Directors Report of J F Laboratories Ltd.

Mar 31, 2010

The Directors have pleasure in presenting the Twenty first Annual Report together with the Audited Statement of Accounts for the financial year ended on March 31, 2010.

1. FINANCIAL RESULTS AND STATUS OF THE PROJECT:

The Companys Project for manufacture of Amino Acids as a 100% Export Oriented Unit though installed was not been commissioned or commenced commercial production. Therefore, no Profit and Loss Account has been prepared for the impending financial years and a statement of net "Pre-operative Expenditure During Construction Period" has been annexed as part of the Accounts. Based on the copies obtained during the year of the orders of the Mumbai Debts Recovery Tribunal I, the company learnt that in the Recovery Proceedings No. 343 of 2003 (OA 17 Of 2001) of the erstwhile Unit Trust of India, an auction for the Companys projects assets was held on 19th February, 2009 and the sale thereat has been confirmed and made absolute as on 30* March, 2009 for the entire asset base of the Project Undertaking of the Company in favour of one, M/s. Jsons Foundry Private Limited, G13, MIDC Kupwad Block, Sangli Maharashtra 416 436 for a sum of Rs. 420 lakhs, albeit without any notice or intimation to the Company though it had sought specific directions of the Honble Tribunal at such proceedings having regards to the specific nature/status of its Project Undertaking. The proceeds thereof have also been appropriated by the Honble Recovery Tribunal to the Companys secured creditors, viz. SBI, IDBI, Kotak Mahindra Bank (ICICI) and IFCI against their dues and charges as aforesaid. Accordingly, the costs and outlay on and relating to the entire Project Undertaking of the Company net of the auction sale proceeds is considered as a loss on such forced sale of its Project Undertaking. Consequently, for the year ended on March 31, 2010, the Company recognized such exceptional items with respect to Schedule 6, Pre-operative . Expenditure as shown separately in the Balance Sheet hitherto. The aggregate expenditure incurred for the year ending March 31, 2010 amounted to Rs. 11.64 Lakhs, also written off towards the Loss of Project Undertaking.

2. MANAGEMENT DISCUSSION AND ANALYSIS

I. INDUSTRY OUTLOOK

The Indian bio-process industry has matured with global acceptance of our knowledge, entrepreneurial, skilled human resource base in the field. For reasons already noted, the Companys pioneering initiative could not be capitalized to its advantage due to its entry at very nascent stage of the industry. The growth of this sector for research, product development and processing tie-ups and ventures, is now visible with various players in the field.

II. FINANCIAL PERFORMANCE - TERM LOANS / DEBENTURES:

The Financial Institutions and Banks have already recovered their dues and charges against financial security of the Project assets and the same having been auctioned by the Honble Mumbai Debts Recovery Tribunal as mentioned in Para 1 above.

III. OUTLOOK ON OPPORTUNITIES, THREATS, RISKS AND CONCERNS

Given the present status of the Companys affairs and the financial position of the Company, there is no outlook on opportunities, threats, risks and concern as there is no project of the company.

IV. INTERNAL CONTROL SYSTEMS AND ADEQUACY

In the above circumstances, the Company has effected various austerity measures and cost controls and given the present size and nature of its operations, the internal control systems are adequate.

3. DIRECTORS:

Mrs. Alka Poddar retires by rotation and being eligible offers herself for re-appointment.

4. AUDITORS:

Messrs. Jhawar Mantri & Associates, Chartered Accountants, retire at the ensuing Annual General Meeting and are eligible for reappointment.

5. PERSONNEL:

The Company has retained only basic work force as a control exercise due to the above circumstances. However, reasonable availability of skilled resources would facilitate any start up operations. None of the employees have been paid remuneration @ Rs. 200,000/- p.m. or part thereof and hence the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, is not applicable and the statement thereunder is not annexed to this report.

6. RESPONSIBILITY STATEMENT

(Pursuant to section 217(2AA) of the Companies Act, 1956) as amended by Companies (Amendment) Act 2000.

The Board further reports that:

(i) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year ended on March 31, 2010.

(iii) the Directors have 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 (also refer Note 5(e));

(iv) subject to Note 1, the annual accounts are prepared on going concern basis.

7. Corporate Governance

The Company is committed to adhere to the Corporate Governance measures prescribed by the Listing Agreement, SEBI guidelines and the Companies Act, 1956. A separate report on Corporate Governance is furnished as a part of Annual Report and the certificate from the Companys Auditors regarding compliance with the said code is annexed to the said Report.

8. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. Conservation of Energy:

As aforesaid, the Company had not commenced commercial operations during the year. In course of the Project execution and implementation, abundant care and attention has been exercised in selection of equipment in order to minimize the consumption of fuel and power.

B. technology Absorption:

As the Members are aware that the National Chemical Laboratory appointed by the Company has confirmed that the basic process technology should be viable through parametric fine tuning of the processes to overcome the intricacies of the technology adopted for its Amino Acids Project. With the present circumstances, the Company has to re-explore the possibility of putting the project on stream for any primary and/or derivative goals in line with such findings.

C. Foreign Exchange Earnings and Outgo:

The Company has not earned or used any foreign exchange during the year.

D. Unpaid Deposits:

The Company has not accepted any deposits from the public and no amount is" due or remaining unpaid or unclaimed to any Depositors.

9. INVESTOR SERVICES:

The Company has appointed Messrs. Sharex Dynamic (India) Pvt. Ltd. as its Registrar and Transfer Agents and has addressed the compulsory dematerialisation format of security as per the SEBI guidelines. The Company shall ensure to provide such services to the best interests of its investors.

10. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation of the continued support and assistance provided by the Financial/ Investment Institutions viz.,IDBI, ICICI, IFCi, UTI and State Bank of India. Your Directors also wish to place on record their appreciation of the contribution made by the employees at all levels.

For and on behalf of the Board

Place : Mumbai S. C. Rane

Date : September 1,2010 Director