Praj Industries

The Directors are pleased to present the 22nd Annual Report and the
 Audited Statements of Accounts for the year ended 31st March, 2008,
 together with the notice of Annual General Meeting.
 
 Financial Results
 
 In the year under review, your Company has recorded a total income of
 Rs. 7403 million (previous year Rs. 6164 million). Profit Before Tax
 also increased from Rs. 1104 million in FY 2006-07 to Rs. 1756 million
 in FY 2007-08.  
 
                                                     (Rs. in million)
                                              2007-08     2006-07
 
 Turnover                                       7016        6075
 Other Income                                    387          89
 Total Income                                   7403        6164
 Total Expenses                                 5647        5060
 PBT                                            1756        1104
 PAT                                            1535         865
 
 Dividend
 
 Your Company declared Interim Dividend of Rs. 1.98 per share (99%),
 which was paid in the month of February 2008. Your Directors are of the
 opinion that the said Interim Dividend should be treated as final
 dividend for the year 2007 - 2008.
 
 Increase in Share Capital
 
 The overseas Investors, Directors and Promoters who were granted
 7,300,125 convertible warrants during the previous year i. e. 2006- 07,
 have converted these warrants by payment of the balance 90% amount
 during the year under review.
 
 During the year, your Company allotted 91,372,879 shares as bonus in
 the ratio of 1 : 1 in terms of the shareholders resolution passed at
 the 21st Annual General Meeting.
 
 During the year, your Company allotted 588,740 shares on exercise of
 options under the Employee Stock Option Plan 2005 Grant I & II.
 
 Consequent to the above, the Issued, Subscribed and Paid - up Share
 Capital of your Company increased from 83,900,066 shares (Rs. 167.800
 million) to 183,161,810 shares (Rs. 366.324 million) as of March 31,
 2008.
 
 Proceeds of Preferential Issue
 
 As reported in the last annual report, your Company issued shares and
 warrants on preferential basis to specified overseas Investors,
 Promoters and Directors. Your Company has mobilized total funds to the
 extent of Rs. 1170.453 million. Out of this, Rs. 786.084 million was
 deployed towards expansion of R & D, manufacturing facilities and
 acquisition of new company. The remaining funds are placed with Mutual
 Funds on a temporary basis until further utilization.
 
 Credit Rating
 
 We are pleased to inform you that the ICRA continues to quote rating as
 A1+ signifying highest safety for the short term debt of your
 Company.
 
 Your Company has appointed CRISIL for obtaining credit rating for its
 banking facilities.
 
 Acquisitions / Promotions / Divestment / Closure
 
 During the year under review :
 
 Your Company promoted a Joint Venture Company, BioCnergy Europa B. V.,
 with Aker Solutions, a renowned EPC Company. BioCnergy is based in The
 Netherlands. Your Company holds 60% of the equity while Aker Solutions
 holds the balance 40%. The Company is actively pursuing business
 opportunities in Europe.
 
 Your Company has entered into a Joint Venture with Jaragua
 Equipamentos, Brazil to form Praj Jaragua Bioenergia. This Joint
 Venture will be based near Sao Paulo, Brazil. The Company will pursue
 business opportunities and provide turnkey solutions to the Brazilian
 Biofuels Industry. 
 
 Praj
 
 Jaragua will provide sugarcane processing to ethanol production as part
 of its turnkey offer. Praj holds 54% in this Company with the balance
 being held by Jaragua.
 
 Your Company has also incorporated Praj Far East Co. Ltd., Bangkok to
 address the biofuels markets in South East Asia, Far East, Australia
 and New Zealand.
 
 With an alternative presence in South East Asia, it is no more
 necessary to keep another Company and hence, your Company has initiated
 steps to close its Singapore subsidiary viz Praj Far East Pte Ltd. and
 is expected to wind up its operations before September 2008.
 
 Your Company has divested its shareholding in Yaan eSites Ltd., a
 specialized software development Company. As a consequence, it ceases
 to be a subsidiary of your Company. The business of the said Company
 has been taken over by the Engineering Division of your Company.
 
 Subsidiaries :
 
 Pacecon Engineering Projects Ltd. (PEPL), Praj Far East Pte Ltd. (PFE),
 Singapore, Praj Schneider Inc, USA, BioCnergy Europa B. V.,
 Netherlands, Praj Jaragua Bioenergia S.A. Brazil and Praj Far East Co.
 Ltd., Thailand are subsidiaries of your Company.
 
 Particulars required as per Section 212 of the Companies Act, 1956 :
 
 Your Company has received approval from the Department of Corporate
 Affairs, Ministry of Finance, New Delhi vide their letter No.
 47/37/2008-CL-lll dt. 22nd February, 2008 granting an exemption from
 attaching the audited accounts of the subsidiaries to the Annual
 Accounts of your Company, for the financial year ended 31st March,
 2008. As per the terms of the letter, a statement containing brief
 financial details of the Companys subsidiaries for the year ended 31st
 March, 2008 is included in the annual report. The annual accounts of
 these subsidiaries and the related detailed information will be made
 available to any member of the Company / its subsidiaries seeking such
 information at any point of time and are also available for inspection
 by any member of the Company / its subsidiaries at the registered
 office of the Company.
 
 Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, Management Discussion and Analysis Report (Annexure 2),
 Corporate Governance Report and Certificate on Corporate Governance
 (Annexure 3) are annexed to this report.
 
 Directors
 
 During the year, Mr. Kishor Chaukar was appointed as Additional
 Director on 19th June, 2007 as Independent Director. As per the
 provisions of Section 260 of the Companies Act, 1956, he holds office
 only upto the date of the forthcoming Annual General Meeting of the
 Company. The Company has received notice under section 257 of the
 Companies Act, 1956 along with the requisite deposit, proposing his
 appointment as Director of the Company. Resolution seeking approval of
 the Members for the appointment of Mr. Kishor Chaukar as Director of
 the Company has been incorporated in the Notice of the forthcoming
 Annual General Meeting.
 
 Mr. Rakesh Jhunjhunwala resigned from the Board w.e.f. 28th July, 2007
 in view of his other pressing pre-occupations. The Board wishes to
 place on record its appreciation for the contributions made by him
 during his tenure. Mr. Utpal Sheth was appointed to fill in the vacancy
 caused by the resignation of Mr. Rakesh Jhunjhunwala.
 
 Mr. Sivaramakrishnan Iyer retires by rotation in terms of Article 82 of
 the Articles of Association of the Company and being eligible offers
 himself for re-appointment.
 
 Mr. Anil Joshi retires by rotation in terms of Article 82 of the
 Articles of Association of the Company and being eligible offers
 himself for re-appointment.
 
 Auditors
 
 The Statutory Auditors M/S BSR & Co., Chartered Accountants, Mumbai
 retire at the conclusion of the 22nd Annual General Meeting. Though
 eligible for reappointment, they do not wish to be reappointed as
 Statutory Auditors of the Company for the year ending 31st March, 2009.
 
 The Audit Committee of your Company has, therefore, recommended the
 name of M/S B K Khare & Co., Chartered Accountants, Mumbai as Statutory
 Auditors of your company. The members may note that M/S B K Khare &
 Co., Chartered Accountants, Mumbai were Statutory Auditors of your
 company from 1997/98 to 2006/07.
 
 M/S B K Khare & Co, Chartered Accountants, Mumbai have expressed their
 willingness to be appointed as Statutory Auditors of your Company. You
 are requested to consider this proposal and appoint the Statutory
 Auditors for the ensuing year 2008/09.
 
 Directors Responsibility Statement
 
 In accordance with the requirements of Section 217C2AA) of the
 Companies Act, 1956, the Board of Directors confirm that :
 
 In the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 The accounting policies which have been selected have been applied
 consistently and judgments and estimates made 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 2007-08 and of the profit
 of the Company for that period;
 
 Proper and sufficient care has been taken 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;
 
 The annual accounts have been prepared on a going concern basis.
 
 Employee Stock Option Plan
 
 In order to attract and retain the best talent, your Company has
 Employee Stock Option Plan (ESOP) to recognize and reward performance
 of employees, Non — Executive Directors and eligible employees of
 subsidiary companies. The information to be disclosed as per SEBI
 (Employees Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999 is annexed to this Report (Annexure 1).
 
 Particulars of Employees
 
 The statment of particulars required pursuant to section 217(2A) of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 (Amendment) Rules, 2002, forms a part of this Report. However, as
 permitted by the Companies Act, 1956, the Report and Accounts are being
 sent to Members and other entitled persons excluding the above
 statment. Those interested in obtaining a copy of the said statement
 may write to the Company Secretary at the Registered Office and the
 same will be sent by post. The statement is also available for
 inspection at the Registered Office, during working hours upto the date
 of the Annual General meeting.
 
 Energy Conservation, Technology Absorption, Adaptation, Innovation :
 
 a) Conservation of Energy :
 
 The operations of your Company are not energy intensive as the
 operations are limited to machining, metal working and finishing of a
 variety of equipment.
 
 b) Technology Absorption, Adaptation, Innovation :
 
 This is covered in Management Discussion & Analysis while discussing
 R&D activities of the Company.
 
 Foreign Exchange Earnings & Outgo
 
 Particulars regarding foreign exchange earnings are presented in
 Schedule 19.20 and outgo are presented in Schedule 19.21 of the
 Audited Accounts. Your Company has retained its status as a net forex
 earner.
 
 Acknowledgements
 
 Your Directors wish to place on record their appreciation towards all
 associates including Customers, Collaborators, Government Agencies,
 Financial Institutions, Bankers, Suppliers, Shareholders, Employees and
 others who have reposed their confidence in the Company.
 
                             For and on behalf of the Board of Directors
 
 Place : Pune                                PRAMOD CHAUDHARI
 Date  : 7th May, 2008                     Executive Chairman