Khoday India Ltd

TO THE SHAREHOLDERS

Your Directors present the 46th Annual Report on the working of your Company and theAudited Statement of Accounts for the year ended 31st March 2012:

FINANCIAL HIGHLIGHTS (Standalone) :

(Rs. in Lakhs)

REVIEW OF PERFORMANCE:

Your Directors note with satisfaction that the Company’s net revenue hasregistered an increase of about Rs.25.79 Crores over the previous year.

Your Directors are pleased to announce that the Company has successfully made a turnaround and registered a net profit of Rs.15.80 Crores for the year.

Your Directors hope that the Company will continue to improve its performance andmaximize shareholder value.

DIVIDEND:

Though the Company has earned an after tax profit of Rs.15.80 Crores, in view of thescarce availability as well as the increasing cost of funds in the current scenario andthe consequent need to improve cash position of the Company, the Management has decided toplough back the entire profit earned for improving business operations and shareholdervalue. Hence your Directors do not propose any dividend for the year.

DIRECTORS: i) In accordance with Article 37(A) of the Articles of Association ofthe Company, Mr. Sudhakar Shetty and Mr. K.S. Giridhar, Directors retire by rotation andbeing eligible have offered to be re-appointed.

ii) Mr. Puranic Ramachar Ananda Murthy who was appointed as Director in the casualvacancy caused by the demise of Mr.D.V.Tikekar, at the meeting of the Board of Directorsof the Company held on 23rd September 2011, pursuant to Article 30 of the Articles ofAssociation of the Company, holds office only up to the ensuing Annual General Meetingunder Section 262 of the Companies Act, 1956. Mr. Ananda Murthy has expressed hiswillingness to continue in office and the Company has since received a notice underSection 257 of the Companies Act, 1956, from a member proposing the candidature ofMr.Ananda Murthy for the office of Director.

iii) Mr.Khoday Ramachandra Nithyanand, Mr.Gurunath Srihari Khoday and Mr.DowrayPrabhakara Rao were appointed as Additional Directors by the Board of Directors at itsmeeting held on 15th May 2012, pursuant to Article 30 of the Articles of Association ofthe Company. The said three Additional Directors hold office only up to the ensuing AnnualGeneral Meeting under Section 260 of the Companies Act, 1956, and they have expressedtheir willingness to continue in office.

The Company has since received three separate notices under Section 257 of theCompanies Act, 1956, from the members proposing the candidature of Mr.Khoday RamachandraNithyanand, Mr.Gurunath Srihari Khoday and Mr.Dowray Prabhakara Rao for the office ofDirector.

AUDITORS :

M/s Rangaraju & Associates, Chartered Accountants, retire at the ensuing AnnualGeneral Meeting and are eligible for re-appointment.

The Company has received a letter from them to the effect that their reappointment, ifmade, would be within the prescribed limits u/s 224(1B) of the Companies Act 1956, andthat they are not disqualified for such reappointment within the meaning of Section 226ibid.

REMARKS OF AUDITORS :

Delay in payment of statutory dues and default in timely repayment of principal andinterest dues to banks.

COMMENTS ON REMARKS OF AUDITORS :

The delay in remittances towards Professional Tax, Employees State Insurance &Provident Fund and the default in timely repayment of principal and interest dues to bank,occurred due to unavoidable circumstances.

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

The information required to be furnished Under Section 217(1)(e) of the Companies Act,1956, is at Annexure ‘A’.

PARTICULARS OF EMPLOYEES UNDER THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975, ASAMENDED:

No employee of the Company was in receipt of remuneration exceeding Rs.5 Lakhs permonth or Rs.60 Lakhs per annum, during the financial year.

INDUSTRIAL RELATIONS:

Industrial Relations were cordial throughout the year under review. Your Directorsappreciate the dedicated services and co-operation of employees at all levels.

CORPORATE GOVERNANCE:

A separate section on Corporate Governance is included in the Annual Report. TheCompany has complied with the requirements of Corporate Governance as stipulated in clause49 of the Listing Agreement. The Certificate obtained from the Company’s Auditors oncompliance with Corporate Governance requirements is annexed thereto.

Exemption from attaching the balance sheet of Company’s wholly owned subsidiaryM/s. Khoday Properties Private Limited.

The Company has availed exemption from attaching to its own balance sheet, the balancesheet of Company’s wholly owned subsidiary M/s. Khoday Properties Private Limitedpursuant to General Circular 02/2011 dated 08th February 2011 issued by the Ministry ofCorporate Affairs under Section 212 of the Companies Act, 1956. In compliance therewith,your directors undertake to provide such information as may be sought by theCompany’s shareholders about the accounts of Khoday Properties Private Limited forthe financial year 2011-12 .Copies of the audited balance sheet of Khoday PropertiesPrivate Limited as at 31st March 2012 and statement of profit and loss for the year endedon that date have been kept for inspection by the Company’s shareholders, both at theRegistered Office of the Company and that of Khoday Properties Private Limited.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Your Directors further report that:-

i. in the preparation of the annual accounts, the applicable accounting standards havebeen followed and that there were no material departures;

ii. the accounting policies selected by them were applied consistently, judgments andestimates that are reasonable and prudent have been made so as to give a true and fairview of the state of affairs of the Company as at 31st March 2012 and of the profit of theCompany for the period ended 31st March 2012;

iii. they 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;

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

ACKNOWLEDGEMENTS:

Your Directors thank the customers, vendors, investors, bankers, financialinstitutions, Central and State Governments for their continued support and co-operationextended to the Company.

Information pursuant to Section 217(1)(e) of the Companies Act, 1956

FORM – A (See Rule 2)

1. Conservation of Energy :-

• Optimum plant load factor was ensured during the manufacturing cycle resultingin considerable savings in energy costs.

• Fans, lights and other electrical devices were switched off when not in usethereby achieving energy saving to a considerable extent. Regular lighting is increasinglybeing switched to CFLs.

• Replacement of capacitors resulted in better power factor and the resultantsavings in power costs.

• The other disclosures of particulars in Form ‘A’ are not applicable,as the production is company’s glass manufacturing unit ceased w.e.f. 01-07-2010.

FORM – B (See Rule 2)

2. RESEARCH AND DEVELOPMENT EFFORTS :

No Research and Development activities were undertaken by the Company during the year.

3. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :

The Company did not introduce any new technology in its manufacturing process duringthe year.

4. Foreign Exchange Earnings & Out Go [in Rs. 000s]