Kothari Fermentation & Biochem Ltd

TO THE MEMBERS OF

KOTHARI FERMENTATION AND BIOCHEM LTD.

Your Directors are pleased to present the 20^th Annual Report together withthe Audited Accounts for the year ended on 31^st March 2010:

1. FINANCIAL RESULTS

2. OPERATIONS

During the year, the capital expenditure on balancing equipments has resulted in betterutilization of plant & machineries. Various steps have been initiated for increasingproduction and improving operating efficiencies. The Company had undertaken tradingactivities during the year 2009-10 and had two segments i.e. manufacturing of yeast andtrading of commodities. The company achieved production of 4304 MT during 2009-10 ascompared to 5185 MT in previous year. Resultantly the turnover of the company frommanufacturing activities has decreased to Rs. 1590.48 Lacs during the year 2009-10 ascompared to Rs. 1914.46 Lacs during previous year. The Company undertook tradingactivities during the year 2009-10 resulting in turnover of Rs. 317.04 Lacs. Theprofitability of the company was Rs. 77.64 Lacs during the year 2009-10 as compared toprofit of Rs. 94.49 Lacs during previous year. The decrease in Turnover was mainly due tocloser of the factory for about one and half months due to upgrading of effluent treatmentplant due to requirement of pollution department. Dividend for the year has not beenproposed in order to plough back the profit for growth of the Company.

3. CURRENT YEAR’S OUTLOOK

The additional investment made in plant & machineries will result in increase ofproduction. Various steps have been taken for cost reduction and improving operatingefficiencies.

In view of above it is expected that the production and profitability of the companyshall improve during the current year.

4. FIXED DEPOSITS

The Company has not accepted any deposit from public during the year under review,which would fall under section 58-A of the Companies Act, 1956.

5. DIRECTORS

In accordance with the provisions of the Companies Acts, 1956 and the Articles ofAssociation of the Company, Mr. Ratan Lal Dudheria is retiring from the Board by rotationand being eligible offers himself for re-appointment. The Board recommends re-appointmentof Mr. Ratan Lal Dudheria as Director of the Company.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO

The statement containing the necessary information 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, is annexed to this report as Annexure-I.

7. PERSONNEL

Your company keeps harmonious relations with all its employees. No employee is drawingsalary more than the limits prescribed under section 217 (2A) of the Companies Act, 1956,read with the Companies (Particulars of Employees) Rules, 1975.

8. AUDITORS

M/s Nahata Jain & Associates, Chartered Accountants, Auditor’s of your companyretire at the ensuing annual general meeting and being eligible offers themselves forre-appointment. The Board recommends their appointment as auditors from the conclusion ofthis meeting to the conclusion of next annual general meeting. The notes on accounts areself-explanatory with regard to auditor’s observations.

9. LISTING OF SHARES

The company’s shares are listed at Stock Exchanges situated at Delhi, Mumbai,Kolkata, Jaipur and Guwahati. The listing at Delhi and Mumbai is continued, and thelisting fee has been paid upto date. Action has already been initiated for delisting ofshares from stock exchanges at Kolkata, Jaipur, and Guwahati. All the formalities havebeen complied with in relating to delisting and as such the listing fee to these StockExchanges were not paid.

10. CORPORATE GOVERNANCE

The provisions of clause 49 of the listing agreement relating to corporate governanceare applicable to the company. So there is a separate section on Corporate Governance inthe annual report of the company, with a detailed compliance report on CorporateGovernance.

11. MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis (MDA), which forms part of this Report,inter-alia, deals adequately with the operations as also current and future outlook of theCompany.

12. DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to Sec.217 (2AA) of the Companies Act, 1956 the Directors hereby report: a)that in the preparation of the annual accounts, the applicable accounting standards havebeen followed along with proper explanation relating to material departures; b) that theDirectors have selected accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year 2009-10 and of theprofit or loss of the company for that year; c) that the Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act for safeguarding the assets of the company and forpreventing and detecting fraud and other irregularities; d) that the Directors haveprepared the Annual Accounts on a going concern basis.

13. ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the wholehearted devotionand commitment extended by the employees at all levels, which have been a source ofstrength and inspiration to the company.

The Directors also wish to thank and deeply acknowledge the cooperation, assistance andsupport extended by the shareholders, the Dealers, vendors, bankers and financialinstitution of the company.

(I) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO.