Kiri Industries Ltd

To

The Members,

Kiri Industries Limited, Ahmedabad.

Your Directors have pleasure in presenting 13th Annual Report together with AuditedAccounts of the Company for the year ended on 31st March, 2011.

REVIEW OF STANDALONE RESULTS:

Your Directors are pleased to report total sales of Rs. 56572.12 Lacs for the year2010-11 as against Rs. 34084.68 Lacs for the year 2009-10; a stupendous increase of65.97%; which is on account of penetration to a wider customer base and persistentemphasis on improving product mix and de-bottlenecking its infrastructural limitationswhich provides better utilization of its Dyes manufacturing unit. The Profit beforeexceptional items and after tax has increased from Rs. 2441.16 Lacs for the year 2009-10to Rs. 4605.15 Lacs for the year 2010-11. The Net Profit after tax has increased from Rs.2490.18 Lacs to Rs. 3305.02 Lacs showing an increase of 32.72% in the current financialyear as compared to the preceding financial year of 2009-10.

REVIEW OF CONSOLIDATED RESULTS:

During the financial year under review, the consolidated sales amounts to Rs. 380667.52Lacs for the year 2010-11 as against Rs. 80150.68 Lacs for the year 2009-10(which includedDyStar operations for 2 months). The topline of DyStar operations have given a boost tothe overall growth to sales. After acquisition of DyStar the first full year of itsoperations displayed regaining of lost grounds by DyStar. The profit before exceptionalitems and after tax has increased amounts to Rs. 10959.76 Lacs for the year 2010-11 which,substantiates the effective implementation of the restructuring program. The provision onaccount of restructuring and certain one time expenses, the consolidated loss is reportedto be Rs. 27773.57 Lacs, a significant portion of which is non-cash. The Company does notforesee more of such restructuring expenses for DyStar operations in the coming period.

DIVIDEND:

For the financial year 2010-11, your Directors are pleased to recommend a finaldividend of Rs. 1.50/- per equity share of Rs. 10/- each (previous year Rs. 1.50/- perequity share). The aggregate amount of dividend including dividend tax is Rs. 331.23 Lacson 19000053 equity shares. The said dividend if declared by the members will be paid on5th October, 2011.

REVIEW OF DYSTAR OPERATIONS AND RESTRUCTURING PROGRAM:

In February, 2010 your Company along with Well Prospering Limited through Kiri HoldingSingapore Private Limited (KHSPL), has acquired Assets of DyStar Textilfarben GmbH andDyStar Textilfarben GmbH & Co. Deutschland KG (DyStar) along with its 36 subsidiariesto strengthen its forward integration growth drive. Thereafter, in October 2010, KHSPLacquired DyStar LP USA for USD 10 Million.

During the year under review, DyStar Entities achieved a robust turnover of Rs.336306.02 Lacs equivalents (Euro 543.31 Mio) and earnings before tax and extraordinaryitems of Rs. 8513.39 Lacs. The restructuring program is under implementation and theCompany has provided for onetime restructuring costs of Rs. 37429.93 Lacs, includingprovisions of Rs. 6841.93 Lacs towards impairment of assets.

QUALIFIED INSTITUTIONAL PLACEMENT:

During the year under review your Company successfully completed its maiden QualifiedInstitutional Placement (QIP) of Rs. 23902.00 Lacs by way of issue of 40 Lacs equityshares of Rs.10 each, at a premium of Rs. 587.55 per equity share. The funds raised fromQIP are utilized to repay outstanding unsecured loans which were accepted for acquisitionof stake in DyStar. Further the funds are being used towards enhancing productioncapacities of Dyes Intermediates and Specialty Dyes Intermediates and investment inequity/preference shares in Joint Venture and associate companies. Out of proceeds of QIP,one of the plants Dyes Intermediates, namely Vinyl Sulphone, Phase I, started commercialproduction since 15th March, 2011.

Pursuant to allotment of 40 Lacs Equity Shares by way of QIP, the paid up capital ofthe Company increased from Rs. 15,00,00,530/- (Rupees Fifteen Crores Five Hundred Thirtyonly) to Rs. 19,00,00,530/- (Rupees Nineteen Crores Five Hundred Thirty only).

FUTURE PROSPECTS:

Your Company on standalone basis, would commence commercial production of certainSpecialty Dyes Intermediates and additional Dyes Intermediates. This shall strengthen thegrowth plan of your Company and provide consistent track record of organic growth andexpansion, which is the epicenter of its core values.

CHANGE OF NAME OF THE COMPANY:

The name of the Company has been changed from Kiri Dyes and Chemicals Limited to KiriIndustries Limited vide Fresh Certificate of Incorporation dated 8th March, 2011 issued bythe Registrar of Companies, Gujarat, Dadra and Nagar Haveli.

SUBSIDIARIES AND CONSOLIDATED FINANCIAL STATEMENTS:

The Ministry of Corporate Affairs vide its General Circular No: 2/2011 dated 8thFebruary, 2011 has granted general exemption from attaching the accounts along with thereport of the Board of Directors and Auditors to the Balance Sheet of the subsidiaryCompanies with Annual Report of the holding Company subject to fulfillment of conditionsprescribed in that circular.

As per the conditions prescribed by the above mentioned circular, the Board ofDirectors of the Company has given their consent for not attaching accounts of subsidiaryCompanies by passing resolution in their meeting held on 1st September, 2011. The Companyhas prepared Consolidated Financial Statements of the Company and its subsidiaries inaccordance with the requirements of Accounting Standard AS-21 issued by the Institute ofChartered Accountants of India. The same has been attached with the Annual Report of theCompany. The summary of financial information of each of the subsidiary companies isattached herewith and forming part of the Annual Report of the Company.

The Company will provide the annual accounts of its subsidiary companies and therelated detailed information on the specific request made by any shareholders/investors.The said annual accounts are open for the inspection at the Registered Office of theCompany during business hours on all working days, except Sunday and public holidays.

LISTING:

The equity shares of your Company are listed and actively traded on the Bombay StockExchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). YourCompany’s shares are tradable compulsorily in electronic form and your Company hasgot connectivity with both the depositories i.e. National Securities Depository Limited(NSDL) and Central Depository Services (India) Limited (CDSL). The Company has paidlisting fees to both the stock exchanges.

DIRECTORS:

Mr. Pravin A. Kiri and Mr. Manish P. Kiri, Directors of the Company retire by rotationat the forthcoming Annual General Meeting and being eligible offer themselves forre-appointment. Profiles of Mr. Pravin A. Kiri and Mr. Manish P. Kiri as required underclause 49 of the Listing Agreement are given as Annexure to the Notice.

The Board of Directors of the Company at their meeting held on 13th May, 2011 hasappointed Ms. Harsha B. Bangari as Nominee Director of Export Import Bank of India.

AUDITORS AND AUDITORS’ REPORT:

M/s. V. D. Shukla & Co., Chartered Accountants, Ahmedabad, Statutory Auditors ofthe Company, retire at ensuing Annual General Meeting and have confirmed their eligibilityand willingness to accept the office, if appointed. They have issued a certificate statingthat their appointment, if made, would be within the prescribed limits under section224(1B) of the Companies Act, 1956. The notes on standalone financial statements andconsolidated financial statements referred to in the auditors’ report areself-explanatory and therefore do not call for any further comments and explanations.

PUBLIC DEPOSITS:

During the year under review, your Company has not accepted or renewed any depositswithin the meaning of the provisions of section 58A of the Companies Act, 1956.

DIRECTORS’ RESPONSIBILITY STATEMENT:

In compliance of Section 217(2AA) of the Companies Act, 1956, with respect toDirectors’ Responsibility Statement, it is hereby confirmed:

1. That in the preparation of the annual accounts for the financial year ended 31stMarch, 2011, all applicable accounting standards have been followed and no materialdeparture have been made from the same;

2. That the Directors have selected appropriate accounting polices and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year 2010-11 and of the profit of the Company for the year under review;

3. That the Directors have taken proper and sufficient care to the best of theirknowledge and ability, for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956 for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;

4. That the Directors have prepared the annual accounts for the financial year ended31st March, 2011 on a ‘going concern’ basis.

EMPLOYEE RELATIONS:

The relations with the employees have been cordial throughout the year. Your Directorsplace on record their sincere appreciation in respect of the services rendered by theemployees of the Company at all levels.

PARTICULARS OF EMPLOYEES:

Information pursuant to Section 217 (2A) of the Companies Act, 1956 read together withthe Companies (Particulars of Employees) Rules, 1975 has been given as under:

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

Additional information on conservation of energy, technology absorption, foreignexchange earning & outgo as required to be disclosed in term of Section 217(1) (e) ofthe Companies Act, 1956, read together with the Companies (Disclosures of Particulars inthe Reports of Board of Directors) Rules, 1988, is given as an annexure to this report.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS:

Your Company is committed to maintain highest standard of corporate governance. Aseparate report on the Corporate Governance and Management Discussion and Analysis Reportas per Clause 49 of the Listing Agreement, along with the Certificate from the StatutoryAuditors of the Company in compliance of clause 49 of the Listing Agreement is annexedherewith and forming part of this Annual Report.

GROUP FOR INTERSE TRANSFER OF SHARES:

As required under clause 3(1) (e) of the Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeovers) Regulations, 1997 persons constituting"Group" (within the meaning as defined in the Monopolies and Restrictive TradePractice Act, 1969) for the purpose of availing exemption from applicability of theprovisions of Regulations 10 to 12 of SEBI (Substantial Acquisition of Shares andTakeovers) Regulations, 1997 is given as under:

1. Mr. Pravin Kiri

2. Mr. Manish Kiri

3. Mrs. Aruna Kiri

4. Mrs. Anupama Kiri

5. Ms. Amisha Kiri

6. Master Hemil Kiri

7. Synthesis International Limited

8. Kiri Infrastructure Private Limited

9. Kiri Holding Singapore Private Limited

10. Kiri International (Mauritius) Private Limited

11. Lonsen Kiri Chemical Industries Limited

12. Kiri Investment and Trading Singapore Private Limited

13. Kiri Peroxide Limited

14. APK Advisory Services Private Limited

15. Chemhub Exim Private Limited

16. Chemhub Tradelink Private Limited.

APPRECIATION:

Your Company maintained health, cordial and harmonious industrial relations at alllevels. The Dynamic and unstinting efforts of the Employees have enabled your Company tobecome leading chemical Company on the globe. Your Directors would like to place onrecord, their sincere appreciation for significant contributions made by the employeesthrough their dedication and commitment towards the success and growth of the Company.

The Board of Directors also acknowledge the support and assistance extended to us bythe suppliers, customers, lenders, business associates, shareholders and the governmentfor their invaluable support and look forward to continued support in the future.

Annexure to the Directors’ Report

Information as per Section 217(1)(e) read with Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988:

A. CONSERVATION OF ENERGY:

C. FOREIGN EXCHANGE EARNING AND OUTGO:

Particulars with respect to Conservation of Energy

B. Consumption per unit of production :

TECHNOLOGY ABSORPTION

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: Nil