welcast steels limited - aia engineering ltd. · welcast steels limited board of directors auditors...

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WELCAST STEELS LIMITED

BOARD OF DIRECTORS

AUDITORS

BANKERS

REGISTERED OFFICE & FACTORY

SHARE TRANSFER AGENT

Mr. Vinod Narain - ChairmanMr. D.P. DhanukaMr. R.P. AgarwalMr. Bhadresh K. ShahMr. Pradip R. ShahMr. Rajendra S. ShahMr. Sanjay Shailesh Majmudar

M/s. Dagliya & Co.Chartered AccountantsL BlockUnity Building Annexe,J.C. Road,Bangalore - 560 002

Canara Bank,Bangalore.

State Bank of IndiaBangalore

Plot No. 15, Phase - 1Peenya Industrial Area,Bangalore - 560 058Phone : 080 - 28394058, 28394059Fax : 080 - 28395638E-mail : [email protected] : www.welcaststeels.com

Bigshare Services Pvt. Ltd.,E-2/3, Ansa Industrial EstateSakivihar Road, Saki NakaAndheri (E), Mumbai- 400 072.Phone : 022 - 28470652, 40430200Fax : 022 - 28475207E-mail : [email protected]

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38TH ANNUAL GENERAL MEETING

Date 26th July 2010

Day

Time 3.00 P.M.

Place The Lalit Ashok,Kumara Krupa High Grounds,Bangalore- 560 001

Book Closure 13th to 26th July 2010(Dates) (Both days inclusive)

Monday

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INDEX

1 Notice 4

2 Directors' Report 5-7

3 Annexures to Directors' Report 8-12

4 Auditors' Report 13-15

5 Balance Sheet 16

6 Profit & Loss Account 17

7 Schedules to the Accounts 18-33

8 Cash Flow Statement 34

9 Attendance Slip/Proxy form 35

Page NoSl. No. Contents

NOTICE is hereby given that the Thirty-Eighth Annual General Meeting of Welcast Steels Limited, will be heldat The Lalit Ashok, Kumara Krupa High Grounds, Bangalore 560 001 at 15.00 hrs on Monday, the 26th day ofJuly 2010 to transact the following business:

(1) To receive, consider and adopt the Directors' Report,Audited Balance Sheet of the Company and Profitand Loss Account for the year ended on 31 March 2010 together with the report of the Auditorsthereon.

(2) To declare dividend.

(3) To appoint a Director in place of Mr.Sanjay Shailesh Majmudar, who retires by rotation and who, beingeligible, offers himself for reappointment.

(4) To appoint a Director in place of Mr. Bhadresh K.Shah, who retires by rotation and who, being eligible,offers himself for reappointment.

(5) To appoint a Director in place of Mr. Vinod Narain, who retires by rotation and who, being eligible, offershimself for reappointment.

(6) To appoint auditors in place of retiring auditors and to fix their remuneration.

Place : Bangalore By order of the Board of Directors

Chairman

1. Every member who is entitled to attend and vote may appoint a proxy to attend and vote instead ofhimself and the proxy need not be a member.

2. The register of members and the share transfer books of the company will remain closed from13th July 2010 to 26th July 2010 (both days inclusive).

3. The dividend, when declared will be paid on or before 22nd August 2010 to those members whosenames appear in the register of members as on 26th July 2010.

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Date : 20-05-2010 VINOD NARAIN

NOTES

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NOTICENOTICENOTICENOTICENOTICE

Gross Income 20,117.36

Less: Excise duty 1154.60

Net Income 18962.76

Profit before Interest and Depreciation 883.93

Less: Interest 122.32

Profit before Depreciation 761.61

Depreciation for the year(Net of withdrawal from revaluation reserve) 383.03

Profit after Interest and Depreciation 378.58

Provision for tax 134.10

Profit for the year 244.48

Taxation adjustments of earlier year (16.27)

Prior period adjustments (1.29)

226.92

Balance profit for earlier years 1,488.56

Profit available for appropriation 1715.48

Transfer to General Reserve 25.00

Dividend on equity shares 12.76

Tax on proposed dividend 2.17

Balance to be carried forward a sum of 1,675.55

Earnings per equity share of Rs. 10/- each. 35.56

14705.15

1009.98

13695.17

661.63

63.60

598.03

362.75

235.28

112.43

122.85

4.40

0.19

TOTAL 127.44

1675.55

1802.99

25.00

12.76

2.12

1763.11

19.97

Your Directors present the Thirty-Eighth Annual Report together with Audited Accounts of the Company forthe year ended 31st March 2010

FINANCIAL RESULTS

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DIRECTORS' REPORT

Rs in Lakhs

PARTICULARS 2009–10 2008–09

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DIRECTORS' REPORT (Contd..)

1) Sales Net of Excise Duty (Rs.in Lakhs)

Financial Year

Rs

.in

La

kh

s 11689.88

13332.76

15305.55

18962.76

13695.17

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2005-06 2006-07 2007-08 2008-09 2009-10

67.57

35.332.63

35.56

19.97

0

10

20

30

40

50

60

70

80

2005-06 2006-07 2007-08 2008-09 2009-10

4) Profit after tax -(Rs.in Lakhs)

Financial Year

Rs.in

Lakh

s

3) Sales quantity (MT)

Qu

an

tity

inM

T

30083

35474 35112

33409

29865

26000

28000

30000

32000

34000

36000

2005-06 2006-07 2007-08 2008-09 2009-10

Financial YearQ

uan

tity

inM

T

29700

35400 35194 34032

29404

0

5000

10000

15000

20000

25000

30000

35000

40000

2005-06 2006-07 2007-08 2008-09 2009-10

Financial Year

2) Production Quantity (in MT)

431.22

225.24 208.21 226.92

127.44

050

100150200250300350400450500

2005-06 2006-07 2007-08 2008-09 2009-10

5) Earnings per share -EPS(Rs.)

Financial Year

Rs.

Your Company continued to face the onslaught of global recession during the year under review.The manufacturing activities had to be scaled down due to constraint in demand. However, there wasimprovement in the last quarter of the year and normalcy was restored to some extent.

PERFORMANCE HIGHLIGHTS

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DIRECTORS' REPORT (Contd..)

PRODUCTION

SALES & PROSPECTS

DIVIDEND

FINANCE

SCIENTIFIC RESEARCH

EMPLOYEE RELATIONS

DIRECTORS

AUDITORS

DIRECTORS' RESPONSIBILITY STATEMENT:

During the year under review the Company produced 29,865 tons of Grinding Media as compared to33,409 tons in the previous year.

The Company sold 29,404 tons of Grinding Media during the year under review as against 34,032 tonsin the previous year. The current year looks to be promising with good inflow of export orders. However, thepower restrictions imposed by the government from time to time are a big setback in growth of the company.The in-house power generation cost being almost double of BESCOM supply renders it uneconomical forlong term utilization.

Your Directors are pleased to recommend a dividend of 20% (Rs.2.0 per share).

The liquidity position of the Company remained satisfactory. Canara Bank and State Bank of Indiaextended their full co-operation to the Company.

The unprecedented recession in the Industry has forced the company to look minutely into every element ofcost and evolve methods to eliminate all wastages. At the same time, quality and innovation have beengiven utmost priority to improve its business share in the global market. The R&D section of the companycontinued to focus its attention in these areas, resulting in development of new chemical compositions forbetter wear resistance of grinding media and improved processes for cost reduction.

During the financial year an amicable labour settlement was reached valid up to 31st December, 2011.

Messrs Sanjay Shailesh Majmudar, Bhadresh K.Shah and Vinod Narain retire by rotation and are eligiblefor reappointment.

Messrs Dagliya & Company, Chartered Accountants, retire at this Annual General Meeting and are eligiblefor reappointment.

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect toDirectors’Responsibility statement, it is hereby confirmed:

ii) That the Directors have selected such accounting policies and applied them consistently and madejudgments and estimates that were reasonable and prudent so as to give a true and fair view of the stateof affairs of the company at the end of the financial year and of the profit of the company for the yearunder review;

iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets ofthe company and for preventing and detecting fraud and other irregularities;

i) That in the preparation of the accounts for the financial year ended 31 March 2010, the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;

iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2010 on a goingconcern basis.

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ANNEXURE – I

I. CONSERVATION OF ENERGY

2009-10

3,83,39,160

19,47,22,378

5.08

1,38,181

3.18

1327

II. RESEARCH AND DEVELOPMENT

1. SPECIFIC AREAS IN WHICH R & D CARRIED OUT BY THE COMPANY

2. BENEFITS DERIVED

Particulars as per the Companies (Disclosures of particulars in the Report of the Board of Directors) Rules, 1988and forming part of the Directors' Report for the year ended 31.03.2010.

Effective steps were taken to conserve energy.

1. POWER AND FUEL CONSUMPTION

Electricity

2008-09

i) Units purchased 4,43,23,200

Total amount in Rs. 20,43,60,190

Rate / Unit (Rs.) 4.61

ii) Units generated 2,24,126

Unit generated /Litre of Diesel/HFO 3.10

2. CONSUMPTION PER UNIT(Metric ton) OF PRODUCTION(PRODUCT : GRINDING MEDIA)

Electricity Units 1306

a) Modification of heat treatment furnace for improving production and cost reduction.b) Air quenching system modification for reduction in power consumption.c) Developed product handling system for container loading in the plant.

a) Cost reduction/increase in productivity.

b) Savings in power / cost.

c) Improvement in productivity / Safety / cost.

Since the units generated during the year are not material in comparison with total units consumed,cost per unit is not comparable and hence not given.representive /

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ANNEXURE-I TO DIRECTORS' REPORT

GENERAL

VINOD NARAIN

1. Information required under section 217(2-A) of the Companies Act of 1956: -

Number of employees employed by the Company during the financial year under review drawing aremuneration in aggregate of not less than Rs. Twenty Four Lakhs per annum or Rs.Two Lakhsper month—NIL

2. Particulars as required under listing agreement Clause 49 is furnished as Annexure-I to this report andform a part thereof.

3. Certificate from a Company Secretary under proviso to section 383A of the Companies Act is attachedas Annexure II to this report.

4. The relevant notes on the accounts and accounting policy contained elsewhere in this Annual Reportare self-explanatory with regard to the observations of the Auditors.

Place : Bangalore For and on behalf of the Board of DirectorsDate : 20-05-2010

Chairman

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ANNEXURE-I TO DIRECTORS' REPORT (Contd..)

3. FUTURE PLAN OF ACTION

III. TECHNOLOGY ABSORPTION AND INNOVATION

1. EFFORTS MADE

2. BENEFITS

3. PARTICULARS OF TECHNOLOGY IMPORTED DURING THE LAST5 YEARS - N I L -

4. EXPENDITURE ON R & D

Rs. in Lakhs

IV. FOREIGN EXCHANGE EARNINGS AND OUTGO Rs.in Lakhs

1. EARNINGS

2. OUTGO

V . PARTICULARS IN COMPLIANCE WITH THE LISTING AGREEMENT:CLAUSE 49

a) Moulding system automation.b) Reduction in rejectionc) Improvement in working environment.

a) Development of new grade of grinding media for use in mining industry.b) Mechanization of oil removal from balls after oil quenching.

a) New export markets developed.b) Increase in productivity / cost savings.

a) Capital N I Lb) Revenue 4.80

Total R&D Expenditure as a percentage of total turnover (%) 0.03

Foreign exchange earned. NIL

a) CIF Value of Imports NILb) Expenditure in Foreign Currency on -

Dividend Payment 1.20

a) The of the Company is not suspended from trading in any stock exchange whereverit is listed.

b) Name and address of the stock exchange where the securities are listed.

The Company has paid the listing fees for the financial year 2010-2011 to all the Stock exchangeswherever its securities are listed.

Securities

SCRIPT CODE NO 504988Stock Exchange Towers, No.51, 1 Cross,J C Road Bangalore - 560 027. Phiroze Jeejeebhai Towers,25 Floor,

Dalal Street, Mumbai – 400 001.

Central Depository Services (India) Limited. National Security Depository Ltd.Phiroze Jeejeebhai Towers,28 Floor, Trade World, Kamala Mills Compound.SenapathiDalal Street,Mumbai - 400 001. Bapat Marg, Lower Parel, Mumbai-400 013

Bangalore Stock Exchange Ltd.,The Stock Exchange-Mumbai,

ISIN – INE 380G01015 ISIN – INE 380G01015

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th

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ANNEXURE-II TO DIRECTORS' REPORT

SECRETARIAL COMPLIANCE CERTIFICATE


To,The Members

previous

I have examined the registers, records, books and papers of WELCAST STEELS LIMITED as required to bemaintained under the Companies Act, 1956, (the act) and the rules made there under and also the provisionscontained in the Memorandum and Articles of Association of the Company for the financial year ended on 31March 2010. In my opinion and to the best of my information and according to the examinations carried out byme and explanations furnished to me by the company, its officers and agents, I certify that in respect of theaforesaid financial year :

1. The Company has kept and maintained all registers as stated in Annexure 'A' to this certificate, as perthe provisions and the rules made there under and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure 'B' to this certificate, with theRegistrar of Companies, Regional Director, Central Government, Company Law Board or otherauthorities within the time prescribed under the Act and the rules made there under.

3. The Company, being a Public Limited Company, comments are not required.

4. The Board of Directors duly met four times on 25.04.2009, 29.07.2009, 30.10.2009 and 29.01.2010 inrespect of which meetings proper notices were given and the proceedings were properly recorded andsigned in the Minutes Book maintained for the purpose.

5. The Company closed its Register of Members from 15.07.2009 to 29.07.2009 and necessarycompliance of section 154 of the Act has been made.

6. The Annual General Meeting for the financial year ended on 31.03.2009 was held on 29.07.2009 aftergiving due notice to the members of the company and the resolutions passed there at were dulyrecorded in Minutes Book maintained for the purpose.

7. No extraordinary General Meeting held during the financial year

8. According to the information and explanations given to me, the company has not advanced loans to itsdirectors and/or persons or firms or companies referred in the section 295 of the Act.

9. The Company has duly complied with the provisions of section 297 of the Act in respect of contractsspecified in that section.

10. The Company has made necessary entries in the register maintained under section 301 of the Act.

11. According to the information and explanations given to me, no appointment has been madenecessitating the company to obtain necessary approvals from the Board of Directors, members and

approval of the Central Government pursuant to Section 314 of the Act wherever applicable.

12. The Board of Directors has approved / ratified the issue of duplicate share certificates.

13. The Company has:

i) Delivered all the certificates on lodgment thereof for transfer / transmission or any other purposein accordance with the provisions of the act;

ii) Deposited the amount of dividend declared in a separate bank account on 31 07.2009 which iswithin five days from the date of declaration of such dividend.

iii) Paid / posted warrants for dividends to all the members within a period of 30 (Thirty) days from thedate of declaration and that all unclaimed / unpaid dividend has been remained in the UnpaidDividend Account of the Company with Canara Bank, IF Branch, Bangalore.

iv) Duly compiled with the requirements of section 217 of the act.

v) There were no instances necessitating the transfer of the amount in unpaid dividend account,application money due for refund, matured deposits, matured debentures and the interestaccrued thereon which have remained unclaimed or unpaid for a period of seven years to InvestorEducation and Protection Fund.

14. The Board of Directors of the Company is duly constituted and the appointment of Directors, additionaldirectors, alternate directors and directors to fill casual vacancies have been duly made.

15. There was no requirement of appointing of a Managing Director / Whole-time-Director / Manager underthe provisions of section 269 read with Schedule XIII to the Act and approval of the CentralGovernment.

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.

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ANNEXURE-II TO DIRECTORS' REPORT (Contd..)

16. According to the information and explanations given to me, the company has not appointed any sole-selling agent.

17. The Company has no requirement necessitating to obtain approvals of the Central Government,Company Law Board, Regional Director, Registrar or such other authorities as may be prescribedunder the various provisions of the Act during the year under scrutiny.

18. The Directors have disclosed their interest in other firms / companies to the Board of Directors pursuantto the provisions of the Act and the Rules made there under.

19. The Company has not issued shares / debentures / other securities during the financial year.

20. The Company has not bought back shares during the financial year ending 31.03.2010.

21. The Company has no redeemable preference shares / debentures due for redemption during the yearunder scrutiny.

22. There were no transactions necessitating the company to keep in abeyance rights to dividend, rightsshares and bonus shares pending registration of transfer of shares.

23. According to the information and explanations given to me, the Company has not accepted anydeposits from the public during the year under review.

24. The amount borrowed by the Company from financial institutions, banks and others during the financialyear ending 31.03.2010 are within the borrowing limits of the company.

25. According to the information and explanations given to me, the company has not made loans andinvestments, or given guarantees or provided securities to other bodies corporate.

26. The company has not altered the provisions of the memorandum with respect to situation of thecompany's registered office from one state to another during the year under scrutiny.

27. The Company has not altered the provisions of the memorandum with respect to the objects of thecompany during the year under scrutiny.

28. The Company has not altered the provisions of the memorandum with respect to name of the companyduring the year under scrutiny.

29. The Company has not altered the provisions of the memorandum with respect to share capital of theCompany during the year under scrutiny

30. The Company has not altered of itsArticles ofAssociation during the financial year under scrutiny.

31. According to the information and explanations given to me, no prosecution was Initiated against orshow cause notices received by the company for alleged Offences under theAct and also the fines andpenalties or any other punishment imposed.

32. According to the information and explanations given to me, the company has not received securitydeposit from its employees during the year under certification.

33. The Company has deposited both employee's and employer's contribution to Provident Fund withprescribed authorities pursuant to section 418 of theAct.

M. MANJUNATHA REDDYPlace : BangaloreDate : 20-05-2010 Name of the Company Secretary

C.P.No: 7259ACS No 19957

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A N N E X U R E : 'A'

A N N E X U R E : 'B'

ANNEXURE-II TO DIRECTORS' REPORT (Contd..)

Name of the company :Corporate Indentity No. : L27104KA1972PLC002163

Registers as maintained by the Company

1.

WELCAST STEELS LTD

Register of Members & Index of Members U/s.150/151.

2. Register of charges U/s.143.

3. Copies of Instrument of charges created by the company U/s.136.

4. Copies of Annual Returns U/s.163

5. Minutes of proceedings of General Meetings U/s.193.

6. Minutes of proceedings of Directors Meetings U/s.193.

7. Books of accounts U/s.209.

8. Register of contracts, etc in which Directors are interested U/s.301

9. Register of Directors, Managing Director, Manager and Secretary U/s.303.

10. Register of Directors' shareholding U/s.307

11. Bank Receipts relating to deposits of Provident fund U/s.417/418/419.

12. Register of renewed and duplicate share certificates.

Forms and returns as filed by the Company with the Registrar of Companies during the financial year endingon 31st March, 2010.

1. Balance Sheet (Schedule VI) as at 31.03.2009 Filed U/s.220 on.09.09.2009

2. Annual Return (Schedule V) U/s.159 filed on 3.10.2009

3. Compliance Certificate u/s.220 filed on 13.8.2009

4. Form No.1 filed on 13.10.2009

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AUDITORS' REPORT

To,

The Members ofWELCAST STEELS LIMITEDBangalore

We have audited the attached Balance Sheet of ., as at 31 March 2010 and the Profitand Loss Account for the year ended on that date annexed thereto and also Cash Flow Statement for the yearended on that date. These financial statements are the responsibility of the Company's management. Ourresponsibility 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 India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that:

1. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government ofIndia in terms of sub-section (4A) of section 227 of the Companies Act, 1956, based on such checks aswe considered appropriate and according to the information and explanations given to us, we statethat:

1) (a) The company has maintained adequate records of fixed assets with full particulars includingquantity and location.

(b) As informed to us, the fixed assets have been physically verified by the management during theyear and no material discrepancies have been noticed on such verification

(c) During the year, the company has not disposed off any substantial part of the fixed assets affectingthe going concern status of the company.

2) (a) As informed to us, the inventory has been physically verified during the year by the management. Inour opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonableand adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticed on verificationbetween the physical stocks and the book records were not material having regard to the nature ofbusiness and volume of operations and the same have been properly dealt with in the books ofaccounts.

3) (a) As informed to us, the company has not granted any loans, secured or unsecured to companies,firms, or other parties covered in the register maintained u/s 301 of the companies Act, 1956.

In view of the above the question of rate of interest, terms and conditions of loans, regularity ofrecovery of principal and interest and over dues does not arise and clauses 4 (iii) (b), (c) and (d) ofthe Order are not applicable.

(b) As informed to us, the company has not borrowed any loans from the companies, firms, or otherparties covered in the register maintained u/s 301 of the companies Act, 1956.

In view of the above the question of rate of interest, terms and conditions of loans, regularity ofrepayment of principal and interest and over dues does not arise and clauses 4 (iii) (e), (f) and (g) ofthe Order are not applicable.

4) In our opinion and according to the information and explanations given to us, and as per our evaluation,it appears that there is adequate internal control system commensurate with the size of the Companyand the nature of its business with regard to purchase of inventory, fixed assets and with regard to thesale of goods & services. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in internal control system.

5) (a) Based on the audit procedures and according to the information and explanations provided by themanagement, we are of the opinion that the particulars of contracts or arrangements that need tobe entered in the register maintained u/s 301 of the companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions madein pursuance of such contracts or arrangements entered in the register maintained u/s 301 of thecompanies Act, 1956 have been made at prices which are reasonable having regard to prevailingmarket prices at the relevant time.

WELCAST STEELS LTD st

6) As explained to us, the company has not accepted any deposits from the public with in the meaning ofsections 58A and 58 AA or any other relevant provisions of the companies Act, 1956 and Rules framedthere under.

7) In our opinion, the company has an internal audit system commensurate with the size of the companyand nature of its business

8) According to the information and explanations given to us, maintenance of cost records under Section209 (1) (d) of the Companies Act 1956 has not been prescribed to the company's products.

9) (a) According to the records of the Company, the company is generally regular in depositing with theappropriate authorities undisputed statutory dues including provident fund, investor education andprotection fund, employees' state insurance, income tax, sales tax, wealth tax, Service Tax,custom duty, excise duty, cess and other material statutory dues to the extent applicable to it.

(b) According to the information and explanations given to us and based on the records verified by us,we state that no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax,Sales Tax, Customs Duty, Excise duty and Cess which have remained outstanding as at 31 March2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, there are no dues of income tax, sales tax,service tax, customs duty, wealth tax and cess, which have not been deposited on account of anydispute except as stated below:

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Name of the Statute Nature of Dues Disputed Amount Forum where the(Rs.) dispute is pending

Foreign Trade Customs Duty, 556.37 lakhs* Additional Director GeneralRegulation Act Interest of Foreign Trade/ Asst(DEEC Scheme) Commissioner of Customs,

ICD, Bangalore

* Rs 35 lakhs has been deposited against the above.

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AUDITORS' REPORT (Contd..)

10) The company neither has accumulated losses at the end of the financial year nor incurred cash lossesduring the current and the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the Company has notdefaulted in repayment of dues to banks. The company has neither borrowed any loans from FinancialInstitutions nor issued any debentures and consequently the question of default in repayment does notarise.

12) The Company has not granted any loans and advances on the basis of security by way of pledge ofshares, debentures and other securities during the year.

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

14) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,2003 are not applicable to the Company.

15) As informed to us, the Company has not given guarantees for loans taken by others from banks orfinancial institutions.

16) Based on the information and explanations given to us by the management, the term loans have beenapplied for the purpose for which they were raised.

17) According to the information and explanations given to us and on an overall examination of the balancesheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment.

18) According to the information and explanations given to us, the Company has not made any preferentialallotment of shares to parties and companies covered in the register maintained under section 301 ofthe Companies Act 1956.

19) According to the information and explanations given to us, during the year covered by our audit report,the Company has not issued any debentures.

15

AUDITORS' REPORT (Contd..)

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

21) Based on the audit procedures performed and according to the information and explanations given to us,no fraud on or by the Company has been noticed or reported during the course of our audit.

2. Further to our comments in Para (1) above:

i. We have obtained all the information and explanations, which to the best of our knowledge and beliefwere necessary for the purpose of our audit.

ii. In our opinion, the company has kept proper books of accounts as required by law so far, as appearsfrom our examination of those books.

iii. The Balance sheet, Profit & Loss Account and Cash Flow Statement referred to in this report are inagreement with the books of accounts.

iv. In our opinion, the Balance sheet, Profit & Loss Account and Cash Flow Statement referred to in thisreport complies with the accounting standards referred to in sub-section (3C) of section 211 of thecompanies Act, 1956.

v. On the basis of written representations received from the directors as on 31 March, 2010 and takenon record by the Board of Directors and the information and explanations given to us, we state thatnone of the Directors of the company is prime facie, as at 31 March 2010, disqualified from beingappointed as a Director in terms of clause (g) of subsection (1) of section 274 of the Companies Act,1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts read together with the Notes and Accounting policies thereon give the information requiredby the companies Act, 1956 in the manner so required and give a true and fair view in conformity withthe accounting principles generally accepted in India:

i) In the case of Balance sheet, of the state of affairs of the company as at 31 March, 2010;

ii) In the case of Profit & Loss Account of the Profit for the year ended on that date; and

iii) In the case of Cash Flow Statement, of the cash flows of the company for the year ended on thatdate.

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Place : BangaloreDate : 20-05-2010 Chartered Accountants

(FRN 000671S)

PartnerMembership No: 16444

For DAGLIYA & CO.

(P.MANOHARA GUPTA)

16

BALANCE SHEET

AS AT 31ST MARCH 2010

Schedule As atReference 31st March 2010

As at31st March 2009

Rupees in Lakhs

I SOURCES OF FUNDS

63.842,055.25 2,119.09

656.65

TOTAL 2,775.74

II APPLICATION OF FUNDS

4,014.382,814.861,199.52

93.30 1,292.82

0.04

63.57

1,673.94496.36

51.98

1,790.46

4,012.74

2,471.45121.98

2,593.43 1,419.31

TOTAL 2,775.74

1. Share holders' funds:a) Capital A 63.84b) Reserves & Surplus B 1,941.50 2,005.34

2. Loan funds: C

Secured Loans 704.36

2,709.70

1. Fixed Assets:

a) Gross block D 3,979.95b) Less:Depreciation 2,453.30c) Net block 1,526.65d) Capital work-in-progress - 1,526.65

2. Investments E 0.04

3. Deferred Tax Asset F 75.79

4. Current Assets: G

a) Inventories 1,623.13b) Sundry Debtors 667.10c) Cash and Bank balances 106.10

5. Loans and Advances H 1,401.10

3,797.43

Less: Current Liabilities & Provisions: I

a) Current Liabilities 2,544.12b) Provisions 146.09

Net Current Assets 2,690.21 1,107.22

SIGNIFICANT ACCOUNTING Q

POLICIES & NOTES ON ACCOUNTS

2,709.70

For and on behalf of the Board As per our Report attachedfor

Chartered AccountantsD. P. DHANUKA VINOD NARAINR. P. AGARWALBHADRESH K. SHAHPRADIP R. SHAH

P.MANOHARA GUPTA

Chairman(FRN 000671S)

DirectorsPartner

M.NO.16444Place : Bangalore Place : BangaloreDate : 20-05-2010 Date : 20-05-2010

DAGLIYA & CO.

FOR THE YEAR ENDED 31ST MARCH 2010the year

endedReference 31st March 2010

For the yearended

31st March 2009

For

SCHEDULE

17

PROFIT AND LOSS ACCOUNT

Rupees in Lakhs

I INCOME14,705.15

1,009.9813,695.17

65.17

TOTAL 13,760.34

II EXPENDITURE12,376.62

20.20215.59169.03317.27

63.60

TOTAL 13,162.31

598.03364.79(2.04)

362.75

235.28

100.2012.23

-(4.40)

127.25(0.19)

127.441,675.551,802.99

APPROPRIATIONS:25.0012.76

2.121,763.11

1,802.99

-19.97

Income from operations(Gross) J 20,117.36Less:Excise duty 1,154.60Net Income from operations 18,962.76Other Income K 39.71

19,002.47

Cost of Production L 17,533.63Purchase of finished goods 334.47(Increase)/Decrease in stocks M (391.26)Administrative expenses N 189.99Selling & Distribution expenses O 451.71Financial Charges P 122.32

18,240.86

Profit before depreciation 761.61Depreciation on Fixed Assets D 389.13Less: Amount transferred from revaluation reserve (6.10)

383.03

Profit before tax 378.58Provision for:

a) Current tax 132.00b) Deferred tax (1.90)c) Fringe Benefit Tax 4.00d) Income Tax adjustment for earlier years 16.27

Profit after Tax 228.21Less:Prior period adjustments 1.29Net Profit 226.92ADD: Balance brought forward 1,488.56Amount available for appropriations 1,715.48

Transfer to General reserve 25.00Proposed Dividend 12.76Dividend distribution tax on proposed dividend 2.17Balance carried to Balance Sheet 1,675.55

1,715.48

Earnings per equity share of Rs.10/ each(Basic and Diluted) 35.56

SIGNIFICANT ACCOUNTING POLICIES Q& NOTES ON ACCOUNTS



P.MANOHARA GUPTA


DirectorsPartner


DAGLIYA & CO.

18

SCHEDULE - A

SCHEDULE -B

SCHEDULE -C

Rupees in Lakhs

SHARE CAPITAL As at 31st March 2010 As at 31st March 2009

RESERVES & SURPLUS As at 31st March 2010 As at 31st March 2009

SECURED LOANS As at 31st March 2010 As at 31st March 2009

From Canara Bank for

(i) Cash Credit * -

(ii) Packing Credit* 550.15 550.15

From State Bank of India

(i) Term Loan ** 154.21

(Repayable within one year Rs.60Lakhs -Previous year Rs 60 lakhs)

704.36

* Secured by

(i) Hypothecation of plant and machinery funded by Canara Bank.(ii) Hypothecation of Equipments and accessories, book debts and inventories.(iii) Land & Buildings accquired out of Company’s own funds on pari pasu basis with State Bank of India.

* * Secured by(i) Hypothecation of plant and machinery funded by State Bank of India(ii) Land & Buildings accquired out of Company’s own funds on pari pasu basis with Canara Bank.

11.28

550.00 561.28

95.37

TOTAL 656.65

SHARE PREMIUM

47.79

REVALUATION RESERVE14.03

3.23

2.04 15.22

GENERAL RESERVE204.13

25.00 229.13PROFIT & LOSS ACCOUNT

1,763.11

TOTAL 2,055.25

as per last Balance Sheet 47.79

as per last Balance Sheet 20.13Add: Excess withdrawn in earlier Years -(Refer footnote in Schedule D)

Less: Withdrawal on account of depreciation 6.10 14.03

as per last Balance Sheet 179.13Add: Transferred from Profit & Loss a/c 25.00 204.13

Balance at credit 1,675.55

1,941.50

AUTHORISED200.00200.00

63.820.02

TOTAL 63.84

20,00,000 Equity Shares of Rs. 10/- each 200.00200.00

ISSUED, SUBSCRIBED & PAID UP638,161(Previous year-6,38,161)Equity Shares of Rs.10/- each 63.82FORFEITED SHARES 0.02425 (Previous year 425 ) Equity shares originallypaid up at Rs 5/- Share

63.84

Paid up capital of the Company includes 4,56,881 (Prev yr 4,56,881) fully paid equity shares held by AIAEngineering Ltd, a holding Company

Land

8.89

--

8.89

Bui

ldin

gs57

5.92

19.3

1-

244.

0133

1.91

Pla

nt&

Mac

hine

ry3,

213.

4012

.50

-2,

098.

201,

115.

20

Pla

nt&

Mac

hine

ry(R

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)6.

55-

-4.

92-

1.63

Bor

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l3.

26-

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411.

85

Fur

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Fix

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s37

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1.11

-21

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16.6

1

Offi

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quip

men

ts51

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1.51

-41

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10.3

9

Labo

rato

ryE

quip

men

ts40

.35

--

6.33

34.0

2

Veh

icle

s42

.26

--

36.1

16.

15

3,97

9.95

2,45

3.30

1,52

6.65

Cap

ital w

ork

inpr

ogre

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93.3

0-

-

3,97

9.95

2,45

3.30

1,52

6.65

Pre

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522.

9063

9.01

181.

963,

979.

952,

110.

7538

9.13

46.5

82,

453.

301,

526.

65-

Not

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Thi

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exce

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8.89

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-8.

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595.

2334

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-27

8.45

316.

78

3,22

5.90

312.

35$3

.23

2,40

7.32

818.

58

6.55

0.21

5.13

1.42

3.26

0.09

-1.

501.

76

38.9

33.

60-

24.8

114

.12

53.0

13.

04-

44.1

58.

86

40.3

59.

46-

15.7

924

.56

42.2

61.

60-

37.7

14.

55

TO

TA

L34

.43

-4,

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3836

4.79

3.23

2,81

4.86

1,19

9.52

93.3

0-

--

93.3

0

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TA

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7.73

-4,

107.

6836

4.79

3.23

2,81

4.86

1,29

2.82

FIX

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SC

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DU

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Gro

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sat

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alT

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31.0

3.20

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ear

31.0

3.20

1031

.03.

2010

19

SCHEDULE - D

1. Stores and Spares 301.84

2. Stock - in - tradea) Raw Materials 498.11

b) Stock in process 738.27c) Foundry Returns 20.20d) Finished Goods 57.11e) Stock of DEBP Receivable 7.60 1,623.13

3. Sundry Debtors(Unsecured and considered good)a) Outstanding for a period exceeding

Six Months 39.46b) Others 627.64 667.10

4. Cash & Bank Balancesa) Cash on hand 3.46b) Bank Balances with scheduled banks

i) in Current Accounts 89.11ii) in Unpaid Dividend Accounts 2.71iii) in Fixed Deposit 10.73

c) With Post Office in Savings Bank 0.09 106.10(Pass book deposited with CentralExcise Dept)

2,396.33

351.27

707.43

313.4627.85

266.337.60 1,673.94

23.19473.17 496.36

4.51

26.862.69

17.83

0.09 51.98

TOTAL 2,222.28

20

As at As at31st March 2010 31st March 2009

SCHEDULE - F

DEFFERED TAX ASSETS As at As at31st March 2010 31st March 2009

SCHEDULE - G

CURRENT ASSETS As at31st March 2010 31st March 2009

SCHEDULE - E

Rupees in Lakhs

1. (At cost, unquoted & Non Trade) -Permanent - In Government Securities(National Saving Certificates/IVP) 0.04

0.040.04

TOTAL 0.04

Arising On account of timing difference in

- Leave encashment 7.01

- Bonus 0.50

- Depreciation 34.47

- Gratuity 33.81

75.79

8.650.50

29.2525.17

TOTAL 63.57

As at

INVESTMENTS

A) CURRENT LIABILITIESSundry Creditors:Total outstanding due to Micro & SmallEnterprises 120.62Total outstanding due to other Creditors 1,079.28Other Liabilities 1,341.51Unclaimed Dividend** 2.71 2,544.12

B) PROVISIONSFor Income Tax 132.00

Less: Advance Tax & TDS paid 120.94 11.06For Fringe Benefit Tax 4.00

Less: Advance Tax paid 4.00 -

Leave Encashment 20.62Group Gratuity 99.48Proposed Dividend 12.76Corporate Dividend Tax on above 2.17 135.03

2,690.21

** Amounts remaining unclaimed shall be credited to Investors’ Education & Protection Fund as andwhen the same falls due.

60.41927.13

1,481.222.69 2,471.45

100.2092.59 7.61

-- -

25.4674.0312.76

2.12 114.37TOTAL 2,593.43

21

LOANS & ADVANCES As at31st March 2010 31st March 2009

SCHEDULE - I

CURRENT LIABILITIES & PROVISIONS As at

31st March 2010 31st March 2009

SCHEDULE - H

Rupees in Lakhs

As at

(Unsecured & considered good)

a) Advances Recoverable in cash or in kindor for value to be received 102.69

b) Deposits

i) Earnest Money Deposit 14.02

ii) Others 412.99 427.01

c) Balance with Central Excise Department 759.36d) Balance with Sales Tax Department 102.55

e) Income tax refund receivable 9.49

1,401.10

629.23

3.84

543.07 546.91

458.18145.16

10.98

TOTAL 1,790.46

As at

22

SCHEDULE - J

For the year ended For the year ended31st March 2010 31st March 2009

SCHEDULE - K


Rupees in Lakhs

OTHER INCOME

0.75

4.67

19.90--

39.85TOTAL 65.17

Interest on deposit with bank and Financialinstitution-TDS Rs.0.19 lacs(PreviousYearRs0.01 lacs) 0.19Interest received from a customer(TDS Rs.nil Previous year Rs.3.97 lacs) 15.43Interest received on security deposit withKPTCL 10.55Profit on sale of Fixed Assets 1.04Gain on Foreign Exchange Fluctuation 0.07Miscellaneous income 12.43

39.71

(TDS 4.50 lacs, previous year Rs. Nil)

A) GROSS REVENUE3,896.63

10,808.52

14,705.15

1,009.98

TOTAL 13,695.17

i) Local Sales 7,316.12

ii) Deemed Export Sales 12,801.24

Sub Total 20,117.36

Less:Excise Duty 1,154.60

18,962.76

23

SCHEDULE - L

Rupees in Lakhs


COST OF PRODUCTION

A. RAW MATERIALS CONSUMED

498.11

20.19 518.30

8,484.57

9,002.87

707.4327.85 735.28

8,267.59

12.89

B. LABOUR & OTHER OVERHEADS

235.1514.55 249.70

219.969.74 229.70

38.33

1,244.211,961.02

68.8416.74 85.58

26.82255.98

1.583.140.08 4.80

TOTAL 12,376.62

OPENING STOCK:

Raw Materials 705.36

Foundry Returns 42.40 747.76

Add : Purchases 12,575.51

13,323.27

Deduct:CLOSING STOCK:Raw Materials 498.11Foundry Returns 20.20 518.31

12,804.96

Alloy Castings -

LABOUR:Wages 220.63Contribution to P. F. & Other Funds 13.66 234.29PRODUCTION STAFF:Salaries 197.39Contribution to P. F. & Other Funds 9.65 207.04Employee Welfare 53.08OTHER OVERHEADS:Stores Consumed * 1,654.70Power & Fuel 2,089.97Repairs to - Plant & Machinery 100.89

- Buildings 20.18 121.07Factory Maintenace 22.78Job charges 340.45Scientfic Research Expenditure:Material consumed 2.11Salaries 3.08Others 0.10 5.29

17,533.63

* Stores consumption includes Rs Nil (previous year Rs. 8.65 lacs) being the net block value of Plantdiscarded and used internally

24

SCHEDULE - N


SCHEDULE - M


Rupees in Lakhs

(INCREASE) /DECREASE IN VALUE OF:

52.37263.79 (211.42)

738.27313.46 424.81

4.752.55 2.20

TOTAL 215.59

i) FINISHED GOODSOpening Stock (Net of Excise) 77.94Closing Stock (Net of Excise) 52.37 25.57

ii) WORK IN PROGRESSOpening Stock 313.96Closing Stock 738.27 (424.31)

iii) EXCISE DUTY ON FINISHED GOODS:Opening Stock 12.22Closing Stock 4.74 7.48

(391.26)

ADMINISTRATIVE EXPENSES

55.421.299.583.518.29

10.942.355.156.44

14.670.90

1.200.300.300.400.50 2.70

27.005.730.89

14.17

TOTAL 169.03

Salaries 51.97Contribution to PF & Other Funds 1.33Contribution to Group Gratuity Fund 17.58Rent 3.49Rates & Taxes 4.53Insurance 11.87Office Upkeeping,Maintenance,Repairs etc., 5.03Printing & Stationery 7.23Telephone & Postage 6.24Travelling,Conveyance & Vehicle Maintenance 18.54Sitting Fees 0.90Auditors Remuneration:

Statutory Audit Fee 1.20Tax Audit Fee 0.30KVAT Audit fee 0.30For Tax Matters 0.40Certification Fee 0.63 2.83

Legal and Professional Charges 32.78Bank Charges 16.37Advertisement expenses 1.02Miscellaneuous expenses 8.27

189.99

Bad debts written off 3.41

Packing materials 379.04

Selling Expenses 6.69

Freight Outward 62.57

451.71

15.87

289.20

3.99

8.21

TOTAL 317.27

25

SCHEDULE - O


SCHEDULE - P

For the year ended31st March 2010

Rupees in Lakhs

48.58

15.02

-

TOTAL 63.60

Interest on Cash Credit / Packing Credit 88.06

Interest on term loans 23.55

Interest- others 10.71

122.32

For the year ended31st March 2009

SELLING & DISTRIBUTION EXPENSES

FINANCIAL CHARGES

26

SCHEDULE - Q

Significant Accounting Policies and Notes on Accounts for the year ended 31st March 2010.A. Significant Accounting PoliciesI. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS.

II. FIXED ASSETS:

III. DEPRECIATION

IV. INVESTMENTS

V. INVENTORY

VI. REVENUE RECOGNITION:

VII. EMPLOYEE BENEFITS :

The financial statements, unless specifically stated otherwise, have been prepared under the historicalcost convention in accordance with Indian generally accepted accounting principles and the provisions ofthe Companies Act 1956 as adopted consistently by the Company.

a) Land, Building and Plant and Machinery acquired up to 31st March 1989 are stated on the basis ofrevaluation and other fixed assets are stated at cost.

b) All direct costs and cost of financing relating to the specific borrowing attributable to the fixed assets arecapitalized and CENVAT credit / VAT credit availed/ available on the capital goods are deducted fromthe cost of the corresponding assets.

c) Profit / Loss on disposal of fixed assets are credited / charged, as the case may be, to Profit and LossAccount.

a) In respect of the assets acquired up to 31-03-1996, depreciation has been provided on straight-linemethod at the rates and in the manner stipulated under schedule XIV to the Companies Act 1956.

b) In respect of the assets acquired after , depreciation has been provided on written downvalue method at the rates and in the manner stipulated under schedule XIV to the Companies Act 1956.

c) Depreciation on incremental value on account of revaluation of Building and Plant & Machinery ischarged to revaluation reserve.

Investments held are classified as long term and carried at cost .However, provision for diminution in valueis made to recognize a decline other than temporary.

a) Finished Goods, Stock-in- process and foundry returns are valued at cost or net realizable valuewhichever is lower. Cost represents material cost, labour cost, and other appropriate overheads.Finished Goods are valued inclusive of excise duty.

b) Raw Materials, Stores & spares and other inputs are valued at cost or net realizable value whichever islower, cost being determined on weighted average method. However raw materials and other inputsheld for use in or in relation to production are not written down below cost if the finished products inwhich they will be used are expected to be sold at or above cost.

c) Excess / shortage, if any, arising on physical verification are absorbed in the respective consumptionaccounts.

Sales are recognized when goods are supplied and are recorded net of trade discounts, rebates andsales tax and inclusive of excise duty.

a) Defined Contribution plans:These are plans in which the company pays pre defined amounts to separate funds, and does not haveany legal or informal obligation to pay any additional sums. These comprise of defined contributionplans for employees comprising of government administered employees state insurance, providentfund and pension plans. The contribution paid / payable to these plans during the year is charged toprofit and loss account for the year on accrual basis.

b) Defined benefit plans:i) Gratuity: The Company makes contributions to the employees’ group gratuity-cum-life assurance

scheme of the Life Insurance Corporation of India. The net present value of the obligation for gratuitybenefits has been determined on actuarial valuation conducted annually by an independent Actuaryusing the projected unit credit method, as adjusted for un recognized past service cost , if any, and asreduced by the fair value of the plan assets, is recognized in the accounts. Actuarial gains and lossesfor the current year are recognized in full in the profit and loss account for the period in which theyoccur.

ii) Compensated absence: The Company has a scheme for compensate absence for employees. Theliability of which is determined on the basis of an actuarial valuation carried out by an independentactuary at the end of the year. The actuarial gains or losses are recognized in full in the profit and lossaccount for the period in which they occur.

iii) Short term employee benefit: All employee benefits which are wholly due within twelve months ofrendering the services are recognized in the period in which the employee renders the relatedservices.

31-03-1996

27

SCHEDULE - Q (Contd..)

VIII. RESEARCH AND DEVELOPMENT:

IX. FOREIGN CURRENCY TRANSACTIONS:

X. TAXATION

XI. IMPAIRMENT OF ASSETS:

XII. PROVISIONS AND CONTINGENT LIABILITIES:

XIII. EARNINGS PER SHARE:

Revenue expenses incurred on Research and Development are charged off to revenue in the year ofincurrence. Fixed assets purchased for Research and Development purposes are capitalized anddepreciated as per the Company's Accounting policy.

Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of thetransactions. Gains / losses resulting from the settlement of such transactions and from the translations ofmonetary assets and liabilities denominated in foreign currency as at the year end are recognized in theprofit and loss account.

:Tax on income for the current period is determined on the basis of taxable income estimated in accordancewith provisions of Income tax Act, 1961.Deferred tax asset is recognized for the future tax consequencesof the timing difference between the tax basis and the carrying values of assets and liabilities. Deferred taxassets are recognised only if there is virtual certainty that they will be realised in future and are reviewedevery year .The tax effect is calculated on the accumulated timing differences at the end of the year basedon enacted or substantively enacted tax rates.

In accordance with Accounting Standard (AS)-28,"Impairment of Assets", where there is an indication ofimpairment of the company’s assets related to cash generating units, the carrying amount of such assetsare reviewed at each balance sheet date to determine whether there is any impairment. The recoverableamount of such asset is estimated as the higher of its realizable value and its value in use. An impairmentloss is recognized in the Profit and Loss Account whenever the carrying amount of such assets exceeds itsrecoverable value.

Provisions in respect of present obligations arising out of past events are made in the accounts whenreliable estimates can be made of the amount of the obligations. Contingent liabilities, if material, aredisclosed by way of Notes to Accounts. Contingent Assets are neither recognized nor disclosed in thefinancial statements.

Basic earnings per share is arrived at based on net profit after taxation available to the equity shareholdersto the weighted average number of equity shares outstanding during the year. Diluted earnings per shareis calculated on the same basis as basic earnings per share after adjusting for the effects of potentialdilutive equity shares.

B. NOTES ON ACCOUNTS:Particulars 31.3.2010

556.373.827.60

Nil

Nil

NilNil

259,880

1.202008-2009

Rs. in Lakhs31.3.2009

1. Contingent liability to the extent not provided for In respect ofDisputed customs duty 556.37Disputed Income Tax 6.04Claims against the company not acknowledged as debt 7.60

2. Estimated amount of contracts remaining to be executedon account of capital expenditure to the extent notprovided for 150.48

3. Expenditure in foreign currency:Travelling expenses 0.54

4. The value of import on CIF basis:Raw materials NilPlant & Machinery Nil

5. Amount remitted in foreign currency on account of Dividend:Number of non resident share holders 2Number of shares held by them 59,880Amount of dividend 1.20Year for which dividend was remitted 2007-2008

(This information pertains to the non-resident shareholders by direct remittance)

9. Related party disclosures:Parties where control exists:

AIA Engineering Limited Controlled By Bhadresh K. Shah –Director

Bhadresh K. ShahPradip .R. Shah Director

Related Party Relationship:

Key Managerial Personnel :

Holding Company

Director

28


Rupees in Lakhs

Current Year Previous Year

Transactions withrelated parties

Holding Directors Holding DirectorsCompany

6. a. The method of determination of cost for the purpose of valuation of raw materials and stores andspares has been changed during the year from First – In – First Out method hitherto followed toweighted average cost method. Consequent to this change, the closing stock value of Raw materialsand profit for the year is increase by Rs.3.67 lakhs. The consequential impact due to this change withregard to stores and spares is not ascertainable, however such impact on the profit for the yearwould not be material in the opinion of the management.

b. The basis of valuation of stores and spares has been changed from cost hither to followed to cost ornet realizable value whichever is lower. However impact due to this change is nil, since thesematerials are not written down below cost in view of finished products in which these are inputs usedin or in relation to the manufacture of final products which is realizable above cost.

7. The company manufactures and deals with a single product, Alloy Steel Cast Grinding Media. AlsoCompany’s operations are solely situated in India. Hence there are no reportable segments asrequired by AS – 17 “Segment Reporting” prescribed under the Companies (Accounting Standards)Rules, 2006.

8. The company has not entered into any non cancelable lease arrangement.

Company

Purchases of Goods/Services 182.99 NIL 447.76 NILOther expenses NIL 1.33 NILSales of Goods 10 832.56 NIL 16,873.35 NILPurchases of fixed assets 79.54 NIL 164.76 NILSales of fixed assets NIL NIL 8.21 NILProfessional charges paid to

NIL 1.80 NIL 1.80Interest paid NIL NIL 10.71 NILDue to holding company as at lastdate of the financial year againstsupply / advances for supplies 1,288.03 NIL 1,291.61 NILLoans repaid NIL NIL 190.00 NIL

10. Earnings Per Share:

Previous Year

Net Profit for the Year Rs.: 226.92

Number of Shares 6,38,161

Nominal Value of each Share in Rs. 10/-

Earnings per Share (Basic and Diluted): 35.56

NIL

ParticularsCurrent Year

127.44

6,38,161

10/-

19.97

Pradip .R. Shah

Rupees in Lakhs

11. Disclosure pursuant to Section 22 of “The Micro, Small & Medium EnterprisesDevelopment Act 2006" is as follows: -

Particulars 31-03-2009

i) Principal amount remaining unpaid at the end of the year 120.62

ii) Interest accrued at the end of the yearInterest remaining unpaid, out of above, as at theend of the year 0.71

iii) Further interest remaining due and payable even in thesucceeding years, until such date when the interest dues asabove are actually paid to the small enterprise, For the purposeof disallowance as a deductible expenditure underSection 23 of the Act 1.45

Note: This information has been determined to the extent such parties have been identified on the basis ofinformation available with the Company.

12. Prior period expenditure:

Purchase of Stores & spares 0.05

Repairs to Plant & Machinery 1.24

1.29

31-03-2010

60.41

4.15

Nil

Nil

TOTAL Nil

2.70

2.70

31-03-2010

0.71

Nature of Expenses 31-03-2009

29


Rupees in Lakhs

Discount Rate (Per annum) 7.75% 7.25%Expected return on plan assets 8.00% 9.15%Salary escalation rate 6% 6%Mortality Rate LIC (1994-96)published table of rates

3 Reconciliation of Fair value of plan assetsFair value of plan assets at the beginningof the year 67.09 71.37 - -Expected return on plan assets 5.58 6.22 - -Actuarial gain / (Loss) 0.77 0.02 - -Contributions 9.58 10.30 2.61 4.94Benefits paid (4.32) (20.81) (2.61) (4.94)Assets distributed on settlement - - - -Fair value of plan assets at the end of the year 78.69 67. -

4. Net (Assets) / Liability recognized in the - - - -balance sheet as at year endof at the end of the year 152.72 166.5 25.46 20.63Fair value of plan assets at the end of the year 78.69 67. - -recognised as ( ssets) /Liability in the - - - -Balance Sheet. 74.03 99.4 25.46 20.63

5 Expenses recognised in the profit and lossaccount - - - -Current Service cost 9.26 10.91 5.57 5.49Interest cost 12.91 11.86 1.60 1.37Expected return on plan assets (5.58) (6.22) -Actuarial (Gain) / Loss recognised in theperiod (32.46) 1.03 0.27 (0.82)Past service costCurtailment ostSettlement ostTotal Expenses recognised in the profit andloss account for the year (15.87) 17.58 7.44 6.0Actual return on plan assets 5.58 6.2

The above disclosures are based on information certified by the independent acutuary and relied upon bythe auditors.

2. Reconciliation of present value of obligationPresent value of obligation at the beginningof the year 166.57 163.57 20.63 19.53Interest cost 12.91 11.86 1.60 1.37Current service cost 9.26 10.91 5.57 5.49Actuarial (gain) /Loss (31.69) 1.05 0.27 (0.82)Benefits Paid (4.32) (20.81) (2.61) (4.94)Curtailments - -Settlements - -Present value of obligation at theend of the year 152.72 166.58 25.46 20.63

10 -

Present valueobligation 8

10A

9

- - - -c - - - -

c - - - -

42 - -

13. As per revised Accounting Standard 15 “Employee Benefits”, the disclosures of Employee Benefits asdefined in the Accounting standard are given below:Employee benefits:

unfunded

i. Defined Contribution Plan For the year ended For the year ended31-03-2010 31-03-2009

ii. Defined Benefit plans: Gratuity -Funded Leave encashment

Contribution to Defined Contribution Plan,recognized as expense for the year are asunder:

Employer’s Contribution to Provident Fund 21.48 20.95Employer’s Contribution to Employee StateInsurance Scheme 4.10 3.68

Particulars

30


Rupees in Lakhs

1. Acturial assumptionsCurrent

YearPrevious

YearCurrent

YearPrevious

Year

14. Quantitative information in respect of goods manufactured / produced :Licensed capacity is not applicable in view of the Company’s products having been deliscensedas per the liscensing policy of the Government of India.

PARTICULARS As at 31st March 2010 As at 31st March 2009

Qty in MT Value Rs in Qty in MT Value Rs inLakhs Lakhs

Installed capacity as certified by theManagement:

Description of the product

ALLOY STEEL CAST GRINDING MEDIA

99 57.11 189 90.16

Own Production - Grinding Media 29,865 33,409Purchase of Finished Goods 40 22.21 533 334.00

29,404 13,695.17 34,032.00 18,962.76

600 266.33 99 57.11

a) Raw Materials Consumed

Melting Steel Scrap 23,796 4,237.03 27,659 6,419.72

Alloy 8,093 4,038.21 9,340 6,363.05

Alloy Castings 32 10.88 Nil Nil

b) Stores & Spares Consumed

Value 1,313.05 1,755.60Percentage 100% 100%

15. Figures for the previous year have been re-grouped and rearranged wherever necessary.

16. Schedules A to Q form an integral part of the accounts and have duly been authenticated.

17. Information pursuant to part IV of schedule VI to the Companies Act 1956

42,000 42,000(On triple shift basis per annum)

Melting Steel Scrap Nil Nil Nil Nil

Alloy Nil Nil Nil Nil

Melting Steel

Melting Steel

Value Nil NilPercentage 0% 0%

Opening Stock of Finished goods

Production

Turnover

Closing Stock of Finished goods

Raw Materials & Stores Consumed

Indigenous

Indigenous

Imported

Imported

Imported

Scrap 100% 100%Alloys 100% 100%

Scrap 0% 0%Alloys 0% 0%

Percentage-wise in terms of valueIndigenous

Percentage-wise in terms of value

31


32

SCHEDULE - Q

BALANCE SHEET ABSTRACT & COMPANY'S GENERAL BUSINESS PROFILEI. REGISTRATION DETAILS

Registration Number

State Code Balance Sheet Date

0 8 3 1 0 3 2 0 1 0

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

Public issue Rights Issue

N I L N I L

Bonus issue Private Placement

N I L N I L

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

Total Liabilities Total Assets

2 7 7 5 7 4 2 7 7 5

SOURCES OF FUNDS

Paid-up Capital Reserves & Surplus

6 3 8 4 2

Secured Loans

6 5 6 6 5

APPLICATION OF FUNDS

Net Fixed Assets Investments

1 2 9 2 8 2 4

N I L

C I N : L 2 7 1 0 4 K A 1 9 7 2 P L C 0 0 2 1 6 3

7 4

0 5 5 2 5

Unsecured Loans

N I L

Deferred Tax Liability

Net Current Assets

1 4 1 9 3 1

Misc. Expenditure

N I L

Deferred axT Assets

6 3 5 7

Accumulated Losses

N I L

A L L O Y S T E E L C A S T G R I N D I N G M E D I A

33


IV Performance of the Company (Amount in Rs. Thousands)

Turnover Total Expenditure

1 3 7 6 0 3 4 1 3 5

Profit before tax Profit after tax

2 3 5 2 6 1 2 7 4 4

Earning per share in Rs. Dividend Rate

1 9 . 9 7 2 0 %

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

Product Description

Item Code No.

7 3 2 5 9 1 0 0

S T E E L C A S T I N G S

2 5 0 8



P.MANOHARA GUPTA


DirectorsPartner


DAGLIYA & CO.

A CASH FLOW FROM OPERATING ACTIVITIESNET PROFIT BEFORE TAX AS PER PROFIT & LOSS A/C 235.28

-235.28

--

0.19362.75

63.60661.82

(217.12)(50.82)(93.28)300.60

(100.75)199.85

-

B. CASH FLOW FROM INVESTING ACTIVITIES(127.73)

-0.00

SUB TOTAL (127.73)C. CASH FLOW FROM FINANCING ACTIVITIES

(47.70)(63.60)(14.93)

(126.23)(54.11)106.10

51.99

378.58Adjusted forExtraordinary items: -Net Profit before tax & extraordinary items 378.58Adjustments for :Profit on sale of Fixed assets (1.04)Assets writen off 8.65Prior Year’s expenditure (1.29)Depreciation (net) 383.03Interest 122.32Operating Profit before working capital changes 890.25Adjustments for :Trade & Other Receivable 158.23Inventories (249.64)Trade Payable 696.52Cash generated from operations 1,495.36Direct Taxes paid (132.82)Cash flow before extraordinary items 1,362.54Extraordinary items -

Purchase of Fixed Assets (517.73)Sale of Fixed assets 6.50Sale of Investments 0.01

(511.22)

(Repayment)/ Proceeds of long term borrowings (625.35)Interest Paid (122.32)Dividend Paid (14.93)SUB TOTAL (762.60)Net (Decrease) / Increase in cash & cash equivalents (A+B+C) 88.73Cash & Cash equivalent at the beginning of the year 17.38Cash & Cash equivalent at the closure of the year 106.10

1,362.54SUB TOTAL 199.85

34

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010

2009-2010 2008-2009

For and on behalf of the Board

Chairman

DirectorsPlace : BangaloreDate :

Place : Bangalore As per our Report attachedDate : 20-05-2010 for

Chartered Accountants

PartnerM.NO.16444

Place : BangaloreDate : 20-05-2010

D.P.DHANUKA VINOD NARAINR.P.AGARWALBHADRESH K. SHAHPRADIP R. SHAH

DAGLIYA & CO.

P. MANOHARA GUPTA

20-05-2010

(FRN 000671S)

The above cash flow has been prepared under "indirect method" as set out in the AS 3 as cash flow statementprescribed under the companies (Accounting Standards) rules 2006.

Rupees in Lakhs

VEGA INDUSTRIES (MIDDLE EAST) F.Z.E., AJMAN

ANNUAL REPORT 2009-2010 BOARD OF DIRECTORS Mr. Bhadresh K. Shah Mr. Paryank R. Shah Mr. Jules Spede Mr. R. A. Gilani BANKERS Standard Chartered Bank P.O.Box 71241 DUBAI (U.A.E.) AUDITORS MOORE STEPHENS Chartered Accountants P.O.Box 28817, Dubai United Arab Emirates REGISTERED OFFICE Post Box No.4275 A1-314, Ajman Free Zone Ajman U.A.E.

VEGA INDUSTRIES (MIDDLE EAST) F.Z.E. - AJMAN

1 ANNUAL REPORT 2009-10

DIRECTORS’ REPORT The Member, Vega Industries (Middle East) F.Z.E. U.A.E. Your Directors have pleasure in presenting the Audited Annual Accounts of the Company of the for the year ended 31st March 2010. 1. FINANCIAL HIGHLIGHTS:

P a r t i c u l a r s

Year ended 31.3.2010 Rs. in Lacs


Turnover 45976.37 50305.82Profit before Interest and Depreciation 4604.26 3513.26Interest 0.03 0.27Depreciation 9.02 7.32Profit 4595.21 3505.67Surplus Brought forward from Previous Year

8462.51 4956.84

Balance Carried to Balance Sheet 13057.72 8462.51 2. REVIEW OF OPERATIONS:

During the year under review the Company has achieved a Turnover of Rs.45976.37 Lacs as against the Turnover of Rs.50305.82 Lacs during the previous year. Company earned a Net Profit of Rs.4595.21 Lacs as against Rs.3505.67 Lacs in the previous year.

3. ACQUISITION OF SHARES OF TUFSAN 295 (PROPRIETARY) LIMITED, SOUTH

AFRICA:

During the year under review, the Company has acquired 100% Shares of Tufsan 295 (Proprietary) Limited, South Africa. The name of the said Company was later on changed to Vega Steel Industries (RSA) Proprietary Limited, South Africa (VEGA RSA). By the acquisition of 100% Shares of VEGA SA, it has become a Wholly-owned Subsidiary of the Company.

4. AUDITORS:

The Auditors retires at the ensuing Annual General Meeting and are eligible for re-appointment.

5. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors hereby confirms that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have

been followed;



(ii) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31st March 2010 and the Profit and Loss Account for the year ended on that date;

(iii) the Annual Accounts have been prepared on a going concern basis. 6. ACKNOWLEDGMENT:

Yours Directors place on record the appreciation of the contribution made by employees of the Company at all levels.

Place : Ahmedabad Date : 29th May, 2010

For and on behalf of the Board Paryank R. Shah Bhadresh K. Shah

Director Director



MOORE STEPHENS Chartered Accountants

P.O.Box 28817, Dubai United Arab Emirates

Tel: 971 4 2820811 / 2820783 Fax : 971 4 2820812

E-mail : [email protected] AUDITORS’ REPORT TO THE SHAREHOLDERS OF VEGA INDUSTRIES (MIDDLE EAST) FZE, AJMAN Report on the financial statements We have audited the accompanying financial statements of Vega Industries (Middle East) FZE., Ajman Free Zone, Ajman (“the Establishment”) which comprise the balance sheet as at 31 March 2010 and the income statement, statement of changes in shareholders’ fund and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 2 to 14.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and maintaining accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgments, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion

In our opinion, the financial statements, present fairly, in all material respects the financial position of Vega Industries (Middle East) FZE, Ajman Free Zone, Ajman, (“the Establishment”) as of 31 March 2010, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

MOORE STEPHENS

CHARTERED ACCOUNTANTS

A. Nandakumar Registration No.340

Dubai

12 May 2010



TO THE BOARD OF DIRECTORS OF VEGA INDUSTRIES (MIDDLE EAST) FZE. Ajman Free Zone, Ajman.

1. We have performed the procedures agreed with you enumerated below with respect to translation and reformatting of the accompanying Balance Sheet of Vega Industries (Middle East) FZE as at March 31, 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on the date. Our engagement was undertaken in accordance with the Auditing and Assurance Standard on Engagements to Perform Agreed-Upon Procedures regarding Financial Information, issued by the Institute of Chartered Accountants of India. In performing the procedures, we have relied upon the financial statement in United State Dollar (‘USD’) originally audited by the Statutory Auditors of the Company.

2. The financial statements in United State Dollar (‘USD’)) originally audited by the statutory Auditors of the Company for the year ended at March 31, 2010.

3. The financial statement in Rupee (‘INR’) currency have been prepared by the Company’s management on the basis stated below and reformatted in accordance with the requirement of the Companies Act, 1956. The said financial statements have been approved by the Board of Directors.

a. All income and expenses at the average rate of exchange prevailing during the year.

b. Assets and Liabilities at the closing rate on the Balance Sheet date. c. Share Capital at historical rate. d. The resulting exchange difference in the Balance Sheet is accumulated in ‘Foreign

Currency/Translation Reserve’.

4. In relation to the financial statements prepared by the management, the following procedures were performed by us:

a. Reviewing the translation of the audited financial statements from USD into INR on the basis stated in the foregoing paragraphs and

b. Reviewing the reformatting of the audited financial statements as per the requirements of Companies Act, 1956.

5. We report that the financial statements as audited in USD by the statutory auditors, have

been translated in INR on the basis stated in paragraph 3 above and such translated financial statements are presented in accordance with the requirements of the Companies Act, 1956

6. The above procedure does not constitute an audit and accordingly, we do not express any opinion on the financial statements.

7. This report is issued to comply with the provisions of the Companies Act, 1956.

For TALATI &TALATI Chartered Accountants (Firm Reg.No. 110758W) Place : Ahmedabad (Anand Sharma) Date : 29th May, 2010 PARTNER Membership No. 129033

B/S 50.8689 B/S 44.9350P&L 46.4319 P&L 47.1878

BALANCE SHEET AS AT 31st MARCH, 2010

Schedule Rs. In Lacs US Dollars Rs. In Lacs US DollarsSOURCES OF FUNDS 1. SHAREHOLDERS' FUNDS :

(a) Share Capital 1 149.39 325,000 149.39 325,000

(b) Reserves and Surplus 2 12,951.72 28,830,454 9727.13 19,092,320

13,101.11 29,155,454 9876.52 19,417,320

2. LOAN FUNDS :

(a) Secured Loans 3 - - 0.13 249

- - 0.13 249

= T O T A L : 13,101.11 29,155,454 9876.65 19,417,569


1. FIXED ASSETS :

(a) Gross Block 4 46.50 103,186 29.81 66,058

(b) Less : Depreciation 30.99 68,918 22.40 49,813

= Net Block 15.51 34,268 7.41 16,245

2. INVESTMENTS 5 150.26 334,389 170.09 334,375

3. CURRENT ASSETS, LOANS AND

ADVANCES : 6

( a ) Inventories 1185.74 2,638,779 2361.47 4,642,265

( b ) Sundry Debtors 13782.80 30,672,757 9559.04 18,791,519

( c ) Cash and Bank balances 4067.18 9,051,260 2376.29 4,671,406

( d ) Loans and Advances 950 11 2 114 406 1046 71 2 057 657


As at As at

31st March, 2009 31st March, 2010

( d ) Loans and Advances 950.11 2,114,406 1046.71 2,057,657

19,985.83 44,477,202 15343.51 30,162,847

Less : CURRENT LIABILITIES AND

PROVISIONS : 7

( a ) Current Liabilities 6,809.16 15,153,346 5332.93 10,483,681

( b ) Provisions 241.33 537,059 311.43 612,217

7,050.49 15,690,405 5644.36 11,095,898

= NET CURRENT ASSETS 12,935.34 28,786,797 9699.15 19,066,949

= T O T A L : 13,101.11 29,155,454 9876.65 19,417,569

0.00 0.01 0.00

Notes forming part of the Accounts 16

As per our report of even date attached.For and on behalf of For and on behalf of the BoardTALATI & TALATI


ANAND SHARMA Paryank R Shah Bhadresh K Shah

Partner Director Director

Place : Ahmedabad Place : Ahmedabad Date : 29th May, 2010 Date : 29th May, 2010



PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2010

Schedule Rs.In Lacs US Dollars Rs.In Lacs US Dollars

INCOME :-

Sales 8 45976.37 97,432,755 50305.82 108,343,220

Other Income 9 1219.01 2,583,326 276.57 595,655

Increase / Decrease (+/-) in Stock 10 (945.40) (2,003,486) 2,155.49 4,642,265

= T O T A L : 46249.98 98,012,595 52737.88 113,581,140

EXPENDITURE :-

Purchases & Other Expenses 11 40188.78 85,167,744 47086.46 101,409,714

Employees emoluments 12 178.02 377,272 336.36 724,411

Administrative and Other Expenses 13 319.58 677,263 535.59 1,153,473

Selling & Distribution Expenses 14 959.34 2,033,017 1266.21 2,727,006

Interest Expenses 15 0.03 60 0.27 576

Depreciation 4 9.02 19,105 7.32 15,772 = T O T A L : 41654.77 88,274,461 49232.21 106,030,952

PROFIT BEFORE TAXES 4595.21 9,738,134 3505.67 7,550,188

PROVISION FOR TAXES

PROFIT AFTER TAXES 4595.21 9,738,134 3505.67 7,550,188

Surplus Brought forward from Previous year 8462.51 19,092,320 4956.84 11,542,132

Balance carried to Balance Sheet 13057.72 28,830,454 8462.51 19,092,320

Basic Earnings per share( Face Value of USD 10 each ) 14,139.12 299.63 10,786.67 232.31


As per our report of even date attached.

Year ended

31st March, 2010

Year ended

31st March, 2009

For and on behalf of For and on behalf of the Board

TALATI & TALATI


Paryank R Shah Bhadresh K Shah

ANAND SHARMA Director Director

Partner Place : Ahmedabad Place : Ahmedabad

Date : 29th May, 2010 Date : 29th May, 2010


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010

2010 2010( Rs.In Lacs) (US Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the year 4,595.21 9,738,134 Add : Depreciation 9.02 19,105

Operating profit before working capital changes 4,604.23 9,757,239

(Increase) in accounts and other receivables (5,320.08) (11,839,503)Decrease / (increase) in inventories 900.27 2,003,486 Increase in accounts and other payables 2,015.55 4,485,480 Increase / (decrease) in employee terminal benefits 4.74 10,543 Difference due to Exchange Rate for Translation (219.81) -

Net cash / (used in) operating activities 1,984.89 4,417,245

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of furniture and equipment (16.68) (37,128)Proceeds from sale of furniture and equipment (0.01) (14)Net cash (used in) investing activities (16.69) (37,142)

CASH FLOWS FROM FINANCING ACTIVITIESIncrease / (decrease) in margin money deposits 44.95 100,031 (Decrease) in motor vehicle loan (0.11) (249)

Net cash (used in) financing activities 44.84 99,782

Net increase/ (decrease) in cash and cash equivalents 2,013.04 4,479,885 during the yearCash and cash equivalents at beginning of the year 1,976.87 4,399,406

Cash and cash equivalents at end of the year 3,989.91 8,879,291

Cash and cash equivalents comprise of :-Bank balance and cash 4,067.18 9,051,260 Margin money deposits under lien (77.27) (171,969)

3,989.91 8,879,291 Note: Cash flow is translated at the closing rate as on the balance sheet date.

0.00

'8


ANNUAL REPORT 2009-10


SCHEDULES 1 TO 8 FORMING PART OF THE BALANCE SHEET AS AT 31st MARCH 2010

SCHEDULE : 1 SHARE CAPITAL

Rs.In Lacs US Dollars Rs.In Lacs US Dollars

AUTHORIZED :50,000 Shares of US Dollars 10 each)

(Previous Year 50000 Shares) 229.83 500,000 229.83 500,000

= T O T A L : 229.83 500,000 229.83 500,000

ISSUED, SUBSCRIBED & PAID UP :

32500 Shares of US Dollars 10 each 149.39 325,000 149.39 325,000

(Above shares are held by

AIA Engineering Ltd. - Holding Company )

( Previous year 32500 Shares )

= T O T A L : 149.39 325,000 149.39 325,000

SCHEDULE : 2 RESERVES AND SURPLUS


Profit and Loss Account 13057.72 28,830,454 8462.51 19,092,320

Exchange Reserve (102.76) 1,249.53

Translation Reserve (3.24) 15.09

31st March, 2010

As at


As at

31st March, 2009

As at As at

Translation Reserve (3.24) 15.09

= T O T A L : 12951.72 28,830,454 9,727.13 19,092,320

SCHEDULE : 3 SECURED LOANS


Vehicle loan from Bank - Car loan 0.00 - 0.13 249

= T O T A L : 0.00 0 0.13 249

As at As at



SCHEDULE : 4 FIXED ASSETS IN USD

SR. NAME OF THE AS AT ADDITIONS SALES / AS AT AS AT FOR THE NET AS AT AS AT AS ATNO. FIXED ASSETS 01-04-2009 ADJUSTMENTS 31-03-2010 01-04-2009 YEAR ADJUSTMENT 31-03-2010 31-03-2010 31-03-2009

A Office Equipment 10,085 3,603 13,688 8,173 2,706 10,879 2,809 1,912 B Computer 23,000 5,900 28,900 16,425 6,686 23,111 5,789 6,575 C Furniture & Fixtures 11,584 771 12,355 9,040 3,033 12,073 282 2,544 D Automobiles 21,389 26,854 48,243 16,175 6,680 22,855 25,388 5,214

= GRAND TOTAL 66,058 37,128 - 103,186 49,813 19,105 - 68,918 34,268 16,245 60,195 5,863 ‐ 66,058 34,041 15,772 ‐ 49,813 16,245 26,154

PL 47.1878 50.8689 b/s 44.9350 46.4319

SCHEDULE : 4 FIXED ASSETS Rs. In Lacs

SR. NAME OF THE AS AT ADDITIONS SALES / AS AT AS AT FOR THE NET AS AT AS AT AS ATNO. FIXED ASSETS 01-04-2009 ADJUSTMENTS 31-03-2010 01-04-2009 YEAR ADJUSTMENT 31-03-2010 31-03-2010 31-03-2009

A Office Equipment 4.51 1.62 - 6.13 3.60 1.28 0.06 4.82 1.31 0.91 B Computer 10.36 2.65 - 13.01 7.22 3.15 0.15 10.22 2.78 3.13 C Furniture & Fixtures 5.00 0.35 - 5.35 3.97 1.43 0.07 5.33 0.02 1.04 D Automobiles 9.94 12.07 - 22.01 7.61 3.15 0.15 10.61 11.39 2.33

= GRAND TOTAL 29.81 16.68 - 46.50 22.40 9.02 0.43 30.99 15.51 7.41

VEGA INDUSTRIES (MIDDLE EAST) FZE, AJMAN

PRIVIOUS YEAR

G R O S S B L O C K D E P R E C I A T I O N N E T B L O C K



SCHEDULE : 5 INVESTMENTS ( AT COST )


LONG TERM TRADE INVESTMENT IN

SUBSIDIARY COMPANIES : 10000 Equity Shares of Vega Industries UK . of GBP 1/- each fully paid up ( Previous year 10000 Equity Shares ) 150.25 334,375 170.09 334,375 100 Ordinary Shares of R-1 each 0.01 14 - -

= T O T A L : 150.26 334,389 170.09 334,375

INVESTMENT #REF! 139

SCHEDULE : 6 CURRENT ASSETS , LOANS AND ADVANCES


CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)

Finished Goods 1,185.74 2,638,779 2,361.47 4,642,265

B. SUNDRY DEBTORS

(Unsecured, Considered Good)

a). Debts outstanding for a period exceeding six

months

b). Others / Trade Debtors 13782.80 30,672,757 9559.04 18,791,519

C. CASH AND BANK BALANCES

As at

31st March, 2009

As at As at

As at

31st March, 2010


a). Cash on hand 0.19 416 0.52 1,021

b). Balance with Scheduled Banks

In Current Accounts 4066.99 9,050,844 2375.77 4,670,385

4067.18 9,051,260 2376.29 4,671,406

LOANS & ADVANCES :

(Unsecured , Considered Good)

A). Advances recoverable in cash or in kind or for

value to be received 937.75 2,086,905 1031.47 2,027,704

B). Sundry Deposits and Advances 12.36 27,501 15.24 29,953

950.11 2,114,406 1046.71 2,057,657

= T O T A L : 19985.83 44,477,202 15343.51 30,162,847



SCHEDULE : 7 CURRENT LIABILITIES AND PROVISIONS


CURRENT LIABILITIES :

a) Sundry Creditors for goods 5548.18 12,347,126 3133.34 6,159,642

b) Sundry Creditors for expenses 1259.64 2,803,243 1564.90 3,076,343

c) Other Liabilities 1.34 2,977 634.69 1,247,696

d) Bank Overdraft 0.00 - 0.00 -

6809.16 15,153,346 5332.93 10,483,681

PROVISIONS :

Provision for Expenses 241.33 537,059 311.43 612,217

= T O T A L : 7050.49 15,690,405 5644.36 11,095,898

SCHEDULES 8 TO 15 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

YEAR ENDED 31st MARCH 2010

SCHEDULE : 8 SALES


Sales 45976.37 97,432,755 50305.82 108,343,220

= T O T A L : 45,976.37 97,432,755 50,305.82 108,343,220

SCHEDULE 9 OTHER INCOME


31st March, 2009

For the year ended

As at As at

For the year ended

31st March, 2010

SCHEDULE : 9 OTHER INCOME


1. Excess provision for expenses writtern off 13.04 27,636 103.59 223,111

2. Miscellaneous Receipts 1154.65 2,446,925 172.98 372,544

3. Exchange Rate Fluctuation Difference 51.32 108,765 - -

= T O T A L : 1219.01 2,583,326 276.57 595,655

SCHEDULE : 10 INCREASE / (DECREASE) IN STOCK


Closing Stock : Finished Goods 1,245.18 2,638,779 2155.49 4,642,265

Less :

Opening Stock : Finished Goods 2,190.58 4,642,265 -

= T O T A L : (945.40) (2,003,486) 2,155.49 4,642,265

31st March, 2009

For the year ended

31st March, 2009

For the year ended

31st March, 2010

For the year ended

31st March, 2010

For the year ended



SCHEDULE : 11 PURCHASES & OTHER EXPENSES


OPERATIONAL AND OTHER EXPENSES

1. Trading purchases 40188.78 85,167,744 47086.46 101,409,714

= T O T A L : 40188.78 85,167,744 47086.46 101,409,714

SCHEDULE : 12 EMPLOYEES EMOLUMENTS


1. Salaries, Wages and Bonus 174.81 370,465 308.49 664,382

2. Contribution to Social Security 0.35 746 13.18 28,389

3. Staff Welfare Expenses 2.86 6,061 14.69 31,640

= T O T A L : 178.02 377,272 336.36 724,411

SCHEDULE : 13 ADMINISTRATIVE AND OTHER EXPENSES


1. Insurance Premium Expenses 4.95 10,481 5.93 12,764

2. Rent, Rates and Taxes 29.66 62,865 20.24 43,600

3. Directors' Remuneration and Perquisites 66.64 141,226 165.60 356,655

For the year ended

31st March, 2009

For the year ended

31st March, 2009

31st March, 2010

For the year ended

31st March, 2010

For the year ended

31st March, 2010

For the year ended

31st March, 2009

For the year ended

4. Statutory Audit Fees 3.92 8,299 2.57 5,537

5. Legal and Professional Consultancy Fees 41.59 88,146 171.11 368,524

6. Bank Commission Charges 74.98 158,907 64.80 139,552

7. Printing and Stationery Expenses 2.33 4,936 2.80 6,022

8. Postage,Telephones,Courier,Internet & E-mail 51.93 110,059 45.80 98,638

9. Computer Expenses 1.20 2,535 0.71 1,524

10. Repairs and Maintenance 3.88 8,225 1.99 4,278

11. Conveyance Expenses 0.10 217 5.61 12,076

12. Advertisment Expenses 0.32 668 0.07 148

13. Conference & seminar Expenses 1.59 3,377 0.48 1,030

14. Sales tax / other taxes 5.13 10,869 6.22 13,392

15. Office Expenses 3.79 8,037 1.12 2,413

16. General / Miscellaneous Expenses 27.57 58,416 40.54 87,320

= T O T A L : 319.58 677,263 535.59 1,153,473



SCHEDULE : 14 SELLING & DISTRIBUTION EXPENSES


1. Freight Outward and Coolies, Cartages 0.00 - 15.46 33,291

2. Commission Expenses 614.38 1,301,984 572.84 1,233,719

3. Travelling Expenses 315.90 669,449 288.27 620,849

4. Sales Promotion Expenses 29.06 61,584 12.13 26,117

6. Exchange Loss - - 377.51 813,030

= T O T A L : 959.34 2,033,017 1266.21 2,727,006

SCHEDULE : 15 INTEREST EXPENSES


1. To Bank 0.03 60 0.27 576

= T O T A L : 0.03 60 0.27 576

Year ended

31st March, 2009

For the year ended

31st March, 2009

Year ended

31st March, 2010

For the year ended

31st March, 2010




SCHEDULE - 16 - NOTES TO THE FINANCIAL STATEMENTS at 31 MARCH 2010 A. GENERAL INFORMATION

The financial statements of Vega Industries (Middle East) F.Z.E., Ajman for the accounting year ended 31st March, 2010, being a Free Zone Establishment incorporated under the Ajman Free Zone Authority Offshore Companies Regulations 2003 of the United Arab Emirates, are audited by Moore Stephens, Chartered Accountants, Dubai and we have been furnished with their audit report dated 12th May, 2010. The principal activity of the Company is that of trading and distribution of grinding media and related items.

The financial statements of Vega Industries (Middle East) F.Z.E., Ajman are presented in Indian Rupees duly converted, on the basis of aforesaid audit report to comply with the requirements of Section 212 of the Companies Act, 1956. The Company is a wholly owned subsidiary of AIA Engineering Limited. The accounts have been prepared and audited for the purpose of attachment to the accounts of the Holding Company to comply with the provisions of the Indian Companies Act, 1956. Vega Industries (Middle East) F.Z.E., Ajman is not a “Company” as defined in the Companies Act, 1956. The auditors have not included the matters specified in paragraph 4 & 5 of Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956 as the order is applicable only to the ‘Company’ in terms of clause 2 of Paragraph 1.

B. SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and presentation of the Accounts: 1. Basis of preparation

These ‘separate’ financial statements are prepared by management for local reporting purposes. Financial statements consolidating the Establishment and its subsidiaries are prepared separately by the ultimate holding company in India. Statement of Compliance These financial statements have been prepared in accordance with the new and revised International Financial Reporting Standards (IFRS) and issued by the International Accounting Standards Board (IASB) and the Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB. The financial statements have been prepared in US Dollars The accounting policies adopted have been consistently applied in dealing with items considered material to the Establishment’s financial statements.

Basis of measurement The financial statements are prepared under the historical cost convention, modified to incorporate the movements on carrying values of assets and liabilities except for investments which are stated at cost.



2. Changes in Accounting Policies:

In the current year, the establishment has adopted all applicable new and revised Standards and Interpretations issued by IASB and the IFRIC that are effective for accounting periods beginning on or after 1 January 2009.

• The following accounting standards, in particular, have resulted in revised

disclosure requirements for the current period.

• Amendments to IAS 1 ‘Presentation of Financial Statements” primarily require the following disclosures :

‘Balance Sheet’ and Cash Flow statement’ to be described as ‘Statement of Financial Position’ and ‘Statement of Cash Flows’ respectively (optional amendments); All owner changes in equity should be presented in the statement of changes in equity separately from non-owner changes in equity, which are presented in the statement of comprehensive income.

There have been other amendments issued by IASB as part of its annual improvements project in the year 2008 that are applicable for accounting periods commencing 1 January 2009. While part I of these amendments deal with accounting changes for presentation, recognition or measurement purposes. Part II which contains amendments that are terminology or editorial changes only, is expected to have no or minimal effect on accounting. Certain amendments to existing standards have been published that are effective and mandatory for accounting periods commencing on or after 1 July 2009 (earlier application permitted), which the management have decided to adopt from the applicable periods. The amendments likely to be relevant to the establishment are as follows: • Amendments to IAS 24 ‘Related party disclosures ‘ has simplified the definition of

a related party and clarified its intended meaning and eliminated inconsistencies from the definition. An entity shall apply this IFRS for annual periods beginning on or after 1st January 2011, though earlier application is permitted.

• IFRS 9 ‘ Financial Instruments’ that has been issued partially in November 2009 will eventually replace IAS 39 ‘ Financial Instruments’ ‘Recognition and Measurement ‘. The Standard issued in November 2009, relates to the classification and measurement of financial assets. An entity shall apply this IFRS for annual periods beginning on or after 1st January 2013, though earlier application is permitted.

3) a) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the

average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.

The Share Capital is carried forward at the rate of exchange prevailing on the

transaction date. The resulting exchange difference on account of translation at



the year end is transferred to Translation Reserve Account and the said account is being treated as “Reserve and Surplus”.

b) FIXED ASSETS AND DEPRECIATION

Furniture and equipment are initially recorded at cost together with any incidental expenses of acquisition. Subsequently they are stated at cost less accumulated depreciation and accumulated impairment losses

c) DEPRECIATION

The cost of Furniture and equipment is depreciated by equal annual installments over the estimated useful lives of the assets. The estimated useful lives of the assets for the calculation of depreciation are as follows:

Years Furniture and fixtures 4 Office equipment 4 Computers 4 Motor vehicles 4 d) REVENUE RECOGNITION

Revenue represents the invoiced value of goods sold during the year net of discounts and returns.

e) TRADE AND OTHER DEBTORS

Accounts receivables originated by the Establishment are measured at cost. An allowance for credit losses of accounts receivable is established when there is objective evidence that the Establishment will not be able to collect the amounts due. Indicators that the accounts receivable are impaired include consistent default in the payments when due in accordance with the terms of the arrangement with the customer, financial difficulties of the customer and other indicators. When an accounts receivable is considered uncollectible, it is written off against the allowance account for credit losses. Subsequent recoveries of amounts previously written off are credited in the statement of income. The carrying value of accounts receivable approximate to their fair value due to the short term nature of those receivables.

f) TRADE AND OTHER CREDITORS

Liabilities are recognized for amounts to be paid in the future for goods or services received, whether or not billed to the Establishment.

g) FOREIGN CURRENCY TRANSACTIONS Functional and presentation currency

The financial statements are presented in US Dollar (USD), which is the Establishment’s functional and presentation currency.



Transaction and balances

Transactions in foreign currencies are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with in the income statement.

h) IMPAIRMENT OF ASSETS.

Financial assets At each balance sheet date, the Establishment assesses if there is any objective evidence indicating impairment of financial assets or non collectability of receivables. An impairment loss, if any, arrived at as a difference between the carrying amount and the recoverable amount, is recognized in the statement of income. The recoverable amount represents the present value of expected future cash flows discounted at original effective interest rate. Cash flows relating to short term receivables are not discounted. Non financial assets At each balance sheet date, the Establishment assesses if there is any indication of impairment of non financial assets. If an indication exists, the Establishment estimates the recoverable amount of the asset and recognizes an impairment loss in the statement of income. The Establishment also assesses if there is any indication that an impairment loss recognized in prior years no longer exists or has reduced. The resultant impairment loss or reversals are recognized immediately in the statement of income.

i) INVENTORIES

Inventories are valued at the lower of the cost or net realizable value, after making due allowance for any obsolete or slow moving items. Cost of determined on weighted average cost basis and consists of aggregate of purchase price and other related expenses incurred to bring the inventories to their present location and condition.

j) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of unrestricted cash, bank balances and bank borrowings.

k) FINANCIAL LIABILITIES

All financial liabilities are initially measured at cost and are subsequently measured at amortized cost.

l) FINANCIAL INSTRUMENTS Financial instruments are recognized in the statement of financial position when the Establishment becomes a party to the contractual provisions of the



instrument. In case 0f financial instruments that are measure in the statement of financial position at fair value, the disclosure of fair value measurement by level of the following fair value measurement hierarchy have been made:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities ( Level 1)

• Inputs other than quoted prices included in Level1 that are observable for the assets or liability, either directly (the prices) or indirectly (derived from prices) (Level2)

• Inputs for the assets or liability that are not based on observable market data (that is unobservable inputs) (Level3).

m) CONTINGENT LIABILITIES AND CONTINGENT ASSETS

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Establishment. It can also be a present obligation arising from the past events that is not recognized because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. Contingent liabilities are not recognized but are disclosed in the notes of the accounts. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognized as provision. A contingent asset is possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Establishment. Contingent assets are not recognized but are disclosed as notes to the accounts when a inflow of economic benefits is possible. When in flow is virtually certain, an asset is recognized.

n) SIGNIFICANT ACCOUNTING ESTIMATES The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are: Impairment of accounts receivable and due from related parties An estimate of the collectible amount of trade accounts receivable and amount due from related parties is made when the collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amount which are not individually significant, but which are past due, are assessed collectively and an allowance applied according to the length of time past due, based on historical recovery rates. Any difference between the amounts actually collected in future periods and the amounts expected to be collected will be recognized in the statement of comprehensive income.



D. NOTES ON ACCOUNTS

1. The transactions are in local currency (US Dollars), which have been converted into Indian Currency (Indian Rupees) for reporting and the rate applied is as per Para 3(a) of the significant accounting policies.

2. INVESTMENT IN SUBSIDIARY

Investment in subsidiary is carried at cost. Subsidiary is the company in which the Establishment, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations. Income from investment is recognized when the right to receive income is established.

3. RELATED PARTY TRANSACTIONS

The Establishment has, entered into transactions during the year with Shareholders, directors and with companies in which certain of the shareholder has an interest. The amounts due to and from related parties do not attract interest and are payable on demand.

(i ) Subsidiaries : 1 Vega Industries Ltd., U.K. 2 Vega Industries Ltd., U.S.A. 3 Vega Steel Industries (RSA)(Proprietary) Ltd.

ii) Holding Company : (iii) Key Management Personnel :

AIA Engineering Ltd. 1 Mr. Paryank R. Shah ( Director) 2 Mr. Bhadresh K. Shah 3 Mr. R.A.Gilani

The significant related party transactions during the year are as follows:

Holding company Subsidiaries Key Management Personnel

2010 US Dollars

2010 INR(In lacs)

2010 US Dollars

2010 INR (In lacs)

2010 US Dollars

2010 INR(In lacs)

Sales - - 34225758 16150.38 - -Purchases 70439607 33238.90 - - - -Accounts Payable

12250884 5504.93 - - - -

Director’s remuneration

- - - - 158967 75.01

Accounts Receivables

- - 17453462 7842.71 - -

Management Fees

- - 403399 190.36 - -

GRAND TOTAL 82690491 38743.83 52082619 24183.45 158967 75.01

SD=47.1878



4. FINANCIAL RISK AND CAPITAL MANAGEMENT

Financial assets of the Establishment includes trade accounts receivable, deposits, advances, amounts due from related parties and bank balances and cash. Financial liabilities include trade accounts payable, amount due to related parties and accruals. The management believes that the fair values of the financial assets and liabilities approximate to their carrying amount.

The Establishment’s financial risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects of the financial performance. Under the Establishment’s financial management programme, the management identifies and documents key risks and sets out policies and procedures required to mitigate these risks. The identified key risks are: Credit risk The Establishment has no significant concentrations of credit risk. It has policies in place to ensure that sales of services are provided to customers with an appropriate credit history. Cash is placed with high quality and established commercial banks.

Currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to Euros. Foreign exchange risk arises from future commercial transactions and assets and liabilities denominated in foreign currencies. The exchange differences are reported as part of the results for the year.

Liquidity risk The Establishment manages its liquidity risk by ensuring it has sufficient liquid cash balances to meet its payment obligations as they fall due. The Establishment maintains good working relations with its banks and ensures compliance with the covenants as stipulated in facility agreements.

5. Capital Management

The Establishment’s objectives when managing capital are to safeguard entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders by pricing products and services commensurately with the level of risk. The Establishment sets the amount of the funds in accordance with the planned level of operations and in proportion to the levels of risk. The Establishment manages the shareholders’ funds and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the shareholders, return funds to shareholders, issue new shares, or sell assets to reduce its exposure to debt.



6. EMPLOYEES’ TERMINAL BENEFITS

The provision for end of service benefits for employees is required to be made in accordance with the provisions of the U.A.E. Labour Laws. This is an unfunded defined benefits retirement plan. Employees are entitled to benefits based on the length of service and final remuneration. Accrued employees’ terminal benefits are payable on termination of employment. The cost of providing these benefits is charged as an expenses on an annual basis and the charge for the year ended 31 March 2010 amounted to USD 16701 (Rs. 7.88 lacs) and for 2008 USD 27535 ( Rs.12.79 lacs ).

7. CONTINGENT LIABILITIES AND COMMITMENTS

1USD=Rs.44.9350 2010

US Dollars

2010 INR

(in lacs)

2009 US

Dollars

2009 INR

(in lacs) Bank performance bonds and guarantees

857367 385.26 1194348 607.56

8. COMPARATIVE FIGURES

The previous year’s figures are regrouped or reclassified wherever necessary to conform to the current year’s presentation.

9. Earnings per Share (EPS) – The numerators and denominators used to calculate

Basic Earnings per Share:

2009-10 (Rs.)

Profit attributable to the Equity Shareholders (Rs.) (A) 459521120Basic / Weighted average number of Equity Shares outstanding during the year( Of USD 10 each) - (B) 32500Basic/Diluted Earnings per Share (Rs.) (A)/(B) 14139.12



9. Additional Information pursuant to the provisions of Part-IV of Schedule VI of the Companies Act,1956. Balance Sheet abstract and Company’s General Business Profile:

I. Registration Details:

Registration No.: N.A. State Code : N.A. Balance Sheet Date : 31-03-2010 II. Capital raised during the year (Amount in Rs. Thousands):

Public Issue: NIL Right Issue : NIL Bonus Issue: NIL Private Placement: NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands):

Total Liabilities 1310111 Total Assets 1310111Source of Funds Paid up Capital

14939 Application of Funds Net Fixed Assets

1551

Reserve & Surplus 1295172 Investments 15026Secured Loans 0 Net Current Assets 1293534Unsecured Loans 0.00 Deferred Tax Liabilities (Net)

0.00

IV. Performance of the Company (Amount in Rs. Thousands):

Turnover 4597637 Total Expenditure 4165477Profit Before Tax 459521 Profit After Tax 459521Earnings per Share (In Rupees)

1413912 Dividend Rate NIL

V. Generic Names of the Three Principal Products/Services of the Company (As per

Monetary Terms):

Item Code No. (ITC Code) (1) 73269013 (2) 7626990990

Product Description (1) Grinding Media Balls & cylpebs (2) Other Cast Articles of Iron & Steel

Signature to Schedule 1 to 16

As per our Report of even date attached. For and on behalf of For and on behalf of the Board TALATI & TALATI, Chartered Accountants (ANAND SHARMA ) Paryank R Shah Bhadresh K Shah Partner Director Director Place : Ahmedabad Date : 29th May 2010

VEGA INDUSTRIES LIMITED, U.K.

ANNUAL REPORT 2009-2010 BOARD OF DIRECTORS Mr. Bhadresh K. Shah Mr. Paryank R. Shah AUDITORS Atkins & Partners Chartered Accountants 34 Brent House 214 Kenton Road, Harrow Middlesex HA3 8BT REGISTERED OFFICE Suit 3, 1st Floor Congress House 14 Lyon Road Harrow, Middlesex HA1 2EN BANKERS HSBC Bank plc 184 High Street Bromley, Kent BR1 1HE Emirates NBD Bank (PJSC) Baniyas Road, Deira P.O. Box 777 Dubai ,UAE Standard Chartered Bank P.O. Box 999 Dubai ,UAE

VEGA INDUSTRIES LIMITED – U.K.


DIRECTORS’ REPORT

The Members, Vega Industries Limited, U.K. Your Directors have pleasure in presenting the Audited Annual Results of the Company for the year ended 31st March 2010 1. FINANCIAL HIGHLIGHTS:




Turnover 19020.38 21901.55Profit before Interest, Depreciation and Taxation.

345.93 393.36

Interest 0.66 0Depreciation 6.00 4.14Profit before Taxation 339.27 389.22Provision for Taxation (a) Current Tax 92.85 110.07(b) Deferred Tax 2.96 (0.17)Total Tax 95.81 109.90Profit after Tax 243.46 279.32Surplus Brought forward from Previous Year 1215.34 936.02Balance Carried to Balance Sheet 1458.80 1215.34

2. REVIEW OF OPERATIONS:

During the year under review the Company has achieved a Turnover of Rs.19020.38 Lacs against the Turnover of Rs. 21901.95 Lacs during the previous year. Company earned a Net Profit of Rs.243.46 Lacs as against Rs. 279.32 Lacs in the previous year.

3. AUDITORS:



Pursuant to Section 217(2AA) of the Companies Act, 1956 your Directors hereby confirm that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards

have been followed;



(ii) sound accounting policies have been selected and applied consistently and

judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31st March 2010 and the Profit and Loss Account for the year ended on that date; and

(iii) the Annual Accounts have been prepared on a going concern basis.

Place : Ahmedabad Date : 29th May 2010

For and on behalf of the Board, Bhadresh K. Shah Paryank R. Shah Director Director



DIRECTORS’ REPORT

FOR THE YEAR ENDED 31ST MARCH 2010 The directors present their report and financial statements for the year ended 31st March 2010. Principal activities and review of business The principal activity of the company continued to be that of importing and distribution of grinding media.

The directors are satisfied with the results for the year bearing in mind the global economic downturn. In spite of extremely difficult trading conditions, volatility in scrap metal prices and exchange rates the company has achieve ₤ 25 million which was down by about 1% over 2009. The company has been able to achieve the turnover of over ₤ 25 million by ensuring quality, service and timely supplies at competitive prices. Although the cost of products has gone up from 86% in 2009 to 90% in 2010, the overall gross profit margin has been maintained at 5.3% helped by significantly lower freight and warehousing costs and by favourable exchange gain.

The net profit margin excluding interest receivable has decreased from 1.76% in 2009 to 1.2% in 2010 due to an increase of 12% in overhead costs.

The current economic climate is expected to continue for sometime and this will have some impact on the company’s performance during the ensuing year. However, the directors and senior members of staff are working closely with major customers and suppliers to mitigate the adverse impact of the current economic climate. The principal risks the company is facing are:

- Competition from competitors - Currency risk - Supply risk

The directors are of the opinion that they have adequate plans and strategies to mitigate these risks. Treasury Treasury operations and financial instruments. The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities. Liquidity risk The company manages its cash and borrowing requirements in order to maximise interest income and minimize interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business



Interest rate risk The company is not exposed to cash flow interest rate on bank overdraft and loans as it has no external bank borrowing. Excess funds are invested as appropriate to maximize interest income.

Foreign currency risk

The company’s principal foreign currency exposure arise from trading with overseas companies. The company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.

Credit risk

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary.

Results and dividends

The results for the year are set out on page 5.

The directors do not recommend payment of a dividend.

Directors

The following directors have held office since 1 April 2008:

B. K. Shah P. R. Shah

Auditors

In accordance with section 487 of the Companies Act 2006, a resolution proposing that Atkins & Partners, Chartered Accountants be reappointed as auditors of the company will be put to the Annual General Meeting.

Directors’ responsibilities

The directors are responsible for preparing the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under the law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing those financial statements, the directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgments and estimates that are reasonable and prudent;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.



The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act, 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Statement of disclosure of information to auditors So far as the directors are aware, there is no relevant audit information of which the company’s auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditors are aware of that information. On behalf of the Board Paryank R. Shah Director Date:21 May,2010



INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF VEGA INDUSTRIES LIMITED

We have audited the financial statements of VEGA INDUSTRIES LIMITED for the year ended 31st March 2010 on pages 5 to 16. These financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company’s members, as a body, in accordance with section 495 and 496 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters that we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, or the opinions we have formed. Respective responsibilities of directors and auditors. As explained more fully in the Directors’ Responsibilities Statement set out on pages 1 – 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements As audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of, whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed, the reasonableness of significant accounting estimates made by the directors, and the overall presentation of the financial statements.

Opinion on financial statements In our opinion, the financial statements - give a true and fair view of the state of the company’s affairs as at 31st March 2010

and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act, 206. Opinion on other matter prescribed by the Companies Act, 1956 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.



Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act, 2006 requires us to report to your if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit

have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and

returns; or - certain disclosures of directors’ remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit. Mr. Atul Maneklal Thanawala FCA CTA (Senior Statutory Auditor) For and on behalf of Atkins & Partners Chartered Accountants Statutory Auditors 34 Brent House 214 Kenton Road, Harrow Middlesex HA3 8BT 21st May 2010



AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF VEGA INDUSTRIES LIMITED. U.K. 1. We have performed the procedures agreed with you enumerated below with respect to

translation and reformatting of the accompanying Balance Sheet of Vega Industries Ltd. UK as at March 31, 2010 the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on the date. Our engagement was undertaken in accordance with the Auditing and Assurance Standard on Engagements to Perform Agreed-Upon Procedures regarding Financial Information, issued by the Institute of Chartered Accountants of India. In performing the procedures, we have relied upon the financial statement in United Kingdom Pound (‘GBP’) originally audited by the Statutory Auditors of the Company.

2. The financial statements in United Kingdom Pound (‘GBP’) originally audited by the statutory Auditors of the Company for the year ended at March 31, 2010.

3. The financial statement in Rupee (‘INR’) currency has been prepared by the Company’s management on the basis stated below and reformatted in accordance with the requirement of the Companies Act, 1956. The said financial statements have been approved by the Board of Directors.

a. All income and expenses at the average rate of exchange prevailing during the year. b. Assets and Liabilities at the closing rate on the Balance Sheet date. c. Share Capital at historical rate. d. The resulting exchange difference in the Balance Sheet is accumulated in ‘Foreign



a. Reviewing the translation of the audited financial statements from GBP into INR on the basis stated in the foregoing paragraphs and


5. We report that the financial statements as audited in GBP by the statutory auditors, have been translated in INR on the basis stated in paragraph 3 above and such translated financial statements are presented in accordance with the requirements of the Companies Act, 1956


7. This report is issued to comply with the provisions of the Companies Act, 1956. For TALATI &TALATI Chartered Accountants (Firm Reg. No. 110758W) Place: Ahmedabad (Anand Sharma) Date : 29th May, 2010 PARTNER Membership No. 129033

B / S 72.7135 68.2552

P & L 78.6198 75.5297


Schedule Rs.in Lacs Pounds Rs.in Lacs Pounds

SOURCES OF FUNDS

1. SHAREHOLDERS' FUNDS :

(a) Share Capital 1 6.88 10,000 6.88 10,000

(b) Reserves and Surplus 2 1,242.19 1,817,402 1,088.34 1,495,079

1,249.07 1,827,402 1,095.22 1,505,079

Deffered Tax Liabilities 3.55 5,202 0.93 1,277

= T O T A L : 1,252.62 1,832,604 1,096.15 1,506,356


1. FIXED ASSETS :

(a) Gross Block 3 57.29 74,543 46.82 59,201


= Net Block 23.44 31,767 16.12 21,048

2. INVESTMENTS 4 22.45 32,895 25.42 34,965


ADVANCES : 5

( a ) Inventories 1,359.22 1,991,385 1,207.13 1,660,115

As at As at


VEGA INDUSTRIES LIMITED - UK

( b ) Sundry Debtors 3,677.75 5,388,240 3,498.55 4,811,421

( c ) Cash and Bank balances 3,857.99 5,652,296 1,393.29 1,916,138

( d ) Loans and Advances - - 22.22 30,553

8,894.96 13,031,921 6,121.19 8,418,227


PROVISIONS : 6

( a ) Current Liabilities 7,467.91 10,941,182 4,905.21 6,745,948

( b ) Provisions 220.32 322,797 161.37 221,936

7,688.23 11,263,979 5,066.58 6,967,884

= NET CURRENT ASSETS 1,206.73 1,767,942 1,054.61 1,450,343

= T O T A L : 1,252.62 1,832,604 1,096.15 1,506,356 Notes forming part of the Accounts 15 (0.00) 1 As per our report of even date attached.For and on behalf ofTALATI & TALATIChartered Accountants

ANAND SHARMA Bhadresh K.shahPartner DirectorPlace : Ahmedabad Date: 29th May 2010

9


Place : Ahmedabad


DirectorParyank R.Shah

Date : 29th May 2010



Schedule Rs.in Lacs Pounds Rs.in Lacs PoundsINCOME :-Sales 7 19,020.38 25,182,651 21,901.95 27,858,069

Other Income 8 303.01 401,181 14.97 19,032 Increase / Decrease (+/-) in Stock 9 250.21 331,270 (314.42) (399,932)

= T O T A L : 19,573.60 25,915,102 21,602.50 27,477,169

EXPENDITURE :-Purchases & Other Expenses 10 18,326.23 24,263,603 20,420.85 25,974,190 Employees emoluments 11 314.78 416,757 300.55 382,275 Administrative Expenses 12 347.13 459,600 333.56 424,257 Selling & Distribution Expenses 13 239.53 317,142 154.18 196,108 Interest Expenses 14 0.66 875 - - Depreciation 3 6.00 7,941 4.14 5,260

= T O T A L : 19,234.33 25,465,918 21,213.28 26,982,090

PROFIT BEFORE TAXES 339.27 449,184 389.22 495,079 PROVISION FOR TAXESa) Current Tax 92 85 122 936 110 07 140 000

31st March, 2009Year endedYear ended

31st March, 2010

a). Current Tax 92.85 122,936 110.07 140,000 b). Deffered Tax 2.96 3,925 (0.17) (217) TOTAL TAX (a+b) 95.81 126,861 109.90 139,783 PROFIT AFTER TAXES 243.46 322,323 279.32 355,296 Surplus Brought forward from Previous year 1,215.34 1,495,079 936.02 1,139,783 Balance carried to Balance Sheet 1,458.80 1,817,402 1,215.34 1,495,079 Basic Earnings per share( Face Value of GBP 1 each ) 2,434.62 32.23 2,793.25 35.53 Notes forming part of the Accounts 15

As per our report of even date attached.For and on behalf ofTALATI & TALATIChartered Accountants

ANAND SHARMA Bhadresh K.shahPartner DirectorPlace : Ahmedabad Date: 29th May 2010

10



Director


Paryank R.Shah

Place : Ahmedabad

PL Rate 75.5297 Bs Rate 68.2552

2010 2010(Rs. in Lacs) £

Reconciliation of operating profit to net cash flow from operating activitiesOperating Profit 224.12 296,727 Depreciation 6.00 7,941 Loss on sale of fixed assets 9.06 13,273 (Increase) / decrease in stocks (226.11) (331,270) (Increase) in debtors (372.85) (546,266) Increase in creditors 2,984.60 4,372,705 Foreign exchange difference 1.41 2,070 Net Cash (outflow)/inflow from operating activities 2,626.22 3,815,180

Returns on investments and servicing of finance 104.06 152,457 Taxation (136.20) (199,546) Capital expenditure and financial investment (21.80) (31,933) Difference due to Exchange rate for translation (22.16) - Cash (outflow)/inflow before use of liquid resources and financing (76.10) (79,022) Net cash inflow 2,550.13 3,736,158

Closing Cash Balance 31st March 2010 3,857.99 5,652,296 Opening Cash Balance 1st April,2009 1,307.86 1,916,138 Increase in net Cash Balances 2,550.12 3,736,158

'11

CASH FLOW STATEMENT AS AT 31ST MARCH 2010


VEGA INDUSTRIES LIMITED - U.K.




Rs.in Lacs Pounds Rs.in Lacs PoundsAUTHORIZED :100000 Shares of GBP 1 each)(Previous Year 100000 Shares) 68.77 100,000 68.77 100,000

= T O T A L : 68.77 100,000 68.77 100,000 ISSUED, SUBSCRIBED & PAID UP :10000 Shares of GBP 1 each) 6.88 10,000 6.88 10,000 (Above Shares are held by Vega Industries(Middle East) FZE - Holding Company)(Previous Year 10000 Shares) = T O T A L : 6.88 10,000 6.88 10,000


Rs in Lacs Pounds Rs in Lacs Pounds 31st March, 2009

31st March, 2010As at As at

31st March, 2010

31st March, 2009

As at As at

Rs.in Lacs Pounds Rs.in Lacs Pounds Profit and Loss Account 1,458.80 1,817,402 1,215.34 1,495,079 Exchange Rate Reserve (218.33) - (128.23) -

Exchange Translation Reserve 1.72 - 1.22 -

= T O T A L : 1,242.19 1,817,402 1,088.34 1,495,079

SCHEDULE : 4 INVESTMENTS ( AT COST )

Rs.in Lacs Pounds Rs.in Lacs Pounds

INVESTMENT IN SUBSIDIARY COMPANIES : 50000 Equity Shares of Vega Industries USA . of USD 1/- each fully paid up ( Previous year 50000 Equity Shares ) 22.45 32,895 25.42 34,965

= T O T A L : 22.45 32,895 25.42 34,965

INVESTMENT 12



31st March, 2009



Rs.in Lacs Pounds Rs.in Lacs PoundsCURRENT ASSETS :A. INVENTORIES (As taken, valued & certified by the Directors) Finished Goods 1,359.22 1,991,385 1,207.13 1,660,115 B. SUNDRY DEBTORS (Unsecured, Considered Good) a). Debts outstanding for a period exceeding six months - - - - b). Others 3,677.75 5,388,240 3,498.55 4,811,421 C. CASH AND BANK BALANCES a). Cash on hand - - 0.16 221 b). Balance with Scheduled Banks In Current Accounts 3,857.99 5,652,296 1,368.71 1,882,334 C). Bid Bonds & Guarantees - - 24.42 33,583

3,857.99 5,652,296 1,393.29 1,916,138 LOANS & ADVANCES :(Unsecured , Considered Good)A). Advances recoverable in cash or in kind or for

As at As at 31st March, 2009 31st March, 2010

value to be received - - 20.32 27,941 B). Sundry Deposits and Advances - - 1.90 2,612

- - 22.22 30,553 = T O T A L : 8,894.96 13,031,921 6,121.19 8,418,227


Rs.in Lacs Pounds Rs.in Lacs PoundsCURRENT LIABILITIES :a). Sundry Creditors for goods 6,642.17 9,731,396 3,487.54 4,796,278 b). Sundry Creditors for expenses 825.74 1,209,786 1,417.67 1,949,670

7,467.91 10,941,182 4,905.21 6,745,948 PROVISIONS :a). Provision for Expenses 204.36 299,407 88.66 121,936 b). Provision for Taxation 15.96 23,390 72.71 100,000

220.32 322,797 161.37 221,936 = T O T A L : 7,688.23 11,263,979 5,066.58 6,967,884

14

As at As at 31st March, 2009 31st March, 2010



SCHEDULES 7 TO 14 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THEYEAR ENDED 31st MARCH 2009

SCHEDULE : 7 SALES

Rs.in Lacs Pounds Rs.in Lacs PoundsSales 19,020.38 25,182,651 21,901.95 27,858,069

= T O T A L : 19,020.38 25,182,651 21,902 27,858,069

SCHEDULE : 8 OTHER INCOME

Rs.in Lacs Pounds Rs.in Lacs Pounds1. Interest 115.81 153,332 3.06 3,886 2. Miscellaneous Receipts - - 11.91 15,146 3. Exchange Rate Fluctuation Difference 187.20 247,849 - - = T O T A L : 303.01 401,181 14.97 19,032

SCHEDULE : 9 INCREASE / (DECREASE) IN STOCK

Rs.in Lacs Pounds Rs.in Lacs Pounds

31st March, 2010

Year ended 31st March, 2010

31st March, 2010Year endedYear ended

31st March, 2009

Year endedYear ended 31st March, 2009


A. Closing Stock : Finished Goods 1,504.09 1,991,385 1,305.18 1,660,115

Less :B. Opening Stock : Finished Goods 1,253.88 1,660,115 1,619.60 2,060,047

= T O T A L : 250.21 331,270 (314.42) (399,932)

SCHEDULE : 10 PURCHASES & OTHER EXPENSES

Rs.in Lacs Pounds Rs.in Lacs PoundsA. PURCHASES AND OTHER EXPENSES Trading purchases 18,326.23 24,263,603 20,013.23 25,455,717 Other Expenses - - 407.62 518,473

= T O T A L : 18,326.23 24,263,603 20,420.85 25,974,190


Rs.in Lacs Pounds Rs.In Lacs Pounds a). Salaries Expenses 304.08 402,592 294.95 375,158 b). Staff Welfare Expenses 10.70 14,165 5.60 7,117 = T O T A L : 314.78 416,757 300.55 382,275

15



Year ended


31st March, 2009


SCHEDULE : 3 FIXED ASSETS IN GBP

Sr Name of the Fixed Assets As at Additions Sales/ As at As at For the Net As at As at As atNo 01-04-2009 Adjustments 31-03-2010 01-04-2009 Year Adjustments 31-03-2010 31-03-2010 31-03-2009

A Furniture,Plant & Equipment 26,491 30,234 13,032 43,693 16,613 5,937 2,606 19,944 23,749 9,878 B Computer 32,710 1,699 3,559 30,850 21,540 2,004 712 22,832 8,018 11,170

= GRAND TOTAL 59,201 31,933 16,591 74,543 38,153 7,941 3,318 42,776 31,767 21,048 Previous Year 58,889 2,345 2,033 59,201 33,300 5,260 407 38,153 21,048 25,589

EXCHANGE RATE= 2009‐10 2008‐09 PL 75.5297 72.7135 BS 68.2552 78.6198

SCHEDULE : 3 FIXED ASSETS Rs. In Lacs

Sr Name of the Fixed Assets As at Additions Sales/ As at As at For the Net As at AS AT AS ATNo 01-04-2009 Adjustments 31-03-2010 01-04-2009 Year Adjustments 31-03-2010 31-03-2010 31-03-2009

A Furniture,Plant & Equipment 20.95 20.64 8.90 32.69 13.27 4.49 2.22 15.54 17.15 7.68 B Computer 25.87 1.16 2.43 24.60 17.43 1.51 0.63 18.31 6.29 8.44

= GRAND TOTAL 46.82 21.80 11.33 57.29 30.70 6.00 2.85 33.85 23.44 16.12


VEGA INDUSTRIES LIMITED - U.K


VEGA INDUSTRIES LIMITED ‐ U.K.


SCHEDULE : 12 ADMINISTRATIVE , GENERAL AND OTHER EXPENSES

Rs.In Lacs Pounds Rs.in Lacs Pounds1. Insurance Premium Expenses 8.10 10,726 6.74 8,579 2. Rent, Rates and Taxes 28.34 37,522 22.67 28,840 3. Statutory Audit Fees 13.97 18,500 16.97 21,579 4. Legal and Professional Consultancy Fees 6.23 8,246 2.95 3,747 5. Bank Commission Charges 17.27 22,866 16.48 20,960 6. Printing and Stationery Expenses 4.44 5,876 3.58 4,549 7. Postage,Telephones,Courier,Internet & E-mail 46.67 61,792 34.72 44,161 8. Computer Expenses 11.77 15,585 7.18 9,127 9. Advertisement Expenses 5.50 7,287 0.80 1,020 10.Conference & seminar Expenses 8.90 11,778 2.20 2,798 11.Office Expenses - - 2.08 2,643 12 Management Fees 175.31 232,111 202.41 257,453 13 Loss on Sales of Assets 10.03 13,273 1.28 1,626 14.General / Miscellaneous Expenses 10.60 14,038 13.50 17,175 = T O T A L : 347.13 459,600 333.56 424,257



Year ended

31st March, 2009

Year ended

Year ended

Rs.in Lacs Pounds Rs.in Lacs PoundsA. Commission Expenses 123.97 164,137 53.85 68,496 B. Traveling Expenses 115.56 153,005 100.33 127,612 = T O T A L : 239.53 317,142 154.18 196,108

SCHEDULE : 14 INTEREST EXPENSES

Rs.in Lacs Pounds Rs.in Lacs PoundsA. To Banks 0.66 875 - - = T O T A L : 0.66 875 - -

16

31st March, 2010


Year ended

31st March, 2009


Year ended



SCHEDULE-15 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2010 A. GENERAL INFORMATION

The financial statements of Vega Industries Limited, U.K. for the accounting year ended 31st March, 2010 being a Company registered in the United Kingdom, are audited by Atkins & Partners, Chartered Accountants, U.K. and we have been furnished with their audit report dated 21st May, 2010. The principal activity of the Company is that of importing and distribution of Grinding Media.

The financial statements of Vega Industries Limited, U.K. are presented in Indian Rupees duly converted, on the basis of aforesaid audit report to comply with the requirements of Section 212 of the Companies Act, 1956. The Company is a wholly owned subsidiary of Vega Industries (Middle East) F.Z.E. which is a wholly owned subsidiary of AIA Engineering Limited. The accounts have been prepared and audited for the purpose of attachment to the accounts of the Holding Company to comply with the provisions of the Indian Companies Act, 1956. Vega Industries Limited U.K. is not a ‘Company’ as defined in the Companies Act, 1956. The auditors have not included the matters specified in paragraph 4 & 5 of Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956 as the order is applicable only to the ‘Company’ in terms of clause 2 of Paragraph 1.

B. SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation

and presentation of the Accounts:

a) SYSTEM OF ACCOUNTING The accounts are prepared on the historical cost basis and on the accounting

principles of a going concern. Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles. b) CONSOLIDATION The financial statements contain information about Vega Industries Limited as an

individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under section 401 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as the company it self is a wholly owned subsidiary undertaking of the ultimate parent company AIA Engineering Limited, incorporated in India. The financial statements of the company and its subsidiary undertaking are included in the consolidated financial of the ultimate parent company.

c) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.



The Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resulting exchange difference on account of translation at the year end is transferred to Translation Reserve Account and the said account is being treated as “Reserve and Surplus”.

d) FIXED ASSETS

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided

at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

i. Fixtures, fittings &equipment 20% per annum ii. Computer equipment 20% per annum

e) REVENUE RECOGNITION

Revenue from sales are recognized when goods are delivered. Turnover

comprises the value of sales and services excluding value added tax and trade discounts.

f) FOREIGN CURRENCY TRANSACTIONS

Monetary assets and liabilities denominated in foreign currencies are translated in to sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to profit and loss account.

g) INVENTORIES

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

h) INVESTMENTS

Investments are included at cost less amounts written off Profit or losses arising from disposals of fixed asset investments are treated as part of the result from ordinary activities including that of subsidiary undertaking.

i) PENSIONS

The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

C. NOTES ON ACCOUNTS

1) The transactions are in local currency (GBP), which have been converted into

Indian Currency (Indian Rupees) for reporting and the rate applied is as per para B(b) of the significant accounting policies.

2) Investment in subsidiary is carried at cost.



3) TAXATION

2010

£ 2010

Indian Rs. in lacsBased on the profit for the year: U K Corporation tax at 28 %

122936 92.85

Deferred tax 3925 2.96 126861 95.81

4. DEFERRED TAXATION

Deferred taxation is provided in full in respect of taxation deferred by timing difference between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted.

The deferred tax liabilityis made up as follows:

2010 £

2010 Indian Rs. in lacs

Accelerated capital allowances 5202 3.55 At 31st March 2010 5202 3.55

5. Related party disclosures under Accounting Standard 18:

(i ) Subsidiary : 1 Vega Industries Ltd., U.S.A.

(i) Holding Company 1 AIA Engineering Ltd. 2 Vega Industries (Middle East) FZE.

Sr. No

Nature of Relationship Subsidiary

In GBP SubsidiaryRs.In Lacs

Holding In GBP

Holding Rs.In Lacs

1 Purchases NIL NIL 18891274 14268.52 2 Management fees paid NIL NIL 232111 175.31 3 Accounts payable NIL NIL 9731397 6642.18 3 Accounts Receivable 2866 1.96 NIL NIL Grand Total 2866 1.96 28854782 21086.01

D. COMPARATIVE FIGURES


E. Earnings per Share (EPS) – The numerators and denominators used to calculate Basic



Earnings per Share:

2009-10 (Rs.)

Profit attributable to the Equity Shareholders (Rs.) (A) 24346200

Basic / Weighted average number of Equity Shares outstanding during the year ( of GBP 1 each ) - (B) 10000

Basic/Diluted Earnings per Share (Rs.) (A)/(B) 2434.62

Additional Information pursuant to the provisions of Part-IV of Schedule VI of the Companies Act, 1956. Balance Sheet abstract and Company’s General Business Profile:


Registration No.: N.A. State Code : N.A. Balance Sheet Date : 31-03-2010

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

Public Issue: NIL Right Issue : NIL

Bonus Issue: NIL Private Placement: NIL


Total Liabilities 125262 Total Assets 125262

Source of Funds

Paid up Capital

688 Application of Funds

Net Fixed Assets

2344

Reserve & Surplus 124219 Investments 2245

Secured Loans - Net Current Assets 120673

Unsecured Loans -

Deferred Tax Liabilities (Net) 355


Turnover 1902038 Total Expenditure 1923433

Profit Before Tax 33927 Profit After Tax 24346

Earnings per Share

(In Rupees) 2434.62 Dividend Rate

NIL



V. Generic Names of the Three Principal Products/Services of the Company (As per Monetary Terms):


Product Description (1) Grinding Media Balls & Cylpebs (2) Other Cast Articles of Iron & Steel


Schedules referred to herein above form an integral part of financial statements. As per our Report of even date attached.

For and on behalf of For and on behalf of the Board TALATI & TALATI, Chartered Accountants (ANAND SHARMA ) Paryank R. Shah Bhadresh K. Shah Partner Director Director Place : Ahmedabad Date : 29th May 2010

VEGA INDUSTRIES LIMITED, USA

ANNUAL REPORT 2009-2010 BOARD OF DIRECTORS Mr. Bhadresh K. Shah Mr. Paryank R. Shah Mr. David Hurlock BANKERS U S Bank National Association P.O.Box 1800 Saint Paul Minnestoa-5501-800 01717TRC 169LBXP.YSTO1 AUDITORS Crowe Horwath LLP Brentwood, Tennessee REGISTERED OFFICE 330, Franklin road Suit No 135-180 Brentwood,TN-37027 USA

VEGA INDUSTRIES LIMITED – U.S.A.


DIRECTORS’ REPORT The Members, Vega Industries Limited, USA Your Directors have pleasure in presenting the Audited Annual Accounts of the Company for the year ended 31st March 2010. 1. FINANCIAL HIGHLIGHTS:




Turnover 4846.20 5954.57Profit before Depreciation and Taxation. 54.13 21.80Depreciation 12.82 14.54Profit before Taxation 41.31 7.26Provision for Taxation (a) Current Tax 13.96 5.29(b) Deferred Tax -2.18 0.77Total Tax 11.78 6.06Profit after Tax 29.53 1.20Surplus Brought forward from Previous Year

243.78 242.58

Balance Carried to Balance Sheet 273.31 243.78 2. REVIEW OF OPERATIONS:

During the year under review the Company has achieved a Turnover of Rs. 4846.20 Lacs as against the Turnover of Rs. 5994.57 Lacs. Company earned a Net Profit of Rs.29.53 Lacs as against Rs.1.20 Lacs in the previous year.

3. AUDITORS:





have been followed;

(ii) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31st March 2010 and the Profit and Loss Account for the year ended on that date;

(iii) the Annual Accounts have been prepared on a going concern basis.



5. ACKNOWLEDGMENT: Yours Directors place on record the appreciation of the contribution made by employees

of the Company at all levels.


For and on behalf of the Board, Bhadresh K. Shah Paryank R. Shah Director Director



REPORT OF INDEPENDENT AUDITORS

Board of Directors Vega Industries Ltd. Nashville, Tennessee We have audited the accompanying balance sheet of Vega Industries Ltd. as of March 31, 2010 and 2009, and the related statements of income and retained earnings and cash flows for the years then ended. 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 audits 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vega Industries Ltd. as of March 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Crowe Horwath LLP Brentwood, Tennessee May 13, 2010



TO THE BOARD OF DIRECTORS OF VEGA INDUSTRIES, LTD Nashville, Tennessee. 1. We have performed the procedures agreed with you enumerated below with respect to

translation and reformatting of the accompanying Balance Sheet of Vega Industries Ltd. USA as at March 31, 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on the date. Our engagement was undertaken in accordance with the Auditing and Assurance Standard on Engagements to Perform Agreed-Upon Procedures regarding Financial Information, issued by the Institute of Chartered Accountants of India. In performing the procedures, we have relied upon the financial statement in United State Dollar (‘USD’) originally audited by the Statutory Auditors of the Company.

2. The financial statements in United State Dollar (‘USD’)) originally audited by the statutory Auditors of the Company for the year ended at March 31, 2010.

3. The financial statement in Rupee (‘INR’) currency have been prepared by the Company’s management on the basis stated below and reformatted in accordance with the requirement of the Companies Act, 1956. The said financial statements have been approved by the Board of Directors.

a. All income and expenses at the average rate of exchange prevailing during the year.

b. Assets and Liabilities at the closing rate on the Balance Sheet date.

c. Share Capital at historical rate.

d. The resulting exchange difference in the Balance Sheet is accumulated in ‘Foreign Currency/Translation Reserve’.


a. Reviewing the translation of the audited financial statements from USD into INR on the basis stated in the foregoing paragraphs and


5. We report that the financial statements as audited in USD by the statutory auditors, have been translated in INR on the basis stated in paragraph 3 above and such translated financial statements are presented in accordance with the requirements of the Companies Act, 1956


7. This report is issued to comply with the provisions of the Companies Act, 1956.

For TALATI &TALATI

Place: Ahmedabad Chartered Accountants Date : 29th May, 2010 (Firm Reg.No.110758W) (Anand Sharma) PARTNER Membership No. 129033

B/S 50.8689 B/S 44.9350P&L 46.4319 P&L 47.1878

Schedule Rs. In Lacs US Dollars Rs. In Lacs US DollarsSOURCES OF FUNDS


(a) Share Capital 1 24.01 50,000 24.01 50,000

(b) Reserves and Surplus 2 275.56 616,291 277.44 553,668

299.57 666,291 301.45 603,668

- - - -

2. DEFERRED TAX LIABILITIES 1.00 2,220 3.48 6,845

= T O T A L : 300.57 668,511 304.93 610,513


1. FIXED ASSETS : (a) Gross Block 3 97.45 220,936 96.89 219,698


= Net Block 32.57 72,097 44.22 98,018


ADVANCES : 4

( a ) Inventories 980.07 2,181,082 1,135.64 2,232,488

( b ) Sundry Debtors 478.67 1,065,245 1,805.93 3,550,165

( c ) Cash and Bank balances 311.82 693,944 79.79 156,862

( d ) Loans and Advances 25.14 55,939 17.45 34,296

1,795.70 3,996,210 3,038.81 5,973,811

VEGA INDUSTRIES LIMITED - U.S.A.

As at


BALANCE SHEET AS AT 31st MARCH, 2010As at


PROVISIONS : 5

( a ) Current Liabilities 1,520.63 3,384,065 2,778.10 5,461,316

( b ) Provisions 7.07 15,731 - -

1,527.70 3,399,796 2,778.10 5,461,316

= NET CURRENT ASSETS 268.00 596,414 260.71 512,495

= T O T A L : 300.57 668,511 304.93 610,513 Notes forming part of the Accounts 13 - 0.00 - As per our report of even date attached. (0.00) 0.00 - For and on behalf ofTALATI & TALATIChartered Accountants

ANAND SHARMA Bhadresh K.ShahPartner Director Place: Ahmedabad Date : 29th May 2010

5


Paryank R.Shah Director

Date : 29th May 2010 Place: Ahmedabad



Schedule Rs.In Lacs US Dollars Rs.In Lacs US DollarsINCOME :-Sales 6 4,846.20 10,270,035 5,994.57 12,910,461 Other Income 7 - - 16.92 36,442 Increase / Decrease (+/-) in Stock 8 (24.29) (51,457) 295.46 636,335

= T O T A L : 4,821.91 10,218,578 6,306.95 13,583,238

EXPENDITURE :-Purchases & Other Expenses 9 4,172.90 8,843,196 5,486.19 11,815,555 Employees emoluments 10 312.31 661,849 391.27 842,672 Administrative and Other Expenses 11 138.16 292,766 101.40 218,360 Selling & Distribution Expenses 12 144.41 306,029 306.29 659,644 Depreciation 3 12.82 27,159 14.54 31,318

= T O T A L : 4,780.60 10,130,999 6,299.69 13,567,548

PROFIT BEFORE TAXES 41.31 87,579 7.26 15,690 PROVISION FOR TAXES a). Current Tax 13.96 29,581 5.29 11,389 b). Deffered Tax (2.18) (4,625) 0.77 1,656 TOTAL TAX (a+b) 11.78 24,956 6.06 13,045 PROFIT AFTER TAXES 29.53 62,623 1.20 2,645 Surplus Brought forward from Previous year 243.78 553,668 242.58 551,023

As at As atPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH 2010


PROFIT AVAILABLE FOR APPROPRIATIONS : 273.31 616,291 243.78 553,668 Balance carried to Balance Sheet 273.31 616,291 243.78 553,668 Basic Earnings per share( Face Value of USD 1 each ) 59.06 1.25 2.40 0.05

Notes forming part of the Accounts 13 As per our report of even date attached.

For and on behalf ofTALATI & TALATIChartered Accountants

ANAND SHARMA Paryank R.Shah Bhadresh K.ShahPartner Director

Place: Ahmedabad Date : 29th May 2010

Place: Ahmedabad


Director


45 2010 2010

( Rs.In Lacs) (US Dollars)

Cash flows from operating activities Net income 29.55 62,623 Adjustments to reconcile net income to net cash from operating activities Depreciation 12.82 27,159 Deferred taxes (2.18) (4,625) Changes in assets and liabilities Accounts receivable 816.96 1,818,097 Inventories 23.10 51,406 Related party receivable 89.00 198,058 Other Current Assets (122.03) (271,568) Accounts payable and accrued expenses (615.33) (1,369,387) Customer Deposits (4.54) (10,104) Refundable Income Taxes 16.47 36,661

Difference due to Exchange Rate for Translation (1.92) - Net cash from operating activities 241.89 538,320

Cash flow from investing activities Purchase of Fixed Assets (0.56) (1,238) Net cash from investing activities (0.56) (1,238)

Net change in cash and cash equivalents 241.33 537,082

Cash and cash equivalents April 1, 2009 70.49 156,862

Cash and cash equivalents March 31, 2010 311.82 693,944 311.81

7

Year ended March 31, 2010

VEGA INDUSTRIES LIMITED - U.S.A

STATEMENT OF CASH FLOWS


VEGA INDUSTRIES LIMITED - U.S.A.6


Rs. In Lacs US Dollars Rs. In Lacs US DollarsSCHEDULE : 1 SHARE CAPITALAUTHORIZED :50,000 Shares of US Dollars 1 each)(Previous Year 50000 Shares) 24.01 50,000 24.01 50,000

= T O T A L : 24.01 50,000 24.01 50,000 ISSUED, SUBSCRIBED & PAID UP :50000 Shares of US Dollars 1 each 24.01 50,000 24.01 50,000 up ( Previous year 50000 Shares ) = T O T A L : 24.01 50,000 24.01 50,000


Profit and Loss Account 273.31 616,291.00 243.78 553,668 Exchange Rate difference 3.79 - 37.86 - Exchange translation Reserve (1.54) - (4.20) - = T O T A L : 275.56 616,291 277.44 553,668


31st March, 2009


SCHEDULE : 3 FIXED ASSETS

IN USD

SR. NAME OF THE FIXED ASSETS AS AT ADDITIONS SALES / AS AT AS AT FOR THE NET AS AT AS AT AS AT

NO. 01-04-2009 ADJUSTMENTS 31-03-2010 01-04-2009 YEAR ADJUSTMENT 31-03-2010 31-03-2010 31-03-2009

A Equipment 92,448 - - 92,448 52,486 10,671 - 63,157 29,291 39,962 B Computer 27,021 1,238 - 28,259 9,242 3,280 - 12,522 15,737 17,779 C Automobiles 100,229 - - 100,229 59,952 13,208 - 73,160 27,069 40,277

= GRAND TOTAL 219,698 1,238 - 220,936 121,680 27,159 - 148,839 72,097 98,018 228,987 39,907 49,195 219,698 139,557 31,319 49,195 121,681 98,017 89,429

EXCHANGE RATE= 2009-10

PL 47.1878

SCHEDULE : 3 FIXED ASSETS

Rs. In Lacs

SR. NAME OF THE FIXED ASSETS AS AT ADDITIONS Sales during AS AT AS AT FOR THE NET AS AT AS AT AS AT

NO. 01-04-2009 ADJUSTMENTS 31-03-2010 01-04-2009 YEAR ADJUSTMENT 31-03-2010 31-03-2010 31-03-2009

A Equipment 42.02 - - 42.02 23.70 5.04 0.24 28.50 13.52 18.32 B Computer 11.79 0.56 - 12.35 5.37 1.55 0.08 6.84 5.51 6.42 C Automobiles 43.08 - - 43.08 23.60 6.23 0.29 29.54 13.54 19.48

= GRAND TOTAL 96.89 0.56 - 97.45 52.67 12.82 0.61 64.88 32.57 44.22 101.62 20.30 25.02 96.90 60.97 14.54 22.84 52.67 44.23 40.65

44.23 19.48

9

VEGA INDUSTRIES LIMITED, USA


Previous Year

PRIVIOUS YEAR




8


Rs. In Lacs US Dollars Rs. In Lacs US DollarsCURRENT ASSETS :A. INVENTORIES (As taken, valued & certified by the Directors) Finished Goods 980.07 2,181,082 1,135.64 2,232,488 B. SUNDRY DEBTORS (Unsecured, Considered Good) a). Debts outstanding for a period exceeding six months b). Others / Trade Debtors ( * ) 478.67 1,065,245 1,805.93 3,550,165 C. CASH AND BANK BALANCES a). Balance with Scheduled Banks In Current Accounts 311.82 693,944 79.79 156,862 D. 'LOANS & ADVANCES : (Unsecured , Considered Good)a) Advances recoverable in cash or in kind or for value to be received 24.60 54,727 17.45 34,296 b) Sundry Deposits and Advances 0.54 1,212 - -

= T O T A L : 1,795.70 3,996,210 3,038.81 5,973,811

31st March, 2009 31st March, 2010As at


As at


Rs. In Lacs US Dollars Rs. In Lacs US DollarsCURRENT LIABILITIES :a). Sundry Creditors for goods 742.79 1,653,050 1,655.57 3,254,606 b). Other Liabilities 1.43 3,174 243.60 478,869 c). Payable to related parties 776.41 1,727,841 878.93 1,727,841

1,520.63 3,384,065 2,778.10 5,461,316 PROVISIONS :a). Provision for exps & Taxation 7.07 15,731 - -

7.07 15,731 - - = T O T A L : 1,527.70 3,399,796 2,778.10 5,461,316

SCHEDULES 6 TO 13 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THEFINANCIAL YEAR ENDED 31st MARCH 2010


SCHEDULE : 6 SALES Sales 4,846.20 10,270,035 5,994.57 12,910,461 = T O T A L : 4,846.20 10,270,035 5,994.57 12,910,461

For the year endedFor the year ended 31st March, 2009 31st March, 2010

31st March, 2009 31st March, 2010As at As at

VEGA INDUSTRIES LIMITED - U.S.A.10

SCHEDULE : 7 OTHER INCOME1. Miscellaneous Receipts - - 16.92 36,442 = T O T A L : - - 16.92 36,442

SCHEDULE : 8 INCREASE / (DECREASE) IN STOCK A. Closing Stock : Finished Goods 1,029.20 2,181,081 1,036.61 2,232,538 Less :B. Opening Stock : Finished Goods 1,053.49 2,232,538 741.15 1,596,203 = T O T A L : (24.29) (51,457) 295.46 636,335

SCHEDULE : 9 PURCHASES & OTHER EXPENSES OPERATIONAL AND OTHER EXPENSES1. Trading purchases 4,106.46 8,702,387 5,394.68 11,618,475 2. Other Expenses 66.44 140,809 91.51 197,080 = T O T A L : 4,172.90 8,843,196 5,486.19 11,815,555

SCHEDULE : 10 EMPLOYEES EMOLUMENTS1. Salaries & Wages 283.40 600,574 358.54 772,192 2. Contribution to Gratuity/Social security/401K plan 14.76 31,291 9.72 20,933 3. Staff Welfare Expenses 14.15 29,984 23.01 49,547

= T O T A L : 312.31 661,849.00 391.27 842,672.00

SCHEDULE : 11 ADMINISTRATIVE AND OTHER EXPENSES


For the year ended For the year ended31st March, 2010 31st March, 2009

Rs.In Lacs US Dollars Rs.In Lacs US Dollars 1. Insurance Premium Expenses 14.35 30,406 3.50 7,547 2. Statutory Audit Fees 1.55 3,283 - - 3. Legal and Professional Consultancy Fees 65.62 139,064 35.23 75,865 4. Bank Commission Charges 4.17 8,842 4.61 9,919 5. Printing and Stationery Expenses 1.49 3,148 0.33 714 6. Postage,Telephones,Courier,Internet & E-mail 17.63 37,354 18.77 40,418 7. Computer Expenses 0.66 1,391 0.05 102 8. Repairs and Maintenance 4.08 8,648 3.54 7,617 9. Management Fees 0.48 1,007 0.81 1,740 10. Conference & seminar Expenses 5.57 11,811 3.28 7,060 11. Advertisement Expenses - - 0.20 425 12. Other Taxes 1.59 3,365 4.87 10,497 13 Rent, Rates & Taxes 11.08 23,476 11.29 24,324 14 Office Expenses 6.71 14,224 6.24 13,438 15. General / Miscellaneous Expenses 3.18 6,747 8.68 18,694 = T O T A L : 138.16 292,766 101.40 218,360



11 ANNUAL REPORT 2009 10



Rs.In Lacs US Dollars Rs.In Lacs US Dollars 1. Freight Outward and Coolies, Cartages 51.61 109,363 232.24 500,176 2. Sales Commission Expenses 15.94 33,790 - - 3. Traveling Expenses - For Staff and Others 73.61 155,997 71.17 153,273 4. Sales Promotion Expenses 3.25 6,878 2.88 6,194 = T O T A L : 144.41 306,029 306.29 659,644

31st March, 2010For the year ended For the year ended

31st March, 2009




SCHEDULE 13 - NOTES TO FINANCIAL STATEMENTS at March 31, 2010 A. GENERAL INFORMATION

The financial statements of Vega Industries Limited, U.S.A. for the accounting year ended 31st March, 2010, being a Company incorporated in the state of Delaware, are audited by Crowe Horwath LLP, Brentwood, Tennessee and we have been furnished with their audit report dated May 13, 2010. The principle activity of the Company is that of distribution of grinding media products.

The financial statements of Vega Industries Limited, U.S.A are presented in Indian Rupees duly converted, on the basis of aforesaid audit report to comply with the requirements of Section 212 of the Companies Act, 1956.

The Company is a wholly owned subsidiary of Vega Industries Ltd., U.K. (“Vega UK”), which is a subsidiary of Vega Industries (Middle East), F.Z.E... The ultimate holding company is AIA Engineering Limited. The accounts have been prepared and audited for the purpose of attachment to the accounts of the Holding Company to comply with the provisions of the Indian Companies Act, 1956.

Vega Industries Limited, U.S.A is not a “Company” as defined in the Companies Act, 1956. The auditors have not included the matters specified in paragraph 4 & 5 of Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956 as the order is applicable only to the ‘Company’ in terms of clause 2 of Paragraph 1.

B. SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and

presentation of the Accounts: a) SYSTEM OF ACCOUNTING

i) The accounts are prepared on the historical cost basis and on the accounting

principles of a going concern. ii) Accounting policies not specifically referred to otherwise are consistent and in

consonance with generally accepted accounting principles. ADOPTION OF NEW ACCOUNTING STANDARD The company adopted FASB ASC 105 (formerly statement no. 168), Generally Accepted Accounting Principles-FASB Accounting Standards codification and Hierarchy of Generally Accepted Accounting Principles. The Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“Codification” or “ASC”) is the single source of authoritative accounting principles recognized by the FASB to be applied by non governmental entities in the preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”). The Codification does not change current GAAP, but is intended to simplify user access to all authoritative GAAP by providing all the authoritative literature related to a particular topic in one place. References to GAAP in these notes to the financial statements are provided under the Codification structure where applicable.



b) CONVERSION TO INDIAN RUPEES For the purpose of accounts, all income and expense items are converted at the

average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.

The Share Capital is carried forward at the rate of exchange prevailing on the

transaction date. The resulting exchange difference on account of translation at the year end is transferred to Translation Reserve Account and the said account is being treated as “Reserve and Surplus”.

c) FIXED ASSETS

Fixed assets are stated at cost. Expenditures for betterments and improvements are capitalized and expenditures for normal repair and maintenance are expenses as incurred. The Company provides for depreciation of fixed assets using the straight-line method over the estimated useful lives of the assets. Depreciation expense amounted to $ 27159 (Rs 12.82 Lacs) and $ 31318 (Rs. 14.54 Lacs) for the year ended March 31, 2010 and 2009 respectively.

d) REVENUE RECOGNITION: Revenue from the sale of products is recognized when the products are shipped to customers.

e) ACCOUNTS RECEIVABLE The Company accounts for accounts receivable based on the amounts billed to customers. Most billings and past due receivables are determined based on contractual terms. The Company does not accrue interest on any of its accounts receivable. Allowance for Doubtful Accounts The allowance for doubtful accounts is determined by management based on the Company’s historical losses, specific customer circumstances, and general economic conditions. Periodically, management review accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables when all attempts to collect have failed. Management has not recorded an allowance for doubtful accounts at March 31, 2010 or 2009 as they believe all amounts to be collectible.

f) EMPLOYEES’ BENEFITS

The Company has a defined contribution 401(K) plan covering all employees who are

21 years of age. The Company matches 50% of employee contributions up to 6% of wages. The Company recognized an expense of $ 23988 (Rs.11.32 Lacs) and $ 20932 (Rs.9.71 Lacs) for the year ended March 31, 2010 and March 31, 2009 respectively.



g) INVENTORIES

Inventories, which consists primarily of grinding media are stated at the lower of cost or market, with cost determined by the average cost method which approximates the first-in, first-out method.

h) CASH AND CASH EQUIVALENTS

For the purpose of the statement of cash flows, cash includes cash and cash equivalents with original maturities of 90 days or less.

i) USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

j) CONTINGENCIES

The Company is the defendant in certain litigation arising in the ordinary course of business. In the opinion of management, such items and their ultimate outcome will not have a material impact on the financial position of the Company.

C. NOTES ON ACCOUNTS

The transactions are in local currency (US Dollars), which have been converted into Indian Currency (Indian Rupees) for reporting and the rate applied is as per Para B (b) of the significant accounting policies.

D. INCOME TAXES

The Company records income tax expense on the liability method. Current expense represents the estimated ax obligation per the income tax return, and deferred expense represents the change in the estimated future tax effects of temporary differences and carry forwards. Deferred tax assets and liabilities are computed by applying enacted income tax rates to the expected reversals of temporary differences between financial reporting and income tax reporting, and by considering carry forwards for operating losses and tax credits. A valuation allowance adjusts deferred tax assets to the net amount that is more likely than not to be realized.

On April 1, 2009, the Company adopted ASC 740, Accounting for Uncertainty in Income Taxes (formerly FASB Interpretation No.48 – “FIN 48”). In accordance with applicable guidance, the Company will recognize a tax benefit only if it is more likely than not the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized will be the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the more-likely-than-not test, no tax benefit will be recorded.

Management is not aware of any uncertain tax positions and the adoption of the new guidance had no effect on the Company’s financial position and results of operations. The Company’s major tax jurisdictions are the United States government and various state governments. The Company’s tax years 2006-2010 remain open and subject to examination by various governmental agencies in the U.S. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.



The Company would recognize interest and / or penalties related to income tax matters in other expenses. The Company recognized no interest or penalties as a result of adopting the standard for the years ending March 31, 2010 and March 31, 2009.

The components of income taxes consist of the following:

2010 2010 Current US Dollars INR in lacs Federal 22833 10.77 State 6748 3.19 Deferred Federal (3991) (1.88) State (634) (0.30) (4625) (2.18) 24956 11.78

The composition of the deferred tax assets and liabilities in the accompanying balance sheet is as follows:

2010 2010 Deferred tax liabilities US Dollars INR in lacs Depreciation 2220 1.00

In 2009, the difference between income tax expense and income taxes at the statutory rates resulted from a change in estimate related to prior year income taxes.

E. Related party disclosures under Accounting Standard 18:

(i) Holding Company (ii) Key Management Personnel : 1 AIA Engineering Ltd. 1 Mr.David Hurlock ( Director) 2 Vega Industries td. – U.K. 3 Vega Industries (Middle East) FZE.

Sr. No

Nature of Relationship

Holding USD

Holding

Rs.In Lacs

Key Management Personnel

USD

Key Management

Personnel Rs.In Lacs

1 Purchases

4146780

1956.77

NIL

NIL

2 Sales 3640457 1717.85 NIL NIL 3 Accounts payable (1882405) (845.86) NIL NIL 4 Accounts

receivables 367258 165.02 NIL NIL

5 Advances payable 1727841 776.40 NIL NIL 6 Key Management

Personnel NIL NIL 86520 40.83

GRAND TOTAL

7999931

3770.18

86520

40.83



F. CONCENTRATIONS

Sales of two customers approximated 49% of total sales and accounts receivable from these two customers approximated 24% of total accounts receivable at March 31, 2010. Sales to three customers approximated 58% of total sales and accounts receivable from these three customers approximated 61% of total accounts receivable at March 31, 2009.

G. CONTINGENCIES

The Company is the defendant in certain litigation arising in the ordinary course of business. In the opinion of management, such items and their ultimate outcome will not have material impact on the financial position of the Company.

H. CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash on deposit and accounts receivable from customers. The Company’s cash deposits are primarily in financial institutions in Tennessee and may at times exceed federally insured amounts. Concentrations of credit risk with respect to accounts receivable are limited to customers primarily in the industry in which the Company is engaged. The Company performs ongoing credit evaluations of its customers’ financial conditions and generally requires no collateral from its customers.

I. COMPARATIVE FIGURES


J. Earnings per Share (EPS) – The numerators and denominators used to calculate Basic

Earnings per Share:

2009-2010 (Rs.)

Profit attributable to the Equity Shareholders (Rs.) (A) 2953000Basic / Weighted average number of Equity Shares outstanding during the year ( of USD 1 each ) - (B) 50000Basic/Diluted Earnings per Share (Rs.) (A)/(B) 59.06

Additional Information pursuant to the provisions of Part-IV of Schedule VI of the Companies Act, 1956. Balance Sheet abstract and Company’s General Business Profile:


Registration No.: N.A. State Code : N.A. Balance Sheet Date : 31-03-2010 II. Capital raised during the year (Amount in Rs. Thousands):

Public Issue: NIL Right Issue : NIL Bonus Issue: NIL Private Placement: NIL




Total Liabilities 30057 Total Assets 30057Source of Funds Paid up Capital

2401 Application of Funds Net Fixed Assets 3257

Reserve & Surplus 27556 Investments 0Secured Loans 0 Net Current Assets 26800Unsecured Loans 0 Deferred Tax Liabilities 100 Deferred Tax Assets 0


Turnover 484620 Total Expenditure 478060Profit Before Tax 4131 Profit After Tax 2953Earnings per Share (In Rupees)

59.06 Dividend Rate NIL

V. Generic Names of the Three Principal Products/Services of the Company (As per

Monetary Terms):


Product Description (1) Grinding Media Balls & Cylpebs (2) Other Cast Articles of Iron & Steel


Schedules referred to herein above form an integral part of financial statements.

As per our Report of even date attached.

For and on behalf of For and on behalf of the Board TALATI & TALATI, Chartered Accountants

(ANAND SHARMA) Paryank R. Shah Bhadresh K. Shah Partner Director Director

Place : Ahmedabad Date : 29th May,2010

VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED

ANNUAL REPORT 2009-2010 BOARD OF DIRECTORS Mr. Bhadresh K. Shah Mr. Paryank R. Shah Mr. Jules Spede Mr. R. A. Gilani SECRETARY S.G.F.Secretaries (Proprietary) Limited Postnet Suite No. 223 Private Bag X 10010 Edenvale 1610 BANKERS Standard Bank of South Africa P.O.Box 62325 Marshalltown 2107 AUDITORS Tuffias Sandberg KSi Chartered Accountants Postnet Suite No. 223 Private Bag X 10010 Edenvale 1610 REGISTERED OFFICE Building No.8 Greenstone Hill Office park Emerald Boulevard Greenstone Hill Ext 22 Edenvale 1609



REPORT OF THE DIRECTORS VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED Your directors submit their report for the year ended 31st March 2010. REGISTRATION The Company was incorporated on 25th March 2009 as Tuffsan Trading 295 (Proprietary) Limited and changed it’s name by Special Resolution to Vega Steel Industries (RSA) (Proprietary) Limited on 10th November 2009. REVIEW OF ACTIVITIES Your company is involved in the imparting, exporting and trading of steel and alloy castings and related components. The results of the Company and the state of its affairs are set out in the attached financial statements and do not, in our opinion, require any further comment. No material fact or circumstances has occurred between the accounting date and the date of this report. STATEMENT OF RESPONSIBILITY The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements and related information. The auditors are responsible to report on the fair presentation of the financial statements. The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice and in the manner required by the Companies Act of South Africa. The directors are also responsible for the company’s system of internal financial control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain accountability of assets, and to prevent and detect misstatement and loss. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the period under review. The financial statements have been prepared on the going concern basis, since the directors have every reason to believe that the company has adequate resources in place to continue in operation for the foreseeable future. SHARE CAPITAL 100 Ordinary shares were issued during the year under review. DIVIDENDS No dividends were declared or recommended during the period under review. DIRECTORS Bhadresh K. Shah Jules Spede Paryank Ramesh Shah Rizwan Aslam Gilani Gillian Alison De Abreu (Resigned 28/09/2009) SECRETARY S.G.F. Secretaries (Proprietary) Limited Business Address Postal Address Building No. 8, Greenstone Hill Office Park Postnet Suite No. 223 Emerald Boulevard Private Bag X10010 Greenstone Hill Ext 22, Edenvale, 1609 Edenvale, 1610



DIRECTORS’ REPORT The Member, Vega Steel Industries (RSA) (Proprietary) Limited SOUTH AFRICA Your Directors have pleasure in presenting the Audited Annual Accounts of the Company for the Financial year ended 31st March 2010. 1. FINANCIAL HIGHLIGHTS:



Turnover 0.00Profit / Loss before Interest and Depreciation 8.37Interest 0.00Depreciation 0.00Loss 8.37Surplus Brought forward from Previous Year 0.00Balance Carried to Balance Sheet 8.37

2. REVIEW OF OPERATIONS:

During the year under review, The Company was incorporated on 25th March 2009 as Tuffsan Trading 295 (Proprietary) Limited. Company has not started its trading of steel and alloy castings and related components.

3. RECOMMENDATION OF THE DIVIDEND: During the year under review, the Board do not recommended any dividend.

4. ACQUISITION OF THE COMPANY’S SHARES BY VEGA INDUSTRIES (MIDDLE

EAST) FZE, UAE

During the year under review, the VEGA Industries (Middle East) FZE, UAE has acquired 100% Shares of the Company. By the acquisition of 100% Shares of VEGA RSA, the Company has become a Wholly-owned Subsidiary of the VEGA Industries (Middle East) FZE, UAE.

5. CHANGE OF THE NAME OF THE COMPANY:

During the year under review, the name of the Company was changed from Tuffsan Trading 295 (Proprietary) Limited to Vega Steel Industries (RSA) (Proprietary) Limited, South Africa (VEGA RSA) with effect from 10th November 2009.

6. AUDITORS:

Tuffias Sandberg KSi, the Auditors of the Company retires at the ensuing Annual General Meeting and are eligible for re-appointment.






have been followed; (ii) sound accounting policies have been selected and applied consistently and

judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31st March 2010 and the Profit and Loss Account for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing & detecting fraud and other irregularities; and

(iv) the Annual Accounts have been prepared on a going concern basis. 8. ACKNOWLEDGMENT:

Yours Directors place on record the appreciation of the contribution made by employees at all levels and Banker of the Company.


For and on behalf of the Board, Paryank R. Shah Bhadresh K. Shah

Director Director



MANAGEMENT CERTIFICATE Messrs. Tuffias Sandberg KSi Postnet Suite No. 223 Private Bag X10010 Edenvale 1610 24 May 2010 Dear Sirs, VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED – YEAR ENDED 31 MARCH 2010 This representation letter is provided in connection with your audit of the financial statements of the above referred to company for the year ended 31 March 2010 for the purpose of expressing an opinion as to whether or not the financial statements present fairly, in all material respects, the financial position of as of the company and of the results of its operations and its cash flows for the year then ended in accordance with South African Statements of Generally Accepted Accounting Practice ( or other relevant financial reporting framework). We acknowledge our responsibility for the fair presentation of the financial statements in accordance with South African Statements of Generally Accepted Accounting Practice (or other relevant financial reporting framework). We confirm, to the best of our knowledge and belief, the following representations: • There have been no irregularities involving management or employees that have a

significant role in the accounting and internal control system or that could have a material effect on the financial statements.

• The company’s accounting policies and the methods followed in applying then are as

disclosed in the financial statements and there have been no changes during the year in the company’s accounting policies except as described in the notes to the financial statements.

• We have made available to you all books of accounts and supporting documentation and

all minutes of meetings of the shareholders and directors. • We confirm the completeness of the information provided regarding the identification of

related parties. • The financial statements are free of material mis-statements, including omissions. • The company has complied with all aspects of contractual agreements that could have a

material effect on the financial statements in the event of non-compliance. There has been no non-compliance with requirements of regulatory authorities that could have a material effect on the financial statements in the event of non-compliance.

• The following have been properly recorded and, when appropriate, adequately disclosed

in the financial statements:

• The identity of, and balances and transactions with, related parties.

• Losses arising from sale and purchase commitments.



• Agreements and options to buy back assets previously sold.

• Assets pledged as collateral.

• Losses arising from the reduction of current assets to net realizable value, where

appropriate. • We have no plans or intentions that may alter materially the carrying value or

classification of assets and liabilities reflected in the financial statements. • We have no plans to abandon lines of products, or no other plans or intentions that will

result in any excess or obsolete inventory, and no inventory is stated at an amount in excess of net realizable value.

• The company has satisfactory title to all assets, and there are no liens or encumbrances

on the company’s assets, except for those that are disclosed in the notes to the financial statements.

• We have recorded or disclosed as appropriate, all liabilities, both actual and contingent,

and have disclosed in the notes to the financial statements all guarantees that we have given to third parties.

• Other than as described in the notes to the financial statements, there have been no

events subsequent to year end that require adjustment of or disclosure in the financial statements or notes thereto.

• No claims in connection with litigation have been or are expected to be received other

than those disclosed in the financial statements. • The method by which management proposes to finance commitments for any capital

expenditure contracted for or authorized is adequately disclosed in the financial statements.

• Except as disclosed in the financial statements, the result of operations for the year are

not materially affected by transactions of an extraordinary or abnormal nature, or items relating to a prior year.

• The net book values at which fixed assets are stated in the balance sheet are arrived at

after:

• taking into account as additions all expenditure during the year which represented capital outlay on these assets but no expenditure of a revenue nature;

• writing off all amounts relating to items which had been sold or scrapped by the

Balance Sheet date;

• providing for depreciation on a scale sufficient to cover obsolescence as well as wear and tear to reduce the net book values of the assets to their residual value by the time they become no longer economically useful to the company.

• Any decline in the value of long-term investments not provided for is considered to be a

temporary nature.



• Current assets shown in the balance sheet are all expected to produce at least the

amounts at which they are stated on realization in the ordinary course of the business. • All known, actual or possible, non-compliance with laws and regulations, the effect of

which should considered when preparing financial statements, has been disclosed to the auditor.

• Insurance cover has been reviewed and is adequate in relation to the asset value and

insurable risks involved. (Paryank R. Shah) (Bhadresh K. Shah) Director Director



Tuffias Sandberg KSi

Greenstone Hill Office Park, Building No 8 Blackrock Street, Greenstone Hill Ext 22 Postnet Suite No 223 Private Bag X10010, Edenvale, 1610 Switchboard +27 011 524 9700 Telefax +27 011 524 9760 email [email protected]

REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED We have audited the financial statements of Vega Steel Industries (RSA) (Proprietary) Limited, which comprise the balance sheet as at 31 March 2010, the statement of comprehensive income, the statement of changes in equity and statement of cash flows for the period then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 2 to 10.

Directors’ Responsibility for the Financial Statements The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice, and in the manner required by the Companies Act of South Africa.. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgments, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the company as of 31 March 2010, and of its financial performance and its cash flows for the period then ended in accordance with South African Statements of Generally Accepted Accounting Practice, and in the manner required by the Companies Act of South Africa.

Emphasis of matter

Without qualifying our opinion above, we draw your attention to the note on going concern in the director’s report.

Richard Joseph Partner

Tuffias Sandberg KSi

Chartered Accountants (SA)

Registered Auditors

Endenvale

24 May 2010



TO THE BOARD OF DIRECTORS OF VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED

1. We have performed the procedures agreed with you enumerated below with respect to translation and reformatting of the accompanying Balance Sheet of Vega Steel Industries (RSA) (Proprietary) Limited as at March 31, 2010, the Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date. Our engagement was undertaken in accordance with the Auditing and Assurance Standard on Engagements to Perform Agreed-Upon Procedures regarding Financial Information, issued by the Institute of Chartered Accountants of India. In performing the procedures, we have relied upon the financial statement in South Africa Rand (R) originally audited by the Statutory Auditors of the Company.

2. The financial statements in South Africa Rand (R) originally audited by the statutory Auditors of the Company for the year ended at March 31, 2010.

3. The financial statements in Rupee (‘INR’) currency have been prepared by the Company’s management on the basis stated below and reformatted in accordance with the requirement of the Companies Act, 1956. The said financial statements have been approved by the Board of Directors.

a. All income and expenses at the average rate of exchange prevailing during the year. b. Assets and Liabilities at the closing rate on the Balance Sheet date. c. Share Capital at historical rate. d. The resulting exchange difference in the Balance Sheet is accumulated in ‘Foreign



a. Reviewing the translation of the audited financial statements from R into INR on the basis stated in the foregoing paragraphs and


5. We report that the financial statements as audited in R by the statutory auditors, have been translated in INR on the basis stated in paragraph 3 above and such translated financial statements are presented in accordance with the requirements of the Companies Act, 1956


7. This report is issued to comply with the provisions of the Companies Act, 1956. For TALATI &TALATI Chartered Accountants (Firm Reg. No. 110758W) Place: Ahmedabad (Anand Sharma) Date : 29th May, 2010 PARTNER Membership No. 129033

B / S 6.1321

P & L 6.1264


Schedule Rs.in Lacs Rand

SOURCES OF FUNDS


(a) Share Capital 1 0.01 100

(b) Reserves and Surplus 2 (8.38) (136,687)

(8.37) (136,587)

Loans from group Company 70.71 1,153,086

= T O T A L : 62.34 1,016,499



ADVANCES : 3

( a ) Inventories 249.87 4,074,771

( b ) Sundry Debtors 0.16 2,562

( c ) Cash and Bank balances 62.18 1,013,937

312.21 5,091,270



As at

31st March, 2010


PROVISIONS : 4

( a ) Current Liabilities 249.87 4,074,771

249.87 4,074,771

= NET CURRENT ASSETS 62.34 1,016,499

= T O T A L : 62.34 1,016,499



For and on behalf of

TALATI & TALATI


ANAND SHARMA


Place : Ahmedabad

Date : 29th May 2010 Date: 29th May 2010

10

Place : Ahmedabad

Paryank R. Shah Bhadresh K. Shah





Schedule Rs.in Lacs Rand

INCOME :-

Sales - -

= T O T A L : - -

EXPENDITURE :-

Employees emoluments 5 7.06 115,272

Administrative Expenses 6 1.15 18,735

Selling & Distribution Expenses 7 0.16 2,680

= T O T A L : 8.37 136,687

PROFIT BEFORE TAXES (8.37) (136,687)

PROVISION FOR TAXES

a) Current Tax - -

31st March, 2010

Year ended

a). Current Tax

b). Deffered Tax - -

TOTAL TAX (a+b) - -

PROFIT AFTER TAXES (8.37) (136,687)

Surplus Brought forward from Previous year - -

Balance carried to Balance Sheet (8.37) (136,687)

Basic Earnings per share( Face Value of RAND 1 each ) (8,370.00) (1,366.87)



For and on behalf of

TALATI & TALATI


ANAND SHARMA


Place : Ahmedabad

Date : 29th May 2010 Date: 29th May 2010

11


Place : Ahmedabad

Paryank R. Shah Bhadresh K. Shah


45

2010 2010( Rs.In Lacs) Rand

Cash flows from operating activities Net income / ( Loss) (8.37) (136,687)

Changes in assets and liabilities Accounts receivable (0.16) (2,562)

Inventories (249.87) (4,074,771)

Accounts payable and accrued expenses 249.87 4,074,771

Difference due to Exchange Rate for Translation (0.01)

Net cash from operating activities (8.54) (139,249)

Cash flow from financing activities Loans from group company 70.71 1,153,086

Net cash from financing activities 70.71 1,153,086

Net change in cash and cash equivalents 62.17 1,013,837

Cash and cash equivalents April 1, 2009 - -

Cash and cash equivalents March 31, 2010 62.17 1,013,837

62.17

'12 ANNUAL REPORT 2009-10


STATEMENT OF CASH FLOWS

Year ended March 31, 2010




Rs.in Lacs Rand

AUTHORIZED :

1000 Ordinary Shares of R 1 each) 0.10 1,000

(Previous Year - Nil)

= T O T A L : 0.10 1,000

ISSUED, SUBSCRIBED & PAID UP :

100 Ordinary Shares of R 1 each) 0.01 100

(Above Shares are held by Vega Industries

(Middle East) FZE - Holding Company)

(Previous Year - Nil)

= T O T A L : 0 01 100

31st March, 2010

As at

T O T A L : 0.01 100


Rs.in Lacs Rand

Profit and Loss Account (8.37) (136,687)

Exchange Rate Reserve (0.01) -

= T O T A L : (8.38) (136,687)

13

31st March, 2010

As at




Rs.in Lacs Rand

CURRENT ASSETS :

A. INVENTORIES

(As taken, valued & certified by the Directors)

Finished Goods 249.87 4,074,771

B. SUNDRY DEBTORS

(Unsecured, Considered Good)

a). Debts outstanding for a period exceeding six

months - -

b). Others 0.16 2,562

C. CASH AND BANK BALANCES

a). Cash on hand - -

b). Balance with Scheduled Banks

In Current Accounts 62.18 1,013,937

62 18 1 013 937

As at

31st March, 2010

62.18 1,013,937

= T O T A L : 312.21 5,091,270


Rs.in Lacs Rand

CURRENT LIABILITIES :

a) Sundry Creditors for goods 249.87 4,074,771

= T O T A L : 249.87 4,074,771


As at

31st March, 2010


SCHEDULES 5 TO 7 FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE

YEAR ENDED 31st MARCH 2010


Rs.in Lacs Rand

a). Salaries Expenses 7.06 115,272

= T O T A L : 7.06 115,272

SCHEDULE : 6 ADMINISTRATIVE , GENERAL AND OTHER EXPENSES

Rs.In Lacs Rand

1. Legal and Professional Consultancy Fees 0.64 10,475

2. Bank Commission Charges - 5

3 Printing and Stationery Expenses 0 05 778

Year ended

31st March, 2010

Year ended

31st March, 2010

3. Printing and Stationery Expenses 0.05 778

4. Postage,Telephones,Courier,Internet & E-mail 0.08 1,317

5. General / Miscellaneous Expenses 0.38 6,160

= T O T A L : 1.15 18,735


Rs.in Lacs Rand

A. Traveling Expenses 0.16 2,680

= T O T A L : 0.16 2,680

15

31st March, 2010

Year ended




SCHEDULE - 8 NOTES TO FINANCIAL STATEMENTS at March 31, 2010 A. GENERAL INFORMATION

The Company was incorporated on 25th March,2009 as Tuffsan Trading 295 (Proprietary) Limited and changed it’s name by Special Resolution to Vega Steel Industries (RSA) (Proprietary) Limited on 10th November 2009.

The financial statements of Vega Steel Industries (RSA) (Proprietary) Limited for the accounting year ended 31st March, 2010, being a Company incorporated in the South Africa are audited by Tuffias Sandberg KSi and we have been furnished with their audit report dated May 24, 2010. The principle activity of the Company is importing, exporting and trading of steel and alloy castings and related components.

The financial statements of Vega Steel Industries (RSA) (Proprietary) Limited are presented in Indian Rupees duly converted, on the basis of aforesaid audit report to comply with the requirements of Section 212 of the Companies Act, 1956.

The Company is a wholly owned subsidiary of Vega Industries (Middle East), F.Z.E. The ultimate holding company is AIA Engineering Limited. The accounts have been prepared and audited for the purpose of attachment to the accounts of the ultimate Holding Company to comply with the provisions of the Indian Companies Act, 1956.

Vega Steel Industries (RSA) (Proprietary) Limited is not a “Company” as defined in the Companies Act, 1956. The auditors have not included the matters specified in paragraph 4 & 5 of Companies (Auditors’ Report) Order, 2003 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956 as the order is applicable only to the ‘Company’ in terms of clause 2 of Paragraph 1.

B. SIGNIFICANT ACCOUNTING POLICIES adopted by the Company in the preparation and

presentation of the Accounts: a) SYSTEM OF ACCOUNTING

i) The accounts are prepared on the historical cost basis and on the accounting

principles of a going concern.

ii) The preparation of financial statements are prepared in accordance with and comply with South African statements of Generally Accepted Accounting Practice and in the manner required by the Companies Act of South Africa.

b) CONVERSION TO INDIAN RUPEES

For the purpose of accounts, all income and expense items are converted at the average

rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date.

The Share Capital is carried at the rate of exchange prevailing on the transaction date.

The resulting exchange difference on account of translation at the year end is transferred to Translation Reserve Account and the said account is being treated as “Reserve and Surplus”.

VEGA STEEL INDUSTRIES (RSA) (PROPRIETARY) LIMITED .


c) GOODWILL

The difference between the fair value of the consideration paid and the fair value of net tangible assets of business acquired at the date of acquisition is charged or credited to goodwill. Goodwill is not amortised, instead it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be required.

d) INVENTORIES

Inventory is stated at the lower of cost or net realisable value. Cost is determined by the first in first out method. The basis of determining cost is invoice prices from supplier plus importation charges where applicable. Net realizable value is the estimate of the selling price in the ordinary course of business, less the cost of completion and selling expenses.

C. NOTES ON ACCOUNTS 1. The transactions are in local currency South African Rand (R) which have been converted

into Indian Currency (Indian Rupees) for reporting and the rate applied is as per Para B (b) of the significant accounting policies.

2. INCOME TAXES

No current taxation has been provided as the company has an estimated tax loss of Rs.143149 which is available for setoff against the future taxable income.

3. RELATED PARTY DISCLOSURES UNDER ACCOUNTING STANDARD 18:

(i) Holding Company 1 Vega Industries (Middle East) FZE.

6.1321

Sr. No

Nature of Relationship South Africa Rand (R) Holding Company

Rs.In Lacs

1 Advances payable 5227857 320.56 2 Loans from Vega

Industries (Middle East) FZE

1153086

7.71

4. COMPARATIVE FIGURES

This is the first year of the company therefore comparative figures of previous year is not presented.

5. Earnings per Share (EPS) – The numerators and denominators used to calculate Basic

Earnings per Share:

2009-10 (Rs.) Profit/(Loss) attributable to the Equity Shareholders (Rs.) (A) (837000)Basic / Weighted average number of Equity Shares outstanding during the year ( of Rand1 each ) - (B) 100Basic/Diluted Earnings per Share (Rs.) (A)/(B) (8370)

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