CONTENTSpanparag.com/Templates/PPIL-2011.pdf · 4th ANNUAL REPORT 201 0 — 201 1 CONTENTS Board...

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CONTENTS

Board of Directors 2

Our Founder 3

Notice 4-8

Directors’ Report 9-10

Auditors’ Report 11-13

Balance Sheet 14

Profit & Loss Account 15

Schedules to Accounts 16-25

Balance Sheet Abstract 26

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BOARD OF DIRECTORS

Chairman & Managing Director

DEEPAK KOTHARI

Deputy Managing Director

MITESH KOTHARI

Directors

DR. AVINASH GUPTA

PRAMOD KUMAR TANDON

KAMLESH MEHTA

Company Secretary

PRAGATI PANDEY

AUDITORSMEHROTRA & MEHROTRA

Chartered Accountants

16/49, Civil Lines,

Kanpur – 208 001

AUDIT COMMITTEE

Chairman

PRAMOD KUMAR TANDON

Members

DEEPAK KOTHARI

DR. AVINASH GUPTA

KAMLESH MEHTA

REMUNERATION COMMITTEE

Chairman

PRAMOD KUMAR TANDON

Members

DR. AVINASH GUPTA

KAMLESH MEHTA

REGISTERED OFFICE & SECRETARIAL DEPARTMENT“Pan Parag House”, 24/19, The Mall, Kanpur – 208 001.

Visit us on Internet at :

http://www.panparag.com

E-mail : [email protected]

Ph. Nos. (0512) 2312171-74, Fax No. (0512) 2312058

INVESTORS’ GRIEVANCE E–MAIL [email protected]

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NOTICE :

Notice is hereby given that the Fourth Annual General Meeting of the Members of Pan Parag India Limited will beheld on Friday, the 23rd September, 2011 at "Royal Cliff", 113/72, Swaroop Nagar, Opposite Motijheel Gate No.1,Kanpur at 11.00 A.M., to transact the following business :-

ORDINARY BUSINESS :1. To consider and adopt the Audited Balance Sheet of the Company as at 31st March, 2011 and the Profit & Loss

Account for the financial year ended on that date and the Reports of the Directors and Auditors thereon.2. To declare a dividend for the aforesaid financial year on the 6% Non Cumulative Redeemable Non Convertible

Preference shares of Rs.10/- each.3. To appoint a Director in place of Sri Kamlesh Mehta, who retires by rotation and being eligible, offers himself for

re-appointment.4. To appoint a Director in place of Dr. Avinash Gupta, who retires by rotation and being eligible, offers himself for

re-appointment.5. To re-appoint M/s.Mehrotra & Mehrotra, Chartered Accountants, retiring Auditors, as Auditors of the Company

and to authorise the Board of Directors of the Company to fix their remuneration.SPECIAL BUSINESS :6. To consider and if thought fit, to pass with or without modification(s), the following as a Special Resolution:-

"RESOLVED THAT pursuant to Section 16 of the Companies Act,1956 and other applicable provisions if any,the Memorandum of Association of the Company be altered in the following manner:In Clause III (B) sub-clause 3 of the Memorandum of Association the word "incidenal" in the 6th line be substitutedby the word "incidental".In Clause III (B) sub-clause 4 of the Memorandum of Association the word "decrease" in the 3rd line be substitutedby the word "decrees".In Clause III (B) sub-clause 9 of the Memorandum of Association the heading for the said clause "Guarantee andSurety" be substituted by the word "Guarantee and Surety for securities".In Clause III (B) sub-clause 10 of the Memorandum of Association the heading for the said clause "Guaranteeand Surety" be substituted by the word "Guarantee and Surety for payment of money".In Clause III (B) sub-clause 14 of the Memorandum of Association the word "seen" in the 5th line be substitutedby the word "seem".In Clause III (B) sub-clause 18 of the Memorandum of Association the word "recongnition" in the 1st line besubstituted by the word "recognition".In Clause III (B) sub-clause 19 of the Memorandum of Association the word "weather" in the 1st line be substitutedby the word "whether".In Clause III (B) sub-clause 23 of the Memorandum of Association the word "gratutously" in the 2nd line besubstituted by the word "gratuitously".In Clause III (C) sub-clause 5 of the Memorandum of Association the word "purched" in the 5th line be substitutedby the word "punched".In Clause III (C) sub-clause 12 of the Memorandum of Association the words "problem clke" in the 2nd line besubstituted by the word "coke" .In Clause III (C) sub-clause 17(b) of the Memorandum of Association the word "properietors" in the 1st line besubstituted by the word "proprietors".In Clause III (C) sub-clause 18 of the Memorandum of Association and the word "bureauts" in the 4th line besubstituted by the word "bureaus".In Clause III (C) sub-clause 19 of the Memorandum of Association the word "properietors" in the 6th line besubstituted by the word "proprietor" and the word "libraties" in the 7th line be substituted by the word "libraries"and the word "threatrical" in the 9th line be substituted by the word "theatrical".In Clause III (C) sub-clause 23 of the Memorandum of Association the word "serticulture" in the 1st line besubstituted by the word "sericulture" and the word "fluides" in the 8th line be substituted by the word "fluids".

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In Clause III (C) sub-clause 24 of the Memorandum of Association the word "good" in the 2nd line be substitutedby the word "food".In Clause III (C) sub-clause 29 of the Memorandum of Association the word "die" in the 3rd line be substitutedby the word "dye".In Clause III (C) sub-clause 30 of the Memorandum of Association the word "filte" in the 4th line be substitutedby the word "filter" and the word "varities" in the 7th line be substituted by the word "varieties".In Clause III (C) sub-clause 33 of the Memorandum of Association the word "lighermen" in the 4th line besubstituted by the word "lightermen".In Clause III (C) sub-clause 35 of the Memorandum of Association the word "weather" in the last line be substitutedby the word "whether".

7. To consider and if thought fit, to pass with or without modification(s), the following as a Special Resolution:"RESOLVED THAT pursuant to Section 31 of the Companies Act,1956 and other applicable provisions if any,the Articles of Association of the Company be altered in the following manner :"In Article 4 (2) of the Articles of Association the word "priviledges" in the 4th line be substituted by the word"privileges".In Article 12 (2) of the Articles of Association the word "endrosement" in the 4th line be substituted by the word"endorsement".In Article 19 of the Articles of Association the word "defendent" in the 5th line be substituted by the word "defendant".In Article 22 of the Articles of Association the word "then" in the 1st line be substituted by the word "than".In Article 26 of the Articles of Association the word "annual" in the 2nd line be substituted by the word "annul".In Article 28 of the Articles of Association the word "intrest" in the 1st line be substituted by the word "interest".In Article 34 (1) of the Articles of Association the word "in" in the 10th line be substituted by the word "is".In Article 34 (2) of the Articles of Association the word "therof" in the 3rd line be substituted by the word "thereof".In Article 36 of the Articles of Association the word "things" in the 2nd line be substituted by the word "thinks".In Article 37 of the Articles of Association the word "from" in the 3rd line be substituted by the word "form."In Article 42 of the Articles of Association the word "book" in the 1st line be removed and in the heading the word"books" be added after the word "transfer".In Article 46 (C) (v) of the Articles of Association the word "if" in the 2nd line be substituted by the word "of".In Article 51 of the Articles of Association the word "Register" in the last line be substituted by the word "Registrar".In Article 67 of the Articles of Association the word "at" be inserted in the 3rd line after the word "transacted".In Article 77 of the Articles of Association the words "and has" before the word "exercised" in the last line beremoved.In Article 84 of the Articles of Association the word "on" in the 4th line be substituted by the word "or".In Article 96 of the Articles of Association the word "descretions" in the 3rd line be substituted by the word"discretions".In Article 99 of the Articles of Association the word "primaficie" in the last line be substituted by the word "primafacie".In Article 104 of the Articles of Association the word "generally" in the 3rd line be substituted by the word "generality".In Article 106 of the Articles of Association the word "thin" in the 2nd line be substituted by the word "thing".In Article 110 of the Articles of Association the word "an" in the 3rd line be substituted by the word "and".In Article 111 of the Articles of Association the word "commerce" in the 1st line be substituted by the word"commence".

In Article 142 of the Articles of Association the word "of" in the 7th line be substituted by the word "or".

8. To consider and if thought fit, to pass with or without modification(s), the following as a Special Resolution:-

"RESOLVED THAT approval of the Company be and is hereby given, pursuant to the provisions of section149(2A) of the Companies Act, 1956, to the commencement by the Company of new businesses, provided in

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clause 26 of the Object Clause III [C] of the Memorandum of Association of the Company which has beenreproduced as under:

26."To buy, sell and deal in shares and securities, foreign exchange, gold, diamond, precious stones, jewellery,silver, cotton, jute hessian, oils, oils-seeds and commodities of all kinds agricultural or otherwise, finished orunfinished and to take delivery and hold them as permitted under the law from time to time in force and tospeculate in shares and securities."

9. To consider and if thought fit, to pass with or without modification(s), the following as a Special Resolution:-

"RESOLVED THAT approval of the members of the Company be and is hereby granted for making investments,of the surplus funds of the Company, making Loan to any other Body Corporate, giving any guarantee, orproviding security, in connection with a loan made by any other person to, or to any other person by, any bodycorporate in excess of 60% of the paid-up share capital and free reserves of the company or 100% of the freereserves of the Company whichever is more, subject to maximum of Rs.200 Crores outstanding at any one pointof time, in the Shares of Companies specified in BSE 500 Index, Units of Mutual Funds registered with SEBI likeReliance, Religare, IDFC, Kotak, Sundaram, Principal, LIC, SBI, HDFC, PRUDENTIAL ICICI, Standard Chartered,IDBI, BIRLA Mutual Funds etc. either in the Debt funds and/or balanced funds and/or Equity funds and/or MIP(s)and/or G-Sec Funds and/or Liquid Funds and /or Hybrid Funds either open ended or close ended either cumulativeor non-cumulative or any combination thereof and also Mutual Funds of Nationalised/Scheduled Banks/ForeignBanks and/or UTI or any other Corporate Bodies formed under the Act of Parliament."

10. To consider and if thought fit, to pass with or without modification(s), the following as an Ordinary Resolution:-

"RESOLVED THAT the consent of the Company be and is hereby granted in terms of Section 293(1)(a) and allother applicable provisions of the Companies Act, 1956 (including any statutory modification or re-enactment thereof,for the time being in force), to the Board of Directors (hereinafter referred to as "the Board") to mortgage and/orcharge, in such form and manner and with such ranking and at such time and on such terms and conditions as theBoard may determine, subject to maximum amount of Rs.50 Crores of charges outstanding at any time, on all orany of the movable and/or immovable property(ies) of the company, both present and future and/or whole or anypart of the undertaking(s) of the Company together with the power to take over the management of the businessand concern of the Company in certain events of default, in favour of the Lender(s), Agent(s) and Trustee(s) forsecuring the borrowing(s) to be availed by the Company, by way of loan(s) (in foreign currency and/or Indiancurrency) and Securities (comprising fully/partly convertible and/or non-convertible debentures with or withoutdetachable warrants and/or secured premium notes and/or floating rates notes/bonds or other debt instrument) tobe issued by the Company from time to time, together with interest at the respective agreed rates, additionalinterest, compound interest and in case of default, accumulated interest, liquidated damages, commitment charges,premia on prepayment, remuneration of the Agent(s)/Trustees, premium (if any) on redemption, all other costs,charges and expenses, including any increase as a result of devaluation/revaluation/fluctuation in the rates ofexchange and all other monies payable by the Company in terms of loan Agreement(s)/other Agreement(s)/DebentureTrust Deed(s) or any other document, entered into/to be entered into between the Company and the Lender(s)/Agent(s) and Trustee(s) in respect of said loans/borrowings/debentures/other securities and containing such specificterms and conditions and covenants in respect of enforcement of security as may be stipulated in that behalf andagreed to between Board of Directors and the Lender(s)/Agent(s) and Trustee(s).

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, the Board of Directors of theCompany be and is hereby authorized to finalise, settle and execute such documents/deeds/writings/papers/agreements as may be required and to do all such acts, deeds, matters and things, as it may in its absolutediscretion deem necessary, proper or desirable and to settle any question difficulty or doubt that may arise inregard to creating mortgages/charges as aforesaid."

Regd. Off :‘PAN PARAG HOUSE’ By Order of the Board24/19, THE MALL, For Pan Parag India LimitedKANPUR - 208 001

(DEEPAK KOTHARI)DATE : 5th August, 2011 CHAIRMAN & MANAGING DIRECTOR

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NOTES :

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TOATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND THE PROXY NEED NOT BE A MEMBER OFTHE COMPANY.

2. Proxies, in order to be effective should be completed, stamped and signed and must be deposited at the RegisteredOffice of the Company not less than 48 hours before the commencement of the meeting.

3. The Register of Members of the Company shall remain closed from Friday, the 16th September, 2011 to Friday,the 23rd September, 2011 (both days inclusive).

4. THE MEMBERS HOLDING PHYSICAL SHARES ARE, IN THEIR OWN INTEREST, ADVISED TO SENDIMMEDIATELY REQUESTS FOR CHANGE OF ADDRESS AND BANK PARTICULARS, IF ANY, TO OURREGISTRAR i.e. ALANKIT ASSIGNMENTS LTD., CORPORATE OFFICE, "ALANKIT HOUSE", 2E/21,JHANDEWALAN EXTENSION, NEW DELHI - 110 055, PHONE NOS. (011) 23541234 / 42541234 & FAX NOS.(011) 42541967 / 23552001. HOWEVER, THE MEMBERS HOLDING DEMAT SHARES ARE ADVISED TOIMMEDIATELY INTIMATE THE CHANGE OF ADDRESS AND BANK DETAILS TO THEIR CONCERNEDDEPOSITORY PARTICIPANTS.

5. Members desirous of getting any information at the meeting about the accounts and operations of the companyare requested to send their query at the Registered office well in advance so that the same may reach the officeatleast seven days before the date of the meeting to enable the management to keep the information requiredreadily available at the meeting.

6. Section 109A of the Companies Act, 1956 has extended nomination facility to individuals holding shares inCompanies. Shareholders, in particular, those holding shares as sole holder are advised to avail of the abovefacility in their own interest, by furnishing to the Company the particulars of their nominations. The prescribedapplication form may be obtained by the shareholders from the Company's Secretarial Department at its RegisteredOffice.

7. The Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowing paperlesscompliances by the Companies and has issued circulars stating that service of notice/documents including AnnualReport can be sent by e-mail to its members. To support this green initiative of the Government in full measure,members who have not registered their e-mail addresses, so far, are requested to register their e-mail addresses,in respect of electronic holdings with the Depository Participants. Members who hold shares in physical form arerequested to register the same with our Registrar Alankit Assignments Ltd., “Alankit House,” 2E/21 JhandewalanExtension, New Delhi-110 055.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173 (2) OF THE COMPANIES ACT, 1956

ITEM NO.6 & 7

The resolutions at item No.6 & 7 mentioned in the notice relate to the corrections regarding the spelling and grammaticalerrors in the Memorandum and Articles of Association of the Company. The present Memorandum and Articles ofAssociation of the Company contains the aforesaid errors and the same need to be rectified by the Company.

Pursuant to the provisions of Section 16 and Section 31 of the Companies Act, 1956 alteration in the Memorandumand Articles of Association of the Company requires the approval of the members by way of special resolutions.Therefore, the approval of the members is accordingly sought for the aforesaid corrections.

The Board of Directors of the Company recommends the resolutions at Item No.6 and 7 as set out in the notice forapproval of the members.

None of the Directors of the Company is in any way concerned or interested in this resolution.

A copy of the existing Memorandum and Articles of Association as well as the draft of the amended Memorandumand Articles of Association of the Company is available for inspection by members at the Registered Office of theCompany during working hours on any working day.

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ITEM NO. 8With a view to diversify the business of the Company, the Board of Directors of your Company has decided tocommence new businesses viz. of buying, selling and otherwise dealing in shares and securities, foreign exchange,Gold, Diamond, precious stones, Jewellery, silver, cotton, jute hessian, oils, oil-seeds and commodities of all kindsagricultural or otherwise etc.The aforesaid businesses, interalia, are covered under clause 26 of the "other objects"clause of the Memorandum of Association of the Company. Since section 149(2A) of the Companies Act, 1956requires passing of a special resolution by the members of the Company in a General Meeting for commencing anybusiness covered in other objects clause of the Memorandum of Association hence the proposed Special Resolutionunder item no.8 of the notice is recommended by the Board to be passed by the members.

None of the Directors of the Company is, in any way, concerned or interested in the aforesaid resolution.

ITEM NO. 9The surplus funds of the Company, not immediately required for the business of the Company, are required to beinvested by the Board of Directors of the Company, from time to time, in various securities viz. shares of other BodiesCorporate, units of Mutual Funds etc. for earning reasonable gains thereon, for giving any guarantee, or providingsecurity, in connection with a loan made by any other person to, or to any other person by any body corporate. Thepresent investments etc., if any, of the Company taken together with the proposed investments may exceed thelimits prescribed under Section 372A of the Companies Act, 1956. Since the aforesaid section requires passing of aSpecial Resolution for exceeding the limits prescribed there under, hence the proposed Special Resolution at itemNo.9 of the notice.

The sources of funds for the aforesaid investments etc. shall be from internal accruals and the purpose of the aforesaidinvestments etc. would be to deploy surplus funds from time to time in a profitable manner and corporate bodies andfunds etc. in which the investments will be made are as contained in the resolution subject to limits mentioned therein.

None of the directors of the Company are concerned or interested in the aforesaid resolution.

The Board of Directors, therefore, recommend passing of the aforesaid resolution by the members.

ITEM NO. 10In order to meet the requirements of funds for the diversified business operations the Company needs to borrow fromBanks by way of various credit facilities. The borrowings by the Company, in general, are required to be secured bymortgage or charge on all or any of the movable and/or immovable property (ies) of the Company in such form,manner and ranking as may be determined by the Board of Directors of the Company from time to time, in consultationwith the lender(s).

The mortgage and/or charge on any of the movable and/or immovable property (ies) and/or the whole or any part ofthe undertaking(s) of the Company, to secure borrowings of the Company with a power to the charge holders to takeover the management of the business and concern of the Company in certain events of default, may be regarded asdisposal of the Company's undertaking(s) within the meaning of Section 293(1) (a) of the Companies Act, 1956.Hence, it is necessary for the members to pass an ordinary resolution under the said section for the aforesaidcreation of charges.

The Board of Directors accordingly recommend the resolution set out in item no.10 of the accompanying notice forthe approval of the members.

None of the Directors of the Company is, in any way concerned or interested in the passing of the said resolution.

Regd. Off : By Order of the Board‘PAN PARAG HOUSE’ For Pan Parag India Limited24/19, THE MALL,KANPUR - 208 001

(DEEPAK KOTHARI)DATE : 5th August, 2011 CHAIRMAN & MANAGING DIRECTOR

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DIRECTORS’ REPORT

TO THE MEMBERS:

The Board of Directors of your company feel delighted in presenting its Fourth Report and Audited Annual Accountsof the Company for the financial year ended 31st March, 2011.

FINANCIAL PERFORMANCE :(Rs. IN LACS)

FINANCIAL FINANCIALYEAR ENDED YEAR ENDED

31.03.2011 31.03.2010

Net Sales 18111 18733Other Income 423 253Profit before Depreciation & Taxation 3167 1577Less : Depreciation 98 94Provision for Taxation: 1042 500Profit after Tax 2028 983Add : Balance of Profit brought forwardfrom previous year 711 290

Profit available for appropriation 2739 1273

APPROPRIATIONSTransfer to General Reserve 203 98Proposed Dividend 398 398Additional Tax on Proposed Dividend 65 66Balance of Profit carried forward 2073 711

2739 12732011 IN RETROSPECTYour Directors are to report that the Company's sales turnover during the year under review has been Rs.18111 Lacsas against Rs.18733 Lacs during the previous financial year. The Profit before Tax and Profit after Tax have beenRs.3069 Lacs and Rs.2028 Lacs respectively during the aforesaid period.EXPORT BUSINESSDuring the aforesaid period the Company has exported its products to various countries amounting to Rs.8328 lacsas against Rs. 4933 Lacs in the previous year.DIVIDENDYour Directors recommend a dividend of 6% (Rs. 0.60 per Preference share of Rs.10/- each) for the financial yearended 31st March, 2011 subject to approval of shareholders in ensuing Annual General Meeting. The aforesaidDividend is tax free in the hands of the shareholders.DIRECTORSSri Kamlesh Mehta and Dr. Avinash Gupta, Directors of the Company, who retire by rotation and being eligible, offersthemselves for re-appointment.DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm :1. That in preparation of the Annual Accounts, the applicable Accounting Standards have been followed;2. That the Directors have selected such Accounting policies and made judgements and estimates that are reasonable

and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financialyear ended 31.03.2011.

3. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and forpreventing and detecting fraud and other irregularities;

4. That the Directors have prepared the Annual Accounts on a going concern basis.

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

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

[A] CONSERVATION OF ENERGY :a) Energy Conservation Measures taken:

The Company has taken all measures for conservation of energy most economically.b) Additional Investments & Proposals, if any, being implemented for reduction of consumption of energy: No

such investment is proposed.c) Impact of measures at (a) & (b) above for reduction of energy consumption and consequent impact on Cost

of Production of Goods.These measures have led to consumption of energy more economically and cost of production of goods hasgone down.

d) Form ‘A’ is not applicable to the company.

[B] TECHNOLOGY ABSORPTION :

The Company has not imported any technology and company's products are based on secret formulations whichare developed by the promoters from time to time and accordingly no technology as such is involved in themanufacturing of the aforesaid products. Further, no separate R & D department exists in the company. Howeverwhatever little R & D is carried out, the expenses relating to that being non quantifiable, are debited to the primaryheads of Account, because no separate staff is employed for this purpose. Hence, the information in form ‘B’ is Nil.

[C] FOREIGN EXCHANGE EARNINGS AND OUTGO :

(a) Activities relating to exports; } The Company's products are being exported directly asinitiatives taken to increase } well as through Merchant Exporters to Mexico,exports; Development of new export } Australia, Singapore, Middle East, Japan, Kenya,markets for Trading Items and } South Africa, U.K., New Zealand, Malaysia, Thailand,Export Plans } Greece, Mauritius, Netherlands, Brunei, Uganda and

} various other Countries. The Company is making} continuous and vigorous efforts to increase its exports to the} existing and new markets. The Company is planning to open} the market in countries like Switzerland, Nigeria and Congo.

(Rs.in Lacs)CURRENT YEAR PREVIOUS YEAR

(b) Earnings in Foreign Currency 8328 4933(c) Expenditure in Foreign Currency 216 69

AUDITORS & AUDITORS' REPORT

M/s Mehrotra & Mehrotra, Chartered Accountants, Auditors of the Company retire at the ensuing Annual GeneralMeeting and are eligible for re-appointment. They have furnished a certificate to the effect that their re-appointmentwill be in accordance with the limits specified in Sub Sec. (1B) of Sec.224 of the Companies Act, 1956. There are noqualifications or adverse remarks in the Auditors' Report which call for explanation by the Directors.

PARTICULARS OF EMPLOYEES

There are no employees who were in receipt of remuneration as specified in Sec.217 (2A) of the Companies Act,1956 read with The Companies (Particulars of Employees) Rules, 1975 as amended.

ACKNOWLEDGEMENT

Your Directors wish to place on record their appreciation for the co-operation and support extended by variousGovernment Departments, Bankers etc.

By order of the BoardFor Pan Parag India Limited

Place : KANPUR (DEEPAK KOTHARI) (MITESH KOTHARI)Date : 5th August, 2011 CHAIRMAN & DEPUTY MANAGING

MANAGING DIRECTOR DIRECTOR

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AUDITORS' REPORT

To,The Members,PAN PARAG INDIA LIMITED

1. We have audited the attached Balance Sheet of Pan Parag India Limited as at 31st March, 2011 and Profit &Loss Account for the year ended on that date annexed hereto. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial statements basedon our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial state-ments are free from material misstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accounting prin-ciples used and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India interms of sub-section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks of thebooks and records of the Company as we considered appropriate and the information and explanations given tous during the course of our audit, we report that, in our opinion:-

(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details andsituation of fixed assets.

(b) According to the information and explanations given to us, these fixed assets have been physicallyverified by the management during the year and no material discrepancies were noticed on such verifi-cation.

(c) The disposal of fixed assets has been done in the normal course of business and it has not affected thegoing concern.

(ii) (a) The stock of finished goods, semi-finished goods, raw material, stores & perfumes and have beenphysically verified by the management at the end of the year. In our opinion, the frequency of verifica-tion is reasonable.

(b) The procedures of physical verification of stocks followed by the management is reasonable and ad-equate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and the discrepancies noticed on physicalverification, which were not material, have been properly dealt with in the books of account.

(iii) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other partiescovered in the register maintained under Section 301 of the Companies Act, 1956.

(b) Not Applicable to the Company.

(c) Not Applicable to the Company.

(d) Not Applicable to the Company.

(e) The Company has not taken any loans, secured or unsecured from Companies, firm or other partiescovered in the register maintained under section 301 of the Companies Act, 1956.

(f) Not Applicable to the Company.

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(iv) There is an adequate internal control system commensurate with the size of the Company and the nature ofits business, for the purchase of stocks and fixed assets, for the sale of goods and services. During thecourse of our audit, we have not observed any continuing failure to correct major weaknesses in internalcontrol system.

(v) (a) To the best of our knowledge and according to the information and explanations given to us, the con-tracts or arrangements that need to be entered into a register in pursuance of section 301 of the Com-panies Act, 1956 have been so entered;

(b) Each of these transactions has been made at prices which are reasonable having regard to the prevail-ing market prices at the relevant time;

(vi) The Company has not accepted any deposits from the public. Therefore, reporting under clause 4(vi) of theCompanies (Auditors’ Report) Order, 2003 is not applicable to the Company.

(vii) The Company has integrated Internal Control cum audit system which involves reasonable internal auditwhich is considered by us to be commensurate with size and nature of its business.

(viii) The maintenance of cost records has not been prescribed by the Central Government under clause (d) ofsub-section (1) of section 209 of the Companies Act, 1956 for the products manufactured by the Company.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, InvestorEducation and Protection Fund, Employees’ State Insurance, Income-tax, Sales tax / Value Added Tax,Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appro-priate authorities.

(b) According to the information and explanations given to us, there are no undisputed amounts payable inrespect of Income-tax, Wealth-tax, Service-tax, Sales-tax / Value Added Tax, Custom duty, ExciseDuty and Cess as at 31st March, 2011 which were outstanding for a period of more than six monthsfrom the date they became payable.

(c) According to the information & explanations given to us, details of dues of Income-tax, Sales-tax andExcise duty which have not been deposited on account of any dispute are given below :

STATUTE FINANCIAL YEAR TO WHICH THE FORUM WHERE MATTER AMOUNTMATTER PERTAINS IS PENDING Rs. '000

Sales-tax / 1991-92, 1992-93, 1994-95, 2000-01, 2001-02, Tribunal 99084Value Added 2005-06, 2006-07, 2007-08Tax

2008-09, 2009-10, 2010-11 Joint Commissioner 2388

2007-08, 2008-09 Additional Commissioner- Appeal 6445

2000-01, 2001-02 High Court 17524

Excise Duty 2004-05, 2005-06, 2006-07, 2008-09 Commissioner- Appeal 181644

2000-01 High Court 350

1996-97, 1997-98, 1999-2000, 2000-01, 2001-02, 2002-03, CESTAT 5058722003-04, 2004-05, 2005-06, 2006-07, 2008-09

(x) The Company does not have any accumulated losses and it has not incurred cash losses during thefinancial year and immediately preceding financial year.

(xi) The Company does not have any dues payable to a financial institution or bank.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society. Therefore, the reporting underClause 4(xiii) of the Companies (Auditors’ Report) Order, 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 invest-ments. Accordingly the reporting under clause 4(xiv) of the Companies (Auditors’ Report) Order, 2003 arenot applicable to the Company.

Pan Parag-5-28.p65 2011/08/12, 03:00 PM12

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(xv) To the best of our knowledge and according to the information and explanations given to us, the Companyhas not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company has not taken any term loans during the year.

(xvii) As per information and explanations given to us, neither short-term funds nor long-term funds have beenraised during the year.

(xviii) The Company has not made any preferential allotment of shares during the year.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, nofraud on or by the Company has been noticed or reported during the year.

4. Further to above, we report that:-

i. we have obtained all information and explanations which to the best of our knowledge and belief werenecessary for the purpose of our audit.

ii. in our opinion, proper books of accounts have been kept by the Company as required by the law, so far asappears from our examination of those books.

iii. the Balance Sheet and the Profit & Loss Account dealt with by this report are in agreement with the books ofaccounts.

iv. in our opinion, Balance Sheet; and the Profit & Loss Account dealt with by this report comply with theAccounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v. based on the written representations received from the directors as on 31st March, 2011 and taken onrecords by the Board of Directors, we report that none of the directors is disqualified from being appointed asa 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 explanations given to us, the said accounts read withSignificant Accounting Policies and Notes thereon, give the information required by the Companies Act,1956 in the manner so required and give a true and fair view :-

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; and

(b) in the case of Profit & Loss Account, of the Profit of the Company for the year ended on that date.

For MEHROTRA & MEHROTRACHARTERED ACCOUNTANTS

Firm Regn No. 000226C

(ANURAG TANDON)PLACE : KANPUR PARTNERDATE : 5th August, 2011 Membership No.078862

Pan Parag-5-28.p65 2011/08/12, 03:00 PM13

14

Schedule As at 31.03.2011 As at 31.03.2010

Nos. (Rupees) (Rupees)

I SOURCES OF FUNDSShareowners’ Fund(a)Share Capital 1 663697000.00 663697000.00

(b) Reserves & Surplus 2 237446120.81 80939932.52

Deferred Tax Liability 12751754.00 12080820.00

TOTAL 913894874.81 756717752.52

II APPLICATION OF FUNDS1 Fixed Assets 3

(a) Gross Block 296210769.07 292264940.58

(b) Less: Depreciation & Impairment 136247875.39 132348195.17(c) Net Block 159962893.68 159916745.41

(d) Capital Work in Progress 0.00 159962893.68 1422347.50 161339092.91

2 Investments 4 27846231.41 23618115.99

3 Current Assets, Loans & Advances(a) Inventories 5 154285191.83 186861052.45(b) Sundry Debtors 6 244081887.32 250863609.33

(c) Cash & Bank Balances 7 211147039.74 167572198.65(d) Loans & Advances 8 449997588.67 262240699.75

1059511707.56 867537560.18

Less: Current Liabilities & Provisions(a) Current Liabilities 9 134299761.84 181986255.56(b) Provisions 10 199399518.00 114200744.00

333699279.84 296186999.56

Net Current Assets 725812427.72 571350560.62

Miscellaneous Expenses to the extent not written off

(a) Preliminary Expenses 268994.00 403491.00(b) Pre-operative Expenses 4328.00 6492.00

TOTAL 913894874.81 756717752.52

Significant Accounting Policies &Notes to the Accounts 16

BALANCE SHEET AS AT 31st MARCH, 2011

As per our report of even date attached hereto.

For MEHROTRA & MEHROTRA By order of the BoardChartered Accountants For Pan Parag India Limited

Firm Regn. No. 000226C

Place : Kanpur (ANURAG TANDON) (DEEPAK KOTHARI) (MITESH KOTHARI) (PRAGATI PANDEY)Dated : 5th August, 2011 Membership No. 078862 Chairman & Managing Director Deputy Managing Director Company Secretary

Partner

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154th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31st MARCH, 2011

Schedule For the year ended For the year ended

Nos. 31.03.2011 31.03.2010(Rupees) (Rupees)

INCOME

Sales 11 1811142642.15 1873273874.04

Increase / Decrease in stock (+/-) 12 -15069922.24 -35802046.64

Other Income 13 42326448.78 25347862.71

TOTAL 1838399168.69 1862819690.11EXPENDITUREMaterials Consumed 14 663388309.27 662982504.38

Excise Duty 437728091.96 621551363.59Manufacturing, Selling, Distribution

and Administrative Expenses 15 420559891.05 420648610.03Depreciation 9776426.12 9351447.75

TOTAL 1531452718.40 1714533925.75PROFIT BEFORE TAXATION 306946450.29 148285764.36

PROVISION FOR TAXES :Current Tax 102500000.00 50000000.00

Earlier years 1022280.00 0.00 0.00

Deferred Tax 670934.00 104193214.00 0.00 50000000.00

PROFIT AFTER TAXATION 202753236.29 98285764.36Balance Brought Forward 71111356.52 29054912.16

AMOUNT AVAILABLE FOR APPROPRIATION 273864592.81 127340676.52

APPROPRIATIONS :Transfer to General Reserve 20275324.00 9828576.00Proposed Dividend on 6% Preference Shares 39791820.00 39791820.00

Provision for Tax on Proposed Dividend 6455228.00 66522372.00 6608924.00 56229320.00

Balance Carried Forward to Balance Sheet 207342220.81 71111356.52Earning Per Share of Rs. 10/- each :Basic 3130.12 1037.70Diluted 3130.12 1037.70

Significant Accounting Policies & Notes to the Accounts 16





Partner

Pan Parag-5-28.p65 2011/08/12, 03:00 PM15

16

SCHEDULE : 3 FIXED ASSETS

(Rupees)

PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Transfer As at Up To For the Adjustments Up To As at As at

31.03.10 31.03.11 31.03.10 year 31.03.11 31.03.11 31.03.10

Land 463485.40 0.00 0.00 463485.40 0.00 0.00 0.00 0.00 463485.40 463485.40

Leasehold Land 357700.00 0.00 0.00 357700.00 223377.79 8754.79 0.00 232132.58 125567.42 134322.21

Building (Factory) 44163175.14 1422347.50 0.00 45585522.64 9543609.23 668795.31 0.00 10212404.54 35373118.10 34619565.91

Residential House 16112800.00 0.00 0.00 16112800.00 262638.64 262638.64 0.00 525277.28 15587522.72 15850161.36

Plant & Machinery 181425145.83 9432070.50 5314505.72 185542710.61 102623849.50 4691558.49 3532889.32 103782518.67 81760191.94 78801296.33

Motor Lorries 11572831.00 0.00 685400.00 10887431.00 6153975.55 896660.16 281616.03 6769019.68 4118411.32 5418855.45

Motor Cars/Scooters 30259856.00 2083777.00 2010045.00 30333588.00 9954225.55 2867385.42 1001704.87 11819906.10 18513681.90 20305630.45

Cycles 1084.40 0.00 1084.40 0.00 683.30 0.00 683.30 0.00 0.00 401.10

Computers 1247574.92 137218.38 37725.92 1347067.38 751483.17 154350.15 35885.37 869947.95 477119.43 496091.75

Office Equipment 4072463.78 230441.08 323056.11 3979848.75 1174596.18 174750.09 103807.10 1245539.17 2734309.58 2897867.60

Furniture & Fixture 2588824.11 25312.00 1013520.82 1600615.29 1659756.26 51533.07 920159.91 791129.42 809485.87 929067.85

TOTAL 292264940.58 13331166.46 9385337.97 296210769.07 132348195.17 9776426.12 5876745.90 136247875.39 159962893.68 159916745.41

PREVIOUS YEAR 233198012.00 71511285.58 12444357.00 292264940.58 127899659.78 9351447.75 4902912.36 132348195.17 159916745.41

As at As at31.03.2011 31.03.2010

(Rupees) (Rupees)

SCHEDULE : 1

Share Capital

Authorised :1000000 Equity Shares of Rs.10/- each 10000000.00 10000000.0069000000 6% Redeemable non convertible,non cumulative Preference Shares of Rs. 10/- each 690000000.00 690000000.00

Issued, Subscribed and Paid Up :50000 Equity Shares of Rs.10/- each fully paid up 500000.00 500000.0066319700 6% Redeemable non convertible,non cumulative Preference Shares of Rs. 10/- each fully paid up 663197000.00 663197000.00(Issued as per ‘Scheme of Arrangement’ to theshareholders of Kothari Products Limited, without payment

being received in cash and redeemable at par on or before 17.03.2012)TOTAL 663697000.00 663697000.00

SCHEDULE : 2

Reserves & Surplus

(a) General ReserveAs at Commencement of the year 9828576.00 0.00Add : Transferred from Profit & Loss Account 20275324.00 30103900.00 9828576.00 9828576.00

(b) Profit & Loss Account - As per account annexed 207342220.81 71111356.52

TOTAL 237446120.81 80939932.52

Pan Parag-5-28.p65 2011/08/12, 03:00 PM16

174th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

Quantity (Nos.) Amount (Rupees)As at As at As at As at

31.03.2011 31.03.2010 31.03.2011 31.03.2010SCHEDULE : 4

Investments — Long Term (At cost)

(1) Held as on 31.03.2011A Quoted - Non Trade

(i) MUTUAL FUND, UNITS OF Rs.10/- EACH, FULLY PAID UPHDFC CASH MANAGEMENT FUND -TREASURY ADVANTAGE PLAN - RETAIL 14136.447 0 141734.44 0.00

(ii) EQUITY SHARES, EACH FULLY PAID UPIDFC LTD. of Rs. 10/- 0 10000 0 1608876.04KARUR VYSYA BANK LTD. of Rs. 10/- 8000 4364946.00POWER FINANCE CORPORATION LTD. of Rs. 10/- 18000 5873331.57REC LTD. of Rs. 10/- 15000 5182777.61SEL MANUFACTURING COMPANY LTD. of Rs. 10/- 15000 787881.00STERLITE INDUSTRIES (INDIA) LTD. of Re. 1/- 0 12500 0 9533714.00TATA STEEL LTD. of Rs. 10/- 0 13000 0 7309919.95TATA MOTORS LTD. of Rs. 10/- 0 7500 0 5165606.00WHIRLPOOL OF INDIA LTD. of Rs. 10/- 37547 11230560.79

(iii) EQUITY SHARES, PARTLY PAID UPKARUR VYSYA BANK LTD. of Rs. 10/- each Rs. 6/- paid up 3200 0 240000.00 0.00

Aggregate Cost TOTAL (A) 27821231.41 23618115.99

Aggregate Market Value 22920599.29 26096950.00

B Unquoted - Trade(i) EQUITY SHARES, EACH FULLY PAID UPKOTHARI DETERGENTS LTD. of Rs. 100/- 250 0 25000.00 0.00

TOTAL (B) 25000.00 0.00TOTAL (A+B) 27846231.41 23618115.99

(2) Purchased & Sold during the Financial Year : QUANTITY PURCHASE SALENos. (Rupees) (Rupees)

I. Equity Shares, each fully paid up

BOSCH LTD. of Rs. 10/- 17 82341.51 94363.68

ICICI BANK LTD. of Rs. 10/- 8074 7248352.96 7941323.92

MARUTI SUZUKI LTD. of Rs. 5/- 1000 1291720.16 1370897.40

NHPC LTD. of Rs. 10/- 20000 615481.47 639453.05

POWER FINANCE CORPORATION LTD. of Rs. 10/- 15000 4894443.43 5329112.00

PUNJ LLYOD LTD. of Re. 1/- 11000 1392994.26 1478842.08

STATE BANK OF INDIA of Rs. 10/- 6000 13654868.88 16593156.00

II. MUTUAL FUNDS, Units of Rs. 10/- each, fully paid upRELIANCE MONEY MANAGER FUND - INSTITUTIONAL -GROWTH 251900.008 328471808.92 329978916.42RELIANCE MEDIUM TERM FUND - RETAIL -GROWTH 20397710.192 398000000.00 399472899.07HDFC CASH MANAGEMENT FUND - TREASURY ADVANTAGE PLAN - RETAIL 1773699.383 17786738.72 17780461.20HDFC CASH MANAGEMENT FUND - TREASURY ADVANTAGE PLAN - WHOLESALE 2353900.005 23608269.95 23594118.18

Pan Parag-5-28.p65 2011/08/12, 03:00 PM17

18

As at As at31.03.2011 31.03.2010

(Rupees) (Rupees)

SCHEDULE : 5

Inventories - (At cost or net realisable Value whicheveris lower & as certified by the Management)

(a) Stores & Perfumes 78844677.50 63084219.80

(b) Raw Materials 27763244.43 43921352.30(c) Finished Goods 1700697.55 16751831.64

(d) Semi-Finished Goods (Work in Process) 206891.55 225679.70(e) Trading Items 3255210.16 3221805.40

(f) Packing Materials 42514470.63 59656163.61

TOTAL 154285191.83 186861052.45

SCHEDULE : 6

Sundry Debtors-(Unsecured considered good)(a) Debts outstanding for over six months 18603603.09 19079246.04(b) Other debts 225478284.23 244081887.32 231784363.29 250863609.33

TOTAL 244081887.32 250863609.33SCHEDULE : 7

Cash & Bank Balances:(a) Cash in hand and in transit 2775305.11 2566148.06(b) Balances with Scheduled Banks

(i) In Current Accounts & EEFC Account 131623899.96 147220435.38

(ii) In Fixed Deposit Account 76747834.67 208371734.63 17785615.21 165006050.59(Including Interest accrued but not due)

TOTAL 211147039.74 167572198.65

SCHEDULE : 8

Loans & Advances - (Unsecured, Considered Good)

(a) Deposit with Central Excise 72252748.26 55252403.39

(b) Security Deposits 28892284.50 29047880.64

(c) Claim Receivable 189240518.85 99408920.77(d) Advance recoverable in cash or in kind or for value

to be received or pending adjustments 61195628.06 19172218.95(e) Deposit with Income Tax 98416409.00 59359276.00

TOTAL 449997588.67 262240699.75

SCHEDULE : 9

Current Liabilities

(a) Sundry Creditors 36758529.67 68021826.79(b) Advance Against Orders 63520227.83 80099931.96

(c) Due to Directors 467973.00 89260.00

(d) Investor Education & Protection Fund (which shallbe credited by the amount of Unclaimed Dividend, wherever applicable) 186234.00 0.00

(e) Outstanding Liabilities 33366797.34 33775236.81

TOTAL 134299761.84 181986255.56

Pan Parag-5-28.p65 2011/08/12, 03:00 PM18

194th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

For the year ended For the year ended31.03.2011 31.03.2010

(Rupees) (Rupees)

SCHEDULE : 11

Sales

(i) Pan Masala & Gutkha 1785087735.68 1837592423.24(ii) Zarda 4517397.61 8353147.69

(iii) Packaged Drinking Water 10185024.87 10238582.73(iv) Trading Items 11352483.99 17089720.38

TOTAL 1811142642.15 1873273874.04

SCHEDULE : 12

Increase/Decrease in stock (+/-)

Opening StockFinished Goods 16751831.64 52422011.28

Semi-Finished Goods (Work in process) 225679.70 16977511.34 357546.70 52779557.98

Closing StockFinished Goods 1700697.55 16751831.64

Semi-Finished Goods (Work in process) 206891.55 1907589.10 225679.70 16977511.34Increase in Stock -15069922.24 -35802046.64

SCHEDULE : 13

Other Income

(i) Interest Earned on Bank Deposits & Others(Gross, T.D.S. Rs.168969/- (P. Y. Rs.43533/-)) 1705799.46 2322765.53

(ii) Dividend Income (Gross, TDS Rs. Nil (P. Y. Rs. Nil)) 588679.91 182663.20(iii) Franchise Receipts (Gross, T.D.S. Rs.Nil (P. Y. Rs. Nil) 296424.80 241410.10

(iv) Profit on Sale of Long Term, Non Trade Investments 10800919.66 4668273.88(v) Miscellaneous Receipts 28934624.95 17932750.00

TOTAL 42326448.78 25347862.71

As at As at31.03.2011 31.03.2010

(Rupees) (Rupees)

SCHEDULE : 10

Provisions(a) Proposed Dividend including Dividend Tax

Rs. 6455228.00 (P. Y. Rs. 6608924.00) 46247048.00 46400744.00(b) Provision for Taxation 153152470.00 67800000.00

TOTAL 199399518.00 114200744.00

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20

SCHEDULE : 15

Manufacturing, Selling, Distribution and Administrative Expenses

Power & Fuel 18549164.00 15449436.55Payments to & provisions for employees :

Salaries, Wages and Bonus 26487845.88 25218917.94Contribution to Provident and other Funds 2613408.00 2266960.00Gratuity 1025809.00 1008497.00Staff welfare and Other Expenses 7621906.34 37748969.22 5573937.45 34068312.39General Insurance 1271928.44 605002.58Transit Insurance 508784.00 347290.00Consumption of Stores & Perfumes 207445050.04 215908922.90Freight & Cartage Inward 12030893.19 12312854.00Rent 6607807.00 6108492.00Rates & Taxes 672639.00 7280446.00 1298013.00 7406505.00Repairs : Building 5790466.00 648440.60 Machinery 4473993.75 3628525.45 Others 3002747.68 13267207.43 1994740.26 6271706.31

Freight, Cartage and Octroi Outward 36819016.26 33615126.15Advertisement & Publicity 10184049.00 32043472.00Selling & Distribution Expenses 23997254.69 27063201.58Travelling & Conveyance 11934169.80 13151202.04Interest & Bank Charges 1088000.42 1173872.26Miscellaneous Expenses 10886726.45 16311163.93Commercial Tax 21148237.92 2905757.83Loss on Sale of Fixed Assets 2425724.19 1615514.51Payment to Auditors :

Statutory Audit Fee 88240.00 88240.00 Tax Audit Fee 11030.00 99270.00 11030.00 99270.00

Directors' Remuneration 3875000.00 300000.00

TOTAL 420559891.05 420648610.03

For the year ended For the year ended31.03.2011 31.03.2010

(Rupees) (Rupees)SCHEDULE : 14

Materials Consumed

(A) Raw & Packing Materials Consumed :

(i) Opening Stock (a) Raw Material 43921352.30 22007430.39(b) Packing Material 59656163.61 103577515.91 13511701.18 35519131.57

(ii) Add: Purchases (a) Raw Material 392017073.34 467312951.44(b) Packing Material 230655034.14 622672107.48 253766298.12 721079249.56

726249623.39 756598381.13(iii) Less: Closing Stock (a) Raw Material 27763244.43 43921352.30

(b) Packing Material 42514470.63 70277715.06 59656163.61 103577515.91

Raw & Packing Materials Consumed 655971908.33 653020865.22

(B) Consumption of Trading Items 7416400.94 9961639.16

TOTAL 663388309.27 662982504.38

Pan Parag-5-28.p65 2011/08/12, 03:00 PM20

214th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

SCHEDULES CONTINUED

SCHEDULE : 16

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS :

(A) SIGNIFICANT ACCOUNTING POLICIES :

(1) SYSTEM OF ACCOUNTING :

The Financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordancewith Generally Accepted Accounting Principles in India, the Accounting Standards issued by the Institute of CharteredAccountants of India and relevant provisions of the Companies Act,1956.

(2) FIXED ASSETS AND DEPRECIATION :

All fixed assets are stated at cost, comprising of purchase price, duty, levies and any direct attributable cost of bringingthe assets to their working condition for the intended use. Depreciation is provided according to straight line method atthe rates prescribed by the Schedule XIV to the Companies Act, 1956 and Provision for impairment loss is recognisedto the extent by which the carrying amount of an asset exceeds its recoverable amount.

Leasehold Land has been amortised over the period of lease and considered as Depreciation.

(3) INVESTMENTS :

Investments are stated at cost less fall in their market value if considered permanent.

(4) INVENTORIES :

Inventories are valued at cost or net realisable value whichever is lower. Cost of Raw Material, Packing Material, Stores& Perfumes and Trading Items is arrived at FIFO basis. Cost of Finished Goods & Work in Process is arrived on thebasis of weighted average cost of raw material, packing material and the cost of conversion thereof for bringing theinventories to their intended use.

(5) SALES :

Sales are recognised on despatch of goods to the customers and are recorded including excise duty but excludingcommercial taxes i.e. central sales tax / value added tax / entry tax and net of returns, if any.

(6) FOREIGN CURRENCY TRANSACTIONS :

Foreign currency transactions are accounted at the exchange rates prevailing at the date of the transaction. Gains /Losses resulting from the settlement of such transactions and from conversion of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the profit and loss account.

(7) EXCISE DUTY :

The liabilities towards excise duty on finished goods lying in excise godown amounting to Rs.28755.00 (Previous yearRs.7222.31) is provided in the books and therefore the stock is valued inclusive of excise duty payable thereon inaccordance with the provisions of AS-2 ‘Valuation of Inventories’. However this has no impact on the profit for the year.

(8) EMPLOYEE RETIREMENT BENEFITS :

a. Company’s contribution to Employees’ Provident Fund is charged to Profit and Loss Account.

b. Company has taken a Group Gratuity Cash Accumulation Policy from LIC for its employees including directors andthe premium for the policy is charged to Profit and Loss Account.

(B) NOTES TO THE ACCOUNTS :

(1) CONTINGENT LIABILITIES : 31.03.2011 31.03.2010

(Rupees) (Rupees)(A) Claims not acknowledged as debt -

(i) Excise Duty – Gross 687866069.00 434391847.00– Net of Tax 459374158.00 286742058.00

(ii) Other Taxes – Gross 125441211.00 30710610.00– Net of Tax 83772777.00 20272074.00

(B) Uncalled liabilities for 3200 partly paid Equity Shares of Karur Vysya Bank Ltd. of Rs. 10/- each, Rs. 6/- paid up isRs. 240000.00.

Pan Parag-5-28.p65 2011/08/12, 03:00 PM21

22

SCHEDULES CONTINUED

(2) ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPHS 3, 4C AND 4D OF PART II OFSCHEDULE VI OF THE COMPANIES ACT, 1956.(A) Class of Goods and Capacity:

Capacity Class of Goods manufactured :-

Licensed Installed Licensed Installed31.03.2011 31.03.2010

Pan Masala and its Preparations N.A. N.A. N.A. N.A.Zarda N.A. N.A. N.A. N.A.Packaged Drinking Water N.A. N.A. N.A. N.A.Ice Cube N.A. N.A. N.A. N.A.

(B) RAW MATERIALS CONSUMED : (Rupees) Kgs. (Rupees) Kgs.(a) Betelnuts 278489780.06 3322252.760 322133675.58 3347926.276(b) Katha 70370289.63 180370.448 62428527.56 206372.712(c) Tobacco 24920138.23 253478.625 29183618.16 279738.060(d) Flavour Powder 9649346.35 184545.006 9530733.32 198591.076(e) Packaged Drinking Water 5054307.87 - 4383771.73 -(f) Other Materials 19691319.07 - 17738703.18 -

(C) FINISHED GOODS : Kgs./Cases/Nos. Kgs./Cases/Nos.

Opening Stock(a) Pan masala and its preparations 16298994.47 37391.140 52532933.59 74551.710(b) Zarda 403873.92 1333.700 55721.00 176.200(c) Packaged Drinking Water (in cases) 48963.25 855 98836.85 1455(d) Gold 3034397.46 3.053 3034397.46 3.053(e) Bubble Top (in nos) 71175.00 665 99809.66 1562(f) Washing Powder & Cake 10020.24 569.875 11085.35 641.695(g) Water Coolers (in nos) 106212.70 24 134117.90 30

Production :(a) Pan masala and its preparations — 4041984.243 — 3950220.730(b) Zarda — 14037.500 — 27103.900(c) Packaged Drinking Water (in cases) — 161370 — 164611(d) Ice Cube — 24892.000 — 26934.000

Purchases :(a) Bubble Top (in nos) 115640.00 967 104932.63 1131(b) Washing Powder & Cake 7334165.70 396732.650 9533621.40 579363.050

Sales :(a) Pan masala and its preparations 1785087735.68 4077231.583 1837863524.31 3987381.300(b) Zarda 4517397.61 15096.200 8353147.69 25946.400(c) Packaged Drinking Water (in cases) 9934589.64 161150 9992450.00 165211(d) Ice Cube 250435.23 24892.00 246132.70 26934.00(e) Bubble Top (in nos) 76644.27 677 70774.75 2028(f) Washing Powder & Cake 11275839.72 397302.525 16718424.39 579434.870(g) Water Coolers (in nos) 0 0 29420.20 6(inclusive of shortage, wastages & net of returns)

Closing Stock :(a) Pan masala and its preparations 1544776.80 2143.800 16298994.47 37391.140(b) Zarda 87500.00 275.000 403873.92 1333.700(c) Packaged Drinking Water (in cases) 68420.75 1075 48963.25 855(d) Gold 3034397.46 3.053 3034397.46 3.053(e) Bubble Top (in nos) 114600.00 955 71175.00 665(f) Washing Powder & Cake 0.00 0.00 10020.24 569.875(g) Water Coolers (in nos) 106212.70 24 106212.70 24

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234th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

(D) VALUE & PERCENTAGE OF IMPORTED MATERIALS CONSUMED :

(Rupees) Percentage (%) (Rupees) Percentage (%)RAW MATERIALS CONSUMED :

Imported 0 0 1269022.00 0.28Indigenous 408175181.21 100.00 444130007.53 99.72

408175181.21 100.00 445399029.53 100.00

STORES & PERFUMES CONSUMED :

Imported 8694755.64 4.19 2168309.27 1.00Indigenous 198750294.40 95.81 213740613.63 99.00

207445050.04 100.00 215908922.90 100.00

(E) VALUE OF IMPORTS (C.I.F. BASIS) : 21557150.00 6939022.00

(F) EXPENDITURE IN FOREIGN CURRENCY :Import of Materials 21557150.00 6939022.00

SCHEDULES CONTINUED

(G) EARNING IN FOREIGN CURRENCY :

Export of goods on F.O.B. Basis 832807988.74 493262149.07

(H) AMOUNT REMITTED DURING THE YEAR IN FOREIGNCURRENCY ON ACCOUNT OF DIVIDEND : Nil Nil

(3) Payments to Auditors :

(a) As Auditors 88240.00 88240.00(b) For Tax Audit 11030.00 11030.00

(4) Payment to Directors – Remuneration 3875000.00 300000.00

(5) Segment Information (Information about Business Segments)

The Company operates in three Business Segments-(a) Pan Masala & Gutkha etc.(b) Packaged Drinking Water(c) Trading ItemsThe Information regarding these segments are as follows-

Particulars For the Year For the Yearended ended

31.03.2011 31.03.2010(Rupees) (Rupees)

(A) SEGMENT REVENUE (NET SALES / INCOME)(a) Segment - Pan Masala & Gutkha etc. 1789605133.29 1845945570.93(b) Segment - Packaged Drinking Water 10185024.87 10238582.73(c) Segment - Trading Items 11352483.99 17089720.38

1811142642.15 1873273874.04Less : Inter Segment Revenue 0 0

TOTAL REVENUE 1811142642.15 1873273874.04

(B) SEGMENT RESULTS (PROFIT (+)/LOSS (-) BEFORE TAX FOR EACH SEGMENT)(a) Segment - Pan Masala & Gutkha etc. 311381662.45 145434265.16(b) Segment - Packaged Drinking Water -6955491.54 -2315300.95(c) Segment - Trading Items 2520279.38 5166800.15

Net Profit Before Exceptional Items 306946450.29 148285764.36(d) Interest Expense 0 0(e) Unallocated - Exceptional Items - Income 0 0

Net Profit After Exceptional Items 306946450.29 148285764.36

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24

(7) Earning Per Share :2010-2011 2009-2010

(a) Profit after tax (Profit attributable to Equity Shareholders) 156506188.29 51885020.36(b) Weighted average nos. of Equity shares for Basic / Diluted EPS 50000 50000(c) Nominal Value of Equity Share (In Rs.) 10.00 10.00(d) Basic / Diluted Earning per Equity Share 3130.12 1037.70

(8) The deferred tax liability amounting to Rs. 12751754.00 (Previous year Rs. 12080820.00) is on account of time difference ofDepreciation which is capable of being reversed in one or more subsequent years.

(9) In terms of Accounting Standard 9 “Accounting for Revenue Recognition in the financial statements” Issued by the Instituteof Chartered Accountants of India, in respect of dividend from investments in shares, the company has not postponed anydividend from revenue recognition for the year.

(10) In terms of Accounting Standard 16 “Borrowing Cost” Issued by the Institute of Chartered Accountants of India, the companyhas not borrowed any funds to acquire, build and install any fixed assets and other assets during the year.

SCHEDULES CONTINUED

(ii) Summary of Transactions:

Particulars Key Management Personnel Associate Companies& Relatives

For the year ended /As on For the year ended /As on31.03.2011 31.03.2010 31.03.2011 31.03.2010

(Rupees) (Rupees) (Rupees) (Rupees)

Remuneration etc. 4975000.00 300000.00 — —On Account of Expenses-Rent 300000.00 300000.00 3970800.00 3847200.00Dividend Paid 25434870.00 0.00 4399998.00 0.00Purchase of Shares 25000.00 0.00 0.00 0.00Outstanding (Payable) 467973.00 89260.00 0.00 0.00Note: Since no amount is considered as bad & doubtful, neither provision is made for the same nor amount written off.

(6) Related Party Disclosures in accordance with the Accounting Standards (AS-18) ‘Related Party Disclosure’, issuedby the Institute of Chartered Accountants of India are as under :(i) Names of Related parties and description of relationship :

(A) Key Management Personnel & their Relatives :

(a) Shri M.M. Kothari(b) Shri Deepak Kothari - Chairman & Managing Director(c) Shri Mitesh Kothari, Deputy Managing Director(d) Smt. Sharda M. Kothari(e) Smt. Arti Kothari(f) Smt. Reeta Shah(g) Smt. Urvi Kothari(h) Mitesh Kothari - HUF

(B) Associate Companies :(a) Kothari Detergents Limited(b) Ekta Flavours Pvt. Limited(c) Kothari Products Limited(d) Dham Securities Pvt. Limited

(C) SEGMENT CAPITAL EMPLOYED (ASSETS-LIABILITIES)As at As at

31.03.2011 31.03.2010

(a) Segment - Pan Masala & Gutkha etc. 866897816.22 707489329.26(b) Segment - Packaged Drinking Water 26798818.81 29686602.88(c) Segment - Trading Items 7446485.78 7461000.38

TOTAL CAPITAL EMPLOYED 901143120.8 744636932.52

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254th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1


For MEHROTRA & MEHROTRA By order of the Board

Chartered Accountants For Pan Parag India LimitedFirm Regn. No. 000226C


Partner

(11) In terms of Accounting Standard 19 “Accounting for Leases” Issued by the Institute of Chartered Accountants of India,(i) All the lease agreements of the Company are in respect of operating lease of the business premises.(ii) The aggregate lease rentals payable are charged to the Profit & Loss Account as Rent in Schedule 15.(iii) The cancellable lease agreements are usually renewable by mutual consent at mutually agreeable terms.

(12) In terms of Accounting Standard 28 “Impairment of Assets” Issued by the Institute of Chartered Accountants of India, provisionfor impairment loss on assets for the year is not required.

(13) In terms of Accounting Standard 29 “Provisions, Contingent Liabilities & Contingent Assets” Issued by the Institute of CharteredAccountants of India, there has been no provision on beginning and at the end of the year, therefore no disclosure required.

(14) Fixed Deposits include Rs. 4165000.00 (Previous year Rs. 4165000.00) given as margin money to the bank against guaranteesissued by them.

(15) Sundry creditors include Rs. 1657338.50 (Previous Year Rs.Nil) due to Micro and Small enterprises, based on the recordsand the information received from suppliers.

(16) The Board of directors consider the diminution in value of its Long Term Investments as temporary in nature and therefore noprovision for the same has been done in the books of accounts.

(17) There is no amount due to be transferred to “Investor Eduction & Protection Fund” maintained by the Government of India asat the year end.

(18) The figures of previous year have been regrouped, recast where ever considered necessary to make them comparable withthose of the current year.

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26

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. REGISTRATION DETAILS

Registration No. U16009UP2007PLC033152 State Code 20

Balance Sheet Date 31.03.2011

II. CAPITAL RAISED DURING THE YEAR (AMOUNT IN Rs. THOUSANDS)

Public Issue Nil Right Issue Nil

Bonus Issue Nil Private Placement Nil

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN Rs. THOUSANDS)

Total Liabilities 1247594 Total Assets 1247594

Sources Of Funds :

Paid-up Capital 663697 Reserves & Surplus 237446

Secured Loans 0 Unsecured Loans 0

Deferred Tax Liability 12752

Application Of Funds :

Net Fixed Assets 159963 Investments 27846

Net Current Assets 725813 Misc. Expenditure 273

IV. PERFORMANCE OF COMPANY (AMOUNT IN Rs. THOUSANDS)

Turnover 1811143 Total Expenditure 1546523

Other Income 42326

Profit Before Tax 306946 Profit After Tax 202753

Earnings Per Share (In Rs.) 3130.12 Dividend Rate % Nil

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS OF COMPANY — N.A.—

Item Code No. (ITC Code) 210690 02 Item Code No. (ITC Code) 240399 01

Product Description Pan Masala Product Description Zarda

Item Code No. (ITC Code) 220110 10

Product Description Packaged Drinking & Aerated Water Bottling





Partner

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274th A N N U A L R E P O R T 2 0 1 0 — 2 0 1 1

PROXY FORM4th ANNUAL GENERAL MEETING ON 23rd SEPTEMBER, 2011

I/We ................................................................................ of ...........................................................................................being a Member/Members of above named Company, hereby appoint .................................................................................................................... of ........................................................... or failing him ...................................................................................................... of ................................................................................................. as my/our Proxyto attend and vote for me/us and on my/our behalf at the Fourth Annual General Meeting of the Company, to beheld at "Royal Cliff", 113/72, Swaroop Nagar, Opposite Motijheel Gate No.1, Kanpur on Friday, the 23rd day ofSeptember, 2011 at 11:00 A.M. and at any adjournment thereof.

Signed at .................................................. this ................................................. day of .................................................

Ledger Folio No. ............................. D.P. Id* .............................................. Client Id* .................................................

Number of Equity Shares held.............................................

Number of Preference Shares held ............................... Signature .............

NOTES :1. The Proxy need not be a member.2. This Proxy duly signed across 1 Rupee Revenue Stamp should reach the Registered Office of the Company

not less than 48 hours before the time fixed for the Meeting.* Applicable for members holding shares in electronic form.

— — — — — — — — — — — — — — — — TEAR HERE — — — — — — — — — — — — — — — — — —

Regd. Office : “PAN PARAG HOUSE”, 24/19, THE MALL, KANPUR - 208 001

ATTENDANCE SLIP

I, hereby record my presence at the Fourth Annual General Meeting being held on Friday, the 23rd day ofSeptember, 2011 at 11.00 A.M. at "Royal Cliff", 113/72, Swaroop Nagar, Opposite Motijheel Gate No.1, Kanpur.

1. Full Name of the Shareholder/Proxy .....................................................................................................................(in Block Letters)

2. Ledger Folio No. .......................................... D.P. Id.* .................................... Client Id.* .....................................

3. No. of Equity Shares held ..................................................... 4. Signature of the Shareholder/Proxy

................................................................................................. attending .........................................................

To be used only when First named Shareholder is not attending.

Please give full name of the Joint Holders.

1. Mr./Mrs./Miss ..................................................................................... Signature ....................................................

2. Mr./Mrs./Miss ..................................................................................... Signature ....................................................(in Block Letters)

NOTES :i. Please fill in this attendance slip and hand it over at the entrance of the hall.ii. Shareholders who come to attend the meeting are requested to bring their copies of the Annual Report with them.iii. Applicable for members holding shares in electronic form.iv. No gift will be distributed in the aforesaid meeting as per SEBI guidelines.

AffixRe. 1/-

Revenue

Regd. Office : “PAN PARAG HOUSE”, 24/19, THE MALL, KANPUR - 208 001

Pan Parag-5-28.p65 2011/08/12, 03:00 PM27

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