21ST DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2006. 
 
 Your Directors have pleasure in presenting the Twenty First Annual Report 
 together with the Audited Accounts of the Company for the financial year ended 
 31st March, 2006. 
 
 Financial Results 
 
 The summarized financial results for the year ended 31st March 2006 and for the 
 previous year ended 31st March, 2005 are as under: 
 
                                                                (Rs. in lacs) 
                                             Year ended            Year ended 
                                             31.03.2006            31.03.2005 
 
 Sates, Job Work & 
 Service Charges                                3938.79               5151.24 
 Other Income                                    245.76                325.41 
 Profit before Interest, 
 Financial Charges, 
 Depreciation &Taxation                          576.28               1096.73 
 Less: 
 i) Interest & Financial 
 Charges                                          94.49                 98.92 
 ii) Depreciation                                213.24                206.03 
 Profit before tax                               268.55                791.78 
 Less: 
 i. Provision for income tax                     139.43                171.44 
 ii. Provision for Fringe benefit tax             17.11                     - 
 iii. Provision for wealth tax                     1.69                  1.92 
 iv. Provision for deferred tax charge                -                  1.54 
 v. Short provision for income 
 tax for earlier year                             15.00                     - 
 Add: 
 - Provision for deferred tax assets              88.36                     - 
 - Excess provision for Income 
 Tax for earlier year                                 -                  0.31 
 Net Profit                                      183.68                617.19 
 
 Review of Operations 
 
 During the year under review, the performance of the core activities of the 
 Company i.e. manufacturing and supply of packaging, printing and allied machines 
 came under severe pressure due to intense competition from the unorganized 
 sector, hardening of prices in the export market and lack of demand for 
 converting machines. 
 
 Innovation and introduction of machines having unique features and facilities 
 have been an ongoing process in the Company. Though the Company develops and 
 manufactures packaging machines of different design and utility according to the 
 market demand and customers' requirements, but tough domestic market conditions 
 have forced the Company to sell its superior quality products at low prices 
 resulting in lower margins and reduced net value addition as well as lower 
 turnover. 
 
 The activities of the Company with regard to acceptance and execution of 
 contracting job in the oil & natural gas sector could not garner any significant 
 orders from the overseas market mainly due to disturbing trend in the 
 middle-east countries including Iraq. 
 
 With the situation in Iraq showing no sign of improvement, the Company as a 
 strategy has shifted its focus to the domestic oil & natural gas sector and is 
 working closely with some established and renowned organization. The efforts of 
 the Company are positive and encouraging. 
 
 Absence of any significant contribution from its other activities including 
 general contracting job, higher overheads had an adverse impact on the over all 
 turnover and profitability of the Company. 
 
 During the year under review, the Company achieved a turnover of Rs.4184.55 lacs 
 including other income of Rs.245.76 lacs as compared to Rs.5476.65 lacs 
 including Rs.325.41 lacs of the previous financial year ended 31.3.2005. The Net 
 Profit for the year ended March, 2006 was Rs.183.68 lacs as against Net Profit 
 of Rs.617.19 lacs of the previous financial year ended March, 2005. 
 
 The Board on a careful consideration of the over all situation is not in a 
 position to recommend any dividend for the financial year under review. 
 
 The operational performance of the Company has been comprehensively covered in 
 the Management Discussion and Analysis Report and the same is deemed to be a 
 part of this Directors' Report. 
 
 Scheme of Arrangement 
 
 Considering the current and future business prospects of the Company vis-a-vis 
 the industry trend and other factors both financial and business prudence, the 
 Board of Directors of your Company at their meeting held on May 20, 2006 has in 
 principle approved Scheme of Arrangement subject to the necessary approvals of 
 Shareholders, Creditors and sanction of the Hon'ble High Court of Delhi 
 inter-alia involving the following: 
 
 (a) amalgamation of Flex Securities Limited (the wholly owned subsidiary) with 
 Flex Engineering Limited. 
 
 (b) amalgamation of Flex Engineering Limited (post amalgamation of Flex 
 Securities Limited with Flex Engineering Limited) and FCL Technologies & 
 Products Limited with Flex Industries Limited. 
 
 Upon the Scheme becoming effective, and in consideration of the amalgamation of 
 the Company (post amalgamation of Flex Securities Limited with the Company) into 
 Flex Industries Limited (FIL), FIL shall issue and allot to the shareholders of 
 the Company, 2(two) equity shares credited as fully paid up in FIL for every 
 3(three) equity shares held by them in the Company on such date fixed as record 
 date after the Effective Date as the Board of Directors of FIL may determine. 
 For the purpose of such allotment fractional entitlements, if any; shall be 
 rounded off to the nearest figure. The equity shares so issued to the 
 shareholders of the Company shall rank pari-passu with the existing shares of 
 FIL. 
 
 The merger will result in pooling of resources of all the companies and the 
 merged entity will emerge as a single entity providing end-to-end solutions in 
 packaging industry. It will unlock and enhance value for the shareholders. 
 
 The Hon'ble High Court of Delhi has convened the meetings of the Shareholders 
 and Creditors on 101, August, 2006 for their approval. 
 
 Subsidiary Company 
 
 The Annual Accounts for the financial year ended March, 2006 along with reports 
 of Auditors and Directors of Flex Securities Limited, the Wholly Owned 
 Subsidiary of your Company are attached together with the statement under 
 Section 212 of the Companies Act, 1956. 
 
 Consolidated Financial Statement 
 
 In accordance with Accounting Standard 21 - Consolidated Financial Statements 
 read with Accounting Standard 23 - on accounting for investments in Associates, 
 your Directors have pleasure in attaching the Consolidated Financial Statement, 
 which form part of this Annual Report & Accounts. The Consolidated Financial 
 Statement has been prepared on the basis of financial statements received from 
 the Subsidiary & Associate company, as approved by their respective Board of 
 Directors. 
 
 Fixed Deposit 
 
 During the year under review the Company has not accepted or renewed any fixed 
 deposit. As at 31st March, 2006 your Company had outstanding fixed deposit of 
 Rs.0.18 lacs having matured for repayment and the same has not been claimed by 
 the concerned depositors despite necessary intimations. There has been no delay 
 in making repayment of fixed deposits on maturity on fulfilment of the terms and 
 conditions of your Company's scheme. 
 
 Directors 
 
 With effect from April 4, 2006 Mr. Sandeep Gupta has been nominated by IFCI 
 Limited on the Board of the Company in place of Mr. B.N. Nayak. 
 
 Your Directors while, welcoming Mr. Sandeep Gupta also take this opportunity to 
 place on record their sincere appreciation for the valuable services rendered by 
 Mr. B.N. Nayak during his tenure as Director on the Board. 
 
 In accordance with the provisions of the Companies Act, 1956 and Articles of 
 Association of the Company Mr.G.N. Gupta, Mr. Ajay Tandon and Mr. Pradeep Tyle, 
 Directors of the Company retire by rotation at the ensuing Annual General 
 Meeting and being eligible offer themselves for re-appointment. 
 
 Brief resume of the Directors seeking re-appointment at this Annual General 
 Meeting, nature of their expertise in specific functional areas and the name of 
 the public limited companies in which they hold the office of Director and the 
 Chairmanship/Membership of the Committees of the Board and their shareholding in 
 the Company, as stipulated under Clause 49 of the Listing Agreement with the 
 Stock Exchanges, are given as Annexure to the Notice convening the 21st Annual 
 General Meeting elsewhere in the Annual Report. 
 
 None of the Directors of your Company is disqualified as per provisions of 
 Section 274(1)(g) of the Companies Act, 1956. Your Directors have made necessary 
 disclosures as required under various provisions of the Companies Act, 1956 and 
 Clause 49 of the Listing Agreement. 
 
 Corporate Governance 
 
 The Securities & Exchange Board of India (SEBI) stipulated Corporate Governance 
 standards for listed companies through Clause 49 of the Listing Agreement of the 
 Stock Exchanges. SEBI, through Circulars dated 29th October, 2004 and 29th 
 March, 2005 has revised the existing Clause 49 and has mandated listed companies 
 to comply with revised Clause 49 by 31st December, 2005. Accordingly, your 
 Company has already put in place systems and procedures and is fully compliant 
 with revised Clause 49 of the Listing Agreement entered into with Stock 
 Exchanges. A separate report on Corporate Governance along with the Auditors' 
 Certificate on its compliance by the Company is included as a part of the Annual 
 Report. 
 
 Directors' Responsibility Statement 
 
 On the basis of the compliance certificates received from the executives of the 
 Company, subject to the disclosure in the Annual Accounts and also on the basis 
 of discussion with the Statutory/ Internal Auditors of the Company, from time to 
 time, we state as under: 
 
 1. That in preparation of the Annual Accounts for the financial year ended 31st 
 March, 2006, the applicable accounting standards have been followed and that 
 there have been no material departures. 
 
 2. That the Directors have selected such accounting policies and applied them 
 consistently and made judgement 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. 
 
 3. That the Directors 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. 
 
 4. That the Directors have prepared the Accounts on a going concern basis. 
 
 The Company's Internal Auditors have conducted periodic audit to provide 
 reasonable assurance that the Company's established policies and procedures have 
 been followed. The Audit Committee constituted by the Board reviews the internal 
 control and financial reporting issues with Internal Auditors. 
 
 Auditors & Audit 
 
 M/s. Vijay Sehgal & Co., Chartered Accountants, Delhi, Statutory Auditors of the 
 Company, retire at the forthcoming Annual General Meeting and being eligible 
 offer themselves for re-appointment. Your Company has also received a 
 certificate from M/s. Vijay Sehgal & Co., Chartered Accountants to the effect 
 that the appointment, if made, would be within the limits as prescribed under 
 Section 224(1B) of the Companies Act, 1956. 
 
 The observations of the Auditors and the relevant notes on the Accounts are 
 self-explanatory and therefore do not call for any further comments. 
 
 Particulars of Employees 
 
 Particulars of employees as required u/s 217 (2A) of the Companies Act, 1956 
 read with Companies (Particulars of Employees) Rules, 1975 is given in Annexure 
 A forming part of this Report. 
 
 Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and 
 Outgo 
 
 Information under Section 217(1)(e) of the Companies Act, 1956 read with the 
 Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 
 1988 is given in Annexure'B' forming part of this Report. 
 
 Personnel 
 
 Personnel relations with all employees remained cordial and harmonious through 
 out the year. Your Directors wish to place on record their sincere appreciation 
 for the devoted services of all employees of the Company. 
 
 Acknowledgement 
 
 Your Directors take this opportunity to thank and acknowledge the co-operation 
 and assistance received from various agencies of the Central Government, 
 Government of Uttar Pradesh, Financial Institutions, Banks and Customers during 
 the year under review. The Board also wishes to place on record their deep 
 appreciation for the continued support of the Shareholders of the Company. 
 
 
 
 Signed on : 27th July, 2006