To the Members,
 
 The Directors present the Forty-Sixth Annual Report on the business
 and operations of the Company for the year ended March 31, 2011.
 
 FINANCIAL RESULTS
 
                                                     [Rupees in Lacs]
 
 Year ending March 31,                             2011         2010
 
 Gross revenue                                    14732        22782
 
 Operating profit (PBIDT)                         (4209)        3775
 
 Finance Expenses                                  2472         2812
 
 Depreciation                                       440          439
 
 Profit before tax & Exceptional items            (7121)         524
 
 Exceptional items                                 (805)       (443)
 
 Profit / (Loss) after tax                        (7926)          81
 
 Excess provision of Income Tax of earlier          -            213
 year written back.
 
 Profit after current tax and deferred            (7926)         294
 
 Tax and Exceptional items
 
 Balance brought forward                            215          (79)
 
 Balance carried to Balance Sheet                 (7711)         215
 
 DIVIDEND  
 
 In respect of the year under review, i.e., the year 2010-2011, in the
 absence of profits your Directors do not propose to declare any
 dividend.
 
 OPERATIONS
 
 During the year under review, the Company has achieved gross revenue of
 Rs. 147.32 crores as against Rs. 227.82 crores in the previous year.
 
 Sales of lighting products comprises of domestic sales and export
 sales.
 
 DOMESTIC SALES
 
 The Company''s sales suffered significantly for want of working capital
 and delayed recoveries from markets. The trading activities have
 yielded marginal returns but in the process have used some of the
 inventories.
 
 EXPORT SALES
 
 The Export Sales was to the tune of Rs. 8.40 crores for the year under
 review as compared to Rs. 20.71 crores in the previous year. The
 Company has consciously focused on this segment and taken steps to grow
 exponentially during the coming years. New products like the Power
 Products and the LED Products were introduced to new customers in this
 year. During the year, a patented Product ''E2T5'' was exclusively
 developed complying to European specifications. The Power Products and
 LED related special designs are likely to cater to both the Export and
 Domestic markets and will play a major role in the business prospects
 of the Company in the coming years.
 
 RESEARCH AND DEVELOPMENT
 
 The Company has set up state of art Asian Technology Centre (ATC) in
 Pune, Maharashtra, which is ISO 9001:2008 compliant. ATC has designed &
 developed products conforming to Global Certification agencies like
 UL/ETL etc. in Power Protection Devices & Solid State LED lighting. It
 has also achieved significant progress in Research & Development for
 LED Garage Parking Lights for the Global market, LED Tubelights, Bulbs,
 cost rationalization and conventional CFL Down Lighters, OTS Products,
 Solar Products and Streetlights. The Company has also obtained the ISI
 certification for manufacture of CFLs. The awareness for LED-based
 products is growing fast in India and therefore the Company''s foray
 into this product segment is a timely step towards establishing its
 presence in the marketplace for innovative and modern lighting
 solutions.
 
 ATC follows Global practices of ''NPI'' (New Product Introduction) and
 ''TOT'' (Transfer of Technology) for conducting Research & Development
 activities. The team at ATC consisting of more than 40 engineers and 15
 support staff has more than 100 man-years of experience of working
 together between them.
 
 Major milestones during the year under review have been:
 
 - UL certified LED Garage Parking Light for exports
 
 - UL / ETL certified Power Protection Devices including 4 models of
 PM20-208, PM20-240, PM30-240, HEMX range.
 
 - LED Tubelight, the Loomlight, for successful replacement of
 conventional tubelights in the Textile industry.
 
 - TOT audit by independent external agency.
 
 - Development of LED lighting products for the general lighting
 space.
 
 An expenditure of over Rs. 2 crores a year is likely to yield a
 significant push to technology and business in years to come.
 
 FINANCE
 
 As advised during the last report, the Company had approached its
 lenders for rescheduling the debt over a longer period. The Company''s
 finances further deteriorated due to lower capacity utilization, higher
 interest and reduced margins. Faced with defaults, the Company
 approached CDR through its largest creditor, IDBI Bank in Jan 2011.
 The proposal is pending approval of the requisite number of creditors.
 The Board of Directors is of the opinion that the Company''s survival
 solely depends on the approval of such a package. The management is
 still in negotiation for such approval. In the meantime, the Company is
 facing law suits from LIC Mutual Fund and from HSBC for recoveries of
 their dues.
 
 The enclosed statement forming part of the report gives details such as
 Financial Position at a glance, Distribution of Income etc.
 
 CAPITAL EXPENDITURE
 
 As at 31st March, 2011, the gross fixed assets stood at Rs. 9864.23
 lacs and the net fixed assets at Rs. 3345.87 lacs. Additions to Fixed
 Assets during the year amounted to Rs.2.90 lacs.
 
 INVENTORIES, RECEIVABLES AND CURRENT ASSETS
 
 The management has done a detailed analysis of its current assets as
 reported in the previous year. For the reasons explained below, the
 
 Board is of the opinion that the realizable value of assets has gone
 down significantly:
 
 Inventories: Rs. 8364.69 lacs. The inventories include a large portion
 of products meant for a specific client who has legal disputes with the
 Company and hence not realizable. Also a large volume of components,
 WIP remained unutilized for such products in domestic and exports
 markets. The total diminution of value is estimated at Rs. 3000.00 lacs
 (36%).
 
 Receivables: Rs. 13167.87 lacs. The Company has disputed export
 receivables where a lawsuit has been lost and also other cases where
 quality counter claims and customers'' reorganization have delayed
 recoveries. On domestic front, large number of debtors have raised
 counter claims. Coupled with a reduced turnover, this has made
 recoveries more difficult. The Company has issued legal notices in over
 200 cases. However, the Board of Directors feels, in normal course of
 business, the recoveries will be difficult to the extent of Rs.
 5215.16 lacs.
 
 Advances: Rs. 2812.82 lacs. In many cases, the Company had advanced
 certain amounts for long term business contracts. The amounts of Rs.
 261.00 lacs seem difficult of recoveries in view of reduced business
 activities.
 
 In view of the above, current assets as stated above are not at
 realizable values as stated in the Balance Sheet
 
 SUBSIDIARY COMPANIES
 
 In furtherance of the various objectives as mentioned in the last
 year''s Report, the Company has effective from 1st October, 2009
 transferred the following Divisions to two 100% subsidiaries (SPVs) as
 under:
 
 a.  Business of ESCO Division, i.e. financing of Projects / Products to
 customers on energy saving basis, and all activities related thereto
 together with all related assets, liabilities and entitlements at book
 values as at the time of transfer, on a going concern basis. The name
 of this 100% subsidiary is AEL ESCO PRIVATE LIMITED.
 
 b.  Business of Projects Division, i.e. State Electricity Board
 Projects and all activities related thereto together with all related
 assets, liabilities and entitlements at book values as at the time of
 transfer on a going concern basis. The name of this 100% subsidiary is
 AEL PROJECTS PRIVATE LIMITED.
 
 The Accounts for the year ended 31st March, 2010 and 31st March, 2011
 have incorporated all such transactions at the book value at the time
 of transfer and the difference between the book values of identified
 assets and liabilities of ESCO Division amounting to Rs.  5174.34 Lacs
 and of Project Division amounting to Rs. 1129.15 Lacs are shown as
 investment in the proposed subsidiaries.
 
 Pending approval of secured / unsecured lenders, the Company has, for
 the time being, shown the said investment under Investment Suspense
 Account in Schedule 6 of the Accounts as on 31st March, 2010 and 31st
 March, 2011. On account of transfer of these two Divisions to two
 separate subsidiaries, the Company has also prepared Consolidated
 Balance Sheet and Profit & Loss Account which forms part of the Annual
 Report 2009-2010 and 2010-2011.
 
 The Company is looking out for strategic partners in these activities
 once the fate of CDR is known.
 
 RIGHT ISSUE
 
 The Company has received the Observation Letter from SEBI bearing No.
 CFD/DIL/ISSUES/SP/VB/17386/2010 dated 25th August, 2010. The validity
 of the said SEBI Observation Letter was for one year from the date of
 issuance ie. upto 24th August, 2011.
 
 SEBI has directed Lead Manager M/s. Vertex Securities Limited, to
 update the Draft Letter of Offer as per the observations enumerated by
 it in the said Observation letter.
 
 In the meanwhile, in order to get the approval of the Bankers to the
 Company for the Company''s proposal for Corporate Debt Restructuring
 (CDR), the issue size is proposed to be increased to Rs. 68.90 Crore.
 No sooner the approval for proposed CDR is received, the updation of
 the Draft Letter of Offer will be undertaken by the Company to ensure
 that the Rights Issue is completed at the earliest.
 
 ACCOUNTS
 
 The accompanying Financial Statements of the Company have been prepared
 on a going concern basis.
 
 In preparation of these accounts, the Accounting Standards made
 applicable by the Institute of Chartered Accountants of India have been
 followed.
 
 We have selected appropriate accounting policies which have been
 applied consistently and have made judgments and estimates that are
 reasonable and prudent so as to ensure that the accounts give a true
 and fair view of the state of affairs of the Company as at 31st March,
 2011 and of the loss of the Company for the year ended on that date.
 
 We have taken proper and sufficient care for maintenance of appropriate
 accounting records in accordance with the provisions of the Companies
 Act, 1956, for safeguarding the assets of the Company and for
 preventing and detecting frauds and other irregularities.
 
 AUDITORS'' REPORT
 
 As regards observations as contained in Auditors'' Report dated 7th
 June, 2011, regarding transfer of related loans and debentures of ESCO
 and Project Divisions to wholly owned subsidiaries, Stock Options
 granted to Directors and Employees, litigations initiated by LIC Mutual
 Fund, Bank of India and other Banks for recovery of their dues and
 diminution in the value of investments, old / unsaleable stocks, sundry
 debtors and loans and advances, a reference may please be made to Note
 No. 2, 4 to 7, 9 and 11 of Schedule 21(III) to the financial statements
 respectively, which are self-explanatory.
 
 PARTICULARS OF THE EMPLOYEES
 
 None of the Employees were drawing salary of Rs. 60,00,000/- or more
 per annum, if employed throughout the year or Rs. 5,00,000/- or more
 per month, if employed for part of the year.
 
 DIRECTORS
 
 Retirement by rotation
 
 In accordance with the provisions of the Articles of Association of the
 Company and the provisions of Companies Act, 1956, Mr. D. G.  Prasad
 retires by rotation at the ensuing Annual General Meeting and is
 eligible for reappointment. The Board recommends his re- appointment.
 
 Nominee Director
 
 IDBI Bank Ltd. (IDBI) vide its letter dated 5th June, 2010, appointed
 Mr. Hemendra Srivastava as its Nominee Director on the Board of
 Directors of the Company with effect from 19th June, 2011 in terms of
 the provisions of Loan Agreement dated 23rd March, 2007 and withdrew
 the nomination of Mr. Dipankar De, then existing Nominee Director of
 IDBI Bank on the Board of Directors of the Company, with effect from
 19th June, 2011.
 
 Subsequently, IDBI Bank Ltd. (IDBI) vide its letter dated 18th October,
 2010 has appointed Mr. S. Ananthakrishnan, its Executive Director, as
 its Nominee Director on the Board of Directors of the Company with
 effect from 1st November, 2010 in terms of the provisions of Loan
 Agreement dated 23rd March, 2007 and has withdrawn the nomination of
 Mr. Hemendra Srivastava, then existing Nominee Director of IDBI Bank on
 the Board of Directors of the Company, with effect from 1st November,
 2010.
 
 IDBI Bank Ltd. vide its letter dated 28th June, 2011 has withdrawn the
 name of Mr.S.Ananthakrishnan as Nomine Director of IDBI on the Board of
 Directors of the Company with effect from 28th June, 2011.
 
 The Board placed on its record its sincere appreciation for the
 valuable contribution made by Mr. Dipankar De, Mr. Hemendra Srivastava
 and Mr. S. Ananthakrishnan during their respective tenures as Nominee
 Directors of IDBI.
 
 Mr. S. Neelakanta Iyer, who is associated with the Company as President
 (Manufacturing Operations) since April, 2007, has been appointed as
 Executive Director and Jt. CEO (Manufacturing Operations) of the
 Company with effect from 1st June, 2011.
 
 Mr. Rajesh I. Mehta, who is Managing Director of INTEGRAL Technologies
 Pvt. Ltd., which is conducting research and development activities of
 the Company since last two years, has been appointed as Executive
 Director and Jt. CEO (Technology & Finance) with effect from 1st June,
 2011.
 
 Your Directors are pleased to report that the rich and varied
 experiences of Mr.Neelakanta Iyer and Mr. Rajesh Mehta will immensely
 benefit the Company.
 
 AUDITORS
 
 M/s. Sorab S. Engineer & Co., Chartered Accountants who are the
 statutory auditors of the Company, hold office until the conclusion of
 ensuing Annual General Meeting and are eligible for re-appointment.
 The members are requested to consider appointment of Statutory Auditors
 for the current financial year 2011-2012.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ETC.
 
 Information on Conservation of Energy, Technology Absorption, Foreign
 Exchange Earning and Out-go as required to be disclosed pursuant to
 Section 217 [1] (e) of the Companies Act, 1956, read with Companies
 [Disclosures of Particulars in the Report of Board of Directors] Rules,
 1988 is given in the Annexure forming part of this Report.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956 with respect to Directors'' Responsibility Statement, it is
 hereby confirmed:
 
 (i) that in the preparation of the annual accounts for the financial
 year ended 31st March, 2011, the applicable accounting standards had
 been followed along with proper explanation relating to material
 departures;
 
 (ii) that the directors had selected such accounting policies and
 applied them consistently and made judgements and estimates that were
 reasonable and prudent 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 the year under review;
 
 (iii) that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) that the directors had prepared the accounts for the financial
 year ended 31st March, 2011 on a ''going concern'' basis.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance along with Auditor''s
 certificate on its compliance is attached as an annexure to this
 report.
 
 DEPOSITORY SYSTEM
 
 As the members are aware, the Company''s shares are compulsorily
 tradable in electronic form. As on 31st March, 2011, 98.84% of the
 Company''s total paid-up capital representing 3,50,41,997 shares are in
 dematerialized form. In view of the numerous advantages offered by the
 Depository system, Members holding shares in physical mode are
 requested to avail of the facility of dematerialization of the
 Company''s shares with either of the Depositories.
 
 ACKNOWLEDGEMENTS
 
 Your Directors take this opportunity to thank the Financial
 Institutions, Banks, Central & State Government authorities, Regulatory
 authorities, Stock Exchanges and the Stakeholders for their continuous
 co- operation and support to the Company.
 
 Your Directors also thank customers, vendors and investors for their
 faith and support. Your Directors also place on record their deep sense
 of appreciation of the contribution made by employees at all levels.
 Their continuous support and their competence, hard work, team spirit
 and solidarity will make all the difference to the business of your
 Company.
 
                                 On behalf of the Board of Directors
 
 Place: Thane                                           Arun B. Shah
 
 Date: 18th August, 2011                          Executive Chairman