HROFFS ENGINEERING LIMITED, VADODARA DIRECTORS’ REPORT TO, THE MEMBERS Your Directors have pleesure In presenting the Fontyfirst Annual Report on the werking of the __Compainy together with the Audited Accounts for the year ended 31° March 2012 1. FINANCIAL RESULTS = oO (& In Lacs) For the Year Ended 31%March 2012 204 Revenue finm Operations (Net of Taxes / Duties) 4200.32 4728.46 Other Income 41.85 13.86 Total Revenue a9. aan. | Profit (Losses) Before InteresDepreciation! 83.02 237.85 Exceptional and Extra Ordinary Items tlessy: Finance Costs 953.44) (89.35) (Less) Hepreciation & Amortization (49.29) (44.52) | Profit (Loss) Before Tax (PBT) (149.38) 103.98 (LessyAdd Tax Expenses a) Current Tax - (31.00) ) Detared Tax Liabiity/ (Assets) (28.95) (2.86) Profit / (Loss) After Tax (PAT) (98.43) 70.12 Add - Balance in Profit 8 Loss Account 63.49 13.38 Amount available for Appropriation Total... (26:24) 93.54 Appropriation : | Proposed Dividend - 17.48 ii Corporate Tax on Dividend - 284 iii General Reserve 2 = Wy. Balance carried to Balance Sheet (26.24) 63.18 TOTAL (26.24) 83.84 REVIEW OF THE COMPANY'S OPERATIONS; “The year under review was challenging and difficult too for the Submersible Pump Industry in general and aise consequently for your Company in paticilae. In the Domestic market erratic climate conditions and disturbances in the Agiicultural markets adversely affected the Sales Volume. The Domestic sales teveruc reachedte the level of Re 3025 78 Lace for the yearendinga& on 31stMorch 2012 comparadio ts Previous yearstevel ot Rs. 3812 21 Lacs Concerted atfors to expand Deslership network across additional new temhorles and increasing of the product range helped to stobize Soles Velume inan unfavourable markat siualion. “The fragile secovary in United States, Soversign debt eres in Europe and siot/down in Chinaaffactedthe global market scenario especially inAtrcan countries which Were the onmary ectual markets for your Campany's products for Export ‘The Export Turnover decreased tothe level of Rs. 253 64 Lacs forthe year anded as on 3t3t Mafch 2072 in comparison 10 thatol the Previous Year's level of is, $01.47 Lacs, However, by March, 2012, new Orders Indicate 8 revivalin Expert Business forthe coming yeat “The Overall reduction in volume ot Sales prevented he Company to generate Surplus for the year The Company concluded the year with an Operating Lossof Rs.. 119.38 Lacs (mclusive of Depreciation for Rs. 49.29 Lacs) However, these ara postive indication in tems af new territories showing promising sales. 3‘SAVLI EXPANSION PROJECT: As per the project implementation programme, the main Factory Building with peripheral infrastructure facilites completed during the year your Company #iso obtained necessary statutory permission, completed registrations in respect of the Operations intended o be started on tia new site at Plot No. 21(A\), Alindra, Savil, GIDC estate and declared Commercial production with ettect from 13th danuary 2012 ‘The Ter Loan sanationad by the present Banker diew for the project activities, Your Company is also eligible for State Government interest subsidy for this project and the necessaty application has already Deen lodged with the Government dept FUTURE OUTLOOK: Your Company has undertaken several inialwes such as increasing of Distibutlon points and intioducing of modemization in menutfacuring process. which wil make sure thatthe comming year iS sucessful The new capacibes generated by the Savi Plant with modern techniques wil help fo miprove quality and producivity apart from the capacity Dulding up. to take fill advantage of the piocesses with expected Inciease as Out come of Gavernent focus on Boasting up ofthe Agiiculural sector. The product basket ofthe Company hos bean increasedwith the addition of valcus Waler Plimpswhichwillcertainly prévide Impetusto Sates growin The Export market with new orders during March 2012. is showing signs of revival and the Export sates are expectedto showa dresticincrease inthe coming year with develooment of newer areas in Overseas Market RIGHTISSUE: In order ta augmant the resources for the Green field Project at new Industral site at Saviil.e. Alinta Piot No. 24(4), your Directors made Right Issue in the proportion of 1 Equity Share against § existing Equiy Shares of Rs 10/-eech fully paie et the premium of Ris 30/- each duly consented by the Membars of the Company during the extra Ordinary General meeting held on 71th October. 2071, The Right Equity Shares have been allotted on Di 20th December2011 HUMAN RESOURCES: Your Compary’s valuable sesets is its dedicated and commited Human Resources Programme to enhance ‘junctional aan skils and leam work wore carried aut to prepare ihe employees fotake on the future challenges Cordis! ndustrialretations prevailedat hoth manufacturing plants through-out the year. FINANCE: Careful. Working Capital Management ensured a Sélistactory Gash Flow and helped to discharge all the financial commitments inspite of nagative Operating results. Your Company succeeded in maintaming the financial discipline in respect of making of the use of the Funds for the purpese of which having beon ‘elsed/arranged Your Company also obtained moderate Credit Rating under BASEL tl fame work trom ihe independent Credit Rating Agency ©. CARE RATING having been stipulsted by the present ankar in terms of the Provisions of Investor Education and Protection Fund (avereness and protection of Investors) Rules, 2001Rs 9,500)-of Unpaid/Unclaimed Dividends were transferred during the year ta the Investor Educationand Protection Fund DIRECTORS; ‘Shi Tushar C. Daysl, Smt. Shruti A. Shroff and Smt Pramie M, Joshi, Directors of the Company, retire by rotation andbeng sigbieoffer themselves forre-aprainiment FIXED DEPOSITS : “The Company has continued to recive a good response tolts Fixed Deposit Scheme. There iso Deposit due belore 1st march, 2012 which was ether not repald or renewed, The Company has complied with the provision ofsection 58 Act the companies Act, 1956 and therules there on asamendes fram time to time:tt 42: 43. 14. 15 16. 7. _SHROFFS ENGINEERING LIMITED, VADODARA COMPANIES (D1SCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, In terms ofthe above Rules, the Board takes pleasure in giving partculats a8 presciibed therein relating to Conservation of Energy. Technology Absorption and Foreign Exchange Famings and Outgo is gWven In the "Annexure" which forms partof this Directors’ Report PARTICULARS OF EMPLOYEES: Information purstiant to provision if section 217 (2A) of the Companies Act, 1956 read with the Companies (Partcularsof Employees) Rules, 1975, as amended, isat’Annexure-tI'tothis Report. AUDITORS = Wis Parikh ‘Shah Chotalia & Associates, Chartered Accountants, based at Vadodara shall retire at the conclusion of ensuing Annual General Meeting, the members are requested to appoint the Statutory Auditors and fix their remuneration, The Company has receives a Certificate pursuant to the Section 224 (1B) of the Companies Act, 1056 from tha retiring Auditors regarding their eligibility for reappointment as the Statutory Audiiors ofthe Company, SECRETERIAL COMPLIANCE CERTIFICATE: your company hag cbiainad a"Compliance Certificate" from Vijay Bhatt Co. Company Secretariesin terms Sf section 383A (1), of the Companies Act, 1856 read with Companies (Complance Certificate) Rules 2004, which attached herewith, forming par ofthis report COST COMPLIANCE REPORT: In accordance with amendment to Section 208 (1) (d) of the Companies Act, 1066 read togethar with Companies (Cost Accounting Recatds) Rules 2017 in respect of maintenance of Cost records, the Company has obtained the corplance raport tom ACMA Mal P_Sonale prctiong Cost Accountant based at Vadodara. The said report wil be fled with the Central Govt as pr the stigulation. DIRECTORS’ RESPONSIBILITY STATEMENT : Pursuant othe requirement under Section 217 (2AA) of the Companias Amendment Act, 2000 with respect to Directors’ responsibilty statement, itis hereby confirmedthat | In the preparation of the ennual accounts for the financial year ended 3tst Merch, 2012; the applicable accourting standartis have been followed along with proper explanation relating tometenal departures. Wl. The Directors have selected stuch accounting policies and applied them consistently and made Judgements and estimates that are reasonable and prudentso asto give a fueand fait view ofthe state of affairsof the Company at the-end of the financial year and of the loss of the Company for the year under review NL The Directors tiave taken proper and sufisient care for the maintenance of adequate accounting records {iv accordance with the provisions ef the CompaniesAct, 1956 for safeguarding the assets of ine Company ‘endfor preventing and detecting fraud and otherirregularites. IV. The Directors have prapered the accounts for the financial year ended 31st March, 2012 on a geing concern basis. ACKNOWLEDGEMENT/APPRECIATION: Your Directors with to acknowledge the cooperation and assistance extended to the ny by AXIS Bank, various State Government Agencies and Local Authorities. Your Directors also ww'sh to place on record their appreciation for the contribution mate by employees ata levels towards the continued growth and prosperity of the Compary. Your Directors also acknowledge with grabtude the support of the Customers, Suppliers, ‘Sharatiolders end members tor he faith reposed in the Company andits Management. By Order of the Board of Directors: PRAFUL M. SARAIVA CHAIRMAN & MANAGING DIRECTOR‘SHROFFS ENGINEERING LIMITED, VADODARA ANNEXURE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1968 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31-03-2012. 1. CONSERVATION OF ENERGY : ‘As such Company/s hasic production process ate not energy intensive and energy costis relatively smaller Percentage ofthe total cost of manufacturing, However, Company’ endeavor sto optimize processes and equipments in continuation TECHNOLOGY ABSORPTION: Researchand Development Customized motors suitable for European OEMs nave been developed Design customized suitable 0 local tmarket as well @s increased preduct basket through intioduction af naw economical ‘models coupled itn value engineering Technology Absorption, Adaption and Innovation: i) The tachnatogy for 100 mm (4") Submersible Pumpsets purchased trom Pleuger of Germany has been sticcesstully implemented in indian conditions. {The 100 mm (4") Pumpsats manutsctured by the Company are operating successfull alioverindia, Imported Technology (Imported during the last Six Years reckoned from the beginning of the financial year). 8: Technology imported : NA be Yeatoflmport NA 6 Hestechnology been fully absorbed ? NA d, {inal fuly absorbed areas where thishas not- “takenplace, reasons thereof and future plan ofaction NA (WV). Foreign Exchange Earning and Outgo: @ Activities relating to Exports The Company has madesome initativestoken toincrease Exports intial effotsin’ Middle East & Developing of now Export Market for Europe. 1b. Foreign exchange earned and used 1. Eamed by way of Exports RS. 4,22.99.235/-(PY.6,1221,951) 2. Used by weyo! Imports/Expenses(OnPaymentBasis) _< Rs. 27.97. 699/-(PY. 12,80.545) By Order of the Board of Directors Place : Vadodara PRAFUL M. SARAIYA Date : 28.06.2012 CHAIRMAN & MANAGING DIRECTORSHROFFS ENGINEERING LIMITED, VADODARA ANNEXURE ‘II PARTICULARS OF EMPLOYEES Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Amendment Rules, 1888 (GSR No. 796 (E) DL. 16.09 1990) and forming part of the Report for the year ended Stat March, 2012, EMPLOVED THROUGHOUT THE YEAR AND IN RECEIPTOF REMUNERATION AGGREGATING TO NOT LESS THAN RS. 24,00,000/-P.A Sr. Name ofthe Age Designation Remuneration Qualification Exp. Date of Last No. Employes Years Rs. Years Commencement Employment of Employment 4. Si PRAFULM, 65 Managing 49,00,000 BE.(MECH) 41 0108-82 CEAT Tyrat SARAIVA Director of India Lic 2 SiMARSHAD 56 Whole-Time 4300000 PGDM(IM 33 25-06-67 Crescent A a oe me NOTES: 4. Remuneration: mentioned above inclides Salary, House Rent Allowance, Contribution to Provident Fund, Superannuation Scheme, Gratuity, Medical Expenses Reimbursement, Leave Travel Concessions ete. and taxable valve of ather perquisites in accordance with the provisions of the Income Tax Act, 1981. 2. Shti Praful M. Saraiya is the brother of Sho Paresh Saralya, a Director of the Company and Shri HM. Joshi Is 2 s0n of Smt PM Joshi, a Director. | 3 . By Order of the Board of Directors Place : Vadodara PRAFUL M. SARAIYA Date : 28.06.2012 CHAIRMAN & MANAGING DIRECTOR Nal