Your Directors have pleasure in presenting the 23rd Annual Report
 together with the audited accounts of the Company for the year ended on
 31s1 March 2006
 
 PERFORMANCE REVIEW:
 
 A summary of your Companys performance during 2005-2006 is given
 below:
 
                                         Current year      Previous year
                                     ended 31st March   ended 31st March
                                                 2006               2005
 
 (a) PRODUCTION
 
 i. Explosives (MT)                              7496               9554
 
 ii. Detonators (M.Nos)                         40.34              45.38
 
 iii. Detonating Fuse (M.Mtrs)                  13.77              14.25
 
 (b) SALES
 
 i. Explosives (MT)                              7548               9441
 
 ii. Detonators (M.Nos.)                        39.79              44.92
 
 iii. Detonating Fuse (M.Mtrs.)                 13.34              14.11
 
                                                          (Rs. in Lakhs)
 
 (c) Sales Revenue(including
 Sales of by products)                        2755.97            3023.11
 
 (d) Miscellaneous Income                       36.24              39.40
 
 (e) Provision for taxation                     11.69                  -
 
 (f) Net Profit (+)/Net loss(-)             - 1392.99            1396.48
 
 OPERATIONS:
 
 Your Company has shown a turnover of Rs.27.55 crores for the period
 under review.
 
 Your Company has produced 609 Mts. of Telmix, 4016 Mts. of Slurry
 Explosives, 2871 Mts. of Emulsion Explosives during the year 2005-06
 when compared to 954 Mts., 5073 Mts., 3527 Mts. in 2004-05
 respectively. Due to low production in line with competitive market and
 low price realization, the turnover has come down when compared to
 previous years Rs.30.23 crores.
 
 PROJECTS:
 
 As already mentioned in our earlier report your company has completed
 the installation of Plant and Machineries to manufacture Mono Methyl
 Amine Nitrate (MMAN) based Paper Cartridged Explosives utilizing the
 existing Nitroglycerine (N.G.) facilities. Your Company has obtained
 required licence for manufacture of MMAN solution and also for trial
 manufacture of MMAN based cartridged explosives.
 
 Your Company has initiated action for the manufacture of a chemical - 2
 Ethyl Hexyl Nitrate (2EHN) by utilizing the existing Nitration Plant.
 
 Further your company has made an agreement with M/s.MAXAM Corp. an
 explosives manufacturing company in Spain. As per the agreement, they
 will incorporate a subsidiary Company in India and TEL & their
 subsidiary would float a marketing joint venture (JV) Company in India
 to market the products of TEL.
 
 DIVIDEND:
 
 In view of loss, your directors do not recommend any dividend for the
 year under review.
 
 EXPORT:
 
 Your Company during the year under review has exported explosives and
 accessories to the tune of Rs.227.61 Lakhs (FOB value). 
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO:
 
 The particulars required 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, the particulars relating to
 conservation of Energy is enclosed as Annexure-A. The Foreign Exchange
 Inflow during the year under review was Rs.227.61 lakhs (FOB Value).
 The Foreign exchange outflow (on CIF basis) was Rs.23.59 lakhs towards
 import of Raw materials and Spares. As already informed in the earlier
 reports, the imported technology was fully absorbed by the Company.
 
 PARTICULARS OF EMPLOYEES:
 
 During the year none of the employees of the company drew remuneration
 in excess of the limit prescribed under the provisions of Section 217
 (2A) of the Companies Act, 1956.
 
 DIRECTORS:
 
 During the year under review and till the date of this report, Thiru S.
 Gopalakrishnan, I.A.S. and Thiru Shakti Kanta Das, I.A.S., Secretary to
 Government, Industries Dept., Govt.of TN have been inducted on the
 Board of the Company. Thiru L.K. Tripathy, I.A.S. and Thiru Malik
 Feroze Khan, I.A.S., Joint Secretary to Government, Industries
 Department have resigned from the Board of TEL.
 
 Your Directors wish to place on record their appreciation of the
 valuable services rendered by Thiru L.K. Tripathy, I.A.S. and Thiru
 Malik Feroze Khan, I.A.S.
 
 Dr.G. Natarajan will retire by rotation at the ensuing Annual General
 Meeting and he is eligible for reappointment
 
 DIRECTORS RESPONSIBILITY STATEMENT:
 
 In compliance with the Provisions of Section 217 (2AA) of the Companies
 Act, 1956, your Directors confirm:
 
 (i) that in preparing the Annual Accounts, all the applicable
 accounting standards have been followed;
 
 (ii) that the accounting policies are adopted and consistently followed
 and the judgements 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 and of the loss of the Company for the
 financial year;
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing/detecting fraud and irregularities.
 
 (iv) that the Directors have prepared the Annual Accounts on going
 concern basis.
 
 INDUSTRIAL RELATIONS:
 
 Personnel relations with our employees generally remained cordial and
 harmonious throughout the year.
 
 CORPORATE GOVERNANCE:
 
 Your Company has taken adequate steps to comply with all mandatory
 provisions of Corporate governance as provided in the Listing
 Agreements of the Stock Exchange.
 
 A separate Report on Corporate Governance along with a Compliance
 Certificate from the Auditors of the Company in this behalf is annexed
 with this report as Annexure-B. A report on Management Discussion &
 analysis is annexed as Annexure-C as a part of Directors Report.
 
 AUDITORS:
 
 In terms of Section 619(2) of the Companies Act, 1956, the Comptroller
 and Auditor General of India has appointed M/s.V. Ramaswamy lyer & Co.,
 Chartered Accountants, Vellore as Auditors of your Company for the year
 2005-06.
 
 With reference to the observations of the Statutory Auditors under
 paragraph 4 of their report, the note 10 and 16 forming part of the
 Annual Accounts of the Company is self-explanatory and therefore do not
 call for any further comments.
 
 ACKNOWLEDGEMENTS:
 
 Your Directors take this opportunity to thank and acknowledge the
 co-operation and assistance received from various agencies of the
 Central Government, State Government of Tamil Nadu, Tamil Nadu
 Industrial Development Corporation Ltd., Financial Institutions, Banks,
 Insurance Companies, valued customers and other agencies during the
 year under review. The Board of Directors also wish to place on records
 their deep appreciation of the continued support of the Shareholders of
 the company
 
                                          For and on behalf of the Board
 Place: Chennai-17. S. GOPALAKRISHNAN, I.A.S.,   SHAKTIKANTA DAS, I.A.S.
 Date: 31.07.2006.          Managing Director.                 Chairman.