Nava Bharat Ventures

The Directors have pleasure in submitting their Report and the Audited
 Accounts of the Company for the Financial Year ended 31st March, 2008.
 
 FINANCIAL RESULTS
 
 The performance of the Company for the Financial Year ended 31st March,
 2008 is summarized below:
                                                      (Rupees in Lakhs)
                                       Year ended           Year ended
                                       31.03.2008           31.03.2007
 
 Turnover/Income (Gross)                112831.07            72318.55
 Profit before Finance Charges, 
 Depreciation and Taxation               41179.96            17362.77
 Less: Finance Charges (excluding 
 amount capitalized)                      1646.58             1519.86
 Profit before Depreciation and Taxation 39533.38            15842.91
 Depreciation                             2513.87             2245.36
 Profit for the year after Depreciation  37019.51            13597.55
 Extra-ordinary items - Gain              -                   1016.61
 Profit after Extra-ordinary Items and 
 before Tax                              37019.51            14614.16
 Provision for Taxation - Current tax     5850.00             1700.00
 - Deferred tax                           (455.00)             (30.54)
 - MAT Credit entitlement                 -                  (1130.00)
 - Fringe Benefit Tax                      140.00               29.00
 Profit after Tax                        31484.51            14045.70
 Balance brought forward from last year   5521.68             4394.43
 Excess provision for Income Tax 
 written back                               50.69               17.00
 Profit available for Appropriation      37056.88            18457.13
 
 Appropriations:
 Dividend on Equity Share Capital         4374.01             2509.04
 Corporate Dividend Tax                    743.36              426.41
 Contingency Reserve                      2000.00             2000.00
 General Reserve                         10000.00             8000.00
 Surplus carried to Balance Sheet        19939.51             5521.68
                                         37056.88            18457.13
 
 REVIEW OF OPERATIONS :
 
 We take pleasure to report stupendous performance of your Company with
 gross earnings of Rs.1128.31 crores and profit of Rs.314.85 crores for
 2007-08 reflecting an increase by 56.02% and 124.16% respectively.
 Your Company was immensely benefited by buoyant ferro alloy operations
 while the power business contributed handsomely to the revenues and
 profits.
 
 Ferro Alloy Division:
 
 The resurgence in the ferro alloy industry, witnessed in the last
 quarter of the previous year, sustained throughout the year under
 review. The Company produced 91969 MT of manganese alloys and 43709 MT
 of chromium alloys and sold 80020 MT of manganese alloys and 34352 MT
 of chromium alloys during the year under review. As apprehended
 earlier, the availability of manganese ore and chrome ore posed a
 significant challenge for your Company . The Company is, through import
 of manganese ore and chrome ore on a relatively lower price compared to
 the domestic ore, able to mitigate the situation to some extent. All in
 all, significant contribution of earnings and profit from this Division
 helped the Company post record turnover and profit for the year under
 review.
 
 Power Division:
 
 Power Division continues to be fulcrum of the operations of your
 Company during the year under review. Addition of second 32 MW Unit in
 A.P. Works sustained the momentum of external sale while the three
 Smelters for manganese alloys in A.P. are fully provided with their
 power requirements. The Company has generated 1101.98 MU in the
 aggregate from the A.P & Orissa Power Plants as against 871.97 MU in
 the previous year. The Company has sold 553.69 MU for production of
 ferro alloys, 97.25 MU for auxiliary consumption and sold 430.28 MU of
 power.
 
 Sugar Division:
 
 During the year under review, your Company crushed 5,26,458 MT of
 sugarcane yielding at an average recovery of 10.25% in the previous
 year. Both the 9 MW Co-generation Unit and the Distillery have
 performed better during the year under review and this integrated
 operation enabled the Company to contain the loss of this Division in
 the backdrop of severe glut in the sugar industry in India and abroad.
 
 Infrastructure:
 
 Under this Division, at present the Company is pursuing the IT and IT
 SEZ through Brahmani Infratech Private Limited, 3 x 350 MW Power Plant
 through Navabharat Power Private Limited, while the consortium bid for
 MRTS project in Hyderabad is in RFQ stage. Your Company would hold
 equity in each of these SPVs/consortium, though during the year under
 review, the infusion of funds was minimal.
 
 OUTLOOK AND FUTURE PLANS:
 
 The outlook and future plans of the Company are presented in
 “Management Discussion and Analysis”, forming part of this Report.
 
 DIVIDEND ON EQUITY SHARE CAPITAL:
 
 Considering the reasonable performance of your Company and keeping in
 view the ongoing capital works and growth trajectory, your Directors
 are pleased to recommend dividend @ 300% on the Paid-up Equity Share
 Capital (on Rs.2/- per share) subject to necessary approvals absorbing
 a sum of Rs.4374 lakhs.
 
 The aggregate dividend payout for the year 2007-08 amounts to Rs.5117
 lakhs including Corporate dividend tax.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
 
 As required under the provisions of Section 217(1)(e) of the Companies
 Act, 1956 read with Rule 2 of the Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules, 1988, the particulars
 relating to Conservation of Energy, Technology Absorption, Foreign
 Exchange Earnings and Outgo have been given in the Annexure - I, which
 forms part of this Annual Report.
 
 CONVERSION OF WARRANTS INTO EQUITY:
 
 During the financial year 2006-07, 32,00,000 Warrants were issued to
 the Promoters/Persons Acting in Concert on 09.06.2006 convertible into
 Equity Shares within 18 months thereof on preferential basis at a
 conversion price of Rs.95/- per Warrant (at a premium of Rs.93/- per
 Equity Share of Rs.2/- each). The Company received Rs.304 lakhs @ 10%
 of conversion price which was deployed for funding the on-going capital
 expenditure.
 
 In addition to allotment of 9,12,000 equity shares on conversion of
 warrants with lock in upto 8.06.2009 during the last financial year,
 22,88,000 Equity Shares were allotted during the year, i.e., to
 M/s.Malaxmi Dwellings Private
 
 Limited (88,000 equity shares), M/s. Malaxmi Avenues Private Limited
 (11,00,000 equity shares) and M/s. Malaxmi Homes Private Limited
 (11,00,000 equity shares) on 5.11.2007. The proceeds of the
 warrants/shares have been spent for ongoing capital expenditure and
 long-term working capital.
 
 ISSUE OF FURTHER SECURITIES:
 
 Your Company considered various growth opportunities from time to time
 for which large funds are required. While it was envisaged that the
 internal generation of funds would partially finance the proposed
 investments, your Board raised a part of the fund requirements through
 the issue of Foreign Currency Convertible Bonds. The Company raised
 FCCBs for JPY 5250 Million and Green Shoe Option of JPY 750 Million
 equivalent to Rs.20490.75 lakhs and Rs.2861.25 lakhs during the
 Financial Year 2006-07.
 
 During the current financial year, FCCBs to an extent of JPY 2480
 million were converted into 77,76,303 equity shares of Rs.2/- each at a
 conversion price of Rs.132.96 per share.
 
 After meeting the issue expenditure of Rs. 954.87 lakhs and project
 expenditure of Rs.14330.84 lakhs, balance proceeds were kept in
 term/current deposits with Banks.
 
 The funds are being used for stated objectives.
 
 EMPLOYEES STOCK OPTION SCHEME:
 
 Under the Employee Stock Option Scheme 2006, the Company granted
 6,00,000 options to the specified employees at an exercise price of
 Rs.90.52 on 05.01.2007 (80% of the closing price of scrip on NSE on
 04.01.2007). The options granted were vested to an extent of 30% at the
 end of first year i.e. 05.01.2008, 30% would vest at the end of second
 year i.e. on 05.01.2009 and 40% at the end of third year i.e. on
 05.01.2010 and the exercise period is 4 years from the dates of said
 vesting.
 
 The Remuneration (Compensation & Allotment) Committee on19.03.2008
 allotted 1,09,890 equity shares of Rs.2/- each to employees of the
 Company on exercise of options granted @ Rs.90.52 per option/equity
 share, including premium.
 
 The Company has received a certificate from the Auditors of the Company
 that the scheme has been implemented in accordance with the SEBI
 Guidelines and the resolution passed at the Annual General Meeting held
 on 27.07.2006.  The Certificate would be placed at the Annual General
 Meeting for inspection by members.
 
 The prescribed details relating to the ESOS as per SEBI Guidelines are
 set out in the Annexure – II.
 
 LISTING OF SHARES:
 
 The Securities of the Company are listed at National Stock Exchange of
 India Limited and Bombay Stock Exchange Limited. The Listing fees for
 these Stock Exchanges have been paid.
 
 The securities of the Company, are proposed to be de-listed on The
 Hyderabad Stock Exchange Limited, Hyderabad, since recognition granted
 to The Hyderabad Stock Exchange Limited stood withdrawn with effect
 from 29th August, 2007 pursuant to notification issued by Securities
 and Exchange Board of India vide P.R.No.252/2007 dated 3rd September,
 2007 in terms of Section 5(2) of the Securities Contracts (Regulation)
 Act, 1956.
 
 FIXED DEPOSITS:
 
 Your Company has been inviting and accepting deposits from the Public,
 Shareholders and Others. The amount of deposits outstanding as on March
 31, 2008 was Rs.218.21 lakhs.
 
 There are no overdue deposits which were unpaid as on date. An amount
 of Rs.0.35 lakhs of unclaimed deposit was transferred to Investor
 Protection and Education Fund on 28.03.2008 and Rs.0.10 lakhs remained
 unclaimed as on date.
 
 INSURANCE:
 
 All the properties of the Company including Buildings, Plant and
 Machinery and Stocks have been adequately insured.
 
 DIRECTORS:
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, the Directors, Sri. P. Punnaiah
 and Sri. K. Balarama Reddi, will retire by rotation at this Annual
 General Meeting and the Director Sri. K. Balarama Reddi, being
 eligible, offered himself for reappointment.
 
 Sri P.Punnaiah, Director of the Company, who was to retire at the
 forthcoming Annual General Meeting expressed his unwillingness to offer
 for reappointment on health grounds and to relieve him from the
 directorship effective from the date of ensuing Annual General Meeting.
 
 Sri P.Punnaiah was one of the First Directors appointed on the Board in
 the year 1972. He worked as Resident Director of the Company at
 Paloncha and was elevated as Joint Managing Director of the Company in
 the year 1980. He is the Chairman of Shareholder’s Grievances Committee
 of the Company. The Board recorded its sincere appreciation of the
 untiring efforts made by Sri P.Punnaiah for the cause and development
 of the Company, but for whose efforts the Company could not have
 achieved the present status.
 
 The Board recorded its appreciation of valuable contributions during
 his long tenure since 1972 on the Board and Committees of the Company.
 
 SUBSIDIARY COMPANIES AND CONSOLIDATED ACCOUNTS:
 
 The Company has four Indian subsidiary companies viz., M/s. Kinnera
 Power Company Limited, M/s. Brahmani Infratech Private Limited, M/s.
 Nava Bharat Realty Limited and M/s. Nava Bharat Projects Limited and
 one Wholly Owned Foreign Subsidiary in Singapore, M/s. Nava Bharat
 (Singapore) PTE Limited.
 
 M/s. Kinnera Power Company Limited:
 
 The Company continues to act as an investment vehicle for M/s. Nava
 Bharat Ventures Limited for the National Highway Project, which is
 being implemented by a Special Purpose Vehicle. The project relating to
 development, construction and operation of the Highway on a full turn
 key basis was entrusted to Meenakshi Group, a renowned Organization in
 this field. M/s. Nava Bharat Ventures Limited intends to dilute its
 equity stake in favour of Meenakshi Group, as permitted under NHAI
 guidelines in due course. The accounts of M/s. Kinnera Power Company
 Limited reflecting Company’s investments would, therefore, not be
 consolidated with those of M/s. Nava Bharat Ventures Limited.
 
 M/s. Brahmani Infratech Private Limited:
 
 The Company has entered into a Joint Development Agreement with
 M/s.Mantri Technology IT Parks Pvt.Ltd., a subsidiary of M/s.Mantri
 Developers Pvt.Ltd., of Bangalore (Mantri) for the development of
 IT/ITES SEZ facility, commercial and residential amenities attendant to
 such facility. The development plan envisages compliance with the
 conditions stipulated by the Government of A.P. / APIIC within the
 permissible time frame.
 
 Mantri is inducted as a Co-developer and Technical Associate of the SEZ
 project and will implement the scheme in a period of 5 years without
 recourse to M/s.Brahmani Infratech Private Limited or its Promoters.
 
 The Company is also planning to restructure its Capital taking into
 account various aspects of the SEZ Project in due course.
 
 M/s. Nava Bharat Realty Limited:
 
 The Authorised Share Capital of the Company was enhanced to Rs.20
 crores during the year.
 
 M/s. Nava Bharat Projects Limited:
 
 The Authorised Share Capital of the Company was enhanced to Rs.20
 crores during the year.
 
 AUDITORS:
 
 M/s. Brahmayya & Co., Chartered Accountants, Hyderabad, the Statutory
 Auditors of the Company, hold office until the conclusion of the
 forthcoming Annual General Meeting and are eligible for reappointment.
 The Company has received letter from them to the effect that their
 appointment, if made, would be within the prescribed limits under
 Section 224 (1-B) of the Companies Act, 1956.
 
 COST AUDIT:
 
 M/s. Narasimha Murthy & Co., Cost Auditors, have been engaged by the
 Company to conduct the Cost Audit in respect of Industrial Alcohol,
 Sugar and Electricity generated by the Company for the financial year
 2007-2008.  The approval of the Central Government has since been
 received for this appointment.
 
 GROUP FOR INTER-SE TRANSFER OF SHARES:
 
 As required under Clause 3 (1) (e) of the Securities and Exchange Board
 of India (Substantial Acquisition of Shares and takeovers) Regulations,
 1997, persons constituting “Group” (within the meaning as defined in
 the Monopolies and Restrictive Trade Practices Act, 1969) for the
 purpose of availing exemption from applicability of the provisions of
 Regulation 10 to 12 of the aforesaid SEBI Regulations are given in
 Annexure III attached herewith and the said Annexure III forms part of
 this Annual Report.
 
 MANAGEMENT DISCUSSION & ANALYSIS:
 
 Management’s Discussion and Analysis for the year under review as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India is presented in a separate section forming part of
 this Annual Report.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT:
 
 The Directors confirm that in the preparation of Annual Accounts for
 the year ended 31.03.2008:
 
 - All applicable accounting standards have been followed.
 
 - The accounting policies framed in accordance with the guidelines of
 the Institute of Chartered Accountants of India have been applied.
 
 - Reasonable and prudent judgement and estimates were made so as to
 give a true and fair view of the state of affairs of the Company.
 
 - Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, as applicable.
 
 - The accounts have been prepared on ‘a going concern’ basis.
 
 CORPORATE GOVERNANCE:
 
 Pursuant to Clause 49 of the Listing Agreement, your Company has to
 mandatorily comply with the requirements of Corporate Governance. A
 separate section on Corporate Governance and a Certificate from the
 Auditors of the Company regarding compliance of conditions of Corporate
 Governance, form part of this Annual Report.
 
 INDUSTRIAL SAFETY AND ENVIRONMENT:
 
 Safety:
 
 Your Company continues to lay high emphasis on safety of all the
 personnel and mitigation of damage to equipment.  The Company has taken
 the advice of specialists in risk management and reviewed thoroughly
 all the safety measures and adopted in the various plants. Specific
 proactive actions are taken to avoid accidents. Safety drills are
 conducted at regular intervals to train the workers and the employees
 to face accidents.
 
 Environment:
 
 The Company received “Pollution Control Excellence Award” from State
 Pollution Control Board, Orissa, for the year 2007.
 
 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, the names and other particulars of the employees are set out
 in the Annexure - IV to the Directors’ Report.
 
 AWARDS:
 
 Your Company received following principal awards during 2007–08:
 
 National Award for Excellence in Energy Management 2007 from
 Confederation of Indian Industry.
 
 5-S Excellence Award, 2007 from the Confederation of Indian Industry.
 
 INDUSTRIAL RELATIONS:
 
 Industrial relations have been cordial and your Directors appreciate
 the sincere and efficient services rendered by the employees of the
 Company at all levels towards successful working of the Company.
 
 ACKNOWLEDGEMENT:
 
 Your Directors would like to express their grateful appreciation for
 the assistance and co-operation received from the Financial
 Institutions, the Company’s Bankers, Insurance companies, the
 Governments of Andhra Pradesh and Orissa, the State utilities and
 Shareholders during the year under review.
 
                                    For and on behalf of the Board
 
                                     P.Trivikrama Prasad
                                     Executive Director
 
 Place : Hyderabad                             D.Ashok
 Date  : May 17, 2008                          Managing Director