1994 SWASTIK NITRO AROMATICS LIMITED. DIRECTORS' REPORT The Directors hereby present their Fifth Annual Report and the audited Statement of Accounts for the year ended 31st March, 1994. Operations: As the members are aware, the company was setting up a Nitrobenzene manufacturing unit of 6000 MT per annum. Due to fund constraints, internal disturbances and its consequential impact on implementation, additions of & modifications in some critical equipments, unforeseen bottlenecks during mechanical testing & commissioning linked with teething troubles during start-up, prospectus projections to commission this project in August, 1993 was not materialised. The project was trial commissioned on July 10, 1994 and your company has produced Nitrobenzene of excellent quality during commissioning. As on 31st October, 1994, your Company had incurred approx. Rs. 5.27 crores towards implementation of this Project. Your Company had recruited sufficient technical & administrative personnel for start-up of this unit. Present Status & Future Prospects: To enhance the viability of the project, the management has reviewed the production facilities and feels it necessary to expand the plants installed capacity from 6000 MT per annum to 900 MT per annum. The management expects to implement this expansion scheme within 3 months with marginal capital cost increment by making some additions/standby arrangements, debottleneckings & engineering improvements in existing set-up, which will result in better yield & more viability of the project. This expansion scheme is recommended to be implemented during this shutdown to take advantage of the idle period needed to make necessary arrangements & tie-up for restarting the plant at expanded capacity . Due to various reasons mentioned herein, the plant is under shut-down for stabilising the operations and your Company is in the process of preparing revised cost of project and its means of finance for submission in Institution/Bank to avail their approval & further assistance towards it under their relevant funding schemes. The directors expect that regular commercial production will be restarted at expanded capacity from next financial year and are optimistic about company's future because of lower cost of production & better quality due to innovative technology. Fixed Deposits: Since your company has not accepted any deposits from the Public, no information is required to be furnished thereon. Insurance: All the properties (fixed assets) of the company have been adequately insured. Directors: Mr. Murlidhar B. Somani and Mr. Kirit T. Gadhia, Directors, retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for reappointment. Mr. Tulsidas G. Gadhia, Jt. Managing Director, has resigned as Joint Managing Director w.e.f. 1.12.94. However, he will continue to be a Director of the Company. The Board places on record services rendered by him as Joint Managing Director of the Company. Mr. Suresh B. Sheth has been appointed by the Board, as Joint Managing Director of the company w.e.f. 3.12.94, for a period of 3 years. The resolution to this effect is being moved at the ensuing Annual General Meeting for your approval. Employees and Other Particulars : There are no employees in the company drawing salary of Rs. 1,44,000/- p.a. and employee for full year and drawing salary of Rs. 12,000/- per month and employed for the part of the year. In terms of Section 217 (1) of the Companies Act, 1956 (as amended) and the Companies (disclosure of particulars in the report of Board of Directors) Rules, 1988, the Directors furnish hereunder the additional information as required. (A) Conservation of Energy Since the project to manufacture Nitrobenzene was in implementation stage and no worthwhile manufacturing activities have commenced till the date of this report, there is nothing to be drsclosed in respect of conservation of energy. However, in designing, engineering and execution of the project, energy optimisation schemes and pollution control features have been incorporated. (B) Technology Absorption: The technology agreement with consulting Technical Director, Mr. Suresh B. Sheth, includes providing technology and provision of training, which has assisted the company in absorption of the technology from pilot plant scale to commercial scale alongwith exchange of information on improvements in technology for manufacturing Nitrobenzene. (C) Foreign Exchange Earning and Outgo: Since the project for the manufacture of Nitrobenzene was in implementation stage and no worthwhile manufacturing activities have commenced till the date of this report, there is nothing to be disclosed in respect of foreign exchange earnings, which might have been possible by export of the product. However, it would be pertinent to note that the technology innovated and adopted by your company for manufacturing Nitrobenzene is being demonstrated for first time in our country thereby resulting in saving of foreign exchange to the extent which would have been paid to any foreign collaborator for technology transfer/collaboration. Auditors: M/s. Nahta Jain & Associates, Auditors of the company hold office until the conclusion of the ensuing Annual General Meeting and are eligible and recommended for reappointment. The company has received consent from them to the effect as per Statutory provisions. Acknowledgements: The Directors place on record their grateful appreciation for the assistance and co-operation received from the Gujarat Industrial Investment Corporation Limited Banks, Government Agencies, consultants, vendors, well-wishers, staff, etc. alongwith Investors in our Public Issue for their overwhelming response during the year under review. For and On Behalf of Board of Directors Chandratan B. Somani Chairman & Managing Director Place: Ahmedabad Date : 3rd December, 1994.