corporate information 03 - meghmanicorporate information 03 chairmans' statement 06...

Corporate Information 03

Chairmans' Statement 06

Directors' Report 09

Management Discussion and Analysis 15

Corporate Governance 18

Auditors' Report 29

Balance Sheet 33

Profit and Loss Account 34

Schedules Forming Part of Balance Sheet and Profit and Loss Account 35

Cash Flow 62

Auditors' Report on Consolidated Financial Statements 66

Consolidated Balance Sheet 67

Consolidated Profit and Loss Account 68

Schedules Forming Part of Consolidated Balance Sheet and Profit and Loss Account 69

Consolidated Cash Flow 84

Meghmani Energy Limited 86

Meghmani Finechem Limited 103

Meghmani Europe BVBA 117

Meghmani Organics Inc. USA 123

Secretarial Audit Report 128

Notice of Annual General Meeting 130

CONTENTS

MEGHMANI ORGANICS LIMITED

Corporate Information

Board Of Directors Jayanti M. Patel

Ashish N. Soparkar

Natwarlal M. Patel

Ramesh M. Patel

Anand I. Patel

Ashvin Raythatha

Chinubhai R. Shah

Balkrishna T. Thakkar

Jayaraman Vishwanathan

Foo Meng Tong

K N Venkatasubramanian

Chandan Bhattacharya

(Appointed on 30.07.2007)

Audit Committee Balkrishna T. Thakkar

Foo Meng Tong

Chinubhai R. Shah

Nominating Committee Jayanti M. Patel

Foo Meng Tong

Chinubhai R. Shah

Remuneration Committee Chinubhai R. Shah

Balkrishna T. Thakkar

Natwarlal M. Patel

Shareholders / Investors Chinubhai R. Shah

Grievance Committee Balkrishna T. Thakkar

Ashish N. Soparkar

Company Secretary K. D. Mehta

Registrar & Share Transfer Agent Intime Spectrum Registry Limited

C-13, Pannalal Silk Mills Compound,

LBS Road, Bhandup (West),

Mumbai 400 078. India.

3


Singapore Depository Shares Tricor Barbinder & Co. Pte. Ltd.

("SDSS") Registrar And SDSS Office 8 Cross Street # 11,

PWC Building,

Singapore 048424

Registered Office Plot No. 184, Phase II,

G.I.D.C. Vatva, Ahmedabad -382 445

Telephone No. 91-79-25831210

Fax No. 91-79-25833403

E-mail : [email protected]

Corporate Office Meghmani House

Shreenivas Society,

Off: Vikas Gruh Road,

Paldi, Ahmedabad - 380 007

Mumbai Office 22 / 23, Vellard View, 1st Floor,

Tardeo Road,

MUMBAI - 400 007.


4


1. Pigment Green - Division Plot No. 184, Phase II,


Telephone No. 91-79-25831210

Fax No. 91-79-25833403


2. Agro Division - I Plot No. 402,403,404 & 452,

Village Chharodi,

Taluka Sanand,

District :- Ahmedabad

Telephone No. 91-2717-273251

Fax No. 91-2717-273254


3. Pigment Blue - Division Plot No. 21,21/1,

G.I.D.C. Panoli,

District :- Bharuch

Telephone No. 91-2646-276352

Fax No. 91-2646-276374


4. Agro Division - II 5001/B, G.I.D.C. Ankleshwar,

District :- Bharuch

Telephone No. 91-2646-222971

Fax No. 91-2646-222965


PRINCIPAL BANKERS State Bank of India,

Overseas Branch,

Navjivan Trust Building,

Ahmedabad - 380014

HDFC Bank Limited

3rd Floor, HDFC Bank House,

Mithakhali, Ahmedabad - 380006

ICICI Bank Limited

JMC House, Opp. Parimal Garden,

Ambawadi, Ahmedabad - 380009

AUDITORS M/s Patel & Khandwala

204, Akik, Opp. Lions Hall,

Mithakhali, Ahmedabad - 380006

PLANT LOCATION


5

Chairman's Statement

Dear Members,

Before I proceed further to present our Annual Report 2008, I would like to thank all the investors for their overwhelming response to the Initial Public Offer of the Company on Indian Stock Exchanges. Without your support it would not have been possible to have issue oversubscribed over 26 times, underscoring investors' recognition of the Company's business model, investment merits and established track record. With this listing, the responsibility of the Company has increased tremendously towards Indian as well as Singapore Depository Shareholders. I would also like to thank our Singapore Depository Shareholders for their continued support and trust in the Company and the Management.

It is with my great pleasure that I share with you our signature milestones and highlights for the year ended 31 March 2008 [FY2008]. We are heartened to report that Meghmani continued to deliver robust financial numbers and highly commendable margins. Despite the ever-escalating increases in the cost of crude oil and other raw materials seen in FY2008, the Group has continued to deliver, both operationally and financially. It is indeed my firm belief that we have emerged stronger and in better competitive shape than ever.

Our announcement on the setting-up of a Caustic Chlorine Complex in Dahej in October 2007 marks the other important thrust of our growth plans. This large-scale integrated complex will commercially produce caustic soda, chlorine gas and hydrogen gas in the first phase, and moving on to caustic/chlorine derivatives in subsequent phases.

After highly successful listing of our shares on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) of India, our shares will also enjoy two-way fungibility between Singapore and Indian Stock Exchanges starting from 28th June, 2008. This will not only enhance the liquidity of our shares but also give an option to our investors to benefit from more vibrant stock exchanges of the two.

The Year in Numbers

For the 12 months ended 31 March 2008, the Group turned in after tax profit of 306 million rupees on the back of approximately 6.0 billion rupees. These compared with profit after tax and revenue of 409 million rupees and 4.7 billion rupees, in the preceding 12-month period.

In spite of rising costs in raw materials and crude oil, Meghmani was still able to demonstrate strong profitability. The Group recorded gross profit of over 1 billion rupees, while gross profit margin came in at 17% compared to 22.8% previously a fair achievement when compared to industry peers.

Growth in Group's revenue was spearheaded by our Agrochemicals business segment with a contribution of approximately 2.58 billion rupees - this marked a 12.6% increase from a revenue of almost 2.27 billion rupees in FY2007. Our Pigments division contributed almost 2.29 billion rupees to Group revenue, against 2.36 billion rupees in the year ago period.

Moving in parallel with revenue growth, distribution and administrative expenses grew by 22% and 9.7% to 87.2 million and 12.5 million rupees, correspondingly. The bulk of distribution expenses are attributed to increase in freight (marine), clearing, forwarding charges and packing material costs. Finance costs for FY2008 witnessed an uplift of 28.9% to 34.89 million rupees, brought about by a higher utilization of working capital facilities, increase in sales and funding for Meghmani Finechem Limited ("MFL").

Earnings per share stood at 1.27 rupees compared to 2.04 rupees in the earlier period, while the earnings per SDS came in at 0.63 rupees as at 31 March 2008, versus 1.02 rupees as at 31 March 2007. The earning per share came down due to infusion of new share capital base because of India Listing. Net asset value per share surged almost 25% from 14.11 rupees to 17.59 rupees.

Review of Core Business Segments

Our Agrochemicals division turned in a revenue of 2.58 billion rupees, up 12.6% from the year ago period of 2.27 billion rupees. Contribution from Pigments slipped 3% to 2.29 billion rupees versus 2.36 billion rupees in FY2007.

Review by Geographical Markets

The Group's export sales grew by 35.7% to reach 4.4 billion rupees, up from 3.3 billion rupees previously. Revenue contributions from Pigments and Agrochemicals edged up 1.1% and 4.4% respectively to 1.9 billion and 1.35 billion rupees. The increase in export sales of Agrochemicals was mainly attributable to heightened quantity sale of Acephate Technical and Chlorpyriphos.


6


Domestic sales of Pigments decreased 20.7% to 351 million rupees as a result of a stronger focus on the export markets while the domestic sales of Agrochemicals increased by 23.6% due to good monsoon and increased sales of Acephate, Cypermethrin Technical and Imidacloprid Technical.

Pathway to Long Term Sustainable Growth

The Group's Rs 555.16 crores [S$191.3 million] investment in the Caustic Chlorine Complex forms the cornerstone to our long term sustainable growth. We view this project as an opportunity to achieve inorganic growth in a diversified yet chemistry-related business with positive growth potential.

Sited in a 161-acre piece of land in Dahej, the proposed plant will be set up under a special purpose vehicle, Meghmani Finechem Limited (MFL), employing the latest membrane cell technology to provide a ready and captive source of basic chemicals as the Group consumes significant quantities of caustic soda, chlorine gas and derivatives of chlorine gas for our pigments and agrochemicals operations.

The caustic-chlorine chemicals are used in a multitude of industries including Pigments, Pesticides, production of metals and resource materials; pulp and paper; petroleum and natural gas extraction; manufacture of organic chemicals, plastics, industrial solvents, water treatment chemicals and pharmaceuticals. Due to their wide ranging applications across industries, demand for Caustic Soda and Chlorine Gas are increasing.

Dahej is widely considered a strategic location for chemical and related industries as it is an approved Chemical Special Economic Zone ("SEZ") with a high concentration of chemicals companies. Dahej also has important infrastructure in place such as communications, effluent treatment, power and water / sanitation facilities. In addition, Dahej possesses a Chemical Port, which has jetties capable of handling gaseous, liquid and solid cargoes and is well-connected by rail, road and sea for easy transportation of raw materials and end products. The Dahej port will be vital to the import of coal from countries such as South Africa and Indonesia amongst others for Meghmani's 40 MW coal based captive power plant.

Another benefit of Dahej is its easy accessibility to salt, a major raw material for the plant, and other basic chemicals which are important for chemical manufacturing operations.

Hence, the critical success factors in driving the plant, namely, salt and power supply, are both reliably and readily available.

The commercial production of the first phase is targeted to commence by December 2008 / January 2009. Phase 2 will comprise the production of derivative products with higher value-addition. The annual manufacturing capacity of Caustic Soda will be 113,000 TPA and Chlorine Gas 100,000 TPA.

We are honoured that the International Finance Corporation (IFC), a member of the World Bank Group, will be investing 461 million rupees and also provide a long term loan (ECB) of 800 million rupees to MFL for this plant. This solid endorsement by a world renowned institution is certainly heartwarming. IFC will certainly help strengthen the project's technology and environment-friendly operating standards.

Industry Prospects

Pigments

On a global basis, consumption of organic pigments is growing at a rate of 2-3%. Improving economic conditions in Europe and increased growth in Asia Pacific pigments market bode well for the Company. Additionally, countries such as the US, Europe, Central & South America, and Japan are increasing their direct supplies of pigments from India.

From Meghmani's perspective, we have bolstered the production capacity of our Pigment Green 7 plant at Vatva to cope up demand in India. We are currently evaluating the possibility of also boosting our Pigment Blue Plant in Panoli.

We are also in the process of introducing a new range of High Performance Pigments - Orange, Red and Yellow - to better cater to global customers.

Agrochemicals

The Group has installed multi-facted production capacities to produce Permethrin, Alpha Cypermethrin and Acephate at the Ankleshwar Plants to meet growing demand for Organo Phosphorous and Synthetic Pyrethroid. Meghmani performed well in the domestic market last year as the Indian monsoon was good. We expect this to continue as we focus on the sale of domestic-branded formulations. Despite threats of global warming and severe flooding in certain parts of the world, we expect Agrochemicals market to remain buoyant this year.

Registrations

We expect to gain from the new registration received from Brazil and Pakistan - two of the world's fastest growing markets for pesticides.

7


Total pesticides market in Brazil is currently worth about US$3.3 billion and Meghmani wasted no time in selling into the Brazilian market. The first order of Acephate was delivered between July and October 2007, just months after we received registration in June 2007. This order accounted for about 30% of Brazilian market share for the Acephate product. Today, we are one of the few players in the Acephate market in Brazil; a market which accounts for between 2000 and 2200 MT (metric tonnes) per year and increasing every year.

As for Pakistan, which has a market size for pesticides worth US$250 million, Meghmani is one of the earliest registrants after the Pakistan government opened the doors for Indian pesticides suppliers.

It is worth noting that there is a lot of similarity between Pakistan and Indian agrochemicals market as crop patterns and climatic conditions are quite similar between the two countries. So we are confident we will be able to capture market share in Pakistan within a short period of time.

Our latest breakthrough in new markets is a vital part of our ongoing strategy to increase our market penetration and raise our profile in the fast growing agrochemicals market, especially in Brazil. We will now be able to embark on marketing activities and sell our products directly to major formulators and distributors in these two markets.

The Group will continue to make concerted efforts to secure overseas registrations - which are essentially "passports" which allow us to sell products in those markets. To date, we have received a total of 130 registrations, and currently have 430 pending registrations in different stages across 60 countries. This healthy pipeline span diverse countries such as Australia, Brazil, China, Indonesia, Malaysia, Nigeria, Paraguay, Thailand, Turkey and Vietnam.

Dividends

The Board is pleased to recommend a final dividend of 0.30 rupee per share, bringing the total distribution for FY2008 toRs. 76.29 million.

Looking Ahead

The price of crude oil rose significantly in the course of FY2008, resulting in the higher costs of raw materials which are derivatives of crude oil. There was also a bullish trend in the prices of copper and aluminium. These phenomena have wide ranging effects which cut across myriad industries and sectors - its effects are universal, and not specific to our industry per se. Despite these challenges, we were effective in passing on the added costs to our customers. We expect this trend to continue.

The silver lining is that the global market for pigments products have shown signs of recovery in the pricing of some products. Separately, the pressure on pricing for agrochemicals seen in FY2008 is expected to ease in FY2009.

Our shareholders can also seek some comfort from our strong financial standing and excellent track record in dealing with price increases in raw materials over the years.

Regardless of the external environment ahead, we remain steadfast in executing our growth strategy with fervor as we further strengthen our leadership position in the global arena.

Commitment to shareholders

The Meghmani board has continued to focus on good governance. This is underpinned by our strong belief that good governance will invariably lead to a more valuable company.

With a bedrock foundation in best corporate practices, we are then better able to not only grow Meghmani, but also ensure sustained performance over the long term. We will drive initiatives to expand our business, and will develop people to uphold a culture that is adaptive to the ever-changing macro environment.

On behalf of the Board and the management team, we wish to thank you for your unstinting commitment and trust in us. We will continue to build the business and deliver returns for years to come.

Jayanti M PatelExecutive Chairman

Meghmani Organics Limited

8


The Members,

Your Directors have pleasure in presenting Fourteenth, Annual report and Audited Statement of Accounts of the Company for the Financial Year ended on 31st March, 2008.

FINANCIAL RESULTS

Rs. in Mn

PARTICULARS YEAR ENDED ON YEAR ENDED ON

MARCH 31, 2008 MARCH 31, 2007

(a) Sales, Other Income & Increase /Decrease in Stock 5870.23 4918.09

(b) Profit Before Interest & Depreciation 709.03 710.94

(c) Interest (Net)/ Financial Expenses 91.13 120.76

(d) Depreciation 143.70 135.01

(e) Profit Before Tax 474.20 455.17

(f) Payment / Provision for Current Tax and FBT 82.91 50.05

(g) Deferred Tax Expenses/(Income) 15.32 (3.69)

(h) Profit After Tax 375.97 408.81

Profit Available for Appropriation 375.97 408.81

Appropriations:-

General Reserve 40.00 41.00

Proposed / Final Dividend 76.29 72.23

Tax on Proposed/ Final Dividend 12.97 12.27

Balance carried forward 246.71 283.31

Total of Appropriations 375.97 408.81

DIVIDEND:-

Your Directors are pleased to recommend dividend of 30% i.e. Rs. 0.30 per Equity share of Re. 1/- each on 254,314,211 Equity Shares of Re. 1/- each, for your final approval. The proposed dividend is tax free in the hands of shareholders.

ISSUE OF EQUITY SHARES

The Company had received the overwhelming response to its Initial Public Offer (IPO) of 53,684,211 Equity shares of Rs. 1/- each at a premium of Rs. 18/- per share aggregating Rs. 102 Crores to list its equity shares on Indian Stock Exchanges. The issue was over subscribed by 26 times. The present share capital after the issue of new equity shares stands to 254,314,211 of Rs. 1/- each.

OPERATIONS:-

The Net Sales Turn over of the Company increased to Rs. 5932.39 Mn in FY 2008 as against Rs. 4690.59 Mn in FY 2007, showing an increase of 26.47%.

DOMESTIC SALES:-

The Domestic Sales of the Company increased by 9.75 % i.e. from Rs. 1419.76 Mn to Rs. 1558.24 Mn in the year under review. The Domestic Sales of Pigment Division decreased from Rs. 442.85 million in FY 2007 to Rs. 351.01 million inFY 2008 and the domestic sales of Agro Division increased from Rs. 976.91 million in FY 2007 to Rs. 1207.23 million in FY 2008.

EXPORT SALES

The Export Sales increased by 33.73% i.e. from Rs. 3270.84 Mn in FY 2007 to Rs. 4374.15 Mn in FY 2008.

Export sales of Agrochemicals Division increased by 8.04% and Pigment Division by 12.25%.

Directors' Report

9


OTHER INCOME

Other income increased substantially, due to Merchant export of Pigment and Agro products. The other main drivers are increase in DEPB (Duty Entitlement Pass Book) Rate, higher dividend income due to investment of surplus amount of Initial Public Offer and gain on foreign exchange.

Profitability:-

During the year, profit came under pressure due to :-

(1) Intermittent stoppage of Pigment -Panoli Plant on leakage of effluent pipe line of GIDC out side our factory premises.

(2) Increase in input costs due to crude oil prices.

(3) Pressure on export realisation due to strengthening of rupee.

(4) The pressure on profitability of the Agro Division was much higher than Pigment Division.

FUTURE STRATEGIES:-

Pigment Division :-

To position itself better from increased demand from local market, the Company has increased the production capacity of its Pigment Green 7 plant at Vatva and Beta Blue at Panoli. To meet the demand of its global customers' base, the Company is in the process of introducing new range of High Performance Pigments.

Agro Division :-

To meet the growing demand for Organophosphorous and Synthetic Pyrethroid, the Company has installed multifaceted production facilities to produce Permethrin, Alpha Cypermethrin and Acephate at the Ankleshwar Plants.

The Company continued to make its concerted efforts to obtain overseas registrations to sell its agro products and sent registration dossiers to 60 countries. The Company has received 130 agro registrations worldwide. The registrations efforts of the Group are in countries such as Argentina, Australia, Brazil, China, Indonesia, Malaysia, Nigeria, Paraguay, Thailand, Turkey, USA, and Vietnam.

SUBSIDIARY COMPANIES

The financial statements have been prepared in accordance with Accounting Standard 23 issued by Institute of Chartered Accountants of India and it includes the results of the following Subsidiaries :-

(1) Meghmani Energy Limited (MEL)

(2) Meghmani Europe BVBA (Meghmani Europe)

(3) Meghmani Organics Inc. USA.

(4) Meghmani Finechem Limited (MFL)

The audited accounts of the Subsidiaries and the Auditors' report thereon form part of the Annual Report.

CAPITAL EXPENDITURE:-

Capital expenditure incurred during the year aggregated to Rs. 348.78 million.

FIXED DEPOSITS:-

The Company has not accepted the fixed deposits during the year under report.

MANAGEMENT & DISCUSSION ANALYSIS REPORT

In terms of clause 49 of the Listing Agreement with the Stock Exchanges, the Management and Discussion analysis, is appended to this report.

CORPORATE GOVERNANCE:-

On listing on Indian Stock exchanges, the Company has complied with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. This report also forms part of the of Singapore Stock Exchange listing requirements.

DIRECTORS' RESPONSIBILITY STATEMENT:-

In compliance of Section 217 (2AA) of the Companies Act, 1956 as amended by the Companies (Amendment) Act, 2000, the Directors of your Company confirm:

10


a) that the applicable accounting standards have been followed in the preparation of final accounts and that there are no material departures;

b) that appropriate accounting policies have been selected and applied consistently and such judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at March 31, 2008 and of the profit of the Company for the year ended on March 31, 2008;

c) That proper and sufficient care has been taken 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;

d) That the annual accounts have been prepared on a going concern basis.

ENERGY, TECHNOLOGY, AND FOREIGN EXCHANGE

The information to be disclosed under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in The Report Of Board Of Directors) Rules, 1988, with respect to energy, technology, and foreign exchange is annexed separately to form part of this report.

DIRECTORS

Mr. Chandan Bhattacharya was appointed as an Additional Director on the Board of Directors of the Company on 30 July, 2007 as an independent Director. He ceases to be a director on the date of this annual General Meeting. Notice under Section 257 has been received in respect of his appointment as Director on the Board.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association, Mr. J Vishwanathan and Mr. Jayanti Patel, retiring by rotation at this Annual General Meeting and being eligible offers themselves for re-appointment. Mr. Foo Meng Tong, has resigned from the Board as well as from Nominating and Audit Committee. The Board takes on record the valuable contributions made by Mr. Meng Tong.

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the details of Directors seeking re-appointment at the ensuing Annual General Meeting is provided in the Notice of the Annual General Meeting, forming part of the Annual Report.

EMPLOYEE RELATIONS & PARTICULARS OF EMPLOYEE

The information required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, forms part of this report and is enclosed separately.

AUDITORS

M/s. Patel & Khandwala, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible have offered themselves for re-appointment.

ACKNOWLEDGMENT

Your directors express their sincere thanks to all customers, vendors, investors, bankers, insurance companies, consultants and advisors for their continued support throughout the year.

Your Directors sincerely acknowledges the contribution made by all the employees for their dedicated services to the company.

for and on behalf of the Board

Place: Ahmedabad Jayanti Patel

Date : 23.05.2008 Executive Chairman

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Section 217(i) (e) of the companies Act, 1956 read with Companies (Disclosure) of particulars in the report of Board of Directors Rules 1988

Annexure To The Directors' Report

1. Conservation of Energy

A Energy conservation measures taken (1) Variable Frequency Drive:

Motors of some reactors and pumps were identified in both the plants as well as in utility areas and installed VFD. This has resulted in 20% saving in power.

(2) Automatic Street light Controller

We have installed automatic photo cell operated device for street light which has resulted in 12% power saving in street light.

(3) Metal halide Light-Energy efficient light

We have installed energy efficient light fitting in incinerator plant. The power saving is @25% in plant light.

(4) We have maintained good power factor as 0.997 & achieved rebate of Rs. 7.5 lacs in electricity bill during the year at - Chharodi Plant.

(5) We have replaced 750 KVA Transformer by 1250 KVA Transformer. The copper losses in transformer have been reduced & the transformer works at maximum efficiency at - Chharodi Plant.

B Additional investments and proposals if (1) Synchronization Panel - Chharodiany being implemented for reduction of At present the overall cost of DG power generation is consumption of energy coming higher due to old DG set & all generators are

running in solo. As a result the cost of DG Power is coming very high to the tune of Rs 12/unit which can be lower to the extent of Rs 10-10.5/unit. Approximate cost of synchronization panel shall be in the range ofRs 20 lacs.

(2) Variable Frequency Drive

We have identified more motors for installation of VFD.

(3) Power Control Centre - Chharodi

The balancing of transformers load is required for trouble free operation. There is some bottleneck in PCC. As a result one Transformer is getting overloaded & the other is under loaded. This causes frequent maintenance problems & increases down time also. If we go for Synchronization Panel then the modification in PCC is required. The cost may be around 20 lacs.

C Impact of the measures at (a) & (b) above As a result the cost of DG Power will be offor reduction of the energy consumption Rs 10-10.5/unit at Chharodiand consequent impact on the cost ofproduction of goods.

D Total energy consumption and energy As per Form - A consumption per unit of production

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Form-A

Form for disclosure of particulars with respect to conservation of Energy

Particulars 2007-08 2006-07

Pigment Agro Pigment Agro

A Power Consumption

1 Electricity Consumption

(a) Purchased

Unit KWH 6115839 10751001 1655124 10779390

Total Amount Rs. 28862869 55297277 9323068 56881803

Rate/Unit Rs. 4.72 5.14 5.63 5.28

(b) Own Generation

Through Diesel Generator

Unit KWH 0 460928 143413 501365

Unit per Liter of Diesel KWH 0 2 2.85 2.70

Cost/Unit Rs. 0 17.72 12.86 13.39

(c) Through Gas

Unit KWH 22528600 8978760 25031700 8503100

Unit per cubic meter KWH 3.51 3.70 3.45 3.64

Cost/Unit Rs. 2.94 2.79 2.93 2.54

2 Coal

Steam Generated 76215.62 50023 78632.5 58928.386

Consumption of Fuel Oil (in MT) 0 1811.71 0.00 2670.44

Gas Consumption (In M3) 5778.72 2071.00 5918.34 1880.42

Cost per unit (kg) 0.87 1.15 0.76 1.11

Steam Purchase 0 10897.00 0 0

Kg. of steam per unit of Fuel 0.00 12.45 0.00 12.55

Kg. of Steam per unit of Gas 13.19 13.26 13.29 13.52

Kg. of Steam per unit of Purchase 0 1.00 0 0

3 Others / internal generations NA NA NA NA

B Consumption per unit of

Production in MT 15736.25 13274,99 14975.55 12909.29

Electricity (Rs. / Mt) 6043.95 6669.66 5650.44 6597.29

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2. Technology Absorption

Form-B

Form for disclosure of particulars with respect to technology absorption

A. Research & Development

1 Specific areas in which R & D is carried out by the Company. Pigment - High Performance Pigment Agrochemical - Insecticides Process Improvement & New Product Development

2 Benefits derived as a result of the above R & D. Two new products Developed.

New HPP developed.

3 Future Plan of Action Consolidation of New Product development and quality improvement.

4 Expenditure on R & D Rs. 10 million

B. Technology Absorption, Adoption and Innovation:

A Efforts, in brief, made towards technology absorption, : During the last five years, no technology has been

adaptation and innovation. imported by way of foreign collaboration or otherwise for the existing products of the Company.

B Benefits derived as a result of the above efforts -

e.g. Product improvement, cost reduction, product

development, import substitution etc.

C Imported technology (imported during the last 5 -

years reckoned from the beginning of the financial year.

C. Foreign Exchange Earnings And Outgo

The particulars with regards to foreign exchange earnings and outgo appear in Schedule 23 forming part of Annual Report and Account.

For and On behalf of the Board

Place : Ahmedabad Jayanti Patel

Date: 23/05/2008 Executive Chairman

Information as per Section 217 (2-A) of the Companies (Particulars of Employees) Rules, 1975 and forming part of Director's Report for the year ended 31st March, 2007

Sr. Name Age Qualification Date of Designation Gross Net Experience Last

No. re-appointment Employment Rs. Rs. (years) Emplo-

yment

1 Jayanti M. Patel 56 B.E. 27-01-2000 Executive 9882660 9036660 32 Nil

(Chemical) Chairman

2 Ashish Soparkar 56 B.E. 27-01-2000 Managing 9882660 9036660 32 Nil

(Chemical) Director

3 Natwarlal 55 M.Sc. 27-01-2000 Managing 9882660 9036660 32 Nil

M. Patel (Chemistry) Director

4 Ramesh 52 B.A. 01-08-2000 Executive 7437540 6930660 28 Nil

M. Patel Director

5 Anand I. Patel 46 B.Sc. 01-09-2000 Executive 6537540 6030660 22 Nil

Director

Note: Except Mr. Jayanti Patel, Mr. Natwarlal Patel, Mr. Ramesh Patel and Mr. Anand Patel are related to each others.

14


Management Discussion And Analysis

Agrochemicals - Industry Outlook

Agriculture is the backbone of Indian economy. Ensuring food security for more than 1 billion (bn) Indian population with diminishing cultivable land resource is a mammoth task.

This necessitates use of high yielding variety of seeds, balance use of fertilizers, judicious use of quality pesticides along with education to farmers & use of modern farming techniques.

It is estimated that India approximately loses 18% of the crop yield valued at Rs. 900 bn due to pest attack each year. The use of pesticides help to reduce the crop losses, provide economic benefits to farmers, reduce soil erosion & help in ensuring food safety and security for the nation. The Indian pesticide industry with 82000 MT of production for 2005-06 is ranked second in Asia (behind China) and twelfth globally. In value terms, the size of the Indian pesticide industry was estimated at Rs 68 bn for 2006, including exports of Rs. 28 bn. Globally, due to consolidation in the industry, the top 5 global MNCs control almost 60% of the market. In India, the industry is very fragmented with about 30-40 large manufacturers and about 400 formulators. Per hectare consumption of pesticide is low in India at 381 grams when compared to world average of 500 grams. Low consumption can be attributed to fragmented land holdings, low level of irrigation, dependence on monsoons, low awareness among farmers about the benefits of usage of pesticides, etc. India, being a tropical country, the consumption pattern is also more skewed towards insecticides which accounted for 67% of the total pesticide consumption in FY06.

India due to its inherent strength of low cost manufacturing and qualified low cost manpower is a net exporter of pesticides to countries such as USA, European Union & African countries. Exports formed 41% of total industry turnover in FY06 and have grown at a CAGR of 18% from 00-01 to 05-06. Prior to 2005, i.e. in the process patent regime, Indian companies focused on applied research and concentrated on marketing generic and off-patent products. Due to this R&D expense by Indian companies was lower at approximately 1% of turnover. Global companies focused on high-end speciality products and dominated the market for patented new molecules. However, with onset of product patent regime in India since 2005, Indian companies will need to increase R&D expense to meet competition from MNCs.

In Agrochemicals all markets are regulated, and hence require data registrations. Data files are required to be submitted to obtain registrations. However, in some markets registrations are faster in terms of time. In some markets like the US and the Latin America, data requirements may be more tedious, thus involving huge cost and time.

The future looks bright and progressive. The Global crop protection and non crop protection Industry has grown from USD 30.4 bn to USD 38.7 bn during last two years at user level, which shows robust 9.7%.

Agrochemicals - overview of the Company

The Company's Agrochemical manufacturing facilities are situated at Plot No. 402,403,404,452 & 455, Village Chharodi, Taluka Sanand, District: - Ahmedabad and at Plot No. 5001 B, GIDC Ankleshwar.

The Company produces a broad spectrum of commonly used pesticides for crop and non-crop applications such as public health, insect control in wood preservation and food grain storage. The Company counts amongst its customers leading pesticide manufacturers from North America, Europe, Latin America and Asia.

The production processes of the Company Agro businesses are vertically integrated. We also manufacture Pesticides, Intermediates which are used in the manufacture of our Pesticides Formulations. Such vertical integration allows us to effectively manage our raw materials costs and assures us of a constant supply of such raw materials at a consistent quality and consequently, has reduced our reliance on third party suppliers for such raw materials.

Particulars 31.03.2008 31.03.2007

Domestic

Agro - Chharodi (Agro - I ) 1042.83 879.17

Agro - Ankleshwar (Agro-II) 164.40 97.74

Total 1207.23 976.91

Export

Agro - Chharodi (Agro - I ) 715.24 566.05

Agro - Ankleshwar (Agro-II) 685.16 730.18

Total 1400.4 1296.23

Grand Total 2948.32 2576.13

15


Management Discussion And Analysis (Contd...)

During the year despite higher sales of Agrochemicals in domestic as well as international market, the profitability has come under pressure due to increase in raw material cost and pressure on pricing. The crude price has also made the impact.

Risks & Concern:-

Besides international Agrochemical producers, there are competitors in India having similar products as our Company. We compete against our competitors on our quality, technical competence, distribution channels, logistics facilities, after sales service and customer relationships.

We sell our products to customers from various countries in North America, Europe, Central and Latin America, and Asia-Pacific. As a result, our business and future growth is dependent on the political, economic, regulatory and social conditions of these countries.

Any change in the policies implemented by the governments of any of these countries which result in currency and interest rate fluctuations, capital restrictions, and changes in duties and tax that are detrimental to our business could adversely affect our operations, financial performance and future growth.

Strategy of the Company:-

To compete with the MNCs and other Indian players and to meet with the growing demand for Organophosphorous and Synthetic pyrothid types of Insecticides, we have installed multifaceted production facilities to produce Permethrin, Alpha Cypermethrin and Acephate at our Ankleshwar Plant. The backward integration in the manufacturing facility has helped us to offer better pricing and assured quality to our customers.

At the domestic front we have our own sales force in Andhra Pradesh, Maharashtra, Madhya Pradesh, Rajasthan and Gujarat.

We have consciously developed our intellectual property rights in the form of trademarks for our products, as well as our logo and corporate name. Our logo and name, viz. "MOL" and "Meghmani" have been registered as trademarks. In addition, we have filed 31 applications for trademarks, of which 14 have been already registered. We believe that our trademarks have significant value and are important to our brand building efforts and aid in the marketing of our products.

In recent years, we have focused on increasing the number of product registrations in countries such as United States of America, Australia, Brazil, Bangladesh, China, Mexico, Malaysia, Turkey, Taiwan, etc. We currently hold 130 registrations worldwide and have 430 registrations pending in 60 countries around the world. Being a manufacturer and distributor of existing molecules with expired patents, we consider registration as crucial and considerable investments for our future growth. Our focus on research and development has also led to an increase in the number of products developed, which has translated, into numerous applications for registrations for our products. In addition to overseas registrations, we also have 96 registration of Central Insecticides Board (CIB) of India.

Pigment Industry Overview

The global market of Dyes and Organic Pigment industry is estimated to be at US$ 8.4 billion. (Source: www.freedonia.com). We believe that out of this, the size of Organic Pigment market would be around US$ 5.5 billion.

The global demand for organic pigments is expected to grow at the rate of 4.9% annually through 2008. (source: www.freedonia.com) The three major drivers of Pigment Industry are printing ink industry, paint industry and plastic industry.

The ink, paints and plastics industries continue to witness steady and sustained growth in demand. India's ability to provide high quality manufacturing is also attracting a higher level of outsourcing from more companies from the developed countries.

In addition, companies in US, Europe, Central and South America, and Japan are also increasing their direct supplies of Pigments from India. The Indian ink industry is also expected to consume more Pigments.

Pigment: - Over view of the Company

We have two manufacturing facilities for the manufacture of our Pigment products, one located in Vatva, Ahmedabad where we manufacture our Pigment Green 7 products, High Performance Pigments and Pigment Additives and the other located in Panoli, near Ankleshwar where we manufacture our CPC Blue and Pigment Blue products.

16


The Company specializes in the manufacture of green and blue pigment and certain High Performance Pigment products that span multiple applications such as printing inks, plastics, paints, textiles, leather and rubber. Its pigment customers comprise mainly MNCs who are leading players in their respective industries.

The production processes of our Pigments businesses are vertically integrated. We manufacture CPC Blue which is the primary raw material required in the manufacture of our Pigment Green and Pigment Blue products. Such vertical integration allows us to effectively manage our raw materials costs and quality standards.

The performance of the Pigment division business wise during the year under review is as under:-

Rs. in Millions

Particulars 31.03.2008 31.03.2007

Domestic

Pigment - Vatva 13.30 9.97

Pigment - Panoli 337.71 432.88

Total 351.01 442.85

Export

Pigment - Vatva 543.28 421.32

Pigment - Panoli 1609.59 1496.62

Total 2152.87 1917.94

Grand Total 2684.68 2498.67

During the year despite higher sales the profitability was affected due to leakage in effluent channel pipeline of GIDC outside the Company premises of Panoli Pigment division. As the raw material used is the derivatives of the Crude oil, the increase in crude price has also made the impact on profitability.

Strategy of the Company:-

There is a move towards High Performance Pigments and Additives as customers upgrade their products and the technical performance requirements of the pigments and additives they incorporate in their formulations.

In recent years, environmental pressure to replace heavy metals such as cadmium and lead has led to an increased demand in organic pigments. The impact of the low volatile organic content ("VOC") regulations is prevalent outside India. The solvent usage is being reduced in the printing ink and coatings industries with alternative technologies, such as water-based systems coming in place.

Currently, our portfolio includes High Performance Pigments like Pigment Green 36, Pigment Blue 60, Yellow 181, Yellow 183 and additives which have been successfully commercialized, and have an additional range of pigments like Pigment Red and Pigment Orange, which are under development in various stages.

We believe that with our existing portfolio and products under development, we are well placed to take advantage of these trends.

To position ourself better from increased demand, we have increased the production capacity of our Pigment Green 7 plant at Vatva, CPC Blue Crude and Beta Blue at Panoli. We are in continuous process to introduce new range of High Performance Pigments, to meet the demand of our global customers.

Human Resources :-

The Company will be investing substantially, in Human resources from recruitment, training and retention view point. The Human Resources Department is committed to improve employee satisfaction at all levels and create an accountable and committed organization.

* * * * *

Management Discussion And Analysis (Contd...)

17


Corporate Governance

1. The Company's Philosophy on Code of Governance

The Directors and Management of the Company and its subsidiaries are committed to maintain high standards of corporate governance in conducting its business and ensure that an effective self regulatory mechanism exists to protect the interest of our Stakeholders (Investors, Customers, Suppliers and Government) and Singapore Depository Holders.

In India, Corporate Governance standards for listed companies are regulated by the Securities and Exchange Board of India (SEBI) through Clause 49 of the Listing Agreement of the Stock Exchange.

The Company has complied with the requirements of the Corporate Governance in terms of Clause 49 of the Listing Agreement. The Company has also complied with Corporate Governance requirements under Singapore Listing requirements. The Board of Directors presents a composite Corporate Governance report on the compliance of the Indian and Singapore Listing requirements in the following paragraphs.

2. Board Composition :-

The Directors of the Company are persons of eminence having vast and varied experience in manufacturing, marketing, finance and corporate administration. As on 31 March, 2008, the total strength of Board of Directors consists of 12 directors, comprising Mr. Jayanti Patel is an Executive Chairman, Mr. Ashish Soparkar and Mr. Natwarlal Patel are Two (2) Managing Directors, Mr. Ramesh Patel, Mr. Anand Patel and Mr. Ashvin Raythatha are (3) Executive Directors and Mr. Chinubhai R Shah, Mr. Balkrishna T Thakkar, Mr. Foo Meng Tong, Mr. J Vishwanathan, Mr. K N Venkatasubramanian and Mr. Chandan Bhattacharya are Six (6) Non Executive Independent Directors.

The Composition of Board is complying with the requirements of Clause 49 (I) (A) i.e. more than 50% of the directors are non executive and more then 33% of the directors are independent directors.

The Composition of the Board is also complying with Guidance Note 2.1 of the Code of Singapore states that independent directors should make up at least one-third of the Board.

3. Board Meetings :-

Minimum four Board meetings are held in each year. Apart from the four prescheduled Board meetings, the meetings are also convened by giving appropriate notice to address the specific needs of the Company. The Company in consultation with the Directors prepares and circulates a tentative Schedule for the meeting of the Board and Committee in order to facilitate the Directors to plan their schedules.

During the financial year ended on 31 March, 2008 nine meetings of the Board of Directors were held on: 30.04.2007; 05.05.2007; 18.05.2007; 21.05.2007, 11.06.2007, 20.06.2007, 30.07.2007; 30.10.2007 and 25.01.2008.

The meetings are normally held at Meghmani House, Shreenivas Society, Vikas Gruh Road, Paldi, Ahmedabad.

Agenda and Notes on Agenda are circulated to the Directors in advance in the defined Agenda format. All material information is incorporated in the Agenda papers for facilitating meaningful discussion. Where it is not practicable the same is tabled before the meeting.

The Company Secretary records the minutes of the proceedings of each Board and Committee meeting. Draft minutes are circulated to the members for their comments.

4. Attendance And Other Directorship :-

The details of composition of Board of Directors and of attendance of the Directors at the Board Meeting during the

18


Corporate Governance (Cont...)

year and at the last annual General Meeting held on 29 June, 2007 and also the number of other Directorship, membership and office of Chairman of Board Committees as on 31 March, 2008 are given below:

Name of Position Board AGM Directorships Committee BoardDirector Meeting Attended in other Membership Committee

attended Public Limited of other Chairmanshipduring the Companies companies of otheryear companies

Mr. Jayanti Patel Executive 8 Yes 4 Nil NilChairman

Mr. Ashish Soparkar Managing 9 Yes 4 Nil NilDirector

Mr. Natwarlal Patel Managing 9 Yes 7 Nil NilDirector

Mr. Ramesh Patel Executive 8 Yes 5 Nil NilDirector

Mr. Anand Patel Executive 8 Yes 3 Nil NilDirector

Mr. Ashvin Executive 3 No - Nil NilRaythatha Director

(Int. Mkt.)

Mr. Chinubhai Independent 8 Yes 12 5 4R Shah

Mr. Balkrishna Independent 9 Yes - Nil NilT Thakkar

Mr. Jayaraman Independent 3 No 1 Nil NilVishwanathan

Mr. Foo Meng Tong Independent 4 No - Nil Nil

Mr. Pankaj H. Shah* Independent - No - - -

Mr. K. N. Independent 4 No 6 Nil NilVenkatasubramanian

Mr. Chandan Independent 2 - 5 1 NilBhattacharya **

* Ceased to be a Director w.e.f. 30.07.2007

** Appointed as a Director w.e.f. 30.07.2007

5. Information placed to the Board :-

The following are generally tabled for information and review of the Board.

CQuarterly results of the Company and operating divisions or business segments.

CMinutes of meeting of Audit Committee.

CMaterially important show cause Notice, demand prosecution and penalty notices.

CAny materially significant effluent or pollution problems.

CAny material relevant default in financial obligations to and by the Company or substantial non payment by the customer for goods sold.

19



CDetails of any joint venture or collaboration agreement.

CTransaction that involves substantial payment towards goodwill, brand equity or intellectual property.

CSignificant labour problem and their proposed solutions. Any significant development on the Humanresources / Industrial relations front like signing of a wage settlement.

CForeign exchange exposures and steps taken by management to limit the risks.

CAny fatal or serious accident.

CAny issue which involves possible or Public liability.

CSale of material nature of investments, subsidiary assets which are not normal course of business.

CNon compliance of any regulatory, statutory or listing requirements .

The Board periodically reviews all statutory compliance reports of all laws applicable to the Company.

6. Details of compensation paid to Directors :-

Particulars of Remuneration of Directors for the year ended 31st March, 2008:

Name of Director Salary & Performance TotalPerquisites Rs. bonus Rs. Rs.

Mr. Jayanti M. Patel 5,382,660 4,500,000 9,882,660

Mr. Ashish Soparkar 5,382,660 4,500,000 9,882,660

Mr. Natwarlal Patel 5,382,660 4,500,000 9,882,660

Mr. Ramesh M. Patel 4,737,540 2,700,000 7,437,540

Mr. Anand I. Patel 4,737,540 1,800,000 6,537,540

Mr. Ashvin R. Raythatha 1,620,000 536,000 2,156,000

Particulars of sitting fees of Directors for the year ended 31st March 2008:

Name of Director Sitting Fees TotalRs. Rs.

Mr. Chinubhai R. Shah 1,50,000 1,50,000

Mr. Balkrishna T. Thakkar 1,20,000 1,20,000

Mr. Jayaraman Vishwanathan - -

Mr. Foo Meng Tong 80,000 80,000

Mr. Pankaj H. Shah - -

Mr. K. N. Venkatasubramanian 40,000 40,000

Mr. Chandan Bhattacharya 20,000 20,000

7. Independent Directors shareholding :-

Mr. Balkrishna T Thakkar, independent director holds 2000 equity shares of Rs. 1/- each of the company.

8. Code of Conduct :-

The Company has adopted a code of conduct for its directors and designated senior management personnel. All the Board members and senior management personnel have agreed to follow compliance of code of conduct.

9. Committees of the Board :-

1.1 Audit committee

The Audit Committee comprises of three independent Directors - Mr. Balkrishna T Thakkar, Mr. Chinubhai R Shah and Mr. Foo Meng Tong who are eminent professionals.

There were four Audit committee meetings held during the year to review annual audited results, half yearly and quarterly results and to review internal control systems and operational aspects.

20



The Committee acts as a link between the management, auditors and the Board and has full excess to financial information.

The Committee met four times during the year on 18th May, 2007, 30th July, 2007, 30 October, 2007 and 25th January, 2008 and particulars of meeting attended by Members of the Committee are given below:

Name of the Director Status No. of No. of Meetings

Meetings held attended

Mr. Balkrishna T. Thakkar Chairman 4 4

Mr. Foo Meng Tong Independent Director 4 4

Mr. Chinubhai R. Shah Independent Director 4 4

The terms of reference of the Audit Committee are as set out in Clause 49 of the Listing Agreement with the Stock Exchanges. The Statutory Auditors were also present at the time of all audit committee meetings. The Company Secretary, Mr. K. D. Mehta acted as the Secretary to the committee.

1.2 Remuneration Committee

The remuneration committee comprises of two independent directors viz., Mr. Chinubhai R. Shah andMr. Balkrishna T. Thakkar and one executive director viz., Mr. Natwarlal Patel.

The role of the Remuneration Committee is to facilitate the transparency, accountability and reasonableness of the remuneration of Director and Senior Management Personnel.

The Remuneration Committee will recommend to Board a framework of remuneration for the Directors and determine specific remuneration packages for each Director.

All aspects of remuneration, including but not limited to directors' fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by the Remuneration Committee. Each member of the Remuneration Committee shall abstain from voting any resolutions in respect of his remuneration package

The Committee met on 18th May, 2007 and particulars of meeting attended by members of the Committee are given below:

Name of the Director Status No. of Meetings held No. of Meetings attended

Mr. Chinubhai R. Shah Chairman 1 1

Mr. Balkrishna T. Thakkar Independent Director 1 1

Mr. Natwarlal Patel Executive Director 1 1

The Company Secretary, Mr. K. D. Mehta, Company Secretary acted as the Secretary to the committee.

1.3 Shareholders'/Investors' Grievance Committee

The Shareholders' / Investors' Grievance, Share Allotment and Share Transfer Committee of our Board were constituted at our Board meeting held on 11 August, 2006. The Committee currently consists of three Directors Viz., Mr. Balkrishna T Thakkar and Mr. Chinubhai R Shah Independent Director and Mr. Ashish Soparkar. The current terms of reference of the Committee are as follows:

To allot the equity shares of the Company, and to supervise and ensure:

i. Efficient transfer of shares; including review of cases for refusal of transfer / transmission of shares and debentures.

ii. Redressal of shareholder and investor complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc.

iii. Issue of duplicate / split / consolidated share certificates.

iv. Allotment and listing of shares.

v. Review of cases for refusal of transfer / transmission of shares and debentures.

21



vi. Reference to statutory and regulatory authorities regarding investor grievances.

vii. And to otherwise ensure proper and timely attendance and Redressal of investor queries and grievances.

The Company Secretary, Mr. K. D. Mehta is the Compliance Officer.

During the year two meetings were held 30 October, 2007 and 25th January, 2008. There were no valid requests for transfer /transmission of shares, issue of duplicate shares etc. pending as on 31.03.2008.

1.4 Other Functional Committee

Nominating Committee

The Nominating Committee now comprises of Viz., Mr. Foo Meng Tong and Mr. Chinubhai R. Shah, Independent Directors and Mr. Jayanti Patel, Executive Chairman as Member.

The Nominating Committee aims at establishing a formal and transparent process for the appointment andre-election of Directors. The Nominating Committee is responsible for:

(i) Re-nomination of our Directors having regard to the Director's contribution and performance.

(ii) Determining annually whether or not a Director is independent; and

(iii) Deciding whether or not a Director is able to and has been adequately carrying out his duties as a Director.

The Nominating Committee will decide how the Board's performance is to be evaluated and propose objective performance criteria, subject to the approval of the Board, which address how the Board has enhanced long-term shareholders' value.

The Chairman Nominating Committee has already initiated the process for assessing the effectiveness of the Board as a whole and for assessing the contribution by each individual Director to the effectiveness of the Board. Each member of the Nominating Committee shall abstain from voting any resolutions in respect of the assessment of his performance or re-nomination as Director.

The Committee met on 18th May, 2007, 30th July, 2007 and 25th January, 2008. The particulars of meeting attended by members of the Committee are given below:

Name of the Director Status No. of Meetings held No. of Meetings attended

Mr. Foo Meng Tong Chairman 3 3

Mr. Chinubhai R Shah Independent Director 3 3

Mr. Jayanti Patel Executive Director 3 3

The Company Secretary, Mr. K. D. Mehta acted as the Secretary to the committee.

10. Management Discussion and Analysis Report:-

This is given as the Separate chapter in the Annual Report.

11. Disclosure of Material Transactions:-

There were no materially significant transactions with promoters, directors or the management, their subsidiaries or relatives that may have potential conflict with the interest of the company at large. A disclosure of all related party transactions has been presented in the Schedule No. 23 Notes to the accounts of this Annual Report.

12. Accounting Policies :-

The Company has adopted accounting treatments which are prescribed by the Accounting Standards.

13. Instances of Non Compliance :-

The Company has complied with the necessary requirements and no penalties or strictures were imposed on the Company by any Stock Exchanges or SEBI or any statutory authority on any matter related to capital markets during the financial year 2007-2008.

1.1 Insider Trading :-

All the directors and senior management personnel have affirmed compliance with the Corporate Code laid down by the Board of Directors of the Company. The Executive Chairman, the Managing Directors and Company Secretary have made the necessary certification to the Board of Directors of the Company.

22



1.2 Non Mandatory requirements:-

The Company is complying with all the mandatory requirements Under Section 49 of the Listing Agreement. In addition the Company has also adopted Non Mandatory requirements.

14. Shareholders :-

Disclosures regarding Re-appointment of Directors has been given in Annual General Meeting Notice.

15. General Body Meeting:-

Last three Annual General Meetings of the Company were held as given below;

Financial Year Category-Date Venue Special-Resolutions passed

and Time

2005 Annual General at 184, Phase II, GIDC, Appointment of Mr. Pankaj

Meeting 29 July, Vatva, Ahmedabad Hiralal Shah as Director

2005 at 10.30 a.m. 382 445

2006 Annual General at 184, Phase II, GIDC, (1) Further issue Equity Shares of not Meeting Vatva, Ahmedabad exceeding 7,70,00,000

30 June, 2006 at 382 445 of Rs. 1/- each.

10.30 a.m. (2) Replacement of Articles of Association.

2007 Annual General at 184, Phase II, GIDC, 1. Appointment of Mr. K N Meeting 29 June, Vatva, Ahmedabad Venkatasubramanian as Director2007 at 10.30 a.m. 382 445 2. Increase in borrowing power Under

Section 293(1) (d) up to Rs. 5000 million

3. Appointment of Mr. Maulik Patel under

Section 314 (1B)

4. Appointment of Ms. Vaishakhi Patel

under Section 314 (1B)

5. Appointment of Mr. Karona Patel under

Section 314(1B)

6. Authority to create mortgage under

Section 293(1) (a) to secure working capital

facility of Rs. 210.65 Crores by State Bank of

India, ICICI bank and HDFC Bank,

Ahmedabad.

No special resolutions were put through postal ballot in the last AGM

16. Corporate Governance of Subsidiaries :-

The subsidiaries of the Company are managed by experienced Board of Directors. The minutes of all the subsidiaries are reviewed by the Board of Directors.

17. CEO/CFO Certification:-

The Managing Director Mr. Ashish Soparkar, has certified to the Board with respect to the financial statement, internal controls and other matters as required by Clause 49 of the Listing Agreement with the Stock Exchanges.

18. Report on Corporate Governance:-

This Chapter read with the information given in the section titled Additional Shareholders' information constitutes the compliance report on Corporate Governance.

23


Corporate Governance (Cont...)19. Auditors' Certificate on Corporate Governance:-

The Company has obtained a certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance prescribed under Clause 49 of the Listing agreement with Stock Exchanges which is attached herewith.

20. Shareholders' Information :-

1.1 Annual General Meeting :-

Date Wednesday, 30 July, 2008

Venue Ahmedabad Management Association, ATIRA Campus, Vastrapur , Ahmedabad

Time 3.00 p.m.

Last date of receipt of Proxy Monday 28 July, 2008 (before 9.30. a.m.)

Book Closure dates Saturday 19 July, 2008 to

Wednesday 30 July, 2008

Posting of Annual Report 01st July, 2008

1.2 Financial year :-

The financial year of the Company is from 01 April to 31 March. The Board meetings for approval of Quarterly financial results during the year ended 31 March, 2008 were held on the following dates:-

Financial Calendar 2007-2008

First Quarter Results 30 July, 2007

Second Quarter and Half yearly results 30 October, 2007

Third Quarter Results 25 January, 2008

Fourth Quarter & Annual Results 23 May, 2008

Financial Calendar 2008-2009

First Quarter Results 30 July, 2008

Second Quarter and Half yearly results 24 October, 2008

Third Quarter Results 30 January, 2009

Fourth Quarter & Annual Results 25 May, 2009

1.3 Dividend payment :-

The Board of Directors at their meeting held on 23rd May, 2008 recommended a final dividend of Rs. 0.30 per equity shares of the face value of Rs. 1/- each for the financial year 2007-2008, subject to approval of the shareholders. Final dividend, if approved by the shareholders will be paid within the prescribed statutory period.

1.4 Registrar and Transfer Agent :-

The Company in compliance with SEBI guidelines has appointed Intime Spectrum Registry Limited as share transfer agent for both the Physical and Electronic form of shareholding.

Intime Spectrum Registry Limited

C-13, Pannalal Silk Mills Compound,

LBS Road, Bhandup (West),

Mumbai 400 078. India.

Tel: +91 22 2596 0320, Fax: +91 22 2596 0329

1.5 Listing details of Equity shares:-

Name of Stock Exchange Stock Code

National Stock Exchange of India Limited MEGH

Bombay Stock Exchange Limited 532865

Singapore Stock Exchange MEGH

24



The listing fee for the financial year 2007-2008 has been paid to the above stock exchanges. The ISIN allotted to the Company's equity shares of face value of Rs. 1/- each under the depository system is INE974H01013

Job of Registrar and Transfer Agents is carried out by Intime Spectrum Registry Limited, Mumbai, Transfer and dematerialization of shares are processed by Intime Spectrum Registry Limited, Mumbai and are approved by Shareholders' / Investors' Grievance Committee.

Information regarding Physical & Demat Form:

Share Capital No. of shares %

Listed Capital 254314211 100%

Held in Dematerialized form

Central Depository Limited 15959995 6.28%

National Depository Limited 37724206 14.83%

Held in Physical Form 200630010 78.89%

254314211 100.00%

1.6 Share Price data:-

The Monthly high and Low prices and volumes of Meghmani Organics share at National Stock Exchange (India) Limited (NSE) and Bombay Stock Exchange Limited for the year ended on 31 March, 2008 are as under :-

Month NSE BSE

High Low High Low

July - 2007 29.25 20.10 28.55 22.05

August - 2007 24.60 19.40 23.75 20.40

September - 2007 27.00 20.65 25.50 21.40

October - 2007 26.80 20.20 25.85 20.95

November - 2007 33.00 21.50 31.60 21.95

December - 2007 39.90 26.40 39.80 28.35

January - 2008 53.45 26.45 50.55 27.75

February -2008 33.00 23.60 31.70 23.90

March - 2008 24.15 17.00 22.95 17.45

Distribution of Shareholding:

Category Shareholders Shares of Re. 1/- each

Number Percent Number Percent

Up to 500 51497 79.35 12918865 5.1

501 to 1000 7819 12.05 6866817 2.7

1001 to 2000 3087 4.76 4953560 2.0

2001 to 3000 981 1.51 2611956 1.0

3001 to 4000 331 0.51 1213246 0.5

4001 to 5000 366 0.56 1776283 0.7

5001 to 10000 420 0.65 3146275 1.2

10001 and above 397 0.61 220827209 86.8

Total 64898 100.00 254314211 100.00

25



1.7 Share holding pattern:-

Category No. of shares %

Directors & Their Relatives 124047350 48.78%

Mutual Funds / UTI 2317242 0.91%

Financial Institutions / Banks 800 0.00%

Foreign Institutional Investors 110000 0.04%

Bodies Corporate 9504557 3.74%

Resident Individual And Others 41365069 16.27%

Non Resident Indians (Repatriation) 386543 0.15%

Shares held By Custodians and 76582650 30.11%against which Singapore DepositoryReceipts have Been Issued

TOTAL 254314211 100.00%

TWENTY-ONE LARGEST SINGAPORE DEPOSITORY SHARES ("SDS") HOLDERS AS AT 16 JUNE 2008

Sr. No. NAME OF SDS HOLDER NO. OF SDS %

1 CITIBANK NOMINEES SINGAPORE PTE LTD 31,588,073 20.62

2 ELECTRA PARTNERS MAURITIUS LIMITED 28,389,320 18.54

3 HSBC (SINGAPORE) NOMINEES PTE LTD 11,859,000 7.74

4 DBS NOMINEES PTE LTD 10,732,000 7.01

5 WATERWORTH PTE LTD 10,000,000 6.53

6 BOON SUAN LEE 7,199,000 4.70

7 RAFFLES NOMINEES PTE LTD 6,149,000 4.01

8 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,581,000 2.34

9 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 1,947,000 1.27

10 ORIX INVESTMENT AND MANAGEMENT PTE LTD 1,840,000 1.20

11 KIM ENG SECURITIES PTE. LTD. 1,425,000 0.93

12 PHILLIP SECURITIES PTE LTD 1,362,000 0.89

13 SEE BENG LIAN JANICE 1,359,000 0.89

14 ING NOMINEES (SINGAPORE) PTE LTD 1,214,000 0.79

15 TEO CHIANG SONG 1,200,000 0.78

16 DAIWA SECURITIES SMBC SINGAPORE LIMITED 1,000,000 0.65

17 LEOW SAU CHING HELENA 1,000,000 0.65

18 INDIA INTERNATIONAL INSURANCE PTE LTD 800,000 0.52

19 OCBC SECURITIES PRIVATE LTD 775,000 0.51

20 LEOW ON CHU 700,000 0.46

21 LIM LENG CHYE 700,000 0.46

Total 124,819,393 81.49

26



Distribution Of Singapore Depository Shares ("SDS") Holders By Size Of SDS Holdings As At 16 June 2008

NO. OF NO. OF

SIZE OF SDS SDSHOLDERS % SDS %

1 - 999 5 0.66 1,907 -

1 - 999 5 0.66 1,907 -

1,000 - 10,000 305 40.51 1,995,000 1.30

10,001 - 1,000,000 428 56.84 31,324,000 20.45

1,000,001 AND ABOVE 15 1.99 119,844,393 78.25

Total 753 100.00 153,165,300 100.00

1.8 Location of Manufacturing facility:-

1. Pigment Green - Division Plot No. 184, Phase II,


2. Agro Division - I Plot No. 402,403,404 & 452,

Village Chharodi,

Taluka Sanand,

District :- Ahmedabad

3. Pigment Blue - Division Plot No. 21,21/1,

G.I.D.C. Panoli,

District :- Bharuch

4. Agro Division - II 5001/B, G.I.D.C. Ankleshwar,

District :- Bharuch

1.9 Investor Correspondence :-

All enquiries, clarification and correspondence should be addressed to the Company Secretary and Compliance Officer:-

Mr. K D Mehta - V P (Company Affairs)

Meghmani Organics Limited

Meghmani House,

Shreenivas Society, Vikasgruh Road,

Paldi, Ahmedabad -380 007

*****

27


Declaration By CEO / CFO

Sub: Code of Conduct

This is to certify that in pursuance of Provision of Clause 49(I)(D) of the Listing Agreement a Code of Business Conduct for the Company has been approved by the Board at its meting held on 23 May, 2008.

The said code of Business Conduct has been uploaded on the website of the Company and has also been circulated to the Board members and Senior management personnel of the Company.

23rd May, 2008 For Meghmani Organics Ltd.Ahmedabad Ashish Soparkar

Managing Director

M/S. PATEL & KHANDWALA.Chartered Accountants204, "AKIK", OPP. LIONS HALL,MITHAKHALI SIX ROADS,AHMEDABAD - 380 006.Phone : (O) 26466215Fax : (079) 26466214

Auditors' Certificate On Compliance With Clause 49 Of The Listing Agreement

To,

The Members of the Meghmani Organics Limited,

We have examined the compliance of conditions of corporate governance by Meghmani Organics Limited for the year ended 31 March, 2008, as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges.

The Compliance of the condition of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedure and implementation thereof. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and explanations given to us, we certify that the Company has complied with the conditions of corporate governance from 28 June, 2007 i.e. the date of listing, as stipulated in the above mentioned Listing agreement.

We have been explained that no investor grievances remaining unattended/pending for a period exceeding one month as on 31 March, 2008.

We further state that such compliance is neither an assurance as to future viability of the Company, the efficiency nor effective ness with which the management has conducted the affairs of the company.

FOR M/S. PATEL & KHANDWALA.

Chartered Accountants

M M Khandwala

Place :- Ahmedabad Partner

Date :- 23.05.2008 Membership Number 32472

28


To,

The Members of

Meghmani Organics Limited,

Ahmedabad.

We have audited the attached Balance Sheet of MEGHMANI ORGANICS LIMITED, as at 31st March, 2008 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003 and (amendment) Order 2004 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, a statement on the matters specified in paragraphs 4 and 5 of the said order is annexed thereto.

Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion proper books of accounts as required by the law have been kept by the Company so far as appears from our examination of the books of the Company.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standard referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of the written representations received from the directors as on 31st March, 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the account read in conjunction with the notes and schedules attached thereto, give the information required under the Companies Act, 1956 in the manner so required and present a true and fair view :-

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2008

ii. In the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date AND

iii. In case of cash flow statement, of the cash flows for the year ended on that date.

For M/S PATEL & KHANDWALA

CHARTERED ACCOUNTANTS

M. M. KHANDWALA

Place: Ahmedabad PARTNER

Date: 23.05.2008 Membership No. 32472

Auditors' Report

29


Annexure To Auditors' Report

i. (a) The Company has maintained division wise records of fixed assets to show full particulars including quantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the Management during the year. As explained to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed of substantial part of the fixed assets during the year.

ii. (a) The inventories have been physically verified at year end by the management. Inventory with third parties at year end have been verified by the management with reference to confirmations or statement of accounts or correspondence of third parties or subsequent receipt of the goods.

(b) According to the information and explanations given to us and in our opinion the procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of the inventories and no serious discrepancies have been noticed on physical verification of inventories as compared to the book record.

iii. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(a) The Company has given loan to Three Subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 10626.06 Lacs and year-end balance is Rs. 1047.22 Lacs.

(b) In our opinion and according to the information and explanations given to us, the Company has charged interest on Loan given to Meghmani Finechem Limited and Meghmani Energy Limited. The other Loans are interest free and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(c) The said interest free loan given to the Subsidiaries of the Company is repayable on demand.

(d) In respect of the loan given by the Company, the same is repayable on demand and therefore the question of overdue amount does not arise.

(e) The Company has not taken unsecured loans form the companies/firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

iv. In our opinion and according to the information and explanations given to us, during the course of our audit, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for sale of goods. We have not observed any major weaknesses in internal control system established by the Company.

v. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature, where no comparison is possible.

vi. The Company has not accepted deposits from the public and therefore the directives issued by the Reserve Bank of India and provisions of Section 58-A and Section 58 AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under do not apply to the Company.

vii. The Company has appointed a firm of Chartered Accountants as Internal Auditor. In our opinion the system of internal audit is commensurate with size and nature of the business of the Company.

viii. We have broadly reviewed the books of accounts maintained by the Company, although, no order has been issued by Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956. We are of the opinion that prima facie records have been maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

30


ix. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Investor Education Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess, and any other statutory dues as applicable to it with the appropriate authorities.

Though there has been delay in some cases of Provident Fund and Professional Tax payments, which were not in arrears at the end of the year. According to the information and explanations given to us, no undisputed amount payable in respect of Income Tax, Sales Tax, Wealth tax, Custom Duty, Service Tax and Excise Duty, were outstanding at the period end for a period of more than six months from the date they become payable.

According to the information and explanations given to us, the statutory dues which have not been deposited on account of disputes are given below.

Name of Statute Nature of Dues Rs. in Lacs Forum where Dispute ispending

Income Tax Act. Income Tax 1151.14 Commissioner of Income Tax.(A.Y. 1999-2000 to (Appeals / ITAT )A.Y. 2005-2006)

Central Excise Tariff Act. Excise Duty 451.60 Commissioner of CentralExcise Director General ofCentral Excise / Audit team of Central Excise.

Labour Laws Compensation Claims 215.17 Labour Court

x. In our opinion, the Company has no accumulated losses at the end of the financial year. The Company has not incurred any cash losses in the immediately preceding financial year.

xi. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has not issued any debentures during the year.

xii. According to information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion the Company is not a chit fund or a nidhi /mutual benefit fund/society. The provisions of nidhi / mutual benefit fund/societies are not applicable to the Company.

xiv. In our opinion the Company is not dealing in or trading in shares, securities debentures and other investments hence the provisions of clause 4 (xiv) are not applicable.

xv. The Company has given corporate guarantee on behalf of Subsidiaries as under.

Sr. no Date of Guarantee Guarantee Favouring Amount Guarantee on account of

1 04.09.2006 ABN AMRO Bank EURO 2 Million Working Capital to(Rs. 12.69 Crore) Meghmani Europe

BVBA (SPRL)

2 21.02.2008 ABN AMRO Bank Rs. 33.00 Crore Letter of Credit (LC) limit to Meghmani Finechem Limited (MFL) to issue LC in favour of AKCC Japan

3 25.02.2008 State Bank of India Rs. 15.00 Crore Three LCs opened onOverseas Branch account of MFL favouringAhmedabad to:- JOC International -

China, Lanxess Germany & Human Techno, Japan

Total Rs. 60.69 Crores

xvi. The Company has obtained fresh term loan which is used for the purpose for which it is obtained.

xvii. The Company has not utilized any funds raised on short term basis for long term investments.

31


xviii. No long-term fund has been used to finance short-term assets except permanent working capital.

xix. According to information and explanations given to us, the Company has not made any preferential allotment of any shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xx. According to information and explanations given to us, the Company has not issued any debenture during the year ended on 31st March, 2008 and hence no Securities have been created.

xxi. We have verified the end use of money raised by the public issue as disclosed in the notes to the financial statement.

xxii. According to information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year ended on 31st March, 2008.



M. M. KHANDWALA

Date: 23.05.2008 PARTNER

Place: Ahmedabad Membership No. 32472

32


Balance Sheet as at 31st March 2008

Schedule As at As at

No. 31.03.2008 31.03.2007

Particulars Rs. Rs. Rs.

SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 254,314,211 200,630,000

Reserves and Surplus 2 3,820,296,777 2,630,052,795

4,074,610,988 2,830,682,795

Loan Funds

Secured Loans 3 1,241,730,648 544,292,256

Unsecured Loans 4 600,600,000 1,174,275,434

1,842,330,648 1,718,567,690

Deferred Tax Liability (Net) 130,950,992 115,627,360

TOTAL 6,047,892,628 4,664,877,845

APPLICATION OF FUNDS

Fixed Assets 5

Gross Block 2,345,437,321 2,294,383,976

Less: Depreciation 996,535,665 857,982,370

Net Block 1,348,901,656 1,436,401,606

Capital Work in progress 26,161,950 47,969,451

1,375,063,606 1,484,371,057

Investments 6 1,090,053,923 284,683,505

Current Assets, Loans and Advances

Inventories 7 854,445,426 943,014,928

Sundry Debtors 8 2,661,750,708 1,950,756,709

Cash and Bank Balances 9 65,622,573 79,115,600

Loans and Advances 10 906,628,463 496,812,754

Total Current Assets 4,488,447,170 3,469,699,991

Less: Current Liabilities & Provisions

Liabilities 11 813,685,562 485,921,585

Provisions 12 91,986,509 87,955,123

Total Current Liabilities 905,672,071 573,876,708

Net Current Assets 3,582,775,099 2,895,823,283

Significant Accounting Policies &

Notes forming part of accounts 23

TOTAL 6,047,892,628 4,664,877,845

As per our attached report of even date For and on behalf of the Board

For M/s Patel & Khandwala

Chartered Accountants J M Patel - Executive Chairman

M M Khandwala A N Soparkar - Managing Director

Partner N M Patel - Managing Director

Membership No. 32472 K D Mehta

Company Secretary

Place : Ahmedabad Date: 23.05.2008 Place : Ahmedabad Date : 23.05.2008

33


Profit and Loss Account for the year ended on 31st March 2008

Schedule 31.03.2008 31.03.2007

Particulars No. Rs. Rs.

Income

Gross Sales 6,440,492,862 4,985,192,427

Less: Excise Duty 476,571,463 266,283,618

Less: VAT 31,531,211 28,315,340

Net Sales 13 5,932,390,188 4,690,593,469

Other Income 14 161,160,944 31,858,594

Increase/(Decrease) in Stock 15 (223,319,845) 195,637,913

Total Income 5,870,231,287 4,918,089,976

Expenditure

Trading Purchases 16 766,202,401 81,409,278

Raw Materials Consumption 17 3,093,798,291 2,947,754,097

Manufacturing Expenses 18 573,161,307 537,342,722

Employees Emoluments 19 126,705,755 115,844,289

Administrative Expenses 20 130,943,584 128,020,084

Selling and Distribution Expenses 21 470,387,305 396,776,523

Financial Expenses 22 91,127,384 120,764,106

Depreciation 143,701,631 135,013,251

Total Expenditure 5,396,027,658 44,62,924,350

Profit Before Tax 474,203,629 455,165,626

Payment & Provision of Current Tax 80,382,548 47,327,243

Fringe Benefit Tax 2,526,252 2,720,693

Deferred Tax 15,323,632 (3,690,443)

Profit After Tax 375,971,197 408,808,133

Profit available for Appropriation 375,971,197 408,808,133

Appropriations :

Transfer to General Reserve 40,000,000 41,000,000

Proposed Dividend 76,294,263 72,226,800

Dividend Tax 12,966,210 12,274,945

Profit carried forward to Balance Sheet 246,710,724 283,306,388

Significant Accounting Policies & Notes

forming part of accounts 23

Total 375,971,197 408,808,133

Basic and Diluted Earning per share of

face value of Re. 1 each (in Rupees) 1.55 2.04

As per our attached report of even date For and on behalf of the BoardFor M/s Patel & KhandwalaChartered Accountants J M Patel - Executive ChairmanM M Khandwala A N Soparkar - Managing DirectorPartner N M Patel - Managing DirectorMembership No. 32472 K D Mehta

Company SecretaryPlace : Ahmedabad Date: 23.05.2008 Place : Ahmedabad Date : 23.05.2008

34


As at As at

31.03.2008 31.03.2007

Particulars Rs. Rs.

Schedule - 1 - SHARE CAPITAL

Authorized Share Capital :

370,000,000 Equity Shares of Rs. 1/- each

(P.Y. 370,000,000) 370,000,000 370,000,000

Issued, Subscribed and Paid Up Share Capital :

254,314,211 Equity Shares of Rs. 1/- Each Fully

paid up (P.Y.200,630,000) 254,314,211 200,630,000

Total 254,314,211 200,630,000

Of the above :-

(1) 36,000,000 Equity Shares of Rs.1/- each issued as Bonus shares by capitalization of Profit and Loss Account in

the ratio of 9:14.

(2) 23,000,000 Equity Shares of Rs.1/- each issued to new stream of Promoters on Right basis.

(3) 69,362,980 Equity Shares of Rs.1/- each issued on private placement basis to Investors and Core

Promoters.

(4) 18,432,980 Equity Shares of Rs.1/- each were bought back at Rs. 8.50 per share.

(5) 34,700,000 Equity Shares of Rs.1/- each were issued as Initial Public Offer (IPO) at Singapore under

Depository system.

(6) 53,684,211 Equity Shares of Rs.1/- each were issued as Initial Public Offer (IPO) to list its Equity Shares on

Indian Stock Exchanges.

Schedule - 2 - RESERVES AND SURPLUS

(1) Securities Premium Account

As per last year accounts 663,258,951 663,258,951

Add : Addition During the Year 901,789,344 -

1,565,048,295 663,258,951

(2) Capital Reserve


(3) General Reserve


Add : Transferred from Profit & Loss Account 40,000,000 41,000,000

Add : Adjusted Gratuity Provision (Earlier Years) 1,743,914 -

434,270,348 392,526,434

(4) Capital Redemption Reserve


(5) Profit & Loss Account

As per last year accounts 1,552,712,413 1,269,406,025

Add : Surplus for the year Brought Forward 246,710,724 283,306,388

1,799,423,137 1,552,712,413

Total 3,820,296,777 2,630,052,795

Schedule 1 to 12 annexed to and forming part of the Balance Sheet as at 31st March 2008

35



As at As at31.03.2008 31.03.2007

Particulars Rs. Rs.

Schedule - 3 - SECURED LOANS

Working Capital Facilities from Banks :

In Indian currency 1,080,667,454 495,367,100

In Foreign currency 161,063,194 48,925,156

Total 1,241,730,648 544,292,256

Notes :

1 Working capital facilities from State Bank of India, HDFC Bank Limited and ICICI Bank Limited (Collectively known

as Consortium Bankers) are secured by:-

(a) First Pari Passu charge created on 25.05.2005 to State Bank of India ( with HDFC Bank Limited and ICICI Bank Ltd.)

for Rs. 1553.50 million by way of hypothecation of the entire stock of raw material, work in process, finished goods,

stores and spares and receivables now stands modified and increased to Rs. 2106.50 million in favour of State Bank

of India (Rs. 1369.20 million), HDFC Bank Limited (Rs. 379.10 million) and ICICI Bank Limited (Rs. 358.20 million).

(b) First Pari Passu charge on immovable properties to State Bank of India ( with HDFC Bank Limited and ICICI Bank Ltd.)

as collateral security for the working capital facilities aggregating Rs. 1553.50 million has been extended to secure

working capital facility up to Rs. 2106.50 million.

(c) The indenture of the mortgage created on immovable properties are located at :

(i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva, Ahmedabad,

(ii) Block No. 402,403,404 and 452 at Village Chharodi, Taluka Sanand, District Ahmedabad,

(iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar,

(iv) Plot No.5001/B of GIDC Industrial Estate, Ankleshwar,

2 Corporation Bank has ceased to be the member of Consortium Banks.

3 An exclusive charge by way of hypothecation has been created in favour of Security Trustee - Unit Trust of India

investment advisory services to secure External Commercial Borrowing of US $ 3 Million granted by ICICI Bank

Limited - Singapore.

Schedule - 4 - UNSECURED LOANS

From Bank - In Foreign Currency 200,600,000 621,982,283

From Bank - In INR 400,000,000 552,293,151

Total 600,600,000 1,174,275,434

36



ETP U

sage

right

37


As at As at

31.03.2008 31.03.2007

Particulars Rs. Rs.

Schedule - 6 - INVESTMENTS (At Cost)

Long Term

Investment in Subsidiary Companies

2,000 Equity Shares of Meghmani Europe BVBA 1,443,433 373,005

27,99,600 Equity Shares of Meghmani Energy Limited 27,996,000 27,996,000

of Rs. 10/- each

12,500 Equity Shares of Meghmani Organics Inc. USA 556,750 556,750

of USD 1/- each

3,51,82,333 Equity Shares of Meghmani Finechem Limited

of Rs. 10/- each 1,054,489,990 -

Sub Total (a) 1,084,486,173 28,925,755

Quoted Equity Shares fully paid up :

2,000 Equity Shares of Saket Project Limited 20,000 200,000

of Rs. 100/- each (Market Value

of the Investment is Not Available)

Sub Total (b) 20,000 200,000

Unquoted Equity Shares fully paid up :

500 Equity Shares of Green Environment

Services Co. Op. Society Limited

of Rs. 10/- each 5,000 5,000

4 Equity Shares of Alaukik Owners Association

of Rs. 100/- each 400 400

8,200 Equity Shares of Lanzorate Finance Limited

of Rs. 10/- each 82,000 82,000

10 Equity Shares of Vellard View Premises

Co. Op. Society Limited of Rs. 50/- each 500 500

2,000 Equity Shares of Suvikas Peoples Co-Op.

Bank Limited of Rs. 50/- each 100,000 100,000

100 Equity Shares of Sanand Eco Project Limited

of Rs. 10/- each 1,000 1,000

491,585 (P.Y. 400,00) Equity Shares of

Bharuch Eco Aqua Infrastructure Limited

of Rs. 10/- each 4,915,850 4,915,850

14,000 Equity Shares of Bharuch Environ Infrastructure Limited

of Rs. 10/- each 140,000 140,000

30,000 Equity Shares of Panoli Enviro Technology Limited

of Rs. 10/- each 300,000 300,000

Sub Total (c) 5,544,750 5,544,750


38


Schedule 1 to 12 annexed to and forming part of the Balance Sheet as at 31st March 2008As at As at

31.03.2008 31.03.2007

Particulars Rs. Rs.

Government Securities

National Savings Certificates 3,000 13,000

Sub Total (d) 3,000 13,000

Other Current Investment

Sundaram BNP Paribas Fixed Term Plan - 100,000,000

DWS Fixed Term Fund Series 28 - 100,000,000

ING Vysya Fixed Maturity Fund Series XXIV - 50,000,000

Sub Total (e) - 250,000,000

Total 1,090,053,923 284,683,505

Note - For investment purchased and sold During the year, refer to Note no. 24 Schedule 23

Schedule - 7 - INVENTORIES

(As taken, valued and certified by the Management)

Stock of Raw Materials 279,856,221 148,013,003

Stock of Trading Goods 2,502,736 10,415,787

Stock of Work In Process 232,650,516 246,888,705

Stock of Finished Goods 299,571,638 500,740,243

Stock of Stores, Packing & Others 39,864,315 36,957,190

Total 854,445,426 943,014,928

Schedule - 8 - SUNDRY DEBTORS

(Unsecured and considered good)

Exceeding Six Month 399,288,088 370,283,184

Others 2,277,462,620 1,595,473,525

(Includes Rs. 2617.56 Lacs (P.Y. Rs. 1559.49 Lacs) due from

firm or a Company in which some of the Directors are interested)

2,676,750,708 1,965,756,709

Less : Provision for Doubtful Debts (15,000,000) (15,000,000)

Total 2,661,750,708 1,950,756,709

Schedule - 9 - CASH AND BANK BALANCES

Cash on hand 992,762 577,255

Balance with Schedule Banks in Current Accounts 56,033,459 76,059,099

Deposits with Schedule Banks 8,596,352 2,479,246

Total 65,622,573 79,115,600

Schedule - 10 - LOANS AND ADVANCES

( Unsecured Considered good)

Export benefit Receivables 73,778,906 38,660,680

Staff Advances 5,292,294 5,005,264

Balance with Central Excise 120,551,671 58,163,279

Deposits 36,525,793 25,430,433

Advance Payment of Income Tax (Net) 53,559,026 55,529,755

39



As at As at31.03.2008 31.03.2007

Particulars Rs. Rs.

Schedule - 10 - LOANS AND ADVANCES (Contd...)

Other Current Assets 266,621,556 124,526,957

Advance Payment to Vendors 245,577,103 165,442,440

Loan to Subsidiary Companies 104,722,114 24,053,946

Total 906,628,463 496,812,754

Schedule - 11 - CURRENT LIABILITIES

Current Liabilities

Sundry Creditors (Trade) 731,883,815 406,901,146

IPO Refund Payable 352,450 -

Other Trade Payable 46,661,431 21,162,041

Statutory Liabilities 34,787,866 57,858,398

Total 813,685,562 485,921,585

Schedule - 12 - PROVISIONS

FBT Provision (Net of Advance payment) 222,609 431,157

Provision for Employee Benefit 2,503,427 3,022,221

Dividend Payable (Proposed) 76,294,263 72,226,800

Corporate Dividend Tax Payable 12,966,210 12,274,945

Total 91,986,509 87,955,123

40


Schedule 13 to 23 forming part of the Profit and Loss Account For the year ended on 31st March 2008

As on As on

Particulars 31.03.2008 31.03.2007

Rs. Rs.

Schedule - 13 - SALES

Manufacturing Goods

Export Sales 3,553,276,021 3,214,169,457

Local Sales 1,479,280,863 1,323,109,706

Other Sales 30,528,043 67,409,210

5,063,084,927 4,604,688,373

Trading Goods

Export Sales 820,875,792 56,668,656

Local Sales 48,429,469 29,236,440

869,305,261 85,905,096

Total 5,932,390,188 4,690,593,469

Schedule - 14 - OTHER INCOME

D E P B Benefit 89,062,620 27,452,932

Duty Drawback 820,572 208,796

Gain on Forex Derivatives 46,577,468 -

Gain on Forward Contracts 412,182 -

Interest Received Others 1,620,650 3,589,591

Rent Received 178,748 165,000

Miscellaneous Income 11,897 21,484

Interest Received on F D R 172,566 390,791

Dividend Income 21,738,524 30,000

Gain From Sale of Investments 565,717 -

Total 161,160,944 31,858,594

Schedule - 15 - INCREASE / (DECREASE) IN STOCK

Opening Stock of Finished Goods 441,830,087 389,450,236

Opening Stock of Trading Goods 10,415,787 16,583,985

Excise Duty on Stock of Finished Goods 58,910,156 26,809,172

Opening Stock of Work In Process 246,888,705 129,563,429

758,044,735 562,406,822

Closing Stock of Finished Goods 248,181,982 441,830,087

Closing Stock of Trading Goods 2,502,736 10,415,787

Excise Duty on Stock of Finished Goods 33,058,245 58,910,156

Goods in Transit 18,331,411 -

Closing Stock of Work In Process 232,650,516 246,888,705

534,724,890 758,044,735

Total (223,319,845) 195,637,913

41



As on As on

Particulars 31.03.2008 31.03.2007

Rs. Rs.

Schedule - 16 - TRADING PURCHASES

Trading Purchase 766,202,401 81,409,278

Total 766,202,401 81,409,278

Schedule - 17 - RAW MATERIALS CONSUMPTION

Raw Materials Consumed 3,036,260,640 2,906,959,566

Other Purchase Related Expenses 57,537,651 40,794,531

Total 3,093,798,291 2,947,754,097

Schedule - 18 - MANUFACTURING EXPENSES

Fuel Consumption 54,650,576 51,260,570

Diesel Consumption 13,210,317 8,720,093

Pollution Expenses 63,639,460 37,769,722

Stores Consumed and Repairs 82,759,231 72,277,700

Power Consumption 324,126,439 287,478,777

Other Manufacturing Expenses 34,775,284 79,835,860

Total 573,161,307 537,342,722

Schedule - 19 - EMPLOYEES EMOLUMENTS

Salary & Wages 108,822,947 98,981,898

Statutory Contribution 6,351,128 6,481,442

Staff Welfare Expenses 11,531,680 10,380,949

Total 126,705,755 115,844,289

Schedule - 20 - ADMINISTRATIVE EXPENSES

Rent , Rates & Taxes 1,907,150 1,584,597

Travelling Expenditures 19,053,173 18,567,795

Postage and Telephone 10,978,505 9,154,431

Insurance Premium 6,536,605 9,536,583

Stationery & Printing Expenses 4,647,163 4,829,689

Legal & Professional Fees 8,803,990 6,281,798

Advertisement Expenses 2,549,767 3,470,097

Audit Fees 1,037,495 1,734,354

Deferred Expenses Written off - 1,970,339

Donations 2,543,460 2,002,001

Repairs & Maintenance to others 1,352,177 1,102,987

Directors Remuneration 45,779,280 45,663,634

Directors Sitting Fees 410,000 410,001

Vehicle Expenses 7,918,723 7,034,135

Singapore Listing Related Expenses 5,249,364 6,153,484

42



As on As on

Particulars 31.03.2008 31.03.2007

Rs. Rs.

Schedule - 20 - ADMINISTRATIVE EXPENSES (Contd...)

Listing Related Expenses 208,527 68,980

Software Expenses 1,483,924 860,900

Exchange Rate Difference Others (55,923) (341,921)

Bad Debts Written off and Provision (net) 1,047,488 (2,929,014)

Loss on Sale of Assets (net) 2,812,584 1,188,512

Other Expenses 6,680,132 9,676,702

Total 130,943,584 128,020,084

Schedule - 21 - SELLING AND DISTRIBUTION EXPENSES

Export Clearing & Forwarding Expenses 77,477,858 22,607,928

Transportation Expenses 123,983,450 146,886,512

Marine Insurance 2,669,617 1,655,367

Sales Commission 18,996,803 14,976,321

Business promotion Expenses 7,967,843 5,126,624

Packing Material Consumption 158,925,974 155,703,452

Other Selling Expenses 80,365,760 49,820,319

Total 470,387,305 396,776,523

Schedule - 22 - FINANCIAL EXPENSES

Interest (net) 78,933,208 107,044,538

Other Financial Charges 12,194,176 13,719,568

Total 91,127,384 120,764,106

Schedule - 23

NOTES FORMING PART OF ACCOUNTS

1. BASIS FOR PREPARATION OF ACCOUNTS

The Financial statements have been prepared to comply in all material aspects in respect with the notified Accounting Standard by companies Accounting Standard Rules, 2006 and the relevant provision of the Companies Act, 1956.

Accounting policies have been consistently applied by the Company.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

3. SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

a) REVENUE RECOGNITION

1) In appropriate circumstances, Revenue is recognised on accrual basis when no significant uncertainty as to determination or realization exists.

43


Notes Forming Part Of Accounts (contd...)

2) Sales

Domestic Sales are accounted exclusive of Excise, net of Central Sales Tax, VAT, sales return and rate difference, if any. Exports sales are accounted on the basis of dates of Bill of Lading and including exchange rate differences arising in export sales transaction. Sales do not include Inter Division transfer.

3) Accounting for claims

Insurance claims are recognised on the basis of approval of claim by insurance company.

4) Export Benefits

Incomes in respect of Duty Drawback and Duty Entitlement Pass Book Scheme (DEPB) in respect of exports made during the period are accounted on accrual basis. Profit or losses on transfer of DEPB licenses are accounted in year of the sales. Duty free imports of material under Advance License matched with the export made against the said licenses.

5) Dividend income is recognised on the basis of dividend declared by the companies.

b) FOREIGN CURRENCY TRANSACTIONS

(i) Transactions in foreign currencies are recorded in Indian Rupees using the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, recorded monetary balances are reported in Indian Rupees at the rates of exchange prevailing at the balance sheet date. All realised and unrealised exchange adjustment gains and losses are dealt with in the profit and loss account.

(ii) In order to hedge exposure to foreign exchange risks arising from certain foreign currency, bank borrowings and trade receivables, the Company enters into forward contracts. In case of forward exchange contracts, the cost of the contracts is amortised over the period of the contract. Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognised as income or expenses for the year.

(iii) Exchange difference is calculated as the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting date, or the settlement date where the transaction is settled during the reporting period and the corresponding foreign currency amount translated at the later of the date of inception of the forward exchange contract and the last reporting date. Such exchange differences are recognized in the profit and loss account in the reporting period in which the exchange rates change.

(iv) Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c) FIXED ASSETS

(i) Fixed assets are stated at cost of acquisition or construction less accumulated depreciation, including financial cost till such assets are ready for its intended use, less specific grants received and Cenvat Credit availed.

(ii) Fixed assets in the course of work-in-progress for production or administrative purposes are carried at cost less any impairment loss. Work in Progress includes expenditure pending for capitalization.

Cost includes land and building improvement costs, related acquisition expenses and construction costs incurred during the period of construction. Depreciation of these assets, on the same basis as the other property assets, commences when the assets are ready for their intended use.

(iii) The exchange rate gain or loss relating to acquisition of capital assets is adjusted to the cost of fixed assets.

(iv) The cost of self-constructed assets includes cost of materials plus any other directly attributable costs of bringing the assets to working condition for its intended use.

(v) Assets identified as intangible assets at cost including incidental expenses thereto and are amortized over a predetermined period in line with AS-26 "Intangible assets"

d) IMPAIRMENT OF ASSETS

At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that asset may be impaired.

44



Recoverable amount is the higher of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately.

e) DEPRECIATION

Except for freehold land, leasehold land and Capital work-in-progress & other assets as stated below depreciation is charged on straight line method (SLM) as per rate prescribed under schedule XIV of the Companies Act, 1956.

Intangible assets are amortized over useful life of assets as per management perception and are not grater than 10 years.

Leasehold land is amortized over the available balance lease period.

Depreciation is not provided on freehold land and capital work-in-progress.

When assets are disposed or retired, their cost and accumulated depreciation are removed from the financial statements. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in Profit and Loss Account for the relevant financial year.

f) INVESTMENTS

Long term investments are stated at cost less amount written off, where there is a permanent diminution in its value. Current investments are stated at lower of cost and fair value. Gain or loss arising from sale or disposal of such investment is accounted at the time of actual sale or disposal.

g) INVENTORIES

Inventories are stated at the lower of cost and net realizable value.

Cost of Raw Material is determined on a monthly moving weighted average on FIFO basis. Stores and consumables are valued at cost (net of CENVAT) or net realizable value whichever is lower.

Finished goods are valued at cost or net realizable value whichever is lower. Cost comprises direct materials and, where applicable, direct labour costs, those overheads that have been incurred in bringing the inventories to their present location and condition and excise duty payable on finished goods.

For finished goods of Export Oriented Units (EOUs) where prima facie finished goods of EOUs are meant for export and no excise duty is leviable, therefore no excise duty is added in finished goods valuation. However in case of EOU also Excise duty is included in valuation of finished goods in proportion to DTA sales. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Work in progress is valued at cost or net realizable value whichever is less. Cost comprises direct materials and appropriate portion of direct labour costs, manufacturing overheads and depreciation.

h) BORROWING COSTS

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets, wherever applicable. A qualifying asset is one which is that necessarily takes substantial period to get ready for intended use. All other borrowing costs are charged to revenue account. Capitalisation of borrowing cost suspended when active development is interrupted.

i) PRIOR YEAR EXPENSES AND INCOME

Transactions pertaining to period prior to Current Accounting Year are adjusted through prior year adjustments, if any.

45



j) RESEARCH AND DEVELOPMENT EXPENSES

Revenue expenditure pertaining to Research and Development is normally charged to Profit and Loss Account. Capital expenditure for Research and Development which results into creation of assets is included in fixed assets as intangible assets.

k) EMPLOYEE RETIREMENT BENEFIT

Contribution to Defined Contribution schemes such as Provident Fund, etc are charged to the Profit & Loss Account as incurred. The Company also provides for retirement / post-retirement benefits in the form of gratuity and leave encashment. Such benefits (Defined benefit plans) are provided for based on valuations, as at the balance sheet date, made by independent actuaries. Termination benefits are recognized as an expense as and when incurred.

l) EXCISE DUTY

Excise duty (including Education cess) on Finished Goods are shown separately in Manufacturing and other expenses and included in the valuation of finished goods.

m) CENVAT

CENVAT Credit of raw materials and other consumables is accounted at the time of purchase and the same is being adjusted to the cost of raw materials and other consumables.

n) ACCOUNTING FOR TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognized, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized if there is virtual certainty that sufficient future taxable income will be available against which such assets can be realized. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed at each Balance sheet date to reassess realization.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

o) PROVISIONS AND CONTINGENT LIABILITIES

A provision is recognized when it is more likely than not that an obligation will result in an outflow of resources.

Provisions are not discounted to their present value and are determined based on management's estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would not result in or involve an outflow of resources.

p) FINANCIAL DERIVATIVES AND COMMODITY HEDGING TRANSACTIONS

In respect of derivative contracts, premium paid, gains / losses on settlement and provision for losses for cash flow hedges are recognized in the Profit & Loss Account, except in case where they relate to borrowing costs that are attributable to the acquisition or construction of fixed assets, in which case, they are adjusted to the carrying cost of such assets.

4. SHARE CAPITAL

During the year the Company made Initial Public Offer (IPO) of 53,684,211 equity shares of face value of Rs. 1/- each at a premium of Rs. 18/- per equity share. The Company has received Rs. 966,315,798/- towards share premium. The net amount of premium of Rs. 901,789,344/- after adjusting issue expenses has been credited to Share Premium account. The purpose for which the amount was raised and utilised up to 31 March, 2008 is given here in below:

46



Sr. Amount raised

No. Rs. in millions Rs. in millions Rs. In millions

1 New High Performance Pigments (HPP)

plant at Vatva

2 New Technical Grade Pesticide / Formulation 114.20 8.32 105.88

Plant at Panoli

3 Investment in our Subsidiary - Meghmani 144.10 81.10 63.00

Energy Limited

4 Inorganic Growth opportunities/ diversification 200.00 424.21 -224.21

opportunities/general corporate purpose

5 Financing Working Capital needs 349.00 349.00 0.00

6 Issue Expenses 67.50 64.50 3.00

Total 1020.00 1020.00 0.00

Note:- As per terms of IPO, unutilized fund of HPP, New Technical Grade Formulation and Investment in Subsidiary aggregating Rs. 224.21 million has been used for Inorganic Growth object.

5. CONTINGENT LIABILITIES

a) Contingent liabilities in respect of Bank Guarantee of Rs. 654.10 Lacs (P.Y. Rs. 473.18 Lacs) and in respect of Letter of Credit opened and outstanding with Bank of Rs. 815.88 Lacs (P.Y. Rs. 968.05 Lacs) are not provided for in the accounts.

b) The Company has given corporate guarantees as under.

Sr. no Date of Guarantee Guarantee Favouring Amount Guarantee on account of

1 04.09.2006 ABN AMRO Bank EURO 2 Million Meghmani Europe BVBA(INR 1269 Lacs) (SPRL) for Working Capital.

2 21.02.2008 ABN AMRO Bank INR 3300 Lacs Letter of Credit (LC) limit to

Meghmani Finechem Limited

(MFL) in favour of AKCC Japan.

3 25.02.2008 State Bank of India INR 1500 Lacs Three LCs opened on accountOverseas Branch, of MFL favouring JOCAhmedabad International - China, Lanxess -

Germany, Human Techno - Japan.

Total INR 6069 Lacs

Objects of the issue Amount utilized Balance Amount

145.20 92.87 52.33

c) Contingent Liabilities in respect of other statutes.

Name of Statute Nature of Dues Amt. in Lacs Forum where Dispute is pending

Income Tax Act. Income Tax 1151.14 Commissioner of Income Tax.

(A.Y. 1999-2000 to (Appeals/ ITAT )

A.Y. 2005-2006)

Central Excise Tariff Act. Excise Duty 451.60 Commissioner of Central Excise /

Director General of Central Excise

/Audit team of Central Excise.


47



In view of retrospective amendment of Section 80 HHC of Income Tax Act, the department has issued Notice under Section 148 of the Income Tax Act, for Assessment year 1999-2000. The Company has filed the revised return of income. The assessment of A.Y. 1999-2000 is completed and the Income Tax Department has raised the additional demand of Rs. 167.46 Lacs. The Company has preferred an appeal before Commissioner of Income Tax (Appeals), Ahmedabad, which is pending for hearing.

The Company has also received notice under Section 153 C of the Income Tax Act requiring it to file its returns of income for Assessment Years 2000-01 to 2005-06. The said assessments are completed and the Income Tax Department has raised the demand of Rs. 983.69 Lacs. The demand has taken place mainly due to retrospective amendment in Section 80 HHC of the Income Tax Act. The Company has preferred an appeal before Commissioner of Income Tax (Appeals), against the said order which is pending for hearing. The liability is contingent in nature and the same is not provided for.

d) Various employee / ex-employee of the Company have filed different legal suits in labour court against the Company. The total claim amount is Rs. 215.17 lacs plus interest wherever applicable. The said claims are not accepted by the Company and the proceedings are pending.

6. INTER DIVISION TRANSFER

Sales and Purchases are shown net of Inter Divisional Transfer amounting to Rs. 4912.62 Lacs (Previous yearRs. 4001.14 Lacs). Other income and manufacturing expenses are shown net of Inter Divisional Job work charges income of Rs. 53.49 Lacs (Previous year Rs. 84.22 Lacs)

During the year 2005-06, the Company has installed Captive Power plants as separate business undertaking, to avail benefit of infrastructure under Section 80 IB of the Income Tax Act, 1961. From the same units the Company has sold power to the tune of Rs. 302.25 Lacs (Previous year Rs. 407.70 Lacs) to its other units. The same is knocked off from sales.

7. AUDITORS REMUNERATION

31.03.2008 31.03.2007

Rs. in Lacs Rs. in Lacs

Audit Fees 8.93 8.02

Taxation Fees 0.79 0.73

Certification 1.24 1.07

Auditors Out of Pocket Expenses 0.62 0.53

Prospectus Certification Fees 0.00 8.98

Total 11.58 19.33

8. FOREIGN EXCHANGE RATE DIFFERENCE

The Net Foreign Exchange Rate difference pertaining to Export realisation amounting to Rs. 380.95 Lacs (Previous year Rs.57.15 Lacs) has been credited to Sales in Profit and Loss Account.

Net Exchange rate difference pertaining to Import Purchases amounting to Rs. 14.34 Lacs (Previous Year Rs. 2.60 Lacs) has been credited to Purchases in Profit & Loss Account.

Exchange rate differences amounting to Rs.80.59 Lacs (Previous year Rs. 54.07 Lacs) towards loan fund in foreign currency have been credited to bank interest in Profit & Loss Account.

Further, Rs.0.56 Lacs (Previous Year Rs. 3.42 Lacs) towards Net Exchange Rate difference pertaining to others transactions have been credited to Administrative Expenses in Profit & Loss Account.

9. IMPAIRMENT OF ASSETS

During the year, the Company has impaired its assts to the tune of Rs. Nil (Previous year Rs. Nil) in respect of dead stock and Rs. Nil (Previous Year Rs. Nil) in respect of plant and machineries.

48



10. SUBSIDIARIES

The Company has following companies as its subsidiaries :-

- Meghmani Europe BVBA (Meghmani Europe)

- Meghmani Organics Inc. USA

- Meghmani Energy Limited (MEL)

- Meghmani Finechem Limited (MFL)

11. SEGMENT REPORTING

For management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigments division

To Manufacture and distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and distribute Technical, Intermediates and Formulations of Insecticides.

(a) Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company's Profit & Loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.

49



Financial year ended on March 31, 2008:

Figures in lacs

Pigments Agro Others * Elimination Total

Chemicals

Revenue

External Sales 25038.78 26076.37 8208.76 - 59323.91

Inter-segment Sales 1808.02 3104.60 302.25 (5214.87) -

Total Revenue 26846.80 29180.97 8511.01 (5214.87) 59323.91

Results

Segment Results 3448.76 1792.27 706.68 - 5947.71

Un-allocable Expenses (511.78)

Profit from Operation 5435.93

Finance Cost (396.02) (369.20) (146.05) - (911.27)

Investments Income 159.14 58.24 - - 217.38

Profit Before Tax 4742.04

Income tax Expenses (803.83)

Fringe Benefit Tax (25.26)

Deferred Tax Expenses (153.24)

Profit after tax 3759.71

Other information Pigments Agro Others CWIP Total

Chemicals

Capital Addition 1216.53 712.08 26.00 1492.27 3446.88

Depreciation (802.10) (612.60) (22.32) - (1437.02)

Balance sheet Pigments Agro Others CWIP Total

Chemicals

Assets

Segment Assets 34848.18 27452.60 6194.11 - 68494.89

Un-allocable Corporate Assets 1040.76

Consolidated total assets 69535.65

Liabilities

Segment Liabilities 4835.05 18286.87 4358.11 - 27480.03

Deferred Tax Liabilities 1309.51

Consolidated total Liabilities 28789.54

! Others includes trading activity and Power generation

50




Figures in lacs

Pigments Agro Others * Elimination Total

Chemicals

Revenue

External Sales 23607.81 22731.44 566.69 - 46905.94

Inter-segment Sales 1378.94 3029.90 - (4408.84) -

Total Revenue 24986.75 25761.34 566.69 (4408.84) 46905.94

Results

Segment Results 4008.40 2634.78 13.15 - 6656.33



Finance Cost (503.47) (695.56) (8.61) - (1207.64)

Investments Income 0.30 - - - 0.30




Deferred Tax Expenses 36.90

Profit After Tax 4090.10

Other information Pigments Agro Others CWIP Total

Chemicals

Capital addition 1130.94 1392.85 1452.31 300.96 4277.06

Depreciation (771.16) (576.70) (2.27) - (1350.13)

Balance sheet Pigments Agro Others Others Total

Chemicals

Assets

Segment Assets 20929.25 28329.79 1891.01 - 51150.05

Un-allocable Corporate Assets 1288.87

Deferred Tax Assets 163.53


Liabilities

Segment liabilities 3823.22 17758.15 1394.45 - 22975.82

Deferred tax liabilities 1319.80

Consolidated total liabilities 24295.62

! Others includes Trading activity and Basic Chemical

! Pigment and Agro Chemical segment are inclusive of Power generation units on the basis of its use.

51



(b) Analysis By Geographical Segment

Segment revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Company's sales by geographical Markets:

Rs in lacs

2007-08 2006-07

Export Sales 43741.52 32708.38

Domestic Sales 15582.38 14197.55

Total 59323.90 46905.93

(c) Segment assets and capital expenditure:

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.

An analysis of the carrying amount of segment assets and capital expenditure by geographical locations is not presented, as the assets are all located in India.

12. MANAGERIAL REMUNERATION

Managerial remuneration under Section 198 of the Companies Act, 1956 paid or payable during the financial year to the Directors and Computation of Net Profit in accordance with Section 198(1) and Section 349 of the Companies Act, 1956 are as under :-

Rs in lacs

2007-08 2006-07

A. Profit as per Profit and Loss Account 3759.71 4088.08

B. Add : Managing Directors' Remuneration (in perquisites) 296.48 296.91

Whole-time Directors' Remuneration (including perquisite) 139.75 140.04

Executive Director Remuneration (including perquisite) 21.56 19.69

Depreciation 1437.02 1350.13

Loss on sale of Fixed Assets 28.13 11.89

Provision for Taxation (including FBT) 829.09 500.48

Provision for Deferred tax 153.24 (36.90)

Sub Total 6664.98 6370.32

C. Less: Depreciation under Section 350 1437.02 1350.13

Profit on which remuneration is payable (A+B-C) 5227.96 5020.19

Details of Directors remuneration

Rs. In Lacs

Managing Whole-time Executive Total

Directors Directors Director

1. Salary 144.00 84.48 11.40 239.88

2. P.F Contribution 17.28 10.14 1.37 28.79

3. Bonus 135.00 45.00 5.36 185.36

4. Perquisites 0.20 0.13 3.43 3.76

Total 296.48 139.75 21.56 457.79

52



13. PROVISION FOR TAXATION

The Company has made Income Tax provision of Rs. 800 Lacs for the year ended on 31st March, 2008 after taking into consideration the Export Oriented units under Section 10 B of Income Tax Act, 1961. The Company has made FBT Provision of Rs. 25.26 Lacs for the year ended on 31st March, 2008.

14. DEFERRED TAX

Rs. in Lacs

March 31, 2008 March 31, 2007

Deferred Tax Liabilities 1398.29 1319.80

Deferred Tax Assets (88.78) (163.53)

Net position 1309.51 1156.27

The movement for the relevant periods in the Company's deferred tax position is as follows:

Rs. in Lacs

March 31, 2008 March 31, 2007

At the beginning of period 1156.27 1193.18

Charge to P & L Account for the period 153.24 (36.91)

At end of period 1309.51 1156.27

Deferred Tax Liabilities are mainly represented by the tax effect of the excess of net book value over tax written down value of certain qualifying assets. The movement for the relevant periods in the Company's deferred tax liabilities is as follows:

Rs. in Lacs

Tax depreciation Others Totals

At April 1, 2007 1319.80 0 1319.80

Charge to expenses for the year 78.49 0 78.49

At March 31, 2008 1398.29 0 1398.29

Deferred Tax Assets are mainly represented by the tax effect of provision for doubtful receivables / bad debts written off and others include Liability for leave encashment and retirement benefits and disallowances under Section 43B & 40(b) of Income Tax Act. The movement for the relevant periods in the Company's Deferred Tax Assets is as follows:

Rs. in Lacs

Provision for Others Total

doubtful debts

At April 1, 2007 (50.98) (112.55) (163.53)

Charge to Income/Expenses for the year 0 74.75 74.75

At March 31, 2008 (50.98) (37.80) (88.78)

15. RELATED PARTIES DISCLOSURES :-

}Holding Company : Nil

}Subsidiaries of the Company : Meghmani Organics Inc., USA

Meghmani Europe BVBA

Meghmani Energy Limited


53



} Enterprises in which Directors & Key Managerial Alpanil Industries

Personnel [KMP] have significant influence : Ashish Chemicals

Tapsheel Enterprise

Meghmani Dyes and Intermediates Ltd.

Meghmani Industries Limit

Meghmani Chemicals Limited

Fidelity Exports Private Limited

Vanguard Overseas Limited

} Key Managerial Personnel Mr. Jayanti M Patel

Mr. Ashish Soparkar

Mr. Natwarlal M. Patel

Mr. R M Patel

Mr. Anand I Patel

Mr. Ashvin Raythatha

} Relatives of Key Managerial Personnel Ms. Deval Soparkar

(Employee) Mr. Maulik Patel

Ms. Vaishakhi Patel

Mr. Kaushal Soparkar

Mr. Karana Patel

} Relatives of Key Managerial Personnel Mr. K. M. Patel

(Consultant) Mr. Saurabh Soparkar

31.03.2008 31.03.2007

Rs. in lacs Rs.in lacs

} Transaction with Subsidiaries during the year :-

Purchase of Goods 952.83 0.00

Sale of finished goods 2508.67 0.00

Services 1.28 0.00

} Transaction with Enterprises in which Directors

& KMP have significant influence during the year :-



} Key Management Personnel Salary :- 457.79 456.64

} Relatives of Key Management Personnel :-

Salary 14.14 9.81

Professional fees and service 1.58 2.93

Outstanding balances as on 31.03.2008 31.03.2007

With Subsidiaries Rs. in lacs Rs. in lacs

Debtors for Goods 2458.42 1281.21

Creditors for Goods 596.77 0.00

Advance Payment 1047.22 240.54

54



With Enterprises in which Directors & KMP have significant influence Rs. in Lacs



16. EARNING PER SHARE

Date Particulars No. of Shares No. of Shares

Issued Outstanding

1st. April, 2007 Balance at beginning of year 200,630,000 200,630,000

19th June, 2007 Issue of Shares for cash 53,684,211 254,314,211

31st March, 2008 Balance at end of period 254,314,211 254,314,211

Computation of weighted average shares

(200,630,000 x 80/366) + (254,314,211 x 286/366) = 242,579,957 shares

Net Profit 375,971,197

Earning Per Share 1.55

17. The Company has called for balance confirmation of Debtors and Creditors on random basis. Out of which the Company has received response from some of the parties, which are reconciled with Company's account. The other balances of Debtors and Creditors are subject to confirmation.

18. The estimated amount of contracts remaining to be executed on capital accounts of Rs. 68.11 Lacs (P.Y. Rs. 381.99 Lacs) is not provided for.

19. (i) Sundry Creditors (Schedule-11) include Rs. 222.02 Lacs (P.Y .Rs. 166.58 Lacs) due to Small-Scale and Ancillary undertakings. The names of small scale industrial units to whom the Company owes any sum which is outstanding for more than 30 days as at the Balance Sheet date, computed on unit wise basis are as under. This disclosure is based on the information available with the Company, regarding the status of the suppliers.

(1) Anal Industry (2) Arth Engineering System (3) Ajay Organics Private Limited (4) Alpanil Industries (5) Ashish Chemicals (6) Chemfilt (7) Data Tech Computers (8) Diamond Engineering Co. (9) Hi-Tech Applicator (10) Jet Fab Industry (11) Jet Fiber Pumps & Equipment Pvt. Ltd. (12) Jay Ambe Engineering Enterprise (13) Luna Chemicals Ind. Pvt. Ltd. (14) Maruti Containers (15) Pooja Packaging Industries (16) Pramukh Packaging Industries (17) Pap-flon Engineering Company (18) Parth Plastic Industries (19) Patel Fiberglass & Chemicals (20) Pest Control (India) Pvt. Ltd. (21) Plasto Pumps & Valves (22) Powerful Industries (23) Sachin Industries. (24) SRN Corporation (25) Savla Chemicals Limited (26) Shree Bharti Pulp & Paper Product Pvt. Ltd. (27) Shree Ganesh Chemicals (28) Shree Parswnath Investment (29) Shyam Chemicals Pvt. Ltd. (30) Sunrise Chemicals (31) Surat Ammonia & Chemical Company (32) Surat Ammonia Supply Company (33) Twin Star Mineral & Chemicals Pvt. Ltd. (34) Trilok Chemicals Pvt. Ltd. (35) Veeshna Poly Pack (36) White Silco Pvt. Ltd. (37) Vesatile Chemicals Pvt. Ltd.

(ii) The Company has not received any intimation from "Suppliers" regarding the status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures if any relating to amounts paid as at year end together with interest paid / payable as required under the said Act have not been given.

20. The figures of previous year is regrouped and rearranged wherever necessary so as to make them comparable.

21. The Company has operating lease from various premises which are renewable on a periodic basis and cancellable at its option. Rental expenses for operating lease are charged to Profit and Loss Account for the year Rs. 18.49 Lacs ( P.Y. Rs. 14.05 Lacs).

Not later than 1 year Rs. 18.49 lacs (P.Y. Rs. 14.05).

Not later than 5 years Rs. Nil. (P.Y. Rs. Nil).

22. The Company uses derivative contracts to manage its foreign currency exposures relating to the underlying transactions and firm commitments. The Company doesn't enter into any derivative instruments for trading or speculation purpose. The derivative contracts outstanding as on 31st March, 2008 aggregates to USD 38.25 Millions and Euro 34.50 Millions for the maturities ranging from 23 months to 57 months.

Rs. in Lacs

55



23. (A) Defined Benefit Plans

As per Actuarial Valuation as on 31st March, 2008 and recognized in the financial statements in respect of Employee Benefit Schemes:

Rs. in Lacs

Gratuity Leave Encashment

I. Components of Employer Expenses

(a) Current Service Cost 2009684 54219

(b) Interest Cost 800815 95343

(c) Expected Return on Plan Assets (840288) -

(d) Curtailment Cost/(Credit) - -

(e) Settlement Cost/(credit) - -

(f) Past Service Cost - -

(g) Actuarial (gain)/loss 302700 (101418)

(h) Total Expenses/(gain) recognized in the

Profit & Loss Account 2272911 48144

II Net Asset/(Liability) recognized in

Balance Sheet as at 31st March, 2008

(a) Present value of Funded Obligation 10080601 -

as at 31st March, 2008

(b) Fair Value of Plan Assets as at 31st March, 2008 10080601 -

(c) Present value of unfunded Obligation 978205 1169826

as at 31st March, 2008

(d) (Assets)/Liability recognized in the Balance Sheet 978205 1169826

* The excess of assets over liabilities in respect of Gratuity

and Officer's Pension have not been recognized as they

are lying in an Income Tax approved irrevocable trust fund

III Change in Defined Benefit Obligations (DBO) during

the year ended as on 31st March, 2008

(a) Present Value of Obligation as at 31st March, 2008 9421355 1121682

(b) Current Service Cost 2009684 54219

(c) Interest Cost 800815 95343

(d) Curtailment Cost/(Credit) - -

(e) Settlement Cost/(Credit) - -

(f) Plan Amendments - -

(g) Acquisitions - -

(h) Actuarial (Gain)/Loss 362441 (101418)

(i) Benefit Paid (1535489) -

(j) Present Value of Obligation as at 31st March, 2008 11058806 1169826

Note: The Present Value of Obligation as at 31st March, 2008

for Post Retirement Gratuity include Rs. 17.44 Lacs

adjusted to General Reserve on adoption of AS 15 (Revised).

56



IV Changes in the Fair value of Plan Assets Rs. in Lacs Rs. in Lacs

(a) Present Value of Plan Assets as at 31st March, 2007 8592458 -

(b) Acquisition Adjustment - -

(c) Expected Return on Plan Assets 840288 -

(d) Actuarial Gain/(Loss) 59741 -

(e) Actual Company Contribution 2123603 -

(f) Benefit Paid (1535489) -

(g) Fair Value of Plan Assets as at 31st March,2008 10080601

V Actuarial Assumptions

(a) Discount Rate (per annum) 8.50% 8.50%

(b) Expected Rate of Return on Assets (per annum) 9.00% -

(c) Annual Increase in Salary Costs (per annum) 6.00% 6.00

The estimates of future salary increases, considered in

actuarial valuation, take account of inflation, seniority,

promotion and other relevant factors, such as supply

and demand in the employment market.

(B) Defined Contribution Plans

Amount recognised as an expenses as "contribution / provision to and for Provident and other Funds" of Profit and Loss Account - Rs. 56.19 Lacs (P.Y. Rs. 56.33 Lacs).

24. During the year the Company invested the temporary surplus fund in Liquid / Cash schemes and Fixed Maturity Plans of Mutual Funds. Those current investments which were made and redeemed during the year are as under.

Particulars No of Units Purchase value

(Rs. Lacs)

Standard Chartered Liquid Manager Plus 199960.008 2000.00

Birla Sunlife Liquid Plus 25990724.125 2600.00

Principal Mutual Fund 14223803.807 1500.00

DSPML SBF 49950.050 500.00

ICICI Prudential Short Term Plan 9030813.134 1000.00

ING Income Fund STP 13346501.882 1500.00

Lotus India Short Term Plan 14933712.858 1500.00

Reliance Liquid Plus Fund 49934.436 500.00

HDFC Cash Management Fund-Saving Plus Fund 4984299.457 500.00

Templeton India Short Term Income Plan 36659.415 400.00

G S S I F - ST 4957809.045 500.00

ING LIQUID PLUS 5498185.599 550.00

25. Administration expenses includes prior period income of Rs. 236704/-

1. Additional information required under para 3, 4 (c) and 4 (d) of part II of Schedule VI of the Companies Act, 1956 are as under :

57


1) Licensed and Installed Capacity (in MT)

Particulars Licensed Capacity Installed Capacity Production

Intermediates 2900 2900 1700.199

Technical 8100 8100 6559.636

Formulation Bulk NA NA 5015.326

Formulation Small Packing NA NA 3582.458

Pigments 25100 25100 15736.252

Note:

Under the New Industrial Policy, No specific license is necessary for the manufacturing of the products mentioned above. The installed capacities are as per the certificates given by the Directors on which Auditors have relied.

Permethrin, Imidacloprid and Alpha Cypermethrin would be produced only on an order basis using multifaceted plants which have the capability to manufacture several products; the designed capacity stated is based on the assumption of 3 months continuous production of each in the relevant multi functional plant.

2) Details of Turnover and production

3) Details of Turnover and production of Power Generation Units

Particulars Opening Opening Production Captive Sales Sales Closing ClosingStock Stock In Units Consumption In In Stock StockIn Lacs In Units /Others in Lacs Units In Lacs In Units

Unit

Power

Generation 0.00 0.00 31507360 25462260 302.255 6045100 0.00 0.00

Units (0.00) (0.00) (34179578) (26025678) (407.695) (8153900) (0.00) (0.00)

Note: Sales include inter-divisional transfer. The above figures are obtained from SAP.


58


4) Details of Trading Goods

Notes: The above information is obtained from SAP

5) Raw material :- Opening and Closing Stock

Item Opening Opening Closing Closing

Stock Stock Stock Stock

In MT In Lacs In MT In Lacs

Agro Chemicals

Acetic Anhydride 18.371 3.78 33.693 11.05

Benzaldehyde 19.11 13.94 14.910 11.90

Bromine 15.274 19.00 4.716 4.56

CTC 78.467 23.40 72.303 3.77

DMPAT 67.250 52.46 60.000 79.15

Isobutylene 25.674 17.72 12.163 9.92

Thionyl Chloride 47.984 7.37 47.383 8.53

Pigment

CPC 27.50 38.50 10.475 14.66

Phthalic Anhydride 235.562 130.69 693.512 343.02

Technical Salt 229.939 12.74 106.439 5.96

Cuprous Chloride 54.927 100.70 70.702 153.88

Others 1059.83 2152.16

Total 1480.13 2798.56


59



Item 31.03.2008 31.03.2008 31.03.2007 31.03.2007

Qty. Amount Qty. Amount

in MT in Lacs in MT in Lacs

Agro Chemicals

Acetic Anhydride 1724.449 894.67 2021.882 1000.63

Acephate (Semi Finished) 17.000 42.50 3.000 6.37

Acrylonitrile 1210.067 936.66 997.366 683.88

Aluminum Ingot 692.241 759.29 679.448 828.72

Benzaldehyde 456.773 361.13 444.666 312.75

Bromine 213.922 238.21 221.082 154.35

CTC 1589.503 226.94 1092.571 334.35

Chlorpyriphos 379.216 875.03 238.313 600.10

DMPAT 2489.013 2120.85 2679.450 2052.32

Acetic Acid Glacial 500.973 148.79 624.181 193.33

Isobutylene 703.604 493.70 548.107 406.62

Phenol Crystal 424.495 354.12 427.352 343.08

S-Methyl N-Acetyl Phospo 0.000 0.00 48.500 97.62

Thionyl Chloride 1944.319 291.21 1461.445 313.62

Pigment

Aluminum Chloride 3955.470 1281.18 3383.860 1239.88

Phthalic Anhydride 9562.510 5108.74 10014.240 5400.77

Technical Salt 10032.182 560.76 10699.290 606.65

Cuprous Chloride 1824.598 3938.88 1861.617 3994.09

Others 12305.32 10910.82

Total 30937.98 29479.95

7) Value of Import on CIF basis

Rs. in lacs

Particulars 31.03.2008 31.03.2007

Raw Material (Mfg.) 10183.50 12218.98

Trading Purchase 7255.83 537.89

Total 17439.33 12756.87

8) Payment made in Foreign Currencies

Rs. in lacs

Particulars 31.03.2008 31.03.2007

Foreign Traveling Expenses 65.30 71.61

Sales Commission 131.94 229.76

Dividend 273.03 266.14

Other Expenses Including Capital Expenditure 22131.72 18415.81

Total 22601.99 18983.32

6) Raw Material Consumption

60



9) Particulars of NRI Shareholders to whom above dividend are remitted.

Final Dividend

No. of Shareholders 1 1

No. of Shares held 76582650 76582650

Year / Period to which dividend relates 2006-07 2005-06

10) Earnings in Foreign Currencies

Rs. in lacs

Particulars 31.03.2008 31.03.2007

Export of Goods (FOB) 42505.61 31585.57

11) Value of imported and indigenous raw materials, stores, components and spare parts consumed.

Rs. in lacs

Particulars 31.03.2008 31.03.2008 31.03.2007 31.03.2007

Imported Indigenous Imported Indigenous

Stores And Spares 0.00 798.98 0.00 686.36

0.00% 100.00% 0.00% 100.00%

Raw Materials 10183.50 20754.48 12218.98 17260.97

32.92% 67.08% 41.45% 58.55%

Signature to Schedule 1 to 23 For and on behalf of the Board






Company Secretary


61


Cash Flow Statement For The Year Ended 31st March 2008

Particulars 31.03.2008 31.03.2007

A.Cashflow from Operating Activities

Net Profit Before Tax and Prior Period Adjustment 474,203,629 455,165,626

Adjustment for :

Depreciation 143,701,631 135,013,251

Deferred Revenue Expenses Written Off - 1,970,339

Unrealised Foreign Exchange Gain (73,838,724) 20,354,746

Interest and Finance Charges 91,127,384 120,764,106

Dividend Received (21,738,524) (30,000)

Interest Received (172,566) (390,791)

Interest Received (Inter Company) (50,105,954) -

Diminution in Investment 190,000 -

Gain on Sale of Investment (565,717) -

Loss on Sale of Fixed Assets (Net) 2,812,584 1,188,512

Sub Total 91,410,114 278,870,163

Operating Profit before Working Capital changes 565,613,743 734,035,789

Adjustment for:

Inventories 88,569,502 (169,561,604)

Debtors (710,993,999) (219,192,103)

Loans and Advances (287,841,760) (140,171,758)

Curent Liabilities 323,157,533 51,298,174

Provision for Employee Benefit 1,225,120 -

Sub Total (585,883,604) (477,627,291)

Cash Generated from Operation (20,269,861) 256,408,498

Direct Taxes Paid (81,146,619) (56,452,692)

Net Cash from operating activities (101,416,480) 199,955,806

B. Cash flow from Investment Activities

Purchase of Fixed Assets (39,234,176) (383,006,568)

Dividend Received 21,738,524 30,000

Interest Received 172,566 390,791

Purchase of Mutual Fund (1,305,000,000) (278,552,750)

Sales of Mutual Fund 1,555,565,717 -

Investment in Subsidiaries (1,055,560,418) -

Sale of Fixed Assets 2,027,412 1,791,180

Net Cash Used in Investing Activities (820,290,375) (659,347,347)

62


Particulars 31.03.2008 31.03.2007

C. Cash flow from Financing Activities

Dividend Paid (72,226,800) (70,220,500)

Tax on Dividend (12,274,945) (9,848,425)

Interest and Finance Charges Paid (86,520,940) (120,764,106)

Bank Borrowing (Working Capital) 697,438,392 (140,353,789)

Proceeds from other Borrowing (573,675,434) 829,359,231

Increase In Share Capital 53,684,211 -

Increase In Share Premium 901,789,344 -

Net Cash from Finanacing Activities 908,213,828 488,172,411

Net (Decrease)/ Increase in Cash and Cash Equivalent (13,493,027) 28,780,870

Cash on Hand -Opening Balance 79,115,600 50,334,730

Cash on Hand -Closing Balance 65,622,573 79,115,600

Notes to the cash flow statement for the year ended on 31.03.2008

(1) The Cash flow statement has been prepared in accordance with the requirements of Accounting Standard - 3 "Cash flow statement" issued by the Institute of Chartered Accountants of India.

(2) Figures in brackets indicate cash outgo.

(3) The previous year figures have been regrouped/restated wherever necessary to conform to this year's classification.

(4) The Company has invested Rs. 10555.60 Lacs (P.Y. Rs. 285.53 Lacs) in its Subsidiaries for Cash.



63


Balance Sheet Abstract And Company's General Business Profile

I Registration Details

Registration No. 24052

Status Code 04

Balance Sheet Date 31st March 2008

II Capital raised during the year

(Amount Rs. in Thousands)

Public Issue 53684

Right Issue NIL

Bonus Issue NIL

Private Placement NIL

III Position of Mobilization and Development of Funds


Total Liabilities 6047893

Total Assets 6047893

Source of Funds

Paid up Capital 254314

Reserves & Surplus 3820297

Secured Loans 1241731

Unsecured Loans 600600

Deferred Tax Liability 130951

Application of Funds

Net Fixed Assets 1375064

Investments 1090054

Net Current Assets 3582775

Miscellaneous Expenditure NIL

Accumulated Losses NIL

IV Performance of Company


Turnover (Including other income) 6093551

Total Expenditure (Including prior year expenses) 5396028

Profit before tax 474204

Profit after tax 375971

Earning per Share (Equity) (Annualised) 1.55

Dividend Rate Nil

V General Names of Three Principal Products

Item Code No. (ITC Code) 32041751

Product Description Pigment Green


Product Description Cypermethrin


Product Description Acephate

64


Consolidated Accounts

65


Auditors' ReportTo,The Board of DirectorsMeghmani Organics LimitedAhmedabad.

We have audited the attached Consolidated Balance Sheet of MEGHMANI ORGANICS LIMITED (the Company) and its Subsidiaries (collectively referred to as "the Group"), as at 31st March, 2008 and also the Consolidated Profit and Loss Account and the Consolidated Cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management and have been prepared by the Management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that, we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. Financial statements/consolidated financial statements of Subsidiaries which reflect total assets of Rs. 173.54 Crore as at 31st March, 2008 , total revenue of Rs. 2.99 Crore and cash flows amounting to Rs. 28.79 Crore for the year then ended, have been audited by us.

2. We did not audit the financial statements of one Subsidiary, whose financial statements /consolidated financial statements reflect total assets of Rs. 5.16 Crore as at 31st March, 2008, total revenue of Rs. 7.27 Crore and Cash flow amounting to Rs. 0.10 Core for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us and our opinion is based solely of other auditors.

3. We have relied on the un-audited financial statements of one Subsidiary whose consolidated financials statements reflect total assets of Rs.35.15 Crore as at 31st March, 2008, total revenue of Rs. 28.91 Crore and Cash flow of Rs. 0.31 Crore for the year then ended. These un-audited financial statements as approved by the respective Board of Directors of these companies have been furnished to us by the management and our report is in so far as it related to the amounts included in respect of the subsidiary, is based solely on such approved un-audited financial statements.

4. We report that the Consolidated Financial Statements have been prepared by the Company's management in accordance with the requirement of Accounting Standards (AS) 21, Consolidated Financial Statements and Accounting Standards (AS) 23, accounting for investments in associates in Consolidated Financial Statements notified by Companies (Accounting Standards) Rules, 2006.

5. Based on our audit as aforesaid and on consolidation of reports of other auditors on the separate financial and on the other financial information of the components and accounts approved by the Board of Directors as explained in paragraph 3 above and to the best of our information and according to the explanations given to us, we are of the opinion that the attached Consolidated Financials Statements give a true and fair view in conformity with the accounting principles generally accepted in India:-

i. In the case of the Consolidated Balance Sheet of the state of affairs of the Company as at 31st March, 2008

ii. In the case of the Consolidated Profit and Loss Account, of the Profit of the Company for the year ended on that date AND

iii. In case of Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

For M/S PATEL & KHANDWALACHARTERED ACCOUNTANTS

M. M. KHANDWALAPlace: Ahmedabad PARTNERDate: 23.05.2008 Membership No. 32472

66


Schedule As at

No. 31.03.2008

Particulars Rs. Rs.

SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 254,314,211

Reserves and Surplus 2 3,748,700,207

4,003,014,418

Minority Interest 400,895,770

Loan Funds

Secured Loans 3 1,465,820,865

Unsecured Loans 4 623,349,580

2,089,170,445

Deferred Tax Liability 130,687,505

TOTAL 6,623,768,138


Fixed Assets 5

Gross Block 2,755,659,217

Less: Depreciation 1,004,897,211

Net Block 1,750,762,006

Capital Work in progress 368,984,883

2,119,746,889

Investments 6 45,577,750


Inventories 7 955,302,789

Sundry Debtors 8 2,646,897,438

Cash and Bank Balances 9 361,087,874

Loans and Advances 10 1,470,753,907

Total Current Assets 5,434,042,008

Less : Current Liabilities & Provisions

Liabilities 11 883,410,920

Provisions 12 92,187,589

Total Current Liabilities 975,598,509

Net Current Assets 4,458,443,499

Significant Accounting Policies and Notes

forming part of accounts 23

TOTAL 6,623,768,138



Consolidated Balance Sheet as at 31st March, 2008

67


Consolidated Profit and Loss Account for the year ended on 31st March, 2008

Schedule 31.03.2008

Particulars No. Rs.

Income

Gross Sales 6,509,817,984

Less: Excise Duty 476,571,463

Less: VAT 32,085,611

Net Sales 13 6,001,160,910

Other Income 14 167,152,491

Increase/(Decrease) in Stock 15 (194,800,069)

Total Income 5,973,513,332

Expenditure

Trading Purchases 16 832,847,843

Raw Materials Consumption 17 3,118,625,704

Manufacturing Expenses 18 553,046,551

Employees Emoluments 19 134,332,406

Administration Expenses 20 140,470,512

Selling and Distribution Expenses 21 483,992,735

Financial Expenses 22 155,659,250

Depreciation 149,114,811

Total Expenditure 5,568,089,812

Profit Before Tax 405,423,520

Payment & Provision of Current Tax 80,382,548

Fringe Benefit Tax 2,543,862

Deferred Tax 16,374,841

Profit After Tax 306,122,269

Minority Interest (1,374,157)

Profit available for Appropriation 307,496,426

Appropriations :

Transfer to General Reserve 40,000,000

Proposed Dividend 76,294,263

Dividend Tax 12,966,210

Profit carried forward to Balance Sheet 178,235,953

Notes forming part of accounts 23

Total 307,496,426

Basic and Diluted Earning per share of face

value of Re. 1 each (in Rupees) 1.27



68


As at

31.03.2008

Particulars Rs.


Authorized Share Capital :

370,000,000 Equity Shares of Rs. 1/- (PY Rs. 1/-) each 370,000,000

(P.Y 370,000,000)

Issued Subscribed and Paid Up Share Capital :

254,314,211 Equity Shares of Rs. 1/- (PY Rs. 1/-) Each Fully paid up 254,314,211

(P.Y. 200,630,000)

Total 254,314,211

Of the above :-

(1) 36,000,000 Equity Shares of Rs. 1/- each issued as Bonus shares by capitalization of Profit and Loss Account in

the ratio of 9:14.

(2) 23,000,000 Equity shares of Rs. 1/- each issued to new stream of promoters on the Right basis.

(3) 69,362,980 Equity Shares of Rs. 1/- each issued on private placement basis to Investors and Core Promoters.

(4) 18,432,980 Equity Shares of Rs. 1/- each were bought back at the rate of Rs. 8.50 per share.

(5) 34,700,000 Equity Shares of Rs. 1/- each were issued as Initial Public Offer (IPO) at Singapore under depository

receipt mechanism.

(6) 53,684,211 Equity Shares of Rs. 1/- each were issued as Initial Public Offer (IPO) to list its Equity Shares on Indian

Stock Exchanges.

Schedule - 2 - RESERVES AND SURPLUS

(1) Securities Premium Account

As per last year accounts 663,258,951

Add : Addition During the Year 901,789,344

1,565,048,295

(2) Capital Reserve


(3) General Reserve


Add : Transferred from Profit and Loss Account 40,000,000

Add : Adjusted Gratuity Provision (Earlier Years) 1,743,914

434,270,348

(4) Capital Redemption Reserve


(5) Currency Translation Reserve

As per last year accounts (44,205)

Add : Current year effect (1,016,721)

(1,060,926)

Schedules 1 to 12 annexed to and forming part of the Consolidated Balance Sheet as at 31st March 2008

69



As at

31.03.2008

Particulars Rs.

(6) Profit & Loss Account

As per last year accounts 1,550,651,540

Add : Surplus for the year Brought Forward 178,235,953

1,728,887,493

Total 3,748,700,207

Schedule - 3 - SECURED LOANS

Working Capital Facilities from Banks :

In Indian Currency 1,080,667,454

In Foreign Currency 385,153,411

Total 1,465,820,865

Notes : 1. Working capital facilities from State Bank of India, HDFC Bank Limited and ICICI Bank Limited

(Collectively known as Consortium Bankers) are secured by

(a) First Pari Passu charge created on 25.05.2005 to State Bank of India ( with HDFC Bank Limited and ICICI Bank Ltd.) for Rs. 1553.50 million by way of hypothecation of the entire stock of raw material, work in process, finished goods, stores and spares and receivables now stands modified and increased to Rs. 2106.50 million in favour of State Bank of India (Rs. 1369.20 million), HDFC Bank Limited (Rs. 379.10 million) and ICICI Bank Limited (Rs. 358.20 million).

(b) First Pari Passu charge on immovable properties to State Bank of India ( with HDFC Bank Limited and ICICI Bank Ltd.) as collateral security for the working capital facilities aggregating Rs. 1553.50 million has been extended to secure working capital facility up to Rs. 2106.50 million.

(c) The indenture of the mortgage created on immovable properties are located at :

(i) Plot No. 168,180,183 and 184 of GIDC Industrial Estate Vatva, Ahmedabad;

(ii) Block No. 402,403,404 and 452 at Village Chharodi, Taluka Sanand, District Ahmedabad

(iii) Plot No. 21 & 21/1 of GIDC Industrial Estate Panoli, Taluka Ankleshwar,

(iv) Plot No.5001/B of GIDC Industrial Estate, Ankleshwar

2. Corporation Bank has ceased to be the member of Consortium Banks.

3. An exclusive charge by way of hypothecation has been created in favour of Security Trustee - Unit Trust of India investment advisory services to secure External Commercial Borrowing of US $ 3 Million granted by ICICI Bank Limited - Singapore.

4. Term loan in respect of Subsidiary Company secured by exclusive charge of all movable and immovable fixed assets of Subsidiary Company Meghmani Energy Limited located at Village - Chharodi, Taluka - Sanand, District Ahmedabad - 382170.


From Bank - In Foreign Currency 200,600,000

From Bank - In INR 400,000,000

From Corporate 22,749,580

Total 623,349,580

Notes : 1. Working capital facilities from ABN AMRO Bank given to Subsidiary Company secured by corporate Guarantee given by Holding company

70



71



As at

31.03.2008

Particulars Rs.


Quoted Equity Shares fully paid up :

2,000Equity Shares of Saket Project Limited of Rs. 100/-

each (Market Value of the Investment is Not Available) 20,000

Sub Total (a) 20,000

Unquoted Equity Shares fully paid up :

500 Equity Shares of Green Environment Services

Co. Op. Society Limited of Rs. 10/- each 5,000

4 Equity Shares of Alaukik Owners Association of Rs. 100/- each 400

8,200 Equity Shares of Lanzorate Finance Limited of Rs. 10/-each 82,000

10 Equity Shares of Vellard View Premises Co. Op. Society

Limited of Rs. 50/- each 500

2,000 Equity Shares of Suvikas Peoples Co-Op. Bank Limited of

Rs. 50/- each 100,000

100 Equity Shares of Sanand Eco Project Limited of Rs. 10/- each 1,000

491,585 (Previous year 400,00) Equity Shares of Bharuch Eco Aqua

Infrastructure Limited of Rs. 10/- each 4,915,850

14,000 Equity Shares of Bharuch Environ Infrastructure Limited

of Rs. 10/- each 140,000

30,000 Equity Shares of Panoli Enviro Technology Limited of

Rs. 10/- each 300,000

Sub Total (b) 5,544,750

Government Securities

National Savings Certificates 13,000

Sub Total (c) 13,000

Other Current Investment

DSPML SBF 40,000,000

Sub Total (d) 40,000,000

Total 45,577,750

Schedule - 7 - INVENTORIES

(As taken, valued and certified by the Management)

Stock of Raw Materials 280,840,657

Stock of Trading Goods 102,375,663

Stock of Work In Process 232,650,516

Stock of Finished Goods 299,571,638

Stock of Stores, Packing & Others 39,864,315

Total 955,302,789

72



As at

31.03.2008

Particulars Rs.

Schedule - 8 - SUNDRY DEBTORS

(Unsecured and considered good)

Exceeding Six Month 399,288,088

Others 2,262,609,350

(Includes Rs. 159.14 Lacs due from firm or a Company

in which some of the Directors are interested)

2,661,897,438

Less : Provision for Doubtful Debts (15,000,000)

Total 2,646,897,438


Cash on hand 1,322,909

Balance with Schedule Banks in Current Accounts 346,225,384

Deposits with Schedule Banks 13,539,581

Total 361,087,874



Export Benefit Receivables 73,778,906

Staff Advances 5,292,294

Balance with Central Excise 153,038,272

Deposits 41,762,401

Advance Payment of Income Tax (Net) 53,565,054

Other Current Assets 295,518,611

Advance Payment to Vendors 847,798,369

Total 1,470,753,907


Sundry Creditors (Trade) 777,545,380

IPO Refund Payable 352,450

Other Trade Payable 55,595,824

Statutory Liabilities 49,517,266

Call in Advance 400,000

Total 883,410,920


FBT Provision (Net of Advance payment) 410,436

Provision for Employee Benefit 2,516,680

Dividend Payable (Proposed) 76,294,263

Corporate Dividend Tax Payable 12,966,210

Total 92,187,589

73


Schedules 13 to 22 forming part of the Consolidated Profit and Loss Account For the year ended on 31st March, 2008

As on

31.03.2008

Particulars Rs.

Schedule - 13 -SALES

Manufacturing Goods

Export Sales 3,303,171,949

Local Sales 1,485,314,433

Other Sales 30,528,043

4,819,014,425

Trading Goods

Export Sales 1,133,717,016

Local Sales 48,429,469

1,182,146,485

Total 6,001,160,910

Schedule - 14 - OTHER INCOME

D E P B Benefit 89,062,620

Duty Drawback 820,572

Gain on Forex Derivatives 46,577,468

Gain on Forward Contracts 412,182

Interest Received Others 1,620,650

Rent Received 178,748

Miscellaneous Income 5,949,226

Interest Received On F D R 226,784

Dividend Income 21,738,524

Gain from Sale of Investment 565,717

Total 167,152,491

Schedule - 15 - INCREASE / (DECREASE) IN STOCK

Opening Stock of Finished Goods 441,830,087

Opening Stock of Trading Goods 10,415,787

Excise Duty On Stock of Finished Goods 58,910,156

Opening Stock of Work In Process 246,888,705

758,044,735

Closing Stock of Finished Goods 248,181,982

Closing Stock of Trading Goods 31,022,512

Excise Duty On Stock of Finished Goods 33,058,245

Goods in Transit 18,331,411

Closing Stock of Work In Process 232,650,516

563,244,666

Total (194,800,069)

74


Consolidated Profit and Loss Account

As on

31.03.2008

Particulars Rs.

Schedule - 16 - TRADING PURCHASES

Trading Purchase 832,847,843

Total 832,847,843

Schedule - 17 - RAW MATERIALS CONSUMPTION

Raw Materials Consumed 3,057,980,382

Other Purchase Related Expenses 60,645,322

Total 3,118,625,704

Schedule - 18 - MANUFACTURING EXPENSES

Fuel Consumption 54,650,576

Diesel Consumption 13,210,317

Pollution Expenses 63,639,460

Stores Consumed and Repairs 83,185,334

Power Consumption 301,572,139

Other Manufacturing Expenses 36,788,725

Total 553,046,551

Schedule - 19 - EMPLOYEES EMOLUMENTS

Salary & Wages 116,203,131

Statutory Contribution 6,576,686

Staff Welfare Expenses 11,552,589

Total 134,332,406

Schedule - 20 - ADMINISTRATIVE EXPENSES

Rent , Rates & Taxes 2,941,537

Travelling Expenditures 19,067,772

Postage and Telephone 12,194,716

Insurance Premium 6,863,752

Stationery & Printing expenses 4,650,581

Legal & Professional Fees 12,860,613

Advertisement Expenses 2,549,767

Audit Fees 1,059,967

Deferred Expenses Written Off 501,040

Donations 2,543,460

Repairs & Maintenance to others 1,376,718

Directors Remuneration 45,779,280

Directors Sitting Fees 410,000

Vehicle Expenses 7,949,999

Singapore Listing Related Expenses 5,249,364

Listing related expenses 208,527

Software expenses 1,483,924

Exchange Rate Difference Others (55,923)

Bad debts Written off and Provision (net) 1,047,488

Loss on Sale of Assets (net) 2,812,584

Other Expenses 8,975,346

Total 140,470,512

75


Consolidated Profit and Loss Account

As on

31.03.2008

Particulars Rs.

Schedule - 21 - SELLING AND DISTRIBUTION EXPENSES

Export Clearing & Forwarding Expenses 84,937,582

Transportation Expenses 123,983,450

Marine Insurance 2,669,617

Sales Commission 19,461,973

Business Promotion Expenses 8,252,573

Packing Material Consumption 159,115,533

Other Selling Expenses 82,933,636

Travelling Expenditures 2,124,671

Vehicle Expenses 513,700

Total 483,992,735

Schedule - 22 - FINANCIAL EXPENSES

Interest (net) 143,151,447

Other Financial Charges 12,507,803

Total 155,659,250

76


Schedule - 23

Significant Accounting Policies To The Consolidated Balance Sheet And Profit And Loss Accounts

1. Principles of consolidation

The Consolidated Financial statements relate to Meghmani Organics Limited ("the Company") and its subsidiary companies. The Consolidated financial statements have been prepared on the following basis :-

a) The financial statements of the Company and its Subsidiary Companies are combined on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses after fully eliminating intra-group balances and intra group transactions in accordance with Accounting Standard (AS) 21 - "Consolidated Financial Statements".

b) In case of Foreign Subsidiaries being non integral operations, revenue items are consolidated at the average of rate prevailing during the year. All assets and liabilities are converted at the rate prevailing at the end of the year. Any exchange rate difference arising on consolidation is recognised in the exchange fluctuations reserve.

c) The difference between the costs of investment in Subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognised in the financial statements as Good will or Capital Reserve as the case may be.

d) The difference between the proceeds from disposal of investment in Subsidiary and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the consolidated statement of Profit and Loss account as exceptional item being the profit or loss on disposal of investment in subsidiary.

e) Minority interest's share of the net profit of Consolidated Subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attribute to shareholders of the Company.

f) Minority interest's share of the net assets of Consolidated Subsidiaries is identified and presented in the consolidated balancesheet separate from liabilities and the equity of the Company's shareholder.

g) As far as possible the Consolidated Financial Statements are prepared using accounting policies for like transactions and other events in similar circumstances and are presented in the same manner as the Company's separate financial statements.

2. Investments other than in subsidiaries and associates have been accounted as per Accounting standard (AS) 13 "Accounting for Investments".

3. Other significant accounting policies :-

These are set out under "Significant accounting policies "as given in the Standalone Financial statements of Meghmani Organics Limited.".

4. This being the first year of Consolidation of Accounts, Previous year figures are not mentioned.

Schedule - 23

Notes On Accounts To Consolidated Balance Sheet And Profit & Loss Account

1. The Subsidiary Companies considered in the financial statements are :-

Name of the subsidiaries Country of Proportion of

ownership ownership interest

Meghmani Finechem Limited # India 73%

Meghmani Energy Limited # India 70%

Meghmani Europe BVBA Belgium 99%

Meghmani Organics USA Inc. USA 100%

# Percentage of ownership is calculated on the basis of voting power as on the balance sheet date.

77


Notes Forming Part of Accounts (contd...)

2. DEFERRED TAX

Rs. in Lacs

March 31, 2008 March 31, 2007


Deferred Tax Assets (103.30) (163.53)

Net position 1306.88 1156.27

The movement for the relevant periods in the Company's Deferred Tax position is as follows:

Rs. in Lacs

March 31, 2008 March 31, 2007

At the beginning of period 1156.27 1193.18

Charge to Profit & Loss Account for the period 163.75 (36.91)

Debited to Pre-Operative Expenses Capitalised (13.14) -

At the end of period 1306.88 1156.27

Deferred Tax Liabilities are mainly represented by the tax effect of the excess of net book value over tax written down value of certain qualifying assets. The movement for the relevant periods in the Company's Deferred Tax Liabilities is as follows:

Rs. in Lacs

Tax depreciation Totals

At April 1, 2007 1319.80 1319.80

Charge to expenses for the year 90.38 90.38

At March 31, 2008 1410.18 1410.18

Deferred Tax Assets are mainly represented by the tax effect of provision for doubtful receivables / bad debts written off and others include Liability for leave encashment and retirement benefits and disallowance under Section 43B & 40(b) of Income Tax Act. The movement for the relevant periods in the Company's Deferred Tax assets is as follows:

Rs. in Lacs

Provision for Others Total

doubtful debts

At April 1 2007 (50.98) (112.55) (163.53)

Charge to Income/Expenses for the year 0 60.23 60.23

At March 31 2008 (50.98) (52.32) (103.30)

3. EARNING PER SHARE

Date Particulars No. of Shares No. of Shares

Issued Outstanding

1st. April, 2007 Balance at beginning of year 200,630,000 200,630,000

19th June 2007 Issue of Shares for cash 53,684,211 254,314,211

31st March 2008 Balance at end of period 254,314,211 254,314,211

Computation of Weighted Average shares

(200,630,000 x 80/366) + (254,314,211 x 286/366) = 242,579,957 shares

Net Profit After Minority Interest 307,496,424

Earning Per Share 1.27

78


4. FINANCIAL DERIVATIVES

The Company uses derivative contracts to manage its foreign currency exposures relating to the underlying transactions and firm commitments. The Company doesn't enter into any derivative instruments for trading or speculation purpose. The derivative contracts outstanding as on 31st, March 2008 aggregates to USD 38.25 Millions and Euro 34.50 Millions for the maturities ranging from 23 months to 57 months.

5. SEGMENT REPORTING

For management purpose, the Company is currently organised into two major operating divisions - Pigments and Agro Chemicals. These divisions are the basis on which the Company reports its primary segment information.

Principal activities are as follows:

Pigments division

To Manufacture and Distribute Phthalocynine Green 7, Copper Phthalocynine Blue (CPC), Alpha Blue and Beta Blue.

Agrochemicals division

To Manufacture and Distribute Technical, Intermediates and Formulations of Insecticides.

Basic Chemical

Basic Chemicals undergo processing in many stages before being converted into downstream Chemicals which are used by the Agriculture sector, industry and also directly by the consumers. The Caustic - Chlorine to be manufactured fall under the category of basic chemicals.

(a) Analysis By Business Segment

Segment revenue and expense:

Segment revenue and expense are the operating revenue and expense reported in the Company's profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital expenditure includes the total cost incurred to acquire property, plant and equipment directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of trade payables and accrued expenses.

Inter-segment transfers:

Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market rates. These transfers are eliminated at the Company level.


79



Figures in lacs

Pigments Agro Basic Others * Elimination Total

Chemicals Chemicals

Revenue

External sales 22900.41 25813.61 - 11297.59 - 60011.61

Inter-Segment Sales 3946.39 3367.36 - 737.67 (8051.42) -

Total Revenue 26846.80 29180.97 - 12035.26 (8051.42) 60011.61

Results

Segment Results 3456.34 1787.63 - 709.30 (48.05) 5905.22



Finance Cost - - - - - (1556.59)

Investments Income - - - - - 217.39




Deferred Tax Expenses (163.75)

Profit after tax 3061.22

Other information Pigments Agro Basic Others Elimination Total

Chemicals Chemicals

Capital Addition 1831.75 699.29 5372.29 1382.67 (357.27) 8928.73

Depreciation (802.10) (612.60) - (76.45) - (1491.15)

Balance sheet Pigments Agro Basic Others Elimination Total

Chemicals Chemicals

Assets

Segment Assets 24253.63 27146.61 14584.50 12580.88 (4068.54) 74497.08

Un-allocable assets 1496.60


Liabilities

Segment liabilities 3767.39 3709.40 331.87 4556.40 (2609.08) 9755.98

Un-allocable Liabilities 22198.58

Consolidated total liabilities 31954.56

Non Cash Expenses other than Depreciation & Amortization

Unrealized Foreign Exchange Gain 443.54 219.04 75.81 - 738.39

Loss on Sale of Fixed Assets (Net) 2.12 26.00 - - 28.12

Un-allocable Non Cash Expenses

Loss on Sale of Investment 5.66

Diminution in Investment 1.80

! Others includes trading activity and Power Generation

! Pigment and Agro Chemical segment are exclusive of Power Generation units on the basis of its consumption.

! As per Accounting Standard (AS) 17 "Segment Reporting" the Company has reported segment information on consolidated basis including businesses conducted through its Subsidiaries.


80


(b) Analysis By Geographical Segment

(1) Segment revenue:

Segment revenue is analysed based on the location of customers regardless of where the goods are produced. The following provides an analysis of the Company's sales by geographical Markets:

Particulars Rs. In Lacs

Outside India 44368.89

Within India 15642.72

Total 60011.61

(2) Segment assets and capital expenditure:

Segment assets and capital expenditure are analysed based on the location of those assets. Capital expenditure includes the total cost incurred to purchase property, plant and equipment.




Total 74497.07

(3) Segment Liability:




Total 9755.98

(4) Segment Capital Expenditure:




Total 9506.20

6. ADDITIONAL INFORMATION

(1) The estimated amount of contracts remaining to be executed on capital accounts of Rs. 19745.60 Lacs is not provided for.

(2) CONTINGENT LIABILITIES

a) Contingent liabilities in respect of Bank Guarantee of Rs. 703.32 Lacs and in respect of Letter of Credit opened and outstanding with Bank of Rs. 7723.77 Lacs is not provided for in the accounts.

b) The Company has given Corporate guarantee as under.

Sr. Date of Guarantee Guarantee Favouring Amount Guarantee on

no account of

1 04.09.2006 ABN AMRO Bank EURO 2 Million Meghmani Europe BVBA

(INR 1269 lacs) (SPRL) for Working

Capital.

2 21.02.2008 ABN AMRO Bank INR 3300 lacs Letter of Credit (LC) limit

to Meghmani Finechem

Limited (MFL) in favour

of AKCC Japan.

3 25.02.2008 State Bank of India INR 1500 lacs Three LCs opened on

Overseas Branch, account of MFL favouring

Ahmedabad JOC International - China,

Lanxess - Germany,

Human Techno - Japan.

Total INR 6069 lacs


81


c) Contingent Liabilities in respect of other statutes.

Name of Statute Nature of Dues Amt. in Lacs Forum where Dispute

is pending

Income Tax Act. Income Tax

(A.Y. 1999-2000 to (Appeals/ ITAT )

A.Y. 2005-2006)

Central Excise Tariff Act. Excise Duty 451.60 Commissioner of Central Excise

/ Director General of Central

Excise /Audit team of Central

Excise.


In view of retrospective amendment of Section 80 HHC of Income Tax Act, the department has issued Notice under Section 148 of the Income Tax Act for Assessment year 1999-2000. The Company has filed the revised return of income. The assessment of A.Y. 1999-2000 is completed and the Income Tax Department has raised the additional demand of Rs. 167.46 Lacs. The Company has preferred an appeal before commissioner of Income Tax (Appeals) Ahmedabad, which is pending for hearing.

The Company has also received notice under section 153 C of the Income Tax Act requiring it to file its returns of income for Assessment Years 2000-01 to 2005-06. The said assessments are completed and the Income Tax Department has raised the demand of Rs. 983.69 Lacs. The demand has taken place mainly due to retrospective amendment in Section 80 HHC of the Income Tax Act. The Company has preferred an appeal before Commissioner of Income Tax (Appeals) against the said order which is pending for hearing. The liability is contingent in nature the same is not provided.

d) Various employee / ex-employee of the Company, has filed different legal suits in labour court against the Company. The total claim amount is Rs. 215.17 lacs plus interest wherever applicable. The said claims are not accepted by the Company and the proceedings are pending.

1151.14 Commissioner of Income Tax.


·Holding Company :Nil

·Enterprises in which directors & Key Managerial Personnel [KMP]

have significant influence :

Alpanil Industries

Ashish Chemicals

Tapsheel Enterprise

Meghmani Dyes and Intermediates Ltd.

Meghmani Industries Limited

Meghmani Chemicals Limited

Fidelity Exports Private Limited

Vanguard Overseas Limited

·Key Managerial Personnel Mr. Jayanti M Patel

Mr. Ashish Soparkar

Mr. Natwarlal M Patel

Mr. R M Patel

Mr. Anand I Patel

Mr. Ashvin Raythatha


82


· Relatives of Key Managerial Personnel Ms. Deval Soparkar

(Employee) Mr. Maulik J Patel

Ms. Vaishakhi R Patel

Mr. Kaushal Soparkar

Mr. Karna R Patel

· Relatives of Key Managerial Personnel Mr. K M Patel

(Consultant) Mr. Saurabh Soparkar

31.03.2008 31.03.2007

Rs. in lacs. Rs.in lacs

·Transaction with Enterprises in which

Directors & KMP have significant influence

during the year :-



·Key Management Personnel Salary :- 457.79 456.64

·Relatives of Key Management Personnel :-

Salary 14.14 9.81

Professional fees and service 1.58 2.93

Outstanding balances as on 31.03.2008 31.03.2007

Rs. in lacs. Rs. in lacs

With Enterprises in which directors &

KMP have significant influence



Advance Payment 0.00 0.00

Disclosure in Respect of Material Related Party Transaction during the year -

Sr. Name of Party Nature of Amount In Closing

No Transaction Rs. Lacs Balance

Rs. Lacs

1 Alpanil Industries Purchase of Finished Goods 192.24 25.18

2 Ashish Chemicals Purchase of Raw Material 186.12 2.79

3 Ashish Chemicals (Sales) Sales of Finished Goods 105.11 40.10

4 Ashish Chemicals EOU Unit - II Sales of Finished Goods 170.98 86.32


83


Particulars 31.03.2008 Rs.

A. Cashflow from Operating Activities

Net Profit Before Tax and Prior Period Adjustment 405,423,520

Adjustment for :

Depreciation 149,114,811

Unrealised Foreign Exchange Gain (73,838,724)

Interest and Finance Charges 155,659,250

Dividend Received (21,738,524)

Interest Received (226,784)

Gain on Sale of Investment (565,717)

Loss on Sale of Fixed Assets (Net) 2,812,584

Sub Total 211,216,896

Operating Profit before working capital changes 616,640,416

Adjustment for:

Inventories (8,161,307)

Debtors (716,245,671)

Loans and Advances (756,235,605)

Curent Liabilities 381,480,586

Provision for Employee Benefit 1,238,373

Sub Total (1,097,923,624)

Cash Generated from operation (481,283,208)

Direct Taxes Paid (81,163,257)

Net Cash from operating activities (562,446,465)

B. Cash flow from Investment Activities

Purchase of Fixed Assets (473,681,930)

Dividend Received 21,738,524

Interest Received 226,784

Purchase of Mutual Fund (1,305,000,000)

Sales of Mutual Fund 1,305,565,717

Investment in Subsidiaries (1,070,428)

Investment in Others 221,131,150

Sale of Fixed Assets 2,027,412

Net Cash Used in Investing Activities (229,062,771)

C. Cash flow from financing Activities

Dividend paid (72,226,800)

Tax on dividend (12,274,945)

Interest and Finance Charges Paid (151,052,806)

Bank Borrowing (Working Capital) 910,372,915

Proceeds from other Borrowing (560,225,854)

Consolidated Cash Flow Statement for the year ended 31st March 2008

84


Particulars 31.03.2008 Rs.

Increase In Share Capital 53,684,211

Increase In Share Premium 901,789,344

Net Cash Used in Finanacing Activities 1,070,066,065

Net (Decrease)/ Increase in Cash and Cash Equivalent 278,556,829

Cash on Hand -Opening Balance 82,531,045

Cash on Hand -Closing Balance 361,087,874


(1) The Cash flow statement has been prepared in accordance with the requirements of Accounting Standard - 3 "Cash flow statement" issued by the Institute of Chartered Accountants of India.

(2) Figures in brackets indicate cash outgo.

(3) The previous year figures have been regrouped/restated wherever necessary to conform to this year's classification.

Consolidated Cash Flow Statement for the year ended 31st March 2008 (Contd...)







Company Secretary


85

MEGHMANI ENERGY LIMITED

Directors' Report

The Members,

Your Directors have pleasure in presenting Second Annual report and Audited Statement of Accounts of the Company for the Financial Year ended on 31st March 2008.

FINANCIAL RESULTS

Rs. in Mn

PARTICULARS YEAR ENDED ON

MARCH 31, 2008

(a) Sales, Other Income & Increase / Decrease in Stock 29.91

(b) Profit Before Interest & Depreciation 4.45

(c) Interest (Net)/ Financial Expenses 3.77

(d) Depreciation 4.19

(e) Profit Before Tax (3.51)

(f) Payment / Provision for Current Tax and FBT 0.02

(g) Deferred Tax Expenses/(Income) 1.05

(h) Profit After Tax (4.58)

DIVIDEND:-

This being the first year of operation and the company has incurred loss of Rs. 4.57 million. Your Directors regret their inability to recommend dividend.

OPERATIONS:-

The Net Sales Turn over of the Company is Rs. 28.59 million.

FINANCE

During the year ICICI Bank Ltd.- Bahrain disbursed External Commercial Borrowing of US $ 25,00,000. The said term loan is to be secured by exclusive charge on all movable and immovable fixed assets purchased out of this facility.

FIXED DEPOSITS:-




a) That the applicable accounting standards have been followed in the preparation of final accounts and that there are no material departures.

b) That appropriate accounting policies have been selected and applied consistently and such judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at March 31, 2008 and of the profit of the Company for the year ended on March 31, 2008.

c) That proper and sufficient care has been taken 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.


ENERGY, TECHNOLOGY, AND FOREIGN EXCHANGE

The information to be disclosed under Section 217 (1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in The Report Of Board Of Directors) Rules, 1988, with respect to energy, technology, and foreign exchange is annexed separately to form part of this report.

86


DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association, Mr. Jayanti Patel andMr. Ashish Soparkar are retiring by rotation at this Annual General Meeting and being eligible offer themselves forre-appointment.


The Company has not employed any individual whose remuneration falls within the purview of limits prescribed under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

AUDITORS


ACKNOWLEDGEMENT

Your directors take this opportunity to express their grateful appreciation for the assistance and support received from Meghmani organics Limited and Meghmani Industries Limited, the bankers, insurance companies, consultants and advisors and all those connected with the Company.

for and on behalf of the Board

Place: Ahmedabad Jayanti Patel

Date : 22.05.2008 Executive Chairman

87


Auditors' Report

To,

The Members of

Meghmani Energy Limited

Ahmedabad.

We have audited the attached Balance Sheet of MEGHMANI ENERGY LIMITED, as at 31st March 2008 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) order, 2003 and (amendment) order 2004 issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, a statement on the matters specified in paragraphs 4 and 5 of the said order is annexed thereto.

Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion proper books of accounts as required by the law have been kept by the Company so far as appears from our examination of the books of the Company.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standard referred to in Section 211 (3C) of the Companies Act 1956.

e) On the basis of the written representations received from the directors as on 31st March 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the account read in conjunction with the notes and schedules attached thereto, give the information required under the Companies Act, 1956 in the manner so required and present a true and fair view :-

i. In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2008

ii. In the case of the Profit and Loss Account, of the Loss of the Company for the year ended on that date

AND

iii. In case of cash flow statement, of the cash flows for the year ended on that date.



M. M. KHANDWALA


Date: 22nd May 2008 Membership No. 32472

88


Annexure To Auditors' Report

i. (a) The Company has maintained records of fixed assets to show full particulars including quantitative details and situation of fixed assets.

(b) All the fixed assets have been physically verified by the Management during the year. As explained to us no material discrepancies were noticed on such verification.

(c) The Company has not disposed of substantial part of the fixed assets during the year.

ii. (a) The inventories have been physically verified at year end by the management.

(b) According to the information and explanations given to us and in our opinion the procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of the inventories and no serious discrepancies have been noticed on physical verification of inventories as compared to the book record.

iii. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(a) The Company has not given any loan to any party.

(b) The Company has taken the unsecured loans from two companies covered in the register maintained under section 301of the Companies Act 1956. The total amount outstanding at the year end is Rs. 758.55 Lakhs.

(c) The rate of interest and other terms and conditions of unsecured loan are prima fascia not prejudicial to the interest of the Company.

(d) The Company is regular in payment of principal amount and interest wherever applicable.

iv. In our opinion and according to the information and explanations given to us during the course of our audit, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for sale of goods. We have not observed any major weaknesses in internal control system established by the Company.

v. (a) According to the information and explanations given to us we are of the opinion that the particulars of contracts or arrangements referred to in sec.301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature where no comparison is possible.

vi. The Company has not accepted deposits from the public and therefore the directives issued by the Reserve Bank of India and provisions of section 58-A and 58 AA or any other relevant provisions of the Companies Act 1956 and rules framed there under do not apply to the Company.

vii. This being the first year of the commercial operation and the volume of transaction is very less. The Company has carried out internal audit through its own staff, which is in commensurate with size and nature of business of the company.

viii. We have broadly reviewed the books of accounts maintained by the Company, although, no order has been issued by Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act 1956. We are of the opinion that prima facie records have been maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including, Provident Fund, Investor Education Protection Fund, Employees' State Insurance, Income tax, Sales Tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Cess, and any other statutory dues as applicable to it with the appropriate authorities.

According to the information and explanation given to us no undisputed amount payable in respect of Income Tax, Sales Tax, Wealth tax, Custom Duty, Service tax and Excise Duty, were outstanding at the period end for a period of more than six months from the date they become payable.

89


b) According to the information and explanations given to us, there is no disputed dues.

x. The Company is registered for the period less than five years. The Company has not incurred any cash loss in current year and Rs. NIL in previous year.

xi. In our opinion and according to the information and explanations given to us the Company has not defaulted in repayment of dues to a financial institution or bank. The Company has not issued any Debenture.

xii. According to information and explanations given to us, the Company has not granted any loans and advances on the basis of Security by way of pledge of shares, Debentures and other securities.

xiii. In our opinion the Company is not a chit fund or a nidhi /mutual benefit fund/society. The provisions of nidhi / mutual benefit fund/societies are not applicable to the Company.

xiv. In our opinion the Company is not dealing in or trading in shares, securities debentures and other investments hence the provisions of clause 4 (xiv) are not applicable.

xv. As explained to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

xvi. The Company has obtained fresh term loan which is used for the purpose for which it is obtained.

xvii. The Company has not utilized any funds raised on short term basis for long term investments.

xviii. No long-term fund has been used to finance short-term assets.

xix. According to information and explanations given to us, the Company has not made any preferential allotment of any shares to parties and companies covered in the Register maintained under Section 301 of the Act.

xx. According to information and explanations given to us the Company has not issued any Debenture during the year ended on 31st March 2008 and hence no Securities has been created.

xxi. The Company has not raised any money through Public Issue.

xxii. According to information and explanations given to us no fraud on or by the Company has been noticed or reported during the year ended on 31st March 2008.



M. M. KHANDWALA


Date: 22nd May 2008 Membership No. 32472

90


Particulars Sch. No. As at 31.03.08 As at 31.03.07

Rs. Rs.

SOURCES OF FUNDS

Shareholders' Fund

Share Capital 1 40,000,000 40,000,000

Reserves and Surplus 2 -

40,000,000 40,000,000

Loan Funds

Secured Loans 3 100,300,000

Unsecured Loans 4 75,854,936 31,000,000

176,154,936 31,000,000

Deferred Tax liability 1,051,209

TOTAL 217,206,145 71,000,000


FIXED ASSETS

Gross Block 5 205,735,736

Less : Depreciation 4,185,934

Net Block 201,549,802

Capital Work-in- progress 5,108,141 90,891,997

206,657,942 90,891,997

Current Assets , Loans and Advances

Inventories 6 984,436 -

Sundry Debtors 7 17,251,515 -

Cash and Bank Balances 8 8,934,140 2,222,646

Loans and Advances 9 1,749,021 6,148,270

Total Current Assets 28,919,112 8,370,916


Liabilities 10 22,948,706 28,763,953

Provisions 11 1,200 -

Total Current Liabilities 22,949,906 28,763,953

Net Current Assets 5,969,206 (20,393,037)

Miscelleneous Expenditure 12 - 501,040

Profit and Loss Account 13 4,578,996 -

Notes forming a part of accounts 21

TOTAL 217,206,145 71,000,000

As per our attached report of even date For and on Behalf of the Board

For M/S Patel & Khandwala R.M.Patel - Director

Chartered Accountants L.K. Patel - Director

M.M. Khandwala

Partner

M.No.32472

Place : Ahmedabad Date :22 May, 2008 Place : Ahmedabad Date :22 May, 2008


91


Profit And Loss Account

Profit and Loss Acount for the year ended on 31st March , 2008

Particulars Sch. No. 31.03.08 31.03.07

Rs. Rs.

Income

Gross Sales 29,142,270 0

Less : VAT 554,400 0

Net Sales 14 28,587,870 0

Other Income 15 1,319,600 0

Total Income 29,907,470 0

Expenditure

Raw Material Consumption 16 21,719,742 0

Manufacturing Expenses 17 2,449,153 0

Employee Emoluments 18 281,618 0

Administrative Expenses 19 1,008,751 0

Interest 20 3,772,448 0

Depreciation 5 4,185,934 0

Total Expenditure 33,417,647 0

Profit / (Loss) before tax (3,510,177) 0

Less : FBT Provision 17,610 0

Less: Provision for Deffered Tax 1,051,209 0

Profit / (Loss) after tax (4,578,996) 0

Notes forming a part of accounts 21

Earning per share of face value of Rs.10/- Each (1.14) 0




M.M. Khandwala

Partner

M.No.32472

Place : Ahmedabad Date :22 May, 2008 Place : Ahmedabad Date :22 May, 2008

92


Schedule 1 to 13 annexed to and forming part of the Balance Sheet as at 31st March,2008

Particulars As at 31.03.08 As at 31.03.07

Rs. Rs.

Schedule - 1 SHARE CAPITAL

Authorised Share Capital :

5000000 Equity Shares of Rs. 10/- each 50,000,000 50,000,000

Issued subscribed & paid up Capital :

4000000 Equity Shares of Rs. 10/- each fully paid up 40,000,000 40,000,000

(Previour Year - 4000000 shares of 10/- each)

Total 40,000,000 40,000,000

Schedule - 2 RESERVES AND SURPLUS - - -

Schedule - 3 SECURED LOAN

ECB ( Term Loan ) From ICICI Bank Ltd --Bahrain 100,300,000 -

Total 100,300,000 -

Note : 2500000 US $ External Commercial Borrowing from ICICI Bank Ltd.- Bahrain disbursed in June ' 07. The said term loan is secured by exclusive charge on all moveble and immoveble fixed assets purchased out of this facility.

First pari passu charge on all moveble and immoveble fixed assets both present and future.

The indenture of the mortgage to be created on all moveble and immoveble fixed assets are located at :Plot No.398, Village - Chharodi , Taluka- Sanand , District - Ahmedabad -382170.

Schedule - 4 UNSECURED LOAN

Meghmani Organics Ltd 53,105,356 21,700,000

Meghmani Industries Ltd 22,749,580 9,300,000

Total 75,854,936 31,000,000

93



94




Rs. Rs.

Schedule - 6 INVENTORIES

(As taken and certified by the Management )

Stock of Raw Materials (At Cost) 984,436 -

Total 984,436 -

Schedule - 7 SUNDRY DEBTORS

Unsecured and considered good)

Exceeding Six Months - -

Others 17,251,515 -

( Rs. 24.17 lacs (P.Y.Rs.Nil) due from company in

which some of the Directors are interested and

Balance amount due from its Holding Co. Rs.145.52

Lacs (P.Y.Rs Nil )

Total 17,251,515 -

Schedule - 8 CASH AND BANK BALANCES

Cash on hand 184,732 22,526

Balance with Schedule Banks in Current Accounts 8,749,408 2,200,120

Deposits with Schedule Banks

Total 8,934,140 2,222,646

Schedule - 9 LOANS AND ADVANCES

(Unsecured Considered good unless otherwise stated )

Advances recoverable in cash or in kind for a value 1,714,021 6,107,470

to be received

Deposits 35,000 35,000

Advance Payment of FBT (net of provision ) - 5,800

Total 1,749,021 6,148,270

Schedule - 10 CURRENT LIABILITIES

Sundry Creditors (Trade ) 10,068,891 -

Sundry Creditors for Capital Goods 7,763,430 28,734,295

Other Liabilities 5,116,385 29,658

Total 22,948,706 28,763,953

Schedule - 11 PROVISIONS

FBT Provisions ( net of advance payment ) 1,200 -

Total 1,200 -

Schedule - 12 MISCELLENEOUS EXPENDITURE

Preliminery Exp. - 501,040

Total - 501,040

Schedule - 13 PROFIT AND LOSS ACCOUNT

As per last year accounts - -

Add : current year loss 4,578,996 -

Total 4,578,996 -

95


Schedule 14 to 20 annexed to and forming part of the Profit and Loss Accountfor the year ended on 31st March,2008

Particulars As on 31.03.08 As on 31.03.07

Rs. Rs.

Schedule - 14 SALES

Power 14,727,870 -

Steam 13,860,000 -

Total 28,587,870 -

Schedule - 15 OTHER INCOME

Exchange Rate Difference 1,212,500 -

Misc. Income 106,951 -

Vatav/Kasar 149 -

Total 1,319,600 -

Schedule - 16 RAW MATERIAL CONSUMPTION

Raw material consumed 16,473,252 -

Other Purchase related expenses 5,246,490 -

Total 21,719,742 -

Schedule - 17 MANUFACTURING EXPENSES

Labour Charges 1,464,646 -

Boiler Expenses 100,553 -

Coal Handling Expenses 128,045 -

Repairs & maintenance 426,103 -

Factory Expenses 4,310 -

Security Charges 107,360 -

RODM Expenses 218,136 -

Total 2,449,153 -

Schedule - 18 EMPLOYEES EMOLUMENTS

Salary and Wages 251,473 -

Statutory Contributions 9,236 -

Staff Welfare Expenses 20,909 -

Total 281,618 -

Schedule - 19 ADMINISTRATIVE EXPENSES

Travelling Expenditures 14,599 -

Postage & Telephone 7,150 -

Insurance Premium 244,974 -

Stationery & Printing 3,418 -

Legal & Professional fees 125,598 -

Audit Fees 22,472 -

Vehicle Expenses 31,276 -

Conveyance Exp. 285 -

Office Expenses 4,320 -

Priliminary ExpensesWritten Off 501,040 -

Transport Exp. 53,619 -

Total 1,008,751 -

Schedule - 20 INTEREST

Interest on Secured Loan 2,851,849 -

Others 920,599 -

Total 3,772,448 -

96


Schedule - 21


The Financial statements have been prepared to comply in all material aspects in respect with the notified Accounting Standard by companies Accounting Standard Rules, 2006 and the relevant provision of the Companies Act, 1956.

Accounting policies have been consistently applied by the Company.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management's best knowledge of current events and actions, actual results could be differ from these estimates.


A) FIXED ASSETS

(i) Fixed assets are stated at cost of acquisition or construction less accumulated depreciation, including financial cost till such assets are ready for its intended use, less specific grants received and Cenvat Credit availed

(ii) Fixed assets in the course of work-in-progress for production or administrative purposes are carried at cost less any impairment loss. Work in Progress includes expenditure pending for capitalization.

Cost includes land and building improvement costs, related acquisition expenses and construction costs incurred during the period of construction. Depreciation of these assets, on the same basis as the other property assets, commences when the assets are ready for their intended use.

(iii) The exchange rate gain or loss relating to acquisition of capital assets is adjusted to the cost of fixed assets.

(iv) The cost of self-constructed assets includes cost of materials plus any other directly attributable costs of bringing the assets to working condition for its intended use.

(v) Fixed assets are valued at cost less accumulated depreciation amount.

B) DEPRECIATION

Depreciation have been provided at the relevant SLM rates prescribed in the Schedule XIV of the Companies Act 1956 or at a higher rate as per management perception in respect of plant and machinery.

C) REVENUE RECOGNITION

In appropriate circumstances, Revenue is recognised on accrual basis when no significant uncertainty as to determination or realization exists. .Sales of power and steam accounted when the significant risk and reward of ownership of goods have been passed to the buyer and are accounted net of value added tax and rate difference , if any

D) INVENTORIES

Inventories being raw materials are valued at cost on FIFO basis.

E) FOREIGN CURRENCY TRANSACTIONS

(i) Transactions in foreign currencies are recorded in Indian Rupees using the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, recorded monetary balances are reported in Indian Rupees at the rates of exchange prevailing at the balance sheet date. All realised and unrealised exchange adjustment gains and losses are dealt with in the profit and loss account.

(ii) Non monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.


97


F) BORROWING COSTS

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets, wherever applicable. All other borrowing costs are charged to revenue account.

G) PRIOR YEAR EXPENSES AND INCOME

Transactions pertaining to period prior to Current Accounting Year are adjusted through prior year adjustments, if any.

H) RESEARCH AND DEVELOPMENT EXPENSES

Revenue expenditure pertaining to Research and Development is normally charged to Profit and Loss Account. Capital expenditure for research and development which results into creation of assets is included in fixed assets as an intangible assets.

I) EMPLOYMENT RETIREMENT BENEFIT

Contribution to Defined Contribution schemes such as Provident Fund, etc are charged to the Profit and Loss account as incurred. The Company also provides for retirement / post-retirement benefits in the form of leave encashment. Such benefits (Defined benefit plans) are provided for based on actual valuations, as at the balance sheet date, made by the company Termination benefits are recognized as an expense as and when incurred.

J) ACCOUNTING FOR TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the year.

Deferred tax is recognized, on timing difference, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized if there is virtual certainty that sufficient future taxable income will be available against which such assets can be realized. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Such assets are reviewed at each Balance sheet date to reassess realization.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

K) PROVISIONS AND CONTINGENT LIABILITIES

A provision is recognized when it is more likely than not that an obligation will result in an outflow of resources.

Provisions are not discounted to their present value and are determined based on management's estimation of the obligation required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current management estimates.

A disclosure for a contingent liability is made where it is more likely than not that a present obligation or possible obligation would not result in or involve an outflow of resources

4 AUDITORS REMUNERATION

Rs. in Lacs

Audit fees 0.22

Taxation fees 0.05

Total 0.27

5. Being the first year of the company for commercial production, the provision of retirement benefits have been carried out on actual basis and no actuarial valuation is carried out. Hence provision of Accounting Standards-15 (AS-15) to the extend not comply with.


98



a) The Company has incurred losses during the year , hence no provision has been made for income tax however a provision for FBT have been made as per Income Tax Act .

b) DEFERRED TAX

The company has been recognising the deferred tax assets / liabilities in the financial statements in accordance with AS- 22 "Accounting for Taxes on Income" issued by ICAI . During the year the company has charged to the profit and loss account with deferred tax liability of Rs. 11.88 lacs (P. Y. Rs. NIL)

The particulars of deferred tax assets and liabilities are as under :

Particulars Rs. in Lacs

March 31, 2008 March 31, 2007


(Depreciation difference in respect of fixed assets)

Deferred Tax Assets 1.37 0.00

(Expenditure debited to profit and loss account in

current year but allowable for tax purpose

in subsequent year)

Net Deferred Tax Assets/Liabilities 10.52 0.00


Holding Company : Meghmani Organics Ltd.

Relatives of Key Managerial Personnel (KMP) - Consultant : Mr. K M Patel

Company in which key managerial personnel is interested : Meghmani Industries Ltd.

Disclosures of Interest - During the year

Transaction with related parties during the year

Holding company :- Rs. In Lacs

Unsecured loan 505.12

Sales of Energy produced 233.96

Purchased of Capital Goods 8.41

Interest on loan 25.93

Relatives of Key Management Personnel :-

Professional fees and service 0.54

Company in which KMP are interested Rs. In Lacs

Unsecured loan 216.51

Sales of Energy produced 65.07

Interest on loan 10.99

8. The balance of Sundry Creditors, Debtors and Advances are subject to confirmation.

9. The Company has not received any intimation from "Suppliers" regarding the status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures if any relating to amounts paid as at year end together with interest paid / payable as required under the said Act have not been given.

10. Depreciation on fixed assets have been provided on straight line method at the rates prescribed under schedule XIV of the companies act 1956

Depreciation on plant and machinery have been provided at a higher rates considering useful life of assets as per management estimate as under .

Plant and Machinery Useful Life 10Years Rate of Dep. 9.5 %

11. The ECB borrowings of about USD 25.00 lacs has been reinstated at the rate prevailing as on Balance Sheet date and exchange rate difference so arise is credited to profit and loss account .

12. The Company is incorporated on 29 th August,2006 and commercial production started from 1st Jan.2008 hence all expenditure up to 31.12.07 are treated as preoperative expenses and capitalised to respective assets on commencement of commercial production .


99



1) Licensed and Installed Capacity (in MW)

Particulars Licensed Capacity Installed Capacity

Power 3MW 3MW

Note:

Under the New Industrial Policy, No specific license is necessary for the manufacturing of the products mentioned above. The installed capacities are as per the certificates given by the Directors on which Auditors have relied.

2) Details of Turnover and production

Particulars Production Captive Sales Sales

In MT. Consumption In MT Rs. In Lacs

Power 4,311.88 1,034.02 3,277.86 147.28

Steam 30,132.20 16,273.00 13,859.20 138.39

Note : This being first year of company's production , previous year figures are NIL

3) Value of Import on CIF basis Nil

4) Expenditure in Foreign Currencies

Particulars Rs. In Lacs Rs. In Lacs

31.03.08 31.03.07

Consultancy Exp. 0.70 Nil

Interest On ECB Loan 33.55 Nil

Value of imported raw materials, stores and spares - NIL

Value of indigenous raw materials, stores, components and spare parts consumed.

Details of Stock of Raw Material :

Item Opening Opening Closing Closing

Stock in Stock in stock Stock

MT Lacs in MT in Lacs

Coal 0.00 0.00 159.28 7.04

Lignite 0.00 0.00 116.85 2.80

Raw Material Consumed (Imported and Indigenious)

Indigenous Imported

Item 31.03.08 31.03.08 31.03.07 31.03.07

Qty in MT Amt. in Lacs Qty in MT Amt. in Lacs

Coal 2,590.77 111.01 NIL NIL

Lignite 4,078.68 53.72 NIL NIL

Signature to Schedule 1 to 21 For and on behalf of the Board


Chartered Accountants L.K.Patel-Director

Mukesh M Khandwala

Partner

Membership No. 32472

Place: Ahmedabad Date : 22nd May 2008 Place : Ahmedabad Date : 22nd May 2008


100

Cash Flow Statement for the year ended 31st March,2008 (Indirect Method )


Rs. Rs.

A. Cashflow from Operating Activities

Net Loss Before Tax and Prior Period Adjustment (4578996) -

Adjustment for :

Depreciation 4185934 -

Interest Expense 3772448 -

Deffered Tax 1051209 -

Operating Profit before working capital changes 4430595

Adjustment for :

Inventories (984436) -

Debtors (17251515) -

Loans and Advances 4399249 (6142470)

Current Liabilities (5803437) 28763953

Cash Generated from Operation (15209544) 22621483

Direct Taxes Paid (10610) (5800)

Net Cash from Operating Activities (15220154) 22615683

B. Cash Flow from Investment Activities

Purchase of Fixed Assets (119951880) (90891997)

Deferred Revenue Expenses written off 501040 (501040)

Net Cash used in Investing Activities (119450840) (91393037)

C. Cash Flow from Financing Activities

Interest Charges (3772448) -

Proceeds from Long Term Borrowing 145154936 31000000

Increase in share Capital - 40000000

Net cash used in Financing Activities 141382488 71000000

Net Increase/(Decrease) in Cash and Cash Equivalent 6711494 2222646

Cash on Hand- Opening Balance 22526 -

Bank Balance- Opening Balance 2200120 -

Total - Cash on hand - Opening Balance 2222646 -

Cash on Hand- Closing Balance 184732 22526

Bank Balance- Closing Balance 8749408 2200120

Total - Cash on hand - Closing Balance 8934140 2222646


( 1 ) The Cash flow statement has been prepared in accordance with requirements of Accounting Standard - 3 " Cash flow statement" issued by the Institute of Chartered Accountant of India.

( 2 ) Figures in brackets indicate cash outgo.




M.M. Khandwala

Partner

M.No.32472

Place : Ahmedabad Place : Ahmedabad

Date : 22 May 2008 Date : 22 May 2008

101



Balance Sheet Abstract And Company's General Business Profile


Registration No. U40105GJ2006PLC048974

State Code 04


II Capital raised during the year

(Amount Rs. In Thousands)

Public Issue NIL

Right Issue NIL

Bonus Issue NIL


III Position of Mobilisation and Development of Funds



Sources of Funds


Reserve and Surplus 0

Secured Loans 100300000


Deffered Tax Liabilitiy 1188553

Application of Funds


Capital Work in process 5108141

Invsetment 0

Deferred Tax Assets 137344


Misc. Expenditure 0

Accumulated Losses 4578996


Turnover ( including other income) 29907470

Total Expentiture 33417647

Profit Before Tax (3510177)

Profit After Tax (4578996)

Earning per share ( Equity-Annualised) (1.14)

Dividend Rate NIL

V General Names of Products/Services of Company

Generation of Power

ITC Code N.A.

102

MEGHMANI FINECHEM LIMITED

Directors' Report

To,

The Members,

The Directors hereby present their First Annual Report of the Company together with the Audited Financial Accounts for the year ended on 31st March, 2008.

The Company was incorporated on 11 September, 2007.

The Company is in the process of implementation of the Project and hence no profit and loss account for the period 11 September, 2007 to 31 March, 2008, has been prepared.

The total cost of the project has been firmed at Rs. 555 Crores. The amount of Rs. 185 Crores will be raised by way of Equity and Rs. 370 Crores will be raised by Debt.

Issue of share Capital:-

The authorized capital has been increased from Rs. 50 Crores to Rs. 100 Crores.

The Company has executed share subscription and shareholders agreement with International Finance Corporation (IFC), accordingly.

1) IFC has agreed to subscribe 15,366,666 Equity shares of Rs. 10/- each at a premium of Rs. 20/- per share

2) Meghmani Organics Limited (the sponsor) has agreed to subscribe 35,133,333 Equity shares of Rs. 10/- each at a premium of Rs. 20/- per share

3) The Individual Promoters have agreed to subscribe 11,000,000 Equity shares of Rs. 10/- each at a premium of Rs. 20/- per share

During the year the Company has issued the equity shares to the following allottees.

Name of the Shareholders No. of Face Value Amount Paid Total amount

Shares per share Rs. per share Rs. Paid on shares Rs.

Meghmani Organics Limited 35,182,333 10 10 351,823,330

MFL Promoters & their family 1,000 10 10 10,000

IFC - Washington 11,057,853 10 10 110,578,530

Total 46,241,186 462,411,860

MFL Promoters & their family 11,000,000 10 2 22,000,000

Grand Total 57,241,186 484,411,860

50,000 Equity Shares (49,000 Equity shares to MOL and 1,000 Equity shares to Promoters ) of Rs. 10/- each issued to Subscribers to the Memorandum of Association are issued at par.

MFL Promoters & their family is to subscribe the shares in tranches.

Borrowings:-

The Company has made tie up for Rs. 80 Crores (USD 20 million) Term Loan by way of External Commercial Borrowings from IFC and Rs. 290 Crores of term loan from Consortium of Indian bankers.

The Company has already executed Loan documents on 14 April, 2008 with IFC and on 19 May, 2008 with Consortium of Indian bankers.

Dividend:-

Since the Company has not commenced any commercial activity, the Directors do not recommend any Dividend for the financial year.

FIXED DEPOSITS:-




a) That the applicable accounting standards have been followed in the preparation of final accounts and that there are no material departures.

103


b) That appropriate accounting policies have been selected and applied consistently and such judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at March 31, 2008 and of the profit of the Company for the year ended on March 31, 2008.

c) That proper and sufficient care has been taken 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.



The Company has not employed any individual whose remuneration falls within the purview of limits prescribed under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

AUDITORS


ACKNOWLEDGEMENT

Your directors express their sincere thanks to all customers, vendors, investors, bankers, insurance companies, consultants and advisors for their continued support throughout the year.

Your Directors sincerely acknowledges the contribution made by all the employees for their dedicated services to the company.

DIRECTOR TO RETIRE BY ROTATION:-

As this being the First Annual General meeting, all the Directors will retire and be reappointed at Annual General Meeting.

The Company has not commenced any commercial activity during the year; therefore other particulars of Directors Report are not given.

For and on behalf of Board


Place : Ahmedabad J M Patel

Date : 22 May, 2008 Director

104


Auditors' Report

To,

The Members of


Ahmedabad

1. We have audited the attached Balance Sheet of MEGHMANI FINECHEM LIMITED as at March 31, 2008 and also the Cash Flow Statement for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

No Profit and Loss Account has been prepared since the company is yet to commence its revenue operations and the expenses so incurred are shown as "Revenue Expenditure incurred during the Construction Period".

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial presentation. We believe that our audit provides reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, We enclose in the annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii) The Balance Sheet and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the Directors as on March 31, 2008 and taken on record by the Board Of Directors, we report that none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereto, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India.

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008; and

b) in the case of Cash Flow Statement, of the cash flow for the year ended on that date.

For M/S PATEL & KHANDWALACHARTERED ACCOUNTANTS

M. M. KHANDWALAPlace: Ahmedabad PARTNERDate: 22.05.2008 Membership No. 32472

105


Annexure To The Auditors' Report

(i) In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

(ii) The Company has not commenced any operation hence clause (ii) of Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

(iii) In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

a) The Company has not given any loan to any party.

b) The Company has taken the unsecured loans from one company covered in the register maintained under Section 301 of the Companies Act 1956. The maximum balance outstanding at any time during the year is Rs. 10947.57 Lacs and total amount outstanding at the year end is Rs. 407.57 Lacs.

c) The rate of interest and other terms and conditions of unsecured loan are prima fascia not prejudicial to the interest of the Company.

d) The Company is regular in payment of principal amount and interest wherever applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets. During the financial year, the Company did not undertake any activity of sale. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

(v) (a) According to the information and explanations given to us we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time except for items stated to be of specialized nature where no comparison is possible.

(vi) The Company has not accepted any deposits from the public during the year. Therefore, the provisions of clause (vi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(vii) This being the first year of incorporation and the volume of transaction is very less. The Company has carried out internal audit through its own staff, which is commensurate with size and nature of business of the company.

(viii) According to the information and explanations given to us, the Company's project is at advance stage of construction and the Company has not commenced the commercial production and hence maintenance of cost records is not applicable during the year under audit.

(ix) In respect of statutory dues:

a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues, to the extent applicable, have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2008 for a period of more than six months, from the date they become payable;

b) According to the information and explanations given to us, there are no disputed dues.

106


(x) The Company has been registered for a period less than five years and hence the provisions of clause 4 (x) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xi) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to the financial institutions and banks. The Company has not issued any debentures.

(xii) In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefits fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report), 2003 are not applicable to the Company.

(xiv) In our opinion the Company is not dealing in or trading in shares, securities debentures and other investments hence the provisions of clause 4 (xiv) are not applicable.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the company has not availed any term loan during the period.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, there are no funds raised on short term basis during the year under audit and hence the question of using the same for long term investment does not arise.

(xvii) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956. The price at which share have been issued is not prejudicial to the Company. However some parties to whom shares have been issued have partly paid the amount of shares.

(xix) According to the information and explanations given to us, the Company has not issued any debentures during the year under audit.

(xx) The Company has not raised any monies by way of public issue during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.



Place: Ahmedabad M. M. KHANDWALA

Date: 22.05.2008 PARTNER


107



Particulars Sch. No. Rs.

SOURCES OF FUNDS

Shareholders' Funds

Share Capital 1 484,411,860

Reserves and Surplus 2 941,423,720

1,425,835,580

Loan Funds Unsecured Loans 3 40,757,299

40,757,299

Deferred Tax Liabilities -

TOTAL 1,466,592,879


Fixed Assets 4

Gross Block 146,814,939

Less: Depreciation 2,168,279

Net Block 144,646,661

Capital Work in progress 390,413,656

535,060,316

Deferred Tax Assets 1,314,696

Investments 5 40,010,000


Cash and Bank Balances 6 281,227,860

Loans and Advances 7 642,167,370

Total Current Assets 923,395,230


Liabilities 8 33,000,736

Provisions 9 186,627

Total Current Liabilities 33,187,363

Net Current Assets 890,207,867

TOTAL 1,466,592,879

Significant Accounting Policies & Notes forming parts of accounts 10


For M/s Patel & Khandwala J M Patel - Director

Chartered Accountants A N Soparkar - Director

M M Khandwala N M Patel -Director

Partner


Place : Ahmedabad Place : Ahmedabad

Date: 22.05.2008 Date: 22.05.2008

108


Schedule 1 to 9 annexed to and forming part of the Balance Sheet as on March 31, 2008

Particulars Rs.


Authorised Share Capital :

75,000,000 Equity Shares of Rs. 10/- each 750,000,000

2,500,000 Preference Shares of Rs. 100/- each 250,000,000

1,000,000,000

Issued Subscribed and Paid Up Share Capital :

46,241,186 Equity Shares of Rs. 10/- Each Fully paid up 462,411,860

11,000,000 Equity Shares of Rs. 10/- Each Partly paid up

(Rs.2/- each per share paid up) 22,000,000

Total 484,411,860

Of the above:-

(1) 50,000 Equity Shares of Rs. 10/- Each Fully paid up, subscribed by Promoters and Meghmani Organics

Limited on formation of Company.

(2) 35,133,333 Equity Shares of Rs. 10/- Each Fully paid up were issued to Meghmani Organics Limited

(3) 11,057,853 Equity Shares of Rs. 10/- Each Fully paid up were issued to International Finance Corporation, Washington

(4) 11,000,000 Equity Shares of Rs. 10/- Each Party paid up were issued to MFL's Promoters and their immediaterelatives. The amount of Rs. 2/- each per share has been paid up.

Schedule - 2 - RESERVES AND SURPLUSShare Premium Account 941,423,720

Total 941,423,720


From Corporate - Meghmani Organics Ltd. 40,757,299

Total 40,757,299

Schedule -4Fixed Assest as on March 31, 2008

109


Schedule 1 to 9 annexed to and forming part of the Balance Sheet as on March 31, 2008

Particulars Rs.


Current Investment

DSPML CASH PLUS FUND 40,000,000

Investment-NSC 10,000

Total 40,010,000


Cash on hand 28,243

Balance with Schedule Banks 281,199,617

Total 281,227,860



Balance with Central excise 35,640,621

Deposits 5,184,356

Other Current Assets 15,650

Advance Payment to Vendors 601,326,743

Total 642,167,370


Sundry Creditors 19,385,967

Call in Advance 400,000

Other liabilities 13,214,769

Total 33,000,736


FBT provision for the FY 2008-09 186,627

Total 186,627

110


Schedule - 10


The Financial statements have been prepared to comply in all material aspects in respect with the notified

Accounting Standard by Companies Accounting Standard Rules, 2006 and the relevant provision of the

Companies Act, 1956.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with the generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of

operations during the reporting period end. Although these estimates are based upon management's best

knowledge of current events and actions, actual results could differ from these estimates.


a) REVENUE RECOGNITION

1) In appropriate circumstances, Revenue is recognised on accrual basis when no significant uncertainty

as to determination or realization exists. However being the first year, the company has not recognised

any income during the year.

b) FOREIGN CURRENCY TRANSACTIONS

i. Transactions in foreign currencies are recorded in Indian Rupees using the rates of exchange prevailing

on the dates of the transactions. All realised exchange adjustment gains and losses are dealt with

expenses incurred during construction period.

ii. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are

reported using the exchange rate at the date of the transaction.

c) FIXED ASSETS

(i) Fixed assets are stated at cost of acquisition or construction less accumulated depreciation and Cenvat

Credit availed.

(ii) Fixed assets in the course of work-in-progress for production or administrative purposes are carried at

cost less any impairment loss. Work in Progress includes expenditure pending for capitalization.

Cost includes land and building improvement costs, related acquisition expenses and construction

costs incurred during the period of construction. Depreciation of these assets, on the same basis as the

other property assets, commences when the assets are ready for their intended use.

(iii) The cost of self-constructed assets includes cost of materials plus any other directly attributable costs

of bringing the assets to working condition for its intended use.

d) DEPRECIATION

Except for leasehold land and Capital work-in-progress & other assets as stated below depreciation is

charged on straight line method (SLM) as per rate prescribed under schedule XIV of the Companies

Act 1956.

Leasehold land is amortized over the available balance lease period.

Depreciation is not provided on capital work-in-progress.

e) INVESTMENTS

Long term investments are stated at cost less amount written off, where there is a permanent

diminution in its value. Current investments are stated at lower of cost and fair value. Gain or loss

arising from sale or disposal of such investment is accounted at the time of actual sale or disposal.

Notes Forming Part of Accounts

111


f) BORROWING COSTS

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets, wherever applicable. All other borrowing costs are shown as preoperative expenses as no such related assets were recognised as on balance sheet date.

g) EMPLOYMENT RETIREMENT BENEFIT

Contribution to Defined Contribution schemes such as Provident Fund, etc. are charged to the Profit and Loss account as incurred. The Company also provides for retirement / post-retirement benefits in the form of gratuity and leave encashment. Such benefits (Defined benefit plans) are provided for based on valuations, as at the balance sheet date, made by independent actuaries. Termination benefits are recognized as an expense as and when incurred.

h) CENVAT

CENVAT Credit of Capital Goods and Consumables is accounted at the time of purchase and such CENVAT credit is shown as balance lying with Excise Authority.

4. REVENUE GENERATION

The Company expects to complete implementation of the project. Hence, during the period the Company has not carried out any commercial activity and no revenue has been generated. Therefore, the Company has not prepared Profit & Loss Account for the period.

5. No Profit & loss Account has been prepared since the company has not commenced revenue operations. The expenditure incurred during the construction period are classified as "Expenditure incurred during the construction period" pending capitalization and will be apportioned to the assets on the completion of the Project. Necessary details as per part II of Schedule VI to the Companies Act, 1956 have been disclosed below:

Expenditure Incurred during Construction Period (included under Capital Work in Progress):

Rs. Rs.

Opening Balance 2,410,985

Add:

(i) Payment to and Provision for Employees

Salaries, Wages & Bonus 3,194,117

Contribution to Statutory fund 321,777

Other Employee Welfare Expenses 2,696,895 6,212,789

(ii) Insurance 2,999,515

(iii) Rent , Rate & Taxes 650,708

(iv) Repair & Maintenance 63,418

(v) Traveling & Conveyance 3,073,672

(vi) Legal & Professional Fees 19,715,573

(vii) Payment to Auditors 70,000

(viii) Other Administrative Expenses 7,371,289

(ix) Depreciation 2,168,279

(x) Financial Charge

Letter of Credit and Bank Charges 12,135,564

Interest on Fixed Loan 5,609,805

Interest to Others 52,698,864 70,444,233

(xi) Fringe Benefit Tax 186,627

112,956,102


112


Rs. Rs.

Less:

Interest Received 26,590

Tender Fees Received 11,000

Other income 1,314,696 1,352,286

Closing Balance 114,014,802

6. SHARE CAPITAL

During the period the Company has issued Equity Shares to Promoters, immediate family members of Promoters and Financial Institution as under:

1) 50,000 Equity shares of Rs. 10/- each at par was subscribed by the Subscribers to the Memorandum on Incorporation of the Company.

2) 35,133,333 Equity Shares of Rs. 10/- each at a premium of Rs. 20/- each were issued to Meghmani Organics Limited

3) 11,057,853 Equity Shares of Rs. 10/- each at a premium of Rs. 20/- each were issued to International Financial Corporation, Washington and

4) 11,000,000 Equity Shares of Rs. 10/- each at a premium of Rs. 20/- each were issued to Promoters and their immediate family members as partly paid up. The amount of Rs. 3.60 per share has been paid(Rs. 2/- as equity share capital and Rs. 1.60/- as premium). The Promoters and their immediate family members will pay the amount in one or more tranches.

7. CONTINGENT LIABILITIES

Contingent liabilities in respect of Bank Guarantee of Rs. 49.22 Lacs and in respect of Letter of Credit opened and outstanding with Bank Rs. 6907.89 Lacs is not provided for in the accounts.

8. RETIREMENT BENEFITS

Being the first year of the Company, the provision of retirement benefits has been made on actual basis and no actuarial valuation is carried out. Hence provision of Accounting Standard-15 (AS 15) to that extent is not complied with.

9. AUDITORS' REMUNERATION

Particulars 31.03.2008

Rs. in Lacs

Audit fees 0.11

Taxation Fees 0.11

Certification 0.56

Total 0.78

10. FOREIGN EXCHANGE RATE DIFFERENCE

Exchange rate differences amounting to Rs. 1.48 Lacs towards loan fund in foreign currency have been shown as part of Expenditure Incurred during the Construction Period.


(i) As the Company has not recognised any revenue, no income tax provision has been made.

(ii) The Company has made FBT Provision of Rs. 1.87 lacs for the year ended 31st March 2008

12. DEFERRED TAX

The Company has recognised the deferred tax assets / liabilities in the financial statement in accordance with AS-22 "Accounting for Taxes on Income" issued by ICAI. During the year the Company has shown provision for deferred tax as expenses incurred during the construction period.


113


The position of deferred tax assets and liabilities are as under.

(Rs. In Lacs)

Deferred Tax Liabilities As at 31.03.2008

Depreciation Difference in respect of Fixed Assets 6.70

Sub total (A) 6.70

Deferred Tax Assets As at 31.03.2008

Expenditure treated as revenue expenditure in 6.45

current year but allowable for tax purpose

in subsequent years

Sub total (B) 6.45

Net Deferred Tax Assets / Liabilities (A-B) 0.25


=Holding Company : Meghmani Organics Limited

=Subsidiaries of the company : Nil

=Enterprises in which directors &

KMP have significant influence : Meghmani Energy Limited

Meghmani Infrastructure

31.03.2008

Rs. in lacs.

=Transaction with Enterprises in which directors

& KMP have significant influence during the period:-

Advance Paid for Goods 2.82

Interest Payable to Holding Company 526.99

Outstanding balances as on 31.03.2008

with Enterprises in which directors Rs. in lacs.

& KMP have significant influence

Advance to Meghmani Energy Limited 2.82

Payable to Meghmani Organics Limited 407.57

14. During the period, the Company has adjusted the amount of advance paid to suppliers towards their outstanding payments for supply of goods and services.

15. The balance of Sundry Creditors and Advances are subject to confirmation.

16. The estimated amount of contracts remaining to be executed on capital accounts of Rs. 19677.49 Lacs (P.Y.Rs. NIL) is not provided for.

17. Being the first year, the Company has not provided previous year figures.

18. The Company has incurred borrowing cost on qualifying assets during the year, however being the first year the same has been shown as part of expenses incurred during construction period, included in capital work in progress and would be capitalised on completion of project.



114


1) Licensed and Installed Capacity (in MT)

Particulars Licensed Capacity Installed Capacity Production

Caustic - Chlorine 100000 Nil Nil

Power 120 MW Nil Nil

2) Details of Expenditure on Foreign Currency Rs. in Lacs


Loan Processing charges (IFC) 4.02

Interest on FCNRB loan (Citi Bank) 16.33

Other Expenses Including Capital Expenditure 937.92

Repayment of loan 1,253.07

Total 2,211.34

3) Value of Imported and Indigenous Raw Materials, Stores, Components and Spare Parts Consumed Nil

Signature to Schedule 1 to 10

For M/S Patel & Khandwala For and on behalf of the Board

Chartered Accountants J M Patel - Director

Mukesh M Khandwala A N Soparkar - Director

Partner N M Patel - Director


Place: Ahmedabad Place : Ahmedabad

Date : 22.05.2008 Date : 22.05.2008


115


BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE


Registration No. U24100GJ2007PLC051717

Status Code 04


II Capital raised during the year (Amount Rs. in Thousands)

Public Issue NIL

Right Issue NIL

Bonus Issue NIL


III Position of Mobilization and Development of Funds (Amount Rs. in Thousands)



Source of Funds


Reserves & Surplus 941424

Secured Loans -


Deferred Tax Liability -

Application of Funds 1466593


Investments 40010

Deferred Tax Assets 1315


Miscellaneous Expenditure 1466593

Accumulated Losses -



Turnover (Including other income) -

Total Expenditure (Including prior year expenses) -

Profit Before tax -

Profit After tax -

Earning Per Share (Equity) (Annualized) -

Dividend Rate -

V General Names of Three Principal Products

Item Code No. (ITC Code)

Product Description

Caustic Soda 3008

116

Directors' Reports

Meghmani Europe BVBA

Report of the Director

The Director present their report together with Financial Statement for the year ended 3st March, 2008.

Principal Activities

The Company is engaged in Trading activities in European Countries.

Change in Shareholding

During the year Meghmani Organics Limited (MOL) acquired the Shares of Payam Properties Limited, UK and concurrent with transfer of shares, the Company became subsidiary of MOL.

Business Review:

During the year under review the company has registered a net loss of Rs. 6,497,413/-

Auditors Remark:

The auditor has given qualified opinion. Your Directors have sent a special team of accounts Personnel to remove all the procedural qualifications. Your directors, believe that the qualifications are of setting up system at Belgium and will not have any further impact on profit.

On behalf of Board

Ketan Mapara

Director

MEGHMANI EUROPE BVBA

117

Auditors' Report

STATUTORY AUDITOR'S REPORT TO THE GENERAL ASSEMBLY OF SHAREHOLDERS (PARTNERS) OF MEGHMANI EUROPE BVBA ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,2008

This report is a free translation of the basis report made up in Dutch.

In accordance with the legal and statutory requirements, we report to you on the performance of the mandate of statutory auditor. This report contains our opinion on the true and fair view of the financial statements as well as the required additional statements (and information).

Qualified audit opinion on the financial statements and explanatory note

We have audited the financial statements for the year (accounting period of 15 months) ended March 31, 2008, prepared in accordance with the financial reporting framework applicable in Belgium, which show a balance sheet total of 5.188.776,37 i. and a loss for the year (accounting period 15 months) 107.768,26 i.

Management is responsible for the preparation and the fair presentation of this financial statement. This responsibility includes: designing, implementing and maintaining as internal control relevant to the preparation and fair presentation of the financial statements that are free of material misstatements, whether due to fraud or error: selecting and applying appropriate accounting policies and the making of accounting estimates that are reasonable in the given circumstances.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the legal requirements and the Auditing Standards applicable in Belgium, as issued by the Institute of Registered Auditors. Those auditing standards require that we plan and perform our audit to obtain reasonable assurance whether the financial statements are free of material misstatements, whether due to fraud or error.

In accordance with the above mentioned auditing standards, we have taken into consideration the company's accounting and administrative system, as well as its internal control procedures, we have obtained from management and the company's officials, the explanations and information necessary for executing our audit procedures. We have examined, on a test basis, the evidence supporting the amounts included in the financial statements. We have assessed the appropriateness of accounting policies and the reasonableness of the significant accounting estimates made by the company as well as the overall presentation of the financial statements. We believe that these procedures provide a reasonable basis for our opinion.

The qualification we will make concerns the following items:

1 Reason for qualification: uncertainty about the collection of some receivables quantified;

a. Receivable on Mister Mapara for the amount of 40.354,62 i.

b. Commissions to receive for an amount of 55.288,44 i.

c. Credit notes to draw up for an account of 28.650,62 i.

d. Amounts to receive from "Flint Denmark" in accrual accounts assets for an amount of 153.880 i.

2 Reason for qualification: uncertainty about the collection, the volume and the completeness of trade - receivables - quantification on the financial position of the company is not possible:

a. The aging balance on March 31, 2008 wasn't presented

b. Provisions for doubtful debtors haven't been booked

c. A revaluation of the receivables in foreign currencies hasn't been booked. This is a violation of a valuation rule which states that receivables need to be revaluated at year end.

d. The intercompany confirmation from the main shareholders for an amount of 559.122,82 i. wasn't presented.

3 Reason for qualification: the bank slips of the Bank of India in Euros haven't been received and haven't been booked. Quantification on the financial position of the company is not possible.

4. Reason for Qualification: Uncertainty about the volume and the completeness of trade payables - quantification on the financial position of the company is not possible:

a. The aging balance on March 31, 2008 wasn't presented.

b. A revaluation of the payables in foreign currencies hasn't been booked . This a is a violation of a valuation rule which states that receivables need to be revaluated at the year end.

c. The intercomany - confirmation from the main shareholder for an amount of 3.065.081,87 i wasn't presented.

5. Reason for qualification : Uncertainty about the expense account - quantification possible :

The petty cash for an amount of 10.777,26 i wasn't documented with sustainable documents.


118


The main banker of the company hasn't answered the bank confirmation :so we are not aware of any guarantees which are made by the company ,group companies or third parties in favour of the bank , due to liabilities of the company towards those bank.

In our opinion, the financial statements for the year ended March 31,2008 doesn't give a true and fair view of the company's assets and liabilities , its financial position and the results of its operation in accordance with the financial reporting framework applicable in Belgium .

Since our appointment was starting for the year 2007/2008 ,it is impossible to form ourselves an opinion on the comparable figures of the previous year, as presented in the financial statements. For this reason also, we can't express an opinion on the true and fair view of the results of this year, which can be influenced by elements from the previous year. During our audit of the current year, we noticed the following points which concern the previous year ended on December 31, 2006.

1. The inventories on December 31, 2006 have been valuated at sales prices. The valuation rules state that the inventory should be valuated at the weighted average buy price. The negative influence on the profit and loss account ended March 31, 2008 has been negative for an amount of 144.126,20 i, booked as a depreciation on inventories.

2. The financial liabilities on bank institutions haven't been presented in the financial statements. The starting amount however on January 1st 2007 was 1.844.599,92 i. This negative amount has been added to the trade suppliers on December 31, 2006.

Despite the serious losses which influence the financial position of the company, the financial statements have been presented in the assumption of the going concern of the activities of the company. The accumulated carry forward loss is 429.900,41 i. The loss of the year is 107.768,26 i. The capital plus the carry forward losses amount to a negative amount of 405.150,41 i. We wish to draw your attention on the report of the director in which he justifies the application of the valuation rules in the supposition of the continuation of the activities of the company. The solvability of the company could be raised through a capital increase. The financial statements have been presented in going concern; no changes in reclassifications or valuations have been made, which could be necessary when the company would not continue her activities.

Additional Statements (and information)

The preparation of the director's report and its content, as well as the company's compliance with the Company Code and its bylawas are the responsibility of the directors.

Our responsibility is to add to our report the following additional statements (and information), which do not modify our qualified audit opinion on the financial statements:

The director's report includes the information required by law and is consistent with the financial statements. We are, however, unable to comment on the description of the principal risks and uncertainties which the company is facing, and on its financial situation, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters disclosed do not present any obvious inconsistencies with the information that we became aware of during the performance of our mandate.

Without prejudice to formal aspects of minor importance, the accounting records were maintained in accordance with the legal and regulatory requirements applicable in Belgium.

There are no transactions undertaken or dicisions taken in violation of the company's statutes or the Company Code that we have to report to you. The appropriation of results proposed to the general assembly complies with the legal and statutory provisions.

This report has been delivered on the date below and doesn't take into consideration the events after balance sheet date between this date and the date of the general assembly of shareholders of the company; the statutory date of this general assembly is September 19, 2008.

Antwerp (Berchem),

June 10, 2008

Bvba Bedrijfsrevisor Grare' & Co,

Auditor represented by

Grare Frank

Bedrijfsrevisor

119


Amt. in INR

Particulars As at 31.03.2008

Share Capital

Issued & Subcribed Capital. 1443433

Reserve & Surplus

Profit & Loss A/c. (20096866)

Add /Less Current year (6497413) (26594279)

Translation Reserve (550860)

Secured Loans

ABN Amro Bank

Loans (hypo of Vehicles) 123790217


Fixed Assets

Gross Block 13095229

Less: Accumulated Depreciation 1614276

Net Block 11480953 11480953

Current Assets

Cash on Hand & Bank Balance 3079074

Inventory 88417982

Sundry Debtors 203528878

Other Current Assets 24895741

Total Current Assets 319921675

Current Liabilities

Creditors 230515762

Provisions and Unpaid Expenses 2798355

Total Current Liabilities 233314117



Balance Sheet as at 31.03.2008

120


Profit & Loss Account for the period ended on 31.03.2008

( Amt. in INR)


To

31.03.2008

Sales 267084903

Cost of Goods Sold 264624605

(Increase) / Decrease in Stock (22003882)

Gross Profit 24464180

Administration Expenses 13048971

Selling & Distribution Expenses 11025603

Financial Expenses 6034894

Depreciation 852124

Net Profit (6497413)

Grouping of Profit & Loss Account


To

31.03.2008

Total Income

Sales 262645366

Interest Received 11729

Commission 4427807

Total 267084903

Cost of Goods Sold

Purchase 261516934

Purchase Expenses 3107671

Total 264624605

Administration Expenses

Office Rent 985021

Office Charges 727894

Telephone Expenses 981015

Postage Expenses 76523

Legal Fees 3090629

Third Pary Expenses (31935)

Software Expenses (68937)

JCH Services (201066)

Sundry Expense / (Recovery) 196829

Computer Maintainance Charges 93478

Rate Difference 1234005

Other Expenses 1404558

Salary Admin Exp. (49347)

Salary 4049132

Social Security on Salary 498859

VAT not recoverable 62313

Total 13048971

121


Profit & Loss Account for the period ended on (Contd...)


To

31.03.2008

Selling & Distribution Expenses

Transporatation & C&F 7439656

Packing Expenses 189559

Storage Charges 949653

Travelling Expenses 1281404

Car Expenses 379705

Fuel Expenses 59021

Gift to Customers 65624

Entertainment to Customer 277745

Commission Paid 465170

Exhibitions (81934)

Total 11025603

Finance Expenses

Tax Payments (1226)

Bank Charges 234629

Interest on Car Lease 109215

Exchanges Difference 737107

Bank Interest 4955169

Total 6034894

122

MEGHMANI ORGANICS INC. USA

Meghmani Organics Inc. USA

Report of the Directors

The Directors present their report together with Financial Statement for the ended 31st March, 2008.

Principal Activities:

The Company is engaged in Tradings activities in USA.

Change in shareholding

There is no change in the Shareholding, during the year.

Business Review:

This is the first year of trading activity of the Company. The Company has appointed the resident representative in USA to explore the market and cater after sales services to its Pigment Clients. The operation of the year under review has reported a loss of Rs. 688759/-. The Company is planning to have positive performance in Financial year 2008-2009.

Auditors:

Jay Patel Tax & Accounting Services, Chartered Accountant has offered for re-appointment.

On behalf of Board

Ashish Soparkar

Director

Directors' Report

123


Review Report

To,

The Board of Directors and Stockholders


3147 Old Ironside Drive Charlotte N C 28213

I have reviewed the accompanying balancesheet of Meghmani Organics Inc. USA as of March 31, 2008 and the related statement of Income, retained earnings and cashflows for the 3 months period than ended in accordance with Statements on Standards for Accounting and Review services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of the company.

A review consists principally of inquiries of company peronnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an pinion regardings the financial statements taken as a whole.

Accordingly, I do not express such an opinion.

Based on may review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.

For Jay Patel Tax & Accounting Services

April 12, 2008 Jay Patel

Charlotte, North Carolina Accontant

Review Report

To,

The Board of Directors and Stockholders


3147 Old Ironside Drive Charlotte N C 28213

I have reviewed the accompanying balancesheet of Meghmani Organics USA Inc. as of December 31, 2007 and the related statement of Income, retained earnings and cashflows for the year than ended in accordance with Statements on Standards for Accounting and Review services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of the company.

A review consists principally of inquiries of company peronnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an pinion regardings the financial statements taken as a whole.

Accordingly, I do not express such an opinion.

Based on may review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.

For Jay Patel Tax & Accounting Services

February, 28, 2008 Jay Patel

Charlotte, North Carolina Accontant

124


Balance Sheet as at 31 March, 2008

Amt. in INR

Balance Sheet As at 31.03.08

Share Capital

12500 Shares of $ 1.00 each 556750

Reserve & Surplus

Profit & Loss A/c (688759)

Translation Reserve (509925)

Unsecured Loans

Meghmani Organics Ltd., India 10859459

Total Liabilites 10217524

Fixed Assets

Gross Block 7507014

Less: Accumulated Depreciation 393056

Net Block 7113959 7113959

Current Assets

Cash on Hand 117172

Wachovia Bank Checking A/c. 500417

Wachovia Money Market A/c. 1606638

Invenotry 16952626

Sundry Debtors 25274244

Prepaid Expenses 18174

Utility Service Connection Deposit 17252

Total Current Assets 44486523

Current Liabilites

Creditors 41226429

Payroll Deduction 82106

Local Tax & Licenses payable 14243

Accounting Charges Payable 60180

Total Current Liabiblities 41382957



125


Profit & Loss Account for the period ended on 31.03.2008


To 31.03.2008

Sales 61192345

Less :Cost of Goods Sold 54907866

Gross Profit 6284480

Administration Expenses 4038634

Selling & Distribution Expenses 1345818

Financial Expenses 77435

Depreciation 375262

Other Income (232411)

Net Profit 679741

Grouping of Profit & Loss Account

( Amt. in INR)


To 31.03.2008

Sales 61192345

Purchase 66229066

(Increase) / Decrease in Stock (11321201)

Cost of Goods Sold 54907866

Administration Expenses

Officers Salary 2628843

Payroll Tax Expenses 217546

Accounting Charges 270911

Insurance 82173

Office Expenses 98101

Postage & Freight 70887

Rent 49366

Telephone, Cable, Internet & Network Exp. 27017

Late Filing Penalties 3209

Other Legal Exp. (visa renewal) 569485

Utilities Exp. 21096

Total 4038634

Selling & Distribution Expenses

Travelling Exp. 843266

Vehicle Exp. 74972

Custom Bond Exp. 20068

Meals & Entertainment 23295

Warehouse & Storage Exp. 384218

Total 1345818

( Amt. in INR)

126


Schedule - Fixed Assets


To 31.03.2008

Finance Expenses

Bank & Other Services 77435

Total 77435

Depreciation

Furniture 60764

Computer 21753

Office Equipments 5980

Vehicles 211993

Building 74772

Total 375262

Other Income

Bank Interest 42489

Other Misc. Income 189922

Total 232411

127

K.J. SHAH K.J.SHAH & CO.

MCom, LLB, DTP, ICWA, FCS Company Secretaries

Off: 301, 2nd floor, "SAMPANNA",

Behind Navrangpura Bus-stand,

Ahmedabad - 380 009

Phone: (O) 26423700 (R) 27450708

SECRETARIAL AUDIT REPORT

I have examined the registers, records and documents of Meghmani Organics Limited ("the Company") for the financial year ended on March 31, 2008 maintained under the provisions of:

o The Companies Act, 1956 and the Rules made under that Act;

o The Depositories Act, 1996 and the Regulations and the Bye-laws framed under the Act;

o The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act');

The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992; and

The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 Purchase Scheme) Guidelines, 1999

o The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the Rules made under that Act;

o The Listing Agreement with National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Singapore Stock Exchange.

1. I report that,

based on my examination and verification of the records produced to me and according to the information and explanations given to me by the Company, the Company bas, in my opinion, complied with the provisions of the Companies Act, 1956 ("the Act") and the Rules made under the Act and Memorandum and Articles of Association of the Company, inter alia with regard to:

a) Maintenance of various statutory registers and documents and making necessary entries therein;

b) Closure of Register of Members;

c) Forms, returns, documents and resolutions required tobe filed with the Registrar of Companies;

d) Service of documents by the Company on its Members, and Registrar of Companies.

e) Notice of Board meetings and Committee meetings of Directors;

f) The meetings of Directors and Committees of Directors including passing of resolutions by circulation;

g) The 13th Annual General Meeting held on 29 June,2007;

h) Minutes of proceedings of General Meetings and of Board and other meetings;

i) Approvals of shareholders, the Board of Directors, the Committee of Directors and government authorities, wherever required;

j) Constitution of the Board of Directors and appointment, retirement and re-appointment of Directors;

k) Appointment and remuneration of Directors including the Managing Director and Whole time Directors;

l) Appointment and remuneration of Auditors ;

m) Transfers and transmissions of the Company's shares and issue and delivery of original and duplicate certificates of shares ;

n) Declaration and payment of dividends ;

o) Form of balance sheet as prescribed under Part I of Schedule VI to the Act and requirements as to Profit & Loss Account as per Part II of the said Schedule;

p) Borrowings and registration, modification and satisfaction of charges;

q) Investment of the Company's funds including loans and investments;

r) Contracts, common seal, registered office and publication of name of the Company; and

s) Generally, all other applicable provisions of the Act and the Rules made under that Act;

128


2. I further report that:

a) The Directors of the Company have obtained Director Identification Number as per section 266A of the Act

b) The Directors have complied with the requirements as to disclosure of interests and concerns in contracts and arrangements, shareholdings and directorship in other companies and interests in the entities.

c) The Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the code of business conduct and Ethics for directors and Management Personnel.

d) There was no prosecution initiated against, or show cause notice received by, the company and no fines or penalties were imposed on the company under the Companies Act, SEBI Act, SCRA, Depositories Act, Listing Agreement and Rules, Regulation and Guidelines framed under these acts against the Company its directors and officers.


The Company has complied with the provisions of the Depositories Act, 1996 and the Regulations and the Bye-laws framed there under with regard to dematerialization/rematerialisation of securities and reconciliation of records of dematerialized securities with all securities issued by the Company.


a) The Company has complied with the requirements under the Listing Agreements entered into with National Stock Exchange of India Limited, Bombay Stock Exchange Limited, and Singapore Stock Exchange.

b) The Company has complied with the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 with regard to disclosures and maintenance of records required under the Regulations.

For K J SHAH & COMPANY

Company Secretary In Practice

Place: Ahmedabad K J SHAH

Date: 23.05.2008 FCS 2420 CP NO 1414

129



Notice of Meeting

NOTICE IS hereby given that Fourteenth Annual General Meeting of the Company will be held on Wednesday, 30 July, 2008 at 3.00 p.m. at Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg, Vastrapur, Ahmedabad to transact the following business:-

ORDINARY BUSINESS:

1) To receive, consider, and adopt the audited Balance Sheet as at March 31, 2008 and the Profit and Loss Account for the financial year ended on that date and the reports of Directors and the Auditors thereon.

2) To declare a dividend.

3) To appoint a director in place of Mr. Jayanti Patel, who retires by rotation and being eligible offers himself for re-appointment.

4) To appoint a director in place of Mr. J Vishwanathan, who retires by rotation and being eligible offers himself for re-appointment.

5) To appoint Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting to the conclusion of next Annual General Meeting and to fix their remuneration for the financial year ending on 31 March, 2009.

SPECIAL BUSINESS:-

6) To Consider and if thought fit to pass the following resolution with or without modification as Ordinary Resolution:-

APPOINTMENT OF MR. CHANDAN BHATTACHARYA

"RESOLVED THAT in accordance with the provisions of Section 257 and 260 of the Companies Act, 1956 and the provision of Clause 137 of Articles of Association Mr. Chandan Bhattacharya, who was appointed as an Additional Director of the Company on 30 July, 2007 and holds office till the conclusion of this Annual General Meeting, be and is hereby appointed as a Director of the Company."

Registered Office: By Order of the Board

184, PHASE II , GIDC For Meghmani Organics Ltd.INDUSTRIAL ESTATE, VATVA, K. D. Mehta

AHMEDABAD 382 445 COMPANY SECRETARY

Date: 23 May, 2008

1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY.

2) The proxy in order to be effective must be deposited at the registered office of the Company not less than 48 hours before the commencement of the meeting.

3) If the appointer is a corporation, the proxy must be executed under its seal or the hand of its duly authorized officer or attorney.

4) Members holding shares in electronic form are requested to provide their client ID and DP ID numbers at the meeting for easy identification.

5) The register of Members and share transfer books of the company shall remain closed from 19th July, 2008 to 30th July, 2008 (both days inclusive).

6) The final dividend for the year ended 31 March, 2008 as recommended by the Board, if approved at the meeting will be paid within the Prescribed Statutory Period to those members whose names appear in the Company's Register of Members as on book closure date.

7) Explanatory statement as required under Section 173 (2) of the Companies Act, 1956 in respect of Item No. 6 is annexed and form part of this Notice.

8) The Statutory Registers Maintained in terms of provisions of the Companies Act, 1956, subject to applicable provisions shall be available for inspection by the Members at the registered office of the Company on all working days between 4.00 p.m. to 6.00 p.m. except Saturday, Sunday and Public holiday, up to the date of the Annual General Meeting.

* * * * *

130

Appointment - Reappointment Of Directors:-

In accordance with the Articles of Association of the Company all the Directors are liable to retire by rotation and if eligible may offer themselves for re-election at every Annual General Meeting.

Mr. Jayanti Patel and Mr. J Vishwanathan being eligible offer themselves for re-appointment. The brief resume of the directors seeking re-appointment are as under:-

Mr. Jayanti Patel, 55 years, is the Executive Chairman of our Company. He was one of the co-founders and partners of M/s. Gujarat Industries, which was subsequently converted into our Company in 1995. He holds a Bachelor of Chemical Engineering degree from Maharaja Sayajirao University, Baroda. Prior to joining the Company, since 1977, he was managing manufacturing and commercial activities of Ashish Chemicals. He has more than 29 years experience in the dyes and pigments industry and more than 10 years of experience in the agrochemicals industry. He was our Chairman and Managing Director, and is currently re-designated as the Executive Chairman of the Company. He currently oversees international marketing of the Company and is responsible for all the major policy decisions.

Mr. Jayanti Patel is a brother of Mr. Natwarlal Patel and Mr. Ramesh Patel and uncle of Mr. Anand Patel who are also directors of the Company. Mr. Jayanti Patel is the member of nominating committee of the Company and is a director on the Board of the following other companies:-

Directorship Chairman / Member of the Board Committee

Meghmani Chemicals Limited -

Fidelity Exports Private Limited -

Meghmani Organics USA Inc. -

Meghmani Energy Limited -

Meghmani Finechem Limited -

Mr. Jayaraman Vishwanathan, 50 years, was appointed as a Director of our Company on July 17, 2003. He has more than 25 years of experience in industry, banking, private equity and entrepreneurial related assignments, both in India as well as in other countries. He was the Director and the Head of Direct Investments in Jardine Fleming India Securities Limited ("JF Electra") (now Electra Partners Asia Limited "Electra Asia") from December 1995 to July 1999 and from February 07, 2005 till February 29th 2008. He led Electra's investment in the equity of Meghmani Organics in 1996, and also played a key role in listing the equity of the Company on the Singapore Stock Exchange in 2004.

He holds a Bachelors of Commerce (Honours) degree from the University of Delhi, India. He is also a qualified Chartered Accountant and also a Management Accountant from the Chartered Institute of Management Accountants, London, United Kingdom. He is currently a resident of Singapore. Mr. Jayaraman Vishwanathan is a director on the Board of the following other companies:-


1. Credere Capital Pte Limited, Singapore -

2. Aavishkaar International Limited, Singapore -

* * * * *


131

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956ITEM NO. 6

Mr. Chandan Bhattacharya, an Indian resident was appointed as the Additional Director on the board vide resolution passed by the Board of Directors on, 30 July, 2007.

Mr. Chandan Bhattacharya did his graduation in Bachelor of Arts from Calcutta University and passed CAIIB Examination.

Mr. Chandan Bhattacharya, has a long 37 years of uninterrupted service in State Bank of India and has very wide range of experience in handling all matters of Banking, Trade and Commerce during his career. Mr. Bhattacharya held several distinguished positions and also served as Director on the following Boards in his long tenure with State Bank of India:-

(i) SBI (California), Los Angeles, U.S.A., a Bank incorporated and operating in USA.

(ii) SBI Capital Markets Ltd.

(iii) SBI Funds Management Private Ltd..

(iv) SBI Factors & Commercial Services Private Ltd.

(v) INMB Bank Limited, Lagos, Nigeria, a Joint Venture Bank of SBI.

(vi) Discount & Finance House of India Limited (DFHI) and 8 Associate Banks of State Bank group spread across India as Deputy Managing Director in charge of SBI's associates and subsidiaries.

Mr. Chandan Bhattacharya retired as Managing Director of State Bank of India on 31.01.2005. After uninterrupted service in State Bank of India for 37 years, joined SEBI Appellate Tribunal as Member in May, 2005 and retired on 12 January 2007. At present Mr. Chandan Bhattacharya is a director on the Board of the following other companies:-


Phoenix ARC Pvt. Limited -

HNG Flotglass Limited -

Jayanti Oil and Derivatives Limited -

JSW Energy Limited JSW Energy Limited - Audit Committee

JSW Power Trading Co. Limited -

JSW Energy (Ratnagiri) Limited -

As per Section 260 of the Companies Act, he holds the office up to the date of forth coming Annual General Meeting.

As required under Section 257 of the Companies Act, 1956, the Company has received a Notice from the Members proposing name of Mr. Chandan Bhattacharya as candidates for the office of the Director.

Your directors recommend to pass the resolutions of the appointment.

No one of the Directors except Mr. Chandan Bhattacharya is interested in the resolution.

Registered Office: By Order of the Board

184, PHASE II , GIDC For Meghmani Organics Ltd.

INDUSTRIAL ESTATE, VATVA, K. D. Mehta

AHMEDABAD 382 445 COMPANY SECRETARY

Date: 23 May, 2008


132

Registered Office: 184, PHASE II, GIDC, INDUSTRIAL ESTATE, VATVA, AHMEDABAD 382 445.Phone: 91-79-26640668, 26640669, Fax: 91-79-26640670, E-mail: [email protected] URL: www.meghmani.com

PROXY FORM

I / We …………………………………..of …………………………..being a Member / Members of Meghmani Organics L im i ted ho ld ing shares in fo l io No. / Demat A/c No. .……………………….hereby appo in t … … … … … … … … … … … … … … … … … o f … … … … … … … … … … … … … . . o r f a i l i n g h i m / h e r …………………………………..…………………………………..of ………………….…………….or failing him / her…………………………………………….of ………………………………….as my/our Proxy to attend and vote for me /us and on my/our behalf at the Fourteenth Annual General Meeting of the said Company to be held on Wednesday, 30 July, 2008 at 3.00 p.m. at Ahmedabad Management Association, ATIRA Campus, Dr. Vikram Sarabhai Marg Vastrapur, Ahmedabad and at any adjournment thereof .

Signed this …………….………………..day of ……………………2008

Signature(s) of the Shareholder(s) ……………………… ………………………

_______________________________________________________________________________________________________

N.B. (i) This form must be deposited at the Registered Office of the Company not later than 48 Hours before the time of meeting

(ii) A PROXY NEED NOT BE A MEMBER

Tear Here


ATTENDANCE SLIP

To be handed over at the entrance of the Meeting Hall

I hereby record my presence at Fourteenth Annual General Meeting held at All India Management Association Hall, ATIRA, Ahmedabad, on Wednesday, 30 July, 2008 at 3.00 p.m

Folio No. / Demat A/c No. :..................................

Full Name of the Shareholder Signature

(in block letters)

* Full Name of Proxy Signature

(in block lettters)

* (To be filled in if the Proxy attends instead of the Member)

AffixRevenueStamp


133

135

NOTES

136

NOTES

corporate information 03 - meghmanicorporate information 03 chairmans' statement 06...

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