MEGHMANI ORGANICS LIMITED - bseindia.com · E-mail : [email protected] SINGAPORE SECRETARIAL...

ANNUAL REPORT2009-2010

MEGHMANI ORGANICS LIMITED

Chemistry of success at work

Annual

2009-10

01


CONTENTS

Corporate Information 02

Chairman's Statement 06

Directors' Report 08

Management Discussion and Analysis 18

Corporate Governance 22

Auditors' Report 39

Balance Sheet 44

Profit and Loss Account 45

Schedules Forming Part of Balance Sheet and Profit and Loss Account 46

Cash Flow Statement 79

Auditors' Report on Consolidated Financial Statements 83

Consolidated Balance Sheet 84

Consolidated Profit and Loss Account 85

Schedules Forming part of Consolidated Balance Sheetand Profit and Loss Account 86

Consolidated Cash Flow Statement 110

Statement Pursuant to Section 212 of the Companies Act, 1956 112

Notice of Annual General Meeting 114

Proxy Form 123


CORPORATE INFORMATION

BOARD OF DIRECTORS Jayanti M PatelAshish N SoparkarNatwarlal M PatelRamesh M PatelAnand I PatelAshvin RaythathaBalkrishna T ThakkarChinubhai R ShahJayaraman VishwanathanChandan Bhattacharya K H PatelAkthar Hassen G Shaik (29.01.2010)

AUDIT COMMITTEE Balkrishna T ThakkarChinubhai R ShahJayaraman Vishwanathan

NOMINATING COMMITTEE Chinubhai R ShahChandan Bhattacharya Jayanti M Patel

REMUNERATION COMMITTEE Chinubhai R ShahBalkrishna T ThakkarNatwarlal M Patel

THE SHAREHOLDERS' / INVESTORS' Balkrishna T ThakkarGRIEVANCES, SHARE ALLOTMENT AND Chinubhai R ShahSHARE TRANSFER COMMITTEE Ashish Soparkar

COMPANY SECRETARY Kamlesh Dinkerray Mehta

REGISTRAR & SHARE TRANSFER AGENT Link Intime India Private LimitedC-13, Pannalal Silk Mills Compound,LBS Road, Bhandup (West),Mumbai 400 078, India.Tel: +91 22 2596 0320Fax: +91 22 2596 0329

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SINGAPORE DEPOSITORY SHARES ("SDSs") Tricor Barbinder Share Registration ServicesREGISTRAR AND SDSs OFFICE 8 Cross Street # 11,

PWC Building, Singapore 048424Telephone No. (65) 6236 3552Fax No. (65) 6236 3405E-mail : [email protected]

SINGAPORE SECRETARIAL AGENT Tricor Evatthouse Corporate Services 8 Cross Street # 11,PWC Building,Singapore 048424Telephone No. (65) 6236 3510Fax No. (65) 6236 4399E-mail : [email protected]

REGISTERED OFFICE Plot No. 184, Phase II,G.I.D.C. Vatva, Ahmedabad -382 445Telephone No. 91-79-25831210Fax No. 91-79-25833403E-mail : [email protected]




1. Pigment Green - Division Plot No. 184, Phase II,G.I.D.C. Vatva, Ahmedabad -382 445Telephone No. 91-79-25831210Fax No. 91-79-25833403E-mail : [email protected]

2. Agro Division - I Plot No. 402,403,404 & 452,Village Chharodi,Taluka Sanand,District :- Ahmedabad Telephone No. 91-2717-273251Fax No. 91-2717-273254E-mail : [email protected]

3. Pigment Blue - Division Plot No. 21,21/1,G.I.D.C. Panoli,District :- Bharuch Telephone No. 91-2646-276352Fax No. 91-2646-276374E-mail : [email protected]

4. Agro Division - II 5001/B, G.I.D.C. Ankleshwar,District :- Bharuch Telephone No. 91-2646-222971Fax No. 91-2646-222965E-mail : [email protected]

5. Agro Division - III Plot No - Ch-1+2/AGIDC Dahej Taluka - VagraDahej - Bharuch -392130Telephone No. 91-2641-256677 /88E-mail : [email protected]

6. Agro Division - IV Plot No. 22/2,G.I.D.C. Panoli,District :- Bharuch Telephone No. 91-2646- 276577E-mail : [email protected]

PLANT LOCATIONS :

04

PRINCIPAL BANKERS State Bank of India,CAG Branch,57, Shrimali Society, Navrangpura,Ahmedabad 380 009

HDFC Bank Limited,HDFC House,Mithakhali Six Road,Ahmedabad 380 009

ICICI Bank LimitedJMC House, Opp. Parimal Garden,Ambawadi, Ahmedabad 380 009

AUDITORS M/s Patel & Khandwala204, Akik,Opp. Lions Hall,Mithakhali, Ahmedabad 380 009

***

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CHAIRMAN'S STATEMENT

Dear shareholders,

It gives me immense pleasure to extend a very warm welcome to all the members of the company at the 16th Annual General Meeting of India's expeditiously growing chemical company, Meghmani Organics Limited (MOL).

At Meghmani, we believe that end of growth and expansion is the end of the company in itself, and to keep this relentless spirit of growth alive; MOL has set up two new agrochemicals manufacturing units last year in addition to one more overseas subsidiary in Indonesia for marketing our own branded formulations in that market. We have strengthened our worldwide marketing network for Agrochemicals and Pigments and currently focusing on exporting technical grade pesticides as well as various formulations to our customers across the globe. We also have a strong pipeline of registrations of several new products for various markets worldwide for Agrochemicals.

To leverage these strengths, we have identified to manufacture 2, 4-D, a widely used and environment friendly herbicide which has a good growth potential. To have advantage of backward/forward integration we have also identified to manufacture Monochloroacetic Acid (MCAA) a major intermediate used in the production of 2, 4-D Acid. In the manufacture of MCAA, Trichloroacetyle Chloride (TCAC) will be generated which is a key raw material for one of our existing technical product Chlorpyriphos, which we manufacture at our Ankleshwar plant. The planned annual installed capacity of 2, 4-D Acid is 9600 MT and MCAA 12,000 MT. MCAA plant will generate TCAC 2400 MT.

The plant is strategically located in the vicinity of Caustic Chlorine complex of the Subsidiary viz., Meghmani Finechem Limited (MFL). The basic advantage will be the availability of Chlorine from MFL through pipeline for production of MCAA as well as for the production of 2, 4-D. This will help us in reducing the cost of production of MCAA. It will also ensure steady supply base of chlorine for MOL's new subsidiary, MFL.

The cost of the Project is firmed up at Rs. 84 Crores. The Project will be funded by way of term loan of Rs. 51 Crores and Rs. 33 Crores by way of Internal Accruals.

The project is expected to commence its first phase of operation by July 2010. We expect to achieve top line of about Rs. 130 Crores by FY 2011.

We have also set up plant of Agrochemical Formulation of Agrochemical Technical products such as Chlorpyriphos and Cypermethrin etc. at Panoli. The administrative advantage of the plot is that it is exactly opposite to our Pigment Manufacturing facility. The investment of around Rs. 3 Crore has already been made. The Company expects to increase turn over by Rs. 50 Crore in coming two years. The Plant commenced its operational by 30th September, 2009 as per schedule. In the last few years the Company has increased its registration strength, sales depots and sales team. This will facilitate the marketing of formulated products.

Last year, our in house Research and Development unit at our Chharodi plant got recognition from Department of Scientific and industrial Research (DSIR), Government of India, Ministry of Science and Technology. It will boost the R&D activities of the Company in off-patent molecules, improvements in process parameters, time cycle optimization, waste management, cost reduction and scale up of new technology from laboratory to production level. The newly set up R&D set up will also enhance the Company's efforts towards attracting contract manufacturing projects.

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Our newly set up overseas subsidiary at Indonesia will focus on selling our own branded agrochemicals in Indonesia and nearby markets. We have established our office, warehouse and dedicated sales team to take up this challenging job. And now, with great pride; I shall proceed to share with you, the highlights of MOL's performance in the Fiscal year 2009-10.

The present fiscal year has turned out to be a considerably good year for both our Agrochemical and Pigment businesses. As we persistently struggled our way out of a dismal and recessionary global business market, we crossed several hurdles such as constantly battling with exchange rate fluctuations, ever increasing oil and other raw material prices and erosion of prices in our end products. Our vigorous and stringent policies and cost cutting measures have without fail; kept us on the track of what we always believed in- “growth”. This year we have embarked upon an extraordinary and phenomenal increase of 22% in PAT leading us to a gigantic increase in profit of Rs 0.11 Billion Our Administrative, Finance, Sales and Distribution Expenses have experienced a sharp cut of 84%, 43% and 0.3% respectively.

Also Standing Firm against the turbulent recessionary winds is our Domestic sales embarking upon an increase by Rs. 0.32 Billion, i.e. a Himalyan 17%. Our Agrochemicals division contributed Rs. 4.12 Billion and Pigment division contributed Rs. 2.81 Billion to the revenue against Rs. 4.30 Billion and Rs. 2.66 Billion in the year ago period. It is out of both bliss and gratification that I inform you; that this vast increase was achieved despite having several competitors in the domestic market. It is hence needless to say that our standards in terms of quality, services, customer satisfaction, technical competence, and logistic amenities are unparalleled, unequalled and beyond compare.

The earnings per share rose to Rs 2.42 per share from Rs.1.99 per share of last year.

On the strength of this performance our Board is recommending a dividend of 40% per share.

On behalf of Board and the Management team, we wish to thank you for your undivided commitment, trust and faith in us. We will continue to build and deliver attractive returns. We would also like to thank our customers, vendors, bankers, insurance companies, consultants and advisors who always stood by us and extended strong support to us in all circumstances. We also take this opportunity to appreciate our employees who with their powerful sense of commitment and belonging helped the company to achieve enviable growth in the sectors of Agrochemicals and Pigments.

Our company is built over a period of three decades. We stood firm on four pillars of transparency, fairness, accountability and merit based professional environment. We value in being a caring member of the society, an equal opportunity provider, fair to our stake holders and a preferred source for our invaluable customers.

I, the Chairman of MOL, promise you all that no efforts will be spared and no opportunity will be wasted to ensure that MOL growth story continues further and stronger in years to come.

***


DIRECTORS' REPORT

To,The Members,Meghmani Organics Limited

Your Directors have pleasure in presenting Sixteenth Annual report and Audited Statement of Accounts of the Company for the Financial Year ended on 31st March, 2010.

FINANCIAL RESULTS

PARTICULARS Year Ended On Year Ended OnMarch 31, 2010 March 31, 2009

(a) Net Sales & Other Income 7521.25 7945.92(b) Profit before Interest & Depreciation 1154.65 1240.28(c) Financial Expenses 136.01 240.05(d) Depreciation 170.16 153.63(e) Profit Before Exceptional Item & Tax 848.48 846.60(f) Exceptional Item 11.20 225.36(g) Profit Before Tax 837.28 621.24(h) Payment / Provision for Current Tax and FBT 230.36 120.17(i) Deferred Tax Expenses/(Income) (8.88) (4.24)(j) Profit After Tax 615.80 505.31Profit Available for Appropriation 615.80 505.31Appropriations:-General Reserve 65.00 55.00Proposed / Final Dividend 101.73 83.93Tax on Proposed/ Final Dividend 16.89 14.26Balance carried forward 550.80 352.12Total of Appropriations 615.80 505.31

DIVIDEND:-

Your Directors are pleased to recommend dividend of Rs. 0.40 per Equity share (40%) on 254,314,211 Equity Shares of Rs. 1/- each, for your approval. The proposed dividend is tax free in the hands of shareholders.

OPERATIONS:-

The Net Sales of the Company has decreased to Rs. 7292.18 Mn in FY 2010 as against Rs. 7683.69 Mn in FY 2009, showing decrease of 5.10%.

DOMESTIC SALES:-

The Domestic Sales of the Company increased by Rs. 323.07 Mn i.e. 17.44% from Rs. 1852.11 Mn in FY 2009 to Rs. 2175.18 Mn FY 2010. The Domestic Sales of Pigment Division increased by Rs. 239.24 million from Rs. 405.32 million in FY 2009 to Rs.644.56 million in FY 2010. The Sales of Pigment Division increased due to new Customer base.

Rs. in Millions

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The sales of Agro Division increased by Rs. 56.01 million from Rs. 1446.79 million in FY 2009 to Rs. 1502.80 million in FY 2010, due t o good monsoon season.

EXPORT SALES

The Export Sales decreased by Rs. 714.57 Mn i.e. 12.25% from Rs. 5831.58 Mn in FY 2009 to Rs. 5117.01 Mn in FY 2010. The Agrochemical Export sales decreased by Rs. 233.57 million i.e. from Rs. 2850.70 Mn in FY 2009 to Rs. 2617.13 Mn in FY 2010 and Pigment Division decreased by Rs. 87.63 million from Rs. 2257.76 Mn in FY 2009 to Rs. 2170.13 Mn in FY 2010. The major impact in export sales is decrease in trading sales by Rs. 393.37 million.

OTHER INCOME

Other income decreased by Rs.33.17 Mn. The lower export sales resulted in decrease in DEPB (Duty Entitlement Pass Book) income.

EXCEPTIONAL ITEMS:-

As per the guide lines issued by Institute of Chartered Accountants of India and Ministry of Corporate Affairs the Company has booked the foreign exchange gain /loss on mark to market basis.

FUTURE STRATEGIES:-

Pigments:

Global demand to rise 3.9% yearly through 2013

The size of the global pigment and dyestuff market is estimated at USD 13.9 Bn in 2009. Of this, the size of the organic pigment market is estimated at USD 9.1 Bn. The market is forecast to grow at a CAGR of 3.9% to emerge as a USD 16.9 Bn market by2013.

The organic pigment market is expected to grow at a faster pace as compared to the dyestuff market. In volume terms, demand will grow 3.5 percent annually to 2.3 million metric tons. While the textile industry will remain the largest consumer of dyes and organic pigments, faster growth is expected in other markets such as printing inks, paint and coatings, and plastics. Strong gains will occur in the Asia/Pacific region and, to a lesser extent, other developing regions such as the Africa/Mideast region and Eastern Europe, while market maturity will limit advances in North America and Western Europe.

The downturn seen in 2009 continued in2010 with some improvements. We expect the market to stabilize in 2011. High raw material cost will no longer be a critical issue in 2011. Despite this expected market condition, we continue to expect pigment users to seek alternate sources affording reasonable growth in 2011 and beyond.

Agrochemicals

The global agrochemical industry is expected to grow at 8.9% CAGR to touch USD 78.3 Bn by 2014, on account of many reasons unparalleled grain prices resulting in increase in demand for pesticides, favorable weather conditions in many parts of the world, increase in crop acreage, etc while Indian market is set to grow 12-15%, given the low penetration and the rising income levels of farmers.


NEW AGROCHEMICAL MANUFACTURING FACILITY AT DAHEJ TO MANUFACTURE 2, 4-D AND MCAA

In order to leverage the inherent strengths of global presence and customer confidence, along with the availability of basic raw materials like caustic soda and chlorine from in-house source, MOL has invested in projects for manufacture of 2, 4-D - a widely used herbicide, as well as Monochloroacetic acid (MCAA) - the intermediate for 2,4-D; also having many other applications. Both the products have vast growth potential, as the global market for them is huge and growing rapidly.

MOL has also started production of Trichloroacetyl chloride (TCAC), a backward integration project for its insecticide - Chlorpyriphos. The Company has last year expanded its production capacity for Chlorpyriphos The entire project proposal is interlinked with the in-house availability of caustic soda and chlorine. The mother liquor generated during manufacture of TCAC is used in production of MCAA. TCAA is used in production of Chlorpyriphos and MCAA is used in production of 2,4-D. Both TCAC and MCAA use caustic soda and chlorine which are steadily available through pipeline from the adjoining complex of Meghmani FineChem Limited. The projects are synergistic and would result in reduction in cost of production for the connected products. All these projects have been set up at CH-1+2A, GIDC Dahej.

The cost of the Project is firmed up at Rs. 84 Crores. The Project is funded by way of term loan of Rs. 51 Crores and Rs. 33 Crores by way of Internal Accruals. The implementation of the entire chain of new projects is to be undertaken in a phased manner. The operation of MCAA and TCAC is to start in 01 July,2010 and in the Second phase, 2, 4-D is likely to start operation by 01 October, 2010.

AGROCHEMICAL FORMULATION EXPANSION AT PANOLI ANKLESHWAR

MOL has also set up plant at Panoli, Ankleshwar, for formulation of its active pesticides, to meet the increased demand based on focused efforts for market penetration in retail / branded segment both locally as well as in global markets. An investment of around Rs. 3 Crore has been made, with a planned turnover of Rs.50 crore in 2010-11. The Plant started commercial production on 30th September, 2009. This has been a strategic investment , made with a view to free some of the formulation capacities at Chharodi and Ankleshwar plants and utilize them in a more meaningful manner for manufacture of high value active ingredients. In-house R&D efforts for launch of new generation pesticides are currently on at a priority level. The new formulation plant is likely to boost our presence in markets like Asia, North & Latin America, Africa, Central Asia & East European markets.

Registrations

The focus for the year has remained Brazil and the African markets, as well as getting registrations of three products with the Word Health Organization (WHO) and Food & Agriculture Organization (FAO) under United Nations, which would allow us access to vast tenders floated by these agencies for humanitarian work. To date, 162 registrations have already been received and 440 registrations are applied for in different parts of the world. We have 131 registration of Central Insecticides Board (CIB) of India.

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RESEARCH & DEVELOPMENT

Last year, our in house Research and Development unit at our Chharodi plant got recognition from Department of Scientific and industrial Research (DSIR), Government of India, Ministry of Science and Technology. It will boost the R&D activities of the Company in off-patent molecules, improvements in process parameters, time cycle optimization, waste management, cost reduction and scale up of new technology from laboratory to production level. The newly set up R&D set up will also enhance the Company's efforts towards attracting contract manufacturing projects. During the year the Company has spent Rs. 19,540,867/- as Research & Development Expenses.

SUBSIDIARY COMPANIES

The Company has following Six subsidiaries.

(1) Meghmani Energy Limited (MEL) - Power Generation

(2) Meghmani Europe BVBA (Meghmani Europe) - Trading Business

(3) Meghmani Organics USA, Inc. - Trading Business

(4) Meghmani Finechem Limited (MFL) - Caustic Chlorine Manufacturing

(5) P T Meghmani Indonesia (Meghmani Indonesia) - Trading Business

(6) Meghmani Chemtech Limited - Manufacturing

A statement of particulars of the said subsidiaries as required under Section 212 of the Companies Act, 1956 is Annexed to this report.

Pursuant to the exemption granted to the Company by the Central Gvernment vide its letter No. 47/552/2010-CL-III dated 04 June,2010, the company has not attached copies of the Balancesheet and Profit & loss Account, Directors' Report and Auditors' Report of its Six Subsidiary Companies for the financial year ended on 31 March, 2010 and other documents required to be attached under Section 212 (1) of the Companies Act, 1956, to the Balacnesheet of the company.

The Company will make available these documents/ details upon request by any member of the Company. These documents/ details will be available on the Company's website www.meghmani.com and will also be available for inspection by any member of the company at the Registered Office of the Company on any working days except Saturday, between 4.00 p.m. to 6 .0 p.m.

In accordance with the requirements of Accounting Standard 21, 23 and 27 issued by Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries have been prepared and the same are annexed to this report.

CAPITAL EXPENDITURE:-

Capital expenditure incurred during the year aggregated to Rs. 622.91 million.

FIXED DEPOSITS:-

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


MANAGEMENT & DISCUSSION ANALYSIS REPORT:-

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

CORPORATE GOVERNANCE:-

As per Clause 49 of the Listing Agreement the Corporate Governance information is appended to this report. This report also forms part 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:

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

b) that appropriate accounting policies have been selected and applied consistently and suchjudgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at March 31, 2010 and of the profit of the Companyfor the year ended on March 31, 2010;

c) that proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets 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.

DISCLOSURE OF INFORMATION RELATING TO FOREIGN EXCHANGE OUTGO

Disclosure of information relating to Foreign Exchange outgo as required under Rule 2(c) is already given in Schedule 23 Notes forming part of the Audited Annual Accounts.

DIRECTORS

Mr. A G Shaik was appointed as an Additional Director on the Board of Directors of the Company on 29th January, 2010 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. Jayanti Patel, Mr. Ashish Soparkar, and Mr. J Vishwanathan retiring by rotation at this Annual General Meeting and being eligible offers themselves for re-appointment.

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Place: AhmedabadDate: 07.06.2010

For and on behalf of the BoardJayanti Patel

Executive Chairman

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 has been 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 annexed to this report.

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.

The Company has received letter from them to the effect of their reappointment, if made,would be within the prescribed limit under Section 224 (B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of Section 226 of the said Act.

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.


ANNEXURE TO THE DIRECTORS' REPORT

A Energy conservation measures taken

Replaced MLL 160 w lamps by 23 w CFL lamp.

Replaced aluminium caste fan set by FRP blade inCooling Tower.

B Additional investments and proposals Not Applicableif any being implemented for reduction of consumption of energy

C Impact of the measures at (a) & (b) Total Power saving of Rs.648000/- per monthabove for reduction of the energy consumption and consequent impact on the cost of production of goods.

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

Replaced Conventional choke by electronics choke.

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FORM A

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

Particulars 2009-10 2008-09

A Power Consumption

1 Electricity Consumption

(a) Purchased

Unit KWH 17559398 17844296

Total Amount RS. 109333697 110091755

Rate/Unit RS. 6.23 6.17 (b) Own Generation

Through Diesel Generator

Unit KWH 209983 208953

Unit per Liter of Diesel KWH 1.23 1.69 Cost/Unit Rs. 30.49 22.92

(c) Own Generation through Steam

Turbine/Generator

Unit KWH 34,311,900 32414400

Cost/Unit Rs. 3.22 3.10

2 Coal (Specify quality and used)

Steam Generated (MT) 121757 113240

Consumption of Coal (in MT) 9305 -

Consumption of Fuel Oil (in MT) 164 2776

Gas Consumption (In M3) 4281 6673

Cost per unit (kg) 0.86 1.54

Steam Purchase (MT) ` 34157 33027

3 Others/internal generations

B Consumption per unit of

Production in MT 33,204 30,931

Electricity (Rs./ Mt) 6,815 6960


FORM-B

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION

2. TECHNOLOGY ABSORPTION

1 Specific areas in which R & D is Agrochemical - Insecticides Process Improvement &New Product Development

2 Benefits derived as a result of the above R & D. New products are at Development stage.

3 Future Plan of Action Consolidation of New ProductDeveloped from Pilot plant level toProduction level

4 Expenditure on R & D Rs. 195.41 lacs

B. Technology Absorption, Adoption and Innovation:

A Efforts, in brief, made towards technology During the last five years, noabsorption, adaptation and innovation. technology has been imported by

way of foreign collaboration orotherwise 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.

carried out by the Company.

Research & Development

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. Place : Ahmedabad Date: 07/06/2010

For and On behalf of the Board of DirectorsJayanti Patel

Executive Chairman

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MANAGEMENT DISCUSSION AND ANALYSIS

AGROCHEMICALS INDUSTRY OVER VIEW

Following a period of declines in overall market values, the global pesticides industry is expected to recover and register modest growth through 2010. Although difficult pricing environment and market maturity will substantially limit gains, this will represent a dramatic improvement over the past few years. At a time of rising food prices, population growth and concerns over global food security, there is a growing need for using every available technology including pesticides, to meet future food needs and tackle the emerging challenges of climate change and resource conservation.

Shaking off the negative growth rates of the last few years, the Indian crop protection chemicals market notched up a compound annual growth rate of 7.5 percent. This is mainly due to the consistent supply and value gain over Chinese manufacturers in the export market and emerging application segments. India is finally poised to compete on par with China, despite the latter's low-priced goods, as Chinese production costs are on the rise. India has raised the level of its export competency with a consistent quality and supply record and possession of a vast unexplored market. Chemicals manufacturers have targeted product awareness campaigns at Indian farmers, as the country's affordability has increased with the cultivation of high-value crops. 'The per capita consumption of pesticides in India is still very low compared to the developed countries and manufacturers need a smart 'get to market' strategy to achieve better reach and acceptance of products. The demand will also be driven by the rising food grain demand and increasing awareness about pesticide usage among the farmer community. Such favorable market factors have sustained and even consistently increased the profitability of manufacturers despite the rising prices of raw materials the demand for pesticides can be augmented only through sustainable growth in agriculture. With the government's focus on development of the agriculture sector, the industry may see a better future. The Indian pesticide industry is also likely to move towards the global product mix, with an increase in the use of herbicides and fungicides. Exports will continue to remain the growth driver.

AGROCHEMICALS OVERVIEW OF THE COMPANY

The Company has 4 Agrochemical manufacturing facilities situated at

1. Plot No. 402,403,404,452 & 455, Village Chharodi, Taluka Sanand District: - Ahmedabad,

2. Plot No. 5001 B, GIDC Ankleshwar, Ankleshwar

3. Plot No. 20, GIDC Panoli, Ankleshwar

4. Plot No. CH-1+2/A GIDC Industrial Estate, Dahej, Taluka : Vagra, District : Bharuch.

The Company produces 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 Asia, Brazil, and South Africa.

The production processes of the Company's Agro businesses are vertically integrated. We manufacture Pesticides Intermediates which are used in the manufacture of our Pesticides Technicals. 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.

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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, Asia-Pacific, South Africa and Brazil. 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 competitors and to meet the growing demand for Herbicides/ Agrochemical facility has been setup to Manufacture MCAA, TCAC and 2,4 D at GIDC Dahej. The Site is strategically located adjust to our Chlor-alkali plant.

The Company has also set up the Formulation plant at GIDC Panoli, Ankleshwar.

At the domestic front we have our own sales force in Andhra Pradesh, Maharashtra, Madhya Pradesh, Rajasthan and Gujarat (the list has grown to 11 states now!).

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. We have 24 trademarks registered and 8 applications are pending.

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.

Particulars 31.03.2010 31.03.2009Domestic Rs. in Mn Rs.in Mn

Agro - Chharodi (Agro - I ) 988.14 1121.44Agro - Ankleshwar (Agro-II) 514.66 325.35Total 1502.80 1446.79ExportAgro - Chharodi (Agro - I ) 873.47 1117.56Agro - Ankleshwar (Agro-II) 1695.78 1733.14Agro - Panoli (Agro-IV) 47.88 0.00Total 2617.13 2850.70Grand Total 4119.93 4297.49


We currently hold 162 registrations worldwide and have 440 registrations pending in 55 countries around the world. Being a manufacturer and distributor of existing molecules with expired patents, we consider registration as crucial and considerable investments are focused on registrations. 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. We have 131 registration of Central Insecticides Board (CIB) of India.

Pigment: - Industry Over view

The worldwide market for inorganic, organic and special pigments had a total volume of around 7.4 million tons in 2006. At growth rates of 2.9% p.a., this volume will rise to 9.8 million tons by 2016. Asia has the highest rate on a quantity basis followed by Europe and North America. In 2006, a turnover of US$ 17.6 billion was reached mostly in Europe, followed by North America and Asia.

This is expected to reach US$ 27.8 billion by 2016, corresponding to its annual growth rate of 5%. Although organic pigments account for only 5% of all pigments based on quantity, they cover 28% when based on their value.

Demand and production of pigments are continually shifting from the USA, Western Europe and Japan to the emerging markets of Asia, especially China and India. This is mainly because of lower wages. Within emerging countries, especially India and China, themselves, domestic demand for consumer products containing pigments is growing. While a few large suppliers of pigments dominate the relatively saturated markets of industrialized countries, Asian markets remain fragmented.

Almost all industrial sectors need pigments, with printing ink, paints, lacquers, and plastics all being growth markets for pigments. More and more manufacturers use new colours and visual effects for their packaging and advertising material. In addition, sectors such as cosmetics, paper, textile, building material, ceramics, and glass make great demands on pigments to add more brilliance to their products. The textile industry increasingly substitutes pigments for dyes.

Organic pigments substitute inorganic pigments

Surpassing growth in organic pigments will continue as these pigments offer a wide colour spectrum and increasingly supplant pigments on a heavy metal basis. Today many environmental regulations restrict the use of lead, chromium, and cadmium. This is also forcing manufactures to replace inorganic pigments and increase usage of organic pigments. (Source: www.ceresana.com)

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 and the other located in Panoli, near Ankleshwar where we manufacture our CPC Blue and Pigment Blue 15 products.

There are competitors in India having similar products as our Company. We compete against our competitors on our quality, technical competence, backward integration, logistics facilities, after sales service and customer relationships.

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The Company specializes in the manufacture of green and blue 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 also ensures consistent quality of inputs.

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

Strategy of the Company:-

We are one of the largest Pigment manufacturing sites in the world. We would like to offer specialized products to our customers at the best possible price leveraging on economies of scale. Our mid-term focus is to introduce range of Pigments for ever growing coatings and plastics industries.

We are also benefiting from growth of India and equally focusing on Indian domestic market. Indian market is expected to grow double digit for consumption of Paint, Plastics and Inks. To serve our newly added domestic customers, we have employed local staff supported by warehousing facilities at the strategic locations.

****

Particulars 31.03.2010 31.03.2009Rs. in Mn Rs. in Mn

Domestic Pigment - Vatva 45.75 53.09Pigment - Panoli 598.81 352.23Total 644.56 405.32ExportPigment - Vatva 662.48 480.58Pigment - Panoli 1507.65 1777.18Total 2170.13 2257.76Grand Total 2814.69 2663.08


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 Shareholders.

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 of Directors

(i) Composition :-

The Directors of the Company are persons of eminence having vast and varied experience in manufacturing, marketing, finance, legal and corporate administration. As on 31 March, 2010, the total strength of Board of Directors consists of 12 directors, comprising Mr. Jayanti Patel (1) an Executive Chairman, Mr. Ashish Soparkar and Mr. Natwarlal Patel are (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. J Vishwanathan, Mr. Chandan Bhattacharya, Mr. K H Patel and Mr. A G Shaik are (6) Non Executive Independent Directors.

The Composition of Board is complying with the requirements of Clause 49 (I) (A) of Indian Listing requirements and more than 50% of the directors are non executive Independent and also complying with Singapore Stock Exchange Listing Guidance note 2.1 of the Code requirements. The Singapore Stock Exchange has exempted the Company from the requirements of two resident directors on the Board.

(ii), (iii) & (iv) Attendance, Other Directorships & Number of other Boards and Board Committee in which he is a member or Chairman :-

The details of attendance of the Directors at the Board Meeting during the year and at the last Annual General Meeting held on 31st July, 2009 and also the number of other Directorship, membership and office of Chairman of Board Committees as on 31 March, 2010 are given below:

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Name of Position Board AGM Directorship Committee BoardDirector Meeting Atten- in other Membership Committee

attended ded Public of other Chairmanshipduring Limited companies of other

the year Companies companies

Mr. Jayanti Patel Executive 4 Yes 3 Nil NilChairman

Mr. Ashish Soparkar Managing 4 Yes 4 Nil NilDirector

Mr. Natwarlal Patel Managing 4 Yes 7 Nil NilDirector

Mr. Ramesh Patel Executive 3 Yes 5 Nil NilDirector

Mr. Anand Patel Executive 4 Yes 4 Nil NilDirector

Mr. Ashvin Executive 3 No Nil Nil NilRaythatha Director

(Int. Mkt.)

Mr. Chinubhai R Independent 4 Yes 14 5 3Shah

Mr. Balkrishna T Independent 4 Yes Nil Nil NilThakkar

Mr. Jayaraman Independent 2 No 2 Nil NilVishwanathan

Mr. Chandan Independent 3 No 7 3 2Bhattacharya

Mr. K H Patel Independent 1 Yes 1 Nil Nil

Mr. A G Shaik Independent 1 NA - - -**

** Appointed as a Director w.e.f. 29.01.2010

2 (a) 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, 2010 four meetings of the Board of Directors were held on: 25.05.2009; 24.07.2009; 31.10.2009 and 29.01.2010.

CORPORATE GOVERNANCE (CONTD...)


The meetings are usually held at Corporate office situated 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 following are generally tabled for information and review of the Board.

• Quarterly results of the Company and operating divisions or business segments

• Minutes of meeting of Audit Committee

• Materially important show cause Notice, demand prosecution and penalty notices.

• Any materially significant effluent or pollution problems.

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

• Details of any joint venture or collaboration agreement.

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

• Significant labour problem and their proposed solutions. Any significant development on the Human resources /Industrial relations front like signing of a wage settlement.

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

• Any fatal or serious accident.

• Any issue which involves Public liability.

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

• Non compliance of any regulatory, statutory or listing requirements

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.

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

3 Audit Committee

3.1 Terms of Reference :-

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 also remains present at the time of review of audited results. The Company Secretary, Mr. K. D. Mehta, acted as the Secretary of the Committee.

3.2 Composition, name of Members and Chair Person :-

The Audit Committee comprises of three eminent professional independent Directors Mr. Balkrishna T Thakkar (Chartered Accountant Institute of Chartered Accountant of India (ICAI), Mr. Chinubhai R Shah and Mr. Jayaraman Vishwanathan (Chartered Accountant Institute of Chartered Accountant of India (ICAI)). Mr. Balkrishna T Thakkar is the Chairman of the Committee.


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

held attended

Mr. Balkrishna T. Thakkar Chairman 4 4

Mr. Chinubhai R. Shah Independent Director 4 4

Mr. Jayaraman Vishwanathan Independent Director 4 2

4. Remuneration Committee


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 the 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

4.2 Composition, name of members and Chair Person

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

4.3 Meetings and attendance during the year:-

The Committee met on 25th May, 2009 particulars of meeting attended by members of the Committee are given below:

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.

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

3.3 Meetings and attendance during the year :-

The Committee met four times during the year on 25.05.2009; 24.07.2009; 31.10.2009 and 29.01.2010 and particulars of meeting attended by Members of the Committee are given below:




held attended

Mr. Chinubhai R Shah Chairman 1 1

Mr. Balkrishna T Thakkar Independent Director 1 1

Mr. Natwarlal Patel Member 1 1

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

4.4 Remuneration Policy:-

The Non Executive Directors of the Company are paid by way of sitting fees. There is no other pecuniary relationship or transaction by the Company with Non Executive Directors.

The Company pays remuneration to its Executive Chairman, Managing Directors and Executive Directors by way of Salary, perquisites and performance based bonus. The remuneration is approved by the Board and is within the over all limits approved by the shareholders.

4. 5 Details of remuneration to all the Directors:-

Particulars of Remuneration of Directors for the year ended 31st March, 2010:


Name of Director Salary & Performance TotalPerquisites bonus Rs. in LacsRs. in Lacs Rs. in Lacs

Mr. Jayanti M Patel 80.75 48.00 128.75

Mr. Ashish Soparkar 80.75 48.00 128.75

Mr. Natwarlal Patel 80.75 48.00 128.75

Mr. Ramesh M Patel 71.07 25.64 96.71

Mr. Anand I Patel 71.07 13.64 84.71

Mr. Ashvin R Raythatha 23.72 8.50 32.20

Total 408.11 191.78 599.89

Particulars of sitting fees of Directors for the year ended 31st March 2010:

Name of Independent Director Sitting Fees Rs.

Mr. Chinubhai R. Shah 2,20,000

Mr. Balkrishna T. Thakkar 2,05,000

Mr. Jayaraman Vishwanathan 65,000

Mr. K. N. Venkatasubramanian 17,500

Mr. Chandan Bhattacharya 67,500

Mr. K H Patel 17,500

Mr. Akthar Shaik 17,500

Resigned 26.05.2009

Appointed on 29.01.2010

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5. Shareholders'/Investors' Grievance Committee

5.1 Terms of Reference:-

The current terms of reference of the Committee are as follows:

i. To allot the equity shares of the Company,

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

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

iv. Issue of duplicate / split / consolidated share certificates;

v. Allotment and listing of shares;

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

vii. Reference to statutory and regulatory authorities regarding investor grievances;

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

5.2 Composition of Committee:-

The Committee comprises of three Director Viz., Mr. Balkrishna T Thakkar, Mr. Chinubhai R Shah Independent Directors and Mr. Ashish Soparkar. Mr. Chinubhai R Shah is the Chairman of the Committee. The Company Secretary, Mr. K. D. Mehta is the Compliance Officer and Company Secretary.


The Shareholders' / Investors' Grievance, Share Allotment and Share Transfer Committee of our Board were held on 25.05.2009; 24.07.2009; 31.10.2009 and 29.01.2010.


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

held attended


Mr. Balkrishna T Thakkar Independent Director 4 4

Mr. Ashish Soparkar Member 4 4

5.4 Details of shareholders' Complaints

Detail of Complaints received Nos.

Number of Shareholders' Complaints received From 01.04.2009 to 31.03.2010 3

Number of Complaints not solved to the satisfaction of the shareholder 0

Number of Pending Complaints on 31.03.2010 0


6. Nominating Committee

6.1 Composition of Committee:-

The Nominating Committee comprises of Viz., Mr. Chandan Bhattacharya, Mr. Chinubhai R Shah, Independent Directors and Mr. Jayanti Patel, Executive Chairman as Member.Mr. Chinubhai R Shah is the Chairman of the Committee.

he Company Secretary, Mr. K. D. Mehta acted as the Secretary of the Committee.


The Committee met on 25.05.2009 and 31.10.2009. The particulars of meeting attended by members of the Committee are given below:


held attended


Mr. Chandan Bhattacharya Independent Director 2 2

Mr. Jayanti Patel Member 2 2


The Nominating Committee aims at establishing a formal and transparent process for the appointment and re-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 of 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.


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Financial Category- Venue Special - Resolutions passed

Year Date and Time

2007 Annual General at 184, Phase II, 1. Appointment of Mr. K N Venkatasubramanian as DirectorMeeting GIDC, Vatva, 2. Increase in borrowing power Under section 30 July, 2007 Ahmedabad 293(1) (d) up to Rs. 5000 millionat 10.30 a.m. 382 445 3. Appointment of Mr. Maulik Patel under section 314 (1B)

4. Appointment of Ms. Vaishakhi Patel under Section 314 (1B)5. Appointment of Mr. Karna Patel under Section 314(1B)6. Authority to create mortgage under section

293(1) (a) to secure working capital facility ofRs. 210.65 Crores by State Bank of India, ICICIbank and HDFC Bank ,Ahmedabad.

2008 Annual General HT Parekh 1. Appointment of Mr. Chandan BhattacharyaMeeting Convention Centre, as Independent Director30 July, 2008 Torrent AMA Centreat 3 p.m. Ahmedabad

Management Association, Atira Campus, Dr. VikramSarabhai Marg, Vastrapur, Ahmedabad

2009 Annual General HT Parekh 1. Appointment of Mr. K H Patel as Independent DirectorMeeting Convention Centre, 31 July, 2009 Torrent AMA Centre at 3 p.m. Ahmedabad

Management Association, Atira Campus, Dr.VikramSarabhai Marg, Vastrapur, Ahmedabad


8 Disclosures :-

8.1. 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.

8.2. 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 2009-2010.

7 General Body Meeting:- Last three Annual General Meetings of the Company were held as given below;


8.3. 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.

8.4. Accounting Treatments :-

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

8.5. 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.

8.6. CEO/CFO Certification:-

The Managing Director and Chief Financial Officer Mr. Ashish Soparkar, have 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.

8.7. 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.

8.8. Report on Corporate Governance:-

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

8.9. 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.

8.10.Management Discussion and Analysis Report:-

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

8.11.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.


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8.12.Disclosures regarding Re-appointment of Directors

As per the Articles of Association of Meghmani Organics Limited, one third of the Directors are liable to retire by rotation every year and if eligible, they offer themselves for reelection by the shareholders at the general meeting.

9 Means of communication

9.1 The Unaudited quarterly/half yearly financial statements are announced within one month of the end of the quarter. The aforesaid financial statements are taken on record by the Board of Directors and are communicated to the Stock Exchanges where the Company's securities are listed.

Once the stock exchanges have been intimated these results are given by way of a press release to news agency and published within 48 hours in two leading daily news papers one in English and one in Gujarati.

9.2 The audited annual results are announced within sixty days from the end of the last quarter i.e. 31st March to meet with the requirements of Singapore Listing requirements. The audited annual financial results were announced on 28 May, 2010. The aforesaid audited annual results are taken on record by the Board of Directors and are communicated to the Stock Exchanges where the Company's securities are listed. The audited financial results form a part of the Annual Report which is sent to the Shareholders prior to the Annual General Meeting.

9.3 The presentations prepared by the Company are also submitted to the Singapore Stock Exchange and placed on the website www.meghmani.com

10 General Shareholders' Information :-

I. Annual General Meeting :-

Date Wednesday, 28 July, 2010

Venue HT Parekh Convention Centre, Torrent AMA Centre Ahmedabad ManagementAssociation, Atira Campus, Dr. Vikram Sarabhai Marg, Vastrapur, Ahmedabad

Time 10.30 a.m.

Last date of receipt of Proxy Wednesday 26 July, 2010 (before 10.30 a.m.)

Posting of Annual Report 02nd July, 2010



II. 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, 2010 were held on the following dates:-

Financial Calendar 2009-2010

First Quarter Results 24/07/2009

Second Quarter and Half yearly results 31/10/2009

Third Quarter Results 29/01/2010

Fourth Quarter & Annual Results 28/05/2010

Financial Calendar 2010-2011

First Quarter Results 30th July, 2010

Second Quarter and Half yearly results 29th October, 2010

Third Quarter Results 28th January, 2011

Fourth Quarter & Annual Results 27th May, 2011

III. Date of Book Closure :-

Book Closure dates Monday 19 July, 2010 to Wednesday 28 July, 2010

IV. Dividend payment :-

The Board of Directors at their meeting held on 28th May, 2010 recommended a final dividend of Rs. 0.40 per equity shares of the face value of Rs. 1/- each for the financial year 2009-2010, subject to approval of the shareholders. Final dividend, if approved by the shareholders will be paid within the prescribed statutory period.

V. Listing details of Equity shares:-

Name of Stock Exchange Stock Code

National Stock Exchange of India Limited MEGH.NS

Bombay Stock Exchange Limited 532865

Singapore Stock Exchange MEGH.SI

The listing fee for the financial year 2009-2010 has been paid to the above stock exchanges.

VI. Stock code :-

The ISIN allotted to the Company's equity shares of face value of Rs. 1/- each under the depository system isINE974H01013


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VII. Share Market 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, 2010 are as under :-

Month MOL Share Price No. of shares Turn Over

High Low Close traded during Rs.in lacsRs. Rs. Rs. the month on NSE

April - 2009 12.40 6.50 8.95 5409310 519.20

May - 2009 15.95 9.10 14.60 5497203 720.47

June - 2009 15.70 11.00 11.75 4709973 651.79

July - 2009 16.30 11.05 13.65 7218931 1008.19

August - 2009 17.30 13.30 16.15 14210229 2186.09

September - 2009 19.65 14.80 18.05 17555621 3125.17

October - 2009 19.15 14.65 15.05 8361768 1494.28

November - 2009 17.70 13.95 15.60 6224296 997.35

December - 2009 17.25 15.05 15.70 6308122 1000.46

January - 2010 19.20 15.55 15.80 10515067 1819.67

February - 2010 16.85 14.25 14.65 2997566 470.75

March - 2010 17.80 14.50 16.00 7764922 1239.89

National Stock Exchange

Bombay Stock Exchange

Month MOL Share Price No. of shares Turn Over

High Low Close traded during Rs.in lacsRs. Rs. Rs. the month on NSE

April - 2009 12.10 6.66 8.94 6297845 597.06

May - 2009 16.00 9.03 14.63 7775380 1016.22

June - 2009 15.55 11.30 11.76 5638070 788.08

July - 2009 16.20 11.11 13.62 6258701 871.22

August - 2009 17.30 13.00 16.20 13454697 2084.47

September - 2009 19.60 14.80 18.05 14952301 2640.47

October - 2009 19.20 14.50 15.00 6551464 1167.16

November - 2009 17.65 14.00 15.57 5211713 837.19

December - 2009 17.30 15.00 15.80 5530568 877.13

January - 2010 19.30 15.05 15.70 11117938 1926.17

February - 2010 16.95 14.30 14.60 2670464 420.58

March - 2010 17.80 14.50 15.98 6916740 1105.97



VIII. Registrar and Transfer Agent :-

The Company in compliance with SEBI guidelines has appointed Link Intime India Private Limited (Formerly Intime Spectrum Registry Ltd) as a common share transfer agent for Physical and Electronic form of shareholding.

Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, LBS Road, Bhandup (West), Mumbai 400 078. India.Tel: +91 22 2596 0320Fax: +91 22 2596 0329

IX. Share Transfer System :-

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

X. Distribution of Shareholding: 31.03.2010

Category Shareholders Shares of Re. 1/- each

Number Percent Number Percent

1-500 50106 75.17 12576169 4.95

501-1000 9152 13.73 8046764 3.16

1001-2000 3855 5.78 6168276 2.43

2001-3000 1224 1.84 3234615 1.27

3001- 4000 511 0.77 1869937 0.74

4001- 5000 562 0.84 2722938 1.07

5001-10000 678 1.01 5103418 2.00

10001- & ABOVE 572 0.86 214592094 84.38

Total 66660 100.00 254314211 100.00

Distribution of Singapore Depository Shares ("SDS") HoldersBy Size of SDS Holdings as at 11 June 2010

Size of SDS No. of Percentage No. of Percentage

Shareholders SDS

1 - 999 4 0.57 820 -

1,000 - 10,000 287 41.06 1,819,500 1.44

10,001 - 1,000,000 395 56.51 28,219,580 22.37

1,000,001 AND ABOVE 13 1.86 96,100,400 76.19

Total 699 100.00 126,140,300 100.00


34

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35



Twenty Largest Singapore Depository Shares ("SDS") Holders as at 11 June, 2010

Share holding pattern: - 31.03.2010

Category No. of shares Value of shares %

OTHER BODIES CORPORATE 8775791 8775791 3.45

CLEARING MEMBER 2487613 2487613 0.98

DEPOSITARY RECEIPTS 63319650 63319650 24.89

FOREIGN INST. INVESTORS 2691500 2691500 1.06

NON NATIONALISED BANKS 100000 100000 0.03

NON RESIDENT INDIANS 680480 680480 0.27

NON RESIDENT (NON REPATRIABLE) 139917 139917 0.06

PUBLIC 50817552 50817552 19.99

PROMOTORS 91605926 91605926 36.02

RELATIVES OF DIRECTORS 33685629 33685629 13.25

TRUSTS 10153 10153 0.00

GRAND TOTAL 254314211 254314211 100.00

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

1 ELECTRA PARTNERS MAURITIUS LIMITED 28,389,320 22.51

2 CITIBANK NOMINEES SINGAPORE PTE LTD 22,315,080 17.69

3 WATERWORTH PTE LTD 10,000,000 7.93

4 BOON SUAN LEE 9,327,000 7.39

5 RAFFLES NOMINEES PTE LTD 7,238,000 5.74

6 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 4,708,000 3.73

7 UNITED OVERSEAS BANK NOMINEES

(PRIVATE) LIMITED 4,171,000 3.31

8 HSBC (SINGAPORE) NOMINEES PTE LTD 3,429,000 2.72

9 KIM ENG SECURITIES PTE. LTD. 1,635,000 1.30

10 SEE BENG LIAN JANICE 1,359,000 1.08

11 PHILLIP SECURITIES PTE LTD 1,265,000 1.00

12 TEO CHIANG SONG 1,200,000 0.95

13 BANK OF SINGAPORE NOMINEES PTE LTD 1,064,000 0.84

14 DAIWA SECURITIES MKTS SINGAPORE LIMITED 1,000,000 0.79

15 LEOW SAU CHING HELENA 1,000,000 0.79

16 INDIA INTERNATIONAL INSURANCE PTE LTD 800,000 0.63

17 MERRILL LYNCH (SINGAPORE) PTE LTD 718,500 0.57

18 LEOW ON CHU 700,000 0.55

19 LIM LENG CHYE 700,000 0.55

20 BOON SU YIN MARIE 674,000 0.53

Total 101,692,900 80.62 %


XI. Independent Directors shareholding:- Particulars of Equity Shareholding of Independent Directors: - 31.03.2010:

Name of Independent Director No. of Equity Shares of Rs. 1/- each

Mr. Chinubhai R. Shah 2000

Mr. Balkrishna T. Thakkar 2000

Mr. Jayaraman Vishwanathan Nil

Mr. Chandan Bhattacharya Nil

Mr. K H Patel Nil

Mr. A G Shaik Nil

XII. Outstanding Singapore Depository Receipts :

153,165,300 Singapore Depository Shares were issued under Depository mechanism on 10th August, 2004 at a 28 Cent per SDS of Rs. 0.50 paisa on Singapore Stock Exchange. The Closing SDS price as on 31 March, 2010 was 12 Cent. As on 31 March, 2010 the number of SDS outstanding are 126,639,300. There is no conversion date fixed for SDS in to Equity Shares. There will be no impact on conversion of SDS in to equity as the conversion takes place under two way fungibility guide lines of Reserve Bank of India.

1. Pigment Green Division Plot No. 184, Phase II,G.I.D.C. Vatva, Ahmedabad -382 445

2. Pigment Blue Division Plot No. 21,21/1,G.I.D.C. Panoli, District :- Bharuch

3. Agro Division - I Plot No. 402,403,404 & 452, Village Chharodi, Taluka Sanand, District :- Ahmedabad

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

5. Agro Division - III Plot No. CH-1+2/A GIDC Industrial Estate, Dahej, District :- Bharuch

6. Agro Division - IV Plot No. 20, G.I.D.C. Panoli, District :- Bharuch

XIII. Location of Manufacturing facility:-

Dematerialization of Shares and Liquidity Distribution: 31.03.2010

Share Capital No. of shares %

Listed Capital 254314211 100.00Held in Dematerialized form :-

Central Depository Limited 21214914 8.34

National Depository Limited 227418147 89.43

Held in Physical Form 5681150 2.23

254314211 100.00


36

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37


XIV. 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

[email protected]

****


DECLARATION BY MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT REGARDING COMPLIANCE WITH CODE OF CONDUCT

In accordance with Clause 49(I)(D) of the Listing Agreement with the Stock Exchange, I hereby confirm that all the Directors and the Senior Management personnel of the Company have affirmed compliance with the Code of Conduct, as applicable to them for the financial year ended on 31 March, 2010.

28 May, 2010Ahmedabad

For Meghmani Organics Limited Ashish Soparkar

Managing Director

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, 2010, as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchanges in India.

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 as stipulated in the above mentioned clause of listing agreement.

We have been explained that no investor grievances remaining unattended/pending for a period exceeding one month as on 31 March, 2010.

We further state that such compliance is neither an assurance as to future viability of the Company the efficiency or effective ness with which the management has conducted the affairs of the Company.

Place: - Ahmedabad Date : - 28.05.2010

For M/S. PATEL & KHANDWALAChartered Accountants

FRN - 107647WPartner

M M KhandwalaMembership Number 32472

38

To,The Members ofMeghmani Organics LimitedAhmedabad.

We have audited the attached Balance Sheet of MEGHMANI ORGANICS LIMITED, as at 31st March, 2010 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, 2010 and taken on record by the Board of Directors, we report that none of the director is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

Annual

2009-10


39

AUDITORS' REPORT


(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, 2010

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 & KHANDWALACHARTERED ACCOUNTANTS

FRN - 107647WM. M. KHANDWALA

PARTNER Membership No. 32472


40

Annual

2009-10

41


ANNEXURE TO AUDITORS' REPORT

i. (a) The Company has maintained division wise records of fixed assets under SAP 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 during the year 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 Six Subsidiaries. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 3343.54 lacs and year end balance is Rs. 2119.23 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 Organics USA INC., Meghmani Europe BVBA 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. Therefore Sub-clause (f) and (g) are not 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 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.

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, Vat, 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, Vat, Wealth Tax, Custom Duty, Service Tax and Excise Duty, were outstanding at the year end, for a period of more than six months from the date they become payable.

(b) 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 Forum where Lacs Dispute is pending

Income Tax Act. Income Tax 464.14 • 2000-2001 & 2003-04 ITAT appeal(A.Y. 2000-2001 & effect pending.2003-2004 & A.Y. • Department has gone to High Court2006-2007) (Rs. 292.78 lacs)

• 2006-2007 Filed appeal to ITAT against CIT appeal order (Rs. 95.57 lacs)

• Filed appeal to CIT appealagainst order of DCIT (Rs. 75.79 lacs)

Central Excise Tariff Act. Excise Duty 643.38 Commissioner of Central ExciseDirector General of CentralExcise / Audit team of Central Excise.

Labour Laws Compensation Claims 206.56 Labour Court

42

Annual

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43


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. According to information and explanation given to us, the Company has given guarantee for loans taken by Subsidiary Company from Bank. The terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company.

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. 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.

xix. According to information and explanations given to us, the Company has not issued any debenture stduring the year ended on 31 March, 2010 and hence no Securities have been created.

xx. According to information and explanations given to us, no fraud on or by the Company has been stnoticed or reported during the year ended on 31 March, 2010.





For and on behalf of the Board

Place : AhmedabadDate: 28.05.2010

J M Patel - Executive ChairmanA N Soparkar - Managing DirectorN M Patel - Managing Director

As per our attached report of even dateFor M/s Patel & KhandwalaChartered AccountantsFRN - 107647WM M KhandwalaPartnerMembership No. 32472Place : AhmedabadDate : 28.05.2010

K D Mehta Company Secretary

Particulars Sch. As at As at

No. 31.03.2010 31.03.2009

Rs. Rs. Rs.

SOURCES OF FUNDSShareholders' FundsShare Capital 1 254,314,211 254,314,211Reserves and Surplus 2 4,724,598,048 4,227,417,192

4,978,912,259 4,481,731,403Loan FundsSecured Loans 3 1,357,244,902 589,914,873Unsecured Loans 4 1,127,977,740 1,311,270,192

2,485,222,642 1,901,185,065Deferred Tax Liability 117,830,967 126,709,320 TOTAL 7,581,965,868 6,509,625,788APPLICATION OF FUNDSFixed Assets 5Gross Block 2,769,843,268 2,557,573,253Less: Depreciation 1,312,505,780 1,144,090,222Net Block 1,457,337,488 1,413,483,031Capital Work in Progress 433,319,072 87,704,402

1,890,656,560 1,501,187,433

Investments 6 1,303,558,854 1,102,688,923Current Assets, Loans and AdvancesInventories 7 1,209,156,121 1,054,448,952Sundry Debtors 8 3,236,968,555 2,968,939,317Cash and Bank Balances 9 153,830,632 85,879,942Loans and Advances 10 1,246,759,772 1,233,619,448Total Current Assets 5,846,715,080 5,342,887,659 Less : Current Liabilities & ProvisionsLiabilities 11 1,315,625,950 1,317,579,977Provisions 12 143,338,676 119,558,250Total Current Liabilities 1,458,964,626 1,437,138,227Net Current Assets 4,387,750,454 3,905,749,432Significant Accounting Policies & Notes forming part of accounts 23 TOTAL 7,581,965,868 6,509,625,788

stBalance Sheet As At 31 March 2010


44

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45


stProfit And Loss Account for the Year Ended on 31 March 2010

Particulars Sch. 31.03.2010 31.03.2009No. Rs. Rs.

IncomeGross Sales 7,724,646,659 8,342,318,121Less: Excise Duty 432,462,128 658,629,750Net Sales 13 7,292,184,531 7,683,688,371Other Income 14 229,063,589 262,233,729 Total Income 7,521,248,120 7,945,922,100Expenditure(Increase)/Decrease in Stock 15 87,613,843 (266,758,290)Trading Purchases 16 324,686,824 739,777,954Raw Materials Consumption 17 4,445,591,812 4,549,198,641Manufacturing Expenses 18 801,455,894 772,006,182Employees Emoluments 19 163,334,122 162,129,833Administration Expenses 20 39,742,374 243,455,388Selling and Distribution Expenses 21 504,174,881 505,834,836Financial Expenses 22 136,011,467 240,055,596Depreciation 170,157,188 153,625,886 Total Expenditure 6,672,768,405 7,099,326,026Profit Before Exceptional Items & Tax 848,479,715 846,596,074Exceptional Items 11,196,163 225,362,149Profit Before Tax 837,283,552 621,233,925Payment & Provision of Current Tax 230,360,000 118,168,660Fringe Benefit Tax - 2,000,001Deferred Tax (8,878,353) (4,241,672)Profit After Tax 615,801,905 505,306,936Profit available for Appropriation 615,801,905 505,306,936Appropriations :Transfer to General Reserve 65,000,000 55,000,000Proposed Dividend 101,725,684 83,923,690Dividend Tax 16,895,365 14,262,831Profit carried forward to Balance Sheet 432,180,856 352,120,415Significant Accounting Policies & Notes forming part of accounts 23 Total 615,801,905 505,306,936Basic and Diluted Earning per share of facevalue of Re. 1 each (in Rupees) 2.42 1.99






Schedule - 1 - SHARE CAPITAL Authorized Share Capital : 370,000,000 Equity Shares of Re. 1/- (PY Re.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 Re. 1/- (PY Re.1/-) Each Fully paid up (P.Y. 254,314,211) 254,314,211 254,314,211

Total 254,314,211 254,314,211

Particulars As at As at31.03.2010 31.03.2009

Rs. Rs.

Schedule - 2 - RESERVES AND SURPLUS(1) Securities Premium AccountAs per last year accounts 1,565,048,295 1,565,048,295(2) Capital ReserveAs per last year accounts 3,122,017 3,122,017 (3) General ReserveAs per last year accounts 489,270,348 434,270,348Add : Transferred from Profit and Loss Account 65,000,000 55,000,000

554,270,348 489,270,348(4) Capital Redemption ReserveAs per last year accounts 18,432,980 18,432,980(5) Profit & Loss AccountAs per last year accounts 2,151,543,552 1,799,423,137Add : Surplus for the year Brought Forward 432,180,856 352,120,415

2,583,724,408 2,151,543,552Total 4,724,598,048 4,227,417,192


Rs. Rs.

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 of Equity 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 during 2001-02.

(5) 34,700,000 Equity Shares of Rs.1/- each were issued as initial public offer at Singapore under depository system.

(6) 53,684,211 Equity Shares of Rs.1/- each were issued as initial public offer to list its equity shares on Indian Stock Exchanges.

stSchedules Forming Part of the Balance Sheet As At 31 March 2010


46

Annual

2009-10

47


Schedule - 3 - SECURED LOANS Term Loan Facilities from Banks: In Foreign currency 628,600,000 152,160,000Working Capital Facilities from Banks: In Indian currency 569,206,940 437,714,643In Foreign currency 159,437,962 40,230

Total 1,357,244,902 589,914,873


Rs. Rs.

Schedule - 4 - UNSECURED LOANSFrom Bank - In INR 802,452,740 1,107,122,192From Bank - In Foreign Currency 325,525,000 204,148,000

Total 1,127,977,740 1,311,270,192


Rs. Rs.

stSchedules Forming Part Balance Sheet As At 31 March 2010of the

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. 3430.80 million in

favour of State Bank of India (Rs. 1987.40 million), HDFC Bank Limited (Rs. 619.40 million) and ICICI Bank Limited

(Rs. 824.00 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. 3430.80 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 External Commercial borrowing of USD 11 Million equivalent to Rs. 511.39 million from Standard Chartered Bank,

UK.The facility is secured by First charge on all the Present and Future Moveable Fixed assets financed under term

loan held at CH-1-2/A. GIDC Dahej,Taluka Vagra, Bharuch.


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Rs. Rs.

Schedule - 6 - INVESTMENTS (At Cost)Long Term - UnquotedInvestment in Subsidiary Company - Trade

2,000 Equity Shares of Meghmani Europe BVBA 1,443,433 1,443,4332,799,600 Equity Shares of Meghmani Energy Limited. 27,996,000 27,996,000

of Rs. 10/- each292,500 Equity Shares of Meghmani Organics USA Inc 13,970,150 556,750

of USD 1/- each (P.Y. 12,500)35,182,333 Equity Shares of Meghmani Finechem Limited.

of Rs. 10/- each 1,054,489,990 1,054,489,99030,000 Equity Shares of Meghmani Chemtech Limited.

of Rs. 10/- each 300,000 300,000 250,000 Equity Shares of PT Meghmani Organics Indonesia.

of USD 1/- each 12,330,000 12,330,000 Sub Total (a) 1,110,529,573 1,097,116,173

Quoted Equity Shares fully paid up - Non Trade 2,000 Equity Shares of Saket Project Limited of Rs. 100/- each 20,000 20,000

(Market Value of the Investment is Not Available)Sub Total (b) 20,000 20,000

Unquoted Equity Shares fully paid up - Non Trade4 Equity Shares of Alaukik Owners Association 400 400

of Rs. 100/- each 491,585 Equity Shares of Bharuch 4,915,850 4,915,850

Eco Aqua Infrastructure Ltd. of Rs. 10/- each14,000 Equity Shares of Bharuch Environ Infrastructure Ltd. 140,000 140,000

of Rs. 10/- each500 Equity Shares of Green Environment Services Co-Op. 5,000 5,000

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

of Rs. 10/- each 30,000 Equity Shares of Panoli Enviro Technology Ltd. 300,000 300,000

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

of Rs. 10/- each 2,000 Equity Shares of Suvikas Peoples Co-Op. Bank 100,000 100,000

of Rs. 50/- each 10 Equity Shares of Vellard View Premises Co-Op.

Society Ltd. of Rs. 50/- each 500 500 Sub Total (c) 5,544,750 5,544,750




Rs. Rs.


50

Government Securities - Trade National Savings Certificates 8,000 8,000

Sub Total (d) 8,000 8,000

Other Current Investment - Quoted Non Trade

Principal Mutual Fund 6,076,421 - Reliance Money Manager Fund 10,268,745 - Canara Robeco Treasury Advantage 20,207,711 - IDFC Money Manager Treasury Plan 50,300,739 - Religare Ultra Short Term Fund 50,312,882 - SBI - SHF - Ultra - Short Term Fund 50,290,033 -

Sub Total (e) 187,456,531 - Note - (1) - For investment purchased and sold during the year,refer to Note No. 23 of Schedule 23Note - (2) - Market Value of Other Investment is Rs. 187,456,531

Total 1,303,558,854 1,102,688,923

Schedule - 7 - INVENTORIES Stock of Raw Materials 426,340,026 213,865,311Stock of Trading Goods 6,080,562 81,465,012Stock of Work In Process 28,794,147 106,544,568Stock of Finished Goods 684,961,794 613,473,600Stock of Stores, Packing & Others 62,979,592 39,100,461

Total 1,209,156,121 1,054,448,952

Schedule - 8 - SUNDRY DEBTORS(Unsecured and considered good)Exceeding Six Months 770,473,770 399,288,088Others 2,481,494,785 2,584,651,229(Includes Rs. 3916.53 Lacs (P.Y. Rs. 3343.43 Lacs) due from SubsidiaryCompany and Rs. 614.34 Lacs (P.Y. Rs. 142.40 Lacs) due from firm

or a Company in which some of the Directors are interested)3,251,968,555 2,983,939,317

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

Total 3,236,968,555 2,968,939,317Schedule - 9 - CASH AND BANK BALANCESCash on hand 1,779,852 1,042,214Balance with Schedule Banks in Current Accounts 144,156,322 75,669,704Deposits with Schedule Banks 7,894,458 9,168,024

Total 153,830,632 85,879,942

Annual

2009-10

51



Rs. Rs.

Schedule - 10 - LOANS AND ADVANCES(Unsecured Considered good)

Export benefits receivable 257,687,634 216,600,161Staff Advances 4,644,150 5,208,336Balance with Central excise 162,744,785 109,406,000Deposits 50,083,639 35,696,589Advance Payment of Income Tax (net of provision for tax) 24,345,281 80,954,216Advance Payment of FBT (net of provision for tax) 125,846 -Other Current Assets 344,984,201 385,304,223Advance Payment to vendors 190,221,014 191,635,499Loan to Subsidiary Companies 211,923,222 208,814,424

Total 1,246,759,772 1,233,619,448Schedule - 11 - CURRENT LIABILITIESSundry Creditors due to undertakings as per MSMED Act. 32,858,606 -Sundry Creditors (Others) 929,950,974 740,873,328IPO Refund Payable* 106,400 113,050Other Trade Payable 294,284,833 538,379,805Statutory Liabilities 57,745,596 37,937,608Unpaid Dividend (F.Y.2007-2008)* 270,711 276,186Unpaid Dividend (F.Y.2008-2009)* 408,830 -* There is no amount due and outstanding to be credited to

Investor Education and Protection FundTotal 1,315,625,950 1,317,579,977

Schedule - 12 - PROVISIONSFBT Provision - 222,610Provision for Employee Benefits 24,717,627 21,149,119Dividend Payable (Proposed) 101,725,684 83,923,690Corporate Dividend Tax Payable 16,895,365 14,262,831

Total 143,338,676 119,558,250


stSchedule Forming Part of he Profit And Loss Account Year Ended On 31 March 2010t of the

Particulars 31.03.2010 31.03.2009

Rs. Rs.

Schedule - 13 - SALES

Manufacturing Goods

Export Sales 4,787,249,871 5,108,461,419

Local Sales 2,161,948,144 1,829,351,189

Other Sales - 8,831,310

6,949,198,015 6,946,643,918

Trading Goods

Export Sales 329,759,143 723,122,691

Local Sales 13,227,373 13,921,762

342,986,516 737,044,453

Total 7,292,184,531 7,683,688,371

Schedule - 14 - OTHER INCOME

Sub Contracting Revenue - 132,635

DEPB Income 207,024,236 225,327,340

Duty Draw Back Benefit 331,616 874,836

Interest Received 20,656,299 27,267,425

Rent Received 465,001 481,500

Dividend Income 330,927 37,000

Sale of ETP Rights 255,510 -

Commission - 8,112,993

Total 229,063,589 262,233,729

Schedule - 15 - (INCREASE) / DECREASE IN STOCK

Opening Stock of Finished Goods 575,706,162 248,181,982

Opening Stock of Trading Goods 81,465,012 2,502,736

Excise Duty on Stock of Finished Goods 37,767,438 33,058,245

Goods in Transit - 18,331,411

Opening Stock of Work In Process 106,544,568 232,650,516

801,483,180 534,724,890

Closing Stock of Finished Goods 552,730,328 575,706,162

Closing Stock of Trading Goods 6,080,562 81,465,012

Excise Duty on Stock of Finished Goods 57,246,310 37,767,438

Goods in Transit 69,017,990 -

Closing Stock of Work In Process 28,794,147 106,544,568

713,869,337 801,483,180

Total 87,613,843 (266,758,290)


52

Annual

2009-10

53


Particulars 31.03.2010 31.03.2009

Rs. Rs.

Schedule - 16 - TRADING PURCHASES

Trading Purchases 324,686,824 739,777,954

Total 324,686,824 739,777,954

Schedule - 17 - RAW MATERIALS CONSUMPTION

Raw Materials Consumed 4,409,449,258 4,491,912,582

Other Raw Material related expenses 36,142,554 57,286,059

Total 4,445,591,812 4,549,198,641

Schedule - 18 - MANUFACTURING EXPENSES

Fuel & Steam Consumption 134,666,701 184,606,785

Diesel Consumption - 6,489,710

Pollution Control Expenses 92,051,565 70,664,733

Stores Consumed 65,041,893 62,178,394

Repairs and Maintenance 34,354,309 37,525,700

Power Consumption 376,804,092 345,186,884

Other Manufacturing Expenses 98,537,334 65,353,976

Total 801,455,894 772,006,182

Schedule - 19 - EMPLOYEES EMOLUMENTS

Salary & Wages 139,917,367 142,460,595

Statutory Contribution 8,107,396 6,757,760

Staff Welfare Expenses 15,309,359 12,911,478

Total 163,334,122 162,129,833

Schedule - 20 - ADMINISTRATIVE EXPENSES

Rent , Rates & Taxes 8,133,554 8,188,038

Travelling Expenditure 14,272,222 24,975,777

Postage and Telephone 13,505,240 11,834,704

Insurance Premium 2,486,887 3,697,503

Stationery & Printing Expenses 7,668,941 5,909,223

Legal & Professional Fees 17,957,648 13,645,077

Advertisement Expenses 4,531,752 2,171,037

Audit Fees 1,261,354 1,306,943

Donations 1,456,178 7,120,620

Repairs & Maintenance to others 2,230,251 1,969,589

Directors Remuneration 59,989,061 49,994,900

Directors Sitting Fees 450,000 570,000

Vehicle Expenses 7,267,724 7,907,446

Stockexchange Expenses 6,654,478 5,555,957

Software Expenses 1,692,760 1,203,286

stSchedule Forming Part of he Profit And Loss Account Year Ended On 31 March 2010t of the

Particulars 31.03.2010 31.03.2009

Rs. Rs.

Exchange Rate difference Others (115,959,466) 83,845,821

Bad debts W/off and Provision (3,999,827) 402,518

Profit / Loss on Sale of Assets (347,962) 1,945,868

Loss on Discarded Assets - 680,458

Premium / Discount on Forward Contract (2,378,616) 728,657

Other Expenses 12,870,195 9,801,966

Total 39,742,374 243,455,388

Schedule - 21 - SELLING AND DISTRIBUTION EXPENSES

Export Clearing & Forwarding Expenses 62,825,406 90,923,478

Transportation Expenses 123,973,292 131,816,066

Marine Insurance 4,398,959 3,082,249

Sales Commission 79,870,960 73,877,389

Business promotion Expenses 10,096,376 9,660,543

Packing Material Consumption 177,080,093 167,649,916

Other Selling Expenses 45,929,795 28,825,195

Total 504,174,881 505,834,836

Schedule - 22 - FINANCIAL EXPENSES

Interest 112,280,511 217,577,195

Other Financial Charges 23,730,956 22,478,401

Total 136,011,467 240,055,596


stSchedule Forming Part of he Profit And Loss Account e Year Ended On 31 March 2010t of the

54

Annual

2009-10

55


Schedule - 23 - Notes Forming Part of Accounts

1. BASIS FOR PREPARATION OF ACCOUNTS

The Financial statements have been prepared to comply with all material aspects in respect with the notified Accounting Standards 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 are 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.

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. 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 year 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 Export or Import, 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 borrowing cost as specified in point (I) till such assets are ready for its intended use, less specific grants received and Cenvat Credit availed if any.

(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.

(iv) 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”


56

Annual

2009-10

57


(D) INTANGIBLE ASSETS

Intangible assets are recognized at acquisition cost when the asset is identifiable, non - monetary in nature, without physical substance and it is probable that such expenditure is to result in future economic benefits to the entity.

(E) 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.

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.

(F) DEPRECIATION

Except for freehold land, leasehold land and Capital work-in-progress and other assets as stated below depreciation is charged on Straight Line Method (SLM) as per rate and in the manner prescribed under Schedule XIV of the Companies Act, 1956.

Intangible assets are amortized over useful life of assets as per management perception are as under:-

(i) ETP waste Rights - 5 Years(ii) Software - 5 Years(iii) License - 5 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.

(G) INVESTMENTS

Long term investments are stated at cost less amount written off, where there is a diminution in its value of long term nature. 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.

(H) INVENTORIES

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

Cost of Raw Material is determined on moving weighted average 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.

(I) 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, till the assets are ready for their intended use. 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 is suspended when active development is interrupted.



58

Annual

2009-10

59


(J) PRIOR YEAR EXPENSES AND INCOME

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

(K) EMPLOYEE BENEFITS

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.

(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 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.

(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.



Rs. In Lacs

As on 31.03.2010 As on 31.03.2009

In respect of Bank Guarantee 803.60 707.29

In respect of Letter of Credit 1143.59 2072.68

In respect of Corporate Bank Guarantee 2500.00 -

In respect of interest provision to MSM Enterprises 28.14 -

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.

Contingent Liabilities are disclosed for all possible obligations that are not remote and all present obligations of which outflow of economic resources is not estimable.

(P) FINANCIAL DERIVATIVES 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 and loss account, in view of Announcement made by ICAI in respect of AS 30 and AS 1.

(Q) LEASES

All lease are classified into operating and finance lease at the inception of the lease. Leases that transfer substantially all risks and rewards from lessor to lessees are classified as finance lease and others being classified as operating lease.

There are no finance lease transactions entered in to by the Company.

Rent Expense and Rent Income represent operating leases which are recognized as an expense in the statement of Profit and Loss Account on a Straight Line basis over the lease terms

4. CONTINGENT LIABILITIES

Contingent liabilities not provided for in account:


60

7. FOREIGN EXCHANGE RATE DIFFERENCE

The Net Foreign Exchange Rate difference pertaining to Export realisation and option derivatives amounting to Rs. 111.96 lacs (Previous Year Rs. 2253.62 lacs) has been considered to be Exceptional Items in Profit and Loss Account.

Annual

2009-10

61



5. INTER DIVISION TRANSFER

Sales and Purchases are shown net of Inter Divisional Transfer amounting to Rs. 6288.13 lacs (Previous year Rs. 5089.94 lacs). Other income and manufacturing expenses are shown net of Inter Divisional Job work charges income of Rs. 384.45 lacs (Previous year Rs. Nil).

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. 710.56 lacs (Previous year Rs. 422.10 lacs) to its other units. The same is knocked off from sales.

a) 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 464.14 2000-2001 & 2003-04 ITAT appeal (Asst.Year. 1999-2000 effect pending. Dept has gone to to Asst. Year 2006-2007) High Court (Rs. 292.78 lacs)

2006-2007 Filed appeal to ITATagainst CIT appeal order (Rs. 95.57 lacs)Filed appeal to CIT appeal againstorder of DCIT (Rs. 75.79 lacs)

Central Excise Excise Duty 643.38 Commissioner of Central Excise / Tariff Act. Director General of Central

Excise /Audit teamof Central Excise.


31.03.2010 31.03.2009Rs. in lacs Rs. in lacs

Audit Fees 13.24 11.36Taxation Fees 1.10 0.83Certification 2.21 1.60Other Services 1.10 -Auditors Out of Pocket Expenses 0.61 0.57Total 18.26 14.36

6 AUDITORS REMUNERATION


Rs. In Lacs

Particulars 31.03.2010 31.03.2009 Maximum Balance

outstanding during the year

Meghmani Europe BVBA 1114.70 1053.46 1114.70

Meghmani Organics - 123.50 123.50

Meghmani Energy Limited 124.67 725.48 725.48

Meghmani Finechem Limited - - 500.00

PT Meghmani Organics Indonesia 102.82 34.17 102.82

Meghmani Chemtech Limited 777.04 151.53 777.04

Total 2119.23 2088.14 3343.54

USA , Inc.

10. 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.

8. IMPAIRMENT OF ASSETS

During the year, the Company has impaired its assets to the tune of Rs. Nil (Previous year Rs. Nil).

9. SUBSIDIARIES

The Company has following companies as its subsidiaries:-

• Meghmani Europe BVBA

• Meghmani Organics USA , Inc.

• Meghmani Energy Limited

• Meghmani Finechem Limited

• PT Meghmani Organics Indonesia

• Meghmani Chemtech Limited

Loans and Advances, in the nature of loans to Subsidiary are as under


62

Annual

2009-10

63


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 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.


Figures in lacsFinancial year ended on March 31, 2010:

Pigments Agro Others * Elimination Total

Chemicals

Revenue

External Sales 28146.95 41199.27 3575.63 - 72921.85

Inter-segment Sales 0.11 6288.02 710.56 (6998.69) -

Total Revenue 28147.06 47487.29 4286.19 (6998.69) 72921.85

Results

Segment Results 3665.75 6313.99 (434.46) - 9545.28

Un-allocable (Expenses) / Income 296.33

Profit from Operation 9841.61

Finance Cost (1360.11)

Investments Income 3.30

Profit before exceptional items 8484.80

Exceptional Items (111.96)

Profit Before Tax 8372.84

Income tax Expenses (2303.60)

Deferred Tax (Expenses) / Income 88.78

Profit after tax 6158.02

Figures in lacs

Other information Pigments Agro Chemicals Others Unallocable Total

Capital Addition 1233.94 4655.46 35.13 304.55 6229.08

Depreciation (842.27) (710.32) (42.20) (106.78) (1701.57)

Non Cash Items 729.73 (1590.44) 123.44 230.60 (506.67)

Balance sheet Pigments Agro Chemicals Others Total

Assets

Segment Assets 24776.37 44505.02 3166.87 72448.26

Un-allocable Corporate Assets 17961.05

Total assets 90409.31

Liabilities

Segment Liabilities 2617.90 14416.26 887.48 17921.64

Un-allocable Corporate Liabilities 21520.24

Deferred Tax Liabilities 1178.31

Total Liabilities 40620.19



*Others includes trading activity and Power generation

64

Annual

2009-10

65



Pigments Agro Chemicals Others * Elimination Total

Revenue

External Sales 26630.79 42974.86 7231.23 - 76836.88

Inter-segment Sales 403.50 4686.44 422.10 (5512.04) -

Total Revenue 27034.29 47661.30 7653.33 (5512.04) 76836.88

Results

Segment Results 3920.25 8011.20 406.35 - 12337.80

Un-allocable (Expenses) / Income (1471.65)

Profit from Operation 10866.15

Finance Cost (2400.56)

Investments Income 0.37

Profit before exceptional items 8465.96

Exceptional Items (2253.62)

Profit Before Tax 6212.34

Income tax Expenses (1181.69)

Fringe Benefit Tax (20.00)

Deferred Tax (Expenses) / Income 42.42


Figures in lacs

• Others includes trading activity and Power generation

Figures in lacs

Other information Pigments Agro Chemicals Others CWIP Total

Capital Addition 421.10 1627.75 195.74 836.55 3081.14

Depreciation (828.07) (683.73) (24.45) - (1536.25)

Balance sheet Pigments Agro Chemicals Others Total

Assets

Segment Assets 36131.65 37272.03 4734.67 78138.35

Un-allocable Corporate Assets 1329.29

Total assets 79467.64

Liabilities

Segment Liabilities 2969.39 28757.33 1656.52 33383.24

Deferred Tax Liabilities 1267.09


Financial year ended on March 31, 2009:

(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:

(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.

11. MANAGERIAL REMUNERATION

Managerial remuneration U/S 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

2009-10 2008-09Export Sales 51170.09 58315.84Domestic Sales 21751.76 18521.04Total 72921.85 76836.88

Rs in lacs

2009-10 2008-09A. Profit as per Profit and Loss Account 6158.02 5053.07B. Add: Managing Directors' Remuneration(including perquisites) 386.25 326.48 Whole-time Directors' Remuneration (including perquisite) 181.42 149.75 Executive Director Remuneration (including perquisite) 32.22 23.72 Depreciation 1701.57 1536.26 Loss on sale of Fixed Assets (3.48) 26.26 Provision for Taxation (including FBT) 2303.60 1201.69 Provision for Deferred tax (88.78) (42.42)

Sub Total 10670.82 8274.81C. Less: Depreciation under Section 350 1605.49 1536.26

Profit on which remuneration is payable (A+B-C) 9065.33 6738.55



Details of Directors remuneration Rs in lacs

Managing Whole-time Executive TotalDirectors Directors Director

1.Salary 216.00 126.72 17.10 359.822.Bonus 144.00 39.28 8.50 191.783.Perquisites 26.25 15.42 6.62 48.29

Total 386.25 181.42 32.22 599.89

66

Rs. in Lacs

Provision for doubtful debts Others Total

At April 1, 2009 (50.98) (112.46) (163.44)

Charge to income/Expenses for the year 0 61.24 61.24

At March 31, 2010 (50.98) (51.22) (102.20)

12. PROVISION FOR TAXATION

The Company has made Income Tax provision of Rs. 2300 Lacs (Previous year Rs. 1175 Lacs) for the

year ended on 31st March, 2010 after taking into consideration the benefit of Export Oriented units

under Section 10 B, U/S 80IB and U/S 35(2AB) of Income Tax 1961. The Company has made FBT

Provision of Rs. Nil (Previous year Rs. 25 lacs) for the year ended on 31st March, 2010.

Annual

2009-10

67



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

Rs. in Lacs

March 31, 2010 March 31, 2009

Deferred Tax Liabilities 1280.51 1430.53

Deferred Tax Assets (102.20) (163.44)

Net position 1178.31 1267.09

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

13. DEFERRED TAX

Rs. in Lacs

March 31, 2010 March 31, 2009

At the beginning of period 1267.09 1309.51

Charge to P & L Account for the period (88.78) (42.42)

At end of period 1178.31 1267.09

Rs. in Lacs

Tax depreciation Others Totals

At April 1, 2009 1430.53 0 1430.53

Charge to expenses for the year (150.02) 0 (150.02)

At March 31, 2010 1280.51 0 1280.51

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:

15. RELATED PARTIES DISCLOSURES :-

• Holding Company : Nil

• Subsidiaries of the company : Meghmani Organics USA, Inc.(MOL-USA)

Meghmani Europe BVBA(MOL-EUROPE)Meghmani Energy Limited (MEL)Meghmani Finechem Limited (MFL)PT Meghmani Organics Indonesia(MOL-INDONESIA)Meghmani Chemtech Limited (MCTL)

• Enterprises in which Directors & : Meghmani Pigments

Key Managerial Personnel [KMP] Ashish Chemicals

have significant influence Tapsheel EnterpriseMeghmani Dyes and Intermediates Ltd.Meghmani Industries LimitedMeghmani Chemicals LimitedFidelity Exports Private LimitedVanguard Overseas Limited

• Key Managerial Personnel : Mr. Jayanti M Patel

Mr. Ashish SoparkarMr. Natwarlal M Patel

Mr. Ramesh M Patel

Mr. Anand I PatelMr. Ashvin Raythatha

• Relatives of Key Managerial Personnel : Ms. Deval Soparkar

(Employee) Mr. Karna R PatelMr. Ankit N Patel

• Relatives of Key Managerial Personnel : Mr. K M Patel

(Consultant)

14. EARNING PER SHARE

Particulars 31.03.2010 31.03.2009Net Profit after tax attributable to shareholders 615,801,905 505,306,936Weighted average number of equity shares at the end of year 254,314,211 254,314,211Nominal value of share 1.00 1.00Basic / Diluted earning per share 2.42 1.99



68

Annual

2009-10

69



Outstanding Balances with Related Parties (Rs. In lacs):

Subsidiary

Enterprises in whichDirectors & Key

ManagerialPersonnel[KMP]

have significantinfluence

KMPRelatives of Key

ManagerialPersonnelTotal

31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009

Debtors 3916.53 3343.43 677.24 158.65 NIL NIL NIL NIL 4593.77 3502.08

Creditors 656.85 741.35 92.69 38.70 NIL NIL NIL NIL 749.54 780.05

UnsecuredLoans

NIL NIL NIL NIL NIL NIL NIL NIL Nil Nil

Salary,PF& GratuityPayable

NIL NIL NIL NIL 31.61 170.83 0.98 0.73 32.59 171.56

Loans andAdvances

2119.23 2088.14 NIL 25.00 NIL NIL NIL NIL 2119.23 2113.14

Total 6692.61 6172.92 769.93 222.35 31.61 170.83 0.98 0.73 7495.13 6566.83

Related Parties Material Transactions (Rs. In lacs):

Subsidiary

Enterprises in whichDirectors & Key

ManagerialPersonnel[KMP]

have significantinfluence

KMPRelatives of Key

Managerial PersonnelTotal

31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009

Purchase of Goods

3233.18 2002.70 224.30 235.43 NIL NIL NIL NIL 3457.48 2238.13

Sale of Goods 4842.76 4454.16 2366.22 427.28 NIL NIL NIL NIL 7208.98 4881.44

Sale of Fixed assets (MEL)

85.23 52.61 NIL NIL NIL NIL NIL NIL 85.23 52.61

Purchase of Service

NIL NIL 713.67 36.54 NIL NIL 0.78 0.68 714.45 37.22

Sale ofService

NIL NIL NIL NIL NIL NIL NIL NIL NIL

Remuneration NIL NIL NIL NIL 599.89 471.16 12.18 10.63 612.07 481.79

Loans Given 1194.30 4439.42 NIL NIL NIL NIL NIL NIL 1194.30 4439.42

Loans Repaid 1115.15 3398.49 NIL NIL NIL NIL NIL NIL 1115.15 3398.49

Investment 134.13 126.30 NIL NIL NIL NIL NIL NIL 134.13 126.30

InterestIncome

67.90 107.81 NIL NIL NIL NIL NIL NIL 67.90 107.81

Rent Income(MEL)

2.16 2.88 NIL NIL NIL NIL NIL NIL 2.16

Total 10674.81 14584.37 3304.19 699.25 599.89 471.16 12.96 11.31 14591.85 15766.09

NIL

2.88



70

Mat

eri

al T

ran

sact

ion

s w

ith

Re

late

d P

arti

es

(Rs.

In la

cs):

Annual

2009-10



71

16. 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.

17. The estimated amount of contracts remaining to be executed on capital accounts of Rs. 982.83 lacs (P.Y. Rs. 720.09 lacs) is not provided for.

18. The Company has received certain intimation from “Suppliers” regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and accordingly company has provided for interest of Rs. 1.01 Lacs being payable as required under the said act.

The details as required by M.S.M.E.D. Act.are given below,

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

20. 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. 82.24 Lacs ( Previous year Rs. 46.12 Lacs)

Not later than 1 year Rs. 82.24 lacs (Previous year Rs. 46.12 Lacs)

Not later than 5 years Rs. Nil. (Previous year Rs. Nil)

21. During the year the Company has upgraded its SAP Programme to ECC 6 Version with Finance, Material Management, Production Planning, Quality Control and Costing Module.

Sr.No Particulars 2009-2010

1 the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year;

Principal Amount Rs. 32757239

Interest Amount Rs. 101367

2 the amount of interest paid by the buyer in terms of section 18, along Nilwith the amounts of the payment made to the supplier beyond the appointed day during each accounting year;

3 the amount of interest due and payable for the period of delay in making Rs. 2814426payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act;

4 the amount of interest accrued and remaining unpaid at the end of each Rs. 101367accounting year; and

5 the amount of further interest remaining due and payable even in the Not succeeding years, until such date when the interest dues as above are Availableactually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23.

24 . The Company uses derivative contracts to manage its foreign currency exposures and interest rate risk 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, 2010 are as under.

Sr. No. contracts USD (in lacs) Euro (in lacs)1 Forward Contract 46 115.00

(43) (102.50) (7.50) (5704.60)2 Option Contract 5 402.50 - 18072.25

(5) (552.50) (-) (28022.80)3 Option & Swap 2 140.00 - 6286.00

Contract (ECB) (1) (30.00) (-) (1521.60)

Particulars No of Amount in Amount in Rs. in Lacs

- 5163.50


Particular Face Value Purchase CostUnits Value

Reliance Money Manager Fund 1000 149989 150159252Reliance Monthly Income Plan 10 501721 10000000Canara Robeco Income Growth Fund(Dynamic) 10 10000000 100000000Canara Robeco Treasury Advantage Fund 10 1766334 120,000,000DWS Ultra Short Term Fund 10 1996426 20000000Birla Sunlife Saving Fund 10 4996602 50000000Tata Floater Fund 10 4982263 50000000L & T Freedom Income - STF 10 4923586 50000000Principle Mutual Fund 10 2996315 30000000ICICI Prudential Flexible Income 100 189152 20000000IDFC Money Manager Treasury Plan 10 7004599 70054992Religare Ultra Short Term Fund - Daily Dividend 10 2998230 30029369


25. Retirement Benefits

As per revised Accounting Standard 15 (AS-15) “Employees Benefits” issued by The Institute of Chartered Accountants of India, the Company has recognized in the financial statements in respects of Employee Benefits Schemes as per Actuarial Valuation as on 31st March 2010.

Previous year figures shown in brackets

22. The Company has written down the value of inventory of trading goods to the extent of Rs. 462.60 Lacs in view of quality of goods.

23. During the year the Company acquired and Sold following Investments in Mutual Funds.

72

Annual

2009-10

73



(A) Defined Benefit Plans I. Components of Employer Expenses

Sr. Particulars Gratuity Leave EncashmentNo. 2010 2009 2010 2009(a) Current Service Cost 3579050 3461435 547086 633624(b) Interest Cost 2515365 774116 153335 93001(c) Expected Return on Plan Assets (1362852) (1034067) - -(d) Actuarial (gain)/loss 318463 17039982 (580405) 81642(e) Total Expenses/(gain) recognized in the

Profit & Loss Account 5050026 20241466 120016 808267

II. Net Asset/ (Liability) recognized in Balance Sheet

Sr. Particulars Gratuity Leave EncashmentNo. 2010 2009 2010 2009(a) Present value of Funded Obligation 38499859 31285635 1900297 1907150(b) Fair Value of Plan Assets 17386954 12898655 - -(c) (Assets)/Liability recognized

in the Balance Sheet 21112905 18386980 1900297 1907150

III Change in Defined Benefit Obligations (DBO)

Sr. Particulars Gratuity Leave EncashmentNo. 2010 2009 2010 2009(a) Opening balance of Present 31285635 11058806 1907150 1169826

Value of Obligation(b) Liability of Outgoing Transferred Employees (41862) (20109)(c) Current Service Cost 3579050 3461435 547086 633624(d) Interest Cost 2515365 774116 153335 93001(e) Actuarial (Gain)/Loss 2528230 17065301 (580405) 81642(f) Benefit Paid (1366559) (1074023) (106760) (70943)(g) Closing Balance of Present 38499859 31285635 1900297 1907150

Value of Obligation

IV Changes in the Fair value of Plan Assets

Sr. Particulars Gratuity Leave EncashmentNo. 2010 2009 2010 2009(a) Opening Balance of Present 12898655 10080601 - -

Value of Plan Assets(b) Assets of Outgoing Transferred Employees (32841) - - -(c) Expected Return on Plan Assets 1362852 1034067 - -(d) Actuarial Gain/(Loss) 2209767 25319 - -(e) Contribution by Employer 2315080 2832691 - -(f) Benefit Paid (1366559) (1074023) - -(g) Fair Value of Plan Assets

as at 31st March 17386954 12898655 - -


V Actuarial Assumptions

Sr. Particulars Gratuity Leave EncashmentNo. 2010 2009 2010 2009(a) Discount Rate (per annum) 8.04% 7.00% 8.04% 7.95%(b) Expected Rate of Return on Assets 9.00% 9.00% - -

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

(per annum)

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. 63.39 Lacs (Previous year Rs. 59.17 Lacs)

VI Major Categories of plan assets as a percentage of total plan assets

Particulars Gratuity Leave Encashment2010 2009 2010 2009

Government of India Securities 0.00% 0.00% 0.00% 0.00%High quality corporate bonds 0.00% 0.00% 0.00% 0.00%Equity shares of listed companies 0.00% 0.00% 0.00% 0.00%Property 0.00% 0.00% 0.00% 0.00%Insurance Company 100.00% 100.00% 0.00% 0.00%

VII Movement in net liability recognized in balance Sheet

Particulars Gratuity Leave Encashment2010 2009 2010 2009

Net opening liability 18,386,980 978205 1907150 1169826Liability of Transferred Employees (9,021) - (20109) -P & L Charges 5,050,026 20241466 120016 808267Contribution paid (2,315,018) (2832691) (106760) (70943)Closing net liability 21,112,905 18386980 1900297 1907150

74


Annual

2009-10

75


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.

Particulars Licensed Installed ProductionCapacity Capacity

Intermediates 2900 2900 2699.323Technical 12140 12140 10399.317Formulation Bulk NA NA 5787.410Formulation Small Packing NA NA 4098.715Pigments 24420 24420 14317.737

1) Licensed, Installed Capacity and Production (in MT)

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

3) Details of Turnover and production of Power Generation UnitsParticulars Opening Opening Production Captive Sales Sales Closing Closing

Stock Stock in Units Consumpti Rs. in Lacs in Units Stock StockRs. in Lacs in Units on/Others Rs. in Lacs in Units

in Units

Power Generation Units 0.00 0.00 34311900 22469300 710.56 11842600 0.00 0.00(0.00) (0.00) (31671200) (24636200) (422.10) (7035000) (0.00) (0.00)

2) Details of Turnover and production

Particulars Opening Opening Production Captive Sales Sales Closing ClosingStock Stock in MT Consumpti Rs. in Lacs in MT Stock Stock

Rs. in Lacs in MT on/Others Rs. in Lacs in MTin MT

Intermediate 153.77 48.264 2699.323 1830.785 3349.40 746.960 504.03 169.842(151.489) (54.739) (2308.000) (1535.310) (3405.19) (779.165) (153.77) (48.264)

Technical 755.56 183.379 10399.317 1739.670 29213.14 7834.586 3038.00 1008.440(269.140) (91.644) (7918.064) (1212.083) (30276.58) (6614.245) (755.56) (183.379)

Formulation (Bulk) 410.73 187.676 5787.410 3193.932 5354.77 2514.684 531.16 266.470(247.086) (151.328) (4762.044) (2842.868) (5451.23) (1882.828) (410.73) (187.676)

Formulation (Small Pack) 542.94 264.138 4098.715 -1345.380 9626.00 5358.006 662.38 350.227(339.986) (162.020) (3224.520) (-948.705) (9258.49) (4071.107) (542.94) (264.138)

Pigments 3893.23 1911.236 14317.737 2777.762 27985.21 12302.546 2677.07 1148.665(1540.089) (678.768) (15942.817) (4177.989) (27054.35) (10532.36) (3893.23) (1911.236)

Note: Sales include inter-divisional transfer.

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 :




4) Details of Trading Goods

Particulars Opening Opening Purchase Purchase Sales Sales Shortage Closing ClosingStock Stock Rs. in Lacs in MT Rs. in Lacs in MT in MT Stock Stock

in Lacs in MT in Lacs in MT

Dyes Pigment 0.000 0.00 590.62 112.996 607.23 106.456 0.000 57.44 6.540(2.144) (0.150) (321.67) (41.578) (354.27) (41.728) (0.00) (0.000) (0.000)

Agro Chemicals 7.79 20.162 2654.49 862.041 2862.02 871.051 8.188 27.14 2.964(77.000) (37.082) (4299.67) (1071.51) (4950.73) (1088.43) (0.000) (7.79) (20.162)

Others 807.00 28785.323 32.16 75.000 105.66 288.700 0.00 58.03 28571.623(0.00) (0.00) (2642.00) (60724.323) (2052.12) (31939.00) (0.00) (807.00) (28785.323)

Notes: The above information is obtained from SAP

5) Raw material :- Opening and Closing Stock

Item Opening Opening Closing Closing Stock Stock Stock StockIn MT in Lacs in MT in Lacs

Agro ChemicalsAcetic Anhydride 38.394 14.87 61.532 34.94Acetic Acid Glacial 0.460 0.16 224.580 61.56Acrylonitrile (CAN) 21.145 9.40 92.127 99.62Benzaldehyde 11.760 8.63 28.560 27.72Bromine 3.528 2.31 5.271 3.98CTC 372.506 14.11 139.63 13.98DETCL 131.283 130.07 163.258 148.61DMPAT 239.500 258.12 346.250 336.21Isobutylene 22.228 22.01 38.082 33.63Lambda Cyhalothric Acid 99 0.172 2.03 9.050 95.43Nitrobenzene 19.971 6.11 95.687 58.76Sodium Salt Trichloro 24.005 52.13 37.228 86.00Solvent C 9 37.568 13.50 326.034 152.31TCAC 0.00 0.00 115.325 67.05Thionyl Chloride 51.804 6.33 77.267 15.80PigmentCPC 16.325 24.01 0.00 0.00Phthalic Anhydride 221.912 100.75 313.062 179.80Technical Salt 60.489 3.39 123.801 7.70Copper Scrap 0.00 0.00 24.157 76.28Cuprous Chloride 19.650 30.52 59.290 138.56Acetoacetyl Amino Benzimidazolone 10.477 74.07 10.478 74.07Para Chloro Benzonitrile (PCBN) 22.760 56.84 22.720 56.74VAT Blue 4 4.100 34.85 7.200 64.63Others 1274.44 2430.02Total 2138.65 4263.40

76

Annual

2009-10

77



7) Value of Import on CIF basis Rs. in lacs

Particulars 31.03.2010 31.03.2009Raw Material (Mfg.) 11450.13 14173.12Trading Purchase 801.49 6447.86Capital goods 267.18 0.00Total 12518.80 20620.98

6) Raw Material Consumption

Item 31.03.2010 31.03.2010 31.03.2009 31.03.2009Qty. in MT Amount Qty. Amount

in Lacs in MT in LacsAgro ChemicalsAcetic Anhydride 2387.42 1277.16 2037.568 1153.57Acrylonitrile 1574.98 99.30 1491.920 1130.62Benzaldehyde 493.29 440.08 510.306 439.56Bromine 239.04 159.90 221.766 174.48CTC 2074.87 195.87 2296.826 244.38Chlorpyriphos 0.00 0.00 97.261 252.52CMAC 0.00 0.00 185.000 777.51Cyno phenoxy Cyclopropane 324.93 1127.16 0.00 0.00DETCL 1677.52 1687.69 1605.757 2108.31DMPAT 3713.25 3609.75 3012.038 5239.72Acetic Acid Glacial 312.72 92.40 0.533 0.28Isobutylene 905.94 848.90 971.185 969.46Phenol Crystal 545.62 368.10 470.676 357.14S-Methyl N-Acetyl Phospo 0.00 0.00 7.500 30.17Thionyl Chloride 2794.10 383.79 2876.128 584.41TCAC 2529.17 1536.09 2025.00 1207.25Pigment DivisionAluminum Chloride 3533.47 1002.28 2208.950 719.79Ammonium Molybidate 27.592 259.29 37.739 699.61Phthalic Anhydride 10341.85 5282.34 11150.900 6007.44Technical Salt 11087.04 672.76 11912.050 678.19Cupric Chloride 104.650 169.98 82.640 137.24Cuprous Chloride 1882.85 3846.93 2244.007 4901.18Copper Scrap 681.154 2022.36 682.805 2389.82CPC Blue 117.125 177.08 824.35 1427.94Liquid Chlorine 2485.192 144.75 2818.590 174.96Others 19051.96 13686.44Total 44455.92 45491.99


8) Expenditure made in Foreign Currencies

Particulars 31.03.2010 31.03.2009Foreign Traveling Expenses 59.58 88.60Sales Commission 582.92 402.94Other Expenses Including Capital Expenditure 12168.82 15094.55Total 12811.32 15586.09

Rs. in lacs

Amount of Final Dividend Remitted (Rs. in Lacs) 224.16 224.87No. of Shareholders 1 1No. of Shares held 68322150 76582650Year / Period to which dividend relates 2008-09 2007-08

9) Particulars of NRI Shareholders to whom dividend is remitted.

Particulars 31.03.2010 31.03.2009Export of Goods (FOB) 50415.31 57490.32

Rs. in lacs10) Earnings in Foreign Currencies

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

Particulars 31.03.2010 31.03.2010 31.03.2009 31.03.2009Imported Indigenous Imported Indigenous

Stores And Spares 0.00 650.42 0.00 621.78 0.00% 100.00% 0.00% 100.00%

Raw Materials 11450.13 33005.79 14173.12 31318.8725.76% 74.24% 31.16% 68.84%

Signature to Schedule 1 to 23For M/s Patel & KhandwalaChartered AccountantsFRN - 107647WM M KhandwalaPartnerMembership No. 32472Place : AhmedabadDate : 28.05.2010






Rs. in lacs

78

Annual

2009-10

79


stCash Flow Statement for the Year Ended 31 March 2010

Particulars 31.03.2010 31.03.2009

Rs. Rs.

A. Cashflow from Operating Activities

Net Profit Before Tax 837,283,552 621,233,925

Adjustment for :

Depreciation 170,157,188 153,625,886

Unrealised Foreign Exchange Gain (21,402,992) 7,788,823

Interest and Finance Charges 136,011,467 240,055,596

Dividend Received (330,927) (37,000)

Interest Received (20,656,299) (27,267,425)

Loss on Discarded assets - 680,458

Profit / Loss on Sale of Investment (376,000) -

Loss on Sale of Fixed Assets (Net) (347,962) 1,945,868

Operating Profit before Exceptional Item 1,100,338,027 998,026,131

Exceptional Item (54,083,279) 427,109,193

Operating Profit before working capital changes 1,046,254,748 1,425,135,324

Adjustment for:

Inventories (154,707,169) (200,003,526)

Debtors (268,029,238) (185,072,231)

Loans and Advances (68,447,699) (420,992,617)

Curent Liabilities (10,690,220) 497,899,972

Provision for Employee Benefit 3,568,508 18,645,692

Sub Total (498,305,818) (289,522,710)

Cash Generated from operation 547,948,930 1,135,612,614

Direct Taxes Paid (174,099,521) (147,563,850)

Net Cash from operating activities 373,849,409 988,048,764

B. Cash flow from Investment Activities

Purchase of Fixed Assets (569,006,233) (288,040,537)

Dividend Received 330,927 37,000


Purchase of Mutual Fund (716,015,400) -

Sales of Mutual Fund 528,934,869 -

Investment in Subsidiaries (13,413,400) (12,630,000)

Investment in Others - (5,000)

Sale of Fixed Assets 9,727,880 5,664,498

Net Cash Used in Investing Activities (739,960,772) (268,426,170)

stCash Flow Statement Year Ended 31 March 2010 for the

Particulars 31.03.2010 31.03.2009

Rs. Rs.

C. Cash flow from financing Activities

Dividend paid (83,923,690) (76,018,077)

Tax on dividend (14,262,831) (12,966,210)

Interest and Finance Charges Paid (131,944,726) (227,215,147)

Bank Borrowing (Term Loan) 476,440,000 -

Bank Borrowing (Working Capital) 290,890,029 (651,815,775)

Proceeds from other Borrowing 1,636,500,000 2,091,668,000

Other Borrowing Repaid (1,815,123,000) (1,388,120,000)

Net Cash Used in Finanacing Activities 358,575,782 (264,467,209)

Net (Decrease)/Increase in Cash and Cash Equivalent (7,535,581) 455,155,385

Cash on Hand -Opening Balance 85,879,942 65,622,573

Cash on Hand -Closing Balance 78,344,361 520,777,958

Reconciliation of Cash and Cash equivalent at the and of the year

Cash on Hand 1,779,852 1,042,214

Balance with Schedule Banks in Current Accounts 144,156,322 75,669,704

Deposits with Schedule Banks 7,894,458 9,168,024

Total Cash & Bank Balance as per Balance Sheet 153,830,632 85,879,942

Net effect of change in Foreign Exchange Rate (75,486,271) 434,898,016

Cash & Cash Equivalent at the end of the year 78,344,361 520,777,958




Notes to the cash flow statement for the year ended on 31.03.2010

(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.

80




Annual

2009-10

81


I Registration Details

Registration No. 24052

State Code 04

Balance Sheet Date 31st March, 2010

II Capital raised during the year (Amount Rs. in Lacs)

Public Issue NIL

Right Issue NIL

Bonus Issue NIL

Private Placement NIL

III Position of Mobilization and Development of Funds (Amount Rs. in Lacs)


Total Assets 75819.66

Source of Funds

Paid up Capital 2543.14

Reserves & Surplus 47245.98

Secured Loans 13572.45

Unsecured Loans 11279.78

Deferred Tax Liability 1178.31

Application of Funds

Net Fixed Assets 18906.57

Investments 13035.59

Net Current Assets 43877.50

IV Performance of Company (Amount Rs. in Lacs)

Turnover (Including other income) 75212.48

Total Expenditure (Including prior year expenses) 66727.68

Profit before Exceptional item & Tax 8484.80

Exceptional item 111.96

Profit before tax 8372.84


Earning per Share (Equity) (Annualised) 2.42

Dividend Rate 40%

V General Names of Three Principal Products

Item Code No. (ITC Code) 32041751

Product Description Pigment Green


Product Description Cypermethrin


Product Description Acephate

Balance Sheet Abstract And Company's General Business Profile


Consolidated Accounts

82

Annual

2009-10

83


To,The Board of Directors Meghmani 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, 2010 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. 57202.80 Lacs as at 31st March, 2010 , total revenue of Rs. 10552.79 Lacs and Net cash flows amounting to Rs. (701.40 Lacs) for the year then ended, have been audited by us.

2. We have relied on the un-audited financial statements of three Subsidiaries whose consolidated financials statements reflect total assets of Rs.5155.22 Lacs as at 31st March, 2010, total revenue of Rs. 6140.04 Lacs and Net Cash flow of Rs. (121.19 Lacs) 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 subsidiaries, is based solely on such approved un-audited financial statements..

3. 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 notified by Companies (Accounting Standards) Rules, 2006.

4. Based on our audit as aforesaid and on consolidation of unaudited separate financial and on the other financial information of the components and accounts approved by the Board of Directors as explained in paragraph 2 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, 2010

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.





AUDITORS' REPORT


Particulars Sch. As at As atNo. 31.03.2010 31.03.2009

Rs. Rs.SOURCES OF FUNDSShareholders' FundsShare Capital 1 254,314,211 254,314,211Reserves and Surplus 2 4,418,731,193 4,026,609,914

4,673,045,404 4,280,924,125Minority Interest 681,737,496 802,245,786Loan FundsSecured Loans 3 5,260,328,020 4,346,210,699Unsecured Loans 4 1,133,299,766 1,342,342,729

6,393,627,786 5,688,553,428Deferred Tax Liability - 119,348,133

TOTAL 11,748,410,686 10,891,071,472APPLICATION OF FUNDSFixed Assets 5Gross Block 8,106,403,696 3,170,712,072Less: Depreciation 1,696,346,104 1,175,793,342Net Block 6,410,057,592 1,994,918,730Capital Work in progress 438,087,113 4,183,871,688

6,848,144,705 6,178,790,418Investments 6 193,039,281 409,737,164Deferred Tax Assets 36,417,559 -Current Assets, Loans and AdvancesInventories 7 1,386,309,815 1,132,090,529Sundry Debtors 8 3,156,863,509 2,829,916,251Cash and Bank Balances 9 220,021,120 234,329,049Loans and Advances 10 1,590,210,428 1,823,753,892Total Current Assets 6,353,404,872 6,020,089,721Less : Current Liabilities & ProvisionsLiabilities 11 1,538,470,684 1,597,714,941Provisions 12 144,125,047 119,830,890Total Current Liabilities 1,682,595,731 1,717,545,831Net Current Assets 4,670,809,141 4,302,543,890Significant Accounting Policies & Notes forming part of accounts 23

TOTAL 11,748,410,686 10,891,071,472

stConsolidated Balance Sheet As At 31 March 2010






84

stConsolidated Profit And Loss Account Year Ended on 31 March 2010 for the

Particulars Sch. 31.03.2010 31.03.2009

No. Rs. Rs.

Income

Gross Sales 8,683,216,755 8,572,631,831Less: Excise Duty 520,493,202 658,629,750Net Sales 13 8,162,723,553 7,914,002,081Other Income 14 227,258,127 251,570,489Total Income 8,389,981,680 8,165,572,570Expenditure(Increase)/Decrease in Stock 15 24,758,312 (228,074,782)Trading Purchases 16 407,383,187 806,182,696Raw Materials Consumption 17 4,976,792,785 4,682,051,383Manufacturing Expenses 18 754,037,422 634,991,239Employees Emoluments 19 234,113,586 181,347,261Administration Expenses 20 7,370,212 401,508,057Selling and Distribution Expenses 21 523,487,230 544,979,835Financial Expenses 22 418,712,051 261,017,209Depreciation 514,279,447 173,516,387Total Expenditure 7,860,934,232 7,457,519,285Profit Before Exceptional Items & Tax 529,047,448 708,053,285Exceptional Items 47,161,842 225,362,149Profit Before Tax 481,885,606 482,691,136Payment & Provision of Current Tax 241,397,254 121,060,220Fringe Benefit Tax - 2,015,801Deferred Tax (155,765,692) (12,654,065)Profit After Tax 396,254,044 372,269,180Minority Interest (120,508,290) 1,055,191Profit available for Appropriation 516,762,334 371,213,989Appropriations :Transfer to General Reserve 65,000,000 55,000,000

Proposed Dividend 101,725,684 83,923,690Dividend Tax 16,895,365 14,262,831Profit carried forward to Balance Sheet 333,141,285 218,027,468

Significant Accounting Policies & Notes forming part of accounts 23 Total 516,762,334 371,213,989Basic and Diluted Earning per share

of face value of Re. 1 each (in Rupees) 2.03 1.46



Annual

2009-10

85





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 of Equity 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 during 2001-02.

(5) 34,700,000 Equity Shares of Rs.1/- each were issued as initial public offer at Singapore under depository system.

(6) 53,684,211 Equity Shares of Rs.1/- each were issued as initial public offer to list its equity shares on Indian Stock Exchanges.


Rs. Rs.

Schedule - 1 - SHARE CAPITAL

Authorized Share Capital :

370,000,000 Equity Shares of Rs. 1/- (PY Rs.1/-) each 370,000,000 370,000,000(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 254,314,211 254,314,211(P.Y. 254,314,211)

Total 254,314,211 254,314,211


st Schedules Forming Part of the Consolidated Balance Sheet As At 31 March 2010


Rs. Rs.Schedule - 2 - RESERVES AND SURPLUS

(1) Securities Premium AccountAs per last year accounts 1,565,048,295 1,565,048,295

(2) Capital ReserveAs per last year accounts 3,519,810 3,519,810

(3) General ReserveAs per last year accounts 489,270,348 434,270,348Add : Transferred from Profit and Loss Account 65,000,000 55,000,000

554,270,348 489,270,348

(4) Capital Redemption ReserveAs per last year accounts 18,432,980 18,432,980

(5) Currency Translation ReserveAs per last year accounts 3,423,520 (1,060,926)Add : Current year effect (6,020,006) 4,484,446

(2,596,486) 3,423,520

(6) Profit & Loss AccountAs per last year accounts 1,946,914,961 1,728,887,493Add : Surplus for the year Brought Forward 333,141,285 218,027,468

2,280,056,246 1,946,914,961

Total 4,418,731,193 4,026,609,914

86

Annual

2009-10

87


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. 3430.80 million in favour of State Bank of India (Rs. 1987.40 million), HDFC Bank Limited (Rs. 619.40 million) and ICICI Bank Limited (Rs. 824.00 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. 3430.80 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 External Commercial borrowing of USD 11 Million equivalent to Rs. 511.39 million from Standard Chanrtered Bank, UK.The facility is secured by First charge on all the present and Future Moveable Fixed assets financed under term loan including moveable fixed assets held at CH-1-2/A. GIDC Dahej,Taluka Vagra, Bharuch.

5 The Group Company has been sanctioned Rupee Term Loan of Rs. 290 Crores from Consortium of Indian Banks as under :

Rs. In CroresSate Bank of India 100.00 Bank of India 55.00 Bank of Maharashtra 60.00 State Bank of Bikaner & Jaipur 35.00 Karur Vysya Bank 40.00 Total 290.00


Rs. Rs.Schedule - 3 - SECURED LOANSTerm Loan Facilities from Banks : In Indian currency 2,892,520,776 2,740,000,000In Foreign currency 1,639,162,342 1,168,455,826Working Capital Facilities from Banks :In Indian currency 569,206,940 437,714,643In Foreign currency 159,437,962 40,230

Total 5,260,328,020 4,346,210,699

st Schedules Forming Part Consolidated Balance Sheet As At 31 March 2010of the


6 The Group Company has also availed a Foreign Exchange term loan by way of External Commercial Borrowing of US $ 20 million (Rs. 100/- Crore) from International Finance Corporation (IFC), Washington, USA.

7 The Group Company has executed a Joint Deed of Hypothecation on 19.05.2008 with State Bank of India in its capacity as Security Trustee for the lenders State Bank of India (SBI), Bank of India (BOI), Bank of Maharashtra(BOM) State Bank of Bikaner and Jaipur (SBBJ) and Karur Vysya Bank (KVB) to secure Rupee term loan of Rs. 290 Crores.

8 The Group Company has also executed Unattested Memorandum of Hypothecation on 11.12.2008 in favour of International Finance Corporation (IFC), Washington, USA represented by State Bank of India in its capacity as Security Trustee to secure Foreign Exchange term loan by way of External Commercial Borrowing of US $ 20 million (Rs. 100/- Crore) by way of creating First Pari Passu charge on all movable properties and Second Pari Passu Charge on all Current Assets of the Group Company.

9 The indenture of mortgage on immovable properties of the Group Company situated at Plot NO. CH 1 and CH 2 has been created on 11.12.2008 with State Bank of India as Trustee for the lenders viz., SBI, BOI, BOM, SBBJ, KVB and IFC to secure Indian and Foreign Term Loan (by way of ECB) of Rs. 390 Crores.

10 The Group Company had approached Consortium members for working capital facility. State Bank of Inida sanctioned Rs. 31 Crores and Bank of India Rs. 14 Crores aggregating to Rs. 45 Crores. The Group Company has availed working capital facilities of Rs. 31 Crores from State Bank of India on stand alone basis and created a first Pari Passu charge by way of hypothecation of entrie stock of raw material, work in process, finished goods, spares and receivables. The Group Company has not availed Rs. 14 Crores sanctioned by Bank of India. The entire facility of Rs. 45 Crores will be secured by primary security of first charge (pari passu) by way of hypothecation of all chargeable current assets of the company including stocks and receivables and collaterally secured by Second Pari passu charge on the fixed assets of the Group Company.

11 The Group Company has availed External Commercial Borrowing of US$ 25,00,000 from ICICI Bank Limited Bahrain disbursed in June, 2007. The said term loan is secured by exclusive charge on all movable and immovable fixed assets purchased out of this facility.

First Pari Passu charge on all movable and immovable fixed assets is created by way of Indenture of Mortage on the property situated at Plot no. 398 Village Chharodi, Taluka Sanand, District Ahmedabad - 382170.


Rs. Rs.Schedule - 4 - UNSECURED LOANSFrom Bank - In INR 802,452,740 1,107,122,192

From Bank - In Foreign Currency 325,525,000 204,148,000

From Corporate 5,322,026 31,072,537

Total 1,133,299,766 1,342,342,729


88

Annual

2009-10

89


st Schedules Forming Part Consolidated Balance Sheet As At 31 March 2010 of the

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Rs. Rs.

Schedule - 6 - INVESTMENTS (At Cost)

Quoted Equity Shares fully paid up - Non Trade

2,000 Equity Shares of Saket Project Limited of Rs. 100/- each(Market Value of the Investment is Not Available) 20,000 20,000

Sub Total (a) 20,000 20,000

Unquoted Equity Shares fully paid up - Non Trade

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

491,585 Equity Shares of Bharuch Eco

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

14,000 Equity Shares of Bharuch Environ Infrastructure Ltd. of Rs. 10/- each 140,000 140,000

500 Equity Shares of Green Environment Services Co. Op. Society Ltd. of Rs. 10/- each 5,000 5,000

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

30,000 Equity Shares of Panoli Enviro Technology Ltd. of Rs. 10/- each 300,000 300,000

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

2,000 Equity Shares of Suvikas Peoples Co-Op. Bank of Rs. 50/- each 100,000 100,000

10 Equity Shares of Vellard View Premises Co. Op. Society Ltd. of Rs. 50/- each 500 500

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

Government Securities - Trade

National Savings Certificates 18,000 18,000

Sub Total (c) 18,000 18,000

Other Current Investment - Quoted Non Trade

Principal Mutual Fund 6,076,421 -

Reliance Money Manager Fund 10,268,745 -

Canara Robeco Treasury Advantage 20,207,711 -

IDFC Money Manager Treasury Plan 50,300,739 -

Religare Ultra Short Term Fund 50,312,882 -

SBI - SHF - Ultra - Short Term Fund 50,290,033 -

JM High Liquidity Fund - 50,016,300

Canara Robeco Income Fund - 104,070,699

DSPBR Liquidity Fund - 50,019,234

Kotak Liquid Fund - 50,015,801

Birla Sunlife Liquid Plus - 50,016,446

Principal Mutual Fund - 50,000,000

ING Liquid Plus - 50,015,934

Sub Total (d) 187,456,531 404,154,414

Note - (1) - For investment purchase and sold During the year, refer to note no. 8 schedule 23

Note - (2) - Market Value of Other Investment is Rs. 187456531

Total 193,039,281 409,737,164

st Schedules Forming Part Consolidated Balance Sheet As At 31 March 2010 of the

90

Annual

2009-10

91



Rs. Rs.Schedule - 7 - INVENTORIES Stock of Raw Materials 448,836,386 229,684,173

Stock of Trading Goods 128,399,640 142,654,431

Stock of Work In Process 28,794,147 106,544,568

Stock of Finished Goods 686,687,666 613,473,600

Stock of Stores, Packing & Others 93,591,976 39,733,757

Total 1,386,309,815 1,132,090,529

Schedule - 8 - SUNDRY DEBTORS

(Unsecured and considered good)

Exceeding Six Month 635,318,991 399,288,088

Others 2,536,544,518 2,445,628,163

(Includes Rs. 614.34 Lacs (P.Y. Rs. 142.40 Lacs) due from firm or a

Company in which some of the Directors are interested) 3,171,863,509 2,844,916,251

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

Total 3,156,863,509 2,829,916,251

Schedule - 9 - CASH AND BANK BALANCES

Cash on hand 2,257,074 3,799,897



Total 220,021,120 234,329,049

Schedule - 10 - LOANS AND ADVANCES

(Unsecured Considered good)

Export Benefit Receivables 257,687,634 216,600,161

Staff Advances 4,656,589 8,724,847

Balance with Central Excise 612,246,176 584,767,902

Deposits 66,754,254 37,798,763

Advance Payment of Income Tax (net of provision for tax) 18,950,865 78,911,501

Advance Payment of FBT (net of provision for tax) 125,846 -

Other Current Assets 353,749,381 452,548,099

Advance Payment to Vendors 276,039,683 444,402,619

Total 1,590,210,428 1,823,753,892



Rs. Rs.Schedule - 11 - CURRENT LIABILITIES'Sundry Creditors (Other than MSMED Act.) 1,062,886,769 932,763,067

Sundry Creditors For MSMED Act. 32,876,255 -

IPO Refund Payable* 106,400 113,050

Other trade payable 374,808,342 617,414,417

Statutory liabilities 67,113,377 47,148,221

Unpaid Dividend (F.Y.2007-2008)* 270,711 276,186

Unpaid Dividend (F.Y.2008-2009)* 408,830 -

*There is no amount due and outstanding to

be credited to Investor Education and Protection Fund

Total 1,538,470,684 1,597,714,941

Schedule - 12 - PROVISIONS

FBT Provision - 322,610


Dividend Payable (Proposed) 101,725,684 83,923,690

Corporate Dividend Tax Payable 16,895,365 14,262,831

Total 144,125,047 119,830,890



92

Annual

2009-10

93


Schedule Forming Part Consolidated Profit And Loss Account for the Year Ended on 31 March 2010

of thest

Particulars 31.03.2010 31.03.2009Rs. Rs.

Schedule - 13 - SALES Manufacturing GoodsExport Sales 4,308,035,945 4,652,952,715Local Sales 2,972,594,157 1,879,726,022Other Sales - 8,831,310

7,280,630,102 6,541,510,047Trading GoodsExport Sales 868,866,078 1,358,570,272Local Sales 13,227,373 13,921,762

882,093,451 1,372,492,034Total 8,162,723,553 7,914,002,081

Schedule - 14 - OTHER INCOMESub Contracting Revenue - 132,635Duty Entitlement Pass Book Income 207,024,236 225,327,340Duty Draw Back Benefit 331,616 874,836Interest Received 15,350,812 16,892,185Rent Received 249,001 193,500Dividend Income 346,386 37,000Misc. Income 1,961,100 -Sales of ETP Rights 255,510 -Commission 1,739,466 8,112,993

Total 227,258,127 251,570,489Schedule - 15 - (INCREASE) / DECREASE IN STOCKOpening Stock of Finished Goods 575,706,162 248,181,982Opening Stock of Trading Goods 142,654,431 102,375,663Excise Duty On Stock of Finished Goods 37,767,438 33,058,245Goods in Transit - 18,331,411Opening Stock of Work In Process 106,544,568 232,650,516

862,672,599 634,597,817Closing Stock of Finished Goods 554,294,047 575,706,162Closing Stock of Trading Goods 128,399,640 142,654,431Excise Duty On Stock of Finished Goods 57,408,463 37,767,438Goods in Transit 69,017,990 -Closing Stock of Work In Process 28,794,147 106,544,568

837,914,287 862,672,599Total 24,758,312 (228,074,782)

Schedule - 16 - TRADING PURCHASESTrading Purchase 407,383,187 806,182,696

Total 407,383,187 806,182,696Schedule - 17 - RAW MATERIALS CONSUMPTIONRaw materials Consumed 4,934,944,618 4,611,188,049Other Raw material related expenses 41,848,167 70,863,334

Total 4,976,792,785 4,682,051,383



of thest


Schedule - 18 - MANUFACTURING EXPENSESFuel & Steam Consumption 79,124,655 102,038,110Diesel Consumption - 6,489,710Pollution Control Expenses 92,153,646 71,052,269Stores Consumed 79,222,656 62,178,394Repairs and Maintenance 41,086,355 38,476,042Power Consumption 310,364,768 280,364,395Other Manufacturing Expenses 152,085,342 74,392,319

Total 754,037,422 634,991,239Schedule - 19 - EMPLOYEES EMOLUMENTSSalary & Wages 200,521,454 154,872,847Statutory Contribution 11,238,543 9,925,515Staff Welfare Expenses 22,353,589 16,548,899

Total 234,113,586 181,347,261Schedule - 20 - ADMINISTRATIVE EXPENSESRent , Rates & Taxes 9,740,006 15,519,310Travelling Expenditures 17,329,747 24,985,643Postage and Telephone 16,364,998 13,765,165Insurance Premium 8,081,637 5,259,494Stationery & Printing Expenses 9,034,057 6,223,741Legal & Professional Fees 24,662,375 17,789,427Advertisement Expenses 4,652,992 2,171,537Audit Fees 1,727,534 1,351,063Donations 1,462,279 7,120,620Repairs & Maintenance to others 3,136,760 3,744,097Directors Remuneration 59,989,061 49,994,900Directors Sitting Fees 510,000 570,000Vehicle Expenses 8,883,374 8,004,009Stock Exchange Expenses 6,799,478 5,555,957Software Expenses 1,692,760 1,203,286Exchange Rate difference Others (226,344,972) 219,634,518Bad debts W/off and Provision 3,995,554 (37,558)Profit / Loss on Sale of Assets 876,579 1,945,868Loss on Discarded Assets 22,494,857 680,458Premium / Discount on Forward Contract (2,378,616) 728,657Other Expenses 34,659,752 15,297,865

Total 7,370,212 401,508,057

94

Annual

2009-10

95



of thest


Schedule - 21 - SELLING AND DISTRIBUTION EXPENSESExport Clearing & Forwarding Expenses 64,426,025 117,315,336Transportation Expenses 125,543,995 131,816,066Marine Insurance 4,911,902 3,082,249Sales Commission 75,788,441 76,312,568Business Promotion Expenses 10,250,539 9,979,082

Packing Material Consumption 182,969,645 167,899,773

Other Selling Expenses 59,596,683 38,574,761

Total 523,487,230 544,979,835

Schedule - 22 - FINANCIAL EXPENSES

Interest 392,389,723 237,227,555

Other Financial Charges 26,322,328 23,789,654

Total 418,712,051 261,017,209


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 currency translation 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) 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.

e) Minority interest's share of the net assets of Consolidated Subsidiaries is identified and

presented in the consolidated balance sheet separate from liabilities and the equity of the

Company's shareholder.

f) 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”.

96

Annual

2009-10

97


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

Name of the subsidiaries Country of

domicile ownership interest

Meghmani Finechem Limited India 57%

Meghmani Energy Limited India 70%

Meghmani Europe BVBA Belgium 100%

Meghmani Organics USA Inc. USA 100%

Meghmani Chemtech Limited India 60%

PT Meghmani Organics Indonesia Indonesia 100%

Proportion of

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

Rs. in LacsMarch 31, 2010 March 31, 2009

Deferred Tax Liabilities 4234.45 1441.28Deferred Tax Assets (4598.63) (247.79)Net position (364.18) 1193.49

3. DEFERRED TAX

Rs. in LacsMarch 31, 2010 March 31, 2009

At the beginning of period 1193.49 1306.88Charge to Profit & Loss Account for the period (1557.67) (126.54)Debited to Pre-Operative Expenses Capitalised - 13.15At the end of period (364.18) 1193.49

Schedule - 23 - Notes on Accounts to Consolidated Balance Sheet And Profit & Loss Account

2. The figures of previous year are regrouped and rearranged wherever necessary so as to

make them comparable with the current year. Figures pertaining to the subsidiary companies

have been reclassified wherever necessary to bring them in line with parent company's

financial statements

3. Other significant accounting policies :-

These are set out under “Significant accounting policies “as given in the Standalone Financial

statements of Meghmani Organics Limited.”.


5. FINANCIAL DERIVATIVES

The Group uses derivative contracts to manage its foreign currency exposures relating to the

underlying transactions and firm commitments. The Group doesn't enter into any derivative

instruments for trading or speculation purpose. The derivative contracts outstanding as on 31st,

March 2010 are as under.

4. EARNING PER SHARE

Particulars 31.03.2010 31.03.2009

Net Profit after Minority Interest attributable to

Weighted average number of Equity Shares at the end of year 254,314,211 254,314,211

Nominal value of share 1.00 1.00

Basic / Diluted earning per share 2.03 1.46

shareholders 516,762,334 371,213,989


98

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. and carry forward losses. The

movement for the relevant periods in the Group's Deferred Tax assets is as follows:

Rs. in LacsTax depreciation Totals

At April 1, 2009 1441.28 1441.28Charge to expenses for the year 2793.17 2793.17At March 31, 2010 4234.45 4234.45

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

Group's Deferred Tax Liabilities is as follows:

Provision for

doubtful debts

At April 1 2009 (50.98) (196.81) (247.79)

Charge to Income/Expenses for the year 0 (4350.84) (4350.84)

At March 31 2010 (50.98) (4547.65) (4598.63)

Others Total

Annual

2009-10

99


6. BORROWING COST

The Group has incurred borrowing cost of Rs.3862.80 Lacs (Previous Year Rs.2664.14 Lacs) on

qualifying assets of the project of the Group Company till the period ending 30th June 2009, which

has been capitalised to fixed assets on completion of Project and Commencement of Commercial

Production by the Group Company.

7. The Group 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. 90.14 Lacs ( Previous year Rs. 50.17 Lacs).

Not later than 1 year Rs. 90.14 lacs (Previous year Rs. 50.17 lacs)

Not later than 5 years Rs. Nil. (Previous year Rs. Nil)

Note - Previous year figures are shown in brackets.

Sr. Particulars No of No. contracts USD (in lacs) Euro

(in lacs)1 Forward Contract 46

(43) (102.50) (7.50) (5704.60)2 Option Contract 5 402.50 (-) 18072.25

(5) (552.50) - (28022.80)3 Option & Swap Contract (ECB)-MOL 2 140.00 - 6286.00

(1) (30.00) (-) (1521.60)4 Option & Swap Contract (ECB)-MEL 1 18.75 - 841.87

(1) (22.92) (1162.44)5 Option & Swap Contract (ECB)-MFL 4 200.00 - 8980.00

(3) (171.42) - (8694.42)

Amount in Amount in Rs. in Lacs

115.00 - 5163.50



100

9. The Group Company has written down the value of inventory of trading goods to the extent of Rs. 462.60 Lacs in view of quality of goods.

10. The Group has amortised Goodwill of Rs. 200.97 Lacs to the Profit and Loss account of the current year being the excess fo cost of investment in subsidiary company over the company's portion of equity of subsidiary at the date of investment.

11. Retirement Benefits

As per revised Accounting Standard 15 (AS-15) “Employees Benefits” issued by The Institute of Chartered Accountants of India, the group has recognized in the financial statements in respects of Employee Benefits Schemes as per Actuarial Valuation as on 31st March, 2010.

Particular Face Value Purchase Cost

Units Value

Reliance Money Manager Fund 1000 155984 156159252

Reliance Monthly Income Plan 10 10000000 100000000

DWS Ultra Short Term Fund 10 1996426 20000000

Birla Sunlife Saving Fund 10 4996602 50000000

Tata Floater Fund 10 4982263 50000000

L & T Freedom Income - STF 10 4923586 50000000

Principle Mutual Fund 10 2996315 30000000

ICICI Prudential Flexible Income 100 189152 20000000

Canara Robeco Income Growth (Dynamic) Fund 10 10000000 100000000

Canara Robeco Treasury Advantage Fund 10 1766334 120000000

IDFC Money Manager Treasury Plan 10 6999100 70000000

Religare Ultra Short Term Fund - Daily Dividend 10 1001365 10000000

Cananra Robeco Income Fund 10 10401395 104440404

Cananra Robeco Dynamic Fund 10 5000000 50000000

Morgan Stanley Fund 10 5000000 50000000

(A) Defined Benefit Plans

I. Components of Employer Expenses

Sr. Particulars Gratuity Leave Encashment

No. 2010 2009 2010 2009

(a) Current Service Cost 4148552 3800422 754868 843232

(b) Interest Cost 2553798 778563 177056 97178

(c) Expected Return on Plan Assets (1455654) (1074406) - -

(d) Actuarial (Gain)/Loss 127799 17093157 (680113) 139218

(e) Total Expenses/(Gain) recognized in the

Profit & Loss Account 5374495 20597736 251811 1079628


8. During the year the Group has acquired and Sold following Investments in Mutual Funds.

Annual

2009-10

101


II Net Asset/ (Liability) recognized in Balance Sheet


No. 2010 2009 2010 2009

(a) Present value of Funded Obligation 39376588 31963398 1900297 1907150

(b) Fair Value of Plan Assets 18738615 13576418 - -

(c) (Assets)/Liability recognized

in the Balance Sheet 21106633 18144542 1907920 1907150

III Change in Defined Benefit Obligations (DBO)


No. 2010 2009 2010 2009

(a) Opening balance of

Present Value of Obligation 31762822 11114742 2201783 1222365

(b) Liability of Outgoing Transferred Employees (41862) - (20109) -

(c) Current Service Cost 4148552 3800422 754868 843232

(d) Interest Cost 2553798 778563 177056 97178

(e) Actuarial (Gain)/Loss 2313565 17101256 (680113) 139218

(f) Benefit Paid (1366559) (1074023) (185618) (120319)

(g) Closing Balance of Present

Value of Obligation 39370316 31720960 1907920 1907150

IV Changes in the Fair value of Plan Assets


No. 2010 2009 2010 2009

(a) Opening Balance of Present

Value of Plan Assets 13576418 10299252 - -

(b) Assets of Outgoing Transferred Employees (32841)

(c) Expected Return on Plan Assets 1455654 1074406 - -

(d) Actuarial Gain/(Loss) 2185766 8099 - -

(e) Contribution by Employer 2887336 3268684 - -

(f) Benefit Paid (1366559) (1074023) - -

(g) Fair Value of Plan Assets

as at 31st March 18738615 13576418 - -



102

(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. 94.70 Lacs (Previous year Rs. 90.85 Lacs)

VI Major Categories of plan assets as a percentage of total plan assets

Particulars Gratuity Leave Encashment

2010 2009 2010 2009

Government of India Securities 0.00% 0.00% 0.00% 0.00%

High quality corporate bonds 0.00% 0.00% 0.00% 0.00%

Equity shares of listed companies 0.00% 0.00% 0.00% 0.00%

Property 0.00% 0.00% 0.00% 0.00%

Insurance Company 100.00% 100.00% 0.00% 0.00%

VII Movement in net liability recognized in balance Sheet

Particulars Gratuity Leave Encashment

2010 2009 2010 2009

Net opening liability 18,386,980 978205 1907150 1169826

Liability of Transferred Employees (9,021) - (20109) -

P & L Charges 5,050,026 20241466 120016 808267

Contribution paid (2,315,018) (2832691) (106760) (70943)

Closing net liability 21,112,905 18386980 1900297 1907150


V Actuarial Assumptions


No. 2010 2009 2010 2009

(a) Discount Rate (per annum) 8.04% 7.00% 8.04% 7.95%

(b) Expected Rate of Return on

Assets (per annum) 9.00% 9.00% 0.00% -

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

Annual

2009-10

103


12. SEGMENT REPORTING

For management purpose, the Group is currently organised into three major operating divisions Pigments. Agro Chemicals and Basic Chemicals. These divisions are the basis on which the Group 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 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 Group'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 operatingreceivables, 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 Group level.




Financial year ended on March 31, 2010: Figures in lacs

Pigments Agro Chemicals Basic Chemicals Others * Elimination TotalRevenueExternal sales 23774.37 40779.70 7526.75 9546.42 - 81627.24Inter-Segment Sales 4372.68 6707.58 961.66 2729.10 (14771.02) -Total Revenue 28147.05 47487.28 8488.41 12275.52 (14771.02) 81627.24ResultsSegment Results 3665.75 6313.99 (1643.79) (45.66) 887.52 9177.81Un-allocable (Expenses) / Income 296.32Profit from Operation 9474.13Finance Cost (4187.12)Investments Income 3.46Exceptional Items (471.61)Profit Before Tax 4818.86Income tax Expenses (2413.97)Deferred Tax (Expenses) / Income 1557.65Profit After Tax 3962.54

Other information Pigments Agro Chemicals Basic Chemicals Others Elimination TotalCapital Addition 1233.94 4655.46 49151.13 522.18 (399.79) 55162.92Depreciation (842.27) (710.32) (3234.79) (365.18) 9.77 (5142.79)

Balance sheet Pigments Agro Chemicals Basic Chemicals Others * Elimination TotalAssetsSegment Assets 24776.37 44505.02 54302.00 11222.89 (18821.44) 115984.84Un-allocable assets 17961.05Deferred Tax Assets 364.18Consolidated total assets 134310.07LiabilitiesSegment liabilities 2617.90 14416.26 40424.76 8475.69 (6692.61) 59242.00Un-allocable Liabilities 21520.24Consolidated total liabilities 80762.24Non Cash Expenses other than Depreciation & Amortization Unrealized Foreign Exchange (Gain)/Loss 726.87 946.46 123.29 39.73 1836.35Loss on Sale of Fixed Assets (Net) 3.07 (7.05) (185.40) 0.50 197.64 8.76Loss on discardedfixed assets 0.00 0.00 23.98 200.97 - 224.95 Un-allocable Non Cash ExpensesUnrealized MTM Foreign Exchange (Gain)/Loss (2142.54)

104

Annual

2009-10

105



Pigments Agro Chemicals Basic Chemicals Others * Elimination TotalRevenueExternal sales 22592.58 42725.48 - 13821.96 - 79140.02Inter-Segment Sales 4441.71 4935.83 - 2651.01 (12028.55) -Total Revenue 27034.29 47661.31 - 16472.97 (12028.55) 79140.02ResultsSegment Results 3920.25 8011.20 - 748.57 (1518.03) 11161.99Un-allocable (Expenses) / Income - - - - - (1471.66)Profit from Operation 9690.33Finance Cost (2610.17)Investments Income 0.37Exceptional Items (2253.62)Profit Before Tax 4826.91Income tax Expenses (1210.60)Fringe Benefit Tax (20.16)Deferred Tax (Expenses) / Income 126.54Profit after tax 3722.69

Financial year ended on March 31, 2009: Figures in lacs

Other information Pigments Agro Chemicals Basic Chemicals Others Elimination TotalCapital Addition 877.32 2008.07 40438.74 866.11 (1334.30) 42855.94Depreciation (828.07) (683.73) - (246.84) 23.48 (1735.16)

Balance sheet Pigments Agro Chemicals Basic Chemicals Others Elimination TotalAssetsSegment Assets 25410.80 36965.99 53935.04 12543.09 (8174.98) 120679.94Un-allocable assets 5429.57Consolidated total 126109.51assetsLiabilitiesSegment liabilities 2812.53 10264.39 3430.16 4776.48 (4084.78) 17198.78Un-allocable Liabilities 58079.01Consolidated total liabilities 75277.79Non Cash Expenses otherthan Depreciation & AmortizationUnrealized Foreign Exchange (Gain)/Loss (129.23) (532.34) - (74.45) - (736.02)Loss on Sale of Fixed Assets (Net) (0.01) 19.09 - 0.38 - 19.46Loss on discarded fixed assets 2.56 4.10 - 0.14 - 6.80Un-allocable Non Cash ExpensesUnrealized Foreign Exchange (Gain)/Loss 5018.88

(3) Segment Liability: Rs. In Lacs

Particulars 2009-2010 2008-2009

Outside India 16980.40 12478.04

Within India 63781.84 62799.77

Total 80762.24 75277.81

(4) Segment Capital Expenditure: Rs. In Lacs

Particulars 2009-2010 2008-2009

Outside India 82.91 268.59

Within India 55080.01 42587.35

Total 55162.92 42855.94



• 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 onconsolidated basis including businesses conducted through its Subsidiaries.

(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 Group's sales by geographical Markets:

Rs. In Lacs

Particulars 2009-2010 2008-2009

Outside India 51769.02 60115.23

Within India 29858.22 19024.79

Total 81627.24 79140.02

Rs. In Lacs

Particulars 2009-2010 2008-2009

Outside India 26750.58 26560.51

Within India 107559.49 99548.99

Total 134310.07 126109.50

(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.

106

13. ADDITIONAL INFORMATION

(1) The estimated amount of contracts remaining to be executed on capital accounts of Rs. 1234.75 Lacs (P.Y. Rs. 4693.33 Lacs) is not provided for.

(2) CONTINGENT LIABILITIESContingent liabilities not provided for in account:

Annual

2009-10

107


Rs. In Lacs

Particulars As on 31.03.2010 As on 31.03.2009

In respect of Bank Guarantee 1144.62 909.67

In respect of Letter of Credit 1276.87 2772.69

In respect of Inland Bill of Exchange Discounted 845.06 -

In respect of Corporate Bank Guarantee 2500.00 -

In respect of interest provision to MSM Enterprises 29.54 -

a) 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 464.14 2000-2001 & 2003-04 ITAT appeal effect

(Asst.Year. 1999-2000 pending. Department has gone to High

to Asst. Year 2006-2007) Court (Rs. 292.78 lacs) 2006-2007

Filed appeal to ITAT against CIT appeal

order (Rs. 95.57 lacs).

Filed appeal to CIT appeal against order of

DCIT (Rs. 75.79 lacs)

Central Excise Tariff Act. Excise Duty 643.38 Commissioner of Central Excise / Director

General of Central Excise /Audit

team of Central Excise.



14. RELATED PARTIES DISCLOSURES :-

• Enterprises in which directors &

Key Managerial Personnel [KMP]

have significant influence : Meghmani Pigments

Ashish Chemicals

Tapsheel Enterprise

Meghmani Infrastructure

Meghmani Dyes and Intermediates Ltd.

Meghmani Industries Limited

Meghmani Chemicals Limited

Fidelity Exports Private Limited

Vidhi Global Chemicals Limited

Vanguard Overseas Limited



Outstanding Balances with Related Parties (Rs. In lacs):

Particu lars Enterprises in which Key Managerial Relatives of Key Total

Directors & Key Personnel Managerial Personnel

Managerial Personnel

[KMP] have significant

influence

31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009

Debtors 688.99 158.65 NIL NIL NIL NIL 688.99 158.65

Creditors 150.89 38.70 NIL NIL NIL NIL 150.89 38.70

Unsecured Loans 53.22 310.72 NIL NIL NIL NIL 53.22 310.72

Salary,PF & Gratuity Payable NIL NIL 31.61 170.83 1.66 1.36 33.27 172.19

Advances NIL 149.27 NIL NIL NIL NIL NIL 149.27

Total 893.10 657.34 31.61 170.83 1.66 1.36 926.37 829.53

Transactions with Related Parties (Rs. In lacs):

Particulars Enterprises in which Key Managerial Relatives of Key Total

Directors & Key Personnel Managerial Personnel

Managerial Personnel

[KMP] have significant

influence

31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009 31.03.2010 31.03.2009

Purchase of Goods 224.30 235.43 NIL NIL NIL NIL 224.30 235.43

Sale of Goods 3177.13 946.14 NIL NIL NIL NIL 3177.13 946.14

Purchase of Service 1304.28 2014.68 NIL NIL 0.78 0.68 1305.06 2015.36

Remuneration NIL NIL 599.89 471.16 20.82 19.00 620.71 490.16

Loans Received NIL 60.00 NIL NIL NIL NIL NIL 60.00

Loan Paid 272.62 NIL NIL NIL NIL NIL 272.62 NIL

Advance for capital goods Nil 149.27 NIL NIL NIL NIL NIL 149.27

Interest Expenses 18.83 30.04 NIL NIL NIL NIL 18.83 30.04

Total 4997.16 3435.56 599.89 471.16 21.60 19.68 5618.65 3926.40

108

• Key Managerial Personnel Mr. Jayanti M Patel Mr. Ashish Soparkar

Mr. Natwarlal M PatelMr. Ramesh M PatelMr. Anand I PatelMr. Ashvin Raythatha

• Relatives of Key Ms. Deval Soparkar Managerial Personnel(Employee) Mr. Maulik J Patel

Mr. Kaushal SoparkarMr. Karna R Patel Mr. Ankit N Patel

• Relatives of Key Managerial Personnel Mr. K M Patel(Consultant)

Annual

2009-10

109


Disclosure in Respect of Material Transaction with Related Party during the year -

Sr. Name of Party Relationship Nature of Amount ClosingNo. Transaction Rs. in Balance

Lacs Rs. in Lacs1 Meghmani Pigments Enterprises in which Directors Purchase of 184.17 83.93

& KMP have significant Finished influence Goods

2 Ashish Chemicals Enterprises in which Directors Purchase of 28.29 2.96& KMP have significant Raw influence Material

3 Meghmani Infrastructures Enterprises in which KMP Purchase of 590.34 57.96& his Relative have significant Servicesinfluence

4 Vidhi Global Chemicals Limited Enterprises in which Directors Sales of 1493.99 62.90& KMP have significant Finished influence Goods

5 Meghmani Industries Limited Enterprises in which Directors Sales of 1068.46 400.27& KMP have significant Finishedinfluence Goods

6 J M Patel Key Managerial Personnel Managerial 128.75 6.72Remuneration

7 A N Soparkar Key Managerial Personnel Managerial 128.75 6.72Remuneration

8 N M Patel Key Managerial Personnel Managerial 128.75 6.72Remuneration

9 R M Patel Key Managerial Personnel Managerial 96.71 5.91Remuneration

10 A I Patel Key Managerial Personnel Managerial 84.71 3.94Remuneration

11 Deval A Soparkar Relative of Key Managerial Salary 7.35 0.50Personnel

12 Karana R Patel Relative of Key Managerial Salary 4.45 0.33Personnel

13 Maulik J Patel Relative of Key Managerial Salary 4.51 0.35Personnel

14 Kaushal A Soparkar Relative of Key Managerial Salary 4.13 0.32Personnel

15 Meghmani Industries Limited Enterprises in which Directors Interest 18.83 53.22& KMP have significant influence

Signature to Schedule 1 to 23For M/s Patel & KhandwalaChartered AccountantsFRN - 107647WM M KhandwalaPartnerMembership No. 32472Place : AhmedabadDate : 28.05.2010







Consolidated Cash Flow Statement for the Year Ended 31st March 2010

Particulars 31.03.2010 31.03.2009

Rs. Rs.

A. Cashflow from Operating Activities

Net Profit Before Tax 481,885,606 482,691,136

Adjustment for :

Depreciation 514,279,447 173,516,387

Prior Period Depreciation 348,906 -

Unrealised Foreign Exchange Gain (17,430,098) 7,788,823

Interest and Finance Charges 426,031,542 262,414,243

Dividend Received (346,385) (37,000)

Interest Received (15,347,359) (16,581,831)

Claim Received from Insurance Company (6,256,590) -

Profit / Loss on Sale of Investment (931,500) -

Profit on Sale of Land (18,539,818) -

Loss on Sale /Discarded Fixed Assets (Net) 48,167,844 2,626,326

Operating Profit before Exceptional Item 1,411,861,595 912,418,084

Exceptional Item (13,188,892) 427,109,193

Operating Profit before working capital changes 1,398,672,703 1,339,527,277

Adjustment for:

Inventories (265,961,608) (172,342,292)

Debtors (356,673,539) (41,383,424)

Loans and Advances (14,415,101) (851,829,036)

Curent Liabilities 153,280,985 402,964,819


Sub Total (480,200,755) (643,955,131)

Cash Generated from operation 918,471,948 695,572,146

Direct Taxes Paid (181,146,124) (148,925,917)

Net Cash from operating activities 737,325,824 546,646,229

B. Cash flow from Investment Activities

Purchase of Fixed Assets (1,418,382,254) (3,213,515,671)

Dividend Received 346,385 16,470,168


Purchase of Mutual Fund (722,015,400) (3,277,843,519)

Sales of Mutual Fund 939,089,283 2,913,965,699

Investment in Others - (5,000)

Receipt from Insurance Claim 6,256,590 -

Profit / Loss on Sale of Investment 555,500 -

Minority Interest - 400,546,260

Sale of Fixed Assets 39,727,880 5,664,498

Net Cash Used in Investing Activities (1,139,619,686) (3,128,074,188)

110

Annual

2009-10

111


Consolidated Cash Flow Statement for the Year Ended 31st March 2010

Particulars 31.03.2010 31.03.2009

Rs. Rs.

C. Cash flow from financing Activities

Dividend paid (83,923,690) (76,018,077)

Tax on dividend (14,262,831) (12,966,210)

Interest and Finance Charges Paid (418,134,519) (424,979,611)

Bank Borrowing (Term Loan) 720,472,967 3,482,339,593

Bank Borrowing (Working Capital) 410,170,181 (651,815,775)

Proceeds from other Borrowing 1,601,034,714 2,129,302,372

Other Borrowing Repaid (1,904,582,375) (1,560,477,886)

Net Cash Used in Financing Activities 310,774,447 2,885,384,406

Net (Decrease)/ Increase in (91,519,415) 303,956,447Cash and Cash Equivalent

Cash on Hand -Opening Balance 234,329,049 361,087,874

Cash on Hand -Closing Balance 142,809,634 665,044,321

Reconciliation of Cash and Cash Equivalent

at the end of the year

Cash on Hand 2,257,074 3,799,897



Total Cash & Bank Balance as per Balance Sheet 220,021,120 234,329,049

Net effect of change in Foreign Exchange Rate (77,211,486) 430,715,272

Cash & Cash Equivalent at the end of the year 142,809,634 665,044,321

Notes to the cash flow statement for the year ended on 31.03.2010

(1) The Cash flow statement has been prepared in accordance with the requirements of AccountingStandard - 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.







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2009-10

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114

Notice of Meeting

NOTICE IS hereby given that the Sixteenth Annual General Meeting of the Members of Meghmani Organics Limited (the “Company”) will be held on Wednesday, 28th July, 2010 at 10.30 a.m. at H T Parekh Convention Centre, Ahmedabad Management Association, ATIRA, Dr. Vikramsarabhai Marg, Vastrapur, Ahmedabad -380 015 to transact the following businesses:-

ORDINARY BUSINESS:-

(1) To receive, consider, and adopt the Audited Balance Sheet as at 31st March, 2010 and the Profit and Loss Account for the financial year ended 31st March, 2010 together with the reports of the Board of Directors and the Auditors thereon.

(2) To declare 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. Ashish Soparkar, who retires by rotation and being eligible offers himself for re-appointment.

(5) To appoint a director in place of Mr. J Vishwanathan, who retires by rotation and being eligible offers himself for re-appointment.

(6) To appoint Statutory Auditors of the Company, to hold office from the conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting and to fix their remuneration for the financial year ending on 31 March, 2011.

SPECIAL BUSINESS:-

(7) To Consider and if thought fit to pass the following resolution with or without modification as Ordinary Resolution:-

APPOINTMENT OF MR. AKTHAR SHAIK

“RESOLVED THAT in accordance with the provisions of Section 257 and 260 of the Companies Act, 1956 and provision of Clause 137 of Articles of Association of the Company, Mr. Akthar Shaik, who was appointed as an Additional Director of the Company by the Board on 29th January, 2010 to hold office upto the date of conclusion of this Annual General Meeting, be and is hereby elected and appointed as a Director of the Company, liable to retire by rotation”

Annual

2009-10

115


1. BASIC SALARY: Rs. 1,89,400/- Per Month.

2. PERQUISITES : In addition to Salary he shall be eligible for perquisites as under:

Category: - A

(a) The Company shall make contribution to Provident Fund or Annuity fund under the Company's rule.

(b) The Company shall pay the Bonus under the Company's rule.

These perquisites shall not be included for computation of the ceiling on remuneration.

Category:-B

(a) Club Fee: - Fee of one Club. This will not include admission and life Membership Fees.

(b) The Company shall pay gratuity at the rate of half month's salary for each completed year of service subject to amount permissible under the Payment of Gratuity Act, 1972 from time to time.

Category: - C

(a) The Company shall provide a car with driver at the entire cost of the company for personal use and office work. The Company shall bill use of car for private purposes.

(b) The Company shall provide telephone at the residence of the Executive Director (International Marketing) at the entire cost of the Company. Personal long distance calls be billed by the Company.

(c) Mr. Ashvin Raythatha shall be entitled to one Month's privilege leave for every eleven-month's service.

“RESOLVED FURTHER THAT the Board of Directors be and is hereby authorized to increase, alter, and vary the salary, perquisites in such manner as the Board in absolute discretion deem fit and acceptable to Mr. Ashvin Raythatha subject to the provisions of Section 198 & 309 read with Schedule XIII of the Companies Act, 1956.”

“RESOLVED FURTHER THAT in the event of any re-enactment or modification or re-codification of the Companies Act, 1956 this Special Resolution shall remain in force and the reference to various provisions of the Companies Act, 1956 shall be deemed to be substituted by the corresponding provisions of the new act or amendments thereto or the Rules and notifications issued there under."

(8) To Consider and if thought fit to pass the following resolution with or without modification as Special Resolution

RE-APPOINTMENT OF MR. ASHVIN RAYTHATHA AS EXECUTIVE DIRECTOR (INTERNATIONAL MARKETING) OF THE COMPANY

"RESOLVED THAT pursuant to the provisions of Section 198, 269 and 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force), and such other approval that may be necessary, consent of the Company be and is hereby granted for re-appointment of Mr. Ashvin Raythatha as the Executive Director (International Marketing) of the Company, for a period of One year with effect from 1 April, 2010 on the terms and conditions including remuneration payable as set out herein below: -


116

Registered Office:184, PHASE II,GIDC INDUSTRIAL ESTATE, VATVA, AHMEDABAD 382 445Date: 28th May, 2010

By Order of the BoardFor MEGHMANI ORGANICS LIMITED

K D MehtaCOMPANY SECRETARY

"RESOLVED FURTHER THAT in case of inadequacy of Profit during the period of appointment, the remuneration payable to Mr. Ashvin Raythatha shall be as per limit prescribed in Schedule XIII of the Companies Act 1956."

"RESOLVED FURTHER THAT the Board of Directors and the Company Secretary of the Company be and are hereby authorized to do all such acts, deeds, matters and things as in its absolute discretion, as may be considered necessary, desirable or expedient and to settle any question, or doubt that may arise in relation thereto and the Board of Directors shall have absolute powers to decide break up of the remuneration within the maximum permissible limit and in order to give effect to this resolution or as may be considered by it to be in the best interest of the Company."

(9) To Consider and if thought fit to pass the following resolution with or without modification as Special Resolution:-

REVISION IN SALARY OF MS. DEVAL SOPARKAR - HEAD CORPORATE COMMUNICATION

“RESOLVED THAT subject to approval of the Central Government and in pursuance of the provisions of Section 314 of the Companies Act, 1956, consent of the Company be and is hereby accorded to Ms. Deval Soparkar, daughter of Mr. Ashish Soparkar, Managing Director of the Company, holding and continuing to hold an office or place of profit as Head Corporate Communication at an enhanced consolidated salary of Rs. 60,000/- per month in the scale of Rs.60,000-10,000-1,00,000 together with the usual allowances and benefits like medical reimbursement, leave travel allowance, provident fund, gratuity, etc., as per the rules of the Company with effect from 01st April, 2010.

(10) To Consider and if thought fit to pass the following resolution with or without modification as Special Resolution:-

Appointment of Mr. Ankit Patel to Hold Office or Place of Profit

“RESOLVED THAT pursuant to the sub section (1B) of section 314 of the Companies Act, 1956, the authority be and is hereby given to the Board of Directors to appoint Mr. Ankit Patel, as Manager (Agro Business) and to hold office or place of profit at a remuneration as may be prescribed under the act from time to time.”

"RESOLVED FURTHER THAT the Board of Directors and the Company Secretary of the Company be and are hereby authorized to do all such acts, deeds, matters and things as in its absolute discretion, as may be considered necessary, desirable or expedient and to make application to Central Government to give effect to this resolution or as may be considered by it to be in the best interest of the Company."

Annual

2009-10

117


Notes:

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 Monday 19 July, 2010 to Wednesday 28 July, 2010 (both days inclusive).

6) The final dividend for the year ended 31 March, 2010 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) Members desirous of obtaining any information concerning the accounts and operations of the Company are requested to address their questions in writing to the Company at least 7 (Seven) days before the date of the Meeting so that the information required may be made available at the Meeting.

8) Explanatory statement as required under Section 173 (2) of the Companies Act, 1956 in respect of Item No. 7, 8, 9 & 10 is annexed and form part of this Notice.

9) The Statutory Registers maintained in terms of provisions of the Companies Act, 1956, subject to applicable provisions and all documents referred to in the accompanying notice 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 and Sunday up to the date of the Annual General Meeting.

10) Pursuant to Clause 49 of the Listing Agreement, the profile of the directors proposed to be re-appointed/appointed is given in a statement containing details of the concerned directors which is annexed to this Notice.

11) The Company has organized a factory visit on Saturday, 28th August, 2010. The interested shareholders are requested to send their nomination on or before 31st July, 2010.

\

***


118

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 reelection at every Annual General Meeting.

Mr. Jayanti Patel,Mr. Ashish Soparkar and Mr. J Vishwanathan directors retiring by rotation and being eligible offer themselves for re-appointment. The brief profiles of the directors seeking re-appointment are as under:-

(1) Mr. Jayanti Patel :-

Mr. Jayanti Meghjibhai Patel, 58 years, is the Executive Chairman of our Company. Together with our Managing Director Mr. Ashish N. Soparkar, our Managing Director Mr. Natwarlal M. Patel and our Executive Directors Mr. Ramesh M. Patel and Mr. Anand I. Patel, he was a co-founder and partner of M/s Gujarat Industries, which was subsequently converted to our Company in 1995. He currently oversees the international marketing of our Company and is responsible for all major policy decisions.

Mr. Jayanti M. Patel has more than 31 years experience in the Dyes and Pigments industry, and more than 16 years experience in the Agrochemicals industry. Mr. Jayanti M. Patel was appointed as our Executive Chairman since the incorporation of our Company in 1995.

Mr. Jayanti M. Patel holds a Bachelors of Chemical Engineering degree from Maharaja Sayajirao University, Baroda. He is currently the executive member of the Gujarat Chamber of Commerce and Industry, Ahmedabad.

Mr. Jayanti Patel is interested in the following companies and partnership firms.

Statement Regarding The Directors Proposed For Appointment - Reappointment

Mr. Jayanti Patel is the brother of Mr. Natwarlal Patel and Mr. Ramesh Patel.Mr. Jayanti Patel is considered to be interested in the resolution

(2) Mr. Ashish Soparkar:-

Mr Ashish Natwarlal Soparkar, 58 years, is the Managing Director of our Company. Together with our Executive Chairman Mr Jayanti M. Patel, our Managing Director Mr Natwarlal M. Patel and our Executive Directors Mr Ramesh M. Patel and Mr Anand I. Patel, he was a co-founder and partner of M/s Gujarat Industries, which was subsequently converted to our Company in 1995. He was responsible for pioneering the export division of our Company. He currently oversees the Corporate Affairs and Finance matters of our Company.

Name of the firm/concern Position

Meghmani Energy Limited - Subsidiary of MOL Director

Meghmani Finechem Limited - Subsidiary of MOL Director

Meghmani Organics USA Inc. - Subsidiary of MOL Director

PT. Meghmani Organics Indonesia - Subsidiary of MOL Director

Meghmani Chemicals Limited Director

Fidelity Exports (Pvt.) Limited Director

Ashish Chemicals Partner

Meghmani Pigments (erstwhile Alpanil Industries) Partner

Annual

2009-10

119


Mr. Ashish Soparkar is considered to be interested in the resolution.

(3) Mr. Jayaraman Vishwanathan :-

Mr. Jayaraman Vishwanathan, 50 years, was appointed as a Director of our Company on July 17, 2003. He has more than 22 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 has rejoined Electra Partners in February 7, 2005. 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

Presently, Mr. Vishwanathan has accepted an assignment with an arm of the Govt of Abu Dhabi to help set up a private equity operation for them in the UAE.

The name of the organization is CERT (Centre of Excellence for Applied Research and Training), which is governed by UAE Ministry for Higher Education and Scientific Research. CERT is the largest investor in the MENA region (Middle East, North Africa) in the discovery and commercialization of innovation / scientific research, and is also the largest provider of education and training across a multitude of disciplines in the UAE. Their existing investments span across the globe.

Mr. J Vishwanathan is interested in the following companies:-1. Aavishkaar International Limited, SingaporeMr. Jayaraman Vishwanathan is considered to be interested in the resolution.

***

Name of the firm/concern Position held

Meghmani Energy Limited - Subsidiary of MOL Director

Meghmani Finechem Limited - Subsidiary of MOL Director

Meghmani Organics USA Inc. - Subsidiary of MOL Director

PT. Meghmani Organics Indonesia - Subsidiary of MOL Director

Meghmani Chemicals Limited Director

Meghmani Exports Limitada Sa De CV Mexico Director

Fidelity Exports (Pvt.) Limited Chairman

Rajpath Club Limited Director

Ashish Chemicals Partner

Meghmani Pigments (erstwhile Alpanil Industries) Partner

Mr Ashish N Soparkar, has more than 31 years experience in the Dyes and Pigments industry, and more than 16 years experience in the Agrochemicals industry. Mr Ashish N Soparkar was appointed as our Managing Director since the incorporation of our Company in 1995. Mr Ashish N. Soparkar holds a Bachelors of Chemical Engineering degree from Maharaja Sayajirao University of Baroda.Mr. Ashish Soparkar is interested in the following companies and partnership firms.


120

Explanatory Statement Pursuant To Section 173(2) Of The Companies Act, 1956

ITEM NO. 7

Mr. Akthar Hassen Goolam Hoosen Shaik

Mr. Shaik was born on 28th December 1950 in Durban South Africa. His family arrived in Durban from Surat, India in 1908 as trading merchants and were the first Indian family in South Africa to set up general trading stores in the coal mines.

He attended Orient Islamic School based in Durban where he completed his schooling in 1967. He then joined the production division of Creamline Diaries, a major milk and milk related product manufacturer, wherein as a young man he gained valuable experience in manufacturing processes.

In 1970, he joined Farmer's Organisation. In those early years he was responsible for procurement, warehousing and dispatching. Farmer's Organisation was the major distributor of agricultural chemicals in KwaZulu-Natal and Swaziland, representing all the major multinationals in distributing their products for the Sugar Industry.

In 1973 and until 1977, Mr. Shaik teamed up with Mr. Robert Maingard who was one of the co-founders of the original Farmer's Organisation, where he gained valuable experience in the agrochemical business. He served on the Executive Committee and was responsible for Marketing and Sales.

From 1977 to over a period spanning around 12 years, he was involved with two other companies which were subsidiaries of Farm-AG, namely Agroserve and Staalchem (based in Transvaal), where he served on the Executive Committee and as General Manager, respectively. He was directly responsible for taking the Sales of the company from R35m in 1984 to R184m in 1989.

Once again the time for change occurred in the evolution of the chemical industry and Farm-AG went into partnership with the Sentrachem Group this alliance became known as Sanachem (South African National Agricultural Chemicals) where Mr. Shaik continued to be a major role-player and contributed hugely to the success of Sanachem. Here he was responsible for Sales, Marketing & Procurement and served as an Executive Director. He once again increased the sales from R184m in 1989 to R1.3billion in 1996. Also during this time he helped expand Sanachem into a global company with sales in more than 100 countries. Dow Agroscience finally bought Sanachem in October 1996.

In 2005, Arysta LifeScience, a Japanese based multinational, purchased a 50% share of Volcano Agroscience with an option of purchasing the balance of the company which took place in July 2008. From 1999, Mr. Shaik steered the company from a humble turnover of R29m to R780m in 2008. Mr. Shaik then completed his contract with Arysta in June 2009.

Thus Mr. Shaik has a very wide reached experience of over 30 years in Agrochemical International Marketing.

The Board of Director is of the opinion that his experience and knowledge will provide new vision and direction to establish company's presence in the Agrochemical international market.

Mr. A G Shaik was appointed as an additional director on 29th January, 2010 to hold the position until the ensuing annual general meeting.

Annual

2009-10

121


As required, under Section 257 of the Companies Act, 1956, the Company has received a Notice from the Members proposing the name of Mr. A G Shaik as a candidate for the office of the Director of the Company.

Your directors recommend for the appointment of Mr. A G Shaik and propose to pass the resolution under Item No.7 of the Notice as an ordinary resolution.

No one of the Directors except Mr. A G Shaik is interested or concerned in the resolution.

ITEM NO. 8

The present terms of Mr. Ashvin Raythatha, Executive Director (International Marketing), has expired on 31 March, 2010. The Managerial remuneration Committee at its meeting held on 28th May, 2010 recommended to re-appoint Mr. Ashvin Raythatha, as Executive Director (International Marketing), of the Company for a further period of one year from 1 April, 2010 to 31 March,2011.

The Board of Directors at its meeting held on 28th May, 2010 approved the re-appointment of Mr. Ashvin Raythatha, as Executive Director (International Marketing), of the company for a period of one year from 01 April, 2010 to 31 March, 2011 and terms of remuneration payable to him.

The Company is a Profit Making Company. The remuneration payable is as per the limit prescribed under the Section I of Part II of Schedule XIII of the Companies Act, 1956.

This may also be considered as intimation under section 302 of the Companies Act, 1956.

Your directors recommend for the re-appointment of Mr. Ashvin Raythatha.

Except Mr. Ashvin Raythatha, no other directors are said to be interested in the resolution.

ITEM NO. 9

Under Section 314(1-B) of the Companies Act, 1956, a Special Resolution is required for enabling any relative of Director of the Company to hold any office or place of profit in the Company. Ms. Deval Soparkar Head (Corporate Communication) is associated with the Company since 01-07-2002. Her existing remunerations were approved by the members at the General Meeting of the Company held on 16th May, 2009. The Board of Directors at their meeting held on Monday, 28th May, 2010 proposed and recommended to revise her remuneration to Rs. 60, 000/- in the scale of Rs.60,000-10,000-100,000 with effect from 01st April, 2010.

The resolution for revision in the terms of remuneration of Ms. Deval Soparkar as recommended by the Board of Directors of the Company requires to be approved by the members under Section 314(1-B) of the Companies Act.

The proposed remuneration is payable subject to approval of Central Government.

Except Mr. Ashish Soparkar, Managing Directors who is the father of Ms. Deval Soparkar, no other Directors are interested in the said resolution.

Your Directors recommend the resolution for approval.


122

Registered Office:

184, PHASE II

GIDC INDUSTRIAL ESTATE,

VATVA, AHMEDABAD 382 445

Date: 28th May, 2010

By Order of the Board

For MEGHMANI ORGANICS LIMITED

K D Mehta

COMPANY SECRETARY

ITEM NO. 10

Mr. Ankit Patel, 25 years, is the Manager (Agro Business) of our Company. He holds a Bachelor of Chemical Engineering from D. D. Desai University, Master of Engineering from Griffith, Austrailia, with main subject Engineering Management and Global Masters in Business Administration with main subject Investment Banking from S. P. Jain Center of Management. Mr. Ankit Patel is currently working as a Manager Agro Business.

The resolution proposed is to hold position or place of profit by relatives of directors under Section 314 (1) (b) of the Companies Act, 1956.

The objective to place the resolution for approval is to enable the Company to pay salary up to Rs. 50,000/- per month. The payment of salary exceeding Rs. 50,000/- per month requires Central Government approval.

Mr. Ankit Patel is son of Mr. Natwarlal Patel, Managing Director and nephew of Mr. Jayanti M. Patel Chairman and Mr. Ramesh Patel Executive Director.

Mr. Natwarlal M. Patel, Mr. Jayanti M Patel and Mr. Ramesh Patel are considered to be interested in the resolution.

Your Directors recommend the resolution for approval.

***

Annual

2009-10

123


Meghmani Organics Limited

Registered Office:- 184 Phase II, GIDC, Industrial Estate, Vatva, Ahmedabad 382445

PROXY FORM

I / We …………….............……………………..of …………….............……………………..being a Member / Members of

Meghmani Organics Limited holding shares in folio No. / Demat A/c No. ………………….....................……..........

hereby appoint:…….................................………………………..of………….................................………………………..or

failing him / her …................………………………………..of …………….......................…….. or failing him / her

…………………………………………….of ………………………….....................……….as my / our Proxy to attend and vote

for me / us and on/our behalf at the Sixteenth Annual General Meeting of the said Company to be held on

Wednesday, 28 July, 2010 at 10.30 a.m. at H T Parekh Convention Centre, Torrent AMA Centre, Ahmedabad

Management Association, ATIRA, Dr. Vikram Sarabhai Marg, Ahmedabad - 380 015 and at any adjournment thereof .

Signed this ……....................…………..day of ……………………...........………2010

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 ofmeeting

(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 Sixteenth Annual General Meeting of Meghmani Organics Limited held on

Wednesday, 28 July, 2010 at 10.30 a.m. at H T Parekh Convention Centre, Torrent AMA Centre, Ahmedabad

Management Association, ATIRA, Dr. Vikram Sarabhai Marg, Ahmedabad - 380 015

Client ID No.:- ………………………..………............................. D.P. ID No. ………………………..………............................

Folio No./Demat A/c No. ..................………………………….....

Signature

Signature

Affix

Revenue

Stamp

Full Name of Shareholder

(In block Letters)

Full Name of Proxy

(In block Letters)

*(To be filled in if the Proxy attends instead of Member)

DP ID* Client ID* Folio No. of Shares held

Shareholder DP ID* Client ID Folio No. of Shares held


124

Notes

World Headquarters :

Tel : +91 79 26640668 / 9, Fax : +91 79 26640670E-mail : [email protected] website : www.meghmani.com

'Meghmani House'Shree Nivas Society, Paldi, Ahmedabad - 380007. Gujarat (INDIA)


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