SURYA ROSHNI LIMITED the sun sets, Surya rises. SURYA ROSHNI LIMITED

When the sun sets, Surya rises.When the sun sets, Surya rises.When the sun sets, Surya rises.When the sun sets, Surya rises.When the sun sets, Surya rises.

SURYA ROSHNI LIMITED

1

BOARD OF DIRECTORS

B. D. Agarwal Chairman andManaging Director

B. B. Chadha

G. S. Gupta

K. K. Narula

M. G. Bakre IDBI Nominee

Rajendra Arya

Urmil Agarwal

J. P. Agarwal Vice-Chairman andJoint Managing Director

MANAGEMENT EXECUTIVES

Corporate

S. N. Bansal Executive Director

Lighting Division

A. P. Sharma Executive Director

Chatur Singh Chief General ManagerKashipur Unit

B. B. Pradhan Chief General ManagerMalanpur Unit

COMPANY SECRETARY

B. B. Singal

STATUTORY AUDITORS

Sastry K. Anandam & CompanyChartered Accountants

COST AUDITORS

R. J. Goel & Co. Lighting DivisionH. R. Singal Steel Division

BANKERS

State Bank of India

Punjab National Bank

State Bank of Patiala

REGISTERED OFFICE AND

WORKS-STEEL DIVISION

Prakash Nagar, Sankhol, Bahadurgarh-124507 (Haryana)E-mail : [email protected]

WORKS-LIGHTING DIVISION

7 k.m. Stone, Kashipur-Moradabad Road,Kashipur-244713 Distt. Udham Singh Nagar (Uttaranchal)E-mail:[email protected]

J - 7, 8 & 9, Malanpur Industrial AreaMalanpur, District Bhind (Madhya Pradesh)E-mail : [email protected]

CONTENTS PAGE NO.

Notice 2

Management Discussion & Analysis 5

Directors' Report 7

Report on Corporate Governance 11

Auditors' Report 16

Balance Sheet 18

Profit & Loss Account 19

Schedules 20

Balance Sheet Abstract 35

Interest in Subsidiary Companies 36

Cash Flow Statement 37

Annual Report of Subsidiary Company:

� Surya Roshni Inc., New York 38

Consolidated Accounts 41



2

NOTICE

Notice is hereby given that the Thirty Second Annual GeneralMeeting of the members of SURYA ROSHNI LIMITED will beheld on Thursday, the 29th September, 2005 at 10.30 A.M., at theRegistered Office of the Company at Prakash Nagar, Sankhol,Bahadurgarh 124 507 (Haryana) to transact the following business:

ORDINARY BUSINESS

1. To consider and adopt the Audited Accounts of theCompany and the Reports of Directors and Auditors thereonfor the year ended 31st March, 2005.

2. To declare dividend.

3. To appoint a Director in place of Smt Urmil Agarwal, whoretires by rotation and, being eligible, offers herself forre-appointment.

4. To appoint a Director in place of Shri Rajendra Arya, whoretires by rotation and, being eligible, offers himself forre-appointment.

5. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS

6. To consider and, if thought fit, to pass with or withoutmodification(s), the following resolution as an OrdinaryResolution:

“RESOLVED THAT the consent of the Company be and is herebyaccorded in terms of Section 293(1)(a) and other applicableprovisions, if any, of the Companies Act, 1956 to mortgagingand/or charging by the Board of Directors of the Company ofall the immovable and movable properties of the Companywheresoever situated, present and future and the whole of theundertaking of the Company in favour of Industrial DevelopmentBank of India Ltd. (IDBI Ltd.) acting for itself and as agent ofBanks/Financial Institutions to secure:

a) Rupee Term Loan of Rs.2000 lac (Rupees Two thousandlac only) lent and advanced by Syndicate Bank to theCompany.

b) Rupee Term Loan of Rs.1500 lac (Rupees One thousandfive hundred lac only) lent and advanced by IDBI Ltd. tothe Company.

c) Foreign Currency Loan of US $ 2 million lent and advancedby IDBI Ltd. to the Company.

d) Rupee Corporate Loan of Rs.900 lac (Rupees Nine hundredlacs only) lent and advanced by State Bank of Travancoreto the Company.

e) Foreign Currency Loan of US $ 3 million lent and advancedby State Bank of Patiala to the Company.

together with interest thereon at the respective agreed rates,interest tax, compound interest, additional interest, liquidateddamages, commitment charges, premia on prepayment oron redemption, costs, charges, expenses and other moniespayable by the Company to Syndicate Bank, IDBI Limited,State Bank of Travancore and State Bank of Patiala underLoan Agreements entered into/to be entered into by theCompany in respect of the aforesaid loans.

RESOLVED FURTHER THAT the Board of Directors of theCompany or a Committee of Directors authorised by the Board

in this behalf be and is hereby authorised to finalise allagreement(s) for creating mortgage and/or charge as aforesaidand to do all such acts, deeds and matter as may be necessaryor expedient for giving effect to the above resolution."

7. To consider and, if thought fit, to pass with or withoutmodification(s), the following resolution as an OrdinaryResolution:

"RESOLVED THAT pursuant to the provisions of Section 198,269,309, 310 and Schedule XIII and such other applicableprovisions, if any, of the Companies Act, 1956, (the Act)including any statutory modification or any amendment or anysubstitution or reenactment thereof for the time being in force,approval of the members of the Company be and is herebyaccorded to increase the remuneration paid to Shri Jai PrakashAgarwal as the Joint Managing Director of the Company w.e.f.01-10-2004 for the rest of his tenure, as set out in theSupplementary Agreement executed on 27-09-2004 betweenthe Company and Shri Jai Prakash Agarwal, which agreementis hereby specifically approved with authority to the Board ofDirectors of the Company to alter and /or vary the remunerationwithin the limits, if any, prescribed in the Act and/or anyschedules thereto.

RESOLVED FURTHER THAT in the event of loss or inadequacyof profits in any financial year during the rest of his tenure, theCompany will pay Shri Jai Prakash Agarwal remuneration,perquisites, benefits and amenities not exceeding the ceilinglaid down in Section II of Part II of Schedule XIII of theCompanies Act, 1956, as may be decided by the Board ofDirectors.

RESOLVED FURHTER THAT the Board of Directors be and arehereby authorised to do all such acts, deeds and things as maybe considered necessary to give effect to the aforesaidresolution."

8. To consider and, if thought fit, to pass with or withoutmodification, the following resolution as an OrdinaryResolution:

"RESOLVED THAT, in accordance with the applicableprovisions of the Companies Act, 1956 and the ListingAgreement with Stock Exchanges, or any amendment orre-enactment thereof, consent be and is hereby accordedfor payment of fees to the Non-Executive Directors ofthe Company, for attending meetings of the Board ofDirectors ('the Board') or Committees thereof, of amount(s),as may be determined by the Board, within the limit ofRs. 20,000/- (Rupees Twenty Thousand) individually permeeting as presently prescribed by the Central Governmentor such other limit as may be prescribed by the CentralGovernment from time to time in that behalf."

By Order of the BoardRegistered Office :Prakash Nagar, Sankhol,Bahadurgarh - 124 507 (Haryana) B. B. SINGALDated : 29th June, 2005 COMPANY SECRETARY

Notice



3

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THISANNUAL GENERAL MEETING MAY APPOINT A PROXYTO ATTEND AND VOTE ON A POLL ON HIS BEHALF. APROXY NEED NOT BE A MEMBER OF THE COMPANY.

Proxies, in order to be effective, must be received at 408,Padma Tower-I, Rajendra Place, New Delhi - 110 008 orRegistered Office, not less than forty-eight hours beforethe commencement of this Annual General Meeting i.e.before 10.30 a.m. on 27th September, 2005.

2. Explanatory statement pursuant to Section 173(2) of theCompanies Act, 1956, in respect of item no. 6, 7 and 8 isannexed hereto.

3. The Register of Members and Share Transfer books of theCompany will remain closed from 14.09.2005 to19.09.2005 (both days inclusive).

4. Members are requested to forward their change of addressnotifications, Bank Account details including 9 digit MICRnumber appearing on the cheque pertaining to the respectivebank account to facilitate distribution of dividend throughElectronic Clearing Service (ECS) to the Company/ Registrarand Transfer Agent - Mas Services Pvt. Ltd., AB-4, SafdarjungEnclave, New Delhi - 110 029, in respect of Shares held inphysical form and to their respective Depository Participantsif the shares are held in electronic form.

5. Pursuant to Section 205A of the Companies Act, 1956,dividend, which remains unpaid or unclaimed for a periodof seven years will be transferred to the Investor Education& Protection Fund of the Central Government.

Members who have not encashed their dividendwarrant so far for the financial year ended 31st March, 1998,or any subsequent financial year(s) are requested toaddress their claim to The Company Secretary, SuryaRoshni Limited, 408, Padma Tower-I, 5, Rajendra Place,New Delhi - 110 008.

6. Information provided as per Clause 49VI(A) of the ListingAgreement.

The following are the details of the directors seekingreappointment or recommended to be appointed as aDirector :

Smt. Urmil Agarwal, aged about 52 years, has been closelyassociated with the business of the company and has beenassisting her husband Sh. J. P. Agarwal (Vice Chairman &Joint Managing Director) for the past 27 years. She doesnot hold any other directorship.

Shri Rajendra Arya, aged about 36 years, has been a directorof the Company since November, 1997. He is a memberof the Company's Remuneration and Shareholders/Investors' Grievance Committees and is a director inPrakash Surya Industries Ltd. Shri Arya holds degree in B.E.(CIVIL) from Malaviya Regional Engg. College, Jaipur inthe year 1993. He has a rich experience of over 11 yearsin the administrative field.

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

ITEM NO. 6

The Company has been sanctioned the term loans from

Notice

Syndicate Bank, IDBI Ltd., State Bank of Travancore and StateBank of Patiala. The details are as under:

a) Rupee Term Loan of Rs.2000 lac (Rupees Two thousandlac only) lent and advanced by Syndicate Bank to theCompany.

b) Rupee Term Loan of Rs.1500 lac (Rupees One thousandfive hundred lac only) lent and advanced by IDBI Ltd. tothe Company.

c) Foreign Currency Loan of US $ 2 million lent and advancedby IDBI Ltd. to the Company.

d) Rupee Corporate Loan of Rs.900 lac (Rupees Nine hundredlac only) lent and advanced by State Bank of Travancore tothe Company.

e) Foreign Currency Loan of US $ 3 million lent and advancedby State Bank of Patiala to the Company.

the financial assistance together with interest thereon at therespective agreed rates, interest tax, compound interest,additional interest, liquidated damages, commitment charges,premia on prepayment or on redemption, costs, charges,expenses and other monies payable by the Company toSyndicate Bank, IDBI Limited, State Bank of Travancore andState Bank of Patiala under Loan Agreements entered into/tobe entered into by the Company in respect of the aforesaidloans have to be secured by a joint mortgage of all theimmovable and movable properties of the Company, presentand future.

Section 293(1)(a) of the Companies Act, 1956, provides interalia that the Board of Directors of a Public Company shall not,without the consent of such Public Company in GeneralMeeting, sell, lease or otherwise dispose of the whole orsubstantially the whole of the undertaking of the Company, orwhere the Company owns more than one undertaking, of thewhole or substantially the whole of any such undertaking. Sincethe mortgage by the Company of its immovable and movableproperties as aforesaid in favour of the Lenders may be regardedas disposal of the Company's properties/undertakings, it isnecessary for the members to pass a resolution under Section293(1)(a) of the Companies Act, 1956, before creation of thesaid mortgage/charge.

Copy of the Loan Agreement(s) executed between the Companyand Lenders and copies of the relevant documents /correspondence between the said Lenders and the Companyare open for inspection at the Registered Office of the Companybetween 11.00 A.M. to 1.00 P.M. on any working day prior tothe date of the meeting.

None of the Directors of the Company is in any way, concernedor interested in the resolution.

ITEM NO. 7

The Shareholders of the Company at the Annual GeneralMeeting held on 28-09-2001 had appointed Shri Jai PrakashAgarwal as a Joint Managing Director for a period of five yearsfrom 01-01-2002 to 31-12-2006. Considering the inflationarytrend and increased in business activities of the Company whichresulted in increase in work and responsibility of the JointManaging Director and also the amount of remunerationpayable in the similar Industries, the Board of Directors deemedfit to revise the remuneration payable to Shri Jai Prakash



4Notice

Agarwal, Joint Managing Director w.e.f. 01-10-2004 for the restof his tenure by executing a Supplementary Agreement on27-09-2004 for modification of remuneration and the rest clausesof the Principal Agreement dated 01-01-2002 will be remainsame and effective.

The Board of Directors in their meeting held on 27-09-2004approved the revised remuneration of Shri Jai Prakash Agarwal,as Joint Managing Director w.e.f. 01-10-2004 for the rest of histenure as follows :

SALARY : Salary of Rs.120000/- per month in the Grade of120000-15000-150000.

COMMISSION : 1% Commission of the net profit of thecompany computed in the manner laid down in section 309(5)of the Companies Act, 1956 subject to a maximum of 50% ofthe annual salary.

PERQUISITES : Perquisites will be allowed in addition to salaryand commission restricted to an amount equal to the AnnualSalary. For this purpose unless the context otherwise requires,perquisites are classified into three categories : Parts A, B and Cand the ceiling shall apply only to Part-A.

PART-A

HOUSING :

I. The expenditure by the Company on hiring unfurnishedaccommodation for the Joint Managing Director shall besubject to the following ceilings:

60% of the Salary, over and above 10% payable by theJoint Managing Director himself.

II. In case the accommodation provided to the Joint ManagingDirector is owned by the Company, the Company shalldeduct 10% of the salary of the Joint Managing Director.

III. In case no accommodation is provided by the Company tothe Joint Managing Director, House Rent Allowance shallbe paid by the Company to him subject to the ceiling laiddown in Housing I, herein above.

IV. The Expenditure incurred by the Company on gas,electricity, water and furnishings shall be valued as per theIncome Tax Rule,1962. This shall , however , be subject toa ceiling of 10% of the salary of the Joint Managing Director.

2. Medical Reimbursement : Expenses incurred for self andfamily subject to a ceiling of one month's salary per yearor three month's salary in a period of three years.

3. Leave Travel Concession : For self and family once in ayear incurred with the rules specified by the Company.

4. Club Fees : Fees of clubs subject to a maximum of twoclubs. Admission and life membership fees shall not beallowed.

5. Personal Accident Insurance : Premium not to exceedRs.4000/-per annum.

PART-B

Contribution to provident fund, Superannuation fund or annuityfund will not be included in the computation of the ceiling onperquisites to the extent these either singly or put together arenot taxable under the Income Tax Act. Gratuity payable shallnot exceed a half month's salary for each completed year ofservice.

PART-C

The Company shall provide a car with driver and telephonefacility at the residence of the Joint Managing Director. Provisionof car with driver for use of Company's business and telephonefacility at the residence will not be considered as perquisites.Personal long distance calls on telephone and use of car forprivate purpose shall be billed by the Company on the JointManaging Director.

The aforesaid remuneration shall be subject to the limit of 5%of the net profits as laid down under sub-section (3) of section309 of the Companies Act, 1956.

If the Company has no profits or the profits are inadequate inany financial year during the terms of his office as the JointManaging Director , Shri Jai Prakash Agarwal will be entitledto receive the above remuneration and perquisites as minimumremuneration , provided that the total remuneration, of salary ,perquisites and any other allowances shall not exceed theceiling as provided in section II of the Part II of Schedule XIII ofthe Companies Act, 1956 or such other amount and perquisitesas/is may be provided in the said schedule XIII as may beamended from time to time or any equivalent statutory re-enactment(s) thereof.

Apart from the aforesaid remuneration, Shri Jai Prakash Agarwalwill be entitled to reimbursement of expenses incurred inconnection with the business of the Company.

No sitting fees will be paid to him for attending the meetings ofthe Board of Directors of the Company or Committees thereof.

Copy of the Supplementary Agreement executed between theCompany and Shri Jai Prakash Agarwal are open for inspectionat the Registered Office of the Company between 11.00 a.m.to 1.00 p.m. on any working day prior to the date of the meeting.

Shri B. D. Agwarwal, Managing Director and Smt. UrmilAgarwal, Director are the relatives of Shri Jai Prakash Agarwaland to the extent they are interested in the resolution.

Item No. 8

In terms of the revised Clause 49 of the Listing Agreement withStock Exchanges, approval of the Shareholders is now requiredfor payment of sitting fees to the Non-Executive Directors of aCompany.

The Non-Executive Directors of your Company are entitled tositting fees, as determined by the Board of Directors ('the Board')from time to time, for attending meetings of the Board andCommittees thereof. The sitting fees are presently Rs. 7500/-per meeting of the Board and Committees thereof.

The Board at its meeting held on 29th June, 2005, recommendedfor the approval of the Members, payment of sitting fees,individually as provided in the resolution.

The Non-Executive Directors of your Company are interestedin the resolution to the extent of sitting fees that may be paid.

The Board recommends the resolution for your approval.

By Order of the BoardRegistered Office :Prakash Nagar, Sankhol,Bahadurgarh - 124 507 (Haryana) B. B. SINGALDated : 29th June, 2005 COMPANY SECRETARY



5

MANAGEMENT DISCUSSION AND ANALYSIS

PROFILE

Surya Roshni Limited began its journey in the Steel Tubes Industry. Itthen diversified into manufacture of Lighting products in 1984. The1990s saw the company implement major expansion and backwardintegration programs. This resulted not only in the timely availabilityof good quality raw material but also proved to be immensely costeffective. Today, your company is the leader in Steel Tubes / Pipesmarket and the second largest Lighting company in India.

Quality has always been the driving force at Surya. Your companysucceeded in bench-marking quality and innovation standards byachieving the ISO 9002 in the year 1999. The company was awardedISO-14001 and OHSAS-18001 certifications related to Environmentand Safety respectively. The company continues to be committedtowards making quality products, ensuring human as well asenvironment safety and bringing value addition to the investments ofthe shareholders. Surya, standing poised towards achieving newheights, is on it's way to becoming one of the leading brands globally.

INDUSTRY STRUCTURE AND DEVELOPMENT

Despite competition from other established market players andunorganized sectors, Lighting Division is witnessing steady growth inturnover and profit. During the year under review, an investment ofRs.30 crores was committed to increase the installed capacities ofmajor products. The following may impact the market in the comingyears :

l Small Scale Industry in GLS and FTL

l The increasing cost of electricity resulting into opting for use ofenergy saving lamps.

l Shift from traditional to innovative lamps and systems

The management is keeping constant watch on these points toovercome from them.

The Steel Tubes industry too witnessed growth during the year underreview and the market growing steadily due to the boom ininfrastructure sector. The future is likely to see only those companiessuccessful, which have their products priced competitively and tosell their products in the international market. All possible efforts arebeing made by your company to reduce costs without compromisingon the quality of the product and increase the export.

SWOT ANALYSIS

Strengths :

l Well focused vision of the Management

l Complete backward integration

l High quality of products

l Nation-wide marketing network

Weaknesses :

l Diminishing margin of profit on the products

l Uncertainties of external market forces

Opportunities :

l Potential increase in demand of energy efficient products

l Untapped potential in outsourcing and marketing of Luminariesunder SURYA brand

l Increase in demand of regular lighting products with a generalimprovement in the power condition in urban as well as ruralsectors and increase in spending on infrastructure development

Threats :

l Tough competition from multi-national companies.

l Unbranded products from the unorganised sector

SEGMENT-WISE PERFORMANCE :

The company is broadly divided into two main segments viz. Steeland Lighting.

A detailed note on the segment-wise performance is given at pointno. 8. under the Notes on Accounts, forming a part of annual accountsof the company.

OUTLOOK

l The Government is giving continuous thrust on housing andinfrastructure sector where Steel Tubes are used. The existingrefineries are expanding their capacities and new refineriesare coming into the scene. In future also there seems to be atremendous scope for export in Cold Rolling as well as ERWPipes particularly to USA and other European Countries. Thegovernment spending on infrastructure development is alsoexpected to increase the demand of pipes every year. Withthe cheaper availability of finance and tax incentives, it isexpected that housing sector will get a major boost. In viewof the same, the long term outlook of Steel Tubes industryremains positive.

RISKS AND CONCERNS :

Technology obsolescence is an inherent business risk in a fast changingworld and speed of change and adaptability is crucial for survival ofbusiness. Government energy policy and development of new superiorproducts may render some of its existing production facilitiesobsolescent. At SURYA, the continuing modernization, aggressive costcutting and adaptability of new technology are always main strengthsand enabled the company to do away with obsolescent plants/processes and to emerge as one of the most modern plants in thelighting industry throughout the world. Its strength enable the Companyto face future risk and convert them into opportunities.

Further aggressive cost cutting, addition to the product mix toincorporate more value-added products and with the present strengthsof the company, the management feels that it can now competeeffectively both in terms of quality and price with similar productsimported from various countries. With the assistance of world-renowned consultants, the company has made good progress towardsits objective of becoming the world leader in lighting products. Intensecompetition in the Lighting industry, the company is adding a newproduct range. Moreover, stress is being laid on boosting exports aswell as institutional demands. At the same time, labour, time andmoney is also being geared towards making the various plant premisesmore and more eco friendly.

The Steel Tubes industry has also been witnessing a fast changingenvironment. The quality parameters of pipes used in the oil sectorare becoming more stringent each day. Moreover, any failure of pipesafter the supply to customers in the oil and gas sector attracts heavypenalties. The company is taking utmost care to ensure very highquality of products. During the year under review, the company tookmajor steps towards upgaradation of technology in order to ensurecompliance of the quality norms.

Further a shift in the policy of the Government of India regarding:

a) Import duty on Steel, Zinc etc.,

b) DEPB on HR Coil, Steel Pipe, CR Strips, FTL and GLS,

c) Incremental benefit scheme for Status Holders,

could adversely affect business of the Company.

Management Disscussion



6

INTERNAL CONTROL SYSTEM :

Your Company remains committed to maintaining internal controlsdesigned to provide adequate assurance on the efficiency of operationsand security of its assets. The accounting records are adequate forpreparation of financial statements and other financial information.The adequacy and effectiveness of internal controls across the variousbusiness, as well as compliance with laid down systems and policiesare regularly monitored by your Company's internal audit processboth at divisional and corporate level. The major IT enabled businessapplications are periodically validated for their integrity, control andquality of functionality by the trained internal audit team. The AuditCommittee of Board, which met five times during the year, reviewsinternal control systems as well as financial disclosures.

FINANCIAL PERFORMANCE :

Your company was able to maintain itself as a leader in the SteelTubes industry and as a strong contender in the Lighting industry.Given below are the financials of the company for the current as wellas the previous year :

(Rs. in crores)

Particulars 2004-2005 2003-2004

Profit for the year 41.83 40.54Less : Depreciation 24.49 25.97Profit before tax 17.34 14.57Provision for tax 4.85 2.58Net Profit after tax 12.49 11.99Balance brought forward from theprevious year 58.00 51.73Profit available for appropriations 70.49 63.72

Capital Redemption Reserve Nil 0.50Proposed Equity Dividend 3.05 3.05Proposed Preference Dividend Nil 0.02Tax on Distributed Profits 0.44 0.39Transferred to General Reserve 1.00 1.00MAT credit utilised Nil 1.87Deferred Tax revision (1.90) (1.11)

Balance carried to Balance Sheet 67.90 58.00

OPERATIONAL PERFORMANCE :

During the year under review, the revenue distribution of variousproducts of the two divisions was as under:

Management Disscussion

HUMAN RESOURCE AND INDUSTRIAL RELATIONS :

Industrial relations during the year under review were cordial and

peaceful. The management wishes to place on record, the excellent

cooperation and contribution made by the employees, collectively

called "SURYA PARIVAR", at all levels of the organisation to the

continued growth of the company. There was constant focus on all

round organizational development. Various training programs

including visionary exercises were conducted for personal as well as

professional development of the employees. Further various other

activities like annual sports, festival celebrations take place every year

to get in touch with them and their families.

Relationship has been very cordial with the worker's union for the

past several years. During the month of December 2004 the

management executed wage agreement with the union, which shall

be applicable till 31st December, 2007.

SAFETY MEASURES TAKEN :

There were various activities carried out in the company in order to

create and enhance the safety awareness among the workers and the

employees. At the Kashipur Unit of Lighting Division, various measures

taken included observation of Fire Service Week (14.04.04 and

20.04.04), Electrical Safety Week (01.05.04 to 07.05.04), Environment

Day (05.06.04) and National Safety Week (04.03.05 to 10.03.05) apart

from regular meetings of the Central Safety Committee, training

programs, safety inspections and onsite Emergency Rehearsals and

received National Safety Awards on 17th September, 2004 for the

year 2003.

CAUTIONARY STATEMENT :

Statements in this Management Discussion and Analysis describing

the company's objectives and projections may constitute "forward

looking statements" within the meaning of applicable laws and

regulations. Actual results might differ materially from those either

expressed or implied.

{Less :



7

DIRECTORS' REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Thirty Second AnnualReport on the operations of your Company, together with auditedaccounts for the year ended 31st March, 2005.

1. FINANCIAL RESULTS (Rs. in crores)

Particulars 2004-2005 2003-2004

Profit for the year 41.83 40.54

Less : Depreciation 24.49 25.97

Profit before tax 17.34 14.57

Provision for tax 4.85 2.58

Net Profit after tax 12.49 11.99

Balance brought forward from theprevious year 58.00 51.73

Profit available for appropriations 70.49 63.72

Capital Redemption Reserve Nil 0.50Proposed Equity Dividend 3.05 3.05

Proposed Preference Dividend Nil 0.02Tax on Distributed Profits 0.44 0.39Transferred to General Reserve 1.00 1.00MAT credit utilised Nil 1.87Deferred Tax revision (1.90) (1.11)

Balance carried to Balance Sheet 67.90 58.00

2. DIVIDEND

Your Directors are pleased to recommend the payment of dividend@ Rs.1.20 per share on the paid up equity share capital of Rs.25.40crores. The dividend on Equity Shares, if approved at the Meeting,will be payable to those shareholders whose names appear on thecompany's register of members on 19th September, 2005. Inrespect of shares held in dematerialised form, the dividend shallbe payable on the basis of beneficial ownership as at the end of13th September, 2005, as per the details furnished by NationalSecurities Depository Ltd./ Central Depository Services (India) Ltd.for the purpose, as on that date.

3. PERFORMANCE DURING THE YEAR UNDER REVIEW

During the year under review, the turnover of your Company increasedto Rs.1198.60 crores from Rs.943.71 crores last year, registering anincrease of 27.01%. However the gross profit increased to Rs.41.83crores from Rs.40.54 crores last year, a rise of 3.18%. The Companysuccessfully demonstrated its ability to meet the Global QualityChallenge. The export turnover during the year under review increasedto Rs.143.05 crores as against Rs. 79.51 crores in previous yearregistering an increase of 79.91%. The export turnover is likely tofurther increase during the coming year. The performance of thevarious divisions and the subsidiaries of your Company is given below:

STEEL DIVISION

During the year under review, the turnover of the division increasedto Rs.844.99 crores as compared to Rs.598.85 crores last year, anincrease of 41.10%. The export turnover of the division has alsobeen increased by more than 100% to Rs.115.18 crores incomparison to Rs.54.97 crores in the last financial year. The divisionhas, however been able to maintain it's leadership in the Steel Tubes'market. The initiatives taken to establish the product in global markethave also started to show results. The product is now well establishedin some countries with orders flowing on a regular basis.

LIGHTING DIVISION

Despite competition from other established market players andunorganised sectors, the Division has witnessed a steady growth

in turnover and profit. During year under review, the turnover ofthe division increased to Rs.353.61 crores as compared toRs.344.86 crores last year, an increase of 2.53%. The exportturnover during the year under review increased to Rs.27.87 croresas against Rs.24.53 crores in previous year registering an increaseof 13.62%. Strategies are being continuously developed to givegreater thrust to the exports.

SUBSIDIARIES

The operation of, Surya Roshni Inc., a wholly owned subsidiary ofthe company in USA, remains under pressure throughout the year.The subsidiary witnessed a decline in its turnover to US$ 0.7 millionas compared to US$ 0.96 million during the previous year. Marginswere even lower on this reduced sale. There was a net loss ofUS$431,222 as compared to previous year loss of US$251,936.

4. FUTURE PROSPECTS

STEEL DIVISION

In view of thrust of the Government of India on water, infrastructureand export sectors, there is tremendous scope for growth in theSteel Pipe and Cold Rolled Industry. In Large Dia Pipe the Companyhas widened its product range as per the requirement of the market.More increased demand is expected from various Oil and Gascompanies for LDP pipes of API standards. Further the Companyis planning to import quality control and measuring equipmentsof international standards and High Speed Cold Rolling Mill inorder to participate in the highly quality sensitive global tendersand to give quality of international standards to their customers.

LIGHTING DIVISION

There is an increase in demand of regular lighting products with ageneral improvement in the power condition in urban as well asrural sectors and increase in spending on infrastructuredevelopment in the coming years. Well defined strategies are beingimplemented in order to cater the gradual increase in demand oflighting products and enhance the product share in market and toboost the demand for your Company's products. As a result of thesincere initiatives being taken at all levels, the turnover andprofitability of your company during the current year are likely toreflect a considerable growth as compared to those of the yearunder review.

5. FIXED DEPOSITS :

The Public response towards the Company's fixed deposit schemecontinued to be encouraging during the year under review. At theclose of the year, 185 deposit holders, whose deposits, aggregatingto Rs.56.34 lacs, had become due for payment, did not claim orrenew their deposits. Since then, deposits aggregating to Rs.38.17lacs have either been claimed or renewed. The principal amountand interest were duly paid for all other deposits, which maturedduring the year.

6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO :

Details of energy conservation and research and developmentactivities undertaken by the Company alongwith information inaccordance with provision of Section 217(1)(e) of the CompaniesAct, 1956, read with the Companies (Disclosure of Particulars inthe Report of Board of Directors) Rules, 1988, are given asAnnexure 'A' to the Directors' Report.

7. PARTICULARS OF EMPLOYEES AND DISCLOSURE OFINFORMATION

Particulars of employees, as required under Section 217(2A) ofthe Companies Act, 1956, read with Companies (Particulars ofEmployees) Rules, 1975, as amended and information as perCompanies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988, are given as Annexure 'B' to the Directors'Report.

Directors' Report

Less : {



8

8. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms :

i) that in the preparation of the annual accounts, the applicableaccounting standards have been followed along with properexplanation relating to material departures;

ii. that the Directors had selected such accounting policies andapplied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for

that period;

iii. that the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and otherirregularities;

iv. that the Directors had prepared the annual accounts on a goingconcern basis.

9. DIRECTORS

As per Article 101 of the Articles of Association of the Company,Smt. Urmil Agarwal and Shri Rajendra Arya, retire by rotation and,being eligible, offer themselves for reappointment.

10. AUDITORS

The Auditors, Messers. Sastry K. Anandam & Company, Chartered

Accountants, retire at the forthcoming Annual General Meetingand, being eligible, offer themselves for reappointment. Theobservations of the Auditors have been suitably dealt with in thenotes on account.

11. ACKNOWLEDGEMENT

Your Directors wish to place on record, their appreciation for thecontinued support from All India Financial Institutions, Bankers,

Government Authorities, Business Constituents and InvestingPublic.

Your Directors also wish to place on record once again, theirappreciation for the contribution made by the workers, staff andexecutives at all levels, to the continued growth and prosperity ofthe Company. The overall industrial relations remained cordial atall the establishments.

for and on behalf ofthe Board of Directors

B. D. AGARWALPlace : New Delhi CHAIRMAN ANDDated : 29th June, 2005 MANAGING DIRECTOR

Directors' Report

ANNEXURE 'A' TO DIRECTORS' REPORTInformation as per Section 217(1)(e) read with Companies(Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and formingpart of the Directors' Report for the year ended 31st March, 2005.

I. CONSERVATION OF ENERGY

a) Energy conservation measures taken :

At Steel Division, Bahadurgarh :

– Intensive efforts has been taken for increasing the loading of the generators so that unit per liter could be increased .

– Use of Compressed Natural Gas (CNG) has been started in place of HSD/LDO/FO in generators, Galvanising, Pickling & Annealing.

– Energy saving controller has been installed on the Motors in order to balance the load thereon as per requirement.

– Electrical Panels has been replaced with new technology in order to reduce breakdown thereon.

– Automatic time controller has been installed on the machine so that in case of breakdown in the Mill, auxiliaries thereof are stoppedautomatically.

At Malanpur Unit of Lighting Division :

– Motor rating reduced in various machinery in Component Division.

– Temperature Controller for automatic operation as per required temperature of chilling plant.

– Replacement of existing reciprocating type compressor with screw type air compressor in both in Divisions.

– Modified the temperature sensing / control and chiller which is resulted in reduced maintenance and saving energy approximately 400units per day.

– Modification in Exhaust oven in FTL which is resulted in power saving of approximately 6 to 8 KW /Hrs.

At Kashipur Unit of Lighting Division :

– Glass Plant compressed air dryer isolated by providing dry compressed air from compressor room refrigerated type air dryer therebypreventing the purge losses.

– Cellulose fills type system installed in FTL/GLS side air cooling plant in place of conventional air washer to increase the efficiency andreplacement of existing 10 H.P. (2 nos.) water pumps replaced by 2 H.P. water pumps for energy conservation.

– A.C. drive installed on FTL side air cooling plant and reduced the frequency from 50 HZ to 40 HZ.

– 3 in nos. 15 H.P. Russian made water pumps replaced by 10 H.P. pumps in D.G. sets.

– Introduced power capacitors to improve the power factor.

– Reduced H.T. Transformer losses by controlling the voltage and load sharing on transformers.

– Maintain the supply voltage at main L.T. room for reducing the unit.



9 Directors' Report

b) Additional investment and proposals being implemented for reduction of consumption of energy :

At Steel Division, Bahadurgarh :

Efforts are going on for conversion of existing Diesel Generators from single fuel system to Duel fuel system with an investment of Rs.15 lacin order to increase more use of CNG.

c) Impact of the measures at a) above for reduction of energy consumption and consequent impact on the cost of production of goods :

The above measures resulted in substantial saving in the consumption of energy and consequent saving in the cost of production of goods.

d) Total energy consumption and energy consumption per unit of production as per Form-A of the Annexure to the Rules in respect ofIndustries in the Schedule thereto :

Steel Division Lighting Division

2004-2005 2003-2004 2004-2005 2003-2004A) Power & Fuel Consumption

1. Electricitya) Purchased

Units (in thousands) 14570.55 18539.16 21631.62 21205.76Total Amount (Rs. in lacs) 576.64 732.20 778.85 803.78Rate / Unit (Rs.) 3.96 3.95 3.60 3.79

b) Own GenerationThrough Diesel GeneratorUnits (in thousands) 4093.52 2515.74 6128.33 5844.36Unit per Ltr. of HSD 3.28 3.46 3.81 3.81Cost / Unit (Rs.) 6.97 4.78 5.73 4.82

c) Own Generation byNatural Gas Generator SetUnits (in thousands) 4038.09 (Not used) (Not used) (Not used)Unit per SCM 2.52 (Not used) (Not used) (Not used)Cost / Unit (Rs.) 3.23 (Not used) (Not used) (Not used)

2. Furnace Oil/LDO Qty. (K.Ltrs.) 729.77 4568.75 9078.55 9034.26 Total amount (Rs. in lacs) 124.89 657.59 1026.86 994.79 Avg. Rate (Rs.) 17.11 14.39 11.31 11.013. Natural Gas used in GI Pipe & CR Mill

Qty. SCM3 (in thousands) 4261.12 (Not used) (Not used) (Not used)Total amount (Rs. in lacs) 310.14 (Not used) (Not used) (Not used)Rate / SCM (Rs.) 7.28 (Not used) (Not used) (Not used)

4. L.P.G.Qty. (Tonnes) (Not used) (Not used) 2047.69 1850.93Total amount (Rs. in lacs) (Not used) (Not used) 478.01 360.13Rate / KG (Rs.) (Not used) (Not used) 23.34 19.46

5. Diesel (LDO Used in C.R. Mill)Qty. (K.Ltrs.) 20.00 1584.58 641.81 534.76Total amount (Rs. in lacs) 3.42 232.63 143.44 102.53Rate / Ltr. (Rs.) 17.11 14.68 22.35 19.17

6. PropaneQty. (Tonnes) (Not used) (Not used) 2151.30 2045.10Total amount (Rs. in lacs) (Not used) (Not used) 490.68 374.13Rate / KG (Rs.) (Not used) (Not used) 22.81 18.29

B) Consumption per unit production

Product Unit Steel Tubes/ Pipes/ C.R.Strips Glass Item(Per M.T.) (Per M.T.)

Electricity Units 107.53 111.18 166.39 168.09

Furnace Oil/HSD/LDO/RFO * Ltrs. 5.04 28.60 190.82 190.34

HSD/LDO (In CR Mill) * Ltrs. 0.36 29.67 (Not used) (Not used)

Propane / LPG Kg. (Not used) (Not used) 56.84 55.81

Natural Gas Consumption (In GI Mill) SCM 27.05 (Not used) (Not used) (Not used)

Natural Gas Consumption (In CR Mill) SCM 34.14 (Not used) (Not used) (Not used)

* Reason of variation : In the year under review, maximum Natural Gas used instead of F.O. /LDO / HSD in GI Pipe & CR Mill.



10

II. TECHNOLOGY ABSORPTION

Efforts made in technology absorption as per Form-B of the Annexure to the Rules :

1. Research and Development (R&D)

a) Specific areas in which R&D carried out by the company :

During the year under review, no R&D carried out.

b) Benefits derived as a result of above R&D : Not Applicable

c) Future Plan of action :

If required, Research and Development activities shall be carried out in future to achieve greater efficiency in production techniques.

d) Expenditure on R&D : No capital as well as recurring expenditure made on R&D.

2. Technology absorption, adaptation & innovation :

a) Efforts, in brief, made towards technology absorption, adaptation & innovation :

Major initiatives are being taken to upgrade the various processes by making use of latest and better techniques. Efforts are constantlybeing made to make the maximum use of the available infrastructure, at the same time innovating new techniques to bring aboutefficiency as well as economy in different areas. Employees are given appropriate training of and on the job, to enable them to achievethe planned performance.

b) Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution etc.:

There were various benefits derived as a result of the efforts listed above, some of them included better utilization of the availableresources, product improvement and development, cost reduction, better overall efficiency.

c) In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year) : Nil

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

a) Activities relating to exports, initiatives taken to increase export, development of new markets for products and services and export plans :

Major initiatives were taken to boost the exports of the company. Some of them included :

– Emphasis has been given on Foreign Traveling of Export Executives and Directors for development of new markets.

– The Company has participated in the conferences and exhibitions organized in various foreign countries.

– Steps has been taken for creating export market for Large Dia Pipe of API standards.

b) Total foreign exchange used and earned (Rs. in lacs)

Used : 2277.19 Earned : 11397.17for and on behalf of

the Board of Directors

Place : New Delhi B. D. AgarwalDate : June 29, 2005 Chairman & Managing Director

Directors' Report

ANNEXURE 'B' TO THE DIRECTORS' REPORT

Statement of particulars of employees pursuant to the provisions of Section 217(2A) of the Companies Act, 1956, and part of the Directors' Report

Sl. Name Age Designation / Remuneration Qualification Experience Date of LastNo. yrs. Nature of duties (Rs.) yrs. Commencement employement

of employment and position held

Employed throughout the financial year

1. Sh. B. D. Agarwal 76 Chairman & 31,50,000 B. A. 50 01.04.1982 Jindal Industries Ltd.Managing Director (Whole Time Director)

2. Sh. J. P. Agarwal * 54 Vice Chairman and 22,20,000 B. Com. 33 01.04.1986 Jindal Industries Ltd.Joint Managing Director (Executive Director)

* The remuneration paid to Shri. J.P. Agarwal was exceeding the limit prescribed under the provisions of the Section 217(2A) of the Companies Act,1956 w.e.f. 01-10-2004.

Notes:

1) Shri B. D. Agarwal, Chairman and Managing Director and Shri J.P. Agarwal, Vice Chairman and Joint Managing Director of the Company areboth related to each other.

2) The employment of Shri B. D. Agarwal and Shri J. P. Agarwal are contractual and governed by the terms and conditions approved by the CentralGovernment/Shareholders.

3) Remuneration includes salary, commission, medical exp., house rent paid / house rent allowance, other allowances and taxable value of perquisites.4) No employees of the Company came within the purview of the provisions of Section 217(2A)(a)(iii) of the Companies Act, 1956 during the year.

for and on behalf ofthe Board of Directors

Place : New Delhi B. D. AgarwalDate : June 29, 2005 Chairman & Managing Director



11

CORPORATE GOVERNANCE REPORT FOR THE YEAR 2004-05

(as required under Clause 49 of the Listing Agreements entered into with the Stock Exchanges)

1. Company's philosophy on Code of Governance

The essence of good corporate governance lies not in the mere compliance of legal and statutory requirements, but in the creation of an entire culture ofexcellence in management, transparency in operations and ensuring, at all times, maximum shareholder value. Your Company believes that efficientCorporate Governance requires a clear understanding of the respective roles of the Board and of Senior Management and their relationships with others inthe Corporate Structure. The relationships of the Board and Management shall be characterized by sincerity; their relationships with employees shall becharacterized by fairness; their relationships with the communities in which they operate shall be characterized by good citizenship; their relationshipswith Government shall be characterized by a commitment to compliance and continuously endeavours to improve on these aspects on an ongoing basis.

Our Corporate Governance philosophy is based on the following principles:

i. Satisfy the spirit of the law and not just the letter of the law.

ii. Be transparent and maintain a high degree of disclosure levels. When in doubt, disclose.

iii. Comply with the laws.

iv. Have a simple and transparent corporate structure driven solely by business needs.

At the core of our corporate governance practice is the Board, which overseas how the management serves and protects the long-term interestsof all the stakeholders of the Company. We believe that an active, well-informed and independent Board is necessary to ensure the higheststandards of corporate governance. Majority of the Board, 5 out of 8, are independent members.

2. Board of Directors

The names, alongwith categories of the Directors on the Board, their attendance at Board meetings during the year and at the last AGM as alsothe number of directorships and committee memberships held by them in other companies are given below :

The Chairman is an Executive Director and the number of Independent Non-Executive Directors on the Board is more than 50% of the Boardstrength at any point of time. All Independent Non-Executive Directors comply with the legal requirements for being "independent".

Under the Law, the Board of Directors must meet at least four times a year, with a maximum time gap of four months between any two meetings.

During the last financial year, our Board met seven times, on 27th May, 2004; 25th June, 2004; 28th July, 2004; 27th September, 2004; 27thOctober, 2004; 30th November, 2004; 28th January, 2005

None of the Directors of our Company were members in more than 10 committees or acted as Chairman of more than five committees acrossall companies in which they were Directors.

Corporate Governance

Name Category No. of Board Whether No. of Directorships No. of Committee positionsof the Director Meetings attended held in other companies held in other companies

attended AGM onduring 24th

Chairman Director Chairman Member2004-05 Sept. 2004

Sh. B. D. Agarwal Promoter(Chairman & ExecutiveManaging Director) Non-Independent 6 YES – 2 – –

Sh. J. P. Agarwal Promoter(Vice Chairman & ExecutiveJt. Managing Director) Non-Independent 6 YES – – – –

Sh. M. G. Bakre Non-Executive(IDBI Nominee) Independent 7 NO – – – –

Sh. K. K. Narula Non-ExecutiveIndependent 7 YES – – – –

Sh. Rajendra Arya Non-ExecutiveIndependent 7 NO – 1 – –

Smt. Urmil Agrwal Non-ExecutiveNon-Independent 5 NO – – – –

Sh. B. B. Chadha Non-ExecutiveIndependent 7 NO 2 2 1 2

Sh. G. S. Gupta Non-ExecutiveIndependent 7 NO – 2 – –



12Corporate Governance

3. Audit Committee

The primary objective of the Audit Committee of the Company is to monitor and provide effective supervision of the management's financialreporting process with a view to ensure accurate, timely and proper disclosures and transparency, integrity and quality of financial reporting.

The Committee met 5 times during the year on 23.06.2004, 27.07.2004, 27.09.2004, 26.10.2004 and 25.01.2005, and the attendance ofMembers at the Meeting was as follows:

Names of the Members Status No. of Meetings Attended

Sh. K.K.Narula Chairman 5(M.Com, CAIIB)

Sh. B. B. Chadha Member 5

Sh. G. S. Gupta Member 5

The Chairman of the Audit Committee, Sh. K.K. Narula, was present at the Annual General Meeting of the company held on 24th September,2004. Sh. Narula has a sound accounting knowledge backed by a wide experience of over 44 years in the field of banking and finance.

The Audit Committee meetings are attended by the heads of Finance and Internal Audit and the Auditors (including Cost Auditors) as invitees.Discussions are held by the members with the Auditors during the meetings and the periodic unaudited and audited results of the company arereviewed by the Committee before being considered and approved by the Board of Directors. Sh. B.B. Singal, Company Secretary, acts as thesecretary to the Committee.

The basic terms of reference of the Committee include the following:• Reviewing the adequacy of internal control systems and the Internal audit reports and compliance thereof.• Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statements

are correct, sufficient and credible.• Recommending the appointment of external auditors and fixation of their audit fees and also approval for payment of any other services.• Reviewing with the management, the quarterly and annual financial statements before submission to the Board.

4. Remuneration Committee

The basic terms of reference of the Committee include the determination of the remuneration package and other compensation of the executivedirectors of the company and the recommendation of the same to the Board. Sh. K. K. Narula, an independent director, is the Chairman of theCommittee. Sh. B. B. Singal, Company Secretary, acts as the secretary to the committee.

The Committee met 1 time during the year on 27.09.2004 and the attendance of Members at the Meeting was as follows:

Names of the Members Status No. of Meetings Attended

Sh. Rajendra Arya Member Nil

Sh. K.K. Narula Chairman 1

Sh. G.S. Gupta Member 1

Remuneration Policy :

The following aspects are considered while determining the remuneration package of the senior management of the company :

• Industry Standards

• Remuneration package of executives in the industry with similar skill sets

Remuneration of the Directors for the year 2004-05 :

Name Salary Perquisites Commission Stock Sitting Fees

& Allowances Options

(Rs.) (Rs.) (Rs.) (Rs.)

Sh. B. D. Agarwal(Chairman & Managing Director) 1575000/- 787500/- 787500/- Nil N.A.

Sh. J. P.Agarwal(Vice Chairman & Jt. Managing Director) 1110000/- 555000/- 555000/- Nil N.A.

Sh. M. G. Bakre (IDBI Nominee) Nil Nil Nil Nil 52500/-

Sh. K. K.Narula Nil Nil Nil Nil 97500/-

Sh.Rajendra Arya Nil Nil Nil Nil 142500/

Smt. Urmil Agarwal Nil Nil Nil Nil 37500/-

Sh. B. B. Chadha Nil Nil Nil Nil 90000/-

Sh. G. S. Gupta Nil Nil Nil Nil 165000/-

Period of Contract (Sh. B. D. Agarwal) : 5 years from 1st November, 2003 (i.e. upto 31st October, 2008)

Period of Contract (Sh. J. P. Agarwal) : 5 years from 1st January, 2002 (i.e. upto 31st December 2006)



13

5. Shareholders/ Investors' Grievance Committee

The Committee has the mandate to review and redress shareholder grievances. The Committee met 4 times during the year on 27.04.2004,19.07.2004, 12.10.2004 and 12.01.2005, and the attendance of Members at the Meeting was as follows:

Name of the members Status No. of Meetings Attended

Sh. B. D. Agarwal Member 4

Sh. Rajendra Arya Chairman 4

Sh. G. S. Gupta Member 2

Compliance Officer : Sh. B.B.Singal (Company Secretary)

Number of shareholders' complaints received upto 31st March, 2005 : 277

Number of complaints not solved to the satisfaction of the shareholders : Nil

Number of pending share transfers : Nil

(None of the transfer was pending for more than a fortnight)

6. General Body Meetings

The last three Annual General Meetings were held on the following dates :27.09.2002 ; 26.09.2003 ; 24.09.2004at the Registered Office of the company at Prakash Nagar, Sankhol, Bahadurgarh -124 507 at 10:30 a.m.None of the special resolutions was put through postal ballot last year.

7. Disclosures

i) The management has made disclosures to the board relating to all material financial and commercial transactions. There are no materiallysignificant related party transactions that may have potential conflict with the interest of the company at large.

ii) By way of abundant caution, the company made certain disclosures regarding persons acting in concert with promoters, under SEBIRegularisation Scheme, 2002. The said disclosures were made during the month of February, 2003 and the requisite penalty, under thescheme, was duly paid. Apart from the same, there have been no other cases of non-compliance by the company or penalties, stricturesimposed on the company by the Stock Exchanges or SEBI or any authority on any matter related to capital markets during the last 3 years.

8. Means of Communication

i) Half yearly report sent to each shareholders residence : No

ii) Newspapers in which quarterly results normally published : Financial Express, Dainik Tribune

iii) Website where results or official news are displayed : www.suryaroshnilighting.com

iv) Whether it also displays presentations made to institutionalinvestors or to the analysts : Yes (if any)

v) Whether Management Discussion & Analysis Report ispart of the Annual Report or not : Yes

9. General Shareholder Informationi) AGM : Date and Time - 29.09.2005 at 10:30 a.m.

Venue - Prakash Nagar, Sankhol, Bahadurgarh, Haryana - 124 507.ii) Financial Year - 1st April to 31st Marchiii) Book closure Date - 14.09.2005 - 19.09.2005 (both days inclusive)iv) Dividend payment date - On or after 30.09.2005v) Listing on Stock Exchanges - The securities of the company were listed on the following Stock

Exchanges during the financial year 2004-05:

The Stock Exchange, Mumbai The National Stock Exchange of India Ltd.Rotunda Building, Dalal Street, Exchange Plaza, Bandra- KurlaFort, Mumbai - 400 001. Complex, Bandra, Mumbai - 400 051.

The company has paid the Annual Listing Fees to the Stock Exchanges for the Financial Year 2004-05 and 2005-06.

vi. Stock Code

Equity Shares - BSE - (Physical) - 336

(Dematerialised) - 500336

NSE - (Symbol) - SURYAROSNI




14

MONTH NSE BSE

HIGH (Rs.) LOW (Rs.) HIGH (Rs.) LOW (Rs.)

April, 2004 22.00 17.55 21.30 18.00

May, 2004 22.65 13.80 20.90 14.90

June, 2004 18.75 13.00 16.60 14.55

July, 2004 22.25 15.00 22.50 15.80

August, 2004 24.60 19.40 24.80 19.80

September, 2004 26.20 22.60 26.25 22.50

October, 2004 29.10 23.25 29.15 23.10

November, 2004 35.75 26.05 35.70 26.00

December, 2004 42.60 29.70 42.90 29.55

January, 2005 42.20 29.35 42.35 31.00

February, 2005 38.00 29.50 37.80 32.00

March, 2005 47.00 26.60 41.40 27.00

viii. Performance in comparison to BSE SENSEX


vii. Market Price Data :

ix. Registrar

(Common for both Physical and Electronic share registry)

x. Share Transfer System

The share transfers lodged with the Company/Registrar and complete in all respects are approved and confirmed once in every fortnight. In caseof physical shares, transfer-cum-demat option is provided to the transferees to facilitate them in getting their holding dematerialised.

xi. Distribution of Shareholding

Shareholders Shares

Holdings Number % of Total Number % of Total

1-5000 20335 98.97 7311426 28.78

5001-10000 105 0.51 765643 3.01

10001- 20000 43 0.21 590642 2.33

20001-100000 29 0.14 1277680 5.03

Over 100000 34 0.17 15455859 60.85

TOTAL 20546 100.00 25401250 100.00

Shareholding Pattern

CATEGORY No. of Shares held % age of Paid-upCapital

Promoters (including Persons Acting in Concert) 5831917 22.959

Institutional Investors 2396630 9.435

Private Corporate Bodies 8878543 34.953

Indian Public 8056447 31.717

NRIs and OCBs 136359 0.537

Others (Clearing Members) 101354 0.399

TOTAL 25401250 100.00

xii. Dematerialisation of Shares & Liquidity : The company has obtained electronic connectivity with the National Securities DepositoryLtd. (NSDL) and the Central Depository Services Ltd. (CDSL) for demat facility (ISIN:INE335A01012). As on 31st March, 2005, 2,09,97,977 equity shares, being 82.66% ofthe company's total paid-up equity shares had been dematerialized.The shares of the company are regularly traded at the NSE and BSE.

xiii. Outstanding GDRs /ADRs /Warrants or : NILany Convertible instruments, conversiondate & likely impact on equity

xiv. Plant Locations : Steel Division : Prakash Nagar, Sankhol, Bahadurgarh, Haryana - 124 507.: Lighting Division : 7 km Stone, Kashipur-Moradabad Road, Kashipur - 244 713

(Uttaranchal)

J-7,8 & 9, Malanpur Industrial Area, Malanpur, Distt. Bhind (M.P).

MAS Services Private LimitedAB-4, Safdarjung Enclave, New Delhi - 110 029.Tel. : (011) 26104142 ; 26104326 Fax : (011) 26181081E-Mail : [email protected]



15 Corporate Governance

xv. Address for correspondence : The Company SecretarySurya Roshni Limited408, Padma Tower - I,5, Rajendra Place,New Delhi - 110 008.Tel. - (011) 51539765, 25810093-96 Fax - (011) 25753955E-Mail - [email protected]

Adoption of non-mandatary requirements :

Remuneration Committee reconstituted on 29th January, 2004.

AUDITOR'S CERTIFICATE

Auditor's certificate on compliance with the conditions of Corporate Governance under Clause 49 of the Listing Agreement

To the members of

Surya Roshni Limited

We have examined the compliance of conditions of corporate governance by Surya Roshni Limited ("the company") for the year ended 31st

March, 2005, as stipulated in Clause 49 of the Listing Agreement of the company with the stock exchanges.

The compliance of the conditions of corporate governance is the responsibility of the management. Our examination was limited to the

procedures and implementation thereof, adopted by the company, for ensuring the compliance of the conditions of corporate governance.

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 according to the explanations given to us, we certify that the company has complied

with the conditions of corporate governance as stipulated in the abovementioned Listing Agreement.

We state that no investor grievances are pending for a period exceeding one month against the company as per the records maintained by the

company.

We further state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with

which the management has conducted the affairs of the company.

For SASTRY K. ANANDAM & CO.

CHARTERED ACCOUNTANTS

Place : New Delhi (K. Ananda Sastry)

Dated : 29th June, 2005 Partner, FCA

Membership No. 9980



16

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 3 of our report of even date

1. In respect of its fixed assets :

a) The Company has maintained records showing full particularsincluding quantitative details and situation of its fixed assetson the basis of available information.

b) As explained to us, the fixed assets have been physicallyverified by the management during the year in a phasedperiodical manner, which in our opinion is reasonable,having regard to the size of the Company and nature of itsassets. No material discrepancies were noticed on suchphysical verification. It was explained that the title deeds ofsome of the assets including lands are with IndustrialDevelopment Bank of India and therefore could not beverified.

c) In our opinion, the Company has not disposed of substantialpart of fixed assets during the year and the going concernstatus of the Company is not affected.

2. In respect of its inventories :

a) As explained to us, inventories have been physically verifiedby the management at regular intervals during the year.

b) In our opinion and according to the information andexplanations given to us, the procedures of physicalverification of inventories followed by the management arereasonable and adequate in relation to the size of theCompany and the nature of its business.

c) The Company has maintained proper records of inventories.As explained to us, there were no material discrepanciesnoticed on physical verification of inventory as compared tothe book records.

3. In respect of loans, secured or unsecured, granted or taken by theCompany to/from companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956:

a) The Company has not granted any loans, secured orunsecured to Companies, firms or other parties covered inthe register maintained under Section 301 of the CompaniesAct, 1956.

b) Since the Company has not granted any loans, the Clause(b), (c), (d) relating to the rate of interest, receipt of Principalamount, overdue amount does not apply.

c) The Company has not taken any loans, secured or unsecuredfrom Companies, firms or other parties covered in the registermaintained under Section 301 of the Companies Act, 1956.

d) Since the Company has not taken any loans, the Clauserelating to the rate of interest, payment of Principal amount,overdue amount does not apply.

4. In our opinion and according to the information and explanationsgiven to us, there are adequate internal control procedurescommensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory, fixed assets and also forthe sale of goods. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses ininternal controls.

5. In respect of transactions covered under Section 301 of theCompanies Act, 1956:

a) In our opinion and according to the information and

AUDITORS' REPORT

ToThe Members

1. We have audited the attached Balance Sheet of M/s SURYA ROSHNILIMITED as at 31st March, 2005 and the Profit and Account & alsothe Cash Flow Statement for the year ended on that date annexedthereto. These financial statements are the responsibility of theCompany's Management. Our responsibility is to express an opinionon these financial statements based on our Audit.

2. We conducted our audit in accordance with Auditing Standardsgenerally accepted in India. Those standards require that we plan &perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. An auditincludes examining, on a test basis, evidence supporting the amounts& disclosures in financial statements. An audit also includes assessingthe accounting principles used & significant estimates made byManagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 asamended by the Companies (Auditors' Report) (Amendment) Order,2004 issued by the Central Government of India in terms of SubSection (4A) of Section 227 of the Companies Act, 1956 and on thebasis of such checks as we considered appropriate and accordingto the information and explanations given to us, we enclose in theAnnexure hereto a statement on the matters specified in paragraphs4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3above, we report that:(i) We have obtained all the information and explanations,

which to the best of our knowledge and belief were necessaryfor the purposes of our audit.

(ii) In our opinion, proper books of account, as required by lawhave been kept by the Company so far as appears from ourexamination of those books.

(iii) The Balance Sheet, Profit and Loss Account and Cash FlowStatement dealt with by this report are in agreement with thebooks of account.

(iv) In our opinion, the Balance Sheet, Profit and Loss Accountand Cash Flow Statement dealt with by this report Complywith the mandatory Accounting Standards referred in SubSection (3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from thedirectors as on 31st March, 2005, and taken on record bythe Board of Directors, we report that none of the directorsis disqualified as on 31st March, 2005 from being appointedas a director in terms of clause (g) of sub-section (1) of Section274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information andaccording to the explanations given to us, the said accountsread together with the Significant Accounting Policies andother notes thereon give the information required by theCompanies Act, 1956 in the manner so required, and presenta true and fair view, in conformity with the accountingprinciples generally accepted in India :a) in so far as it relates to Balance Sheet, of the State of

affairs of the Company as at 31st March, 2005;b) in so far as it relates to Profit and Loss Account, of PROFIT

of the Company for the year ended on that date; andc) in so far as it relates to the Cash Flow Statement, of the

Cash Flows for the year ended on that date.

For SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS

(K. ANANDA SASTRY)

Place : New Delhi Partner, F.C.A.Dated : 29th June, 2005 Membership No. 9980

Auditors' Report



17

explanations given to us, there are no transactions made inpursuance of contracts or arrangements, that needed to beentered into in the register maintained under Section 301 ofthe Companies Act, 1956.

b) Since there are no transaction, the Clause relating to makingentry in the register maintained under Section 301 of theCompanies Act, 1956 does not apply.

6. In our opinion and according to the information and explanationsgiven to us, the Company has complied with the provisions ofSection 58A and 58AA or any other relevant provisions of theCompanies Act, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 with regard to the deposits accepted from the public.Since the Company has not defaulted in repayments of deposits,compliance of Section 58AA or obtaining any order from theCompany Law Board, National Company Law Tribunal or ReserveBank of India or any other Court or Tribunal, does not arise.

7. In our opinion, the internal audit system of the Company iscommensurate with its size and nature of its business.

8. We have broadly reviewed the books of accounts relating tomaterials, labour & other items of cost maintained by the CompanyPursuant to the Rules made by the Central Government for themaintenance of Cost Records under Section 209(1) (d) of theCompanies Act, 1956 and we are of the opinion, that prima facie,the prescribed accounts and records have been made andmaintained. We have , however, not made a detailed examinationof the same.

9. In respect of statutory dues :

i) the company is generally regular in depositing with appropriateauthorities undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees StateInsurance, Income Tax, Sales Tax, Wealth Tax, Service Tax ,Custom Duty, Excise Duty, Cess and other material statutorydues applicable to it.

ii) According to the information and explanations given to us,no undisputed amounts payable in respect of Income Tax,Wealth Tax, Sales Tax, Custom Duty, Excise Duty and Cesswere in arrears as at 31st March, 2005 for a period of morethan six months from the date they became payable.

iii) The disputed statutory dues aggregating to Rs.5,35,87,714/-that have not been deposited on account of matters pendingbefore appropriate authorities are as under:

Sl. Name of Nature of Dues Forum where Amount in (Rs.)

No. the Statue dispute is

pending

1. Central Excise Excise Duty – Commissioner of 46,56,548

Act, 1944 Central Excise

– CEGAT 30,12,245

– High Court 1,32,31,551

2. Trade Tax Act, Trade Tax Departmental

1948 Appeal before

Supreme Court 2,92,31,542

3. Employees State Employees High Court

Insurance Act, State Insurance

1966 Calculation 34,55,828

Total 5,35,87,714

10. The Company has no accumulated losses and has not incurredany cash losses during the financial year covered by our audit or inthe immediately preceding financial year.

11. Based on our audit procedures and according to the informationand explanation given to us, we are of the opinion that the Companyhas not defaulted in repayment of dues to financial institutions,banks or debenture holders.

12. In our opinion and according to the information and explanationsgiven to us, no loans and advances have been granted by theCompany on the basis of security by way of pledge of shares,debentures and other investments.

13. In our opinion, the Company is not a chit fund or a nidhi/mutualbenefit fund/ society. Therefore, clause 4(xiii) of the Companies(Auditor's Report) Order 2003 is not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, theProvisions of Clause 4 (xiv) of the Companies (Auditors' Report)Order, 2003 are not applicable to the Company

15. The Company has given guarantees for loans taken by subsidiaryfrom banks. According to the information and explanations givento us, we are of the opinion that the terms and conditions thereofare not prima-facie prejudicial to the interests of the Company.However, the guarantee has since been released.

16. In our opinion, the term loans have been applied for the purposesfor which they were raised.

17. According to the information and explanations given to us and onan overall examination of the Balance Sheet of the Company, wereport that no funds raised on short term basis have been used forlong term investments. No long term funds have been used tofinance short term assets except permanent working capital.

18. During the year, the Company has not made any preferentialallotment of shares to parties and companies covered in the Registermaintained under Section 301 of the Companies Act, 1956.

19. The Company has no debentures as at 31st March, 2005.

20. The Company has not raised any money by way of public issueduring the year.

21. In our opinion and according to the information and explanationsgiven to us, no fraud on or by the Company has been noticed orreported during the year, that causes the financial statements to bematerially misstated.

for SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS

(K. ANANDA SASTRY)

Place : New Delhi Partner, F.C.A

Dated : 29th June, 2005 Membership No. 9980

Auditors' Report



18

BALANCE SHEET AS AT 31ST MARCH, 2005

Particulars Schedule As at As atNo. 31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SOURCES OF FUNDS

SHAREHOLDER'S FUND

Share Capital 1 25,40,12,500 25‚40‚12‚500

Reserve & Surplus 2 1,12,11,60,785 1‚01‚25‚87‚207

LOAN FUNDS

Secured Loans 3 2,67,44,89,264 2‚49‚78‚63‚806

Unsecured Loans 4 51,91,86,380 58‚27‚40‚260

DEFERRED TAX LIABILITIES (NET) 49,42,28,629 51‚24‚08‚617

TOTAL 5,06,30,77,558 4‚85‚96‚12‚390

APPLICATION OF FUNDS

FIXED ASSETS : 5

Gross Block 5,36,77,07,424 5‚17‚11‚41‚895

Less : Depreciation 2,81,01,78,108 2‚58‚36‚40‚915

Net Block 2,55,75,29,316 2‚58‚75‚00‚980

Capital Work in Progress 11,04,94,010 1‚13‚29‚850

INVESTMENTS 6 7,22,79,284 7‚25‚11‚514

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 1,58,05,56,586 1‚39‚95‚98‚258

Sundry Debtors 8 90,48,40,468 96‚23‚64‚125

Cash & Bank Balances 9 3,37,49,433 4‚25‚13‚324

Loans & Advances 10 16,57,39,472 15‚89‚66‚724

2,68,48,85,959 2‚56‚34‚42‚431

LESS : CURRENT LIABILITIES & PROVISIONS

Current Liabilities 11 30,24,23,698 29‚06‚10‚406

Provisions 12 5,96,87,313 8‚45‚61‚979

36,21,11,011 37‚51‚72‚385

NET CURRENT ASSETS 2,32,27,74,948 2‚18‚82‚70‚046

TOTAL 5,06,30,77,558 4‚85‚96‚12‚390

Significant Accounting Policies and Notes on Accounts 21

Balance Sheet

The Schedules referred to above and notes on accounts thereon form an integral part of Balance Sheet.

As per our attached report of even date

For SASTRY K. ANANDAM & CO.Chartered Accountants B. D. Agarwal

Chairman andK. ANANDA SASTRY Managing DirectorPartnerMembership No. 9980

J. P. AgarwalPlace : New Delhi B. B. Singal Vice Chairman &Dated : June 29, 2005 Company Secretary Joint Managing Director

Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



19

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2005Particulars Schedule Year ended Year ended

No. 31st March, 2005 31st March, 2004(Rs.) (Rs.)

INCOME

Sales 13 11,98,60,49,632 9‚43‚70‚88‚320Less : Internal consumption 65,06,15,971 63‚52‚91‚855

11,33,54,33,661 8‚80‚17‚96‚465Less : Excise duty recovered on sales 1,15,71,18,739 98‚62‚28‚706

10,17,83,14,922 7‚81‚55‚67‚759Other Income 14 69,47,165 1‚26‚79‚900Accretion/(Decretion) to Stock 15 11,88,04,770 83‚43‚757TOTAL 10,30,40,66,857 7‚83‚65‚91‚416

EXPENDITURERaw Material Consumed 7,87,72,42,105 5‚67‚81‚47‚708Less : Internal Consumption 59,56,73,478 58‚46‚54‚944

7,28,15,68,627 5‚09‚34‚92‚764Purchase for Resale 22,44,11,656 16‚89‚20‚819Packing Material Consumed 15,89,90,194 14‚55‚28‚958Manufacturing Expenses 16 50,43,06,158 46‚13‚10‚675Employees Remuneration & Benefits 17 44,84,96,849 39‚60‚99‚030Selling Expenses 18 67,93,42,618 58‚96‚90‚728Interest 19 24,55,91,186 27‚04‚79‚251Other Expenses 20 34,30,56,605 30‚56‚76‚779Depreciation 5 24,54,06,090 26‚01‚92‚013Less: Transferred from Capital Reserve on Revaluation

of Fixed Assets 5,01,226 5‚01‚340

24,49,04,864 25‚96‚90‚673TOTAL 10,13,06,68,757 7‚69‚08‚89‚677

PROFIT/(LOSS) BEFORE TAX FOR THE YEAR 17,33,98,100 14‚57‚01‚739

Provision for Tax

– Current 4,76,68,134 2‚63‚09‚725– Deferred 8,21,762 (5,51,937)

PROFIT/(LOSS) AFTER TAX 12,49,08,204 11‚99‚43‚951

Surplus brought forward from previous year 57,99,44,737 51‚72‚61‚506

AVAILABLE FOR APPROPRIATIONS

Proposed Dividend– On Equity Shares 3,04,81,500 3‚04‚81‚500– On Preference Shares – 1‚99‚452

Tax on Dividend 43,53,650 39‚30‚997Capital Redemption Reserve – 50‚00‚000MAT Credit Utilised – 1‚87‚47‚516Deferred Tax Revision (1,90,01,750) (1,10,98,745)Transfer to General Reserve 1,00,00,000 1‚00‚00‚000

Balance carried to Balance Sheet 67,90,19,541 57‚99‚44‚737

Earning per Equity Share (Basic & Diluted) 4.92 4.71

Significant Accounting Policies and Notes on Accounts 21

Profit & Loss Account

The Schedules referred to above and notes on accounts thereon form an integral part of Profit & Loss Account.





Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



20Schedules

Schedules to the Balance Sheet

SCHEDULE 1 As at As at31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SHARE CAPITAL

Authorised :

4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000 49‚80‚00‚000

6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000 6‚20‚00‚000

56‚00‚00‚000 56‚00‚00‚000

Issued, Subscribed and Paid up :

2,54,01,250 Equity Shares of Rs. 10/- each fully paid up 25‚40‚12‚500 25‚40‚12‚500(Of the above shares 3,00,000 Equity shares ofRs.10/- each allotted as fully paid up Bonus sharesby capitalisation of General Reserve during 1980-81,86,47,500 Equity shares of Rs.10/- each during1994-95 and 22,38,750 Equity shares of Rs. 10/-each during 1995-96 by capitalisation of securitiespremium account.)

Total 25‚40‚12‚500 25‚40‚12‚500

SCHEDULE 2 As at As at As at31.03.2004 Addition Deduction 31.03.2005 31.03.2004

RESERVES AND SURPLUS

Capital Reserve

– Capital subsidy 50‚00‚000 – – 50‚00‚000 50‚00‚000

– on revaluation of Fixed Assets 1‚27‚24‚590 – 5,01,226 1,22,23,364 1,27,24,590

Capital Redemption Reserve 3‚00‚00‚000 – – 3,00,00,000 3,00,00,000

Securities Premium 22‚91‚29‚175 – – 22,91,29,175 22,91,29,175

General Reserve 15‚57‚88‚705 1,00,00,000 – 16,57,88,705 15,57,88,705

43‚26‚42‚470 1,00,00,000 5,01,226 44,21,41,244 43,26,42,470

Profit & Loss Account 67,90,19,541 57,99,44,737

Total 1‚12,11,60,785 1,01,25,87,207



21 Schedules



(Rs.) (Rs.)

SECURED LOANS

Term Loans

From Financial Institutions 60,96,97,221 59‚76‚21‚777

From Banks 79,97,29,669 66‚74‚42‚903

Working Capital Loans from Banks 1,26,50,62,374 1‚23‚27‚99‚126

2,67,44,89,264 2‚49‚78‚63‚806

NOTES :

1) Term Loans from Banks and financial Institutions secured by deposit of title deeds relating to immovable assets of the company and further secured byexecution of hypothecation of all company’s movable assets.

2) Working Capital Loans from Banks are secured against hypothecation of present and future stock of raw material, stock in process, finished goods, spareand stores, book debts etc., guaranteed by two directors of the company and further secured by way of second charge on the company’s Fixed Assets.


(Rs.) (Rs.)

UNSECURED LOANS

Fixed deposits from Public 17,34,00,000 22‚06‚07‚000

From Financial Institutions and Banks 20,00,00,000 25‚00‚00‚000

Interest Free Sales Tax Loan 9,76,83,622 7‚57‚89‚064

Deposit from Companies * 1,42,18,750 –

Trade Deposit & Others 3,38,84,008 3‚63‚44‚196

Total 51,91,86,380 58‚27‚40‚260

* Includes Current Year - Rs. 1,42,18,750 (Previous Year Rs. Nil) from Surya Roshni inc., a wholly owned subsidiary company.



22

Schedules to the Balance Sheet/Profit & Loss Account

Schedules

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44

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4‚3

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92

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42

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52

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23


As at As at31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SCHEDULE 6

INVESTMENTS (AT COST)

Non Trade

Quoted

943 (Previous Year Nil)Equity Share of

Rs.10/- each issued at a premium of 3,67,770 –

Rs. 380/- each, fully paid up in Punjab National Bank (PNB)

Unquoted

200 (Previous year 200) IDBI Growing Interest 10,00,000 10‚00‚000

Bond (2002A) of Rs. 5000/- each

Nil (Previous year 50000) shares of Rs.10/- each – 6‚00‚000

issued at a premium of Rs. 2/- each, fully paid

up in Lord Krishna Bank Ltd.

In Subsidiary Companies :

100 Common Stock (Previous Year 100) of US $ 100,000 43,62,000 $ 100,000 43‚62‚000

$1000 each of Surya Roshni Inc., fully paid up

56 Common Stock (Previous Year 56) of US $ 1,400,000 6,65,49,514 $ 1,400,000 6‚65‚49‚514

$25000 each of Surya Roshni Inc., fully paid up

Total 7,22,79,284 7‚25‚11‚514

Book Value of Quoted Investments Rs. 3,67,770 (Previous Year Rs. Nil)

Market Value of Quoted Investments Rs. 3,70,929.05 (Previous Year Rs. Nil)

SCHEDULE 7

STOCK (as certified by the Management)

Stores and spare parts, etc. (at cost on FIFO Basis) 14,86,16,258 12‚80‚23‚309

Raw Materials (at cost on FIFO basis) 43,72,84,788 39‚57‚24‚179

Scrap and salvage (at market value) 1,80,38,777 88‚82‚561

Semi-finished goods (at cost or net realisable value, whichever is less) 20,64,38,466 14‚80‚27‚134

Finished goods (at cost or net realisable value, whichever is less) 77,01,78,297 71‚89‚41‚075

Total 1,58,05,56,586 1‚39‚95‚98‚258

SCHEDULE 8

SUNDRY DEBTORS

(unsecured, considered good)

Debts outstanding for a period exceeding six months 1,42,78,533 1‚52‚31‚520

Other debts* 89,05,61,935 94‚71‚32‚605

Total 90,48,40,468 96‚23‚64‚125

* includes Current Year - Nil (Previous Year Rs. 2,75,93,362) due from Surya Roshni Inc., a wholly owned subsidiary Company

Schedules



24

SCHEDULE 9

CASH AND BANK BALANCE

Cash on hand 28,47,336 35‚30‚661

Cheques/Drafts/TTs in hand/ in transit 1,70,54,010 2‚39‚31‚405

Balance With Scheduled Banks in :

– Current Account 24,84,985 66‚28‚908

– Fixed Deposits 91,54,814 64‚56‚397

– Unpaid Dividend Accounts 22,08,288 19‚65‚953

3,37,49,433 4‚25‚13‚324

SCHEDULE 10

LOANS AND ADVANCES

(Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received 14,46,14,204 14‚22‚17‚600

Security Deposits 1,69,59,673 1‚46‚42‚637

Earnest Money Deposits 29,51,100 21‚06‚487

Claims Recoverable / Receivable 12,14,495 –

Total 16,57,39,472 15‚89‚66‚724

SCHEDULE 11

CURRENT LIABILITIES

Sundry Creditors

– Due to SSI 92,64,896 82‚07‚521

– Others 16,14,92,245 14‚78‚84‚494

Other Liabilities 12,25,52,773 12,23,60,777

Interest accrued but not due 91,13,784 1‚21‚57‚614

Total 30,24,23,698 29‚06‚10‚406

SCHEDULE 12

PROVISIONS

Proposed Dividend

– On Preference Share – 1‚99‚452

– On Equity Share 3,04,81,500 3‚04‚81‚500

Tax on Dividend 42,75,030 39‚30‚997

Provision for gratuity * 1,58,16,240 4‚19‚69‚584

Provision for Leave Encashment * 91,14,543 79‚80‚446

5,96,87,313 8‚45‚61‚979* Refer Note No. 6



(Rs.) (Rs.)

Schedules



25

Schedules to the Profit & Loss Account

For the Year ended For the year ended31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SCHEDULE 13

SALES

Inland (net of return) 10,55,55,66,014 8‚64‚20‚26‚854

Export* 1,43,04,83,618 79‚50‚61‚466

11,98,60,49,632 9‚43‚70‚88‚320

Less : Internal consumptions of components 65,06,15,971 63‚52‚91‚855

Total 11,33,54,33,661 8‚80‚17‚96‚465

* Export Includes Export Benefits of DEPB credits on Post Export basis

of Rs. 9,81,73,775 (Previous Year Rs. 8,72,03,419) and Rs. 12,65,900(Previous Year 4,04,64,273) to Surya Roshni Inc., a wholly owned subsidiary

SCHEDULE 14

OTHER INCOME

Rent 1,04,000 99,000

Interest (TDS Rs. 1,16,884) 6,02,419 5‚31‚290

Others 35,01,459 71‚92‚138

Insurance claims 1,95,180 4‚66‚982

Income from Investment (Non-Trade) (TDS Rs. Nil) 1,04,760 1‚91‚392

Foreign Exchang fluctuation 8,21,618 37‚96‚086

Profit on Sale of Fixed Assets 15,67,729 4‚03‚012

Profit on Sale of Investments 50,000 –

69,47,165 1‚26‚79‚900

SCHEDULE 15

ACCRETION/(DECRETION) TO STOCKStock as at 1st April

Finished Goods 71,89,41,075 73‚44‚40‚111Semi Finished Goods 14,80,27,134 12‚32‚08‚831Scrap 88,82,561 98‚58‚071

87,58,50,770 86‚75‚07‚013Stock as at 31st March

Finished Goods 77,01,78,297 71‚89‚41‚075Semi Finished Goods 20,64,38,466 14‚80‚27‚134Scrap 1,80,38,777 88‚82‚561

99,46,55,540 87‚58‚50‚770Accretion/(Decretion) to Stock 11,88,04,770 83,43,757

SCHEDULE 16

MANUFACTURING EXPENSESStores and spares consumed 14,52,95,807 12‚26‚47‚736Power and fuel 26,99,40,228 26‚31‚37‚284Water charges 21,85,925 19‚68‚663Repairs to :

Machinery 2,67,98,402 2‚65‚54‚488Building 1,04,97,728 64‚74‚655Others 25,17,978 28‚61‚650

3,98,14,108 3‚58‚90‚793

Miscellaneous manufacturing expenses 3,80,94,074 4‚67‚96‚804Excise Duty 89,76,016 (91,30,605)

Total 50,43,06,158 46‚13‚10‚675

Schedules



26

SCHEDULE 17

EMPLOYEES REMUNERATION AND BENEFITS

Salaries,wages and allowances including bonus and gratuity 38,56,54,221 34‚16‚33‚405

Employers contribution to PF, ESI and administrative charges 3,24,62,583 2‚87‚71‚442

Staff Welfare Expenses 2,34,38,542 2‚06‚74‚296

Remuneration to Managerial Personnel* 53,70,000 38‚07‚000

Staff Recruitment and Training Expenses 15,71,503 12‚12‚887

Total 44,84,96,849 39‚60‚99‚030

* Refer Note No.13

SCHEDULE 18

SELLING EXPENSES

Carriage Outward 32,31,73,447 26‚12‚66‚524

Commission\Service Charges on sale 4,97,14,596 3‚44‚51‚857

Discounts 19,51,72,971 18‚45‚46‚693

Advertisement 3,25,54,472 2‚72‚29‚214

Claims for defective 2,40,11,820 2‚34‚06‚489

Others 5,47,15,312 5‚87‚89‚951

Total 67,93,42,618 58‚96‚90‚728

SCHEDULE 19

INTEREST

Interest on Debentures – 1‚20‚22‚579

Term Loans and Fixed Deposits 14,03,42,957 17‚02‚31‚798

Other Interest & Financial Charges 10,52,48,229 8‚82‚24‚874

Total 24,55,91,186 27‚04‚79‚251

SCHEDULE 20

OTHER EXPENSESRent 1,10,48,123 1‚12‚48‚820

Insurance 77,91,007 85‚15‚486

Rates & Taxes 8,51,313 8‚71‚511

Postage, Telegraph,Telephone and Telex 1,42,25,050 1‚29‚23‚995

Printing and Stationery 61,19,716 44‚62‚872

Travelling & Conveyance 4,33,12,548 3‚70‚88‚112

Cost Auditors’Remuneration :

– Fee 1,23,000 1,21,680– Expenses 17,803 41,400

Internal Auditors’ Remuneration & Expenses – 4,991Miscellaneous Expenses 4,55,14,351 4‚33‚73‚851Loss on sale of fixed assets 22,60,053 5,86,673Loss on sale of Investments* – 2‚39‚300Sales Tax Paid 20,83,66,147 18‚43‚11‚601

33,96,29,111 30‚37‚90‚292

Directors’ Expenses

Sitting Fees 5,85,000 2‚93‚500Travelling & Conveyance 17,10,503 4‚16‚011Meeting Expenses 21,821 37,346Foreign Travelling 4,48,631 5‚32‚607

27,65,955 12‚79‚464* includes Nil (Previous Year Rs. 2,55,612) loss on sale of investment due to

winding up of Surya Roshni (HK) Ltd., a wholly owned subsidiary



(Rs.) (Rs.)

Schedules



27

Statutory Auditors’ Remuneration

Statutory Audit Fees 3,75,000 3‚63‚960

Income Tax Audit Fees 1,00,000 95,040

Auditors’ Expenses 31,127 28,467

Management Fees for certificates/reports 1,55,412 1,19,556

6,61,539 6‚07‚023

Total 34,30,56,605 30‚56‚76‚779

SCHEDULE 21

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of Financial Statements

(a) The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accountingprinciples (GAAP) and the provisions of the Companies Act, 1956, as adopted consistently by the Company except for certain fixed assetswhich have been revalued.

(b) The Company generally follows mercantile system of accounting and recognises significant items of income and expenditure on accrualbasis.

2. Fixed Assets

Fixed Assets are stated at cost net of CENVAT and includes amounts added on revaluation, less accumulated depreciation. All costs, includinginterest on borrowings attributable to acquisition of Fixed Assets upto the date of commissioning of the assets and net charges on foreignexchange contracts and adjustments arising from exchange rate variations relating to borrowings attributable to the fixed assets are capitalised.

3. Depreciation

(i) Depreciation on fixed assets is provided on straight line method as per the provisions of Sec. 205(2) of the Companies Act, 1956.

(ii) Depreciation on additions is being provided on pro rata basis from the date of such additions.

(iii) Depreciation on assets sold, discarded or demolished during the year is being provided at their rates up to the date in which such assets aresold, discarded or demolished.

(iv) Depreciation on additions on account of increase in rupee value due to revaluation of foreign currency loan is being provided at respectiverates of depreciation of related assets.

4. Foreign Currency Transactions

(i) The Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting yearexcept where the Company has entered into forward exchange contracts, the difference between the forward rate and the exchange rate atthe date of the transaction is recognised in the statement of profit & loss over the life of the contract.

(ii) Exchange differences arising due to repayment or restatement of liabilities incurred for the purpose of acquiring fixed assets are recognisedas Income or Expense as per Accounting Standard 11 issued by the Institute of Chartered Accountants of India.

(iii) Non-Monetary items denominated in foreign currency are stated at cost.

5. Investments

The investments are valued at cost of acquisition.

6. Gratuity and Leave Encashment

The Provision for Gratuity and Leave Encashment are made as per actuarial valuation basis as at the end of the financial year. However theCompany has covered its Gratuity liabilities with Life Insurance Corporation of India (LIC) by forming a Gratuity Trust and the liabilities paid toLIC is debited to Gratuity provisions.

7. Insurance Claims

Insurance claims are accounted for on settlement of claims.

8. Inventories

(i) Raw material, Stores & Spares are valued at cost on FIFO basis.

(ii) Finished Goods are valued at cost or net realisable value whichever is lower. Cost includes direct cost and appropriate portion of overheads.

(iii) Semi-finished goods are valued at cost or net realisable value whichever is lower.

(iv) Scrap and Salvage is valued at market price.

(v) The closing stock constituting duty-free imports consequent to utilisation of DEPB credit is valued at the actual cost of purchase includingsuch foregone import duty.



(Rs.) (Rs.)

Schedules



28Schedules

B. NOTES ON ACCOUNTS 31.3.2005 31.3.2004(Rs.) (Rs.)

1. Contingent liabilities not provided for in respect of :

(a) Letter of Credit outstanding 19,41,49,113 7,42,64,925

(b) Counter Guarantees by the Company on guarantees given by bank 12,76,56,648 10,60,44,976

(c) Bond executed by the Company to Custom Department 42,85,689 42,85,689

(d) Disputed Excise duties liability 2,09,00,344 2,20,50,477

(e) Disputed Commercial tax liability Nil 4,64,574

(f) Disputed Trade tax liability 2,92,31,542 2,92,31,542

(g) Bonds executed by the company to custom department against fulfillment of export

obligation under 5% EPCG Scheme. 5,14,52,783 3,33,56,510

(h) Disputed ESI liability 34,55,828 Nil

(i) Disputed demand of Uttaranchal Power Corporation 34,87,907 Nil

2. Estimated amount of contracts remaining to be executed on capital account (less advances) Rs.5,75,75,000/- (Previous year - Rs.1,80,187/-)

3. The pending customs case in regard to H.R. Coils' imports during financial year 1985 to 1988 wherein refunds of customs duty amounting to

Rs.85.71 lacs has been decided in favour of the Company by CEGAT. However, bonds and bank guarantees executed by the Company for the

said amount are still not released by the department and are included in the contingent liabilities, since the department has appealed the

judgement of CEGAT in Supreme Court.

4. The name of small scale industrial undertaking to whom the company owe any sum together with interest outstanding for more than thirty days

are : Apex Industries, Arya Filaments Pvt. Ltd., Bharat Packaging, B. P. Packaging Pvt. Ltd., Chhaya Packers Pvt. Ltd., Gwalior Carton Works Pvt.

Ltd., Jain Packaging Industries, Kusum Packers, Nav Bharat Packaging, Patiala Packers, Patiala Packing Industries, Surya Tapes Pvt. Ltd., Sai

Enterprises, Utility Electricals, Cosmic Aluminium Wires (P) Ltd., Indian Machine Tools, Jurgyan Industries, Multi Track Enterprises (P) Ltd.,

Mantisa Engineers, M. P. Engineering Industries, Natthu Singh Kushwaha Spring Works, Precision Engineers, S&U Mek Engineers (P) Ltd.,

Synergy, Hind Rubber Industries, Kumaun Diesels, Osna Electronics (P) Ltd., Panel Power Movers, Rockwin Flommeter IndiaPvt. Ltd., Crompton

Greaves Ltd., Electrical Instrumentation, D.B. Engineering Pvt. Ltd., Divya Jyoti Sales Corpn. (Regd.), Ratan Hose & Engineering Works Pvt. Ltd.,

Hightech Kuplings, Pioneer Industrial Equipments, Pneumatic Power Tools & Co.

5. The Trade Tax cases for the assessment year 1994-95 to 1995-96 has been decided in favour of Company by Hon'ble High Court, Allahabad.

The assessment upto the year 1999-2000 has been completed and the refunds have been received, which were due on the basis of the above

Hon'ble High Court decision. However, the Trade Tax liability Rs. 2,92,31,542/- is shown as contingent liability as the matter is subjudice at the

Supreme Court of India.

6. Earning per Share (Basic & Diluted)

Particulars This Year (Rs.) Previous Year (Rs.)

Profit after Tax 12,49,08,204 11,99,43,951less : Preference Dividend including dividend tax – 2,25,007Profit for Equity Shareholders 12,49,08,204 11,97,18,945Number of Equity Shares 2,54,01,250 2,54,01,250(Face Value Rs. 10/- each)

EPS (Rs.) 4.92 4.71

7. Deferred Tax

As per Accounting Standard (AS - 22) on accounting for Taxes on income issued by the Institute of Chartered Accountants of India, the deferred

tax liability as on 31st March, 2005 comprises of the following :

Deferred Tax As on As on

31st March, 2005 31st March, 2004

(a) Deferred Tax Liability

1. Related to Fixed Assets (50,26,20,330) (53,03,28,190)

(b) Deferred Tax Assets

1. Gratuity 53,23,746 1,50,56,588

2. Leave Encashment 30,67,955 28,62,985

Net Deferred Tax Assets / (Liabilities) (49,42,28,629) (51,24,08,617)

The deferred tax liability upto 31st March, 2004 was measured as per the Income Tax rates enacted on the Balance Sheet date. The same has

been revised to Rs.49,34,06,867/- and the difference of Rs.1,90,01,750/- has been credited to the Profit and Loss Appropriation Account.



29 Schedules

8. Segment Information for the year ended 31st March, 2005 and 31st March, 2004The company has identified the following two Primary Business Segments :1. Steel - Engaged in the production of Steel Tubes & Pipes and Cold Rolled Strips.2. Lighting - Engaged mainly in the manufacture of different varieties of Lamps.Secondary Segment reporting has been performed on the basis of Geographical Locations.

Primary Business Segments

Particulars Lighting (Rs.) Steel (Rs.) Total (Rs.)

Revenue

External Sales 2,88,54,99,135 8,44,99,34,526 11,33,54,33,6612,81,33,20,723 5,98,84,75,742 8,80,17,96,465

Inter-segment Sales – – –– – –

Total 2,88,54,99,135 8,44,99,34,526 11,33,54,33,6612,81,33,20,723 5,98,84,75,742 8,80,17,96,465

Result

Segment Result 20,86,46,192 20,33,95,929 41,20,42,121(Profit(+)/Loss(-) before tax & interest) 21,91,90,575 18,43,10,515 40,35,01,090Unallocable Corporate Expenditure –

–Operating Profit 41,20,42,121

40,35,01,090Interest Expenses 24,55,91,186

27,04,79,251Other Income 69,47,165

1,26,79,900Income Tax 4,84,89,896

2,57,57,788Profit from ordinary activities 12,49,08,204

11,99,43,951Net Profit after Tax 12,49,08,204

11,99,43,951

Other Information

Segment Assets

Net Block 1,71,35,92,371 84,39,36,944 2,55,75,29,3161,78,62,78,688 80,12,22,291 2,58,75,00,979

Capital Work-in-Progress 10,42,00,229 62,93,780 11,04,94,01020,99,502 92,30,349 1,13,29,851

Investment 7,15,95,984 6,83,300 7,22,79,2847,14,11,514 11,00,000 7,25,11,514

Current Assets, Loans and Advances 1,03,13,02,373 1,65,35,83,586 2,68,48,85,9591,07,58,20,381 1,48,76,22,050 2,56,34,42,431

Total Segment Assets 2,92,06,90,958 2,50,44,97,611 5,42,51,88,5692,93,56,10,085 2,29,91,74,690 5,23,47,84,775

Unallocated Corporate Assets ––

Total Assets 5,42,51,88,5695,23,47,84,775

Segment Liabilities

Loan Fund 1,71,34,17,541 1,48,02,58,103 3,19,36,75,6441,75,82,36,164 1,32,23,67,902 3,08,06,04,066

Current Liabilities & Provisions 19,66,59,757 16,54,51,254 36,21,11,01118,91,45,076 18,60,27,309 37,51,72,385

Total Segment Liabilities 1,91,00,77,298 1,64,57,09,357 3,55,57,86,6551,94,73,81,240 1,50,83,95,211 3,45,57,76,451

Unallocated Corporate Liabilities 49,42,28,62951,24,08,617

Total Liabilities 4,05,00,15,2843,96,81,85,068

Capital Employed 1,37,51,73,2841,26,65,99,707

Capital expenditure 32,12,99,7287,85,58,036

Depreciation 17,44,87,580 7,04,17,284 24,49,04,86418,97,30,451 6,99,60,222 25,96,90,673

Non-cash expenses other than Depreciation – – –– – –

Geographic Segment

India 10,00,31,23,8188,09,39,38,418

Outside India 1,33,23,09,84370,78,58,047



30

9. Related party disclosuresRelated party disclosures as required under Accounting Standard on “Related Party Disclosures” issued by the Institute of Chartered Accountantsof India are given hereunder :

A. Relationship :

i) Subsidiary Companies– Surya Roshni Inc., New York– Surya Roshni (HK) Limited, Hong Kong (deregistered on 22nd July, 2003)

ii) Key Management Personnel– Sh. B.D. Agarwal– Sh. J.P.Agarwal

iii) Relatives of the Key Management Personnel

Relation Sh. B.D.Agarwal Sh. J.P.Agarwal

Spouse Smt. Ganga Devi Agarwal Smt. Urmil AgarwalSon(s) Sh. V.P.Agarwal & Sh. J.P. Agarwal Sh. Vinay SuryaDaughter(s) Smt. Sudha Gupta Smt. Padmini & Smt. BhartiBrother(s) Sh. Ruli Ram, Sh. Babu Ram & Sh. Ram Bilas Sh. V P AgarwalSister(s) Smt. Bimla, Smt. Rajesh & Smt. Parvati Smt. Sudha GuptaMother Deceased Smt. Ganga Devi AgarwalFather Deceased Sh. B.D.Agarwal

iv) Entities over which the key management personnel are able to exercise significant influence– Surya Global Limited– Prakash Industries Limited

B. Transactions carried out with the related parties in the ordinary course of business :

Paticulars This Year Previous Year

Amount in Rs. US $ Amount in Rs. US $

i) Subsidiary Companies :

Surya Roshni Inc.

Investment:

– Total Investment at the beginning of the year 7,09,11,514 1,500,000 7,09,11,514 1,500,000

– Investment made during the year Nil Nil Nil Nil

– Total investment at the year end 7,09,11,514 1,500,000 7,09,11,514 1,500,000

Loan Given:

– Loan given during the year Nil Nil 22,86,500 50,000

– Loan repaid during the year Nil Nil 22,75,000 50,000

– Loan outstanding at the year end Nil Nil Nil Nil

Loan Taken:

– Loan taken during the year 1,48,18,750 325,000 Nil Nil

– Loan repaid during the year Nil Nil Nil Nil

– Loan outstanding at the year end 1,42,18,750 325,000 Nil Nil

Interest Received:

– Interest received during the year Nil Nil 14,333 315

Interest Paid:

– Interest Paid during the year 2,50,553 5,719 Nil Nil

Sale :

– Receivables against sales at the beginning of the year 2,75,93,362 631,174.3 28,68,103 60,330

– Sale of goods during the year 12,65,900 27,475 4,04,64,273 898,670

– Outstanding receivable at the year end Nil Nil 2,75,93,362 631,174.3

This Year Previous Year

Amount in Rs. HK $ Amount in Rs. HK $

Surya Rohni (HK) Ltd.

– Total investment at the beginning of the year Nil Nil 5,98,429 1,00,000

– Investment received on Winding up Nil Nil 3,42,817 58,380

– Total Investment at the year end Nil Nil Nil Nil

ii) Key Management Personnel & their Relatives :

Remuneration for the year 2004-2005 :

– Sh. B.D.Agarwal (Chairman & Managing Director) Rs. 31,50,000

– Sh. J.P.Agarwal (Vice-Chairman & Jt. Managing Director) Rs. 22,20,000

– Sh. Vinay Surya (Chief Operating Officer – Export) Rs. 4,92,000

Sitting Fees for the year 2004-2005

Smt. Urmil Agarwal (Director) Rs. 37,500/-

Schedules



31

Add:

Less:

10. Disclosure of loans / advances and investment as per Clause 32 of the Listing Agreement with the Stock Exchanges :Investment :

Subsidiary As on 31st March, 2005 Maximum outstanding during theyear ended 31st March, 2005

Surya Roshni Inc. (USA) Rs. 7,09,11,514 ($1,500,000) Rs. 7,09,11,514 ($1,500,000)

11. Disclosure of Foreign Exchange Transactions in terms of AS - 11

Particulars This year Previous Year

i) Exchange rate fluctuation differences included in the net profit/ 71,63,005 1,47,29,239(loss) for the period.

ii) Exchange rate fluctuation differences in respect of forward exchange (97,954) (8,97,192)contracts to be recognised in next year profit & loss Account.

12. The exchange difference of Rs.18,85,895/- on account of borrowing for the purpose of acquiring fixed assets is credited to Profit and Loss Accountin accordance with the accounting standard 11 issued by the Institute of Chartered Accountants of India. However in the previous year, theexchange difference of Rs.60,82,284/- on account of borrowing for the purpose of acquiring fixed assets are adjusted in carrying cost of fixedassets.

13. Remuneration of Managerial Personnel Paid/payable during the year:

Particulars This Year Previous Year(Rs.) (Rs.)

Salary, HRA & Medical Exp. 40,27,500 28,58, 250

Commission 13,42,500 9,48,750

Total 53,70,000 38,07,000

COMPUTATION OF REMUNERATION OF MANAGERIAL PERSONNEL UNDER SECTION 198 OF THE COMPANIES ACT, 1956

Particulars This Year Previous Year(Rs.) (Rs.)

Profit for the year: 17,33,98,100 14,57,01,739

Depreciation 24,49,04,864 25,96,90,673(Loss on sale of Fixed Assets 22,60,053 5,86,673(Remuneration to Managerial Personnel 53,70,000 38,07,000(Profit on sale of fixed assets as per section 350 of the Companies Act, 1956 19,10,043 4,89,493

42,78,43,060 41,02,75,578

(Profit on sale of fixed assets 15,67,729 4,03,012(Loss on sale of fixed assets as per Section 350 of the Companies Act, 1956 14,77,728 3,84,334(Depreciation computed as per Section 350 of the Companies Act, 1956 24,49,04,864 25,96,90,673

24,79,50,321 26,04,78,019Net Profit U/ 349 of the Companies Act, 1956 17,98,92,739 14,97,97,559Remuneration @ 10% per annum 1,79,89,274 1,49,79,756

14. Additional information pursuant to the provisions of paragraph 3 and 4C of Part II of Schedule VI of the Companies Act, 1956.

A. Capacity and Production Unit Licenced Capacity *Installed Capacity Production

As at 31st March As at 31st March As at 31st March

2005 2004 2005 2004 2005 2004

Steel DivisionPipes/Tubes M.T. N.A. N.A. Not Yet Assessed 156226 135953Cold Rolled Strips/Sheets M.T. N.A. N.A. Not Yet Assessed 54894 53418Cold Rolled Formed Sections M.T. N.A. N.A. Not Yet Assessed – –Lighting DivisionGLS Lamps Million Nos. N.A. N.A. 160.500 135.500 135.630 116.521Fluorescent Tube Lamps Million Nos. N.A. N.A. 35.000 35.000 39.741 36.059Tubular Glass Shells Million Nos. N.A. N.A. 53.340 53.340 62.340 56.047Glass Shells for GLS Lamps Million Nos. N.A. N.A. 426.900 426.900 397.305 434.124Filament Million Nos. N.A. N.A. 213.000 213.000 232.478 215.271Auto Halogen Lamps Million Nos. N.A. N.A. 12.500 12.500 – –Cap -GLS Lamps Million Nos. N.A. N.A. 150.000 150.000 153.716 157.156Fluorescent Powder M.T. N.A. N.A. 200.000 200.000 236.640 227.740Lead Glass Tubings M.T. N.A. N.A. 1700.000 1700.000 2045.13 2124.901HPSV / HPMV Lamps Nos. N.A. N.A. 150000 150000 273442 182874

* as certified by the management

{

{

Schedules



32

{

B. Turnover Unit This Year Previous Year

Quantity Value (Rs.) Quantity Value (Rs.)

Pipes/Tubes M.T. 157700 5,77,30,14,431 133224 3‚77‚37‚76‚311Zinc dross and rejected zinc M.T. 503 2,88,25,542 597 3‚08‚66‚263Zinc blow and ash M.T. 1196 2,21,08,004 1352 1‚90‚22‚419Side cutting. Beads etc. M.T. 12190 22,28,48,521 9737 13‚55‚29‚273Others 8,84,85,903 3‚16‚55‚836

Cold Rolled Steel Strips/Sheets M.T. 54752 1,86,41,36,369 52747 1‚44‚75‚09‚472H.R./C.R. Coils M.T. 17127 45,05,15,756 26992 55‚01‚16‚168GLS Lamps Million Nos. 135.038 94,68,65,818 125.325 89‚85‚38‚811Filament Million Nos. 235.328 11,51,26,838 211.619 11‚87‚54‚974Auto Halogen Lamps Million Nos. – – 0.004 1‚32‚875Fluorescent Tube Lamps Million Nos. 42.464 1,33,75,65,685 39.384 1‚26‚97‚34‚886Tubular Glass Shells Million Nos. 60.203 27,28,26,068 55.893 25‚52‚80‚503Glass Shells for GLS Lamps Million Nos. 406.133 28,71,31,430 418.530 29‚51‚47‚157Cap-GLS Lamps Million Nos. 161.340 11,34,31,316 144.947 10‚87‚96‚671Lighting Fitting Complete & Acces. 7,34,22,997 5‚80‚93‚983HPSV / HPMV Lamps Nos. 246894 6,40,46,922 169942 5‚16‚81‚836Compact Fluorescent Lamps Nos. 1482330 11,74,31,384 1712593 16‚15‚71‚712Fluorescent Powder M.T. 221.120 4,82,79,190 235.660 6‚17‚43‚848Lead Glass Tubings M.T. 2087.828 8,88,71,715 2079.672 8‚40‚54‚285Scrap & Others 7,11,15,743 8‚50‚81‚037

TOTAL 11,98,60,49,632 9‚43‚70‚88‚320

Less : Internal Consumption of ComponentsTubular Glass Shells Million Nos. 40.954 18,87,03,462 37.341 18‚56‚76‚493Glass Shells for GLS Lamps Million Nos. 147.670 9,88,60,443 130.543 9‚45‚82‚711Filament Million Nos. 219.213 10,78,34,587 197.674 11‚29‚33‚278Cap-GLS Lamps Million Nos. 135.888 9,87,26,395 117.533 9‚14‚34‚036Fluorescent Powder M.T. 211.120 4,53,79,039 191.820 5‚04‚31‚676Lead Glass Tubings M.T. 1290.154 5,81,12,219 1012.430 4‚33‚94‚884Others 5,29,99,826 5‚68‚38‚777

TOTAL 65,06,15,971 63‚52‚91‚855

NET 11,33,54,33,661 8‚80‚17‚96‚465

C. Opening Stock Unit This Year Previous Year

Quantity Value (Rs.) Quantity Value (Rs.)

Pipes/Tubes MT 15974 41,22,69,109 13245 28‚99‚59‚768Cold Rolled Steel Strips/Sheets MT 882 2,23,47,124 211 43‚25‚637GLS Lamps Million Nos. 14.398 10,25,72,314 23.301 17‚15‚86‚647Fluorescent Tube Lamps Million Nos. 2.888 9,16,58,834 6.163 19‚40‚42‚626Tubular Glass Shells Million Nos. 0.611 23,67,925 0.458 16‚48‚954Glass Shells for GLS Lamps Million Nos. 21.537 98,86,756 5.948 29‚17‚482Auto Halogen Lamps Million Nos. 0.002 1,86,486 0.006 3‚26‚194Filament Million Nos. 9.595 45,45,533 5.947 29‚65‚174Caps-GLS Lamps Million Nos. 15.725 95,91,945 3.516 21‚44‚760HPSV / HPMV Lamps Nos. 65920 1,94,37,163 52941 1‚68‚07‚627Compact Fluorescent Lamps Nos. 245887 2,28,77,695 292457 2‚84‚09‚720Lighting Fitting Complete & Acces. 1,43,53,801 1‚24‚71‚728Lead Glass Tubings M.T. 153.532 59,47,830 108.329 42‚38‚914Fluorescent Powder M.T. 4.32 8,98,560 12.24 25‚94‚880

71,89,41,075 73‚44‚40‚111Semi-Finished Goods 14,80,27,134 12‚32‚08‚831Scrap 88,82,561 98‚58‚071

TOTAL 87,58,50,770 86‚75‚07‚013

D. Closing Stock Unit This Year Previous YearQuantity Value (Rs.) Quantity Value (Rs.)

Pipes/Tubes MT 14500 44,20,68,387 15974 41‚22‚69‚109Cold Rolled Steel Strips/Sheets MT 1024 2,98,62,484 882 2‚23‚47‚124GLS Lamps Million Nos. 14.923 10,60,48,325 14.398 10‚25‚72‚314Fluorescent Tube Lamps Million Nos. 3.19 9,63,25,393 2.888 9‚16‚58‚834Tubular Glass Shells Million Nos. 2.748 96,44,915 0.611 23‚67‚925Glass Shells for GLS Lamps Million Nos. 12.704 56,58,480 21.537 98‚86‚756

Scrap

Schedules



33

Auto Halogen Lamps Million Nos. 0.002 2,08,866 0.002 1‚86‚486Filament Million Nos. 6.725 45,45,533 9.595 45‚45‚533Caps-GLS Lamps Million Nos. 8.097 35,62,680 15.725 95‚91‚945Lighting Fitting Complete & Acces. 1,66,73,723 1‚43‚53‚801HPSV / HPMV Lamps Nos. 94061 2,01,00,175 65920 1‚94‚37‚163Compact Fluorescent Lamps Nos. 267591 2,77,37,122 245887 2‚28‚77‚695Lead Glass Tubings M.T. 110.66 40,02,572 153.532 59‚47‚830Fluorescent Powder M.T. 19.84 37,39,642 4.32 8‚98‚560

TOTAL 77,01,78,297 71‚89‚41‚075Semi-Finished Goods 20,64,38,466 14‚80‚27‚134Scrap 1,80,38,777 88‚82‚561

TOTAL 99,46,55,540 87‚58‚50‚770

NOTE : Closing Stock is after excluding the following :

Breakage during handling or distributed as samples : Unit This Year Previous Year

Fluorescent powder Kgs. – 0.500GLS Lamps Nos. 86,968 102,119Fluorescent Tube Lamps Nos. 55,117 93,441HPSV / HPMV Lamps Nos. 607 (47)Compact Fluorescent Lamps Nos. 6,239 2,796Auto Halogen Lamps Nos. 155 203GLS Filament Nos. 20,150 4,700Tubular Glass Shells Nos. – 836Caps-GLS Lamps Nos. 3,475 –Glass Shells for GLS Lamps Nos. 5,106 5,021Lead Glass Tubings M.T. 0.174 0.026

E. PURCHASE FOR RESALE Unit This Year Previous YearQuantity Value (Rs.) Quantity Value (Rs.)

Light Fitting Complete & Accessories 6,43,43,968 5‚04‚24‚347Fluorescent Tube Lamps Million Nos. 3.080 7,21,82,527 0.144 30‚45‚368GLS Lamps Million Nos. 0.020 7,06,855 0.003 85‚113HPSV/HPMV Lamps Nos. 2,200 2,51,768 – –Compact Fluorescent Lamps Nos. 15,10,273 8,69,26,538 16,68,819 11‚53‚65‚991

TOTAL 22,44,11,656 16‚89‚20‚819

F. RAW MATERIAL CONSUMPTION Unit This Year Previous YearQuantity Value (Rs.) Quantity Value (Rs.)

Strip/Skelp M.T. 2,21,019 5,75,43,66,379 1,94,856 3‚63‚93‚74‚088

Zinc M.T. 5,345 32,48,49,749 5,832 32‚14‚38‚571

Sockets – 1,20,36,482 – 1‚86‚52‚098

HR/CR Coil M.T. 17,127 40,96,12,992 26,992 46‚66‚78‚712

Filaments Million Nos. 228.852 10,79,13,501 198.720 10‚67‚16‚046

Caps Million Nos. 221.464 13,78,66,858 196.230 12‚33‚35‚627

Moly Wire Million Nos. 7.601 1,79,88,365 6.735 1‚36‚26‚282

Lead -In -Wire Million Nos. 462.769 2,75,30,437 411.230 2‚05‚77‚265

Tubular Glass Shell Million Nos. 40.975 17,52,68,263 37.303 17‚29‚99‚936

Glass Shell for GLS Lamps Million Nos. 149.584 8,73,07,769 127.472 7‚49‚03‚169

Arc Tubes Nos. 162721 1,39,74,364 108587 1‚32‚86‚746

Di -Calcium Phosphate M.T. 199.380 2,04,11,797 195.000 1‚90‚20‚545

Lead Glass Tubings M.T. 1174.164 4,95,64,441 1012.094 4‚06‚04‚591

Soda Ash M.T. 6612.794 6,47,78,056 6612.600 6‚33‚15‚415

Red Lead M.T. 285.300 1,68,16,210 292.028 1‚28‚84‚299

Tungston wire M.T. 5.479 1,43,28,883 5.276 1‚56‚64‚201

Fluorescent Powder M.T. 220.527 4,70,31,464 194.347 4‚99‚46‚097

Aluminium Strip M.T. 418.316 5,96,62,224 434.130 5‚86‚79‚259

Brass Strip M.T. 35.985 68,98,198 37.430 55‚46‚124

Silica Sand M.T. 13448.000 1,22,88,421 13620.650 1‚09‚14‚326

Others 51,67,47,252 42‚99‚84‚310

TOTAL 7,87,72,42,105 5‚67‚81‚47‚708

Less : Internal Consumption of Components 59,56,73,478 58‚46‚54‚944

NET 7,28,15,68,627 5‚09‚34‚92‚764

Unit This Year Previous YearQuantity Value (Rs.) Quantity Value (Rs.)

Schedules



34

15. CIF VALUE OF IMPORTS This Year Previous Year

(Rs.) (Rs.)

Raw materials and purchases for trading * 5,45,39,326 4‚84‚82‚270

Stores & Spares 2,13,83,122 97‚67‚801

Capital goods 9,10,42,647 1‚15‚07‚137

* excludes Rs. Nil (Previous Year 3,94,42,916) transferred on high seas basis to Surya Roshni Inc., a wholly owned subsidiary

16. Value of consumption of imported and indigeneous raw material, This Year Previous Year

stores, and spares and its percentage to total consumption Rs. % age Rs. % age

Raw Materials Imported 5,55,64,200 0.76 4‚95‚27‚464 0.97Indigenous 7,22,60,04,427 99.24 5‚04‚39‚65‚300 99.03

Total 7,28,15,68,627 100.00 5‚09‚34‚92‚764 100.00

Stores and Spares Imported 2,38,70,353 16.43 1‚03‚72‚161 8.46

Indigenous 12,14,25,454 83.57 11‚22‚75‚575 91.54

Total 14,52,95,807 100.00 12‚26‚47‚736 100.00

17. Earning In Foreign Exchange on Account of Export This Year Previous Year(Rs.) (Rs.)

FOB Value 1,13,97,16,785 57‚15‚16‚624

18. Expenditure in Foreign Currency This Year Previous Year(Rs.) (Rs.)

a) Interest in rupee to FIs on Foreign Currency Loan 2,87,24,621 3‚63‚25‚783

b) Royalty & Technical Services ( Net of Taxes) 44,18,158 13‚73‚973

c) others 2,76,11,176 31‚85‚654

19. (a) Previous year figures have been regrouped and rearranged wherever necessary.

(b)Figures have been rounded off to the nearest rupee.





Schedules

Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



35

STATEMENT PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

I. REGISTRATION DETAILS

Registration No. State Code

Balance Sheet Date

Date Month Year

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

Public Issue Rights Issue Bonus Issue Preferential/Private Placement

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

Total Liabilities Total Assets

SOURCES OF FUNDS

Paid-Up Capital Reserves & Surplus Secured Loans Unsecured Loans Deferred Tax Liabilities (Net)

APPLICATION OF FUNDS

Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses

IV. PERFORMANCE OF THE COMPANY (AMOUNT IN RS. THOUSANDS)

Turnover Total Expenditure

+ – Profit/(Loss)Before Tax + – Profit/(Loss)After Tax

Earning Per Share (in Rs.) Dividend Rate %

V. GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY (AS PER MONETARY TERMS)

Item Code No. (ITC Code) Product Description



Balance Sheet Abstract

5 4 2 5 81 9 5 4 2 5 81 9

� �

7 3 0 4 01 . 0 1

L A M P S8 5 3 9 00

C O L D O L L E D TS RR I P S7 2 0 9 22





4 9 4 2 922 6 7 4 4 8 9 5 1 9 1 8 6

2 6 6 8 0 2 3 7 2 2 7 9 2 3 2 2 7 7 5 N I L N I L

N I L N I L N I L N I L

1 1 9 9 2 9 9 7 1 1 8 1 9 5 9 9

1 7 3 3 9 8 1 2 4 9 0 8

4 . 9 2 1 2

0 5

0 33 1

7 5 4 3

2 0 0 5

Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal

S T E E L T U B E S A N D P I P E S

2 5 4 0 1 2 1 1 2 1 61 1



36

INTEREST IN SUBSIDIARY COMPANIES

Statement pursuant to section 212 of the Companies Act, 1956

1. Name of Subsidiary Companies Surya Roshni Inc.(New York)

2. Financial Year ending of the Subsidiary 31st March, 2005

3. Shares of the Subsidiary held bySurya Roshni Ltd. on the above date:

(a) Number of Shares & face value 100 Common Stock ofUS$ 1000 each and 56 CommonStock of US$ 25000 each

(b) Extent of Holding 100%

4. Net aggregate amount of Profit/(Loss)of the subsidiary so far as theyconcern members of Surya Roshni Ltd.:

(a) Dealt with in the accounts of Surya NILRoshni Ltd. for the year ended31st March, 2005

(b) Not Dealt with in the accounts of (US$ 431,222)Surya Roshni Ltd. for the yearended 31st March, 2005

5. Net aggregate amount of Profit/(Loss)for the previous financial years of theSubsidiary since it became Subsidiaryso far as they concern members ofSurya Roshni Ltd.:

(a) Dealt with in the accounts of Surya NILRoshni Ltd. for the year ended31st March, 2005

(b) Not Dealt with in the accounts of (US$ 173,281)Surya Roshni Ltd. for the yearended 31st March, 2005

6. Change of interest of Surya Roshni Not ApplicableLtd. in the Subsidiary between the endof the financial year of the Subsidiaryand that of Surya Roshni Ltd.

7. Material changes between the end of Not Applicablethe financial year of the Subsidiary andthe end of the financial year of SuryaRoshni Ltd. in respect of Subsidiary’sfixed assets, investments, lending andborrowing for the purpose other thanmeeting than current liabilities

8. Remarks NIL

Interest in Subsidiary Companies

B. D. AgarwalChairman andManaging Director


Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



37

CASH FLOW STATEMENT

This Year Previous Year

(Rs.) (Rs.) (Rs.) (Rs.)

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 17,33,98,100 14‚57‚01‚739

ADJUSTMENT FOR :

Depreciation 24,49,04,864 25‚96‚90‚673

Interest (Net) 24,49,88,767 26‚99‚47‚961

Loss/(Profit) on Sale of Fixed Assets 6,92,324 1,83,661

Rent Income (1,04,000) 49,04,81,955 (99,000) 52‚97‚23‚295

Operating Profit before working capital changes 66,38,80,055 67‚54‚25‚034

ADJUSTMENT FOR :

Trade & Other Receivables 5,07,50,909 (18,21,97,867)

Inventories (18,09,58,328) 14,19,576

Trade Payables (1,32,05,955) (14,34,13,374) 2‚68‚84‚854 (15,38,93,437)

Cash Generated from Operations 52,04,66,681 52‚15‚31‚597

Income Tax Paid (4,76,68,134) (2,63,09,725)

MAT Credit Utilised – (1,87,47,516)

Interest Paid (10,52,48,229) (15,29,16,363) (8,82,24,874) (13,32,82,115)

NET CASH FROM OPERATING ACTIVITIES 36,75,50,318 38‚82‚49‚483

B. CASH FLOW FROM INVESTING ACTIVITIES

Sale/(Purchase) of Investments 2,32,230 25,87,429

Interest Received 6,02,419 5,31,290

Purchases of Fixed Assets (22,21,35,568) (7,21,49,669)

Capital Work in Progress (9,91,64,160) (64,08,367)

Sale/Adjustments of Fixed Assets 60,08,818 1,16,19,861

Rent Received 1,04,000 99,000

NET CASH USED IN INVESTING ACTIVITIES (31,43,52,261) (6,37,20,456)

C. CASH FLOW FROM FINANCING ACTIVITIES

Increase/(Decrease) Long Term Borrowings 8,08,08,330 (16,96,07,067)

Increase/(Decrease) Short Term Borrowings 3,22,63,248 6,91,15,703

Issue/(Redemption) of Share Capital – (1,00,00,000)

Interest on borrowings (14,03,42,957) (18,22,54,377)

Dividend Paid (3,46,90,569) (3,04,60,167)

NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES (6,19,61,948) (32,32,05,908)

Net Increase/(decrease) in cash & cash equivalents (87,63,892) 13,23,119

Opening Cash & Cash equivalents 4,25,13,325 4‚11‚90‚206

Closing Cash & Cash equivalents 3,37,49,433 4‚25‚13‚325

Cash Flow Statement



AUDITORS’ REPORT

We have examined the above Cash Flow Statement of Surya Roshni Limited for the year ended 31st March, 2005 The Statement has beenprepared by the Company in accordance with the requirements of listing agreement Clause 32 with Stock Exchanges and is based on and inagreement with the books and records of the Company and also the Profit and Loss Account and Balance Sheet of the Company covered by ourreport of even date to the members of the Company.

For SASTRY K. ANANDAM & CO.CHARTERED ACCOUNTANTS

Place : New Delhi K. ANANDA SASTRYDated : June 29, 2005 Partner, F.C.A

Membership No. 9980

Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal


SURYA ROSHNI INC. (NEW YORK)

38

COMPARATIVE BALANCE SHEET AS AT 31ST MARCH, 2005

31.03.05 31.03.04

$ $

ASSETS

CURRENT ASSETS :

Cash & Bank Balance 131,563 151,673

Accounts Receivable - Trade (net) (Note 4) 139,965 673,548

Other Assets 4,560 11,849

Inventory (Note 3) 392,744 1,267,443

Advance : Surya Roshni Ltd. (Note 5) 325,000 –

Total current assets 993,832 2,104,513

FIXED ASSETS :

Office Equipment 8,400 8,400

Less : Accm Depreciation (4,431) (4,304)

Total Fixed Assets 3,968 4,095

TOTAL ASSETS 997,801 2,108,608

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES :

Accounts Payable - Misc. 5,523 654,751

Accrued Expenses 2,705 14,455

SBI - Line of Credit (Note 6) 94,000 110,000

Other Current Liabilities 75 2,683

Total current liabilities 102,303 781,889

EQUITY : (Note 7)

Equity Capital - Common 1,500,000 1,500,000

RETAINED EARNINGS :

Beginning of the Period (173,281) 78,655

Profit / (Loss) for Current Period (431,222) (251,936)

Total Retained Earnings (604,503) (173,281)

Total Stockholders' Equity 895,497 1,326,719

TOTAL LIABILITY & STOCKHOLDERS' EQUITY 997,801 2,108,608

(See accompanying notes to financial statements)

DIRECTORS' REPORT 2004-2005

The Directors present this Report and the Financial Statement of the Companyfor the financial year ended 31st March, 2005

Operations

The company was incorporated on December 7, 1999, in the state of New York,under the name of Surya Roshni Ltd. and subsequently the name was changed toSurya Roshni Inc. The Company focuses on marketing and distribution of EnergySaving Lamps for a wide variety of customers.

In the year under review, due to competition with other vendors, inadequateproduct range and lesser fund with the utility companies, the Company witnesses-lower sales $ 701,390 from last year $ 966,552 and suffered a loss of $ 431,222against the previous year loss of $ 251,936 due to low margins and reduction inthe value of inventory.

Share Capital

The entire issued share capital of $ 1,500,000 is owned by the Surya RoshniLimited (A Corporation of India) and the company is a Wholly Owned Subsidiaryof Holding Corporation.

Auditors

M/s Mahesh J Agashiwala, C.P.A.P.C. Certified Public Accountant the Auditorsof the company are eligible for re-appointment for the current financial year.

On Behalf of the Board of Directors

Basudev Agarwal

Dated : May 09, 2005 Director - President & Secretary

REPORT OF INDEPENDENT AUDITORS

To The Board of Directors and Stockholdersof Surya Roshni Inc.

We have audited the accompanying Balance Sheet of Surya Roshni Inc. (the“Company”) as of March 31, 2005 and March 31, 2004 and the related statementsof Income and Expenditure, Retained Earnings and Cash Flows for the years thenended.

These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements basedon our audit. We conducted our audit in accordance with Generally AcceptedAuditing Standards in the United States of America. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statement. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe our audit provides areasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Surya Roshni Inc as of March 31,2005 and March 31, 2004 and the results of its operations and cash flows for theyears then ended in conformity with Generally Accepted Accounting Principlesin the United States of America.

New York, NY Mahesh J. AgashiwalaMay 09, 2005 CPA P.C.



39

COMPARATIVE INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2005 AND 200431.03.2005 31.03.2004

$ $

Sales 710,403 966,552

Less : Returns & Allowances (9,013) –

Net Sales 701,390 966,552

Cost of sales (Schedule A) 951,554 (903,295)

Total Cost of Sales 951,554 (903,295)

Gross profit / (Loss) (250,164) 63,256

Operating expenses : (Schedule B)

Selling, general and administrative expenses 201,445 (320,902)

Other Income:

Interest Income 7,534 2,120

Interest Tax Refund 12,853 –

Income (Loss) before taxes (431,222) (255,526)

Corporate Taxes – 3,590

Net Income (431,222) (251,936)(See accompanying notes to financial statements)

COMPARATIVE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2005 AND 2004

31.03.2005 31.03.2004

Cash flows from operating activities : $ $

Net Income / (Loss) (431,222) (251,936)

Adjustments to reconcile net profit to net cash

provided (used in) by Operating activities :

Depreciation for the Period 127 474

(Increase)/Decrease in Accounts Receivable 533,583 (332,100)

(Increase)/Decrease in Inventory 874,699 (237,876)

Decrease in Other Current Assets 7,289 64,289

Increase/(Decrease) in Current Liabilities (679,587) 461,100

Net cash provided by operating activities 736,111 (44,113)

Cash Flow from Investing activities :

(Increase)/Decrease in Furniture, Fixture & Equipment – (791)

Loan to Surya Roshni Limited, India (325,000) –

Cash Flow from Financing activities :

Increase in Equity – –

Net Increase/(decrease) in cash flow (20,111) (296,840)

Cash at beginning of year 151,673 448,513

Cash at end of Period 131,563 151,673(See accompanying notes to financial statements)

SCHEDULE OF COST OF SALES FOR THE YEAR ENDED MARCH 31, 2005 AND 2004 (SCHEDULE A)

31.03.2005 31.03.2004

$ $

Cost of Sales

Inventory - beginning 1,267,443 1,029,567

Purchases – 1,029,155

Freight Charges 8,399 6,789

Discount – 138

Warranty Exp./Income – (30,401)

Packing Materials 39,404 43,725

Warehousing 20,690 –

Inventory Reduction – 91,765

Custom & Clearing Charges 8,363 –

Total 1,344,298 2,170,738

Inventory - ending (392,744) (1,267,443)

Cost of Sales 951,554 903,295




40

SCHEDULES OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED MARCH 31, 2005 AND 2004

(SCHEDULE B) 31.03.2005 31.03.2004

$ $

Advertisement – 5,810Bad Debts 93,145 26,182Bank Charges 453 884Commission 41,455 –Company Guest House Expense – 2,700

Depreciation 127 474Discount 3,463 –FUTA 56 262Insurance 1,295 9,237Interest 1,374 3,291Miscellaneous Expenses 4,359 5,935Payroll & Other Taxes 2,350 8,899Postage 482 2,297Professional Fees 12,200 17,180Rent 10,230 19,305Salary-Others 20,000 131,483Selling & Distribution Expenses – 43,213Stationery & Office Supplies 261 842Telephone Expenses 2,023 6,692Travel 7,415 34,849Utilities 758 1,366

201,445 320,902(See accompanying notes to financial statements)

COMPARATIVE STATEMENT OF RETAINED EARNINGS AS OF MARCH 31, 2005 AND 2004 31.03.2005 31.03.2004

RETAINED EARNINGS : $ $

Beginning Balance (173,281) 78,655

Net Profit / (Loss) for the Period (431,222) (251,936)

Ending Balance (604,503) (173,281)


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2005

NOTE 1 - ORGANIZATION

Surya Roshni Inc. ("the Company") was incorporated under the laws of the state of New York on December 7, 1999, and also obtained certificate to do businessin the States of California.

The principal business of the Company is the marketing and distribution of light bulbs for a wide variety of customers.

The Company is a wholly owned subsidiary of Surya Roshni Ltd. (India) which is incorporated in India.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Accounting is done on accrual basis.

b. Inventory is valued at cost or market whichever is lower.

NOTE 3 - INVENTORY

The inventory of the Company is valued at $ 392,744 and it comprises of 226890 units of PMI-15W light bulbs valued at $ 158,823 (based on its net realizablevalue). The company has further reduced its valuation by $ 238,235 this year.

NOTE 4 : ACCOUNTS RECEIVABLE

Almost 70% of the Accounts Receivable are over 2 year past due. Management has booked bad debts of $ 84,160.00 in the current year and has made anadditional provision of $ 25000 for this year. The management expects to realize the overdue acconts by instituting continuous follow up with the customers.

NOTE 5 - LOANS AND ADVANCES

The Company has advanced a loan of $ 325,000 to its parent company, Surya Roshni Limited, India @ 3.50% p.a.

NOTE 6 : LINE OF CREDIT

The cash and bank balance includes the Certificate of Deposit of $ 120,000. This Certificate of Deposit is held as a collateral against $ 94,000 Line of Creditfrom State Bank of India. The CD earns 1.5% interest whereas the Company pays 2% interest on the Line of Credit.

NOTE 7 - EQUITY

The Company is authorized to issue 200 shares @ No Par Value.

Shares issued and outstanding as on March 31, 2005 was $ 1,500,000 (100 shares @ $1,000 per share and 56 shares @ $25,000 per share.)



41

AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIALSTATEMENTS

The Board of DirectorsSurya Roshni LimitedNew Delhi

We have examined the attached Consolidated Balance Sheet of Surya RoshniLimited and its subsidiaries as at March 31, 2005, the Consolidated Profit and LossAccount and the Cash Flow Statement for the year then ended.These financial statements are the responsibility of the Company’s management.Our responsibility- is to express an opinion on the financial statements based on ouraudit. We have conducted our audit inaccordance with generally accepted auditingstandards in India. These Standards require that we plan and perform the audit toobtain reasonable assurance whether the financial statements are prepared, in allmaterial respects, in accordance with an identified financial reporting frameworkand are free of material misstatements. An audit includes, examining on a test basis,evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statements. Webelieve that our audit provides a reasonable basis for our opinion.We did not audit the financial statements of subsidiaries, whose financial statementsreflect total assets ofRs. 436.54 lakhs as atMarch 31,2005 andRs.921.83 lakhs as atMarch 31,2004 and total revenues ofRs-315.78 lakhs and Rs.423.48 lakhs respectivelyfor the years then ended. These financial statements have been audited by other

auditors, whose reports have been furnished to us. and our opinion, insofar as itrelates to the amounts included in respect of the subsidiaries, is based solely on thereport of the other auditors.We report that the consolidated financial statements have been prepared by theCompany in accordance with the requirements of Accounting Standard (AS) 21,Consolidated Financial Statements, issued by the Institute of Chartered Accountantsof India and on the basis of the separate audited financial statements of Surya RoshniLimited and its subsidiaries included in the consolidated financial statements.On the basis of the information and explanations given to us and on the considerationof the separate audit reports on individual audited financial statements of SuryaRoshni Limited and its subsidiaries. we are of the opinion that :a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state

of affairs of Surya Roshni Limited and its subsidiaries as at March 31, 2005;b) the Consolidated Profit and Loss Account gives a true and fair view of the

consolidated results of operations of Surya Roshni Limited and its subsidiaries forthe year then ended ; and

c) the consolidated Cash Flow Statement gives a true and fair view of”the consolidatedCash Flow of the Company and its subsidiaries for the year then ended.

For SASTRY K. ANANDAM AND CO.CHARTERED ACCOUNTANTS

(K. ANANDA SASTRY)Place : New Delhi PARTNER F.C.A.Dated : 29th June, 2005 Membership No. 9980

CONSOLIDATED BALANCE SHEET

Particulars Schedule As at As atNo. 31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SOURCES OF FUNDS

SHAREHOLDER’S FUND

Share Capital 1 25‚40‚12‚500 25‚40‚12‚500

Reserve & Surplus 2 1‚08‚94‚27‚265 99‚96‚76‚527

LOAN FUNDS

Secured Loans 3 2‚67‚44‚89‚264 2‚49‚78‚63‚806

Unsecured Loans 4 50‚49‚67‚630 58‚27‚40‚260

DEFERRED TAX LIABILITIES (NET) 49‚42‚28‚629 51‚24‚08‚617

TOTAL 5‚01‚71‚25‚288 4‚84‚67‚01‚710

APPLICATIONS OF FUNDS

FIXED ASSETS : 5

Gross Block 5‚36‚80‚74‚924 5‚17‚15‚09‚122

Less : Depreciation 2‚81‚03‚72‚008 2‚58‚38‚29‚119

Net Block 2‚55‚77‚02‚916 2‚58‚76‚80‚003

Capital Work in Progress 11‚04‚94‚010 1‚13‚29‚850

INVESTMENTS 6 13‚67‚770 16‚00‚000

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 1‚59‚77‚39‚136 1‚45‚50‚07‚697

Sundry Debtors 8 91‚09‚63‚937 96‚42‚16‚595

Cash & Bank Balances 9 3‚95‚05‚315 4‚91‚44‚088

Loans & Advances 10 16‚59‚38‚972 15‚94‚84‚732

2‚71‚41‚47‚360 2‚62‚78‚53‚112

LESS : CURRENT LIABILITIES & PROVISIONS

Current Liabilities 11 30‚68‚99‚454 29‚71‚99‚276

Provisions 12 5‚96‚87‚313 8‚45‚61‚979

36‚65‚86‚768 38‚17‚61‚255

NET CURRENT ASSETS 2‚34‚75‚60‚592 2‚24‚60‚91‚857

TOTAL 5‚01‚71‚25‚288 4‚84‚67‚01‚710Significant Accounting Policies and

Notes on Accounts 21

The Schedules referred to above and notes on accounts thereon form an integral part of Balance Sheet.

Auditors' Report & Balance Sheet





Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



42

CONSOLIDATED PROFIT & LOSS ACCOUNT

Particulars Schedule Year Ended Year EndedNo. 31st March, 2005 31st March, 2004

(Rs.) (Rs.)

INCOME

Sales 13 12‚01‚67‚35‚445 9‚47‚93‚43‚557

Less : Internal consumption 65‚06‚15‚971 63‚52‚91‚855

11‚36‚61‚19‚474 8‚84‚40‚51‚702

Less : Excise duty recovered on sales 1‚15‚71‚18‚739 98‚62‚28‚706

10‚20‚90‚00‚735 7‚85‚78‚22‚996

Other Income 14 78‚39‚096 1‚27‚72‚581

Accretion/(Decretion) to Stock 15 8‚05‚36‚689 1‚87‚43‚101

TOTAL 10‚29‚73‚76‚520 7‚88‚93‚38‚678

EXPENDITURE

Raw Material Consumed 7‚87‚72‚42‚105 5‚67‚81‚47‚708

Less : Internal Consumption 59‚56‚73‚478 58‚46‚54‚944

7‚28‚15‚68‚627 5‚09‚34‚92‚764

Purchase for Resale 22‚44‚11‚656 21‚39‚12‚903

Packing Material Consumed 16‚07‚14‚119 14‚74‚40‚506

Manufacturing Expenses 16 50‚59‚44‚683 46‚42‚96‚187

Employees Remuneration & Benefits 17 44‚94‚74‚662 40‚22‚36‚180

Selling Expenses 18 68‚11‚56‚274 59‚18‚33‚891

Interest 19 24‚56‚71‚117 27‚06‚61‚772

Other Expenses 20 34‚89‚92‚824 31‚12‚22‚300

Depreciation 5 24‚54‚11‚646 26‚02‚12‚735

Less: Transferred from Capital Reserve on Revaluation of Fixed Assets 5‚01‚226 5‚01‚340

24‚49‚10‚420 25‚97‚11‚395

TOTAL 10‚14‚28‚44‚382 7‚75‚48‚07‚897

PROFIT/(LOSS) BEFORE TAX FOR THE YEAR 15‚45‚32‚138 13‚45‚30‚781

Provision for Tax

– Current 4‚76‚68‚134 2‚61‚52‚779

– Deferred 8,21,762 (5,51,937)

PROFIT/(LOSS) AFTER TAX 10‚60‚42‚241 10‚89‚29‚940

Surplus brought forward from previous year 57‚23‚63‚695 52‚07‚00‚106

AVAILLABLE FOR APPROPRIATIONS

Proposed Dividend

– On Equity Shares 3‚04‚81‚500 3‚04‚81‚500

– On Preference Shares – 1‚99‚452

Tax on Dividend 43‚53‚650 39‚30‚997

Capital Redemption Reserve – 50‚00‚000

MAT Credit Utilised – 1‚87‚47‚516

Deferred Tax Revision (1,90,01,750) (1,10,98,745)

Transfer to General Reserve 1‚00‚00‚000 1‚00‚00‚000

Balance carried to Balance Sheet 65‚25‚72‚535 57‚23‚69‚326

Earning per Equity Share (Basic & Diluted) 4.17 4.28

Significant Accounting Policies and

Notes on Accounts 21

Profit and Loss Account





The Schedules referred to above and notes on accounts thereon form an integral part of Profit & Loss Account.

Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



43

Schedules to the Consolidated Balance Sheet


(Rs.) (Rs.)

SHARE CAPITAL

Authorised :

4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000 49‚80‚00‚000

6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000 6‚20‚00‚000

56‚00‚00‚000 56‚00‚00‚000

Issued, Subscribed and Paid up

2,54,01,250 Equity Shares of Rs. 10/- each fully paid up 25‚40‚12‚500 25‚40‚12‚500(Of the above shares 3,00,000 Equity shares ofRs.10/- each allotted as fully paid up Bonus sharesby capitalisation of General Reserve during 1980-81,86,47,500 Equity shares of Rs.10/- each during1994-95 and 22,38,750 Equity shares of Rs. 10/-each during 1995-96 by capitalisation of securitiespremium account.)

Total 25‚40‚12‚500 25‚40‚12‚500

SCHEDULE 2 As at As at As at31.03.2004 Addition Deduction 31.03.2005 31.03.2004

RESERVES AND SURPLUS

Capital Reserve

– Capital subsidy 50‚00‚000 – – 50‚00‚000 50‚00‚000

– on revaluation of Fixed Assets 1‚27‚24‚590 – 5,01,226 1‚22‚23‚364 1‚27‚24‚590

Capital Redemption Reserve 3‚00‚00‚000 – – 3‚00‚00‚000 3‚00‚00‚000

Securities Premium 22‚91‚29‚175 – – 22‚91‚29‚175 22‚91‚29‚175

General Reserve 15‚57‚88‚705 1‚00‚00‚000 – 16‚57‚88‚705 15‚57‚88‚705

Translation Reserve (53,35,269) 48,755 – (52,86,514) (53,35,269)

42‚73‚07‚201 1‚00‚48,755 5,01,226 43‚68‚54‚730 42‚73‚07‚201

Profit & Loss Account 65‚25‚72‚535 57‚23‚69‚326

1‚08‚94‚27‚265 99‚96‚76‚527


(Rs.) (Rs.)

SECURED LOANS

Term Loans

From Financial Institutions : 60‚96‚97‚221 59‚76‚21‚777

From Bank 79‚97‚29‚669 66‚74‚42‚903

Working Capital Loans from Banks 1‚26‚50‚62‚374 1‚23‚27‚99‚126

2‚67‚44‚89‚264 2‚49‚78‚63‚806

NOTES :

1) Term Loans from Banks and financial Institutions secured by deposit of title deeds relating to immovable assets of the company and further secured by executionof hypothecation of all company's movable assets.

2) Working Capital Loans from Banks are secured against hypothecation of present and future stock of raw material, stock in process, finished goods, spare andstores, book debts etc., guaranteed by two directors of the company and further secured by way of second charge on the company's Fixed Assets.

Schedules



44

SCHEDULE 5

FIXED ASSETS (Amt. in Rs.)

PARTICULARS

GROSS BLOCK DEPRECIATION NET BLOCK

Up To Additions Sales/ As at Up To For the Year Sales/ Up To As at As at

01.04.2004 Adjustments 31.3.2005 31.3.2004 ended 31.3.2005 Adjustments 31.3.2005 31.3.2005 31.3.2004

Land & Site Development 9‚70‚78‚041 – – 9‚70‚78‚041 – – – – 9‚70‚78‚041 9‚70‚78‚041

Building 59‚27‚45‚507 22‚43‚884 5‚00‚000 59‚44‚89‚391 15‚32‚29‚954 1‚72‚30‚328 # 17,818 17‚04‚42‚464 42‚40‚46‚927 43‚95‚15‚553

Plant & Machinery 4‚32‚05‚44‚062 19‚13‚59‚994 $ 2‚00‚07‚937 $ 4‚49‚18‚96‚119 2‚33‚61‚76‚724 21‚48‚16‚303 # 1‚59‚73‚665 2‚53‚50‚19‚362 1‚95‚68‚76‚757 1‚98‚43‚67‚338

Furniture & Fixtures 2‚48‚14‚701 3‚97‚749 – 2‚52‚12‚450 1‚34‚40‚501 15‚63‚769 – 1‚50‚04‚270 1‚02‚08‚180 1‚13‚74‚200

Vehicles 5‚38‚80‚797 1‚28‚95‚427 48‚29‚524 6‚19‚46‚700 2‚40‚95‚948 52‚63‚433 26‚55‚290 2‚67‚04‚091 3‚52‚42‚609 2‚97‚84‚849

Office Equipments 5‚61‚41‚889 1‚35‚70‚919 2‚32‚578 6‚94‚80‚230 3‚76‚86‚757 49‚71‚641 2‚21‚984 4‚24‚36‚414 2‚70‚43‚816 1‚84‚55‚132

Airconditioners & Coolers 86‚76‚248 10‚69‚704 – 97‚45‚952 42‚12‚632 4‚23‚946 – 46‚36‚578 51‚09‚374 44‚63‚616

Miscellaneous Assets 25‚72‚312 5‚98‚164 – 31‚70‚476 9‚45‚217 1‚28‚047 – 10‚73‚264 20‚97‚212 16‚27‚095

Temporary Erections 1‚50‚55‚565 – – 1‚50‚55‚565 1‚40‚41‚386 10,14,179 – 1‚50‚55‚565 – 10,14,179

TOTAL 5‚17‚15‚09‚122 22‚21‚35‚841 2‚55‚70‚039 5‚36‚80‚74‚924 2‚58‚38‚29‚119 24‚54‚11‚646 1‚88‚68‚757 2‚81‚03‚72‚008 2‚55‚77‚02‚916 2‚58‚76‚80‚003

Previous Year 5‚11‚68‚76‚518 7‚21‚55‚583 1‚75‚22‚979 5‚17‚15‚09‚122 2‚32‚93‚50‚227 26‚02‚12‚735 57‚33‚843 2‚58‚38‚29‚119 2‚58‚76‚80‚003 2‚78‚75‚26‚291

$ Includes adjustments for change in rate of exchange as on 31/03/2005 Rs. Nil (Previous year Rs. (60,82,284/-))

# Includes depreciation on revalued cost of assets amounting to Rs. 5,01,226/- (Previous Year Rs. 5,01,340/-)


(Rs.) (Rs.)

Schedules



(Rs.) (Rs.)

UNSECURED LOANS

Fixed deposits From Public 17‚34‚00‚000 22‚06‚07‚000

From Financial Institutions & Banks 20‚00‚00‚000 25‚00‚00‚000

Interest Free Sales Tax Loan 9‚76‚83‚622 7‚57‚89‚064

Trade Deposit & Others 3‚38‚84‚008 3‚63‚44‚196

Total 50‚49‚67‚630 58‚27‚40‚260

INVESTMENTS (AT COST)

NON TRADE

Quoted

943 (Previous Year Nil)Equity Share ofRs.10/- each issued at a premium of 3,67,770 –Rs. 380/- each, fully paid up in Punjab National Bank (PNB)

Unquoted

200 (Previous year 200) IDBI Growing Interest 10,00,000 10‚00‚000

Bond (2002A) of Rs. 5000/- each

Nil (Previous year 50000) shares of Rs.10/- each – 6‚00‚000issued at a premium of Rs. 2/- each, fully paidup in Lord Krishna Bank Ltd.

Total 13,67,770 16‚00‚000

Book Value of Quoted Investments Rs. 3,67,770 (Previous Year Rs. Nil)

Market Value of Quoted Investments Rs. 3,70,929.05 (Previous Year Rs. Nil)



45


(Rs.) (Rs.)


Schedules

SCHEDULE 7

STOCK (as certified by the Management)

Stores and spare parts ,etc (at cost on FIFO Basis) 14‚86‚16‚258 12‚80‚23‚309

Raw Materials (at cost on FIFO basis) 43‚72‚84‚788 39‚57‚24‚179

Scrap and salvage (at market value) 1‚80‚38‚777 88‚82‚561

Semi -finished goods (at cost or net realisable value, whichever is less) 20‚64‚38‚466 14‚80‚27‚134

Finished goods (at cost or net realisable value, whichever is less) 78‚73‚60‚847 77‚43‚50‚514

Total 1‚59‚77‚39‚136 1‚45‚50‚07‚697

SCHEDULE 8

SUNDRY DEBTORS(unsecured, considered good)

Debts outstanding for a period exceeding six months 1‚42‚78‚533 1‚52‚31‚520

Other debts 89‚66‚85‚404 94‚89‚85‚075

Total 91‚09‚63‚937 96‚42‚16‚595

SCHEDULE 9

CASH AND BANK BALANCE

Cash on hand 28‚47‚336 35‚30‚661

Cheques/Drafts/TTs in hand/ in transit 1‚70‚54‚010 2‚39‚31‚405

Balance With Scheduled Banks in :

– Current Account 82‚40‚867 1‚32‚59‚672

– Fixed Deposits 91‚54‚814 64‚56‚397

– Unpaid Dividend Accounts 22‚08‚288 19‚65‚953

3‚95‚05‚315 4‚91‚44‚088

SCHEDULE 10

LOANS AND ADVANCES

(Unsecured, considered good)

Advances recoverable in cash or in kind orfor value to be received 14‚48‚13‚704 14‚27‚35‚608

Security Deposits 1‚69‚59‚673 1‚46‚42‚637

Earnest Money Deposits 29‚51‚100 21‚06‚487

Claims Recoverable/Receivable 12,14,495 –

Total 16‚59‚38‚972 15‚94‚84‚732

SCHEDULE 11

CURRENT LIABILITIES

Sundry Creditors

– Due to SSI 92‚64‚896 82‚07‚521

– Others 16‚17‚33‚876 14‚89‚15‚221

Other Liabilities 12‚66‚68‚554 12‚72‚86‚983

Interest accrued but not due 92‚32‚128 1‚27‚89‚550

Total 30‚68‚99‚454 29‚71‚99‚276

SCHEDULE 12

PROVISIONSProposed Dividend

– On Preference Share – 1‚99‚452– On Equity Share 3‚04‚81‚500 3‚04‚81‚500

Tax on Dividend 42‚75‚030 39‚30‚997Provision for gratuity 1‚58‚16‚240 4‚19‚69‚584Provision for Leave Encashment 91‚14‚543 79‚80‚446

5‚96‚87‚313 8‚45‚61‚979



46

Schedules to the Consolidated Profit and Loss Account

For the Year ended For the Year ended31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SCHEDULE 13

SALESInland (net of return) 10‚58‚62‚51‚827 8‚68‚42‚82‚091Export* 1‚43‚04‚83‚618 79‚50‚61‚466

12‚01‚67‚35‚445 9‚47‚93‚43‚557Less : Internal consumptions of components 65‚06‚15‚971 63‚52‚91‚855Total 11‚36‚61‚19‚474 8‚84‚40‚51‚702* Export Includes Export Benefits of DEPB credits on Post

Export basis of Rs. 9,81,73,775 (Prev. Year Rs. 8,72,03,419)and Rs. 12,65,900 (Prev. Year 4,04,64,273) to Surya Roshni Inc., a wholly owned subsidiary

SCHEDULE 14OTHER INCOMERent 1‚04‚000 99‚000Interest (TDS Rs. 1,16,884) 14‚94‚350 6‚23‚971Others 35‚01‚459 71‚92‚138Insurance claims 1‚95‚180 4‚66‚982Income from Investment (Non-Trade) 1‚04‚760 1‚91‚392Foreign Exchang fluctuation 8‚21‚618 37‚96‚086Profit on Sale of Fixed Assets 15‚67‚729 4‚03‚012Profit on Sale of Investments 50,000 –

78‚39‚096 1‚27‚72‚581

SCHEDULE 15ACCRETION/(DECRETION) TO STOCKStock as at 1st April

Finished Goods 77‚43‚91‚706 77‚94‚50‚206Semi Finished Goods 14‚80‚27‚134 12‚32‚08‚831Scrap 88‚82‚561 98‚58‚071

93‚13‚01‚401 91‚25‚17‚108Stock as at 31st MarchFinished Goods 78‚73‚60‚847 77‚43‚50‚514Semi Finished Goods 20‚64‚38‚466 14‚80‚27‚134Scrap 1‚80‚38‚777 88‚82‚561

1‚01‚18‚38‚090 93‚12‚60‚209

Accretion/(Decretion) to Stock 8‚05‚36‚689 1‚87‚43‚101

SCHEDULE 16MANUFACTURING EXPENSESStores and spares consumed 14‚52‚95‚807 12‚26‚47‚736Power and fuel 26‚99‚40‚228 26‚31‚37‚284Water charges 21‚85‚925 19‚68‚663Repairs to:

Machinery 2‚67‚98‚402 2‚65‚54‚488Building 1‚04‚97‚728 64‚74‚655Others 25‚17‚978 28‚61‚650

3‚98‚14‚108 3‚58‚90‚793Miscellaneous manufacturing expenses 3‚97‚32‚599 4‚97‚82‚316Excise Duty 89,76,016 (91,30,605)

Total 50‚59‚44‚683 46‚42‚96‚187

SCHEDULE 17EMPLOYEES REMUNERATION AND BENEFITSSalaries,wages and allowances including bonus and gratuity 38‚66‚32‚034 34‚77‚70,555Employers contribution to PF, ESI and administrative charges 3‚24‚62‚583 2‚87‚71‚442Staff Welfare Expenses 2‚34‚38‚542 2‚06‚74‚296Remuneration to Managerial Personnel 53‚70‚000 38‚07‚000Staff Recruitment and Training Expenses 15‚71‚503 12‚12‚887

Total 44‚94‚74‚662 40‚22‚36,180

SCHEDULE 18SELLING EXPENSESCarriage Outward 32‚31‚73‚447 26‚12‚66‚524Commission\Service Charges on sale 4‚97‚14‚596 3‚44‚51‚857Discounts 19‚51‚72‚971 18‚45‚46‚693Advertisement 3‚25‚54‚472 2‚72‚29‚214Claims for defective 2‚40‚11‚820 2‚34‚06‚489Others 5‚65‚28‚968 6‚09‚33‚114

Total 68‚11‚56‚274 59‚18‚33‚891

Schedules



47

Schedules to the Consolidated Profit and Loss Account

For the Year ended For the Year ended31st March, 2005 31st March, 2004

(Rs.) (Rs.)

SCHEDULE 21

A. SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. General

Surya Roshni Limited was incorporated in India and operates as a Holding Company for other group companies.2. Principles and Basis of preparation of Financial Statements

The consolidated financial statements have been prepared in accordance with Accounting Standards (AS 21) Consolidated Financial Statements

The consolidated financial statements comprise the financial statements of the parent company and its subsidiaries.

The following group companies considered for consolidation.

Sl. Name of the Subsidiary Company Country of Extent of Holding (%) Conversion Rate

No. Incorporation as on March 31, 2005 This Year Previous Year

1. Surya Roshni Inc. USA 100.00 US$ Rs. 43.75 US$ Rs. 43.7175

The consolidated financial statements are prepared on historical cost convention using accounting policies of the parent company unless otherwise stated. InterCompany balances and transactions have been eliminated in the consolidation.

3. Fixed Assets

Fixed Assets are stated at cost net of CENVAT and includes amounts added on revaluation, less accumulated depreciation. All costs, including interest on borrowingsattributable to acquisition of Fixed Assets upto the date of commissioning of the assets are capitalised.

4. Depreciation(i) Depreciation on fixed assets for the parent company is provided on straight line method as per the provisions of Sec. 205(2) of the Companies Act, 1956 and

for the subsidiaries, the basis of depreciation rates prescribed under respective domestic laws.(ii) Depreciation on addition is being provided on pro rata basis from the date of such additions.(iii) Depreciation on assets sold, discarded or demolished during the year is being provided at their rates up to the date in which such assets are sold, discarded or

demolished.(iv) Depreciation on additions on account of increase in rupee value due to revaluation of foreign currency loan is being provided at respective rates of depreciation

of related assets.5. Foreign Currency Translations

The Monetary items denominated in foreign currency have been translated at the exchange rate prevailing on the last day of the accounting year and the resultantdifference is carried as translation reserve under "Reserves and Surplus".

Schedules

SCHEDULE 19INTERESTInterest on Debentures – 1‚20‚22‚579TermLoans and Fixed Deposits 14‚03‚42‚957 17‚02‚31‚798Other Interest & Financial Charges 10‚53‚28‚160 8‚84‚07‚395

Total 24‚56‚71‚117 27‚06‚61,772

SCHEDULE 20OTHER EXPENSESRent 1‚14‚95‚686 1‚20‚92‚786Insurance 78‚47‚663 89‚19‚305Rates & Taxes 8‚84‚476 9‚31‚229Postage, Telegraph,Telephone and Telex 1‚43‚34‚644 1‚33‚16‚972Printing and Stationery 61‚31‚135 44‚99‚682Travelling & Conveyance 4‚36‚36‚954 3‚86‚11‚623Cost Auditors’Remuneration :

– Fee 1‚23‚000 1‚21‚680– Expenses 17‚803 41‚400

Internal Auditors’ Remuneration & Expenses – 4‚991Miscellaneous Expenses 5‚04‚67‚770 4‚56‚58‚571Loss on sale of fixed assets 22‚60‚053 5‚86‚673Loss on sale of Investments * – 2‚39‚300Sales Tax Paid 20‚83‚66‚147 18‚43‚11‚601

34‚55‚65‚330 30‚93‚35‚813Directors’ ExpensesSitting Fees 5‚85‚000 2‚93‚500Travelling & Conveyance 17‚10‚503 4‚16‚011Meeting Expenses 21‚821 37‚346Foreign Travelling 4‚48‚631 5‚32‚607

27‚65‚955 12‚79‚464Statutory Auditors’ RemunerationStatutory Audit Fees 3‚75‚000 3‚63‚960Income Tax Audit Fees 1‚00‚000 95‚040Auditors’ Expenses 31‚127 28‚467Management Fees for certificates/reports 1‚55‚412 1‚19‚556

6‚61‚539 6‚07‚023

Total 34‚89‚92‚824 31‚12‚22‚300

* includes Current Year NIL( Previous Year Rs. 2,55,612) loss on sale of investment due to winding up of Surya Roshni (HK) Ltd., a wholly owned subsidiary



48

6. Investments

The investments are valued at cost of acquisition

7. Gratuity and Leave Encashment

The Provision for Gratuity and Leave Encashment are made as per actuarial valuation basis as at the end of the financial year. However the Parent Company hascovered its Gratuity liabilities with Life Insurance Corporation of India (LIC) by forming a Gratuity Trust and the liabilities paid to LIC is debited to Gratuity provisions.

8. Insurance Claims

Insurance claims are accounted for on settlement of claims.

9. Inventories

(i) Raw material, Stores & Spares are valued at cost. Cost calculated on FIFO basis.

(ii) Finished Goods are valued at cost. Cost includes direct cost and appropriate portion of overheads.

(iii) Semi-finished goods are valued at cost or net realisable value whichever is lower.

(iv) Scrap and Salvage is valued at market price.

(v) The closing stock constituting duty-free imports consequent to utilisation of DEPB credit is valued at the actual cost of purchase including such foregone importduty.

10. Share Capital

Authorised4,98,00,000 Equity Shares of Rs.10/- each 49‚80‚00‚000

6,20,000 Preference Shares of Rs.100/- each 6‚20‚00‚000

56‚00‚00‚000

Issued, Subscribed and Paid up2,54,01,250 Equity Shares of Rs. 10/- each fully paid up 25‚40‚12‚500

(Of the above shares 3,00,000 Equity shares of Rs.10/- each allotted as fully paid up Bonus shares bycapitalisation of General Reserve during 1980-81, 86,47,500 Equity shares of Rs.10/- each during 1994-95and 22,38,750 Equity shares of Rs. 10/- each during 1995-96 by capitalisation of securities premium account.)

Total 25‚40‚12‚500

11. Deferred Tax

As per Accounting Standard (AS - 22) on accounting for Taxes on income issued by the Institute of Chartered Accountants of India, the deferred tax liability as on 31stMarch, 2005 comprises of the following :

Particulars As on 31st March, 2005 As on 31st March, 2004

(a) Deferred Tax Liability

1. Related to Fixed Assets (50,26,20,330) (53,03,28,190)

(b) Deferred Tax Assets

1. Gratuity 53,23,746 1,50,56,588

2. Leave Encashment 30,67,955 28,62,985

Net Deferred Tax Assets/(Liabilities) (49,42,28,629) (51,24,08,617)

The deferred tax liability upto 31st March, 2004 was measured as per the Income Tax rates Enacted on the Balance Sheet date. The same has been revised toRs.49,34,06,867/- and the difference of Rs.1,90,01,750/- has been credited to the Profit and Loss Appropriation Account.

Schedules

12. Segment Information for the year ended 31st March, 2005 and 31st March, 2004

The company has identified the following two Primary Business Segments :

1. Steel - Engaged in the production of Steel Tubes & Pipes and Cold Rolled Strips

2. Lighting - Engaged mainly in the manufacture of different varieties of Lamps

Secondary Segment reporting has been performed on the basis of Geographical Locations.

Primary Business Segments

Particulars Lighting Cons. Steel Total Cons.

REVENUE

External Sales 2,91,61,84,948 8,44,99,34,526 11,36,61,19,474

2,85,55,75,960 5,98,84,75,742 8,84,40,51,702Inter-segment Sales – – –

– – –Total 2,91,61,84,948 8,44,99,34,526 11,36,61,19,474

2,85,55,75,960 5,98,84,75,742 8,84,40,51,702RESULTSegment Result 18,89,68,230 20,33,95,929 39,23,64,159(Profit(+)/Loss(-) before tax & interest) 20,81,09,457 18,43,10,515 39,24,19,972Unallocable Corporate Expenditure –

–Operating Profit 39,23,64,159

39,24,19,972Interest Expenses 24,56,71,117

27,06,61,772Other Income 78,39,096

1,27,72,581



49

Particulars Lighting Cons. Steel Total Cons.

Schedules

Income Tax 4,84,89,8962,56,00,842

Profit from ordinary activities 10,60,42,24110,89,29,939

Net Profit after Tax 10,60,42,24110,89,29,939

Other InformationSegment AssetsNet Block 1,71,37,65,972 84,39,36,944 2,55,77,02,916

1,78,64,57,712 80,12,22,291 2,58,76,80,003Capital Work-in-Progress 10,42,00,230 62,93,780 11,04,94,010

20,99,502 92,30,348 1,13,29,850Investment 6,84,470 6,83,300 13,67,770

5,00,000 11,00,000 16,00,000Current Assets, Loans and Advances 1,06,05,63,774 1,65,35,83,586 2,71,41,47,360

1,14,02,31,063 1,48,76,22,050 2,62,78,53,113Total Segment Assets 2,87,92,14,446 2,50,44,97,610 5,38,37,12,056

2,92,92,88,277 2,29,91,74,689 5,22,84,62,966Unallocated Corporate Assets –

–Total Assets 5,38,37,12,056

5,22,84,62,966Segment LiabilitiesLoan Fund 1,69,91,98,791 1,48,02,58,103 3,17,94,56,894

1,75,82,36,165 1,32,23,67,902 3,08,06,04,067Current Liabilities & Provisions 20,11,35,514 16,54,51,254 36,65,86,768

19,57,33,946 18,60,27,309 38,17,61,255Total Segment Liabilities 1,90,03,34,305 1,64,57,09,357 3,54,60,43,662

1,95,39,70,111 1,50,83,95,211 3,46,23,65,322Unallocated Corporate Liabilities 49,42,28,629

51,24,08,617Total Liabilities 4,04,02,72,291

3,97,47,73,939

Capital Employed 1,34,34,39,7651,25,36,89,027

Capital expenditure 32,13,00,00114,83,68,126

Depreciation 17,44,93,136 7,04,17,284 24,49,10,42018,97,51,173 6,99,60,222 25,97,11,395

Non-cash expenses other than Depreciation – – –– – –

Geographic SegmentIndia 10,00,31,23,818

8,09,39,38,418Outside India 1,36,29,95,656

75,01,13,28415. Earning per share (Basic and Diluted)

Particular This Year (Rs.) Previous Year (Rs.)

Profit after Tax 10,60,42,241 10,89,29,940less : Preference Dividend including dividend tax Nil 2,25,007Profit for Equity Shareholders 10,60,42,241 10,87,04,933Number of Equity Shares 2,54,01,250 2,54,01,250(Face Value Rs. 10/- each)EPS (Rs.) 4.17 4.28

14. Related party disclosureRelated party disclosures as required under Accounting Standard on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India are givenhereunder :

A. Relationship :i) Key Management Personnel

– Sh. B.D. Agarwal– Sh. J.P.Agarwal

ii) Relatives of the Key Management Personnel

Relation Sh. B.D.Agarwal Sh. J.P.Agarwal

Spouse Smt. Ganga Devi Agarwal Smt. Urmil AgarwalSon(s) Sh. V.P.Agarwal & Sh. J.P. Agarwal Sh. Vinay SuryaDaughter(s) Smt. Sudha Gupta Smt. Padmini & Smt. BhartiBrother(s) Sh. Ruli Ram, Sh. Babu Ram & Sh. Ram Bilas Sh. V P AgarwalSister(s) Smt. Bimla, Smt. Rajesh & Smt. Parvati Smt. Sudha GuptaMother Deceased Smt. Ganga Devi AgarwalFather Deceased Sh. B.D.Agarwal

iii) Entities over which the key management personnel are able to exercise significant influence– Surya Global Limited– Prakash Industries Limited

CONSOLIDATED CASH FLOW STATEMENT

This year Previous Year

(Rs.) (Rs.) (Rs.) (Rs.)

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT BEFORE TAX 15‚45‚32‚138 13‚45‚30‚781

ADJUSTMENT FOR :

Depreciation 24‚49‚10‚420 25‚97‚11‚395Interest (Net) 24‚41‚76‚767 27‚00‚37‚800Loss/(Profit) on Sale of Fixed Assets 6,92,324 1,83,661Rent Income (1,04,000) 48‚96‚75‚511 (99,000) 52‚98‚33‚857Operating Profit before working capital changes 64‚42‚07‚649 66‚43‚64‚638Adjustment for :Trade & Other Receivables 4‚67‚98‚419 (16,76,07,425)Inventories (14,27,31,439) (51,00,874)Trade Payables (1,53,19,069) (11,12,52,089) 2‚10‚87‚848 (15,16,20,451)Cash Generated from Operations 53‚29‚55‚560 51‚27‚44‚187Income Tax Paid (4,76,68,134) (2,61,52,779)MAT Credit Utilised – (1,87,47,516)Exchange Difference on translation of foreign currency 43,122 (57,08,346)Interest Paid (10,53,28,160) (15,29,53,172) (8,84,07,395) (13,90,16,036)NET CASH FROM OPERATING ACTIVITIES 38‚00‚02‚387 37‚37‚28‚151

B. CASH FLOW FROM INVESTING ACTIVITIES

Sale/(Purchase) of Investments 2‚32‚230 19‚89‚000Interest Received 14‚94‚350 6,23,971Purchases of Fixed Assets (22,21,35,841) (7,21,55,583)Capital Work in Progress (9,91,64,160) (64,08,367)Sale/Adjustments of Fixed Assets 60‚08‚958 1‚16‚05‚475Rent Received 1,04,000 99,000NET CASH USED IN INVESTING ACTIVITIES (31,34,60,463) (6,42,46,504)

C. CASH FLOW FROM FINANCING ACTIVITIES

Increase/(Decrease) Long Term Borrowings 6‚65‚89‚580 (16,96,07,067)Increase/(Decrease) Short Term Borrowings 3‚22‚63‚248 6‚91‚15‚703Issue/(Redemption) of Share Capital – (1,00,00,000)Interest on borrowings (14,03,42,957) (18,22,54,377)Dividend Paid (3,46,90,569) (3,04,60,167)NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES (7,61,80,698) (32,32,05,908)Net Increase/(decrease) in cash & cash equivalents (96,38,773) (1,37,24,261)Opening Cash & Cash equivalents 4‚91‚44‚088 6‚28‚68‚349Closing Cash & Cash equivalents 3‚95‚05‚315 4‚91‚44‚088

Cash Flow Statement

B. Transactions carried out with the related parties in the ordinary course of business :

i) Key Management Personnel & their Relatives :

Remuneration for the year 2004-2005 :– Sh. B.D.Agarwal (Chairman & Managing Director) Rs. 31,50,000– Sh. J.P.Agarwal (Vice-Chairman & Jt. Managing Director) Rs. 22,20,000– Sh. Vinay Surya (Chief Operating Officer – Export) Rs. 4,92,000Sitting Fees for the year 2004-2005

Smt. Urmil Agarwal (Director) Rs. 37,500/-

AUDITORS’ REPORTWe have examined the above Consolidated Cash Flow Statement compiled from the consolidated audited financial statements of Surya Roshni Limited for theyear ended March 31,2005, reported by us on 29th June ,2005 and found the same to be drawn in accordance therewith

For SASTRY K. ANANDAM & CO.CHARTERED ACCOUNTANTS

K. ANANDA SASTRYPlace : New Delhi Partner, F.C.ADated : June 29, 2005 Membership No. 9980



Directors

B.B. Chadha

G.S. Gupta

K.K. Narula

M.G. Bakre

Rajendra Arya

Urmil Agrwal



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NOTES

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NOTES

SURYA ROSHNI LIMITED the sun sets, Surya rises. SURYA ROSHNI LIMITED

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