Your Directors present the 17th Annual Report together with the Audited
 Balance Sheet and Profit & Loss Account for the year ended 31st March,
 2002.
 
 FINANCIAL RESULTS
 
                                                          (Rs. in Lakhs)
                                              2001-2002        2000-2001
                                            (12 Months)       (9 Months)
 
 Sales & other income                            4692.5           3675.9
 
 Gross Profit (Loss) before interest
 & depreciation                                 (813.7)          (219.6)
 
 Interest                                        3504.7           2524.9
 
 Depreciation                                    6.36.4            470.3
 
 Profit/(Loss) before tax                      (4954.8)         (3214.7)
 
 Prior period adjustments                           7.7            460.1
 
 Profit/(Loss) after tax                       (4962.5)         (3674.8)
 
 Transfer from investment allowance
 reserve (utilized)                                   -             80.1
 
 Balance of Profit & Loss Account brought
 forward                                      (12286.3)         (8691.5)
 
 (Loss) carried forward to Balance Sheet      (17248.8)        (12286.3)
 
 DIVIDEND
 
 In view of the poor performance of the Company, your Directors are
 unable to recommend any dividend for the year 2001-2002.
 
 OPERATIONS
 
 The year under review continued to be a difficult one for the Company.
 The company could achieve a turnover of Rs. 46.92 Crores during the
 year as against the previous years turnover of Rs. 36.76 Crores of
 nine months. The Company suffered net loss of Rs. 49.54 Crores as
 compared to net loss of Rs. 32.14 Crores during the last period. The
 low volume of sales continued due to non availability of adequate
 working capital facilities leading to underutilisation of the
 manufacture facilities. The management has been making its sincere
 efforts to arrange funds for revival/settlement of outstanding dues and
 has submitted proposals to Banks and Financial Institutions but the
 efforts of the management have not yet been materialised in arranging
 the funds. Your Directors are confident for the revival of the Company
 and are making sincere efforts to raise the required finances.
 
 REFERENCE TO BIFR
 
 As the members are aware that due to complete erosion of its entire net
 worth as on 31st March, 2001, a reference was made on 17.07.2001 to the
 Board for Industrial and Financial Reconstruction (BIFR) under proviso
 to sub section (1) of Section 15 of the Sick Industrial Companies
 (Special
 
 Provisions) Act, 1985 for determination of measures for the
 rehabilitation of the company. Proceedings before the BIFR have already
 been started and the BIFR in their hearing held on 30.07.2002 has
 appointed IFCI Ltd. as the Operating Agency u/s 16(2) of the Act for
 conducting an inquiry into the Sickness of the Company and other
 related aspects by getting a Special Investigative Audit (SIA) of the
 Companys Accounts done by reputed firm of Chartered Accountants. The
 Company is proposing to file an appeal against some of the directions
 contained in BIFRS Orders dated 30.07.2002.
 
 FIXED DEPOSITS
 
 The company has not invited/accepted any fresh deposit from public
 during the year ended 31st March, 2002 under section 58A of the
 Companies Act, 1956.
 
 DIRECTORS
 
 Since the last Annual General Meeting, the following changes have taken
 place in the Board of Directors of your Company.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the company, Shri V. S. Dewan and Shri J. C.
 Dewan retire by. rotation and being eligible offer themselves for
 re-appointment. Further, the nominations of Shri A. K. Sharma and Shri
 Devender Singh have been withdrawn from the Board by the IFCI Ltd. and
 PICUP respectively.
 
 AUDITORS
 
 M/s Ashok & Co., Chartered Accountants, auditors of the company was to
 be retired at the ensuing Annual General Meeting. However, due to
 sudden sad demise of Sh. Ashok Kumar, Chartered Accountant, Proprietor
 of M/s Ashok & Co., the Board of Directors has appointed M/s Gupta
 Pramod & Co., Chartered Accountants, Meerut as auditors of the Company
 to fill the vacancy caused by the sudden death of the existing Auditor
 of the Company. M/s Gupta Pramod & Co. will be retiring at the ensuing
 Annual General Meting and being eligible, offer themselves for
 re-appointment.
 
 AUDITORS REPORT
 
 The notes to the accounts referred to in the Auditors Report are
 self-explanatory and therefore do not call for any further explanation.
 
 AUDIT COMMITTEE
 
 The Audit Committee was re-constituted on 30.10.2002 consisting of
 three members viz. S/Sh. S. K. Verma, V. S. Dewan and K. R. Gupta. Sh.
 V. S. Dewan is the Chairman of the Audit Committee.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement u/s 217(2AA) of the Companies Act, 1956,
 with respect to directors responsibility statement, the Directors of
 your company confirm:
 
 i. that in the preparation of the annual accounts for the year ended
 31st March, 2002, the applicable Accounting Standards have been
 followed and no material departures have been made from the same.
 
 ii. that they 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 end of the financial year and of the loss of the
 company for the year.
 
 iii. that they have 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; and
 
 iv. Since the net worth of the Company has been completely eroded as on
 31.3.2001 and accordingly a reference was made before the Honble BIFR
 under proviso to sub section (i) of Section 15 of Sick Industrial
 Companies (Special Provisions) Act, 1985 for determination of measures
 for the rehabilitiation of the Company, the accounts of the Company for
 the year ended 31st march, 2002 have been prepared on a going concern
 basis.
 
 LITIGATIONS
 
 Some creditors of the company have filed winding up petitions against
 the company in the High Court. Some of the creditors have also
 initiated legal proceedings in various Courts/Tribunals for recovery of
 their dues. Your company is taking appropriate steps to defend the said
 proceedings and is also negotiating with the parties for sorting out
 the matters amicably and on terms favourable to the Company.
 
 OTHER INFORMATION
 
 Annexure to this report gives the information in respect of
 conservation of energy, technology absorption and Foreign Exchange
 earnings and outgo, required 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 forms a part of the
 Directors Report.
 
 None of the employees was in receipt of remuneration of Rs. 2,00,000 or
 more per month and hence the provisions of section 217(2A) of the
 Companies Act, 1956 are not applicable.
 
 The equity shares of the company are presently listed with the Stock
 Exchanges at Kanpur, Delhi, Mumbai, Ahemdabad and Kolkata. The
 shareholders in their meeting held on 15.03.2001 had approved
 de-listing of equity shares of the company from stock exchanges at
 Ahemdabad and Kolkata. The Annual listing fee amounting to Rs. 5.62
 lakhs is pending to the various stock exchanges.
 
 In order to raise funds by issue of shares to increase the business
 activities of the Company, the Company increased its Authorised Capital
 from Rs. 25 Crores to Rs. 50 Crores during 1996. However, due to
 adverse capital market conditions and present financial health of the
 Company, it is no longer appropriate for the Company to come out with
 an issue in the next few years and hence, it has been decided to
 reinstate the authorised capital of the Company from Rs. 50.00 Crores
 to Rs. 25,00 Crores.
 
 In the 11th Annual General meeting held on 27.03.1997, the Company
 declared dividend @ 20% pro-rata to its shareholders for the year
 1995-96. The financial position of the Company deteriorated day by day
 and the Company could not make the payments of the Dividend within
 stipulated time. Since the liquidity position of the company has also
 been adversely affected due to continuous heavy losses in the
 subsequent years and the company has become Sick Industrial Company u/s
 3(1)(o) of SICA, 1985, it has been decided to revoke dividend for the
 year 1995-96 subject to the approval of the shareholders in the ensuing
 Annual General Meeting.
 
 CORPORATE GOVERANCE
 
 The Report on Corporate Governance is annexed as part of this report.
 
 ACKNOWLEDGEMENT
 
 Your Directors appreciate the valuable co-operation extended by the
 Central and State Government Authorities and are grateful to the
 financial institutions and bankers for their continued assistance,
 guidance and support.
 
 Your Directors place on record their appreciation of the contribution
 made by the employees of the company at all levels, the shareholders,
 suppliers, dealers, customers and public for their support and
 confidence reposed in the management.
 
 ANNEXURE TO DIRECTORS REPORT
 
 PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
 BOARD OF DIRECTORS) RULES 1988.
 
 A. CONSERVATION OF ENERGY
 
 Energy Conservation Measures taken:
 
 a) Energy conservation is receiving high priority, and major steps
 towards energy conservation are being taken by the company on a
 continuous basis.
 
 1. Closely monitors energy consuming equipments, company surrendered
 the sanctioned load of 3252 KVA over a period of three years and
 started the generation of power from its own generator sets.
 
 2. Maintains close liaison between energy generating centres and
 consuming points.
 
 b) Additional investments and proposals being implemented for reduction
 of consumption of energy.
 
 The management endeavours to reduce consumption of energy and
 explorations/research in new areas for reduction in energy consumption.
 
 c) Impact of measures at (a) and (b) above for reduction of energy
 consumption and consequent impact on the cost of production of goods.
 
 The measures taken above for reduction in energy consumption will help
 to reduce the dependency on State Supplied power and stabilization of
 production with the reduction in cost of production.
 
 d) Total energy consumption and energy consumption per unit of
 production as per Form A of the Annexure to the Rules:
 
 B. CONSUMPTION PER UNIT OF PRODUCTION:
 
 There is no specific standard for the per unit consumption of
 electricity, as the consumption per unit depends on the production, and
 product mix, as the energy consumption per unit varies in accordance
 with the change in product mix.
 
 FORM `B
 
 1. RESEARCH & DEVELOPMENT:
 
 i) Specific areas in which R&D carried out by the Company:
 
 The company has installed proper laboratories at its various plants for
 the better study of its products quality.
 
 ii) Benefits derived as a result of the above R&D:
 
 Reduction in cost of out-put, improvement of quality, better
 marketability.
 
 iii) Future Plan of Action:
 
 The above activities shall continue and more efforts in this direction
 will be made.
 
 iv) Expenditure on R&D:
 
 No System of separate maintenance of R&D records has yet developed. The
 expenditure is merged with various other heads of expenses.
 
 2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
 
 i) The efforts in brief towards technology absorption, adaptation and
 innovation:
 
 The plants are based on indigenous technology. Every effort is made to
 know the latest development in technology in India as well as abroad.
 
 ii) Benefits derived as a result of the above efforts e.g. Output
 improvement, cost reduction, product development, import substitution.
 
 It has helped the company to improve the quality of products according
 to the need of the market.
 
 iii) Details of Imported Technology: NOT APPLICABLE
 
 3. FOREIGN EXCHANGE USED AND EARNED:
 
                                                2001-02          2000-01
                                            (12 Months)       (9 Months)
                                         (Rs. in Lakhs)   (Rs. in Lakhs)
 
 i) Foreign Exchange earned including
 Direct and indirect Exports                    3437.31          2460.06
 
 ii) Foreign Exchange used                        52.75            28.93
 
                             For and on Behalf of the Board of Directors
 
 PLACE: MEERUT                                               V. S. DEWAN
 DATED: 30.10.2002                                              CHAIRMAN