forbes gokak limited reports and accounts of subsidiary companies

ANNUAL REPORT 2006-2007

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CONTENTS1. Aquamall Water Solutions Limited S 2 to S 29

2. Eureka Forbes Limited S 30 to S 57

3. Euro Forbes International Pte Limited S 58 to S 75

4. Forbes Aquamall Limited S 76 to S 94

5. Forbes Campbell Holdings Limited S 95 to S 108

6. Forbes Container Line Pte. Ltd. S 109 to S 123

7. Forbes Doris & Naess Maritime Limited S 124 to S 138

8. Forbes Finance Limited S 139 to S 157

9. Forbes Facility Services Pvt. Limited S 158 to S 172

10. Forbes Services Limited S 173 to S 184

11. Forbes Smart Data Limited S 185 to S 196

12. Forbes Sterling Star Limited S 197 to S 209

13. Forbes Technosys Limited S 210 to S 230

14. Forbes Tinsley Company Limited S 231 to S 242

15. Gokak Textiles Limited S 243 to S 251

16. Latham India Limited S 252 to S 267

17. Next Gen Publishing Limited S 268 to S 286

18. Prohandyman (I) Limited S 287 to S 300

19. Volkart Fleming Shipping & Services Limited S 301 to S 317

20. Warrior (Investment) Limited S 318 to S 331

FORBES GOKAK LIMITEDReports and Accounts of Subsidiary Companies

2006-2007

AQUAMALL WATER SOLUTIONS LIMITED

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( a wholly owned Subsidiary Company of Eurka Forbes Limited) Annual Report and Accounts

for the year ended 31st March, 2007

DIRECTORS:

S.L.Goklaney Chairman

P.J.Reddy

A.V.Suresh

J.N.Ichhaporia

BANKERS:

State Bank Of India

AUDITORS:

Batliboi & Purohit

CORPORATE HEAD OFFICE:

Konkan Co-op Housing Society Ltd,

Konkan Nagar Hall, Ground Floor,

Plot No.123, Lt.P.K.Marg,

Mahim (West), Mumbai 400 016

REGISTERED OFFICE:

No.20, 1st Floor,

Sony Business Complex, Prasanthi Nagar,

Kukatpally,

Hyderabad 500 037


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REPORT OF THE DIRECTORS OF AQUAMALL WATER SOLUTIONS LIMITED

ToThe Shareholders,Gentlemen,

Your Directors submit herewith their Report and the Audited Accounts of the Company for the year ended 31st March, 2007

1 . FINANCIAL RESULTS:

Current Year Previous YearRupees Rupees

PROFIT BEFORE DEPRECIATION 17,80,08,168 17,64,87,780

Less : Depreciation 6,50,62,413 6,01,11,672

PROFIT BEFORE TAX 11,29,45,755 11,63,76,108

Less : Provision for Taxation (including Fringe benefit tax) 1,36,53,471 1,24,04,595

Deferred Tax -

PROFIT AFTER TAX 9,92,92,284 10,39,71,513

Deduct: Income-tax Provision for earlier years 4,79,18710,34,92,326

Add : Profit brought forward from previous Year 20,46,11,254 14,39,24,840

Amount available for appropriations 30,39,03,538 24,74,17,166

APPROPRIATIONS

Interim Dividend 2,00,00,800 200,00,800Tax on Dividend 28,05,113 28,05,112

Transferred to General Reserve 4,00,00,000 2,00,00,000

Balance carried to Balance Sheet 24,10,97,625 20,46,11,254

2. DIVIDEND

Your Company has paid 100% interim dividend amounting toRs.200.00 lakhs (Previous Year – Rs.200.00 lakhs). Keeping inview the investments to be made in Information Technology andin new products development / upgradation as well as for settingup of new unit at Uttranchal , your Directors have decided not torecommend final dividend for the year under review (PreviousYear – Nil).

3. OPERATIONS:

During the year under review, the Company’s sales grew by 10%as compared to the previous year. Due to rising input costsespecially of petroleum products, metals & plastic componentsetc, there is a marginal increase of 1% in the profit beforedepreciation for the year 2006-07. However, the management teamof your Company has been working closely on reducing coststhrough value engineering and price negotiation. These effortshave helped in offsetting the uncontrollable increase in input costsof petroleum products, metals & plastic components etc. TheCompany’s focus on control of costs has also enabled the Companyto substantially maintain it’s profitability.

As was informed the Company has now migrated to a highertechnological level by adopting “SAP” the leading ERP for allit’s operations. This was the first year of the implementation and

the company had faced several operational problems during thecourse of migration. As the overall internal control systems are inplace, the reconciliation of opening balances etc., which are inprogress, are not expected to have any significant impact on theoperations.

The Directors are pleased to inform the Company has nowstabilised it’s operations under the new ERP system and shouldbe able to derive the benefits of the ERP package during thecoming years by improving the response speed to serve it’scustomers better, increase productivity, optimise working capitaland exercise better control on materials consumption and theplanning process.

The Company continues to focus on upgrading technology andhas considerably improved the quality of the products beingmanufactured. The Company is continuing to make efforts to tapthe growth potential of the Export Markets and is making effortsto introduce new products in the global market in line with theevolving customer needs.

Supplying high quality products continues to remain the mainfocus area and the Company is taking several steps in its endeavourtowards achieving zero defects and enhancing customersatisfaction. Constant upgradations are also being made in themanufacturing infrastructure to improve the quality andproductivity.


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To meet the increasing demand for water purifiers as also tostreamline it’s operations, the Company is setting up additionalmanufacturing facilities near Dehradun in Uttranchal . This unitwould fall under a notified area eligible for fiscal incentivesannounced by the Central Government.

4. SUBSIDIARY COMPANY :

Forbes Aquamall Limited, a wholly owned subsidiary of theCompany has reported encouraging results with a turnover of Rs.233 Million and a profit before tax of Rs 23.7 Million. This hasbeen possible with the concerted efforts of the whole team inForbes Aquamall . The unit has focused on delivering qualityproducts which has enabled it to stabilise operations and alsoobtain ISO and BIS certification in a short time.

5. COMMUNITY SERVICES:

Your Company continued to focus on Community Services byproviding the Water Purifiers to the various Charitableorganizations and Old Age Homes; providing scholarships to theneedy students of primary schools; and organising medical healthcheck-up and awareness programmes.

The Company is also focusing on developing a pollution freeatmosphere. To this effect it has taken several steps for reducingthe noise and dust pollution levels within the various factories,which has also enabled the Company to obtain EMS -14000certification for all it’s units. The Company has also introducedwater harvesting systems at it’s various locations.

6. AWARDS:

Your Directors are pleased to report that year after year theCompany’s Bommasandra Manufacturing Facility has receivedthe Best Landscaping Award from the Mysore HorticulturalSociety and this year has been no exception.

7. DIRECTORS:

Mr. P.J.Reddy & Mr. J.N.Ichhaporia, Directors retire by rotationand are eligible for re-appointment.

8. AUDITORS :

You are requested to appoint Auditors for the current year and fixtheir remuneration. The retiring Auditors, M/s. Batliboi & Purohit,Chartered Accountants, offer themselves for re-appointment.

9. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

The information in accordance with the provision of Section217(1)(e) of the Companies Act, 1956 read with Companies(Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, regarding conservation of energy, technologyabsorption and foreign exchange earnings and outgo is given inthe Annexure hereto.

10. PARTICULARS REGARDING EMPLOYEES:

The Company has no employee drawing remuneration ofRs.24,00,000/- per annum and over Rs.2,00,000/- per month ifemployed for a part of the year. Hence, Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particulars ofEmployees) Rules, 1975, does not apply.

11. DIRECTORS’ RESPONSIBILITY STATEMENT:

In terms of Section 217(2AA) of the Companies Act, 1956, asamended, the Board of Directors hereby state that:

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

(ii) the directors had selected such accounting policies andapplied them consistently and made judgements andestimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company atthe end of the financial year and of the profit of the companyfor that period;

(iii) the directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of this Act for safeguarding the assetsof the company and for preventing and detecting fraud andother irregularities;

(iv) that the directors had prepared the annual accounts on a goingconcern basis.

12. APPRECIATION:

The Directors wish to convey their appreciation to allAQUAMALL employees for their individual and collectivecontribution to the Company’s performance. We would also liketo place on record our appreciation to the Trade Unions for theircontinued support in maintaining harmonious industrial relationsthroughout the year.

The Directors also wish to thank the Company’s Bankers for thehelp and co-operation extended during the year and look forwardto their continued support in future.

On behalf of the Board of Directors

PLACE : MUMBAI S.L.GOKLANEYDATED : 30.06.2007 Chairman


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ANNEXURE TO THE DIRECTORS’ REPORT

[Information Under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March, 2005.]

A. CONSERVATION OF ENERGY:

1. Energy Conservation Measures taken :

The manufacturing operations of the Company do not need substantial energy inputs. However, your company has been looking atdifferent ways of reducing the energy consumption and conserving energy in day-to-day operations through conscious efforts.

2. Additional investments and proposals, if any, being implemented for reduction of consumption of energy:

The Company has been putting lot of emphasis in making its operations as much eco-friendly as possible. Towards this end, we haveobtained the ISO 14000 EMS (Environment Management System) certification for all the three Units

3. Impact of the measures at (1) and (2) above for reduction of energy consumption and consequent impact on the cost of production ofgoods:

The impact on the cost of production of goods is marginal but awareness amongst the people has been significant.

B. TECHNOLOGY ABSORPTION:

Research and Development (R & D)

1. Specific areas in which R & D carried out by the Company:

For all the manufacturing units of the Company totally indigenous technology has been used. Several efforts have been made towardsdevelopment and improvement of product quality, incorporating additional features to improve product performance by introductionof sophisticated and advanced engineering techniques and value engineering. Further redesign and upgradation of electronics is inprogress. The Company is also working on different technologies for Water Purification and special accessories to treat specific watercontaminants like iron, fluoride, arsenic etc.

2. Benefits derived as a result of above efforts :

The efforts described in (1) above were directed towards better product quality, cost reduction in specific areas and productivityimprovement. This would also help in expanding the application areas for Water Purifiers.

3. Future Plan of Action :

Efforts would be directed towards adopting the latest technology for water purification and following international best practices formanufacture. The main focus would continue to be on enhancing product quality, optimising costs, enhancing human asset valuethrough training and development and improving overall performance thereby achieving improved operating efficiency and customerdelight.

4. Expenditure on R & D :

The R & D infrastructure of the holding Company, Eureka Forbes limited, is used for developmental activities of the Company. Therehas been significant work done in the areas of electronics, value engineering and development of new models of water purifiers inassociation with the parent Company.

5. Technology absorption, adaptation and innovation:

The Company has not imported any technology during the last five years and has fully absorbed the indigenous technology for themodels currently produced.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Earnings in Foreign Exchange during the year under review were 1,23,90,154/- and the Outgo was Rs. 28,95,31,101/-


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AUDITORS’ REPORT TO THE MEMBERS OF AQUAMALL WATER SOLUTIONS LIMITED

1. We have audited the attached balance sheet of Aquamall Water Solutions Limited (‘the Company’) as at 31st March 2007, and also theprofit and loss account and the cash flow statement of the company for the year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statementsbased on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposesof our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination ofthose books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount;

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

(v) On the basis of written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms ofclause (g) of sub-section (l) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, subject to Note No.16 in respect ofreconciliation of creditors, advance to parties and stock lying with third parties and our comments in clause ii( c) of the annexure tothe report regarding inventory the said accounts read together with notes thereon, give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with the Accounting Principles generally accepted inIndia:

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2007;

(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For BATLIBOI & PUROHITChartered Accountants

ATUL MEHTAPartner

PLACE : MUMBAI, M.No.15935Dated : 30-06-2007


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Annexure to the Auditor’s Report

(Referred to in paragraph 3 of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have been physically verified by the management during the year. As informed, no material discrepancies were noticedon such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) As per the information furnished, the inventories have been physically verified by the management at regular intervals during the year.In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, procedures of physical verification of inventory followedby the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) According to the explanations given to us, the company has experienced difficulties in extracting stock quantities as at the time ofphysical verification consequent to a shift to a new “Enterprise Resource Planning” (ERP) system. As a result, the physical quantitieshave formed the basis of valuation of closing inventories. As stock quantities could not be correctly drawn up as at the time of physicalverification, the differences between physical stocks and book records cannot be determined.

(iii) (a) As per the information furnished, the Company has granted loan, to one company, covered in the register maintained under Section 301of the Companies Act, 1956. The maximum amount involved during the year was Rs. 70,000 and the year end balance of loan grantedto the above company was Nil.

(b) In our opinion and according to the information and explanations given to us, the terms and conditions for such loan is not prima facieprejudicial to the interest of the Company.

(c) The loan granted was re-payable on demand and was interest free.

(d) As per the information furnished, the Company has taken loan from two companies covered in the register maintained under Section 301of the Companies Act, 1956.The maximum amount involved during the year was Rs.3.85 crores and the year end balance of loan takenfrom the above companies was Rs. 1 crore.

(e) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for suchloan are not prima facie prejudicial to the interest of the company.

(f) In respect of loan taken, repayment of the principal amount is stipulated and payment of interest has been regular except in case of onecompany where the loan taken is interest free.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate withthe size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. Duringthe course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are ofthe opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the registermaintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts orarrangements entered in the Register maintained under Section 301 and exceeding the value of Rupees five lakhs in respect of any partyduring the year, have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A, 58AA orany other relevant provisions of the Companies Act, 1956 and rules made there under.

(vii) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(viii)According to the information and explanations given to us the maintenance of cost records has not been prescribed by the Central Governmentunder clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956, for any of the products of the Company.

(ix) (a) According to the information and explanations given to us and based on the books as produced and examined, the company is regular indepositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund,employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory duesapplicable to it.


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(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees state insurance income tax, wealth tax, service tax, sales tax, customs duty and excise duty,cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date theybecame payable.

(c) According to the records of the company, the dues outstanding of income tax, sales tax, excise duty on account of any dispute are asfollows:

Name of the Statute Nature of dues Amount Forum where the Dispute is pending

(Rs. in lakhs)

Sales Tax Act Sales Tax 615.36 Trade Tax Tribunal

1999.60 Stayed by High Court

2.00 Joint Director (ENF)-cum-Deputy Excise andtaxation commissioner.

3.66 Dy. Commissioner of Commercial Taxes – appeals

16.82 Joint Commissioner of Commercial Taxes

Income Tax Act Income Tax 21.52 Appellate Tribunal

Central Excise Act Excise Duty 3706.01 Commissioner of Central Excise (Appeals)

265.99 Central excise sales tax appellate tribunal

87.91 Deputy Commissioner of Central Excise

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediatelypreceding financial year.

(xi) Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the company hasnot defaulted in repayment of dues to banks and the company has not borrowed / taken loans from any financial institutions nor has it issuedany debentures.

(xii) Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/oradvances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisionsof clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banksor financial institutions.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans wereobtained.

(xvii) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flow Statement of thecompany, we report that no funds raised on short term basis have been used for long term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties orcompanies covered in the register maintained under Section 301 of the Companies Act, 1956.


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(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per theinformation and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.


ATUL MEHTA

Partner

PLACE : MUMBAI M.No.15935

DATE : 30.06.2007


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BALANCE SHEET AS AT 31ST MARCH, 2007

As at As at31-03-2007 31-03-2006

Schedule Rupees Rupees Rupees

FUNDS EMPLOYED:

1. SHARE CAPITAL ‘A’ 2,00,00,800 2,00,00,800

2. RESERVES AND SURPLUS ‘B’ 46,55,97,685 38,91,11,314

3. TOTAL SHAREHOLDERS’ FUNDS 48,55,98,485 40,91,12,114

4. LOANS:

a. SECURED LOANS ‘C’ 11,63,26,371 7,99,44,263

b. UNSECURED LOANS ‘D’ 10,000,000 -

12,63,26,371 7,99,44,263

5. TOTAL FUNDS EMPLOYED 61,19,24,856 48,90,56,377

APPLICATION OF FUNDS :

6. FIXED ASSETS ‘E’

Gross Block 57,83,73,032 48,16,91,200


Net Block 32,51,04,872 29,31,33,137

7. INVESTMENTS ‘F’ 1,52,02,398 152,02,398

8. CURRENT ASSETS, LOANS AND ADVANCES ‘G’ 71,30,88,128 54,05,81,795

9. Less : CURRENT LIABILITIES AND

PROVISIONS ‘H’ 45,41,95,734 25,88,92,394 37,31,71,021

10 NET CURRENT ASSETS 25,88,92,394 16,74,10,774

11. MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted) - 5,84,876

12 Deferred Tax Assets /(Liabilities) [Refer Note 15] 12,725,192 1,27,25,192

13 TOTAL ASSETS (NET) 61,19,24,856 48,90,56,377

14 NOTES TO THE ACCOUNTS ‘K’ -

Per our report attachedFor BATLIBOI & PUROHIT S.L. GOKLANEY ChairmanChartered Accountants

P.J. REDDYA.V. SURESH Directors J.N. ICHHAPORIA

ATUL MEHTA S. RAMESH Company SecretaryPartner

Mumbai, Dated : 30 th June, 2007

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Mumbai, Dated : 30 th June, 2007

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007

Year Ended Previous31-03-2007 Year

Schedule Rupees Rupees Rupees1. INCOME :

Sales (Gross) 2,06,43,82,736 1,87,63,04,907Less: Excise Duty 3,61,56,636 7,48,25,925Sales (Net) 2,02,82,26,100 1,80,14,78,982

2. OTHER INCOME ‘I’ 243,22,900 86,06,1032,05,25,49,000 1,81,00,85,085

3. EXPENDITURE :a) Trading , Manufacturing & Other Expenses ‘J’ 1,86,82,28,017 1,62,47,91,722b) Depreciation 6,50,62,413 6,01,11,672c) Interest 63,12,815 88,05,583

1,93,96,03,245 1,69,37,08,9774. PROFIT BEFORE TAX AND EXTRAORDINARY ITEM 11,29,45,755 11,63,76,1085. EXTRAORDINARY ITEM -6. PROFIT BEFORE TAX 11,29,45,755 11,63,76,1087. PROVISION FOR TAXATION

Current Year Tax Provision 125,48,540 97,93,100Less: Deferred Tax [Refer Note 15] - -Fringe benefit tax 1,104,931 26,11,495Previous Year Tax Provision 4,79,187

1,36,53,471 1,28,83,7828. PROFIT AFTER TAX 9,92,92,284 10,34,92,3269. PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR 20,46,11,254 14,39,24,84010. AMOUNT AVAILABLE FOR APPROPRIATIONS 30,39,03,538 24,74,17,16611. APPROPRIATIONS:

Interim Dividend 2,00,00,800 2,00,00,800Tax on Dividend ,28,05,113 28,05,112Transferred to General Reserve 4,00,00,000 2,00,00,000

6,28,05,913 4,28,05,91212. BALANCE CARRIED TO BALANCE SHEET 24,10,97,625 20,46,11,254

Number of Equity Shares 20,00,080 20,00,080Face Value per share 10 10Profit After Tax available to Equity Shareholders 9,92,92,284 10,34,92,326Basic and Diluted Earning Per Share 49.64 51.74

13. NOTES TO THE ACCOUNTS ‘K’

}


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SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2007

SCHEDULE ‘A’ - SHARE CAPITAL

As at As at31-03-2007 31-03-2006

Rupees Rupees

AUTHORISED

50,00,000 (Previous year 50,00,000) Equity Shares of Rs.10/- each 5,00,00,000 5,00,00,000

ISSUED, SUBSCRIBED AND FULLY PAID UP:

20,00,080 (Previous year 20,00,080) Equity Shares of Rs. 10/- each 2,00,00,800 2,00,00,800

Of the above Shares :

1. 2,00,008 Equity Shares were allotted as fully paid up Bonus Sharesby Capitalisation of General Reserve;

2. 20,00,074 Equity Shares are held by the Holding Company Eureka Forbes Limitedand 6 shares are held by individuals jointly with Eureka Forbes Limited.

SCHEDULE ‘B’ - RESERVES AND SURPLUS

As at As at31-03-2007 31-03-2006

Rupees Rupees Rupees

1. CAPITAL RESERVE

Capital Subsidy 30,00,000 30,00,000

2. SHARE PREMIUM ACCOUNT

As per last Balance Sheet 15,00,060 15,00,060

3. GENERAL RESERVE

As per last Balance Sheet 18,00,00,000 16,00,00,000

Transferred from Profit & Loss Account 4,00,00,000 2,00,00,000

22,00,00,000 18,00,00,000

4. PROFIT AND LOSS ACCOUNT 24,10,97,625 20,46,11,254

46,55,97,685 38,91,11,314


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SCHEDULE ‘C’ - SECURED LOANS

As at As at31-03-2007 31-03-2006

Rupees Rupees

Term Loan From Bank 50,000,000 -(Secured by way of equitable mortgage by depositof title deeds in respect of company’s immovable properties)

Cash Credit 6,63,26,371 7,99,44,263(Secured by hypothecation of stock in trade and book debtsFurther, secured by way of equitable mortgage by deposit oftitle deeds in respect of company’s immovable properties)

11,63,26,371 7,99,44,263

SCHEDULE ‘D’ - UNSECURED LOANS

As at31-03-2007 31-03-2006

Rupees Rupees

Intercorporate Deposit 10,000,000.00 -[From Holding Company]

10,000,000.00 -

SCHEDULE ‘E’ - FIXED ASSETS

Amount in Rupees.COST DEPRECIATION NET BLOCK

AS AT ADDITIONS/ DEDUC- AS AT AS AT FOR THE ADJUSTMENT AS AT AS AT AS ATDESCRIPTION OF ASSETS 01-04-2006 EXPENSES TIONS 31-03-2007 01-04-2006 YEAR FOR 31-03-2007 31-03-2007 31-03-2006

CAPITALISED DEDUCTIONS

1 LAND - FREEHOLD 4,008,101 - - 40,08,101 - - - - 4,008,101 40,081012 LAND - LEASEHOLD * 2,783,513 2,362,500 - 51,46,013 2,00,289 29,267 - 2,29,556 49,16,457 2,583,2243 BUILDINGS 46,725,818 33,317,533 - 8,00,43,351 2,83,72,262 47,12,926 - 3,30,85,188 4,69,58,163 18,353,5564 BUILDINGS - LEASED 43,828,923 0 - 4,38,28,923 1,37,74,683 15,02,712 - 1,52,77,395 2,85,51,528 30,054,2405 ELECTRICAL INSTALLATIONS 16,883,501 5,952,805 41,500 2,27,94,806 1,13,07,004 15,99,669 12,661.00 1,28,94,012 99,00,794 5,576,4976 ELECTRICAL INSTALLATIONS

- LEASED 3,87,321 0 - 3,87,321 2,34,221 ,21,296 - 2,55,517 1,31,804 153,1007 COMPUTERS 117,38,844 1,665,286 135,000 1,32,69,130 91,11,695 1426,331 90,811.00 104,47,215 28,21,915 2,627,1498 PLANT AND MACHINERY 4,09,50,461 12,447,156 - 5,33,97,617 2,06,59,492 39,18,256 - 2,45,77,748 2,88,19,870 20,290,9699 PATTERNS AND DIES 6,66,54,810 7,673,959 - 7,43,28,769 3,52,86,122 1,06,32,617 ,, 4,59,18,739 2,84,10,030 31,368,68810 INTANGIBLE ASSETS 18,60,66,800 0 - 18,60,66,800 460,83,664 3,72,13,360 - 8,32,97,024 10,27,69,776 139,983,13611 FURNITURE AND FIXTURES 1,45,08,449 2,387,616 37,250 1,68,58,815 112,11,196 14,28,354 21,304 1,26,18,246 42,40,569 3,297,25312 FURNITURE AND FIXTURES

- LEASED 81,81,554 0 - 81,81,554 58,79,560 4,13,921 - 62,93,481 18,88,073 2,301,99413 OFFICE EQUIPMENTS 36,54,374 2,005,529 - 56,59,903 20,22,640 3,60,086 - 23,82,726 32,77,177 1,631,73414 VEHICLES 76,29,402 432,798 721,376 73,40,824 26,21,872 12,81,718 2,27,540 36,76,050 36,64,774 5,007,53015 LABORATORY EQUIPMENTS 55,38,373 18,698 - 55,57,071 17,93,363 5,21,900 - 23,15,263 32,41,808 3,745,01016 CAPITAL ADVANCE 100,51,767 41,810,593 10,051,767 418,10,593 - - - - 4,18,10,593 10,051,76717 Building under Construction 120,99,189 1,284,916 9,445,278 39,38,827 - - - - 39,38,827 12,099,18918 CAPITAL WORK IN PROGRESS 57,54,614 57,54,614 57,54,614 -T O T A L 48,16,91,200 11,71,14,003 2,04,32,171 57,83,73,032 18,85,58,063 6,50,62,413 3,52,316 25,32,68,160 32,51,04,872 29,31,33,137AS AT 31.03.2006 42,93,64,000 5,43,50,555 20,23,355 48,16,91,200 12,91,52,036 6,01,11,672 7,05,645 18,85,58,063 29,31,33,137

* Rs. 12,83,513 (Previous Year Rs. 12,83,513) represents leasehold land at Bhimtal, which is written-off in equal 99 yearly instalments, beingthe lease period.


S 14

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2007

SCHEDULE ‘F’ - INVESTMENTS

As at As at31-03-2007 31-03-2006

Nos Rupees Rupees Rupees

INVESTMENTS (AT COST)

LONG TERM INVESTMENTS

1. TRADE INVESTMENTS - UNQUOTED

Equity Shares of Subsidiary Company -

Forbes Aquamall Limited

fully paid Equity Shares of Rs.10/- each 5,00,000 50,00,000 50,00,000(5,00,000)

CURRENT INVESTMENTS

2. NON TRADE INVESTMENTS - QUOTED

Equity Shares of -

Bank of Baroda Ltd. 28,823 66,29,290 66,29,290

Fully paid Equity Shares of Rs.10/- each (28,823)

(Sold during the year 2,386 Equity Shares)

Andhra Bank Ltd. 44,135 - 35,66,108 39,72,150

Fully paid Equity Shares of Rs.10/- each (44,135)

Less : Dimiunition in Value of Investment - 4,06,042

1,51,95,398 35,66,108

3. TRADE INVESTMENTS - UNQUOTED

National Savings Certificates (Lodged with Govt. Authorities) 7,000 7,000

- Rs.7,000 (Previous year Rs.7,000)

1,52,02,398 1,52,02,398

QUOTED INVESTMENTS 1,01,95,398 1,01,95,398

UNQUOTED INVESTMENTS 50,07,000 50,07,000

TOTAL 1,52,02,398 1,52,02,398

Market Value Of Quoted Investments 1,14,92,433 1,02,04,045


S 15


SCHEDULE ‘G’ - CURRENT ASSETS, LOANS AND ADVANCES

As at As at31-03-2007 31-03-2006

Rupees Rupees Rupees Rupees

1 CURRENT ASSETS:

[i] Stock-in-trade: *

Raw material and Components 20,83,71,125 16,79,45,672

Packing Material 35,83,127 20,69,698

Stores and spare parts 34,50,487 18,19,826

Work-in-Progress - 99,27,778

Finished Goods 4,04,84,875 5,11,88,125

*(As valued and certified by the Management) 25,58,89,613 23,29,51,099

[ii] Sundry Debtors (Unsecured) (Considered good

unless otherwise stated)

[a] Debts outstanding for a period exceeding

six months 3,865,503.00 20,08,773

[b] Other debts [Due from Holding Company 19,30,37,555 16,59,94,674

Rs. 16,35,87,492/- ;(Previous Year

Rs.14,82,71,824/-)] 19,69,03,058 16,80,03,447

[iii] Cash and Bank Balances:

Cash, cheques on hand and remittance in transit 1,33,688 3,51,463

With Scheduled Banks :

In Current Accounts 81,96,543 93,51,286

In Deposit Accounts - 5,02,004

83,30,231 102,04,753

2 LOANS AND ADVANCES (Unsecured, Considered

Good unless otherwise stated)

[i] Advances recoverable in cash or in kind or forvalue to be receivedConsidered good 10,65,68,773 1,70,19,037

[ii] Advance Payment of tax 11,75,32,892 10,26,61,316

[iii] Other Deposits :

With Government Authorities 255,28,228 75,59,875

With Others 23,35,332 21,82,268

278,63,560 97,42,143

278,63,560 12,94,22,496

71,30,88,128 54,05,81,795


S 16


SCHEDULE ‘H’ - CURRENT LIABILITIES AND PROVISIONS

As at As at31-03-2007 31-03-2006


1 CURRENT LIABILITIES

Sundry Creditors:

Small Scale Industrial Undertakings [Refer Note 16] 8,35,96,294 7,95,59,195

Others 18,73,39,599 11,65,68,038

25,93,41,969 19,61,27,233

Other Current Liabilities 7,35,55,509 6,82,18,246

33,28,97,478 26,43,45,479

2 PROVISIONS :

For Income Tax 10,59,87,905 9,34,39,365

For fringe benefit tax 37,16,426 26,11,495

Proposed Final Dividend - -

Tax on Proposed Final Dividend - -

For Expenses 72,19,699 86,68,145

For Retirement and other Employee Benefits 34,43,205 34,52,244

For Leave Encashment 9,31,021 6,54,293

45,41,95,734 37,31,71,021

SCHEDULE ANNEXED TO AND FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,

2007

SCHEDULE ‘I’ - OTHER INCOME

As at As at31-03-2007 31-03-2006

Rupees Rupees

OTHER INCOME :Interest on Deposits, Loans & Advances (Gross) 3,29,183 2,19,018

[Tax deducted at source Rs.56,493/- ;(Previous year Rs.9,556/-]

Dividend Income 298,588 55,928

Rental Income 26,08,116 25,50,516[(Tax deducted at source Rs 5,85,266/- ;(Previous year Rs.5,72,352-)]

Profit on Sale of Investment (Net) - 1,99,718

Excess / Short Provisions written back / off (net) 146,34,077 4,650

Miscellaneous Income 64,52,937 55,76,273

24,322,900 86,06,103


S 17

SCHEDULE ANNEXED TO AND FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR

ENDED 31ST MARCH, 2007

SCHEDULE ‘J’ - MANUFACTURING, TRADING AND OTHER EXPENSES



1 RAW MATERIAL AND COMPONENTS CONSUMED : 1,48,57,06,423 124,60,16,776

2 COST OF RAW MATERIAL AND COMPONENTS SOLD 12,94,99,072 7,52,06,419

3 EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS ,60,303 8,53,467

4 PAYMENTS TO AND PROVISIONS FOR EMPLOYEES:

Salaries, Wages and Bonus 4,02,34,690 5,08,44,679

Contribution to Provident Fund and other Funds 23,46,921 40,56,710

Contribution to State Insurance 86,082 54,249

Workmen and Staff Welfare Expenses ,41,84,175 1,13,08,660

4,68,51,868 6,62,64,298

5 OPERATIONS AND OTHER EXPENSES :

Packing Material Consumed 4,53,77,821 5,74,76,483

Stores Consumed 2,29,02,199 2,06,06,374

Power, Electricity and Water Charges 42,95,156 36,62,565

Repairs to Building 50,73,332 9,42,210

Repairs to Machinery 8,43,382 9,66,919

Repairs to other Assets 74,69,723 44,35,677

133,86,436 63,44,806

Insurance 34,29,156 37,03,340

Rent 15,82,210 43,48,923

Rates, Taxes and Filing Fees ,36,79,528 89,77,041

Travelling Expenses ,55,35,978 1,80,69,498

Auditors’ Remuneration:

Audit Fees 3,00,000 3,21,893

Tax Audit Fees 12,000 12,000

Management Services - -

Out of Pocket expenses 86,042 44,022

3,98,042 3,77,915


S 18



SCHEDULE ‘J’ - MANUFACTURING, TRADING AND OTHER EXPENSES (Contd..)



Freight and Octroi 3,75,11,568 3,14,78,102

Directors’ Sitting Fees 1,80,000 1,70,000

Diminution in Value of Investments - 4,06,042

Product Development Expenses 48,59,567 19,77,408

Advertisement 46,584 96,295

Bad Debts/Irrecoverable Advances - 1,19,914

Other Establishment Expenses 4,22,95,079 3,36,59,104

18,54,79,323 6,79,06,865

1,84,75,96,989 1,57,98,14,770

6 LOSS ON FIXED ASSETS SOLD/DISCARDED (NET) - 5,75,974

7 ADJUSTMENT FOR STOCKS :

(Other than Raw Material and Components)

(a) Opening Stock :

Finished Goods 5,11,88,125 9,45,64,394

Work-in-Progress 99,27,778 1,09,52,487

6,11,15,903 10,55,16,881

(b) Closing Stock :

Finished Goods 4,04,84,875 5,11,88,125


4,04,84,875 6,11,15,903

2,06,31,028 444,00,978

1,86,82,28,017 1,62,47,91,722


S 19

SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST

MARCH, 2007

SCHEDULE ‘K’- NOTES TO THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting

The Financial Statements are prepared under historical cost convention and on accrual basis.

b) Fixed Assets

Fixed Assets are stated at cost less depreciation. Cost comprises of the purchase price and any attributable cost of bringing the assetsto its working condition for its intended use.

c) Investments

Current investments are valued at lower of cost and quoted / fair value. Long term investments are carried at cost. Provision fordiminution in the value of long term investment is made only if such decline is not temporary in the opinion of the Management.

d) Inventories

Inventories are valued at cost or net realisable value, whichever is lower by using first-in-first-out basis.

e) Sales

Sales are accounted for on despatch / delivery of goods to the customers and are net of sales returns, discounts and Sales Tax, andExcise Duty.

f) Depreciation

Depreciation is provided (except in the case of leasehold land which is being amortised over the period of lease) on the written downvalue method and at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction or at the rates under therelative forward exchange contracts. Transactions not covered by forward exchange contracts and outstanding at the year end aretranslated at the exchange rates prevailing at the year end and the profit / loss so determined; and also the realized exchange gains /losses are recognized in the Profit and Loss Account. In the case of forward exchange contracts, the difference between the forwardrate and the exchange rate at the inception of the forward exchange contract is recognized as income / expense over the life of thecontract.

h) Retirement Benefits

i) The Company has covered its employees under the Group Gratuity Scheme of Life Insurance Corporation of India. The Premiumpaid under this scheme is charged to Profit and Loss Account.

ii) The Company has covered certain categories of its employees under Group Superannuation Scheme of Life Insurance Corporationof India. The Premium paid under this scheme is charged to Profit and Loss Account.

iii) Accrued liability for Leave Encashment payable on retirement of employees is being provided on an actuarial valuation as at theend of the accounting period.

i) Research and Development:

Normally Research and Development costs are charged as an expense of the period in which they are incurred. If Research andDevelopment costs are deferred, they are allocated to the time period over which the product or process is expected to be sold or used.

j) Taxation:

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at theamount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects theimpact of current year timing differences between taxable income and accounting income for the year and reversal of timing differencesof earlier years.

k) Earnings Per Share :

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deductingpreference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period.

l) Brand Valuation:

Expenditure incurred for acquiring brand from which future economic benefit will flow over a period of time, is amortised over theestimated useful life of 5 years.


S 20


MARCH, 2007

SCHEDULE ‘K’- NOTES TO THE ACCOUNTS (Contd.)

2. Estimated amount of contracts remaining to be executed on Capital accounts and not provided for – Rs. 1000lakhs (Previous Year -Rs.145.33 lakhs).

3. Contingent liabilities not provided for on account of:

a. Bank Guarantees issued on behalf of the Company – Rs. 24.70 lakhs (Previous Year Rs. 24.70 lakhs)

b. Disputed Sales Tax demands – Rs. 2637.44 lakhs (Previous Year – Rs.2,637.44 lakhs)

c. Disputed Central Excise demands – Rs. 4059.91 lakhs (Previous Year – Rs.488.73 lakhs)

d. Disputed Income Tax demand – Rs. 21.52 lakhs (Previous Year – Rs.21.52 lakhs)

e. Disputed Civil Suit – Rs. 27.15 lakhs (Previous Year – Rs.27.15)

4. The amount of exchange differences included in the profit and loss account is a net losst of Rs. 9.15 lakhs (Previous Year net profit of –Rs.4.76 lakhs)

2006-07 2005-06Rupees Rupees

6. Value of Imports on CIF basis :

Raw Materials & Components 28,88.02,439 22,64,20,080

Machinery - -

Moulds & Dies - 1,20,70,400

28,88,02,439 23,84,90,480

7. Raw Materials and Components consumed during the year :

For the year ended For the year ended 31.03.2007 31.03.2006

Unit Quantity Value Quantity Value(Rupees) (Rupees)

a) Printed Circuit Boards Nos 551991 27,38,24,071 4,98,143 25,85,92,358

b) Aluminium Kgs 430302 5,92,57,054 3,40,337 3,86,92,313

c) Acrilo Butadyne Styryne (ABS) Kgs 303405 3,56,00,562 7,91,956 7,40,11,487

d) Others — — 111,70,24,736 — 87,47,20,618

148,57,06,423 124,60,16,776

8. Value of imported and indigenous Raw Materials and Components consumed and percentage of each to total consumption :

2006-07 2005-06

Rupees % to Total Rupees % to TotalConsumption Consumption

a) Indigenous 119,10,65,650 80.17 99,44,56,496 79.81

b) Imported 29,46,40,773 19.83 25,15,60,280 20.19

148,57,06,423 100.00 1,24,60,16,776 100.00


S 21


MARCH, 2007

SCHEDULE ‘K’- NOTES TO THE ACCOUNTS (Contd.)


9. Expenditure in Foreign Currency on account of travel,subscription, certification, acquisition of brand etc. 3,72,348 15,35,279

10. Earnings in Foreign Exchange:

Export of Goods on F.O.B. basis 1,23,90,154 85,99,943

11. Particulars in respect of goods manufactured:

Class of goods manufactured Unit Annual Capacity Actual

Installed Production

i) a) Water Purifier (Depolluting) Equipment Nos. 5,72,000 4,76,889 (Water Filter-cum-Purifier) (5,72,000) (4,,60,838)

b) Testing Kit Nos. 2,00,000 4,24,100(2,00,000) (—)

ii) Water Filter Cartridge Nos. 7,00,000 5,54,540(7,00,000) (5,17,062)

iii) Water Cooler-cum-Purifier Nos. 6,500 3,593(6,500) (4,553)

iv) Flexible Food Grade Tube / Pipe Mts. 10,00,000 12,16,532(10,00,000) (11,66,575)

v) Super Filter Nos. 24,000 --(24,000) (344)

vi) Automated Switching Device Nos. 24,000 11,359(24,000) (14,049)

vii) Softner Nos. 24,000 8,185(24,000) (9,883)

viii) Hose Pipe Nos. 1,50,000 1,55,436(1,50,000) (1,79,264)

ix) Mixer-cum-Grinder Nos. 2,000 —(2,000) (—)

x) Value Plus Products Nos. 25,000 —(25,000) (348)

xi) Pump Attachment Nos. 25,000 14,392( — ) ( 15,936)

Figures in brackets pertain to previous year.

Per Industrial Policy, 1991, as amended, no licences are required for the products manufactured by the Company.


S 22


MARCH, 2007

SCHEDULE ‘K’- NOTES TO THE ACCOUNTS (Contd...)

12. a) Particulars of Inventory and Turnover of manufactured products:

Class of goods Unit Opening Stock Closing Stock Sales / Disposals

Nos. Rs. Nos. Rs. Nos. Rs.

i) a) Water Purifier(Depolluting)Equipment(Water Filter- Nos. 17,572 4,32,94,143 13,861 3,67,18,414@ 4,80,600$ 1,80,70,34,529cum-Purifier) (29,751) (7,70,75,768 ) (17,572) (4,32,94,143@) (4,73,017 $) (1,65,66,71,405)

b) Testing Kit Nos. — — 18,000 1,44,000 4,06,100 32,69,460

( — ) ( — ) ( — ) ( — ) (—) (—)

ii) Water Filter Cartridge Nos. 4,411 1,69,593 38,000 14,93,736 75,931*$ 43,79,984

(5,135) (1,88,089) (4,411) (1,69,593) (89,622) (50,11,192)

iii) Water Cooler-cum-Purifier Nos. 315 37,56,281 14 1,39,788 3,894$ 5,59,22,181

(109) (13,74,013) (315) (37,56,281) (4,347 $) (5,67,61,114)

iv) Flexible Food gradeTube / Pipe Mts. 7,041 81,119 41,825 3,49,333 2,93,361# 31,94,304

(400) (4,426) (7,041) (81,119) (2,64,789#) (32,12,817)

v) Super Filter Nos. 1,351 11,16,311 62 — 1289 —

(1,190) (13,38,083) (1,351) (11,16,311) (183) (2,28,750)

vi) Automated Switching Device Nos. 880 3,56,462 200 72,159 12,039 65,00,520

(1,027) (4,91,155) (880) (3,56,462) (14,196) (75,00,334)

vii) Softner Nos. 237 1,98,689 37 21,645 8,385 78,47,120

(774) (6,37,410) (237) (1,98,689) (10,420) (1,19,34,913)

viii) Hose Pipe Nos. 3,600 10,112 — — 1,59,036 1,31,45,720

(1,736) (98,233) (3,600) (10,112) (1,77,400) (2,06,35,168)

ix) Mixer-cum-Grinder Nos. — — — — — —

(—) (—) (—) (—) (—) (—)

x) Value Plus Products Nos. 607 3,76,447 157 — 450 —

(1,001) (9,86,181) (607) (3,76,447) (742) (4,22,715)

xi) Pump Attachment Nos. 2,646 18,28,968 2,620 15,45,800 14,418 1,40,29,270

(401) (3,49,233) (2,646) (18,28,968) (13,691) (1,37,38,410)

xii) Components 14,63,44,263

(8,80,65,786)

T O T A L 5,11,88,125 4,04,84,875 2,06,16,67,351

(8,25,42,591) (5,11,88,125) (1,86,41,82,604)

@ Includes value of Accessories

$ Includes free samples, shortages, breakages etc., and is net of returns.

* Excluding 4,45,020 Nos. (Previous Year 428,164 Nos) captive consumption

# Excluding 8,88,387 Mtrs (Previous Year 895,145 Mts.) captive consumption

Figures in brackets pertains to previous year


S 23

6 Agarwal Fastners Pvt. Ltd.

7 Alok Industries

8 Amar Engineering Enterprises

9 Ambika Engineering Works

10 Anand Enterprises

11 Ananda Technologies

12 Apex Fastners

13 Aqua Products

14 Aravind Filters Pvt Ltd

15 Arora & Co.,

16 Ayyappa Patterns

17 Balaji Engineering Corporation

18 Balaji Enterises

19 Beeline Engineers

20 Belaire Refrigeration Services

21 Bhagirathi Rubber Udyog

22 Bharath Magnetics

23 Bhaskari Aqua Products Pvt Ltd.

24 Bhimtal Furniture Mart

25 Binu Enterprises

26 Blinex Filter-Coat Pvt. Ltd.

27 Blue Tack Office Automation

28 Bombay Packaging Corporation

29 Brahad Elastomers Private Ltd

30 Charminar Press Tools Company

31 Classic Display Systems

32 Creative Industries

33 Datta Sai Industries

34 Dayton Tools

35 Deccan Power Products Pvt. Ltd.

36 Deluxe Industries

37 Divyesh Precision Components

38 Doon Rubber Industries

39 Eagle Hunter Solutions Ltd

40 Electroplast Enterprises

41 Electroplasts Private Limited


MARCH, 2007


b) Particulars of Inventory, Purchase and Turnover of Traded goods:

Class of goods Unit Opening Stock Purchases Closing Stock Sales / Disposals

Nos. Rs. Nos. Rs. Nos. Rs. Nos. Rs.

i) Vaccum Cleaner Nos. — — 1,919 25,29,336 — — 1,919 27,15,385

(3,738) (1,20,21,803) (—) (—) (—) (—) (3,738) (1,21,22,303)

TOTAL — 1.919 25,29,336 — 1,919 27,15,385

(1,20,21,803) (—) (—) (3,738) (1,21,22,303)

Figures in brackets pertains to previous year

13. The Company has a single business segment as per Accounting Standard 17 dealing with “Segment Reporting” issued by the Institute ofChartered Accountants of India.

14. As required under Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, thelist of related parties and their transactions is attached.

15. The Company is entitled to deduction under section 80IC of the Income Tax Act, 1961. The Deferred Tax in respect of of timing differenceswhich originate during the tax holiday period and reverse during the tax holiday period are not recognised as specified in AccountingStandard 22 “Accounting for Taxes on Income”.

16. Total outstanding dues to Small Scale Industries have been determined to the extent such parties have been identified on the basis ofinformation available with the Company. The list of small scale industries to whom the Company owes any sum which is outstanding formore than 30 days as on 31st March, 2007 are :

17. The Company has implemented Enterprise Resource Planning (ERP) System during the year, which require transfer of closing balancesfrom old accounting system to ERP System. The reconciliation of balances brough forward with the opening balances in ERP System is inprogress especially pertaining to Sundry Creditors’ balances and Advances to Parties.Further the Stock/Materials lying with third partiesare subject to reconciliation.

The Consequent impact thereof, on the accounts for the year ended 31st March,2007 cannot be ascertained.

18. Total outstanding dues to Small Scale Industries have been determined to the extent such parties have been identified on the basis ofinformation available with the Company. The list of small scale industries to whom the Company owes any sum which is outstanding formore than 30 days as on 31st March, 2007 are :

S.No. SSI Undertaking Name S.No. SSI Undertaking Name S.No. SSI Undertaking Name


S 24

42 Elegant Rocks Pvt. Ltd.,

43 Excel Engg. Industries

44 Featherlite Collections

45 Fi Tech Chemechtron Pvt Ltd

46 Filtrex International Pvt. Ltd.

47 Filtrex Technologies Pvt Ltd

48 Forbes Aquatech Limited

49 Front Line Electronic Limited

50 Futura Enterprises,

51 Gamon Industries

52 Garg Sanitary & Hardware

53 Global Punch

54 Global Telectronics

55 Golden Technologies

56 Great Eastern Impex P Ltd

57 Guru Enterprises,

58 H M Industrial Corporation

59 Hi-Flex Industries

60 Highgene Technologies Pvt Ltd

61 Hindustan Packers

62 Hyderabad Coils P Ltd.,

68 Industrial Plastics

69 Infa Grafix

70 J.G.Packs

71 Jagapati Industries

72 Jai Ambey Enterprises

73 Jai Vishnu Enterprises

74 Jay Corporation

75 K K Nag Limited

76 Kamala Electro Plating Works

77 Krishna Engg. Ind.

78 Ksk Packaging Solutions Pvt Ltd

79 Kumaon Printing Press

80 Lakshmi Engineering

81 Lakshmi Enterprises

82 Laxami Assembling Works

83 Lotus Polymers Industries,

84 M N Engineering Works

85 M.M. Engineering Works

86 M.R.L.Packers Pvt Ltd

87 Mahalakshmi Enterprises

88 Mambally Connectronix

89 Mangaraj Engg. Industries

90 Marktac Displays

91 Maruthi Plastics

92 Maruti Engineering Company

93 Medina Plastics

94 Merit Enterprises

95 Metal Tubes Corporation

96 Mica Polytech (P) Ltd

97 Micro Plast

98 Micron Industries.

99 Micron Plastics Pvt. Ltd.

100 Mittal Impex P Ltd

101 N K Engineers

102 National Sales Corp.

103 Navadanam’S

104 Neil Polychem

105 New Millenium Printers

106 Newinfosystems

107 Nu - Tek Optics

108 Nypro Forbes Products P Ltd.

109 P R Enterprises

110 P.V.M. Fibretech

111 Pace Enterprises

112 Pam India

113 Paper Pack Industries

114 Polywin Industries

115 Precision Metal Stampings

116 Printech Solutions

117 Prospect Engineering Works

118 Quality Anodisers

119 Quality Electronics

120 R G General Order Supplier

121 R K Carbons

122 R K Packaging

123 Rubber Products

124 S A S Enterprises

130 S.N.Rubber Works

131 Sai Madhuri Enterprises

132 Sankhala Industries

133 Sankhla Polymers

134 Sant Engineering Industries

135 Saroj Pack Aids

136 Seagull Graphics

137 Sgp Industries

138 Shakthi Coms

139 Shiv Shakti Packers

140 Shiva Sai Fabricators

141 Siddhartha Industries

142 Siddhartha Printing Press

143 Sjs Enterprises

144 Skycab Sales Agencies

145 Solid Electronics

146 Sonic Engineers

147 Source Marketing

148 Span Plastic (P) Ltd.,

149 Spark Klean Pvt. Ltd.,

150 Spectra Sales Corporation

151 Sree Vinayaka Electricals

152 Sri Advance Polymers

153 Sri Ganesh Industries

154 Sri Kollapuri Amma Enterprises

155 Sri Lakshmi Narayana Engg. Industries

156 Sri Ragavendra Industries,

157 Sri Vijaya Scientifics

158 Srinivasa Packaging

159 Stiff Packaging P Ltd.,

160 Stikvac Appliances (P) Ltd.,

161 Stypak (P) Ltd.,

162 Sujana Associates

163 Sumayya Industries

164 Super Bright Engineering Co.

165 Supreme Agencies

166 Tayal Brothers

167 Techno Coats

168 Techno Perfecto Engg. Co.,

169 Teknic Electromeconics Pvt Ltd

170 Terminal Technologies (I) P Ltd.,

171 Thejus Enterprises

172 Thermo Packing Industries P Ltd.

173 Trimurti Polychem Pvt. Ltd.

174 Triple ‘Sss’ Rubbers & Plastics

175 U S Engg. Pvt. Ltd.

176 Vandana Coatings

177 Varna

178 Ved Electrical Store

179 Veerajanaki & Co

180 Venkateswara Optics

181 Vijay Plastic Industries

182 Vijetha Polytek Private Limited

183 Ysl Electronics

S.No. SSI Undertaking Name S.No. SSI Undertaking Name S.No. SSI Undertaking Name

CHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST

MARCH, 2007



S 25


MARCH, 2007


The Company has not received the required information from suppliers regarding their status under the Micro, Small and Medium EnterprisesDevelopment Act,2006. Hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/payable as requiredunder the said Act have not been made.

16. Additional information as required under Part IV of Schedule VI of Companies Act, 1956.Balance Sheet Abstract and Company’s General Business Profile.

I. Registration DetailsRegistration No. 2 8 5 1 State Code 0 1

Balance Sheet Date 3 1 0 3 2 0 0 7Date Month Year

II. Capital raised during the year (Amounts in Rs. Thousands)Public Issue Rights Issue

N I L N I LBonus Issue Private Placement

N I L N I LIII. Position of mobilization and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets 1 0 6 5 1 1 4 1 0 6 5 1 1 4

Source of Funds Paid-up Capital Reserves & Surplus

2 0 0 0 0 4 6 5 5 9 8Secured Loans Unsecured Loans

1 1 6 3 2 6 1 0 0 0 0Application of Funds Net Fixed Assets Investments

3 2 5 1 0 5 1 5 2 0 2Net Current Assets Deferred Tax Assets / (Liability)

2 5 8 8 9 2 1 2 7 2 5Misc. Expenditure Accumulated Losses

N I L N I LIV. Performance of Company (Amount in Rs. Thousands)

Net Turnover (Sales & Other Income) Total Expenditure2 0 5 2 5 4 9 1 9 3 9 6 0 3

+ - Profit Before Tax + - Profit After Tax � � 9 9 2 9 2

Earnings Per Share in Rs. Dividend Rate %4 9 . 6 4 1 0 0

V. Generic Names of Three Principal Products / Services of Company (As per monetary terms)

Item Code No. (ITC Code) 8 4 2 1 2 1 0 0

Product Description W A T E R P U R I F I E R

( D E P O L L U T I N G )

E Q U I P M E N T

( W A T E R F I L T E R -

C U M - P U R I F I E R )

Item Code No. (ITC Code) 8 4 2 1 2 1 0 9Product Description W A T E R F I L T E R

C A R T R I D G E

Item Code No. (ITC Code) 8 5 0 9 9 0 0 0Product Description H O S E P I P E

17. Previous year’s figures have been regrouped or rearranged wherever necessary.

1 1 2 9 4 6


S 26

Related Party Disclosure – As specified by Accounting Standard 18

I) Name of related Party and nature of relationship where control exists are as under:

A. Enterprises having more than one half of Voting Powers:

Eureka Forbes Limited

Forbes Gokak Limited

Shapoorji Pallonji & Co. Ltd.

Sterling Investment Corp. Pvt. Ltd

B. Enterprises that are controlled – (Subsidiary Company) –


C. Enterprises that are under common control:

Forbes Doris & Naess Maritime Ltd

Forbes Finance Ltd

Forbes Sterling Star Ltd.

Pro Handyman India Limited

Next Gen Publishing Ltd.

Volkart Fleming Shipping & Services Limited

D. Associates

Forbes Aquatech Ltd.

Euro Forbes International PTE Ltd

Forbes Facility Services(P) Ltd

II) Transactions with Related Parties:

Nature of Transactions Related Party

Referred to Referred to Referred to Referred to

in A above in B above in C above in D above

1 Purchases

Goods and Materials 92,29,653 1,43,936Fixed Assets 14,14,215

2 Sales Goods and Materials 2,04,12,56,207 95,38,832 2,20,403 6,07,363

3 Expenses

Rent and other service charges 12,76,558 56,151 —

Other Expenses 1,01,58,455 — —

Interest 23,78,493 — —

4 Income

Rent and other service charges 40,48,145 21,31,869 — 30,87,872

5 Finance

Loans and Advances Given 70,000

Loans and Advances Taken 6,00,00,000 1,40,00,000

Repayment of Advances Given 70,000

Repayment of Advances Taken 5,00,00,000 1,40,00,000

6 Dividend paid 2,00,00,800 — —

7 Outstanding

Receivables 17,17,78,797 60,91,561 46,74,326ICDs Given —Payable 11,41,915 — 1,25,646ICDs Taken 1,00,00,000 — —Interest — — —Other Deposits 36,42,120 — —


S 27

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007

2006-2007 2005-2006(Rupees) (Rupees)

PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS 11,29,45,755 11,63,76,108Adjusted for

Depreciation 6,50,62,413 60,11,16,72

Profit on Sale of Investments - (1,99,718)

Dividend Income (298,588) (55,928)

Interest Income (3,29,183) (2,19,017)

Loss on Fixed Assets sold / Discarded - 5,75,974

Loss in Value of Investment - 4,06,042

Interest Expenditure 63,12,815 88,05,583

7,07,47,458 6,94,24,60818,36,93,213 18,58,00,716

OPERATING PROFIT BEFORE WORKING CAPITAL

CHANGES AND OTHER ADJUSTMENTS

Changes and other adjustments

Trade and Other Receivables (13,65,70,765) (4,13,71,714)

Inventories (2,29,38,514) (1,95,73,648)

Trade Payables and Others 6,71,03,553 8,35,67,729

Leave Encashment Provision 267,689 54,509

Miscellaneous Expenses 5,84,876 (2,88,289)

(9,15,53,162) 2,23,88,587CASH GENERATED FROM OPERATIONS 9,21,40,051 20,81,89,303Direct Taxes Paid (1,48,71,576) (1,38,05,124)

(1,48,71,576) (1,38,05,124)( a) NET CASH FROM OPERATING ACTIVITIES 7,72,68,475 19,43,84,179

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (including adjustments

on account of capital (9,76,16,958) (5,37,11,392)

work-in-progress and capital advances)

Sale of Fixed Assets ( net of assets written off) 5,82,810 1,02,573

Purchase of Investments - (2,29,74,273)

Sale of Investments - 1,25,72,551

Interest Received 3,29,183 2,19,017

Dividends 2,98,588 55,928

( b) NET CASH FROM / (USED IN) INVESTING ACTIVITIES (9,64,06,377) (6,37,35,596)

Decrease/Increase in Intercorporate Deposit 1,00,00,000 (15,29,25,246)

Decrease / Increase in cash credit & Demand loan 3,63,82,108 5,52,47,782

Interest paid (63,12,815) (88,05,583)

( c) Dividend paid (including Corporate Dividend Tax) (2,28,05,913) (2,28,05,912)

( d) NET CASH FROM / (USED IN) FINANCING ACTIVITIES 1,72,63,380 (12,92,88,959)

NET DECREASE / INCREASE IN CASH AND

CASH AND CASH EQUIVALENTS (a)+(b)+(c) (18,74,522) 43,59,624


S 28


2006-2007 2005-2006(Rupees) (Rupees)

Cash and Cash Equivalent As At

THE COMMENCEMENT OF THE YEAR, COMPRISING:

Cash, Cheques on hand & Remittances in transit 3,51,463 2,88,477

Balance with scheduled banks on current

accounts and deposit accounts 98,53,290 85,56,652

102,04,753 88,45,129

CASH AND CASH EQUIVALENTS AS AT

THE END OF THE YEAR, COMPRISING:

Cash, Cheques on hand & remittances in transit 1,33,688 3,51,463

Balances with scheduled banks on current

accounts and deposit accounts 81,96,543 98,53,290

NET DECREASE /INCREASE AS DISCLOSED ABOVE 83,30,231 1,02,04,753

(18,74,522) 13,59,624

Note: Figures for the previous year have been regrouped wherever necessary.




Mumbai, Dated : 30.06.2007

}


S 29

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO

SUBSIDIARY COMPANY

Name of the subsidiary Company Forbes Aquamall Limited

The financial year of the subsidiary company ended on 31st March,2007

(a) Number of shares in the subsidiary Company held by

Aquamall Water Solutions Limited at the above date

(i) Fully paid 500,000

(ii) Partly paid Nil

Percentage holding 100%

(b) The net aggregate amount of profits of the subsidiary company for

the financial year so far as it concerns the members of Aquamall water

Solutions Limited which has not been dealt with in the accounts of Aquamall

Water solutions Limited upto 31st March, 2007 are as follows

For the year Rs.2,10,32,340.00

For the previous years Rs.2,17,49,995.00

(c) The net aggregate amount of profits of the subsidiary company which

has been dealt with in Aquamall water Solutions Limited accounts upto

31st March, 2007 being the dividends received are as under

For the year Nil

For the previous years Nil





}

EUREKA FORBES LIMITED

S 30

(a wholly owned subsidiary Company) Annual Report and Accountsfor the year ended 31st March, 2007

DIRECTORS :

Shapoor P. Mistry Chairman

K.C.Mehra Deputy Vice Chairman

S.L.Goklaney Vice Chairman & Managing Director

D.E.Udwadia

J.C.Chopra

N.D.Khurody

C.G.Shah

PRINCIPAL BANKERS :

State Bank of India

The Bank of Nova Scotia

BNP Paribas

UTI Bank Ltd.

SOLICITORS AND ADVOCATES :

Udwadia & Udeshi

AUDITORS :

Batliboi & Purohit

CORPORATE HEAD OFFICE :

Konkan Co-op. Hsg. Soc. Ltd.,

Konkan Nagar Hall, Ground Floor,

Plot No.123, Lt.P.K.Marg,

Mahim (West), Mumbai – 400 016

REGISTERED OFFICE :

7, Chakraberia Road (South),

Kolkata – 700 025


S 31

DIRECTORS’ REPORT

To,The Members,

The Directors are pleased to submit their Report and the Audited Accounts of the Company for the year ended 31st March, 2007.

1. FINANCIAL RESULTS:

Current Year Previous Year

Rupees Rupees

Sales and Other Income 7,39,98,67,154 6,33,57,03,128

Profit before Depreciation 47,95,68,457 42,37,45,077


Profit before Tax 38,95,40,690 33,95,84,444

Less : Provision for Current, Fringe Benefit and Deferred Tax 14,04,03,806 11,98,48,588

Profit After Tax 24,91,36,884 21,97,35,856

Add : Balance brought forward from Previous year 12,89,86,712 10,47,50,156

Amount available for appropriation 37,81,23,596 32,44,86,012

APPROPRIATIONS :

Interim Dividend 6,39,00,000 8,52,00,000

Proposed Final Dividend 2,13,00,000 NIL

Tax on Dividend 1,25,81,910 1,19,49,300



of companies abroad. The job markets continue to improve withthe retail segment booming in addition to the call centres.

With this backdrop, your Company has also excelled in its SilverJubilee year, reaching a turnover of Rs. 740 Crores, a growth of17% over previous year. The Profit before Tax has increased fromRs.33.96 Crores to Rs. 38.95 Crores, a growth of 14.7 % ascompared to 5.7 % in the previous year.

Your Company continues to win international and nationalrecognition. During the year, your Company once again washonoured with the MAKE (Most Admired Knowledge Enterprise)India 2006 award. Your Company was also one of the finalist ofGlobal MAKE award 2006. ‘Aquaguard’ and ‘Euroclean’, the twowell-known products of the Company have been recognized asConsumer Superbrands. The SMART Living award, instituted bythe Times of India Group has bestowed the Company’s product‘Aquaguard’ as the most preferred brand among Water Purifiers.The Company’s efforts in Customer service and satisfaction got itsdue recognition when it took the Best Franchisor Award 2006 forConsumer Durable by Franchisee India. Your Company was alsohonoured with the Golden Peacock Innovation award (Institute of

2. DIVIDEND:

In March 2007, your Company paid an interim dividend of Rs.15/-per share (150% on face value of Rs.10/- each) amounting to Rs.6.39crores. In view of the Company’s creditable performance, the directorsare pleased to recommend for the approval of the members a finaldividend of Rs 5/- per share on 42.60 lakhs shares of Rs. 10/- eachfor the financial year 2006-07 amounting to Rs.2.13 crores towardsdividend and Rs. 0.36 crores towards dividend tax resulting in totaloutflow of Rs. 2.49 crores bringing the total dividend to Rs. 8.52crores (previous year Rs.20/- per share i.e. 200% on face value ofRs.10/- per share amounting to Rs.8.52 crores).

3. TRANSFER TO RESERVES:

The Company proposed to transfer Rs.10 crores to the GeneralReserve out of the amount available for appropriations and anamount of Rs. 18.03 crores is proposed to be retained in the Profitand Loss Account.

4. OPERATIONS:

The year 2006-07 has been a robust year for the Indian Economy.A lot of foreign investors have shown great interest in investing inIndia and Indian business houses have been on an acquisition spree


S 32

Directors) and most importantly, being cited in the world’s mostrenowned marketing text – the legendary Philip Kotler’s MarketingManagement book.

Your Company maintained its leadership position by continuing todevelop the 3 Ps – Purpose, People and Processes. It consistentlystrives to strengthen its leadership position in the water purificationcategory by developing top-of-the-line water purifiers with the mostmodern technology, some of these products will be launched duringthe year 2007-08. The Company had launched an affordable resintechnology based brand called ‘Aquasure’ for the masses of Indiawhose households have either no running water or electricity or both.Your Company is proud to inform you that ‘Aquasure’ has receivedmass acceptance amongst Indian households and is now poised togrow at a rate of over 50% in the ensuing year. In the vacuum cleanercategory also, the Company has successfully launched new modelsfor the discerning Indian customers. The Company, therefore, takesinto its stride the threat of the competition by constantlyendeavouring to innovate and seek new opportunities and newmarket segments with a focus on future trends and behaviour.

Your Company follows a prudent policy of maintaining adequateliquidity to cover any unforeseen eventualities on account ofdisruptive market forces. During the year, your Company hascovered from its internal cash accruals - enhanced working capitalrequirements, capital expenditure in Information Technology,investment in international operations, investment in subsidiariesand also dividend payout. The Company is all set in the ensuingyear to reap the benefits of MySAP, the ambitious project which itundertook in April 2005 to bring about revolutionary change in theoperations of the Company leading to high level of Customer focusand customer satisfaction as well as customer retention andacquiring lost customers. Your Company has also embarked on aCost Optimisation drive believing that the fixed costs need to beconverted to variable costs to counter the dynamic market forcesin a competitive business environment.

Your Company has always been in the forefront in carrying out itsCorporate Social Responsibility. The Company’s Institute ofEnvironment (EFIE) is always working towards various socialcauses. This is done through air pollution monitoring, rainwaterharvesting consultancy, running awareness programmes amongschool children, and conducting the Euro Enviro Quiz, India’s firstand only national environment quiz for school children that nowcovers 160 schools in 14 cities and 1.2 lakh participants.

Euro Parivaar Enviro Park and Aaji Aajoba Park for senior citizensand handicapped children, as well as other social activities continueto be sponsored by your Company to benefit the less privilegedand society at large.

Your Directors are confident that, barring unforeseen circumstances,the Company’s performance will reflect in its theme for the year to“Reinvent the Past, Create the Future”.

5. DIRECTORATE :

Mr. N.D. Khurody and Mr. C.G. Shah retire by rotation and beingeligible offer themselves for reappointment.

6. SUBSIDIARY COMPANIES :

During the year under review, the Company’s wholly ownedsubsidiary, Aquamall Water Solutions Ltd., had a sales growth of12% as compared to previous year but due to rising input costs, ithas a marginal increase of 1% in profit before depreciation for theyear 2006-07. The management team of Aquamall is, however,seized of this issue and is working closely on reducing costs throughvalue engineering, price negotiation and cost optimization driveduring the ensuing year.

Aquamall has now stabilized its operations under the new ERPsystem and should be able to drive the benefits of the ERP packageduring the coming years by improving the response speed to serveits customers better, increase productivity, optimize working capitalon materials consumption and the planning process.

Aquamall continues to focus on upgrading technology, supply highquality products by constant upgradations. It is also setting up anadditional manufacturing facility near Dehradun in Uttranchal tomeet the ever increasing demand for water purifiers.

During the year Aquamall’s wholly owned subsidiary, ForbesAquamall Ltd. (FAQL) registered a growth of 15.5% in sales. Theprices of all major inputs rose sharply during the year. However,inspite of the unprecedented increase in input costs, due to thevarious cost control initiatives implemented by FAQL, FAQL hasbeen able to maintain its profitability. The Directors are confidentthat, barring unforeseen circumstances, the increase in turnover inthe ensuing year shall enable FAQL to improve its profitability.

During the year under review, the Company’s subsidiary, ForbesAbans Cleaning Solutions Pvt.Ltd. changed its name to ForbesFacility Services Pvt.Ltd. (FFSPL) with effect from 22nd February2007 pursuant to a Dissolution Agreement dated 21st June, 2006with the joint venture partners, Abans Ltd. and Stock Traders IndiaPvt.Ltd. (STPL). Accordingly, STPL sold its shareholding toEureka Forbes Ltd. in the month of July 2006, which enhancesthe shareholding of Eureka Forbes Ltd. to 70%. The 30%shareholding held by Abans Ltd. has, however, not beentransferred to Eureka Forbes Ltd. as yet, which the Company ispursuing with Abans Ltd.

The year gone by has seen FFSPL being recognized in the segmentsof hotels and manufacturing setups. It is setting benchmarks inthe field of mechanized housekeeping and providing integratedfacility services. During the year under review, FFSPL has madea modest profit before tax of Rs.12.16 lakhs on gross income ofRs.620.52 lakhs.

Your Company’s wholly owned subsidiary, Euro ForbesInternational Pte.Ltd., (EFIPL), Singapore, has shown improvedperformance for the financial year under review with a turnover of


S 33

Rs. 15.65 crores and a profit before tax of Rs. 1.88 crores. Duringthe year, EFIPL has set up its operations in other ASEAN countriesof Thailand, Malaysia and Vietnam. Your Company has advancedworking capital loans of S$14.13 mn (Rs.40.45 crores) to fund theoperations in these countries with liberal credit period in order toestablish business in these countries. In the opinion of themanagement, the interest bearing loans and advances are good andfully recoverable after the initial gestation period of three years.

From 1st January 2007, Subject to completion of formalities andnecessary approvals, EFIPL will become a part of the joint venturecompany, Forbes Lux Group AG, which is a 50:50 joint venturepartnership with Lux International AG, Switzerland. Forbes LuxGroup AG was incorporated in January 2006 as per Swiss Law inZug, Switzerland. This Company caters to the markets of EastEurope, South Africa and Russia. Your Directors are confident thatin the years to come this Company combining with EFIPL willleverage on each other’s strengths to capture the overseas marketsin its own field of operations.

During the year under review, your Company formed a subsidiarycompany with 70% shareholding in the name of Pro HandymanIndia Ltd., registered and incorporated in Bangalore on 8thNovember 2006 with certificate for Commencement of Businessfrom 15th December 2006. As the company’s name itself suggests,Pro Handyman India Ltd. has been formed with the object ofproviding any and all types of service, including servicing ofelectrical and electronic and/or consumer appliances and/or all kindsof allied services such as housekeeping, facility management andthe like. It will also cater to any kind of concierge services for anykind of customer, whether households, societies, commercialestablishments in India or overseas.

Initial response from the customers has been highly encouragingin the geographical territory of Indira nagar, Bangalore. ThisCompany’s immediate plan is to expand its business model to sevenmajor cities and to establish localised satellite offices for sales andservice within the operating town. Barring unforeseencircumstances, this company’s next year’s performance shouldstrengthen the confidence, the Directors have reposed in it.

7. INSURANCE :

Assets of the Company have been adequately insured against usualrisks.

8. AUDITORS AND AUDIT REPORT :

You are requested to appoint Auditors for the current year, and tofix remuneration. The retiring auditors, M/s. Batliboi & Purohitoffer themselves for re-appointment.

Reference is made to Clause No.(ii)(c) of Annexure to the Auditor’sReport which is self-explanatory. However, it should be noted thatthe non-availability of book stock to compare with physical stockwill not have any impact on the financial results of the Companyfor the year under review, since the physical stocks are considered

for valuation of stocks as at 31st March 2007.

9. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE :

The information in accordance with the provisions of Section217(1)(e) of the Companies Act, 1956 read with Companies(Disclosure of Particulars in the Report of the Board of Directors)Rules, 1988, regarding conservation of energy, technologyabsorption, and foreign exchange earnings and outgo is given inthe Annexure hereto.

10. PARTICULARS REGARDING EMPLOYEES :

A statement setting out the details of remuneration paid to theemployees as required under Section 217 (2A) of the CompaniesAct, 1956, read with the Companies (Particulars of Employees)Rules, 1975 is attached hereto and forms part of this Report.

11. DIRECTORS’ RESPONSIBILITY STATEMENT :

Pursuant to Section 217(AA) of the Companies Act, 1956, theDirectors, based on the representations received from the OperatingManagement, confirm –

(i) that in the preparation of the annual accounts, the applicableaccounting standards have been followed and there are nomaterial departures;

(ii) that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and of the profit of the company for that period;

(iii) that they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of thisAct, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

(iv) that they have prepared the annual accounts on a goingconcern basis.

12. APPRECIATION :

Employee relations continues to be harmonious and cordial. TheBoard of Directors wishes to place on record its sincere appreciationof the devoted services made by employees at all levels in ensuringthe high levels of performance and growth that your Company hasachieved during the year.

Your Board would like to place on record its sincere appreciationfor the assistance given by the Company’s Bankers andacknowledge that their continued support has been a source ofconsiderable strength.

On behalf of the Board of Directors

SHAPOOR P. MISTRY

ChairmanMumbai, Dated : 2nd July, 2007


S 34

ANNEXURE TO DIRECTORS’ REPORT

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board ofDirectors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March, 2007

A. CONSERVATION OF ENERGY :

(a) Energy Conservation Measures taken : Nil

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy :

None at present.

B. TECHNOLOGY ABSORPTION :

Efforts made in technology absorption in Form ‘B’.

Form ‘B’


1. Specific areas in which R & D carried out by the Company :

The company’s R&D Centre continues to be recognized by the Department of Science and Industrial Research, Ministry of Scienceand Technology, Government of India. The Water Laboratory at Bangalore is recognized by Karnataka State Pollution Control Boardand World Water Quality Association – USA and accredited by National Accreditation Board for Testing and Calibrating Laboratories,India. The R&D Centre has been in close touch with the customers, manufacturers and field sales force to evaluate the customer’sneeds and product performance. The main focus has been on improving and upgrading the product offering by accelerating productdevelopment.

The R&D has helped maintain the market leadership position through absorption of latest technology in the areas of floor careproducts, water purifiers and domestic appliances.

The R&D Centre has contributed significantly towards value engineering and cost control measures, at the same time maintainingvalue – benefit equation for the customers. The R&D team also provides training to the field sales and service staff besides providingconstant updates on technology and new products to the field and Marketing division.

2. Benefits derived as a result of the above efforts :

R&D through its efforts has enabled the manufacturer to introduce on its own water purifiers at the lower end of the market segment.R&D has also recommended improved electronics, which is more stable and also automatically communicates to the service callcenter if there is a service requirement.

R&D has, moreover, contributed to improve upon products and accessories like modern UV water purifiers, new media to addresspesticide issues, membrane technology based purifiers, etc. to meet the different requirements due to varying water condition in themarket place.

R&D has also tested and suggested improvements in imported products like Reverse Osmosis, 3-in-1 Vacuum Cleaners, Five StageWater Purifiers to suit Indian conditions.

Company introduced Ecofriendly household cleaning Liquids for sale through service personnel.


There are a number of products, process improvements and accessories, which are under development in the field of water purifiers,vacuum cleaners, air purifiers, kitchen appliances and eco-friendly chemical cleaning solutions. These products would be at variousprice points to cater to different market segments. R&D will involve in joint development of products with Foreign Business associatesfor International requirements.

R&D would continue to work on value engineering, cost optimization and re-engineering to improve the overall operating efficiency.

R&D works closely with Business Development to introduce new products from the foreign business associates and also for importsubstitution.


S 35


a. Capital - Rs. 0.39 Lakhs

b. Recurring - Rs. 216.72 Lakhs

c. Total - Rs. 217.11 Lakhs

d. Total R&D Expenditure

as percentage of total turnover - 0.30%

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION :

1. Efforts, in brief, made towards technology absorption, adaptation and innovation.

In line with the rapidly changing technological environment, the R & D staff are provided with the requisite means to keep abreast of thechanges. They are also encouraged to attend national and international technical symposiums and trade fairs to understand the latest technologyand adapt them to Indian conditions. Worked with MS Ramaiah School of advanced Studies to develop advanced CAD / CAE designs. Thetechnology is implemented in the product seamlessly.

2. Benefits derived, as a result of the above: product improvement, cost reduction, product development, import substitution, etc.

The results derived from the above efforts have contributed to significant improvement in product quality and performance.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO :

Earnings in foreign exchange during the year under review were Rs.8,53,62,856/- and the outgo Rs. 49,26,27,498/-.

STATEMENT UNDER SECTION 217(2-A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES AND

FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2007

SR. NAME, AGE AND QUALIFICATIONS DESIGNATION/NATURE OF DUTIES, GROSS PARTICULARS OF

NO. COMMENCEMENT OF EMPLOYMENT REMUNERATION LAST EMPLOYMENT

AND EXPERIENCE (YEARS) RS.

(A) Particulars of employees employed throughout the financial year and who are in receipt of remuneration of not less

than Rs.24,00,000/- per annum :

1. MR. GANGULY R.K. (51) Vice President - Region 3 31,46,129 Accounts Assistant

B.Com, ICWAI 01-03-1981 (30) Deepika Electronics & Engg. Pvt. Ltd

2. MR. GOKLANEY S.L. (60) Managing Director 1,59,38,915 General Sales Manager -

B.Sc 02-03-1987 (38) Johnson & Johnson Ltd.

3. MR. ICHHAPORIA J. N. (59) Sr.Vice President - Finance 44,94,421 Manager Accounts-

B.Com., F.C.A 11-02-1994 (32) Mafatlal Dyes & Chemicals Ltd.

4. MR. PALEKAR S. K. (56) Sr.Vice President - Marketting 36,13,973 Vice President - Marketting,

M.Sc., MMS 27-07-1998 (32) Sales and Services.

MIRC Electronics Ltd.

5. MR. RAMAN P V K (56) Vice President - Customer Service & SSD 24,89,338 Assistant Manager

B.Com 02-07-1990 (30) Sundaram Motors, Bangalore

6. MR. SURESH A V (51) Sr.Vice President - Operations 48,33,120 Materials Manager -

B.E.( Hons). PGDM 08-12-1988 (27) Facit Asia Ltd.

7. MR. WADHWA LALIT(64) Vice President - Region 1 24,91,910 General Manager

FSC - Textile Engineers 01-07-1997 (41) Show Wallace Ltd, Delhi


S 36

(B) Particualrs of employees employed for part of the year who were in receipt of remuneration at the rate not less

than Rs. 2,00,000/- per month :

1. MR. KARMALI ASLAM (42) Vice President - Dealer Sales 24,76,417 National Sales Head, Direct Indent

B.Sc , MBA 08-05-2006 (16) Phillips India Ltd

2. MR. SHROFF MARZIN (43) Sr.Vice President-Strategy & Business Development 30,04,012 President

B.Com, MBA , MCIM (UK ) 03-07-2006 (16) Suashish Diamond Ltd.

3. MR. TANDON RAHUL (52) Sr.Vice President - Business Development & strategy planning 10,98,627 Executive Director

B.Com, MBA (IIM Ahmedabad) 01.12.2005 (28) Triumph Distillers & Vinters Pvt. Ltd

NOTES:

1. Nature of employment in all cases is contractual.

2. Remuneration as shown above include Salary, House Rent Allowance, Other Allowances,Commission,Company’s Contribution

to Provident Fund, Superannuation Fund and Taxable Perquisites in respect of use of Company’s Furniture, Leave Travel

Conession, Medical Reimbursement , etc.as applicable.

3. Other terms and conditions applicable as per Company’s Rules/Schemes :-

(i) Company’s contribution under Gratuity Scheme.

(ii) Medical Insurance or reimbursement of medical expenses.

(iii) Personal Accident Insurance.

4. None of the above employees are related to any of the Directors of the Company.

5. There was no employee employed either throughout the financial year or part thereof who was in receipt of remuneration which in

the aggregate or as the case may be at a rate which in the aggregate was in excess of that drawn by the Managing Director and

who held by himself or alongwith his spouse or dependent children two percent of the Equity Shares of the Company.


S 37

AUDITORS’ REPORT TO THE MEMBERS OF EUREKA FORBES LIMITED

(1) We have audited the attached balance sheet of Eureka Forbes Limited as at 31st March 2007, the profit and loss account and the cash flowstatement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audit.

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

(3) As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in Paragraphs 4and 5 of the said Order.

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

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

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

(c) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the said books ofaccount.

(d) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(e) On the basis of written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms ofclause (g) of sub-section (l) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, subject to our comments in clause ii(c)of the annexure to this report in respect of inventory the said accounts read together with significant accounting policies and notesthereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view, inconformity with the Accounting Principles generally accepted in India:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2007;

(ii) in the case of the profit and loss Account, of the profit for the year ended on that date; and

(iii) in the case of the cash flow statement of the cash flows for the year ended on that date.


ATUL MEHTAPartner

M.No. 15935Mumbai Dated : 2nd July, 2007


S 38

ANNEXURE TO THE AUDITOR’S REPORT(REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The Management has physically verified the Company’s fixed assets at regular intervals during the year, which in our opinion isreasonable having regard to the size of the company and nature of its fixed assets. The discrepancies noticed on verification were notmaterial and have been properly dealt with in the books of accounts.

c) During the year, Company has not disposed of any substantial part of fixed assets.

ii) a) As per the information furnished, the inventories have been physically verified by the management at regular intervals during theyear. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

b) In our opinion and according to the information and explanations given to us, procedures of physical verification of inventoryfollowed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) According to the explanations given to us, the company has experienced difficulties in extracting stock quantities as at the time ofphysical verification consequent to a shift to a new “Enterprise Resource Planning (ERP) system. As a result, the physical quantitieshave formed the basis of valuation of closing inventories. As stock quantities could not be correctly drawn up as at the time ofphysical verification, the differences between physical stocks and book records cannot be determined.

iii) a) As per the information furnished, the company has granted loans, to six companies covered in the register maintained under Section301 of the Companies Act, 1956.The maximum amount involved during the year was Rs. 21.44 crores and the year end balance ofloan given was Rs. 18.89 crores

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions forsuch loan is not prima facie prejudicial to the interest of the company.

c) In respect of loan granted repayment of principal amount is as stipulated and payment of interest has been regular, except in case ofone subsidiary company where the loan given is interest free and the repayment of principal is not stipulated.

d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301of the Companies Act, 1956.

e) As per the information furnished, the company has not taken any loans, secured or unsecured, from companies, firms or other partiescovered in the register maintained under Section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, that some of the items purchased are of a special nature andcomparative alternative quotations are not available, there are adequate internal control procedures commensurate with the size of thecompany and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the courseof our audit, no major weakness has been noticed in the internal controls.

v) a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we areof the opinion that the transactions that need to be entered in to the register maintained under Section 301 have been so entered.

b) In our opinion and according to the information and explanations given to us, that some of the items purchased are of a special natureand comparable alternative quotations are not available, the transactions made in pursuance of contracts or arrangements entered inthe Register maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year, havebeen made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A, 58AA orany other relevant provisions of the Companies Act, 1956 and rules made there under.

vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

viii) According to the information and explanations given to us the maintenance of cost records has not been prescribed by the Central Governmentunder clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for any of the products of the company.

ix) a) According to the information and explanations given to us and according to the books as produced and examined by us in ouropinion, the company is regular in depositing with the appropriate authorities undisputed statutory dues including provident fund,employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutorydues applicable to it.

(b) According to the information and explanations given to us, no undisputed amount payable in respect of income tax, wealth tax,service tax, sales tax, customs duty and excise duty were outstanding, as at the year end for a period of more than six months from thedate they became payable.


S 39

(c) According to the information and explanations given to us, the dues outstanding of income tax, sales tax, wealth tax, service tax,customs duty, excise duty or cess on account of any dispute, are stated as under:

Name of the Statute Nature of dues Amount Forum where the dispute is pending

(Rs.in lacs)

Income Tax Act Income Tax: 34.15 Appellate Tribunal.

Central Excise Act Excise Duty : 56.51 Appellate Tribunal12.24 Deputy Commissioner of Central Excise.47.08 Assistant Commissioner-Service Tax (Central Excise)

Sales Tax Act Sales Tax : 951.92 Deputy Commissioner Commercial Tax (Appeals)117.99 Deputy Commissioner of Commercial Taxes.224.37 Joint Commissioner of Commercial Taxes.

2.10 Commissioner of Commercial Taxes.13.56 Assistant commissioner of Sales Tax-Appeals

1.28 Superintendent of Tax. 77.15 Appellate Assistant Commissioner.

7.43 Assistant Commissioner (Assessment) Trade Tax.509.84 High Court.

12.84 Assessing Authority.6.48 Jt. Commissioner (Appeals) Trade Tax

12.00 Appellate Tribunal

x) There are no accumulated losses of the company at the end of the financial year and it has not incurred any cash losses in the current and theimmediately preceding financial year.

xi) Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the company hasnot defaulted in repayment of dues to banks and the company did not have any dues to financial institutions or debenture holders during theyear.

xii) Based on our examination of the records and the information and explanations given to us, the company has not granted any loans andadvances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures or other investments. Accordingly, the provisionsof clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

xv) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banksor financial institutions.

xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans wereobtained.

xvii) On the basis of overall examination of the balance sheet and cash flows of the company and the information and explanations given to us,we are of the opinion that no funds raised on short term basis have been used for long term investments.

xviii)According to the information and explanations given to us the company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) The company has not issued any debentures during the year or in earlier years.

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

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per theinformation and explanations given by the management, we report that no fraud of material significance on or by the Company has beennoticed or reported during the course of our audit..


ATUL MEHTAPartner

Mumbai Dated : 2nd July, 2007 M.No. 15935


S 40


As At31-03-2006


FUNDS EMPLOYED:

1. SHARE CAPITAL A 4,26,00,000 4,26,00,000

2. RESERVES AND SURPLUS B 83,97,45,989 68,83,91,015

3. TOTAL SHAREHOLDERS’ FUNDS 88,23,45,989 73,09,91,015

4. SECURED LOANS C 20,31,05,131 3,98,78,967


APPLICATION OF FUNDS:

6. FIXED ASSETS : D

Gross Block 75,78,83,575 66,91,73,026


Net Block 44,16,74,678 39,16,08,160

7. INVESTMENTS E 37,62,93,134 42,30,09,350

8. CURRENT ASSETS, LOANS AND ADVANCES F 289,16,03,577 235,81,04,245

9. Less : CURRENT LIABILITIES AND PROVISIONS G 263,13,46,029 240,49,81,339

10. NET CURRENT ASSETS 26,02,57,548 (468,77,094)

11. DEFERRED TAX ASSET (Net) ( Refer Note 14 ) 72,25,760 31,29,566

12. TOTAL ASSETS (NET) 108,54,51,120 77,08,69,982

13. NOTES TO THE ACCOUNTS J

Per our report attached S.P.Mistry Chairman

For BATLIBOI & PUROHITChartered Accountants K.C.Mehra Deputy Chairman


N.D.Khurody

C.G.ShahDirectors

V.Natarajan Company Secretary

ATUL MEHTAPartner

Mumbai, Dated : 2nd July, 2007

}


S 41


For BATLIBOI & PUROHITChartered Accountants K.C.Mehra Deputy Chairman


N.D.Khurody

C.G.ShahDirectors


ATUL MEHTAPartner

Mumbai , Dated : 2nd July 2007

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2007

Current Previous

Year Year


1. INCOME :

Sales and Other Income H 739,98,67,154 633,57,03,128

2. EXPENDITURE :

a) Trading & Other Expense I 691,63,71,901 591,02,11,894

b) Depreciation 9,00,27,767 8,41,60,633

c) Interest (Refer Note 4 ) 39,26,796 17,46,157

701,03,26,464 599,61,18,684

3. PROFIT BEFORE TAX 38,95,40,690 33,95,84,444

Provision for Taxation

Current Year tax provision 12,00,00,000 9,90,00,000

Less : Deferred Tax (Refer Note 14) 40,96,194 16,51,412

Fringe Benefit tax provision 2,45,00,000 225,00,000

14,04,03,806 11,98,48,588

4. PROFIT AFTER TAX 24,91,36,884 21,97,35,856

5. PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR 12,89,86,712 10,47,50,156

6. AMOUNT AVAILABLE FOR APPROPRIATIONS 37,81,23,596 32,44,86,012

7. APPROPRIATIONS :

Interim Dividend 6,39,00,000 8,52,00,000

Proposed Final Dividend 2,13,00,000

Tax on Dividend 1,25,81,910 1,19,49,300


19,77,81,910 19,54,99,300

8. BALANCE CARRIED TO BALANCE SHEET 18,03,41,686 12,89,86,712

Number of Equity Shares 42,60,000 42,60,000

Weighted average number of equity shares 42,60,000 42,88,357

Face Value per share 10 10

Profit After Tax available to Equity Shareholders 24,91,36,884 21,97,35,856

Basic and Diluted Earning Per Share 58.48 51.24

9. NOTES TO THE ACCOUNTS J

}


S 42

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31 ST MARCH,2007


As At31-03-2006

Rupees RupeesAUTHORISED :

1,50,00,000 Equity Shares of Rs.10/- each 15,00,00,000 15,00,00,000

ISSUED, SUBSCRIBED AND PAID UP :

42,60,000 (Previous Year 42,60,000) Equity Shares of Rs.10/- each 4,26,00,000 4,26,00,000

[Of the above Shares, (i) 39,90,000 (Previous Year 39,90,000) Sharesare allotted as fully paid up Bonus Shares by capitalisation ofGeneral Reserve ; and (ii) 42,59,994 (Previous Year 42,59,994) Sharesare held by the Holding Company, Forbes Gokak Limited; and 6 (PreviousYear 6) shares are held jointly with Forbes Gokak Limited bynominees of Forbes Gokak Limited.]

SCHEDULE ‘B’ - RESERVES AND SURPLUS As At31-03-2006

Rupees Rupees Rupees1. CAPITAL RESERVE


2. CAPITAL REDEMPTION RESERVE 69,00,000 69,00,000

3. GENERAL RESERVE

As per last Balance Sheet 55,00,00,000 60,00,00,000Less: Buy back of equity share capital 14,83,50,000Add : Transferred from Profit and Loss Account 10,00,00,000 9,83,50,000

65,00,00,000 55,00,00,0004. PROFIT AND LOSS ACCOUNT 18,03,41,686 12,89,86,712

83,97,45,989 68,83,91,015

CHEDULE ‘C’ - SECURED LOANS As At31-03-06

Rupees Rupees1. Cash Credit 11,47,03,348 2,13,57,176

(Secured by hypothecation of stock-in-trade & book debts)2. Short Term Loan 2,70,00,000 —

(Secured by hypothecation of stock-in-trade & book debts)3. Overdraft 6,14,01,783 1,85,21,791

(Secured by charge over Fixed Deposit)20,31,05,131 3,98,78,967

SCHEDULE ‘D’ FIXED ASSETSAmount in Rupees

DESCRIPTION GRO S S BL O C K DEPRECIATION BL O C K N E T B L O C KAs On Additions Deletions As On As On Depreciation Depreciation As on As on As on

01.04.2006 31.03.2007 01.04.2006 for the year on deductions 31.03.2007 31.03.2007 31.03.2006during the year

Land - Freehold 25,78,705 — — 25,78,705 — — — — 25,78,705 25,78,705Buildings * 20,70,54,743 — — 20,70,54,743 2,67,56,239 90,88,846 — 3,58,45,085 17,12,09,658 18,02,98,504Plant & Machinery 5,86,75,896 72,73,560 90,38,671 5,69,10,785 3,41,94,525 46,71,158 79,77,832 3,08,87,851 2,60,22,934 2,44,81,371Computers 15,84,05,784 3,69,21,359 134,68,316 18,18,58,827 10,35,07,594 2,97,27,148 1,23,94,830 12,08,39,912 6,10,18,915 5,48,98,190Furnitures & Fixtures 4,24,81,315 42,25,305 167,42,076 2,99,64,544 3,47,55,408 40,08,356 1,56,29,073 2,31,34,691 68,29,853 77,25,907Vehicles 17,39,85,139 6,36,34,888 2,62,24,339 21,13,95,688 6,97,02,862 3,38,84,021 1,53,82,001 8,82,04,882 12,31,90,806 10,42,82,277Intangible Asset -Computer Software 2,59,44,714 — — 2,59,44,714 86,48,238 86,48,238 — 1,72,96,476 86,48,238 1,72,96,476Total 66,91,26,296 11,20,55,112 6,54,73,402 71,57,08,006 27,75,64,866 9,00,27,767 5,13,83,736 31,62,08,897 39,94,99,109 39,15,61,430Capital Advance 46,730 4,21,75,569 46,730 4,21,75,569 — — — — 4,21,75,569 46,730Grand Total 66,91,73,026 15,42,30,681 6,55,20,132 75,78,83,575 27,75,64,866 9,00,27,767 5,13,83,736 31,62,08,897 44,16,74,678 39,16,08,160Previous Year 53,67,73,179 19,75,06,537 6,51,06,690 66,91,73,026 22,63,42,326 8,41,60,633 3,29,38,093 27,75,64,866 39,16,08,160

* Includes a property for which co-op society is yet to be formed.** Intangible assets are amortised equally over a period of 3 years.


S 43


SCHEDULE ‘E’ - INVESTMENTSAs At

31.03.2006INVESTMENTS (AT COST) Nos. Rupees Rupees RupeesLONG TERM INVESTMENTS1. TRADE INVESTMENTS - UNQUOTED

i. Subsidiary CompaniesAquamall Water Solutions Ltd.Fully paid Equity Shares of Rs.10/- each 20,00,080 1,95,01,280 1,95,01,280

(20,00,080)Euro Forbes International Pte. LtdFully paid Equity shares of Singapore $ 1/- each 35,00,000 9,38,85,000 9,38,85,000

(35,00,000)

Forbes Facility Services Pvt Ltd 7,00,000 60,50,000 51,00,000(Formerly Forbes Abans Cleaning Solutions (P) Ltd.) (5,10,000)Fully paid Equity Shares of Rs.10/- each

Pro Handyman India Ltd 35,000 3,50,000Fully paid Equity Shares of Rs.10/- each (Nil)

Forbes Technosys Ltd. 20,00,000 50,00,000Partly Paid Equity Shares of Rs. 2.50/- each (Nil)

ii. Other CompaniesForbes Aquatech LimitedFully paid Equity Shares of Rs.10/- each 5,00,000 50,00,000 50,00,000

(5,00,000)

ForbesLux Group AGFully paid Equity shares of Swiss Franc 1000/- each 500 1,86,20,750

(Nil)

Forbes Concept Hospitality Services Ltd 5,00,000 50,00,000Fully paid Equity Shares of Rs.10/- each (Nil)

15,34,07,030 12,34,86,2802. TRADE INVESTMENTS - QUOTED

Equity Shares of -Svadeshi Mills Co.Ltd. ( Listed but not quoted)Fully paid Equity Shares of Rs.10/- each 13,49,260 27,42,279 27,42,279

(13,49,260)3. OTHER INVESTMENTS - QUOTED

a. Bank of BarodaFully paid Equity Shares of Rs.10/-each 1,44,084 3,31,39,320 6,62,59,320(Sold during the Year 1,44,000 Equity shares) (2,88,084)

b. Andhra BankFully paid Equity Shares of Rs.10/-each 75,919 68,32,710 4,05,82,710(Sold during the Year 3,75,000 Equity shares) (4,50,919)

c. Union Bank of IndiaFully paid Equity Shares of Rs.10/-each 92,464 1,01,71,040 2,01,81,040(Sold during the Year 1,83,464 Equity Shares) (1,83,464)

5,01,43,070 12,70,23,070


S 44


SCHEDULE ‘E’ - INVESTMENTS - (Contd.)As At

31.03.2006Nos. Rupees Rupees Rupees

4. OTHER INVESTMENTS - UNQUOTEDFace Value Rs. 10/- eacha. Birla Sun Life Monthly Income - Monthly Dividend 1,19,56,193 13,50,00,000 13,50,00,000

(1,19,56,193)

b. Deutsche Fixed Term Fund - Series 5 37,50,000 3,75,00,000 3,75,00,000(37,50,000)

CURRENT INVESTMENTS5. OTHER INVESTMENTS - UNQUOTED

a. CPOP -HSBC AM - PMS 7,359

b. LIC Mutual Fund Floating Rate Fund -Short Term Plan - Growth option 19,727 2,35,675(Purchased during the Year 7,91,26,182 Units &Sold during the Year 7,91,06,454 Units) (Nil)

17,27,43,034 17,25,00,000

(Figures in brackets indicate that of previous year) 37,90,35,413 42,57,51,629Less: Diminution in value of long term Investments 27,42,279 27,42,279

37,62,93,134 42,30,09,350

QUOTED INVESTMENTS 5,01,43,070 12,70,23,070UNQUOTED INVESTMENTS 32,61,50,064 29,59,86,280

TOTAL 37,62,93,134 42,30,09,350

Market Value Of Quoted Investments 4,64,16,343 12,51,38,698

Investments acquired and sold during the year other than shown above:Mutual Funda. 37,75,237 Units of Rs.10/- each of Birla Bond Plus Institutional - Growthb. 44,58,177 Units of RS.10/- each of Birla Cash Plus - Institutional Premium - Growthc. 1,08,63,449 Units of Rs.10/- each of DWS Money Plus Fund - Growthd. 73,60,308 Units of Rs.10/- each of DWS Money Plus Fund Institutional Plan - Growthe. 9,77,995 Units of Rs.10/- each of Fidelity India Special Situations Fund - Growthf. 50,00,000 Units of Rs.10/- each of JM Arbitrage Advantage Fund - Growth Plang. 42,30,068 Units of Rs.10/- each of JM Floater Fund - Short Term Plan - Growth Optionh. 1,97,06,126 Units of Rs.10/- each LICMF Liquid Fund - Growth Plani. 1,00,00,000 Units of Rs.10/- each of LICMF Fixed Maturity Plan - Series 9 - Growthj. 63,371 Units of 100/- each of Templeton India TMA Institutional Plan - Growthk. 9,77,517 Units of Rs.10/- each of Templeton India Equity Income Fund - Growthl. 54,050 Units of Rs.1000/- each of Templeton India Short Term Income Plan Growth - Growth Optionm. 67,673 Units of Rs.100/- each of Templeton India Short Term Income Plan IP - Growth

Equity Sharesa. 14,003 Equity Shares of Rs.10/- each of Reliance Petrolieum Limitedb. 9,954 Equity Shares of Rs.10/- each of Development Credit Bank Limitedc. 3,332 Equity shares of Rs.10/- each of Patel engineering Limitedd. 748 Equity Shares of Rs.10/- each of Parsvanath Developers Limitede. 248 Equity Shares of Rs.10/- each of Sobha Developers Limited


S 45

As At

31-03-2006


1. CURRENT ASSETS

i) Stock-in-trade : *

Finished Goods 51,59,61,358 42,91,74,958

Packing Materials 2,766 2,83,476

Spares & Accessories 36,42,86,522 19,05,99,339

Stock-in-Transit 6,96,12,813 365,25,494

* (As valued and certified by the Management.)

94,98,63,459 65,65,83,267

ii) Sundry Debtors :

(Unsecured, Considered Good unless otherwise stated)

a)Debts outstanding for a period exceeding six months 7,24,13,984 5,47,58,409

b) Other Debts 52,59,35,194 42,12,98,039

59,83,49,178 47,60,56,448

iii) Cash and Bank Balances :

Cash on hand (Including cheques on hand Rs. 11,42,02,558/-) 13,79,80,821 8,87,92,427

With Scheduled Banks -

in Current Accounts 35,42,64,669 28,78,46,897

in Margin Accounts 7,97,574 7,97,574

in Deposit Accounts 1,75,00,000 36,75,00,000

51,05,43,064 74,49,36,898

2. LOANS AND ADVANCES


i) Loans [including Rs.19,340 (Previous Year Rs.31,480/-)due from

an officer, maximum amount due at any time during the year

Rs.31,480/-] 2,96,17,442 2,97,04,967

ii) Advances recoverable in cash or in kind or

for value to be received 18,71,34,432 8,75,72,082

iii) Advance Payment of Tax 33,18,99,725 29,29,29,034

iv) Deposits with

Subsidiary Company 18,38,08,280

Other Companies 40,00,000 —

18,78,08,280

v) Other Deposits 9,51,50,057 6,61,10,072

[Including Rs.36,42,120 /- ( Previous year Rs. 36,42,120/-)

given to a subsidiary company]

vi) Income accrued on Investments and Deposits 12,37,940 42,11,477

83,28,47,876 48,05,27,632

289,16,03,577 235,81,04,245


SCHEDULE ‘F’ - CURRENT ASSETS, LOANS AND ADVANCES


S 46

SCHEDULE ‘G’ - CURRENT LIABILITIES AND PROVISIONS

As At

31-03-2006


1. CURRENT LIABILITIES

Sundry Creditors :

Small Scale Industrial Undertakings (Refer Note 20) 1,36,62,975 144,28,502

Others

[Including Rs.20,81,18,791/- (Previous Year Rs.16,47,61,403/-) 50,39,21,992 43,42,77,554

due to a subsidiary companies] 51,75,84,967 44,87,06,056

Other Liabilities 45,76,01,959 42,05,42,489

Advances Received 99,98,31,511 96,24,01,774

2. PROVISIONS

For Taxation 33,62,75,544 28,72,75,544

Proposed Final Dividend 2,13,00,000 0

For Tax on Proposed Final Dividend 36,19,935 0

For Expenses 26,88,99,623 25,81,17,899

For Retirement and other employee benefits 11,05,454 1,15,74,224

For Leave encashment 2,51,27,036 1,63,63,353

263,13,46,029 240,49,81,339

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THEYEAR ENDED 31ST MARCH, 2007

SCHEDULE ‘H’ - SALES AND OTHER INCOME PreviousYear


1) SALE OF PRODUCTS 590,93,17,703 515,49,32,789

2) INCOME FROM SERVICES 132,30,42,116 99,04,70,084

3) OTHER INCOME :Interest Received :

From Deposits, Loans, Advances and Deferred Payment Scheme 6,61,28,242 6,30,90,554( Gross) (Tax deducted at source Rs.21,25,946/-Previous Year Rs.28,22,588/-)

Dividend Income :From Long Term Investment In :- Subsidiary Company 2,00,00,800 2,00,00,800- Others 1,33,70,962 1,05,54,522

3,33,71,762 3,05,55,322

Profit on Fixed Assets sold/discarded (net) 29,98,738 93,46,939Profit on Sale of Investment (net) 2,68,26,782 5,28,94,190Excess Provision for earlier years 1,67,946 4,50,000Miscellaneous Income 3,80,13,865 3,39,63,250

16,75,07,335 19,03,00,255739,98,67,154 633,57,03,128



S 47

SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THEYEAR ENDED 31ST MARCH, 2007

SCHEDULE ‘I’ - TRADING AND OTHER EXPENSESPrevious

YearRupees Rupees Rupees Rupees

1) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES :Salaries, Bonus and Commission 95,00,40,841 84,44,83,603Company’s Contribution to Provident and Other Funds 7,32,02,117 7,56,88,547Staff Welfare Expenditure 3,95,61,369 3,64,72,100

106,28,04,327 95,66,44,2502) OPERATIONAL AND OTHER EXPENSES :

Electricity 1,99,19,335 1,76,93,238Rent [Net of recoveries Rs.10,08,104/-;(Previous year 7,06,80,537 5,98,75,508Rs.8,09,256/-)Repairs and Maintenance -

Building 28,02,744 100,84,559Machinery 37,459Other Assets 4,59,51,970 4,38,85,980

4,87,54,714 5,40,07,998

Insurance 3,63,77,017 3,59,41,793Advertisement 28,49,14,681 19,11,21,335Selling and Sales Promotion 28,05,29,635 18,92,67,880Demonstration 61,90,586 89,76,601Freight, Forwarding and Delivery 6,38,25,391 4,50,05,229Auditors’ Remuneration -

Audit Fees 10,11,240 10,10,160Out of pocket expenses 1,93,943 2,16,315Management Services 1,96,420 1,92,850

14,01,603 14,19,325

Printing and Stationery 4,67,51,768 3,86,62,620Postage, Telegrams, Telephones and Telex 9,58,68,287 8,36,20,741Travelling and Conveyance 11,53,51,068 8,46,02,587Legal and Professional Fees 5,46,13,440 4,09,80,954Vehicle Expenses and Maintenance 15,29,03,736 12,53,07,729Rates and Taxes 6,52,82,620 6,33,86,113Conference Expenses 5,97,53,369 3,92,70,788Service Charges 47,42,02,827 41,89,63,579Other Establishment Expenses 15,86,38,513 15,49,89,785Directors’ Sitting Fees 2,90,000 2,55,000Bad Debts/Advances Written-Off 1,90,11,632 1,23,38,555

205,52,60,759 166,56,87,358

3) COMMISSION TO DIRECTORS (Refer Note 9 ) 116,31,250 86,05,000

4) ADJUSTMENTS FOR STOCKS :Opening Stocki) Traded 65,65,83,267 42,73,80,400Less : VAT Credit on opening stock 1,35,25,963Add : Purchases 407,99,55,757 352,20,04,116

473,65,39,024 393,58,58,553

Less : Closing Stock - Traded 94,98,63,459 65,65,83,267

378,66,75,565 327,92,75,286

691,63,71,901 591,02,11,894


S 48

SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007

SCHEDULE ‘J’ - NOTES TO THE ACCOUNTS


(a) Basis of Accounting


(b) Fixed Assets

Fixed Assets are stated at cost less depreciation.Cost comprises of the purchase price and any attributable cost of bringing the assets toits working condition for its intended use. Depreciation is provided on the written down value method and at the rates and in the mannerspecified in Schedule XIV of the Companies Act,1956. Intangible assets are amortised over a period of 3 to 5 years.

(c) Investments

Short term investments,if any, are carried at the lower of costs and quoted / fair value, computed categorywise. Long term investmentsare carried at costs.Provision for diminution in the value of long term investments is made only if such decline is not temporary in theopinion of the management.

Dividend income is accounted when the right to receive payment is established and known.

(d) Inventories

Inventories are valued at cost or net realisable value, whichever is lower by using First In First Out (FIFO) method of valuation.Obsolete / Slow moving inventories are adequately provided for.

(e) Sales

Sales are accounted for on despatch / delivery of goods to the customers and are net of sales returns, discounts and sales tax.

(f) Foreign Currency

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction at the rates under the relativeforward exchange contracts. Transactions not covered by forward exchange contracts and outstanding at the year end are translated atthe exchange rates prevailing at the year end and the profit/ loss so determined and also the realised exchange gains / losses arerecognised in the Profit and Loss Account . In the case of forward exchange contract , the difference between the forward rate and theexchange rate at the inception of forward exchange contract is recognised as income / expense over the life of the contract.

(g) Retirement Benefits

Contributions are made to Provident and Superannuation Funds on actual liability basis and Gratuity Fund on actuarial valuationbasis.Liability for leave encashment at the time of retirement is provided on the basis of actuarial valuation.

(h) Research and Development

(a) Capital Expenditures are shown separately under respective heads of fixed assets.(b) Revenue expenses are included under the respective heads of expenses.

(i) Product warranty expenses

Product warranty costs are provided in the year of sale based on past experience.

(j) Deferred Tax

Deferred Tax is recognised on timing differences between taxable income and accounting income that originate in one period and arecapable of reversal in one or more subsequent periods in accordance with the requirements of Accounting Standard 22 - Accounting forTaxes on Income.

(k) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share holders by theweighted average number of equity shares outstanding during the period.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for - Rs.802 lakhs (previous year Rs.Nil lakhs).

3. (a) Provision for warranty - Rs. 567.95 lakhs (Previous year Rs.525.65 lakhs).The company gives warranty on certain products, undertaking to repair or replace the items that fail to perform satisfactorily during thewarranty period. Warranty provisions are made for expected future outflows and determined based on past experience where no reim-bursements are expected. Additional provision made during the year is Rs.42.30 lakhs. Due to the volume and spread of the business,the actual utilisation of product warranty provision during the year is not determinable.

(b) Contingent liabilities not provided for on account of :(i) Bank Guarantees issued on behalf of the Company - Rs.714.59 lakhs (previous year Rs.590.90 lakhs)(ii) Claims against the Company not acknowledged as debts- Rs.Nil (previous year Rs.46.38 lakhs)(iii) Disputed Income Tax Demands - Rs.34.15 lakhs (previous year Rs.54.33 lakhs).(iv) Disputed Central Excise Demands - Rs. 115.83 lakhs (previous year Rs.115.83 lakhs).(v) Disputed Sales Tax demands - Rs 1936.96 lakhs (previous year Rs.872.67 lakhs).


S 49

4. Expenditure on interest of Rs. 39,26,796/- (previous year Rs.17,46,157/-) pertains to interest on Bank Loan , deposits etc.


5. (a) Expenditure in foreign currency on account of :

Subscription,travelling,advterisment, testing charges

salary, training,professional fees royalty etc. 1,51,57,614 62,20,812

(b) Remittance in Foreign Currency :On account of Investment in wholly owned subsidiary Nil 6,67,65,000On account of Investment in joint venture 1,86,20,750 —On account of Inter corporate deposit to wholly owned subsidiary 17,18,08,280 —On account Capital Advance 31,87,828 —

6. Value of Imports on C.I.F basis : Finished goods,Components & Spare parts 28,38,53,026 19,43,10,776

7. Earnings in Foreign Exchange : Export of goods on F.O.B basis 7,33,79,871 3,85,43,808 Consultancy charges & other receipts 45,22,808 38,81,386 Interest on Inter corporate deposit towholly owned subsidiary 74,60,177 —

8. Managerial Remuneration under Section 198 of the Companies Act 1956,payable to :


i) The Managing Director :

Salary 29,34,758** 22,66,000**

Commission 86,31,250 61,05,000

Perquisites in cash or in kind 36,68,447** 33,37,360**

Contribution to provident and other funds 7,92,385** 6,11,820**

ii) The Non-Wholetime Directors :Commission 30,00,000 25,00,000

1,90,26,840 1,48,20,180

* The above remuneration does not include provision for leave encashment and contribution togratuity fund, as separate actuarial valuation for Managing Director is not available.

** Includes arrears for the previous year

9. Computation of net profit as per Section 349 read with Section 309 (5) and Section 198 of the CompaniesAct,1956 and calculation of commission payable to Directors :


Profit Before tax as per Profit and Loss Account 38,95,40,690 33,95,84,444

Add :Depreciation charged in accounts 9,00,27,767 8,41,60,633Remuneration to Managing Director 1,60,26,840 1,23,20,180Commission to Non-wholetime Directors 30,00,000 25,00,000

49,85,95,297 43,85,65,257Less : Depreciation chargable u/s 350 9,00,27,767 8,41,60,633Profit on sale of Investments (net) 2,68,26,782 5,28,94,190Profit u/s 349 of the Companies Act 38,17,40,748 30,15,10,434Commission to Non-wholetime Directors @ 1 % 38,17,407 30,15,104Commission provided in Accounts for -

Managing Director 86,31,250 61,05,000Non-wholetime Directors 30,00,000 25,00,000

Total 1,16,31,250 86,05,000


SCHEDULE ‘J’ - NOTES TO THE ACCOUNTS (contd.)


S 50

10. Information in regard to class of goods traded by the Company :

i) Quantity (Nos.)

Product Opening Purchases * Sales / Closing

Stock Disposals Stock

Vacuum Cleaners 45,559 2,74,622 2,48,735 71,446

(27,480) (237,020) (218,941) (45,559)

Water filter-cum-purifiers 97,688 6,34,995 6,26,931 105,752

(50,398) (641,152) (593,862) (97,688)

Electronic air cleaning systems 2,620 3,860 3,037 3,443

(3,851) (2,137) (3,368) (2,620)

Others — — — —

(4,154) (2,791) (6,945)

ii) Value (Rs.)

Product Opening Purchases * Sales / Closing

Stock Disposals Stock

Vacuum Cleaners 13,42,04,308 81,47,29,479 145,04,47,699 19,32,55,044

(9,25,57,037) (71,80,88,448) (129,25,77,564) (13,42,04,308)

Water filter - cum - purifiers 25,58,33,073 236,26,75,926 399,05,38,535 29,64,22,791

(12,05,52,014) (209,58,76,239) (346,89,03,401) (25,58,33,073)

Electronic air cleaning systems 27,90,121 63,07,946 1,34,69,823 52,42,735

(64,14,410) (43,06,963) (144,62,512) (27,90,121)

Digital Security Systems 4,81,14,297 14,74,29,536 20,47,63,245 5,33,08,585

(3,65,16,239) (14,30,00,709) (13,79,84,937) (4,81,14,297)

Chemicals 121,73,629 2,88,35,039 3,44,66,663 2,03,28,670

(87,42,622) (1,69,67,557) (2,25,93,033) (1,21,73,629)

Others — — — —

(78,07,861) (24,49,870) (1,20,49,375)

Spares & Accessories 20,34,67,839 71,99,77,831 21,56,31,738 38,13,05,634

(15,47,90,217) (54,13,14,330) (20,63,61,967) (20,34,67,839)

Less:VAT credit on opening stock — — — —

(1,35,25,963)

65,65,83,267 407,99,55,757 590,93,17,703 94,98,63,459

(41,38,54,437) (352,20,04,116) (515,49,32,789) (65,65,83,267)

* Sales / Disposals include free samples,shortages,breakages etc and is net of returns.

Figures in brackets relate to Previous Year.

11. The Company is primarily engaged in the business of Health,Hygiene & Safety products and its services. As the basic nature of theseactivities are governed by the same set of risk and returns,these have been grouped as single segment as per accounting standard 17 dealingwith “Segment Reporting” issued by the Institute of Chartered Accountants of India. The geographical segmentation is insignificant as theexport turnover is less than 1 % of the total turnover.

12. As required under Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, the listof related parties and their transactions is attached.

13. The company has taken various residential/commercial premises under cancelable operating lease. Lease rental expenses included in theprofit and loss account for the year is Rs. 706.80 lakhs




S 51

14. Deferred tax liability (net) as specified in Accounting Standard 22 “Accounting for taxes on income” has been worked out using the appli-cable rate of tax based on the impact of timing differences between financial statements and estimated taxable income for the current year.

The movement of provision for deferred tax is given below :

Provision for Deferred Tax Opening Charge / (Credit) Closing

As at 01.04.06 during the year As at 31.03.07

Depreciation 46,74,912 (25,12,014) 21,62,898

Others (78,04,478) (15,84,180) (93,88,658)

Total (31,29,566) (40,96,194) (72,25,760)

15. As required under Accounting Standard 27 on “Financial Reporting of interest in Joint Venture” issued by the Institute of Chartered Accoun-tants of India, the companies’ interests in the joint ventures is attached.

16. Consequent to a shift to the Enterprise Resource Planning (ERP) system, the reconciliation of open items of sundry debtors and advancesfrom customers, is in progress. However it is not expected to have any significant impact on the financial results of the company for the year2006-07.

17. Rs.216.72 Lakhs (previous year Rs.186.94 lakhs) revenue expenses incurred during the year on Research and Development has been chargedto the respective heads of accounts.

18. Net foreign exchange difference (loss) , included in the profit and loss account is Rs. 43.44 lakhs. ( Previous Year Rs.19.93 lakhs (loss) ).

19. Small scale industrial undertakings (SSI) to whom amounts are due have been determined based on the information available with thecompany and are given below -

Acqua Systems, Ananda Techonologies, Archana Industries, Consolidated Mops, Excellent Printers,Excel Industries, Gazelle Enterprise,Highgene Technologies Pvt. Ltd., Infa Graphics, Mambally connectronix Micrologix, Polywin Industries, R.K.Carbons, S.B.SEngineers,S.N.Industries,U.S.Engineers Pvt Ltd, and Zeebeetronics.

Out of the above listed SSI, the following are the small scale industrial undertakings to whom the company owes and which are outstandingfor more than 30 days-

Acqua Systems, Ananda Techonologies, Archana Industries, Consolidated Mops, Excellent Printers, Excel Industries, Gazelle Enterprise,Highgene Technologies Pvt. Ltd., Infa Graphics, Micrologix Polywin Industries, R.K.Carbons, S.B.S Engineers,S.N.Industries,U.S.EngineersPvt Ltd, and Zeebeetronics.

The company has not received the required information from suppliers regarding their status under the Micro, Small and Medium EnterprisesDevelopment Act,2006. Hence disclosure,if any, relating to amounts unpaid as at the year end together with interest paid/payable as requiredunder the said Act have not been made.

20. Information required in terms of Part IV of Schedule VI of the Companies Act,1956 is attached.

21. Figures for the previous year have been regrouped,rearranged or reclassified,wherever necessary.


For BATLIBOI & PUROHIT

Chartered Accountants

K.C.Mehra Deputy Chairman

S.L.Goklaney Vice Chairman & Managing DirectorATUL MEHTA

Partner

N.D.Khurody

C.G.ShahDirectors





}


S 52

Related Party Disclosure - As specified by Accounting Standard 18

( I ) Name of related Party and nature of relationship where control exists are as under :

A. Enterprises having more than one half of Voting Powers -

Forbes Gokak Ltd.

Shapoorji Pallonji & Co.Ltd

Sterling Investment Corporation. Pvt. Ltd

B. Enterprises that are controlled - ( Subsidiary Company) -

Aquamall Water Solutions Limited.


Euro Forbes International Pte. Ltd.

Forbes Facility Serivces Pvt Ltd.

Pro Handyman India Ltd.

Forbes Technosys Ltd.

C. Enterprises that are under common control -

Forbes Doris & Naess Maritime Ltd.

Forbes Container Lines Ltd

Forbes Finance Ltd.

Forbes Sterling Star Ltd.

Forbes Smart Data Ltd.

Latham India Limited.

Next Gen Publishing Ltd.

Volkart Fleming Shipping & Services Limited.

Forbes Services Ltd.

Forbes Tinsley Co.Ltd

Warrior (Investment) Ltd.

Forbes Campbell Holdings Ltd.

Gokak Textiles Ltd.

D. Associate Company

Euro P2P Direct (Thailand) Co.Ltd.

E. Joint Venture

Forbes Aquatech Limited

Forbes Concept Hospitality Services Ltd

ForbesLux Group AG

F. Key Management Personnel

Mr. S.L.Goklaney


S 53

Details required under Accounting Standard 27 on “Financial Reporting of interest in Joint Venture” issued by the Institute ofChartered Accountants of India - referred in note no. 15 in Schedule J to the Accounts for the year ended 31st March 2007.

Figures in Rs.Lakhs

S.No Name of the Company Country of Year Ended % of Eureka Forbes Ltd. Share

Incorporation on Shares Assets Liabilities Income Expenses

1 Forbes Lux AG Switzerland 31.12.2006 50% 504.42 324.51 17.85 18.85

2 Forbes Concept HospitalityServices Pvt Ltd. India 31.03.2007 50% 199.77 149.77 138.80 228.38

3 Forbes Aquatech Limited India 31.03.2007 50% 206.35 105.30 706.46 626.14

( II ) Transactions with Related Parties

Related Party

Nature of Transactions Referred to Referred to Referred to Referred toin A above in B above in E above in F above *

PurchasesGoods and Materials 72,52,29,621 225,88,47,167 15,62,78,583Fixed Assets

SalesGoods and Materials 9,25,274 697,23,364 3,85,562

ExpensesRent and other services 45,75,171 75,06,266Provision/Write offs

IncomeRent and other services 7,11,750 2,59,62,302 68,026Interest 1,08,11,015 3,32,582Dividend 2,00,00,800Provision/Write offs

FinanceICDs Given 23,58,08,280 75,00,000Advances Given 42,66,970Investment in shares 63,00,000 2,36,20,750

Dividend paid 6,39,00,000

OutstandingPayable 7,31,81,156 20,81,18,791 98,57,989Receivables 17,500 8,51,87,594 34,74,190ICDs Given 18,38,08,280 40,00,000Interest Receivables 93,698 3,32,582Other Deposits Given 36,42,120

* Details of remuneration is disclosed in note number 8 of the notes to the accounts.


S 54


S 55

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 20072006-2007 2005-2006


In Lakhs In Lakhs In Lakhs In Lakhs

NET PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS 38,95,40,690 33,95,84,444

Adjusted For -

Depreciation 9,00,27,767 8,41,60,633

Profit on sale of Fixed Assets(Net) (29,98,738) (93,46,939)

Profit on sale of Investments(Net) (2,68,26,782) (5,28,94,190)

Investment Income (4,84,48,273) (4,70,48,575)

Interest and other finance charges 39,26,796 17,46,157

15680770.00 (233,82,914.00)

OPERATING PROFIT BEFORE WORKING CAPITAL

CHANGES AND OTHER ADJUSTMENTS 40,52,21,460 31,62,01,530

Changes in -

Trade and Other Receivables (26,98,19,172) (19,36,95,646)

Inventories (29,32,80,192) (22,92,02,867)

Trade Payables and others 15,24,44,755 48,06,53,315

(41,06,54,609) 5,77,54,802

Other Adjustments-

Bad Debts 1,90,11,632 1,23,38,555

(39,16,42,977) 7,00,93,357

CASH GENERATED FROM OPERATIONS (39,16,42,977) 7,00,93,357

1,35,78,483 38,62,94,887

Direct Taxes Paid (13,44,70,691) (13,86,58,291)

(a) NET CASH FROM OPERATING ACTIVITIES (12,08,92,208) 24,76,36,596

CASH FLOW FROM INVESTING ACTIVITIES:

Buy Back of shares at Premium (14,83,50,000)

Purchase of Fixed Assets(Including adjustment on account (15,41,83,951) (18,52,49,623)

of Capital Advances)

Sale of Fixed Assets 1,70,88,404 2,92,58,622

Purchase Of Investments (194,64,30,642) (241,79,74,155)

Sale of Investments 201,99,73,641 249,25,00,142

Interest Received 1,78,06,142 1,67,64,541

Dividend Received 3,36,15,667 3,06,68,906

Deposits Given/Received back from other Companies (18,78,08,280) 15,00,00,000

(b) NET CASH FROM /(USED) IN INVESTING ACTIVITIES (19,99,39,019) (3,23,81,567)

CASH FLOW FROM FINANCING ACTIVITIES

Increase/(Decrease) in cash credit account 16,32,26,164 3,75,97,145

Interest Paid (39,26,796) (17,46,157)

Dividend Paid ((including Dividend tax) (7,28,61,975) (9,71,49,300)

(c) NET CASH FROM/ (USED) IN FINANCING ACTIVITIES 8,64,37,393 (6,12,98,312)

NET INCREASE IN CASH AND CASH EQUIVALENTS (23,43,93,834) 15,39,56,717


S 56

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2007 (CONTD.)2006-2007 2005-2006


In Lakhs In Lakhs In Lakhs In Lakhs

CASH AND CASH EQUIVALENTS AS AT THE COMMENCEMENT

OF THE YEAR , COMPRISING :

Cash , Cheques on hand 8,87,92,427 8,17,43,501

Balances with scheduled banks on Current accounts,

Margin accounts and Deposit accounts 65,61,44,471 74,49,36,898 50,92,36,680 59,09,80,181

CASH AND CASH EQUIVALENTS AS AT THE END

OF THE YEAR , COMPRISING :

Cash , Cheques on hand 13,79,80,821 8,87,92,427

Balances with scheduled banks on Current accounts,

Margin accounts and Deposit accounts 37,25,62,243 51,05,43,064 65,61,44,471 74,49,36,898

NET INCREASE /(DECREASE) AS DISCLOSED ABOVE (23,43,93,834) 15,39,56,717






ATUL MEHTA

Partner

N.D.KhurodyDirectors

C.G.Shah



}


S 57

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES

Name of the Subsidiary Company Aquamall Water Euroforbes Forbes Facility Pro Handyman ForbesSolutions Ltd. International Pte Services PVT. India Ltd Technosys Ltd.

Limited Ltd.

The Financial Year of the Subsidiary Company ended on 31-03-2007 31-03-2007 31-03-2007 31-03-2007 31-03-2007

( a ) Number of Shares in the Subsidiary Company held byEureka Forbes Limited at the above date( i ) Fully paid 20,00,080 35,00,000 7,00,000 35,000

( ii ) Partly paid NIL NIL NIL NIL 20,00,000

Percentage Holding 100 100 70 70 71.43

( b ) The net aggregate amount of profits of theSubsidiary Company for the financial year sofar as it concerns the members of Eureka ForbesLimited which has not been dealt with in theaccounts of Eureka Forbes Limited upto31 st March,2007 are as follows:

For the year Rs. 7,92,91,484 Rs.1,41,15,311 Rs. 8,34,333 (Rs.63,20,171) (Rs.2.25,99,816)

For the previous years Rs. 40,36,54,840 (Rs.31,28,253) (Rs.42,54,872) Nil Nil

( c ) The net aggregate amount of profits of theSubsidiary Company which has been dealt within Eureka Forbes Limited accounts upto31 st March,2007 being the dividends receivedare as under :

For the year Rs. 2,00,00,800 Nil Nil Nil Nil

For the previous years Rs.16,22,62,565 Nil Nil Nil Nil

S.P.Mistry Chairman



N.D.KhurodyDirectors

C.G.Shah



}

EURO FORBES INTERNATIONAL PTE. LIMITED. (Registration No: 200412038H)(Incorporated in the Republic of Singapore)

S 58

(a wholly owned Subsidiary Company of Eureka Forbes Ltd.) Annual Report and Accountsfor the year ended 31st March, 2007

DIRECTORS :


Pallonji Mistry

A.V.Suresh

J.N.Ichhaporia

S.K.Palekar

Govind Bommi

J.B.Shahani

PRINCIPAL BANKERS :

The Hongkong & Shanghai Banking Corporation Limited

AUDITORS :

RSM Chio Lim

REGISTERED OFFICE :

35, Selegie Road, #04-07,Parklane Shopping Mall, Singapore - 188307


S 59

The directors of the company are pleased to present their report togetherwith the audited financial statements of the company for the financialyear ended 31 March 2007.

1. DIRECTORS AT DATE OF REPORT

The directors of the company in office at the date of this report are:

Suresh Lal Goklaney

Bommi Govind

Jamasp Nariman Ichhaporia

Pallonji Shapoorji Mistry

Sarvadaman Krishnarao Palekar

Suresh Appakudal Venkata Subramanyam

Jagdish Bhagwandas Shahani

2. ARRANGEMENTS TO ENABLE DIRECTORS TO

ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION

OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during thefinancial year did there subsist any arrangement whose object is toenable the directors of the company to acquire benefits by means ofthe acquisition of shares or debentures in the company or any otherbody corporate.

3. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the company holding office at end of the financialyear had no interests in the share capital of the company and relatedcorporations as recorded in the register of directors’ share holdingskept by the company under Section 164 of the Companies Act, Cap.50.

4. CONTRACTUAL BENEFITS OF DIRECTORS

Since the date of incorporation, no director of the company hasreceived or become entitled to receive a benefit which is required

to be disclosed under section 201(8) of the Companies Act, Cap 50,by reason of a contract made by the company or a related corporationwith the director or with the firm of which he is a member, or witha company in which he has a substantial financial interest.Certaindirectors of the company received remuneration from relatedcorporations in their capacity as directors and or executives of thoserelated corporations.

5. OPTIONS TO TAKE UP UNISSUED SHARES

During the financial year, no option to take up unissued shares ofthe company was granted.

6. OPTIONS EXERCISED

During the financial year, there were no shares of the company issuedby virtue of the exercise of an option to take up unissued shares.

7. UNISSUED SHARES UNDER OPTION

At the end of the financial year, there were no unissued shares underoption.

8. INDEPENDENT AUDITORS

The independent auditors, RSM Chio Lim , have expressed theirwillingness to accept reappointment

on behalf of the Directors

Jamasp Nariman IchhaporiaDirector

Suresh Appakudal Venkata SubramanyamDirector

Date : 16 July, 2007

REPORT OF THE DIRECTORS


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In the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view of the state of affairs of thecompany as at 31 March 2007 and of the results, changes in equity and cash flows of the company for the financial year then ended and at the dateof this statement there are reasonable grounds to believe that the company will be able to pay its debts as and when they fall due.The board of directors authorised the issue of these financial statements.

on behalf of the Directors

Jamasp Nariman IchhaporiaDirector

Suresh Appakudal Venkata SubramanyamDirector

Date: 16 July, 2007

STATEMENT OF DIRECTORS


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We have audited the accompanying financial statements of Euro Forbes International Pte. Ltd., which comprise the balance sheet as at 31 March2007, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significantaccounting policies and other explanatory notes.

Directors’ Responsibility for the Financial Statements

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions ofthe Singapore Companies Act, Cap. 50 (“the Act”) and Singapore Financial Reporting Standards. This responsibility includes: designing, implementingand maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.

Independent Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Except as discussed in the following paragraph, weconducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements.

The company has an amount of S$ 14,101,121 in trade and other receivables as at 31 March 207 for which no significant provision has been made(see Note 5). At the date of this report, we have not received sufficient evidence to enable us to determine whether these receivables are shown atthe fair value of the consideration determined by discounting all future receipts using an imputed rate of interest as required by FRS 18 for tradereceivables and FRS 39 for the other receivables, and that the amount are fully recoverable. Accordingly, we are unable to satisfy ourselves as tocarrying value of these receivables.

Opinion

Because of the significance of the matters discussed in the preceding paragraph, we do not express an opinion on the financial statements and theaccounting and other records required by the act to be kept by the company.

RSM Chio LimCertified Public Accountants

Singapore16 July, 2007Partner In charge of Audit : Kaka Singh

INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF

EURO FORBES INTERNATIONAL PTE. LTD.


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Notes 2007 2007 2006 2006SG $ INR SG $ INR

ASSETS

Current assets:

Cash and cash equivalents 4 392,494 11,234,905 263,624 7,273,386

Trade and other receivables 5 7,344,166 210,222,334 2,442,934 67,400,549

Inventories 6 42,089 1,204,772 0 0

Total current assets 7,778,749 222,662,012 2,706,558 74,673,935

Non-current assets:

Investment in associate 7 41,837 1,197,559 - -

Investment in subsidiary 8 384,977 11,019,736 - -

Other receivables 5 6,817,530 195,147,711 2,908,428 80,243,529

Plant and equipment 9 4,108 281,551 14,263 574,720

Total non-current assets 7,248,452 207,646,557 2,922,691 80,818,249

Total assets 15,027,201 430,308,569 5,629,249 155,492,184

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings 10 715,140 20,470,453 - -

Trade and other payables 11 4,313,279 123,465,023 2,184,189 60,261,775

Current tax payable 231,000 6,612,236 66,000 1,820,940

Total current liabilities 5,259,419 150,547,712 2,250,189 62,082,715

Non-current liabilities:

Long term borrowings 12 5,900,000 168,883,960 - -

Total Non-current liabilities 5,900,000 168,883,960 - -

Equity:

Share capital 13 3,500,000 93,885,000 3,500,000 93,885,000

Retained earning (accumulated losses) 367,782 10,987,057 (120,940) (3,128,253)

Foreign currency translation reserve 6,004,839 2,652,722

Total equity 3,867,782 110,876,896 3,379,060 93,409,469

Total liabilities and equity 15,027,201 430,308,569 5,629,249 155,492,184

See accompanying notes to financial statements.

BALANCE SHEET AS AT 31 MARCH, 2007


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Notes 2007 2007 2006 2006

SG $ INR SG $ INR

Revenue 14 5,430,340 156,558,331 2,951,498 78,701,694

Cost of sales (2,909,479) (83,889,819) (1,427,488) (38,059,938)

Gross profit 2,520,861 72,668,512 1,524,010 40,641,756

Financial income 15 635,387 18,318,398 149,731 3,992,577

Financial expenses 15 (461,507) (13,305,385) (234,834) (6,261,848)

Distribution costs (184,551) (5,320,661) (76,872) (2,049,792)

Administrative expenses (1,856,468) (53,522,527) (1,237,686) (33,002,894)

Other charges 16 - - (662) (17,652)

Profit before income tax 653,722 18,838,337 123,687 3,302,147

Income tax expense 18 (165,000) (4,723,026) (66,000) (1,820,940)

Profit for the year 488,722 14,115,311 57,687 1,481,207

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH, 2007

Accumulated

Losses

Share /Retained

capital earnings Total

SG$ SG$ SG$ INR

Balance at 1 April 2005 1,000,000 (178,627) 821,373 22,510,540

Profit for the year - 57,687 57,687 1,481,207

Total recongnised Income and Expenses for the year - 57,687 57,687 1,481,207

Issue of Share Capital (Note 13) 2,500,000 2,500,000 66,765,000

Balance at 31 March 2006 3,500,000 (120,940) 3,379,060 90,756,747

Balance at 1 April 2006 3,500,000 (120,940) 3,379,060 90,756,747

Profit for the year - 488,722 488,722 14,115,311

Total recongnised Income and Expenses for the year - 488,722 488,722 14,115,311

Balance at 31 March 2007 3,500,000 367,782 3,867,782 104,872,058


INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH, 2007


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2007 2007 2006 2006 SG $ INR SG $ INR

Cash flows from operating activities :

Profit for the year 488,722 14,115,311 57,687 1,481,207

Adjustments for :

Income tax expense 165,000 4,791,296 66,000 1,820,940

Depreciation expense 12,085 348,414 11,830 315,441

Interest income (635,387) (18,318,398) (149,731) (3,992,577)

Interest expense 285,287 8,224,910 - -

Loss on disposal - - 662 17,652

Operating profit/ (loss) before working capital changes 315,707 9,161,533 (13,552) (357,337)

Trade and other receivables (8,810,334) (257,725,967) (4,857,023) (134,653,305)

Inventories (42,089) (1,204,772) 33,581 891,408

Trade payables 2,129,090 63,203,248 2,075,848 57,517,341

Net cash used in operating activities (6,407,626) (186,565,958) (2,761,146) (76,601,893)

Cash flows from investing activities :

Purchase of plant and equipment (1,930) (55,245) (10,013) (262,842)

Disposal of plant and equipment - - 501 13,346

Investment in associate (41,837) (1,197,559) - -

Investment in subsidiary (384,977) (11,019,736) - -

Interest received 635,387 18,318,398 149,731 3,992,577

Net cash from/ (used in) investing activities 206,643 6,045,858 140,219 3,743,081

Cash flows from financing activities :

Proceeds from issuing capital - - 2,500,000 66,765,000

Interest Expense (285,287) (8,224,910) - -

Increase in borrowings 6,615,140 189,354,413 - -

Foreign Currency Translation Reserve 3,352,117 3,159,302

Net cash from financing activities 6,329,853 184,481,619 2,500,000 69,924,302

Net increase in cash 128,870 3,961,519 (120,927) (2,934,510)

Cash at beginning of year 263,624 7,273,386 384,551 10,207,896

Cash at end of year (Note 4) 392,494 11,234,905 263,624 7,273,386


Note : 1) The audited financial statements of the company are prepared in accordance with the laws of the country on incorporation andthey do not include the Indian Rupee equivalent figures.

2) On 31st March 2007 : SG$ 1 = Rs.28.62

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH, 2007


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1. GENERAL

The company is incorporated in Singapore with limited liability. The financial statements are presented in Singapore dollars. They are drawnup in accordance with the provisions of the Companies Act, Cap 50 and Singapore Financial Reporting Standards (“FRS”). The financialstatements were approved and authorised for issue by the board of directors on 16 July, 2007.

The principal activities of the company are those of manufacture and direct selling of water purifiers and other health related products.

The registered office address is: 35 Selegie Road, #04-07 Parklane Shopping Mall, Singapore 188307. The company is domiciled in Singapore.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING CONVENTION – The financial statements are prepared under the historical cost convention except where an FRS requirean alternative treatment (such as fair values) as disclosed where appropriate in these financial statements.

BASIS OF PRESENTATION – Consolidated financial statements have not been presented and equity method of accounting has not beenused as the company is a wholly owned subsidiary. The address of the parent company presenting the group financial statements is: P.O. Box936, G.P.O., Mumbai – 400 001.

BASIS OF PREPARATION OF FINANCIAL STATEMENT – The preparation of financial statements in conformity with generally acceptedaccounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoingbasis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies.The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significantto the financial statements, are disclosed at the end of this footnote, where applicable.

CASH AND CASH EQUIVALENTS – Cash and cash equivalents include bank and cash balances and any highly liquid debt instrumentspurchased with an original maturity of three months or less. Cash for the cash flow statement includes cash and cash equivalents less bankoverdrafts payable on demand that form an integral part of cash management and cash subject to restriction.

TRADE RECEIVABLES – After initial recognition at fair value, trade receivables are measured at amortised cost using the effective interestmethod but short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect ofimputing interest would be significant. Trade receivables are stated after provision for impairment. A trade receivable amount is regarded asimpaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition and that lossevent has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. The carrying amounts of tradereceivables are assumed to approximate their fair value. The amount of the provision is recognised in the income statement. Normally nointerest is charged on trade receivables.

LOANS AND OTHER RECEIVABLES – Loans and other receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market, not held for trading, not designated as available for sale and are not substantially recoverable otherthan because of credit deterioration which are classified as available for sale. Items with a short duration are not discounted. After initialrecognition such financial assets, including derivatives that are assets, are measured at their fair values, without any deduction for transactioncosts that may be incurred on sale or other disposal, except for the non-current financial assets that are loans and receivables which aremeasured at amortised cost using the effective interest method less provision for impairment. These items are included in the balance sheet inloan receivables and trade and other receivables as current assets or as non-current assets where the maturities are greater than 12 months afterthe balance sheet date.

INVENTORIES – Inventories are measured at the lower of cost (first in first out method) and net realisable value. Net realisable value is theestimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make thesale. A write down on cost is made for where the cost is not recoverable or if the selling prices have declined. Cost includes all costs ofpurchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

SUBSIDIARIES – A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group. Control is thepower to govern the financial and operating policies of an entity so as to obtain benefits from its activities accompanying a shareholding ofmore than one half of the voting rights or the ability to appoint or remove the majority of the members of the board of directors or to cast themajority of votes at meetings of the board of directors. The existence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the group controls another entity. In the company’s own separate financial statements, theinvestments in subsidiaries are stated at cost less any provision for impairment in value. Impairment loss recognised in profit or loss for asubsidiary is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. The net book values of the subsidiaries are not necessarily indicative of the amounts that would be realisedin a current market exchange.

NOTES TO FINANCIAL STATEMENTS 31 MARCH, 2007


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ASSOCIATES – An associate is an entity including an unincorporated entity in which the investor has a substantial financial interest (usuallynot less than 20% of the voting power), significant influence and that is neither a subsidiary nor a joint venture of the investor. Significantinfluence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over thosepolicies. Investments in associates are stated at cost less any provision for impairment in value. Impairment loss recognised in profit or lossfor an associate is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. The book values of the associates are not necessarily indicative of the amounts that would be realised in acurrent market exchange.

PLANT AND EQUIPMENT – Depreciation is provided on a straight-line basis to allocate the gross carrying amounts less their residualvalues over their estimated useful lives of each part of an item of plant and equipment. The annual rates of depreciation are as follows.

Plant and equipment - 33 %

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assetsstill in use are retained in the financial statements.

Plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses. The residual value and theuseful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous estimates, the changes areaccounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. The gain orloss arising from the derecognition of an item of plant and equipment is determined as the difference between the net disposal proceeds, if any,and the carrying amount of the item and is recognised in the income statement.

Cost also includes acquisition cost, any cost directly attributable to bringing the asset to the location and condition necessary for it to becapable of operating in the manner intended by management. Subsequent cost are recognised as an asset only when it is probable that futureeconomic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs andmaintenance are charged to the income statement when they are incurred.

IMPAIRMENT OF NON-FINANCIAL ASSETS – At each reporting date an assessment is made whether there is any indication that adepreciable or amortisable asset may be impaired. If any such indication exists, an estimate is made of the recoverable amount of the asset.Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on anintangible asset with an indefinite useful life or an intangible asset not yet available for use. The impairment loss is the excess of the carryingamount over the recoverable amount and is recognised in the income statement unless the relevant asset is carried at a revalued amount, inwhich case the impairment loss is treated as a revaluation decrease. The recoverable amount of an asset or a cash-generating unit is the higherof its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their presentvalue using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets. Forthe purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each reporting date non-financial assets other than goodwill with impairment loss recognised in prior periods areassessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount does notexceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

IMPAIRMENT OF FINANCIAL ASSETS – All financial assets except those measured at fair value through profit or loss are subject toreview for impairment. A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objectiveevidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that lossevent (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliablyestimated. Losses expected as a result of future events, no matter how likely, are not recognised.

FINANCIAL LIABILITIES – Financial liabilities at fair value through profit or loss when recognised initially are measured at fair value.Financial liabilities not at fair value through profit or loss are measured at fair value plus transaction costs that are directly attributable to theacquisition or issue of the financial liability. After initial recognition financial liabilities at fair value through profit or loss, including derivativesthat are financial liabilities, are measured at fair value. Other financial liabilities not at fair value through profit or loss are measured atamortised cost and any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the incomestatement over the period of the borrowings using the effective interest method. Financial liabilities including bank and other borrowings areclassified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the balancesheet date. Items classified within trade and other payables are not usually re-measured, as the obligation is usually known with a high degreeof certainty and settlement is short-term.

LIABILITIES AND PROVISIONS – A liability or provision is recognised when there is a present obligation (legal or constructive) as a resultof a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliableestimate can be made of the amount of the obligation. These include trade and other payables and where the effect of the time value of moneyis material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax ratethat reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision dueto passage of time is recognised as interest expense.

NOTES TO FINANCIAL STATEMENTS 31 MARCH, 2007 (Contd.)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Contd.)


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LEASES AS A LESSEE– A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Atthe commencement of the lease term, a finance lease is recognised as an asset and as liability in the balance sheet at amounts equal to the fairvalue of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Thediscount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicableto determine; if not, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognisedas an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each periodduring the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are chargedas expenses in the periods in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessoreffectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operatingleases, lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease unlessanother systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentivesreceived are recognised in the income statement as an integral part of the total lease expense.

SHARE CAPITAL – Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options areshown in equity as a deduction from the proceeds. Where the company reacquires its own equity instruments as treasury shares, the considerationpaid, including any directly attributable incremental cost is deducted from equity attributable to the company’s equity holders until the sharesare cancelled, reissued or disposed off. Where such shares are subsequently sold or reissued, any consideration received, net of any directlyattributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holdersand no gain or loss is recognised in the income statement.

FAIR VALUE OF FINANCIAL INSTRUMENT – The carrying values of current financial assets and financial liabilities including cash,accounts receivable, short-term borrowings, accounts payable approximate their fair values due to the short-term maturity of these instruments.The fair values of long-term debts are not disclosed unless there are significant items at the end of the year and are disclosed in the relevantnotes. Disclosures of fair value are not made when the carrying amount is a reasonable approximation of fair value. The maximum exposureto credit risk is the fair value of the financial instruments at the balance sheet date.

REVENUE RECOGNITION – The revenue amount is the fair value of the consideration received or receivable from the gross inflow ofeconomic benefits during the period arising from the course of the ordinary activities of the entity and it is shown net of related tax, estimatedreturns, discounts and volume rebates. Revenue from sale of goods is recognised when significant risks and rewards of ownership aretransferred to the buyer, there is neither continuing managerial involvement to the degree usually associated with ownership nor effectivecontrol over the goods sold, the amount of revenue and the costs incurred or to be incurred in respect of the transaction can be measuredreliably. Interest revenue is recognised on a time-proportion basis using the effective interest rate that takes into account the effective yield onthe asset.

FOREIGN CURRENCY TRANSACTIONS – The functional currency is the Singapore dollar as it reflects the primary economic environmentin which the entity operates. Transactions in foreign currencies are recorded in Singapore dollars at the rates ruling at the dates of thetransactions. At each balance sheet date, recorded monetary balances and balances measured at fair value that are denominated in foreigncurrencies are reported at the rates ruling at the balance sheet and fair value dates respectively. All realised and unrealised exchange adjustmentgains and losses are dealt with in the income statement. The presentation is in functional currency.

BORROWING COSTS – All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds arerecognised as an expense in the period in which they are incurred except for borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale arecapitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use orsale are complete. The interest expense is calculated using the effective interest rate method.

INCOME TAX – The income taxes are accounted using the asset and liability method that requires the recognition of taxes payable orrefundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in thefinancial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enactedor substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sumof the tax currently payable and deferred tax. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the sameincome tax authority. The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced, if necessary, by theamount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for alltemporary differences. A deferred tax liability is not recognised for all taxable temporary differences associated with investments in subsidiariesand associates because(a) the company is able to control the timing of the reversal of the temporary difference; and (b) it is probable that thetemporary difference will not reverse in the foreseeable future.

EMPLOYEE BENEFITS – Contributions to defined contribution retirement benefit plans are recorded as an expense as they fall due. Theentity’s legal or constructive obligation is limited to the amount that it agrees to contribute to the fund. This includes the government managedretirement benefit plan such as the Central Provident Fund in Singapore. For employee leave entitlement the expected cost of short-term



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employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences, when the employeesrender service that increases their entitlement to future compensated absences; and in the case of non-accumulating compensated absences,when the absences occur. A liability for bonuses is recognised where the entity is contractually obliged or where there is constructive obligationbase on past practice.

CRITICAL JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES

There were no critical judgements made in the process of applying the entity’s accounting policies that have the most significant effect on theamounts recognised in the financial statements. The key assumptions concerning the future, and other key sources of estimation uncertaintyat the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities withinthe next financial year are discussed below:

ALLOWANCES FOR DOUBTFUL ACCOUNTS – An allowance is made for doubtful accounts for estimated losses resulting from thesubsequent inability of our customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting inan impairment of their ability to make payments, additional allowances may be required in future periods. Management specifically analysesaccounts receivables when making a judgement to evaluate the adequacy of the allowance for doubtful accounts. Management has givenextended credit to the customers till their businesses stabilise does not expects significant payments in the near future. At the balance sheetdate, the receivables are measured at fair value and their fair values might change materially within the next financial year but these changeswould not arise from assumptions or other sources of estimation uncertainty at the balance sheet date.

RISK MANAGEMENT POLICIES FOR FINANCIAL INSTRUMENTS

GENERAL RISK MANAGEMENT PRINCIPLES – The entity’s financial instruments comprise borrowings, some cash and liquid resources,and various items, such as trade and other receivables, trade and other payables, that arise directly from its operations. The main purpose ofthese financial instruments is to raise finance for the entity’s operations. The main risks arising from the entity’s financial instruments arecredit risk, interest risk, liquidity risk and foreign currency risk. The management reviews and agrees policies for managing each of theserisks and they are summarised below.

CREDIT RISK ON FINANCIAL ASSETS – Financial assets that are potentially subject to concentrations of credit risk and failures bycounterparties to discharge their obligations consist principally of cash, cash equivalents and trade and other accounts receivable. Themanagement believes that the financial risks associated with these financial instruments are minimal. The cash and cash equivalents and otherliquid financial assets are placed with high credit quality institutions. An ongoing credit evaluation is performed of the debtors’ financialcondition and a loss from impairment is recognised in the income statement. There is no significant concentration of credit risk, as theexposure is spread over a large number of counterparties and customers as disclosed in the notes to the financial statements.

OTHER RISKS ON FINANCIAL INSTRUMENTS – The main risks arising from the entity’s financial instruments are interest risk, liquidityrisk and foreign currency risk. The operations are financed through a mixture of retained earnings and borrowings. Borrowings are in thedesired currencies at both fixed and floating rates of interest. The policy is to retain flexibility in selecting borrowings at both fixed andfloating rates of interest. There is exposure to interest rate price risk for financial instruments with a fixed interest rate and to interest rate orcash flow risk for financial instruments with a floating interest rate that is reset as market rates change. Interest rate swaps are not used togenerate the desired interest profit and to manage the exposure to interest rate fluctuations. There is also exposure to liquidity. As regardsliquidity, the policy has to ensure continuity of funding and where necessary a certain percentage of the borrowings should mature in two tofive years. Short-term flexibility is achieved by overdraft facilities. There is also exposure to changes in foreign exchange rates arising fromforeign currency transactions and balances and changes in fair values. These exposures and changes in fair values from time to time aremonitored and any gains and losses are included in the income statement unless otherwise stated in the notes to the financial statements.There is no policy to reduce currency exposures through forward currency contracts, derivatives transactions or other arrangements.

3. RELATED PARTY TRANSACTIONS

A related party is an entity or person that directly or indirectly through one or more intermediaries controls, is controlled by, or is undercommon or joint control with, the entity in governing the financial and operating policies, or that has an interest in the entity that gives itsignificant influence over the entity in financial and operating decisions. It also includes members of the key management personnel or closemembers of the family of any individual referred to herein and others who have the ability to control, jointly control or significantly influenceby or for which significant voting power in such entity resides with, directly or indirectly, any such individual. This includes parents,subsidiaries, fellow subsidiaries, associates, joint ventures and post-employment benefit plans, if any.

3.1 Related Companies

The company is a subsidiary of Eureka Forbes Limited, incorporated in India. The company’s ultimate parent company is Forbes GobakLimited, incorporated in India. Related companies in these financial statements refer to members of the ultimate parent company’s group ofcompanies



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There are transactions and arrangements between the company and members of the group and the effects of these on the basis determinedbetween the parties are reflected in these financial statements. The current intercompany balances are unsecured without fixed repaymentterms and interest unless stated otherwise. For non-current balances an interest is imputed based on the cost of borrowing less the interest rateif any provided in the agreement for the balance.

Significant related company transactions :

In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following :

Holding Holding Holding HoldingCompany Company Company Company

2007 2007 2006 2006SG $ INR SG $ INR

Interest Expenses 244,360 7,044,972 - -Purchases 2,026,352 58,420,336 1,198,325 31,953,336

Subsidiary Subsidiary Subsidiary SubsidiaryCompany Company Company Company

2007 2007 2006 2006SG $ INR SG $ INR

Sale of Goods 70,294 2,026,576 - -

Associate Associate Associate AssociateCompany Company Company Company

2007 2007 2006 2006SG $ INR SG $ INR

Interest Income 182,183 5,252,391 - -Sale of goods 814,476 23,481,587 - -

3.2 Key management compensation

Key management personnnel are the directors and they did not receive any compensation during the year.They received compensationfrom related corporations in their capacity as directors and/or executives of those related corporations.

3.3 Other receivables from and other payables to related parties

The trade transactions and the trade receivables and payables balances arising from sales and purchases of goods and services are disclosedelsewhere in the notes to the financial statements.

The movements in other receivables from and other payables to related parties are as follows:

Associate Associate Associate AssociateCompany Company Company Company

2007 2007 2006 2006SG $ INR SG $ INR

Other receivableBalance at beginning of the year 0 0 - -Amount paid during the year 2,004,015 57,363,727 - -Balance at end of the year 2,004,015 57,363,727 - -

Subsidiary Subsidiary Subsidiary SubsidiaryCompany Company Company Company

2007 2007 2006 2006SG $ INR SG $ INR

Other receivableBalance at beginning of the year 0 0 - -Amount paid during the year 3,353 95,978 - -Balance at end of the year 3,353 95,978 - -

NOTES TO FINANCIAL STATEMENTS 31 MARCH, 2007 (Contd.)


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NOTES TO FINANCIAL STATEMENTS 31 MARCH, 2007 (Contd.)

4. CASH AND CASH EQUIVALENTS2007 2007 2006 2006SG $ INR SG $ INR

Not restricted in use 392,494 11,234,905 263,624 7,273,386

Analysis of above amount denominnated in foreign currency:

United States Dollar 65,221 1,866,912 44,225 1,220,168United Arab Emirates Dirham 13,430 384,426 23,093 637,136The cash and cash equivalent amounts does not earn any interest.

5. TRADE AND OTHER RECEIVABLES2007 2007 2006 2006

Trade Receivables SG $ INR SG $ INR Outside parties 6,282,414 179,830,320 2,413,274 66,582,230Associate (Note 3 and 7) 814,475 23,313,858 - -Subsidiary (Note 3 and 8) 70,294 2,012,124 - -Other ReceivablesOutside Parties 5,088,670 145,660,125 3,077,310 80,455,640Associate (Note 3 and 7) 2,004,015 57,363,733 - -Subsidiary (Note 3 and 8) 3,353 95,978 - -Deposits to secure services 24,758 708,683 17,297 452,228Prepayments 35,818 1,025,269 5,581 153,980Less: Provision for impairment (162,100) (4,640,015) (162,100) (4,322,397)Total trade and other receivables 14,161,697 405,370,073 5,351,362 143,321,681

Total Current portion (7,344,166) (210,222,334) (2,442,934) (67,400,549)Non current portion - other receivables:Associate ( Note 3) 2,004,015 57,363,733 - -Outside Parties 4,975,615 142,423,994 3,070,528 84,565,926Less : Provision for Impairment (162,100) (4,640,015) (162,100) (4,322,397)Outside parties 6,817,530 195,147,711 2,908,428 80,243,529Movement in above provision:Balance at beginning of year 162,100.00 4,640,015 - -Charge for other receivables to income statement included in - - 162,100 4,322,397Financial Expense - - - -Balance at end of year 162,100 4,640,015 162,100 4,322,397Analysis of the above amount denominated in foreign currency:Thai Baht 1,673,694 47,908,487 - -Malaysian Ringgit 135,141 3,868,330 - -Philippine Peso 29,678 849,515 - -United Arab Emirates Dhiram 120,477 3,448,582 50,578 1,395,447United States Dollor 5,917,671 169,389,782 2,755,895 76,035,143Concentration of customers:Top 1 customer 3,865,899 110,659,039 1,496,815 41,297,126Top 2 customers 5,993,238 171,552,842 2,370,632 65,405,737Top 3 customers 6,807,714 194,866,729 2,413,273 66,582,202

The average credit period generally granted to non-related trade receivable customers is about 180 days (31.03.2006 : 180 days). Thecustomers are taking a longer period of credit. Current receivables with a short duration are not discounted and the carrying values areassumed to be a reasonable approximation of fair values.Non-current other receivables include working capital loans to distributors, An interest at 10% per year is charged. The term of the workingcapital loan states that the distributors shall repay the working capital loans in full together with interest or in such instalments as may bedecided by the company. Further, the company has a right to call upon the distributors to repay the loan along with interest any time afterthe period of 3 years from the date of first disbursement of the loan.


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6. INVENTORIES2007 2007 2006 2006SG $ INR SG $ INR

Goods for resale at cost 42,089 1,204,772 - -

Changes in inventories of finished goods (increase) (42,089) (1,204,772) 33,581 891,408

The amout of inventories included in cost of goods sold 2,918,783 84,149,390 1,366,792 36,425,007

7. INVESTMENTS IN ASSOCIATE2007 2007 2006 2006SG $ INR SG $ INR

Quoted equity shares at cost 41,837 1,197,559 - -

Analysis of above amount denominated in foreign currencyThai Baht 41,837 1,197,559 - -Share of net book value (146,485) - - -

The associate held by the company is listed below:Name fo associate, country of incorporation Percentage of equity heldplace of operations and principal activities group

2007 2007 2006 2006% % % %

Euro P2P Direct (Thailand) Co Ltd (a) ThailandDirect selling of wlater purifiers and other health products 49 -

(a) Other independent auditors. Audited by firms of accountants otherthan member firms of RSM International of which RSM Chio Lim in Singapore is a member

8. INVESTMENTS IN SUBSIDIARY2007 2007 2006 2006SG $ INR SG $ INR

Quoted equity shares at cost 384,977 11,019,736 – -

Analysis of above amount denominated in foreign currency:Malaysian Ringgit 384,977 11,019,736 – -

Share of net book value 275,544The subsidiary held by the company is listed below:Name of subsidiary, country of incorporation, Percentage of equity heldplace of operations and principal activities group

31.12.06 31.12.06 31.03.06 31.03.06% %

Euro Forbes International Sdn Bhd (a) Malaysia

Direct selling of water purifiers and other health related products 90 –

(a) Other independent auditors. Audited by firms of accountants otherthan member firms of RSM International of which RSM Chio Lim in Singapore is a member.

30% of the interest in subsidiary is held by an individual on behalf of the company via a trust deed made on 15 May 2006.

60% of the interest in subsidiary is held by an another company on behalf of the company via a trust deed made on 31 January 2007.


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9. PLANT AND EQUIPMENT2007 2007 2006 2006

Cost: SG $ INR SG $ INR

At the beginning of year 34,327 915,411 25,864 693,900Additions 1,930 55,245 10,013 262,842Disposals - - (1,550) (41,331)

At end of year 36,257 970,656 34,327 915,411

Accumulated deprecation:At the beginning of year 20,064 340,691 8,621 35,583Depreciation for the year 12,085 348,414 11,830 315,441Disposals - - (387) (10,333)

At end of year 32,149 689,105 20,064 340,691

Net book value:At end of year 4,108 281,551 14,263 574,720The depreciation expenses is charged to administrative expenses

10. SHORT-TERM BORROWINGS2007 2007 2006 2006SG $ INR SG $ INR

Bank loans (secured) 715,140 20,470,453 – –

Total short-term borrowings 715,140 20,470,453 – –

The range of floating rate interest rates paid were as:Bank loans 6.63% to

6.97% – –

Analysis of above amount denominated in foreign currency:United States dollars 715,140 20,470,453 – –

The short-term borrowings carry floating rates of interest. The carryingamounts are assumed to be a reasonable approximation of fair values.These are due within 3 months.

The bank loan is secured by the company’s assets.

11. TRADE AND OTHER PAYABLES2007 2007 2006 2006SG $ INR SG $ INR

Trade Payables :Parent company (Note 3) 2,085,371 59,692,494 1,089,242 30,052,187Outside parties and accrued liabilities 2,227,908 63,772,530 1,094,947 30,209,588

4,313,279 123,465,023 2,184,189 60,261,775

Analysis of above amount denominated in foreign currency:United Arab Emirates Dhiram 60,102 1,720,384 13,521 373,044Indian Rupee 746,471 21,367,284 355,501 9,808,273United States dollor 1,322,796 37,864,242 1,089,242 30,052,187Philippines Peso 595,331 17,040,993 209,692 5,785,402Indonesia Rupiah 1,165,060 33,349,143 425,485 11,739,131

The average credit period taken to settle non-related trade payablesis about 180 days (2006: 180 days). The other payablesare with short-term durations. The carrying amounts are assumed tobe a reasonable approximation of fair values.


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12. LONG TERM BORROWINGS2007 2007 2006 2006SG $ INR SG $ INR

Parent company loans payable ( Note 3) 5,900,000 168,883,960 - -The non-current portion is repayable as follows:Due within 2 to 5 years:Parent company loans payable ( Note 3) 5,900,000 168,883,960 - -

The floating rate interest rate paid were as follows:Parent company loans payable ( Note 3) 12% - 12.25% - - -

Analysis of above amount denominated in foreign currency:United States Dollar 500,000 -

The carrying value of the long-term debt approximates the fair value.

The agreement for the loan payable to parent company provides thatthey are unsecured, with the above interest rates based on market rates and repayable after one year.

13. SHARE CAPITALIssued Share Capital

Number ofShares SG $ INR

Ordinary Shares of no par value:Balance at end of year 31 March 2005 1,000,000 1,000,000 27,120,000Issue of shares at SG $ 1 each 2,500,000 2,500,000 66,765,000Balance at end 31 March 2006 and31 March 2007 3,500,000 3,500,000 93,885,000

During the year ended March 2006, 2,500,000 ordinary sharesof SG $1 each were issued at par for cash. The proceeds were used as working capital.

The ordinary shares of no par value carry no right to fixed income and are fully paid.The company is not subject to any externally imposed capital requirements.

14. REVENUE2007 2007 2006 2006SG $ INR SG $ INR

Sale of goods 5,430,340 156,558,331 2,951,498 78,701,694

15. FINANCIAL INCOME AND (EXPENSE)2007 2007 2006 2006SG $ INR SG $ INR

Foreign exchange transaction loss (176,220) (5,080,475) (72,734) (1,939,452)Interest income 635,387 18,318,398 149,731 3,992,577Interest expense (285,287) (8,224,910) - -Provision for impairment on other receivables - - (162,100) (4,322,397)

173,880 5,013,013 (85,103) (2,269,271)

Presented in the income statement as :Financial income 635,387 18,318,398 149,731 3,992,577Financial expense (461,507) (13,305,385) (234,834) (6,261,849)Financial income and (expense) net 173,880 5,013,013 (85,103) (2,269,271)

16. OTHER CHARGES2007 2007 2006 2006SG $ INR SG $ INR

Loss on disposal of plant and equipment - - 662 17,652


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17. EMPLOYEE BENEFITS EXPENSE2007 2007 2006 2006SG $ INR SG $ INR

Employee benefits expense 292,353 8,428,625 247,505 6,599,721Contributions to defined contribution plans - - 3,460 92,261

Total employee benefits expense 292,353 8,428,625 250,965 6,691,982

18. INCOME TAX2007 2007 2006 2006SG $ INR SG $ INR

Current tax expense 165,000 4,723,026 66,000 1,820,940

The income tax expense varied from the amount of income tax expensedetermined by applying the Singapore income tax rate of 18.0%(2006 : 20 %) to profit before income tax as a result of the following differences:

2007 2007 2006 2006SG $ INR SG $ INR

Profit / (loss) before tax 653,722 18,838,337 123,687 3,302,147

Income tax expense /(benefit) at the statutory rate 117,670 24,737Non allowable items 59,841 80,630Deferred tax valuation allowance (439) (29,741)Tax exemption (14,291) (10,500)Other items less than 3 % 2,219 874Total income tax expense 165,000 66,000

The net deferred tax amount in the balance sheet is as follows:Balance sheet Net Change in income statement

2007 2006 2007 2006SG $ SG $ SG $ SG $

Deferred tax assets:Excess of tax written down value over net book value of 196 635 439 1,090plant and equipmentTax losses carryforward - - - 28,651

Total deferred tax assets 196 635 439 29,741Deferred tax assets valuation allowance (196) (635) (439) (29741)

Balance – - - - -

An allowance is made to the extent that it is not probable that taxable profit will be available against which the unused taxloss carryforwards can be utilised. The realisation of the future income tax benefits from tax loss carryforwards and temporarydifferences from capital allowances is available for an unlimited future period subject to the conditions imposed by law includingthe retention of majority shareholders as defined.

There are no income tax consequences of dividends to shareholders of the company.

In 2007, the government enacted a change in the national income tax rate from 20.0% to 18.0%

19. OPERATING LEASE COMMITMENTSAt the balance sheet date the commitments in respect of operating leases with a term of more than one year were as follows:

2007 2007 2006 2006SG $ INR SG $ INR

Within one year 55,552 1,601,581 95,794 2,554,347Within 2 to 5 years - - 33,000 879,945Rental expense for the year 85,132 2,454,381 126,128 3,363,203

Operating lease payments represent rental payable for certain of its office premises. The lease rental terms are negotiated for anaverage term of 12 to 36 months and rentals are subject to an escalation clause but the amount of the rent increase is not to exceeda certain percentage. Such increases are not included in the above amounts.


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20. CHANGES AND ADOPTION OF FINANCIAL REPORTING STANDARDSFor the year ended 31 March 2007 the following new or revised Singapore Financial Reporting Standards were adopted for the first time. Thenew or revised standards did not require any material modification of the measurement method or the presentation in the financial statementsFRS No. TitleFRS 1 Presentation of Financial StatementsFRS 16 Property, Plant and EquipmentFRS 19 Employee Benefits - Amendments relating to actuarial gains and losses, group plans and disclosuresFRS 21 The Effects of Changes in Foreign Exchange Rates - Amendments relating to net investment in a foreign operationFRS 24 Related Party DisclosuresFRS 32 Financial Instruments: Disclosure and PresentationFRS 37 Provisions, Contingent Liabilities and Contingent AssetsFRS 38 Intangible Assets (*)FRS 39 Financial Instruments: Recognition and Measurement - Amendments relating to cash flow hedge accounting of

forecast intragroup transactions Amendments relating to financial guarantee contracts (*)FRS 101 First-time Adoption of Financial Reporting Standards - Amendments relating to comparative disclosures for

FRS 106 Exploration for and Evaluation of Mineral Resources (*)FRS 101 Implementation Guidance (*)FRS 104 Insurance Contracts (*)FRS 104 Implementation Guidance (*)FRS 106 Exploration for and Evaluation of Mineral Resources (*)INT FRS 104 Determining whether an Arrangement contains a LeaseINT FRS 105 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (*)INT FRS 107 Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinflationary Economies (*)INT FRS 108 Scope of FRS 102 (*)INT FRS 109 Reassessment of Embedded Derivatives (*)INT FRS 110 Interim Financial Reporting and Impairment (*)(*) Not relevant to the entity.

21. FUTURE CHANGES IN ACCOUNTING STANDARDSThe following new or revised Singapore Financial Reporting Standards that have been issued will be effective in future. The transfer to thenew or revised standards from the effective dates is not expected to have a material impact on the financial statement.FRS No. Title Effective date for periods

beginning on or afterFRS 1 Presentation of Financial Statements - Amendments relating to capital disclosures 1.1.2007FRS 10 Events after the Balance Sheet Date 1.1.2007FRS 12 Income Taxes 1.1.2007FRS 14 Segment Reporting (*) 1.1.2007FRS 17 Leases 1.1.2007FRS 19 Employee Benefits 1.1.2007FRS 32 Financial Instruments: Presentation 1.1.2007FRS 33 Earnings per Share (*) 1.1.2007FRS 39 Financial Instruments: Recognition and Measurement 1.1.2007FRS 39 Implementation Guidance (*) 1.1.2007FRS 40 Investment Property (*) 1.1.2007FRS 101 First-time Adoption of Financial Reporting Standards (*) 1.1.2007FRS 101 Implementation Guidance (*) 1.1.2007FRS 102 Share-based Payment (*) 1.1.2007FRS 103 Business Combinations(*) 1.1.2007FRS 104 Insurance Contracts (*) 1.1.2007FRS 104 Implementation Guidance - Revisions relating to FRS 107 Financial Instruments: Disclosures (*) 1.1.2007FRS 107 Financial Instruments: Disclosures - Implementation Guidance 1.1.2007FRS 108 Operating Segments (*) 1.1.2009INT FRS 105 Rights to Interests arising from Decommissioning, Restoration and

Environmental Rehabilitation Funds (*) 1.1.2007INT FRS 111 FRS102 - Group and Treasury Share Transactions (*) 1.3.2007INT FRS 112 Service Concessions Arrangements 1.1.2008(*) Not relevant to the entity.

FORBES AQUAMALL LIMITED

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( a wholly owned Subsidiary Company of Aquamall Water Solutions Limited) Annual Report and Accounts


DIRECTORS:


P.J.Reddy

A.V.Suresh

J.N.Ichhaporia

R.Ganguly

Vicco Siyem

BANKERS:

Industrial Development Bank of India Limited

AUDITORS:

K.A.Mehta & Co.

REGISTERED OFFICE:

G.S.Road, 9th Mile,

Baridua, Dist.Ri-Bhoj,

P.O.Amerigog,

Meghalaya


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REPORT OF THE DIRECTORS OF FORBES AQUAMALL LIMITED

To

The Shareholders,

Gentlemen,

Your Directors submit herewith their Report and the Audited Accounts of the Company for the year ended 31st March, 2007.



PROFIT BEFORE DEPRECIATION 2,43,52,467 2,44,83,117

Less : Depreciation 6,20,010 6,53,056

PROFIT BEFORE TAX 2,37,32,457 2,38,30,061

Less : Provision for Taxation ( Including fringe Benefit tax) 27,00,217 20,72,432

Deferred Tax - -

PROFIT AFTER TAX 2,10,32,240 2,17,57,629

Less : Income Tax for earlier year 7,634

2,17,49,995

Add : Profit brought forward from previous year 5,48,70,977 3,51,20,982

Amount available for appropriations 7,59,03,217 5,68,70,977

APPROPRIATIONSTransferred to General Reserve 18,00,000 20,00,000


2. DIVIDEND:

To conserve resources in view of the Company’s growing workingcapital requirements, your Directors do not recommend anydividend for the year under review (Previous Year – Nil).

3. OPERATIONS:

During the year the Company has registered a growth of 13.9%in sales turnover. The prices of all major inputs rose sharply duringthe year. However inspite of the unprecedented increase in inputcosts, due to the various cost control initiatives implemented bythe Company, the Company was able to maintain it’s profitability.The Directors are confident that, barring unforseen circumstances,the increase in turnover in the ensuing year shall enable theCompany to improve its profitability.

During the year under review your Company has further extendedthe range of water purification systems and the Directors are happyto report that all the products being manufactured by the Companyhave been meeting the specified quality standards and have beenwell accepted in the market.

Supplying high quality products is a focus area for your Companywhich is also taking several steps in its endeavour towardsachieving zero defects and enhancing customer satisfaction.Constant upgradations are being made in the manufacturinginfrastructure to improve the quality and productivity.

4. COMMUNITY SERVICES:

Your Company, in line with the group’s philosophy, has beenmaking efforts to be a responsible corporate citizen. The Company

has been involved in providing Water Purifiers to the variousCharitable organizations and Old Age Homes; providingscholarships to the needy students of primary schools; andorganising awareness programmes.

5. DIRECTORS:

Mr. S.L.Goklaney and Mr.A.V.Suresh , Directors retire by rotationand are eligible for re-appointment.

6. AUDITORS :

You are requested to appoint Auditors for the current year and fixtheir remuneration. The retiring Auditors, M/s. K.A. Mehta &Co., Chartered Accountants, offer themselves for re-appointment.

7. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

The information in accordance with the provision of Section217(1)(e) of the Companies Act, 1956 read with Companies(Disclosure of Particulars in the Report of Board of Directors)Rules, 1988, regarding conservation of energy, technologyabsorption and foreign exchange earnings and outgo is given inthe Annexure hereto.


The Company has no employee drawing remuneration ofRs.24,00,000/- per annum and over Rs.2,00,000/- per month ifemployed for a part of the year.

Hence, Section 217(2A) of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975, does not apply.


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Pursuant to Section 217(AA) of the Companies Act, 1956, theDirectors based on the representations received from the OperatingManagement confirm –

(i) that in the preparation of the annual accounts, the applicableaccounting standards have been followed and there are no materialdepartures;

(ii) that they have selected such accounting policies and applied themconsistently and made judgements and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial yearand of the profit of the company for that period ;

(iii) that they have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of this Act, forsafeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

(iv) that they have prepared the annual accounts on a going concernbasis.

10. SECRETARIAL COMPLIANCE CERTIFICATE:

In terms of Sub-Section I of Section 383A of the CompaniesAmendment Act 2000, the Company has obtained a SecretarialCompliance Certificate from a practicing Company Secretary.

11. APPRECIATION:

The Directors wish to convey their appreciation to all theemployees for their individual and collective contribution to theCompany’s performance. We would also like to place on recordour appreciation to the Government of Meghalaya and its variousagencies for the support and assistance provided in the smoothrunning of the unit.

On behalf of the

Board of Directors

PLACE : MUMBAI S.L.GOKLANEY

DATED : 30.06.2007 Chairman


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[Information Under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 and forming part of the Directors’ Report for the year ended 31st March, 2007.]

A. CONSERVATION OF ENERGY

1. Energy Conservation Measures taken :

The manufacturing operations of the Company do not need substantial energy inputs. However, your company has been looking at differentways of reducing the energy consumption and conserving energy in day-to-day operations through conscious efforts.

2. Additional investments and proposals, if any, being implemented for reduction of consumption of energy: The Company has been puttinga lot of emphasis in making its operations as much eco-friendly as possible with the least pollution.

3. Impact of the measures at (1) and (2) above for reduction of energy consumption and consequent impact on the cost of production of goods:The impact on the cost of production of goods is marginal but awareness amongst the people has been significant.

B. TECHNOLOGY ABSORPTION


1. Specific areas in which R & D carried out by the Company:

For all the products manufactured by the Company, totally indigenous technology has been used. Continuous efforts are being madetowards development and improvement of product quality, incorporating additional features to improve product performance and valueengineering to control costs. The Company is also working on different technologies for Water Purification systems and is producingspecial accessories to treat specific water contaminants like iron, fluoride, arsenic etc.

2. Benefits derived as a result of above efforts :

The efforts described in (1) above were directed towards better product quality, cost reduction in specific areas and productivity improvement.This would also help in expanding the application areas for Water Purifiers.


Efforts would be directed towards adopting the latest technology for water purification and following international best practices formanufacture. The main focus would continue to be on enhancing product quality, optimising costs, enhancing human asset value throughtraining and development and improving overall performance thereby achieving improved operating efficiency and customer delight.


There has been significant work done in the areas of electronics, value engineering and development of new models of water purifiers inassociation with the parent Company.

5. Technology absorption, adaptation and innovation:

The Company has not imported any technology during the last five years and has fully absorbed the indigenous technology for the modelscurrently produced.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Earnings in Foreign Exchange during the year under review was Rs.Nil and the Outgo was Rs. Nil.


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AUDITORS’ REPORT TO THE MEMBERS OF FORBES AQUAMALL LIMITED

1. We have audited the attached balance sheet of Forbes Aquamall Limited (‘the company’) as at 31st March 2007, and also the profit and lossaccount and the cash flow statement of the company for the year ended on that date annexed thereto. These financial statements are theresponsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section(4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 ofthe said Order.

4. Further to our comments in the Annexure referred to above, we report that :(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes

of our audit;(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of

those books; (iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of

account;(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting

standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;(v) On the basis of the written representations received from the directors as on 31st March, 2007, and taken on record by the Board of

Directors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together withnotes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India:(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March 2007;(b) in the case of the profit and loss account, of the profit for the year ended on that date; and(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

For K.A.MEHTA & CO.Chartered Accountants

M.Y.BamboatPartner

MUMBAI, Dated: 30-06-2007 M. No. 105794

ANNEXURE TO THE AUDITOR’S REPORT

(Referred to in paragraph 3 of our report of even date)i (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and as informed no material discrepancies wereidentified on such verification.

(c) There was no substantial disposal of fixed assets during the year. i (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In our opinion, having

regard to the nature and location of stocks the frequency of physical verification is reasonable.(b) In our opinion and according to the information and explanation given to us, procedures of physical verification of inventory followed

by management are reasonable and adequate in relation to the size of company and the nature of its business.(c) The company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of stock were

not material in relation to the operation of the company and the same have been properly dealt with in the books of accounts.iii (a) As per the information furnished, the Company has granted loan, to one company, covered in the register maintained under section

301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.85 lacs and the year- end balance of loangranted to the company was Nil.

(b) In our opinion and according to the information and explanations given to us, the terms and conditions of the loan is not prima facieprejudicial to the interest of the Company.

(c) The loan granted was re-payable on demand and it was interest free.(d) As per the information furnished, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties

covered in the register maintained under section 301 of the Companies Act, 1956.


S 81

iv In our opinion and according to the information and explanations given to us, that some of the item purchased are of a special nature andcomparative alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Companyand the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the courseof our audit, no major weakness has been noticed in the internal controls system in respect of these areas.

v (a) Based on audit procedure applied by us and according to the information and explanations provided by the management, we are of theopinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the registermaintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, that some of the items purchased are of special natureand comparable alternative quotations are not available, the transaction made in pursuance of contract or arrangement entered in theregister mentioned under Section 301 and exceeding the value of five lakhs rupees in respect of any party during the year, have beenmade at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi The Company has not accepted any deposits during the year from the public within the meaning of provisions of Sections 58A, 58AA andany other relevant provision of Companies Act, 1956 and rules made there under.

vii In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.viii To the best of our knowledge and according to the information and explanations given to us the central government has not prescribed

maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for any of the products of thecompany.

ix (a) According to the information and explanation given to us and based on the books as produced and examined by us, the Company isregular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protectionfund, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.The provisions of Employees State Insurance Act are not applicable to the company.

(b) According to the information and explanations given to us, no undisputed amount payable in respect of provident fund, investoreducation and protection fund, income tax, wealth tax, service tax, sales tax, customs duty, excise duty, cess and other undisputedstatutory dues were outstanding as at the year end for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, there are no outstanding dues of income tax, sales tax, wealth tax, servicetax , customs duty, excise duty, cess which have not been deposited on account of any dispute.

x The Company has been registered for a period of less than five years, hence we are not required to comment on whether or not accumulatedlosses at the end of the financial year is fifty percent or more of its net worth and whether it has incurred any cash losses in such financialyear and in the immediately preceding financial year.

xi Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that theCompany has not defaulted in repayment of dues to bank and the company did not have any dues to a financial institution or debentureholders during the year.

xii According to the information and explanations given to us and based on the documents and records produced to us, the Company has notgranted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

xiv In our opinion, the Company is not dealing in or trading in shares, securities, debentures or other investments. Accordingly, the provisionsof clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

xv According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bankor financial institutions.

xvi The Company has not taken any term loans during the year.xvii According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statement of

the Company, we report that no funds raised on short-term basis have been used for long-term investment. xviii According to the information and explanations given to us the Company has not made any preferential allotment of shares to the parties and

companies covered in the register maintained under section 301 of the Companies Act, 1956.xix The Company did not have any outstanding debentures during the year.xx The Company has not raised any money by way of Public issues during the year.xxi Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the

information and explanations given by the management, no fraud on or by the Company has been noticed or reported during the course ofour audit.

For K.A.MEHTA & CO.Chartered Accountants

M.Y.BamboatPartner

MUMBAI, Dated : 30-06-2007 M. No.105794


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Per our report attached

For K.A.MEHTA & CO. S.L. GOKLANEY ChairmanChartered Accountants


M.Y.BAMBOATPartner

Mumbai, Dated : 30-06-2007


As at As at

31-03-2007 31-03-2006


FUNDS EMPLOYED

1 SHARE CAPITAL ‘A’ 50,00,000 50,00,000

2 RESERVES AND SURPLUS ‘B’ 8,13,63,634 6,03,31,394

3 TOTAL SHAREHOLDERS’ FUNDS 8,63,63,634 6,53,31,394

4 DEFERRED TAX LIABILITY (Net) [Refer Note 14] 2,07,414 2,07,414

5 TOTAL FUNDS EMPLOYED 8,65,71,048 6,55,38,808


6 FIXED ASSETS ‘C’

Gross Block 69,23,882 59,53,228


Net Block 39,80,834 36,30,190

7 INVESTMENTS ‘D’ 2,76,50,436 1,07,54,761

8 CURRENT ASSETS, LOANS AND ADVANCES ‘E’ 9,46,27,270 7,82,43,464

9 Less : CURRENT LIABILITIES AND

PROVISIONS ‘F’ 3,96,87,493 2,70,89,607

10 NET CURRENT ASSETS 5,49,39,777 5,11,53,857

11 TOTAL ASSETS (NET) 8,65,71,048 6,55,38,808

12 NOTES TO THE ACCOUNTS ‘I’

}


S 83


For K.A.MEHTA & CO. S.L. GOKLANEY ChairmanChartered Accountants


M.Y.BAMBOATPartner





1 INCOME :Sales (Gross) 23,33,53,178 20,49,41,515

Less : Excise Duty [Refer Note 2] 1,50,88,106 1,59,35,016

Sales (Net) 21,82,65,072 18,90,06,499

2 OTHER INCOME ‘G’ 27,05,203 14,32,543

22,09,70,275 19,04,39,042

3 EXPENDITURE :a) Trading, Manufacturing & Other Expenses ‘H’ 19,66,17,808 16,59,55,925

b) Depreciation 6,20,010 6,53,056

c) Interest - -19,72,37,818 16,66,08,981

4 PROFIT BEFORE TAX 2,37,32,457 2,38,30,061

5 PROVISION FOR TAXATIONCurrent Year Income Tax Provision 26,51,675 20,04,657

Current Year Fringe Benefit Tax Provision 99,000 67,775

Less Prior Year Provision Reserved (50,457) -Less : Deferred Tax [Refer Note 14] - -

27,00,218 20,72,432

6 PROFIT AFTER TAX 210,32,240 2,17,57,629

7 INCOME TAX FOR EARLIER YEAR - 7,634

21,032,240 2,17,49,995

8PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR 5,48,70,977 3,51,20,982

9AMOUNT AVAILABLE FOR APPROPRIATIONS 7,59,03,217 5,68,70,977

10 APPROPRIATIONS:Transferred to General Reserve 18,00,000 20,00,000

11 SURPLUS CARRIED TO BALANCE SHEET 7,41,03,217 5,48,70,977

Number of Equity Shares 5,00,000 5,00,000

Face Value per share 10.00 10.00

Profit After Tax available to Equity Shareholders 2,10,32,240 2,17,57,629

Basic and Diluted Earning per share 42.06 43.50

12 NOTES TO THE ACCOUNTS ‘I’

}


S 84



As at31-03-2007 31-03-2006

Rupees Rupees

AUTHORISED

5,00,000 (Previous Year 5,00,000) Equity Shares of Rs.10/- each 50,00,000 50,00,000

ISSUED, SUBSCRIBED AND FULLY PAID UP:

5,00,000 (Previous year 5,00,000) Equity Shares of Rs. 10/- each 50,00,000 50,00,000

Of the above Shares :

1. 4,99,940 Equity Shares are held by the Holding CompanyAquamall Water Solutions Limited and 60 shares areheld by individuals jointly with Aquamall Water Solutions Limited

SCHEDULE ‘B’ - RESERVES AND SURPLUS

As at As at31-03-2007 31-03-2006


1. CAPITAL RESERVE


2. GENERAL RESERVE

As per last Balance Sheet 52,00,000 32,00,000

Transferred from / (to) Profit & Loss A/c 18,00,000 20,00,000

70,00,000 52,00,000

3. PROFIT AND LOSS ACCOUNT 7,41,03,217 5,48,70,977

8,13,63,634 6,03,31,394

SCHEDULE ‘C’ - FIXED ASSETS

Amount in RupeesGROSS BLOCK DEPRECIATION BLOCK NET BLOCK

DESCRIPTION OF ASSETS AS ON ADDITIONS/ DELE- AS ON AS ON FOR THE AS ON AS ON AS ON

01-04-2006 EXPENSES TIONS 31.03.2007 01-04-2006 31-03-2007 FOR 31.03.2007 31.03.2006

CAPITALISED

1 BUILDINGS 4,71,737 - - 4,71,737 1,41,147 33,059 1,74,206 2,97,531 3,30,590

2 ELECTRICAL INSTALLATIONS 6,12,479 - - 6,12,479 2,34,028 52,643 2,86,671 3,25,808 3,78,451

3 COMPUTERS 6,57,507 40,850 - 6,98,357 4,61,543 81,397 5,42,940 1,55,417 1,95,964

4 PLANT AND MACHINERY 25,33,866 9,53,058 - 34,86,924 8,96,648 2,87,314 11,83,962 23,02,962 16,37,218

5 PATTERNS AND DIES 30,000 39,676.00 - 69,676 12,401 14,313 26,714 42,962 17,599

6 FURNITURE AND FIXTURES 5,63,467 - - 5,63,467 3,12,271 45,467 3,57,738 2,05,729 251,196

7 OFFICE EQUIPMENTS 8,90,337 - 62,930 8,27,407 2,17,155 85,510 3,02,665 5,24,742 6,73,182

8 LABORATORY EQUIPMENTS 1,93,835 - - 1,93,835 47,845 20,307 68,152 1,25,683 145,990

9 CAPITAL WORK-IN-PROGRESS -

i) CAPITAL ADVANCE - - - - - - - - -

G R A N D T O T A L 59,53,228 10,33,584 62,930 69,23,882 23,23,038 6,20,010 29,43,048 39,80,834 36,30,190

PREVIOUS YEAR 56,74,315 2,93,330 14,417 59,53,228 16,69,982 6,53,056 23,23,038 36,30,190


S 85

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH, 2007

SCHEDULE ‘D’ - INVESTMENTS

As at As at31-03-2007 31-03-2006

Nos. Rupees Rupees RupeesCURRENT INVESTMENTSNON-TRADE INVESTMENTS - QUOTEDquity Shates of -IDFC Ltd.Fully paid Equity Shares of Rs.10/- each 2,388 81,192 81,192

(2,388)Bank of BarodaFully paid Equity Shares of Rs.10/- each 14,581 33,53,630 33,53,630

(14,581)Andhra BankFully paid Equity Shares of Rs.10/- each 22,524 18,19,939 18,19,939RPLI PO - QIB - R (22,524)Fully paid Equity Shares of Rs.10/- each 1,399 83,940 -

(Nil)Power Finance Corporation LimitedFully paid Equity Shares of Rs.10/- each 2,491 2,11,735 -

(Nil) 55,50,436 52,54,761NON-TRADE INVESTMENTS - UNQUOTEDFace Value Rs.10/- eachPrudential ICICI Floating Rate Plan A - Growth - 55,00,000(Purchased during the year 12,34,698.562 Units;Sold during the year 17,45,277.758 Units)HDFC MF Monthly Income Plan-Long Term-Growth 30,00,000 -(Purchased during the year 2,09,254.635 Units)SBI Arbitrage Opportunities Fund-Growth 51,00,000 -(Purchased during the year 5,10,000 Units)DSP Merrill Lynch Fixed Term Plan Series 1 I-Growth 50,00,000 -(Purchased during the year 2,75,156.581 Units)Sundaram BNP Paribas Fixed Term Plan Series XXV-Grow 50,00,000 -(Purchased during the year 5,00,000 Units)Birla Fixed Term Plan Quarterly Series 11 40,00,000 -(Purchased during the year 1,00,000 Units)

2,76,50,436 1,07,54,761

QUOTED INVESTMENTS 55,50,436 52,54,761UNQUOTED INVESTMENTS 2,21,00,000 55,00,000TOTAL 2,76,50,437 107,54,761

Market Value of Quoted Investments 55,10,943 53,36,746

Investments acquired and sold during the year other than shown above :a. 3,53,573.295 Units of Rs.10/- each Templeton Floating Rate Income Fund - Short Term Plan - Growthb. 23,54,656.552 Units of Rs.10/- each DWS Money Plus Fund - Growth Optionc. 2,09,254.635 Units of Rs.10/- each HDFC Liquid Fund Growthd. 13,99,692.068 Units of Rs.10/- each Principal Cash Management Fund - Liquid Option Dividend Reinvestmente. 12,34,698.562 Units of Rs.10/- each Prudential ICICI Long Term Floating Rate Plan A - Growth - Acquiredf. 17,45,277.758 Units of Rs. 10/- each Prudential ICICI Long Term Floating Rate Plan A - Growth - Sold


S 86


SCHEDULE ‘E’ - CURRENT ASSETS, LOANS AND ADVANCES

As at As at31-03-2007 31-03-2006

Rupees Rupees Rupees Rupees1 CURRENT ASSETS:

[i] Stock-in-trade: *

Raw material and Components 2,31,36,265 2,77,60,528

Packing Material 9,84,317 9,25,757

Stores and spare parts 79,377 10,129

Work-in-Progress 11,53,750

Finished Goods 1,04,769 1,67,427

* (As valued and certified by the Management

at lower ofcost and net realisable value) 2,43,04,728 3,00,17,591

[ii] Sundry Debtors (Unsecured)

(Considered good unless otherwise stated)

[a] Debts outstanding for a period exceeding

six months - -

[b] Other debts [Due from holding company 4,43,94,818 1,65,08,936

(Previous Year Nil )

4,43,94,818 1,65,08,936

[iii] Cash and Bank Balances:

Cash, cheques on hand and remittance in transit 88,243 1,04,865


In Current Accounts 147,11,690 86,52,788

In Deposit Accounts 1,01,00,000

1,47,99,933 1,88,57,653

2 LOANS AND ADVANCES


[i] Advances recoverable in cash or

in kind or for value to be received 41,94,386 70,95,333

[ii] Advance Payment of Income Tax 63,30,413 52,68,526

Advance Payment of Fringe Benefit Ta 2,83,228 1,96,228

66,13,641 54,64,754

[iii] Deposits :

With Government Authorities 1,26,564 1,05,997

With Others 1,93,200 1,93,200

3,19,764 2,99,197

1,11,27,792 1,28,59,284

9,46,27,270 7,82,43,464


S 87


SCHEDULE ‘F’ - CURRENT LIABILITIES AND PROVISIONS

As at As at31-03-2007 31-03-2006


1 CURRENT LIABILITIES

Sundry Creditors:

Small Scale Industrial Undertakings 120,11,193 65,39,773

[Refer Note 15]87

Others 2,00,78,789 1,20,11,148

[Including Rs. Nil /- (Previous

Year Rs.22,79,887/) due to Holding Company]

3,20,89,982 1,85,50,921

Other Current Liabilities 2,11,336 12,93,670

3,23,01,318 198,44,5912 PROVISION :

For Income Tax 60,91,332 50,96,987

For Fringe Benefit Tax 1,66,775 67,775

For Expenses 11,28,068 20,80,254

3,96,87,493 2,70,89,607

SCHEDULE ‘G’ - OTHER INCOME


Rupees Rupees

1 Interest from Deposits, Loans & Advances (Gross) 7,38,934 6,24,108

[Tax deducted at source Rs.1,54,765/-;

(Previous year Rs.1,52,314/-) ]

2 Dividend Received on Mutual Funds 75,293 46,599

3 Profit on Sale of Investments (Net) 13,86,438 5,12,362

4 Excess / Short Provisions written back 3,68,035 98,802

5 Miscellaneous Income 1,36,503 1,50,673

27,05,203 14,32,543


S 88



SCHEDULE ‘H’ - MANUFACTURING, TRADING AND OTHER EXPENSESYear Ended Previous31-03-2007 Year


1 RAW MATERIAL AND COMPONENTS CONSUMED : 17,20,24,577 13,61,32,763

2 PAYMENTS TO AND PROVISIONS FOR EMPLOYEES:

Salaries, Wages and Bonus 52,77,581 37,54,138

Workmen and Staff Welfare Expenses 5,13,553 3,83,015

57,91,134 41,37,153

3 OPERATIONS AND OTHER EXPENSES :

Packing Material Consumed 61,93,878 91,28,432

Stores Consumed 37,53,133 20,66,188

Power, Electricity and Water Charges 5,50,722 3,45,184

Repairs and Maintenance -

Machinery 211,564 87,651

Other Assets 9,34,625 10,57,358

11,46,189 11,45,009

Insurance 194,387 207,272

Rent 8,10,651 8,46,500

Rates, Taxes and Filing Fees 7,88,730 6,97,851

Travelling Expenses 2,97,974 3,26,336

Auditors’ Remuneration:

Audit Fees 75,000 75,000

Tax Audit Fees 6,500 6,500

Out of Pocket expenses 18,378 1,100

99,878 82,600

Freight and Octroi ,22,925 25,11,234

Directors’ Sitting Fees 70,000 80,000

Loss In Value of Investment ,, 2,07,221

Pre-Operative Expenses Written Off - ,

Legal & Professional Charges 17,29,645 20,10,147

Other Establishment Expenses 19,27,578 20,75,986

1,74,85,689 2,17,29,960

4 ADJUSTMENT FOR STOCKS :(Other than Raw Material and Components)(a) Opening Stock : Finished Goods 1,67,427 41,32,377

Work-in-Progress 11,53,750 11,44,849

13,21,177 52,77,226

(b) Closing Stock :Finished Goods 1,04,769 1,67,427


1,04,769 13,21,177

12,16,408 39,56,049

19,66,17,808 16,59,55,925


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SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31STMARCH, 2007

SCHEDULE ‘I’- NOTES TO THE ACCOUNTS


a) Basis of Accounting


b) Fixed Assets

Fixed Assets are stated at cost less depreciation. Cost comprises of the purchase price and any attributable cost of bringing theassets to its working condition for its intended use.

c) Investments

Current Investments are carried at lower of cost and quoted/fair value. Long term investments are carried at cost. Provision fordiminution in the value of long term investment is made only if such decline is not temporary in the opinion of the Management.

d) Inventories

Inventories are valued at cost or net realisable value, whichever is lower by using weighted average basis.

e) Sales

Sales are accounted for on despatch / delivery of goods to the customers and are net of sales returns, discounts, Sales Tax andExcise Duty, as applicable.

f) Depreciation

Depreciation is provided on the written down value method and at the rates and in the manner specified in Schedule XIV of theCompanies Act, 1956.

g) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction at the rates under therelative forward exchange contracts. Transactions not covered by forward exchange contracts and outstanding at the year endare translated at the exchange rates prevailing at the year end and the profit / loss so determined; and also the realized exchangegains / losses are recognized in the Profit and Loss Account.

h) Pre-Operative Expenses

Expenses incurred prior to the commencement of commercial production have been capitalised and were shown under thegeneral group heading of ‘Miscellaneous Expenditure’ except to the extent that they are written off to Profit and Loss Account.

i) Taxation:

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at theamount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflectsthe impact of current year timing differences between taxable income and accounting income for the year and reversal of timingdifferences of earlier years.

j) Earnings Per Share :

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (afterdeducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during theperiod.

2. The Company’s factory is located in a notified area eligible for Central Excise benefits. Net Excise Duty paid on sale of goods is eligible forrefund. Excise Duty which has been netted off against gross sales is the duty amount using CENVAT credit availed on purchases.

3. Estimated amount of contracts remaining to be executed on Capital accounts and not provided for – Nil

4. Contingent liabilities not provided for : Nil

5. The amount of exchange differences included in the profit and loss account is a net loss of Rs. 1.40 Lacs (net loss previous year–Rs.0.91 lacs)

2006-2007 2005-2006

Rupees Rupees

6. Value of Imports on CIF basis : Raw Materials & Components

40,41,317 46,73,842


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SCHEDULE ‘I’- NOTES TO THE ACCOUNTS (Contd...)

7. Raw Materials and Components consumed during the year :For the year ended For the year ended

31.03.2007 31.03.2006Unit Quantity Value (Rupees) Quantity Value(Rupees)

a) Printed Circuit Boards Nos 71,432 3,45,28,801 64,472 2,32,74,411b) Aluminium Kgs 36,922 52,11,884 65,818 19,33,398c) Acrilo Butadyne Styryne (ABS) Kgs2 9,318 26,56,106 49,464 75,41,521d) Others — — 12,96,27,786 — 10,33,83,434

17,20,24,577 13,61,32,7648. Value of imported and Indigenous Raw Materials and Components consumed and percentage of each to total consumption :

2006-07 2005-06Rupees % to Total Rupees % to Total

Consumption Consumptiond) Indigenous 16,58,61,782 96.00% 13,21,41,984 97.10e) Imported 61,62,795 4.00% 39,90,780 2.90

17,20,24,577 100.00% 13,61,32,764 100.00


9. Expenditure in Foreign Currency on account of travel, subscription, certification, etc. - NIL -10. Particulars in respect of goods manufactured:

Class of goods manufactured Unit Annual Capacity ActualInstalled Production

i) Water Purifier (Depolluting) Equipment 71,765(Water Filter-cum-Purifier) Nos. 1,00,000(1,00,000) (61,517)

ii) Forbes Iron Remover Nos. 24,000 (24,000) 11,696 (10,266)iii) Forbes Ironil Nos. 12,000 (12,000) 8,182 (6,698)iv) 10” Iron Remover Core Assembly Nos. 24,000 (24,000) 13,404 (12,233)

(Figures in brackets pertain to previous year)Per Industrial Policy, 1991, as amended, no licences are required for the products manufactured by the Company.11. Particulars of Inventory and Turnover of manufactured products:

Class of goods Unit Opening Stock Closing Stock Sales/Disposals

Nos. Rs. Nos. Rs. Nos. Rs.i) Water Purifier (Depolluting) Nos. 72 1,64,718 36 10,4,769* 71,801 21,67,94,001

Equipment (Water Filter-cum-Purifier) (1,805) (39,49,195) (72) (1,64,718) * (63,250) (18,94,74,397)ii) Forbes Iron Nos. 6 2,000 0 0 11,702 59,09,605

Remover (2) (585) (6) (2,000) (10,262) (51,86,350)iii) Forbes Ironil Nos. — — 0 0 8,182 69,54,700

(281) (1,82,597) (—) (—) (6,979) (59,21,950)iv) 10” Iron Remover Core Assembly Nos. 4 709 0 0 13,408 31,50,880

(—) (—) (4) (709) (12,229) (28,73,815)v) Components 5,43,992

(14,85,003)T O T A L 1,67,427 1,04,769 23,33,53,178

(41,32,377) (1,67,427) (20,49,41,515)

* Includes value of Accessories.Sales and Disposals includes free samples, shortages, breakages etc., and is net of returns.(Figures in brackets pertain to previous year)


S 91



12. The Company has a single business segment as per Accounting Standard 17 dealing with “Segment Reporting” issued by the Institute ofChartered Accountants of India.

13. As required under Accounting Standard 18 on “Related Party Disclosures” issued by the Institute of Chartered Accountants of India, thelist of related parties and their transactions is attached.

14. The Company is entitled to deduction under section 80IB of the Income Tax Act, 1961. The Deferred Tax in respect of timing differenceswhich originate during the tax holiday period and reverse during the tax holiday period are no not recognised as specified in AccountingStandard 22 “Accounting for Taxes on Income” .

15. Total outstanding dues to small scale industries have been determined to the extent such parties have been identified on the basis ofinformation available with the Company. The list of small scale industries to whom the Company owes any sum which is outstanding formore than 30 days as on 31st March 2007 are :

S.No. SSI Undertaking Name S.No. SSI Undertaking Name

1 Ambika Engg.Works 25 Printech Solutions

2 Ashok Rubber Works 26 Quality Anodizers

3 Amar Engineering Enterpris 27 R K Packaging

4 Agrawal Fastners Pvt Ltd. 28 Sankhla Industries

5 Brahmputra Packing 29 Solid Electronics

6 Binu Enterprises 30 Sri Lakshmi Agencies

7 Excel Engineering Industri 31 S.N.Rubber Works

8 Eskay Kaycee Industries Pv 32 Seagull Graphics

9 Filtrex International Pvt 33 Sucharitha Power Systems

10 Filtrex Technologies Pvt L 34 Shree Ganesh Industries.

11 Golden Technologies 35 Span Plastic (P) Ltd.

12 Jagapati Industries 36 Skycab Sales Agency

13 Kamrup Exports (P) Ltd 37 Srinivasa Packaging.

14 Lakshmi Enterprises 38 Super Bright Co

15 M N Engineering Works 39 Sri Lakshmi Sai Graphics

16 Mica Polytech Pvt Ltd 40 Sujana Associates

17 Maruti Engineering Company 41 Sumayya Industries

18 M.R.L.Packers Pvt.Ltd 42 S.V. Electronics

19 Metlok Company 43 Stypack Private Limited

20 Marktac Displays 44 Triple ‘Sss’ Rubbers & Pla

21 Merit Enterprises 45 U.S. Engineerings (P) Ltd.

22 Oxford Packaging Pvt Ltd. 46 Venkateswara Optics

23 Precision Metal Stampings 47 Vijay Plastic Industries

24 Pennar Profiles Limited 48 Vijetha Polytek Pvt Ltd


S 92



The Company has not received the required information from suppliers regarding their status under the Micro, Small and Medium EnterprisesDevelopment Act,2006. Hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid/payable asrequired under the said Act have not been made.

16. Additional information as required under Part IV of Schedule VI of Companies Act, 1956.Balance Sheet Abstract and Company’s General Business Profile.

I. Registration Details

Registration No. 1 3 - 0 6 9 0 0 State Code 1 3

Balance Sheet Date 3 1 0 3 2 0 0 7

Date Month Year

II. Capital raised during the year (Amounts in Rs. Thousands)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III. Position of mobilization and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

1 2 6 2 5 9 1 2 6 2 5 9

Source of Funds

Paid-up Capital Reserves & Surplus

5 0 0 0 8 1 3 6 3

Secured Loans Unsecured Loans

N I L N I L

Application of Funds

Net Fixed Assets Investments

3 9 8 0 2 7 6 5 0

Net Current Assets Deferred Tax Liability

5 4 9 3 9 2 0 7

Misc. Expenditure/Preliminary Expenses Accumulated Losses

N I L N I L

IV. Performance of Company (Amount in Rs. Thousands)

Turnover & Other Income Total Expenditure

2 2 0 9 7 0 1 9 7 2 3 7

+ - Profit Before Tax + - Profit After Tax

2 3 7 3 2 2 1 0 3 2

Earnings Per Share in Rs. Dividend Rate %

4 2 . 0 6 N I L

V. Generic Name of Principal Product / Services of Company (As per monetary terms)

Item Code No. (ITC Code) 8 4 2 1 2 1 0 0

Product Description W A T E R P U R I F I E R

( D E P O L L U T I N G )

E Q U I P M E N T

( W A T E R F I L T E R -

C U M - P U R I F I E R )

18. Previous year’s figures have been regrouped or rearranged wherever necessary.

� �


S 93

Related Party Disclosure – As specified by Accounting Standard 18

I) Name of related Party and nature of relationship where control exists are as under:

A. Enterprises having more than one half of Voting Powers:

Aquamall Water Solutions Limited

Eureka Forbes Limited


Shapoorji Pallonji & Co. Ltd.

Sterling Investment Corp. Pvt. Ltd

Cyrus Investments

B. Enterprises that are under common control:

Forbes Abans Cleaning Solutions Pvt Ltd.

Forbes Aquatech Ltd.

Euro Forbes International Pte. Ltd.


II) Transactions with Related Parties:

Nature of Transactions Related Party referred to in A above

Purchases

Goods and Materials 95,38,832Fixed Assets —

Sales Goods and Materials 23,40,02,537Expenses

Rent and other service charges 21,39,969Interest —Provision / Write offs —

Income

Rent and other service charges 23,78,160Finance

Loan and Advances given 1,40,00,000Loans and Advances taken —Repayment of Advances given 1,40,00,000Repayment of Advances taken —ICDs taken —Share Capital Received —Dividend paid —Outstanding

Receivables 44,53,299Payables 60,91,561ICDs taken —Other Deposits Taken —


S 94


( Rupees ) ( Rupees )2006-2007 2005-2006

PROFIT BEFORE TAX AND EXTRAORDINARY ITEMS 2,37,32,457 2,38,30,061Adjusted for

Depreciation 6,20,010 6,53,056Profit on Sale of Investments (13,86,438) (5,12,362)Interest Income (7,38,934) (6,24,108)Dividend Income (75,293) (46,599)Pre-Operative Expenses Written off - -oss in value of Investments ,, 2,07,221

(15,80,655) (3,22,791)2,21,51,802 2,35,07,270

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES AND OTHER ADJUSTMENTS

Changes inTrade and Other Receivables (,2,50,05,503) (55,25,002)Inventories 57,12,863 (86,26,118)Trade Payables and Others 1,15,04,541 41,59,589

(77,88,099) (99,91,531)Other AdjustmentsCapital subsidy short received - (42,312)Refund of previous year advance tax , (7,634)

,, (49,946)(,77,88,099) (1,00,41,477)

CASH GENERATED FROM OPERATIONS 1,43,63,703 1,34,65,793Direct Taxes Paid (27,55,759) (22,94,271)

( a) NET CASH FROM OPERATING ACTIVITIES 1,16,07,944 1,11,71,522CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (including adjustments on (9,70,654) (2,78,913)account of capital work-in-progress and capital advances)Purchase of Investments (1,55,09,237) (5,69,61,982)Sale of Investments - 495,05,839Interest Received 7,38,934 6,34,156Dividend Received 75,293 46,599

( b) NET CASH FROM / (USED IN) INVESTING ACTIVITIES (1,56,65,664) (70,54,301)CASH FLOW FROM FINANCING ACTIVITIES

( c) NET CASH FROM / (USED IN) FINANCING ACTIVITIES - -NET DECREASE / INCREASE IN CASH ANDCASH EQUIVALENTS ( a) + ( b) + ( c) (,,40,57,720) 41,17,220CASH AND CASH EQUIVALENTS AS ATTHE COMMENCEMENT OF THE YEAR, COMPRISING:Cash, Cheques on hand & Remittances in transit 1,04,865 2,56,564Balance with scheduled banks on current accounts anddeposit accounts 1,87,52,788 1,44,83,869

1,88,57,653 1,47,40,433CASH AND CASH EQUIVALENTS AS ATTHE END OF THE YEAR, COMPRISING:Cash, Cheques on hand & remittances in transit ,88,243 1,04,865Balances with scheduled banks on current accounts anddeposit accoun 1,47,11,690 187,52,788NET DECREASE /INCREASE AS DISCLOSED ABOVE 1,47,99,933 1,88,57,653

(,,40,57,720) 41,17,220

Note: Figures for the previous year have been regrouped wherever necessary.


For K.A.MEHTA & CO.Chartered Accountants S.L. GOKLANEY Chairman

P.J.REDDYM.Y.BAMBOAT A.V. SURESH DirectorsPartner J.N. ICHHAPORIA

Mumbai, Dated : 30-06-2007

}


S 95

FORBES CAMPBELL HOLDINGS LIMITED

(a wholly owned Subsidiary Company) Annual Report and Accountsfor the year ended 31st March, 2007

DIRECTORS:

C.G. Shah Chairman

K. C. Mehra

R.T. Doshi

C.A. Karnik

J.G. Kanaga

M.L. Khetan

BANKERS:

Union Bank of India

AUDITORS:

Messrs. Batliboi & Purohit

REGISTERED OFFICE:

Forbes Building

Charanjit Rai Marg,

Fort,

Mumbai 400 001


S 96

2. DIVIDEND:

Having regard to the operating result for the year, the Board ofDirectors of the Company have paid an Interim Dividend at therate of rs.5/- per share i.e. an aggregate amount of Rs.100 lakhs.For the previous year ended 31st March, 2006, the Companydeclared dividend at the rate of Rs.1.00 per share amounting toRs.20 lakhs.

3. INVESTMENTS:

The Position of Investments is as under:

As at As at 31-03-2007 31-03-2006

Rupees Rupees

Quoted Investments - -

Unquoted Investments 1,74,16,403 3,43,79,155

TOTAL 1,74,16,403 3,43,79,155

During the year the Company opted for redemption of Units ofMutual Fund.

4. AMALGAMATION:

With the change of ownership of our Company, we have becomesubsidiary of Forbes Finance Limited. Our Company and Forbes

DIRECTORS’ REPORT

The Shareholders,

The Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March, 2007.

1. FINANCIAL RESULTS: Current Year Previous YearRupees Rupees

Total Income 1,16,67,402 36,41,884Less: Expenditure 97,734 1,52,137

Balance 1,15,69,668 34,89,747Less: Provision for Doubtful Loan - 34,74,000

Profit Before Prior Period Items 1,15,69,668 15,747Less: Prior year Tax Adjustment - 3,33,285

Profit/Loss Before Tax 1,15,69,668 (3,17,538)Less: Provision for Tax

Current Income Tax 12,82,000 9,82,000

Fringe Benefit Tax 500 -

Profit/Loss after Tax 1,02,87,168 (12,99,538)Add: Excess Provision for Taxation written Back - 1,20,713Add: Amount brought forward from previous year 3,53,11,411 3,87,70,736

Balance available for Appropriations 4,55,98,579 3,75,91,911

APPROPRIATIONS TO: -Equity Dividend 1,00,00,000 20,00,000Dividend Tax 14,02,500 2,80,500Transfer to General Reserve 20,58,000 -Surplus carried to Balance Sheet 3,21,38,079 3,53,11,411

4,55,98,579 3,75,91,911

Finance Limited are having similar business, objective etc &hence amalgamation of our Company with Forbes FinanceLimited will give a greater advantage in terms of economics ofscale, common clientele etc. Forbes Finance Limited., our parentCompany has proposed our getting merged with them alongwithWarrior (Investment) Limited.

Your Directors recommend the amalgamation with ForbesFinance Limited.

5. DIRECTORATE:

Mr. K.C. Mehra and Mr. C.G. Shah, retire from the Board byrotation and are eligible for re-appointment. Your Directorsrecommend their appointments.

6. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors M/s. Batliboi &Purohit, Chartered Accountants, offer themselves for re-appointment as Auditors of the Company.


The Company did not have any employee who was entitled toreceipt of Rs.24,00,000/- or more in aggregate throughout thefinancial year or Rs.2,00,000/- or more per month for a part ofthe financial year.


S 97


Pursuant to section 217(2AA) of the Companies Act, 1956, theDirectors based on the representations received from the OperatingManagement confirm:

a) that in the preparation of the annual accounts, the applicableaccounting standards had been followed and that there areno material departures;

b) that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company forthat period;

c) that they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a goingconcern basis.

9. INFORMATION REQUIRED UNDER THE COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF

BOARD OF DIRECTORS) RULES, 1988.

A) Conservation of energy and technology absorption:

Since the Company does not own any manufacturing facility,particulars relating to conservation of energy and technologyabsorption are not applicable.

B) Foreign exchange earnings and outgo:

The Company has not earned and used any foreignexchange during the year.

For and on behalf of the Board of Directors,

C. G. SHAH Chairman

Mumbai,Dated : 18th May, 2007.


S 98

AUDITORS REPORT TO THE MEMBERS OF FORBES CAMPBELL HOLDINGS LIMITED

1. We have audited the attached balance sheet of Forbes Campbell Holdings Limited (“the Company”)as at 31st March 2007, and also theprofit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred in paragraph 3 above, we report that:


(b) In our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examinationof those books.

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount.

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

(e) On the basis of the written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on March 31, 2007 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the AccountingPrinciples generally accepted in India;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007.

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.



K.K. Kshirsagar

Place : Mumbai Partner

Dated : 18th May, 2007 Membership No. 4047

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS

OF FORBES CAMPBELL HOLDINGS LTD ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH,

2007.

i. The company does not have any fixed assets. Accordingly the provision of clause 4(i) of the Companies (Auditor’s Report) Order, 2003 (asamended) are not applicable.

ii. Company does not have any inventory. Accordingly the provision of clause 4(ii) of the Companies (Auditor’s Report) Order, 2003 (asamended) are not applicable.

iii. (a) Company has granted unsecured loans to two parties covered in the register maintained under Section 301 of the Companies Act,1956. The maximum amount involved during the year was Rs. 6,19,50,000 and the year end balance of loans granted to such partieswas Rs. 5,38,50,000.

(b) In our opinion and according to the information and explanations given to us, rate of interest and other terms and conditions of loangiven by the company are not prima facie prejudicial to the interest of the company.

(c) In respect of the loans granted, repayment of the principal amount is stipulated and the payment of interest have been regular exceptin case of interest free loan given to Lathem India Ltd.


S 99

(d) Based on the Audit procedures and the information and explanations given to us, there is an overdue amount in respect of loan givento Lathem India Ltd for which the Company is taking reasonable steps for recovery of the principal amount. However, the Companyhas made necessary provision for the same.

(e) As informed the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956.

iv. The Company does not have any inventory or fixed assets hence the provisions of clause 4(iv) of Companies (Auditor’s Report), 2003 (asamended) in respect of internal control is not applicable.

v. There are no contracts or arrangements with the company covered under section 301 of the Companies Act., 1956.

vi. The company has not accepted any deposits from the public within the meaning of provision of Section 58A, 58AA or any other relevantprovisions of the Companies Act, 1956 and the rules framed there under.

vii. In our opinion the Company has an internal audit system commensurate with its size and nature of its business.

viii. The Company being an investment company is not required to maintain cost records under clause (d) of subsection (1) of section 209 ofthe Companies Act, 1956.

ix. (a) The company is regular in depositing undisputed statutory dues including provident fund, Investor education and protection fund,Employees State Insurance, Income Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriateauthorities. Sales tax, wealth Tax, customs duty and Excise duty are not applicable to the company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees state insurance, income – tax , Wealth – Tax, Service Tax, Sales Tax, Customs Duty, exciseduty, cess and other undisputed statutory dues were outstanding at the year end for a period of more than six months from the datethey become payable.

(c) According to the information and explanations given to us, there are no dues of Income tax, sales tax, wealth tax, service tax, customsduty, excise duty and cess which have not been deposited on account of any dispute.

x. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediatelypreceding financial year.

xi. The Company did not have any dues to financial institution, banks or debenture holders during the year.

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

xiii. Company is not a chit fund / nidhi / mutual benefit fund / societies. Therefore, the provisions of clause 4 (xiii) of the Companies (AuditorsReport) Order 2003 (as amended) are not applicable to the company.

xiv. In our opinion, the Company is not trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause4 (xiv) of the Companies (Auditors Report) Order 2003 (as amended) are not applicable to company

xv. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from bankor financial institutions.

xvi. The Company did not have any term loans outstanding during the year.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are ofthe opinion that the company has not raised any funds on short term basis.

xviii. Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301of the companies Act, 1956.

xix. The Company did not have outstanding debentures during the year.

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

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per theinformation and explanations given by the management, we report that no fraud on or by the company has been noticed or reported duringthe course of our audit.


K.K. KshirsagarPlace: Mumbai Partner

Dated : 18th May, 2007 Membership No. 4047


S 100


As atSchedule 31-Mar-2006


SOURCES OF FUNDS :

1. SHAREHOLDERS FUNDS :

A. Share Capital A 20,000,000 20,000,000B.Reserves & Surplus B 53,627,079 54,742,411

73,627,079 74,742,411

73,627,079 74,742,411APPLICATION OF FUNDS :

1. INVESTMENTS : C 17,416,403 34,379,155

2. CURRENT ASSETS, LOANS AND ADVANCES : DA. Cash and Bank Balances 1,943,148 1,370,800B. Loans and Advances 54,283,820 41,283,619

56,226,968 42,654,419

Less : CURRENT LIABILITIES AND PROVISIONS EA. Sundry Creditors 16,292 10,663B. Provisions

0 2,280,500

16,292 2,291,163

NET CURRENT ASSETS 56,210,676 40,363,256

73,627,079 74,742,411

NOTES TO THE ACCOUNTS (SCHEDULE ‘ F ‘ ) F

As per our report of even date attached C. G. Shah Chairman

For BATLIBOI & PUROHIT K. C. Mehra

Chartered Accountants R. T. Doshi

C. A. KarnikDirectors

M. L. Khetan

K. K. KSHIRSAGAR M. K. Sonawala Company Secretary

Partner

Membership No. 4047

Mumbai, Dated : 18th May, 2007

}


S 101

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007

As at31-Mar-2006

Rupees Rupees Rupees1. INCOME :

Dividend (Gross) 4,888,932 645,037Interest (Gross) 3,905,141 2,996,847(Tax Deducted at Source Rs. 882201/- Previous Year Rs.6,69,935/-)Profit on Sale of Investments 2,223,329 0Provision for Doubtful Loan, no longer 650,000 0required written back

11,667,402 3,641,8842. EXPENDITURE :

Auditors Remuneration :Audit Fees 7,500 7,500Tax Audit Fees 5,000 0Service Tax 1,545 918Out of Pocket Expenses 59 2,600

14,104 11,018Professional Tax 2,500 2,500Directors Fees 46,000 46,000Miscellaneous Expenses 35,130 21,369Loss on Sale of Investments 0 71,250

97,734 152,13711,569,668 3,489,747

Provision for Doubtful Loan 0 3,474,000Profit Before Prior Period Items 11,569,668 15,747Prior Year Tax Adjustment 0 333,285

3. Profit/ Loss before Tax 11,569,668 (317,538)4. Provision for Taxation - Income Tax 1,282,000 982,000

Fringe Benefit Tax 500 05. Profit/ Loss after Tax 10,287,168 (1,299,538)6. Excess Provision for Taxation Written back. 0 120,7137. Surplus as per previous year Accounts 35,311,411 38,770,7368. Balance Available for Appropriations 45,598,579 37,591,9119. Appropriations to :

Interim Dividend 10,000,000 0Proposed Dividend 0 2,000,000Dividend Tax 1,402,500 280,500Transfer to General Reserves 2,058,000 0Surplus carried to Balance Sheet 32,138,079 35,311,411

45,598,579 37,591,911

No. of Eqity Shares 2,000,000 2,000,000Face value per share 10 10Basic and Diluted Earning per share 5.14 (0.65)NOTES TO THE ACCOUNTS (SCHEDULE ‘F’)





M. L. Khetan


Partner

Membership No. 4047


}


S 102



As at

31-Mar-2006Rupees Rupees

AUTHORISED :

20,00,000 Equity Shares of Rs. 10/- each 20,000,000 20,000,00015,00,000 12% Cumulative Redeemable pref. Share of Rs. 10/-each 15,000,000 15,000,0005,00,000 Unclassified Share of Rs. 10/- each 5,000,000 5,000,000

40,000,000 40,000,000

ISSUED SUBSCRIBED AND PAID-UP :

20,00,000 Equity Shares of Rs.10/- each Fully paid-up 20,000,000 20,000,000( Out of the above, 1280000 shares are held by Forbes Gokak Ltd.which is asubsidiary of Sterling Investment Corporation Private Ltd.The ultimate holding company is Shapoorji Pallonji & Company Ltd.)

20,000,000 20,000,000

SCHEDULE ‘B’ - RESERVES & SURPLUS

As at31-Mar-2006

Rupees RupeesRESERVES FUND:

Balance as per last balance sheet 19,431,000 19,431,000Add: Transferred from Profit & Loss Account 2,058,000 -

21,489,000 19,431,000SURPLUS:

As per Profit & Loss Account 32,138,079 35,311,411

53,627,079 54,742,411


S 103

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH,2007

SCHEDULE ‘C’ INVESTMENTS (LONG TERM TRADE INVESTMENTS)

As at

31-Mar-2006

Rupees Rupees

1. QUOTED-EQUITY SHARES : NIL NIL

2. OTHERS :

DSP Merrill Lynch - 375346 Units of Rs.10/- each 0 3,800,000

HDFC Floating rate bond 355675 (Prev. Year 347548) Units of Rs. 10/- each 0 3,485,497

Franklin Templeton 348229 (Prev. Year 340793 ) Units of Rs,10/- each. 0 3,501,505

Grindlays Floating rate 596007 Units of Rs.10/- each 0 6,000,000

0 16,787,002

3. UNQUOTED-EQUITY SHARES :


5000 fully paid shares of Rs. 10/- each. 50,000 50,000

Tornado Appliances Ltd.

2400 fully paid shares of Rs. 10/- each. 24,003 24,003

Barwil Forbes Shipping Ser. Ltd.,

NIL (Prev. Year2000 fully paid shares of Rs. 100/- each.) 0 175,750

Warrior (Investment) Ltd.

720000 fully paid shares of Rs. 10/- each 17,366,400 17,366,400

P.T.Gokak , Indonesia

687 fully paid shares of US $ 1000/- each. 5,639,486 5,639,486

Forbes Technosys Ltd.

215980 fully paid shares of Rs.10/- each. 131,035 131,03523,210,924 23,386,674

23,210,924 40,173,676

Less: PROVISION FOR DIMINUTION IN

VALUE OF INVESTMENTS. 5,794,521 5,794,521

TOTAL RUPEES 17,416,403 34,379,155

As at 31-03-2007 As at 31-03-2006

Aggregate Aggregate

Cost Cost

Unquoted Investment 17,416,403 34,379,155

17,416,403 34,379,155


S 104


SCHEDULE ‘D’ - CURRENT ASSETS, LOANS AND ADVANCES

As at

31-Mar-2006


1. CURRENT ASSETS :

Cash and Bank balances :

Cash on hand 14,329 13,266


On Current Accounts 1,928,819 1,357,534

1,943,148 1,370,800

2. LOANS AND ADVANCES :

(UNSECURED, CONSIDERED GOOD)

Deposits with Companies

Good and Unsecured 53,850,000 41,200,000

Doubtful and Unsecured 2,824,000 3,474,000

56,674,000 44,674,000

Less: Provision for Doubtful Loan 2,824,000 3,474,000

53,850,000 41,200,000

Advances recoverable in cash or in kind or

for value to be received.

Unsecured, Considered Good 500,000 0

54,350,000 41,200,000

Advance Payment of Tax (66,180) 83,619

(Net after Provision for Taxation)

54,283,820 41,283,619

56,226,968 42,654,419

SCHEDULE ‘E’ - CURRENT LIABILITIES AND PROVISIONS

As at

31-Mar-2006


CURRENT LIABILITIES :

Sundry Creditors 16,292 10,663

PROVISIONS :

Proposed Dividend 0 2,000,000

Dividend Tax 0 280,500

16,292 2,291,163


S 105


SCHEDULE ‘F’ NOTES TO THE ACCOUNTS


A. BASIS OF ACCOUNTING :

The Financial Statement are prepared under historical cost convention, on accural basis, and are in accordance with the requirements of theCompanies Act, 1956 and comply with the Accounting Standards referred to in sub-section (3C) of the Section 211 of the said Act.

B. INVESTMENTS

Long term investments are stated at cost less provision for diminution in value, where applicable. Current investments are stated at lowerof cost and fair value.

2 The additional information as required under Schedule VI of the Companies Act, 1956 has not been furnished as the same is not applicable.

3 No amount is due to Small Scale Industries ( SSI ) as at 31st March, 2007.

4 I. Related Party Disclosures : As required by Accounting Standard 18

A. Enterprises collectively having more than one half of voting powers :

As on 31-3-2007 As on 31-3-2006

Shapoorji Pallonji & Co. Ltd. (Ultimate Holding Co.) Shapoorji Pallonji & Co. Ltd. (Ultimate Holding Co.)

Sterling Investment Corporation Pvt. Ltd. Sterling Investment Corporation Pvt. Ltd.

Forbes Gokak Ltd. Forbes Gokak Ltd.

B. Associate Companies

As on 31-3-2007 As on 31-3-2006

Warrior (Investment) Ltd. Forbes Sterling Star Ltd. Warrior (Investment) Ltd. Forbes Sterling Star Ltd.

Forbes Services Ltd. Latham India Ltd. Forbes Services Ltd. Latham India Ltd.

Forbes Technosys Ltd. Forbes Aquamall Ltd. Forbes Technosys Ltd. Forbes Aquamall Ltd.

Forbes Tinsley Co. Ltd. Forbes Doris & Naess Maritime Ltd. Forbes Tinsley Co. Ltd. Forbes Doris & Naess Maritime Ltd.

Aquamall Water Solutions Ltd. Forbes Abans Cleaning Solu. Pvt. Ltd. Aquamall Water Solutions Ltd. Forbes Abans Cleaning Solu. Pvt.Ltd.

Eureka Forbes Ltd. Next Gen Publishing Ltd. Eureka Forbes Ltd. Next Gen Publishing Ltd.

Volkart Fleming Shipping & Ser.Ltd. Euro Forbes Int.Pte.Ltd. Volkart Fleming Ship. & Ser.Ltd. Euro Forbes Int.Pte.Ltd.

Forbes Finance Ltd. Forbes Finance Ltd.


S 106

II Transactions with related parties

Nature of Transactions

Referred to in Referred to in

“A” above “B” above

31.03.2007 31.03.2006 31-03-07 31-03-06

Income

1. Interest Received 3,886,604 2,985,452 18537 0

2. Dividend Received — — 4320000 —

Expenses

3. Dividend Paid 7,680,000 — 4320000 —

Finance

4. Deposits Placed 23,850,000 5,000,000 — —

5. Deposits Refunded 50,500,000 400,000 — —

Outstandings

6. Deposits Given 14,550,000 41,200,000 39800000 —

III Related Party Disclosures

The above transactions includes :

1. All amounts referred in table ‘A’ are with a single party viz. Forbes Gokak Ltd.

2. Item No.1B and 6B represents transactions with Forbes Finance Ltd.

3. Item No.2B and 3B represents transactions with Warrior (Investment) Ltd.





M. L. Khetan


Partner

Membership No. 4047


}


S 107

Statement pursuant to Part IV of Schedule VI to the Companies Act, 1956.

Balance Sheet and Company’s General Business Profile

I Registration Detailes

Registration No. 17434 State code 11

Balance Sheet Date 31-03-2007

II. Capital Raised During The Year (Amount Rs. In Thousands)

Public Issue NIL Bonus Issue NIL

Rights Issue NIL Private Placement NIL

III. Position of Mobilisation And Deployment of Funds

(Amount Rs. In Thousands)

Total Liabilities 73627 Total Assets 73627

Sources of Funds Application of Funds

Paid up Capital 20000 Net Fixed Assets NIL

Reserves & Surplus 53627 Investments 17416

Secured Loans NIL Net current Assets 56211

Unsecured Loans NIL Misc. Expenditure NIL

Accumulated Losses NIL

IV. Performance of Company (Amount Rs. In Thousands)

Turnover 11667

Total Expenditure 98

Profit/(Loss) Before Tax 11569 Profit/(Loss) After Tax 10287

Earning Per Share (Rs.) 5.14 Dividend Rate (%) 50

V. General Names of Three Principal Products/Services of The Company (As Per Monetary Terms)

Item Code No. (ITC Code) Product Deacription INVESTMENT CO.

Item Code No. (ITC Code) Product Deacription



S 108

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2007

2006-07 2005-06CASH FLOW FROM OPERATING ACTIVITIES Rupees Rupees Rupees RupeesPROFIT / LOSS BEFORE TAX 11,569,668 (317,538)Adjustments :

Dividend Income (4,888,932) (645,037)Interest Income (3,905,141) (2,996,847)Profit on Sale of Investments (2,223,329) - -Recovery of Doubtful Debts (650,000) -Loss on sale of Investments - 71,250Provision for doubtful loan - 3,474,000Prior year tax adjustment - (11,667,402) 333,285 236,651

OPERATING PROFIT BEFORE WORKING

CAPITAL CHANGES & OTHER ADJUSTMENTS (97,734) (80,887)

Change in Debtors/ Advances (500,000) 24,932Direct Taxes Paid (1,132,701) (1,212,180)Change in Sundry Creditors 5,629 (1,627,072) (8,806) (1,196,054)

(A) NET CASH FLOW FROM OPERATING ACTIVITIES (1,724,806) (1,276,941)CASH FLOW FROM INVESTING ACTIVITIESDividend Income 4,888,932 645,037Interest Income 3,905,141 2,996,847Sale of Investments 19,186,081 966,115Recovery of Doubtful Debts 650,000 -Loss on sale of Investments - (71,250)Change in Deposits with Companies (12,650,000) (3,100,000)

Dividend Paid (12,000,000) -

Dividend Tax Paid (1,683,000) -(B) NET CASH FLOW FROM INVESTING ACTIVITIES 2,297,154 1,436,749

CASH FLOW FROM FINANCING ACTIVITIES - -NET INCREASE/DECREASE IN CASH ANDCASH EQUIVALENTS (A+B) 572,348 159,808Cash and Cash Equivalents as at the commencement ofthe year comprising Cash & Balance with Banks 1,370,800 1,210,992Cash and Cash Equivalents as at the end of the year comprisingCash & Balance with Banks 1,943,148 1,370,800

NET INCREASE/DECREASE AS DISCLOSED ABOVE 572,348 159,808





M. L. Khetan


Partner

Membership No. 4047


}


S 109

FORBES CONTAINER LINE PTE. LTD.

(incorporated in Singapore)

DIRECTORS :

Capt. S. P. Rao Chairman

Mr. P. Unnikrishnan

BANKERS :

Oversea-Chinese Banking Corporation, Singapore

AUDITORS :

Moore Stephens

Certified Public Accountants

11, Cellyer Quay

# 10-02, The Arcade

Singapore - 049317

REGISTERED OFFICE :

19, Keppel Road

# 03-08, Jit Poh Building

Singapore - 089058

(a wholly owned Subsidiary Company) Annual Report and Accounts for the year ended 31st March, 2007



S 110

DIRECTORS’ REPORT

The directors present their report to the shareholder together with theaudited financial statements of Forbes Container Line Pte. Ltd.(the“Company”) for the financial period from 7 August 2006 (date ofincorporation) to 31 March 2007.

1. Directors

The directors of the Company in office at the date of this reportare:

Surya Prasad Rao (appointed on 7 August 2006)

Padmakumar Unnikrishnan (appointed on 7 August 2006)

2. Arrangements to Enable Directors to Acquire Shares orDebentures

Neither at the end of nor at any time during the financial periodwas the Company a party to any arrangement whose object wasto enable the directors of the Company to acquire benefits bymeans of the acquisition of shares in or debentures of the Companyor any other body corporate.

3 Directors’ Interests in Shares or Debentures

None of the directors holding office at the end of the financialyear had any interest in the share capital of the Company andrelated corporations as recorded in the register of directors’shareholdings.

4 Directors’ Contractual Benefits

Since the date of incorporation, no director of the Company hasreceived or become entitled to receive a benefit by reason of acontract made by the Company with the director or with a firm of

which he is a member, or with a company in which he has asubstantial financial interest except, in respect of director’sremuneration as disclosed in the financial statements.

5 Options Granted

During the financial period, no option to take up unissued sharesof the Company has been granted.

6 Options Exercised

No shares have been issued during the financial period by virtueof the exercise of options to take up unissued shares of theCompany.

7 Options Outstanding

There are no unissued shares of the Company under option at theend of the financial period.

8 Auditors

The auditors, Moore Stephens, retire and being eligible haveexpressed their willingness to accept reappointment.

Directors

…………………………………

SURYA PRASAD RAO

…………………………………

PADMAKUMAR UNNIKRISHNAN

31.07.2007


S 111

STATEMENT BY THE DIRECTORS31 MARCH 2007

In the opinion of the directors, the financial statements set out on pages 6 to 19* are drawn up so as to give a true and fair view of the state of affairsof the Company as at 31 March 2007 and of the results of the business, changes in equity and cash flows of the Company for the period from 7August 2006 (date of incorporation) to 31 March 2007.

At the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

Directors

………………………………………..

SURYA PRASAD RAO

………………………………………..

PADMAKUMAR UNNIKRISHNAN

Singapore

31.07.2007

* i.e. pages 6 to 19 of this report



S 112

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDER OF FORBES CONTAINER LINE PTE.LTD.(INCORPORATED IN SINGAPORE)

We have audited the accompanying financial statements of Forbes Container Line Pte. Ltd., comprising the balance sheet as at 31 March 2007 andthe income statement, statement of changes in equity and cash flow statement for the period from 7 August 2006 (date of incorporation) to 31March 2007 and a summary of significant accounting policies and other explanatory notes as set out on pages 6 to 19.


The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with SingaporeFinancial Reporting Standards and the Singapore Companies Act, Cap. 50 (the “Act”). This responsibility includes designing, implementing andmaintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with SingaporeStandards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance whether the financial statements are free of material misstatement.

An audit includes performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selecteddepend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and reasonablenessof accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion,

(a) the financial statements are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act ”) andSingapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Company as at 31 March 2007 andthe results, changes in equity and cash flows of the Company for the period from 7 August 2006 (date of incorporation) to 31 March 2007;and

(b) the accounting and other records required by the Act to be kept by the Company have been properly kept in accordance with the provisionsof the Act.

In forming our opinion we have considered the adequacy of the disclosures made in the financial statements concerning the financial position of theCompany which has net liabilities of S$29,794 (INR 853,300) as at 31 March 2007. The financial statements have been prepared on a goingconcern basis, the validity of which depends on the shareholder providing continuing financial support to the Company. In this regard, the shareholderhas given its undertaking to do so. Details of the circumstances relating to the fundamental uncertainty are described in Note 2(l) to the financialstatements. We consider that the fundamental uncertainties have been adequately accounted for and disclosed in the financial statements.

Moore Stephens

Certified Public Accountants

Singapore

31.07.2007


S 113

INCOME STATEMENT

FOR THE PERIOD FROM

7 AUGUST 2006 (DATE OF INCORPORATION) TO 31 MARCH 2007

Period from Period from

7.8.2006 to 7.8.2007 to

Note 31.3.2007 31.3.2007

S$ INR

Revenue 3 2,704,357 78,061,246

Cost of sales (2,493,203) 71,966,305

Gross profit 211,154 6,094,959

Administrative expenses (295,885) (8,535,900)

Other operating expenses (11,103) (320,489)

Interest expense - holding company (5,212) (149,272)

Loss before income tax 4 (101,046) 29,10,701

Income tax expense 7 (8,748) (250,543)

Loss for the period (109,794) (3,161,244)



S 114

BALANCE SHEET

AS AT 31 MARCH 2007

Note 2007 2007

S$ INR

ASSETS

Non-Current Assets

Plant and equipment 8 103,545 2,965,529

Current Assets

Trade receivables 9 265,309 7,598,450

Other receivables 10 38,627 1,106,277

Cash and bank balances 11 138,899 3,978,067

442,835 12,682,794

Total Assets 546,380 15,648,323

EQUITY AND LIABILITIES

Share capital and reserves

Share capital 12 80,000 2,291,200

Accumulated losses (109,794) (3,161,244)

Foreign Currency Translation Reserve - 16,741

Total equity (29,794) (853,303)

Current liabilities

Loan from holding company 13 224,306 6,424,124

Trade payables 14 267,275 7,654,757

Other payables 15 17,403 498,423

Advances from a related company 16 67,190 1,924,322

576,174 16,501,625

Total Equity and Liabilities 546,380 15,648,323


S 115

STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM


Share Capital Accumulated Loss Total

S$ INR S$ INR S$ INR

Issuance of ordinary share capital at

date of incorporation 80,000 2,291,200 - - 80,000 2,291,200

Net loss for the period - - (109,794) (3,161,244) (109,794) (3,161,244)

Balance at 31 March 2007 80,000 2,291,200 (109,794) (3,161,244) (29,794) (870,044)



S 116

CASH FLOW STATEMENT

FOR THE PERIOD FROM


Period from Period from7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Cash Flows from Operating Activities

Loss before income tax (101,046) (2,910,701)

Adjustments for:

Depreciation of plant and equipment 21,429 613,727

Interest expense 5,212 149,272

Foreign Currency Translation Reserve - 16,742

Operating cash flow before working capital changes (74,405) (2,130,961)

Changes in working capital:

Trade receivables (265,309) (7,598,450)

Other receivables (38,627) (1,106,277)

Trade payables 267,275 7,654,757

Other payables 8,655 247,879

Advances from a related company 67,190 1,924,322

Net cash used in operating activities (35,221) (1,008,730)

Cash Flows from Investing Activities

Purchase of plant and equipment (124,974) (3,579,255)

Net cash used in investing activities (124,974) (3,579,255)

Cash Flows from Financing Activities

Proceeds from issuance of share capital 80,000 2,291,200

Loan from holding company 219,094 6,274,852

Net cash generated from financing activities 299,094 8,566,052

Net increase in cash and cash equivalents for the period 138,899 3,978,067

Cash and cash equivalents comprise of:

Cash and bank balances 138,899 3,978,067


S 117

NOTES TO THE FINANCIAL STATEMENTS — 31 MARCH, 2007

These notes form an integral part of and should be read in conjunction with the accompanying financial statements:

1 General

The Company was incorporated on 7 August 2006 as a limited liability company and domiciled in the Republic of Singapore. The principalplace of business is 19 Keppel Road, #03-08 Jit Poh Building, Singapore 089058.

The Company is a wholly owned subsidiary of Forbes Gokak Limited, a company incorporated and publicly listed in India.

The principal activities of the Company are those freight forwarding and services allied to transport of goods.

The board of directors have authorised the issue of the financial statements on the date of the statement by directors.

2 Significant Accounting Policies

(a) Basis of Preparation

The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Cap. 50 and SingaporeFinancial Reporting Standards (“FRS”). The financial statements have been prepared under the historical cost convention, except asdisclosed in the accounting policies below.

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptionsthat affect the application of accounting policies and reported amounts of assets, liabilities, revenues and expenses, and disclosuresmade. Estimates and judgements are continually evaluated and are based on historical experience and relevant factors, includingexpectations of future events that are believed to be reasonable under the circumstances.

In the process of applying the Company’s accounting policies, which are described below, the director is of the opinion that anyinstances of application of judgements are not expected to have a significant effect on the amounts recognised in the financialstatements.

FRS Not Yet Effective

The Company has not applied the following relevant FRS that has been issued but is only effective for annual financial years beginningafter 1 January 2007:

FRS 107Financial Instruments: Disclosures

The application of the above new standard will not affect any of the amounts recognised in the financial statements, but will changethe disclosures presently made in relation to the Company’s financial instruments, and the objectives, policies and processes formanaging capital. FRS 107 requires more disclosures in relation to all risks arising from financial instruments, including credit riskand liquidity risk. The standard also requires a sensitivity analysis of market risks and how changes for each type of market risk wouldhave impacted profit or loss in the period.

(b) Revenue Recognition

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognisedif there are significant uncertainties regarding recovery of the consideration due, associated costs or possible returns of goods.

Freight income is recognised over the duration of voyages. At the balance sheet date, revenue and costs in relation to the uncompletedportion of a voyage are deferred and recognised in the subsequent accounting period. Time charter revenue is recognised over the lifeof time charter agreements.

Interest income is recognised on a time-proportion basis, by reference to the principal outstanding and at the effective interest rateapplicable.

(c) Functional Currency and Foreign Currency Transactions

(i) Functional currency

Items included in the financial statements of the Company are measured using the currency that best reflects the economicsubstance of the underlying events and circumstances relevant to the Company (“the functional currency”). The financial statementsare presented in Singapore dollars, which is the functional currency of the Company.



S 118

(ii) Foreign currency transactions

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currencyusing the exchange rates prevailing at the dates of the transactions. Gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilities denominated in the foreign currencies at the closing ratesat the balance sheet date are recognised in the income statement.

(d) Taxation

Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts for financial statements. Deferred tax is charged or credited to the income statement, exceptwhen it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred taxassets and liabilities are offset when they relate to income taxes levied by the same tax authority. Deferred income tax is determinedusing tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the relateddeferred tax asset is realised or deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which thetemporary differences can be utilised.

(e) Plant and Equipment

Plant and equipments are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is calculated on the straight-line method to write off the cost over their estimated useful lives. The estimated useful livesare as follows:

Software system - 3 years

Computers - 3 years

Office equipment - 5 years

Furniture and fittings - 5 years

The residual values and useful life of plant and equipments are reviewed and adjusted as appropriate, at each balance sheet date. Fullydepreciated assets are retained in the financial statements until they are no longer in use.

Subsequent expenditure relating to plant and equipment that has already been recognised, is added to the carrying amount of the assetonly when it is probable that future economic benefits, in excess of the standard performance of the asset before the expenditure wasmade, will flow to the Company and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense inthe income statement during the financial year in which it is incurred. When assets are retired or otherwise disposed of, their carryingvalue and the related accumulated depreciation and any impairment values are removed from the financial statements, and anyresulting gain or losses are reflected in the income statement for the year.

(f) Trade and Other Receivables

Trade and other receivables are initially measured at fair value, and subsequently measured at amortised cost, using the effectiveinterest method, less allowance for impairment. An allowance for impairment of trade receivables is established when there is objectiveevidence that the Company will not be able to collect all amounts due according to the original term of the receivables. The amount ofthe allowance is the difference between the asset’s carrying amount and the present value of the estimated cash flows discounted at theoriginal effective interest rate. The amount of the allowance is recognised in the income statement. The credit terms of trade receivablesare 30 days.

(g) Trade and Other Payables

Trade and other payables including loan from holding company and advances from a related company, are initially measured at fair valueand subsequently measured at amortised cost, using the effective interest method. The credit terms of trade payables are 30 days.

(h) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can bemade of the amount of the obligation.

(i) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and bank balances.


S 119

(j) Employee Benefits

(i) Defined contribution plans

Contributions to defined contribution plans are recognised as an expense in the income statement as incurred.

(ii) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimatedliability for annual leave as a result of services rendered by employees up to the balance sheet date.

(k) Operating Leases

Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the incomestatement on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way ofpenalty is recognised as an expense in the period in which termination takes place.

(l) Going Concern

As of 31 March 2007, the Company had net liabilities of S$29,794 (INR 853,300). The financial statements have been prepared on agoing concern basis as the shareholder has undertaken to provide continuing financial support as and when required. The directors areof the opinion the financial support will be available when required. In the absence of such support, the going concern basis will notbe valid and provisions may need to be made for any shortfall on realisation of assets and further liabilities that may arise.

3 Revenue


7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Freight service income 873,907 25,225,326

Charter hire income 1,830,450 52,835,939

2,704,357 78,061,264

4 Loss before Income Tax


7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Net loss for the period has been arrived at after charging:

Depreciation of plant and equipment (Note 8) 21,429 613,727

Rental – operating lease expense 32,055 925,268

5 Staff Costs


7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Staff salaries and related costs 106,116 3,063,038

Contributions to defined contribution plans 8,456 244,082

114,572 3,307,121



S 120

6 Director’s Remuneration


7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Salaries and other costs 75,750 2,186,524

Contributions to defined contribution plans 1,770 51,091

Consultation fee 9,000 259,785

86,520 2,497,400

7 Income Tax

Income tax expense on the results for the financial period varies from the amount of income tax determined by applying the Singaporestandard rate of income tax to loss before taxation due to the following:


7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007

S$ INR

Loss before income tax (101,046) (2,910,701)

Income tax benefit at statutory rate of 18% (18,188) (582,140)

Non-allowable expenses 490 15,703

Deferred tax asset not recognised 17,698 567,630

Withholding tax expense 8,748 250,543

8,748 250,543

There is no current taxation charge for the Company for the financial period due to the loss incurred. As at the balance sheet date, the Companyhas unabsorbed capital allowance and tax losses of approximately S$21,000 (INR 601,440) and S$77,000 (INR 2,205,280) respectivelyavailable for set-off against future taxable profits of the Company subject to agreement by the Tax Authorities and compliance with therelevant provisions of the Singapore Income Tax Act.

The deferred tax assets of S$17,698 (INR 506,871) are not recognised in accordance with the accounting policy as set out in note 2(d).

8 Plant and Equipment

Software System Computers Office Equipment Furniture and TotalFittings

S$ INR S$ INR S$ INR S$ INR S$ INR2007Cost Additions and at 31 March 2007 70,378 2,015,626 41,006 1,174,412 1,690 48,402 11,900 340,816 124,974 3,579,255Accumulated depreciation Depreciation for the period and at 31 March 2007 12,490 357,714 7,761 222,275 186 5,327 992 28,411 21,429 613,727Net book value At 31 March 2007 57,888 1,657,912 33,245 952,137 1,504 43,075 10,908 312,405 103,545 2,965,529


S 121

9 Trade Receivables

Trade receivables are denominated in the following currencies:

2007 2007

S$ INR

Singapore dollar 16,961 485,763

United States dollar 248,348 7,112,687

265,309 7,598,450

10 Other Receivables

2007 2007

S$ INR

Deposits 32,850 940,824

Prepayments 5,777 165,453

38,627 1,106,277

11 Cash and Bank Balances

Cash and bank balances are denominated in the following currencies:

2007 2007

S$ INR

Singapore dollar 88,607 2,529,112


138,899 3,978,067

12 Share Capital

2007 2007

S$ INR

Issued and fully paid - 80,000 ordinary shares 80,000 2,291,200

13 Loan from Holding Company

The loan bears interest at 8.5% per annum and is denominated in the following currencies:

2007 2007

S$ INR

Singapore dollar 100,000 2,864,000

Euro 119,094 3,410,852

219,094 4,274,852

Accrued interest 5,212 149,272

224,306 6,424,124

The loans are rolled over on 51 and 160 days terms and are repayable in cash.

14 Trade Payables

2007 2007

S$ INR

Trade payables are denominated in the following currencies:

Singapore dollar 27,406 784,908


267,275 7,654,757



S 122

15 Other Payables

2007 2007

S$ INR

Accrued expenses 8,655 247,879

Withholding tax provision 8,748 250,543

17,403 498,423

16 Advances from a Related Company

The advances from a related company are interest free, unsecured and repayable on demand.

17 Lease Commitments

The company leased its office premises from 1 August 2006 to 31 July 2008 renewable for such terms and conditions as may be agreed uponwith the lessor. At the balance sheet date, the Company was commited to make the following payments in respect of operating leases:

2007 2007

S$ INR

Payable:

Within 1 year 46,080 1,319,731

After 1 year but within 5 years 15,360 439,910

61,440 1,759,641

18 Financial Risk Management Policies

The Company’s activities expose it to a variety of financial risks, including the effects of changes in foreign exchange rates, interest rates,credit risk and liquidity risk. The Company does not use any financial derivatives to hedge its risks.

(i) Foreign exchange risk

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarilywith respect to financial assets and liabilities denominated in the United States dollar.

The Company does not engage in activities to hedge its foreign currency exposures. The Company monitors the fluctuation inexchange rates closely to ensure that the exposure to the risk is minimised.

(ii) Interest rate risk

The Company does not have any significant interest rate risk.

(iii) Credit risk

The maximum exposure to credit risk in the event that counterparties fail to perform their obligations as at the end of the financialyear in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the balance sheet.

(iv) Liquidity risk

The Company’s policy on liquidity risk management is to maintain sufficient cash and the availability of funding through adequateamounts of committed credit facilities. The shareholder has also undertaken to provide the necessary financial support to enable theCompany to continue its business on a going concern basis.

(v) Fair value of financial assets and liabilities

The carrying amount of current receivables and payables are assumed to approximate their fair values.

19 Comparative Figures

This being the first set of financial statements of Company since incorporation on 7 August 2006, there are no comparatives.


S 123

DETAILED INCOME STATEMENTFOR THE FINANCIAL PERIOD FROM


Period from Period7.8.2006 to 7.8.2006 to

31.3.2007 31.3.2007S$ INR

FREIGHT SERVICE INCOME 2,704,357 78,061,264

LESS: COST OF SERVICE 2,493,203 71,966,305

GROSS PROFIT 211,154 6,094,959

LESS: OPERATING EXPENSES

Administrative expenses:

Advertising and promotion 5,734 165,512

Bank Charges 423 12,210

Communication expenses 10,826 312,492

Conveyance 1,286 37,120

CPF contributions 8,456 244,082

Depreciation of plant and equipments 21,429 613,727

Directors’ remuneration 86,520 2,497,400

Entertainment 2,188 63,157

General expenses 5,014 144,729

Housekeeping 1,900 54,844

Insurance 77 2,223

Newspaper and periodicals 33 953

Office equipment rental 899 25,950

Postage and courier 1,305 37,669

Printing and stationery 4,367 126,053

Rental expense 32,055 925,268

Salaries 105,312 3,039,831

Staff welfare benefits 804 23,207

Travelling 6,152 177,577

Utilities 1,105 31,896

295,885 8,535,900

Other operating expenses:

Consultation expenses 8,320 240,157

Formation expenses 2,721 78,542

Loss in foreign exchange 62 1,790

11,103 320,489

Finance cost:

Interest expenses paid to holding company 5,212 149,272

5,212 149,272

LOSS BEFORE INCOME TAX 101,046 2,910,701

FORBES DORIS & NAESS MARITIME LIMITED

S 124

(Subsidiary Company) Annual Report and Accountsfor the year ended 31st March,2007

DIRECTORS :

Capt. S.P.Rao Chairman

N. Wirth

J. H. Rand IV

A.Menon

BANKERS :

Hongkong & Shangai Banking Corp.

AUDITORS :

U.V.Shah & Co.,

REGISTERED OFFICE :Forbes Building,Charanjit Rai Marg,Fort, Mumbai 400 001



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3. OPERATIONS :

The Company is in the business of ship management and is lookingfor acquiring ships for management. The Company is also exploringopportunities available in other alternative lines relating to shippingindustries and is negotiating with various shipping companies. TheCompany has incurred a loss of Rs. 1.49 lakhs during the year underreview.

4. DIRECTORATE :

Capt. S. P. Rao, Mr. N. Wirth, Mr. J. H. Rand and Mr. A. Menon areon the Board of Directors of the Company.

Mr. N.Wirth is due for retirement by rotation.

5. SECRETARIAL COMPLIANCE CERTIFICATE :

Pursuant to Section 383A of the Companies Act,1956, secretarialcompliance certificate from M/s Rathi & Associates, PracticingCompany Secretaries is attached.

6. AUDITORS :

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors, M/s U.V.Shah & Co.,Chartered Accountants, offer themselves for re-appointment.

Auditors, in their Report for the year, have commented that theCompany did not have an internal audit system during the year.Director wish to advise that the requirement of an internal auditsystem is presently not applicable to the Company.

DIRECTORS’ REPORT

To,The Shareholders,Gentlemen,

1. Your Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March,2007.

2. FINANCIAL RESULTS :

Current Year ended Previous Year ended

31.3.2007 31.3.2006

Rupees Rupees

a. Profit/(Loss) before Depreciation ( 77,255) (19,97,965)

b. Less: Depreciation 72,041 61,133

c. Profit/ (Loss) before tax (1,49,296) (20,59,098)

d. Less: Provision for taxation-

-Deferred Tax - (1,652)

- Fringe Benefit Tax - 11,500

e. Profit/(Loss) after tax (1,49,296) (20,68,947)

f. Add: Balance brought forward from previous year (23,99,186) (3,30,239)

g. Balance carried to Balance Sheet (25,48,482) (23,99,186)


The Company did not have any employee who was entitled to receiptof a remuneration of Rs. 24,00,000 or more in aggregate throughoutthe financial year or Rs. 2,00,000 or more per month for a part ofthe financial year.


Pursuant to the provisions of section 217 (2A) of the CompaniesAct,1956, the Directors confirm –

a. that in the preparation of the annual accounts, the applicableaccounting standards have been followed and that there areno material departures;

b. that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fairview of the state of affairs of the company at the end ofthe financial year and of the profit or loss of the companyfor the period;

c. that they have taken proper and sufficient care to the bestof their knowledge and ability for the maintenance ofadequate accounting records in accordance with theprovisions of the Act, for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities;

d. that they have prepared the annual accounts on a goingconcern basis.


S 126

9. INFORMATION REQUIRED UNDER THE COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF

BOARD OF DIRECTORS ) RULES,1988.

A. Conservation of energy and technology absorption.

The Company’s operations involve low energy consumption.Wherever possible energy conservation measures have alreadybeen implemented and there are no major areas where furtherenergy conservation measures can be taken. However, effortsto conserve and optimize the use of energy through operationalmethods will continue.

B. Foreign Exchange earning and outgo

The Company has not earned and used any foreign exchangeduring the period.

For and on behalf ofthe Board of Directors

Capt. S.P.RaoChairman

Mumbai, 13th August,2007


S 127

Registration No. of the Company: 11-134998Nominal Capital: Rs.25,00,000/-

ToThe MembersFORBES DORIS & NAESS MARITIME LIMITED(Formerly Forbes Wilhelmsen Logistics Private Limited)

I/We have examined the registers, records, books, and papers of ForbesDoris & Naess Maritime Limited (“the company”) as required to bemaintained under the Companies Act, 1956, (“the Act”) and the rulesmade thereunder and also the provisions contained in the Memorandumand Articles of Association of the Company for the financial year endedon 31st March 2007 (“financial year”). In my/our opinion and to thebest of my/our information and according to the examinations carriedout by me/us and explanations furnished to me/us by the company, itsofficers and agents, I/We certify that in respect of the aforesaid financialyear:

1. The company has kept and maintained all registers as stated in“Annexure A” to this certificate, as per the provisions of the Actand the rules made thereunder and all entries therein have beenduly recorded.

2. The company has duly filed the forms and returns as stated in“Annexure B” to this certificate, with the Registrar of Companies,Regional Director, Central Government, Company Law Board orother authorities within the time prescribed under the Act and therules made thereunder.

3. The Company, being a public limited company, comments are notrequired.

4. The Board of Directors duly met Four times during the year on 27th

June, 2006, 24th July, 2006, 29th December, 2006 and 29th March,2007, in respect of which meetings proper notices were given andthe proceedings were properly recorded and signed including thecircular resolutions passed in the Minutes Book maintained for thepurpose.

5. The company has not closed its Register of Members during thefinancial year.

6. The annual general meeting for the financial year ended on 31stMarch 2006 was held on 21st August, 2006 and the resolutionspassed thereat were duly recorded in Minutes Book maintained forthe purpose.

7. No extra-ordinary general meetings were held during the financialyear.

8. The company has not advanced any loans to its directors or personsor firms or companies referred to under section 295 of the Act.

9. The company has not entered into any contracts falling within thepurview of Section 297 of the Act.

10. The company was not required to make any entries in the registermaintained under section 301 of the Act.

11. As there were no instances falling within the purview of section314 of the Act, the company was not required to obtain any approvalsfrom the Board of directors, members or Central Government.

12. The company has not issued any duplicate share certificate duringthe financial year.

13. The company:

(i) there was no allotment/transfer/transmission of securitiesduring the financial year.

(ii) has not deposited any amount in a separate Bank Account asno dividend was declared during the financial year.

(iii) was not required to post warrants to any member of thecompany as no dividend was declared during the financialyear.

(iv) was not required to transfer any amount to Investor Educationand Protection Fund

(v) has duly complied with the requirements of section 217 of theAct.

14. The Board of Directors of the company is not duly constituted sincethe Directors Mr. N. Writh and Mr. James H. Rand, have not obtainedtheir Directors Identification Number leading further to noncompliance with respect to completion of formalities pertaining toDIN2 and DIN 3 under section 266A to 266G.

There was no appointment of additional directors, alternate directorsand directors to fill casual vacancies during the financial year.

15. The Company has not appointed any Managing Director / Wholetime Director / Manager during the financial year.

16. The Company has not appointed any sole selling agent during thefinancial year.

17. The Company was not required to obtained the approvals of theCentral Government, Company Law Board, Regional Director,Registrar or such other authorities as prescribed under the variousprovisions of the Act during the financial year.

18. The Directors have disclosed their interest in other firms / companiesto the Board of Directors pursuant to the provisions of the Act andthe rules made thereunder.

19. The company has not issued any shares, debentures or othersecurities during the financial year.

20. The company has not bought back any shares during the financialyear.

21. There were no outstanding debentures or preference shares andaccordingly no redemption of preference shares or debentures hasbeen made during the financial year.

22. There were no transactions necessitating the company to keep inabeyance the rights to dividend, rights shares and bonus sharespending registration of transfer of shares.

23. The company has not invited/accepted any deposits including anyunsecured loans falling within the purview of section 58A duringthe financial year.

24. The Company has not made any borrowings during the financialyear ended 31st March 2007.

25. The company has not made any loans or advances or givenguarantees or provided securities to other bodies corporate andconsequently no entries have been made in the register kept for thepurpose.

SECRETARIAL COMPLIANCE CERTIFICATE


S 128

26. The company has not altered the provisions of the Memorandumwith respect to situation of the company’s registered office fromone State to another during the year under scrutiny.

27. The company has not altered the provisions of the Memorandumwith respect to the objects of the company during the year underscrutiny.

28. The Company has not altered the provisions of the Memorandumwith respect to name of the Company during the year under scrutiny.

29. The company has not altered the provisions of the Memorandumwith respect to share capital of the company during the year underscrutiny.

30. The company has not altered its Articles of Association duringfinancial year.

31. There were no prosecution initiated against or show cause noticesreceived by the company and no fines or penalties or any other

Punishment was imposed on the company during the financial year,for offences under the Act.

32. The company has not received any money as security from itsemployees during the financial year.

33. The company has not deducted any contribution towards ProvidentFund during the financial year.

For RATHI & ASSOCIATESCompany Secretaries

(HIMANSHU S. KAMDAR)Partner

C.P. No. 3030

Place: MumbaiDate: 13th August, 2007

“Annexure - A”

Statutory Registers as maintained by the Company

1. Register of Members u/s.150

2. Register of Directors, Managing Director, Manager and Secretary u/s.303

3. Register of Directors Shareholdings u/s.307

4. Register of Disclosures of Interest by Directors u/s.301(3)

5. Register of Contracts u/s 301

6. Minutes Book u/s. 193

Other Registers

1. Register of Transfers

“Annexure B”

Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during thefinancial year ended 31st March 2007.

Sr. Form No./ Filed under For Date of Filing Whether filed within If delay in filing whetherNo. Return Section prescribed time requisite additional fee

Yes/No paidYes/No

1. Balance Sheet 220 Annual Requirement 15/09/2006 Yes No

2. Compliance Cetificate 383 Annual Requirement 15/09/2006 Yes No

3. Annual Return 159 Annual Requirement 19/10/2006 Yes No

4. Form 32 303(2) Appointment ofMr. A. Menon asDirector at the AGMheld on 21.8.2006 15/09/2006 Yes No

5. Form DIN 3 266D Form DIN 3 forMr. Ashok Menon andMr. S. P. Rao 04/12/2006 Yes No


S 129

AUDITORS’ REPORT TO THE MEMBERS OF FORBES DORIS & NAESS MARITIME LIMITED

1. We have audited the attached Balance Sheet of FORBES DORIS & NAESS MARITIME LIMITED (FORMERLY KNOWN AS: FORBESWILHELMSEN LOGISTICS PRIVATE LIMITED) as at 31st March 2007 and also the Profit & Loss Account and Cash flow statement foryear ended on the date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibilityis to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors’ Report) Order, 2003 as amended by the Companies (Auditors’ Report) (Amendment) Order, 2004,(together the ‘Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act 1956, and on the basis ofsuch checks of the books and the records of the company and according to information and explanations given to us, we enclose in theannexure a statement on the matters specified in paragraph 4 & 5 of the said order, to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

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

c) In our opinion, the Balance Sheet, Profit & Loss Account and Cash flow statement comply with the accounting standards referred to insub section 211(3C) of the Companies Act, 1956.

d) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, including the BalanceSheet, Profit & Loss Account, and Cash flow statement dealt with by this Report read with the notes thereon and documents annexedthereto, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India.

(i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2007;

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

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

5. On the basis of the written representations from the directors, taken on record by the Board of Directors, non of the directors is disqualified asat 31st March 2007 from being appointed as directors of the company under clause 274(1) (g) of the Companies Act, 1956.

FOR U. V. SHAH & COChartered Accountant

Uday V. ShahProprietor

(Membership No 35626)Place : MumbaiDate : 13th August, 2007


S 130


As at As at31.03.2007 31.03. 2006

Schedule Rupees Rupees Rupees RupeesFUNDS EMPLOYED :

1 SHARE CAPITAL “1” 2,174,500 2,174,500

3 TOTAL FUNDS EMPLOYED 2,174,500 2,174,500


4 FIXED ASSETS - “3”

(a) Gross Block 3,06,907 3,88,407

(b) Less: Total Depreciation 1,31,502 80,256

(c) Net Block 1,75,405 3,08,151

5 INVESTMENTS - -

6 DEFERRED TAX ASSET (NET ) -

7 CURRENT ASSETS, LOANS AND ADVANCES “4”

(a) Sundry Debtors - -

(b) Cash & Bank Balances 1,27,808 67,429

(c) Other Current Assets - - -

(d) Loans and Advances 1,38,105 2,25,716

2,65,912 2,93,145

8 Less: CURRENT LIABILITIES AND PROVISIONS “5”

(a) Current Liabilites 8,39,850 8,37,953

(b) Provisions - 12,580

8,39,850 8,50,533

9 NET CURRENT ASSETS (5,73,939) (5,57,388)

10 MISCELLANEOUS EXPENDIUTURE 24,552 24,552

11 Profit and loss accountDebit balance per account annexed “2” 2,548,482 2,399,186

12 TOTAL ASSETS (NET) 2,174,500 2,174,500

NOTES TO THE ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIESSchedules 1 to 8 annexed hereto form part of the Accounts

In terms of our report of even date attached.

For U V Shah & Co. CAPT. S.P.RAO ChairmanChartered Accountants

ASHOK MENON Director(UDAY V. SHAH)Proprietor P. PRADHAN SecretaryM.No 35626

Mumbai, 13th August, 2007 Mumbai, 13th August, 2007


S 131


For the year For the yearended ended

31.03.2007 31.03.2006Schedule Rupees Rupees Rupees

1 SERVICES & OTHER INCOME “6” 12,757 1,917,816

2 OTHER EXPENSES “7” 90,012 3,915,781

(77,255) (1,997,965)

3 DEPRECIATION 72,041 61,133

4 PROFIT BEFORE TAXATION (1,49,296) (2,059,098)

5 Less: PROVISION FOR TAXATION

—for Income-tax Current - -

—for Income-tax Deferred - (1,652)

—for Fringe Benefit Tax - 11,500 - 9,848

6 PROFIT AFTER TAX AVAILABLE FOR APPROPRIATION (1,49,296) (2,068,947)

7 BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR (2,399,186) (330,239)

8 BALANCE CARRIED TO BALANCE SHEET (2,548,482) (2,399,186)

NOTES TO THE ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIESSchedules 1 to 8 annexed hereto form part of the Accounts

In terms of our report of even date attached.


ASHOK MENON Director(UDAY V. SHAH)ProprietorM.No 35626 P. PRADHAN Secretary

Mumbai, 13th August, 2007 Mumbai, 13th August, 2007


S 132

SCHEDULES “1” TO “8” ANNEXED TO & FORMING PART OF THE ACCOUNTS

SCHEDULE “1” - SHARE CAPITALAs at As at

31.03.2007 31.03.2006Rupees Rupees

1 AUTHORISED2,50,000 Equity Shares of Rs.10 each 2,500,000 2,500,000

2 ISSUED AND SUBSCRIBED2,17,450 Equity Shares of Rs.10 each fully paid-up 2,174,500 2,174,500

of the above1,30,470 ( previous year 1,30,470) shares are held by the holding companyForbes Gokak Limited and its nominees.

TOTAL 2,174,500 2,174,500

SCHEDULE “2” - RESERVES AND SURPLUSAs at As at

31.03.2007 31.03.2006Rupees Rupees

1 GENERAL RESERVE - -

2 BALANCE IN PROFIT AND LOSS ACCOUNT (2,548,482) (2,399,186)

TOTAL (2,548,482) (2,399,186)

SCHEDULE “3” - FIXED ASSETSAmount in Rupees

GROSS BLOCK DEPRECIATION BLOCK NET BLOCK

Total Cost (after Cost of Cost of Total Cost (after Cumulative Depreciation Depreciation Total Balance BalanceDescription of Assets deducting sale additions deductions deducting sale Depreciation as at for the on deduction Depreciation as at as at

proceeds where during the during the proceeds where 1st April 2006 year during the as at 31st March 31st March,the cost is not year year the cost is not (inclusive of accumu year 31st March 2007 2006ascertainable) ascertainable) lated depreciation on 2007

as at upto assets sold whose1st April,2006 31st March, 2007 cost is not

ascertainable)

Data Processing Equipments 3,69,907 - 81,500 2,88,407 72,833 71,630 20,795 1,23,668 1,64,739 2,97,074

Furniture, Fixtures andOffice Equipments 18,500 - - 18,500 7,423 411 - 7,834 10,666 11,077

TOTAL RUPEES 3,88,407 - 81,500 3,06,907 80,256 72,041 20,795 1,31,502 1,75,405 3,08,151

As at 31-3-2006 3,48,807 39,600 - 3,88,407 19,123 61,133 - 80,256 3,08,151

Depreciation for the year is net of excess depreciation charged in respect of earlier years Rs. 27,908; (Previous Year Rs. Nil)


S 133


SCHEDULE “4” - CURRENT ASSETS, LOANS AND ADVANCESAs at As at

31. 03.2007 31. 03. 2006Rupees Rupees Rupees Rupees

1 CURRENT ASSETS(a) SUNDRY DEBTORS (UNSECURED,CONSIDERED GOOD)

(i) Debts outstanding for a period exceeding six monthsLess: Provision for Doubtful Debts - - -

(ii) Debts outstanding for a period less than six months - - - -(b) CASH AND BANK BALANCES

(i) Cash on hand - 20,125(ii) With Scheduled Banks -

On Current Accounts 1,27,808 47,304On Deposit Accounts - -

1,27,808 -TOTAL 1,27,808 67,429

2 LOANS AND ADVANCES(Unsecured,considered Good unless otherwise stated)(a) Advances recoverable in cash or in kind or for value

to be received 1,38,105 1,36,805(b) Advance payments of Income tax less provisions - 88,911

1,38,105 2,25,716

TOTAL 2,65,912 2,93,145

SCHEDULE “5” - CURRENT LIABILITIES AND PROVISIONSAs at As at

31.03.2007 31.03.2006 Rupees Rupees

1 CURRENT LIABILITIES(a) Sundry Creditors (Other than to Small 74,877 82,114

Scale Industrial undertakings)(b) Other Liabilities * - 1,358(c) Amount payable to Holding Company 7,64,973 7,54,481

(Includes Amount Payable to Forbes Gokak Ltd- Patvolk Division Rs. 7,41,288- Mills Division Rs. 23,685)

8,39,850 8,37,9532 PROVISIONS

Provision for Expenses - 1,080Provision for Fringe Benefit Tax - 11,500

TOTAL 8,39,850 8,50,533

* No amount is due to be credited to Investor Education and Protection Fund.


S 134


SCHEDULE “6” - SERVICES AND OTHER INCOMEFor the year For the year

ended ended31.03.2007 31.03.2006

Rupees Rupees

SERVICES & OTHER INCOME

(a) Management Fees - 1,890,000

(b) Miscellaneous Income 6,137 27,816

(c) Profit on Sale of Fixed Asset 6,620 -

TOTAL 12,757 1,917,816

SCHEDULE “7” - OTHER EXPENSESFor the year For the year

ended ended31.03.2007 31.03.2006


1. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES

(a) Salaries, Wages and Bonus - 1,53,000

(b) Staff Welfare Expenses - - 85,500

- 2,38,5002. OTHER EXPENSES

(a) Repairs to

(i) Others - 70,767

(b) Professional Fees - 1,104,813

(c) Conveyance/travelling expenses - 91,261

(d) Office working expenses - 69,755

(e) Entertainment expenses - -

(f) Miscellaneous Expenses 46,417 9,359

(g) Stamps, Telegrams, Stationery

Printing and Telephones 20,823 56,288

(h) Legal and Professional charges 14,345 57,500

(i) Claim - 2,200,000

(j) Directors’ Fees - 6,000

(k) Profession Tax - -

(l) Insurance - 1,620

(m) Auditors’ Remuneration -

i) As Statutory Auditors 7,500 7,500

ii) Company Law Matters - -

iii) Service tax 927 918

iv) Out of Pocket expenses - 1,500

8,427 9,918

90,012 3,677,281

TOTAL 90,012 3,915,781


S 135

SCHEDULE ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31STMARCH, 2007 AND THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON THAT DATE.

SCHEDULE ‘8’ - NOTES TO THE ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES :


The Financial Statements are prepared under historical cost convention, on accrual basis, and are in accordance with the requirements ofthe Companies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the CompaniesAct, 1956

B. FIXED ASSETS :

Fixed Assets (Gross) are stated at cost. Cost comprises of the purchase price and any attributable cost of bringing the assets to its workingcondition for its intended use.

C. DEPRECIATION :

(a) Depreciation is calculated on Pro-rata basis. Items costing less than and upto Rs. 5000 are fully written off.

(b) The details as to method and the rates of depreciation are as under:

Method of Depreciation Rate of Depreciation

Plant and Machinery Straight Line Method 16.21%

Office equipment & Furniture & Fittings Straight Line Method 6.33%

D. REVENUE RECOGNITION :

The Company recognises Income from service activity is accounted as and when services are rendered or as per contractual agreemententered with parties.

E. FOREIGN CURRENCY TRANSACTIONS ;

(i) Gains or losses on cancellation of foreign exchange contracts are recognised as income or expense.

(ii) Gains or losses in respect of foreign exchange contracts are recognised as income or expense over the life of the contract.

2 No amount is due to Small Scale Industries (SSI) as at 31st March, 2007.

3 The Accounting Standard 22 (AS-22) for ‘Accounting for Taxes on Income’, requires the Company to review the carrying amount of Deferrdtax Assets at each Balance Sheet Date. Based on concept of prudence, the deferred tax liability for the year is Rs. NIL.The AccountingStandard 22 (AS-22) for ‘Accounting for Taxes on Income’, requires the Company to review the carrying amount of Deferrd tax Assets at eachBalance Sheet Date. Presently management has not recognised Deferred Tax Assets, since Company have no virtual certainty that the companywill have sufficient future taxable income. Therefore based on concept of prudence, the deferred tax liability for the year Rs NIL has beenrecognised in the profit and loss account for the year.

4 Balance payable to holding company amounting to Rs.7,64,973 (P.Y Rs.7,54,481) which is included in current liabilities. Adjustments, if anywill be recorded as and when on completion of such reconciliations.


6 Company ship managment business is at standstill, However management is of the opinion that the company intend to carry out its businessoperations in other alternative lines relating to Shipping industries and accordingly company is negotiating with various shipping lines to carryout business activity and accordingly accounts have been prepared on the basis that the company is a going concern.

7 Related Party Disclosures : As required by Accounting Standard 18

I. Name of the Related Party and Nature of relationship where control exists are as under :

A. Enterprises collectively having more than one half of voting power of Forbes Doris & Naess Maritime Ltd.-

As on 31-3-2007 As on 31-3-2006

1. Forbes Gokak Limited 1. Forbes Gokak Limited


S 136

B. Enterprises that are under common control:As on 31-03-2007 As on 31-03-2007

1. Aquamall Water Solutions Ltd. 1. Aquamall Water Solutions Limited2. Eureka Forbes Ltd. 2. Eureka Forbes Limited3. Euro Forbes International Pte. Ltd. 3. Euro Forbes International Pte. Limited4. Forbes Aquamall Limited 4. Forbes Abans Cleaning Solutions Private Limited5. Forbes Campbell Holding Ltd. 5. Forbes Aquamall Limited6. Forbes Container Lines Pte Ltd. 6. Forbes Finance Limited7. Forbes Smart Data Ltd. 7. Forbes Sterling Star Limited8. Forbes Facility Services Pvt. Ltd. 8. Latham India Limited(Formely known as Forbes Abans Cleaning Solutions Pvt. Ltd.)9. Forbes Finance Ltd. 9. Next Gen Publishing Limited10. Forbes Services Ltd. 10. Volkart Fleming Shipping & Services Limited11. Forbes Sterling Star Ltd. 11. Forbes Services Ltd.12. Forbes Technosys Ltd. 12. Forbes Technosys Ltd.13. Forbes Tinsley Co. Ltd. 13. Forbes Tinsley Co. Ltd.14. Gokak Textiles Ltd 14. Warriors (Investment) Ltd.15. Latham India Ltd. 15. Forbes Campbell Holdings Ltd.16. Next Gen Publishing Ltd.17. Pro Handyman India Ltd.18. Volkart Fleming Shipping & Services Ltd.19. Warrior (Investment) Ltd.

C. Associate Companies :1. Forvol International Services Limited

D. Key Management Personnel

1. Capt S.P Rao 1. Mr. K C Mehra

2. Ashok Menon 2. Capt S.P Rao

II. Transactions with related parties :

Nature of Transactions Referred to in Referred to in Referred to in Referred to inA above A above B above C above

31.03.2007 31.03.2006 31.03.2006 31.03.2006Income1. Management Services ** - 1,890,000Expenses2. Recovery of Expenses 10,492 - -3. Service Charges - -4. Business Claim - 22,00,000Outstandings5. Payables 7,64,973 7,54,482

** Does not include amounts received from related party in lieu of re imbursment of costs.

8 Certain expenses for which supporting where not available are certified by the management as expenses incurred for the purpose of business.

9 Company have sold during the year, Fixed Asset amounting to Rs. 67,326. No prior approval of Board of Director is obtained as per companypolicy.

10 Figures for the previous year have been regrouped wherever necessary.

As per our Report of even date attached

For U.V. SHAH & Co. CAPT. S.P. RAO ChairmanCHARTERED ACCOUNTANTS

ASHOK MENON Director

P. PRADHAN Secretary(UDAY SHAH)ProprietorM.No 35626Date : 13th August, 2007


S 137

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


Registration No. 134998 State code 11Balance Sheet Date 31-3-2007

II. Capital Raised during the year (Amount in Rs. ‘000)

Public Issue Nil Right Issue NilBonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. ‘000)

Total Liabilites 2,175 Total Assets* 2,175

Sources of Funds Application of FundsPaid-up Capital 2,175 Fixed Assets 176Reserves and Surplus - Net Current Assets (574)Unsecured Loans - Miscellaneous Expenditure 25Deferred Tax Liability - Profit & Loss Account 2,548

* Net of Current Liabilities and Provisions

IV. Performance of the Company (Amount in Rs. ‘000)

Turnover 13Total Expenditure 90Profit before Tax (149)Profit after Tax (149)Earning per Share in Rs. -Dividend Rate -

V. Generic names of three principal products/services of Company (as per monetary terms)

Item Code No. Nil Product Description Ship Management

CAPT. S. P. RAO Chairman


P. PRADHAN Secretary

Mumbai, 13th August, 2007


S 138

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH,20072006-2007 2005-2006


PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS (1,49,296) (2,059,099)

Adjusted for.: Profit on Sale of Asset (6,620) -

Adjusted for.: Depreciation 72,041 61,133

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (83,875) (1,997,966)AND OTHER ADJUSTMENTS

Changes in

Trade and other recievables (1,300) (84,305)

Trade payables and others 817 (482) (1,594,016)

CASH GENERATED FROM OPERATIONS (84,358) (3,676,287)

Add:- Income Tax Refund 77,781

Less:- Direct Taxes paid (Net) (370) (11,105)

(A) NET CASH FLOW FROM OPERATING ACTIVITIES (6,946) (3,687,392)


Proceeds from sale of assets 67,326 -

Purchase of Fixed Assets - (39,600)

(B) NET CASH FLOW FROM INVESTING ACTIVITIES 67,326 (39,600)

(C) NET CASHFLOW FROM FINANCING ACTIVITIES - -

NET DECREASE/INCREASEIN CASH AND CASH 60,379 (3,726,992)

EQUIVALENTS (A)+(B)+(C)

CASH AND CASH EQUIVALENTS AS AT THE COMMENCEMENTOF THE YEAR, COMPRISING:

Cash, Cheques on hand & Remittances in transit 20,125 24,398

Balance with scheduled banks on Current accounts and Deposit accounts 47,304 67,429 3,770,022

3,794,420

CASH AND CASH EQUIVALENTS AS AT THE ENDOF THE YEAR, COMPRISING:

Cash, Cheques on hand & Remittances in transit - 20,125

Balance with scheduled banks on Current accounts and Deposit accounts 1,27,808 47,304 1,27,808 67,429

60,379 (3,726,991)



(UDAY V. SHAH) P. PRADHAN SecretaryProprietorMembership.No 35626Mumbai, 13th August, 2007 Mumbai, 13th August, 2007


S 139

(a wholly owned Subsidiary Company ) Annual Report and Accounts


DIRECTORS :

C.G. Shah Chairman

R.T. Doshi

K.L. Khetan

A.T. Shah

M.K. Sonawala

BANKERS :

Union Bank of India

AUDITORS :

Messrs. Batliboi and Purohit

REGISTERED OFFICE :

Pallani Center, 2nd Floor,

32 Venkat Narayan Road,

Tagore Nagar,

Chennai 600 017.

FORBES FINANCE LIMITED


S 140

TWENTY FIFTH REPORT OF THE DIRECTORS OF FORBES FINANCE LIMITED

The Shareholders,




Rupees Rupees

PROFIT FOR THE YEAR 33,40,903 1,43,09,779

Less : Prior Year Adjustment 2,349 -

PROFIT BEFORE TAX 33,38,554 1,43,09,779

Less: Provision for Taxation 2,69,000 -

Fringe Benefit Tax 500 -

PROFIT AFTER TAX 30,69,054 1,43,09,779

Add : Amount brought forward from Previous Year 4,80,69,170 4,17,06,906


APPROPRIATIONS TO:

Interim Dividend 66,90,000 -

Proposed Dividend - 44,60,000

Dividend Tax 9,38,273 6,25,515

Transfer to General Reserve 6,14,000 28,62,000

Balance retained in Profit & Loss Account 4,28,95,951 4,80,69,170

5,11,38,224 5,60,16,685

2. INVESTMENTS:

The position of Investments is as under:

As at 31-3-2007 As at 31-3-2006

Rupees Rupees

Quoted Investments 50,59,649 50,59,649


8,56,30,773 2,35,62,789

During the year the Company purchased 64% shareholding (12,80,000 shares) in Warriors (Investment) Ltd. from Forbes Gokak Ltd. fora total consideration of Rs.618.37 lakhs. As a result, Warrior (Investment) Ltd. has became a subsidiary of Forbes Finance Ltd.

3. DIVIDEND:

Having regard to the operating result for the year, the Board of Directors of the Company, have paid an Interim Dividend at the rate of Rs.30per share i.e. an aggregate amount of Rs.66.90 lakhs. For the previous year ended 31st March, 2006, the Company declared dividend at therate of Rs.20.00 per share amounting to Rs.44,60,000/-

4. AMALGAMATION:

With the change of control from Forbes Gokak Limited, we have become holding Company of Forbes Campbell Holdings Limited andWarrior (Investment) Limited. Our Company and Forbes Campbell Holdings Limited and Warrior (Investment) Limited are having similarbusiness; objective etc & hence amalgamation of our Company with Forbes Campbell Holdings Limited and Warrior (Investment) Limitedwill give a greater advantage in terms of economics of scale, common clientele etc. Hence it is proposed to merge Forbes CampbellHoldings Limited and Warrior (Investment) Limited with our Company.

Your Directors recommend the amalgamation with Forbes Finance Limited.


S 141

5. CHANGE OF NAME OF THE COMPANY:

With the amalgamation of Forbes Campbell Holdings Limited and Warrior (Investment) Limited, it was proposed that the name of theCompany be changed to Forbes Campbell Finance Limited., Subject to approval of the Registrar of Companies and also subject to theapproval of the members of the Company. If approval at the General Body Meeting, the amalgamation petition shall include change ofname as above w.e.f. approval of the scheme.

6. DIRECTORATE:

Mr. C.G. Shah, retires from the Board by rotation and is eligible for re-appointment. The Board of Directors commends his appointment asa Directors of the Company.

Mr. M.K. Sonawala is appointed as an 'Additional Directors' with effect from 23rd March, 2007. In terms of the provisions of Section 260of the Companies Act, 1956, Mr. M. K. Sonawala would hold office upto the date of forth coming Annual General Meeting. Being eligible,have offered him services to act as Director on the Board of the Company. The Board recommend his appointment.

7. COMPLIANCE REPORT:

Pursuant to Section 383A of the Companies Act, 1956, secretarial Compliance Certificate from M/s. Rathi & Associates, Practicing CompanySecretary is attached.

8. AUDITORS:

You are requested to appoint Auditors for the current year and to fix their remuneration. The retiring Auditors M/s. Batliboi & Purohit.,Chartered Accountants, offer themselves for re-appointment as Auditors of the Company.


The Company did not have any employee who was drawing a remuneration of Rs.24,00,000/- or more in aggregate if employed throughoutthe financial year or Rs.2,00,000/- or more per month if employed for a part of the financial year.

10. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors based on the representations received from the OperatingManagement confirm :-

a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no materialdepartures;

b) that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit orloss of the Company for the period;

c) that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

d) that they have prepared the Annual Accounts on a going concern basis.

11. INFORMATION REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD

OF DIRECTORS) RULES, 1998.


Since the company does not own any manufacturing facility, particulars relating to conservation of energy and technology absorption arenot applicable.


The Company has not earned and used any foreign exchange during the year.

For and on behalf of the board

(C.G. SHAH)

Mumbai: 18th May, 2007. Chairman


S 142

COMPLIANCE CERTIFICATE OF FORBES FINANCE LIMITEDFOR THE YEAR ENDED 31ST MARCH 2007

CIN No. of the Company : U65993TN1981PLC009127Nominal Capital: Rs. 55,00,000/-

To,The MembersForbes Finance Limited(Formerly known as Forbes Estates Limited)Chennai

We have examined the register, records, books and papers of Forbes Finance Limited (formerly known as Forbes Estate Limited) (the Company) asrequired to be maintained under the Companies Act, 1956 (the Act) and the rules made thereunder and also the provisions contained in theMemorandum and Articles of Association of the Company for the financial year ended on 31st March 2007 (financial year). In our opinion and tothe best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers andagents, we certify that in respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rulesmade thereunder and all entries therein have been duly recorded.

2. The Company has filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies, Regional Director,Central Government, Company Law Board or other authorities prescribed under the Act and the rules made thereunder.

3. The Company, being a Public Limited Company, comments are not required.

4. The Board of Directors duly met Five times respectively on 10th May 2006, 21st September 2006, 27th December 2006, 1st March 2007 and23rd March 2007 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed includingthe circular resolutions passed in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of Members during the financial year.

6. The Annual General Meeting for the financial year ended 31st March 2006 was held on 15th May 2006 after giving shorter notice to themembers of the Company and resolutions passed thereat were duly recorded in the Minutes Book maintained for the purpose.

7. One extra-ordinary general meeting was held during the financial year on 21st day of September, 2006 for shifting of the registered officefrom Tamilnadu to Maharashtra after giving shorter notice to the members of the company and the resolutions passed thereat were dulyrecorded in the Minutes Book maintained for the purpose.

8. The Company has not advanced any loans to its directors or persons or firms or companies referred to under Section 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company was not required to make necessary entries in the Register maintained under Section 301 of the Act.

11. As there were no instances falling within the purview of Section 314 of the Act, the Company has not obtained any approvals from Board ofDirectors, members or Central Government.

12. The Company has not issued any duplicate share certificates during the financial year.

13. (i) There was no allotment / transfer/ transmission of securities during the financial year.

(ii) The Company has not deposited any amount in a separate Bank Account as the dividend declared was paid by cheques.

(iii) The Company did not post warrants to any member of the Company as the dividend declared during the financial year was paid throughcheques.

(iv) The Company was not required to transfer the amounts in unpaid dividend account, application money due for refund, matured deposits,matured debentures and the interest accrued thereon which have remained unclaimed or unpaid for a period of seven years to InvestorEducation and Protection Fund.

(v) The Company has duly complied with the requirements of Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted and the appointment of Additional Director has been made.


S 143

15. The Company has not appointed any Managing Director/Whole-time Director/ Manager during the financial year.

16. The Company has not appointed any sole selling agents during the financial year.

17. The Company was required to obtain approval of the Company Law Board for the shifting of the registered office from Tamilnadu toMaharashtra and the same is in process.

18. The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and therules made thereunder.

19. The Company has not issued any shares, debentures or other securities during the year.

20. The Company has not bought back any shares during the financial year.

21. There was no redemption of preference shares/debentures during the financial year.

22. There were no transactions necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pendingregistration of transfer of shares.

23. The Company has not invited/accepted any deposits including any unsecured loans falling within the purview of Section 58A during thefinancial year.

24. The amount borrowed by the Company from Directors, Members, Public, Financial Institutions, Banks and others during the financial yearending 31st March 2007 are within the borrowing limits of the Company.

25. The Company has made loans and investments, or given guarantees or provided securities to other bodies corporate in compliance with theprovisions of the Act and has made necessary entries in the register kept for the purpose.

26. The Company has not altered the provisions of the Memorandum with respect to situation of the Company’s registered office from one Stateto another during the year under scrutiny.

27. The Company has not altered the provisions of Memorandum with respect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of Memorandum with respect to name of the Company during the year under scrutiny.

29. The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financial year.

31. There was/were no prosecution initiated against or show cause notices received by the Company and no fines or penalties or any otherpunishment imposed on the Company during the financial year, for offences under the Act.

32. The Company has not received any money as security from its employees during the financial year.

33. The company has not constituted a separate Provident Fund trust for its employees or class of its employees as contemplated under Section418 of the Act.

For RATHI & ASSOCIATES

Company Secretaries

Place: Mumbai (NARAYAN RATHI)Date: 18th May 2007 PARTNER

C.P. NO. 1104


S 144

COMPLIANCE CERTIFICATE OF FORBES FINANCE LIMITED

FOR THE YEAR ENDED 31ST MARCH 2007

“ANNEXURE -A”

Statutory Registers as maintained by the Company

1. Register of Members u/s.150

2. Register of Directors, Managing Director, Manager and Secretary u/s.303

3. Register of Directors Shareholdings u/s.307

4. Register of Disclosures of Interest by Directors u/s.301(3)

5. Minutes Book u/s. 193

6. Register of Charges

7. Register of Investments u/s 372A

Other Registers


COMPLIANCE CERTIFICATE OF FORBES FINANCE LIMITED

FOR THE YEAR ENDED 31ST MARCH 2007

“ANNEXURE B”

Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities during thefinancial year ended 31st March 2007.

Sr. No. Form No./Return Filed For Date of Filing Whether filed within If delay in filing feeunder Section prescribed time whether requisite

Yes/No additional paidYes/No

1. Form 23 192 Change of Registered to 21.10.2006 Yes —Office from TamilnaduMaharashtra

2. Balance Sheet 220 Annual Requirement 14.06.2006 Yes —

3. Secretarial 383(A) Annual Requirement 14.06.2006 Yes —ComplianceCertificate

4. Annual Return 159 Annual Requirement 11.07.2006 Yes —

5. Form 32 303(2) Appointment of 28.03.2007 Yes —Mr. M.K. Sonawala asAdditional Director


S 145

AUDITORS REPORT TO THE MEMBERS OF FORBES FINANCE LIMITED.

1. We have audited the attached balance sheet of Forbes Finance Limited (‘the Company’)as at 31st March 2007, and also the profit and lossaccount and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of thecompany’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order 2004issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified in Paragraphs 4 and 5 of the said Order.



(b) In our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examinationof those books.


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

(e) On the basis of the written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956 in the manner so required and give a true and fair view, in conformity with the AccountingPrinciples generally accepted in India;

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March 2007.

(ii) in the case of the profit and loss Account, of the profit for the year ended on that date.

(iii) in the case of the cash flow statement of the cash flows for the year ended on that date.



K.K. KSHIRSAGAR

Partner

Mumbai: 18th May, 2007. Membership No. 4047


S 146

ANNEXURES TO AUDITORS REPORT

Annexure referred to in paragraph 3 of our report of even date to the members of Forbes Finance Limited on the accounts for the year ended 31stMarch, 2007.

i. The company does not have any fixed assets. Accordingly the provision of clause 4(i) of the Companies (Auditor Report) Order, 2003 (asamended) are not applicable.

ii. Company does not have any inventory. Accordingly the provision of clause 4(ii) of the Companies (Auditors Report) Order, 2003 (asamended) are not applicable.

iii. (a) Company has granted unsecured loans to one party covered in the register maintained under section 301 of the companies Act, 1956.The maximum amount involved during the year was Rs. 40 lacs and the year end balance of loans granted to such parties was Rs. 40lacs.

(b) As informed the Company has taken unsecured loan from one party i.e., Forbes Campbell Holdings Ltd. covered in the registermaintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 3,98,00,000/- andthe year end balance of the loan taken was Rs. 3,98,00,000/-.

(c) In our opinion and according to the information and explanations given to us, rate of interest and other terms and conditions of loangiven by the company are not prima facie prejudicial to the interest of the company.

(d) In respect of loans granted, repayment of the principal amount is as stipulated and payment of interest have been regular.

(e) There is no overdue amount in respect of loans granted to Companies, firms or other parties listed in the register maintained undersection 301 of the companies Act, 1956.


v. There are no contracts or arrangements with the company covered under section 301 of the Companies Act., 1956.

vi. The company has not accepted any deposits from the public within the meaning of provision of Section 58A, 58AA or any other relevantprovisions of the Companies Act, 1956 and the rules framed there under.

vii. The company does not have any internal audit because the no. of transactions are very few.

viii. The Company being an investment company is not required to maintain cost records under clause (d) of subsection (1) of section 209 of theCompanies Act, 1956.

ix. (a) The company is regular in depositing undisputed statutory dues including provident fund, Investor education and protection fund,Employees State Insurance, Income Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriateauthorities. Sales tax, wealth Tax, customs duty and Excise duty are not applicable to the company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees state insurance, income – tax , Wealth – Tax, Service Tax, Sales Tax, Customs Duty, exciseduty, cess and other undisputed statutory dues were outstanding at the year end for a period of more than six months from the datethey become payable.



xi. The Company did not have any dues to financial institution, banks or debenture holders during the year.

xii. According to the information and explanations given to us and based on the documents and records produced to us, the Company has notgranted any loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.

xiii. Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Companies (AuditorsReport) Order 2003 (as amended) are not applicable to Company.


S 147

xiv. In our opinion, the Company is not trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order 2003 (as amended) are not applicable to company

xv. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from bank orfinancial institutions.

xvi. The Company did not have any term loans outstanding during the year.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of theopinion that the company has not raised any funds on short term basis.

xviii. Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 ofthe companies Act, 1956.

xix. The Company did not have outstanding debentures during the year.

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

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per theinformation and explanation given by the management, we report that no fraud or by the company has been noticed or reported during thecourse of our audit.



K.K. KSHIRSAGAR

PartnerMumbai: 18th May, 2007. Membership No. 4047


S 148

As At

31-03-2006

SCHEDULE Rupees Rupees Rs.

1. SOURCES OF FUNDS:

I. SHARE HOLDERS FUNDS :

(a) Share capital A 2,230,000 2,230,000

(b) Reserves & Surplus B 50,051,908 54,611,127

52,281,908 56,841,127

II. UNSECURED LOANS C 39,800,000 -

92,081,908 56,841,127

2. APPLICATION OF FUNDS :

I. INVESTMENTS D 85,630,773 23,562,789

II. CURRENT ASSETS, E

LOANS AND ADVANCES :

(a) Cash and Bank Balances 1,130,650 989,039

(b) Loans and Advances 5,331,721 37,389,405

6,462,371 38,378,444

LESS :

CURRENT LIABILITIES AND

PROVISIONS : F

(a) Sundry Creditors for Expenses 11,236 14,591

(b) Provisions 0 5,085,515

11236 5,100,106


92,081,908 56,841,127

NOTES FORMING PART OF THE ACCOUNTS G


As per our Report of even date attachedFor BATLIBOI & PUROHIT C.G.Shah Chairman

Chartered Accountants R.T.Doshi

M.L.Khetan

K. K. KSHIRSAGAR A.T.ShahDirectors

Partner M.K.Sonawala

M. No. 4047

Dated : 18th May, 2007

}


S 149

Previous YearRupees Rupees Rupees

1 INCOME

Dividend (Gross) 944,310 1,024,352Interest (Other than Bank) 2,467,315 1,265,769(Tax Deducted at Source Rs. 553665/- Previous Year Rs.284039/-.)Miscellaneous Income 190 -Profit on Sale of Investments ( Long Term ) 0 16,176,205Profit on Sale of Investments ( Short Term ) 0 8,158,547

3,411,815 26,624,8732 EXPENDITURE :

Auditors Remuneration :Audit Fees 5,000 5,000Tax Adit Fees 0 5,000Service Tax 618 1,224Out of pocket expenses 1,000 1,000

6,618 1,2224Miscellaneous Expenses 45,757 47,295Interest on Loans 18,537 6,709,934Loss on Sale of Investments 0 5,545,641

70,912 12,315,094Balance Profit 3,340,903 14,309,779Less: Prior Year Adjustment 2349 -

3 PROFIT BEFORE TAX 3,338,554 14,309,779Less : Provision for Taxation 2,69,000

Fringe Benefit Tax 500 269,500 -4 PROFIT AFTER TAX 3,069,054 14,309,7795 ADD : SURPLUS AS PER PREVIOUS YEAR ACCOUNTS 48,069,170 41,706,9066 BALANCE AVAILABLE FOR APPROPRIATIONS 51,138,224 56,016,6857 APPROPRIATIONS TO:

Interim Dividend 6,690,000 -Proposed Dividend 0 4,460,000Dividend Tax 938,273 625,515Transferred to General Reserve 614,000 2,862,000Surplus Carried to Balance Sheet 42,895,951 48,069,170

51,138,224 56,016,685

No. of Equity Shares 492,500 492,500

Face value per share 10 10

Basic and Diluted Earning per share 13.76 64.17

8 NOTES TO THE ACCOUNTS-SCHEDULE 'G'




M.L.Khetan



M. No. 4047


}


S 150


As At

31-03-2006


SCHEDULE - A - SHARE CAPITAL

1. AUTHORISED CAPITAL:

540000 Equity Shares of Rs. 10/- each. 5400000 5,400,000

10000 Preference Shares of Rs. 10/- each. 100000 100,000

5,500,000 5,500,000

2. ISSUED AND SUBSCRIBED :

492500 Equity Shares of Rs. 10/- each 4,925,000 4,925,000

3. PAID-UP :

2500 Equity Shares of Rs. 10/- each,fully paid-up. 2,500 25,000

490000 Equity Shares of Rs. 10/- each Rs.4.50 paid-up per Share. 2,205,000 2,205,000

2,230,000 2,230,000

(ALL SHARES ARE HELD BY FORBES GOKAK LTD.

THE HOLDING COMPANY AND ITS NOMINEES)

As At

31-03-2006


SCHEDULE - B - RESERVES AND SURPLUS

1. GENERAL RESERVE :

Balance as per last Balance Sheet 6541957 3,679,957

Transferred from Profit and Loss Account 614000 2,862,000

7,155,957 6,541,957

2. SURPLUS :

As per Profit and Loss Account 42,895,951 48,069,170

50,051,908 54,611,127

As At

31-03-2006

Rupees Rupees

SCHEDULE - C - UNSECURRED LOANS

Intercorporate Deposits

(From Forbes Campbell Holdings Ltd.) 39,800,000 -

39,800,000 -


S 151


As At

31-03-2006

Rupees Rupees

SCHEDULE 'D' INVESTMENTS NON-TRADE

AT COST -LONG TERM

1. QUOTED :

Forbes Gokak Ltd.,

164862 Equity Shares of Rs. 10/- each 5,059,649 5,059,649

Fully paid-up ( Previous Year 164862)

2. UNQUOTED

Sea Speed Shipping ( 24000 Eq.Shares of Rs.10/- each) 9,383,400 9,383,400

Trident Shipping ( 24000 Eq. Shares of Rs.10/- each ) 4,306,740 4,306,740

Sea Falcon Shipping ( 25000(Prev.year 24000) Eq. Shares of Rs.10/- each ) 5,042,576 4,812,000

Forbes Tinsley Co. Ltd. (37500 Eq. Shares of Rs.10/- each) 1,000 1,000

Warrior (Investment ) Ltd.(1280000 Eq.Shares of Rs.10/- each) 61,837,408 -

85,630,773 23,562,789

AS AT 31-03-2007 AS AT 31-03-2006

AGGREGATE MARKET AGGREGATE MARKET

COST VALUE COST VALUE

QUOTED INVESTMENTS 5,059,649 65,779,938 5,059,649 92,352,226

UNQUOTED INVESTMENTS 80,571,124 - 18,503,140 0

85,630,773 65,779,938 23,562,789 92352226

As At

31-03-2006


SCHEDULE - E - CURRENT ASSETS,LOANS AND ADVANCES

1. CURRENT ASSETS :

Cash and Bank Balances : -

Scheduled Bank:

On Current Accounts 1,130,650 989,039


(UNSECURED,CONSIDERED GOOD)

Inter-Corporate Deposits 4,000,000 36,975,000

Advances recoverable in cash or in kindor for value to be received :Unsecured Considered Good 500,000Advance payment of Tax 831,721 414,405(Net after provision for Taxation) 5,331,721 37,389,405

6,462,371 38,378,444


S 152


As At

31-03-2006

Rupees Rupees

SCHEDULE 'F' CURRENT LIABILITIES

AND PROVISIONS

1. CURRENT LIABILITIES :

Sundry Creditors for Expenses 11,236 14,591

2. PROVISIONS :

Proposed Dividend – 4,460,000

Dividend Tax – 625,515

11,236 5,100,106

SCHEDULE ‘G’ NOTES TO THE ACCOUNTS



The Financial Statements are prepared under historical cost convention, on accrual basis, and are in accordance with the requirementsof the Companies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

B. INVESTMENTS :

Long term investments are stated at cost, less provision for diminution in value. Current investments are stated at lower of cost andfair value.

Dividend Income is accounted when the right to receive payment is established and known.

C. TAX ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of theIncome - Tax Act, 1961.

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

Since there are no timing differences the implementation of Accounting Standard (AS-22) “Accounting for taxes on Income issued bythe Institute of Chartered Accountants of India is not required.

2. Additional information as required under Schedule VI of the Companies Act, 1956 has not been furnished as the same is not applicable.

3. Figures for the previous year have been regrouped wherever necessary.

4. No amount is due to Small Scale Industries ( SSI ) as at 31st March, 2007

5. Related Party Disclosures : As required by Accounting Standard 18

I Name of the Related Party and nature of relationship where control exists are as under :

A Enterprises having more than one half of voting powers :

FORBES GOKAK LTD.


S 153

B. Enterprises that are under common control :

As on 31-3-2007 As on 31-3-2006

1. Aquamall Water Solutions Ltd. 1. Aquamall Water Solutions Ltd.

2. Eureka Forbes Ltd. 2. Eureka Forbes Ltd.

3. Volkart Fleming Shipping & Services Ltd. 3. Volkart Fleming Shipping & Services Ltd.

4. Forbes Sterling Star Ltd. 4. Forbes Sterling Star Ltd.

5. Latham India Ltd. 5. Latham India Ltd.

6. Forbes Aquamall Ltd. 6. Forbes Aquamall Ltd.

7. Forbes Abans Cleaning Solutions Pvt. Ltd. 7. Forbes Abans Cleaning Solutions Pvt. Ltd.

8. Forbes Doris & Naess Maritime Ltd. 8. Forbes Doris & Naess Maritime Ltd.

9. Next Gen Publishing Ltd. 9. Next Gen Publishing Ltd.

10. Euro Forbes International Pte. Ltd. 10. Euro Forbes International Pte. Ltd.

11. Forbes Technosys Ltd. 11. Fal Industries Ltd.

12. Forbes Campbell Holdings Ltd. 12. Forbes Technosys Ltd.

13. Warrior (Investment) Ltd. 13. Forbes Campbell Holdings Ltd.

14. Forbes Services Ltd. 14. Warrior (Investment)Ltd

15. Forbes Tinsley Co. Ltd. 15. Forbes Services Ltd.

16. Forbes Tinsley Co.Ltd.


Nature of Transactions Related Party

Referred to in Referred to in

“A” above “B” above

31-03-2007 31-03-2006 31-03-2007 31-03-2006

Purchases1. Investments 61,683,200 0 230,000 0

Sale2 Investments 0 190,421,181 0 23975725

Expenses3 Interest Paid 0 6709934 18,537 04 Dividend Paid 11,150,000 0 0 05 Reimbursement of Expenses 0 0 0 0

Income6 Interest Received 2,147,315 965,769 320,000 3000007 Dividend Received 824,310 759,700 0 264,652

Finance8 Deposit Taken 0 24,000,000 0 09 Repayment of Deposit taken 0 197,909,000 0 010 Deposits Placed 3,100,000 33,100,000 0 400000011 Deposits Refunded 35,575,000 0 0 0

Outstanding12 Deposits payable 0 0 39,800,000 013 Deposits Receivable 500,000 32,975,000 4,000,000 4000000


S 154

III Related party disclosures

The above transactions includes :-

1. All amounts referred to in table ‘A’ are with a single party viz. Forbes Gokak Ltd.

2. 1B represents Investments made in Forbes Tinsley Co. Ltd.

3. 2A represents Sale of Shares of Eureka Forbes Ltd. to Forbes Gokak Ltd.

4. 7B includes dividend received from FAL Industries Ltd.

5. 2B represent buy back of Shares by Eureka Forbes Ltd.

6. 6B represents Interest received from Forbes Technosys Ltd.

7. 13B represents Deposits placed with Forbes Technosys Ltd.



M.L.Khetan



M. No. 4047


}


S 155






Public Issue Nil Right Issue Nil

Bonus Issue Nil Private Placement Nil


Total Liabilites 92082 Total Assets* 92082


Paid-up Capital 2230 Investments 85631

Reserves and Surplus 50052 Net Current Assets 6451

Loans 39800

*Net of Current Liabilities and Provisions


Turnover 3412


Profit before Tax 3341

Profit after Tax 3069

Earning per Share in Rs. 13.76

Dividend Rate 300%


Item Code No. Nil Product Description Finance / Estate co.


S 156


2006-2007 2005-2006Rupees Rupees Rupees Rupees

PROFIT BEFORE TAX 3,338,554 14,309,779

Adjusted for -Dividend Income (944,310) (1,024,352)Interest Recd (2,467,315) (1,265,769)Profit on Sale of Investments - (24,334,752)Loss on Sale of Investments - 5,545,641Interest Paid 18,537 6,709,934

Prior Year Tax Adjustment 2,349 (3,390,739) - (14,369,298)

OPERATING PROFIT BEFORE WORKING (52,185) (59,519)CAPITAL CHANGESAND OTHER ADJUSTMENTSChanges in Sundry Creditors (3355) 5224Changes in Advances (500000) 0Direct Taxes Paid Net (689,165) (284,039)

(A) NET CASH FROM OPERATING ACTIVITIES (1,244,705) (338,334)CASH FLOW FROM INVESTING ACTIVITIES

Dividend 944,310 1024352Interest Received 2,467,315 1265769Purchase of Investments (62,067,984) (18,503,140)Sale of Investments - 230834156

(58,656,359) 214,621,137

(B) NET CASH FROM ( USED IN) INVESTNG ACTIVITIES (59,901,064) 214,282,803CASH FLOW FROM FINANCING ACTIVITIES

Refund of I/C Deposits 32,975,000 (173784000)Proceedings from Borrowings 39,800,000 -Intercorporate Deposit given - (32,975,000)Interest Paid (18,537) (6,709,934)Dividend Paid (11,150,000) -Dividend Tax Paid (1,563,788) -

60,042,675 (213,468,934)

NET DECREASE / INCREASE IN 141,611 813,869CASH AND CASH EQUIVALENTS (A) + (B)

Cash and Cash equivalent as at the commencement 989,039 175,170of the year comprising Cash, Cheques on hands &remmittances in transit and Balance with Bank

Cash and Cash equivalent as at the end of the 1,130,650 989,039year comprising cash, cheques on hands andremmittances in transit and balance with bank.

NET DECREASE/INCREASE AS DISCLOSED ABOVE 141,611 813,869



M.L.Khetan



M. No. 4047


}


S 157

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956 RELATING TO SUBSIDIARYCOMPANIES.

WARRIOR (INVESTMENT) LIMITED

1. Financial Year of the Subsidiary Company 31.3.2007

2. (a) Number of Shares held in a Subsidiary Company 1280000

(b) Percentage of the Shareholding in a Subsidiary Company 64%

3. Total Subscribed Share Capital of the Subsidiary Company 2000000

4. The net aggregate amount of the profits of theSubsidiary Company for the financial year sofar as it concerns the members of Forbes Finance Limited which havenot been dealt with in the accounts of Forbes Finance Limitedupto 31st March, 2007 is as follows :

For the year Rupees * 54,813

For the previous year Rupees NIL

5. The net aggregate amounts of profits of theSubsidiary Company which have been dealtwith in the accounts of Forbes Finance Limitedupto 31st March, 2007 being the dividendreceived are as under :

For the year Rupees NIL

For the previous years Rupees NIL

* Warrior (Investment) Limited become our Subsidiary on 29.3.2007

C.G.Shah Chairman

R.T.Doshi

M.L.Khetan

A.T.ShahDirectors

M.K.Sonawala


}

FORBES FACILITY SERVICES PRIVATE LIMITED

(Formerly known as Forbes Abans Cleaning Solutions Pvt. Ltd)

S 158

DIRECTORS :

S. L. Goklaney ChairmanC. A. KarnikJ. N. IchhaporiaMarzin Shroff

S. K. Palekar

PRINCIPAL BANKERS :

Centurion Bank of Punjab Ltd.

State Bank of India

AUDITORS :

Batliboi & Purohit

CORPORATE HEAD OFFICE :

81/83, Shalini Palace, 2nd floor,

Bhawani Shanker Road,

Dadar (west),

Mumbai – 400 028

Annual Report and Accountsfor the year ended 31st March, 2007


S 159

DIRECTORS’ REPORT

To,The Members,

The Directors are pleased to submit their Report and the Audited Accounts of the Company for the Financial Year ended 31st March 2007.



Income from Operations & Other Income 620.52 279.35

Profit/(Loss) before Depreciation 29.48 11.16

Less : Depreciation 17.32 13.17

Profit/(Loss) before Tax 12.16 ( 2.01)

Less: Provision for Taxation 3.82 4.03

Profit/(Loss) after Tax 8.34 (6.04)

Profit/(Loss) b/fd of previous year (42.55) (36.51)

Balance carried to Balance Sheet (34.20) (42.55)

2. CHANGE OF NAME :

The Company has changed its name from Forbes Abans CleaningSolutions Pvt. Ltd to Forbes Facility Services Pvt. Ltd with effectfrom February 22, 2007, and complied with all the formalitiesunder the Companies Act, 1956.

3. OPERATIONS :

During the year under review, the Company has made a profit ofRs. 12.16 lakhs. The highlight of current year being:

(a) Your Company concentrated on acquiring customers fromindustrial sector in Maharashtra and Madhya Pradesh andstabilized the operations of the contracts acquired duringthe year. The Company commenced the current financial yearwith 9 contracts on hand and was able to acquire further 9contracts by March 2007 thereby increasing contracts invalue terms also. This has been achieved despite increase inthe cost of labour due to revision of labour rate with effectfrom 1st January 2007.

(b) Your Company has successfully renewed ISO 9001: 2000certification for its major sites.

(c) Your Company has acquired new businesses to strengthenthe market in which it operates. Your Company has alsosucceeded in achieving organic growth of 46% whichdenotes confidence shown by customers in capabilities ofthe Company.

The year gone by has seen your Company being recognized in

the segments of hotels and manufacturing set-ups. It is settingbenchmarks in the field of mechanized housekeeping andproviding integrated facility services. The customer satisfactionfrom all sites has shown a rating of above average whencompared to industry norms.

4. CAPITAL :

During the year under review, there has been no change in thePaid up capital of the company which stands at Rs. 1,00,00,000/- comprising 10,00,000 fully paid up equity shares of Rs. 10/-each.

On June 21, 2006, the joint venture partners, namely, EurekaForbes Ltd, Abans Ltd and Stock Traders India Pvt. Ltd. (STPL)decided to dissolve the joint venture effective from that date. Interms of the Dissolution Agreement, Abans Ltd and STPL haveagreed to sell their shareholdings at 30% and 19% respectivelyto Eureka Forbes Ltd at the price stated in the DissolutionAgreement. Accordingly, STPL sold its shareholding to EurekaForbes Ltd. in the month of July 2006, which enhances theshareholding of Eureka Forbes Ltd to 70%. The 30%shareholding held by Abans Ltd has, however, not beentransferred to Eureka Forbes Ltd so far, which Eureka ForbesLtd is pursuing with Abans Ltd.

5. DIRECTORS :

Following the dissolution of the joint venture, Mr. Sushil K.Premchand who represented STPL resigned as a Director of thecompany with effect from September 21, 2006 and the Directors



S 160

placed on record their deep appreciation of the services renderedby Mr. Sushil K. Premchand. Mr. Phiroze Pestonjee, whorepresented Abans Ltd on the Board, did not attend number ofconsecutive Board Meetings held during the year. Consequently,he is deemed to have vacated the office of Director pursuant tosection 283(1)(g) of the Companies Act, 1956.

Pursuant to Article 17 of the Articles of Association of theCompany and the provisions of section 256 of the CompaniesAct, 1956, Mr. S. L. Goklaney, retires at the forthcoming AnnualGeneral Meeting of the Company and being eligible offershimself for reappointment.

Mr. S.K. Palekar was appointed as an Additional Director at theBoard Meeting held on June 26, 2007. As an Additional Director,he will retire at the Annual General Meeting and being eligibleoffers himself for reappointment.

6. AUDITORS :

M/s. Batliboi & Purohit were re-appointed at the last AnnualGeneral Meeting of the company held on September 23, 2006,and hence, retire at this Annual General Meeting and offerthemselves for re-appointment.

7. EMPLOYEES :

There are no employees covered under the provisions of Section217 (2A) of the Companies Act, 1956, read with the Companies(Particular of Employees) Rules, 1975 as amended


As required under Section 217(2AA), your Directors confirmthat:-

(i) In the preparation of the Annual Accounts for the year endedMarch 31, 2007, the applicable accounting standards havebeen followed along with proper explanation relating tomaterial departures.

(ii) The accounting policies are consistently applied andreasonable. Prudent judgment and estimates are made so asto give a true and fair view of the state of affairs of theCompany at the end of the Financial Year and of the profits

of the Company for that period.

(iii) The Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities.

(iv) The Directors have prepared the Annual Accounts on a goingconcern basis

9. ACKNOWLEDGEMENT:

The Directors wish to place on record their appreciation for theco-operation and support received from the bankers andemployees of the Company, relations with whom have beencordial.

COMPANIES (DISCLOSURE OF PARTICULARS IN THEREPORT OF THE BOARD OF DIRECTORS) RULES,1988:

(a) CONSERVATION OF ENERGY AND TECHNOLOGYABSORPTION.

There are no particulars under Section 217(1) of theCompanies (Disclosure Of Particulars In The Report Of TheBoard Of Directors) Rules, 1988 regarding conservation ofenergy and technical absorption.

(b) FOREIGN EXCHANGE EARNING AND OUTGO

Particulars with regards to Foreign Exchange earnings andoutgo are shown in the Annual Accounts vide note No. 4(a)of Schedule ‘L’.

For and on behalf of the Board of Directors

S. L. GOKLANEYChairman

Mumbai, Dated : 26th June, 2007


S 161

AUDITORS’ REPORT TO THE MEMBERS OF

FORBES FACILITY SERVICES PRIVATE LIMITED.

1. We have audited the attached Balance Sheet of FORBES FACILITY SERVICES PVT LTD as at 31st March 2007, and also the profit andloss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of section227 (4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that :


(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examinationof those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books ofaccount;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance withthe Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

(v) On the basis of written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms ofclause (g) of sub-section (l) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together withnotes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2007;

(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.


ATUL MEHTAPartner

Mumbai , Dated : 26th June, 2007 M.No.15935



S 162


(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have been physically verified by the management during the year. As informed, no material discrepancies werenoticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) There is no inventory during the year. Accordingly the provisions of clause 4 (ii) of the Companies (Auditor’s Report) Order, 2003 (asamended) are not applicable.

(iii) (a) As informed the Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.

(b) As per the information furnished, the Company has taken loan from one company covered in the register maintained under Section301 of the Companies Act, 1956.The maximum amount involved during the year was Rs.40 lacs and the year end balance of loantaken from the above company was 20 lacs.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions forsuch loan are not prima facie prejudicial to the interest of the company.

(d) In respect of loan taken, repayment of the principal amount and payment of interest has been regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business, for the purchase of consumables and fixed assets and for the sale of services.During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts orarrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been soentered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts orarrangements exceeding value of Rupees five lakhs have been entered into during the finaancial year at prices which are reasonablehaving regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Section 58A, 58AAor any other relevant provisions of the Companies Act, 1956 and rules made there under.

(vii) The company does not have an internal audit system.

(viii) To the best of our knowledge and as explained, the central government has not prescribed maintenance of cost records under clause (d) ofsub-section (1) of Section 209 of the Companies Act, 1956.

(ix) (a) According to the information and explanations given to us and based on the books as produced and examined, the company is regularin depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protectionfund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other materialstatutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees state insurance, income tax, wealth tax, service tax, sales tax, customs duty and excise duty,cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date theybecame payable.

(c) According to the information and explanations given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customduty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company has been registered for a period of less than five years and hence we are not required to comment on whether or not theaccumulated losses at the end of the financial year is fifty percent or more of its net worth and whether it has incurred cash losses in thecurrent and immediately preceding financial year.

(xi) Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the company hasnot defaulted in repayment of dues to a financial institution, bank or debenture holders.


S 163

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our Opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisionsof clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banksor financial institutions.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans wereobtained.

(xvii) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flow Statement ofthe Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per theinformation and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported duringthe course of our audit.


ATUL MEHTAPartner

Mumbai , Dated : 26th June, 2007 M.No.15935



S 164


31st March 2007 31st March, 2006Schedule Rupees Rupees Rupees Rupees

FUNDS EMPLOYED :

1. SHARE CAPITAL A 1,00,00,000 1,00,00,000

2. RESERVES & SURPLUS — —

3. TOTAL SHAREHOLDERS FUNDS 1,00,00,000 1,00,00,000

4. SECURED LOANS B 74,26,619 88,71,282

5. UNSECURED LOANS C 20,93,698 —

6. DEFERRED TAX LIABILITY (Net) 3,62,875 3,51,023



FIXED ASSETS : D

8. Gross Block 2,20,08,007 1,30,81,024


Net Block 1,80,21,260 1,16,43,835

9. CURRENT ASSETS, LOANS & ADVANCES: E 2,45,24,881 1,07,58,675

10. Less : CURRENT LIABILITIES & PROVISIONS F 2,65,02,642 80,63,809

11. NET CURRENT ASSETS (19,77,762) 26,94,866

12. MISCELLANEOUS EXPENDITURE G 4,19,155 6,28,732(To the extent not written off or adjusted)

13. DEBIT BALANCE IN PROFIT & LOSS ACCOUNT 34,20,539 42,54,872

14. TOTAL ASSETS (NET) 1,98,83,192 1,92,22,305

NOTES TO THE ACCOUNTS L




S. L. GOKLANEY

C. A. KARNIK

ATUL MEHTA J. N. ICHHAPORIA Directors

Partner S. K. PALEKAR

Mumbai , Dated : 26th June, 2007

}


S 165


31st March 2007 31st March, 2006Rupees Rupees Rupees Rupees

1. INCOME H

INCOME FROM SERVICES RENDERED 5,91,80,519 2,77,20,220

OTHER INCOME 28,71,821 620,52,340 2,14,767 2,79,34,987

2. EXPENDITURE

COST OF SERVICES RENDERED I 3,29,74,669 1,35,44,763

EMPLOYEES’ COSTS J 1,47,21,224 70,68,344

ADMINISTRATIVE & OTHER CHARGES K 86,97,948 53,04,359

DEPRECIATION 27,10,715 13,17,403

INTEREST 17,31,598 9,01,092

6,08,36,155 2,81,35,961

3. PROFIT/(LOSS) BEFORE TAX 12,16,185 (2,00,974)

PROVISION FOR TAXATION -

CURRENT YEAR TAX PROVISION — 30,500

ADD: FRINGE BENEFIT TAX 3,70,000 2,30,000

ADD: DEFERRED TAX 11,852 3,81,852 1,42,735 4,03,235

4. PROFIT/(LOSS) AFTER TAX 8,34,333 (6,04,209)

5. BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR (42,54,872) (36,50,663)

6. BALANCE CARRIED TO BALANCE SHEET (34,20,539) (42,54,872)

NO. OF EQUITY SHARES 10,00,000 10,00,000

FACE VALUE Rs. 10/- EACH

BASIC AND DILUTED EARNING PER SHARE (Refer Note 13) 0.83 (0.60)

NOTES TO THE ACCOUNTS L




S L GOKLANEY

C A KARNIK

ATUL MEHTA J N ICHHAPORIA Directors

Partner S K PALEKAR


}



S 166


As At31-03-2006

Rupees RupeesSCHEDULE ‘A’ : SHARE CAPITAL

AUTHORISED:20,00,000 Equity Shares of Rs.10 each

2,00,00,000 2,00,00,000

ISSUED, SUBSCRIBED AND PAID-UP:10,00,000 Equity Shares of Rs.10 each fully paid-up

1,00,00,000 1,00,00,000

[of the above Shares, 7,00,000 Shares are held by the HoldingCompany, Eureka Forbes Limited including 4 shares held jointlywith nominees ;(P.Y. 5,10,000 shares were held by Eureka ForbesLimited including 4 shares held jointly with nominees)]

As At31-03-2006

Rupees RupeesSCHEDULE ‘B’ - SECURED LOANSTerm Loan From Centurion Bank 37,90,269 49,10,630(Secured by Hypothecation of Fixed Assets , Stock & Receivables)

Cash Credit From Centurion Bank 36,36,350 39,60,652(Secured by Hypothecation of Current Assets )

74,26,619 88,71,282

As At31-03-2006

Rupees RupeesSCHEDULE ‘C’ - UNSECURED LOANSInter Corporate Deposit 20,00,000 -Interest accrued and due 93,698 -

20,93,698 -

SCHEDULE ‘D’ : FIXED ASSETS

GROSS BLOCK DEPRECIATION NET BLOCK

Description As on ADDITION DELETION As on As on Depreciation Depreciation on As on As at As at01-04-2006 31-03-2007 01-04-2006 for the year deductions during 31-03-2007 31-03-2007 31-03-2006

the yearRupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees

1. Plant & Machinery 1,19,09,111 1,11,28,742 27,46,439 2,02,91,414 13,16,607 22,18,536 95,408 34,39,735 1,68,51,679 1,05,92,504

2. Furniture & Fixtures 1,90,750 1,54,337 2,70,304 74,783 12,519 26,388 18,436 20,471 54,312 1,78,231

3. Electrical Fittings 26,485 — 2,250 24,235 4,597 3,886 209 8,274 15,961 21,888

4. Computers 3,67,816 2,02,413 96,431 4,73,798 82,766 1,52,386 12,255 2,22,897 2,50,901 2,85,050

5. Vehicles 5,86,862 7,96,915 2,40,000 11,43,777 20,700 3,09,519 34,849 2,95,370 8,48,407 5,66,162

1,30,81,024 1,22,82,407 33,55,424 2,20,08,007 14,37,189 27,10,715 1,61,157 39,86,747 1,80,21,260 1,16,43,835

Previous Year 48,22,186 82,75,038 16,200 1,30,81,024 1,26,331 13,17,403 6,545 14,37,189 1,16,43,835 46,95,855


S 167


As At31-03-2006

SCHEDULE ‘E’ - CURRENT ASSETS, Rupees Rupees Rupees RupeesLOANS AND ADVANCES

CURRENT ASSETS :[I] Stock-in-trade *

Stores & other consumables — 2,44,018 * (As certified by the Management ) — 2,44,018

[ii] Sundry Debtors (Unsecured) (Considered Goodunless otherwise stated ) :[a] Debts outstanding for a period exceeding six months — —[b] Other debts 1,47,34,860 43,51,242

1,47,34,860 43,51,242[iii] Cash and Bank Balances :

[a] Cash, cheques on hand 78,669 1,01,240[b] with Scheduled Banks :

In Current Accounts 3,38,535 12,86,260In Deposit Accounts 20,000 —

4,37,204 13,87,500

LOANS AND ADVANCES

(Unsecured, Considered unless otherwise stated ) :[i] Advances recoverable in cash or in kind or for value to be received 60,00,038 33,96,143[ii] Advance Payment of Tax 23,12,896 8,33,964[iii] Other Deposits :

With Government authorities 7,28,182 2,97,808With Others 3,11,702 2,48,000

93,52,817 47,75,915

2,45,24,881 1,07,58,675

SCHEDULE ‘F’ - CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIESSundry Creditors :Others(Including Rs. 1,44,70,924/- (Previous Year Rs.25,61,844/- 2,12,73,656 59,93,529due to Holding Company) 2,12,73,656 59,93,529Other Liabilites 37,69,034 12,37,885

PROVISIONS :For Taxation :

Income Tax 30,500 30,500Fringe Benefit Tax 6,00,000 6,30,500 2,30,000 2,60,500

For Expenses 7,68,273 5,71,895For Retirement and other employee benefits 61,179 —

2,65,02,642 80,63,809

SCHEDULE ‘G’ - MISCELLANEOUS EXPENDITURE(TO THE EXTENT NOT WRITTEN-OFF OR ADJUSTED)

Preliminary ExpensesTotal Expenses incurred 6,28,732 8,38,309Less : written -off during the year 2,09,577 2,09,577

4,19,155 6,28,732

4,19,155 6,28,732



S 168

SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNT

As At31-03-2006


SCHEDULE ‘H’ - INCOMECleaning Services Rendered 5,91,80,519 2,77,20,220

Other Income :Sales - Food & Beverages 26,85,003 1,24,606Miscellaneous Income 1,71,844 —Profit on sale of Assets 14,974 —Profit on sale of investments — 90,161

6,20,52,340 279,34,987

SCHEDULE ‘I’ - COST OF SERVICES RENDEREDService Charges 2,64,68,349 109,52,037Consumables 65,06,321 25,92,726

3,29,74,669 1,35,44,763

SCHEDULE ‘J’ - EMPLOYEES’ COSTSWages , Allowances and Incentive 30,756 21,26,271Salaries , Allowances and Incentive 1,10,89,989 42,62,856Company’s Contribution to Provident, Gratuity and Other Funds 9,02,514 3,26,058Staff Welfare Expenses 26,97,965 3,53,159

1,47,21,224 70,68,344

SCHEDULE ‘K’ - ADMINISTRATIVE & OTHER EXPENSESRent (net of recoveries Rs. Nil (previous year Rs. 4,18,400/-) 7,74,910 5,63,429Repairs & Maintenance- Office premises — 16,530 Others 9,42,039 1,82,335Auditors Remuneration : Audit Fees 84,270 84,180 Tax Audit Fees 33,708 —

1,17,978 84,180Postage, Telegrams, Telephones 4,68,875 3,72,621Travelling and Conveyance 15,39,983 11,97,316Loss on Sale of Assets — 3,055Printing & Stationery 2,47,193 94,140Legal & Professional Fees 7,03,285 7,07,733Transport Charges 8,69,550 1,69,706Vehicles : Hire charges — 3,17,274 Maintenance charges 7,44,119 6,11,566

7,44,119 9,28,840Miscellaneous expenditure written-off 2,09,577 2,09,577Director’s sitting Fees 60,000 48,000Insurance 4,03,732 1,55,090Other Establishment Expenses 16,16,707 5,71,807

86,97,948 53,04,359


S 169

SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2007

SCHEDULE ‘L’ - NOTES TO THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES:



(b) Fixed Assets

Fixed Assets are stated at cost less depreciation. Cost comprises of the purchase price and any attributable cost of bringing the assets toits working condition for its intended use. Depreciation is provided on the written down value method and at the rates and in the mannerspecified in Schedule XIV of the Companies Act,1956.

(c) Investments

Short term investments, are carried at the lower of costs and quoted / fair value, computed categorywise. Long term investments arecarried at costs. Provision for diminution in the value of long term investments is made only if such decline is not temporary in theopinion of the management.

Dividend income is accounted when the right to receive payment is established and known.

(d) Value of Service Rendered

Value of Services Rendered to the Customer are accounted on accrual basis based on contractual arrangements with the Customers andare stated net of deductions made, if any.

(e) Retirement Benefits

Contributions are made to Provident Funds on actual liability basis. While provision for Gratuity has been made based on independentactuarial valuation

(f) Taxation

Tax expense comprise of both current & deferred tax. Current Income Tax is measured at the amount expected to be paid to the taxauthority in accordance with the Income Tax Act. Deferred income Taxes reflect the impact of current year timing difference betweentaxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred Tax is measured basedon tax rate and tax laws enacted or substantively enacted at the Balance sheet date.

(g) Preliminary Expenditure

Expenses incurred during formation of the Company are being capitalised and shown under the head “Miscellaneous Expenditure”(to the extent not written off or adjusted) in the Balance Sheet. These expenses are written off in equal installment over period of 5years.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for -Rs. Nil (previous year Rs.8.71 Lakhs ).

3. Company does not have any Contingent liabilities2006-07 2005-06Rupees Rupees

4. Remittance in Foreign Currency :On account of -Reimbursement of expatriate’s expenses Nil Nil

5. Value of Imports on C.I.F basis :Finished goods, Components & Spare parts Nil Nil

6. Earnings in Foreign Exchange : Nil Nil

7. Information in regard to Service activity of the Company :

i) Value (Rs.)

Value of Services rendered 5,91,80,519 2,77,20,220

8. The Company’s business consist of a single segment only.

9. To the best of the information available, the Company has nil amount due to Small Scale Industrial Undertakings for more than 30 days.



S 170

SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2007

SCHEDULE ‘L’ - NOTES TO THE ACCOUNTS (contd.)10. Deferred tax liability (net) as specified in Accounting Standard 22 “ Accounting of taxes on income” has been worked out using the applicable

rate of tax based on the impact of timing differences between financial statement and estimated taxable income for the current year.The movement of provision for deferred tax is given below :

Provision for Deferred Tax Opening Charge / (Credit) ClosingAs at 01.04.06 during the year As at 31.03.07

Depreciation 3,51,023 11,852 3,62,875Others — — —Total 3,51,023 11,852 3,62,875

Income Tax Loss has not been considered as Deferred Tax Asset as there is no virtual certainty that sufficient futureIncome will be available against which such Deferred Tax Asset can be realised.

11. Related Party Disclosures(i) Names of related parties and nature of related party relationship:

A Enterprises collectively having more than one half of voting powerEureka Forbes Limited Sterling Investment Corp. Pvt. LtdForbes Gokak Limited Cyrus Investments Ltd.Shapoorji Pallonji & Co. Ltd.

B Enterprises that are controlled - (Subsidiary Companies)C Enterprises that are under common control

Aquamall Water Solutions Limited Forbes Finance LtdEuro Forbes International Pte. Ltd. Forbes Sterling Star LtdForbes Aquamall Limited Latham India LtdForbes Doris & Naess Maritime Ltd. Next Gen Publishing Ltd.

Volkart fleming Shipping & Services LtdD Associate Company

Forbes Concept Hospitality Services Pvt Ltd

E Key Management Personnel(ii) Transactions with related parties

Related PartyReferred to Referred to Referred to Referred to

Nature of Transactions in A above in B above in C above in D aboveRs. Rs. Rs. Rs.

PurchasesGoods and Materials 7,18,422 — — —Services 319,051 — 3,57,071Fixed Assets 86,46,469 — — —

SalesGoods and Materials - — 14,25,536Services Rendered 3,03,048 — — —

ExpensesRent and other Expenses 31,68,784 — — —

FinancingInter-Corporate Deposit (net of Repaid) 20,00,000

OutstandingReceivable 54,16,817Payable 1,65,64,622 — — —

12. Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weightedaverage number of Equity Shares outstanding during the period.

13. Figures for the previous year have been regrouped, rearranged or reclassified, wherever necessary.

Per our report attachedFor BATLIBOI & PUROHITChartered Accountants S L Goklaney

C A Karnik DirectorsATUL MEHTA J N IchhaporiaPartner S K Palekar


}


S 171

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 20072006-2007 2005-2006


NET PROFIT BEFORE TAX 12,16,185 (2,00,974)Add / (Less) :

Depreciation 27,10,715 13,17,403Miscellaneous expenditure written-off 2,09,577 2,09,577Loss/(profit) on sale of fixed Assets (14,974) 3,055Interest on Term loan / others 17,31,598 9,01,092Profit on sale of investments — (90,161)

46,36,917 23,40,966 OPERATING PROFIT/(LOSS) BEFORE WORKING CAPITAL CHANGES AND OTHER ADJUSTMENTS 58,53,102 21,39,992Changes in -

Trade and Other Receivables (1,34,81,588) (68,81,954)Inventories 2,44,018 (2,44,018)Trade Payables and others 1,80,68,833 20,04,773

CASH GENERATED FROM OPERATIONS 48,31,263 (51,21,199)

106,84,365 (29,81,208)Direct Taxes Paid (14,78,932) (2,30,000)

(A) NET CASH FROM OPERATING ACTIVITIES 92,05,433 (32,11,208)

CASH FLOW FROM INVESTING ACTIVITIES:Purchase of Fixed Assets (122,82,407) (82,75,038)Sale of Fixed Assets 3,209,241 6,600Sale of Investments — 40,95,827Purchase Of Investments — —Preliminary Expenditure — —

(B) NET CASH FROM /USED IN INVESTING ACTIVITIES (90,73,166) (41,72,611)CASH FLOW FROM FINANCING ACTIVITIESIssue of Equity Shares — —Inter-Corporate Deposit 2,000,000 —

Increase / (Decrease) in Bank Borrowings (3,24,302) 89,60,652 Interest Paid (16,37,900) (9,01,092) Term Loan Repaid (11,20,361) (89,370)

(C) NET CASH FROM/ USED IN FINANCING ACTIVITIES (10,82,563) 79,70,190NET INCREASE IN CASH AND CASH EQUIVALENTS (9,50,296) 5,86,371

CASH AND CASH EQUIVALENTS AS AT THECOMMENCEMENT OF THE YEAR , COMPRISING :Cash , Cheques on hand 1,01,240 8,567Balances with scheduled banks on currentaccount, Margin accounts and Deposit accounts 12,86,260 7,92,562

13,87,500 8,01,129CASH AND CASH EQUIVALENTS AS AT THE ENDOF THE YEAR , COMPRISING :Cash , Cheques on hand 78,669 1,01,240Balances with scheduled banks on currentaccount, Margin accounts and Deposit accounts 3,58,535 1,286,260

4,37,204 13,87,500NET INCREASE / (DECREASE) AS DISCLOSED ABOVE (9,50,296) 5,86,371

Per our report attachedFor BATLIBOI & PUROHITChartered Accountants S L Goklaney

C A Karnik DirectorsATUL MEHTA J N IchhaporiaPartner S K Palekar


}



S 172

S L GoklaneyC A Karnik DirectorsJ N IchhaporiaS K Palekar


}

173

FORBES SERVICES LIMITED

(Subsidiary Company ) Annual Report and Accounts


DIRECTORS :

C. A. Karnik Chairman

R. T. Doshi

A. T. Shah

M. L. Khetan

BANKERS :

Union Bank of India

AUDITORS :

M/s. Atul HMV & Associates

REGISTERED OFFICE :

21, A.K. Nayak Marg,

Fort,

Mumbai - 400 001.


S 174

DIRECTORS’ REPORT

Your Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March, 2007.



Rupees Rupees

Profit / (Loss) for the year (10,423) (53,716)

Less: Prior Year Adjustment 3,338 -

Profit/(Loss) Before tax (13,761) (53,716)

Less : Provision for Taxation - -

Fringe Benefit Tax 25,800 12,800

Profit / (Loss) after Tax (39,561) (66,516)

Add: Amount brought forward from previous year 1,48,036 2,14,552

Surplus carried to Balance Sheet 1,08,475 1,48,036

2. DIRECTORATE :

Mr. C.A. Karnik retires from the Board by rotation and is eligiblefor re-appointment. The Board of Directors commends hisappointment as a Director of the Company.

3. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors M/s. Atul HMV &Associates., Chartered Accountants, offer themselves for re-appointment as Auditors of the Company.


The Company did not have any employee who was entitled toreceipt of Rs.24,00,000/- or more in aggregate throughout thefinancial year or Rs.2,00,000/- or more per month for a part ofthe financial year.

5. DIRECTOR’S RESPONSIBILITY STATEMENT :

“ Pursuant to the provisions of section 217 (2AA) of theCompanies Act, 1956, the Directors based, on the representationsreceived from the operating management, confirm -

a. that in the preparation of the annual accounts, the applicableaccounting standards have been followed and that there areno material departures;

b. that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of thefinancial year and of the profit or loss of the company forthe period;

c. that they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;

d. that they have prepared the annual accounts on a goingconcern basis”.

6. INFORMATION REQUIRED UNDER THE COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OFBOARD OF DIRECTORS) RULES, 1988.

A. Conservation of energy and technology absorption:


B. Foreign exchange earnings and outgo:

The Company has not earned and used any foreign exchangeduring the year.


C.A.KARNIK

Place : Mumbai CHAIRMAN

Dated: 9th June, 2007.


S 175

AUDITOR’S REPORT TO THE MEMBERS OF FORBES SERVICES LTD

1. We have audited the attached Balance Sheet of FORBES SERVICES LTD, as at 31st March 2007 and also the profit & Loss Account andthe Cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors’ Report) Order, 2003, as amended by the Companies (Auditors’ Report) (Amendment) Order,2004., issued by the Central Government of India in terms of sub Section (4A) of Section 227 of the Companies Act, 1956, we enclose inthe Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposeof our audit;

(ii) In our opinion, proper Books of account as required by law have been kept by Company so far as appear from our examination ofthose books;

(iii) The Balance sheet and the Profit & Loss Account and Cash flow statements dealt with by this report are in agreement with the Booksof Accounts;

(iv) In our opinion, the Balance sheet and the Profit & Loss Account and Cash flow statement dealt with by this report comply with theAccounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the Directors as on 31st March, 2007 and taken on record by the Board ofDirectors, we report that none of the Directors is disqualified as on 31st March, 2007 from being appointed as a Director in terms ofclause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so required and give a true & fair view in conformity with the accountingprinciples generally accepted in India.

(a) in the case of the Balance sheet of the state of affairs of the Company, as at 31st March 2007.

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

(c) in the case of the Cash Flow Statement, of the cash flow of the company for the year ended on that date.

FOR ATUL HMV & ASSOCIATES


Hemanshu M. Vera

Partner

Mumbai Mem. No.100283

Date : 9th June, 2007

ANNEXURE TO THE AUDITORS’ REPORT

Annexure referred to in paragraph 3 of our Report of even date to the Members of FORBES SERVICES LTD. (the Company) on the FinancialStatements for the year ended 31st March, 2007.

1. The company does not have any fixed assets. Accordingly the provision of clause 4(i) of the Companies (Auditor’s Report) Order, 2003 arenot applicable.

2. The Company does not have any inventory. Accordingly the provision of clause 4(ii) of the Companies (Auditor’s Report) Order, 2003 arenot applicable.


S 176

3. The Company has neither granted nor taken any loan, secured or unsecured to/from the Companies, firms or other parties covered in theregister maintained under Section 301 of the Act. Consequently, clauses (iii) (b), (iii) (c), (iii) (d), (iii) (f) & (iii) (g) of paragraph 4 of theOrder are not applicable.

4. There are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchaseof stores and assets and for provision of services. There is no sale of goods by the Company. Further, on the basis of our examination ofbooks and records of the company and according to the information and explanation given to us we have neither come across nor have webeen informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. a) According to the information and explanation given to us, we are of the opinion that the particulars of all contracts or arrangementsthat need to be entered into the register maintained u/s 301 of the Companies Act, 1956 have been so entered.

5. b) In our opinion and according to the information and explanations given to us, the transaction for sale or services made in pursuanceof such contracts or arrangements aggregating during the year to Rs.5,00,000/- or more in respect of each party were made at cost tothe Company. In the absence of any comparable prices, we are unable to comment whether the transactions are made at prices whichare reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of provision of Section 58A, 58AA or any other relevantprovision of the Companies Act, 1956 and the rules framed there under.

7. In our opinion the Company has an internal audit system commensurate with its size and nature of its business.

8. The Company being a service company is not required to maintain cost records under clause (d) of subsection (1) of section 209 of theCompanies Act, 1956.

9. According to information and explanation given to us and the records of the company examined by us the Company is regular in depositingwith appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax, wealth and servicetax. The provisions of Investor Education & Protection Fund, Sales Tax, Customs Duty, Excise Duty and Cess are not applicable to theCompany. As per information and explanation given to us, there is no undisputed amount payable in respect of Income Tax, Wealth Tax andService Tax.

10. The Company has no accumulated losses as at 31st March, 2007. However it has incurred cash loss in the financial year ended on that dateand in the immediately preceding financial year.

11. The Company did not have any dues to financial institution, banks or debenture holders during the year.

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

13. The Company is not a chit fund/nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (AuditorsReport) Order 2003 are not applicable to the company.

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

15. Accordingly to the information and explanations given to us the company has not given any guarantee for loans taken by others from bankor financial institutions.

16. The Company did not have any term loans outstanding during the year.

17. Accordingly to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are ofthe opinion that the company has not raised any funds on short term basis.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section301 of the companies Act, 1956.

19. The Company did not have outstanding debentures during the year.

20. The Company has not raised any money by public issues during the year.21. According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.

FOR ATUL HMV & ASSOCIATESChartered Accountants

HEMANSHU M. VORAPARTNER

Place : Mumbai Memb. No. 100283Date : 9th June, 2007


S 177

BALANCE SHEET AS AT 31st MARCH, 2007

As at As at31.03.2007 31.03.2006


1. SOURCES OF FUNDS :

I SHAREHOLDERS FUNDS :

(a) Share capital A 500,000 500,000

(b) Reserves and Surplus B 108,475 148,036

608,475 648,036

2. APPLICATION OF FUNDS :

CURRENT ASSETS ,

LOANS AND ADVANCES : C

(a) Cash and Bank Balances 326,169 144,941

(b) Loans and Advances 686,372 991,399

1,012,541 1,136,340

LESS :

CURRENT LIABILITIES AND

PROVISIONS : D 404,066 608,475 488,304

NET CURRENT ASSETS 608,475 648,036

NOTES TO THE ACCOUNTS G

As per our Report of even date attached.

For Atul HMV & Associates C. A. KARNIK Chairman

Chartered Accountants R. T. DOSHIA. T. SHAH DirectorsM. L. KHETAN

Hemanshu M. Vora

Partner

Memb. No.: 100283

MUMBAI: DATE:9th June,2007

}


S 178


As at

31.03.2006

Schedule Rupees Rupees1 INCOME :

Interest and other Income E 504 9,577

2 LESS: EXPENDITURE :

Establishment Expenses F 10,927 63,293

3 PROFIT / (LOSS) BEFORE PRIOR YEAR ADJUSTMENT. (10,423) (53,716)

4 LESS: Prior year Adjustment 3,338 -

5 PROFIT / LOSS BEFORE TAX (13,761) (53,716)

6 LESS : PROVISION FOR TAXATION - -

FRINGE BENEFIT TAX 25,800 12,800

7 PROFIT/ LOSS AFTER TAX (39,561) (66,516)

8 BALANCE BROUGHT FORWARD FROM 148,036 214,552

PREVIOUS YEAR

9 SURPLUS CARRIED TO BALANCE SHEET 108,475 148,036

No. of Equity Shares 50,000 50,000

Face Value pre Share 10 10

Basic & Diluted Earning per Share (0.79) (1.07)

10 NOTES TO THE ACCOUNTS G


For Atul HMV & Associates C. A. KARNIK Chairman


Hemanshu M. Vora

Partner

Memb. No.: 100283

MUMBAI: DATE:9th June,2007

}


S 179

SCHEDULE ‘A’ SHARE CAPITAL

As at As at

31-03-2007 31-03-2006

Rupees Rupees

1 AUTHORISED :

50,000 Equity Shares of Rs. 10/- each. 500,000 500,000

2. ISSUED, SUBSCRIBED AND PAID-UP:

50,000 Equity Shares of Rs. 10/- each fully paid up. 500,000 500,000

SCHEDULE ‘B’ RESERVES AND SURPLUS

As at As at

31st March, 2007 31st March, 2006

Rupees Rupees

1 SURPLUS :

Profit and Loss Account Balance 108,475 148,036

108,475 148,036

SCHEDULE ‘C’ CURRENT ASSETS,LOANS AND ADVANCES

As at As at



1. CURRENT ASSETS :

Cash and Bank Balances :

Cash on hand 26,062 7,205


In Current Accounts 300,107 137,736

326,169 144,941


(UNSECURED,CONSIDERED GOOD)

Advances recoverable in cash or in kind orfor value to be received : 439,866 846,129

Advance payment of Tax 246,506 145,270

686,372 991,399

1,012,541 1,136,340

SCHEDULE ‘D’ CURRENT LIABILITIES AND PROVISIONS

As at As at


Rupees Rupees

1. CURRENT LIABILITIES :


Advances Received against Services 216,710 291,710

404,066 488,304

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2007.


S 180

SCHEDULE ‘E’ INTEREST AND OTHER INCOME

As at As at

31-03-2007 31-03-2006

Rupees Rupees

Interest from others 504 9,577

504 9,577

SCHEDULE ‘F’ ESTABLISHMENT EXPENSES

As at As at

31-03-2007 31-03-2006


1 Payment to and Provisions for Employees

(a) Salaries & Allowances 2,528,576 1,662,563

(b) Co’s contribution to P.F. & others Funds 172,609 168,463

(c) Staff Welfare 64,655 -

2,765,840 1,831,026

2 Professional Fees 953,058 920,384

3 Motor Car Expenses 215,851 172,272

4 Conveyance Expenses 71,280 176,207

5 Professional Tax 2,500 2,500

6 Telephone & Telegram 29,305 35,590

7 Office Expenses 43,330 22,851

8 Miscellanceous Expenses 31,674 10,051

9 Auditors RemunerationAudit Fees 7,500 7,500Service Tax 927 918Out of Pocket Expenses 1,599 1,200

4,122,864 3,180,499

10 Less : Recoveries (TDS Rs.101236/-, P.Y. Rs.78635/-) 4,111,937 3,117,206

10,927 63,293

SCHEDULE ‘E’ INTEREST AND OTHER INCOME


S 181

SCHEDULE ‘G’ NOTES TO THE ACCOUNTS

1 Significant Accounting Policies

A BASIS OF ACCOUNTING :

The Financial statements are prepared under historical cost convention, on accrual basis, and are in accordance with the requirements

of the Companies Act, 1956, and comply with Accounting Standards referred to in Sub-Section (3C) of Section 211 of the said Act.

B REVENUE RECOGNITION:

Income from service activity is accounted as and when service are rendered.

C EXPENSES:

Expenses are accounted for on accrual basis and provision is made for all known losses and liabilities.

D RETIREMENT BENEFITS:

• Contributions to defined contribution schemes such as Provident fund and Family Pension fund are charged to Profit & Loss

account as incurred.

• Leave encashment is charged to Profit & Loss account on the basis of actuarial valuation as at balance sheet date.

• Provisions for liabilities in respect of gratuity is based on Employees Group Gratuity Scheme with Life Insurance Corporation

of India and is administered through trust formed for this purposes. The liability, if any, not provided for will be accounted in the

year of payment.

E TAX ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the

Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the difference between taxable income and accounting Income that originate

in one period and are capable of reversal in one or more subsequent periods.

Since there are no timing differences the implementation of Accounting Standard (AS-22) “Accounting for taxes on Income issued by

the Institute of Chartered Accountants of India is not required.

2 Balance in respect of certain advance given and advance received is subject to confirmation.

3 Additional information as required under Schedule VI of the Companies Act, 1956 has not been furnished as the same is not applicable.

4 Figures for the previous year have been regrouped wherever necessary.


6 Related Party Disclosures : As required by Accounting Standard 18

I Name of the Related Party and nature of relationship where control exists are as under :

A. Enterprises collective having more than one half of voting powers :

As on 31-3-2007 As on 31-3-2006

Shapoorji Pallonji & Co.Ltd. (Ultimate holding Co.) Shapoorji Pallonji & Co.Ltd. (Ultimate holding Co.)




S 182


As on 31-3-2007 As on 31-3-2006

Forbes Campbell Holdings Ltd. Forbes Campbell Holdings Ltd.

Forbes Sterling Star Ltd. Forbes Sterling Star Ltd.

Warrior (Investment) Ltd. Warrior (Investment) Ltd.

Latham India Limited Latham India Limited

Forbes Technosys Ltd. Forbes Technosys Ltd.

Forbes Aquamall Ltd. Forbes Aquamall Ltd.

Aquamall Water Solutions Ltd. Aquamall Water Solutions Ltd.

Forbes Dorbis & Naess Maritime Ltd. Forbes Dorbis & Naess Maritime Ltd.

Eureka Forbes Ltd. Eureka Forbes Ltd.

Forbes Abans Cleaning Solutions Pvt. Ltd. Forbes Abans Cleaning Solutions Pvt. Ltd.

Volkart Fleming Shipping & Services Ltd. Volkart Fleming Shipping & Services Ltd.

Next Gen Publishing Ltd. Next Gen Publishing Ltd.

Forbes Tinsley Co. Ltd. Forbes Tinsley Co. Ltd.

Euro Forbes International Pte. Ltd. Euro Forbes International Pte. Ltd.

Forbes Finance Ltd. Forbes Finance Ltd.

II Transactions with related parties :


Income 31.03.2007 31.03.2006

1 Service Charges (including service tax) 4,545,462 3,394,384

Expenses

2 Service charges paid 72,002 36,567

Outstandings

3 Advances (expense recoverable) 194,618 224,324

4 Expenses 2,424 -

All transactions and outstanding balance referred above are with a single party viz. Forbes Gokak Ltd.


For ATUL HMV & ASSOCIATES C. A. KARNIK Chairman


HEMANSHU M. VORA

Partner

Memb. No.: 100283

Mumbai: Date: 9th June, 2007

}


S 183

FORBES SERVICES LTD.

Statement pursuant to Part IV of Schedule VI to the Companies Act, 1956.Balance Sheet and Company’s General Business Profile

I REGISTRATION DETAILES State code 1 1

Registration No. 1 1 - 1 8 0 7 7

Balance Sheet

Date 3 1 0 3 2 0 0 7

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

Public Issue Bonus Issue

N I L N I L

Rights Issue Private Placement

N I L N I L

III. POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS

(AMOUNT Rs. IN THOUSANDS)


6 0 8 6 0 8

SOURCES OF FUNDS

Paid up Capital Reserves & Surplus

5 0 0 1 0 8


N I L N I L

APPLICATION OF FUNDS

Net Fixed Assets Investments

N I L N I L

Net current Assets Misc. Expenditure

6 0 8 N I L

Accumulated Losses

N I L

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

Turnover Total Expenditure

1 1 1

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

1 0 4 0

(Please Tick Appropriate box + for Profit, - for Loss)

Earning Per Share (Rs.) Dividend Rate (%)

( 0 . 7 9 ) N I L

V. GENERAL NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF THE COMPANY

(AS PER MONETARY TERMS)


S E R V I C E C O .




S 184

2006 - 2007 2005 - 2006


Profit / loss before tax (10,423) (53,716)

Adjusted for

Interest received (504) (9,577) (9,577)

Prior year adjustment (3,338) -

Operating profit before

Working capital changes (14,265) (63,293)

Change in

Creditors (84,238) 20,083

Advances 406,263 322,025 (82,708) (62,625)

Income tax refund - 63,380Direct tax paid (127,036) (127,036) (91,435) (28,055)

(A) NET CASH FROM OPERATING ACTIVITIES 180,724 (153,973)


(Interest received) 504 9,577

(B) NET CASH FROM INVESTING ACTIVITIES 504 9,577


(C) NET CASH FROM FINANCING ACTIVITIES - -

NET INCREASE / DECREASE IN

CASH AND CASH EQUIVALENTS (A)+(B)+( C ) 181,228 (144,396)

Cash and cash equivalent as at the commencement 144,941 289,337

Of the year comprising cash, cheques on hands and

Remmittances in transit and balance with bank.

Cash and cash equivalent as at the end of the year

Comprising cash, cheques on hands and remmittances

In transit and balance with bank 326,169 144,941

Net decrease / increase as disclosed above 181,228 (144,396



For ATUL HMV & ASSOCIATES C. A. KARNIK Chairman


HEMANSHU M. VORA

Partner

Memb. No.: 100283

Mumbai: Date: 9th June, 2007

}



DIRECTORS :

G.Mukherji Chairman

M.L.Khetan

K.S. Ravishankar

BANKERS :

IDBI Bank Limited

AUDITORS :

Messrs. U.V.Shah & Co.

REGISTERED OFFICE :

Forbes Building,

Charanjit Rai Marg,

Fort, Mumbai 400 001

FORBES SMART DATA LIMITED

185


S 186

DIRECTORS’ REPORT

ToThe Shareholders,

1. Your Directors submit their Report and the Audited Accounts of the Company for the period from 24th April,2006 to 31st March,2007.

2. OPERATIONS :

The Company has not commenced commercial activity. There was no activity during the period ended 31st March,2007. The Companyearned an interest of Rs. 5655 on an inter corporate deposit placed with the holding company, Forbes Gokak Limited.

3. DIRECTORATE :

Mr. G..Mukherji and Mr. M.L.Khetan are liable to retire by rotation.

4. AUDITORS :

You are requested to appoint Auditors for the current year and to fix their remuneration. The retiring Auditors, M/s U.V.Shah & Co.,Chartered Accountants, offer themselves for re-appointment.


The Company did not have any employee who was entitled to receipt of remuneration of Rs. 24,00,000 or more in aggregate throughout thefinancial year or Rs. 2,00,000 or more per month for a part of the financial year.


“Pursuant to the provisions of section 217 (2A) of the Companies Act,1956, the Directors confirm –

a. that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no materialdepartures;

b. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit orloss of the company for the period;

c. that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

d. that they have prepared the annual accounts on a going concern basis”.

7. INFORMATION REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD

OF DIRECTORS ) RULES,1988.

A. Conservation of energy and technology absorption.

Since the Company does not own any manufacturing facility, particulars relating to conservation of energy and technology absorptionare not applicable.

B. Foreign Exchange earning and outgo

The Company has not earned and used any foreign exchange during the period.


G. MUKHERJIMumbai, 14th June, 2007. Chairman


S 187

AUDITORS' REPORT TO THE MEMBERS OF FORBES SMART DATA LIMITED ON THE ACCOUNTS

FOR THE YEAR ENDED 31ST MARCH 2007.

1. We have audited the attached Balance Sheet of FORBES SMART DATA LIMITED as at 31st March 2007 and also the Profit & LossAccount for year ended on the date annexed thereto. These financial statements are the responsibility of the Company's management. Ourresponsibility is to express the opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) Order,2004,( together the 'Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act 1956, and on thebasis of such checks of the books and the records of the Company and according to information and explanations given to us, we enclosein the annexure a statement on the matter as specified in paragraph 4 & 5 of the said order, to the extent applicable to the Company.

4. Further to our comments in the annexure referred to in paragraph 2 above, we report that:

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

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination ofthe books.

(iii) The Balance Sheet and Profit and Loss Account referred to in this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet and Profit and Loss Account comply with the accounting standards referred to in sub section (3C)of section 211 of the Companies Act, 1956.

(v) On the basis of information and explanation received by us, none of the directors are, prima facie, as at 31st March 2007 disqualifiedfrom being appointed as directors of the company under clause (g) of sub section (1) of Section 274 of the Companies Act, 1956.

(vi) In our opinion, and to the best of our information and according to the explanations given to us, the accounts subject to notes thereongive the information required by the Companies Act, 1956 in the manner so required and give a true and fair view:

(i) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2007 and

(ii) In the case of the Profit and Loss Account of the profit for the year ended on that date.

U.V. SHAH & CO.


(UDAY SHAH)

ProprietorMembership No. : 35626

Mumbai, 14th June, 2007


S 188

ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF FORBES SMART DATA LIMITED

FOR THE PERIOD ENDED 31ST MARCH 2007.

(Referred to in paragraph 3 of our report of even date)

1) In our opinion and according to the information and explanations given to us, and the nature of the Companies activities during the yearhave been such that the requirement of paragraph 4 (i), (ii), (iv), (vii), (viii), (x), (xi), (xiii), and (xiv) of paragraph 4 of the Companies(Auditor’s Report) Order,2003 are not, on facts, applicable and hence no comments have been offered there under.

2) Loans taken / granted

(a) As per the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firmor other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions ofclause 4 (iii) (b), (c) and (d) of the Companies (Auditors’ Report) Order, 2003 are not applicable to the Company.

(b) The Company has not taken any loans during the year, secured or unsecured, from the companies, firms or other parties covered in theregister maintained under section 301 of the Companies Act, 1956. Accordingly, clauses (iii) (f), and (iii) (g) of paragraph 4 of theOrder are not applicable

3) Section 301

a) As per the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements thatneed to be entered in register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (v) (a), and (v) (b) ofparagraph 4 of the Order are not applicable

4) Deposit from Public

The company has not accepted any deposits from the public to which the provisions of sections 58A of the Companies Act, 1956 and therules framed there under would apply.

5) Payment of Statutory Dues

According to the information and explanations given to us, No undisputed statutory dues including Provident Fund, Investor Educationand Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess andany other statutory dues payable to appropriate authorities were outstanding as at 31st March, 2007 for a period of more than six monthsfrom the date they became payable.

6) Grant of Secured Loans and Advances

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

7) Provision of Guarantee

According to the information and explanations given to us, The Company has not given any guarantee for loans taken by others from Banksor financial Institutions.

8) Term Loans

According to the information and explanations given to us, The Company has not raised any term loan under review and hence question ofits application of the clause does not arise.

9) Usage of Funds

According to the information and explanations given to us, The Company has not raised any funds on short term basis which have beenused during the year for long term investment and vice versa.

10) Preferential Allotments

The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301of the Companies Act, 1956.

11) Creation of security for Debenture Issue

In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during


S 189

the period covered by our report. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors’ Report) Order, 2003 are notapplicable to the Company.

12) Disclosure of end use of Fund

During the year, the Company has not raised money by public issue and hence the question of disclosure and verification of end use if suchmonies does not arise.

13) Frauds

To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company hasbeen noticed or reported during the course of our audit.

For U.V. SHAH & CO.,Chartered Accountants

(UDAY V. SHAH)

Membership No. 35626Place : MumbaiDate : 14th June, 2007


S 190


As at

31st March,

2007

Schedule Rupees Rupees

SOURCES OF FUNDS

Share Capital ......................................................................................... 1 500,000

Reserves & Surplus ............................................................................... -

Total Shareholders Fund ....................................................................... 500,000

Loan: ......................................................................................................

Secured .............................................................................................. -

Unsecured .......................................................................................... -

Total ....................................................................................................... 500,000

APPLICATION OF FUNDS : .............................................................

Current Assets, Loans & Advances ...................................................... 2

(a) Sundry Debtors ............................................................................ -

(b) Cash and Bank Balances .............................................................. 18,417

(c) Loans and advances ..................................................................... 301,269

...................................................................................................... 319,686

Less: Current liabilities & provisions .................................................. 3 8,492

Net Current assets ................................................................................. 311,194

Deferred Tax Asset (See Note 1) .......................................................... 955

Miscellaneous Expenditure ................................................................... 185,969

(to the extend not written off) ...............................................................

Profit and Loss Debit Balance .............................................................. 1,882

Total ....................................................................................................... 500,000

Notes to the accounts (per schedule ‘4’)

As per our report of even date attached.

For U.V.SHAH & CO

Chartered Accountants G.MUKHERJI Chairman

UDAY V. SHAH M.L.KHETAN Director

Proprietor

(Membership No. 35626)



S 191

PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH 2007

For the period

24th April, 2006

to

31st March, 2007

Rupees Rupees

1 Income:

Interest Income ............................................................................. 5,655

2 Expenditure: .................................................................................

Filing Fees .................................................................................... 1,500

Profession Tax .............................................................................. 2,500

Auditor's remuneration

Audit Fees ................................................................................ 2,500

Service tax ................................................................................ 309

Certification Fees ..................................................................... 1,683 4,492

...................................................................................................... 8,492

Profit / (Loss) before tax .............................................................. (2,837)

......................................................................................................

3 Less : Provision for Taxation .......................................................

Current tax .......................................................................... -

Deferred Tax ........................................................................ (955)

4 Profit / Loss after tax ................................................................... (1,882)

5 Balance Carried to the Balance sheet .......................................... (1,882)

Notes to the accounts (per schedule ‘4’)


For U.V.SHAH & CO

Chartered Accountants G.Mukherji Chairman

UDAY V. SHAH M.L.Khetan Director

Proprietor

(Membership No. 35626)



S 192

SCHEDULES “1” TO “4” ANNEXED TO AND FORMING PART OF THE ACCOUNTS

As at

31st March, 2007

Rupees Rupees

SCHEDULE “1” - SHARE CAPITAL

AUTHORISED:

10,00,000 Equity Shares of Rs.10 each ............................................. 10,000,000

ISSUED AND SUBSCRIBED:

50,000 Equity Shares of Rs.10 each fully paid-up ........................... 500,000

............................................................................................................. 500,000

SCHEDULE “2” – CURRENT ASSETS, LOANS AND ADVANCES

Sundry Debtors

Unsecured, considered good and subject to confirmations

1. Outstanding for more than six months -

2. Other Debts -

-Cash and Bank Balances

Cash in hand -


on Current Accounts 18,417

18,417

Loans and Advances

(Unsecured, considered good and subject to confirmations)

Advances recoverable in cash or in kind

or for value to be received -

Inter-corporate deposits 300,000

Taxes paid less provisions

(other than deferred tax) 1,269

301,269

319,686

SCHEDULE “3” – CURRENT LIABILITIES AND PROVISIONS

Current liabilities

Sundry creditors (No outstanding dues of Small Scale

Industrial Undertakings) -

Provisions

Provision for Expenses 8,492

8,492


S 193

SCHEDULE: “4” NOTES FORMING PART OF THE ACCOUNTS



The Financial Statements are prepared under historical cost convention, on accural basis, and are in accordance with the requirements ofthe Companies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

B. TAX ON INCOME :

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income-tax Act, 1961.

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

The Company has accounted for deferred taxation in respect of timing difference in accordance with the requirement of Accountingstandard 22- “ Accounting for Taxes on Income.

Break up of Deferred Tax Liability and Assets

Nature of Timing Difference Deferred Tax Liability (-) / Deferred Tax Liability (-) /Assets (+) Assets (+) as on 31.03.2007

Business Loss 955 955

C. REVENUE RECOGNITION :

The Company recognises Income from service activity as and when services are rendered or as per contractual agreement entered withparties. Interest Income is recognised on the time proportion basis.

2. No amount is due to Small Scale Industries (SSI ) as at 31st March, 2007

3. The additional information as required under Schedule VI of the Companies Act, 1956 has not been furnished as the same is not applicable.

4. Related Party Disclosures : As required by Accounting Standard 18

I. Name of the Related Party and Nature of relationship where control exists are as under:

A. Enterprises having more than one half of voting powers:


B. Enterprises that are under common control:

1. Aquamall Water Solutions Ltd.

2. Eureka Forbes Ltd

3. Euro Forbes International Pte.Ltd.

4. Forbes Aquamall Limited

5. Forbes Campbell Holdings Ltd

6. Forbes Container Lines Pte Ltd

7. Forbes Doris & Naess Maritime Ltd

8. Forbes Facility Services Pvt. Ltd. (Formerly known as Forbes Abans Cleaning Solutions Pvt. Ltd.)

9. Forbes Finance Ltd

10. Forbes Services Ltd

11. Forbes Sterling Star Ltd.


S 194

12. Forbes Technosys Ltd.

13. Forbes Tinsley Co. Ltd

14. Gokak Textiles Ltd

15. Latham India Ltd

16. Next Gen Publishing Ltd.

17. Pro Handyman India Ltd.

18. Volkart Fleming Shipping & Services Ltd

19. Warrior (Investment) Ltd

B. Key Managerial Personnel:

1. Mr. G. Mukherji

2. Mr. M.L. Khetan

II. Transactions with related parties:

Nature of Transactions Referred to in A above Referred to in B above Referred to in C above

1. Incomea) Interest Received 5,655 - -

2. Financea) Deposits Placed 300,000 - -b) Reimbursement of Expenses - 193,542 -

1. All amount referred in above table “A’ are with a single party viz., Forbes Gokak Limited

2. Item 2b refers to Forbes Technosys Limited

Related Parties defined under clause 3 of AS -18 “Related Party Disclosure: have been identified on the basis of representation made bymanagerial personnel and information available with the Company

5. The Company was incorporated on 24th April, 2006 and has not yet commenced any commercial activity.

For U.V.SHAH & CO G.Mukherji ChairmanChartered Accountants

M.L.Khetan DirectorUDAY V. SHAH

Proprietor(Membership No. 35626)



S 195



Registration No. U72100MH2006PLC161311 State code 11

Balance Sheet Date 31st March, 2007

II. Capital Raised during the year (Amount in Rs. '000)



III. Position of Mobilisation and Deployment of Funds (Amount in Rs. '000)

Total Liabilites 500 Total Assets* 500


Paid-up Capital 500 Fixed Assets -

Reserves and Surplus - Net Current Assets 311

Unsecured Loans - Deferred Tax Assets 1

* Net of Current Liabilities and Provisions Misc. Expenditure 186

Profit and Loss 2

IV. Performance of the Company (Amount in Rs. '000)

Turnover 6

Total Expenditure 9

Profit before Tax (3)

Profit after Tax (2)

Earning per Share in Rs. -

Dividend Rate Nil


Item Code No. Nil Product Description

G.Mukherji Chairman

M.L.Khetan Director



S 196

2006 - 2007

Rupees Rupees

PROFIT BEFORE TAX AND EXTRA ORDINARY ITEMS (2,837)Adjusted for.: Interest Received (5,655)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES (8,492) AND OTHER ADJUSTMENTS

Changes inTrade and other recievables -Trade payables and others 8,492 8,492

CASH GENERATED FROM OPERATIONS -Less:- Direct Taxes paid (Net) 1,269

(A) NET CASH FLOW FROM OPERATING ACTIVITIES (1,269)


Interest Received on Loans 5,655Intercorporate deposit (300,000)

(B) NET CASH FLOW FROM INVESTING ACTIVITIES (294,345)


Proceeds from Issue of Share Capital 500,000CASH FLOW FROM FINANCING ACTIVITIES BEFORE

EXTRA ORDINARY ITEMS 500,000Less:- Pre-operative Expenditure (185,969)

(C) CASH FLOW FROM FINANCING ACTIVITIES 314,031

NET DECREASE/INCREASE IN CASH AND CASH 18,417EQUIVALENTS (A)+(B)+(C)

CASH AND CASH EQUIVALENTS AS AT THE COMMENCEMENT

OF THE YEAR, COMPRISING:

Cash, Cheques on hand & Remittances in transit -Balance with scheduled banks on Current accounts and Deposit accounts - -

CASH AND CASH EQUIVALENTS AS AT THE END

OF THE YEAR, COMPRISING:

Cash, Cheques on hand & Remittances in transit -Balance with scheduled banks on Current accounts and Deposit accounts 18,417

18,417

18,417


For U.V.SHAH & CO G.Mukherji ChairmanChartered Accountants

UDAY V. SHAH M.L.Khetan DirectorProprietor(Membership No. 35626)



S 197

(a wholly owned Subsidiary Company) Annual Report and Accountsfor the year ended 31st March,2007

DIRECTORS :

Capt. S. P. Rao

Timothy A. Hartnoll

V. K. Shetty

BANKERS :

Standard Chartered Bank, Singapore

AUDITORS :

Moore StephensCertified Public Accounts11, Collyer Quay# 10-02, The ArcadeSingapore - 049 317

REGISTERED OFFICE :

C/o. Atlas Corporation LimitedFirst Floor,International Building,Lini Highway,Port Vila, Vanuatu

FORBES STERLING STAR LIMITED

(Incorporated in Vanuatu)



S 198

STATEMENT BY DIRECTORS31 MARCH 2007

In the opinion of the directors, the financial statements set out on pages 4 to 17* are drawn up so as to give a true and fair view of the state of affairsof Forbes Sterling Star Limited as at 31 March 2007 and of the results of the business, changes in equity and cash flows of the Company for theperiod then ended.

At the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the directors

Capt. S. P. RaoT. A. Hartnoll

V. K. Shetty

Dubai26 July, 2007

*i.e. pages to this report


S 199

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDER OFFORBES STERLING STAR LIMITED

(Incorporated in Vanuatu)31 MARCH 2007

We have audited the accompanying financial statements of Forbes Sterling Star Limited for the year ended 31 March 2007 as set out on pages 4to 17* which comprise the balance sheet, income statement, statement of changes in equity and a summary of significant accounting policies andother explanatory notes.


The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with InternationalFinancial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance whether the financial statements are free of material misstatement.

An audit includes performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

As discussed in Note 2(a) to the financial statements, drydocking costs are expensed in the income statement as incurred. International AccountingStandard 16: Property, plant and equipment requires such costs to be capitalised and amortised over the period to the next scheduled drydockingor special survey. In the financial statements for the year ended 31 March 2006, drydocking costs of US$ 250,200 were expensed. As the nextscheduled drydocking was not known, it was not possible to estimate the impact in the financial statements and our audit report was qualified inthis respect.

At the date these financial statements were prepared, the vessel has been sold in April 2007. Accordingly, it is possible to estimate the periodover which these drydocking costs should have been amortised. The drydocking costs incurred in January 2006 should have been allocated asfollows:

- US$ 35,743 to the period ended 31 March 2006; and

- US$ 214,457 to the period ended 31 March 2007.

Accordingly, the loss for the year ended 31 March 2006 is overstated by US$ 214,457 and the profit for the year ended 31 March 2007 isoverstated by the same amount.

Opinion

In our opinion, except for the effect on the financial statements of the matter referred to in the preceding paragraph, the financial statements givea true and fair view of the state of affairs of the Company as at 31 March 2007 and the results, changes in equity and cash flows of the Companyfor the year ended on that date.

MOORE STEPHENSCertified Public Accountants

Singapore26 July, 2007

* i.e. pages to this report



S 200

DIRECTORS’ REPORT

To,The Shareholders,Gentlemen,

Your Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March,2007.

1. FINANCIAL RESULTS :The results for the current year are set out below :

For the period For the period For the period For the periodended 31.3.2007 ended 31.3.2007 ended 31.3.2006 ended 31.3.2006

US $ INR US $ INR

a. Income from Charter 2,335,800 105,087,642 1,981,511 87,919,643

b. Less :Expenses 1,239,999 55,787,556 1,867,588 82,954,258

c. Operating Profit 1,095,801 49,300,086 113,923 4,965,385

d. Less: Finance Charges 99,771 4,488,697 114,011 5,058,668

e. Profit/ ( Loss) for the year / period 996,030 44,811,389 (88) (93,283)

2. DIVIDEND :During the year, the Company declared and paid a dividend amounting to US $ 40,000 for the financial year ended 31st March,2007

3. CAPITAL :The Authorised capital of the Company is US $ 1000.00 divided into 1,000 Fully paid Ordinary Shares of US $ 1.00 each.

4. DIRECTORATE :The Board of Directors of the Company as on the date of this Report are Capt. S P Rao, Mr. Timothy A Hartnoll and Mr. S.K.Shetty.

5. OPERATIONS :The year under review is the third year of the operation of the Company. The Company’s ship “M.V. X-Press Alexander” is deployed oncharter to Sea Consortium Pte. Ltd., Singapore and had been deployed on shuttle service between Jeddah and Port Sudan. The Companyachieved an operating profit of US $ 1,095,801. “M.V. X-Press Alexander” was acquired by the Company in May,2004 and is now in its27th year. The Board of Directors of the Company consider it uneconomical to run the ship past its docking date and have proposed to scrapthe same at the end of its charter period.

6. AUDITORS AND AUDIT REPORT :For the current year i.e 2007 –2008, it is proposed to appoint M/s Moore Stephens, Certified Public Accounts, as the auditors of theCompany.

For and on behalf ofthe Board of Directors

Capt. S.P.Rao

T.A.Hartnoll V.K.Shetty

26th July, 2007.


S 201

INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

2007 2007 2006 2006Note US$ INR US$ INR

REVENUE (3) 2,335,800 1,981,511 10,50,87,642 8,79,19,643

Less: Expenses

Maintenance cost 1,052,900 1,171,535 4,73,69,971 5,19,81,008

Insurance 110,450 93,062 49,69,146 41,29,161

Registration and statutory fees 2,932 3,600 1,31,911 1,59,732

Damage and repair compensation 33,779 40,912 15,19,717 18,15,265

Depreciation - 288,320 - 1,28,82,138

Drydocking cost - 250,200 - 1,11,01,374

Professional fees 37,234 16,993 16,75,158 7,53,979

Bank Charges 2,704 2,966 121,653 131,601

1,239,999 1,867,588 5,57,87,556 8,29,54,258

OPERATING PROFIT 1,095,801 113,923 4,93,00,086 49,65,385

Finance charges (5) (99,771) (114,011) (44,88,697) (5,058,668)

PROFIT/(LOSS) BEFORE INCOME TAX 996,030 (88) 4,48,11,389 (93,283)

Income tax (6) - - - -

PROFIT/(LOSS) FOR THE YEAR 996,030 (88) 4,48,11,389 (93,283)

The accompanying notes are an integral part of these financial statements



S 202

BALANCE SHEET

AS AT 31 MARCH 2007

2007 2007 2006 2006

Note US$ INR US$ INR

ASSETSNON-CURRENT ASSETS

Plant and equipment (7) 1,686,545 7,32,63,515 1,686,545 7,53,54,831

1,686,545 7,32,63,515 1,686,545 7,53,54,831

CURRENT ASSETS

Inventories (8) - - 19,212 8,58,392

Trade receivable (9) 6,100 2,64,984 - -

Other receivables (10) 148,189 64,37,330 19,760 8,82,876

Due from related company (11) 42,680 18,540,019 - -

Cash and bank balances 3,255 1,41,397 13,305 5,94,467

200,224 86,97,730 52,277 23,35,735

Total Assets 1,886,769 8,19,61,245 1,738,822 7,76,90,566

SHARE CAPITAL AND RESERVESShare capital (12) 1,000 43,440 1,000 44,680

Retained earnings 1,058,514 4,75,01,423 102,484Foreign Currency Translation reserve - - (15,19,575) 6,64,782

Total Equity 1,059,514 4,60,25,288 103,484 46,23,664

Non-Current LiabilitiesLoan from holding company, non-trade - - 1,593,429 7,11,944,08

CURRENT LIABILITIES

Other payables (13) 14,054 6,10,506 41,909 18,72,494

Loan from holding company, non-trade (14) 813,201 3,53,25,451 - -

827,255 35,935,957 41,909 18,72,494

Total Liabilities 827,255 35,935,957 1,635,338 7,30,66,902

Total Equity and Liabilities 1,886,769 8,19,61,245 1,738,822 7,76,90,566



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STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

Note Share Capital Retained Earnings Total

US$ INR US$ INR US$ INR

Balance at 1 April 2005 1,000 43,870 102,572 4,908,872 103,572 4,952,742

Loss for the year - - (88) (93,283) (88) (93,283)

Balance at 31 March 2006 1,000 44,680 102,484 4,489,634 103,484 4,534,314

Balance at 1 April 2006 1,000 44,680 102,484 4,489,634 103,484 4,534,314

Profit for the year - - 996,030 44,811,389 996,030 44,811,389

Dividends (15) - - (40,000) (1,799,660) (40,000) (1,799,660)

Balance at 31 March 2007 1,000 44,680 1,058,514 47,501,423 1,059,514 47,544,863




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CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

2007 2006US$ US$

CASH FLOWS FROM OPERATING ACTIVITIESProfit/(Loss) before income tax 996,030 (88)

Adjustments for:Depreciation of plant and equipment - 288,320

99,771 114,011

Operating cash flows before working capital changes 1,095,801 402,243

Changes in working capital:Inventories 19,212 -

Receivables (134,528) 7,244

Payables (27,855) (34,561)

Cash generated from operating activities 952,630 374,926

Finance charges paid - (1,505)

NET CASH GENERATED FROM OPERATING ACTIVITIES 952,630 373,421

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (40,000) (160,000)

Repayment of loan from holding company (880,000) (409,903)

Proceeds from loan from holding company - 175,000

Advance to related company (42,680) -

NET CASH USED IN FINANCING ACTIVITIES (962,680) (394,903)

DECREASE IN CASH AND CASH EQUIVALENTS (10,050) (21,482)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 13,305 34,787

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 3,255 13,305



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NOTES TO THE FINANCIAL STATEMENTS – 31 MARCH 2007

These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1 GENERAL

Forbes Sterling Star Limited is domiciled and incorporated in Vanuatu. The registered address of the Company is 1st floor, InternationalBuilding, Line Highway, Port Villa.

The principal activity of the Company is that of vessel ownership and chartering. The principal place of business is Dubai.

The Company is a 100% owned subsidiary of Forbes Gokak Ltd, a public listed company incorporated in India, which is also regarded by thedirectors as the ultimate holding company.

The Directors have authorised the issue of these financial statements on the date of the Statement by Directors.

2 SIGNIFICANT ACCOUNTING POLICY

(a) Basis of Preparation

The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policiesbelow.

The financial statements have not been prepared under International Financial Reporting Standards (“IFRS”) as the Company has notcomplied with the requirements of IAS 16 Property, Plant and Equipment – Drydocking Costs.

Under IAS 16, where a condition of continuing to operate an asset is the performance of regular maintenance inspections for faults,the cost of such inspection should be recognised within the carrying amount of the asset as a replacement. This applies to drydockingand special survey costs for vessels which under IAS 16 should be capitalised as part of plant and equipment and depreciated over theexpected period to the next drydocking. The Company’s accounting policy, as disclosed in Note 3(d) is to expense drydocking costsas incurred which is not in accordance with IAS 16.

The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,and the reported amounts of revenues and expenses during the financial year. Although these estimates are based on management’sbest knowledge of current events and actions, actual results may ultimately differ from those estimates.

In the process of applying the Company’s accounting policies, which are described below, the directors are of the opinion that anyinstances of application of judgments are not expected to have a significant effect on the amounts recognised in the financial statements

In the current year, the Company has adopted all the new and revised Standards and Interpretations issued by the InternationalAccounting Standards Boards (“IASB”) and the International Financial Reporting Interpretations Committee of the IASB that arerelevant to its operations, and effective for accounting periods beginning on 1 January 2006. The adoption of these new and revisedStandards and Interpretations did not result in any changes to the Company’s accounting policies.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

IFRS 7 Financial Instruments: Disclosures

IFRS 8 Operating Segments

IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies

IFRIC 8 Scope of IFRS 2

IFRIC 9 Reassessment of Embedded Derivatives

IFRIC 10 Interim Financial Reporting and Impairment

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financialimpact on the financial statements of the Company.

(b) Revenue Recognition

Revenue relating to time charters is recognised at invoice value, and accounted for on a time-apportioned basis.



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(c) Plant and Equipment

The vessel is stated at cost less accumulated depreciation and impairment losses. Depreciation is calculated on the diminishingbalance method to write off the cost of the vessel and vessel equipment at 14.6% per annum.

The residual value and useful life of the vessel are reviewed and adjusted as appropriate at each balance sheet date.

Subsequent expenditure relating to the vessel that has already been recognised, is added to the carrying amount of the asset when it isprobable that future economic benefits, in excess of the standard performance of the asset before the expenditure was made, will flowto the Company and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financialyear in which it is incurred.

(d) Drydocking and Special Survey Costs

Drydocking and special survey costs are recognised in the income statement as incurred, and are not capitalised as part of plant andequipment.

e) Impairment of Assets

Assets including property, plant and equipment are reviewed for impairment whenever there is any indication that these assets may beimpaired. If any such indication exists, the recoverable amount (i.e. the higher of the fair value less cost to sell and value in use) of theasset is estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the assetdoes not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount isdetermined for the cash-generating unit (CGU) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (orCGU) is reduced to its recoverable amount. The impairment loss is recognised in the income statement.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the assets’recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverableamount, provided that this amount does not exceed the carrying amount that would have been determined (net of depreciation) had noimpairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in the incomestatement.

(f) Inventories

Inventories which related to lubricating oil are stated at the lower of cost and net realisable value, with cost determined on a first-infirst-out basis. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs to sell.

(g) Trade and Other Receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effectiveinterest method, less allowance for impairment. An allowance for impairment of receivables is established when there is objectiveevidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. The amountof the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discountedat the original effective interest rate. The amount of the allowance is recognised in the income statement.

(h) Other Payables

Other payables, are initially measured at fair value, and subsequently measured at amortised cost, using the effective interest method.

(i) Borrowings

Borrowings are initially recognised at fair value net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.

Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in thebalance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedulepayments, on a long term basis is completed after the balance sheet date and before the financial statements are authorised for issue.Other borrowings due to be settled more than twelve months after the balance sheet date are included in non-current borrowings in thebalance sheet.

(j) Borrowing Costs

Borrowing costs incurred to finance the development of plant and equipment are capitalised during the period of time that is requiredto complete and prepare the asset for its intended use. The capitalised costs are depreciated over the useful life of the plant andequipment.

Other borrowing costs including interest cost and foreign exchange differences, on short term borrowings are recognised on a time-apportioned basis in the income statement using the effective interest method.


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(k) Provisions for Other Liabilities and Charges

Provisions are recognised when the Company has a legal or constructive obligation as a result of past events, it is probable that anoutflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.

(l) Currency Translation

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environmentin which the Company operates (“the functional currency”). The financial statements are presented in United States Dollars,which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currencyusing the exchange rates prevailing at the dates of the transactions. Currency translation gains and losses resulting from thesettlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominatedin foreign currencies are recognised in the income statement.

(m) Cash and Cash Equivalents

Cash and cash equivalents consist of bank balances.

3. REVENUE

2007 2006US$ US$

Charter hire income 1,440,309 1,686,545

4. STAFF COSTS

The Company had no staff costs during the year.

5. FINANCE CHARGES

2007 2006US$ US$

Interest payable on loan from holding company 99,771 114,011

6. INCOME TAX

Despite a profit from operations, there is no taxation charge. This is because in the opinion of the directors, the Company’s income is notsubject to tax in the jurisdiction in which it was derived.

7. PLANT AND EQUIPMENTVessel

Vessel Equipment TotalUS$ INR US$ INR US$ INR

2007CostAt 1 April 2006 and at 31 March 2007 2,250,000 9,77,40,000 15,593 6,77,360 2,265,593 9,84,17,360Accumulated depreciationAt 1 April 2006 575,989 2,50,20,962 3,059 1,32,883 579,048 25,153,845Charge for the year - - - - - -At 31 March 2007 575,989 25,020,962 3,059 132,883 579,048 25,153,845Net book valueAt 31 March 2007 1,674,011 72,719,038 12,534 5,44,477 1,686,545 73,263,5152006CostAt 1 April 2005 and at 31 March 2006 2,250,000 100,530,000 15,593 696,696 2,265,593 101,226,696Accumulated depreciationAt 1 April 2005 289,800 12,948,264 928 41,463 290,728 12,989,727Charge for the year 286,189 12,786,925 2,131 95,213 288,320 12,882,138At 31 March 2006 575,989 25,735,189 3,059 136,676 579,048 25,871,865Net book value - - - - - -At 31 March 2006 1,674,011 74794811 12,534 560,020 1,686,545 75,354,831

The vessel has been pledged to a financial institution as security for the loan from the holding company amounting to US$813,201 (2006:US$1,593,429) at the balance sheet date.



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8. INVENTORIES

2007 2007 2006 2006US$ INR US$ INR

Lubricating oil - - 19,212 858,392

9. TRADE RECEIVABLE

2007 2007 2006 2006US$ INR US$ INR

Trade receivable 6,100 264,984 - -

10. OTHER RECEIVABLES

2007 2007 2006 2006US$ INR US$ INR

Other receivable 101,785 44,21,540 - -

Prepaid expenses 46,403 2,015,790 19,760 882,876

148,188 64,37,330 19,760 882,876

Other receivable refers to a damage and repair compensation claim.

11. DUE FROM A RELATED COMPANY

The related company refers to a company, which has certain common directors and shareholders as the Company.

The amount owing to the related company is non-trade in nature, unsecured, interest-free and repayable on demand.

12. SHARE CAPITAL2007 2007 2006 2006US$ INR US$ INR

Issued and fully paid:

1,000 ordinary shares of US$1 each 1,000 43,440 1,000 44,680

13. OTHER PAYABLES

2007 2007 2006 2006US$ INR US$ INR

Accrued operating expenses 14,054 610,506 15,109 675,070

Deferred revenue - - 26,800 1,197,424

14,054 610,506 41,909 1,872,494

14. LOAN FROM HOLDING COMPANY, NON-TRADE

The loan from the holding company is secured by a pledge of the Company’s vessel as disclosed in Note 7. Interest is charged at a rate of 8%(2006: 7%) per annum. The loan was fully redeemed by April 2007

15. DIVIDENDS

During the year, the company declared and paid a dividend amounting to US$40,000 for the financial year ended 31 March 2007.

16. RELATED PARTY TRANSACTIONS

Balances outstanding at the balance sheet date with related parties consist of the loans referred to in Note 11 and 14. Transactions during thecurrent and previous financial years with related parties relate to the interest payable on these loans disclosed in Note 5.

17. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company does not have specific financial risk management policies or guidelines. Generally, they adopt conservative strategies on theirrisk management as the directors believe that the Company’s exposure associated with these risks is minimal.

(I) CREDIT RISK

The Company’s policy is to enter into transactions with creditworthy counterparties so as to mitigate any significant credit risk.Provisions for estimated irrecoverable amounts have been made where appropriate. The maximum exposure to credit risk is representedby the carrying amount of each financial asset as stated in the balance sheet.


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(ii) Interest risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in marketinterest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in marketinterest rates. As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows aresubstantially independently of changes in market interest.

The Company’s interest risk mainly arises from current borrowings. The Company’s interest rate risks mainly arise from the loanfrom holding company which is carried at fixed interest rates.

The tables below set out the Company’s exposure to interest rate risks. Included in the tables are the assets and liabilities at carryingamounts, categorised by the earlier of contractual repricing or maturity dates:

Fixed RatesInterest Non-InterestBearing Bearing Total

US$ US$ US$At 31 March 2007ASSETSInventories - - -Trade receivable - 6,100 6,100Other receivables - 148,189 148,189Due from related company - 42,680 42,680Cash and bank balances - 3,255 3,255Non-financial assets - 1,686,545 1,440,309Total Assets - 1,886,769 1,886,769LIABILITIESOther payables - 14,054 14,054Inter-company balances 813,201 - 813,201Total Liabilities 813,201 14,054 827,997

At 31 March 2006ASSETSInventories - 19,212 19,212Other receivables - 19,760 19,760Cash and bank balances - 13,305 13,305Non-financial assets - 1,686,545 1,686,545Total Assets - 1,738,822 1,738,822

LIABILITIESOther payables - 41,909 41,909Inter-company balances 1,593,429 - 1,593,429Total Liabilities 1,593,429 41,909 1,635,338

(iii) Foreign currency risk

Certain of the transactions engaged by the Company are denominated in foreign currency. As a result, the Company is exposed tomovements in foreign currency exchange rates.

The Company does not use derivative financial instruments to protect against the volatility associated with foreign currency transactionsas the directors believe that the risks arising from fluctuations in the foreign currency exchange rates are not significant. Nevertheless,the directors constantly monitor the currency rates to ensure the Company’s exposure is within an acceptable level.

18. Vessel Charter Arrangements

The vessel is fixed on a time charter expiring in May 2007 at a rate agreed from time to time with the charterer which amounted toUS$6,700 per day as at 31 March 2007.

19. Subsequent Events

Subsequent to the year end, the directors have sold the vessel on 20 April 2007 at a consideration of US$ 2,477,295.

FORBES TECHNOSYS LIMITED

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( a wholly owned Subsidiary Company) Annual Report and Accounts


DIRECTORS:

K. C. Mehra Chairman

Ashok Barat

C. A. Karnik

A. T. Shah

Rahul Jain

BANKERS:

Union Bank of India

Industrial Development Bank of India Limited

AUDITORS:

U. V. Shah & Co.

REGISTERED OFFICE:

Forbes Building,

Charanjit Rai Marg,

Fort, Mumbai - 400 001


S 211

DIRECTORS’ REPORT

Your Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March 2007.


CurrentYear PreviousYearRupees Rupees

Profit / Loss before Tax (224,56,516) (6814409)

Less : Provision for Taxation – Current Tax - -

Fringe Benefit Tax 1,43,300 31,300

Profit / Loss : After Tax (225,99,816) (68,45,709)

Debit Balance brought forward (206,61,349) (138,15,640)

Loss carried to Balance Sheet (432,61,165) (206,61,349)

2. OPERATIONS:

The company posted a turnover of Rs. 3.22 crores during the fiscalyear. Loss Before Tax increased from Rs 0.68 crores to Rs 2.24crores.

The Company had exclusive contract for Medical Transcriptionactivity with Cbay Corporation, USA that made the entire activitydependent on a single customer. The volume of Cbay was alsonot matching to the figures indicated in the agreement. The basicfacilities installed and made available by us to take up the volumeas indicated in the agreement was under utilized and this madethe whole activity unprofitable / non remunerative.

Now the company focuses on two specific areas of business:Solutions and Managed Assets.

The Solution business presently is primarily Cheque TruncationSystem, mandated by Reserve Bank of India (RBI) for the NationalCapital Region of Delhi. During the year the Company securedcontracts from Dena Bank and Vijaya Bank for implementationof CTS Solution at their branches at New Delhi. In addition,Development Credit Bank, Dhanalakshmi Bank and Lakshmi VilasBank entrusted the CTS processing contract on transactionprocessing basis with the Company. The Company would also beproviding the CTS Solution to Deutsche Bank through theirService Provider. The implementation of these installations isunder process and it is expected that the RBI ‘go live’ shall beduring the last quarter of the calendar year 2007. The Company isalso exploring opportunities in the area of Image Aided Inwardprocessing, Image Based Teller Cash Dispensing etc, beyondconventional CTS opportunities.

The Company represents Alogent Corporation of US for the CTSapplication Software to be sold to various banks in India. AlogentCorporation is one of the leading five companies’ globally incheques processing space and their products are being used byleading bankers in US and UK.

The Company is exploring opportunities beyond the shores ofIndia. As a first step, the company is negotiating the Contractwith Alogent Corporation for extending its role beyond India.There is an in principle agreement reached to represent Alogentin South East Asia, Middle East and Africa. The finer details ofthe Contract need to be finalized.

Similarly, the company is exploring opportunities in othercountries for Back Office Transaction Processing services in thefield of Cheque Truncation.

The Company secured a Contract from BSNL for deployment of1,000 Bill Payment Kiosks across various locations in the country.As per the schedule, first batch of around 500 numbers would beinstalled by December 2007 and balance during the fiscal2008~09.

To augment the Managed Assets business, the company hasplanned investments in designing, developing and assembling itsown line of Kiosks along with own software for the Bill PaymentApplications for various utilities. The companies own Kioskswould roll out during the second half of the fiscal 07-08.

The Company is strengthening its team in the forthcoming yearwith recruitment of people at various crucial levels in theorganisation such as CTO, CFO, and Program Manager - KioskDevelopment. These recruitments would be part of the first quarterof 2007-08.

3. DIRECTORATE:

Mr. C. A. Karnik, retires from the Board by rotation and is eligiblefor re-appointment. Your Directors commend his re-appointmentas a Director of the Company.

Mr. Ashok Barat and Mr. Rahul Jain had been appointed as anAdditional Director of the Company effective from 22ndSeptember, 2006. In terms of the provisions of Section 260 of theCompanies Act, 1956, Mr. Ashok Barat and Mr. Rahul Jain will


S 212

hold office up to the date of forth coming Annual General Meetingand the item regarding their appointment as a Director of theCompany in included in the Notice convening the Annual GeneralMeeting.

The Board of Directors commends their appointment as a Directorof the Company.

4. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors M/s. U. V. Shah &Co., Chartered Accountants, offer themselves for re-appointmentas Auditors of the Company.

5. COMPLIANCE AUDIT CERTIFICATE :

Pursuant to Section 383 A of the Companies Act, 1956, SecretarialCompliance Certificate from M/s. Sanjay Dholakia & Associates,is attached herewith.


The Company did not have any employee who was entitled toreceipt of Rs.24,00,000/- or more in aggregate throughout thefinancial year or Rs. 2,00,000/- or more per month if employedfor a part of the financial year.


Pursuant to Section 217(2AA) of the Companies Act, 1956, theDirectors based on the representations received from the OperatingManagement confirm -

a) that in the preparation of the annual accounts, the applicableaccounting standards have been followed and that there areno material departures;

b) that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company forthe period ;

c) that they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct, for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities ;



The required particulars are annexed hereto which forms a part ofthis Report.


(ASHOK BARAT)

CHAIRMAN.

Dated: 7th August, 2007.


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Information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

A. Conservation of Energy:

The Company’s operations involve low energy consumption. Wherever possible, energy conservation measures have already beenimplemented and there are no major areas where further energy conservation measures can be taken. However, efforts to conserve andoptimise the use of energy through operational methods will continue.

B. Forms for Disclosure of Particulars with respect to Absorption :

FORM – B

Research & Development (R & D)

1. Specific areas in which R&D carried out by the Company —

3. Benefits derived as result of the above R&D —

4. Future Plan of action —

5. Expenditure on R&D —

a) Capital

b) Recurring

c) Total

d) Total R&D expenditure as percentage of total turnover.

Technology Absorption, Adaptation and Innovation :

1. Efforts in brief, made towards technology absorptionAdaptation and Innovation. NIL

2. Benefits derived as a result of the above efforts e.g.product improvement, cost reduction, product development,import substitution, etc. N.A.

3. In case of imported technology (imported during last fiveyears reckoned from the beginning of the Financial Year),following information may be furnished :-

a) Technology imported

b) Year of Import

c) Has technology been fully absorbed?

d) If not fully absorbed areas where this has not taken

place, reasons therefore and future plans of action. —

C. Foreign Exchange Earnings and Outgo:

1. Activities relating to exports; initiatives taken to increase

exports; markets for products and services; and export plans. N I L

2. Total Foreign Exchange used and earned.

Earned Rs.1,36,86,154.

Used Rs.3,70,48,684


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COMPLIANCE CERTIFICATE

ToThe Board of Directors,Forbes Technosys Limited

We have examined the registers, records, books and papers of Forbes Technosys Limited (the Company) as required to be maintained under theCompanies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Associationof the Company for the financial year ended on 31st March, 2007. In our opinion and to the best of our information and according to the examinationscarried out by us and explanations furnished to us by the company, its officers and agents, we certify that in respect of the aforesaid financial year:

1. The company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions and the rules madethereunder and all entries therein have been duly recorded.

2 The company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies or otherauthorities within the time prescribed under the Act and the rules made thereunder.

3. The company is a public limited company, the restriction clauses as provided in section 3(1)(iii) of the Companies Act, 1956, is not applicable.

4. The Board of Directors duly met 4 times on 22nd June, 2006, 22nd September, 2006, 7th November, 2006 and 26th March, 2007 andCircular Resolution Dt. 19th January, 2007, 19th February, 2007 and 23rd March, 2007 in respect of which meetings, proper notices weregiven and the proceedings were properly recorded and signed.

5. The company was not required to close its Register of Members during the financial year.

6. The annual general meeting for the financial year ended on 31st March, 2006 was held on 22nd June, 2006 after giving due notice to themembers of the company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. One Extra Ordinary General Meeting was held on 26th May, 2006 during the financial year after giving due notice to the members of thecompany and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

8. The company has not advanced any loans to its directors and/or persons or firms or companies referred in the section 295 of the Act.

9. The company has not entered into any contracts falling within the purview of section 297 of the Act.

10. The company has made necessary entries in the Register maintained under section 301 of the Act.

11. As there were no instances falling within the purview of section 314 of the Act, the Company has not obtained any approvals from theBoard of Directors, Members or Central Government, as the case may be.

12. The company has not issued any duplicate share certificates during the financial year.

13. The Company has:

(i) not made any transmission of securities during the financial year. However the Company has allotted 20,00,000 Equity Shares anddelivered the Share Certificates on lodgment thereof for transfer of 10 Equity Shares during the financial year.

(ii) not deposited any amount in a separate Bank Account as no dividend was declared during the financial year.

(iii) not posted warrants to any member of the company as no dividend was declared during the financial year.

(iv) no unpaid dividend, application money due for refund, matured deposits, matured debentures and the interest accrued thereonwhich have remained unclaimed or unpaid and as are required to be transferred to Investor Education and Protection Fund.

(v) duly complied with the requirements of section 217 of the Act.

14. The Board of Directors of the company is duly constituted. There was one appointment of an Additional Director and one Resignation ofDirector during the financial year.

15. The company has not appointed any manager/whole-time director / managing director during the financial year.

16. The company has not appointed any sole-selling agents during the financial year.

17. The company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar orsuch other applicable authorities as may be prescribed in the Act during the year under review.

18. The directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and therules made thereunder.


S 215

19. The company has not issued any debentures/ other securities during the financial year. The Company has allotted and issued 20,00,000Equity Shares during the year.

20. The company has not bought back any shares during the financial year.

21. There was no redemption of preference shares or debentures during the financial year.

22. There were no transaction necessitating the company to keep in abeyance the rights to dividend, rights shares and bonus shares pendingregistration of transfer of shares.

23. The company has not invited/accepted any deposits as per the provisions of section 58A read with companies (Acceptance of Deposits)Rules, 1975 during the financial year. However the company has accepted inter-corporate deposits which are exempt from section 58A ofthe Companies Act, 1956.

24. The company has not made any borrowings during the financial year.

25. The company has not made any loans, investments, or given guarantees or provided securities to other bodies corporate and consequentlyno entries have been made in the Register kept for the purpose.

26. The company has not altered the provisions of the memorandum with respect to situation of the company’s registered office from one stateto another during the year under scrutiny.

27. The company has not altered the provisions of the memorandum with respect to the objects of the company during the year under scrutiny.

28. The company has not altered the provisions of the memorandum with respect to name of the company during the year under scrutiny.

29. The company has altered the provisions of the memorandum with respect to share capital of the company during the year under scrutiny.

30. The company has altered its articles of association with respect to share capital of the company during the financial year.

31. There was no prosecution initiated against or show cause notices received by the company during the financial year for offences under the Act.

32. The company has not received any money as security from its employees during the financial year under certification as per provisions ofsection 417(1) of the Act.

33. The company has deposited both employer’s and employee’s contribution towards Provident Fund within the meaning of section 418 of theCompanies Act, 1956, during the financial year.

For SANJAY DHOLAKIA & ASSOCIATES

(SANJAY R. DHOLAKIA)Place : Mumbai Practising Company SecretaryDate : 7th August, 2007 Proprietor

ANNEXURE - A

Registers as maintained by the Company

1. Register of Members u/s. 150.


3. Register of Directors, Managing Director, Manager and Secretaries u/s.303.

4. Register of Contracts with the Companies and firms in which directors are directly or indirectly interested u/s. 301.

5. Register of Director’s Shareholding u/s. 307.

6. Minutes of the Annual General Meeting/Extra Ordinary General Meeting and Board Meeting under section 193.

7. Register of intercorporate loans and investments.


S 216

ANNEXURE – B

Forms and Returns as filed by the Company with the Registrar of Companies, Regional Director, Central Government or other authorities duringthe financial year ending on 31st March, 2007.

1. Balance Sheet as at 31/3/2006 filed u/s. 220 with the Registrar of Companies, Maharashtra on 20th July, 2006.

2. Compliance Certificate for the year ended 31st March, 2006, as required u/s. 383A of the Companies Act, 1956, was filed with the Registrarof Companies, Maharashtra on 20th July, 2006.

3. Annual Return made up to 22nd June, 2006, filed with the Registrar of Companies, Maharashtra on 20th July, 2006.

4. Form No. 5 and Form No. 23 in respect of Increase in Authorised share capital from Rs. 3.00 Crores to Rs. 5.00 Crores passed at the ExtraOrdinary General Meeting held on 26th May, 2006 were filed with the Registrar of Companies, Maharashtra on 17th June, 2006.

5. Form No. 5 and Form No. 23 in respect of Increase in Authorised share capital from Rs. 5.00 Crores to Rs. 7.00 Crores passed at the AnnualGeneral Meeting held on 22nd June, 2006 were filed with the Registrar of Companies, Maharashtra on 17th July, 2006.

6. Form No. 32 in respect of Appointment of Mr. Ashok Barat as an Additional Director w. e. f. 22nd September, 2006 and resignation of Mr.C G Shah as Director w. e. f. 22nd September, 2006 was filed with the Registrar of Companies, Maharashtra on 9th November, 2006.

7. Form No. 23 in respect of resolutions passed at the Annual General Meeting held on 22nd June, 2006 was filed with the Registrar ofCompanies, Maharashtra on 14th November 2006.

8. Form No. 2 in respect of allotment of 20,00,000 Equity shares allotted on 7th November, 2006 was filed with the Registrar of Companies,Maharashtra on 15th February, 2007.

For SANJAY DHOLAKIA & ASSOCIATES

(SANJAY R. DHOLAKIA)Place : Mumbai Practising Company SecretaryDate : 7th August, 2007 Proprietor


S 217

AUDITORS’ REPORT TO THE MEMBERS OF FORBES TECHNOSYS LIMITED (FORMERLY KNOWN AS: WANDEL &GOLTERMAN & FORBES LIMITED) ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2007.

1. We have audited the attached Balance Sheet of FORBES TECHNOSYS LIMITED (FORMERLY KNOWN AS: WANDEL &GOLTERMANN & FORBES LIMITED) as at 31st March 2007 and also the Profit & Loss Account for year ended on the date annexedthereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express the opinion onthese financial statements based on our audit.

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

3. As required by the Companies (Auditors’ Report) Order, 2003 as amended by the Companies (Auditors’ Report) (Amendment) Order,2004, (together the ‘Order) issued by the Central Government of India in terms of Section 227(4A) of the Companies Act 1956, and on thebasis of such checks of the books and the records of the company and according to information and explanations given to us, we enclosein the annexure a statement on the matter as specified in paragraph 4 & 5 of the said order, to the extent applicable to the company.

4. The accounts have been prepared on a going concern basis having regard to the representation made by the company in this behalf,referred to in Note 2 on Schedule 11. We are unable to express an opinion in the matter.

5. Subject to the matter referred in paragraph 4 above Further to our comments in the annexure referred to in paragraph 2 above, we reportthat:

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

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination ofthose books.

(iii) The Balance Sheet and Profit and Loss Account referred to in this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet and Profit & Loss Account comply with the accounting standards referred to in sub section (3C) ofsection 211 of the Companies Act, 1956.

(v) On the basis of information and explanation received by us, none of the directors are, prima facie, as at 31st March 2007 disqualifiedfrom being appointed as directors of the company under clause (g) of sub section (I) of Section 274 of the Companies Act, 1956.

(vi) In our opinion, and to the best of our information and according to the explanations given to us, the said accounts, including theBalance Sheet, Profit & Loss Account, dealt with by this Report read with the notes thereon and documents annexed thereto, give theinformation required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India in the case of:

(i) Balance Sheet of the state of affairs of the Company as at 31st March, 2007 and

(ii) Profit and Loss Account of the Loss of the Company for the year ended on that date.

FOR U. V. SHAH & COCHARTERED ACCOUNTANT

(UDAY V. SHAH)PROPRIETORMembership .No 35626

7th August, 2007


S 218

ANNEXURE TO THE AUDITOR’S REPORT TO THE MEMBERS OF FORBES TECHNOSYS LIMITED (FORMERLY KNOWNAS: WANDEL & GOLTERMANN & FORBES LIMITED FOR THE PERIOD ENDED 31ST MARCH 2007.(Referred to in paragraph 3 of our report of even date)

i) Fixed Assets

(a) According to the information & explanation given to us, the Company has maintained proper records showing full particulars,including quantitative details and situation of fixed assets.

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals. Material discrepancies werenoticed on such verification have been properly dealt with and adjusted in books of accounts.

ii) Inventory

(a) The physical verification of inventory has been conducted at reasonable intervals by the management;

(b) The procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size ofthe company and the nature of its business.

(c) The company is maintaining proper records of inventory and discrepancies noticed on physical verification have been properly dealtwith in the books of account.

iii) Loans taken / granted

(a) The company has not granted any loans, secured or unsecured, from Companies, firms or other parties listed in the register maintainedunder section of the Companies Act, 1956.

(b) In our opinion, the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, areprima facie not prejudicial to the interests of the company or its members;

(c) The parties to whom the loan has been given making payment of the principal and interest amount as stipulated.

(d) There is no overdue amount of loans taken or granted to Companies, Firms or other parties listed in the register maintained undersection 301 of the Companies Act, 1956.

(e) The company has taken loans, secured or unsecured, from Companies, Firms or other parties listed in the register maintained undersection of the Companies Act, 1956. The details of which are mentioned here below:

SI.No Name of Related Parties Maximum amount due at any time Balance due as at the end of theduring the yearAmount (Rs.) Financial yearAmount (Rs.)

1 Forbes Gokak Ltd 7,70,00,000 7,70,00,000

2 Forbes Finance Ltd 40,00,000 40,00,000

(f) In our opinion, the rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are primafacie not prejudicial to the interests of the company or its members.

(g) The company is regular in making the payment of the principal and interest amount as stipulated from whom the loans have beentaken.

iv) Internal Control

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the company and the nature of its business for purchase of services and sale of services.

v) Section 301

In respect of transactions entered in register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of ourknowledge and belief and according to the information and explanations given to us:

a) The transactions that needed to be entered in the Register have been so entered

b) Where each of such transactions in excess of Rs 5 lakhs in respect of any party, the transactions have been made at prices which areprima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of transactions of Serviceswhich are of special nature where, owing to their nature, comparable alternative quotations are not available.

vi) Deposit from Public

The company has not accepted any deposits from the public to which the provisions of sections 58A of the Companies Act, 1956 or anyother relevant provisions of the act and the rules framed there under would apply.

vii) Internal Audit

The company did not have an internal audit system during the year.


S 219

viii) Cost Records

As explained to us, the maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub-section (1)of section 209 of the Act.

ix) Payment of Statutory Dues

According to the information & explainations given to us, No undisputed statutory dues including Provident Fund, Investor Education andProtection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and anyother statutory dues payable to appropriate authorities were outstanding as at 31st March, 2007 for a period of more than six months fromthe date they became payable.

x) Accumulated Losses / Cash Losses

The Company has accumulated losses at the end of the financial year; which are more than fifty per cent of its net worth. The Company hasincurred operating cash losses during the financial period; and also in the immediately preceding financial period.

xi) Default in repayment of Dues

The Company has not defaulted in repayment of dues to any financial Institution or Bank or Debenture Holders.

xii) Grant of Secured Loans and Advances

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

xiii) Special Statue- Chit Fund Companies, Nidhis / Mutual Benefit Fund / Societies

Not applicable to this company

xiv) Company dealing or Trading in Shares, Securities Etc.,

Not applicable to this company.

xv) Provision of Guarantee

According to the information and explanations given to us, The Company has not given any guarantee for loans taken by others fromBanks or financial Institutions.

xvi) Term Loans

According to the information and explanations given to us, The Company has not raised any term loan under review and hence question ofits application of the clause does not arise.

xvii) Usage of Funds

According to the information and explanations given to us and on overall examination of the balance sheet of the company, there are nofunds raised on short term basis, which have been used for long term investment except for funding of the losses during the year.

xviii) Preferential Allotments

During the year under audit, the company has made preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956. in our opinion, each of the transactions has been made at prices; which are notprejudicial to the interest of the company.

xix) Creation of security or charge for Debenture Issue

In our opinion and according to the information and explanations given to us, the Company has not issued any debentures during the periodcovered by our report. Accordingly, the provisions of clause 4(xix) of the Companies (Auditors’ Report) Order, 2003 are not applicable tothe Company.

xx) Disclosure of end use of Fund

During the year, the company has not raised money by public issue and hence the question of disclosure and verification of end use if suchmonies does not arise.

xxi) Frauds

To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company hasbeen noticed or reported during the course of our audit.

FOR U. V. SHAH & COCHARTERED ACCOUNTANT

(UDAY V. SHAH)PROPRIETORMembership .No 35626

7th August, 2007


S 220


As at As at31-Mar-07 31-Mar-06


FUNDS EMPLOYED :

Share Capital 1 13,000,000 8,000,000

Unsecured Loans 2 81,000,000 15,500,000

Total Funds Employed 94,000,000 23,500,000


Fixed Assets 3

(a) Gross Block 43,255,632 266,170

(b) Less : Total Depreciation 10,466,556 33,395

(c) Net Block 32,789,076 232,775

Current Assets, Loans & Advances 4

(a) Stock-in-Trade 11,664,795 -

(b) Sundry Debtors 13,852,651 3,776,190

(c) Cash and Bank Balances 2,001,270 1,180,736

(d) Loans and advances 5,721,973 297,417

33,240,688 5,254,343

Less : Current liabilities & provisions 5

(a) Liabilities 14,326,619 1,684,374

(b) Provision 964,310 964,093

15,290,929 2,648,467

Net Current assets 17,949,759 2,605,876

Profit and loss account Debit Balance 43,261,165 20,661,349

Total Assets (Net) 94,000,000 23,500,000

NOTES TO THE ACCOUNTS (per Schedule “11”)


For U.V.SHAH & CO K.C.Mehra Chairman


Ashok Barat

UDAY V. SHAH Rahul. Jain

Proprietor C.A.KarnikDirectors

(Membership No. 35626) A.T.Shah


}


S 221


For U.V.SHAH & CO K.C.Mehra Chairman


Ashok Barat

UDAY V. SHAH Rahul. Jain

Proprietor C.A.KarnikDirectors

(Membership No. 35626) A.T.Shah


}

PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH, 2007

As at As at31-Mar-07 31-Mar-06


1 INCOME

Sales - Solutions 16,777,063 -

Services rendered & other Income 6 15,431,551 12,236,488

32,208,614 12,236,488

2 EXPENDITURE

Purchase of Traded goods 7 10,201,904 -

Staff costs 8 16,283,987 11,946,555

Administrative & General Expenses 9 13,677,638 6,218,823

Finance Charges 10 4,068,439 863,260

44,231,968 19,028,638

3 PROFIT BEFORE DEPRECIATION AND TAX (12,023,355) (6,792,150)

4 DEPRECIATION 10,433,161 22,259

5 PROFIT BEFORE TAX (22,456,516) (6,814,409)


Current tax - -

Fringe Benefit Tax 143,300 31,300

Deferred Tax - -

143,300 31,300

7 PROFIT AFTER TAX (22,599,816) (6,845,709)

8 BALANCE BROUGHT FORWARD FROM LAST YEAR (20,661,349) (13,815,640)

AMOUNT AVAILABLE FOR APPROPRIATION (43,261,165) (20,661,349)

Less: APPROPRIATIONS - -

9 BALANCE CARRIED TO BALANCE SHEET (43,261,165) (20,661,349)

NOTES TO THE ACCOUNTS (per Schedule “11”)


S 222


SCHEDULE ‘1’ - SHARE CAPITAL

Year ended Year ended

31-Mar-07 31-Mar-06

Rupees Rupees

Authorised

7,000,000 Equity Shares (P.Y. 3,000,000 ) of Rs.10 each 70,000,000 30,000,000

Issued and Subscribed

Fully paid up Shares

8,00,000 (P.Y. 800,000) Equity Shares of Rs.10 each fully paid up 8,000,000 8,000,000

Partly paid up shares

20,00,000 (P.Y. Nil) Equity Shares of Rs 10 each

Rs 2.50 per share paid up on call 5,000,000 -

(All the shares are held by Forbes Gokak Ltd., Warrior (Investment) Ltd., Forbes Campbell Holdings Ltd. and Eureka Forbes Ltd, which aresubsidiary Companies of Sterling Investment Corporation Pvt. Ltd. The ultimate holding Company is Shapoorji Pallonji & Co. Ltd.)

SCHEDULE ‘2’ - UNSECURED LOANYear ended Year ended31-Mar-07 31-Mar-06

Rupees Rupees

Forbes Finance Ltd. 4,000,000 4,000,000

Forbes Gokak Ltd. 77,000,000 11,500,000

81,000,000 15,500,000

SCHEDULE ‘3’ - FIXED ASSETS(Amount in Rupees )

DESCRIPTION GROSS BLOCK DEPRECIATION BLOCK NET BLOCK

As at Aditions / As at Up to for the on Deductions/ Up to value as at value as at

01-04-2006 (Deductions) 31.03.2007 31-03-2006 year Adjustments 31.03.2007 31.03.2007 31-03-2006

Tangible Assets

Furniture and fittings 15,545 - 15,545 9,771 984 - 10,755 4,790 5,774

Data Processing Equip. 150,407 316,997 467,404 19,951 44,469 - 64,420 402,983 130,456

Vehicle 43,819 - 43,819 2,920 4,162 - 7,082 36,737 40,899

Office Equiptment 56,399 1,171,618 1,228,017 753 8,334 - 9,087 1,218,930 55,646

Intangible Assets

Intellectual Property/

Distribution Rights - 41,500,847 41,500,847 - 10,375,212 - 10,375,212 31,125,635 -

Total 266,170 42,989,462 43,255,632 33,395 10,433,161 - 10,466,556 32,789,075 232,775

Previous Year 99,300 166,870 266,170 11,136 22,259 - 33,395 232,775 88,164


S 223


SCHEDULE ‘4’ - CURRENT ASSETS, LOANS AND ADVANCES

Year ended Year ended31-Mar-07 31-Mar-06

Rupees Rupees RupeesInventories

(as taken, valued and certified by the Management 11,664,795 -Sundry Debtors

Unsecured, Considered Good and subject to confirmations1. Outstanding for More than Six months 428,0632. Other Debts 13,424,588 3,776,190

13,852,651 3,776,190Cash and Bank Balances

Cash on hand 119,700 15,527Balance with Scheduled Banksin Current Account 1,881,569 1,165,209

2,001,270 1,180,736Loans and Advances

(Unsecured,Considered Good and subject to confirmations)Advances recoverable in cash or in kindor for value to be received 4,107,851 265,540Advances to Suppliers 1,474,273 -Taxes paid less provisions including Fringe Benefit Tax 133,927 25,955(other than deferred tax)Balance with Central excise 5,922 5,922

5,721,973 297,41733,240,688 5,254,343

SCHEDULE ‘ 5’ - CURRENT LIABILITIES AND PROVISIONSYear ended Year ended31-Mar-07 31-Mar-06

Rupees Rupees RupeesCurrent LiabilitiesSundry creditors (No dues to SSI) 9,722,652 -Advances received from Customers 507,939 1,684,374VAT Payable 57,386 -Other Liabilities 4,038,642 -

14,326,619 1,684,374

ProvisionsProvision for taxation 964,310 964,093

15,290,929 2,648,467

SCHEDULE ‘6’ - SERVICES RENDERED & OTHER INCOMEYear ended Year ended31-Mar-07 31-Mar-06


Services Rendered 15,431,551 12,233,941

Interest on Income - Tax Refunds - 2,547

15,431,551 12,236,488


S 224


SCHEDULE ‘7’ - PURCHASE OF TRADED GOODSYear ended Year ended31-Mar-07 31-Mar-06


Opg Stock - -Purchases

Local 20,955,215 -Import Purchase 911,484 -

21,866,699 -Less: Closing Stock 11,664,795 -

10,201,904 -

SCHEDULE ‘8’ - STAFF COST: Salaries 15,218,500 11,402,352 Medical reimbursement 87,046 - Refreshment expenses 243,134 303,797 Job Related Exp. - 7,233 Staff Welfare 89,870 - Co s Contribution to P.F. 522,718 209,946 Training, Seminar & Other Exp. 122,719 23,227

16,283,987 11,946,555

SCHEDULES ‘9’ - ADMINSTRATIVE & GENERAL EXPENSESRent 47,425 2,400Electricity Charges 1,636,842 2,593,976Auditor’s remuneration Audit Fees 12,000 12,000 Tax Audit Fees 5,000 5,000 Service tax thereon - 2,081 For other matters 5,000 -

22,000 19,081Legal and Prof. Fees 1,436,662 1,610,610Loss on Foreign Exchange fluctuations 343,061 78,863ROC filing fees 289,242 143,500Telephone Expenses 592,755 148,206Sundry Purchases 160,251 227,266Motor car Running Expenses 437,161 69,938Security Charges 268,060 370,956Postage & Stamp Expenses 112,062 15,633Lease Line Expenses 467,667 3,860Printing & Stationery 131,927 110,185Profession Tax 2,500 2,500Travel and conveyance 2,632,753 181,201Entertainment 12,333 320Advertisements & Selling exps 275,811 162,975Freight Expenses 410,662 -Business Development expenses 1,731,368 -Annual Maintenance Charges 1,535,105 -Other expenses 1,131,991 477,353

13,677,638 6,218,823

SCHEDULES ‘10’ -FINANCIAL CHARGESBank Charges & Interest 416,324 31,375Interest on Loan 3,652,115 831,885

4,068,439 863,260


S 225

SCHEDULE ‘11’ - NOTES TO THE ACCOUNTS

1 Significant Accounting Poloicies


The Financial Statements are prepared under historical cost convention, on accural basis, and are in accordance with the requirements ofthe Companies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

(b) Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. The Company capitalises all costs relating to the acquisition and installationfor tangible Fixed Assets. The Company capitalises all expenses incurred to bring the assets to its present locatiion and condition forintangible Fixed Assets. Fixed assets purchased in foreign currency are recorded at the actual equivalent rupee cost incurred.

(c) Depreciation

Depreciation is provided pro-rata to the period of use on the straight line method, at the following rates stipulated in Schedule XIV to theCompanies Act, 1956 except for Intagible Asset - Intellectual Property / Distribution Rights.

Data processing equipment 16.21%

Office equipment 4.75%

Furniture and Fixtures 6.33%

Vehicles 9.50%

Intellectual Property / Distribution Rights apportioned over 12 quarters

(d) Inventories

Inventories are valued at cost or net realizable value, whichever is lower using First In First Out (FIFO) method of valuation. Cost ofinventories comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their presentlocation and condition.

(e) Revenue Recognition

Revenue from Sales of products is recognised when the risk and rewards of ownership are passed on to the customers, which aregenerally on despatch of goods. Sales are stated net of sales returns, discounts and Sales Tax. The Company recognises Income fromservice activity as and when services are rendered or as per contractual agreement entered with parties. Revenue from Rental contractsare recognised pro-rata over the period of the contract. Interest Income is recognised on the time proportion basis.

(f) Foreign Currency

Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilitiesrelated to foreign currency transactions remaining unsettled at the close of the year are translated at the year end rate and difference intranslation and realised gains and losses on foreign exchange transaction are recognised in the profit and loss account.

(g) Retirement Benefits

Provident Fund contribution as required by the statute made to Government Provident Fund is debited to the Profit and Loss Acount.

(h) Deferred Taxes

The Accounting Standard 22 (AS-22) for ‘Accounting for Taxes on Income’, requires the Company to review the carrying amount ofDeferred tax Assets at each Balance Sheet Date. Presently the balance of Deferred tax Asset as per Books is Rs. NIL as at 31st March theCompany has not recognised the Deffered tax Assets since the Company has substantial unabsorbed depreciation & carried forward lossunder the Income Tax Act, 1961 and there is no virtual certainty that the company will have sufficient future taxable income. Thereforebased on concept of prudence, the deferred tax liability for the year Rs NIL has been recognised in the profit and loss account for theyear and the deferred tax liability upto 31st March 2007 amounting to Rs. NIL has been adjusted to the Profit & Loss balance.

(i) Tax on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of theIncome Tax Act 1961.

The accounts have been prepared on going concern basis inspite of total erosion of net worth, as the management is consideringalternative proposals to improve the business of the company.


S 226

3 Estimated amount of contracts remaining to be executed on capital account (Intangible Fixed Assets) and not provided for - Rs 43,00,000/-(Previous Year Rs Nil)

4 The amount of exhange differences:

(i) included in the Profitand Loss Account is a net Income of Rs 3,43,061/- ( Previous year: 78,863/-)

2006-07 2005-06

5 Expenditure in foreign currency

a Travelling 684,504 -

b Licenses/Service Charges 35,452,696

6 C.I.F. Value of Direct Imports purchase 911,484 -

7 Earnings in Foreign Exchange

Export of goods/services calculated on FOB Basis 13,686,154 12,233,941

8 Contingent Liabilities not provided for: Nil

9 Information in regard to class of goods traded by the Company:


Quantity Value Quantity ValueProduct In Nos In Rs. In Nos In Rs.

A. Opg Stock

Handheld Terminals - - - -

Printer Ribbons - - - -

Servers - - - -

Tax Meters - - - -

Cheque Scanners - - - -

Cheque Deposit Kiosk - - - -

Luna PCI 7000 - - - -

NCM - NT2000 - - - -

Handheld Portable Microcomputer - - - -

Other Products - - - -

- - - -

B. Closing Stock

Handheld Terminals 16 172,167 - -

Printer Ribbons 137 7,768 - -

Servers 14 3,377,236 - -

Tax Meter T-1000 22 413,834 - -

Tax Meter software 36 688,554 - -

Cheque Deposit Kiosk 16 2,321,420 - -

Luna PCI 7000 - - - -

NCM - NT2000 - - - -

Handheld Portable Microcomputer - - - -

Other Products 147 4,683,816 - -

388 11,664,795 - -


S 227

C. Sales

Handheld Terminals 25 380,500 - -Printer Ribbons 5,863 603,350 - -Servers 4 1,588,980 - -Tax Meter T-1000 19 2,582,000 - -Tax Meter software - - - -Cheque Deposit Kiosk - - - -Luna PCI 7000 3 1,100,000 - -NCM - NT2000 10 1,211,450 - -Handheld Portable Microcomputer 474 6,414,480 - -Other Products 118 2,896,303 - -

6,516 16,777,063 - -

D. Purchases

Handheld Terminals 41 419,167 - -Printer Ribbons 6,000 340,200 - -Servers 18 4,953,132 - -Tax Meter T-1000 41 771,235 - -Tax Meter Software 36 688,554 - -Cheque Deposit Kiosk 16 2,321,420 - -Luna PCI 7000 3 1,055,000 - -NCM - NT2000 10 860,213 - -Handheld Portable Microcomputer 474 3,957,000 - -Other Products 265 6,500,778 - -

6,904 21,866,699 - -

10 Related party disclosures: As required by AS-18I Name of the Related Party and Nature of relationship where control exists as under:

A. Enterprises having more than one half of the voting power:As on 31-March-2007 As at 31-March-2006Shapoorji Pallonji & Co Ltd Shapoorji Pallonji & Co Ltd(Ultimate Holding Company) (Ultimate Holding Company)Forbes Gokak Limited Forbes Gokak Limited

B. Enterprises that are under common control:As at 31-March-2007 As at 31-March-20061 Aquamall Water Solutions Ltd 1 Aquamall Water Solutions Ltd2 Eureka Forbes Ltd 2 Eureka Forbes Ltd3 Volkart Fleming Shipping & Services Ltd 3 Volkart Fleming Shipping & Services Ltd4 Latham India Ltd 4 Latham India Ltd5 Forbes Aquamall Ltd 5 Forbes Aquamall Ltd6 Forbes Abans Cleaning Solutions Pvt Ltd 6 Forbes Abans Cleaning Solutions Pvt Ltd7 Forbes Doris & Naess Maritime Ltd 7 Forbes Doris & Naess Maritime Ltd8 Next Gen Publishing Ltd 8 Next Gen Publishing Ltd9 Euro Forbes International Pte Ltd 9 Euro Forbes International Pte Ltd

10 Forbes Finance Ltd 10 Forbes Finance Ltd11 Forbes Tinsley Company Ltd 11 Forbes Tinsley Company Ltd12 Forbes Campbell Holdings Ltd 12 Forbes Campbell Holdings Ltd13 Warrior (Investment) Ltd 13 Warrior (Investment) Ltd14 Forbes Sterling Star Ltd 14 Forbes Sterling Star Ltd15 Forbes Services Ltd 15 Forbes Services Ltd16 Forbes Smart Data Ltd


S 228

II Transactions with related parties:

Nature of Transactions Referred in ‘A’ above Referred in ‘B’ above

31-3-2007 31-3-2006 31-3-2007 31-3-2006

Purchases

1 Goods and Materials 64,455,239 - - -

2 Fixed Assets 1,017,946 - - -

Expenses

3 Rent 217,075 - - -

4 Electricity charges 1,318,322 2,593,976 - -

5 Other Service Charges 100,144 133,834 - -

6 Interest paid 3,332,115 531,885 320,000 300,000

Finance

7 Deposits taken 65,500,000 11,500,000 - -

8 Loans and Advances taken 1,216,400 - - -

9 Loans and Advances given - - - -

10 Equity Contribution - - 5,000,000 -

Outstandings

11 Deposits payable 77,000,000 11,500,000 4,000,000 4,000,000

12 Sundry Creditors 3,826,978 8,107 - -

13 Prepaid Rent - 100 - -

1 All amount referred to in table ‘A’ are with single party viz, Forbes Gokak Limited, except item No. 4 which refers to ShapoorjiPallonji & Company.

2 Item 6B and 11B refers to Forbes Finance Limited.

3 Item 10B refers to Eureka Forbes Limited.

11 Previous years figures are regrouped / rearrange wherever necessary to confirm to this year classification.

12 Additional information as required under schedule VI of the Companies Act, 1956 has not been furnished, as the same is not applicable.

K.C.MehraFOR U.V. SHAH & COCHARTERED ACCOUNTANTS Ashok Barat

Rahul. Jain

(Uday V. Shah) C.A.KarnikM.No 356267th August, 2007 A.T.Shah

} Directors


S 229




Balance Sheet Date 31.03.2007



Bonus Issue Nil Private Placement 5,000


Total Liabilites 94,000 Total Assets* 94,000


Paid-up Capital 13,000 Fixed Assets 32,789

Reserves and Surplus - Net Current Assets 17,950

Unsecured Loans 81,000 Accumulated Loss 43,261

* Net of Current Liabilities and Provisions


Turnover 32,209

Total Expenditure 44,232

Profit before Tax (22,457)

Profit after Tax (22,600)

Earning per Share in Rs. -

Dividend Rate NIL


Item Code No. Nil Product Description BPO BusinessBanking SolutionsOffice Atomation

K.C.Mehra

Ashok Barat

Rahul. Jain

C.A.Karnik

A.T.ShahMumbai, 7th August, 2007

} Directors


S 230


2006-2007 2005-2006


PROFIT /LOSS BEFORE TAX (22,456,516) (6,821,186)Adjusted forDepreciation 10,433,161 22,259Interest Paid 3,652,115 831,885Interest Received - (2,547)

14,085,276 851,597Operating Profit Before (8,371,240) (5,969,589)Working Capital Changeschange increditors 12,642,245 (35,819)debtors (10,076,461) (3,769,413)Inventory (11,664,795) -Advances (5,316,584) (260,540)

(14,415,595) (4,065,772)Income Tax Refund/Paid (107,755) 46,343Direct Tax Paid (143,300) (31,300)

(251,055) 15,043(A) NET CASH FROM OPERATING ACTIVITIES. (23,037,889) (10,020,318)

CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets. (42,989,462) (166,870)Interest Received. - 2,547

(42,989,462) (164,323)(B) NET CASH FROM INVESTING ACTIVITIES.

CASH FLOW FROM FINANCING ACTIVITIESProceeds from Borrowings 65,500,000 11,500,000Proceeds from Capital increase 5,000,000Interest Paid (3,652,115) (831,885)

66,847,885 10,668,115(C) NET CASH FROM FINANCING ACTIVITIES.

NET DECREASE/INCREASE INCASH AND CASH EQUIVALENTS (A)+(B)+(C) 820,534 483,474

Cash and Cash equivalent as at the commencement 1,180,736 697,262of the year comprising Cash, Cheques on hands &remmittances in transit and Balance with Bank.

Cash and Cash equivalent as at the end of the 2,001,270 1,180,736year comprising Cash, Cheques on hands andremmittances in transit and Balance with Bank.

NET DECREASE/INCREASE as disclosed above 820,534 483,474

As per our Report of even date attachedK.C.Mehra

For U.V. Shah & Co.Chartered Accountants Ashok Barat

Rahul. Jain(Uday Shah)Proprietor C.A.Karnik(Membership No. 35626)Mumbai, 7th August, 2007 A.T.Shah

} Directors

FORBES TINSLEY COMPANY LIMITED

231

( Subsidiary Company ) Annual Report and Accountsfor the year ended 31st March,2007

DIRECTORS :

G.Mukharji Chairman

R.T.Doshi

A.T.Shah

BANKERS :

Union Bank of India

AUDITORS :

Messrs. Shirish Karnik & Co.

REGISTERED OFFICE :Forbes Building,Charanjit Rai Marg,Fort, Mumbai 400 001


S 232

DIRECTORS’ REPORT

The Shareholders,

Your Directors submit their Report and the Audited Accounts of the Company for the year ended 31st March 2007.



Profit / (Loss) before Depreciation (2,53,730) (12,947)

Less : Depreciation - 44,341

Balance (2,53,730) (57,288)

Less : Provision for Taxation (49,408) -

Profit/(Loss) for the year (3,03,138) (57,288)

Debit balance brought forward (28,21,307) (27,64,019)

Debit balance carried to Balance Sheet (31,24,445) (28,21,307)

2. OPERATIONS:

The Company shrunk its operations, in order to curtail cost. Weare also exploring new business opportunities to reduce overalllosses.

3. DIRECTORATE:

Mr. R.T. Doshi, who retires from the Board by rotation and beingeligible, offers himself for re-appointment. Your Directorsrecommend his appointment.

4. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors, M/s. Shirish Karnik& Co., Chartered Accountants, being eligible, offer themselves forre-appointment and they have confirmed that they are notdisqualified u/s.224(1)(B) of the Companies Act, 1956.

5. SECRETARIAL COMPLIANCE AUDIT:

Pursuant to Section 383 A of the Companies Act, 1956, SecretarialCompliance Certificate from M/s. Rathi & Associates, is attachedherewith.


The Company did not have any employee who was drawing aremuneration of Rs.24,00,000/- or more in aggregate throughoutthe financial year or Rs.2,00,000/- or more per month if employedfor a part of the financial year.


Pursuant to the provisions contained in sub-section (2AA) ofSection 217 of the Companies Act, 1956, the Board Reports to the

members of the Company that, to the best of their knowledge andbelief :-

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

b) the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view ofthe state of affairs of the company at the end of the financialyear and of the profit or loss of the company for that period;

c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets ofthe company and for preventing and detecting fraud and otherirregularities;

d) the Directors had prepared the annual accounts on a goingconcern basis.


The required particulars are annexed hereto which forms a part ofthis Report.


Place : Mumbai GAUTAM MUKHARJI Dated: 6th July, 2007. CHAIRMAN.

ANNUAL REPORT 2006-2007FORBES TINSLEY COMPANY LIMITED

S 233


Information required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

A. Conservation of Energy:

The Company’s operations involve low energy consumption. Wherever possible, energy conservation measures have already beenimplemented and there are no major areas where further energy conservation measures can be taken. However, efforts to conserve andoptimise the use of energy through operational methods will continue.

B. Forms for Disclosure of Particulars with respect to Absorption :

FORM – B

Research & Development (R & D)

1. Specific areas in which R&D carried out by the Company —

2. Benefits derived as result of the above R&D —

3. Future Plan of action —

4. Expenditure on R&D —

a) Capital

b) Recurring

c) Total

d) Total R&D expenditure as percentage of total turnover.

Technology Absorption, Adaptation and Innovation:

1. Efforts in brief, made towards technology absorption Adaptation and Innovation.

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

3. In case of imported technology (imported during last five years reckoned from the beginning of the Financial Year), following informationmay be furnished :-


b) Year of Import


d) If not fully absorbed areas where this has not taken place, reasons therefore and future plans of action.

C. Foreign Exchange Earnings and Outgo :

1. Activities relating to exports; initiatives taken to increase exports; N I L

markets for products and services; and export plans.

2. Total Foreign Exchange used and earned.

Earned

Used


S 234

AUDITORS REPORT

TO THE MEMBERS.FORBES TINSLEY COMPANY LIMITEDREPORT OF THE AUDITORS TO THE MEMBERS OF FORBES TINSLEY COMPANY LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED31st MARCH, 2007.We have audited the attached balance sheet of FORBES TINSLEY COMPANY LIMITED as at 31st March, 2007 and also the profit and loss account of the companyfor the year ended on that date, annexed thereto. These financial statement are the responsibi1ity of the Company’s management. Our responsibility is to express anopinion on these financial statement based on our audit.I. We conducted our audit in accordance with auditing standards which are generally accepted, These Standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining; on a test basic, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accounting-principles used and significant estimate made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

II. As required by the statement on Companies (Auditors” Report) Order; 2003 issued by the Central Government of India in terms of sub-section (4A) of section227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

III. The Company has a negative net worth of Rs.624445/- as at 31st March, 2007 and the accounts have been prepared on a going concern basis.IV. Further to our comments in the Annexure referred to above, we report that.

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit:(ii) In our opinion. proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books;(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are ill agreement with the books of account.(iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by\his report comply with the Accounting. Standard referred to in sub-section (3C)

of section 211 of the Companies Act, 1956:(v) On the basis of written representations received from directors as on 31st March, 2007 and taken on record by the Board of Directors. We report that none of

the director is disqualified as on 31st March, 2007 from being appointed as a director in term of clause (g) of sub - section (I) of section 274 of theCompanies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by theCompanies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted.(a) In the case of the Balance Sheet, of the state of affairs of the Company, as at 31st March, 2007, and(b) In the case of Profit and Loss Account, of the Loss for the year ended on that date.

FOR SHIRISH KARNIK & CO.CHARTERED ACCOUNTANTS

Place : Mumbai SHIRISH KARNIKDated : 6th July, 2007 (Proprietor)

ANNEXURE REFERRED TO IN PARAGRAPH I OF THE REPORT OF THE AUDITORS TO THE MEMBERS OF FORBES TINSLEY COMPANYLIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007.Clauses No. (I)(c), (v), (vi), (vii), (viii), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), (xx) of the CARO are not applicable in case of this Company.(i) In respect or its fixed assets:

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.(b) Most of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification which. In our opinion,

provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no materialdiscrepancies were noticed on such verification.

(ii) In respect of inventories:(a) As explained to us, inventories (other than stocks lying with third parties, in respect of which confirmation have been obtained in most cases) were

physically verified during the year by the management at reasonable Intervals.(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the Management

was reasonable and adequate in relation to the size of the company and the nature of its business.(c) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories and no material

discrepancies were noticed on physical verification.(iii) The company has taken loan from following party:-

Serial No. Name of party Relationship Amount Year endWith the company

1) Forbes Gokak Ltd. Subsidiary 4200000/- 700000/-

(IV) In our opinion and according to the information and explanation given to us there are adequate internal control procedure commensurate with the size of thecompany and the nature of its business for purchase of inventory and fixed assets and for the sale of goods. We have not.observed any continuing failure to correct major weakness in such internal controls.

(v) According to the information and explanations given to us, no undisputed amounts payable in respect of income - tax, wealth - tax, sales tax.,Customs duty and excise duty were outstanding as at 31st March, 2007 for a period of more than six months from the date they became payable.

(vi) The company has a negative net worth of Rs.624445/- as at 31.3.2007. The company has incurred cash Josses of Rs. 253730/- in the financialYear under review, namely march 31st 2007. The cash loss incurred in the previous year ended on 31st March 2006 was Rs. 57228/-.

FOR SHIRISH KARNIK & CO.CHARTERED ACCOUNTANTS

Place : Mumbai SHIRISH KARNIKDated : 6th July, 2007 (Proprietor)


S 235


As at

31.03.2006


SOURCE OF FUNDS

Shareholders’ funds

Share Capital 1 25,00,000 25,00,000

Loan Funds

Unsecured Loans 2 7,00,000 9,00,000

Total 32,00,000 34,00,000


Fixed Assets

Gross Block 3 - 14,22,751

Less: Accmulated Depreciation - 11,06,895

Net Block - - 3,15,856

Investments 4 - 7,360

Current Assets, Loans and Advances : 5

Current Assts

Interest Accrued on Deposits - 188

Inventories - 1,48,837

Sundry Debtors - -

Cash and Bank Balances 90,838 1,12,956

90,838 2,61,981

Loans and Advances 51,000 108

141,838 2,62,089

Less :

Current Liabilities and Provisions 6

Current liabilites 16,875 6612

Provisions 49408 0

66,283 6612

Net Current Assets 75,555 2,55,477

Profit and Loss Account

Debit Balance as per Account Annexed 31,24,445 28,21,307

Total 32,00,000 34,00,000

NOTES TO THE ACCOUNTS 9


For SHIRISH KARNIK & CO.

Chartered Accountants G. Mukharji Chairman

SHIRISH KARNIK R.T. Doshi

Proprietor A.T. ShahDirectors

Mumbai : 6 th July, 2007

}


S 236

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2007

As at

31.03.2006


INCOME

Sales and other income 7 2,22,828 3,240

EXPENDITURE

Manufacturing, Trading and other expenses 8 4,76,558 16,187

Interest on fixed loans 0 0

Depreciation - 44,341

4,76,558 60,528

Profit (Loss) before Tax (2,53,730) (57,288)

Less : Provision for Taxation (49,408) 0

Profit (Loss) for the year after Tax (3,03,138) (57,288)

Debit balance brought forward (28,21,307) (27,64,019)

Debit balance carried to balance sheet (31,24,445) (28,21,307)

Notes to the Accounts 9


For SHIRISH KARNIK & CO.

Chartered Accountants G.Mukharji Chairman

SHIRISH KARNIK R.T.Doshi

Proprietor A.T.ShahDirectors

Mumbai : 6th July 2007

}


S 237


SCHEDULE 1 - SHARE CAPITAL

As at

31.03.2006

Rupees Rupees

AUTHORISED :

2,50,000 Equity SHARES OF Rs.10 each 25,00,000 25,00,000

Issued and subscribed:

2,50,000 Equity shares of Rs.10 each fully paid - up 25,00,000 25,00,000

SCHEDULE 2 - UNSECURED LOANS

As at

31.03.2006

Rupees Rupees

Short term deposit from a company 7,00,000 9,00,000

Total 7,00,000 9,00,000

SCHEDULE 3 - FIXED ASSETS

(Amount in RS.)

DESCRIPTION OF ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

As at Additions Deductions As at As at For On As at As at As at

01.04.2006 during during 31.03.2007 01.04.2006 the year Deductions 31.03.2007 31.03.2007 31.03.2006

the year the year

Leasehold improvents 2,77,248 0 2,77,248 - 2,77,248 0 277248 - 0 0

Plant and Machinery 8,71,250 0 8,71,250 - 5,66,585 0 5,66,585 - 0 3,04,665

Furniture, fixture and

office equipments 2,74,253 0 2,74,253 - 2,63,062 0 2,63,062 - 0 11,191

Total 14,22,751 0 14,22,751 - 11,06,895 - 11,06,895 - 0 3,15,856

Previous year 14,22,751 0 0 14,22,751 10,62,554 44,341 0 11,06,895 3,15,856

SCHEDULE 4 - INVESTMENTS :

As at

No.of Face Value 31.03.2006

Shares Rupees Rupees Rupees

Sea Falcon Shipping Services Pvt. Ltd. 1,000 10,000 - 7,360

Total - 7,360


S 238


SCHEDULE 5 - CURRENT ASSETS , LOANS AND ADVANCES

As at31.03.2006

Rupees Rupees RupeesCurrent assets :Interest accrued on deposits 0 188Inventories( at lower of cost and net realisable value, as certified by the directors)Stock - in- trade:Components - 1,25,028( including good in transist Nil; as at 31st March 2007 : Nil )Work - in - progress - 23,809Finished goods 0 0

- 1,48,837Sundry debtors:Debts outstanding for a period exceeding six monthsa) Unsecured , considered good 0 0b) Considered doubtful - 1,72,910Other debts 0 0

- 1,72,910Less: Provision for doubtful debts - 1,72,910

- -Cash & bank balances:Cash on hand - -with schedule banks:on current accounts 90,838 1,09,181on margin account - 3,775

90,838 1,12,956Loans and advances :( Unsecured , considered good )Advances recoverable in cash or in kind for value to be received 0 0Advances Tax paid 51,000 0Balance with Central Excise 0 108

51,000 108Total 1,41,838 2,62,089

SCHEDULE 6 - CURRENT LIABILITES AND PROVISIONS

As at31.03.2006


CURRENT LIABILITIES :

Sundry creditors 16,875 6,612

PROVISIONS:

Provision for Income Tax 49,408 0

Total 66,283 6,612


S 239

SCHEDULE 7 - SALES AND OTHER INCOME

For the

year ended

31.03.2006

Rupees Rupees

Sales (net of excise duty Rs.0/- - -

Previous year Rs.NIL)

Services charges - -

Interest on fixed deposit 188 194

Miscellaneous Income - 3,046

Profit on Sale of Longterm Investment 2,22,640 0

2,22,828 3,240

SCHEDULE 8 - MANUFACTURING ,TRADING AND OTHER EXPENSES

For theyear ended31.03.2006

Rupees Rupees Rupees( a ) Components consumed :

Opening stock 1,25,028 1,25,028Add: Purchases - -Less: Closing stock - 1,25,028

125,028 -Power 0 0

125,028 -( b ) Other expenses:

Emplyee cost :Salary, Wages, Bonus and other allowances 0 0( including employee seconment cost Rs.Nil.Previous year : Rs. Nil )Staff welfare 0 0Repairs to :Plant and machinery 0 0Others 0 0

0 0Freight 0 0Rent 2,400 2,400Rates and taxes 1,750 1,780Insurance 1162 2006Auditors remuneration:Audit fees 6,000 6,000Service tax thereon 856 612Out of pocket expenses 0 0Certification charges 0 0

6,856 6,612Bad Debts Write off 0 0Less : Provision held 0 0

0 0

SHEDULES ANNEXED TO AND TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR

THE YEAR ENDED 31ST MARCH 2007


S 240

SHEDULES ANNEXED TO AND TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR

THE YEAR ENDED 31ST MARCH 2007

SCHEDULE 8 - MANUFACTURING ,TRADING AND OTHER EXPENSES (Contd.)

For theyear ended31.03.2006


Postage and telephone 0 0Printing & stationery 0 0Professional fees 23,509 827Bank charges 628 228Filing fees and stamp charges 4,975 2,334Refreshment & entertainment 200 0Travelling and conveyance 90 0Provision for doubtful debts 0 0Workshop charges 0 0Commission, Brokerage & Discount 0 0Miscellaneous expenses 873 0Loss on Sale of Assets 2,85,278 0Decrease in stock of work-in-progress and finished goodsOpening stock :Work - in - progress 23,809 23,809Finished goods 0 0

23,809 23,809Less :Closing stockWork - in - progress 0 23,809Finished goods 0 0

- 2380923,809 -

Total 4,76,558 16,187


S 241


AND THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON THAT DATE

SCHEDULE 9 . - NOTES TO THE ACCOUNTS

1. Significant Accounting Policies

The financial statements are prepared under historical cost convention, on accrual basis, and are in accordance with the requirements of theCompanies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

A) Fixed Assets and Depreciation

The gross block of fixed assets is stated at the cost of acquisition including any attributable cost of bringing the asset to its workingcondition for its intended use.

The Company follows the straight line method for providing depreciation on fixed assets at the rates prescribed in Schedule XIV tothe Companies Act, 1956. Cost of leasehold improvements are depreciated equally over a period of three years.

B) Investment

Long term investments are stated at cost, less provision for diminution in value.

C) Inventories

Inventories are valued at lower of weighted average cost and net realisable value. Cost includes cost of material, freight, directlabour and manufacturing overheads and are net of write-offs on demonstration inventory as estimated by the management.

Excise duty amounting to Rs. Nil (p.y.Nil) payable on finished goods lying in factories or stored in a bonded godown is charged to theprofit and loss account and also included in the valuation of closing stock. This has no effect on the profit for the year.

D) Sales

Sales are accounted for, on despatch of goods to the customers and are net of excise duty.

E) Foreign Currency Transactions

There are no foreign transactions during the year.

F) Retirement Benefits

Leave encashment and Gratuity liability is accrued for on an arithmetical basis.

2. Contingent Liabilities not provided for: Rs. Nil

3. The Company has not maintained product wise records in respect of work-in-progress. However, the valuation takes into account thecertificate of technical personnel with reference to the extent of completion of work-in-progress.

4. Value of imports calculated on C.I.F. basis (excluding value of items locally purchased): Components Rs. NIL (Previous year Rs. NIL).

5. Value of all imported components consumed during the financial year and value of all indigenous components similarly consumed and thepercentage of each to the total consumption :

Current year Previous year

Value %to total Value% to totalRupees Consumption Rupees Consumption

Imported 0 0 0 0

Indigenous 0 0 0 0

Total 0 0 0 0

(b) It is not feasible to give the item-wise break-up indicating the value and quantity of each component consumed in view of the diverse natureof components.

Note: Consumption has been derived on a global basis by adding purchases to opening stock and reducing therefrom the closing stock determinedon physical count.


S 242


AND THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON THAT DATE(contd.)

6. INFORMATION FOR EACH CLASS OF GOODS MANUFACTURED AND SOLD.


Product Coil Turns L.C.R Lift Coil Turns L.C.R LiftTester Data Bridge Overload Tester Data Bridge Overload

Indicator Indicator

Unit Nos Nos Nos Nos Nos Nos

Installed capacity(foot note 1) 100 125 125 100 125 125Actual production 0 0 0 0 0 0Opening stock :Quantity 0 0 0 0 0 0Value rupees 0 0 0 0 0 0Closing stock :Quantity(foot note 3) 0 0 0 0 0 0Value rupees 0 0 0 0 0 0Total closingStock value 0 0 0 0 0 0Sales :Quantity(foot note 2) 0 0 0 0 0 0Value rupees(foot note 3) 0 0 0 0 0 0TotalSales value 0 0

1. Installed capacity has been certified by the management and accepted by the auditors without verification, this being a technicalmatter.

2. Sales quantity has been arrived at by adding production to opening stock and deducting therefrom the closing stock determined onphysical count.

3. Includes value of accessories in closing stock/sold for which quantities have not been included in the relevant column.

G. MUKHARJI Chairman

R.T. DOSHI

A.T. SHAHDirectors

Mumbai, Dated 6th July, 2007

7. Transaction with related parties

1) Nature of Transaction Forbes Gokak LimitedTreasury Division

Rs.ExpensesRent and other services 2,400FinanceRefund of Loans 2,00,000Total 2,02,400

2) Nature of Transaction Forbes Finance LtdRs.

Sale of InvestmentSale of 1000 Shares of M/s.Sea Falcon 2,30,000Shipping Services Ltd.Total 2,30,000

8. Previous year’s figures have been regrouped wherever necessary for comparison.

Signatures to Schedules 1 to 9

}



DIRECTORS :

Shapoor P. Mistry Chairman

Pallonji S. Mistry

K.C.Mehra

Cyrus P. Mistry

Ashok Barat

G.D.Prasad

BANKERS :

Union Bank of India

AUDITORS :

Messrs. Chhajed Kedia & Associates

REGISTERED OFFICE :

1st Floor, 45/ 3 Gopal Krishna Complex

Residency Cross Road

Bangalore 560 025

GOKAK TEXTILES LIMITED

243


244

DIRECTORS’ REPORT

ToThe Shareholders,

Your Directors have pleasure in presenting the First Annual Report togetherwith audited Statement of Account for the period ended on 31stMarch, 2007.

1. BACK GROUND:-

The Company was incorporated on 27th March, 2006. During the year, the Company became a wholly-owned subsidiary of Forbes GokakLimited. The Board of Directors of the Company and the Shareholders of the Company have approved a Scheme of Demerger of TextilesUndertaking of Forbes Gokak Limited to this Company, effective from 1st April 2007, in respect of which a petition under Sections 391 to394 of the Companies Act 1956 has been submitted to the High Court of Karnataka at Bangalore and the same was approved by the Courton 13th July, 2007. The Scheme provides that upon the Demerger becoming effective, the Textiles activity of Forbes Gokak Limited will beundertaken by the Company.

The present paid up Share Capital of the Company is Rs.5 lakhs divided into 50,000 shares of Rs.10 each. The Authorised Share Capital ofthe Company is being enhanced to Rs. 7 crores. Upon the Demerger becoming effective, shareholders of Forbes Gokak Limited, on arecord date to be decided by the Board of Directors of the Company, shall be allotted one equity share of the Company for two equity sharesheld by them in Forbes Gokak Limited, by way of additional entitlement and not in lieu of their shareholding in Forbes Gokak Limited. TheBalance Sheet & Profit & Loss Account are for the period from 27th March,2006 to 31th March, 2007.


During the year Company has earned Income from Interest on Bank Fixed Deposit of Rs.6,672 and incurred expenses of Rs.20,992resulting into a loss of Rs.14,250.

3. DIVIDEND :

As the Company is yet to commence commercial operations, the question of a dividend does not arise at this stage.

4. FIXED DEPOSIT :

Your Company has not accepted any Fixed Deposit during the year under report.

5. AUDITORS:

You are requested to appoint Auditors for the current year and authorised the Board to fix their remuneration.

M/s. Chhajed Kedia & Associates, Chartered Accountants, Mumbai, the Auditors of the Company, retire at the conclusion of the ensuingAnnual General Meeting and being eligible offer themselves for re- appointment.

It is proposed to appoint M/s Murugesh & Co. Chartered Accountants, as the Branch Auditors of the Forbes Campbell Knitwear Divisionof the Company.

6. DIRECTORS :

Pursuant to Section 260 of the Companies Act 1956, Mr. Pallonji S. Mistry, Mr. Shapoor P. Mistry, Mr. Cyrus P. Mistry, Mr. Ashok Barat,Mr. D. G. Prasad, Mr. H. S. Bhaskar and Mr. C. G. Shah retire at the forthcoming Annual General Meting and being eligible offer themselvesfor re-appointment.

Mr. Sanjay R. Buch, Mr. A. Menon, Ms Naheed T Carrimjee and Mr. K.C. Mehra ceased to be Directors of the Company during the year.The Board wishes to place on record their sincere appreciation of the services rendered by them during their tenure as Directors of theCompany.

7. INFORMATION PURSUANT TO SECTION 217(1)(e) and 217(2A) of THE COMPANIES ACT, 1956:

Information as required under section 217(1)(e) and 217 (1A)of the Companies Act, 1956 read with the Companies (Disclosures of particularsin the Report of Board of Directors) Rules, 1988 is Nil as there were no commercial operations during the period.


245

8. DIRECTORS RESPONSIBILITY STATEMENT :

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956, the Directors, based on the representation received fromthe operating management, confirm -

(a) that in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanationrelating to material departures;

(b) that they have selected such accounting policies and applied them consistently and made judgement and estimates that are reasonableand prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit orloss of the Company for that period;

(c) that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

(d) that they have prepared the annual accounts on a going concern basis.

10. APPRECIATION :

The Directors are thankful to everyone associated with the Company for their help, support and understanding.


SHAPOOR P. MISTRY

Chairman

Mumbai: 9th August, 2007.


246

AUDITORS' REPORT

To,The Members ofGOKAK TEXTILES LIMITED

We have audited the attached Balance Sheet of GOKAK TEXTILES LIMITED as at 31st March, 2007 and the Profit and loss Account for theperiod ended on that date annexed thereto and report that:-

1. These financial statements are the responsibility of the Company's management, Our responsibility is to express an opinion on thesefinancial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) ofsection 227 of the Companies Act, 1956 , We enclose in the Annexure a statement on the matters specified in Paragraphs 4 & 5 of the saidOrder as per notification of the Government of India, Department of Companies affairs, number G.S.R. 766(E) dated 25th November, 2004.

4. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of ouraudit.

5. In our opinion, proper books of accounts as required by the law have been kept by the Company so far as it appears from our examinationsof such books.

6. The Balance Sheet and the Profit and Loss Account referred to in this report are in agreement with the books of account.

7. In our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report comply with the Accounting Standards referredto in Sub-section (3C) of Section 211 of the Companies Act, 1956.

8. On the basis of confirmation received from the Directors, We report that none of the Directors are disqualified as on 31st March, 2007 frombeing appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

9. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with thenotes thereof give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India.

(a) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2007.

(b) In the case of the Profit and Loss Account of the Loss for the year ended on that date.

For CHHAJED KEDIA & ASSOCIATES


LALIT CHHAJED

Partner

Mumbai: April 30, 2007.


247

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in Paragraph 3 of our report of even date to the members of Gokak Textiles Limtied, on the accounts

as at and for the year ended on 31st March, 2007.)

1) There is no Fixed Assets so the question of maintenance of records and its physical verification does not arise.

2) There is no purchase and Sale of Goods during the period under review hence there was no inventory.

3) (a) The Company has not granted loans to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company has not taken loans from parties listed in the register maintained under section 301 of the Companies Act, 1956.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the company and the nature of its business during the period under review.

5) According to the information and explanations given to us, we are of the opinion that there were no particulars of contracts or arrangementsthat need to be entered into the register required to be maintained under section 301 of the Companies Act, 1956.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public asenvisaged in the provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975.

7) As per information and explanation given to us the provisions of other paras of this Order are not applicable to the Company; in view of nocommercial operation during the period. Hence we have no comments thereon.



LALIT CHHAJED

PartnerPlace : Mumbai: April 30, 2007.


248

SCHEDULE Year ended

31-03-2007

Rs.

INCOME

Bank Interest on Fixed Deposit 6,672

TOTAL A 6,672

EXPENDITURE

Audit Fees 5000

Printing & Stationary 3765

Bank Charges 412

Roc Filins Fees 2295

General Expenses 9450

TOTAL B 20,922

Profit / (Loss) Before Taxation ( A – B ) (14,250)

Provision For Taxation —

Net Profit (Loss) After Taxation (14,250)

Balance Carried Over to Balance Sheet (14,250)

NOTES ON ACCOUNTS D

The Schedules referred to above form an integral part of the Balance Sheet.

This is the Balance Sheet referred to in our Report of even date.



LALIT CHHAJED K.C.MEHRAPartner ASHOK BARAT Directors

Place : Mumbai: April 30, 2007.

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH 2007

}


249

SCHEDULE As At

31-03-2007

Rs.

SOURCES OF FUNDS:

1. SHARE HOLDERS FUNDS

a) Share Capital A 5,00,000

b) Reserves & Surplus

2. LOANS FUNDS :

a) Secured Loans —

b) Unsecured Loans —

Total Funds Employed 5,00,000

APPLICATIONS OF FUNDS:

1. Fixed Assets —

2. Investments —

3. Current Assets, Loans & Advances

a) Loans & Advances-(TDS on Bank Int.) 1,498

b) Cash & Bank Balance B 4,98,702

Total Current Assets 5,00,200

Less : Current Liabilities & Provisions C 35,990

NET CURRENT ASSETS 4,64,210

MISCELLANEOUS EXPENDITURE:

Preliminary Expenses (to be written Off) 21,540

Profit & Loss Account Balance 14,250

Total Assets 5,00,000

NOTES ON ACCOUNTS D

The Schedules referred to above form an integral part of the Balance Sheet.




LALIT CHHAJED K.C.MEHRAPartner ASHOK BARAT

Directors



}


250

SCHEDULE FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2007.

As At

31-03-2007

Rs.

SCHEDULE - A - SHARE CAPITAL

AUTHORISED CAPITAL:

50,000 Equity Shares of Rs. 10 each 5,00,000

5,00,000

ISSUED SUBSCRIBED & PAID UP CAPITAL

50,000 Equity Shares of Rs. 10 each fully paid up. 5,00,000

5,00,000SCHEDULE - B - CASH & BANK BALANCE :

Cash Balance --

(As certified by Directors)

Bank Balance in current account

Union Bank of India 4,98,702

4,98,702

SCHEDULE - C - CURRENT LIABILITIES & PROVISION :

Payable to Forbes Gokak Ltd

(Towards incorporation Expenses) 30,990

Audit Fees Payable

(Chhajed Kedia & Associates) 5000

35,990

SCHEDULE - D - NOTES ON ACCOUNTS:

1. SIGNIFICANT ACCOUNTING POLICIES:(a) Generally the mercantile system of accounting is followed.(b) The financial statements have been prepared on historical cost convention in accordance with generally accepted accounting principles.(c) All preliminary expenses shall be written off at a later date on commencement of commercial operation.

2. The Balance Sheet and Profit & Loss Account is for the period from the date of incorporation i.e. 27-03-2006 to 31-03-2007

3. In the opinion of the Directors there is no contingent liability.4. This being the first financial year, hence there are no previous year figures.5. Provision for Income Tax has not been made in view of losses .6. Additional Information pursuant to the provision of paragraphs III & IV of the schedule VI of the Companies Act, 1956 are -

I) Payment To Auditors Audit Fees Rs. 5,000

II) Expenditure in Foreign Currency : NilIII) Additional information pursuant to part II of Schedule VI of the Companies Act, 1956 are Nil or not applicable.

The Schedules referred to above forms an integral part of the Balance Sheet.




LALIT CHHAJED K.C.MEHRAPartner ASHOK BARAT

Directors


}


251

LATHAM INDIA LIMITED

S 252



DIRECTORS :

K. C. Raman

M.L.Khetan

P. Govidarajan

BANKERS :

Canara Bank

AUDITORS :

G. Ravishankar Associates

REGISTERED OFFICE :

Pallani Centre,

2nd Floor,

32, Venkat Narayan Road,

T-Nagar,

Chennai - 600 017


S 253

3. OPERATION:

The Company is engaged in the marketing of office equipments.The Company shrunk its operations, in order to curtail cost. TheCompany in order to bring down the losses has minimized itsbusiness activities.

4. INSURANCE:

The company holds no asset during the year. No insurance havebeen taken against the usual risks, i.e. fire, explosions, riots, strike,malicious and terrorist damage etc.

5. DIRECTORS:

Mr. K.C.RAMAN retires from the Board by rotation and is eligiblefor re-appointment. During the year Mr.S.S.REWRI andM.K.B.KAPADIA resigned and in their place Mr.M.L.KHETANand Mr.P.GOVINDARAJAN were appointed as Directors.


None of the employees of the Company were in receipt ofremuneration which in the aggregate exceeded the limits fixedunder sub-section (2A) of section 217 of the Companies Act, 1956.

7. COMPLIANCE CERTIFICATE:

The Company has obtained a Compliance Certificate as requiredunder proviso to Section 383A of the Companies Act, 1956 fromMr. S. Eshwar, Company Secretary and the same is attached tothis Report.


Pursuant to the provisions under Section 217 (2AA) of the

DIRECTORS’ REPORT

To

The Shareholders

Ladies and Gentlemen:

1. Your Directors submit their Report with the Audited Accounts of the Company for the year ended 31st March 2007.


The Summarized figures are as under:

Current year Previous yearEnded ended

31st March 07 31stMarch 06Rupees Rupees

(a) Profit before Depreciation 1129102 1167452

(b) Less: Depreciation 0 3000

(c) Profit for the year before tax 1129102 1164452

(d) Less: Provision for Taxation 126685 35000

(e) Profit after Tax 1002417 1129452

(f) Add: Balance brought forward from previous year (95264208) (96393660)

(g) Loss carried to Balance Sheet (94261791) (95264208)

Companies Act, 1956, the Directors based on the representationreceived from the Operating Management confirm:

(i) that in the presentation of the annual accounts, the applicableaccounting standards have been followed and that there areno material departures.

(ii) That they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and the profit or loss of the Company for theperiod.

(iii) That they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.

(iv) That they have prepared the annual accounts on a ‘goingconcern’ basis.

For and on behalf of

the Board of Directors

Director

Date: 15.06.2007


S 254


A. CONSERVATION OF ENERGY:

There are no major areas where further energy conservation measures can be taken.

B. FORMS FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSOPTION. RESEARCH AND DEVELOPMENT (R&D)

FORM –‘B’

Research and Development (R&D)

1) Specific areas in which R&D carried out by the Company.

2) Benefits derived as a result of the above R&D

3) Future plan of action

4) Expenditure on R&D

a) Capital

b) Recurring

c) Total

d) Total R&D expenditure as percentage of total turnover

Technology Absorption, Adaptation and Innovation

The Company having decided to minimize activities and hence there are noactivities towards R&D.

1) Efforts in brief made towards technology absorption, adaptationand innovation

2) Benefits derived as a result of the above efforts e.g. product improvement.Cost reduction. Product development, import substitution etc.

3) In case of imported technology (imported N.A. during last 5 years asreckoned from the beginning of the financial year).

Following information may be furnished:

a) Year of import

b) Has technology been absorbed? NO

c) If not fully absorbed areas where this has not taken place. Reasons therefore NOand future plans of action.

C. FOREIGN EXCHANGE EARNING AND OUTGO

1. Activities relating to export initiatives taken to increase exports, development No export business activitiesof new export, markets for products and services and export plan. during the year.

2. Total foreign exchange used and earned. There is no foreign Exchange earning throughexports by the Company.

NOT APPLICABLE


S 255

AUDITORS’ REPORT TO THE SHAREHOLDERS OF LATHAM INDIA LIMITED.

We have audited the attached Balance Sheet of LATHAM INDIA LIMITED, as at 31st March 2007, and the Profit and Loss Account for the yearended on that date. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese financial statements based on our audit.

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

2. As required by the Companies (Auditor’s Report) Order, 2004 issued by the Central Government of India in terms of section 227 (4A) of theCompanies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4 and 5 of the said Order.


(i) We have obtained all the information and explanation, which, to the best of our knowledge and belief, were necessary for the purposeof our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination ofthe books of the Company;

(iii) The Balance Sheet, the Profit and Loss Account together with notes attached thereto referred to in this report are in agreement with thebooks of account of the Company;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account dealt with by this report comply with the accounting standards referredto in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) Based on the representations made by the Directors as on 31st March, 2007 and taken on record by the Board of Directors of theCompany and the information and explanation given to us none of the directors is, as at 31st March, 2007, prima-facie disqualifiedfrom being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the companies Act 1956, in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007; and

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

For G.RAVISHANKAR ASSOCIATESChartered Accountants

Place: Chennai (G. RAVISHANKAR)Date : 15.06.2007 Partner

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITOR’S REPORT OF EVEN DATE ON THE

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2007 OF LATHAM INDIA LIMITED

On the basis of such checks as we considered appropriate and in terms of the information and the explanation given to us, we state that:

i. The Company has no fixed assets during the year.

ii. As explained to us, the Company has no opening inventory or any closing inventory. Hence the physical verification of inventory was notnecessitated.

iii. (a) In our opinion and according to the information and explanations given to us, the company has not granted any loans, secured orunsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act.

(b) The Company has not taken any loan from a body corporate listed in the register maintained under Section 301 of the Companies Act,1956.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the company and the nature of its business with regard to purchase of inventory, fixed assets, and for the sale of goods. In ouropinion, there is no continuing failure to correct major weaknesses in internal control.


S 256

v. According to the information and explanations given to us, there are no transactions of purchase and sale of goods and services made inpursuance of contracts entered in the register maintained under Section 301 of the Companies Act, 1956.

vi. The company has not accepted deposits from the public within the meaning of the provisions of section 58 A and Section 58AA of theCompanies Act 1956.

vii. In our opinion, the company has an adequate Internal audit System commensurate with the size and nature of the present business.

viii. Maintenance of cost records has not been prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956.

ix. (a) According to the records of the company, it has been regular in depositing undisputed statutory dues including provident fund, Incometax, Wealth tax, Custom Duty, Excise Duty, Cess and other Statutory Dues with the appropriate authorities. With regard to sales Tax anamount of Rs.1569598 which is undisputed is outstanding as at the last day of the financial year and is outstanding for a period of morethan six months from the date they became payable.

(b) On the basis of our examination of the documents and records, the disputed sales tax dues which has not been deposited with theappropriate authorities nor has been provided for in the books of accounts of the Company as detailed below.

Name of the statute Year to which it pertains Amount (Rs) Forum where dispute is pending

Madya Pradesh Sales Tax Act 1997 – 1998 8,26,148 Commercial Tax Officer Bhopal

1998 – 1999 1,00,883

1999 – 2000 82,046

Kerala 1998 - 1999 3,58,558

x. The accumulated losses at the end of the financial year are more than its net worth. The Company has not incurred cash losses in the currentfinancial year, and in the preceding financial year 2005-2006.

xi. On the basis of the records examined by us and the information and explanations given to us, the Company has no dues to financial institutions,banks or debentures holders and hence clause 4 (xi) of the Companies (Auditors’ report) Order, 2003 is not applicable to the Company.

xii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans or advances on thebasis of security by way of pledge of shares, debentures or any other securities;

xiii. The Company is not a Chit fund or a Nidhi/Mutual benefit fund/Society. Therefore, the provision of clause 4 (xiii) of the Companies(Auditors’ report) Order, 2003 is not applicable to the Company.

xiv. The Company is not dealing with or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause4(xiv) of the Companies (Auditors’ report) Order, 2003 is not applicable to the Company.

xv. According to the information and explanations given to us, and representations made by the management, the Company has not given anyguarantee for loans taken by others from any bank or financial institution.

xvi. The company has not availed any term loans and therefore the provision of clause 4 (xvi) of the Companies (Auditors’ report) Order, 2003 isnot applicable to the Company.

xvii. According to the information and explanations given to us and on an over all examination of the Financial Statements of the Company andafter placing reliance on the reasonable assumptions made by the Company for classification of long term and short term usages of funds, weare of the opinion that, prima-facie, short term funds have not been utilized for long term purposes and vice versa.

xviii. The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under Section301of the Companies Act, 1956.

xix. The Company has not issued any debentures and therefore the provision of clause 4 (xix) of the Companies (Auditors’ report) Order, 2003 isnot applicable to the Company.

xx. The Company has not raised any money by public issue, during the year. Hence the provision of clause 4 (xx) of the Companies (Auditors’report) Order 2003 is not applicable to the Company.

xxi. According to the information and explanations given to us, and to the best of our knowledge and belief, no fraud on or by the Company, hasbeen noticed or reported by the Company, during the year.

For G. RAVISHANKAR ASSOCIATESChartered Accountants

Place : Chennai (G. RAVISHANKAR)Date : 15.06.2007 Partner


S 257


BALANCE SHEET AS AT 31ST MARCH 2007

As at As at

SOURCES OF FUNDS Sch 31.03.07 31.03.06

Shareholder’s funds:

Share Capital 1 12800000 12800000

Reserves and Surplus 2 10059935 10059935

Loan funds :

Unsecured Loans 3 45784510 46566016

Total 68644445 69425951

APPLICATION OF FUNDS:

Current Assets, Loans and Advances 4

Current Assets:

Sundry Debtors 0 0

Cash and Bank balances 23323 5574

23323 5574

Loans and Advances 13111911 13288406

Total (A) 13135234 13293980

Less: Current liabilities 5

Liabilities 16233427 16704769

Provisions 10426685 10335000

Total (B) 26660112 27039769

Net Current assets (A-B) -13524878 -13745789

Profit and Loss Account 6 82169323 83171740

Total 68644445 69425951

Notes on Accounts 9

Schedules 1 to 6 and Notes in Schedule 9 form part of this Balance Sheet

As per our Report of even dateFor and on behalf ofG. Ravishankar AssociatesChartered Accountants

G.RAVISHANKAR K . C. RAMAN P. GOVINDARAJANPARTNER DIRECTOR DIRECTOR

Place : ChennaiDate : 15.06.2007


S 258

PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31ST MARCH 2007

Amount in Rs. Amount in Rs.Particulars Period ended Year ended

Sch 31.03.07 31.03.06

INCOME

Sales and Other income 7 1939471 1795207

EXPENDITURE

Trading and Other Expenses 8 810369 627755

Depreciation 0 3000

810369 630755

PROFIT FOR THE YEAR 1129102 1164452

Provision for Taxation 126685 35000

PROFIT AFTER TAX 1002417 1129452

Deficit brought forward from Previous Year -95264208 -96393660

Balance carried to Balance Sheet -94261791 -95264208

Notes on Accounts 9

Schedules 7 & 8 and Notes in Schedule 9 form part of this Profit and Loss Account





S 259

SCHEDULES 1 TO 8 ANNEXED TO AND FORMING PART OF THE ACCOUNTS

As at As at

31st March 2007 31st March 2006

Rs. Rs.

SCHEDULE 1 - SHARE CAPITAL

AUTHORISED

30,00,000 Shares of Rs.10/- each 30000000 30000000

ISSUED AND SUBSCRIBED AND PAIDUP

12,80,000 Equity Shares of Rs.10/- each fully paid up.

Of the above shares, 6,20,000 Shares were allotted as

fully paid up Bonus shares by capitalization of General Reserve.

All the Equity shares are held by Forbes Gokak Limited,

Mumbai, the holding company and its nominees 12800000 12800000

SCHEDULE 2 - RESERVES & SURPLUS

General reserve

Balance 12092468 12092468

Less: Deficit in P&L A/C As per Contra 12092468 12092468

0 0

Capital Reserve 10059935 10059935

10059935 10059935

SCHEDULE 3 - UNSECURED LOANS

FROM OTHERS:

From Holding Company 32656510 32138016

Intercorporate Deposits 13128000 14428000

45784510 46566016

SCHEDULE 4 - CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS

SUNDRY DEBTORS

Debts outstanding for a period exceeding

six months

Unsecured, Considered Good 0 0

Considered doubtful 6234622 6234622

6234622 6234622

Less: Provision for Doubtful Debts 6234622 6234622

0 0

CASH AND BANK BALANCES

Cash on hand 621 4384

Bank balances

with Scheduled Banks:

On Current Accounts 22702 1190

23323 5574


S 260

LOANS AND ADVANCES

A. Advances recoverable in cash or in kind or

for value to be received:

Unsecured Considered Good 13111911 13288406

Considered Doubtful 64813 64813

13176724 13353219

Less: Provision for doubtful advances 64813 64813

13111911 13288406

B. Deposits

Unsecured Considered Good 0 0

Considered Doubtful 1409946 1409946

1409946 1409946

Less: Provision for doubtful advances 1409946 1409946

0 0

Total ( A + B) 13111911 13288406

Total Current Assets 13135234 13293980

SCHEDULE 5 - CURRENT LIABILITIES AND PROVISIONS

A. CURRENT LIABILITIES:

Sundry Creditors 16233427 16704769

B. PROVISIONS:

For Taxation 10426685 10335000

Total Current Liabilities (A+B) 26660112 27039769

SCHEDULE 6 - PROFIT AND LOSS ACCOUNT

Profit and Loss account balance 94261791 95264208

Less: General Reserve as per contra 12092468 12092468

82169323 83171740

SCHEDULE 7 SALES, SERVICE AND OTHER INCOME

Sales 41600 0

Commission 248750 1034400

Interest on Income Tax 1329582 401054

Profit on Sale of Vehicle 0 16411

Sundry Creditors Written Back 284539 328529

Provision for Taxation no longer required written back 35000 14813

1939471 1795207

SCHEDULES (Contined)

As at As at


Rs. Rs.


S 261

SCHEDULE 8 - TRADING AND OTHER EXPENSES

MATERIALS CONSUMED OR SCRAPPED / COST OF GOODS SOLD

Opening Stock 0 0

Add: Purchases 37500 037500 0

Less: Closing Stock 0 0

37500 0

Rent 5000 0

Repairs & Maintenance 78000 12740

Salaries, Wages, Bonus & Exgratia 271276 79942

Contribution to :

- Provident and other funds 22103 5636

- Gratuity 6635 6635

- Pension Fund 22680 6210

Staff Welfare Expenses 12600 3960

Bank Charges 3182 3677

Rates & Taxes 8646 1887

Remuneration to Auditors

Statutory audit 22448 22448

Out of pocket 2500 0

Printing & Stationery 3411 3737

Subscription 1000 0

Legal & Professional Charges 131700 113479

Travelling & Conveyance 72998 62663

Telephone, Telex & Postage 44957 16159

Miscellaneous Expenses 26467 16080

Fringe Benefit Tax 17136 16499

Sales Tax Paid 7587 89748

ESI Paid 12543 0

Bad Debts Written Off 0 166255

810369 627755

SCHEDULE 9 - SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIESI. Basis of Accounting

The accounts have been prepared on going concern basis inspite of total erosion of net worth, the current liabilities exceeding the currentassets and the total liabilities exceeding the total assets, as the management is considering alternative proposals to improve the businessof the company.

II. Fixed Assets and DepreciationThe Company does not hold any Fixed Assets.


Period Ended Year ended

31.03.2007 31.03.2006

Rs. Rs.


S 262

III. INVENTORIESThere were no opening or closing stocks during the year.

IV. REVENUE RECOGNITIONSales are accounted for on despatch of goods to the customers and are net of excise duty and sales returns.

V. RETIREMENT BENEFITS

Contribution to Provident Fund are made in accordance with the rules. Contribution to Gratuity by way of premium is made to LIC ofIndia. Provision for leave encashment on retirement has been assessed and provided for.

B. NOTES ON ACCOUNTS

1 a. Claims against the company not acknowledged as debts - By a supplieron a price dispute in connection with purchase of tradingstock under legal proceedings. 16400000 16400000

b. Contingent Liability in respect of Guarantees given Nil Nil

2 No Provision has been made for the disputed tax demands against the company,as it has been advised that there are reasonable chances of success in the appeal. Nil Nil

3 The Company during the year 2003 - 2004 has receiveddemands for three years as detailed consequent to the BestJudgement Assessment Order passed by the Commercial 1997 -98 826148 826148Tax Officer, Bhopal, M.P. The Company has filed Revision 1998 -99 100883 100883Petition against the order. No provision has been made in 1999 - 00 82046 82046the Books of Accounts pending final assessment orders.

4 Debtors over two years considered good in respect ofwhich legal proceedings have been initiated in certain cases. 0 0

5 Based on an Arbitration Agreement with FAL Industries Ltd,every year commission due has been recognised as income,which has been adjusted towards the amount payable to them. 248750 1034400

7 During the year the company has repaid a portion of inter corporate loansout of the Income Tax refund received as detailed below.Forbes Campbell Holdings Ltd 650000 1500000Warrior Investment Ltd. 650000 1500000

8 The Accounting Standard AS-22, Accounting for Taxes on income has become applicable from 01.04.2002 and to comply with thesame, the company reviewed the deferred tax assets and liabilities. The timing difference relates mainly to depreciation and carryforward losses for the period upto 31.03.05 and for the year ended 31.03.06 resulting in net deferred tax asset. As a prudent measure,deferred tax asset has not been recognised in the accounts in view of uncertainty of taxable income in the immediate future years.

9 The Company is not in a position to furnish the details of outstanding as on 31.03.2007 due to Small Scale Industrial undertakings as thecompany has no information in this regard.

10 Previous year’s figures are regrouped wherever necessary to conform to the classification for the year.


As at As at

31st March 2006

2007 31st March

Rs. Rs.


S 263

31.03.07 31.03.06

11 Expenditure in foreign currency Nil NilIncome in foreign currency Nil Nil

STOCKS, PURCHASES AND TURNOVER:As at As a


Qty Rs. Qty Rs.

a) OPENING STOCK NIL NIL NIL NIL

b) CLOSING STOCK NIL NIL NIL NIL

c) PURCHASES

Fax 5 37500 NIL NIL

Total 37500 0

d) SALES

Fax 5 41600 NIL NIL

Total 41600 0






S 264

SCHEDULE 9- NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007

(a) Related Party Disclosures

(ii) Transactions with related parties for the year ended 31st March, 2007:

Forbes Warrior Forbes Forbes TridentCambell Investment Energy Gokak Ltd Shipping

Holding Ltd. Ltd. Systems- - Treasury Agency LtdDivision of Division

FGL

Nature of Transaction

1 Purchases2 Goods and Materials - - - - -

3 Services Rendered - - - - -

4 Fixed Assets - - - - -

5 Investment - - - - -

6 Sales

7 Goods and Materials - - - - -

8 Services Rendered - - - - -

9 Fixed Assets - - - - -

10 Investment - - - - -

11 Expenses12 Repairs & Other Expenses - - - - -

13 Recovery of Expenses - - - - -

14 Dim. in Value of Investment - - - - -

15 Agency Commission - - - - -

16 Interest Paid - - - - -

17 Dividend Paid - - - - -

18 Professional Fees - - - 13,500.00 -

19 Directors Fees - - - - -

20 Provision /Write offs - - - - -

21 Loss on sale of Investments - - - - -

22 Income23 Rent and Other Service Charges - - - - -

24 Interest Received - - - - -


S 265

25 Dividend Received - - - - -

26 Profit on sale of Investment - - - - -

27 Write backs - - - 30,581 -

28 Misc. Income Commission Received - - 2,48,750 – -

29 Other Receipts

30 Deputation of Staff - - - - -

31 Other Reimbursements - - - - -

32 Finance

33 Loans and Advances Given - - - - -

34 Loans Taken (2006-07) Advances Given - - - 738,494 -

35 Repayment (Paid) (650,000.00) (650,000.00) - (220,000.00) -

36 Deposits Given - - - - -

37 Deposits Taken - - - - -

38 Outstandings

39 Sundry Creditors - - - - -

40 Interest accrued but not due asset/(liab) - - - - -

41 Sundry Debtors - - - - -

42 Loans and Advances - - - - -

43 Provision for Doubtful Debts - - - - -

44 Provision for Doubtful Loans - - - - -

45 and Advances - - - - -

46 Loan payable 2,824,000 3,804,000 12,881,866 32ð656,510 6500000

47 Deposits Receivable - - - - -

48 Prepaid Expenses - - - - -

49 Remuneration

50 Paid / Payable - - - - -

51 Outstanding - - - - -

52 Guarantees53 Given - - - - -

54 Outstanding - - - - -


S 266

SCHEDULES ANNEXED TO AND FORMATING PART OF THE BALANCE SHEETAS AT 31st MARCH 2007

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

I.Registration Details

Registration No. 7310 State Code 18Balance Sheet Date 31.03.2007

II.Capital raised during the year (Amount in Rs.’000)

Public Issue Nil Rights Issue Nil



Total liabilities 68644 Total Assets * 68644

Source of Funds Application of FundsPaid-up Capital 12800 Net Fixed Assets 0

Reserves and Surplus 10060 Investments 0

Secured Loans 0 Net Current Assets -13525

Unsecured Loans 45784 Accumulated Losses 82169

* Net of Current Liabilities and ProvisionsIV. Performance of the company (Amount in Rs.’000)

Total Income 1939


Profit before Tax 1129

Profit after Tax 1002

Earning per share in Rs. 0.78

Dividend Rate NA

V.Generic names of three principal products/services of company(as per monetary terms)

Item Code No.(ITC Code) 84693000 Products Description Manual Typewriter

Item Code No.(ITC Code) 85172100 Products Description Fax

Item Code No.(ITC Code) 84721000 Products Description Duplicator





S 267

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007

Particulars Amount Amount AmountRs. Rs. Rs.

A. CASH FROM OPERATING ACTIVITY

NET PROFIT BEFORE TAX AND EXTRA-ORDINARY ITEM 1129102Adjusted for -

Depreciation 0Fringe Benefit Tax 17136Interest and Other Finance Charges 0Profit on scrap of Fixed Assets 0 17136

OPERTING PROFIT BEFORE WORKING CAPITAL 1146238

CHANGE IN WORKING CAPITAL

Change in -Trade and Other Receivables 0Other Advances -36828Inventories 0Trade payable and Others -471342 -508170

CASH GENERATED FROM OPERATIONS 638068Fringe Benefit Tax Paid -17136Provision for tax written back -35000Income Tax Refund 213323 161187 NET CASH FROM OPERTING ACTIVITY (a) 799255 799255

B CASH FLOW FROM INVESTMENT ACTIVITYNET CASH FLOW FROM INVESTING ACTIVITY (b) 0

C CASH FLOW FROM FINANCING ACTIVITYUnsecured Loans -781506NET CASH FLOW FORM FINANCING ACTIVITY © -781506 -781506

NET INCREASE IN CASH AND CASH EQUIVALENTS (a+b+c) 17749

CASH AND CASH EQUIVLENTS AS AT THE COMMENCEMENT

OF THE YEAR - COMPRISING OF

Cash on hand 4384

Balance with Scheduled Banks 1190 5574

CASH AND CASH EQUIVLENTS AS AT THE END OF THE YEAR -

COMPRISING OF

Cash on hand 621

Balance with Scheduled Banks 22702 23323

NET INCREASE OR DECREASE AS DISCLOSED ABOVE 17749 17749

DIRECTORS :

Mr. N.D. Khurody Chairman

Mr. K.C. Mehra

Mr. Keki Mistry

Mr. R.N. Jha

Mr. Jimmy Parakh

Mr.Humayun Dhanrajgir(w.e.f May 05,2006)

BANKERS :

HDFC Bank Ltd.

SOLICITORS AND ADVOCATES :

DSK Legal

AUDITORS :

Kalyaniwalla & Mistry

REGISTERED OFFICE :

Khatau House, 2nd Floor,

Mogul Lane,

Mahim (West)

Mumbai 400 016

NEXT GEN PUBLISHING LIMITED

268

( Subsidiary Company) Annual Report and Accounts for the year ended 31st March, 2007


S 269

DIRECTORS’ REPORT

ToThe Shareholders,Ladies & Gentlemen,1. Your Directors submit their third Report and the Audited Accounts of the Company for the year ended 31st March, 2007.2. FINANCIAL RESULTS: (Rs.) (Rs.)

Year ended Year ended


01. Sales & Other Income 172,047,359 66,304,11602. Less: Expenditure:

(a) Manufacturing and other Expenses 255,739,877 95,693,265 (b) Interest 4,115,713 1,703,339 (c) Preliminary Expenses Amortised — —

(d) Depreciation 9,199,771 7,395,787

(e) Sub Total 269,055,361 104,792,391

03. Deficit before Taxation (97,008,002) (38,488,275)04. Less: Provision for Taxation

(a) Current Tax — —(b) Deferred Tax 2,950,642 (1,794,342)(c) Fringe Benefit Tax 1,733,203 1,892,673

05. Deficit after Taxation (101,691,847) (38,586,606)06. Balance Brought Forward (41,387,122) (2,800,516)

07. Deficit carried to Balance Sheet (143,078,969) (41,387,122)

3. ISSUE OF SHARE CAPITAL:

During the year, your Company issued and alloted 11,20,000 EquityShares at Rs.32/-per share (including a premium of Rs.22/- pershare) on preferential basis to Forbes Gokak Limited (898240Shares) and Housing Development Finance Corporation Limited(221760 Shares).

Your Company had planned an Initial Public Offer (IPO) of48,12,500 Equity Shares in order to raise long-term funds.Pursuant to the application made by the Company to proceedwith the IPO, the Company had received in-principle approvalfrom the Bombay Stock Exchange Ltd., the National StockExchange Ltd and the Securities Exchange Board of India. Thisplan has now been abandoned in favour of participation in Equityto the extent of 40.10% by EMAP Publishing (Nederland) B.V.,a 100% subsidiary of EMAP Plc., a leading United Kingdombased brand-led, multi-platform media group. Accordingly, at aBoard Meeting held on March 22,2007 and an Extra-OrdinaryGeneral Meeting held on March 24,2007, your Board ofDirectors and the Company has accorded its approval to offer,issue and allot 48,12,500 Equity Shares of the face value of Rs.10/-each, on a preferential basis, for cash at a price of Rs.66/- (SixtySix) per Equity Share (including a premium of Rs.56/-per share),ranking pari passu in all respects with the existing Equity Sharesof the Company, to EMAP Publishing (Nederlands) B.V., subjectto the regulatory approvals. The Company has also entered intoa Shareholders Agreement and Subscription Agreement to giveeffect to this transaction.

4. OPERATIONS & PROSPECTS:

During the year, your Company launched 2 magazines –

Commercial Vehicle and The Ideal Home & Garden. Commercial

Vehicle is the first title in its genre. The Ideal Home & Garden is

a title exclusively devoted to the home. For The Ideal Home &

Garden, the Company has a syndication arrangement with IPC

Media, UK. Both the magazines have met with an encouraging

response.

In the area of Events, Smart Photography conducted the Uniross

Smart Photography awards in Delhi for the second time. The

NDTV Car India and Bike India awards was held in Mumbai.

Both the events were highly successful.

The Company organised its first Exhibition “Digital Imaging &

Technology 2007” in New Delhi in January. All major players

from the imaging industry participated and the seeds were laid

for a solid foundation for this business.

Your Company also runs a Call Centre with a leading telecom

company in New Delhi and has been appointed as a re-seller for

Google Adwords for Mumbai, Delhi and Ahmedabad.

The first editions of the Forbes Yellow Pages for the cities of

Delhi and Mumbai were published during the year.

The results of the Company have to be viewed in the context of

the sector in which it is operating and the brands which it is

developing.


S 270

5. DIRECTORS:

Mr. Keki Mistry and Mr. K. C. Mehra retire by rotation andbeing eligible, offers themselves for reappointment.

6. AUDITORS:

M/s.Kalyaniwala & Mistry, Auditors of the Company,who holdoffice until the conclusion of the ensuing Annual GeneralMeeting retire and being eligible, offer themselves for re-appointment.


Pursuant to the provisions of Section 217 (2AA) of theCompanies Act, 1956, the Directors, based on the representationreceived from the operating management, confirm -

(i) that in the preparation of the annual accounts, theapplicable Accounting Standards have been followed andthat there are no material departures;

(ii) that they have selected such accounting policies and appliedthem consistently and made judgements and estimates thatare reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end ofthe financial year and of the profit or loss of the Companyfor that period;

(iii) that they have taken proper and sufficient care to the bestof their knowledge and ability for the maintenance ofadequate accounting records in accordance with the

provisions of the Act, for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities;

(iv) that they have prepared the accounts for the financial yearended 31st March, 2007 on a ‘going concern’ basis.

8. CONSERVATION OF ENERGY:

The Company’s operations involve low energy consumption.Efforts to conserve and optimise use of energy on a continousbasis through operational methods will continue.

9. TECHNOLOGY ABSORPTION, ADAPTATION AND

INNOVATION:

Not Applicable

10. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange earnings were at Rs. 74.91 lakhs (p/y Rs 56.04lakhs) and Foreign exchange outgo was Rs. 230.20 lakhs (p/yRs 104.59 lakhs) principally on account of import of rawmaterials

11. ACKNOWLEDGEMENTS:

The Directors place on record their appreciation of thecontribution of employees at all levels, principal shareholders’,customers, suppliers and all other stakeholders towards theperformance of the Company during the year under review.

12. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

Information as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules,1975, and forming part of the Directors’ Report for the period ended March 31, 2007.

S.No. Name Designation Qualification Age Date of Experi- Gross Previous(years) joining ence remune- Employment/

Years ration Designation

1 Mr. Hoshang S. Billimoria Chief B.Com (Hons) 55 12.01.2005 30 5,536,000 InfomediaExecutive FCA (England India Ltd -Officer & Wales) Vice Chairman

FCA (India) & ManagingDirector


N.D. KHURODY

Chairman

Notes:

1) The nature of employment is contractual.

2) The remuneration as shown above includes salary, other allowances,

contribution towards Provident and Superannuation Funds and

taxable perquisites.

3) The employee is not related to any of the Directors of the Company.

Mumbai, May 15, 2007


S 271

AUDITOR’S REPORT TO THE MEMBERS OF NEXT GEN PUBLISHING LIMITED

1. We have audited the attached Balance Sheet of NEXT GEN PUBLISHING LIMITED as at March 31, 2007, the Profit and Loss Account

and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility

of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of

the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.


a. The accounts for the year ended March 31, 2007, have been prepared on a “Going Concern” basis since the two main shareholders

of the Company have made finance available to the Company since its inception and also after the financial year end.

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

of our audit.

c. In our opinion, proper books of account as required by law, have been kept by the Company so far as appears from our examination

of such books.

d. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of

account.

e. In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the

Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

f. Subject to our comments in paragraph (a) above, in our opinion and to the best of our information and according to the explanations

given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner

so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2007;

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

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

5. On the basis of the written representations received from the Directors as on March 31, 2007 and taken on record by the

Board of Directors, we report that none of the Directors is disqualified as on March 31, 2007, from being appointed as a Director

in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.


KALYANIWALLA & MISTRY


K. M. ELAVIA

Partner

Mumbai: May 15, 2007. M. No.: 12737


S 272

ANNEXURE TO THE AUDITOR’S REPORT OF NEXT GEN PUBLISHING LIMITED

As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of the

Companies Act, 1956, we further report that:

1. Fixed Assets:a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is

reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on suchverification.

c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

2. Inventory:

a) The Management has conducted physical verification of inventory of raw material at reasonable intervals. In our opinion, the frequency

of verification is reasonable. We have been informed that the Company is in the business of production of printed products, which are

normally produced outside on a job work basis. As per the information given to us, the surplus/unsold copies of the printed products

are distributed free of cost for promotional purpose and have little other use and therefore the Company does not maintain any records

for the same. Accordingly, the Company has not carried out the physical verification of stock for the printed products, nor has it

valued the same.b) The procedures of physical verification of raw material inventories followed by the management are reasonable and adequate in

relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of raw material inventory and no material discrepancies were noticed on verification

between the physical stocks and the book records.

3. Loans and Advances:a) The Company has not granted any loans, secured or unsecured, to Companies, firms or other parties listed in the register maintained

under section 301 of the Companies Act, 1956.b) The Company has taken unsecured loans from a company listed in the register maintained under section 301 of the Companies Act,

1956. The maximum amount involved during the year was Rs. 55,300,000/-.c) In our opinion, the rate of interest and other terms and conditions on which the unsecured loans have been taken from companies,

firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956, are not prima facie prejudicialto the interest of the Company.

d) The Company is regular in repaying the principal amounts as stipulated and has also been regular in the payment of interest.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods andservices. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal controlsystem.

5. Transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956:a) Based upon the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion

that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, have been entered in theregister maintained under that section.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts orarrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.500,000in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at therelevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the publicwithin the meaning of section 58A, 58AA, or any other relevant provisions of the Companies Act, 1956 and the rules framed thereunder. orNo order has been passed by the Company Law Board, or National Company Law Tribunal, or Reserve Bank of India, or any Court, anyother Tribunal.


S 273

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

8. According to the information and explanations given to us, the maintenance of cost records has not been prescribed by the Central Governmentunder section 209(1)(d) of the Companies Act, 1956, for any of the activities of the Company.

9. Statutory Duesa. According to the information and explanation given to us, the Company is regular in depositing undisputed statutory dues, including

dues pertaining to Provident Fund, Employees’ State Insurance, Income-tax, Service Tax, Custom Duty, Cess and any other statutorydues with the appropriate authorities. We have been informed that there are no undisputed dues which have remained outstanding asat the end of the financial year, for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, customsduty, excise duty or cess outstanding on account of any dispute.

10. In our opinion and according to the information and explanations given to us, the Company has accumulated losses as at the end of thefinancial year which exceed fifty per cent of its net worth and it has incurred cash losses in the current financial year and the immediatelypreceding financial year. However, the Company has not been registered for a period of more than five years.

11. According to the information and explanations given to us and based on the documents and records produced before us, there has been nodefault in repayment of dues to banks. There are no dues to financial institutions or debenture holders.

12. According to the information and explanations given to us and based on the documents and records produced before us, the Company hasnot granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract anyspecial statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14. The Company does not deal or trade in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banksor financial institutions.

16. The Company has not taken any term loan during the year.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet, the Cash Flow Statementand other records examined by us, the Company has used funds raised on short term basis for long term investment.

18. According to the information and explanations given to us, the Company has made preferential allotment of shares to parties and companiescovered in the register maintained under section 301 of the Companies Act, 1956. In our opinion, the price at which the shares have beenissued is not prima-facie prejudicial to the interest of the Company.

19. The Company did not issue any debentures during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed by us, to the best of our knowledge and belief and according to the information and explanationsgiven to us by the Management, no fraud on, or by the company, has been noticed or reported during the year.


KALYANIWALLA & MISTRY


K. M. Elavia

Partner

Mumbai: May 15, 2007. M.No. - 12737


S 274


As at As at

31st March, 31st March,

2007 2006


SOURCES OF FUNDS

SHARE HOLDERS’ FUNDS :

Share Capital ................................................................................ “1” 71,875,000 60,675,000

Reserves and Surplus ................................................................... “2” 45,265,000 20,625,000

LOAN FUNDS :

Secured Loans .............................................................................. “3” 2,318,258 3,762,611

Unsecured Loans .......................................................................... “4” 67,300,000 40,000,000

TOTAL SOURCES OF FUNDS .......................................................... 186,758,258 125,062,611


FIXED ASSETS :

Gross Block ....................................................................................... 52,636,562 43,487,334

Less: Depreciation ............................................................................ 16,510,986 7,525,952

Net Block ..................................................................................... “5” 36,125,576 35,961,382

Advance for capital expenditure ....................................................... - 219,403

............................................................................................................... 36,125,576 36,180,785

DEFERRED TAX ASSET .................................................................... - 2,950,642

CURRENT ASSETS, LOANS AND ADVANCES ........................ “6”

Inventories ......................................................................................... 3,732,365 4,008,303

Sundry Debtors ................................................................................. 25,936,510 15,947,803

Cash and Bank Balances ................................................................... 11,383,227 24,994,009

Other Current Assets ......................................................................... 34,399,207 54,311,210

Loans and Advances ......................................................................... 10,601,655 9,991,263

............................................................................................................... 86,052,964 109,252,588

Less: CURRENT LIABILITIES AND PROVISIONS ................... “7”

Liabilities .......................................................................................... 75,483,248 63,702,458

Provisions .......................................................................................... 3,016,003 1,006,068

............................................................................................................... 78,499,251 64,708,526

NET CURRENT ASSETS .................................................................... 7,553,713 44,544,062

PROFIT AND LOSS ACCOUNT ........................................................ 143,078,969 41,387,122

TOTAL APPLICATION OF FUNDS ................................................... 186,758,258 125,062,611

Notes to the financial statements ................................................... “11”

In terms of our report attached N.D.Khurody ChairmanFor and on behalf ofKALYANIWALLA & MISTRY K.C.MehraCHARTERED ACCOUNTANTS

R.N.Jha

J.Parakh Director

Keki M. Elavia K.MistryPARTNERMumbai ,May 15, 2007. H.Dhanrajgir

C D Sakaria Company Secretary

⎫⎬⎭


S 275

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2007

For the year For the year

ended 31st March ended 31st March,

2007 2006


INCOME

Sales..................................................................................................... “8” 170,949,871 64,933,622Other Income....................................................................................... “9” 1,097,488 1,370,494

............................................................................................................. 172,047,359 66,304,116

EXPENDITURE

Manufacturing and Other Expenses..................................................... “10” 255,739,877 95,693,265Interest.................................................................................................. 4,115,713 1,703,339Depreciation.......................................................................................... 9,199,771 7,395,787

269,055,361 104,792,391

(LOSS) FOR THE PERIOD................................................................. (97,008,002) (38,488,275)

PROVISION FOR TAXATIONCurrent Tax........................................................................................... - -Deferred Tax......................................................................................... 2,950,642 (1,794,342)

Fringe Benefit Tax................................................................................ 1,733,203 1,892,673

.............................................................................................................. 4,683,845 98,331

(LOSS) AFTER TAXATION............................................................... (101,691,847) (38,586,606)

BALANCE BROUGHT FORWARD.................................................. (41,387,122) (2,800,516)

BALANCE CARRIED FORWARD................................................. (143,078,969) (41,387,122)

Earnings per share - Basic and Diluted (Nominal value per share Rs 10) “11-(15)” (14.80) (10.29)

Notes to the financial statements “11”


R.N.Jha

J.Parakh Director

Keki M. Elavia K.MistryPARTNERMumbai ,May 15, 2007. H.Dhanrajgir


⎫⎬⎭


S 276


As at As at


Rupees Rupees


AUTHORISED:

1,50,00,000 (As at 31st March 2006: 1,00,00,000) Equity Shares of Rs.10 each........................ 150,000,000 100,000,000

ISSUED AND SUBSCRIBED:

71,87,500 (As at 31st March 2006: 60,67,500) Equity Shares of Rs.10 each fully paid up 71,875,000 60,675,000

Of the above :

49,08,235 shares are held by the Holding Company, Forbes Gokak Limited(As at 31st March 2006: 40,09,995 shares).

and 5 shares are held by Forbes Gokak Limited jointly with individuals (As at 31st March 2006: 5 shares)

SCHEDULE “2” –RESERVES AND SURPLUS As at As at


Rupees Rupees

Share Premium Account

Balance as at 31st March 2006: 20,625,000 -

Add : Received during the year 24,640,000 20,625,000

Balance as at 31st March,2007 45,265,000 20,625,000

SCHEDULE “3” – SECURED LOANS As at As at


Rupees Rupees

LOANS FROM BANKS:

Vehicle Loan from Banks 2,318,258 3,762,611

(Secured against hypothecation of the

vehicles purchased under the loan)

TOTAL 2,318,258 3,762,611

SCHEDULE “4” – UNSECURED LOANS As at As at


Rupees Rupees

Intercorporate Loans 67,300,000 40,000,000

(entire amount repayable within 1 year)

TOTAL RUPEES ................................................................................ 67,300,000 40,000,000


S 277

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As at As at



SCHEDULE “6”-CURRENT ASSETS,LOANS AND ADVANCES

CURRENT ASSETS :

(a) INVENTORIES:

Raw materials 3,732,365 4,008,303

(b) SUNDRY DEBTORS:

(Unsecured - Considered good, unless otherwise stated) .........i) Debts outstanding for a period exceeding six months 3,787,148 1,063,325

(Including doubtful debts Rs. 460,564; ...................- previous year Rs. Nil) ............................................

ii) Other Debts ............................................................... 22,609,926 14,626,816

26,397,074 15,690,141iii) Less: Provision For Doubtful Debts .......................................... 460,564 -

25,936,510 15,690,141

(c) CASH AND BANK BALANCES :

(i) Cash on hand ..................................................................... 64,180 19,801(ii) Cheques on hand ................................................................ 988,724 846,317(iii) With Scheduled Banks : ....................................................

In Current Accounts ........................................................... 847,380 4,192,318In Fixed Deposit Accounts….see Notes (17 ) .................. 9,482,943 19,935,573

11,383,227 24,994,009

(d) OTHER CURRENT ASSETS :

(i) Prepaid Expenses in respect of Unearned Billings ........... 32,208,996 54,297,245(ii) Interest accrued on fixed deposits ..................................... 36,370 13,965(iii) Other Current Assets ......................................................... 2,153,841 -

34,399,207 54,311,210(e) LOANS AND ADVANCES :

(a) Advances recoverable in cash or in kind or for ................value to be received ........................................................... 3,849,931 4,778,387

(b) Deposits ............................................................................. 4,922,687 5,174,893(c) Advance Payments of Taxes (tax deducted at source) ...... 1,829,037 295,645

10,601,655 10,248,925

TOTAL RUPEES ................................................................................ 86,052,964 109,252,588SCHEDULE “7”-CURRENT LIABILITIES AND PROVISIONS

As at As at



CURRENT LIABILITIES:

(i) Sundry Creditors............................................................................. 38,351,106 23,352,442

(ii) Other Liabilities.............................................................................. 36,602,209 40,264,646

(iii) Interest accrued but not due........................................................... 529,933 85,370

75,483,248 63,702,458PROVISIONS:

(i) Leave Encashment............................................................................ 1,066,346 552,227

(ii) Gratuity............................................................................................ 932,868 453,841

(iii) Provision for Rebates..................................................................... 1,016,789 -

3,016,003 1,006,068

TOTAL RUPEES................................................................................... 78,499,251 64,708,526


S 279

SCHEDULE “8” – SALES For the year For the year

ended 31st March, ended31st March,

2007 2006

Rupees Rupees

Income from Publishing (Gross) (Net of Sales Returns) 152,896,624 59,859,845Call Centre Revenue ........................................................................... 17,177,975 4,078,777Other Revenue ..................................................................................... 875,272 995,000

TOTAL RUPEES 170,949,871 64,933,622

SCHEDULE “9” – OTHER INCOME For the year For the year


2007 2006

Rupees Rupees

Interest on fixed deposits (Gross)-(tax deducted at source on interestreceived Rs.163,560; previous year 720,867 302,351Rs 67,847)Insurance claim - 889,783Miscellaneous Receipts 376,621 178,360

TOTAL RUPEES ................................................................................ 1,097,488 1,370,494

SCHEDULE “10” -MANUFACTURING AND OTHER EXPENSES For the year For the year


2007 2006


Raw Materials Consumed 29,115,021 8,018,394Production and Processing Charges 34,801,941 21,589,727Payments to and provisions for employees :(a)Salaries , Wages and other Personnel Costs 63,374,587 20,805,539(b)Gratuity 479,027 430,632(c)Company’s Contribution to Provident and Other Funds 3,572,602 1,393,477(d)Staff Welfare Expenses 9,347,039 3,072,226

Other expenses :

(a) Repairs to(i) Plant and Machinery - -(ii) Buildings - -(iii) Others 1,886,724 551,916

1,886,724 551,916(b) Power and fuel 6,573,344 1,851,357(c) Advertising and publicity 30,351,771 14,454,911(d) Agency Commission 3,103,694 1,578,381(e) Rent 11,646,636 4,007,499(f) Rates and taxes 94,395 96,302(g) Internet, E-mail and fax expenses 1,133,497 325,668(h) Telephone 5,572,908 1,473,993(i) Travel and Conveyance 8,499,234 4,546,334(j) Books and periodical costs 1,023,293 407,646(k) Contract labour charges 9,608,007 1,820,214(l) Postage,Courier,Transport,Packing & Octroi 6,613,114 2,227,074(m) Hire Charges 1,870,396 59,508(n) Consultancy and professional charges 3,562,203 2,428,453(o) Printing and stationery 3,944,577 814,238


S 280

For the year For the year


2007 2006


(p) Other Administrative costs 4,588,700 1,156,857(q) Exhibition Rentals 9,301,743 979,021(r) Auditor’s Remuneration - Audit Fees

(i) Audit Fees 200,000 70,000(ii) Tax Audit Fees 50,000 -(iii) Certification Work 25,000 -(iv) Out of Pocket Expenses 4,330 -(v) Service Tax 33,990 8,568

313,320 78,568(s) Royalty 3,340,316 1,523,580(t) Software Charges 132,000 -(u) Foreign Exchange Loss 65,352 (1,750)(v) Bad Debts written off 182,228 -(w) Provision for Doubtful Debts 460,564 -(x) Provision for Rebates 1,016,789 -(y) Loss on Sale of Asset 56,308 -(z) Loss on Damaged Stock 108,547 -

TOTAL RUPEES ........................................................................ 255,739,877 95,689,765

SCHEDULE “10” -MANUFACTURING AND OTHER EXPENSES (Contd.)


S 281


SCHEDULE “11” - NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007

1. SIGNIFICANT ACCOUNTING POLICIES:

A. BASIS OF ACCOUNTING:

The Financial Statements are prepared under historical cost convention, on accrual basis, in accordance with the requirements of theCompanies Act, 1956 and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

B. FIXED ASSETS:

Fixed Assets (Gross) are stated at the aggregate of cost of acquisition including any attributable cost related to bringing the asset to itsworking condition for its intended use.Costs relating to software licenses of an enduring benefit are capitalised as computersoftware.Improvements to the leased properties are capitalised under furniture, fittings and office equipments and the same arewritten off over the balance period of the lease.

C. DEPRECIATION:

(a) Depreciation is calculated on pro-rata basis. Items costing less than and upto Rs. 5,000 are fully depreciated in the year ofaddition itself.

(b) The details as to method and the rates of depreciation are as under:

Method of Providing

Class of Assets Depreciation Rate of Depreciation

(i) Fixed Assets, other than Straight Line Method Schedule XIV of theassets referred in (ii), (iii), (iv) Companies Act, 1956.(v), (vi), (vii), (viii) and (ix) below

(ii) Computer Equipments Straight Line Method 25%(iii) Computer Softwares Straight Line Method 25%(iv) Furniture and Fittings Straight Line Method 10%(v) Electrical and Office Equipments Straight Line Method 15%(vi) Photographic Equipments Straight Line Method 25%(vii) Vehicles Straight Line Method 20%(viii) Intangible Assets Straight Line Method 25%(ix) Improvements to properties taken Depreciated over the

under lease balance period of lease.

D. INVENTORIES:

Inventories of raw materials are valued at cost or net realisable value, whichever is lower. Cost is determined using the weightedaverage method.

E. REVENUE RECOGNITION:

Revenues are accounted gross of commissions allowed to advertising agencies but net of discounts allowed to newsagents.Advertisement sales are recognised in the month in which the publication is printed.Copy sales are recognised in the month ofdespatch to the customer.The estimated returns of unsold copies are reduced from sales.Subscription sales are recognised on aproportionate basis over the period of subscription. Service Income is recognised when the work is performed. Interest income isrecognised on the time proportion basis.

F. FOREIGN CURRENCY TRANSACTIONS:

(i) Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction.

(ii) Monetary assets and liabilities determined in foreign currencies are stated at the exchange rates prevailing at the year end.

(iii) Gains or losses on settlement and translation of foreign exchange transactions are recognised as income or expense.

G. TAXATION

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of theIncome Tax Act, 1961. Deferred tax is recognised on timing differences between taxable income and accounting income that originatein one period and are capable of reversal in one or more subsequent periods.


S 282

SCHEDULE “11” - NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007 (Contd.)

H. RETIREMENT BENEFITS:

In respect of defined contributory employee retirement benefit plans (Provident and Superannuation Fund) contribution/provision tothe recognised funds are charged to the Profit and Loss Account based on percentage of salary.In respect of defined benefit plan (Gratuity and Leave Encashment) provision is made based on actuarial valuation.

I. PROVISIONS AND CONTINGENT LIABILITIES:

As per Accounting Standard 29, ‘Provisions, Contingent Liabilities and Contingent Assets’, the Company recognizes provisions onlywhen it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefitswill be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

No Provision is recognized for –

A. Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence ornon-occurrence of one or more uncertain future events not wholly within the control of the Company; or

B. Any present obligation that arises from past events but is not recognized because-a. It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; orb. A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed periodically and only that part of the obligation for whichan outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances whereno reliable estimate can be made.

Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never berealized.

The details of provision and movement in each class of provision required by Accounting Standard 29 on Provisions, ContingentLiabilities and Contingent Assets are as follows-

Particulars Leave Encashment Gratuity Rebates

Current Year Previous Year Current Year Previous Year Current Year Previous Year

Carrying amount as at the

beginning of the year 552,227 39,159 453,841 23,209 - -

Additional provision made

during the year 629,942 539,326 479,027 430,632 1,016,789 -

Amount paid/ utilized during

the year 115,823 26,258 - - - -

Unused amount reversed during

the year - - - - - -

Carrying amount as at the end

of the year 1,066,346 552,227 932,868 453,841 1,016,789 -

2. Contingent Liabilities not provided for : Guarantee given by the bankers on behalf of the Company Rs 1,13,774 (previous year Rs 1,13,774).

3. Estimated amounts of contracts remaining to be executed on Capital account (net of advances) and not provided for Rs Nil (Previous YearRs.4,70,597).

4. There are no small scale industrial undertakings to whom the company owes any sum outstanding for more than 30 days. The auditors haveaccepted the representation of the Management for identifying the creditors, which are small scale industrial undertakings.

5. The surplus /unsold copies of printed products are normally distributed free of cost for promotional purposes and have little other use,

although in rare cases they may be sold on future occasions. Therefore quantitative details have not been disclosed for the purposes of part

2 of schedule VI of the Companies Act,1956.

Opening and closing stocks of these printed products are also not valued.


S 283

6. Raw materials consumed : 2006-2007 2005-2006

Type of material Unit Quantity Value (Rs). Quantity Value (Rs).

Paper Kgs 4,47,204 291,15,021 1,37,158 80,18,394

7. Managerial Remuneration

Remuneration to Non-wholetime Directors: 2006-2007 2005-2006

Directors’ Sitting Fees 220,000 85,000

8. Value (Rs) of imported and indigenous raw materials consumed during the financial year and the percentage of each to the total consumption.

2006-07 % 2005-2006 %

Imported raw materials 267,10,322 92% 61,19,147 76%

Indigenous raw materials 24,04,699 8% 18,99,247 24%

9. CIF Value (Rs) of imports of 2006-07 2005-06

Raw materials 191,26,590 7,339,859

Capital goods - 682,413

10. Expenditure in Foreign Currency on account of travel,books and periodicals etc. Rs 38,93,108 (Previous Year Rs.24,37,237/-).

11. Earnings in Foreign Currency on account of Advertisement sales Rs 74,91,064 (Previous Year Rs.56,04,109/-)

12. The Company operates only in one segment-Publishing of printed products.Accordingly, in the context of Accounting Standard 17 dealing

with “Segment Reporting” issued by the Institute of Chartered Accountants of India, the operations are constituted under one primary

segment only.

13. Net Deferred Tax Asset / Liability as at 31st March 2007 is as summarised below.

Deferred Tax Assets arising from : 2006-07 2005-06

(i) Unabsorbed depreciation loss. Rs. - 3,325,725

(ii) Disallowances u/s 43B -reversible Rs. - 417,407

Deferred Tax Liabilities arising from :

(i) Timing difference of Depreciation in the financial

statements and for Income Tax Purpose. Rs. - 792,490

Net Deferred Tax Asset taken to Balance Sheet Rs. - 2,950,642

Note : Deferred Tax assets are recognised only if there is virtual certainty that they will be realised.

14. As required under Accounting Standard 18 on “ Related Party Disclosures” issued by the Institute of Chartered Accountants of India, the

list of related parties and their transactions is disclosed below.

(A) Names of related parties and nature of related party relationship for the period ended 31st March, 2007.

(A) Enterprise collectively having more than one half of voting power of Next Gen Publishing Ltd.

(i) Forbes Gokak Limited

(B) Associate Company

(i) Forvol International Services Limited

(ii) Shapoorji Pallonji & Company Limited

(C) Subsidiary of the Holding Company

(i) Forbes Services Limited


S 284

(B) Transactions with related parties for the year ended 31st March , 2007:



i) With Parties listed in (a) above

Income from Publishing - 195,000

Rent and Other Service Charges 1,385,572 2,267,529

Interest Expenses 3,097,721 1,097,755

Equity Contribution 8,982,400 16,040,000

Share Premium Contribution 19,761,280 -

Loans Taken net of repayment 19,300,000 36,000,000

Outstandings PayableSundry Creditors 246,300 298,074

Intercorporate Deposits Payable 55,300,000 36,000,000

Interest Payable 428,783 -

ii) With Parties listed in (b) aboveTravelling Expenses 919,731 1,085,863

Income from Publishing 775,000 -

Outstandings Payable


iii) With Parties listed in (c) aboveOther Service Charges 87,723 -

15. EARNINGS PER SHARE2006-07 2005-06

Rs. Rs.

a) Net Loss After Tax (101,691,847) (38,586,606)

b) Number of Equity Shares:

As at the commencement of the year 6,067,500 3,000,000

Issued during the year / (bought back and extinguished) 1,120,000 3,067,500

As at the end of the year 7,187,500 6,067,500

Weighted Average Number of Equity Shares during the year 6,871,445 3,751,411

c) Basic and Diluted Earnings Per Share (Face Value Rs. 10/-) (14.80) (10.29)

16. Information on leases as per Accounting Standard 19 on “Accounting for Leases” :

The Company has various operating leases for office facilites and residential premises for employees that are renewable on periodical basisand cancelable at its option. Rental expenses for operating leases recognised in the Profit and Loss Account for the year is Rs.1,16,46,636/- (Previous Year Rs.40,07,499/-)

17. a) The Company has a sweep in facility with its bankers against cheques issued from the linked current account. The fixed depositaccount gets reduced only when such cheques are presented to the bank. As on March 31st 2007, the the Company has reduced fromfixed deposit account, the value of cheques issued by it which exceed the balance lying in the linked current account.

b) Fixed deposits include deposits under lien with the Customs Authorities Rs. 1,19,162/- (previous year Rs. 1,13,774/-) and deposit ofRs. 9,159,583/- (previous year Rs Nil ) under lien as margin money against letter of credit issued by bankers.

18. GENERAL:

a) Other information required by Schedule VI to the Companies Act, 1956, has been given only to the extent applicable.

b) The prior year financial statements were audited by a firm of chartered accountants other than Kalyaniwalla & Mistry.


S 285

c) Figures for the previous year have been regrouped / restated wherever necessary to conform to current year’s presentation.

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


Registration No. U 22100 MH 2004 PTC 149173 State Code-11

Balance Sheet Date 3/31/2007

II. Capital raised during the year (Amount in Rs.’000)Preferential Allotment 11,200 Private Placement -

III. Position of Mobilisation and Deployment of Funds (Amount in Rs.’000)

Total Liabilities 186,758 Total Assets* 186,758


Paid-up Capital 71,875 Net Fixed Assets 36,126Reserves Investments -and Surplus 45,265 Net Current Assets 7,553Secured Loans 2,318 Miscellaneous Expenditure -Unsecured Loans 67,300 Deferred Tax -

Accumulated Losses 143,079

* Net of Current Liabilities and Provision

IV.Performance of the Company (Amount in Rs.’000)Turnover : 172,047

Total Expenditure : 269,055Loss before Tax : (97,008)Loss after Tax : (101,692)

Earnings per Share in Rs. : (14.15)Dividend Rate : -V. Generic names of principal products/services of Company

Item Code No. : Not ApplicableProduct Description : Special Interest PublicationsItem Code No. : 49011001Product Description : Buyers Guides

⎫⎬⎭

Signatures to Schedules “1” to “11”

N.D.Khurody Chairman

K.C.Mehra

R.N.Jha

J.Parakh Directors

K.Mistry

Mumbai ,May 15,2007. H.Dhanrajgir



S 286

2006 - 2007 2005 - 2006


CASH FLOW FROM OPERATING ACTIVITIES

Net Loss before tax (97,008,002) (38,488,275)

Adjustments forDepreciation 9,199,771 7,395,787Interest received (720,867) (302,351)Loss On Sale of Assets 56,308 -Interest charged 4,115,713 1,703,339

Operating profit before working capital changes (84,357,077) (29,691,500)

Adjustments for :(Increase) / Decrease in trade and other receivables 11,144,640 (77,566,092)Increase / (Decrease) in trade and other payables 13,346,162 60,850,050Cash Generated from Operations (59,866,275) (46,407,542)Direct Taxes Paid (3,266,595) (1,892,673)(A) NET CASH FROM / (USED IN) OPERATING ACTIVITIES (63,132,870) (48,300,215)

CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets (9,587,079) (38,157,462)Sale of Assets 386,209 -Interest received 698,461 302,351(B) NET CASH FROM / (USED IN) INVESTING ACTIVITIES (8,502,409) (37,855,111)

CASH FLOW FROM FINANCING ACTIVITIESProceeds from issue of shares-share capital 11,200,000 30,675,000Proceeds from issue of shares-share premium 24,640,000 20,625,000Proceeds from borrowings 25,855,647 43,340,435Interest paid (3,671,150) (1,703,339)

(C) NET CASH FROM / (USED IN) FINANCING ACTIVITIES 58,024,497 92,937,096

Net Increase / (Decrease) in cash and cash equivalents

(A) + (B) + (C) (13,610,782) 6,781,770

Cash and Cash Equivalents as at the commencement

of the period, comprising

Cash on hand 19,801 3,136Balances with scheduled banks on current and deposit accounts 24,974,208 18,209,103Cash and Cash Equivalents as at the end

of the period, comprising

Cash on hand 64,180 19,801Balances with scheduled banks on current and deposit accounts 11,319,047 24,974,208Net Increase as disclosed above (13,610,782) 6,781,770

Note: The Cash Flow Statement has been prepared under the indirect method as set out in Accounting Standard -3 issued by the Institute ofChartered Accountants.



R.N.Jha

J.Parakh Directors

Keki M. Elavia K.MistryPARTNERMumbai, May 15, 2007. H.Dhanrajgir


⎫⎬⎭



DIRECTORS :

P.J.Reddy

J.N.Ichhaporia

Peter Pushparaj

BANKERS :

State Bank of India

AUDITORS :

Sridhar & Santhanam

REGISTERED OFFICE :

No: 17, II Floor,

II Main, Domlur II Stage,

Bangalore-560 038

PROHANDYMAN INDIA LIMITED

287


S 288

REPORT OF THE DIRECTORS OF PRO HANDYMAN INDIA LTD.

To,

The Members,

The Directors are pleased to submit their Report and the Audited Accounts of the Company for the period ended 31st March, 2007.

FINANCIAL RESULTS :

Particulars Period ended on 31st March 2007

Sales and Other Income 88,240

Profit/(Loss) before Depreciation (62,35,313)

Less : Depreciation 46,174

Profit/(Loss) before Tax (62,81,487)

Less : Provision for Current, Fringe Benefit and Deferred Tax 38,684

Profit/(Loss) after Tax (63,20,171)

Loss Carried to Balance Sheet (63,20,171)

OPERATIONS:

Your company was incorporated on November 8th 2006 and certificate of commencement was received on December 16th 2006.

During the period under review the following activities were carried out

1) Execution of all the formalities for the formation of the company as a public limited company as per the Company's Act including all thenecessary statutory registrations for the same.

2) Set up of the required office infrastructure for the commencement of the operations, including the Central Monitoring Station and TechnicalTraining Centre.

3) Building of the Head Office team and the initial teams of Sales, Service, Central Monitoring Station and Accounts for the implementationof the business model.

4) Development of all the branding components and the implementation of the same through all collaterals of sales and service.

5) Initial operating policies and procedures for all functions viz. Human Resources and Development, Accounts & Finance, Service andCentral Monitoring Station.

6) Process documentation bridging all the functions of the organisation together from acquisition to service to the members.

7) Customised Customer Relation Management package to support the interface with the members and the technical team to meet the serviceoffer.

8) Successful implementation of the business model, from customer acquisition to providing services as per the service offer and initialresponse from the customers has been highly encouraging in the geographical territory of Indiranagar, Bangalore.

Your company's immediate plan is to expand its business model to seven major cities viz. Chennai, Hyderabad, Pune, Mumbai, Delhi, Kolkattaand Ahmedabad and to establish localised satellite offices for sales and service within the operating town.

Your company would be strengthening all the existing process and invest on continuous training and development of people and InformationTechnology backbone to ensure the high level of service standards to its members.

SHAREHOLDING PATTERN:

As on date of this report, the shareholding pattern is as follows: 70% with Eureka Forbes Ltd. and it associates, 30% to Mr. Peter Pushparaj.

DIRECTORATE:

Mr. P.J. Reddy retires by rotation and being eligible offers himself for reappointment, as per Memorandum and Articles of Association.


S 289

AUDITORS AND AUDIT REPORT:

You are requested to appoint Auditors for the current year, and to fix remuneration. The retiring auditors, M/s Sridhar & Santhanam CharteredAccountants, Bangalore, retire at this AGM being eligible, offer themselves for re-appointment.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

The information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure ofParticulars in the Report of the Board of Directors) Rules, 1988, regarding conservation of energy, technology absorption, is not relevant in newour Company being a service organisation. The company did not have any foreign exchange earnings or outgo during the year under consideration.

PARTICULARS REGARDING EMPLOYEES:

There are no employees to whom details as required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particularsof Employees) Rules, 1975 apply.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217(AA) of the Companies Act, 1956, the Directors, based on the representations received from the Management, confirm-

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the loss of the companyfor that period ;

iii. that they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accountingrecords in accordance with the provisions of this Act, for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities;

iv. that they have prepared the annual accounts on a going concern basis.

APPRECIATION:

The Board of Directors wishes to place on record its sincere appreciation of the committed services made by the employees at all levels in theformation of the company and implementing the innovative multi-brand, multi-product service business model for the first time in India,successfully in the shortest possible time span of three months.

Your Board would like to place on record its sincere appreciation for the assistance given by Eureka Forbes Ltd. and acknowledge that theircontinued support has been a source of considerable strength.

For and On behalf of the Board of Directors

Mr. P. J. Reddy

Chairman

Bangalore, Dated : 30th June, 2007

ADDENDUM TO DIRECTOR’S REPORT

1) Regarding par 3 (vi) of Auditor’s Report relating to approval of Central Government for remuneration paid to Managing Director, applicationhas already been made to the Central Government for its approval as per the requirements of Companies Act, 1956 and the same is awaited.

For and On behalf of the Board of Directors

Mr. P. J. Reddy

Chairman

Bangalore, Dated : 30th June, 2007


S 290

AUDITOR’S REPORT TO THE MEMBERS OF PRO HANDYMAN INDIA LIMITED

We have audited the attached balance sheet of Prohandyman India Limited (“the company”), as at 31st March 2007 and the Profit and Loss accountfor the period ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsi-bility is to express an opinion on these financial statements based on our audit.

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

2. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditor’s Report) (Amendment) Order2004 (together ‘the order”) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act,1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to thecompany.



(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination ofthose books;

(iii) The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the accounting standards referredto in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March 2007 and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March 2007 from being appointed as a director in terms ofclause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so required, subject to approval of the Central Govt. being obtained for theremuneration to the Managing director of Rs 3.98 lacs provided in the books of accounts, and give a true and fair view in conformitywith the accounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2007;

(b) in case of the profit and loss account, of the loss for the period ended on that date

(c) in the case of Cash Flow statement, of the cash flows of the company for the year ended as on that date.

For Sridhar & SanthanamChartered Accountants

Seethalakshmi MMem. No. 208545

(Partner)

Place: BangloreDate: 30th June, 2007


S 291


(i)

(a) The company has maintained records showing particulars, including quantitative details of Fixed assets.

(b) Fixed assets have been physically verified by the management during the year. No material discrepancies were noticed on suchverification.

(c) Substantial part of the fixes assets have not been disposed off during the year, accordingly provisions of clause 4 (i) (c) of the orderare not applicable to the company.

(ii)

(a) The company does not hold any inventory and hence provisions of clause 4 (ii) of the order are not applicable.

(iii) According to the information and explanations given to us the company has not granted/ taken loans, secured or unsecured to/ fromcompanies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956. Therefore the provisionsof clause 4 (iii) of the order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensuratewith the size of the company and the nature of its business with regard , for the purchase of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internalcontrol system.

(v) In respect of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, to the best of our knowledge and belief andaccording to the information and explanation given to us:

(a) The particulars of contracts or arrangements have been entered in the register maintained under that section.

(b) Transactions made in pursuance of such contracts or arrangements do not exceed the value of Rs. 5 lacs.

(vi) According to the information and explanations given to us, the company has not accepted deposits from the public. Therefore provisionsof Clause 4 (vi) of the order are not applicable to the company.

(vii) Provisions of Clause 4 (vii) of the order do not apply to the Company, as the requirements of Internal audit are not mandatory on thecompany,

(viii) Maintenance of cost records has not been prescribed by the Central Government under clause (d) of sub Section (1) of Section 209 of theCompanies Act, 1956. Accordingly the provisions of clause 4(viii) of the order are not applicable to the company.

(ix)

(a) The company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees’ State Insurance,Income-tax, Sales-tax, Service tax with the appropriate authorities.

(b) According to the information and explanations given to us, there are no dues, which have not been deposited on account of anydispute.

(x) The company has not been registered for over a period of five years and hence provisions of Clause 4(x) do not apply.

(xi) In our opinion and according to the information and explanations given to us, the company does not have any dues payable to anyfinancial institutions or banks.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities andhence clause 4(xii) of the order are not applicable to the company.

(xiii) In our opinion, the company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of theorder are not applicable to the company.

(xiv) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisionsof clause 4(xiv) of the Order are not applicable to the company.

(xv) According to the information and explanations provided to us, the company has not given guarantees for loans taken by others frombanks and financial institutions. Therefore the provisions of clause 4(xv) of the order are not applicable to the company.


S 292

(xvi) According to the information and explanations given to us, the company has not availed any term loans and hence clause (xvi) of theorder are not applicable to the company.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we reportthat no funds raised on short-term basis have been used for long-term investment.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the Act. Therefore the provisions of clause 4 (xviii) are not applicableto the company.

(xix) According to the information and explanations given to us, the company has not issued any debentures during the year of audit and thereare no debentures outstanding as at the beginning of the year. Therefore provisions of clause 4 (xix) of the order are not applicable to thecompany.

(xx) There has been no public issue during the current year by the company.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the courseof our audit.

For Sridhar & SanthanamChartered Accountants

Seethalakshmi MMem. No. 208545

(Partner)Place: BangloreDate: 30th June, 2007


S 293


FUNDS EMPLOYED

1. SHARE CAPITAL A 500,000

2. DEFERRED TAX LIABILITY (NET) 23,092

TOTAL 523,092


3. FIXED ASSETS B

Gross Block 1,321,360

Less: Depreciation 46,174 1,275,186

4. CURRENT ASSETS, LOANS AND ADVANCES C

Sundry Debtors 250

Cash and Bank Balances 859,964

Loans and Advances 254,697

1,114,911

5. LESS: CURRENT LIABILITIES AND PROVISIONS D

Current liabilities 8,130,382

Provisions 56,794

8,187,176

6. NET CURRENT ASSETS (7,072,265)

7. PROFIT AND LOSS ACCOUNT 6,320,171

TOTAL 523,092

8. NOTES TO THE ACCOUNTS E

BALANCE SHEET AS AT 31ST MARCH 2007

Per our report of even date attached

For SRIDHAR & SANTHANAM

Chartered AccountantsP.J. REDDY

J.N.ICCHAPORIA Directors

Seethalakshmi M PETER PUSHPARAJ

Partner

Membership No. 208545

Bangalore, Dated: 30th June, 2007

}


S 294


1 INCOME FINCOME FROM SERVICES RENDERED 84,050OTHER INCOME 4,190

88,2402 EXPENDITURE

COST OF SERVICES RENDERED G 82,090EMPLOYEES’ COSTS H 4,088,989ADMINISTRATIVE & OTHER CHARGES I 2,152,474DEPRECIATION 46,174

6,369,727

3 LOSS BEFORE TAX (6,281,487)

DEFERRED TAX (23,092)

FRINGE BENEFIT TAX (15,592)

LOSS AFTER TAX (6,320,171)

NO.OF EQUITY SHARES 50,000

BASIC AND DILUTED EARNINGS PER SHARE (126.40)

NOTES TO THE ACCOUNTS E

PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 15TH DECEMBER, 2006 TO 31STMARCH 2007






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S 295

SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT 31ST MARCH 2007

Rupees

SCHEDULE ‘A’ : SHARE CAPITAL

AUTHORISED

50000 Equity Shares of Rs.10/- each 500,000

ISSUED SUBSCRIBED AND PAID-UP

50000 Equity Shares of Rs.10/- each * 500,000

* - of the above 34500 shares are held by Holding company M/s Eureka Forbes Limited,and 500 shares are held by Associates of Eureka Forbes Limited

SCHEDULE ‘B’ : FIXED ASSETS

Description Gross Block Depreciation Block Net Block

Particulars Additions As on Depreciation As on As on

31.03.2007 for the period 31.03.2007 31.03.2007

Computers 762,708 762,708 35,807 35,807 726,901

Furniture & Fixutures 558,652 558,652 10,367 10,367 548,285

Total 1,321,360 1,321,360 46,174 46,174 1,275,186

SCHEDULE ‘C’ : CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS

(a) Cash on Hand 9,129

(b) Balance with scheduled bank in Current account 850,835 859,964

SUNDRY DEBTORS

(Unsecured, considered good unless otherwise stated)

Debts outstanding less than 6 months 250

LOANS AND ADVANCES

(Unsecured, considered good unless otherwise stated)

(a) Prepaid Expenses 112,500

(b) Advances recoverable in cash or kind for value received 126,605

(c) Advance payment of FBT 15,592 254,697

TOTAL 1,114,911

SCHEDULE ‘D’ : CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES

(a) Sundry Creditors 711,029

(b) Income received in Advance 565,719

(c) Advance received from Customers 179,900

(d) Advance from Director 1,350,000

(e) Amount due to Holding Company 4,266,970

(f) Other Liabilities 1,056,765 8,130,382

PROVISIONS

(a) Provision for leave encashment 33,702

(b) Provision for gratuity payable 7,500

(c) Provision for FBT 15,592 56,794

TOTAL 8,187,176


S 296

SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT & LOSS ACCOUNT FOR THE PERIOD

ENDED 31ST MARCH 2007

Rupees Rupees

SCHEDULE ‘F’ : INCOME

Income from services 84,050 —

Repair charges collected 4,190 —

TOTAL 88,240

SCHEDULE ‘G’ : COST OF SERVICES RENDERED

Service tools 44,590 —

Insurance Premium 37,500 —

TOTAL 82,090

SCHEDULE ‘H’ : EMPLOYEES COSTS

Salary and incentives (Refer Note 5, Note 6) 3,817,195 —

Company contribution to PF and other funds 194,725 —

Staff welfare expenses 77,069 —

TOTAL 4,088,989

SCHEDULE ‘I’ :ADMINISTRATIVE AND OTHER EXPENSES

Professional fees 364,459

Rent 291,000

Travelling & Conveyance 230,355

Postage, telegram and Telephone 127,095

Preliminary expenses 126,208

Other expenses 102,124

Advertisement and Sales promotion 93,327

Repairs and Maintenance 46,837

Printing & Stationery 53,904

Office supplies and expenses 43,206

Brokerage 33,000

Software licence 31,100

Auditors Remuneration 28,090

Electricity expenses 11,915

Sales and Marketing expenses 569,854

2,152,474


S 297

SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED 31ST

MARCH 2007

SCHEDULE ‘E’ - NOTES TO ACCOUNTS

1. Significant Accounting Policies

a. The financial statements are prepared under the historic cost convention on an accrual basis

b. Revenue Recognition: Income from services rendered to customers is accounted over the period of contract with Customers.

c. Cost of materials purchased: Cost of marketing collaterals purchased are written off in the year of purchase.

d. Fixed Assets: Fixed assets are valued at cost less depreciation. Cost comprises the purchase price and any attributable cost of bringingthe assets to their working condition for their intended use.

e. Depreciation: Depreciation is provided on a straight line basis, from the date of installation of asset, applying the rates specified inSchedule XIV of the Companies Act, 1956. Assets acquired during the year have been depreciated pro-rata for the number of daysused.

f. Gratuity: As the company has commenced operations recently and there are few permanent employees. Provision for gratuity is made,at 15 days for every completed year of service

g. Leave Encashment: Leave encashment is provided for employees, confirmed in service for the value of unutilized leave due to theemployees at the end of the year.

h. Preliminary Expenses: Preliminary expenses incurred on incorporation of the company are written off in the same year of incurring ofexpenditure.

i. Deferred tax: Deferred tax is accounted for by computing the tax effect of timing differences which arise during the year and reversein subsequent periods, in accordance with the requirements of Accounting Standard 22 - Accounting for Taxes on Income.

j. Earnings per share : Basic earnings per share are calculated by dividing the net loss for the period attributable to equity share holdersby the weighted average number of equity shares outstanding during the period.

2. The company was incorporated on 8th November 2006 and received the certificate of commencement of business on 15th December 2006.

3. Related Party Disclosures

List of Related parties and relationships

Party Relationship

Eureka Forbes limited Holding Company

Mr. Peter Pushparaj Key Management Personnel - Managing Director

Mr. Mathew Pushparaj Relative of Managing Director

Related party transactions

Transaction Holding Managing Relative of

Company Director Managing Director

- Rs. -

Share Capital 350000 150000 —

Advances taken 4266970 1350000 —

Purchase of Materials — 437769

Remuneration to Managing Director — 396702 —


S 298

4. Deferred Tax liability:

Details of Deferred tax liability - categorywise are as given below:

Particulars Charge / Credit during

the year (Rs.)

Depreciation 70945

Others (47853)

Net Liability 23092

5. Managerial Remuneration (February 2007 - March 2007):

Particulars Amount (Rs.)

Salary, including Perquisites 337500

Contribution to Provident fund 18000

Provision for retirement benefits 41202

TOTAL 396702

Amount due to Managing Director - Rs. 1.91 lacs

6. The above remuneration to Managing director is subject to approval of the Central Government for which an application has been made bythe Company on 30th April 2007

7. Payment to Auditors:

For Statutory Audit - Rs. 28090/-

8. Expenditure / Earnings in Foreign currency: NIL

9. Value of Imports calculated on CIF basis: NIL

10. Value of imported raw material Spare parts ad components consumed: NIL

11. Amount remitted during the year in foreign currencies on account of dividends: NIL

12. Contingent liabilities: NIL

13. The company operates in only one segment - viz - service of equipments and hence requirement for segment-wise information does notarise.

14. Amounts due to Small scale undertakings to whom amounts are outstanding for more than 30 days: NIL

15. Information required in terms of Part IV of Schedule VI of the Companies act, 1956 is attached.

16. As this is the first year of the company, there are no previous year figures.






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S 299

I Registration Details

Registration No. State Code

Balance Sheet Date

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

Public Issue Rights Issue

Bonus Issue Private Placement

III Position of Mobilisation and deployment of funds (Amount in Rs. thousands)


Sources of Funds

Paid-up Capital Reserves & Surplus


Application of funds

Net fixed Assets Investments

Net current Assets Misc. Expenditure

Accumulated Losses

IV Performance of the Company

Turnover Total Expenditure

Profit / Loss before tax Profit / Loss after tax

Earnings per share in Rs. Dividend rate %

V Generic Names of Three principal products / services of CompanyItem Code No. N AProduct N ADescription

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

0 4 0 8 9 2

3 1 0 3 0 7

0 8

5 0 0

5 2 3 5 2 3

5 0 0

1 2 7 5

(7 0 7 2)

6 3 2 0

8 4 6 3 7 0

6 2 8 1 6 3 2 0

(1 2 6)






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S 300

2006-2007

Rupees Rupees

Net Profit / (Loss) before tax (6,281,487)

Add: Depreciation 46,174

Changes in:

Trade and other receivables (254,947)

Trade payables & others 8,187,176 7,978,403

Cash Generated from Operations 1,696,916

Taxes paid (15,592)

(A) Net cash Generated by Operating Activities 1,681,324

Cash flow from investing activities

Purchase of Fixed Assets (1,321,360)

(B) Net cash from / (used in) Investing activities (1,321,360)

Cash Flow from Financing activites

Issue of Equity Shares 500,000

(C ) Net cash from / (used in) Financing activities 500,000

NET INCREASE IN CASH AND CASH EQUIVALENTS 859,964

CASH AND CASH EQUVIVALENTS AS AT THE COMMNCEMENT OF THE YEAR -

CASH AND CASH EQUVIVALENTS AS AT THE END OF THE YEAR 859,964

CASH FLOW STATEMENT FOR THE PERIOD FROM 15TH DECEMBER 2006 TO 31ST MARCH 2007






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S 301



DIRECTORS :

K. C. Mehra Chairman

C. G. Shah

C. A. Karnik

Capt. S. P. Rao

BANKERS :

Standard Chartered Bank

UTI Bank

Bank of India

AUDITORS :

Batliboi & Purohit

REGISTERED OFFICE :

21, A.K. Nayak Marg,

Fort, Mumbai 400 001.

VOLKART FLEMING SHIPPING & SERVICES LIMITED


S 302

3. REVIEW OF OPERATIONS:

Volkart Fleming Shipping & Services Ltd. (VFSSL) has beenappointed as Agent at all Indian Ports by M/s. Forbes ContainerLine Pte.Ltd. registered in Singapore, which is a 100% subsidiaryCompany of Forbes Gokak Limited.

The Sub Agency arrangement which we entered into the previousyear, has turned out to be unviable and hence the said arrangementhas been discountinued.

4. DIRECTORATE:

Mr.C.A.Karnik retires from the Board by rotation and is eligiblefor re-appointment. Your Directors recommend his appointment.


Pursuant to the provisions of section 217(2AA) of the CompaniesAct, 1956, the Directors based on the representations receivedfrom the operating management confirm: -

a) That in the preparation of the annual accounts, the applicableaccounting standards have been followed along with properexplanation relating to material departures; been followedalong with proper explanation relating to material departures;

b) That the directors have selected such accounting policies

DIRECTORS’ REPORT

ToThe Shareholders,Gentlemen,

1. Your Directors submit their Report and the Audited Accounts for the year ended 31st March 2007.

2. FINANCIAL RESULTS:Current Year Previous Year

ended ended31st March, 2007 31st March, 2006

Rupees Rupees

(a) Operating Profit before Depreciation (3,080,373) 13,635,047

(b) Less: Depreciation/Assets discarded 810,616 1,094,901

(b) Provision for doubtfull debts - 6,832

(d) Balance (3,890,989) 12,533,135

(e) Provision for Taxation (including previous year adjustments) (376,400) 3,860,715

(f) Profit after Tax (3,514,589) 8,672,600

Appropriations to:

(a) Proposed Dividend - 3,000,000

(b) Provision for tax on Final Dividend - 392,040

(c) General Reserve - 867,260

Balance brought forward from last year 28,227,714 23,814,414

TOTAL 24,713,125 28,227,714

and applied them consistently and made judgments and esti-mates that are reasonable and prudent so as to give as trueand fair view of the state of affairs of the Company at theend of the financial year and of the profit of loss of the Com-pany for that period; That they had selected such accountingpolicies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the company atthe end of the financial year and of the profit of the compa-ny for the year ended on that date;

c) That they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct for safeguarding the assets of the Company and detect-ing fraud and other irregularities

d) The directors have prepared the annual accounts on a goingconcern basis.

6. COMPLIANCE REPORT:

Pursuant to Section 383A of the Companies Act, 1956, secretarialCompliance Certificate Mr.A.D.Gupte, Company Secretaries isattached.


S 303

7. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration.


The Company did not have any employee who was entitled toreceipt of Rs 24,00,000/- or more in aggregate throughout theFinancial year or Rs.2,00,000/- or more per month for a part pfthe financial year.

9. COMPANIES (DISCLOSURE OF PARTICULARS IN RE-PORT OF THE BOARD OF THE DIRECTORS) RULES1988:

Required particulars are annexed hereto, which form part of thereport.

For and on behalf of theBoard of Directors

K.C.MehraMumbai : 29th June 2007. Chairman.

The Company is engaged essentially in service activities.The Company derives the benefits of R & D of its Principalsin its area of operations.

Technology absorption, adaptation and innovation :

1. Efforts in brief, made towards technology absorption, adaptationand innovation.

2. Benefit derived as a result of the above efforts e.g. productimprovement, cost reduction, product development, importsubstitution, etc.

3. In case of imported technology (imported during the last 5 yearsreckoned from the beginning of the financial year), followinginformation may be furnished:


b) Year of import


d) If not fully absorbed areas where this has not taken place,reasons therefore and future plans of actions.

C. Foreign exchange earnings and outgo:

1. Activities relating to exports; initiatives taken to increase exports;development of New export markets for products and services;and export plans.

2. Total foreign exchange used and earned.

Nil

The Company endeavours to absorb technological improve-ments to the extent consistent with the nature of business ofthe Company.

The Company has not imported technology in the relevantperiod.


Information required under the Companies (Disclosure of Particulars in the Report Of Director) Rules, 1988.

A. Conservation of energy :

The Company’s operations involve low energy consumption. Wherever possible energy conservation have already been implemented andthere are no major areas where further energy conservation measures can be taken. However, efforts to conserve and optimize the use ofenergy through operational methods will continue.

B. Form for disclosure of Particulars with respect to Technology Absorption :

FORM – ‘B’

Research and Development (R & D) :

1. Specific areas in which R&D carried out by the Company.

2. Benefits derived as a result of the above R&D.

3. Future Plan of action.

4. Expenditure on R&D

(a) Capital

(b) Recurring

(c) Total

(d) Total R&D expenditure as Percentage of total turnover


S 304

AUDITORS’ REPORT TO THE MEMBERS OFVOLKART FLEMING SHIPPING & SERVICES LIMITED

1. We have audited the attached Balance Sheet of VOLKART FLEMING SHIPPING & SERVICES LIMITED (‘the company’) as at 31st

March 2007 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government in terms of Section 227(4A)of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above we report that:(a). We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes

of our audit;

(b). In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination ofthose books;

(c) The Balance Sheet and the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with thebooks of account;

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

(e). On the basis of the written representations received from the directors as on March 31, 2007 and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March 2007 from being appointed as a director under clause (g)of sub section (1) of Section 274 of the Companies Act, 1956.

(f). In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together withsignificant accounting policies & notes thereon give the information required by the Companies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted in India;

i). in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2007;

ii). in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and

iii). in the case of Cash Flow statement, of the Cash Flows of the Company for the year ended on that date.


K.K.KshirsagarPartner

Membership No. 4047Place : MumbaiDated : 29th June, 2007


S 305

Annexure to the Auditor’s Report(Referred to in paragraph 3 of our report of even date)

i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verificationwhich, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no materialdiscrepancies were noticed on such verification.

c) There was no substantial disposal of fixed assets during the year.

ii) Since the business of the Company is Service Oriented, the provision of clause 4 (ii) of the Companies (Auditor’s report) Order, 2003(as amended) in respect of physical verification of inventory is not applicable to the Company.

iii) a) As informed the Company has granted loan to one party covered in the register maintained under section 301 of the Companies Act,1956. The maximum amount involved during the year was Rs. 4.54 crores and the year- end balance of loans granted to the above partyis Rs 3.21 crores.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for suchloans are not prima facie prejudicial to the interest of the Company.

c) The loans granted are repayable on demand. As informed, the company has not demanded repayment of any such loan during the year,thus, there has been no default on the part of the party to whom the money has been lent. The payment of interest has been regular.

d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 ofthe companies Act, 1956.

e) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensuratewith the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. During thecourse of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts orarrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been soentered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts orarrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonablehaving regard to the prevailing market prices at the relevant time.

vi) The Company has not accepted any deposits during the year from the public within the meaning of provisions of Sections 58A, 58AAor any other provisions relevant to the Companies Act, 1956 and rules made there under.

vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

viii) Since the business of the Company is Service Oriented, the provision of clause 4(viii) of the Companies (Auditor’s report) Order, 2003(as amended) is not applicable to the Company.

ix) a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor educationand protection fund, employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and othermaterial statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amount payable in respect of provident fund, investoreducation and protection fund, employees’ state insurance, income tax, wealth tax, service tax, sales tax, customs duty, excise duty, cessand other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they becamepayable.


S 306

c) According to the records of the company, there are no dues outstanding of income tax, sales tax, excise duty on account of any dispute.

x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediatelypreceding financial year.

xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that theCompany has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company hasnot granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the Company.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures or other investments. Accordingly, the provisionsof clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

xv) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from bank orfinancial institutions.

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

xvii) According to the information and explanations given to us and on an overall examination of the balance sheet and cash flow statementof the Company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section301 of the Companies Act, 1956.

xix) The Company did not have any outstanding debentures during the year.

xx) The Company has not raised any money by way of Public issues during the year.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per theinformation and explanations given by the management, we report that no fraud on or by the Company has been noticed or reportedduring the course of our audit.


K.K.KshirsagarPartner

Membership No. 4047Place : MumbaiDated : 29th June, 2007


S 307

BALANCE SHEET AS AT 31ST MARCH, 2007 As at As at

31.03.2007 31.03. 2006Schedule Rupees Rupees Rupees Rupees

FUNDS EMPLOYED :1 SHARE CAPITAL “1” 6,000,000 6,000,000

2 RESERVES AND SURPLUS “2” 61,940,186 65,454,775

3 TOTAL SHAREHOLDERS’ FUNDS 67,940,186 71,454,775

4 TOTAL FUNDS EMPLOYED 67,940,186 71,454,775

APPLICATION OF FUNDS :5 FIXED ASSETS -

(a) Gross Block 20,294,115 20,399,516

(b) Less: Total Depreciation 14,192,909 13,980,598

(c) Net Block “3” 6,101,206 6,418,918

(d) Capital Advances - -

6,101,206 6,418,918

6 INVESTMENTS “4” 454,461 441,451

7 DEFERRED TAX ASSET ( NET ) 1,192,790 730,174

8 CURRENT ASSETS, LOANS AND ADVANCES “5”

(a) Sundry Debtors 4,887,308 2,620,583

(b) Cash & Bank Balances 42,548,445 4,475,748

(c) Other Current Assets - 598

(d) Loans and Advances 89,350,842 95,612,011

136,786,595 102,708,940

9 Less: CURRENT LIABILITIES AND PROVISIONS “6”

(a) Current Liabilites 73,097,276 35,448,208

(b) Provisions 3,767,262 3,868,426

76,864,538 39,316,634

10 NET CURRENT ASSETS 59,922,057 63,392,306

11 MISCELLANEOUS EXPENDIUTURE

(TO THE EXTENT NOT WRITTEN OFF OR

ADJUSTED)

Deferred Revenue Expenditure

Voluntary Retirement Compensation 269,672 471,926

12 TOTAL ASSETS (NET) 67,940,186 71,454,775

NOTES TO THE ACCOUNTS AND SIGNIFICANCT ACCOUNTING POLICIES (per Schedule”9")Schedules 1 to 9 annexed hereto form part of the AccountsIn terms of our report of even date attached.

For BATLIBOI & PUROHIT K. C. MEHRA ChairmanChartered Accountants

C.G.SHAHK.K.KSHIRSAGAR C.A.KARNIK DirectorsPartner S.P.RAO


}


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NOTES TO THE ACCOUNTS AND SIGNIFICANCT ACCOUNTING POLICIES (per Schedule”9")Schedules 1 to 9 annexed hereto form part of the AccountsIn terms of our report of even date attached.

For BATLIBOI & PUROHIT K. C. MEHRA ChairmanChartered Accountants

C.G.SHAHK.K.KSHIRSAGAR C.A.KARNIK DirectorsPartner S.P.RAO


}


For the year For the yearended ended

31.03.2007 31.03. 2006Schedule Rupees Rupees Rupees

1 SERVICES & OTHER INCOME “7” 19,913,405 38,682,335

2 OTHER EXPENSES “8” 22,791,524 24,845,034

3 VOLUNTARY RETIREMENT COMPENSATION AMORTISED 202,254 202,254

(3,080,373) 13,635,047

4 DEPRECIATION 810,616 1,094,901

5 PROVISION FOR DOUBTFUL DEBTS - 6,832

6 PROFIT BEFORE TAX (3,890,989) 12,533,315


` — for Wealth-tax - 1,000

— for Income-tax Current - 4,000,000

— for Income-tax Deferred (462,617) (210,285)

— for Fringe Benefit Tax 86,217 70,000

(376,400) 3,860,715

8 PROFIT AFTER TAX AVAILABLE FOR APPROPRIATION (3,514,589) 8,672,600

9 BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR 28,227,714 23,814,414

10 Less: APPROPRIATIONS

(a) Proposed Dividend - 3,000,000

(b)Tax on Proposed Dividend - 392,040

(c) Amount transferred to General Reserve - 867,260

11 BALANCE CARRIED TO BALANCE SHEET 24,713,125 28,227,714

Basic earnings per shares of face value of Rs. 100 each (59) 145(Refer Note-III of Schedule - 9)


S 309



As at As at31.03.2007 31.03.2006

Rupees Rupees

1 AUTHORISED

100,000 Equity Shares of Rs.100 each 10,000,000 10,000,000

2 ISSUED AND SUBSCRIBED

60,000 Equity Shares of Rs.100/- each fully paid-up 6,000,000 6,000,000

(a) All Shares are held by ForbesGokak Limited, the Holding Companyand their nominees. The ultimate Holding Company isShapoorji Pallonji & Company Limited.

(b) Of the above shares,

(1) 2,000 shares were allotted as fully paid pursuant to acontract without payment being received in cash.

(2) 57,000 shares were allotted as fully paid-up, by way ofBonus shares by capitalisation of Reserves and balancein Profit and Loss Account.

(3) In the year 2000-2001, the Company bought back forcancellation 20,000 shares at Rs 655 per share throughGeneral Reserve pursuant to Section 77A of theCompanies Act, 1956.

TOTAL 6,000,000 6,000,000

SCHEDULE “2” - RESERVES AND SURPLUS

As at As at31.03.2007 31.03.2006

Rupees Rupees

1 INVESTMENT ALLOWANCE RESERVE ACCOUNT 137,710 137,710

2 GENERAL RESERVE 34,803,418 34,803,418

3 FOREIGN PROJECTS RESERVE 285,933 285,933

4 CAPITAL REDEMPTION RESERVE 2,000,000 2,000,000

5 BALANCE IN PROFIT AND LOSS ACCOUNT 24,713,125 28,227,714

TOTAL 61,940,186 65,454,775


S 310


SCHEDULE “3” - FIXED ASSETS

Amount in Rupees

GROSS BLOCK DEPRECIATION BLOCK NET BLOCK

Description of Assets Total Cost (after Cost of Cost of Total Cost (after Cumulative Depreciation Depreciation Total Balance Balancededucting sale additions deductions deducting sale Depreciation as at for the on deduction Depreciation as at as at

proceeds where during the during the proceeds where 1st April 2006 year during the as at 31st March, 1st April,the cost is not year year the cost is not (inclusive of year 31st March, 2007 2006ascertainable) ascertainable) accumulated 2007

as at upto depreciation1st April, 31st March, on assets sold

2006 2007 whose cost is notascertainable)

Goodwill 122,190 - - 122,190 122,190 - - 122,190 - -

Buildings* 14,121,909 - - 14,121,909 8,752,336 268,479 - 9,020,815 5,101,094 5,369,573

Plant & Machinery 2,037,850 - - 2,037,850 1,747,253 290,593 - 2,037,846 4 290,597

Data Processing Equipments 1,749,998 340,734 - 2,090,732 1,588,541 149,411 - 1,737,952 352,780 161,457

Furniture & Fixtures 276,407 - - 276,407 204,675 12,984 - 217,659 58,748 71,732

Office Equipments 1,401,162 243,865 - 1,645,027 989,921 66,526 - 1,056,447 588,580 411,241

Vehicles 690,000 - 690,000 - 575,682 22,623 598,305 - - 114,318

TOTAL RUPEES 20,399,516 584,599 690,000 20,294,115 13,980,598 810,616 598,305 14,192,909 6,101,206 6,418,918

As at 31-3-2006 20,301,946 170,370 72,800 20,399,516 12,955,100 1,094,901 69,403 13,980,598 6,418,918

*Buildings include :Amount of the cost of an ownership flat and Rs. 1,500/- being cost of shares in a Co-operative Housing Society.Rs. 7,206,806 in respect of office premises at Delhi of which conveyance of property is pending.Rs. 767,575 being cost of ownership flat at Banglore where a Co-operative Society is yet to be formed.

SCHEDULE “4” - INVESTMENTS (AT COST UNLESS OTHERWISE STATED)

As at As atFace Value 31.03.2007 31.03.2006

Number Rupees Rupees Rupees Rupees

LONG TERM (Unquoted Fully Paid)1 TRADE INVESTMENTS

Equity Shares -

i) Forbes Services Limited 1,000 10,000 10,000 10,000

Invested During The Year 2005-06 4,000 40,000 40,000 40,000

Invested During The Year 2006-07 1,000 13,010 13,010 -

63,010 50,000

2 INVESTMENT IN IMMOVABLE PROPERTIESEquity Shares -Carmel Properties Private Limited. 250 2,500 2,500 2,500

Debentures -Carmel Properties Private Limited. 3,089 308,900 388,951 388,951

391,451 391,451

454,461 441,451

Less: Provision for Diminution in the value of investments - -

TOTAL 454,461 441,451


S 311


SCHEDULE “5” - CURRENT ASSETS, LOANS AND ADVANCESAs at As at

31.03.2007 31.03.2006 Rupees Rupees Rupees Rupees

1 CURRENT ASSETS

(a) SUNDRY DEBTORS (UNSECURED,CONSIDERED GOOD)

(i) Debts outstanding for a period exceeding six months (6,832) 6,832

Less: Provision for Doubtfull Debts - (6,832) (6,832)

(ii) Other Debts 4,894,140 2,620,583

4,887,308 2,620,583

(b) CASH AND BANK BALANCES

(i) Cash on hand 99,484 11,088

(ii) With Scheduled Banks -On Current Accounts 42,136,407 4,249,660

On Deposit Accounts 312,554 215,000

42,448,961 4,464,660

42,548,445 4,475,748

(c) OTHER CURRENT ASSETS

Interest Accrued on Investments - 598

TOTAL 47,435,753 7,096,929

2 LOANS AND ADVANCES

(Unsecured,considered Good unless otherwise stated)

(a) Advances recoverable in cash or in kind or for valueto be received 2,484,479 1,751,742

(b) Balances with Customs,Port Trusts. 3,684,722 383,758

(c) Deposits with Industrial Development Bank of India 518,000 518,000under the Companies Deposit (Surcharge onIncome-tax) Scheme, 1986

(d) Other Deposits 42,341,807 42,303,003

(e) Inter-corporate Deposits with Companies

(i) Deposit with Holding Company 32,100,000 45,400,000

(f) Interest Accrued on Loans & Advances - -

(g) Interest Accrued on Deposits 18,729 2,122,799

(h) Advance payments of Income tax less provisions

(Advance tax - Provisions - TDS on Reciepts) 8,065,296 3,132,709

(i) Advance FBT(FY. 06-07) 137,809 -

89,350,842 95,612,011

TOTAL 136,786,595 102,708,940


S 312


SCHEDULE “6” - CURRENT LIABILITIES AND PROVISIONS

As at As at31.03.2007 31.03.2006

Rupees Rupees Rupees1 CURRENT LIABILITIES

(a) Sundry Creditors (Other than to Small 57,995,344 22,450,434Scale Industrial undertakings)

(b) Other Liabilities * 2,312,776 40,855(c) Amount payable to Holding Company 12,789,156 12,956,919

73,097,276 35,448,2082 PROVISIONS

Provision for Retirement & Other Employee Benefits 2,276,899 302,928Leave Salary Encashment 1,490,363 144,748Proposed Dividend - 3,000,000Tax on Dividend - 420,750

3,767,262 3,868,426TOTAL 76,864,538 39,316,634

* No amount is due to be credited to Investor, Education and Protection Fund.

SCHEDULE “7” - SERVICES AND OTHER INCOMEFor the year For the year

ended ended31.03.2007 31.03.2006

Rupees RupeesSERVICES & OTHER INCOME

(a) Income from services rendered (Gross)Shipping Commission includingDocumentation Charges 7,526,523 -

(b) Yard Income(Storage, Handling & Reparing, Professional) 974,454 18,110,362(Tax deducted at source Rs.0/- Previous year Rs. 6,55,813/-)

(c) Interest on long term investment- Other than trade 3,089 3,250(Tax deducted at source Rs.693/-Previous year Rs. 868/- )

(d) Interest received from others 3,223,495 5,825,834(Tax deducted at source Rs. 7,19,275/-Previous year Rs. 13,03,249/-)

(e) Rent 1,196,855 2,035,200

(Tax deducted at source Rs.1,68,029/—Previous year Rs. 2,06,804/-)

(f) Miscellaneous Income 1,319,977 29,012

(g) Excess Provisions written back - 2,226,802

(h) Profit on sale of Fixed Assets 17,306 2,603

(i) Sundry amounts written back - 10,449,272

(j) Professional Service Rendered 5,651,707 -

TOTAL 19,913,405 38,682,335


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SCHEDULE “8” - OTHER EXPENSESFor the year For the year

ended ended31.03.2007 31.03.2006


1. PAYMENTS TO AND PROVISIONS FOR EMPLOYEES(a) Salaries, Wages and Bonus 4,845,453 1,937,748

(b) Gratuity 67,884 50,000

(c) Company’s contribution to Provident andSuperannuation Funds 459,753 254,743

(d) Company’s contribution to Employees’ State 7,224 40

Insurance Scheme(e) Staff Welfare Expenses 499,407 193,391

5,879,722 2,435,922

2. OTHER EXPENSES

(a) Repairs to(i) Building 60,000 1,071,820

(ii) Others 7,274,946 206,671

7,334,946 1,278,491

(b) Rent 882,990 10,120,479

Less: Recoveries (89,538) (8,212,763)

793,452 1,907,716

(c) Rates and Taxes 20,180 111,139

(d) Insurance 26,564 31,915

(e) Electricity charges 212,639 464,962

(f) Bad Debts - 402,969

(g) Conveyance/travelling expenses 634,720 497,937

(h) Advertisement 108,990 7,836

(i) Retainership Charges 4,765,235 345,264

(j) Sundry Office Expenses 268,021 160,616

(k) Entertainment expenses 82,884 20,044

(l) Miscellaneous Expenses 482,199 498,339

(m) Stamps, Telegrams, Stationery 820 1,475

(n) Printing and Telephones 735,922 354,571

(o) Legal and Professional charges 7,80,563 10,82,156

(p) Directors’ Fees 26,000 32,000

(q) Auditors’ Remuneration -

i) As Statutory Auditors 60,000 60,000

ii) As Tax Auditors 15,000 15,000

iii) Service tax 9,270 -

iv) Out of Pocket expenses 4,000 4,000

88,270 79,000

(r) Yard Related Expenses 550,397 14,712,681

(s) Loss on Sale of Investments - 420,000

16,911,803 22,409,112

TOTAL 22,791,524 24,845,034


S 314


SCHEDULE “9” - NOTES TO ACCOUNTS AND SIGNIFICANCT ACCOUNTING POLICIES

I) SIGNIFICANCT ACCOUNTING POLICIES

a) BASIS OF ACCOUNTING

The financial statements are prepared under historical cost convention, consistantly on accrual basis, and are in accordance with therequirements of the Companies Act, 1956, and comply with Accounting Standards referred to in sub-section (3C) of section 211 of thesaid Act.

b) FIXED ASSETS

Fixed Assets are stated in the accounts at the purchase price including any attributable cost of bringing the assets to their workingcondition for their intended use.

c) DEPRECIATION

Depreciation on Fixed Assets is provided Written Down Value basis at the rates specified in Schedule XIV of the Companies Act ,1956.

d) INVESTMENTS

The Company has classified its investments into long term investments which are stated at cost less provision for permanent diminutionin value.

e) REVENUE RECOGNITION

The Company recognises income from container yard activity on accrual basis.

f) RETIREMENT BENEFITS

(i) The Company has a defined contribution plan for provident fund and the Company’s contribution thereto is charged to the Profit& Loss Account. The Company has its own gratuity fund for gratuity payable to the employees and the Contribution there to,based on an actuarial valuation, is charged to the Profit & Loss Account. The company also has a benefit defined Superannutionplan and cotribution made to Life Insurance Corporation of India and is charged to the Profit & Loss Account.

(ii) Provision for leave encashment is made on the basis of actual valuation at the end of each year.

(iii) Entitlement to earned leave can be encashed or availed by employees while in service or at the time of termination if certaineconditions are met. Earned leave which can be carried forward to future periods is treated as a ‘short-term benefit’ provided theemployee is entitled to either encash/utilise the benefit during the twelve months after the end of the period when he becameentitled to the leave and is also expected to do so. Where the encashment / availment is not expected to wholly occur in the nexttwelve months, the benefit is considered as ‘long-term’. The value of short term benefit is determined without discouting. Longterm benefits are recognised and measured as the present value of the benefits in accordance with paragraph 129 of the revisedAccounting Standards (AS-15) on Employee Benefits.

g) TAXATION

Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at the amountexpected to be paid to the tax authority in accordance with the Indian Income Tax Act, 1961.

Deffered tax is recoginised on timing differences, being the difference between taxable income and accounting income that originatein one period and are capable of reversal in one or more subsequent periods in accordance with the requirements of AccountingStandard 22 - “Accounting for Taxes On Income”.

h) DEFERRED REVENUE EXPENDITURE:

Voluntary Retirement Compensation :

The lumpsum compensation paid to employees retiring under the Voluntary Retirement Schemes is charged to the Profit & LossAccount over a period of 60 months or over the balance period of service, whichever is shorter.

i) EARNINGS PER SHARE:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by theweighted average number of Equity Shares outstanding during the period.


S 315


SCHEDULE “9” - NOTES TO ACCOUNTS AND SIGNIFICANCT ACCOUNTING POLICIES

I The break-up of deferred tax liability and assets are as under :-

Break-up of Deferred Tax liability and assets

Nature of Timing Difference Deferred Tax Liability Deferred Tax Liability Deferred Tax Liability(-) / Assets (+) (-) / Assets (+) (-) / Assets (+)

As at 01.04.2006 As at 31.03.2007

Depreciation 420,905 27,983 448,888

Items Allowed U/s 43B (102,184) (95,014) (197,198)

Items Disallowed u/s 43B 235,308 529,648 764,956

Provision for Doutfull Debts 176,144 - 176,144

730,174 462,617 1,192,790

II Earnings per Share

2007 2006

(I) Net Profit attributable to Equity Shareholders (3,514,589) 8,672,600

(ii) Weighted Average Number of Equity shares outstandingduring the period (Face Value Rs. 100/- each) 60,000 60,000

(iii) Earnings Per Share (59) 145

The company has not issued any potential dilutive equity shares.

III Contingent Liabilities Not Provided For :Current Previous

Year Year

a) Claims against the company not acknowledged as debts 12,035 12,035

IV Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs NIL (Previous YearRs Nil).

V Previous year’s figures have been regrouped wherever necessary.

K. C. MEHRA Chairman

C.G.SHAH

CAPT. S. P. RAO Directors

C.A.KARNIK


}


S 316

Information Pursuant to Part IV of Schedule VI of the Companies Act

Balance Sheet Abstract and Company’s General Business Profile as at 31st March,2007

I REGISTRATION DETAILS

Registration No. 00808 State Code 11

Balance Sheet Date 31.3.2007

II CAPITAL RAISED DURING THE YEAR (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil


III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS(Amount in Rs. Thousands)

Total Liabilities 67,940 Total Assets 67,940

SOURCES OF FUNDS APPLICATION OF FUNDS

Paid-up Capital 6,000 Net Fixed Assets 6,101

Reserves & Surplus 61,940 Investments 454

Secured Loans Nil Deffered Tax Assets 1,193

Unsecured Loans Nil Net Current Assets 59,922

Deffered Tax Liability Nil Misc. Expenditure 270

IV PERFORMANCE OF COMPANY (Amount in Rs. Thousands)

Turnover 19,913

Total Expenditure 23,804

Profit Before Tax (3,891)

Profit After Tax (3,515)

Earnings per Share (59)

Dividend rate

V GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY(As per monetary terms)

Item Code No.(ITC Code) Not Applicable as Company renders Services

Product/Service Description: Shipping Activity

K. C. MEHRA Chairman

C.G.SHAH


C.A.KARNIK


}


S 317


2006-2007 2005-2006 Rupees Rupees

PROFIT BEFORE TAX AND EXTRA ORDINARY ITMES (3,890,989) 12,533,315 Adjusted for.:

Depreciation 810,616 1,094,901Amortisation of VRS 202,254 202,254Interest Income (3,226,584) (5,829,084)Rent Income (1,196,855) (2,035,200)Bad Debts - 402,969Provision for doubtful debts - 6,832Provision for doubtful debts Written Back - (526,802)Sundry Provision Written Back - (10,449,272)Provision for Diminution in Value of Investments written back - (1,700,000)Profit / loss on sale of assets (17,305) (2,603)Loss on sale of Investments - 420,000

(3,427,874) (18,416,005) (7,318,863) (5,882,691)

OPERATION PROFIT BEFORE WORKING CAPITAL CHANGESAND OTHER ADJUSTMENTSChanges in

Trade and other recievables (2,266,725) 1,213,705Loans & Advances (1,968,435) (40,071,573)Trade payables and others 37,547,904 4,838,729

33,312,744 (34,019,139)CASH GENERATED FROM OPERATIONS 25,993,881 (39,901,829)

Direct Taxes Adjusted (5,156,613) (6,915,585)(A) NET CASH FLOW FROM OPERTING ACTIVIES 20,837,268 (46,817,414)

CASH FLOW FROM INVESTING ACTIVITIESInterest received 3,227,183 3,724,428Rent received 1,196,855 2,035,200Purchase of Assets (Net) (584,599) (170,370)capital advances adjusted / paid - 388,410Proceeds from sale of assets 109,000 6,000Sale of Investments - 1,280,000Purchase of investments (13,010) -Intercorporate deposit (given) - -Refund of Intercorporate deposit 13,300,000 39,700,000

(B) NET CASH FLOW FROM INVESTING ACTIVITIES 17,235,429 46,963,668CASH FLOW FROM FINANCING ACTIVITIESDividend Paid - (3,000,000)Corporate Dividend Tax Paid - (392,040)

C) NET CASHFLOW FROM FINANCING ACTIVITIES - (3,392,040)NET DECREASE/INCREASEIN CASH AND CASHEQUIVALENTS (A)+(B)+(C) 38,072,697 (3,245,786)CASH AND CASH EQUIVALENTS AS AT THE COMMENCEMENTOF THE YEAR, COMPRISING:Cash, Cheques on hand & Remittances in transit 11,088 9,571Balance with scheduled banks on Current accounts and Deposit accounts 4,464,660 7,711,963CASH AND CASH EQUIVALENTS AS AT THE END OFTHE YEAR, COMPRISING: 4,475,748 7,721,534Cash, Cheques on hand & Remittances in transit 99,484 11,088Balance with scheduled banks on Current accounts and Deposit accounts 42,448,961 4,464,660

42,548,445 4,475,748 NET DECREASE/INCREASE AS DISCLOSED ABOVE 38,072,697 (3,245,786)


For BATLIBOI & PUROHIT K. C. MEHRA ChairmanChartered Accountants C.G.SHAH


C.A.KARNIK


}


S 318

(a wholly owned Subsidiary Company) Annual Report and Accountsfor the year ended 31st March, 2007

DIRECTORS:

C.G. Shah Chairman

C.A. Karnik

R.T. Doshi

M.L. Khetan

S.P. Kadakia

BANKERS:

Union Bank of India

AUDITORS:

Messrs. Batliboi & Purohit

REGISTERED OFFICE:

Forbes Building

Charanjit Rai Marg,

Fort, Mumbai 400 001



S 319

2. DIVIDEND:

Having regard to the operating result for the year, the Board ofDirectors of the Company have paid an Interim Dividend at the rateof Rs.5/- per share i.e. an aggregate amount of Rs.100 lakhs. Forthe previous year ended 31st March, 2006, the Company declareddividend at the rate of Rs.1.00 per share amounting to Rs.20 lakhs.

3. CHANGE OF STATUS OF THE COMPANY:

During the year Forbes Finance Ltd a 100% subsidiary of ForbesGokak Ltd has purchased 64% shares of the company from ForbesGokak Ltd. As a result the Company became a subsidiary of ForbesFinance Ltd and due to interconnected shareholdings, the Companybecame wholly owned subsidiary Company of Forbes Gokak Ltd.

4. AMALGAMATION:

With the change of ownership of our Company, we have becomesubsidiary of Forbes Finance Limited. Our Company and ForbesFinance Limited are having similar business, objective etc & henceamalgamation of our Company with Forbes Finance Limited willgive a greater advantage in terms of economics of scale, commonclientele etc. Forbes Finance Limited., our parent Company hasproposed our getting merged with them alongwith ForbesCampbell Holdings Limited.

Your Directors recommend the amalgamation with Forbes FinanceLimited.

The Shareholders,


1. FINANCIAL RESULTS:Current Year Previous Year

Rupees Rupees

Total Income 1,22,75,060 41,50,337

Less: Expenditure 5,22,475 4,54,211

Balance 1,17,52,585 36,96,126

Less: Provision for Doubtful Loan - 44,54,000

Profit /Loss Before Tax 1,17,52,585 (7,57,874)

Less: Provision for Taxation

Current Income Tax 13,62,000 10,64,000

Fringe benefit Tax 500 6,600

Profit/Loss After Tax 1,03,90,085 (18,28,474)

Add: Excess Provision written back 30,000 -

Add: Amount brought forward from previous year 3,84,96,456 4,26,05,430


APPROPRIATIONS TO:

Equity Dividend 1,00,00,000 20,00,000

Dividend Tax 14,02,500 2,80,500

Transfer to General Reserve 20,79,000 -

Surplus Carried to Balance Sheet 3,54,35,041 3,84,96,456

4,89,16,541 4,07,76,956

5. INVESTMENTS:

The position of investments is as under:

As at As at31st March, 31st March,

2007 2006Rupees Rupees

Quoted Investments 2,81,165 1,46,91,622


TOTAL 1,61,89,869 3,07,76,076

During the year the Company opted for redemption of Units ofMutual Fund.

6. DIRECTORS:

Mr. C. G. Shah and Mr. R.T. Doshi retire from the Board by rotationand are eligible for re-appointment. Your Directors recommendtheir appointment.

Mr. S.P. Kadakia is appointed as an ‘Additional Director’ witheffect from 18th May, 2007. In terms of the provisions of Section260 of the Companies Act, 1956, Mr. S.P. Kadakia would holdoffice upto the date of forth coming Annual General Meeting. Beingeligible, have offered his services to act as Director on the Boardof the Company. The Board recommend his appointment.


S 320

7. AUDITORS:

You are requested to appoint Auditors for the current year and tofix their remuneration. The retiring Auditors M/s. Batliboi &Purohit., Chartered Accountants, offer themselves for re-appointment as Auditors of the Company.


The Company did not have any employee who was entitled toreceipt of Rs.24,00,000/- or more in aggregate throughout theFinancial year or Rs.2,00,000/- or more per month for a part ofthe financial year.


Pursuant to Section 217(2AA) of the Companies Act, 1956, theDirectors based on the representations received from the OperatingManagement confirm:

a) that in the preparation of the annual accounts, the applicableaccounting standards have been followed and that there areno material departures :

b) that they have selected such accounting policies and appliedthem consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company forthat period;

c) that they have taken proper and sufficient care to the best oftheir knowledge and ability for the maintenance of adequateaccounting records in accordance with the provisions of theAct for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;






The Company has not earned and used any foreignexchange during the year.

For and on behalf of the Board of Directors,

(C.G. SHAH)

Chairman

Mumbai, dated: 18th May, 2007.


S 321

AUDITORS REPORT TO THE MEMBERS OF WARRIOR (INVESTMENT) LTD.

1. We have audited the attached balance sheet of Warrior (Investment) Limited (‘the Company’) as at 31st March 2007, and also the profitand loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report) (Amendment) Order, 2004issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in theAnnexure a statement on the matters specified in Paragraphs 4 and 5 of the said Order.



(b) In our opinion, proper Books of Account as required by law have been kept by the Company so far as appears from our examination ofthose books;


(d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the AccountingStandards referred to in Sub-Section (3C) of section 211 of the Companies Act. 1956.

(e) On the basis of the written representations received from the directors as on 31st March, 2007, and taken on record by the Board ofDirectors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms of clause(g) of sub-section (1) of Section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the AccountingPrinciples generally accepted in India;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2007;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For BATLIBOI & PUROHIT Chartered Accountants

K.K. KshirsagarPlace : Mumbai PartnerDated : 18th May, 2007 Membership No. 4047


S 322

ANNEXURE TO AUDITORS’ REPORTANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE TO THE MEMBERS OFWARRIOR (INVESTMENT) LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2007i. The company does not have any fixed assets. Accordingly the provision of clause 4(i) of the Companies (Auditor’s Report) Order, 2003 (as

amended) are not applicable.ii. The Company does not have any inventory. Accordingly the provision of clause 4(ii) of the Companies (Auditor’s Report) Order, 2003 (as

amended) are not applicable.iii. (a) Company has granted unsecured loans to one party Forbes Gokak Limited covered in the register maintained under Section 301 of the

Companies Act, 1956. The maximum amount involved during the year was Rs. 6,83,50,000 and the year end balance of loans granted tosuch parties was Rs. 6,02,50,000.

(b) In our opinion and according to the information and explanations given to us, rate of interest and other terms and conditions of loangiven by the company are not prima facie prejudicial to the interest of the company.

(c) In respect of the loans granted, repayment of the principal amount is stipulated and the payment of interest have been regular except incase of interest free loan given to Lathem India Ltd.

(d) Based on the Audit procedures and the information and explanations given to us, there is an overdue amount in respect of loan given toLatham India Ltd for which the Company is taking reasonable steps for recovery of the principal amount. However, the Company hasmade necessary provision for the same.

(e) As informed the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the registermaintained under section 301 of the Companies Act, 1956.


v. There are no contracts or arrangements with the company covered under section 301 of the Companies Act., 1956.vi. The company has not accepted any deposits from the public within the meaning of provision of Section 58A, 58AA or any other relevant

provisions of the Companies Act, 1956 and the rules framed there under.vii. In our opinion the Company has an internal audit system commensurate with its size and nature of its business.viii. The Company being an investment company is not required to maintain cost records under clause (d) of subsection (1) of section 209 of the

Companies Act, 1956.ix. (a) The company is regular in depositing undisputed statutory dues including provident fund, Investor education and protection fund,

Employees State Insurance, Income Tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriateauthorities. Sales tax, wealth Tax, customs duty and Excise duty are not applicable to the company.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investoreducation and protection fund, employees state insurance, income – tax , Wealth – Tax, Service Tax, Sales Tax, Customs Duty, exciseduty, cess and other undisputed statutory dues were outstanding at the year end for a period of more than six months from the date theybecome payable.



xi. The Company did not have any dues to financial institution, banks or debenture holders during the year.xii. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not

granted any loans and advances on the basis of securities by way of pledge of shares, debentures and other securities.xiii. Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditors

Report) Order 2003 (as amended) are not applicable to the company.xiv. In our opinion, the Company is not trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4

(xiv) of the Companies (Auditors Report) Order 2003 (as amended) are not applicable to company.xv. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from bank or

financial institutions.xvi. The Company did not have any term loans outstanding during the year.xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we are of the

opinion that the company has not raised any funds on short term basis.xviii.Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of

the companies Act, 1956.xix. The Company did not have outstanding debentures during the year.xx. The Company has not raised any money by public issues during the year.xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statement and as per the

information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during thecourse of our audit.

For BATLIBOI & PUROHIT Chartered Accountants

K.K. KshirsagarPlace : Mumbai PartnerDated : 18th May, 2007 Membership No. 4047


S 323

As atSchedule 31-Mar-2006

No. Rupees Rupees Rupees

SOURCES OF FUNDS :

1. SHAREHOLDERS FUNDS :

A. Share Capital A 20,000,000 20,000,000

B. Reserves & Surplus B 59,188,349 60,170,764

79,188,349 80,170,764

79,188,349 80,170,764


1. INVESTMENTS : C 16,189,869 30,776,076

2. CURRENT ASSETS, LOANS, D

AND ADVANCES :

A. Sundry Debtors 15,096 0

B. Cash and Bank Balances 1,688,644 1,924,743

C. Loans and Advances 61,373,151 49,858,839

63,076,891 51,783,582

Less : CURRENT LIABILITIES E

AND PROVISIONS

A. Sundry Creditors 78,411 108,394

B. Provisions 0 2,280,500

78,411 2,388,894


79,188,349 80,170,764

NOTES TO THE ACCOUNTS F



For BATLIBOI & PUROHIT C. A. Karnik

Chartered Accountants R. T. DoshiDirectors

M. L. Khetan

K. K. KSHIRSAGAR S. P. Kadakia

Partner V. K. Vora Company Secretary

Membership No. 4047


}


S 324


For BATLIBOI & PUROHIT C. A. KarnikChartered Accountants R. T. Doshi

DirectorsM. L. Khetan

S. P. KadakiaK. K. KSHIRSAGAR V. K. Vora Company SecretaryPartnerMembership No. 4047Mumbai, Dated : 18th May, 2007

As at31-Mar-2006

Rupees Rupees Rupees1. INCOME :

Dividend (Gross) 4,860,013 564,237Interest (Gross)From others 4,566,344 3,586,100(Tax Deducted at Source Rs. 1024687/-Previous Year Rs.804721/- )Profit on Sale of Investments 2,198,703 0Provision for Doubtful Loan, no longerrequired written back 650,000 0

12,275,060 4,150,3372. EXPENDITURE :

Payments to and Provisions for Employees :Salaries and Allowances 0 195,505Co’s cont.to Provident & other fund 0 31,312Staff Welfare Expenses 0 86,326

0 313,143Auditors Remuneration :

Audit Fees 7,500 7,500Tax Audit fees 5,000 5,000Out of Pocket Expenses 2,659 2,600Service Tax 1,545 1,530

16,704 16,630Office Admn. Expenses 430,673 0Professional Tax 2,500 2,500Directors Fees 36,000 36,000Miscellaneous Expenses 36,598 59,438Loss on Sale of Investments. 0 26,500

522,475 454,21111,752,585 3,696,126

Provision for Doubtful Loan 0 4,454,0003 Profit / Loss before Tax 11,752,585 (757,874)

Less : Provision for TaxationCurrent Income Tax 1,362,000 1,064,000Fringe Benefit Tax 500 1,362,500 6,600

4 Profit / Loss after Tax 10,390,085 (1,828,474)5 Excess Provision Written back 30,000 06 Surplus as per previous year Accounts 38,496,456 42,605,4307 Total Amount available for Appropriations 48,916,541 40,776,9568 Appropriations To :

Interim Dividend 10,000,000 0Proposed Dividend 0 2,000,000Dividend Tax 1,402,500 280,500Transfer to General Reserves 2,079,000 -Surplus carried to Balance Sheet 35,435,041 38,496,456

48,916,541 40,776,956No. of Equity Shares 2,000,000 2,000,000Face value per share 10 10Basic and Diluted Earning per share 5.20 (0.91)NOTES TO THE ACCOUNTS SCHEDULE ‘F’


}


S 325


SCHEDULE ‘A’ - SHARE CAPITALAs at


AUTHORISED, ISSUED AND SUBSCRIBED :20,00,000 Equity Shares of Rs. 10/- each 20,000,000 20,000,000

20,000,000 20,000,000PAID-UP :

20,00,000 Equity Shares of Rs.10/- each Fully paid-up 20,000,000 20,000,000of the above shares, 12,80,000 shares are held by Forbes FinanceLtd. which is a 100% subsidiary of Forbes Gokak Ltd.Forbes Gokak Ltd. is a subsidiary of Sterling Investment Corporation Pvt. Ltd.The ultimate holding company is Shapoorji Pallonji & Company Ltd. 20,000,000 20,000,000

SCHEDULE ‘B’ - RESERVES & SURPLUS

As at31-Mar-2006


GENERAL RESERVES :Balance as per last Balance Sheet 21,674,308 21,674,308Add: Transferred from Profit & Loss Account 2,079,000 -

23,753,308 21,674,308

SURPLUS :As per Profit & Loss Account 35,435,041 38,496,456

59,188,349 60,170,764


S 326


SCHEDULE ‘C’ - INVESTMENTS (LONG TERM TRADE INVESTMENTS)As at


1. QUOTED-EQUITY SHARES :Forbes Gokak Ltd. 281,165 281,1651536 Shares(Prev.Year10752 shares of FAL Ind. Ltd.)Fully Paid shares of Rs.10/- each.

2. OTHERS : MUTUAL FUNDSDSP Merrill Lynch - 345713 Units of Rs.10/- each 0 3,500,000HDFC Floating rate Bond 377231(Prev. year 368612 0 3,696,739Units of Rs.10/- each.Franklin Templeton 369337(Prev.year 361448 0 3,713,718Units of Rs.10/- each.Grindlays Floating Rate 347670 Units of Rs.10/- each 0 3,500,000

281,165 14,691,6223. UNQUOTED-EQUITY SHARES :

Forbes Services Ltd.10000 fully paid shares of Rs. 10/- each 100,050 100,050

R.S.Business Machines Pvt.Ltd.34 fully paid shares of Rs. 100/- each. 3,417 3,417

Barwil Forbes Shipping Services Ltd.,NIL( Prev. year 2000 fully paid shares of Rs. 100/- each). 0 175,750

Forbes Campbell Holdings Ltd.,720000 Fully paid Shares of Rs.10/- each 15,557,400 15,557,400

P.T.Gokak , Indonesia688 fully paid shares of US $ 1000/- each. 5,648,726 5,648,726

Forbes Technosys Ltd.392000 fully paid shares of Rs.10/- each. 1,969,270 1,969,270

Forbes Tinsley Ltd.37470 Fully paid Shares of Rs. 10/- each 374,700 374,700

High Point Properties Ltd. 251,250 251,25025000 Fully paid shares of Rs.10/- each 23,904,813 24,080,563

24,185,978 38,772,185Less: PROVISION FOR DIMINUTION IN

THE VALUE OF INVESTMENTS. 7,996,109 7,996,109

TOTAL RUPEES. 16,189,869 30,776,076

As at 31-03-2007 As at 31-03-2006

Aggregate Market Aggregate MarketCost Value Cost Value

Quoted Investments 281,165 612,864 281,165 825,216

612,864 825,216Unquoted Investments 15,908,704 30,494,911

16,189,869 30,776,076


S 327


SCHEDULE D’ - CURRENT ASSETS, LOANS AND ADVANCESAs at

31-Mar-2006Rupees Rupees Rupees

1. CURRENT ASSETS :Sundry Debtors 15,096 0

Cash and Bank balances :Cash on hand 12,301 11,230

With Scheduled Banks :On Current Accounts 1,676,343 1,913,513

1,688,644 1,924,743

2. LOANS AND ADVANCES :(UNSECURED, CONSIDERED GOOD)Good and Unsecured 60,250,000 49,250,000Doubtful and Unsecured 3,804,000 4,454,000

64,054,000 53,704,000

Less: Provision for Doubtful Loan 3,804,000 4,454,000

60,250,000 49,250,000Advances recoverable in cash or in kind or for valueto be received.Unsecured, Considered Good 500,000 0

60,750,000 49,250,000

Advance Payment of Tax. 623,151 608,839

(Net after Provision for Taxation) 61,373,151 49,858,839

63,076,891 51,783,582

SCHEDULE ‘E’ - CURRENT LIABILITIES AND PROVISIONS

As at31-Mar-2006

Rupees Rupees RupeesCURRENT LIABILITIES :Sundry Creditors 78,411 108,394

PROVISIONS :Proposed Dividend 0 2,000,000Dividend Tax 0 0 280,500

78,411 2,388,894


S 328


SCHEDULE ‘F’ - NOTES TO THE ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES :


The Financial Statements are prepared under historical cost convention, on accural basis, and are in accordance with the requirements of theCompanies Act, 1956, and comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the said Act.

B. INVESTMENTS :

Long term investments are stated at cost less provision for diminution in value, where applicable. Current investments are stated at lowerof cost and fair value.

C. TAX ON INCOME

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the IncomeTax Act 1961.

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

Since there are no timing differences the implementation of Accounting Standard (AS-22) Accounting for taxes on income issued by theInstitute of Chartered Accountants of India is not required.



4 Related Party Disclosures : As required by Accounting Standard 18.

I. Name of the Related Party and nature of relationship where control exists are as under :

A. Enterprises collectively having more than one half of voting powers :

As on 31-3-2007 As on 31-3-2006

Shapoorji Pallonji & Co. Ltd. (Ultimate holding Co.) Shapoorji Pallonji & Co. Ltd. (Ultimate holding Co.)



Forbes Finance Ltd.


As on 31-3-2007 As on 31-3-2006

Forbes Campbell Holdings Ltd. Forbes Sterling Star Ltd. Forbes Campbell Holdings Ltd. Forbes Sterling Star Ltd.

Forbes Services Ltd. Latham India Ltd. Forbes Services Ltd. Latham India Ltd.

Forbes Technosys Ltd. Forbes Aquamall Ltd. Forbes Technosys Ltd. Forbes Aquamall Ltd.

Aquamall Water Solutions Ltd. Forbes Doris and Naess FAL Industries Ltd. Forbes Dories and NaessMaritime Ltd. Maritime Ltd.

Eureka Forbes Ltd. Forbes Abans Cleaning Aquamall Water Solutions Ltd. Forbes Abans CleaningSolutions Pvt. Ltd. Solu. Pvt. Ltd.

Volkart Fleming Shipping & Next Gen. Publishing Ltd. Eureka Forbes Ltd. Next Gen. Publishing Ltd.Services Ltd.

Forbes Tinsley Co.Ltd. Euro Forbes Int. Pte. Ltd. Volkart Fleming Ship. Ser. Ltd. Euro Forbes Int. Pte. Ltd.Forbes Tinsley Co. Ltd.


S 329


Referred to in Referred to in“A” above “B” above

31-03-07 31-03-06 31-03-07 31-03-06

Purchase

1. Investments - - - 251,250

Expenses

2. Other Service Charges - 13,407

3. Dividend Paid 7,680,000 - 4,320,000 0

4 Reimbursement of Expenses - - 430,673 0

Income

5 Interest Received 4,566,344 3,586,100 - -

6 Dividend Received 7680 4,320,000 10,752

Finance

6 Deposits Placed 26,600,000 6,480,000

7 Deposits Refunded 15,100,000 1,700,000

Outstandings

8 Deposits Given 60,750,000 49,250,000 -

9 Interest Receivable 15,096 - - -

III Related Party Disclosures

The above transactions includes :

1. All amount referred to in table ‘A’ are with a single party viz. Forbes Gokak Ltd.

2. 1B represents investment made in Highpoint Properties Ltd.

3 3B represents Dividend paid to Forbes Campbell Holdings Ltd.

4. 6B includes dividend received from Forbes Campbell Holdings Ltd. (Prev. Year FAL Industries Ltd. Rs.10,752/-)

5. 4B represents payment made to VFSS


For BATLIBOI & PUROHIT C. A. Karnik

Chartered Accountants R. T. DoshiDirectors

M. L. Khetan

K. K. KSHIRSAGAR S. P. Kadakia

Partner V. K. Vora Company Secretary

Membership No. 4047


}


S 330

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

Balance Sheet and Company’s General Business Profile

I Registration Detailes

Registration No. 17433/TA State code 11


II. Capital Raised During The Year (Amount Rs. In Thousands)

Public Issue NIL Rights Issue NIL

Bonus Issue NIL Private Placement NIL

III. Position of Mobilisation And Deployment Of Funds(Amount Rs. In Thousands)

Total Liabilities 79188 Total Assets 79188

Sources of Funds

Paid up Capital 20000 Reserves & Surplus 59188

Secured Loans NIL Unsecured Loans NIL

Application of Funds

Net Fixed Assets NIL Investments 16190

Net current Assets 62998 Misc. Expenditure NIL

Accumulated Losses NIL

IV. Performance Of Company (Amount Rs. In Thousands)

Turnover 12275


Profit/(Loss) Before Tax 11753 Profit/(Loss) After Tax 10390

(Please Tick Appropriate box + for Profit, - for Loss)

Earning Per Share (Rs.) 5.20 Dividend Rate (%) 50

V. General Names Of Three Principal Products/Services Of The Company (As Per Monetary Terms)

Item Code No. (ITC Code) Product Deacription Investment Co.




S 331

CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2007

2006-2007 2005-2006Rupees Rupees Rupees Rupees

CASH FLOW FROM OPERATING ACTIVITIESPROFIT BEFORE TAX 11,752,585 (757874)

Adjustments :Dividend Income (4,860,013) (564,237)Interest Income (4,566,344) (3,586,100)Loss on sale of Investments - 26,500Provision for doubtful loan - 4,454,000Profit on Sale of Investments (2,198,703) -Recovery of Doubtful Debts (650,000) -Prior Year Adjustments (30,000) -

(12,305,060) 330,163

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES &OTHER ADJUSTMENTS (552,475) (427,711)

Change in Stock-in-trade - 281,165Change in Sundry Debtors/ Advances (515,096) -Direct Taxes Paid (1,376,778) (1,299,758)Change in Sundry Creditors 29,983 (1,861,891) (23,235) (1,041,828)

(A) NET CASH FLOW FROM OPERATING ACTIVITIES (2,414,366) (1,469,539)


Dividend Income 4,860,013 564,237Interest Income 4,566,344 3,586,100Loss on sale of Investments - (26,500) Sale of Investments 16,784,910 1,058,092Recovery of Doubtful Debts 650,000 -Dividend Paid (12,000,000) -Dividend Tax Paid (1,683,000) -Change in Deposits with Companies (11,000,000) (3,200,000)

(B) NET CASH FLOW FROM INVESTING ACTIVITIES 2,178,267 1,981,929

CASH FLOW FROM FINANCING ACTIVITIES - -

NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS (A+B) (236,099) 512,390Cash and Cash Equivalents as at the commencement of the year comprising Cash &Balance with Banks 1,924,743 1,412,353Cash and Cash Equivalents as at the end of the year comprising Cash &Balance with Banks 1,688,644 1,924,743

NET INCREASE/DECREASE AS DISCLOSED ABOVE (236,099) 512,390


For BATLIBOI & PUROHIT C. A. KarnikChartered Accountants R. T. Doshi

DirectorsM. L. KhetanK. K. KSHIRSAGAR S. P. KadakiaPartner V. K. Vora Company SecretaryMembership No. 4047


}


S 332

Note :

forbes gokak limited reports and accounts of subsidiary companies

Documents