Finolex cables | Electrical and telecommunication cables

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Board of Directors

P. P. Chhabria Chairman

Dr. H. S. Vachha

B. G. Deshmukh

Atul C. Choksey

Sanjay K. Asher

P. G. Pawar

S. B. (Ravi) Pandit

Pradeep R. Rathi

A. J. Engineer

D. K. Chhabria Managing Director

M. L. Jain Asst. Managing Director and Chief Operating Officer

M. Viswanathan Director - Finance

(Chief Financial Officer)

R. G. D’Silva Company Secretary &

Vice President (Legal)

Bankers Central Bank of India

Bank of Baroda

BNP Paribas

Citibank N.A.

Corporation Bank

HDFC Bank Ltd.

ICICI Bank Ltd.

Standard Chartered Bank

State Bank of India

The Bank of Nova Scotia

Auditors B. K. Khare & Co.

Chartered Accountants

Solicitors Crawford Bayley & Co.

Registered Office 26/27, Mumbai-Pune Road,

Pimpri, Pune 411 018

Tel.: 020-27506200/27475963

42ndAnnual Report 2009-10

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Directors’ ReportTo

The Members

Your Directors are pleased to present their 42nd Annual Report and Audited Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS:

(Rs. in million)

2010 2009

Income 16,428.259 13,924.664

Profit Before Interest, Depreciation, Exceptional Items and Tax 2,191.086 1,265.820

Less : Interest 168.954 300.049

Less : Depreciation 372.270 387.636

Profit Before Exceptional Items and Tax 1,649.862 578.135

Less : Exceptional Items 758.176 878.953

Profit Before Tax 891.686 (300.818)

Less : Provision for Taxation

(a) Current Tax 217.412 —

(b) Deferred Tax 98.014 46.393

(c) Fringe Benefit Tax — 7.700

Profit After Tax 576.260 (354.911)

Surplus brought forward and other adjustments 32.674 423.371

608.934 68.460

APPROPRIATIONS

Proposed Dividend 91.764 30.588

Tax on Proposed Dividend 15.595 5.198

General Reserve 100.000 —

Surplus carried to Balance Sheet 401.575 32.674

608.934 68.460

OPERATIONS

2009-10 has been a year of substantial changes – many parts of Asia, led by India and China have experienced a robust economic recovery from the downturn experienced in the previous year. While at the global level recovery has been slow, the picture in India has been much healthier since:

- there is a stable government in place since the middle of 2009

- economic activity has seen improvement in most sectors

- the country has witnessed a robust GDP growth and the economy is poised for a healthy growth in the coming years

- infrastructure, power, automobile and communication sectors will be powering the projected growth in the upcoming years

Your Company is favorably positioned to take advantage of the opportunities that the economic growth will provide; however a rather poor monsoon and lower agricultural output have had an impact on prices, especially inflation which has been spiraling in recent months. Commodity prices which were subdued during the early part of this financial year, have surged once more, nearing pre financial crisis levels in many cases.

During 2009-10 your Company saw significant improvement in sales volumes across all product lines – electrical cables, optic fibre and coaxial cables saw robust growth in volumes compared to the previous year. Similarly, the product offering to various customer sectors – automotive, agriculture, real estate, power and OEM – all saw healthy volume growth during the year under review.

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FinolexCables Limited

As mentioned above, commodity prices such as in the case of Copper, have surged during the second half of the year under review – keeping in mind the need to reach additional market areas and expand market share, your Company has resorted to price adjustments in the selling prices as was considered appropriate.

Currency markets continued their volatile trend; at the year end, the Indian Rupee had appreciated against most other currencies; however in view of the volatility experienced, your Company had decided not to keep any uncovered exposures on account of foreign exchange – all its current purchases of raw materials from outside India are fully covered as soon as the import is finalized. Foreign currency and interest rate protection measures taken in the earlier years, however continued to produce negative results and an amount of Rs. 758.176 million has been charged as an Exceptional Item to the Profit & Loss Account in the year 2009-10.

Income for the year under review was significantly higher at Rs. 16,428.26 million (previous year Rs.13,924.66 million) representing a growth of 18% over the previous year. Following the robust growth achieved at the sales level, your Company has recorded a Net Profit of Rs. 576.20 million as against a Net Loss of Rs. 354.91 million in the previous year. This represents a significant turnaround in your Company’s operations in almost all areas be it production, sales or finance. Higher capacity utilization, increase in market share, growth in sales volumes across all product lines, tight monitoring of costs and working capital requirement all led to significant improvement in the financials for the year under review. Several cost reduction projects were undertaken and completed successfully during the year incorporating the learnings from the Six Sigma program that employees went through during the earlier years.

Segmentally, while Electrical Cables contributed 60%, Communication Cables contributed 16% to the total sale of products. The Electrical Cables growth was led by the rebound in the Real Estate & Infrastructure sectors and in the Communication Cables segment, Optic Fibre Cables business continued to grow and the order book in this business is currently healthy. With the imminent introduction of 3G services and expansion of internet connectivity to rural areas, it is envisaged that the Communication Cables segment will witness considerable growth in the coming years.

DIVIDEND

Considering the business situation, your Directors have pleasure in recommending an enhanced payment of dividend on equity shares to 30%.The amount thereof per equity share will be Rs 0.60. The total dividend outgo (including dividend tax) will be Rs. 107.36 million.

PROJECTS

The current status of the various projects undertaken by your Company is mentioned in the paragraphs below:

Compact Fluorescent Lamps (CFLs) Project, Urse near Pune

The second production line to manufacture mini CFLs was commissioned during the year under review. The 3rd line to manufacture T5 tubelights with a range of fittings will be commissioned shortly. Upon commissioning the 3rd line, your Company will have an annual capacity of 30 million pieces to offer to the market. Efforts are currently on to increase market penetration through establishment of additional channel partners, introduction of a full range of lighting solutions as per market needs and increased staffing to manage the business. Your Company’s product offerings include standard CFLs, mini CFLs, and T5 tubelights along with a range of fittings to address a complete solution to the end customer. As awareness of the benefits of using green products with a smaller carbon imprint has increased within the country, supported by government initiatives in promoting the use of such products, Your Company believes that demand for such products will increase in the coming years and the capacity created will reach and better its potential.

Urse Plant Projects

Your Company had undertaken to manufacture insulated, underground usage power cables up to 66 kV rating. Necessary product approvals from various authorities including Central Power Research Institute (CPRI), Bureau of Indian Standards (BIS), State Electricity Boards, Government and private bodies, power and infrastructure utilities have now been secured.

During the year under review, Your Company shifted the Low Voltage Power Cables facility from its Pimpri plant to the above facility thereby integrating the manufacturing of the full range of power cables from 1.1 kV to 66 kV) at one facility. This will benefit Your Company in better utilizing its resources.

In view of the massive investments that are taking place within the country in the power and infrastructure sectors, Your Company believes that the demand for power cables will grow substantially in the coming years. To be well positioned to take advantage of the growth in demand, Your Company has embarked on a project to double the existing capacity.

Further the capacity of compounding plant and of various Low Duty Cables (copper based) at Urse is also being enhanced during the current financial year. These measures will bring about a better cost control on the compounds used as well as improve availability of


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a variety of copper cables.

All the above additions are estimated to result in a capital expenditure of about Rs 1000 million during the current financial year.

Uttarakhand Project, Roorkee

During the year under review, this plant has fully stabilised and is currently the major source of production of light duty electrical cables. Further this plant has also established its ability to produce multiple varieties of cables for various applications in agriculture, construction industry, electrical panel wiring, auto cables and consumer electrical goods.

In the month of March 2010, the capacity at Roorkee was enhanced by over 50%. Your Company is very happy to report that the Roorkee facility is now operating at near pre March capacity levels. Achieving these levels, has a significant positive effect on the Company’s financials since the profits from this unit would be tax exempted for the next few years.

Electrical Switches Project

During the year under review, progress was achieved in expanding the basic product range as well as accessories. Further, additional capacity has been created at your Company’s manufacturing facility at Roorkee to take advantage of fiscal benefits.

Your Company is taking steps to expand market reach and create a better distribution network.

Finolex J-Power Systems Private Limited, Shirval near Pune

Civil work on the project has since commenced and is progressing well. The main factory building is expected to be ready in a few months from now. The project is targeted to be completed by the end of the current financial year.

During the year under review your Company along with the JV partner, brought in the second tranche of equity to help finance the project. By the end of the current financial year the third and final tranche of equity would also be subscribed to and the Company’s investment in the joint venture would have reached Rs 380 million.

NEW PRODUCTS

Your Company released for domestic use its newly developed range of “Lead Free” house wiring cables under the brand “Finogard” showcasing your Company’s commitment to generate environmentally friendly products. Further, your Company also developed 50 Ohms RF Coaxial cables for use in mobile telephony connectivity and these cables have now been type approved by BSNL for use in their network. It is envisaged that more such innovations would become an integral part of your Company’s product portfolio in the near future and help generate additional revenue.

EXPORTS

During the year your Company was awarded the Silver Shield in the category of Large Enterprises-Highest Exporter in Thrust Markets for Thrust Products- Award for Special Contribution by the Engineering Export Promotion Council.

Despite the depressed market situation overseas FOB value of exports for the year was Rs. 582.80 million (lower than the previous year’s export value of Rs. 776.23 million). New markets were explored during the year under review and your Company gained some inroads into China and some African countries for the first time.

FINANCE

To finance the capacity enhancement activities undertaken during the year, your Company availed of a long term External Commercial Borrowing (ECB) of USD 10 million. The said loan has an average maturity of 4 years and is repayable in 3 equal yearly installments from 2013 onwards.

Your Company’s short term debt programs continue to enjoy the highest ratings from CRISIL. Since the last few years these have been accorded the P1+ rating. The Company also holds AA/Negative rating for its Rs. 500 million long term non convertible debentures which are due for redemption in August 2010. A similar rating has also been obtained for another Rs. 500 million long term non convertible debentures to be issued at an appropriate time in future.

The Company follows a balanced policy to manage liquidity and borrowing. Owing to tight controls on matching fund requirements with availability, your Company has saved significantly on financial expenses during the year under review. The Company has been able to meet its financial commitments in a timely manner.

IFRS

In accordance with recent guidelines issued, your Company plans to ensure that its accounts are drawn up in compliance with the

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International Financial Reporting Standards (IFRS) with effect from 1st April, 2011. In this connection, your Company has engaged the services of M/s Ernst & Young to train staff and help oversee the transition to the new standards. The transition will also cover modifications necessary to the current ERP and is expected to be completed in the next six months.

ERP SYSTEM

With a view to respond to customer’s needs with promptness, your Company had installed SAP based ERP solution in the year 2000. Initially the solution covered Sales, Finance and Materials modules. In 2008-09 your Company extended the coverage to HR and Costing functions. During 2009-10, Production Reporting and Planning was also covered across all product segments thus integrating the manufacturing process with all other functions. Further, migration to the latest version of SAP (v ECC 6.0) was also undertaken during the year thus ensuring that the most current practices are adopted.

SUPERBRAND STATUS

Your Company continues to hold the “Consumer Superbrand” status since many years now. The Company is the only Indian cable company to have achieved this enviable distinction.

FIXED DEPOSITS

No new fixed deposits have been accepted during the year under review. As on 31st March, 2010, there were unclaimed deposits of Rs. 23,000 with interest accrued thereon till the original expiry date. The Company continues to follow up with the deposit holders at their last known addresses with a view to returning/liquidating the above deposits. Deposits which remain unclaimed beyond the time limits prescribed under law will be transferred to the Investor Education and Protection Fund as and when due.

EMPLOYEES

Your Company recognizes the importance of a motivated and skilled human resource. Your Company endeavors to create a challenging and favorable work environment that encourages entrepreneurial behaviour, innovation and the drive towards business excellence.

Industrial relations continued to be cordial during the year.

The Company had 1,383 permanent employees on its roll as on 31st March, 2010 (previous year 1,340 permanent employees as on 31st March, 2009).

CORPORATE GOVERNANCE

The statement on Corporate Governance is annexed hereto and forms a part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

The focus during the year under review has been in the field of education. The Company continues to support Finolex Academy of Management & Technology which offers engineering courses at Ratnagiri that is affiliated to Mumbai University. International Institute of Information Technology or I2IT as it is known is also patronized by the Company. I2IT offers post graduate MS and MBA courses with various specializations in Advanced Information Technology.

The Company discharges its duties as a responsible corporate citizen and accords importance to legal compliances. It also handsomely contributes to the exchequer.

While all the older plants are environment compliant and hold ISO14001 (Environment Management System) certification, your Company is preparing for its newest plant at Uttarkhand to be similarly certified.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed;

ii) appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the Profit and Loss Account for the year ended 31st March, 2010;

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

iv) the annual accounts have been prepared on a going concern basis.


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ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information on conservation of energy, technology absorption, foreign exchange earning and outgo required to be given pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies Rules, 1988 (Disclosure of Particulars in the Report of the Board of Directors) is annexed hereto and forms part of this Report.

PARTICULARS OF EMPLOYEES

Information as required under the provisions of Section 217(2A) of the Companies Act, 1956 (the Act) and the rules framed there under forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders, excluding the statement of particulars of employees under Section 217(2A) of the Act. Any shareholder desirous of obtaining a copy of the said statement may write to the Company Secretary & Vice President (Legal) at the Registered Office of the Company.

LISTING OF SECURITIES

The Company’s equity shares are listed on the two premier stock exchanges of the country namely Bombay Stock Exchange Limited and National Stock Exchange of India Limited, amongst other stock exchanges. The Company has issued Global Depository Receipts which are listed on the Luxembourg Stock Exchange. The Company’s non-convertible debentures are listed on wholesale debt market segment of the National Stock Exchange of India Limited.

DIRECTORS

Mr Ashok Kumar Puri who hails from New Delhi had been co-opted as an Additional Director by the Board of Directors during the previous year 2008-09 but was unable to continue and held office up to 26th August 2009, viz. the date of the last Annual General Meeting.

Pursuant to his appointment as the Managing Director of Finolex Plasson Industries Limited, associate company, Mr. V. K. Chhabria, a promoter executive Director has ceased as Deputy Managing Director of the Company with effect from close of business hours on 31st March 2010. The Board of Directors places on record its appreciation of the valuable services rendered by Mr. V. K. Chhabria during his tenure of about 12 years as a whole time Director of the Company.

Mr. D. K. Chhabria, Managing Director will be completing his term of appointment on 30th June 2010. The Board of Directors at its meeting held on 30th April 2010 has approved his reappointment for a period of five years. The terms and conditions of his reappointment are being put up to the members for approval. Accordingly, suitable resolution which appears in the notice of ensuing Annual General Meeting has been proposed for consideration.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. S. B. (Ravi) Pandit, Mr. Pradeep R. Rathi and Mr. Sanjay K. Asher retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment. The Board of Directors recommends their reappointment as Directors of the Company.

AUDITORS

M/s B.K. Khare & Company, Chartered Accountants, Auditors of the Company, hold office until conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

ACKNOWLEDGEMENT

Your Directors are grateful to the Central and State Governments, Statutory Authorities, Local Bodies, Banks and Financial Institutions for their cooperation and support. Your Directors warmly acknowledge the faith and confidence reposed in the Company by its channel partners, dealers, customers, and Real Estate Organisations in suportings its business activities and growth. Your Directors express their gratitude to the other business associates of the Company for their unstinting support. Your Directors value the commitment of the employees towards the Company and appreciate their valuable contributions for the progress and growth of the Company. Last but not the least your Directors are thankful to the Members for extending the trust and confidence shown.

For and on behalf of the Board of Directors

P.P. ChhabriaChairman

PuneDated : 30th April 2010.

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Annexure to Directors’ ReportCOMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 :

A. Conservation of Energy :

a) Energy Conservation measures :

i) Less efficient Eddy Current Couplings replaced by energy efficient AC Drives.

ii) Use of solar power for heating water in canteen.

iii) Pipe line in 3CFC lines modified for effective utilization of chilled water to reduce total chiller compressor runtime.

iv) Installation of energy efficient FRP fan blades in cooling tower.

v) Energy Efficient Metal Halide light fittings provided in shop floor in place of 250 W HPML lamps.

vi) Auto control ON-OFF provided to street lights.

vii) Improved preventive maintenance of machines to reduce energy loss.

b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy :

Various proposals / measures for reducing energy consumption are under consideration.

c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:

Impact has not been separately measured.

d) Total energy consumption and energy consumption per unit of production as per Form A in respect of industries specified in the schedule thereto:

Not applicable.

B. Technology Absorption :

Efforts made in technology absorption as per Form B are as follows :

Form for disclosure of particulars with respect to Absorption, Research and Development (R&D)

1. Specific areas in which the Company is pursuing R & D efforts :

(a) Following new cables have been designed, developed and type approvals obtained/successfully launched in the market :

(i) Lead Free FR-HR Finogard Cables.

(ii) Radio Frequency Cable – 50 Ohms for use in mobile communication.

(iii) Co-axial cable – 75 Ohms (for CATV).

2. Benefits derived as a result of the above R&D :

The aforesaid newly developed products have been introduced in the market and give significant benefits in terms of quality, better performance of the end-user application and import substitution.

3. Future plan of action:

— To develop HFFR compound.

— To develop cross-linkable HFFR cables for high temperature working.

— To develop super flex cable and Aluminium cable in RF cables product range

— To develop Rubber based 3 Core Flat and Flexible cables

— To develop CAT7 LAN cables with higher bandwidth

— To develop cost effective FTTH Cables.


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4. Expenditure on R & D

(a) Capital } The development work is carried on

(b) Recurring } by the concerned departments on

(c) Total } an ongoing basis. The expenses

(d) Total R & D expenditure as } and the costs of assets are grouped

a percentage of total turnover } under the respective heads.

Technology Absorption, Adaptation and Innovation :

1. Efforts in brief, made towards technology absorption, adaptation and innovation :

(a) Imported snout of holding furnace modified and replaced by local make snout to prevent copper solidification in entry passage.

(b) Burner weldments of the shaft furnace have been modified to allow taper screens in place of parallel screens thereby eliminating jamming of screens in weldment and reduction in effort and time required to change screens.

(c) Continuous efforts are going on for further developing, improving and upgrading all types of cables.

2. Benefits derived as a result of the efforts e.g. product improvement, cost reduction, product development, import substitution etc.:

Several tangible and intangible benefits from new technology are derived such as cost reduction, productivity, development of new products, import substitution and better customer services. Development and manufacture of new products with enhanced features will extend the product range of the Company, enabling it to cater to different customer needs.

3. Imported technology (imported during the last 5 years reckoned from the beginning of the financial year) :

a) Technology Imported : Nil

b) Year of Import : Not applicable

c) Has technology been fully absorbed ? : Not applicable

d) If not fully absorbed, areas where this

has not taken place, reasons therefor,

and future plans of action : Not applicable

C. Foreign Exchange Earnings and Outgo :

The Company is strongly focused in strengthening efforts to improve earnings from its business in the international markets. A variety of cables are exported and the Company is continuously striving to increase its bouquet of products that cater to the export markets. With its key strengths of strong and diversified manufacturing background of last few decades, access to and availability of best breed technology and its products conforming to international standards the Company has been offering customized cable solutions to its international customers and is poised to take advantage of opportunities that are presented in the highly competitive export markets. Your Company has been aggressively pursuing new markets for increasing exports of standard products as well as new products.

i) Earnings by way of Exports : Rs. 582.803 million

ii) Outgo by way of Imports : Rs. 1,635.293 million

For and on behalf of the Board of Directors

Pune P. P. ChhabriaDated : 30th April 2010 Chairman

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MANAGEMENT DISCUSSION AND ANALYSIS1. BUSINESS OF THE COMPANY:

There are two main segments in which the Company participates - Electrical Cables and Communication Cables. Further, the Company manufactures Continuous Cast Copper Rods (CCC rods), essentially for captive consumption; however a part of the production of CCC rods is sold. Besides the above, the Company has over the last few years, expanded its product range to include Electrical Switches and Compact Fluorescent Lamps (CFLs). The Company also manufactures PVC Sheets for various applications like roofing, signage and interiors.

1.1 Main Segments:

The Company is the leading domestic manufacturer of electrical and communication cables with a wide product range. The Company offers a ‘Total Cable Solution’. The broad segmentation of the products manufactured by the Company is as follows:

Group Products Covered ApplicationElectrical Cables 1100 V PVC insulated cables Electrification of residential, commercial and

industrial establishments, electrical panel wiring and consumer electrical goods.

Motor winding PVC insulated cables and 3 core flat cables

Submersible pumps and electrical motors.

Automotive/battery cables Wiring harness for automobile industry and battery cables for various applications

UPS cables For providing power from the UPS to the computer/appliances in the networking environment.

Heavy duty, underground, low voltage, power and control cables

Connection to the user point from main supply of power.

Heavy duty, underground, high voltage, power cables

Intra-city power distribution network

Communication Cables Jelly filled telephone cables (JFTCs) Telephone line connections to exchanges and users.

Local area network (LAN) cables Indoor and outdoor networking, voice and data transmission, broadband usage.

PE insulated telephone cables (Switchboard cables)

Telephone instrument connections to EPABX.

Coaxial cables Cable TV network solutions, microwave communications, mobile towers.

Optic fibre Principal raw material for optic fibre cables.Optic fibre cables For use in networks requiring high speed

transfer of large bandwidth due to voice, image and data transmission.

V-SAT cables For connecting V-SAT dish to base station.Copper Rods CCC rods of 8 mm diameter Raw material for manufacture of copper based

cables.Electrical Switches Premium & classic switches, sockets,

regulators, etc.Domestic lighting, hotels, shops, offices, corridors.

Compact Fluorescent Lamps (CFLs)

Retrofit & non-retrofit lamps Domestic lighting, hotels, shops, offices, corridors.

PVC Sheets PVC corrugated sheets, foam sheets and rigid sheets

Industrial roofing, wall cladding, signage boards, partition boards, exhibition display boards and false roofing.

The Company’s product application range is thus for electrical usage, transmission of voice, data and images (contents) for domestic, commercial and industrial applications to electrical products, touching every person in his daily life.


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1.2 Revenue Break up (inclusive of Excise Duty) :

Segment-wise revenue breakup for the last two years is as follows:

2. REVIEW OF OPERATIONS:

• Production of electrical cables during the year under review was at 1,152.01 TCKM (thousand core kilometers) (previous year: 782.48 TCKM). Production of metal based communication cable was 516.17 TCKM (previous year 896 TCKM). Production of optic fibre during the year was 8,67,911 fibre kilometers (previous year: 4,49,320 fibre kilometers).

• The sale value (including excise duty) of electrical cables was Rs 11,093 million (previous year: Rs 8,824 million) and of Communication cable was Rs 1,761 million (previous year: Rs 2,569 million).

• The sale of CCC rods (net of interdivisional transfers) was higher at Rs 3,615 million (previous year: Rs 2,939 million).

• Exports were lower at Rs 583 million as against Rs 776 million of the earlier year.

• The income from operations (including excise duty) was Rs 17,266 million for the year under review as compared to Rs 15,015 million for the earlier year.

• High voltage power cables (up to 66 kV range) produced at the Company’s Urse plant are now being well received in the market. The plant has now stabilized and capacity utilization continues to improve. During the year under review Company obtained its products approvals from Central Power Research Institute (CPRI), Electrical Research & Development Association (ERDA). Company also obtained approvals from various Electricity Boards, Power utility companies in the private sector, electrical contractors and other major private users. Looking at synergy opportunities, the Company shifted its Low voltage power cables operations also to the Urse site from Pimpri. This has led to better coordination and cost optimization – full benefits of the synergies will begin to flow from the current financial year.

• Civil work on the Joint Venture with J-Power Systems Corp. of Japan to manufacture Extra High Voltage cables (between 60kV to 500 kV) is progressing well. The main factory building is expected to be ready in a few months from now. The project is targeted to be completed by the end of the current financial year.

• The second production line to manufacture mini CFLs was commissioned during the year under review. The 3rd line to manufacture T5 tubelights with a range of fittings will be commissioned shortly. Upon commissioning the 3rd line, your Company will have an annual capacity of 30 million pieces to offer to the market. Efforts are currently on to increase market penetration through establishment of additional channel partners, introduction of a full range of lighting solutions as per market needs and increased staffing to manage the business.

• In the month of March 2010,the capacity at Roorkee was enhanced by over 50%. Currently the Roorkee facility is now operating at near pre March capacity levels. This plant has also established its ability to produce multiple varieties of cables for various applications in agriculture, construction industry, electrical panel wiring, auto cables and consumer electrical goods.

• During the year your Company was awarded the Silver Shield in the category of Large Enterprises-Highest Exporter in Thrust Markets for Thrust Products- Award for Special Contribution by the Engineering Export Promotion Council.

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• A reference may please be made to the financial statements.

3. KEY STRENGTH AREAS:

3.1 Leading Manufacturer

The Company is India’s leading manufacturer of electrical and communication cables with a wide product range. This status not only helps the Company in terms of economies of scale, but as a market leader it is well positioned to reach out to new customers, both domestic and international.

3.2 Technical Superiority of Products

The Company lays a lot of emphasis on maintaining superiority status in terms of quality and product features through in-house research and development. The Company has defined quality assurance processes and strives for improvement in products. This product advantage is key reason why the Company has been able to carve out a niche position for itself in the market. Consistent efforts have been made each year to not only protect and enhance product quality but also add better features and ensure wider application.

3.3 Extensive Distribution Network

The Company has created a strong and dependable distribution network of channel partners and dealers, spreading across the country. The distribution network also includes commission agents/dealers appointed in the overseas market. The intention is to service the customer at his doorstep. Not only has the distribution network been built, the Company undertakes a periodical review of it for up gradation and expansion. The domestic distribution network is well supported by branch offices and depots opened by the Company at a number of locations throughout the Country.

3.4 Backward Integration

The Company manufactures CCC rods used as principal raw material for copper based electrical and communication cables. The Company makes its own compounds using PVC resin of different grades and formulations tailored specially for high performance cables. The Company manufactures FRP rods and draws its own fibre for fibre optic cables. These backward integration measures help in product differentiation and facilitate maintaining desired quality of products for superior consistent performance besides ensuring timely supply of the raw material.

3.5 ERP System

With a view to respond to customer’s needs with promptness, Your Company had installed SAP based ERP solution in the year 2000. Initially the solution covered Sales, Finance and Materials modules. In 2008-09 your Company extended the coverage to HR and Costing functions. During 2009-10, Production Reporting and Planning was also covered across all product segments thus integrating the manufacturing process with all other functions. Further, migration to the latest version of SAP (v ECC 6.0) was also undertaken during the year thus ensuring that the most current practices are adopted.

3.6 Super brand Status

The Company is the only Indian cable company which holds the coveted Super brand status since the year 2004.

3.7 Export potential

The Company’s products meet the requirement of international standards and thus are capable of geographical penetration. The Company has its presence in the international market for sometime now. The Company has been exporting light duty electrical cables, LAN cables, optic fibre cables, copper telephone cables and a variety of customised cables. With the best technology products in its armory, the Company is putting a greater thrust on exports. During the year under review newer markets were explored and the Company made its first inroads into China.

3.8 Total Cable Solution

The Company is probably the only one of its kind in the country to offer a “Total Cable Solution”. Different types of electrical cables are produced using copper as the core conductor. Various types of communication cables are produced using copper as well as optic fibre as the primary medium of transportation of signals. Different types of low voltage and high voltage power cables are produced using aluminum or copper as the core conductor. The Company keeps on introducing new cable varieties besides upgrading the existing cable varieties. The Company has the ability to produce customised cables.

The Company manufactures electrical products namely electrical switches and CFLs which are germane to electrical cable


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business of the Company. Due to its product portfolio, the Company has the advantage of operating in multiple market segments simultaneously. The Company is well placed to leverage its position for a distinct competitive advantage.

4. Growth Drivers:

The Company’s position as the market leader is due to its persistent efforts and emphasis in the following areas:

Product quality

Continuous product improvement

Introduction of new products through in-house developments

Creating customer preferences

Competitive pricing and extremely competitive cost structure

Dynamic approach to situations

Strong and dependable distribution channel spread all over the Country.

5. BUSINESS ENVIRONMENT :

The segment-wise discussion on the markets which are served by the Company is as follows:

5.1 Electrical Cables

Electrical cables can be further categorised into light duty electrical cables, power and control cables.

(i) Light duty electrical cables include electrical wires used extensively for electrification of residential, commercial and industrial establishments, electrical panel wiring in industrial establishments and major equipments, consumer durable goods, automobiles, agricultural pump sets, small generator applications besides general lighting purposes.

(ii) In power cable category, the Company has the ability to manufacture such cables within the range 1.1 kV to 66 kV. These cables are either low voltage or high voltage cables depending upon their applications; however, always meant for underground usage. Power and control cables upto 3.3 kV rating are used for connecting user point to the main supply of power. Power cables above 3.3 kV rating are meant for use in underground application for intra-city electricity distribution network. The Company manufactures insulated power cables only. These cables meet the requirements of international standards.

Performance

For the year under review, the electrical cables registered sales (inclusive of excise duty) of Rs. 11,093 million against Rs. 8,824 million of the previous year

Outlook

Electrical cables are the main focus area of business for the Company. It accounted for 60% of total sales for the year under review. Growth during the year under review was driven by the improvement shown by the real estate sector, automobile industry, power and infrastructure sectors. Further general economic improvement witnessed during the year also reflected in the volume improvement across all applications which the Company’s products cater to. The Union Budget of 2010-11 places great importance on infrastructure development and substantial funds have been allocated – this in turn should lead to improved business opportunities for the Company’s power cables. Implementation of a unified GST across the country over the next years would further remove any fiscal imbalance and create an environment for accelerated business development. The long term out look for this sector remains positive.

The Company faces two principal risks in this business. The Indian electrical cable industry is characterised by a large unorganized sector. Besides, there are smaller, regional players creating electrical cables business to be highly competitive. The first and foremost risk the Company faces is of competition from unorganized sector( that largely produces inferior quality products but at very cheap prices) and smaller and regional players. The Company has been dealing with the competitive forces through its organized business approach by providing superior quality products, safe products and maintaining high standards of service levels with its customers. The Company enjoys the advantages of economies of scale and backward integration. The Company evolves innovative business practices and adopts a dynamic approach for handling the competitive business situations. Earlier the introduction of VAT and in future implementation of a robust GST

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system will help in bringing in a level playing field that will ensure fair competition. The other risk is of raw material price movements which can occasionally be sharp. Though the Company endeavors to pass on the price effect to the customers, there has always been a time lag between the price movement and the passing thereof which could benefit or dis-benefit the Company for the lag period or otherwise. The Company negotiates price variation contracts with bulk buyers. The Company has been fair in dealing with its customers and accordingly enjoys customer confidence in pricing decisions.

5.2 Communication Cables

The communication cables comprise of state of art, new generation communication cables and traditional telephone cables.

(i) The state of art communication cables are either copper based or glass based. The copper based cables include LAN cables, coaxial cables, PE insulated switchboard cables and V-SAT cables. These cables are used for last mile connectivity. LAN cables are used in high speed networks, Coaxial cables are used to provide content input to TV receiving sets and in microwave communications and mobile towers, PE insulated switchboard cables are used to connect telephone instruments to an EPABX system and V-SAT cables find their application in V-SAT towers to connect the dish to the base station.

Optic fibre cables are glass based cables and they have the maximum bandwidth and speed. Certain cable designs are used as trunk cables in long distance networks while other designs are used in distribution, whether by telecom companies, multi-service organisations or other service providers.

Communication cables which carry, voice data or images is the backbone of an economic activity. The speed and bandwidth determine the capabilities of a communication network.

(ii) Traditional telephone cables include JFTCs which are laid underground and are used for connecting land line telephones to exchanges. These are copper based cables. With introduction of mobile telephones in India and due to substitution by optic fibre cables, JFTC business has lost its value. Nevertheless, JFTC continues to remain a preferred option for last mile connectivity in fixed line telephones. The demand for JFTCs may continue to remain modest. The Company would continue to manufacture JFTCs especially with broadband features for public sector and private sector telecom companies and to meet the export demand. The Company has the capability to make JFTCs as per customer’s needs.

Performance:

The communication cables segment (including optic fibre) recorded sales (inclusive of excise duty) of Rs 1,761 million for the year under review against Rs. 2,569 million for the earlier year. During the year under review there was no supply of JFTC to prime users in the country such as BSNL/MTNL since no tenders were floated/finalized by them. Consequently this segment shows degrowth.

Outlook:

Over the last few years the teledensity in India has improved considerably and telephone and general communication connectivity is growing at a very fast pace. Further with the imminent introduction of high end services such as 3G and the impetus from the Government in providing better and faster internet access to rural India, demand for the products produced by the Company will be high for the foreseeable future. The economic development requires inter-alia, a strong, dependable and sustainable communication network. The Company’s communication cables meet with the requirement of local as well as international standards and therefore, find ready acceptance with domestic customers as well as in the exports market. The outlook here, too, is positive.

The risks of competition and copper price movements similar to the electrical cables business are also applicable to the business of communication cables. The varying global demand-supply equation of optic fibre and resultant price movement thereof; availability of preforms and price thereof and delay/slow-down in investment into networks by telecom companies/service provider and other relevant entities due to global slow-down pose risk to the business of communication cables. The Company has increased its supplier base to reduce the risk of dependence on a single source; further price contracts are negotiated on yearly basis with the intent of evening out volatility in prices.

5.3 Copper Rods

The copper rod is the feed stock for copper based electrical and communications cables. The Company manufactures its own copper rods. The base material for producing copper rods is copper cathodes, the bulk of which are procured from local manufacturers under supply agreements. A smaller portion of the requirement of copper cathodes is imported as and when needed. After meeting the in-house requirement of copper rods, the balance capacity to produce copper rods is allocated for third party sale.


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Performance:

During the year under review, the CCC rods division recorded a production volume of 35,844 metric tones against 34,310 metric tones for the earlier year. The sales were Rs. 9,986 Million (previous year Rs. 7,377 million) of which Rs. 3,615 million were sales to third parties (previous year Rs. 2,939 million) and balance was inter-divisional transfers. The volatility which had been observed in copper prices in the earlier period continued during the year under review. The monthly average LME copper price (CSP) varied between a high of USD 7,900 per metric tonne to a low of USD 4,500 per metric tonne.

Outlook:

The copper rod production is mainly for in-house consumption. The Company’s steps to set up new plants for cables as well as to expand the cable capacity at the existing plants will boost up the captive consumption of copper rods. Further the copper requirements of the joint venture with J-Power Systems Corp. of Japan will also be partially met from the Company’s copper set up, once the joint venture commences production. Accordingly the utilization of capacity at copper rod plant is expected to improve in coming years.

5.4 Electrical Switches and CFLs

The manufacture and sale of these electrical products act as a logical extension of the cables business of the Company. They have the backing of Finolex name, assuring the customer of quality, safety and performance standards. These electrical and lighting products are sold through the existing well-spread distribution network of cables. Other distribution avenues are also being explored to penetrate further in the market. Products have been well accepted by the market.

On its part to contain the effects of global warming, the Government is promoting use of CFLs. Keeping in mind the expected growth in CFL demand the Company has been expanding the CFL manufacturing capacities.

5.5 PVC Sheets

PVC Sheets may be classified as corrugated flat sheets and rigid sheets. Corrugated sheets are used for roofing. Flat sheets are used for partition, exhibition, false roofing, wall cladding, display board and signage. The Company also manufactures rigid sheets which find application in chemical industry for manufacture of tanks and other handling system for corrosive chemicals and gases. PVC sheets are light in weight, anti-corrosive and clean. The Company manufactures them in various thicknesses, profiles and colours. PVC sheets are meant for substituting asbestos sheet (which may be carcinogenic) and metal sheets (which are corrosive).

Performance:

During the year under review, the PVC Sheets division recorded production volume at 1,357 metric tonnes as against 1,507 metric tonnes for the earlier year. The sales (inclusive of excise duty) were Rs. 141 million, as against Rs. 169 million, for the earlier year.

Outlook:

The business of PVC sheets is not growing as expected due to availability of cheaper substitutes (though not recommended) like asbestos sheet, corrugated metal sheets, etc. The domestic market is extremely competitive. There exists an overseas demand for PVC sheets and the Company exports PVC sheets in modest quantity. The infrastructure at the sheet division is also being utilized to house PVC compounding as the infrastructure is best suited to derive maximum benefits.

5.6 Summary

The Company’s main business which comprises of manufacture of electrical cables and communication cables is closely linked to the economic development of the country. India is coming of age and thriving to progress and convert herself into a developed nation. This crusade for development requires substantial spending on infrastructure for development and up gradation. Addition to power generation capacity, spending on construction, industrialization, urbanization, increase in consumption expenditure, laying, up gradation and modernization of communication network and the like are the indicators for growing cable business. The governmental initiative on rationalizing commercial taxation system like VAT and consolidating different business and commercial taxes into a single point tax system like Goods and Services Tax (GST) should give a business boost to the manufacturers in the organized sector like your Company. Copper rod consumption shall increase due to increase in business of copper based electrical and communication cables. The Company is also desirous of increasing copper rod sale to other consumers. Electrical switches and CFL businesses are steadily gaining firmer roots in the market. The business of PVC sheets is closely linked to the customer preference for a better quality product. The Company’s products satisfy the Indian and international standards’ requirements. Looking futuristically, the

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Company has undertaken expansion of manufacturing capacities. The Company has added high voltage power cables to its range of electrical cables. Through a joint venture the Company is entering into the business of extra high voltage power cables hitherto not within the Company’s domain.

Thus the Company is committed to expanding its business activities in an optimal manner. The Company has resources available at its disposal to implement and realize its business goals.

6. RISK MANAGEMENT DOCUMENT:

The Company has a Risk Management Document in place The Document defines the risk policies, lays out the risk strategies and methodology to decide on the risk taking ability of the organisation. The Document has been recently reviewed and amended as appropriate in line with the current assessment of various risks associated with the Company’s business.

7. INTERNAL CONTROL SYSTEM:

The Company has evolved a system of internal controls which is adequate to its size and nature of business operations. The internal control systems are designed to ensure desired level of control over the transactions. The company reviews and upgrades internal control system periodically. In addition to internal control system, there exists a system of internal audit. The internal audit is conducted under the guidance and advice of the Audit Committee comprising of independent directors. The internal audit thus plays an important role as it conducts audit of all key business areas as per a pre drawn and approved audit plan. The internal audit, amongst other things, looks at internal controls and procedures, reports to the Audit Committee non-compliances and gives suggestions for strengthening the internal controls. All audit observations, reviews and follow-up actions are reported to the Audit Committee. The Audit Committee met 8 times during the year under review.


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Financial summary for ten years (Rs. In million) 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10PROFIT AND LOSS ACCOUNT DATAGross Revenue ++ 6,279 6,750 5,189 5,689 6,701 8,899 12,055 16,270 15,525 17,507 Materials and manufacturing cost (including excise duty) 4,313 4,876 3,682 4,132 5,191 6,855 9,557 13,068 12,429 13,573 Employee cost 230 261 251 292 254 326 355 497 533 592 Administration & selling expenses 424 502 493 461 520 660 750 1,033 2,152 1,891 Extra ordinary Items — — — 37 — — — — — — Depreciation 190 222 235 263 259 313 264 265 388 372 Interest and finance charges 196 164 246 178 106 128 159 204 324 187 Profit before tax 926 725 282 326 371 617 970 1,203 (301) 892 Taxation 201 65 35 30 63 113 280 314 54 315 Profit after tax 725 660 247 296 308 504 690 889 (355) 576 Dividend (including tax on dividend distribution if applicable) 284 230 104 138 157 209 251 268 36 107

BALANCE SHEET DATAShare capital 343 343 306 306 306 306 306 306 306 306 Reserves 5,545 5,526 4,923 5,080 4,702 5,055 5,495 6,109 5,656 6,125 Net worth 5,888 5,869 5,229 5,386 5,008 5,361 5,801 6,415 5,962 6,431 Loan Funds 1,047 1,223 2,036 1,880 1,321 2,343 2,653 2,876 2,959 2,751 Deferred Tax (Net) — 213 285 295 184 213 208 175 221 319 Total Liabilities 6,935 7,305 7,550 7,561 6,513 7,917 8,662 9,466 9,142 9,501 Gross Block 3,102 4,211 4,596 4,777 4,126 4,753 5,807 6,773 8,022 8,313 Net Block 2,049 2,872 3,074 3,006 2,118 2,288 3,079 3,784 4,557 4,476 Investments 2,137 2,012 2,318 3,067 2,491 2,722 2,833 3,168 3,141 2,802 Net current assets 2,749 2,421 2,144 1,488 1,904 2,907 2,750 2,514 1,444 2,223 Miscellaneous Expenditure (to the extent not written off or adjusted) — — 14 — — — — — — — Total Assets 6,935 7,305 7,550 7,561 6,513 7,917 8,662 9,466 9,142 9,501

KEY RATIOSGrowth in Revenue (%) 9.0 7.5 (23.1) 9.6 17.8 32.8 35.5 35.0 (4.6) 12.8 PAT to Revenue (%) 11.5 9.8 4.8 5.2 4.6 5.7 5.7 5.5 (2.3) 3.3 Return on Net Worth (%) 12.3 11.2 4.7 5.5 6.2 9.4 11.9 13.9 (6.0) 9.0 Earnings per Share Rupees 4.2 3.8 1.6 1.9 2.0 3.3 4.5 5.8 (2.3) 3.8 (for face value of Rs.2/- each)Asset Turns (Revenue to Total Assets) 0.9 0.9 0.7 0.8 1.0 1.0 1.4 1.7 1.7 1.8Return on CapitalEmployed (%) 16.3 12.3 6.2 6.5 6.7 10.1 13.5 15.4 (0.01) 11.4 Debt to Equity Ratio 0.2 0.2 0.4 0.4 0.3 0.4 0.5 0.4 0.5 0.4 Dividend (incl. Dividend Tax) Distribution to PAT(%) 39.1 34.8 41.9 46.7 51.0 41.5 36.4 30.1 (10.1) 18.6Note : ++ Comprises Income From Operations (including excise duty) and Other Income

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Auditors’ ReportTo the Members of Finolex Cables Limited.

We have audited the attached Balance Sheet of Finolex Cables Limited as at 31st March 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

We report as follows:

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

2. Further to our comments in the Annexure referred to in paragraph 1 above:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us;

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

e) On the basis of the written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as Director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, read together with the Company’s Accounting Policies and the Notes thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as on 31st March, 2010

ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

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

For B. K. Khare & Co. Chartered Accountants

U. B. JoshiPlace: Pune PartnerDated: 30th April , 2010 Membership No. 44097

Firm Registration No. 105102W


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Annexure to the Auditors’ ReportReferred to in paragraph 1 of our Report of even date:

i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The Company is still in the process of completing the reconciliation of Physical Inventory of Fixed Assets with book records.

c) During the year, Company has not disposed of any substantial/major part of fixed assets.

ii. a) As explained to us, the inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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

c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of inventory, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been properly dealt with in the books of account.

iii. a) According to the information and explanations given to us and on the basis of our examination Company has granted a loan to the following party covered in the Register maintained under Section 301 of the Companies Act, 1956;

Name of the Party Relationship Maximum Amount (Rs. Million)

Outstanding as on 31/3/2010 (Rs. Million)

Finolex Infrastructure Ltd. Associate Company 33.50 28.40

b) According to the information and explanations given to us, and as represented by the Company, the rate of interest and other terms and conditions of loan granted to the above party are not prima facie prejudicial to the interest of the Company.

c) According to the information and explanations given to us, Company has been regular in receipt of interest to whom the loan is granted.

d) According to the information and explanations given to us, there is no overdue amount of loan granted from the parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to the purchase of inventory and fixed assets, and with regard to the sale of goods. During the course of our audit, no continuing failure to correct major weakness has been noticed in the internal controls.

v. In respect of transactions entered in the register maintained in pursuance of section 301 of the Companies Act 1956,

a) Based on audit procedures applied by us, to the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements have been entered in the register required to be maintained under Section 301.

b) According to the information and explanations given to us and excluding certain transactions of purchase of goods and material of special nature for which alternate quotations are not available, in our opinion, the contracts or arrangements have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vi. In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and therefore, the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and Rules there under are not applicable to the Company.

vii. In our opinion, the Company has an internal audit system commensurate with the size and the nature of its business.

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viii. We have broadly reviewed the books of account maintained by the Company relating to the manufacture of cables, conductors and compact florescent lamps pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

ix. a) According to the records of the Company and information and explanations given to us, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues with the appropriate authorities during the year.

b) According to the records of the Company and information and explanations given to us, dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and cess which have not been deposited on account of disputes and the forum where dispute is pending as under:

Name of Statue Nature of Dues Amount (Rs.in Million)

Period to which amount relates

Forum where dispute is pending

Sales Tax Act Sales Tax demand 0.403 F.Y.1992-93 Appellate Tribunal Sales Tax demand 0.560 F.Y.1993-94 Appellate Tribunal Sales Tax demand 0.070 F.Y.1999-00 Dy. Commissioner (Appeals) Sales Tax demand 0.060 F.Y.2001-02 Dy. Commissioner (Appeals)

Sales Tax demand 4.427 F.Y.2002-03 Jt. Commissioner (Appeals) Sales Tax demand 2.203 F.Y.2002-03 Asstt. Commissioner (Appeals) Sales Tax demand 5.484 F.Y.2003-04 Jt. Commissioner (Appeals)

Sales Tax demand 12.241 F.Y.2003-04 Appellate TribunalSales Tax demand 0.805 F.Y.2004-05 Jt. Commissioner (Appeals)Sales Tax demand 17.195 F.Y.2005-06 Asstt. Commissioner (Appeals)Sales Tax demand 345.550 F.Y.2006-07 Asstt. Commissioner (Appeals)

x. The Company does not have accumulated losses as at the end of the year and the Company has not incurred cash losses during current and the immediately preceding financial year.

xi. Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

xii. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiv. a) Based on the records examined by us and according to the information and explanations given to us, we are of the opinion that the Company is maintaining proper record of the transactions and contracts of dealing in shares and securities and that timely entries have been made in these records.

b) Based on our audit procedures and to the best of our knowledge and belief and according to the information and explanation given to us, the shares and securities have been held by the Company in its own name.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from banks and financial institutions.

xvi. To the best of our knowledge and belief and according to the information and explanation given to us, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained.

xvii. According to the Cash Flow Statement and records examined by us and according to the information and explanations given to us, on overall basis, funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.


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xviii. The Company has not made any preferential allotment to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956, during the year and the question of whether the price at which the shares have been issued is prejudicial to the interest of the Company does not arise.

xix. According to the information and explanations given to us and the records examined by us, security or charge has been created in respect of the debentures issued.

xx. The Company has not raised money by any public issues during the year and hence the question of disclosure and verification of end use of such money does not arise.

xxi. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company was noticed or reported during the year.

For B. K. Khare & Co. Chartered Accountants

U. B. JoshiPlace: Pune PartnerDated: 30th April, 2010 Membership No. 44097

Firm Registration No. 105102W

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Balance Sheet as at 31st March, 2010

(Rs. in million)Schedule 2010 2009

Sources of FundsShareholders’ Funds :Share Capital 1 305.879 305.879 Reserves & Surplus 2 6,125.195 5,656.294

6,431.074 5,962.173

Loan Funds : Secured Loans 3 2,465.690 2,524.484 Unsecured Loans 4 285.491 434.160

2,751.181 2,958.644

Deferred Tax Credit (Net) 319.136 221.122 Refer Note 5 - Schedule 15

9,501.391 9,141.939 Application of Funds Fixed Assets :Gross Block (including Capital WIP) 5 8,312.839 8,021.797 Less : Depreciation 3,837.020 3,464.789 Net Block 4,475.819 4,557.008

Investments 6 2,802.746 3,140.993 Current Assets, Loans & Advances : 7Inventories 2,209.498 1,435.957 Sundry Debtors 710.471 576.674 Cash & Bank Balances 371.621 281.224 Loans & Advances 857.220 864.002

4,148.810 3,157.857 Less: Current Liabilities and Provisions : 8Liabilities 1,780.410 1,629.209 Provisions 145.574 84.710

1,925.984 1,713.919 Net Current Assets 2,222.826 1,443.938

9,501.391 9,141.939 Notes 15

As per our report of even date

For B. K. KHARE & COMPANY P.P. Chhabria D.K. ChhabriaChartered Accountants Chairman Managing Director

Dr. H.S. Vachha M.L. JainU.B. Joshi R.G.D’Silva B. G. Deshmukh Asst. Managing Director andPartner Company Secretary & P. G. Pawar Chief Operating OfficerMembership No. 44097 Vice President (Legal) P.R. Rathi

A.J. Engineer

Pune: 30th April, 2010 Pune: 30th April, 2010


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Profit and Loss Account for the year ended 31st March, 2010




A.J. Engineer


(Rs. in million)Schedule 2010 2009

Income:Income from Operations 9 17,265.954 15,015.484 Less : Excise Duty 1,078.798 1,600.412

16,187.156 13,415.072 Other Income 10 241.103 509.592

16,428.259 13,924.664 Expenditure:Materials & Manufacturing 11 12,494.466 10,829.008 Personnel Expenses 12 592.256 533.204 Other Expenses 13 1,890.711 2,151.599 Finance Charges 14 186.870 324.035 Depreciation 372.270 387.636

15,536.573 14,225.482

Profit Before Tax 891.686 (300.818)Less : Provision for Taxation

Current Tax (includes prior years Rs. 87.172 millions) 217.412 — Deferred Tax (Net) 98.014 46.393 Fringe Benefit Tax — 7.700

Profit After Tax 576.260 (354.911)Add : Surplus brought forward 32.674 423.371 Balance Available for Appropriation 608.934 68.460 AppropriationsProposed Dividend 91.764 30.588 Tax on Proposed Dividend 15.595 5.198 General Reserve 100.000 —

207.359 35.786 Surplus Carried to Balance Sheet 401.575 32.674 Earnings Per Share Basic & Diluted (face value Rs.2 each) 3.77 (2.32)Profit after Tax available for equity shareholders 576.260 (354.911)No. of Shares used in computing Earnings per Share (Basic Diluted) 152,939,345 152,939,345 Notes 15

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(Rs. in million)2010 2009

A. Cash Flow from Operating ActivitiesNet profit Before Tax 891.686 (300.818)Adjustments for :Depreciation (Net) 372.270 387.636 Surplus on reversal of impairment of Optic Fibre Assets 0.000 (271.298)Provision for Short Term Compensated Absences 1.686 5.062 Income from Investments (0.244) (0.436)Dividend Income (42.498) (125.123)Interest Income (20.858) (39.965)Loss / (Profit) on : Sale of Fixed Assets (0.042) 2.106 Loss / (Profit) on : Sale of Investments (119.173) (33.832)Loss / (Profit) on : Forex Transactions 737.273 1,094.391 Interest Cost 168.954 300.049 Diminution / (increase) in value of Investments (20.748) 42.630

1,076.620 1,361.220 Operating Profit before Working Capital Changes 1,968.306 1,060.402 Adjustments for Working Capital Changes :Trade and Other Receivable 62.770 606.106 Inventories (773.541) 924.801 Trade Payable 138.806 (16.167)

(571.965) 1,514.740

Cash generated from Operations 1,396.341 2,575.142 Tax refund / (Paid) (407.197) (156.042)Net Cash Flow from Operating Activities 989.144 2,419.100

B. Cash Flow from Investing ActivitiesIncome from Investments 0.244 0.436 Dividend Income 42.498 125.123 Interest Income 20.858 39.965 Inflow from / (Additions to) Investments 101.178 37.077 Investment in Joint Venture company (88.200) (195.951)(Diminution) / increase in value of Investments 20.748 (42.630)Purchase of fixed assets/ Capital Expenditure (Net) (291.039) (891.728)Net Cash Flow from Investing Activities (193.713) (927.708)

C. Cash Flow from Financing ActivitiesProceeds from External Commercial Borrowings (Net of Exchange Gain) 305.400 322.500 Adjustment of Exchange Difference against General Reserve 0.000 (62.300)Short Term Acceptances movement (487.467) (51.652)(Loss) / Profit on : Forex Transactions (737.273) (1,094.391)Dividend & dividend tax paid (35.786) (270.198)Interest Cost (168.954) (300.049)Net Cash Flow from Financing Activities (1,124.080) (1,456.090)

Total (A) + (B) + ( C ) (328.649) 35.302

Cash Flow for the year ended 31st March, 2010


31

Cash Flow for the year ended 31st March, 2010


D. Increase / (Decrease) in Cash and Cash EquivalentsCash and Cash EquivalentsOpening Balance 1,531.818 1,496.516 Closing Balance 1,203.169 1,531.818 Net Increase / (Decrease) in Cash and Cash Equivalents (328.649) 35.302

Notes :1) The above Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting

Standard 3 on Cash Flow Statement issued by ICAI2) Previous year figures have been regrouped wherever necessary to conform to current years classification.




A.J. Engineer


32


Schedules forming part of the Balance Sheet


Schedule 1 - Share CapitalAuthorised

235,000,000 Equity Shares of Rs. 2/- each 470.000 470.000 15,000,000 Unclassified Shares of Rs. 2/- each 30.000 30.000

500.000 500.000

Issued & Subscribed152,939,345 Equity Shares of Rs. 2/- each fully paid. 305.879 305.879

(Of the above, 146,065,520 Equity Shares are issuedas fully paid up bonus shares by capitalisation of Reserves)

305.879 305.879

Schedule 2 - Reserves & SurplusCapital Reserveas per last Balance Sheet 84.079 84.079

84.079 84.079

Share Capital Buyback Reserveas per last Balance Sheet 55.183 55.183

55.183 55.183

Share Premium as per last Balance Sheet 1,090.955 1,090.955

1,090.955 1,090.955

Debenture Redemption Reserveas per last Balance Sheet 250.000 250.000 Less : Transferred to Profit & Loss Account — —

250.000 250.000

General Reserve as per last Balance Sheet 4,143.403 4,205.703 Less : Provision for differential amount of compensated absence — — Less : Effect of exchange fluctuation (Refer Note No. 4, Schedule 15) — 62.300 Add : Transferred from Profit & Loss Account 100.000 —

4,243.403 4,143.403

Surplus in Profit & Loss Account 401.575 32.674 4,644.978 4,176.077

6,125.195 5,656.294


33



Schedule 3 - Secured LoansTerm Loans:Long Term Loans:Non-Convertible Debentures

7.60% L-Series 500.000 500.000 External Commercial Borrowings 1,827.000 1,521.600

2,327.000 2,021.600 Amount repayable within one year Rs. 500 million (Previous Year Rs. Nil)

Short Term Loans from Banks:Packing Credit 138.690 477.488 Other Working Capital Borrowings — 25.396

138.690 502.884 2,465.690 2,524.484

Notes:Particulars Redemption

conditionTenor Amount

(Rs. in million)Repayment schedule

a) Debentures – L Series At par 5 years 500.000 Lumpsum on 11th August, 2010b) External Commercial Borrowing At par 5 years 1,378.000 Lumpsum on 27th March, 2012c) External Commercial Borrowing At par 5 years 449.000 3 equal installments on 6th Jan. 2013,

6th Jan. 2014 and 6th Jan. 2015

Securitya) Debentures - L Series First pari-passu charge on the immovable properties of JFTC Goa Division and

premises situated at Ahmedabad.b) External Commercial Borrowing (i) First pari-passu charge on all the immovable / movable fixed properties of the

company, both present and future, save and except properties to be excluded as agreed to by the lendors.

c) External Commercial Borrowing (ii) Hypothecation of movable fixed assets located at CFL, HVPC plant pari pasu with ECB (i) holders

d) Short Term Loans from Banks Hypothecation of inventories and book debts.

Schedule 4 - Unsecured LoansAcceptances (Short Term)- Banks 261.698 410.367 Deferred Sales Tax Loan 23.793 23.793

285.491 434.160

34


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35


Schedule 6 — Investments (Contd.)Non Trade Long Term (At Cost)Quoted Investments (Listed)

30,500 Equity Shares of Rs. 2 each fully paid in Bharat Forge Limited (Previous Year 91,000)

0.505 1.506

40,192,597 Equity Shares of Rs. 10 each paid in Finolex Industries Limited (Previous Year 40,192,597)

1,518.530 1,518.530

358,500 Equity Shares of Rs. 10 each paid in IndusInd Bank Limited (Previous Year 399,500)

3.585 3.995

Aggregate Market Value of Quoted Investments Rs. 2,689.469 million (Previous Year 1,149.104 million)

1,522.620 1,524.031

Unquoted Investments6,100,000 Equity Shares of Rs. 10 each fully paid in I2IT Pvt. Limited

(Previous Year 6,100,000)61.000 61.000

1,000,000 Equity Shares of Rs. 10 each fully paid in Finolex Plasson Industries Limited (Previous Year 1,000,000)

10.011 10.011

3,350 Equity Shares of Rs. 10 each fully paid in Promain Limited (Previous Year 3,350)

0.041 0.041

967,700 Equity Shares of Rs. 10 each fully paid in SICOM Limited (Previous Year 967,700)

77.803 77.803

1,000 Equity Shares of Rs. 10 each fully paid in The Saraswat Co-op Bank Limited (Previous Year 1,000)

0.010 0.010

1,974,975 Equity Shares of Rs.10 each fully paid in Finolex Infrastructure Limited (Previous Year 24,975)

19.749 0.250

Investments in Joint Venture Company28,420,000 Equity Shares of Rs.10 each fully paid in Finolex J-Power

Systems Pvt Limited (Previous Year 1,960,000)284.200 196.000

452.814 345.115 Provision for dimunition in value of shares of SICOM Ltd. 12.328

452.814 332.787

Current Investments(Valued at lower of cost and fair value)Quoted Invesments

6,000 Equity Shares of Rs. 10 each fully paid in Bank of Rajasthan Limited (Previous Year 5,000)

0.155 0.151

168,750 Equity Shares of Rs. 5 each fully paid in BF Utilities Limited (Previous Year 198,750)

0.844 0.994

168,750 Equity Shares of Rs. 5 each fully paid in BF Investment Limited (Previous Year NIL)

— —

100 Equity Shares of Rs.10 each fully paid in Birla Ericsson Optical Limited (Previous Year 100)

0.001 0.001


36



Schedule 6 — Investments (Contd.)100 Equity Shares of Rs. 10 each fully paid in Delton Cables

Limited (Previous Year 100)0.001 0.001

57 Equity Shares of Re. 1 each fully paid in Dish TV India Limited (Previous Year 57)

— —

3,150 Equity Shares of Rs. 10 each fully paid in ICICI Bank Limited (Previous Year 3,150)

0.460 0.460

200,000 Equity Shares of Rs. 10 each fully paid in Kirloskar Ferrous Limited (Previous Year 200,000)

6.210 2.197

100,000 Equity Warrants in Kirloskar Ferrous Limited (Previous Year 100,000)

— —

100 Equity Shares of Rs. 10 each fully paid in Nicco Corporation (Previous Year 100)

0.000 0.000

2,100 Equity Shares of Rs. 10 each fully paid in RPG Cables Limited (Previous Year 2,100)

0.030 0.018

100 Equity Shares of Rs. 10 each fully paid in Sterlite Technologies Limited (Previous Year 100)

0.003 0.003

100 Equity Shares of Rs. 10 each fully paid in Uniflex Cables Limited (Previous Year 100)

0.001 0.001

100 Equity Shares of Rs. 10 each fully paid in Usha Martin Education & Solutions Limited (Previous Year 100)

0.000 0.000

500 Equity Shares of Re. 1 each fully paid in Usha Martin Limited (Previous Year 500 Equity Shares of Re. 1 each fully paid)

0.003 0.003

100 Equity Shares of Rs. 10 each fully paid in Vindhya Telelinks Limited (Previous Year 100)

0.002 0.002

50 Equity Shares of Rs. 10 each fully paid in Wire & Wireless India Limited (Previous Year 50)

— —

100 Equity Shares of Re. 1 each fully paid in ZEE Entertainment Enterprises Limited (Previous Year 100)

0.014 0.010

45 Equity Shares of Rs. 10 each fully paid in ZEE News Limited (Previous Year 45)

0.000 0.000

— Units of Rs. 10 each of ABN AMRO Fixed Term Plan Series 10 Plan E Institutional- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of Birla Fixed Term Plan AK- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of Birla Sun Life Cash Plus - Institutional Premium - Growth (Previous Year 3,555,252)

— 50.000

— Units of Rs. 10 each of Birla Sun Life Short Term Fund - Institutional - Growth (Previous Year 9,593,249)

— 100.019

5,927,261 Units of Rs. 10 each of Birla Sun Life Saving Fund - Institutional - Growth (Previous Year Nil)

103.531 —

10,617 Units of Rs.10 each of Bharti Axa Liqid Fund-Institutional - Growth (Previous Year NIL)

11.700 —

— Units of Rs. 10 each of Canara Robeco Floating Rate Short Term Growth Fund (Previous Year 3,683,822)

— 50.009

3,311,951 Units of Rs. 10 each of Canara Robeco Treasury Advantage Retail Growth Fund (Previous Year Nil)

50.007 —



37


Schedule 6 — Investments (Contd.)5,215,053 Units of Rs. 100 each of Canara Robeco Treasury

Advantage Super Institutional -Growth (Previous Year Nil)72.007 —

— Units of Rs. 10 each of DBS Chola Liquid Super Institutional Plan - Cumulative (Previous Year 412,841)

— 5.000

— Units of Rs.10 each of DSP BlackRock Strategic Bond Fund Institutional Plan- Growth (Previous Year 53,833)

— 55.236

— Units of Rs.10 each of DSP ML FMP 13 Months Series 1- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs.10 each of DWS Fixed Term Fund Series 47- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs.10 each of DWS Insta Cash Plus Fund Institutional Plan - Growth (Previous Year 3,607,243)

— 50.000

— Units of Rs. 10 each of Fidelity Ultra Short Term Debt Fund Institutional -Growth Option (Previous Year 2,190,963)

— 24.033

— Units of Rs. 10 each of Fortis Overnight-Institutional Plus -Growth (Previous Year 6,845,156)

— 73.798

6,005,262 Units of Rs. 10 each of Fortis Money Plus Institutional -Growth (Previous Year Nil)

82.638 —

— Units of Rs. 100 each of Franklin India Smaller Companies Fund - Growth (Previous Year 1,000,000)

— 5.756

— Units of Rs. 10 each of HDFC Fixed Maturity Plan - 13 Months March 08 Series VII - Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of HDFC Fixed Maturity Plan 14 Months Feb 2008 (VII) - Wholesale Plan - Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of HDFC Fixed Maturity Plan - 370 Days March 08 (2) - Growth (Previous Year 3,000,000)

— 30.000

— Units of Rs.10 each of HDFC Infrastructure Fund-Dividend (Previous Year 1,000,000)

— 5.182

— Units of Rs.10 each of HDFC Liquid Fund - Premium Plus Plan - Growth (Previous Year 3,398,105)

— 60.000

2,477,296 Units of Rs.10 each of HDFC Cash Management Fund - Treasury Advantage Plan-Wholesale - Growth (Previous Year NIL)

50.008 —

— Units of Rs.10 each of HSBC Ultra Short Term Bond Fund-Institutional Plus- Growth (Previous Year 4,519,383)

— 55.007

— Units of Rs. 10 each of ING Liquid Fund Super Institutional - Growth (Previous Year 8,484,176)

— 109.809

— Units of Rs.10 each of ING Vysya Long Term FMP 1 Institutional- Growth (Previous Year 1,000,000)

— 10.000

411,664 Units of Rs. 100 each of ICICI Prudential Flexible Income Plan Premium -Growth (Previous Year Nil)

70.448 —

1,000,000 Units of Rs.10 each of JM Agri & Infra Fund - Dividend (Previous Year 1,000,000)

2.955 2.215

— Units of Rs.10 each of JM FMP Series IX Months Institutional- Growth (Previous Year 2,000,000)

— 20.000


38



Schedule 6 — Investments (Contd.)743,050 Units of Rs.10 each of JM Money Manager Fund Super

Institutional- Growth (Previous Year NIL)96.130 —

— Units of Rs.10 each of JP Morgan India Liquid Fund - Super Institutional Growth (Previous Year 1,758,690)

— 20.000

— Units of Rs.10 each of Kotak FMP 14 Months Series 4- Growth (Previous Year 1,000,000)

— 10.000

5,000,000 Units of Rs.10 each of Kotak Quarterly Interval Plan Series 7- Dividend (Previous Year NIL)

50.000 —

— Units of Rs.10 each of Lotus India FMP 13 Months Series IV- Institutional- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs.10 each of Lotus India FMP 375 Days Series VIII- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs.10 each of Principal Cash Management Fund-Liquid Option Institutional Premium Plan- Growth (Previous Year 1,237,327)

— 17.000

— Units of Rs.10 each of Prudential ICICI FMP Series 43-14 Months Plan A- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of Prudential ICICI Fusion Fund - Growth (Previous Year 1,000,000)

— 6.220

— Units of Rs. 10 each of Prudential ICICI Floating Rate Plan D - Growth (Previous Year 3,848,345)

— 50.010

— Units of Rs. 10 each of Reliance Equity Fund -Growth (Previous Year 1,990,013)

— 18.484

— Units of Rs. 10 each of Reliance Liquidity Fund -Growth (Previous Year 3,775,922)

— 50.000

52,206 Units of Rs. 100 each of Reliance Money Manager Fund-Institutional Option-Growth Plan (Previous Year 54,740)

65.514 65.012

— Units of Rs. 100 each of Reliance Medium Term Fund- Retail Plan-Growth Plan-Growth Option (Previous Year 1,794,618)

— 32.500

4,998,401 Units of Rs. 100 each of Reliance Quarterly Fund - Series III-Institutional Dividend Plan (Previous Year Nil)

50.000 —

— Units of Rs. 10 each of SBI Debt Fund Series 13 Months- Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs.10 each of SBI Infrastructure Fund - Dividend (Previous Year 1,000,000)

— 5.650

— Units of Rs. 10 each of Standard Chartered Enterprise Equity - Dividend (Previous Year 1,000,000)

— 7.788

— Units of Rs.10 each of Standard Chartered Fixed Maturity Plan Yearly Series 20 Plan B - Growth (Previous Year 1,000,000)

— 10.000

959,506 Units of Rs. 10 each of Sundaram BNP Paribas Equity Multiplier Fund - Growth (Previous Year 959,506)

9.595 5.640

— Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term Plan Series C Institutional - Growth (Previous Year 1,000,000)

— 10.000

— Units of Rs. 10 each of Sundaram BNP Paribas Fixed Term Plan Series E - Growth (Previous Year 1,000,000)

— 10.000



39


Schedule 6 — Investments (Contd.)1,000,000 Units of Rs.10 each of Sundaram BNP Paribas Select

Thematic Funds Energy Opportunities Fund - Dividend (Previous Year 1,000,000)

8.330 4.607

— Units of Rs. 100 each of Sundaram BNP Paribas Ultra Short Term Fund Super Institutional Fund - Growth (Previous Year 7,359,097)

— 87.015

89,994 Units of Rs. 10 each of Tata Treasury Manager SHIP -Growth (Previous Year Nil)

93.762 —

— Units of Rs. 10 each of Templeton India Treasury Management Account Super Institutional Plan- Growth (Previous Year 38,268)

— 50.000

— Units of Rs. 10 each of UTI Fixed Term Income Fund Series VI Plan V - Growth (Previous Year 1,000,000)

— 10.000

[Aggregate Market Value of Current Quoted Investments Rs.974.768 million (Previous Year Rs. 1,367.186 million)]

824.347 1,279.831

Unquoted Investments1 Pass through Certificate of Rs. 10,000,000/- each of Old

Palasia RMBS Trust Series - I; Trustee - IDBI Bank Limited (Previous Year 1 )

2.965 4.344

2.965 4.344

2,802.746 3,140.993

Aggregate Value of — Quoted Investments Book Value 2,346.967 2,803.862 Market Value 3,664.237 2,516.291

— Unquoted InvestmentsBook Value 455.779 337.131


40



Details of Purchase and Sale of Shares/ Units during the year No. of Shares/ Units

Birla Cash Plus Institutional Premium - Growth 27,800,080.79Principal Cash Management Fund Liquid Institutional Premium - Growth 719,507.28Reliance Liquidity Fund -Growth 49,567,353.89JM High Liquidity Fund-Super Institutional Plan - Growth 47,406,555.04UTI Liquid Cash Plan Institutional-Growth Option 183,494.64Sundaram BNP Paribas Money Fund Super Institutional - Growth 22,000,593.29ICICI Prudential Institutional Liquid Plan-Super Institutional Growth 46,068,538.02Birla Sun Life Cash Manager-Institutional Plan - Growth 20,751,564.44Magnum Insta Cash Fund Liquid Floater Plan-Growth 568,216.90SBI Infrastructure Fund - Growth 864,459.64HSBC Cash Fund-Institutional Plus-Growth 2,895,487.38Reliance Liquid Fund-Treasury Plan-Institutional Option - Growth 7,120,734.82Fidelity Cash Fund - Super Institutional - Growth 30,857,750.06DWS Short Maturity Fund-Institutional- Growth 6,647,231.16JP Morgan India Liquid Fund - Super Institutional - Growth 10,518,369.69SBI Premier Liquid Fund-Super Institutional-Growth 7,143,616.85HDFC Liquid Fund Premium Plus Plan-Growth 63,337,491.71Bharti AXA Liquid Fund-Institutional-Growth Plan 40,652.89Fortis Overnight Institutional Plus- Growth 61,722,958.36Canara Robeco Liquid Super Institutional Fund - Growth 52,640,294.22DWS Insta Cash Plus Fund-Institutional Plan - Growth 4,517,200.98Religare Liquid Fund-Institutional-Growth 18,537,504.30Reliance Money Manager Fund Institutional - Growth 249,870.04DSP BlackRock Money Manager Fund-Institutional - Growth 23,988.61Reliance Medium Term Fund-Retail Plan-Growth 11,492,798.99Birla Sun Life Short Term Fund Institutional - Growth 1,060,870.48DSP BlackRock Strategic Bond Fund-Institutional - Growth 53,832.58Templeton India Treasury Management Account-Super Institutional Plan - Growth 523,474.37Fidelity Ultra Short Term Debt Fund Institutional-Growth 12,271,345.78Canara Robeco Floating Rate Short Term - Growth 8,401,768.46Sundaram BNP Paribas Ultra Short Term Fund - Super Institutional - Growth 28,862,517.86DWS Insta Cash Plus-Institutional - Growth 790,076.42HSBC Floating Rate Fund-Long Term-Institutional-Growth 4,014,033.27ICICI Prudential Institutional Short Term-Cumulative Option 7,543,204.07UTI Treasury Advantage Fund-Institutional-Growth 92,029.56DSP BlackRock Liquidity Fund-Institutional - Growth 97,459.36HSBC Income Fund-Short Term-Institutional-Growth 3,342,564.24Templeton Floating Rate Income Fund Short Term Plan Retail option - Growth 2,977,928.60ICICI Prudential Flexible Income Plan Premium-Growth 8,182,349.94DSP BlackRock Cash Manager Fund-Institutional-Growth 26,296.69Tata Liquid Super High Inv. Fund-Appreciation 227,661.04


41


Details of Purchase and Sale of Shares/ Units during the year No. of Shares/ Units

Tata Floater Fund-Growth 2,547,949.40IDFC Money Manager Fund-Treasury Plan-Super Institutional Growth 29,962,712.69Canara Robeco Treasury Advantage Super Institutional-Growth 19,026,423.85JM Money Manager Fund Super Plus Plan - Growth 31,047,657.69Religare Ultra Short Term Fund Institutional - Growth 12,927,899.19IDFC Cash Fund - Institutional Plan B - Growth 11,137,724.40Fortis Money Plus Institutional Growth 18,235,940.30JP Morgan India Treasury Fund-Super Institutional-Growth 3,171,394.55Bharti AXA Treasury Advantage Fund-Institutional Growth 40,400.78Templeton India Treasury Management Account - Growth 6,747.02Templeton India Ultra Short Bond Fund Retail - Growth 654,086.58Birla Sun Life Savings Fund Institutional - Growth 20,531,089.19HDFC Cash Management Fund-Treasury Advantage Plan- Growth 14,556,062.10Templeton India Ultra Short Bond Fund Institutional-Growth 13,234,194.28Axis Liquid Fund-Institutional-Growth 153,627.66Tata Treasury Manager Super High Investment Plan - Growth 182,158.04IDFC Cash Fund - Super Institutional Plan C - Growth 9,087,110.76Axis Treasury Advantage Fund-Growth 98,785.98Tata Treasury Manager Retail Investments Plan - Growth 7,903.50Bharti AXA Treasury Advantage Fund-Regular Plan-Growth 7,802.19HDFC Floating Rate Income Fund-Short Term Plan-Growth 3,785,414.81Birla Cash Plus Institutional Premium - Growth 65,788,387.72Religare Liquid Fund Super Institutional- Growth 8,060,794.88Canara Robeco Treasury Advantage Retail- Growth 506,578.35

42



Schedule 7 - Current Assets, Loans and Advances(A) Current Assets

Interest Accrued on Investments — — InventoriesStores and Spares 113.102 91.911 Raw Materials 384.042 290.359 Semi finished Goods 547.594 360.668 Finished Goods 1,116.525 655.203 Packing Materials 25.258 19.042 Scrap 2.289 5.097 Goods for Trading 20.688 13.677

2,209.498 1,435.957 Sundry DebtorsUnsecured, considered good, unless stated otherwiseOutstanding for a period exceeding six months 106.659 129.651 Considered Doubtful 17.561 17.561 Less : Provision 17.561 17.561

106.659 129.651 Other Debts 603.812 447.023

710.471 576.674

Cash & Bank BalancesCash on hand 1.510 1.978 Balances with Scheduled Banks in : – Current Accounts 267.779 279.221 – Fixed Deposit Accounts 102.332 0.025

370.111 279.246

371.621 281.224

3,291.590 2,293.855

(B) Loans & AdvancesBalances with Customs, Excise etc. 17.267 41.882 Advances recoverable in cash or in kind or forvalue to be received 267.422 439.374 Include Rs. 28.400 million (Previous year Rs. 19.500 million) to associate company, Finolex Infrastrcture Ltd.Maximum amount outstanding during the year Rs. 33.500 million (Previous year Rs. 19.500 million)Advance Income Tax (Net of provision) 572.531 382.746

857.220 864.002 4,148.810 3,157.857



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Schedule 8 - Current Liabilities and Provisions(A) Current Liabilities

Sundry Creditors (Refer Note No. 6) 532.796 592.566 Other Liabilities 1,165.899 975.889 Deposits from Distributors 4.030 3.482 Deposits from Customers / Others 61.911 42.110 Interest accrued but not due 8.587 7.396 Unclaimed Fixed Deposits 0.023 0.033 Unclaimed Dividend * 7.164 7.733

1,780.410 1,629.209

(B) ProvisionsProposed Dividend 91.764 30.588 Tax on Proposed Dividend 15.595 5.198 Provision for Short term compensated absences 33.845 32.159 Provision for Gratuity 4.370 16.765

145.574 84.710 1,925.984 1,713.919

*The figure does not include any amount due and outstanding to be credited to Investor Education & Protection Fund.

44



Schedule 9 - Income from operationsSale of Products 16,955.949 14,748.082 Sale Others 53.079 54.401 Sale of Scrap 256.926 213.001

17,265.954 15,015.484

Schedule 10 - Other IncomeInterest earned on– Investments 0.244 0.436 – Deposits 4.202 0.485 – Others 16.656 39.480 Dividend Received

From Long Term Investments 41.670 122.636 From Current Investments 0.828 2.487

Profit on Sale of Assets 0.042 0.036 Profit on Sale of Investments (Net) 119.173 33.832 Miscellaneous Income 58.288 38.902 [Tax deducted at source Rs.1.724 million(Previous year Rs. 1.766 million)]Reversal of impairment loss on Optic Fibre Assets 0.000 271.298 (Refer Note No. 7, Schedule 15)

241.103 509.592

Schedule 11 - Materials and Manufacturing ExpensesMaterials ConsumedRaw Materials * 12,436.050 9,574.157 Packing Materials 216.751 165.821 Stores & Spares 168.630 163.384 Add/(Less):Decrease/(Increase) in stock of (645.442) 787.532 Finished, Semi-finished Goods & Scrap Add/(Less): Incremental/(Decremental) Excise Duty on 34.954 (106.314)Closing Stock of Finished Goods

12,210.943 10,584.580

Manufacturing Expenses Processing Charges 1.069 0.372 Power & Fuel 291.107 254.993

292.176 255.365 Less: Captive Consumption for Capitalisation 8.653 10.937

12,494.466 10,829.008

* Includes cost of goods traded in Rs. 18.847 million (Previous year Rs. 8.177 million)



45



Schedule 12 - Personnel ExpensesSalaries, Wages, Bonus and Commission etc. 560.329 478.020 (Refer Note No. 11, Schedule 15)Contribution to Provident and other Funds 25.575 48.886 Workmen and Staff Welfare Expenses 2.842 2.800 Recruitment & Training Expenses 3.510 3.498

592.256 533.204

Schedule 13 - Other ExpensesRent, Rates and Taxes 21.607 20.461 Insurance 7.299 6.727 Repairs & Maintenance:

Building 6.932 8.642 Machinery 18.622 16.265 Other Assets 14.470 14.226

Directors’ Sitting Fees 1.080 1.260 Auditors’ Remuneration:

Audit Fees 2.500 2.500 Tax Audit Fees 0.500 0.500 Other Services 0.800 1.240 Out of Pocket Expenses 0.099 0.076

Travelling and Conveyance 48.901 48.678 Communication Expenses 14.518 14.161 Selling & Distribution Expenses:

Sales Incentives 636.613 485.887 Freight Outward (Net) 178.295 134.460 Advertisement, Publicity etc. 56.667 42.101

Miscellaneous Expenses 139.037 237.793 Provision for Doubtful debts — 8.988 Amounts Written off 5.498 11.101 Losses on Foreign Exchange Transactions, 737.273 1,094.391 including derivatives (Net)(Refer Note No. 10(d), Schedule 15)Loss on Sale of Assets — 2.142

1,890.711 2,151.599

Schedule 14 - Finance ChargesInterest:

Fixed Period Loans 45.521 82.896 Others 123.433 217.153

Bank Charges 17.916 23.986 186.870 324.035

46


Notes forming part of the Accounts

Schedule – 15

1. Significant Accounting Policies

i) Accounting Convention:

The financial statements are prepared under the historical cost convention, having due regard to fundamental accounting assumptions of going concern, consistency and accrual, in compliance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956.

ii) Fixed Assets:

a) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. Attributable finance costs and expenses of bringing the respective assets to working condition for their intended use are capitalised.

b) Intangible Assets: Expenses incurred by the Company on acquisition, development or enhancement of intangible resources are recognised as intangible assets if these are identifiable, controlled by the Company and it is probable that future economic benefit attributable to the asset would flow to the enterprise. Intangible asset are amortised from the date when they are available for use over the best estimate of their useful life.

c) Impairment: The carrying amount of cash generating units / assets is reviewed at balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated as the higher of net selling price and value in use. Impairment loss is recognised whenever carrying amount exceeds the recoverable amount. Conversely, previously recognised losses are reversed when the estimated recoverable amount exceeds the carrying amount.

d) Borrowing Costs that are directly attributable to the acquisition or production of a qualifying asset are capitalised as part of the cost of those assets. Other borrowing costs are recognised as expense in the period in which they are incurred.

iii) Depreciation:

Depreciation is provided on straight-line method as per the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

iv) Investments:

Investments are classified as long-term and current. Investments classified as long term are stated at cost. Provision for diminution, if any, in the value of long-term investments is made to recognise a decline other than temporary in the fair value of investments. The fair value of a long-term investment is ascertained with reference to its market value, investee’s assets and results and the expected cash flows from the investment as well as the strategic importance to the company. Investments classified as current are valued at lower of cost and fair value.

v) Valuation of Inventories:

All the inventories are valued at lower of cost or net realisable value. Cost of Raw Materials, Packing Materials, Stores and Spares is determined at weighted average cost. Finished goods and Semi Finished goods are valued at material cost, cost of conversion and excise wherever applicable. Scrap generated out of manufacturing process is valued at net realisable value except in case of sheets, optic fibre, CFL and Switch divisions where it is accounted for on sale.

vi) Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Assets and Liabilities denominated in foreign currency are translated at the year-end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of Assets and Liabilities at the end of the year is recognised as income or expense, as the case may be. In accordance with the transitional provisions contained in The Companies (Accounting Standards) Amendment Rules 2009, and in conforming to the Accounting Standard 11 (AS 11), in respect of long term foreign currency loan taken for acquisition of assets, the exchange difference arising on reporting of said loan is adjusted to the cost of the assets.

The Company uses foreign exchange forward contracts and options to reduce the cost or to hedge its risks associated with foreign currency fluctuations to underlying transactions, for certain firm commitments or forecasted transactions. The difference between the forward rate and the exchange rate at the inception of the forward contract for underlying transaction is recognised as income or expense over the life of the contract. In respect of hedge contracts, for firm commitment or forecasted transactions, the attributable gain or loss is accrued and taken to profit and loss account on periodic settlement


47

and/or completion of contract. Loss if any, in respect of outstanding derivatives at the balance sheet date is assessed by the management based on the principle of prudence and charged to profit and loss account of that period.

vii) Revenue Recognition:

a) Sale of goods is recognised on despatches to customers which generally coincides with transfer of title, significant risk and rewards of ownership to customer and includes excise duty.

b) Dividend income is accounted for when right to receive is established.

c) Interest is recognised on time proportionate basis taking into account the amount outstanding and the rate applicable.

d) Credits on account of Custom Duty and other benefits, which are due to be received with reasonable certainty, are accrued upon completion of exports.

viii) Employee Benefits:

a) Defined Contribution Plan :

Contributions are made to approved Superannuation and Provident Fund.

b) Defined Benefit Plan:

Company’s liability towards gratuity is determined using the projected unit credit method which consider each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past Service Gratuity Liability is computed with reference to the service put in by each employee till the date of valuation as also the projected terminal salary at the time of exit. Actuarial gain or losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligation is measured at the present value of estimated future Cash Flow using a discount rate that is determined by reference to market yields at the Balance Sheet date on government bonds where the currency and terms of the government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short Term Compensated Absences:

Liability on account of encashment of leave to employee is considered as short term compensated expense provided on actual.

ix) Taxation :

Income Tax expense comprises current tax and deferred tax charge or credit.

Deferred tax for timing difference between the book and tax profit for the year is accounted using tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date. Deferred Tax assets arising from the timing difference are recognised to the extent that there is virtual certainty that sufficient future taxable income will be available.

x) Provisions and Contingent Liabilities:

a) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

b) Contingent liabilities are disclosed by way of note to the financial statements, after careful evaluation by the management of the facts and legal aspects of the matter involved.

2. Contingent Liabilities:

a) Liability on account of Sales Bills discounted with Bank Rs. 385.096 million (Previous year Rs. 395.817 million).

b) Disputed demands in appeal towards excise Rs. 73.623 million (Previous year Rs. 61.860 million), customs Rs. 13.427 million (Previous year 13.427 million) and sales tax Rs. 453.491 million (Previous year Rs. 71.370 million)

c) i) Disputed Income Tax demands and matters in appellate proceedings Rs. 440.390 million (Excluding consequential interest or penalty), (Previous year Rs. 468.110 million).


48


ii) Appeals preferred by Income Tax Department against Appellate decisions in favour of the Company, wherein, should the ultimate decision be unfavourable to the Company, the liability is estimated to be Rs. 538.290 million (Previous year Rs. 535.860 million)

d) Guarantees given by Company’s Bankers on behalf of the Company, towards performance and other matters, amounting to Rs. 523.237 million (Previous year Rs. 663.149 million), are secured by hypothecation of Stock in trade, Book Debts, Stores and Spares etc.

e) The Company has imported capital goods under the Export Promotion Capital Goods (EPCG) scheme, of the Government of India, at concessional rates of duty on an understanding to fulfil quantified exports against which future obligation aggregates to Rs. 1,017.00 million (Previous year Rs. 1,297.321 million) over a period of eight years from the date of license.

3. Estimated amount of contracts remaining to be executed on capital account (net of advances paid), not provided for Rs. 187.750 million (Previous year Rs. 236.239 million).

4. Pursuant to notification of 31st March 2009 issued by Ministry of Corporate Affairs, Government of India, in respect of changes to Accounting Standard 11 the Company had in 2008-09 capitalised exchange differences to the tune of Rs. 196.723 million. Further an amount of Rs 62.300 million debited to General Reserve towards exchange difference previously recognised in the Profit and loss Account for the year 2007-08. As required under the said notification, the exchange difference has been recalculated based on the exchange rate prevalent on 31.03.2010 and accordingly an amount of Rs. 143.600 million has been decapitalised during the year 2009-10.

5. Taxation:

Deferred Tax:

The break-up of deferred tax assets and liabilities into major components at the year end is as below.(Rs. in million)

Particulars of timing difference Liabilities AssetsDepreciation 319.136

(324.432)NIL

(NIL)Income Tax Depreciation / Business Loss NIL

(NIl)NIL

(103.310)Total 319.136

(324.432)NIL

(103.310)Net Deferred Tax Liability 319.136

(221.122)

Current Tax:

Provided in accordance with the provisions of the Income Tax Act 1961.

6. Sundry Creditors:

A) Outstanding to creditors other than Micro, Small & Medium Enterprise Rs. 530.547 million (Previous year Rs. 581.133 million) (Interest Paid/Payable is Rs. Nil, Previous year Rs. Nil)

B) Outstanding to Micro, Small & Medium Enterprise : Rs. 2.249 million (Previous year Rs. 11.433 million)



49

The identification of suppliers as Micro & Small Enterprises covered under the “Micro, Small and Medium Enterprises Development Act, 2006” was done on the basis of the information to the extent provided by the suppliers to the company. Total Outstanding dues of Micro and Small Enterprises, which were outstanding for more than stipulated period are given below:

Rs. MillionCurrent Year

Rs. MillionPrevious Year

a) Principal amount due 1.764 0.032b) Interest paid under MSMED Act, 2006 Nil Nilc) Interest due 0.523 0.251d) Interest accrued and due Nil Nile) Interest due and payable for the year till actual payment 0.523 0.251

7. Based on the periodic review, it is the Company’s view that the Preform Manufacturing Facility which was impaired in 2004-05 continues to remain impaired. Consequently, the impairment loss of Rs 288.510 million (Gross) is being carried forward. No further addition have been made to the impairment provisions, since there is no significant change in status.

8. Investment in Joint Venture 1. The name of the joint venture company : Finolex J-Power Systems Private Limited

2. Ownership interest : 49%

3. Country of Incorporation : India

On 13th December, 2007, the Company entered into a joint venture agreement with J- Power Systems Corporation of Japan, to offer complete turnkey solutions in extra high voltage (EHV) cable systems in India and abroad.

As on 31st March, 2010 the Company has invested Rs. 284.200 million in the shares of the joint venture with a commitment to invest a further Rs. 100.000 million.

9. Related Party Transactions: Disclosures as required by Accounting Standard 18 “Related Party Disclosures” are given below:

a) List of Related Parties :

Associate Companies Finolex Industries LimitedFinprop Advisory Services LimitedCorrugated Box Industries (India) Private LimitedFinolex Plasson Industries LimitedFinolex Infrastructure Limited

Other Companies Akash-Tatva Investments Private LimitedCoated Fabrics Private LimitedDevita Investments Private LimitedFino Communication Equipments Private LimitedFinolib Chemicals Private LimitedHi-Tech Poly Coatings Private LimitedK. P. Investments Private LimitedMajesty Investments Private LimitedMohini Investments Private LimitedOrbit Electricals Private LimitedPratibha Xero-Graph. Imp. Private LimitedVKC Investments Private Limited

Joint Venture Finolex J-Power Systems Private Limited

b) Key Management Personnel and Relatives Key Management Personnel

1. Mr. P. P. Chhabria — Chairman2. Mr. D. K. Chhabria — Managing Director3. Mr. V. K. Chhabria — Deputy Managing Director4. Mr. M. L. Jain — Asst. Managing Director and Chief Operating Officer5. Mr. Mahesh Viswanathan — Director (Finance) & Chief Financial Officer

Relatives

Mr. K. P. Chhabria — Brother of Mr. P.P. Chhabria, and Father of Mr. D. K. Chhabria and Mr. V. K. Chhabria


50


c) Transactions with Related Parties - Major Parties (Rs. in million)

Nature of Transactions Associate Companies/

Joint Venture

Key ManagementPersonnel & Relatives

Sales, Services and Other Income1 Sale of goods

Finolex Industries Limited 5.153 —(19.244) (—)

Finolex J-Power Systems Private Limited 0.110 —(0.046) (—)

Others 0.049 —(1.209 ) (—)

2 Sale of other materialFinolex Industries Limited — —

(—) (—)3 Recoveries

a) Finolex Industries Limited 0.758 —(0.862) (—)

b) Finolex J-Power Systems Pvt. Ltd. 0.300(—)

4 Sale of LandFinolex Industries Limited —

(—)—

(—)5 Dividend Received


Finolex Plasson Industries Limited 1.000 —(1.500) (—)

6 Interest ReceivedFinolex Infrastructure limited 0.720 —

(1.042) (—)Purchase of Material / Assets1 Purchase of Raw Material and Components


Others 0.032 —(0.026) (—)

2 Purchase of Fixed AssetsFinolex Industries Limited 0.198 —

(0.075 ) (—)3 Purchase of Investments

a) Finolex J - Power Systems Private Limited - Allotment 88.200 —

(195.900) (—) - Purchased from Mr. D. K. Chhabria — —

(—) (0.051)b) Finolex Infrastructure Limited - Allotment 19.500 —

(—) (—)Expenses1 Remuneration to Key Management Personnel — 45.323

(—) (45.433 )



51


Joint Venture


2 ServicesFinprop Advisory Services Ltd. 9.927 —

(10.086) (—)3 Rent

Corrugated Box Industries (India) Private Limited 3.309 —(3.366) (—)

Mr. K.P. Chhabria — 0.528(—) (0.528)

4 Reimbursement of Expenses PaidFinolex Industries limited 16.241

(25.348)—

(—)Finprop Advisory Services Ltd. 1.402

(0.779)—

(—)5 Dividend Paid

Finolex Industries limited 4.437(33.280)

—(—)

6 Interest paid to companies against ICDCoated Fabrics Private Limited — —

(1.155) (—)Finolib Chemicals Private Limited — —

(0.102) (—)Orbit Electricals Private Limited — —

(1.810) (—)Akash-Tatva Investments Private Limited — —

(0.341) (—)Devita Investments Private Limited — —

(0.220) (—)Fino Communication Equipments Private Limited — —

(0.137) (—)Hi-Tech Poly Coatings Private Limited — —

(0.030) (—)K. P. Investments Private Limited — —

(0.102) (—)Majesty Investments Private Limited — —

(0.552) (—)Mohini Investments Private Limited — —

(0.201) (—)Pratibha Xero-Graph. Imp. Private Limited — —

(0.011) (—)VKC Investments Private Limited — —

(0.070) (—)Corrugated Box Industries (India) Private Limited — —

(0.242) (—)Amount Outstanding1 Creditors


Others — —(1.796) (—)

2 DebtorsFinolex Industries Limited 12.377 —

(17.708) (—)Others 3.74 —

(1.917) (—)


52



Joint Venture


3 Loans and Advances and Deposits

Corrugated Box Industries (India) Private Limited 3.000(0.375)

—(—)

Mr. K.P. Chhabria —(—)

5.000(5.000)

Finolex Infrastruture Limited 28.400 —

(19.500) (—)

4 Other

Finolex Infrastruture Limited — —

(0.018) (—)

5 Others

Refund of Deposit

Corrugated Box Industries (India) Private Limited —(0.550)

—(—)

Interest Receivable

Finolex Infrastructure Limited 0.476 —

(—) (—)

10. A. Quantitative information of derivative instruments outstanding as at the balance sheet date:

(Rs. in million)

Category Amount Amount

Year ended 31.03.2010


Foreign Exchange Forwards/ Options 1,434.850 3,385.860

Interest Rate Swaps 3,536.890 5,307.130

Currency Swaps 1,796.000 1,521.600

B. The Company has entered into derivative transactions with an objective to hedge the financial risks associated with its business viz. foreign exchange and interest rate.

C. The Company has not hedged the following foreign currency exposures :

(i) Borrowings grouped under secured loans equivalent to Rs. 1,347.000 million (Previous year Rs. 1,521.600 million).

(ii) Creditors for imports equivalent to Rs. 97.435 million (Previous year Rs. 48.954 million)

(iii) Receivables equivalent to Rs. 23.194 million (Previous year Rs. 50.372 million)

D. Loss on Derivative / Forex transactions includes Rs. 100.000 million (Previous year 100.000 million) loss on certain outstanding derivatives at the Balance Sheet date assessed by the management based on the principle of prudence.



53

11. Managerial Remuneration :

Details of payments and provisions on account of remuneration to Chairman, Managing Director, Dy Managing Director, Asst. Managing Directors and Non-Whole-Time Directors included in the Profit & Loss A/c :


a) Computation of Net Profit in accordancewith section198 of Companies Act 1956

Profit as per Profit & Loss Account (Before Tax) 891.686Add : Directors’ Remuneration 40.290

Directors’ Commission 26.850Directors’ Sitting Fees 1.080Depreciation 372.270

440.490 1,332.176

Less : Depreciation u/s 350 of the Companies Act1956 372.270Revaluation of Investments 20.748Profit on Sale of Assets (Net) 0.042Profit / (Loss) on Sale of Investments (Net) 119.173

512.233Profit available for Distribution 819.943Restricted to 10% 81.994Commission as decided by the BoardChairman, Managing Director andDeputy Managing Director 26.000Non-Whole-time Directors 0.850

26.850b) Details of payments and provisions on

account of remuneration to Chairman,Managing Director, Deputy Managing Director,Asst Managing Directors and Non-Whole-timeDirectors included in the Profit & Loss Account

i) Salary 18.732 18.240ii) Commission to

Chairman, Managing Director &Deputy Managing Director 26.000 —Non-Whole-time Directors 0.850 — 26.850 —

iii) Contribution to Funds 4.763 4.842iv) Other Perquisites 16.795 19.703

Paid 67.140 42.785

Note: Contribution to Gratuity Fund is made on global valuation and hence is not precisely ascertained.

The Company has provided for remuneration of whole time Directors in accordance with the resolution passed by the Shareholders at the Annual General Meeting of the Company held on 30th July, 2008.

Pursuant to the recommendation of the Remuneration Committee of Directors and the approval of the Members in the Annual General Meeting held on 26th August, 2009 in terms of the provisions of Section 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956 (the “Act”) read with Schedule XIII to the Act, the Company has filed separate applications with


54


the Central Government for obtaining its approval for payment of remuneration including all perquisites but excluding commission due to inadequacy or absence of profits for the previous financial year 2008 - 2009, to the following whole time Directors of the Company namely : Mr. P. P. Chhabria, Chairman, Mr. D. K. Chhabria, Managing Director, Mr. V. K. Chhabria, Deputy Managing Director and Mr. M. L. Jain, Assistant Managing Director and Chief Operating Officer. The approval of the Central Government is yet to be received by the Company

12. Capacities and Production

Class of Goods Unit Installed

Capacity

31.3.2010

Production

(Net)

2009-2010

Installed

Capacity

31.3.2009

Production

(Net)

2008-2009

1 Electrical Cables TCKM 2,135.97 1,152.01# 1,701.37 782.48 #

2 Communication Cables

Optic Fibre Cables KM 58,000.00 35,348.75 48,000.00 38,516.14

Other Telecommunication Cables TCKM 10,648.00 516.17 10,612.00 896.00

3 PVC Sheets and Accessories MT 2,100.00 1,344.16 2,100.00 1,506.97

4 Fibre KM 1,500,000.00 867,911.45* 1,200,000.00 449,319.80 *

5 Cross Linked Polyethylene and other MT 2,500.00 — 2,500.00 —

Compounds ( used for captive consumption)

6 Polycoated FRP Rod KM 24,000.00 22,491.91 24,000.00 19,359.84

7 Continuous Cast Copper Rods MT 60,000.00 35,583.00@ 60,000.00 34,309.84 @

Installed capacities are certified by the Managing Director and relied upon by the Auditors

# Equivalent tonnage 32,669 MT (Previous year 28,906 MT)

* Includes captive consumption of 486,685 Kms (Previous Year 473,069 Kms.)

@ captive consumption of 20,726.556 MT (Previous year 15,439.964 MT) & Job Work done 4,836.880 (Previous year 10,293.541 MT)

5,000 TCKM of JFTC Capacity is interchangeable with 332 TCKM of Electrical Cable capacity

The above statement includes production from erstwhile facilities of Finolex Wire Products Limited (since merged with the Company) as under :

Sr. No.

Class of Goods Unit Installed Capacity

Production 2009-10

1. Continuous Cast Copper Rods MT 60,000 35,583

2. Optic Fibre Cables KM 32,000 18,498

3. 3 Core Flat Cables KM 10,000 17,719

4. FRP Rods KM 24,000 22,492



55

13. Stock & Turnover (Rs. in million)

Class of Goods Unit Opening Stock Closing Stock Turnover

Quantity Value (Rs.) Quantity Value (Rs.) Quantity # Value (Rs.)

1 Electrical Cables TCKM 174.37 374.774 71.00 824.128 1,255.38 11,093.064

(70.12) (684.298) (174.37) (374.774) (678.22) (8,823.667)

2 Communication Cables

Optic Fibre Cables KM 2,698.19 46.797 3,026.94 78.644 35,020.00 933.687

(2,920.81) (50.155) (2,698.19) (46.797) (38,738.76) (1,174.689)

3 Other Communication Cables TCKM 103.81 69.557 88.03 101.762 531.96 827.250

(114.25) (98.864) (103.81) (69.557) (906.44) (1,394.613)

4 PVC Sheets and Accessories MT 381.67 12.347 368.49 10.703 1,357.34 141.373

(373.45) (14.681) (381.670) (12.347) (1,498.754) (169.025)

5 Fibre KM 48,545.54 16.158 123,228.17 36.639 793,228.82 ** 145.857

(88,360.00) (32.443) (48,545.54) (16.158) (489,134.26) ** (5.541)

6 Continuous Cast Copper Rod MT 352.31 79.778 91.46 37.048 35,843.55 & 3,615.026

(283.41) (117.084) (352.31) (79.778) (34,240.94) & (2,939.075)

7 Others *** 68.951 90.568 509.697

(86.242) (68.951) (508.874)

8 Less - Excise Duty 1,078.798

(1,600.412)

668.361 1,179.492 16,187.156

(1,083.767) (668.361) (13,415.072)

# Includes captive consumption

** Includes captive consumption of 486,685 Kms (Previous Year 473,069 Kms.)

& Includes captive consumption of 20,726.556 MT (Previous Year 15,439.964 MT) & Job Work done 4,836.880 MT

(Previous Year 10,293.541 MT)

*** Includes goods traded in Rs. 30.652 million (Previous year Rs. 13.458 million.)


14. Raw materials consumed: QTY (MT) Value (Rs. million) QTY (MT) Value (Rs. million)Copper 31,440 9,904.357 24,624 7,261.001PVC 16,440 1,050.245 12,766 809.462Polythene 2,942 239.773 3,270 285.470Preform 23 168.223 13 88.208Others 1,073.452 1,130.016Total 12,436.050 # 9,574.157 ## Includes Cost of Goods Traded Rs. 18.847 million (Previous Year Rs. 8.177 million).


56



15. CIF Value of Imports:Raw Material 1,377.346 1,080.664Spares & Components 24.916 22.116Capital Goods 233.031 301.587

1,635.293 1,404.367

16. Consumption of raw materials:Imported 11.36% 1,412.610 8.29% 793.226Indegeneous 88.64% 11,023.440 91.71% 8,780.931Total 100% 12,436.050 100% 9,574.157

17. Consumption of stores & spares:Imported 10.82% 18.253 14.48% 23.656Indegeneous 89.18% 150.377 85.52% 139.728Total 100% 168.630 100% 163.384

18. Expenditure in foreign Currency:Travelling 2.639 3.239Interest 39.933 59.851Foreign Bank Charges 2.316 3.869Export Sales Commission 3.258 18.354Professional Fees 4.054 4.481Others 2.406 4.836

54.606 94.630

19. Earnings in Foreign Currency:FOB Value of Exports 582.803 776.227Interest 0.000 0.087

20. Dividends Remitted in Foreign Currency:Number of Share holders 1 1Number of Shares held 6,143,425 6,143,425Year to which dividend relates Year ended 31/03/09 Year ended 31/03/08Amount remitted (Net of tax deducted at source) Rs. in million 1.228 9.215

21. Segment Reporting: The Business segment has been considered as a primary segment for disclosure. The categories included in each of the reported

business segment are as follows:i) Electrical Cables ii) Communication Cables iii) Copper Rodsiv) Others

The above business segments have been identified consideringi) The nature of the product/services ii) The related risks and returns iii) The internal financial reporting systems

Revenue and expenses have been accounted for based on their relationship to the operating activities of the segment. Revenues and expenses which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocable Expenses”. Assets and Liabilities which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis have been included under “Unallocable Assets/Liabilities”.



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22 A) Primary Segment Information for the year ended 31st March, 2010(Rs. in million)

Period Electrical Cables

Communication Cables

Copper Rod

Others Other than Segments

Elimination Total

REVENUEExternal Current Year 10,383.225 2,790.661 3,710.246 381.822 — — 17,265.954

Previous Year 8,751.144 2,825.780 3,047.081 391.480 — — 15,015.484Inter - segment Current Year — — 6,370.581 1,826.619 — (8,197.200) —(Net of Excise) Previous Year — — 4,438.334 20.250 — (4,458.584) —Less : Excise Duty Current Year 558.883 200.423 297.211 22.282 — — 1,078.798

Previous Year 903.583 293.913 359.581 43.336 — — 1,600.412Total Revenue Current Year 9,824.342 2,590.238 9,783.616 2,186.159 — (8,197.200) 16,187.156

Previous Year 7,847.561 2,531.867 7,125.834 368.394 — (4,458.584) 13,415.072RESULTSegment Result Current Year 1,564.159 434.800 167.030 (27.659) — — 2,138.330

Previous Year 878.982 440.567# 105.205 (30.993) — — 1,393.760

Other Unallocable income Current Year — — — — (1,077.690) — (1,077.690)net of expenditure Previous Year — — — — (1,394.454) — (1,394.454)LessInterest Expenses Current Year — — — — — — 168.954

Previous Year — — — — — — 300.124Profit before Taxation Current Year — — — — — — 891.686

Previous Year — — — — — — (300.818)LessProvision for Taxation Current Year — — — — — — 315.426

Previous Year — — — — — — 54.093Profit after Tax Current Year — — — — — — 576.260

Previous Year — — — — — — (354.911)OTHER INFORMATIONSegment Assets Current Year 4,288.828 2,112.792 303.623 1,105.061 3,617.071 — 11,427.375

Previous Year 3,298.910 2,250.243 336.485 859.313 4,110.907 — 10,855.858Segment Liabilities Current Year 397.239 195.691 28.122 102.353 1,202.579 — 1,925.984

Previous Year 377.889 257.764 38.544 98.434 941.288 — 1,713.919Capital Expenditure Current Year 140.083 16.251 4.306 94.352 36.050 — 291.042

Previous Year 442.497 102.887 2.354 276.126 69.430 — 893.294Depreciation Current Year 155.586 151.015 19.400 39.400 6.869 — 372.270

Previous Year 101.468 217.413 19.315 43.913 5.527 — 387.636# Includes Rs. 271.298 million pertaining to reversal of impairment loss. (Refer note no. 7)

22 B) Secondary Segment Information (by Geographical Segment)(Rs. in million)

Particulars Year ended 31.03.2010


REVENUE (Net of Excise)Exports 592.433 785.688Domestic 15,594.723 12,629.384Total 16,187.156 13,415.072DebtorsExports 23.194 50.372Domestic 687.277 526.302Total 710.471 576.674

Note :Assets of the Company except sundry debtors are not identified with the geographical segment as these are used interchangeably and are located in India.


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23. Disclosure as per Accounting Standard 15 (Revised 2005)

The following table sets out the status of the Gratuity Plan as required under AS 15 (Revised 2005).

Statement Showing changes in Present Value of obligations(Rs. in million)

2010 2009Present Value of obligations at the beginning of the Year 67.007 49.114Interest Cost 5.345 3.933Current Service Cost 6.399 4.419Benefits Paid (3.512) (7.224)Actuarial(gain)/Loss on obligations 3.916 16.764P.V. of obligations as at end of the year 79.155 67.007

Table showing changes in the fair value of plan assets

2010 2009

Fair Value of plan Assets at the beginning of the year 50.242 48.686

Expected return on Plan assets 5.343 4.436

Contributions 22.199 4.350

Benefits Paid (3.512) (7.224)

Actuarial Gain/ (Loss) on Plan assets 0.513 (0.055)

Fair value of plan Assets at the end of Year 74.785 50.242

Funded Status (4.370) (16.764)

Actuarial Gain/Loss recognised

2010 2009

Actuarial gain/(Loss) for the year-obligation (3.916) (16.764)

Actuarial gain/(Loss) for the year-plan assets 0.513 (0.055)

Total(gain)/Loss For the year 3.403 16.770

Actuarial (gain)/Loss recognised in the year 3.403 16.770

Amounts to be recognised in the Balance Sheet

2010 2009

Present Value of obligations as at the end of the year 79.155 67.007

Fair value of plan assets as at the end of the year 74.785 50.242

Funded Status (4.370) (16.764)

Net Asset/(Liability) recognised in balance sheet (4.370) (16.764)

Expenses Recognised in statement of Profit & Loss Account

2010 2009

Current Service Cost 6.399 4.419Interest Cost 5.345 3.933Expected return on plan assets (5.343) (4.436)Net Actuarial(gain)/Loss recognised in the year 3.403 16.770Expenses recognised in statement of Profit & Loss 9.804 20.687



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Table showing fair value of plan assets

2010 2009

Fair Value of plan assets at beginning of the year 50.242 48.686Actual return on plan assets 5.856 4.430Contributions 22.199 4.350Benefits Paid (3.512) (7.224)Fair Value of plan assets at the end of the year 74.785 50.242Funded Status (4.370) (16.764)Excess of actual over estimated return on Plan Assets 0.513 (0.055)

Actuarial Assumptions:

Other than Copper Rod Division Rod DivisionDiscounted Rate 8% 8%Salary Escalation 7% 7%

24. Figures in respect of the previous year have been regrouped or rearranged wherever necessary to conform to current year’s classification.

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25. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

(Information pursuant to Part IV of Schedule VI to the Companies Act, 1956)

I. Registration Details

Registration No. 1 6 5 3 1

Date Month Year State Code

Balance Sheet Date 3 1 0 3 2 0 1 0 1 1

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

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

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

Total Liabilities Total Assets

9 5 0 1 3 9 1 9 5 0 1 3 9 1

Sources of Funds

Paid-up Capital Reserves and Surplus

3 0 5 8 7 9 6 1 2 5 1 9 5

Deferred Tax Credit (Net)

3 1 9 1 3 6

Secured Loans Unsecured Loans

2 4 6 5 6 9 0 2 8 5 4 9 1

Application of Funds

Net Fixed Assets Investments

4 4 7 5 8 1 9 2 8 0 2 7 4 6

Net Current Assets Miscellaneous Expenditure

2 2 2 2 8 2 6 N I L

Accumulated Losses

N I L

IV. Performance of the Company (Amount in Rs. thousands)

Turnover Total Expenditure

1 6 4 2 8 2 5 9 1 5 5 3 6 5 7 3

+ / - Profit /Loss Before Tax + / - Profit /Loss After Tax

+ 8 9 1 6 8 6 + 5 7 6 2 6 0

Earnings Per Share in Rs. Dividend Rate % (For Face Value of Rs 2/- each)

Rs. 3 . 7 7 3 0


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V. Generic Names of Three Principal Products / Services of the Company

(As per Monetary Terms)

Item Code No. (ITC Code) Product Description

8 5 4 4 4 9 1 9 JELLY FILLED TELEPHONE CABLES


8 5 4 4 ELECTRICAL CABLES - LIGHT DUTY


8 5 4 4 ELECTRICAL CABLES - HEAVY DUTY


9 0 0 1 1 0 FIBRE OPTIC CABLE


8 5 4 4 2 0 CO- AXIAL CABLES


8 5 4 4 5 9 LAN CABLES


3 9 2 0 PVC SHEETS


7 4 0 7 . 1 0 CONTINUOUS CAST COPPER RODS




A.J. Engineer


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CORPORATE GOVERNANCE

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:

The Company’s philosophy on Corporate Governance envisages attainment of transparency, accountability and propriety in the total functioning of the Company and in the conduct of its business internally and externally, including its interactions with employees, shareholders, deposit holders, creditors, consumers and institutional and other lenders.

The Company believes that its systems and actions must be dovetailed for enhancing the performance and shareholder value in the long term.

The Company has adopted certain practices to achieve good corporate governance; the salient ones being fairness and transparency in dealings, accountability for performance, effective management control by the Board, constitution of Board Committees as a part of internal control system, fair representation of professional, qualified, non-executive and independent Directors on Board, adequate and timely disclosure of financial and other information and prompt discharge of statutory obligations and duties. The Board has laid down a Code of Conduct for all Board members and senior management of the Company. The Code of Conduct has been hosted on the website (http://www.finolex.com) of the Company.

2. BOARD OF DIRECTORS:

2.1 Constitution of the Board:

• The Composition of the Board of Directors with reference to number of executive and non-executive Directors, meets the requirement of Code of Corporate Governance.

• Out of Twelve Directors, there are three promoter executive Directors namely Mr. P. P. Chhabria, Chairman, Mr. D. K. Chhabria, Managing Director and Mr. V. K. Chhabria, Deputy Managing Director and one non-promoter executive Director namely Mr. M. L. Jain, Assistant Managing Director and Chief Operating Officer. Pursuant to his appointment as the Managing Director of Finolex Plasson Industries Limited, associate company, Mr. V. K. Chhabria has ceased as Deputy Managing Director of the Company with effect from close of business hours on 31st March 2010 as approved by the Board at its meeting held on 30th April, 2010.

• There are eight independent non-executive Directors, namely Dr. H. S. Vachha, Mr. B. G. Deshmukh, Mr. Atul C. Choksey, Mr. Sanjay K. Asher, Mr. P. G. Pawar, Mr. S.B. (Ravi) Pandit, Mr. P. R. Rathi and Mr. A. J. Engineer. Mr. A. K. Puri erstwhile non promoter non-executive Director who was appointed on 16th October, 2008 as additional director ceased to be a Director of the Company with effect from 26th August 2009, date of Annual General Meeting.

2.2 Meetings:

Board meetings are held at least four times during the year coinciding with the presentation of each quarterly financial result. During the last Financial Year five Board Meetings were held i.e. on 5th May, 2009, 11th June, 2009, 22nd July, 2009, 27th October, 2009 and 15th January 2010.

The meetings were attended as follows:

• Mr. P. P. Chhabria, Mr. D. K. Chhabria, Mr. M. L. Jain, Dr. H. S. Vachha, Mr. B. G. Deshmukh, Mr. S. B. (Ravi) Pandit and Mr. P. R. Rathi attended all five meetings.

• Mr. V. K. Chhabria and Mr. A. J. Engineer attended four meetings.

• Mr. Sanjay K. Asher and Mr. P. G. Pawar attended three meetings.

• Mr. Atul C. Choksey attended two meetings.

• Mr. A. K. Puri who ceased to be a Director of the Company with effect from 26th August 2009, had not attended any meetings during the year.

All Directors attended last Annual General Meeting on 26th August, 2009 except for Mr. Atul C. Choksey, Mr. S. B. (Ravi) Pandit, Mr. A. J. Engineer and Mr. A. K. Puri.


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2.3 Remuneration to Executive Directors :

Particulars Chairman Managing Director Deputy Managing Director

Assistant Managing Director and Chief Operating Officer

P. P. Chhabria D. K. Chhabria V. K. Chhabria M. L. JainSalary and Allowances 6,000,000 6,000,000 3,600,000 2,040,000Contribution to Provident and Superannuation Funds

1,620,000 1,620,000 972,000 550,800

Other Perquisites 5,999,320 5,999,061 3,599,057 1,789,778Commission / Incentive 10,000,000 10,000,000 6,000,000 500,000Total 23,619,320 23,619,061 14,171,057 4,880,578

Notes:

1) There was no scheme of ‘Employee Stock Options’ during the year.

2) The above does not include contributions to group superannuation and gratuity funds as the contributions/ benefits are on group basis.

3) In all the cases, the service contract is for a period of five years from the date of appointment. Notice period/ severance fees applicable are 180 days for Mr. P. P. Chhabria, Mr. D.K. Chhabria and Mr. V. K. Chhabria, and 90 days in case of Mr. M. L. Jain.

4) Performance is evaluated by the Remuneration Committee which, inter alia, considers and recommends payment of commission/ incentive based on the performance of the Company and contemporary practices in Industry. The recommendations of the Committee are further considered by the Board and a collective decision taken without participation of interested Directors.

5) Pursuant to the recommendation of the Remuneration Committee of Directors and the approval of the Members in the Annual General Meeting (“AGM”) held on 26th August, 2009 in terms of the provisions of Section 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956 (the “Act”) read with Schedule XIII to the Act, the Company has filed separate applications with the Central Government for obtaining its approval for payment of remuneration including all perquisites but excluding commission due to inadequacy or absence of profits for the previous financial year 2008-2009, to the following whole time Directors of the Company namely : Mr. P. P. Chhabria, Chairman, Mr. D. K. Chhabria, Managing Director, Mr. V. K. Chhabria, Deputy Managing Director and Mr. M. L. Jain, Assistant Managing Director and Chief Operating Officer. The approval of the Central Government is yet to be received by the Company.

2.4 Remuneration to Non-Executive Directors :

Name of Non-Executive Director

Sitting Fees (Rs.)

Commission (Rs.)

Total (Rs.)

Shareholding (in Nos. of shares) of Non-Executive Directors in the Company

Dr. H. S. Vachha 195,000 150,000 345,000 —Mr. B. G. Deshmukh 90,000 100,000 190,000 —Mr. Atul C. Choksey 30,000 100,000 130,000 —Mr. Sanjay K. Asher 240,000 100,000 340,000 12,395Mr. P. G. Pawar 135,000 100,000 235,000 —Mr. S. B. (Ravi) Pandit 75,000 100,000 175,000 —Mr. P. R. Rathi 255,000 100,000 355,000 —Mr. A. J. Engineer 60,000 100,000 160,000 —Mr. A. K. Puri(ceased w.e.f.26.08.2009)

— — — —

Total 1,080,000 850,000 1,930,000 12,395

a) Sitting fees are uniform for meetings of the Board / Committee thereof and are paid to each non-executive Director for attending Board / Committee meetings.

b) Commission not exceeding one percent of the net profits of the Company or Rupees Thirty Lacs, whichever is less as per the terms of Section 309 of the Companies Act, 1956 and as may be determined by the Board each financial year is payable to non-executive Directors. Such commission being divisible amongst such Directors in such proportion as the Chairman of the Board may determine or, failing such determination, is shared equally amongst them. The sitting

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fees was approved by the Members at the Annual General Meeting held on 5th July, 2005 and payment of commission to non-executive Directors upto a maximum of Rs. 30 Lacs was approved by the Members at the Annual General Meeting held on 30th July, 2008.

2.5 The details of other Directorship and Committee membership :

No. of Companies Committee positions heldDirectorship in Public Companies Other Companies

Mr. P. P. Chhabria 2 10 2 (Chairman of two)Dr. H. S. Vachha 6 — 5 (Chairman of four)Mr. B. G. Deshmukh 2 3 1 (Chairman of one)Mr. Atul C. Choksey 8 1 —Mr. Sanjay K. Asher 15 18 8 (Chairman of five)Mr. P. G. Pawar 5 12 3 (Chairman of one)Mr. D. K. Chhabria 1 8 —Mr. V. K. Chhabria* 1 — —Mr. M. L. Jain — 1 —Mr. S. B. (Ravi) Pandit 2 1 2Mr. P. R. Rathi 10 10 4Mr. A. J. Engineer 6 — 3 (Chairman of one)

* Mr. V.K. Chhabria ceased at close of business hours on 31st March, 2010 and Mr. A. K. Puri ceased earlier with effect from 26th August, 2009 date of last AGM.

In accordance with Clause 49 of the listing agreements with the Stock Exchanges, memberships/ chairmanships of only the Audit Committee and Shareholders’/ Investors’ Grievance Committees of all public limited companies (excluding those of the Company), have been considered.

2.6 Information placed before the Board of Directors :

The information placed before the Board of Directors is as follows:

a) Annual operating plans and budgets, revisions and updates, if any.

b) Capital budgets with revisions and updates, if any.

c) Quarterly (including periodic) results of the Company and its operating divisions / business segments.

d) Minutes of the meetings of Audit and other Committees of the Board.

e) The information on recruitment and remuneration of senior officers below the Board level, including appointment or cessation of office by Chief Financial Officer and Company Secretary.

f) Show cause, demand and prosecution notices, which are materially important.

g) Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.

h) Details of any joint venture or collaboration agreement.

i) Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.

j) Industrial relationship issues of material nature and proposed remedial actions. All significant developments in Human Resources / Industrial Relations.

k) Transactions of material nature of buying and selling of investments, or undertaking / assets, which are not in normal course of business.

l) Quarterly reports on foreign exchange exposure and the steps taken by the Management to manage the risks of adverse exchange rate movement, if material.

m) Status on compliance with all regulatory, statutory and material contractual requirements.

n) Details of delegation of authorities to executives and Powers of Attorney issued.

3. AUDIT COMMITTEE:

The Audit Committee which was formed in February 1997, presently comprises of four independent non-executive Directors, namely Dr. H.S. Vachha (Chairman of the Committee), Mr. Sanjay K. Asher, Mr. P. R. Rathi (Alternate Chairman) and Mr. P.G. Pawar (co-opted by Board at its meeting held on 30th April, 2010).

Mr. R. G. D’Silva, Company Secretary & Vice President (Legal) acts as the Secretary to the Committee.


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The brief terms of reference of the Audit Committee include-

1) Review of the Company’s financial reporting process and financial statements,

2) Review of accounting and financial policies and practices,

3) Review of internal control and internal audit systems,

4) Discussion with Internal Auditors and Statutory Auditors on any significant findings and follow-up thereon,

5) Reviewing the Company’s financial and risk management policies, including foreign exchange related risks,

6) To investigate any activity within its terms of reference,

7) To seek information from any employee,

8) To obtain outside legal or other professional advice,

9) To secure attendance of outsiders with relevant expertise, if it considers necessary,

10) Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statements is correct, sufficient and credible,

11) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees,

12) Approval of payment to statutory auditors for any other services rendered by the statutory auditors,

13) Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:

a) Matters required to be included in the Directors’ Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956,

b) Changes, if any, in accounting policies and practices and reasons for the same,

c) Major accounting entries involving estimates based on the exercise of judgment by management,

d) Significant adjustments made in the financial statements arising out of audit findings,

e) Compliance with listing and other legal requirements relating to financial statements,

f) Disclosure of any related party transactions,

g) Qualifications, if any, in the draft audit report,

14) Reviewing, with the management, the quarterly financial statements before submission to the Board for approval,

15) Reviewing, with the management, performance of statutory and internal auditors and adequacy of the internal control systems,

16) Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit,

17) Discussion with internal auditors any significant findings and follow up there on,

18) Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board,

19) Discussion with the statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussions to ascertain any area of concern,

20) To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors,

21) The Audit Committee shall mandatorily review the following information:

a) Management discussion and analysis of financial condition and results of operations,

b) Statement of significant related party transactions (as defined by the Audit Committee),

c) Management letters/ letters of internal control weaknesses issued by the Statutory Auditors,

d) Internal audit reports relating to internal control weaknesses, and

e) The appointment, removal and terms of remuneration of the Chief Internal auditor.

The Committee has met 8 times during the financial year ended 31st March 2010, as against the minimum requirement of four meetings i.e. on 12th May, 2009, 5th June, 2009, 11th June, 2009, 22nd July, 2009, 5th September, 2009, 27th October, 2009, 8th January, 2010 and 15th January, 2010. Dr. H.S. Vachha attended 8 meetings, Mr. Sanjay K. Asher attended 7 meetings and Mr. P. R. Rathi attended 5 meetings. The date of the meeting of the Committee held for considering finalization of accounts for the year ended 31st March, 2010 was 30th April, 2010.

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4. REMUNERATION COMMITTEE:

In view of the importance given by the Company to good corporate governance and though it is a non-mandatory requirement, a Remuneration Committee was constituted by the Board of Directors at its meeting held on 21st October, 2000.

The Remuneration Committee has been set up to determine on behalf of the Board and on behalf of the shareholders with agreed terms of reference, the Company’s policy on specific remuneration packages for Executive Directors including pension rights and any compensation payment.

The Committee comprises of four independent and non-executive Directors namely Mr. B.G. Deshmukh (Chairman of the Committee), Mr. Sanjay K. Asher, Mr. P. G. Pawar and Mr. P. R. Rathi.

Mr. R.G. D’Silva, Company Secretary & Vice President (Legal) acts as the Secretary to the Committee.

The Committee has met on 11th June, 2009 during the financial year ended 31st March 2010. Mr. B.G. Deshmukh, Mr. Sanjay K. Asher and Mr. P.R. Rathi attended the said meeting.

5. SHAREHOLDERS’ COMMITTEE:

The Share Transfer cum Investors’ Grievances Committee presently comprises of three executive Directors (namely Mr. P. P. Chhabria, Mr. D. K. Chhabria and Mr. M.L. Jain) and three independent, non-executive Directors (namely Mr. P.G. Pawar, Mr. Sanjay K. Asher and Mr. P. R. Rathi). Mr. P.G. Pawar an independent and non-executive Director is the Chairman of the Committee. The Board has designated Mr. R.G. D’Silva, Company Secretary & Vice President (Legal) as the Compliance Officer.

The Committee in addition to considering matters of share transfers, oversees redressal of shareholders’ and investors’ complaints/grievances and recommends measures to improve the level of investor services.

The Committee normally meets once in a month, as required, and there were 6 meetings during the year.

One complaint was received and replied to the satisfaction of shareholder during the year. No complaint was outstanding as on 31st March 2010.

6. GENERAL BODY MEETINGS:

Location and time for last three Annual General Meetings:

Year Location Date Time Whether any special resolution passed therein

2006-07 Acharya Atre Rangmandir Sant Tukaramnagar,Pimpri, Pune 411 018

29th June, 2007 11.30 a.m. Yes


30th July, 2008 11.30 a.m. Yes


26th August, 2009 11.30 a.m. Yes

(a) Special resolution pursuant to the recommendation of Remuneration Committee of Directors at its meeting held on 11th June, 2009 and in terms of the provisions of Section 198, 269, 309 and other applicable provisions, if any, of the Companies Act, 1956 (the “Act”) read with Schedule XIII to the Act in respect of payment of remuneration including all perquisites but excluding commission in case of inadequacy or absence of profits for the financial year 2008-2009, to the following whole time Directors of the Company namely : Mr. P. P. Chhabria, Chairman, Mr. D. K. Chhabria, Managing Director, Mr. V. K. Chhabria, Deputy Managing Director and Mr. M. L. Jain, Assistant Managing Director and Chief Operating Officer was passed in the Annual General meeting held on 26th August, 2009.

(b) No special resolution was passed through postal ballot last year and no such resolution is proposed to be passed by postal ballot this year.

7. DISCLOSURES:

(a) Disclosures regarding materially significant related party transactions :

For details please refer Schedule 15 (Note No. 9) of Notes forming part of the Accounts.


67

(b) There were no instances of non-compliance or penalty, strictures imposed on the Company by the Stock Exchanges or SEBI or any other Statutory Authority on any matter related to capital markets, during the last three years.

(c) The Company has complied with the mandatory requirements of corporate governance Clause 49 of the Listing Agreements with the Stock Exchanges.

(d) The non-mandatory requirements have not been adopted as a formal policy except for Remuneration Committee as set out in item 4 above.

8. MEANS OF COMMUNICATIONS:

The quarterly results of the Company are published in leading newspaper viz, normally Business Standard (all editions) and Sakal (Pune edition) and also displayed on the corporate website (http://www.finolex.com) along with official news releases. The corporate presentation last prepared by the Company was uploaded on its website and was also informed to the stock exchange for taking the same on record. Management provides detailed analysis of Company’s operations, which forms a part of the Annual Report.

9. SHAREHOLDER INFORMATION:

The Annual report includes Financial Statements, key financial data and detailed information in the Management Discussion and Analysis and Shareholders’ information sections.

10. CODE OF CONDUCT:

The Board had laid down a code of conduct for all Board members and senior management of the Company. The Code of Conduct has been hosted on the website (http://www.finolex.com) of the Company.

Declaration:

All Board members and senior management personnel have affirmed compliance with the Code of Conduct of the Company in the year under report.

Sd/-Place: Pune D K ChhabriaDate: 30th April, 2010 Managing Director

Auditors’ Certificate on Corporate GovernanceTo the Members of FINOLEX CABLES LIMITED

We have examined the compliance of conditions of corporate governance by Finolex Cables Limited (the Company) for the year ended on 31st March 2010 as stipulated in clause 49 of the Listing Agreement of the Company with the stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreements.

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

For and on behalf ofB. K. KHARE & CO.

Chartered Accountants

Sd/-U. B. JOSHI

PartnerPlace : Pune Membership No. 44097Date : 30th April, 2010 Firm Registration No. 105102W

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Shareholder InformationRegistered Office

Finolex Cables Limited, 26/27 Mumbai-Pune Road, Pimpri, Pune 411 018

Annual General Meeting

The Forty Second Annual General Meeting (“AGM”) of the Company will be held on Monday, 9th August, 2010 at 11.00 a.m., at Acharya Atre Rangmandir, Sant Tukaramnagar, Pimpri, Pune- 411 018.

Financial Calendar (Tentative):

(a) Annual General Meeting : 9th August, 2010

(b) Results for quarter ending 30th June, 2010 : Second week of August, 2010

(c) Results for quarter ending 30th September, 2010 : Second week of November, 2010

(d) Results for quarter ending 31st December, 2010 : Second week of February, 2011.

(e) Results for quarter ending 31st March, 2011 : Last week of May, 2011.

Dates of Book Closure

The Company’s Transfer Books will be closed from Saturday, 17th July, 2010 to Monday, 9th August, 2010 (both days inclusive) for purpose of AGM and for payment of Dividend for the year ended 31st March, 2010.

Dividend Payment

The Board of Directors of the Company at its meeting held on 30th April, 2010 recommended payment of Dividend @ 30% (i.e. Rs.0.60 per share) for the year ended 31st March, 2010. The payment of dividend is to be approved by the shareholders at the AGM and as on the date is exempt from income-tax in the hands of shareholders. The aforesaid Dividend, if declared at the AGM, will be paid on or before 7th September, 2010 to those members whose names appear in the Register of Members as on the date of AGM. In respect of shares held in electronic form, the dividend will be paid on the basis of beneficial ownership as per the details to be received from the Depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for this purpose, the same being as of close of their respective hours of business on the date immediately preceding the aforesaid Book Closure period (i.e. as of Friday, 16th July, 2010).

Stock Exchange Listing

The Company’s shares are presently listed on the Stock Exchanges at Ahmedabad, Bangalore, Chennai, Cochin, Delhi, Kolkata, Mumbai and Pune and also on the National Stock Exchange and OTC Stock Exchange. The Company’s Global Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange.

Stock Code

Code/ Trading Symbol ISIN

Trading Symbol Bombay Stock Exchange 500144

Trading Symbol National Stock Exchange FINCABLES-EQ INE235A01022

Payment of Listing Fees

Annual Listing Fee for the year 2010-11 as applicable has been paid to the said Stock Exchanges and Annual Maintenance Fees for the Calender year 2010 has been paid by the Company to the Luxembourg Stock Exchange in respect of the GDRs listed thereon.


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Stock Market Data

The monthly high and low quotations and volume of shares traded at National Stock Exchange Limited (NSE) and Bombay Stock

Exchange Limited (BSE) are as follows: (Source : BSE and NSE websites)Period NSE BSE

High (Rs.) Low (Rs.) Volume Shares traded (Nos.)

High (Rs.) Low (Rs.) Volume Shares traded (Nos.)

April 09 28.35 19.05 1,952,456 28.45 19.50 1,475,722May 09 41.65 23.75 2,797,340 41.40 23.75 2,017,881June 09 44.40 30.05 2,761,334 45.00 30.00 1,847,179July 09 42.40 26.55 6,918,891 42.25 26.50 5,863,705August 09 44.50 35.55 7,336,601 45.00 36.00 6,198,430September 09 50.60 41.50 7,495,885 50.55 40.70 6,142,033October 09 56.40 44.00 8,009,332 56.70 44.30 6,161,415November 09 57.00 47.00 4,661,600 56.60 46.00 3,210,187December 09 62.60 53.20 5,645,015 62.50 53.00 3,462,466January 10 71.40 50.35 8,831,949 71.30 50.25 5,641,097February 10 54.65 48.10 2,121,282 54.90 48.10 1,233,734March 10 54.85 48.65 2,578,007 55.00 48.50 1,563,824Total 61,109,692 44,817,673

Registrar and Transfer Agents

The Company has taken requisite steps and centralized at a single point its share registry works for shares held in physical as well as electronic form with Finolex Industries Limited, P-14, Rajiv Gandhi Infotech Park, MIDC Hinjewadi, Pune – 411 057 holding Share Transfer Agent Category II Registration No. INR0000001765 issued by Securities and Exchange Board of India (“SEBI”).

Share Transfer System

Share Transfer requests received in physical form are registered within 30 days from date of receipt and Demat requests are normally confirmed within an average of 15 days from the date of receipt.

Statistics of shareholders - 2008 - 201031st March No. of shareholders

2008 35,862 2009 42,351 2010 44,077

Shareholding Pattern as on 31st March, 2010Category No. of shares held Percentage ShareholdingA Promoters Shareholding

1. Promoters* 53,721,077 35.13– Indian Promoters NIL NIL– Foreign Promoters NIL NIL2. Persons acting in Concert

Sub Total 53,721,077 35.13B. Non-Promoters holding

3. Institutional Investorsa Mutual Funds and UTI 7,140,468 4.67b Banks, Financial Institutions, Insurance Companies

(Central / State Govt. Institutions/ Non-Government Institutions)14,299,875 9.35

c FIIs 3,141,181 2.05 Sub Total 24,581,524 16.07

4. OTHERSa Private Corporate Bodies** 26,221,015 17.15b Indian Public 41,526,649 27.15c NRIs/ OCBs 752,655 0.49d Any others (Custodian for GDRs) 6,136,425 4.01

Sub Total 74,636,744 48.80 Grand Total 152,939,345 100.00

* The promoters have confirmed to the Board of Directors that they have not pledged any of their shares held in the Company as at 31st March 2010 with any party / bank.

** Includes 22,187,075 shares (14.51%) held by Associate Company- Finolex Industries Limited.

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Distribution by Size of Shareholding as on 31st March, 2010

No. of Equity Shares held No. of shareholders % of Shareholders No. of Shares % of Shareholding1-100 17,461 39.61 1,112,470 0.73101-500 15,914 36.11 4,936,218 3.23501-1000 4,555 10.33 3,941,925 2.581001-5000 5,327 12.09 12,585,086 8.235001-10000 450 1.02 3,310,995 2.1610001 & above 370 0.84 127,052,651 83.07Grand Total 44,077 100.00 152,939,345 100.00

Corporate Benefits to Investors

a) Bonus Issues of Fully Paid-up Equity Shares:

Year Ratio1999 1:11994 1:11992 1:11988 4:5

b) Dividend Declared during previous 10 years:

Financial Year Date of Declaration Face Value of Equity Shares (Rs.)

Dividend RatePercentage (%) Amount (Rs.)/ per share

2008-09 26th August, 2009 2* 10 0.20*2007-08 30th July, 2008 2* 75 1.50*2006-07 29th June, 2007 2* 70 1.40*2005-06 27th June, 2006 10 60 6.002004-05 5th July, 2005 10 45 4.502003-04 18th June, 2004 10 40 4.002002-03 12th June, 2003 10 30 3.002001-02 31st July, 2002 10 75 7.502000-01 31st July, 2001 10 75 7.501999-00 22nd August, 2000 10 75 7.50

* In the year 2006-07, the Company had sub-divided each Equity Share of Rs.10/- face value into 5 (Five) Equity Shares of Rs.2/- each with effect from 16th January, 2007.

Dematerialisation of Shares

The Company’s equity shares are included in the list of Companies whose scrips have been mandated by SEBI for settlement only in dematerialized form by all institutions and all investors. The Company had signed agreement with National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL) to offer depository services to its shareholders. As on 31st March, 2010, 96.58% (i.e NSDL: 92.38 and CDSL: 4.20%) of the equity share capital of the Company has been dematerialized.


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Outstanding GDRs/ DRs/ Warrants, etc.

There are no outstanding GDRs/ DRs/ Warrants or any convertible instruments as on 31st March, 2010

Plant Locations:Pimpri (Electrical Cables) Urse (Electrical & Communication Cables)26/27, Mumbai-Pune Road Taluka MavalPimpri, Pune 411 018 Dist-Pune-410 506Telephone: 27506200 (15 lines) Telephone: (02114) 237026/27Facsimile:(020) 27472239/ 27472224 Facsimile: (02114) 237025Email:[email protected] Email:[email protected]

Optic Fibre Division Lighting Division (CFL)Urse Plot No. 399, Village UrseTaluka Maval Taluka MavalDist-Pune-410 506 Dist-Pune-410 506Telephone: (02114) 237003/4/5/6/7 Telephone: (02114) 237035, 237036Facsimile: (02114) 237009 Facsimile: (02114) 237041Email:[email protected] Email:[email protected]

Switches Division Sheets DivisionGat No. 344 Village Urse, Gat No. 399, Village UrseTaluka Maval Taluka MavalDist-Pune-410 506 Dist-Pune-410 506Telephone: (02114) 237021-2-3 Telephone: (02114) 237035/36Facsimile: (02114) 237006 Facsimile: (02114) 237042Email:[email protected] Email:[email protected]

Goa (Electrical & Communication Cables) Goa (Communication Cables) Plot No. 117/L118 Plot No. L123/9A,Verna Industrial Estate Verna Industrial EstateVerna Salcette Verna Salcette, South Goa, GOA South Goa, GoaTelephone: (0832) 2782002/3/4 Telephone: (0832) 2782002/3/4Facsimile: (0832) 2783909 Facsimile: (0832) 2783909Email:[email protected] Email:[email protected]

Goa (CCC Rod) RoorkeePlot No. S263/2 Plot Nos. K-1& K-2 AIS Industrial EstatePanjim-Belgaum Road Jatherdeva Hoond, Manglaur, RoorkeeUsgaon-Tisk, Ponda Taluka Haridwar, Goa-403406 Uttarakhand- 247667Telephone: (0832) 2344378/9 Telephone: (01332) 224069Facsimile: (0832) 2344140 Telefax: (01332) 224068Email:[email protected] Email:[email protected]

HVPC Urse, PuneGat No. 343, Village Urse Taluka MavalDist-Pune-410 506Telephone: (02114) 237001-5Facsimile: (02114) 237006Email:[email protected]

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Investor Correspondence

The Company’s Share Department provides assistance to shareholders under the supervision of Mr. R.G D’Silva, Company Secretary & Vice President (Legal).

Any query relating to shares and requests for transactions such as transfers, transmissions, nomination facilities, issue of duplicate share certificates, change of address pertaining to physical shares and non-receipt of dividends/ Annual Reports, as also regarding dematerialisation of shares may please be taken up with :

Mr. R.G D’SilvaCompany Secretary & Vice President (Legal)Finolex Cables Limited26/27 Mumbai – Pune Road,Pimpri, Pune 411 018Telephone: (20) 27506279/27506230Board: (020) 27506200/27475963 Ext 279/230Facsimile: (020) 27472239Email: [email protected] / [email protected]

Shareholder information On-line

The Balance Sheet information is a part of the Company’s World Wide home page http://www.finolex.com.. Users can obtain information on Company’s background products and services, Management and financial information and other major developments.

Nomination facility

Individual shareholders can avail of the facility of nomination. The nominee shall be person in whom all rights of transfer and / or amount payable in respect of the shares shall vest in the event of the death of concerned shareholder(s). A minor also can be a nominee provided the name of the guardian is given in the Nomination Form. The facility of nomination is not available to non-individual shareholders such as bodies corporate, financial institutions, Kartas of Hindu Undivided Families (HUFs) and holders of Power of Attorney. In case of any assistance, please contact, Company Secretary & Vice President (Legal) at the Registered Office of the Company.


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NOTICENOTICE is hereby given that the Forty Second Annual General Meeting of Members of Finolex Cables Limited will be held on Monday, 9th August, 2010 at 11.00 a.m. at Acharya Atre Rangmandir, Sant Tukaramnagar, Pimpri, Pune - 411 018, to transact the following business:

ORDINARY BUSINESS1. To receive, consider, approve and adopt the audited Balance Sheet as at 31st March, 2010 and the Profit & Loss

Account for the financial year ended on that date and the reports of the Directors and Auditors.

2. To declare dividend for the year ended 31st March, 2010.

3. To appoint a Director in place of Mr. S.B. (Ravi) Pandit, who retires by rotation, and being eligible, offers himself for reappointment.

4. To appoint a Director in place of Mr. Pradeep R. Rathi, who retires by rotation, and being eligible, offers himself for reappointment.

5. To appoint a Director in place of Mr. Sanjay K. Asher, who retires by rotation, and being eligible, offers himself for reappointment.

6. To appoint Auditors to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration and, in this connection, to pass, with or without modifications, the following resolution as an Ordinary Resolution, provided that in the event of the provisions of Section 224A of the Companies Act, 1956 becoming applicable to the Company on the date of holding of this meeting the same will be proposed as a Special Resolution.

“RESOLVED THAT M/s. B.K. Khare & Co., Chartered Accountants be and are hereby reappointed as Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and that the Board of Directors of the Company be and is hereby authorised to fix their remuneration.”

SPECIAL BUSINESS7. To consider, and, if thought fit, to pass, with or without modifications, the following resolution as an Ordinary

Resolution:

“RESOLVED THAT in accordance with the provisions of Sections 198, 269, 309, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 (the “Act”) and subject to the limits prescribed under the Act, and also subject to such approvals as may be necessary, the Company hereby approves the reappointment of Mr. D.K. Chhabria as whole time Director of the Company designated as Managing Director for a period of five years with effect from 1st July, 2010 upon terms and conditions as set out in the draft of the Agreement (placed before the meeting and initialed by the Chairman for purpose of identification) to be entered into between the Company and Mr. D.K. Chhabria the terms of which Agreement is hereby specifically approved with liberty to the Board of Directors (the “Board”) to alter and vary the terms and conditions of the said Agreement in such manner as may be agreed to between the Board and Mr. D.K. Chhabria but so as not to exceed the limits specified in Scheduled XIII read with Sections 198, 309 and other applicable provisions, if any, of the Act or any amendments thereto or reenactments thereof.

AND RESOLVED FURTHER THAT the Board be and is hereby authorised to do all such acts, deeds, matters and things as may be considered necessary, usual, proper or expedient to give effect to the aforesaid resolution.”

8. To consider, and, if thought fit, to pass, with or without modifications, the following resolution as a Special Resolution:

“RESOLVED THAT pursuant to the provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 (the “Act”) and subject to the provisions of Section 268 and other applicable provisions, if any, of the Act, the Rules framed under the Act as may be applicable as also such approvals as may be required in this regard,

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the following existing Articles of the Articles of Association of the Company be and are hereby amended as set out below:

(i) existing Article 121 of the Articles of Association of the Company be deleted and the following Article 121 be substituted in place thereof:

121. (1) Subject to the provisions of the Act, Executive Chairman, Managing Director and Executive Director may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the Company or partly by one way and partly by the other.

121. (2) Subject to the provisions of the Act, a Director, who is neither in the whole-time employment nor Executive Chairman, Managing Director or Executive Director may be paid remuneration either:-

(a) by way of monthly, quarterly or annual payment with the approval of the Central Government; or

(b) by way of commission if the Company by a special resolution authorised such payment.

121. (3) The fee payable to a Director for attending each meeting of the Board or a Committee thereof shall be determined by the Board and shall be such sum not exceeding the maximum sum as may be prescribed under Section 310 or any other provision of the Companies Act, 1956, as applicable to the Company.

(ii) existing Article 131 of the Articles of Association of the Company be deleted and the following Article 131 be substituted in place thereof:

131. At every Annual General Meeting of the Company, one third of such of the Directors for the time being as are liable to retire by rotation or if their number is not three or a multiple of three, the number nearest to one-third shall retire from office. The Debenture Directors, if any, shall not be subject to retirement under this clause and shall not be taken into account in determining the rotation of retirement or the number of Directors to retire. Notwithstanding anything to the contrary contained herein, no Chairman, Executive Chairman or Managing Director shall be liable to retire by rotation. Subject to the provisions of the Act, an Executive Director may be appointed by the Board as a Director not liable to retire by rotation.

(iii) existing Article 141 of the Articles of Association of the Company be deleted and the following Article 141 be substituted in place thereof:

141.(1) (a) The Board shall be entitled to appoint, as mentioned in Article 149, any Director for the time being of the Company as Chairman of the Board of Directors. The Board shall also be entitled to appoint Executive Chairman and also Managing Director, who shall both be in whole time employment of the Company. The Executive Chairman shall be Chief Executive of the Company.

(b) If the Chairman appointed pursuant to Article 149 is Executive Chairman, the Company shall also appoint a suitable person as Managing Director of the Company.

(c) If the Chairman appointed pursuant to Article 149 is not Executive Chairman, the Company may at any time thereafter appoint any person as Executive Chairman whereupon he shall be the Chief Executive pursuant to sub-clause (a) above and Managing Director if already appointed as Chief Executive shall be appropriately re-designated.

(d) If the Company has a non-executive Chairman the term ”Chairman” wherever used in these Articles shall mean the non-executive Chairman referred to in Article 89 and not Executive Chairman. If, however, the Company does not have a non-executive Chairman the term ”Chairman” wherever used in these Articles shall mean Executive Chairman, if one is appointed.

(e) In addition to Executive Chairman and Managing Director, the Board shall be entitled to appoint one or more Executive Directors who shall be in whole time employment of the Company.


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(f) Executive Chairman, Managing Director and Executive Directors shall be whole-time Directors of the Company.

(g) No person who is a relative of Executive Chairman shall be entitled to be appointed as Managing Director or Executive Director and no person who is a relative of Managing Director shall be entitled to be appointed as Executive Chairman or Executive Director. The term “relative” shall have the meaning assigned thereto by Section 6 of the Act.

(h) The powers and duties of Executive Chairman, Managing Director and Executive Director shall be such as are determined by the Board.

141.(2) The remuneration of the Executive Chairman, Managing Director and Executive Director (who is in the whole time employment of the Company) shall be such as may be determined by the Board from time to time and may be by way of monthly payment, fee for each meeting or participation in profits or by any or all these modes or any other mode not expressly prohibited by the Act.

141.(3) Executive Chairman, Managing Director and Executive Director shall not be required to hold any qualification shares and subject to the provisions of the Act and these Articles, shall not be liable to retire at any General Meeting of the Company.

(iv) existing Article 142 of the Articles of Association of the Company be deleted and the following Article 142 be substituted in place thereof:

142. The Executive Chairman, Managing Director or Executive Director shall not exercise the powers to:-

(a) make calls on Shareholders in respect of money unpaid on the shares in the Company;

(b) issue of debentures;

and except to the extent mentioned in the resolution passed at the Board meeting, under Section 292 of the Act, shall also not exercise the powers to:-

(c) borrow moneys, other than on debentures;

(d) invest the funds of the Company; and

(e) make loans

(v) existing Article 143 of the Articles of Association of the Company be deleted and the following Article 143 be substituted in place thereof:

143. The Company shall not appoint or employ, or continue the appointment or employment of a person as its Executive Chairman, Managing Director or Executive Director who:

(a) is an undischarged insolvent, or has at any time been adjudged an insolvent;

(b) suspends, or has at any time suspended, payment to his creditors or makes, or has at any time made, a composition with them; or

(c) is, or has at any time been, convicted by a Court of an offence involving moral turpitude.

(vi) existing Article 148 of the Articles of Association of the Company be deleted and the following Article 148 be substituted in place thereof:

148. The Executive Chairman/Managing Director/Executive Director/ Secretary shall, as and when directed by any Director to do so, convene a meeting of the Board by giving a notice in writing to every Director.

(vii) existing Article 159 of the Articles of Association of the Company be deleted and the following Article 159 be substituted in place thereof:

159. The Company shall not appoint or employ at the same time more than one of the following categories of managerial personnel, set out at (a) or (b) below namely:-

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(a) Managing Director, by whatever name called

(b) Manager

RESOLVED FURTHER THAT the Board of Directors of the Company (hereinafter referred to as the “Board” which term shall be deemed to include any Committee constituted or to be constituted for the purposes herein) be and is hereby authorized to do all such acts, deeds, matters and things as may be considered necessary, usual, proper or expedient to give effect to these resolutions without being required to seek any further consent or approval of members or otherwise to the end and intent that the members shall be deemed to have given their approval thereto expressly by the authority of these resolutions.”

By Order of the Board of Directors

R.G. D’SILVAPlace : Pune Company Secretary &Dated : 30th April, 2010 Vice President (Legal)

Registered Office:26/27, Mumbai-Pune RoadPimpri, Pune - 411 018.

Notes:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND

AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXY, IN ORDER TO BE EFFECTIVE, MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING.

2. The Explanatory Statement setting out the material facts concerning the special business mentioned under item Nos. 7 to 8 of the Notice as required under Section 173 (2) of the Companies Act, 1956 is annexed hereto.

3. The Register of Members and the Share Transfer Books of the Company will be closed from Saturday, 17th July, 2010 to Monday, 9th August, 2010 (both days inclusive) for the purpose of Annual General Meeting (AGM) and payment of Dividend.

4. The Board of Directors in their meeting held on 30th April, 2010 have recommended payment of Dividend of 30% (Rs. 0.60 per equity share) for the year 2009-2010. The payment of dividend is to be approved by the shareholders at the AGM. The aforesaid dividend, if declared at the AGM, will be paid on or before 7th September, 2010 to those members whose names appear in the Register of Members as on the date of the AGM. In respect of shares held in electronic form the dividend will be paid on the basis of beneficial ownership as per details to be received from the Depositories, i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) the same being as of close of their respective business hours on the date immediately preceding the aforesaid Book Closure period (i.e. as of Friday, 16th July, 2010).

5. The members are requested to:

a) intimate to the Company (for shares held in physical form) and to their Depository Participant (DP) (for shares held in Dematerialised form) the changes, if any, in their registered address, ECS / Bank account number/details, etc. at an early date;

b) quote ledger folio numbers/DP Identity and Client Identity Numbers in all their correspondence;

c) approach the Company for consolidation of folios, if shareholdings are under multiple folios;

d) direct all correspondence to the Company’s Registered Office at 26/27, Mumbai-Pune Road, Pimpri, Pune 411018 for the attention of the Secretarial Department;

e) get the shares transferred in joint names, if they are held in single name to avoid inconvenience;

f) bring their copies of the Annual Report and the Attendance Slip duly fi lled in for attending the Annual


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General Meeting; g) intimate the Company/Depository Participant (DP) the Permanent Account Number (PAN) allotted by the

Income Tax Authorities for incorporation in the records/TDS Certificates, as maybe applicable; and

h) members desirous of obtaining any information concerning the accounts and operations of the Company are requested to address their questions to the Company Secretary, so as to reach at least seven days before the date of the Meeting, to enable the information required to be made available at the Meeting, to the extent possible.

6. The Securities and Exchange Board of India (“SEBI”) has vide its circulars Ref. No.MRD/DoP/Cir-05/2009 dated 20th May 2009 and Ref. No. SEBI/MRD/DoP/SE/RTA/Cir-03/2010 dated 7th January, 2010 specified that for securities market transactions and off-market/private transactions involving transfer/transmission of shares, deletion of name of deceased shareholder(s) and transposition of names in respect of shares held in physical form of listed companies, it shall be mandatory for the transferee(s)/shareholder(s) to furnish copy of PAN card to the Company/Registered Transfer Agents (RTAs) for registration of such transfer/transmission of shares or other requests, as aforesaid. All shareholder(s) desirous of lodging physical shares for any of the aforesaid should therefore invariably furnish copy of their PAN card at the time of lodging requests for such matters together with all requisite documents to the Company/RTA for necessary action, to avoid inconvenience.

7. Pursuant to Section 205A of the Companies Act, 1956 all unclaimed/unpaid dividends upto the financial year ended 31st March, 1995 have been transferred to the General Revenue Account of the Central Government. Shareholders who have not encashed the dividend warrant for the said period are requested to claim the amount from the Registrar of Companies, Maharashtra, PMT Commercial Building, Deccan Gymkhana, Pune - 411004.

Further, pursuant to Section 205A of the Companies Act, 1956, the amount of dividends for the financial years ended 31st March, 1996 to 31st March 2002 each of which were remaining unpaid or unclaimed for a period of seven years have, from time to time, been transferred to the Investor Education and Protection Fund of the Central Government (the “Fund”) by the Company upon expiry of the period prescribed in this regard. The dividends remaining unpaid or unclaimed for the financial year ended 31st March 2003 and thereafter shall similarly on expiry of the prescribed period of seven years also be transferred to the Fund.

The Company had individually informed the concerned Shareholders and those Shareholders who have still not encashed the Dividend Warrants for the financial year ended 31st March, 2003 (which is to be transferred to the Fund within one month from 19th July 2010) or for any of the financial years subsequent thereto are therefore, requested to immediately forward the same to the Company for revalidation. It may also please be noted that once the unclaimed dividend is transferred to the Investor Education and Protection Fund, as above, no claim shall lie against the Fund or the Company in respect of the individual amounts which were unclaimed and unpaid for a period of seven years from the date that they fi rst became due for payment and no payment shall be made in respect of any such claims.

8. In order to provide protection against fraudulent encashment of dividend warrants, shareholders are requested to furnish their Bank account number with the name of the Bank/Branch, its address and quoting their folio number, etc so that the Bank account details are available for payment of dividend by ECS / can be printed on the dividend warrants. Similarly, members holding shares in dematerialised form may please immediately inform changes, if any, in their Bank account details (with MICR Code) to their Depository Participant (DP) to enable the correct Bank account details to be made available to the Company by the DP for ECS / printing on the dividend warrants. In any case, Members will appreciate that the Company will not be responsible for any loss arising out of fraudulently encashed dividend warrants.

9. All documents referred to in the accompanying Notice are open for inspection by Members at the Registered Office of the Company between 10.00 a.m. to 12.00 noon on any working day of the Company till 9th August, 2010.

10. Reappointment of Directors:

(a) At the ensuing Annual General Meeting, Mr. S.B. (Ravi) Pandit, Mr. Pradeep R. Rathi and Mr. Sanjay K. Asher, Directors retire by rotation and being eligible offer themselves for reappointment.

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(b) Mr. D. K. Chhabria, Managing Director of the Company will be completing his term of appointment on 30th June, 2010. The Board of Directors at its meeting held on 30th April, 2010 has approved his reappointement for a period of five years with effect from 1st July, 2010 on the main terms and conditions as set out in the Explanatory Statement hereto.

The information or details to be provided for the aforesaid Directors under the Code of Corporate Governance are as under:

(a) Mr. S.B. (Ravi) Pandit who is a Director of the Company from 1st August, 2006 is aged 60 years and is the Chairman and Group Chief Executive Officer of KPIT Cummins Infosystems Limited. Mr. Pandit is a MS from MIT, USA where he specialized in Finance and Controls. He is the ex President of the Mahratta Chamber of Commerce, Industries and Agriculture. A fellow member of the Institute of Chartered Accountants of India and a Member of Institute of Cost & Works Accountants of India, he has over 28 years of experience in the fields of Information Technology, Corporate Strategy Formulation and Management Consulting. He is also a senior partner in M/s Kirtane & Pandit, Chartered Accountants and a Director in the following companies, viz.: KPIT Cummins Infosystems Limited (also a member of its Audit Committee and its Investors’ Grievance Committee), K & P Capital Services Limited, Kirtane Pandit Foundation Private Limited, MRG Management Resources Group Private Limited, Proficient Trading & Investment Private Limited, K & P Management Services Private Limited, Kirtane & Pandit Consulting Private Limited and KPM Info Security Private Limited. Mr. Pandit does not hold any shares in the Company as on 31st March, 2010.

(b) Mr. Pradeep R. Rathi is aged 56 years and is a Director of the Company from 10th May, 2007 and has considerable experience in Industry. Mr. Rathi is MS (Chemical Engineering) MIT, USA and MBA from Columbia University, USA. He is the Vice Chairman and Managing Director of Sudarshan Chemical Industries Limited (“SCIL”) (also a member of its Audit Committee and its Shareholders’/Investors’ Grievance Committee). He is actively involved with Indian Chemicals Manufacturers’ Association and has represented the Association in different capacities. Mr. Rathi is also a Director on the Board of the following companies, viz.: Prescient Colour Limited, Lahoti Overseas Limited (also a member of its Audit Committee), GPSK Capital Private Limited, Rathi Brothers Poona Limited, Rathi Brothers Calcutta Limited, Rathi Brothers Madras Limited, Rathi Brothers Delhi Limited, RIECO Industries Limited, I.W.Technologies (India) Private Limited, Thirumalai Chemicals Limited, Rathi Brothers Private Limited, PRR Finance Private Limited, Clean Science & Technology Private Limited, Rathi Lightnin Mixers Private Limited, Rathi Enterprises Private Limited, Rathi Vessels and Systems Private Limited, Sanghvi Movers Limited (also a member of its Audit Committee), Sudarshan Europe B.V. and Sudarshan North America Inc., Mr. Rathi does not hold any shares in the Company as on 31st March, 2010.

(c) Mr. Sanjay K. Asher who is a Director of the Company from 1st July, 1998 is aged 46 years and is a Chartered Accountant and a Solicitor and Partner of Crawford Bayley & Co., Solicitors, Advocates & Notaries, Mumbai. Mr Sanjay K. Asher has been practising for a number of years on various matters including corporate laws. He is also a Director in the following companies, viz.: A. L. Movers Private Limited, A. L. Records Management Private Limited, Allied Pickfords India Private Limited, Bajaj Allianz General Insurance Company Limited, Bajaj Allianz Life Insurance Company Limited, Dewas Soya Limited (Alternate Director), Diamant Boart Marketing Private Limited, Divinet Access Technologies Limited, Finolib Chemicals Private Limited, Finolex Plasson Industries Limited, Finolex Infrastructure Limited, Hoganas India Private Limited, ArjoHuntleigh Healthcare India Private Limited, I2IT Private Limited, Kryfs Power Components Limited, Mandhana Industries Limited (also a member of its Audit Committee), Majesty Investments Private Limited, Morgan Stanley Investment Management Private Limited, Mepha Pharma India Private Limited, NV Advisory Services Private Limited, Orbit Electricals Private Limited, Oerlikon Textile Components India Private Limited, Peass Industrial Engineers Limited, Ratiopharm India Private Limited, Repro India Limited (also a member of its Audit Committee), Schlafhorst Engineering (India) Limited (also Chairman of its Audit Committee), Sharp India Limited (also a member of its Audit Committee and Chairman of its Share Transfer and Investors’ Grievance Committee), Sparsh BPO Services Limited (also Chairman of its Audit Committee), Shree Renuka Sugars Limited (also Chairman of its Audit Committee and its Share Transfer and Investors’ Grievance Committee), Siporex India Private Limited, Sudarshan Chemical Industries Limited, ValueQb Consulting Private Limited and Zinser Textile Systems Private Limited. Mr. Sanjay K. Asher holds 12,395 shares in the Company as on 31st March, 2010.


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(d) Mr. D. K. Chhabria is aged 47 years and is a Bachelor of Science in Engineering Management from the University of Evansville, USA. He joined the services of the Company on 1st May, 1986. He was appointed a whole time Director with the designation of “Executive Director” for a period of five years from 13th February, 1992. Subsequently, the Board of Directors at its meeting held on 11th June, 1993 reappointed Mr. D. K. Chhabria as Deputy Managing Director of the Company for a period of five years w.e.f. 1st July, 1993. The Board of Directors at its meeting held on 24th June, 1998 reappointed Mr. D. K. Chhabria as Deputy Managing Director for a period of five years from 1st July 1998. The said reappointement was approved by the members at the thirtieth Annual General Meeting of the Company held on 9th September, 1998. The Board of Directors at its meeting held on 29th June, 2000 reappointed Mr. D. K. Chhabria as whole time Director designated as “Managing Director” for a period of five years from 1st July 2000 which appointment was approved by the Members at the thirtysecond Annual General Meeting of the Company held on 22nd August, 2000. The Board of Directors at its meeting held on 12th May, 2005 reappointed Mr. D. K. Chhabria as whole time Director designated as “Managing Director” for a period of five years from 1st July, 2005 which appointment was approved by the Members at the thirtyseventh Annual General Meeting of the Company held on 5th July, 2005. As stated earlier, the Board of Directors at its meeting held on 30th April, 2010 has reappointed Mr. D. K. Chhabria as whole time Director designated as “Managing Director” for a period of five years with effect from 1st July, 2010. Mr. D. K. Chhabria has a number of years experience in Industry and is also a Director in the following companies, viz.: Finolex Infrastructure Limited, Finolex J-Power Systems Private Limited, Mohini Investments Private Limited, Fino Communication Equipments Private Limited, K P Investments Private Limited, VKC Investments Private Limited, Finolib Chemicals Private Limited, Pratibha Xero-Graphic Impressions Private Limited, Hi-Tech Poly Coatings Private Limited.

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EXPLANATORY STATEMENT IN RESPECT OF ITEM NOS. 7 & 8 OF THE NOTICE PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 7 The Board of Directors at its meeting held on 30th April, 2010 and pursuant to the recommendation of the Remuneration Committee, reappointed Mr. D. K. Chhabria as Managing Director for a period of five years w.e.f. 1st July, 2010 subject to the approval of the shareholders on the remuneration set out in the Agreement to be executed between the Company and Mr. D. K. Chhabria.

The main terms and conditions of appointment, remuneration and perquisites paid or granted to Mr. D. K. Chhabria as Managing Director are as follows:

(i) Mr. D. K. Chhabria is appointed as Managing Director of the Company for a period of five years w.e.f. 1st July, 2010.

(ii) Mr. D. K. Chhabria shall exercise and perform such powers and duties as the Board of Directors of the Company (hereinafter called “the Board”) shall from time to time determine and subject to any directions and restrictions from time to time given or imposed by the Board, he shall have the general control and management of the business of the Company.

(iii) During his employment under this Agreement, the Managing Director shall devote his whole time and attention to the business and affairs of the Company during the normal business hours of the Company and shall use his best endeavours to promote its interest and welfare.

(iv) The Company shall pay to the Managing Director during the continuance of this Agreement in consideration of the performance of his duties a salary of Rs.5,00,000/- (Rupees Five Lacs only) per month.

(v) The Company shall pay to the Managing Director during the continuance of this Agreement in consideration of the performance of his duties, commission as may be decided by the Board of Directors for each financial year of the Company or part thereof, on the profits of the Company computed in the manner laid down under Section 309 of the Companies Act, 1956 (the “Act”) subject to a minimum commission equal to the annual salary.

(vi) The Company shall pay or cause to pay to the Managing Director during the continuance of this Agreement in consideration of the performance of his duties:

(a) a total amount not exceeding Rs.60,00,000/- per annum or Rs.5,00,000/- per month as allowances for / reimbursement of expenses incurred on housing, gas, electricity, water, furnishings, leave travel concession, full hospital and medical expenses and club fees, as per the claim(s) received from the Managing Director from time to time;

(b) reimbursement of full hospital and medical expenses within the overall limit specified in clause (vi) (a) above, shall be inclusive of reimbursements towards expenditure incurred by the Managing Director on specialised medical treatment abroad for self and family. For this purpose family shall mean self, wife, dependent children and dependent parents of the Managing Director; and

(c) benefit of any personal accident insurance scheme, as per the rules of the Company.

(vii) In addition to the aforesaid Remuneration, the Managing Director shall be eligible for the following perquisites:

(a) contribution to providend fund, superannuation fund or annuity fund to the extent these either singly or put together are not taxable under the Income Tax Act, 1961 or under any statutory modification(s) or reenactment thereof;

(b) gratuity payable at a rate not exceeding half a month’s salary for each completed year of service; and

(c) encashment of leave at the end of the tenure.

(viii) It is expressly provided that the salary, commission, allowances/reimbursement of expenses and payments towards perquisites as per (iv), (v), (vi) and (vii) above (hereinafter collectively referred to as the “Remuneration”) are subject to provisions of Section 198 and 309 of the Act and in case of absence or inadequacy of profits of the Company in any particular financial year, the Remuneration payable to the Managing Director shall not exceed the limits specified under Schedule XIII to the Act or any amendment thereto or reenactment thereof from time to time.


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(ix) The salary and commission as stated above and perquisites, benefits and amenities as aforesaid shall, subject to the approval of the Central Government, as may be necessary, be paid and allowed to the Managing Director as minimum remuneration in any year in case of absence or inadequacy of profits computed in the manner referred to in Section 198 read with Sections 349, 350 and 351 of the Act, for that year.

(x) The Managing Director shall be entitled to leave on full pay and allowances but not exceeding one month’s leave for 11 months’ service; plus additional two weeks’ leave at the end of every third year.

(xi) The Managing Director shall be entitled to free use of motor car with driver provided by the Company for business purpose; the Company meeting all running, maintenance and other expenses of every kind whatsoever incurred in respect thereof. Use of car for personal purpose shall be billed by the Company to the Managing Director.

(xii) The Managing Director shall be entitled for free telephone facility at residence. All charges including rental, call charges, etc. thereof shall be paid by the Company in full; personal long distance calls shall be billed by the Company to the Managing Director.

(xiii) The Company shall reimburse entertainment and other business promotion expenses actually incurred in the course of business of the Company.

(xiv) No sitting fees shall be paid for attending the Meetings of the Board or any Committee thereof.

(xv) Subject expressly to the provisions of Section 318 of the Act the Company shall pay compensation for loss of office, or as consideration for retirement from office or in connection with such loss or retirement. The amount of such compensation shall be strictly in accordance with the provisions of Section 318(4) of the Act.

(xvi) The Managing Director shall not, so long as he functions as such, become interested or otherwise concerned directly or through his wife and/or minor children in any selling agency of the Company without the prior approval of the Central Government.

(xvii) The Managing Director shall not directly or indirectly engage himself in any other employment without the previous sanction of the Board of Directors.

(xviii) For purposes of Gratuity, Provident Fund, Superannuation and other benefits, the service of the Managing Director under this Agreement will be considered continuous service in the Company from the original date of his joining the service of the Company on 1st May, 1986 and termination of agreement followed by immediate renewal of agreement will not be considered as any break in service.

(xix) The Rules of the Company shall be applicable for purpose of carry forward of leave, leave travel allowance, medical benefit entitlements, encashment of leave, contribution towards Provident Fund, Superannuation Fund and Gratuity Fund.

(xx) The Company shall be entitled to determine the agreement by giving 180 days’ notice or salary for six months in lieu of the notice.

(xxi) The terms of appointment provide for higher remuneration being paid to Mr. D. K. Chhabria in case of a change in the statute or issue of any notification permitting higher remuneration to be paid to managing director/whole time director without the approval of Central Government.

The draft of the Agreement to be executed between the Company and Mr. D. K. Chhabria is available for inspection by the Members of the Company at the Registered Office of the Company between 10.00 a.m. to 12.00 noon on any working day of the Company till 9th August, 2010.

This may be treated as an abstract of the terms of Agreement between the Company and the Managing Director pursuant to Section 302 of the Act.

Mr. D. K. Chhabria is concerned or interested in this resolution as it relates to the terms and conditions of his appointment and remuneration.

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Item No. 8It is proposed to amend the following Articles of Articles of Association of the Company:

1) Article 121(3) of the Articles of Association of the Company is being amended to provide for maximum sum that may be paid to a member of the Board of Directors (the “Board”) for attending each meeting of the Board or a Committee thereof.

2) It is proposed to amend Article 141 of the Articles of Association of the Company to provide for appointment of Executive Chairman, Managing Director and Executive Directors (who shall be in the whole time employment of the Company) and the powers and responsibilities to be vested in them. Consequently Article Nos.121(1), 121(2), 131, 142, 143, 148 and 159 are proposed to be suitably amended.

Accordingly, consent of the shareholders is solicited by passing a Special Resolution for amendment of Article Nos. 121, 131, 141, 142, 143, 148 and 159 as detailed in the resolution for item No. 8 of the accompanying Notice.

A copy each of the existing Articles of Association and a new set of the Articles of Association after incorporating the proposed amendments will be available for inspection by the members of the Company at the registered office of the Company between 10:00 a.m. to 12:00 noon on any working day of the Company till 9th August, 2010.

All Directors except Mr. P. P. Chhabria, Mr. D. K. Chhabria and Mr. M. L. Jain are deemed to be concerned or interested directly or indirectly in proposed amendment of Article No. 121(3) of the Articles of Association since the same is relating to sitting fees payable to Directors for attending the meetings of the Board and Committees thereof.

Mr. P. P. Chhabria, Mr. D. K. Chhabria and Mr. M. L. Jain are deemed to be concerned or interested directly or indirectly in proposed amendments of Article Nos.121(1), 121(2), 131, 141, 142, 143, 148 and 159 of the Articles of Association of the Company, since the same is relating to appointment and remuneration of Executive Chairman, Managing Director and Executive Directors (who are in whole time employment of the Company) and demarcation of the roles and responsibilities of the persons holding the said positions in the Company.

By Order of the Board of Directors

R.G. D’SILVAPlace : Pune Company Secretary &Dated : 30th April, 2010 Vice President (Legal)

Registered Office:26/27, Mumbai-Pune RoadPimpri, Pune - 411 018.

Finolex Cables LimitedREGISTERED OFFICE : 26/27, MUMBAI-PUNE ROAD, PIMPRI, PUNE - 411 018.

PROXY FORM

Folio No. : No. of Shares

DP ID :

Client ID No. :

I/We, , of

in the district of being

member(s) of the above named Company, hereby appoint

in the district of or failing him/her

in the district of as my/our proxy to attend and vote for me/us on my/our behalf at the 42nd Annual General Meeting of the Company to be held on Monday, 9th August, 2010 at 11.00 a.m. at Acharya Atre Rangmandir, Sant Tukaramnagar, Pimpri, Pune - 411 018.

Signed this day of 2010.

N. B. : Any member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote instead of himself on a poll and the proxy need not be a member. The form duly completed should be deposited at the Registered Office of the Company at Pimpri, Pune, not later than 48 hours before the time for holding the Meeting.

TEAR HERE

Finolex Cables LimitedREGISTERED OFFICE : 26/27, MUMBAI-PUNE ROAD, PIMPRI, PUNE - 411 018.

42nd ANNUAL GENERAL MEETING - 9th AUGUST, 2010.

ATTENDANCE SLIP(To be handed over at the entrance of the Meeting Venue)

Folio No. : No. of Shares

DP ID :

Client ID No. :

Name of the attending member (in block letters)

Name of the Proxy (in block letters) (to be filled by the Proxy attending instead of the member)

I hereby record my presence at the 42nd Annual General Meeting held on 9th August, 2010 at 11.00 a.m. at Acharya Atre Rangmandir, Sant Tukaramnagar, Pimpri, Pune - 411 018.

Member’s / Proxy’s Signature

Notes : 1) Interested joint members may obtain attendance slips from the Registered Office of the Company. 2) Members/joint members/proxies are requested to bring the duly filled in attendance slip with them. Duplicate

slips will not be issued at the entrance of the Auditorium.

TEA

R H

ER

E

(Pl. Sign across the stamp)

Signature

AffixRevenueStamp

of 30 paise

Documents

Finolex cables | Electrical and telecommunication cables