BOARD OF DIRECTORS

RAMCHANDRA R. GANDHI Chairman

VIRENDRA R. GANDHI Vice-Chairman & Managing Director

RAJESH R. GANDHI DEVANSHU L. GANDHI Managing Directors - Director C.M. MANIAR M.N. VORA - Director (upto 24-6-2007) KSHITISH M. SHAH - Director ROHIT J. PATEL - Director

NIKHIL PATEL Company Secretary

AUDITORS M/s. Kantilal Patel & Co. Chartered Accountants, Ahmedabad (A member Firm of Polaris International, USA)

BANKERS Bank of Baroda • State Bank of India • State Bank of Travancore • South Indian Bank Ltd. Export Import Bank of India (Exim Bank) • IDBI Bank Ltd.

REGISTERED OFFICE & SHARE DEPARTMENT Vadilal House, Shrimali Society, Nr. Navrangpura Rly. Crossing, Navrangpura, Ahmedabad – 380 009 Phone : 079 – 26564019 to 24 • Fax : 079 – 26564027

REGISTRAR & SHARE TRANSFER AGENT (For Physical & Demat) MCS Limited, 101, Shatdal Complex, 1st Floor, Opp. Bata Show Room, Ashram Road, Ahmedabad – 380 009. Phone : 079 – 26582878, 26584027 Fax : 079 – 26581296

FACTORIES Ice-cream Division Village Pundhra, Tal. Mansa, Dist. Gandhinagar (Gujarat) Parsakhera Industrial Area, Bareilly (Uttar Pradesh) Dudheshwar Road, Ahmedabad (Gujarat)

Processed Foods Division Dharampur, Dist. Valsad (Gujarat)

Forex Division Vadilal House, Navrangpura, Ahmedabad. Web : www.vadilalmarkets.com

E-mail for Investor Grievances [email protected] Web : www.vadilalgroup.com

24th ANNUAL REPORT 2007-2008 (1) NOTICE management may, from time to time, decide NOTICE is hereby given that the 24th ANNUAL upon, a revised monthly salary and other GENERAL MEETING of the members of VADILAL allowances, benefits and perquisites including bonus, reimbursement of medical expenses, INDUSTRIES LIMITED will be held on Monday, the 29th September, 2008, at 12.30 p.m., at Sheth Shri LTA/LTC etc., for an amount as may be decided Amrutlal Hargovandas Memorial Hall, Gujarat by the Board/Management from time to time, within an overall limit of Rs. 1,50,000/- p.m., Chamber of Commerce & Industry (GCCI), Ashram Road, Ahmedabad - 380 009 to transact the following with effect from 1st October 2008 or such other business : amount as may be decided by the Central Government, while granting its approval to the ORDINARY BUSINESS : aforesaid revision in remuneration and acceptable 1) To receive, consider and adopt the Balance to Mr. Maulin P. Surti. Sheet as at 31st March, 2008 and the Profit and RESOLVED FURTHER THAT the Board of Loss Account for the year ended on that date Directors of the Company be and are hereby and reports of the Directors and Auditors thereon. severally authorised to promote him to higher 2) To declare dividend on Equity Shares for the cadres and/or to sanction him accelerated year ended on 31st March, 2008. increments within the said cadre or higher cadre as and when they deem fit, subject, 3) To appoint a Director in place of Mr. Chaitan M. however, to the rules and regulations of the Maniar, who retires by rotation and being eligible, Company, in force, from time to time, provided offers himself for re-appointment. that total monthly remuneration shall not exceed 4) To appoint a Director in place of Mr. Kshitish M. Rs. 1,50,000/- p.m. or such other amount as Shah, who retires by rotation and being eligible, may be decided by the Central Government, offers himself for re-appointment. while granting its approval to the revision. 5) To appoint M/s. Kantilal Patel & Co., Chartered RESOLVED FURTHER THAT the Board of Accountants, Ahmedabad, as Statutory Auditors Directors of the Company be and are hereby of the Company to hold office from the conclusion authorised to make application to the Central of this Meeting until the conclusion of the next Government for seeking its approval for the Annual General Meeting and to authorise the revision in the remuneration of Mr. Maulin P. Board of Directors of the Company to fix their Surti, within the overall limit of Rs. 1,50,000/- remuneration. p.m., to sign the application form, annexures, affidavit, Memorandum of Appearance and all SPECIAL BUSINESS : other deeds and documents as may be required 6) Increase in remuneration of Mr. Maulin P. Surti, to be executed and to represent the Company Vice-President (Food Processing and before the Central Government, Registrar of Purchase), who is a relative of Mr. Ramchandra Companies and such other authorities as may R. Gandhi, Chairman of the Company. be required in this matter, to accept the To consider and, if thought fit, to pass, with or suggestions, modifications or alterations as without modification(s), the following resolution suggested by the Central Government while as a Special Resolution : granting its approval and to do all such acts, deeds, matters and things as may be required, “RESOLVED THAT pursuant to the provisions proper and expedient to give effect to this of Section 314 and other applicable provisions, resolution.” if any, of the Companies Act, 1956 including any statutory modification or re-enactment thereof 7) Increase in Borrowing Limits for the time being in force and as may be To consider and if thought fit, to pass with or enacted from time to time, the Directors’ Relatives without modification(s), the following resolution (Office or Place of Profit) Rules, 2003 and as an Ordinary Resolution: subject to approval of the Central Government “RESOLVED THAT the Board of Directors and such other approvals, permissions and (hereinafter referred to as “the Board”, which sanctions, if required and as may be necessary, consent of the Company be and is hereby term shall be deemed to include any Committee which the Board may constitute for this purpose), accorded to Mr. Maulin P. Surti, who is a be and is hereby authorized, in accordance with relative of Mr. Ramchandra R. Gandhi, Chairman of the Company, and who holds office as a Vice- Section 293(1)(d) of the Companies Act, 1956 (including any statutory modification or re- President (Food Processing and Purchase), enactment thereof for the time being in force) and to hold and continue to hold an office or place of profit under the Company as Vice- and the Articles of Association of the Company, to borrow any sum or sums of money whether President (Food Processing and Purchase), or rupee loans or foreign currency loans or other with such other designation as the Company’s

VADILAL INDUSTRIES LIMITED (2) external commercial borrowings (including non- Institutions/other Lender(s), Agent(s) and fund based facilities) from time to time at their Trustee(s) for securing the borrowings availed/ discretion, for the purpose of the business of to be availed by the Company and/or any of the the Company, from any one or more Banks, Company’s holding / subsidiary / affiliate / Financial Institutions and other persons, firms, associate Company, by way of loan(s) (in foreign bodies corporate or from any other sources, currency and/or rupee currency) and Securities notwithstanding that the monies to be borrowed (comprising fully/partly convertible Debentures together with the monies already borrowed by and/or Non Convertible Debentures with or without the Company (apart from temporary loans detachable or non-detachable Warrants and/or obtained from the Company’s Bankers in the secured premium notes and/or floating rates ordinary course of business) may, at any time, notes/bonds or other debt instruments), issued/ exceed upto a sum of Rs. 100 Crores (Rupees to be issued by the Company, from time to time, One Hundred Crores) over and above the subject to the limits approved under Section aggregate of the then paid-up capital of the 293(1)(d) of the Companies Act, 1956, together Company and its free reserves (that is to say with interest at the respective agreed rates, reserves not set apart for any specific purpose) additional interest, compound interest in case and that the Board of Directors be and is hereby of default, accumulated interest, liquidated empowered and authorized to arrange or fix the damages, commitment charges, premia on terms and conditions of all such monies to be prepayment, remuneration of the Agent(s)/ borrowed from time to time as to interest, Trustees, premium (if any) on redemption, all repayment, security or otherwise as they may, other costs, charges and expenses, including in their absolute discretion, think fit. any increase as a result of devaluation / RESOLVED FURTHER THAT for the purpose of revaluation / fluctuation in the rates of exchange giving effect to this resolution, the Board be and and all other monies payable by the company in terms of the Loan Agreement(s)/ other is hereby authorized to do all such acts, deeds, matters and things as it may in its absolute Agreement(s), Debenture Trust Deed(s) or any discretion thinks necessary, proper, or desirable other document, entered into/to be entered into between the Company and the Lender(s)/Agent(s) and to settle any question, difficulty, doubt that may arise in respect of the borrowing(s) aforesaid and Trustee(s) in respect of the said loans/ and further to do all such acts, deeds and things borrowings / debentures and containing such specific terms and conditions and covenants in and to execute all documents and writings as respect of enforcement of security as may be may be necessary, proper, desirable or expedient to give effect to this resolution.” stipulated in that behalf and agreed to between the Board of Directors or Committee thereof 8) Creation of Charge and the Lender(s) / Agent(s) /Trustee(s). To consider and if thought fit, to pass with or RESOLVED FURTHER THAT for the purpose of without modification(s), the following resolution giving effect to this resolution, the Board and/or as an Ordinary Resolution: its duly constituted Committee be and are hereby “RESOLVED THAT the consent of the Company authorized to finalise, settle and execute such be and is hereby granted in terms of Section documents/deeds/writings/papers/agreements as 293(1)(a) and all other applicable provisions of may be required and do all such acts, deeds, the Companies Act, 1956, (including any statutory matters and things, as it may in its absolute modification or re-enactment thereof, for the discretion thinks necessary, proper or desirable time being in force), to the Board of Directors and to settle any question, difficulty or doubt (hereinafter referred to as “the Board” which that may arise in regard to creating mortgages/ term shall be deemed to include any Committee charges as aforesaid.” which the Board may constitute for the purpose) By order of the Board to mortgage/hypothecate and/or create charge/ For VADILAL INDUSTRIES LIMITED pledge, etc. in addition to the mortgages/ hypothecation/charges created/to be created RAMCHANDRA R. GANDHI by the Company, in such form and manner and with such ranking and at such time and on such Chairman terms as the Board may determine, on all or any Registered Office : of the movable and/or immovable properties of Vadilal House, Shrimali Society, the Company, both present and future and/or Nr. Navrangpura Rly. Crossing, the whole or any part of the undertaking(s) of Navrangpura, the Company together with the power to take Ahmedabad - 380 009. over the management of the business and Dated : 30th July, 2008 concern of the Company in certain events of default, in favour of the Banks/Financial 24th ANNUAL REPORT 2007-2008 (3) NOTES : by an application in Form II of the aforesaid (a) A MEMBER ENTITLED TO ATTEND AND VOTE Rules to the Registrar of Companies, Gujarat at AT THE MEETING IS ENTITLED TO APPOINT ROC Bhavan, Opp. Rupal Park, Behind Ankur Bus Stand, Naranpura, Ahmedabad - 380 013. PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF AND THAT THE PROXY However, pursuant to Section 205A of the Act NEED NOT BE A MEMBER OF THE COMPANY. as amended by the Companies (Amendment) Act, 1999 (1st Amendment), which came into THE INSTRUMENT APPOINTING PROXY effect from 31-10-1998, the Company has already SHOULD HOWEVER BE DEPOSITED AT THE transferred unclaimed dividend declared for the REGISTERED OFFICE OF THE COMPANY NOT financial year ended on 31st March, 1995, 31st LESS THAN 48 HOURS BEFORE THE March, 1996, 31st March, 1997 (Interim & Final COMMENCEMENT OF THE MEETING. Dividend) and 30th September, 1998 (18 months) (b) Corporate Members intending to send their to the Investor Education and Protection Fund authorised representatives to attend the meeting established by the Government under Section are requested to send a certified copy of the 205C(1) of the Act. Board Resolution authorising their representatives The amount of dividend for the financial year to attend and vote on their behalf at the meeting. ended on 31st March, 2005, 31st March, 2006 (c) In case of joint holders attending the meeting, and 31st March, 2007, remaining unpaid or only such joint holder who is higher in the order unclaimed for a period of 7 years is due for of names will be entitled to vote. transfer to the Investor Education and Protection Fund on 3rd November, 2012, 1st November, (d) The Explanatory Statement as required under 2013 and 3rd November, 2014 respectively. Section 173(2) of the Companies Act, 1956 in Members who have so far not encashed their respect of Special Business mentioned in the dividend warrants for the said financial years above Notice is annexed hereto. are requested to approach the Company for (e) The Register of Members and Share Transfer revalidation or duplicate dividend warrants. Books of the Company will remain closed from Thereafter, no claims shall lie against the said 15th September, 2008 to 29th September, 2008 Fund or the Company for the amount of dividend (both days inclusive) for the purpose of payment so transferred nor shall any payment be made of dividend on Equity Shares for the year in respect of such claims. ended 31st March, 2008 as recommended by (h) Members who hold shares in dematerialised the Board and if declared at the meeting. form are requested to bring their Client ID and (f) Dividend @ 12% on Equity Shares for the year DP ID numbers for easy identification of ended on 31st March, 2008 as recommended attendance at the meeting. by the Board, if declared at the meeting, will be (i) Members are requested to intimate immediately paid without deduction of tax at source : the change in their registered address, if any, to # to those members whose names appear on their Depository Participants (DPs) in respect of the Register of Members after giving effect their electronic share accounts and to the to all valid share transfers in physical form Company in respect of their physical share lodged with the Company / Share Transfer folios, if any. In case of mailing address mentioned Agent on or before 13th September, 2008, on this Annual Report is without PINCODE, or members are requested to kindly inform their PINCODE immediately. # in respect of shares held in electronic form, to those “Beneficial Owners” whose names (j) The documents and/or letters referred to in the appear in the Statement of Beneficial Resolutions and in the accompanying notice Ownership furnished by NSDL and CDSL as are open for inspection for the members at the at the end of business hours on 14th Registered Office of the Company on all working September 2008. days between 2.00 p.m. and 4.00 p.m., upto the date of this Annual General Meeting. (g) Pursuant to Section 205A of the Companies Act, 1956, the Company has already transferred (k) Members are requested to bring their copy of all unclaimed dividends declared upto the financial Annual Report to the meeting, as the copies of year ended on 31st March, 1994 (18 months) to Annual Report will not be distributed at the the General Revenue Account of the Central meeting. Government as required by the Companies (l) Members seeking any further information about Unpaid Dividend (Transfer to the General Revenue the Accounts and/or Operations of the Company Account of the Central Government) Rules, are requested to send their queries to the 1978. Those Shareholders who have so far not Company at its Registered Office, at least TEN claimed or collected their dividend upto the days before the date of the meeting. aforesaid financial year may claim their dividend VADILAL INDUSTRIES LIMITED (4) (m) At the ensuing Annual General Meeting, Mr. Member of the Board Committees: Chaitan M. Maniar and Mr. Kshitish M. Shah, Audit Committee: Directors of the Company, shall retire by rotation  Hindalco Industries Limited and being eligible, offer themselves for re-  Varun Shipping Company Limited appointment.  Twenty-First Century Printers Limited As required under Clause 49 of Listing Agreement  Pioneer Investcorp Limited with the Stock Exchanges, given below are the details of the above Directors to be re-appointed Shareholders/Investors’ Grievance Committee: as Directors of the Company :-  Hindalco Industries Limited Mr. Chaitan M. Maniar  Twenty-First Century Printers Limited  Mr. Chaitan M. Maniar is a Partner in the Firm Pioneer Investcorp Limited of Crawford Bayley & Co., Solicitors & Advocates,  Godfrey Philips India Limited Mumbai. He holds degrees of Master of Arts Share Transfer Committee: (Economic & Politics), Bachelor of Commerce  Godfrey Philips India Limited and Bachelor of Laws of the University of  Pioneer Investcorp Limited Bombay. He is an Advocate and a member of  Twenty-First Century Printers Limited the Maharashtra Bar Council. He specialises in Corporate and Commercial Laws with special Mr. Kshitish M. Shah reference to Company Law, Foreign & Technical Mr. Kshitish M. Shah is BS. (Text. Chemistry), BS Collaborations, Anti-trust and Competition Laws, (Textile Technology), Masters in Textile Technology Cosmetics and Insecticides, Intellectual and N. C. State University (USA). He has worked as a Industrial Property Laws - Trade Marks, Patents, Vice-President of Crystex Corporation, USA from Designs and Copyright and drafting of documents 1971 to 1975. He is an Industrialist, manufacturing generally. He is a Director in following other diecasting, one of the most diversified product line Companies. He is a member of Remuneration in diecasting industry. It is the largest diecasting Committee of the Directors of the Company. He unit in India and largest in the State of Gujarat. He is also a member/chairman of various committees is a Joint-Managing Director of Textile Traders Co- of the other Companies, such as Audit Committee, Operative Bank Ltd. He is a Honarary Secretary of Share Transfer Committee, Shareholder/ Gujarat Cancer Society, Apang Manav Mandal. He Investors’ Grievance Committee, as mentioned is a Trustee of Jivaraj Mehta Memorial Foundation, hereunder. Mr. C. M. Maniar does not hold any Saath - Suicide Prevention Centre and he is a shares in Vadilal Industries Limited. Founder of Madanmohan Ramanlal Centre of Directorship: Human Resources Development, Ahmedabad Management Association. He is a Director in the  Akzo Nobel Coatings India Private Limited following other Companies. He is a member of the  Amsar Private Limited Audit Comittee of your Company. He is also a  Chemtex Engineering of India Limited Chairman of Remuneration Comittee of your (Alternate Director) Company. He is also a chairman of Audit Committee of Vadilal Chemicals Limited. Mr. Kshitish M.  Gujarat Ambuja Exports Limited Shah does not hold any shares in Vadilal Industries  Foods & Inns Limited Limited.  Godfrey Philips India Limited Directorship:  HGC Foundation Private Limited  Purvish Services Pvt. Ltd.  Hindalco Industries Limited  M. Ramanlal Holdings Pvt. Ltd.  Indo-Euro Investment Company Limited  Shree Vyankateswar Engineering Pvt. Ltd.  Indian Card Clothing Company Limited  Vadilal Chemicals Ltd.   Multi Commodity Exchange of India Limited Textile Traders Co-op. Bank Ltd.  21st Century Equipments Pvt. Ltd.  Northpoint Trading & Research Private Limited  Pioneer Investcorp Limited ANNEXURE TO NOTICE  Sudal Industries Limited EXPLANATORY STATEMENT AS REQUIRED UNDER  Twenty-First Century Printers Limited SECTION 173(2) OF THE COMPANIES ACT, 1956. In conformity with the provisions of Section 173(2) of  Varun Shipping Company Limited the Companies Act, 1956, the following Explanatory Chairman of the Board Committee: Statement sets out all material facts relating to Shareholders/Investors’ Grievance Committee: Special Business mentioned in the accompanying  Varun Shipping Company Limited Notice and should be taken as forming part of the Notice.

24th ANNUAL REPORT 2007-2008 (5) ITEM NO. 6 plants situated at Pundhra and Bareilly and Processed Mr. Maulin P. Surti, a relative of Mr. Ramchandra R. Food manufacturing plant situated at Dharampur, it Gandhi, Chairman of the Company, was appointed is considered desirable to increase the said borrowing limits from Rs. 75 Crores to Rs. 100 Crores. as General Manager (Food Processing) with a Basic salary of The Directors therefore recommend the Resolution Rs. 9400/- p.m. in the scale of 5600-500-8100-650- as mentioned in Item No. 7 of the Notice for approval 13300 and other perquisites, allowances and benefits of the Members. aggregating to Rs. 42,000/- p.m. The said remuneration None of the Directors of the Company is, in any way, of Rs. 42,000/- was approved by the Shareholders of concerned or interested in the said resolution. the Company by way of a Special Resolution passed at an Extra-Ordinary General Meeting of the Company ITEM NO. 8 held on 17th June, 2003. The Borrowings by a Company, in general is required Keeping in view the result oriented contribution to be secured by mortgage/hypothecation/pledge or made by him in the growth and development of the charge on all or any of the movable or immovable Company, he has been elevated as Vice-President properties of the Company in such form, manner and (Food Processing and Purchase) and the Company ranking as may be determined by the Board of proposes to increase the Salary to be paid to Mr. Directors of the Company from time to time, in Maulin P. Surti, from the present salary of Rs. consultation with the lender(s). 42,000/- p.m., for such amount as may be decided The mortgage/hypothecation/pledge and/or charge by the Board/Management from time to time within on any of the movable and/or immovable properties overall limit of Rs. 1,50,000/- p.m., with effect from and/or the whole or any part of the undertaking(s) of 1st October, 2008. the Company, to secure borrowings of the Company Pursuant to the provisions of Section 314 of the or of any of its holding, subsidiary, affiliate or Companies Act, 1956 read with Rule 10C of the associate company, with a power to the charge Companies (Central Government’s) General Rules holders to take over the management of the business and Forms, 1956 and the Directors’ Relatives (Office and concern of the Company in certain events of or Place of Profit) Rules, 2003, no relative of a default, may be regarded as disposal of the Company’s Director shall be appointed at any office or place of undertaking(s) within the meaning of Section 293(1)(a) profit in the Company, which carries a total monthly of the Companies Act, 1956. Hence, it is necessary remuneration of Rs. 50,000/- or more, except with for the Members to pass a resolution under the said the prior approval of shareholders of the Company Section. by a Special Resolution and the approval of Central The Directors therefore recommend the Resolution Government. as mentioned in Item No. 8 of the Notice for approval The Directors therefore recommend the Resolution of the Members. as mentioned in Item No. 6 of the Notice for approval None of the Directors of the Company is, in any way, of the Members. concerned or interested in the said resolution. Save and except Mr. Ramchandra R. Gandhi, none of the Directors is, in any way, concerned or interested By order of the Board in the said resolution. For VADILAL INDUSTRIES LIMITED ITEM NO. 7 In terms of the provisions of Section 293(1)(d) of the RAMCHANDRA R. GANDHI Companies Act, 1956, the Board of Directors of the Chairman Company, cannot except with the consent of the Registered Office : Company in general meeting, borrow moneys, apart Vadilal House, Shrimali Society, from temporary loans obtained from the Company’s bankers in the ordinary course of business, in excess Nr. Navrangpura Rly. Crossing, of aggregate of the paid-up capital and its free Navrangpura, reserves that is to say reserves not set apart for any Ahmedabad - 380 009. specific purpose. Dated : 30th July, 2008 The Shareholders of the company had in their meeting held on 18th November, 1995 approved borrowings upto an amount of Rs. 75 Crores and authorised the Board to borrow funds from time to time for the business of the company. Keeping in view the Company’s business requirements and its growth plans including expansion made recently by the Company in its Ice-cream manufacturing VADILAL INDUSTRIES LIMITED (6) DIRECTORS’ REPORT To, The members, VADILAL INDUSTRIES LIMITED Ahmedabad Your Directors have pleasure in presenting herewith the 24th Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2008. FINANCIAL RESULTS (Rs. In Lacs) Particulars Year ended Previous year 31-3-2008 ended 31-3-2007 (a) Profit for the year before 1,425.92 1483.79 Depreciation and Financial Expenses (b) Less: Depreciation 410.66 291.41 Financial Expenses (Net) 428.00 838.66 302.67 594.08

(c) Profit before Exceptional & Prior Year items 587.26 889.71 (d) Prior Year’s Adjustments (Net) (0.30) (2.21) (e) Profit before tax 586.96 887.50 (f) Provision for Tax — Current 100.10 272.00 — Deferred Tax 87.52 (5.71) — Fringe Benefit Tax 13.00 11.00 — (Short) / Excess Provision of Tax / Deferred (6.16) (51.35) Tax of earlier years (Net)

(g) Net Profit after Tax 380.18 558.86 (h) Profit brought forward 263.65 255.71

Amount available for appropriation 643.83 814.57

Appropriation — Proposed Dividend 86.26 86.26 — Tax on Proposed Dividend 14.66 14.66 — Transfer to General Reserves 259.40 450.00 — Balance carried to Balance Sheet 283.51 263.65

Total 643.83 814.57

DIVIDEND The Directors have recommended dividend of 12% on 71,88,230 Equity Shares of Rs. 10/- each of the Company for the Financial Year ended on 31st March, 2008. The Company declared 12% dividend for the previous Financial Year ended on 31st March, 2007. This will absorb Rs. 86.26 lacs as against Rs. 86.26 lacs absorbed in the previous year. The corporate dividend tax payable by the Company on the said dividend will be Rs. 14.66 lacs as against Rs. 14.66 lacs in the previous year. If approved, the dividend will be paid without deduction of tax at source to those shareholders whose names appear in the Register of Members of the Company as on 29th September, 2008. MANAGEMENT DISCUSSION AND ANALYSIS: Management Discussion and Analysis Report has been enclosed herewith as per Annexure “A” and forming part of the Directors’ Report. ADDITIONAL DISCLOSURES: In line with the requirements of Listing Agreement with the Stock Exchanges and the Accounting Standards of the Institute of Chartered Accountants of India, your Company has made additional disclosures in the Notes on Accounts for the year under review in respect of Related Party Transactions, Employees Benefits, Derivative Instruments, Segmental Reporting (in Notes on Consolidated Accounts), Calculation of EPS, etc. QUALITY ASSURANCE AND SYSTEMS ISO 22000:2005 AND ISO 9001:2000 CERTIFICATES Your Company has always made continuous efforts to improve the process of manufacturing and to achieve quality and efficiency in each of its operations. This is evident from the award of ISO 9001:2000 to the Company conferred upon by Nemko AS, Certification Department, towards Quality Management System for its Processed Food Division situated at Dharampur, Dist. Valsad, Gujarat. The Company has also received award of ISO 22000:2005 from Nemko AS, Certification Department, towards Food Safety Management System for the said Processed Food Division. 24th ANNUAL REPORT 2007-2008 (7) The Company has also obtained ISO 9001:2000 certification from BVQI, Netherland for its Ice-cream plant at Bareilly in the State of Uttar Pradesh. The Company has also obtained ISO 9001:2000 and 22000:2005 certifications from BVQI, Netherland for its Ice-cream plant at Pundhra in the State of Gujarat. The plant has also been certified by Export Inspection Council of India. The Company has also obtained BRC (British Retail Consortium) FOOD GLOBAL STANDARD 2005 from BVQi for its ice-cream plant at Pundhra. FINANCE : During the year under review, 3 Term Lenders, namely, State Bank of India, IDBI Bank Ltd. and Exim Bank, have sanctioned to the Company Rupee Term Loan aggregating to Rs. 21 crores to part finance towards expansion-cum-modernisation of Company’s existing Ice-cream plants situated at Pundhra and Bareilly and Processed Food plant situated at Dharampur, Dist. Valsad. The Company has also executed necessary security documents in favour of the said Term Lenders for creation of charge on immovable and movable properties and current assets of the Company. The Consortium Banks, namely, Bank of Baroda, State Bank of India, South Indian Bank Ltd., State Bank of Travancore, IDBI Bank Ltd. and Exim Bank have enhanced their working capital facilities availed by the Company from Rs. 31.65 crores to Rs. 49.25 crores. During the previous financial year, the Company has availed Working Capital Facilities aggregating to Rs. 31.65 Crores from the said Consortium Banks. The Company has executed necessary security documents in favour of the said Consortium Banks for creation of charge on immovable and movable properties and current assets of the Company. During the year under review, the Company has availed Trade Finance Facility of Rs. 5.00 Crores from Global Trade Finance Limited, Ahmedabad. The Company had also availed a Short Term Loan of Rs. 2.00 Crores from Development Credit Bank Limited, Ahmedabad, however fully repaid during the year under review. In terms of the provisions of Investor Education and Protection Fund (IEPF) Rules, 2001, during the year under review, the Company has transferred the unclaimed interest on Fixed Deposit of Rs. 43,313/- upto 31-03-2001, to Investors’ Education & Protection Fund, established by the Central Government under Section 205C(1) of the Companies Act, 1956. The Company has also transferred the unclaimed principal amount of Fixed Deposit of Rs. 40,000/- upto 31-03-2001, to Investors’ Education & Protection Fund. FIXED DEPOSITS : The Company has no overdue deposits outstanding other than those unclaimed deposits of Rs. 24.30 lacs as on 31st March, 2008. As on date of this Report, deposits aggregating Rs. 12.70 lacs thereof have been claimed and either paid or renewed. The Company has mobilised Fixed Deposit of Rs. 556.72 lacs during the year ended on 31st March, 2008, after complying with the provisions of Section 58 A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975 as amended. After repaying the maturities during the year, the total Fixed Deposits as on 31st March, 2008 stood at Rs. 736.99 lacs. CORPORATE GOVERNANCE : Being a Listed Company, the Company has taken necessary measures to comply with the Listing Agreement with the Stock Exchanges including revised Clause 49 regarding Corporate Governance. A separate report on Corporate Governance for the year ended on 31st March, 2008 is produced as a part of this Annual Report. A certificate from Statutory Auditors of the Company regarding compliance of Corporate Governance as stipulated under the revised Clause 49 of Listing Agreement is obtained by the Company and annexed to the Directors’ Report. RESPONSIBILITY STATEMENT : To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956 and confirm : a) that in the preparation of Annual Accounts, the applicable accounting standards have been followed and that no material departures have been made from the same; b) that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 31st March, 2008 and of the profit or loss of the Company for that year; c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that they have prepared the Annual Accounts on a going concern basis. INSURANCE : All insurable interests of the Company including buildings, plant and machinery, furniture & fixtures and other insurable interest are adequately insured. CONSOLIDATED FINANCIAL STATEMENTS: As stipulated by Clause 32 of Listing Agreement with Stock Exchanges, Consolidated Financial Statements of the Company and its Associates, namely, Vadilal Cold Storage, a Partnership Firm and Vadilal Chemicals Limited, an Associate Company for the year ended on 31st March, 2008 have been prepared by the Company in accordance with the requirements of Accounting Standard 21 “Consolidated Financial Statements” and Accounting Standard 23 “Accounting for investments in Associates” issued by the Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements form part of the Annual Report. VADILAL INDUSTRIES LIMITED (8) CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: As required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in Report of Board of Directors) Rules, 1988, details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure “B” attached hereto and forming part of the Directors’ Report. LISTING AGREEMENT WITH STOCK EXCHANGES: Pursuant to the provisions of Listing Agreement with the Stock Exchanges, the Company declares that the Equity Shares of the Company are listed on the Bombay Stock Exchange Limited and Ahmedabad Stock Exchange Limited. The Company confirms that it has paid Annual Listing Fees due to the Bombay Stock Exchange Ltd. and Ahmedabad Stock Exchange Ltd. upto the Financial Year 2008-2009. PARTICULARS OF EMPLOYEES: The statement of particulars of employees providing information as per section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 form part of this report. However, as per provisions of section 219 (1)(b) (iv) of the Companies Act, 1956, the annual report excluding this statement is being sent to all members. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the Registered Office of the Company. DIRECTORS : Pursuant to the provisions of Section 255 and 256 of the Companies Act, 1956 and Articles of Association of the Company, Mr. C. M. Maniar and Mr. Kshitish M. Shah, Directors of the Company, shall retire by rotation at this Annual General Meeting, and being eligible, offer themselves for re-appointment. The Members are requested to consider their re-appointment as Directors of the Company, for which necessary resolutions have been incorporated in the notice of the meeting. The brief resume/details relating to the said Directors, who are to be re-appointed are furnished in the Notes to the Notice of the Annual General Meeting. AUDITORS : M/s. Kantilal Patel & Co., Chartered Accountants, Ahmedabad, hold office as Statutory Auditors of the Company until the conclusion of this Annual General Meeting and as recommended by Audit Committee, the Board recommends their appointment, as Statutory Auditores of the Company, for the Financial Year - 2008-2009 and to hold office from the conclusion of the ensuing 24th Annual General Meeting till the conclusion of the next Annual General Meeting of the Company. The Company has received a certificate from the said Auditors under Section 224(1B) of the Companies Act, 1956 to the effect that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Act. The Members are requested to consider their appointment as Statutory Auditors of the Company for the Financial Year - 2008-2009, at a remuneration to be decided by the Board of Directors. ACKNOWLEDGEMENT: The Directors place on record the appreciation and gratitude for the co-operation and assistance extended by various departments of the Union Government, State Government, Bankers and Financial Institutions. The Directors also place on record their appreciation of dedicated and sincere services of the employees of the Company at all levels. The Company will make every effort to meet the aspirations of its Shareholders and wish to sincerely thank them for their whole hearted co-operation and support at all times.

By Order of the Board of Directors

RAMCHANDRA R. GANDHI Chairman Ahmedabad, Dated : July 30, 2008

24th ANNUAL REPORT 2007-2008 (9) ANNEXURE “A” TO THE DIRECTORS’ REPORT MANAGEMENT DISCUSSION AND ANALYSIS 1) INDUSTRY STRUCTURE & DEVELOPMENT, BUSINESS OVERVIEW AND SUSTAINABLE GROWTH OPPORTUNITIES. a) Ice-cream Division The ice-cream industry has slowly picked up after opening of the sector in 1997. Per capita consumption of ice-cream in India is one of the lowest at around 180 ml per annum and the ice-cream penetration at national level was just 15%, thus had a huge scope. The ice-cream market in India is estimated to be about US$ 200 million per annum. The industry structure and ongoing transformation offers opportunities for organized players to invest and grow. The Ice-cream division of your Company showing a sustainable growth year to year, which has been triggered by increasing demand for newer varieties & change in consumer preferences, which has been catered by novel products & providing value addition to the consumers. There is a considerable increase in demand for impulses & novelties. There is a completely new segment of market developing, which consist of catering & institutional customers from where a large chunk of revenue is generated. Also with service industry, growing at the rate of 13%, has created demand for ice-cream parlor concept, which is again a focus area for ice-cream industry. b) Processed Food Division The country’s share in the world trade of processed fruits and vagetables is less than one percent and only two percent of India’s total agriculture produce are processed which underlines enormous scope for investing in processed food sector. The significance of investment potential is emphasised by factors such as 300 million upper & middle class segment, increased per capita income & purchasing power, investment friendly and liberal policy initiatives by Government of India, etc. The major processed food products on offer to domestic as well as international market are canned fruit pulps, frozen fruits and vegetables, ready-to-eat snacks and meals. The overseas and domestic sales accounts to approximately 75% and 25% respectively of total sales volume generated per annum. There is a tremendous growth potential in India for processed foods due to sizeable consuming population, expanding list of metro cities, increased awareness and need to adopt usage of convenience foods. Moreover, in coming years the exports is likely to accelerate due to sales in newer markets, increased penetration in existing countries, focus on range of volume products and host of other factors. c) Forex Division Money Changing - RBI authorised category II The Forex Division of the Company is doing Full Fledged Money Changers (FFMC) activities to purchase/sale foreign currencies and travelers cheques, as licensed by RBI. Amongst Private Money Changers operating from Ahmedabad, the Division is the second to obtain RBI licence under Category - II. The Division is once again a separate profit generating in its related activities dealing with buying and selling currencies and travelers cheques of all traded currencies, viz. USD, GBP-Sterling, EURO, Canadian Dollars, Australian Dollars. The Division is authorised stock holders of TCs of American Express travel related service. 2) FUTURE STRATEGY a) Ice-cream Division For your Company, the future strategy is to give innovative & value added products to the consumers, as far as the price factor is concerned. With major expansion in both the Pundhra & Bareilly plant, there has been increase in production capacity to cater to the needs of the markets. With the addition of imported “Candy Machine” & “Double Sunday Machine” in capacity has created our stronger hold in market. Due to this expansion, the Company has been able to add innovative candies (3 layered candies, mini candies & innovative chocolate candies) in the product portfolio. The Company primarily focuses on increasing the ice-cream consumption by offering novel impulses. The Company is committed in eliminating the barriers for availability of ice-cream with focused distribution & franchising new Happinezz parlors all over India. The overall vision of the Company to increase the consumption of ice-cream on a national level is fully supported by appropriate promotion and market communication. The basic focus of the Company has

VADILAL INDUSTRIES LIMITED (10) been in brand building coupled with quality products & services. The Company is among the frontiers and maximum spender on News paper advertisement all over India. This spending actually surpasses the annual advertising budget of some of the regional players. The Company has been negotiating to set up new manufacturing facility at a strategic location in the Eastern part of India. This manufacturing facility will suffice the purpose of getting a strong hold in the Eastern market together with catering the need of the consumer there. Earlier this was not the case and looking to the immense potentiality of the market, competitor scenario, and demographic profile of the region, the Company has taken this strategic decision. For availability of ice-cream, Vadilal has got the largest fleet of Refrigerated Vehicles in India, backed by the strong Distribution Network of C&F Agents, distributors and retail dealers. Distribution network is continuously being improved by appointing new C&F Agents, Distributors and Dealers, together with making proper investment in respective territories for providing infrastructure. The Company clearly dominated the market in Gujarat, Rajasthan, Uttar Pradesh, Uttaranchal, Haryana and Delhi. Also the regional competitors often feel the presence of Vadilal in West Bengal, Orissa, Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Tamilnadu, Chandigarh, Punjab, Himachal Pradesh, and Jammu. b) Processed Food Division Expansion process The completion of expansion process at Dharampur Plant will boost up Company’s ability to deliver quality products backed by on-time deliveries. The 2000 MT cold storage has become operational very recently enabling the Company to offer temperature sensitive products such as frozen pomegranate kernels etc. Additionally, frozen products can now be offered at more competitive prices due to reduced transportation costs. The demand driven by ethnic population residing overseas has contributed to sale of frozen vegetables, fruits, ready-to-eat snacks & meals in the past. The promotional activities will be directed to generate sales through brand building not only amongst NRI’s but also the local popullation of targeted countries. The BRC certification (British Retail Consortium) for retail sales received by the company will ease entry to world renowed Supermarkets worldwide. The Company’s aim is to strengthen the existing distribution channel in South Pacific and US region and simultaneously increased retail presence in European sub- continent. In recent times, with reduction of agricultural subsidies, the price of frozen vegetables especially Green Peas has increased in European markets thereby presenting a window of opportunity to offer such products. The Company is seeking to encash this opportunity to increase sales of frozen vegetables. The frozen fruit products will be marketed with a holistic view but the focus will indeed be frozen mango products. This year a special emphasis will be placed on other tropical fruits such as frozen papaya, guava products. Domestic Market Many of the products launched in the overseas markets are also made available in the local markets. The Company has already achieved significant volumes in frozen peas and corn. Apart from this, large quantities of mango pulp and mango ras (a pulp based proprietary product) are also being sold in the domestic market. 3) HIGHLIGHTS OF FINANCIAL PERFORMANCE AND OPERATIONAL PERFORMANCE. Inspite of stiff competition, particularly in ice-cream industry, your Company has earned an Income from Operations of Rs. 13,261.84 lacs during the year ended on 31st March, 2008 as against Rs. 11,979.94 lacs earned during the previous year ended on 31st March, 2007. Your Company has earned the Gross Profit of Rs. 1425.92 lacs before Depreciation and Financial Expenses during the year ended on 31st March, 2008 as compared to Rs. 1483.79 lacs earned during the previous year ended on 31st March, 2007. The Company has earned the Net Profit of Rs. 380.18 lacs during the year ended on 31st March, 2008 after providing Financial Expenses and Depreciation and other adjustments and after making Provision for Current Tax of Rs. 100.10 lacs, Deferred Tax of Rs. 87.52 lacs, Fringe Benefit Tax of Rs. 13.00 lacs and other adjustments as compared to Net Profit of Rs. 558.86 lacs earned during the previous year ended on 31st March, 2007.

24th ANNUAL REPORT 2007-2008 (11) 4) SEGMENT WISE PERFORMANCE. The Company has identified three business segments in line with the Accounting Standard on Segment Reporting (AS 17). These are (1) Ice-cream (2) Processed Foods and (3) Others. Below mentioned table gives the audited financial results of these segments. Segment revenue, results and capital employed for the year ended 31st March, 2008 (Rs. in lacs) Segment Revenue (Sales plus income from services) Ice-cream 10241.17 Processed Foods 3058.33 Others 197.81 Total: 13497.31 Less : Inter-segment revenue (41.50) Net Sales/Income from Operations 13455.81

Segment Results (PBIT) Ice-cream 844.14 Processed Foods 243.56 Others 31.10 Total: 1118.80 Less : Interest (Net) & prior year adjustment 412.40 Other unallocable expenditure 103.78 516.18 Total Profits (PBT) 602.62

Capital employed in segments (Segment assets less liabilities) - as at 31st March, 2008 Ice-cream 5359.50 Processed Foods 3621.99 Others 124.28

Total Capital employed in segments 9105.77 Add : Unallocable corporate assets less corporate liabilities (5,460.23)

Total Capital Employed 3645.54

5) RISK AND CONCERN a) Ice-cream Division The Company is facing competition with major competitors especially on pricing front, though company overcome the competition successfully in past. New local & regional brands mushrooming locally that are flooding the markets with cheaper products are creating threats in the market. But the Company with its experience & expertise of more than 8 decades for providing quality ice-cream products is well equipped to face these developments. b) Processed Food Division China has always posed serious threat by dumping frozen and canned products at very low prices in the international market. But, we can not afford to ignore countries such as Thailand, Vietnam & Phillipines, offering competitively priced pineapple and other fruit products. Even the countries from South American subcontinent, engage in volume production of frozen fruits and have sizeable market share in US and other markets worldwide. There are many companies in processed food sector in India that have emerged on the international scene resulting in increased competition, more so in Ready-to-eat snacks and meals segment. Although the situation has improved but prime area of concern has always been lack of sufficient infrastructure, right from cropping areas to the processing plant. The lack of overall cold chain facility has remained a bottleneck that results in loss of produce, quality compromise etc. every year. 6) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY. In view of the management, the Company has adequate internal control systems for the business processes followed by the Company. The External and Internal Auditors carry out periodical reviews of the functioning and suggest changes if required. The Company has also a sound budgetary control system with frequent reviews of actual performance as against those budgeted. The Audit Committee of the Board meets periodically to review various aspects of the performance of the Company and also reviews the adequacy and effectiveness of internal control systems and suggest improvement for strengthening them from time to time. The External Auditors also attend these meetings and convey their view on the business processes and also of the policies of financial disclosures. When found necessary, the Committee also gives suggestions on these matters. VADILAL INDUSTRIES LIMITED (12) The Company has always made continuous efforts to improve the process of manufacturing and to achieve quality and efficiency in each of its operations. This is evident from the award of ISO 9001:2000 to the Company conferred upon by Nemko AS, Certification Department, towards Quality Management System for its Processed Food Division situated at Dharampur, Dist. Valsad, Gujarat. The Company has also received award of ISO 22000:2005 from Nemko AS, Certification Department, towards Food Safety Management System for the said Processed Food Division. The Company has also been awarded the ISO 9001:2000 certification from BVQI Netherland for its Ice-cream plant at Bareilly in the State of Uttar pradesh. The Company has also obtained ISO 9001:2000 and 22000:2005 certifications from BVQI, Netherland for its Ice-cream plant at Pundhra in the State of Gujarat. The ice-cream plant has also been certified by Export Inspection Council of India. The Company has also obtained BRC (British Retail Consortium) FOOD GLOBAL STANDARD 2005 from BVQi for its ice-cream plant at Pundhra. 7) HUMAN RESOURCES The Company has total staff strength of 811 at all locations, which includes 197 workers. The Company recognizes the important role that its employees need to play for the growth of various business activities. The human resource policies and processes of the Company are in line with this. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the steady growth. 8) CAUTIONARY STATEMENT The statements made and figures given in the various sections of “Management Discussion and Analysis” is keeping in mind the Company’s objectives, estimates and expectations. The Actual results may differ from those expected depending upon the economic conditions, changes in Govt. Regulations, tax regimes and other external and internal factors. ANNEXURE “B” TO THE DIRECTORS’ REPORT [Information under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended on 31st March, 2008] A) CONSERVATION OF ENERGY a) Energy Conservation measures taken : Ice-cream Division : - The Company has installed one additional Cone Machine, so there will be separate cone machine for each size and shape of cone. - The Company has installed one additional continuous Freezer, to improve the production capability. - The Company has installed new one additional Hardening Tunnel and a cold storage to enhance the production capacity and to improve the product availability during peak season. - The company has installed a new pasteurizer (5,000 lts. per hours) with Homogenizer to improve the thorough put of the mix and thus saving the energy. - Three numbers of additional I/C freezers along with Fruit Feeder have been installed to improve the capacity and in the processes saving the total energy consumed. - One air compressor has been added to meet the air requirements of machine for their efficient running. - Three numbers of Ammonia compressors have been added to improve the refrigeration capacity of IBT causing the efficient production and energy saving in the process. - Three numbers of Cooling tower have been added for better utilization of energy obtained from the steamed generated. - A D.G. set (1010 KVA) has been installed to prevent the loss of production hours and for utilization of energy. - Four numbers of Cold Rooms have been installed to preserve the quality of product and to prevent quality deterioration and wastage of energy. - Two numbers of new Hardening Tunnels have been installed for the improved productivity and thus reducing the energy cost. - An additional Glycol Chiller has been installed to minimize the pasteurizer outlet temperature thus minimizing the load on freezer and Hardening Tunnel. - The capacity of exciting IBT has been enhanced by addition of additional coil and modification of compressors. - All utility lines in the plant have been insulated to avoid the waste of energy due to heat loss to atmosphere. - Two numbers of Aging Vats and Two numbers of Mix batch tanks has been added to the system to improve the throught put of the plant and conservation of energy due to improved utilization of resources.

24th ANNUAL REPORT 2007-2008 (13) - The air-condensing unit of five numbers of cold rooms has been modified to improve its efficiency. Similarly three nos. of old hardening chambers has also been modified. - A new transformer (2500 KVA) has been installed to take care of additional power load. - An independent power feeder has been taken from Electricity Board to minimize the power failures and the loss of materials and energy in the process. - Capacitors have been added to the electrical system to improve the power factor for efficient use of Electrical energy. - The Despatch Dock has been expended for faster dispatch of vehicles and thus minimizing the time loss and energy loss. - An additional plot of the industrial area (F-13) has been acquired for the expansion of the plant for the efficient utilization of resources at increased capacity. - The existing Conference Hall has been extended for organizing the interaction between the processes for better utilization of resources and improved productivity. - A new three storied production building along with raw material and packing material stores has been constructed for the convince in the production at higher capacity and prevent the losses due to improper storage of materials. - A new refrigeration building has been constructed to accommodate the newly installed refrigeration equipments. The convince in operation is likely to minimize the energy losses. - The worker’s amenity such as Toilet and worker’s change room has been newly constructed for the convenience of work force and also to maintain the food safety norms to avoid product failures and the energy cost evolved in reworking or product failure. - A sap rate building for accounts and administration has been constructed for the convenience of working and obtaining the better output. - A laboratory has been constructed to monitor the incoming materials, inline testing and finished product testing to avoid the loss of energy in reworking of the product. Processed Food Division: - 14'’ Suction Header installed at Condenser & Jacket Pump’s, Suction for decreasing discharge pressure of refrigeration plant resulting energy saving. - Existing 200 TR Cooling Tower Outlet Lime modified to increase its efficiency resulting in energy saving. - For Cold Store and Plate Freezer’s Inter Coller and Chilled Water Accumulator separates Liquid Ammonia line with Header from Ammonia Receiver provided to increase Production Rate - Mini IQF Cooling Effect has been increased by making one Duct for all three Cooling Fans instead of separate Duct. - The Company has replaced old 500 KVA DG set with New Reconditioning 500 KVA DG to generate power during GSEB Power-off to avoid production break-down. - The Company has added two plate freezer and one blast freezer to increase production rate and improvement of quality - The Company installed a New Cold Storage of capacity of 2400 MT to enhance the production capacity and to improve the product availability during peak season. b) Additional investments and proposals, if any, for reduction of consumption of energy : Ice-cream Division : - The Company has planned additional investment to increase its production capacity and product quality. The Company has made investment to install the following machines : 1. Continuous Freezers - 2 Nos. 2. Automatic Cup Filling Machines - 2 Nos. 3. Fruit Feeder, Tetra pack Make 4. 2 Nos. of Cold Storage Machines and one Hardening Tunnels 5. Raw Water Plant 6. Receiving Oil in Tankers instead of in barrels 7. Blow down heat recovery system 8. Planning to installed one small air compressor for off peak hours load. Processed Food Division: - The Company has planned to change Cooling Tower Fins and install New Louvers to reduce water temperature, discharge pressure and save electricity. - The Company planned to add Power Capacitors Bank to improve power factor. c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods : Ice-cream Division - The measures listed above (a) and (b) would result in increase in production capacity, improve product quality and reduce energy consumption. VADILAL INDUSTRIES LIMITED (14) Processed Food Division - The measures listed in above (a) and (b) would result in energy saving, increase in production rate, improvement in quality and avoiding in production break-down due to power-off. d) Total Energy Consumption and Energy Consumption per unit of production as per prescribed Form-A : As per Annexure - A attached. Details have been given product wise, i.e. Ice-cream and Processed Food and not each individual factory wise. B) TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENTS a) Specific areas in which R & D carried out by the Company : - New product development related to frozen food products. - Process modifications to improve the productivity. - Product diversification in similar type of products. As ecological absorption, adaptation and innovation, the company has taken following actions- - A new Rolla machine has been installed as a new plant, which is an automatic candy-making machine at a high capacity. - A husk feed boiler has been installed to reduce the consumption of furnace oil and shifting to the use of agricultural waste as a fuel. - The construction of a modern anaerobic effluent treatment plant is under construction to minimize the pollution generated though the effluent discharge. - A peas cold room is under construction for the preservation and processing of peas. - A hot chamber has been constructed to maintain the temperature of Glucose during winter. - Three numbers of lifts have been installed in the plant building for the convenience in shifting of raw materials and packing materials between the sections. b) Benefits derived as a result of the above R & D : - To continuously upgrade the quality of products, the Company has given a thrust to Research and Development (R&D) activities and this has resulted in better acceptance of the products by all classes of consumers. c) Future Plan of Action : - The Company is planning to introduce various new products which will include full range of Frozen vegetables, Fruits and Ready to serve foods by considering consumer requirements as well as export demand. d) Expenditure on R & D : Rs. 5.41 lacs. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: a) Efforts in brief, made towards technology absorption, adaptation and innovation : - Total computerization of despatch operations including vehicle movement, billing, payments, costing analysis. - Introduced bar coding system at production shop floor to account goods transfer from production to cold stores. The next phase to be introduced is to despatch the goods from cold store to C&F / Distributors. - Adopted computerized forecast production modules for improved production planning. - Implementation of bar coding system. - Up-gradation of computerization. b) Benefits derived as a result of the above efforts : As per B (b) above. c) In case of Imported technology (imported during last five years reckoned from the beginning of the financial year) following information to be furnished : The Company has not imported any technology, hence the questionnaire is not applicable. C) FOREIGN EXCHANGE EARNINGS AND OUTGO : As against Foreign Exchange Earnings of Rs. 2143.24 lacs for the previous year ended on 31st March, 2007, the Company has earned Foreign Exchange of Rs. 1847.98 lacs for Export of Goods on FOB value for the year ended on 31st March, 2008. As against Foreign Exchange Outgo of Rs. 465.88 lacs for the previous year, the Outgo during the year under review was Rs. 216.83 lacs.

24th ANNUAL REPORT 2007-2008 (15) ANNEXURE - FORM A Form for disclosure of particulars with respect to Conservation of Energy Year ended Year ended on 31-3-2008 on 31-3-2007 (ICE-CREAM DIVISION) (A) Power and Fuel Consumption : 1) Electricity a) Purchased - i) Units KWH 10860533 8922633 Total Amount (Rs.) 52608417 44631464 Rate/Unit (Rs.) 4.84 5.00 b) Own Generation - i) Through Diesel Generator Units KWH 598364 623445 Units per liters of diesel 3.20 3.31 Cost per unit (Ltrs.) (Rs.) 10.16 10.11 2) Coal Qty. (Tones) Nil Nil Total Cost Nil Nil Average rate (Rs.) Nil Nil 3) Furnace Oil/LDO a) Furnace Oil for Boiler Qty. (Kg./K. Liters) 400895 285139 Total Amount (Rs.) 9482995.60 6465230.51 Average rate (Rs.) 23.65 24.97 b) HSD for Boiler Qty. (Kg./K. Liters) 200 2360 Total Amount (Rs.) 7048.00 84769.00 Average rate (Rs.) 35.24 35.92 4) Other/internal generation Qty. Nil Nil Total Cost Nil Nil Rate/unit Nil Nil B) Consumption per unit of production. Unit of Year ended Year ended Measurement on 31-3-2008 on 31-3-2007 Ice-cream Electricity : Units 0.478 0.446 Diesel for steam generation : Liters Nil Nil (PROCESSED FOOD DIVISION) (A) Power and Fuel Consumption : 1) Electricity a) Purchased - i) Units KWH 2679707 2757248 Total Amount (Rs.) 14396357.00 13889700.00 Rate/Unit (Rs.) 5.37 5.04 b) Own Generation - i) Through Diesel Generator Units KWH 53890 22346 Units per litre of diesel 1.78 1.97 Cost per unit (Ltrs.) (Rs.) 19.27 17.92 2) Coal Qty. (Tones) Nil Nil Total Cost Nil Nil Average rate (Rs.) Nil Nil 3) Furnace Oil / LDO a) Furnace Oil for Boiler Qty. (Kg./K. Liters) 127826 135970 Total Amount (Rs.) 3731245.91 3009016.00 Average rate (Rs.) 29.19 22.13 b) HSD for Boiler Qty. (Kg./K. Liters) Nil Nil Total Amount (Rs.) Nil Nil Average rate (Rs.) Nil Nil 4) Other/internal generation Qty. Nil Nil Total Cost Nil Nil Rate/unit Nil Nil B) Consumption per unit of production. Unit of Year ended Year ended Measurement on 31-3-2008 on 31-3-2007 Processed Food Electricity : Units 0.333 0.357 Diesel for steam generation : Liters Nil Nil VADILAL INDUSTRIES LIMITED (16) CORPORATE GOVERNANCE REPORT Report on Corporate Governance for the year ended on 31st March, 2008 (2007-2008) Brief statement on Company’s philosophy on Code of Governance In April, 2000, the Securities and Exchange Board of India (SEBI) introduced a comprehensive code on Corporate Governance and amended from time to time. Pursuant to this, the Stock Exchanges have amended Listing Agreements. A report, in line with the requirement of the Stock Exchanges pursuant to Clause 49 of Listing Agreement as amended, is given below. Over the past few years, the transition in the business environment, coupled with liberalisation and changing market conditions, has led to a fundamental shift in the management’s approach to enhancing shareholder value. In this context, Corporate Governance has attained paramount importance for ensuring fairness, transparency, accountability and responsibility to all stakeholders. The Company’s philosophy on Corporate Governance is aimed at making the top management of the Company in the efficient conduct of its business and in making its obligation to Shareholders. The Report on Corporate Governance is divided into nine parts :- 1) Board of Directors, 2) Remuneration of Directors, 3) Committees of the Board - Audit Committee, Remuneration Committee and Share Transfer and Investors’ Grievance Committee, 4) General Body Meetings, 5) Disclosures, 6) Code of Conduct 7) Means of Communication, 8) General Shareholder information, and 9) Compliance of non-mandatory requirements 1) Board of Directors (i) Composition and category of Directors (as on 31-03-2008) : The Board comprises Executive and Non-executive Directors. The majority Directors on the Board are Non- executive Directors. The day-to-day management of the Company is conducted by the Managing Directors of the Company, subject to the supervision and control of the Board of Directors of the Company. The Company fulfills the condition of minimum 1/3 rd Directors as Independent Directors, as the Chairman of the Company is Non-executive Chairman. The Board of Directors of the Company as on 31-03-2008 consists the following 7 Directors :- Category Name of Directors - Promoter, Chairman & Mr. Ramchandra R. Gandhi Non-executive Director - Promoters & Executive Directors Mr. Virendra R. Gandhi, Mr. Rajesh R. Gandhi, Mr. Devanshu L. Gandhi. - Non-executive & Independent Directors Mr. C. M. Maniar, Mr. Kshitish M. Shah, Mr. Rohit J. Patel Note : Mr. M. N. Vora ceased to be a Director of the Company w.e.f. 25-06-2007 due to his sad demise. (ii) Number of Board Meetings held and the dates on which held : 6 Board Meetings of the Company were held during the year under review on 30-06-2007, 28-07-2007, 29-10-2007, 15-12-2007, 31-01-2008 and 27-02-2008. The gap between two Board Meetings did not exceed 4 months. The Board Meetings are held at the Registered Office of the Company. (iii) Attendance of each Director at the Board Meetings (6 Board Meetings) held during the year from 01-04-2007 to 31-03-2008, last Annual General Meeting (AGM) and number of Directorship and Chairmanship / Membership of Committee of each Director in various Companies as on 31-03-2008 :

Name of Director Attendance No. of directorships and particulars committee member/ chairmanship Board Last Directorship * Committee Committee Meetings AGM Membership ** Chairmanship ** (6 Board Meetings) Ramchandra R. Gandhi 6 No 4 4 2 Virendra R. Gandhi 6 No 4 3 1 Rajesh R. Gandhi 5 Yes 4 3 Nil Devanshu L. Gandhi 6 Yes 4 3 Nil C. M. Maniar 2 No 13 9 1 Kshitish M. Shah 6 Yes 2 2 1 Rohit J. Patel 5 Yes 2 1 1 24th ANNUAL REPORT 2007-2008 (17) * This excludes Directorship held in Private/Foreign Companies and Companies incorporated under Section 25 of the Companies Act, 1956. ** Committees of Directors includes Audit Committee and Shareholders/ Investors’ Grievance Committee. None of the Directors of the Company is a member of Board of more than 15 Companies, in terms of Section 275 of the Companies Act, 1956. None of the Directors is a member of more than 10 Board level Committees or a Chairman of more than 5 such Committees as required under Clause 49 of Listing Agreement. The necessary disclosures regarding Committee positions have been made by the Directors. (iv) Relationship between the Directors :- Name of the Director Name of the Relative Director Nature of relation Mr. Ramchandra R. Gandhi Mr. Virendra R. Ganhi Son Mr. Rajesh R. Gandhi Son Mr. Virendra R. Gandhi Mr. Ramchandra R. Gandhi Father Mr. Rajesh R. Ganhi Brother Mr. Rajesh R. Gandhi Mr. Ramchandra R. Gandhi Father Mr. Virendra R. Gandhi Brother No other Directors have any relations inter-se. (v) Information supplied to the Board :- Among others, this includes : (a) Annual operating plans and budgets and updates, (b) Capital budget and updates, (c) Quarterly Results of the Company and its operating divisions or business segments, (d) Minutes of meetings of Audit Committee & other Committees of the Board, (e) The information on recruitment and remuneration of senior officers just below the Board level, (f) Show cause, demand, prosecution notices and penalty notices which are materially Important, (g) Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems, (h) Any material default in financial obligations to and by the Company or substantial non-payment for goods sold by the Company, (i) Any issue, which involves possible public or product liability claims of substantial Nature, (j) Details of any Joint Ventures or Collaboration Agreement, (k) Transactions that involve substantial payment towards goodwill, brand equity or intellectual property, (l) Significant labour problems and their proposed solutions. Significant development in Human Resources/Industrial Relations front, (m) Sale of material nature of investments, subsidiaries, assets, which is not in normal course of business, (n) Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material, (o) Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non- payment of dividend, delay in share transfer etc. The Board is routinely presented with all information required under Clause 49 of Listing Agreement wherever applicable and materially significant. These are submitted either as a part of the Agenda papers or are tabled in the course of Board Meeting. Action taken report on the decision / minutes of the previous meeting is placed at the immediately succeeding meeting of the Board/Committee for noting by the Board/Committee. 2) Remuneration to all Directors : The aggregate value of salary, perquisites, allowances and commission paid including contribution towards Provident Fund to the two Managing Directors of the Company during the year ended on 31-03-2008 (i.e. from 01-04-2007 to 31- 03-2008) are as follows as per approval received from the Central Government for re-appointment of Mr. Rajesh R. Gandhi and Mr. Devanshu L. Gandhi as Managing Directors of the Company for a further period of 5 years w.e.f. 1st April, 2004 and increase in remuneration w.e.f. 1st April, 2005 for a period of 3 years :- Amount (Rs. in lacs) Name of Managing Director Salary Perquisites/ Commission Contribution Total Allowances @ 1% on to PF Net Profit Mr. Rajesh R. Gandhi 12.00 7.21 6.26 1.44 26.91 Mr. Devanshu L. Gandhi 12.00 7.21 6.26 1.44 26.91 Besides this, the above Managing Directors are also entitled to Superannuation or Annuity Fund, to the extent not taxable and Gratuity and encashment of Leave at the end of tenure as per Rules of the Company. The Company has not paid Bonus to the above Managing Directors of the Company for the financial year ended on 31-03-2008. VADILAL INDUSTRIES LIMITED (18) The Company has entered into an Agreement on 12-8-2004 with each Managing Directors of the Company for a period of 5 years for their appointment, powers, duties and payment of remuneration. The Company has also entered into a Supplemental Agreement on 20-04-2006 with Mr. Rajesh R. Gandhi and Mr. Devanshu L. Gandhi for increase in remuneration w.e.f. 1st April, 2005 for a period of 3 years, i.e. upto 31st March, 2008. The Managing Directors are required to give 3 months notice in writing to the Company to resign from the office of Managing Director. The Company does not have a scheme for grant of stock options either to the Managing Directors or Employees. None of the other Directors are paid remuneration except sitting fees for attending Board and Committee Meetings. The Company paid sitting fees to all Non-executive Directors of the Company at the rate of Rs. 2,000/- each for attending Board Meetings as under during the year ended on 31-03-2008 : Sr. No. Name of the Director Amount in Rs. 1 Mr. Ramchandra R. Gandhi 12,000/- 2 Mr. C. M. Maniar 4,000/- 3 Mr. Kshitish M. Shah 12,000/- 4 Mr. Rohit J. Patel 10,000/- The Company also paid sitting fees to the following Non-executive Directors of the Company for attending 6 Audit Committee meetings at the rate of Rs. 2,000/- for each meeting during the year ended on 31-03-2008 :- Sr. No. Name of the Director Amount in Rs. 1 Mr. Ramchandra R. Gandhi 12,000/- 2 Mr. Kshitish M. Shah 12,000/- 3 Mr. Rohit J. Patel 12,000/- The Company also paid sitting fees to the following Non-executive Directors of the Company for attending 1 Remuneration Committee meeting of the Company held on 28-07-2007, at the rate of Rs. 2,000/- for each meeting during the year ended on 31-03-2008 :- Sr. No. Name of the Director Amount in Rs. 1 Mr. Kshitish M. Shah 2,000/- 2 Mr. Rohit J. Patel 2,000/- 3 Mr. C. M. Maniar 2,000/- The Non-Executive Directors of the Company are also reimbursed the travelling and out-of-pocket expenses for attending such meetings. As on 31st March, 2008, Mr. Ramchandra R. Gandhi holds 47,798 Equity Shares of Rs. 10/- each of the Company in his individual capacity. No other Non-executive Directors hold any shares in the Company. 3) Committees of the Board : (a) Audit Committee (As on 31-03-2008) : (i) Composition As on 31-03-2008, there were 3 members of Audit Committee as under :- 1. Mr. Rohit J. Patel - Chairman 2. Mr. Ramchandra R. Gandhi - Member 3. Mr. Kshitish M. Shah - Member Note : Mr. M. N. Vora ceased to be a member of the Audit Committee w.e.f. 25-06-2007 due to his sad demise. All members of Audit Committee as mentioned above are Non-executive Directors. The constitution of the Audit Committee also fulfills the requirements under Section 292A of the Companies Act, 1956 apart from the requirements pursuant to Clause 49 of Listing Agreement with the Stock Exchanges. Out of 3 members of the Audit Committee, 2 members are Independent Directors, namely, Mr. Kshitish M. Shah and Mr. Rohit J. Patel. Mr. Rohit J. Patel, who is the Chairman of Audit Committee was present at the last Annual General Meeting of the Company held on 29-09-2007. No queries related to financial results were raised by the members present at the said meeting. Mr. Ramchandra R. Gandhi, Member of the Audit Committee, has the knowledge of Finance & Accounts. Mr. Nikhil Patel, who is a Company Secretary of the Company, is a Secretary to the Audit Committee. (ii) Meeting and Attendance : The Audit Committee met 6 times during the year under review on 30-06-2007, 28-07-2007, 26-10-2007, 15-12-2007, 31- 01-2008, and 27-02-2008. The presence of the Members of the aforesaid Audit Committee Meetings are as under : Sr. No. Name of the Director No. of Audit Committee Meetings attended. 1 Mr. Rohit J. Patel 6 2 Mr. Ramchandra R. Gandhi 6 3 Mr. Kshitish M. Shah 6 24th ANNUAL REPORT 2007-2008 (19) The representative of the Statutory Auditors was present in all meetings of the Audit Committee. The Internal Auditors were also present in the meetings. The Managing Directors of the Company were also generally invited to attend the Audit Committee meetings. The Minutes of the Audit Committee Meetings are sent to all Directors of the Company at the time of Board Meeting and are confirmed in the Board Meeting. (iii) Terms of reference : The terms of reference of the Audit Committee as stipulated by the Board are as under and they are in accordance with all items listed in Clause 49(II)(D) of Listing Agreement with Stock Exchanges : a) Oversight of the Company’s financial reporting process and disclosure of its financial information. b) Recommending the appointment and removal of external Auditor, fixation of audit fee and also approval for payment for any other services. c) Reviewing with the management, the annual financial statements before submission to the Board, focusing primarily on : - Any changes in accounting policies and practices, - Major accounting entries based on exercise of judgment by management, - Qualifications in draft Audit Report, - Significant adjustments arising out of audit, - The going concern assumption, - Compliance with accounting standards, - Compliance with stock exchange and legal requirements concerning financial statements, - Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives, etc., that may have potential conflict with the interest of Company at large. d) Reviewing with the management, external and internal Auditors, the adequacy of internal control systems. Discussions with Internal Auditors any significant findings and follow-up thereon. e) Reviewing the findings of any internal investigations by the Internal Auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board. f) Discussions with external Auditors before the audit commences, nature and scope of audit as well as to have post- audit discussion to ascertain any area of concern. g) Reviewing the Company’s financial and risk management policies. h) To look into the reasons for substantial defaults in the payment to the depositors, shareholders (in case of non- payment of declared dividends) and creditors. i) It shall have discussions with the Auditors periodically about internal control systems, the scope of audit including observations of the Auditors and review the half yearly and annual financial statements before submissions to the Board. Review of annual financial statements of Subsidiary Companies. j) It shall ensure compliance of internal control systems. k) Taking note of Report on Corporate Governance. (b) Remuneration Committee (As on 31-03-2008) : The Remuneration Committee of the Directors of the Company was constituted by the Board of Directors at their meeting held on 1st February, 2003 pursuant to the provisions contained in Schedule XIII to the Companies Act, 1956. The Remuneration Committee consists the following three Directors of the Company, as on 31st March, 2008, namely : 1. Mr. Kshitish M. Shah - Chairman 2. Mr. C. M. Maniar - Member 3. Mr. Rohit J. Patel - Member The Remuneration Committee was re-constituted by the Board at their meeting held on 30th June, 2007 by introducing Mr. C. M. Maniar as the member in place of Mr. M. N. Vora, who ceased to be a member of Remuneration Committee due to his sad demise. The constitution of Remuneration Committee fulfills the requirements of Schedule XIII to the Companies Act, 1956. All members of the Remuneration Committee are independent and non-executive Directors of the Company. The Remuneration Committee was constituted by the Board for the purpose of taking its approval for payment of managerial remuneration to Mr. Rajesh R. Gandhi and Mr. Devanshu L. Gandhi, Managing Directors of the Company. The members of the Remuneration Committee has, at their meeting held on 28-07-2007, increased the managerial remuneration to be paid to Mr. Rajesh R. Gandhi and Mr. Devanshu L. Gandhi, Managing Directors of the Company for a period of 1 year i.e. from 01-04-2008 to 31-03-2009. The Remuneration Committee has also approved the payment of remuneration to the said Managing Directors for their next term of office for a period of 5 years w.e.f. 1st April, 2009.

VADILAL INDUSTRIES LIMITED (20) Subsequently, the Board of Directors of the Company had also approved the said increase in Managerial Remuneration and remuneration for next term of office for a period of 5 years. The Shareholders of the Company had, at the 23rd Annual General Meeting held on 29th September 2007, approved the said Managerial Remuneration. (c) Share Transfer and Investors’ Grievance Committee : (i) Composition : The Board of Directors of the Company has constituted a Share Transfer and Investors’ Grievance Committee, comprising 4 Directors of the Company, namely: 1 Mr. Ramchandra R. Gandhi - Chairman & Non-executive Director 2 Mr. Virendra R. Gandhi - Member 3 Mr. Rajesh R. Gandhi - Member 4 Mr. Devanshu L. Gandhi - Member The Committee, interalia, approves the transfer of Shares, issue of duplicate Share Certificates, splitting and consolidation of Shares etc. The Committee also looks after redressal of Shareholder’s complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, etc. The Board of Directors have delegated the power of approving transfer of Shares etc. to the Share Transfer and Investors’ Grievance Committee. (ii) No. of Shareholders complaints received and not solved to the satisfaction of the Shareholders : The total number of complaints received and replied to the satisfaction of Shareholders during the year under review were as under : No. of Complaints outstanding as on 31-03-2007 - NIL No. of complaints received during the year under review - 9 No. of complaints disposed off during the year under review - 8 No. of complaints outstanding as on 31-03-2008 - 1 The outstanding complaint has been subsequently resolved by the Company. (iii) Name and designation of Compliance Officer : The Board has designated Mr. Nikhil Patel, Dy. General Manager (Secretarial & Legal) and Company Secretary, as the Compliance Officer of the Company pursuant to Clause - 49 of the Listing Agreement. (iv) Number of pending transfers : No requests for transfer and dematerialisation were pending for approval as on 31st March, 2008. 4) General Body Meetings : (i) Location and Time for last 3 Annual General Meetings (AGM) were : Year AGM Location Date Time 2006-2007 23rd Bhaikaka Hall, Nr. Law Garden, Ellisbridge, Ahmedabad 29-09-2007 1.00 p.m. 2005-2006 22nd Bhaikaka Hall, Nr. Law Garden, Ellisbridge, Ahmedabad 27-09-2006 2.00 p.m. 2004-2005 21st Bhaikaka Hall, Nr. Law Garden, Ellisbridge, Ahmedabad 29-09-2005 3.30 p.m. (ii) Resolution carried out through Postal Ballot : No postal ballots were used/invited for voting at the above meetings in respect of Special Resolutions passed in the above said meetings. At the forthcoming 24th AGM, no resolution is proposed to be passed through Postal Ballot. 5) Disclosures : (i) Transaction with related parties are disclosed in Note No. 8(c) of Schedule - 22 to the Notes on Accounts for the year ended on 31st March, 2008, in the Annual Report as required by the Accounting Standard (AS) 18 issued by ICAI. However, there are no materially significant related party transactions made by the Company with its promoters, directors or the management or their subsidiaries etc. that may have potential conflict with the interests of the Company at large. The Independent Directors, who are also Non-executive Directors, who apart from receiving sitting fees for attending Board Meeting, Audit Committee and Remuneration Committee Meeting, do not have any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiary, which in the judgment of the Board may affect independence of the judgment of the Directors. The Directors regularly make full disclosures to the Board of Directors regarding nature of their interest in the Companies in which they are Directors or Members. Full particulars of contract entered with the Companies / Partnership Firms in which the Directors are directly or indirectly concerned or interested are entered in the Register of Contract maintained under Section 301 of the Companies Act, 1956 and the same is placed in every Board Meeting for the noting of the Directors.

24th ANNUAL REPORT 2007-2008 (21) (ii) During the last three years, there were no strictures or penalties imposed on the Company by either SEBI or the Stock Exchanges or any statutory authority for non-compliance of any matter related to the capital markets. (iii) Risk Management : Business risk evaluation and management is an ongoing process within the Company. During the year under review, the Board of Directors has reviewed the risk assessment and minimisation procedure adopted by the Company covering the business operations of the Company. (iv) CEO/CFO Certification : In terms of revised Clause 49 of Listing Agreement, the Certification by CEO and CFO on the financial statements and internal controls relating to financial reporting has been obtained. (v) Management : The Management Discussion and Analysis Report is set out in a separate section included in this Annual Report and forms part of this report. Pursuant to Clause-49 of Listing Agreement with the Stock Exchanges, the Senior Management Personnel have made disclosures to the Board that during the year ended on 31st March, 2008, they have not entered into any material financial and commercial transactions, where they have personal interest that may have a potential conflict with the interest of the Company. 6) Code of Conduct : The Board of Directors has adopted the Code of Business Conduct and Ethics for Directors and Senior Management Personnel. The said Code has been communicated to all the Directors and members of Senior Management. They have also affirmed to the Company about the compliance of the said Code during the financial year ended on 31st March, 2008. The Code has also been posted on the Company’s website-www.vadilalgroup.com. The Certificate received from the Managing Directors affirming compliance of the said Code of Conduct by all the Board Members and the Senior Management Personnel is annexed separately to this Report. 7) Means of communication : The Company has total 10511 shareholders as on 31st March, 2008. The main channel of communication to the shareholders is through Annual Report, which includes inter alia, the Director’s Report, Management Discussions & Analysis and Report on Corporate Governance and Audited Financial Results. The Unaudited Quarterly Results ended on 30-06-2007 (1st Quarter), 30-09-2007 (2nd Quarter), 31-12-2007 (3rd Quarter) and Annual Audited Accounts for the year ended on 31-03-2008 including notes and segment wise revenue, results and capital employed and also the Consolidated Financial Results and Limited Review Report thereon were submitted to the Stock Exchanges immediately after conclusion of the Board Meetings in which, they are approved by the Board. The said results were published in Indian Express / Business Standard (English) and Jansatta (Gujarati) newspapers of Ahmedabad edition. The said results including Notes and Segment wise revenue, results and capital employed are displayed on the corporate website of the Company viz. www.vadilalgroup.com. The Financial Results and the Shareholding Pattern of the Company are also uploaded in the EDIFAR (Electronic Data Information Filing and Retrieval) website viz. www.sebiedifar.nic.in. The website of the Company viz. www.vadilalgroup.com has an exhaustive investor-help section. It contains comprehensive guidelines and procedure for investors. 8) General Shareholder information : (i) Annual General Meeting, i.e. next AGM - Date & Time : 29th September, 2008, at 12.30 p.m. - Venue : Sheth Shri Amrutlal Hargovandas Memorial Hall, Gujarat Chamber of Commerce & Industry (GCCI), Ashram Road, Ahmedabad - 380 009. (ii) Financial Calendar (from 01-04-2008 to 31-03-2009) (Tentative) : - Results for quarter ended on 30-06-2008 : 30th July, 2008 - Results for quarter ending on 30-09-2008 : Last week of October, 2008 - Results for quarter ending on 31-12-2008 : Last week of January, 2009 - Results for quarter ending on 31-03-2009 / Last week of April, 2009/ Audited Results for the year ending on 31-03-2009 : Last week of June, 2009 - AGM for the year ending on 31-03-2009 : Last week of September, 2009 (iii) Book-closure date : Book-closure shall be from 15th September, 2008 to 29th September, 2008 (both days inclusive) for the purpose of payment of dividend on Equity Shares for the year ended on 31st March, 2008. (iv) Dividend payment date : The Dividend @ 12 % on Equity Shares for the year ended on 31st March, 2008, if declared, will be paid within the prescribed time limit.

VADILAL INDUSTRIES LIMITED (22) (v) Listing of Equity Shares on Stock Exchanges at - The Company’s shares are listed at the Bombay Stock Exchange Limited and Ahmedabad Stock Exchange Limited. The Listing fees for the Financial Year 2008-2009 has already been paid to the respective Stock Exchanges. (vi) Security Code No. : - Bombay Stock Exchange Limited : 519156 - Ahmedabad Stock Exchange Limited : 64530 - ISIN No. of NSDL & CDSL for demat of Equity Shares : INE694D01016 (vii) Stock Market Data : The monthly High, Low and Closing Prices of Shares of the Company at Bombay Stock Exchange Limited, (BSE), for the year under review are as under: Months High(Rs.) Low(Rs.) Closing(Rs.) April, 2007 38.50 32.70 34.30 May, 2007 47.85 34.30 42.85 June, 2007 50.85 38.20 42.45 July, 2007 58.00 40.20 48.10 August, 2007 67.40 43.00 58.60 September, 2007 101.05 56.15 85.65 October, 2007 94.35 69.75 71.45 November, 2007 88.65 60.00 70.65 December, 2007 81.00 68.10 76.90 January, 2008 93.00 55.25 56.05 February, 2008 63.85 49.00 57.15 March, 2008 57.00 37.25 50.45 (viii) Share price performance in comparison to BSE Sensex : Market - Price data : The monthly high, low and closing prices of the shares of the Company, during the financial year under review and performance of the same in comparison to BSE Sensex are given below : BSE SENSEX Months High Low Closing High Low Closing (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) April, 2007 38.50 32.70 34.30 14383.72 12425.52 13872.37 May, 2007 47.85 34.30 42.85 14576.37 13554.34 14544.46 June, 2007 50.85 38.20 42.45 14683.36 13946.99 14650.51 July, 2007 58.00 40.20 48.10 15868.85 14638.88 15550.99 August, 2007 67.40 43.00 58.60 15542.40 13779.88 15318.60 September, 2007 101.05 56.15 85.65 17361.47 15323.05 17291.10 October, 2007 94.35 69.75 71.45 20238.16 17144.58 19837.99 November, 2007 88.65 60.00 70.65 20204.21 18182.83 19363.19 December, 2007 81.00 68.10 76.90 20498.11 18886.40 20286.99 January, 2008 93.00 55.25 56.05 21203.77 15332.42 17648.71 February, 2008 63.85 49.00 57.15 18895.34 16457.74 17578.72 March, 2008 57.00 37.25 50.45 17227.56 14677.24 15644.44

24th ANNUAL REPORT 2007-2008 (23) (ix) Registrar and Transfer Agent : In terms of SEBI Circular No. D&CC/FITTC/CIR-15/2002, dated 27-12-2002, the Company has assigned all work related to Share Registry in terms of both physical and electronic to MCS Ltd., Ahmedabad, by entering into an Agreement with the said R&T Agent to that effect. Hence, all Shareholders are requested to send/deliver the documents/correspondence including complaints relating to the Company’s share transfer/demat/remat activity to MCS Ltd. at 101, Shatdal Complex, 1st Floor, Opp. Bata Show Room, Ashram Road, Ahmedabad-380 009. (x) Share Transfer system : Presently, the requests for share transfer, which are received by the Company or its Registrar & Share Transfer Agent, in physical form, from the shareholders, are processed and the share certificates are returned to the shareholders, within a period of 1 month from the date of receipt of such request for transfer, subject to the documents being valid and complete in all respects. The Share Transfer & Investors’ Grievance Committee of the Company, normally meets twice a month to approve the transfer, issue of duplicate share certificates, consolidation and splitting of shares etc. (xi) Secretarial Audit : A Practicing Company Secretary carried out secretarial audit in each of the quarter in the Financial Year - 2007-08, to reconcile the total admittted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and total issued and listed capital. The audit reports confirm that the total issued / paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with depositories. Pursuant to Clause 47 (c) of the Listing Agreement with the Stock Exchanges, certificates, on half yearly basis, have been issued by a Practicing Company Secretary for due compliance of share transfer formalities by the Company. (xii) Shareholding Details : (a) Distribution of Shareholding as on 31st March, 2008 : No. of Equity No. of Share No. of % of Shares held holders Shares Shares 1-500 10065 828383 11.52 501-1000 196 160305 2.23 1001-2000 93 135240 1.88 2001-3000 31 81696 1.14 3001-4000 23 82413 1.15 4001-5000 18 86248 1.20 5001-10000 33 245951 3.42 10001- 50000 38 830054 11.55 50001-100000 6 434152 6.04 100001 & above 8 4303788 59.87 Total: 10511 7188230 100.00 (b) Categories of Shareholders as on 31st March, 2008 : Sr. Category of No. of Equity % to total No. Shareholder Shares held Shares 1 Directors, Relatives & HUF 1240871 17.26 2 Foreign Institutional Investors (FIIs) 500000 6.96 3 Mutual Funds and UTI 7750 0.11 4 Nationalise Bank 350 0.00 5 NRIs / OCBs 18035 0.25 6 Corporate Bodies 3602847 50.12 7 Public 1818377 25.30 Total 7188230 100.00 (xiii) Dematerialisation of Shares : The Company, consequent to introduction of Depository System (DS), has established an electronic connectivity with NSDL & CDSL, Depositories. Members, therefore, have the option of holding and dealing in the shares of the Company in electronic form through NSDL and CDSL. In view of the numerous advantages offered by the DS, members are requested to avail the facility of dematerialisation of the Company’s shares on either of the Depositories as aforesaid. If you wish to maintain your shareholding in the electronic form by joining DS, you will have to open an account with a Depository Participant (DP), who are agents of NSDL or CDSL and lodge your share certificates with your DP for Dematerialisation. The DP will then ensure that the physical share certificates are cancelled and after verification

VADILAL INDUSTRIES LIMITED (24) by the Company, an equivalent number of shares will be credited to your account with the DP in the electronic form. You are also permitted under the DS to reconvert your electronic shareholding into the physical form of share certificates by a process of Rematerialisation. It may be noted that the DP would charge the investors for its services, which may vary from one DP to another. It is reiterated that requests for Dematerialisation and Rematerialisation are to be made only to the DP with whom you have opened an account and not directly to the Company or its Registrar & Share Transfer Agent. 24,87,127 Equity Shares of the Company representing 34.60 % of the total paid-up capital of the Company have been dematerialised upto 31-03-2008. Trading in Equity Shares of the Company is permitted only in dematerialised form as per notification issued by SEBI. (xiv) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on Equity : Not Applicable (xv) Plant locations : Ice-cream Division : 1) Village Pundhra, Taluka Mansa, Dist. Gandhinagar (Gujarat) 2) Parsakhera Industrial Area, Bareilly, (Uttar Pradesh) 3) Dudheshwar Road, Ahmedabad (Gujarat) Processed Food Division : Dharampur, Dist. Valsad (Gujarat) Forex Division : Vadilal House, Navrangpura, Ahmedabad (Gujarat) (xvi) Investor Correspondence : For transfer and dematerialisation of shares, payment of dividend on shares and interest and redemption on debentures and any other query relating to the shares of the Company :- 1) MCS Limited, (Unit : Vadilal Industries Limited), 101, Shatdal Complex, 1st Floor, Opp. Bata Show Room, Ashram Road, Ahmedabad - 380 009. Tel. Nos. : (079) 26582878, 26584027 Fax No. : (079) 26581296 2) Secretarial & Share Department Vadilal House, Shrimali Society, Nr. Navrangpura Railway Crossing, Navrangpura, Ahmedabad - 380 009. Contact person : Mr. Nikhil Patel, Company Secretary Tel. Nos. : (079) 26564019 to 24 Fax No. : (079) 26564027 E-mail : [email protected] Shareholders holding shares in electronic mode should address all their correspondence to their respective Depository Participant. (xvii) Amalgamation of Vadilal Financial Services Ltd. with Vadilal Industries Limited - Exchange of Share Certificates : Vadilal Financial Services Ltd. (VFSL), which was a Subsidiary Company, was amalgamated with Vadilal Industries Limited (VIL) w.e.f. 1st April, 1997. It is observed that some of the members of VFSL have still not exchanged their Share Certificates for new Shares of VIL on amalgamation of VFSL with VIL. As the Share Certificates of VFSL are no longer valid, concerned Shareholders are requested to surrender their Share Certificates of VFSL at the Registered Office of the Company to enable them to get new Shares of VIL in the ratio of 1:4. (xviii)Address of Registrar of Companies (ROC), Gujarat : The Registrar of Companies, Gujarat, ROC Bhavan, Opp. Rupal Park, Behind Ankur Bus Stand, Naranpuura, Ahmedabad - 380 013. (Phone : 079 - 27438531, 27437597) (xix) Consolidation of Folios : Some of the members might have more than one folio in their individual name or jointly with other person(s) mentioned in the same order. It is desirable to consolidate all similar holdings under one folio. Consolidation helps the members to monitor their holdings effectively. By doing so, it would also enable the Company to avoid unnecessary duplication of effort and related costs. Please write to the Company at its Registered Office or to the Registrar & Share Transfer Agent viz. MCS Ltd., quoting the folio numbers that need to be consolidated and send the relevant Share Certificates. (xx) Nomination facility : Your Company has already offered the facility of nomination to the members. Individual Shareholders can avail of the facility of nomination and may submit to the Company the prescribed Form 2B at the Registered Office of the Company. It is advisable to avail of this facility especially by Shareholders who currently hold Shares in single name. In case of any assistance, please contract at the Registered Office of the Company at Vadilal House, Shrimali Society, Near Navrangpura Railway Crossing, Navrangpura, Ahmedabad-380009. Telephone Nos. (079) 26564019 - 24.

24th ANNUAL REPORT 2007-2008 (25) 9) Compliance of non-mandatory requirements : The Company has not adopted the following non-mandatory requirements as per Clause 49 of Listing Agreement regarding Corporate Governance :- 1) Half-yearly declaration of Financial performance and summary of significant events in last six months have not been sent to each shareholder of the Company. 2) The Company has not conducted training for the Board members. 3) The Company does not have peer group of Board of Directors to evaluate performance of Non-executive Directors. 4) The Company does not have Whistle Blower policy.

DECLARATION REGARDING AFFIRMATION OF CODE OF CONDUCT In terms of the requirement of the amended Clause 49 of Listing Agreement with the Stock Exchanges regarding Corporate Governance, we hereby confirm that all Board Members and Senior Management Personnel of Vadilal Industries Limited have affirmed the compliance of Code of Business Conduct and Ethics for the year ended on 31st March, 2008. For VADILAL INDUSTRIES LIMITED

Place : Ahmedabad Date : July 15, 2008

CERTIFICATE To, The Members of Vadilal Industries Limited,

We have examined the compliance of conditions of Corporate Governance by Vadilal Industries Limited, for the year ended on 31st March, 2008, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of the Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For KANTILAL PATEL & CO., Chartered Accountants

Date : July 30, 2008 Arpit K. Patel Place : Ahmedabad Partner Membership No.: 34032

VADILAL INDUSTRIES LIMITED (26) AUDITORS’ REPORT (iii) The balance sheet, profit and loss account and cash To, flow statement dealt with by this report are in The Members of agreement with the books of account. Vadilal Industries Ltd, (iv) In our opinion, the balance sheet, profit & loss Ahmedabad. account and cash flow statement dealt with by this 1. We have audited the attached balance sheet of Vadilal report comply with accounting standards referred to Industries Limited as at March 31, 2008, the profit & in sub-section (3C) of section 211 of the Companies loss account and also the cash flow statement for the Act, 1956. year ended on that date annexed thereto. These financial (v) On the basis of the written representations received statements are the responsibility of the company’s from directors, as on 31st March 2008, and taken on management. Our responsibility is to express an opinion record by the Board of Directors, we report that none on these financial statements based on our audit. of the directors is disqualified as on 31st March, 2008 2. We conducted our audit in accordance with auditing from being appointed as a director in terms of clause standards generally accepted in India. Those Standards (g) of sub-section (1) of section 274 of the Companies require that we plan and perform the audit to obtain Act, 1956, on the said date. reasonable assurance about whether the financial (vi) In our opinion and to the best of our information and statements are free of material misstatement. An audit according to the explanations given to us, the said includes examining, on a test basis, evidence supporting accounts give the information required by, the the amounts and disclosures in the financial statements. Companies Act, 1956, in the manner so required An audit also includes assessing the accounting principles and give a true and fair view in conformity with the used and significant estimates made by management, accounting principles generally accepted in India: as well as evaluating the overall financial statement (a) in the case of the balance sheet, of the state of presentation. We believe that our audit provides a affairs of the company as at 31st March, 2008; reasonable basis for our opinion. (b) in the case of the profit & loss account, of the 3. As required by the Companies [Auditors’ Report] Order, ‘Profit’ of the company for the year ended on 2003 issued by the Central Government of India in terms that date; of sub-section (4A) of Section 227 of the Companies Act, and 1956, we enclose in the Annexure, a statement on the (c) in the case of the cash flow statement, of the matters specified in paragraphs 4 and 5 of the said Order. cash flows for the year ended on that date. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) We have obtained all the information and For KANTILAL PATEL & CO., explanations, which to the best of our knowledge Chartered Accountants and belief, were necessary for the purposes of our audit. Arpit K. Patel Place : Ahmedabad Partner (ii) In our opinion, proper books of account as required Date : June 30, 2008 Membership No.: 34032 by law have been kept by the company so far as appears from our examination of the books.

ANNEXURE TO THE AUDITORS’ REPORT TO THE MEMBERS OF VADILAL INDUSTRIES LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2008. (i) (a) The company, has maintained proper records physically verified during the year. In respect showing particulars about quantitative details of inventory lying with third parties, inventory and situation of Gross Block. However, details have been confirmed by them. In our opinion, such as adjustments for revaluation, the frequency of verification is reasonable. depreciation and accumulated depreciation (b) In our opinion and according to the information relating to individual assets is under preparation and explanations given to us, the procedures and pending reconciliation with financial records. of physical verification of inventories followed (b) The company has not conducted physical by the management are reasonable and verification of fixed assets during the year. In adequate in relation to the size of the company absence of physical verification of fixed assets and the nature of its business. during the year material discrepancies, if any, (c) In our opinion and according to the information could not be ascertained. and explanations given to us, the company (c) The company has not disposed off substantial has maintained proper records of inventory part of fixed assets during the year. and the discrepancies noticed on such physical (ii) (a) As explained to us, the inventory have been verification between physical stocks and book physically verified during the year by the records were not material and have been management except stock of frozen products adequately dealt with in the books of account. lying at Dharampur which has not been In absence of physical verification of frozen 24th ANNUAL REPORT 2007-2008 (27) products lying at Dharampur the discrepancy We are informed that no order has been passed by if any, could not be ascertained. the Company Law Board or National Company Law (iii) In respect of loans, secured or unsecured, granted or Tribunal or Reserve Bank of India or any Court or taken by the company to or from companies, firms or any other Tribunal. other parties covered in the register maintained under (vii) In our opinion, the company has an internal audit section 301 of the Companies Act, 1956 : system commensurate with the size of the company [a] The company has not granted loans to any and the nature of its business. company and hence paragraphs 4(iii) (a), (b), (viii)We are informed that Central Government has not (c), and (d) of Company (Auditors’ Report) prescribed under section 209 [1][d] of the Companies Order, 2003 are not applicable to the company. Act, 1956, maintenance of cost records for the [b] The company has taken unsecured loan from products manufactured by the company. one company. The year end balance of loan (ix) (a) The company is generally regular in depositing taken from such party is Rs.10.85 lakhs. undisputed provident fund, investor education [c] In our opinion, the rate of interest and other & protection fund, employees state insurance, terms and conditions of such loan is not prima income tax, sales tax, wealth tax, service tax, facie prejudicial to the interest of the company. custom duty, excise duty, cess and other [d] In respect of loan taken by the company the material statutory dues to appropriate authorities interest payments are regular and the principal except amount of Rs.0.83 lakhs required to amount is repayable on demand be deposited with investor education and protection fund. (Which is subsequently (iv) In our opinion and according to the information and deposited) explanations given to us, having regard to the explanation that some of the items purchased are (b) According to the information and explanations of a special nature and suitable alternative sources given to us, no undisputed amount in respect do not exist for obtaining comparable quotations, of aforesaid statutory dues were outstanding st there are adequate internal control procedures as at 31 March, 2008 for the period of more commensurate with the size of the company and than six months from the date they become the nature of its business with regard to purchase payable except sales tax of Rs.8.47 lakhs of inventory, fixed assets and for the sale of goods which remains outstanding for a period of and services. During the course of our audit, we more than six months from the date it became have not observed any continuing failure to correct payable. major weaknesses in internal controls. (c) The details of disputed statutory dues as at (v) In respect of contracts or arrangements referred to March 31, 2008 that have not been deposited in section 301 of the Companies Act, 1956: by the company, are as under: [a] In our opinion and according to the information (Rs. in lacs) and explanations given to us, the particulars Sr. Dispute Amt. Period to Forum of contracts or arrangements referred to in No. under: (net of which the where deposit) amount dispute is section 301 of the Act, have been entered in (Rs.) relates pending the register required to be maintained under that section. (i) Central 131.03 1997-98 - High Court Sales to [b] According to the information and explanations Tax Act 2004-05 given to us, transactions made in pursuance and of contracts or arrangements entered in the Sales 23.24 1998-99 - Tribunal register maintained under section 301 of the Companies Act, 1956 and aggregating during Tax Act 12.49 2000-01 - Jt. Commissioner the year to Rupees five lakhs or more in of various 1.55 2001-02 - Dy Commissioner respect of any party, have been made at the states 1.10 2002-03 - Tribunal prices which are prima facie reasonable having 0.86 2002-03 - Jt. Commissioner regard to prevailing market prices at the relevant time. In respect of ice cream, sales 4.00 2003-04 - Dy Commissioner are made at predetermined prices, which in 2.39 2003-04 - Tribunal our opinion are prima facie reasonable. 16.62 2003-04 - Jt. Commissioner (vi) In our opinion and according to the information and 3.67 2004-05 - Jt. Commissioner explanations given to us, the company has complied with the provisions of section 58 A and 58AA or any (ii) Income 6.22 2002-03 - CIT (Appeals) other relevant provisions of the Companies Act, Tax Act, 1956 and the rules framed there under with regard 1961 to the deposits accepted from the public except (iii) Central 1.11 2005-06 - Tribunal that there has been a slight shortfall in maintaining Excise 1.53 2006-07 - Appellate liquid assets. Act Commissioner VADILAL INDUSTRIES LIMITED (28) The following matters, which have been excluded from (xiii)The company has given guarantee for loans taken the above table, have been decided in favour of the by others from banks or financial institutions. In company but the department has preferred appeals at our opinion and based on the information and higher levels. The details are as under: explanations given to us, the terms and conditions (Rs. in lakhs) are considered not prejudicial to the interest of the company. Sr. Dispute AmL Period to Forum where (xiv)To the best of our knowledge and belief and No. under: (net of which the department has according to the information and explanations given deposit) amount preferred to us, in our opinion, the term loans raised during (Rs.) relates appeals the year were prima facie been used for the (i) Central 4.58 1988-89 - Asst. Comm. of purpose for which they were raised. The term loans Excise Central Excise outstanding at the beginning of the year were Act. 1944 4.28 2003-04 - Asst. Comm. of applied for the purpose for which they were obtained. Central Excise (xv) According to the information and explanations given to us and on an overall examination of the 9.17 2000-01 - High Court, balance sheet of the company, we report that no Hyderabad funds raised on short-term basis have been used (ii) Income 1.99 1991-92 - Income Tax for long-term investment. Tax Act, Appellate Tribunal (xvi)During the year, the company has not made any preferential allotment of shares to parties and 1961 2.16 1992-93 - Income Tax companies covered in the register maintained under Appellate Tribunal section 301 of the Companies Act, 1956. 19.16 1993-94 - Income Tax (xvii) According to the information and explanations Appellate Tribunal given to us, the company has not issued any 13.14 1995-96 - Income Tax debentures during the year. Appellate Tribunal (xviii) The company has not raised any money by way of public issue during the year. 21.30 1996-97 - Income Tax (xix)To the best of our knowledge and belief and Appellate Tribunal according to the information and explanations given 3.12 1999- - Income Tax to us, no fraud on or by the company was noticed 2000 Appellate Tribunal or reported during the year. 12.44 2001-02 - Income Tax (xx) In our opinion and according to the information and Appellate Tribunal explanations given to us, the nature of the company’s business/activities during the year are such that (x) The company has no accumulated losses and has clause; not incurred any cash losses during the current 4(xiii) provisions of any special statute applicable financial year or for immediately preceding financial to chit fund, year. 4(xiv) dealing or trading in shares, securities, (xi) In our opinion and according to the information and debentures and other investments explanations given to us, the company has not defaulted in repayment of dues to financial institution of Company (Auditors’ Report) Order, or banks. The company has not obtained any 2003 are not applicable to the company. borrowings by way of debentures. (xii) In our opinion and according to the information and For KANTILAL PATEL & CO., explanation given to us, no loans and advances Chartered Accountants have been granted on the basis of security by way of pledge of shares, debentures and other securities. Arpit K. Patel Place : Ahmedabad Partner Date : June 30, 2008 Membership No.: 34032

24th ANNUAL REPORT 2007-2008 (29) BALANCE SHEET AS AT 31ST MARCH, 2008

SCHEDULE As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) I. SOURCES OF FUNDS : (1) Shareholders’ Funds: Share Capital 1 718.78 718.78 Reserves & Surplus 2 2,824.45 2,582.03 3,543.23 3,300.81 (2) Deferred Government Grant 38.36 41.56 (3) Loan Funds : Secured Loans 3 4,488.74 2,655.75 Unsecured Loans 4 1,012.17 822.61 5,500.91 3,478.36 (4) Deferred Tax Liability (Net) 5 505.68 423.00 TOTAL -> 9,588.18 7,243.73

II. APPLICATION OF FUNDS : (1) Fixed Assets : 6 (a) Gross Block 8,135.97 6,181.59 Less : Depreciation 3,568.41 3,226.65 Net Block 4,567.56 2,954.94 (b) Capital Work - In - Progress 641.05 730.81 5,208.61 3,685.75 (2) Investments : 7 331.65 331.89 (3) Current Assets, Loans & Advances : (a) Inventories 8 3,086.06 2,438.17 (b) Sundry Debtors 9 2,737.01 2,191.53 (c) Cash & Bank Balances 10 146.50 103.54 (d) Other Current Assets 11 70.59 41.25 (e) Loans & Advances 12 1,075.46 923.10 Sub Total (A) -> 7,115.62 5,697.59 LESS : Current Liabilities & Provisions : (a) Current Liabilities 13 2,838.84 2,011.80 (b) Provisions 14 271.51 491.85 Sub Total (B) -> 3,110.35 2,503.65 Net Current Assets (A - B) 4,005.27 3,193.94 (4) Misc. Expenditure 15 42.65 32.15 (To the extent not written off or adjusted) TOTAL -> 9,588.18 7,243.73

Significant Accounting Policies 22 Notes to Financial Statements 23

This is the Balance Sheet referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008

VADILAL INDUSTRIES LIMITED (30) PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Year Ended Year Ended SCHEDULE 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) I INCOME : (a) Income From Operations 16 13,263.69 11,980.76 Less : Excise Duty on sales 1.85 0.82 Net Turnover 13,261.84 11,979.94 (b) Other Income 17 287.10 157.28 Total 13,548.94 12,137.22

II EXPENDITURE : (a) (Increase) / Decrease in stock 18 (509.36) (166.76) (b) Materials Consumed and Purchase of goods 19 8,194.14 6,906.37 (c) Manufacturing & Other Expenses 20 4,438.24 3,913.82 (d) Financial Expenses (Net) 21 428.00 302.67 (e) Depreciation 436.80 317.66 Less : Withdrawn From Revaluation Reserve/ 26.14 26.25 Deferred Govt. Grant 410.66 291.41 Total 12,961.68 11,247.51

III Profit before Exceptional & Prior year items 587.26 889.71 IV Prior Years’ Adjustments (Net) (0.30) (2.21) V Profit before Tax 586.96 887.50 VI Provision for Tax (Refer Note I on Schedule 22) - Current 100.10 272.00 - Deferred 87.52 (5.71) - Fringe Benefit Tax 13.00 11.00 - (Short) / Excess Provision of Tax / Deferred Tax (6.16) (51.35) of earlier years (Net) VII Net Profit after Tax 380.18 558.86 VIII Profit Brought Forward 263.65 255.71

Amount available for appropriation 643.83 814.57

Appropriations : (a) General Reserve 259.40 450.00 (b) Proposed Dividend 86.26 86.26 (c) Tax on Proposed Dividend 14.66 14.66 (d) Balance carried to Balance Sheet 283.51 263.65

Total 643.83 814.57

Basic and Diluted Earnings Per Share of Rs. 10/- each 5.29 7.77 (Refer Note 10 on Sch 23) Significant Accounting Policies 22 Notes to Financial Statements 23

This is the Profit & Loss Account referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008

24th ANNUAL REPORT 2007-2008 (31) CASH FLOW STATEMENT ANNEXED TO THE BALANCE SHEET For the year For the year ended ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) A CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax and Exceptional Items 587.26 889.71 Adjusted for Depreciation 436.80 317.66 Withdrawn From Revaluation Reserve / (26.14) (26.25) Deferred Government Grant Loss / (Profit) on sale of Assets 3.37 (19.58) Loss / (Profit) on Partnership Firms (Net) (29.68) (24.61) Provision For Doubtful Advances 7.20 2.30 Bad Debts 2.80 11.95 Consideration Short received on Sale of property 0.11 3.80 Voluntary Retirement Scheme 18.25 22.75 Upfront Interest on restructuring of Loan 5.21 6.85 Diminuition in value of Current Investments 0.24 0.00 Excess Provision written back (71.07) (36.93) Dividend (0.14) (0.13) Financial Expenses (Net) 428.00 302.67

Operating Profit before working capital changes 1,362.21 1,450.19 Adjusted for Trade and other Receivables (649.51) (344.20) Inventories (647.89) (665.13) Trade Payables and Liabilities 883.31 558.25 Deferred Revenue Expenditure (33.97) 0.00

Cash Generated from Operations 914.15 999.11 Direct taxes (paid / adjusted) (346.84) (143.26)

Cash flow before extraordinary items 567.31 855.85 Net Prior Year Expenses (0.30) (2.21)

Net Cash from Operating Activities 567.01 853.64 B. CASH FLOW FROM INVESTING ACTIVITIES Loans given (Net) (29.02) 43.19 Purchase of fixed assets (1,910.12) (919.14) Sale of fixed assets 8.17 19.06 Sale of Investments (0.24) 0.00 Interest received 61.67 56.85 Dividend received 0.14 0.13

Net Cash used in Investing Activities (1,869.40) (799.91) C CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 3,329.86 1,292.71 Repayment of borrowings (1,307.31) (999.36) Interest paid (578.04) (427.36) Dividend paid (99.16) (82.31)

Net Cash used in Financing Activities 1,345.35 (216.32)

Net Increase/(Decrease) in cash and 42.96 (162.59) Cash equivalents (A+B+C) Op. Balance of Cash and Cash Equivalents (Includes unrealised 103.54 266.13 exchange difference of Rs. 0.28 lacs (P.Y. Rs. 0.55 lacs)) Cl. Balance of Cash and Cash Equivalents (Includes unrealised 146.50 103.54 exchange difference of Rs. 0.05 lacs (P.Y. Rs. 0.28 lacs)) Major Components of Cash and Cash Equivalents as at 31.03.2008 31.03.2007 Cash and Cheques on hand 29.47 27.95 Balance With Banks - On Current Accounts 81.45 31.16 - On Fixed / Margin Money Deposit Accounts 35.58 44.43

146.50 103.54 Notes : 1. The above Cash Flow has been prepared under Indirect Method set out in AS 3, issued by The Institute of Chartered Accountants of India. 2. Previous Year figures have been restated wherever necessary to make them comparable with current year figures. This is the Cash Flow Statement referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008 VADILAL INDUSTRIES LIMITED (32) SCHEDULES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 1 SHARE CAPITAL AUTHORISED : 1,00,00,000 Equity Shares of Rs. 10/- each 1,000.00 1,000.00 1,000.00 1,000.00

ISSUED AND SUBSCRIBED : 71,88,230 ( P.Y. 71,88,230 ) Equity Shares of Rs. 10/- each 718.82 718.82 718.82 718.82

PAID UP : 71,88,230 ( P.Y. 71,88,230 ) Equity Shares of Rs. 10/- each 718.82 718.82 (Of the above Equity Shares 15,53,500 Equity Shares are allotted as fully paid up by way of Bonus Shares by Capitalisation of General Reserve of Rs. 155.35 lacs and 5,08,230 Equity Shares of Rs. 10/- each issued as fully paid up pursuant to the scheme of amalgamation of Vadilal Financial Services Limited with the company) Less : Calls Unpaid (Other than Directors) 0.04 0.04 718.78 718.78

SCHEDULE : 2 - RESERVES & SURPLUS Balance Addition Deduction/ Balance As at During the Adjustment As at 01.04.2007 Year During the year 31.03.2008 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) 1 Capital Reserve 8.82 0.00 0.00 8.82 (8.82) (0.00) (0.00) (8.82) 2 Securities Premium Account* 487.27 0.00 0.00 487.27 (487.27) (0.00) (0.00) (487.27) 3 General Reserve 1,650.00 259.40 9.40 ** 1,900.00 (1,200.00) (450.00) (0.00) (1,650.00) 4 Revaluation Reserve*** 172.29 0.00 27.44 144.85 (Refer Note No C (ii) on Schedule 22) (195.34) (0.00) (23.05) (172.29) 5 Profit & Loss Account 263.65 283.51 (a) 263.65 (b) 283.51 (255.71) (263.65) (255.71) (263.65) 2,582.03 542.91 300.49 2,824.45 (2,147.14) (713.65) (278.76) (2,582.03) NOTE: Figures shown in Bracket relate to previous year * Securities Premium 487.32 Less : Calls Unpaid (arrears) 0.05 487.27 ** Charge on account of transitional provisions under Accounting Standard 15 Gross Rs 14.24 Lacs. Deferred Tax Assets (Net) Rs 4.84 Lacs. *** Opening Balance 172.29 Less : Utilised during the year 22.93 Less : Inter Unit Transfer / Sale / Discarded 4.51 144.85 (a) Transferred from (b) Transferred to As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 3 SECURED LOANS A. TERM LOANS I) From Financial Institutions 525.00 205.60 Carried Forward... 525.00 205.60 24th ANNUAL REPORT 2007-2008 (33) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) Brought Forward... 525.00 205.60 II) Loans from Banks 1,239.01 553.14 (Principal repayable within One year Rs. 129.91 Lacs (P.Y. Rs. 100.85 Lacs)) B WORKING CAPITAL LOANS From Banks 2,722.50 1,897.01 Add : Interest accrued & due 2.23 0.00 2,724.73 1,897.01 A 1) Term loans from IDBI, SBI, Exim Bank and MFPI (BOB - Bank Guarantee) are secured by way of Legal Mortgage on immovable properties and hypothecation on movable properties of the Company situated at the following places by way of 1st and 2nd charge on pari passu basis :- i Dudheshwar, Ahmedabad (Icecream Plant) (1st Charge) ii Dharampur, Dist.: Valsad (Canning Unit) (1st Charge) iii Basement and 3rd Floor, Vadilal House, Navrangpura, Ahmedabad (Office Complex) (1st Charge) iv Village Pundhra, Tal : Kalol, Dist. : Gandhinagar (Icecream Plant) (1st Charge) v Unit - I, Parsakhera Industrial Estate,Bareilly, U.P.(Icecream Plant (1st Charge) vi Dharampur, Dist,: Valsad (IQF Unit) (2nd Charge) vii Ground and 2nd Floor, Vadilal House, Navrangpura, Ahmedabad (Office Complex) (2nd Charge) viii Dharampur, Dist. : Valsad (New Land) (1st Charge) ix Unit - II, Parsakhera Industrial Estate, Bareilly, U.P. (Icecream Plant) (Only on movable properties as 1st Charge) x Gomtipur, Ahmedabad (earlier in Gujarat Cup Company, a Partnership Firm) (Only on movable properties as 1st Charge) xi Gomtipur, Ahmedabad (earlier in Vadilal Cone Company) ( Only on movable properties as 1st Charge) xii Specific additional Plant & Machinery situated at IQF Unit, Dharampur and Bareilly Unit - II (movable properties in favour of IDBI Ltd. as 1st Charge) 2) The above Term Loans are also secured by way of Hypothecation on entire current assets of the Company on 2nd pari-passu charge basis 3) Vehicle Loans are secured by hypothecation of vehicles B 1) Working Capital facilities from consortium banks namely BOB, SBI, SBT, SIB, IDBI Ltd and Exim Bank are secured by way of legal mortgage on Immovable properties and hypothecation on movable properties of the Company situated at the following places by way of 1st & 2nd Charge on pari-passu basis :- i Dudheshwar, Ahmedabad (Icecream Plant) (2nd Charge) ii Dharampur, Dist. : Valsad (Canning Unit) (2nd Charge) iii Basement and 3rd Floor, Vadilal House, Navrangpura, Ahmedabad (Office Complex) (2nd Charge) iv Village Pundhra, Taluka Kalol, Dist. : Gandhinagar (Icecream Plant) (2nd Charge) v Unit - I, Parsakhera Industrial Estate,Bareilly,U.P. (Icecream Plant) (2nd Charge) vi Dharampur, Dist. : Valsad (IQF Unit) (1st Charge) vii Ground and 2nd Floor, Vadilal House, Navrangpura, Ahmedabad (Office Complex) (1st Charge) Carried Forward... 4,488.74 2,655.75

VADILAL INDUSTRIES LIMITED (34) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) Brought Forward... 4,488.74 2,655.75 viii Unit - II, Parsakhera Industrial Estate, Bareilly, U.P. (Icecream Plant) (Only on movable properties as 2nd Charge) ix Gomtipur, Ahmedabad (earlier in Gujarat Cup Company, a Partnership Firm) (Only on movable properties as 2nd Charge) x Gomtipur, Ahmedabad (earlier in Vadilal Cone Company) ( Only on movable properties as 2nd Charge) 2) The Working Capital facilities are also secured by way of hypothecation on entire current assets of the Company on 1st pari-passu charge basis. C The Term Loans and Working Capital facilities are also secured by Personal Guarantee of some of the Directors of the Company and also guaranteed by two Companies

4,488.74 2,655.75 SCHEDULE : 4 UNSECURED LOANS (a) Fixed Deposits 712.69 723.80 Add: Interest accrued and Due 9.83 7.12 (Repayable within One year Rs. 401.63 Lacs (P.Y. Rs. 553.45 lacs)) 722.52 730.92 (b) Inter Corporate Deposits 52.27 56.55 (c) Security Deposits from Customers 37.40 35.14 (d) Development Credit Bank Ltd (Short Term Loan) 199.98 0.00 1,012.17 822.61 SCHEDULE : 5 DEFERRED TAX LIABILITY (NET) (Refer Note No I (a) on Schedule 22) Deferred Tax Liability Difference between book and Income Tax Depreciation 532.22 445.06 Other Timing Difference 10.11 5.71 542.33 450.77 Deferred Tax Assets Expenditure under section 43 B of the Income Tax Act, 1961 20.88 24.00 Other Timing Difference 15.77 3.77 36.65 27.77 Deferred Tax Liability (Net) 505.68 423.00

SCHEDULE : 6 FIXED ASSETS (Refer Note No. C on Schedule 22) (Rs. in Lacs) GROSS BLOCK (AT COST / REVALUED) DEPRECIATION NET BLOCK As At Addition Deduction As At Up to As At As At 31.03.2007 31.03.2008 31.03.2008 31.03.2008 31.03.2007 Land (Freehold) 161.72 4.34 0.00 166.06 0.00 166.06 161.72 Land (Leasehold) 100.66 10.50 0.00 111.16 0.00 111.16 100.66 Buildings 1,266.98 464.13 0.00 1,731.11 357.43 1,373.68 945.05 Plant & Machinery 4,123.41 1,525.56 83.01 5,565.96 2,804.23 2,761.73 1,626.67 Furniture & Fixtures 105.73 3.99 0.00 109.72 91.57 18.15 20.61 Office Equipments 287.08 22.30 17.52 291.86 224.25 67.61 56.24 Vehicles 136.01 34.65 10.56 160.10 90.93 69.17 43.99 Total (A) 6,181.59 2,065.47 111.09 8,135.97 3,568.41 4,567.56 2,954.94 Leased Assets Vehicles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total (B) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total (A+B) 6,181.59 2,065.47 111.09 8,135.97 3,568.41 4,567.56 2,954.94 Previous year 5,822.30 426.29 67.00 6,181.59 3,226.65 2,954.94 2,848.75 Capital W I P 730.81 641.05 730.81 641.05 0.00 641.05 730.81 Previous Year 91.95 723.26 84.40 730.81 0.00 730.81 91.95 24th ANNUAL REPORT 2007-2008 (35) NOTES : I. Land & Building includes Rs.29.43 lacs (P.Y. Rs. 100.66 lacs) & Rs. 151.61 lacs (P.Y. Rs. 170.99 lacs) respectively in process of being transferred in the name of the company. II. a. Building includes House Building of Rs. 12.90 lacs (Gross) (P.Y. Rs. 12.90 lacs) acquired against loan which is yet to be transferred in the name of the company. b. The Value of Building acquired against loan includes cost of documentation charges. III Borrowing cost capitalised during the year and shown in additions to fixed assets Rs. 39.50 Lacs (P.Y. Rs 3.46 Lacs) and in additions to Capital work in progress Rs. 26.09 Lacs (P.Y. Rs. 12.38 Lacs) IV. Estimated amount of contracts (Net Amount) remaining to be executed on capital account not provided for Rs. 178.72 Lacs (P.Y. Rs. 689.06 lacs) V Capital Work in progress includes - i) Rs 492.05 Lacs (P.Y. Rs 193.01 Lacs) on account of Construction materials at site ii) Rs 115.87 Lacs (P.Y. Rs 525.42 Lacs) on account of Capital Advances iii) Rs 33.13 Lacs (P.Y. Rs 12.38 Lacs) on account of Preoperative expenses 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) Preoperative Expenses a Opening Balance 12.38 0.00 b Add : Expenses Transferred from Profit & Loss Account 45.54 0.00 Interest Capitalised 65.59 15.84 c Less : 111.13 15.84 Capitalised during the year 90.38 3.46

Closing Balance 33.13 12.38

VI . Adjusted Depreciation upto 01.04.2007 3,226.65 Add : Depreciation for the year 436.80

3,663.45 Less : Depreciation adjusted on Assets Sold / Discarded / Transferred during the year 95.04

3,568.41

Face No of As At No of As At Value Units / 31.03.2008 Units / 31.03.2007 (in Rs.) Shares (Rs. in Lacs) Shares (Rs. in Lacs) SCHEDULE : 7 INVESTMENTS (At or below Cost) (Refer Note No D on Schedule 22) I Long Term Investments 1 In Government / Other Securities Unquoted (i) 7 Year National Saving Certificates 0.00 0 0.28 0 0.28 (Lodged with Govt. Authorities) (ii) 11.5 % IDBI Bond 2008 1,000.00 280 2.41 280 2.41 2 Trade Investments a) In Equity Shares Quoted (i) Vadilal Chemicals Ltd. 10.00 1473100 162.04 1473100 162.04 Unquoted (i) Vadilal Happinezz Parlour Ltd 10.00 72500 7.25 72500 7.25 (ii) Vadilal Gases Ltd. 10.00 165000 14.84 165000 14.84 (iii) Majestic Farm House Ltd. 10.00 74100 1.87 74100 1.87 b) In Partnership Firm (Refer Note No 8 (D) on Schedue 23) (i) Vadilal Cold Storage 0.00 0 140.00 0 140.00 c) Other Investments Equity Shares - other than trade Unquoted (i) Textile Traders Co.op. Bank Ltd 25.00 4195 1.05 4195 1.05 (ii) Siddhi Co.op. Bank Ltd 25.00 3540 0.89 3540 0.89

Total (I) 330.63 330.63

VADILAL INDUSTRIES LIMITED (36) Face No of As At No of As At Value Units / 31.03.2008 Units / 31.03.2007 (in Rs.) Shares (Rs. in Lacs) Shares (Rs. in Lacs) II Currrent Investments In Equity Shares Quoted (i) Aminex Chemicals Ltd. 10.00 400 0.04 400 0.04 (ii) Golden Agro Tech Industries Ltd 10.00 200 0.02 200 0.02 (iii) Interface Financial Services Ltd 1.00 25000 2.00 25000 2.00 (iv) Century Enka Ltd 10.00 15 0.06 15 0.06 (v) Radhe Developers Ltd 10.00 4900 0.49 4900 0.49 (vi) Matrix Laboratories Ltd 2.00 120 0.64 120 0.64 (vii) Saket Projects Ltd 10.00 2500 0.25 2500 0.25 (viii) Great Eastern Shipping Co.Ltd 10.00 100 0.04 141 0.05 (ix) Great Offshore Ltd 10.00 25 0.01 0 0.00 (x) Essar Steel Ltd. 10.00 60 0.01 60 0.01

3.56 3.56 Less : Diminution in value of Investments 2.54 2.30

Total (II) 1.02 1.26 In Preference Shares Unquoted (i) Essar Steel Ltd. 10.00 0.00 0.00 40.00 0.01

Total (I+II) 331.65 331.89

Aggregate Value of - a. Quoted Investments Book Value 165.60 165.60 Market Value ** 180.36 164.02 b. Unquoted Investments Book Value 168.59 168.59 ** In respect of Investment in shares of M/S Vadilal Chemicals Limited, book value of shares is considered in the absence of any trading in the market. As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 8 INVENTORIES (Refer Note No E on Schedule 22) Stores & Spares 134.53 88.96 Raw Materials 898.25 911.67 Packing Materials 526.00 419.51 Finished Goods (Includes Goods in Transit 1,527.28 1,018.03 Rs. 85.21 Lacs (P.Y. Rs. 76.45 Lacs)

3,086.06 2,438.17

SCHEDULE : 9 DEBTORS (UNSECURED) Outstanding over six months Considered Good 13.44 39.43 Others Considered Good 2,723.57 2,152.10

2,737.01 2,191.53

SCHEDULE : 10 CASH & BANK BALANCES Cash Balance 29.47 27.95 (Including cheques on hand / D D in transit Rs. 8.11 Lacs (P.Y. Rs. 0.88 Lacs)) Bank Balances. With Scheduled Banks. In Current Accounts 76.54 28.00 In Fixed / Margin Money Deposit Accounts * 35.58 44.43 In Unpaid Dividend A/c 4.91 3.16

24th ANNUAL REPORT 2007-2008 (37) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) * Out of which deposit of Rs. 28.37 Lacs (P.Y. Rs. 43.54 Lacs) (pledged with scheduled banks) (b) With Others Textile Traders Co op Bank Ltd In Current Accounts 0.00 0.00 (Maximum amount outstanding at any time during the year Rs. Nil (P.Y. Rs. 0.01 Lacs)) 146.50 103.54 SCHEDULE :11 OTHER CURRENT ASSETS Interest Receivable 70.59 41.25 70.59 41.25 SCHEDULE :12 LOANS & ADVANCES (Unsecured, considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received Considered Good 369.59 287.59 Considered Doubtful 9.50 2.30 Less : Provided for : 9.50 2.30 0.00 0.00 369.59 287.59 Staff Loan 8.04 7.12 Deposits with Government Authorities 104.92 87.31 Considered Doubtful 3.76 3.76 Less : Provided for : 3.76 3.76 0.00 0.00 104.92 87.31 Other Trade / Security Deposits 408.12 414.73 Advance Income Tax less Provision (Current Tax) 56.21 56.47 Loans in Current Account 36.60 1.79 Balance with Firm in which company is a partner 91.98 68.09 1,075.46 923.10 SCHEDULE : 13 CURRENT LIABILITIES Sundry Creditors (Refer Note No 14 on Schedule 23) 1,266.21 949.93 Other Liabilities 427.14 403.16 Bills Payable 1,006.09 441.35 Advances From Customers 33.91 25.87 Interest accrued but not due on loans 55.69 49.13 Temporary Overdraft in Current A/C with Banks 2.13 95.09 Due to Managing Directors 12.83 18.09 Unclaimed Dividends 4.90 3.15 Unpaid Matured Deposits * 26.43 22.99 Interest on Deposits * 3.51 2.74 Unpaid Matured Debenture & Interest 0.00 0.30 * These figures includes Rs. 0.98 lacs due and outstanding as on date 31.03.2008, subsequently 2,838.84 2,011.80 Rs. 0.83 lacs credited to Investor Education and Protection Fund, except Rs. 0.15 lacs (P.Y. Rs 0.15 lacs) which is held in abeyance due to legal case pending SCHEDULE : 14 PROVISIONS Employee Benefits (Refer Note No F On Schedule 22) 91.36 76.86 Income Tax Less Advance Tax (Current Tax) 64.70 294.54 Fringe Benefit Tax (Net) 8.00 6.00 Proposed Dividend 86.26 86.26 Tax on Proposed Dividend 14.66 14.66 Other Provisions 6.53 13.53 (Refer Note No 9 of Schedule 23) 271.51 491.85

VADILAL INDUSTRIES LIMITED (38) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE :15 MISCELLANEOUS EXPENDITURE Employees seperation cost (Refer Note No O (a) of Schedule 22) 26.02 18.51 Upfront Interest on restructuring of loan (Refer Note No O (b) of Schedule 22) 8.42 13.64 Ancilliary Cost incurred in connection with Term Loans Borrowings 8.21 0.00 (Refer Note No H(ii) of Schedule 22) 42.65 32.15

Unit of Year Ended Year Ended Measure- 31.03.2008 31.03.2007 -ment (Qty)(Rs. in Lacs) (Qty) (Rs. in Lacs) SCHEDULE : 16 INCOME FROM OPERATIONS (Refer Note No G (i) on Schedule 22) Sales Ice Cream & Frozen Desserts K. Ltrs 23,708.00 10,241.09 21,335.00 8,885.69 Fruit Pulp,Frozen Fruits & Vegetables M.Tonnes 6,251.00 3,016.83 5,509.00 3,091.65 Others - - 0.08 - 0.00 Income from Money Changing Business 5.69 3.42 Sales includes Export Benefits / Licence DEPB / Forward Contract Rs. 288.41 Lacs (P.Y. Rs. 280.94 Lacs ) 13,263.69 11,980.76

Year Ended Year Ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 17 OTHER INCOME Profit on Sale of Fixed Assets 0.00 19.58 Share of Profit / (Loss) of Partnership Firms (Refer Note No 2 (b) on Schedule 23) 29.68 24.61 Excess Provision Written Back / Amount written off in earlier years recovered 71.07 36.93 Miscellaneous Income 170.61 68.33 Foreign Exchange Rate Fluctuation (Refer Note No J on Schedule 22) 15.60 7.70 Dividend (Gross) On Long Term Investments 0.14 0.13 287.10 157.28 SCHEDULE : 18 (INCREASE)/DECREASE IN STOCK Opening Stock : Finished Goods 1,018.03 851.47 Less : Excise Duty 0.73 0.93 1,017.30 850.54 Closing Stock Finished Goods 1,527.28 1,018.03 Less : Excise Duty 0.62 0.73 1,526.66 1,017.30 (509.36) (166.76) SCHEDULE : 19 MATERIALS CONSUMED AND PURCHASE OF GOODS Raw & Packing Materials Consumption (Refer Note No 20 on Schedule 23) 8,128.56 6,897.74 Purchase of Finished Goods (Refer Note No 19 on Schedule 23) 65.58 8.63 8,194.14 6,906.37 SCHEDULE : 20 MANUFACTURING AND OTHER EXPENSES Employees’ Expenses Salary, Wages, Allowances, Gratuity & Bonus, etc 590.12 543.74 Contribution to Provident & other funds 42.58 34.78 Staff Welfare Expenses 51.57 50.59 684.27 629.11 Excise Duty others 58.41 57.59 Job Charges 584.81 479.11 Power & Fuel 906.39 804.21 Stores & Spares Consumption 31.74 64.88 Warehouse Charges 195.40 143.25 24th ANNUAL REPORT 2007-2008 (39) Year Ended Year Ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) Repairs Building 20.01 12.66 Machinery 124.73 68.86 Others 37.44 27.89 Other Manufacturing Expenses 45.04 36.24 Rent 4.99 3.74 Rates & Taxes 7.12 4.95 Insurance 35.69 35.35 Donation 1.33 3.14 Vehicle Repairs & Petrol Expenses 49.57 53.83 Research & Development Expenses (Refer Note No N on Schedule 22) 5.41 3.20 Directors’ Sitting Fees 0.80 1.14 Travelling 74.78 63.42 (Includes Directors Travelling Rs. 10.37 Lacs (P.Y. Rs 16.04 Lacs) Freight and Forwarding 1,143.56 1,078.40 Entry Tax and Sales Tax Assessment Dues 12.37 13.54 Advertisement & Sales Promotion 23.67 19.90 Sales Commission and Brokerage 13.31 15.96 Provision for Doubtful Debts & Advances 7.20 2.30 Bad Debts 2.80 11.95 Consideration Short received on Sale of property Development 0.11 3.80 Loss on sale of Fixed Assets 3.37 0.00 Diminuition in Value of Investments 0.24 0.01 Royalty 10.81 17.71 Other Expenses (Including Legal & Professional, 352.87 257.68 Conveyance, Telephone, Postage, Printing & Stationery, Reuter’s Fees, etc) 4,438.24 3,913.82 SCHEDULE : 21 FINANCIAL EXPENSES (NET) (Refer Note No H on Schedule 22) Fixed Loans 126.15 83.35 Bank Overdrafts 168.75 119.02 Fixed Deposits 67.68 59.26 Others 12.61 7.52 Bill Discounting Charges 80.23 42.12 Brokerage & Other Financial Charges 63.59 59.40 519.01 370.67 Less : Interest Income 91.01 68.00 (TDS Rs. 20.55 lacs (P.Y. Rs. 12.46 lacs) 428.00 302.67

SCHEDULE : 22 SIGNIFICANT ACCOUNTING POLICIES : A) ACCOUNTING CONVENTION : The financial statements have been prepared in accordance with the accounting principles generally accepted in India (Indian GAAP) and comply with the Companies (Accounting Standards) Rules,2006 issued by the Central Government and relevant provisions of Companies Act,1956 and are based on the historical cost convention as modified to include the revaluation of certain fixed assets. B) USE OF ESTIMATES Preparation of financial statements in confirmity with the generally accepted accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differance between the actual result and estimates, are recognised in the period in which the results are known/materialised. C) FIXED ASSETS, DEPRECIATION AND EXPENDITURE DURING CONSTRUCTION PERIOD : i) Fixed assets are stated at cost of acquisition & installation, net of cenvat and VAT credits availed ,if any, and includes amount added on revaluation less accumulated depreciation and impairment loss, if any. Pre-operative expenses, borrowing costs incurred during the periodof construction/acquisition of assets areadded to the cost of Fixed Assets.Major expenses on modification /alterations increasing efficiency/capacity of the plant are also capitalised.Adjustments arising from exchange rate variations relating to borrowings attributable to the fixed assets acquired from a country outside india are capitalised up to 31.03.2007.

VADILAL INDUSTRIES LIMITED (40) ii) Free hold Land, Building and Plant & Machineries of Ice Cream Plant, Ahmedabad and Agri. Foods plant, Dharampur have been revalued as on 31st March 2000 and are shown at the value approved by an external valuer, using relpacement basis policy. The net increase due to revaluation of such assets of Rs. 669.82 lacs (Previous year Rs. 669.82 lacs) is transferred to revaluation reserve account which stands reduced to Rs.144.85 lacs as at 31st March 2008 (Previous year Rs.172.29 lacs) after charging incremental depreciation and adjustment for disposal/inter unit transfer during the last eight years. The revalued amount of Rs. 2298.70 lacs (Previous year Rs. 2378.47 lacs) stands substituted for historical cost of Rs. 1424.14 lacs (Previous year Rs.1470.71 lacs) in the gross block of fixed assets. iii) a) Depreciation on fixed assets is provided on Straight Line Method at the rates and in the manner prescribed in Schedule XIV of the Companies Act 1956, (as amended). b) Incremental cost arising on account of translation of foreign currency liabilities up to 31.03.2007 for acquisition of fixed assets, depreciation has been provided over the residual life of the respective assets. c) On revalued assets, depreciation is provided on the estimate of the remaining useful life of such assets. d) In respect of major alterations/modifications forming an integral part of existing assets, depreciation is provided at the rate arrived on the basis of useful life of such assets after such alterations/ modifications or at the rate prescribed under schedule XIV, whichever is higher on the total value of such assets. iv) IMPAIRMENT OF ASSETS The carrying amount of assets is reviewed at each balance sheet date for any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of fixed assets exceeds its recoverable amount.The recoverable amount is measured as the higher of the net selling price and the value in use determined by the present value of estimated future cash flows. D) INVESTMENTS : Investments are classified into current and long term investments. Long term investments are carried at cost. A provision for diminution in value of long term investments is made for each investment individually ,if such decline is other than temporary. Current investments are stated at the lower of cost and fair value, computed category wise. E) INVENTORIES : Inventories are valued as under: i) RAW MATERIALS, PACKING : Valued at lower of cost or net realisable value and for this purpose MATERIALS AND STORES cost is determined on weighted average basis. Due provision for & SPARES. obsolescence is made. ii) FINISHED GOODS & WORK : At cost or net realisable value, whichever is lower. Cost is determined -IN-PROGRESS on absorption basis. Due provision for obsolescence is made. F) EMPLOYEE BENEFITS : (a) Short Term Employee Benefits All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences, etc, and the expected cost of bonus, ex-gratia are recognised in the period in which the employee renders the related service. (b) Post-Employment Benefits : (i) Defined Contribution Plans : State Governed provident fund scheme and employees state insurance scheme are defined contribution plans.The contribution paid / payable under the schemes is recognised during the period in which the employees renders the related services. (ii) Defined Benefit Plans : The employee’s gratuity fund scheme and compensated absences is company’s defined benefit plans. The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefits entitlement and measures each unit seprately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government Securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Acturial gains and losses are recognised immediately in the profit and loss account. In case of funded plans, the fair value of the plan assets is reduced from the gross obligations under the defined benefit plans, to recoginse the obligation on net basis. Gains or losses on the curtailment or settlement of any defined benefits plans are recoginsed when the curtailment or settlement occurs. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. (c) Long term employee benefits : The obligation for long term employee benefits such as long term compensated absences, is recognised in the same manner as in case of defined benefit plans as mentioned in b) ii) above. 24th ANNUAL REPORT 2007-2008 (41) d) Termination benefits : Where termination benefits such as compensation under voluntary retirement scheme are payable within a year of the balance sheet date, the actual amount of termination benefits is amortised over a defined period.Where termination benefits are payable beyond one year of the balance sheet date, the discounted amount of termination is amortised over the defined period. The defined period of amortisation is 36 months or the period till March 31, 2010, whichever is earlier. G) REVENUE RECOGNITION : i) SALES ACCOUNTING : a) Sales is inclusive of Excise,Export Incentives/Licences and exclusive of VAT and Sales Tax. b) Excise duty paid for captive consumption of goods, where cenvet credit is not available, is shown as excise expense. ii) DIVIDEND INCOME : Dividend income from Investment is accounted for when the right to receive is established. H) BORROWING COSTS : i) Borrowing costs whether specific or general, utilized for acquisition, construction or production of qualifying assets are capitalised as part of cost of such assets till the activities necessary for its intended use are complete. General borrowing costs are capitalised at the weighted average of such borrowings outstanding during the year.All other borrowing costs are charged in statement of profit & loss of the year in which incurred. ii) Ancilliary cost incurred in connection with term loan borrowings is amortised over the period of term loan. I) TAXES ON INCOME AND EXPENSES a) Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised only if there is virtual certainty that sufficient future taxable income will be available against which such assets can be realised. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Such assets are reviewed at each balance sheet date to reassess realisation. b) Fringe benefit tax has been determined at current applicable rate on taxes falling within the ambit of “Fringe Benefit” as defined under the Income Tax Act, 1961. J) FOREIGN CURRENCY TRANSACTIONS : i) Transactions denominated in foreign currencies are normally recorded at the Exchange Rate prevailing at the time of the transaction. ii) Monetary items denominated in foreign currency at the year end are translated at the Exchange Rates prevailing at the Balance Sheet date. iii) Premium or discount arising at the inception of the forward exchange contract is amortised as income or expense over the period of the contract. Any profit or loss arising in renewal or cancellation of forward exchange contracts is recognised as income or expense during the year. iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account. v) Losses in respect of all outstanding derivative contracts at the balance sheet date is provided by marking them to market. K) PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS : Provisions are recognised when the company has present obligation as a result of past events,for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. Contingent Liabilities are disclosed by way of notes to financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements. Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date. L) CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE : All contingencies and events occurring after the Balance Sheet date which have a material effect on the financial position of the company are considered for preparing the financial statements. M) ACCOUNTING FOR GOVERNMENT GRANTS : i) Government grants in the form of promoters contribution is treated as capital receipt and credited to capital reserve. ii) Grant in the form of revenue subsidy is treated as revenue receipt and credited to “Other Income” in Profit and Loss Account. However,from 2007-08, specific grants in the form of revenue subsidy is deducted from the related expenses. iii) Grant towards specific fixed assets was presentedas deduction from its gross value up to 31.03.2005 and thereafter the same is presented by credit to Deferred Government grant and amortised overthe period of useful life of specific fixed assets. VADILAL INDUSTRIES LIMITED (42) N) RESEARCH AND DEVELOPMENT EXPENSES : Expenditure relating to capital items is debited to Fixed Assets and depreciated at applicable rates. Revenue expenditure is charged to Profit and Loss Account of the periodin which they are incurred. O) MISCELLANEOUS EXPENDITURE : a) Compensation paid for Voluntary Retirement of employees is amortised over a period of 36 months or the period up to 31st March 2010, whichever is earlier, as per the revised AS-15. b) Upfront interest paid on restructuring of term loans is amortised over the tenure of such loans. SCHEDULE : 23 NOTES TO FINANCIAL STATEMENTS 1) [ A ] CONTINGENT LIABILITIES NOT PROVIDED FOR : (Rs. in Lacs) C. Year P. Year I) Guarantees given by the company 1245.00 995.00 against Term Loans given to companies in which Directors are interested . Outstanding against this as at 31.03.2008 523.03 582.94 II) i) For Excise - a) Related to a matter decided in favour of the company, against which the Excise department has preferred an appeal. Gross Rs 18.03 lacs (P.Y. Rs 18.03 lacs) Net of Tax 11.96 11.96 b) Related to the matters for which, final hearing of the submissions filed by the company in response to show cause notices by the Excise Department is pending. Gross Rs Nil lacs (P.Y. Rs 32.01 lacs) Net of Tax 0.00 21.24 c) Related to a matter which is disputed by the company against which appeal is preferred. Gross Rs. 2.64 lacs (P. Y. Rs. Nil lacs) Net of Tax 1.74 0.00 ii) For Income Tax - a) whichis disputed by the company 5.55 5.55 and against which company has preferred appeal, based on the demand notices raised by Income Tax Dept. and received by the company. b) Against which Income Tax department has 73.31 85.99 preferred appeal (as per information available with the company ) c) In respect of erstwhile Vadilal Financial Services 3.95 3.95 Limited (VFSL) Income Tax Demand (including interest) for which the company has preferred appeal. iii) For Sales Tax - Disputed by the company and against which company has preferred an appeal. Gross Rs 85.59 lacs ( P.Y. Rs 77.69 lacs ) Net of Tax 56.78 51.54 iv) For other Matters - Gross Rs 1.94 lacs (P.Y. Rs.1.94 lacs) Net of Tax 1.29 1.29 v) In respect of other labour suits pending before various courts, liability is unascertainable. vi) Differential amount of custom/excise duty in respect 386.64 28.71 of machinery imported under EPCG scheme. Note : a) Future cash outflows in respect of A (II) (i) to (v) above depends on ultimate settlement / conclusions with the relevant authorities. b) Future cash outflows in respect of A (II) (vi) above depends if company unable to fulfill export obligations of Rs. 2450.53 Lacs within next twelve years.

24th ANNUAL REPORT 2007-2008 (43) [B] Particulars of dues of Sales Tax, Income Tax and Excise Duty as at March 31, 2008, which have not been deposited. (I) Disputed cases, where company has preferred appeals. Name of Nature Amount Period of Forum where Statute of (Rs. in which the dispute is dues Lacs) amount relates pending (i) FOR SALES TAX ASST.DUES S.Tax Asst.dues 0.00 1997-98 S.Tax Tribunal (2.37) Asst.dues 23.24 1998-99 S.Tax Tribunal (23.24) Asst.dues 12.49 2000-01 Jt.Comm.,S.Tax (0.00) Asst.dues 1.55 2001-02 Dy.Comm.,S.Tax (1.55) Asst.dues 1.10 2002-03 S.Tax Tribunal (1.10) Asst.dues 0.86 2002-03 Jt.Comm.,S.Tax (0.00) Asst.dues 4.00 2003-04 Dy.Comm.,S.Tax (4.00) Asst.dues 2.39 2003-04 S.Tax Tribunal (2.39) Asst.dues 16.62 2003-04 Jt.Comm.,S.Tax (16.62) Asst.dues 3.67 2004-05 Jt.Comm.,S.Tax (3.67) Total 65.92 (54.94) (ii) FOR S.TAX EXEMPTION CERTIFICATE - [ Ref.Note No.3 ] S.Tax Asst.dues 131.03 1997-98 High Court (130.06) to 2004-05 (iii) FOR EXCISE Excise Cenvat credit 1.11 2005-06 Appellate Tribunal (0.00) Cenvat credit 1.53 2006-07 Appellate (0.00) Commissioner Total 2.64 (0.00) iv) FOR INCOME TAX I. Tax Computation of I. Tax under 6.22 2002-03 CIT (Appeals) section 115JB (6.22) (II) Decided in favour of the company but the department has preferred appeals. (i) Excise Goods cleared without duty 4.58 1988-89 Asst.Commissioner (4.58) Cenvat credit 4.28 2003-04 Asst.Commissioner (4.28) Cenvat credit 9.17 2000-01 High Court, (9.17) Hyderabad Total 18.03 (18.03) (ii) I.Tax I.Tax Asst. 1.99 1991-92 ITAT (1.99) 2.16 1992-93 ITAT (14.83) 19.16 1993-94 ITAT (19.17) 13.14 1995-96 ITAT (13.14) 21.30 1996-97 ITAT (21.30) 3.12 1999-2000 ITAT (3.12) 12.44 2001-02 ITAT (12.44) Total 73.31 (85.99) Note : Figures in brackets relate to previous year. VADILAL INDUSTRIES LIMITED (44) 2) a) INVESTMENT IN PARTNERSHIP FIRMS The details regarding investment in the total capital of the partnership firm as well as Profit/Loss sharing ratio of the company alongwith other partner is stated hereunder : Investment in the Capital of - ( Rs.in Lacs ) M/s Vadilal Cold Storage Total Capital Rs 142.90 Investment in Capital Account Rs 140.00 Name of the Partners Share in Profit/ Losses of the firm i) Vadilal Industries Limited 98 % ii) Vadilal Chemicals Limited 2 % b) Amount of share of profit in partnership firm amounting to Rs. 29.68 Lacs have been accounted on the basis of Unaudited Financial Statements of the partnership firm. 3) Company has availed Sales Tax exemption benefit of Rs. 151.46 lacs up to 31.03.2008 (previous year Rs.151.46 lacs) in respect of assets and liabilities of Bareilly plant - II assigned from erstwhile company. In respect of erstwhile company, U.P.Trade Tax Tribunal has upheld the eligibility exemption against the order of Divisional Level Committee, Bareilly Region, Bareilly refusing exemption. Trade Tax Dept. U.P. has preferred appeal against the said order of U.P.Trade Tax Tribunal in High Court of Allahabad, Lucknow Bench.The company has filed counter appeal. Based on legal advise of its entitlement to sales tax exemption,the company is contesting demand for sales tax of Rs. 137.35 lacs (Previous year Rs. 136.38 lacs) raised up to 2004-05 for completed sales tax assessment. 4) a) The company has accounted transport subsidy available on exports for the year 2006-07 of Rs. 61.71 Lacs in current year on accrual basis due to reasonable certainty of receipt of claims.The same was earlier accounted on settlement basis. The same has been shown under “Other Income”. b) For the year 2007-08, though a formal policy is not pronounced by the distribution agency i.e. APEDA,(Agricultural and Processed Food Products Export Development Authority) the company has accounted transport subsidy of Rs. 42.83 Lacs, based on anticipation of pronouncement of such policy considering announcements by Government from time to time and such benefit being made available in past years. Such income is deducted from freight expense. 5) a) The Company has taken building on operating lease that is renewable on a perodic basis and cancelable at its option. Rental expenses for operating lease recognised in statement of profit and loss for the year is Rs. 4.99 lacs (Previous year Rs. 3.74 lacs). b) In respect of asset taken on finance lease on or after 1st April, 2001 : (Rs. in Lacs) Balance Not later Later than Later Particulars as at than one one year & not than five 31.03.08 year later than five years years i) Total of minimum lease payments 48.87 11.76 37.11 — ii) Present value of minimum lease payments 38.95 8.07 30.88 — iii) A general description of the significant finance lease arrangements : The company has taken vehicle on finance lease for a period of 24 to 60 months. 6) The company has written down the inventories to net realisable value during the year by Rs. 73.08 Lacs (Previous year Rs. 35.82 Lacs). 7) (i) Pursuant to the transitional provision of Accounting Standard (AS) 15 (Revised) on “Employees Benefits”, an amount of Gross Rs 14.24 Lacs (Net of Tax Rs.9.40 Lacs) has been debited to the General Reserve. The said amount represent the difference between the liability in respect of various employees benefits determined under AS 15 (Revised) as on April 1, 2007 and the liability that existed as on that date as per AS 15 prior to the revision. (ii) Defined Contribution Plans: Amount of Rs. 24.90 Lacs is recognised as expense and included in “Employee’s Expenses” (Schedule 20) in the Profit and Loss Account. (iii) Defined Benefit Plans : (a) The changes in the present value of defined benefit obligation representing reconciliation of opening and closing balance thereof are as follows: Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Opening defined benefit Obligation as at 01.04.07 83.07 26.34 Service Cost 7.21 2.00 Interest Cost 6.80 2.16 Actuarial Losses (Gains) 2.94 1.38 Losses (Gains) on curtailments — — Liabilities extinguished on settlements — — Benefits Paid (8.71) (2.24) Closing defined benefit obligation as at 31.03.2008 91.31 29.64 24th ANNUAL REPORT 2007-2008 (45) (b) Changes in the fair value of plan assets representing reconciliation of the opening and closing balance thereof are as follows: Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Opening fair value of plan assets as at 01.04.2007 35.85 — Expected return 3.75 — Acturial gains and (Losses) (0.85) — Assets distributed on settlements — — Contribution by employer 17.42 — Benifit paid (8.71) — Closing balance of fair value of plan assets as at 31.03.2008 47.46 — (c) The amounts recognised in Balance Sheet are as follows : Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Amount to be recognised in Balance Sheet A) Present Value of Defined Benefit Obligation - Funded 47.46 — - Unfunded 43.85 29.64 Total 91.31 29.64 Less: Fair Value of Plan Assets 47.46 — - Unrecognised Past Service Costs — — Amount to be recognised as liability 43.85 29.64 B) Amount Reflected in the Balance Sheet Liabilities 43.85 29.64 Assets — — Net Liability/(Asset) 43.85 29.64 (d) The amounts recognised in Profit and Loss account are as follows: Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) 1. Current Service Cost 7.21 2.00 2. Interest cost 6.81 2.16 3. Expected return on plan assets (3.75) — 4. Net Acturial Losses (Gains) recognised in year 3.79 1.38 5. Past service cost — — 6. Losses (gains) on curtailments and settlement — — Total Included in ‘Employee’s expense’ [ Ref. Sch. 20 ] 14.06 5.54 Actual return on plan assets 2.90 — (e) The Major categories of plan asset as a percentage of total plan assets are as follows: Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Government of India Securities 0.00 % 0.00 % High quality corporate bonds 0.00 % 0.00 % Equity shares of listed companies 0.00 % 0.00 % Property 0.00 % 0.00 % Insurance company 100.00 % 0.00 % (f) Principal acturial assumptions at the balance sheet date. (expressed as weighted averages): Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Discount rate 8.20 % 8.20 % Expected return on plan assets 9.00 % 0.00 % Proportion of employees opting for early retirement/Attrition rate 17.00 % 17.00 % Annual increase in salary costs 6.00 % 6.00 % VADILAL INDUSTRIES LIMITED (46) The estimates of future salary increase, considered in acturial valuation, take account of inflation, seniority, promotion, and other relavant factors, such as supply and demand in the employment market, (g) Amount pertaining to defined benefits plans are as follows : Particulars Gratuity Plan Leave Encashment Current Year (Rs.in Lacs) Defined benefit obligation 91.31 — Plan assets 47.46 — Surplus / (Deficit) (43.85) — Experience adjustment on plan Liabilities — — Experience adjustment on plan Assets — — Note : The current year ended 31.03.2008, being the first year of adoption of AS-15 (Revised),the figures for the previous year are not applicable. (h) The company expects to fund Rs. 20.00 Lacs towards gratuity plan and Rs. 30.00 Lacs towards provident fund plan during the year 2008-09. Notes : i) No corresponding figures for the previous year are presented as the company has adopted AS-15 (Revised), effective 01.04.2007. ii) The company provides retirement benefits in the form of Provident Fund, Gratuity and Leave Encashment. Provident fund contributions made to “Government Administrated Provident Fund” are treated as defined contribution plan since the company has no further obligations beyond its monthly contributions. Gratuity is treated as defined benefit plan, and is administrated by making contributions to Group Gratuity Scheme of Life Insurance Corporation of India. Leave encashment and Sick leave is considered as defined benefit plan and remains unfunded. 8) RELATED PARTY DISCLOSURES : As per Accounting Standard 18. A) Name of related party and description of relationship where control exists. Vadilal Cold Storage : Partnership firm where share is more than 51 % B) Name of related party and description of the relationship with whom transactions taken place. 1) Associates : Vadilal Chemicals Ltd. 2) Key Management Personnel : i) Virendra R Gandhi ii) Rajesh R Gandhi iii) Devanshu L Gandhi 3) Enterprises owned or significantly influenced by key management personnel or their relatives : i) Vadilal Enterprises Ltd. ii) Vadilal International Pvt. Ltd. iii) Kalpit Reality & Services Ltd. iv) Vadilal Happiness Parlour Ltd. v) Veronica Construction Pvt.Ltd. vi) Padm Complex Pvt.Ltd. vii) Ambica Dairy Products viii) Majestic Farm House Ltd. ix) Vadilal Soda Fountain 4) Relative of key Management Personnel : Mamta R Gandhi C) Transaction with related parties : (Rs. in Lacs) Sr. Particulars of Transaction & Control Associates Relatives of Enterprises Total No. Name of Related Party with Exist Key owned or whom transactions are more management significantly than 10% Personnel influenced by key management personnel or their relatives 1 Sales : i) Vadilal Enterprises Ltd. — — — 10671.57 10671.57 (—) (—) (—) (9200.03) (9200.03) ii) Others — — — 51.21 51.21 (—) (—) (—) (45.87) (45.87)

24th ANNUAL REPORT 2007-2008 (47) Sr. Particulars of Transaction & Control Associates Relatives of Enterprises Total No. Name of Related Party with Exist Key owned or whom Transactions are more management significantly than 10% Personnel influenced by key management personnel or their relatives 2 Purchase : i) Vadilal Chemicals Ltd. — 8.29 — — 8.29 (—) (6.42) (—) (—) (6.42) ii) Others — — — — — (—) (—) (—) (0.64) (0.64) 3 Sale of RM/PM : i) Vadilal Enterprises Ltd. — — — — — (—) (—) (—) (0.18) (0.18) ii) Vadilal Soda Fountain — — — — — (—) (—) (—) (0.32) (0.32) 4 Hire Charges/Rent paid : Vadilal Cold Storage 6.79 — — — 6.79 (4.55) (—) (—) (—) (4.55) 5 Freight paid : Kalpit Reality & Services Ltd. — — — 251.31 251.31 (—) (—) (—) (246.25) (246.25) 6 Rent Income : Vadilal Enterprises Ltd. — — — 0.90 0.90 (—) (—) (—) (0.90) (0.90) 7 Interest paid : i) Vadilal Happiness Parlour Ltd. — — — 1.06 1.06 (—) (—) (—) (1.01) (1.01) ii) Padm Complex Pvt.Ltd. — — — 4.46 4.46 (—) (—) (—) (4.79) (4.79) 8 Salary paid : Mamta R.Gandhi — — 1.08 — 1.08 (—) (—) (1.20) (—) (1.20) 9 Interest Income : Vadilal International Pvt.Ltd. — — — 4.03 4.03 (—) (—) (—) (4.00) (4.00) 10 Share of profit in partnership firm : Vadilal Cold Storage 29.68 — — — 29.68 (24.61) (—) (—) (—) (24.61) 11 Royalty paid/payable : Vadilal International Pvt. Ltd. — — — 10.81 10.81 (—) (—) (—) (17.71) (17.71) 12 Corporate guarantee given : Vadilal Enterprises Ltd. — — — 250.00 250.00 (—) (—) (—) (380.00) (380.00) 13 Corporate guarantee taken : Vadilal Enterprises Ltd. — — — 800.00 800.00 (—) (—) (—) (—) (—) 14 Balance outstanding at year end : a) Investments : i) Vadilal Chemicals Ltd. — 162.04 — — 162.04 (—) (162.04) (—) (—) (162.04) ii) Others — — — 1.87 1.87 (—) (—) (—) (1.87) (1.87) b) Receivable : i) Vadilal Enterprises Ltd. — — — 2304.65 2304.65 (—) (—) (—) (1847.49) (1847.49) ii) Vadilal International Pvt. Ltd. — — — 381.47* 381.47 (—) (—) (—) (400.00)* (400.00)

VADILAL INDUSTRIES LIMITED (48) Sr. Particulars of Transaction & Control Associates Relatives of Enterprises Total No. Name of Related Party with Exist Key owned or whom transactions are more management significantly than 10% Personnel influenced by key management personnel or their relatives iii) Others 231.98** — — 84.75 316.73 (208.09)** (—) (—) (45.57) (253.66) c) Payable : i) Vadilal Chemicals Ltd. — 11.62 — — 11.62 (—) (8.94) (—) (—) (8.94) ii) Padm Complex Pvt.Ltd. — — — 41.42 41.42 (—) (—) (—) (46.47) (46.47) iii) Vadilal Happiness Parlour Ltd. — — — 10.85 10.85 (—) (—) (—) (10.08) (10.08) d) Against corporate guarantee given : Vadilal Enterprises Ltd. — — — 523.03 523.03 (—) (—) (—) (582.94) (582.94) e) Against corporate guarantee taken : Vadilal Enterprises Ltd. — — — 750.00 750.00 (—) (—) (—) (—) (—) Note : a) Payment to key management personnel in form of Managing Director’s remuneration is shown in Note No. 16 a). * b) Represents towards deposit. ** c) Represents as capital investments and amount in current account with partnership firm in which company is partner. d) Director’s sitting fees is shown seperately in accounts. e) Transaction of sales are shown net of VAT & S.Tax. f) Figures in brackets relate to previous year. D) Disclosure as required under clause No.32 of Stock Exchange listing agreement : Loans/Advances and Investments of the company : O/S.as at Maximum O/S. Particulars 31.03.08 during the year (Rs.in Lacs) (Rs.in Lacs) (I) ASSOCIATES Vadilal Chemicals Ltd. - Investments 162.04 162.04 (162.04) (162.04) (II) PARTNERSHIP FIRMS WHERE SHARE IS MORE THAN 51 % Vadilal Cold Storage - Investments 140.00 140.00 (140.00) (140.00) Figures in bracket relate to previous year. 9) Disclosure as required by Accounting Standard (AS)29 "Provision, Contingent Liabilities and Contingent Assets" : a) Movement in provisions : (Rs.in Lacs) Sr. Particulars of —— Class of Provisions ——- No. Disclosure Excise Others Total 1) Balance as at 01.04.2007 7.81 5.72 13.53 2) Additional provision during 2007-08 — — — 3) Provision used during 2007-08. 7.00 — 7.00 4) Provision reversed during 2007-08. — — — 5) Balance as at 31.03.2008 0.81 5.72 6.53 b) Nature of provisions : Provision for others represents Entry Tax. c) The timing and the probability of the outflow with regards to these matters depend on the ultimate settlement / conclusion with the relevant authorities. 10) EARNINGS PER SHARE a) The amount used as the numerator in calculating basic and diluted earnings per share is the net profit for the year disclosed in the profit and loss account. 24th ANNUAL REPORT 2007-2008 (49) b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 71,88,230. 11) As per Accounting Standard (AS) 17, “Segment Reporting”, segment information is provided in the Notes to Consolidated Financial Statements. 12) PARTICULARS OF DERIVATIVE INSTRUMENTS : a) Derivative contracts entered into by the company and outstanding as on 31st March, 2008 i) Particulars of derivative instruments acquired for hedging amount as under : PARTICULARS C.YEAR P.YEAR (NOS.) (AMOUNT) (NOS.) (AMOUNT) Number of sell contract 5 US $ 5000000 2 US $ 2000000 Aggregate Amount Rs. 2007.00 Lacs Rs. 871.20 Lacs ii) All derivative and financial instruments acquired by the company are for hedging. iii) Foreign currency exposure that are not hedged by derivative instruments as on 31st March, 2008 : US $ 1346742 equal to Rs. 539.05 Lacs (Previous year US $ 1719232 equal to Rs. 751.16 Lacs) Euro 363243 equal to Rs.228.20 Lacs (Previous year Euro 116850 equal to Rs. 67.84 Lacs) b) In respect of all outstanding derivative contracts at the balance sheet date by marking them to market shows net profit, which has been ignored. 13) Exchange (loss)/gain in respect of forward exchange contracts to be recognised in the Profit & Loss Account of subsequent accounting period aggregate to Rs. 1.75 Lacs (Previous year Rs. 13.60 Lacs) 14) Based on the information available with the company, there are no suppliers who are registered under the Micro, Small and Medium Enterprises Development Act, 2006 as at March 31,2008. Hence,the disclosure relating to amounts unpaid as at the year end together with interest paid/payable under this Act have not been given. 15) AUDITORS REMUNERATION (Rs.in Lacs) C.YEAR P.YEAR Audit fees 6.85 * 5.50 Tax Audit fees 2.56 2.30 Certification 4.57 3.95 Taxation matter fees 2.35 0.79 Out of pocket expenses 0.60 0.44 Total 16.93 12.98 * Included in preoperative expenses incurred during the year Rs. 0.75 Lacs (Previous year Nil). 16) MANAGERIAL REMUNERATION a) Salaries, Wages, Allowances, Bonus etc. includes Rs. 53.82 lacs towards Managing Director’s remuneration as per details given below (Rs.in Lacs) C.YEAR P.YEAR Salary 24.00 24.00 Commission 12.52 18.09 Contribution to P.F. 2.88 2.88 other perquisites in cash or kind 14.42 14.42 Total.... 53.82 59.39 b) Computation of net profit u/s. 349 of the Companies Act,1956. Net Profit/(Loss) before tax for the year as per Profit & Loss A/c 586.96 887.50 Add : 1) Depreciation charged in a/c’s 436.80 317.66 Less : Withdrawn from Revaluation Reserve / Deferred Govt. Grant 26.14 26.25 410.66 291.41 2) Director’s remuneration 53.82 59.39 3) Sitting Fees 0.80 1.14 4) Loss on sale of assets u/s. 349 (3) (c) (d) 3.37 — 5) Loss on sale of investments — — 6) Provision for doubtfull debts/ Advances 7.20 2.30 1062.81 1241.74 Less : 1) Depreciation u/s.350 of the Companies Act, 1956 436.80 317.66 2) Profit of a capital nature in terms of section 349 (3) (d) — 19.58

436.80 337.24 Net Profit / (Loss) U/S. 349 of the Companies Act,1956 626.01 904.50 Commission payable to two Managing Directors @ 1 % each 12.52 18.09 VADILAL INDUSTRIES LIMITED (50) 17) LICENSED, INSTALLED CAPACITY & PRODUCTION * Licensed capacity ** Installed capacity Production (as registered (as certified by with DGTD) Managing Director) (per annum) (per annum) a) Ice cream & Frozen Dessert 700 MT 51900 K.Ltrs. 23962 K.Ltrs. (700) MT (37740) K.Ltrs. (21386) K.Ltrs. b) Fruit Pulp, Frozen Fruits & Vegetables 5400 MT 25000 MT 8216 MT (5400) MT (16200) MT (7780) MT c) Sugar Cone 231.00 Nos. 187.59 Nos. (210.00) in Lacs (165.50) in Lacs d) Paper Cup/Lid & Corrugated Boxes 1050.00 Nos. 1199.24 Nos. (1050.00) in lacs (948.98) in Lacs * For Pundhra and Bareilly plant 17500 MT per annum (Previous year 17500 MT per annum) capacity is registered with S.I.A. for which licence is not required. ** This being technical matter the auditors have placed reliance on certificate issued by the Managing Director. 1) Figures in brackets relate to previous year. 2) Production of Fruit Pulp,Frozen Fruits & Vegetables includes 1346 MT (Previous year 990 MT) processed by third parties, and 1242 MT (Previous year 2010MT) used for captive consumption. 3) Licenced capacity is not applicable for Frozen Fruits and Vegetables. 18) STOCK OF FINISHED GOODS : (Rs.in Lacs) Sr. Products Units Opening Stock Closing Stock No. (Qty.) (Rs.) (Qty.) (Rs.) A) Ice cream & Frozen Dessert K.Ltrs. 708 308.23 967 438.40 (681) (263.76) (708) (308.23) B) Fruit Pulp, Frozen Fruits & Vegetables MT 2795 709.80 3525 1088.88 (2664) (587.71) (2795) (709.80) 19) QUANTITATIVE DETAILS IN RESPECT OF PURCHASE OF GOODS. Sr. Products Units Quantity Purchase Value No. (Rs.in Lacs) A) Fruit Pulp, Frozen Fruits & Vegetable MT 223 65.58 (19) (8.63) B) Others —— (—) (—) NOTE : Figures in brackets relate to previous year. 20) CONSUMPTION OF RAW AND PACKING MATERIALS . Particulars Units C.YEAR P.YEAR Qty. in Value Qty. in Value Lacs Rs. in Lacs Lacs Rs. in Lacs Milk & Milk Products Kgs. 49.78 2203.32 52.89 1769.62 Dry Fruits, Fresh Fruits & Vegetables Kgs. 130.54 1960.17 105.78 1523.31 Packing Materials — 1821.38 — 1648.38 Others — 2143.69 — 1956.43 8128.56 6897.74

NOTES :- 1) Inter godown transportation and Octroi charges included in others Rs. 8.29 lacs (previous year Rs. 6.21 lacs). 2) Consumption of Raw and Packing Materials : C.YEAR %age P.YEAR %age Rs.in Lacs Rs.in Lacs 1) Imported 361.97 4.45 510.45 7.40 2) Indigenous 7766.59 95.55 6387.29 92.60

8128.56 100.00 6897.74 100.00

21) STORES AND SPARES CONSUMED : Rs.in Lacs C.YEAR %age P.YEAR %age 1) Imported 5.93 18.68 8.73 13.46 2) Indigenous 25.81 81.32 56.15 86.54 31.74 100.00 64.88 100.00

24th ANNUAL REPORT 2007-2008 (51) 22) A) C.I.F. VALUE OF IMPORTS : (Rs.in Lacs) C.YEAR P.YEAR a) Raw Materials and Packing Materials 93.20 293.61 b) Stores and Spares 10.15 11.86 c) Capital Goods 31.34 84.17

B) EXPENDITURE IN FOREIGN CURRENCY: i) Sales Promotion and Commission 9.36 4.10 ii) Travelling 8.80 8.61 iii) Freight 49.60 47.64 iv) Others 14.38 15.89 C) EARNINGS IN FOREIGN CURRENCY:- Export of Goods (F.O.B.Value) 1847.98 2143.24 23) REMITTANCE OF FOREIGN CURRENCIES FOR DIVIDENDS : The company has not made any remittances in foreign currencies on account of dividends during the year. The particulars of dividends paid to non-resident shareholders are as follows : C.YEAR P.YEAR Year to which dividend relates 2006-07 2005-06 Number of non-resident shareholders 14 9 Number of shares held by them on which dividend is due 21845 50925 Amount remitted to bank accounts in India of non-resident shareholders - (Rs. in Lacs) 0.26 0.51 24) Previous year figures have been restated wherever necessary to make them comparable with current year’s figures. 25) BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE I REGISTRATION DETAILS Registration No. 5169 State Code 04 Balance Sheet Date 31.03.2008 II CAPITAL RAISED DURING THE YEAR (AMT.IN RS.THOUSAND) Public issue Nil Right issue Nil Bonus issue Nil Private placement Nil III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS AMT. (RS.IN THOUSAND) Total liabilities 958818 Total Assets 958818 Sources of Funds Paid up capital 71878 Reserves & Surplus 282445 (Incl.share capital suspense) Deferred Govt. Grant 3836 Secured Loans 448874 Unsecured Loans 101217 Deferred Taxation (Net) 50568 Application of Funds Net Fixed Assets 520861 Investments 33165 Net Current Assets 400527 Misc.Expenditure 4265 Accumulated Losses Nil IV PERFORMANCE OF COMPANY (AMT. IN RS. THOUSANDS) Turnover 1354894 Total Expenditure 1296198 Profit/(Loss) before tax 58696 Profit/(Loss) after tax 38018 Earnings per share (in Rs.) Annualised 5.29 Dividend rate 12 % V GENERIC NAME OF PRINCIPAL PRODUCT OF THE COMPANY Item Code No. (ITC Code) 040210.09 Product Description Ice Cream Item Code No. (ITC Code) 081290.02 Product Description Mango Pulp Item Code No. (ITC Code) 200490.00 Product Description Frozen Vegetable

Signatures to schedule 1 to 23 For and on behalf of the Board Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary

Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008 VADILAL INDUSTRIES LIMITED (52) CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008 SCHEDULE As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)

I. SOURCES OF FUNDS : (1) Shareholders’ Funds: (a) Share Capital 1 718.78 718.78 (b) Reserves & Surplus 2 2,823.76 2,570.76 3,542.54 3,289.54 (2) Minority Interest 6.44 5.84 (3) Deferred Government Grant 38.36 41.56 (4) Loan Funds : (a) Secured Loans 3 4,488.74 2,655.75 (b) Unsecured Loans 4 1,012.17 822.61 5,500.91 3,478.36 (5) Deferred Tax Liability (Net) 5 505.68 423.00 TOTAL -> 9,593.93 7,238.30

II. APPLICATION OF FUNDS : (1) Fixed Assets : 6 (a) Gross Block 8,422.63 6,463.69 Less : Depreciation 3,755.77 3,409.24 Net Block 4,666.86 3,054.45 (b) Capital Work In Progress 641.05 730.81 5,307.91 3,785.26 (2) Investments : 7 (a) In Associate 161.31 150.72 (b) In Others 29.61 29.85 (3) Current Assets, Loans & Advances : 190.92 180.57 (a) Inventories 8 3,086.06 2,438.17 (b) Sundry Debtors 9 2,742.44 2,197.73 (c) Cash & Bank Balances 10 149.63 105.48 (d) Other Current Assets 11 70.59 41.32 (e) Loans & Advances 12 1,155.00 986.15 Sub Total (A) -> 7,203.72 5,768.85 LESS : Current Liabilities & Provisions : (a) Current Liabilities 13 2,862.55 2,023.31 (b) Provisions 14 288.72 505.22

Sub Total (B) -> 3,151.27 2,528.53 Net Current Assets (A - B) 4,052.45 3,240.32 (4) Misc. Expenditure 15 42.65 32.15 (To the extent not written off or adjusted) TOTAL -> 9,593.93 7,238.30

Significant Accounting Policies 22 Notes to Financial Statements 23

This is the Balance Sheet referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008 24th ANNUAL REPORT 2007-2008 (53) CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 SCHEDULE Year Ended Year Ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs)

I. INCOME : (a) Income From Operations 16 13,455.81 12,170.68 Less : Excise Duty on sales 1.85 0.82 Net Turnover 13,453.96 12,169.86 (b) Other Income 17 257.49 133.73 Total 13,711.45 12,303.59

II. EXPENDITURE : (a) (Increase) / Decrease in stock 18 (509.36) (166.76) (b) Materials Consumed and Purchase of goods 19 8,194.14 6,906.37 (c) Manufacturing & Other Expenses 20 4,595.92 4,074.90 (d) Financial Expenses (Net) 21 412.40 288.77 (e) Depreciation 441.57 322.49 Less : Withdrawn From Revaluation Reserve / 26.14 26.25 Deferred Govt. Grant 415.43 296.24 Total 13,108.53 11,399.52

III. Profit before Exceptional & Prior year items 602.92 904.07 IV. Prior Years’ Adjustments (Net) (0.30) (2.21) V. Profit before Tax 602.62 901.86 VI. Provision for Tax - Current 115.10 285.30 - Deferred 87.52 (5.71) - Fringe Benefit Tax 13.06 11.07 - (Short) / Excess Provision of Tax / Deferred Tax (6.16) (51.84) of earlier years (Net) VII Profits applicable to minority interest 0.60 0.50 vIII Share in Profit/(Loss) of Associate 10.59 17.27 IX. Net Profit after Tax 390.77 576.13 X Profit Brought Forward 205.97 180.76 Amount available for appropriation 596.74 756.89

Appropriations : (a) General Reserve 259.40 450.00 (b) Proposed Dividend 86.26 86.26 (c) Tax on Proposed Dividend 14.66 14.66 (d) Balance carried to Balance Sheet 236.42 205.97 Total 596.74 756.89

Basic and Diluted Earnings Per Share of Rs. 10/- each 5.44 8.02 Significant Accounting Policies 22 Notes to Financial Statements 23

This is the Profit & Loss Account referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008 VADILAL INDUSTRIES LIMITED (54) CONSOLIDATED CASH FLOW STATEMENT ANNEXED TO THE BALANCE SHEET For the Year For the Year Ended Ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) A. CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax and Exceptional Items 602.92 904.07 Adjusted for Depreciation 441.57 322.49 Withdrawn From Revaluation Reserve / (26.14) (26.25) Deferred Government Grant Loss / (Profit) on sale of Assets 3.37 (19.58) Provision For Doubtful Advances 7.20 2.30 Bad Debts Written Off 2.80 11.95 Consideration short received for sale of property 0.11 3.80 Voluntary Retirement Scheme 18.25 22.75 Upfront Interest on restructuring of Loan 5.21 6.85 Diminuition in value of Current Investments 0.24 0.00 Excess Provision written back (71.08) (37.99) Dividend (0.14) (0.13) Financial Expenses (Net) 412.40 288.77

Operating Profit before working capital changes 1,396.71 1,479.03 Adjusted for Trade and other Receivables (669.49) (343.91) Inventories (647.89) (665.13) Trade Payables and Liabilities 895.63 555.32 Deferred Revenue Expenditure (VRS) (33.97) 0.00 Cash Generated from Operations 940.99 1,025.31 Direct taxes (paid / adjusted) (360.84) (152.89) Cash flow before extraordinery items 580.15 872.42 Net Prior Year Expenses (0.30) (2.21) Net Cash from Operating Activities 579.85 870.21 B. CASH FLOW FROM INVESTING ACTIVITIES Loans given (Net) (51.78) 20.23 Purchase of fixed assets (1,914.68) (925.87) Sale of fixed assets 8.17 19.06 Purchase of Investments (0.24) 0.00 Interest received 77.34 70.68 Dividend received 0.14 0.13 Net Cash used in Investing Activities (1,881.05) (815.77) C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings 3,329.86 1,292.71 Repayment of borrowings (1,307.31) (999.36) Interest paid (578.04) (427.36) Dividend paid (99.16) (82.31) Net Cash used in Financing Activities 1,345.35 (216.32) Net Increase/(Decrease) in cash and Cash equivalents (A+B+C) 44.15 (161.88) Op. Balance of Cash and Cash Equivalents (Includes unrealised 105.48 267.36 exchange difference of Rs. 0.28 lacs (P.Y. Rs. 0.55 lacs)) Cl. Balance of Cash and Cash Equivalents (Includes unrealised 149.63 105.48 exchange difference of Rs. 0.05 lacs (P.Y. Rs. 0.28 lacs)) Major Components of Cash and Cash Equivalents as at 31.03.2008 31.03.2007 Cash and Cheques on hand 31.74 29.44 Balance With Banks - On Current Accounts 82.31 31.61 - On Fixed / Margin Money Deposit Accounts 35.58 44.43 149.63 105.48 Notes : 1. The above Cash Flow has been prepared under indirect method set out in AS 3, issued by the Institute of Chartered Accountants of India. 2. Previous Year figures have been restated wherever necessary to make them comparable with current year figures. This is the Cash Flow Statement referred For and on behalf of the Board to in our report of even date Ramchandra R. Gandhi : Chairman Virendra R. Gandhi : Vice-Chairman & For KANTILAL PATEL & CO. Managing Director Chartered Accountants Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Partner Nikhil Patel : Company Secretary Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008 24th ANNUAL REPORT 2007-2008 (55) SCHEDULES TO CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 1 SHARE CAPITAL AUTHORISED : 1,00,00,000 Equity Shares of Rs. 10/- each 1,000.00 1,000.00 1,000.00 1,000.00 ISSUED AND SUBSCRIBED : 71,88,230 ( P.Y. 71,88,230 ) Equity Shares of Rs. 10/- each 718.82 718.82 718.82 718.82 PAID UP : 71,88,230 ( P.Y. 71,88,230 ) Equity Shares of Rs. 10/- each 718.82 718.82 Less : Calls Unpaid (Other than Directors) 0.04 0.04 718.78 718.78

SCHEDULE : 2 RESERVES & SURPLUS

Balance Addition Deduction/ Balance As at during the Adjustment As at 01.04.2007 Year during the Year 31.03.2008 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) 1. Capital Reserve 55.23 0.00 0.00 55.23 (55.23) (0.00) (0.00) (55.23) 2. Securities Premium * 487.27 0.00 0.00 487.27 (487.27) (0.00) (0.00) (487.27) 3. General Reserve 1,650.00 259.40 9.40 ** 1,900.00 (1,200.00) (450.00) (0.00) (1,650.00) 4. Revaluation Reserve *** 172.29 0.00 27.45 144.84 (195.34) (0.00) (23.05) (172.29) 5. Profit & Loss Account 205.97 236.42 (a) 205.97 (b) 236.42 (180.76) (205.97) (180.76) (205.97) 2,570.76 495.82 242.82 2,823.76 (2,118.60) (655.97) (203.81) (2,570.76)

NOTE: Figures shown in Bracket relate to previous year * Securities Premium 487.32 Less : Calls Unpaid (arrears) 0.05

487.27

** Charge on account of transitional provisions under Accounting Standard 15 Gross Rs 14.24 Lacs. Deferred Tax Assets (Net) Rs 4.84 Lacs

** Opening Balance 172.29 Less : Utilised during the year 22.94 Less : Inter Unit Transfer / Sale / Discarded 4.51

144.84

(a) Transferred from (b) Transferred to

VADILAL INDUSTRIES LIMITED (56) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 3 SECURED LOANS A. TERM LOANS i) From Financial Institutions 525.00 205.60 ii) Loans from Banks 1,239.01 553.14 (Principal repayable within One year Rs. 129.91 Lacs (P.Y. Rs. 100.85 Lacs)) B. WORKING CAPITAL LOANS From Banks 2,722.50 1,892.84 Add : Interest Accrued and due 2.23 4.17 2,724.73 1,897.01 4,488.74 2,655.75 SCHEDULE : 4 UNSECURED LOANS Fixed Deposits 712.69 723.80 Add: Interest accrued and Due 9.83 7.12 (Repayable within One year Rs. 401.63 lacs) (P.Y. Rs. 553.45 lacs)) 722.52 730.92 Inter Corporate Deposits 52.27 56.55 Security Deposits from Customers 37.40 35.14 Development Credit Bank Ltd (Short Term Loan) 199.98 0.00 1,012.17 822.61 SCHEDULE : 5 DEFERRED TAX LIABILITY (NET) Deferred Tax Liability Difference between Book and Income Tax Depreciation 532.22 445.06 Other Timing Difference 10.11 5.71 542.33 450.77 Deferred Tax Assets Expenditure under section 43 B of the Income Tax Act, 1961 20.88 24.00 Other Timing Difference 15.77 3.77 36.65 27.77 Deferred Tax Liability (Net) 505.68 423.00

SCHEDULE : 6 FIXED ASSETS (Rs. in Lacs) GROSS BLOCK (AT COST / REVALUED) DEPRECIATION NET BLOCK As At Addition Deduction As At Up to As At As At 31.03.2007 31.03.2008 31.03.2008 31.03.2008 31.03.2007 Land (Freehold) 161.72 4.34 0.00 166.06 0.00 166.06 161.72 Land (Leasehold) 144.28 10.50 0.00 154.78 0.00 154.78 144.28 Buildings 1,356.17 464.13 0.00 1,820.30 416.76 1,403.54 975.33 Plant & Machinery 4,270.44 1,530.12 83.01 5,717.55 2,930.37 2,787.18 1,652.08 Furniture & Fixtures 105.92 3.99 0.00 109.91 91.71 18.20 20.67 Office Equipments 289.15 22.30 17.52 293.93 225.99 67.94 56.39 Vehicles 136.01 34.65 10.56 160.10 90.94 69.16 43.98 Total (A) 6,463.69 2,070.03 111.09 8,422.63 3,755.77 4,666.86 3,054.45 Leased Assets Plant & Machinery 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Vehicles 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total (B) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total (A+B) 6,463.69 2,070.03 111.09 8,422.63 3,755.77 4,666.86 3,054.45 Previous year 6,097.67 433.02 67.00 6,463.69 3,409.24 3,054.45 2,946.36 Capital W I P 730.81 641.05 730.81 641.05 0.00 641.05 730.81 Previous Year 91.95 723.26 84.40 730.81 0.00 730.81 91.95 NOTES : I. Land & Building includes Rs. 29.43 lacs (P.Y. Rs. 100.66 lacs ) & Rs. 151.61 lacs (P.Y. Rs. 170.99 lacs) respectively in process of being transferred in the name of the company. II. a. Building includes House Building of Rs. 12.90 lacs (Gross) (P.Y. Rs. 12.90 lacs) acquired against loan which is yet to be transferred in the name of the company. b. The Value of Building acquired against loan includes cost of documentation charges. 24th ANNUAL REPORT 2007-2008 (57) III. Borrowing cost capitalised during the year and shown in additions to fixed assets Rs. 39.50 lacs (P. Y. Rs. 3.46 Lacs) and in additions to capital work in progress Rs. 26.09 Lacs (P. Y. Rs. 12.38 Lacs) IV. Estimated amount of contracts (Net Amount) remaining to be executed on capital account not provided for Rs. 178.72 lacs (P.Y. Rs. 689.06 lacs) V Capital Work in progress includes Rs 525.42 Lacs (P.Y. Rs 70.76 Lacs) as Capital Advance i) Rs 492.05 Lacs (P.Y. Rs 193.01 Lacs) on account of Construction materials at site ii) Rs 115.87 Lacs (P.Y. Rs 525.42 Lacs) on account of Capital Advances iii) Rs 33.13 Lacs (P.Y. Rs 12.38 Lacs) on account of Preoperative expenses 31.03.2008 31.03.2007 (Rs. In lacs) (Rs. In lacs) (Rs. In lacs) Preoperative Expenses a Opening balance 12.38 0.00 b Add : Expenses Transferred from Profit & Loss Account 45.54 0.00 Interest Capitalised 65.59 15.84 c Less : 111.13 15.84 Capitalised during the year 90.38 3.46 d Closing balance 33.13 12.38 VI Adjusted Depreciation upto 01.04.2007 3,409.24 Add : Depreciation for the Year 441.57 3,850.81 Less : Depreciation adjusted on Assets Sold / Discarded / Transferred during the Year 95.04 3,755.77

Face No of As At No of As At Value Units / 31.03.2008 Units / 31.03.2007 in Rs. Shares (Rs. in Lacs) Shares (Rs. in Lacs) SCHEDULE : 7 INVESTMENTS (At or below Cost) I In Associate Vadilal Chemicals Ltd. 10.00 1473100 161.31 1473100 150.72 (Including Rs 46.41 lacs of capital 208.45 208.45 reserve after adjusting Rs 15.14 lacs in share of accumulated losses upto 31.03.2002) Less : Accumulated Losses 47.14 57.73 since 2002-03 Onwards II Others A Long Term Investments 1 In Government / Other Securities Unquoted (i) 7 Year National Saving Certificates 0.00 0 0.28 0 0.28 (Lodged with Govt. Authorities) (ii) 11.5 % IDBI Bond 2008 1000.00 280 2.41 280 2.41 2 Trade Investments a) In Equity Shares Unquoted (i) Vadilal Happinezz Parlour Ltd. 10.00 72500 7.25 72500 7.25 (ii) Vadilal Gases Ltd. 10.00 165000 14.84 165000 14.84 (iii) Majestic Farm House Ltd. 10.00 74100 1.87 74100 1.87 b) Other Investments Equity Shares - other than trade Unquoted (i) Textile Traders Co-op Bank Ltd 25.00 4195 1.05 4195 1.05 (ii) Siddhi Co-op Bank Ltd 25.00 3540 0.89 3540 0.89 Total (A) 28.59 28.59 B Currrent Investments In Equity Shares Quoted (i) Aminex Chemicals Ltd. 10.00 400 0.04 400 0.04 (ii) Golden Agro Tech Ind Ltd 10.00 200 0.02 200 0.02 (iii) Interface Financial Services Ltd. 1.00 25000 2.00 25000 2.00 (iv) Century Enka Ltd 10.00 15 0.06 15 0.06 VADILAL INDUSTRIES LIMITED (58) Face No of As At No of As At Value Units / 31.03.2008 Units / 31.03.2007 in Rs. Shares (Rs. in Lacs) Shares (Rs. in Lacs) (v) Radhe Developers Ltd 10.00 4900 0.49 4900 0.49 (vi) Matrix Laboratories Ltd 2.00 120 0.64 120 0.64 (vii) Saket Projects Ltd 10.00 2500 0.25 2500 0.25 (viii) Great Eastern Shipping Co Ltd. 10.00 100 0.04 141 0.05 (ix) Great Offshore Ltd 10.00 25 0.01 0 0.00 (x) Essar Steel Ltd. 10.00 60 0.01 60 0.01 3.56 3.56 Less : Diminution in value of Investments 2.54 2.30 Total (B) 1.02 1.26 In Preference Shares Unquoted (i) Essar Steel Ltd. 10.00 0.00 0.00 40 0.01 Total (A+B) 29.61 29.85 Total (I+II) 190.92 180.57 As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 8 INVENTORIES Stores & Spares 134.53 88.96 Raw Materials 898.25 911.67 Packing Materials 526.00 419.51 Finished Goods (Includes Goods in Transit 1,527.28 1,018.03 Rs. 85.21 lacs (P.Y. Rs. 76.45 lacs) 3,086.06 2,438.17 SCHEDULE : 9 DEBTORS (UNSECURED) Outstanding over six months Considered Good 13.44 39.43 Others Considered Good 2,729.00 2,158.30

2,742.44 2,197.73

SCHEDULE : 10 CASH & BANK BALANCES Cash Balance 31.74 29.44 (Including cheques on hand / D D in transit Rs. 8.11 lacs (P.Y. Rs. 0.88 lacs)) Bank Balances. (a) With Scheduled Banks. In Current Accounts 77.40 28.45 In Fixed / Margin Money Deposit Accounts * 35.58 44.43 In Unpaid Dividend A/c 4.91 3.16 (* Out of which deposit of Rs. 28.37 Lacs (P.Y. Rs. 43.54 lacs) pledged with scheduled banks) (b) With Others Textile Traders Co-op Bank Ltd In Current Accounts 0.00 0.00 (Maximum amount outstanding at any time during the year Rs. Nil (P.Y. Rs. 0.01 Lacs)) 149.63 105.48

SCHEDULE :11 OTHER CURRENT ASSETS Interest Receivable 70.59 41.32

70.59 41.32

24th ANNUAL REPORT 2007-2008 (59) As At As At 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 12 LOANS & ADVANCES (Unsecured, considered good unless otherwise stated) Advances recoverable in cash or in kind 392.84 287.74 or for value to be received Considered Doubtful 9.50 2.30 Less : Provided for : 9.50 2.30

0.00 0.00

392.84 287.74 Staff Loan 8.25 7.34 Deposits with Government Authorities 104.92 89.54 Considered Doubtful 3.76 3.76 Less : Provided for : 3.76 3.76

0.00 0.00

104.92 89.54 Other Trade / Security Deposits 408.12 414.84 Advance Income Tax less Provision (Current Tax) 61.99 59.47 Loans in Current Account 178.88 127.22

1,155.00 986.15

SCHEDULE : 13 CURRENT LIABILITIES Sundry Creditors 1,266.21 949.93 Other Liabilities 436.33 411.60 Bills Payable 1,006.09 441.35 Advances From Customers 33.91 25.87 Interest accrued but not due on loans 55.69 49.13 Temporary Overdraft in Current A/C with Banks 16.65 98.16 Due to Managing Directors 12.83 18.09 Unclaimed Dividends 4.90 3.15 Unpaid Matured Deposits* 26.43 22.99 Interest on Deposits * 3.51 2.74 Unpaid Matured Debenture & Interest 0.00 0.30 * These figures includes Rs 0.98 Lacs due and outstanding as on date 31.03.2008. 2,862.55 2,023.31 Subsequently Rs 0.83 Lacs credited to Investor Education and Protection fund, except Rs 0.15 Lacs (P.Y. Rs 0.15 Lacs) which is held in abeyance due to legal case pending) SCHEDULE : 14 PROVISIONS Employee Benefits 91.36 76.86 Income Tax Less Advance Tax (Current Tax) 81.87 307.84 Fringe Benefit Tax 8.04 6.07 Proposed Dividend 86.26 86.26 Tax on Proposed Dividend 14.66 14.66 Other Provisions 6.53 13.53

288.72 505.22

SCHEDULE : 15 MISCELLANEOUS EXPENDITURE Employees seperation cost 26.02 18.51 Upfront Interest on restructuring of loan 8.42 13.64 Ancilliary Cost incurred in connection with 8.21 0.00 Term Loan Borrowings 42.65 32.15

Unit of Year Ended 31.03.2008 Year Ended 31.03.2007 Measurement (Qty) (Rs. in Lacs) (Qty) (Rs. in Lacs) SCHEDULE : 16 INCOME FROM OPERATIONS Sales Ice Cream & Frozen Desserts K. Ltrs 23708 10,241.09 21335 8,885.69 Fruit Pulp,Frozen Fruits & Vegetables M.Tonnes 6251 3,016.83 5509 3,091.65 Others - 192.20 - 189.92 Income from Money Changing business - 5.69 - 3.42 Sales includes Export Benefits / Licence / DEPB / Forward Contract Rs. 288.41 Lacs (P.Y. Rs. 280.94 Lacs ) 13,455.81 12,170.68 VADILAL INDUSTRIES LIMITED (60) Year ended Year ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 17 OTHER INCOME Profit on Sale of Fixed Assets 0.00 19.58 Excess Provision Written Back 71.08 37.99 Miscellaneous Income 170.67 68.33 Foreign Exchange Rate Fluctuation 15.60 7.70 Dividend (Gross) On Long Term Investments 0.14 0.13 257.49 133.73 SCHEDULE : 18 (INCREASE)/DECREASE IN STOCK Opening Stock : Finished Goods 1,018.03 851.47 Less : Excise Duty 0.73 0.93 1017.30 850.54 Less : Closing stock : Finished Goods 1,527.28 1,018.03 Less : Excise Duty 0.62 0.73 1,526.66 1,017.30 (509.36) (166.76) SCHEDULE : 19 MATERIALS CONSUMED AND PURCHASE OF GOODS Raw & Packing Materials Consumption 8,128.56 6,897.74 Purchase of Finished Goods 65.58 8.63 8194.14 6906.37 SCHEDULE : 20 MANUFACTURING AND OTHER EXPENSES Employees’ Expenses Salary, Wages, Allowances, Gratuity & Bonus, etc 619.23 571.99 Contribution to Provident & other Funds 42.58 34.78 Staff Welfare Expenses 53.36 50.95 715.17 657.72 Excise Duty Others 58.41 57.59 Job Charges 584.81 479.11 Power & Fuel 986.94 895.20 Stores & Spares Consumption 31.74 64.88 Warehouse Charges 191.01 141.10 Repairs Building 27.30 19.48 Machinery 142.27 78.77 Others 41.83 31.18 Other Manufacturing Expenses 48.89 39.98 Rent 2.59 2.53 Rates & Taxes 7.13 5.37 Insurance 36.15 35.35 Donation 1.33 3.14 Vehicle Repairs & Petrol Expenses 49.64 53.83 Research & Development Expenses 5.41 3.20 Directors’ Sitting Fees 0.80 1.14 Travelling (Includes Directors Travelling Rs 10.37 Lacs (P.Y. Rs 16.04 Lacs) 74.99 63.72 Freight and Forwarding 1,153.30 1,088.86 Sales & Turnover Tax and VAT 12.37 13.54 Advertisement & Sales Promotion 23.67 19.90 Sales Commission and Brokerage 13.31 15.96 Provision for Doubtful Debts and Advances 7.20 2.30 Bad debts 2.80 11.95 Consideration short received for sale of Property Development 0.11 3.80 Loss on sale of Fixed Assets 3.37 0.00 Diminuition in Value of Investments 0.24 0.01 Royalty 10.81 17.71 Other Expenses (Including Legal & Professional, 362.33 267.58 Conveyance, Telephone, Postage, Printing & Stationery, Reuters Fess, etc) 4,595.92 4,074.90

24th ANNUAL REPORT 2007-2008 (61) Year ended Year ended 31.03.2008 31.03.2007 (Rs. in Lacs) (Rs. in Lacs) SCHEDULE : 21 FINANCIAL EXPENSES (NET) Fixed Loans 126.15 83.35 Bank Overdrafts 168.75 119.02 Fixed Deposits 67.68 59.26 Others 12.61 7.52 Bill Discounting Charges 80.23 42.12 Brokerage & Other Financial Charges 63.59 59.40 519.01 370.67 Less : Interest Income 106.61 81.90 (TDS Rs. 20.55 lacs (P.Y. Rs. 12.46 lacs) 412.40 288.77

SCHEDULE : 22 SIGNIFICANT ACCOUNTING POLICIES : A) ACCOUNTING CONVENTION : The consolidated financial statements have been prepared in accordance with Accounting standards 21 ( AS 21) - ”Consolidated Financial Statements” and Accounting standards 23 ( AS 23) - “ Accounting for investments in associates” issued by the Institute of Chartered Accountants of India. B) PRINCIPLES OF CONSOLIDATION The consolidated financial statements relate to “ Vadilal Industries Ltd.”( The Parent Company ), Enterprise under the control of a parent and Vadilal Chemicals Ltd.,an Associate Company.The consolidated statements have been prepared on the following basis. a) The financial statements have been combined on a line -by-line basis by adding together the book values of like items of Assets, Liabilities, Income and Expenses. The Intra-group balances and Intra-group transactions and unrealised profits or losses have been fully eliminated . b) The consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the parent company’s separate financial statements. c) The difference between the cost/carrying amount of investments over the net assets is recognised in financial statements as goodwill or capital reserve as the case may be. d) Minority interest’s share of net profit/loss of consolidated for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders. e) In case of associates where the company holds more than 20 % of equity, investments in associates are accounted for using equity method in accordance with Accouting Standard - ( AS 23 ) “Accounting for investments in associates in consolidated financial statements” issued by the Institute of Chartered Accountsts of India. f) The company accounts for its share in the change in the net assets of the associate, post acquisition,after eliminating unrealised profit and losses resulting from transactions between the company and its associate to the extent of its share,through its profit and loss account to the extent such change is attributable to the associate’s profit and loss account and through its reserves for the balance,based on available information. g) The difference between the carrying amount of investments in the associate and the share of net assets at the time of acquisition of shares in the associate is identified in the financial statements as goodwill or capital reserve as the case may be. C) Investments other than in subsidiaries and associates have been accounted as per Accounting Standard 13 on Accounting for Investments. D) OTHER SIGNIFICANT ACCOUNTING POLICIES : These are setout in the notes to financial statements under “Statement of accounting policies” of the financial statements of Vadilal Industries Ltd. SCHEDULE : 23 NOTES TO FINANCIAL STATEMENTS 1) Enterprises considered in the consolidated financial statements are : Name Country of Proportion of Incorporation ownership interest Vadilal Cold Storage India 98.00 % 2) The associate considered in the consolidated financial statement is : Name Country of Proportion of Incorporation ownership interest Vadilal Chemicals Ltd. India 30.22 % 3) The original cost of investments in associate, Vadilal Chemicals Ltd. has been substituted during the year 2002-03 by adjusting / writting off diminution in value aggregating to Rs.63.36 lacs against Securities Premium Account. Capital reserve VADILAL INDUSTRIES LIMITED (62) has been accordingly worked out considering the carrying amount instead of original cost. Share of net profit/(losses) in associate after relationship up to 31.03.2002 amounting to Rs.15.14 lacs is reduced from capital reserve arising on such reworking. 4) CONTINGENT LIABILITIES NOT PROVIDED FOR : C. Year P. Year ( Rs. in Lacs ) I) Guarantees given by the company 1245.00 995.00 against Term Loans given to companies in which Directors are interested . Outstanding against this as at 31.03.2008 523.03 582.94 II) i) For Excise - a) Related to a matter decided in favour of the company, against which the Excise department has preferred an appeal. Gross Rs.18.03 lacs (P.Y. Rs 18.03 lacs) Net of Tax 11.96 11.96 b) Related to the matters for which, final hearing of the submissions filed by the company in response to show cause notices by the Excise Department is pending. Gross Rs. Nil lacs (P.Y. Rs 32.01 lacs) Net of Tax 0.00 21.24 c) Related to a matter which is disputed by the Company against which appeal is preferred. Gross Rs. 2.64 lacs (P.Y.Rs. Nil lacs) Net of Tax 1.74 0.00 ii) For Income Tax - a) which is disputed by the company and against which Company 5.55 5.55 has preferred appeal, based on the demand notices raised by Income Tax Dept. and received by the company. b) Against which Income Tax department has preferred appeal 73.31 85.99 (as per information available with the company ) c) In respect of erstwhile Vadilal Financial Services Limited(VFSL) Income Tax 3.95 3.95 Demand ( including interest) for which the company haspreferred appeal. iii) For Sales Tax - Disputed by the company and against which company has preferred an appeal. Gross Rs.85.59 lacs (P.Y. Rs. 77.69 lacs) Net of Tax 56.78 51.54 iv) For other Matters - Gross Rs.1.94 lacs (P.Y. Rs. 1.94 lacs) Net of Tax 1.29 1.29 v) In respect of other labour suits pending before various courts, liability is unascertainable. vi) Differential amount of custom/excise duty in respect of machinery 386.64 28.71 imported under EPCG scheme. Note : a) Future cash outflows in respect of A (II) (i) to (v) above depends on ultimate settlement / conclusions with the relevant authorities. b) Future cash outflows in respect of A (II) (vi) above depends if company unable to fulfill export obligations of Rs. 2450.53 Lacs within next twelve years. 5) Company has availed Sales Tax exemption benefit of Rs. 151.46 lacs up to 31.03.2008 ( previous year Rs.151.46 lacs) in respect of assets and liabilities of Bareilly plant - II assigned from erstwhile Company. In respect of erstwhile Company, U.P.Trade Tax Tribunal has upheld the eligibility exemption against the order of Divisional Level Committee, Bareilly Region, Bareilly refusing exemption. Trade Tax Dept. U.P. has preferred appeal against the said order of U.P.Trade Tax Tribunal in High Court of Allahabad, Lucknow Bench.The company has filed counter appeal. Based on legal advise of its entitlement to sales tax exemption, the company is contesting demand for sales tax of Rs. 137.35 lacs ( Previous year Rs. 136.38 lacs) raised up to 2004-05 for completed sales tax assessment. 6) a) The Company has taken building on operating lease that is renewable on a periodic basis and cancelable at its option. Rental expenses for operating lease recognised in statement of profit and loss for the year is Rs. 4.99 lacs ( Previous year Rs. 3.74 lacs ). 24th ANNUAL REPORT 2007-2008 (63) c) In respect of assets taken on lease from 1st April, 2001 : (Rs. in Lacs) Balance Not later Later than Later as at than one one year & not than five 31.03.08 year later than five years years i) Total of minimum lease payments 48.87 11.76 37.11 — ii) Present value of minimum lease payments 38.95 8.07 30.88 — iii) A general description of the significant finance leasing arrangements : The company has taken vehicle on finanace lease for a period of 24 To 60 months. 7) The Company has written down the inventories to net realisable value during the year by Rs. 73.08 lacs ( Previous year Rs. 35.82 lacs ) 8) SEGMENT INFORMATION : A PRIMARY SEGMENT - BUSINESS SEGMENT : [Rs. in Lacs] SR. PARTICULARS ICE CREAM PROCESSED OTHERS ELIMINATION TOTAL NO. FOODS a) SEGMENT REVENUE External Sales 10241.17 3016.83 197.81 13455.81 (8885.69) (3091.65) (193.34) (12170.68) Inter segment 41.50 -41.50 0.00 (-34.81) (34.81) (0.00) Other segment Income 71.45 185.77 0.11 257.33 (33.23) (62.77) (1.28) (97.28) Total segment revenue 10312.62 3244.10 197.92 -41.50 13713.14 (8918.92) (3119.61) (194.62) (34.81) (12267.96) b) SEGMENT RESULTS 844.14 243.56 31.10 1118.80 (808.75) (401.70) (24.33) (1234.78) Unallocated Expenditure net of unallocated income 103.78 (44.15) Operating profit 1015.02 (1190.63) Interest Expense ( Net ) 412.40 (288.77) Taxation for the year - Current Tax 115.10 (285.30) - Deferred Tax 87.52 (-5.71) - Fringe Benefit Tax 13.06 (11.07) - Short/Excess provision of 6.16 I.Tax of earlier years (51.84) - Minority Interest 0.60 (0.50) - Share in Profit/Loss of 10.59 Associate (17.27) Net Profit/ (Loss) 390.77 (576.13) TOTAL CARRYING AMOUNT OF c) SEGMENT ASSETS 7907.83 3965.02 158.42 12031.27 (6342.53) (2684.77) (128.56) (9155.86) Unallocated Assets 671.25 (578.86) Total Assets 12702.52 (9734.72) d) SEGMENT LIABILITIES 2548.33 343.03 34.14 2925.50 (1655.89) (413.94) (13.03) (2082.86) Unallocated liabilities 6131.48 (4347.07) Total Liabilities 9056.98 (6429.93) VADILAL INDUSTRIES LIMITED (64) SR. PARTICULARS ICE CREAM PROCESSED OTHERS ELIMINATION TOTAL NO. FOODS e) Cost incurred during the period to acquire segment fixed assets 1719.96 986.43 4.69 2711.08 (880.64) (240.45) (35.19) (1156.28) f) Depreciation/Amortisation 334.66 96.02 5.57 436.25 (211.94) (88.66) (16.57) (317.17) g) Non cash expenses other than depreciation/amortisation 0.11 10.00 0.00 10.11 (18.05) (0.00) (0.00) (18.05) Note : Figures in brackets relate to previous year. B SECONDARY SEGMENT - GEOGRAPHICAL SEGMENT : Segment revenue by geographical area based on geographical location of customers : (Rs. in Lacs) Geographical Area Current Year Previous Year 1 India 11428.99 9836.51 2 Middle East Asia 659.39 431.68 3 North America 301.66 585.74 4 Europe 648.71 882.45 5 Asia pecific 417.06 424.02 6 Africa 0.00 10.28

13455.81 12170.68

C OTHER DISCLOSURES a) Inter segment revenue Inter segment transfers have been recognized at cost price. b) Business Segment Ice Cream : Ice Cream & Frozen Dessert Processed Food : Mango Pulp, Frozen Fruit, Pulp, Vegetable & Ready to eat/serve food Others : Forex management, Money changing and Cold Storage c) The company’s operating facilities are located in India. 9) The figures of the partnership firm, enterprise under control of the company is considered on the basis of its unaudited financial statements. 10) RELATED PARTY DISCLOSURES A) Name of related party and description of the relationship with whom transactions taken place. 1) Associates : Vadilal Chemicals Ltd. 2) Key Management Personnel : i) Virendra R Gandhi ii) Rajesh R Gandhi iii) Devanshu L Gandhi 3) Enterprises owned or significantly influenced by key management personnel or their relatives : i) Vadilal Enterprises Ltd. ii) Vadilal International Pvt. Ltd. iii) Kalpit Reality & Services Ltd. iv) Vadilal Happiness Parlour Ltd. v) Veronica Construction Pvt.Ltd. vi) Padm Complex Pvt.Ltd. vii) Ambica Dairy Products viii) Majestic Farm House Ltd. ix) Vadilal Soda Fountain 4) Relative of Key Management Personnel : Mamta R Gandhi 24th ANNUAL REPORT 2007-2008 (65) B) Transaction with related parties : (Rs. in Lacs)

Sr. Particulars of Transaction Associates Relatives of Enterprises owned Total No. & Name of Related Party Key Management or significantly with whom transactions are Personnel influenced by more than 10% Key Management personnel or their relatives 1 Sales : i) Vadilal Enterprises Ltd. — — 10671.57 10671.57 (—) (—) (9200.03) (9200.03) ii) Others — — 51.21 51.21 (—) (—) (45.87) (45.87) 2 Purchase : i) Vadilal Chemicals Ltd. 8.29 — — 8.29 (6.42) (—) (—) (6.42) ii) Others — — — — (—) (—) (0.64) (0.64) 3 Sale of RM/PM : i) Vadilal Enterprises Ltd. — — — — (—) (—) (0.18) (0.18) ii) Vadilal Soda Fountain — — — — (—) (—) (0.32) (0.32) 4 Freight paid :Kalpit Reality & Services Ltd. — — 251.31 251.31 (—) (—) (246.25) (246.25) 5 Rent Income : Vadilal Enterprises Ltd. — — 0.90 0.90 (—) (—) (0.90) (0.90) 6 Interest paid : i) Vadilal Happiness Parlour Ltd. — — 1.06 1.06 (—) (—) (1.01) (1.01) ii) Padm Complex Pvt.Ltd. — — 4.46 4.46 (—) (—) (4.79) (4.79) 7 Salary paid : Mamta R.Gandhi — 1.08 — 1.08 (—) (1.20) (—) (1.20) 8 Interest Income : Vadilal International Pvt.Ltd. — — 4.03 4.03 (—) (—) (4.00) (4.00) 9 Royalty paid/payable : Vadilal International Pvt.Ltd. — — 10.81 10.81 (—) (—) (17.71) (17.71) 10 Corporate guarantee given : Vadilal Enterprises Ltd. — — 250.00 250.00 (—) (—) (380.00) (380.00) 11 Corporate guarantee taken : Vadilal Enterprises Ltd. — — 800.00 800.00 (—) (—) (—) (—) 12 Balance outstanding at year end : a) Investments : i) Vadilal Chemicals Ltd. 162.04 — — 162.04 (162.04) (—) (—) (162.04) ii) Others — — 1.87 1.87 (—) (—) (1.87) (1.87) b) Receivable : i) Vadilal Enterprises Ltd. — — 2304.65 2304.65 (—) (—) (1847.49) (1847.49) ii) Vadilal International Pvt.Ltd. — — 381.47 * 381.47 (—) (—) (400.00)* (400.00) iii) Others — — 84.75 84.75 (—) (—) (45.57) (45.57) VADILAL INDUSTRIES LIMITED (66) Sr. Particulars of Transaction Associates Relatives of Enterprises owned Total No. & Name of Related Party Key Management or significantly with whom transactions are Personnel influenced by more than 10% key management personnel or their relatives c) Payable : i) Vadilal Chemicals Ltd. 11.62 — — 11.62 (8.94) (—) (—) (8.94) ii) Padm Complex Pvt.Ltd. — — 41.42 41.42 (—) (—) (46.47) (46.47) iii) Vadilal Happiness Parlour Ltd. — — 10.85 10.85 (—) (—) (10.08) (10.08) d) Against corporate guarantee given : Vadilal Enterprises Ltd. — — 523.03 523.03 (—) (—) (582.94) (582.94) e) Against corporate guarantee taken : Vadilal Enterprises Ltd. — — 750.00 750.00 (—) (—) (—) (—) Notes : * a) Represents towards deposit. b) Transaction of sales are shown net of VAT & S.Tax. c) Figures in brackets relate to previous year. 11) EARNINGS PER SHARE a) The amount used as the numerator in calculating basic and diluted earning per share is the net profit for the year disclosed in the profit and loss account. b) The weighted average number of equity shares used as the denominator in calculating both basic and diluted earnings per share is 71,88,230. 12) PARTICULARS OF DERIVATIVE INSTRUMENTS : a) Derivative contracts entered into by the company and outstanding as on 31st March, 2008. i) Particulars of derivative instruments acquired for hedging amount as under : PARTICULARS C.YEAR P.YEAR NOS. AMOUNT NOS. AMOUNT Number of sell contract 5 US $ 5000000 2 US $ 2000000 Aggregate Amount Rs. 2007.00 Lacs Rs. 871.20 Lacs ii) All derivative and financial instruments acquired by the company are for hedging. iii) Foreign currency exposure that are not hedged by derivative instruments as on 31st March, 2008 - US $ 1346742 equal to Rs. 539.05 Lacs (Previous year US $ 1719232 equal to Rs. 751.16 Lacs) Euro 363243 equal to Rs.228.20 Lacs (Previous year Euro 116850 equal to Rs. 67.84 Lacs) b) In respect of all derivative contracts at the balance sheet date by marking them to market shows net profit, which has been ignored. 13) Exchange (loss)/gain in respect of forward exchange contracts to be recognised in the Profit & Loss account of subsequent accounting period aggregate to Rs. 1.75 Lacs (Previous year Rs. 13.60 Lacs). 14) Previous year figures have been restated wherever necessary to make them comparable with current year’s figures.

Signatures to schedule 1 to 23 For and on behalf of the Board For KANTILAL PATEL & CO. Ramchandra R. Gandhi : Chairman Chartered Accountants Virendra R. Gandhi : Vice-Chairman & Managing Director Rajesh R. Gandhi : Managing Director Devanshu L. Gandhi : Managing Director Arpit K. Patel Nikhil Patel : Company Secretary Partner Place : Ahmedabad Place : Ahmedabad Date : June 30, 2008 Date : June 30, 2008

24th ANNUAL REPORT 2007-2008 (67) Auditors’ Report to The Board of Directors of VADILAL available, we have relied upon the unaudited financial INDUSTRIES LIMITED on the Consolidated Financial statements as provided by the management of the Statements. firm for the purpose of our examination of consolidated financial statements. 1. We have audited the attached consolidated balance sheet of Vadilal Industries Limited, (“the Company”) 5. Subject to our remark in paragraph 4 above : and its partnership firm / associate as at 31st March (i) We report that consolidated financial statements 2008, the consolidated profit and loss account and have been prepared by the Company’s the consolidated cash flow statement for the year management in accordance with the requirements ended on that date annexed thereto. These financial of Accounting Standard (AS) 21, Consolidated statements are the responsibility of the company’s Financial Statements and Accounting Standard management and have been prepared by the (AS) 23, Accounting for Investments in Associates management on the basis of separate financial in Consolidated Financial Statements, issued by statements and other financial information regarding the Institute of Chartered Accountants of India. components. Our responsibility is to express an opinion on these financial statements based on our (ii) Based on our audit and on consideration of report audit. of other auditor on separate financial statements and on the other financial information of the 2. We conducted our audit in accordance with generally components, and to the best of our information accepted auditing standards in India. These standards and according to the explanations given to us, we require that we plan and perform the audit to obtain are of the opinion that the attached consolidated reasonable assurance whether the financial financial statements give a true and fair view in statements are prepared, in all material respects, in conformity with the accounting principles accordance with an identified financial reporting generally accepted in India : framework and are free of material misstatements. An audit includes examining, on a test basis, evidence (a) in the case of consolidated balance sheet, of supporting the amounts and disclosures in the financial the. consolidated state of affairs of the statements. An audit also includes assessing the company, its partnership firm and associate accounting principles used and significant estimates as at 31st March 2008; made by management, as well as evaluating the (b) in the case of the consolidated profit and overall financial statement presentation. We .believe loss account, of the consolidated results of that our audit provides a reasonable basis for our operations of the company, its partnership opinion. firm and associate for the year ended on that 3. We did not audit the financial statements of partnership date; and firm which in aggregate represent .total assets (net) (c) in the case of the consolidated cash flow as at March 31, 2008 of Rs.238.43 lakhs and total statement, of the consolidated cash flows of revenues for the year ended on that date of Rs.192.19 the company, its partnership firm and lakhs and of associate which reflect the company’s associate for the year ended on that date. share of profit for the year of Rs. 10.59 lakhs. The financial Statements and other financial information of the associate have been audited by other qualified For KANTILAL PATEL & CO., auditor whose report has been furnished to us by the Chartered Accountants management of the company, and our opinion is Arpit K. Patel based solely on the report of the other auditor. Place : Ahmedabad Partner 4. As stated in note 9 of schedule 22 as the audited Date : June 30, 2008 Membership No.: 34032 financial statements of partnership firm, are not

VADILAL INDUSTRIES LIMITED (68) 24th ANNUAL REPORT 2007-2008 (69) FORM OF PROXY

VADILAL INDUSTRIES LIMITED Regd. Office : Vadilal House, Shrimali Society, Nr. Navrangpura Railway Crossing, Navrangpura, Ahmedabad - 380 009.

I/We of

being a member/members of VADILAL INDUSTRIES LIMITED, hereby appoint

of

or failing him/her of

as my/our Proxy to vote for me/us on my/our behalf at the 24th Annual General Meeting of the members of the Company to be held on Monday, the 29th September, 2008, at 12.30 p.m., at Sheth Shri Amrutlal Hargovandas Memorial Hall, Gujarat Chamber of Commerce & Industry (GCCI), Ashram Road, Ahmedabad - 380 009 and at any adjournment thereof.

Ledger Folio No. *DP ID No. : Affix *Client ID No. : 15 Paise No. of Shares Signature...... Revenue ...... Signed this day of 2008 Stamp * Applicable for investors holding shares in electronic form. IMPORTANT [1] This form duly completed and signed across the stamp as per specimen signature registered with the Company should be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the commencement of the Meeting.

Tear here Tear [2] Revenue Stamp of 15 Paise is to be affixed on this form. [3] A Proxy need not be a member.

ATTENDANCE SLIP

VADILAL INDUSTRIES LIMITED Regd. Office : Vadilal House, Shrimali Society, Nr. Navrangpura Railway Crossing, Navrangpura, Ahmedabad - 380 009. PLEASE COMPLETE THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE MEETING HALL. JOINT SHAREHOLDERS MAY OBTAIN ADDITIONAL ATTENDANCE SLIP ON REQUEST. Name Regd Folio No. *DP ID No. and No. of Shares held Client ID No.

Shareholder

Proxy

I hereby record my presence at the 24th Annual General Meeting of the members of the Company on Monday, the 29th September, 2008, at 12.30 p.m., at Sheth Shri Amrutlal Hargovandas Memorial Hall, Gujarat Chamber of Commerce & Industry (GCCI), Ashram Road, Ahmedabad - 380 009 * Applicable for investors holding shares in electronic form.

Signature of Shareholder(s)/Proxy VADILAL INDUSTRIES LIMITED

24th ANNUAL GENERAL MEETING

Day - Monday

Date - 29th September, 2008

Time - 12.30 p.m.

Venue - Sheth Shri Amrutlal Hargovandas Memorial Hall, Gujarat Chamber of Commerce & Industry (GCCI), Ashram Road, Ahmedabad - 380 009.

CONTENTS PAGE NO.  Board of Directors and other details 1  Notice & Explanatory Statement 2-6  Directors’ Report 7-9  Management Discussion & Analysis 10-13  Report on Corporate Governance 17-22  Shareholder Information 22-26  Auditors’ Certificate on 26 Corporate Governance  Auditors’ Report on Accounts 27-29  Balance Sheet 30  Profit & Loss Account 31  Cash Flow Statement 32  Schedules to Balance Sheet 33-40 and Profit & Loss Account  Significant Accounting Policies 40-43  Notes on Accounts 43-52  Balance Sheet Abstract and 52 Company’s General Business Profile  Consolidated Accounts 53-67  Auditors’ Report on Consolidated Accounts 68  Proxy Form & Attendance Slip