Download - 26th Annual Report 2009-2010 - Bombay Stock Exchange · Opening a New Chapter Annual Report 2009-10 1 NOTICE Notice is hereby given that the 26th Annual General Meeting of the members

26th Annual Report 2009-2010

Board Of Directors:Baldevkrishan Sharma - Chairman

Karan Sharma - Managing Director

K.P. Bharadwaj

Promila Sharma

Mona Menon

Pratap Menon

Pradeep Nagori

Gurvinder Singh Saggu

Registered Office :109, Kakad Udyog Bhavan,

L.J.Road, Mahim,

Mumbai - 400 016.

Tel : 022 - 40702121 / 20

Fax : 022 - 40702161

Email : [email protected]

Gratex -Opening a New Chapter Annual Report 2009-10

Auditors :

M/s. B. H. Patel & Co.

Chartered Accountants.

Mukta Bhavan, 1st Floor,

22-Popatwadi, Kalbadevi Road,

Mumbai - 400 002

Registrar And Transfer Agents :

Adroit Corporate Services Pvt. Ltd.,

19, Jaferbhoy Industrial Estate,

Makwana Road, Marol Naka,

Andheri (East), Mumbai. - 400 059.

Bankers :

Bank of Maharashtra,

Gadkari Chowk Branch,

Dadar, Mumbai - 400 028.Factory :

Gratex House,

TTI Industrial Area, Khairne,

Thane - Belapur Road,

New Bombay - 400 703

CONTENTS

Notice ..................................................................... 1

Directors' Report .................................................... 4

Report on Corporate Governance ........................ 6

Management Discussion and Analysis ............... 11

Auditors' Report ................................................... 14

Balance Sheet ..................................................... 18

Profit & Loss Account ........................................... 19

Schedules forming part of Balance Sheet .......... 20

Notes on Balance Sheet &Profit & Loss Account ........................................... 24

Cash Flow Statement .......................................... 27

Balance Sheet Abstract & Company'sGeneral Business Profile ..................................... 28


1

NOTICE

Notice is hereby given that the 26th Annual General Meeting of the members of Gratex Industries Limited will beheld on Monday, 20th September, 2010, at 11.30 a. m., at Giants International, 2nd Floor, Orient Club Bldg.No. 9, Chowpatty Seaface, Mumbai - 400 007 to transact the following business:

ORDINARY BUSINESS :

1. To consider and adopt the audited Balance Sheet as at March 31, 2010 the Profit and Loss Account for theyear ended on that date and the reports of the Board of Directors and Auditors thereon.

2. To appoint a Director in place of Mr. K. P. Bharadwaj, who retires by rotation and being eligible, offershimself for re-appointment.

3. To appoint a Director in place of Mr. Pratap Menon, who retires by rotation and being eligible, offershimself for re-appointment.

4. To appoint a Director in place of Mrs. Mona Menon, who retires by rotation and being eligible, offersherself for re-appointment.

5. To appoint Auditors and to fix their remuneration and in this regard to consider and, if thought fit, to pass,with or without modification, the following resolution as an Ordinary Resolution :

"RESOLVED THAT pursuant to section 224 of the Companies Act, 1956, M/s B.H. Patel & Co.,Chartered Accountants (ICAI Registration No. 107664W), the retiring Auditors of the Company, bere-appointed as Auditors of the Company to hold office from the conclusion of this Annual GeneralMeeting, until the conclusion of the next Annual General Meeting of the Company at a remuneration asmay fixed by the Board of Directors."

SPECIAL BUSINESS:

6. To consider and if thought fit to pass with or without modification the following resolution as a SpecialResolution:

Remuneration to Mr. Baldevkrishan Sharma, Chairman - Executive :

"RESOLVED THAT pursuant to sections 198, 269 and 309 read with Schedule XIII and all other applicableprovisions, if any, of the Companies Act, 1956 or any statutory modification(s) or re-enactment thereof,and whereas pursuant to the recommendations of the Remuneration Committee, approval of the Companybe and is hereby accorded to the re-appointment of Mr. Baldevkrishan Sharma as Chairman of theCompany for a further period of 5 years with effect from 1st April, 2010 on the modified terms andconditions as set out in the Explanatory Statement annexed to the Notice convening this meeting and forthe purpose of identification, initialed by the Managing Director for authentication.

FURTHER RESOLVED THAT consent of the Company be accorded to the Board of Directors (hereinafterreferred to as 'the Board' which terms shall be deemed to include any Committee of the Board constitutedto exercise its powers including the powers conferred by this Resolution) to alter and vary the terms andconditions and/or remuneration, subject to the same not exceeding the limits specified under ScheduleXIII to the Companies Act,1956, in such form and manner or with such modifications as the Board maydeem fit and agreed to by Mr. Baldevkrishan Sharma.

RESOLVED FURTHER THAT Mr. Baldevkrishan Sharma, be and is hereby not entitled to retire by rotation.

RESOLVED FURTHER THAT the Board be and is hereby authorised to take all such steps as may benecessary, proper or expedient to give effect to this Resolution."

NOTES :

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attendand vote instead of himself and proxy need not be a member of the company.

2. Proxy form duly stamped and executed in order to be effective, must reach the registered office of thecompany not less than 48 hours before the time of commencement of the annual general meeting.


2

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 6 :

The Board propose to appoint Mr. Baldevkrishan Sharma, as Chairman of the Company for a period of 5 yearsw.e.f April 1, 2010.

Mr. Baldevkrishan Sharma is a BSC (Hons) from Mumbai University. He is a visionary and looks after theplanning and finance of the Company. A brief resume of Mr. Baldevkrishan Sharma is given in the Annexureattached to the Notice.

The following are the terms of appointment and remuneration :-

i. Tenure : For a period of 5 years commencing from April 1, 2010.

Nature of Duties : Mr. Baldevkrishan Sharma ("the Appointee") shall devote his whole time and attention to thebusiness of the Company and carry our such duties as may be entrusted to him by the Board from time to timeand exercise such powers as may be assigned to him, subject to superintendence, control and directions ofthe Board in connection with the Company.

a. Salary - In the scale of Rs. 40,000/- to 75,000/- per month

Minimum Remuneration : Notwithstanding anything to the contrary herein contained, where in any financialyear during the currency of the tenure of the Appointee, the Company has no profits, or its profits are inadequate,the Company will pay remuneration by way of salary, as specified above.

The aggregate of the remuneration as aforesaid shall be within the maximum limits as stipulated undersections 198, 309 and all other applicable provisions, if any, of the Act read with Schedule XIII of the Act, asamended from time to time.

The terms and conditions of the said appointment may be altered and varied from time to time by the Board asit may, in its discretion deem fit, within the maximum amounts payable to the Appointee, in accordance with theprovision of the Act or any amendments made hereafter in this regard and subject to such approvals as maybe required.

3. Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 is annexed and forms partof this notice.

4. Members / Proxy holders are requested to bring their Attendance slip duly signed along with their copy ofAnnual Report to the meeting.

5. The Register of Members and Share Transfer Books of the Company shall remain closed from Wednesday,15th September, 2010 to Monday, 20th September, 2010 (both days inclusive) for determining the namesof members eligible for dividend on Equity Shares, if declared at the Annual General Meeting.

6. In all correspondence with the Company or with its Share Transfer Agent, members are requested toquote their folio number and in case the shares are held in the dematerialized form, they must quote theirClient ID Number and their DPID Number.

7. Members desiring any information on the Accounts of the Company are requested to write to the Companyat least 7 days in advance so as to enable the Company to keep the information ready.

For Gratex Industries LimitedPlace : Mumbai. By Order of the BoardDate : 11th August, 2010Registered Office Karan Sharma109, Kakad Udyog Bhavan, Managing DirectorL.J.Road, Mahim, Mumbai - 400 016.


3

APPOINTMENT/ RE-APPOINTMENT OF DIRECTORS

The Following Information is being furnished in terms of Clause 49 of the Listing Agreement in respect ofDirectors retiring by rotation and proposed to be reappointed.

Particulars Mr.K.P.Bharadwaj Mrs. Mona Menon Mr. Pratap Menon Mr. Baldevkrishan Sharma

Date of Birth July 10, 1933 April 26, 1975 June 12, 1973 April 21, 1947

Date of October 1, 1994 October 1, 1995 August 10, 2004 October 1, 1992Appointment

Qualifications Bachelor of Science B.Com + B.Com + D.M.M. Bachelor of Sciencedegree in D.C.E and Interior Designer degree fromEngineering Diploma Mumbai University.from City and GuildInstitute of London

Expertise in Expertise in Wide experience in Experience of more First Generationspecific functional Technology & Marketing & than 10 years in Enterpreneur.areas Operations Corporate Marketing and Promoter of Gratex

Management and Management. General Management. Industries Limited.General He is heading the He looks after planningManagement Dealer Market with and finance of the

Network spread all company.over India.

Directorships held Nil Nil Nil Nilin other PublicCompanies(excluding foreigncompanies)

Memberships/ Nil Nil Nil NilChairmanshipsof committees of otherpublic companies(Includes only Auditand Shareholders /Investors GrievanceCommittee)

Number of Shares 5300 137200 1000 1017000held in the Company

In compliance with the provisions of section 269, 309 and other applicable provisions of the Act read withSchedule XIII of the Act, the terms of appointment and remuneration specified above are now being placedbefore the members for their approval.

The Directors commend the resolution at Item No. 6 of the accompanying notice for approval of the membersof the Company.

Except Mr. Baldevkrishan Sharma, Mrs. Promila Sharma, Mrs.Mona Menon and Mr. Karan Sharma, no otherDirector has any interest or concern in the resolution.

For Gratex Industries LimitedPlace : Mumbai. By Order of the BoardDate : 11th August, 2010

Registered Office Karan Sharma109, Kakad Udyog Bhavan, Managing DirectorL.J.Road, Mahim, Mumbai - 400 016.


4

DIRECTORS' REPORT

Your Directors have pleasure in presenting the 26th Annual Report and the Audited Statement of Accounts ofthe Company for the financial year ended 31st March, 2010.

1. FINANCIAL HIGHLIGHTS:

The financial performance of the Company, for the year ended 31st March, 2010 is summarized below:

(Amount in Lacs)

CURRENT YEAR PREVIOUS YEAR 31.03.2010 31.03.2009

Income from Operations 320.02 392.26

Total Expenditure 298.04 404.45

Profit before Interest & Depreciation 21.62 (11.90)

Interest 4.00 3.35

Depreciation 1.19 3.17

Profit After Tax 16.44 (18.44)

2. PERFORMANCE REVIEW:

The year under review was a transformational year for the Company. Turnover for the year under review isRs. 3,20,02,097 against Rs. 3,91,95,679 (previous year) showing a decrease of Rs.71,93,582. However,Net Profit After tax for the year was Rs.16,43,781 as against a loss of Rs. 18,44,411 in the previous year.

3. DIVIDEND :

Due to carry forward losses, which now stand at Rs.61,13,348 your Directors do not recommend anyDividend for the financial year ended 31st March, 2010.

4. PUBLIC DEPOSITS:

The Company has not accepted any deposits form the Public during the year under review, under theprovisions of the Companies Act, 1956 and the rules framed.

5. DIRECTORS :

In accordance with the relevant provisions of the Companies Act, 1956, Mr. K. P. Bharadwaj, Mr. PratapMenon and Mrs. Mona Menon, Directors of the Company are liable to retire by rotation at the ensuingAnnual General Meeting and being eligible, offer themselves for re-appointment. The Board recommendstheir re-appointment at the ensuing Annual General Meeting.

Further, the approval of Shareholders pursuant to applicable Sections of the Companies Act, 1956 readwith Schedule XIII thereof, is sought w.e.f. 1st April, 2010, for the re-appointment of Mr. BaldevkrishanSharma, - Chairman for a period of five years. The brief resume and other details relating to the directors,who are to be re-appointed as stipulated under clause 49(IV)(G) of the Listing Agreement, are furnished inthe Notice convening the Annual General Meeting.

6. DIRECTORS' RESPONSIBILITY STATEMENT :

As required under Section 217(2AA) of the Companies Act, 1956, your Directors confirm having:-

l followed in the preparation of the Annual Accounts, the applicable the applicable accounting standardswith proper explanation relating to material departures if any;

l selected such accounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at theend of the financial year and of the profit or loss of the Company for that period;


5

l taken proper and sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the said Act for safeguarding the assets of the Company and for preventing and detectingfraud and other irregularities;

l prepared the annual accounts on a going concern basis

7. CORPORATE GOVERANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

A report on Corporate Governance is attached to this Report along with the Management Discussion andAnalysis statement.

8. INSURANCE:

Properties and Assets of the Company are adequately insured.

9. SUBSIDIARY COMPANIES:

The Companies does not have any subsidiary.

10. AUDITORS AND AUDITORS' REPORT:

M/s B.H. Patel & Co., Chartered Accountants, holds office until the conclusion of the ensuing AnnualGeneral Meeting of the shareholders of the Company, and are eligible for re-appointment.

The Company has received a confirmation from them to the effect that, their re-appointment if made,would be in accordance with Section 224(1B) of the Companies Act, 1956 and that they are not disqualifiedfor reappointment within the meaning of Section 226 of the said Act.

The Notes on Accounts referred to in the Auditors' Report are self-explanatory and do not call for anyfurther comments.

11. PARTICULARS OF EMPLOYEES :

Information in accordance with the provision of Section 217 (2A) of the Companies Act, 1956, read with theCompanies (Particular of Employees) Rules 1975, as amended, regarding employees to the DirectorsReport is as follows.

None of the Employees of the Company are in receipt of remuneration aggregating to Rs.24,00,000/- ormore p.a. if employed for the entire year or Rs.2,00,000/- or more per month, if employed for the part of theyear.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS / OUTGO :

In view of the nature of activities which are being carried on by the Company, Rules 2A and 2B of theCompanies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, regardingconservation of Energy and Technology absorption respectively, are not applicable.

Foreign Exchange earning of the Company during the year 2009-10 was Nil while the outgo wasEURO 2,31,394, USD 47,161 and GBP 9,675.

13. ACKNOWLEDGEMENTS :

The Board acknowledges with gratitude the co-operation and assistance provided to your Company byall government authorities, financial institutions, banks, transfer agents, consultants, solicitors of theCompany for their continued support and encouragement. The Board wishes to place on record itsappreciation to the contribution made by employees of the Company during the year under review. YourDirectors are thankful to the shareholders and depositors for their continued patronage.

For Gratex Industries LimitedPlace : Mumbai. By Order of the BoardDate : 11th August, 2010

Registered Office Karan Sharma109, Kakad Udyog Bhavan, Managing DirectorL.J.Road, Mahim, Mumbai - 400 016.


6

REPORT ON CORPORATE GOVERNANCE

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges in India, the report containingthe details of governance systems and processes at Gratex Industries Limited is as under :

1. COMPANY'S PHILOSOPHY ON THE CODE OF GOVERNANCE :

Your Company is committed to good Corporate Governance and adheres to the highest standards ofbusiness ethics, compliance with statutory and legal requirements and commitment to transparency inbusiness dealings.

Your Company has always believed in adopting the best practices of Corporate Governance with an aimto maximise the interest of the shareholders with those of the other stakeholders, customers, employees,investors, dealers and society at large in order to achieve long term sustained value while ensuringaccountability in the exercise of corporates' financial, legal and contractual obligations.

Your Company is fully committed to and continues to follow procedures and practices in conformity withthe Code of Corporate Governance contained in the Listing Agreement.

2. BOARD OF DIRECTORS AND MEETINGS:

The Board of Directors of the Company has an optimum combination of executive, non-executive andindependent directors. The present strength of the Board of Directors of the Company is 8 (Eight) Directors.Five Board Meetings were held in 2009-10. The following table shows the detailed composition of Boardof Directors as well as their attendance details at the Board Meetings :-

Names of the Category of No. of meeting Whether attended No. of otherDirectors Directorship attended last AGM Directorship

Mr. Baldevkrishan Chairman, Executive 5 Yes 1Sharma

Mrs. Promila Sharma Non-Executive, Promoter 5 Yes 1

Mr. K.P. Bharadwaj Non-Executive, 4 No NILIndependent Director

Mrs. Mona Menon Non-Executive Promoter 5 Yes 1

Mr. Karan Sharma Managing Director, 5 Yes 1Executive

Mr. Pratap Menon Non-Executive 5 Yes NILIndependent Director

Mr. Pradeep Nagori Non-Executive 5 Yes NILIndependent Director

Mr. Gurvinder Singh Non-Executive 5 Yes NILSaggu Independent Director

Code of Conduct :

The Board has laid down a Code of Conduct for all Board members and Senior Management Personnel of theCompany. All Board members and Senior Management Personnel have affirmed compliance with the Codeof Conduct.

The Code of Conduct seeks to ensure that the Directors and the Senior Management Personnel observe atotal commitment to their duties and responsibilities while ensuring a complete adherence with the applicablestatutes on one hand and values and ethics on the other.


7

3. AUDIT COMMITTEE :

The terms of reference of the Audit Committee are as per the guidelines set out in the Listing Agreementread with the Section 292A of the Companies Act, 1956. The composition of members of the AuditCommittee and their attendance for the meetings are as under:

Name Nature of Membership Number of Audit Committee meetings

Held Attended

Mr. Pradeep Nagori Chairman 4 4

Mr. Gurvinder Singh Saggu Member 4 4

Mr. Karan Sharma Member 4 4

4. INVESTORS/SHAREHOLDERS GRIEVANCE COMMITTEE :

The investors/Shareholders Grievances Committee overseas functions like issuance of physical sharecertificates on re materialization of shares, issuance of duplicate share certificates, redressing grievancesreceived from the investors like non receipt of dividends and Annul Report and suggesting measures toimprove investor satisfaction.

Names of the members Designation

Mr. Gurvinder Singh Saggu Chairman

Mr. Karan Sharma Member

Mr. Pradeep Nagori Member

The complaints received during the year from the shareholders have been resolved to the satisfaction ofthe shareholders. The committee met once during the year under review.

5. GENERAL BODY MEETINGS :

Details of the location, date and time of the last three Annual General Meetings (AGM) and the Resolutionspassed therein are as under :

Day, Date & Time Location Particulars of Special Business

Tuesday,8th September, 2009 Giants International, 2nd Floor, 1. Alteration of Objects Clause inat 12.30 p.m. Orient Club Bldg. No. 9, Memorandum of Association

Chowpatty Seaface, Mumbai - 400 007

Tuesday,23rd September, 2008; Giants International, 2nd Floor, NIL12 noon Orient Club Bldg. No. 9,

Chowpatty Seaface, Mumbai - 400 007

Saturday,29th September, 2007 Giants International, 2nd Floor, 1. Appointment of Mr.Karan Sharma12 noon Orient Club Bldg. No. 9, as Managing Director.

Chowpatty Seaface, Mumbai - 400 0072. Preferential Allotment of 9,65,200Equity Shares at par to Shri BaldevSharma, Promoter of the Company.

The shareholders passed all the resolutions including the special resolutions set out in the respective Notices.No Postal Ballots were used for voting at these meetings.


8

6. DISCLOSURES :

a) Details on materially significant related party transactions:

None of the transactions with any of the related parties were in conflict with the interest of theCompany. Attention of members is drawn to the disclosure of transactions with the related parties setout in Notes on Accounts- Schedule 'Q', forming part of the Annual Report.

b) Statutory Compliance, Penalties and Strictures:

There has been no instance of any non-compliance, penalties or strictures imposed on the Companyby the Stock Exchanges, or any other statutory authority on any matter relating to the Capital Market.

c) Whistle Blower policy and affirmation that no personnel has been denied access to the Audit

Though the Company does not have a Whistle Blower Policy, the Company encourages the employeesto freely express their views on various issues faced by them and thereafter follow up the same fornecessary resolution of it. The employees have access to the Audit Committee.

d) Details of compliance with mandatory requirements and adoption of the non-mandatoryrequirements of Clause 49 :

The Company has complied with all the mandatory requirements of the Clause 49 of the ListingAgreement. The details of these compliances have been given in the relevant sections of this Report.

7. MEANS OF COMMUNICATION :

l Publication of Results The quarterly / annual results of the Company are publishedin the leading newspapers viz Business Standard in Englishand Sakal in Marathi

l Email Id for redressal of investor In terms of Clause 47(f) of the Listing Agreement,complaints investors may use the E-mail ID : gratexinvestor@ gmail.com

for redressal of complaints.

8. GENERAL SHAREHOLDER'S INFORMATION :

l AGM: Date, Time and Venue Monday, September 20, 2010, 11.30 a. m. GiantsInternational, Orient Club Bldg. 2nd Floor, No. 9, ChowpattySeaface, Mumbai - 400 007

l Date of Book Closure Wednesday, 15th September, 2010 to Monday,20th September, 2010

l Listing on stock exchange Yes

l Stock codes:Bombay Stock Exchange 526751Ahmedabad Stock ExchangeISIN for Dematerialisation INE915E01013

l Registrar and Transfer Agents Adroit Corporate Services Pvt. Ltd.,19, Jaferbhoy Industrial Estate, Makwana Road, MarolNaka, Andheri (East), Mumbai. - 400 059.

l Share Transfer System Registrar and Transfer Agents

l Outstanding GDRs /ADRs /Warrants orany convertible instruments conversion NILdate and likely impact on equity

l Address for correspondence. Regd.Office: 109, Kakad Udyog Bhavan, L.J.Road, Mahim,Mumbai - 400 016.


9

Financial Calendar 2010 - 2011 (tentative)

Financial reporting for the quarter ending June 30, 2010 Upto August 15, 2010

Financial reporting for the half year ending September 30, 2010 Upto November 15, 2010

Financial reporting for the quarter ending December 31, 2010 Upto January 15, 2011

Financial reporting for the quarter ending March 31, 2010 Upto May 15, 2011

Annual General Meeting for the year ending March 31, 2011 Upto September 30, 2011

9. LISTING FEES :

The Company has paid the listing fees to all stock exchanges for the period 2010-2011.

10. THE DISTRIBUTION OF SHAREHOLDERS AS ON 31.03.2010 IS AS FOLLOWS :

No. of equity shares held No. of Folios % No. of shares %

1-500 3928 91.60 631301 20.80501-1000 179 4.17 151000 4.981001-2000 98 2.29 149899 4.942001-3000 18 0.42 45400 1.503001-4000 16 0.37 57300 1.894001-5000 12 0.28 58100 1.915001-10000 16 0.37 127800 4.2110001-ABOVE 21 0.49 1814000 59.77

Grand Total 4288 100.00 3034800 100.00

11. SHAREHOLDING PATTERN AS ON 31ST MARCH, 2010 :

Category Sub-category No.of securites held

Promoter's holding Indian Promoters 1501100

Foreign Promoters 0

Persons Acting in Concern 0

Sub Total 1501100

Institutional Investors Mutual Funds & UTI 0

Banks, FIs, Insurance Co.s, Central / 0

State Govt. / Non-Govt. Institutions

FII 0

Sub-Total 0

Others Private Corporate Bodies 95479

Indian Public 1329121

Any Other 109100

Sub Total 1533700

Grand Total 3034800


10

12. STOCK MARKET PRICE DATA AT BOMBAY STOCK EXCHANGE :

MONTH BSE

HIGH LOW

April, 2009 3.21 3.05

May, 2009 3.36 3.20

June, 2009 - -

July, 2009 3.71 3.20

August, 2009 3.75 3.57

September, 2009 5.43 3.74

October, 2009 8.24 5.15

November, 2009 8.11 7.71

December, 2009 7.33 5.39

January, 2010 5.65 4.95

February, 2010 5.35 5.10

March, 2010 5.60 5.07

13. COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE:

The Company has obtained a Certificate from Mr. B. M. Doshi, Practising Chartered Accountant regardingCompliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreementand the same is annexed.

14. CEO AND CFO CERTIFICATION

As per the requirement of Clause 49 of the Listing Agreement, a Certificate duly signed by ManagingDirector and the Chairman of the Company has been submitted to the Board.

FOR & ON BEHALF OF THE BOARD

Baldevkrishan Sharma Karan Sharma

Chairman Managing Director

Place : Mumbai

Date : 11th August, 2010


11

MANAGEMENT DISCUSSION AND ANALYSIS

1. Industry Structure, Developments and OutlookGratex Industries Limited, being well known in the Industry as a pioneer, its product commands a strong brandimage. GIL has been in the forefront in launch of new designs, which make a life-style statement. Our focus is alsoon the Industrial Consumer and this will significantly expand the market base.

During the year, the Company has consolidated on the area of setting up the infrastructure for efficient Warehousingof Imported Stocks and Network Marketing on all India basis.

GIL is also focused on making its infrastructure strong by extending Karigar Training Classes and Contractor /Sale Staff Training Programmes by establishing a formal Gratex Academy. The Company intends to train at least50 Karigars per annum, who would enter the Wallpaper Field every year.

Significant progress is also made by the Company in installation of wallpapers by up-grading the Adhesives usedand providing technical back up support for post sales problems.

2. Perceived Business Risks :

The Company's business activities expose it to a variety of risks including survival in thehighly competitive Wallpaperindustry. Identification and management of these risks are essential to its success and financial soundness.

3. Risk Management and Environment policy

Our risk management procedures ensure that the management controls risks though means of a properly definedframe work.

The Company is committed to achieving excellence in environmental performance, and preservation and promotionof environment are of fundamental concern in all our business activities.

4. Internal Control Systems :

The Company has adequate system of internal controls for business processes, with regardto operations, financialreporting, compliance with applicable laws and regulations etc. The Audit Committee of the Board of Directorsactively reviews the adequacy and effectiveness of internal control systems and suggests improvement forstrengthening the existing control system in view of changing business needs form time to time.

5. Social Commitment

Your Company has commitment for fulfilling its responsibilities towards the enrichment of the society.

6. Human Resources Development

Human resources continue to be the most important asset of the Company. Your Company believes that itshuman resources are the key to the success of the organization in realizing its objectives. The Company continuedits utmost efforts to further align its HR policies, organizational processes and initiatives to meet the needs ofthe business. The Company has created a conducive working environment with prudent knowledge managementleading to enhanced skills and capabilities. Your Company provides challenging career development opportunitiesand encourages innovative thinking. It monitors employees performance to enhance individual and organizationalperformance. The employees relations during the year remained cordial and initiatives were taken to improve theproductivity of employees.

7. Cautionary Statement :

Statements in this Management Discussions and Analysis Report describing the Company's objectives, projections,estimates and expectations may be forward looking statements within the meaning of applicable laws andregulations. Actual results might differ materially from those either expressed or implied.

The Company is not under any obligation to publicly amend, modify or revise any forward looking statements onthe basis of any subsequent developments, information or events.

PLACE : MumbaiDATE : 11th August, 2010


12

CERTIFICATE OF CHAIRMAN AND OF THE MANAGING DIRECTOR

We have reviewed the financial statements and the cash flow statement for the financial year 2009-10 and

certify that :

(a) These statements to the best of our knowledge and belief :

(i) do not contain any materially untrue statement or omit any material fact or contain statements that

might be misleading.;

(ii) present a true and fair view of the Company's affairs and are in compliance with existing accounting

standards, applicable laws and regulations.

(b) To the best of our knowledge and belief, no transactions entered into by the Company during the

period which are fraudulent, illegal or violative of the Company's Code of Conduct.

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting in GRATEX

INDUSTRIES LIMITED and we have evaluated the effectiveness of the internal control systems of the

Company pertaining to financial reporting. We have disclosed to the Auditors and the Audit Committee,

deficiencies in the design or operation of internal controls, if any, of which we are aware and the steps we

have taken or propose to take to rectify these deficiencies.

(d) We have also indicated to the Auditors and the Audit Committee:

(i) Significant changes in internal control during the year.

(ii) Significant changes in the accounting policies during the year and that the same have been disclosed

in the notes to the financial statements; and

(iii) Instances of significant fraud of which they have become aware and the involvements therein, if any, of

the Management or an employee having a significant role in the company's internal control system.

(iv) We affirm that we have not denied any personal access to the Audit Committee of the Company (in

respect of matters involving alleged misconduct, if any)

(v) We further declare that all Board members and Senior Management have affirmed compliance with

the Code of Conduct for the current year.

FOR & ON BEHALF OF THE BOARD

Baldevkrishan Sharma Karan Sharma

Chairman Managing Director

Place : Mumbai

Date : 11th August, 2010


13

AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of Gratex Industries Limited

We have examined the compliance of the conditions of Corporate Governance by M/s Gratex Industries

Limited for the year ended 31st March 2010 as stipulated in clause 49 of the Listing Agreement of the said

company with the Stock Exchanges.

The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination

was limited to procedures and implementation thereof, adopted by the Company for ensuring compliances of

conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements

of the Company.

Subject to aforesaid, in our opinion and to the best of information and explanation given to us, we certify that

the Company has complied in all material respects with the conditions of Corporate Governance as stipulated

in the above mentioned listing agreement.

As required by the Guidance note issued by the Institute of Chartered Accountants of India, we have to state

that the Registrar and Share Transfer Agents of the Company have certified that they have maintained the

records to show the investor's grievances against the Company and that as at 31st March 2010, there were no

grievances remaining unattended/ pending for more than 15 days.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the

efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For B. H. PATEL & CO.,

Chartered Accountants

Place : Mumbai

Date : 11th August, 2010 B. M. DOSHI

Proprietor

Membership No. 17370


14

AUDITORS' REPORT

TO THE SHAREHOLDERS OF GRATEX INDUSTRIES LTD

1] We have audited the Balance Sheet of GRATEX INDUSTRIES LTD as on 31st March, 2010 togetherwith Profit and Loss Account of the Company for the year ended on that date annexed hereto. TheseFinancial Statements are the responsibility of the Company's Management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2] We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining on a test basis,evidence supporting, the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by themanagement as well as evaluating the overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.

3] As required by the Companies (Auditor Report) Order, 2003 issued by the Central Government of Indiain terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure astatement on the matters specified in paragraphs 4 & 5 of the said order to the extent applicable.

4] Further to our comments in the annexure referred to above, we report that:

i) We have obtained all the informations and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit.

ii) In our opinion, proper books of accounts as required by Law have been kept by the Companyin so far as appears from our examination of such books.

iii) The Balance Sheet and Profit & Loss account dealt with by this report are in agreementwith the books of accounts.

iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt with by this report comply withthe accounting standard referred in sub-section (3C) of section 211 of the Companies Act, 1956.

v) On the basis of written representations received from the Directors as on 31st March, 2010 and takenon record by the Board of Directors, we report that none of the directors is disqualified as on31st March, 2010 from being appointed as a director in terms of clause.

vi) In our opinion, and to the best of our information and according to the explanations given to us, thesaid accounts give the information required by the Companies Act, 1956 in the manner sorequired and give a true and fair view in conformity with the accounting principles generally acceptedin India :

i) in the case of the Balance Sheet of the state of affairs of the Company as at March 31, 2010 and

ii) in the case of Profit and Loss Account of the profit for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flow, for the year ended on that date;

For B. H. PATEL & CO.,Chartered Accountants

Place : MumbaiDate : 11th August, 2010 B. M. DOSHI

Proprietor



15

ANNEXURE TO THE AUDITORS' REPORT

(REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)

i] (a) The Company has maintained proper records showing full particulars including quantitative details

and situation of fixed assets.

(b) As explained to us, physical verification of a major portion of fixed assets as at 31st March, 2010 was

conducted by the Management during the year. In our opinion, the frequency of physical verification

is reasonable. Having regard to the size of the operations of the Company and on the basis of

explanations received, in our opinion no difference was found between physical verification and the

records kept by the Company.

(c) We understand from the Company that, Company has not sold any plant & machinery and therefore

question of effect as going concern does not arise.

ii] (a) As explained to us, the Company is following a system of physical verification of significant stock at

appropriate interval during the year under consideration. In our opinion the frequency of verification

is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures

of physical verification of stocks followed by the Management are reasonable and adequate in

relation to the size of the Company and the nature of it's business.

(c) In our opinion and according to the information and explanations given to us, the Company is

maintaining proper records of inventory. The discrepancies noticed on verification between the

physical stocks and the book records were not material having regard to the size of the operations

of the Company.

iii] (a) The Company has not granted or taken any loans, secured or unsecured from Companies, Firms or

other parties listed in the register maintained U/S 301 of the Companies Act, 1956.

(b) Company has accepted unsecured loan of Rs. 4,00,000/- from Smt.Premlata Bhardwaj who happens

to be the wife of Director Shri K. P. Bhardwaj and Rs. 12,00,000/- from Smt. Promila Sharma who

happens to be the wife of Chairman Shri Baldevkrishan Sharma.

(c) In our opinion the rate of interest paid on unsecured loan is reasonable and the Company is regular

in the payment of interest.


16

iv] In our opinion and according to the information and explanations given to us, there are adequate internal

control procedure commensurate with the size of the Company and the nature of it's business with

regards to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of

our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v] Company has not taken or given any loan applicable under section 301 of the Companies Act, 1956.

vi] Company has not accepted any public deposit and therefore section 58 A and 58 AA of the Companies

Act, 1956 does not apply.

vii] There is no separate internal audit department. However internal checks and controls at various levels

of operations are there as considered appropriate.

viii] Central Government has not prescribed maintenance of cost report U/S 209 (1)(d) of the Companies Act,

1956. Since there are not any mafucture activities the question of maintenance of cost doesn't arise

ix] (a) Company is regular in depositing with appropriate authority undisputed statutory dues including

provident fund, employees state insurance, income tax, sales tax, custom duty, excise duty and other

material statutory dues applicable to it.

(b) According to the information and explanation given to us, no undisputed amount payable in respect

of income tax, sales tax, custom duty, excise duty as at 31st March, 2010 for a period of more than

six months from the date they become payable.

(c) According to the information and explanation given to us, no disputable amount due to income tax,

sales tax, custom duty, excise duty etc.

x] In our opinion there is an accumulated loss amounting to Rs. 61.13 lacs. The Company has not

incurred cash losses during the financial year covered by our audit and the immediate preceding

financial year.

xi] In our opinion and according to the information and explanations given to us, Company has not defaulted

in repayment of dues to a financial institution or bank.

xii] Company has not given or pledged in form of shares as security.

xiii] In our opinion the Company is not a Chit Fund or Nidhi / Mutual Benefit Fund / Society. Therefore the

provision of clause 4 (XIII) of the Companies (Auditor's Report) Order, 2003 are not applicable to the

Company.


17

xiv] In our opinion the Company is not dealing in or trading in shares, securities, debentures and other

investment. Accordingly the provision of clause 4 (XIV) of the Companies (Auditor's Report) Order,

2003 are not applicable to the Company.

xv] The Company has not given anyguaranteefor loan takenby others from banks or financial institutions.

xvi] As per information given to us, the Company has not taken any term loans during the financial year

under consideration.

xvii] According to the information and explanations given to us and on an overall examination of the balance

sheet of the Company, we report that the no funds raised on short-term basis have been used for

long-term investment. No long-term funds have been used to finance short-term assets except permanent

working capital.

xviii] As per information given to us, the Company has not made any preferential allotment of the shares

covered in the register maintained U/S. 301 of the Companies Act, 1956..

xix] According to the information given to us, the Company has not issued any debentures during the year

under consideration.

xx] Company has not raised any public issues.

xxi] According to information and explanations given to us, no fraud on or by the Company has been noticed

or reported during the course of our audit.

For B. H. PATEL & CO.,


Place : Mumbai

Date : 11th August, 2010 B. M. DOSHI

Proprietor



18

BALANCE SHEET FOR THE YEAR ENDED AS ON 31ST MARCH, 2010

PARTICULARS SCHEDULES AS AT AS AT

31.03.2010 31.03.2009

(AUDITED) (AUDITED)

SOURCES OF FUNDS :

SHARE CAPITAL A 30,348,000 30,348,000

RESERVE & SURPLUS B 1,852,810 1,935,068

BORROWINGS :

SECURED LOANS C 3,406,222 2,640,820

UNSECURED LOANS D 1,600,000 1,600,000

TOTAL 37,207,032 36,523,888

APPLICATION OF FUNDS :

FIXED ASSETS E 11,233,673 11,405,916

CURRENT ASSETS, LOANS & ADVANCES F 26,922,123

LESS : CURRENT LIABILITIES & PROVISIONS G 7,678,548 19,243,575 16,744,408

MISCELLANEOUS EXPENDITURE R 616,436 616,436

(To the extent not written off)

PROFIT & LOSS ACCOUNT S 6,113,348 7,757,128

(Debit Balance)

TOTAL 37,207,032 36,523,888

NOTES ON ACCOUNTS Q

As per our attached report of even date

For M/S. B. H. PATEL & CO. For GRATEX INDUSTRIES LTD


B. M. DOSHI BALDEVKRISHAN SHARMA KARAN SHARMA

Proprietor Chairman Managing Director

Place : Mumbai

Dated : 11th August, 2010


19

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED AS ON 31ST MARCH, 2010

PARTICULARS SCHEDULES AS AT AS AT

31.03.2010 31.03.2009

(AUDITED) (AUDITED)

INCOME :

SALES H 32,002,097 39,195,679

OTHER INCOME I 65,475

TOTAL 32,002,097 39,261,154

EXPENDITURE :

TRADING PURCHASES & MATERIAL CONSUMED J 24,697,216 27,179,015

MANUFACTURING EXPENSES K - 1,898,180

SELLING, ADMINISTRATION & OTHER EXPENSES L 3,502,924 4,213,060

PAYMENT TO & PROVISION FOR EMPLOYEE M 1,639,251 7,161,590

TOTAL 29,839,391 40,451,845

PROFIT/(LOSS) BEFORE INTEREST & DEPRECIATION 2,162,706 (1,190,692)

INTEREST N 399,802 335,976

DEPRECIATION O 119,124 317,743

PROFIT/(LOSS) BEFORE TAXATION 1,643,781 (1,844,411)

PROVISION FOR TAXATION - -

PROVISION FOR DIVIDEND

NET PROFIT/(LOSS) TRANSFERRED 1,643,781 (1,844,411)


For M/S. B. H. PATEL & CO. For GRATEX INDUSTRIES LTD


B. M. DOSHI BALDEVKRISHAN SHARMA KARAN SHARMA

Proprietor Chairman Managing Director

Place : Mumbai

Dated : 11th August, 2010


20

SCHEDULE FORMING PART OF THE BALANCE SHEET AND PROFIT & LOSS ACCOUNTFOR THE YEAR ENDED AS ON 31ST MARCH, 2010

PARTICULARS AS AT AS AT31.03.2010 31.03.2009

UN- AUDITED AUDITED

SCHEDULE "A"SHARE CAPITAL

AUTHORISED CAPITAL40,00,000 EQUITY SHARES OF RS. 10.00 EACH 40,000,000 40,000,000ISSUED, SUBSCRIBED AND PAID-UP CAPITAL30,34,800 EQUITY SHARES OF RS. 10.00 EACH 30,348,000 30,348,000

30,348,000 30,348,000SCHEDULE "B"RESERVE AND SURPLUS

CAPITAL RESERVE 1,046,026 1,046,026GENERAL RESERVE 806,783 889,041

1,852,810 1,935,068SCHEDULE "C"SECURED LOANS

BANK OF MAHARASHTRA, DADAR, MUMBAI 3,406,222 2,640,8203,406,222 2,640,820

SCHEDULE "D"UNSECURED LOANS

MRS. PREMLATA BHARDWAJ 400,000 400,000MRS. PROMILA SHARMA 1,200,000 1,200,000

1,600,000 1,600,000SCHEDULE "E"FIXED ASSETS

(As per statement attached) 11,233,673 11,405,91611,233,673 11,405,916

SCHEDULE "F"CURRENT ASSETS, LOANS & ADVANCESCURRENT ASSETSA) CLOSING STOCK 11,499,820 16,164,151B) SUNDRY DEBTORS

(Unsecured considered good)OVER SIX MONTHS 272,451 167,586OTHERS 373,015

272,451 540,601C) CASH & BANK BALANCES

CASH IN HAND 51,746 25,607BANK OF MAHARASHTRA - (GSC) 5,120CITIBANK N. A. - MUMBAI 370 488

52,116 31,215D) LOANS & ADVANCES

ADVANCE AGAINST IMPORT AND PURCHASES 2,390,309ELAR FASHIONS LTD. 6,810,117 6,810,117ANDHRA PRADESH POWER TOOLS LTD. 5,720,514 5,720,514GIRISH KULKARNI - STAFF LOAN 7,000 -KARAN SHARMA 2,265 -RASCH 19,537STAFF LOANS 6,000DEPOSITS 167,532 271,689SHRI SAI CONSTRUCTION 2,417SUNDEEP PURI ADVOCATE & ASSOCIATES 3,193ADVANCE INCOME TAX 52,690DEEPCHAND KHESHTWAL 608

15,097,737 12,886,765

TOTAL (A TO D) 26,922,124 29,622,733


21



UN- AUDITED AUDITED

SCHEDULE "G"

CURRENT LIABILITIES & PROVISIONS

CURRENT LIABILITIES

SUNDRY CREDITORS FOR GOODS & EXPENSES 590,604 1,222,462

ADVANCE RECEIVED AGAINST SALES 7,056,597 11,336,571

VALUE ADDED TAX 31,347 15,000

OUTSTANDING EXPENSES 301,143

STAFF DEPOSITS 3,149

7,678,548 12,878,325

SCHEDULE "H"

SALES

SALES 32,002,097 39,195,679

32,002,097 39,195,679

SCHEDULE "I"

OTHER INCOME

INTEREST RECEIVED - 5,111

INSURANCE CLAIM 5,896

MISC. INCOME - 54,468

- 65,475

SCHEDULE "J"

TRADING PURCHASE & MATERIALS CONSUMED 24,697,216 27,179,015

SCHEDULE "K"

MANUFACTURING EXPENSES - 1,898,180

SCHEDULE "L"

SELLING, ADMINISTRATION & OTHER EXPENSES

REPAIRS & MAINTENANCE - BUILDING 415,219

REPAIRS & MAINTENANCE - OTHERS 61,609 136,334

RENT, RATES & TAXES 168,807 183,222

PROFESSIONAL CHARGES 356,438 360,253

ADVERTISEMENT 81,652 19,588

PRINTING & STATIONERY 69,759 261,477

DIRECTORS REMUNERATION AND PERKS 1,135,651 1,099,475

DIRECTORS SITTING FEES 101,000 95,000

SALES DISCOUNT 72,606 10,098

RETAINERSHIP CHARGES 176,425 186,744

MOTOR CAR EXPENSES (DELIVERY VAN) 266,004 282,084

SALES PROMOTIONS 115,341

AUDIT FEES 50,000


22

BANK CHARGES 19,284 16,720

Loss of Fixed Assets ( Scrap) 81,724

CANTEEN EXPENSES - 152,101

POSTAGE & TELEGRAM 20,074 42,231

GENERAL EXPENSES 76,650 83,745

FREIGHT OUTWARD 6,508 5,503

ELECTRICITY CHARGES (HEAD OFFICE) 232,870 12,000

INSURANE EXPENSES 195,418 199,918

PACKING MATERIALS 33,195

WATER CHARGES 23,435

LOADING & UN-LOADING 7,149

MEDICAL EXPENSES 550 5,802

STAFF TRANSPORT EXPENSES 28,954 86,581

BAD DEBTS 10,604

TRAINING EXPENSES 16,170

VALUE ADDED TAX (F.Y.2006-07) 102,481

CONVEYANCE EXPENSES 88,827 128,319

TELEPHONE CHARGES 32,993 39,654

FOREIGN TRAVELLING EXP. 261,737

3,502,924 4,213,060

SCHEDULE 'M" -

PAYMENT TO & PROVISION FOR EMPLOYEES

SALARIES, WAGES, BONUS & OTHERS 1,522,859 5,603,346

EMPLOYEES CONTRIBUTION TO PF, ESIC ETC. 116,392 236,897

GRATUITY 1,321,347

1,639,251 7,161,590

SCHEDULE "N"

INTEREST

BANK 179,802 175,976

OTHERS 220,000 160,000

399,802 335,976

SCHEDULE "O"

MISCELLANEOUS EXPENDITURE

(To the extent not written off)

MISAPPROPRIATED FROM BANK 616,436 616,436

(To be recovered from PNB)

PUBLIC ISSUE EXPENSES - -

616,436 616,436

SCHEDULE "P"

PROFIT & LOSS ACCOUNT

(Debit Balance) 7,757,128 5,912,717

LESS : PROFIT/(LOSS) FOR THE YEAR 1,643,781 (1,844,411)

6,113,348 7,757,128



UN- AUDITED AUDITED


23

SC

HE

DU

LE "

E"

FIX

ED

AS

SE

TS

G

R O

S S

B

L O

C K

D E

P R

E C

I A

T I

O N

N

E T

B

L O

C K

SR.

PART

ICUL

ARS

RATE

TOTA

L AS

ONAD

DITIO

NSDE

DUCT

IONS

TOTA

L AS

ONTO

TAL A

S ON

PROV

ISIO

NSDE

DUCT

IONS

TOTA

L AS

ONAS

ATAS

AT

NO.

%01

.04.20

0931

.03.20

1001

.04.20

0931

.03.20

1031

.03.20

1031

.03.20

09A

BUILD

INGS

-

-

1LA

ND (M

IDC)

-24

0,000

-

-

240,0

00

-

-

-

-

240,0

00

24

0,000

2FA

CTOR

Y BU

ILDIN

G3.3

44,2

49,36

5

-

4,249

,365

1,4

56,76

3

-

1,456

,763

2,7

92,60

2

2,792

,602

-

-

B

PLAN

T & M

ACHI

NERY

-

-

1PL

ANT &

MAC

HINE

RY4.7

55,9

02,76

8

-

-

5,902

,768

3,2

88,59

0

-

3,288

,590

2,6

14,17

8

2,614

,178

2

FACT

ORY

EQUI

PMEN

TS4.7

54,7

96,36

1

-

4,796

,361

2,0

36,10

8

-

2,036

,108

2,7

60,25

3

2,760

,253

-

-

C

POW

ER &

INST

ALLA

TION

-

-

1EL

ECTR

IC IN

STAL

LATI

O N4.7

57,1

32

-

-

7,132

6,0

83

50

-

6,133

99

9

1,0

49

2EL

ECTR

IC E

QUIP

MENT

S4.7

516

4,314

-

-

164,3

14

97

,515

3,173

-

10

0,688

63,62

6

66

,799

3

ELEC

TRIC

FITT

INGS

4.75

303,1

72

-

-

30

3,172

176,8

15

6,0

02

-

182,8

17

12

0,355

126,3

57

-

-

D

PRIN

TING

CYLIN

DERS

-

-

1PR

INTIN

G CY

LINDE

RS4.7

52,8

25,62

4

-

-

2,825

,624

1,2

54,49

6

-

1,254

,496

1,5

71,12

8

1,571

,128

-

-

E

FURN

ITURE

& FI

XTUR

ES-

-

1

FURN

ITUR

E &

FIXTU

RES

6.33

1,072

,540

-

-

1,0

72,54

0

675,5

50

25

,129

28

,605

67

2,074

400,4

66

39

6,990

-

-

-

F

OTHE

RS-

-

-

1IN

TERC

OM &

TEL

ECOM

6.33

201,4

52

-

29

,629

171,8

23

11

3,985

5,537

11

9,521

52,30

1

87

,467

2

FANS

6.33

31,96

0

-

-

31,96

0

21

,837

641

-

22,47

8

9,4

82

10,12

3

3OF

FICE

EQUI

PMEN

TS6.3

314

7,352

-

147,3

52

71

,195

4,821

-

76

,016

71,33

6

76

,157

4

TYPE

WRI

TERS

6.33

37,38

4

-

13,10

8

24

,276

24,27

6

24

,276

-

-

13

,108

5

COMP

UTER

S16

.2193

5,048

-

935,0

48

66

1,335

44,36

9

-

705,7

04

22

9,344

273,7

13

6

FAX

MACH

INE

6.33

52,00

0

-

-

52,00

0

31

,612

1,291

-

32

,902

19,09

8

20

,388

7

AIR

COND

ITION

ERS

6.33

119,9

78

-

-

11

9,978

57,93

2

3,9

28

-

61,85

9

58

,119

62,04

6

8XE

ROX

MACH

INE

6.33

73,05

7

-

29,24

6

43

,811

43,81

1

43

,811

-

-

29

,246

-

-

-

GVE

HICA

LS-

-

-

1QU

ALLIS

-DEL

IVER

Y VA

N9.5

537,5

32

-

-

53

7,532

282,9

61

24

,184

-

30

7,145

230,3

87

25

4,571

2MO

TOR

CYCL

E9.5

57,24

8

-

9,741

47,50

7

47

,507

47,50

7

-

-

9,741

TO

TAL

21,75

4,288

-

81

,724

21,67

2,563

10

,348,3

72

119,1

24

144,1

99

10,32

3,296

11

,233,6

73

11,40

5,916

PR

EVIO

US Y

EAR

21,75

4,288

-

-

21

,754,2

88

9,995

,629

31

7,743

35

,000

10

,348,3

72

11

,405,9

16

11,75

8,659

Note

: We h

ave n

ot cla

imed

any d

eprec

iation

on Plan

t & M

achin

ery ha

s the

re is no

man

ufactu

re ac

tivitie

s during

the f

inanc

ial ye

ar un

der the

conside

ration


24

SCHEDULE "Q"NOTES TO ACCOUNTS

1. ACCOUNTING POLICIES :

The Accounts are prepared on a Historical Cost Convention and complies with the Mandatory AccountingStandards issued by the Institute of Chartered Accountants of India. Company follows mercantile systemof Accounting.

The significant accounting policies followed by the Company are as under:

2. FIXED ASSETS :

1. Expenditure which are of a capital nature are capitalised at a cost which comprises of purchaseprice (Net of rebates & discounts), import duties, levies and any directly attributable cost of bringingthe assets to its working condition for the intended use.

Depreciation is provided from the day of asset put to use on written down value method (WDV) atthe rates and in the manner specified under Schedule XIV of the Companies Act, 1956.

2. Investments are valued at it's acquisition cost.

3. We understand from the management that manufacture activities is stoped from 24th August 2008and therefore depreciation on Plant & Machinery under the Income Tax is not claimed.

3. INVENTORIES :

Since we are traders, Stock is valued as cost as per market price which is even in lower

4. The Company has paid PF regularly of all employees.

5. PENDING FRAUD CASE : Rs.6,16,436/-

The Company has reflected the following amount under the head "Miscellaneous ExpensesNot Written Off".

Misappropriation from Bank to be recovered from Punjab National Bank Rs. 5.0l,000/-

Provision of interest upto 31.03.95 Rs. 1,15,436/-

Total Rs. 6,16,436/-

The Company had C C A/c (Cash Credit Account) bearing Account No. 109 with Punjab National Bank,Shivaji Park Branch, Mumbai. during the financial year 1993-94 and 1994-95 Mr. Jatin M. Chhaya anAccountant had forged the signature of Director, Mrs. Promila Sharma and misappropriated the abovestated sum. The Company on detection of above fraud lodged a complaint with the Registrar, ConsumerRedressed Commission, Mumbai, Maharashtra on 11.8.l994 bearing Suit No.222/94.

An Ex-parte Order had been issued by the High Court in favour of the Company for the Civil Suit filedin the High Court vide Suit No. 2647 of 1996 against Punjab National Bank and Others.

CIVIL SUIT NO. 2647 OF 1996 : PUNJAB NATIONAL BANK & OTHERS

From the information passed by the Company, the High Court has passed the Order to withdraw theamount of Rs. 5,06,000/- deposited in the High Court by the Punjab National Bank with a condition thatthe Company submits a Bank Guarantee. The Bank Guarantee has been submitted by the Company.The said matter will be on the High Court Board after 3 to 4 years for contesting and till then the matteris pending.


25

PRIVATE COMPLAINT NO. 990/P/1995 : MR. JATIN CHHAYA V/S STATE OF MAHARASHTRA.

We understand from the Management that the hand-writing expert report + other documents arereceived in the Court by the Mahim Police Station. The original cheques areyet to be received in theCourt. The Trial is posted to proceed.

6. We understand from the management that the case filed by the Company against the Managing DirectorMr. Prabodh Agarwal of M/s. Elar Fashions Ltd., Sukhsagar Building, Opera House, Mumbai-400 007 inthe Economic Offences Wing had been revived and fresh proceedings under the Indian Penal Code hadbeen activated against the Managing Director, his wife Mrs. Deepti Rani Agarwal and Mr. Mansingha forissue of false Invoices and Duplicate Share Certificates.

Mr. Mansingha was jailed for 2 days and released on Bail. The management will appear when thesummons are issued to it and the matter comes up on Board

The Red Corner Notice against the Accused was also issued by the Economic Offences Wing.

We understand from the Management that there has been no progress on the various cases filedagainst the Managing Director Mr. Prabodh Agarwal and Mrs. Deepti Rani Agarwal, Director of theCompany. They are absconding for more than 6 years and hence the case is pending.

In view of pending litigation for a long time, management has decided to account for due interest oncash basis i.e. year in which the actual interest is received.

7. We understand from the management that in the case filed by the Company against ConsortexKal Doelitzsch (India) Ltd. formerly known as Andhra Pradesh Power Tools Ltd., against whom theCompany was successful in getting an Order under the Summary Suit but the said case papers aremisplaced in the record room of High Court and hence the said matter will be reconstructed in the HighCourt. The process will take at least two months for getting the decree copy of the case and till then thematter is pending in the High Court.

Execution Petition had filed in City Civil Court at Hyderabad and the Honorable Court had issued showcause Notice. Against respondent and the said respondent refused to accept the notice and the matter iskept for further process.

The matter under section 138 is pending in High Court Mumbai the said matter lastly on 18.06.2010 andhonorable Court had given time to serve notice upon the accused respondent.

In view of pending litigation for a long time, management has decided to account for due interest on cashbasis i.e. year in which the actual interest is received.

8. CONTINGENT LIABILITIES :

The contingent liabilities on gratuity payment is not indicated.

As at 31.03.2010 As at 31.03.2009 ------------------------------------------------------------

Payment to Directors-Directors Sitting Fees 1,01,000 95,000Remuneration 11,35,651 10,99,475No Provision for taxation has been made in view ofcarry forward of losses. - -Auditors Remuneration 50,000 40,000Expenditure in foreign currency Euro 2,31,394 2,40,759

USD 47,161 31,441GBP 9,675 7,196


26

9. Information for Goods Manufactured during the year :

Since there is not any manufacture activities running, the Question of Goods manufacture

10. Information of Raw Material Consumption :

Since there is not any manufacture activities running, the Question of Raw Material Consumption

11. Information of Opening Stock, Closing Stock and Sale of Goods manufactured :

Since there is not any manufacture activities running, the Question of Opening Stock, Closing Stock andSale of Goods manufactured

12. Breakup of expenditure incurred on employees in respect of remuneration of not less thanRs.6,00,000/- p.a. is Nil

13. Sundry Debtors/Creditors balances are subject to confirmation.

14. The following items are treated on cash basis in the book of accounts of the company.

1) Income Tax

2) Duty draw back/cash incentive/excise duty

3) Sales tax set off

4) Refund of Sales tax

5) Interest on Sticky Loans (Litigation in the High Court)

6) Property Tax

15. Previous year's figures have been regrouped/recasted wherever necessary to confirm this year'sclassification.

-------------------------------------------------------------------------------------------------------------------------------------------------


For M/S. B. H. PATEL & CO. For GRATEX INDUSTRIES LTDChartered Accountants

B. M. DOSHI BALDEVKRISHAN SHARMA KARAN SHARMAProprietor Chairman Managing DirectorMembership No. 17370

Place : MumbaiDated : 11th August, 2010


27

CASH FLOW STATEMENT FOR THE YEAR ENDED AS ON 31ST MARCH, 2010

Rupees in Lakhs

2010-11 2009-10

A. Cash flow from Operating ActivitiesNet Profit before Tax and Extraordinary Items 16.44 (18.45)

Adjustments for :Depreciation 1.19 5.88Interest Paid 3.998 3.59

Operating Profit Before Working Capital Changes 21.63 (11.91)

Adjustment for :Trade and Other Receivables -17.23 11.24Inventories 46.64 (28.35)Trade Payables -25.67 17.66

Cash generated from operations 25.37 (11.36)Interest Paid (3.998) (3.36)Public Issue Expenses --- ---Cash flow before extraordinary items 21.37 (15.52)Extraordinary Item -- (2.59)Net Cash from Operating Activities 21.37 (16.51)

B. Cash from Investing ActivitiesPurchase of Fixed Assets - -Sale of Investments - -Other Income for Warehousing - 0.50Interest Received - 0.05Net cash used in Investing Activities - 0.55

C. Cash flow from Financing ActivitiesProceeds from issue of Share Capital - -Proceeds from Long Term Borrowings (7.65) (16.38)Net cash used in Financing Activities (7.65) (16.38)Net increased in cash and cash equivalents (0.83) (0.58)

CASH AND CASH EQUIVALENTS AS AT 01.04.2009 0.31 (0.27)(Opening Balance)CASH AND CASH EQUIVALENTS AS AT 31.03.2010 0.52 0.31(Closing Balance)





28

SCHEDULE VI OF COMPANIES ACT, 1956 (PART IV)BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

1. Registration DetailsRegistration Number 32248 State Code : 11Balance Sheet 11 08 2010

(Date) (Month) (Year)2. Capital Raised during the year (Amount in '000 )

Public Issue Right Issue Bonus Issue Private PlacementNil Nil Nil Nil

3. Position of Mobilization and Development of Fund (Amount in '000)Total Liabilities Total Assets

3,72.07 3,72.07Sources of Funds :

Paid-up Capital Reserves & Surplus3,03.48 18.53

Secured Loans Unsecured Loans34.06 16.00

Application of Funds :Net Fixed Assets Investments

1,12. 33 -Net Current Assets Miscellaneous Expenditure

2,69.22 6.16Accumulated Losses

61.134. Performance of Company (Amount in '000)

Turnover Total Expenditure3,20.00 2,99.59

Profit before Tax Profit after Tax16.44 16.44

Earning per Share in rupees Dividend %0.55

5. Generic names of three principal products/services of the Company (as per monetary terms)Product description Item Code No.

i) Manufactures of Wall Papers Nil ii) Trading, Dealing in Imported Wall Papers Nil

Note : For ITC Code of products please refer to the publication Indian Trade Classification based on harmonizedcommodity description and coding system by Ministry of Commerce, Directorate of Commercial Intelligence &Statistics, Kolcutta - 700 001.




GRATEX INDUSTRIES LIMITEDRegd. Office : 109, Kakad Udyog Bhavan, L. J. Road, Mahim, Mumbai - 400 016.

PROXY FORM

I/We____________________________________________________________ of__________________in the district of _________ being a member/members of GRATEX INDUSTRIES LIMITED hereby appoint

______________of______________ in the district of___________________ of failing him ______________of ___________ in the district of ________________________________________ as my/our proxy to votefor me/us and on my/our behalf at the TWENTY-SIXTH ANNUAL GENERAL MEETING of the Company to be

held on 20th September, 2010 at Giants International, 2nd Floor, Orient Club Bldg. No. 9, Chowpathy Seaface,Mumbai - 400 007 at 11.30 a.m. and at any adjournment thereof.

Signed this _____day of_____________2010.

Folio No.:Client ID / DP ID ________________________

NOTE : This form duly completed should be deposited at the Registered Office of the Company before 48hours of the meeting. A Proxy need not be a Member.

Signature of Shareholder

Affix Re. 1/-Revenue

Stamp

GRATEX INDUSTRIES LIMITEDRegd. Office : 109, Kakad Udyog Bhavan, L. J. Road, Mahim, Mumbai - 400 016.

ATTENDANCE SLIP

(Shareholders attending the Meeting in person or by proxy are requested to complete the attendance slip andhand over at the entrance of the Meeting hall)

I hereby record my presence at the TWENTY-SIXTH ANNUAL GENERAL MEETING of the Company to be heldon 20th September, 2010, at the Giants International, 2nd Floor, Orient Club Bldg., No. 9, Chowpathy Seafeace,

Mumbai - 400 007 at 11.30 a.m.

Folio No. _________________________

Client ID / DP ID. ____________________________

Full name of the Shareholder / Proxy _________________________________ (in block letters)

Signature of the Shareholder/s or Proxy

PLEASE BRING THIS ATTENDANCE SLIP AT THE MEETING