Ellenbarrie Industrial Gases Ltd

DEAR SHAREHOLDERS

Your Directors are pleased to present the Thirty Sixth Annual Report on the operationsof the Company together with audited Accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

PERFORMANCE

Your Company has registered a Sales revenue of Rs. 4,726.67 lakh (net of excise) whichis 3% higher than the previous year. The state of the art Air Separation Plant is locatedin JN Pharma City, near Visakhapatnam has since been successfully commissioned. Highercapacity utilization of our plant in Uluberia along with new production from Visakhapatnamplant resulted in an overall volumetric sales growth of 24% over same period last year.However, your company would have registered higher sales volume but for delay incommissioning and longer time taken in stabilization of the new plant in Visakhapatnam.Primarily delay in supply of some key equipments by overseas suppliers and malfunctioningof some these units had caused delay in timely completion of the plant. There was alsoinordinate delay in obtaining power connection from Andhra Pradesh Power TransmissionCompany. These unexpected problems had caused the operating cost to go up affectingprofitability of the company. We are happy to state that all the issues with the planthave since rectified and the same is now producing at designed capacity, the benefits ofwhich would get reflected in the current year.

Goods manufactured during the year 2009 - 2010 included the following :-

STRATEGIC INITIATIVES

The Company has taken some concrete steps for growth and enhancing competitiveness.Besides higher operating efficiency of our plants, the company has bagged a few largeorders which would improve capacity loading of Visakhapatnam plant and phenomenal increaseof volumetric sales. With a view to achieving sustainable development and committed to theenvironment care, you company has embarked on a special project for optimizing on energyconservation and saving overall Carbon emission. The operations of the company have alsoreceived accreditation under International Quality Management system.

Your Company has also identified to make forays into the areas of Healthcare where ourproducts and services have found a synergy. The other new business areas are inmanufacture and sale of Carbon-di-Oxide Dry Ice and specialty Gases. These initiatives areexpected to show its result in terms of higher profitability and earning per share incoming years.

Your Company has also taken many Human Resources Development related initiatives toimprove competency of the manpower.

DIVIDEND

The Directors have recommended dividend 5% on Equity Shares of the Company for the yearended 31st March, 2010. The total outgo including Dividend Tax would be Rs. 38.30 lakhs(Las year Rs. 76.60 lakhs)

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, based onrepresentations received from the operating management, confirm :

1. That in the preparation of the annual accounts, the applicable accounting standardshave been followed and there have been no material departure.

2. That the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive true and fair view of the state of affairs of the Company as at the financial yearended or 31st March, 2010.

3. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.

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

PARTICULARS OF EMPLOYEES

Your Company has not paid any remuneration attracting the provisions of the Companies(Particulars of Employee) Rules 1975 read with Section 217(2A) of the Companies Act, 1956.Hence no information is required to be appended to this report in this regard.

DIRECTORS

In accordance with provisions of Companies Act, 1956 read with Articles of Associationof your Company, Shri Manas Kumar Dutta and Shri Rajesh Jhunjhunwala retire by rotationand being eligible, offer themselves for re-appointment.

The brief resume / details relating to Shri Manas Kumar Dutta and Shri RajeshJhunjhunwala are furnished in the notice of the ensuing Annual General Meeting.

AUDITORS AND AUDITORS REPORT

The Auditors M/s. A. K. Kumar & Co., Chartered Accountants retire at the conclusionof the forthcoming Annual General Meeting and being eligible, offer themselves forre-appointment. As regards Auditor's comment on non-compliance of AS-15, present accruedliability for future payment of gratuity has been actuarially ascertained as Rs. 27,31,788which has been accounted for but not yet funded. Due process for implementation of AS-15will be started shortly. In case of non-compliance of AS-22, relating to Deferred Taxarising out of timing difference between Accounting Income and Taxable Income, incrementaldeferred tax liability has been ascertained as Rs. 4 crores approximately. Neverthelessnon provision of deferred tax will not result in company's cash outflow.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

a) The Company has been able to improve the power factor by installing capacitor atUlubena plant. With the closure of Oxygen Plant at Kalyani and after modification atUluberia Plant the power consumption per Cu.m. of liquid production stands reducedsignificantly.

b) Energy conservation is an on-going process and there is a continuous effort tocreate awareness and also through Production Planning, Inventory Management etc.

c) Foreign Exchange Earning : Rs. 17,46,084 on FOB Basis.

d) Foreign Exchange Expenditure : Rs. 3,66,03,066.

MD / CFO CERTIFICATION

As per the requirements of Clause 49 of the listing agreement on Code of CorporateGovernance, the certification made in the prescribed format in respect of the FinancialStatements and Cash Flow Statements for the financial year ended 31st March. 2010 isannexed herewith as Annexure 'A'. MANAGEMENT DISCUSSION AND ANALYSIS

As stipulated under Clause 49 of the listing Agreement with the Stock Exchange, it ispresented in a separate Section as Annexure - B.

CORPORATE GOVERNANCE REPORT FOR THE YEAR

Corporate Governance is set out as annexure for the report.

ACKNOWLEDGEMENT

The Board of Directors deeply acknowledge the dedication and commitment of employees atall levels and thank the Customers. Shareholders, Investors, Government Authorities,Financial Institutions and Bank for their continued co-operation and support to theCompany.

ANNEXURE - A' TO THE DIRECTORS' REPORT

The Board of Directors

ELLENBARRIE INDUSTRIAL GASES LTD.

3A, Ripon Street

Kolkata-700 016

MD/CFO Certification

(a) We have reviewed financial statements and the Cash Flow Statement for the year andthat to the best of our knowledge and belief:

(i) These statements do not contain any materially unfare statement or any materialfact or Statements that might be misleading.

(ii) These statements together present a true and fair view of the Company's affairsand are in compliance with existing accounting standards, applicable Laws and regulations.

(b) There are, to the best of our knowledge and belief, no transactions entered into bythe Company during the year which are fraudulent, illegal or violative of the Company'sCode of conduct.

(c) We accept responsibility for establishing and maintaining internal control and thatwe have evaluated the effectiveness of the Internal Control Systems of the Company andhave disclosed to the Auditors and the Audit Committee deficiencies in the design oroperation of Internal Controls, if any, of which we are aware and the steps we have takenor propose to take to rectify these deficiencies.

(d) We have indicated to the Auditors and the Audit Committee :

(i) Significant changes in internal Control during the year.

(ii) Significant changes in Accounting policies during the year and that the same havebeen disclosed in the notes to the financial statements and

(iii) There are no instances of significant fraud of which we have become aware and theinvolvement therein if any of the management or an employee having a significant role inthe Company's internal Control System, if any.