullypaid-up 2,306.04 2,286.04 (Previousyear2,28,60,386) Nil (2,00,000EquitysharesofRs.10/-eachissuedduring thepreviousyear)(ReferNote-(vi)below) 0.00 20.00 2,306.04 2,306.04 Less:Unpaidallotmentcallmoney(fromothers) 6.21 6.21 2,299.83 2,299.83 54,46,000 0.01%CumulativeRedeemablePreference SharesofRs.100/-each(Previousyear54,46,000) (ReferNote-(vii)below) 5,446.00 5,446.00

TOTAL 7,745.83 7,745.83

19

SCHEDULES FORMING PART OF THE BALANCE SHEET (Contd.)

SCHEDULE – 3 As at Asat 31.03.2010 30.09.2009 Notes (Rs. in Lakhs) (Rs.inLakhs)A. SECURED LOANSI. Debentures/Bonds ZeroCouponBonds A 195.00 785.84

Less:Redeemedduringtheperiod 44.00 590.84

151.00 195.00

151.00 195.00II. FromBanks (i) Cash/PackingCreditAccounts B 1,983.81 3,269.63 (ii) WorkingCapitalLoans 14,771.79 13,024.75

16,755.60 16,294.38III. TermLoans (i) FinancialInstitutions a) RupeeLoan 0.00 847.48 b) ForeignCurrencyLoan 0.00 397.35

0.00 1,244.83 (ii) Banks C a) RupeeLoan 0.00 1,843.00 b) ForeignCurrencyLoan 12,850.39 12,334.43

12,850.39 14,177.43 (iii) VehicleFinance D 165.68 89.75

13,016.07 15,512.01IV. DeferredInterest 0.00 93.86

TOTAL 29,922.67 32,095.25 (ReferNoteNo.5Schedule12B)

Notes:(A) Zero Coupon Bonds of Rs. 100/- each aggregating to Rs. 151.00 Lakhs (Previous year Rs. 195.00 Lakhs) are secured by a mortgage on

Company’simmovablepropertysituatedatVileParle,Mumbai.(B) Cash/PackingCredit/WorkingCapitalLoanaresecuredbyhypothecationofstores,spares&packingmaterialsandstock-in-tradeandbook

debts of theCompany and further secured by a second charge on themovable assets of theCompany& immovable properties situated atAurangabadandNasik.

(C) TermLoansofRs.12,850.39Lakhs(PreviousyearRs.14,177.43Lakhs)aresecuredasunder: (1) Term Loans of Rs. 11,123.39 Lakhs from Indian Overseas Bank (Previous year Rs. 11,671.67 Lakhs) are secured by a mortgage on

Company’simmovablepropertysituatedatVileParle,Mumbai. (2) TermLoansofRs.1,727.00LakhsfromIndianOverseasBank(PreviousyearRs.2,323.67Lakhs)aresecuredbychargeontheProject

assetsandalsobywayofcollateraloftheCompany’simmovablepropertysituatedatVileParle,Mumbai. (3) TermLoansofRs.NilfromIndianOverseasBank(PreviousyearRs.71.60Lakhs)wassecuredbyamortgageonCompany’simmovable

propertysituatedatVileParle,Mumbai. (4) TermloanofRs.NilfromICICIBankLimited(PreviousyearRs.110.49Lakhs)wassecuredby: a) A mortgage ranking pari passu with mortgage created on Company’s immovable properties situated atAurangabad and Nasik in

favourofICICIBankLimitedandEXIMBankfortheirtermloans. b) Hypothecation /charge rankingparipassuwithchargescreated / tobecreated in favourof ICICIBankLimitedandEXIMBank for

theirTermLoansofallthemovablepropertiesoftheCompanyincludingmovablePlant&Machinery,Spares,ToolsandAccessories,presentandfuture(saveandexceptBookDebts)atNasikandAurangabad,subjecttopriorchargecreatedand/ortobecreatedinfavouroftheCompany’sbankerson:

(i) SpecifiedmovablesforsecuringborrowingsfortheCompany’sWorkingCapitalRequirementsand, (ii) SpecifiedassetschargedtotheCompany’sbankersassecurityforTermLoans.(D) VehicleFinancesaresecuredbyhypothecationofspecificassets. As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)B. UNSECURED LOANS Interest-freeSalesTaxLoansfromSICOM. AmountrepayablewithinoneyearRs.5.66Lakhs (PreviousyearRs.64.43Lakhs) 30.56 93.25

TOTAL 30.56 93.25

20


SCHEDULE-4FIXEDASSETS (Rs. in Lakhs)

GROSS BLOCK DEPRE- NET BLOCKCIATION

Sr. DescriptionofAssets Cost/ Additions Sales/ Cost/ Upto As at AsatNo. Revaluation during Transfer/ Revaluation 31.03.2010 31.03.2010 30.09.2009 Asat the Adjustment Asat 01.10.2009 period during 31.03.2010 theperiod

1. Land(Freehold) 11,576.62 0.00 0.00 11,576.62 0.00 11,576.62 11,576.62

2. Land(Leasehold) 1,863.36 0.00 0.00 1,863.36 0.00 1,863.36 1,863.36

3. Buildings 7,847.37 0.00 0.00 7,847.37 5,054.70 2,792.67 2,935.25

4. Plant&Machinery 56,682.46 253.92 13.52 56,922.86 36,602.68 20,320.18 21,427.53

5. ElectricalInstallations 3,016.88 1.70 0.00 3,018.58 2,517.88 500.70 538.47

6. Moulds 287.54 0.00 0.00 287.54 287.54 0.00 0.00

7. LaboratoryEquipments 350.70 0.68 0.00 351.38 223.02 128.36 137.89

8. Furniture&Fixtures 509.14 0.48 0.00 509.62 449.53 60.09 66.59

9. OfficeEquipments 524.45 15.35 0.00 539.80 394.00 145.80 141.13

10. Vehicles 424.13 116.70 44.75 496.08 265.36 230.72 148.09

11. CapitalExpenditureOn 218.60 0.00 0.00 218.60 211.60 7.00 8.50 Research&Development

12. DataProcessingEquipments 1,212.25 2.94 0.00 1,215.19 1,154.21 60.98 75.41

13. ExpenditureOnTech. 1,430.76 0.00 0.00 1,430.76 1,419.53 11.23 15.61 know-how/ProductDevelopment

14. Copyrights 157.46 0.00 0.00 157.46 157.46 0.00 0.00

Total 86,101.72 391.77 58.27 86,435.22 48,737.51 37,697.71 38,934.45

Previousyear 85,193.97 926.67 18.92 86,101.72 47,167.27 38,934.45

CapitalWork-in-Progress 331.96 222.22

NOTES :

1. TheFreeholdlandincludesRs.4,584.49LakhsonaccountofrevaluationoflandatVileParle,Mumbaiasat31stMarch,2007.

2. BuildingincludeRs.0.07Lakhbeingvalueof136sharesinCo-op.HousingSocieties.

3. Depreciationhasbeenprovidedasfollows:

– onCapital Expenditure onR&D and onAssets other thanPlant&Machinery onWrittenDownValueMethod as per rates prescribedunderScheduleXIVoftheCompaniesAct,1956.

– onPlant&Machineryacquiredbefore02.04.1987,onStraightLineMethodasper ratesprevalentat the timeofacquisitionofAssetsonsingleshiftbasis.

– onPlant&Machineryacquiredafter02.04.1987,onStraightLineMethodasperratesprescribedunderScheduleXIVof theCompaniesAct,1956.

4. NoWrite-offhasbeenmadeinrespectofleaserelatingtoleaseholdland.

5. DepreciationincludesTechnicalKnow-howfees/ProductDevelopmentExpensesamortised.

6. TheGrossblockincludesRs.6,765.35LakhsonaccountofEvaluationofcertainAssetsasat31stMarch,2002.

7. In accordance with Accounting Standard (AS-11) and Amendment Rules 2009 on AS-11 Notified by Government of India on 31.03.2009Companyhasde-capitalisedRs. 11.59Lakhs (Previous yearCapitalisedRs. 98.52 lakhs) onaccount of exchange ratedifferenceon foreigncurrancyloans(ReferNoteNo.5inschedule12A).


21


As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE - 5INVESTMENTS(ATCOST)LONGTERMINVESTMENTSA. In Government Securities (Unquoted): 1. 10Years8.5%RuralDebenturesofMaharashtraState ElectricityBoardofthefacevalueofRs.0.17Lakh – – 2. 7YearsNationalSavingsCertificatesoftheface valueofRs.0.03lakh(Lodgedwiththe ExciseAuthoritiesasSecurityDeposit) – –

– –B. In Shares:

I Quoted 1. 50EquitySharesofM.M.RubberLtd.oftheface valueofRs.10/-each,fullypaid-up. 0.01 0.01 2. 2,80,000EquitySharesofGarwareMarineIndustries Ltd,ofthefacevalueofRs.10/-each,fullypaid-up – – 3. 4,00,000EquitySharesofGarwareWallRopesLimited, ofthefacevalueofRs.10/-each,fullypaid-up. 56.80 56.80

56.81 56.81II Unquoted

1. 2,500EquitySharesofTheNewIndia Co-operativeBankLtd.Mumbai,ofthefacevalue ofRs.10/-each,fullypaid-up. 0.25 0.25 2. 2,500EquitySharesofTheNorthKanaraGoud SaraswatBrahminCo-operativeBankLtd.,Mumbai, ofthefacevalueofRs.10/-each,fullypaidup. 0.25 0.25 3. 500sharesofTheCo-operativeStoresLtd. (NewDelhi)ofthefacevalueofRs.10/-each, fullypaidup. 0.05 0.05 4. 10,000EquitySharesofSICOMLtd., ofthefacevalueofRs.10/-eachfullypaid-up 8.00 8.00 5. 20,000EquitySharesofDeogiriNagariSahakari BankLtdofthefacevalueofRs.25/-eachfullypaidup. 5.00 5.00 6. 4,000EquitySharesofVaidyanathUrbanCo-op.BankLtd ofthefacevalueofRs.25/-eachfullypaid-up. 1.00 1.00 7. 1,000EquitySharesofPoornawadico-op BankLtdofthefacevalueofRs.100/-eachfullypaid-up. 1.00 1.00 8. 3,03,36,820EquityShares(PreviousYear3,03,36,820 EquityShares)ofGarwareChemicalsLtdoftheface valueofRs.10/-eachfullypaid-upincludingfourequity sharesheldbynominees. 2,307.19 2,307.19 9. 1,29,69,0000.01%OptionalConvertibleCumulative RedeemablePreferenceShares(PreviousYear1,29,69,000 OCCRPShares)ofGarwareChemicalsLtd.ofthe facevalueofRs.10/-eachfullypaidup. 1,296.90 1,296.90

3,619.64 3,619.64III In Subsidiary Company (Unquoted)

2,50,000OrdinarySharesofGarwarePolyester InternationalLimited,London,ofthefacevalue of Pound1/-eachfullypaid-up. 133.57 133.57

TOTAL 3,810.02 3,810.02

Cost Market Cost Market value valueNOTE:AggregateamountofCompany'sinvestments. Quoted 56.81 287.46 56.81 298.88 Unquoted 3,753.21 3,753.21

TOTAL 3,810.02 3,810.02

22



As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 6CURRENTASSETS,LOANS&ADVANCESA) CURRENT ASSETS:

I. Inventories : (As taken,valued&certifiedbytheManagement) (a) Stores,Spareparts&Packingmaterials(AtCost) 2,250.75 2,257.84 (b) Stock-in-trade (i) RawMaterials(Atcost) 1,002.01 1,015.74 (ii) Finishedgoods(Atcostormarketvaluewhicheverislower) 590.17 580.13 (iii) Semi-finishedgoods(Atcost) 1,606.05 1,824.16

5,448.98 5,677.87II. Sundry Debtors :

(Unsecured,consideredgood,unlessotherwise statedexcludingBillsReceivablediscounted) (RefernoteNo.4inSchedule12B) (a) Debtsoutstandingforaperiodexceedingsixmonths. (i) ConsideredGood 22.86 2.36 (ii) ConsideredDoubtful 493.33 493.33

516.19 495.69 Less : ProvisionforDoubtfulDebts 493.33 493.33

22.86 2.36 (b) OtherDebts IncludingRs.462.47Lakhsduefromsubsidiarycompanies, (PreviousYearRs.57.07Lakhs)andRs.7,412.50Lakhsdue fromAssociatecompanies(PreviousYearRs.6,760.90Lakhs) 10,631.07 9,862.14

10,653.93 9,864.50III. Cash and Bank Balances:

(a) Cashonhand 18.74 21.43 (b) Bankbalances: With ScheduledBanks: InCurrentAccounts 803.16 733.35 InFixedDepositAccounts 160.22 188.22 InUnclaimedDividendAccounts 14.48 9.29

996.60 952.29IV. Other Current Assets:

(a) Exportbenefits/Incentivesreceivable 485.66 427.34 (b) Otherreceivables 1,662.58 1,649.90 (c) ForeignCurrencyMonetaryItemsTranslationDifference Account.(Exchangeratedifferenceonforeigncurrencyloan) 0.00 85.23 2,148.24 2,162.47B) LOANS & ADVANCES: (Unsecured,consideredgood,unlessotherwisestated) (i) Advancesrecoverableincashorinkindorforvalue tobereceived 487.47 568.69 (ii) AdvanceagainstCapitalExpenditure 16.70 0.00 (iii) BalancewithCustoms&Exciseauthorities 318.79 226.82 (iv) Depositswithothers 96.47 96.27 (v) MATCreditEntitlement 897.77 467.77 (vi) AdvancePaymentofIncomeTax/FringeBenefitTax andTaxDeductedatSource(NetofProvisions) 104.45 0.00

1,921.65 1,359.55

TOTAL 21,169.40 20,016.68

23


As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 7CURRENTLIABILITIESANDPROVISIONS:A. Current Liabilities: (i) SundryCreditors(ReferNoteNo.16inSchedule12B) 1,625.95 1,654.19 IncludingRs.217.97LakhsofAssociateCompany (PreviousYearRs.17.79lakhs)andRs.83.92lakhsdueto SME(PreviousYearRs.97.30Lakhs) (ii) OtherLiabilities(IncludingRs.76.69Lakhsdueto Subsidiarycompanies(PreviousYearRs.76.69Lakhs) 597.58 770.94 (iii) DepositsandAdvancesfromCustomers&Others IncludingRs.NiladvancefromSubsidiaryCompany (PreviousYearRs.85.63Lakhs) 503.38 401.68 (iv) UnclaimedDividend 15.02 9.79 (v) UnclaimedDebentureandInterest 2.14 2.14 2,744.07 2,838.74B. Provisions (a) ProvisionforTaxation(NetofAdvancePayments) 0.00 118.89 (b) ProvisionforLeaveEncashment/Gratuity 1,114.63 915.35 (c) ProvisionforDividendonPreferenceShares 0.27 1.02 (d) ProvisionforProposedDividendonEquityShares 345.91 230.60 (e) ProvisionforTaxonDividend 57.50 39.36

1,518.31 1,305.22

TOTAL 4,262.38 4,143.96

SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT 2009-10 2008-09 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)

SCHEDULE – 8OTHER INCOME Insuranceclaims 23.56 27.55 DividendIncome 11.40 11.99 Interestonshorttermdepositswithbanksandothers(Gross) (TDSRs.2.16LakhsPreviousyearRs.13.79Lakhs) 22.86 85.34 Miscellaneousincome 40.55 37.60 Profitonsaleoffixedassets(Net) 12.53 2.39 ExcessProvision/SundryCreditBalanceswrittenback 23.93 3.56 Rent(TDSRs.0.15LakhPreviousyearRs.0.41Lakh) 2.10 4.20 SalesTax/Exciserefund 0.00 27.38 TOTAL 136.93 200.01

SCHEDULE – 9INCREASE/(DECREASE)INFINISHEDANDSEMI-FINISHEDGOODSOpening Stock: Finishedgoods 580.13 1,124.56 Semifinishedgoods 1,824.16 2,883.94 2,404.29 4,008.50Closing Stock: Finishedgoods 590.17 580.13 Semifinishedgoods 1,606.05 1,824.16 2,196.22 2,404.29 Increase/(Decrease) (208.07) (1,604.21)

SCHEDULE – 10RAWMATERIALSCONSUMEDOpening Stock 1,015.74 1,384.15

Add:PurchasesandExpenses 14,809.68 24,664.79 15,825.42 26,048.94

Less:ClosingStock 1,002.01 1,015.74 TOTAL 14,823.41 25,033.20

24


SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT (Contd.)

2009-10 2008-09 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 11MANUFACTURINGANDOTHEREXPENSESA. Manufacturing Expenses: Stores,SparesandPackingMaterialsconsumed 1,204.11 2,162.87 PowerandFuel 3,159.83 5,408.73 ProcessingCharges 963.01 1,343.13 WaterCharges 14.91 94.13 5,341.86 9,008.86B. Employees' Remuneration & Benefits: Salaries,WagesandBonus 1,500.95 2,544.22 ContributiontoProvidentandotherfunds 328.74 496.31 StaffWelfareExpenses 116.86 227.09 1,946.55 3,267.62C. Administrative, Selling and General Expenses: Rent,HirechargesandCompensation(Net) 30.96 59.34 Rates,TaxesandLicenceFees 22.82 25.30 Insurance 58.43 149.27 FreightandForwarding(Net) 744.68 1,420.15 ResearchandDevelopmentExpenses 104.70 94.79 RepairsandMaintenanceof: (i) PlantandMachinery 225.98 504.91 (ii) Buildings 120.71 179.87 (iii) OtherAssets 216.83 419.06 563.52 1,103.84 AdvertisementExpenses 32.41 46.13 SalesTax/VAT 40.08 18.63 Travelling&Conveyance 137.30 409.88 Postage,Telegrams&Telephones 52.67 96.28 LeaseRentals 0.00 24.47 CommissiononSales 112.96 201.85 Donations 50.20 45.05 LegalandProfessionalcharges 258.88 608.01 (ReferNoteNo.7inSchedule12B) Auditors'Remuneration (i) Auditfees 6.00 8.00 (ii) TaxAuditfees 2.00 4.00 (iii) ForCertification/Others 1.60 2.63 (iv) ReimbursementofoutofpocketExpenses 0.35 0.35 9.95 14.98 MiscellaneousExpenses 459.97 857.65 LossonSwap/ExchangeRateFluctuations 269.13 363.29 2,948.66 5,538.91D. Managerial Remuneration: (a) ToManagingDirector&JointManagingDirectors: (i) Salary 140.00 240.00 (ii) ContributiontoProvidentfundand SuperannuationScheme 21.60 64.80 (iii) OtherPerquisites 63.19 73.16 (iv) LeaveSalary 82.78 9.29 307.57 387.25 (b) ToWholeTimeDirector: (i) Salary 6.00 10.20 (ii) ContributiontoProvidentfundand SuperannuationScheme 1.62 2.76 (iii) Otherperquisites 5.33 8.14 (iv) LeaveSalary 0.09 1.59 13.04 22.69 (c) Directors'Commission 31.00 0.00 (d) Directors'sittingfees 0.68 1.15 352.29 411.09

TOTAL 10,589.36 18,226.48

25

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of presentation of Financial Statements The financial statements are prepared under the historical

cost convention modified by revaluation of fixed assets andin accordance with applicable Accounting Standards andrelevant presentation requirements of the Companies Act,1956.

The Company generally follows the mercantile system ofaccounting and recognizes significant items of income andexpenditureonaccrualbasis.

2. Fixed Assets and Depreciation / Amortization Fixed Assets are stated at cost net of MODVAT / CENVAT

and includes amounts added on revaluation, lessaccumulated depreciation. Cost comprises of the purchasepriceandanydirectlyattributable costofbringing theassetsto working condition for its intended use including interestand other incidental and trial run expenses up to the dateof commercial production.When fixed assetswere revalued,surplus on revaluation was credited to Capital / RevaluationReserveAccount.

Depreciation/Amortizationisprovidedasfollows: – OnTechnicalKnow-how/ProductDevelopmentExpenses

@1/6thperannum.

– OnCopyrightExpenditure@1/5thperannum

– On Capital Expenditure on R&D andAssets other thanPlant & Machinery on Written Down Value methodas per rates prescribed under Schedule XIV of theCompaniesAct,1956.

– On Plant & Machinery acquired before 02.04.1987 onStraight Linemethod as per rates prevalent at the timeofacquisitionoftheassetonsingleshiftbasis.

– On Plant & Machinery acquired after 02.04.1987 onStraight Line Method as per rates prescribed underSchedule XIV of the Companies Act, 1956, videNotificationGSRNo.756(E)dated16.12.1993.

– Nowrite-offisbeingmadeinrespectofleaseholdland.

– Assets costingRs.5000/- or Less is depreciated fully intheyearofacquisition.

3. Investments Investments are considered as long term investments and

are accordingly stated at cost of acquisition. Market valueof Quoted Investments at the date of the Balance Sheet isdisclosed. Provision for diminution in the value of long-terminvestments is made only if such a decline is other thantemporaryintheopinionoftheManagement.

4. Inventories Raw Materials,StoresandSparesandPackingMaterialsare

valuedatweightedaverage cost. Finishedgoodsare valuedat lower of the cost and market value. Semi-finished goodsincluding those held for captive consumption are valued atfactorycost(includingdepreciation).

5. Foreign Currency Transactions a) Transactions denominated in foreign currencies are

recordedat theexchange rateprevailingon thedateofthe transaction or that approximates the actual rate atthedateofthetransaction.

SCHEDULE – 12

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES ANNEXED TO AND FORMING PART OF THE ACCOUNTS

b) Monetary items denominated in foreign currencies atthe year-end are restated at year-end rates. In case ofitemswhicharecoveredbyforwardexchangecontracts,the difference between the year-end rate and rate onthe date of the contract is recognised as exchangedifferenceand thepremiumpaidon forwardcontracts isrecognizedoverthelifeofthecontract.

c) Nonmonetaryforeigncurrencyitemsarecarriedatcost. d) Any income or expense on account of exchange

difference either on settlement or on translation isrecognized in the Profit and Loss account exceptin case of long term liabilities, where they relate toacquisition of fixed assets, in which case they areadjustedtothecarryingcostofsuchassets.

e) The Company has opted for accounting exchange ratedifferences arising on reporting of long term ForeignCurrency Monetary Items in line with Companies(Accounting Standard) Amendment Rules 2009 onAccountingStandard11(AS-11)notifiedbyGovt.ofIndiaon March 31, 2009.Accordingly, the effect of exchangedifferences on Foreign Currency Loans of the Companyis accounted by addition or deduction to the cost ofassets so far it relates to depreciable capital assets andinothercasesby transfer to “ForeignCurrencyMonetaryItemsTranslationDifferenceAccount” to be amortized insubsequent period.Accordingly, in the previous year theCompanyhasdebitedRs.50.76 lakhs toassetsaccountby adjusting against reserve. The exchange loss for theyear 2007-08 in the year under review the Companyhas amortized Rs. 85.23 lakhs from Foreign CurrencyMonetary ItemsTranslation Difference due to repaymentofthesaidLoans.

f) Investments in shares of foreign subsidiary Companyare expressed in Indian Currency at the rate ofexchange prevailing at the time when the originalinvestmentsweremade.

6. Inter-divisional Transfers Inter-divisional transfers of goods for internal use as captive

consumption are shownas contra items in theProfit& LossAccount to reflect the true economic value of the productioninter-se the divisions. This accounting treatment has noimpactontheProfitoftheCompany.

7. Duties Excise duty on finished goods and customduty on imported

materials has been accounted on the basis of paymentsmade inrespectofgoodsclearedasalsoprovisionmadeforgoodslyinginBondedWarehouse.

8. Employee Benefits: a) ShortTermEmployeeBenefits: All benefits paid / payable wholly within 12 months

of rendering the service are classified as shortterm. Benefits such as salaries, wages, short-termcompensated absences, etc and the expected costof bonus, ex-gratia, medical, LTA are recognized inthe period in which the employee renders the relatedserviceandchargedtoProfitandLossAccount.

b) DefinedContributionPlans: Company contributes Provident Fund in accordance

with EPFAct, 1952 and ESIC Schemes in accordancewith ESIC Act,1948 under Government administeredschemes,howevercertainemployeesarecoveredunderthe contributory plans with the trust “GarwarePolyesterLimited Office Staff & Officers Provident Fund”.Contributionsareaccountedonaccrual /paidbasisandchargedtoProfit&LossAccount.

26


c) DefinedBenefitPlans: 1) Liability towards Superannuation and Gratuity

are covered by appropriate schemes with LifeInsurance Corporation of India on accrual basis.GratuityplansaredeterminedbyactuarialvaluationbyusingtheProjectedUnitCreditmethod.

2) Leave encashment benefits are accounted onactuarialvaluationbasis.

9. Lease Rentals Lease Rentals are accounted on accrual basis over the

LeaseTermaspertherelevantLeaseAgreements.

10. Provisions, Contingent Liabilities & Contingent Assets : Provisions involving substantial degree of estimation in

measurement are recognised when there is a presentobligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent Liabilitiesarenotrecognisedbutaredisclosedinthenotes.ContingentAssets are neither recognised nor disclosed in the financialstatements.

11. Research and Development Revenue expenditure on Research and Development is

charged out in the accounting year in which it is incurred.Expenditure,whichresultsincreationofassets,isincludedinFixedAssetsanddepreciation isprovidedonsuchassetsasapplicable.

12. Revenue Recognition a) Sales: Sales are accounted for inclusive of excise duty and

VAT/ sales tax (wherever not charged separately), andarenetofdiscountsandreturns.

b) Export Benefits: Export entitlements under the Duty Entitlement Pass

Book(DEPB)scheme/otherschemearerecognizedasincomewhentherighttoreceivecreditasperthetermsof the scheme is established in respect of the exportsmade and where there is no significant uncertaintyregarding the ultimate collection of the relevant exportproceeds.

13. Taxation a) Deferred tax is recognised, subject to the consideration

of prudence, on timing differences, being the differencebetween taxable income and accounting income thatoriginate in one period and are capable of reversal inoneormoresubsequentperiods.

b) Current tax isdeterminedas theamountof taxpayablein respect of taxable income for the period. The creditis taken as per entitlement for the tax liability providedunder MAT based on taxable income as per theprovisionsofIncomeTaxAct,1961.

14. Borrowing Cost: Borrowing costs specifically relatable to the acquisition

of fixed assets are capitalized as part of the cost of fixedassets,otherborrowingcostsarechargedtorevenue.

15. Impairment of assets Impairment loss, ifany, isprovidedtotheextent,thecarrying

amount of assets exceeds their recoverable amount.

Recoverable amount is higher of an asset's net selling priceand its value in use. Value in use is the present value ofestimated future cash flows expected to arise from thecontinuinguseofanassetandfromitsdisposalattheendofits usefullife.

B. NOTES:1. Estimated amount of contracts remaining to be executed

on capital account and not provided for Rs. 943.18 Lakhs(Previous year Rs.858.50 Lakhs) against which an advanceofRs.16.70Lakhs(PreviousyearRs.Nil)hasbeenpaid.

2. The Company has given counter-guarantees for Rs. 723.56Lakhs (Previous year Rs.738.59 Lakhs) to Banks in respectof guarantees given by the Banks to third parties forpurchaseofequipments,supplyofgoods,clearanceofgoodsfromCustoms,ExciseBonds,etc.

3. Letters of Credit opened on behalf of the Company byBanks for purchase of materials and equipments amount toRs. 15,538.11Lakhs(PreviousyearRs.13,577.63Lakhs).

4. Bills of Exchange discounted under Bill Marketing Schemeamount to Rs. 2,257.75 Lakhs (Previous year Rs. 2,725.29Lakhs).

5. Secured Loans:

Zero Coupon Bonds of Rs. 151.00 Lakhs are repayable inquarterly installments with premium of Rs.128.35 Lakhs till1stJanuary,2012.

AmountofTermLoans /ZeroCouponBondrepayablewithinone year is Rs.6,716.45 Lakhs (Previous Year Rs.1,947.60Lakhs).

6. Contingent Liabilities not provided for –(Rs.inLakhs)

As at Asat 31-03-2010 30-09-2009

Disputedmattersinappeal/contestedinrespectof:

IncomeTax 63.91 43.22

ExciseDuty 43.94 39.02

SalesTax 17.13 17.13

MaharashtraStateElectricityBoard(MSEB) 27.72 0.00

7. Legal and Professional Charges include Rs. 0.83 Lakh(PreviousyearRs.7.90Lakhs)paidtosomeofthePartnersoftheAuditorsforotherservices&Rs.NilpaidtoafirminwhichoneoftheDirectorisapartner.(PreviousyearRs.0.25Lakh).

8. Break up of Interest and financial charges are:

2009-10 2008-09 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)

OnSecuredTermLoans(Net) 471.92 2,041.37

OtherInterest(Net) 722.96 2,569.46

FinancialCharges 438.86 648.33

Total 1,633.74 5,259.16

SCHEDULE – 12 (Cond.)

27


9. ExportBenefits/Incentivesareaccountedonaccrualbasis.Accordingly,netestimatedbenefitaggregatingtoRs.510.21Lakhs(Previousyear Rs.752.27 Lakhs) against export effected during the period has been credited to Export Benefits earned account which has beenincludedinsales.

10. Computationofnetprofitaspersection349readwithsection309(5)and198oftheCompaniesAct,1956isasunder.

2009-10 2008-09 6 Months 12Months (Rs. in Lakhs) (Rs.inLakhs)

ProfitbeforeTax 2,542.08 2,297.82

Add:

A. RemunerationtoDirectors 237.74 399.06

B. DirectorsSittingFees 0.68 1.15

C. Commission 31.00 0.00

2,811.50 2,698.03

Less:

A. ProfitonsaleoffixedAssets 12.53 2.39

B. Provisionfordoubtfuldebtsandsundrycreditbalanceswrittenback 23.93 3.56

Netprofitaspersection349oftheCompaniesAct1956 2,775.04 2,692.08

Remunerationincludingcommission@10% 277.50 269.21

Commissionprovidedissubjecttoapprovalofshareholderattheensuing AnnualGeneralMeeting. 31.00 N.A.

Note:

(i) The remunerationofRs. 377.96Lakhs forPrevious year paid to theManagingDirector and JointManagingDirector areasperCentralGovernmentsanctions.

(ii) Theabovefiguredoesnotincludeprovisionforgratuitiesasseparateactuarialvaluationisnotavailable.

11. Segment Reporting: (a) TheCompanyisonlyinonelineofbusinessnamely-Polyesterfilm.

(b) TheSegmentRevenueintheGeographicalsegmentconsideredfordisclosureareasfollows:-

(i) RevenuewithinIndiaincludessalestocustomerslocatedwithinIndia.

(ii) RevenueoutsideIndiaincludessalestocustomerslocatedoutsideIndiaincludingExportBenefits/Incentives.

2009 -10 (6 Months) 2008-09(12Months) (Rs. in Lakhs) (Rs.inLakhs)

Within India Outside India Total WithinIndia OutsideIndia Total

Sales 20,396.36 12,525.98 32,922.34 38,691.04 20,130.94 58,821.98

AmountofSegmentAssetsbylocationofassets.

(NetValue) 20,320.18 0.00 20,308.81 21,427.53 0.00 21,427.53

28


12. Related Party Disclosures a) ListofRelatedParties.

Subsidiary : GarwarePolyesterInternationalLimited UltimateSubsidiary : GlobalPetFilmsInc AssociateCompanies : GarwareIndustriesLimited&GarwareChemicalsLimited KeyManagementPersonnel : (1) Shri.S.B.Garware (2) Mrs.MonikaGarwareModi (3) Ms.SaritaGarware (4) Miss.SoniaS.Garware EnterprisesoverwhichKey : GarwareCharitableTrust ManagerialPersonareableto exercisesignificantinfluence

b) TransactionwithRelatedParties(Rs.inLakhs)

2009-10 * 2008-09*6 Months 12Months

(i) SaleofGoods/CapitalItems

(a) Subsidiary 426.13 735.34

(b) UltimateSubsidiary 743.79 2,252.33

(c) AssociateCompanies 9,031.34 6,455.04

(ii) PurchasesofMaterialsandCapitalItems AssociateCompanies 8.95 5.39

(iii) ServicesReceived/ProcessingCharges

AssociateCompanies 1,061.38 1,335.01

(iv) ServicesRendered

AssociateCompanies 64.30 212.21

(v) Balances[Dr./(Cr)]

(a) Subsidiary 78.20 (137.24)

(b) UltimateSubsidiary 307.58 31.99

(c) AssociateCompanies 7,194.53 6,743.11

(vi) KeyManagementPersonnel&Relatives

ManagerialRemuneration(ReferScheduleNo.11)

* Figuresareongrossbasis(IncludingTaxes&Duties)

13. Earning Per Share

(Rs.inLakhs)

2009-2010 2008-2009 (6 Months) (12Months)

ProfitAfterTax 2,537.33 1,063.36

Less:DividendonPreferencesharesincludingTax 0.32 1.19

AmountavailableforEquityShareholders 2,537.01 1,062.17

WeightedaveragenumberofShares 2,30,60,386 2,30,27,053

EarningPerShare-Basic&Diluted(Rs)(Absolute) 11.00 4.61

14. Deferred Tax: As per the legal advice obtained by the Company and in compliance with provisions of Accounting Standard and based on General

Prudence, the Company has not recognized the deferred tax asset / liability while preparing the accounts of the year under review(PreviousYearprovisionofRs.1,193.75lakhsasdeferredtaxliability).


29


15. DisclosureasperAS-15(Revised)on“EmployeeBenefit”fortheperiodended31stMarch2010. A. Funded retirement benefit - Gratuity

Description 2009-2010 2008-2009 (6 Months) (12Months)

Rs. in Lakhs Rs.inLakhs

Change in the defined benefit obligationsDefinedbenefitobligationsatbeginningoftheperiod/year 1,295.89 865.37Servicecost 44.40 82.43Interestcost 49.80 99.60ActurialLoss/(Gain) 157.54 282.37Benefitspaid (37.76) (33.88)Definedbenefitobligationsatendoftheperiod/year(a) 1,509.87 1,295.89Change in plan assetsFairValueofplanassetsatbeginningoftheperiod/year 1,226.56 809.00Expectedreturnonplanassets 55.33 94.46Contributionsbyemployer 43.60 206.85ActuarialGain/(Loss) 13.43 150.13Benefitspaid (37.76) (33.88)Fairvalueofplanassetsatendoftheperiod/year(b) 1,301.16 1,226.56Present Value of un funded obligations (a-b) 208.71 69.33Thenetamountrecognizedinthestatementofprofitandlossfortheperiodended31stMarch,2010isasfollows:Currentservicecost 44.40 82.43Interestcost 49.80 99.60Expectedreturnonplanassets (55.33) (94.46)NetactuarialLoss/(Gain)recognized 144.11 282.37Netamountrecognized 182.98 369.94ActualReturnonPlanAssets Theprincipalactuarialassumptionsusedasat31stMarch,2010areasfollows:DiscountRate 8.00% 7.80%ExpectedrateofreturnonplanassetsWithdrawalrate Up to Upto

Age 35: 5% Age35:5%36-50 : 2% 36-50:2%

51& abv: 1% 51&abv:1%Rateofincreaseincompensationlevels 5.00% 5.00%

B. Un-funded retirement benefit – Leave Encashment



Change in the defined benefit obligationsDefinedbenefitobligationsatbeginningoftheperiod/year 846.02 779.26Servicecost 32.65 40.79Interestcost 44.53 62.11ActurialLoss/(Gain) 0.40 (30.35)Benefitspaid (17.69) (5.79)Definedbenefitobligationsatendoftheperiod/year(a) 905.91 846.02Change in plan assetsFairValueofplanassetsatbeginningoftheperiod/year 0.00 0.00Expectedreturnonplanassets 0.00 0.00Contributionsbyemployer (0.40) 5.79ActuarialGain/(Loss) 0.00 0.00Benefitspaid 0.40 (5.79)Fairvalueofplanassetsatendoftheperiod/year(b) 0.00 0.00Present Value of un funded obligations (a-b) 905.91 846.02Thenetamountrecognizedinthestatementofprofitandlossfortheperiodended31stMarch,2010isasfollows:Currentservicecost 32.65 40.79Interestcost 44.53 62.11Expectedreturnonplanassets 0.00 0.00NetactuarialLoss/(Gain)recognized (17.69) (30.35)Netamountrecognized 59.49 72.55ActualReturnonPlanAssets 0.00 0.00Theprincipalactuarialassumptionsusedasat31stMarch,2010areasfollows:DiscountRate 8.00% 7.80%ExpectedrateofreturnonplanassetsWithdrawalrate Up to Upto

Age 35: 5% Age35:5%36-50 : 2% 36-50:2%

51& abv: 1% 51&abv:1%Rateofincreaseincompensationlevels 7.00% 7.00%

30



16. DISCLOSURE IN ACCORDANCE WITH SECTION 22 OF MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006

Sr. Particulars As at AsatNo. March 31, September30,

2010 2009

(i) Principalamountremainingunpaid NIL NIL(ii) Interestduethereon NIL NIL(iii) InterestpaidbytheCompanyintermofSection16 NIL NIL(iv) Interestdueandpayablefortheperiodofdelayinpayment NIL NIL(v) Interestaccruedandremainingunpaid NIL NIL(vi) Interestremainingdueandpayableeveninsucceedingyears NIL NIL

ThisinformationasrequiredtobedisclosedundertheMicro,SmallandMediumEnterprisesDevelopmentAct,2006hasbeendeterminedtotheextentsuchpartieshavebeenidentifiedonthebasisofinformationavailablewiththeCompany.

17. InaccordancewithAccountingStandard28(AS28)issuedbytheInstituteofCharteredAccountantsofIndiaonImpairmentofAssets,theCompanyhadappointedprofessionalconsultancyfirmasthevaluerstoassessimpairmentofeachcashgeneratingunit(CGU)bytakingmarketvalueanditspotentialcapacitytogeneratecashflows.Accordingtothevaluersreport,thereisnoimpairmenttoanyoftheassetsassuchnoprovisionforimpairmentofassetsisrequiredtobemadeintheaccounts.

18. The significant leasing arrangements of the Company are in respect of operating leases for premises and vehicles. These leasingarrangements ranges between 11months and 5 years and are usually renewable by mutual consent onmutually agreeable terms.Theagreeable lease rentalpayablearecharged toProfitandLossaccountandshownunderadministrative,sellingandgeneralexpenses inappropriateheads.

19. Additionalinformationpursuanttotheprovisionsofparagraphs3and4CofpartIIofScheduleVIoftheCompaniesAct,1956. (A) Licensed & Installed Capacities:

2009-10 2008-09 Product Licensed / Installed Licensed/ Installed Registered Capacity Registered Capacity (T.P.A.) (T.P.A.) (T.P.A.) (T.P.A.)

(i) PolyesterFilm 80,000 41,000 80,000 41,000(ii) MetallisedFilm 2,210 2,210 2,210 2,210(iii) PolyesterChips 104,400 104,400 104,400 104,400

Note: InstalledcapacitiesandLicensedcapacitiesareasperthecertificategivenbytheDirector–TechnicalonwhichAuditorshaverelied.(B) Details of Sales

2009-10 (6 Months) 2008-09(12Months) Qty. Value Qty. Value (MT) (Rs. in Lakhs) (MT) (Rs.inLakhs)Class of Goods:(i) Polyesterfilms(Plain/ Lacquered/Laminated/Stabilised /Coloured&Metallised) 23,058 32,921 43,250 58,708(ii) Others(includingChips) 1 114

(C) Actual Production & Stocks

2009-10 (6 Months) 2008-09(12Months)

Unit Op. Production Cl. Op. Production Cl. Stock Stock Stock Stock

Class of Goods(i) Polyesterfilms(Plain/ MT 405.37 23,023.87 371.21 666.88 42,988.36 405.37 Lacquered/OHP/ Rs.in 577.87 589.89 1,072.41 577.87 Laminated/Stabilised/ Lakh Coloured&Metallised)

(ii) Chips(excluding NA Produced for captive use in NA Producedforcaptiveusein conversion) the manufacture of films. themanufactureoffilms.

(iii) Others Rs.in 2.26 0.28 52.15 2.26 Lakh

31


(D) Consumption of Raw Materials:

2009-10 (6 Months) 2008-09(12Months) Qty. Value Qty. Value (MT) (Rs. in Lakhs) (MT) (Rs.inLakhs)(i) DMT 14 9.42 8 5.25(ii) PTA 19,493 8,785.24 35,141 14,343.62(iii) MEG 7,787 3,325.45 14,538 4,621.45(iv) Others 2,703.30 6,062.88Total* 14,823.41 25,033.20

‘*’AfteradjustingsaleofrawmaterialamountingtoRs.32.14Lakhs(PreviousyearRs.54.10Lakhs).

(E) Details of imports on CIF basis:

2009-10 2008-09(6 Months) (12Months)

(Rs. in Lakhs) (Rs.inLakhs)

(i) RawMaterials 615.00 1641.85(ii) PackingMaterials 31.00 78.11(iii) Components&Spares 93.51 223.12(iv) CapitalGoods 32.16 260.88

(F) Details of Imported & Indigenous Raw Materials and Spare parts consumed and percentage of each to the total:

2009-10 (6 Months) 2008-09(12Months) Value % of Value %of (Rs. in Lakhs) Total (Rs.inLakhs) Total(i) RawMaterials: – Imported 910.99 6 2,042.66 8 – Indigenous 13,912.42 94 22,990.54 92

Total 14,823.41 100 25,033.20 100(ii) Stores&Spares: – Imported 44.87 11 201.96 29 – Indigenous 345.32 89 500.96 71

Total 390.19 100 702.92 100

(G) Remittances / Expenditure in Foreign Currency:

2009-10 (6 Months) 2008-09(12Months)(Rs. in Lakhs) (Rs.inLakhs)

(i) Commission 20.31 62.84(ii) Advertisement/SellingExpenses 57.45 148.11(iii) TravellingExpenses 13.98 161.34(iv) Books,Periodicals&Subscription 11.47 11.40(v) Technical/Engg.Services/ProfessionalCharges 25.37 142.53(vi) ExhibitionExpenses 8.08 3.13(vii) Interest 396.78 379.78

(H) Earnings in Foreign Exchange:

2009-10 (6 Months) 2008-09(12Months)(Rs. in Lakhs) (Rs.inLakhs)

Exports(FOBbasis) 11,879.97 19,163.15

20. Previousyears’sfigureshavebeenrearrangedandregroupedwherevernecessarytoconformtotheclassificationadoptedforthecurrentperiod.Figuresofthecurrentperiodarenotcomparablewiththefiguresofthepreviousyearbeingofsixmonthperiod.


S. B. GARWARE – Chairman & Managing Director

Asperourreportofevendate B. MORADIAN – Director M. S. ADSUL – Director – Technical


L. M. AGRAWAL – Chief Financial Officer INDULAL H. SHAH SUNIL BHANDARI MANOJ KOUL – Company Secretary &Partner Partner General ManagerMumbai,05thAugust,2010

32


B BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

I. Registration Details

RegistrationNo. 10889 StateCode 11

BalanceSheetDate 31.03.2010

II. Capital raised during the year (Amount in Rs. Thousand)

PublicIssue NIL RightsIssue NIL

BonusIssue NIL PrivatePlacement NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)

TotalLiabilities 5875254 TotalAssets 5875254

SourcesofFunds

Paid-upCapital 774583 Reserves&Surplus 1960924

SecuredLoans 2992267 UnsecuredLoan 3056

DeferredTaxLiability 144424

ApplicationofFunds

NetFixedAssets 3802967 Investments 381002

NetCurrentAssets 1690702 Misc.Expenditure 583

IV. Performance of Company ( Amount in Rs. Thousand )

Turnover 5287348 TotalExpenditure 5033140

Profitbeforetax 254208

NetProfit 253733 Profitaftertax 253733

+ – + –

4 4

(PleasetickAppropriatebox"+"forProfit"–"forLoss)

Earningpershare* 11.00 Dividendrate% 15.00

V. Generic Names of Three Principal Products/Services of Company (as per monetary term)

ItemCodeNo. 39206909 39206903 39206904

ProductDescription POLYESTERFILM PACKAGINGPOLYESTERFILM SUNCONTROLFILM

*ReferNoteNo13inSchedule12B

33

CASH FLOW STATEMENT FOR THE 6 MONTHS ENDED MARCH 31, 2010

Period ended Yearended 31.03.2010 30.09.2009 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)A. Cash flow from operating activities: Profitbeforetax 2,542.08 2,297.82

Add : Depreciation 1,609.39 3,247.09 Interestexpenses-Net 1,633.74 5,259.16 LossonExchangeRateFluctuations 269.13 363.29 ForeignCurrencyMonetaryItemsTranslationDifference 0.00 50.76 ProvisionforLeave&GratuityProvision 199.28 79.72 SubTotal 3,711.54 9,000.02 Total 6,253.62 11,297.84

Less: Interestincome 22.86 85.34 Profitonsaleoffixedassets 12.53 2.39 Dividendreceived/IncomefromInvestment 11.40 11.99 SundrybalancesWrittenBack(Net) 23.93 3.56 Rent 2.10 4.20 Subtotal 72.82 107.48

Operating profit before working capital changes 6,180.80 11,190.36 AdjustmentsFor: (Increase)/Decreaseintrade/otherreceivable(Net) (802.85) 1,588.13 (Increase)/Decreaseininventories 228.89 2,100.76 Increase/(Decrease)intrade/otherpayables (75.97) (423.16) Cashgeneratedfromoperations 5,530.87 14,456.09 Directtaxesrefund/(paid)(Net) (658.09) (245.75)

Net cash inflow / (outflow) from operations 4,872.78 14,210.34B. Cash flow from investing activities : Purchaseoffixedassets (489.92) (835.96) Saleoffixedassets 20.06 6.55 Interestreceived 22.86 85.34 LossonExchangeRateFluctuations (269.13) (363.29) Dividendreceived/IncomefromInvestment 11.40 11.99 Rent 2.10 4.20

Net cash inflow / (outflow) from investing activities (702.63) (1,091.17)C. Cash flow from financing activities EquityShareCapitalincludingsharepremium 0.00 65.34 Interest/FinancialCharges (1,633.74) (5,280.31) Repaymentofborrowings-secured (2,633.80) (5,582.36) Proceeds/(repayments)ofborrowings-Unsecured (62.69) (412.43) Cashcreditaccounts 461.22 (1,650.45) Dividendpaid/UnclaimedDividendPaidincludingTaxes (265.75) 0.00 MiscellaneousExpenditure(TotheextentnotWrittenoff) 8.92 17.83

Net cash inflow / (outflow) from financing activities (4,125.84) (12,842.38)Net increase / (decrease) in cash and cash equivalents 44.31 276.79Cash and cash equivalents as at opening

Cashandbankbalances 952.29 675.50Cash and cash equivalents as at closing

Cashandbankbalances 996.60 952.29 44.31 276.79







34


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956,RELATING TO SUBSIDIARY COMPANIES

A) NameoftheSubsidiaryCompanies GarwarePolyester GarwarePet InternationalLimited FilmsInc.

B) FinancialYearoftheSubsidiaryCompaniesendedon: 31stMarch,2010 31stMarch,2010

C) SharesoftheSubsidiaryheldbyGarware PolyesterLimited,ontheabovedates:

(a) NumberandFaceValue 2,50,000EquityShares NIL ofPound1each

(b) Extentofholding 100%

D) ThenetaggregateofProfit/(Loss)oftheSubsidiaryCompanies sofarasitconcernsthemembersofGarwarePolyesterLimited

(a) NotdealtwithintheaccountsGarwarePolyesterLimited, fortheyearended31.03.2010.

(i) FortheSubsidiaries’FinancialYear (inPound) N.A. endedontherespectivedates 168054

(ii) ForthepreviousFinancialYearsoftheSubsidiariessincethey (inPound) N.A. becametheHoldingCompany’sSubsidiaries (62695)

(b) DealtwithintheaccountsofGarwarePolyesterLimited, fortheyearended31.03.2010amountedto:-

(i) FortheSubsidiaries’FinancialYear endedontherespectivedates N.A. N.A.

(ii) ForthepreviousFinancialYearsof (inPound) theSubsidiariessincetheybecamethe 25000 N.A. HoldingCompany’sSubsidiaries

E) ChangesintheinterestofGarwarePolyesterLtd.betweentheendofthe NIL NIL Subsidiaries’FinancialYearand31.03.2010

F) Materialchangesbetweentheendofthe NIL NIL Subsidiary’sFinancialYearand31.03.2010

(1) FixedAssets

(2) Investments

(3) MonieslentbytheSubsidiary

(4) MoniesborrowedbytheSubsidiaryCompanyotherthan formeetingCurrentLiabilities



B. MORADIAN – DirectorM. S. ADSUL – Director – Technical

L. M. AGRAWAL – Chief Financial Officer MANOJ KOUL – Company Secretary &

General Manager


35

AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF GARWARE POLYESTER LIMITED ON THE CONSOLIDATED FINANCIAL STATEMENTS OF

GARWARE POLYESTER LIMITED AND ITS SUBSIDIARIES

WehaveexaminedtheattachedconsolidatedBalanceSheetofGarwarePolyesterLimitedanditssubsidiariesasmentionedinNoteB(1)ofSchedule12oftheconsolidatedfinancialaccountsasat31stMarch,2010,andalsotheConsolidatedProfitandLossAccountandtheConsolidatedCashFlowStatementfortheperiodendedonthatdateannexedthereto.

ThesefinancialstatementsaretheresponsibilityoftheGarwarePolyesterLimited’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedourauditinaccordance withauditingstandardsgenerallyacceptedinIndia.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsareprepared,inallmaterialrespects,inaccordancewithandidentifiedfinancialreportingframeworkandarefreeofmaterialmisstatements.Anauditincludesexaminingonatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatements.Webelievethatourauditprovidesareasonablebasisforouropinion.

WedidnotauditthefinancialstatementsofGarwarePolyesterInternationalLimitedandGlobalPetFilmsInc.Thesefinancialstatementshavebeenauditedbyotherauditorswhosereportshavebeenfurnishedtousforthetwelvemonthsperiodended31stMarch,2010andouropinioninsofarasitrelatestotheamountsincludedinrespectofsubsidiariesisbasedsolelyontheunauditedaccountsfortheperiodofsixmonthsended31stMarch,2010dulycertifiedbythedirectoroftherespectivesubsidiarycompanies.

WereportthattheconsolidatedfinancialstatementshavebeenpreparedbytheCompanyinaccordancewiththerequirementsofAccountingStandard21‘ConsolidatedFinancialStatements’issuedbytheInstituteofCharteredAccountantsofIndiaonthebasisoftheseparateauditedfinancialstatementsofGarwarePolyesterLimitedandunauditedFinancialstatementsofitssubsidiariesincludedintheConsolidatedFinancialStatements.

Onthebasisoftheinformationandexplanationsgiventous,andontheconsiderationoftheseparateauditreportonindividualauditedfinancialstatementsofGarwarePolyesterLimitedandotherfinancialinformationofitssubsidiariesontheaccountsfortheperiodof6months,thesaidConsolidatedFinancialStatementsreadwithnoteno.15regardingDeferredTaxliabilityandreadtogetherwithothernotesinSchedule12,weareoftheopinionthattheattachedConsolidatedFinancialStatementsgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia.

a) In the case of theConsolidatedBalanceSheet of the consolidated state of affairs ofGarwarePolyester Limited and its subsidiaries as at31stMarch,2010;

b) InthecaseoftheconsolidatedProfitandLossAccountoftheconsolidatedresultsofoperationsofGarwarePolyesterLimitedanditssubsidiariesfortheperiodendedonthatdate;

AND

c) InthecaseoftheConsolidatedCashFlowsStatementoftheConsolidatedCashFlowsfortheperiodendedonthatdate.



Mumbai05thAugust,2010

36


CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

As at Asat 31.03.2010 30.09.2009 Schedule (Rs. in Lakhs) (Rs.inLakhs)FUNDS EMPLOYED :SHAREHOLDERS'FUNDS ShareCapital 1 7,745.83 7,745.83 Reserves&Surplus 2 19,419.16 17,153.86 27,164.99 24,899.69LOANFUNDS SecuredLoans 3A 30,394.01 32,501.41 UnsecuredLoans 3B 30.56 93.25 30,424.57 32,594.66DeferredTaxliabilities 1,444.24 1,444.24

TOTAL 59,033.80 58,938.59APPLICATION OF FUNDS :FIXEDASSETS 4 GrossBlock 86,470.43 86,136.93 Less:Depreciation 48,766.23 47,193.51

NetBlock 37,704.20 38,943.42 CapitalWorkinProgress 331.96 222.22 38,036.16 39,165.64INVESTMENTS 5 3,676.45 3,676.45CURRENTASSETS,LOANSANDADVANCES 6 Inventories 5,660.75 6,038.67 SundryDebtors 10,473.32 8,953.23 CashandBankBalances 1,522.14 1,582.20 OtherCurrentAssets 2,152.58 2,188.84 LoansandAdvances 1,928.37 1,364.86

21,737.16 20,127.80Less:CURRENTLIABILITIESANDPROVISIONS 7 CurrentLiabilities 2,893.23 2,717.31 Provisions 1,528.57 1,328.74 4,421.80 4,046.05 Net Current Assets 17,315.36 16,081.75MiscellaneousExpenditure(Totheextentnotwrittenofforadjusted)ShareIssueExpenses 5.83 14.75 TOTAL 59,033.80 58,938.59

ThenotesinSchedule12and ForandonbehalfoftheBoardofDirectorsSchedulesreferredtohereinformanintegralpartoftheBalanceSheet S. B. GARWARE – Chairman & Managing Director





37

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD OCTOBER 1, 2009 TO MARCH 31,2010

2009-2010 2008-09 (6 Months) (12Months) Schedule (Rs. in Lakhs) (Rs.inLakhs)INCOME : SalesincludingExciseduty 33,174.57 59,812.51 Inter-DivisionalTransfers(aspercontra) 19,814.21 32,644.18 GrossSales 52,988.78 92,456.69

Less:Exciseduty 1,653.22 3,354.03 NetSales 51,335.56 89,102.66 OtherIncome 8 143.77 269.77 Increase/(Decrease)inFinishedand Semi-finishedGoods 9 (357.12) (2,092.04) 51,122.21 87,280.39EXPENDITURE : Raw Materialsconsumed 10 14,463.21 24,903.28 Inter-DivisionalTransfers(aspercontra) 19,814.21 32,644.18 Manufacturing&otherexpenses 11 10,876.37 18,809.96 Interest&financialcharges (ReferNoteNo.10inSchedule12B) 1,648.89 5,301.14 46,802.68 81,658.56Profit before Depreciation and Tax 4,319.53 5,621.83Depreciation 1,611.48 3,251.49Profit before Tax 2,708.05 2,370.34Less:ProvisionforTaxation DeferredTax 0.00 1,193.75 CurrentTax 431.01 459.86

Less:MATCreditEntitlement (430.00) (467.77) FringeBenefitTax 0.00 35.80 WealthTax 4.75 4.91Profit after Tax 2,702.29 1,143.79Add:Balancebroughtforwardfrompreviousyear 7,121.60 6,248.79Profit available for appropriations 9,823.89 7,392.58APPROPRIATIONS :DividendonRedeemablePreferenceShares 0.27 1.02ProposedDividendonequityshares 345.91 230.60TaxonDividend 57.50 39.36TransfertoGeneralReserve 130.00 0.00 533.68 270.98Balance carried to Balance sheet 9,290.21 7,121.60

EarningperShare{(Basic/Diluted)(Rupees)(facevalueofRs10each)} 11.72 4.96(NotAnnualisedforcurrentperiod)(ReferNoteNo.14inSchedule12B)

ThenotesinSchedule12and ForandonbehalfoftheBoardofDirectorsSchedulesreferredtohereinformanintegralpartoftheProfit&LossAccount S. B. GARWARE – Chairman & Managing Director





38


Out of the above : (i) 16,50,600EquitySharesofRs.10/-eachwereallottedasfullypaid-upBonusSharesbyCapitalisationofReserves(Previousyear16,50,600). (ii) 6,60,000EquitySharesofRs.10/-eachwereallottedas fullypaid-uppursuant toaschemeofamalgamationwithoutpaymentbeingreceived incash

(Previousyear6,60,000). (iii) 64,860EquitySharesofRs.10/-eachwereallottedasfullypaiduptoIndustrialDevelopmentBankofIndiaLimited(IDBI)atapremiumofRs.40/-per

shareinconsiderationofconversionofapartoftheloanamountofRs.32.43Lakhs(Previousyear64,860). (iv) 47,80,799 Equity Shares of Rs.10/- each were allotted as fully paid up at a premium of Rs. 40/- per share against 23,90,400 detachable warrants

(Previousyear47,80,799). (v) 10,19,022 Equity shares ofRs.10/- eachwere allotted as fully paid up to IDBI at a premiumofRs.48.88 per share on 7thNovember 2007 as per

arrangement.

(vi) 2,00,000EquitysharesofRs.10/-eachwereallottedasfullypaiduptovariousschemesoperatingunderUTIAssetsManagementCompanyLimitedatapremiumofRs.22.67pershareon23rdDecember2008asperarrangement.

(vii) 54,46,0000.01% Cumulative Redeemable Preference Shares of Rs. 100/- each were allotted as fully paid up to IDBI at par (49,54,000 on 7thNovember2007and4,92,000on19thJune2008)asperarrangement.ThepreferencesharesamountingtoRs.4954.00Lakhsshallberedeemedin3equalinstallmentsfrom1stApril2014to1stApril2016andRs.492.00Lakhsshallberedeemedinsingleinstallmenton1stApril2016.

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEETSCHEDULE – 1 As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)SHARE CAPITALAuthorised: 4,00,00,000EquitySharesofRs.10/-each 4,000.00 4,000.00 60,00,000PreferenceSharesofRs.100/-each 6,000.00 6,000.00

10,000.00 10,000.00Issued,Subscribed and Paid-up: 2,30,60,386EquitySharesofRs.10/-each 2,306.04 2,286.04 fullypaid-up(Previousyear2,28,60,386) Nil(2,00,000EquitySharesofRs.10/-eachissuedduring thePreviousyear)(ReferNote-(vi)below) 0.00 20.00 2,306.04 2,306.04Less:UnpaidAllotmentCallmoney(fromothers) 6.21 6.21 2,299.83 2,299.83 54,46,0000.01%CumulativeRedeemablePreferenceSharesof Rs100each.(Previousyear54,46,000)(Refernote-(vii)below) 5,446.00 5,446.00

TOTAL 7,745.83 7,745.83

SCHEDULE 2RESERVES AND SURPLUSShare Premium : BalanceasperlastBalanceSheet 592.14 546.80 Add:PremiumonequityshareissuedtoUTI/IDBI (ReferNote(vi)inSchedule1) 0.00 45.34 592.14 592.14Debenture Redemption Reserve : BalanceasperlastBalanceSheet 1,356.05 1,356.05Reavaluation Reserve : BalanceasperlastBalanceSheet 4,584.49 4,584.49General Reserve : BalanceasperlastBalanceSheet 3,364.00 3,313.24 Add:Lossonexchangeratefluctuationon FCLoanfortheyear2007-08 0.00 50.76 Add:TransferredfromProfit&LossAccount 130.00 0.00 3,494.00 3,364.00Foreign Currency Translation Reserve BalanceasperlastBalanceSheet 135.58 186.58 Addition/(deduction)duringtheperiod (33.31) (51.00) 102.27 135.58

Profit & Loss Account 9,290.21 7,121.60

TOTAL 19,419.16 17,153.86

39

Notes :(A) Zero Coupon Bonds of Rs.100/- each aggregating to Rs.151.00 Lakhs (Previous year Rs.195.00 Lakhs) are secured by a mortgage on

Company’simmovablepropertysituatedatVileParle,Mumbai.(B) Cash/PackingCredit/WorkingCapitalLoanaresecuredbyhypothecationofstores,spares&packingmaterialsandstock-in-tradeandbook

debts of theCompany and further secured by a second charge on themovable assets of theCompany& immovable properties situated atAurangabadandNasik.

(C) TermLoansofRs.12,850.39Lakhs(PreviousyearRs.14,177.43Lakhs)aresecuredasunder: (1) Term Loans of Rs.11,123.39 Lakhs from Indian Overseas Bank (Previous year Rs.11,671.67 Lakhs) are secured by a mortgage on

Company’simmovablepropertysituatedatVileParle,Mumbai. (2) TermLoansofRs.1,727.00Lakhs from IndianOverseasBank (Previous yearRs.2,323.67Lakhs)are securedby chargeon theProject

assetsandalsobywayofcollateraloftheCompany’simmovablepropertysituatedatVileParle,Mumbai. (3) TermLoansofRs.NilfromIndianOverseasBank(PreviousyearRs.71.60Lakhs)wassecuredbyamortgageonCompany’simmovable

propertysituatedatVileParle,Mumbai. (4) TermloanofRs.NilfromICICIBankLimited(PreviousyearRs.110.49Lakhs)wassecuredby: (a) A mortgage ranking pari passu with mortgage created on Company’s immovable properties situated atAurangabad and Nasik in

favourofICICIBankLimitedandEXIMBankfortheirtermloans. (b) Hypothecation /charge rankingparipassuwithchargescreated / tobecreated in favourof ICICIBankLimitedandEXIMBank for

theirTermLoansofallthemovablepropertiesoftheCompanyincludingmovablePlant&Machinery,Spares,ToolsandAccessories,presentandfuture(saveandexceptBookDebts)atNasikandAurangabad,subjecttopriorchargecreatedand/ortobecreatedinfavouroftheCompany’sbankerson:

(i) SpecifiedmovablesforsecuringborrowingsfortheCompany’sWorkingCapitalRequirementsand, (ii) SpecifiedassetschargedtotheCompany’sbankersassecurityforTermLoans.(D) VehicleFinancesaresecuredbyhypothecationofspecificassets.

As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)

B. UNSECURED LOANS Interest-freeSalesTaxLoansfromSICOM. (AmountrepayablewithinoneyearRs.5.66Lakhs) (PerviousyearRs.64.43Lakhs) 30.56 93.25

TOTAL 30.56 93.25

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET (Contd.)SCHEDULE – 3 As at Asat 31.03.2010 30.09.2009 Notes (Rs. in Lakhs) (Rs.inLakhs)

A. SECURED LOANS

I. Debentures/Bonds

ZeroCouponBonds A 195.00 785.84

Less:Redeemedduringtheperiod 44.00 590.84

151.00 195.00

II. FromBanks

(i) Cash/PackingCreditAccounts B 2,455.15 3,675.79

(ii) WorkingCapitalLoans 14,771.79 13,024.75

17,226.94 16,700.54

III. TermLoans C

(i) FinancialInstitutions 0.00 1,244.83

(ii) Banks(Rs.) 0.00 1,843.00

(iii) Banks(Foreigncurrency) 12,850.39 12,334.43

(iv) VehicleFinance 165.68 89.75

13,016.07 15,512.01

IV. DeferredInterest D 0.00 93.86

TOTAL 30,394.01 32,501.41

(ReferNoteNo7inschedule12B)

40


SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET

SCHEDULE – 4

FIXED ASSETS

(Rs.inLakhs)

GROSS BLOCK DEPRECIATION NET BLOCK

Sr.DescriptionofAssets

Cost/ Additions Sales/ Cost/ No. Revaluation during Transfer Revaluation Upto As at Asat Asat the during As at 31.03.2010 31.03.2010 30.09.2009 01.10.2009 period theperiod 31.03.2010

1. Land(Freehold) 11,576.62 0.00 0.00 11,576.62 0.00 11,576.62 11,576.62

2. Land(Leasehold) 1,867.50 0.00 0.00 1,867.50 0.00 1,867.50 1,867.50

3. Buildings 7,848.15 0.00 0.00 7,848.15 5,061.40 2,786.75 2,929.33

4. Plant&Machinery 56,682.87 253.92 13.52 56,923.27 36,605.15 20,318.12 21,427.94

5. ElectricalInstallations 3,016.88 1.70 0.00 3,018.58 2,517.89 500.69 538.47

6. Moulds 287.54 0.00 0.00 287.54 287.54 0.00 0.00

7. LaboratoryEquipments 350.70 0.68 0.00 351.38 223.02 128.36 137.89

8. Furniture&Fixtures 533.06 0.48 0.00 533.54 467.20 66.34 72.84

9. OfficeEquipments 527.91 15.35 0.00 543.26 394.00 149.26 144.59

10. Vehicles 424.13 116.70 44.75 496.08 265.36 230.72 148.09

11. CapitalExpenditureOnResearch& 218.60 0.00 0.00 218.60 211.60 7.00 8.50 Development

12. DataProcessingEquipments 1,214.75 2.94 0.00 1,217.69 1,156.08 61.61 76.04

13. ExpenditureOnTech.know-how/Product 1,430.76 0.00 0.00 1,430.76 1,419.53 11.23 15.61 Development

14. Copyrights 157.46 0.00 0.00 157.46 157.46 0.00 0.00

Total 86,136.93 391.77 58.27 86,470.43 48,766.23 37,704.20 38,943.42

PreviousYear 85,228.46 927.39 18.92 86,136.93 47,193.51 38,943.42 41,271.67

CapitalWork-in-Progress 331.96 222.22

NOTES :1. TheFreeholdlandincludesRs.4,584.49LakhsonaccountofrevaluationoflandatVileParle,Mumbaiasat31stMarch2007.

2. BuildingincludeRs.0.07Lakhbeingvalueof136sharesinCo-op.HousingSocieties.

3. Depreciationhasbeenprovidedasfollows:

– onCapitalExpenditureonR&DandAssetsotherthanPlant&MachineryonWrittenDownValueMethodasperratesprescribedunderScheduleXIVoftheCompaniesAct,1956.

– onPlant&Machineryacquiredbefore02.04.1987,onStraightLineMethodasper ratesprevalentat the timeofacquisitionofAssetsonsingleshiftbasis.

– onPlant&Machineryacquiredafter02.04.1987onStraightLineMethodasper ratesprescribedunderScheduleXIVof theCompaniesAct,1956.

4. NoWrite-offhasbeenmadeinrespectofleaserelatingtoleaseholdland.

5. DepreciationincludesTechnicalKnow-howfees/ProductDevelopmentExpensesamortised.

6. TheGrossblockincludesRs.6,765.35LakhsonaccountofEvaluationofcertainAssetsasat31stMarch,2002.

7. In accordancewithAccounting Standard (AS-11) and an amendment Rules 2009 onAS-11Notified byGovernment of India on 31/03/2009,Company has de-capitalised Rs.11.59 Lakhs (Previous year capitalised Rs.95.52 Lakhs) on account of exchange rate difference on foreigncurrancyloans(ReferNoteNo.5inSchedule12A)

41

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET (Contd.)SCHEDULE – 5 As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)

INVESTMENTS (AT COST)

LONG TERM INVESTMENT

A. In Government Securities (Unquoted) :

1. 10Years8.5%RuralDebenturesofMaharashtraState ElectricityBoardofthefacevalueofRs.0.17Lakh – –

2. 7YearsNationalSavingsCertificatesoftheface valueofRs.0.03lakh(LodgedwiththeExcise AuthoritiesasSecurityDeposit) – –

– –

B. In Shares :

I. Quoted 1. 50EquitySharesofM.M.RubberLtd.oftheface valueofRs.10/-each,fullypaid-up. 0.01 0.01 2. 2,80,000EquitySharesofGarwareMarineIndustries Ltd,ofthefacevalueofRs.10/-each,fullypaid-up – – 3. 4,00,000EquitySharesofGarwareWallRopesLimited, ofthefacevalueofRs.10/-each,fullypaid-up. 56.80 56.80 56.81 56.81

II. Unquoted 1. 2,500EquitySharesofTheNewIndiaCo-operativeBank Ltd.Mumbai,ofthefacevalueofRs.10/-each,fullypaid-up. 0.25 0.25 2. 2,500EquitySharesofTheNorthKanaraGoudSaraswat BrahminCo-operativeBankLtd.,Mumbaioftheface valueofRs.10/-each,fullypaidup. 0.25 0.25 3. 500sharesofTheCo-operativeStoresLtd.(NewDelhi) ofthefacevalueofRs.10/-each,fullypaidup. 0.05 0.05 4. 10,000EquitySharesofSICOMLtd.,ofthefacevalue ofRs.10/-eachfullypaid-up. 8.00 8.00 5. 20,000EquitySharesofDeogiriNagariSahakariBank Ltd.,ofthefacevalueofRs.25/-eachfullypaidup. 5.00 5.00 6. 4,000EquitySharesofVaidyanathUrbanCo-op.Bank Ltd.,ofthefacevalueofRs.25/-eachfullypaid-up. 1.00 1.00 7. 1,000EquitySharesofPoornawadiCo-opBankLtdof thefacevalueofRs.100/-eachfullypaid-up. 1.00 1.00 8. 3,03,36,820EquityShares(PreviousYear3,03,36,820Equity Shares)ofGarwareChemicalsLtdofthefacevalueof Rs.10/-eachfullypaid-upincludingfourequityshares heldbynominees. 2,307.19 2,307.19 9. 1,29,69,0000.01%OptionalConvertibleCumulative RedeemablePreferenceShares(PreviousYear 1,29,69,000OCCRPShares)ofGarwareChemicalsLtd., ofthefacevalueofRs.10/-eachfullypaidup. 1,296.90 1,296.90 3,619.64 3,619.64

TOTAL 3,676.45 3,676.45

Market MarketNOTE:AggregateamountofCompany'sinvestments. Cost value Cost value

Quoted 56.81 287.46 56.81 298.88

Unquoted 3,619.64 3,619.64

TOTAL 3,676.45 3,676.45

42


SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET (Contd.)SCHEDULE – 6 As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)

CURRENTASSETS,LOANS&ADVANCESA) CURRENT ASSETS:

I. Inventories : (As taken,valued&certifiedbytheManagement) (a) Stores,Spareparts&Packingmaterials(AtCost) 2,250.75 2,257.82 (b) Stock-in-trade (i) RawMaterials(Atcost) 1,002.01 1,015.74 (ii) Finishedgoods(Atcostormarketvalue whicheverislower) 645.92 701.13 (iii) Semi-finishedgoods(Atcost) 1,606.05 1,824.16 (iv) StockinTransit 156.02 239.82 5660.75 6,038.67

II. Sundry Debtors : (Unsecured,consideredgood,unlessotherwisestatedexcluding BillsReceivablediscounted)(ReferNoteNo6inSchedule12B) (a) Debtsoutstandingforaperiodexceedingsixmonths. (i) ConsideredGood 22.86 2.36 (ii) ConsideredDoubtful 493.33 524.81

516.19 527.17 Less:ProvisionforDoubtfulDebts 493.33 524.81

22.86 2.36 (b) OtherDebts (IncludingRs.7,412.50LakhsduefromAssociated Company.PreviousyearRs.6,760.90Lakhs) 10,450.46 8,950.87 10,473.32 8,953.23

III. Cash and Bank Balances : (a) Cashonhand 18.74 21.43 (b) Bankbalances: With ScheduledBanks: InCurrentAccounts 1,328.70 1,363.26 InFixedDepositAccounts 160.22 188.22 InUnclaimedDividendAccount 14.48 9.29 1,522.14 1,582.20

IV. Other Current Assets: (a) Exportbenefits/Incentivesreceivable 485.66 427.34 (b) Otherreceivables 1,666.92 1,676.27 (c) Foreigncurrencymonetaryitemstranslationdifference account.(Exchangeratedifferenceonforeigncurrencyloan) 0.00 85.23 2,152.58 2,188.84B) LOANS & ADVANCES: (Unsecured,consideredgood,unlessotherwisestated) (i) Advancesrecoverableincashorinkindorforvalue tobereceived. 494.19 574.00 (ii) AdvanceagainstCapitalExpenditure 16.70 0.00 (iii) BalancewithCustoms&Exciseauthorities 318.79 226.82 (iv) Depositswithothers 96.47 96.27 (v) MATCreditEntitlement 897.77 467.77 (vi) AdvancePaymentofIncomeTax/FringeBenefitTax andTaxDeductedatSource(NetofProvisions) 104.45 0.00 1,928.37 1,364.86

TOTAL 21,737.16 20,127.80

43

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET (Contd.)

As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 7CURRENTLIABILITIESANDPROVISIONS:A. Current Liabilities: (i) SundryCreditors(IncludingRs.217.97LakhsofAssociate 1,572.06 1,624.76 Comapnay)(PreviousyearRs.17.79Lakhs) (ii) OtherLiabilitiesIncludingRs3.39LakhsduetoDirectors 533.70 764.57 (PreviousyearRs3.63Lakhs) (iii) Depositsandadvancesfromcustomers&others 770.31 316.05 (iv) UnclaimedDividend 15.02 9.79 (v) UnclaimedDebenture&Interest 2.14 2.14 2,893.23 2,717.31B. Provision (i) ProvisionforTaxation(Netofadvancepayment) 10.26 142.41 (ii) ProvisionforLeaveencashment/Gratuity 1,114.63 915.35 (iii) ProvisionforDividendonPreferenceShares 0.27 1.02 (iv) ProvisionforProposedDividendonEquityShares 345.91 230.60 (v) ProvisionforTaxonDividend 57.50 39.36 1,528.57 1,328.74 TOTAL 4,421.80 4,046.05

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT 2009-10 2008-09 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 8OTHER INCOME Insuranceclaims 23.56 27.55 IncomefromInvestments(Gross) 11.44 12.31 Interestonshorttermdepositswithbanksandothers(Gross) (TaxdeductedatsourceRs.2.16Lakhs,PreviousyearRs.13.79Lakhs) 22.86 85.34 Miscellaneousincome 40.55 37.60 Otherincome 6.80 69.44 Profitonsaleoffixedassets(Net) 12.53 2.39 ExcessProvision/SundryCreditBalanceswrittenback 23.93 3.56 Rent(TaxdeductedatsourceRs.0.15LakhPreviousyearRs.0.41Lakh) 2.10 4.20 SalesTax/Exciserefund 0.00 27.38 TOTAL 143.77 269.77

SCHEDULE – 9INCREASE/(DECREASE)INFINISHEDANDSEMI-FINSIHEDGOODSOpening Stock: Finishedgoods 940.95 1,973.21 Semifinishedgoods 1,824.16 2,883.94 2,765.11 4,857.15Closing Stock: Finishedgoods 801.94 940.95 Semifinishedgoods 1,606.05 1,824.16 2,407.99 2,765.11

Increase/(Decrease) (357.12) (2,092.04)

SCHEDULE – 10RAWMATERIALSCONSUMEDOpening Stock 1,015.74 1,384.15

Add:PurchasesandExpenses 14,449.48 24,534.87 15,465.22 25,919.02

Less:ClosingStock 1,002.01 1,015.74 TOTAL 14,463.21 24,903.28

(ReferNoteNo19inSchedule12B)

44


SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT (Contd.)

2009-10 2008-09 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)SCHEDULE – 11MANUFACTURINGANDOTHEREXPENSESA. Manufacturing Expenses : Stores,SparesandPackingMaterialsConsumed(Net) 1,204.11 2,162.87 PowerandFuel 3,160.69 5,409.69 ProcessingCharges 963.01 1,343.13 WaterCharges 14.91 94.13 5,342.72 9,009.82B. Employees' Remuneration & Benefits : Salaries,WagesandBonus 1,563.34 2,694.94 ContributiontoProvidentandOtherFunds 328.74 496.31 StaffWelfareExpenses 116.86 227.09 2,008.94 3,418.34C. Administrative, Selling and General Expenses : Rent,HirechargesandCompensation(Net) 66.72 88.86 Rates,TaxesandLicenceFees 25.22 29.92 Insurance(Net) 65.11 173.28 FreightandForwarding(Net) 763.21 1,511.01 ResearchandDevelopmentExpenses 104.70 94.79 RepairsandMaintenanceof: (i) PlantandMachinery 225.98 504.91 (ii) Buildings 120.71 179.87 (iii) OtherAssets 218.28 420.18 564.97 1,104.96 AdvertisementExpenses 76.56 125.98 SalesTax/VAT 40.08 18.63 Travelling&Conveyance 173.46 463.48 Postage,Telegrams&Telephones 63.03 118.05 LeaseRentals 0.00 24.47 CommissiononSales 112.96 201.85 Donations 50.20 45.05 LegalandProfessionalCharges 271.83 620.92 (ReferNoteNo.9inSchedule12B) Auditors'Remuneration (i) Auditfees 9.53 23.50 (ii) TaxAuditfees 2.00 4.00 (iii) ForCertification/Others 1.60 2.63 (iv) ReimbursementofoutofpocketExpenses 0.35 0.35 13.48 30.48 MiscellaneousExpenses 466.23 871.59 Provisionfordoubtfuldebts 0.00 0.33 LossonSwap/ExchangeRateFluctuations 269.13 363.29 3,126.89 5,886.94D. Managerial Remuneration : (a) ToManagingDirector&JointManagingDirectors: (i) Salary 140.00 240.00 (ii) ContributiontoProvidentfundand SuperannuationScheme 21.60 64.80 (iii) OtherPerquisites 63.19 73.16 (iv) Leavesalary 82.78 9.29 307.57 387.25 (b) ToWholeTimeDirector: (i) Salary 51.53 93.97 (ii) ContributiontoProvidentfundand SuperannuationScheme 1.62 2.76 (iii) OtherPerquisites 5.33 8.14 (iv) Leavesalary 0.09 1.59 58.57 106.46 366.14 493.71 (c) Directors'Commission 31.00 0.00 (d) Directors'sittingfees 0.68 1.15 397.82 494.86 TOTAL 10,876.37 18,809.96

45

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of presentation of Financial Statements The financial statements are prepared under the historical

cost convention modified by revaluation of fixed assets andin accordance with applicable Accounting Standards andrelevant presentation requirements of the Companies Act,1956.

The Company generally follows the mercantile system ofaccounting and recognizes significant items of income andexpenditureonaccrualbasis.

2. Fixed Assets and Depreciation / Amortization Fixed Assets are stated at cost net of MODVAT / CENVAT

and includes amounts added on revaluation, lessaccumulated depreciation. Cost comprises of the purchasepriceandanydirectlyattributable costofbringing theassetsto working condition for its intended use including interestand other incidental and trial run expenses up to the dateof commercial production.When fixed assetswere revalued,surplus on revaluation was credited to Capital / RevaluationReserveAccount.

Depreciation/Amortizationisprovidedasfollows: – OnTechnicalKnow-how/ProductDevelopmentExpenses

@1/6thperannum. – OnCopyrightExpenditure@1/5thperannum – On Capital Expenditure on R&D andAssets other than

Plant & Machinery on Written Down Value methodas per rates prescribed under Schedule XIV of theCompaniesAct,1956.

– On Plant & Machinery acquired before 02.04.1987 onStraight Linemethod as per rates prevalent at the timeofacquisitionoftheassetonsingleshiftbasis.

– On Plant & Machinery acquired after 02.04.1987 onStraight Line Method as per rates prescribed underSchedule XIV of the Companies Act, 1956, videNotificationGSRNo.756(E)dated16.12.1993.

– Nowrite-offisbeingmadeinrespectofleaseholdland. – Assets costingRs.5000/- or Less is depreciated fully in

theyearofacquisition.

In respect of Subsidiaries: – Garware Polyester International Ltd.(GPIL) Tangible fixed assets are stated at cost less depreciation.

Deprecation is provided at rates calculated to write off thecost less estimated residual value of each assets over itsexpectedusefullife,asfollows:

Landandbuildingsleasehold – Straightlineoverthe lifeofthelease

Furniture,fittingsandequipment – 25%Reducingbalance

– Global Pet Films, Inc. (GPF) Equipmentsarestatedatcostlessaccumulateddepreciation.

Some assets are depreciated using Straight Line MACRSmethod over the useful lives of the assets and some otherassets are expensed under Sec. 179 of Internal RevenueCode. Legal cost for organization of business is capitalizedand is carried at cost less accumulated amortization, whichis being provided on straight line basis over the economicusefullifeof5years.

3. Investments Investments are considered as long term investments and

are accordingly stated at cost of acquisition. Market valueof Quoted Investments at the date of the Balance Sheet isdisclosed. Provision for diminution in the value of long-term

SCHEDULE – 12

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENT

investments is made only if such a decline is other thantemporaryintheopinionoftheManagement.

4. Inventories Raw Materials,StoresandSparesandPackingMaterialsare

valuedatweightedaverage cost. Finishedgoodsare valuedat lower of the cost and market value. Semi-finished goodsincluding those held for captive consumption are valued atfactorycost(includingdepreciation).

In respect of subsidiaryGarware Polyester International Ltd,stockisvaluedatthelowerofcostandnetrealisablevalue.

In respect of ultimate subsidiary Global Pet films Inc.inventories are stated at the lower of cost ( determined byFIFOmethod)ormarket(Netrealizable)value.

5. Foreign Currency Transactions a) Transactions denominated in foreign currencies are

recordedat theexchange rateprevailingon thedateofthe transaction or that approximates the actual rate atthedateofthetransaction.

b) Monetary items denominated in foreign currencies atthe year-end are restated at year end rates. In case ofitemswhicharecoveredbyforwardexchangecontracts,the difference between the year-end rate and rate onthe date of the contract is recognised as exchangedifferenceand thepremiumpaidon forwardcontracts isrecognizedoverthelifeofthecontract.

c) Nonmonetaryforeigncurrencyitemsarecarriedatcost. d) Any income or expenses on account of exchange

difference either on settlement or on translation isrecognized in the Profit and Loss account exceptin case of long term liabilities, where they relate toacquisition of fixed assets, in which case they areadjustedtothecarryingcostofsuchassets.

e) The Company has opted for accounting exchange ratedifferences arising on reporting of long term ForeignCurrency Monetary Items in line with Companies(Accounting Standard) Amendment Rules 2009 onAccountingStandard11(AS-11)notifiedbyGovt.ofIndiaon March 31, 2009.Accordingly, the effect of exchangedifferences on Foreign Currency Loans of the Companyis accounted by addition or deduction to the cost ofassets so far it relates to depreciable capital assets andinothercasesby transfer to “ForeignCurrencyMonetaryItemsTranslationDifferenceAccount” to be amortized insubsequent period.Accordingly, in the previous year theCompanyhasdebitedRs.50.76 lakhs toassetsaccountby adjusting against reserve. The exchange loss for theyear 2007-08 in the year under review the Companyhas amortized Rs. 85.23 lakhs from Foreign CurrencyMonetary ItemsTranslation Difference due to repaymentofthesaidLoans.

f) Investments in shares of foreign subsidiary Companyare expressed in Indian Currency at the rate ofexchange prevailing at the time when the originalinvestmentsweremade.

g) In case of Garware Polyester International Ltd.,monetary assets and liabilities denominated in foreigncurrencies are translated in to sterling at the ratesof exchange ruling at the balance sheet date. Thetransactions in foreign currencies are recorded at theraterulingatthedateoftransactions.AlldifferencesaretakentoProfitandLossaccounts.

6. Inter-divisional Transfers Inter-divisional transfers of goods for internal use as captive

consumption are shownas contra items in theProfit& LossAccount to reflect the true economic value of the productioninter-se the divisions. This accounting treatment has noimpactontheProfitoftheCompany.

46



7. Duties Excise duty on finished goods and customduty on imported

materials has been accounted on the basis of paymentsmade inrespectofgoodsclearedasalsoprovisionmadeforgoodslyinginBondedWarehouse.

8. Employee Benefits: a) ShortTermEmployeeBenefits:- All benefits paid / payable wholly within 12 months

of rendering the service are classified as shortterm. Benefits such as salaries, wages, short-termcompensated absences, etc and the expected costof bonus, ex-gratia, medical, LTA are recognized inthe period in which the employee renders the relatedserviceandchargedtoProfitandLossAccount.

b) DefinedContributionPlans: Company contributes Provident Fund in accordance

with EPFAct, 1952 and ESIC Schemes in accordancewith ESIC Act,1948 under Government administeredschemes,howevercertainemployeesarecoveredunderthe contributory plans with the trust “GarwarePolyesterLimited Office Staff & Officer’s Provident Fund”.Contributionsareaccountedonaccrual /paidbasisandchargedtoProfit&LossAccount.

c) DefinedBenefitPlans: 1) Liability towards Superannuation and Gratuity

are covered by appropriate schemes with LifeInsurance Corporation of India on accrual basis.GratuityplansaredeterminedbyactuarialvaluationbyusingtheProjectedUnitCreditmethod.

2) Leave encashment benefits are accounted onactuarialvaluationbasis.

9. Lease Rentals Lease Rentals are accounted on accrual basis over the

LeaseTermaspertherelevantLeaseAgreements. In case of GPIL rentals payable under operating leases are

charged against income on a straight line basis over theleaseterm.

10. Provisions, Contingent Liabilities & Contingent Assets : Provisions involving substantial degree of estimation in

measurement are recognised when there is a presentobligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent Liabilitiesarenotrecognisedbutaredisclosedinthenotes.ContingentAssets are neither recognised nor disclosed in the financialstatements.

11. Research and Development Revenue expenditure on Research and Development is

charged out in the accounting year in which it is incurred.Expenditure,whichresultsincreationofassets,isincludedinFixedAssetsanddepreciation isprovidedonsuchassetsasapplicable.

12. Revenue Recognition a) Sales: Sales are accounted for inclusive of excise duty and

VAT/ sales tax (wherever not charged separately), andarenetofdiscountsandreturns.

In respect of Garware Polyester International Limitedturnover represents amount receivable for goods andservicesnetofVATandtradediscounts.

In respect of Global Pet Films Inc., revenues fromproduct sales to customers are recognized whenproductsareshippedtocustomers.

b) Export Benefits: Export entitlements under the Duty Entitlement Pass

Book (DEPB) scheme/other schemeare recognizedasincomewhentherighttoreceivecreditasperthetermsof the scheme is established in respect of the exportsmade and where there is no significant uncertaintyregarding the ultimate collection of the relevant exportproceeds.

13. Taxation a) Deferred tax is recognised, subject to the consideration

of prudence, on timing differences, being the differencebetween taxable income and accounting income thatoriginate in one period and are capable of reversal inoneormoresubsequentperiods.

b) Current tax isdeterminedas theamountof taxpayablein respect of taxable income for the period. The creditis taken as per entitlement for the tax liability providedunder MAT based on taxable income as per theprovisionsofIncomeTaxAct,1961.

c) In respectofsubsidiary,GarwarePolyester InternationalLimited, the accounting policy in respect of deferredtax reflects the requirements of FRS19-Deferred Tax.Deferred tax is provided in full in respect of taxationdeferred by timing differences between the treatment ofcertain items for taxation and accounting purposes. Onthebasis of thesefinancial statementsnoprovisionhasbeenmadefordeferredtax.

14. Borrowing Cost: Borrowing costs specifically relatable to the acquisition

of fixed assets are capitalized as part of the cost of fixedassets,otherborrowingcostsarechargedtorevenue.

15. Impairment of assets Impairment loss, ifany, isprovidedtotheextent,thecarrying

amount of assets exceeds their recoverable amount.Recoverable amount is higher of an asset's net selling priceand its value in use. Value in use is the present value ofestimated future cash flows expected to arise from thecontinuinguseofanassetandfromitsdisposalattheendofits usefullife.

16. Purchases : In case Global Pet Films Inc., purchases are recorded in

books only when received in Company Warehouse andor received at Customs warehouse located at the port ofdestination.

17. Use of Estimates: In case of Global Pet Films Inc, the preparation of financial

statements in conformity with generally accepted accountingprincipals require management to make estimates andassumptions that affect the reported amounts of assetsand liabilities at the dates of the financial statements andthe reported amounts of revenue and expenses during thereporting period. Actual results could differ from thesesestimates.

18. Accounts Receivable : In case of Global Pet Film Inc. the accounts receivable

balance(Net)asofMarch31,2010was$2,79,390.91. TheCompanyhas terminated it’s factoringarrangementwith

CofacewitheffectfromMay2009.19. In case of Global Pet Film Inc. Cash and cash equivalents

includemoneymarketinstruments.

47


B. NOTES ON CONSOLIDATED FINANCIAL STATEMENT:-1. Thesubsidiarycompaniesconsideredintheconsolidatedfinancialstatementsare:

NameoftheCompany CountryofIncorporation Percentageofvoting FinancialYearPower

Direct SubsidiaryGarwarePolyesterInternationalLtd. UnitedKingdom 100% April09-March10Indirect SubsidiarySubsidiaryofwhollyownedsubsidiaryGlobalPetFilms,Inc. U.S.A. 100% April09-March10

2. PrinciplesofConsolidation: (i) Consolidated financial statements are done in accordance with theAS-21 by consolidating financial statements of subsidiaries on

the reporting period. The consolidation is based on the audited financial statement of Garware Polyester International Ltd. for theperiodended31stMarch,2010andnecessaryadjustments/deductionsthathavebeen incorporatedtogiveeffect toall transactionoccurredbetweentheperiodfrom01/10/2009to31/03/2010asperreportingperiodoftheparentCompany.

(ii) ThefinancialstatementsoftheCompanyandthesubsidiarieshavebeencombinedtotheextentpossibleona line-by-linebasis,byaddingtogetherlikeitemsofassets,liabilities, incomeandexpenses.Allsignificantintragroupbalancesandtransactionshavebeeneliminatedonconsolidation.

(iii) In respect of subsidiaries, transactions of Profit and Loss account and the assets and items of the balance sheet have beentranslated into Indian Rupees at the closing exchange rate of respective currencies prevailing as at 31st March, 2010 except forsubsidiary’ssharecapital.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs 943.18 Lakhs (Previous yearRs.858.50Lakhs)againstwhichanadvanceofRs.16.70Lakhs(PreviousyearRsNIL)hasbeenpaid.

4. TheCompany has given counter-guarantees for Rs. 723.56 Lakhs (Previous year Rs.738.59 Lakhs) to Banks in respect of guaranteesgivenbytheBankstothirdpartiesforpurchaseofequipments,supplyofgoods,clearanceofgoodsfromCustoms,ExciseBonds,etc.

5. Letters ofCredit openedonbehalf of theCompanybyBanks for purchaseofmaterials andequipmentsamount toRs15,538.11Lakhs(PreviousyearRs.13,577.63Lakhs).

6. BillsofExchangediscountedunderBillMarketingSchemeamounttoRs.2,257.75Lakhs(PreviousyearRs.2,725.29Lakhs).

7. SecuredLoans: ZeroCouponBondsofRs.151.00LakhsarerepayableinquarterlyinstallmentswithpremiumofRs.128.35Lakhstill1stJanuary,2012. AmountofTermLoans/ZeroCouponBondrepayablewithinoneyearisRs.6,716.45Lakhs(PreviousYearRs.1,947.60Lakhs).

8. ContingentLiabilitiesnotprovidedfor–

As at Asat 31.03.2010 30.09.2009 (Rs. in Lakhs) (Rs.inLakhs)

Disputedmattersinappeal/contestedinrespectof:IncomeTax 63.91 43.22ExciseDuty 43.94 39.02SalesTax 17.13 17.13MaharashtraStateElectricityBoard(MSEB) 27.72 0.00

9. Legal andProfessionalCharges includeRs. 0.83Lakhs (Previous yearRs.7.90Lakhs) paid to someof thePartners of theAuditors forotherservices&Rs.NilpaidtoafirminwhichoneoftheDirectorisapartner.(PreviousyearRs0.25Lakhs).

10. BreakupofInterestandfinancialchargesare:

2009-10 2008-09(6 Months) (12Months)

(Rs. in Lakhs) (Rs.inLakhs)OnSecuredTermLoans(Net) 471.92 2,041.37OtherInterest(Net) 738.11 2,611.44FinancialCharges 438.86 648.33

Total 1,648.89 5,301.14

11. ExportBenefits/Incentivesareaccountedonaccrualbasis.Accordingly,netestimatedbenefitaggregatingtoRs.510.21Lakhs(Previousyear Rs.752.27 Lakhs) against export effected during the period has been credited to Export Benefits earned account which has beenincludedinsales.

48



12. Segment Reporting: a) TheCompanyisonlyinonelineofbusinessnamely-Polyesterfilm. b) TheSegmentRevenueintheGeographicalsegmentconsideredfordisclosureareasfollows:- i) RevenuewithinIndiaincludessalestocustomerslocatedwithinIndia. ii) RevenueoutsideIndiaincludessalestocustomerslocatedoutsideIndiaincludingExportBenefits/Incentives.

2009 -10 (6 Months) 2008-09(12Months) (Rs. in Lakhs) (Rs.inLakhs)

Within India Outside India Total WithinIndia OutsideIndia TotalSales 20,396 12,779 33,175 38,691 21,036 59,727AmountofSegmentAssetsbylocationofassets.(NetValue) 20,318 – 20,318 21,428 – 21,428

13. Related Party Disclosures a) ListofRelatedParties.

AssociateCompanies : GarwareIndustriesLimited&GarwareChemicalsLimited KeyManagementPersonnel : (1) Shri.S.B.Garware (2) Mrs.MonikaGarwareModi (3) Ms.SaritaGarware (4) Ms.SoniaS.Garware EnterprisesoverwhichKeyManagerialPerson : GarwareCharitableTrust areabletoexercisesignificantinfluence

b) TransactionwithRelatedParties

2009-10 2008-096 Months 12Months

(Rs. in Lakhs)* (Rs.inLakhs)*

i) SaleofGoods/CapitalItems AssociateCompanies 9,031.34 6,455.04 ii) PurchasesofMaterialsandCapitalItems AssociateCompanies 8.95 5.39 iii)ServicesReceived/ProcessingCharges AssociateCompanies 1,061.38 1,335.01 iv) ServicesRendered AssociateCompanies 64.30 212.21 v) Balances[Dr./(Cr)] AssociateCompanies 7,194.53 6,743.11 vi) Balance(Dr/Cr.) Ms.S.Garware (3.39) (3.63) vii) KeyManagementPersonnel&Relatives ManagerialRemuneration(ReferScheduleNo.11)

* Figuresareongrossbasis(IncludingTaxes&Duties)14. Earning Per Share

2009-2010 2008-2009 (6 Months) (12Months)

(Rs. in Lakhs) (Rs.inLakhs)ProfitAfterTax 2,702.29 1,143.79Less:DividendonPreferenceSharesincludingtax 0.32 1.19AmountavailableforEquityShareholders 2,701.97 1,142.60WeightedaveragenumberofShares 2,30,60,386 2,30,27,053EarningPerShare-Basic&Diluted(Rs)(Absolute) 11.72 4.96

15. Deferred Tax:

As per the legal advise obtained by the Company and in compliance with provisions of Accounting Standard and based on GeneralPrudence, the Company has not recognized the deferred tax asset / liability while preparing the accounts of the year under review(PreviousYearprovisionofRs.1,193.75lakhsasdeferredtaxliability).

49

16. DisclosureasperAS-15(Revised)on“EmployeeBenefit”fortheperiodended31stMarch2010. A. Funded retirement benefit - Gratuity



Change in the defined benefit obligations

Definedbenefitobligationsatbeginningoftheperiod/year 1,295.89 865.37

Servicecost 44.40 82.43

Interestcost 49.80 99.60

ActurialLoss/(Gain) 157.54 282.37

Benefitspaid (37.76) (33.88)

Definedbenefitobligationsatendoftheperiod/year(a) 1,509.87 1,295.89

Change in plan assets

FairValueofplanassetsatbeginningoftheperiod/year 1,226.56 809.00

Expectedreturnonplanassets 55.33 94.46

Contributionsbyemployer 43.60 206.85

ActuarialGain/(Loss) 13.43 150.13

Benefitspaid (37.76) (33.88)

Fairvalueofplanassetsatendoftheperiod/year(b) 1,301.16 1,226.56

Present Value of un funded obligations (a-b) 208.71 69.33

Thenetamountrecognizedinthestatementofprofitandlossfortheperiodended31stMarch,2010isasfollows:

Currentservicecost 44.40 82.43

Interestcost 49.80 99.60

Expectedreturnonplanassets (55.33) (94.46)

NetactuarialLoss/(Gain)recognized 144.11 282.37

Netamountrecognized 182.98 369.94

ActualReturnonPlanAssets

Theprincipalactuarialassumptionsusedasat31stMarch,2010areasfollows:

DiscountRate 8.00% 7.80%

Expectedrateofreturnonplanassets

Withdrawalrate Up to UptoAge 35: 5% Age35:5%36-50 : 2% 36-50:2%

51& abv: 1% 51&abv:1%

Rateofincreaseincompensationlevels 5.00% 5.00%


50


B. Un-funded retirement benefit – Leave Encashment



Change in the defined benefit obligationsDefinedbenefitobligationsatbeginningoftheperiod/year 846.02 779.26Servicecost 32.65 40.79Interestcost 44.53 62.11ActurialLoss/(Gain) 0.40 (30.35)Benefitspaid (17.69) (5.79)Definedbenefitobligationsatendoftheperiod/year(a) 905.91 846.02

Change in plan assetsFairValueofplanassetsatbeginningoftheperiod/year 0.00 0.00Expectedreturnonplanassets 0.00 0.00Contributionsbyemployer (0.40) 5.79ActuarialGain/(Loss) 0.00 0.00Benefitspaid 0.40 (5.79)Fairvalueofplanassetsatendoftheperiod/year(b) 0.00 0.00PresentValueofunfundedobligations(a-b) 905.91 846.02Thenetamountrecognizedinthestatementofprofitandlossfortheperiodended31stMarch,2010isasfollows:Currentservicecost 32.65 40.79Interestcost 44.53 62.11Expectedreturnonplanassets 0.00 0.00NetactuarialLoss/(Gain)recognized (17.69) (30.35)Netamountrecognized 59.49 72.55ActualReturnonPlanAssets 0.00 0.00Theprincipalactuarialassumptionsusedasat31stMarch,2010areasfollows:DiscountRate 8.00% 7.80%Expectedrateofreturnonplanassets Up to UptoWithdrawalrate Age 35: 5% Age35:5%

36-50 : 2% 36-50:2%51& abv: 1% 51&abv:1%

Rateofincreaseincompensationlevels 7.00% 7.00%

17. InaccordancewithAccountingStandard28(AS28)issuedbytheInstituteofCharteredAccountantsofIndiaonImpairmentofAssets,theCompanyhadappointedprofessionalconsultancyfirmasthevaluerstoassessimpairmentofeachcashgeneratingunit(CGU)bytakingmarketvalueanditspotentialcapacitytogeneratecashflows.Accordingtothevaluersreport,thereisnoimpairmenttoanyoftheassetsassuchnoprovisionforimpairmentofassetsisrequiredtobemadeintheaccounts.

18. The significant leasing arrangements of the Company are in respect of operating leases for premises and vehicles. These leasingarrangements ranges between 11months and 5 years and are usually renewable by mutual consent onmutually agreeable terms.Theagreeable lease rentalpayablearecharged toProfitandLossaccountandshownunderadministrative,sellingandgeneralexpenses inappropriateheads.

19. Raw materials consumed includes expenses for clearing, warehousing and duty etc on goods received from parent Company bysubsidiaryandultimatesubsidiary.

20. Previousyears’sfigureshavebeenrearrangedandregroupedwherevernecessarytoconformtotheclassificationadoptedforthecurrentperiod.Figuresofthecurrentperiodarenotcomparablewiththefiguresofthepreviousyearbeingofsixmonthperiod.


51

CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010 Period ended Yearended 31.03.2010 30.09.2009 (6 Months) (12Months) (Rs. in Lakhs) (Rs.inLakhs)A. Cash flow from operating activities: Profitbeforetax A 2,708.05 2,370.34

Add:Depreciation 1,611.48 3,251.49 Interestexpenses-gross 1,648.89 5,301.14 LossonExchangeRateFluctuations 269.13 363.29 ForeignCurrencyMonetaryItemsTranslationDifference 0.00 50.76 Provisionforleaveencashment/Gratuity 199.28 79.72

SubTotal B 3728.78 9,046.40

SubTotalA+B C 6436.83 11,416.74

Less:Interestincome 22.86 85.34 Profitonsaleoffixedassets 12.53 2.39 Dividendreceived/IncomefromInvestment 11.44 12.31 SundrybalancesWrittenBack(Net) 23.93 3.56 Rent 2.10 4.20

SubTotal 72.86 107.80

Operating profit before working capital changes 6363.97 11,308.94 Adjustmentsfor: Transfertoforeigncurrancytransaltionreserve (33.31) (51.00) (Increase)/Decreaseintrade/otherreceivable(Net) (1,512.89) 2,121.97 (Increase)/Decreaseininventories 377.92 2,588.61 Increase/(Decrease)intrade/otherpayables 195.01 (337.89)

Cash generated from operations 5390.70 15,630.63 Directtaxesrefund/(paid)(Net) (672.36) (245.75)

Net cash inflow / (outflow) from operations 4,718.34 15,384.88

B. Cash flow from investing activities: Purchaseoffixedassets (489.92) (836.68) Saleproceedsoffixedassets 20.06 6.55 Interestreceived 22.86 85.34 LossonExchangeRateFluctuations (269.13) (363.29) Dividendreceived/IncomefromInvestment 11.44 12.31 Rent 2.10 4.20

Net cash inflow / (outflow) from investing activities (702.59) (1,091.57)

C. Cash flow from financing activities: Proceedsfromissueofshares 0.00 65.34 Interest/FinancialCharges (1648.89) (5,322.29) Repaymentofborrowings-secured (2633.80) (5,582.36) Proceeds/(repayments)ofborrowings-unsecured (62.69) (412.43) Cashcreditaccounts 526.40 (2,642.13) Dividendpaid(Includingcorporatedividendtax) (265.75) 0.00 Miscellaneousexpenditure(totheextentnotwrittenoff) 8.92 17.83

Net cash inflow/(outflow) from financing activities (4,075.81) (13,876.04)Net increase / (decrease) in cash and cash equivalents (60.06) 417.27Cash and cash equivalents as at opening

Cashandbankbalances 1,582.20 1,164.93

Cash and cash equivalents as at closing Cashandbankbalances 1,522.14 1,582.20

(60.06) 417.27





L. M. AGRAWAL – Chief Financial Officer INDULAL H. SHAH SUNIL BHANDARI MANOJ KOUL – Company Secretary &Partner Partner General ManagerMumbai,05thAugust,2010

52


1

Thedirectorspresenttheirreportandconsolidatedfinancialstatementsfortheyearended31March2010.

Principal activities, review of the business and performance duringthe year The principal activity of the group continued to be that ofdistributionofindustrialpolyesterfilm.

The result for the year and the financial positionat the year endwereconsidered to be satisfactory by the directors. They expect continuedgrowthintheforseeablefuture.

Thekeyfinancialperformance indicatorsusedby theBoard tomonitorthe the financial performance of the Company and its subsidiary andtheirresultsfortheyearended31March,2010areasfollows:

– Group turnover of £5,896,058 has been achieved in the yearcomparedto£7,596,350fortheyearended31March,2009.

– Although group turnover has fallen during the current year, thegrouphasachievedabettergrossprofitmargin.

– The subsidiary has made a profit in the sum of £163,097 ascomparedtoaloss£10,495fortheyearended31March,2009.

– Thegroupusesanumberofnon-financial performance indicatorsto monitor and drive the business including measures within theareas of technological advancement. Examples are customersatisfactionstatisticsandordersdeliveredtoclientsontime.

Future DevelopmentsThe directors are confident that the Company and its subsidiary willmaintain their success as continued orders have already been placedfor the next accounting period and in some instances, payments onaccounthavebeenreceivedduringthecurrentaccountingperiod.Theyareassured that thiswillunderpin the long termstabilityandgrowthofthegroup.

Risks and uncertainties

The main financial risks arising from the group's activities are economicrisk, currency risk and operating risk. These are monitored by the boardofdirectorsandwerenotconsideredtobesignificantat thebalancesheetdate.

The group's policy in respect of currency risk, is to closely monitorexchange rate fluctuations between sterling, euro and US dollar. Thismayimpactontheoperatingprofitattainedbythegroup.

The group's policy in respect of economic and operating risk, is toadheretosetobjectiveslaidbythedirectorsinanefficientmannerandexercisetightcontroloncosts.

Thegrouphasa high profile client base.However, the ongoing globalcrisisinthefinancialmarketsmayleadtoreducedorderlevelswhichinturnmayimpactonrevenuegenerated.

Post balance sheet event

Therearenomattersthatgiverisetoapostbalancesheetevent.

Results and dividends

Theresultsfortheyeararesetoutonpage5.

Thedirectorsdonotrecommendpaymentofanordinarydividend.

2DirectorsThefollowingdirectorshaveheldofficesince1April2009:MrSGarwareMsSGarwareMrBDDoshiMsSGarware (Appointed2October2009)MrVKNairMrsSSGarware (Appointed2October2009)MrsMGModi (Appointed2October2009)MrCJPathak (Appointed2October2009)

AuditorsThe auditors, MCT Partnership, are deemed to be reappointed undersection487(2)oftheCompaniesAct2006.

Statement of directors' responsibilitiesThe directors are responsible for preparing the Directors' Report and thefinancialstatementsinaccordancewithapplicablelawandregulations.Company law requires the directors to prepare financial statements foreach financial year. Under that law the directors have elected to preparethe financial statements in accordance with United Kingdom GenerallyAcceptedAccountingPractice (UnitedKingdomAccountingStandardsandapplicable law). Under Company law the directors must not approve thefinancialstatementsunless theyaresatisfied that theygivea trueand fairview of the state of affairs of the Company and of the profit or loss ofthe Company for that period. In preparing these financial statements, thedirectorsarerequiredto:– select suitable accounting policies and then apply them

consistently;– make judgements and accounting estimates that are reasonable

andprudent;– state whether applicable UK Accounting Standards have been

followed, subject to any material departures disclosed andexplainedinthefinancialstatements;

– prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Company willcontinueinbusiness.

Thedirectorsare responsible forkeepingadequateaccounting recordsthataresufficient toshowandexplain theCompany’s transactionsanddisclosewith reasonable accuracy at any time the financial position oftheCompanyandenable them to ensure that the financial statementscomply with the Companies Act 2006. They are also responsiblefor safeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraud and otherirregularities.

Statement of disclosure to auditorsSofarasthedirectorsareaware,thereisnorelevantaudit informationof which the Company's auditors are unaware. Additionally, thedirectors have taken all the necessary steps that they ought to havetaken as directors in order to make themselves aware of all relevantaudit information and to establish that the Company's auditors areawareofthatinformation.

Onbehalfoftheboard

Mr B D DoshiDirector

04August,2010

DIRECTORS' REPORTFOR THE YEAR ENDED 31 MARCH, 2010

GARWARE POLYESTER INTERNATIONAL LIMITED

53

3

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GARWARE POLYESTER INTERNATIONAL LIMITEDWe have audited the financial statements of Garware PolyesterInternational Limited for the year ended 31 March 2010 set out onpages5to18.Thefinancialreportingframeworkthathasbeenappliedin their preparation is applicable law and United Kingdom AccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).

This report is made solely to the Company's members, as a body, inaccordance with Chapter 3 of Part 16 of the Companies Act 2006.Our audit work has been undertaken so that we might state to theCompany's members those matters we are required to state to themin an auditors' report and for no other purpose. To the fullest extentpermittedby law,wedonotacceptorassumeresponsibility toanyoneother than the Company and the Company'smembers as a body, forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective responsibilities of directors and auditors

Asexplainedmore fully in theDirectors'ResponsibilitiesStatementsetout on pages 1 - 2, the directors are responsible for the preparationof thefinancial statementsand forbeingsatisfied that theygivea trueand fair view. Our responsibility is to audit the financial statements inaccordancewithapplicablelawandInternationalStandardsonAuditing(UK and Ireland). Those standards require us to comply with theAuditingPracticesBoard'sEthicalStandardsforAuditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts anddisclosures in the financial statements sufficient to give reasonableassurance that the financial statements are free from materialmisstatement, whether caused by fraud or error. This includes anassessment of: whether the accounting policies are appropriate to theCompany's circumstances and have been consistently applied andadequately disclosed; the reasonableness of significant accountingestimates made by the directors; and the overall presentation of thefinancialstatements.

Opinion on financial statements

Inouropinionthefinancialstatements:

– give a true and fair view of the state of the Company's and thegroup's affairs as at 31March 2010 and of its profit for the yearthenended;

– have been properly prepared in accordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and

– have been prepared in accordance with the requirements of theCompaniesAct2006.

OpiniononothermatterprescribedbytheCompaniesAct2006

In our opinion the information given in the Directors' Report for thefinancial year for which the financial statements are prepared isconsistentwiththefinancialstatements.

4

Matters on which we are required to report by exception

WehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:

– adequate accounting records have not been kept, or returnsadequate forouraudithavenotbeen received frombranchesnotvisitedbyus;or

– thefinancial statementsarenot inagreementwith theaccountingrecordsandreturns;or

– certaindisclosuresof directors' remuneration specifiedby lawarenotmade;or

– we have not received all the information and explanations werequireforouraudit.

KaileshPatelFCA(SeniorStatutoryAuditor) 04August,2010forandonbehalfofMCTPartnership 1WarnerHouseCharteredAccountants HarrovianBusinessVillageStatutoryAuditors BessboroughRoad

HarrowMiddlesexHA13EX


54

AnnuAl RepoRt 2009-10GARWARE POLYESTER INTERNATIONAL LIMITED

5GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2010

2010 2009Notes £ £

Turnover 2 5,896,058 7,596,350Costofsales (4,934,389) (6,827,406)

Gross profit 961,669 768,944Sellinganddistributioncosts (352,910) (372,756)Administrativeexpenses (450,980) (484,738)Otheroperatingincome 10,876 114,826

Operating profit 3 168,655 26,276Otherinterestreceivableandsimilarincome 4 889 5,802Interestpayableandsimilarcharges 5 – (72)

Profit on ordinary activities before taxation 169,544 32,006Taxonprofitonordinaryactivities 6 (1,490) (8,692)

Profit on ordinary activities after taxation 13 168,054 23,314

The profit and loss account has been prepared on the basis that all operations are continuingoperations.

6

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH, 2010

2010 2009£ £

Profitforthefinancialyear 168,054 23,314

Currencytranslationdifferencesonforeigncurrencynetinvestments (7,218) (26,136)

Total recognised gains/(losses) relating to the year 160,836 (2,822)

7

GROUP BALANCE SHEET AS AT 31 MARCH, 2010 2010 2009

Notes £ £ £ £Fixed assets

Tangibleassets 7 9,611 12,271

Current assets

Stock 9 177,369 380,582

Debtors 10 47,658 208,842

Cashatbankandinhand 773,154 271,524

998,181 860,948

Creditors: amounts falling due within one year 11 (827,705) (880,104)

Net current assets/(liabilities) 170,476 (19,156)

Total assets less current liabilities 180,087 (6,885)

Capital and reserves

Calledupsharecapital 12 250,000 250,000

Otherreserves 13 (7,218) (26,136)

Profitandlossaccount 13 (62,695) (230,749)

Shareholders' funds - 15 180,087 (6,885)equity interests

ThefinancialstatementswereapprovedbytheBoardon04August,2010.

Mr B D Doshi Director

8COMPANY BALANCE SHEET AS AT 31 MARCH, 2010

2010 2009Notes £ £ £ £

Fixed assetsTangibleassets 7 8,387 10,406Investments 8 62,046 62,046 70,433 72,452Current assetsStock 9 155,255 120,208Debtors 10 116,663 145,327Cashatbankandinhand 536,039 254,381 807,957 519,916Creditors: amounts falling due within one year 11 (411,063) (129,998)Net current assets 396,894 389,918Total assets less current 467,327 462,370liabilitiesCapital and reservesCalledupsharecapital 12 250,000 250,000Profitandlossaccount 13 217,327 212,370Shareholders' funds - equity interests 15 467,327 462,370ThefinancialstatementswereapprovedbytheBoardon04August,2010.Mr B D DoshiDirector

9GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2010 2010 2009 £ £ £ £Net cash inflow/(outflow) from operating activities 515,907 (175,893)Returns on investments and servicing of financeInterestreceived 889 5,802Interestpaid – (72)Net cash inflow for returns on investments and servicing of finance 889 5,730Taxation (13,928) 70Capital expenditurePaymentstoacquiretangibleassets (660) (4,809)Net cash outflow for capital expenditure (660) (4,809)Net cash inflow/(outflow) before management of liquid resources and financing 502,208 (174,902)Increase/(decrease) in cash in the year 502,208 (174,902)

10NOTES TO THE GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 20101. Reconciliation of operating profit to net cash outflow from operating activities 2010 2009 £ £ Operatingprofit 168,655 26,276 Depreciationoftangibleassets 3,320 5,292 Decreaseinstock 203,213 1,272,060 Decreaseindebtors 161,184 470,116 Decreaseincreditorswithinoneyear (39,383) (1,837,246) Neteffectoftranslationdifferences 18,918 (112,391)

Net cash inflow/(outflow) from operating activities 515,907 (175,893)2. Analysis of net funds 1April2009 Cashflow Othernon 31March, -cashchanges 2010 £ £ £ £ Netcash: Cashatbankandinhand 271,524 501,630 – 773,154 Bankoverdraft (578) 578 – – Netfunds 270,946 502,208 – 773,1543. Reconciliation of net cash flow to movement in net funds 2010 2009 £ £ Increase/(decrease)incashintheyear 502,208 (174,902)

Movement in net funds in the year 502,208 (174,902) Openingnetfunds 270,946 445,848

Closing net funds 773,154 270,946

55


11NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH, 20101 Accounting policies1.1 Accounting convention The financial statements are prepared under the historical cost convention and in

accordancewiththeCompaniesAct2006andapplicableAccountingStandards.1.2 Compliance with accounting standards The financial statements are prepared in accordance with applicable United Kingdom

Accounting Standards (United Kingdom Generally Accepted Accounting Practice), whichhavebeenappliedconsistently(exceptasotherwisestated).

1.3 Turnover TurnoverrepresentsamountsreceivableforgoodsandservicesnetofVATandtradediscounts.1.4 Tangible fixed assets and depreciation Tangiblefixedassetsarestatedatcost lessdepreciation.Depreciation isprovidedat rates

calculatedtowriteoffthecostlessestimatedresidualvalueofeachassetoveritsexpectedusefullife,asfollows:

Landandbuildingsleasehold Straightlineoverthelifeofthelease Fixtures,fittingsandequipment 25%reducingbalance1.5 Leasing Rentalspayableunderoperatingleasesarechargedagainstincomeonastraightlinebasis

overtheleaseterm.1.6 Stock Stockisvaluedatthelowerofcostandnetrealisablevalue.1.7 Deferred taxation Deferred tax balances are recognised in respect of all timing differences that have

originated but not reversed by the balance sheet date except that the recognition ofdeferred tax assets is limited to the extent that theCompany anticipatesmaking sufficienttaxableprofitsinthefuturetoabsorbthereversaloftheunderlyingtimingdifferences.

1.8 Foreign currency translation Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintosterling

attheratesofexchangerulingatthebalancesheetdate.Transactionsinforeigncurrenciesare recorded at the rate ruling at the date of the transaction.All differences are taken toprofitandlossaccount.

122. Turnover Turnover 2010 2009

£ £Geographical market

Foreignsales 5,615,223 7,236,644 UKsales 280,835 359,706 5,896,058 7,596,350

3. Operating profit 2010 2009£ £

Operatingprofitisstatedaftercharging: Depreciationoftangibleassets 3,487 5,430 – Otherassets 70,709 41,146 Auditorsremuneration – Company 6,750 8,000 – Group 12,679 12,520 Remunerationofauditorsfornon-auditwork 2,750 –4. Investment income 2010 2009

£ £ Bankinterest 889 5,8025. Interest payable 2010 2009

£ £ Onoverduetax – 72

136. Taxation 2010 2009

£ £Domestic current year tax

U.K.corporationtax 1,490 8,692Current tax charge 1,490 8,692Factors affecting the tax charge for the yearProfitonordinaryactivitiesbeforetaxation 169,544 32,006

ProfitonordinaryactivitiesbeforetaxationmultipliedbystandardrateofUKcorporationtaxof21.00%(2009:21.00%) 35,604 6,721

Effectsof: Depreciationaddback 697 1,140 Capitalallowances (427) (925) Othertaxadjustments (34,384) 1,756 (34,114) 1,971

Current tax charge 1,490 8,692

147. Tangible fixed assets

Group Land and Fixtures, Totalbuildings fittings andleasehold equipment

£ £ £Cost

At1April2009 9,100 45,879 54,979 Exchangedifferences – (627) (627) Additions – 660 660 At31March2010 9,100 45,912 55,012

Depreciation At1April2009 9,100 33,608 42,708 Exchangedifferences – (627) (627) Chargefortheyear – 3,320 3,320 At31March2010 9,100 36,301 45,401

Net book value At31March2010 – 9,611 9,611 At31March2009 – 12,271 12,271

Company Land and Fixtures, Totalbuildings fittings andleasehold equipment

£ £ £Cost

At1April2009 9,100 26,668 35,768 Additions – 660 660 At31March2010 9,100 27,328 36,428 Depreciation At1April2009 9,100 16,262 25,362 Chargefortheyear – 2,679 2,679 At31March2010 9,100 18,941 28,041 Netbookvalue At31March2010 – 8,387 8,387 At31March2009 – 10,406 10,406

158. Fixed asset investments

Company Shares in subsidiary undertaking £Cost

At1April2009and31March2010 62,046Holdings of more than 20%

TheCompanyholdsmorethan20%ofthesharecapitalofthefollowingCompany;Company Country of registration Shares held

or incorporation Class % Subsidiaryundertaking GlobalPETFilmsInc USA Commonstock 1009. Stock Group Company 2010 2009 2010 2009

£ £ £ £ Finishedgoodsandgoodsforresale 177,369 380,582 155,255 120,208

10. Debtors Group Company 2010 2009 2010 2009

£ £ £ £ Tradedebtors 8,418 189,418 23,038 114,394 Amountsowedbysubsidiaryundertaking – – 59,891 18,282 Otherdebtors 26,876 8,670 23,843 4,517 Prepayments 12,364 10,754 9,891 8,134 47,658 208,842 116,663 145,327 Allamountshownunderdebtorsfalldueforpaymentwithinoneyear.

1611. Creditors: amounts falling due within one year Group Company 2010 2009 2010 2009

£ £ £ £ Bankoverdraft – 578 – 578 Tradecreditors 306,379 32,039 77,555 2,665 Amountsowedtoparentundertaking 487,386 761,880 305,422 60,479 Corporationtax 1,490 13,928 1,490 13,928 Othertaxesandsocialsecuritycosts 14,185 27,927 13,612 25,895 Director'sloanaccount 4,989 16,023 4,989 16,023 Othercreditors – 3,055 – 3,055 Accruals 13,276 24,674 7,995 7,375 827,705 880,104 411,063 129,99812. Share capital 2010 2009

£ £Authorised

1,000,000Ordinarysharesof£1each 1,000,000 1,000,000Allotted, called up and fully paid

250,000Ordinarysharesof£1each 250,000 250,000

56

AnnuAl RepoRt 2009-10GARWARE POLYESTER INTERNATIONAL LIMITED

13. Statement of movements on profit and loss account Group Company Other reserves Profit and Profit and

(see below) loss loss account account

£ £ £ Balanceat1April2009 (26,136) (230,749) 212,370 Retainedprofitfortheyear – 168,054 4,957 Foreigncurrencytranslationdifferences (7,218) – – Movementduringtheyear 26,136 – – Balanceat31March2010 (7,218) (62,695) 217,327

Other reserves £ Balanceat1April2009 (26,136) Reversalof2009translationdifference 26,136 2010translationdifference (7,218) Balanceat31March2010 (7,218)

1714. Profit of the parent Company - Garwarwe Polyester International Limited As permitted by Section 408 of the Companies Act 2006, the profit and loss account of

the parent Company is not presented as part of these financial statement. The parentCompany'sprofitfortheyearamountedto£4,957(2009-£33,809)

15. Reconciliation of movements in shareholders' funds Group Company 2010 2009 2010 2009

£ £ £ £ Profitforthefinancialyear 168,054 23,314 4,957 33,809 Otherrecognisedgainsandlosses (7,218) (26,136) – – Movementsonotherreserves 26,136 (86,255) – – Netadditionto/(depletionin)

shareholders'funds 186,972 (89,077) 4,957 33,809 Openingshareholders'funds (6,885) 82,192 462,370 428,561 Closingshareholders'funds 180,087 (6,885) 467,327 462,37016. Financial commitments At 31March 2010 the Company was committed to making the following payments under

non-cancellableoperatingleasesintheyearto31March2011: Group Company

Land and buildings Land and buildings 2010 2009 2010 2009

£ £ £ £Operating leases which expire:

Withinoneyear 75,400 – 75,400 – Betweentwoandfiveyears 21,070 35,185 14,905 29,942 96,470 35,185 90,305 29,942

17. Director's emoluments 2010 2009 £ £

Emolumentsforqualifyingservices 109,000 109,000

1818. Employees Numberofemployees Theaveragemonthlynumberofemployees(includingdirectors)duringtheyearwas: Group Company 2010 2009 2010 2009

Number Number Number Number Administrationandmanagement 2 2 1 1 Sellinganddistribution 3 2 2 1 5 4 3 2 Employment costs Group Company 2010 2009 2010 2009

£ £ £ £ Wagesandsalaries 248,663 289,179 160,726 151,000 Socialsecuritycosts 18,428 12,550 18,428 12,550 267,091 301,729 179,154 163,550

19. Ultimate parent Company and control TheCompany is controlled byGarwarePolyester Limited, aCompany registered in India.

ThedirectorsregardGarwarePolyesterLimitedastheultimateparentCompany. Copies of the financial statements of the parent Company are available from Investor

Relations at Garware Polyester Ltd ,50-A, Swami Nityanand Marg, Western ExpressHighway,VileParle(East),Mumbai400057,India.

20. Related party transactions Thefollowingrelatedpartytransactionswereundertakenintheordinarycourseofbusiness: 2010 2009

Purchase of goods and services: Relationship £ £Related party

GarwarePolyesterLimited ParentCompany 4,702,583 5,292,833

Thefollowingamountwasowedtorelatedpartiesatthebalancesheetdate:

2010 2009Related party Relationship £ £

GarwarePolyesterLimited ParentCompany 487,386 761,880

57

GLOBAL PET FILMS, INC.

INDEPENDENT AUDITOR’S REPORT The Board of Directors and Stockholders of Global Pet Films, Inc. Pembroke Pines, Florida, USA

WehaveauditedtheaccompanyingbalancesheetsofGlobal Pet Films, Inc.asofMarch31,2010and2009,andtherelatedstatementsofincome,retainedearnings,andcashflowsfortheyearsthenended.Thesefinancialstatements are the responsibility of theCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.WeconductedourauditsinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Thosestandardsrequirethatwe plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free ofmaterialmisstatement.Anaudit includesexamining, on a test basis, evidence supporting theamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebythemanagement,aswellaevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasis forouropinion.Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inall materialrespects,thefinancialpositionofGlobal Pet Films,Inc.asofMarch31,2010and2009andtheresultsofitsoperationsanditscashflows for theyears thenended inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

KhushalViraCertifiedPublicAccountantHazelCrest,IL,USA

July20,2010

BALANCE SHEET MARCH 31, 2010 AND 2009

ASSETS As of As of March 31, 2010 March31,2009 $ $

CURRENT ASSETS CashinBankandPettyCash 359,189.47 24,510.90 AccountsReceivable 279,390.91 745,693.88 CofaceFactoringReceivable 0.00 93,003.77 Inventory:StockattheEnd 33,498.76 372,282.10 OtherAccountsReceivable 1,323.10 54,592.00 PrepaidTaxes 3,746.00 3,746.00 RentDeposit 4,594.40 5,938.15

Total Current Assets 681,742.64 1,299,766.80

PROPERTY AND EQUIPMENT ComputerSystems&Software 6,677.59 6,677.59 AccumDepr.ComputerSystems (4,920.03) (3,728.03) Equipments:Cost 14,102.07 14,102.07 Accum.Depr.Equipments (14,102.07) (14,102.07)

Total Property and Equipment 1,757.56 2,949.56

OTHER ASSETS OrganisationExpenses:Cost 7,373.01 7,373.01 OrganisationExpenses:AccumulatedAmortization (7,373.01) (7,373.01)

Total Other Assets 0.00 0.00

TOTAL ASSETS 683,500.20 1,302,716.36

LIABILITIES AND STOCK HOLDER'S EQUITY As of As of March 31, 2010 March31,2009 $ $CURRENT LIABILITIES AccountsPayable 710,475.35 1,857,018.67 AccruedExpenses 8,000.00 24,733.52 AdvancefromCustomers 305,386.06 0.00 PayrollLiabilities 868.00 2,904.26

Total Current Liabilities 1,024,729.41 1,884,656.45

LONG-TERM LIABILITIES TotalLong-TermLiabilities 0.00 0.00

TotalLiabilities 1,024,729.41 1,884,656.45STOCKHOLDERS’ EQUITY

CapitalStock 100,000.00 100,000.00 RetainedEarnings (681,940.09) (664,524.93) NetIncome(Loss) 240.710.88 (17,415.16)

TotalStockholders’Equity (341,229.21) (581,940.09)

TOTAL LIABILITIES ANDSTOCKHOLDERS’ EQUITY 683,500.20 1302,716.36

58

AnnuAl RepoRt 2009-10GLOBAL PET FILMS, INC.

INCOME STATEMENT ONE YEAR ENDED MARCH 31, 2010 AND 2009 1 Year Ended 1YearEnded Mar. 31, 2010 Mar.31,2009 $ $Revenue Sales 6,475,669.00 9,517,055.01 SalesReturns&Discounts (68,044.48) (291,252.25) Sales:ServiceIncome 0.00 133,306.00

Total Revenue 6,407,624.52 9,359,108.76Cost of Goods Sold

Purchases 5,172,823.59 6,188,236.87 PurchaseDocument&Returns (51,059.89) (143,858.41) Increase/DecreaseinInventory 338,783.34 2,168,452.64 CustomDuties&ClearanceFees 47,400.96 18,687.44 SlittingCharges 0.00 2,991.52 WarehouseExpenses 1,848.21 323,224.64

Freight(Air&Sea) 19,722.65 13,663.82Total Cost of Goods Sold 5,529,518.86 8,571,398.52

Gross Profit 878,105.66 787,710.24Operating Expenses BadDebtsExpense 0.00 691.29 BankFees 6,998.56 7,682.23 CreditChargeProcessingFees 59,345.42 6,252.46 Factoring(BillDiscounting)fees 19,198.93 55,505.56 DepreciationExpense 1,192.00 3,545.67 DesignExpenses 0.00 12,012.50 Freight&ShippingExpenses 127,373.67 167,579.37 InsuranceExpense 23,562.00 48,287.18 LicensesandPermits 607.89 332.10 Marketing&Advertising 157,651.06 204,925.04 PostageandDelivery 287.54 1,111.82 OfficeSupplies&Expense 2,132.84 7,347.07 GrossWagesandSalaries 117,124.71 198,966.04 EmployeeMedical&BusinessExpense 31,650.00 44,300.00 LeasedStaffingExpense 1,302.02 10,676.00 PayrollTaxes 11,357.13 19,664.97 PrintingandReproduction 3,506.41 2,807.81 ConsultingFees 9,719.94 11,875.11 AccountingFees 8,750.00 18,945.00 LegalFeesandCharges 8,865.87 14,884.96 RentExpense 9,099.69 20,063.95 RepairsandMaintenance 2,433.36 2,893.71 TelephoneExpense 24,409.41 39,115.43 TravelExpense 41,806.65 105,457.14

Total Operating Expenses 668,375.10 1,004,922.41

Operating Income (Loss) 209,730.56 (217,212.17)Other Income MiscellaneousIncome 13,991.76 0.00 CustomsDutyRefunds 0.00 135,417.21 Claims&OtherExps.Recovered 16,052.21 58,813.31 InterestIncome 936.35 5,566.49

Total Other Income 30,980.32 199,797.01Other Expenses

Total Other Expenses 0.00 0.00

Income (Loss) Before Income Taxes 240,710.88 (17,415.16)

Net Income (Loss) 240,710.88 (17,415.16)

59

STATEMENT OF CASH FLOWS FOR ONE YEAR ENDED MARCH 31, 2010 AND 2009 INCREASE (DECREASE) IN CASH OR CASH EQUIVALENTS

1 Year 1Year Ended Ended March 31, 2010 March31,2009 $ $Cash Flows from Operating Activities

NetIncome(Loss) 240,710.88 (17,415.16)

AdjustmentstoReconcileCashFlow

Depreciation 1,192.00 3,545.67

Decrease (Increase) in Currents Assets

AccountsReceivable-Trade 466,302.97 432,560.02

CofaceFactoringReceivable 93,003.77 (33,301.61)

OtherAccountsReceivable 53,268.90 (54,592.00)

Inventory 338,783.34 2,168,452.63

RentDeposit 1,343.75 0.00

Increase (Decrease) in Current Liabilities

AccountsPayable-Trade (1,146,543.32) (2,495,762.81)

PayrollTaxesPayable (2,036.26) (1,366.05)

BadandDoubtfulDebtsProvision 0.00 (96,414.77)

AdvancefromCustomers 305,386.06 0.00

AccruedExpenses (16,733.52) (19,909.23)

Total Adjustments 93,967.69 (96,788.15)

Net Cash Provided by (Used in)

Operating Activities 334,678.57 (114,203.31)

Cash Flow from Investing Activities

Sales(Purchases)ofAssets

ComputerSystem&Software 0.00 (3,031.48)

AccumulatedAmortization

Cash Provided (Used) by Investing 0.00 (3,031.48)

Cash Flow From Financing Activities

Cash(Used)orprovidedby:

Net Increase (Decrease) in Cash 334,678.57 (117,234.79)

Cash at Beginning of Period 24,510.90 141,745.69

Cash at End of Period 359,189.47 24,510.90

SeeaccompanyingNotestofinancialstatements


60


(1) Description of Business:

Global Pet Films, Inc.wasincorporatedonDecember22,1997underthelawsofStateofIllinois,USAandisalsoregisteredwithStateofFlorida,USA.TheCompanyisengagedinthebusinessofsupplyanddistributionofpolyesterandsolarcontrolfilmsinUSA.TheCompanyhasitsplaceofbusinessatPembrokePines,Florida,USA.

(2) Significant Accounting Policies:

TheSignificantaccountingpoliciesofGlobalPetFilms, Inc.,whichare summarized below, are consistentwith accounting principlesgenerallyacceptedintheUnitedStatesofAmericaandreflectpracticesappropriatetothebusinessinwhichtheyoperate.

(a) Cash and Cash equivalents $359,189.47 Cashandcashequivalentsincludemoneymarketinstruments

(b) Inventories Inventoriesarestatedat the lowerofcost(determinedbyFIFO

method)ormarket(netrealizable)value.

(c) Depreciation and Amortization Equipmentsarestatedatcostlessaccumulateddepreciation.Some

assetsaredepreciatedusingstraight lineMACRSmethodovertheusefullivesoftheassetsandsomeotherassetsareexpensedunderSec.179ofInternalRevenueCode.

Legalcostoforganizationofbusinessiscapitalizedandiscarriedatcostlessaccumulatedamortization,whichisbeingprovidedonastraight-linebasisovertheeconomicusefullifeof5years.

(d) Revenue Recognition Revenuesfromproductsalestocustomersarerecognizedwhen

productsareshippedtocustomers.

(e) Purchases PurchasesarerecordedinbooksonlywhenreceivedinCompany

warehousesandorreceivedatCustomswarehouseslocatedattheportofdestination.

(f) Use of Estimates Thepreparationoffinancialstatementsinconformitywithgenerally

accepted accounting principles requiremanagement tomakeestimatesandassumptions that affect the reportedamountsofassetsandliabilitiesatthedatesofthefinancialstatementsandthereportedamountsofrevenueandexpensesduringthereportingperiod.Actualresultscoulddifferfromtheseestimates.

(3) Stockholder’s Equity TheCompany’scertificateofincorporationauthorizes1,000,000shares

ofcapitalstockforissuance.AsofMarch31,2010,99,999sharesofcapitalstockhasbeenissuedtoGarwarePolyesterInternationalLtd.,aUnitedKingdomCompanyinconsiderationof$99,999and1shareofcapitalstockhasbeenissuedtoMs.SoniaGarwareinconsiderationof$1.

(4) Accounts Receivable The accounts receivable balance as of March 31, 2010 was

$279,390.91.

OtherAccountsReceivable balance of $1,323.10 includes claimsreceivablefromGarwarePolyesterLtd.fortravelexpenses.

TheCompanyhasterminatedits`factoringarrangementwithCofacewitheffectfromMay2009.

(5) Accounts Payable TheAccountspayablebalanceof$710,475.35asofMarch31,2010

representsfollowingvendors.

(a)GarwarePolyesterLtd.India$275,645.43 (fortradepurchases)

(b)GPIL,UK $393,585.91 (fortradepurchases)

(c)Othervendors $41,244.01 (forexpenses)

(6) Beginning and Ending Inventory and Inventory Variation Inventory Inventory Inventory Variation Value as of Value as of for the year ending March 31, 2009 March 31, 2010 March 31, 2010

EndingInventory- $372,282.10 $33,498.76 $338,783.34

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010


Regd. Office : Naigaon, Post Waluj, Aurangabad 431 133

FIFTY THIRD ANNUAL GENERAL MEETINGATTENDANCE SLIP

PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE HALL

I / We hereby record my / our presence at the 53rd Annual General Meeting of the Company held at the Registered Office of the Company at Naigaon, Post Waluj, Aurangabad 431 133 on Wednesday, 29th September, 2010 at 11.30 a.m.

I / We ……………………………………………………………………… of ..……………………………….. in the District of …………………………………………………..............………. being a member / members of Garware Polyester Limited hereby appoint ………………………………………………………………….....…................................... in the District of …….................……or failing him ……………..………………………………………………………...........……………… of

…………………………………… …..in the district of ………..…………………………………………… as my / our proxy to attend and vote for me / us on my / our behalf at the 53rd Annual General Meeting of the Company to be held on Wednesday, 29th September, 2010 at 11.30 a.m. at the Registered Office of the Company at Naigaon, Post Waluj, Aurangabad 431 133 and at any adjournment thereof.

Signed this ……....................…… day of ……………………2010.

Signature …………………………………...................……

Proxy No. Regd. Folio No. DP-ID No. CLIENT ID No. No. of Shares

Regd. Office : Naigaon, Post Waluj, Aurangabad 431 133

PROXY FORM

NAME OF THE SHAREHOLDER OR REDG. FOLIO No. DP-ID No. CLIENT-ID No. PROXY (IN BLOCK LETTERS)

SIGNATURE OF THE SHAREHOLDER OR PROXY

RevenueStamp

Note : This form duly completed and signed as per specimen signature registered with the Company should be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the commencement of the Meeting.

UC

HIT

HA

GR

AP

HIC

403

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