Annual Report - Jain Irrigation Systems - 2008-2009

JAIN IRRIGATION SYSTEMS LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To
The Members,

The Directors' present hereby their report on the business and operations
of the Company and the financial statements for the year ended 31st March,
2009.

1. Financial Highlights:

Rs. in Million
(except EPS)
Particulars 2008-09 2007-08

Domestic Sales 17,487 12,926

Export Sales & Services 4,886 4,534

Other operating Income 280 129

Sales and Operating Income 22,653 17,589

Operating Profit 3,923 3,595

Interest and Finance Charges 1,563 1,134

Depreciation and Amortisation 473 398

Amounts written off and provisions 50 7

Profit before taxation and exceptional items 1,838 2,056

Exceptional items (Service tax disallowed) - 14
Provision for Tax

Deferred Tax (Asset)/Liability 615 570

Current Tax - provision 206 227

MAT Credit (206) (227)

Fringe Benefit 21 16

Profit for the year 1,202 1,455

Profit b/f from the previous year 2,463 1,386

Less Loss of Orient Vegetexpo Ltd. FY 07 - (5)

Balance available for appropriation 3,664 2,835

Out of which the Directors have
appropriated as under;

Proposed Dividend 219 194

Dividend Tax 37 33

General Reserve 120 145

Transfer to CRR 437

Balance to be carried forward 2,851 2,463
Earnings Per Share

Basic 16.12 21.48

Diluted 16.03 21.41

2. Operations:

The net sales grew by 28% on YoY basis while the other operating income has
grown at 117% to Rs. 280 mn. Despite a severe global slowdown the growth
looks satisfactory. The domestic sales grew at an impressive 35% to
Rs.17,487 mn on the back drop of a robust demand in MIS/SIS, Fruit
processing and PVC piping segments. The exports grew at 8% this year at
Rs.4,886 mn despite a major slowdown in the world economy post major bank
collapse in US. The notional loss on account of foreign currency
fluctuations Rs.777.2 mn (as against gain of Rs.150 mn last year) caused a
383 bps hit to the operating profit. FE loss is book entry and does not
have impact on cash flows, especially given the fact that the Company's FC
denominated loans are for a 8 year term. Thus, the operating profit at
Rs.3,923 mn would have improved by 30.7% had the FC notional loss not
arisen, reflecting the continual improvement in resource utilization. After
providing for depreciation and amortization of Rs. 473 mn, the interest and
finance charges of Rs. 1,563 mn, the deferred tax liability of Rs.615mn and
Rs.21mn of FBT, and the prior year expenses of Rs.4 mn, the profit for the
year is lower than the earlier year by about 17% at Rs. 1,202 mn.


3. Dividend:

An amount of Rs. 30.97 mn is payable on the Redeemable Preference Shares
issued by the Company as per predetermined coupon rate and an amount of
Rs.5.23 mn is payable as Dividend Distribution Tax on the said preference
dividend. The Board of Directors have recommended to the Shareholders for
declaration at the ensuing AGM a dividend of Rs.2.50 per share to the
eligible Shareholders. The said dividend is expected to result in a cash
outgo of Rs. 188.29 mn while the outgo on the Dividend Distribution on the
said dividend works out to Rs.32 mn.

4. Warrant Conversion, ZCCB Conversion and use of the proceeds 3,20,900
Equity Shares of Rs. 10 each were issued to the holders of the 2,500 Zero
Coupon Convertible Bonds of $1,000 each who opted for the conversion in
terms of the Offering Circular dated 24th March 2006 during the year.
Hence, an amount of Rs.3.21mn has been added to the Share Capital of the
Company while an amount of Rs.107.69 mn has been added to the Securities
premium reserve of the Company. However, till date in FY 2010, further
943,446 Equity Shares of Rs. 10 each were issued to the holders of the
7,350 Zero Coupon Convertible Bonds of $1,000 each who opted for the
conversion in terms of the Offering Circular dated 24th March 2006. Hence
after FY 2009, an amount of Rs.9.43mn has been added to the Share Capital
of the Company while an amount of Rs.316.61 mn has been added to the
Securities premium account of the Company. Thus far just over 94% of the
bondholders have opted for the conversion of ZCCB's into Equity Shares.
There was no impact of the conversion of ZCCB's on the cash flows of the
Company during the year as money was raised in FY 06 and utilised in FY 07.

On 9th April 2009, as per Shareholders authority in GM dated 26th March
2009, the Board has allotted 19,97,780 Equity Shares of Rs.10 each for cash
at a premium of Rs. 350.40 each to International Finance Corporation,
Washington, USA (IFC) on a preferential basis under the applicable
provisions of the SEBI (DIP) Guidelines. An amount of Rs.720 mn
(approximately) raised has augmented the Equity Share Capital by Rs.19.98
mn while the Share premium account has been accreted with Rs. 7 bn
approximately. IFC has been a lender of approximately USD 45 mn to the
Company, including USD 15 mn during the FY 2009 and another USD 15 mn in FY
2010 so far.

As you may be aware, pursuant to approval of Shareholders on the 19th
October 2007, the Company allotted 8.6 mn Equity Warrants to the Corporate
Entities of the Promoters Group on Preferential basis under the applicable
SEBI (DIP) Guidelines. The subscribers had paid an amount of 10% (Rs.411 mn
approx) at a price of Rs. 478.15 each. Out of the above, the subscribers of
Equity Warrants had opted for conversion of 1,102,600 warrants and as a
result 1,102,600 Equity Shares of Rs.10 each were issued to the holders of
the warrants. However, 74,97,400 warrants lapsed as the holders thereof did
not exercise the conversion rights. Hence, as per terms of the issue an
amount of Rs. 354.49 mn was forfeited. The proceeds of forfeited warrant
deposit appropriated on the conversion option not being exercised has
augmented the long term resource base of the Company.

5. Resource mobilization and capacity expansion During the year under
review, the Company has raised from international financial markets/
institutional lenders, further External Commercial Borrowings (ECB's)/
Foreign Currency Loans based on LIBOR linked rate at competitive pricing.
Total amount raised is $55.5 mn and of which US$ 25.5 million have been
disbursed during the year under consideration. Out of the balance amount a
further sum of $15 mn is disbursed in July 2009 while the last instalment
shall be disbursed in September 2009. The loan amounts are being used by
the Company for the expansion and modernization activities.

The Company has invested an amount of Rs.1.185 bn to increase the capacity
of the MIS/SIS division by 47,730 MTPA. An amount of Rs.922mn has been
spent on capital expenditure for the piping segment adding in excess of
over 56,400 MTPA in the segment. An amount of Rs 607 mn has been spent on
capital expenditure for the Agro processed division for increase in
capacity addition of 3,354 MTPA in Dehydration segment and 24,975 MTPA in
the processed fruits segment. An amount of Rs. 2mn. has been spent on
capital expenditure for Tissue Culture segment to increase the capacity by
8 mn plantlets. An amount of Rs.10 mn was spent on balancing equipment for
Plastic Sheet division. An amount of Rs. 520 mn was spent towards
strengthening the common corporate service infrastructure.

6. The operations of subsidiaries:

The integration activities with investee companies have continued in
earnest and there is a very positive effect on the product development
activities of the Company as feedback from various geographic areas are now
available for such activities. The availability of a wide spectrum of
products in the irrigation segment is making it possible for the Company to
serve customers in a complete manner which in the preacquisition time
resulted in loss of business opportunities. The Mauritius based direct
subsidiary of the Company has earned an income of $388,889 and made a net
loss of $456,017. Summarised Balance Sheet and the Income statement of the
said subsidiary is available elsewhere in the Annual Report. The resources
of the subsidiary have been further strengthened by infusion of $11 mn as
Equity Capital and $22.5 mn as Loan & Redeemable Preference Shares during
the year under review. Further, there was a redemption of Redeemable
Preference Shares worth $4.49 mn from the said subsidiary to the Company.

The Netherlands based subsidiaries have invested monies for incorporation
of a new step down subsidiary in Turkey. Other Subsidiaries: Information on
operations of other subsidiaries including new acquisitions has been
covered in Management Discussion and Analysis report.

7. Employee Stock Option Plan (ESOP):

The implementation of Employees Stock Options and Shares Plan, 2005 (ESOP-
2005) has continued during the year under review. Thus four lots are now
issued to eligible employees including whole time directors, and key
management personnel. No employee has been issued options entitling such
person to subscribe to more than 1% of Equity Share capital of the Company.
Although during the year the Shareholders on 26th March 2009 had authorised
re-pricing of the 4 issued lots of the ESOP's in view of the low share
prices in 2008, but so far the decision is not acted upon by the
Compensation Committee of the Board as the Share prices have rebound since
the end of March 2009. Details and disclosures in compliance with the
clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out in the table below:

Details and disclosures in compliance with the clause 12 of the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are set out in the table below:

Particulars Lot No. 1 Lot Lot No. 2

A] Options Granted 5,00,000 5,00,000

B] Pricing Formula 25% discount 10% discount on
on market price market price on
on the date the date
preceding preceding
the the date date the date
of grant of grant

C] Options vested 5,00,000 3,33,333

D] Options exercised Nil Nil

E] The total number of shares arising Nil Nil
as a result of exercise of option

F] Options lapsed Nil Nil

G] Variations in terms of options None None

H] Money realised by Nil Nil
exercise of options

I] Total Number of options in force 5,00,000 5,00,000

J] Employee-wise details
of options granted to:

i) Senior managerial personnel 60,000 1,20,000

ii) Any other employee who receives 0 0
a grant in any one year of option
amounting to 5% or more of
option granted during that year

iii) Identified employees who were 0 0
granted option, during any year,
equal to or exceeding 1% of the
issued capital tal (excluding
outstanding warrants and
(excluding outstanding warrants
and conversions) of the Company
at the time of grant

K] Diluted Earnings Per Share NA NA
(EPS) pursuant to issue of shares on
exercise of option calculated in
accordance with Accounting Standard
(AS) 20 'Earnings per Share'

L] Where the Company has Please refer Please refer
calculated the employee note 1 below note 1 below
Compensation cost using the
intrinsic value of the stock options,
the difference between the employee
compensation cost so computed and the
employee compensation cost that shall
have been recognized if it had used
the fair value of the options, shall
be disclosed. The impact of this
difference on profits and on EPS of
the Company shall also be disclosed
(in lakhs)

M] Weighted-average exercise prices
and weighted-average fair values of
options shall be disclosed separately
for options whose exercise price either
equals or exceeds or is less than the
market price of the stock
on the grant date.

(a) Weighted average exercise price 307.76 413.46

(b) Weighted average fair value 175.11 174.77

N] A description of the method and
significant assumptions used during
the year to estimate the fair
values Black Scholes Method Black
Scholes Method of options,including the
following weighted-average information:

(1) Risk-free interest rate 7.50% 8%

(2) Expected life, (in years, average) 4 4.5

(3) Expected volatility, (in months) 6 6

(4) Expected dividends, and '21% in
first year
with 3%
increase
per year
thereafter'

(5) The price of the underlying 410.35 459.4
share in market at the time of
option grant. Rs. per share

Particulars Lot No. 3 Lot No. 4

A] Options Granted 5,00,000 5,00,000

B] Pricing Formula 10% discount 10% discount on
on market price market price on
on the date the date
preceding preceding
the the date date the date
of grant of grant
C] Options vested
1,66,667 1,66,667

D] Options exercised Nil Nil

E] The total number of shares arising Nil Nil
as a result of exercise of option

F] Options lapsed Nil Nil

G] Variations in terms of options None None

H] Money realised by Nil Nil
exercise of options

I] Total Number of options in force 5,00,000 5,00,000

J] Employee-wise details
of options granted to:

i) Senior managerial personnel 1,20,000 1,20,000

ii) Any other employee who receives 0 0
a grant in any one year of option
amounting to 5% or more of
option granted during that year

iii) Identified employees who were 0 0
granted option, during any year,
equal to or exceeding 1% of the
issued capital tal (excluding
outstanding warrants and
(excluding outstanding warrants
and conversions) of the Company
at the time of grant

K] Diluted Earnings Per Share NA NA
(EPS) pursuant to issue of shares on
exercise of option calculated in
accordance with Accounting Standard
(AS) 20 'Earnings per Share'

L] Where the Company has Please refer Please refer
calculated the employee note 1 below note 1 below
Compensation cost using the
intrinsic value of the stock options,
the difference between the employee
compensation cost so computed and the
employee compensation cost that shall
have been recognized if it had used
the fair value of the options, shall
be disclosed. The impact of this
difference on profits and on EPS of
the Company shall also be disclosed
(in lakhs)

M] Weighted-average exercise prices
and weighted-average fair values of
options shall be disclosed separately
for options whose exercise price either
equals or exceeds or is less than the
market price of the stock
on the grant date.

(a) Weighted average exercise price 568 428.58

(b) Weighted average fair value 277 211.11

N] A description of the method and
significant assumptions used during
the year to estimate the fair
values Black Scholes Method Black
Scholes Method of options,including the
following weighted-average information:

(1) Risk-free interest rate 9% 9%

(2) Expected life, (in years, average) 5 5

(3) Expected volatility, (in months) 6 6

(4) Expected dividends, and '22% in
first year
and increase
on 2% every
year
thereafter'

(5) The price of the underlying 630.15 476.2
share in market at the time of
option grant. Rs. per share

Note 1:

The impact on profit for the year of the amounts referred to in point L
above are Rs. 77.478 mn and the impact on EPS is Rs.1.08 Per Share and
Rs.Per 1.07 Share Basic and Fully diluted respectively.

8. New Directors, Directors retiring and Their background The Board in its
meeting held on 25th August 2009 has decided to increase the strength of
the Board to 12 by reappointing Mr. Atul B. Jain as Director-Marketing and
simultaneously co-opting Mr. Ghansham Dass as Director (Independent) on the
Board. Mr. Atul Jain comes back as Director-Marketing, a post he
relinquished to enable the Company to comply with the fresh corporate
governance provisions introduced by SEBI in May 2008. Mr. Ghanshyam Dass
has had an outstanding career in domestic, international banking and
Capital Markets for over 32 years, during which he developed a firm
understanding of the complexities of international markets. He is
thoroughly familiar with the regulatory and business environment in USA,
European Union, South East Asia, The Middle East, India and other major
money-center locations. Mr Dass is an Advisor to Intel Capital, member of
TiE, Association of Biotech Led Enterprises (ABLE), Bangalore Hardware Task
Force, Founder Member Association of Outsourcing Professionals (AOP),
Member Academic Council - Union Bank School of Management, Member of the
CII National Council on Corporate Governance and Regulatory Framework and
CII National Committee on Capital Markets and Government Nominee on the
Governing Council of The Institute of Company Secretaries of India (ICSI).
Mr Dass is a member of Brickwork Ratings Committee (A Credit Rating Agency)
and Vice President Karnataka Athletics Association as also Independent
Director on the board of Dhanalakshmi Bank.

Retiring Directors:

Shri. R.C.A. Jain and Mrs Radhika C. Pereira are retiring by rotation and
being eligible offer themselves for reappointment at the ensuing AGM. In
terms of the Corporate Governance requirements, given below are the brief
resume of each of the retiring directors:

Mr. Ramesh C.A. Jain [IAS retd.] (Independent):

Shri. Jain is a Director of the Company w.e.f. 30th September 2005. He
holds a Bachelor of Arts Degree from the University of Rajasthan, a
Bachelor of Law Degree from the University of Bombay and a Post-graduate
Diploma in Development Administration from the University of Manchester in
the United Kingdom. He has 10 years of experience in the industrial
development and financial sectors. In 2003 he was Secretary of the
Department of Agriculture and Cooperation in the Ministry of Agriculture in
New Delhi and was responsible for the formulation and implementation of
national policies and Programmes for agricultural development. In 2004,
before joining the Food and Agriculture Organization of the United Nations
as its Country Representative in the Philippines, he held the post of
Member Secretary, National Commission on Farmers, established by the
Government of India.

Mrs. Radhika C. Pereira (Independent) Mrs. Pereira is a Director of the
Company w.e.f. 29th December, 2005. She is a graduate of Mumbai University
concentrating in life sciences and law, and holds an LLM from Cambridge
(England) and Harvard (USA). Currently, she is the founding Managing
Partner of Dudhat, Pereira and Associates, Advocates, Mumbai. Prior to
joining Dudhat, Pereira and Associates, she worked with Mulla & Mulla,
Cragie, Blunt & Caroe, Advocates and Solicitors, Mumbai as Articles, and
with Arthur Anderson, Mumbai and as a Partner in Udwadia & Udeshi,
Advocates, Mumbai until 2005. Mrs Pereira was a part of the core group
committee established by the Government of Maharashtra to make
recommendations to the State Government on legal issues relating to
privatisation. Mrs Pereira is also a Fellow of the Cambridge Commonwealth
Society and Member Scholar of the Pegasus Commonwealth Trust. She is the
author of 'Right to Information' The Indian Advocate 24 (1992) and 'Legal
Risk Management-An Overview' Asia Law, Volume 11, June 2004.

9. Director's Responsibility Statement:

In accordance with the provisions of Section 217(2AA) of the Companies Act,
1956, your Directors state that:

i) In the preparation of the annual accounts, the applicable accounting
standards have been followed except, to the extent indicated in notes;

ii) The accounting policies are selected and applied consistently and are
reasonable and prudent judgments and estimates were made so as to give a
true and fair view of the state of affairs of the Company as at 31st March,
2009, and, of the profit of the Company for the year ended 31st March,
2009; and

iii) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of Companies
Act, 1956, for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities.

10. Material Developments:

In Human Resource Training and Development A major thrust was given to
'Training' this year, with an objective to create a virtual pool of trained
associates. To start with, a separate cell for Corporate Training and
Relationship was established, which identified various technical,
behavioural and skill related development requirements of the associates.
The requisite training contents are being developed to produce the desired
training result. Various In House trainers were identified and are
undergoing training like in a 'Train the Trainer' program. Similarly, the
process of scrutiny for empanelling the experts from various fields for
training function is on. The requisite infrastructure is being created. At
Jain Gurukul, our state of the art training centre, an additional capacity
of training for 133 associates in 4 training halls is created in addition
to the present capacity.

Training & Development details from April 2008 to March 2009 are as under:

No. Location Inhouse Faculties
No. of Prog. No. of Associates Duration (hrs.)


1. Agri Park 26 337 648
2. Plastic Park 220 2,744 15,272
3. Food Park 78 2,290 39,001
Total 324 5,371 54,921

No. Location External Faculties
No. of Prog. No. of Duration Total
Associates (hrs.) Man hours


1. Agri Park 2 4 38 686
2. Plastic Park 7 13 152 15,424
3. Food Park 10 19 384 39,385
Total 19 36 574 55,495

Associate Involvement:

A programme for strengthening the relationship with the associates was
undertaken. As a part.

a) 534 nos. of Children of Associates were tested for Intelligence Quotient
(IQ) and Aptitude to give them the right direction on educational front.

b) In continuation of that, a special coaching program was undertaken for
them.

c) Another measure of strengthening the relationship is seen by way of a
special coaching which was undertaken for the Children of the Associates
appearing for SSC examination.

d) A visit of all family members of the associates to all the locations and
particularly where the associate family member is working was organized.

Welfare:

a) During the period under review, 3063 associates from the three major
locations underwent Medical Examination, consisting of comprehensive
Pathological Tests followed by General Physical Examination by the experts
in the field.

b) A dispensary was set in the factory premises with a view to cater
requirements of associates at work. The dispensary also helps in creating
awareness about the common lifestyle related and other diseases.

c) The initiatives introduced in the previous year like Scholarship for the
children of associates on need and merit basis continued during the year
and 172 children benefited from such scholarship during period under
review, at an expense of Rs.1.4 mn. The Company has started a project with
a Jalgaon based local NGO for providing guidance to students studying
between VII to X standard on how to prepare for examination and how to
improve the marks obtained as well as time management and improvement of
writing speed etc.;

d) The associates continued to receive support of the Medical Insurance.
1039 Nos. of Associates received an amount of Rs. 13.4 mn. towards the
settlement of their claims. Also the Personal Accident Group Insurance kept
the associates protected round the clock wherein 102 associates received an
amount of Rs.5.5 mn. towards settlement of their claims.

Social Involvement:

The associates demonstrated their Social Involvement by participating in a
Blood Donation Camp organized by the Company on demand of the local Blood
Banks wherein 700 units of Blood was donated.

Recruitment:

Despite of the current economic slowdown, the performance of the
organization demanded a lot of enrolment where HR had to take a lot of
efforts to find the right people in the right place since the tally reached
1470 (gross) additions during the year under review.

The permanent Employee Strength of the Company as on 31st March 2009 was
5082.

11. Corporate Social Responsibility/ Corporate Sustainability Report:

Sustainability is imbibed in the philosophy of our Company and we had added
a chapter of CSR activities last year to provide precise details of our
activity. This year we have set up a separate cell to look into these
activities and Company is coming with the separate report on 'Corporate
Sustainability' as per Global Reporting Initiative (GRI-G3) guidelines and
it will be third party assured. It will be published on the day of Annual
General Meeting. This report shall also contain details of corporate social
responsibility initiatives of the Company. It shall cover economic,
environment and social impacts caused by our organization through its
everyday activities.

It is a standard process having global influence of reporting on the non-
financial performance of the Company. As a part of CSR activities the
Company is supporting following three important projects:

1) Rural Development of village Wakod.

(2) Establishment of Gandhi Research Foundation at North Maharashtra
University and

(3) Setting up of Anubhuti School-An Experimental Residential International
Academy.

12. Environment Health & Safety Performance:

Environment:

During the FY2009, the Company has kept all environmental pollution under
control, within the limits of consent issued by the appropriate
authorities. Company had introduced inhouse air quality checking which
continues. The Company has strengthened the Effluent Treatment Plant (ETP)
for recycling the treated water. The Company had provided Dcoustic canopies
for DG Sets and Air Compressor to reduce noise levels in its plants. The
Company has sold Hazardous waste to authorised land filling agent at Taloja
near Mumbai.

The Company has continued awareness training programme on ISO-14001 an
Environmental Management System, with all its employees.

The Company has planted more than 5,000 plants during the FY2009 in its
premises.

Health & safety:

The Company has trained and experienced persons on industrial safety and
has two safety officers. The Company has a Multipurpose Fire Tender with
water Co2, DCP and Foam facilities to deal with fire related incidents. The
Company has a medical Doctor and male nurses for its Medical Inspection
room for 24 hours service. Drinking water checks were conducted
periodically and ensured safe drinking water to employees. Corrective
actions are in place to control the minor accidents/incidents. The Company
is now certified under OHSAS-18001 for some locations.

13. Internal controls for adequacy and Management:

Information Systems:

The Company believes that a formal strong control framework is prerequisite
for establishing an effective governance framework. It is also equally
important to inculcate a culture that fosters the control environment in
the organization. Therefore, the Company has established both formal and
iformal processes to assess and strengthen the internal controls across the
businesses.

The Company is committed to establish an internal control framework that
ensures prevention and detection of control failures, ensures efficiency
and effectiveness of processes to strengthen the delivery capabilities of
the organization. Formal processes include management control framework,
internal audits, independent review of control system by Statutory
Auditors, review mechanism by the Audit Committee and periodic review by
the Management. To ensure independence and to incorporate leading control
practices, internal audit function has been outsourced to Ernst & Young
Private Limited, a renowned professional firm. Significant deviations in
the internal control framework and remedial action plan are discussed with
the Audit Committee of the Board.

Your organization has grown at a very rapid pace and, therefore, along with
the formal control mechanism, the Management has placed equal emphasis on
building a culture that drives value and control consciousness. The
management information system is the main source of the control and
decision making mechanism in the Company. The Company operates under
decentralized operating controls exercised at various Segment Business Unit
levels. The budgetary mechanism is already in place and annual & rolling
budgets are approved by the Board.

The actual performance versus budgets is measured for the deviations and
timely corrective actions taken. The Company has also embarked on
implementing an ERP application which along with facilitating business
transactions, will also establishes a robust automated preventive control
framework.

14. Fixed Deposits:

The Company, during the year under review, has not accepted nor renewed any
deposits from public, under the Companies (Acceptance of Deposits) Rules,
1975. The Company had no unclaimed/overdue deposits as on 31st March,
2009.

15. Auditors:

The Auditors, M/s. Dalal & Shah, Chartered Accountants, Mumbai have
furnished a Certificate under Section 224(1B) of the Companies Act, 1956
that their proposed re-appointment, if made, will be in accordance with the
said provision of the Companies Act, 1956.

16. Promoters Group for the purposes of SEBI:

(Substantial Acquisition of Shares and Takeover) Regulations, 1997:

In pursuance to clause 3 (1) (e) (i) of SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 definition of group as defined in
the Monopolies and Restrictive Trade Practices Act, 1969 the representative
of Promoters Group of the Company has filed the following list of the
individual Promoters and Corporate entities of Promoters Group as under:

A. Individuals:

Name of Promoter:

1. Shri Bhavarlal H Jain
2. Shri Ashok B Jain
3. Smt. Jyoti Ashok Jain
4. Arohi Ashok Jain(N/G Ashok B Jain)
5. Aatman Ashok Jain (N/G Ashok B Jain)
6. Shri Anil B Jain
7. Smt. Nisha A Jain
8. Athang Anil Jain (N/G Anil B Jain)
9. Amoli Anil Jain (N/G Anil B Jain)
10. Ashuli Anil Jain (N/G Anil B Jain)
11. Shri Ajit B Jain
12. Smt. Shobhana Ajit Jain (N/G Ajitl B Jain)
13. Abhedya Ajit Jain (N/G Ajit B Jain)
14. Abhang Ajit Jain (N/G Ajit B Jain)
15. Shri Atul B Jain
16. Dr. Bhavana Atul Jain

B. Corporate Entities:

Name of Corporate Entity:

1. Atlaz Technology Pvt. Ltd
2. Cosmos Investment & Trading Pvt. Ltd.
3. Jalgaon Investment Pvt. Ltd.
4. Jain Brothers Industries Pvt. Ltd
5. JAF Products Private Ltd.
6. Jain Extrusion & Moulding Pvt. Ltd
7. Jain Solar Systems Ltd
8. Labh subh Securities International Ltd
9. Pixel Point Pvt. Ltd
10. Stock & Securities India Pvt. Ltd
11. Gauri Hi Tech Agriculture Pvt. Ltd
(Formerly Space Tech Plastics Pvt. Ltd)
12. Jain Investments & Finance B.V. Netherlands
13. Jain Overseas Investment Ltd, Mauritius
14. Jain investments A.G., Switzerland

17. Particulars of Employees:

As per provisions of Section 217 (2A) of the Companies Act, 1956 only eight
of the persons in employment of the Company have drawn remuneration in
excess of Rs. 200,000/- per month, during the year under review of part
thereof as per details in the annexure to this report.

18. Particulars of energy conservation, technology absorption, research and
development, foreign exchange earnings and outgo:

A) ENERGY CONSERVATION:

Plastic Park- energy conservation:

* Application of AC drives along with introduction of PLC controls is
extended to PVC Pipe & other areas, resulting in further energy saving.

* The PVC Pipe division and EOU divisions maintained a power factor of
unity and all the other divisions together maintained a power factor of
0.98, which has resulted in a gain of power factor incentive of Rs. 12.8mn.

* Energy saving efforts in Injection molding division through AC drives,
mould optimization etc. has resulted in a gain of Rs. 1.41 mn.

* Wind driven ventilators and heat insulation roof top covering are
installed on all newly constructed buildings. This system has saved nearly
0.32 mn units of energy during FY 2009 worth Rs. 1.1 mn.

Agri Park-energy conservation:

Jain Tissue Culture Banana plants have increasing demand from the farmers
end because of uniformity in age and genetic purity of the plants that
gives two and half times more yield than the conventional planting
material. Earlier Company was selling banana plants in few states of the
country, where the planting season were restricted to June to October only.
Because of limited planting season the tissue culture laboratory required
more Man, Machine and Space. To utilize the facility cent per cent, the
Company has extended the area of marketing in those states where planting
seasons are different than above. Team of Agronomist have also achieved big
success by developing methods to plant banana round the year that actually
saved at least 30% energy because of continuous production in the
laboratory.

The pilot scale production of tissue culture Pomegranate plants last year
led the company in commercializing this plant after banana. Jain Irrigation
is the only Company that made available tissue culture Pomegranate plants
first time in India. The planting season of Pomegranate and Banana are
different hence it also helped in utilizing the laboratory vnd hardening
facilities that saved the cost of energy in maintaining the facilities.

In order to fulfil the farmer's demand of other states; management has
decided to establish primary and secondary hardening facilities in these
states to reduce the cost of transporting the secondary hardened plants.
This development benefited Company in reaching each and every corner of the
state along with increased sale. In this connection the primary and
secondary hardening facilities have been expanded at Udumalpet, near
Coimbatore, Tamilnadu and new secondary hardening facilities have been
established at Baroda, Gujarat. In future similar facilities are under
consideration for Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Karnataka
etc.

Tissue culture laboratory requires huge amount of water for glassware
washing in the laboratory, plant washing and maintenance of microclimatic
conditions in the green house. Team of mechanical engineers & automation
engineers have developed semi automated glassware washing system for
laboratory that helped to save more than 40% water and energy. Similarly,
automation has also been done in the green houses for maintaining
microclimatic conditions that saved more than 30% water and energy. The
efforts are still going on to conserve water and energy by making full
automation of operating in laboratory, Green House and Shade House.

The bio-gas plant produced 40,000 m3 of bio-gas which was used for
conservation of energy equivalent to 50,000 KWH (Rs. 0.22 mn).

Food Park- energy conservation:

* The Fruit Division has completed installation of bio-mass based boilers
at the Chittoor fruit processing plants. The boilers will use the bio-waste
generated by the plant, which will not only solve the problem of disposal
of waste, but also generate steam required for the plant.

* The Fruit Division has completed installation of coal based hot air
generator at Baroda dehydration plant.

* The Fruit Division has completed installation of condensate recovery
system at Jalgaon. The hot condensate will be fed to boilers which means,
lower energy requirement to convert the water to steam.

* The Fruit Division has initiated a water conservation program to reduce
water consumption and also to recycle and reuse water, which is going to be
the most scarce resource.

B) TECHNOLOGY ABSORPTION:

Plastic Park-Technology Absorption NA
Food Park-Technology Absorption NA
Agri Park-Technology Absorption NA

C) RESEARCH AND DEVELOPMENT:

Plastic Park- Research and Development:

* In sprinkler Irrigation System 'Jain Single Metal Clamps' are developed
replacing complex Double Clamps for sizes 90mm, 110mm, 125 & 140mm.

* 'All plastic sprinkler system' is developed and established thereby
eliminating costly metal sprinkler unit including the riser pipe.

* 'Jain Quick Connect plus Pipe' system is developed. This has totally
avoided Butt Welding operations and made the production process more
environment friendly. Patent is applied for this innovation.

* The existing SWR range is extended from Dia 110 mm to 160 mm.

* The PVC Fitting range is extended from Dia 160 to 200 mm.

Special couplers for corrugated PE Pipes are developed making the
application of product user friendly.

* New spray heads in the range Dia 6mm to 8mm are developed under the brand
name 'Jain Quick Spray Heads'.

Existing Sure Lock is further improved with built in key and keyway
provisions. This feature has enhanced the locking of PVC Column Pipe in
Bore Well application.

* The Company has developed the largest size pipe in HDPE range with Dia
1600 mm for Sewerage & Water Transmission Application. This product has
opened gates for mass de-salination plants installation in India,
benefiting the society at large.

* Product development efforts in various segments such as Pipes, Fittings,
Drip lines, and Sprinkler lines, Filters, SWR etc have extended the
existing product range by nearly 120 new products.

* During the Financial Year 2008-09 the Company has registered 12 designs,
with controller General of Patents and Design.

* In PVC Sheets a new product namely 'Extra Bright White Foam Sheet' is
developed, which has opened wide range bof digital printing applications.

* Besides this another new product 'Extra Low Density Free Foam Sheet' is
introduced which has high potential in domestic market.

* New generation pipes in HDPE material Viz. 'Corrugated PE pipes' were
developed by the Company for the application of sewerage & cable
transmission. The main advantage of this product is, they consume nearly
35% - 40% less material compared to a conventional PE pipe with higher wall
thickness.

* On line 'Belling Operation' is developed in sprinkler pipes which
facilitated elimination of Moulded components for joining, besides
substantial time saving.

* In the field of drip irrigation, the new product 'Jain Turbo Tape' is
introduced which eliminated costly and complex moulded components.

* Introduction of Laser Punching Technique in 'Jain Turbo Line' (with
moulded drippers) has facilitated higher productivity levels.

Agri Park- Research and Development:

* Jain Irrigation Systems Limited is one of the biggest and oldest tissue
culture production laboratories in India that also have developed its
unique facility for research and development work. Apart from continual
improvements made in banana and newly commercialized Pomegranate tissue
culture, the team of scientists is now engaged in developing tissue culture
protocol to regenerate Citrus plants. The system will help in producing
disease free, high yielding Citrus clones on large scale that will benefit
Company in meeting the demand of desired raw material for fruit processing
unit in future, while farmer will be benefited by getting an assured price
of their produce.

* Solar Division has developed anti corrosion coating for application
inside the tanks, which improved the life of product substantially.

* Developed LED based Solar street light system which consumes nearly 50%
of power compared to conventional solar light, and supplied to Railways for
their level cross lighting.

* Developed Solar Fencing System and is used in Company's own premises.
Food Park- Research and Development

* The Fruit Division has completed installation of new type of peeling and
pulping equipment and has made certain modification to the process to
increase the yield of Mango pulp and reduction in labour requirement by
65%.

* The Fruit Division has completed installation and commercialization of
hot water system at Jalgaon to improve quality of the Mango pulp, reduce
wastage and eliminate use of external agents to initiate ripening process.

* The Fruit Division has completed developed processes for making blended
products.

* The Fruit Division has completed Undertaken trials to eliminate chlorine
with other sanitizers and improve the quality of the products.

* The dehydration Division has completed Undertaken trials to produce
premium onion powder.

R & D Expenditure:
Rs. Million
Particulars 2008-09 2007-08

a. Capital Expenditure 69.71 13.35
b. Revenue Expenditure 34.99 18.89
c. Total 104.70 32.24
d. % of Revenue 0.48% 0.19%

D) FOREIGN EXCHANGE EARNING AND OUTGO:

C.I.F. Value of Imports, Expenditure
and Earnings of Foreign Currency Rs. Million
2008-09 2007-08
a) C.I.F. Value of Imports:

Raw Materials, Components and Stores and Spares 3,064.62 2,243.61
Capital Goods 839.18 332.55
Total 3,903.80 2,576.16

b) Expenditure in Foreign
Currency (on Cash basis):

Interest and Finance Charges 201.99 130.59
Discount/Commission on Export Sales 11.42 2.89
Export Selling/Market Development Expenses 16.31 2.55
Travelling Expenses 9.44 9.49
Law & Legal/Professional Consultancy Expenses 14.99 44.61
Others 9.18 32.03
Total 263.33 222.16

c) Earnings in Foreign Currency:

FOB Value of Exports (on 4,449.82 4,082.57
the basis of bill of lading)

Interest and Other Income 45.86 36.06
Total 4,495.68 4,118.63

19. Acknowledgement:

The Directors take this opportunity to place on record their appreciation
of wholehearted support received from all stakeholders, customers and the
various departments of Central and State Governments, Financial
Institutions, Bankers, the Dealers and Suppliers of the Company. The
Directors wish to place on record their sense of appreciation for the
devoted services of all the associates of the Company.

By order of the Board

Anil B. Jain
Managing Director
Place: Jalgaon
Date : 25th August, 2009

MANAGEMENT DISCUSSION AND ANALYSIS:

The unprecedented changes in global macroeconomic environment in mid FY09,
triggered by sub-prime crises in United States, has made the year
unforgettable and had its adverse impact on the Indian economy. During the
second half of FY09, the economy experienced a sharp slowdown in activity,
liquidity squeeze and a dip in confidence levels, in line with the global
conditions. With a weak second half, when industrial production nearly
stagnated and exports declined, India's GDP growth in FY09 declined to
6.7%, as per the latest CSO estimates. Weak demand conditions were also
reflected in the wholesale-level inflation approaching closer to zero by
the end of the year. However, there have been some positive factors.
International energy prices have eased considerably. Prompt counter-
cyclical measures from policy makers, in the form of interest rate cuts and
fiscal stimuli, moderated the effect of global factors on demand.

Relative to other emerging economies, the inherent strengths of India
helped it better withstand the adverse effects of the global financial
crisis. With a fairly young population, skilled manpower, a tradition of
saving, a vibrant service sector, a potentially large source of domestic
demand (particularly rural) and the emergence of globally competitive
firms, India has held out the promise of stable and sustained future
growth. These strengths will get further augmented by the planned
investments in infrastructure development envisaged in the Twelfth Five
Year Plan.

The first monsoon (between June and September) of FY 09 was 98% of the long
period average, resulting in a good kharif crop. However, during the second
half of the year, the country experienced a deficient north east rainfall
by 31% in 30 of the 36 metrological districts. In spite of overall lower
rainfall and lower reservoir levels in FY09, the total food grain
production during the year was 228 million tones (based on RBI's report

'Macroeconomic and Monetary Developments in 2008-09' (MMD09) in April
2009).

Substantial increase in the minimum support prices for various crops
announced by the government have positively impacted rural disposal
incomes. In addition, credit allocation to agriculture, in Union Budget
2008, saw an increase of Rs 50,000 crores to reach Rs 280,000 crores. There
were increases in other outlays as well for supporting development of rural
economy. As per RBI's report (MMD09) India's agriculture GDP grew by 2.9%
in FY 09 and was 17.1% of the India's GDP.

Despite adverse global & local economic conditions and subdued agri growth
in the country in Rabi season, JISL could continue it's growth momentum and
grew by 28% in revenue and 39% in EBIDTA terms.

Leadership position across the businesses, improving financials, key ratios
and promising business outlook have helped the Management discussion and
analysis

Company to get improved credit rating. The improved credit rating has
helped the Company to borrow funds at low cost compared to the historical
borrowing cost and has also helped the Company to negotiate and reduce
interest cost on the long term loans.

The strong and stable government at centre post recently concluded election
augurs well for the country. The Government now has the mandate and the
opportunity to boldly move forward with its reforms agenda, creating in the
process, an enabling climate for a faster and wider economic recovery. This
augurs well for the Company to maintain it's growth momentum.

(1) Overview of Business:

Your Company (JISL) is leading agri-business Company, operating in diverse
but integrated segments of the agribusiness value chain. It is the second
largest micro irrigation Company globally and is largest manufacturers of
irrigation systems in India. Globally It's leadership position is not
restricted to irrigation alone, it is the largest manufacturer of Mango
pulp, puree and concentrate in the world and also third largest
manufacturer of dehydrated onions.

JISL is also India's largest manufacturers of polyethylene pipes, one of
large 3 PVC pipe manufacturer and is the largest manufacturer of Tissue
Culture Banana Plants in India. JISL is also into hybrid & grafted plants;
greenhouses, poly and shade houses; bio-fertilizers; solar water heating
systems and bio-energy sources. JISL also renders consultancy for complete
or partial project planning and implementation e.g. Watershed or Wasteland
and/or Crop Selection and Rotation.

(2) The Strategy:

(a) Growing the business organically and through select strategic
partnerships and mergers and acquisitions The aim of the Company is to be
among the top three global players in each of its major business segments
such as Micro Irrigation Systems and Agro-Processed Products. In addition
to organic growth, the Company will evaluate on a case-by-case basis
potential acquisition targets, that offer an opportunity to grow the
business, offer new technology, production capacity and/or expand its
capabilities or geographic reach. The Company intends to pursue those
acquisitions that are related to its key strengths, are synergistic and in
its assessment, have manageable integration risks. Your Company may also
enter into strategic partnerships with leading overseas manufacturers and
distributors of similar products with coverage in markets where the
Company is presently under-represented.

(b) Focusing on the agri-supply chain:

We plan to sell products and services at various levels of the agri-supply
chain, leveraging the existing strong brand in India and established
domestic and international distribution networks. For example, for the
domestic farming customers, the Company plans to provide an integrated
'full service' product offering assistance to them at every step of their
crop growing cycle with products and services which are synergistic with
the current products of the Company. The Company plans to help its
customers to improve their cropb yield through Micro Irrigation Systems and
higher quality planting material like the selected high yielding and hybrid
bonion varieties presently supplied to its contract farmers. The Company
also plans to work with its customers to take their agricultural projects
from conception to completion on a turnkey basis, providing services such
as engineering, soil and water analysis, water resource estimation, crop
planning, irrigation and fertigation scheduling, marketing assistance and
other agronomical support. The Company believes that these activities are
also complimentary to and synergistic with the vegetable and fruit
dehydration and processing activities downstream in the agri-supply chain.
The Company intends to achieve further vertical integration of its
activities in the agri-supply chain such as through expanded upstream
contract farming arrangements to support the downstream Agro-Processed
Products business.

(c) Expanding into new growth products and markets:

Your Company also plans to further penetrate the urban and commercial
applications for its PVC Piping Systems, focusing on India's increasing
need for housing, sewerage, water supply, telecommunications and other
infrastructure. The Company plans to enhance its distribution reach by
adding new dealers and distributors to penetrate into new domestic and
international markets, particularly in Africa, the Middle East and the East
and West coasts of the US. Furthermore, there are plans to foster strategic
alliances with global players so as to have access to their distribution
reach for marketing the Company's products.

In case of fruit & vegetable processing Company plans to add vegetables
other than onion to it's portfolio. It also will increase capacities in IQF
fruits.

(d) Maintaining cost competitiveness:

Your Company seeks to be a cost-competitive highquality producer and is
focused on maintaining its cost competitiveness in the domestic and
international markets. There are plans to further increase productivity and
production while reducing costs by continuing to invest in new equipment,
improving the material management system to minimize wastage and production
losses, improving the working capital cycle to reduce the interest costs,
refinancing the higher cost debt with lower interest debt and exploring
ways to use the solid waste produced by our food processing facilities to
generate electricity etc. Since 2004. The Company has engaged in contract
farming, whereby it sources the raw materials for its onion dehydration
business by buying-back onions at pre-determined prices from over 2,000
farmers, covering approximately 3,000 acres of farm land. The Company
provides such farmers with various agricultural inputs and services.

(e) Positive contribution towards prosperity of rural India:

In line with your Company's philosophy, we are spreading and pushing
concept of Micro Irrigation into newer states and we are also increasing
our penetration level in our existing states. We are educating farmers in
deep rural areas and giving them comprehensive guidance on making the
farming more remunerative, along with teaching them techniques of
conserving water, labour, fertilizer and power. Your Company is also
running a training centre for farmers, agri students, Govt. officials etc.
where annually more than 30,000 people benefit by visiting the same.

(f) Creating Jains as an international icon in Agri Value Chain:

Your Company and all its associates are working hard to make Jain a
respected icon in agriculture value chain globally. As of now we have 13
manufacturing facilities in countries like USA, Israel, Switzerland, Peru,
Chile, Brazil, Spain etc.; Your Company has 23 offices outside India and
your Company is exporting its products to more than 160 countries.

(g) Focus on liquidity and reduction of finance cost:

With growing businesses, not only in value and volume terms, but also
geographically, managing finance is becoming more and more critical. On a
continuous basis your Company is focused on having the limits and
facilities available to fund our future growth plan. We are equally
focused on bringing our interest cost down by changing the borrowing mix in
line with change in the market dynamics.

International Finance Corporation (IFC) has become an equity stake holder
in your Company in April 2009. IFC is a member of World Bank group. They
bought around 2.69% stake in the Company. Your Company has also borrowed
USD45 million (including USD 15 million borrowed in July-2009), so far,
from IFC at competitive rates and has sanction of another USD 15million for
Company's expansion project. Our association with IFC will be very
beneficial to the Company on long term basis.

(3) Corporate Structure:

The below table sets forth the current corporate structure of the Company.

(4) [1] Operating Subsidiary Companies:

a) JISL Overseas Ltd. is a wholly owned subsidiary of the Company and was
incorporated in 1994 under the laws of Mauritius. JISL Overseas Ltd. acts
as a holding Company for the overseas subsidiaries and all of the overseas
subsidiaries are directly held by JISL Overseas Ltd. For the year ended
31st March, 2009, JISL Overseas had share capital of approximately US$88.25
million out of which $24.01 million was infused in the year FY 2009. The
said Company had a loss of US$456,017 for the year ended 31st March, 2009.
Mainly due to premium paid on redemption of preference shares of the
parent.

b) Jain (Americas) Inc. is a wholly owned subsidiary of the Company and was
incorporated in 1994, under the laws of Ohio, USA. It is our key marketing,
distribution investment arm in the United States. For the year ended 31st
March, 2009, Jain (Americas) Inc. had sales of US$23.36 million.

c) Jain (Europe) Ltd. is a wholly owned subsidiary of the Company and was
incorporated in 1996, under English laws. Jain (Europe) Ltd. is our key
marketing and distribution arm in the UK and other European countries. For
the year ended 31st March, 2009, Jain (Europe) Ltd. had sales of GBP 15.20
million(Equivalent to US$25.89).

d) Jain Irrigation Inc., USA is a wholly owned subsidiary of the Company
thru the Jain Americas Inc. JII is engaged in drip tape manufacturing and
distribution business based in California. The Company has reported revenue
of US$46.75 million in the 12 months to March 2009.

e) Cascade Specialities Inc. USA is owned to the extent of 80.17% by the
Company thru the Jain (Americas) Inc. It is engaged in onion and garlic
dehydration business with specialization in natural low bacteria and
organic dehydrated products. The revenues for 12 months ended in March 2009
were US$15.41 million. The Company has definite agreement to acquire over
the next 2 years remaining ownership from other shareholders at an agreed
EBIDTA multiple each year.

f) NuCedar Mills Inc. USA is a start-up venture engaged in the manufacture
of PVC sidings thru a patentable product for the home building market in
USA. The Company has continued to develop it's products. It has received
revenue of US$ 0.74 millions from sale of products to prove the concept.

g) Naandan Jain Irrigation C.S. Ltd. Israel is owned to the extent of
50.001% by the Company thru Jain (Israel) B.V. It is engaged in the
manufacturing of drip/sprinkler irrigation. NaanDan also has manufacturing
facilities in USA, Chile, Brazil, Spain & Australia. The Company has
reported revenue of NIS 369.76 million (Equivalent to US$100.58 million) in
the 12 months to March 2009.

The Company has a call option to acquire remaining ownership over the next
8 years from other shareholders at an agreed fixed price.

h) THE Machines S.A. is a Switzerland based manufacturer of plastic
extrusion equipments with laser technology. The Company owns 69.75% of
Thomas Machines thru JISL. The Revenue for 12 months is CHF 21.53 million
(Equivalent to US$19.57million). The Company has a call option to acquire
remaining ownership over the next 1 year from other shareholders at an
agreed fixed price.

[2] Overseas Holding Companies:

These Companies are investment holding vehicles:

1) JISL Overseas Ltd., Mauritius
2) Jain Overseas B.V., Netherland
3) JISL Global S.A. Switzerland
4) Jain (Israel) B.V. Netherland
5) JISL Systems S.A. Switzerland
6) Jain Irrigation Holdings Inc. Delaware, USA

(5) Competitive Strengths:

The Company believes that the following are its principal competitive
strengths to successfully execute the earlier mentioned strategy.

(a) Strong brand in India:

Jain Irrigation is one of India's leading manufacturers of Micro Irrigation
Systems, Piping Systems, Plastic Sheets and Agro-Processed Products. Since
the Company commenced operations in 1986, it has built an extensive
distribution network throughout semi-urban and rural India, selling
flagship brands such as Jain Pipe and Jain Drip, which are well-known in
the domestic markets. Company's MIS products are customized to assist in
meeting the special requirements of its domestic customers. Management
believes that the Company's strong brand, leading market position and
understanding of the customers' needs, makes it well-placed to capitalize
on growth opportunities in the fast growing domestic markets for its
products. Formation of Jain Irrigation was preceded with other group
companies that dealt with agriculture since 1963. Thus, there is 46 Years
of a strong relationship and mutual warmth with the larger agricultural
community.

(b) Unparalleled soft Infrastructure:

Your Company has the splendid pool of agriculture professional, probably
the largest employed by any private sector organization in the country.
Your Company has around 1800 dealers on pan India basis selling exclusively
Jains irrigation products. Most of these dealers come from farming
background and are influential personality in their respective region.
Unmatched knowledge pool sourced from the ongoing agriculture R & D
activities coupled with vast farming experience has enabled your Company to
built an unparallel strong soft infrastructure which is the helping the
Company to continue its journey on the growth path especially in rural
India.

(c) Flexible and Scalable Production Facilities:

Management believes that the flexibility and scalability of the Company's
existing production facilities will help it meet increased demand for its
products. The scalability of the Company's existing facilities enables it
to increase its production capacity through the installation of new
equipment and production lines. For example, the Company can increase the
capacity to produce our PVC/PE pipes and Plastic Sheets by upgrading
critical equipment such as screws/barrels and gear boxes, or if greater
capacity enhancement is required, by adding new extruders. The Company's
flexible manufacturing facilities enable it to produce a wide range of
products with different specifications, such as PVC/PE pipes with different
diameters and working assure ranges and processed and dehydrated fruits and
vegetables using different organic feedstock. This flexibility assists the
Company in meeting the specific demands of its customers and reducing the
impact of seasonal changes in production volumes for specific products such
as the Agro-Processed Products and Piping Systems. The ability to expand
production across product streams is demonstrated by the achievements in
the past 5 years in which Company has increased its plastic piping systems
capacity, 4.6 times to 2,05,420 tons as of 31st March, 2009 from 44,276
tons as of 31st March, 2003 and It increased the PVC sheet capacity by
almost 4 + times to 36,300 tons as of 31st March, 2009 from 7,735 tons as
of 31st March, 2003 Your Company plans to continue this aggressive capacity
build up in current and coming year so as to maintain substantial organic
growth across most of the divisions.

(d) Backward Technical Integration:

Last year, your Company acquired THE Machines S.A., a Switzerland based
manufacturer of Plastic Extrusion equipment. This Company has more than 15
years of expertise in developing and manufacturing of machineries with
focus on automation and laser technology. With this, your Company's ability
to get quality equipment in timely manner and also at competitive cost, has
become stronger. This will also ensure that supply of equipment and
machineries would not be a barrier for the fastest growing business i.e.
micro irrigation of your Company.

(e) Cost competitive high quality producer:

The Company's modern, large-scale production facilities, the de-
centralization of its plastics manufacturing facilities in Jalgaon,
Hyderabad and Udumalpeth near Coimbatore in India, the increasing de-
centralization of the food processing and dehydration facilities throughout
India, closer to the growing regions for the raw material and efficient
working capital management, make your Company a cost competitive
manufacturer of various products. While the Company is committed to
maintaining international quality standards for all its products, the
success in meeting the quality requirements of the international customers
is demonstrated by your Company's increasing export sales. The overall
export sales increased by 8% to Rs. 489 crores in FY 2009.

The Company's Food plant are certified of ISO 22000-2005 Food Safety
Management systems accredited by ISA Cert, The Netherland & Fruit Plant
also certified for SGF, Germany. Onion dehydration Plant is certified for
British Retail Consortium (BRC issue:5) Global Standard For Food Safety,
The Netherlands. Tissue Culture activities and solar division had achieved
ISO 9001-1987 certification. The Company's plastics processing was
certified under ISO 14001-2004 Environment Management System and BS OHSAS
18001-2007 by TUV NORD Germany in 2005-06.

(f) Experienced Management & Sales Teams:

With significant experience in the plastics manufacturing, fruit and
vegetable dehydration and/or fruit processing industries, the Company's
senior management team has wealth of experience in the industries in which
it operates. The Chairman, Mr. B.H. Jain is the Founder and is
acknowledged as one of the pioneers of micro irrigation in India. He was
recently confirmed highest civilion award by Government of India for his
contribution to Science and technology. The experience of the Company's
management team in international markets will help it increase the
penetration of strategically selected countries and expand the range of its
product offerings in existing export markets. Company has also acquired
large and talented manegerial pool through various acquisitions. The
management team also has long-standing relationships with many of the major
customers, distributors/dealers and suppliers. Further, the Company has a
strong local sales force, which together with the management team give the
Company a excellent understanding of the needs of the domestic customers.

(g) Diverse Revenue Streams:

Although the Company's business and its prospects are significantly
integrated with the Indian agricultural sector, your Company also derives a
significant portion of its revenue from non-agricultural sources, such as
from sales of piping systems to commercial, industrial and government
customers, sale of fruit pulp & onion to large global food Companies and
sales of PVC sheets to the home building construction industry. In fiscal
2009, the Company derived a little over 50% of its revenues from non-
agricultural sources. The revenues are further diversified across the wide
range of products sold. This diversification can help insulate the overall
sales and operations from adverse conditions affecting any one of the
business segments or products.

(6) Overview of Segments:

A) High-Tech Agri Input Products:

The segment comprises of Micro and Sprinkler irrigation systems, PVC Pipes,
biotech tissue culture and other agri inputs. The segment has grown at
almost 52% over the previous year at Rs. 13,249 million. The main growth
engine was the MIS/ SIS business at a robust 54% growth. PVC pipes also
grew at significantly high growth rate of 43 %. The segment profit has
grown by an impressive 47% over the earlier year's level, while the capital
employed grew at a little over 20% reflecting the creation of additional
capacities during the year.

a) Micro and sprinkler irrigation:

i) Industry:

The industry is broadly divided into the organized and unorganized segments
in the country. The Company is the largest player in the organized sector.
In view of the involvement of a large number of components in a system, all
of which are not available with a single manufacturer, it is difficult to
hazard a guess about the exact size of the industry as most of the figures
are derived on the basis of information available from different sources.
While the Company controls 55% of the Micro Irrigation business in the
country, it has a market share of 35% in the Sprinkler irrigation business
in the country. The current estimate of industry size is Rs. 17 bn. and it
is growing rapidly. Currently about 3.0 to 3.5 million Ha of possible 70
million Ha area is covered under the micro and sprinkler irrigation in the
country. However, as per Government task force 17million Ha of land can be
easily brought under micro irrigation coverage in the country in the near
future, say in next 5 years or so.

The world over the MIS/SIS industry is undergoing a consolidation phase
with M & A activity at its highest in the last 30 years or so. The Company
has secured a firm foothold in the mature North American market with two
significant acquisitions to gain a 10% market share. The JV with Naandan
gives it strategic access to markets the world over, specially in Europe,
South America & Australia while it faces a demand explosion in the fastest
growing Indian market.

ii) Performance:

The business contributes a little over 43% of the Company's turnover. The
division has been growing at a CAGR of 60% plus on the back of projects in
the States of Andhra Pradesh, Gujarat, Tamil Nadu and consistant growth in
Maharashtra continues. The business added 47,730 MT of capacity during the
year under review, while Fixed Assets addition was to the tune of Rs. 1185
million.

iii) Opportunity & Outlook:

Almost 50% of the arable land in the country is still rain fed. The
Government (Central and State) provide 50% capital subsidy for promoting
the use of Micro Irrigation by farmers. While targeting an agriculture
growth of 4% per annum the government had also placed higher targets for
farm credit and agriculture investments at 2% plus of the GDP for the XI
plan period.

State governments have also started work on new concept of 'On Demand
Irrigation' which will help farmers to do more productive farming. Another
initiative called 'No Lift without Drip' will encourage wide spread use of
Micro Irrigation Systems even in crops such as cereal and pulses. Adoption
of Micro Irrigation System is becoming more prevalent even in crops such as
Cotton, Chillies, Onions, Potatos and other vegetable crops. States from
Northen parts of India are picking up speed especially with Horticulture
crops. All in all, outlook for this industryb in very positive and
opportunity is immense.

With current year's deficient rainfall in most of the states, till mid
august, Micro irrigation could be the key water conservation tool for the
central government and state governments. Recently AP government had
announced that by 2014, approximately 6.2 million acres (around 2.5 Mn Ha)
would be brought under micro irrigation and lift irrigation scheme. Haryana
has inc reased the subsidy for micro irrigation from 50% to 90% to
popularize micro irrigation in the State.

Your Company is making significant investment in production capacity and in
network building so that it can maintain the growth momentum in this
division going forward as well.

iv) Risks & Challenges:

The growth in markets is dependent on Government policies and release of
capital subsidy etc in the short term. The growth in industry will need a
large pool of trained sales people and a dedicated dealer network in the
far flung areas of the country. The uneven distribution of rainfall in the
country, consecutive drought like situation for 2/3 years and fluctuations
in the polymer prices are constant threats faced by the industry. Low cost
quality competition is another threat.

b) PVC Piping:

i) Industry Indian Scenario:

During the year 2007-08 the Indian industry used 1373 KT of PVC Resin,
achieving a growth of 13% over previous year. Out of this about 70% i.e.
972 KT was consumed for pipes & fittings. For the year 2008-09 Indian PVC
industry in general looks forward to consume 11% more and looks forward to
a CAGR of 10% up to the year 2012-13, matching the Global pace. Jain
Irrigation, with a 15% share, is one of the handful major players in the
organized market.

Rest of the industry, being small and medium scale in nature, is
unorganized, fragmented and scattered near the user belts in the country.
However, there are 3 major players in the organized sector. Increased micro
irrigation spends, push for urban infrastructure by government agencies and
Command Area Development Programme will improve the demand situation for
the industry.

ii) Performance:

During the FY 2009, this business contributed 18% revenue for the Company.
The business has grown at a steady 43% in revenues. The business added
36,540 MT of capacity during the year under review, while the Fixed Assets
addition was to the tune of Rs.349 million.

iii) Opportunity & Outlook:

While the expansion of capacity undertaken last fiscal year is complete, in
view of increased budgetary allocation from government, demand is expected
to continue to increase. Hence the Company has again decided to enhance the
capacity by 33,323 MT, the full effect of which will be observed in FY
2011. In a full year's operation the investment would generate Rs.1939
million of incremental revenues.

While the government infrastructure spends are increasing all the time, the
government programmes continued for safe drinking water, urban and rural
sanitation, Rain-water harvesting and integrated watershed management
programme etc. are expected to generate substantial demand for piping
products in the coming years. The Company is considering establishing two
more production centres in the north part of country in near future. A
large part of the Urban Infrastructure projects in the current five year
plan is towards irrigation, drinking water supply & sanitation.

v) Risks & Challenges:

Delays in government decision/spending and limited availability of PVC
resin in India are, the potential threats to the otherwise rosy picture for
the future of the industry. Low cost low quality manufacturers continue to
twist the healthy markets. volatility in price of raw material PVC resin is
another dampening factor on demand.

c) Biotech Tissue Culture:

i) Industry The industry is broadly divided into two segments:

(1) Fruits and vegetables and.

(2) Leafy Plants and flowering Ornamental Plants.

The industry is not organized although some big names did start forays in
this industry in the mid 1990's. Most of the players are engaged in tissue
culture for cut flower exports, where the model of business is quite
different. The Company started with banana as the main crop for tissue
culture and the efforts have really paid off. The industry is still growing
at an estimated 25% per annum.

ii) Performance:

The sales in business crossed Rs. 148 million during the year, reflecting a
26% growth over the previous year. The quantity increase at 12.18 million
plantlets contributed 30% of the growth while 1% increase in price
realization was achieved during the year. Keeping quality of plants as the
top priority Company had implemented four stage disease testing program.
Unit has also undergone BCIL Certification, certification standard for
commercial tissue culture laboratories by Department of Biotechnology,
Govt. of India. The Unit has also received 'Rajeev Gandhi National Quality
Award, 2007' for efforts and commitment to quality in the field of
Biotechnology industry.

Your Company has developed Pomegranate Tissue Culture for the 1st time and
has distributed around 3 lacs Pomegranate Tissue Culture plants free of
cost in FY 2009 among farmers.

iii) Opportunity & Outlook:

The outlook continues to be excellent and demand shows improved offtake in
the coming season. Now, many State Governments are evincing keen interest
in promoting tissue culture. The Company has opportunity to diversify the
business & produce fruit & ornamental plants & other fruit plants. To begin
with in last year Company has started production of issue cultured
pomegranate plants. There is also an export potential to other Asian
countries which can be tapped.

iv) Risks & Challenges:

Lack of skilled work force and the risk of legal problems in case of non-
performance of the planting material in the farmer's field are the major
challenges facing the business.

B) Industrial Products:

The segment business includes the varied business lines like PVC Sheets,
Polycarbonate Sheets, PE pipes for industrial applications, Fruit
processing, and onion and vegetable dehydration. Business in this segment
has grown at 7% over the earlier year's level at Rs. 8,541 million. The
major growth came from the Onion Dehydration business at a 48%. The segment
profit has grown by 42% over the earlier year's level, while the capital
employed grew at a little over 43% reflecting the creation of additional
capacities during the year.

a) PVC & PC Sheets:

i) Industry:

The market is divided into two segment; Graphics Market (GM) and Building
Materials Market (BMI) In the BMI segment, Lumber the traditional building
material was being replaced by PVC. The basic uses of PVC in BMI was in
Trim, used as surrounds for windows and garage doors, Corner Boards,
Soffits and interior applications such as Wainscoat and Beadboards. The
inherent qualities of PVC such as impervious to water absorbtion; protected
against insect attacks and a life term warranty promulgated the product
over traditional Lumber. Further, availability of good quality wood was a
problem as resources were drying up and cost of processing was escalting.

The market is serviced by 7 manufacturers and some Chinese imports.

The GM market has been using PVC sheets in manufacturing Sign and Graphic
boards, Point-of Purchase displays and large print mediums. This industry
has stayed with PVC for over 3 decades. This segment is serviced by 5
manufacturers. Some China products have attempted to penetrate the market.

Polycarbonate Sheets have been traditionally used in Glazings, Roofing,
Security windows, some Sign and Display applications in the general purpose
segment. At the high end, Aeronautical applications, Eyeware, Compact Discs
have been its niche markets.

ii) Performance:

Since other businesses are growing faster and this business has seen some
de-growth in last two years, revenue mix of this business has come down
substantially. In FY 2009 it accounted for around 8% of the revenue.

The adverse effect of continued slowdown of American Housing Industry has
led to decline in PVC Sheet business revenue by about 12% over the previous
year, however it is a decline 20% in terms of volume.

iii) Opportunity & Outlook:

The economic downturn has resulted into some players exiting the market and
others redefining their basket of offerings. We are expecting some
consolidation in the industry globally, which ultimately will benefit both
the manufacturer and the end user. US housing market has started showing
sign of recovery and is expected to comeback on growth track.

The JAIN name has been fore front in publications in Plasticas and
Irrigation industry magazines due to the recent acquisitions. This gives
the companies a greater exposure for growth.

iv) Risks & Challenges:

A lot will depend on the price of resin. The fluctuating oil prices do not
provide any comfort. The industry as a whole has put through price
increases and the reaction of these will be felt in the coming months. The
pace of recovery of the housing industry and the credit situation could
have major impact on demand for this business.

b) PE Piping:

i) Industry:

The applications of PE pipes are growing at a fast pace and yet new
applications are being developed for the product. In applications like
Sewage & Effluent disposal the tougher environmental laws and stricter
application of the same by the Govt. departments, the replacement of
cement/metal pipes by PE pipes is becoming very relevant. Such
possibilities are huge, especially since the larger diameter PE pipes are
now indigenously available within the country itself. The Company's
presence in gas and cable duct segments of the PE pipe business is
commanding and hence the overall market share is 30%. The Company is
operating in all segments of the industry like cable duct, sprinklers, gas
distribution, water conveyance, house service connection, Sewage
conveyance, Effluent disposal, sand stowing, dust suppression etc.;

ii) Performance:

This business has witnessed de-growth in FY 2009. Revenue was down by 11%
and volumes were down by 16% reflecting sluggish and subdued capital
expenditure by the infrastructure sector in general and telecom sector in
particular amid prevailing tight liquidity and poor sentiment during major
period of FY 2009. However, with all user industries like telecom, gas,
water and sewerage having good plans for growth and capital expenditure,
the future is very bright for this business. The business added 19860 MT of
capacity during the year under review, while Fixed Assets addition was to
the tune of Rs. 573 million.

iii) Opportunity & Outlook:

The Company has successfully continued to get large supply contracts with
multinational companies for supply all over the world as a preferred
supplier with very encouraging revenues. The massive infrastructure
projects undertaken under the Bharat Nirman Yojana, increased investments
by telecommunication industry and plans for piped gas in cities, continue
to be the potential demand drivers for the industry. All the Gas
Distribution companies are continuing their growth plans. The telecom
sector in India, in view of the ever expanding market, the government has
started releasing additional spectrum for normal as well as 3G and 4G
applications. The demand for next 18 months is expected to be around
250,000 kms of duct pipes. In water transmission and distribution business
there are around 200 firms registered with BIS, but the national players
are only 5 and Jain Irrigation is the only player to manufacture 1000 mm
and above dia pipes up to 1600 mm dia. Recently Jain irrigation has become
the first Company in India to successfully install indigenously
manufactured 1600mm dia. PE Pipe under sea water in one of the prestigious
infrastructure project in Chennai. With this added strength, Jain
Irrigation now has developed the capability to provide a complete solution
to Water Management, Waste-water Treatment and judicious use of treated
water.

iv) Risks & Challenges:

The unstable raw material prices and business cycles of the end users and
delay in implementation of projects remain the major risks faced by the
business segment. Lack of awareness about quality needs at the customer end
provide significant challenge. Also conversion to HDPE from steel or
concrete is still not easy due to unwillingness to change at specification
level.

c) Onion and vegetable dehydration:

i) Industry:

Dehydrated Onion industry is lead by USA who accounts for around 65% of
world's total production. USA is also the biggest consumer of dehydrated
onion in the world followed by EU, Latin America, etc. Total capacity of
Indian onion dehydrators is today second to USA. The Company is a large
player and accounts for upwards of 50% of share in export of dehydrated
vegetables from the country. Most of the domestic industry is unorganized.
Unorganized producers supply semi-finished products in crude form, that
many buyers in the EU and USA further process to make the finished
products. The Company has an edge over unorganized producers because of
backward linkages in seed production / distribution, contract farming, and
its ability to supply processed finished products, ready to be used in the
finished products of customers. Almost all big users of dehydrated onion in
the world are the customers of the Company either directly or through
distributors, resellers or blenders.

With the acquisition of controlling stake in Cascade Specialities Inc, the
Company has also established its manufacturing presence in the USA, the
world's biggest market for dehydrated onion. As the US market is protected
by tariff barriers, having a production base in the country allows the
Company to have access to that market as a local producer. The Company is
also the only producer in the world that has manufacturing base in two
different countries and as a result is able to produce dehydrated onions
throughout the year. Due to the location advantage, Cascade Specialities
also specializes in production of naturally produced low microbiology laden
products, which are in great demand from flavor and seasoning companies.
Ability to produce large quantity of low micro products gives the Company
an edge over all other competitors in USA and outside, who are unable to
produce large quantities of natural low micro products. Cascade
Specialities is also the only producer of organic dehydrated onions in the
USA.

ii) Performance:

During the year under review, Company's sale grew by approximately 48% in
terms of value and approximately 31% in terms of volume. The realization
Increased by 13% .The Company achieved this sales growth under the adverse
scenario of bad onion crop, increased raw material cost, volatile rupee,
etc. Company's US Operation continued to perform well with increase
production of low micro products, increase in sales and realization.

To maintain very important food specific certifications, the Company
continues to have ISO 9001, ISO 22000, FSMS, BRC Global Standard and GMA
food certifications. To continue our thrust to offer value added products,
the Company has added fresh fried onion and dried fried onion to its
product basket.

iii) Opportunity & Outlook:

Outlook for vegetable dehydration industry in general and dehydrated onion
industry in particular looks very good. Large multinational companies with
very popular household brands are looking towards consolidating the number
of suppliers and trying to align with select few suppliers who can provide
better traceability and sustainability. This puts the Company in a very
good position due to its backward linkages, relationship with farmers,
contract farming programs and sustainability in general.

Worldwide Onion dehydration industry is estimated to be around 180,000MTPA.
The industry is growing globally at 6-8% per annum. The Company now has
capacity to produce approximately 25,000 MT per annum of finished products
between its three plants in two countries. This makes the Company the third
largest dehydrated onion producer in the world. The acquisition of
controlling stake in Cascade Specialities Inc, USA has further opened up
the global customer base for the Company's products.

The Company has also made improvements in its plant in the USA by capacity
expansion, addition of cold storages for fresh onion storages to increase
the season of production and other operational improvements. Demand for
naturally produced low micro products and organic dehydrated vegetables
continues to grow. The Company estimates that with growing demand of its
finished products and general upward movement of food prices globally, the
Company will be able to achieve further growth in sale and better
realization in the coming year. The Company is also looking at increasing
production of value added products like fried onion, frozen onion and other
vegetables in the coming year.

iv) Risks & Challenges:

As the Company experienced in the onion season of 2006-07, uncertain crop
patterns continued to be the major risk for such businesses. Company also
faces stiff challenge from low cost / low quality producers who can
adversely affect the overall market. Rising energy costs and strengthening
of the Rupee also pose challenges. Growing interest in bio-fuels have
further added pressure on food industry as more and more farm land is now
getting used for bio-fuel crops. Other risk is slow markets in Europe and
USA where customers are delaying their off takes and seeking lower prices.

A poor monsoon can adversely affect the availability, pricing and quality
of the onion and other vegetables. This can have significant impact on the
profitability of Agro Processing business.

d) Fruit processing:

i) Industry:

India is the world's second largest producer of fruits next only to China
and has the potential of becoming the largest producer. India also ranks
second in the world in the production of fruits and vegetables. Despite the
large production of fruits and vegetables, fruit and vegetable processing
was limited to only 2% of the produce till 2001-02.

This sector has been accorded a very high priority by the Government of
India and fruit & vegetable processing industry has been encouraged.
Further, with the economic developments taking place in India, increasing
health consciousness and with the coming of organized retail trade, the
food industry is poised to grow rapidly. The Indian fruit processing
industry is growing currently at the rate of 20% p.a. The demand for fruit
juices and fruit drinks and other processed fruit products is growing
rapidly in India. Further, Indian mango and other processed fruit products
are getting popular in developed markets overseas. There are 4,000 fruit
processing units in the country with an aggregate capacity of 1.2 million
tonnes per annum. It is estimated that 20% of the output is exported and
the rest caters to domestic consumption.

Realizing the opportunity and potential of fruit and vegetable processing,
the Company established modern plants a decade ago for processing fruits
and vegetables. The Company has also added new capacities, acquired a
number of plants and also increased the product portfolio. Jain Irrigation
is now the largest processor of fruits and vegetables from India. Apart
from growth in mango pulp and the concentrate business, the Company has
set-up the most modern and largest Pomegranate processing facility at
Jalgaon.

The rationalization of manufacturing locations was completed by the Company
in the year under review by deciding to process the mangoes in season only
at two locations. The IQF and BF fruit products have further diversified
the basket of fruits being processed by the Company.

ii) Performance:

This division forms an important part of the Company's approach to
integrated farming model, wherein the Company supplies the farmer with
hightech agri inputs, and is ready to buy back the surplus output to add
value and offer the same locally and in International markets, thereby
completing the agri value chain. The division clocked yearly revenues of
Rs. 2,014 Mn. during the year under review. The business grew at 26% in
value terms. The division processed 82,107 MT of fruits during the year.
The division added new capacities in Aseptic, Frozen and IQF part of the
business.

The division continues to retain its accredition under various quality
standards such as ISO 22000, SGF, Kosher etc. The division is now actively
working towards achieving accreditation under ISO 14000 and OSHAS 18000
standards.

With the increased capacity, improved plant utilization and reduction in
raw material transport cost, this division has become cost efficient and a
high quality producer of fruit purees and concentrates. The Company
produced 30,214 MT of Mango products, 2,996 MT of Banana products, 2,413 MT
of Tomato products, and 2,518 MT of other products like Guava, Amla,
Papaya, Pomogranate etc during the year under review.

Your Company is supplying Mango Pulp and Puree to Coca Cola for last 7
years. The Maaza brand of Coca Cola Company is growing very fast at the
rate of around 40-50%. Recently your Company has bagged large orders worth
Rs. 158 crores from various Coca Cola bottlers in India and Overseas for
supply of mango for the 2009-10 season. This is increase of more than 85%
compared to last season.

iii) Opportunity & Outlook:

India's Economic development has registered a growth rate of 8% for the
last three consecutive years. Contributing to this flourishing economy is
the agriculture sector, where productivity is showing an increasing trend.
Keeping pace with the world production of Fruits and Vegetables the
production in India has also grown and now accounts for 15% of world's
vegetable production and 8% of world's fruit production. The focus has now
changed from grains and cereals to fruit and vegetables owing to change in
consumption pattern resulting in increase in demand for fruits and
vegetables.

The fruit and vegetable processing industry is critical to fruit and
vegetable sector. Although the horticulture sector has grown by 10%, only
2% of the produce is processed, resulting in huge post harvest losses.
Fruit and vegetable processing establishes the vital linkage between
agriculture and industry. In order to sustain the growth in the economy,
Govt. has realized the need to support this vital link and has been
providing support to accelerate growth in the sector. The sector has seen
exponential growth with demand for fruit juices, beverages, convenience
foods growing by around 30% YoY.

The demographic profile of the consumers has been changing. With increase
in disposable incomes and standard of living, the consumption pattern is
shifting from basic foods to more healthy, convenience foods resulting in
growing demand for processed food in general and processed fruits and
vegetables in particular.

There is a marked shift in the International markets with emphasis being
laid on wellness products and products having nutritive/therapeutic
properties. There is also a shift from the usual products such as Citrus
and Apple to more exotic products like Mango, Guava, and Pomegranate etc.
which are being increasingly being researched for their wellness aspects.

New markets such as China, Russia and Africa are opening up and the
existing markets such as Middle East are moving up the value and quality
chain. With opening up of US and Japanese markets for fresh Mango, the
taste profile is witnessing a change, resulting in opening up of these
markets for processed products also.

The demand for tropical fruit purees and concentrates and processed
vegetables is growing rapidly within India as well as in International
markets. The new format stores have added a different dimension to the
distribution and sale of products, opening up opportunities, hitherto non
existing. The packaged juices have seen a growth of more than 30% YoY and
the consumption of fruits and vegetables as whole has shown an increase of
2.3% CAGR whereas that of cereals has decreased.

With a view to offer products with therapeutic values, the Company is
working on offering products from Amla and Mangosteen in the International
markets. Company is also working on setting up a processing line for
processing Mosambi, the most widely consumed juice in India and also other
citrus varieties. The Company was successful in standardizing process and
technology for these products, heatherto not processed in India. Orange
being the largest processed and consumed juice in the world and to be able
to meet the growing demand for this juice within the country, the Company
has drawn up plans to cultivate the processing variety of Oranges in India.

iv) Risks & Challenges:

The main risk that the Company perceives in this business is that of
securing raw material and to mitigate this risk the Company is pro-
actively working to expand its sourcing base and is promoting the concept
of integrated development of agriculture and establishing backward
linkages. The successful model of contract farming in Onion and integrated
development in case of Banana is being extended to other fruit crops such
as Mango, Pomegranate and Tomato. However many states still have to amend
the laws to permit contract farming and direct supply to the factories.

The other major risk being the ever increasing cost of energy. The
spiraling fuel oil prices are not only mounting pressure on the processing
costs, but also directly and indirectly increasing the cost of various
inputs. The Company is working towards utilizing its bio-waste to generate
energy to offset these rising costs. fiscal and non fiscal trade barriers
in the form of multifarious certifications being put by importing countries
adds to cost.

At farm level, low yields and mismatch in quality produced and that
required by the processing industry are two critical issues hampering the
development of the fruit and vegetable processing industry.

Changing weather patterns is also a cause of worry as this is resulting in
peak and trough's in production. Concern with use of pesticides and excess
fertilizer is also mounting and it is a challenge to convince the farmers
to desist from using these.

Processing agro products, requires procurement of good quality fruits, a
poor monsoon can adversely affect the availability, pricing and quality of
the fruits. This can have significant impact on the profitability of Agro
Processing business.

(7) Human Resource:

The long-term objective of all HR is to create a culture of sustained
business outperformance accompanied by extreme care for all stakeholders,
while sustaining and strengthening the core values of the Group.

Given the business imperatives in the current economic slowdown, the focus
during the year was on aligning all HR levels to support the initiatives
for cost control and conservation of cash, while creating the required
capabilities in the workforce and ensuring organizational confidence and
employee motivation that would enable the Company to face current
challenges and seize future opportunities. A major challenge was to find a
sense of balance between the short and the long term and to honour the
Triple Bottom Line of profit, people and planet.

The focus on cost control from the HR perspective resulted in changes in
the organization structure and work design, a review of the number of
employees along with salary levels and incentive schemes, and the right
level and mix of skills. Performance Management continued to be the
backbone of all HR activities and goal-setting received a lot of focus in
the year under review.

The Talent Management process has grown in strength during the year.
Succession planning for critical positions, use of development centres
continued to be high on the priority list along with cross-business
rotation of employees. Various training programs were organized at all
plants for developing personal, interpersonal and technical skills of the
workmen. These training programs covered a wide range of topics including
Positive Attitude, Stress Management, Creativity, Team Effectiveness,
Safety and Environment, Quality Tools, TPM, Dexterity and Technical
training. The workmen wholeheartedly participated in all training programs
and in many cases on a holiday or after working hours.

The permanent Employee strength of the Company as on 31st March, 2009 was
5082.

(8) Risks and concerns at corporate level:

Your Company has significant experience in managing risks related to
farming, weather, seasonality, global markets and impact of government
policy. During last few very volatile years, this experience and expertise
has helped Company to navigate turbulent times in a smooth manner resulting
in sustained growth, improved margins and increasing market share, despite
historical financial meltdown and violent disruption of all types of global
markets.

Now, your Company is preparing a comprehensive risk management policy. The
risk management inter alia, shall provide for periodical review of the
procedure to ensure that executive management controls the risks through a
properly defined framework. The Company has identified the risks and their
owners within the organisation and following risks have emerged as the top
5 risks:

* Continuous fund requirement

* Seasonality in agriculture and monsoon

* Currency fluctuations

* Aggressive strategies of competition

* Integration of acquisitions

Continuous fund requirement:

Challenges in managing cash to cash cycle (payment for procurement to
collection for sales) needs continuous fund infusion. This results in
increased capital requirements. This risk is specially relevant for a
growth oriented company and the kind of business Company operates in.

Seasonality in agriculture:

Company's performance is also dependent on the seasonality in agriculture
sector.

Currency fluctuations:

Adverse changes in the exchange rates leading to erosion in export income,
however, in most cases the adverse exchange rate movement cannot be passed
on to the customers.

Aggressive strategies of competition:

The competition adopts aggressive strategies (large sales force, credits,
products offered at multiple price points etc.) and competition from
unorganised sector (aggressive pricing) results in pressure on
sales/margins.

Integration of acquisitions:

Inability to capitalize on the opportunities arising from the acquisitions
due to sub optimal integration of the people, process and technology from
the acquired entities is one of the risks associated with the recently
completed acquisitions.

The Company has scheduled the development of plan for mitigation of risks
in FY 2010, and on completion of the exercise, the Risk Management Plan
shall be in place in full.

(9) Analysis of the Standalone Financial Performance:

a) Net sales Rs. in Million
2008-09 2007-08 Change Change %

Micro Irrigation Systems 9,509 6,179 3,330 53.90%
Piping Systems 7,445 6,601 844 12.79%
Agro processed Products 3,217 2,417 800 33.12%
Plastic Sheets 1,717 1,891 (175) -9.24%
Other Products 485 373 112 30.17%
Total Gross Sales 22,373 17,460 4,912 28.13%
Less: Excise Duty (863) -879 16 -1.77%
Net sales 21,509 16,582 4,928 29.72%
Domestic 16,623 12,048 4,576 37.98%
Export 4,886 4,534 352 7.76%
Export to Total 22.72% 27.3% - -

* Sales excludes export incentives.

Net Sales on corporate basis increased by 29.72% to Rs. 21,509 million as
compared to Rs. 16,582 million in previous year. This increase in revenues
primarily reflected increased domestic sales of Micro Irrigation Systems,
and Agro Processed products.

Our total domestic revenue increased by 37.98% in fiscal 2009 to Rs. 16,623
million from Rs 12,048 million in fiscal 2008. The revenues from exports
increased by 7.76% in fiscal 2009 to Rs.4,889 million from Rs 4,534 million
in fiscal 2008. Export sales accounted for 22.72% corporate sales in fiscal
2009 as compared to 27.30% in fiscal 2008.

i) Micro Irrigation Systems: Revenues from domestic sales of our Micro
Irrigation Systems increased by 48% in fiscal 2009 to Rs.8.847 million from
Rs. 5,967 million in fiscal 2008, primarily due to increased retail sales
in States like Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh, and
Uttar Pradesh and project sales in Andhra Pradesh, Tamil Nadu & Gujarat
States. During the same period, exports of Micro Irrigation Systems
increased by 213% to Rs.662 million from Rs.211 million mainly due to sales
to overseas subsidiaries.

ii) Piping Products:

Revenues from domestic sales of our Piping Systems increased by 26% in
fiscal 2009 to Rs. 6798 million from Rs. 5,394 million in fiscal 2008. The
retail business in Maharashtra & Madhya Pradesh contributed to the
increased domestic sales of PVC pipes while slowdown in demand from telecom
duct segment led to a marginal increase in domestic sales of our PE pipes.
The revenues from export of Piping Products decreased by 46% in fiscal 2009
to Rs.647 million from Rs.1,206 million in fiscal 2008, mainly on account
of slowdown in exports of PE pipes to an MNC of telecom ducting exports to
the African continent.

iii) Agro-Processed Products:

Revenue from exports of Agro-Processed Products increased by an impressive
49% in fiscal 2009 to Rs.2,353 million from Rs.1579 million in fiscal 2008
mainly on account of higher exports of mango puree and dehydrated onions in
our European & US markets. Revenues from domestic sales of our Agro-
Processed Products increased marginally by 3.22% in fiscal 2009 to Rs.865
million from Rs.838 million in fiscal 2008.

iv) Plastic Sheets:

Revenues from our Plastic Sheet products de-accelerated by 9.2% in fiscal
2009 to Rs. 1,717 million from Rs.1,891 million in fiscal 2008, mainly due
to slowdown in housing market in United States of America. One of the
applications of Plastic sheets is in trim boards and siding products as a
replacement of cedar wood in housing segment in USA, which segment is not
performing well. The other application of plastic sheet is in signage and
advertisement segment, which is growing at 5-8% in Europe & USA.

v) Other products:

Other product includes Solar Water Heating systems, Solar Photovoltaic
Systems, Tissue Culture Plants and Agricultural products. Revenues from
other products increased by 30.20% in fiscal 2009 to Rs. 485 million from
Rs.373 million in the fiscal 2008, mainly due to higher sales of tissue
culture plants & solar products.

b) Operating Income:
Rs. in Million
2008-09 2007-08 Change Change %
Export Incentives
& Assistance 280 129 151 117

Operating income includes accrued export incentives & assistance under VKYU
Scheme & Transport Assistance Scheme of GOI for our agro processed products
division.

c) Raw materials consumption:
Rs. in Million
2008-09 2007-08 Change Change %

Polymers, Chemicals 12,898 10,808 2,090 19.34%
& additives, Fruits
& Vegetables,
Consumables, packing
material, etc.

Raw materials consumption increased by 19.34% to Rs. 12,898 million as
compared to Rs. 10,808 million in the previous year, as against revenue
increase of over 27.5%. The growth in major segments was offset partly by
lower raw material prices (specially plastics) during the year. During the
same period, polymer consumption increased to 146,882 MT from 133, 916 MT
representing an increase of 9.68%; however in value terms the increase is
15.26%. Similarly, the consumption of fruits and vegetables increased to
198,032 MT from 166,907 MT representing an increase of 18.64%, however in
value terms, the increase is 22.19% reflecting marginal price increase.

d) Stores Consumed and Repairs to Machinery:

Rs. in Million
2008-09 2007-08 Change Change %

Stores 419 371 48 12.94%
Consumed
and Repairs to
Machinery

Stores consumed and repairs & maintenance costs increased by 12.94% to
Rs.419 million as compared to Rs.371 million in the previous year, mainly
due to the increased scale of operations and expenses towards relocation to
a bigger facility in major plastic products divisions.

e) Power and Fuel:

Rs. in Million
2008-09 2007-08 Change Change %

Power & Fuel Cost 678 664 14 2.11%

Power & Fuel cost increased merely by 2.11% to Rs. 678 million as compared
to Rs. 664 million in the previous year. Despite the increased level of
production in all major divisions, fuel cost was offset by replacement of
furnace oil used as fuel in agro processed products division with coal.

f) Other Manufacturing Expenses:
Rs. in Million
2008-09 2007-08 Change Change %

Other Manufacturing 440 360 80 22.22%
Expenses including
operating lease rent

Other Manufacturing Cost increased by 22.22% to Rs. 440 million as compared
to Rs. 360 million in the previous year, mainly due to the increased level
of production in all major divisions.

g) Payments and Provisions to Employees:

Rs. in Million
2008-09 2007-08 Change Change %

Payments to and 810 658 152 23.1%
provisions for
Employees

Employee costs increased by 23.10% to Rs. 810 million as compared to Rs.658
million in the previous year. The increase is mainly due to higher employee
compensation expenses, commission to directors and new employment. During
the year a total of 806 new associates joined the Company. Employee Cost as
% of Net Sales is 3.77% in current year, as against 3.97% in previous year
reflecting better fixed cost absorption.

h) Selling & Distribution Expenses:
Rs. in Million
2008-09 2007-08 Change Change %

Selling & Distribution 1,446 1,185 262 22.11%
Expenses

The Selling & Distribution Expenses increased by 22.11% to Rs. 1,447
million as compared to Rs. 1,185 million in the previous year mainly due to
increase in cash discount and commission and brokerage on sales. S&D
Expenses as % of Net Sales are 6.72% in current year as against 7.15% in
previous year reflecting better cost management & higher sales.

i) Interest & Finance Charges:
Rs. in Million
2008-09 2007-08 Change Change %

Interest Expense 1,483 1,071 412 38.47%

Bank charges 128 94 34 36.17%

Total 1,611 1,165 446 38.28%

Less: Interest Income (48) (30) (18) 60%

Interest & Finance 1,563 1,135 428 37.71%
Charges (Net)

The net interest charges increased by 37.71% to Rs. 1,563 million as
compared to Rs. 1,135 million in the previous year, mainly due to long term
loans raised for growth capex, increase in working capital utilization for
growth.

J) Fixed Assets:
Rs. in Million
2008-09 2007-08 Change Change %
Gross Block
(net of disposal) 13,149 9,790 3,359 34.31%
Less: Depreciation (3,637) (3,157) (480) 15.24%
Net Block 9,511 6,633 2,878 43.39%

Gross block increased by Rs.3,359 million during the year, mainly due to
expansion & modernization plan implemented across all divisions. In current
year we have increased installed capacities in plastic processing to
362,880 MT as compared to 258,750 MT in previous year increase of 3,354 MT
in DHO, increase of 24,975 MT in fruit processing division, and substantial
increase of 8 million plantlets in Tissue Culture. New Capex has been
financed out of long term loans and internal accruals during the current
year.

k) Investments:
Rs. in Million
2008-09 2007-08 Change Change %

Investment in 3,892 2,745 1,147 41.79%
wholly owned
subsidiary (WoS)

Other Investment 13 413 (400) -69.61%

The increase of Rs. 1,147 million in investments is on account of capital
infused in the WoS based in Mauritius. The WoS has in turn invested in
second generation subsidiaries in the USA, Israel and Switzerland and
Turkey. The funds have been ultimately utilized towards funding the capex
growth and working capital needs of the acquired companies during the year.
Others investments of Rs. 400 million in Mutual Fund Units (Liquidity Fund-
Growth Option) as a part of treasury management was divested during the
year.

l) Inventories:
Rs. in Million
2008-09 2007-08 Change Change %

Inventories 5,195 4,844 351 7.25%

The increase in inventory by Rs. 351 million during the current year
compared to previous year is mainly on account of increased in meterial in
transit by 465 million. However raw material inventory decreased by Rs. 241
million due to deflation in prices of various polymers for plastic
processing divisions.

m) Sundry Debtors:

Rs. in Million
2008-09 2007-08 Change Change %

Gross Debtors 7,861 5,987 1,874 31.30%

Less: Provision
Doubtful Debts (45) (31) (14) 45.16%

Net Debtors 7,816 5,956 1,860 31.23%

The increase in debtors is commensurate to increase in sales. Net sales in
last quarter were about 32% of total sales for the year.

n) Loans and Advances:
Rs. in Million
2008-09 2007-08 Change Change %

Loans & 3,236 2,254 982 43.57%
Advances

Loans & Advances increased by Rs.982 million to Rs. 3,236 million in
current year from Rs.2,254 million in previous years mainly due to increase
in loan to WoS subsidiary (Rs. 328 million), increase in MAT credit
receivable (Rs. 206 million), increase in advance tax (Rs.178 million),
increase in incentives & assistance from GoI (Rs. 160 million).

o) Current Liabilities & Provisions:
Rs. in Million
2008-09 2007-08 Change Change %

Current Liabilities 6,879 5,251 1,628 31.00%
Provisions 786 516 270 52.33%

Current Liabilities & Provisions increased by Rs.1,628 million to Rs. 6,879
million in current year from Rs. 5,767 million in previous year mainly due
to increase in sundry creditors for purchases (Rs. 645 million), unrealized
derivatives liability (Rs.399 million), increase in customer advances
(Rs.263 million), increase in outstanding liabilities for expenses (Rs.235
million), increase in provision for income taxes (Rs. 206 million) etc.

p) Secured & Unsecured Loan:

Rs. in Million
2008-09 2007-08 Change Change %

Secured Term Loan 6,950 4,373 2,577 58.93%
Secured working

Capital Loan 6,052 4,164 1,888 45.34%

Unsecured Loan 553 534 19 3.56%

Company has raised new secured term loan of Rs. 2,263 million towards
(excluding forex loss of Rs. 901 million on foreign currency loss) (1)
Foreign currency loan for funding Capex of US$25.50 million and CHF 1.84
million (equivalent to US$1.64 million) aggregating equivalent to Rs.1,219
million. (2) Rupee term loan taken for improving the long term working
capital margin of Rs. 1,014 million and (3) Term loan of Rs. 30 million for
financing commercial & agriculture
vehicles.

Further, during the current year Company has repaid secured term loan of
Rs. 673 million.

Working capital loan increased by Rs. 1,888 million for higher scale of
operation during the year mainly for MIS and Agro processing divisions.

Unsecured loan increased by Rs.19 million during the current year due to
revaluation by Rs. 111 million and conversion into equity by Rs. 130
million of FCCB.

q) Shareholders Funds:
Rs. in Million
Equity Preference Share Other
Capital Capital Premium Reserves
Balance as on
31-March-2008 721 885 4,367 857
Changes
during the year

* Conversion of FCCB 3 108

* Adjustment for (402)
unrealized gain/
loss due to hedging
derivatives

* Premium on Redemption (437) (34)
of Preference Shares
& Debentures

* Profit for
the Year

* Profit transferred 120
to General
Reserve

* Profit transferred 437
to Capital Redemption
Reserve

* Dividend (incl.
Dividend Tax)

* Sub Total 3 (437) 74 155

Rs. in Million
Retained Share
Earnings Warrants Total

Balance as on
31-March-2008 2,463 358 9,651
Changes
during the year

* Conversion of FCCB 111

* Adjustment for (402)
unrealized gain/
loss due to hedging
derivatives

* Premium on Redemption (471)
of Preference Shares
& Debentures

* Profit for 1,202 1,202
the Year

* Profit transferred (120) -
to General
Reserve

* Profit transferred (437) -
to Capital Redemption
Reserve

* Dividend (incl. (257) (257)
Dividend Tax)

* Sub Total 388 0 184

Refer Note No. (3), (4), & (14b) of Notes to Accounts Schedule 21 (Part-
B).

r) Appropriation:

Rs. in Million
2008-09 2007-08 Change Change %

Transfer to CRR 437 - 437 100.0%
Transfer to Reserves 120 146 -26 -17.81%

An amount of Rs.120 million has been transferred to the General Reserve
during the year. An amount of Rs. 437 million is transfered to Capital
Redemption Reserve in view of Redemption of preference shares during the
year.

s) Dividend:
Rs. in Million
2008-09 2007-08 Change Change%

Preference Dividend 31 35 -4 -11.43%
Equity Dividend 188 156 29 18.24%

The Board has proposed to pay dividend on 4.00% and 1.00% Redeemable
Preference Shares at fixed rates, while it is proposed to pay dividend on
Equity Shares @Rs.2.5 per share (25%) to all eligible Shareholders, subject
to approval of Shareholders at the ensuing AGM. The dividend cashoutgo
(including dividend tax) would be Rs. 256 million as against Rs.227 million
in previous year. The dividend payout (including current year dividend on
Preference Shares) as % of Net Profit works out to 21.31% as compared to
16% in previous year.

Note:

The Management cautions that some of statements above are directional and
forward looking and do not represent correctness of the underlying
projections as they are dependent on various factors some of which may be
outside control of management.