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ANNUAL REPOIT

W E A V I N G

THE

FUTURE

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COTTAGE INDUSTRIES EXPOSITION LTD.
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Corporate Information
Directorate A. Rashid Mir- Chairman M. Ashraf Mir - Managing Director Dr. Tabasum Mir Rauf A. Qazi Brijendra Kumar Pran Ganju Company Secretary Geetu Lall Statutory Auditors Roy Malhotra & Co. (Sgr), New Delhi Branch Auditors i (except Goa & Cochin Branches) I Virendra K Gupta & Co., New Delhi Bankers The Jammu & Kashmir Bank Ltd. H.S.B.C. Ltd. Standard Chartered Bank American Express Bank ICICI Ltd. Citi Bank Registered Office Shalimar, Srinagar - Kashmir : :
;

Corporate Office I 15, Anand Lok, New Delhi -110049 ,

Showrooms
Agra, Bangalore, Chennai, Cochin, Goa, Hyderabad, Jaipur, Leh, Madurai, Mumbai, New Delhi, Srinagar, Trichy, Triyandrurn, : Udaipur, Varanasi. ; Subsidiaries ! Renaissance Corporation Ltd., UK ' j Cottage Industries Exposition (Mauritius) Ltd., Mauritius Renaissance Corporation of America, USA , Cottage Industries Exposition (Kenya) Ltd., Kenya CIE Overseas Services & Trading Co. Ltd., Mauritius

Contents
. Directors',; Report Statement Relating to : Subsidiary Companies Auditors' Report Balance Sheet Profit & Loss Account '. Schedules &. Notes on Accounts Part IV & Quantitative Details Accounts' of Subsidiaries

Page No
2-4

5 6-8 9
10
11-22 23-24 In separate booklet(s)

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Report of Directors
To The Members of, Cottage Industries Exposition Ltd.
The Board of Directors of your Company have great pleasure in placing their 28th Annual Report on the performance of the company together with the audited annual accounts for the year ended 31st March, 2006. FINANCIAL HIGHLIGHTS
(IN RS. LACS) PARTICULARS Sales & Other Income Profit before Depreciation & Taxation Less: Depreciation Profit Before Taxation Less: Provision For Taxation Less: Provision for Fringe Benefit Tax Less: Benefit for Deferred Tax Profit After Taxation Add: Balance Brought Forward from Previous Year Previous Year Adjustment Profit Available For Appropriation Recommended Appropriations Transferred To General Reserve Balance Carried To Balance Sheet YEAR ENDED 31-3-2006 16,729.19 560.31 232.73 327.58 144.00 48.00 (29.79) 165.37 495.11
2.73

Directors for the year under report to conserve the funds for expansion and growth of the Company. SUBSIDIARIES In terms of prvisions of Section 212 of the Companies Act, 1956 the Audited Statements of Accounts, Directors and Auditors Report thereon and the Statement pursuant to section 212 of the Companies Act 1956 of the subsidiaries Cottage Industries Exposition (Kenya) Ltd., Kenya for the financial year ended 31-12-2005, Renaissance Corporation Ltd., U.K. for the financial year ended 31 -01 -2006, Renaissance Corporation of America, USA for the financial year ended 31 -03-2006, Cottage Industries Exposition (Mauritius) Ltd., Mauritius for the financial year ended 30-09-2005 and CIE Overseas Services & Trading Co. Ltd., Mauritius for the financial year ended 30-09-2005 and SPA Legends Resorts Pvt. Ltd. for the financial year ended 31 -03-2006 are annexed to this report. DIRECTORATE Mr. Rauf Ahmed Qazi and Mr. Pran Ganju, Directors of the Company, will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. AUDITORS

YEAR ENDED 31-3-2005 14,623.58 597.73 152.09 445.64 146.00 (11.10) 310.74 687.37 (3.00) 995.11 500.00 495.11

663.21 200.00 463.21

PERFORMANCE & OPERATIONS The overall performance of the Company during the financial year under review was satisfactory with the sales and other income increasing by 14.39% to Rs.16729.19 lacs as against Rs. 14623.58 lacs for the previous financial year. The profit after tax is reduced to Rs. 165.37 lacs as against Rs.310.74 lacs for the previous financial year. The increase in administrative & selling expenditure, depreciation at accelerated rate for impairment or obsolescence anticipated and provision for new fringe benefit tax adversely affected the profitability. During the year under review, the Company has opened four new showrooms at Mysore, Design Centre New Delhi, Habitat Cochin, Habitat Trivandrum. Three new showrooms in New Delhi and two more showrooms, one at Jaipur and another at Hyderabad are expected to start in the current fiscal. Out of the sanctioned amount of Rs. 1000 lakhs by SIDBI for Goa Projects, the Company has drawn term loan of Rs.370 lakhs for Calangute Project. Remaining term loan of Rs.630 lakhs will be drawn for the Panaji Project by the end of the current fiscal. DIVIDEND No dividend has been recommended by the Board of

M/s Roy Malhotra & Co. (Srinagar), Chartered Accountants will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Company has obtained the certificate from the Auditors as required under section 224 (1B) of the Companies Act, 1956 to the effect that the appointment, if made, would be within the limit specified in that section. M/s V.K. Gupta&Co., Chartered Accountants, New Delhi, Branch Auditors of the Company (Except Goa & Cochin Branches), will retire at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their re-appointment. AUDITORS' REPORT The observations made by the auditors in their report have been adequately dealt with in the notes on accounts, which are self explanatory and do not call for any further comments. PUBLIC DEPOSITS Your Company has neither accepted nor renewed any deposits, during the year under review, under section 58A of the Companies Act, 1956 and rules framed thereunder.

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PERSONNEL None of the employees is covered under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended up to date. HUMAN RESOURCES Being aware of increased significance and importance of human resources for the growth and development of the organisation your company is committed to enrich its manpower and accordingly imparts training to its employees from time to time within its limited financial resources. The company continues to have very cordial and harmonious relations with its employees. AUDIT COMMITTEE The report of Audit Committee containing its constitution and functions is attached hereto. DIRECTORS' RESPONSIBILITY STATEMENT In compliance of Section 217(2AA) of the Companies Act 1956, your Directors hereby confirm: a) that in preparation of the annual accounts, the applicable accounting standards have been followed alongwith the proper explanation relating to material departures; that such accounting policies have been selected and applied consistently and the judgment and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2006 and of the profit of the Company for the year ended on that date; that 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 of assets of the Company and for preventing and detecting the fraud and other irregularities; that the annual accounts have been prepared on a going concern basis. PARTICULARS UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956 The information required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988, as regards Conservation of Energy and Technology Absorption is not given since your Company does not belong to the Scheduled Industries as specified under the schedules to the above rules. Operations of your Company are not energy intensive and expenses on power in relation to income are very nominal. However, steps & measures were taken to use energy conservatively. The Company's activities do not involve any technology absorption or expenditure on Research and Development. The Foreign exchange earnings and outgo during the year under review are as follows:

Foreign exchange earnings :i. il. iii. Value of goods exported on GIF basis Sale in Foreign Exchange Management: Fees & Dividend

(In Rs. Millions) : 823.18 : 596.73 : 11.95 (In Rs. Millions) : 5.45 : 0.49

Foreign exchange outgo ::i. i i. On Travelling & sales promotion Purchase of Goods & Furniture

ACKNOWLEDGMENTS The Board takes this opportunity to express their deep gratitude for the continued co-operation and valuable assistance received from its esteemed customers, suppliers and various Govt. of India's agencies especially ISEPC, CEPC, IHEPC, Reserve Bank of India, The Jarnmu & Kashmir Bank Ltd. and SIDBI. Your Directors also place on record their sincere appreciation towards the contributions made by employees at all levels in the Company. For and on behalf of the Board For COTTAGE INDUSTRIES EXPOSITION LTD.

b)

c)

M. Ashraf Mir Managing Director Date: 31st August, 2006 Place: New Delhi

Rauf Ahmad Qazi Director

d)

COphMGE.INDUSTRIESI ;EXPOSITION U. Ml .! LTDI i i 11 IlllhJT .1 lit IIK.lllkl.nl l ' , , ; l l i . B . Ul U . J i - J M k j:ilill::i l i l t iM,

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Report of Audit Committee
The Company has a Audit Committee which consists of following members being Directors other than Managing Director & Whole Time Director namely: 1. 2. 3. Ms. Tabasum Mir - Chairman of the Committee Mr. Rauf Ahmad Qazi Mr. Pran Ganju During the year, the Committee reviewed: 1. The functions of internal audit. 2. The internal controls ensuring the correctness, adequacy and reliability of financial statements. 3. Accounting implication of major transactions. 4. Management Information Systems. 5. Company's financial and risk management policies 6. The Annual financial statements before submission to the Board focusing primarily on accounting policies and accounting standards and compliance of legal requirements concerning the financial statements. 7. The appointment of internal and statutory auditors, their term of reference, scope of work and powers, remuneration etc. The Board was informed by the Chairman of the Audit Committee regarding various matters discussed in the Audit Committee and the actions taken thereat. For and on behalf of the Board

Ms. Tabasum Mir, was elected as Chairman of Audit Committee. Ms. Tabasum Mir, Mr. Rauf Ahmed Qazi and Mr. Pran Ganju are the non executive Directors of the Company. The responsibility of the Audit Committee is to supervise effectively the financial reporting process, which ensures financial & accounting controls and compliance with the financial policies of the Company. The Committee interacts with the Statutory and Internal Auditors to ascertain the quality and veracity of the Company's transactions to review the manner in which they are performing their responsibilities and to discuss their reports. During the year, the members of Audit Committee have met thrice and in addition, one meeting was also held to consider the Annual Accounts of the Company for the year ended 31st March, 2006.

M. Ashraf Mir Managing Director Date : 31s' August, 2006 Place: New Delhi

Rauf Ahmad Qazi Director

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STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES.
Name of the subsidiary Particulars: Renaissance Corporation of America, USA Cottage Industries Exposition (Mauritius) Ltd., Mauritius 30-09-2005 120,000 equity shares of MRU 100 each fully paid up. 100% CIE Overseas Services & Trading Co. Ltd., Mauritius Cottage Industries Exposition (Kenya) Ltd., Kenya Renaissance Corporation Ltd., SPA Legends Resorts Pvt.

U.K.

Ltd.

1. 2.

Financial year of the company. Extent of holding company's interest in subsidiary company:

31-03-2006 750,000 equity shares of US S 1 each fully paid up. 100%

30-09-2005 25,000 equity shares of MRU 100 each fully paid up. 100%

31-12-2005 13,940 equity shares of KSh. 1000 each fully paid up. 100%

31-01-2006 321 ,000 equity shares of GBP 1 each fully paid up. 100%

31-03-2006 11,77,000 equity shares of Rs. 10 each fully paid up. 100%

Percentage of holding 3. ft Net aggregate amount of Profit/Losses of the subsidiary company for the financial year(s) so far as it concern members of the Company.: a) Dealt within the accounts of the Company i) for the financial year of the subsidiary company ii) for the previous financial years of subsidiary company since it became subsidiary. b) i) ii) Not dealt within the accounts of the Company for the financial year of the subsidiary company

Nil Nil

Nil Nil

Nil Nil

Nil Nil

Nil Nil

Nil Nil

for the previous financial years of the subsidiary company since it became subsidiary # Note: As per the information available to us 4. # Material changes between the end of the financial year of subsidiary company and that of the Company in respect of: i) Change in the interest of holding co. in subsidiary(%) ii) Fixed Assets iii) Investments iv) Money lent by the subsidiary company v) Money borrowed by the subsidiary other than for meeting current liabilities

US $(1691 44) (7524) US $ (328989) (14633)

MRU 2,99,48.374 44,623 MRU (35,37,388) (5271)

MRU 2,68,32,861 39981 MRU 13,52,47,031 201518

KSh (57,74,31 3) (3580) KSh (15,842,967) (9823)

GBP 28,059 2198 GBP (4,63, 128) (36281)

Rs. (7,604.16) Rs. (3,849) -

Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil

# Note: As per the information available to us Note : Figures in italics have been mentioned in Rupees Thousands (Conversion rates 1 US $ = Rs.44.48 as on 31.03.2006, 1 Mauritian Rupee = Rs.1.49 as on 30.09.2005, 1 Kenyan Shilling = Rs.0.62 as on 31.12.2005, 1 Pound Sterling (E) = Rs. 78.34 as on 31.01.2006)

A.S. Prasad General Manager (Accounts)

Geetu Lall Company Secretary

M. A. Mir
Managing Director

Rauf Ahmad Qazi Director

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Report of Auditors
To, The Members of, COTTAGE INDUSTRIES EXPOSITION LTD.

Account dealt with by this report are in agreement with the books of the account. (d) Based on the confirmations received from Directors of the Company and the information and explanations given to us, none of the Director is disqualified from being appointed as Director in terms of section 274(1 )(g) of the Companies Act, 1956. (e) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement of the company comply with the Accounting Standards referred to in sub-section 3(c) of section 211 of the Companies Act, 1956. (f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts, together with the schedules and subject to accounting of Income from premium on sale of DEBP Licences, Govt. Department refunds & insurance claims on cash basis (Note No. 5) confirmation of balances (Note No. 13) seizure of stock having FOB value Rs.5919067/-lying in possession of Hotel Park Sheraton (Adyar), Chennai (Note No.16(b)), Land at Madanpur Khadar & Basement at D.C.M. Building, New Delhi not being registered in the name of the company (Note No. 17), noninclusion of 1/12th share of Agra land & building as per the Hon'ble High Court Order (Note No. 19) and read with other notes in schedule 14 give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; ii) In the case of the Profit & Loss Account, of the Profit of the company for the year ended on 31st March, 2006 and iii) In the case of the Cash Flow Statement, of the Cash Flow for the year ended on 31st March, 2006. For Roy Malhotra & Co. (Sgr.) Chartered Accountants

We have audited the attached Balance Sheet of Cottage Industries Exposition Limited as at 31st March, 2006 and also the annexed Profit & Loss Account and Cash Flow Statement for the year ended on that date annexed hereto, which also incorporate the accounts of the branches at DELHI, CHENNAI, MUMBAI, MADURAI, BANGALORE, TRIVANDRUM, VARANASI, AGRA, JAIPUR, UDAIPUR & HYDERABAD audited by the branch auditors. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report that: 1. As required by the Company (Auditor's Report) Order, 2003 issued by the Central Govt. of India in terms of Section 227(4A) of the Companies Act 1956, we enclose in the Annexure a statement on the matters specified in Paragraph 4&5 of the said Order. 2. Further to our comments in the annexure referred to in paragraph (1) above, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of the audit. (b) In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of the books of account at Head Office, Cochin & Goa Branches and as reported to us by the Branch Auditors. (c) The Balance Sheet and the Profit & Loss

Place: New Delhi Date: 31s' August, 2006

K.K. ftfehra Partner

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