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SIMRAN FARMS LIMITED

(Farmers' Friend Since 1989)

16th
ANNUAL REPORT 2001-2002

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BOARD OF DIRECTORS
Mr. H.S. Bhatia Chairman-Cum-Managing Director Mr. G.S. Bhatia Director Mr. A.S. Bhatia Director Dr. Surendra Singh Director Mr. Surjeet Singh Kohli Director Dr. Harpal Singh Director Mr. K.S. Bhatia Executive Director REGISTERED OFRCI9-A, Prem Nagar Manik Bagh Road, INDORE - 452 001

CORPORATE OFFICE
1 -B, Vikas Rekha Complex, Near Tower Chauraha, Khatiwala Tank, Indore - 452 001

CONTENTS
1. Notice 2. Director's Report 3. Auditor's Report 4. Balance Sheet 5. Profit & Loss Account 6. Schedule & Notes forming part of the accounts 7. Cash Flow Statement

Page No.
1 3 6 9 10 11 19 24

LISTING AT
M. P. Stock Exchange Mumbai Stock Exchange

AUDITORS
Khandelwal Kakani & Co., Chartered Accountants, Indore.

LEGAL ADVISORS
Mr. L.D. Joshi Mr. Pankaj Joshi Advocate

8. Annual Account & Report on Subsidiary Co. M/s. Simran Breeders (P) Ltd. (Now Puregene Biotech Ltd.)

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SIMRAN FARMS LIMITED, INDORE

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 16th Annual General Meeting of the members of Simran Farms Limited will be held on Wednesday the 11th of December, 2002 at 10:00 A.M. at Sindoor Marriage Hall, Bhanwarkuan Road, Indore to transact the following Businesses.

ORDINARY BUSINESSES:
1. 2. 3. 4. To receive, consider and adopt the Audited Balance Sheet as at 30th June '2002 and profit & Loss Account for the year ended on same date and the reports of Board of Directors & Auditors thereon. To appoint director in place of Shri Harender Singh Bhatia, who retires by rotation and being eligible offer himself for reappointment. To appoint director in place of Shri Harpal Singh, who retires by rotation and being eligible offer himself for reappointment. To appoint Auditors to hold office from the conclusion of this Annual General Meeting until the conclusion of next Annual General Meeting and fix their remuneration.

SPECIAL BUSINESS
To consider and if thought fit, to pass with or without modification, the following.resolutions. 5. As a special resolution "RESOLVED THAT Shri Kawaljeet Singh Bhatia be and is hereby appointed as Director of the Company to hold office subject to retirement by rotation." "RESOLVED FURTHER THAT pursuant to provisions of section 198, 269, 309, 310, 314 and Schedule XIII and other applicable provisions, if any of the Companies Act, 1956 as amended up to date, consent of the company be and is hereby accorded to the appointment of Mr. Kawaljeet Singh Bhatia as Executive Director of the Company for the period of 5 years on and with effect from 1st April, 2002 to 31st March, 2007 on a remuneration, detailed as under, to be paid to him on and with effect from 1st April, 2002. a. b. Salary: Rs. 20.000/- (Rupees Twenty Thousand Only) per Month. Perquisites: In addition to the above salary, Shri Kawaljeet Singh, Executive Director of the company shall also be entitled 'to the perquisites (evaluated as per Income tax Rules whenever applicable and at actual cost to the company in other cases) like benefits of furnished Accommodation/House rent along with gardener and security Guard, gas, electricity, water, furniture, chauffeur, driven car and telephone at residence, Medical reimbursement, personal accident insurance. Leave travel concession, club fees, provident fund, Superannuation fund, exgratia & gratuity in accordance with the scheme(s) and Rule(s) applicable to the members of the staff or any modification(s)that may be made in any scheme/rule for the aforesaid benefits. However perquisites shall be restricted to 40% of the annual salary."

NOTES:
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself and such a proxy need not be a member of the company. The proxies in order to valid must be deposited at the registered office of the company not less that 48 hours before the commencement of the meeting. Register of the members and share transfer book of the company will remain closed from Saturday the 20th October to 23rd the Wednesday 2002 (both days inclusive). Members are requested to send their queries, if any at least 7 days in advance so that the information can be made available at the meeting. An explanatory statement pursuant to section 173(2) of the Companies Act 1956 in respect of item No.5 of the notice is annexed hereto.

2. 3. 4.

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SIMRAN FARMS LIMITED, INDOREANNEXURE TO NOTICE Explanatory Statement Mr. Kawaljeet Singh Bhatia is young, enthusiastic and posses professional qualification and he has good experience of poultry farming and management activities. Accordingly he is proposed to be appointed as Executive Director of the Company for a period of five years w.e.f. 1st April 2002. The Board has considered his service very useful and more particularly in the field of poultry farming and management activities as such and under his active participation the company is expected to make all round progress, his appointment is being recommended by the Board of Directors for period of 5 years w. e. f. From 1st April 2002 to 31st March 2007. None of the Director other than Mr. Kawaljeet Singh Bhatia, Harender Singh Bhatia, Gurdeep Singh Bhatia and Mr. Amarjeet Singh Bhatia are concerned or interested in the above resolution. The contents of the resolution along with the explanatory statement shall be deemed to be an abstract of the terms and conditions of appointment of Mr. Kawaljeet Singh Bhatia under section 302 of the companies, Act 1956 and the Memorandum of interest in that behalf.

Place: Indore Date: 28.09.2002

By Order of the Board For SIMRAN FARMS LIMITED HARENDER SINGH BHATIA (Managing Director)

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SIMRAN FARMS LIMITED, INDORE DIRECTOR'S REPORT

To the members of Simran Farms Limited, Your Directors have immense pleasure in presenting the 16th Annual Report of your company together with the Audited statements of Accounts for the period ended on 30th June'2002. The Financial Results of the company in the year under review are as under:

FINANCIAL RESULTS:
2001-2002 Total Income Gross Profit Less: Depreciation Profit before Tax Less: Provision for taxation (Deferred) Profit after Tax Prior Period Adjustment Net prof it Balance brought forward from the previous year Balance which the Directors Appropriated as under: General Reserve Balance carried to Balance Sheet 988.63 62.84 32.43 30.41 (4.38) 34.79 0.11 34.58 100.73 135.32 0.00 135.32

Rs. in lacs
2000-2001 993.92 49.09 31.27 17.82 0.00 17.2 0.20 17.62 83.11 100.73 0.00 100.73

POULTRY SECTOR OUTLOOK:

Since last few years the poultry industry is passing through a difficult phase due to rapidly rising cost of feed ingredients, over productions and depressed price realization in the market. The persistent stagnation of domestic consumption, rapid expansion of poultry sector in the country and late arrival of rains during the ensuing kharif season has aggravate the situation. Contineous hike in feed cost resulted in high production cost because feed alone contributes to over 70% of the production cost. Although the poultry sector is growing at an average rate of 10% the maize production is almost stagnant. There is severe shortage of maize and Soya in the market. The fast growth in layer and broiler productions is another threat to the poultry industry itself because of large concentration of birds in certain areas of the country. Hence constant watch is required to maintain not only the lead but also to maintain stability in the price. These problems have resulted in closure of small farms and distress sale of broiler chicks/birds at as low as Rs. 7.00 per chick and Rs. 20.00 per live bird at Farms. Thus, broiler hatcheries are facing lack of demand to the chicks/ birds in the market. Wide fluctuations in the broiler & layer markets and drastic increase in feed cost witnessed during this period but your Company has been able to withstand the adverse trends and continued to maintain its growth profile. The turnover was Rs. 988.62 Lacs with profit after Tax of Rs. 34.79 Lacs for the year ended 30th June, 2002, as compared to Rs. 17.82 Lacs for the corresponding period in the previous year, an improvement in profits. This has become possible just because of maintaining financial discipline and curtailing the cost of production.

SUBSIDIARY COMPANY:
Information Pursuant to the provisions of the Section 212 of the Companies Act 1956 relating to Puregene Biotech Ltd., a Subsidiary Company is annexed forming Part of this Report.

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SIMRAN FARMS LIMITED, INDORE

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO A. Pursuant to Section 217(1 )(e) of the Companies Act, 1956 read with the Companies (Disclosures of particulars in the Report of Board of Directors) Rules 1988, the Poultry is exempted. Expenditure on the electricity incurred by the company is very nominal and here is the statement showing details of this expenditure. (Rs. in Lacs) 2001-02 2000-2001 Units Amount Unite Amount Electricity Coal Diesel (Litres) 3,94,645 27,235 72,250 24,31,423 83,008 14,46,257 310790 58775 131420 1409618 223074 2485855

Gas 139 37,960 854 222469 B. The Company has not made any expenditure/or investment towards the Technology Absorption or Developments. C. The Company has not made earning or expenditure in the foreign exchange. PUBLIC DEPOSITS: The Company has not accepted any deposits from the public during the period. CORPORATE GOVERNANCE: The Director's fully support the broad principles of Corporate Governance. In addition to the basic governance issues, the board lays strong emphasis on transparency, accountability and integrity.

DIRECTORS:
Mr Harender Singh Bhatia and Dr. Harpal Singh, Directors of the Company retire by rotation being eligible, offer themselves for reappointment. Further during the year Mr. Kawaljeet Singh Bhatia was co-opted on the board as additional Director to hold office up to date of the next Annual General Meeting and was also appointed as Executive Director subject to approval of members. The company has received notice from the members - pursuant to the provisions of Section 257 of the Companies Act, 1956 for appointment of Shri Kawaljeet Singh Bhatia as Director of the company.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under section 217 (2AA) of the Companies Act 1956 with respect to Directors responsibility statement, it is hereby confirmed: I. That in the preparation of the accounts for the financial year ended on 30th June, 2002, the applicable accounting standards have been followed. II. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of financial year and of the Profit of the company for the year under review. III. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 1956 for the safe guarding the assets of the company and for preventing and detecting fraud and irregularities. IV. That the Directors have prepared the accounts for the financial year ended on 30th June, 2002 on a going concern basis.

DEPOSITORY SYSTEM
As the members are aware, your company's shares are tradable compulsorily in electronic form and your company has established connectivity with both the Depositories i.e. National Securities Depository Limited [NSDL] and Central Depository Services (India) Limited [CDSL]. In view of the numerous advantage offered by the Depository System, members are requested to avail of the facility of Dematerialization of the company's shares on either of then depository as aforesaid.

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SIMRAN FARMS LIMITED, INDOREPARTICULARS OF THE EMPLOYEES

The company did not have any employee during the year drawing remuneration attracting the provisions of section 217 (2A) of the Companies Act, 1956 read with the Companies (particulars of employee) Rules 1975.

AUDITORS:
M/s Khandelwal Kakani & Co., auditor of the company, retires as the auditors at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment.

ACKNOWLEDGMENT:
Your Director wish to thank every employee of Simran Farms Limited family for their commandable efforts, teamwork and professionalism. The Board of Directors also gratefully acknowledges the faith reposed in the company by its customers, Bankers and Investors.

For and behalf of the Board Date: 28.09.2002 Place: Indore HARENDER SINGH BHATIA (Chairman & Managing Director)

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SIMRAN FARMS LIMITED, INDORE

AUDITOR'S REPORT
To,

The Member of Simran Farms Ltd., Indore (M.P.) We have audited the annexed Balance Sheet of SIMRAN FARMS LIMITED, Indore as at 30th June, 2002 and the annexed Profit and Loss Account of the Company for the period ended on that date. These financial statements are the responsibilities of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit A) We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free from any material misstatement. An audit includes, examining on 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. As required by the manufacturing and other Companies (Auditor's Report) order 1988, issued by the Company Law Board is terms of Section 227(4A) of the Companies Act, 1956, we Annex hereto a statement on the matters specified in paragraph 4 of the said order. That Company has not quantified/provided the amount of Gratuity and accrued leave encashment as on 30.06.2002 as required as per "Accounting Standard 15" of Institute of Chartered Accountants of India. Further to above and our comments in the annexure referred to in paragraph 1 above : i) ii) iii) iv) v) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit; 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 such books of account; The Balance Sheet and Profit and Loss Account dealt with in this report are in agreement with the said books of account; In our opinion the Balance Sheet and Profit Loss Account comply with the accounting standard referred to in section 211 (3C) of the Companies Act 1956 to the extent they are applicable. According to the information and explanation given to us and on the basis of the written representations received from the Directors of the Company taken on record by the Board of Directors, none of the Director is disqualifying as on 30th June, 2002 from being appointed as a Director u/s 274 (1) (g) of the Companies Act, 1956. In our opinion and to the best of our information and according to the explanations given to us, and read together with other notes thereon, gives information required by the Companies Act, 1956, in the manner so required and give a true and fair view; a) In the case of the Balance Sheet of the State of Affairs of the Company as at 30th June, 2002 and b) In the case of Profit and Loss Account, of the Profit for the period ended on that date.

B)

C) D)

vi)

Place: Indore
Date : 5th August 2002

for KHANDELWAL KAKANI & CO.

Chartered Accountant

SANTHOSH DESHMUKH PARTNER

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SIMRAN FARMS LIMITED, INDORE-

ANNEXURETOTHE AUDITORS REPORT

(Referred to in Paragraph 'A' of our Report of even date) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The Management has physically verified the fixed assets at reasonable intervals during the year and on the basis of the explanations given to us, no discrepancies have been noticed on such verification. The fixed assets have not been revalued during year. The physical verification has been conducted by the management at reasonable period in respect of finished goods, stores, spare parts and raw material. iv) In our opinion the procedure of physical verification of stocks followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business. The discrepancies noticed on such verification between the physical stock and book records were not significant and the same has been properly dealt with in the books of account. In our opinion and on the basis of our examination the valuation of the stock is fair and proper, and (n abS&rdftnee with the normal accounting principles. The company has not taken any loans, secured or unsecured from Companies or other parties listed in the Register maintained u/s 301 of the Companies Act, 1956. Further, Company has not accepted any loan from Companies under same management as defined in section 370(16) of Companies Act, 1956. The Company had given interest free loan of Rs. 11.00 Lacs to Company which is fully owned subsidiary company and the terms and conditions and the rate of interest are not prima-facie prejudicial to the interest of the company, except to the above, the Company has not granted any loan, secure or unsecured to the firms or parties listed in the Register maintained u/s 301 of the Companies Act, 1956. The Company has given interest free advances to staff, recovery of principles is almost regular. In our opinion and according to the information and explanation given to us, there is adequate internal control procedure commensurate with the size of the Company and nature of its business for the purchase of stores, raw material, including components, plant and machinery, equipments, other assets, and sale of goods. According to the information and explanation given to us, purchase of goods and material and sales of goods and materials, made in pursuance of contracts or arrangements are entered with the Register maintained u/s 301 of the companies Act, 1956 and aggregating during the year Rs.50,000/- or more in value in respect of each party have been made at prices which are reasonable having regard to the prevailing market prices for such goods or materials or the prices at which the transaction for similar goods or materials have been made with other parties. As explained to us, the Company has regular procedure for determination of unserviceable stores and raw materials and finished goods and during the year no such stores of raw material have been identified as unserviceable. The Company has not accepted any deposits from public and hence, provision of Section 58- A of the Companies Act, 1956 are not applicable.

v)

vi)

vii)

viii)

ix) x)

xi)

xii)

xiii)

xiv) The Company has maintained proper record for sale and disposal of scrap, the company has no by product, xv) xvi In our opinion, the company has an internal audit system commensurate with size and nature of the business, As per explanations given to us, maintenance of cost records u/s 209(1 )(D) is not applicable to the Company.

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SIMRAN FARMS LIMITED, INDORExvii) The company generally deposits its PF dues regularly, however with some delay. Further as explained to us, provision of ESI Act are not applicable to the Company. xviii) According to the information and explanation given to us, there were no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty, Excise Duty which were outstanding as at 30th June, 2002 for a period of more than six months from the date of they became payable. xix) In our opinion, and according to the information and explanation given to us no personal expenses other than those payable under service contractual obligation with the Companies Employee and/or accepted business practices have been charged to revenue account. xx) The Company is not a sick industrial company within the meaning of clause (O) of subject-section (1) of section (3) of the sick industrial companies (special provision) Act, 1985.

Place. Indore Date : 5th August, 2002

for KHANDELWAL KAKANI & CO. Chartered Accountant

SANTHOSH DESHMUKH PARTNER

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