Your Directors take pleasure in presenting the 12th Annual Report of
 the company together with the Audited Accounts for the year ended 31st
 March, 1997.
 
 OPERATIONS :
 
 During the year under review profit before depreciation, interest and
 misc expenses written off has increased from Rs.2.52 lakhs to Rs.16.31
 lakhs inspite of decrease in sales from 173.10 tonns amounting Rs.92.73
 lakhs to 115.63 tonns amounting Rs.69.22 lakhs.  This is mainly due to
 reduction in expenses in all areas.  Sales has come down by 57.47 tonns
 due to old stock clearance programme of Malabar Building Products Ltd.
 Fire accident which occurred on 09.03.97 at factory did not affect
 production works in any major way.  Attempts were made to increase sales by own marketing. Due to price and
other factors the proposal did not come through. Your company has been continuously on its work to maintain
high quality and increase in the product base. The company hopes to fare well in the coming years by change
of product mix. 
 
 Loss from operations has decreased to Rs.53.79 lakhs from Rs. 58.28 lakhs inspite of increase in finance
expenses from Rs.51.68 lakhs to
 Rs.60.99 lakhs.
 
 Board for Industrial Fitness and Reconstruction had ordered for inviting proposals for
sale/merger/amalgamation/change of management on 31.10.96 and necessary advertisements were released on
05.11.96 in Deccan Chronicle and on 07.11.96 in Financial Express. Nobody responded the advertisement. Board
for Industrial and Financial Reconstruction referred matter to High Court of Andhra Pradesh for winding up
proceedings. Appeal was preferred with Appellate Authority for Industrial and Financial Reconstruction on
02.05.97 but appeal was dismissed on 16.07.97. The company will try to convince High Court for
 not issuing winding up order due to improved developments in operating
 profit and other factors.
 
 DIRECTORS :
 
 Dr S P Adarkar resigned for directorship and the same was accepted by
 Board on 31.03.97.
 
 Sri G V Subramanyam, nominee director of BIFR ceased to be director
 from 22.04.97 as per directions of BIFR.
 
 Sri A R Viswanath resigned for directorship and the same was accepted
 by Board on 30.07.97.
 
 Board wishes to express appreciation for suggestions and guidance given
 by Dr S P Adarkar, Sri G V Subramanyam and Sri A R Viswanath during their tenure as directors.
 
 The Company has received notices from members pursuant to Section 257
 of the Companies Act, 1956 signifying their intention to propose the
 candidatures of Sri P Narendra Prasad, Sri M Sudhakar Reddy and Sri A
 Lumumba Reddy.
 
 Sri P Narendra Prasad was appointed as additional director by Board on
 31.03.97 and holds office till the ensuing annual general meeting.
 
 Sri M Sudhakar Reddy was appointed as additional director on 30.07.97
 and holds office till the ensuing annual general meeting.
 
 Sri A Lumumba Reddy was appointed as additional director on 30.07.97
 and holds office till the ensuing annual general meeting. Proposal has
 come for his appointment as Director.
 
 Your Board has pleasure in recommending their appointments.
 
 AUDITORS :
 
 M/s. Rambabu & Co, Chartered Accountants retire at the conclusion of the
 ensuing annual general meeting and are eligible for re-appointment.
 Members are requested to consider their re-appointment on a remuneration to be decided by the Board of
Directors for the financial year ending 31.03.1998.
 
 PARTICULARS RELATING TO CONSERVATION OF ENERGY ETC.,:
 
 The particulars required to be disclosed under section 217(1)(e) of the
 Companies Act, 1956 with regard to conservation of energy etc., are
 furnished in a separate statement which forms part of this report.
 
 Annexure to the Directors' Report for the year 1996-97
 
 Particulars under Section 217(1)(e) of the Companies Act, 1956.
 
 (A) Conservation of energy :
 
 The main manufacturing process is cold casting by chemical reaction.
 Hence power consumption is not higher.  However all the required measures are taken to reduce the energy
consumption.
 
 (B) Technology absorption :
 
 1.  Research & Development : Not applicable
 
 2.  Technology absorption, adaptation & innovation :
 
 i.  Efforts in Brief : Technology provided by M/s Wildon Industries
 Inc., has been fully absorbed.
 
 ii. Benefits from above efforts : Several innovative measures were
 introduced and they helped for cost reduction.
 
 iii. Imported technology :
 
 a) Technology Report : Manufacture of Synthetic Marble Products.
 
 b) Year of import  : 1986
 
 c) Has technology been fully absorbed :    Yes
 
 (C) Foreign exchange earnings & Outgo   :  Nil