manugraph india limited report 07 08.pdf · manugraph kenya limited ... 2006 and pursuant to...

36 th Annual Report 2007-2008

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BOARD OF DIRECTORS

CHAIRMAN Mr. Sanat M. Shah

DIRECTORS Mr. Jayant C. Vakil ]

Mr. Jitendra N. Mehrotra ]

Mr. Hiten C. Timbadia ] Independent Non-Executive Directors

Mr. Harshad H. Vasa ]

Mr. Amit N. Dalal ]

Mr. Mohan R. Harshe Whole-time Director

VICE-CHAIRMAN & MANAGING DIRECTOR Mr. Sanjay S. Shah

MANAGING DIRECTOR Mr. Pradeep S. Shah

COMPANY SECRETARY Mr. Vinay Nagaonkar

MANAGEMENT Mr. S. M. Mordekar (General Manager - Operations)

Mr. B. B. Nandgave (General Manager - Operations)

AUDITORS Messrs B. F. Pavri & Co.Chartered Accountants

SOLICITORS & ADVOCATES Messrs Tyabji Dayabhai

REGISTERED OFFICE Sidhwa House, 1st Floor,N. A. Sawant Marg, Colaba,Mumbai 400 005.

CONTENTS

36th Annual General Meeting on Thursday, the 28th August, 2008 at M. C. Ghia Hall, Bhogilal Hargovindas Building,18/20, Kaikhushru Dubash Marg, Mumbai-400 001, at 3.30 p.m.

Notice ..................................................................................................... 2

Directors’ Report .................................................................................. 7

Report on Corporate Governance .............................................. 12

General Shareholder Information ............................................... 16

Analysis of Results in Brief ............................................................. 19

Auditors’ Report ............................................................................... 20

Balance Sheet .................................................................................... 24

Profit and Loss Account ................................................................. 25

Schedules A to T ............................................................................... 26

Notes forming part of theAccounts - Schedule T .................................................................... 39

Cash Flow Statement ...................................................................... 52

Consolidated Accounts .................................................................. 55

Financial Statistics ............................................................................ 77

Statement pursuant to Section 212of the Companies Act, 1956 ......................................................... 78

Manugraph DGM, Inc. ................................................................... 79

Manugraph Kenya Limited. .......................................................... 92

Constrad Agencies (Bombay)Private Limited .. ............................................................................ 107

Page No. Page No.

Manugraph India Limited


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NOTICE

NOTICE is hereby given that thirty-sixth Annual General Meeting of Members of Manugraph India Limited will be held onThursday the 28th August, 2008 at 3.30 p.m. at M. C. Ghia Hall, Bhogilal Hargovindas Building, 18/20, Kaikhushru DubashMarg, Mumbai - 400 001, to transact the following business :

AS ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at 31st March, 2008 and Profit and Loss account for the year ended31st March, 2008 together with reports of the Directors and the Auditors thereon;

2. To declare a dividend on equity shares;

3. To appoint a Director in place of Mr. Harshad H. Vasa who retires by rotation and being eligible offers himself forre-appointment;

4. To appoint a Director in place of Mr. Jitendra N. Mehrotra who retires by rotation and being eligible offers himself forre-appointment;

5. To appoint M/s B. F. Pavri & Co., Chartered Accountants, as Auditors of the Company to hold office from the conclusion ofthis Annual General Meeting until the conclusion of the next Annual General Meeting and to authorise the Board ofDirectors to fix their remuneration.

AS SPECIAL BUSINESS

6. To consider and, if thought fit, to pass, with or without modification(s), the following as an Ordinary resolution.

“RESOLVED THAT in partial modification of the resolution passed at the Annual General Meeting of the Company held on18th August, 2006 and pursuant to Sections 198, 269, 309, 310, 311 read with Schedule XIII and other applicable provisions,if any, of the Companies Act, 1956 including any statutory modification or re-enactment thereof, the approval of themembers of the Company be and is hereby accorded to the modification in the terms of remuneration, to enhance theperquisites payable to Mr. Mohan R. Harshe, Director (Works) of the Company with effect from 01st April, 2008 to 30thJune, 2009 (including remuneration to be paid in the event of loss or inadequacy of profits in the financial year during thetenure of his appointment) with an authority to the Board of Directors to review, revise, increase or enhance theremuneration, perquisites and benefits to be paid or provided to Mr. Mohan R. Harshe, in accordance with the provisions ofthe Companies Act, 1956.

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds,

matters and things as may be necessary, desirable or appropriate to give effect to this Resolution."

Registered Office : Sidhwa House, 1st Floor, By Order of the Board of Directors

N. A. Sawant Marg,

Colaba,

Mumbai – 400 005. Sanjay S. Shah

Vice Chairman & Managing Director

Date : 30th June, 2008.


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NOTES :

1. Explanatory Statement as required by Section 173(2) of the Companies Act, 1956 in respect of item No. 6 being specialbusiness is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND ANDVOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE PROXIES IN ORDER TO BEEFFECTIVE MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORETHE COMMENCEMENT OF THE MEETING.

3. The Register of Members and the Share Transfer Books of the Company will be closed from Tuesday, 19th August, 2008 toThursday, 28th August, 2008, both days inclusive.

4. Members are requested to:

a) intimate any change in their addresses to the company's registrar and share transfer agents, Intime Spectrum RegistryLimited, C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai - 400 078, if shares are held inphysical form. Intimate any change in their addresses/bank details to the Depository Participant if shares are held inelectronic form.

b) quote client ID and DP ID numbers in respect of shares held in dematerialised form and ledger folio number in respectof shares held in physical form in all the correspondence.

c) Intimate Permanent Account Number (PAN) and contact telephone number to the company’s registrar and sharetransfer agents, Intime Spectrum Registry Limited.

5. Members/Proxies are requested to bring copy of Annual Report and attendance slip duly filled in.

6. Corporate members are requested to send a duly certified copy of the board resolution authorising their representatives toattend and vote at the Annual General Meeting.

7. Members holding shares under multiple folios in the identical order of names are requested to consolidate their holdingsinto one folio.

8. Members can avail of the facility of nomination in respect of shares held by them in physical form pursuant to the amendmentto the Companies Act, 1956. Members desiring to avail of this facility may send their nomination in the prescribed FormNo. 2B duly filled in to Intime Spectrum Registry Limited.

9. Members desirous of getting any information about the accounts and operations of the company are requested to addresstheir queries to the Secretary of the Company atleast 10 (Ten) days in advance of the meeting so that the informationrequired can be made readily available at the meeting to the extent possible.

10. The final dividend, as recommended by the board, if declared at the annual general meeting, will be paid on or after4th September, 2008 to those persons or their mandates :

a) whose names appear as beneficial owners as at the end of the business hours on 18th August, 2008 in the list ofbeneficial owners to be furnished by National Securities Depository Limited and Central Depository Services (India)Limited in respect of the shares held in electronic form; and

b) whose names appear as members in the register of members of the company after giving effect to valid share transfersin physical form lodged with the company/its registrar and share transfer agents on or before 18th August, 2008.

Unclaimed Dividends :

The details of dividends paid by the Company and their respective due dates of the proposed transfer to such Fund of theCentral Government if they remain unencashed are as under :

Date of Declaration Date of Dividends Dividend Due date of theof dividend Dividend warrant for the year per share proposed transfer to

Rs. the Central Government

30.07.2001 07.08.2001 31.03.2001 1.20 06.08.2008

30.07.2002 03.08.2002 31.03.2002 1.80 02.08.2009

29.08.2003 01.09.2003 31.03.2003 1.20 31.08.2010


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30.07.2004 03.08.2004 31.03.2004 4.00 02.08.2011

10.01.2005 28.01.2005 Interim 04-05 4.00 27.01.2012

10.08.2005 16.08.2005 31.03.2005 6.00 15.08.2012

25.10.2005 15.11.2005 Interim 05-06 1.50 * 14.11.2012

18.08.2006 25.08.2006 31.03.2006 2.50 * 24.08.2013

05.02.2007 27.02.2007 Interim 06-07 2.00 * 26.02.2014

11.09.2007 18.09.2007 31.03.2007 1.00 * 17.09.2014

02.11.2007 26.11.2007 Interim 07-08 2.00 * 25.11.2014

*The face value of equity share is Rs. 2/- per share w.e.f. 10.10.2005.

Your Company has maintained and followed a practice of sending an Indemnity Letter - cum - Reminder to, each and everyeligible shareholder, whose dividend remains unpaid / unclaimed, atleast 6 (Six) Months before the actual due date forTransfer of Unpaid / Unclaimed Dividend Amount to the Investor Education & Protection Fund of the Central Government.The Company waits for the replies of the said shareholders / claimants until atleast up to 10 (Ten) days before the actualdue date and processes the relevant requests received accordingly with the help of its bankers.

It may please be noted that no claim will lie from a member once the transfer is made to the credit of the Investor Education& Protection Fund of the Central Government, under the amended provisions of Section 205(C) of the Companies Act,1956.

In view of the new regulation, the shareholders are advised to send the entire unencashed dividend warrants to theRegistered Office of the Company for revalidation and encash them before the due date for transfer to the CentralGovernment.


N. A. Sawant Marg,

Colaba,

Mumbai – 400 005. SANJAY S. SHAH



Date of Declaration Date of Dividends Dividend Due date of theof dividend Dividend warrant for the year per share proposed transfer to

Rs. the Central Government


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ANNEXURE TO THE NOTICE

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

Item No. 6

Mr. Mohan R. Harshe, Director (Works) was appointed for a term of 3 (three) years, commencing from 1st July, 2006 to 30thJune, 2009 on the terms and conditions approved by the shareholders at the 34th Annual General Meeting of the Companyheld on 18th August, 2006.

As per the existing terms of employment agreement with Mr. Mohan R. Harshe, an amount of Rs.15,000/- (Rupees FifteenThousand Only) per month is payable as perquisites.

On the recommendation of the Remuneration Committee, the Board of Directors at their meeting held on 30th June, 2008decided that considering various socio-economic factors and the industry practices of revision of pay packages of key personnel,it is expedient to modify the amount of perquisites payable to Mr. Mohan R. Harshe during the term commencing from 1st April,2008 to 30th June, 2009.

Accordingly, it is proposed to modify the relevant clause of the employment agreement as follows :

Clause D (2)

Perquisites such as house rent allowance, educational allowance, Newspapers and periodicals, special allowance, leave travelallowance, soft furnishing, medical reimbursement, holiday resort and conveyance allowance not exceeding Rs. 50,000/-(Rupees Fifty Thousand only) per month.

The revised terms of remuneration for approval of members of the Company.

All other terms and conditions governing his appointment as approved by the members at the Annual General Meeting held on18th August, 2006 shall remain unchanged.

Mr. Mohan R. Harshe is concerned and interested in resolution under Item No. 6.

This may be treated as an abstract of the modification in the terms of remuneration payable to Mr. Mohan R. Harshe, pursuantto Section 302 of the Companies Act, 1956.

Save as aforesaid, none of the other Directors of the Company is, in any way, concerned or interested in this business.


N. A. Sawant Marg,

Colaba,

Mumbai – 400 005. SANJAY S. SHAH




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Details of directors seeking re-appointment/modification of terms of remunerationat the forthcoming Annual General Meeting are given below:

Particulars Details of the Directors

Name of the Director Mr. Harshad H. Vasa Mr. Jitendra N. Mehrotra Mr. Mohan R. Harshe

Date of Birth 25.03.1934 03.06.1931 31.01.1945

Date of appointment 20.03.1986 24.04.1987 16.02.1998

Expertise in specific Business executive in textile He has over 4 decades of He has vast experience in thefunctional areas industry for 33 years having managerial experience in the field of Printing and Printing

vast business experience. He company and has extensive Technology especially design,has sound knowledge of share, knowledge on machine tool assembly & testing.stock and finance related industry and has served on thematters. Board of many well-reputed

companies.

List of other 1. Varda Plastopack 1. Anjai Investments Pvt. Ltd. NilDirectorship Industries Pvt. Ltd. 2. Surbhay Consultancy &

2. Vardayini Plastopack Investments Pvt. Ltd.Industries Pvt. Ltd. 3. Vigel Manufacturing

3. Vasa R. Engineering Pvt. Ltd. Technologies Pvt. Ltd.4. RMA Consultants

Chairmanship / Nil Nil NilMembership of thecommittees of otherCompanies


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DIRECTORS’ REPORTincluding Management Discussion and Analysis Report.

Dear Shareholders,

Your Directors have pleasure in presenting the thirty-sixth Annual Report and audited accounts for the year ended 31st March,2008.

FINANCIAL HIGHLIGHTS (Rs. in lakhs) (Rs. in lakhs)April to March 2007 – 2008 April to March 2006 – 2007

Profit for the year 10,200.93 7,782.91

Less : Depreciation 828.62 741.85

Profit before tax 9,372.31 7041.06

Less : Provision for Taxation

Current tax 2,910.00 2,160.00

Deferred tax 227.45 115.12

Fringe benefit tax 28.85 23.10

3,166.30 2,298.22

Provision for wealth tax 3.13 2.27

3,169.43 2,300.49

Profit after tax 6,202.88 4,740.57

(Less) / Add : Income-tax pertaining to previous years (13.16) 21.15

6,189.72 4,761.72

Add : Balance brought forward from previous year 1,597.09 1,459.35

AMOUNT AVAILABLE FOR APPROPRIATION 7,786.81 6,221.07

APPROPRIATIONSInterim dividend 608.30 608.30Tax on interim dividend 103.38 85.31Proposed dividend 608.30 304.15Tax on proposed dividend 103.38 51.69General reserve 4,600.00 3,574.53Balance carried to balance sheet 1,763.45 1,597.09

7,786.81 6,221.07

DIVIDEND

During the year, the Board declared and paid interim dividend of Rs. 2/- per equity share of Rs. 2/- each (Previous year Rs. 2/- pershare of Rs. 2/- each). Your Directors recommend a final dividend of Rs. 2/- per equity share of Rs. 2/- each (Previous year Re. 1/-per share of Rs. 2/- each) subject to the approval of the members at the ensuing annual general meeting.

MANAGEMENT DISCUSSION AND ANALYSIS

INDUSTRY STRUCTURE AND OPPORTUNITIES

In the year ended March 2008 you will observe the demand continues to remain strong both in domestic and internationalmarkets. Increase in the vendor base resulted in increasing outsourcing and plant modernization of machine shop throughincreased Capex has enabled the Company to increase the production from 704 print units to 812 print units.

With the increased Capex the installed capacity will be enhanced from 830 print units to 960 print units.

The Agreement of Business Co-operation for marketing with MAN Germany comes to a close with both Partners parting waysmutually to explore business in their respective segments. This will be effective 26th July, 2008.

The Selling agreement with MAN Ferrostaal continues.


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OUTLOOK

The decline in the US market continues and will affect your subsidiary in the current year 2008-09. Although synergies of bothcompanies are in progress, due to an extremely busy order booking in your parent company, the effect of synergies will mate-rialize in the year 2009-10 only. However prudent measures have been taken to ensure reduction in work force and other costsin your subsidiary.

The business outlook for 2008-09 continues to be favourable with your parent company and with Dollar remaining at today'svalue, hopefully, the export business will generate additional income.

Your company has successfully participated in just concluded, once in four years, DRUPA 08 Exhibition in Germany. The eventwas extremely successful with visitors from over 25 countries. Enquiries, new agents and new markets effect will be felt in thenext fiscal 2009-10. Your company will continue participating in Domestic and International Trade Shows as deemed necessary.

The global outlook for the printing industry remains encouraging. The Manugraph brand continues to be globally seen as avalue proposition with reliable and quality products having excellent performance characteristics.

RISKS AND CONCERNS

As mentioned above your subsidiary will be severely affected due to decline in the US market. Your company is trying to takeadequate steps to ensure that the bottom line will not be severely affected. However the very idea of obtaining 100% subsidiarywas to have a continual presence in North American markets, which we will ensure.

Your company, which was negotiating for a New Wage Agreement has signed the same effective from April, 2007, for three years.

Increase in cost of raw materials continues at an alarming rate, whereas the cost has not been able to be passed on to customers,since contracts already signed before hand.

The uncertain interest rate outlook with an upward bias, the recent backdrop of rupee depreciation against the USD and thehigh levels of inflation provide a challenging backdrop for the overall finance and treasury management. The Company has aprudent risk mitigation structure to contain these risks. The debt funding is expected to be lowered during the year, replaced byinternal accruals.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has an effective system of accounting and administrative controls which ensures that all assets are safe guardedand protected against loss from unauthorised use or disposition. The company's policies, guidelines and procedures are in placeto ensure that all transactions are authorised, recorded and reported correctly.

The company has a reporting system, which evaluates and forewarns the management on issues related to compliance. Theperformance of the company is regularly reviewed by the Board of Directors to ensure that it is in keeping with the overallcorporate policy and in line with pre-set objectives.

The company has appointed independent firms of Chartered Accountants, as internal auditors, who carry out audits in differentareas of company's operations. The Audit Committee reviews internal audit reports and the adequacy of internal controls.

Discussion on financial performance with respect to operational performance :

HIGHLIGHTS (Rs. in lakhs) (Rs. in lakhs)2007 – 2008 2006 – 2007

Net sales 42,296.15 36,884.32

Operating Income 2,121.94 951.07

Other income 1,045.60 282.16

Profit before interest, depreciation, and tax 10,611.53 8,093.69

Interest expenditure (Net of income) 410.60 310.78

Depreciation 828.62 741.85

Profit before tax 9,372.31 7,041.06

Provision for Taxation

Current 2,941.98 2,185.37

Deferred 227.45 3,169.43 115.12

2,300.49

Net profit 6,202.88 4,740.57

Earnings per share (in Rs.) 20.39 15.73

The overall performance of the company during the year under consideration has been satisfactory.


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Sales

Total income from operations were Rs.44,418.09 lakhs including export sales of Rs. 14,125.84 lakhs.

Other income

Other income consists of dividend, rent and profit on sale of investments.

Interest

The company is continuing its efforts to bring down the finance costs.

Income-tax

As required by Accounting Standard AS-22, issued by the Institute of Chartered Accountants of India, deferred tax liability ofRs. 227.45 lakhs has been adjusted in the Profit and Loss Account.

Earnings per share

Earnings per share stood at Rs. 20.39 per share in 2007-2008.

Personnel

To ensure and boost both productivity and efficiency, the company offers incentives to employees, based on basic minimumoutput. Industrial relations remain very cordial at all levels.

At the year end, 1341 employees were on the payroll of the company.

For the year under consideration there are no employees coming within the purview of provisions of Section 217(2A) of theCompanies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975. Hence, no information under the saidprovisions is being given.

Cautionary Note

The statements forming part of the Directors' Report may contain certain forward looking statements within the meaning of theapplicable securities laws and regulations. Many factors could cause the actual results, performances or achievements of thecompany to be materially different from any future results, performances or achievements that may be expressed or implied,since the company's operations are influenced by many external and internal factors beyond the control of the management.

FIXED DEPOSITS

Fixed deposits accepted from the shareholders and the public stood at Rs. Nil at the close of the financial year. Deposits of Rs.0.05 lakh from a depositor which fell due for repayment before the close of the financial year remained unclaimed by thedepositor as on 31st March, 2008, and have remained unclaimed upto the date of this report.

INSURANCE

The buildings, plant and machinery, stock in trade, standing charges and loss of profits have been adequately and appropriatelyinsured.

CAPITAL EXPENDITURE

Your company incurred Rs. 2,355.84 lakhs towards capital expenditure consisting of building, plant and machinery and otherfixed assets during the year under review, which will further continue in the current year 2008-09 to improve, enhance andmodernise both the plants.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard AS-21, prescribed by the Institute of Chartered Accountants ofIndia, the consolidated accounts of the company and its subsidiaries are annexed to this report.

SUBSIDIARY COMPANIES

As required under Section 212 of the Companies Act, 1956, the audited statements of accounts along with the directors' reportfor the year ended 31st March, 2008 of Constrad Agencies (Bombay) Private Limited, Manugrph Kenya Ltd. and ManugraphDGM Inc., USA, wholly owned subsidiaries of your company, are annexed.


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CORPORATE GOVERNANCE

Your company is fully committed to the philosophy of conducting its business with due compliance of laws, rules and regula-tions. The sound internal control and efficient management information systems, which play a pivotal role in corporate gover-nance, are in place in your company.

We are pleased to inform you that your company has complied in all material respects with the features of corporate gover-nance as specified in the Listing Agreement. A certificate of compliance from the statutory auditors together with a report oncorporate governance forms part of this report.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and company's articles of association, Mr. H. H. Vasa and Mr. J. N.Mehrotra retire by rotation and are eligible for re-appointment.

AUDITORS

Messrs B. F. Pavri & Company, the auditors of company will retire from the office of the auditors at the forthcoming AnnualGeneral Meeting and being eligible offer themselves for re-appointment. The Board recommends their re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors confirm that, to the best of their knowledge and belief:

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

(ii) the directors have selected such accounting policies and applied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March,2008, and of the profit of the company for the year ended on that date;

(iii) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing anddetecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

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

Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in theReport of the Board of Directors) Rules, 1988 is given as Annexure A to this report.

ACKNOWLEDGEMENTS

The directors would like to thank the employee unions, shareholders, customers, suppliers, bankers, financial institutions, allother business associates and various departments of Central Government and State Government for the continuous supportgiven by them to the company and their confidence in its management.

For and on behalf of the Board

S. M. SHAHChairman

MumbaiDate : 30th June, 2008


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INFORMATION REQUIRED UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 READ WITH COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY :

Apart from implementing systematically the energy conservation measures mentioned in the earlier reports, consciousefforts were made to bring awareness among energy users for energy conservation. The additional efforts were also made:

1. Installed APFC Unit to control Unity Power Factor & same was maintained.

2. Use of electronics ballast with 28W T5 tubes against conventional copper chokes of 40W.

3. Use of Asian 9 W, 13W, and 18W CFL lamps at Executive building instead of ordinary 40W tube lights.

4. Use of transparent roof sheets to increase light intensity in factory buildings to minimise the use of electricity in daytime.

B. TECHNOLOGY ABSORPTION :

Efforts made in technology absorption :

1. The focus on improvement in existing products and development of new products was maintained throughout theyear. Thrust is given on strengthening of manpower infrastructure in application of Computer Aided EngineeringSoftware and Application of Data Acquisition System for Design of Experiments, to meet the future requirements ofhigh speed, high performance machines. The new machines and main features under development are :

I. MDGM Folder - 1240.

II. S16 Commercial Web Offset.

III. Development for Project X.

IV. Cityline Mono unit with integrated Autopaster.

2. Benefits derived as a result of the above R&D :

I. New product development.

II. More automation on existing products.

III. Cost reduction and space saving on machines.

IV. Performance improvement.

V. Expanding domestic and export markets.

VI. Import substitution.

3. Expenditure on R&D :

Rs. In Lakhs

I. Capital 38.95

II. Recurring 229.92

III. Total 268.87

IV. Total R&D expenditure as a percentage of net sales 0.64

C. FOREIGN EXCHANGE EARNINGS AND OUTGO :

1. Activities relating to exports, initiatives taken to increase exports, development of new export markets for products andservices, and export plans.

During the year under review, the Company is continuously exploring the possibilities of exporting more of its productsto countries in Europe, Middle East Asia, Africa, South America and Australia.

2. Total foreign exchange used and earned :

The information on foreign exchange earnings and outgo is contained in notes 19, 20, 21 and 23 in Schedule T - Notesforming part of annual Accounts.

ANNEXURE A TO THE DIRECTORS' REPORT


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REPORT ON CORPORATE GOVERNANCEPursuant to Clause 49 of the Listing Agreement, a report on Corporate Governance is given below.

I. MANDATORY REQUIREMENTS

1. Company's philosophy on code of governance

The company is committed to good Corporate Governance. The mandatory requirements of Clause 49 of the ListingAgreement with the Stock Exchanges have been fully implemented by your company. The principles of transparency,accountability, trusteeship and integrity are at the core of the company's basic character. The company firmly believes inthe right of its stakeholders to information regarding the company's business and financial performance.

2. Board of Directors

The present strength of your company's Board is nine directors comprising of three promoter directors viz. Mr. Sanat M.Shah, Mr. Sanjay S. Shah and Mr. Pradeep S. Shah. Mr. Sanat M. Shah, is a Non-Executive Chairman of the Company.Mr. Sanjay S. Shah is Vice Chairman and Managing Director and Mr. Pradeep S. Shah is a Managing Director of the Company.Mr. Mohan R. Harshe is Director (Works). Mr. Jayant C. Vakil, Mr. Harshad H. Vasa, Mr. Jitendra N. Mehrotra, Mr. Hiten C.Timbadia and Mr. Amit N. Dalal are other five non-executive independent directors.

During the financial year 2007-2008, six Board Meetings were held on 30th April, 2007, 20th June, 2007, 23rd July, 2007,30th October, 2007, 2nd November, 2007, and 24th January, 2008.

The attendance at board meetings held during the financial year 2007-2008 and at the last Annual General Meeting(AGM), the number of other directorships and committee memberships / chairmanships of directors as on 31st March,2008, are as follows:

Sr. No. Name of the Director No. of Board meetings attended Attendance at the last AGM

1 Mr. Sanat M. Shah 6 Yes

2 Mr. Sanjay S. Shah 5 Yes

3 Mr. Pradeep S. Shah 5 Yes

4 Mr. Mohan R. Harshe 4 Yes

5 Mr. Jayant C. Vakil 5 Yes

6 Mr. Harshad H. Vasa 6 Yes

7 Mr. Jitendra N. Mehrotra 5 Yes

8 Mr. Hiten C. Timbadia 6 Yes

9 Mr. Amit N. Dalal 5 Yes

Sr. No. Name of the Director No. of Directorships Held (**) No. of Committee memberships

1 Mr. Sanat M. Shah 7 Nil

2 Mr. Sanjay S. Shah 7 1*

3 Mr. Pradeep S. Shah 8 Nil

4 Mr. Mohan R. Harshe Nil Nil

5 Mr. Jayant C. Vakil 1 Nil

6 Mr. Harshad H. Vasa 3 3*

7 Mr. Jitendra N. Mehrotra 5 2*

8 Mr. Hiten C. Timbadia Nil 2*

9 Mr. Amit N. Dalal 7 Nil

*Includes Committee membership of Manugraph India Ltd.

* * Includes private companies and foreign company directorship.


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3. Audit Committee

Your company has an Audit Committee comprising three non-executive independent directors viz. Mr. Hiten C. Timbadia,Mr. Jitendra N. Mehrotra and Mr. Harshad H. Vasa. Mr. Hiten C. Timbadia is the Chairman of the committee.

The Company Secretary acted as secretary to the committee.

The Vice-chairman and Managing Director is an invitee to the meetings. The Statutory Auditors are also invited to attendthe meetings.

The terms of reference of the audit committee cover the matters specified under Clause 49 of the Listing Agreement as wellas in Section 292A of the Companies Act, 1956.

During the year under review, four audit committee meetings were held on 30.04.2007, 23.07.2007, 26.10.2007, and23.01.2008.

Attendance at the audit committee meeting:

Sr. No. Name of the Director No. of meetings held No. of meetings attended

1 Mr. Hiten C. Timbadia 4 4

2 Mr. Jitendra N. Mehrotra 4 4

3 Mr. Harshad H. Vasa 4 4

All the members of the audit committee were present at the last Annual General Meeting held on 11th September, 2007.

4. Remuneration Committee

Terms of reference :

The broad terms of reference of the committee are to determine and recommend to the board, compensation payable toManaging Directors and Whole-time Director.

The Remuneration Committee consists of Mr. Jitendra N. Mehrotra, Mr. Harshad H. Vasa and Mr. Hiten C. Timbadia. Mr.Jitendra N. Mehrotra is the Chairman of the Committee. All are non-executive independent directors.

The remuneration committee meeting was held on 30th June, 2008. All members of the remuneration committee attendedthe meeting.

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

1 Mr. Hiten C. Timbadia 1 1

2 Mr. Jitendra N. Mehrotra 1 1

3 Mr. Harshad H. Vasa 1 1

The details of remuneration paid to the directors of the company during the financial year 2007-08 are given below:

Sr. No. Name of the Director Details of Salary Sitting fees for board andand perquisites committee meetings

Rupees Rupees

1 Mr. Sanjay S. Shah *2,07,52,525.70 -

2 Mr. Pradeep S. Shah *2,07,49,973.19 -

3 Mr. Mohan R. Harshe 11,51,550.00 -

4 Mr. Sanat M. Shah - 60,000.00

5 Mr. Jayant C. Vakil - 50,000.00

6 Mr. Harshad H. Vasa - 94,000.00

7 Mr. Jitendra N. Mehrotra - 84,000.00

8 Mr. Hiten C. Timbadia - 94,000.00

9 Mr. Amit N. Dalal - 50,000.00

* includes commission for financial year 2007-08


14

The remuneration paid to Managing Directors and Whole-time Director are within the ceiling prescribed under the provisionsof the Companies Act, 1956.

Except the Managing Directors and Whole-time Director, all the members of the board are liable to retire by rotation.

Sr. No. Name of the Director Service Contract Notice Period Severance Fee

1 Mr. Sanjay S. Shah- Vice Chairman & Managing Director 1-4-2007 to 31-3-2010 Three Months Nil

2 Mr. Pradeep S. Shah - Managing Director 1-4-2007 to 31-3-2010 Three Months Nil

3 Mr. Mohan R. Harshe -Director (Works) 1-7-2006 to30-6-2009 * Three Months Nil

* Service Contract is being modified w.e.f. 01.04.2008 to 30.06.2009

Your company presently does not have a scheme for grant of stock options or performance-linked incentives for its directors.

5. Shares and Debentures Committee

The company has Shares and Debentures Committee comprising Mr. Harshad H. Vasa and Mr. Sanjay S. Shah. Mr. HarshadH. Vasa is the Chairman of the Committee.

All shares received for transfer were registered and despatched within 30 (Thirty) days of receipt, provided the documentswere correct and valid in all respects.

There were no pending share transfers as on 31st March, 2008.

The Shares and Debentures Committee also functions as a Shareholders' / Investors' Grievance Committee to look into theshareholders' and investors' grievances. The Company Secretary acts as the Compliance Officer and Secretary to the Sharesand Debentures Committee.

During the year under review, the company received complaints from shareholders relating to non-receipt of dividend,non-receipt of annual report and non-receipt of shares sent for transfer. The complaints were duly attended to and therewere no complaints pending for more than 30 (Thirty) days as on 31st March, 2008.

6. General Body Meetings

Financial year 2006-2007 – 35th AGM 2005-2006 – 34th AGM 2004-2005 – 33rd AGM

Venue M. C. Ghia Hall, Bhogilal M. C. Ghia Hall, Bhogilal M. C. Ghia Hall, BhogilalHargovindas Building, Hargovindas Building, Hargovindas Building,18/20, Kaikhushru Dubash 18/20, Kaikhushru Dubash 18/20, Kaikhushru DubashMarg, Mumbai - 400 001 Marg, Mumbai - 400 001 Marg, Mumbai - 400 001

Day Tuesday Friday Wednesday

Date 11th September, 2007 18th August, 2006 10th August, 2005

Time 3.30 p.m. 3.30 p.m. 11.30 a.m.

No. of Special Nil Nil 2Resolution(s) passed

All resolutions as set out in the respective notices were duly passed by the shareholders.

No special resolution was put through postal ballot at the last annual general meeting. No special resolution requiringpostal ballot is being proposed at the ensuing annual general meeting.

7. Disclosures

Related Parties Transactions :

The company has not entered into any transaction of a material nature with the promoters, directors or the management,their subsidiaries or relatives, etc. that may have potential conflict with the interests of the company at large. The register ofcontracts containing transactions, in which directors are interested, is placed before the Board regularly.

Statutory Compliance, Penalties and Strictures :

The company has complied with various rules and regulations prescribed by the Stock Exchanges, Securities and ExchangeBoard of India or any other statutory authority relating to capital markets during the last three years. No penalties orstrictures have been imposed by them on the company.


15

8. Means of Communication

The quarterly and half-yearly results of the company are published in the following newspapers :

Economic Times (English newspaper)

Maharashtra Times (Marathi newspaper)

The financial results are made available at Company's Website www.manugraph.com for shareholders/investorsinformation.

II. NON-MANDATORY REQUIREMENTS

A. Office of the chairman of the board and reimbursement of expenses by the company.

The company is presently reimbursing the expenses incurred in performance of duties.

B. Shareholders' rights - furnishing of half-yearly results.

The company's half-yearly results are published in English and Marathi newspapers having wide circulation.

C. Postal Ballot

The company will seek shareholders' approval through postal ballot in respect of such resolutions as are laid down inCompanies (Passing of the Resolution by Postal Ballot) Rules, 2001, as and when the occasion arises.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges on Code of Corporate Governance, Certificatefrom the Statutory Auditors regarding compliance of conditions of Corporate Governance by the company is annexed. TheAuditors' Certificate will also be sent to the Stock Exchanges, Mumbai where the company's shares are listed, along withthe annual report to be filed by the company.

AUDITORS’ CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OFCORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENT

TOTHE MEMBERS OFMANUGRAPH INDIA LIMITEDMUMBAI.

We have examined the relevant records relating to compliance of conditions of Corporate Governance by Manugraph IndiaLimited for the year ended 31st March, 2008, as stipulated in Clause 49 of the Listing Agreement of the said company with theStock Exchange.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limitedto procedures and implementation thereof, adopted by the company for ensuring the compliance of the conditions of Corpo-rate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, and the representations madeby the Directors and the management, we certify that the company has complied with the conditions of Corporate Governanceas stipulated in Clause 49 of the above mentioned Listing Agreement.

We state that per the records maintained by the Registrars and Share Transfer Agents of the company and presented to theshareholders’/investors’ grievance committee, no investor grievances against the company, received during the year ended31st March, 2008, were remaining unattended/pending for a period exceeding thirty days.

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

FOR B. F. PAVRI & CO.CHARTERED ACCOUNTANTS

BURJOR F. PAVRIMumbai PROPRIETORDate : 30th June, 2008 Membership No. 4931


16

General Shareholder Information

i. Annual general meeting

Date and Time : 28th August, 2008, 3.30 p.m.

Venue : M. C. Ghia Hall, Bhogilal Hargovindas Building,Kaikhushru Dubash Marg, Mumbai - 400 001.

ii. Financial calendar

Financial year : April to March

Financial reporting (tentative)

First quarter results : Fourth week of July, 2008

Half-yearly results : Fourth week of October, 2008

Third quarter results : Fourth week of January, 2009

Fourth quarter results : Fourth week of April, 2009

iii. Dates of book closure : From : Tuesday, 19th August, 2008To : Thursday, 28th August, 2008 (both days inclusive)

iv. Dividend payment date : On or after 4th September, 2008

v. Listing on Stock Exchange : The Bombay Stock Exchange LimitedPhiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001.

National Stock Exchange of India Limited,Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051

vi. Stock Code : PhysicalThe Bombay Stock Exchange Limited : 505324

National Stock Exchange of India Limited :Security symbol : MANUGRAPHSecurity Series : EQ

Demat ISIN Number :INE-867A 01022

vii. Market price data :

Monthly high and low quotations of shares traded on Bombay Stock Exchange Limited and National Stock Exchange ofIndia Limited for the financial year 2007-2008:

Bombay Stock National Stock ExchangeExchange Ltd. (BSE) of India Ltd. (NSE)

Months Month's High price Month's Low price Month's High price Month's Low price

April, 2007 176.00 150.65 176.00 150.30

May, 2007 159.00 131.50 164.00 132.00

June, 2007 159.80 131.00 159.40 131.00

July, 2007 154.80 125.05 154.50 107.10

August, 2007 135.00 110.50 134.95 115.10

September, 2007 135.00 115.25 136.80 116.00

October, 2007 148.00 104.25 150.00 104.10

November, 2007 204.00 135.00 204.95 137.50

December, 2007 201.00 156.60 189.00 141.05

January, 2008 192.00 100.00 195.00 100.10

February, 2008 119.95 95.50 120.00 93.25

March, 2008 106.00 68.50 105.50 65.10


17

viii. Performance in comparison to broad-based indices BSE Sensex.

ix. Registrar and share transfer agents : Intime Spectrum Registry Limited,C-13, Pannalal Silk Mills Compound,L. B. S. Marg, Bhandup (W), Mumbai - 400 078,Phone : 25963838 • Fax : 2594 6969Email: [email protected]

x. Share transfer system : Share transfers in physical form have to be lodged with Intime SpectrumRegistry Limited at the above mentioned address.

All shares received for transfer were registered and despatched within 30(Thirty) days of receipt, provided the documents were correct and valid in allrespects.

The time taken to process dematerialisation of shares is 10 (Ten) days uponreceipt of documents from the Depository Participants.

xi. Distribution of shareholdings as on 31st March, 2008 :

No. of No. of % of No. of % ofEquity Shares Shareholders Shareholders Shares held Shareholding

1 – 500 11207 81.99 1709179 5.62

501 – 1000 1231 9.01 963709 3.17

1001 – 2000 710 5.19 1047399 3.44

2001 – 3000 197 1.44 494560 1.63

3001 – 4000 109 0.80 381765 1.26

4001 – 5000 51 0.37 235529 0.77

5001 – 10000 88 0.64 605401 1.99

10001 and above 76 0.56 24977519 82.12

Total 13669 100.00 30415061 100.00

25000 –

20000 –

15000 –

10000 –

5000 –

0 –

– 250

– 200

– 150

–100

– 50

– 0| | | | | | | | | | | |

APR ‘07 MAY ‘07 JUN ‘07 JUL ‘07 AUG ‘07 SEP ‘07 OCT ‘07 NOV ‘07 DEC ‘07 JAN ‘08 FEB ‘08 MAR ‘08

BSE

In

de

x

MIL

Tra

de

d S

ha

re P

rice

Months of Trading

176.00159.00 159.80

154.80135.00 135.00

148.00

204.00 201.00192.00

119.95106.00

14383.72 14576.37 14683.36

15868.85 15542.40

17361.47

20238.16 20204.21 20498.1121206.77

18895.0017227.56

BSE INDEX 2007-2008 MIL SHARE PRICE


18

xii. Shareholding pattern as on 31st March, 2008

Category No. of shares held % of shareholding

A Promoter's Holding

1. Promoters

– Indian Promoters 8592700 28.25

– Foreign Promoters – –

2. Persons acting in concert 8725902 28.69

Sub-Total (A) 17318602 56.94

B Non-promoter's holding

3. Institutional Investors

a. Mutual Funds / UTI 2810537 9.24

b. Banks 375 0.00

c. Insurance Companies 1649550 5.42

d. Foreign Institutional Investors 706381 2.32

Sub-Total (B) 5166843 16.99

C 4. Others

a. Private Corporate Bodies 497779 1.64

b. Indian Public 5563931 18.29

c. Trusts 65000 0.21

d. Directors and their relatives 80655 0.27

e. Non-Resident Individuals 1256598 4.13

f. Foreign Companies 250 0.00

g. Foreign Nationals 398306 1.31

h. Any other (Clearning Members) 67097 0.22

Sub-Total (C):- 7929616 26.07

Grand Total [A+B+C] 30415061 100.00

xiii. Dematerialisation of shares and liquidity : 92.24 per cent of the company's paid-up equity share capital has beendematerialised upto 31st March, 2008.

xiv. Outstanding GDR/Warrants or : Not applicableconvertible bonds, conversion datesand likely impact on equity

xv. Plant Locations : Plot No. D - 1, MIDC Shiroli Industrial Area,Pune-Bangalore Road, Shiroli, Kolhapur, Maharashtra.

Warananagar, Kodoli, Tal. Panhala,Dist. Kolhapur, Maharashtra,

Gokul Shirgaon, Plot No. A/8, MIDC, Kolhapur, Maharashtra

xvi. Address for correspondence : The Company Secretary, Manugraph India Limited,Sidhwa House, 1st Floor, N. A. Sawant Marg,Colaba, Mumbai - 400 005Phone : 22852256/57/58Fax : 22840672 • E-mail: [email protected].

Declaration by the Vice Chairman and Managing Director under Clause 49 of the Listing Agreement regardingadherence to the Code of Conduct.

In accordance with Clause 49(ID) of the Listing Agreement with the Stock Exchanges, I hereby confirm that all the directorsand the senior management personnel of the company have affirmed compliance to their respective codes of conduct, asapplicable to them for the financial year ended 31st March, 2008.

For MANUGRAPH INDIA LIMITED

Mumbai SANJAY S. SHAH

Date : 30th June, 2008 Vice Chairman & Managing Director


19

(Rupees in lakhs)

Year ended Year ended31st March, 2008 31st March, 2007

SALES 47,074.08 41,163.06

Operating income 2,121.94 951.07

Other income 1,045.60 282.16

% %

50,241.62 100.00 42,396.29 100.00

Less : Cost of materials and services 30,833.21 61.37 27,233.04 64.24

Materials 26,910.45 53.56 23,151.07 54.61

Services 3,922.76 7.81 4,081.97 9.63

VALUE ADDED 19,408.41 38.63 15,163.25 35.76

Disposal of value added

% %

To employees 4,018.95 7.99 2,790.82 6.58

To government (excise duties and income-tax) 8,167.28 16.26 6,695.08 15.79

To providers of capital 1,627.20 3.24 1,223.23 2.88

Financial institutions, bankers and others (interest) 410.60 0.82 310.78 0.73

Shareholders (dividend) 1,216.60 2.42 912.45 2.15

Re-invested in business 5,594.98 11.14 4,454.12 10.51

Depreciation set aside 828.62 1.65 741.85 1.75

Profit retained 4,766.36 9.49 3,712.27 8.76

19,408.41 38.63 15,163.25 35.76

ANALYSIS OF RESULTS IN BRIEF


20

AUDITORS’ REPORT

TO THE MEMBERS OFMANUGRAPH INDIA LIMITEDMUMBAI.

1. We have audited the attached balance sheet of MANUGRAPH INDIA LIMITED, as at 31st March, 2008, the profit and lossaccount and also 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 financialstatements based on our audit.

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

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

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 necessaryfor 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 ourexamination of those books;

(iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with thebooks of account;

(iv) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report complywith 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, 2008 and taken on record bythe Board of Directors, we report that none of the said directors is disqualified as on 31st March, 2008 from beingappointed as a director in terms of clause (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,together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so requiredand give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2008;

(b) in the case of the Profit and Loss Account, of the profit of the company 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 B. F. PAVRI & CO.

CHARTERED ACCOUNTANTS

(BURJOR F. PAVRI)PROPRIETOR

Membership No. 4931

Mumbai



21

ANNEXURE TO THE AUDITORS’ 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 offixed assets.

(b) As explained to us, a major portion of fixed assets has been physically verified by the management during the year inaccordance with a phased programme of verification adopted by the company. In our opinion, the frequency ofphysical verification is reasonable. Having regard to the size of the operations of the company and on the basis ofexplanations received, in our opinion, the net differences found on physical verification were not significant.

(c) The company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) As explained to us, the stocks of finished goods and work-in-progress in the company’s custody have been physicallyverified by the management as at the end of the financial year. In respect of stocks of stores, spare parts and rawmaterials, there is a perpetual inventory system and a substantial portion of the stocks have been physically verifiedduring the year. In our opinion, the frequency of verification is reasonable. In case of materials lying with third parties,certificates confirming stocks have been received in respect of the substantial portion of the stocks held at the yearend.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verificationof stocks followed by the management are reasonable and adequate in relation to the size of the company and thenature of its business.

(c) In our opinion and according to the information and explanations given to us, the company is maintaining properrecords of inventory. The discrepancies noticed on verification between the physical stocks and the book records werenot material having regard to the size of the operations of the company.

(iii) (a) The company has granted unsecured loans to a wholly owned subsidiary company covered in the register maintainedunder Section 301 of the Companies Act, 1956. The balance as on 31st March, 2008 and the maximum amount involvedduring the year was Rs.1506.25 lakhs.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms andconditions on which loans have been given to the company covered in the register maintained under Section 301 ofthe Companies Act, 1956 are not prima facie, prejudicial to the interest of the company.

(c) The terms of repayment of loans and payment of interest have been stipulated. In respect of the principal amount andinterest, there are no overdue amounts.

(d) According to the information and explanations given to us, the company has during the year not taken any loans,secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 ofthe Companies Act, 1956. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that someof the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations,there are adequate internal control procedures commensurate with the size of the company and the nature of its businesswith regard to purchases of inventories and fixed assets and with regard to the sale of goods and services. During thecourse of our audit, we have not observed any continuing failure to correct major weakness in internal control.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts orarrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintainedunder the said section have been so entered.

(b) In our opinion and having regard to our comments in paragraph (iv) above, and according to the information andexplanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintainedunder Section 301 of the Companies Act, 1956 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 therelevant time where such market prices are available.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted depositsfrom public during the period covered by our audit report. In respect of unclaimed deposit matured in earlier year that isoutstanding during the year, the company has complied with the provisions of Sections 58A, 58AA or any other relevantprovisions of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975 with regard to the depositsaccepted from the public. According to the information and explanations given to us, no order has been passed by theCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on thecompany in respect of the aforesaid deposits.


22

(vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that the coverage of internal auditfunctions carried out by the firms of chartered accountants appointed by the management, is commensurate with thesize of the company and the nature of its business.

(viii) According to the information given to us, the Central Government has not prescribed maintenance of cost records underSection 209(1)(d) of the Companies Act, 1956, for any of the products of the company.

(ix) (a) According to the records of the company examined by us, in our opinion, the company is generally regular in depositingwith appropriate authorities undisputed statutory dues including provident fund, investor education and protectionfund, employees’ state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess andother material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2008 for aperiod of more than six months from the date they became payable.

(c) According to the information and explanations given to us, details of dues of income-tax, sales tax, wealth tax, servicetax, customs duty, excise duty and cess which have not been deposited on account of any dispute are stated in thestatement attached herewith.

(x) The company does not have accumulated losses at the end of the financial year and has not incurred cash losses duringthe financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repaymentof dues to any financial institution, bank or debenture holders.

(xii) 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 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 clause4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

(xiv) In respect of shares, securities, debentures and other investments dealt in or traded by the company, proper records havebeen maintained in respect of transactions and contracts and timely entries have been made therein. All the investmentsare held by the company in its own name except investments under approved portfolio management schemes whichwere held in the name of portfolio managers.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions on which thecompany had given guarantee for loan taken by its subsidiary from bank are not prima facie prejudicial to the interest ofthe company.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion,term loans availed by the company were, prima facie, applied by the company during the year for the purposes for whichthe loans were obtained.

(xvii) According to the information and explanations given to us, and on an overall examination of the balance sheet of thecompany, funds raised on short-term basis have prima facie not been used for long-term investment.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment ofshares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956,during the year.

(xix) In our opinion and according to the information and explanations given to us, the company has not issued any secureddebentures during the period covered by our report. Accordingly, the provisions of clause 4 (xix) of the Companies(Auditor’s Report) Order, 2003 are not applicable to the company.

(xx) During the period covered by our audit report, the company has not raised any money by public issues.

(xxi) According to the information and explanations given to us, and to the best of our knowledge and belief, no materialfraud on or by the company has been noticed or reported during the year.




Membership No. 4931

Mumbai

30th June, 2008


23

Statement of statutory dues outstanding on account of disputes, as on 31st March, 2008,referred to in para 4(ix)(c) of the Annexure to the Auditors' Report

Name of statute Nature of dues Amount Period to which Forum where dispute isRs. the amount relates pending

Customs Act, 1962 Customs duty on two dryers 2,389,242 Assessment Year The Commissioner of Customs1987 - 1988 (Appeals) Airport, Mumbai

The Central Excise Act, Duty on scrap generated at 448,135 Assessment Year The Deputy Commissioner,1944 vendors end under notification No. 2005 - 2006 Central Excise, Kolhapur-I Division

214/86

The Central Excise Act, Duty on scrap generated at 458,001 Assessment Year The Deputy Commissioner,1944 vendors end under notification No. 2005 - 2006 Central Excise, Kolhapur-I Division

214/86

The Central Excise Act, Duty on scrap generated at 415,064 Assessment Year The Deputy Commissioner,1944 vendors end under notification No. 2006 - 2007 Central Excise, Kolhapur

214/86

The Central Excise Act, Duty on scrap generated at 429,970 1.6.2004 to 30.11.2004 The Deputy Commissioner,1944 vendors end Central Excise, Kolhapur-II

The Central Excise Act, Duty on scrap generated at 478,021 1.12.2004 to 30.4.2005 The Deputy Commissioner,1944 vendors end Central Excise, Kolhapur-II

The Central Excise Act, Duty on scrap generated at 241,310 1.4.2006 to 30.6.2006 The Assistant Commissioner,1944 vendors end Central Excise, Kolhapur-II



The Central Excise Act, Duty on jigs and fixtures 116,073 1.4.2004 to 31.12.2004 Custom Excise & Service tax1944 Appellate Tribunal, West Zonal

Bench, Mumbai.

The Central Excise Act, Duty on sale of spares to related 944,654 1.12.2000 to 31.5.2005 Custom Excise & Service tax1944 persons Appellate Tribunal, West Zonal

Bench, Mumbai.

The Central Excise Act, Duty on sale of spares to related 3,006 1.6.2005 to 31.12.2005 The Assistant Commissioner,1944 persons Central Excise, Kolhapur-II

The Central Excise Act, Duty on sale of spares to related 6,879 1.1.2006 to 30.6.2006 The Deputy Commissioner,1944 persons Central Excise, Kolhapur-II



The Central Excise Act, Claim for refund of duty on scrap 54,578 1.4.2003 to 31.3.2004 The Assistant Commissioner,1944 generated during job work Central Excise, Kolhapur-II

The Central Excise Act, Duty on debit notes raised on 56,196 1.7.2001 to 31.3.2002 The High Court of Judicature,1944 vendors towards recovery of Mumbai

raw material cost

Finance Act, 1994 Interest on service tax on goods 51,405 Assessment Year The Commissioner,Service Tax Rules, 1994 transport operators 2001 - 2002 Central Excise (Appeals-II), Pune

Finance Act, 1994 Service tax on technical know-how 741,680 Assessment Year The Deputy Commissioner,Service Tax Rules, 1994 2005 - 2006 Central Excise, Kolhapur-I Division

Finance Act, 1994 Service tax on clearing and 203,671 1.7.1997 to 31.8.1999 Custom Excise & Service taxService Tax Rules, 1994 forwarding charges paid by the Appellate Tribunal, West Zonal

company for the services availed Bench, Mumbai.from clearing and forwarding agents

Finance Act, 1994 Service tax on services rendered 4,943 1.8.2003 to 31.8.2003 Customs Excise and Service TaxService Tax Rules, 1994 in respect of repairs and maintenance Appellate Tribunal, West Zonal

Bench, Mumbai

TOTAL 7,800,870


24

BALANCE SHEET AS AT 31ST MARCH, 2008

As at 31stMarch, 2007

Schedule (Rs. in lakhs) (Rs. in lakhs)

SOURCES OF FUNDSSHAREHOLDERS' FUNDS

Capital A 608.30 608.30Reserves and surplus B 20,217.09 15,450.73

20,825.39 16,059.03LOAN FUNDS

Secured loans C 6,818.52 9,234.96Unsecured loans D 0.05 0.15Deferred payment liability E 802.40 1,304.40

7,620.97 10,539.51DEFERRED TAX LIABILITY F 514.66 287.20

TOTAL FUNDS EMPLOYED 28,961.02 26,885.74

APPLICATION OF FUNDSFIXED ASSETS G

Gross block 13,401.50 11,926.55Less: Depreciation 6,149.23 6,009.16

Net block 7,252.27 5,917.39Capital work-in-progress 75.81 36.63

7,328.08 5,954.02INVESTMENTS H 13,807.28 16,549.93CURRENT ASSETS, LOANS AND ADVANCES

Inventories I 10,538.14 8,928.92Sundry debtors J 4,132.25 2,721.35Cash and bank balances K 2,012.93 822.38Loans and advances L 14,074.58 9,833.52

30,757.90 22,306.17

Less:CURRENT LIABILITIES AND PROVISIONS

Liabilities M 12,420.95 9,955.75Provisions N 10,511.29 7,968.63

22,932.24 17,924.38

NET CURRENT ASSETS 7,825.66 4,381.79

TOTAL ASSETS (NET) 28,961.02 26,885.74

CONTINGENT LIABILITIES AND NOTES ONBALANCE SHEET T

Per our attached Report of even date FOR AND ON BEHALF OF THE BOARD

FOR B. F. PAVRI & CO. S. M. Shah ChairmanChartered Accountants S. S. Shah Vice Chairman and Managing Director

M. R. Harshe Whole-time DirectorBURJOR F. PAVRIProprietor

Vinay NagaonkarCompany Secretary

Mumbai, 30th June, 2008 Mumbai, 30th June, 2008


25

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Previous YearSchedule (Rs. in lakhs) (Rs. in lakhs)

INCOMESales (gross) (Excluding sales returnRs. 7.40 lakhs - previous year : Rs. 16.49 lakhs) 47,074.08 41,163.06Less : Excise duty 4,777.93 4,278.74

Net sales 42,296.15 36,884.32Operating income O 2121.94 951.07Other income P 1045.60 282.16

45,463.69 38,117.55EXPENDITURE

Materials Q 26,243.07 22,495.97Other expenses R 8,716.07 7,672.37Depreciation 828.62 741.85Interest S 410.60 310.78

36,198.36 31,220.97Less: Expenditure transferred

to capital accounts 106.98 144.48

TOTAL EXPENDITURE 36,091.38 31,076.49

PROFIT BEFORE TAX 9,372.31 7,041.06Less: Provision for taxation

Current tax 2,910.00 2,160.00Deferred tax 227.45 115.12Fringe benefit tax 28.85 23.10

3,166.30 2,298.22Provision for wealth tax 3.13 2.27

3,169.43 2,300.49

PROFIT AFTER TAX 6,202.88 4,740.57Less/Add: Income-tax pertaining to previous year 13.16 21.15

6,189.72 4,761.72Add: Balance brought forward from last year 1,597.09 1,459.35

AMOUNT AVAILABE FOR APPROPRIATIONS 7,786.81 6,221.07APPROPRIATIONS

Interim dividend 608.30 608.30Tax on interim dividend 103.38 85.31Proposed dividend 608.30 304.15Tax on proposed dividend 103.38 51.69General reserve 4600.00 3,574.53

6,023.36 4,623.98

BALANCE CARRIED TO BALANCE SHEET 1,763.45 1,597.09

Basic and diluted earningsper share (Rs.) (Schedule T - Note 24) 20.39 15.73

NOTES ON PROFIT AND LOSS ACCOUNT T







26

SCHEDULE FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2008


(Rs. in lakhs) (Rs. in lakhs)

SCHEDULE 'A'CAPITAL

AUTHORISED9,85,00,000 equity shares of Rs. 2 each 1,970.00 1,970.0010,000 preference shares of Rs.100 each 10.00 10.0020,000 unclassified shares of Rs.100 each 20.00 20.003,50,000 redeemable preference shares of Rs. 100 each 350.00 350.00

2,350.00 2,350.00

ISSUED3,04,15,061(previous year : 3,04,15,061)equity shares of Rs. 2 each 608.30 608.30

SUBSCRIBED3,04,15,061(previous year : 3,04,15,061)equity shares of Rs. 2 each, fully paid up 608.30 608.30

Of the above equity shares,

2,21,840 equity shares of Rs.10 each, fully paid up, allotted (at premiumof Rs.10 per share) on conversion of part of the face value (i.e. Rs.40) ofeach 14 per cent secured redeemable convertible debenture of Rs.140.

20,28,822 equity shares of Rs.10 each, fully paid up, allotted (at premiumof Rs. 35 per share) on conversion of each zero per cent interest securedfully convertible debenture of Rs. 90.

3,20,000 equity shares of Rs.10 each, fully paid up, allotted (at premiumof Rs. 35 per share) on conversion of each zero per cent interest securedfully convertible debenture of Rs. 90 issued to non-residents of Indiannationality/ origin and Overseas Corporate Bodies.

10,40,000 equity shares of Rs. 10 each, allotted to shareholders of theerstwhile Manuweb International Limited in the ratio of one equity shareof Rs. 10 each credited as fully paid up in exchange for one equity shareof Rs. 10 each fully paid up held in the erstwhile Manuweb InternationalLimited pursuant to Mumbai High Court's Order.

During the year ended 31st March, 2002, the company bought-backand cancelled 11,05,825 equity shares of Rs. 10 each under the schemeof buy-back of the shares at Rs. 30 per share. Accordingly, the issuedand subscribed share capital was reduced from Rs. 7,10,91,760 toRs. 6,00,33,510.

The equity shares of Rs. 10 each have been sub-divided into 5 equityshares of Rs. 2 each pursuant to the resolution passed by theshareholders at the extraordinary general meeting held on 19thSeptember, 2005.

3,98,306 equity shares of Rs. 2 each, fully paid up, allotted to 9 foreignnationals at premium of Rs. 246 per share on 20th December, 2006.Accordingly, the issued and subscribed share capital increased fromRs. 6,00,33,510 to Rs. 6,08,30,122

TOTAL 608.30 608.30


27




SCHEDULE 'B'RESERVES AND SURPLUSCapital reserve

Balance per last balance sheet 70.00 70.00

Amalgamation capital reserve

Surplus on amalgamation 128.00 128.00

Share premium

Balance per last balance sheet 2,145.06 1,165.23

Add : Amount received on allotment of 3,98,306 equity shares at Rs. 246 per share – 979.83

2,145.06 2,145.06

Capital redemption reserve


General Reserve


Less : Transitional charge for gratuity liability (Net of deferred tax) – 174.53

11,400.00 7,825.47

Add : Amount transferred from profit and loss account 4,600.00 3,574.53

16,000.00 11,400.00

Profit and loss account

Balance carried forward 1,763.45 1,597.09

TOTAL 20,217.09 15,450.73


28

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT 31ST MARCH, 2008



SCHEDULE 'C'

SECURED LOANS

From State Bank of India

The term loan is secured by the mortgage by deposit of title

deeds in respect of all the immoveable properties of the

company and by hypothecation of all moveable assets of the

company, present and future, subject to prior charges in

favour of the company's bankers for securing the borrowings

for working capital requirements, save and except property

situated at Panhala, Kolhapur. 3,874.53 6,922.02

From Export-Import Bank of India

Term loans under production equipment finance programme

Secured by first charge by way of hypothecation of moveable

fixed assets, present and future and mortgage of land and

other immoveable properties, present and future save and

except property situated at Panhala, Kolhapur 2,747.13 2,312.94

Cash credit accounts

State Bank of India 196.86 –

Secured by hypothecation of stock-in-trade, stores, book-

debts and other receivables and second charge on the

company's moveable and immoveable properties, save and

except property situated at Panhala, Kolhapur.

TOTAL 6,818.52 9,234.96

SCHEDULE 'D'

UNSECURED LOANS

Fixed deposits

(Repayable within one year - previous year Rs.0.15 lakh) 0.05 0.15

TOTAL 0.05 0.15


29




SCHEDULE 'E'

DEFERRED PAYMENT LIABILITY

Due for balance purchase considerationpayable for acquisition of shares ofsubsidiary Manugraph DGM Inc. 802.40 1,304.40

TOTAL 802.40 1,304.40

SCHEDULE 'F'

DEFERRED TAX LIABILITY

Deferred tax liability

Arising on account of

difference between book and tax depreciation 667.68 600.88

667.68 600.88

Deferred tax assets


compensation under voluntaryretirement scheme 6.87 154.77

provision for leave encashment 65.56 47.33

provision for transitional gratuity liability 71.90 89.87

provision for warranty expenses 6.55 16.33

provision for doubtful debts and advances 2.14 2.64

provision for diminution in value of current investments – 2.74

153.02 313.68

Net deferred tax liability 514.66 287.20

TOTAL 514.66 287.20


30

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31




SCHEDULE 'H'

INVESTMENTS Nos. Cost Nos. Cost

LONG TERM INVESTMENTS (AT COST)

In Government securities (unquoted)

6 years National Savings Certificates - VIII issue – 0.52 – 0.52

Equity shares of Rs. 10/- each fully paid up(quoted) (unless otherwise specified)

In subsidiary companies (unquoted)

Constrad Agencies (Bombay) Private Limited(shares of Rs.100/- each) 5000 177.16 5000 177.16

Manugraph Kenya Limited, Nairobi(shares of K. Shs.100 each) 22500 22.67 22500 22.67

Manugraph DGM Inc. USA(shares of US $0.01 each) 356472 8,819.31 356472 8,819.31

Trade investments

Manugraph Securities and FinancePrivate Limited (unquoted) 250 0.03 250 0.03

Manugraph Impex FZC, Sharjah(shares of US $1000 - each) -- -- 67 31.18

Other InvestmentsJagran Prakashan Limited -- -- 1401 3.74

Mahindra and Mahindra Financial Services Limited -- -- 1166 2.33

Shree Warna Sahakari Bank Limited (unquoted) 2000 0.50 2000 0.50

INVESTMENTS IN MUTUAL FUNDS

Units of the face value of Rs. 10/- each(unless otherwise specified)

Benchmark Derivative Fund-Growth(Face value of Rs.1000/-) -- -- 28371 300.00

Deutsche Fixed Term Fund - Sr. 5 - Growth -- -- 2000000 200.00

Prudential ICICI InstitutionalFMP 15 Months Plan - Growth -- -- 3731586 400.00

Reliance Equity Fund - Growth -- -- 2000000 200.00

UTI Spread Fund-Dividend 1950000 210.60 -- --

JM Arbitrage Advantage Fund-Dividend 3375328 341.36 -- --

SBI Debt Fund Sr.13 months - Growth 11232500 1,123.25 -- --

Prudential ICICI Equity & Derivatives Fund-Income Optimiser-Rtl. Dividend 2032121 206.88 -- --

Prudential ICICI Fixed Maturity Plan Sr. 35 -13 months Rtl. Growth 5000000 500.00 -- --

TOTAL - LONG TERM INVESTMENTS 11,402.28 10,157.44

CURRENT INVESTMENTS (AT COST)


Gujarat Narmada Valley FertilizersCompany Limited -- -- 65000 73.22

Tech Mahindra Limited -- -- 447 1.63


32



Birla Fixed Term Plan - Quarterly Series-5- Dividend -- -- 5000000 500.00

Fidelity India Special Situation Fund - Growth -- -- 1250000 125.00

JM Arbitrage Advantage Fund - Dividend -- -- 3092352 312.59

Pru. ICICI Equity and Derivatives Fund -Income Optimiser -Rtl. Dividend -- -- 2000000 200.00

Prudential ICICI Fixed MaturityPlan-Sr-35-13 month Rtl. Growth -- -- 5000000 500.00

Standard Chartered Fixed Maturity Plan -Quarterly Series-6 -- -- 11232500 1,123.25

SBI Debt Fund Series -90 days - Dividend -- -- 16395405 1,639.59

SBI Debt Fund Series -13 months - Growth -- -- 11232500 1,123.25

Standard Chartered Arbitrage Fund-Plan B- Dividend -- -- 5069024 507.02

UTI Spread Fund - Dividend -- -- 1950000 195.00

UTI Wealth Builder Fund - Growth -- -- 1000000 100.00

Standard Chartered Arbitrage Fund-Plan A 5228265 520.50 -- --

Reliance Liquid Plus Fund 53334 534.50 -- --

UTI Infrastructure Advantage Fund Sr.1 500000 50.00 -- --

Standard Chartered Fixed Maturity Plan -Yearly Series-17 6000000 600.00 -- --

LIC Mutual Fund Fixed Maturity Plan - Sr. 37 3000000 300.00 -- --

Reliance Fixed Horizon Fund VII - Sr. 5 4000000 400.00 -- --

2,405.00 6,400.55

Less : Provision for diminution in value of current investments -- 8.06

TOTAL - CURRENT INVESTMENTS 2,405.00 6,392.49

TOTAL 13,807.28 16,549.93

Notes :

1 Aggregate of quoted investments

Cost 4,787.09 7,506.62

Market value 5,020.48 7,679.53

2 Aggregate of unquoted investments

Cost 9,020.19 9,051.37

3 6 Years National Savings Certificates -VIII Issue of the face value of Rs.52,500(previous year: Rs. 52,500) have beendeposited with the sales-tax authoritiesand a customer.

4 Details of investments purchased andsold during the year are stated in(Schedule 'T' - Note-4)





33

SCHEDULE 'I'

INVENTORIES

Per inventory verified, valued andcertified by the whole-time director

Stores and spares 151.26 166.40

Consumable tools 150.21 158.92

Finished products 3,189.45 2,629.42

Work-in-progress 1,058.84 1,180.98

Manufactured components 2,634.52 2,197.73

Raw materials and components 3,353.86 2,595.47

TOTAL 10,538.14 8,928.92

SCHEDULE 'J'

SUNDRY DEBTORS

Over six months old (unsecured)

Considered good 972.45 262.93

Considered doubtful 6.31 7.77

978.76 270.70

Less: Provision for doubtful debts 6.31 7.77

972.45 262.93

Others (unsecured)

Considered good 3,159.80 2,458.42

TOTAL 4,132.25 2,721.35

Note :

Amounts due from the subsidiaries

Over six months old 298.16 153.52

Others 127.52 293.76





34

SCHEDULE 'K'

CASH AND BANK BALANCES

Cash balance on hand 24.47 21.10

Bank balances

With scheduled banks

In current accounts 759.97 399.22

In cash credit accounts 971.25 182.66

In fixed deposit accounts 204.48 160.87

In unclaimed dividend accounts 52.05 56.47

1,987.75 799.22

With Shree Warna Sahakari Bank Limited

In current account(Maximum balance at any time duringthe year Rs. 56.56 lakhs - previousyear : Rs. 32.57 lakhs) 0.71 2.06

TOTAL 2,012.93 822.38

SCHEDULE 'L'

LOANS AND ADVANCES

Unsecured - Considered good exceptotherwise stated

Advances to a subsidiary companies 1509.25 3.00

Advances recoverable in cash orin kind or for value to be received


Advance payments against taxes 9,884.63 7,932.34

Balances with Central Excise Collectorate 402.42 332.36

TOTAL 14,074.58 9,833.52

Note:

Advances recoverable in cash or in kindor for value to be received include :

Amount due by officers of the company 17.16 18.68

Maximum during the year 23.80 22.94





35




SCHEDULE 'M'

LIABILITIES

Sundry creditors

Small scale industrial undertakings 1,081.55 777.61

Others 5,769.49 3,634.85

6,851.04 4,412.46

Advances received from customers 5,490.75 5,434.92

Unclaimed dividends* 52.04 56.47

Interest accrued but not due on loans 27.12 51.90

TOTAL 12,420.95 9,955.75

* There are no amounts due and outstandingto be credited to Investor Education andProtection Fund

SCHEDULE 'N'

PROVISIONS

Provision for taxation 9,587.46 7,425.50

Proposed dividend 608.30 304.15

Provision for tax on proposed dividend 103.38 51.69

Other provisions(Refer Schedule 'T' - Note-10) 212.15 187.29

TOTAL 10,511.29 7,968.63


36

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2008

Previous Year(Rs. in lakhs) (Rs. in lakhs)

SCHEDULE 'O'

OPERATING INCOME

Service and erection charges received(Tax deducted at source Rs.15.70 lakhs -previous year Rs.8.27 lakhs) 451.82 345.61

Exchange gain (Net) 1,376.98 339.03

Packing and forwarding charges recovery -- 42.03

Miscellaneous receipts 259.01 222.29

Profit on sale of assets (Net) 21.09 --

Sundry credit balances appropriated 3.53 0.57

Excess provision for doubtful debts and advances 1.46 1.54

Excess provision for diminution in value of investments 8.05 --

TOTAL 2,121.94 951.07

SCHEDULE 'P'

OTHER INCOME

Dividend 246.15 133.98

Rent (gross)(Tax deducted at source Rs.4.32 lakhs -previous year: Rs.4.67 lakhs) 21.90 21.90

Profit on sale of investments 777.55 126.28

TOTAL 1,045.60 282.16


37

SCHEDULE FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2008


SCHEDULE 'Q'

MATERIALS

A. Consumption of raw materials and components

Opening stock 2,595.47 2,196.17

Add: Purchases(including component processingcharges Rs. 1,309.45 lakhs -previous year : Rs. 1,066.97 lakhs) 27,980.87 21,074.12

30,576.34 23,270.29

Less: Closing stock 3,353.86 2,595.47

Consumption(excluding amount capitalisedRs. 13.50 lakhs - previous year :Rs. 19.50 lakhs) 27,222.48 20,674.82

B. Excise duty on closing stock of finished products 240.65 345.38

Less : Provision for excise duty on opening stock of finished products 345.38 345.68

(104.73) (0.30)

C. Increase/Decrease in stock of finishedproducts, work-in-progress andmanufactured components

Closing stock




6,882.81 6,008.13

Less: Opening stock




6,008.13 7,829.58

(874.68) 1,821.45

TOTAL 26,243.07 22,495.97


38

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2008


SCHEDULE 'R'

OTHER EXPENSES

PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, wages, bonus and allowances 3,479.01 2,424.53Company's contributions to provident and other funds 217.03 168.30Company’s contributions to Employees Group Gratuity Scheme 144.79 55.07Welfare expenses 178.12 142.92

4,018.95 2,790.82OPERATION AND OTHER EXPENSES

Stores and tools consumed 667.38 655.10Electricity charges 194.41 189.72Repairs to machinery 160.82 152.83Repairs to buildings 46.53 63.66Other repairs 90.19 77.67Rent 8.60 8.66Rates and taxes (other than on income) 3.11 2.75Insurance charges 63.37 75.08Travelling and conveyance 507.68 423.47Advertisement and sales promotion expenses 258.20 304.60Commission on sales 1,117.33 1,144.53Discount on sales 14.04 –Royalty on sales 50.28 47.26Bank and finance charges 98.80 77.87Bad debts 10.22 0.31Sundry debit balances written off 0.34 14.30Service tax – 3.87Loss on sale of assets – 0.40Fixed assets written off 6.56 8.72Warranty expenses 55.50 175.58Research and development expenses 229.92 158.08Donations 3.70 25.07Legal and professional fees 45.89 511.43Miscellaneous expenses 542.79 501.27Short provision and adjustments relating to previous years 134.70 130.37

4,310.36 4,752.60FREIGHT AND HANDLING CHARGES 115.43 114.81PACKING AND FORWARING CHARGES 267.01 –DIRECTORS' FEES 4.32 6.08PROVISION FOR DIMINUTION IN VALUE OFCURRENT INVESTMENTS – 8.06

TOTAL 8,716.07 7,672.37

SCHEDULE 'S'

INTEREST

On fixed deposits and fixed loans 499.72 350.62On cash credit accounts 3.93 38.64Others 32.85 0.12

536.50 389.38Less : Interest on deposits, debts etc. (gross)

(Tax deducted at source Rs. 10.11 lakhs- previous year : Rs. 9.47 lakhs) 125.90 78.60

TOTAL 410.60 310.78


39

SCHEDULE FORMING PART OF THE ACCOUNTSFOR THE YEAR ENDED 31ST MARCH, 2008

2007 - 2008 2006 - 2007(Rs. in lakhs) (Rs. in lakhs)

SCHEDULE 'T'

NOTES FORMING PART OF THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT

1 Accounting Policies

Basis for preparation of accounts

The accounts have been prepared to comply in all material aspects with applicableaccounting principles in India, the Accounting Standards issued by the Institute ofChartered Accountants of India and the relevant provisions of the Companies Act,1956. Revenues/incomes and costs/expenditure are generally accounted on accrualbasis, as they are earned or incurred.

Sales

Sales comprise of sale of goods and spare parts and are net of trade discount and salesreturns.

Employee benefits

(i) Provident fund is a defined contribution scheme established under a State Plan.The contributions to the Scheme are charged to the profit and loss account in theyear in which the contributions to the fund are accrued.

(ii) Superannuation fund is a defined contribution scheme and contributions to thescheme are charged to the profit and loss account in the year when thecontributions accrue. The scheme is funded with an insurance company in theform of a qualifying insurance policy.

(iii) The company has a defined benefit gratuity scheme. For the defined benefitscheme, actuarial valuations are being carried out at each balance sheet date.Actuarial gains and losses are recognized in full in the profit and loss account inthe period in which they occur.

(iv) Leave encashment benefit is provided on the basis of actuarial valuation done atthe end of the year. The aforesaid leave liability is not funded.

Research and development

Revenue expenditure on research and development is charged to profit and lossaccount in the year in which it is incurred. Capital expenditure on research anddevelopment is included in additions to fixed assets under appropriate heads.

Depreciation

Depreciation on fixed assets is provided on straight-line method at the rates and in themanner prescribed in Schedule XIV to the Companies Act, 1956.

Transactions in foreign currencies

Transactions in foreign currencies are accounted for in the following manner :

Transactions covered by forward contracts are accounted for by recognising thedifference between the forward rate and the exchange rate on the date of thetransaction as income or expenditure over the life of the contract.

Transactions not covered by forward contracts are accounted for in the followingmanner :

(i) Export sales and import purchases are accounted for at exchange rates prevailingat the time of the transactions.

(ii) Gains/losses arising out of the foreign currency transactions are recognised in theprofit and loss account.

(iii) Other assets and liabilities are restated at the rates ruling at the year-end and thedifferences on such retranslation are recognised in the profit and loss account.


40



The company has not used any other derivative instrument except forward contractswhich have been used for hedging its foreign currency exposure.

The company does not undertake any speculative or trading activity through derivativeinstruments.

As at the year-end the company had un-utilised foreign exchange forward contractsof USD 27,184,000.

Fixed assets

Fixed assets are stated at their original cost of acquisition including incidental expensesrelated to acquisition and installation of the concerned assets. The fixed assetsmanufactured by the company are stated at manufacturing cost. Fixed assets are shownnet of accumulated depreciation.

Impairment of assets

Cash generating unit/assets are assessed for possible impairment at balance sheetdate based on external and internal sources of information. Impairment losses, if any,are recognised as an expense in the profit and loss account.

Investments

Long term investments are stated at cost less other than temporary diminution in value,if any. Current investments are stated at lower of cost and fair value, determined on aportfolio basis.

Inventories

Cost of inventories is generally ascertained on the weighted average basis. Costcomprises all costs of purchase, costs of conversion and other costs incurred in bringingthe inventories to their present location and condition.

Raw materials and components, stores and spares are stated at lower of cost and netrealisable value.

Consumable tools are stated at cost or under.

Work-in-progress and manufactured components are valued at estimated cost.

Finished products are valued at lower of cost and net realisable value.

Excise duty is included in the value of finished products inventory.

Provision for doubtful debts/advances

Sundry debtors/advances are stated after making adequate provision for doubtfuldebts/advances.

Taxation

Provision for income-tax is made on the basis of the estimated taxable income per theprovisions of the Income-tax Act, 1961 and the relevant Finance Act.

The company provides for deferred tax using the liability method, based on the taxeffects of timing differences resulting from the recognition of items in the financialstatements and in estimating its current income-tax provision.

Provisions, contingent liabilities and contingent assets

Provisions are recognised only when there is a present obligation as a result of pastevents and when a reliable estimate of the amount of the obligation can be made.Contingent liability is disclosed for (i) possible obligations which will be confirmedonly by future events not wholly within the control of the company or (ii) presentobligations arising from past events where it is not probable that an outflow of resourceswill be required to settle the obligation or a reliable estimate of the amount of theobligation cannot be made. Contingent assets are not recognised in the financialstatements since this may result in the recognition of income that may never be realised.


41



2 Contingent liabilities

(i) Claims against the company not acknowledged as debts 36.86 31.45

(ii) Income-tax, sales tax, customs duty, excise duty and service tax demands

against which the company has preferred appeals/made representations 78.01 68.54

(iii) Unexpired letters of credit opened by banks amount to 596.19 --

(iv) On account of guarantees executed by the company's bankers 8.34 2,493.50

(v) On account of undertakings given by the company in favour of Customs Authority 1,763.50 1,212.00

(vi) On account of undertaking in the form of Support Agreement executed bythe company in favour of the bankers of its subsidiary Manugraph DGM, Inc. 5957.82 --

3 Estimated amount of contracts remaining to be executed on capital accountand not provided for was 700.63 765.80

4 The particulars of investments purchased and sold during the year are as under.

Name of the company Nos. Purchase Nos. Purchasecost cost

Rs. Rs

3M India Limited 1887 3776957 -- --ADLABS Limited 3902 3528900 -- --Bharat Electronics Limited 2635 4586998 -- --Bharati Televentures Limited 4247 3471703 -- --Birla Bond Plus Fortnightly Rtl. Div. Re-Investment -- -- 3545219.272 40,000,000Century Textile Limited 4514 4422099 -- --DLF Limited 4633 2910217 -- --DSP Merrill Lynch Balance Fund Div. -- -- 424268.137 10,000,000DSP Merrill Lynch Liquid Fund InstitutionalPlan Growth 55428.3326 61294000 -- --Great Eastern Shipping Limited 13670 3489975 20000 4,628,198Great Offshore Limited 4970 3695149 -- --Himadri Chemical and Industries Limited 3992 1531624 -- --ICICI Bank Limited 5632 5000247 -- --Infosys Technologies Limited -- -- 2000 2,907,124KEC International Limited 9173 5068183 -- --Mahanagar Telephone Nigam Limited -- -- 30000 4,659,576Maruti Udyog Limited 2498 1992129 -- --Moser Baer India Limited 6900 2506239 -- --Mphasis Limited 16906 5311294 -- --Oil and Natural Gas Corporation Limited 3976 3693068 -- --Prudential ICICI Blended Plan-A Growth -- -- 4581481.651 50,000,000Punjab National Bank Limited 6475 3298111 -- --Reliance Communication Limited 7569 3496122 -- --Reliance Energy Limited 4960 3564595 -- --Reliance Industries Limited 2594 4459561 -- --Reliance Liquid Plus Fund Institutional Weekly Dividend 39904.966 40000000 -- --Standard Chartered Arbitrage Fund Plan-ADividend-Reinvestment 4932133.838 50000000 -- --Standard Chartered Arbitrage Fund Plan-ADividend-Reinvestment 5892578.298 60000000 -- --Standard Chartered Liquidity Manager Plus -Dividend -- -- 49978.165 50,000,000


42


Name of the company Nos. Purchase Nos. Purchasecost cost

Rs. Rs

Standard Chartered Liquidity Manager Plus -Dividend -- -- 49950.564 50,000,000Sundaram Rural India Fund Growth -- -- 750000 7,500,000Suzlon Energy Limited 2862 4228865 -- --Tata Consultancy Services Limited -- -- 2000 1,813,050Union Bank of India 29167 3919434 -- --

5 The current assets, loans and advances are approximately of the value stated,if realised in the ordinary course of business. The provision for depreciation and for allknown liabilities is adequate and not in excess of the amount reasonably necessary.

6 The names of small scale industrial undertakings, to whom the company owes a sumwhich is outstanding for more than 30 days at the balance sheet date, areAccura Tech, Amruta Industries, Anu Engineering, Aspire Polymers Private Limited,Auto Component Enterprises, Avison Industries, Bhakti Enterprises, Blue Line Engineers,Chemi Flow Rubber Industries, Dadsons, Dynamic Engineers, Echaar EquipmentsPrivate Limited, Flame Industries, Fulai Enterprises, G.M. Automat, G.S. Gears IndiaPrivate Limited, Gauraj Metal Finishers, Gorson Enterprises, Hanuman EngineringWorks, Hemmant Industries, Hind Gears Industries, Hind Gears, Hindustan EngineeringWorks, K.M. Engineering Works, Krupa Metals, Krushnal Agro Engineers, KuberIndustries, M.G. Karajgar Engineering System, Mahalaxmi Industries, MaharashtraEngineering Systems, Mangalmurti Industries, Maruti Udyog, Master Precision,Mayuresh Enterprise, Micro Engineers, Morval Engineers (India) Private Limited, NationalEngineering, New Hind Gear, Om Engineering, Omkar Industries, Omsia Industries,Onkar Engineers, Padmavati Industries, Panditrao Engineering Works, Pat Industries,Patil Engineering Works, Perfect Engineering Enterprises, Plasma Spray Processors, PlazaEngineering Works, Pramod Industries, Preci-Fab Industries, Precise Systems, PreciseTranstech, Quality Engineers, Radhika Techno Systems Private Limited, Raj EngineeringWorks, Raj Mangal Engineers, Rajrajeshwari Industries, Ratnprabha Industrial Products,Reliance Engineers, Research Development and Manufacturing Corporation, RishikeshIndustries, Rotadyne Tools Private Limited, S.B. Industries, S.B. Engineers, S.R. Engineers,Sadamate Industries, Fabricators, Sajomuna Precision Product, Sanvik Engineers, SarathiEngineering Works, Saraswati Udyog, Sathish Industries, Shalini Udyog, ShivaprasadIndustries, Shree Ganesh, Shree Mallikarjuna Enginnering Works, Shri Ambika Industries,Shri Balaji, Shri Dattatraya Industries, Shri Ganesh Precision Parts, Shri Jagadamba AutoIndustries, Shri Jagadamba Engineering Works, Shri Krupa Enterprises, Shri KrupaIndustries, Shri Swami Samarth Industries, Shri Tulja Bhavani Engineers, ShriramIndustries, Sky Engineers, Somaiya Techno Product, Spiro Gears, Sudhirlaxmi Industries,Sudin Industries, Sutar Engineering Works, Swapnagandha Enterprises, SwaroopIndustries, Tara Industries, TCPC, Techno-Skill Engineering Works, The Top Technique,Toolex Engineers Private Limited, Track Engineers, Tushar Industries, Ulka Industries,Unify Industries, United Industries, Unitherm Engineers, Vicky Enterprises, VijayEngineering Works, Vijay Engineers, Vikrant Engineers, Vimal Engineers, and Tech.Services, Vinayak Fabrication, Vintage Machinist Private Limited, Visa Industries, Y.P.Industries, Yash-SV Engineers.

This information and that given in Schedule M -Liabilities, regarding dues to small scaleindustrial undertakings is disclosed based on the information available with thecompany regarding status of the suppliers as defined under 'Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings Act, 1993'. This has beenrelied upon by the auditors.

7 In the absence of necessary information with the company, relating to the registrationstatus of suppliers under the Micro, Small and Medium Enterprises Development Act,2006, the information required under the said Act could not be compiled and disclosed.

8 Confirmations from some of the creditors were not received by the company andtherefore their balances are per books of account only.


43



9 After the close of the year the company under stock purchase agreement has convertedloan of Rs.690.90 lakhs (US $1,750,000) given to its subsidiary, Manugraph DGM, Inc.into 31,818 shares of common stock of the subsidiary.

10 Other provisions

As at 1st Provision Amounts As atApril, made during utilised/ 31st2007 the year reversed March,

during 2008the year

Leave encashment 139.26 53.62 -- 192.88

(129.89) (9.37) (--) (139.26)

Warranty expenses 48.03 19.27 48.03 19.27

(16.00) (48.03) (16.00) (48.03)

187.29 72.89 48.03 212.15

(145.89) (57.40) (16.00) (187.29)

11 Revenue expenses on research and development activities amounting to Rs.229.92lakhs (previous year Rs.158.08 lakhs) as certified by the management, have been debitedto the profit and loss account, per past practice of the company.

12 Miscellaneous expenses 542.79 501.27

This amount includes fees and out of pocket expensespaid to the auditors as follows

Audit fees 10.00 8.50

In other capacities

Tax audit 1.25 1.00

Taxation matters 0.75 1.00

Other services 3.89 3.98

Reimbursement of travelling and out of pocket expenses 0.13 0.13

13 (a) Managerial remuneration under Section 198 of theCompanies Act, 1956 for managing directors and whole-time director

Salary 67.65 36.84

Rent allowance 36.60 9.60

Commission 300.00 100.00

Perquisites 13.02 9.21

Company's contributions to provident and other funds 9.27 5.45

426.54 161.10

(b) Computation of net profit for commission payable tomanaging directors

Profit before taxation per profit and loss account 9,372.31 7,041.06

Add : Managing and other directors' remunerationand commission 426.54 161.10

Depreciation charged in accounts 828.62 741.85

Loss on sale of assets -- 0.40

Fixed assets written off 6.56 8.72

Directors' fees 4.32 6.08

Provision for earned leave wages 53.62 9.36


44



Provision for warranty expenses -- 32.03

Provision for diminution in value of current investments -- 8.06

Provision for gratuity liability 47.14 --

1366.80 967.60

10739.11 8008.66

Less : Depreciation under Section 350 of the CompaniesAct, 1956 828.62 741.85

Profit on sale of assets 21.09 --



Excess provision for diminution in value of currentinvestments 8.05 --

1,636.77 869.66

Net profit per Section 309(5) of the Companies Act, 1956 9,102.34 7,139.00

Maximum managerial remuneration to two managing directors.

10% of the net profit Rs. 9,102.34 lakhs(previous year Rs.7,139.00 lakhs) 910.23 713.90

Commission payable, restricted to -

Vice-chairman and Managing Director 150.00 50.00

Managing Director 150.00 50.00

14 The company provides gratuity to all employees. The benefit is in the form of lumpsum payments to vested employees on resignation, retirement, death while inemployment or on termination of employment of an amount equivalent to 15 days'basic salary and dearness allowance for each completed year of service. Vesting occursupon completion of five years of service. The company makes annual contributions tofund administered by trustees and managed by Life Insurance Corporation of India,for amounts notified by it. The gratuity benefit is a defined benefit plan.

Reconciliation of opening and closing balance of the present value of the definedbenefit obligation

Present value of obligation as at April 1, 2007 596.27

Interest cost 47.94

Current service cost 55.83

Benefits paid (10.91)

Actuarial (gain)/loss on obligation 77.54


Reconciliation of opening and closing balance of

the fair value of plan assets

Fair value of plan assets as at March 31, 2007 331.88

Expected return on plan assets 36.51

Contributions 197.66

Benefits paid 10.91

Actuarial gain/(loss) on plan assets --



45



Amount recognised in Balance Sheet

Fair value of plan assets as at the end of the year 555.14

Present value of obligation as at the end of the year 766.67

Asset/(liability) recognised in the balance sheet (211.53)

Expense recognised in the Profit and Loss account

Interest cost 47.94


Expected return on plan assets (36.51)

Net actuarial (gain)/loss recognised in the year 77.54

Net cost 144.80

Assumptions

Discount rate 8%

Salary escalation rate (annual) 4%

15 The operation of the company represents wholly one segment of activity relating toproduction of printing machines and the entire production operations are locatedin India. Accordingly all earnings, assets and liabilities relate to this activity only.

16 Licenced capacity, installed capacity and production

Licenced Installed Productioncapacity capacity*

Nos. Nos. Nos.

Printing units N.A. 960 812(N.A.) (830) (704)

* Installed capacities are as certified by the whole-time director,but not verified by the auditors, being a technical matter.

17 Turnover and closing and opening stocks of productsmanufactured.

Turnover

Quantity Amount(Nos.) (Rs. in lakhs)

Printing units 812 40,838.30(737) (35,366.00)

Spares and accessories 1,457.85(1,518.32)

42,296.15(36,884.32)

Closing and Opening StocksClosing stock Opening stock

Quantity Amount Quantity Amount(Nos.) (Rs. in lakhs) (Nos.) (Rs. in lakhs)

Printing units 70 3,189.45 70 2,629.42(70) (2,629.42) (103) (3,644.14)


46



18 Raw materials and components consumed

Items Unit Quantity Amount(Rs. in lakhs)

Steel and other metals Mtrs. 50176 1,300.60(47689) (1,165.90)

Castings Kgs. 4244890 1,946.70(3183817) (1,577.18)

Electrical parts 8,209.21(6,082.77)

Components 15,765.97(11,848.97)

27,222.48(20,674.82)

Note:

The consumption in value has been ascertained on the basis of opening stock pluspurchases less closing stock as adjusted on account of excesses and shortagesascertained on physical count and write off of obsolete and unserviceable components.

19 Value of imports (calculated on C.I.F. basis)

(Rs. in lakhs)

Components 5,193.67(3,393.69)

Capital goods 1,233.30(848.35)

Stores, spares and tools 40.21(70.82)

20 Expenditure in foreign currencies

Royalty on sales 43.61(41.01)

Professional fees 1.54(131.56)

Interest 499.71(348.97)

Payments on other accounts 296.95(145.95)


47



21 Remittances in foreign currencies for dividend

The company has remitted during the year dividend in foreign currency to non-residentshareholders. The particulars of dividend paid during the year are as under.

Number of non-resident shareholders 11(12)

Number of equity shares of Rs. 2 415,306each held by them (416,806)

Amount of dividend remitted (Rs.)For 2006 - 2007 - final dividend 415,306

(46,250)

For 2007 - 2008 - interim dividend 830,613(830,612)

22 Value of imported and indigenous raw materials and components consumed andthe percentage of each to the total consumption.

Amount Percentage(Rs. in lakhs)

Imported - C.I.F., custom duty and other charges 6,917.11 25%(4,512.53) (22%)

Indigenously obtained 20,305.37 75%(16,162.29) (78%)

27,222.48 100%(20,674.82) (100%)

Note :

In giving the above information, the company has taken the view that spares andcomponents as referred to in clause 4D(c) of part II of Schedule VI cover only suchitems as go directly into production.

23 Earnings in foreign exchange

(Rs. in lakhs)

Export of printing units (calculated on F.O.B. basis) 14,125.84(12,270.24)

Dividend 17.62(17.91)

Interest 61.46(21.71)

Miscellaneous receipts 4.07(4.63)


48



24 Earnings per share

(a) Net profit after tax available for equity shareholders 6,202.88(4,740.57)

(b) Weighted average number of equity shares of Rs. 2outstanding during the year(No. of shares) 30,415,061

(30,128,062)

(c) Basic and diluted earnings per share (Rs. ) (a/b) 20.39(15.73)

25 DISCLOSURE PURSUANT TO CLAUSE 32 OF THE LISTING AGREEMENT

Name of Loanees Amount of Loan / Advances in nature of loanoutstanding with no repayment schedule

As at Maximum amount31st March, 2008 outstanding during

2007-2008

Subsidiary Companies

Manugraph DGM Inc. 1,506.25 1,506.25

Advances in nature of loan carrying NilRate of Interest

As at 31st March, 2008 Maximum amountoutstanding during

2007-2008

Constrad Agencies (Bombay) Private Limited 3.00 3.00

26 Related parties disclosure (as identified by the management)

Related party relationships

(a) Subsidiary companies Constrad Agencies (Bombay) Private LimitedManugraph Kenya LimitedManugraph DGM Inc. USA.

(b) Other related parties where control exists Multigraph Machinery Company LimitedManu Enterprises LimitedManubhai Sons and Company

(c) Key management personnel Mr. Sanjay S. Shah, Vice-Chairman and Managing DirectorMr. Pradeep S. Shah, Managing Director

(d) Relatives of key management personnel Mr. Sanat M. Shah (Father of Messrs Sanjay and Pradeep Shah)Mrs. Ameeta S. Shah (Spouse of Mr. Sanjay S. Shah)Mrs. Rupali P. Shah (Spouse of Mr. Pradeep S. Shah)


49


Transactions with related parties

Rupees in lakhs

Type of related party Description of the nature Volume of Amount outstandingof trasactions trasactions during as on 31st March, 2008

2007 - 2008Receivable Payable

Subsidiary companies Purchase of goods 49.77 49.77(Nil) (Nil)

Sale of goods 293.38 415.20(665.32) (460.91)

Investment (Nil)(9019.14)

Finance given 1478.70 1478.70(Nil) (Nil)

Interest received 61.46 27.56(21.71) (Nil)

Advances recoverable 3.00(3.00)

Expenditure on other services 1.18 1.18(Nil) (Nil)

Other relatedparties where Sale of goods 33.92 4.84control exists (34.75) (7.43)

Commission paid 1,084.06 305.52(1077.25) (Nil)

Rent received 21.90(21.90)

Rent paid 3.38(Nil)

Key Management ManagerialPersonnel remuneration paid 415.02

(150.61)

Relatives ofkey management Directors' fees 0.60personnel (0.90)

In respect of above parties, there is no provision for doubtful debts as on 31st March, 2008 and no amount has beenwritten off or written back during the year in respect of debts due from/to them.


50

27 Additional information as required under part IV of Schedule VI to the Companies Act, 1956

Balance sheet abstract and Company's general business profile.

I. Registration details

Registration No. L29290MH1972PLC015772

State Code 11

Balance Sheet date 31.03.2008

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

Public issue NIL

Rights issue NIL

Bonus issue NIL

Private placement NIL

III. Position of mobilisation and deployment of funds (Amount in Rs. thousands)

Total liabilities 2896102

Total assets 2896102

Sources of funds

Paid-up capital 60830

Reserves and surplus 2021709

Secured loans 681852

Unsecured loans 5

Deferred payment liability 80240

Deferred tax liability 51466

Application of funds

Net fixed assets 732808

Investments 1380728

Net current assets 782566

Miscellaneous expenditure NIL

Accumulated losses NIL

IV. Performance of the Company

Turnover (Gross revenue) 4546369

Total expenditure 3609138

Profit before tax 937231

Profit after tax 620288

Earning per share - Basic (Rs.) 20.39

Dividend rate % 200



51


V. Generic names of two principal products

Item Code No. (I.T.C. Code) 844312

Product Description Sheet fed offset printing units

Item Code No. (I.T.C. Code) 844321

Product description Web offset printing units

28 Figures of the previous year have been regrouped to confirm with this year's groupings wherever necessary.

29 Figures in parenthesis are in respect of the previous year.

30 Figures have been rounded off to the nearest thousand and shown in rupees lakhs.

Signatures to Schedules 'A' to 'T'.







52

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008



A CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax and

extraordinary items 9,372.31 7,041.06

Add : Depreciation 828.62 741.85

Interest 410.60 310.78


Loss on sale of assets – 0.40


Provision for diminution invalue of current investments – 8.06

Provision for warranty expenses – 32.03

1,299.40 1,111.21

10,671.71 8,152.27

Deduct : Dividend received 246.15 133.98

Excess provision for diminutionin value of investments 8.05 --

Excess provision for warranty expenses 28.76 --

Rent received 21.90 21.90

Profit on sale of assets 21.09 --


1,103.50 282.16

Operating profit before working capital changes 9,568.21 7,870.11

Add : Increase in trade

payables and other

liabilities 2,546.85 1,125.86

Decrease in inventories – 1,405.57

2,546.85 2,531.43

12,115.06 10,401.54

Deduct : Increase in trade and other

receivables 3,699.67 1,968.21

Increase in inventories 1,609.22 --

5,308.89 1,968.21

Cash generated from operations 6,806.17 8,433.33

Deduct : Direct taxes 2,789.88 2,492.96

Net cash inflow in course of operating activities 4,016.29 5,940.37


53

B CASH FLOW FROM INVESTING ACTIVITIES

Outflow

Purchase of fixed assets 2,264.81 1,575.37

Purchase of investments 5,097.30 17,588.79

7,362.11 19,164.16

Inflow

Sale of investments 8,617.52 3,811.25

Sale of fixed assets 76.66 56.43

Dividend received 246.15 133.98


8,962.23 4,023.56

Net cash inflow / (outflow) in courseof investing activities 1,600.12 (15,140.60)

C CASH FLOW FROM FINANCING ACTIVITIES

Share capital – 7.96

Share premium – 979.83

Borrowings (Net) (2,918.54) 8,778.26

(2,918.54) 9,766.05

Less : Interest paid (Net) 435.37 291.90

Dividend paid 916.88 1,340.00

Tax on dividend 155.07 190.55

1,507.32 1,822.45

Net cash (outflow) / inflow in course

of financing activities (4,425.86) 7,943.60

Net increase / decrease in cash / cash

equivalents [(A + B) – C] 1,190.55 (1,256.63)

Add : Opening cash/cash equivalents 822.38 2,079.01

Cash/cash equivalents at the close of the year 2,012.93 822.38

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008





BURJOR F. PAVRIProprietor




54

AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OFMANUGRAPH INDIA LIMITED

We have examined the attached consolidated balance sheet of Manugraph India Limited and its subsidiaries as at 31st March,2008, the consolidated profit and loss account for the year ended on that date and the consolidated cash flow statement for theyear ended on that date annexed thereto. These consolidated financial statements are the responsibility of the ManugraphIndia Limited’s management. Our responsibility is to express an opinion on these consolidated financial statements based onour audit.

We conducted our audit in accordance with the 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 prepared, in allmaterial respects, in accordance with an identified financial reporting framework and are free of material misstatement. Anaudit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of any of the subsidiaries, whose financial statements reflect total assets of Rs. 4,351.76lakhs as at 31st March, 2008 and total revenue of Rs. 22,887.10 lakhs for the year then ended. These financial statements andother financial information have been audited by other auditors, whose reports have been furnished to us and our opinion, inso far as it relates to the amounts included in respect of these subsidiaries, is based solely on the reports of the other auditors.

We report that the consolidated financial statements have been prepared by the company in accordance with the require-ments of Accounting Standard 21– Consolidated Financial Statements, issued by the Institute of Chartered Accountants of Indiaand on the basis of the separate audited financial statements of Manugraph India Limited and its subsidiaries included in theconsolidated financial statements.

On the basis of the information and explanations given to us and on consideration of the separate audit reports on individualaudited financial statements of Manugraph India Limited and its aforesaid subsidiaries, in our opinion, the attached consoli-dated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the consolidated balance sheet, of the state of affairs of Manugraph India Limited and its subsidiaries as at 31st

March, 2008;

(b) in the case of the consolidated profit and loss account, of the results of operations of Manugraph India Limited and itssubsidiaries for the year ended on that date; and

(c) in the case of the consolidated cash flow statement, of the cash flows of Manugraph India Limited and its subsidiaries forthe year ended on that date.




Membership No. 4931

Mumbai

30th June, 2008


55

CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008


Schedule (Rs. in lakhs) (Rs. in lakhs)

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Capital A 608.30 608.30Reserves and surplus B 19,921.96 15,441.35

20,530.26 16,049.65LOAN FUNDS

Secured loans C 9,779.38 11,671.62Unsecured loans D 0.05 113.13Deferred payment liability E 922.76 1,304.40

10,702.19 13,089.15

TOTAL FUNDS EMPLOYED 31,232.45 29,138.80

APPLICATION OF FUNDSFIXED ASSETS FGross block 17,491.90 15,631.92Less: Depreciation 7,557.45 7,001.25

Net block 9,934.45 8,630.67Capital work-in-progress 75.81 36.74

10,010.26 8,667.41GOODWILL ON CONSOLIDATION 6,644.09 6,644.09INVESTMENTS G 4,788.14 7,530.79

DEFERRED TAX ASSETS H 294.71 137.40

CURRENT ASSETS, LOANS AND ADVANCESInventories I 14,877.06 15,859.71Sundry debtors J 5,811.47 4,495.58Cash and bank balances K 2,035.03 1,184.60Loans and advances L 13,264.24 10,565.94

35,987.80 32,105.83

Less:CURRENT LIABILITIES AND PROVISIONS

Liabilities M 15,583.37 17,960.94Provisions N 10,938.57 8,002.34

26,521.94 25,963.28

NET CURRENT ASSETS 9,465.86 6,142.55

MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred financing cost 29.39 16.56

TOTAL ASSETS (NET) 31,232.45 29,138.80

CONTINGENT LIABILITIES AND NOTES ONCONSOLIDATED BALANCE SHEET T



M. R. Harshe Whole-time Director(BURJOR F. PAVRI)Proprietor


Mumbai, Mumbai,30th June, 2008 30th June, 2008


56

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Previous YearSchedule (Rs. in lakhs) (Rs. in lakhs)

INCOMESales (gross) (Excluding sales returnRs. 7.40 lakhs - previous year : Rs. 60.45 lakhs) 69,620.02 52,549.70Less : Excise duty 4,777.93 4,278.74

Net sales 64,842.09 48,270.96Operating income O 2,132.67 1,138.76Other income P 1,033.63 289.97

68,008.39 49,699.69EXPENDITURE

Materials Q 41,373.14 30,542.91Other expenses R 16,090.76 11,119.51Depreciation 1,292.68 929.33Interest S 660.78 412.78

59,417.36 43,004.53Less: Expenditure transferred to capital accounts 106.98 144.49

TOTAL EXPENDITURE 59,310.38 42,860.04

PROFIT BEFORE TAX 8,698.01 6,839.65Less: Provision for taxationCurrent tax 2,912.18 2,007.38Deferred tax (157.31) 115.12Fringe benefit tax 28.85 23.10

2,783.72 2,145.60Provision for wealth tax 3.13 2.27

2,786.85 2147.87

PROFIT AFTER TAX 5,911.16 4,691.78Less / Add : Income-tax pertaining to previous year 13.16 21.15

5,898.00 4,712.93Add: Balance brought forward from last year 1,546.47 1,457.52

AMOUNT AVAILABLE FOR APPROPRIATIONS 7,444.47 6,170.45APPROPRIATIONS

Interim dividend 608.30 608.30Tax on interim dividend 103.38 85.31Proposed dividend 608.30 304.15Tax on proposed dividend 103.38 51.69General reserve 4,600.00 3,574.53

6,023.36 4,623.98

BALANCE CARRIED TO BALANCE SHEET 1,421.11 1,546.47

Basic and diluted earningsper share (Rs.) (Schedule 'T'- Note 10) 19.43 15.57

NOTES ON CONSOLIDATEDPROFIT AND LOSS ACCOUNT T



M. R. Harshe Whole-time Director(BURJOR F. PAVRI)Proprietor




57

SCHEDULE FORMING PART OF THE CONSOLIDATED BALANCE SHEETAS AT 31ST MARCH, 2008



SCHEDULE 'A'

CAPITAL

AUTHORISED

9,85,00,000 equity shares of Rs. 2 each 1,970.00 1,970.00

10,000 preference shares of Rs.100 each 10.00 10.00

20,000 unclassified shares of Rs.100 each 20.00 20.00

3,50,000 redeemable preference shares of Rs. 100 each 350.00 350.00

2,350.00 2,350.00

ISSUED

3,04,15,061(previous year : 3,04,15,061)equity shares of Rs. 2 each 608.30 608.30

SUBSCRIBED

3,04,15,061(previous year : 3,04,15,061)equity shares of Rs. 2 each, fully paid up 608.30 608.30

Of the above equity shares,

2,21,840 equity shares of Rs.10 each, fully paid up, allotted (atpremium of Rs.10 per share) on conversion of part of the face value(i.e.Rs.40) of each 14 per cent secured redeemable convertibledebenture of Rs.140.

20,28,822 equity shares of Rs.10 each, fully paid up, allotted (atpremium of Rs. 35 per share) on conversion of each zero per centinterest secured fully convertible debenture of Rs. 90.

3,20,000 equity shares of Rs.10 each, fully paid up, allotted (atpremium of Rs. 35 per share) on conversion of each zero per centinterest secured fully convertible debenture of Rs. 90 issued to non-residents of Indian nationality/ origin and Overseas Corporate Bodies.

10,40,000 equity shares of Rs. 10 each, allotted to shareholders ofthe erstwhile Manuweb International Limited in the ratio of oneequity share of Rs. 10 each credited as fully paid up in exchange forone equity share of Rs. 10 each fully paid up held in the erstwhileManuweb International Limited pursuant to Mumbai High Court’sOrder.

During the year ended 31st March, 2002, the company bought-backand cancelled 11,05,825 equity shares of Rs. 10 each under thescheme of buy-back of the shares at Rs. 30 per share. Accordingly,the issued and subscribed share capital was reduced from Rs.7,10,91,760 to Rs. 6,00,33,510

The equity shares of Rs. 10 each have been sub-divided into 5 equityshares of Rs. 2 each pursuant to the resolution passed by theshareholders at the extraordinary general meeting held on 19thSeptember, 2005.

3,98,306 equity shares of Rs. 2 each, fully paid up, allotted to 9 foreignnationals at premium of Rs. 246 per share on 20th December, 2006.Accordingly, the issued and subscribed share capital increased fromRs. 6,00,33,510 to Rs. 6,08,30,122

TOTAL 608.30 608.30


58




SCHEDULE 'B'

RESERVES AND SURPLUS

Capital reserve


Capital reserve on consolidation 37.33 37.33

Amalgamation capital reserve

Surplus on amalgamation 128.00 128.00

Share premium


Add : Amount received on allotment of3,98,306 equity shares at Rs. 246 per share — 979.83

2,145.06 2,145.06

Capital redemption reserve


Investment revaluation reserve

Balance per last balance sheet — 159.19

Less: Adjusted against investments — 159.19

— —

General Reserve


Less : Transitional charge for gratuity

liability (Net of deferred tax) — 174.53

11,400.00 7,825.47

Add : Amount transferred from

profit and loss account 4,600.00 3,574.53

16,000.00 11,400.00

Foreign currency translation reserve 7.88 1.91

Profit and loss account

Balance carried forward 1,421.11 1,546.47

TOTAL 19,921.96 15,441.35


59

SCHEDULE 'C'

SECURED LOANS

From State Bank of India

The term loan is secured by the mortgage by deposit of title deeds inrespect of all the immoveable properties of the company and byhypothecation of all moveable assets of the company, present andfuture, subject to prior charges in favour of the company’s bankersfor securing the borrowings for working capital requirements, saveand except property situated at Panhala, Kolhapur. 3,874.53 6,922.02

From Export-Import Bank of India

Term loans under production equipment finance programme Securedby first charge by way of hypothecation of moveable fixed assets,present and future and mortgage of land and other immoveableproperties, present and future save and except property situated atPanhala, Kolhapur 2,747.13 2,312.94

From Community Bank N. A., USA

Equipment term loans

Secured by real estate and pledge of all assets of the company ascollateral 2,960.85 2,436.66

Cash credit account

State Bank of India 196.87 —Secured by hypothecation of stock-in-trade, stores, book-debts andother receivables and second charge on the company’s moveableand immoveable properties, save and except property situated atPanhala, Kolhapur.

TOTAL 9,779.38 11,671.62

SCHEDULE 'D'

UNSECURED LOANS

Fixed deposits

(Including Rs. 0.50 lakh - previous year:Rs. 0.15 lakhs - repayable within one year) 0.05 0.15

Other loans

Giro Commercial Bank Limited, Kenya – 1.40

Community Bank N. A., USA – 111.58

– 112.98

TOTAL 0.05 113.13

SCHEDULE 'E'

DEFERRED PAYMENT LIABILITY

Due for balance purchase consideration payable for acquisitionof shares of subsidiary Manugraph DGM Inc. 802.40 1,304.40

Due for balance purchase consideration payable for acquisitionof shares of step-down subsidiary Offset Services Inc. 120.36 —

TOTAL 922.76 1,304.40

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEETAS AT 31ST MARCH, 2008




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61



(Rs. in lakhs) (Rs. in lakhs)Nos. Cost Nos. Cost

SCHEDULE 'G'

INVESTMENTS

LONG TERM INVESTMENTS (AT COST)

In Government securities (unquoted)

6 years National Savings Certificates - VIII issue — 0.52 — 0.52


Trade investments

Manugraph Securities and FinancePrivate Limited (unquoted) 250 0.03 250 0.03

Manugraph Impex FZC, Sharjah(shares of US $1000.- each) — — 67 31.18

Other investments

Jagran Prakashan Limited — — 1401 3.74

Mahindra and Mahindra Financial Services Limited — — 1166 2.33

Shree Warna Sahakari Bank Limited (unquoted) 2000 0.50 2000 0.50



Benchmark Derivative Fund-Growth(Face value of Rs.1000/-) — — 28371 300.00

Deutsche Fixed Term Fund - Sr. 5 - Growth — — 2000000 200.00

Prudential ICICI Institutional FMP15 Months Plan - Growth — — 3731586 400.00

Reliance Equity Fund - Growth — — 2000000 200.00

UTI Spread Fund-Dividend 1950000 210.60 — —

JM Arbitrage Advantage Fund-Dividend 3375328 341.36 — —

SBI Debt Fund Sr.13 months - Growth 11232500 1,123.25 — —

Prudential ICICI Equity & Derivatives Fund-

Income Optimiser-Rtl. Dividend 2032121 206.88 — —

Prudential ICICI Fixed Maturity PlanSr.35 -13 months Rtl. Growth 5000000 500.00 — —

TOTAL - LONG TERM INVESTMENTS 2,383.14 1,138.30

CURRENT INVESTMENTS (AT COST)


Gujarat Narmada Valley Fertilizers Company Limited — — 65000 73.22

Tech Mahindra Limited — — 447 1.63




62

Birla Fixed Term Plan - Quarterly Sr-5-Dividend — — 5000000 500.00

Fidelity India Special Situation Fund - Growth — — 1250000 125.00

JM Arbitrage Advantage Fund - Dividend — — 3092352 312.59

Pru. ICICI Equity and Derivatives Fund -

Income Optimiser - Rtl. Dividend — — 2000000 200.00

Prudential ICICI Fixed Maturity Plan-Sr-35-13

month Rtl. Growth — — 5000000 500.00

Standard Chartered Fixed Maturity Plan- Quarterly Series-6 — — 11232500 1,123.25

SBI Debt Fund Series -90 days - Dividend — — 16395405 1,639.59

SBI Debt Fund Series -13 months - Growth — — 11232500 1,123.25

Standard Chartered Arbitrage Fund-Plan B-Divd. — — 5069024 507.02

UTI Spread Fund - Dividend — — 1950000 195.00

UTI Wealth Builder Fund - Growth — — 1000000 100.00

Standard Chartered Arbitrage Fund-Plan A 5228265 520.50 — —

Reliance Liquid Plus Fund 53334 534.50 — —

UTI Infrastructure Advantage Fund Sr.1 500000 50.00 — —

Standard Chartered Fixed Maturity Plan- Yearly Series-17 6000000 600.00 — —

LIC Mutual Fund Fixed Maturity Plan - Sr.37 3000000 300.00 — —

Reliance Fixed Horizon Fund VII - Sr.5 4000000 400.00 — —

2,405.00 6,400.55

Less : Provision for diminution invalue of current investments — 8.06

TOTAL - CURRENT INVESTMENTS 2,405.00 6,392.49

TOTAL 4,788.14 7,530.79

Notes :

1 Aggregate of quoted investments

Cost 4,787.09 7,506.62

Market value 5,020.48 7,679.53

2 Aggregate of unquoted investments

Cost 1.05 32.23

3 6 Years National Savings Certificates - VIII Issue of the face value ofRs. 52,500 (previous year: Rs. 52,500) have been deposited withthe sales-tax authorities and a customer.



(Rs. in lakhs) (Rs. in lakhs)Nos. Cost Nos. Cost


63

SCHEDULE 'H'

DEFERRED TAX ASSETS

Deferred tax liability


difference between book and tax depreciation 667.68 600.88

667.68 600.88

Deferred tax assets

Arising on account of compensationvoluntary retirement scheme 6.87 154.77

provision for leave encashment 65.56 47.33

provision for transitional gratuity liability 71.90 89.87

provision for warranty expenses 6.55 16.33

provision for doubtful debts and advances 2.14 2.64

provision for diminution in value of current investments — 2.74

153.02 313.68

Net deferred tax liability 514.66 287.20

Net deferred tax assets - Subsidiaries 809.37 424.60

TOTAL 294.71 137.40

SCHEDULE 'I'

INVENTORIES

Per inventory taken, valued andcertified by the management

Stores and spares 151.26 166.40

Consumable tools 150.21 158.92


Work-in progress 3,040.12 5,056.36


Raw materials and components 5,258.65 2,855.05

TOTAL 14,877.06 15,859.71

SCHEDULE 'J'

SUNDRY DEBTORS

Over six months old (unsecured)


Considered doubtful 6.31 46.14

1,317.71 2,377.06

Less: Provision for doubtful debts 6.31 46.14

1,311.40 2,330.92Others (unsecured)


TOTAL 5,811.47 4,495.58





64

SCHEDULE 'K'

CASH AND BANK BALANCES

Cash balance on hand 24.84 22.37

Bank balances

With scheduled banks

In current accounts 781.70 760.18

In cash credit accounts 971.25 182.66

In fixed deposit accounts 204.48 160.86

In unclaimed dividend accounts 52.05 56.47

2,009.48 1,160.17

With Shree Warna Sahakari Bank Limited

In current account(Maximum balance at any time during the yearRs. 56.56 lakhs - previous year: Rs. 32.57 lakhs) 0.71 2.06

TOTAL 2,035.03 1,184.60

SCHEDULE 'L'

LOANS AND ADVANCES

Unsecured - Considered good except otherwise stated

Advances recoverable in cash orin kind or for value to be received


Advance payments against taxes 9,889.77 7,943.22

Balances with Central Excise Collectorate 402.42 332.36

TOTAL 13,264.24 10,565.94

Note:

Advances recoverable in cash or in kindor for value to be received include :

Amount due by officers of the company 17.16 18.68

Maximum during the year 23.80 22.94





65

SCHEDULE 'M'

LIABILITIES

Sundry creditors

Small scale industrial undertakings 1,081.55 777.61

Others 7,663.46 7,067.31

8,745.01 7,844.92

Advances received from customers 6,736.51 9,952.37

Unclaimed dividends* 52.04 56.47

Interest accrued but not due on loans 27.12 51.90

Unclaimed hire purchase interest income 22.69 55.28

TOTAL 15,583.37 17,960.94

* There are no amounts due and outstanding to be creditedto Investor Education and Protection Fund

SCHEDULE 'N'

PROVISIONS

Provision for taxation 9,587.46 7,459.21

Proposed dividend 608.30 304.15

Provision for tax on proposed dividend 103.38 51.69

Other provisions 639.43 187.29

TOTAL 10,938.57 8,002.34





66

SCHEDULE 'O'

OPERATING INCOME

Service and erection charges received 451.82 568.56(Tax deducted at source Rs. 15.70 lakhs- previous year: Rs. 8.27 lakhs)

Exchange gain (Net) 1,376.98 336.95

Miscellaneous receipts 259.01 226.33

Profit on sale of assets (Net) 31.82 0.48

Sundry credit balances appropriated 3.53 0.57


Excess provision for diminution in value of investments 8.05 —

TOTAL 2,132.67 1,138.76

SCHEDULE 'P'

OTHER INCOME

Dividend 246.15 133.98

Rent (gross)(Tax deducted at source Rs. 4.32 lakhs -previous year: Rs. 4.67 lakhs) 21.90 21.90


Hire purchase financing activity (11.97) 7.81

TOTAL 1,033.63 289.97

SCHEDULES FORMING PART OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2008

PreviousYear



67

SCHEDULE 'Q'

MATERIALS

A. Consumption of raw materials and components

Opening stock 2,855.05 2,455.75

Add: Purchases(including component processing chargesRs. 1,309.45 lakhs - previous year :Rs. 1,066.97 lakhs) 40,519.07 28,349.95

43,374.12 30,805.70

Less: Closing stock 5,258.65 2,855.05

Consumption(excluding amount capitalised Rs. 13.50lakhs - previous year : Rs. 19.50 lakhs) 38,115.47 27,950.65

B. Excise duty on closing stock of finished products 240.65 345.38

Less : Provision for excise duty on openingstock of finished products 345.38 345.68

(104.73) (0.30)

C. Decrease in stock of finished products,work-in-progress and manufactured components

Closing stock




9,316.94 12,679.34

Less: Opening stock




12,679.34 15,271.90

3,362.40 2,592.56

TOTAL 41,373.14 30,542.91


PreviousYear



68

SCHEDULE 'R'

OTHER EXPENSES

PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, wages, bonus and allowances 7,051.19 4,274.59Company’s contributions to provident and other funds 529.40 168.36Company’s contributions to Employees’Group Gratuity Scheme 144.79 55.07Welfare expenses 827.48 374.41

8,552.86 4,872.43OPERATION AND OTHER EXPENSES

Stores and tools consumed 902.44 726.78Electricity charges 293.08 236.74Repairs to machinery 273.26 181.92Repairs to buildings 63.83 70.53Other repairs 163.37 107.51Rent 88.67 40.15Rates and taxes (other than on income) 3.11 18.92Insurance charges 203.69 141.57Travelling and conveyance 903.80 620.12Advertisement and sales promotion expenses 441.89 372.61Commission on sales 1,445.74 1,232.44Discount on sales 14.04 —Royalty on sales 50.28 47.26Bank and finance charges 183.12 88.69Bad debts 34.30 0.31Sundry debit balances written off 0.34 14.30Service tax – 3.87Fixed assets written off 6.56 8.72Warranty expenses 421.12 438.00Research and development expenses 420.00 216.91Donations 6.51 26.04Legal and professional charges 259.92 605.97Miscellaneous expenses 837.37 723.69Short provision and adjustments relating to previous years 134.70 130.37

7,151.14 6,053.42FREIGHT AND HANDLING CHARGES 115.43 114.81PACKING AND FORWARDING CHARGES 267.01 64.71DIRECTORS’ FEES 4.32 6.08PROVISION FOR DIMINUTION IN VALUE OF CURRENT INVESTMENTS – 8.06

TOTAL 16,090.76 11,119.51

SCHEDULE 'S'

INTEREST

On fixed deposits and fixed loans 754.96 457.20On cash credit accounts 3.92 38.64Others 32.85 0.28

791.73 496.12Less : Interest on deposits, debts etc. (gross)(Tax deducted at source Rs. 10.11 lakhs-previous year : Rs. 9.47 lakhs) 130.95 83.34

TOTAL 660.78 412.78


PreviousYear



69

SCHEDULE FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH, 2008


SCHEDULE 'T'NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS1 Principles of consolidation

The consolidated financial statements relate to Manugraph India Limited (the company)and its subsidiary companies. The consolidated financial statements have been preparedon the following basis.

– The financial statements of the company and its subsidiary companies have beencombined on a line-by-line basis by adding together the book values of like itemsof assets, liabilities, income and expenses after fully eliminating intra groupbalances and intra group transactions resulting in unrealised profits or losses,per Accounting Standard AS - 21 - Consolidated Financial Statements issued bythe Institute of Chartered Accountants of India.

– In case of foreign subsidiaries, revenue items are converted at the average rateprevailing during the year. All assets and liabilities are converted at the ratesprevailing at the end of the year. Exchange gains or losses on conversion arisingon consolidation are recognised under foreign currency translation reserve.

– The financial statements of the subsidiaries used in the consolidation are drawnupto the same reporting date as that of the company i.e. 31st March, 2008.

– The difference between cost to the company of its investments in the subsidiarycompanies and the equity value as at the acquisition date is recognised in thefinancial statements as goodwill or capital reserve.

– The list of subsidiary companies which are included in the consolidation and thecompany’s holdings therein are as under.

Name of the subsidiary companies Country of Percentageincorporation of holdings

Constrad Agencies (Bombay) Private Limited India 100%

Manugraph Kenya Limited, Nairobi Kenya 100%

Manugraph DGM, Inc., USA USA 100%

Offset Services, Inc., USA USA 100%(100% equity is held by Manugraph DGM, Inc.)

2 Significant accounting policies and notes to these consolidated financial statementsare intended to serve as means of informative disclosure and a guide to betterunderstanding the consolidated position of the companies. Recognising this purpose,the company has disclosed only such policies and notes from the individual financialstatements, which fairly present the needed disclosures. Lack of homogeneity andother similar considerations made it desirable to exclude some of them, which, in theopinion of the management, could be better viewed, when referred from the individualfinancial statements.

3 Accounting policies

Basis for preparation of accounts

The accounts have been prepared to comply in all material aspects with applicableaccounting principles in India, the Accounting Standards issued by the Institute ofChartered Accountants of India and the relevant provisions of the Companies Act,1956. Revenues/incomes and costs/expenditure are generally accounted on accrualbasis, as they are earned or incurred.

Revenue recognition


Sales comprise of sale of goods and spare parts and are net of trade discount andsales returns.


70

Manugraph Kenya Limited

Revenue is measured at the fair value of the consideration received/receivable andrepresents amounts receivable for goods and services provided in the normal courseof business, net of discounts and VAT.

Sales of goods are recognised when goods are delivered and title has passed.

Hire purchase interest income is accrued on a time basis by reference to the principalamount outstanding and at the effective interest rate applicable.

The operating expenses are apportioned to the hire purchase financing activity usingthe ratio of the gross hire purchase interest income to the total of trading income andgross hire purchase income.

Manugraph DGM, Inc.

The company generally recognises revenue upon shipment and passage of title tocustomers, or if applicable the installation of its products, or when a service is completed.

Employee benefits

(i) Provident fund is a defined contribution scheme established under a State Plan.The contributions to the Scheme are charged to the profit and loss account inthe year in which the contributions to the fund are accrued.

(ii) Superannuation fund is a defined contribution scheme and contributions to thescheme are charged to the profit and loss account in the year when thecontributions accrue. The scheme is funded with an insurance company in theform of a qualifying insurance policy.

(iii) The company has a defined benefit gratuity scheme. For the defined benefitscheme, actuarial valuations are being carried out at each balance sheet date.Actuarial gains and losses are recognized in full in the profit and loss account inthe period in which they occur.

(iv) Leave encashment benefit is provided on the basis of actuarial valuation doneat the end of the year. The aforesaid leave liability is not funded.

Research and development

Revenue expenditure on research and development is charged to profit and lossaccount in the year in which it is incurred. Capital expenditure on research anddevelopment is included in additions to the assets under appropriate heads.

Depreciation


Manugraph DGM Inc.

Depreciation on fixed assets is provided on straight line method at the applicable ratesover the estimated useful lives of assets.


Depreciation is calculated on the reducing balance basis to write down the cost ofeach asset to its residual value over its estimated useful lives.

Transactions in foreign currencies

Transactions in foreign currencies are accounted for in the following manner :

Transactions covered by forward contracts are accounted for by recognising thedifference between the forward rate and the exchange rate on the date of thetransaction as income or expenditure over the the life of the contract.

Transactions not covered by forward contracts are accounted for in the followingmanner:

(i) Export sales and import purchases are accounted for at exchange rates prevailingat the time of the transactions.




71

(ii) Gains/losses arising out of the foreign currency transactiions are recognised inthe profit and loss account.

(iii) Other assets and liabilities are restated at the rates ruling at the year-end andthe differences on such retranslation are recognised in the profit and loss account.

The company has not used any other derivative instrument except forward contractswhich have been used for hedging it’s foreign currency exposure. The company doesnot undertake any speculative or trading activity through derivative instruments. As atthe year-end the company had unutilised foreign exchange forward contracts of USD27,184,000.

Fixed assets

Fixed assets are stated at their original cost of acquisition including incidental expensesrelated to acquisition and installation of the concerned assets. The fixed assetsmanufactured by the company are stated at manufacturing cost. Fixed assets are shownnet of accumulated depreciation.

Impairment of assets

Cash generating unit/assets are assessed for possible impairment at balance sheetdate based on external and internal sources of information. Impairment losses, if any,are recognised as an expense in the profit and loss account.

Investments

Long term investments are stated at cost less other than temporary diminution in value,if any. Current investments are stated at lower of cost and fair value, determined on aportfolio basis.

Inventories


Cost of inventories is generally ascertained on the weighted average’ basis. Costcomprises all costs of purchase, costs of conversion and other costs incurred in bringingthe inventories to their present location and condition.

Raw materials and components, stores and spares are stated at lower of cost and netrealisable value.

Consumable tools are stated at cost or under.

Work-in-progress and manufactured components are valued at estimated cost.

Finished products are valued at lower of cost and net realisable value.

Excise duty is included in the value of finished products inventory.


Inventories are stated at the lower of cost and net realisable value. Cost is determinedby the first-in- first-out (FIFO) method. Net realisable value is the estimate of the sellingprice in the ordinary course of business less the selling expenses. The inventories arestated at the value certified by the directors.

Manugraph DGM Inc.

Inventory is stated at the lower of cost or market. The first-in, first-out method is usedfor materials and parts. Work-in-process and finished press inventory also include actualdirect labour and an allocation of overhead costs. Used equipment is carried usingspecific cost methodology.

Provision for doubtful debts/advances

Sundry debtors/advances are stated after making adequate provision for doubtfuldebts/advances.

Taxation

Provision for income-tax is made on the basis of the estimated taxable income per theprovisions of the tax legislations and the company provides for deferred tax using the




72

liability method, based on the tax effects of timing differences resulting from therecognition of items in the financial statements and in estimating its current income-tax provision.

Provisions, contingent liabilities and contingent assets

Provisions are recognised only when there is a present obligation as a result of pastevents and when a reliable estimate of the amount of the obligation can be made.Contingent liability is disclosed for (i) possible obligations which will be confirmedonly by future events not wholly within the control of the company or (ii) presentobligations arising from past events where it is not probable that an outflow of resourceswill be required to settle the obligation or a reliable estimate of the amount of theobligation cannot be made. Contingent assets are not recognised in the financialstatements since this may result in the recognition of income that may never be realised.

4 Contingent liabilities

(i) Claims against the company not acknowledged as debts 36.86 31.45

(ii) Income-tax, sales tax, customs duty, excise duty and service tax demands againstwhich the company has preferred appeals/made representations 78.01 68.54

(iii) Unexpired letters of credit opened by banks amount to 596.19 —

(iv) On account of guarantees executed by the company’s bankers 8.34 2,493.50

(v) On account of undertakings given by the company in favour of Customs Authority 1,763.50 1,212.00

(vi) On account of undertaking in the form of Support Agreement executed by thecompany in favour of the bankers of it’s subsidiary Manugraph DGM, Inc. 5,957.82 —

5 Estimated amount of contracts remaining to be executed on capitaland not provided for was 700.63 765.80

6 Goodwill amounting to Rs.6,644.09 lakhs has arisen on consolidation of accountsbetween the company and its wholly owned subsidiaries Constrad Agencies (Bombay)Private Limited and Manugraph DGM, Inc., USA. Capital reserve amounting to Rs. 37.33lakhs has arisen on consolidation of accounts between the company and its whollyowned subsidiary Manugraph Kenya Limited. These goodwill and capital reserverepresent difference between cost to company of its investments in the subsidiarycompanies and the equity value on the date of acquisition.

7 Acquisition

On April 10, 2007, Manugraph DGM, Inc. acquired 100% of the outstanding commonshares of Offset Services, Inc. (OSI). The results of OSI’s operations have been includedin the consolidated financial statements since that date.

8 After the close of the year the company under stock purchase agreement has convertedloan of Rs.690.90 lakhs (US $1,750,000.-) given to it’s subsidiary, Manugraph DGM Inc.into 31,818 shares of common stock of the subsidiary.

9 The company provides gratuity to all employees. The benefit is in the form of lumpsumpayments to vested employees on resignation, retirement, death while in employmentor on termination of employment of an amount equivalent to 15 days’ basis salary anddearness allowance for each completed year of service. Vesting occurs upon completionof five years of service. The company makes annual contributions to fund adminis-tered by trustees and managed by Life Insurance Corporation of India, for amountsnotified by it. The gratuity benefit is a defined benefit plan.




73

Reconciliation of opening and closing balance of the present value of the definedbenefit obligation


Interest cost 47.94


Benefits paid (10.91)

Actuarial (gain)/loss on obligation 77.54


Reconciliation of opening and closing balance of the fair value of plan assets


Expected return on plan assets 36.51

Contributions 197.66

Benefits paid 10.91

Actuarial gain/(loss) on plan assets —


Amount recognised in Balance Sheet

Fair value of plan assets as at the end of the year 555.14

Present value of obligation as at the end of the year 766.67

Asset/(liability) recognised in the balance sheet (211.53)

Expense recognised in the Profit and Loss account Interest cost 47.94


Expected return on plan assets (36.51)

Net actuarial (gain)/loss recognised in the year 77.54

Net cost 144.80

Assumptions

Discount rate 8%

Salary escalation rate (annual) 4%

10 Earnings per share

(a) Net profit after tax available for equity shareholders (Rs./lakhs) 5,911.16 4,691.79

(b) Weighted average number of equity shares of Rs. 2 each outstandingduring the year (No. of shares) 30415061 30128062

(c) Basic and diluted earnings per share (Rs. ) (a/b) 19.43 15.57

11 Related parties disclosure (as identified by the management)

Related party relationships

(a) Related parties where control exists Multigraph Machinery Company LimitedManu Enterprises LimitedManubhai Sons and Company

(b) Key management personnel Mr. Sanjay S. Shah, Vice-Chairman and Managing DirectorMr. Pradeep S. Shah, Managing Director

(c) Relatives of key management personnel Mr. Sanat M. Shah (Father of Messrs. Sanjay and Pradeep Shah)Mrs. Ameeta S. Shah (Spouse of Mr. Sanjay S. Shah)Mrs. Rupali P. Shah (Spouse of Mr. Pradeep S. Shah)




74

Transactions with related parties

Rupees in lakhs

Type of related party Description of the nature Volume of transactions Amount outstandingof transactions during 2007 - 2008 as on 31st March, 2008

Receivable Payable

Related parties where Sale of goods 33.92 4.84control exists (34.75) (7.43)

Commission paid 1084.06 305.52(1077.25) (Nil)

Rent received 21.90(21.90)

Rent paid 3.38(Nil)

Key management 415.02personnel Managerial remuneration paid (150.61)

Relatives of key 0.60management personnel Directors' fees (0.90)

In respect of above parties, there is no provision for doubtful debts as on 31st March, 2008 and no amount has beenwritten off or written back during the year in respect of debts due from/to them.

12 Figures of the previous year have been regrouped to confirm with this year’s groupings wherever necessary.

13 Figures in parenthesis are in respect of the previous year.

14 Figures have been rounded off to the nearest thousand and shown in rupees lakhs.







Signatures to Schedules 'A' to 'T'.


75

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2008



A. CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax and extraordinary items 8,698.01 6,839.65

Add: Depreciation 1,292.68 929.33

Interest 660.78 412.78



Provision for diminution in value of current investments – 8.06

Provision for warranty expenses 398.52 32.03

2,412.16 1,400.29

11,110.17 8,239.94

Deduct: Dividend received 246.15 133.98

Excess provision for diminutionin value of current investments 8.05 –


Profit on sale of assets 31.82 0.48


1,085.47 282.64

Operating profit before working capital changes 10,024.70 7,957.30

Add: Increase in trade payables and other liabilities – 9,129.94

Decrease in inventories 982.65 –

982.65 9,129.94

11,007.35 17,087.24

Deduct: Decrease in trade payables and other liabilities 2,348.36 –

Increase in trade and other receivables 2,067.64 4,466.96

Increase in inventories – 5,525.22

Increase in misc. expenditure 12.83 16.56

4,428.83 10,008.74

Cash generated from operations 6,578.52 7,078.50

Deduct: Direct taxes 2,775.62 2,742.17

Net Cash Inflow in course of operating activities 3,802.90 4,336.33


76

B. CASH FLOW FROM INVESTING ACTIVITIES

Outflow

Purchase of fixed assets 3,160.69 4,461.65

Goodwill – 6,471.93

Purchase of investments 5,097.30 8,746.81

8,257.99 19,680.39

Inflow

Sale of fixed assets 550.42 50.20

Sale of investments 8,625.55 3,798.39

Dividend received 246.15 133.98


9,444.02 4,004.47

Net cash inflow / (outflow) in course of investing activities 1,186.03 (15,675.92)

C. CASH FLOW FROM FINANCING ACTIVITIES

Share capital – 7.96

Share premium – 979.83

Capital reserve and foreign currencytransaction reserve on consolidation 5.97 18.70

Borrowings (Net) (2,386.96) 11,327.90

(2,380.99) 12,334.39

Less: Interest paid (Net) 685.56 393.90

Dividend paid 916.88 1,340.00

Tax on dividend 155.07 190.55

1,757.51 1,924.45

Net cash (outflow) / inflow in course of financing activities (4,138.50) 10,409.94

Net increase/decrease in cash /cash equivalents [(A+B)–C] 850.43 (929.65)

Add : Opening cash/cash equivalents 1,184.60 2,114.25

Cash/cash equivalents at the close of the year 2,035.03 1,184.60



BURJOR F. PAVRIProprietor



CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH, 2008




77

CAPITAL ACCOUNTS

Year Share Reserves Borrowings Deferred Capital Gross Depreciation NetCapital Tax Employed Block Block

1998-99 710.92 3317.92 5181.67 - 9210.51 6426.43 2810.35 3616.08

1999-00 710.92 3338.86 4482.18 - 8531.96 6662.25 3196.74 3465.51

2000-01 710.92 3504.07 3404.58 - 7619.57 7071.50 3602.23 3469.27

2001-02 600.34 3006.11 3957.60 445.36 8009.41 6717.81 3604.20 3113.61

2002-03 600.34 3023.12 4277.26 478.83 8379.55 7122.67 3997.35 3125.32

2003-04 600.34 3781.86 3678.72 188.31 8249.23 7908.95 4515.12 3393.83

2004-05 600.34 6079.90 3938.78 220.78 10839.80 9312.54 4944.78 4367.76

2005-06 600.34 10933.16 1761.25 261.96 13556.71 10517.54 5331.49 5186.05

2006-07 608.30 15450.73 10539.51 287.20 26885.74 11963.18 6009.16 5954.02

2007-08 608.30 20217.09 7620.97 514.66 28961.02 13477.31 6149.23 7328.08

REVENUE ACCOUNTS

Year Gross Expe- Depre- Profit Taxes Distri- EPR Divi- Earn- Divi- NetRevenue nses ciation before butable DRR dends nings dend worth

Taxes profit (Rs.) (Rs.) (Rs.)for

the year

1998-99 9818.25 8913.75@ 434.14 470.36 22.00 1035.56 - 127.96 6.31 1.80 56.67

1999-00 12368.85 11670.72# 440.73 257.40 63.00 299.61 - 142.18 2.73 2.00 56.97

2000-01 11344.14 10449.38& 462.57 432.19 156.00 370.37 - 85.31 3.89 1.20 59.29

2001-02 14177.94 12940.31^ 534.28 703.35 123.91 663.39 - 108.06 8.38 1.80 60.07

2002-03 12849.01 12096.39+ 519.89 232.73 106.57 253.61 - 72.04 2.10 1.20 60.36

2003-04 23057.73 20699.32** 600.73 1757.68 489.21 1349.86 - 240.14 21.13 4.00 73.00

2004-05 28649.46 23575.98 582.09 4491.39 1538.67 3238.33 - 600.34 49.18 10.00 111.27

2005-06 33768.75* 23984.55 605.33 9178.87 2995.08 6578.41 - 1200.67 20.60 4.00 38.42

2006-07 38117.55 30334.64 741.85 7041.06 2300.49 6221.07 - 912.45 15.73 3.00 52.80

2007-08 45463.69 35262.76 828.62 9372.31 3169.43 7786.81 - 1216.60 20.39 4.00 68.47

(Per Equity Share of Rs. 10/-up to 2004-05 and Rs.2/- from 2005-06)

@ Including Rs. 243.59 lakhs of compensation under Voluntary Retirement scheme.

# Including Rs. 141.12 lakhs of compensation under Voluntary Retirement scheme.

& Including Rs. 163.16 lakhs of compensation under Voluntary Retirement scheme.

^ Including Rs. 46.36 lakhs of compensation under Voluntary Retirement scheme.

+ Including Rs. 145.04 lakhs of compensation under Voluntary Retirement scheme.

** Including Rs. 605.43 lakhs of compensation under Voluntary Retirement scheme.

* Including Rs. 444.79 lakhs of surplus on prepayment of sales tax (deferral) loans

MANUGRAPH INDIA LTD.

Financial Statistics

(Rs. in lakhs)


78

Statement pursuant to Section 212 of the Companies Act, 1956relating to Subsidiary Companies

1. Name of the Company : Manugraph Manugraph ManugraphIndia Limited India Limited India Limited

2. Name of the Subsidiary : Constrad Agencies Manugraph Kenya Manugraph DGMCompany (Bombay) Private Limited Inc. USA

Limited

3. Financial year of the : 31.03.2008 31.03.2008 31.03.2008subsidiary ended on

4. Holding Company’s : 5,000 Equity Shares of 22,500 Equity 3,56,472 Equityinterest in the subsidiary Rs.100/- each (100% Shares of Kshs.100 Shares of US$ 0.01

as on 31.03.2008) each (100% as on each (100% as on31.03.2008) 31.03.2008)

5. Currency : Rs. Kshs. US$

6. Net aggregate amountof the profits/(loss) ofthe subsidiary NOTdealt with in the holdingcompany’s accounts

a) For the financial year : Rs. (1,750.00) Kshs. (9,33,186) US$ (7,13,817)of the subsidiaryCompany

b) For the previous : Rs. (11,169.00) Kshs. 1,21,96,323 US$ (2,84,079)financial year of thesubsidiary Company

7. Net aggregate amountof the profits/(loss) ofthe subsidiary dealtwith in the holdingCompany’s accounts

a) For the financial : NIL NIL NILyear of the subsidiaryCompany

b) For the previous : NIL NIL NILfinancial year of thesubsidiary Company


S. M. Shah Chairman

S. S. Shah Vice Chairman andManaging Director

M. R. Harshe Whole-time Director

Vinay Nagaonkar Company Secretary

Place : MumbaiDate : 30th June, 2008


79

Manugraph DGM, INC.

MANUGRAPH DGM, INC.

CONTENTS PAGES

DIRECTORS' REPORT ..............................................................................................................................................................................80

INDEPENDENT AUDITORS' REPORT ................................................................................................................................................81

BALANCE SHEET ......................................................................................................................................................................................82

LIABILITIES AND STOCKHOLDERS' EQUITY ..................................................................................................................................83

STATEMENTS OF LOSS ..........................................................................................................................................................................84

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY .....................................................................................................85

STATEMENTS OF CASH FLOWS .........................................................................................................................................................86

NOTES TO FINANCIAL STATEMENTS ..............................................................................................................................................87

COMPANY INFORMATION

BOARD OF DIRECTORS : Sanat ShahSanjay ShahPradeep ShahVinod JainBrian LaBineKyle Monroe

AUDITORS : Brown Schultz Sheridan FritzCertified Public Accountants210 Grandview AvenueCamp HillPennsylvaniaUSA


80

Manugraph DGM, INC.

REPORT OF THE BOARD OF DIRECTORS

30th June, 08

The board of directors have considered the accounts of the company for the period ended 31st March, 2008 and approve thesame.

No dividend is proposed to be declared for the year.

The principal activity of the company continues to be manufacturing, sales and service of printing systems. The demand for theCompany’s products in the US was lower due to the overall business environment in the US, however the exports prospects forthe Company have improved.

Statement on Director’s Responsibility in respect of the Financial Statements.

Based on our knowledge, the financial statements and other financial information included in the annual report fairly present inall material aspects the financial condition, result of operations and cash flows of the company as of and for the period in theannual report.

For and on behalf of the Board of Directors of

Manugraph DGM, Inc.

Sanjay S. Shah

Director

Place : Mumbai


81

Manugraph DGM, INC.

INDEPENDENT AUDITORS’ REPORT

To,

The Stockholders

Manugraph DGM, Inc. and Subsidiary

Elizabethville, Pennsylvania

We have audited the accompanying consolidated balance sheet of Manugraph DGM, Inc. and subsidiary as of March 31, 2008

and the related consolidated statements of loss, changes in stockholder's equity and cash flows for the year ended March 31,

2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an

opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 disclo-

sures 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 reason-

able basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial

position of Manugraph DGM, Inc. and subsidiary as of March 31, 2008 and the results of its operations and its cash flows for the

year then ended in conformity with accounting principles generally accepted in the United States of America.

June 24, 2008

Brown Schultz Sheridan Fritz

Certified Public Accountants

210 Grandview Avenue

Camp Hill

Pennsylvania

USA


82

Manugraph DGM, INC.

ASSETS Rs. in Lakhs USD

Current assets:

Accounts receivable:

Trade, net of allowance for doubtful accounts of $ 104,573 (Rs. 41.95 lakhs) 1,513.32 $ 3,771,968

Affiliates 0.96 2,383

Other 3.28 8,178

Inventory 4,186.44 10,434,803

Deposits 351.48 876,066

Prepaid expenses 83.57 208,307

Deferred income taxes 614.05 1,530,537

Other Assets 79.38 197,865

Total current assets 6,832.48 17,030,107

Property, plant and equipment:

Land and land improvements 103.30 257,483

Buildings and leasehold improvements 1,486.80 3,705,888

Machinery and equipment 1,465.64 3,653,140

Toolings and patterns 202.83 505,561

Office equipment 296.13 738,104

3,554.70 8,860,176

Accumulated depreciation (1,389.59) (3,463,595)

Net cost of property, plant and equipment 2,165.11 5,396,581

Other assets:

Deferred financing costs, net of $ 36,600 (Rs. 14.68 lakhs)accumulated amortization 29.39 73,246

Cash surrender value of life insurance 97.63 243,351

Goodwill 502.45 1,252,378

Other assets 12.44 31,000

Deferred income taxes 42.78 106,641

684.69 1,706,616

Total assets 9,682.28 $ 24,133,304

See notes to consolidated financial statements.

Sanjay Shah

Brian LaBine Directors

Kyle Monroe

BALANCE SHEET – MARCH 31, 2008

}


83

Manugraph DGM, INC.

LIABILITIES AND STOCKHOLDERS’ EQUITY

Rs. in Lakhs USD

Current Liabilities:

Cash overdraft 525.65 $ 1,310,187

Current portion of long-term debt 719.67 1,793,797

Accounts payable 1,199.25 2,989,150

Accrued:

Compensation 129.27 322,215

Other 163.37 407,202

Billings in excess of costs and estimated gross profit 37.24 92,818

Warranty reserve 427.28 1,065,000

Customer advances 1,245.73 3,105,024

Total current liabilities 4,447.46 11,085,393

Long-term liabilities:

Line of Credit 1,113.73 2,775,999

Long-term debt, net of current portion 2,226.66 5,550,006

Deferred compensation liability 127.30 317,302

Total long-term liabilities 3,467.69 8,643,307

Total liabilities 7,915.15 19,728,700

Stockholder's equity:

Common stock, no par value, 1,000,000 shares authorized, 356,472 issued 1.43 3,565

Additional paid-in capital 1,547.63 3,857,496

Retained earnings 248.16 618,543

1,797.22 4,479,604

Treasury stock, 7,500 shares, at cost (30.09) (75,000)

Total stockholder's equity 1,767.13 4,404,604

Total liabilities and stockholder's equity 9,682.28 $ 24,133,304


84

Manugraph DGM, INC.

Rs. in Lakhs USD

Net sales, including auxiliary suppliers pass-through costs of $10,819,916 22,526.84 $ 56,131,442 .(Rs. 4342.28 lakhs)

Cost of goods sold, including auxiliary suppliers pass-through costs of $10,819,916(Rs. 4342.28 lakhs) 20,178.48 50,277,077

Gross profit 2,348.36 5,854,365

Operating expenses:

Selling 1,439.22 3,586,191

General and administrative 1,104.82 2,752,949

Research and development 190.08 473,635

Total operating expenses 2,734.12 6,812,775

Loss from operations (385.76) (958,410)

Other income (expense):

Interest:

Income 5.01 12,484

Expense (255.24) (636,003)

Gain on sale of property, plant and equipment 10.72 26,718

Other (43.27) (107,806)

Total other income (expense) (282.78) (704,607)

Loss before income tax benefit (668.54) (1,663,017)

Income tax benefit 380.93 949,200

Net loss (287.61) $ (713,817)


Sanjay Shah


Kyle Monroe

STATEMENTS OF LOSS - YEAR ENDED MARCH 31, 2008

}


85

Manugraph DGM, INC.

STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

YEAR ENDED MARCH 31, 2008

(Rs. in Lakhs)Additional

Common paid-in Retained TreasuryStock capital earnings stock Total

Balance, March 31, 2007 1.43 1,547.63 535.77 (30.09) 2,054.74 $ 3,565 $ 3,857,496 $ 1,332,360 $ (75,000) $ 5,118,421

Net loss (287.61) (287.61)(713,817) (713,817)

1.43 1547.63 248.16 (30.09) 1767.13Balance, March 31, 2008 $ 3,565 $ 3,857,496 $ 618,543 $ (75,000) $ 4,404,604


Sanjay Shah


Kyle Monloe}


86

Manugraph DGM, INC.

STATEMENT OF CASH FLOWS - YEAR ENDED MARCH 31, 2008

Rs. in Lakhs USD

Cash flows from operating activities:Net loss (287.61) $ (713,817)

Adjustments:Depreciation and amortization 462.14 1,151,904Property & Equipment 14.68 36,600OtherGain on sale of property, plant and equipment (10.72) (26,718)Change in operating assets and liabilities net of effects of business combination:(Increase) decrease in:

Accounts receivable 4.33 10,794Inventory 2,181.22 5,436,731Deposits 16.13 40,194Prepaid expenses 48.48 120,837Deferred income taxes (321.64) (801,700)Other assets (53.23) (132,670)

Increase (decrease) in:Accounts payable (1,009.75) (2,516,826)Accrued:

Compensation (54.53) (135,865)Income taxes payable (93.99) (234,200)

Warranty reserve 47.45 118,273Customer advances (2,905.62) (7,242,331)Billings in excess of costs and estimated gross profit (93.72) (233,597)Other current liabilities 39.73 99,037Deferred compensation liability 11.96 29,811

Total adjustments (1,717.08) (4,279,726)

Net cash used in operating activities (2,004.69) (4,993,543)

Cash flows from investing activities:Purchase of property, plant and equipment (106.59) $ (265,589)OSI (295.01) (735,326)Proceeds from sale of property, plant and equipment 109.30 272,346Decrease in cash surrender value of life insurance 13.33 33,217

Net cash used in investing activities (278.97) (695,352)

Cash flows from financing activities:Increase in cash overdraft 525.81 1,310,187Borrowings on line of credit 15,947.09 39,736,307Payments on line of credit (14,833.02) (36,960,308)Borrowings of long-term debt 2,548.40 6,350,000Principal payments on long-term debt (2,076.60) (5,174,377)Increase in deferred financing costs (28.79) (71,744)

Net cash provided by financing activities 2,082.89 5,190,065

Net decrease in cash (200.77) (498,830)Cash:

Beginning of year 200.77 498,830

End of year Rs. – $ –

Supplemental disclosure of cash flow information:Cash paid during the period for interest 249.09 $ 620,679Noncash transaction:The Company purchased all of the capital stock of Offset Services, Inc. for$ 1,300,000 (Rs. 521.56 lakhs) in conjunction with the acquisition,liabilities were assumed as follows :Fair Value of Assets acquired 944.02 $ 2,353,000Total paid for the Capital Stock 521.56 (1,300,000)

Liabilities assumed 422.46 $ 1,053,000

The Company incurred (Rs. 120.36 lakhs) $ 300,000 in long-term debt in connection with its acquisition of Offset Services, Inc.see notes to consolidated financial statements


87

Manugraph DGM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2008

1. Nature of activities:

Manugraph DGM, Inc. is a leading manufacturer and supplier of parts and service for printing systems in the newspaperand commercial printing market. The Company's primary products include single width printing presses and folders usedto print newspapers, inserts, magazines and other written or graphic material and related parts and accessories. The Companyis located in central Pennsylvania and sells to both domestic and international customers. Included within the accounts ofManugraph DGM, Inc. is a wholly-owned subsidiary, Offset Services, Inc. (OSI), which was acquired on April 10, 2007. OSI,located in Sacramento, California, remanufactures, refurbishes, and services printing presses for, and sells spare parts to,customers located throughout the United States.

Manugraph DGM, Inc. is a wholly owned subsidiary of Manugraph India Ltd. Manugraph India Ltd. is India's largestmanufacturer of newspaper web offset printing presses, with manufacturing facilities at Kolhapur, Maharashtra, and istraded on the Mumbai stock exchange. Management believes that, on a combined basis, the entities form the world'slargest single width press manufacturing company.

2. Summary of significant accounting policies:

Trade accounts receivable:

Trade accounts receivable are stated at the amount management expects to collect from outstanding balances. Managementprovides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based onits assessment of the current status of individual accounts. Balances that are still outstanding after management has usedreasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accountsreceivable. The Company generally does not require collateral on credit sales but generally requires customer advances onmost sales.

Inventory:

Inventory is stated at the lower of cost or market. The first-in, first-out method is used for materials and parts. Work-in-process and finished press inventory also include actual direct labour and an allocation of overhead costs. Used equipmentis carried using specific cost methodology.

Property, plant and equipment and depreciation:

These assets are stated at cost. Depreciation is provided on the straight-line method over the estimated useful lives of theassets.

Deferred financing costs:

Deferred financing costs are amortized over the terms of the related obligations.

Deposits:

Deposits consist of prepayments to vendors for the purchase of equipment that is called for by its customer sales contracts.These amounts are recognized as expense when the related sales revenue is recognized.

Goodwill:

Goodwill consists of $ 1,102,378 (Rs. 442.27 lakhs) from the purchase of OSI and $ 150,000 (Rs. 60.18 lakhs) from a previousacquisition.

Customer advances:

Customer advances are collected in accordance with the terms of certain sales contracts. Such amounts are deferred andused to offset future billings.

Revenue and cost recognition:

The Company generally recognizes revenue upon shipment and passage of title to customers, or if applicable, the installationof its products, or when a service is completed. Revenues from larger OSI service work are recognized on the percentage-of-completion method, measured by the percentage of costs incurred to estimated total costs for the work. The liability."Billings in excess of costs and estimated gross profit" represents billings in excess of revenues recognized.

Auxiliary suppliers pass-through costs:

The Company purchases certain auxiliary equipment for resale to its customers along with its manufactured products. Thisauxiliary equipment is sold at cost and is included in both net sales and cost of goods sold on the statement of loss.

Warranty reserve:

The Company provides a warranty to its customers upon the sale of its products. A warranty reserve liability is carried basedon management's estimates of future costs to be incurred during the term of its existing warranty periods.

Advertising costs:

The Company expenses advertising cost as incurred. Expenses incurred were $ 235,885 (Rs. 94.67 lakhs) for the year.


88

Manugraph DGM, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Contd.)

Research and development costs:

Research and development costs are charged to expense as incurred. Research and development costs for the year endedMarch 31, 2008 were $ 473,635. (Rs. 190.08 lakhs)

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires managementto make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from those estimates.

3. Acquisition :

On April 10, 2007, Manugraph DGM, Inc. acquired 100% of the outstanding common shares of Offset Services, Inc. (OSI).The results of OSI’s operations have been included in the consolidated financial statements since that date. As a result ofthe acquisition, the Company has been able to expand their printing press servicing and refurbishment activity, and hasestablished a business presence on the west coast of the United States.

The aggregate purchase price was $ 1,300,000 (Rs. 521.56 lakhs) with $1,000,000 (Rs. 401.20 lakhs) paid in cash and$ 300,000 (Rs. 120.36 lakhs) in debt assumed, payable to the former shareholders. The following table summarizes theestimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

Rs. in lakhs USD

Cash 106.32 $ 265,000Accounts receivable 151.65 378,000Inventory 22.47 56,000Net property, plant and equipment 188.56 470,000Prepaid assets 6.82 17,000Other assets 26.08 65,000Goodwill 442.12 1,102,000

Total assets 944.02 $ 2,353,000

Accounts payable 76.23 $ 190,000Billings in excess of costs and estimated gross profits 130.79 326,000Accrued expenses 53.36 133,000Long-term debt 104.31 260,000Deferred tax liabilities 57.77 144,000

Total liabilities 422.46 $ 1,053,000

None of the $ 1,102,000 (Rs. 442.12) in goodwill is expected to be deductible for tax purposes.

4. Concentrations of credit risk:

Financial instruments:

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash in excess of theFederal Deposit Insurance Corporation (FDIC) coverage limits, repurchase agreements and accounts receivable. Cashamounts are insured by the FDIC up to $100,000, (Rs. 40.12 lakhs) and bank balances exceed that amount from time totime. The Company also invests in an overnight collateralized repurchase agreement from time to time. The collateral forthese repurchase agreements is federal government agency obligations.

Accounts receivable and sales:

Major customers are as follows:

Net Sales Trade receivable

Customer A 19% 12%

Customer B 23%

Customer C 14%

19% 49%


89

Manugraph DGM, INC.

5. Inventories: Rs. in Lakhs USD

Inventories consisted of the following at March 31, 2008:

Raw materials and parts 1,904.79 $ 4,747,733

Work-in-process 1,981.28 4,938,397

Used equipment 48.74 121,475

Finished press inventory 251.63 627,198

4,186.44 $ 10,434,803

6. Warranty reserve:

The change in the Company's accrued warranty obligations follows:

Accrued warranty obligation at April 1, 2007 379.83 $ 946,727

Actual warranty experience during 2008 (328.15) (817,919)

2008 Warranty provisions 375.60 936,192

Accrued warranty obligation at March 31, 2008 427.28 $ 1,065,000

7. Line of credit:

The Company has a $ 5,000,000 (Rs. 2006 lakhs) line of credit with a bank, with an outstanding balance of $ 2,775,999(Rs. 1,113.73 lakhs) at March 31, 2008. The line of credit requires interest at a base rate equal to the LIBOR rate and the ratein effect may also be increased up to an additional 250 basis points based on the calculation of the Company's funded debtratio.

The Company also has available an unused $ 2,500,000 (Rs. 1003 lakhs) line with the same bank, to be used for exporting/importing purposes. This line contains the same provisions as the first line and also contains an exporting/importing borrowingbase provision.

The lines of credit are secured by substantially all of the assets of the Company and are subject to certain financial ratios andgeneral covenants.

The Company is currently in the process of renegotiating these two lines and the equipment term loan discussed below. Itis anticipated that the existing debt will be replaced by an $ 8,000,000 (Rs. 3209.60 lakhs) line of credit and a $ 2,500,000(Rs. 1003 lakhs) exporting/importing line of credit, with terms similar to the existing lines but including certain real propertyliens and a $ 4,000,000 (Rs. 1604.80 lakhs) letter of credit from Manugraph India Ltd.

8. Long-term debt:

Monthly Current Long-termpayment portion portion Maturity

Equipment term loan (a) $ 138,889 $ 1,666,668 $ 1,583,331 2010Rs. 668.67 Rs. 635.23

Vehicles (b) $ 3,019 $ 27,129 $ 16,675 2009-2011Rs. 10.88 Rs. 6.69

Manugraph India Ltd. (c) $ 1,750,000 2011Rs. 702.10

(c) $ 2,000,000 2011Rs. 802.40

R. & A. Syracuse (d) $ 100,000 $ 200,000 2011Rs. 40.12 Rs. 80.24

$ 1,793,797 $ 5,550,006Rs. 719.67 Rs. 2,226.66

(a) Interest is charged at a base rate equal to the LIBOR rate and the rate in effect may also be increased up to an additional275 basis points based on the calculation of the Company's funded debt ratio. This note is secured by substantially allof the assets of the Company and is subject to certain financial ratios and general covenants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Contd.)


90

Manugraph DGM, INC.


(b) Interest rates on these four loans range from 3.9% to 9.5% and are secured by vehicles.

(c) These loans are payable to Manugraph India Ltd. and require monthly payments of interest at LIBOR plus two hundredbasis points. The loans mature April 1, 2010.

(d) This note is payable to the former shareholders of Offset Services, Inc. and requires three annual payments of $100,000each. The note does not require payment of interest, and management believes that imputed interest is not material.

Future maturities of these loans are as follows:Rs. in lakhs

2009 719.67 $ 1,793,797

2010 680.57 1,696,331

2011 1546.09 3,853,675

2946.33 $ 7,343,803

9. Operating leases:

The Company leases certain of its facilities under a lease which expires in March 2010 and requires monthly payments of$15,751, adjusted annually based on the Consumer Price Index. The Company leases other facilities under a leasewhich expires in April 2017 and requires monthly payments of $ 16,625.

The Company is also obligated under various operating leases for office equipment and vehicles. Future rent paymentsunder all operating leases are as follows:

Rs. in lakhs

2009 227.41 $ 566,819

2010 209.64 522,521

2011 115.31 287,423

2012 102.32 255,028

2013 97.75 243,652

thereafter 327.54 816,397

Rent expense for the period ended March 31, 2008 amounted to $ 627,729. (Rs. 251.92 lakhs)

10. Benefit plans:

The Company maintains a 401 (k) profit sharing plan. The plan covers all full-time employees who meet age and servicerequirements. The plan requires annual employer contributions equal to 3% of eligible wages and amounted to $ 269,076(Rs. 107.99 lakhs) for the period ended March 31, 2008. Additional profit sharing contributions are made at the discretionof management. No such profit sharing contribution was made in the period ended March 31, 2008.

11. Income taxes:

At March 31, 2008, the deferred tax asset resulted primarily from additional costs being capitalized in inventory for taxpurposes that are expensed for book purposes, differences in bases of property and equipment, the establishment of baddebt, warranty and inventory reserves, and the effect of net operating loss carryforwards. Deferred tax liabilities resultprimarily from prepaid expenses and commissions. Valuation allowances are established when necessary to reduce deferredtax assets to the amount expected to be realized. Income tax expense or credit is the tax payable or refundable for theperiod plus or minus the change during the period in deferred tax assets and liabilities.

The Company's total deferred tax assets and deferred tax liabilities at March 31, 2007 are as follows:


91

Manugraph DGM, INC.

(Rs. in Lakhs)

Federal State

Deferred:

Tax asset $ 1,362,736 $ 409,395Rs. 546.73 Rs. 164.24

Tax liabilities (101,741) (33,212)Rs. (40.82) Rs. (13.32)

Net deferred tax asset $ 1,260,995 $ 376,183Rs. 505.91 Rs. 150.92

Income tax benefit consists of the following:

Federal tax benefit, deferred $ 760,200Rs. 305.08

State tax benefit, deferred $ 189,000Rs. 75.85

Total income tax benefit $ 949,200Rs. 380.93

At March 31, 2008, the Company has a federal net operating loss carry forward of approximately $ 1,380,000(Rs. 553.66 lakhs) which expires in 2028. The Company also has state net operating loss carry forward, available for use invarious jurisdictions of approximately $ 1,810,000 (Rs. 726.17 lakhs) which expire at various times up to 2028.

12. Subsequent event:

Subsequent to March 31, 2008, the Company entered in to a stock purchase agreement with Manugraph India Ltd. whereinthe Company sold 31,818 previously unissued common shares to Manugraph India Ltd. for $ 1,750,000 (Rs. 702.10 lakhs),which was used to pay off a $ 1,750,000 (Rs. 702.10 lakhs) loan from Manugraph India Ltd.



92


MANUGRAPH KENYA LIMITED

CONTENTS PAGES

COMPANY INFORMATION ................................................................................................................................................................. 92

REPORT OF THE DIRECTORS ............................................................................................................................................................. 93

STATEMENT OF DIRECTORS’ RESPONSIBILITIES ........................................................................................................................ 94

REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF THE COMPANY ................................................... 95

THE FINANCIAL STATEMENTS :-

BALANCE SHEET ..................................................................................................................................................................................... 96

INCOME STATEMENT ........................................................................................................................................................................... 97

SCHEDULE OF EXPENSES ................................................................................................................................................................... 98

STATEMENT OF CHANGES IN EQUITY .......................................................................................................................................... 99

CASH FLOW STATEMENT ................................................................................................................................................................... 100

NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................................... 101

COMPANY INFORMATION

BOARD OF DIRECTORS : Mr. Pradeep Sanat ShahMr. Paresh Shashikant Jai

COMPANY SECRETARIES : Shantilal Anandji GalaP.O. Box 32567 - 00600Nairobi

REGISTERED OFFICE : L.R. No.209/8288Hughes BuildingKenyatta AvenueP.O. Box 49874Nairobi - 00100

AUDITORS : Nalin Shah & Co.Certified Public AccountantsP.O. Box 49874Nairobi - 00100

PLACE OF BUSINESS : L.R. NO 209/11370Sunview ComplexEnterprise RoadP.O. Box 39789Nairobi - 0623


93


REPORT OF THE DIRECTORS

The directors present their report and the audited financial statements for the year ended 31St March 2008 which disclose thestate of affairs of the company.

PRINCIPAL ACTIVITIES

The company continues to import, sell and service printing machines and spare parts. The company also continues to financesell of machines on hire purchase.

RESULTS

The trading for the year has resulted in a net loss of Kshs 933,186 after taxation.

Retained earnings amounting to Kshs 18,545,213 is carried forward.

DIVIDEND

The directors do not recommend the declaration of a dividend for the year.

DIRECTORS

The names of directors who held office to the date of this report are shown on page 1

AUDITORS

Nalin Shah & Co. Certifed Public Accountants, continue in office in accordance with Section 159 (2) of the Kenyan CompaniesAct (Cap. 486).

By Order of the Board

PRADEEP SHAHDirector

30th June, 2008


94


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Kenyan Companies Act (Cap 486) requires the directors to prepare financial statements which give a true and fair view ofthe state of affairs of the company as at the end of the financial year and of the operating results for the period. It also requiresthe directors to ensure that the company maintains proper accounting records which disclose with reasonable accuracy thefinancial position of the company. The directors are also responsible for safeguarding the assets of the company.

The directors accept the responsibility for the financial statements which have been prepared using appropriate accountingpolicies supported by reasonable and prudent judgements and estimates, and in conformity with the International FinancialReporting Standards and the requirements of the Kenyan Companies Act (Cap 486).

The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of thecompany as at 31St March 2008 and of its opreating results for the year then ended.

The directors further accept responsibility for the maintenance of accounting records which have been relied upon in thepreparation of the financial statements as well as on the adequacy of the systems of internal financial controls.

Nothing has come to the attention of the directors to indicate that the company will not remain a going concern for at least thenext twelve months from the date of this statement.

PRADEEP SHAH PARESH SHASHIKANT JAIDirector Director

Dated this 30th day of June, 2008


95


REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OFMANUGRAPH (KENYA) LIMITED

We have audited the financial statements on pages 5 to 17 for the year ended 31St March 2008 and have obtained all theinformation and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. Thefinancial statements are in agreement with the books of account.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As described on page 3, the directors are responsible for the preparation of financial statements which give a true and fair viewof the state of affairs of the company and its operating results. Our responsibility is to express an opinion on these financialstatements based on our audit.

BASIS OF OPINION

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.An audit includes an examination, 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 directors, as well asevaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for ouropinion.

OPINION

In our opinion proper books of account have been kept by the company and the financial statements, give a true and fair viewof the state of affairs of the company at 31St March 2008, and of its results of operations and cash flows for the year then endedand comply with International Financial Reporting Standards and the Kenyan Companies Act.

NALIN SHAH & CO.CERTIFIED PUBLIC ACCOUNTANTS

8th Floor,Hughes Building,Kenyatta Avenue,P. O. Box 49874 - 00100,Nairobi

Dated this 30th day of June, 2008


96


NOTES 2008 2007 2008 2007

Kshs Kshs Rs. Rs.NON-CURRENT ASSETSProperty and equipment (3) 1,135,810 1,331,256 723,511 848,010

1,135,810 1,331,256 723,511 848,010CURRENT ASSETSInventories (4) 23,935,750 9,405,750 15,247,073 5,991,463

Trade and other receivables (5) 106,564,447 128,161,649 67,881,553 81,638,970

Taxes recoverable 807,157 – 514,159 –

Cash at bank 3,311,237 5,225,913 2,109,258 3,328,907

Cash in hand 56,830 75,792 36,201 48,280

134,675,422 142,869,104 85,788,244 91,007,619

CURRENT LIABILITIESTrade and other payables (6) 3,549,895 4,845,668 2,261,283 3,086,691

Taxes payable – 3,971,774 – 2,530,020

Borrowings – 223,469 – 142,350

Unearned hire purchase interest income 2,904,058 5,535,366 1,849,885 3,526,028

Amount due to related parties (7) 108,365,760 104,492,154 69,028,989 66,561,502

114,819,713 119,068,431 73,140,157 75,846,591

NET CURRENT ASSETS 19,855,709 23,800,673 12,648,086 15,161,029

TOTAL ASSETS LESS CURRENT LIABILITIES 20,991,519 25,131,929 13,371,598 16,009,039

NON-CURRENT LIABILITIESUnearned hire purchase interest income (659,417) (3,258,744) (420,049) (2,075,820)

Deferred taxes (8) 463,111 (144,786) 295,002 (92,229)

NET ASSETS 20,795,213 21,728,399 13,246,551 13,840,990

REPRESENTED BY:Share capital (9) 2,250,000 2,250,000 1,433,250 1,433,250

Retained earnings (10) 18,545,213 19,478,399 11,813,300 12,407,740

SHAREHOLDERS’ FUNDS 20,795,213 21,728,399 13,246,550 13,840,990

The financial statements on pages 5 to 17 were approved by the Board of Directors and authorised for issue on . They weresigned on its behalf by:

PRADEEP SHAH PARESH SHASHIKANT JAIDirector Director

BALANCE SHEET AS AT 31ST MARCH 2008


97


INCOME STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008

NOTES 2008 2007 2008 2007

Kshs Kshs Rs. Rs.

SALES 57,366,873 162,265,736 36,542,698 103,363,274

LESS: COST OF SALES

Opening inventories 9,405,750 7,628,536 5,991,463 4,859,377

Purchases 63,526,521 138,769,220 40,466,394 88,395,993

72,932,271 146,397,756 46,457,856 93,255,371

Closing inventories (23,935,750) (9,405,750) (15,247,073) (5,991,463)

48,996,521 136,992,006 31,210,784 87,263,908

GROSS PROFIT 8,370,353 25,273,730 5,331,915 16,099,366

Expenses as per schedule (7,666,539) (7,924,184) (4,883,585) (5,047,705)

PROFIT FROM OPERATIONS 703,814 17,349,546 448,329 11,051,661

Net deficit on hire purchase financing activity (11) (1,899,084) (739,785) (1,209,717) (471,243)

NET PROFIT BEFORE TAXATION (1,195,270) 16,609,761 (761,387) 10,580,418

Taxation (12) (345,813) (5,105,287) (220,283) (3,252,068)

Deferred tax charge (12) 607,897 24,917 387,230 15,872

NET PROFIT AFTER TAXATION (933,186) 11,529,391 (594,440) 7,344,222


98


SCHEDULE OF EXPENSES FOR THE YEAR ENDED 31ST MARCH 2008

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Accountancy and secretarial fees 420,000 216,800 267,540 138,102

Administration salaries 2,475,668 2,604,516 1,577,001 1,659,077

Audit fees 264,000 120,000 168,168 76,440

Bank interest and charges 147,505 117,262 93,960 74,696

Depreciation 302,446 262,770 192,658 167,384

Electricity and water 68,369 60,431 43,551 38,495

General expenses 64,330 57,389 40,978 36,557

Industrial training levy 4,600 2,800 2,930 1,784

Insurances 206,034 244,993 131,244 156,061

Licences 20,050 20,000 12,772 12,740

Motor vehicle running expenses 473,453 513,406 301,590 327,040

N.S.S.F. company contribution 15,800 15,200 10,065 9,682

Postages and telephone 641,072 575,247 408,363 366,432

Printing and stationery 65,029 64,865 41,423 41,319

Professional fees 15,900 73,188 10,128 46,621

Rent and rates 725,700 696,000 462,271 443,352

Repairs and maintenance 57,932 36,542 36,903 23,277

Staff house rent and expenses 541,822 550,633 345,141 350,753

Staff refreshments and entertainment 241,272 219,093 153,690 139,562

Stamp duty – 83,000 0 52,871

Travelling expenses 1,022,680 1,439,267 651,447 916,813

Work permits 557,991 112,500 355,440 71,663

8,331,652 8,085,902 5,307,262 5,150,720

Less:Expenses apportioned to hire purchase finance activity (665,113) (161,718) (423,677) (103,014)

7,666,539 7,924,184 4,883,585 5,047,705

Operating expenses 665,113 161,718 423,677 103,014

Hire purchase licence expense 50,000 52,400 31,850 33,379

Realised exchange loss 676,054 1,474,581 430,646 939,308

1,391,167 1,688,699 886,173 1,075,701


99


STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2008

Share Revenue Share Revenuecapital reserve Total capital reserve Total

KSHS KSHS KSHS Rs. Rs. Rs.

Year ended 31st March 2007

At 1st April 2006 2,250,000 7,949,008 10,199,008 1,433,250 5,063,518 6,496,768

Net profit for the year – 11,529,391 11,529,391 - 7,344,222 7,344,222

At 31st March 2007 2,250,000 19,478,399 21,728,399 1,433,250 12,407,740 13,840,990

Year ended 31st March 2008

At 1st April 2007 2,250,000 19,478,399 21,728,399 1,433,250 12,407,740 13,840,990

Net profit for the year (933,186) (933,186) – (594,440) (594,440)

At 31st March 2008 2,250,000 18,545,213 20,795,213 1,433,250 11,813,300 13,246,550


100


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

CASH FLOW FROM OPERATING ACTIVITIES

Net profit before taxation (1,195,270) 16,609,761 (761,387) 10,580,418

Adjustments for:

Depreciation 302,446 262,770 192,658 167,384

Net hire purchase interest deficit / (income) 1,899,084 (2,126,605) 1,209,717 (1,354,647)

Interest expense 147,505 117,262 93,960 74,696

Operating profit before working capital changes 1,153,764 14,863,188 734,948 9,467,851

Trade and other receivables 21,597,202 (42,713,412) 13,757,417 (27,208,443)

Inventories (14,530,000) (1,777,214) (9,255,610) (1,132,085)

Trade and other payables (1,295,773) 4,291,934 (825,407) 2,733,962

Due to related parties 3,873,606 21,891,113 2,467,487 13,944,639

Unearned hire purchase interest income (5,230,635) 2,960,389 (3,331,914) 1,885,768

Cash generated from operations 5,568,164 (484,002) 3,546,920 (308,309)

Income taxes paid (5,124,744) (1,037,017) (3,264,462) (660,580)

Net cash generated from operating activities 443,420 (1,521,019) 282,458 (968,889)

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of property and equipment (107,000) (162,536) (68,159) (103,535)

Net cash flow from investing activities (107,000) (162,536) (68,159) (103,535)

CASH FLOW FROM FINANCING ACTIVITIES

Hire purchase interest received (1,899,084) 2,126,605 (1,209,717) 1,354,647

Interest expense (147,505) (117,262) (93,960) (74,696)

Net cash from financing activities (2,046,589) 2,009,343 (1,303,677) 1,279,951

Net (decrease)/increase in cash and cash equivalents (1,710,169) 325,788 (1,089,378) 207,527

Cash and cash equivalents at beginning 5,078,236 4,752,448 3,234,836 3,027,309

Cash and cash equivalents at end 3,368,067 5,078,236 2,145,459 3,234,836


101


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2008

1. GENERAL INFORMATION

Manugraph ( Kenya ) Limited is a company incorporated in Kenya under the Kenyan Companies Act. (Cap. 486), and isdomiciled in Kenya. The address of the registered office is given on page 1 in the company information.

The company continues to import, sell and service printing machines and spare parts. The company also continues tofinance sell of machines on hire purchase.

2. ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below:

a) BASIS OF PREPARATION

The financial statements are prepared under the historical cost convention and are in compliance with InternationalFinancial Reporting Standards.

b) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation.

Depreciation is calculated on the reducing balance basis to write down the cost of each asset, to its residual value overits estimated useful life using the following annual rates:

Rate

Furniture, fittings and equipments 12.50%

Motor vehicles 25.00%

Computer equipment 30.00%

Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and aretaken into account in the income statement.

c) INVENTORIES

Inventories are stated at the lower of cost and net realisable value. Cost is determined by the first-in-first-out (FIFO)method. Net realisable value is the estimate of the selling price in the ordinary course of business less the sellingexpenses. The inventories are stated at the value certified by the directors.

d) TRADE RECEIVABLES

Trade receivables are carried at original invoiced amount less an estimate made for doubtful debts based on a reviewof all outstanding amounts at the year-end. Bad debts are written off in the year in which they are identified.

e) TRADE PAYABLES

Trade payables are non interest bearing and are stated at their nominal value.

f) LEASES

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classifiedas operating leases. Payments made under operating leases are charged to the income statement on a straight linebasis over the period of the lease.

g) REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration received/ receivable and represents amounts receivable forgoods and services provided in the normal course of business, net of discounts and VAT.

Sales of goods are recognised when goods are delivered and title has passed.

Hire purchase interest income is accrued on a time basis by reference to the principal amount outstanding and at theeffective interest rate applicable


102


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2008 (Contd.)

h) TRANSLATION OF FOREIGN CURRENCIES

Transactions in foreign currencies during the year are converted into Kenya Shillings at the rates ruling at the transactiondates. Assets and liabilities at the balance sheet date which are expressed in foreign currencies are retranslated intoKenya Shillings at rates ruling at that date. Gains/losses arising on conversion and retranslation are included in theincome statement in the year in which they arise.

i) BORROWING COSTS

All borrowing costs are recognised in the income statement in the period in which they are incurred.

j) TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in theincome statement because it excludes items of income or expense that are taxable or deductible in other years and itfurther excludes items that are never taxable or deductible.

Deferred tax is provided using the liability method for all temporary timing differences arising between the tax base ofassets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used todetermine deferred tax. Deferred tax assets are recognised only to the extent that is is probable that future taxableprofits will be available against which temporary timing differences can be utilised.

k) APPORTIONMENT OF OPERATING EXPENSES

The operating expenses are apportioned to the hire purchase financing activity using the ratio of the gross hire purchaseinterest income to the total of trading income and gross hire purchase income.

l) CASH AND CASH EQUIVALENTS

For the purposes of cash flow statement, cash and cash equivalents comprise cash in hand, deposits held at call withbanks, and other short-term highly liquid investments with a maturity of three months or less, net of bank overdrafts. Inthe balance sheet, bank overdrafts are included in borrowings in current liabilities.

m) COMPARATIVES

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the currentyear.

n) CURRENCIES

The financial statements have been expressed in Kenya Shillings.


103


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104


4. INVENTORIES2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Finished goods 23,935,750 9,405,750 15,247,073 5,991,463

23,935,750 9,405,750 15,247,073 5,991,463

5. TRADE AND OTHER RECEIVABLES2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Trade receivables 100,017,908 118,776,930 63,711,407 75,660,904

Deposits and prepayments 385,901 378,668 245,819 241,212

VAT Recoverable 3,494,138 1,978,017 2,225,766 1,259,997

Sundry receivables 2,666,500 7,028,034 1,698,561 4,476,858

106,564,447 128,161,649 67,881,553 81,638,970

6. TRADE AND OTHER PAYABLES2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Trade payables 3,113,072 4,633,899 1,983,027 2,951,794

Accruals 436,823 211,769 278,256 134,897

3,549,895 4,845,668 2,261,283 3,086,691

7. RELATED PARTY TRANSACTIONSThere are some companies which are related through common control due to common shareholding and/or commondirectorships.

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Purchase of goods and services 61,602,502 113,576,515 39,240,794 72,348,240

Purchases from related parties were made at terms and conditions similar to those offered to major customers.

Outstanding balances arising from sale and purchase of goods/services

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Payables to related parties 108,365,760 104,492,154 69,028,989 66,561,502



105



8. DEFERRED TAXDeferred tax is calculated, in full, on all temporary timing differences under the liability method using a principal tax rateof 30%. The movement on the deferred tax account is as follows:

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

At 1st April 144,786 169,703 92,229 108,101

Income statement (credit) (Note 12) (607,897) (24,917) (387,230) (15,872)

AT 31ST MARCH (463,111) 144,786 (295,002) 92,229

Deferred tax liabilities and deferred tax (credit) in the income statement are attributable to the following items:

As at Charged As at As at Charged As at1sApril to I/S 31st March 1sApril to I/S 31st March

Kshs Kshs Kshs Rs. Rs. Rs.

Deferred tax liabilities

Accelerated capital allowances 144,786 (38,172) 106,614 92,229 (24,316) 67,913

144,786 (38,172) 106,614 92,229 (24,316) 67,913

Deferred tax assets

Tax losses carried forward – (569,725) (569,725) – (362,915) (362,915)

– (569,725) (569,725) – (362,915) (362,915)

Net deferred tax asset 144,786 (607,897) (463,111) 92,229 (387,230) (295,002)

9. SHARE CAPITAL2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Authorised Share Capital

30,000 ordinary shares at Kshs 100 each 3,000,000 3,000,000 1,911,000 1,911,000

Issued Share Capital

22,500 ordinary shares at Kshs 100 each 2,250,000 2,250,000 1,433,250 1,433,250

10. RETAINED EARNINGS2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Retained profit for the year (933,186) 11,529,391 (594,440) 7,344,222

Balance brought forward 19,478,399 7,949,008 12,407,740 5,063,518

BALANCE CARRIED FORWARD 18,545,213 19,478,399 11,813,300 12,407,740

11. HIRE PURCHASE FINANCING ACTIVITY2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Gross hire purchase income 5,202,984 3,815,314 3,314,301 2,430,355

Less: Interest paid (5,710,901) (2,866,390) (3,637,844) (1,825,890)

Expenses (1,391,167) (1,688,709) (886,173) (1,075,708)

NET DEFICIT (1,899,084) (739,785) (1,209,717) (471,243)


106



12. TAX

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Current tax 249,316 5,029,802 158,814 3,203,984

Under provision of current tax 96,497 75,485 61,469 48,084

Deferred tax charge / (credit) (Note 8) 607,897 (24,917) 387,230 (15,872)

953,710 5,080,370 607,513 3,236,196

The tax on the company’s profit before tax differs from thetheoretical amount that would arise using the basic rate as follows:

Profit before tax (1,195,270) 16,609,761 (761,387) 10,580,418

Tax calculated at a rate of 30% (358,581) 4,982,928 (228,416) 3,174,125

Tax effect of:

Expenses not deductible for tax purposes – 21,956 – 13,986

Excess depreciation over capital allowances 38,172 24,918 24,316 15,873

Current tax losses carried forward 569,725 – 362,915 –

Tax charge 249,316 5,029,802 158,814 3,203,984

13. ANALYSIS OF CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash flow statement comprise of the following balances:

2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Cash at bank 3,311,237 5,225,913 2,109,258 3,328,907

Cash in hand 56,830 75,792 36,201 48,280

Bank overdrafts – (223,469) – (142,350)

3,368,067 5,078,236 2,145,459 3,234,836

14. CAPITAL COMMITMENTS2008 2007 2008 2007

Kshs Kshs Rs. Rs.

Capital expenditure contracted for but not recognisedin the financial statements. NIL NIL NIL NIL

Capital expenditure authorised by the directorsbut not contracted for : NIL NIL NIL NIL

15. CONTINGENT LIABILITY

There were no contingent liabilities.

16. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The company's activities expose it to a variety of financial risks including credit and liquidity risks, effects of changes inforeign currency and interest rates and changes in market prices of the company's products and services. The company'soverall risk management programme focuses on unpredictability of changes in the business environment and seeks tominimise the potential adverse effects of such risks on its performance by setting acceptable level of risks. The companydoes not hedge any risks and has in place policies to ensure that credit is extended to customers with appropriate credithistory.


107

Constrad Agencies (Bombay) Private Limited

CONTENTS PAGES

Directors’ Report ......................................................................................................................................................................................108

Auditor’s Report .......................................................................................................................................................................................109

Balance Sheet ............................................................................................................................................................................................110

Profit & Loss Account .............................................................................................................................................................................111

Schedule 1 to 5 .........................................................................................................................................................................................112

Schedule 6 Notes On Accounts .........................................................................................................................................................113

Board of Directors

Sanat M. Shah, Chairman

Suresh B. Shah

V. K. Moorthy

Auditors

Messrs D. P. Sangoi & Co.,

Chartered Accountants

CONSTRAD AGENCIES (BOMBAY) PRIVATE LIMITED


108


DIRECTORS’ REPORT

To,

The Members,CONSTRAD AGENCIES BOMBAY (P) LTD.

Your Directors hereby present their Annual Report together with the Audited Balance Sheet as at 31st March, 2008.

DIVIDEND

In absence of profits during the year under review, the Board does not recommend any dividend.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors of the Company hereby stateand confirm that :

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed.

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimate thatare reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that year;

(iii) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

(iv) the Directors had prepared the annual accounts on a going concern basis.

AUDITORS

M/s. D. P. Sangoi & Co., the Auditors of the Company will retire at the forthcoming Annual General Meeting have eligible, haveoffered themselves for re-appointment.

PUBLIC DEPOSITS

Your Company has not accepted any deposits from the public.

PARTICULARS OF EMPLOYEES

Pursuant to Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, asamended, your company has no person in its employment drawing salary within the monetary ceiling prescribed u/s. 217 (2A)of the Companies Act, 1956.

PARTICULARS U/S. 217 (1) (e) OF THE COMPANIES ACT, 1956

A. CONSERVATION OF ENERGY : N. A.

B. TECHNOLOGY ABSORPTION : N. A.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO : NIL


SURESH B. SHAH V. K. MOORTHY

Director Director

Place : MumbaiDate : 15th May, 2008


109


AUDITOR’S REPORT

TO THE MEMBERS OFCONSTRAD AGENCIES (BOMBAY) PRIVATE LIMITED

We have audited the attached Balance Sheet of CONSTRAD AGENCIES (BOMBAY) PVT. LTD. as at 31st March, 2008together with the annexed Profit and Loss Account of the Company for the year ended upon that date. These financial state-ments are the responsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with the Auditing Standards generally accepted in India. These Standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from anymaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amount and significant estimatesmade by management, as well as evaluating the overall presentation of financial statements. We believe that our audit providesa reasonable basis for our opinion.

The Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section227 of the Companies Act, 1956 is not applicable to this company being a private limited company with a paid-up capital andreserves not more than fifty lakh rupees and has not accepted any public deposit and does not have loan outstanding of twentyfive lakh rupees or more from any bank or financial institution and does not have a turnover exceeding five crore rupees.

1. Further to our comments in the Annexure referred to in paragraph 1 above we report that :-

a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessaryfor the purpose of our audit.

b) In our opinion, proper books of Accounts as required by law have been kept by the Company so far as appears frommy examinations of those books.

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

d) In our opinion, the Profit and Loss Account and Balance Sheet comply with the Accounting Standard referred to insub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representation received from the directors are taken on record by the Board of Directors,none of the directors is disqualified as on 31st March, 2008 from being appointed as director in terms ofclauses (g) of Section 274(1) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the aforesaidaccounts read with the notes thereon give the information required by the Companies Act, 1956 in the mannerso 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, 2008.

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

For D. P. SANGOI & CO.Chartered Accountants,

DHIRENDRA P. SANGOIProprietor

Membership No. 32158

Place : Mumbai

Date : 15th May, 2008


110


BALANCE SHEET AS ON 31ST MARCH, 2008

Schedule Current Year Previous Year(Rupees) (Rupees) (Rupees)

SOURCES OF FUNDS :

Shareholders’ Fund

a) Share Capital 1 500,000.00 500,000.00

b) Reserve and Surplus 2 200,000.00 200,000.00

700,000.00 700,000.00

APPLICATION OF FUNDS :

Ownership Premises 3 748,000.00 748,000.00

748,000.00 748,000.00

Current Assets, Loans and Advances 4

a) Cash and Bank balance 65,176.61 58,149.61

b) Loans and Advances 2,000.00 7,954.00

67,176.61 66,103.61

Less : Current Liabilities 5 311,184.00 308,361.00

244,007.39 (242,257.39)

503,992.61 505,742.61

Profit & Loss Account 196,007.39 (194,257.39)

700,000.00 700,000.00

As per our report even date

For D. P. SANGOI & CO. For and on behalf of the BoardChartered Accountants

D. P. SANGOI SURESH B. SHAH V. K. MOORTHYProprietor Director Director



111


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Current Year Previous Year(Rupees) (Rupees)

INCOME

Interest Received 4,046.00 —

4,046.00 —

EXPENDITURE

Bank Charges — 165.00

Professional charges 4,000.00 2,500.00

Audit fees 1,000.00 500.00

Miscellaneous expenses 560.00 1,175.00

Service Tax 124.00 550.00

Filing charges 112.00 6,099.00

Printing & Stationery — 180.00

5,796.00 11,169.00

Profit / Loss for the year (1,750.00) (11,169.00)

Add : Income Tax paid pertaining to previous year — (135.00)

Loss brought forward from previous year (194,257.39) (182,953.39)

Loss Carried to Balance Sheet (196,007.39) (194,257.39)

E. P. S. (0.35) (2.23)






112



Current Year Previous Year(Rupees) (Rupees)

SCHEDULE - 1

SHARE CAPITAL

Authorised

5900 Equity Shares of Rs.100/- each 590,000.00 590,000.00

100 Preference Shares of Rs.100/-each 10,000.00 10,000.00

600,000.00 600,000.00

Issued, subscribed & Paid-up 5000 shares of Rs.100/- each fully paid-up 500,000.00 500,000.00

TOTAL 500,000.00 500,000.00

SCHEDULE - 2

RESERVE AND SURPLUS

Capital Reserve 200,000.00 200,000.00

TOTAL 200,000.00 200,000.00

SCHEDULE - 3

Ownership premises 748,000.00 748,000.00

2000 sq.feet of second floor of Sidhwa House,Colaba purchased on Ownership rights

TOTAL 748,000.00 748,000.00

SCHEDULE - 4

LOANS & ADVANCES

A) Cash & Bank Balances

Cash on hand 1,326.00 1,998.00

Balances with Scheduled Bank

in Current Account Bank of Maharashtra 63,850.61 56,151.61

65,176.61 58,149.61

B) Loans & Advances

Advances recoverable in cash or kind or for value to be received

MTNL Deposit 2,000.00 2,000.00

Income Tax on rent earned (A. Y. 96-97) – 5,954.00

2,000.00 7,954.00

TOTAL 67,176.61 66,103.61

SCHEDULE - 5

CURRENT LIABILITIES AND PROVISIONS

Sundry Creditors :-

Manugraph Ind. Ltd. 300,000.00 300,000.00

Excess Insurance Premium refundable – 2,301.00

A. P. Valia & Co. 6,500.00 2,500.00

D. P. Sangoi & Co. 1,684.00 560.00

308,184.00 305,361.00

Advance from Customer 3,000.00 3,000.00

TOTAL 311,184.00 308,361.00


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SCHEDULE - 6

NOTES TO ACCOUNTS :

1. Significant Accounting Policies

(i) Basis of Accounting :

The financial statements are prepared under historical cost convention on accrual basis and are in accordance withgenerally accepted accounting principles.

(ii) Fixed Assets :

All Fixed Assets are stated of cost of acquisition.

(iii) Depreciation :

No provision for Depreciation on Fixed Assets has been made.

(iv) Investment :

Investments are stated at cost.

(v) Accounting policies not specifically referred to herein are in consistency with generally accepted accounting policies.

2. Additional information under Part II of Schedule VI to the Companies Act, 1956.

Earning per share Current Year Previous Year

Net Profit / (Loss) for the year (Rs.) (1,750) (11,169)

No. of Equity Shares of Rs. 100/- 5,000 5,000

E. P. S. (0.35) (2.23)

Balance Sheet Abstract and Company’s General Business Profile

3. Registration Details

Registration No. 39336

State Code : 11

Balance Sheet Date 31st March, 2008

4. Capital raised during the year Public Issue Right Issue

NIL NIL

Bonus Issue Private Placement

NIL NIL

5. Position of Mobilization and Development of Funds : Total Liabilities Total Assets700,000.00 700,000.00

Paid-up Capital Reserve & Surplus500,000.00 200,000.00

Secured Loans Unsecured LoansNIL NIL

6. Application of Funds: Net Fixed Assets Investments748,000.00 NIL

Net Current Assets Miscellaneous Expenditure-2,44,007.39 NIL

Accumulated Losses-196,007.39


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7. Performance of the Company: Total Income Total Expenditure 4,046.00 5,796.00

Profit / Loss Before Tax Profit / Loss After Tax(1,750.00) (1,750.00)

Earning per share in Rs. Dividend Rate %(0.35) NIL

8. Generic Names of Three Principal products / Services of the Company (As per Monetary Terms)

Item Code No. (ITC Code) N. A.Product Description



Signature to Schedulee 1 to 6






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