1996 SURYO FOODS & INDUSTRIES LIMITED CHAIRMAN'S REPORT On behalf of the Board of Directors of the Company, I welcome you all to the Seventh Annual General Meeting. The Audited Balance Sheet and Profit & Loss Account for the year ended 31st March, 1996 together with Directors' Report have been with you and with your permission I will take them as read. POST LIBERALISATION SCENARIO The year past has not been an entirely easy for the Indian Industry. An unprecedented liquidity crisis, made worse by a lacklustre capital market, volatile exchange and interest rates necessitating repeated interventions by the Reserve Bank of India, political uncertainties concerning the Government policy towards Foreign Direct Investments and growing infrastructural constraints were some of the features that had pulled back the growth of the industry. On the upside, however, has been the determination of Indian Industry to ride these out without waiting for administrative sops from the Government. It is this inner confidence of the industry in itself that perhaps has been the single largest contribution of the Liberalisation. MACRO-ECONOMIC OVERVIEW The Indian economy today reflects fundamental strength with sustained export growth, substantial reduction in the current account deficit as a proportion of GDP, and spectacular growth in foreign direct investment since 1991-92. But the year 1995 - 96 also witnessed slower monetary growth accompanied by a deceleration in growth of bank credit for the commercial sector, largely due to a huge increase in net RBI credit to the Central Government. This situation has led to banks lending at interest rates in the range of 17% to 20%, despite a drop in inflation below 5%. Such high real interest rates could hamper the growth of production. The recent reduction in the CRR by one percentage point announced by the RBI has eased the situation a little bit. The pace of reforms in banking and capital markets has been maintained with the auto nomous regulators, RBI and SEBI, ushering in significant policy changes. In spite of strong export growth at 21% in dollar terms in 1395-96, the balance of payment came under some pressure due to consistent import growth, high debt service commitments and decline of inflows from external sources. However, due to the RBI's unrelenting efforts, the foreign exchange market stabilised at around Rs. 35.60 per Dollar in September, 1996. In retrospect, the events of recent times have sown the seeds for transforming the Indian economy into a globally competitive strong economy. YOUR COMPANY'S PERFORMANCE I am delighted to report that the results achieved in our last financial year reveal a marked improvement. Turnover at Rs.1947.50 lacs was higher by 123.9% over the previous year. The profit after tax at Rs.164.07 lacs recorded an increase of 101%. With our hatchery and farming sectors being fully complete and operational, we should witness even faster growth in the coming years. The Board of Directors has placed before you a recommendation for the payment of 10% dividend this year, for your approval. VISION No vision or business strategy can be fulfilled without a strong, capable organisation and the support of personnel focused on the tasks before them. In today's business environment, especially in marine sea-foods, it is imperative that any organisation which serves international interests, should have both a global presence and internationally recognised quality standards. The future of Indian aquaculture depends on, the improvements in quality standards and farm management practices as well as market diversification. Your company was conscious from the beginning of its responsibilities in maintaining strict measures in production control and quality standards and conforming well within the eco-envo parameters. You may be aware that your company is presently exporting under the brand name "SURYA" an established premium brand of the promoting company M/S SURYO UDYOG LIMITED that has been included for its consistance supply of quality products by USA FOODS & DRUGS ADMINISTRATION, known all over the world to be extremely conscious of rigid health norms under its "A" list - a fact we are proud of. ACKNOWLEDGEMENT I am very grateful to the members of our Board for their valuable support and advice which has enabled us to achieve the results. I would like to thank IDBI, State Bank of India, MPEDA, Government authorities, Suppliers, Foreign Buyers and other Business Associates for their continuous cooperation. I take this opportunity also to express my sincere thanks and appreciation of the contribution made by employees at all levels. Last but not the least, I am grateful to all the shareholders for reposing their confidence and unstinting support and providing strength to us to make the company a success. I would like to end with firm assurance that this long, exciting journey will take us from strength to strength. Hard work and dedication will be required at all levels, but the rewards of perseverance will surely be bountiful. SRI AMARENDRA DASH CHAIRMAN DATED : 27TH SEPTEMBER, 1996.