Aries Agro

The Directors have pleasure in presenting their 38th Annual Report on
 the operations of the Company together with the Audited Statements of
 Accounts for the Financial Year ended 31st March, 2008. This is the
 maiden report after the successful Public Issue of the Company.
 
 FINANCIAL RESULTS
 
                                                         (Rs. In Lakhs)
 PARTICULARS                      AS AT 31.03.2008    AS AT 31.03.2007
 
 Turnover                              10,337.93       7,405.34
 Profit Before Tax Interest             1,939.91       1,693.63
 & Depreciation
 Less:Interest                            330.84         247.48
 Depreciation                68.84        399.68  48.47  295.95
 Profit Before Tax                      1,540.23       1,397.68
 Provision for Taxation                   496.50         476.60
 Deferred Tax             (110.18)        386.32  51.66  528.26
 Profit After Tax                       1,153.91         869.42
 Balance Brought Forward                1,645.00         878.90
 Prior Period Expense                      37.50          16.00
 Exceptional Items                          0.69          87.32
 Amount available for                   2,760.72       1,645.00
 appropriation
 General Reserve                          150.00           NIL
 Proposed Dividend                        156.05           NIL
 Tax on Proposed Dividend                  26.52           NIL
 Surplus Carried Forward to             2,428.15       1,645.00
 Balance Sheeet
 
 OPERATIONS
 
 During the period year under review, the Company has earned total
 income of Rs. 1,939.91 Lakhs. As at March’08, the Gross Fixed Asset is
 Rs. 3,174.24 Lakhs.  The turn over for the year was 10,337.93 Lakhs as
 against Rs. 7,405.34 Lakhs in the previous year reflecting a growth of
 40%. Profit after tax for the year was Rs.  1,153.91 Lakhs registering
 an increase of 33%.
 
 The Company is a major manufacturer and supplier of micronutrients/
 secondary nutrient fertilizers and also water soluble NPK fertilizers.
 
 DIVIDEND AND RESERVES
 
 The Company has paid interim Dividend at Rs. 1.20 per Share (12 %)
 aggregating to Rs. 1,56,05,206/80 plus dividend distribution tax of Rs.
 26,52,105/- as per the resolution passed in the meeting of Board of
 Directors held on 28th May, 2008. As there is no significant change in
 profits of the Company for the year ended on 31st March, 2008 after
 payment of Interim Dividend, it is proposed not to recommend to the
 members any further dividend for the year ended on 31st March, 2008 and
 confirm the Interim Dividend as Final Dividend.
 
 FUTURE PROSPECTS:
 
 The monsoon estimates made by Meteorological Department for 2008 are
 extremely positive with 99% long term average. This would mean a good
 kharif crop and therefore a positive outlook for the current financial
 year in terms of revenue. The Company is also introducing range of
 speciality plant nutrition concepts and will be launching 7 new brands
 during the current financial year adding to the product range being
 marketed through the wide distribution network of the Company.  The
 current line of products are expected to grow well during the current
 season.
 
 The Company has also invested in Golden Harvest Middle East FZC a
 manufacturing facility for chelated micronutrients and is expected to
 commence commercial production by July’08. This will provide the
 Company with a cost advantage and will lead to savings in cost of
 production.  The Company has inaugurated its largest and most automated
 manufacturing facility at Hyderabad on 24th March, 2008. The capacity
 of this Hyderabad factory exceeds the total capacity of all the
 Company’s Units as on 31.03.2007. This will undoubtedly strengthen and
 enhance our production capabilities and service our largest markets.
 The entire capacity of this unit will be available during the whole of
 2008-09. The other 2 factories in Ahmedabad and Lucknow is expected to
 commence commercial production as per schedule.
 
 RESEARCH AND DEVELOPMENT:
 
 The Company continues to invest on Research and Development at 3
 different levels:
 
 1) There is a continuous focus on university research on speciality
 plant nutrition which continues across India.
 
 2) Our team of extension officers conducts continuous field
 demonstrations and extension work including large scale soil sampling,
 which provides constant updates on deficiency levels across all states
 in India.  3) The Company’s R&D at Bombay is ISO 9001 certified and
 works on new product development and continuous quality checks. The new
 manufacturing unit at Hyderabad has been equipped with a state of art
 laboratory to keep pace with the Company’s expansion in that region.
 
 INITIAL PUBLIC OFFERING (IPO)
 
 During the period under review, the Company entered the capital market
 and offered 45,00,000 Equity Shares of Rs. 10/- each at a premium of
 Rs. 120/- through book building process on 11th January, 2008 for
 subscription to the public. The Company received overwhelming response
 from the investors and net issue to Indian public was oversubscribed to
 the extent of about 7.62 times.  Allotments of Shares have been made
 and the Shares of the Company are now listed and traded at Bombay Stock
 Exchange Limited and National Stock Exchange of India Limited. Your
 Directors take this opportunity to thank the investors for their
 confidence in the Company.
 
 USE OF IPO PROCEEDS
 
 The commitments made on the utilization of the IPO funds have been
 adhered to during the period following the IPO. Till the close of June,
 2008, the Company has utilized the IPO funds for the purposes for which
 it was raised, namely, in setting up a manufacturing facility at
 Pashamylaram, Patancheru, Dist. Medak, Andhra Pradesh, is the largest
 and state-of-the-art Unit of the Company for secondary and
 micronutrients involving a total out lay of Rs. 245 lakhs (excluding
 land and buildings), in repaying the funds borrowed for the general
 corporate purpose. The Company has also invested in setting up
 Manufacturing facility to Manufacture chelated Micronutrients at the
 Sharjah Airport International Free Zone (SAIF Zone) to the tune of Rs.
 654.60 Lakhs.  The Company has expended monies for the projects for
 which funds were raised through the IPO and it is expected to
 implement/commission all the projects within the committed time frame.
 
 DEPOSITS
 
 The Company has not accepted any deposits from the public within the
 meaning of Section 58A of the Companies Act, 1956.
 
 SUBSIDIARIES
 
 The Company has only two wholly owned subsidiaries, Aries Agro Care
 Private Limited and Aries Agro Equipments Private Limited having NIL
 aggregate assets as at 31st March, 2008 and gross income of Rs. NIL and
 Rs. NIL respectively, since the activity is yet to commence.
 
 In the Current year Company has subscribed for 75% stake in Golden
 Harvest Middle East, a Company incorporated in UAE.  As required under
 Section 212 of The Companies Act, 1956, annexed hereto are the Audited
 Statement of accounts, the Reports of the Board of Directors and
 Auditors’ Reports for the year ended 31st March, 2008 of Aries Agro
 Care Private Limited, Aries Agro Equipments Private Limited and Golden
 Harvest Middle East FZC.
 
 Golden Harvest Middle East FZC is setting up a project for manufacture
 of speciality secondary plant nutrients in Fujairah Free Trade Zone,
 U.A.E. Accordingly, for expansion /operations, your Company has
 obtained term loan from ICICI Bank Ltd., to fund investment in
 subsidiary.
 
 The Company has just floated another subsidiary which has been
 incorporated on 20.06.2008 in the name and style of Aries Agro Produce
 Private Limited wherein the Company has subscribed to the extent of 75%
 of its Equity. The purpose of incorporating the said Company is mainly
 for corporate farming.
 
 A Statement of Subsidiary Companies as prescribed under Section 212 of
 the Companies Act, 1956, is annexed and is forming part of the Annual
 Report.  Apart from the above statement a list of Subsidiary Companies
 is given in Note No. 9 A of the Notes to Accounts forming part of the
 Annual Report.
 
 DIRECTORS
 
 In accordance with the Companies Act, 1956 and the Articles of
 Association of the Company, Dr. Rahul Mirchandani and Dr. D. S. Jadhav
 retire by rotation at the ensuing Annual General Meeting and being
 eligible, offer themselves for re-appointment. Accordingly their re-
 appointment forms part of the notice of ensuing AGM.
 
 AUDITORS’ REMARKS
 
 As regards compliance with the Accounting Standard 15 in respect of
 Retirement benefits, the Company has already opted for the gratuity
 fund administered by Life Insurance Corporation of India, Mumbai for
 the employees of the Company. The Company will provide for Gratuity
 liability for earlier period as and when paid, since the Company has
 been granted time upto 30.11.2010.
 
 APPOINTMENT OF AUDITORS
 
 M/s. Kirti D. Shah & Associates, the Auditors of the Company retires at
 the ensuing Annual General Meeting and being eligible, offers
 themselves for re-appointment.
 
 DIRECTORS’ RESPONSIBILITY STATEMENTS
 
 Pursuant to the requirements of Section 217 (2AA) of the Companies Act,
 1956 with respect to the Directors’ responsibility statement, it is
 hereby confirmed that:
 
 1.  In preparation of the Annual Accounts, applicable accounting
 standards have been followed.
 
 2.  The accounting policies are consistently applied and reasonable,
 prudent judgment and estimates are made so as to give a true and fair
 view of the state of affairs of the Company at the end of the financial
 year and of the profit of the Company for that period.
 
 3.  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;
 
 4.  The Directors had prepared the Annual Accounts on a going concern
 basis.
 
 PERSONNEL
 
 Your Directors wish to place on record their appreciation of the
 contribution made by the employees at all levels for the successful
 operations of the Company during the year.
 
 Information in accordance with the provisions of Section 217(2A) of the
 Companies Act, 1956 (“Act”) read with the Companies (Particulars of
 Employees) Rules, 1975, as amended, are required to be set out in the
 Annexure to this Report. However, as per the provisions of Section
 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to all
 the members of the Company excluding the statement of particulars of
 employees’ under Section 217(2A) of the Act. Any member interested in
 obtaining a copy of this statement may write to the Compliance Officer
 at the Registered Office.
 
 CORPORATE GOVERNANCE
 
 The Company has complied with the various requirements under the
 Corporate Governance reporting system. A detailed compliance report on
 Corporate Governance is annexed to this report. The Auditors’
 certificate on compliance with the conditions of corporate governance
 under clause 49 of the listing agreement is also annexed to this
 report.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNING & OUTGO
 
 Particulars in respect of Conservation of Energy, Technology Absorption
 and Foreign Exchange Earnings and Outgo, as required to be disclosed
 under Section 217(1) (e) of the Companies Act, 1956 read with the
 Companies {Disclosure of Particulars in the Report of the Board of
 Directors} Rules, 1988 and forming a part of the Directors Report are
 as under:
 
 Power and Fuel Consumption
 
 Particulars                Current Year      Previous Year
                            2007-2008         2006-2007
 
 (a)   Purchased:
 (i)   Unit (KWH)            5,64,555         5,60,800
 (ii) Total Amount (Rs.)    40,44,753        30,69,004
 (iii) Rate/Unit (Rs.)          7.16             5.47
 
 (b)  Own Generation:
 
 (i)   Coal              Not Applicable     Not Applicable
 
 (ii) Furnace Oil - Kl       5,528             2,849
 (iii) Internal 
 Generation - Units         18,463             9,521
 
 Technology Absorption
 
 The Management has focused on productivity and Total Quality Management
 [TQM] in order to optimize manufacturing costs. This has helped in
 achieving optimum manufacturing costs, improved quality of products and
 consequently, enhanced customer satisfaction. The Company uses
 indigenous technology.
 
 Foreign Exchange Earnings and Outgo
 
 The particulars regarding Foreign Exchange Earnings and Expenditure
 appear as item number 12 in the Notes to the Accounts.
 
 ACKNOWLEDGEMENT
 
 Your Directors gratefully acknowledge the support and co- operation
 extended by Banks, Local authorities, Customers and Shareholders of the
 Company and hopes to achieve greater and greater heights in the years
 to come.
 
                                                  By Order of the Board
 
                                                       Sd/-
 Place : Mumbai                            Dr. T. B. Mirchandani
 Date  : 30th June, 2008                  Chairman & Managing Director