Kothari Products Ltd

TO THE MEMBERS:

The Board of Directors of your Company presents herewith its 25th Annual Report and Audited Accounts for the financial year ended 31st March, 2009. The report also includes the Management discussion and Analysis Report in accordance with the guidelines of Corporate Governance.

FINANCIAL PERFORMANCE :

2009 IN RETROSPECT :

Your Directors are to report that the Company's sales turnover during the year under review has been Rs.9654 Lacs as against Rs.20069 Lacs during the previous financial year. The Profit before tax during the year has been Rs.l 111 Lacs as against Rs.6561 Lacs in the previous year. The Profit after Tax has also similarly decreased to Rs.l 174 Lacs as against Rs.6446 Lacs in the previous year. The sales and Profitability of the Company have gone down mainly due to the demerger of Pan Masala, Beverages 6k Trading Divisions of the Company.

INTERNATIONAL BUSINESS :

The Companys' exports during theyear under review have decreased to Rs.5367 Lacs as compared to Rs.l 2813 Lacs during the previous year. The aforesaid fall in Export turnover which substantially include the Export of Pan Masala has been mainly due to the demerger of Pan Masala, Beverages 6k Trading Divisions of the Company.

DIVIDEND RECOMMENDED :-

Your Directors recommend a dividend of 100% (Rs.10/- per Equity share of Rs.l0/- each) for the financial year ended 31st March, 2009 subject to approval of shareholders in ensuing Annual General Meeting, absorbing Rs.776 Lacs (Approx) including additional tax on dividend. The aforesaid Dividend is tax free in the hands of the shareholders.

SUBSIDIARY :

The Company already had Sukhdham Constructions 6k Developers Ltd., Arti Web-Developers Pvt. Ltd., MK Web-Tech Pvt. Ltd. and KPL Exports Pvt. Ltd. as its wholly owned subsidiary Companies and Kothari Products Singapore Pvt. Ltd. as its subsidiary Company. During the year under review, IMK Hotels Pvt. Ltd. incorporated on 6th August, 2008 became 100% subsidiary Company of the Company on 3rd February, 2009. In accordance with section 212 of the Companies Act, 1956, the detailed accounts and the Directors' Reports of the aforesaid subsidiary companies form part of this annual report.

SCHEME OF ARRANGEMENT :

During the year under review the Scheme of Arrangement between the Company and Pan Parag India Ltd. for the Demerger of Pan Masala, Beverages 6k Trading Divisions of the Company in Pan Parag India Ltd. was approved by the Hon'ble High Court of Allahabad on 16th September, 2008 which became effective from 18th November, 2008 pursuant to which the Pan Masala, Beverages & Trading Divisions of the Company were transferred to Pan Parag India Ltd.. Pursuant to the aforesaid Scheme Ten 6% Non Cumulative Redeemable Non Convertible Preference shares of Rs.10/- each have been allotted by Pan Parag India Ltd. for every one Equity share held by the shareholders of your Company.

DIRECTORS :

Dr. Avinash Gupta & Sri Pramod Kumar Tandon, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. Further, die present term of appointment of Sri M.M. Kothari, Chairman comes to end on 30th September, 2009 and he is eligible for re-appointment and the Board of Directors of the Company has decided to reappoint him and the resolution for approving his reappointment is incorporated in the Notice of the ensuing Annual General Meeting. Brief resumes of the aforesaid Directors, nature of their expertise in specific functional areas and names of Companies in which they hold the Directorships 6k the memberships/Chairmanships of the committees of the Board, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges are given in the section on Corporate Governance elsewhere in this Annual Report.

STOCK EXCHANGE LISTING & COMPLIANCE:

The Shares of die Company are presently listed at Bombay Stock Exchange Ltd., Mumbai, National Stock Exchange of India Ltd., Mumbai & U.P. Stock Exchange Association Ltd., Kanpur. The Shares of the Company have been voluntarily delisted from Calcutta Stock Exchange w.e.f. 21st October, 2008.

CORPORATE GOVERNANCE CODE:

The report on the Corporate Governance Code as required under clause 49 of the Listing Agreement is included in this Annual Report under a separate section.

DIRECTORS' RESPONSIBILITY STATEMENT _:

As required under Sec.217 (2AA) introduced by the Companies (Amendment) Act, 2000, your Directors confirm:

(i) that in die preparation of the annual accounts, the applicable accounting standards have been followed ;

(ii) that the Directors have selected such accounting policies and applied them consistendy and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of die state of affairs of the company at the end of the financial year and of die profit of the company for the year;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

MANAGEMENT DISCUSSION & ANALYSIS REPORT:

The information, as required under clause 49 of the Listing Agreement, is as under :-

a) INDUSTRY STRUCTURE AND DEVELOPMENTS :

The Company was earlier belonging mainly to Pan Masala 6k Gutkha Industry. However w.e.f. 18th November, 2008 the Company has demerged its Pan Masala and some other divisions to Pan Parag India Ltd. Consequent upon the demerger, the Company has focussed on seizing the business opportunities in the most buoyant 6k vibrant sectors of the economy such as International Trade 6k Real Estate.

b) OPPORTUNITIES 6k THREATS :

The opportunities for the Trading 6k Real Estate Industries are immense. Thus the future of the Company appears to be bright. However, the Industry may face the risk of facing a ban on the import/export of any item by the Central/State Governments.

c) FINANCIAL PERFORMANCE :

The Company's sales have decreased to Rs.9654 Lacs during the period under review as against Rs.20069 Lacs during the previous financial year due to the demerger as mentioned earlier in this report. The profit before tax during the year has similarly gone down to Rs.l 111 Lacs as against Rs.6561 Lacs in the previous year. The profit after tax has similarly gone down to Rs.l 174 Lacs as against Rs.6446 Lacs during he previous financial year. Profitability of the Company has gone down mainly due to the aforesaid demerger and gestation period for the diversified activities.

d) OUTLOOK :

In view of the aforesaid opportunities, the outlook of the company seems to be very bright.

e) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

The Company has Internal Control procedures commensurate with the size of the Company and the nature of its business for the import 6k export of commodities and purchase of Stores, Raw Materials including components, Plants 6k Machinery, Equipment 6k other Assets and with regard to the sale of goods.

AUDITORS AND AUDITORS' REPORT -.

M/s Mehrotra 6k Mehrotra, Auditors retiring at the ensuing Annual General Meeting having furnished the requisite certificate U/s 224(1 B) of The Companies Act, 1956, are eligible for re-appointment.

There are no qualifications or adverse remarks in the Auditors' Report which need explanation in the Directors Report.

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

The information required under the companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 is as under :-

[A] CONSERVATION OF ENERGY :

a) Energy Conservation Measures taken :

The Company has taken all measures for conservation of energy most economically.

b) Additional Investments 6k Proposals, if any, being implemented for reduction of consumption of energy. No such investment is proposed.

c) Impact of measures at (a) 6k (b) above for reduction of energy consumption and consequent impact on cost of Production of goods.

These measures have led to consumption of energy more economically and cost of production of goods has gone down, d) Form 'A' is not applicable to the company.

[B] TECHNOLOGY ABSORPTION _:

The Company has not imported any technology and company's products were based on secret formulations which are developed by the promoters, from time to time and accordingly no technology as such is involved in the manufacturing of the aforesaid products. Further, no separate R6kD department exists in the company. However whatever little R6kD is carried out, the expenses relating to that being non quantifiable, are debited to the primary heads of Account, because no separate staff is employed for this purpose. Hence the information in form 'B' is Nil.

[C] FOREIGN EXCHANGE EARNINGS AND OUTGO :

INDUSTRIAL RELATIONS :

Cordial and harmonious industrial relations prevailed throughout the year.

PARTICULARS OF EMPLOYEES :

The particulars of employees who were in receipt of remuneration as specified in Sec.217(2A) of tire Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975 as amended, is Nil.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the continued co-operation and support extended by various Government Departments, Bankers, Dealers 6k suppliers and also acknowledge and appreciate the contribution made by the employees.

The Board also wishes to place on record its gratitude to the valued customers, members and investors for their continued support and confidence in the Company.

For and on behalf of the Board