Directors Report of Adarsh Chemicals & Fertilisers Ltd.

Mar 31, 2000

The Directors hereby present the 41st Annual report of the Company and the Audited Statement of Accounts for the year ended on 31-03-2000.

1999-00 1998-99

FINANCIAL RESULTS Rs. / LACS Rs. / LACS

Turnover 423.45 168.58

Gross Loss 1314.31 1278.12

Depreciation 250.34 252.37

Prior Year Adjustment Income/ (Expenditure) (2.81) (422.11)

Loss before tax 1567.46 1952.60

Provision for taxation Nil Nil

Loss after tax 1567.46 1952.60

Balance of Loss of Provious Year Brought Forward 5537.54 3584.94

Balance of Profit & Loss Account 71050.00 5537.54

Dividend Nil Nil

ADJOURNED 41st AGM:

The 41st AGM of the company was held on 19-5-2001 and was postponed for the adoption of accounts by the members of the company, as the accounts could not be prepared. As the qualified employees of the company had left including the a power-cut in the company and delay in compiling the details for the preparation of accounts, the company had to employ outside professional staff to prepare the accounts of the company.

REVIEW OF OPERATIONS:

The production during the year was meager and therefore the turn over of the company stood only at Rs. 423.45 lacs as against Rs. 168.58 lacs for the previous year.

The Maleic Anhydride plant could be operated upto March 2000. The company also had taken steps to restructure, reorganize and revamp its operations. As a result of this the production of Maleic Anhydride during the year could aggregate to only 1466 MT and for d,L Malic Acid 31MT.

The company faces financial difficulties and hence the operation could not be continued on regular basis. Further, frequent shut down of the operation of the plants increases the re-start cost of the plants. The board of the company is in the process of alternate use of assets of the company and repayment of dues to the financial institutions, banks and fixed depositors.

INSURANCE :

The properties of the Company have been insured from time to time as deemed fit by the Directors under the circumstances.

ENVIRONMENT:

The Company has ensured that the Air, Water and others environment standards are achieved as per prescribed norms.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The information in respect of Conservation of Energy, Technology absorption and Foreign Currency earnings and outgo as required u/s 217(1)(e) of the Companies Act, 1956, are set out in the Annexure which forms part of this Report.

PARTICULARS OF EMPLOYEES :

There was no employee who earned the remuneration in excess of ceiling prescribed under Section 217(2A)(a)(i) of the Companies Act, 1956 and hence the details are not furnished.

DIRECTORS CLARIFICATION U/s 217 (3) OF THE COMPANIES ACT, 1956.

Your Directors offer the following explanations as to the qualifications in the Auditors Report:

i) As regards item 2(A)(a) and 2(A) in the Auditors Report relating to non provision of doubtful advance of Rs. 10,48,11,137 and doubtful debts of Rs. 7,28,93,980 your Directors wish to inform that due to the dislocation in Administrative office of the Company during the period under review, follow up with the parties could no be taken up. Your Directors are fully seized of the matter and after making sincere efforts of recovery, the unrecovered amount will be dealt with in accounts.

ii) As regards item 2(A)(c) relating to discontinued plants, your Directors would like to state to that necessary steps have been initiated to sell/realise on account of these plant.

iii) Other qualification in the Auditors Report, are explained in the notes to the Account and does not require any further elaboration by the Board of Directors.

DIRECTORS RESPONSIBILITY:

Pursuant to Section 217(2AA) of the Companies (Amendment) Act, 2000 the Directors confirm that:

(i) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures in the Notes on Accounts.

(ii) The directors had selected such accounting policies and applied them consistently and fair view of the affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

(iii) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

The directors had prepared the annual accounts on a going concern basis.

ACKNOWLEDGMENT:

Your Directors express their sincere gratitude to the Members, Creditors including Fixed Depositors, Financial Institutions and Banks, Government Authorities for their continuous co-opration to the company.

By order of the Board of Directors For, ADARSH CHEMICALS & FERTILIZERS LTD.,

N. D. PATEL WHOLE-TIME DIRECTOR

Date : October 3, 2002 PLACE : UDHNA