Emmessar Biotech & Nutrition Ltd.1 Emmessar Biotech & Nutrition Ltd. Notice is hereby given that the Eighteenth Annual General Meeting of the Members of Emmessar Biotech & Nutrition

Emmessar Biotech &Nutrition Ltd.

18th 18th 18th 18th 18th ANNUANNUANNUANNUANNUAL REPORAL REPORAL REPORAL REPORAL REPORTTTTT

2009-20102009-20102009-20102009-20102009-2010

BOARD OF DIRECTORS

Shri Ashok M. Kadakia (Chairman)Shri MSR Ayyangar (Managing Director)Shri Arvind M. ShahShri Manoj M. ShahShri Vijay K. AgrawalShri. A.V. Vardharajan (Executive Director)

AUDITORS

M/s. R.G. Jain & Co.,Chartered Accountants507, 5th floor, Kakad Market306, Kalbadevi Road,Mumbai - 400 002.

REGISTERED OFFICE & FACTORY

Plot No. T-3/2, MIDC Area,P.O. Box No. 39,Taloja - 410 208,Dist. Raigad, Maharashtra.Tel: 022-65220956

ADMINISTRATIVE OFFICE

29, Kamer Building, 4th floor,38, Cawasji Patel Street,Fort, Mumbai - 400 001.Tel : 00-91-22-66356209/10/11Fax : 00-91-22-66370190Email : [email protected]/[email protected] email for Investors: [email protected]: www.ebnl.co.in

18th ANNUAL REPORT

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Emmessar Biotech & Nutrition Ltd.

Notice is hereby given that the Eighteenth AnnualGeneral Meeting of the Members of EmmessarBiotech & Nutrition Ltd will be held at the RegisteredOffice of the Company at T-3/2, MIDC Area, Taloja,Dist. Raigad on Saturday, the 26th of June 2010 at11.00 hrs, to transact the following business.

Ordinary Business:

1. To receive, consider and adopt the Directors’Report, Audited Profit & Loss Account for the yearended 31st March 2010, the Balance Sheet as atthat date and the Auditors’ Report thereon.

2. To appoint a Director in place of Mr. Vijay K.Agrawal, who retires by rotation and being eligibleoffers himself for re-appointment.

3. To appoint a Director in place of Mr. Manoj M.Shah, who retires by rotation and being eligibleoffers himself for re-appointment.

4. To appoint Auditors and fix their remuneration.

“Resolved that pursuant to the provisions ofSection 224, and other applicable provisions, ifany, of the Companies Act, 1956, M/s. R. G. Jain& Co, Chartered Accountants, retiring auditors ofthe Company, be and are hereby re-appointedAuditors of the Company, to hold office from theconclusion of this meeting up to the conclusion ofthe next Annual General Meeting of the Company”.

Resolved Further that M/s R. G. Jain & Co,Chartered Accountants, be paid for the financialyear 2010 - 2011 such remuneration as may bemutually agreed upon.

By Order of the BoardFor Emmessar Biotech & Nutrition Ltd

Place: Mumbai MSR AyyangarDate: 30th April 2010 Managing Director

NOTICE

Notes

a) A member entitled to attend and vote is entitled toappoint a proxy to attend and vote instead of himself/ herself and the proxy so appointed need not be amember.

b) The proxy form duly completed and signed mustbe deposited at the Registered Office of theCompany at least 48 hours before thecommencement of the meeting.

c) Members are requested to notify the Company’sRegistrar, M/s. Link Intime India Pvt. Ltd.,immediately at its Office, the change of address,corrections in name etc., if any.

d) The Directors who retire by rotation and beingeligible for re-appointment are deemed to beinterested in the resolution concerning them.

e) The Register of Members will remain closed from18th June 2010 to 26th June 2010, both daysinclusive.

By Order of the Board For Emmessar Biotech & Nutrition Ltd


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Your Directors present their 18th Annual Report togetherwith Audited Statement of Accounts of your Companyfor the year ended 31st March 2010.

Financial Results

(Rs in Lacs) (Rs in Lacs)

2009-2010 2008-2009

Profit /(Loss) before Interest, (7.59) 3.30Depreciation and Tax:

Depreciation: 7.52 7.86

Provision for FBT 0.00 0.27

Net Profit / (Loss) (15.11) (4.83)

Add Surplus / (Deficit) broughtforward from last year (246.80) (241.97)

Surplus / (Deficit) carriedforward to next year (261.91) (246.80)

Operations, Management’s discussions andanalysis:

Our Sales of fine chemicals and Micro Nutrients didnot grow as expected. However our Health careformulations have shown promise. We now have over45 Marketing and Distribution network within thecountry covering all states. We have overseasdistribution network in 5 countries. Our products aregetting progressively increasing acceptance worldover.

Dividends:

As the Company has accumulated losses, no dividendsare recommended.

Directors:

Mr. Vijay K. Agrawal and Mr. Manoj M. Shah retire byrotation and being eligible offer themselves for re-appointment.

The Directors mentioned above are deemed to beinterested in their resolutions for re-appointment.

Mr. P. Chandrasekar, Director of the company hassubmitted his resignation on 23rd November 2009 to theboard citing personal reasons. His resignation wasaccepted by the Board. The Board wishes to place onrecord its appreciation of Mr. Chandrasekhar for hiscontributions made during his tenure.

Statement Pursuant to Listing Agreements:

The Company’s shares are listed with The Bombay StockExchange Ltd. Your Company has paid the annual listingfees up to date.

Auditors:

M/s. R. G. Jain & Co, Chartered Accountants, the retiringAuditors of the Company are eligible for re-appointment.Members are requested to re-appoint the Auditors forthe current year and fix their remuneration.

Particulars of Employees:

The particulars of employees under Section 217(2A) ofthe Companies Act 1956 is given in Annexure 1.

Energy Conservation, Technology Absorption,Foreign Exchange Earnings and Pollution Control.

A statement giving details of the Conservation of Energy,Technology absorption, Pollution Control, Exports andForeign Exchange earnings and outgo is annexed tothis report (Annexure 2).

Directors Responsibility Statement:

In Compliance with the provisions of Section 217 (2AA)of the Companies Act, 1956 (the Act) your Directorshereby confirm that:

i) In preparing the Annual Accounts for the year ended31st March 2010 all the applicable accountingstandards have been followed.

DIRECTORS’ REPORT

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ii) Accounting policies were adopted and appliedconsistently and made judgments and estimatesthat are reasonable and prudent so as to give atrue and fair view of the state of affairs of theCompany as at 31st March 2010 and of the Loss ofthe Company for the year ended on that date.

iii) Proper and sufficient care for the maintenance ofadequate accounting records in accordance withthe provisions of the Companies Act and forpreventing / detecting fraud and irregularities havebeen taken.

iv) The Annual Accounts have been prepared on a“going concern” basis.

Corporate Governance:

A separate section on Corporate Governance and acertificate from Auditors of the Company regardingcompliance of conditions of Corporate Governance asstipulated under Clause 49 of the Listing Agreementwith Stock Exchanges, form part of the Annual Report.

Acknowledgements:

Your Directors wish to place on record theirappreciation of the wholehearted co-operation receivedby the Company from the Shareholders, Employeesand its Bankers during the year under review.

For and on behalf of the Board of Directors

Place: Mumbai MSR Ayyangar.Date: 30th April 2010 Managing Director

Annexure 1 to Directors Report.

Particulars of employees pursuant to Section 217(2A)of the Companies Act 1956 read with the Companies(Particulars of Employees) Rules 1975 as amended bythe Companies Amendment Act 1988 and forming partof the Directors’ Report for the year ended 31st March2010.None of the employees (including for part of the year)received remuneration exceeding Rs.2,00,000 permonth.(Rs.24.00 lacs per annum).

Annexure 2 to Directors Report.

Information as per Section 217(1)(e) read withCompanies (Disclosure of Particulars in the DirectorsReport) Rules 1988 and forming part of the Directors’Report.

1. Conservation of Energy & Pollution Control:

As the Company’s own factory has not been inoperation, no special energy saving measures wererequired and there was no need for the Company totake any pollution control measures.

2. Research and Development:

The total amount spent on the R&D activities thisyear and previous year was not material and as thesame have been included in normal heads ofaccounts, no amount can be quantified separatelyunder the head of R&D cost.

3. Foreign Exchange Earning ( CIF ) & Outgo:

Earnings Rs. 24,08,513/- Previous year Rs.50,84,515/-Expenses Rs. 0/- Previous year Rs. 630/-

For and on behalf of theBoard of Directors


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The detailed report on Corporate Governance as per theformat prescribed by SEBI and incorporated in Clause49 of the Listing Agreement is set out below.

MANDATORY REQUIREMENTS

1. COMPANY’S PHILOSOPHY ON CODE OFGOVERNANCEThe Company’s philosophy on CorporateGovernance envisages attainment of high level oftransparency and accountability in the functioning ofthe Company and the conduct of its business,including its interaction with employees, shareholders, creditors, consumers and institutional andother lenders and places due emphasis on regulatorycompliance.The Company believes that its systems and actionsmust be integrated for enhancement of Corporateperformance resulting in the maximisation ofstakeholder’s value in the long run.

2. BOARD OF DIRECTORSComposition of BoardThe Board consists of 4 Non-Executive Directors and2 Executive Directors, the Chairman being Non-Executive Director. During the financial year theBoard met 4 times on the following dates: 27th

April 2009, 31st July 2009, 28th October 2009 and29th January 2010.The composition of category of members of the Boardand the number of their other directorships are setout below:

Director Category No. of CommitteeDirectorship Membership/held in other Chairmanship inCompanies other companies

Mr. Ashok M. Kadakia Non-Promoter 8 2Chairman Non ExecutiveMr. MSR Ayyangar Promoter 2 2Chief ExecutiveMr. Arvind M. Shah Non-Promoter 7 Nil

Non-ExecutiveMr. Manoj M. Shah Non-Promoter 7 Nil

Non-ExecutiveMr. Vijay K. Agrawal Non-Promoter 3 1

Non-ExecutiveMr. A.V. Vardharajan Non-Promoter 1 Nil

Executive

CORPORATE GOVERNANCE FOR 18TH ANNUAL REPORT

Details of remuneration paid to all the Directors

The Company pays no sitting fees to its Directors, bothexecutive and non-executive, for each Board and Auditcommittee meetings attended. Non-Executive Directors arenot paid any salary, bonus, stock options, pension etc.

Attendance record of the Directors

Director Board Meetings Attendance at lastAttended during AGM held on

the year 27.6.2009

Mr. Ashok M. Kadakia 3 NoMr. MSR Ayyangar 4 YesMr. Arvind M. Shah 4 YesMr. Manoj M. Shah 2 YesMr. Vijay K. Agrawal 4 YesMr. P. Chandrasekar 2 YesMr. A.V. Vardharajan 4 Yes

None of the Directors is a member in more than tencommittees and acts as Chairman in more than 5committees across all the companies in which he is aDirector.

Brief Resume of Directors (Those retiring and eligiblefor reappointment)

i) Mr. Vijay K. Argawal has an experience of more than3 decades in the field of Fine and Speciality Chemicals.He is involved in activities of indenting, manufacturing,trading and sourcing for a long time. He is also advisingU.S. based companies for their investment opportunitiesin Pharma Sector in India. He is a Director in thefollowing other Companies.1. Agarwal Chemical Agencies Pvt. Ltd.2. Lee Pharma Ltd.3. Survival Technologies Pvt. Ltd.

II) Mr. Manoj M. Shah Shri. Manoj Moolchand Shah is aqualified Chartered Accountant and an experiencedFinancial Specialist. He is member of The Bombay StockExchange Ltd. He is a valued investor in our Company.The list of other Companies in which he is a Director isas follows.1. Amu Investment & Finance Pvt. Ltd.2. Amu Properties & Finance Pvt. Ltd.3. Amu Shares & Securities Ltd.4. Gava Securities Ltd.5. Lamhas Entertainment Ltd.6. Lamhas Satellite Services Ltd.7. Dideonet India Limited

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3. COMMITTEES OF THE BOARD

AUDIT COMMITTEEComposition of the committee

Director Category Audit Committee MeetingsAttended during the year

Mr. Vijay K. Agrawal Non-Executive 4Director

Mr. Arvind M. Shah Non-Executive 4Director

Mr. Manoj M. Shah Non-Executive 2Director

Mr. MSR Ayyangar Chief Executive 4Managing Director

During the year, the committee met 4 times on the followingdates:27th April 200931st July 200928th October 200929th January 2010

All the Directors are from business background, Mr. ManojM. Shah is a Chartered Accountant.

Functions of the Committee:

The Committee oversees the audit and risk managementfunctions in the Company, including quality of internal andmanagement audit. It also reviews audit plans, auditedand un-audited financial results and findings of the internaland statutory auditors and recommends to the Board forits approval. The constitution of the Audit Committee meetswith the requirements under Section 292A of theCompanies Act, 1956.

The Board has stipulated the following as terms ofreference, as are stipulated under Clause 49 of the listingagreement:-

a. Overseeing of the company’s financial reportingprocess and the disclosure of its financial informationto review that the financial statement is correct,sufficient and credible.

b. Recommending the appointment and removal ofexternal auditor, fixation of audit fee and also approvalof payment for any other services.

c. Reviewing with management the annual financialstatements before submission to the board, focusingprimarily on:

Any changes in accounting policies and practices.

Major accounting entries based on exercise ofjudgment by management.

Qualifications in draft audit reportSignificant adjustments arising out of auditThe going concern assumptionCompliance with accounting standardsCompliance with stock exchange and legalrequirements concerning financial statements.

Any related party transactions i.e. transactions of thecompany of material nature, with promoters or themanagement, their subsidiaries or relatives etc; thatmay have potential conflict with the interests of companyat large.

d. Reviewing with the management, external and internalauditors, the adequacy of internal control systems.

e. Reviewing the adequacy of internal audit function,including the structure of the internal audit department,staffing and seniority of the official heading thedepartment, reporting structure coverage andfrequency of internal audit.

f. Discussion with internal auditors any significant findingsand follow up thereon.

g. Reviewing the findings of any internal investigation bythe internal auditors into matters where there issuspected fraud or irregularity or a failure of internalcontrol systems of a material nature and reporting thematter to the board.

h. Discussions with external auditors before the auditcommences, nature and scope of audit as well as havepost-audit discussion to ascertain any area of concern.

i. Reviewing the company’s financial and riskmanagement policies.

j. To look into the reasons for substantial defaults in thepayment to the depositors, debenture holders,shareholders (in case of non payment of declareddividends) and creditors.

4 SHARE TRANSFER & INVESTOR GRIEVANCECOMMITTEE

Composition of Committee

Name of Directors Category

Mr. Ashok M Kadakia Non-Executive / Independent

Mr. A.V. Vardharajan Executive Director

Mr. MSR Ayyangar Chief Executive/Managing Director

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During the year, the committee met 2 times on the followingdates:31st July 200929th January 2010

Functions of the Committee

The Committee approves, transfer / transmission /transposition / consolidations / splitting, issue of duplicatecertificates, de-materialisation, allotment of shares anddebentures, shareholders grievances pertaining to non-receipt of transferred share certificates, non-receipt ofbalance sheet and non-receipts of dividend / interest etc.

Compliance Officer

The Board has designated Mr. A.V. Vardharajan, as theCompliance Officer and in his absence Mr. I. J. Pereirahas been designated as the Compliance Officer.

Details of shareholder’s complaints received, notsolved and pending share certificates.

The Company has approximately 6542 shareholders. Thetotal number of complaints received and replied to thesatisfaction of shareholders during the year under reviewwere 7. There were no outstanding complaints as onMarch 31, 2010. There were no request for transfers &dematerialisation pending for approval as on March 31,2010. They were approved and dealt with before 5th April2010.

The company has an exclusive email id<[email protected]> for receiving investor ’scomplaints.

5. GENERAL BODY MEETINGS

Date, time and venue of the last three Annual GeneralMeetings held are given below:-

Financial Year Date Time Venue

2006 – 2007 30-06-2007 11.00 AM T-3/2, MIDC,Taloja.2007 – 2008 28-06-2008 11.00 AM T-3/2, MIDC,Taloja2008 – 2009 27-06-2009 11.00 AM T-3/2, MIDC,Taloja

No postal ballots were used / invited for voting at thesemeetings in respect of special resolutions passed. TheCompany shall comply with the requirements relating topostal ballot as and when necessary.

6. DISCLOSURES

i) In respect of related party transaction, thecompany does not have any transaction, whichmay have potential conflicts with the interest ofthe Company at large.

ii) The Company has complied with the requirementsof regulatory authorities on capital markets and hasnot incurred any penalties / strictures during the lastthree years.

7. MEANS OF COMMUNICATION

i. The quarterly, half yearly and annual results areforthwith communicated to all the Stock Exchangeswith whom the Company is listed as soon as theyare approved and taken on record by the Board ofDirectors of the Company. Further, the results arepublished in one English daily newspaper (FreePress Journal) circulating in the country and inMarathi newspaper (Navshakti), published fromMumbai.

ii. Management discussion and analysis, forms partof the Directors’ Report.

8. GENERAL SHAREHOLDERS INFORMATION

i. Annual General Meeting

Date and time : 26th June, 2010 at 11.00 hrs.Venue : Plot No. T-3/2, MIDC Area,

Taloja – 410 208.

ii. Financial Calendar for 2010-11(tentative)

Financial reporting for the quarter ending June 30,2010 End of July 2010

Financial reporting for the quarter ending September30, 2010 End of October 2010

Financial reporting for the quarter ending December31, 2010 End of January 2011

Financial reporting for the year ending March 31,2011 Between April & June 2011

iii Date of Book Closure:

18th June, 2010 to 26th June, 2010 (both daysinclusive).

iv Dividend payment date: This is not applicable asdividend is not declared.

v Listing on Stock Exchanges

Equity shares of the Company are listed only in TheBombay Stock Exchange Limited.

vi Stock Code:Physical - 24768Demat Segment - 524768ISIN No. - INE634B01016

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vii Stock Market DataBombay Stock Exchange Limited

High(Rs) Low(Rs.)

April 2009 4.15 3.20May 2009 5.12 3.48June 2009 6.72 4.75July 2009 4.97 4.00August 2009 5.40 4.11September 2009 6.61 3.82October 2009 7.28 5.33November 2009 6.44 4.42December 2009 5.85 4.53January 2010 6.14 4.95February 2010 4.76 3.28March 2010 4.35 3.18

viii Corporate EthicsThe consistent endeavour of Emmessar Biotech& Nutrition Ltd., is to enhance the reputation ofthe Company and irrespective of the goals to beachieved, the means are as important as the end.The Company has adopted “the Code of Conductfor prevention of insider trading”, which containspolicies prohibiting insider trading. The Companyhas also promulgated Code of Conduct to befollowed by Directors and Management.

ix Registrar and Share Transfer AgentsLink Intime India Pvt. Ltd.C-13, Pannalal Silk Mills Compound,LBS Marg, Bhandup West, Mumbai – 400078.Telephone Number: 25946970Fax number: 25946970Email: [email protected]

x Share Transfer SystemShare Transfer requests received in physical formare registered within 7 days from the date of receiptand Demat requests are normally confirmed withinan average of 7 days from the date of receipt.

xi Distribution of ShareholdingPromoters includingPersons acting in concert : 24,92,905 Shares (49.90%)Private Corporate Bodies : 1,33,606 Shares ( 2.67%)NRI : 9,100 Shares ( 0.18%)Indian Public : 23,50,689 Shares (47.05%)FIIs & Banks : 9,800 Shares ( 0.20%)

xii Dematerialisation of sharesAbout 80.93% of the shares have beendematerialised as on 31st March 2010. Trading inEmmessar Biotech & Nutrition Ltd shares is incompulsory demat w.e.f. 29th May 2000 as per thenotification issued by Securities and ExchangeBoard of India.

NON-MANDATORY REQUIREMENTSRemuneration CommitteeSince no remuneration is being paid to the non-executiveDirectors, remuneration committee has not been formed.

Shareholder’s RightThe Company publishes quarterly and half yearly financialresults and performance in newspapers, the same are notsent to the shareholders of the Company. The Companysends Annual Report, the yearly financial results /performance to the shareholders.

Postal BallotNo postal ballots were used / invited for voting at generalmeetings in respect of special resolutions passed. TheCompany shall comply with the requirements relating topostal ballot as and when necessary.

AUDITORS’ CERTIFICATE ON CORPORATE OVERNANCE

To the Members of Emmessar Biotech & Nutrition Ltd.

We have examined the compliance of conditions of CorporateGovernance by Emmessar Biotech & Nutrition Limited (“theCompany”) for the year ended on 31st March 2010 as stipulated inClause 49 of the Listing Agreement of the Company with the BombayStock Exchange Limited.

The compliance of the conditions of Corporate Governance is theresponsibility of the management. Our examination was limited toreview of the procedures and implementation thereof, adopted bythe Company for ensuring the compliance of the conditions of thecertificate of Corporate Governance as stipulated in the said Clause.It is neither an audit nor an expression of opinion on the financialstatements of the Company.

In our opinion and to the best of our information and according tothe explanations given to us, and based on the representations madeby the Directors and the management, we certify that the Companyhas complied with the conditions of Corporate Governance asstipulated in Clause 49 of the above mentioned Listing Agreementfor the year ended 31st March 2010.

We state that in respect of investor grievances received during theyear ended 31st March 2010, no Investor Grievance is pending /unattended for a period exceeding one month against the Companyas per the records maintained by the Share Transfer and InvestorGrievance Committee and as intimated by the Registrars and ShareTransfer Agents of the Company.

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

For R. G. Jain & CoChartered Accountants

Place: Mumbai Girish JainDate: 30th April 2010 Partner

Membership No. 107416

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To the members of Emmessar Biotech & NutritionLimited

1. We have audited the attached Balance Sheet ofEmmessar Biotech & Nutrition Limited, as at 31st

March 2010 and also the Profit and Loss Account andCash Flow Statement for the year ended on that dateannexed thereto. These financial statements are theresponsibility of the Company’s management. Ourresponsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Thosestandards require that we plan and perform the auditto obtain reasonable assurance about whether thefinancial statements are free of material misstatement.An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financialstatements. An audit also includes assessing theaccounting principles used and significant estimatesmade by the management, as well as evaluating theover all financial statement presentation. We believethat our audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditor’s Report)Order, 2003 (as amended) issued by the CentralGovernment of India in terms of sub-section (4A) ofSection 227 of the Companies Act, 1956, andaccording to the information and explanations givento us and on the basis of such checks of the availablebooks and records as we considered appropriate, weenclose in the Annexure hereto, a Statement on thematters specified in paragraphs 4 and 5 of the saidOrder.

4. Further to our comments in the Annexure referred toin Paragraph – 3 above, we report that:

(a) We have obtained all the information andexplanations, which, to the best of our knowledgeand belief, were necessary for the purposes of ouraudit;

(b) In our opinion, proper books of account as requiredby law have been kept by the Company so far asit appears from our examination of those books;

(c) The Balance Sheet, Profit & Loss Account andCash Flow Statement dealt with by this report arein agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by

this report are in compliance with the AccountingStandards referred to in sub-section (3C) of Section211 of the Companies Act, 1956 except asmentioned in Para (f) below

(e) On the basis of written representations receivedfrom the directors as on 31st March, 2010, and takenon record by the Board of Directors, we report thatprima-facie none of the Directors of the Companyis disqualified as on 31st March 2010 from beingappointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956;

(f) As mentioned in Note No-4 of Schedule XI inNotes to Accounts, Sundry Debtors includesRs.5.82 Lacs due from customers outstandingfor a considerable long period. During the yearthe company has recovered Rs 1.23 Lacs fromthese customers. In the opinion of themanagement the entire amount is recoverableand hence considered good. In thesecircumstances, requirement of provisions, ifany, in respect of recovery of this debt cannotbe determined with certainty or estimatedreasonably and hence we are unable to expressour opinion thereon.

(g) Subject to above, in our opinion and to the best ofour information and according to the explanationsgiven to us, the said accounts read together withthe Significant Accounting Policies and notesthereon in Schedule X, give the information requiredby the Companies Act 1956, in the manner sorequired and give a true and fair view in conformitywith the accounting principles generally acceptedin India:

i) in the case of the Balance Sheet, of the state ofaffairs of the Company as at 31St March 2010

ii) in the case of the Profit and Loss Account, ofthe loss of the Company for the year ended onthat date; and

iii) in the case of the Cash Flow Statement, of theCash flows for the year ended on that date.

For R.G. Jain & Co.Chartered Accountants


Membership No 107416

AUDITOR’S REPORT

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Referred to in Paragraph 3 of our report of evendate

As required by the Companies (Auditors Report) Order,2003, as amended (“the Order”) issued by the CentralGovernment of India in terms of Section 227 (4A) ofthe Companies Act, 1956, on the matters specified inparagraphs 4 and 5 of the said Order, we further reportthat:

(i) In respect of Company’s Fixed Assets:

(a) The Company has maintained proper recordsshowing full particulars including quantitativedetails and situation of Fixed Assets.

(b) According to the information and explanationsgiven to us, the Company has formulated aregular programme of verification by whichall assets of the Company shall be verified inphased manner, which in our opinion isreasonable, having regard to the size of theCompany and the nature of its business andassets. To the best of our knowledge, nomaterial discrepancies were noticed on suchphysical verification conducted during theyear as compared with the book records.

(c) During the year under report the Companyhas not disposed off any of its fixed assetsand the going concern status of the Companyis not affected.

(ii) In respect of Company’s Inventories:

(a) The stock of finished goods and raw materialhas been physically verified during the yearby the Management. In our opinion thefrequency of verification is reasonable. In thecase of material lying with the third parties,certificates confirming stocks have been

received in respect of a substantial portion ofthe stocks held.

(b) In our opinion, the procedures of physicalverification of inventory followed by theManagement are reasonable and adequate inrelation to the size of the Company and thenature of its business.

(c) The Company is maintaining proper recordsof inventory. As explained to us, thediscrepancies noticed on verification betweenphysical inventories and the book records werenot material in relation to the size of theCompany and the same have been properlydealt with in the books of account.

(iii) In respect of loans, secured or unsecured,granted or taken by the Company to / fromCompanies, firms or other parties covered inthe register maintained under Section 301 ofthe Companies act, 1956:

The Company has not granted / taken any loan,secured or unsecured to / from companies, firmsor other parties covered in the register maintainedunder Section 301 of the Companies Act, 1956.Accordingly, Clause 4 (iii) of the Companies(Auditor’s Report) Order, 2003, as amended, is notapplicable to the Company for the year underreport.

(iv) On the basis of selective checks carried out duringthe course of audit and in our opinion and accordingto the information and explanations given to us,there are adequate internal control systemcommensurate with the size of the Company andthe nature of its business for the purchase ofinventory and fixed assets and for the sale of goods.During the course of our audit, no major weaknesshas been noticed in the internal control system.

ANNEXURE TO AUDITORS’ REPORT

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We have not observed any continuing failure onthe part of the Company to correct majorweakness in the internal control system.

(v) (a) To the best of our knowledge and belief andaccording to the information and explanationsgiven to us, we are of the opinion that thetransactions that need to be entered into theregister maintained under Section 301 of theCompanies Act, 1956 have been so entered.

(b) Transaction made in pursuance of suchcontracts or arrangements have been madeat prices which are reasonable having regardto the prevailing market prices at the relevanttime.

(vi) In our opinion and according to the informationand explanations given to us during the year underreport, the Company has not invited and acceptedany deposits from the public within the meaningof Section 58A, 58AA or any other relevantprovisions of Companies Act, 1956 and theCompanies (Acceptance of Deposits) Rules,1975.

(vii) In our opinion, the Company has an internal auditsystem for the year under audit commensuratewith the size of the Company and the nature of itsbusiness.

(viii) We have been broadly reviewed the books ofaccount maintained by the Company pursuant tothe rules made by the Central Government forthe maintenance of cost records under Section209 (1) (d) of the Companies Act, 1956 in respectof the company’s products to which the said rulesare made applicable and are of the opinion thatprima facie the prescribed records have beenmade and maintained. We have, however, notmade a detailed examination of the said recordswith a view to determine whether they areaccurate or complete.

(ix) In respect of Statutory dues:

(a) According to the records examined by us, theCompany is generally regular in depositingduring the year, the undisputed statutory duesincluding Provident Fund, Investor Educationand Protection Fund, Employee StateInsurance, Income Tax, Sales Tax, Wealth Tax,Service Tax, Custom Duty, Excise Duty, Cessand any other statutory dues, to the extentapplicable to it with the appropriate authorities.According to the information and explanationsgiven to us, there are no arrears of undisputedoutstanding statutory dues as at 31st March2010 for a period of more than six months fromthe date they became payable.

(b) In our opinion and according to the information& explanations given to us, there are no duesof Income Tax, Sales Tax, Wealth Tax, ServiceTax, Customs Duty, Excise Duty and Cesswhich have not been deposited on account ofany dispute as on 31st March 2010.

(x) In our opinion, the accumulated losses of theCompany as at the end of the year are more thanfifty percent of its net worth. The Company hasincurred cash losses during the current financialyear however cash losses have not been incurredin the immediately preceding financial year.

(xi) In our opinion and according to the information andexplanations given to us and based on thedocuments and records produced to us, theCompany has not taken any loan from financialinstitutions or banks. The Company does not haveany debenture holder. Therefore Clause 4(xi) ofthe Companies (Auditor’s Report) Order 2003regarding default in repayment of dues to a financialinstitution or bank or debenture holder is notapplicable to the Company.

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(xii) Based on our examination of the records and theinformation and explanations given to us, theCompany has not granted any loans andadvances on the basis of security by way pledgeof shares, debentures and other securities.

(xiii) In our opinion and according to the informationand explanations given to us, the Company is nota chit fund, nidhi, mutual benefit fund / society.Therefore, the provision of Clause 4 (xiii) of theCompanies (Auditor’s Report) Order, 2003, is notapplicable to the Company.

(xiv) In our opinion and according to the informationand explanation given to us, the Company is notdealing in shares, securities and debentures andother investments. Therefore Clause 4 (xiv) ofCompanies (Auditor’s Report) Order, 2003 is notapplicable to the Company.

(xv) In our opinion and according to the informationand explanations given to us, the Company hasnot given any guarantee for loans taken by othersfrom banks or financial institutions.

(xvi) As per records, the Company has not obtainedany term loans during the financial year underreport.

(xvii)According to the information and explanationsgiven to us and on the basis of an overallexamination of the Balance Sheet and Cash Flowof the Company, we report that no funds raisedon short-term basis have been utilized for long-term investment.

(xviii)The Company has not made any preferentialallotment of shares to parties and companiescovered in the register maintained under Section301 of the Companies Act, 1956 during the year.

(xix) On the basis of records made available to us, theCompany did not issue any debentures during theyear. Hence, Clause 4 (xix) of the Companies(Auditor’s Report) Order, 2003 regarding creationof security or charge in respect of debenturesissued is not presently applicable to the Company.

(xx) The Company has not raised any money by way ofpublic issue during the year. Accordingly, Clause(xx) of the Companies (Auditor’s Report) Order,2003 on the end use of money raised by publicissues is not presently applicable to the Company.

(xxi) Based on the audit procedures performed and theinformation and explanations given by theManagement, we report that to the best of ourknowledge and belief, no fraud on or by theCompany has been noticed or reported during theyear that causes the financial statements to bematerially misstated.

For R.G. Jain & Co.Chartered Accountants


Membership No 107416

12


(Value in Rs.)Schedule As at 31.3.2010 As at 31.3.2009

A) SOURCES OF FUNDS1. Shareholders’ Funds

a) Share Capital I 4,99,61,000 4,99,61,000b) Reserves & Surplus II 6,38,900 6,38,900

TOTAL FUNDS EMPLOYED 5,05,99,900 5,05,99,900

B) APPLICATION OF FUNDS1. Fixed Assets

a) Gross Block III 3,12,37,621 3,11,33,846b) Less: Accumulated Depreciation 1,08,56,657 10104401

c) Net Block 2,03,80,964 2,10,29,445

2. InvestmentsSBI Magnum Insta Cash Fund IV 7,36,646 15,81,272

3. Current Assets Loans & Advances Va) Inventories 20,37,819 17,24,110b) Sundry Debtors 14,14,635 19,38,833c) Cash & Bank Balances 9,83,816 5,01,680d) Sundry Deposits 46,010 46,745e) Other Current Assets 3,64,966 4,28,142f) Loans & Advances 42,23,825 3,96,694

90,71,071 50,36,204Less: Current Liabilities & Provisions VI 57,79,756 17,26,618

Net Current Assets 32,91,315 33,09,586

4. Profit & Loss Account(Deficit as per Account annexed) 26190975 24679597

TOTAL FUNDS APPLIED 5,05,99,900 5,05,99,900

Notes Forming Part of Accounts XIThe Schedules referred to above form an integral part of the accounts.

BALANCE SHEET AS AT 31ST MARCH 2010.

As per our report of even date For and on behalf of the Board

For R.G. Jain & Co. Ashok M. Kadakia MSR AyyangarChartered Accountants Chairman Managing Director

Arvind M. Shah Manoj M. ShahDirector Director

Girish JainPartner Vijay K. Agrawal A.V. VardharajanMembership No. 107416 Director Executive Director

Place : Mumbai Place : MumbaiDate : 30th April 2010 Date : 30th April 2010

13







PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2010

(Value in Rs)

Schedule For the year For the yearended 31.3.2010 ended 31.3.2009

A. INCOME:Sales VII 5,78,32,139 5,53,74,043Increase / (Decrease) - Inventories 5,37,893 -8,01,027(Finished & Semi finished goods)Other Income VIII 8,37,304 10,57,526

TOTAL 5,92,07,336 5,56,30,542

B. EXPENDITURE:

Material Cost IX 5,48,72,579 5,02,91,045Manufacturing & Other Overheads X 50,93,879 50,09,711Depreciation 7,52,256 7,86,566

TOTAL 6,07,18,714 5,60,87,322

Profit / (Loss) before Taxation -15,11,378 -4,56,780

Provision for Fringe Benefit Tax Nil 26,642

Net Profit / (Loss) for the year -15,11,378 -4,83,422Add: Deficit in Profit & Loss A/c Brought Forward -2,46,79,597 -2,41,96,175

Deficit Carried Over to the Balance Sheet -2,61,90,975 -2,46,79,597

Basic and Diluted Earnings per Share (in Rs.) -0.30 -0.10

Notes Forming Part of Accounts XIThe Schedules referred to above form an integral part of the accounts.

14


2009-2010 2008-2009(in Rs.) (in Rs.)

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit before Tax and Extraordinary Items -15,11,378 -4,56,780Adjustments: Depreciation 7,52,256 7,86,566Interest / Dividend -35,374 - 39,642

Operating Profit before Working Capital changes -7,94,496 2,90,144

Adjustment for Movement in working Capital:

Decrease / (Increase) in Inventories -3,13,709 6,04,552Decrease / (Increase) in Sundry Debtors 5,24,198 19,46,946Decrease / (Increase) in Sundry Deposits 735 1,575Decrease / (Increase) in Other Current Assets 63,176 45,390Decrease / (Increase) in Loans & Advances -38,27,131 -13,930Increase / (Decrease) in Current Liabilities & Provisions 40,53,138 13,10,315

Cash generated from operations -2,94,089 15,64,362Direct Taxes paid (FBT) 0 -26,642

Cash Flow before extraordinary items -2,94,089 15,37,720Extraordinary items --- —Net Cash flow from operating activities -2,94,089 15,37,720

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets -1,03,775 - 34,875Investments in Mutual Funds 8,44,626 -12,39,642

Interest/Dividend Received 35,374 39,642

Net Cash inflow/(out flow) in Investing activities 7,76,225 -12,34,875

C. CASH FLOW FROM FINANCING ACTIVITIESRepayment of long term borrowings 0 0

Net Cash used in financing activities 0 0

Net increase in cash and cash equivalents 4,82,136 3,02,845Cash and cash equivalents as at 1.4.2009 5,01,680 1,98,835Cash and cash equivalents as at 31.3.2010 9,83,816 5,01,680

Note: The figures of the previous year have been regrouped / reclassified wherever necessary, toconform with the classification of the current year.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2010






15


SCHEDULE ATTACHED TO AND FORMING PART OF BALANCE SHEET AS AT 31ST MARCH 2010As at 31.3.2010 As at 31.3.2009

(in Rs.) (in Rs.)

SCHEDULE - ISHARE CAPITALA. Authorised

54,00,000 Equity Shares of Rs. 10/- each 5,40,00,000 5,40,00,000B. Issued, Subscribed & Paid Up

49,96,100 Equity Shares of Rs. 10/- each 4,99,61,000 4,99,61,000fully paid-up.

Note:Of the above equity shares, 4,98,000 Equity Shares ofRs. 10/- eachwere issued by way of bonus Shares in the ratio of 3 Bonus Shares ofevery 10 shares held, out of Revaluation Reserve in the year 1994.

TOTAL 4,99,61,000 4,99,61,000

SCHEDULE - IIRESERVES & SURPLUSi) Land Revaluation Reserve 6,38,900 6,38,900

TOTAL 6,38,900 6,38,900

SCHEDULE - III : FIXED ASSETS (Value in Rs ) Nature of Assets G R O S S B L O C K (COST) D E P R E C I A T I O N N ET B L O C K

As on Addition/ As on Accumulated For the Accumulated As on As on1.4.2009 (deletioin) 31.3.2010 upto year upto 31.3.2010 31.3.2009

during 31.3.2009 31.3.2010the year

Tangible Assets1. Industrial Land 88,71,300 0 88,71,300 0 0 0 88,71,300 88,71,3002. Buildings 2,03,55,452 0 2,03,55,452 83,31,857 6,74,186 90,06,043 1,13,49,409 1,20,23,5953. Furniture & Fixtures 5,95,660 0 5,95,660 5,56,260 20,144 5,76,404 19,256 39,4004. Office Equipments 13,11,434 1,03,775 14,15,209 12,16,284 57,926 12,74,210 1,40,999 95,150

Total 3,11,33,846 1,03,775 3,12,37,621 1,01,04,401 7,52,256 1,08,56,657 2,03,80,964 2,10,29,445

Previous Year 3,10,98,971 34,875 3,11,33,846 93,17,838 7,86,566 1,01,04,401 2,10,29,445

1. The Company has provided Depreciation on Straight Line Method at the rates and in the manner providedin Schedule XIV to the Companies Act, 1956.

SCHEDULE - IVINVESTMENTS(At Cost / Book Value)(Fully Paid Up unless otherwise stated)

NON TRADE INVESTMENTS(Quoted but not listed)Investments in Units of Mutual Fund(Units of Rs. 10/= each unless otherwise stated)Dividend Option SBI Magnum Insta Cash Fund 736646 1581272(43978.0818 ( (P.Y. 94402.5996 ) Units.)TOTAL: 736646 1581272

Aggregate Cost of Quoted Investment – Cost 736646 1581272 – NAV 736646 1581272

16



(in Rs. (in Rs.)

SCHEDULE - VCURRENT ASSETS, LOANS AND ADVANCESa) Inventories

(As taken valued and certified by Management)i) Finished Goods 15,71,200 10,33,307ii) Raw Material & Packing Materials 4,66,619 6,90,803

TOTAL 20,37,819 17,24,110

b) Sundry Debtorsi) Unsecured (considered good)

a) Outstanding for more than six months 6,42,582 9,90,302b) Others 7,72,053 9,48,531

TOTAL 14,14,635 19,38,833

c) Cash & Bank Balancesi) Cash on hand 1,07,660 5,576ii) Balances with Scheduled Bank

a) In Current Accounts 8,76,156 4,96,104

TOTAL 9,83,816 5,01,680

d) Sundry Depositsi) Govt. & Semi Govt. Bodies 45,010 45,745ii) Others 1,000 1,000

TOTAL 46,010 46,745

e) Other Current Assetsi) Cenvat Credit Receivables - Inputs 2,08,961 3,22,098ii) Balance in Central Excise PLA A/c. 561 561iii) MVAT Receivable 1,05,226 1,05,483iv) Refund of duty receivable 50,218 0

TOTAL 3,64,966 4,28,142

f) Loans & Advances(Unsecured – considered good unless otherwise stated)

i) Recoverable in cash or kind or for 1,24,805 1,50,957value to be received

ii) TDS receivable 2,98,622 2,45,737iii) Advance to Suppliers for Goods & Services 38,00,398 0

TOTAL 42,23,825 3,96,694

SCHEDULE - VICURRENT LIABILITIES AND PROVISIONS

i) Sundry Creditors for goods & expenses 20,13,010 16,89,436ii) Other Liabilities 27,750 34,784iii) Advance from customers 37,38,996 2,398

,TOTAL 57,79,756 17,26,618

17



(in Rs.) (in Rs.)

SCHEDULE - VIIGross Sales 5,87,43,999 55374043Less: Discount 911,860 Nil

Net Sales 5,78,32,139 55374043

SCHEDULE - VIIIOTHER INCOME

i) License Fees / Compensation 7,00,000 628562ii) Profit on Exchange rate fluctuation 0 174182iii) Dividend Income 35,374 39642iv) Miscellaneous Income 1,01,930 215140

TOTAL 8,37,304 1057526

SCHEDULE – IXA) Cost of Material

Opening Stock 6,90,803 494328Add:- Purchases 17,26,780 1896565

24,17,583 2390893Less: Closing Stock 4,66,619 690803

19,50,964 1700090B) Purchase of Finished Goods 5,29,21,615 48590955

TOTAL 5,48,72,579 50291045

SCHEDULE – XMANUFACTURING AND OTHER OVERHEADS1. Processing Charges 2,47,439 5,39,9442. Excise Duty 17,776 43,5243. Product Inspection Charges 0 4,4944. Freight, Clearing & Forwarding charges 2,35,889 3,77,6025. Salaries, Allowances 14,62,389 14,52,5386. Contribution to PF and Other Funds 1,08,652 1,04,0947. Director’s Remuneration 8,71,872 8,47,5728. Staff Welfare Expenses 2,30,468 1,18,9829. Rent, Rates & Taxes 1,24,756 2,21,29710. Repairs & Maintenance – Others 65,056 74,42011. Electricity Charges 85,998 69,29812. Insurance Charges 39,053 42,47013. Printing & Stationery 46,463 52,66814. Travelling & Conveyance Charges 1,34,601 1,50,96615. Bank Charges & Commission 73,241 38,31616. Telephone & Mobile Charges 1,87,049 1,76,27317. Advertisement Expenses 68,184 51,88318. Marketing & Sales Promotion Expenses 3,23,857 1,16,10819. Auditor’s Remuneration 44,120 40,00020. Postage & Courier Charges 99,084 46,60721. Listing Fee with Stock Exchanges 12,190 10,00022. Internet & Website Expenses 1,56,711 15,62723. Professional Charges 89,075 1,46,84024. Registrar & Share Transfer Agents Fee 59,562 60,67325. NSDL / CDSL Connectivity Charges 6,618 4,49526. Loss on Exchange Rate Fluctuation 98,837 027. Miscellaneous Expenses 2,04,939 2,03,020

TOTAL 50,93,879 50,09,711

18


SCHEDULE - XI

NOTES TO ACCOUNTS

I. Significant Accounting Policies : Majorconsideration governing selection and application ofsignificant accounting policies of the Company torepresent true and fair view of the state of affairs ofthe financial statements of the Company are;

i) Prudenceii) Substance over Form andiii) Materiality

Significant Accounting Policies adopted and followedby the Company in preparation of its FinancialAccounts are as under:

a) Basis of Preparation of FinancialStatements:Subject to significant accountingpolicies outlined herein under, the accounts andthe financial statements have been prepared onthe basis of going concern, on the accrual basisof accounting, under the historical cost conventionexcept for revaluation of land, in accordance withaccounting principles generally accepted in Indiaand to comply in all material aspects with themandatory accounting standards issued by theInstitute of Chartered Accountants of India asapplicable and the relevant provisions of theCompanies Act, 1956. The accounting policieshave been consistently applied by the Companyand are consistent with those followed in previousyear.

b) Use of Estimates: The preparation of financialstatements in conformity with generally acceptedaccounting principles (GAAP) requiresmanagement to make estimates and assumptionsthat affect the reported amounts of assets &liabilities and the disclosure of contingent liabilitiesas at the date of the financial statements andreported amounts of revenues and expensesduring the reporting period. Difference betweenthe actual results and estimates are recognizedin the period in which the results are known /materialized.

c) Revenue Recognition:Sale of goods isrecognised on transfer of Property in goods tocustom-ers on agreed terms. Sales excludesamounts recovered towards Excise Duty, CentralSales Tax, Value Added Tax & Courier Chargesand in case of Export Sales excludes amountsrecovered towards insurance and freight.

d) Fixed Assets:Fixed Assets are stated at costexcept for revaluation of Land, less accumulated

depreciation. The cost of fixed assets includesfreight and other incidental expenses related to theacquisition and installation of the respective assetsand excludes Cenvat and MVAT, if any. Interest onborrowings for the purpose of acquir-ing FixedAssets are also added to the cost of acquisition untilthe use thereof for Com-mercial Production.

Items of fixed assets that have been retired fromactive use and are held for disposal are stated atthe lower of either net book value or net realizablevalue and are disclosed separately in the financialstatements. Any expected loss is recognized in theProfit and Loss account as “Diminution in FixedAssets”.

e) Depreciation:Depreciation on Fixed Assets isprovided on Straight Line Method at the applicablerates and in the manner as prescribed in ScheduleXIV to the Companies Act, 1956, whichmanagement considers as being representative ofthe useful economic lives of such assets.

Depreciation on addition / deletion of Fixed Assetsmade during the year is provided on pro-rata basisfrom / up to the date of such addition / deletion, asthe case may be. Assets under construction arenot depreciated.

f) Impairment of Assets: The Company assesses ateach Balance Sheet date where there is anyindication that any assets may be impaired and ifsuch indication exists, the carrying value of suchassets is reduced to its estimated recoverableamount and a provision is made for such impairmentloss in the Profit and Loss Account. If at the BalanceSheet date there is an indication that a previouslyassessed impairment loss no longer exists, therecoverable amount is reassessed and the asset isreflected at the recoverable amount subject to amaximum of depreciable historical cost.

g) Investments:Investments are stated at cost ofacquisition and related expenses.

h) Inventories:Raw material and Finished goods arevalued at lower of costs or net realizable value. Costof inventories comprises all cost of purchase,conversions and other costs incurred in bringing theinventories to their present location and condition.Cenvat and MVAT are excluded in the value of theinventories. Provision for obsolescence / expiredgood is made, wherever necessary. Cost isdetermined by using FIFO method.

i) Retirement Benefit: Contribution to Provident Fundand other defined contribution schemes are madeat pre-determined rates and are charged to the Profit

19


and Loss Account monthly. Provision for Gratuityis made in the accounts in respect of all employeesof the company. Gratuity payment is accountedas and when the same becomes due and payableby the Company at the time of retirement ofconcerned employee in the year in which theliability for the same crystalises against theprovision made for gratuity in the accounts inrespect of the concerned employee.

j) Insurance: Wherever considered necessary, theCompany covers all the normal risks on the basisof estimated values of its assets. The premiumpertaining to the year is charged against revenueof the year. Insurance claims are accounted asand when admitted as due by the InsuranceCompany.

k) Research and Development Cost : All revenueexpenses pertaining to Research andDevelopment are charged to the Profit and LossAccount under the normal and natural heads ofaccount under which they are incurred, hence noamount can be quantified separately under thehead of R & D Cost. The expenditure of capitalnature on R & D is capitalized as fixed assets,and depreciated as per the Company’s policy.

l) Classification of Expenditure and Income:Unless otherwise stated, all items of expenditureand income are being classified and stated undertheir respective normal and natural heads ofaccounts having regard to the nature of businessin which the Company is engaged.

m) Provisions: A provision is recognized when theCompany has a present obligation as a result ofpast event and it is probable that an outflow ofresources will be required to settle the obligationin the respect of which a reliable estimate can bemade based on technical evaluation and pastexperience. Provisions are not discounted to itspresent value and are determined based onmanagement estimate required to settle theobligation at the Balance Sheet date. These arereviewed at each Balance Sheet date and adjustedto reflect the current management estimates.

n) Cenvat and VAT Credit: Excise duty and VAT oninputs are carried forward in current assets and isincluded in “Other Current Assets” till it isutilized.Consequently such inputs are accountedfor exclusive of excise duty and VAT credit.

o) Foreign Currency Transactions : Transactionsdenominated in foreign currency are normallyrecorded at the exchange rate prevailing on thedate of relevant transaction. Translation of allforeign currency denominated monetary Current

Assets & Current Liabilities as at 31st March 2010are translated at exchange rates prevailing as onthe same date. The Gain / Loss arising ontranslations and on foreign currency transactionssettled during the year are recognized in the Profitand Loss Account of the year.

p) Extra Ordinary Events and Prior PeriodItems:Material extra ordinary events and priorperiod items are disclosed separately in theAccounts.

q) Claims Receivable from Third Parties &Litigations.Revenues on claims pending disposalare recognised at the time of accept-ance of claimby third parties on disposal of litigation.

r) Events occurring after Balance Sheet date:Events occurring after Balance Sheet date whichare materially affecting the determination of theamounts relating to conditions existing at theBalance Sheet date are being recognized /disclosed as per Accounting Standard 4 (AS4) –Contingencies and Events Occurring after theBalance Sheet Date.

s) Taxation: Income Tax expense comprises currenttax (i.e. Amount of Income tax for the perioddetermined in accordance with the Income Tax law),deferred tax charge or credit (reflecting the tax effectof timing differences between accounting incomeand taxable income for the period). The deferredtax charge or credit and the corresponding deferredtax liabilities or assets are recognized using the taxrates that have been enacted or substantivelyenacted by the Balance Sheet date. Deferred Taxassets are recognized only to the extent there isreasonable certainty that the assets can be realizedin future. However, where there is unabsorbeddepreciation or carried forward loss under taxationlaws, deferred tax assets are recognized only ifthere is virtual certainty of realisation of the assets.Deferred tax assets are reviewed at each BalanceSheet date and written down or written up to reflectthe amount that is reasonable / virtual certain (asthe case may be) to be realized.

Earnings per share:

Basic earnings per share are calculated by dividingthe net profit or loss for the year attributable to equityshare holders by the weighted average number ofequity shares outstanding during the year.

For the purpose of calculating diluted earnings pershare, the net profit for the period attributable toequity share holders and the weighted averagenumber of shares outstanding during the year areadjusted for the effects of all dilutive potential equityshares.

20


II. Notes to Accounts

1. a) Contingent Liabilities: NIL

b) Estimated amount of contracts remaining to beexecuted on capital account and not provided for(Net of Advances) : NIL

2. Registration is pending for 2 residential flats included inbuildings shown in the Schedule III of Fixed Assets.

3. The Company has incurred net loss during the year andit has also brought forward unabsorbed depreciation andbusiness losses from previous years as per books ofaccount as well as under the Income Tax Act, 1961. Inview thereof, no Provision for Income Tax includingMinimum Alternate Tax on Book Profits has been madein the accounts. However, Deferred Tax Asset has notbeen recognised, as there is uncertainty of the realizationthereof in the future.

4. Sundry Debtors include Rs.5.82 lakhs due fromcustomers outstanding for a considerable long period.During the year the company has recovered Rs. 1.23Lacs from these customers. In the opinion of themanagement the entire amount is recoverable and henceconsidered good.

5. Quantitative information as required by paragraph 3of Part II of Schedule VI to the Companies Act, 1956(As Certified by the Management):a) LICENSED AND INSTALLED CAPACITY – NILb) PRODUCTION

Sr. No. Class of Goods Units 2009-2010 2008-2009a) Dietary Supplements Kg 13437.00 2812.55b) Fine Chemicals Kg 00.00 2576.00c) Skin Creams Kg 1560.09 924.17

6. Particulars in respect of Turnover:- 2009-2010 2008-2009 Sales Sales

Class of Goods Unit Qty Value(Rs.) Qty Value(Rs.)Dietary Supplements Kg 8133.33 3738969 6974.10 3287553Fine Chemicals Kg 108.00 108000 2500.00 2733000Skin Creams Kg 1550.30 1893666 1203.90 947653Generics Nos 141135 52716914 126690 47600842Others 870 286450 1916 804995Total 58743999 55374043

7. Particulars in respect of Opening Stocks and Closing Stock 2009-2010 2008-2009

Opening Stock Closing Stocks Opening Stock Closing StocksClass of Unit Qty Value Qty Value Qty Value Qty ValueGoods Rs. Rs. Rs. Rs.

DietarySupplements Kg 3528.45 665342 8271.45 1513282 7690.40 1432452 3528.45 665342

Fine Chemicals Kg 108 61284 25 26000 440 227774 108 61284

Skin Creams Kg 76.27 42222 86.06 31169 356.00 171414 76.27 42222Others 264458 749 2694 264458Total 1033306 1571200 1834334 1033306

8.Cost of Material ConsumedSr. Class of Goods 2009-2010 2008-2009No.

Unit Quantity Value Quantity Value(in. Rs) (in Rs.)

01 Solvents Kg 12355 1193850 2250 28800002 Inorganic Salts Kg 0 0 2332 20637903 Mineral Acids Kg 0 0 1758 30340.5004 Phenolic

Compounds Kg 0 0 2179 24917105 Amines Kg 0 0 2085 29270006 Oxidising

Substances Kg 11028 298289 2020 6278707 Skin Cream

Ingredients Kg 702.17 96265.62 292.22 30707.0808 Dietary

SupplementsIngredients Kg 77.82 19634.50 71 20796.96

09 PackingMaterials Mix 286252 359914

10 Generic Nos 141410 52921615 126690 4758365511 Others 56673 5213 1166596

Total 54872579 50291045

9. Cost of Materials Consumed and Percentage thereof:

Particulars 2009-2010 2008-2009Value % of Total Value % of Total

(in Rs.) Consumption (in Rs.) ConsumptionImported NIL NIL NIL NILIndigenous 54872579 100 50291045 100.00Total 54872579 100 50291045 100.00

10. Value of Imports on CIF Basis

Particulars 2009-10 2008-09(in Rs) (in Rs)

Raw Materials NIL NILOther Material NIL NIL

11. Earnings in Foreign Exchange

Particulars 2009-2010 2008-2009(in Rs.) (in Rs.)

a) Export of Goods(FOB Value basis) 24,08,513 50,84,515

Total Earnings on FOBvalue basis 24,08,513 50,84,515

12. Expenditure in Foreign Currency:

Particulars 2009-2010 2008-2009(in Rs) (in Rs.)

a) Bank Charges & Commission 0 630Total 0 630

21


13. Remuneration to Auditors:

Particulars 2009-2010 2008-2009(in Rs) (jn Rs.)

a) Statutory Audit Fees 22060 20000b) Tax Audit Fees 11030 10000c) Limited Review,

Interim Audit & CorporateGovernance 11030 10000

Total 44120 40000

14. Managerial Remuneration paid to Directors:

Particulars 2009-2010 2008-2009(in Rs.) (in Rs.)

Basic Remuneration 8,71,872 8,47,572Contribution toProvident Fund 18,720 18,720Total 8,90,592 8,66,292

The aforesaid remuneration does not exceedRs.100000/ per month or Rs. 1200000/- per annum(the effective capital of the Company is Rs. 1 Crore ormore but less than Rs. 5 Crores) as provided in PartII of Schedule XIII to the Companies Act, 1956 videCircular No. GSR 36(E) issued in connection withRemuneration Payable by the Companies having noprofits or inadequate profits as payment ofremuneration is approved by a resolution passed bythe members in the General Meeting of the Companyand the Company has not made any default inrepayment of any of its debts or interest payablethereon.

15. Information on Segment Reporting is Annexed.

16. EARNING PER SHARE

The Numerator and Denominator used to calculateBasic / Diluted Earning Per Share and the CalculatedBasic / Diluted Earning Per Share is as under.

(Value in Rs.)2009-10 2008-09

Net Profit\ (Loss)after Tax (15,11,378) (483422)

Weighted AverageNo. of Equity Share 4996100 4996100

Nominal Valueper share (Rs) 10 10

Basic and DilutedEarning per share (0.30) (0.10)

17. RELATED PARTY DISCLOSURES:

List of related parties.

a) Parties where control exists — None

b) Other related parties with whom transactions havetaken place during the year:

i) Emmessar Technologies Limited.

c) Key Management Personnel and their Relatives

i) MSR Ayyangar (Managing Director)ii) A.V. Vardharajan (Executive Director)iii) A.V. Sarangarajan(Brother of A.V. Vardharajan)iv) Vasudevan Raghavan (Son of MSR Ayyangar)

Details of remuneration to Managing Director &Executive Director are disclosed at Note No. 14herein before.

Details of Related Party Transactions:

(Financial transactions have been carried out in theordinary course of business and / or in discharge ofcontractual obligations)

Transaction during With parties referred With parties referredthe year to in (b) (i) to in (c) (i) (ii) (iii) (iv)

Purchases NIL ---(7,40,792) ---

Advance against supply 25,691 ---(NIL) ---

Short Term Loan NIL ---(NIL) ---

Remuneration --- 12,06,024--- (11,89,668)

18. In the opinion of the Management, the Current Assets,Loans and Advances are expected to produce at leastequal to the amount at which they are stated in theBalance Sheet in the ordinary course of business.

19. Dues to/ from parties are subject to confirmation.

20. As no dividend has been declared during the currentyear as well as previous year, the Company has notremitted any dividend in foreign currency to its non-resident shareholders during the current year as wellas previous year.

21. In the opinion of the Management, the provisions for allknown undisputed liabilities are adequate and is neitherin excess nor short of the amount reasonably considerednecessary.

22


22. There is no amount due to “Micro or Small Enterprises”and Medium Enterprises Act, 2006. Further no interestis paid / payable in terms of section 16 of the said Act.The information regarding dues to “Micro or SmallEnterprises” are given to the extent such parties havebeen identified on the basis of information availablewith the Company.

23. Additional information pursuant to the provision of PartIV of Schedule VI to the Companies Act, 1956,pertaining to Balance Sheet Abstract and Company’sGeneral Business Profit is annexed hereto.

24. Schedules “I” to “XI” form integral part of the accountsand have been duly authenticated.

25. Previous year figures have been reclassified /regrouped / recasted / rearranged whereverconsidered necessary to conform with theclassification of the current year and to make themcomparable with the current year’s figures.






23


SEGMENT REPORTINGInformation about Primary Business Segments – Revenues, Results and Other Information

(All amounts in Rs. Thousands)

2009-2010 2008-2009

Healthcare Speciality Total Healthcare Speciality Total ofSegment Chemicals Reportable Segment Chemicals Reportable

Segment Segments Segment SegmentsREVENUE

External Sales (Net of Excise Duty and MVAT) 58370.03 0.00 58370.03 52006.00 2566.00 54572.00Inter-Segment SalesOther IncomeTotal Segment Revenues 58370.03 0.00 58370.03 52006.00 2566.00 54572.00

RESULTSegment result 3232.242 3232.242 2528.00 1213.00 3741.00

Unallocated Corporate Expenses 5580.92 5580.92 5255.00Operating Profit -2348.67 -2348.678 -1514.00Interest Expenses — — —Interest Income — — —License Fee / Compensation 700.00 700.00 628.56Dividend 35.37 35.37 39.64Miscellaneous Income 101.93 101.93 389.32Income Taxes (FBT) 0.00 0.00 26.64Profit From Ordinary activities -1511.37 -1511.378 -483.12Extraordinary Loss : 0.00 0.00 —Net Profit after Tax -1511.37 -1511.378 -483.12

OTHER INFORMATIONSegment Assets 2011.81 26.00 2037.81 3599.26 61.28 3660.54Unallocated Corporate Assets 7033.25 1373.26Total Assets 9071.06 5033.80Segment Liabilities 529.66 0.00 529.66Unallocated Corporate Liabilities 5779.75 1194.56Total Liabilities 3291.31 1724.22Capital Expenditure 103.77 34.88Depreciation 752.25 786.57Non-cash expenses other than depreciation - —

i) Business Segments:

The Company has disclosed Business Segment as the primarysegment. Segments have been identified taking into accountthe nature of the products, the differing risks and returns, theorganization structure and internal reporting system. Thebusiness of the Company is divided into two segments. TheCompany’s operations predominantly relate to HealthcareProducts. Other business segment comprise Specialitychemicals. Export Sales are less than10% of the total sales,hence not reported.The business of each segment comprise of:

a) Healthcare Products:1) Methyl Sulfonyl Methane (MSM) or Dimethyl Sulfone2) N,N-Dimethylglycine Hydrochloride (DMG.HCl)3) Skin Creams (CalmCream & MagiCream)4) Supportt – Joint and5) Supportt – Bones

b) Speciality Chemicals:1) Para Quinone Dioxime (PQD)

ii) Segment Revenue, Segment Results, Segment Assets andSegment Liabilities includes the respective amounts identifiable to

each of the segments as also amounts allocated on a reasonablebasis. The expenses, which are not directly relatable to the businesssegment, are shown as Unallocated Corporate Cost. Assets andLiabilities that cannot be allocated between the business segmentsare shown as Unallocated Corporate Assets and Liabilitiesrespectively.






24


Balance Sheet Abstract and Company’s General BusinessProfile

I. Registration Details:Registration No. : 11-65942 State Code : 11Balance Sheet Date : 31.03.2010

II. Capital Raised during the Year(Amount in Rs. Thousands):a. Public Issue Nil b. Rights Issue Nilc. Bonus Issue Nil d. Private Placement Nil

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

Total Liabilities 50599.90 Total Assets: 50599.90Sources of Funds Application of Funds:Paid-up Capital 49961.00 Net Fixed Assets 20380.96Reserves & Surplus 638.90 Investments 736.65Secured Loans — Net Current Assets 3291.32Unsecured Loans — Accumulated Losses 26190.97

IV. Performance of Company(Amount in Rs. Thousands):

Turnover 59207.34 Total Expenditure 60718.71(including Other Income)Profit/Loss before Tax (1511.37) Profit/Loss after Tax (1511.37)Earnings per Share in Rs. (0.30) Dividend Nil

V. Generic Names of Three Principal Products of Company:Item Code No. : 29309090

Product Description : Dimethyl Sulfone (or) Methyl Sulfonyl MethaneItem Code No. : 29146990Product Description : Para Quinone DioximeItem Code No. : 30049011Product Description : Ayurvedic Medicines






Emmessar Biotech & Nutrition LtdRegd. Office: T-3/2, MIDC Area, Taloja - 410 208, Dist. Raigad, Maharashtra.

PROXY FORM

Reg. Folio No. ________________

I/We ________________________________________________________________________________________of ______________________________________ in the District of ____________________________________being a member/members of the above Company appoint* ____________________________________________of ___________________________________ in the District of ___________________________ or failing him_____________________ of _________________________ in the District of __________________ as my/ourproxy to vote for me/us on my/our behalf at the Eighteenth Annual General Meeting of the Company to be held atT-3/2, MIDC Area, Taloja, Dist. Raigad, Maharashtra, at 11 hrs. on 26th June 2010.

Signed this _______________ day of ____________

Note: Signature

This form duly completed and signed should be deposited atthe Registered Office of the Company at least 48 hours beforethe time of the meeting.

Emmessar Biotech & Nutrition LtdRegd. Office: T-3/2, MIDC Area, Taloja - 410 208, Dist. Raigad, Maharashtra.

ATTENDANCE SLIPTo be signed and handed over at the Entrance of the Meeting Hall

(TO BE FILLED IN BLOCK LETTERS)

Full Name of the Member attending _______________________________________________________________Full Name of the First Joint-Holder ________________________________________________________________

(To be filled in if the first-namedjoint-holder does not attend the meeting)

Name of the Proxy _____________________________________________________________________________(To be filled in if proxy form has been duly deposited with the Company)

I hereby record my presence at the Eighteenth Annual General Meeting of the Company to be held at:T-3/2, MIDC Area, Taloja, Dist. Raigad, Maharashtra, at 11 hrs. on 26th June 2010.

Regd. Folio No. ____________No. of Shares held ________ _____________________________

Members’/Proxy’s Signature (To be signed at time of handing over this slip)

BOOK - POST

TO,

If undelivered please return to :EMMESSAR BIOTECH & NUTRITION LTD.29, KAMER BUILDING, 4TH FLOOR,38, CAWASJI PATEL STREET, FORT,MUMBAI 400 001.

RIVERA SYSTEMS22165034 - 22165035

Documents

Emmessar Biotech & Nutrition Ltd.1 Emmessar Biotech & Nutrition Ltd. Notice is hereby given that the Eighteenth Annual General Meeting of the Members of Emmessar Biotech & Nutrition