Aries Agro Ltd

To

The Members, Aries Agro Limited

Your Directors have pleasure in presenting their 42^nd Annual Report on theoperations of the Company together with the Audited Statements of Accounts for theFinancial Year ended 31^st March, 2012.

(Rs. In Lakhs)

Operations

During the year under review, the earnings before Interest, Depreciation and Tax wasRs. 3,930.75 compared to Rs 3,662.33 Lakhs in the previous year. The Total Revenue for theyear was Rs. 19,694.09 Lakhs as against Rs. 15,976.16 Lakhs in the previous yearreflecting a growth of 23.27%. Profit after tax for the year was Rs. 1,098.23 compared toRs. 1,471.80 Lakhs in the previous year. Despite the higher turnover the profitability ofthe Company has reduced on account of interest cost and depreciated rupee value.

The Company is a major manufacturer and supplier of Chelated micronutrients, valueadded secondary nutrient fertilizers and also water soluble NPK fertilizers. In addition,we also have a growing range of farm sprayers and plant protection chemicals, includingpesticides, insecticides, fungicides and herbicides in our product portfolio. In total,Aries has 84 brands. For detailed discussion please refer to the Management DiscussionAnalysis forming part of this report.

Dividend

After considering the impact of delayed monsoon, requirement of the fund and objectiveof rewarding the shareholders the Directors have recommended a Dividend of 15 % being Rs.1.50 per Equity Share of Rs. 10/- each subject to your approval at the ensuing AnnualGeneral Meeting. The Dividend, if approved, will result in an outflow of Rs. 227.46 lakhsincluding Dividend Distribution Tax.

TRANSFER TO RESERVES

Your Directors propose to transfer Rs. 150.00 Lakhs to the General Reserve and theBalance of Rs. 4,894.78 Lakhs is proposed to be retained in the Profit & Loss Account.

CREDIT RATING-FOR BORROWING

CRISIL Limited, one of the leading external Rating Agency, has rated your Company asunder:

Future Prospects:

The Company is in the process of launching 3 new products during 2012-13. This includesZincated Sulphur Bentonite, horticultural mineral oil for biological pest prevention andEddha range of chelates. In addition, the Company will also be expanding its presence innew markets like Kashmir, Kerala, Manipur and Goa.

We have also been actively participating in Government Tenders under the National FoodSecurity Mission and other State and Central Government Schemes. Some of our productsincluding Aries Endomyco, Chelamin and Agromin have been included in various Governmentschemes and this is a positive development. We are also pursuing institutional businesswith seed companies, nurseries and plantations.

Use of ipo proceeds

Your Company had come out with its maiden IPO in January 2008 for the purposes asstated in the Prospectus dated 26^th December, 2007 and as amended by themembers at their Annual General Meeting held on 29^th September, 2009.Accordingly the Company has utilized the IPO funds for the purposes for which it wasraised.

Deposits

The Company has not accepted any deposits from the Public within the meaning of Section58A of the Companies Act, 1956.

Subsidiaries

Your Company has five subsidiaries viz Aries Agro Care Private Limited, Aries AgroEquipments Private Limited, Aries Agro Produce Private Limited, Golden Harvest Middle EastFZC and a Step Down Subsidiary viz Amarak Chemicals FZC.

The operations of Aries Agro Care Pvt. Ltd. commenced in the Financial Year 2008-09 andduring the Financial Year 201112 the Company has ended with a total revenue of Rs. 37.40Lakhs and incurred a loss of Rs. 10.92 Lakhs.

The business operations of Aries Agro Equipments Pvt. Ltd. commenced in the year2009-10 in agricultural sprayers. During the Financial Year 2011-12 the Company has aTurnover of Rs. 235.05 Lakhs with profit after tax of Rs. 25.34 Lakhs.

The above two Companies are Wholly Owned Subsidiaries of the Company.

There was no business activity in other Subsidiary namely Aries Agro Produce Pvt. Ltd.During the Financial Year 2011-12 the Company has incurred a loss of Rs. 2.06 Lakhs

As regards the overseas subsidiary M/S. Golden Harvest Middle East FZC with aninstalled capacity of 10,800 MT p.a., in their fourth year of operation, has generated atotal sale of AED 2,95,14,219/- with a profit of AED 41,03,369/- for the year 2011-12.

M/s. Amarak Chemicals FZC, which is a step down Subsidiary of Aries Agro Limited withan installed capacity of 60,000 MT p.a., in their second year of operation, has generateda total sale of AED 2,28,03,625/- and has incurred a loss of AED 4,93,682/- for the year2011-12.

As required under Section 212 of The Companies Act, 1956, annexed hereto are theAudited Statement of accounts, the Reports of the Board of Directors and Auditors' Reportsfor the year ended 31^st March, 2012 of Aries Agro Care Private Limited, AriesAgro Equipments Private Limited, Aries Agro Produce Private Limited, Golden Harvest MiddleEast FZC. and Amarak Chemicals FZC.

A Statement of Subsidiary Companies as prescribed under Section 212 of the CompaniesAct, 1956, is annexed and is forming part of the Annual Report.

Apart from the above statement a list of Subsidiary Companies given in Note No. 27-A ofthe Notes to Accounts is forming part of the Annual Report.

All the above subsidiary Companies are non-material, non-listed Companies as definedunder Clause 49 of the Listing Agreement with the Stock Exchanges.

INSURANCE

All properties and assets of your Company are adequately insured covering allconceivable risks attributable to the Industry.

Directors

In accordance with the Companies Act, 1956 and the Articles of Association of theCompany, Dr. Jimmy Mirchandani and Prof. R. S. S. Mani retire by rotation at the ensuingAnnual General Meeting and being eligible, offer themselves for reappointment. Accordinglytheir re-appointment forms part of the notice of ensuing Annual General Meeting.

The term of the appointment of Dr. Jimmy Mirchandani and Dr. Rahul Mirchandani as theChairman & Managing Director and Executive Director, respectively, expires on 30^thSeptember, 2012. The Directors recommend their re-appointment for a further period of 3years. Accordingly their re-appointment forms part of the notice of ensuing AGM.

Appointment of Cost Auditors

M/s. R. Nanabhoy & Co., Cost Auditors were re-appointed as the Cost Auditor of theCompany for the year ending 31-03-2013 by the Board of Directors in their meeting held on14^th February, 2012 after ensuring their eligibility and obtaining the letterof eligibility from them.

The Company's Cost Audit is under progress and is likely to be completed shortly as theCompany is required to file the Cost Audit Report within 6 months of the end of theFinancial Year-2011-12 i.e. on or before 30th September, 2012.

Appointment of Auditors and Audit Report

M/s. Kirti D. Shah & Associates(Membership No. 32371), the Auditors of the Companyretire at the ensuing Annual General Meeting and being eligible and holding Peer ReviewCertificate issued by the Institute of Chartered Accountants of India, offer themselvesfor re-appointment.

There is no qualification in the Audit Report.

Directors' Responsibility Statements

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956 withrespect to the Directors' responsibility statement, it is hereby confirmed that:

1. In preparation of the Annual Accounts, applicable Accounting Standards have beenfollowed and that there are no material departures

2. The Directors have selected such Accounting Policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the State of the Affairs of the Company at the end of the financial year andof the profit of the Company for that year;

3. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and

4. Annual Accounts have been prepared on a 'going concern' basis.

PARTICULARS OF EMPLOYEES

Information in accordance with the provisions of Section 217(2A) of the Companies Act,1956 ("Act") read with the Companies (Particulars of Employees) Rules, 1975, asamended , are as under:

PARTICULARS OF EMPLOYEES IN TERMS OF SECTION 217(2-A) OF THE COMPANIES ACT, 1956DRAWING REMUNERATION NOT LESS THAN Rs. 60 Lakhs p.a./ Rs. Five Lakhs p.m.DURING THE YEAR 2011-12

LISTING

The Equity Shares of the Company are listed at Bombay Stock Exchange Limited(BSE) andNational Stock Exchange of India Limited(NSE).

The Company has made all the compliances of Listing Agreement including payment ofAnnual Listing Fees upto 31^st March, 2013 to both the Stock Exchanges.

CORPORATE GOVERNANCE

The Company has complied with the various requirements under the Corporate Governancereporting system. A detailed Compliance Report on Corporate Governance is annexed to thisreport. The Auditors' certificate on compliance with the conditions of CorporateGovernance under clause 49 of the Listing Agreement is also annexed to this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGO

Particulars in respect of Conservation of Energy, Technology Absorption and ForeignExchange Earnings and Outgo, as required to be disclosed under Section 217(1) (e) of theCompanies Act, 1956 read with the Companies {Disclosure of Particulars in the Report ofthe Board of Directors} Rules, 1988 and forming a part of the Directors Report are asunder: -

I. Conservation of energy

The Company accords great importance to conservation of energy. The main focus of theCompany during the year was:

a. Energy Conservation measures taken:-

i. Close monitoring of consumption of electricity, LPG, Diesel and water.

ii. Optimum use of Energy by Switching off Machines, Lights, Fans, Air Conditionersand Exhaust Systems whenever not required.

iii. Creating awareness among Workmen to conserve energy.

b. Additional investments and proposals, if any, being implemented for reduction ofconsumption of energy;

i. installation of energy efficient lights in the office and factory

ii. installation of LED lights.

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

i. Due to measures taken as described above, the overall power and fuel oilconsumption at plants and office has reduced and reduction in the cost of production isachieved.

d. Total energy consumption and energy consumption per unit of production

Form -A

Form for disclosure of Particulars with respect to Conservation of Energy.

1. Specific Areas in which Research and Development was carried out by the Company.

• There is a continuous focus on University research on specialty plant nutritionwhich continues across India.

• Our team of extension officers conducts continuous field demonstrations andextension work including large scale soil sampling, which provides constant updates ondeficiency levels across all states in India.

• The Company's R&D at Bombay is ISO 9001 certified and works on new productdevelopment and continuous quality checks. The new manufacturing unit at Hyderabad hasbeen equipped with a state of art laboratory to keep pace with the Company's expansion inthat region.

• Our ISO 9001 certification has now been upgraded from the ISO 9001:1998 standardto the latest ISO 9001:2008 standards.

2. Benefits derived as a result of the above efforts.

• Improvement in productivity/quality and reduction in cost of production ofCompany's Plants and at Customer's end.

• Cost reduction, import substitution, safer environment and strategic resourcemanagement.

• Meeting the statutory requirements.

3. Future Plan of Action :

• Evaluation of potential Customized Crop Specific combinations for enhancementnutrients.

• Design of secondary packaging automation for chelamin and other brands.

4. Expenditure on R & D

B1. Technology Absorption, Adaptation and Innovation

The Management has focused on productivity and Total Quality Management [TQM] in orderto optimize manufacturing costs.

B2. Benefits

This has helped in achieving optimum manufacturing costs, improved quality of productsand consequently, enhanced customer satisfaction. The Company uses indigenous technology.

B3. The Company has not imported any technology during the year under review.

1. Activities relating to exports, initiatives taken to increase exports,development of new export markets for products and services and export plans:

International sales have commenced in 6 countries with supplies from Indian and UAEfactories. Distributors have been appointed in 4 countries and we expect export and globalsales to continue to grow rapidly and form 20/25 % of the group revenues of the Company byFinancial Year 2012-13

2. Total Foreign Exchange used and earned:

Used : Rs. 53,46,64,959/-

Earned: Rs. 5,42,50,195/-

3. INITIATIVE FOR EXPORTS

Our overseas manufacturing units(Subsidiaries) have started supplying Sulphur Bentoniteto key fertilizer companies in India and also in other countries including Pakistan,Australia and Tanzania during 2011-12. International sales accounted for 29 percentage oftotal group consolidated revenue and we believe that in the next 2 years exports andglobal sales shall be maintained at similar level.

SPECIAL BUSINESS

As regards the items of the Notice of the AGM relating to Special Business, theresolutions incorporated in the Notice and the Explanatory Statement relating thereto,fully indicate the reasons for seeking the approvals of members to those proposals. Yourattention is drawn to these items and Explanatory Statement annexed to the Notice.

GENERAL

Notes forming part of the Accounts are self-explanatory. As required under the VAT Actsof various States, Company has appointed a VAT Auditor to conduct the VAT Audit.

CORPORATE SOCIAL RESPONSIBILITY

Your Company continues to demonstrate a strong commitment towards providing productswhich do not hamper the soil and crop eco systems. A detailed Report on Corporate SocialResponsibility is annexed to this report.

ACKNOWLEDGEMENT

We would like to acknowledge with gratitude, the support and co-operation extended byShareholders, Vendors, Media and Banks and look forward to their continued support. Weappreciate continued co-operation received from various regulatory authorities includingDepartment of Agriculture, Department of Corporate Affairs, Registrar of Companies,Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges andDepositories. We also recognize and appreciate the sincere hard work, loyalty and effortsof the employees and look forward to their continued support.