ESS DEE Aluminium

The Directors are pleased to present the Fourth Annual Report together
 with the Audited Statements of Accounts for the year ended 31st March
 2008.
 
 FINANCIAL RESULTS
 
 The financial highlights of the year are:
                                                           (Rs in lacs)
 Particulars                                Year Ended      Year Ended
                                            31.03.2008      31.03.2007
 
 Sales (net of excise duty) and Other Income 28,840.30       14,381.89
 Profit before Depreciation and Tax           7,497.41        3,227.96
 Less Depreciation                              305.71           97.48
 Profit After Depreciation before Tax         7,191.70        3,130.48
 Less Provision for Taxation                  1,020.93          368.70
 (Net) Profit after Tax                       6,170.77        2,761.78
 
 PERFORMANCE REVIEW
 
 Your Company has recorded a significant growth in its performance.
 Total Income grew to Rs. 28840.30 lacs, registering 100% growth of over
 previous years income of Rs.14381.89 lacs. Profit after Tax improved
 by 123% to Rs.6170.77 lacs in the current year compared to Rs. 2761.78
 lacs in the previous year. This growth has been possible primarily due
 to a combination of factors like repeat orders,client additions
 supported by capacity expansions.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend of 20% (Rs.2/- per
 equity share) for the year ended 31st March 2008 on the equity share
 capital of Rs.27.82 crores, involving an outgo of Rs. 556.50 lacs.
 Additionally, dividend distribution tax at 16.995 % (including
 surcharge and education cess) will involve an outlay of Rs.94.58 lacs,
 which will be borne by the company.
 
 SHARE CAPITAL
 
 During the year under review the Authorised Share Capital was increased
 from Rs.3,000.00 lacs to Rs.3,500.00 lacs. The Paid-up Share Capital
 was increased from Rs. 2641.48 lacs to Rs. 2782.48 lacs pursuant to the
 Preferential Allotment of 14,10,000 equity shares of Rs.10/- each at a
 premium of Rs.565/- each to M/s. Morgan Stanley.
 
 PUBLIC DEPOSIT
 
 Your Company has not accepted any fixed deposit from the public. As
 such, no amount of principal or interest is outstanding as on the
 balance sheet date.
 
 UTILISATION OF IPO PROCEEDS
 
 As on the balance sheet date the Company had utilized Rs. 15881.08 lacs
 as against the estimate of Rs.17840.40 lacs mentioned in the
 prospectus. The details of the utilization are mentioned in point No.
 1.2 of schedule 20 B forming part of the audited annual accounts.
 
 INDUSTRY STRUCTURE AND DEVELOPMENT, OUTLOOK
 
 The company derives the demand for its products majorly from the
 pharmaceutical industry. The role of packaging is paramount here as the
 packaging is directly in touch with the medicines and requires
 extremely high quality and standards to be maintained. The demand for
 pharmaceutical industry is expected to remain robust given the
 increasingly stressful lifestyles.  Further penetration of healthcare
 insurance will boost the industry by increasing the demand for better
 healthcare needs.  Companies are spending huge amounts on research and
 development and all in all, these factors contribute immensely to the
 growth of pharmaceutical packaging products.
 
 The company has forayed into the FMCG and Retail space. Here the role
 of packaging is multi-dimensional as it not only protects the products
 but also enhances its brand recall and gives it a unique identity.
 With increased investments from private players the organized retail
 segment is expected to grow. As per ASSOCHAM estimates, the organized
 retail segment would grow at 30-35% over the next 3-4 years indicating
 the need for an additional investment of USD 70 billion by 2010. Thus
 Ess Dees products are expected to see good demand in view of robust
 prospects of the user industries.
 
 OPERATIONS
 
 Your Company operates in single segment i.e. Advanced Packaging
 Solutions.
 
 With core competency in aluminium packaging, your Company has extended
 its product portfolio to include specialized packaging for the Food and
 FMCG sectors. Your Company has established itself as a leading supplier
 of primary packaging materials and as a specialist in providing tailor
 made aluminium foil based flexible packaging laminates and PVC & PVdC
 coated PVC based thermoforming solutions. Resultantly, your Company is
 first in India to manufacture dedicated high-end pharma packaging
 products like cold form blister and child-resistant-blister packaging.
 The quality of your Companys product portfolio has been significantly
 enhanced by sophisticated and technologically advanced products. The
 new pharmaceutical applications include cold form blister packs, oral
 rehydration salts, PVDC-coated PVC, child resistant packs, cough
 lozenges, and anti-TB combo packs.
 
 Your Company has also established presence in the prophylactics segment
 and has been entrusted with the task of providing specialized aluminium
 foil based laminates for large contraceptive brands. Our facility at
 Daman has been approved by contraceptive manufacturing companies
 likeTTK and Hindustan Latex.
 
 The new plant in Daman also offers cost-effective aluminium foil based
 laminates to the food and FMCG sectors. Many products that we intend to
 make are import substitutes and will facilitate usage expansion.
 
 India is passing through an economic growth phase and resultantly
 witnessing the opening up of retail chains across the country and
 consequent demand for increased packaging requirements. Aluminium foil
 remains best suited for products requiring longer shelf life and
 preservation of properties.
 
 The Pharmaceutical companies are faced with the threat of counterfeit
 packaging solutions from the spurious suppliers. Your Company has been
 endeavoring to provide innovative packaging solutions to pharmaceutical
 companies to thwart the menace of spurious drugs.
 
 Aluminium sheet is the major raw material which is imported from
 GARMCO, Bahrain. Company enjoys very cordial relationship with the
 supplier having bagged the Best Customer Awardfor two consecutive
 years.
 
 KEY DEVELOPMENTS
 
 The company has joined hands with Madras Aluminium Limited (MALCO), the
 current promoters of India Foils Limited (IFL), for the revival of IFL
 through a Rehabilitation Scheme in consultation with the operating
 agency and subject to BIFR approvals.
 
 The new plant at Daman has received the Food Safety Management System
 Certificate in compliance with the ISO 22000:2005 from a renowned
 accreditation body, CERMET, Italy. Ess Dee Aluminium Limited is one of
 the first packaging solutions providers in India to receive such
 certification
 
 Our Company is the first Indian Company to follow the CGMP norm
 (current Good Manufacturing Practice) which is recognized worldwide for
 the control and management of manufacturing and quality control testing
 of foods and pharmaceutical products.
 
 CONSERVATION OF ENERGY, etc.
 
 The company has taken effective steps at every stage to reduce energy
 consumption and conserve energy in all phases of operation. Your
 Company has been continuously upgrading facilities in order to minimize
 power consumption and maximise on power factors at manufacturing
 locations. Cross-sectional energy audit teams across production units
 have been put in place for monitoring energy consumptions.
 
 The particulars relating to energy conservation, technology absorption,
 foreign exchange earnings and outgo, as required to be disclosed as per
 section 217(1)(e) read with Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 is annexed as AnnexureA.
 
 PARTICULARS OF EMPLOYEES
 
 Statement of particulars of employees as required by the provisions of
 section 217(2A) of the Companies Act, 1956, read with Companies
 (Particulars of Employees) Rules 1975, as amended and forming part of
 the Directors Report is annexed as AnnexureB.
 
 SUBSIDIARY
 
 Flex Art Foil Private Limited, a wholly owned subsidiary of the company
 provides facilities for printing of aluminium blister and poly to
 pharmaceutical companies for their packaging solutions at various
 locations across the country. With the introduction of new products and
 spurt in the number of registered DMFs (Drug Master File), service vis
 a vis lead times have assumed primary importance. The Company with its
 unique Hub and Spoke model is catering to the pharmaceutical industry
 as a strategic partner to their growth. It is in the process of setting
 up a unit in Sikkim to further augment its aluminium foil printing
 capacity.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 As stipulated by Clause 32 of the Listing Agreement with the Stock
 Exchanges, the attached consolidated financial statements have been
 prepared in accordance with the Accounting Standard AS-21 on
 Consolidated Financial Statements read with Accounting Standard AS-23
 on Accounting for Investments in Associates.
 
 The report of the Directors and the accounts of the subsidiary
 company, together with the Auditors Report thereon are attached.
 
 Requisite statement pursuant to section 212 of the Companies Act, 1956,
 is also attached herewith as Annexure C.
 
 PERSONNEL & INDUSTRIAL RELATIONS
 
 The Industrial relations continue to be peaceful and cordial.
 
 Your Company endeavors to attract and recruit best possible talent and
 considers the quality of its human resources to be most important.
 
 The Companys management values the dedication of its employees and
 acknowledges their contribution in attaining short and long term goals
 of the Company. The Company has been encouraging employees by providing
 better working environment and opportunities.
 
 DIRECTORS
 
 In terms of Articles 169 and 171 of the Articles of Association of the
 Company Mr. Shankar Kamble and Mr. Gautam Mukherjee, Directors of the
 Company, retire by rotation and being eligible, offer themselves for
 reappointment at the ensuing Annual General Meeting.
 
 CORPORATE GOVERNANCE
 
 The Company is committed to maintain the highest standards of Corporate
 Governance. The Company has complied with the Corporate Governance
 practices set out by Securities and Exchange Board of India.
 
 The Report on Corporate Governance as stipulated under clause 49 of the
 Listing Agreements forms part of the Annual Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Company is in compliance with various accounting and financial
 reporting requirements in respect of the financial statement for the
 period under review. Pursuant to section 217(2AA) of the Companies Act,
 1956, and in respect of the annual accounts for the period under
 review, the Directors hereby confirm that:
 
 I) In the preparation of the annual accounts, the applicable accounting
 standards had been followed;
 
 II) Appropriate accounting policies have been selected and applied
 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 profit or loss
 of the Company for that period;
 
 III) Proper and sufficient care for 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 have been taken to the best of
 their knowledge and ability;
 
 IV) The Annual Accounts have been prepared on a going concern basis.
 
 MANAGEMENT DISCUSSION & ANALYSIS
 
 The Directors report includes details of Management Discussion and
 Analysis of various businesses of the Company.
 
 INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
 
 Your company has an effective internal control system for all its units
 to ensure efficiency of operations, financial reporting, proper
 recording and safeguarding of assets, compliance with applicable laws
 and regulations, etc.
 
 The adequacy of the same has been reported by the statutory auditors of
 your company in their report as required under the Companies (Auditors
 Report) Order, 2003.
 
 AUDITORS & AUDITORS REPORT
 
 M/s M.P. Chitale & Co., Chartered Accountants, the Auditors of the
 company retire at the conclusion of the forthcoming Annual General
 Meeting and being eligible, offer themselves for reappointment.They
 have confirmed that the reappointment, if made, will be in accordance
 with the provisions of sub-section (IB) of section 224 of the Companies
 Act, 1956.
 
 The Notes on Annual Accounts referred to in the Auditors Report are
 self-explanatory and therefore do not call for any further comments.
 
 RISKS & CONCERNS
 
 The major risk and concerns attributed to the performance of the
 Company are:
 
 a.  Aluminium foil stock (Aluminium Sheets) is the major raw material
 for your Companys products. Hence, volatility in aluminium prices may
 have an impact on the Companys financial performance.
 
 b.  Increase in other input costs may affect the Company adversely.
 
 c.  Any changes in tax structure, interest rates and in government
 policies may also impact the overall performance of your Company.
 
 d.  The Company is exposed to risks from market fluctuations in foreign
 exchange.
 
 e.  Profitability may be affected on account of competition from
 existing and prospective manufacturers of the Companys products.
 
 CAUTIONARY STATEMENT
 
 Statements in this report, particularly those which relate to
 Management Discussion and Analysis, describing the Companys objective,
 projections, estimates and expectations may constitute forward looking
 statements within the meaning of applicable laws and regulations.
 Forward looking Statements are based on certain assumptions and
 expectations of future events. The Company cannot guarantee that these
 assumptions and expectations are accurate or will be realized. The
 Companys actual results, performance or achievements might differ
 materially from those either expressed or implied herein.
 
 ACKNOWLEDGEMENT
 
 Your Directors take this opportunity to thank all investors, clients,
 vendors, banks, regulatory and Government authorities and stock
 exchanges for their continued support and co-operation.The Directors
 also wish to place on record their appreciation of the contribution
 made by business partners / associates at all levels.
 
 Your Directors also take this opportunity to acknowledge the dedicated
 efforts made by workers, staff and officers at all levels for their
 contribution to the success of the Company.
 
 Place: Mumbai                          For and on behalf of the Board
 
 Date: 26th May, 2008
                                            Sudip Dutta
                                         Chairman & Managing Director